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HomeMy WebLinkAbout1990-10-23 Minutes• • • MINUTES OF A MEETING OF THE FIRE PENSION BOARD A special meeting of the Fayetteville Fire Pension and relief Fund Board of Trustees was held on Tuesday, October 23, 1990 at 11:00 a.m. in Room 326 of City Hall. PRESENT: Fire Chief Mickey Jackson, City Manager Scott Linebaugh, Firemen John Dill, Pete Reagan, Finance Director Ben Mayes, retiree Darrell Judy, and Secretary Sherry Thomas. ABSENT: Mike Bonaduce CALL TO ORDER The meeting was called to order by Fire Chief Mickey Jackson. PENSION LIST It was stated that Cleo Morris was now deceased. Jackson stated that Mrs. Morris' name would be put on the pension list and they would continue to pay her the $45.00 per month. He told Secretary Sherry Thomas he would find out what Mrs. Morris' first name was and give her all the information, including the exact date of death. Reagan, seconded by Dill, made a motion to approve the pension list for the month of November, 1990. The motion passed unanimously. OLD BUSINESS The status of the affidavits of authenticity was requested. Thomas stated they had been mailed out, and she was waiting for them to be returned, and November 1 was the deadline. Dill asked if anyone knew the exact requirements for the make-up of the Fire Pension Board and asked if they could be researched and added into the minutes. Linebaugh assured him that it would be done. INVESTMENTS Richard Yada, representing Merrill Lynch Investments, reviewed the total portfolio as of the last day of September, 1990. The fixed income portfolio (including CD's) market value is $2,391,929.00. He stated there was $114,000 in cash and money market funds, earning 7.9% as of 10-22-90. The CD's at Merrill Lynch are priced on the estimated market value which pays the bearer, upon cashing, the estimated market value plus earned interest. If it was a bank CD, the bearer would have an interest penalty charged to the total paid out. • Yada stated there was a $1,250,000 Zero Coupon Treasury due to mature in February of 1991. It shows up on the asset allocation as cash because it will mature in less than one year. Yada explained the Walt Disney Zero Coupon Bond was really a unique investment in that the bonds could be converted at any time to be realized as approximately 18.2 shares of Walt Disney Stock. He stated that the worst that could be done on that particular investment was to make only a 6% rate of return in five years. The best scenario would depend on the upturn in the Euro -Disney stock. Yada stated that all Europe funds were down at the moment, but he looks for them to go up in the spring as their economy rises. Transactions included one CD maturing and the purchase of one bond and one CD during the month. He stated that the ML Lee Fund was paying approximately an 8% dividend, and a good distribution is expected for the fourth quarter. The stock portfolio shows $101,000 in cash (20% of the portfolio). During the month, the stock American Home Products (551 shares) was sold. The stock was purchased for $80 and sold on September 30 for $93-$95. Chuck Drummer, from New Mexico Capital, addressed the Board and explained something of their philosophy and their investing strategies. He stated that as of October 16 the account was only • off 3.34%. This did not reflect the market rally on the Thursday and Friday. Drummer stated that he felt the account was probably pretty close to even on the year. Drummer stated the records showing the account to be down for the third quarter explains why New Mexico Capital believes a balanced approach to investments is wise. He explained the reason that the account was only down 3.4% was that 42 1/2% is in bonds and approximately 14% in cash, resulting in 56-57% of the portfolio in short term U.S. Treasury Bonds and in cash. Drummer explained that a recession would mean about two quarters of flat GNP, meaning that the economy would not grow and corporate earnings would decrease. He stated projections are for lower corporate earnings for cyclical businesses that depend heavily on the economy. Drummer also explained that not all stocks are experiencing an earnings decline in the present recessionary environment. Drummer explained the rationale of owning several foreign stocks. He stated that currency fluctuation stands to take away from the earnings in the United States. Overseas, earnings in other currency converted to dollars shows a rate of earning. ADJOURNMENT • The meeting was adjourned at 12:20 p.m.