HomeMy WebLinkAbout1992-07-16 Minutes•
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MINUTES OF A MEETING OF THE POLICE PENSION BOARD
A meeting of the Fayetteville Police Pension and Relief Fund Board
of Trustees was held on Thursday, July 16, 1992, at 2:52 p.m. in
Room 326 of the City Administration Building, 113 W. Mountain,
Fayetteville, Arkansas.
PRESENT: Eldon Roberts, Rick Hoyt, Jr., Hollis Spencer, City
Manager Scott Linebaugh, Administrative Services
Director Ben Mayes, and City Clerk Sherry Thomas.
ABSENT: Dr. James Mashburn and Jerry Friend
CALL TO ORDER
The meeting was called to order by City Manager Scott Linebaugh.
MINUTES
Roberts, seconded by Mayes, made a motion to approve the minutes
from the April 16, 1992 meeting. The motion was approved by a
unanimous vote.
NEW BUSINESS
INVESTMENTS
•
LONGER INVESTMENTS
Elaine Longer addressed the Board and the actuary report just
received by the Board.
She reported the June 30 combined account report reflected 51%
equities. Longer stated this was not so much a function of the
different policies, but rather a result of the prospect of a third
party presidential candidate (Perot), as well as the economic
uncertainty and had caused the market to go into a "tizzy". She
explained the last time a presidential vote went to the House of
Representatives was in 1824, and this threat causes uncertainty in
the currency and bond markets. Since June 30, the fed has cut the
discount rate again, and the stock market will benefit with short-
term rates down 3%. However, there is no indication of improving
economic growth that is sustainable with only a 2% to 21/2% growth
rate. Longer stated the earnings market is high priced at 20 to 22
times earnings.
The stock account reflects 30% in cash reserves with the purchase
of the two-year option in June at a 5.11% yield and has earned more
in cash reserves than money market rates of return. Longer
explained these two-year treasuries have realized a 1.38% profit.
Mayes addressed the actuary report stating in order to be
actuarially sound, the portion of liabilities covered by assets
needed to be 45%, and they are currently at 41%. Longer explained
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July 16, 1992
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there are realized gains in 1992 of $118,000.00; the actuary
assumptions on return are based on those realized gains, instead of
annualized gains.
Longer reported that the bond account, with no reinvestment, has
maintained the yield. Profits have been realized from the high
coupon bonds in the amount of 6%. Theperformance numbers for the
year reflect the equity fund down 5.4%, compared to the S&P return
through June 30 of a minus 1%. Longer explained they invest for
growth, and the growth stocks which gave them 42% in 1991 are the
same stocks on the decline this year. Portfolio managers entered
1992 by selling the drug and beverage stocks, the high growth, high
multiple stocks, and rotated toward more economically sensitive
companies, such as Alcoa, International Paper, or Weyerhaeuser.
Longer explained they only invest in a few cyclical stocks with no
deep cyclical stocks in the portfolio. Therefore, this rotation
hurt the growth sector and helped the Dow -Jones industrial average.
There continues to be a lot of churning and rotating of stocks, and
the bottom line is the overall market is not moving.
Since account inception in July 1990, the equity fund is up 27.5%,
and during the same period, the S&P 500 return was 22.07%. Year-
to-date bond performance is at 2.6%, compared to Solomon Brothers
Bond Treasury Index at 2.08%. Longer reported the second quarter
• of 1992 did better than the first which was spooked by the bond
market. The first quarter was down because of interest rates.
From account inception to date, the bond fund has earned 24.2%, and
an annualized return of 11.9%. Over time, many of their actively
managed bond accounts have done really well compared to stocks.
Longer reported from account inception, the combined bonds and
stocks portfolio at a 23.76% return, or an annualized return of
11.7%.
Longer reiterated the purchases and sales report reflected realized
gains year-to-date of $118,558.00. Due to "political posturing",
legislation coming before Congress on price controls on drugs and
limitation of tax deduction of subsidiaries for increasing prices
more than the rate of inflation, Longer reported drug stocks have
been hit really hard this year. She further stated the problem
with escalating health care costs is not with pharmaceuticals,
which only make up 5% of total health care cost. However,
consumers are most sensitive to pharmaceutical costs as they are
paying at the point of sale. To attempt to control pricing on
drugs, Longer stated that the U.S. government will be shooting
themselves in the foot. As world leaders in pharmaceuticals, this
would essentially choke off research and development.
Longer next addressed the income and expense report and estimated
income summary. She stated the newsletter discusses the economic
outlook which is anticipated to be sluggish growth. The short term
•
interest rates have dropped from 8% down to 3% in a year's time;
however, the economy is not showing the effects due to the U.S.'s
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July 16, 1992
tremendous debt overhang. The only method for stimulating the
economy on the government level is monetary policy, which is
inadequate. The treasury yield curve reflects that even though
short term interest rates have dropped considerably, a rich spread
(100 base points) exists between treasury bill rates and the two-
year treasury bond.
The market action review for the year shows Dow -Jones industrial as
the worst performing index in 1991, and the best in 1992; however,
they are still lagging behind the growth stocks for 1991. With the
Dow -Jones industrial hitting new highs and unaccompanied by a
rising advanced decline line, the new highs the Dow has been
hitting have been very thin rallies. Most of the underlying stocks
in the broader averages are simply "churning", correcting and
taking profits. The top Dow stocks, General Motors, General Tire,
and Disney are giving the new highs in 1992. Longer explained that
this action is considered healthy and building a future advance.
Giving Bristol -Meyers as an example, Longer reported they are down
28% year-to-date but are trading at a 41/2% dividend yield. In the
event that Clinton is way ahead in the polls nearing November,
Longer stated they would want to lighten up on long-term bonds.
Longer reported the historical profile reflects the market's return
over time, with a 10% average annual return over the last 62 years.
The best year was 54%, and the worst year a minus 43%; therefore,
1991 at 42%-43% qualifies as one of the best years ever. Longer
stated that following a year like that, the kind of base -building
being experienced is healthy. The growth stocks reflect a value
line of a relative price versus the overall price on the market,
back to May 1990, growth stocks relative to the price of the market
are at the cheapest point in trading during the past two years.
Selling in the growth area has therefore given them great buying
opportunities. Longer gave the example of selling Briers' Ice
Cream at 36 3/4% and was purchased back yesterday at 17h%, totally
representing profit taking..
Hoyt stated although the Board does not have the power to pick
their stocks, he would be making a motion to avoid Time -Warner
stock. He reported that the Little Rock Police Pension Board had
quite a lot of Time -Warner stock, which they have quickly unloaded.
City Clerk Sherry Thomas presented an "Option Agreement" from A.G.
Edwards. Longer explained this is a way to protect a downside
without selling the stock. They normally use options only for
hedging purposes; however, A.G. Edwards requires the extra
documentation for option trades.
Ben Mayes asked Longer to explain "puts and calls" as represented
in her report.
Longer stated with the stock account, when they buy a "put", you
are buying the right to put that stock to someone at a specified
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July 16, 1992
price. She gave the example of Boeing purchased very cheaply at
$46, followed with Delta Air canceling an option order with Boeing
which dropped the stock to around $40. Therefore, when purchasing
a Boeing 40 "put", you are buying the right to sell at $40. In
other words, the "put" purchased for half a dollar will be worth
$5. When buying a "put", the base is locked in, and if the stock
drops further, money is made on the "put". Longer gave the example
of Boeing "puts" - Boeing stock dipped down to 391/4% yesterday, so
the "puts" purchased for 604 were sold at 870. "Puts" can either
be held and exercised on expiration date, which allows you to
unload stock at 40%, even if down to 34%, or you can take the
profit on the "put", and hold the stock.
She further explained that "calls", for instance on higher priced
stocks, like American Home Products, IBM, and Bristol -Meyers, is a
way to increase income earned from stocks. Longer gave the example
of American Home Products dropping to 69'%, and the July 70% call
was sold at a $2 premium. If the stock continues to rise, they
risk having the stock "called", which would give them $70 for the
stock, plus a $2 premium. If the stock would hover around 69% to
70%, the $2 premium would be pocketed, and the stock is maintained
and sold in August to increase income. In a market that is "topsy-
turvy", this is a method to increase portfolio income on a stock
that doesn't pay much of a dividend. Longer stated that they use
options against existing positions - the difference between a
"hedge" and "speculation". People who wish to purchase Walmart
stock, and without the money to buy 100 shares, they buy "naked
options", which are purely speculation. If using options against
an existing position as a "hedge", the risk is reduced and income
increased.
DEAN WITTER
Mike Kirkland, from Dean Witter, addressed the Board reporting that
Gerry Sandel, Chairman of the Equity Stocks Selection Committee,•
will be taking over the management of the Acorn account. Mr.
Sandel, along with the Equity Stocks Selection Committee, approves
all stocks which go into the portfolio, and the investment
discipline will remain the same. Gerry Sandel's experience
includes serving as Director of Equity Research; Senior Analyst and
Portfolio Manager at Abraham & Sons Asset Management, as well as
experience managing foreign accounts in the Far East. Mike further
reported that Gerry Sandel would be available to speak to the Board
at any time.
Kirkland gave his report with figures from the close of the stock
market on July 15, with the cash account showing a balance of
$371,000, which includes the two C.D.'s at 8%. The Acorn Account
shows $447,000 or 37% of the total portfolio with bond exposure
reduced to 6%. He explained this was due to rates decreasing, and
gains are being taken on existing bonds. Acorn doesn't want to
take a chance on the rates decreasing any further, to be prudent.
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July 16, 1992
They currently have very little in bonds and more in cash than
normal. Stock selection is running at 55% pending market's
reaction to the political environment. Madison remains steady, has
backed off of its bond exposure, taking some gains. The breakdown
reflects 40% in cash, 37% in bonds, and 23% in stocks.
The portfolio accounts have done fairly well in the last 31 months,
with an approximate $109,000 increase. Kirkland reported at, the
end of March, the Acorn account was worth $1.15 million, and is
currently worth $1.212 million. The Madison account was worth
$1.237 million and is currently worth $1.282 million. Since its
account inception, 1.7 years ago, Acorn is running at 12%'per year
on an annualized basis. Since Madison's account inception 2.54
years ago and due to the recent strong bond market, the return is
running at 10.24% on an annualized basis.
In response to Roberts' question regarding the half a million shown
in Dean Witter's account, and the current interest being drawn,
Kirkland responded C.D.'s are drawing 8% to 8.05%, and, they are
locked in for another 4 years. The $371,000 has drawn an average
of 3.72% in the last thirty days. Kirkland further verified that
this cash account with Dean Witter is the fund from which pensions
are drawn. Acorn's cash balance of $447,000 is basically a
defensive posture that rates will increase. Dean Witter's current
breakdown is 55% in stocks, 35% in bonds, and 10% in cash.
Kirkland suggested the Board may wish to transfer a portion of the
$371,000 to Longer, Acorn, or to the straight fixed account with
Madison, depending upon the emergency needs.
Roberts asked for verification with respect to the two C.D.'s, with
maturity dates of 5/8/96 and 6/19/96, and stated their discussion
at their last meeting regarding another C.D. that was to become due
in June 1992.
Kirkland responded that the C.D. Roberts refers to came due in
June, and the cash of approximately $100,000 is located in the
money fund.
Director of Administrative Services Ben Mayes reported they
typically receive the insurance turn -back and majority of property
taxes in October and November. Therefore, they need to cover July,
August, and September and could probably justify transferring
$200,000 from the $371,000 cash balance. He further stated that
discussion was had at the April meeting that a decision would be
made at this time regarding the C.D. maturing.
In response to a question regarding transfer of funds, Kirkland
stated if the Board was pleased with Dean Witter and Elaine
Longer's investments, they may not want to go to the trouble of
finding another money manager. The process is simple in allowing
Madison or Acorn to invest the money and involves a letter of
authorization to move the funds.
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July 16, 1992
Roberts stated with the absence of two Board members, he isn't sure
they should take any action on transfer of funds at this meeting.
However, with this much cash, he is strongly in favor of a transfer
which would bring them more of a return than 3.72%.
Kirkland stated once the Board has decided on a figure for
transfer, either he or the Board should play the "what if" game and
determine where a division and transfer of funds would place them
in their percentage of equity.
Ben Mayes stated he recalls discussion at the April meeting that
there would be one more CD maturing between then and now, and it
was agreed that they would make a decision on transfer of funds at
this meeting. He further reminded the Board that with the money
coming in from property tax, insurance turn -back, and the City
note, all in October and November. There will be enough capital
that they will want to make an additional investment. He reported
last winter, the Board decided to invest an additional $200,000 to
$300,000 with Elaine Longer.
Kirkland stated he would be glad to look into an additional manager
for these funds. The Board responded they are currently satisfied
and don't wish to look for an additional portfolio manager.
• Hoyt requested that Kirkland report back to him with regard to
Time -Warner.
•
Following Kirkland's report, the Board discussed the portfolio
accounts they currently have and concurred that they are all doing
really well.
Roberts questioned whether it would be best if the money were
divided. between Elaine Longer and Dean Witter, or whether they
would be better off to choose one or the other. Mayes stated the
Board could handle the investment in any matter they wished.
Hoyt, seconded by Roberts, made a motion to give $100,000 to Longer
Investments and $100,000 to Dean Witter, to be split between the
Madison and Acorn Accounts as recommended by Kirkland.
City Manager Linebaugh stated they need to determine whether they
want the funds placed in a fixed-income or equity account. He
stated that if they placed the entire amount in equities, they
would stay under the 40% investment guideline for equities.
Hoyt amended his motion to transfer $100,000 to Longer Investments
and $100,000 to Acorn Investments. Roberts seconded. The motion
passed unanimously.
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July 16, 1992
TIME -WARNER
Hoyt, seconded by Roberts, made a motion to instruct any of their
money managers that they do not wish to own any Time -Warner stock.
This motion was due to the rap song, "Cop Killer", by Body Count,
sung by Ice Tea, produced and marketed by Time -Warner.
City Manager Linebaugh suggested they forward a copy of the
resolution to Time -Warner.
The motion passed unanimously by those present.
ACTUARY REPORT
In response to Hoyt's inquiry about how the state's actuary report
could have increased from 1 to 41 so quickly, City Manager
Linebaugh stated the investment managers have done terrific jobs,
and in addition, some of the gains were taken in the last couple of
years.
Director of Administrative Services Mayes stated they have a closed
plan, and they paid an actuary to made a determination of the rate
of return necessary to make the fund actuarially sound. The
actuary reported 6% per year would make the fund sound. In
actuality, they have out -performed that estimate, and the actuary
was very conservative in his estimates for contributions from the
City. Contributions by the City have been increased from 6% to 9%
to 12%, court fines and fees, property taxes, and state insurance
turn -back funds have all increased. Mayes reported at the end of
1991, their asset value was approximately $400,000 ahead of
projections. He explained they have discussed before that the
"valuation assets" used is the "cost" and not the "market" value of
investments. At the end of 1991, they had a "market value" of
$5,560,000.00; and this figure makes the 41/% jump even greater at
56%. Mayes further stated that to be considered actuarially sound,
there must be a 5% increment increase per year, and their 41% would
be 56% if the market value had been used. He further explained
that in order for them to be actuarially sound, 50% would be
required in 1994, 55% in 1996, and so on, every other year until
2003.
In response to Hoyt's question, City Manager Linebaugh stated he
would report to the City Board on the State Actuary Report because
much of this favorable report is due to the increased contribution
made by the City, and he believes anytime someone contributes to
success as this has, it is important to acknowledge.
Ben Mayes reported that at the time of their last actuary report,
he prepared a letter to the City Board, advising them of the report
and thanking them for their contributions.
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July 16, 1992
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Roberts reported from the March meeting in Little Rock about a
discussion regarding relaxing the criteria and standards for
actuary soundness, and the actuary was instructed to do a study on
-this suggestion and report back to Board. The actuary reported
that he would not currently recommend relaxation of criteria and
standards required for actuary soundness, and this opinion was
primarily due to the larger plans, for instance, of the Little Rock
Fire Department, currently experiencing financial difficulty.
BOARD REPRESENTATION
Roberts stated he had previously mentioned the possibility of
dividing the Fayetteville Police Pension and Relief Fund Board of
Trustees to allow for additional representation from retired
members. He recalled someone was going to research the various
statutes and codes which require a certain percentage of
representation depending on current membership. He reported
Fayetteville currently has 40 retired members, and 22 active
members. Roberts requested Staff look into this matter and report
to the Board at their next meeting.
Mayes suggested they request a report from LaGayle McCarty,
Assistant City Attorney, regarding Board representation, and that
the Board be advised by letter of her findings.
LOPFI
Hoyt stated the figure for the City's contribution for LOPFI was
drastically decreased from 16.5% in 1991 to 12% in 1993. He asked
whether this was based on city -by -city or statewide figures.
Ben Mayes responded he would have to look that up, but believes it
was based on certain logic. Mayes further reported receiving a
memo from Strib Boynton which requested certain changes including
a change in their assumptions, and he would look that up and report
at the next meeting. He explained there are assumptions made for
investment earnings, average pay increases, mortality tables, etc.,
and based on a change in some of the assumptions, they expected
that the contribution would decrease dramatically. He stated this
was merely a straight calculation the City is requested to
contribute, and this calculation is updated periodically. Mayes
reported the City contributed approximately 12% under the old plan,
and he expects it will remain the same.
ADJOURNMENT
The meeting adjourned at 3:59 p.m.
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LONGER INVESTMENTS, INC.
REGISTERED INVESTMENT ADVISOR
P. 0. Box 1269
18 E. CENTER STREET SUITE 201
FAYETTEVILLE. ARKANSAS 72702
TELEPHONE 501/443-5851
ELAINE M. LONGER. C.F.A.
July 13, 1992
Mr. Scott Linebaugh
City of Fayetteville
Police Pension Fund
113 W. Mountain
Fayetteville, AR 72701
PPS
•
("1-'1"-s.
Dear Mr. Linebaugh:
Please find enclosed an option agreement that has been requested
by A. G. Edwards & Sons. An option transaction has been executed
in the Police Pension Fund account, therefore this documentation
is required.
You may return the signed form to us in the enclosed envelope.
Please feel free to call if you have any questions.
Sincerely,
ci)Ledirc
Patty Kinder
Enclosure
•
DEAN WITTER REYNOLDS INC. MICR
First South Centre, Suite 200, 280 North College, Fayetteville, AR 72701
Telephone (501) 575-1400
•(800) 487-4880
FAX (501) 444-7435
FAYETTEVILLE:POLICE' PENSION FUND
T-16-92. •
CASH' ACCOUNT' 342-018786
$;371,048. CASH.
90,000- 8%;'CD 5-8-96:
90,000 8.052' CD 6-1996
$551,048
ACORN: BALANCED ACCOUNT 342=018922
CASH'— $447;371 372:
BONDS' — 78,375 62.
STOCKS — 686,547 57%:
$1:,.212,293 1002'
- MADISON FIRED • INCOME' ACCOUNT: 342-015178
CASH — $398,569, 31%•
BONDS' — 883,598 69%'
$1,282,167 100%
--OVERALL BALANCE':
CASH — $1,216,988' 402:
BONDS: — 1,141,973 372:
STOCKS. •— 686,547 232
$3,045,508 1002:
PPB
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City of Fayetteville, Arkansas
Policemen's Pension & Relief Fund
Asset Allocation - Cost Basis
June 30, 1992
c
9
I
(r TQC -%i?*-: qrN,
. k P/, ABEN\POLINV
Cash & Fixed Percent
Equivalent Income Equities Total Of
(10-25%) (15-75%) (20-40%) Total
DEAN WITTER
Dean Witter $551,149 $0 $0 ! $551,149 10%
Madison Investment 387,450 827,461 0 i; '1,214,911:; 23%
Acorn Asset Management 109,890 383,204 673,885 1,166,979. 22%
TOTAL DEAN WITTER
LONGER INVESTMENTS INC.
• CITY HELD INVESTMENTS (A)
TOTAL FUND
80%
1,048,489
18%
236,814
2%
21,762
52% 38%
1,210,665 673,885 2,933,039
33% 62%
755,457 1,080,610 2,072,881'.
15% 0%
350,000
$1,307,065 $2,31.6,122 $1',,7541495 $5,3771682;
.......................................
PERCENT OF TOTAL 24%
A. 8.375% U S T—Note, maturing 11-15-92 175,000
7.250% U S T—Note, maturing 07-15-93 175,000
350,000
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33%I 100%
39%#
7%`;
100%
FAYETTEVILLE
• CITY OF FAYETTEVILLE, ARKANSAS
SHERRY L. THOMAS, CITY CLERK
TO:
FROM:
DATE:
SUBJECT:
Members of the Police Pension
Sherry L. Thomas, City Clerk
July 1, 1992
Next meeting
Board
Attached are the minutes from the April 16, 1992 meeting.
Also, please mark your calendars with the next meeting scheduled
for July 16 at 2:30 p.m. in Room 326 of City Hall.
Attachment
List:
Eldon Roberts
Jerry Friend
Rick Hoyt
Hollis Spencer
Dr. James Mashburn
Scott Linebaugh
Ben Mayes
Mike Kirkland
Elaine Longer
113 WEST MOUNTAIN 72701 501 575-8313
•
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LONGER INVESTMENTS. INC.
REGISTERED INVESTMENT ADVISOR
P. 0. Box 1269
18 E. CENTER STREET SUITE 201
FAYETTEVILLE. ARKANSAS 72702
TELEPHONE 501/443-5851
ELAINE M. LONGER. C.F.A.
•
•
July 2, 1992
City of Fayetteville
Police Pension Fund
Attn: Scott Linebaugh
113 W. Mountain
Fayetteville, AR 72701
Dear Scott:
Please find enclosed the 1992 second quarter portfolio reports
for the City of Fayetteville Police Pension Fund. These reports
include a portfolio appraisal, a report of realized gains/losses,
an income and expense report, and an estimated income summary.
As instructed, the Northern Trust account will be billed for the
management fee.
Also enclosed is our newsletter for June 30, 1992 that reviews
the market action this year and our outlook for the second half.
Please take a moment to read it and feel free to call if you have
any questions or if we can be of further assistance.
Sincerely,
laine M. Lon•er,
President
EML/pak
Enclosure
I0-7- oigz r;l
Quantity
COMMON STOCK
Security
1,000 Abbott Labs
1,200 American Barrick
Resources
400 American Home
Products
500 Amoco
1,300 Baxter Intl.
