HomeMy WebLinkAbout1995-07-20 - Agendas - Final FAYETTEVI LLE
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HE CITY OF FAYETTEVILLE, ARKANSAS TRACI PAUL, CITY CLERK
TO : Policemen ' s Pension Board Members
FROM : Traci Paul , City Clerk/Treasurer Tr
DATE : July 12 , 1995
SUBJECT : Police Pension Board Meeting
The next Police Pension Board Meeting is Thursday , July 20 , 1995 ,
at 1 : 30 p . m . , in room 326 of City Hall . Attached , please find a
copy of the agenda for the upcoming meeting , the minutes from the
April 20 regular meeting and the May 10 special meeting , the
pension list for July , 1995 , and an updated list of Pension Board
members . `
Attachment
01
113 WEST MOUNTAIN 72701 501 575-8323
i
AGENDA
POLICEMEN ' S PENSION AND RELIEF BOARD
July 20 , 1994
1 : 30 p . m . c�O
City Hall Room 326 A\
�0
4P
1 . Approval of the minutes of the April 20 regular meeting
and the May 10 special meeting .
2 . Old Business
3 . New Business
A . Mike Kirkland , Dean Witter ELho �1 S A�pT
MAsN13U1"•r1 'S
B . Elaine Longer , Longer Investments irlOnl
4 . Adjournment
MINUTES OF A POLICE PENSION BOARD MEETING
A meeting of the Police Pension Board was held on April 20 , 1995 ,
at 2 : 30 p . m . in room 326 of the City Administration Building , 113
West Mountain , Fayetteville , Arkansas .
NO
PRESENT : Mayor Fred Hanna , Eldon Roberts , , Hollis
Spencer , City Clerk/Treasurer Traci Paul , and
Administrative Services Director Ben Mayes ,
ABSENT : Dr . James Mashburn and Jerry Friend
CALL TO ORDER
The meeting was called to order by Mayor Hanna .
MAYES - COST BASIS SUMMARY
Mayes distributed and reviewed a cost basis summary .
In answer to a question from Mayor Hanna , Mayes stated Dean
Witter is holding 51 % of the assets and Longer Investments is
holding 49 % . The City holds $ 20 , 000 for pension payments .
Roberts pointed out that the Board had voted in the past to keep
enough money in the City held investments to make pension
payments for three months . The amount being paid each month is
approximately $ 31 , 000 .
Mayes explained that a portion of money in the Dean Witter
account is available if it is needed.
In answer to a question from the Board , Mayes stated the City has
paid out almost $ 96 , 000 in pension expenses in the last two
months . Revenues have only been $ 33 , 000 .
In response to comments made by Roberts , Mayes stated all the
income comes to the Board from July to October . It is not
unusual to have a loss during the first of the year .
NEW BUSINESS
LONGER INVESTMENT REPORT
Kim Cooper , Longer Investments , distributed and reviewed
portfolio appraisals and other documents dated March 31 , 1995 .
Cooper stated as of March 31 , the current annual income on the
portfolio for the combined account was $ 172 , 645 . That is a 5 . 2 %
yield .
Hollis Spencer arrived .
•
_ — April 20 , 1995
• Although the portfolio was down last year because of the rising
interest rates , there was an increase in income .
Referring to the stock account , Cooper stated about 34 % of the
portfolio is in treasuries . They can be used for purchasing
power .
Cooper briefly reviewed a listing of stock accounts by industry .
Cooper explained that the yield is up on the bond portfolio .
Cooper stated since account inception , the average annual return
in stocks is 9 . 7 % and the fixed income is 8 . 3 % . The total
account in 7 . 8 % . That is' all net of any fees and expenses on the
account .
For 1995 , the account is up 4 . 3 % in the first quarter . In the
first three months of this year , almost everything that was lost
last year has been retraced .
In comparing the portfolio structure in equities to the S & P ,
it shows to be conservative .
The income in the portfolio is up to $ 172 , 645 annually which is a
5 . 2 % yield . The weighted average maturity is a little over five
years . Yield to maturity is 7 . 26 % and the duration is 3 . 5 $ .
Twenty percent of the stock portfolio will mature in less than
three years and 60 % of the bond portfolio will mature in less
than three years . There is lots of purchasing power there .
DEAN WITTER INVESTMENT REPORT
Mike Kirkland , Dean Witter , distributed various reports .
Kirkland stated that TCW had gotten rid of all the Latin American
stocks which brought the account down last year . Currently the
portfolio is about 60% equities and 40 % bonds .
In reviewing the Madison first quarter report , Kirkland stated
the total return year-to-date, is up 4 . 45 % .
Rates probably will not come down substantially . Inflation is
not out of control and the economy is slowing down . That should
help stabilize some things overall .
On Madison , the value was $ 1 , 483 , 222 on December 31 , 1993 , On
December 31 , 1994 , the value was $ 1 , 473 , 404 . Currently , the
value is up almost 5 % year-to-date .
Kirkland pointed out that TCW is dealing with more familiar
names .
April 20 , 1995
• Kirkland stated there is about $ 24 , 700 in the cash account . Some
CD ' s will be maturing in June , some in September and some in
December . Next year , $214 , 000 will be maturing . The value of
the cash account is approximately $ 272 , 000 .
In response to comments from Roberts regarding .the amount of
money paid to pensioners each month , Kirkland stated some of the
CD ' s could be sold .
BOARD APPOINTMENTS
Mayor Hanna announced that Randy Bradley has been appointed to a
two year term on the Police Pension Board ending in May of 1997 .
Bradley replaced Clint Hutchens . Hollis Spencer has been re-
elected to another term .
In answer to a question from Mayor Hanna , Roberts explained that
his term would be ending in May . The active employees at the
Police Department will hold an election .
