Ge-19 - Pace Board Meeting Minutes 10000

AUll-I~-2001

OB :48am

':2 Frol:l-PIUlIP'

615 315 2.

)-~l

j- SiD P.002/ 010

'1 -

1- \ 0 F-2IJ

MINUTES OF THE

PACE

L~O(JSTRY UNJOr\-lV1ANAGEMENT PE NSION FuND

BOARD OF TR1JS1"EES M "£ETlN G

October 5, 2000

:eRESEf\T :

Labor Trustees

Man::t gement Trystees

Boyd Young, Chairman Gary B. Cook Roger Heiser Donald L. Laugharn

Gayle Sparapani, Secretary Pat ricia Barnard Jane Lareer Susan Staudnhar ALSO PRESENT:

Maria F. Wieck, Administrative Manager Don Wilkes, Director, I'enslnns aud Insurance Richard E. Nlkndyrn, OCAW/PACE Unicu-Iudusrry Pension Fund Darrin Owens, The Segal Company Francis X. Lilly, Independent Fid ucia ry Services, Inc. Edward Patchett, Independent Fiduciary Services, II1e. Ban")' S, Slevin, Slevin & Hm-I! P.C.

The meeting was held at the Fun d Office in Nas hvil le, Tennessee.

Chairman. The Chairman advised that Gary Cook had replaced Mario Sc arsellerta as a Trus tee and there was a vacancy on the Benefit Committ ee that would be filled by the Union Trustees. The Chairman advised rhat he had be en discussing U1e consolidati on of the administration of the OCAW/P ACE Union-Ind us try P ensio n Fund as a first step tow ard th e eve ntual merger of the rwo Funds. He noted that a timetable for 11 e merger nee ds to b e establ ished. The Chairman stated that th ere were a number of'p ersonnel issues that the Trustees would also have to address.

Minutes . Upon a motion duly made and seconded, it was unanim ously

"---- .'

GOVERNMENT EXHIBIT GE -19

AUi-\4-2001 08:50am

', -

From-PIW'

&15 315

,6

T-510

P.OOS/O IO

F-113

. .

"

Financial. Ms . Wieck reviewed the Fund AI' A Glance as of June 30. 2000 and 1999 for the Defined Benefit Pr0 graI11. T he Trus tees noted the level of cash shown and Mr. P atchen ad vised that this was due to normal trading by the investment managers. Ms. Wieck noted that th e amount of benefits sbown included the paym ent of th e ] 3 1h check. Ms. Wieck also reviewed the reports for the Defined Contribution Program. She reviewed wi th the Board the operating expens es as of June 30. 2000 and 1999.

Ms. Wieck noted that the Lincoln P ulp and Paper m erger was complete and [he merger of the Roaring Springs Plan w as expected co be effective No vember 1, 2000. She reviewed wi th the Board the information relating to the participating employers. Investment Fiducia rv Services. Frank Lilly and Ed P atchett, representatives of Independent Fi d uciary Services, Inc. (HIPS',), highlighted the materi als prepared by lFS and included in the m eeting book, no ting the

<::»

order in which the materi al would be covered. Mr. Lilly then review ed (he Fund' s E xecutive . Summary of Performance for the period ended August 2000, advising that the to tal Fund had increas ed 6.7 6% on a year-co-date basis compared to an increas e of 5.36% for the Fund's Policy Index. Mr. Lilly noted thai the Fund' s equity investm ent man agers. as a group, earned 6.69% year-to-date compared to the 4.19 % retum of the bro ad eqni t:y m arket Wilshire 5000 Index, Mr . Lilly pointed out that each equity manager' s perform ance was ah ead of the broad market. with ICC Cap ital performing strongly over the past mo nth and quarter. With regard to fixed income, Mr. Lilly noted the Fund ' s managers, as a group, w ere up 6.83% year-io-date co mpared to 6.45% for the Lehman Aggregate index. Finally, Mr. Lilly indicated the Fund' s overall as set allocatio n at the end of August 2000 was consistent with the Fund ' s established target. Thereafter, Mr. Patchett re viewed IFS' norma l quar terly performance report for the Fund for the period ended Ju ne 2000. He pointed out that the rep ort comp ares the p erformance of the total Fund, th e equity and fixed inco me composites and each inves tm ent manager to appropriate benchm ark indices and p eer universe groups. Mr . P atchett also reviewed wi th the Board the sections of the r eport that comp ares total Fun d and manager inv estment portfolio ch aracteristics and risk statistics to appropria te indices. The Truste es noted their c oncern with Wright's longerte rm perfo rm ance. Mr. Patchen indicated recent perform ance had im proved and reviewed wi th th e Board recent changes made by Wrigh t in its inv estm ent strategy. 1\.11". Lilly n oted th at th e action TO transfer assets to a small cap index fund pendin g a decision to hire an active manager, as di scussed at the last meeting had Dot occurred given the B ank of New York Index Fund's rules relating to the ability to liquidate the Fund's inve stment in the Index Fund. Mr. Lilly said IFS w ou ld make a recommendation on this matter later in its presentation. Th e Chairman noted that the low allocation to ICC results in a higher proportionate fee and little impact on the returns ofth e Fun d. Mr. lilly noted That ifICC is able to outperform [he Wilshire 5000 Index, the Fund 's equity policy benchmark, that would warr ant an increase in the amount allocated to lee.

Mr. Lilly then reviewed tbe draft In ves tm ent Policy Statem ent ("rPS'') that IF S prep ared, consi st ent with its rec ommendations at the last meeting. Mr. Lilly reviewed certai n k ey clem ents

of the IPS including its purpose, the assignm ent of investme nt-related responsibili ties as between PTUIvIPF

-

4-

Octcber 5,2000