Comprehensive annual financial report / Elected Officials' Retirement Plan fy 2002

              ELECTED OFFICIALS’ RETIREMENT PLAN
A PENSION TRUST FUND OF THE STATE OF ARIZONA
TWENTY-FIRST COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2002
This report was prepared by the staff of the EORP
1020 East Missouri Avenue
Phoenix, Arizona 85014
(602) 255-5575
Fax (602) 255-5572
www.psprs.com
STATE OF ARIZONA
ELECTED OFFICIALS’ RETIREMENT PLAN
TWENTY-FIRST COMPREHENSIVE ANNUAL FINANCIAL REPORT
CONTENTS
INTRODUCTORY SECTION
Fund Managers' Report ……………………………………………………………………………………. 3
Letter of Transmittal ………………………………………………………………………………………... 4
Certificate of Achievement for Excellence in Financial Reporting ……………………………………. 7
The Retirement Board and Administrative Organization ………………………………………………. 8
Organizational Chart ……………………………………………………………………………………….. 9
Summary of Plan Provisions (See Note 1 in Notes to Financial Statements) …………………......... 19
FINANCIAL SECTION
Independent Auditor's Report …………………………………………………………………………….. 13
Management’s Discussion and Analysis ………………………………………………………………… 14
Basic Financial Statements
Statements of Plan Net Assets…………………………………………………………………… 17
Statements of Changes in Plan Net Assets....................………………………………………… 18
Notes to Financial Statements………………………………………………���…………………… 19
(These Notes are an Integral Part of the Financial Statements)
Required Supplementary Information
Schedule of Funding Progress …………………………………………………………………… 25
Schedule of Employer Contributions………………………………………………………………. 26
Supporting Schedule of Changes in Fund Balance Reserves ………………………………………... 27
Supporting Schedule of Administrative and Investment Expenses ………………………………...… 28
Supporting Schedule of Payments to Consultants ……………………………………………………... 28
Supplemental Schedule of Cash Receipts and Cash Disbursements ………………………..……… 29
INVESTMENT SECTION
Fund Objectives ……………………………………………………………………………………………. 33
Investment Performance Data ………………………………………………��…………………………. 34
Supporting Schedule of Commissions Paid to Brokers ……………………………………...………… 38
Summary of Changes in Investment Portfolio …………………………………………………………... 39
Detailed List of Investments Acquired …………………………………………………………………… 40
Detailed List of Sales and Redemption of Investments ………………………………………………... 46
Detailed List of Investments Owned ……………………………………………………………………… 50
ACTUARIAL SECTION
Actuarial Certification Statement …………………………………………………………………………. 61
Aggregate Actuarial Balance Sheet, June 30, 2002 …………………………………………………… 62
Summary of Valuation Methods and Assumptions …………………………………………………… 63
Solvency Test ………………���……………………………���……………………………………………. 66
Summary of Active Member Data ………………………………………………………………………… 67
Summary of Inactive Member Data ……….……………………………………………………………… 68
Schedule of Retirants and Beneficiaries………………………………………………………………… 68
Schedule of Experience Gain / (Loss)…………………………………………………………………… 69
STATISTICAL SECTION
Schedule of Revenues by Source and Expenses by Type…………………………………………… 73
Schedule of Benefit Expenses by Type ……………………………………………………………....…. 74
Summary of Retired Member and Survivor Data ………………………………………………….....… 75
Summary of Benefit Increases ………………………………………………………………………..... 76
Participating Employers …………….....................…………………………………………………....…. 78
Summary of Growth of the Plan ………………………………………………………………….....……. 79
INTRODUCTORY SECTION
ELECTED OFFICIALS’ RETIREMENT PLAN
TWENTY-FIRST COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2002
Fund Managers' Report
Letter of Transmittal
Certificate of Achievement for
Excellence in Financial Reporting
The Retirement Board and
Administrative Organization
Organizational Chart
Summary of Plan Provisions
(See Note 1 in Notes to Financial Statements)
PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM
CORRECTIONS OFFICER RETIREMENT PLAN
ELECTED OFFICIALS’ RETIREMENT PLAN
1020 East Missouri Avenue
Phoenix, Arizona 85014-2613
Jack M. Cross, C.P.A., C.F.A.
Administrator TELEPHONE: (602) 255-5575
James A. Nielsen, C.P.A., J.D.
Assistant Administrator
FAX: (602) 255-5572
September 13, 2002
The Honorable Jane Dee Hull
Governor of the State of Arizona
State Capitol
Phoenix, Arizona 85007
Dear Governor Hull:
The Fund Manager of the Public Safety Personnel Retirement System respectfully submits the Twenty-First
Comprehensive Annual Financial Report of the Elected Officials' Retirement Plan for the fiscal year ended June
30, 2002.
We are pleased to report that despite the volatile stock market, the Plan is still in excellent financial and actuarial
condition. In fact, the Plan is 125.5% funded, one of the best funded plans in the country. Set forth below are
some of the highlights for the fiscal year ended June 30, 2002.
Benefits paid to retired Elected Officials and their beneficiaries increased from $16,802,302 to $19,529,287. The
average employer contribution rate as a percentage of gross payroll decreased from a high of 16.83% for the
1992/93 fiscal year to 7.55% for the 2002/03 fiscal year.
For the current year, the Plan had a total rate of return of –15.3%. However, the Plan continues to perform well
against the market indexes (S&P 500/NYSE stock and Shearson Lehman Government/Corporate bond) on a
long-term basis. The 5-year and 10-year total rates of return, which includes realized as well as unrealized gains
and losses, for the entire fund was 2.54% and 8.11%, respectively. The 5-year rate of return for the stock portfolio
and bond portfolios were –0.18% and 7.55%, respectively. The 10-year rate of return for the stock portfolio and
bond portfolios were 8.58% and 7.68%, respectively. The net effective yield, which takes into account only
realized gains and losses, was 2.37%.
Total administrative and investment expenses increased from $82,871 to $100,134. Costs have increased 82%
during the past seventeen years. This increase is incredibly low since the assets managed have increased 390%
and the Plan membership has increased over 90%.
We sincerely appreciate the opportunity of serving the State of Arizona, its political subdivisions, and its elected
officials and judges.
Respectfully submitted,
DON DE MENT/sig.
PAT CANTELME/sig.
Don De Ment, Chairman
RON SNODGRASS/sig.
Pat Cantelme, Member
BETSEY BAYLESS/sig.
Ron Snodgrass, Member
WENDY HANCOCK/sig.
Betsey Bayless, Member Wendy Hancock, Member
Page 4
PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM
CORRECTIONS OFFICER RETIREMENT PLAN
ELECTED OFFICIALS’ RETIREMENT PLAN
1020 East Missouri Avenue
Phoenix, Arizona 85014-2613
Jack M. Cross, C.P.A., C.F.A.
Administrator TELEPHONE: (602) 255-5575
James A. Nielsen, C.P.A., J.D.
Assistant Administrator
FAX: (602) 255-5572
www.psprs.com
September 13, 2002
The Fund Manager
Public Safety Personnel Retirement System
State of Arizona
Phoenix, Arizona
Gentlemen:
There is presented, herewith, the Twenty-First Comprehensive Annual Financial Report of the operations and financial
conditions of the Elected Officials' Retirement Plan for the fiscal year ended June 30, 2002. Incorporated in this report are
the audited financial statements and other financial data from the June 30, 2002, report of Barrows & Schatza, P.L.C.,
Certified Public Accountants and auditors for the Plan. Also included is the Actuarial Certification Statement and the
Actuarial Balance Sheet from the June 30, 2002, Actuarial Valuation prepared by the Plan’s actuary, Rodwan & Nichols,
Consulting Actuaries.
This report has been organized into five sections: (1) the Introductory Section containing general information regarding the
operations of the Elected Officials' Retirement Plan; (2) the Financial Section containing the new Management’s Discussion
and Analysis and, the financial reports and schedules of the funds administered by the Elected Officials' Retirement Plan; (3)
the Investment Section containing detailed lists of the investment transactions and portfolios of the Plan, along with
investment performance; (4) the Actuarial Section containing actuarial information regarding the funding of the pension trusts,
and (5) the Statistical Section containing statistical data pertaining to the benefits paid by the Elected Officials' Retirement
Plan and growth of the Plan.
FINANCIAL INFORMATION
The primary responsibility for the integrity and objectivity of the financial statements and related financial data rests with the
management of the Plan. The financial statements were prepared in conformity with generally accepted accounting
principles appropriate for government-sponsored defined benefit pension plans. Management believes that all other financial
information included in this annual report is consistent with those financial statements.
It is the Plan's policy to maintain a control-conscious environment through an effective system of accounting controls. These
controls are adequate to provide reasonable assurance that assets are safeguarded against loss or unauthorized use and to
produce the records necessary for the preparation of financial information. There are limits inherent in all systems of internal
control based on the recognition that the costs of such plans should be related to the benefits to be derived. Management
believes the Plan's controls provide this appropriate balance.
The Plan uses the accrual basis of accounting for both revenues and expenses. Contributions to the Plan are based on
principles of level-cost financing with current service financed as a level percent of payroll on a current basis and prior service
amortized as a level percent of payroll over a rolling twenty (20) year period.
REVENUES
Revenues to the Plan are derived from three sources: member contributions, employer contributions, and investment
income. As shown by the Schedule of Revenues by Source included in the Statistical Section later in this report, the Plan
suffered an investment loss this fiscal year that was partly offset by member contributions and employer contributions.
Please refer to the Statistical Section for a ten-year history of revenues and expenses.
ADMINISTRATIVE AND INVESTMENT EXPENSES
The 2001/2002 Administrative and Investment Expenses of the Administrative Office increased to $100,134 compared to
$82,871 for the prior year. This is only 82% higher than the total for fiscal year 1984/1985. This is a compounded annual
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rate of increase of 3.58% over the last seventeen years. This rate of increase is consistent with the rate of inflation and the
rate of growth of the Plan. A dedicated staff and constantly improving internal expertise has allowed management to keep
costs extremely low for the past seventeen years even though inflation, membership and assets managed have increased
substantially during this same period (over 60%, over 90% and nearly 400%, respectively).
INVESTMENTS
Since the Plan is well funded, the management takes a moderately conservative approach to investing. The Plan invests
primarily in bonds rated A or better and blue chip common stock. A detailed summary of the investment portfolio and all
investment transactions is presented in the Investment Section. At year-end, the investment portfolio was made up of
14.21% U. S. Government Securities, 17.17% Corporate Bonds, 3.98% Corporate Notes, 2.89% Other Investments, 0.09%
insured Money Market Funds and 61.66% Common Stocks. All investments are held in trust by the Arizona subsidiary of
one of the largest banks in the world.
Even with this relatively conservative investment philosophy, the fixed income portfolio has outperformed the Lehman
Government/Corporate Bond Index in twelve of the last sixteen years and the equity portfolio has outperformed the applicable
Index (NYSE until 98/99, then S&P 500) nine of the last sixteen years. The Plan’s performance resulted in a net effective
yield of 2.37% and a 10-year total rate of return of 8.11%. Graphs depicting the Plan’s extraordinary performance since
1987, the year the current Administrator took over the portfolio management, can be found in the Investment Section.
ECONOMIC OUTLOOK
The economy appears to be bottoming out. It is likely the economy will continue to improve this fall and into early 2003.
With interest rates so low, it may be difficult to continue to outperform the Plan’s 9% assumed rate of investment return over
the next couple of years.
ACTUARIAL AND FUNDING INFORMATION
Funding a retirement plan on a sound actuarial reserve basis involves the accumulation of substantial reserves to guarantee
the payment of promised benefits. These reserves are invested and the rate of investment earnings, over time, is a major
factor in determining the employer contribution requirement to meet the calculated level cost of the Plan.
There is no single all-encompassing test to measure a retirement plan's funding progress and current status. A traditional
measure is the ratio of assets to unfunded accumulated normal costs, often referred to as the "percent funded." The percent
funded for the Plan at June 30, 2002, is 125.5%, which is well ahead of schedule.
The Plan is funded through a member contribution of 7% of gross payroll, an employer contribution set by an actuarial
valuation expressed as a percent of gross payroll and a distribution of the net earnings of the Plan. State and county
employers receive credit for a portion of certain fees collected by the Clerks of the Superior Courts, Courts of Appeals, and
the Supreme Court. Currently, these fees are enough to provide all of the state and county employer costs. This is
expected to continue through fiscal year 2002/2003 when the city employer rate will be 6.97%.
POST RETIREMENT BENEFIT INCREASES
State law provides for an annual benefit increase for retirees or their survivors. The increases are effective July 1 of each
year and based on benefits received on the preceding June 30. The maximum amount of the increase is 4% and
contingent upon sufficient excess investment earnings for the fund.
Below is a schedule of the increases in monthly benefits granted since this program began:
July 1, 1990 – 4.0%
July 1, 1991 – 4.0%
July 1, 1992 – 2.0%
July 1, 1993 – 3.5%
July 1, 1994 – 2.0%
July 1, 1995 – no benefit allowed by law
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July 1, 1996 – no benefit allowed by law
July 1, 1997 – 1.5%
July 1, 1998 – 1.2%
July 1, 1999 – 4.0%
July 1, 2000 – 4.0%
July 1, 2001 – 4.0%
July 1, 2002 – 4.0%
July 1, 2003 – 4.0%
This is a compounded increase of over 40%.
CERTIFICATE OF ACHIEVEMENT
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the EORP for its comprehensive annual financial report for the fiscal
year ended June 30, 2001. This was the eighth consecutive year that the Plan has achieved this prestigious award. In order
to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable
legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial
report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to
determine its eligibility for another certificate.
SUMMARY
The Plan's actuary, Rodwan & Nichols, summarized the results of the latest Actuarial Valuation as of June 30, 2002, as
follows:
The results of the valuations indicate that Retirement Plan benefit obligations are being funded as incurred. Favorable
economic experience over the last decade has significantly accelerated the funding progress. Current assets are
125.5% of actuarial accrued liability. We believe the assumptions produce a reasonable estimate of costs likely to
emerge in the operation of the Retirement Plan.
The Plan has experienced great change during the past seventeen years. The Plan's accrual rate was raised to 4% of pay
for each year of credited service. Members can now take normal retirement with twenty years of credited service regardless
of age and they can take a reduced early retirement with five or more years of credited service with no age limit. The Plan
now provides for disability benefits, survivor benefits for spouses and children, post-retirement increases and health
insurance subsidies. Funding has increased to 125.5%. Over just the past seventeen years, membership has grown
dramatically and total assets of the Plan have increased more than six times. I am proud to have been a part of the Plan's
management team and I look forward to the Plan's continued success in the future.
Respectfully submitted,
Jack M. Cross, C.P.A., CFA
Administrator
Page 7
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STATE OF ARIZONA
ELECTED OFFICIAL’S RETIREMENT PLAN
THE RETIREMENT BOARD AND ADMINISTRATIVE ORGANIZATION
THE FUND MANAGER Term Expires
Don De Ment
Retired City Clerk
City of Tucson
Chairman January 2003
Pat Cantelme
Retired Firefighter
City of Phoenix
Member January 2005
Ron Snodgrass
Police Officer
City of Phoenix
Member January 2004
Betsey Bayless
Secretary of State
State of Arizona
Member January 2003
Wendy Hancock
Public Member
Member January 2005
PROFESSIONAL ADVISORS
Standard & Poor’s Securities, Inc. Investment Counsel
Rodwan & Nichols Consulting Actuaries
Barrows & Schatza, P.L.C. Auditors
Lieberman, Dodge, Gerding, Kothe & Anderson, Ltd. Legal Counsel
ADMINISTRATIVE STAFF
Jack M. Cross, CPA, CFA Administrator
James A. Nielsen, CPA, JD Assistant Administrator
Tracey D. Peterson, CPA, CFE Operations Director
Jared A. Smout Finance Director
Karen L. Lewis, CPA Controller
Donald B. Mineer MIS Manager
Alliene Jonas Benefits/Insurance Specialist
Annette L. Jorgensen Insurance Specialist
D. Steven Williams Legal Assistant
Deborah S. Irwin Senior Active Member Specialist
Eric T. Ellsworth Building Maintenance
Joann L. Lowey Senior Benefits Analyst
Kathleen A. Mattoon Office Specialist
LaDawn M. Snodgrass Active Member Supervisor
Lilian L. Leung Senior Accounting Specialist
Lori A. Boyle Office Manager
Scott D. Willard MIS/Accounting Specialist
Sheryl D. Saltsman Benefits Supervisor
Tiffani M. Wright Active Member Specialist
1020 East Missouri Avenue | Phoenix, Arizona 85014
Telephone (602) 255-5575 | Fax (602) 255-5572
www.psprs.com
--\
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-------- --------
Legal
Assistant
-------- Controller
_________________________________________|______________________________________________________________________________________________________________
| | | |
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Benefits
Supervisor
Accounting
Manager
MIS
Manager
Active
Member
Superviser
______ ______|______ ______ | ______ ______|______ ______ ______ ______|______ ______
| | | | | | | | | |
Insurance
Specialist
Benefits /
Insurance
Specialist
Senior
Benefits
Analyst
Senior
Accounting
Specialist
Office
Manager
MIS /
Accounting
Specialist
Building
Maintenance
Senior Active
Member
Specialist
Active
Member
Specialist
Office
Specialist
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
ORGANIZATION CHART
Legal Counsel
Consulting Actuaries
JUNE 30, 2002
Administrator
(CIO, Portfolio Manager)
Auditor
The Fund Manager
|
Investment Counsel |
Assistant
Administrator
Finance Director
(Cash Manager)
Operations
Director
|
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Page 9
Page 10
FINANCIAL SECTION
ELECTED OFFICIALS’ RETIREMENT PLAN
TWENTY-FIRST COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2002
Independent Auditor's Report
Management’s Discussion and Analysis
Statements of Plan Net Assets
Statements of Changes in Plan Net Assets
Notes to Financial Statements
Schedule of Funding Progress
Schedule of Employer Contributions
Supporting Schedule of Changes
In Fund Balance Reserves
Supporting Schedule of
Administrative and Investment Expenses
Supporting Schedule of Payments to Consultants
Supplemental Schedule of
Cash Receipts and Cash Disbursements
Phoenix, Arizona
INDEPENDENT AUDITOR'S REPORT
FUND MANAGER
STATE OF ARIZONA PUBLIC SAFETY
PERSONNEL RETIREMENT SYSTEM
PHOENIX, ARIZONA
We have audited the accompanying statements of plan net assets of the STATE OF ARIZONA
ELECTED OFFICIALS’ RETIREMENT PLAN as of June 30, 2002 and 2001, and the related
statements of changes in plan net assets for the years then ended, appearing on pages 17 and 18,
respectively. These financial statements are the responsibility of the Plan’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial status of STATE OF ARIZONA ELECTED OFFICIALS’ RETIREMENT PLAN as of June
30, 2002 and 2001, and the results of its operations and the changes in plan net assets for the years then
ended in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the STATE OF ARIZONA ELECTED OFFICIALS’
RETIREMENT PLAN adopted the provisions of the Governmental Accounting Standards Board
Statements No. 34, Basis Financial Statements and Management’s Discussion and Analysis for State and
Local Governments, No. 37, Basic Financial Statements and Management’s Discussion and Analysis for
State and Local Governments-Omnibus, and No. 38, Certain Financial Statement Note Disclosures for
fiscal year ended June 30, 2002.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole.