MINUTES
Roberts stated that at the January 19 meeting the Board discussed
the issue of Jerry Surles and Clint Hutchens being eligible for
• additional benefits . Spencer made a motion that the Board accept
the written opinions of Jerry Rose and ask the City Clerk to
forward the opinions to the involved parties . The motion did
not have a second and a vote was not taken .
Spencer restated his motion from the January 19 meeting . Roberts
seconded the motion . The motion passed unanimously .
Roberts , seconded by Spencer , made a motion to approve the
minutes of the January 19 , 1995 meeting . The motion passed
unanimously .
PENSION AFFIDAVITS
Paul stated that pension affidavits had been mailed to the
retirees . All affidavits have been returned to the City Clerk ' s
Office .
MASHBURN TERM TO EXPIRE
Paul stated that Dr . Mashburn ' s term will expire in May .
Roberts stated the Board members will vote on the filling the
position . In the past , the opening was advertised in the
newspaper .
•
April 20 , 1995
• Discussion ensued regarding whether or not the position had to be
advertised .
Paul offered to check with Jerry Rose for clarification .
ADJOURNMENT
The meeting adjourned at 3 : 20 p . m .
•
MINUTES OF A POLICE PENSION BOARD MEETING
A special meeting of the Police Pension Board was held on May 10 ,
1995 , at 2 : 30 p . m , in room 313 of the City Administration
Building , 113 West Mountain , Fayetteville , Arkansas .
PRESENT : Mayor Fred Hanna , Eldon Roberts , Randy Bradley , Hollis
Spencer , Jerry Friend , Dr . James Mashburn , City
Clerk/Treasurer Traci Paul , and Administrative Services
Director Ben Mayes .
CALL TO ORDER
The meeting was called to order by Eldon Roberts .
GERALD BRADLEY RETIREMENT
Roberts explained that Assistant Police Chief Gerald Bradley will
be retiring voluntarily and has submitted his application for
pension purposes . Roberts stated the application has been
reviewed and has been found to be fair and accurate . Bradley has
been in the Department 22 years and has purchased two years of
military time . The military time will increase his benefit by
$ 40 . 00 a month . Bradley ' s total retirement benefit is $2 , 345 . 47
per month .
. Board members discussed their appreciation for Bradley ' s
dedication and loyalty .
Mashburn arrived .
Roberts restated the details of Bradley ' s retirement .
Mashburn , seconded by Hollis , made a motion to retire Gerald
Bradley with appreciation and a special thank you from the Board .
The motion passed unanimously .
PENSION BENEFITS
Roberts distributed a list of monthly benefits . The pension
benefits total $ 410 , 692 per year . Currently , there are 44
retired members and 15 active members on the old plan .
Mashburn expressed concern that some of the older members of the
plan were not receiving very much money compared to recently
retired members .
Bradley asked if the lower amounts had been raised once .
Roberts stated that the minimum was raised to $ 250 . 00 .
Mashburn asked if there was a chance for another raise in the
• future .
May 10 , 1995
Roberts explained that he attended a pension board meeting in
Little Rock . Roberts stated the pension board in Little Rock
asked the actuary if the actuarial soundness term could be looked
at and redefined . A board rule was passed in 1985 that spells
out the requirements to meet actuarial soundness . Because of a
recent change in the law regarding insurance turnback money ,
there is an additional source of income that should be
considered .
The actuary has reviewed the information and has come up with a
new method . Under the new method , the two police plans that
would become actuarial sound are Fayetteville and Russellville .
There is a public meeting scheduled for July 18 to allow for
discussion on changing the board rule . There will also be a
Pension Review Board meeting to possibly adopt the new actuarial
soundness definition .
Act 1197 , passed in 1993 , raised the monthly payment on actuarial
sound police and fire pension plans to a minimum of $ 350 . 00 . As
soon as Fayetteville ' s plan becomes actuarial sound , each person
who receives less than 350 . 00 will need a benefit raise . Raising
benefits to $ 350 . 00 will cost $ 681 . 72 per month . Then the Board
can discuss a possible benefit increase for all the retired
people . A benefit increase would need to go through the board in
Little Rock and would be reviewed by the actuary .
The Board discussed the issue and decided that the information
should not be forwarded to retirees . Mashburn stated an
announcement should be made only after a decision has been made .
Mayor Hanna pointed out that the people receiving below $ 350 . 00
have been collecting it a very long time . Their benefits were
paid as a percentage of a much smaller salary .
Spencer explained that he will have been drawing his small
pension amount for 20 years in July .
Mayor Hanna suggested , if the opportunity presents itself ,
giving each person a one or two percent increase rather than
bringing each person up to a certain amount .
Roberts stated benefit increases are always a percent of salary .
In answer to a question from Mayor Hanna , Roberts stated the half
mill that goes to retirement plans goes to the old plan .
The Board discussed possible future benefit increases and the
amount of caution that must be taken before increases are
requested .
•
May 10 , 1995
• Mayor Hanna suggested the Board review , at the next meeting , how
much money is received from the half mill and the amount of money
made from investments in the past five years .
Friend arrived .
In answer to a question from Mayor Hanna , Roberts stated there
are 15 active employees on the plan .
Roberts suggested the Board give benefit increases as soon as it
is safe to do so . He stated the plan should not have millions of
dollars in it when there are only two people left on the plan .
Friend expressed concern about the benefit rules for first and
second wives .
ADJOURNMENT
The meeting adjourned at approximately 3 : 15 p . m .
