Gn-07 - Local 773 Board Meeting Minutes 0606

LOCAL 773 BENEFITS OFFICE Northeastern New York District Council Pipefitters Welfare Fund Plumbers & Pipefitters Local 773 Annuity Plan Plumbers Local 773 Pension Fund 30 Bluebird Road

P.O. Box 1396 South Glens Falls, NY 12803

MINUTES OF LOCAL 773 PLUl\1BERS PENSION, WELFARE AND ANNUITY FUND TRUSTEE MEETING HELD AT THE QUEENSBURY HOTEL IN GLENS FALLS, NEW YORK ON ruNE 29. 2006 AT 9:00 A.M. Present at the meeting were the following Trustees:

Union Trustees:

Absent:

Terry Monroe Larry Bulman Michael Salerno

Contractor Trusfees: Terry Bulman

Robert Barody Evan Myers

Absent:

David Cronin Da.niel Monroe Douglas Brockway William Gordon.

Also, in attendance: Lawrence 1. Gonnelly, Fund Administrator William Pozefsky, Counsel

Michael Chrys of Wachovia Securities The meeting was called to order at 9:00 a.rn. Lawrence 1. Gonnelly acted as Chairman of the meeting and WiUiam Pozefsky as Secretary.

PRELlMlNARY

Minutes, The Minutes of the Regular Meeting of April 5, 2006 and the Special Meeting of June 1, 2006 were reviewed. As 00 quorum was as yet present, no vote co approve tbe Minutes was taken, and the Minutes will be voted upon at the next meeting. INTERNATIONAL 'MANAGER SEARCH

1.

Preliminary Summary

In furtherance of the prior decision of the Trustees to hire an International Investment Manager, Investment Consultant Michael Chrys informed the Trustees that three International Managers were in attendance to make presentations. They were : Alliance Bernstein, Wright Investors Service and HGK Asset Management, Inc.

GOVERNMENT EXH IB IT GN - 7

2.

Alliance Bernsteio

Judy Eng, Manager, Client Relations, Taft-Hartley Group made the presentation on behalf of her Company. She passed out copies of Alliance Bernstein's Booklet dated June 29, 2006, containing the fum' s agenda, reasons for international investing, philosophy and research capabilities and additional information. A copy of the Booklet is filed with cbese Minutes. Ms. Eng informed the Trustees that Alliance Bernstein, overall, had 20 l billion dollars in assets under investment and 1.7 billion dollars In assets under investment in their International Value Fund in which over 55 Taft-Hartley Funds participate. Ms. Eng pointed out that the Fund invested only in developed countries and did not use American Depository Receipts (ADR's). The Company's objective is to earn a 3% premium over market cycles with a tracking error of 500-700 basis points. Tbe Company uses Taft-Hartley guidelines (AFL-CIO Standards). Any contract would be between OUI Fund and Alliance Bernstein, not its Delaware Trust Fund. Alliance Bernstein would accept Fiduciary SIaD..lS to our Fund. 3.

Wright Investors Service

Amit S. Khandwala, Executive Vice-President, CIa Equity Management and Kenneth H. Singer, Senior Vice-President. Institutional Sales and Service, made the presentation on behalf of their Company. They passed out the Wright Investors Service Booklet dated June 2006 with material about the Company A copy of the Booklet is filed with these Minutes, They discussed the Wright International CORE Fund witb 2.2 billion dollars in assets under management and mentioned that SO% of Wright's business is with Taft-Hartley Funds. Tbe Company focuses on stock selection, using a Quantitative Analysis. The CORE Fund has 50% in growth and 50% in value, witb a tracking error 0[200 basis points. The Company rebalances monthly and invests in mostly developed markets with J% in emerging market exposure. Two types of investrnents are offered: one is a broad universe of international blue chip securities; the second is an ADR universe with individual securities.