The accompanying supplementary information, Management’s Discussion and Analysis, Schedule of
Funding Progress and Schedule of Employer Contributions, are required by the Governmental Accounting
Standards Board and are not a required part of the basic financial statements. Also, the accompanying
additional information, contained on pages 27 to 29, are not required disclosures under Governmental
Accounting Standards Board (GASB) statement No. 25 and are not a required part of the basic financial
statements. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the supplementary and additional
information. However, we did not audit this information and express no opinion on it.
BARROWS & SCHATZA, P.L.C./sig
September 6, 2002
Page 14
STATE OF ARIZONA
ELECTED OFFICIALS’ RETIREMENT PLAN
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2002 AND 2001
The Elected Officials’ Retirement Plan’s discussion and analysis is designed to assist the reader in focusing on
significant financial issues, provide an overview of the Plan’s financial activity, identify changes in the Plan’s financial
position and identify any issues or concerns.
Since the Management’s Discussion and Analysis (MD&A) is designed to focus on the current year’s activities,
resulting changes and currently known facts, it is intended to be read in conjunction with the Transmittal Letter,
Financial Statements and Notes to the Financial Statements.
Financial Highlights
Key financial highlights for 2002 are as follows:
·  As of the close of the fiscal year 2002, the Future Benefit Increase Reserve was $23,400,088. This will enable
another 4% increase for qualifying retirees or their survivors for the seventh consecutive year.
·  Retirement benefits paid totaled $19,529,287 for the current fiscal year, compared to $16,802,302 for the
previous year. This represents a 17% increase from the prior year. The majority of this increase is the result of
increased health insurance benefits and cost of living adjustments (COLAs) paid to the retirees or their survivors
of the Plan.
Using this Comprehensive Annual Financial Report (CAFR)
This annual report consists of a series of financial statements and notes to those financial statements. These
statements are organized so the reader can understand the Plan as an operating entity. The statements and notes
then proceed to provide an increasingly detailed look at specific financial activities.
The Statement of Net Assets and The Statement of Changes in Net Assets
These statements include all assets and liabilities of the Plan using the accrual basis of accounting, which is similar
to the accounting used by most private-sector companies.
These two statements report the Plan’s net assets and changes in them. Net assets are the difference between
assets and liabilities, one way to measure the financial health, or financial position. Over time, increases or
decreases in the net assets are one indicator of the financial health of the Plan.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the financial
statements. The notes can be found immediately following The Statement of Net Assets and The Statement of
Changes in Net Assets.
Required Supplemental Information
The basic financial statements are followed by a section of required supplemental information. This section includes
the Schedule of Funding Progress and the Schedule of Employer Contributions.
The Schedule of Funding Progress shows the ratio of assets as a percentage of the actuarial accrued liability
(funding ratio) and the ratio of unfunded actuarial accrued liabilities to member payroll. The trend in these two ratios
provides information about the financial strength of the Plan. Improvement is indicated when the funding ratio is
increasing and the ratio of the unfunded actuarial liability to payroll is decreasing.
The Schedule of Employer Contributions shows the Annual Required Contributions by fiscal year. The purpose of
this schedule is to provide information about the required contributions of the employers and the extent to which
those contributions are being made. The information should assist users in understanding the changes and possible
reasons for the changes in the Plan’s funding status over time.
Other Supplemental Information
The Other Supplemental Information Section includes the Supporting Schedule of Changes in Fund Balance
Reserves, Supporting Schedule of Payments to Consultants, and a Supplemental Schedule of Cash Receipts and
Page 15
Cash Disbursements. The total columns and information provided on these schedules carry forward to the
applicable financial statement.
Financial Analysis
Net Assets
The Plan’s Net Assets totaled $265,566,712 at the close of the fiscal year 2002, compared to $326,159,456 at the
close of the previous fiscal year. This is a 19% decrease from the prior year. The majority of the decrease is the
direct result of the recent declines in the stock market.
ELECTED OFFICIALS’ RETIREMENT PLAN
NET ASSETS
2002 2001
Book Cost* Market Value Book Cost* Market Value
Current Assets $ 1,813,939 $ 1,813,939 $ 2,211,211 $ 2,211,211
Investments 369,674,905 347,522,134 387,246,630 419,940,645
Total Assets 371,488,844 349,336,073 389,457,841 422,151,856
Other Liabilities 83,111,845 83,769,361 95,979,484 95,992,400
Total Liabilities 83,111,845 83,769,361 95,979,484 95,992,400
Total Net Assets $ 288,376,999 $ 265,566,712 $ 293,478,357 $ 326,159,456
*Cost information is provided for reference only.
The largest portion of the Plan’s Net Assets (62%) are invested in Equity Securities; 17% is invested in high quality
Corporate Bonds; 14% is invested in Government Securities; 4% is invested in Cash or cash equivalents; and, the
remaining 3% is invested in Other investments.
Changes in Net Assets
The recent volatility in the stock market has attributed to the majority of the decrease in net assets, as noted earlier.
Additional key elements of this decrease are as follows:
ELECTED OFFICIALS’ RETIREMENT PLAN
CHANGES IN NET ASSETS
2002 2001
Additions:
Contributions $ 7,252,336 $ 7,700,164
Net Investment (Loss) Income (48,685,393) (67,059,808)
Total Additions (41,433,057) (59,359,644)
Deductions:
Pension Benefits 19,529,287 16,802,302
Terminated Members Refunds (6,518) 133,561
Administrative Expenses 70,983 58,796
Transfers (434,065) (269,738)
Total Deductions 19,159,687 16,724,921
Change in Net Assets (60,592,744) (76,084,565)
Net Assets, Beginning of Year 326,159,456 402,244,021
Net Assets, End of Year $ 265,566,712 $ 326,159,456
Page 16
Pension benefits and administrative expenses increased from the previous fiscal year. Pension benefits, to include
health insurance subsidies and cost of living adjustments, rose 17% and administrative expenses rose 21% during
the year.
Trend in Expenses – by Type
(Pension Benefits, Refunds and Administrative Expenses) (in 000’s)
($5,000)
$0
$5,000
$10,000
$15,000
$20,000
1998 1999 2000 2001 2002
Pension
Refunds
Administrative
Member contribution rates are set by Statute and were unchanged from the previous fiscal year. Employer
contributions were reduced by $474,858 as a result of the state and counties employer contribution rates going from
0.73% in the previous fiscal year to 0.00%.
Trend in Revenues – by Type
(Member and Employer Contributions, Investment Income (Loss) (in 000’s)
($80,000.00)
($60,000.00)
($40,000.00)
($20,000.00)
$0.00
$20,000.00
$40,000.00
$60,000.00
1998 1999 2000 2001 2002
Member Contributions
Employer Contributions
Investment Income (Loss)
Economic Factors and Employer Rate s
Revenues to the Plan are derived from three sources: member contributions, employer contributions and investment
income. Member contribution rates are set by Statute and will remain unchanged at 7.00%. Employer contribution
rates are determined annually by an actuarial valuation. The valuation encompasses the rate of investment earnings
and the accumulation of substantial reserves to guarantee payment of promised benefits.
Investment gains and losses are smoothed over a four-year period to stabilize the employer contribution rates from
year to year. The investment loss suffered last year was the first substantial loss the Plan had suffered in 14 years.
The investment loss from the current fiscal year, in conjunction with the investment loss from the previous year, will
have a negative impact on the current actuarial valuations. It is anticipated that employer contribution rates will
increase to sustain the funding level.
Requests for Information
This report is designed to provide a general overview of the Elected Officials’ Retirement Plan’s finances. Questions
concerning any of the information provided in this report or requests for additional financial information should be
addressed to: Elected Officials’ Retirement Plan, Operations Director, 1020 E. Missouri, Phoenix, AZ 85014.
2002 2001
ASSETS
Receivables
Members' Contributions $ 84,518 $ 122,223
Employers' Contributions 4,167 19,087
Court Fees 288,613 288,265
Interest and Dividends 1,436,641 1,781,636
Total Receivables 1,813,939 2,211,211
[Book Cost - [Book Cost -
Investments at Fair value (Note 2): For Reference Only] For Reference Only]
U.S. Government Securities $ 34,169,572 37,487,412 $ 46,007,836 48,917,129
Corporate Bonds 46,297,202 45,293,655 43,552,118 42,384,670
Corporate Notes 10,494,805 10,494,805 2,998,918 2,998,918
Corporate Stocks 187,762,407 162,637,827 190,250,496 221,189,750
Other Investments 7,612,230 7,612,230 8,113,706 8,113,706
Money Market Account 226,844 226,844 344,072 344,072
Collateral Held in Trust
for Securities on Loan 83,111,845 83,769,361 95,979,484 95,992,400
Total Investments $ 369,674,905 347,522,134 $ 387,246,630 419,940,645
Total Plan Assets 349,336,073 422,151,856
Liability- Collateral Subject to
Return to Borrower (83,769,361) (95,992,400)
Net Assets Held in Trust
for Pension Benefits 265,566,712 326,159,456
Net Asset Reserves
Refundable Members' Reserve $ 25,853,543 $ 24,060,967
Employers' Reserve 216,313,081 267,662,327
Future Benefit Increase Reserve 23,400,088 34,436,162
Total Net Asset Reserves $ 265,566,712 $ 326,159,456
A schedule of funding progress is presented immediately following the notes to the financial statements.
The accompanying notes are an integral part of these financial statements.
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
STATEMENTS OF PLAN NET ASSETS
AS OF JUNE 30, 2002 AND 2001
Page 17
2002 2001
Additions
Contributions
Member Contributions (Notes 1 and 3) $ 3,595,732 $ 3,544,290
Employer Contributions (Notes 1 and 3) 171,945 646,803
Court Fees 3,484,659 3,509,071
Total Contributions 7,252,336 7,700,164
Net (Depreciation) Appreciation
in Fair Value of Investments (Note 2) (57,507,423) (75,726,825)
Interest 7,540,509 7,337,278
Dividends 1,143,973 1,238,447
Securities Lending Activities
Securities Lending Income $ 2,447,776 $ 5,433,400
Borrower rebates (2,191,327) (5,255,919)
Agents Share of Income (89,750) (62,114)
Net Securities Lending Income (Note 2) 166,699 115,367
(48,656,242) (67,035,733)
Less Investment Expense (29,151) (24,075)
Net Investment Income (48,685,393) (67,059,808)
Amounts Transferred from Other State-
Sponsored Pension Plans--Net 434,065 269,738
Total Additions (40,998,992) (59,089,906)
Deductions
Pension and Insurance Benefits (Note 1) 19,529,287 16,802,302
Refunds to Terminated Members (Note 1) (6,518) 133,561
Administrative Expenses 70,983 58,796
Total Deductions 19,593,752 16,994,659
Net (Decrease) Increase (60,592,744) (76,084,565)
Net Assets Held In Trust
for Pension Benefits
Beginning of Year - July 1 326,159,456 402,244,021
Ending of Year - June 30 $ 265,566,712 $ 326,159,456
The accompanying notes are an integral part of these financial statements.
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
STATEMENTS OF CHANGES IN PLAN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2002 AND 2001
Page 18
Page 19
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
NOTE 1 - PLAN DESCRIPTION
Organization
The Elected Officials' Retirement Plan (EORP), a pension trust fund of the State of Arizona, is a cost-sharing multiple-employer
public employee retirement plan established by Title 38, Chapter 5, Article 3 of the Arizona Revised Statutes, to
provide benefits for elected officials and judges of certain state, county and local governments. The Plan is administered by
the Fund Manager of the Public Safety Personnel Retirement System (PSPRS).
The Fund Manager is a five-member board. Effective August 6, 1999, it became the Governor’s responsibility to appoint all
members of the Fund Manager, who serve a fixed three-year term. The Fund Manager is responsible for the investment of
the Plan's assets, setting employer contribution rates in accordance with an actuarial study, adopting a budget, hiring
personnel to administer the Plan, setting up records, setting up accounts for each member, paying benefits and the general
protection and administration of the Plan.
The addition or deletion of eligible groups does not require the approval of the other participating employers. New eligible
groups are approved for participation by the Fund Manager. The EORP is not reported as a component unit of any other
organization.
The Fund Manager of the EORP is also responsible for the investment and general administration of two other statewide
retirement plans—the Public Safety Personnel Retirement System and the Corrections Officer Retirement Plan. The
investments and expenses of these plans are held and accounted for separately from those of the EORP. Since none of the
plans have the authority to impose their will on any of the other plans, each plan is reported as its own stand-alone
government.
At June 30, 2002 and 2001, the number of participating local government employer groups was:
2002 2001
Cities 16 16
Counties 15 15
State Agencies 1 1
Total Employers 32 32
All state and county elected officials and judges are members of the Plan. Any city in the State of Arizona may elect to
have its’ elected officials covered by the EORP. At June 30, 2002 and 2001, statewide EORP membership consisted of:
2002 2001
Retirees and beneficiaries currently
receiving benefits 659 647
Terminated vested employees 165 165
Current employees
Vested 444 409
Non-vested 294 328
Total Members 1,562 1,549
EORP provides retirement benefits as well as death and disability benefits. Generally, all benefits vest after five years of
credited service. A Summary of Benefits and Plan provisions follows:
SUMMARY OF BENEFITS
Purpose (A.R.S. §38-810.02.B)
To provide a uniform, consistent and equitable statewide program for those eligible elected officials as defined by the Plan.
Eligibility (A.R.S. §38-801 and §38-804.A)
All elected officials are members of the Plan, except that an elected official who is subject to term limits may elect not to
participate in the Plan for that specific term of office. An elected official means every elected official of this state, every
elected official of each county of this state, every justice of the supreme court, every judge of the court of appeals, every
Page 20
judge of the superior court, every full-time superior court commissioner, the administrator of the fund manager if the
administrator is a natural person and each elected official of an incorporated city or town whose employer has executed a
proper joinder agreement for coverage of its elected officials.
Contributions (A.R.S. §38-810.A)
Each member shall contribute 7.00% of salary to the Plan on a pre-tax basis. Each employer shall contribute the following:
For state and county employers, a designated portion of certain fees collected by the Clerks of the Superior Courts,
Courts of Appeals and the Supreme Court plus additional contributions as determined by actuarial valuation to ensure
proper funding for the Plan, but not less than 2% of salary. (A.R.S. §38-810)
For incorporated city or town employers, a level percent of salary as determined by actuarial valuation to ensure proper
funding for the Plan but not less than 2% of salary. (A.R.S. §38-810)
Credited Service (A.R.S. §38-801, ¶ 3)
Means the number of whole and fractional years of a member's service as an elected official after the elected official's
effective date of participation for which member and employer contributions are on deposit with the fund, plus credited service
as an elected official transferred to the Plan from another retirement system or plan for public employees of this state, plus
service as an elected official before the elected official's effective date of participation which is being funded pursuant to a
joinder agreement or which was redeemed pursuant to §38-816.
Average Yearly Salary (A.R.S. §38-801, ¶ 2)
Means the highest average total salary over a period of three consecutive years within the last ten completed years of
credited service which was paid to the elected official at the time of death or retirement or at the time the elected official
ceases to hold office.
Normal Retirement (No Reduction for Age) (A.R.S. Sections 38-805.A and 38-808.B, ¶ 1)
An elected official may retire upon meeting one of the following age and service requirements:
1. Age sixty-five years, with five or more years of credited service.
2. Age sixty-two years, with ten or more years of credited service.
3. Twenty or more years of credited service regardless of age.
The amount of a normal retirement pension is four percent (4%) of the member's average yearly salary multiplied by the
years of the member's credited service. Maximum is eighty percent (80%) of the member's average yearly salary.
Early Retirement (Reduction for Age) (A.R.S. §38-805.B and §38-808.B, ¶ 1)
An elected official who has five or more years of credited service may retire before meeting the age or service requirement for
normal retirement. The amount of an early retirement pension is computed by determining the amount of accrued normal
retirement pension and then reducing the amount determined by three-twelfths of one percent for each month early
retirement precedes the member's normal retirement age as noted above. The maximum reduction is 30%.
Vested Termination (Deferred Retirement)
An elected official with five or more years of credited service retains entitlement to deferred pension, upon ceasing to be an
elected official, if the elected official's accumulated contributions are left on deposit in the retirement plan. The amount of
pension is determined in the same manner as a normal or early pension, whichever is applicable.
