Columbus, Georgia

Georgia's First Consolidated Government

Post Office Box 1340
Columbus, Georgia, 31902-1340
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Council Members

MINUTES OF THE

BOARD OF TRUSTEES MEETING OF THE

COLUMBUS GEORGIA EMPLOYEES' PENSION PLAN



January 9, 2008





A meeting of the Board of Trustees for the Columbus Georgia Employees? Pension

Plan was held January 9, 2008 at 2:00 P.M. in the Mayor?s Conference Room.





PRESIDING: Mayor Jim Wetherington, Chairman





PRESENT: Isaiah Hugley, City Manager; Pamela J. Hodge, Finance

Director, Morton Harris Trustee; Omagene Holland, Trustee; Carol

Strozier-Weaver, Trustee; Col. R. George Plummer, Trustee; Major Lemuel Miller,

Trustee; Joe Smith, Vice-Chairman; Richard Swift and Henry Swift, (Smith

Barney); Tom Barron, Human Resources Director; Denise Baxter, Revenue Division

(Investment Officer)





ABSENT: Alan Rothschild, Trustee and Reather Hollowell, Trustee





GUESTS: Peter V. Miklos, Balaam T. Elliott, Richard O. Applebach with

Evergreen Investments and Karl R.S. Engelmann with Cambiar Investors









Mayor Jim Wetherington called the meeting to order. Ms. Julia Rasch, Recording

Secretary, recorded the attendance.





MINUTES OF THE PREVIOUS MEETING:



The minutes from the November 7, 2007 meeting was presented for approval. A

motion was made and seconded to accept the minutes as submitted. The vote was

unanimous.





INVESTMENT UPDATE: Interim Report (Mr. Richard Swift)



Mr. Swift began with the interim report for the fourth quarter. The Ten Year

Treasury Bonds chart showed that the yield dropped from 4.57% to 4.09% which

indicates a better bond market, and that, in the current environment, helped

the pension plan a lot. The next chart, the S&P 500 showed a drop in the stock

market from 1526.75 down to 1478.79. As represented in these figures, the

market has been very volatile. Some managers have performed quite well and

others are down drastically.



First are the Fixed Income Managers, Synovus, Tattersal and Madison. The value

in the bond portfolio went from $85,018 million to $87,839 million, up 3.32%.

Tattersal is here today and they will report what has been happening within the

bond market. This is a good return from our fixed income managers vs. the

Index.



The Growth Managers, Santa Barbara, Rittenhouse, and Trusco are the next

group. Also included in this area is the new account which is the Russell 1000

Growth account, which, is the exchange-traded fund, representing that index

investment. The combined growth went from $37,206 million to $36,560 million,

down -1.74% vs. the benchmark of down -1.08%. The Russell 1000 Growth Account

was down 25 basis points, while the Russell 1000 Growth Index was down -1.08%.

The difference being, that cash was held in this account throughout the

quarter. There is still about 25% of that account still in cash and this cash

position helped the fund quite a bit for the quarter.



The next space is the Value Space, TCW, Cambiar, Spears and the Russell 1000

Value account. The Value asset class went from $35,035 million to $33,419

million, down -4.61%, a very, very tough quarter for the value managers.

However, they held their heads up relative to their benchmark quite well, the

benchmark was down -6.46%.



The Core Managers, Knott, Madison and the S&P 500 account, $34,027 million to

$34,163 million, up 40 basis points vs. the S&P 500 which was down -3.14%.

This was a good out-performance from the core managers.



Last is our international manager, Lazard International and the EAFE Account.

The combined value was $21,654 million and it went to $22,538 million, up 5.20%

vs. the EAFE being down -4.36%, therefore a good return by Lazard. Lazard, in

the past, has had a few quarters where they had been under-performing so this

is a really good report from them.



Your small-cap fund is a new account. Two million dollars was put into that

account when it was initially started. It was very close to 9/30/07, the first

investment was 10/02/07 so it was a few days after this but the account was

funded at that time. It is now at $1,954,000 down -2.30% vs. the Russell 2000

index which was down -4.35%.



The mid-cap is the other new account. Two million dollars was put into that

account when it was initially started. It is now at $1,966,000 down -1.70% vs.

the Russell Mid-Cap index which was down -3.59%.



The managers have held up very well in spite of a volatile quarter. In

summary, the combined fixed went from $85,018 million to $87,838 million, up

3.32% and the combined equity was down -1.00% from $131,922 million to $130,600

million. The total city account went from $216,940 million to $218,438

million, up 69 basis points vs. the 60%/40% benchmark which was down -1.14%.

The fund finished the quarter at $218,438 million.



It has been an extremely volatile marketplace. Although there were some

managers who were disappointing in their performance, all-in-all the

performance was good vs. the marketplace and again this represents why bonds

are so important, the bond performance is what saved the fund during this last

quarter.



Mr. Swift passed copies of memos that had been sent to Rittenhouse, Santa

Barbara, and Madison Core Equity. The first one, Rittenhouse, stated that

Smith Barney?s Consulting Group had put Rittenhouse on watch due to the

departure of John Waterman. John Waterman had been a key figure in

Rittenhouse?s platform but his role has changed over the last few years from

portfolio manager to a more supervisory role as Chief Investment Officer.

Rittenhouse?s performance has improved over the last 12 months yet the group

will keep a close watch on Rittenhouse due to this management change.



The next memo was to Santa Barbara notifying them that they have formally been

put on watch until December 31, 2007. The memo stated that should the gap in

their performance narrow in the 4th quarter, the board would discuss their

options at that time, but if the gap widened then the board would have to take

the position to consider termination.



