Minutes

Investment Committee Meeting

Fire and Police Pension Fund, San Antonio

Thursday, March22, 2007

Pension Office – 1:30 p.m.

Roll Call:Mr. Stewartcalled the meeting to order at 1:30 P.M.

Committee

Members

Present:Lieutenant Bart Moczygemba, Fire Representative; D.I. Teddy Stewart, Police Representative, Captain Harry Griffin, Police Representative, Larry Reed, Retired Fire Representative

Committee

Members

Absent:None

Others

Present:Curtis Creed, Retired Police Representative; Mark Gremmer, Financial Officer;A.C. Berry, Investment Analyst; and Mr. Warren Schott, Executive Director/CIO.

Approval of Minutes from February 20th, 2007

Mr. Reed made the motion to approve the minutes of the February 20, 2007 Investment Committee Meeting. The motion to approve the minutes was seconded by Mr. Stewart. Motion carried unanimously.

Annual Review Presentations
  • Rothschild Asset Management Inc. - Tina Jones, CFA presented on behalf of Rothschild. Rothschild is one of the most tenured managers, working with the Fund since August 1st 1997. Rothschild is employed as a small cap manager for SAFP, managing approximately 4.60% of the aggregate portfolio with a Russell 2000 Value benchmark. Recent returns show Rothschild exceeding its benchmark year-to-date through month-end February 2007 by 128 bps, by 68 basis points (bps) for calendar year 2006, and since inception (stated above) by 201 bps.
  • J&W Seligman & Co. Inc. - Alan Puklin and Richard Rosen presented on behalf of J & W Seligman & Co. Seligman is a bottom-up, fundamental, large-cap equity manager which seeks to invest in a concentrated portfolio of companies with improving fundamentals. Seligman’s (gross) performance for the fourth quarter of 2006 (Q4-06) and full-year 2006 were 7.4% and 13.6%, respectively. This compares to the Russell 1000 Value Index’s performance of 8.0% and 22.2%, respectively. Through 12/31/06, Seligman’s 3-Year and 5-Year Annualized Rates of Return were 14.4% and 7.0% respectively. The Russell 1000 Value Index produced returns of 15.1% and 10.9% during the same periods. Concern in regards to Seligman’s underperformance is mounting and will continue to be scrutinized.

Huff Energy Fund, LP

William Huff, Richard D’Angelo, and Dwight Walker presented on behalf of Huff Energy Fund, LP.The Huff strategy seeks to exploit high-return opportunities left behind by reserve replacement driven or production-focused companies. Huff proposes building a portfolio of oil & gas companies under a holding company structure, rather than a traditional operating company, thereby afford multiple value creation/exit opportunities. Huff’semphasis towards making investments are as follows:strong, balanced management teams, target specific geographies, balance traditional exploration and resource type projects, and increase probability of success through advanced geological and geophysical evaluation and drilling techniques.Staff will pursue further research on Huff’s investment experience and track record.

Bernstein Litowitz Berger & Grossman LLP

Mr. JerrySilk presented to the Committee on behalf of Bernstein Litowitz Berger & Grossman LLP (BLBG). BLBG assured the Committee that BLBG carefully reviews the holdings of the San Antonio Fire & Police Pension Fund (the “Fund”) to determine the adequacy of a variety of security fraud claims. In that, BLBG examines the portfolio for a number of possible claims beyond securities class actions to include (but not limited to): possible opt-out claims (individual law suits wherein an investor decides to leave a class action to pursue its own action; stock option back-dating claims (suits seeking to unwind the fraudulent actions of some corporate executives to change the effective date of stock options granted to the most advantageous date available); “deal cases” (whereby the adequacy of leverage buyouts and other stock purchase transactions are challenged by shareholders).

Crossroads 1999 Series Loan

Staff informed the Committee that negotiations have finalized with Lehman Brothers / Crossroads regarding a loan towards the 1999 Series. During the investment period, Crossroads 1999 overcommitted itself, thereby short capital in funding their commitments. The request was that San Antonio Fire & Police Pension Fund (SAFP) fund its pro-rata share of the loan which represents approximately $3.7M. Collateral for the loan will be the underlying private equity funds in the portfolio. Interest on the loan will be prime + 600 bps (6%) which will be paid directly to the Fund.The loan was previously approved pending successful negotiations at another Committee meeting.

Solicitation Agreement between The Townsend Group and Jale Investment Group, Inc.

Staff informed the Committee that the Fund has been presented a Solicitation Agreement by Jale Investment Group, Inc. The disclosure A is in accordance with SEC Rule 206 (4)-3(b) which verifies that The Townsend Group utilizes the marketing services of the Jale Investment Group, Inc. The document, ifsigned by SAFP, acknowledges that the Fund knew Jale Group marketed for The Townsend Group.Mr. Moczygemba made a motion to acknowledge the relationship between the Jale Investment Group and The Townsend Group. Mr. Griffin led the opposition and expressed his opinion to the Committee. Motion carried 3 to 1.

Adjournment:Mr. Stewartmade the motion to adjourn the meeting.

The Investment Committee adjourned at 4:30 P.M.

Approved this ____ day of ______, 2007.

______

Harry Griffin, Investment Committee Chairman

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