500 Boeing Co.
600 Bristol Myers Squibb
1,000 Claire's Stores
1,000 Computer Associates
International
1,800 Emerson Electric
800 Fluor Corp.
1,200 Food Lion Inc. B
1,750 Genuine Parts
1,500 Glaxo Holding
500 Harnischfeger
Industries
750 Intl Business
Machines
1,000 Jacobs Engineering
1,100 John H. Harland
1,400 Luby's Cafeterias
937 Mattel Inc.
1,000 McDonald's Corp
500 Minnesota Mining 8
Mfg.
600 Mobil Corp.
800 Perkin Elmer
Corporation
500 Philip Morris
500 Reynolds Metals
1,000 SafeCard Services
800 Sensormatic Electric
700 Southwestern Bell
700 Texaco
1,300 Toys -R -Us
850 Tyson Foods
500 Walmart Stores
500 Warner Lambert
400 Waste Management
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Combined Account
June 30, 1992
Unit Total
Cost Cost
20.97 20,974.34
24.33 29,196.00
73.37 29,350.00
52.25
34.73
45.57
65.18
8.38
15.22
43.21
38.87
13.80
31.96
19.74
21.21
Market Market Pct. Unit
Price Value Assets Income
29.62 29,625.00
27.75 33,300.00
71.50 28,600.00
26,125.00 47.75
45,146.00 36.12
22,785.00 39.87
39,107.18 65.75
8,382 14 6.87
15,218.75 11.50
77,780.00
31,100.00
16,556.00
55,925.00
29,608.50
10,606.67
93.89 70,418.30
27.52
21.82
15.39
12.77
32.38
88.44
27,520.00
24,002.00
21,543.67
11,966.11
32,385.00
44,222.50
48.75
40.00
11.75
32.00
25.37
19.75
23,875.00
46,962.50
19,937.50
39,450.00
6,875.00
11,500.00
87,750.00
32,000.00
14,100.00
56,000.00
38,062.50
9,875.00
97.87 73,406.25
23.37
20.62
16.87
25.12
46.00
97.00
23,375.00
22,687 50
23,625.00
23,542.12
46,000.00
48,500.00
Annual Cur.
Income Yield
1.4 0.600 600.00 2.0
1.5 0.130 156.00 0.5
1.3 2.600 1,040.00 3.6
1.1
2.2
0.9
1.8
0.3
0.5
4.1
1.5
0.7
2.6
1.8
0.5
2.200
0.860
1.000
2.760
0.100
0.100
1.380
0.400
0.110
1.000
0.740
0.400
1,100.00
1,118.00
500.00
1,656.00
100.00
100.00
2,484.00
320.00
132.00
1,750.00
1,110.00
200.00
4.6
2.4
2.5
4.2
1.5
0.9
2.8
1.0
0.9
3.1
2.9
2.0
3.4 4.840 3,630.00 4.9
0.000
0.900
0.500
0.130
0.400
3.200
65.19 39,113.00 61.37 36,825.00 1.7 3.200
32.10 25,680 00 30.00 24,000.00 1.1 0.680
44.96
59.50
10.47
27.58
61.91
59.94
28.25
17.44
40.33
73.60
33.85
22,478.39
29,750.00
10,472.50
22,062.50
43,339.59
41,961.50
36,724.00
14,820.17
20,163.33
36,800.00
13,540.91
1,046,824.06
1
73.50
57.87
10.12
26.75
61.00
61.75
34.50
17.12
53.62
61.00
33.75
36,750.00
28,937.50
10,125.00
21,400.00
42,700.00
43,225.00
44,850.00
14,556.25
26,812.50
30,500.00
13,500.00
1.7
1.3
0.5
1.0
2.0
2.0
2.1
0.7
1.2
1.4
0.6
1,113,229.62 51.5
2.100
1.800
0.150
0.300
2.920
3.200
0.000
0.040
0.210
2.040
0.520
0.00
990.00
700.00
121.81
400.00
1,600.00
0.0
4.4
3.0
0.5
0.9
3.3
1,920.00 5.2
544.00 2.3
1,050.00
900.00
150.00
240.00
2,044.00
2,240.00
0.00
34.00
105.00
1,020.00
208.00
2.9
3.1
1.5
1.1
4.8
5.2
0.0
0.2
0.4
3.3
1.5
30,262.81 2.7
Longer investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Combined Account
June 30, 1992
Unit Total Market Market Pct. Unit Annual Cur.
Quantity Security Cost Cost Price Value Assets Income Income Yield
PUTS
CALLS
5 Boeing Co. July 40 0.60 300.00 1.12 562.50 0.0
Puts
15 GLaxo Holdings July 0.60 893.75 0.50 750.00 0.0
25 Puts
1,193.75 1,312.50 0.1
-4 American Home 2.00 -799.97 2.50 -1,000.00 0.0
Product July 70
Calls
-6 Bristol Myers 2.04 -1,224.95 1.00 -600.00 0.0
September 70 Calls
-5 Philip Morris July 4.64 -2,318.55 4.25 -2,125.00 -0.1
70 Calls
-7 Southwestern Bell 1.93 -1,349.95 1.56 -1,093.75 -0.1
August 60 Calls
-5 Wal Mart July 55 2.02 -1,012.46 0.62 -312.50 0.0
Calls
CORPORATE BONDS
100,000 Philip Morris
9.250% Due 12-01-97
Accrued Interest
-6,705.88 -5,131.25 -0.2
100.54 100,543.50 112.63 112,629.00 5.2 9.250 9,250.00 8.2
100,543.50
2
745.14 0.0
113,374.14 5.2 9,250.00 8.2
•
•
•
•
•
Quantity
Security
GOVERNMENT BONDS
115,000
24,000
300,000
100,000
100,000
100,000
U. S. Treasury Note
(912827026)
6.375% Due 08-31-93
U. S. Treasury Note
7.125% Due 10-15-93
U. S. Treasury Note
5.000% Due 06-30-94
Federal Home Loan
Mortgage Corp.
9.150% Due 08-08-00
U. S. Treasury Note
8.000% Due 05-15-01
U. S. Treasury
Strips
0.000% Due 08-15-12
Accrued Interest
CASH AND EQUIVALENTS
Dividends Accrued
Money Market
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Combined Account
June 30, 1992
Unit Total
Cost Cost
Market Market Pct. Unit Annual Cur.
Price Value Assets Income Income Yield
99.89 114,869.45 102.41 117,767.19 5.4 6.375 7,331.25 6.2
99.80 23,952.16 103.50 24,840.00 1.1 7.125 1,710.00 6.9
99.81 299,429.00 100.34 301,031.25 13.9 5.000 15,000.00 5.0
100.00 100,000.00 108.00 108,000.00 5.0 9.150 9,150.00 8.5
99.00 99,000.00 105.66 105,656.25 4.9 8.000 8,000.00 7.6
18.73 18,732.00 19.59 19,593.75 0.9 0.000 0.00 0.0
CERTIFICATE OF DEPOSIT (MONTHLY PYMT.)
100,000
First USA Bank
Wilmington, DE 8.3%
1-2-96
8.300% Due 01-02-96
TOTAL PORTFOLIO
7,409.17 0.3
655,982.61 684,297.60 31.6
41,191.25 6.1
1,919.60 1,919.60 0.1 0.000 0.00 0.0
145,798.03 145,798.03 6.7 3.480 5,073.77 3.5
147,717.63 147,717.63 6.8
5,073.77 3.4
100.00 100,000.00 108.31 108,310.00 5.0 8.300 8,300.00 7.7
100,000.00 108,310.00 5.0
2,045,555.67
3
8,300.00 7.7
2,163,110.25 100.0 94,077.83 4.4
•
•
Quantity
COMMON STOCK
Security
1,000 Abbott Labs
1,200 American Barrick
Resources
400 American Home
Products
500 Amoco
1,300 Baxter Intl.
500 Boeing Co.
600 Bristol Myers Squibb
1,000 Claire's Stores
1,000 Computer Associates
International
1,800 Emerson Electric
800 Fluor Corp.
1,200 Food Lion Inc. 8
1,750 Genuine Parts
1,500 Glaxo Holding
500 Harnischfeger
Industries
750 Intl Business
Machines
1,000 Jacobs Engineering
1,100 John H. Harland
1,400 Luby's Cafeterias
937 Mattel Inc.
1,000 McDonald's Corp
500 Minnesota Mining 8
Mfg.
600 Mobil Corp.
800 Perkin Elmer
Corporation
500 Philip Morris 44.96
500 Reynolds Metals 59.50
1,000 SafeCard Services 10.47
800 Sensormatic Electric 27.58
700 Southwestern Bell 61.91
700 Texaco 59.94
1,300 Toys -R -Us 28.25
850 Tyson Foods 17.44
500 Walmart Stores 40.33
500 Warner Lambert 73.60
400 Waste Management 33.85
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Stock Account
June 30, 1992
Unit Total
Cost Cost
20.97 20,974.34
24.33 29,196.00
73.37 29,350.00
52.25
34.73
45.57
65.18
8.38
15.22
43.21
38.87
13.80
31.96
19.74
21.21
26,125.00
45,146.00
22,785.00
39,107.18
8,382 14
15,218.75
77,780.00
31,100.00
16,556.00
55,925.00
29,608.50
10,606.67
93.89 70,418.30
27.52 27,520.00
21.82 24,002.00
15.39 21,543.67
12.77 11,966.11
32.38 32,385.00
88.44 44,222.50
Market Market Pct. Unit Annual Cur.
Price Value Assets Income Income Yield
29.62 29,625.00 1.9 0.600 600.00 2.0
27.75 33,300.00 2.2 0.130 156.00 0.5
71.50 28,600.00 1.9 2.600 1,040.00 3.6
47.75
36.12
39.87
65.75
6.87
11.50
48.75
40.00
11.75
32.00
25.37
19.75
23,875.00
46,962.50
19,937.50
39,450.00
6,875.00
11,500.00
87,750.00
32,000.00
14,100.00
56,000.00
38,062.50
9,875.00
1.5
3.0
1.3
2.6
0.4
0.7
5.7
2.1
0.9
3.6
2.5
0.6
2.200
0.860
1.000
2.760
0.100
0.100
1.380
0.400
0.110
1.000
0.740
0.400
1,100.00
1,118.00
500.00
1,656.00
100.00
100.00
2,484.00
320.00
132.00
1,750.00
1,110.00
200.00
4.6
2.4
2.5
4.2
1.5
0.9
2.8
1.0
0.9
3.1
2.9
2.0
97.87 73,406.25 4.8 4.840 3,630.00 4.9
23.37 23,375.00
20.62 22,687.50
16.87 23,625.00
25.12 23,542.12
46.00 46,000.00
97.00 48,500.00
1.5
1.5
1.5
1.5
3.0
3.1
0.000
0.900
0.500
0.130
0.400
3.200
0.00
990.00
700.00
121.81
400.00
1,600.00
0.0
4.4
3.0
0.5
0.9
3.3
65.19 39,113.00 61.37 36,825.00 2.4 3.200 1,920.00 5.2
32.10 25,680.00 30.00 24,000.00 1.6 0.680 544.00 2.3
22,478.39
29,750.00
10,472.50
22,062.50
43,339.59
41,961.50
36,724.00
14,820.17
20,163.33
36,800.00
13,540.91
1,046,824.06
1
73.50
57.87
10.12
26.75
61.00
61.75
34.50
17.12
53.62
61.00
33.75
36,750.00
28,937.50
10,125.00
21,400.00
42,700.00
43,225.00
44,850.00
14,556.25
26,812.50
30,500.00
13,500.00
2.4
1.9
0.7
1.4
2.8
2.8
2.9
0.9
1.7
2.0
0.9
2.100
1.800
0.150
0.300
2.920
3.200
0.000
0.040
0.210
2.040
0.520
1,050.00
900.00
150.00
240.00
2,044.00
2,240.00
0.00
34.00
105.00
1,020.00
208.00
2.9
3.1
1.5
1.1
4.8
5.2
0.0
0.2
0.4
3.3
1.5
1,113,229.62 72.1 30,262.81 2.7
•
•
•
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Stock Account
June 30, 1992
Unit Total Market Market Pct. Unit Annual Cur.
Quantity Security Cost Cost Price Value Assets Income Income YieLd
PUTS
CALLS
5 Boeing Co. July 40 0.60 300.00 1.12 562.50 0.0
Puts
15 Glaxo Holdings July 0.60 893.75 0.50 750.00 0.0
25 Puts
1,193.75 1,312.50 0.1
-4 American Home 2.00 -799.97 2.50 -1,000.00 -0.1
PFoduct July 70
Calls
-6 Bristol Myers 2.04 -1,224.95 1.00 -600.00 0.0
September 70 Calls
-5 Philip Morris July 4.64 -2,318.55 4.25 -2,125.00 -0.1
70 Calls
-7 Southwestern Bell 1.93 -1,349.95 1.56 -1,093.75 -0.1
August 60 Calls
-5 Nal Mart July 55 2.02 -1,012.46 0.62 -312.50 0.0
Calls
-6,705.88 -5,131.25 -0.3
GOVERNMENT BONDS
300,000 U. 5. Treasury Note 99.81 299,429.00 100.34 301,031.25 19.5 5.000 15,000.00 5.0
5.000% Due 06-30-94
Accrued Interest 0.00 0.0
CASH AND EQUIVALENTS
Dividends Accrued
Maley Market
299,429.00
301,031.25 19.5 15,000.00 5.0
1,919.60 1,919.60 0.1 0.000 0.00 0.0
132,175.21 132,175.21 8.6 3.480 4,599.70 3.5
134,094.81
TOTAL PORTFOLIO 1,474,835.74
2
134,094.81 8.7 4,599.70 3.4
1,544,536.93 100.0 49,862.51 3.2
Date Quantity
Longer Investments, Incorporated
REALIZED CAPITAL GAINS AND LOSSES
City of Fayetteville Police Pension Fund
Stock Account
From 01-01-92 Through 06-30-92
Security
Cost
Basis
Proceeds Gain Or Loss
01-08-92
01-14-92
01-20-92
01-29-92
01-29-92
02-07-92
02-12-92
02-24-92
02-25-92
02-25-92
03-03-92
03-05-92
03-05-92
03-05-92
03-11-92
03-11-92
03-30-92
04-01-92
04-01-92
04-01-92
04-01-92
04-01-92
04-01-92
04-01-92
04-02-92
04-02-92
04-02-92
04-07-92
04-07-92
04-07-92
04-07-92
04-07-92
04-08-92
04-09-92
05-04-92
05-05-92
05- 8-92
05- 8-92
05- 8-92
05-18-92
100,000
800
500
500
800
1,000
10
1,700
1,000
900
1,000
400
500
500
500
400
450
500
1,000
400
500
750
600
600
500
800
600
1,500
500
1,000
500
1,100
500
5
-8
400
630
500
500
200,000
U. 5. Treasury Note
8.000% Due 05-15-01
Dreyer's Grand Ice Cream
Tyson Foods
Armstrong World Ind
Cintas
TRC Cos
OEX February 390 Puts
Input/Output, Inc.
Community Psychiatric
Center
Dean Foods
Pacificorp
Briggs & Stratton
Crane Co.
Diebold, Inc.
Durr Fillauer
Kaydon, Corp.
Hershey Foods
Abbott Labs
America Service Group
Briggs & Stratton
Bob Evans Farms
Claire's Stores
Centex Telemanagement
Diebold, Inc.
Bob Evans Farms
Centex Telemanagement
Compaq
Arbor Drug
Comptronix Corp.
Crane Co.
E.I. du Pont Nemours &
Co.
Hasbro, Inc.
Walmart Stores
Schlumberger May 55 Puts
Briggs & Stratton May 50
Calls
Mobil Corp
Archer Daniels Midland
Eli Lilly & Co.
Schlumberger, LTD
U. S. Treasury Strips
1
98,265.63 107,875.00
20,700.00
8,717.75
16,062.50
35,361.32
11,085.00
8,373.11
20,819.00
11,955.00
27,075.00
19,570.00
13,678.87
13,118 33
21,478.32
11,172.00
19,235.00
18,823.50
20,974.34
12,000.00
13,678.87
9,062.50
6,286.61
10,932.00
25,773.99
9,062.50
14,576.00
18,810.00
29,375.00
6,852.50
26,236.67
23,477.50
22,548.95
20 163 33
1,035.00
1,148.00
26,075.33
13,973.79
43,112.50
28,972.50
37,596.12
28,544.00
9,147.50
14,499.51
46,300.00
14,999.49
5,719.01
28,475.00
14,499.51
23,124.22
21,249.28
20,372.84
13,437.05
29,217.77
10,687 50
20,550.00
18,188.39
30,311.48
12,250.00
20,849.30
12,875.00
5,999.79
8,958.00
34,198.85
13,062.50
12,200.00
15,599.47
31,479.00
6,312.50
25,179.15
23,311.72
27,705.32
25,249.15
464.98
2,803 30
25,149.16
14,961.99
33,061.39
31,543.58
39,100.00
9,609.37
7,844.00
429.75
-1,562.99
10,938.68
3,914.49
-2,654.10
7,656.00
2,544.51
-3,950.78
1,679.28
6,693.96
318.72
7,739.45
-484.50
1,315.00
-635.11
9,337 14
250.00
7,170.42
3,812.50
-286.82
-1,974.00
8,424.86
4,000.00
-2,376.00
-3,210.53
2,104.00
-540.00
-1,057.52
-165.78
5,156.37
5,085.82
-570.02
1,655.30
-926.17
988.20
-10,051.11
2,571.08
1,503.88
Longer Investments, Incorporated
REALIZED CAPITAL GAINS AND LOSSES
City of Fayetteville Police Pension Fund
Stock Account
From 01-01-92 Through 06-30-92
Date Quantity Security
Cost
Basis Proceeds Gain Or Loss
05-21-92
05-21-92
05-26-92
06-02-92
06-02-92
06-02-92
06-04-92
06-05-92
06-05-92
06-05-92
06-05-92
06-05-92
06-08-92
06-10-92
06-10-92
06- 0-92
06- 2-92
06- 6-92
06- 7-92
06-H7-92
06-22-92
06-22-92
06-22-92
06-22-92
06-22-92
TOTAL GAINS
TOTAL LOSSES
•
1
1
1
1
1
0.000% Due 08-15-12
300 Briggs & Stratton 10,259.16 14,199.52 3,940.36
650 Tyson Foods 11,333.07 11,943.75 610.67
500 Tyson Foods 8,717.75 9,402.50 684.75
400 Bristol Myers Squibb 26,071.45 26,649.11 577.66
500 Durr Fillauer 11,172.00 10,431.50 -740.50
350 Grainger, W. W. 19,602.63 17,449.41 -2,153.22
500 Monsanto 33,925.00 31,186.45 -2,738.55
500 Briggs & Stratton 17,098.59 23,561.71 6,463.12
600 Computer Associates 9,131.25 8,024.73 -1,106.52
International
,000 Comptronix Corp. 13,705.00 13,574.00 -131.00
700 Philip Morris 31,469.74 51,798.27 20,328.53
500 Pall Corp. 13,500.00 12,437.08 -1,062.92
1000 Hasbro, Inc. 20,499.05 28,294.05 7,795.00
,000 Glaxo Holding 19,739.00 26,774.10 7,035.10
500 Reader's Digest 14,435.00 23,089.22 8,654.22
500 Warner Lambert 36,800.00 29,561.51 -7,238.49
7 OEX June 395 Puts 5,591.60 5,259.62 -331.98
0 Mattel Inc. 6.39 10.25 3.86
500 Grainger, W. W. 28,003.75 23,749.20 -4,254.55
8000 Ingersoll-Rand 28,160.00 27,929.06 -230.94
500 Harnischfeger Industries 10,606.67 9,562.17 -1,044.50
600 Luby's Cafeterias 9,233.00 9,224.69 -8.31
,000 SafeCard Services 10,472.50 9,624.67 -847.83
700 VeriFone, Inc. 14,350.00 14,217.91 -132.09
10 OEX July 385 Puts 6,597.52 7,506.10 908.58
169,744.63
-52 466 82
1,207,694.48 1,324,972.28 117,277.80
•
•
•
Date
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Stock Account
From 01-01-92 Through 06-30-92
Security Amount
COMMON STOCK
O 1-02-92
01-02-92
O 1-02-92
01-02-92
01-02-92
01-03-92
01-03-92
01-03-92
01-07-92
01-09-92
O 1-10-92
O 1-15-92
01-27-92
02-03-92
02-03-92
02-03-92
02-04-92
02-05-92
02-10-92
02-10-92
02-14-92
02-18-92
O 2-18-92
02-19-92
02-19-92
02-20-92
02-24-92
02-25-92
02-25-92
02-25-92
02-28-92
02-28-92
03-02-92
O 3-02-92
O 3-02-92
03-04-92
03-05-92
03-06-92
03-09-92
03-09-92
03-12-92
03-12-92
03-13-92
Arbor Drug
Baxter Int'l.
Briggs & Stratton
Luby's Cafeterias
Waste Management
Dean Foods
Mattel Inc.
Walmart Stores
Dreyer's Grand Ice Cream
Harnischfeger Industries
Philip Morris
American Barrick Resources
SafeCard Services
Bristol Myers Squibb
Reader's Digest
Warner Lambert
Mobil Corp.
Amoco
E.I. du Pont Nemours & Co.
Eli Lilly & Co.
Emerson Electric
Abbott Labs
Pacificorp
Claire's Stores
Hasbro, Inc.
Hershey Foods
Briggs & Stratton
Durr Fillauer
McDonald's Corp
Schlumberger, LTD
Crane Co.
Perkin Elmer Corporation
Archer Daniels Midland
American Home Products
Bob Evans Farms
Diebold, Inc.
Baxter Int'1.
Philip Morris
Luby's Cafeterias
Mattel Inc.