Disability Retirement (A.R.S. §38-806 and §38-808.B, ¶ 2)
The Fund Manager may retire an elected official who becomes incapacitated for the purpose of performing the duties of the
member’s office based on a certification by a board of physicians that the member is mentally or physically incapacitated
and qualifies for a disability retirement. The amount of pension is eighty percent (80%) of member's average yearly salary if
the elected official has ten (10) or more years of credited service or forty percent (40%) of the member's average yearly
salary if the elected official has five (5) but less than ten (10) years of credited service or twenty percent (20%) of the
member's average yearly salary if the elected official has fewer than five (5) years of credited service.
Survivor Pension (A.R.S. §38-807)
Payable to the eligible beneficiary of a retired member or an active or inactive member who dies before retirement. An
eligible beneficiary is a surviving spouse who was married to the retired or active or inactive member for at least two years;
or, if there is no eligible spouse, then to a minor child. A surviving spouse's pension terminates upon death. A surviving
child's pension terminates upon marriage, adoption or death or upon attainment of age 18 years, unless the child is a full-time
student under the age of 23 or the child is under a disability which began before the child attained the age of 23. The
Page 21
amount of a surviving spouse's pension is three-fourths of the pension being paid the deceased retired elected official or
three-fourths of the pension which the member would have received assuming he had retired under a disability. The amount
of a surviving child's pension is an equal share of the amount of a surviving spouse's pension.
Death Benefit (A.R.S. §38-807.E)
If a member dies and no pension is payable on account of the member’s death, the deceased member’s accumulated
contributions shall be paid to the beneficiary named by the member.
Termination Refund (A.R.S. §38-804.B)
Upon termination of employment for any reason other than death or retirement, a member shall, within twenty days after
filing an application with the Fund Manager, receive a lump-sum payment, equal to the accumulated contributions, as of the
date of termination, less any benefits paid or any amounts owed to the Plan. A member forfeits all membership rights and
credited service in the Plan upon receipt of refund of contributions. If the member has 5 or more years of credited service
upon termination they shall receive an additional amount according to the schedule below:
5 to 5.9—25% of member contributions deducted from the member’s salary pursuant to ARS 38-810.A
6 to 6.9—40% of member contributions deducted from the member’s salary pursuant to ARS 38-810.A
7 to 7.9—55% of member contributions deducted from the member’s salary pursuant to ARS 38-810.A
8 to 8.9—70% of member contributions deducted from the member’s salary pursuant to ARS 38-810.A
9 to 9.9—85% of member contributions deducted from the member’s salary pursuant to ARS 38-810.A
10 or more—100% of member contributions deducted from the member’s salary pursuant to ARS 38-810.A plus interest
at 3% if left on deposit after 30 days.
Reemployment And Repayment Of Contributions (A.R.S. §38-804.F)
An elected official who terminates membership in the Plan and takes a refund of his contributions and is later re-employed
as an elected official may restore prior service credits, if the elected official signs a written election within ninety days after
re-employment to reimburse the Plan within one year after the date of re-employment. The reimbursement will equal the
amount previously withdrawn plus interest from the date of withdrawal to the date of repayment at the rate of 9%
compounded annually.
Reemployment After Retirement (A.R.S. §38-804.G and §38-804.H)
If a retired member subsequently becomes an elected official, contributions shall not be made to the Plan nor additional
years of credited service accrued. Additionally, if a retired member, by reason of election or reelection, becomes an elected
official of the same office from which the member retired within a time period that is less than one full term for that office, the
member shall not receive a pension until the member ceases to hold the same office.
Redemption Of Prior Service (A.R.S.§38-816)
Active members who had previous service in this state as an elected official with an employer now covered by the Plan
before the effective date of participation and who received a refund of accumulated contributions from the applicable
retirement system upon termination or who was not covered by a retirement system or plan during the elected official’s prior
elected official service may elect to redeem any part of the prior service by paying into the Plan the amounts required in
A.R.S. §38-816.B.
Purchase Of Prior Active Military Service (A.R.S. §38-820)
A member may purchase up to four years of prior active military time that is not on account with any other retirement
system. The member must pay the actuarial present value of the increase of credited service resulting from this purchase.
Transfer Between State Retirement Systems (A.R.S. §38-921 and §38-922)
Members of any of the four Arizona state retirement systems or plans who have credited service under another Arizona state
retirement system or plan may transfer or redeem the credited service to their current Arizona state retirement system or
plan by paying or transferring the full actuarial present value of the credited service into their current Arizona retirement
system or plan with approval of the Fund Manager or retirement boards involved. A reduced credited service amount may be
transferred based on the transfer of the actuarial present value of the credited service under the prior Arizona state system or
plan.
Cola Benefit Increases (A.R.S. §38-818)
Effective July 1 of each year, each retired member or survivor of a retired member may be entitled to a permanent benefit
increase in their base benefit. The maximum amount of the increase is four percent (4%) of the EORP benefit being received
on the preceding June 30 and is contingent upon sufficient excess investment earnings for the fund. To be eligible for the
increase the member or survivor must be age 55 or older on July 1 of the current year and was receiving benefits on or before
Page 22
July 31 of the previous year. A member or survivor is also eligible if they were receiving benefits on or before July 31 of the
two previous years regardless of age.
Health Insurance Premium Subsidy (A.R.S. §38-817)
For EORP retirees who have elected group health and accident insurance coverage provided and administered by the state
or another EORP employer and who had 8 or more years of credited service, the EORP will pay up to the following amounts:
Single Family
Not Medicare Eligible Medicare Eligible
All Not Medicare
Eligible All Medicare Eligible One with Medicare
$150.00 $100.00 $260.00 $170.00 $215.00
Those retired members who had between 5 and 8 years of credited service would receive a proportionate share of the full
subsidy.
Until June 30, 2003, a retiree or survivor who lives in a nonservice area receives up to the following amounts in addition to the
subsidy listed above. A nonservice area is defined as an area in this state where the state retiree group insurance program
or employer’s retiree health insurance program does not provide or administer a health maintenance organization (HMO) for
which the member or survivor is eligible. The subsidy consists of up to the following amounts:
Single Family
Not Medicare Eligible Medicare Eligible
All Not Medicare
Eligible All Medicare Eligible One with Medicare
$300.00 $170.00 $600.00 $350.00 $470.00
State Taxation Of EORP Benefits (A.R.S. §38-811 and §43-1022)
Effective tax year commencing January 1, 1989, all EORP retirement benefits in excess of $2500 annually will be subject to
Arizona state tax.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
Basis of Accounting
EORP financial statements are prepared using the accrual basis of accounting. Member and employer contributions are
recognized as revenues in the period in which employee services are performed. Benefits due are paid in arrears on the last
working day of each month. Refunds are due and payable by state law within 20 days of receipt of a written application for a
refund. Refunds are recorded when paid. Furniture and equipment purchases, which are not material in amount, are
expensed in the year of purchase. Investment income net of administrative and investment expenses is allocated to each
employer group based on the average relative fund size for each employer group for that year.
The Plan implemented Statement No. 25 of the Governmental Accounting Standards Board for Fiscal Year End 1997. As
such, the Plan reports assets on a Fair Value Basis. Certain cost information is provided for reference only and to comply
with state law.
The Plan implemented GASB Statement No. 34 for the Fiscal Year End 2002. The purpose of Statement No. 34 is to
enhance the understandability and usefulness of state and local government financial reports. To accomplish this,
Statement No. 34 requires supplemental information titled Management’s Discussion and Analysis (MDA) that precedes the
basic financial statements. The MDA will provide an analytical overview of the government’s financial activities.
Other GASB Statements were required to be implemented in conjunction with GASB Statement No. 34. Therefore, the Plan
has also implemented the following GASB Statements in the current fiscal year: Statement No. 37 – Basic Financial
Statements – and MDA for State and Local Governments-Omnibus; and, Statement No. 38 – Certain Financial Statement
Note Disclosures.
By state statute, this Plan is required to provide information in the financial statements used to calculate Net Effective Yield.
Net Effective Yield includes only realized gains and losses. The Net Realized Gain (Loss) used in this calculation totaled
$(2,016,036) for FYE 2002 and $8,601,335 for FYE 2001.
Investments
EORP investments are reported at Fair Value. Fair Values are determined as follows: Short-term investments are reported
Page 23
at Fair Value, which approximates Cost. Equity securities are valued at the last reported sales price. Fixed-income
securities are valued using the last reported sales price or the estimated fair market value as determined by one of the
world's largest and most prominent fixed-income broker/dealers. Investments that do not have an established market are
reported at estimated fair value. Investment income is recognized as earned.
Statutes enacted by the Arizona Legislature authorize the Fund Manager to make investments in accordance with the
"Prudent Man" rule. The Fund Manager is not limited to so-called "Legal Investments for Trustees." (A.R.S. §38-848.D) In
making every investment, the Fund Manager shall exercise the judgment and care under the circumstances then prevailing
which men of ordinary prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to
speculation but in regard to the permanent disposition of their funds, considering the probable income from their funds as
well as the probable safety of their capital, provided:
1) That not more than seventy per cent of the pension fund shall be invested at any given time in corporate stocks, based
on cost value of such stocks irrespective of capital appreciation.
2) That not more than five per cent of the pension fund shall be invested in securities issued by any one institution, agency
or corporation, other than securities issued as direct obligations of and fully guaranteed by the United States
Government.
3) That not more than five per cent of the voting stock of any one corporation shall be owned.
4) That corporate stocks eligible for purchase shall be restricted to stocks that, except for bank stocks and insurance
stocks, are either:
a) Listed or approved on issuance for listing on an exchange registered under the Securities Exchange Act of 1934, as
amended (15 United States Code §78a through §7811);
b) Designated or approved on notice of issuance for designation on the national market system of a national securities
association registered under the Securities Exchange Act of 1934, as amended (15 United States Code §78a
through §7811);
c) Listed or approved on issuance for listing on an exchange registered under the laws of this [Arizona] state or any
other state; or
d) Listed or approved on issuance for listing on an exchange of a foreign country with which the United States is
maintaining diplomatic relations at the time of purchase, except that no more than ten per cent of the pension fund
shall be invested in foreign equity securities on these exchanges, based on the cost value of the stocks irrespective
of capital appreciation.
A.R.S. §38-848.D
The Plan's investment portfolio is in compliance with state law.
Statement No. 3 of the GASB requires government entities to categorize investments for the purpose of giving an indication
of the level of risk assumed by the entity at year-end. Category 1 includes investments that are insured or registered or for
which the Plan or its agent in the name of the Plan holds securities. Category 2 includes uninsured and unregistered
investments for which the securities are held by the counterparty, or by its trust department or agent but not in the Plan's
name.
All investments of the Plan (other than those held by broker/dealers under the security loan program and those investments
categorized as "Other Investments”) meet the criteria of Category 1. "Other Investments", which primarily consists of loans
and real estate investments, are not considered securities for purposes of credit risk classification. Substantially all
investments are held in the name of the Plan by its custodian bank.
Money Market Account
The money market account is on deposit with an Arizona bank. These deposits are insured by federal depository insurance.
The money market account is subject to the general depository laws of the State of Arizona that require deposits to be
either insured by the Federal Deposit Insurance Corporation or collateralized by certain securities including U.S. Government
obligations and first mortgages.
Securities Lending Income
The Plan is party to a securities lending agreement with a bank. The bank, on behalf of the Plan, enters into agreements
with brokers to loan securities and have the same securities returned at a later date. The loans are fully collateralized
primarily by cash. Collateral is marked-to-market on a daily basis. Non-cash collateral can be sold only upon borrower
default. The Plan requires collateral of at least 102% of the fair value of the loaned U.S. Government or corporate security.
Securities on loan are carried at fair value. As of June 30, 2002 and 2001 the fair value of securities on loan was
$81,493,029 (consisting of Stocks-$38,003,099, Corporate Bonds-$8,563,980 and Treasuries and Agencies-$34,925,950)
and $91,481,670 (consisting of Stocks-$47,705,918, Corporate Bonds-$9,303,338 and Treasuries and Agencies-
Page 24
$34,472,414), respectively. The Plan receives a negotiated fee for its loan activities and is indemnified for broker default by
the securities lending agent. The Plan participates in a collateral investment pool. Either the pool participants or the
borrower can terminate all securities loans on demand. All term loans have a matched collateral investment. The total cash
collateral investments received for unmatched loans (any loan for which the cash collateral has not been invested for a
specific maturity) will have a maximum average maturity, using the reset date as the maturity date, of not more than 45
days. And, at least 20% of total collateral investments must be invested on an overnight basis and at least 30% of total
collateral investments must be invested with maturity of 7 days or less. Additionally, no more than 20% of the total
collateral investments will be invested in instruments maturing in over 91 days. In lending securities, investments of cash
collateral for open loans as of June 30, 2002 are not matched in maturity and have a weighted average maturity of 17 days, 9
days as of June 30, 2001. The Plan has no credit risk exposure to borrowers, because the amounts the Plan owes to the
borrowers exceed the amounts the borrowers owe the Plan. Under this program, the Plan has not experienced any defaults
or losses on these loans.
NOTE 3 - CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE
The Retirement Plan's funding policy provides for periodic employer contributions at actuarially determined rates that,
expressed as percentages of annual covered payroll, are designed to accumulate sufficient assets to pay benefits when due.
The normal cost and actuarial accrued liability are determined using an entry age actuarial funding method. Unfunded
actuarial accrued liabilities and assets in excess of actuarial accrued liabilities are being amortized as a level percent of
payroll over a rolling twenty (20) year period. Beginning with fiscal year 2001-2002, the employer contribution rate shall not
be less than two per cent of salary.
During the year ended June 30, 2002, contributions totaling $7,252,336 ($3,656,604 employer and $3,595,732 member) were
made in accordance with contribution requirements determined by an actuarial valuation of the Plan as of June 30, 2000. The
employer contributions consisted of approximately $8,573,252 for normal cost less ($4,916,648) for amortization of the
assets in excess of the actuarial accrued liability in aggregate. Employer contributions represented 6.97% of covered
payroll. [16.69% for normal costs and (9.72)% for amortization of assets in excess of the actuarial accrued liability in
aggregate.] Member contributions represented 7.00% of covered payroll and are attributable to normal costs.
During the year ended June 30, 2001, contributions totaling $7,700,164 ($4,155,874 employer and $3,544,290 member) were
made in accordance with contribution requirements determined by an actuarial valuation of the Plan as of June 30, 1999. The
employer contributions consisted of approximately $7,611,766 for normal cost less ($3,455,892) for amortization of the
assets in excess of the actuarial accrued liability in aggregate. Employer contributions represented 8.94% of covered
payroll. [16.49% for normal costs and (7.55)% for amortization of assets in excess of the actuarial accrued liability in
aggregate.] Member contributions represented 7.00% of covered payroll and are attributable to normal costs.
NOTE 4 – REQUIRED SCHEDULES
The Schedule of Funding Progress and the Schedule of Employer Contributions are presented immediately following the
notes to the financial statements.
Actuarial Unfunded UAAL as a
Actuarial Accrued (Excess) Percentage
Actuarial Value of Liability (AAL) AAL Funded Covered of Covered
Valuation Assets at Entry Age (UAAL) Ratio Payroll Payroll
Date (a)2 (b) (b-a) (a/b) (c) ((b-a)/c))
6-30-82 $ 13,162 $ 18,357 $ 5,195 71.7% $ 7,444 69.8%
6-30-83 $ 15,350 $ 19,013 $ 3,663 80.7% $ 8,087 45.3%
6-30-84 $ 17,694 $ 19,694 $ 2,000 89.8% $ 8,113 24.7%
6-30-85 *3 $ 49,900 $ 48,969 $ (931) 101.9% $ 17,691 -5.3%
6-30-86 $ 58,757 $ 53,427 $ (5,330) 110.0% $ 17,842 -29.9%
6-30-87 1 $ 65,818 $ 66,642 $ 824 98.8% $ 20,409 4.0%
6-30-88 1 $ 73,993 $ 77,908 $ 3,915 95.0% $ 21,444 18.3%
6-30-89 *1 $ 84,258 $ 90,951 $ 6,693 92.6% $ 24,605 27.2%
6-30-90 *1 $ 92,421 $ 100,433 $ 8,012 92.0% $ 25,776 31.1%
6-30-91 *1 $ 103,570 $ 109,650 $ 6,080 94.5% $ 27,838 21.8%
6-30-92 *1 $ 115,869 $ 115,098 $ (771) 100.7% $ 27,777 -2.8%
6-30-93 * $ 127,984 $ 127,478 $ (506) 100.4% $ 29,708 -1.7%
6-30-94 1 $ 140,145 $ 138,322 $ (1,823) 101.3% $ 29,633 -6.2%
6-30-95 1 $ 159,111 $ 149,366 $ (9,745) 106.5% $ 30,324 -32.1%
6-30-96 * $ 181,754 $ 158,126 $ (23,628) 114.9% $ 29,967 -78.8%
6-30-97 * $ 214,035 $ 169,593 $ (44,442) 126.2% $ 33,896 -131.1%
6-30-98 $ 241,884 $ 199,662 $ (42,222) 121.1% $ 40,441 -104.4%
6-30-99 $ 283,337 $ 227,100 $ (56,237) 124.8% $ 43,087 -130.5%
6-30-00 $ 329,777 $ 253,478 $ (76,299) 130.1% $ 45,382 -168.1%
6-30-01 $ 355,768 $ 250,987 $ (104,781) 141.7% $ 48,669 -215.3%
6-30-02 $ 351,349 $ 279,947 $ (71,402) 125.5% $ 48,729 -146.5%
*
1.
2.
AAL is calculated using the entry-age normal method. Significant assumptions used in determining AAL include: (a) a
rate of return on the investment of present and future assets of 9.0% per year compounded annually; (b) projected
salary increases of 6.5% per year compounded annually, attributable to an assumed inflation rate of 5.5% and other
across-the-board factors of 1.5%; and (c) additional projected salary increases ranging from 0.0% to 3.0% per year,
depending on age, attributable to seniority/merit.
