HomeMy WebLinkAbout1996-07-22 - Agendas - FinalFAYETTEVILLE
1111
THE CITY OF FAYETTEVILLE, ARKANSAS TRACI PAUL, CITY CLERK
•
TO: Firemen's Pension Board Members
FROM: Traci Paul, City Clerk/Treasurer 71D
-DATE: July 22, 1996
SUBJECT: Firemen's Pension Board Meeting
The next Firemen's Pension Board meeting is Thursday, July 25,
1996, at 11:00 a.m., in room 326 of City Hall. Attached, please
find a copy of the agenda for the upcoming meeting, the minutes
from the June 27 meeting, and the pension list for August, 1996.
Attachments
113 WEST MOUNTAIN 72701 501 575-8323
AGENDA
FIREMEN'S PENSION AND RELIEF BOARD
July 25, 1996
11:00 a.m.
City Hall Room 326
1 Approval of the minutes of June 27, 1996.
2 Approval of Pension List for August 1996.
3 Investment Report, Merrill Lynch
4. Old Business -
A. Election Results - Retired member position
B. Proposed Benefit Increase
5. New Business
6 Adjournment
MINUTES OF A MEETING OF THE FIRE PENSION BOARD
A meeting of the Fayetteville Firemen's Pension and
was held on Thursday, June 27, 1996, at 11:00 a.m.,
of the City Administration Building, 113 W. Mountain,
Fayetteville, Arkansas.
Marion Doss, Ron Wood, Howard Boudrey, Darrell Judy,
and City Clerk/Treasurer Traci Paul
Relief Board
in room 326
PRESENT:
ABSENT:
Mayor Fred Hanna & Pete Reagan
CALL TO ORDER
Marion Doss called the meeting to order.
MINUTES
Wood, seconded by Boudrey, moved to approve the minutes of the
May 30, 1996 regular meeting. The motion passed unanimously.
PENSION LIST
Paul reported no changes in the pension list.
Boudrey, seconded by Judy, moved to approve the
list. The motion passed unanimously.
NEW BUSINESS
Investment Report
Paul stated Richard Yada had not contacted
would be in attendance or not.
OLD BUSINESS
July pension
her about whether
he
Proposed Benefit Increase
In answer to a question from Doss, Paul stated she did not have
any additional information.
Doss stated the item will be tabled until the next meeting.
DROP Application
Doss stated there is a DROP application from Robert Johnson.
Doss asked if Johnson still needed to come in and fill his
application in with a peninstead of a pencil.
•
June 27, 1996
Paul stated the application has been revised with ink but Johnson
needs to come in and initial the changes.
Wood stated he had asked Johnson to come in and take careof
that.
Doss stated the Board should not approve the DROP application
until Johnson comes in and initials the changes on his
application.
Paul suggested the Board could approve the application subject to
Johnson initialling it.
In answer to a question from Doss, Paul stated Johnson needs to
initial that the effective date has been changed from June.1 to
July 1. He also needs to initial the change in the amount. Paul
explained she filled in the amount that the Accounting Division
will be using.
In answer to a question from Paul regarding the beneficiaries
listed on Johnson's beneficiary form, Doss explained it was okay
that Johnson listed his two sons.
Boudrey, seconded by Judy,
Johnson's DROP application
motion passed unanimously.
MORE NEW BUSINESS
made a motion to approve Robert
subject to his signing it. The
Doss presented copies of a letter from the Pension Review Board.
Doss explained that there is a problem with the increased
benefits for three volunteer surviving spouses. Doss stated the
three surviving spouses are Ms. Barnes, Ms. Morris, and Ms.
Polly. The Pension Review Board said the increase was just for
retired firemen and not spouses so the benefit for the three
spouses should be $45 per month instead of $50.
The Pension Review Board also said that Mr. Carl and Mr. Christie
should be receiving $65 per month. Somewhere it is documented
that they have more than 20 years of service. Floyd Carl and
Arnold Christie both had 20 years of service.
Doss explained he had been in contact with Cathyrn Hinshaw and
Camus. He stated the Insurance turnback check will not be
processed until this situation is corrected. Doss explained he
sent a list showing the years of service of the different people.
Doss stated he told Hinshaw and Camus that the proposed increase
will include volunteers and paid retirees.
June 27, 1996
MORE OLD BUSINESS
Proposed Benefit Increase
Doss pointed out a corrected that needed to be made on the draft
of the proposed resolution for a benefit increase. Doss stated
the resolution states "be it resolved by the City Council of the
City of Fayetteville, Arkansas".
Paul agreed that it should be changed as stated she would take
care of it.
Paul stated she
for retirees to
given two weeks
Paul stated she
Retired Member Election
sent out ballots in the pension checks on June 15
elect a retired Board member. Retirees were
to return the ballots. The deadline is July 1.
would report the results at the next meeting.
In answer to a question from Boudrey, Paul stated 19 ballots have
been returned. Darrell Judy has eight votes, Bill Morris has six
votes, and Carl Springston has four votes.
Everett Cole
Doss asked if Paul had any additional information about the
person inquiring about Everett Cole's widows benefits.
Paul explained that she did not.
Doss stated Mr. Cole was divorced after het retired from the Fire
Department long ago. It could have just been a relative who was
wondering if there were any additional benefits.
Paul stated the woman said she was his wife.
Doss stated his wife's name was Bullah. Doss explained that a
woman named Helen called to inquire about Mr. Cole benefits.
Doss stated a person could not receive benefits until they
submitted a written request to the Board. According to the
pension laws, if a person divorces and remarries after he retires
from the Department, the new wife does not receive benefits.
Paul stated a written request has not been submitted.
In answer to a question from Doss, Paul stated Cole's name should
be removed from the pension list. Paul checked the July pension
list a second time for any changes.
In answer to a question from Doss, Paul stated the Board will
probably have to approve a revised July list at the next meeting.
•
•
June 27, 1996
Doss pointed out that the pension list for July lists Mrs.
Everett Cole.
Paul stated the June pension list has Everett Cole listed and the
July list has Mrs. Everett Cole listed.
In answer to a question from Doss, Paul stated the pension list
is distributed by the Accounting Division.
Doss stated he would look into it.
Paul stated the Board might not need to take any action on this
issue until the situation is more clear. The Board can fix
things at the next meeting.
Doss left the meeting to call Denise Land in Accounting.
Doss returned and reported that nobody called back to request any
benefits. The Accounting Division knew there was some question
regarding the issue. They placed the name in the space on the
pension list ]ust in case it was going to be needed. The Board
should remove Everett Cole's name from the pension list since he
passed away.
Judy, seconded by Boudrey, made a motion to remove Everett Cole's
name from the pension list. The motion passed unanimously.