Arbor Drug
Waste Management
Dean Foods
1
52.50
185.00
640.00
125.00
44.00
126.00
31.25
21.25
40.00
100.00
630.00
25.95
150.00
552.00
100.00
510.00
800.00
275.00
210.00
275.00
621.00
250.00
375.00
43.75
84.00
110.25
640.00
70.00
92.50
150.00
281.25
136.00
15.75
260.00
70.00
462.00
279.50
630.00
250.00
31.25
52.50
44.00
126.00
•
•
•
•
Date
03-16-92
03-17-92
03-19-92
03-30-92
03-30-92
03-30-92
04-09-92
04-10-92
04-21-,92
04-27-92
04-28792
04-30=92
05-04-92
05-04=92
05-05=92
05-06-92
05-07-92
05-07-92
05-07=92
05-11-�92
05-11-92
05-11-92
05-13-92
05-181192
05-18-92
II
05-18192
05-26-92
05-26-92
05-27�92
06-01-92
06-02192
06-04-92
06-08-921
06-08-92
06-09-92
06-09-92
06-11-92
06-15-92
06-15-92
06-16-92
06-17=92
06-19-92
06-22'92
06-2692
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Stock Account
From 01-01-92 Through 06-30-92
Security Amount
Tyson Foods
Walmart Stores
Harnischfeger Industries
Bristol Myers Squibb
Kaydon, Corp.
Sensormatic Electric
Abbott Labs
Reader's Digest
Pall Corp.
Hasbro, Inc.
Texaco
Claire's Stores
Archer Daniels Midland
Mobil Corp.
Grainger, W. W.
Monsanto
American Home Products
Amoco
Warner Lambert
Boeing Co.
Glaxo Holding
Eli Lilly & Co.
Ingersoll-Rand
Durr Fillauer
Emerson Electric
Minnesota Mining & Mfg.
Briggs & Stratton
Perkin Elmer Corporation
McDonald's Corp
Reynolds Metals
Genuine Parts
Baxter Int'1.
Luby's Cafeterias
Mattel Inc.
Philip Morris
Walmart Stores
Waste Management
American Barrick Resources
Tyson Foods
Computer Associates
International
Fluor Corp.
Harnischfeger Industries
Sensormatic Electric
Bristol Myers Squibb
2
20.00
52.50
100.00
690.00
60.00
60.00
150.00
125.00
45.00
50.00
560.00
25.00
15.75
800.00
140.25
280.00
260.00
275.00
510.00
125.00
567.06
275.00
175.00
37.50
621.00
400.00
200.00
136.00
100.00
225.00
187.50
279.50
250.00
46.85
262.50
26.25
52.00
78.00
13.50
50.00
80.00
100.00
60.00
414.00
18,947.86
Date
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Stock Account
From 01-01-92 Through 06-30-92
Security Amount
GOVERNMENT BONDS .
01-08-92 U. S. Treasury Note
8.000% Due 05-15-01
CASH AND
EQUIVALENTS
02-03792
O 3-02-92
04-01-92
05-01-92
06-01-92
Money Market
Money Market
Money Market
Money Market
Money Market
EXPENSE ACCOUNTS
01-15-92
02-0392
O 3-02-92
04-01-92
05-01-92
05-11-92
O 6-01=92
06-15-92
AFTER
Foreign Tax on
Automated Cash
Automated Cash
Automated Cash
Automated Cash
Foreign Tax on
Automated Cash
Foreign Tax on
Dividends
Mgmt.
Mgmt.
Mgmt.
Mgmt.
Dividends
Mgmt.
Dividends
FEE PERFORMANCE EXPENSE ACCOUNTS
O 1-10-92
O 1-30-92
03-31-92
04-08-92
06-30-92
Management Fee
Northern Trust Fee
Northern Trust. Fee
Management Fee
Northern Trust Fee
1,230.77
1,230.77
241.32
110.17
128.38
180.01
63.54
723.42
3.89
8.72
6.77
8.24
11.87
85.06
4.20
11.70
140.45
4,423.84
2,050.00
584.18
4,089.25
576.18
11,723.45
NET INCOME 9,038.15
3
Quantity
Security
CORPORATE BONDS
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Bond Account
June 30, 1992
Unit
Cost
Total Market
Cost Price
Market Pct. Unit Annual Cur.
Value Assets Income Income Yield
100,000 Philip Morris 100.54 100,543.50 112.63 112,629.00 18.2 9.250 9,250.00 8.2
9.250X Due 12-01-97
Accrued Interest 745.14 0.1
GOVERNMENT BONDS
115,000
24,000
100,000
100,000
100,000
100,543.50
113,374.14 18.3
9,250.00 8.2
U. S. Treasury Note 99.89 114,869 45 102.41 117,767.19 19.0 6.375 7,331.25 6.2
(912827C26)
6.375% Due 08-31-93
U. 5. Treasury Note 99.80 23,952.16 103.50 24,840.00 4.0 7.125 1,710.00 6.9
7.125% Due 10-15-93
Federal Home Loan 100.00 100,000.00 108.00 108,000.00 17.5 9.150 9,150.00 8.5
Mortgage Corp.
9.150% Due 08-08-00
U. 5. Treasury Note 99.00 99,000.00 105.66 105,656.25 17.1 8.000 8,000.00 7.6
8.000% Due 05-15-01
U. 5. Treasury 18.73 18,732.00 19.59 19,593.75 3.2 0.000 0.00 0.0
Strips
0.000% Due 08-15-12
Accrued Interest 7,409.17 1.2
CASH AND EQUIVALENTS
CERTIFICATE
Money Market
OF DEPOSIT (MONTHLY PYMT.)
100,000
First USA Bank
Wilmington, DE 8.3%
1-2-96
8.300% Due 01-02-96
356,553.61
13,622 82
13,622.82
383,266.35 62.0
26,191.25 7.0
13,622.82 2.2 3.480 474.07 3.5
13,622.82 2.2
474.07 3.5
100.00 100,000.00 108.31 108,310.00 17.5 8.300 8,300.00 7.7
100,000.00
TOTAL PORTFOLIO 570,719.93
108,310.00 17.5
8,300.00 7.7
618,573.31 100.0 44,215.32 7.2
•
Longer Investments, Incorporated
REALIZED CAPITAL GAINS AND LOSSES
City of Fayetteville Police Pension Fund
Bond Account
From 01-01-92 Through 06-30-92
Date Quantity Security
Cost
Basis Proceeds Gain Or Loss
TOTAL GAINS
TOTAL LOSSES
0.00
0.00
0.00
0.00 0.00
•
Date
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Bond Account
From 01-01-92 Through 06-30-92
Security Amount
CORPORATE BONDS
06-01-92 Philip Morris
9.250% Due 12-01-97
GOVERNMENT BONDS
02-08-92
02-28-92
04-15-92
05-15-92
Federal Home Loan Mortgage Corp.
9.150% Due 08-08-00
U . S. Treasury Note (912827C26)
6.375% Due 08-31-93
U . S. Treasury Note
7.125% Due 10-15-93
U . S. Treasury Note
8.000% Due 05-15-01
CASH AND EQUIVALENTS
02-03-92
03-02-92
04-01-92
05-01-92
06-01-92
Money Market
Money Market
Money Market
Money Market
Money Market
CERTIFICATE OF DEPOSIT (MONTHLY PYMT.)
02-05-92
03-03-92
04-02
92
06-05-92
First USA
8.3% 1-2-9
8.300% Due
First USA
8.3% 1-2-9
8.300% Due
First USA
8.3% 1-2-9
8.300% Due
First USA
8.3% 1-2-9
8.300% Due
Bank Wilmington, DE
6
01-02-96
Bank Wilmington, DE
6
01-02-96
Bank Wilmington, DE
6
O 1-02-96
Bank Wilmington, DE
6
O 1-02-96
4,625.00
4,625.00
4,575.00
3,605.20
855.00
4,000.00
13,035.20
167.69
24.18
12.70
195.01
91.44
491.02
714.72
668.61
714.72
714.72
2,812.77
•
•
Date
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Bond Account
From 01-01-92 Through 06-30-92
Security Amount
EXPENSE ACCOUNTS
02-03-92
03-02-92
04-01-92
05-01-92
06-01-92
AFTER
Automated
Automated
Automated
Automated
Automated
Cash
Cash
Cash
Cash
Cash
Mgmt.
Mgmt.
Mgmt.
Mgmt.
Mgmt.
FEE PERFORMANCE EXPENSE ACCOUNTS
01-10-92
03-31-92
04-08-92
06-30-92
NET INCOME
Management Fee
Northern Trust
Management Fee
Northern Trust
Fee
Fee
2
6.06
1.49
0.82
12.85
6.04
27.26
1,487.22
216.07
1,616.52
224.07
3,543.88
17,392.85
•
•
•
•
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ESTIMATED It•;O E SUMMARY
ff*t**ff**f*******#******f*i****f****f*******f Rf**#****fff**f*#ifffi*ffffff*ffifff**fffffff**fff
JANUARY FEBRUARY MARCH APRIL A
1942 1492 1/92 1942 14;
f****************4141414ffyffffff*xf?*i***aff4*. *#f*if***fffffff*ii*****E**
EQUITIES
ABBOTT 1000 50.60
A::ER BARRICK 1260 SO.13
AMER HDtF PROD 400 $2.63
A;t000 500 $2,20
1AfiER 1,':IL 1300 10.86 42;4.50 $279.53
DfFitlr 564 i1.:0
B115:: ;MFRS Ali. E2.7/ $401.00
CLAIRE y 1000 t0.1u
LC{F..IEt AS,UC 1110) $0.10 $25.01 125.00
w:E(sD:. E,EC 1$0.' $1.38
q1106 cuff• R00 50.40 $30.00 0u.0
?OOu LI0;: 8 120u $$.11 433.00
fakin::E FAR18 1750 $1.00 $437.50 $437.50
JAR! H:i:fi. lSu4 51.11 '
HAR0161GE4iEk 500 $$.40 $50.00 550.00
Ibri 750 $4.b4 $907,50
JOHN HANLA;e$ 1100 $0.40 124-.5,
LUBY'S 1400 40.50 $175.A
BIATIEa INC 937 $0.13 $30.45 t30.f.5
UCDOBALDS 100u $0.4 $100.00
tlltl. MN; 6 NES 500 $3.20 • $400.44
NCaIL 600 $3.20 $480.0
FERNIC ELVER B00 $0.68 $136.00 $1:6.40
PHILIP MORRIS NO '$2.10 $262.50 062,50
kEY;.1L7:5 METAL 5D0 $1.60 $225.00 $225.00
SAF£Cn RD SVCS 1060 $1.15 $37.50 $37.50
SEktDRMATIC ELE 600 $0.30 $60.00 S6U.1"I
ST.•ESTER:i BELL 700 $2.922 1 $511,00 iitLcu
TEb.LC 700 $3.20 I $560.'1
i7SCt( FOODS B50 $0.04
UALhART 500 $0.21 1 $26.25 $26.25
UARLER LiA8ERT 503 $2.04 t $/55.06
,,ASIF art 400 $0.52 15..00
:SORLTAL 11,617./0 41.140.0A Et," �.,` 1 tI.61 .�. �C�.41
$150.00
339.00
$267.05
X275.+`0
$,50.05
$41:.1
$555.00
•
JU 4i
:50 )2-1-41 I5. CGS) 4.451
FIRS' USN f.D 100000 6,30$. $691.67
Li: ii2/96
FALX:. 8/8,00 100006 9,151 1
IST:: I;@ -:S'.-9;, II5'i0 6.502
:STI: 10-15-43 24000 7.1?::
LSTH 6-30-44 300000 5.00Y
"IN 0 -1:i -U1 100003 8.001 1
SuLIOTAL
.6, th41.6/ 3r•4t.a $nuL a.
$4,:175.00
$3.,660. 63
t691.67 $3,932.79 $691.67 1 51;546.67 $01.67
TOTAL $2,303.37 $10,077.74 15,222.1' $3,158.87 $7,07
•
•
•
•
- • is t‘,,tTlcVILE MALE t'EUSIUN FU1t0
***i** tt4*4*44***********4****44*********4i.****4*****f*4f**,*c*f*****04*e***t*****;{i-*{{g*t*i*1172*Y***
JL+E- 30;2 s08Uo7 SEV'EMEk 0CTL8Ei Av:'ibE'c OECE"6E9 TOTAL
lR9c 1992 192 1992 1942 1992
MAA**1ffi**********f**1-*1**1**t******t***t*****+***t************••*****:4******4{*#**
111'6.0..$:52.'0 $60).0!
1739.00 , 734.00 £156.00
£::60.00 1 Stni .CO 171,040.00
$7.75.'0 75.,•U 5:,11u.CL
t;14.',0 1 3;:!9.55 41,11.00
$125.60 1 $125.00 1 $500.00
5V.14.0) 541:.1:6 11,656.0:
$27 Cu : "['.',. , 5170.17.'
ft.,u $25.,0 $100,:0
43
241)1.0a { I67�.J', 1 ''1:,444.0.,
! ''0 43u.J1 ::..."
$33.00 533.01." $137.00
5437,50 4437.55 1.7-•4.0)
1555.00 tl, O.C.I
550.,,) $2L0.0J
49" $90!-50 1 $407.50 $3,6371.00
i $247.5- :
42:7.5' $940. J0
3175.0$.76.61: 1 3740.30
432_,45 $30,45 1 4121.31
il[_.;u 3100.0: 1 ttCO.04 I $409.00
STC;.. 2-45,0:" 1 $402:0 1 311600.0:
-h::. $4135.00 I $480.04 $1,420.00
4135.00 1 4136.00 4544.00
3262.5': $262.50
41,050.00
, 52225.00 1 42'5.00 4900.50
3177.50 1 337.50 1 $156.40
160. i,7 86• W I $240.7,0
551..00 $511.00 1 $2.043.00
t. , 1564.:7'. , $56.'0 , $2,240.0)
1'.' 1 S8.7..J : $8.50 1 333.00
$:c6. 5 5:6.'[:2 i 105. Jl!
3; 55.7"0 : 4'215.00 . V. , 0 , 49
152.1'0 ,552.0 , 42,4.00
! 3 J11"4./.S..I4F...54 3'i,a30.i,t 1,,6P:.'[C $1,700.5/ t;,S:S'''.50 3: 'i, 262. d1
..o . 1 $41645.1:: £9,250.0
i ?'.kr V.4'.61 bAl.:J 1 4691.67 S641.b1 364I.57 .3,300..'0
$4,575.04 1 '1,150.0'
$.3,65`..,,3 I 37,331,2,
5851.08' $1,710.00
:7.51,'. $7,50:.01 ' $:5,907,00
$ , , 3-,000.01 $81000.00
11!.7.7 , $671.67 :8.932.29 $691.67 , $1,5-,6.67 $-2164:.67 112;8'16.67 $:3,741.25
521301.07 $.0,C71.79 $5,222.17 1 $3,158.41 $6,392.17 $1:,3;7.17 $,4,604.06
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
LONGER NEW�l I xn1!,/IARKET Comments and Outlooks from Longer Investments, Inc.
INCORPORATED June 30, 1992
The Economy
The economic data released so far this year have been consistent with the forecast of a slow but sustainable expansion resulting in real GNP
growth sof approximately 2.5% in 1992. Profits improved 11.3% in the first quarter and we estimate profits for the year will show a 15-20%
improvement over 1991.
Corporate and consumer confidence have been slow to improve and as a consequence, job growth and consumer spending have been less robust
than in prior recoveries. Housing starts and permits have shown a pattern of erratic improvement this year with monthly fluctuations related
to weather. Auto sales have picked up and domestic auto manufacturers have increased market share in the United States.
The decline in interest rates in the last six to nine months has opened a window of
opportunity for corporations and consumers to reduce interest payments through
renegotiation of debt. Corporations have issued billions of dollars of debt in the first
and second quarter of the year to lock in lower interest rates and corporate treasurers
have taken advantage ofa bouyant stock market environment to issue equity in order
to retire debt. Households have actively refinanced mortgage debt at rates between
8% and 8.75% on thirty-year fixed mortgages and consumers have been reducing
installment debt. (See Graph A.)
Although the private sector balance sheet has been improving, the public sector debt
continues to grow. This year's Federal deficit is estimated to be $350-370 billion and
Gross Treasury Debt will exceed $4 trillion this quarter. One of the results of such
indebtedness is fewer policy options for goverment officials to use to stimulate the
economy. It is interesting to look back to President Bush's State ofthe Union Address
earlier this year with its incentives for first-time homebuyers, accelerated deprecia-
ion for corporate investment, liberal new rules for I.R.A. accounts, additional money for Head Start, initiatives for health care, tax exemption
of$500,perchild, capital gains tax cut, etc. The Democrats countered with a more stimulative spending program, tax cuts for the middle class,
higher tax rates on the wealthy, a more aggressive national health care proposal, deeper defense cuts, etc. The result - gridlock! The bottom
line is that policymakers have few options available to help the economy with fiscal stimulus because of the overhang of debt from the 1980s
and theiearly 1990s.
Another direct result of our government's indebtedness is higher inflation-adjusted long-term interest rates. Although the Federal Reserve
bas lowered short-term rates dramatically since mid-1990 and inflationary pressures are benign, long-term rates have remained stubbornly
high. High real interest rates act as a drag on commercial and residential real estate markets and corporate capital investment, which will
continue to restrain economic growth and deliver a subdued economic recovery.
Fedeal Reserve Policy
The Federal Reserve can be expected to err on the side of ease through the
election. Itis hard to imagine that Alan Greenspan would want to preside over
a tripledip recession before election day, after being reappointed as Fed
Chairman by George Bush. If the economy begins to falter again, Alan
Greenspan can be expected to nudge short-term rates lower. However, long-
term interest rates, which are influenced by market forces such as currency
valuation and inflation expectations, may not drop below 7.75%. Low short-
term rates and high long-term rates have produced a very steep yield curve. (See
Graph H.) Investors can dramatically increase yields by lengthening maturities
to two to four years.
9 OOfs
e.60fe
7.5O%
7.00X
6.00X
6.608
5.O0%
..e0X
..00a
3 OOft a
Treasury Security Yield Curve
e
10
CONSUMER
8 - __ _._.-_INSTALLMENT
DEBT, year-
s to -year corn-
_
parson
2 I --'—'----._.---'---
e i
18 I 169 .-.... ;10 ..- .91 .. :.
Graph A
Source: Dow Theory Letters (6-24-92).
12
The decline in interest rates in the last six to nine months has opened a window of
opportunity for corporations and consumers to reduce interest payments through
renegotiation of debt. Corporations have issued billions of dollars of debt in the first
and second quarter of the year to lock in lower interest rates and corporate treasurers
have taken advantage ofa bouyant stock market environment to issue equity in order
to retire debt. Households have actively refinanced mortgage debt at rates between
8% and 8.75% on thirty-year fixed mortgages and consumers have been reducing
installment debt. (See Graph A.)
Although the private sector balance sheet has been improving, the public sector debt
continues to grow. This year's Federal deficit is estimated to be $350-370 billion and
Gross Treasury Debt will exceed $4 trillion this quarter. One of the results of such
indebtedness is fewer policy options for goverment officials to use to stimulate the
economy. It is interesting to look back to President Bush's State ofthe Union Address
earlier this year with its incentives for first-time homebuyers, accelerated deprecia-
ion for corporate investment, liberal new rules for I.R.A. accounts, additional money for Head Start, initiatives for health care, tax exemption
of$500,perchild, capital gains tax cut, etc. The Democrats countered with a more stimulative spending program, tax cuts for the middle class,
higher tax rates on the wealthy, a more aggressive national health care proposal, deeper defense cuts, etc. The result - gridlock! The bottom
line is that policymakers have few options available to help the economy with fiscal stimulus because of the overhang of debt from the 1980s
and theiearly 1990s.
Another direct result of our government's indebtedness is higher inflation-adjusted long-term interest rates. Although the Federal Reserve
bas lowered short-term rates dramatically since mid-1990 and inflationary pressures are benign, long-term rates have remained stubbornly
high. High real interest rates act as a drag on commercial and residential real estate markets and corporate capital investment, which will
continue to restrain economic growth and deliver a subdued economic recovery.
Fedeal Reserve Policy
The Federal Reserve can be expected to err on the side of ease through the
election. Itis hard to imagine that Alan Greenspan would want to preside over
a tripledip recession before election day, after being reappointed as Fed
Chairman by George Bush. If the economy begins to falter again, Alan
Greenspan can be expected to nudge short-term rates lower. However, long-
term interest rates, which are influenced by market forces such as currency
valuation and inflation expectations, may not drop below 7.75%. Low short-
term rates and high long-term rates have produced a very steep yield curve. (See
Graph H.) Investors can dramatically increase yields by lengthening maturities
to two to four years.
9 OOfs
e.60fe
7.5O%
7.00X
6.00X
6.608
5.O0%
..e0X
..00a
3 OOft a
Treasury Security Yield Curve
1 S 3 6
10
30
Graph B
Source: Value Line
(6-26-92)
—veer.ae
1 S 3 6
10
30
Market News
•
•
•
Page Two
Politics
This year's political environment carries more uncertainty than most
people expected just three months ago. For the fust time in recent
history, a credible third -party candidate poses a serious challenge to
an incumbent president. As an independent with unknown ideas and
programs, a Ross Perot candidacy is difficult for investors to assess.
But assess it they must, and the prospect of a close three-way race in
November is beginning to unsettle the markets.
It's not to say that a Perot presidency would be bad for the country,
it's just that no one knows for sure what a Perot presidency would
mean. If Perot captures enough electoral college votes to preclude
either Bush or Clinton from gaining the 270 electoral votes needed to
win outright, the election could be thrown into the House of Repre-
sentatives. For Perot to become President, he would have to win a
majority of the electoral college votes as it is unlikely he would be
elected President by the House. If the election is to be conducted by
the House, the next President of the United States will not be known
for two months as the vote would be taken in January. Each state
delegation in the House of Representatives would cast one vote for
president. In the current House, the Democrats control the majority
of thirty-one state delegations, Republicans control ten and the rest
are evenly divided. It is possible that we could have a three way race
with a Democratic candidate coming in third in electoral votes who
is then elected to the Presidency by the House of Representatives.
The last time a Presidential election was thrown into the House of
Representatives was in 1824, when currency and bond markets were
not trading twenty-four hours a day. Uncertainty unnerves the
markets and unless Ross Perot does a fast fade as we approach the
election in November, the uncertainty will continue to weigh on
investors' minds.
Market Action
The year so far has been characterized by profit-taking in last year's
stock market winners (growth stocks) and institutional buying of last
year's underperformers (cyclical stocks). The Dow Jones Industrial
Average (DMA), which is heavily weighted in industrial cyclical
companies, has moved to new
highs this year However, the
recent new highs in the DJIA
have not been accompanied by
new highs in the broader mar-
ket averages. Although the
DMA is up approximately 5%
year-to-date, the Standard and
Poor's 500 (S & P 500) is
down approximately 3% and
the Over -the -Counter (OTC)
index has declined approxi-
mately 6% year-to-date. The
Mutual Fund Index that tracks
the performance of twenty of
the largest stock mutual funds
is down 11.7% since January
1, 1992 (see Graph C).