Excludes the amount held in reserve for future benefit increases. Beginning 6-30-95, includes an amount for partial recognition of
the difference between market value and book value of Plan assets amortized over a four-year period.
One-time cost-of-living adjustments for retired members and survivors, effective July 1 were included in this valuation. Future
increases for retirees and their survivors are dependent upon excess earnings created by the System.
Reflects significant Plan amendments or assumption changes.
While not any one or two numeric indices can fully describe the financial condition of a retirement plan, the
ratio of unfunded actuarial accrued liabilities to active member payroll is significant. The ratio of unfunded
actuarial accrued liabilities to member payroll is a relative index of condition where inflation is present in both
items. Observation of the ratio over a period of years gives an indication of funding achievement. The
smaller the index, the stronger the plan's condition. Shown below is a Comparative Schedule ($ in
thousands) since legislation was enacted in 1987, setting up a 40-year amortization schedule. Effective
June 30,1997, Unfunded (Excess) Actuarial Accrued Liabilities are being amortized on a level percent
method over a rolling twenty (20) year period.
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS
Page 25
Fiscal Annual
Year Ended Required Percentage
June 30 Contributions Contributed
1990 $3,048,190 100.0%
1991 $4,141,666 100.0%
1992 $4,830,326 100.0%
1993 $4,941,470 100.0%
1994 $5,555,890 100.0%
1995 $5,224,545 100.0%
1996 $4,886,479 100.0%
1997 $4,934,939 100.0%
1998 $3,668,144 100.0%
1999 $3,941,018 100.0%
2000 $4,126,694 100.0%
2001 $4,155,874 100.0%
2002 $3,656,604 100.0%
Employer Contributions
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER CONTRIBUTIONS
Page 26
Refundable Future Benefit
Members' Employers' Increase
Reserve Reserve Reserve
Balance - June 30, 2000 $ 24,038,167 $ 331,297,268 $ 46,908,586
Distribution of Revenues and Expenses
Members' Contributions 3,544,290
Employers' Contributions 4,155,874
Earnings on Investments Net of Investment Expenses (67,059,808)
Pension Benefits (16,802,302)
Refunds to Terminated Members (132,118) (1,443)
Administrative Expenses (58,796)
Distribution of Transfers
Excess Investment Earnings to be used
for Future Benefit Increases - -
Earnings on Excess Investment Earnings Account Assets 7,953,820 (7,953,820)
Amount Utilized by Benefit Increases Granted 4,518,604 (4,518,604)
Net Transfers from Other State-Sponsored Pension Plans 154,128 115,610
Inter-System Transfers -- Member Account
Balances Transferred to Employers' Reserve
due to Retirement (3,543,500) 3,543,500
Balance - June 30, 2001 $ 24,060,967 $ 267,662,327 $ 34,436,162
Distribution of Revenues and Expenses
Members' Contributions 3,595,732
Employers' Contributions 3,656,604
Earnings (Loss) on Investments Net of Investment Expenses (48,685,392)
Pension Benefits (19,529,287)
Refunds to Terminated Members (30,636) 37,153
Administrative Expenses (70,983)
Distribution of Transfers
Excess Investment Earnings to be used
for Future Benefit Increases - -
Earnings (Loss) on Excess Investment Earnings Account Assets 5,234,297 (5,234,297)
Amount Utilized by Benefit Increases Granted 5,801,777 (5,801,777)
Net Transfers from Other State-Sponsored Pension Plans 156,613 277,452
Inter-System Transfers -- Member Account
Balances Transferred to Employers' Reserve
due to Retirement (1,929,133) 1,929,133
Balance - June 30, 2002 $ 25,853,543 $ 216,313,081 $ 23,400,088
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
SUPPORTING SCHEDULE OF CHANGES IN FUND BALANCE RESERVES
FOR THE YEARS ENDED JUNE 30, 2002 AND 2001
Page 27
Administrative Investment Total
Accounting and Auditing Services $ 4,850 $ - $ 4,850
Actuarial Services 12,800 - 12,800
Computer Equipment 1,007 493 1,500
Contractual Services 3,463 896 4,359
Educational Expenses 1,408 2,457 3,865
Furniture and Equipment 338 166 504
Occupancy Expenses 1,655 271 1,926
Office Supplies 581 213 794
Payroll Taxes and Fringe Benefits 5,573 2,936 8,509
Postage Expense 1,761 173 1,934
Printing, Publications and Subscriptions 7,491 151 7,642
Professional Services 2,674 239 2,913
Salaries and Wages 26,612 20,731 47,343
Telephone Expense 639 166 805
Travel Expense 131 259 390
$ 70,983 $ 29,151 $ 100,134
Fees Paid
$ (1)
12,800
4,850
2,913
$ 20,563
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
SUPPORTING SCHEDULE OF ADMINISTRATIVE AND INVESTMENT EXPENSES
FOR THE YEAR ENDED JUNE 30, 2002
SUPPORTING SCHEDULE OF PAYMENTS TO CONSULTANTS
The value of their services is approximately $7,500.00
Lieberman, Dodge, Gerding, Kothe & Anderson Ltd. - Legal Counsel
Consultants
Standard & Poor's Securities, Inc. - Investment Counsel
Rodwan & Nichols - Consulting Actuaries
Barrows & Schatza, P.L.C. - Auditors
(1) This service was provided to the Plan without charge by Standard & Poor's Securities, Inc.
Page 28
2002 2001
RECEIPTS
Members' Contributions $ 3,627,191 $ 3,525,605
Employers' Contributions 186,865 640,996
Court Fees 3,484,311 3,537,287
Interest 7,825,250 7,765,749
Dividends 1,143,059 1,248,232
Securities Lending Income 167,127 111,529
Amounts Transferred from Other
State-Sponsored Pension Plans 522,745 419,338
Maturities and Sales of
U.S. Government Securities 14,827,952 4,033,350
Corporate Bonds 6,798,498 3,029,229
Corporate Notes 678,172,923 728,948,269
Other Investments 1,853,132 1,220,372
Common Stock 33,118,720 67,105,521
Net Decrease in Money Market Funds 117,228 612,216
Total Receipts 751,845,001 822,197,693
DISBURSEMENTS
Pension Benefits 19,529,287 16,802,302
Refunds to Terminated Members (6,518) 133,561
Investment and Administrative Expenses 93,887 89,117
Amounts Transferred to Other
State-Sponsored Pension Plans 88,681 149,600
Acquisitions of:
U.S. Government Securities 2,989,688 11,731,449
Corporate Bonds 9,113,875 5,152,069
Corporate Notes 685,668,810 728,952,022
Other Investments 1,252,715 2,472,636
Common Stock 33,114,576 56,714,937
Net Increase in Money Market Fund - -
Total Disbursements 751,845,001 822,197,693
DECREASE IN CASH - -
BEGINNING CASH BALANCE - July 1 - -
ENDING CASH BALANCE - June 30 $ - $ -
FOR THE YEARS ENDED JUNE 30, 2002 AND 2001
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
SUPPLEMENTAL SCHEDULE OF
CASH RECEIPTS AND CASH DISBURSEMENTS
Page 29
Page 30
INVESTMENT SECTION
ELECTED OFFICIALS’ RETIREMENT PLAN
TWENTY-FIRST COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2002
Fund Objectives
Investment Performance Data
Supporting Schedule of Commissions Paid to Brokers
Summary of Changes in Investment Portfolio
Detailed List of Investments Acquired
Detailed List of Sales and Redemption of Investments
Detailed List of Investments Owned
FUND OBJECTIVES
1. The intent of the Public Safety Personnel Retirement System, the Elected Official's Retirement Plan and the
Corrections Officer Retirement Plan (herein after referred to as the Plan) is to provide the Plan participants
benefits as defined in Title 38, chapter 5, articles 3, 4 and 6 of the Arizona Revised Statutes.
2. The Fund Manager and the Administrator will discharge their duties with respect to the Plan solely in the interest
of the Plan participants, beneficiaries and employer sponsors. In making every investment, the Fund Manager
shall exercise the judgment and care under the circumstances then prevailing which men of ordinary prudence,
discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in
regard to the permanent disposition of their funds, considering the probable income from their funds as well as
the probable safety of their capital, provided these investments are made in conformity with all applicable laws.
3. The intention of the Plan is to maintain the benefit level as stated in Title 38, chapter 5, articles 3, 4 and 6 of the
Arizona Revised Statutes and as amended from time to time by the Arizona State Legislature. In order to
maintain this benefit level the Plan will annually adjust the employer contribution rate based on the
recommendations made by the annual actuarial valuations. The Plan’s funding goal is for the Plan assets to be
equal to Plan liabilities within any twenty-year period.
4. It is the intent of the Plan to level off or reduce the employer contribution rate to the Plan as well as to provide
the opportunity for increased benefits for retirees as the legislature may from time to time enact, through the
systematic growth of the investments of the fund.
5. The primary objective of the investment program of the Plan is a reasonable, long-range total rate of return.
Inherent in this goal is the preservation and enhancement of capital through effective management of the
portfolio in order to take advantage of attractive opportunities various market sectors have to offer.
Adopted this 17th day of June, 1998, by the Fund Manager.
55 Water Street Kenneth A. Shea
New York, NY 10041 Managing Director
Tel 212 438 9546 Director of Equity Research
Fax 212 438 9512
Kenneth_shea@sandp.com
August 19, 2002
The Fund Manager
Elected Officials’ Retirement Plan
of the State of Arizona
1020 East Missouri Avenue
Phoenix, Arizona 85014
Dear Sirs:
The attached charts and tables depict the investment performance for the Elected Officials’
Retirement Plan of the State of Arizona. The performance results shown are based entirely on
data provided by the plan's staff and does not constitute an audit on Standard & Poor's part.
We note that Standard & Poor's has assumed that all data that has been supplied by the staff
is accurate and complete and that Standard & Poor's has not taken steps to verify same. We
also note that the performance was calculated under the assumption that cash inflows and
outflows take place uniformly throughout each month.
The performance data include realized and unrealized capital gains and losses, as well as
interest and dividend income earned by the fund. We believe these computations were
performed in accordance with accepted AIMR procedures.
Based on the foregoing, during the past fiscal year, the stock portfolio underperformed the
NYSE and S&P 500 indices, while the bond portfolio outperformed the Lehman
Government/Credit Index. The overall fund underperformed a custom benchmark, using bond
and stock indices weighted in a fixed proportion. The overall fund has attained a rate of return
over the past sixteen years (since inception) that compares favorably with this custom index.
Sincerely,
Kenneth Shea/sig
Kenneth Shea
Managing Director-Global Equity Research
Fair Total Balanced
FYE Value Contribution Return Index*
06-30-02 $ 263,752,773 $ (11,539,231) -15.36% -4.50%
06-30-01 $ 323,948,245 $ (8,619,538) -16.96% -1.40%
06-30-00 $ 399,600,916 $ (3,551,579) 13.20% 6.02%
06-30-99 $ 356,162,525 $ (5,775,793) 17.51% 12.23%
06-30-98 $ 308,491,389 $ (3,624,820) 21.26% 17.66%
06-30-97 $ 257,721,510 $ (2,741,757) 24.59% 17.87%
06-30-96 $ 209,379,157 $ (2,779,807) 17.70% 13.98%
06-30-95 $ 180,418,272 $ (1,649,899) 18.78% 16.30%
06-30-94 $ 153,422,862 $ 54,156 -0.19% 0.25%
06-30-93 $ 153,665,647 $ (794,301) 10.70% 12.26%
06-30-92 $ 139,529,010 $ 844,693 16.29% 12.12%
06-30-91 $ 119,192,732 $ 625,797 12.31% 8.32%
06-30-90 $ 105,498,890 $ 420,839 12.26% 9.21%
06-30-89 $ 93,578,548 $ 1,095,348 16.61% 13.98%
06-30-88 $ 79,125,721 $ 1,018,730 1.80% 1.19%
06-30-87 $ 76,655,143 $ 554,007 11.01% 12.61%
06-30-86 $ 68,508,067
5-year 2.54% 5.68%
10-year 8.11% 8.77%
16-year 9.41% 9.04%
Prior to 1990, the weightings in each asset class were calculated using the fiscal year-end market values. Since
1990, the asset class weightings have been calculated using the average weightings of the quarter's beginning and
ending market values.
Our investment universe is the New York Stock Exchange (NYSE) prior to July 21, 1997. Prior to FYE June 30,
1998, the Fund's stock benchmark was the NYSE Composite. S&P 500 is the stock benchmark for each FYE
thereafter. The Lehman Government/Credit bond index includes more than 5,000 publicly traded bond issues of
$25 million or more rated Baa or better for a total market value of more than $2 trillion.
*The Balanced Index is calculated using the following formula: 45% Stock Benchmark + 45% Lehman
Government/Credit + 10% 91 Day T-bill.
Investment Performance Data
Annualized Returns
Cumulative Return - Total Fund
Elected Officials' Retirement Plan
$100
$150
$200
$250
$300
$350
$400
$450
$500
$550
$600
$650
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
EORP Total Fund Balanced Index
Page 35
Fair Total Stock* NYSE S&P
FYE Value Contribution Return Benchmark Index 500
06-30-02 $ 162,637,827 $ (1,087,377) -26.20% -17.99% -12.80% -17.99%
06-30-01 $ 221,189,751 $ (11,629,031) -25.47% -14.83% -1.77% -14.83%
06-30-00 $ 310,309,992 $ (2,522,218) 16.58% 7.25% 0.84% 7.25%
06-30-99 $ 268,364,567 $ (2,803,445) 23.05% 22.76% 13.86% 22.76%
06-30-98 $ 219,970,996 $ 3,973,823 25.61% 27.29% 27.29% 30.16%
06-30-97 $ 172,058,639 $ (1,803,251) 33.72% 31.51% 31.51% 34.71%
06-30-96 $ 130,754,134 $ 2,472,037 25.69% 25.91% 25.91% 26.00%
06-30-95 $ 100,984,922 $ (4,284,646) 24.88% 22.40% 22.40% 26.06%
06-30-94 $ 84,956,830 $ 858,704 -0.41% 1.24% 1.24% 1.23%
06-30-93 $ 84,488,875 $ 9,068,166 9.90% 13.32% 13.32% 13.52%
06-30-92 $ 68,365,688 $ 6,044,772 18.05% 11.59% 11.59% 13.45%
06-30-91 $ 52,650,675 $ 9,161,349 12.20% 5.50% 5.50% 7.39%
06-30-90 $ 37,844,300 $ 5,083,288 22.43% 11.25% 11.25% 16.44%
06-30-89 $ 26,506,185 $ (3,016,405) 24.94% 16.81% 16.81% 20.53%
06-30-88 $ 24,034,290 $ (805,321) -8.16% -8.57% -8.57% -6.92%
06-30-87 $ 27,185,325 $ 4,220,210 21.22% 21.46% 21.46% 25.08%
06-30-86 $ 18,284,450
5-year -0.18% 3.20% 4.59% 3.66%
10-year 8.58% 10.53% 11.28% 11.40%
16-year 10.77% 10.04% 10.51% 11.68%
Cumulative Return - Domestic Equities
Elected Officials' Retirement Plan
Investment Performance Data
Annualized Returns
Prior to 1990, the weightings in each asset class were calculated using the fiscal year-end market values. Since
1990, the asset class weightings have been calculated using the average weightings of the quarter's beginning and
ending market values.
*Our investment universe is the New York Stock Exchange (NYSE) prior to July 21, 1997. Prior to FYE June 30,
1998, the Fund's stock benchmark was the NYSE Composite. S&P 500 is the stock benchmark for each FYE
thereafter.
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
EORP Equities Stock Benchmark NYSE S&P 500
Page 36
Fair Total 91-Day
FYE Value Contribution Return Lehman* T-Bill
06-30-02 $ 101,114,946 $ (10,451,854) 8.73% 8.24% 2.57%
06-30-01 $ 102,758,495 $ 3,009,493 11.58% 11.14% 5.89%
06-30-00 $ 89,290,924 $ (1,029,361) 2.97% 4.29% 5.53%
06-30-99 $ 87,797,958 $ (2,972,348) 2.56% 2.69% 4.90%
06-30-98 $ 88,520,393 $ (7,598,643) 12.29% 11.08% 5.28%
06-30-97 $ 85,666,634 $ (938,506) 9.98% 7.76% 5.43%
06-30-96 $ 78,625,023 $ (5,251,844) 6.02% 4.65% 5.52%
06-30-95 $ 79,433,350 $ 2,634,747 11.67% 12.75% 5.52%
06-30-94 $ 68,466,032 $ (804,548) 0.08% -1.45% 3.37%
06-30-93 $ 69,176,772 $ (9,862,467) 11.75% 13.15% 3.37%
06-30-92 $ 71,163,322 $ (5,200,079) 15.01% 14.17% 5.19%
06-30-91 $ 66,542,057 $ (8,535,552) 11.55% 10.21% 7.55%
06-30-90 $ 67,654,590 $ (4,662,449) 8.06% 7.11% 8.50%
06-30-89 $ 67,072,363 $ 4,111,753 13.40% 12.33% 8.47%
06-30-88 $ 55,091,431 $ 1,824,079 7.61% 7.47% 6.75%
06-30-87 $ 49,469,818 $ (3,666,202) 6.12% 4.68% 6.17%
06-30-86 $ 50,223,617
5-year 7.55% 7.43% 4.83%
10-year 7.68% 7.33% 4.73%
16-year 8.63% 8.06% 5.61%
Our Fixed Income is comprised of all Bonds, Notes, Other Investments and Money Market securities.
Prior to 1990 the weightings in each asset class were calculated using the fiscal year-end market values. Since
1990, the asset class weightings have been calculated using the average weightings of the quarter's beginning and
ending market values.
Investment Performance Data
*The Lehman Government/Credit bond index includes more than 5,000 publicly traded bond issues of $25 million or
more rated Baa or better for a total market value of more than $2 trillion.