•
•
POLICE PENSION FUND
JULY 1995
EMP# NAME GROSS FED. TAX ST. TAX NET
131 ARNOLD, R D 838.00 838.00
130 BAYLES, DON 760.73 760.73
107 BLACK, JOE P 539.44 539.44
120 BOWEN , J R 342.33 10.00 332.33
147 BRADLEY, GERALD 21345.47 300.00 45.47 2,000.00
139 BRADLEY, RANDALL 1 ,388.45 11388.45
101 BROOKS, BILL 728.22 728.22
109 COOPER, ADRIAN 310.95 310.95
111 DAY, LUCILLE 250.00 250.00
108 DENNIS, WARREN 666.51 666.51
125 FLOWERS, HAROLD 413.39 413.39
140 FOSTER, BILLIE D. 1 ,563.71 100.00 20.00 1 ,443.71
145 HANNA, MARK 1 ,311 .73 120.00 35.00 1 , 156.73
124 HASKINS, RONALD 374.85 374.85
146 HUTCHENS, BERNICE 874.85 130.00 744.85
143 JOHNSON , CHARLES 11176.74 36.70 1 , 140.04
103 JOHNSON , WENDELL 375.30 375.30
118 JONES, BOB 1 ,581 .67 1 ,581 .67
144 KILGORE, DONALD 980.73 19.72 961 .01
129 LAWSON, FORREST 751 .38 50.00 701 .38
114 LITTLE, LOYD F 250.00 250.00
119 LORCH , EARL 315.00 315.00
128 MCCAWLEY, LARRY 812. 19 70.00 742. 19
116 MCCHRISTIAN, MARIE 250.00 250.00
• 126 MCWHORTER, KAREN 485.02 485.02
136 MITCHELL, MICHAEL 1 , 104.75 150.00 954.75
141 MUELLER, ROSEMARY 969. 10 989. 10
112 MURPHY, JAKE 250.00 250.00
137 PERDUE, LARRY 1 , 113.09 100.00 11013.09
132 PHILLIPS, HOMER GENE 843.00 300.00 543.00
105 PRESTON, GEORGE DAVID 767.43 67.43 700.00
135 RICKMAN , LOREN 1 ,069. 19 169.00 20.00 880. 19
104 RIGGINS, RAYMOND C 806.67 100.00 706.67
115 RITCHIE, LIZZIE 250.00 250.00
122 SKELTON , FRANK 398.70 398.70
123 SPENCER, HOLLIS 659.25 50.00 609.25
121 STOUT, WAYNE 415.25 415.25
133 SURLES, JERRY 1 ,304. 17 138.00 1 , 166. 17
142 TAYLOR, DENNIS 989. 10 60.00 15.00 914.10
106 UPTON , FRANKLIN 506.58 10.00 496.58
110 WATTS, BEULAH 250.00 250.00
138 WILLIAMS, BOBBY 11217.07 217.07 11000.00
134 WITT, DON 846.72 64.00 782.72
127 WOOD, PAUL J 757.62 757.62
$34,224.35 $2,205.50 $191 .89 $31 ,826.96
r ,
POLICEMEN'S PENSION AND RELIEF FUND
BOARD OF TRUSTEES
This board administers and manages the Police Pension Fund. There are seven members who serve
two-year terms ending in May. This board meets the third Thursday of each quarter at 2:30.
MEMBER TERM
Eldon Roberts 05-30-95 to 05-01 -97
Route 10
Fayetteville, AR 72701
521 -8050
Dr. James Mashburn 10-00-89 to 05-01 -95
236 Oakwood Ave.
Fayetteville, AR 72703
442-8225
Randy Bradley 04-20-95 to 05-01 -97
16951 Dripping Springs Rd. Replaced Hutchins
West Fork, AR 72774
H) 761 -3515 W) 444-1739
• Jerry Friend 05-00-94 to 05-01 -96
1640 Stewart
Fayetteville, AR 72703
443-9337
Hollis Spencer 05-00-94 to 05-01 -96
P.O. Box 267
Fayetteville, AR 72702
4433044
Chairman
Mayor Fred Hanna 11 -10-92 to INDEF.
#41 E. 29th Cr. Replaced Linebaugh
Fayetteville, AR 72701
H) 443-4980 W) 575-8330
Treasurer
Traci Paul 01 -01 -95 to INDEF.
4310 Chaparral Lane Replaced Bunton
Fayetteville, AR 72704
H) 521 -1943 W) 575-8323
•
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-. 7 -,1r ',Y�p'k¢3 y,,v "4 F: sa ,�. ,r :• �. <�1. �s. x r � tti4"Y��+ �t .
( Display ad to appear in the editions of July 23 , July 30 and
August 2 , 1995 . The first two insertions are to be headed
"NOTICE OF VACANCY " and the last is to be headed " FINAL NOTICE OF
VACANCY " . )
(Appropriate Heading )
POLICEMENFS PENSION AND
RELIEF FUND BOARD OF TRUSTEES *
One position with a term
ending in May of 1997 is open
to a reputable physician who
shall represent the board of
trustees in the examination of
any member of the department
upon a claim of disability .
Registered voters
residing in the corporate
limit of the City of
Fayetteville who would like to
be considered for appointment
to this committee should
contact the Office of City
Clerk for an application form T /
by calling 575-8323 or by L - GAYLE MGCA—JZE
coming to Room 309 of City
Hall ( 113 West Mountain S.J�Iq�S C�JJ A��OkI�.C_Y�
Street ) .
Completed applicationsEC�j1�.d .bb
must be returned by no later
than 5 : 00 p . m . on Friday , �o5 � T1O1\1—�E_/�b_V_ T15EJ�,—
August 4 , 1995 .
There is no salary for _q_ .�� Crl J.M.E -J-T C.OU.LO I3E
service on City committees . �C1 T�_CONJI�J7T�_.
