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Home My WebLink About2009-04-09 - Agendas - Final Fayetteville Fireman's Pension and Relief Fund Meeting Dates r/ 1,00 9 Adjourn Time Attendees: Subject: / Subject: a2 d D a ,, Motion To: Motion To: Motion By: Motion B Seconded: Seconded: Mayor Jordan / Mayor Jordan V Marion Doss Marion Doss ,// Pete Reagan Pete Reagan Gene Warford Gene Warford Ronnie Wood ✓ Ronnie Wood .✓ Sondra Smith Sondra Smith r¢u.¢ S 3, 00 14 fo / Subject: -10 16ANIA OAmJA Subject: _3 Oa ,7fR.La 40 fiwak 2 Motion To: Motion To: Motion By: f ydum Motion By: " Seconded: d 49 Seconded: Mayor Jordan 0J. Mayor Jordan ✓ Cdl Marion Doss Marion Doss ✓ Pete Reagan j y` Pete Reagan (�j Gene Warford Gene Warford Ronnie Wood . Ronnie Wood Sondra Smith Sondra Smith Fayetteville Fireman's Pension and Relief Fund Meeting Date ! CU O Adjourn Time o p d Attendees: 0 i' M"N J, Subject: //� 4 , Subject: Motion To: alt," D j!1! J Motion To: Motion By: d M tU., Motion By: Seconded: SS Seconded: Mayor Jordan vl� Mayor Jordan Marion Doss t/ Marion Doss Pete Reagan ✓ Pete Reagan Gene Warford ✓ Gene Warford Ronnie Wood a/ Ronnie Wood Sondra Smith I Sondra Smith Subject: Subject: Motion To: ®6 Motion To: Motion By: Motion By: Seconded: Seconded: Mayor Jordan Mayor Jordan Marion Doss 0 Marion Doss Pete Reagan AAA 0 Pete Reagan Gene Warford Gene Warford Ronnie Wood Ronnie Wood Sondra Smith Sondra Smith Uoneld Jordan Chairman Sondra E.Smith Secretary Marion Doss Position 1/Retired 7aye I Pete Reagan Position 2/Retired �i Gene Warford Position 3/Retired _ 1Y Ron Wood Position 4/Retired A R K A IV S A 5 Special Firemen's Pension and Relief Fund Meeting Agenda April 9, 2009 A special meeting of the Fayetteville Firemen's Pension and Relief Fund will be held at 11:00 AM on April 9, 2009 in Room 326 of the City Administration Building. Unfinished Business: • Scenario's for Actuary study • Attorney General Opinion • PRB letter dated February 2, 2006 regarding Cash Flow basis benefit increase New Business: • Updated Revenue/Expense Report • Change meeting time Longer Investments • Market Update March 20, 2009 • 2009 First Quarter Report lzye eve 113 West Mountain ARKANSAS Fayetteville,AR 72701 Telephone:(479)575-8323 Fax:(479)718-7695 city--clerk@d.fayettevillear.us City Clerk/Treasurer Division March 13, 2009 The Honorable Sue Madison State Senator 573 Rock Cliff Road Fayetteville, AR 72701 RE: Firemen's Pension and Relief Fund Board of Trustees request for Attorney General's Opinion Dear Senator Madison: I have been asked as Secretary of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees to submit the following request to the Attorney General for his opinion: If the Fayetteville Firemen's Pension and Relief Fund Board takes action to reduce pension benefits to retirees will that violate their rights protected under Article 2 Section 17 of the Arkansas State Constitution as interpreted by the Arkansas Supreme Court? If so will members of the Pension Board and the City of Fayetteville be exposed to liability should a lawsuit be filed on behalf of any retiree? With kindest regards, Sondra E. Smith City Clerkrrreasurer City of Fayetteville Secretary Firemen's Pension & Relief Fund Board of Trustees Question: If the Fayetteville Firemen's Pension and Relief Fund Board takes action to reduce pension benefits to retirees will that,violate their rights protected under Article 2 Section 17 of the Arkansas State Constitution as interpreted by the Arkansas Supreme Court? If so,will members of the pension board,and the City of Fayetteville be exposed to liability should a lawsuit be filed on behalf of any retiree? L PRItARKANSAS FIRE & POLICE PENSION REVIEW BOARD 620 W.3rd, Suite 200 Little Rock, Arkansas 72201-2212 February 2, 2006 Telephone: (501)682-1745 Toll-Free:(866) 859-1745 Sondra Smith Fax:(501) 682-1751 City of Fayetteville Police Pension Fund email: info@lopfi-prb.com 113 West Mountain website:www.lopfi-prb.com Fayetteville, AR 72701 Dear Ms. Smith: This letter is in response to your letter of January 27, 2006. For ease of understanding I will respond to each of the questions in the order they were presented, but avoid repeating the actual question. . 