BANK OF AMERICA #41 Dorothy Paquette explained that the Bank of America's role in terms of the Pension Funds is custodian of the accounts, they hold the assets on behalf of each Board of Trustees. Since Columbia Management was sold and is no longer a proprietary fund company, they now have the ability to combine everything under each plan and lessen the complexity of each account. When asked by Mr. Mattiello how a custodial account is different from an agent account, she said agent accounts are holdings that were considered non-proprietary funds, so anything that FIA invested on
our behalf, other than Columbia funds, are in that agent account.
Mr. Mattiello pointed out that the combined account report is the most important one for the trustees to be looking at. Ms. Paquette said that theoretically, the combined report gives the entire picture. A quarterly investment review lists all the assets, its book value, its market value, and its unrealized gain or loss. She said an annual report really gives a great level of detail.
Mr. Mattiello asked for an explanation of fees. Ms. Paquette said the Columbia Funds were considered proprietary funds, and there's a recently required reporting that any fund company needs to make if somebody owns that particular fund which is to show and demonstrate what the actual fees are for these funds that you're paying. They estimate it based on an ending market value and determine what you're actually paying for the particular fund. Each fund has an expense ratio, something they pay the investment manager to make the investment decisions on and, being a proprietary fund, which Columbia Management was, Bank of America is required by law to report what the hypothetical return is and also what the hypothetical expense would be for holding that fund. Those are just reporting requirements.
Mr. Tranghese explained the parent company changed from Bank of America to Ameriprise, which is going to change its name to Columbia. Ms. Paquette said everything is going to be business as usual for the Columbia Funds, and the units will be the same.
Councilor Carbone asked what will happen to the management fee credit previously applied, due to Bank of America's ownership of Columbia. Ms. Paquette said there are no additional charges other than what Bank of America is taking at the fund level. Fees are charged every day and all are included in the price of the fund on a daily basis so the fees aren't seen as they're taken out, but included in the price. She said the fees will not change even though the ownership does for the period of time that the guarantee is set.
MINUTES - MAY 03, 2010 SPECIAL JOINT MEETING OF THE BOARD OF TRUSTEES OF THE CITY EMPLOYEES RETIREMENT FUND AND THE BOARD OF TRUSTEES OF THE POLICE & FIREMEN PENSION FUND Page 2
Ms. Paquette recommended e-statements online.
FIDUCIARY INVESTMENT ADVISORS, LLC. #701 Anthony Tranghese of FIA explained his role is as an independent non-discretionary advisor, receiving value information from the custodian, Bank of America, and making recommendations in writing that the Board votes on. Tranghese said he was there to explain the processes, under Mr. Mattiello's direction.
He explained FIA is paid by a quarterly fee rather than by portfolio investments, and reviewed the layout of the reports, pointing out they are customized.
The Boards discussed when to hold regular meetings.
Mr. Tranghese said that collectively this group of managers should offer enough diversification of complimentary size to help meet our objections over time, after fees.
Both Boards agreed the reports could be combined into one.
NEW BUSINESS Mr. Mattiello said he and the Comptroller plan to send out a request for proposal for an Actuarial since the current one has been in place since 1968. All in attendance were in agreement.
ADJOURNMENT #1964 On a motion by Councilor Jerram, seconded by Commissioner Potter, both Boards voted unanimously to adjourn at 6:30 p.m.
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