Cumulative Return - Fixed Income
Elected Officials' Retirement Plan
Annualized Returns
$100
$125
$150
$175
$200
$225
$250
$275
$300
$325
$350
$375
$400
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
EORP Fixed Income Lehman T-Bill
Page 37
Number of Shares Average
Broker Traded Commission Commissions
Dain Rauscher 143,000 0.050 $ 7,150.00
Greenberg Financial Group 24,000 0.050 $ 1,200.00
Investors Capital Corporation 18,000 0.050 $ 900.00
ISI Group 125,000 0.050 $ 6,250.00
Merrill Lynch 206,680 0.020 $ 4,100.00
Morgan Stanley Dean Witter 109,000 0.050 $ 5,450.00
Pin Oak Partners, Inc. 50,000 0.050 $ 2,500.00
Salomon Smith Barney (Phoenix) 198,800 0.016 $ 3,240.00
Salomon Smith Barney (Scottsdale) 170,186 0.026 $ 4,359.30
Standard & Poor's Securities 288,000 0.050 $ 14,400.00
U. S. Securities and Futures 245,000 0.050 $ 12,250.00
UBS | Paine Webber 215,765 0.029 $ 6,238.25
Wells Fargo / Van Kasper 257,000 0.050 $ 12,850.00
Total Commissions 2,050,431 0.039 $ 80,887.55
The Plan typically pays $ .05 per share traded plus SEC charges on sale transactions. Over the Counter stocks are
typically traded net of commissions. The firms with an average commission of less than $.05 have traded Over the
Counter stocks net of commissions for the Plan.
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
SUPPORTING SCHEDULE OF COMMISSIONS PAID TO BROKERS
FISCAL YEAR ENDED JUNE 30, 2002
Page 38
Percent Percent
at Fair Fair Book Maturites (Premium) Fair Book at Fair
Description Value Value Value Acquisitions and Sales Discount Value Value Value
U.S. Treasury
Obligations 3.9% 12,767,960.00 10,968,450.14 - 6,000,956.52 (1,733.07) 6,620,010.00 4,965,760.55 1.7%
Federal Agency
Obligations 11.2% 36,149,168.77 35,039,386.40 2,989,687.50 8,825,262.16 30,867,401.60 29,203,811.74 10.2%
Total U.S. Government
Securities 15.1% 48,917,128.77 46,007,836.54 2,989,687.50 14,826,218.68 (1,733.07) 37,487,411.60 34,169,572.29 11.9%
Corporate Bonds 13.1% 42,384,669.63 43,552,117.80 9,113,874.59 6,354,101.93 (14,688.43) 45,293,654.94 46,297,202.03 16.2%
Total Bond
Portfolio 28.2% 91,301,798.40 89,559,954.34 12,103,562.09 21,180,320.61 (16,421.50) 82,781,066.54 80,466,774.32 28.1%
Corporate Notes 0.9% 2,998,918.34 2,998,918.34 685,668,809.74 678,172,923.09 - 10,494,804.99 10,494,804.99 3.6%
Common Stock 68.3% 221,189,750.55 190,250,495.59 33,114,575.55 35,602,664.13 - 162,637,826.77 187,762,407.01 65.6%
Other Investments 2.5% 8,113,706.13 8,113,706.13 1,252,714.97 1,754,191.10 - 7,612,230.00 7,612,230.00 2.7%
Money Market Account 0.1% 344,071.93 344,071.93 117,227.60 - 226,844.33 226,844.33 0.0%
Total Portfolio 100.0% 323,948,245.35 291,267,146.33 732,139,662.35 736,827,326.53 (16,421.50) 263,752,772.63 286,563,060.65 100.0%
Balance June 30, 2001 Balance June 30, 2002
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
SUMMARY OF CHANGES IN INVESTMENT PORTFOLIO
FOR THE FISCAL YEAR ENDED JUNE 30, 2002
Page 39
Purchase (Premium) Accrued Book
Security Coupon Maturity Price Par Value Principal Discount Interest Total Amount Yield
GNMA Pool #552514 6.500 04/15/2032 99.65625 3,000,000.00 2,989,687.50 10,312.50 9,208.33 2,998,895.83 6.52%
3,000,000.00 2,989,687.50 10,312.50 9,208.33 2,998,895.83 6.52%
CORPORATE BONDS
AT&T CORPORATES 6.500 03/15/2029 86.76000 500,000.00 433,800.00 66,200.00 14,354.17 448,154.17 7.49%
DELTA AIRLINES SERIES 01-1B 7.711 09/18/2011 99.47900 500,000.00 497,395.00 2,605.00 1,178.07 498,573.07 7.75%
FORD HOLDINGS INC 9.375 03/01/2020 112.48500 500,000.00 562,425.00 (62,425.00) 10,546.88 572,971.88 8.33%
FORD MOTOR COMPANY 7.450 07/16/2031 91.86000 500,000.00 459,300.00 40,700.00 18,107.64 477,407.64 8.11%
FORD MOTOR CREDIT 7.250 10/25/2011 101.76200 500,000.00 508,810.00 (8,810.00) 4,934.03 513,744.03 7.12%
LIBERTY MUTUAL INSURANCE 7.875 10/15/2026 94.09000 1,000,000.00 940,900.00 59,100.00 29,750.00 970,650.00 8.37%
NATIONAL RURAL UTILITIES 8.000 03/01/2032 101.04500 1,000,000.00 1,010,450.00 (10,450.00) - 1,010,450.00 7.92%
NORTHWEST AIRLINES 7.935 04/01/2019 109.25000 927,506.67 1,013,301.04 (85,794.37) 15,946.16 1,029,247.20 7.26%
STANDARD CHARTERED BANK 8.000 05/30/2031 104.67800 1,000,000.00 1,046,780.00 (46,780.00) 13,333.33 1,060,113.33 7.64%
UNION CARBIDE CORP 7.875 04/01/2023 96.66500 627,000.00 606,089.55 20,910.45 6,309.19 612,398.74 8.15%
WORLDCOM INC. 8.250 05/15/2031 102.16240 1,000,000.00 1,021,624.00 (21,624.00) 18,562.50 1,040,186.50 8.08%
ZURICH CAPITAL TRUST I 8.376 06/01/2037 101.30000 1,000,000.00 1,013,000.00 (13,000.00) 23,499.33 1,036,499.33 8.27%
TOTAL CORPORATE BONDS 9,054,506.67 9,113,874.59 (59,367.92) 156,521.30 9,270,395.89 7.89%
TOTAL BONDS PURCHASED 12,054,506.67 12,103,562.09 (49,055.42) 165,729.63 12,269,291.72 7.55%
TOTAL FEDERAL AGENCY OBLIGATIONS
ELECTED OFFICIALS' RETIREMENT PLAN
BONDS ACQUIRED
STATE OF ARIZONA
INVESTMENTS ACQUIRED
JULY 1, 2001 THROUGH JUNE 30, 2002
FEDERAL AGENCY OBLIGATIONS
Page 40
Page 1 of 3
Amount of Maturity
Description Cost Interest Value
AEGON FUNDING CORP 1,499,567.50 432.50 1,500,000.00
ALLMERICA FINANCIAL CORP 999,401.11 598.89 1,000,000.00
ALLSTATE CORPORATION 1,248,819.10 1,180.90 1,250,000.00
AMGEN INC 1,748,906.74 1,093.26 1,750,000.00
AMSTEL FUNDING 999,770.00 230.00 1,000,000.00
AMSTERDAM FUNDING CORP 8,246,024.17 3,975.83 8,250,000.00
ASSET ONE SECURITIZATION 6,497,024.30 2,975.70 6,500,000.00
ASSET SECURT. COOPERATIVE 999,893.61 106.39 1,000,000.00
AUTOBAHN FUNDING CORP 79,805,628.57 19,371.43 79,825,000.00
BANK OF IRELAND 2,024,318.81 681.19 2,025,000.00
BANNER HEALTH SYSTEMS 999,655.56 344.44 1,000,000.00
BARTON CAPITAL CORP 1,999,167.50 832.50 2,000,000.00
BAVARIA FINANCE FUNDING 3,996,519.44 3,480.56 4,000,000.00
BBL NORTH AMERICA FUNDING 999,261.11 738.89 1,000,000.00
BEETHOVEN FUNDING CORPORATION 17,194,207.04 5,792.96 17,200,000.00
BELFORD FUNDING COMPANY LLC 999,639.17 360.83 1,000,000.00
BROADWAY CAPITAL 1,998,475.28 1,524.72 2,000,000.00
BRYANT PARK FUNDING LLC 1,499,325.00 675.00 1,500,000.00
CARGILL INC 999,667.50 332.50 1,000,000.00
CATHOLIC HEALTHCARE PARTNERS 1,548,915.00 1,085.00 1,550,000.00
CDC COMMERCIAL PAPER PROGRAM 2,999,525.55 474.45 3,000,000.00
CHECK POINT CHARLIE INC 4,399,690.72 309.28 4,400,000.00
CINTAS CORPORATION NO. 2 999,104.44 895.56 1,000,000.00
CLIPPER RECEIVABLES 2,998,545.27 1,454.73 3,000,000.00
COCA COLA COMPANY 999,266.67 733.33 1,000,000.00
CONCORD MINUTEMAN CAPITAL 5,223,190.02 1,809.98 5,225,000.00
COOPERATIVE ASSN OF TRACTOR DEALERS 23,318,590.65 6,409.35 23,325,000.00
COUNTRYWIDE HOME LOANS 2,249,325.00 675.00 2,250,000.00
CROWN POINT CAPITAL 3,172,839.02 2,160.98 3,175,000.00
CVS CORPORATION 999,615.56 384.44 1,000,000.00
CXC INC 999,711.67 288.33 1,000,000.00
DAKOTA NOTES 3,499,443.61 556.39 3,500,000.00
DEALERS CAPITAL ACCEPTANCE 3,174,131.38 868.62 3,175,000.00
DEALERS CAPITAL ACCESS TRUST INC. 21,994,133.19 5,866.81 22,000,000.00
DELAWARE FUNDING CORP 999,758.33 241.67 1,000,000.00
DOW CHEMICAL COMPANY 1,499,794.44 205.56 1,500,000.00
DUKE ENERGY CORP 999,255.00 745.00 1,000,000.00
EAGLE FUNDING CAPITAL 16,890,623.17 9,376.83 16,900,000.00
EDISON ASSET SECURITIZATION 1,998,050.83 1,949.17 2,000,000.00
EMINENT FUNDING 10,295,819.31 4,180.69 10,300,000.00
ERASMUS CAPITAL CORP 999,511.94 488.06 1,000,000.00
EXXON PROJECT 3,796,636.12 3,363.88 3,800,000.00
EXXON PROJECT INVESTMENT 2,999,654.17 345.83 3,000,000.00
FALCON ASSET SECURITIZATION 3,499,155.55 844.45 3,500,000.00
FLORDIA POWER AND LIGHT 999,583.33 416.67 1,000,000.00
FORRESTAL FUNDING MASTER TRUST 999,849.17 150.83 1,000,000.00
FOUR WINDS FUNDING CORP 13,998,524.70 1,475.30 14,000,000.00
FPL FUELS, INC. 999,444.44 555.56 1,000,000.00
GALLEON CAPITAL 46,493,594.08 6,405.92 46,500,000.00
GE CAPITAL CORP 3,398,766.58 1,233.42 3,400,000.00
GENERAL ELECTRIC COMPANY 999,570.00 430.00 1,000,000.00
GIRO FUNDING (US) 4,498,731.81 1,268.19 4,500,000.00
SHORT TERM INVESTMENTS MATURED
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS ACQUIRED
JULY 1, 2001 THROUGH JUNE 30, 2002
Page 41
Page 2 of 3
Amount of Maturity
Description Cost Interest Value
SHORT TERM INVESTMENTS MATURED
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS ACQUIRED
JULY 1, 2001 THROUGH JUNE 30, 2002
GIRO MULTI-FUNDING US CORP 999,090.00 910.00 1,000,000.00
GOTHAM FUNDING 1,549,123.82 876.18 1,550,000.00
GRAND FUNDING CORP 1,499,572.64 427.36 1,500,000.00
HALOGEN CAPITAL COMPANY 3,997,872.50 2,127.50 4,000,000.00
HANNOVER FUNDING 15,197,382.57 2,617.43 15,200,000.00
HOLDENBY CAPITAL COMPANY LLC 999,949.72 50.28 1,000,000.00
HOLLAND LIMITED SECURITZATION 24,987,082.12 12,917.88 25,000,000.00
INDIANA GAS COMPANY 999,788.33 211.67 1,000,000.00
K2 (USA) LLC 499,976.39 23.61 500,000.00
KITTY HAWK FUNDING CORP 3,024,097.88 902.12 3,025,000.00
LEXINGTON PARKER CAPITAL CORP 3,498,227.22 1,772.78 3,500,000.00
LIBERTY STREET FUNDING 2,999,064.72 935.28 3,000,000.00
LONG LANE MASTER TRUST 998,872.22 1,127.78 1,000,000.00
LONG LANE MASTER TRUST IV 499,408.33 591.67 500,000.00
MARKET STREET FUNDING 6,497,994.59 2,005.41 6,500,000.00
MARSH & MCLENNAN 3,498,043.89 1,956.11 3,500,000.00
MEDTRONIC 1,499,713.33 286.67 1,500,000.00
MIDAMERICAN ENERGY CO 499,873.61 126.39 500,000.00
MOAT FUNDING 3,998,129.16 1,870.84 4,000,000.00
MONTAUK FUNDING CORP 4,598,303.17 1,696.83 4,600,000.00
NEPTUNE FUNDING 11,344,363.42 5,636.58 11,350,000.00
NESS LLC 1,999,587.50 412.50 2,000,000.00
NESTLE CAPITAL CORP 1,999,901.67 98.33 2,000,000.00
OLD LINE FUNDING 2,898,515.55 1,484.45 2,900,000.00
ORANGE & ROCKLAND UTILITY 999,687.50 312.50 1,000,000.00
PARADIGM FUNDING 5,547,737.81 2,262.19 5,550,000.00
PEOPLES ENERGY CORPORATION 999,901.94 98.06 1,000,000.00
PREFERRED RECEIVABLES FUNDING CORP 2,898,556.56 1,443.44 2,900,000.00
QUESTAR CORP 999,300.00 700.00 1,000,000.00
QUINCY CAPITAL CORPORATION 999,655.56 344.44 1,000,000.00
REGENCY MARKETS NO. 1 7,021,224.05 3,775.95 7,025,000.00
REVOLVING COMMITMENT VEHICLE 999,086.39 913.61 1,000,000.00
SOUTHERN COMPANY FUNDING CORP 1,499,416.67 583.33 1,500,000.00
SPECIAL PURPOSE ACCTS. REC. 3,046,702.50 3,297.50 3,050,000.00
STARBIRD FUNDING CORPORATION 21,792,661.53 7,338.47 21,800,000.00
STEAMBOAT FUNDING 7,746,998.88 3,001.12 7,750,000.00
SUNBELT FUNDING CORP 24,989,529.18 10,470.82 25,000,000.00
SUNFLOWERS FUNDING CO 5,499,392.10 607.90 5,500,000.00
SUPERIOR FUNDING CAPITAL CORP 999,385.83 614.17 1,000,000.00
SWEDBANK 999,480.00 520.00 1,000,000.00
SYDNEY CAPITAL CORP 3,996,709.45 3,290.55 4,000,000.00
TEXTRON INC 999,337.78 662.22 1,000,000.00
THAMES ASSET GLOBAL SECURITIZATION 499,418.61 581.39 500,000.00
THREE CROWNS FUNDING 78,029,051.80 20,948.20 78,050,000.00
THUNDER BAY FUNDING 9,997,771.38 2,228.62 10,000,000.00
TOTAL FINA ELF SA 1,499,426.67 573.33 1,500,000.00
TRANSAMERICA ASSET FUNDING 7,748,339.99 1,660.01 7,750,000.00
TRIDENT CAPITAL FINANCE 999,222.22 777.78 1,000,000.00
TRIPLE A-1 FUNDING 4,498,249.57 1,750.43 4,500,000.00
UBS AMERICAS INC 19,497,604.78 2,395.22 19,500,000.00
UBS FINANCE (DELAWARE) 4,999,436.39 563.61 5,000,000.00
UNITED TECH CORP 999,562.50 437.50 1,000,000.00
Page 42
Page 3 of 3
Amount of Maturity
Description Cost Interest Value
SHORT TERM INVESTMENTS MATURED
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS ACQUIRED
JULY 1, 2001 THROUGH JUNE 30, 2002
USAA CAPITAL CORP 999,761.11 238.89 1,000,000.00
VECTREN UTILITY HOLDING CORP 2,999,729.99 270.01 3,000,000.00
VISTAONE METAFOLIO LLC 6,997,467.23 2,532.77 7,000,000.00
WELLS FARGO & COMPANY 5,547,029.44 2,970.56 5,550,000.00
WGL HOLDINGS 1,999,499.16 500.84 2,000,000.00
WINDMILL FUNDING CORPORATION 3,796,830.83 3,169.17 3,800,000.00
WISCONSIN PUBLIC SERVICE 999,191.11 808.89 1,000,000.00
WORLD OMNI VEHICLE LEASING 3,749,010.00 990.00 3,750,000.00
TOTALS 678,172,923.09 227,076.91 678,400,000.00
Page 43
Page 1 of 1
No. Dividend Annual Book Average Book
Company Shares Rate Income Yield Cost Cost
ALBERTO CULVER CO 14,000 0.36 5,040.00 0.66% 54.32 760,447.26
AMERICAN STANDARD COMPANY INC 11,000 - - - 76.56 842,207.68