1. Yes, the Fayetteville Police Pension Fund Board of Trustees (Board) can decide to only implement one of the benefit increases that were approved by the PRB. The approval of the PRB was simply to show the requested benefit increase valuation;produced results that demonstrated the specific items contained within the Board's request could be implemented and funded under the conditions stated within the valuation. If by"majority" you mean at least 6 of the 7 members of the Board approved this action, implementing only part of the approved benefit increases, the January 27th Tetter will serve as notification to the PRB of this decision. In the event that "majority"means some numberless than 6, then another meeting would need to occur where at least 6 of the 7 board members were present and voted on this measure. If this is the case, then please provide a letter explaining that another meeting was held and what the approved increase(s) were, if the decision is to implement something other than what was approved by the PRB. The reason this is necessary is to ensure the PRB and the actuaries are clear on the exact benefit structure of the fund. Up to this point the presumption was the benefit increases approved in my October 18th letter were implemented. 2. The present COLA is a temporary COLA. If the Board prefers to make this a permanent COLA, or implement any other benefit increases, they will need to go through the,benefit increase process with the PRB as explained in PRB Rule 4. 3 See.response to,question 2. RECEIVED FEB 0 6 2006 CITY OF FAYEITEViLu CITYCLERMSr Ft:1n '.4.3s. Sondra Smith February 2, 2006 Page 2 of 2 4. See response to question 2. 5. See response to question 2. 6. The Board would need to pro-rate benefits. The Board should refer to A.C.A. 24- 11-416 and legal counsel for guidance on this matter. 7. In your police pension fund's current situation benefit increases only need City Council approval if any of the following provisions from the 2003 Legislative Session are implemented: Act 1371, Act 1372, and/or Act 1736. 8. The Board has the authority to make the decision as to how soon they would like to replace this position. Please refer to A.C.A. 24-11-405(a)(3)(D) for guidance. 9. A Cash Flow valuation is one method of determining the actuarial soundness (are there sufficient assets to pay promised benefits) of a pension fund. Please refer to PRB Board Rule 4 for further information on this topic. I hope this letter has properly answered your questions. Should you need further information please feel free to contact me at your convenience. Respectfully, David B. Clark Executive Director IZ8 January 27, 2006 David Clark Arkansas Fire & Police Pension Review Board 620 W 3rd Street Suite 200 Little Rock, AR 72201 RE: City of Fayetteville Policemen's Pension and Relief Fund Board of Trustees Benefit Increase Dear David: The Fayetteville Policemen's Pension and Relief Fund Board of Trustees requested a Cash Flow Projection Evaluation Study be completed for a proposed benefit increase which was approved by the actuaries and by PRB. The Cash Flow Study allowed for an increase for all current and future retirees to 95% of ending salary (plus the already approved 3% five year COLA), and an increase in the survivor's benefits to 90% of the deceased pensioner's salary amount. The Pension Board received the results of the Cash Flow Study and voted to approve only a portion of the proposed increase. They approved the increase to the widow's benefits and did not approve the increase to 95% for all current and future retirees. I have several questions regarding this increase. 1. The City of Fayetteville's Policemen's Pension Board voted by majority vote to increase only the widows benefits to 90% of the deceased pensioner's salary amount. • Are we allowed to increase the widow's benefits only? • Does it take more than a majority vote to increase only the widow's benefits? • Do we need to complete a resolution showing this was the only increase given? If a resolution is needed, does it have to be signed by more than a majority of the Board? 2. The Board also discussed the current 3% COLA the pensioners are receiving and if they could make that a permanent COLA. • Can you clarify if the existing Cash Flow Study that was completed in 2005 supports a permanent COLA or does the letter that Steve Davis, Finance & Internal Services Director received from Osborn, Carreiro & Associates, Inc. dated August 7, 2003 that states the COLA is a 5 year temporary COLA still apply? • If a permanent COLA is requested by the Pension Board would a new Cash Flow study have to be completed? 3. How long can a benefit increase be considered with the Cash Flow Study that was completed in 2005. Can it be used to increase benefits in the future up to the amount allowed by the study? 4. If a Cash Flow Study is requested for a benefit increase does that mean the Pension Board has to agree to that increase before the study is completed? 5. 1s a resolution required by the Pension Board for any and all benefit changes and does it need to be signed by a majority vote of the Pension Board or 6 out of the 7 Pension Board members? 6. What happens if benefits are increased due to a Cash Flow Study and in the future that plan can not sustain the increase due to a deduction in the net income of the plan? 7. Do benefit increases have to be approved by the City Council? 