FRESNO COUNTY BOARD OF RETIREMENT



BOARD OF RETIREMENT

FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION

March 2, 2011

Trustees Present:

Alan Cade, Jr. Michael Cardenas Nick Cornacchia

Franz Criego Vicki Crow Eulalio Gomez

Steve Jolly Regina Wheeler (sitting for John Souza)

Trustees Absent:

John Souza Phil Larson

Others Present:

Jeffrey MacLean, Wurts & Associates

Susan Coberly, Senior Deputy County Counsel

Roberto L. Peña, Retirement Administrator

Kelly Prinz, Retirement Benefits Manager

Elizabeth Avalos, Administrative Secretary

1. Call to Order

Chair Cade called the meeting to order at 8:37 AM.

2. Pledge of Allegiance

Recited.

3. Public Presentations

None.

Consent Agenda/Opportunity for Public Comment

Trustee Wheeler pulled Consent Item 4 for discussion.

A motion was made by Trustee Crow, seconded by Trustee Gomez, to Approve Consent Items 5-13 as presented. VOTE: Unanimous (Absent – Larson)

*4. Approve the February 16, 2011 Retirement Board Regular Meeting Minutes

Trustee Wheeler noted that Item 13 of the February 16, 2011 minutes incorrectly identifies the Retired Members of Fresno County (REFCO) as Retirement Members of Fresno County and requested that the minutes be updated to reflect the correct name. Administration agreed.

A motion was made by Vice Chair Gomez, seconded by Trustee Crow, to Accept Consent Item 4 with noted change. VOTE: Unanimous (Absent – Larson)

RECEIVED AND FILED; APPROVED

*5. Retirements

RECEIVED AND FILED; APPROVED

|Alfred Alvarez |Behavioral Health |13.16 |

|Susan R. Arce |Dept of Social Services |13.10 |

|Michael Bagwell |Sheriff |28.27 |

|Patricia A. Barrios |Superior Court |22.52 |

|Diana E. Barrera |Behavioral Health |11.15 |

|Melvin M. Chong |Dept of Social Services |10.23 |

|Christine B. Diesslin |Probation, Deferred |13.13 |

|Edward Lee Garza |Dept of Social Services |10.51 |

|Marilyn J. Harlan |Coroner/Public Administrator |7.70 |

|John Paul LaLonde |District Attorney |13.92 |

|Robert Lara |General Services |18.53 |

|David Laumer |Public Works & Plan, Deferred |6.01 |

|Richard J. Leibold |Public Health, Deferred |10.13 |

|Larry Leon |Dept of Social Services |16.56 |

|Karen Lindsey |Public Health, Deferred |5.57 |

|Johnny G. Lujan |General Services |21.80 |

|Mary Lou Reilly |Dept of Social Services |22.93 |

|Sylvia M. Reyes |Superior Court |10.00 |

|Kenneth Sipe |Public Works & Planning |21.41 |

|Graciela Siqueiros |VMC, Deferred |7.85 |

|Michael J. Stephenson |General Services |22.64 |

| | | |

*6. Disability Retirements

RECEIVED AND FILED; APPROVED

|Roberta Lambert |Sheriff |13.95 |

*7. Deferred Retirements

RECEIVED AND FILED; APPROVED

|Ajit Singh |Public Health |8.97 |

*8. Public Records Requests and/or Retirement Related Correspondence from Dinesh Kangya, Diamantisse; Kevin Imhoff, Smith Bridge Partners; Christopher Smith, Mandate Wire, Lisa Sabrin, Transcendent Investments; Bernhard Steiner, Alternative Investment Partner; and Rainer Busch, Mercury Partners

RECEIVED AND FILED

*9. Update of Board of Retirement directives to FCERA Administration

RECEIVED AND FILED

*10. Educational Reading Materials

RECEIVED AND FILED

• February 7, 2011 Alameda County Employees’ Retirement Association correspondence – Pension Initiative, Legislation Planned

• February 7, 2011 SACRS correspondence – Re: Registration of Municipal Advisors File No. S7-45-10

• February 7, 2011 New Jersey Newsroom article – N.J. public employee pension reform bill introduced

• February 10, 2011 Beyond Chron editorial – Don’t Blame California Public Employees!