—CJS!CONJI�J_1S�.ES�.�ZE
�}ZEQUJ�2J=b�a_AbaLE)�rJ.SE
VA_ CAniCJS&a
S.Enl.b CO.p LES OF A�.S •
Ql_.�T vV.�n1.E)_CT ACr�hIbA_
'i
24-11-405 RETIREMENT AND PENSIONS 412 413
R
I ' History. Acts 1941, No. 16, H 1, 214; approval of this subsection," Acts 1985, (A)
1985, No. 900, H 1, 3; A.S.A. 1947, No. 900 was signed by the Governor on k cent ('
H 19-1707, 19-1708, 19-1710; Acts 1989, April 15, 1985, and took effect on June.28, board
No. 341, § 1. 1985. . retire(
Publisher's Notes. In reference to the Acts 1941, No. 16, §§ 1, 2, and 4, are
term, "passage of this section," Acts 1941, also codified as § 24-11.503. (B)
No. 16 was signed by the Governor and Amendments. The 1989 amendment ) (50%)
took effect January 30, 1941. substituted "sixty (60)" for "ten (10) in shall 1
In reference to the term, "passage and . (b)(3). memb
(C)
CASE NOTES cent ('
'
Cited: Board of Trustees v. City of Lit- board?'
tle Rock, 295 Ark. 585, 750 S.W.2d 950 x retire(
(1988). (b) Th
r the boar
24-11-405. Board of trustees. sors are
(a) The board of trustees of the policemen's pension and relief fund funds pr•
shall consist of seven (7) .membe- rs, 1as follows: or asses:
(1) The ctlief.executive oofficeiof:the.city�, 'who shall be chairman of retired r
the board; minor cl
(2) The city Ttreasurer, 'who shall be the treasurer of the fund; for their
(3)(A)(i) Four-(4),active�oraretired rriembers of the pension fund; (d) Th
(ii) The4active= pension fund members shall elect the active mem- governm
bers by secret written ballot in May of each year, with the member or all appli
members to be chosen in alternating years. The retired member or sions up(
members shall be chosen in May of each year, by a, method to be
determined by the board, with the member or members to be chosen review m
in alternating years. All member trustees shall serve two-year ¢ a record
terms;
(iii) If there are no active members of the pension fund, all four (4) History.
employee members shall be elected from and b the retired member- Pope's Dig.
Y 390, § 1;
ship of the pension fund; 19-1804; A
(B) The board shall select one (1) of the police members as secre- No. 365, §
tary of the board to serve for a period of two (2) years or until his
successor is elected and qualified;
l (C) However, if no retirant is available to serve on the boardi all
four (4) employee positions shall be held by active members of the
pension fund and shall all be elected by secret ballot by the active
members of the pension fund for two-year terms as provided above. Action ags
The board shall have the power to make all rules and regulations Hearing m
needful for its guidance to implement the provisions regarding board '~ Action Ag
composition; If the cin
(4) The six (6) members provided for in subdivisions (1)43) of this sal of man(
{ . subsection shall elt_one (T)-more membei-who=shall=be-a reputalile b and a dei
tphysician--and,who-shal represent'_the7board of-trustees 1 the exam ) be res juds
nation-of-any-member of the department ,upon, ayclaim-of-disatiility r yi civil right
(5rTlie number of active members or retired members to serve .on o r3
the board shall be determined by the proportionate number of active <; ;
members to retired members:
IP .
lv td � tl�
412 l 413 LOCAL POLICE AND FIRE PENSION FUNDS 24-11-405 ?
s 1985, (A) When the number of active members equals seventy-five per- III{
:mor on cent (75%) of the total of retired members and active members, the °
June 28, * board shall be comprised of three (3) active members and one (1)
d 4, are retired member. J
(B) When the number of active members equals fifty percent 11 j
mciment r;., (50%) of the total of retired members and active members, the board
(10)" in •' shall be comprised of two (2) active members and two (2) retired
members.
4
' (C) When the number of retired members equals seventy-five per-
cent (75%) of the total of retired members and active members, the
board shall be comprised of one (1) active member and three (3)
retired members.
(b) The police officer members and the physician representative of
the board shall serve for a period of two (2) years or until their succes-
sors are elected and qualified.
f fund �� (c) The board shall have the absolute control and management of the
funds provided for in this subchapter and of all moneys donated, paid,
4; or assessed for the relief or pension of disabled, superannuated, and
man of retired members of the police department, their surviving spouses and
+ minor children, or dependent parents solely dependent upon members
.0 ' for their support.
��;: (d) The board shall make all necessary rules and regulations for its
government and the discharge of its duties and shall hear and decide
nberor
nber or . all applications for relief or pension under this subchapter; all deci- j
• sions upon applications shall be final and conclusive and not subject to
1 to beIlk. '` review or reversal except by the board. The board shall cause to be kept
chosen �4 a record of all its meetings and proceedings.
vo-year Via,,, .
btx
:our (4) n vt. History. Acts 1937, No. 250, §§ 3, 4; Amendments. The 1991 amendment
ember- L.1 ;' Pope's Dig., §§ 9858, 9859; Acts 1985, No. rewrote (a)(3)(A); and added (a)(5).
.1 390, § 1; A.S.A. 1947, §§ 19-1803,
w4 19-1804; Acts 1987, No. 405, § 2; 1991,
s secre- t t r No. 365, § 1.
:itil his F
CASE NOTES `
ird, all , ', 1
of the t" > AN.vssis Hirrill v. Merriweather, 629 F.2d 490
active (8th Cir. 1980).
above. ' Action against pension board.
aationa
Hearing on pension claim. Hearing on Pension Claim.
- �- Police officer was entitled to have his
ok board y r - Action Against Pension Board.