Wriglu also offers what they call "Labor Friendly

Screening." The Compaoy's fee is 60 basis points using the Fuod's existing custodian. Wright's regular fee schedule would be 70 basis points on the first 5 million dollars of assets.

4.

liCK Asset Management. Inc.

Martin J Maddaloni, Jr., Managing Director/Marketing & Client Services, made the presentation on behalf of his Company. Mr. Maddaloni passed out his Company's Booklet dated June 29,2006 containing an overview oftbe Firm, a discussion of the investment process, certain statistics and performance information and disclosures. A copy oftbe Booklet is filed with these Minutes. The HGK International Equity product has 3 billion dollars in assets under management, with approximately 100 separate accounts. One Hundred and Sixty Million DoU ars is i nvested in International Di scipline, Tbe Company's fee is either 100 ba sis points or 80 basis points plus a performance percentage. Mr. Maddaloni explained that his Company uses a direct investment portfolio, oat ADR' 5, and that the account is oat CQ-m ingl ed. but is separately managed using our Fund's guidelines, No specific style (value or growth) is followed. The investments are in developed, not emerging markets, and ills Company follows AFL~CrO guidelines for International Investing. Mr. Maddaloni informed the Trustees that a highly qualified individuaJ named Richard Bruce does proprietary research for his Company.

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5.

Disc.ussion on Managers

Upon the conclusion of the presentations, the Trustees and Michaet Chrys discussed each of them. Mr. Chrys confirmed that all three of the Managers have good performance and good Taft-Hartley relationships. He pointed out that Alliance Bernstein's individual portfolio requires a 25 million dollar investment (NWQ, for example, has a 10 million dollar individual portfolio requirement) so that our Fund's assets would be co-mingled with other clients; that Richard Bruce, the analyst for HG~ is very good, but that custody of assets would be a potential issue since HGK uses sub-custody arrangements outside the U.S.; and that Wright lnvestors, the "vanilla" choice, uses ADR's but not all great companies have ADR's. After ao extensive discussion, a quorum having been obtained, Trustee Larry Bulman made a MOTION, seconded by Trustee Michael Salerno to hire Wright Investors and Invest 4 million dollars in option Dumber 2 (tbe ADR Universe of individual securities); to take the 4 million dollars from assets managed by TCW, with the understanding that if TCw does not have 4 million dollars available, tbe balance should be taken from assets managed by NWQ; and to amend the Investment Guidelines to permit up to 15% of the Fund assets in International Investments.

The Monon passed unanimously. PENSION FUND J. Micbael Chrys discussed the fact that Wachovia had placed TCW on "watch" and distributed two handouts frOID Wachovia's Managers Strategy Group outlining certain personnel departures from TCW and under performance by TeW relating to allocation and volatility. After some further discussion, MI. Chrys recommended tbat the Trustees close out TCW. 2.

Rebalancing

Mr. Chrys informed the Trustees that be would like to rebalance the value-growth ratio of

investments. ~'ELF ARE

FUND

I. Fund Manager Gonoelly reviewed with the Trustees the application of Gregory W Brown for a Health Care Expense Benefit reimbursement for the purchase of a treadmill for his wife Suzanne. Mr. Gonnelly explained that Gregory Brown bad followed the required procedures of obtaining a doctor's prescription, submitting a reimbursement request, first to Blue Shield of Northeastern New York appealing Blue Shield's denial. and then submitting the appeal denial to tile WeIfare Fund, along with the receipt for the purchase and a signed Certification and Hold Harmless Agreement. Mr. Gonnelly also explained that the paperwork had been approved by the Fund Actuary Stephen Thomas and tbe Fund Attorney William Pozefsky.

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After discussion, Trustee Larry Bulman made a MOTION, seconded by Trustee David Cronin, to reimburse Gregory Brown the sum of $695.37 for the purchase of the treadmill. The Motion passed unanimously .

2.