ADDITIONAL NEW BUSINESS
Paul reported that she had just been given a faxed investment
report from Merrill Lynch. Paul distributed copies to each
member.
The Board reviewed and briefly discussed the investment report.
DROP Application Cont'd.
Boudrey asked if Robert Johnson would be considered as a retiree
and receive 65% because he is a DROP member.
Doss pointed out that the member election form states that raises
given to retirees are also given to DROP participants. Doss
stated when someone signs up for the DROP they do not stay at
50%. Increases are given to DROP participants.
The Board reviewed and discussed Section 6.04 of the Fayetteville
Firemen's Pension and Relief Fund Rules and Regulations for
Fayetteville Firemen's Deferred Retirement Option Plan. Doss
stated the regulations say, "Any retiree raises granted to all
retirees, or overall benefit increases, shall also be given to
persons on DROP".
•
June 27, 1996
The Board discussed the possible proposed benefit increase and
how it will effect retirees and DROP participants.
Paul reported that the next meeting is scheduled for July 25,
1996.
There being no further business, Doss adjourned the meeting at
11:45 a.m.
•
•
•
FIREMEN'S RELIEF AND PENSION FUND
AUGUST 1996
TRACI PAUL, TREASURER
THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE
MONTH OF AUGUST 1996. YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE
PAYEES, IN THE AMOUNTS SHOWN, AND FOR THE PURPOSE SO STATED.
EMP# NAME
43 BAIRD, RICHARD H.
2 BLACKARD, PAUL
63 BOLAIN, ANN
44 BOUDREY, BETTY MRS.
45 BOUDREY, HOWARD
49 BOUDREY, JACK
4 CARL, FLOYD JR
5 CASELMAN, ARTHUR
57 CATE, ROY
6 CHRISTIE, ARNOLD
8 COUNTS, WAYNE
61 DAVIS, BEULAH F.
10 DEARING, EMMA MRS.
11 FARRAR, ALONZO
38 FRALEY JOSEPH G.
33 HARRIS, BILL C.
34 HARRIS, JAMES E.
64 JORDAN, CHARLIE
47 JUDY, DARRELL
37 KING, ARNOLD D.
54 KING, ARVIL
12 LANE, HOPE MRS
13 LAYER, MERLIN
14 LEE, HAROLD
51 LEWIS, CHARLES
60 LEWIS, MARVIE
55 LEWIS, ROGER
40 LOGUE, PAUL D.
50 MASON, LARRY
39 MC ARTHUR, RONALD A.
35 MC CHRISTIAN, DWAYNE
15 MC WHORTER, CHARLES
29 MILLER, DONALD
42 MOORE JAMES H.
17 MORRIS, WILKIE MRS.
16 MORRIS, WILLIAM H.
62 MORRISON, ELIENE
48 MULLENS, DENNIS W.
58 OSBURN, EDWARD
46 OSBURN, TROY
53 POAGE, LARRY
20 POLLY, GRACE A. MRS.
22 REED, JOE
30 SCHADER, EARVEL
41 SCHADER, TROY
23 SKELTON, BURL L.
24 SKELTON, LEE
56 SKELTON, ROY
36 SPRINGSTON, CARL
25 STOUT, ORVILLE
27 TUNE, MILDRED MRS.
26 TUNE, BILLIE SUE
GROSS FED. TAX
916.20 100 00
55.00
55.00
1,266.21 180 00
1,066.66
837.68 287.68
50.00
75.00
909.50
50.00
55.00
377.50
50.00
707.84
953.38 100.00
55.00
55.00
1,192.17
837 68
828.42 100.00
1,131.00 130.00
50.00
417.50
55.00
837.68
4.39.16
439.17
1,469.38 175.00
829.35 29 35
891.62 100.00
55.00 30.00
885.14 50.00
863.01 125.00
55.00
50.00
60.00
70.00
1,114.11
1,284.63 160.00
965.81 65.81
1,201.98 200.00
50.00
55.00
915.78
783.74 20.00
692.50 42.50
390.00
1,626.02 126.02
609 88
590.36 50.00
70.00
70.00
ST. TAX NET
816.20
55,00
55.00
1,086.21
1,066.66
50.00 500.00
50.00
75.00
909.50
50.00
55.00
377 50
50.00
707.84
10.00 843.38
55.00
55.00
1,192.17
837.68
10.00 718.42
1,001.00
50.00
41750
55.00
837.68
439.16
439.17
20.00 1,274.38
800.00
791 62
25.00
835.14
738.01
55.00
50.00
60.00
70.00
1,114.11
1,124.63
900.00
30.00 971.98
50.00
55.00
915.78
763.74
650.00
390.00
50.00 1,450.00
609.88
540 36
70.00
70.00
6
•
28 WATTS, DONALD
59 WATTS, WAYNE
52 WRIGHT, RANDALL
400.00
921.17
877.68
96.17
150.00
400.00
825.00
727.68
31,609.91 2,317.53 170.00 29,122.38
WE, THE UNDERSIGNED, DO SOLEMNLY SWEAR THAT THE ABOVE OBLIGATIONS ARE
JUST AND CORRECT; THAT NO PART THEREOF HAS BEEN PREVIOUSLY PAID; THAT
THE PENSION PAYMENTS SO CHARGED ARE IN ACCORDANCE WITH THE ACTIONS OF
THE BOARD OF TRUSTEES OF THE FIREMEN'S RELIEF AND PENSION FUND; THAT
THE SERVICES OR SUPPLIES FURNISHED, AS THE CASE MAY BE, WERE ACTUALLY
RENDERED OR FURNISHED; AND THAT THE CHARGES MADE THEREFORE DO NOT
EXCEED THE AMOUNT ALLOWED BY LAW OR THE CUSTOMARY CHARGE FOR SIMILAR
SERVICES OR SUPPLIES.
CHAIRMAN AN. PRESIDENT
ACKNOWLEDGEMENT
STATE OF ARKANSAS )
COUNTY OF WASHINGTON) )SS
• SWORN TO AND SUBSCRIBED BEFORE ME THIS 7 b0 DAY OF j.4.1 � , 1996.
MY COMMISSION EXPIRES: 3- /" 0700.5—
loominnopy,
lot L
• i• +,•
;•
NOTARY
• ole QN
_D
?es.. jUBI%C :'
:��'�6; song •; Q`
•
Merrill Lynch.
July 11, 1996
Fayetteville Fire Pension and
Relief fund u/a dtd 6/18/86
Income Account
113 W. Mountain Street
Fayetteville, AR 72701-6083
Re: 563-96345
Dear Ladies and/or Gentlemen:
Private Client Group
425 West Capitol, Suite 200
Little Rock, Arkansas 72201
501 370 2000
RECEIVtt.i
JUL 1 5 1996
FINANCE DEPT,
ECEIVED
al 1 5 1996
CITY CLERK'S OFFICE
Havmg recently reviewed your account, I want to express thanks for the business you
have been giving Merrill Lynch.