8. Due to the change in law in 2005 that replaced the physician on the Board with a pensioner does that physician need to be replaced immediately or can he continue to serve until the end of his term? 9. Please explain the difference between the Cash Flow Plan Study and an Actuarial Soundness Study. 1 have enclosed a copy of the resolution asking that a Cash Flow Study be completed. I have also enclosed a copy of the letter dated August 7, 2003 from Osborn, Carreiro & Associates, Inc. regarding the COLA. The Pension Board voted for the widow's benefits to become effective on February 1, 2006 and the increase is to be included in their February check. If the increase can not be granted please let me know before February 3, 2006. 1 really appreciate your help in clarifying the above issues. Sincerely, Sondra Smith Treasurer Policemen's Pension and Relief Fund Board of Trustees 24-11-416. Proration where fund insufficient. If at any time there should not be sufficient money in the fund to pay each person a full amount to which he or she may be entitled, the beneficiaries shall be paid by prorating the fund available among them. History. Acts 1937,No. 250, 11; Pope's Dig., 9866; A.S.A. 1947, 19-1811. Fire Pension Fund Revenue Expense Summary Thru Feb 28 ,2009 2009 2008 2007 2006 2005 2004 Revenues: Employee Contributions $ $ 1,356.43 $` 6,987.00 $ 11,863.00 $ 23,439.00 $ 25,393.00 Employer Contributions $ $ 2,712.85 $ 13,973.00 $ 25,852.00 $ 46,878.00 $ 53,730.00 State Insurance Tax $ - $ 146,031.32 $ 150,067.00 $ 151,560.00 $ 225,492.00 $ 185,445.00 Local Millage(.4 mills) $ 21,994.99 $ 441,696.50 $ 388,877.00 $ 370,649.00 $ 339,416.00 $ 295,409.00 Interest and Dividends $ 29,255.59 $ 265,704.47 $ 292,444.00 $ 311,217.00 $ 308,578.00 $ 328,158.00 Gain (Loss)on Sales $ (189,184.12) $ (728,656.78) $ 421,630.00 $ 383,393.00 $ 297,771.00 $ 466,221.00 Future Supplement $ 31,333.44 $ 38,917.00 $ 27,060.00 $ 24,480.00 $ 16,661.00 Misc Revenue $ 283.18 $ 0.96 $ 1,044.00 $ 541.00 $ 176.00 $ 121.00 Total Revenue $ (137,650.36) $ 160,179.19 $ 1,313,939.00 $ 1,282,135.00 $ 1,266,230.00 $ 1,371,138.00 Expenditures Regular Monthly Benefits $ 239,081.22 $ 1,436,083.26 $ 1,430,646.00 $ 1,281,954.00 $ 1,097,427.00 $ 1,005,154.00 Future Supplement $ 31,333.44 $ 38,766.00 $ 26,749.00 $ 24,390.00 $ 16,349.00 Drop Expense $ 43,816.86 $ 125,419.00 $ 238,801.00 $ 398,082.00 $ 431,817.00 Investment Manager Fees $ 13,403.41 $ 67,758.33 $ 76,454.00 $ 78,764.00 $ 84,005.00 $ 86,515.00 Other Expenses: Audit Fees $ 3,500.00 $ 3,500.00 $ 3,300.00 $ 3,210.00 $ 3,700.00 Professional Services $ 2,200.00 Legal Fees $ 1,025.00 Bank Fees $ 32.80 $ 228.60 $ 205.00 $ 202.00 $ 188.00 $ 129.00 Publications and Dues $ 150.00 $ 150.00 $ 150.00 $ 100.00 $ 100.00 Travel and Training $ 2,548.88 $ 3,462.00 $ 2,389.00 Total Expenses $ 252,517.43 $ 1,585,419.37 $ 1,675,140.00 $ 1,636,607.00 $ 1,609,791.00 $ 1,543,764.00 Net Income(Loss) Before Market Adj $ (390,167.79) $ (1,425,240.18) $ (361,201.00) $ (354,472.00) $ (343,561.00) $ (172,626.00) Market Adjustment $ (967,119.37) $ 3,621.71 $ 280,562.00 $ (378,645.00) $ (79,916.00) Net Income(Loss) $ (390,167.79) $ (2,392,359.55) $ (357,579.29) $ (73,910.00) $ (722,206.00) $ (252,542.00) Book Value Total Reserve Assets* $ 5,670,967.65 $ 6,061,155.44 $ 7,486,396.00 $ 7,847,597.00 $ 8,202,070.00 $ 8,545,630.00 .Market Value Total Reserve Assets* $ 5,823,183.74 $ 8,215,544.00 $ 8,573,123.00 $ 6,647,034.00 $ 9,369,238.00 *Assets less any liabilities **Market Value calculated at year end 4/8/2009 C:\DOCUME-1\ssmith\LOCALS-1\Temp\XPgrpwise\Fire Pension Summary.xls ti Page 1 of 3 Sondra Smith - Market Update 3/20/09 From: 'Blaine Longer" <elaine@longerinv.com> To: 'Blaine Longer" <elaine@longerinv.com> Date: 3/20/2009 5:26 PM Subject: Market Update 3/20/09 Dear Clients: When we sent the last update (February 20, 2009), we commented that the lows of November had been violated, leading us to reduce equity exposure and raise cash balances. From the level where the market broke the November low to the new low reached in the first week of March, the market fell 13%to 16%, depending on the index. At the low price reached on March 6 (S&P 500 value of 667 and Dow Jones Industrial Average [DJIA] value of 6470),the market had fallen 54% (DJIA)to 58% (S&P 500) from the highs reached in the fourth quarter of 2007. The declines in the stock market and in the housing market have led to a dramatic decline in household wealth in the U.S. By some estimates, $18 trillion of wealth has disappeared from the balance sheets of American families as the two primary asset classes —stock investments and the home—have declined in value simultaneously. As a result, consumption patterns changed dramatically