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HomeMy WebLinkAbout1992-07-16 Minutes• • • 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 t July 16, 1992 • 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 • 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 • • • 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. • • • • 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. • 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. • • 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. • • • July 16, 1992 • 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. • 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 • 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 • ................ 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 • • • 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 • • • • po11 ))\\\\10Ofl \ -\ 3 §z§i0 it |:CO 2 ,z, ,a.-�- z \}) 2./ •) 40. CP \ 7: %, • 1.41, RI { ± 5 CO 011. • 11 0 1,4 11 -0 11 2 21 • -4 21 "VI 0 En 33 in Lb. £:a-2102:®;!l2+:::2;�;:`;«=_ r■!72:!21/e%{�3®:2!\!!\}G<}»:§I \\�-- \�" )�/:17 \� :;:2i!!£!r!E§■t82088;&!£!#cn 0-00.00 a;;;=;_&I_0al=;l0C0000l:0 § E 3 )(7 m ; 40. t4 411 We 2 • 0 21 44 LP 2 0 0 0 0 a &&k CI IS a At S • 4 4 4 IN 4 4 4 4 4 IP Si a S III a AI a 40 Ad a ] 1 411 VI Jos c. O. 01 a 10. CO • Clt • 04 0 - )\)\\\j a l;m;2u: 4.1 0 • • • • • • • • • • • • • • • • • • • • • • • • • 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. C:\TEMP\ACTIVE\DF171PA9.FIL 9 Naso •IN ARNOLD ■ BATLIS 'LACI 'CVIS B100I5 COOPII DAT DINNIS ItCWt*3 HMIs. /VTCIIINS BON 30IBS I LAWSON LITiLI LOICI MC CAWLIT MCCMIISTI MCVIOITI1 MITCNILL MURPHY PERMS • • ►tyettevllls Police 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 • • y O V0 U 604 y 8 d w C w VI y00 N 6 C Q 0 J • 0 0 O O Co Y 6 1.1 U • 0 C 6 C O d f r Y .. N r 1.1 0 O • x > V d d N > W C U l+ - 2 d CU 0 LL p O C o w O J W O. « U • 0 1- W 0 W W X0 - LL CC w 0 W o• eVsv��U 0 0 P P P P O O O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o o 0 0 0 0 0 O �} 4O CO -t -} N O N M pNNO Ipt O• m CO CO CO ^ A A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O o 04 0 Ill I` CO 00 P 0 0 • CO M 0 A M O7 O P P O P O O 0 111 O tl 0 Ill M 't '0 0 O O ▪ CO CO VI I� CO O P P P P P P 0 P M Vl N N d J d O r O N r 0 M 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ✓ A N M N 4- P 0 0 N 0 0 O <O le 1 1 N tel 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 P ▪ O N !4 N P O f� ✓ O N N •O M CO NO ▪ N Lel CO -O 1 N P N -t 0 r 0 N N 0 •.t P P P P P P ✓ P r O r 0 M N M M M M • N M .t M '0 0 0 0 0 0 0 O 0 0 0 0 0 P P CV P P P O M M M N M M M PJ N r N M Yl 0 O0 0 O 0 Date to Date P VNl t r • • P 0 O - N P w 0 1 M J C • C • a S & P 500 Return 12/31/91 - 6/30/92 • N j •8i c w J O CO U •� 0 N ▪ f 11. w 0 b N 6 O CA 10 0 a r r 0 O]• Ws 0 U N T 6 0 ca C C 0 b F• - E N -•b! • = > b 0 N > w w C U w - Z b a >. 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O A N N • e CO 0 0 In A •O I-- In P O 03 A P VI 14 .1 .1 N - ▪ •O O N— rA M 1•• 1 1 1 N e • to 09-30-90 O r - N P P P P P P P - 0 0 ' O M M M M M M M llll M •O P au ll O O O O 0 O O 0 0 0 0 0 0 P P P P P P P co •O •O O - .- O O N N M M M M M M M I� n P' MI <I ^ 0 0 O 0 0 0 0 Date to Date N P O 0 • V 0' •0 CO C C C O Q S & P 500 Return 7/26/90 - 6/30/92 22.07% • • • ice Pension Performance 0 0- 0 0 0 LL U • O U cicsCc O t a) 0 o • • • • • • • • , • 1 •• • M N 1 0 0 a) c T a2 2 0 a) LL Si N c U c� 0 0 O Z U O a) ) _ = W a) —1 c -C T c ta2 0 0 L N Sc C! L y 0.c O O Y la O CO; w O. 0 yC 2 Z. 6 00 > 0 O LL CI CO > V V! C w Y O. d T L CI C) LL COC O O J >. w 0 O 6 COQ C 0 L O W O M 0 0 O V' J 3 0 G O 0 • ea o C > N w 0 0 6 acas 0 N N UC 0 CO L N r Q C > p w Q N i L N .0 .0 O .� O « in O . Q s w a • m o C i_ Nezi v 0 0 0 L) OO P O O CO .t CO P •O O O CO W W W O N O O. 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O 1 popON PCO PPP O %t P CO O IV N O N0t V ON 1%.