My review indicates that your account is active and I trust you are satisfied with the
efforts of Richard Yada, Curtis Williams and Gib Weisbecker in helping you achieve
your investment objectives. If you would like to discuss your account or our services
directly with me at any time, please call. I would be happy to arrange a personal
meeting.
Again, thank you for your valued business.
Sine rely,
V vein.
Peter S. lendorf
District Administrative Manager
PSA/gkj
cc: Richard Yada
Curtis Williams
Gib Weisbecker
FOI WAIabEb COZ=IES
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Page —2of2
KNOWLEDGE
SIS
iii e
This event continues our
tradition of trustee education in
"plain English." The two-day
retreat combines intense class-
room study with lively panel
discussions and debate to pro-
vide the prudent fiduciary with a
foundation of practical knowl-
edge.
Day one's theme is "Who's
on First?", a thorough examina-
tion of the roles of different
members of the pension fund
"team" including the consultant,
the actuary, the manager, the
custodian, etc. The duties and
obligations for each are clearly
and simply delineated, under-
scoring our commitment to
providing in-depth training
without useless and confusing
jargon.
THE WASHINGTON HACKETT COMPANY'S
New Frontiers
Fiduciary Education Retreat
August 15-17,1996
JW Marriott at Lenox
Atlanta, Georgia
In response to trustee de
mand, we will introduce a segment on Commis-
sion Recapture, Soft Dollars and Directed Broker-
age. We will explain who has discretion over
commissions, the investment managers or the
Board?
Our objective is to create an atmosphere where
participants can feel comfortable asking any
question they would like on any of the subjects.
Our presenters are therefore challenged to "make
it plain" until the student says "I understand." In
our seven years of conducting seminars and
"'conferences, this innovative concept in training has
received the most acclaim.
Day two's theme, "Controversy - Let's ask the
Tough Questions," includes three sessions - a
"New Strategies" panel which
explores the investment vehicles
of the future which many funds
are reaping the benefit of now; a
"Global Investing" panel that
promises to provide the real low-
down on this all-important asset
class, and what promises to be a
special concluding forum with
trustees and sponsors debating
the advisors on the tough ques-
tions of the day.
The best news of all is that
registration for this event is
absolutely free for trustees, plan
sponsors, and staff. Registration
includes most meals, educational
materials, and a tour of the
Olympic Village.
As always, the nation's top
institutional investment -related
firms will serve as our partners in
this conference, and will be
featured as panelists and speakers. Each "student"
will be provided with a tote bag for convenient
storage of seminar materials, and the seminar
binder, which contains the full presentations of our
speakers in addition to glossaries and other educa-
tionalmaterial of the highest level.
We've also taken the series into cyberspace.
Washington Hackett maintains a site on the World
Wide Web, where fiduciaries around the globe can
gain immediate and up-to-date access to confer-
ence highlights, participants, schedules, and future
plans all from their home or office computer:
http://www.neosoft.comb—washhack
Call (504) 524-1101 with questions on how you
can take part in this exciting event.
PARTNERS INCLUDE:
The Bank of New York
The Boston Company
Asset Management, Inc.
Diaz -Verson
Capital Investments, Inc.
GW Capital, Inc.
Highland Investment
Group, L.P
Invesco Capital Management
JMC Capital
Management, Inc.
Lynch & Mayer, Inc.
Miller/Howard
Investments, Inc.
Peachtree Asset Management
Vuong & Company, LLC
In response to trustee de
mand, we will introduce a segment on Commis-
sion Recapture, Soft Dollars and Directed Broker-
age. We will explain who has discretion over
commissions, the investment managers or the
Board?
Our objective is to create an atmosphere where
participants can feel comfortable asking any
question they would like on any of the subjects.
Our presenters are therefore challenged to "make
it plain" until the student says "I understand." In
our seven years of conducting seminars and
"'conferences, this innovative concept in training has
received the most acclaim.
Day two's theme, "Controversy - Let's ask the
Tough Questions," includes three sessions - a
"New Strategies" panel which
explores the investment vehicles
of the future which many funds
are reaping the benefit of now; a
"Global Investing" panel that
promises to provide the real low-
down on this all-important asset
class, and what promises to be a
special concluding forum with
trustees and sponsors debating
the advisors on the tough ques-
tions of the day.
The best news of all is that
registration for this event is
absolutely free for trustees, plan
sponsors, and staff. Registration
includes most meals, educational
materials, and a tour of the
Olympic Village.
As always, the nation's top
institutional investment -related
firms will serve as our partners in
this conference, and will be
featured as panelists and speakers. Each "student"
will be provided with a tote bag for convenient
storage of seminar materials, and the seminar
binder, which contains the full presentations of our
speakers in addition to glossaries and other educa-
tionalmaterial of the highest level.
We've also taken the series into cyberspace.
Washington Hackett maintains a site on the World
Wide Web, where fiduciaries around the globe can
gain immediate and up-to-date access to confer-
ence highlights, participants, schedules, and future
plans all from their home or office computer:
http://www.neosoft.comb—washhack
Call (504) 524-1101 with questions on how you
can take part in this exciting event.
5:00=7:00 pm Registration
7:00-9:00 pm Opening Cocktail Reception and Exhibits
8:00 am
9100 am
9:15-11.:45 am
12:00 pm
1.00-2:00 pm
2:00-3:30 pm
:3:30J5:00 pm
Registration and Breakfast
Welcoming Remarks
'What you should (expect from advisors;
with the jargon of each advisor explained.
The Role cof Your !Consultant
A'ssetAllocation, investment polio=,
performance measurement,manager
search,'irustee education.
'The Able of'You r Custodian
!Safekeeping, 'nth [Management 'settle=
mentioftransactions, recordikeeping,
oonline'aCtess to data, liaison to managers;
and performance calculations.
The Role Of Your Attuary
Investment return, assumption rate,
iDROP,plans, benefits im,pact,cetc.
The Role of'Yout Broker
Trade execution, listed OTC, neiv;issues;
global, introducing vs. clearing brokers;
and "best' execution'.
'The Role:ofYour Investment Manager
Management styles, types, and bench=
marks, explained.
Luncheon and Keynote Address (invrfed)
THE HONORABLE MICHAEL HIGHTOWER
Fulton•County Commissioner
The mechanics of securities lending, the
advantages, risks, online services and
performance measurement.