What is behind these divergences? Last year the DNA was the worst
performer of the major indices for the period December 31, 1990
through December 31, 1991, to wit:
DMA
NASDAQ (OTC)
S&P500
Wilshire 5000
Longer Investments -
Equity Accounts
24.3%
56.8%
30.5%
30.3%
43.2%
Although the DJIA has risen this year, it is only catching up to the
performance of the broader market averages last year.
Graph D -
Source: Dow Theory Letters
(5-13-92) D -J INDUSTRIAL
AVERAGE
3
ADVANCE -DECLINE
RATIO
JAN Fip
The rallies this year have been accompanied with declining breadth,
or participation (see Graph D). With each new high, fewer stocks
have been advancing. The number of new highs on the New York
Stock Exchange has declined with each new high in the DJIA,
indicating waning participa-
tion in the advance by most
listed stocks.
MUTUAL RIND sulfa
.....••••••••
=„
..`•
1
mans .am ( anti ansa an 1 -ra%
Iswe ms 640 1 IN.Salm.�."' frill
220
_200
Graph - uu,n
Source: Investors Business ..w: & .
Daily "(6-39-92) ........... ..... .
IIIMMNI IOI[ el IMnuMI, if I4104u411, 11644
mi rime Anis, 175
worn � 141&
r 170
-182
Kam...11 " 20. ... r
' V I.. 11 1. !lira
I4M11 INT IAA
Last year's market action was
more characteristic of a trend-
ing, strong bull market. New
highs in the DJIA were accom-
panied by new highs in the
broader market averages as
well. Thenegative divergences
between the averages this year
and non -confirmations are
warning signs that theadvance
is aging and the market is due
fora correction and consolida-
tion phase.
•
•
•
•
•
•
•
•
•
•
Market News
Page Three
Market Outlook
The stock market will probably extend its pattern of rotational
corrections and trendless churning until the uncertainty surrounding
the economic outlook and presidential election subsides. Last year
was an exceptional year in the stock market, by historical perspective.
On average, our equity portfolios were up 43% and the S & P 500
increased by 31%. By comparison, the average annual return in the
stock market over the last sixty-five years has been 10% pa year with
the bel year being 54%and the worst year -43%. (See Graph E.) Last
year's return would rank as one ofthe best years during that sixty-five
year period. It is quite natural for a period of digestion and
equilibration to follow such an extraordinary year.
The valuation level of the market is not cheap by historical standards
and technical studies indicate caution is appropriate. We have
utilized option strategies to increase income on long-term equity
holdings and to hedge downside risk. Profit-taking in the first half of
the year has raised cash reserves to levels that are higher than year-
end levels. We have invested some cash reserves in the two-year
Treasury Notes yielding over 5%. These notes can be converted to
cash when needed. In the meantime, the return is much better than the
3.5% available in the money market funds. The accounts are
positioned to have reserves available to be able to take advantage of
expected buying opportunities as they occur.
1.6
1.4
1.2
1.0
0.9
oa
A 24—Month Study
A4bliw •/E
MJJASONOJFMAMJJASOND FMAM
1990 1 1901 1 1992
Graph F
Source: Value Line
(6-12-92)
(roup 1 Avg.Growdr 14swyr.
Group 5 A g. Growth: 6.01 /yr.
Many high quality growth stocks are 25-40% below the highs made
last year. Robert Farrell, chief market strategist for Merrill Lynch,
recently concluded a study indicating that 44% of the 5000 stocks in
Merrill's universe are down 30% or more from the highs made in the
first quarter. As a result, growth is getting cheaper. Value Line
Investment Service reports that in the first five months of 1992,
growth stocks that show compound annual earnings growth of 14.5%
per year have gone from a 40% premium valuation to the market to
zero premium. In other words, because of the pronounced sell-off in
growth stocks, the investor buying these companies today is paying
no valuation premium to participate in their above-average growth
rates. (See Graph F.)
We continue to believe that equity ownership will do more to grow
investors' wealth in the 1990s than bonds or cash. However, there are
times when it is prudent to be defensive and to maintain reserves. It
is possible that the market could fully discount the election result
before November just as the Persian Gulf War was discounted weeks
before the January 15, 1991 invasion deadline. As the summer
progresses, we will have more information on the economy, political
candidates and policy platforms to incorporate into investment
decisions. For now, the defensive team is on the field and the
offensive team is bench -sitting.
Have a nice summer! Please feel free to call ifyou have any questions
or comments.
"Yeah. Clem, I hurt But yimor, its a good kind of hurt"
LONGER
INVESTMENTS
INCORPORATED
P. O. Box 1269
Fayetteville, AR 72702
Phone: (501) 443-5851
Fax: (501) 443-7129
65 Years 5 Years
1926-1990 1986-1990
Best
Year
Worst
Year
Stocks
10.1% 13.2%
54.0%
-43.3%
Bonds
4.6% 9.4%
40.4%
-9.2%
Cash
3.7% 7.5%
14.7%
0.0%
Graph
E
Source:
Ibbotson & Shiqueaeld (1989)
Updated
via Interactive Data Corporation
The valuation level of the market is not cheap by historical standards
and technical studies indicate caution is appropriate. We have
utilized option strategies to increase income on long-term equity
holdings and to hedge downside risk. Profit-taking in the first half of
the year has raised cash reserves to levels that are higher than year-
end levels. We have invested some cash reserves in the two-year
Treasury Notes yielding over 5%. These notes can be converted to
cash when needed. In the meantime, the return is much better than the
3.5% available in the money market funds. The accounts are
positioned to have reserves available to be able to take advantage of
expected buying opportunities as they occur.
1.6
1.4
1.2
1.0
0.9
oa
A 24—Month Study
A4bliw •/E
MJJASONOJFMAMJJASOND FMAM
1990 1 1901 1 1992
Graph F
Source: Value Line
(6-12-92)
(roup 1 Avg.Growdr 14swyr.
Group 5 A g. Growth: 6.01 /yr.
Many high quality growth stocks are 25-40% below the highs made
last year. Robert Farrell, chief market strategist for Merrill Lynch,
recently concluded a study indicating that 44% of the 5000 stocks in
Merrill's universe are down 30% or more from the highs made in the
first quarter. As a result, growth is getting cheaper. Value Line
Investment Service reports that in the first five months of 1992,
growth stocks that show compound annual earnings growth of 14.5%
per year have gone from a 40% premium valuation to the market to
zero premium. In other words, because of the pronounced sell-off in
growth stocks, the investor buying these companies today is paying
no valuation premium to participate in their above-average growth
rates. (See Graph F.)
We continue to believe that equity ownership will do more to grow
investors' wealth in the 1990s than bonds or cash. However, there are
times when it is prudent to be defensive and to maintain reserves. It
is possible that the market could fully discount the election result
before November just as the Persian Gulf War was discounted weeks
before the January 15, 1991 invasion deadline. As the summer
progresses, we will have more information on the economy, political
candidates and policy platforms to incorporate into investment
decisions. For now, the defensive team is on the field and the
offensive team is bench -sitting.
Have a nice summer! Please feel free to call ifyou have any questions
or comments.
"Yeah. Clem, I hurt But yimor, its a good kind of hurt"
LONGER
INVESTMENTS
INCORPORATED
P. O. Box 1269
Fayetteville, AR 72702
Phone: (501) 443-5851
Fax: (501) 443-7129
Market News
•
Page Four
Company Spotlight
BRISTOL-MYERS SQUIBB COMPANY
June 30, 1992
In October of 1989 Bristol-Myers Company and Squibb Corp.
merged to become Bristol-Myers Squibb Company(BMY), a leading
worldwide manufacturer of medical, pharmaceutical, household,
health and beauty products. The merger has proven to be productive
and financially rewarding for Bristol-Myers Squibb Company(BMY).
Through coordination of sales and marketing activities and the
increased scope and quality of the combined pharmaceutical research
and development, BMY is positioned to compete globally in each of
their business segments.
Revenues for 1991 were in excess of $11 billion, an 8% increase,
while earnings increased over 18% to $3.95 per share. BMY displays
many of the fundamental characteristics we favor in evaluating a
stock. Return on shareholders'equity has grown over the past five
years and exceeded 35% in 1991. The company's main capital
requirements (dividends and capital expenditures) are covered by
cash flow from operations. BMY is relatively debt -free and carries
a AAA credit rating by both Moody's and Standard and Poor's.
Earnings per share have grownconsistently over the years. Dividends
per share have increased at an annual rate of 18% over the past ten
years. The most recent increase in January of 1992 to $2.76 per share
marks the twentieth consecutive year of dividend increases.
In recent months, performance of pharmaceutical stocks as a group
has lagged that of the market. BMY is no exception. Since reaching
a high of 90 1/8 early in the year, the price has fallen approximately
27% to the 65 3/4 level where it closed the quarter. Several factors
have contributed to this underperformance. The fast is a sector
rotation during 1992 from last year's strong -performing growth
stocks to the cyclical stocks which stand to benefit most as the
economy emerges from the recession. The second reason is the
possibility of increased government intervention in the pricing of
prescription drugs. Finally, the announcement by the company early
in June that second quarter earnings would show mid -single digit
growth further weakened the stock.
Despite the recent concern over increased government scrutiny of
drug pricing, pharmaceuticals should be viewed as cost-effective. As
a percent of total health care cost, the cost of drugs is actually
declining. In 1960, outpatient prescriptions accounted for 10% ofU.S
health care costs. In 1990, it was less than 5%. However, pharma-
ceutical bills are the medical bill most often paid by the consumer at
point-of-sale. Although drug pricing policy is not the primary cause
of escalating medical expenses in the U S., it is a politically popular
target in an election year.
The lower-than-expected second quarter earnings guidance by BMY
is the result of excess wholesaler inventories that built up late in 1991
in advance of a 6 to 7% average price hike in January of 1992.
Additionally, wholesalers appear to be working off the inventories at
a rate lower than historical norms. For these reasons, BMY's orders
in the first half of 1992 were affected. Management has indicated they
consider this a cyclical short-term phenomenon that should be
corrected by year-end 1992. Management has implemented new
ordering procedures to reduce year-end inventory building by whole-
salers in the future.
Markets
The two fastest-growing pharmaceutical market segments are anti-
cancer drugs and cholesterol-lowering drugs. BMY has dominant
market position in each of them. While established medicines'
continue to twain solid performance, BMY's new drug introductions
have been well received. Both Pravachol, a newly -released choles-
terol-lowering drug and Taxol, an anti-cancer drug to be released in
1993 are expected to emerge as billion dollar products by the end of
the decade. BMY's VIDEX is one of only two anti-viral agents
approved for use in treating AIDS and recent studies presented by
independent investigators to the FDA indicate that VIDEXisthe more
effective (Shearson Lehman Brothers 4/21/92).
Valuation
Historical valuation studies indicate that when BMY stock is priced
to yield 3.7%, it is undervalued. The current 4.2% dividend yield
should provide support from further price deterioration. At current
levels the stock is trading at 15.1 times estimated 1992 earnings and
12.7 times estimated 1993 earnings.
Due to the technical damage BMY suffered after the recent announce-
ment that second quarter earnings will be below expectations, the
stock will likely trade at current levels in the near-term. However, it
possesses good long-term value. The strong growth ofproducts, retail
demand for anti-cancer drugs, the credit quality of the company, low
relative valuation and 4.2% dividend yield lead us to view Bristol
Myers Squibb as an undervalued growth stock for long-term conser
vative investors.
Bristol-Myers Squibb Company
Price (06/30/92): $65.75
52 -Week Range: $62.00-$90.125
Dividend Rate: $2.76
Dividend Yield 4.2%
Institutional Ownership: 60%
EPS 1991: $3.95
EPS 1992E: $4.35
P/E 1991: 16.6X
P/E 1992E: 15.1X
Beta: 1.00
Financial Data as of Fiscal Year -End
'20 '89' '88 '87
Profit Margin (%): 18A 17.0 15.7 14.7 14.1
ROA (%): 21.8 19.0 16.9 15.2 14.2
ROE (%): 35.5 32.3 28.3 25.3 22.4
Revenue (% incr.): 8.3 12.1 7.4 13 2 14.2
Net Income (% incr )• 17.6 34.3 14.8 17.5 35.9
EPS (% incr.): 18.5 34.2 15.1 20.4 37.2.
Div./Share (% incr )• 13.2 6.0 19.1 20.0 32.1
COGS (% of rev.). 26.3 27.9 28.9 29.0 30.5
Debt/Capital (%): 2.3 4.1 4.5 5.4 5.5
Div. (% of Net Income): 60.8 63.8 50.2 51.1 49.3
Cash Flow from Operations (% of Debt Retirement, Div. &
Capital Spending): 93.0 104.4 91.5 133.9 135.1
Asset Turnover (times): 1.2 1.1 1.1 1.0 1.0
Earnings Per Share ($): 3.95 3.33 2.75 2.39 1.98
'Excluding non-recurring merger-related charges.
This information is obtained from internal and external research sources considered to be reliable.
Any opinions expressed are subjea to change without notice. This report is prepared for
mrormtional purposes only and does not wnsbmn ero®endadon for purchase.
•
•
•
ACORN PPR
ACORN ASSET MANAGEMENT CORPORATION
VT !CR ORLMED
July 13, 1992
Mr. Hollis Spencer
P.O.Box 267
Fayetteville AR 72702
RE: Fayetteville Police & Fire Pension Fund Account
Dear Mr. Spencer:
The purpose of this letter is to introduce myself as the individual that will be managing the
above -referenced account going forward.
Michael Kirkland, of Dean Witter Reynolds, and I recently discussed the objectives for the
portfolio. I am looking forward to working with you in the management of these assets. Please
do not hesitate to contact me should you have any questions or concems that you would like me
to address.
Sincerely,
92Q,
Gerry M. Sandel
Portfolio Manager
cc•
Michael Kirkland
2000 North Woodward Ave. 0 Suite 110 0 Bloomfield Hills, Michigan 48304 0 (313) 540-4410 0 (800) 783-2276 0 FAX: (313) 540-2812
•
• Coopers
&Lybrand
•
•
•
certified public accountants
1400 Mid -Continent Tower in principal areas of the world
401 South Boston
Tulsa. Oklahoma 74103
telephone (918) 596-8200
fax (918) 596-8300
May 1, 1992
The Honorable Mayor
Members of the City Board of Directors
and the City Manager
City of Fayetteville
113 West Mountain
Fayetteville, Arkansas 72701
Gentlemen:
We have compiled the accompanying financial statements as listed
in the Index at Page 1 of the City of Fayetteville -Police Pension
Fund as of December 31, 1991, and for the year then ended, included
in the accompanying Pension Fund Financial Disclosure Form, in
accordance with standards established by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form prescribed by
the Arkansas Fire and Police Pension Review Board information that is
the representation of management. We have not audited or reviewed
the accompanying financial statements referred to above and,
accordingly, do not express an opinion or any other form of assurance
on them.
These financial statements, including related disclosures, are
presented in accordance with the requirements of the Arkansas Fire
and Police Pension Review Board, which differ from generally accepted
accounting principles. Accordingly, these financial statements are
not designed for those who are not informed about such differences.
Very truly yours,
CITY OF FAYETTEVILLE
Police Pension Fund Financial Statements
December 31, 1991
INDEX
Statement Page
Statement of Revenues and Expenditures 2
Schedule of Interest and Dividends 4
Statement of Plan Reserve Assets 5
Accumulated Employee Contributions 6
Statement Comparing Actual Employer Contributions to
Actuarially Computed Employer Contributions Requirements 6
Statement of Investment Results 7
Cost of Securities Held Statement 8
Active Members as of December 31, 1991 9
Retiree Listing as of December 31, 1991 10
Investments - Current Holdings - December 31, 1991 12
1
•
A.
REVENUES
ARKANSAS FIRE 6 POLICE PENSION REVIEW BOARD
P.O. DRAWER 34164
LITTLE ROCK, ARKANSAS 72293
City of Fayetteville, Arkansas
Police Pension Fund
(Pension Fund Name)
STATEMENT OF REVENUES AND EXPENDITURES
for the year ending December 31, 1991
A. Employee Contributions: $ 39,954.55
B. Employer Contributions:
from State Insurance Tax $ 135,488.83
C. Employer Contributions:
from Local Millage Tax $ 131,932.95
D. Employer Contributions:
Other Local 1. 6% match or $12
per volunteer $ 79,908.08
Police funds only>2. lei city fines 6 forfeitures $ 71.432.49
• • • • >3. Sale of Confiscated Goods $ 1.830.6
Suspension
4. Other (specify) Pines $ 2,145.45
S. Total Other Local $155,316.68
E. Total Employer Contributions (B+C+DS) $422,738.46
F.
G.
N.
•
Investment Income (Gross Totals)
1. Interest and Dividends $297,748.67
2. Gain or (Loss) on sales $176,135.61
3. Other (specify) Disc/Prem $ 5,215.40
amort.
4. Total Gross Investment Income (1+2+3) $479,099.68
Other Revenues (specify) Donations 700.00 $ 700.00
Total Revenues ((A+E+F4+G) $942,492.69
See Accountant's Compilation Report.
•
• EXPENDITURES
A.
B.
C.
D.
E.
F.
Refunds of Employee Contributions $
Benefits Paid S288,021.84
Administrative Expenses $ 2,212.00
Investment Expenses
1. Investment Manager Fee $ 49,979.43
2. Brokerage Fees
3. Custodial Fees
4. Other Investment Fees (specify)
S. Total Investment Expenses
Other (specify)
Total Expenditures
$
$
$
$ 49,979.43
S340.211 97
• Addition (Reduction) in Pension Fund Assets For The Year
(Total Revenues "H" minus Total Expenditures "F") $ 602,279.42
Did the pension fund receive a full mill during the reporting year?
Yes_ Sox
If no, what fraction of mill was received? 0.5 .
See Accountant's Compilation Report.
•
•
•
SCHEDULE •A'
SCHEDULE OF INTEREST AND DIVIDENDS
BT ASSET TYPE
for year ending December 31, 1991
This Schedule should reflect only the interest and dividends earned
on Fund investments for the year.
A.
8.
C.
• D.
E.
F.
G.
•
H.
I.
.3.
Bank Deposits S 739.11
Savings and Loan Deposits S
Other Cash Equivalents 77,196.04
(maturing in one year or less) $
U.S. Government Securities $ 134,500.22
Non -U.8. Government Securities S
Mortgages S
Corporate Bonds $ 42,971.58
Corporate Common Stock S 42,341.72
Other (specify) S
Total Interest and Dividends
(See page 1, revenue item F1) S 297.748.67
See Accountant's Compilation Report.
4
• K. Total Reserve Assets (A thru J) $5,144,950.32
STATEMENT OF PLAN RESERVE ASSETS
for the year ending December 31, 1991
RESERVE ASSETS Book Value (Cost)
A. Cash and bank checking account S
(non-interest earning)
B . Bank deposits (interest earning) $ 4 871.49
C. Savings and loan deposits (interest earning) S
D . Other cash equivalents $1,267,139.35
(maturing in one year or less)
E . U.S. Government securities $1,706,413.38
F. Non -U.S. Government securities $
G. Mortgages $
H. Corporate Bonds $ 444,534.09
(Market value of corporate bonds at
December 31: $478,388.50 )
I. Corporate common stock and convertibles
(Market value of common stock and convertible
issues at December 31:1,984,884.24
Acc. Int. 411/11.88
J. Other (specify) Purch Int. 8,807.55 $ SR. RS6 09
Due from others 8,336.66
$1,663,135.92
RESERVE ACCOUNTS
A.
Member Reserves at December 31
(Total, Cumulative Employee Contributions Only)
Employer Reserves at December 31 $4.808.010.26
(Total, Cumulative State Insurance Tax, Millage,
Interest and Dividends, Etc.)
Other (Specify) $
Total Reserve Balances (A thru C) $5,144,950.32
S 336.940.06
Note: Act 6 funds should attach a listing of all securities by type and
amount.
See Accountant's Compilation Report.
3.
ACCUMULATED EMPLOYEE CONTRIBUTIONS
at December 31, 1991
$ 336,940.06
NOTE: Funds for Police Officers and Full -Paid Firefighters should complete
YEimiA. Funds for Volunteer Firefighters should complete 4B. Funds with
both Full -Paid and Volunteer Firefighters should identify the dollar
amount contributed for each by allocating revenue item "E• from the
Statement of Revenues and Expenditures in accordance with the attached
Method of Allocation (see instructions)
4A. STATEMENT COMPARING ACTUAL EMPLOYER CONTRIBUTIONS TO ACTUARIALLY
COMPUTED EMPLOYER CONTRIBUTIONS REQUIREMENT FOR POLICE OFFICERS 4
FULL -PAID FIREFIGHTERS
for the year ending December 31, 1991
A
B
C
A.
B.
Total employer contributions in dollars
(Revenue item "E" from Statement of Revenues
and Expenditures - Page 1)
Covered employee payroll for the year, in dollars
Actual employer contribution percent for the
year (a/b)
Actuary's computed contribution percent for the
year (For years ending through 12/31/91, the
actuary's computed contribution would be established
by the most recent actuarial valuation on file ) $ 36%
$422,738.46
$ 665,901.07
$ 63.5%
4B. STATEMENT COMPARING ACTUAL EMPLOYER CONTRIBUTIONS TO ACTUARIALLY
COMPUTED EMPLOYER CONTRIBUTION REQUIREMENTS FOR VOLUNTEER FIREFIGHTERS
for the year ending December 31, 1991
Total employer contributions in dollars (Revenue
item "E" from Statement of Revenues and
Expenditures - Page 1.) $
Actuary's computed contribution for the year in
dollars (For years ending through 12/31/91, the
actuary's computed contribution would be established
by the most recent actuarial valuation on file.) $.
See Accountant's Compilation Report.
.1 •
•
JInsunces\♦ VC ♦.\,pJinaas fflaVI.ID
for the year ending December 31, 1991
NOTE: Funds which have not diversified investments under Act 6 of 1985
• Fenild complete Section 5A only. Funds which have diversified under Act 6
should use 5B.
• 5A.
1. Reserve Assets
a. End of Year Balance la.
b. Beginning of Year Balance lb.
c. Interest Income, received during year
(See page 1, item F1) lc.
