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HomeMy WebLinkAboutCOMM - Meeting Minutes - 204 - 5-20-2004 - RETIREMENTSold ev IMR Limited Form 825 E00102204 nute No. 204 Washington County Retirement Board Washington, PA May 20, 2004 The quarterly meeting of the Washington County Retirement Board was held at pproximately 11:36 a.m. Thursday, May 20, 2004, in the Public Meeting Room, with the Ilowing members being present: Commissioners Larry Maggi, J. Bracken Burns, Sr., and Tana L. Irey; Treasurer Francis King; and Controller Michael Namie. Also present: Director of Administration Leo Trich; Director of Finance Roger Metcalfe; Chief Clerk Mary Helicke; Secretary Joyce Thornburg; Audit Manager, Kathy Demarest. tes Mr. Burns entertained a motion to approve Minute No. 203 dated February 29, 2004. It moved by Mr. Maggi and seconded by Mrs. Irey that the above mentioned minutes be as written. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Maggi - Yes; Mr. Burns - Yes. n carried unanimously. Mr. Burns requested to include an amendment to Minute No. 203 regarding Mrs. Irey's on directed to Mr. Domeisen as to whether he would leave his personal money in the Fund. His answer to this question was yes. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Maggi - Yes; Mr. Burns - Yes. ion carried unanimously. reasurer's Report Mr. King stated that the February and March reports contain a deposit error. This is due BlackRock making their deposit on the first day of the month versus the last day. This has w been clarified with BlackRock and the deposits will be made on the last day of the month. Mr. Burns entertained a motion to approve the Treasurer's Report. It was moved by Mr. ing and seconded by Mr. Namie that the above report be approved as submitted. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Maggi - Yes; Mr. Burns - Yes. otion carried unanimously. Retirement Allowance Report ank Balance as of February 1, 2004 $ 183,180.05 Deposits to Checking Account 182,439.96 ransfers from Investment Accounts 429,877.43 ss: Cancelled Checks (111,247.02) I.ess: Transfers to Investment Accounts (486,793.68) F.e ss: ACH Debits (106,316.60) nk Balance as of February 29, 2004 $ 91,140.14 posit Error 72,708.64 ss: ACH Debit (7,209.97) ss: Outstanding Checks (79,848.00) ss: Retirement Check Run February 29, 2004 (76,790.81) ank Balance as of February 29, 2004 $ -0- Retirement Allowance Report Bank Balance as of March 1, 2004 Deposits to Checking Account Transfers from Investment Accounts Less: Cancelled Checks Less: Transfers to Investment Accounts Less: ACH Debits Bank Balance as of March 31, 2004 Deposit Error Less: Outstanding Checks Less: Retirement Check Run March 31, 2004 Bank Balance as of March 31, 2004 Requisitions $ 91,140.14 273,042.74 372,398.72 (277,587.01) (273,042.74) (110,580.21) $ 75,371.64 100,074.69 (105,901.11) (69,545.22) $ -0- Mr. Namie stated that requisitions for the months of February, March and April 2004 totaled $1,012,480.84. Mr. Burns entertained a motion to approve requisitions. The motion wao moved by Mr. Namie and seconded by Mrs. Irey. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Maggi - Yes; Mr. Burns - Yes. Motion carried unanimously. February 2004 Distributions Check Payee Amount 2604 Capital Bank and Trust Co. as trustee of IRA of John P. Bevec $ 18,763.96 2605 Eric V. DeLong 3,952.53 2606 Brenda L. Rollison 453.03 2607 James M. Stillwell 9,216.55 2608 Tracey L. Williams 957.70 2609 Banc One Securities Corp. as trustee of IRA of Merrel W. Yocum 4,441.74 2610 Estate of Flora J. Richards 197.03 2611 A.G.Edwards as trustee of IRA of J. Alan Fuehrer 41,292.42 2612 PA SCDU Arthur Couts 169-54-0923 75.00 Transfer: PNC Bank 10,264.88 2613 Washington Co. Cash Disbursement Account 34,936.20 Transfer: Washington Co. Retirement Account 167,822.24 TOTAL MONTHLY $ 292,373.28 March 2004 Distributions Check Payee Amount 2614 Estate of Lester Quinn $ 49.96 2615 Estate of Josie Kelley 51.26 2616 John L. Cox 51,645.86 2617 Susan L. Accetta 69,123.44 2618 Victoria R. Adams 8,055.27 2619 Jessop Community FCU as trustee of IRA of Vincent Borello 3,400.77 2620 John P. Smider 16,005.90 2622 PA SCDU Arthur Couts 169-54-0923 75.00 Transfer PNC Bank 42,639.54 2621 Washington Co. Cash Disbursement Account 35,125.37 Transfer Washington Co. Retirement Account 172,901.50 TOTAL MONTHLY $ 399,073.87 1 I� IMR Limited Form 825 EM02204 1 F L� April 2004 Distributions eck Payee Amount ?4 Pacific Life Insurance Co. as trustee of IRA of Eleanor Bury $ 44,188.96 ?5 Eleanor Bury 16,000.00 26 Albert J. Monkewicz 16,920.19 27 Estate of Catherine Lindley 101.91 28 John Bout 1,254.37 29 Benjamin L. Dille 3,393.62 30 Peter J. Garvey 84.89 31 David A. Hammond 113.89 32 Erika K. Patterson 334.14 33 PA SCDU Arthur Couts 169-54-0923 75.00 insfer: PNC Bank 16,094.05 34 Washington Co. Cash Disbursement Account 44,447.46 insfer: Washington Co. Retirement Account 178,025.21 TOTAL MONTHLY $ 321,033.69 Mr. King expressed a concern that he was not provided with a copy of the SEC report oncerning market timing allegations against Invesco prior to this issue being discussed at the ebruary 19, 2004 meeting. Mr. Burns responded that he received the information too late to ave it distributed prior to the last meeting. Mr. King requested that any relevant reports or that may be discussed in a meeting be forwarded to the Secretary for proper istribution to the Board. (:? A request for action on a disability pension has been submitted for John Olshock ;tive November 21, 2003. Mr. Olshock has been approved by the Social Security inistration for a disability pension. Mr. Burns entertained a motion that this be accepted. motion was moved by Mr. King and seconded by Mrs. Irey. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Maggi - Yes; Mr. Burns - Yes. carried unanimously. Albert Monkewicz has an agreement to purchase service credit dated 10/10/95 to in the amount of $823.38. Bernard Tychinski has an agreement to purchase Non Intervening Military Service dated 1/61 to 03/30/64 in the amount of $9,223.80. Retirement contributions were made by Washington County for Intervening Military on behalf of the following individuals: Michael Sabatasse for the period 03/17/03 to 09/30/03 in the amount of $1,175.38; Tom Jess for the period 07/03/03 to 09/14/03 in the amount of $756.00; Erik Parks for the period 06/25/02 to 02/06/03 in the amount of $884.02. The 1st quarter of 2004 was a decent quarter. Since the close of the 1st quarter, the arket has gone south. There was a net increase in the quarter of almost $985,000.00 with a imbined asset increase of approximately 2.7%. As far as the quarter ending March 31, 2004, we led the fixed income areas 2.74% versus the index of 2.66% and, for the second time in the!' last fourteen quarters, we slightly trailed the equity Russell 1000 Value Index. This is due to th@s underperformance of two different stocks in the health care sector of the portfolio: HealthNet and Universal Health Services. At the end of the 12-month period, there have been outstanding performances in fixed income of 5.66% versus the index of 5.41 % and in value equity of 46.070 versus 40.82% for the index. The Lehman Aggregate bond index through the end of March wag up 2.66%. As of the close of business on May 19, 2004, the Lehman Aggregate bond index wag negative 1.20%. The problem is the perceived damage done by inflation and increased interest; rates. Basically, bonds are going to be tough all year because interest rates are going up. Stocks have a chance of rebounding fairly significantly in the 4th quarter. Some slight help came to the market with the reappointment of Greenspan as the Federal Reserve Chairman. However, some settlement has to come in the Middle East before we see a significant change. John Thompson - Emerald It was noted that Emerald has not lost a direct institutional client in their 12-year historyix Emerald has stayed with their core discipline with no deviation from the small cap growth ii mandate. Two things affect stock prices: earnings growth and sentiment. We were up over 50% last year. As good as things appeared to be in January and into February, all of a sudden; 3, the prospects for stock growth and the slowing down of the economy are beginning to drive the!, market downward. The best earnings visibility over the last four or five months have been in th technology area. An e-mail was received by the Board on May 19, 2004 stating that over the history of Emerald, there have been two types of small cap growth portfolios. A concentrated portfolio which has between 50-60 names, and a diversified portfolio which has between 100-120 namet;. The reason Emerald started Washington County with a concentrated portfolio was because at the time there was a lot less liquidity in the market, meaning it was more difficult to get in and oult of these small cap managers and that trading costs were substantially more. Over the last five years, liquidity in the market has risen substantially resulting in the fact that it is much easier to get in and out of these small companies and trading costs have come down substantially. Whe you look at the performance of the diversified portfolio relative to the concentrated portfolio, thetf is not that much of a barrier over the long-term performance during the last 7, 8, or 9 years. However, the short-term fluctuation on a quarterly basis is much greater in the concentrated portfolio than it is in the diversified portfolio. On the County side of the table and a fiduciary perspective, the county may be better served with a diversified portfolio rather than with a concentrated portfolio. Mr. Burns asked Mr. Thompson if he was eliminating the concentrated and going with the diversified portfolio and whether this requires action on our part. Mr. Thompson stated that Emerald has a number of clients where they manage portfolios of less 3 than $1 million and Emerald probably will not eliminate concentrated portfolios. Mr. Thompson stated that Bucks County, Mercer County and Center County have been recommended by Emerald to go with the conversion and this has received a positive response. Frank Domeisen' stated he will follow up with any action that has to be taken and will let John Thompson know. .6 Mr. Domeisen stated this would take him approximately two weeks. is I" Mr. Thompson stated no matter if the County was in the concentrated or the diversified portfolio, Emerald does have internal constraints. There will never be more than three times tl Russell 2000 weighting in any one economic sector. Emerald has sector constraints and industry constraints in both diversified and concentrated portfolios. The only difference being that the average weighting in the concentrated portfolio maybe in the 2% range and when you have a portfolio that has 120 stocks, such as the diversified, average weighting is around 1%. Mr. Burns entertained a motion to move to the diversified portfolio contingent upon Mr. Sold By ]MR Limited Form 825 E00102204 eisen's recommendation. The motion was moved by Mr. King and seconded by Mr. Namie. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Maggi - Yes; Mr. Burns - Yes. carried unanimously. If%/1JJGL-JII II FUIHV1 IV The portfolio has $12.9 million in equity and $161,000.00 in cash for a total of a little ver $13 million. Overall, 2003 was a good year. Ark Asset was up approximately 9% and the arket was up a little over 10%. This underperformance was due to the fact that we were not ver-weighted in large pharmaceuticals. Equity was probably the worst class in the 1 st quarter. rk Asset outperformed the index 6 out of the last 6 calendar years. We are going to add value our stock selection and take on a similar risk profile to the Russell 1000 growth index. Capital pending continues to increase after being very depressed. The market is definitely being hurt y interest rates and political instability. The S&P 500 Sector Performance was led by consumer staples, energy, and utilities. bond market sector was led by Treasuries, Agencies, and corporate investments. The aker segment is mortgage -backed securities. Over the last one year period the performance n March to March was up 24.5%. This is just behind the target market index and puts it in the decile, outperforming 7 out of 10 in similar managed profiles. The three year performance i a 5.3% return, putting it in the 2nd decile, outperforming 8 out of 10 managed profiles. C.S. Kee is slightly behind the benchmark for the quarter. However, in March 2004, C.S. McKee utperformed the benchmark by 80 basis points. C.S. McKee's one year numbers and longer re in the 1 St decile of the large cap value peer group. Ark results have a limited history. Evergreen underperformed for the quarter. During the month of April, they did outperform by 4 ercentage points and now year-to-date, they are up 3.4% and the market is down 1.3%. merald underperformed the benchmark for the quarter. Looking at the one-year number, 9.5%, puts it behind the benchmark, but still in the median and in the 6th decile. Looking at the ve-year number, 11.1 %, puts it well ahead of the Russell growth and in the 4th decile, utperforming 6 out of 10. In fixed income, C.S. McKee is showing a 2.7% return, matching the enchmark. BlackRock year-to-date through the end of April is ahead of the benchmark by 20 asis points. Regarding the International Equity Manager search, the five candidates are American unds, Boston Company, Brandywine, C.S. McKee, and Fidelity. Mr. King asked if the fees are egotiable. Mr. Domeisen commented that the fees are not because all are co -mingled vehicles. he number of times these managers beat the index on a rolling 4-quarter basis for a five-year eriod is about 50/50. On a risk adjusted basis, all the candidates have favorable attributes. It Fas decided by the Board to hold a special interview to determine the new International Equity tanager. The meeting was adjourned at 12:20 p.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: 13 .2004 ATTEST:7// SECRETARY Minute No. 205 SP Washington County Retirement Board! E Washington, PA August 5, 2004 The Special Meeting of the Washington County Retirement Board was held at approximately 2:35 p.m. Thursday, August 5, 2004, in the Public Meeting Room, Courthouse Square Office Building, Washington, Pennsylvania, with the following members being present: Commissioners Larry Maggi, J. Bracken Burns, Sr., and Diana Irey; Treasurer Francis King; ai Controller Michael Namie. Also present: Director of Administration Scott Fergus. The purpose of this special meeting was to hear presentations for an international equ manager. Frank Domeisen updated the Board on the current performances of the 3 candidates: Boston Company Asset Management, LLC; Brandywine Asset Management, LLC; and C.S. McKee Investment Managers. Net of fees, all three candidates exceeded the MSCI EAFE benchmark. As of June 30, 2004, performance was as follows: Brandywine, + 6.2%; Boston Company, + 6.8%; and C.S. McKee, + 1.8%. Presentations were given by the following: Brandywine Asset Management, LLC — Mr. Craig G. Scott, Director of Marketing. The Boston Company Asset Management, LLC — Mr. Daniel J. McCormack, Director of Consultant Relations; Mr. John Truschel, CFA, Portfolio Management. C.S. McKee Investment Managers — Mr. Norman S. Allen, Executive Vice President; Mtt Robert A. McGee, Senior Vice President, Mr. William J. Andrews, Vice President. All presentation materials are available in the Office of the Controller for inspection. The meeting was adjourned at approximately 5:10 p.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: .i %3 2004 ATTEST:' �+ SECRETARY 1 1