BELLSOUTH CORPORATION 29,000 0.76 22,040.00 1.90% 40.08 1,162,315.50
BROADWING INC. 22,000 - - - 21.41 471,109.30
CANADIAN NATIONAL RAILWAY 25,000 0.55 13,670.00 1.16% 47.16 1,179,064.40
CHEVRON CORPORATION 14,000 2.80 39,200.00 3.35% 83.70 1,171,759.20
CHOICEPOINT INCORPORATED 29,000 - - - 52.53 1,523,421.20
DAL-TILE INTERNATIONAL 14,000 - - - 17.30 242,179.20
ELECTRONICS BOUTIQUE HOLDINGS CORP. 40,000 - - - 36.74 1,469,763.76
FORTUNE BRANDS, INC. 11,000 1.00 11,000.00 1.92% 52.20 574,201.10
GENZYME CORPORATION 29,000 - - - 57.59 1,670,056.65
HEALTHSOUTH CORP 14,000 - - - 15.03 210,383.60
JACOBS ENGINEERING GROUP INC. 11,000 - - - 60.47 665,126.40
JOHNSON & JOHNSON CO 14,000 0.82 11,480.00 1.52% 53.85 753,905.60
LANDSTAR SYSTEMS, INC 6,800 - - - 105.54 717,661.60
LENNAR CORPORATION 15,000 0.05 750.00 0.11% 43.60 653,925.40
MBNA CORP 12,000 0.40 4,800.00 1.06% 37.87 454,442.40
MICROCHIP TECHNOLOGY INC. 14,000 - - - 38.79 543,008.00
MOHAWK INDUSTRIES 11,000 - - - 69.04 759,405.10
MOODY'S CORPORATION 14,000 0.18 2,520.00 0.46% 38.96 545,478.67
OXFORD HEALTH PLANS, INC. 14,000 - - - 26.29 368,068.30
P.F. CHANG'S CHINA BISTRO 59,000 - - - 39.80 2,348,438.34
PACTIV CORPORATION 13,000 - - - 16.00 207,950.10
PEPSICO INC. 36,000 0.60 21,600.00 1.23% 48.65 1,751,229.57
PFIZER INC. 15,000 0.52 7,800.00 1.27% 41.01 615,204.00
QUALCOMM INCORPORATED 15,000 - - - 45.70 685,428.00
QUEST DIAGNOSTIC 11,000 - - - 87.08 957,889.90
SCP POOL CORPORATION 38,000 - - - 35.76 1,358,846.62
SEARS, ROEBUCK AND COMPANY 14,000 0.92 12,880.00 1.63% 56.37 789,158.88
SEI INVESTMENTS COMPANY 15,000 0.24 3,600.00 0.61% 39.18 587,731.50
SIEBEL SYSTEMS 44,000 - - - 34.90 1,535,404.60
SPRINT CORPORATION (PCS GROUP) 43,000 - - - 26.72 1,148,860.80
ST. JUDE MEDICAL 22,000 - - - 81.57 1,794,435.30
TENET HEALTHCARE CORPORATION 11,000 0.04 440.00 0.07% 61.06 671,706.60
VISHAY INTERTECHNOLOGY INC 15,000 - - - 23.12 346,774.50
WALGREEN COMPANY 14,000 0.15 2,032.80 0.37% 39.62 554,686.60
WATERS CORPORATION 14,000 - - - 34.30 480,179.00
WHIRLPOOL CORP 7,000 1.36 9,520.00 1.75% 77.53 542,720.92
168,372.80 0.51%
COMMON STOCK ACQUIRED
TOTAL COMMON STOCK BOUGHT
JULY 1, 2001 THROUGH JUNE 30, 2002
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS ACQUIRED
33,114,575.55
Page 44
Name Coupon Maturity Book Cost
BRIDGE FINANCIAL
BRIDGE FINANCIAL-DYNAMITE MTN. RANCH 12.750 4/30/2002 31,089.97
BRIDGE FINANCIAL-GRAND INN 12.500 9/25/2000 10,000.00
TOTAL BRIDGE FINANCIAL ACQUIRED 41,089.97
PIVOTAL EQUITY
CENTURY PLAZA HOTEL 213,750.00
NEWS I, LLC 9,000.00
PROMONTORY 562,500.00
PROMONTORY-LOANS 360,000.00
SPA AT RED CANYON 66,375.00
TOTAL PIVOTAL EQUITY ACQUIRED 1,211,625.00
TOTAL OTHER INVESTMENTS ACQUIRED 1,252,714.97
STATE OF ARIZONA
OTHER INVESTMENTS ACQUIRED
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS ACQUIRED
JULY 1, 2001 THROUGH JUNE 30, 2002
Page 45
Accrued Amortized
Security Coupon Maturity Par Value Sale Price Interest Principal Cost Gain or (Loss) Amount Due
US TREASURY BOND 14.250 2/15/2002 5,000,000.00 100.00 - 4,999,973.61 4,999,973.61 - 4,999,973.61
US TREASURY NOTE 7.500 11/15/2001 1,000,000.00 100.10 - 1,000,982.91 1,000,982.91 - 1,000,982.91
6,000,000.00 - 6,000,956.52 6,000,956.52 - 6,000,956.52
8,825,262.16
CORPORATE BONDS
ANTHEM INSURANCE COMPANEY 9.125 4/1/2010 1,000,000.00 92.32 28,895.83 1,047,500.00 923,246.24 124,253.76 952,142.07
AUTO BOND RECEIVABLE TRUST 6.400 4/15/2001 20,238.64 100.00 - 20,238.64 20,238.64 - 20,238.64
AXA SA 8.600 12/15/1930 500,000.00 108.38 3,105.56 568,120.00 541,920.77 26,199.23 545,026.33
FORD MOTOR COMPANY 7.450 7/16/1931 500,000.00 91.94 13,037.50 474,550.00 459,719.71 14,830.29 472,757.21
LEHMAN BROTHERS HOLDINGS 8.750 5/15/2002 1,000,000.00 100.06 - 1,000,609.00 1,000,609.00 - 1,000,609.00
NATIONAL RURAL UTILITIES 8.000 3/1/1932 1,000,000.00 101.04 22,666.67 1,125,570.00 1,010,363.87 115,206.13 1,033,030.54
OHIO NATIONAL LIFE INSURANCE 8.500 5/15/2026 1,000,000.00 99.82 8,500.00 1,058,790.00 998,179.71 60,610.29 1,006,679.71
OKLAHOMA GAS & ELECTRIC 6.500 4/15/2028 815,000.00 83.67 588.61 745,545.70 681,923.74 63,621.96 682,512.35
SECURITY NATIONAL MORTGAGE 7.870 8/25/1930 265,746.42 100.00 - 265,746.42 265,746.42 - 265,746.42
TYCO INTERNATIONAL GROUP 6.875 1/15/2029 500,000.00 90.43 1,527.78 477,140.00 452,153.83 24,986.17 453,681.61
TOTAL CORPORATE BONDS 6,600,985.06 78,321.95 6,783,809.76 6,354,101.93 429,707.83 6,432,423.88
TOTAL BONDS SOLD 12,600,985.06 78,321.95 12,784,766.28 21,180,320.61 429,707.83 12,433,380.40
ELECTED OFFICIALS' RETIREMENT PLAN
STATE OF ARIZONA
SALES AND REDEMPTION OF INVESTMENTS
JULY 1, 2001 THROUGH JUNE 30, 2002
TOTAL FEDERAL AGENCY OBLIGATIONS
FEDERAL AGENCY OBLIGATIONS
Detailed information for the redemptions of Federal Agency Obligations are too lengthy to include in this report; therefore, only totals are given.
BONDS SOLD
US TREASURY OBLIGATIONS
TOTAL US TREASURY OBLIGATIONS
Page 46
Page 1 of 2
Shares Sale Gain (Loss) % Gain
Company Sold Price Amount + SEC Fee Net Amount Book Cost on Sale on Sale
3COM SECURITIES LITIGATION - - - - - - 60,740.54 0.00%
AES CORPORATION 14,000 12.82 179,464.60 705.99 178,758.61 702,056.60 (523,297.99) -74.54%
ALLTEL CORPORATION 11,000 60.58 666,429.80 572.22 665,857.58 711,026.39 (45,168.81) -6.35%
AMERICAN EXPRESS 31,000 37.09 1,149,743.50 1,567.25 1,148,176.25 1,083,822.41 64,353.84 5.94%
AMERICAN INT'L GROUP 33,765 76.29 2,575,795.10 1,755.89 2,574,039.21 792,105.20 1,781,934.01 224.96%
AMGEN 19,000 58.59 1,113,286.00 37.11 1,113,248.89 737,340.14 375,908.75 50.98%
BELLSOUTH CORPORATION 29,000 32.34 937,764.30 1,478.23 936,286.07 1,162,315.50 (226,029.43) -19.45%
BIOGEN INC 35,000 54.33 1,901,532.40 778.54 1,900,753.86 1,730,555.99 170,197.87 9.83%
BJ'S WHOLESALE CLUB, INC. 19,000 42.35 804,588.60 974.23 803,614.37 769,792.29 33,822.08 4.39%
BROADWING INC. 15,000 3.34 50,104.50 751.51 49,352.99 368,755.05 (319,402.06) -86.62%
CHARTER COMMUNICATIONS, INC 15,000 11.70 175,503.00 5.86 175,497.14 333,346.50 (157,849.36) -47.35%
CHOICEPOINT - - - - - - 30.65 0.00%
CISCO SYSTEMS 37,000 19.75 730,799.50 24.37 730,775.13 320,846.46 409,928.67 127.76%
CORNING INCORPORATED 45,000 9.80 440,811.00 2,264.70 438,546.30 3,126,229.40 (2,687,683.10) -85.97%
DEVON ENERGY CORPORATION 11,000 33.01 363,136.40 562.11 362,574.29 632,261.15 (269,686.86) -42.65%
ECHOSTAR COMMUNICATIONS 'A' 29,000 23.05 668,566.00 22.29 668,543.71 1,380,089.56 (711,545.85) -51.56%
EL PASO CORPORATION 29,000 21.92 635,633.60 1,469.14 634,164.46 1,683,906.50 (1,049,742.04) -62.34%
EMC CORP 43,000 13.69 588,719.00 2,165.39 586,553.61 485,357.31 101,196.30 20.85%
ENRON CORPORATION 80,000 20.14 1,611,408.50 1,853.72 1,609,554.78 1,445,951.00 163,603.78 11.31%
EXPRESS SCRIPTS 12,000 44.30 531,659.70 7.99 531,651.71 239,853.11 291,798.60 121.66%
GUIDANT CORPORATION 14,000 32.10 449,400.00 714.98 448,685.02 914,021.20 (465,336.18) -50.91%
HELLER FINANCIAL, INC. 11,000 53.09 584,008.70 569.47 583,439.23 289,263.21 294,176.02 101.70%
HOME DEPOT 16,000 50.46 807,398.40 812.12 806,586.28 163,164.49 643,421.79 394.34%
INTEL CORPORATION 55,000 23.12 1,271,654.50 42.40 1,271,612.10 1,191,572.91 80,039.19 6.72%
INTERNATIONAL BUSINESS MACH. 41,000 108.85 4,463,026.20 2,177.93 4,460,848.27 1,177,848.25 3,283,000.02 278.73%
JABIL CIRCUIT 15,000 32.91 493,698.00 766.46 492,931.54 343,426.45 149,505.09 43.53%
LEXMARK INTERNATIONAL GROUP 21,000 57.24 1,202,019.00 1,068.04 1,200,950.96 1,561,303.00 (360,352.04) -23.08%
MCI Group 4,180 15.27 63,844.48 2.13 63,842.35 133,783.82 (69,941.47) -52.28%
MOHAWK (Fractional Shares) 0.2 - - - - - 11.71 0.00%
MOHAWK/DAL-TILE MERGER CASH - - - - - - 154,000.00 0.00%
NEWS CORPORATION 58,000 28.20 1,635,828.40 2,933.94 1,632,894.46 1,258,212.58 374,681.88 29.78%
NOKIA CORPORATION 87,000 18.08 1,572,957.20 4,385.60 1,568,571.60 1,564,224.38 4,347.22 0.28%
NORTEL NETWORKS CORP 19,000 7.85 149,150.00 954.98 148,195.02 299,416.88 (151,221.86) -50.51%
OFFICEMAX INC. 185,000 3.08 569,698.51 9,269.11 560,429.40 2,544,169.95 (1,983,740.55) -77.97%
PFIZER INC. 15,000 39.93 598,906.50 769.97 598,136.53 361,673.03 236,463.50 65.38%
PLANTRONICS, INC. 15,000 20.30 304,460.10 760.17 303,699.93 414,683.23 (110,983.30) -26.76%
QUANTA SERVICES, INC. 14,000 13.98 195,694.04 702.96 194,991.08 475,131.20 (280,140.12) -58.96%
RAINBOW MEDIA GROUP 14,000 19.95 279,305.60 709.32 278,596.28 223,129.22 55,467.06 24.86%
SCHERING-PLOUGH CORP 35,000 36.93 1,292,575.80 1,793.10 1,290,782.70 597,413.25 693,369.45 116.06%
Commission
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
SALES AND REDEMPTION OF INVESTMENTS
COMMON STOCK SOLD
JULY 1, 2001 THROUGH JUNE 30, 2002
Page 47
Page 2 of 2
Shares Sale Gain (Loss) % Gain
Company Sold Price Amount + SEC Fee Net Amount Book Cost on Sale on Sale
Commission
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
SALES AND REDEMPTION OF INVESTMENTS
COMMON STOCK SOLD
JULY 1, 2001 THROUGH JUNE 30, 2002
SEITEL, INC 28,000 5.53 154,729.85 1,402.55 153,327.30 523,473.17 (370,145.87) -70.71%
SUN MICROSYSTEMS, INC 29,000 17.08 495,322.90 1,466.52 493,856.38 1,197,633.46 (703,777.08) -58.76%
TARGET CORP 13,000 31.46 408,929.30 663.64 408,265.66 373,689.19 34,576.47 9.25%
WILLIAMS COMMUNICATIONS GROUP 36,186 2.13 77,138.41 1,811.89 75,326.52 154,760.93 (79,434.41) -51.33%
WORLDCOM INC. 67,500 10.37 700,197.75 918.57 699,279.18 2,135,059.77 (1,435,780.59) -67.25%
TOTAL STOCK SOLD 1,300,631 32,894,889.14 51,692.39 32,843,196.75 35,602,664.13 (2,544,684.48) -7.15%
Page 48
Capital
Name Coupon Maturity Book Cost Gains (Loss)
BRIDGE FINANCIAL
BRIDGE FINANCIAL-15 E. MONROE 12.500 1/5/2001 61,500.00 -
BRIDGE FINANCIAL-BEAVER CREEK 13.000 8/3/2001 46,000.00 -
BRIDGE FINANCIAL-DYNAMITE MTN. RANCH 12.750 6/30/2002 6,195.00 -
BRIDGE FINANCIAL-LAKE PLEASANT 14.000 9/15/2001 - 1,267.66
BRIDGE FINANCIAL-VILLAGE AT HASSAYAMPA 12.000 11/11/2001 19,937.00 -
TOTAL BRIDGE FINANCIAL SOLD 133,632.00 1,267.66
PIVOTAL
PIVOTAL PROMONTORY 247,500.00 -
PIVOTAL PROMONTORY-LOANS 360,000.00 -
TOTAL PIVOTAL SOLD 607,500.00 -
DESERT TROON
DESERT TROON EQUITY-LA JOLLA 760,000.00 96,292.40
DESERT TROON EQUITY-TORREON - 1,381.06
TOTAL DESERT TROON SOLD 760,000.00 97,673.46
MISCELLANEOUS
PEBBLECREEK PROPERTIES 10.000 4/1/2005 253,059.10 -
TOTAL MISCELLANEOUS SOLD 253,059.10 -
TOTAL OTHER INVESTMENTS SOLD 1,754,191.10 98,941.12
OTHER INVESTMENTS SOLD
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
SALES AND REDEMPTIONS OF INVESTMENTS
JULY 1, 2001 THROUGH JUNE 30, 2002
Page 49
Page 1 of 3
Book Current Gain or Annual Book
Par Value Security Coupon Maturity Book Cost Price Price Current Value (Loss) Income Yield YTM
U.S. TREASURY OBLIGATIONS
1,000,000 U.S. TREASURY BOND 7.500 11/15/2016 965,760.55 96.57606 120.34400 1,203,440.00 237,679.45 75,000.00 7.77 5.45
2,000,000 U.S. TREASURY BOND 9.125 5/15/2018 2,000,000.00 100.00000 138.21900 2,764,380.00 764,380.00 182,500.00 9.13 5.50
1,000,000 U.S. TREASURY BOND 9.000 11/15/2018 1,000,000.00 100.00000 137.31300 1,373,130.00 373,130.00 90,000.00 9.00 5.52
1,000,000 U.S. TREASURY BOND 8.000 11/15/2021 1,000,000.00 100.00000 127.90600 1,279,060.00 279,060.00 80,000.00 8.00 5.63
5,000,000.00 4,965,760.55 99.31521 6,620,010.00 1,654,249.45 427,500.00 8.61 5.52
FEDERAL AGENCY OBLIGATIONS
1,711.78 GNMA Pool #007766 8.500 2/15/2006 538.86 31.47951 105.21200 1,801.00 1,262.14 145.50 27.00 3.68
32,026.79 GNMA Pool #143093 9.000 6/15/2016 31,055.98 96.96876 109.93800 35,209.61 4,153.63 2,882.41 9.28 3.84
24,547.42 GNMA Pool #148408 9.000 5/15/2016 23,580.86 96.06248 110.40700 27,102.07 3,521.21 2,209.27 9.37 3.84
102,317.55 GNMA Pool #157733 9.000 5/15/2016 94,835.58 92.68750 110.40700 112,965.74 18,130.16 9,208.58 9.71 3.84
308,876.55 GNMA Pool #158992 9.000 6/15/2016 307,235.63 99.46875 110.40700 341,021.33 33,785.70 27,798.89 9.05 3.84
109,410.17 GNMA Pool #163336 9.000 7/15/2016 106,093.71 96.96878 110.40700 120,796.49 14,702.78 9,846.92 9.28 3.84