What do these terms mean? Whose
commissions are they, anyway? A step=
by -step breakdown of the mechanics of
the "trade" and of equity and fixed
:income trading.
Anrexploration of the rights and responsi-
tb'tli:ies of the trustee.
4:45=5:00 pm
Si00=900 am
'9'0040:00 am
10:00=91100 ram
11.00 am -Noon
Fiduciary :Responsibility
ERISA in plain English.
The Role of Your Legal Counsel
Investment and benefits polities,'dispi
iiibbVing:governmental bodies, hiring a
board attorney..
Conclusion and presentation of certificates
of completion.
Breakfast' Buffet and Exhibits
,Can your fund take ad vantage of ren-
Ihanced equity strategies iha'tadd value
.and lower risk?
title r'e'heard a'lot about it, but are the real
(costs? This session wilhcover(all of the
hidden costs associated with global
investing - currencytrading and custody.
Does this strategy 'add valuer over' the long
term? 1s your'fund,ready'to take on this
asset:class?
A panel of trustees and plan sponsors face
off with a panel of advisors .(consultants,
media, money managers, brokers,']aw-
vers, actuaries) in a moderated vetinfor-
inaldebate to tackle such questions as:
• How many managers is too many?
• When :should .you fire a manager?
• What if any should the limits be in
lobbying tactics — free gifts, .trips,
meals, etc.?
12:00 :pm Luncheon
1:00 pm T.our:of the Olympic Village
cori-col
100
Atlanfa1996T
INo. *tarry, They probablycw.bri 1Iletlyou ba becueion lit ...
KNOWLEDGE
IS THE KEY
TRUSTEE AND PLAN SPONSOR REGISTRATION CARD
THE WASHINGTON HACKETT COMPANY'S
NEW FRONTIERS FIDUCIARY EDUCATION RETREAT
August 15-17,1996 • JW Marriott at Lenox • Atlanta, Georgia
If you are interested in attending the New Frontiers Fiduciary Education Retreat, August 15-17 in
Atlanta, please fax the completed registration form below to The Washington Hackett Company at
(504) 524-1411 no later than 7/31/96.
FUND
STREET TEL. FAX
CITY STATE ZIP
1. NAME
2. NAME
3. NAME
411 NAME
5. NAME
6. NAME
7. NAME
8. NAME
TITLE
TITLE
TITLE
TITLE
TITLE
TITLE
TITLE
TITLE
❑ Please confirm registration (NOTE: Retreat attendance is FREE to trustees, plan sponsors and investment staff)
❑ .I cannot attend Retreat in August, but please send me information about the upcoming Washington Hackett Company
Fiduciary Education Congresses to be held December 5-6 in Cincinnati, Ohio.
VENUE:
1
JW MARRIOTT HOTEL
AT LENOX
3300 Lenox Road
• Atlanta, GA 30326
Reservations:
1-800-831-4004
Comments, questions, special requests:
FAYETTEVI LLE
THE CITY OF FAYETTEVILLE, ARKANSAS
TO: Members of the Police Pension Board
Members of the Fire Pension Board
FROM: Denise Land, Accounting Coordinatorb-44,(4;...)2_10-4244
THROUGH: Ben Mayes, Administrative Services Director •W l.
DATE: July 24, 1996
SUBJECT: Internal Revenue Service Tax Deposit Requirements
Beginning January 1, 1997, the 1993 North American Free Trade Agreement Implementation
Act (NAFTA) mandates that businesses making deposits of more than $50,000 in employment
taxes make all Federal Tax Deposit (FTD) payments electronically.
Since the City of Fayetteville's Police and Fire Pensions operate under a single Federal
identification number, the electronic transfer of FTD payments must be made from one checking
account The account so designated is the Payroll Fund account at Boatmen's Bank.
Each month, the amount of Federal income tax withheld from Police and Fire Pension retirees'
checks will be transferred from the respective Pension Fund to Payroll. The FTD payment will
then be made from the Payroll account and will equal the sum of the Federal income tax
withheld from both Police and Fire retirees' checks.
If you have any questions, please call me at 575-8288.
113 WEST MOUNTAIN 72701 501.521.7700
FAX 501-575-8257
FAYETTEVILLE FIRE DEPT PENSION AND RELIEF FUND
PORTFOLIO PERFORMANCE 12/31/95 TO 06/30/96
12/31/95 06/30/96
NM CAPITAL MANAGEMENT $3,891,670
- 40,000
INCOME ACCOUNT 3,848,643
+40, 000
KEYSTONE ASSET MGT 1,0181776
3 - MONTHS TREASURY E+ILLS
DJIA W/DIV REINVESTED
S & P 500 W/DIV REINVEST
LONG TERM TREASURY BONDS
H IGH GRADE CORP BONDS
CPI (May)
NM CAPITAL (tirne wtd)
INCOME ACCOUNT
KEYSTONE ASSET MGMT
W ITHDRAWALS:
03/13/96
04/12/96
$16,000
10,000
ry314s - .77/7. 10
$4,144,867
3,8221166
1,102,470
12/31/95 06/30/96
+ 5.46
+35.53
+34. 94
+27.63
+23.51
+ 2.67
+ 15.68
+ 15.61
+ 1.88
+ 2. 53
+ 11.74
+ 10.04
- 7.17
- 4. 32
+ 2. 02
+ 6.91
- 1.47
+ 7. 38
Policemen's Pension and
Relief Fund:
1995
1994
1993
1992
1991
1990
1989
1988
1987
Firemen's Pension and
Relief Fund:
1995
1994
1993
1992
1991
1990
1989
1988
1987
Arkansas Local Police
Retirement System:
1995
1994
1993
1992
1991
1990
1989
1988
1987
Arkansas Local Fire
Retirement System:
1995
1994
1993
1992
1991
1990
1989
1988
1987
City of Fayetteville, Arkansas
Required Supplemental Information
Analysis of Funding Progress - Pension Plans
(unaudited)
Net Assets
Available
for Benefits
$ 7,187,710 $
6,742,568
6,297,795
5,749,346
5,144,950
4,542,670
4,009,866
3,640,817
3,374,250
8,897,591
7,807,256
7,275,674
6,549,315
5,999,963
5,583,618
5,189,846
4,812,967
4,460,948
1,929,068
1,582,316
1,192,787
921,331
674,408
507 841
362,894
149,355
1,538,665
1,252,844
936,951
704,764
504,826
371,696
258,708
111,969
Pension
Benefit
Obligation
7,900,817
7,496,242
7,100,265
6,733,298
6,424,513
6,122,604
5,678,769
5,440,025
8,250,753
7,852,610
7,800,213
7,451,686
7,485,673
7,170,353
6,432,088
5,916,109
1,127,407
841,498
662,012
515,346
544,250
410,842
290,019
112,077
1,061,417
826,121
654,649
492,950
467,790
305,871
205,715
82,595
Percentage
Funded
85%
84%
81%
76%
71%
65%
64%
62%
95%
93%
84%
81%
75%
72%
75%
75%
171%
188%
180%
179%
124%
124%
125%
133%
145%
152%
143%
143%
108%
122%
126%
136%
Assets in
Excess of
Pension
Benefit
Obligation
$ $
(1,158,249)
(1,198,447)
(1,350,919)
(1,588,348)
(1,881,843)
(2,112,738)
(2,037,952)
(2,065,775)
(443,497)
(576,936)
(1250,898)
(1,451,723)
(1,902,055)
(1,980,507)
(1,619,121)
(1,455,161)
801,661
740,818
530,775
405,985
130,158
96,999
72,875
37,278
477,248
426,723
282,302
211,814
37,036
65,825
52,993
29,374
Annual
Covered
Payroll
536,775
563,842
570,777
646,442
665,901
667 807
695,877
690,991
666,941
686,455
692,112
635,136
638,103
594,929
634,520
655,702
792,027
788,348
1,520.802
1,394,555
1,097,137
917,421
813,758
740,095
616,734
521,495
389,843
1243,452
1,118,723
907,118
807,545
646,045
572,003
480,149
454,912
286,329
(Unfunded)
Overfunded
Obligation as
a Percentage
of Covered
Payroll
(20$) %
(210) %
(209) %
(239) %
(282) %
(304) %
(295) %
(310) %
(64) %
(91) %
(196) %
(244) %
(300) %
(302) %
(204) %
(185) %
57%
68%
58%
50%
18%
16%
14%
10%
43%
47%
35%
33%
6%
14%
12%
10%
GASB No 5 requires that ten years of historical data be presented as required supplementary information; however, since fiscal year
1987 was the first year that the standardized pension benefit obligation was computed, eight years' information is presented.