as households shifted to saving from spending, bringing the savings rate to 5% in January. In trying to implement policies, the newly elected administration has hit some stumbling blocks that include the stimulus plan, the delays in a bank bailout plan, the continued need for capital from Citigroup and AIG, etc. Confidence in a speedy resolution or a clearly defined policy outline has waned. With the investor disappointment, many threw in the towel and sold stocks, delivering the final wash-out that caused the lows we saw in March. At that point, the stock market capitalization reached 55% of GDP (down from 110% in 2007 and from a long-term average of 75%) and cash continued to pile up in money market funds paying virtually no interest return(money market funds equal approximately 42% of the capitalization of the stock market versus the last 50-year peak of 22%). By all measures—price to dividend, price to earnings,price to book value,price to cash flow, etc. —the stock market reached a level that was strongly oversold. When investors are aligned on one side of the spectrum, the market is ripe for a tum. Good news from Citigroup (it turned profitable on an operating basis in the first quarter),positive earnings announcements from select companies and favorable trends in retail and housing contributed the catalyst to spark a dramatic rally off those lows. In just a few trading sessions, the S&P 500 and DJIA rallied approximately 15% off the lows. The momentum and breadth measurements were very impressive. This week the Fed met and decided to leave interest rates unchanged at the 0%to 0.25%range specified at the last meeting. However,the statement contained some surprises. It removed any possibility that the rate would increase any time this year. Also, it dramatically increased the purchases of mortgage-backed securities the Fed will conduct, and for the first time, said it would be actively purchasing Treasury notes in the two-to 10-year maturities. It intends to drive the interest rates lower in order to lower the mortgage rates available to homeowners, and hasten a bottom in the housing market. As a result of the decline in prices of houses and the decline in interest rates on mortgages,the housing affordability index reached a new high this month(see chart). The Fed brought out the big guns at this meeting, with an immediate market response. Gold rallied intraday by $70 per ounce, and bond prices jumped(interest rates declined) dramatically. The dollar weakened due to the prospect of the Fed buying Treasuries. The stock market response was more a sector-shift than an absolute price increase, with economically sensitive issues and inflation beneficiaries outperforming. The Fed has drawn a line in the sand to fight deflation, which it has identified as "public enemy number one." It will deal with any resulting inflation at a later date. For now, its intent is clear—no prolonged file://C:\Documents and Settings\ssmith\Local Settings\Temp\XPgrpwise\49C3D1D3FAYETTEVILLEC... 3/20/2009 Page 2 of 3 deflation on Fed Chairman Bernanke's watch. Composite Housing Af#ordabRity Index Meow 10C.Quaal"ying Ina-100 190 1&0: .. ... . . .... . _.'. . _.. _. 190 AL 140. . . : .... _ -_.___ . .;. _ ._ ._ . . :..140 120 . , :._..:. . . . .- 120 i 1oa 100 SNOUT 90 80 J-60 Saarta: NWoaaaMM�aaA>a aza+NR+n4iwRTiWWatnaaFrlc� We were able to selectively buy back individual stocks that we had sold(in most cases) considerably higher. We are positioning the portfolios defensively with stocks that carry dividend yields in excess of the yield on the 10-year Treasury note (on a portfolio average) and possess sound balance sheets. This is still a fluid environment, subject to abrupt changes and policy shifts. But, at a level that is down 58% from the highs, a lot of this is discounted in the price of stocks. With the Fed's action,the alternatives to equity ownership are even less compelling with taxable Treasury yields of 1.6% on the five-year note and 2.5% on the ten-year. Money market yields are near zero. Although many companies have cut dividends this year, the yields on many blue-chip companies are still very attractive. At one point, we were below most investment policy guidelines for equity exposure. We have moved back into the range defined in policies, but retain purchasing power for additional opportunities. We are still cautious, awaiting further clarification on the bank bill,the auto bailout, and other issues that must be defined and addressed for the outlook to be more positive. However, the stock market bottoms well in advance of the economy's bottom. That is why stock market performance is one of the leading economic indicators. Positive stock activity will precede positive economic news by six to nine months. It is possible we have discounted the worst news at the 6500 low on the DJIA reached in March. We remain vigilant, but are turning more optimistic and find it easier to uncover long-term value at these levels. We appreciate your patience through this most difficult market period and welcome your input. Please feel free to call if you have any questions. Sincerely, Elaine M. Longer, CFA President EML/kme file://C:\Documents and Settings\ssmith\Local Settings\Temp\YPgrpwise\49C3D1D3FAYETTEVILLEC... 