• February 11, 2011 PlanSponsor article – CalSTRS Adopts New Approach for Risk Management

• February 11, 2011 PlanSponsor article – AR Pension Fund Suing State Street over Foreign Exchanges Trades

• February 11, 2011 Asset International article – Hewitt InnisKnupp Denied Outsourced CIO Role at Ventura, California Pension

• February 14, 2011 Asset International article – Illinois Leans on SWFs to Relive Pension Debt

• February 14, 2011 PlanSponsor article – Lawmakers Hear Public Pensions aren’t Dying

• February 15, 2011 PlanSponsor article – NYC Considers Firing Managers Who Disparage Pensions

• February 17, 2011 Asset International – NY Pension Scammer Head to Prison for Pay-to-Play Scandal

• February 17, 2011 PlanSponsor article – CalPERS Approves Placement Agent Policy Additions

• February 20, 2011 The Sacramento Bee article – Calif. Workers’ public pensions again targeted for cuts

• February 23, 2011 Top 1000 Funds article – Wurts polishes its silver

• February 24, 2011 Little Hoover Commission press release – Commission calls for Pension Roll-Back for Current Workers

• February 2011 Employee Benefit News survey – Reeling them in with retirement bait: Retirement benefits shown effective to attract and retain

• February 2011 Employee Benefit News article – Map offers 24/7 access to state, local pension reforms

• Winter 2011 CALAPRS Newsletter

• SACRS Symposium 2011 March 16, 2011 – Huntington Beach, California

*11. Most recent investment returns, performance summaries and general investment information from investment managers

RECEIVED AND FILED

*12. Correspondence from Jeffrey MacLean, Wurts & Associates, regarding Grosvenor Capital Management Update Memo

RECEIVED AND FILED

*13. Travel Request from Chair Cade to attend the 2011 Pension Bridge Annual Conference on April 12-13, 2011 in San Francisco, CA

RECEIVED AND FILED; APPROVED

14. Discussion and appropriate action on selection/recommendation of management firm for the International Value Equity mandate

Roberto L. Peña, Retirement Administrator, opened discussions by reminding the Board that at a prior meeting, the Board selected two investment managers, Research Affiliates and Dimensional Fund Advisors (DFA), for further review through on-site due diligence visits for the International Large Value Equity mandate. Trustees Nick Cornacchia and Steven J. Jolly, Jeffrey J. MacLean and Michael J. Kamell from Wurts & Associates, and Mr. Peña traveled to both locations and met with staff of the Investment Managers.

Mr. Peña noted that the main purpose of these visits was to meet key investment staff such as portfolio managers and investment analysts, gain a better understanding of their investment philosophy, style, process, ownership structure, client base, products, and the level of commitment to the investment mandate which FCERA is considering.

Mr. Peña noted both managers are very capable of skillfully managing this strategy and each employs quantitative strategies with highly diversified portfolios.

In general, all agreed that DFA offers a very good product that has provided consistent outperformance over the past ten years, their tracking error has mostly been on the upside and their trade execution process is an added value factor to their strategy. Research Affiliates is a dynamic contrarian strategy that is easy to understand which tends to trade out of the most recently popular sectors and styles and the feared segments that are priced to offer a substantial risk premium and poses less risk of material underperformance. Also, both managers offer lower fee structures than their active counterparts.

The Board engaged in detailed discussions regarding the firms’ various strategies, track records, processes, fees, and risk controls.

A motion was made by Trustee Crow, seconded by Trustee Jolly, to direct Administration to work with Wurts to begin contract negotiations with Research Affiliates. VOTE: Unanimous (Absent – Larson)

RECEIVED AND FILED; APPROVED

15. Discussion and appropriate action on Asset Allocation presented by Jeffrey MacLean, Wurts & Associates

Jeffrey MacLean, Wurts & Associates, opened discussions with a review of FCERA’s current asset allocation noting the various changes to the asset allocation that were implemented in 2008-2010 to take advantage of opportunities becoming available in the market.