2. Total Return
a. Interest Income: (Line lc) 2a.
b. Average Fund Balance: (laalb/2) 2b.
c. Rate of Return (2a/2b) 2c.
513. ACT 6 FUNDS ONLY
1. Reserve Assets
•
•
2.
3
4.
a. End of Year Balance la. 5,144,950.32
b. Beginning of Year Balance lb.4,542,670.90
c. Realized Gains During Year lc. 221,750.86
d. Realized Losses During Year Id. 45,615.25
e. Interest and Dividends Received
During Year (See page 1, item F1) le. 297.748.67
f. Other Income (page 1, item F3) lf. 5,215.40
•
Ordinary Income
a. Investment Income: (line le)
b. Average Book Value: (la+lb/2)
c. Rate of Return: (2a/2b)
Total Return
a. Total Investment Income :
(le+lc-ld+lf)
b. Average Book Value: (Same as 2b)
c. Rate of Return: (3a/3b)
2a. 297,748.67
2b.4,843,810.61
2c. 6.15%
3a. 479,099.68
3b.4,843,810.61
3c. 9.89%
Total Market Value of all assets held at 12/31/91 $ 5,560,286.54
See Accountant's Compilation Report.
7
CERTIFICATION STATEMENT
•
I certify that the records of the have been
examined and prepared by a CPA, Registered Accountant or
Recorder/Treasurer, for the year ended December 31, 1991, and prepared the
following financial statements required by Act 700 of 1979, as amended.
1. Statement of Revenues and Expenditures
2. Statement of Plan Reserve Assets
3. Statement Comparing Actual Employer Contributionssto Actuarially
Computed Employer Contribution Requirements
4. Statement of Investment Results
It is my opinion that the aforementioned financial statements conform to
the requirements of Act 700 of 1979 as amended, and are a true accounting
of
•
•
he records, as of the above date.
Name
Title
Date
City
See Accountant's Compilation Report.
Bradley
ad Bradley
Brown
Carroll
• Cole
v
Dugger
Foster
✓ Friend
Hanna
N
Hartwick
• Helder
Jai•t JR
Johnson
Johnson
V Kilgore
Martin
J Mueller
Munson
Roberts
ad Schuster
V Stanley
Taylor
a0 Watson
oo
ii
0
•
Name
Fayetteville
Police
Active Members As Of December 31, 199f
Date of Date of Gross Annual Accumulated
Sex Birth Hire Salary Contributions Couents
, C M 11/40 4/77 22,680.84 13,057.39
, G M 10/49 10/72 41,153.22 20,166.03
R M 9/44 1/72 31,432.45 18,606.68
J M 11/59 5/82 22,479.52 8,669.51
, R M 6/57 3/82 22,514.70 10,155.82
R N 10/56 8/82 26,363.12 10,661.37
G M 2/49 7/80 22,640.28 11,268.32
, B M 2/34 10/68 35,394.32 21,907.30
J M 3/47 11/75 28,827.30 15,663.51
M M 10/56 12/78 26,303.28 11,780.48
T M 5/50 7/82 22,278.45 10,140.69
T M 1/59 2/82 28,922.38 11,567.25
R N 7/54 4/76 31,391.85 16,621.20
C M 7/46 2/79 25,303.94 12,554.27
F M 4/60 5/81 27,726.58 11,845.17
D M 4/58 9/80 21,494.72 11,380.69
K M 8/48 4/77 31,233.80 15,677.27
R F 10/40 4/73 22,841.00 13,105.66
, A F 9/50 6/81 25,297.71 11,287.80
R M 10/47 11/68 31,633.48 20,036.95
J M 7/58 8/76 22,760.78 11,976.03
, M M 12/48 7/81 26,722.18 11,456.87
, D M 6/53 1/77 20,740.68 12,968.54
R M 6/38 8/66 47,764.49 24,385.26
See Accountant's Compilation Report.
Accumulated Contributions is the total amount contributed while an
Employee plus any interest credited to the member's account.
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tetlrem Listing As Of December 31, 1994
Date of Date of Benefit Monthly Spouse Age 60 Final Tears of
Sea girth Retirement Option gendlt DOS Bonus Salary Service Counts
L r 2/21 0/ 0* 3 272.50 0/ 0
D M 10/34 0/ 0 * 1 636.00 11/29
D M 6/39 0/ 0 * 1 760.73 6/42
3 M 5/35 0/0* 1 539.44 12/44
1 M 10/26 0/ 0* 1 342.33 0/ 0
I M 11/21 0/ 0* 1 726.22 0/ 0
A M 2/24 0/ 0* 1 310.95 4/30
L r 6/97 0/ 0* 3 250.00 0/ 0
N M 3/24 0/ 0* 1 666.51 0/ 0
5 M 3/23 0/ 0* 1 413.39 11/22
I M 7/42 0/ 0* 2 374.65 0/ 0
C M 4/32 0/ 0* 1 674.65 0/ 0
✓ M 6/40 0/ 6* 2 375.30 7/40
, 0 M 12/36 0/ 0* 2 1,561.67 4/36
, P M 1/39 0/ 0* 1 151.36 6/41
, L M 6/23 0/ 6* 1 250.00 4/30
, t M 1/23 0/ 0* 1 315.00 :/27
, L M 11/42 0/ 0* 1 612.19 6/45
, M 1 8/23 0/ 0* 3 250.00 0/ 0
, t 1 10/43 0/ 0* 3 465.02 0/ 0
, M M 10/31 6/69* t 1,104.75 1/41
, 3 M 2/31 0/ B* 2 250.00 10/32
, L M S/47 8/89 2 1,113.09 3/52
* Information not available
See Accountant's Compilation Report.
Bennflt Option: 1-6ervice tette—ent, 2 -Disability, 3-6urvivor Benefit
Final Salary and Tears of Service ars u of the Data of tatiremsnt
C:\TCMP\IRlttt\D/171PI9./1L
10
Name
T11 LLIf3S
FRISSON
11 CIO LN
IIGGINS
■ITCHIS
SIELTON
SOUTHERN
SPENCER
STOUT
SUPLES
UPTON
WATT*
LL1AM3
Wirt
WOOD
1
►ayettevllls
Polka
Retiree Listing As Of December 31, 1991
!Date of Date of 9eneflt Monthly Spouse Age 60 final Tears of
Sex girth Retirement Option Benefit DOB Sinus Salary Service Comment■
C M 9/40 0/ 0* 1 643.00 5/44
G M 7/42 0/ 0 * 2 761.43 6/45
, L M 10/40 0/ 0* 1 1,061.19 3/45
1 M 6/33 0/ 0* 2 606.67 6/36
, L f 6/ 7 0/ 0* 3 250.00 0/ 0
, 1 M 2/12 0/ 0* 1 396.10 7/23
, 1 M 10/ 0 0/ 0* 1 250.00 4/11
1 M 12/22 0/ 0* 1 659.25 0/ 9
•
W M 9/22 0/ 0* 1 415.25 6/26
, J M 1/42 0/ 0* 1 1,304.17 2/43
, 1 M 6/53 0/ 0* 2 506.56 0/ 0
, P 1 12/94 0/ 0* 3 250.00 0/ 0
9 M 4/41 6/61 2 1,217.07 12/42
, D M 3/36 0/ 0* 1 646.72 0/39
, 1 M 2/32 4/83 1 757.62 5/29
•
* Information not available
See Accountant's Compilation Report.
Benefit Option: 1 -Service Retirement, 2 -Disability, 3 -Survivor benefit
final Salary and Tsars of Service are as of the Date of Retirement
C:\TEMP\IETIREE\D►171f19.t1L
11
•
City of Fayetteville, Arkansas
Policemen's Pension A Relief Fund
I1ts - Currant Holdings
r 31, 1991
Purchase Investment
Units Date Cost
Cash Equivalents
Dean Witter Accounts:
Sears Us Gvt Myekt
CD - Green>.00dl Tnnt -Delaware
8% due 5/8/96
CD - 1st Fed. Bark - Santa Monica
6 4% due 6/19/92
CD - Sears Savings Bark
8.057 da 619/96
larger Investments:
Benchmark Govt Furl
CD - 1st USA Bark - Wilmington
8.3% due 1/2/96
City Held:
Cash in Bak
Dtel Cash Equivalents
Government Securities:
Dean Hitter Accounts:
FNMA-8.2%.due 12/23/96
U.S. T -Note -8.5%,
due 02/15/2000
FIIIA -9 2%, due 9/11/2000
U.S. T -Hots -7.875%,
due 11/15/99
FNMA -8.8757 due 1/10/94
U.S. /-Note-8%. de 5/15/2001
longer Invest I is Accounts:
Fad Ham Lor Mtg.
9.15%.due 08/08/2000
U.S. T -Note -7.1254
due 10/15/93
U>S> T -Note -84 due 5/15/2001
U>S> T-Nota6.375%. due 8/31/93
City Held:
U5 T -Iota 7 25%, due 7/15/93
Us T -dote 8.375%, da 11/15/92
•otal Government Securities
01/12/90
08/13/90
04/02/91
06/20/91
12/16/91
06/19/91
08/08/90
03/12/91
06/06/91
09/03/91
6-02-88
6-02-88
694,574.10
90,000.00
90,000.00
90,000.00
202,565.25
100,000.00
4,871.49
PPEN 91
Market
Value
694,574.10
90,000.00
90,000.00
90,000.00
202.565.25
100.000.00
4,871.49
1,272,010.84 1,272,010.84
150.000.00
100,000.00
63,452.35
195.283.60
215.752.35
195.812.50
100.000.00
23,977.50
197.265.63
114,869.45
175,000.00
175,000.00
162,750.00
111,500.00
68.475.00
212,250.00
221,250.00
217,000.00
109,875.00
24.983.00
217.000.00
118.163.00
181.890.00
179.867.00
1.706,413.38
1.825,003.00
See Accountant's Compilation Report.
12
•
•
City of Fayetteville, Arkansas
Policemen's Pension & Relief Fund
Its - Current Holdings
31, 1991
Corporate Bonds:
Dean Hitter:
Eastman Kodak 9.125%
due 3/1/98
Xerox Credit Corp. 10.125%
die 4/15/99
Toronto Dom US 9 9.9%
DUE 2/1/99
Dayton Hudson 9.4%
do 2/15/2001
Pepsico Inc 7 75%
die 10/01/98
TVA - 7.45%
due 10/15/2001
L• Investments:
Philip Morris 9 25%
due 12/1/97
Total Corporate Bonds
Corporate Stocks:
Dean Matter:
Amertal. $ Tel
Amoco Corp.
Bectin Dickinson
Boeing Co.
Boeing Co.
Eastman Kodak
Eestean Kodak
General Electric
GTE Corp
Hanson TR
IBM
Lilly Eli $ Co
Lincoln Natl. Corp.
MuMot rola
le
Pec zc Telesis
Phillip Morris
Spans.
PPEN 91
Purchase Investment Market
Units Date Cost Value
01/02/90
07/24/90
09/20/99
02/21/91
10/09/91
10/24/91
1.000.00 01/22/91
1.000.00 09/11/91
600.00 08/22/91
400.00 07/01/91
300.00 05/15/91
800.00 05/13/91
300.00 11/16/90
400.00 11/16/90
1,000.00 11/16/90
1.600.00 05/13/91
300.00 04/26/91
500.00 10/29/91
800.00 09/16/91
300.00 02/01/91
300.00 05/15/91
600.00 11/16/90
300.00 06/07/91
50.000.00
50.000.00
50.000.00
51,252.35
74.886.00
68.395.74
54,000.00
55,750.00
52.812.50
56.000.00
77,437.50
71,837.50
100.000.00 110.551.00
444,534.09 478.388.50
29,250.00 39.125.00
51.951.00 49,125.00
41.925 00 41.100.00
18,250.00
14,100.00 33,425.00
33,200.00
11.737.50 53.075.00
20.700.00 30.600.00
28.250.00 34,625.00
32,000.00 32,600.00
33,000.00 26.700.00
36,625.00 41.750.00
39.200.00 43.800.00
18.675.00
18.675.00 39,150.00
26.700.00 26.775.00
20.152.20
See Accountant's Compilation Report.
13
•
•
•
City of Fayetteville. Arkansas
Policemen's Pension A Relief Fund
Irnv�rnta - Current Holdings
r 31. 1991
Phillip Morris
PPG Industries
SHL Trans. it Trod.
Haste Mgmt.
Haste Mgmt.
Haste Mgmt.
Mast. Mgmt. Inc
Longer Investments:
Abbott labs
ADR Glaxo Holdings
American Barrick Res.
American Home Prod
Amoco Corp
Arbor Drugs
Arbor Drugs
Archer Daniels Midland
Armstrong Morld
Baxter Intl.
Bri 4 Stratton
BriStratton
Briggs 6 Stratton
Bristol Myers - Squibb
Bristol Myers - Squibb
Bristol Myers - Squibb
Cintas Corp
Claire* Stores
Claims Stores
Comm. Psych. Centers
Crane Co.
Crary Co.
Dean Foods
Diebold
Diebold Inc. .
Dreyer: Grand Ica Cream
Dur Fillauer Med.
Emerson Electric
Emerson Electric
Evens Bob Farms
Harnischfeger Inds
Harnischfeger Inds.
Hasbro Inc.
Hershey Foods
IBM Call Option
tputIafst Corp
L Cabteria
Mattel Inc.
Units
500.00
500.00
400.00
200.00
500.00
300.00
500.00
Purchase
Dab
11/16/90
12/18/91
11/16/90
07/08/91
07/01/91
05/13/91
02/01/91
1,000.00 01/14/91
2,000.00 02/06/91
1,200.00 11/14/91
400.00 11/01/91
500.00 10/09/91
1,000.00 08/14/91
500.00 10/08/91
630.00 12/31/90
500.00 09/19/91
1,000.00 07/31/91
900.00 06/12/91
300.00 09/24/91
400.00 10/10/91
300.00 01/11/91
200.00
300.00 12/31/90
500.00 10/15/91
1,000.00 09/23/91
750.00 09/26/91
1,000.00 12/20/91
1.000.00 09/05/91
500.00 09/27/91
900.00 04/12/91
500.00 08/29/91
100.00 02/07/91
800.00 10/11/91
1,000.00 11/01/91
300.00 05/07/91
1,200.00 12/04/90
1,000.00 09/20/91
500.00
500.00
1,000.00
450.00
400.00
1.000.00
1,500.00
625.00
08/06/91
07/31/91
09/26/91
08/16/91
11/20/91
12/19/90
03/13/91
Investment
Cost
24,000.00
22.812.50
20,800.00
7,394.40
18,312.50
12,112.50
21,062.50
40.350.00
35.687.50
29,196.00
29,350.00
26,125.00
19,875.00
9,500.00
13,973.72
16,062.50
33,350.00
28,237.50
11,150.00
15,328.00
18,861.00
12,480.00
17,376.00
21,785.00
8,875.00
5,793.75
11,955.00
27,320.00
12,035.00
27,074.50
21,737.50
3,760.00
20,700.00
22,344.00
13,498.50
48,084.00
18,125.00
11,000.00
10,410.00
27,820.00
18,823.50
2.349.21
13,070.00
18,132.50
11,971.00
PPEN 91
Market
Value
64,200.00
25,250.00
22,450.00
63,187.50
68,875.00
63,500.00
33,450.00
33,850.00
24,563.00
34,875.00
20,869.00
14,625.00
40,000.00
70,600.00
70,600.00
25.000.00
14,656.00
14,125.00
35,438.00
27,450.00
28,950.00
27,800.00
20,250.00
82,500.00
26,000.00
21,375.00
40,500.00
19,969.00
2,349.21
11,125.00
14,375.00
20,703.00
See Accountant's Compilation Report.
14
•
City of Fayetteville, Arkansas
Policemen's Pension 1 Relief Fund
Rants - Currant Holdings
D r 31, 1991
McDonalds
McDoralds
Mobil Corp
Mobil Corp.
Pacificorp
Phillip Morris
Phillip Morris
Readers Digest
TCR
Toys R Us
Toys R Us
Toys R Us
Tyson Foods
Tyson Foods
Tysaa
Malart
Nalort
Horner Lambert - all option
Masts Via.
W� Npmt.
Total Corporate Stocks
•
Grand Total
Purchase
Units Date
500.00 08/08/91
500.00 08/09/91
500.00 12/19/90
500.00 09/30/91
1,000.00 12/10/90
400.00 01/28/91
800.00 12/10/90
500.00 02/06/91
1,000.00 07/09/91
200.00 12/10/90
600.00
500.00
1,000.00
1,000.00
500.00
500.00
500.00
500.00
100.00
300.00
04/01/91
10/29/91
10/02/91
12/16/91
12/16/91
01/10/91
PPEN 91
Investment Market
Cost Value
16,240.00
16,097.50
31,085.84
34,102.50
19,570.00
21,200.00
32,748.16
14,435 00
10,850.00
5,768.50
15,600.00
14,785.00
10,696.50
20,070.00
9,687.50
25,812.50
14,514.14
1,548.50
3,336.00
10,537.50
38,000.00
67,875.00
25,125.00
96,300.00
24,188.00
15,250.00
15,250.00
50,313.00
58,875.00
1,548.50
16,850.00
1,663,135.92 1,984,884.21
5,086,094.23 5,560,286.55
See Accountant's Compilation Report.
15
FAYETTE`'I LLE
•CITY OF FAYETTEVILLF. ARKANSAS
SHERRY THOMAS, CITY CLERK
•
•
April 20, 1992
Mr. Franklin Upton
#7 Palomino Drive
Rogers, AR 72756
Dear Mr. Upton:
As required by the Policemen's Pension and Relief Board, a Pension
and Relief Fund Affidavit must be completed and filed with my
office each year. This form has been mailed to you, but you have
failed to return it to this office.
Under the direction of the Board, your May pension check will be
held pending receipt of this affidavit by my office. Enclosed for
your convenience is another copy of the form for you to complete
and a return envelope.
I will be more than happy to help you in any way to complete this
form. I am a Notary Public and will be glad to notarize the form
for you. Please complete the form and return it to me so that we
will not have to hold your pension check.
Again, if you have any questions, give me a call at 575-8323.
Thanks for your help in getting this form completed.
Sincerely,
Sherry L. Thomas
City Clerk
Enclosure
cc: Police Pension Board
113 WEST MOUNTAIN 72701 501 575-8323
•
•
•
•
MICR TIMED
LONGER
INVESTMENTS
INCORPORATED
City of Fayetteville
Police Pension Board Meeting
July 16, 1992
Quantity
COMMON STOCK
Security
1,000 Abbott Labs
1,200 American Barrick
Resources
400 American Home
Products
500 Amoco
1,300 Baxter Intl.
500 Boeing Co.
600 Bristol Myers Squibb
1,000 Claire's Stores
1,000 Computer Associates
International
1,800 Emerson Electric
800 Fluor Corp.
1,200 Food Lion Inc. B
1,750 Genuine Parts
1,500 Glaxo Holding
500 Harnischfeger
Industries
750 Intl Business
Machines
1,000 Jacobs Engineering
1,100 John H. Harland
1,400 Luby's Cafeterias
937 Mattel Inc.
1,000 McDonald's Corp
500 Minnesota Mining 8
Mfg.
600 Mobil Corp.
800 Perkin Elmer
Corporation
500 Philip Morris
500 Reynolds Metals
1,000 SafeCard Services
800 Sensormatic Electric
700 Southwestern Bell
700 Texaco
1,300 Toys -R -Us
850 Tyson Foods
500 Walmart Stores
500 Warner Lambert
400 Waste Management
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Combined Account
June 30, 1992
Unit Total
Cost Cost
20.97 20,974.34
24.33 29,196.00
73.37 29,350.00
52.25
34.73
45.57
65.18
8.38
15.22
43.21
38.87
13.80
31.96
19.74
21.21
26,125.00
45,146.00
22,785.00
39,107.18
8,382.14
15,218.75
77,780.00
31,100.00
16,556.00
55,925.00
29,608.50
10,606 67
Market Market Pct. Unit
Price Value Assets Income
29.62 29,625.00 1.4
27.75 33,300.00 1.5
71.50 28,600.00 1.3
47.75
36.12
39.87
65.75
6.87
11.50
23,875.00
46,962.50
19,937.50
39,450.00
6,875.00
11,500.00
48.75 87,750.00
40.00 32,000.00
11.75 14,100.00
32.00 56,000.00
25.37 38,062.50
19.75 9,875.00
1.1
2.2
0.9
1.8
0.3
0.5
4.1
1.5
0.7
2.6
1.8
0.5
Annual Cur.
Income Yield
0.600 600.00 2.0
0.130 156.00 0.5
2.600 1,040.00 3.6
2.200
0.860
1.000
2.760
0.100
0.100
1.380
0.400
0.110
1.000
0.740
0.400
93.89 70,418.30 97.87 73,406.25 3.4 4.840
27.52 27,520.00
21.82 24,002.00
15.39 21,543.67
12.77 11,966.11
32.38 32,385.00
88.44 44,222.50
23.37 23,375.00
20.62 22,687.50
16.87 23,625.00
25.12 23,542.12
46.00 46,000.00
97.00 48,500.00
0.000
0.900
0.500
0.130
0.400
3.200
65.19 39,113.00 61.37 36,825.00 1.7 3.200
32.10 25,680.00 30.00 24,000.00 1.1 0.680
44.96
59.50
10.47
27.58
61.91
59.94
28.25
17.44
40.33
73.60
33.85
22,478.39
29,750.00
10,472.50
22,062.50
43,339.59
41,961.50
36,724.00
14,820.17
20,163 33
36,800.00
13,540.91
1,046,824.06
73.50
57.87
10.12
26.75
61.00
61.75
34.50
17.12
53.62
61.00
33.75
36,750.00
28,937.50
10,125.00
21,400.00
42,700.00
43,225.00
44,850.00
14,556.25
26,812.50
30,500.00
13,500.00
1.7
1.3
0.5
1.0
2.0
2.0
2.1
0.7
1.2
1.4
0.6
1,113,229.62 51.5
2.100
1.800
0.150
0.300
2.920
3.200
0.000
0.040
0.210
2.040
0.520
1,100.00
1,118.00
500.00
1,656.00
100.00
100.00
2,484.00
320.00
132.00
1,750.00
1,110.00
200.00
4.6
2.4
2.5
4.2
1.5
0.9
2.8
1.0
0.9
3.1
2.9
2.0
3,630.00 4.9
0.00
990.00
700.00
121.81
400.00
1,600.00
0.0
4.4
3.0
0.5
0.9
3.3
1,920.00 5.2
544.00 2.3
1,050.00
900.00
150.00
240.00
2,044.00
2,240.00
0.00
34.00
105.00
1,020.00
208.00
2.9
3.1
1.5
1.1
4.8
5.2
0.0
0.2
0.4
3.3
1.5
30,262.81 2.7
•
•
•
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Combined Account
June 30, 1992
Unit Total Market Market Pct. Unit Annual Cur.