3/20/2009 Page 3 of 3 This email and any files transmitted with it are confidential and intended solely for the entity or individual to whom they are addressed.If you have received this email in error,destroy it immediately. file://C:\Documents and Settings\ssmith\Local Settings\Temp\YPgrpwise\49C3DID3FAYETTEVILLEC... 3/20/2009 RECEIVE® LONGER INVESTMENTS INCORPORATED APR 0 62009 ® CITY OF FAYETTWILLE A Registered Investment Advisor CITY CLERK'S OFFICE April 4, 2009 Ms. Sondra Smith City of Fayetteville Fire Pension& Relief Fund 113 W. Mountain Fayetteville, Arkansas 72701 Dear Sondra: Enclosed you will find the 2009 first-quarter reports for the Fayetteville Fire Pension and Relief Fund account. These reports include a portfolio appraisal, an income/expense report and a report of realized gains/losses. As instructed, the account at Northern Trust will be billed for the management fee. Our client update letter, which was mailed on March 20, discussed the recent activity in the equity and fixed-income markets and our current strategy. If you did not receive it, or if you would like us to send it again, please contact our office. The stock market declined again in the first quarter of the year, although we did close the quarter significantly off the lows reached in March. The Dow Jones Industrial Average (DJIA) hit a low of 6500 on March 8, before rising to 7930 by March 26 (the largest percentage move—22%—in such a short time period since 1938). Even with the impressive bounce off the lows, the market closed the quarter down 13.3% (DJIA cash return). We wrote in our March update about some of the signs of improving economic numbers and technical indicators. We see only slight signs of favorable indicator changes at this time, but the markets were very oversold at the lows, and any signs of improvement can cause the market to spring back in a dramatic way. This is one of the reasons we never advocate leaving equities totally, no matter how painful, unless something has changed in the long-term investment plan. As we entered April, the market continued to improve, so we are hopeful that we have seen the worst. P.O.Box 1269 Fayetteville,Arkansas 72702 - Telephone:479-443-5851 Toff free:800-827-7710 Fax:479-443-7129 - Web site m mlongmu.com Ms. Sondra Smith April 4, 2009 Page Two Have we reached the bottom? This is the question on everyone's mind, including ours. At this point, there is no way to say with certainty that we have seen the ultimate low in this bear market. Much will depend on the strength of the worldwide economic recovery, the policies of the government and the resolution of the banking crisis. Market"bottoms" are a process, not an event. Stocks achieve bottoms differently, depending on their economic sector and industry. Many stocks meet our valuations at current levels, but that has been true for the past year. Finally, we see technical strength to complement the fundamental valuations we employ, and that has made us more optimistic. First-quarter performance for 2009 is detailed below. Performance is quoted net of all fees and expenses. Domestic Foreign Government Total Equities Funds Bonds Account City of Fayetteville Fire Pension&Relief Fund -10.3% -14.1% 0.2% -6.6% In comparison, first-quarter performance of the market indices is listed below: S&P 500 (cash basis) -11.7% Dow Jones Industrial Average (cash basis) -13.3% MSCI Europe Australasia Far East Index -14.6% Longer Investments appreciates the opportunity to assist with the management of the Fayetteville Fire Pension and Relief Fund's assets. Please do not hesitate to call if you have any questions or comments, or if we can be of further service. Sincerely, �k 1 Kim M. Cooper Executive Administrator /kmc Enclosures City of Fayetteville Fire Pension and Relief Fund U/A Dated 06-18-86 FIRST QUARTER REPORTS March 31, 2009 ' LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 March 31, 2009 Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield Common Stock 2,435 AT&T 24.65 60,031.37 25.20 61,362.00 1.2 1.640 3,993.40 6.7 1,000 Abbott Laboratories 47.48 47,478.60 47.70 47,700.00 0.9 1.600 1,600.00 3.4 3,000 American Express Co. 12.60 37,794.17 13.63 40,890.00 0.8 0.720 2,160.00 5.7 1,175 B.P.Amoco PLC A.D.S. 42.90 50,405.45 40.10 47,117.50 0.9 3.360 3,948.00 7.8 1,200 Best