Madison?s memo basically stated the same as Santa Barbara?s, placing them on

watch until December 31, 2007. Madison, however, did narrow the gap; they beat

the benchmark for the quarter and therefore have bought themselves another

quarter.



Smith Barney?s recommendation is that Santa Barbara be terminated and that a

search be launched for a new manager.



Following a short discussion on how to handle the termination and disbursement

of the stocks, Mr. Harris made the motion to terminate Santa Barbara, liquidate

the stocks and move the funds into the Russell 1000 Growth Account (ETF) until

such time that a new manager is found.



At this time there was some discussion between several of the board members

about the loss that would or could occur by liquidating the stocks. It agreed

that following the presentations by Evergreen and Cambiar that Mr. Swift would

come back and have those figures and the discussion could continue at that time.



Ms. Hodge did ask Mr. Swift that when this action was taken in the past, was

the stock typically liquidated when a new manager was hired or did they just

take over the portfolio.



Mr. Swift stated that what has typically been done in the past is that a search

would be launched, bring the recommendations back to the sub-committee and give

them the choice to select one of the new managers or to keep the current

manager and give them another chance to improve their performance. Once a

decision was made, the funds would be either moved to the new manager or stay

with the current manager.



Mr. Smith commended that he didn?t have a problem seconding the motion but

would rather wait until after the presentations and the board has the figures

they have requested.



Mr. Swift stated at this time that there are two managers to make their

presentations. The first manager was Evergreen, Tattersal Fixed Income. Peter

V. Miklos, the outgoing relationship manager; Balaam T. Elliott, the new

relationship manager; and Richard O. Applebach, the portfolio manager. The

second manager was Karl R. L. Engelmann with Cambiar.





PRESENTATION(S): Evergreen, Tattersal Fixed Income



Capital Markets Overview

Economic Review/Outlook

Growth

Consumer Fundamentals

Capital Outlays

Inflation

Monetary and Fiscal Policy

Capital Markets Performance Summary

Fixed Income Review

Treasury Market Performance

Fixed Income Sector Performance

Performance By Credit Rating



Investment Objectives

Investment Policy

Fixed Income Guidelines

Allowable Assets

Prohibited Assets (not limited to)



Portfolio Review

Fixed Income Portfolio

Portfolio Reconciliation

Investment Performance



Fixed Income Analysis

Portfolio Review

Sector Allocation

Duration Distribution

Strategy and Outlook

Portfolio Characteristics

Quality Distribution



Fixed Income Market Outlook





PRESENTATION(S): Cambiar Investors



The Cambiar Advantage

34-year record of consistent out performance of the market

Performance-driven

Fundamental Research

Opportunistic Philosophy

Consistent Out performance



The Cambiar Investment Team

Tenured Investment Team

Fundamental, Bottom-up Research

Focused, Dedicated Professionals

Contra-sector Approach Provides Target-rich Environment



The Cambiar Investment Process

Quality Companies

Attractive Valuation

Catalysts

High Upside

Portfolio of 35-40 Stocks



Sell Discipline/Risk Control

A good sell discipline takes the emotion out of selling

Disciplined about selling positions as they hit their price target or when the

initial investment premise is no longer valid



Demonstrated Active Management ? 12/31/07

Cambiar?s benchmark-agnostic investment approach

They recognize that to outperform the benchmark, it is sometimes necessary to

look different than the index

Holdings decisions are driven by fundamental conviction, not the composition of

the index



Stock Example ? Archer Daniels Midland (ADM)

Overview

Compelling Value

Perception Gap/Catalysts

Portfolio Positioning



Sell Example ? Washington Mutual (WM)

Overview

Investment Thesis/Perception Gap at Entry

Fundamental Change to Original Purchase



Market Cycles

Rolling 2-year performance (Annualized as of 12/31)

Rolling 5-year performance (Annualized as of 12/31)



Portfolio Profile ? December 31, 2007

Characteristics

Top Ten Holdings

Sector Weightings



Investment Performance ? December 31, 2007



City of Columbus Holding ? December 31, 2007



Performance ? 05/31/07 to 12/31/07

Contributing Sectors to Cambiar?s Performance

Detracting Sectors to Cambiar?s Performance



A copy of the evaluation reports and the other information presented to the

board is retained in the Finance Director?s Office by the Board Secretary and

is available for review upon request.



Following the presentations, Mr. Henry Swift reported to the board the numbers

they had requested. Santa Barbara was hired on May 31, 2005. Since that date

through September 30, 2007, according to the last audited numbers, they are up

8.35% vs. the index being up 12.33%. The problem comes when the last twelve

months are evaluated. For the last twelve months they are up 11.7% vs. the

index being up 19.4%. At the current moment, they have $260,496.00 in gains.

From the point of hire and through January 8, 2008, they had had $789,000.00 in

gains, so there have been no losses, there?s been losses but they have been

netted out by gains, so the manager has not lost us money, they just have not

made as much as the index that they are in has lost.



Mr. Richard stated at this time that he understood Mr. Harris? motion to be

that Santa Barbara is fired and the funds be moved into the index fund, in

Growth space until at which time a new manager is found and the funds placed

with them.





Since the motion was made by Mr. Harris and seconded by Mr. Smith, the vote was

taken and it was unanimous that Santa Barbara is fired and the funds be moved

into the index fund in the growth space.



Mr. Henry Swift asked the Mayor to appoint a 3 or 4 man subcommittee who will

be charged with finding a new manager.





OLD BUSINESS:



None





NEW BUSINESS:



None



With no further business for discussion, the meeting was adjourned.



The next regular meeting is scheduled for February 6, 2008 at 2:00 p.m. in the

Mayor?s Conference Room. The guest speaker(s) will be from Lazard

International and TCW.





_______Julia A. Rasch ____

Julia A. Rasch

Recording Secretary

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