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MINUTES OF MEETING HELD
September 21, 2009
A meeting of the Board of Trustees was called to order at 9:20 A.M. at Council
Chambers, Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES
Tom Murphy
Rick Rhodes
Ed Morejon
Roy 011iff (9:58 A.M.)
MINUTES
OTHERS
Margie Adcock, Administrator
Pedro Herrera, Attorney
Joe Bogdahn, Investment Monitor
The Board reviewed the minutes of the meeting held July 20, 2009. A motion was made,
seconded and carried 3 -0 to accept the minutes of the meeting held July 20, 2009.
INVESTMENT MONITOR REPORT
Joe Bogdahn appeared before the Board. He reviewed the market environment for the
period ending June 30, 2009. He noted that small cap and mid cap did a little better than
large cap, and low quality did a little better than high quality. Mr. Bogdahn reviewed the
investment performance for the quarter ending June 30, 2009. The total market value of
the Fund as of June 30, 2009 was $23,334,022. The asset allocation was 48% in
domestic equities; 8.5% in international; 34.1% in fixed income; 3.6% in real estate; and
5.8% in cash. The Fund was up 5.68% net of fees for the quarter while the benchmark
was up 11.73 %. Mr. Bogdahn noted that it was a tough quarter, although there were
positive numbers. The total domestic equity portfolio was up 11.82% while the
benchmark was up 16.82 %. The equity portfolio managed by Dana was up 11.07% for
the quarter while the S &P 500 was up 15.93 %. The international portfolio managed by
Voyageur was up 16.56% for the quarter while the EAFE was up 25.85 %. The real estate
portfolio managed by American Realty was down 7.44% for the quarter while the
NCRETF was down 5.20 %. The total fixed income portfolio was up 2.62% for the
quarter while the benchmark was up 1.68 %. Agincourt was up 2.091/6 for the quarter
while the benchmark was up 1.78 %. DHJ fixed income was up 3.10% for the quarter
while the benchmark was up 1.68 %. There was a lengthy discussion on performance and
meeting expectations. There was a lengthy discussion on the assumed rate of return of
8.25 %. Mr. Bogdahn stated that in general terms he would like to see a lower number as
it would be easier to reach the return but would require the City to contribute more
money. He stated that he thinks long term this is a good number. The difficult challenge
in going forward it how to achieve it, but they have some things in progress to help such
as increasing the international exposure. Mr. Bogdahn stated that he was not
recommending any change at this time. Mr. Bogdahn reviewed the compliance checklist.
Roy 011iff entered the meeting.
Mr. Bogdahn stated that the only thing he would do is add some things, some of which
cannot be done until the Ordinance is amended. However, one thing the Board could do
now is add to emerging markets. There was a lengthy discussion on emerging markets.
When the interest rates start to go up, it will be a bad time for bonds. He does not think
that will happen for at least twelve to eighteen months, so there is time to look into that.
There was a lengthy discussion on increasing the international limit to 25% and whether
an Ordinance change is necessary. It was noted that this issue should be discussed at the
upcoming Division of Retirement Conference.
REAPPOINTMENT OF RICHARD RHODES
It was noted that the term for Richard Rhodes as the 50' Trustee was due to expire on
September 30, 2009. A motion was made, seconded and carried 3 -0 to reappoint Richard
Rhodes for another term as the 5t' Trustee. Richard Rhodes did not vote on the motion.
Tom Murphy departed the meeting.
ATTORNEY REPORT
Mr. Herrera stated that they forwarded the proposed Ordinance to the Actuary for an
impact statement. They received a letter from the Actuary dated September 8, 2009
regarding the impact of allowing retirees to change their joint annuitants. Mr. Herrera
replied to the Actuary regarding his letter asking if a recalculation would take into
account the anti- selection. He has not yet heard back from Mr. Armstrong. Currently the
language is that a recalculation will take place. They may need to include language that
any cost will be passed on to the member requesting the calculation. There are two
issues. One is the cost of the recalculation. The other is the actuarial funding cost and he
is waiting to hear back from the Actuary on this. A motion was made, seconded and
carried 3 -0 that any cost from anti - selection and a recalculation associated with that
would be borne by the Participant requesting the recalculation. Mr. Herrera reviewed
the Ordinance and noted that the Ordinance provides that the cost of any recalculation
would be borne by the Participant.
ADAI MSTRATIVE REPORT
Ms. Adcock presented the Board with the benefit calculation and election for Evan
Bestland. A motion was made, seconded and carried 3 -0 to approve the benefit election.
Ms. Adcock presented the list of disbursements to be made. It was noted that on the
invoice for the Attorney there were two entries for the same item on August 3, 2009. Mr.
Herrera noted that they do not double bill for two attorneys and therefore would remove
one of the entries. It was noted that $142.50 would be deducted from their invoice. A
motion was made, seconded and carried 3 -0 to approve the disbursements listed with the
exception that $142.50 would be deducted from the invoice for the Attorney.
OTHER BUSINESS
It was noted that Richard Hitchins resigned form the Board. The City Clerk has advised
that there are two applicants for the vacant position. The City will appoint someone to
the position in October.
Mr. Bogdahn provided a revised Investment Policy Statement. He stated that it added
language regarding scrutinized companies and incorporated an increase in the maximum
for international securities to 25 %. Mr. Herrera stated that he did not want the Board to
include the 25% maximum when the Ordinance had not yet passed. The Board decided
to review the matter at the next meeting after they had a revised Statement and an impact
statement from the Actuary.
There being no further business, the meeting adjourned.
Respectfully submitted,
Tom Murphy, Secretary