Quantity Security Cost Cost Price Value Assets Income Income Yield
PUTS
CALLS
5 Boeing Co. July 40 0.60 300.00 1.12 562.50 0.0
Puts
15 Glaxo Holdings July 0.60 893.75 0.50 750.00 0.0
25 Puts
1,193.75 1,312.50 0.1
-4 American Home 2.00 -799.97 2.50 -1,000.00 0.0
Product July 70
Calls
-6 Bristol Myers 2.04 -1,224.95 1.00 -600.00 0.0
September 70 Calls
-5 Philip Morris July 4.64 -2,318.55 4.25 -2,125.00 -0.1
70 Calls
-7 Southwestern Bell 1.93 -1,349.95 1.56 -1,093.75 -0.1
August 60 Calls
-5 Mal Mart July 55 2.02 -1,012.46 0.62 -312.50 0.0
Calls
-6,705.88 -5,131.25 -0.2
CORPORATE BONDS
100,000 Philip Morris 100.54 100,543.50 112.63 112,629.00 5.2 9.250 9,250.00 8.2
9.250% Due 12-01-97
Accrued Interest 745.14 0.0
100,543.50
2
113,374.14 5.2 9,250.00 8.2
•
•
•
•
Quantity
Security
GOVERNMENT BONDS
115,000
24,000
300,000
100,000
100,000
100,000
U. S. Treasury Note
(912827C26)
6.375% Due 08-31-93
U S Treasury Note
7.125% Due 10-15-93
U. 5. Treasury Note
5.000% Due 06-30-94
Federal Home Loan
Mortgage Corp.
9.150% Due 08-08-00
U. S. Treasury Note
8.000% Due 05-15-01
U. S. Treasury
Strips
0.000% Due 08-15-12
Accrued Interest
CASH AND EQUIVALENTS
Dividends Accrued
Money Market
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Combined Account
June 30, 1992
Unit
Cost
Total Market
Cost Price
Market Pct. Unit Annual Cur.
Value Assets Income Income Yield
99.89 114,869.45 102.41 117,767.19 5.4 6.375 7,331.25 6.2
99.80 23,952.16 103.50 24,840.00 1.1 7.125 1,710.00 6.9
99.81 299,429.00 100.34 301,031.25 13.9 5.000 15,000.00 5.0
100.00 100,000.00 108.00 108,000.00 5.0 9.150 9,150.00 8.5
99.00 99,000.00 105.66 105,656.25 4.9 8.000 8,000.00 7.6
18.73 18,732.00 19.59 19,593.75 0.9 0.000 0.00 0.0
CERTIFICATE OF DEPOSIT (MONTHLY PYMT.)
100,000
First USA Bank
Wilmington, DE 8.3%
1-2-96
8.300% Due 01-02-96
TOTAL PORTFOLIO
655,982.61
7,409.17 0.3
684,297.60 31.6
41,191.25 6.1
1,919.60 1,919.60 0.1 0.000 0.00 0.0
145,798.03
147,717.63
100.00 100,000.00
100,000.00
2,045,555.67
3
145,798.03 6.7 3.480 5,073.77 3.5
147,717.63 6.8
5,073.77 3.4
108.31 108,310.00 5.0 8.300 8,300.00 7.7
108,310.00 5.0
8,300.00 7.7
2,163,110.25 100.0 94,077.83 4.4
•
•
•
Quantity
COMMON STOCK
Security
1,000 Abbott Labs
1,200 American Barrick
Resources
400 American Home
Products
500 Amoco
1,300 Baxter lnt'l.
500 Boeing Co.
600 Bristol Myers Squibb
1,000 Claire's Stores
1,000 Computer Associates
International
1,800 Emerson Electric
800 Fluor Corp.
1,200 Food Lion Inc. 8
1,750 Genuine Parts
1,500 Glaxo Holding
500 Harnischfeger
Industries
750 Intl Business
Machines
1,000 Jacobs Engineering
1,100 John H. Harland
1,400 Luby's Cafeterias
937 Mattel Inc.
1,000 McDonald's Corp
500 Minnesota Mining 8
Mfg.
600 Mobil Corp.
800 Perkin Elmer
Corporation
500 Philip Morris
500 Reynolds Metals
1,000 SafeCard Services
800 Sensormatic Electric
700 Southwestern Bell
700 Texaco
1,300 Toys -R -Us
850 Tyson Foods
500 Walmart Stores
500 Warner Lambert
400 Waste Management
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Stock Account
June 30, 1992
Unit Total
Cost Cost
20.97 20,974.34
24.33 29,196.00
73.37 29,350.00
52.25
34.73
45.57
65.18
8.38
15.22
26,125.00
45,146.00
22,785.00
39,107.18
8,382.14
15,218.75
43.21 77,780.00
38.87 31,100.00
13.80 16,556.00
31.96 55,925.00
19.74 29,608.50
21.21 10,606.67
Market
Price
Market Pct. Unit Annual Cur.
Value Assets Income Income Yield
29.62 29,625.00 1.9 0.600 600.00 2.0
27.75 33,300.00 2.2 0.130 156.00 0.5
71.50 28,600.00 1.9 2.600 1,040.00 3.6
47.75
36.12
39.87
65.75
6.87
11.50
23,875.00
46,962.50
19,937.50
39,450.00
6,875.00
11,500.00
48.75 87,750.00
40.00 32,000.00
11.75 14,100.00
32.00 56,000.00
25.37 38,062.50
19.75 9,875.00
1.5
3.0
1.3
2.6
0.4
0.7
5.7
2.1
0.9
3.6
2.5
0.6
2.200
0.860
1.000
2.760
0.100
0.100
1.380
0.400
0.110
1.000
0.740
0.400
1,100.00
1,118.00
500.00
1,656.00
100.00
100.00
2,484.00
320.00
132.00
1,750.00
1,110.00
200.00
4.6
2.4
2.5
4.2
1.5
0.9
2.8
1.0
0.9
3.1
2.9
2.0
93.89 70,418.30 97.87 73,406.25 4.8 4.840 3,630.00 4.9
27.52 27,520.00
21.82 24,002.00
15.39 21,543.67
12.77 11,966.11
32.38 32,385.00
88.44 44,222.50
23.37 23,375.00
20.62 22 687 50
16.87 23,625.00
25.12 23,542.12
46.00 46,000.00
97.00 48,500.00
1.5
1.5
1.5
1.5
3.0
3.1
0.000
0.900
0.500
0.130
0.400
3.200
0.00
990.00
700.00
121.81
400.00
1,600.00
0.0
4.4
3.0
0.5
0.9
3.3
65.19 39,113.00 61.37 36,825.00 2.4 3.200 1,920.00 5.2
32.10 25,680.00 30.00 24,000.00 1.6 0 680 544.00 2.3
44.96
59.50
10.47
27.58
61.91
59.94
28.25
17.44
40.33
73.60
33.85
22,478.39
29,750.00
10,472.50
22 062 50
43 339 59
41,961.50
36,724.00
14,820.17
20,163 33
36,800.00
13,540.91
1,046,824.06
1
73.50
57.87
10.12
26.75
61.00
61.75
34.50
17.12
53.62
61.00
33.75
36,750.00
28,937.50
10,125.00
21,400.00
42,700.00
43,225.00
44,850.00
14,556.25
26,812.50
30,500.00
13,500.00
2.4
1.9
0.7
1.4
2.8
2.8
2.9
0.9
1.7
2.0
0.9
2.100
1.800
0.150
0.300
2.920
3.200
0.000
0.040
0.210
2.040
0.520
1,050.00
900.00
150.00
240.00
2,044.00
2,240.00
0.00
34.00
105.00
1,020.00
208.00
2.9
3.1
1.5
1.1
4.8
5.2
0.0
0.2
0.4
3.3
1.5
1,113,229.62 72.1 30,262.81 2.7
•
•
•
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Stock Account
June 30, 1992
Unit Total Market Market Pct. Unit Annual Cur.
Quantity Security Cost Cost Price Value Assets Income Income Yield
PUTS
CALLS
5 Boeing Co. July 40 0.60 300.00 1.12 562.50 0.0
Puts
15 Glaxo Holdings July 0.60 893.75 0.50 750.00 0.0
25 Puts
1,193.75 1,312.50 0.1
-4 American Home 2.00 -799.97 2.50 -1,000.00 -0.1
Product July 70
Calls
-6 Bristol Myers 2.04 -1,224.95 1.00 -600.00 0.0
September 70 Calls
-5 Philip Morris July 4.64 -2,318.55 4.25 -2,125.00 -0.1
70 Calls
-7 Southwestern Bell 1.93 -1,349.95 1.56 -1,093.75 -0.1
August 60 Calls
-5 Nal Mart July 55 2.02 -1,012.46 0.62 -312.50 0.0
Calls
-6,705.88 -5,131.25 -0.3
GOVERNMENT BONDS
300,000 U. S. Treasury Note 99.81 299,429.00 100.34 301,031.25 19.5 5.000 15,000.00 5.0
5.000X Due 06-30-94
Accrued Interest 0.00 0.0
CASH AND EQUIVALENTS
Dividends Accrued
Money Market
TOTAL PORTFOLIO
299,429.00
301,031.25 19.5 15,000.00 5.0
1,919.60 1,919.60 0.1 0.000 0.00 0.0
132,175.21 132,175.21 8.6 3.480 4,599.70 3.5
134,094.81
1,474,835.74
2
134,094.81 8.7 4,599.70 3.4
1,544,536.93 100.0 49,862.51 3.2
•
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
Bond Account
June 30, 1992
Unit Total Market Market Pct. Unit Annual Cur.
Quantity Security Cost Cost Price Value Assets Income Income Yield
CORPORATE BONDS
100,000 Philip Morris
9.250% Due 12-01-97
Accrued Interest
GOVERNMENT BONDS
100.54 100,543.50 112.63 112,629.00 18.2 9.250 9,250.00 8.2
100,543.50
745.14 0.1
113,374.14 18.3 9,250.00 8.2
115,000 U. S. Treasury Note 99.89 114,869.45 102.41 117,767.19 19.0 6.375 7,331.25 6.2
(912827C26)
6.375% Due 08-31-93
24,000 U. S. Treasury Note 99.80 23,952.16 103.50 24,840.00 4.0 7.125 1,710.00 6.9
7.125% Due 10-15-93
100,000 Federal Home Loan 100.00 100,000.00 108.00 108,000.00 17.5 9.150 9,150.00 8.5
Mortgage Corp.
9.150% Due 08-08-00
100,000 U. S. Treasury Note 99.00 99,000.00 105.66 105,656.25 17.1 8.000 8,000.00 7.6
8.000% Due 05-15-01
100,000 U. S. Treasury 18.73 18,732.00 19.59 19,593.75 3.2 0.000 0.00 0.0
Strips
0.000% Due 08-15-12
Accrued Interest 7,409.17 1.2
CASH AND EQUIVALENTS
Money Market
CERTIFICATE OF DEPOSIT (MONTHLY PYMT.)
100,000 First USA Bank
Wilmington, DE 8.3%
1-2-96
8.300% Due 01-02-96
TOTAL PORTFOLIO
356,553.61
383,266.35 62.0 26,191.25 7.0
13,622.82 13,622.82 2.2 3.480 474.07 3.5
13,622.82
13,622.82 2.2 474.07 3.5
100.00 100,000.00 108.31 108,310.00 17.5 8.300 8,300.00 7.7
100,000.00
570,719.93
108,310.00 17.5 8,300.00 7.7
618,573.31 100.0 44,215.32 7.2
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Longer Investments, Incorporated
PURCHASE AND SALE REPORT
City of Fayetteville Police Pension Fund
Combined Account
From 04-16-92 To 06-30-92
Security
Unit
Price
Amount
PURCHASES
06-12-92
06-12-92
O 6-18-92
05-05-92
05-13-92
06-11-92
04-28-92
04-16-92
06-12-92
06-18-92
06-22-92
06-19-92
06-05-92
06-30-92
SALES
18-92
1-92
O -05-92
06-02-92
06-05-92
06-05-92
06-02-92
05-18-92
O 6-10-92
06-02-92
06-17-92
06-22-92
06-08-92
O 6-17-92
06-22-92
06-16-92
05-05-92
06-04-92
06-05-92
06-05-92
06-10-92
•
1,000
500
250
700
300
1,100
500
500
700
5
15
10
7
300,000
630
300
500
400
1,000
600
500
500
1,000
350
500
500
1,000
1,000
600
0
400
500
500
700
500
Genuine Parts
Int'l Business Machines
Int'l Business Machines
Jacobs Engineering
Jacobs Engineering
John H. Harland
Monsanto
Reynolds Metals
Southwestern Bell
Boeing Co. July 40 Puts
Glaxo Holdings July 25 Puts
OEX July 385 Puts
OEX June 395 Puts
U. S. Treasury Note
5.000% Due 06-30-94
Archer Daniels Midland
Briggs & Stratton
Briggs & Stratton
Bristol Myers Squibb
Comptronix Corp.
Computer Associates
International
Durr Fillauer
Eli Lilly & Co.
Glaxo Holding
Grainger, W. W.
Grainger, W. W.
Harnischfeger Industries
Hasbro, Inc.
Ingersoll-Rand
Luby's Cafeterias
Mattel Inc.
Mobil Corp.
Monsanto
Pall Corp.
Philip Morris
Reader's Digest
1
32.94 32,945.00
93.36 46,680.80
94.95 23,737.50
28.10 19,670.00
26.17 7,850.00
21.82 24,002.00
67.85 33,925.00
59.50 29,750.00
61.91 43,339.59
O .60 300.00
O .60 893.75
6.60 6,597.52
7.99 5,591.60
99.81 299,429.00
574,711.76
23.75 14,961.99
47.33 14,199.52
47.12 23,561.71
66.62 26,649.11
13.57 13,574.00
13.37 8,024.73
20.86 10,431.50
66.12 33,061.39
26.77 26,774.10
49.86 17,449.41
47.50 23,749.20
19.12 9,562.17
28.29 28,294.05
27.93 27,929.06
15.37 9,224.69
20.50 10.25
62.87 25,149.16
62.37 31,186.45
24.87 12,437.08
74.00 51,798.27
46.18 23,089.22
•
Date
Quantity
Longer Investments, Incorporated
PURCHASE AND SALE REPORT
City of Fayetteville Police Pension Fund
Combined Account
From 04-16-92 To 06-30-92
Security
Unit
Price
Amount
06-22-92
05-18-92
05-21-92
05-26-92
06-22-92
06-10-92
06-22-92
06-12-92
05-18-92
06-29-92
SHORT SALES
06-16-92
06-03-92
06-11-92
06-22-92
0104-92
SHORT COVERS
05-04-92
1,000
500
650
500
700
500
10
7
200,000
175,000
SafeCard Services
Schlumberger, LTD
Tyson Foods
Tyson Foods
VeriFone, Inc.
Warner Lambert
OEX July 385 Puts
OEX June 395 Puts
U . S. Treasury Strips
O .000% Due 08-15-12
U . S. Treasury Strips
O .000% Due 08-15-12
4 American Home Product July 70
Calls
6 Bristol Myers September 70 Calls
5 Philip Morris July 70 Calls
7 Southwestern Bell August 60
Calls
5 Wal Mart July 55 Calls
8 Briggs & Stratton May 50 Calls
2
9.62
63.09
18.37
18.80
20.31
59.12
7.51
7.51
19.55
19.53
2.00
2.04
4.64
1.93
2.02
1.43
9,624.67
31,543.58
11,943.75
9,402.50
14,217.91
29,561.51
7,506.10
5,259.62
39,100.00
34,177.50
623,454.20
799.97
1,224.95
2,318.55
1,349.95
1,012.46
6,705.88
1,148.00
1,148.00
Date Quantity
Longer Investments, Incorporated
REALIZED CAPITAL GAINS AND LOSSES
City of Fayetteville Police Pension Fund
Combined Account
From 01-01-92 Through 06-30-92
Security
Cost
Basis Proceeds
Gain Or Loss
01-08-92 100,000 U. S. Treasury Note
8.000% Due 05-15-01
01-14-92 800 Dreyer's Grand Ice Cream 20,700.00
01-20-92 500 Tyson Foods 8,717.75
01-29-92 500 Armstrong World Ind 16,062.50
01-29-92 800 Cintas 35,361.32
02-07-92 1,000 TRC Cos 11,085.00
02-12-92 10 OEX February 390 Puts 8,373.11
02-24-92 1,700 Input/Output, Inc. 20,819.00
02-25-92 1,000 Community Psychiatric 11,955.00
Center
02-25-92 900 Dean Foods 27,075.00
03-03-92 1,000 Pacificorp 19,570.00
03-05-92 400 Briggs 8 Stratton 13,678.87
03-05-92 500 Crane Co. 13,118.33
03-05-92 500 Diebold, Inc. 21,478.32
03-11-92 500 Durr Fillauer 11,172.00
03-11-92 400 Kaydon, Corp. 19,235.00
03-30-92 450 Hershey Foods 18,823.50
04-01-92 500 Abbott Labs 20,974.34
04-01-92 1,000 America Service Group 12,000.00
04-01-92 400 Briggs 8 Stratton 13,678.87
04-01-92 500 Bob Evans Farms 9,062.50
04-01-92 750 Claire's Stores 6,286.61
04-01-92 600 Centex Telemanagement 10,932.00
04-01-92 600 Diebold, Inc. 25,773.99
04-02-92 500 Bob Evans Farms 9,062.50
04-02-92 800 Centex Telemanagement 14,576.00
04-02-92 600 Compaq 18,810.00
04-07-92 1,500 Arbor Drug 29,375.00
04-07-92 500 Camptronix Corp 6,852.50
04-07-92 1,000 Crane Co. 26,236.67
04-07-92 500 E.I. du Pont Nemours 8 23,477.50
Co.
04-07-92 1,100 Hasbro, Inc. 22,548.95
04-08-92 500 Walmart Stores 20,163.33
04-09-92 5 Schlumberger May 55 Puts 1,035.00
05-04-92 -8 Briggs 8 Stratton May 50 1,148.00
Calls
05-05-92 400 Mobil Corp. 26,075.33
05-18-92 630 Archer Daniels Midland 13,973.79
05-18-92 500 Eli Lilly 8 Co. 43,112.50
05-18-92 500 Schlumberger, LTD 28,972.50
05-18-92 200,000 U. S. Treasury Strips 37,596.12
98,265.63 107,875.00
1
28,544.00
9,147.50
14,499.51
46,300.00
14,999.49
5,719.01
28,475.00
14,499.51
23,124.22
21,249.28
20,372.84
13,437.05
29,217.77
10,687.50
20,550.00
18,188.39
30,311.48
12,250.00
20,849.30
12,875.00
5,999.79
8,958.00
34,198.85
13,062.50
12,200.00
15,599.47
31,479.00
6,312.50
25,179.15
23,311.72
27,705.32
25,249.15
464.98
2,803.30
25,149.16
14,961.99
33,061.39
31,543.58
39,100.00
9,609.37
7,844.00
429.75
-1,562.99
10,938.68
3,914.49
- 2,654.10
7,656.00
2,544.51
-3,950.78
1,679.28
6,693.96
318.72
7,739.45
-484.50
1,315.00
-635.11
9,337.14
250.00
7,170.42
3,812.50
-286.82
-1,974.00
8,424.86
4,000.00
- 2,376.00
-3,210.53
2,104.00
-540.00
- 1,057.52
-165.78
5,156.37
5,085.82
-570.02
1,655.30
-926.17
988.20
-10,051.11
2,571.08
1,503.88
J -
•
•
•
Date Quantity
Longer Investments, Incorporated
REALIZED CAPITAL GAINS AND LOSSES
City of Fayetteville Police Pension Fund
Combined Account
From 01-01-92 Through 06-30-92
Security
Cost
Basis Proceeds Gain Or Loss
05-21-92
05-21-92
05-26-92
06-02-92
06-02-92
06-02-92
06-04-92
06-05-92
06-05-92
06-05-92
06-05-92
06-05-92
06-08-92
06-10-92
06-10-92
06-10-92
06-12-92
06-16-92
06-17-92
06-17-92
06-22-92
06-22-92
06-22-92
06-22-92
06-22-92
06-29-92
TOTAL GAINS
TOTAL LOSSES
300
650
500
400
500
350
500
500
600
1,000
700
500
1,000
1,000
500
500
7
0
500
1,000
500
600
1,000
700
10
175,000
0.000% Due 08-15-12
Briggs & Stratton 10,259.16 14,199.52 3,940.36
Tyson Foods 11,333.07 11,943.75 610.67
Tyson Foods 8,717.75 9,402.50 684.75
Bristol Myers Squibb 26,071.45 26,649.11 577.66
Durr Fillauer 11,172.00 10,431.50 -740.50
Grainger, W. W. 19,602.63 17,449.41 -2,153.22
Monsanto 33,925.00 31,186.45 -2,738.55
Briggs 8 Stratton 17,098.59 23,561.71 6,463.12
Computer Associates 9,131.25 8,024.73 -1,106.52
International
Comptronix Corp. 13,705.00 13,574.00 -131.00
Philip Morris 31,469.74 51,798.27 20,328.53
Pall Corp 13,500.00 12,437.08 -1,062.92
Hasbro, Inc. 20,499.05 28,294.05 7,795.00
Glaxo Holding 19,739.00 26,774.10 7,035.10
Reader's Digest 14,435.00 23,089.22 8,654.22
Warner Lambert 36,800.00 29,561.51 -7,238.49
OEX June 395 Puts 5,591.60 5,259.62 -331.98
Mattel Inc. 6.39 10.25 3.86
Grainger, W. W. 28,003.75 23,749.20 -4,254.55
Ingersoll-Rand 28,160.00 27,929.06 -230.94
Harnischfeger Industries 10,606.67 9,562.17 -1,044.50
Luby's Cafeterias 9,233.00 9,224.69 -8.31
Safecard Services 10,472.50 9,624.67 -847.83
VeriFone, Inc. 14,350.00 14,217.91 -132.09
OEX July 385 Puts 6,597.52 7,506.10 908.58
U. S. Treasury Strips 32,896.61 34,177.50 1,280.89
0.000% Due 08-15-12
2
171,025.52
-52,466.82
1,240,591.08 1,359,149.78 118,558.70
•
•
Date
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Combined Account
From 01-01-92 Through 06-30-92
Security Amount
COMMON STOCK
01-02-92
01-02-92
01-02-92
01-02-92
01-02-92
01-03-92
01-03-92
O 1-03-92
O 1-07-92
O 1-09-92
01-10-92
01-15-92
01-27-92
02-03-92
02-03-92
02-03-92
02-04-92
02-05-92
02-10-92
02-10-92
02-14-92
02-18-92
02-18-92
02-19-92
02-19-92
02-20-92
02-24-92
02-25-92
02-25-92
02-25-92
02-28-92
02-28-92
03-02-92
03-02-92
03-02-92
03-04-92
03-05-92
03-06-92
03-09-92
03-09-92
03-12-92
03-12-92
03-13-92
Arbor Drug
Baxter Int''.