(continued)
69
Policemen's Pension
and Relief Fund:
1995
1994
1993
1992
1991
1990
1989
1988
City of Fayetteville, Arkansas
Required Supplemental Information
Analysis of Funding Progress - Pension Plans, continued
(unaudited)
Revenue by Source
Employer Contributions
Percent of
Annual
Employee Dollar Covered
Contributions Amount Payroll
$ 32.206 $ 64,413
33,830 67,661
34,247 68,493
39,051 77,572
39.955 79,908
40.068 80.137
47,853 62,629
41,459 41,459
Firemen's Pension and
Relief Fund:
1995
1994
1993
1992
1991
1990
1989
1988
Municipal Judge
Retirement Fund:
1995
1994
1993
1992
1991
1990
1989
1988
41,187
41,527
38,108
38,286
35,695
39 125
39,587
47,522
82,375
83,054
76,216
76.572
71,392
95,814
39,343
46.241
12%
12%
12%
12%
1296
12%
9%
6%
12%
1296
12%
12%
12%
15%
6%
6%
•
Investment
Earnings
$ 318,782 $
298,166
411,241
431,387
430,951
368,253
238,028
174,207
1,047,672
504 938
738.433
561,855
445,912
360,318
401,173
345,091
22,796
13,524
9,195
9,724
14,734
18,012
16,157
12,165
Property
Taxes
166,068 $
150,989
143,432
137,614
131,933
143,005
128,295
122,813
166,068
150,989
143,432
137,614
131 933
143,005
128,295
122,813
State
Funds
163,469 $
167,546
165.482
150,012
135,489
130,499
115,732
80,768
137,227
123.948
123.120
112.743
109,371
101,233
101,810
101,511
•
Other Total
107,443 $
110,482
92,393
85,244
74,278
71,844
59,785
65,534
852,381
828,674
915,288
920,880
892,514
833,806
652,322
526,240
762 1.475,291
690 905,146
16 1,119,325
101 927,171
345 794,648
300 739,795
358 710,566
663,178
15,281
15,926
14,847
15,034
13,828
14,133
12,156
10,916
38,077
29,450
24,042
24,758
28,562
32.145
28.313
23,081
GASB No.5 requires thatten years of historical data be presented as required supplementary information. However, 1988 wasthefirstyear
that the City classified revenues of the trust funds. Accordingly, only eight years have been presented.
(continued)
70
1
f.
1
1
1
1
1
t
City of Fayetteville, Arkansas
Required Supplemental Information
Analysis of Funding Progress - Pension Plans, continued
(unaudited)
Expenses by Type
Benefits
Policemen's Pension
and Relief Fund:
1995 $ 403,839 $ 3,400 $ 407,239
1994 381,901 2,000 383,901
1993 353,186 13,653 366,839
1992 314,560 1,923 316,483
1991 288,024 2,211 290,235
1990 297,931 3,070 301,001
1989 263,333 19,941 283,274
1988 244,334 15,339 259,673
Administrative
Expenses
Total
Firemen's Pension and
Relief Fund:
1995 379,530 5,426 • 384,956
1994 371,153 2,411 373,564
1993 374,223 18,743 392,966
1992 375,573 2,246 377,819
1991 375,094 3,209 378,303
1990 343,710 2,313 346,023
1989 301,304 32,383 333,687
1988 2371616 73,543 311,159
Municipal Judge
Retirement Fund:
1995 - 75 75
1994 - 68 68
1993 - 61 61
1992 - 61 61
1991 - 67 67
1990 - 51 51 �'
1989 - 52 52 z
1988 - 52 52 c
g
v
i
R
IT
GASB No. 5 requires that ten years of historical data be presented as required supplementary information. ?
However, 1988 was the first year that the City classified expenses of the trust funds. Accordingly, only v
eight years have been presented.
71
•
•
July 15, 1996
City Clerk of Fayetteville
113 West Mountain Street
Fayetteville, AK 72701
Dear Sir or Madam:
KEYSTONE ' ECEf ltD
INVESTMENTS
JUL 2 2 1996
COTY CLERICS OFFICE
Enclosed please find the July appraisal of your portfolio showing values as of June 28, 1996.
Appended to the appraisal you will find summary transaction and performance statements. Also
enclosed is a copy of our latest Quarterly Investment Commentary.
During the second quarter, interest rates continued the rise that began in the first quarter. This
occurred in response to a continuing stream of unexpectedly strong reports concerning U. S.
economic growth during the quarter, and reflected rising investor concerns that such growth would
in time lead to a pickup in inflation. Equity market returns were generally positive, but cross-
currents were severe as the markets shifted from a focus on slow growth early in the quarter to strong
growth as the quarter ended.