Buy Co.Inc. 31.98 38,373.84 37.96 45,552.00 0.9 0.560 672.00 1.8 1,250 Cardinal Health,Inc. 32.21 40,261.65 31.48 39,350.00 0.8 0.560 700.00 1.7 2,220 Caterpillar Inc. 58.44 129,730.42 27.96 62,071.20 1.2 1.680 3,729.60 2.9 1,635 Emerson Electric 32.90 53,786.30 28.58 46,728.30 0.9 1.320 2,158.20 4.0 - 11,140 Financial Select Sector 17.06 190,052.00 8.81 98,143.40 1.9 0.345 3,841.96 2.0 SPDR Fund 1,050 Fluor Corporation 39.29 41,249.57 34.55 36,277.50 0.7 0.500 525.00 1.3 2,500 Health Care Select 24.13 60,325.00 24.21 60,525.00 1.2 0.585 1,462.40 2.4 Sector SPDR Fund 2,080 Home Depot,Inc. 21.31 44,320.64 23.56 49,004.80 1.0 0.900 1,872.00 4.2 2,200 Ingersoll-Rand Co.Ltd. 16.59 36,499.40 13.80 30,360.00 0.6 0.720 1,584.00 4.3 5,885 Intel Corp. 17.92 105,471.84 15.03 88,451.55 1.7 0.560 3,295.60 3.1 1,215 Johnson&Johnson 59.03 71,717.32 52.60 63,909.00 1.3 1.840 2,235.60 3.1 1,450 Joy Global,Inc. 24.67 35,769.21 21.30 30,885.00 0.6 0.700 1,015.00 2.8 1,100 McKesson Corp. 35.98 39,575.69 35.04 38,544.00 0.8 0.480 528.00 1.3 3,885 Microsoft Corp. 29.79 115,720.65 18.37 71,367.45 1.4 0.520 2,020.20 1.7 1,450 National Oilwell Vance, 29.52 42,807.50 28.71 41,629.50 0.8 0.000 0.00 0.0 Inc. 1,000 Norfolk Southern Corp. 31.41 31,412.20 33.75 33,750.00 0.7 1.360 1,360.00 4.3 2,535 Oracle Corp. 15.85 40,169.83 18.07 45,807.45 0.9 0.200 507.00 1.3 2,215 Pfizer Inc. 13.52 29,946.80 13.62 30,168.30 0.6 1.280 2,835.20 9.5 6,600 Powershares Dynamic 20.61 135,999.37 11.92 78,672.00 1.5 0.031 207.50 0.2 Energy Exploration 6,500 Powershares QQQ Trust 29.98 194,874.80 30.32 197,080.00 3.9 0.196 1,270.88 0.7 Series I -NASDAQ 1,275 Procter&Gamble Co. 47.10 60,055.73 47.09 60,039.75 1.2 1.600 2,040.00 3.4 750 Research In Motion Ltd. 44.12 33,088.50 43.11 32,332.50 0.6 0.000 0.00 0.0 1,600 Schlumberger Limited 71.00 113,599.02 40.62 64,992.00 1.3 0.840 1,344.00 1.2 4,22.5 Standard&Poors 93.58 395,384.95 79.52 335,972.00 6.6 2.246 9,488.17 2.4 Depository Receipts 1,850 Staples,Inc. 15.78 29,188.75 1&11 33,503.50 0.7 0.330 610.50 2.1 194 Time Warner Cable Inc. 23.90 4,637.22 24.80 4,811.20 0.1 0.000 0.00 0.0 777 Time Warner Inc. 18.21 14,143.15 19.30 14,989.52 0.3 0.750 582.49 4.1 750 Union Pacific Corp. 39.90 29,923.65 41.11 30,832.50 0.6 1.080 810.00 2.7 1,075 United Technologies 47.27 50,812.97 42.98 46,203.50 0.9 1.540 1,655.50 3.3 Corp. 2,670 Vanguard Small Cap 40.68 108,621.58 38.60 103,062.00 2.0 0.011 29.37 0.0 Growth ETF 1,200 Wal-Mart Stores Inc. 50.00 59,995.92 52.10 62,520.00 1.2 1,090 1,308.00 2.2 3,725 Weatherford 11.35 42,287.87 11.07 41,235.75 0.8 0.000 0.00 0.0 International Ltd. 2,615,512.93 2,215,840.17 43.5 61,389.58 2.4 Real Estate Investment Trusts 2,650 iShares Cohen&Steers 39.35 104,269.02 27.76 73,564.00 1.4 3.235 8,573.81 8.2 Realty Majors 104,269.02 73,564.00 1.4 8,573.81 8.2 I $ LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund UTA DTD 6-18-86 March 31, 2009 Unit Total Market Pct Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield Preferred Debt Securities 5,000 AT&T Preferred 24.99 124,939.00 25.04 125,200.00 2.5 1.594 7,968.75 6.4 6.375%A2/A(C 2-12-12) 1,500 G.E.Preferred 6.10% 24.76 37,139.10 20.50 30,750.00 0.6 1.525 2,287.50 6.2 AAA/AAA(C I I-15-07) 162,078.10 155,950.00 3.1 10,256.25 6.3 Mutual Funds-Equity 1,000.0000 Thai Fund Inc. 9.63 9,634.50 5.28 5,280.00 0.1 0.549 548.80 5.7 425.0000 iPath MSCI India Index 43.55 18,508.65 30.34 12,894.50 0.3 0.000 0.00 0.0 ETN 1,300.0000 iShares FTSE China 27.61 35,898.48 28.53 37,089.00 0.7 0.416 540.87 1.5 Index Fund 425.0000 iShares MSCI Brazil 57.75 24,541.97 37.70 16,022.50 0.3 2.641 1,122.52 4.6 Index Fund 630.0000 iShares MSCI EAFE 70.47 44,396.67 37.59 23,681.70 0.5 1.082 681.80 1.5 Index Fund 510.0000 iShares MSCI Emerging 26.09 13,305.74 24.81 12,653.10 0.2 0.681 347.23 2.6 Markets Index Fund 750.0000 iShares MSCI Hong 22.71 17,032.50 10.17 7,627.50 0.1 0.735 551.22 3.2 Kong Index Fund 14,345.0000 iShares MSCI Japan 9.85 141,298.25 7.90 113,325.50 2.2 0.150 2,149.23 1.5 Index Fund 1,650.0000 iShares MSCI Singapore 7.53 12,422.85 6.30 10,395.00 0.2 0.577 951.27 7.7 Index Fund 500.0000 iShares MSCI South 39.28 19,640.24 28.46 14,230.00 0.3 0.378 189.14 1.0 Korea Index Fund 1,415.0000 iShares MSCI Taiwan 10.15 14,361.48 8.07 11,419.05 0.2 1.203 1,702.67 11.9 Index Fund 2,625.0000 iShares S&P Europe 40.53 106,378.13 25.58 67,14250 1.3 0.745 1,956.05 1.8 350lndex 475.0000 iShares S&P Latin 27.13 12,886.26 25.64 12,179.00 0.2 0.942 447.62 3.5 American Index 470,305.71 343,944.35 6.7 11,188.42 2.4 Corporate Bonds 50,000 Hershey Foods Corp. 97.63 48,816.00 108.95 54,475.95 1.1 6.950 3,475.00 7.1 Notes A2/A(NC) 6.950%Due 08-15-12 50,000 IBM Corp.Debentures 100.01 50,004.00 105.86 52,928.75 1.0 7.000 3,500.00 7.0 A I/A+(Subject to make whole call) 7.000%Due 10-30-25 Accrued Interest 1,902.36 0.0 98,820.00 109,307.06 2.1 6,975.00 7.1 Government Bonds 400,000 U.S.Treasury Note 99.99 399,976.70 100.56. 