113,251.63 GNMA Pool #165863 9.000 8/15/2016 108,279.18 95.60938 110.40700 125,037.73 16,758.55 10,192.65 9.41 3.84
53,512.18 GNMA Pool #168530 9.000 8/15/2016 52,291.37 97.71863 110.40700 59,081.19 6,789.82 4,816.10 9.21 3.84
64,479.06 GNMA Pool #181945 9.000 4/15/2020 61,597.63 95.53122 109.40600 70,543.96 8,946.33 5,803.12 9.42 3.84
25,284.86 GNMA Pool #182127 9.000 11/15/2016 24,783.37 98.01664 110.40700 27,916.26 3,132.89 2,275.64 9.18 3.84
203,205.63 GNMA Pool #207671 9.000 7/15/2018 192,283.32 94.62500 110.40700 224,353.24 32,069.92 18,288.51 9.51 3.84
22,210.17 GNMA Pool #208705 9.000 5/15/2020 20,822.05 93.75007 109.40600 24,299.26 3,477.21 1,998.92 9.60 3.84
35,831.71 GNMA Pool #227210 9.000 9/15/2017 34,006.51 94.90619 110.40700 39,560.72 5,554.21 3,224.85 9.48 3.84
61,478.46 GNMA Pool #229798 9.000 10/15/2017 60,018.35 97.62501 110.40700 67,876.52 7,858.17 5,533.06 9.22 3.84
19,858.56 GNMA Pool #230557 9.000 4/15/2018 18,986.64 95.60935 110.40700 21,925.24 2,938.60 1,787.27 9.41 3.84
26,686.88 GNMA Pool #234695 10.000 12/15/2017 26,570.14 99.56256 112.87500 30,122.82 3,552.68 2,668.69 10.04 8.86
109,981.18 GNMA Pool #235280 9.000 4/15/2018 103,588.53 94.18751 110.40700 121,426.92 17,838.39 9,898.31 9.56 3.84
44,314.42 GNMA Pool #247096 9.000 5/15/2018 41,877.13 94.50001 110.40700 48,926.22 7,049.09 3,988.30 9.52 3.84
50,498.75 GNMA Pool #247310 9.000 4/15/2018 48,510.31 96.06240 110.40700 55,754.15 7,243.84 4,544.89 9.37 3.84
44,430.50 GNMA Pool #250933 9.000 6/15/2018 43,180.91 97.18754 110.40700 49,054.38 5,873.47 3,998.75 9.26 3.84
48,571.27 GNMA Pool #251643 9.000 4/15/2018 47,205.20 97.18749 110.40700 53,626.08 6,420.88 4,371.41 9.26 3.84
40,495.91 GNMA Pool #252138 9.000 10/15/2018 38,717.87 95.60933 110.40700 44,710.32 5,992.45 3,644.63 9.41 3.84
31,486.53 GNMA Pool #252306 9.000 4/15/2018 29,085.68 92.37499 110.40700 34,763.33 5,677.65 2,833.79 9.74 3.84
72,912.27 GNMA Pool #252538 9.000 5/15/2018 70,861.64 97.18754 110.40700 80,500.25 9,638.61 6,562.10 9.26 3.84
30,069.24 GNMA Pool #255161 9.000 3/15/2019 27,663.68 91.99993 110.40700 33,198.55 5,534.87 2,706.23 9.78 3.84
44,314.57 GNMA Pool #262845 9.000 3/15/2020 42,278.85 95.40621 109.40600 48,482.80 6,203.95 3,988.31 9.43 3.84
20,211.70 GNMA Pool #305689 9.000 4/15/2021 20,211.70 100.00000 109.53100 22,138.08 1,926.38 1,819.05 9.00 3.84
472,620.75 GNMA Pool #377589 7.500 8/15/2025 471,291.47 99.71874 106.43700 503,043.35 31,751.88 35,446.56 7.52 4.10
377,507.58 GNMA Pool #390014 7.000 6/15/2024 354,326.25 93.85937 104.37500 394,023.54 39,697.29 26,425.53 7.46 5.28
1,781,714.44 GNMA Pool #391992 7.000 3/15/2024 1,667,153.60 93.57019 104.37500 1,859,664.45 192,510.85 124,720.01 7.48 5.28
465,703.31 GNMA Pool #398831 8.000 8/15/2026 464,975.64 99.84375 107.00000 498,302.54 33,326.90 37,256.26 8.01 3.62
188,569.17 GNMA Pool #403979 8.500 10/15/2024 185,357.60 98.29687 107.93700 203,535.91 18,178.31 16,028.38 8.65 3.68
BOND PORTFOLIO
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS OWNED
JUNE 30, 2002
TOTAL U.S. TREASURY OBLIGATIONS
Page 50
Page 2 of 3
Book Current Gain or Annual Book
Par Value Security Coupon Maturity Book Cost Price Price Current Value (Loss) Income Yield YTM
BOND PORTFOLIO
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS OWNED
JUNE 30, 2002
276,867.49 GNMA Pool #406811 7.500 1/15/2026 276,521.44 99.87501 106.43700 294,689.45 18,168.01 20,765.06 7.51 4.10
581,059.05 GNMA Pool #427558 7.500 4/15/2026 579,334.04 99.70313 106.28100 617,555.37 38,221.33 43,579.43 7.52 4.10
426,947.81 GNMA Pool #432701 8.000 6/15/2026 426,947.81 100.00000 107.00000 456,834.16 29,886.35 34,155.82 8.00 3.62
1,568,877.46 GNMA Pool #434237 6.000 3/15/2029 1,452,927.58 92.60937 100.28100 1,573,286.01 120,358.43 94,132.65 6.48 6.06
122,543.50 GNMA Pool #439645 8.000 9/15/2026 122,466.92 99.93751 107.00000 131,121.55 8,654.63 9,803.48 8.01 3.62
812,028.23 GNMA Pool #441619 7.500 11/15/2029 808,856.24 99.60937 105.46900 856,438.05 47,581.81 60,902.12 7.53 4.10
476,738.72 GNMA Pool #458918 7.000 8/15/2028 468,097.83 98.18750 103.93700 495,507.92 27,410.09 33,371.71 7.13 5.28
1,221,938.82 GNMA Pool #472997 7.000 6/15/2029 1,215,447.26 99.46875 103.81200 1,268,519.13 53,071.87 85,535.72 7.04 5.28
540,547.24 GNMA Pool #486761 7.000 12/15/2028 529,905.21 98.03125 104.11000 562,763.73 32,858.52 37,838.31 7.14 5.28
1,871,668.19 GNMA Pool #499907 7.000 5/15/2029 1,794,169.43 95.85938 104.06800 1,947,807.65 153,638.22 131,016.77 7.30 5.28
1,413,410.75 GNMA Pool #507496 7.000 6/15/2029 1,370,125.05 96.93750 103.81200 1,467,289.97 97,164.92 98,938.75 7.22 5.28
1,764,884.35 GNMA Pool #510958 7.000 5/15/2029 1,752,199.24 99.28125 103.81200 1,832,161.74 79,962.50 123,541.90 7.05 5.28
619,299.15 GNMA Pool #513367 7.000 8/15/2029 592,978.92 95.75000 104.06800 644,492.24 51,513.32 43,350.94 7.31 5.28
1,877,064.63 GNMA Pool #530611 6.500 5/15/2031 1,875,451.53 99.91406 102.00000 1,914,605.92 39,154.39 122,009.20 6.51 5.95
3,144,804.16 GNMA Pool #530631 6.500 6/15/2031 3,130,800.36 99.55470 102.00000 3,207,700.24 76,899.88 204,412.27 6.53 5.95
2,258,469.29 GNMA Pool #539629 6.500 4/15/2031 2,250,000.03 99.62500 102.00000 2,303,638.68 53,638.65 146,800.50 6.52 5.95
1,760,605.72 GNMA Pool #548963 6.500 3/15/2031 1,756,204.20 99.75000 102.00000 1,795,817.83 39,613.63 114,439.37 6.52 5.95
2,994,185.73 GNMA Pool #552514 6.500 4/15/2032 2,983,893.21 99.65625 102.00000 3,054,069.44 70,176.23 194,622.07 6.52 5.95
998,532.26 GNMA Pool #780220 7.500 8/15/2025 998,220.20 99.96875 106.39000 1,062,338.47 64,118.27 74,889.92 7.50 4.10
29,758,563.54 29,203,811.74 98.13582 30,867,401.60 1,663,589.86 2,071,018.88 7.09
CORPORATE BONDS
1,000,000.00 AGL CAPITAL TRUST 8.170 6/1/2037 1,017,704.12 101.77041 97.72500 977,250.00 (40,454.12) 81,700.00 8.03 8.37
1,500,000.00 AMERICAN UNITED LIFE INS CO 7.750 3/30/2026 1,423,922.73 94.92818 87.70200 1,315,530.00 (108,392.73) 116,250.00 8.16 9.01
2,750,000.00 ANTHEM INSURANCE COMPANY INC 9.000 4/1/2027 2,907,159.67 105.71490 111.00900 3,052,747.50 145,587.83 247,500.00 8.51 7.98
500,000.00 AT&T CORPORATES 8.350 1/15/2025 507,104.49 101.42090 76.17700 380,885.00 (126,219.49) 41,750.00 8.23 11.29
500,000.00 AT&T CORPORATES 6.500 3/15/2029 435,848.95 87.16979 65.13900 325,695.00 (110,153.95) 32,500.00 7.46 10.39
38,018.85 AUTO BOND RECEIVABLE TRUST 6.400 4/15/2001 38,018.85 100.00000 99.87500 37,971.33 (47.52) 2,433.21 6.40 -
1,000,000.00 BANC ONE CORP 8.000 4/29/2027 1,025,190.26 102.51903 112.09300 1,120,930.00 95,739.74 80,000.00 7.80 6.97
1,000,000.00 BANKERS TRUST CORP 144A 8.090 12/1/2026 1,000,000.00 100.00000 104.01700 1,040,170.00 40,170.00 80,900.00 8.09 7.72
500,000.00 DELTA AIRLINES SERIES 01-1B 7.711 9/18/2011 497,648.89 99.52978 103.85400 519,270.00 21,621.11 38,555.00 7.75 7.12
1,000,000.00 FARMERS INSURANCE EXCHANGE 8.625 5/1/2024 928,680.84 92.86808 93.52400 935,240.00 6,559.16 86,250.00 9.29 9.32
1,000,000.00 FIRST HAWAIIAN CAPITAL TRUST 8.343 7/1/2027 1,052,895.96 105.28960 105.69400 1,056,940.00 4,044.04 83,430.00 7.92 7.82
500,000.00 FIRST UNION CAPITAL II 7.950 11/15/2029 453,169.83 90.63397 107.82600 539,130.00 85,960.17 39,750.00 8.77 7.29
500,000.00 FORD HOLDINGS INC 9.375 3/1/2020 561,847.00 112.36940 114.09800 570,490.00 8,643.00 46,875.00 8.34 7.88
1,000,000.00 FORD MOTOR COMPANY 9.500 9/15/2011 999,622.17 99.96222 113.07200 1,130,720.00 131,097.83 95,000.00 9.50 7.48
500,000.00 FORD MOTOR CREDIT 7.250 10/25/2011 508,732.04 101.74641 99.93700 499,685.00 (9,047.04) 36,250.00 7.13 7.26
1,000,000.00 GENERAL AMERICAN LIFE INSURANCE CO7.625 1/15/2024 894,186.05 89.41861 103.25400 1,032,540.00 138,353.95 76,250.00 8.53 7.32
1,000,000.00 GOODRICH CORPORATION 7.100 11/15/2027 910,102.27 91.01023 94.56000 945,600.00 35,497.73 71,000.00 7.80 7.59
920,000.00 GTE CORPORATION 7.900 2/1/2027 898,562.48 97.66983 94.97300 873,751.60 (24,810.88) 72,680.00 8.09 8.39
500,000.00 HUNTINGTON BANKS SUB NTS 6.600 6/15/2018 458,452.82 91.69056 97.26200 486,310.00 27,857.18 33,000.00 7.20 6.88
TOTAL FEDERAL AGENCY OBLIGATIONS
Page 51
Page 3 of 3
Book Current Gain or Annual Book
Par Value Security Coupon Maturity Book Cost Price Price Current Value (Loss) Income Yield YTM
BOND PORTFOLIO
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS OWNED
JUNE 30, 2002
2,000,000.00 JOHN HANCOCK MUTUAL LIFE INS CO 7.375 2/15/2024 1,887,045.31 94.35227 104.45500 2,089,100.00 202,054.69 147,500.00 7.82 6.97
1,000,000.00 JPM CAPITAL TRUST II 7.950 2/1/2027 1,040,641.26 104.06413 103.46200 1,034,620.00 (6,021.26) 79,500.00 7.64 7.64
2,000,000.00 KEY CORP CAPITAL III 7.750 7/15/2029 1,911,172.09 95.55860 99.60300 1,992,060.00 80,887.91 155,000.00 8.11 7.79
1,000,000.00 LEHMAN BROTHERS HOLDINGS INC 8.800 3/1/2015 1,093,791.06 109.37911 117.21200 1,172,120.00 78,328.94 88,000.00 8.05 6.74
1,000,000.00 LIBERTY MUTUAL INSURANCE 7.875 10/15/2026 941,690.64 94.16906 91.95800 919,580.00 (22,110.64) 78,750.00 8.36 8.67
3,000,000.00 LUMBERMANS MUTUAL CASUALTY CO 9.150 7/1/2026 3,412,662.00 113.75540 90.88100 2,726,430.00 (686,232.00) 274,500.00 8.04 10.17
1,000,000.00 MERRILL LYNCH & COMPANY 8.000 6/1/2007 1,000,000.00 100.00000 112.28000 1,122,800.00 122,800.00 80,000.00 8.00 5.18
2,000,000.00 NATIONWIDE MUTUAL INS CO 7.500 2/15/2024 1,903,828.61 95.19143 96.35200 1,927,040.00 23,211.39 150,000.00 7.88 7.85
927,506.67 NORTHWEST AIRLINES 7.935 4/1/2019 1,012,880.48 109.20466 105.92500 982,461.44 (30,419.04) 73,597.65 7.27 7.32
1,000,000.00 PMI CAPITAL 8.309 2/1/2027 1,028,796.97 102.87970 93.08300 930,830.00 (97,966.97) 83,090.00 8.08 9.01
1,000,000.00 PRINCIPAL MUTUAL LIFE INSURANCE CO 7.875 3/1/2024 956,864.54 95.68645 103.70100 1,037,010.00 80,145.46 78,750.00 8.23 7.53
1,000,000.00 ROCKWELL INTERNATIONAL 6.700 1/15/2028 911,104.15 91.11042 95.48100 954,810.00 43,705.85 67,000.00 7.35 7.09
1,500,000.00 SAFECO CAPITAL TRUST 8.072 7/15/2037 1,509,228.49 100.61523 94.86000 1,422,900.00 (86,328.49) 121,080.00 8.02 8.54
1,000,000.00 SEARS ROEBUCK & CO. 9.375 11/1/2011 1,000,000.00 100.00000 119.05300 1,190,530.00 190,530.00 93,750.00 9.38 6.64
1,000,000.00 SECURITY MUTUAL LIFE NEW YORK 9.375 12/15/2016 1,098,869.73 109.88697 102.40000 1,024,000.00 (74,869.73) 93,750.00 8.53 9.07
1,000,000.00 SECURITY NATIONAL MORTGAGE 99-1 8.353 9/25/2030 1,000,000.00 100.00000 102.68000 1,026,800.00 26,800.00 83,530.00 8.35 8.11
727,490.88 SECURITY NATIONAL MORTGAGE LOAN 7.870 8/25/2030 727,490.88 100.00000 105.98400 771,023.93 43,533.05 57,253.53 7.87 7.37
1,000,000.00 SOUTHERN COMPANY CAPITAL TRUST 8.190 2/1/2037 1,073,834.32 107.38343 101.93000 1,019,300.00 (54,534.32) 81,900.00 7.63 8.02
1,000,000.00 STANDARD CHARTERED BANK 8.000 5/30/2031 1,045,339.80 104.53398 102.61100 1,026,110.00 (19,229.80) 80,000.00 7.65 7.77
627,000.00 UNION CARBIDE CORP 7.875 4/1/2023 606,254.19 96.69126 98.08200 614,974.14 8,719.95 49,376.25 8.14 8.07
1,000,000.00 UNION CENTRAL LIFE 8.200 11/1/2026 1,010,951.76 101.09518 100.80300 1,008,030.00 (2,921.76) 82,000.00 8.11 8.12
500,000.00 US WEST COMMUNICATIONS 7.500 6/15/2023 477,466.55 95.49331 70.19000 350,950.00 (126,516.55) 37,500.00 7.85 11.22
1,000,000.00 USF&G CAPITAL II, SERIES B 8.470 1/10/2027 1,094,590.00 109.45900 100.50500 1,005,050.00 (89,540.00) 84,700.00 7.74 8.42
1,000,000.00 WORLDCOM INC. 8.250 5/15/2031 1,020,971.26 102.09713 15.75000 157,500.00 (863,471.26) 82,500.00 8.08 52.38
1,000,000.00 ZURICH CAPITAL TRUST I 8.376 6/1/2037 1,012,878.52 101.28785 94.67700 946,770.00 (66,108.52) 83,760.00 8.27 8.87
45,990,016.40 46,297,202.03 100.66794 45,293,654.94 (1,003,547.09) 3,748,860.64 8.10 8.15
80,748,579.94 BOND PORTFOLIO TOTALS 80,466,774.32 99.65101 82,781,066.54 2,314,292.22 6,247,379.52 7.76 6.88
TOTAL CORPORATE BONDS
Page 52
Date Interest Maturity Amount of Maturity
Acquired Description Rate Date Cost Interest Value
6/24/2002 TRANSAMERICA ASSET FUNDING 1.810 7/1/2002 2,499,120.14 879.86 2,500,000.00
6/28/2002 EMINENT FUNDING 2.100 7/1/2002 499,912.50 87.50 500,000.00
6/26/2002 NEPTUNE FUNDING 1.860 7/2/2002 499,845.00 155.00 500,000.00