The acceleration in economic growth during the second quarter occurred due to a resurgence in
employment, strong consumer spending particularly for durable goods arising from such
employment, and several significant but non-recurring factors. These factors included a sharp rise
in mortgage re -financings late last year and early this year due to the relatively low mortgage rates
that existed at that time; an unusually large volume of tax refunds during the second quarter; a
variety of incentives to spend such as rebates on autos; and recovery from depressed winter activity
levels. These factors are discussed in somewhat greater detail in the Commentary.
One effect of the surge in employment and spending has been to focus investor attention on the
likelihood of a move by the Federal Reserve to increase short-term interest rates in order to preempt
any acceleration in inflation. We expect that the Fed may initiate higher rates in the near future,
probably at the August meeting of the Federal Open Market Committee if not before. An important
qualifier will be trends in employment levels reported between now and. then. We anticipate that
short rates, if increased, may rise in several stages for an eventual total of between 50 and 75 basis
points. A 75 basis point increase would bring the Fed Funds rate from 5.25% currently to 6.0%.
Such a move would; we believe, be regarded as a positive by the bond market, since it would be a
fresh signal of the Fed's intent to suppress inflation. We note that in any case the shorter -term end
of the bond market has already discounted a meaningful percentage of that anticipated hike in short-
term interest rates
200 Berkeley Street, Boston, Massachusetts 02116-5034 Phone: (617) 338-3200
City Clerk of Fayetteville
July 15, 1996
Page Two
In the meantime, we believe we are still in an economic environment best characterized as exhibiting
moderate growth with comparatively low and contained inflation. Corporate profits have been nsmg
strongly for some time as a function of controlled inflation, declining unit labor costs, and nsmg
profit margins While the extent of any further increase in collective profitability is open to question
at this Juncture, we do believe profit margins can be maintained in that they have only recovered to
levels which are normal when viewed in historical context. Thus, we look for continued overall
earnings progress this year and next, with our expectation being that S&P 500 earnings per share will
increase about 8% in 1996 and.by 10% in 1997. Market valuations remain reasonable in Light of the
inflation and interestTate backdrop�c rs ;'
Our investment policy,, at this juncture continues to call fora fully invested position with only
frictional cash.levels.,_ In-balanced`-portfolios,'we are in a neutral posture with respect to asset
allocation, which is to say 60% equity and 40% fixed income.
Do not hesitate to let us know if you have any questions on any of the foregoing.
Sincerely,
Andrew G. Baldassarre, CFA
Vice President and Portfolio Manager
AGB/klh -
Enclosures
cc: Mr. Curtis Williams
Mr. Richard.Yada
•
KEYSTONE
N V: E S T, E N T S.
•
•
•
Quarterly
Jnvestvnent
Covrwnentczry
•
•
n.
•
..Stcohd Quarter
199
•
0
the Sive ` le's"
omestic capital markets moved in divergent
directions during the first quarter. Fixed
income instruments continued to lose ground
while equities continued to gain. Most of the rationale
for this atypical behavior' can be found in underlying
economic patterns, coupled with a resultant radical
shift in investor expectations.
As the second quarter got under way, most observers
believed that the economy was weak, primarily as a
result of short -.term interest rate hikes during 1994
which in time led to a sizable inventory correction.
'Consequently, it was expected that the Fed would
continue to lower short rates as 1996 progressed.
Beginning in April, however, signs of increasing
economic strength began to proliferate both in the
U.S. and abroad. For example; commodity prices
soared; employment reports were much stronger
than forecast- there was a great deal of discussion
about raising the minimum wage; short rates were
again reduced in Europe; evidence of stronger
Japanese growth accumulated; and economies in
Canada and Mexico seemed to be strengthening as
well. This unquantified evidence was soon followed
by release of a preliminary first quarter report of U.S.
GDP showing growth at a 2.8% annualized rate (sub-
sequently revised to 2.2%), much stronger than
expected despite the ongoing inventory correction.
•
SECOND QUs4n'rEn seOnE6OARD
(Price only; not total return)
Index
DJ Industrials
DJ Transportation
DJ Utilities
S&P 500 .
Russell 1000 -
NYSE Composite
Amex -
Nasdaq OTC Compos to
Russell 2000
S&P Mid Cap 400
S&P Small Cap 600
Wilshire 500 (Bis. $)
Federal Funds (%) - Target
9I -Day T -Bill Yield (%
10 -Year T -Note Yield (o)
30 -Year T -Bond -Yield (%)
Dollar (in Yen)
Dollar (in Marks) !
Gold (Troyoz., London)
Crude Oil (Nearby Fuure)
ICR-CRB Index
t
6/28/96 3/28/96
5654.63 5587,14
2181.76 2152.11
220.30 212.76
670.63 645.50
357.10 345.01
35910 346.92
576.79 . 571.38
1185.02 1101.40
346.61
236.00
" 134.03
6612.77
- 5.25
5.04
6.70
6.89
109.15
1.53
382.00
20.92
248.66
.11
330.77
230.30
126.90-
6365.88
26.906365.88
4.98
6.39
6.72
107.22
1.48
396.35
21.47
251.40
% Che_
1.2
1.4
3.5
3.9
3.5 .
3.5
0.9
7.6
43
2.5
5.6
3.9
0.0
1.2
4.9
2.5
1.8
3.4
-3.6
-2.6
-1.1
Source: Keystone Investments
When the Fed eventually started reducing rates
late in 1995, it sparked a major imprbvement in
the relative performance of cyclical stocks as the
markets began to discount the economic acceleration
expected to flow from lower rates. At the same time, .,
mid and small cap stocks began to out -perform large
cap stocks, in part due to the expected -economic -pick-
up argument, but also due to expectations that contin-
uing strength in the dollar would in time penalize
the foreign -source earnings component of the larger,
multi -national corporations.
As the perception of growing economic strength per-
meated the markets, both these trends sharply'
reversed themselves. That is, the markets shifted
focus from the likelihood of further Fed ease to the
potential for another round of Fed tightening and
higher interest rates. At this point the market started
to place emphasis on large -cap, growth -oriented equi-
ties,effectively th6se which would be least affected by
a period of rising short-term interest rates. Even
though the abruptness and magnitudes of the rever-
sals in relative strength of various market sectors and
equity characteristics which'occurred during -the' quar-
ter were dramatic and s ery abrupt, respectable gains
were recorded by nearly every stock index.
The reasons for the unexpected pickup in domestic
economic growth have been summarized by one of
our consultants under the heading of the "five R's."
They include the following:
• Rtes were down at the start of the year,
with mortgage rates having fallen some
200 basis points during 1995 to 7%. The
natural consequence was that...
• Re -financings increased significantly
in late 1995 and early 1996, helping to
lift retail sales.
• Rebates on auto purchases were
increased in early 1996 in response
to weak auto sales in late 1995.