402,250.00 7.9 2.750 11,000.00 2.8 2.75%YTM 2.750%Due 02-15-19 2 LONGER INVESTMENTS INCORPORATED A Registered Investment Adtdsm Longer Investments Inc. PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 March 31, 2009 Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield Accrued Interest 1,337.02 0.0 399,976.70 403,587.02 7.9 11,000.00 2.8 Government Agency 50,000 Tennessee Valley 98.95 49,474.00 107.28 53,642.45 1.1 5.625 2,812.50 5.7 Authority(NC) 5.625%Due 01-18-1 l 65,000 Federal Home Loan 100.00 65,000.00 100.13 65,081.25 1.3 5.020 3,263.00 5.0 Bank(Call 4-13-09 @ 100, IX) 5.020%Due 04-13-11 150,000 Federal Home Loan 100.00 150,000.00 100.88 151,312.50 3.0 4.020 6,030.00 4.0 Bank(Call 7-22-09 @ too, IX) 4.020%Due 07-22-11 200,000 Federal Farm Credit 100.00 200,000.00 100.84 201,687.50 4.0 3.750 7,500.00 3.8 Bank(Call 7-28-09 @ 100, 1 X) 3.750%Due 07-28-11 175,000 Federal Farm Credit 100.00 175,000.00 101.13 176,968.75 3.5 3.750 6,562.50 3.8 Bank(Call 9-29-09 @ 100,CC) 3.750%Due 09-29-11 50,000 Federal Farm Credit 100.00 50,000.00 101.06 50,531.25 1.0 3.375 1,687.50 3.4 Bank(Call 11-18-09 @ 100, 1X) 3.375%Due 11-18-11 250,000 Federal Home Loan 100.00 250,000.00 105.31 263,281.25 5.2 5.000 12,500.00 5.0 Bank(Call 10-1-10 @ too, IX) 5.000%Due 10-01-12 100,000 Federal Home Loan 100.00 100,000.00 100.34 100,344.60 2.0 6.000 6,000.00 6.0 Mortgage Corp.(Call 4-28-09 @ 100, quarterly) 6.000%Due 04-28-16 200,000 Federal Home Loan 100.00 200,000.00 108.91 217,812.50 4.3 6.000 12,000.00 6.0 Bank(Call 1-3-12 @ 100, IX) 6.000%Due 07-03-17 Accrued Interest 16,954.53 0.3 1,239,474.00 1,297,616.58 25.5 58,355.50 4.7 Alternative Investments 5,550 Central Fund of Canada 11.61 64,460.45 11.92 66,156.00 1.3 0.010 55.50 0.1 Ltd. 1,350 SPDR Gold Shares 98.02 132,328.49 90.28 121,878.00 2.4 0.000 0.00 0.0 196,788.94 188,034.00 3.7 55.50 0.0 Cash and Equivalents Dividends Accrued 4,132.21 4,132.21 0.1 0.000 0.00 0.0 3 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 March 31, 2009 Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield Money Market 203,774.16 203,774.16 4.0 0.049 99.65 0.0 207,906.37 207,906.37 4.1 99.65 0.0 Certificate of Deposit 100,000 Westernbank PRCD 100.00 100,000.00 101.71 101,711.30 2.0 3.400 3,400.00 3.4 (NC)FDIC-Insured 3.400%Due 06-24-10 Accrued Interest 65.21 0.0 100,000.00 101,776.51 2.0 3,400.00 3.4 TOTAL PORTFOLIO 5„595,131.77 '5,097,526.04 100.0 ' 171,293.70 r'3.2 4 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund UTA DTD 6-18-86 From 01-01-09 Through 03-31-09 Security Ex-Date Pay-Date Amount Common Stock AT&T 01-07-09 02-02-09 834.35 Allergan Inc. 03-13-09 03-13-09 75.00 B.P.Amoco PLC A.D.S. 02-18-09 03-09-09 1,041.60 Boeing Co. 02-04-09 03-06-09 714.00 Cardinal Health,Inc. 03-30-09 04-15-09 175.00 Caterpillar Inc. 01-15-09 02-20-09 932.40 E.I.DuPont de Nemours&Co. 02-11-09 03-13-09 471.50 Emerson Electric 02-11-09 03-10-09 539.55 Financial Select Sector SPDR Fund 03-20-09 04-01-09 960.49 General Dynamics Corp. 01-14-09 02-06-09 390.25 General Electric 02-19-09 04-27-09 1,015.25 Health Care Select Sector SPDR Fund 03-20-09 04-01-09 365.60 Ingersoll-Rand Co. Ltd. 02-11-09 03-02-09 743.40 Intel Corp. 1 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-09 Through 03-31-09 Security Ex-Date Pay-Date Amount 02-04-09 03-01-09 823.90 Johnson &Johnson 02-20-09 03-10-09 558.90 Joy Global,Inc. 03-03-09 03-19-09 232.75 Microsoft Corp. 02-17-09 03-12-09 505.05 Monsanto Co. 01-07-09 01-30-09 192.00 Powershares Dynamic Energy Exploration 03-20-09 03-31-09 51.88 Powershares QQQ Trust Series 1 -NASDAQ 03-20-09 04-30-09 195.52 Schlumberger Limited 02-13-09 04-03-09 299.25 Standard&Pours Depository Receipts 03-20-09 04-30-09 968.47 Staples,Inc. 03-25-09 04-16-09 152.63 United Technologies Corp. 02-18-09 03-10-09 336.88 Vanguard Small Cap Growth ETF 03-23-09 03-27-09 29.37 Common Stock Total 12,604.99 Real Estate Investment Trusts iShares Cohen &Steers Realty Majors 03-24-09 03-30-09 1,474.94 2 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-I8-86 From 01-01-09 Through 03-31-09 Security Ex-Date Pay-Date Amount Preferred Debt Securities AT&T Preferred 6.375%A2/A(C 2-12-12) 01-28-09 02-17-09 5,976.57 G.E.Preferred 6.10%AAA/AAA(C 11-15-07) 02-11-09 02-17-09 571.88 Preferred Debt Securit Total 6,548.45 Mutual Funds-Fixed iShares iBoxx Investment Grade Corp Bond 02-02-09 02-06-09 294.48 Corporate Bonds Hershey Foods Corp.Notes A2/A 6.950%Due 08-15-12 (NC) 02-15-09 02-15-09 1,737.50 Government Bonds U. S. Treasury Note 0.690%YTM 0.875%Due 12-31-10 01-20-09 01-23-09 -138.98 01-28-09 01-29-09 175.24 36.26 U. S.Treasury Note 2.75%YTM 2.750%Due 02-15-19 