Mr. MacLean commented on the capital market expectations and gave a brief summary on the methodologies used in determining market forecasts. Wurts’ approach is based on a combination of underlying macroeconomic conditions, valuations, historical analysis of economic relationships, and subjective analysis. Essentially, Wurts uses a top-down approach to return forecasting based on theoretical relationships.

Mr. MacLean proposed a revised asset allocation based on the market expectations and reviewed the recommended allocation that includes enhancing inflation protections with a higher allocation to TIPS and Commodities, making additional commitments to Core Real Estate, reviewing Mezzanine Debt opportunities and making additional commitments to this Private Equity strategy The recommendation shifts reflect a stabilized market environment and incorporate the most current capital market assumptions.

The proposed asset allocation changes are as follows:

| |Current Policy |Revised Target Allocation |

|Large Cap US Equity |24 |24 |

|Small/Mid Cap US Equity |8 |5 |

|International Large |12 |15 |

|International Small |6 |4 |

|Emerging Markets |3 |5 |

|US Credit Fixed Income |16 |16 |

|High Yield Fixed Income |9 |6 |

|TIPS |2 |4 |

|Commodities |3 |4 |

|Real Estate |6 |6 |

|Liquid Alts/HFoF |4 |4 |

|Private Equity/VC |7 |7 |

| |100 |100 |

Detailed discussions ensued regarding the costs and timeframe for implementing the recommended revised asset allocation.

A motion was made by Trustee Criego, seconded by Trustee Jolly, to Approve the revised asset allocation as presented. VOTE: Unanimous (Absent – Larson)

It was noted that discussions/presentations with the potential mezzanine debt managers would be scheduled accordingly.

RECEIVED AND FILED; APPROVED

16. Presentation of the December 31, 2010 Investment Performance Review presented Jeffrey MacLean, Wurts & Associates

Jeffrey MacLean, Wurts & Associates, opened discussions with an overview of the current economic environment and its impact on the investment markets. He further reviewed the Plan’s various asset classes and the individual managers within the asset classes noting any significant over or under performance over the three and five year periods.

It was noted that the Plan’s market value as of December 31, 2010 is approximately $2.9 billion.

RECEIVED AND FILED

17. Presentation of the December 31, 2010 Guideline Compliance Report presented by Jeffrey MacLean, Wurts & Associates

Jeffrey MacLean, Wurts & Associates had no violations to report.

RECEIVED AND FILED

Roberto L. Peña, Retirement Administrator, pulled Closed Session Items 18.A.2. and 18.A.3. as there was nothing to discuss.

18. Closed Session:

A. Conference with Legal Counsel – Actual Litigation - pursuant to G.C. §54956.9(a)

1. Geraldine Chisom, et al. v. Board of Retirement, etc., et al., Fresno County Superior Court Case No. 10 CECG 02372

2. Fresno County Employees’ Retirement Association v. Countrywide Financial Corporation, et al., United States District Court Central District of California Case No. CV11-0811-PA-SHX

3. Stephanie Mallen, Individually, and et al. v. Alphatec Holdings Inc., et al., United States District Court Southern District of California Case No. 3:10-CV-1673-BEN-JMA

B. Disability Retirement Applications – Personnel Exception (G.C. §54957):

1. Joyce Likens

19. Report from Closed Session

18.A.1. Nothing to Report

18.A.2. Pulled.

18.A.3. Pulled.

18.B.1. Joyce Likens – Decision - Grant Non-Service Connected Disability benefits based on the Findings of Fact and Decision with an effective date of December 26, 2009, the day following the last day compensated. M – Jolly. S – Criego. VOTE: Unanimous. (Absent – Larson)

20. Report from FCERA Administration

Roberto L. Peña, Retirement Administrator, reported on the following:

1. Rotary Club Presentation

2. Communications

3. Conflict of Interest forms (Form 700) are due no later than March 30, 2011.

21. Report from County Counsel

Susan Coberly, Senior Deputy County Counsel, had nothing to report.

22. Board Member Announcements or Reports

The Board Members had nothing to report.

There being no further business the meeting at adjourned at 11:10 AM.

Roberto L. Peña

Secretary to the Board

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