If the circuit court's una pension claim considered by a body of res- i
. , ppealed dismis- sonable and fair-minded persons who
of this sal of mandamus suit was based on sub-
section (d) precluding judicial review of were able and willing to give the claim !
putable 4 ± . board's decision, the dismissal would not fair consideration and to grant it if meri-
exami- be res judicata as to the police officer's torious. Hirrill v. Merriweather, 629 F.2d
ability; .w�` ,: civil rights suit in the federal courts. 490 (8th Cir. 1980). . �
n
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• City of Fayetteville, Arkansas \BEMPOUNV
Policemen's Pension & Relief Fund
Asset Allocation — Cost Basis
June 30, 1995
Cash & Fixed Percent
Equivalent Income Equities Total Of
(10-25%) (15-75%) (20-407o) Total
DEAN WITTER
Dean Witter — #18786 $285,611 $0 $0 $285,61 1 4%
Madison Invest.—#15178 1039219 19458,892 0 ::, 1 ,562,1111 23%
TCW — #18922 102,051 565513 886,439 1 ,554,003 : 230/a
73% 5391, 40%
TOTAL DEAN WITTER 490,881 21024,405 886,439 3,401 ,725 51%'
26% 46% 60%
LONGER INVESTMENTS. INC. 174,598 11756,946 11348,660 3,280,204 49%:
l0
1% 0% 0%
CITY HELD INVESTMENTS (A) 71815 17,133 0 . 24,948 1)%z
TOTAL FUND $673,294 $3,798,484 $2,235,099 $6,706,877 ; 100%
PERCENT OF TOTAL 10'/0 57% 331o'j 1000/0
40
RECEIVE
JUL 2 0 1995
C
{TY CLERK'S OFFICE
t
' CITY OF FAYETTEVILLE
' POLICEMEN'S PENSION & RELIEF FUND
' Second Quarler Report
June- 30, 1995
1
1 Contents:
= Performance and Asset Growth
' • June Quarter.Review
s Profile of Your Portfolio
Portfolio Appraisal
' s Footnotes
t
1
'1995 June Quarter Report
June 30, 1995
' CITY. OF FAYETTEVILLE
POLICEMEN'S PENSION & RELIEF FUND
Performance: 6/30/95 Calendar Summary for 1995 to date:
Quarter Year
' Your Total Return" 4.17% 8,80% Portfolio Change
Compare with market indices:
90-Day Treasury Bills 1 .44% 2.71% Marketvalue, 12/31/94 S 194739404
Lehman Intermediate Govt/Corp 5.01% 9.61% Investment Return ' 129,602
Lehman Governmcnt/Corpomte 6.48% 11.78% Additions/Withdmwals -39763
' Compare with 1994s experience: Market value, 6/30/95 $ 1,599443
Your Portfolio -0.16%
Lehman Intermediate Govt/Corp -1 .93%
Lehman Government/Corporate -3.51%
Lehman Long-Term Treasuries =7.64%
' • See Footnotes to Quarterly Report -
' An Explosive Rally Continues
Interest rates continued to decline sharply over the last
' quarter, largely because of emerging evidence of a broad
economic slowdown and-reduced inflationary pressures. And,
more than a few experts have begun to use the "R" word. While
a full blown recession does not seem in the cards, the very real
possibility of experiencing more than just a "Soft Landing" has
quickly led to lower interest rates. Therefore, the "bounce" in
' the bond market that we first suggested in our "Outlookfor
1995" is proving to be much larger than anyone could have
reasonably expected. Of course, we are pleased with the nice
increase in your portfolio since the first of the year.
1 ,
tAccount Profile
CITY OF FAYETTEVILLE
POLICEMEN'S PENSION & RELIEF FUND
A Tale of Two Years:
' During one of the worst years in bond market history, with many
fiords declining 4-10%, by achieving near break-even results we Best Case:
achieved a true victory. To date, 1995 has been a complete reversal of If interest rates declined
trend. The charts below illustrate how your portfolio might fare for another 100 basis points by
the fiill year, given our current conservative posture. year-endyour fund would .
then enjoy a 14-15% year!
' J F M A M J J A S O N D D J F M A M J J A S O N D
• e
13 A 13 /.
1994 1995 ��
' 13% 13%
11% 11%
Worse Case:
' 9% 9%
If interest rates rise
7% 7% 100 basis points by
year-end, your fund
s% 5% would still post a ,.
' 3% 3% .10-11% year.
1% 1%
CITY OF FAYETTEVILLE -
Increase Through June, 1995
' — — — Range of Potential Returns -
for Balance of 1995
' historical Returns & Asset Growth
Gross
Investment % Additions
' - Return Return' Withdrawals Assets
Date of Inception: 11 /27/89 Initial Value: 110031443
. 1989 5,343 P 0.57% - 1 ,022 1 ,007,764
1990 97,233 9.70% -7,247 1,097,750
1991 168,770 15.41% -5,707 1,260,813
s ' 1992 721771 5.76% 68,615 174021199
1993 88,284 6.30% 4,304 1 ,4831179
1994 -22315 -0. 16% -7,460 1 ,473,404
Thru 6-30-95: 12902 P 8. 80% -3,763 1,5997243
559,688 P = Partfatrear 362112
• See Footnotes to Quarterly Report
1 -
' MADISON INVESTMENT ADVISORS, INC.
PORTFOLIO APPRAISAL
FAYE7TEVILLE, CITY OF
POLICEMEN'S PENSION & RELIEF FUND
Iuae 30, 1995
Unit Total Market PcL
Quantity Security Cost Coat Price Value Assets'. Yleld e
CORPORATEBONDS
65,000 Ford Capital$V_ - 113.49 73,770 106.60 69,289 4.3 6.5
9.375.% Due 01-01 -98
' .