02-20-09 02-23-09 -243.09 Government Bonds Total -206.83 Government Agency Federal Farm Credit Bank(Call 3.750%Due 07-28-11 7-28-09 @ 100, 1X) 01-28-09 01-28-09 3,750.00 3 LONGER INVESTMENTS INCORPORATED A Registered Lrveshnenf Advisor Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-09 Through 03-31-09 Security Ex-Date Pay-Date Amount Federal Farm Credit Bank(Call 3.750%Due 09-29-11 9-29-09 @ 100, CC) 03-29-09 03-29-09 3,281.25 Federal Home Loan Bank(Call 6.000%Due 07-03-17 1-3-12 @ 100, 1X) 01-03-09 01-03-09 6,000.00 Federal Home Loan Bank (Call 5.500%Due 08-18-11 2-18-09 @ 100, 1X) 02-18-09 02-18-09 3,437.50 Federal Home Loan Bank(Call 5.250%Due 02-09-11 2-9-09 @ 100, 1X) 02-09-09 02-09-09 9,187.50 Federal Home Loan Bank(Call 4.020%Due 07-22-11 7-22-09 @ 100, 1X) 01-22-09 01-22-09 3,015.00 Federal Home Loan Bank(Call since 5.000%Due 02-13-18 2-13-09 @ 100,CC) 02-13-09 02-13-09 3,125.00 03-31-09 03-31-09 370.37 3,495.37 Tennessee Valley Authority(NC) 5.625%Due 01-18-11 01-18-09 01-18-09 1,406.25 Government Agency Total 33,572.87 Cash and Equivalents Money Market 01-06-09 01-06-09 1.32 01-31-09 01-31-09 27.80 02-28-09 02-28-09 15.78 03-31-09 03-31-09 T92 52.82 a LONGER INVESTMENTS INCORPORATED to A Registered Investment Advisor Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-09 Through 03-31-09 Security Ex-Date Pay-Date Amount Certificate of Deposit Westernbank PR CD(NC) 3.400%Due 06-24-10 FDIC-Insured . 01-24-09 01-24-09 288.77 02-24-09 02-24-09 288.77 03-24-09 03-24-09 260.82 838.36 EXPENSE ACCOUNTS Northern Trust Fee 01-30-09 01-30-09 374.39 02-28-09 02-28-09 364.49 03-31-09 03-31-09 318.55 1,057.43 MANAGEMENT FEES Management Fee 01-12-09 01-12-09 12,664.53 NET INCOME 43,195.62 5 LONGER INVESTMENTS INCORPORATED A Registered L vestinent Advisor Longer Investments Inc. REALIZED GAINS AND LOSSES Fayetteville Fire Pension and Relief Fund UTA DTD 6-18-86 From 01-01-09 Through 03-31-09 Gain Or Loss Open Close Cost Date Date Quantity Security Basis Proceeds Short Term Long Term 09-17-08 01-06-09 175 Freeport-McMoRan Copper 11,532.40 5,363.25 -6,169.15 &Gold 10-01-08 01-06-09 .500 Freeport-McMoRan Copper 26,499.05 15,323.56 -11,175.49 &Gold 10-15-08 01-06-09 650 Freeport-McMoRan Copper 23,054.85 19,920.63 -3,134.22 &Gold 10-24-08 01-06-09 280 Freeport-McMoRan Copper 6,610.00 8,581.19 1,971.19 &Gold I1-12-08 01-06-09 335 Freeport-McMoRan Copper 7,794.76 10,266.79 2,472.03 &Gold 11-21-08 01-06-09 685 Freeport-McMoRan Copper 12,802.44 20,993.28 8,190.84 &Gold 02-13-08 01-06-09 150 G.E.Preferred 6.10% 3,713.91 3,488.53 -225.38 AAA/AAA(C 11-15-07) 12-31-08 01-06-09 650.0000 iShares iBoxx Investment 65,520.00 65,684.47 164.47 Grade Corp Bond 02-13-08 01-07-09 500 G.E.Preferred 6.10% 12,379.70 11,568.68 -811.02 AAA/AAA(C 11-15-07) 12-09-08 01-07-09 6,185 The Technology Select Sec 99,331.10 96,659.87 -2,671.23 SPDR Fund 12-30-08 01-08-09 350 Standard&Poors Depository 30,994.47 31,601.39 606.92 Receipts 10-06-08 01-08-09 425 Standard&Poors Depository 44,347.01 38,373.12 -5,973.89 Receipts 12-31-08 01-12-09 1,075 Stericycle,Inc. 56,627.13 53,413.12 -3,214.01 12-26-08 01-12-09 395 SPDR Gold Shares 33,854.21 31,967.33 -1,886.88 11-21-08 01-12-09 2,420 SPDR Gold Shares 187,030.91 195,850.47 8,819.56 01-07-09 01-13-09 1,170 Norfolk Southern Corp. 57,334.10 49,057.82 -8,276.28 12-09-08 01-14-09 940 eBay Inc. 13,712.16 12,365.72 -1,346.44 12-03-08 01-14-09 410 eBay Inc. 5,658.97 5,393.56 -265.41 12-02-08 01-14-09 2,600 eBay Inc. 34,436.22 34,203.07 -233.15 12-31-08 01-14-09 3,650 Williams-Sonoma Inc. 28,586.80 28,323.83 -262.97 12-19-08 01-1.5-09 1,560 Accenture Ltd. 49,467.76 49,030.52 -43T24 12-31-08 01-15-09 2,100 Amphenol Corp. 51,309.09 49,913.98 -1,395.11 12-31-08 01-15-09 230 Google 70,980.28 66,669.62 -4,310.66 11-26-08 01-15-09 1,200 Parker Hannifin Corp. 46,097.64 46,162.30 64.66 12-08-08 01-15-09 3,780 Health Care Select Sector 96,770.65 95,179.86 -1,590.79 SPDR Fund 11-26-08 01-20-09 1,370 ConocoPhillips 69,048.27 64,517.86 -4,530.41 12-11-08 01-20-09 2,000 Dover Corp. 59,415.60 60,130.26 714.66 01-06-09 01-20-09 2,565 Powershares QQQ Trust 80,277.32 71,665.69 -8,611.63 Series 1 -NASDAQ 10-01-08 01-20-09 1,275 Financial Select Sector SPDR 26,112.00 10,998.09 -15,113.91 Fund 09-29-08 01-20-09 1,510 Financial Select Sector SPDR 30,256.32 13,025.18 -17,231.14 Fund 01-07-09 01-20-09 2,100 Adobe Systems Inc. 51,363.48 41,524.74 -9,838.74 01-14-09 01-26-09 -10 S&P.500 February 86 Calls 3,104.36 3,932.97 828.61 01-20-09 01-28-09 250,000 U.S.Treasury Note 0.690% 250,859.38 250,078.13 -781.25 YTM 0.875%Due 12-31-10 12-31-08 02-02-09 200 General Dynamics Corp. 11,456.56 10,993.48 -463.08 12-08-08 02-02-09 915 General Dynamics Corp. 49,510.10 50,295.16 785.06 1 LONGER INVESTMENTS INCORPORATED A Registered Lrveshneni Advisor