Briggs & Stratton
Luby's Cafeterias
Waste Management
Dean Foods
Mattel Inc.
Walmart Stores
Dreyer's Grand Ice Cream
Harnischfeger Industries
Philip Morris
American Barrick Resources
SafeCard Services
Bristol Myers Squibb
Reader's Digest
Warner Lambert
Mobil Corp.
Amoco
E.I. du Pont Nemours & Co.
Eli Lilly & Co.
Emerson Electric
Abbott Labs
Pacificorp
Claire's Stores
Hasbro, Inc.
Hershey Foods
Briggs & Stratton
Durr Fillauer
McDonald's Corp
Schlumberger, LTD
Crane Co.
Perkin Elmer Corporation
Archer Daniels Midland
American Home Products
Bob Evans Farms
Diebold, Inc.
Baxter Int''.
Philip Morris
Luby's Cafeterias
Mattel Inc.
Arbor Drug
Waste Management
Dean Foods
1
52.50
185.00
640.00
125.00
44.00
126.00
31.25
21.25
40.00
100.00
630.00
25.95
150.00
552.00
100.00
510.00
800.00
275.00
210.00
275.00
621.00
250.00
375.00
43.75
84.00
110.25
640.00
70.00
92.50
150.00
281.25
136.00
15.75
260.00
70.00
462.00
279.50
630.00
250.00
31.25
52.50
44.00
126.00
•
•
Date
03-16-92
03-17-92
03-19-92
03-30-92
03-30-92
03-30-92
04-09-92
04-10-92
04-21-92
04-27-92
04-28-92
04-30-92
05-04-92
05-04-92
05-05-92
05-06-92
05-07-92
05-07-92
05-07-92
05-11-92
05-11-92
05-11-92
05-13-92
05-18-92
05-18-92
05-18-92
05-26-92
05-26-92
05-27-92
06-01-92
06-02-92
O 6-04-92
O 6-08-92
06-08-92
06-09-92
06-09-92
06-11-92
O 6-15-92
06-15-92
O 6-16-92
O 6-17-92
06-19-92
O 6-22-92
O 6-26-92
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Combined Account
From 01-01-92 Through 06-30-92
Security Amount
Tyson Foods
Walmart Stores
Harnischfeger Industries
Bristol Myers Squibb
Kaydon, Corp.
Sensormatic Electric
Abbott Labs
Reader's Digest
Pall Corp.
Hasbro, Inc.
Texaco
Claire's Stores
Archer Daniels Midland
Mobil Corp.
Grainger, W. W.
Monsanto
American Home Products
Amoco
Warner Lambert
Boeing Co.
Glaxo Holding
Eli Lilly & Co.
Ingersoll-Rand
Durr Fillauer
Emerson Electric
Minnesota Mining & Mfg.
Briggs & Stratton
Perkin Elmer Corporation
McDonald's Corp
Reynolds Metals
Genuine Parts
Baxter Int'l.
Luby's Cafeterias
Mattel Inc.
Philip Morris
Walmart Stores
Waste Management
American Barrick Resources
Tyson Foods
Computer Associates
International
Fluor Corp.
Harnischfeger Industries
Sensormatic Electric
Bristol Myers Squibb
20.00
52.50
100.00
690.00
60.00
60.00
150.00
125.00
45.00
50.00
560.00
25.00
15.75
800.00
140.25
280.00
260.00
275.00
510.00
125.00
567.06
275.00
175.00
37.50
621.00
400.00
200.00
136.00
100.00
225.00
187.50
279.50
250.00
46.85
262.50
26.25
52.00
78.00
13.50
50.00
80.00
100.00
60.00
414.00
18,947.86
•
•
•
Date
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Combined Account
From 01-01-92 Through 06-30-92
Security Amount
CORPORATE BONDS
06-01-92 Philip Morris
9.250% Due 12-01-97
GOVERNMENT BONDS
01-08-92
02-08-92
02-28-92
04-15-92
05-15-92
U . S. Treasury Note
8.000% Due 05-15-01
Federal Home Loan Mortgage Corp.
9.150% Due 08-08-00
U . S. Treasury Note (912827C26)
6.375% Due 08-31-93
U . S. Treasury Note
7.125% Due 10-15-93
U . S. Treasury Note
8.000% Due 05-15-01
CASH AND EQUIVALENTS
02-03-92
02-03-92
O 3-02-92
O 3-02-92
04-01-92
04-01-92
05-01-92
05-01-92
06-01-92
06-01-92
Money
Money
Money
Money
Money
Money
Money
Money
Money
Money
Market
Market
Market
Market
Market
Market
Market
Market
Market
Market
3
4,625.00
4,625.00
1,230.77
4,575.00
3,605.20
855.00
4,000.00
14,265.97
241.32
167.69
110.17
24.18
128.38
12.70
180.01
195.01
63.54
91.44
1,214.44
Date
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Combined Account
From 01-01-92 Through 06-30-92
Security Amount
CERTIFICATE OF DEPOSIT (MONTHLY PYMT.)
02-05-92
03-03-92
04-02-92
06-05-92
First USA
8.3% 1-2-9
8.300% Due
First USA
8.3% 1-2-9
8.300% Due
First USA
8.3% 1-2-9
8.300% Due
First USA
8.3% 1-2-9
8.300% Due
EXPENSE ACCOUNTS
01-15-92
02-03-92
02-03-92
03-02-92
03-02-92
04-01-92
04-01-92
05-01-92
05-01-92
05-11-92
06-01-92
06-01-92
06-15-92
Bank Wilmington, DE
6
01-02-96
Bank Wilmington, DE
6
01-02-96
Bank Wilmington, DE
6
01-02-96
Bank Wilmington, DE
6
01-02-96
Foreign Tax on
Automated Cash
Automated Cash
Automated Cash
Automated Cash
Automated Cash
Automated Cash
Automated Cash
Automated Cash
Foreign Tax on
Automated Cash
Automated Cash
Foreign Tax on
Dividends
Mgmt.
Mgmt.
Mgmt.
Mgmt.
Mgmt.
Mgmt.
Mgmt.
M9mt .
Dividends
Mgmt.
Mgmt.
Dividends
4
714.72
668.61
714.72
714.72
2,812.77
3.89
8.72
6.06
6.77
1.49
8.24
0.82
11.87
12.85
85.06
4.20
6.04
11.70
167.71
Date
Longer Investments, Incorporated
INTEREST, DIVIDENDS, AND EXPENSES
City of Fayetteville Police Pension Fund
Combined Account
From 01-01-92 Through 06-30-92
Security Amount
AFTER FEE PERFORMANCE EXPENSE
ACCOUNTS
O 1-10-92
O 1-10-92
O 1-30-92
03-31-92
03-31-92
04-08-92
04-08-92
06-30-92
06-30-92
Management Fee
Management Fee
Northern Trust Fee
Northern Trust Fee
Northern Trust Fee
Management Fee
Management Fee
Northern Trust Fee
Northern Trust Fee
4,423.84
1,487.22
2,050.00
584.18
216.07
4,089.25
1,616.52
576.18
224.07
15,267.33
NET INCOME 26,431.00
5
IONc>. NEW• Law..
II xrs.M1T
Comments and Outlooks from Longer Inv stmeots, Inc.
INCORPORA u June 30, 1992
The Economy
The economic data released so far this year have been consistent with the forecast of a slow but sustainable expansion resulting in real GNP
growth of approximately 2.5% in 1992. Profits improved 11.3% in the first quarter and we estimate profits for the year will show a 15-20%
improvement over 1991.
Corporate and consumer confidence have been slow to improve and as a consequence, job growth and consumer spending have been less robust
than in prior recoveries. Housing starts and permits have shown a pattern of erratic improvement this year with monthly fluctuations related
to weather. Auto sales have picked up and domestic auto manufacturers have increased market share in the United States.
The decline in interest rates in the last six to nine months has opened a window of
opportunity for corporations and consumers to reduce interest payments through
renegotiation of debt. Corporations have issued billions of dollars of debt in the first
and second quarter of the year to lock in lower interest rates and corporate treasurers
have taken advantage ofa bouyant stock market environment to issue equity in order
to retire debt. Households have actively refinanced mortgage debt at rates between
8% and 8.75% on thirty-year fixed mortgages and consumers have been reducing
installment debt. (See Graph A.)
Although the private sector balance sheet has been improving, the public sector debt
continues to grow. This year's Federal deficit is estimated to be 5350-370 billion and
Gross Treasury Debt will exceed $4 trillion this quarter. One of the results of such
indebtedness is fewer policy options for goverment officials to use to stimulate the
economy. It is interesting to look back to President Bush's State ofthe Union Address
earlier this year with its incentives for first-time homebuyers, accelerated deprecia-
tion for corporate investment, liberal newrules for I.R A. accounts, additional money for Head Start, initiatives for health care, tax exemption
ofS500 per child, capital gains tax cut, etc. The Democrats countered with a more stimulative spending program, tax cuts for the middle class,
higher tax rates on the wealthy, a more aggressive national health care proposal, deeper defense cuts, etc. The result - gridlock! The bottom
line is that policymakers have few options available to help the economy with fiscal stimulus because of the overhang of debt from the 1980s
and the early 1990s.
Another direct result of our government's indebtedness is higher inflation-adjusted long-term interest rates. Although the Federal Reserve
has lowered short-term rates dramatically since mid- 1990 and inflationary pressures are benign, long-term rates have remained stubbornly
high. High real interest rates act as a drag on commercial and residential real estate markets and corporate capital investment, which will
continue to restrain economic growth and deliver a subdued economic recovery.
Federal Reserve Policy
The Federal Reserve can be expected to err on the side of ease through the
election It is hard to imagine that Alan Greenspan would want to preside over
a triple -dip recession before election day, after being reappointed as Fed
Chairman by George Bush. If the economy begins to falter again, Alan
Greenspan can be expected to nudge short-term rates lower. However, long-
term interest rates, which are influenced by market forces such as currency
valuation and inflation expectations, may not drop below 7.75%. Low short-
term rates and high Tong -term rates have produced a very steep yield curve. (See
Graph B.) Investors can dramatically increase yields by lengthening maturities
to two to four years.
Treasury Security Yield Curve
to
a
CONSUMER
a __._..._ _.__-..INSTALLMENT
DEBT, year-
to-year com-
4
parison
2
o
__— --------_..---
a.
—carr..,
Graph
Source
A
Dow Theory Letters (6-24-92).
The decline in interest rates in the last six to nine months has opened a window of
opportunity for corporations and consumers to reduce interest payments through
renegotiation of debt. Corporations have issued billions of dollars of debt in the first
and second quarter of the year to lock in lower interest rates and corporate treasurers
have taken advantage ofa bouyant stock market environment to issue equity in order
to retire debt. Households have actively refinanced mortgage debt at rates between
8% and 8.75% on thirty-year fixed mortgages and consumers have been reducing
installment debt. (See Graph A.)
Although the private sector balance sheet has been improving, the public sector debt
continues to grow. This year's Federal deficit is estimated to be 5350-370 billion and
Gross Treasury Debt will exceed $4 trillion this quarter. One of the results of such
indebtedness is fewer policy options for goverment officials to use to stimulate the
economy. It is interesting to look back to President Bush's State ofthe Union Address
earlier this year with its incentives for first-time homebuyers, accelerated deprecia-
tion for corporate investment, liberal newrules for I.R A. accounts, additional money for Head Start, initiatives for health care, tax exemption
ofS500 per child, capital gains tax cut, etc. The Democrats countered with a more stimulative spending program, tax cuts for the middle class,
higher tax rates on the wealthy, a more aggressive national health care proposal, deeper defense cuts, etc. The result - gridlock! The bottom
line is that policymakers have few options available to help the economy with fiscal stimulus because of the overhang of debt from the 1980s
and the early 1990s.
Another direct result of our government's indebtedness is higher inflation-adjusted long-term interest rates. Although the Federal Reserve
has lowered short-term rates dramatically since mid- 1990 and inflationary pressures are benign, long-term rates have remained stubbornly
high. High real interest rates act as a drag on commercial and residential real estate markets and corporate capital investment, which will
continue to restrain economic growth and deliver a subdued economic recovery.
Federal Reserve Policy
The Federal Reserve can be expected to err on the side of ease through the
election It is hard to imagine that Alan Greenspan would want to preside over
a triple -dip recession before election day, after being reappointed as Fed
Chairman by George Bush. If the economy begins to falter again, Alan
Greenspan can be expected to nudge short-term rates lower. However, long-
term interest rates, which are influenced by market forces such as currency
valuation and inflation expectations, may not drop below 7.75%. Low short-
term rates and high Tong -term rates have produced a very steep yield curve. (See
Graph B.) Investors can dramatically increase yields by lengthening maturities
to two to four years.
Treasury Security Yield Curve
0.00*
a.aox -
a.00a _
v.aom -
9.OGA -
a.aor• -
a.a°x
4.aO1L-
e.00x
s aos
Graph
Source:
(6-26-92)
B
Value Line
—carr..,
s
Moo
•
r
w
10 30
Marker News
Page Two
Politics
This year's political environment carries more uncertainty than most
people expected just three months ago. For the first time in recent
history, a credible third -party candidate poses a serious challenge to
an incumbent president. As an independent with unknown ideas and
programs, a Ross Perot candidacy is difficult for investors to assess.
But assess it they must, and the prospect of a close three-way race in
November is beginning to unsettle the markets.
It's not to say that a Perot presidency would be bad for the country,
it's just that no one knows for sure what a Perot presidency would
mean. If Perot captures enough electoral college votes to preclude
either Bush or Clinton from gaining the 270 electoral votes needed to
win outright, the election could be thrown into the House of Repre-
sentatives. For Perot to become President, he would have to win a
majority of the electoral college votes as it is unlikely he would be
elected President by the House. If the election is to be conducted by
the House, the next President of the United States will not be known
for two months as the vote would be taken in January. Each state
delegation in the House of Representatives would cast one vote for
president. In the current House the Democrats control the majority
of thirty-one state delegations, Republicans control ten and the rest
are evenly divided. It is possible that we could have a three way race
with a Democratic candidate coming in third in electoral votes who
is then elected to the Presidency by the House of Representatives.
The last time a Presidential election was thrown into the House of
Representatives was in 1824, when currency and bond markets were
not trading twenty-four hours a day. Uncertainty unnerves the
markets and unless Ross Perot does a fast fade as we approach the
election in November, the uncertainty will continue to weigh on
investors' minds.
Market Action
The year so far has been characterized by profit-taking in last year's
stock market winners (growth stocks) and institutional buying of last
year's underperformers (cyclical stocks). The Dow Jones Industrial
Average (DJIA), which is heavily weighted in industrial cyclical
companies, has moved to new
highs this year. However, the
recent new highs in the DMA
have not been accompanied by
new highs in the broader mar-
ket averages. Although the
DJIA is up approximately 5%
year-to-date, the Standard and
Poor's 500 (S & P 500) is
down approximately 3% and
the Over -the -Counter (OTC)
index has declined approxi-
mately 6% year-to-date. The
Mutual Fund Index that tracks
the performance of twenty of
the largest stock mutual funds
is down 11.7% since January
1, 1992 (see Graph C).
What is behind these divergences? Last year the DMA was the worst
performer of the major indices for the period December 31, 1990
through December 31, 1991, to wit:
DMA
NASDAQ (OTC)
S&P500
Wilshire 5000
Longer Investments -
Equity Accounts
24.3%
56.8%
30.5%
30.3%
43.2%
Although the DMA has risen this year, it is only catching up to the
performance of the broader market averages last year.
Graph D •
Source: Dow Theory Letters
(5-13-92) D -J INDUSTRIAL
AVERAGE
ADVANCE -DECLINE
RATIO
PIAN FAP MAR APR 1MY
The rallies this year have been accompanied with declining breadth,
or participation (see Graph D). With each new high, fewer stocks
have been advancing. The number of new highs on the New York
Stock Exchange has declined with each new high in the DMA,
indicating waning participa-
tion in the advance by most
listed stocks.
MUTUAL FUND NDEI
s140 [or
_I- 11111 u1
205.24 +0.07 (tU%) SINCE JAN 1 -11.754
44 Moe tin 11
1-
-yfoam�_
=mr.A•I-O 4F •1 I
q ti6•w"" 1•4,."„„ •.1-4Y,
t. d.
INIW
-leo
• 230
Graph C . - 111:
•
•
•
Market News
Page Three
Market Outlook
The stock market will probably extend its pattern of rotational
corrections and trendless churning until the uncertainty surrounding
the economic outlook and presidential election subsides. Last year
was an exceptional year in the stockmarket, by historical perspective.
On aveiage, our equity portfolios were up 43% and the S & P 500
increased by 31%. By comparison, the average annual return in the
stock market over the last sixty-five years has been 10% per year with
the best year being 54% and the worst year -43%. (See Graph E.) Last
year's return would rank as one of the best years during that sixty-five
year period. It is quite natural for a period of digestion and
equilibration to follow such an extraordinary year.
65 Years 5 Years Best Worst
1926-1990 1986-1990 Year Year
Stocks
Bonds
Cash
10.1% 13.2% 54.0% -43.3%
4.6% 9.4% 40.4% -9.2%
3.7% 7.5% 14.7% 0.0%
Graph E
Source: Ibbotson & Stuquefeld (1989)
Updated via Interactive Data Corporation
The valuation level of the market is not cheap by historical standards
and technical studies indicate caution is appropriate. We have
utilized option strategies to increase income on long-term equity
holdings and to hedge downside risk. Profit-taking in the first half of
the year has raised cash reserves to levels that are higher than year-
end levels. We have invested some cash reserves in the two-year
Treasury Notes yielding over 5%. These notes can be convened to
cash when needed. In the meantime, the return is much better than the
3.5% available in the money market funds. The accounts are
positioned to have reserves available to be able to take advantage of
expected buying opportunities as they occur.
1.6
1.4
1.2
1.0
0.9
0.11
A 24—Meat Study
Restive r/t
1JJASONDJ AAASJJA50No rMAIA
1990 1 1991 1 1992
Graph F
Source: Value Lane
(6-12-92)
-- Group 1 Avg.Grow10: 143%/yr.
— Group 5 Avg. Growth 6.0f /y1.
Many high quality growth stocks are 25-40% below the highs made
last year. Robert Farrell, chief market strategist for Merrill Lynch,
recently concluded a study indicating that 44% of the 5000 stocks in
Merrill's universe are down 30% or more from the highs made in the
first quarter. As a result, growth is getting cheaper. Value Line
Investment Service reports that in the fust five months of 1992,
growth stocks that show compound annual earnings growth of 14.5%
per year have gone from a 40% premium valuation to the market to
zero premium. In other words, because of the pronounced sell-off in
growth stocks, the investor buying these companies today is paying
no valuation premium to participate in their above-average growth
rates (See Graph F.)
We continue to believe that equity ownership will do more to grow
investors' wealth in the 1990s than bonds or cash. However, there are
times when it is prudent to be defensive and to maintain reserves It
is possible that the market could fully discount the election result
before November just as the Persian Gulf War was discounted weeks
before the January 15, 1991 invasion deadline. As the summer
progresses, we will have more information on the economy, political
candidates and policy platforms to incorporate into investment
decisions. For now, the defensive team is on the field and the
offensive team is bench -sitting.
Have a nice summer! Please feel free to call ifyou have any questions
or comments.
"Yeah. Gem,1 hurt But yknor. d•, agood kind of hurt"
LONGER
INVESTMENTS
INCORPORATED
P. O. Box 1269
Fayetteville, AR 72702
Phone: (501) 443-5851
Fax: (501) 443-7129
Markel News
Page Four
Company Spotlight
BRISTOL-MYERS SQUIBB COMPANY
June 30, 1992
In October of 1989 Bristol-Myers Company and Squibb Corp.
merged to become Bristol-Myers Squibb Company (BMY), a leading
worldwide manufacturer of medical, pharmaceutical, household,
health and beauty products. The merger has proven to be productive
and financially rewarding for Bristol-Myers Squibb Company (BMY).
Through coordination of sales and marketing activities and the
increased scope and quality of the combined pharmaceutical research
and development, BMY is positioned to compete globally in each of
their business segments.
Revenues for 1991 were in excess of $11 billion, an 8% increase,
while earnings increased over 18% to $3.95 per share. BMY displays
many of the fundamental characteristics we favor in evaluating a
stock. Return on shareholders'equity has grown over the past five
years and exceeded 35% in 1991. The company's main capital
requirements (dividends and capital expenditures) are covered by
cash flow from operations. BMY is relatively debt -free and carries
a AAA credit rating by both Moody's and Standard and Poor's.
Earnings per share have grown consistently over the years. Dividends
per share have increased at an annual rate of 18% over the past ten
years. The most recent increase in January of 1992 to $2.76 per share
marks the twentieth consecutive year of dividend increases.
In recent months, performance of pharmaceutical stocks as a group
has lagged that of the market. BMY is no exception. Since reaching
a high of 90 1/8 early in the year, the price has fallen approximately
27% to the 65 3/4 level where it closed the quarter. Several factors
have contributed to this underperformance. The first is a sector
rotation during 1992 from last year's strong -performing growth
stocks to the cyclical stocks which stand to benefit most as the
economy emerges from the recession. The second reason is the
possibility of increased government intervention in the pricing of
prescription drugs. Finally, the announcement by the company early
in June that second quarter earnings would show mid -single digit
growth further weakened the stock.