Future Health Care Expense Benefit Reimbursement Procedure

The Trustees discussed the procedure to be followed in the future to expedite Health Care Assistance Benefit Reimbursement, in view of the fact that the required steps for such reimbursement have been well defined . Trustee Larry Bulman made a MOTION, seconded by Trustee Terry Monroe, that in the future, if the Fund Manager obtained all tbe necessary paperwork for payment of a HeaJth Care Assistance Benefit and the benefit is approved by the Fund Actuary, then the Fund Manager is authorized to approve the reimbursement and issue the reimbursement check without additiooal Trustee approval . The Motion passed unanimou sly. GENERAL

1.

Robert Southard Discussion

Robert Southard of Allegiance Capital, Inc. discussed with the Trustees, a Dew Fund with. which he is associated. The Fund has been registered with the Securities and Exchange Commission as a Registered Investment Advisor, and is owned equally by Allegiance Capital and Treesdale Partners. The Fund is a "Fund of Funds" containing 22 separate Funds, on average, and is intended to be Don-correlated to stocks and non-correlated to the rest of the Hedge Fund industry. The goal of the Fund will be to produce better returns than the bond market and to show positive returns most of tbe time. The Fund was started in May 2005 and will not contain any Hedge Funds that are correlated to stocks . Mr. Southard further explained that he was not in a position to offer the Fuod to the Trustees at tills time but that his intention was to make them aware of this new product. The offering documents for the Fund are numbered, as required by SCC regulations , and were not passed out at the meeting. NEXT MJ£ETING I. The Trustees set September 14, 2006 as the date for the next meeting, at a location to be determ..ined . 2. Trustee Michael Salerno made a MOnON, seconded by Trustee Larry Bulman to adjourn tbe meeting. The Motion passed unanimously and the meeting adjourned at 1:37 p.rn.

Yours Truly, Lawrence J. Gonnelly Fund Manager ' .\Fil, SCf\'C: ~0 04\Cli e nt DiJb\L 773 (5S)\I'<1inut.:s.2.13.(l..l .RB\ 1SED.(WORD).wpd

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Benefits Meeting June 29. 2006 PENSION APPLICATrONS SINCE LAST MEETING 6/2912006,

I. Michael LaViollerte effective 9J1/2006 life form benefit $720.30 16.42 years pension service MUB rate of $57. 72 2. Pending application from Gtlfld Fobare QDRO Deaths I. Terry Waldron active age 46 spouse received Lump Sum Payment of $38,963.60

2. Robert Pratt Life fOI1J1 benefit age 73 Total Plan: as of IJI12006 171 Pensioners MonthJy payout is around $210,000 .00

New Business Wacbovla

Wachovia CQntracts hav e not vet received onlv consulting agreement contracts Off sit e Back ups done dailv remotely

I. received a portfolio monitoring report from Lerach Coughlin, 2 class action suites fiJed against HCA,Inc. holdings only (means that no purchases were made during the class period & PrxAR our pension fund suffered a loss of$5,602. We will receive class action suite forms in the near future . In

breif casc I . Draft copy of SPD for the Pension from Steve Thomas. 2. Steve Thomas in Relative Value disclosure regulations (Steve Thomas to report) 3. Mike Chrys guideline for investment policy for Wright investors

OLD BUSINESS Contractor in Arrears I. Advance June & July 2. Check Data base for aoy others

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WE.L FARE Opt outs since last meeting Pending Dave Rozelle

NEW BllSI.I\'ESS

[FEB conference set up events for the 2 Trustees so far MassMutual & Wright Ivestors QLD BUSINESS

ANNUITY

ANNUI T Y ACTIVITlES Annu ity Distributions since last meeting LIn-Service Benefits: Keith Purick $4,195.76. William Laybee SI3,418.ll

Michael Cameron $4,991.63,

2.Normal retirement:

Peter Hughes $2,099.84

Gerald Jabaut $3,800,

3. Termination benefit: Mark Maynard $1,314.11

NEW BUSINESS Plan Assets: $4,1 08,450.00 as of 612&/2006

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