60,000 , Alcan Aluminum 106.76 64,054 102.70 61 ,622 3.9 6.5
7.250 % Due 12-15-99
702000 IBM 96.09 679266 99.64 69,748 4.4 6.5
6.375 % Due 06- 15-00
60,000 International I& se 117.08 70,246 110. 18 66,109 4. 1 6.7
Finance
8.875 % Due 04- 15-01
' 60,000 Marshall & Ilsley 100.29 60,173 96.74 582042 3.6 6.9
Corporation
6.375 %Due '07= 1-5-03
' Accrued Interest 69260 0.4
335,509 331 ;070 20.7 6.6
GOVERNMENTBONDS
300,000 U.S. Treasury Notes 100.97 302,909 100.31 300,937 18.8 5.8
-� - 8.500 % Due 08-15-95
290,000 U.S. Treasury Notes 99.82 2892465 99.78 289,366 18. 1 5.7
5. 125 % Duel1 -15-95
260,000 U.S. Treasury Notes 99.39 - 258,418 100.91 262,356 16.4 5.8
6.500 % Due 11 -30-96
300,000 U.S. Treasury Notes 90.86 272,592 97.66 292,969 18.3 6.2
' 5.875 % Due 02-15-04
Accrued-Interest 19,326 1 .2
1 ,1231384 11164,954 72.8 5.9
' CASH AND EQUIVALENTS
Cash Equiv Money Market Fund 103,219 103,219 6.5 5.5
' 103,219 103,219 6.5 5.5
' TO1AI PRTFOp „ .... IS6z;1131 i,S99„ta3 1000;: 60 € 4 -
CITY OF FAYETTEVILLE
POLICEMEN'S PENSION & RELIEF FUND
Footnotes to Quarterly Report
' Your Total Return:
- Your actual "total return" for each calendar quarter, namely a combination of interest received, earned or accrued,
' realized gains or losses on sales of securities and price appreciation or depreciation of assets held at the end of the calendar
quarter 'Performance represents monthly "linked" results, adjusting the base value invested by daily time-weighting any
intra-month additions and withdrawals. Investment returns are presented net of all commissions, trading costs, and other
' execution costs, but not reduced by the investment management fees of Madison Investment Advisors, Inc.
Historical Returns & Asset Growth reports performance both before reduction for management fees. For "net of
fees" purposes, actual management fees are reflected as a cost, reducing investment results during the month(s) when such
' fees are actually paid, whether withdrawn directly from the portfolio or paid separately. We have provided performance "net
of fees" for 1993, 1994 and 1995 to provide greater information and to comply with industry standards. We have not
included "net of fees" results for prior years due to the considemble efforts necessary to enter multi-year data by recomputing
all clients' performance on all months of earlier years. However, most clients are aware of their historical management fee
costa and hive given such expenses proper consideration. .Of course; we would be pleased to provide computations for prior
years upon-request. Performance for 1993, 1994 and 1995 is as follows:
1993 1994 1995
6.30% -0.16% 8.80%
5.77% -0.66% 8.54%
' Average Maturity:
The average overall maturity of the bonds in the portfolio at quarter end, adjusted for cash balances (money market
' fiords-or short-term instruments) and for all applicable "call", "put", early redemption or other provisions affecting the
expected "life" of-each bond.
' Average Duration:
The average weighted effective duration of the bonds in the portfolio at quarter end, adjusted for cash balances
(money market fands or short-term instruments) and for all applicable "call", "put", early redemption or other provisions
' affecting the expected "life" of each bond - -
Average Quality:
The average weighted quality rating of the bonds in the portfolio at quarter end, including cash balances (money
' market funds or short-tern instruments) with quality ratings generally those placed on each security by Standard & Pooes.
Offer to Deliver Disclosure Brochure
' When you became a client of Madison Investment Advisors, Inc., you received our "Disclosure Brochure", actually
Pail Two of our Form ADV registration filing with the Securities and Exchange Commission. Each year, we are required to
offer to provide you with our current Disclosure Brochure which may have new or amended information about our firm, its
practices, personnel or policies. if you wish to receive our current brochure, please advise Jaci Sloppleworth of our firm.
t
fie The Bond Cycle in Perspective
By late 1993, bond prices had reached all-time peaks . . . with interest rates at the lowest level
in 25-30 years. When interest rates turned sharply upward, bonds suffered broad losses through early
November, 1994. Then, a recovery rally commenced.
104
Looking back to late -
1993: After peaking on
100 I 10-15-93, this bond's
' I
price declined over 17% -
Price of 10-year I
over the following year!
- - - , '
96 Treasury Bond., '
The 90.93 bond rally was -
longest in I&A 20yem!
92
I ,
I I ,
� I '
i I
84
, I I
I ' I
I I �
I
80
- _ 1990 ' 1991 , F,-,,-21 , - X1993 ' 1994 1995
%
I ,
10.00 '
I
9.50
. . . While interest -
_ rates declined to the -
9.00 ` lowest IeJel in the last '
I
8.50
I I
8.00
- Over the same time
7.50 period, its yield rose
from 5.2% to 8.0%
7.00 - before failing again.
_ Are we now back to
6.50 the high risk zone?
I
6.00 Yield of the SAME
10-Year Treasury Bond
5.50
I �
I i �
5.00
y
Federal - -
Funds Greenspan's Fed: Interest Rate Decisions "
Rate
10%
Interest rates were
9% consistently lowered
during a three year
period, until the economy
g% finally got rolling.
The Fed has raised
7% 1 rates seven times,
from 3.0% on
6% February 4, 1994 to
6.0% almost exactly
one year later.
5% Recession
4%
3% I
2%
88 89 90 91 '92 93 94 95
Federal Funds rate
was held firm at a low
3% for 17 months,
_ -
easily the longest
period of unchanged
policy in years . . .
NAPM COMPOSITE INDEX
> 65 :0
60.0 r
56:0
50.0
s
45 .0
40.0 sf 45
35 .0
n n n r 0 0 0 n n
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
r� n -06 m m m o o N N c`7 (`74 4 l0
W 00 m 00 m 00 m D) m m m m m m m m m -
m m m m m m m m m m m m o) m m m m
CONSUMER FUTURE EXPECTATIONS
120.0
110.0
100.0
93' y
90.0
80.0
70.0 ov
60.0
50.0
�raeQe -US�
40.0
0 0 0 00 . , 0 0 0 0 0 0 0 0 0 0 0 0 0
I�: n (30 6 m m OO N N C9 C6 a V 6
,a ) co . - m co 00 m m m m: rn m m m m m m m
CD m m . m m m m m m m m m m m m m m
O .