• Refunds of tax payments ran ahead of
last year's pace in early 1996, which
also helped lift retail sales.
• Rebounds from temporary drags on
activity such as the Boeing strike, the
Federal government shutdowns,
blizzards, and the General Motors
strike likely combined to cause
economic growth to accelerate.
Of course, the root of all the concerns over the pace:of
the economy and the Fed's intentions is the potential
,for a pickup in inflation, and here news has been '
. quite sanguine. There is still little evidence of any .,
acceleration in inflation, and in fact some evidence of •
' .deflation since recent Producer PriceIndex reports
Shave shown negative changes. Also, unit.labor costs in
• manufacturing' have been declining at one_ofthe .
fastest rates ever measured. "
Of some concern, however, is the situation with
regard -to the leading inflation indicators: It will no
doubtbe recalled that much of the rationalefor the •
Fed's move to raise short rates in 1994 Was that it
• .would thereby,preempt any pickup in inflation. At the
time; leading inflation measures were rising sharply, 1.
_ and it was thought that the Fed was heavily influ-
• encedby that.trend. Due to the tightening that took
place, the -leading inflation index we monitor Moved
sharply lower, but only to its threshold levet, and ,
from that point it has recently ticked up. One tick -up
• does not a trend make; ofcourse, but the situation
_ bears Watching. Concern is mounting -that inflation
may'rise as a function of labor shortages and cone-
quent higher wage costs. During the January -'May
period, for,example,'payroll,employment. rose by a ` - -
monthlyaverage of 222;000, a pace of growth that
_cannot be maintained.indefinitely without a pickup
in -wages.
be in -the vicinity of 4%. On the other hand, a number
of indicators are signaling slower growth ahead: Most
of •the "five R's, `for example, can be considered non •
-
, recurring and some have, in fact, already gone into
. reverse. Mortgage rates are now up some' 140 basis
•-.points off their lows, and as a'result the level of refi-
na,ncitigs has given up all of its 1995 increase Since '
there is a high degree of correlation between refinanc-
ings and retail sales, retail sales should be negatively
impacted. Tax. refunds are done with. Rebates are .
;doubtless either the same or lower. Rebounds are
now behind us. .
Accordingly, in addition to the monthly employment ,
reports,ihe investment community is currently
obsessed with the question of whether ornbt the ,
Fed will raise rates, and if so when and by how -
much. Not incidentally,.the possible consequences
• Mr the Markets of any such moves are matters for
seribus debate as well ,
• The Fed will.move toxaise rates at the July FOMC. -
Meeting or the August ineetirig, with their actions to.,
some extent a function of near-term employment
reports. We expect the increases to ultimately total
• S0-75 basis points; implemented in several stages. •
• There is littletobe gained by merely announcing a .
policy bias towards tightening, since that would.leave .
the actuality of a rate increase overhanging the marL
kets. In fact, we believe the long end of the bond mar- •
ket. Would. react favorably to such a. move, and observe
that the short end of the coupon curve has already
adjusted in large measure to the potential effects of
the antiapated,tightening. We.look for the' Long
' Treasury, bond yield tomove in a 6.75% 7.50.%band
until the economic slowing.which we expect due to
the unwinding.of non-recurring stimuli together with
the eventual impact of higher short-term interest rates
1
• • begin to'become apparent. • -
Outlook
•
• s is usually the case when discussing the out •
-
look for the economy, there is considerable •
divergence of opinion, none more so than in
the current instance when the economy is giving off
• mixed signals. On'one hand, .the current economic l ,
background is quite strong not only in terms of
employment but also in terns of things that employ-.
ment leads to: retail sales gerierally,'auto and housing
• sales most particularly. As a result, the consensus . .
expectation is for second•quarter real'.GDP growth to •
•
•
• ' `` /YlanufacturingUnit .Cabor
.Percent Change, Year Ago •
Costs . .
13
6
6
- 4ncumbent
party .
•
ZT .,
K
K¢?
1 .mills
Won •
Jt
t
.y
.
1968 Tightened
_Lost
�>.
sta
F.
.
y
•
6xriiL-
i•
I�
Lost
II
61
b3 65 67 69
Source: Bureau
71
73
75
of
77 79
Labor
i��
61
S
attstics
3
1984 Eased -
1992 Eased
Won
Lost
Lynch
. -
65 67 99
andMerrill
91 93'95
55
57 59
Of some concern, however, is the situation with
regard -to the leading inflation indicators: It will no
doubtbe recalled that much of the rationalefor the •
Fed's move to raise short rates in 1994 Was that it
• .would thereby,preempt any pickup in inflation. At the
time; leading inflation measures were rising sharply, 1.
_ and it was thought that the Fed was heavily influ-
• encedby that.trend. Due to the tightening that took
place, the -leading inflation index we monitor Moved
sharply lower, but only to its threshold levet, and ,
from that point it has recently ticked up. One tick -up
• does not a trend make; ofcourse, but the situation
_ bears Watching. Concern is mounting -that inflation
may'rise as a function of labor shortages and cone-
quent higher wage costs. During the January -'May
period, for,example,'payroll,employment. rose by a ` - -
monthlyaverage of 222;000, a pace of growth that
_cannot be maintained.indefinitely without a pickup
in -wages.
be in -the vicinity of 4%. On the other hand, a number
of indicators are signaling slower growth ahead: Most
of •the "five R's, `for example, can be considered non •
-
, recurring and some have, in fact, already gone into
. reverse. Mortgage rates are now up some' 140 basis
•-.points off their lows, and as a'result the level of refi-
na,ncitigs has given up all of its 1995 increase Since '
there is a high degree of correlation between refinanc-
ings and retail sales, retail sales should be negatively
impacted. Tax. refunds are done with. Rebates are .
;doubtless either the same or lower. Rebounds are
now behind us. .
Accordingly, in addition to the monthly employment ,
reports,ihe investment community is currently
obsessed with the question of whether ornbt the ,
Fed will raise rates, and if so when and by how -
much. Not incidentally,.the possible consequences
• Mr the Markets of any such moves are matters for
seribus debate as well ,
• The Fed will.move toxaise rates at the July FOMC. -
Meeting or the August ineetirig, with their actions to.,
some extent a function of near-term employment
reports. We expect the increases to ultimately total
• S0-75 basis points; implemented in several stages. •
• There is littletobe gained by merely announcing a .
policy bias towards tightening, since that would.leave .
the actuality of a rate increase overhanging the marL
kets. In fact, we believe the long end of the bond mar- •
ket. Would. react favorably to such a. move, and observe
that the short end of the coupon curve has already
adjusted in large measure to the potential effects of
the antiapated,tightening. We.look for the' Long
' Treasury, bond yield tomove in a 6.75% 7.50.%band
until the economic slowing.which we expect due to
the unwinding.of non-recurring stimuli together with
the eventual impact of higher short-term interest rates
1
• • begin to'become apparent. • -
Outlook
•
• s is usually the case when discussing the out •
-
look for the economy, there is considerable •
divergence of opinion, none more so than in
the current instance when the economy is giving off
• mixed signals. On'one hand, .the current economic l ,
background is quite strong not only in terms of
employment but also in terns of things that employ-.
ment leads to: retail sales gerierally,'auto and housing
• sales most particularly. As a result, the consensus . .
expectation is for second•quarter real'.GDP growth to •
•
•
There is also a question as to whether or not the Fed
will act soon before anational election. Based on the
•
• -
Election - jed Policy'
- 4ncumbent
party .
