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Home My WebLink About1994-12-01 - Agendas - Final• • • AGENDA FIREMEN'S PENSION AND RELIEF BOARD December (November 11:00 City Hall 1, 1994 meeting) a.m. Room 326 1. Approval of the minutes of the October 27, 1994 meeting 2. Approval of Pension List for December, 1994 3. Old Business 4. New Business A. Investment Report 5. Adjournment MINUTES OF A MEETING OF THE FIRE PENSION BOARD A meeting of the Fayetteville Firemen's Pension and Relief Board was held on Thursday, October 27, 1994, at 11:00 a:..m&An Room 111 of the City Administration Building, 113 W. Mountain,?.FA•etteville, Arkansas. PRESENT: Marion Doss, Pete Reagan, Ron Wood, Retirees Darrell Judy Mayor Fred Hanna, City Clerk Traci Glyndon Bunton. and Howard Boudrey, Paul, and Treasurer CALL TO ORDER Marion Doss called the meeting to order. MINUTES Reagan, seconded by the September 29, unanimously PENSION LIST Doss, made a motion to approve the minutes of 1994, meeting. The motion was approved Paul stated the only change in the Pension List was the correction on the spelling of "Fraley." Reagan, seconded by Doss, made a motion to approve the pension list for November, 1994. The motion was approved unanimously. NEW BUSINESS STATE INSURANCE TURNBACK - 1994 Reagan stated the City received a State Insurance Turnback check for $123,948.06 and asked if anyone remembered the amount from the previous year. The Board came to the conclusion that the amount for the previous year was $123,120.00. INVESTMENT REPORT Curtis Williams, Merrill Lynch, distributed a summary of the portfolio performance as of September 30, 1994. He stated New Mexico Capital is up 2.27% through September 30. The S&P is up 1.34% and the Dow is up a little more than that. Industrial stocks should do better in a growing economy. New Mexico has managed to out -perform the S&P. The income account is down 2.92% for the year. Because long bonds are down 9.49% and the high grade corporate bonds are down 6.67%, fixed income is the only way money has been made this period. Treasury Bills made 2.83%. =MAD • • • October 27, 1994 This is the worst bond market is U.S. history. There will probably be a negative return in bonds for the year. It will be the first time in twelve years that we would finish the year with a negative return. A negative return means the income received from a bond is less than the price depreciation of the bonds due to rising rates. Factoring in the loss of the value of the bonds versus the income, there is a negative rate of return for the year. There is a strong possibility that it will happen this year and next. Rates are going to continue to rise. Mayor Hanna arrived. There is a very high probability that we will see another point added after November. The Federal Discount rate will probably go up to 6.5% to 6.75% by mid 1995. There may be an inverted yield curve in 1995 or 1996. The activity in the portfolio for this year shows a short in maturities and holding cash. Our mandate has always been to manage this in the most conservative way possible. We started lightening up early this year and we intend to continue to lighten up. We will continue to trim back on the long maturities that will be most impacted by higher rates. We will be in three and six month CD's until we see the yield curve flatten or invert. An inverted yield curve is when short rates actually go higher than long rates. We are going to keep the portfolio very liquid. When the yield curve inverts; you go out to about ten years; lock in very high quality, fixed income securities; buy them at a discount; and get call protection. The Term Trusts would be the only thing we would consider buying in any great amount. We have a dollar that is in free fall. With interest rates going up and the dollar declining, there is only one way the stock market can go. We are looking for a significant correction in the market in the future as there has been in many stocks. It is going to be difficult to make money in stocks for six to nine months. On the Fixed Income side, we will just roll CD's. What New Mexico does is out of our hands. It will be a difficult environment for both fixed income and equities for the next six to twelve months. Right now, cash looks good. Combining the two accounts with the equity account being up, you are positive for the year. In answer to a question from Reagan, Williams stated it's hard to tell when we will come out of this. It depends partly on the Federal Government and politics. There could be a tax cut bidding war between the Republicans and Democrats as a result of the November election. There are many negatives facing the economy. • • • October 27, 1994 NOVEMBER MEETING Paul stated the next regularly scheduled meeting would fall on Thanksgiving and asked if the Board had an alternative meeting date in mind. Reagan suggested the meeting be held on Thursday, December 1, 1994. ADJOURNMENT The meeting adjourned at 11:30 a.m. INVOICE NM CAPITAL MANAGEMENT, INC. 7510 MONTGOMERY, NE SUITE 201 ALBUQUERQUE, NM 87109 October 31, 1994 Merrill Lynch 425 W. Capitol, Suite 200 Little Rock, AR 72201 Io illEm. - i iaivSTS Re: City of Fayetteville Fire Pension & Relief Fund Account #563-96346 STATEMENT OF MANAGEMENT FEES: For the period from July 01, 1994 through September 30, 1994 CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND Portfolio Valuation as of 09-30-94 $ 4,061,006.11 @ 0.5000% per annum Quarterly Management Fee TOTAL DUE AND PAYABLE $ 4,304,988.26 * $ 5,340.73 5,340.73 5,340.73 ALL INVOICES ARE DUE UPON RECEIPT. TO INSURE PROPER CREDIT, PLEASE INDICATE ACCOUNT NAME ON CHECK. *Portfolio Valuation used for fee computation has been reduced by accruals amounting to $32,407.77. A copy of this invoice has been sent to the client for their record. • FAYETTEVILLE FIRE DEPT PENSION AND RELIEF FUND PORTFOLIO PERFORMANCE 12/31/93 TO 10/31/94 NM CAPITAL MANAGEMENT INCOME ACCT deposit 1/7/94 9/08/94 3 - MONTHS TREASURY PILLS DJIA W/DIV REINVESTED S & P 500 W/DIV REINVEST LONG TERM TREASURY BONDS H IGH GRADE CORP PONDS CPI (SEP) NM CAPITAL INCOME ACCT (time wtd) 12/31/93 $4,205,795 3,192,618 245, 000 100,000 12/31/93 + 3.19 + 16.96 + 10.09 + 17.74 + 13.71 + 2.75 + 15.34 + 7.01 ORIGINAL INVESTMENT: NM CAPITAL W ITHDRAWALS: 02/14/94 03/14/94 05/09/94 07/12/94 08/11/94 12/06/85 06/26/86 10/01/86 04/23/87 $10, 000. 20,000 5, 000 5, 000 15, 000 10/31/94 $4,287,317 3,324,857 10/31/94 + 3.26 + 6.51 + 3.68 9.89 7.04 + 1.51 + 1.94 - 5.88 $1,000,000.00 312, 657. 00 195, 000. 00 6471.585.00 2,155,242.00