HomeMy WebLinkAbout2002-10-17 MinutesREVISED
MINUTES OF A MEETING
OF THE
POLICE PENSION AND RELIEF FUND BOARD
OCTOBER 17, 2002
A meeting of the Fayetteville Police Pension and Relief Fund Board was held on October 17, 2002
at 1:30 p.m. in Room 326 of the City Administration Building located at 113 West Mountain Street,
Fayetteville, Arkansas.
PRESENT: Eldon Roberts, Randy Bradley, City Clerk Heather Woodruff, and City Attorney Kit
Williams.
MINUTES
There was no approval of the July 18, 2002 meeting due to lack of a quorum present.
PENSION LIST
STATE BENEFIT SUPPLEMENT
INVESTMENT REPORT
The combined portfolio report as of September 30, 2002 has an 18-19% equity. The third quarter
was down, it was the worst quarter since 1987, this caused a wash out at the end of September. It is
good that we have bonds in treasuries and agencies. Last week Ford started to trade as junk bonds
and General Motors bonds were downgraded this week. We got out of these bonds last year causing
you to be unexposed to these corporate bonds. You have only about 11% of corporate bonds and
they are all investment grade bonds, with limited credit risk.
The stock account is 43% invested in equities. All the bonds are trading above the price we paid for
them so they are all convertible to cash which can be used to add to the stock side. We have
flexibility to continue to switch from the fixed income to the equity and back. The top five holdings
are high quality type stocks, it is a very blue chip equity portfolio.
Realized gains and losses: This year we have had net losses over gains, we have never had a year
like this before, we have always tried to keep it pretty much evened up. The net income has been
enough to offset the gains so that net the book value of the portfolio has not gone down.
Fixed income, securities and total portfolio: The yield on the book value as of September 30 was
5.9%, on June 30 it was 6.1%. Rather than extending out into the longer maturities that did not
offer much yield for the amount of risk that we were tasking we ended up investing about
$450,000.00 in shorter maturities with about a 3% yield. So temporarily the yield dropped a little on
the fixed income side. The total portfolio that includes your stock has an income yield of 5%. We
target trying to keep that income yield at 4% on the total portfolio. The weighted average maturity
is 6.9 years and the weighted average duration is 5.2 years. The duration is the measure of price
fluctuation when interest rate increases. If interest rates go up the price value of your bonds will
drop.
Performance history summary: Annualized returns are holding together very well, because we have
had returns on bonds that offset the losses on stocks. For the year 2002 your stocks alone are
down 36% but with the bonds the total account is down 4.2% for the year. Holding the principle
together is the most important part. This market through last week was the worst Bear market since
the depression.
Investment equity exposure is back to 25% or so equity weighting is moving toward the lower end
of your policy guidelines and your return objective is still intact.
Total portfolio is about $10 million.
Meeting adjourned at 2:15 pm