6/27/2002 STARBIRD FUNDING CORPORATION 1.930 7/2/2002 1,999,463.89 536.11 2,000,000.00
6/24/2002 BEETHOVEN FUNDING CORPORATION 1.830 7/8/2002 2,498,220.83 1,779.17 2,500,000.00
6/25/2002 WORLD OMNI VEHICLE LEASING 1.840 7/9/2002 999,284.44 715.56 1,000,000.00
6/25/2002 THUNDER BAY FUNDING 1.820 7/9/2002 999,292.22 707.78 1,000,000.00
6/27/2002 THREE CROWNS FUNDING 1.850 7/10/2002 499,665.97 334.03 500,000.00
TOTALS 10,494,804.99 5,195.01 10,500,000.00
ELECTED OFFICIALS' RETIREMENT PLAN
CORPORATE NOTES
STATE OF ARIZONA
INVESTMENTS OWNED
JUNE 30, 2002
Page 53
Page 1 of 3
Div Book Cost Market Annual Gain or (Loss)
Description Rate per Share Book Cost Price Market Value Income Amount
74,000 ABBOTT LABORATORIES 0.94 11.3534 840,149.75 37.6500 2,786,100.00 69,560.00 1,945,950.25
52,000 ADOBE SYSTEMS 0.05 34.2924 1,783,207.10 28.5000 1,482,000.00 2,600.00 (301,207.10)
14,000 ALBERTO CULVER CO 0.36 54.3177 760,447.26 47.8000 669,200.00 5,040.00 (91,247.26)
63,000 ALLSTATE CORPORATION 0.84 22.2783 1,403,533.34 36.9800 2,329,740.00 52,920.00 926,206.66
37,000 ALLTEL CORPORATION 1.36 64.6388 2,391,634.21 47.0000 1,739,000.00 50,320.00 (652,634.21)
59,000 AMERICAN EXPRESS 0.32 34.9620 2,062,758.79 36.3200 2,142,880.00 18,880.00 80,121.21
82,000 AMERICAN INT'L GROUP 0.19 23.4594 1,923,667.30 68.2300 5,594,860.00 15,580.00 3,671,192.70
11,000 AMERICAN STANDARD COMPANY INC - 76.5643 842,207.68 75.1000 826,100.00 - (16,107.68)
89,000 AMGEN - 38.8074 3,453,856.43 41.8800 3,727,320.00 - 273,463.57
48,000 ANALOG DEVICES, INC. - 77.9262 3,740,455.90 29.7000 1,425,600.00 - (2,314,855.90)
85,800 APACHE CORPORATION 0.40 48.4493 4,156,953.00 57.4800 4,931,784.00 34,320.00 774,831.00
216,000 APPLIED MATERIALS - 8.7613 1,892,430.00 19.0200 4,108,320.00 - 2,215,890.00
29,000 BIOGEN INC - 49.4445 1,433,889.25 41.4300 1,201,470.00 - (232,419.25)
110,000 BJ SERVICES COMPANY - 38.0749 4,188,241.00 33.8800 3,726,800.00 - (461,441.00)
55,000 BJ'S WHOLESALE CLUB, INC. - 40.5154 2,228,346.10 38.5000 2,117,500.00 - (110,846.10)
65,000 BROADWING INC. - 24.5837 1,597,938.55 2.6000 169,000.00 - (1,428,938.55)
82,000 CABLEVISION SYSTEMS CORP - 44.9040 3,682,129.50 9.4600 775,720.00 - (2,906,409.50)
25,000 CANADIAN NATIONAL RAILWAY 0.55 47.1626 1,179,064.40 51.8000 1,295,000.00 13,750.00 115,935.60
14,000 CHEVRONTEXACO CORP 2.80 83.6971 1,171,759.20 88.5000 1,239,000.00 39,200.00 67,240.80
38,666 CHOICEPOINT INCORPORATED - 39.3995 1,523,421.20 45.4700 1,758,143.02 - 234,721.82
222,000 CISCO SYSTEMS - 8.6715 1,925,078.75 13.9500 3,096,900.00 - 1,171,821.25
138,833 CITIGROUP, INC. 0.72 43.1824 5,995,141.68 38.7500 5,379,778.75 99,959.76 (615,362.93)
143,000 COMCAST CORP. - 32.4440 4,639,486.28 23.8400 3,409,120.00 - (1,230,366.28)
15,000 CONSTELLATION ENERGY GROUP INC 0.96 43.8045 657,067.50 29.3400 440,100.00 14,400.00 (216,967.50)
185,500 COVAD COMMUNICATIONS GROUP - 42.1745 7,823,364.85 1.1800 218,890.00 - (7,604,474.85)
108,000 CYTYC CORPORATION - 16.7000 1,803,602.40 7.6200 822,960.00 - (980,642.40)
40,000 ELECTRONICS BOUTIQUE HOLDINGS CORP. - 36.7441 1,469,763.76 29.3000 1,172,000.00 - (297,763.76)
117,000 EMC CORP - 11.2874 1,320,623.39 7.5500 883,350.00 - (437,273.39)
88,000 EXPRESS SCRIPTS - 19.9878 1,758,922.85 50.1100 4,409,680.00 - 2,650,757.15
131,928 EXXON MOBIL CORP 0.92 31.4279 4,146,224.99 40.9200 5,398,493.76 121,373.76 1,252,268.77
29,000 FLEETBOSTON FINANCIAL CORPORATION 1.40 37.8054 1,096,357.40 32.3500 938,150.00 40,600.00 (158,207.40)
11,000 FORTUNE BRANDS, INC. 1.00 52.2001 574,201.10 56.0000 616,000.00 11,000.00 41,798.90
15,000 GENENTECH, INC. - 45.0459 675,688.50 33.5000 502,500.00 - (173,188.50)
29,000 GENZYME CORPORATION - 57.5882 1,670,056.65 19.2400 557,960.00 - (1,112,096.65)
42,000 GLOBALSANTAFE CORP 0.13 34.5314 1,450,316.80 27.3500 1,148,700.00 5,460.00 (301,616.80)
14,000 HEALTHSOUTH CORP - 15.0274 210,383.60 12.7900 179,060.00 - (31,323.60)
107,000 HOME DEPOT 0.20 10.1978 1,091,162.52 36.7300 3,930,110.00 21,400.00 2,838,947.48
Shares
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS OWNED
COMMON STOCK PORTFOLIO
JUNE 30, 2002
Page 54
Page 2 of 3
Div Book Cost Market Annual Gain or (Loss)
Shares Description Rate per Share Book Cost Price Market Value Income Amount
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS OWNED
COMMON STOCK PORTFOLIO
JUNE 30, 2002
117,000 INTEL CORPORATION 0.08 21.6650 2,534,800.53 18.2700 2,137,590.00 9,360.00 (397,210.53)
29,000 INTERNATIONAL BUSINESS MACH. 0.60 28.7280 833,112.19 72.0000 2,088,000.00 17,400.00 1,254,887.81
59,000 JABIL CIRCUIT - 22.8951 1,350,810.68 21.1100 1,245,490.00 - (105,320.68)
22,000 JACOBS ENGINEERING GROUP INC. - 30.2330 665,126.40 34.7800 765,160.00 - 100,033.60
81,000 JDS UNIPHASE CORPORATION - 71.3331 5,777,980.25 2.6700 216,270.00 - (5,561,710.25)
14,000 JOHNSON & JOHNSON CO 0.82 53.8504 753,905.60 52.2600 731,640.00 11,480.00 (22,265.60)
60,000 JP MORGAN CHASE & CO 1.36 52.0203 3,121,220.00 33.9200 2,035,200.00 81,600.00 (1,086,020.00)
44,000 KIMBERLY-CLARK CORPORATION 1.20 52.0765 2,291,364.27 62.0000 2,728,000.00 52,800.00 436,635.73
29,000 KINDER MORGAN, INC. 0.20 54.0719 1,568,085.80 38.0200 1,102,580.00 5,800.00 (465,505.80)
6,800 LANDSTAR SYSTEMS, INC - 105.5385 717,661.60 106.8500 726,580.00 - 8,918.40
25,000 LENNAR CORPORATION 0.05 43.6233 1,090,583.40 61.2000 1,530,000.00 1,250.00 439,416.60
37,000 LEXMARK INTERNATIONAL GROUP - 74.3478 2,750,867.20 54.4000 2,012,800.00 - (738,067.20)
97,000 LSI LOGIC - 37.8078 3,667,355.00 8.7500 848,750.00 - (2,818,605.00)
120,750 MBNA CORP 0.28 11.6355 1,404,991.51 33.0700 3,993,202.50 33,810.00 2,588,210.99
27,000 MEDIMMUNE, INC. - 58.2863 1,573,731.00 26.4000 712,800.00 - (860,931.00)
21,000 MICROCHIP TECHNOLOGY INC. - 25.8575 543,008.00 27.4300 576,030.00 - 33,022.00
74,000 MICROSOFT CORPORATION - 78.7175 5,825,098.10 54.7000 4,047,800.00 - (1,777,298.10)
14,098 MOHAWK INDUSTRIES - 71.0444 1,001,584.30 61.5300 867,449.94 - (134,134.36)
29,000 MOODY'S CORPORATION 0.18 35.8629 1,040,025.07 49.7500 1,442,750.00 5,220.00 402,724.93
44,000 NABORS INDUSTRIES, LTD - 54.5717 2,401,155.17 35.3000 1,553,200.00 - (847,955.17)
26,000 NATIONAL-OILWELL, INC. - 38.4161 998,819.20 21.0500 547,300.00 - (451,519.20)
18,000 NEWS CORPORATION 0.05 21.6933 390,479.77 22.9300 412,740.00 900.00 22,260.23
51,000 NOBLE CORPORATION - 44.8905 2,289,416.04 38.6000 1,968,600.00 - (320,816.04)
29,000 OXFORD HEALTH PLANS, INC. - 26.9898 782,702.80 46.4600 1,347,340.00 - 564,637.20
88,000 P.F. CHANG'S CHINA BISTRO - 26.6868 2,348,438.34 31.4200 2,764,960.00 - 416,521.66
13,000 PACTIV CORPORATION - 15.9962 207,950.10 23.8000 309,400.00 - 101,449.90
36,000 PEPSICO INC. 0.60 48.6453 1,751,229.57 48.2000 1,735,200.00 21,600.00 (16,029.57)
71,500 PFIZER INC. 0.52 27.6574 1,977,505.76 35.0000 2,502,500.00 37,180.00 524,994.24
30,000 PHARMACEUTICAL PRODUCT DEVELOPMENT, INC- 24.0344 721,032.30 26.3400 790,200.00 - 69,167.70
51,000 PLANTRONICS, INC. - 27.6455 1,409,922.97 19.0100 969,510.00 - (440,412.97)
15,000 QUALCOMM INCORPORATED - 45.6952 685,428.00 27.4900 412,350.00 - (273,078.00)
11,000 QUEST DIAGNOSTIC - 87.0809 957,889.90 86.0500 946,550.00 - (11,339.90)
120,000 SAFEWAY INC - 32.1511 3,858,130.50 29.1900 3,502,800.00 - (355,330.50)
164,000 SANMINA CORP. - 26.3013 4,313,410.36 6.3100 1,034,840.00 - (3,278,570.36)
83,000 SCHOLASTIC CORPORATION - 26.1145 2,167,501.80 37.9000 3,145,700.00 - 978,198.20
50,500 SCP POOL CORPORATION - 26.9079 1,358,846.62 27.7600 1,401,880.00 - 43,033.38
14,000 SEARS, ROEBUCK AND COMPANY 0.92 56.3685 789,158.88 54.3000 760,200.00 12,880.00 (28,958.88)
Page 55
Page 3 of 3
Div Book Cost Market Annual Gain or (Loss)
Shares Description Rate per Share Book Cost Price Market Value Income Amount
STATE OF ARIZONA
ELECTED OFFICIALS' RETIREMENT PLAN
INVESTMENTS OWNED
COMMON STOCK PORTFOLIO
JUNE 30, 2002
51,000 SEI INVESTMENTS COMPANY 0.12 39.3668 2,007,704.40 28.1700 1,436,670.00 6,120.00 (571,034.40)
37,000 SEITEL, INC - 18.6955 691,732.40 1.0000 37,000.00 - (654,732.40)
44,000 SIEBEL SYSTEMS - 34.8956 1,535,404.60 14.2200 625,680.00 - (909,724.60)
89,000 SOLECTRON - 42.7172 3,801,831.20 6.1500 547,350.00 - (3,254,481.20)
43,000 SPRINT CORPORATION (PCS GROUP) - 26.7177 1,148,860.80 4.4700 192,210.00 - (956,650.80)
22,000 ST. JUDE MEDICAL - 81.5652 1,794,435.30 73.8500 1,624,700.00 - (169,735.30)
158,000 SYMANTEC CORPORATION - 25.1844 3,979,131.40 32.8500 5,190,300.00 - 1,211,168.60
40,000 T. ROWE PRICE GROUP INC 0.64 39.5794 1,583,176.90 32.8800 1,315,200.00 25,600.00 (267,976.90)
59,000 TARGET CORP 0.24 28.7453 1,695,974.03 38.1000 2,247,900.00 14,160.00 551,925.97
33,000 TENET HEALTHCARE CORPORATION - 46.5472 1,536,056.60 71.5500 2,361,150.00 - 825,093.40
37,000 TXU CORP 2.40 41.1039 1,520,844.71 51.5500 1,907,350.00 88,800.00 386,505.29
145,480 TYCO INTERNATIONAL LTD. 0.05 32.2399 4,690,260.12 13.5100 1,965,434.80 7,274.00 (2,724,825.32)
9,000 UNITED RENTALS, INC - 21.7481 195,732.90 21.8000 196,200.00 - 467.10
13,000 VALERO ENERGY CORPORATION 0.40 50.0294 650,382.20 37.4200 486,460.00 5,200.00 (163,922.20)
73,000 VISHAY INTERTECHNOLOGY INC - 26.0956 1,904,976.40 22.0000 1,606,000.00 - (298,976.40)
149,000 VODAFONE GROUP PLC 0.22 20.7764 3,095,682.56 13.6500 2,033,850.00 32,780.00 (1,061,832.56)
47,000 WALGREEN COMPANY 0.15 14.9566 702,958.99 38.6300 1,815,610.00 7,050.00 1,112,651.01
52,000 WAL-MART STORES 0.30 54.1842 2,817,577.20 55.0100 2,860,520.00 15,600.00 42,942.80
14,000 WATERS CORPORATION - 34.2985 480,179.00 26.7000 373,800.00 - (106,379.00)
7,000 WHIRLPOOL CORP 1.36 77.5316 542,720.92 65.3600 457,520.00 9,520.00 (85,200.92)
44,000 WILLIAMS COMPANIES, INC. 0.80 39.3771 1,732,593.36 5.9900 263,560.00 35,200.00 (1,469,033.36)
37,000 WORLDCOM INC. - 31.6305 1,170,329.06 0.8300 30,710.00 - (1,139,619.06)
COMMON STOCK PORTFOLIO TOTALS 187,762,407.01 162,637,826.77 1,154,947.52 (25,124,580.24)
Page 56
Current Gain or Annual Book
Security Coupon Maturity Book Cost Value Loss Income Yield
BRIDGE FINANCIAL LOANS
BRIDGE FINANCIAL--Dynamite Mtn. Ranch 12.750 6/30/2002 133,805.00 133,805.00 - 17,060.14 12.8%
BRIDGE FINANCIAL--Grand Inn 12.500 9/25/2000 110,000.00 110,000.00 - 13,750.00 12.5%
TOTAL BRIDGE FINANCIAL LOANS 243,805.00 243,805.00 - 30,810.14 12.6%
MISCELLANEOUS
PEBBLECREEK PROPERTIES 10.000 4/1/2005 10,000.00 10,000.00 1,000.00 10.0%
TOTAL MISCELLANEOUS 10,000.00 10,000.00 - 1,000.00 10.0%
253,805.00 253,805.00 - 31,810.14 12.5%
LLC
Desert Troon, LLC 1,240,000.00 1,240,000.00
Pivotal X, LLC 6,118,425.00 6,118,425.00
TOTAL LLC 7,358,425.00 7,358,425.00
TOTAL OTHER INVESTMENTS 7,612,230.00 7,612,230.00
STATE OF ARIZONA
TOTAL BEFORE LLC
ELECTED OFFICIALS' RETIREMENT PLAN
OTHER INVESTMENTS PORTFOLIO
INVESTMENTS OWNED
JUNE 30, 2002
Page 57
Page 58
ACTUARIAL SECTION
ELECTED OFFICIALS’ RETIREMENT PLAN
TWENTY-FIRST COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2002
Actuarial Certification Statement
Aggregate Actuarial Balance Sheet, June 30, 2002
Summary of Valuation Methods and Assumptions
Solvency Test
Summary of Active Member Data
Summary of Inactive Member Data
Schedule of Retirants and Beneficiaries
Schedule of Experience Gain / (Loss)
August 28, 2002
The Fund Manager
Arizona Public Elected Officials’ Retirement Plan
1020 East Missouri
Phoenix, Arizona 85014-2613
Attention: Jack Cross, Administrator
The purpose of the annual actuarial valuations of the Arizona Elected Officials’
Retirement Plan is to determine the liabilities and funding requirements for the
participating groups. We certify that the June 30, 2002 annual actuarial valuations
were made in accordance with recognized actuarial methods.
Data for the annual valuations was fur nished by the Administrator and was checked
by us for internal completeness and year to year consistency, but was not otherwise
audited. The actuary prepared all of the schedules in the Actuarial Section and the
Schedule of Funding Progress in the Financial Section of the Comprehensive Annual
F