A Quarterly Look at the Economy
The economy continued to expand in 1994, at a 4. 1 % annual clip, the fastest pace in 10 years.
Conventional wisdom assumes a slowdown, a "soft landing", a quiet 1995. But, the recent decline in
interest rates seems to have discounteda potential slowdown. Thus, any sustained economic strength
will be unexpected, negatively impacting bond prices over the months ahead.
% Growth -
8.0
6.0
. . ' 4.0 - * Estimates
2.0
0.0
-2.0
-4.0
- 87 - 88 89 90 91 92 93 94 95
Recent Quarterly Growth of GDP
A Multi- Year Look at the Economy
Looking at Recessions. After a shallow 90-91 -"recession", the economic recovery was
relatively anemic, but accelerated in1994. Early estimates call for
a "soft landing", not a recession in 1995- 1996.
% Growth
8.0
7.0 6.7
5.9.
6.0
5.0' 4.5 4.5
3.9 4.1
4.0 _ 3-3 & 3.3 - -
3.0
3.0
* Estimate
2.0
0.9 "
1.0 0.3
0.0 '
-0.2 -0.1 -
-4.0
-Li
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95
L�nnual Growth of GDP: 1978-1995
o o o
� 0 0
L6
.- .-
to O L9 .-
606966L
Z L '1766 L
60'17661
x 1 LO'1766L
d
C
170 17661
10'1766 L
m
c OL £66L
m
t
m U
� o L06 £66L
x U
c O y 170' £66L
n
c p LO'£66 L
w
OL ' Z66L
CL0'Z66 L
's v
£ O 170'Z66 L
0L4L66L
r LO' L66L
170' L66L
LO' L66
0 L '066 L
L0'066 L
170'066 L
LO'066 L
ie o Cn o o 0 o ( o
® f7 f7 N N O O OI T
N N N N
AAA�...MEMO
1 s• a _,`:.a !• • • o.r.�s�nl onMIMIN.
� y�J
.04
re
AI 'An Economist is said 1
I be
who kIabout a great deal
and keeps knowingI less about
more and more until he knows practically
nothing about everything.
f' •
Whereas, on other hand, I
i I
III I I • • I • I •I along
knowing
)•��� 1 /� rJ — •finally he I I I
re and more about less and
ctically
. about nothing.
folio Manager starts out
knowing everything about .
ends up knowing nothing about anything,
due to his association with economists
and salesman.
s .
r
U%AER15 Thu Jul 20 10 : 01 : 37 1995
rA 342 018922 049 2 7 / 19 / 95 1 CITY OF FAYETTEVILLE P DOB 03 / 01 / 50
HOME ( 501 ) 573 - 8330
ACCESS
FOR ACCT CSH SWP=AAA/AAMT TYP CASH AAA TEFRA=2
V SUMMARY 13313 =JUL94 / JUN95 6692 =JAN95 /JUN95 O =JUN95
1 T . D . CASH BAL 28 , 529 . 52 DB 5 MKT VAL LONG POSITIONS 11637 , 019 . 00 CR
2 S . D . CASH BAL 4 , 558 . 48 CR 6 MKT VAL LONG OPTIONS 0 . 00 CR
3 CSH AVAILABLE 0 . 00 CR 7 MKT VAL SHORT POSITIONS 0 . 00 CR
4 MTHLY ACC INC 0 . 00 CR B MKT VAL SHORT OPTIONS 0 . 00 CR
9 MONEY MKT BAL AAMT 87 , 438 CR VAL BELOW FOR PRICED POSIT ONLY
10 MKT VAL CUSTODIAL POSIT 0 CR * 7 UNREALZD GAIN/LOSS 141 , 680 +
11 TOTAL PENDING DB/CR 33 , 088 DB ACCT VAL Y . E . 12 / 94 1 , 4831310CR
12 TD ACCT VL ( 1 +5 + 6 +9 + 10 - 7 - 8 ) 1 , 695 , 928 CR ACCT VAL M . E . 06 / 95 1 , 697 , 419CR
13 TD LONG HOLDGS VAL ( 5 + 6 + 10 ) 116371019 CR PROJTD CASH AUG/ OCT 18 , 259 +
14 TD INVESTABLE FUNDS ( 1+ 9 - 4 ) 581909 CR PERCENT INVESTED ( 13 / 12 ) 96
- - RECAP OF RECENT ACTIVITIES - -
07 / 19 JNL- . . . . ACCESS 3Q95 FEE TCW 7 , 125 . 65DB
07 / 19 BOT* 10 CIRCUS CIRCUS ENTERPRISES INC 29 . 678 296 . 78DB
07 / 18 BOT* 1070 CIRCUS CIRCUS ENTERPRISES INC 30 . 646 32 , 791 . 22DB
07 / 18 BOT 317 ACTIVE ASSETS MONEY TRUST 1 . 00 317 . 50DB
07 / 17 BOT 355 ACTIVE ASSETS MONEY TRUST 1 . 00 355 . 00DB
07 / 15 DIV OCCIDENTAL PETROLEUM CORP DE 317 . 50CR
•
•
USER15 Thu Jul 20 10 : 01 : 57 1995
A 342 018922 049 3 7 / 19 / 95 2 CITY OF FAYETTEVILLE POLICE
;ASSET ALLOCATION FOR DWR POSITIONS
CASH + MMKT = 38 EQUITIES = 648 BONDS = 338 OTHER = 08