'
1956 • Tightened
Won •
1964' - lightened -
Won
1968 Tightened
_Lost
1972 - Tightened
• Won
1980 - 1 Tightened-
Lost
1988 Tightened
Won
'
1960 Eased __
' Lost'
1976 Eased -
Lost -
,
1984 Eased -
1992 Eased
Won
Lost
*Just prior to election
Source: ISI Croup '
There is also a question as to whether or not the Fed
will act soon before anational election. Based on the
•
record, it seems a Fed tightening is not necessarily a
kiss of death. During the last ten presidential election
years, the Fed has tightened six times -just prior to the
election. The incumbent party won two-thirds of
those times. Interestingly, the incumbent party lost
three-quarters of the times when the Fed eased just
prior to the election. Apparently, the key determinant
of re-election is whether or not the economy is flour-
ishing rather than Fed policy shifts.
We also expect corporate profits to display continuing
good; if moderating, growth. We look for S&P 500
earnings per share to advance 8% to $42 during
1996 on an operating basis, and we anticipate a fur-
ther gain of 1Q% during 1997 to $46 per share. Due to
early indications that profit margins may have
peaked for this cycle, concerns are rising that they
will now reverse course. Perspective on this issue is
provided by a recent Goldman Sachs study which
argues that the recent rise in profits simply brings the
profit share of total national income back to the "nor-
mal" level of the 1960s. They believe that "...the
1960s represent the normal shares of income for three
reasons. First, an 8%-12% profit share was the norm
during seven separate postwar business cycles from
1937 to 1973. Second, the profit share losses during
the 1970s can be explained, in part, by the rise in
inflation and higher energy prices that depressed
returns on capital. ...Third, when the shares of income
shifted towards labor during the 1970s, disruptive
forces were unleashed. For example, U.S. cost com-
petitiveness declined, as unit labor costs in the United
States soared approximately 50% higher than costs in
Germany and Japan by the end of the 1970s. The
1980s' restructuring wave could be viewed as one
necessary consequence to help push the shares of
income back toward equilibrium."
Summary & Conclusion
e believe a fully invested position remains
appropriate. Bonds continue to offer signifi-!
cant real returns which ate unlikely to be
evaporated while the Fed remains vigilant. This vigi-
lance will likely manifest itself in an increase in short
rates over the near term, but as noted the markets
seem to have,discounted that outlook in large mea-
sure. The outlook for equities remains constructive in
view of the outlook for healthy further corporate
earnings progress, and still -reasonable levels of valua-
tion given our expectation for a contained correction
in bond yields.
It is interesting to place the recent equity bull market
in longer-term perspective, as was done recently in a
study prepared by Morgan Stanley. We extract above
a table showing nominal and real returns over three
major bull market cycles of this century, and a graph
showing that the real total return of the S&P 500 has
only recently exceeded its own trend extending from
1926. The figures show that in real terms the current
bull market is not that huge in comparison with past
experiences
George F. Wilkins, Jr., CFA, CMT
Senior Vice President & Chairman
Asset Allocation Committee
Volume XVI, No. 2, July 1, 1996
KEYSTONE
INVEST MENT5
Keystone Institutional Company, Inc.
200 Berkeley Street
Boston, Massachusetts 02116-5034
1-800-633-4200
i�PRINTED ON RECYCLED PAPER.
• S&P 500 gull )Market Comparisons
Aug Aug Jun Oct Jul Jan
1921-1929 1949-1972 1982-1996
-
'Nominal Index Return
385% - 684% 494% .
•
TLyC •
193'433'-73
Annual Nominal Index Return
21.8% - 9.3% • 14.1%
. Real Index Return
396% 345%• 252%
Annual Real Index Return
22.2% 6.6% 9.8%
Total Return
625% 1940% 864%
Annual Total Return .
28.1% 13.80 18.3% .
Total Real Return -
645% 1048% 503%.
- Annual Total Real Return
28.5% 11.1% 14.2% '
_ -
Source: Ibbotson, WEFA and Morgan Stanley
'
It is interesting to place the recent equity bull market
in longer-term perspective, as was done recently in a
study prepared by Morgan Stanley. We extract above
a table showing nominal and real returns over three
major bull market cycles of this century, and a graph
showing that the real total return of the S&P 500 has
only recently exceeded its own trend extending from
1926. The figures show that in real terms the current
bull market is not that huge in comparison with past
experiences
George F. Wilkins, Jr., CFA, CMT
Senior Vice President & Chairman
Asset Allocation Committee
Volume XVI, No. 2, July 1, 1996
KEYSTONE
INVEST MENT5
Keystone Institutional Company, Inc.
200 Berkeley Street
Boston, Massachusetts 02116-5034
1-800-633-4200
i�PRINTED ON RECYCLED PAPER.
Profit Share of Income Since 1937
Portent Flamm
20
20
15
10
5'
a.�.
,
•
TLyC •
193'433'-73
e
ID
15
•6
yy
Stan.4. 1.75% bn
a! LTS%
... ..... ...............
as 43 u 5a Mea
a
......... .... .... e
13 r5 53 M 0
' Source: Goldman Sachs
It is interesting to place the recent equity bull market
in longer-term perspective, as was done recently in a
study prepared by Morgan Stanley. We extract above
a table showing nominal and real returns over three
major bull market cycles of this century, and a graph
showing that the real total return of the S&P 500 has
only recently exceeded its own trend extending from
1926. The figures show that in real terms the current
bull market is not that huge in comparison with past
experiences
George F. Wilkins, Jr., CFA, CMT
Senior Vice President & Chairman
Asset Allocation Committee
Volume XVI, No. 2, July 1, 1996
KEYSTONE
INVEST MENT5
Keystone Institutional Company, Inc.
200 Berkeley Street
Boston, Massachusetts 02116-5034
1-800-633-4200
i�PRINTED ON RECYCLED PAPER.
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