Despite the recent concern over increased government scrutiny of
drug pricing, pharmaceuticals should be viewed as cost-effective. As
a percent of total health care cost, the cost of drugs is actually
declining. In 1960, outpatient prescriptions accounted for 10% ofU.S
health care costs. In 1990, it was less than 5%. However, pharma-
ceutical bills are the medical bill most often paid by the consumer at
point-of-sale. Although drug pricing policy is not the primary cause
of escalating medical expenses in the U. S., it is a politically popular
target in an election year.
The lower-than-expected second quarter earnings guidance by BMY
is the result of excess wholesaler inventories that built up late in 1991
in advance of a 6 to 7% average price hike in January of 1992
Additionally, wholesalers appear to be working off the inventories at
a rate lower than historical norms. For these reasons, BMY's orders
in the first half of 1992 were affected. Management has indicated they
consider this a cyclical short-term phenomenon that should be
corrected by year-end 1992. Management has implemented new
ordering procedures to reduce year-end inventory building by whole-
salers in the future.
Markets
The two fastest-growing pharmaceutical market segments are anti-
cancer drugs and cholesterol-lowering drugs. BMY has dominant
market position in each of them. While established medicines
continue to tum in solid performance, BMY's new drug introductions
have been well received. Both Pravachol, a newly -released choles-
terol-lowering drug and Taxol, an anti-cancer drug to be released in
1993 are expected to emerge as billion dollar products by the end of
the decade. BMY's VIDEX is one of only two anti-viral agents
approved for use in treating AIDS and recent studies presented by
independent investigators to the FDA indicate that VIDEXisthe more
effective (Shearson Lehman Brothers 4/21/92).
Valuation
Historical valuation studies indicate that when BMY stock is priced
to yield 3.7%, it is undervalued. The current 4.2% dividend yield
should provide support from further price deterioration. At current
levels the stock is trading at 15.1 times estimated 1992 earnings and
12.7 times estimated 1993 earnings.
Due to the technical damage BMY suffered after the recent announce-
ment that second quarter earnings will be below expectations, the
stock will likely trade at current levels in the near-term. However, it
possesses good long-term value. The strong growth ofproducts, retail
demand for anti-cancer drugs, the credit quality of the company, low
relative valuation and 4.2% dividend yield lead us to view Bristol
Myers Squibb as an undervalued growth stock for long-term conser
vative investors.
Bristol-Myers Squibb Company
Price (06/30/92): $65.75
52 -Week Range: $62.00-$90.125
Dividend Rate: 52.76
Dividend Yield 4.2%
Institutional Ownership: 60%
EPS 1991: $3.95
EPS 1992E: $4.35
P/E 1991: 16.6X
P/E 1992E: 15.1X
Beta: 1.00
Financial Data as of Fiscal Year -End
Profit Margin (%): 18.4 17.0 15.7 14.7 14.1
ROA (%): 21.8 19.0 16.9 15.2 14.2
ROE (%): 35.5 32.3 28.3 25.3 22.4
Revenue (% incr.). 8.3 12.1 7.4 13 2 14.2
Net Income (% incr.): 17.6 34.3 14.8 17.5 35.9
EPS (% incr.): 18.5 34.2 15.1 20.4 37.2
Div./Share (% incr.): 13 2 6 0 19.1 20.0 32.1
COGS (% of rev.): 26.3 27.9 28.9 29.0 30.5
Debt/Capital (%): 2.3 4.1 4.5 5.4 5.5
Div. (% of Net Income): 60.8 63.8 50 2 51.1 49.3
Cash Flow from Operations (% of Debt Retirement, Div. &
Capital Spending): 93.0 104.4 91.5 133.9 135.1
Asset Turnover (times): 1.2 1.1 1.1 1.0 1.0
Earnings Per Share ($): 3.95 3.33 2.75 2.39 1.98
'Excluding non-recurring merger-related charges.
ibis locomotion is obtained from internal and atonal research puma considered to be reliable.
Any opinion apremed are aubim to ddanae without notice. This repos is prepared ka
informational outposts only and doa not caoatimte s rW`mmand'inn for pacaase.
• • • • • • • • • • • • • • • • • • • • • •
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• • • • • • • • • • • • • • • • • • • • • •
•
•
•
Me!CROnL ED'S 6
D ARKANSAS FIRE & POLICE PENSION REVIEW BOARD
P.O. DRAWER 34164
LITTLE ROCK, ARKANSAS 72203
TELE►NON( (501) 324-9495
FAX: (501) 324-9497
TO: The Board of Trustees
Police Pension and Relief of FAYETTEVILLE
FROM: Arkansas Fire and Police Pension Review Board
RE: 1991 Pension Fund Actuarial Valuation
DATE: July 8, 1992
In accordance with State law, the actuary under contract to this office
periodically tests all local fire and police pension funds for actuarial
soundness. The 1991 actuarial study of your pension fund is enclosed. The
financial tests for the pension fund are to answer the following questions:
• 1 Is there enough annual income to the pension
fund to fully fund it? (See page 4 of the
actuary's report.)
2. Are there enough assets in the pension fund to
cover all active member contributions, all
payments to current retirants, and at least 45%
of future payments earned by active members?
(See page 10 of actuary's report.)
3. Is this pension fund considered actuarially
sound under State law?
•
112
1J
•
a. RIME CR(PUS pit flSSOCIfl1CS, Inc.
�
cum • .0 UTIS • MISTS
1
1
(.
•
C
July 2, 1992
Board of Trustees
Fayetteville Police Pension Fund
Gentlemen:
1303 Tower BuOdk
Rh 8 Omit Streets
Utile Rock, Manes 72201
501/3768043
This report presents the results of our actuarial valuation of the assets and
liabilities of the Fayetteville Police Pension Fund as of December 31, 1991.
The purpose of this report is to (1) evaluate the actuarial status of the
Fund, (2) determine the level contribution requirement needed, and (3) review
the development of the Fund over the past several years.
The member and financial information used in this report was supplied by the
Arkansas Fire 6 Police Pension Review Board, whose cooperation is appreciated.
I certify that this report has been prepared in accordance with generally
accepted actuarial principles and practices. In my opinion, the actuarial
methods used are appropriate and the actuarial assumptions are reasonable in
the aggregate.
If you have any questions or comments, please let me know.
Sincerely,
Steve Osborn, F.S.A., M.A.A.A.
Actuary
cy
•
1
1
1
1
o
EXHIBIT 1
CONTRIBUTIONS
The following contribution level reflects the payment of the current year
Normal Cost for benefits attributable to said year (see Exhibit 2) plus an
amount sufficient to pay off the Unfunded Actuarial Accrued Liability over a
22 -year period (11 year period for any unfunded retiree liability). These
costs do not include the contributions due to the Local Police and Firefight-
ers Retirement System ("LOPFI") for persons hired after 1982.
1992
Annual contributions necessary to
PaY:
1. Normal Cost, plus $ 190,437
2. Pay off the Unfunded Actuarial 92,658
Accrued Liability
3. -Total necessary $ 283,095.
Less
4. Expected Employee Contribution - 40,554
Necessary Employer Contribution $ 242,541
(This is the amount needed in
addition to investment income)
Covered Payroll $ 675,900
Necessary Employer Rate 35.9%
These contributions assume that the dollar contribution grows at a rate of 4%
per year. The contributions are assumed to be made continuously during the
year.
The actual 1991 contribution was $422,739 from the employer.
4
•
•
i
1
1
1..
1.
1.
EXHIBIT 2
COSTS AND LIABILITIES
A. Normal Cost (Cost to fund
current active members)
1. Regular Retirement Benefits
2. Voluntary Termination Benefits
3. Survivors' Benefits
4. Disability Benefits
TOTAL
B. Actuarial Accrued Liability
1. Actives Lives
Regular Retirement Benefits
Voluntary Termination Benefits
Survivors' Benefits
Disability Benefits
TOTAL ACTIVE LIVES
2. Inactive Lives
Retirees
Disability Retirees
Widows & Children
TOTAL INACTIVE LIVES
3. Total Liability
C. Assets
D. Unfunded Actuarial
Accrued Liability
5
December 31
1991
Dollar
Amount
$ 174,535
2,854
6,305
6,743
$ 190,437
$ 3,076,454
77
10,672
15,761
$ 3,102,964
$ 2,158,089
1,338,162
177,929
$ 3,674,180
$ 6,777,144
$ 5,144,950
$ 1,632,194
Percent
of Pay
25.82%
. 43
. 93
1.00
28.18%
r-.
1
•
t
EXHIBIT 3
SUMMARY OF FINANCIAL INFORMATION
(Items D -E determined by Camus and Associates, Inc.)
A. INCOME
1. Contributions
Employee
Donations
Employer/Court Fines/
Other
Insurance Tax
Local millage
Adjustment to prior year
asset value
Year Ended Year Ended Year Ended
12/31/89 12/31/90 12/31/91
47,853 $ 40,069 $ 39,955
850 60 700
124,062 151,919 155,317
115,732 130,499 135,489
128,295 143,005 131,933
0 0 0
2. Net Investment Income 217,806
368,253 429,120
TOTAL INCOME $ 634,598 $ 833,805 $ 892,514
B. EXPENSES
1. Administrative $ 2,216 $ 3,069 $ 2,212
2. Benefits 263,333 288,122 288,022
3. Refunds 0 9,809 0
TOTAL EXPENSES $ 265,549 $ 301,000 $ 290,234
6
r
r
1
•
EXHIBIT 3 (Continued)
C. ASSETS (at book value)
1. Cash & Checking Accounts
2. Bank deposits
3. Savings & Loan deposits
4. Other cash equivalents
5. U.S. Govt Securities
6. Non -U.S. Govt Securities
7. Mortgages
8. Corporate Bonds
9. Common stocks
•
10. Other
11. Payables
TOTAL ASSETS
D. RATIO OF ASSETS TO
ANNUAL EXPENSES:
E. INVESTMENT RETURN:
12/31/89
S 0 $
73,083
0
1,316,479
1,367,653
0
0
0
1,245,221
7,430
0
12/31/90
0
25,432
0
1,247,498
1,610,000
0
0
400,000
1,218,983
40,758
12/31/91
S 0
4,872
0
1,267,139
1,706,413
0
0
444,534
1,663,136
58,856
0 - 0
$ 4,009,866 $ 4,542,671 S 5,144,950
15.1
6.5%
7
15.1
17.7
9.5% 9.9%
•
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1
1
1
1
1
1
EXHIBIT 3 (Continued)
ACCOUNTING INFORMATION
This page is included to provide the information required by the Governmental
Accounting Standards Board Statement No. 5. The values below are based on the
assumptions contained in Exhibit 8.
STATEMENT OF CREDITED PROJECTED BENEFITS
December 31
1991
Actuarial present value of credited projected
plan benefits
Participants currently receiving
benefits
Terminated employees not yet
receiving benefits
Active employees
Accumulated employee contributions
Employer financed
Vested
Nonvested
$ 3,674,180
0
336,940
669,948
2,052,230
January 1
1992
$ 3,674,180
0
336,940
669,948
2,052,230
Total actuarial present value of credited
projected benefits i 6,733,298 $ 6,733,298
The actuarial present value of credited projected benefits is used in the
financial statements of the plan and the Employer. These numbers are used for
disclosure purposes only, and are not used in determining the actuarial
contribution requirements.
8
1
1.
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EXHIBIT 4
COMPARISON WITH PRIOR YEARS
This Exhibit compares the current valuation results with those of prior years.
Actuarial Computed
Active Members Employer Contrib.
Unfunded Normal
Valuation Annual Percent Dollar Actuarial Cost
Date No. Payroll of Pay Amount Assets Liability Percent
6/30/77 44 424,538 28.4% 120,770 979,074 753,803 21.98%
12/31/82+ 48 775,875 30.8% 239,145 1,968,196 1,564,043 23.48%
12/31/84 38 691,245 32.9% 227,671 2,637,566 1,685,881 23.74%
12/31/86 29 604,566 35.5% 214,343 3,251,235 1,712,937 23.91%
12/31/87* 28 666,941 37.8% 252,114 3,374,250 2,065,775 24.62%
12/31/89 25 634,711 38.8% 246,132 4,009,866 2,175,493 27.72%
12/31/91 24 675,900 35.9% 242,541 5,144,950 1,632,194 28.18%
* Benefits changed
9
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1
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1
EXHIBIT 5
SHORT CONDITION TEST
The Arkansas General Assembly has stated that the funding objective for these
plans is to pay for benefits with contributions that remain level as a per-
centage of employee payroll. Thus, the long-term condition test is met when
the actual contributions are fairly level and are paid when due.
A short condition test can be used to measure a plan's progress. Under the
short condition test, the fund's assets are compared with:
1) Active member contributions;
2) The liabilities for future benefits to the present retirees and inac-
tive members;
3) The liabilities for service already rendered by active members.
If the plan has been following level cost funding, liability (1) and liability
(2) above will almost always be fully covered by the rest of the present
assets. In addition, lia6ility (3) above will be at least partially funded.
The larger the funded portion of liability (3), the stronger the condition of
the fund. For a closed plan (i.e., one like yours, where no new members are
being admitted), the funded portion of liability (3) should be steadily
increasing.
The following table illustrates the history of the short condition test for
this plan:
Valuation
Date
6/30/77
12/31/82
12/31/84
12/31/86
12/31/87
12/31/89
12/31/91
Computed Actuarial Liabilities Portion of Liabilities
Covered by Assets
(1) (2)
Active Retirees
Member and
Contrib. Inactives
60,724 785,894
141,635 1,538,508
186,492 2,220,660
200,487 2,982,120
229,457 3,095,232
266,726 3,719,388
336,940 3,674,180
(3)
Actives
-Employer
Financed
886,259
1,852,096
1,916,295
1,781,565
2,115,336
2,199,245
2,766,024
10
Valuation
Assets
979,074
1,968,196
2,637,566
3,251,235
3,374,250
4,009,866
5,144,950
(1) (2) (3)
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
1
•
Age
Exhibit 6
Employee Profile
Employee data needed for the valuation was obtained from the records
fumished by the Arkansas Fire and Police Pension Review Board. The
following table shows a detailed breakdown of the present participants by
the number of participants and total salary.
Actives
Years of Service
0-5
Under
25
25-29
Count
Salary
Count
Salary
30 and
5-10 10-15 15-20 20-25 25-30 Over Total
O 0 0 0 0 0 0
O 0 0 0 0 0 0
30-34
35-39
40-44
45-49
50-54.
55-59
Count
Salary
Count
Salary
count
Salary
Court
Salary
Count
Salary
Cant
Salary
O 0 0 0 0 0 0
O 0 0 0 0 0 0
O 3
O 73,917
O 1
O 26,363
O 1
O 22,278
2
49,222
0
0
1 0 0 0
22,761 0 0 0
2 1 0 0 0
57,044 31,392 0 0
4 2 1 0
105,894 69,980 31,633 0
O 0 1 1
O 0 25,304 31,432
60-64
Count
Salary
0 0 1
O 0 22,681
0
0
11099
0 0 0
0 0 0 >t;»:
O 0 0 0 1 0 0
O 0 0 0 35,394 0 0 35,394
O 0 0 0 0 0 0
65&
Over
Unknown
Age
Total
Count
Salary
Count
Salary
Count
Salary
O 0 0 0 0 0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
10
O 122,558 260,145
0
0
178,406
11
0
0
0
0
0
0:
0
0.
•
Age
Under
40
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
Count
Benefit
Court
Benefit
Count
Benefit
Exhibit 6
Inactive Profile
Employee data needed for the valuation was obtained from the records
furnished by the Arkansas Fire and Police Pension Review Board. The
followng table shows a detailed breakdown d the present payees by the
number d payees and total annual benefit
Retirees and Survivors
Years Since Retirement
10 and
0-1 1-2 2-3 3-4 4-5 5-10 Over
0 0 0 0 0 0 1
0 0 0 0 0 0 6,079 • 6,079
0 0 1 0 0 0 0. • . 1
0 0 13,357 0 0 0 0 .::.13, 7.
0 0 0 0 0 0 5
0 0 0 0 0 0 44,923
O 0 2
Court
Benefit
Cowl
Benefit
Count
Benefit
80-84
85&
Over
Unknown
Age
Total
Count
Benefit
Count
Benefit
Cant
Benefit
Corn
Benefit
Can
Benefit
Count
Benefit
Cant
Benefit
Total
O 0 0 5
O 0 27,862 0 0 0 45,596
O 0 0 0 0 1 6
o 0 0 0 0 9,091 65,848
0 0 0
0
O 0 2 2
O 0 0 0 0 0 11,739
ATM
O 0 9 9
O 0 0 0 0 0 43,472 ;;
0 0 0 0 0 0 1 t.
0 0 0 0 0 0 3,270 °:.
0 0 0 0
O 0 0 0
0 1
0 1.
O 0 0 0 0 0 4,784 4,784
0 0 0 0
0
0
O 0 0 0 0 0 3,000 3,000
0 0 0 0
0
0
0 0 0 0 0 0 9,000 9,000
0 0 0 0
3 3
O 0 0
O 3
41,219
This includes
This includes
This includes
0
0
0
0
0
O 0 1 34 `..: 38
O 9,091 :237711 288.821'
22 retirees with annual benefit of $169,762 .
10 disableds with annual benefit of $97,169 .
6 survivors with annual benefit a $21,090 .
12
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EXHIBIT 7
PRINCIPLE PROVISIONS OF THE PLAN
EMPLOYEE: Member of Police Department.
EMPLOYER: Fayetteville Police Department.
MEMBERSHIP: Condition of employment. Police officers hired
after 1982 must join the statewide Local Police
and Firefighters Retirement System.
CREDITABLE SERVICE:
1 CONTRIBUTIONS:
1
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Employee
Employer:
Determined on basis of service since employment.
6% of Salary. Refundable if member terminates
before retirement eligibility.
1. 6% of Salary Matching contribution.
2. State Insurance Premium Tax turnback.
3. Local millage.
4. 10% of all fines and forfeitures
collected by the Police Department.
FINAL SALARY: Highest salary for any continuous twelve-month
period of time worked prior to retirement.
13
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EXHIBIT 7 (Continued)
RETIREMENT BENEFITS:
Eligibility: 20 years of service regardless of age.
Benefit: 50% of Final Salary, but not less than
$3,000/year. If service exceeds 20 years, the
annual benefit is increased by $240 for each year
of service over 20, up to $1,200/year extra. If
service is more than 25 years, member receives an
extra 1.25% (for each year of service over 25) of
Final Salary, payable once the retiree reaches age
60. The benefit cannot exceed 75% of Final Sal-
ary.
DISABILITY BENEFITS:
Eligibility:
•
Benefit:
DEATH BENEFITS:
Permanent physical or mental disability. Five
year service requirement unless disability is
incurred in the line of duty.
Non -duty disability: Retirement benefit, but not
less than $3,000/year.
Dutv related disability: Retirement benefit, but
not less than 65% of Final Salary, and not less
than $3,000/year.
Eligibility: Death of active member or member receiving bene-
fits.
Benefits:
1. Widow receives same amount retiree
was receiving (or would have received, in
the case of an active member), excluding
the 1.25% additional formula for service
over 25 years. Minimum of $3,000/year.
2. Each child under age 18 (age 23 if still
in school) receives $1,500/year.
3. If no widow or children, widowed mother
receives $1,500/year.
14
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{
EXHIBIT 8
ACTUARIAL METHODS AND ASSUMPTIONS
ACTUARIAL COST METHOD:
PRE -RETIREMENT MORTALITY:
POST-RETIREMENT MORTALITY:
41
VOLUNTARY TERMINATIONS:
The "entry age normal" cost method has been used.
Deaths have been projected on the basis of the
1971 Group Annuity Table for Males, set back five
years for females. Mortality rates at a few
sample ages are:
AGE MORTALITY RATE PER 1,000
25 .619
35 1.122
45 2.922
55 8.519
The 1971 Group Annuity Mortality Table was used.
For females, the male table was used with a
five-year setback. The life expectancy according
to this table is as follows:
AGE
55
65
MALES
22.71 years
15.11 years
FEMALES
27.99 years
19.24 years
Annual termination rates at a few sample ages
are:
AGE
20
25
30
35
40
45
50
55
15
TERMINATION RATE PER 1,000
45
45
39
23
9
5
5
5
1
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t
EXHIBIT 8 (Continued)
EXPECTED RETIREMENT
PATTERN:
•
When a person had less than 4 years of service,
we assumed that his chances of voluntary termina-
tion were a multiple of thereafter rates, with
the following multiples being used:
1st year
2nd year
3rd year
4th year
2.85
2.00
1.50
1.15
Since the plan allows full benefits at ages
younger than the traditional "65", an assumption
that will have an important impact is what per-
centage of people who are eligible for this early
retirement will actually take advantage of it.
This will depend on intangible things such as the
economy, health, financial ability to retire,
Social Security eligibility, and work patterns.
Based on recent experience, we are using the
following assumed rates, effective December 31,
1991:
AGE RETIREMENT RATE PER 1000 MEMBERS
40 - 44 200
45 - 59 250
60+ 1,000
NOTE: It is assumed that twice the above
number will retire in the first year
of eligibility. A member was assumed
to be eligible for retirement after
attaining age 40 with 20 years of
service.
ASSUMED INVESTMENT RETURN: 6.0%.
16
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•
EXHIBIT 8 (Continued)
DISABILITIES:
ASSET VALUATION:
SALARY GROWTH:
We continued the disability rates used in prior
reports. Disability rates at a few sample ages
are:
AGE DISABILITY RATE PER 1,000
20
25
30
35
40
45
50
55
60
0.8
0.8
0.8
0.8
2.0
2.6
4.9
8.9
14.1
One third of the disabilities were assumed to be
service related.
For mortality after disability, we assumed rates
based on the Eleventh Actuarial Valuation of the
Railroad Retirement System, for occupational dis-
abilities.
Book value.
We have used the salary scale used in prior
reports. Annual assumed growth at a few samples
ages is:
ANNUAL SALARY INCREASE
AGE Base Merit Total
20
25
30
35
40
45
50
55
60
17
4.0%
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0%
3.2
2.8
2.5
2.2
1.7
1.2
0.7
0.2
8.0%
7.2
6.8
6.5
6.2
5.7
5.2
4.7
4.2