0USTODIAL POSITIONS MARGINED/
DATE RENU QTY / YLD SYMBL MGN PLAN NR DIV RE PRICE VALUE POLICY #
7 / 19 87 , 438 . 940 ACTIVE ASSETS MONEY TRUST 1 . 00 87 , 438 . 94
O . CASH POS 1 OF 50 7 / 19 / 95
28 , 529 . 52 T/D 41558 . 48CR S / D 1637 , 034 . 00 MKT 0 . 00 CSH
SECURITY OPN PRICE UNITS MKT VALUE COST SYMBOL
DEAN ' WITTER DISCOVER & CO N/O 48 3 / 8 831 40199 32189 DWD
ALLSTATE CORP B 29 7 / 8 324 9679 * N/A ALL
COLUMBIA/HCA HEALTHCARE CORP BRL 45 1 / 8 880 39710 36151 COL
FORD MTR CR 5625 98DE15 +A+ ? 97 ? 84 , 000 81480 83848 TD942
NATIONSBK CORP 6875 05FBRG A- ? 97 1 / 2 ? 83 , 000 80925 84476 TJ288
PACIFIC BELL 7125 26MHRG-AA- ? 93 1 / 2 ? 85 , 000 79475 85302 TJ412
US TSY NOTE 7500 02MY15 -N/0? 106 3 / 8 ? 21 , 000 22338 22460 TRA23
US TSY BOND 7250 22AU15 -N/0? 103 3 / 8 ? 26 , 000 26877 24423 TRA51
US TSY NOTE 4250 95JL31 -N/O ? 99 7 / 8 ? 64 , 000 63920 63385 TRB46
US TSY . NOTE 6750 99MY31 -N/0? 102 ? 24 , 000 24480 24264 TRC50
USER15 Thu Jul 20 10 : 02 : 06 1995
A 342 018922 049 4 7 / 19 / 95 3 CITY OF FAYETTEVILLE POLICE
O . CASH POS 11 OF 50 7 / 19 / 95
SECURITY OPN PRICE UNITS MKT VALUE COST SYMBOL
ACORP DE B 74 1 / 2 480 35760 32986 AMR
AWRTSONS INC 3 * 29 5 / 8 550 16293 15966 ABS
AMERADA HESS CORP N 47 1 / 8 398 18755 20300 AHC
AMERICAN INTERNATIONAL GP BRL 110 3 / 4 218 24143 20250 AIG
AT&T CORPORATION B 53 5 / 8 510 27348 25555 T
BOEING CO 4 * 62 3 / 4 478 29994 21330 BA
CHAMPION INTERNATIONAL CORP N 54 1 / 8 300 16237 16228 CHA
CHEVRON CORP N 48 1 / 4 470 22677 21023 CHV
CHRYSLER CORP A 48 7 / 8 612 29911 25328 C
CIRCUS CIRCUS ENTERPRISES INC N 29 3 / 4 1 , 080 * 32130 * 33088 CIR
CITICORP BRL 60 3 / 4 464 28188 20687 CCI
DELTA AIRLINES B 77 349 26873 22216 DAL
ERICSSON LM TEL ADR B SEK 10 - S 20 1 / 8 1 , 488 29946 16444 ERICY
FORD MOTOR CO B 30 1 / 8 946 28498 23709 F
GENERAL ELECTRIC CO BRL 58 1 / 8 502 29178 24562 GE
GENERAL MOTORS CORP CL E BRL 43 5 / 8 574 25040 20210 GME
•
USER15 Thu Jul 20 10 : 02 : 17 1995
; A 342 018922 049 5 7 / 19 / 95 4 CITY OF FAYETTEVILLE POLICE
O . CASH POS 27 OF 50 7 / 19 / 95
SECURITY OPN PRICE UNITS MKT VALUE COST SYMBOL
ERAL MOTORS CORP CL H 4 * 41 1 / 4 576 . 23760 21081 GMH
TON HOTELS N 69 1 / 8 380 26267 26030 HLT
INTEL CORP B 65 1 / 4 808 52722 26033 INTC
MASCO CORP - 3 * 26 740 19240 26364 MAS
MC DONALDS CORP A 37 3 / 8 792 29601 21532 MCD
MERCK & CO +B 50 1 / 2 430 21715 17656 MRK
MERRILL LYNCH & CO INC N/ O 54 1 / 2 538 29321 24647 MER
MICROSOFT CORP A 94 1 /2 245 23152 18098 MSFT
MOTOROLA INC +BRL 72 7 / 8 490 35708 23734 MOT
NATIONAL SEMICONDUCTOR 3 * 26 7 / 8 11132 30422 21016 NSM
NORTHERN TELECOM LTD +2 * 35 7 / 8 703 25220 21357 NT
OCCIDENTAL PETROLEUM CORP DE N 23 1 / 4 1 , 270 29527 23924 OXY
PENNEY J C CO N 50 365 18250 20821 JCP
PHELPS DODGE CORP 4 * 65 1 / 4 160 10440 10256 PD
PHILIP MORRIS CO INC A 75 350 26250 21454 MO
PROCTER & GAMBLE B 68 3 / 4 340 23375 20502 PG
USER15 Thu Jul 20 10 : 02 : 26 1995
A 342 018922 049 END 7 / 19 / 95 5 CITY OF FAYETTEVILLE POLICE
O . CASH POS 43 OF 50 7 / 19 / 95
SECURITY OPN PRICE UNITS MKT VALUE COST SYMBOL
Y CORP N 52 3 / 4 257 13556 12136 TAN
CO INC B 65 7 / 8 270 17786 17720 TX
UNOCAL CORP N 27 3 / 4 11049 29109 30679 UCL
UNISYS CORP N 9 7 / 8 21547 25151 33075 UIS
US TSY NOTE 6875 960C31 -N/ 0 ? 101 1 / 4 ? 172 , 000 174150 179189 817F7
WESTINGHOUSE ELECTRIC N 13 1 / 8 10 131 152 WX
WEYERHAEUSER CO B 46 1 / 2 756 35154 31734 WY
XEROX CORP N 113 3 / 4 237 26958 21042 XRX
•