• O P P P O O P N P P CO M O O P A111ppt pp• CO o CO CO P P P P O NO CO Y- O ' O O h M M O O O W P N P O N O P ON P ON O O P O N N NJ N.. in.t •O A. ^ V r 0 0 0 r r • h 0 M O r r 0 •t r N OA m d F A •n N •1 1 M M CO •PO P M O r N r O N co r O N 2 ZS A NO m P O M V 03 0 r M 0 r o r N.2 COP • P r P O A F O N N 0 r N•0 O •O co •N • r • O r O r N N N N N N N P P P P P P r N M < in •0 0 0 0 0 0 0 r✓ � 0 u 0 V N N N N N O P P P P P O• P 0 M M M N M M M ' 'O O O N O M 8 V O Date to Date N -t 0 CO •O N M P 0 M O 0 N P H M • C / 0 3 J 0 O 8.c N d L n 0 O 0 2wd 0 ^ C. x 3 • O O N W n U Y U C 2 d rig O • O > 0 • u. > K Y 0 C w - O. t Lq LL O 0 1 O J 1 • d • C > o p v 6 N 6 O d• cd O C > 0 v p 0 N n 0 U • .d O C > 07 v 0 n 0 04 in 0 0 CO O6 rel N r v 'O v IL- CO NO N 0 0 NO CO 0 10 N O M 0 O O O Al N N O 4▪ .4 NA M P A 0 N 0 0 0 P 0 0 0 r r 11 - CI 0 .1 M 0 N CO Mtn M O ▪ ( Mn P N CO N40 N N O A M0 CO O- M M N O 0 V NO .O IMn M r c0 CO 0 ▪ 4In .t0 P •O Ln 0 0 P O O O P A A P N M M A O NN O In In O O. 0 CI NO 0 0 CO O O r N P N O P CO M 0 0 P N CO 0 P A d I• Nt P r .1 •O 0 c• 00 P O 0 o r r r O M •O CO M M .1 P O •O P N P M O O r O r .1 A 0 In r P .1 0 0 0 0 0 r N r N b O O In N 0 .O M •O N In .1 M O In N r to In r Tel In N • • In .1 ▪ •O In N 0 CO N 0 .1 CO r Co -1 In N M r 0 r N r r r NP A In M A •O N O M A N P •O in P Al CO P r O r N .O .O N N N 1 r r 1 N •- r A in o NO P P n 0 P N A r r In A r o L AA CO N 070 CO NO .. r .1 to M M A 0 0 M CO .• 1 O to 0 N r N O r 1 1 N r O 00/1030.•-0 d 0 Ipn 1'n N O .O M A M r 6 A 1 141 N N •O 00 P •O M r M ▪ N r N V P P P P P P P P O e eO O r r O M 1411.11/11/11/1141141 0 4-41 r 0 0 Cu r 0 0 O 0 0 0 0 0 0 0 Y PPPPP P P P P co co N N 014/1011411414/1141 A A P N M •O P171 M 0 0 0 r 0 0 0 0 Date to Date O •C 0 OP N N O d N J • C C 0 6 3 LL C G 8 0 La m 0 O. d f d C , O S r d O N W O. « u p Ey ECrC C • j• Ep] C W M L d d LL 0 T U C L d E . % GE N N d OL d co VC MI o L N 1• a u • > O .• 0 6 2 6 2 6 • O 0• ed O C >_ N 0-4 0, v O W O Cf) N e a 0 O 0a —•C> - — ._ p v p cc Q a O 0 L 0 O .0 O M N O •4- - M 3 3 W O. O d ed O C > In r •.- el v p O. ea O N 3 u d a O cocm CQ LO . VI ^ • .O .1 N O O 0 0-- N N O •O o P CO O N Y1 A O -.4 MA M P A O N O Ci W P 0 0 0 r N. ry O MNCONM P -41 N N O A O M M N O . V .O 111 CO Ql CO •— 0 .1 CO P O N O P •O in OP O P A A P N M M A O In N O N 01 O P O O 2 .1 M A ^ M P N O 0 P O O N N O P CO v N P P .N1 •CQ O O V1 N ▪ N .i CO A M .t O CO P O O O r r r O A M A CO 03 M M •O O P M M N O M P A O M O r N CO W M M O P O r r r N N N •O O O N A M O CO P N M W O Ln O In N r In N r M N N • M •O In in CO CO N 0 .1 CO • •• O • .1 N N M . • N r - •O N O M A N P •O In P N CO P r O r N •O •O' N N r N M A O 4 A P M A V1 O •O P P A P M ▪ A In 4- 1n A e O 1n A V 03 •O v N M in 03 ni A O co M CO ▪ b O N CO N •- N O r 1 1 N .- 0 O M 03 O V •-- •0 •O O 142 1n N• -. A M .1 A M M I- O N •O Ln 03 r •O W O N. O CO 03 1n A •O •O▪ •O r O N coM O M r 1 r 11 N r P O P P P P P P Or O O M M M M M M M M �• ' M V P' M•-000.-00 •O 0 0 0 O O O 0 0 0 0 0 0 0 M O 0 OP P P P P P P •O •G O r r O O r r N N M M M M M M M P M •O P ' M O 0 0 0 0 Date to Date 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 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. • • • • • • • • • • • • • • • • • • • • • • _ _ 01 - -4 -+ Lt •r ✓ c - r c. - - r r rr. 'n -r a x m - - • n -- -• cr - r -- x - Cr - r - z c••. f -r- . r --I - °- -. s D 0 - m 3 - re-. N fir l' •. 'Yl fl . . _ -- -- - _� G - a = y :T CC -OT O c P T__r_ " T S r r. - ..x 4i _ J T cc -- C: T 6 x 7 r T _ G4-- MI •- CP _ - rd !I. T C Z :D C• En ii -. m r' - n - 40 L. 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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% • l 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. 1 0 l_ 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 • w 1 1 1 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 • 4 1 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 i 1 1 i • 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 • ( 1 1 • 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 lv • 1 1 r r f { 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 I 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 1 1 • 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