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HomeMy WebLinkAbout2000-12-21 MinutesMINUTES OF A MEETING OF THE POLICE PENSION AND RELIEF FUND BOARD A meeting of the Fayetteville Police Pension and Relief Fund Board was held on December 21, 2000 in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Elton Roberts, Jerry Friend, Randy Bradley, and City Clerk Heather Woodruff. ABSENT: Mayor Hanna and Dr. Mashburn. MINUTES Mr. Bradley moved to approve the minutes. Mr. Friend seconded the motion. Upon roll call the motion carried unanimously. PENSION LIST Mr. Roberts stated there were only eight people at the station still on this plan. Four of those people would be able to retire soon. Gary Dugger would be retiring next month. INVESTMENT REPORT Ms. Elaine Longer and Kim Cooper, Longer Investments, presented the investment report. • Ms. Longer stated they did not have a recession, but they were having an earning recession In June their growth estimates for the fourth quarter earnings were approximately 15%, those had come down to 7%. She felt they would be looking at 3 to 5% growth rate for this quarter. They were into the earnings impact of the slowing economy and the market was just adjusting to the revised earnings outlook. The area which had been hit the most was the technology stocks. There was a definite correction going on with those stocks. They were under weighted in Technology. They would like to start picking up some in the first quarter. September 15, 2000 their total equity exposure in common stock was 40%. 50% were in equity mutual funds. About a 46% in exposure. Bonds made up the rest of the portfolio. The market value was at 11.195 million dollars. December 15, 2000 portfolio update showed they were about 41% stock. They had another 10% of total portfolio value, which was over one million dollars, that they could use on the equity side. They had their core earning tack. They had done some hedging in the fourth quarter. They brought in approximately $60,000, by hedging their technology stocks. They had been able to off set some of the decline by using some tentative earnings The market value on December 15, 2000, was 11.2 million dollars. Thru yesterday, the equities on their account, year to date, were down about 12.9%. That was just the stock portion of the portfolio. Their bonds were up about 9%, year to date. Their real estate investment trusts were up about 1.8.6%. The total portfolio was off 1.8% for the year so far. It sounded bad to be down for the year, but the S&P 500 was down about 13.9% for the year This was the largest yearly drop for the Dow since 1981. It was also the largest yearly drop for the S&P since 1977. The NASDQ was now down 56% from its high. The bad news was that it • was a horrible year, but the good news was that the impact on the portfolio had only been 1.8% • for the year. That was easily recoverable. The main objective in a year like this was to minimize the losses. A lot of this decline had taken place in this quarter. The Bond portfolio report, 37% was in corporate bonds. Their treasuries were approximately 30%. Government agency securities were at 32%. The weighted average income yield on book value on the bonds was 6.55%. This was with an average weighted maturity at 4.9 years. When AT&T announced their break up into four smaller divisions, they did not bother to tell the creditors where their 62 billion dollars in debt was going to go. Two of those divisions did not have earnings. They were sitting on an AT&T Bond which was rated A2. She did not want to wait and end up with a bond with a less of an investment rate. They had sold the AT&T bonds because she felt that represented a significant risk. Tyson Bonds, the acquisition that they were talking about making with IDP, half of the purchase would be done with cash. The other half would be done with equity. It would raise Tyson debt to capitol to approximately 56%. That could put them on a credit watch for a possible credit down grade. They were currently rated A-. The minimum credit rating was an A. They had taken the bonds off. They had also sold some of the Tyson stock. They did not want to be involved with Tyson as a creditor while this acquisition played out. Their performance summary for September 30, 2000, their average annual return in equity was approximately 12.3%. Bonds were about 7%. The total was approximately 8.6%. Mr. Roberts stated he felt that they were getting better service than they would with a larger company. It was obvious that someone was watching their money. That was what they hired money managers for was to watch their money in down times. .• RETIREMENT OF GARY DUGGER Mr. Roberts suggested rather than calling a special meeting the first part of January to retire Gary Dugger, why didn't they go ahead and approve his retirement. There was nothing unusual about his retirement. He could go ahead and retire him. I -le would notify accounting and the board, then at the first meeting in January they would bring it up and vote on it. It was a perfect retirement. Mr. Friend moved to approve Mr. Dugger's retirement. Mr. Bradley seconded the motion. Upon roll call the motion carried unanimously. Meeting adjourned at 2:15 p.m.