Minutes



Delaware College Investment Plan

Delaware State Treasurer’s Office Conference Room

Board of Trustees Meeting

May 9, 2007

|Trustees Attending: |Others Present: |

|Jack Markell, Chair |Christopher Sharpe, Fidelity Investments, Boston |

|Glenn Barlow |Joe Ciccariello, Fidelity Investments, Boston |

|Santosh Viswanathan |Adam Colon, Fidelity Investments, Boston |

|Tom Cook (Designee for Richard Cordrey) |Andrew Dierdorf, Fidelity Investments, Boston |

| |Ann Visalli, Deputy Treasurer |

| |Elio Battista, Deputy Attorney General |

| |Maureen Laffey, DHEC |

| |Michelle Harris, DHEC |

| |Corey Marshall-Steele, Office of State Treasurer |

| |Leighann Hinkle, Office of State Treasurer |

Chairman Jack Markell called the meeting to order at 10:00 a.m.

Tom Cook requested to be a designee for Richard Cordrey when he is unable to attend. Chairman Markell made a motion for approval and was seconded by Glenn Barlow.

Minutes from the October 18, 2006 meeting were distributed and reviewed. Upon a motion to approve the minutes by Jack Markell and seconded by Tom Cook, the minutes were unanimously approved.

Christopher Sharpe distributed the Investment Review as of March 31, 2007, the Business Update as of May 9, 2007 and the Proposed Investment Changes as of May 9, 2007. He referred everyone to page 3 and 4 of the Investment Review to discuss the market overview in the first quarter. He noted that U.S. stocks registered positive returns and mid-cap stocks such as utilities, materials, and telecom performed best, while financials lagged. However the international stock markets fared better than the U.S. stock market.

Chairman Markell said it would be helpful to see a detailed page that shows the benchmark, single investments and monthly investments. Christopher Sharpe said he will get that information to him following today’s meeting.

Andrew Dierdorf then gave an overview of Fidelity’s performance. He referred everyone to page 5 of the Investment Review and discussed the DE 529 Performance Analysis since inception and noted that the funds under performed their benchmark.

Chairman Markell inquired as to the reason why the funds did not meet the benchmark. Andrew Dierdorf referred to page 6 and explained that U.S. and International Stock contributed to the underperformance. He said the funds were over weighted in Information Technology and underweighted in Financials. Chairman Markell expressed his concern of the underperformance and asked at what point Fidelity would consider replacing the fund.

Christopher Sharpe referred everyone to page 10 of the Investment Review and page 2 of the Proposed Investment Changes. He discussed the DCIP proposed changes regarding funds being removed and added. Factors considered were quantitative, stock picking, and large cap core enhanced index fund.

Santosh Viswanathan commented that going forward we need to make sure that the causes of the underperformance do not continue. Christopher Sharpe noted that you have to give funds a chance and not change them each year because they are not performing well. Chairman Markell said he would like to set up a meeting in August or September to meet with Fidelity. He also commented that legislation should be addressed and changed regarding 34 basis points for cash.

Joe Ciccariello discussed the Business Update as of May 9, 2007. He referred everyone to page 3 and noted that many states are enacting tax legislation and modifying their plan design and consolidation and change continues to take shape in the industry. He then referred to page 4 and 5 and noted as of March 31, 2007, total accounts were 24,886 and total plan assets were $361M. New and existing participants are contributing more dollars to the Delaware College Investment Plan as of March 2007, net sales were up 92% and new accounts were up 15% versus March 2006. Because there is a consumer demand for investment flexibility, Fidelity is offering their customers a choice as to whether they would like to manage their account or have Fidelity manage it. Fidelity’s goal in 2007 is to open 2,200 accounts and generate $37M in net sales. Marketing objectives include continuing to build and broaden plan awareness and strategies include expanding focus on new parents, grandparents, existing participants and influencers.

Advertising and local marketing continue to evolve based on previous earnings. Joe Ciccariello referred to page 8 and advised that radio will be eliminated for advertising and local marketing due to legal exposure. Print and online banner advertising have been very successful. The 529 Rewards Card has also been very successful with 70 million into the 529 plan and 2 to 3 million from Delaware going into the plan.

Ann Visalli asked if people can do online contributions if they are not the account holder. Joe Ciccariello responded not at this time, but maybe next year. He said that is the direction Fidelity is headed and they are doing a lot to enhance the program.

Maureen Laffey inquired as to the percentage of people that open accounts online. Joe responded that there were 47% in March and 51% in April.

Ann Visalli distributed the Proposal for the Delaware College Investment Plan for Board approval. She discussed budget issues and new outreach programs that will help achieve awareness. She explained that annual administrative costs are approximately $380,000 and would include annual audit costs, education and professional dues, printing and publishing of educational materials, payroll stuffers, website maintenance, sponsorships, advertising, special events, and a new resource request which consists of 2 new employees to support the program.

Chairman Markell asked for a motion to approve the two positions. Tom Cook made a motion, and it was seconded by Glen Barlow.

Ann Visalli requested the Board’s approval to endorse the Early Start Grant Program. She would like Delaware Higher Education Commission and the State Treasurer’s Office to work out the details of the program together. Once the details have been implemented, this proposal will be brought back to the Board to vote on at the next meeting in September.

Chairman Markell noted that they had a recent review of the Delaware 457 Plan and he would like to hire such as Ennis Knupp or a similar firm to review the DCIP Plan.

The Board was in agreement with the proposals.

The next scheduled board meeting will be held on September 26, 2007.

There being no further business, the meeting was adjourned at 11:45 a.m.

Respectfully submitted,

Michelle Harris

Administrative Secretary

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