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Home My WebLink About4.10 CT Investment Report 1998/99 ~ . ;; . CITY CLERK File # D~C2J[Q]-[3][(i] AGENDA STATEMENT CITY COUNCIL MEETING DATE: (July 20, 1999) SUBJECT: ~'^ City Treasurer's Investment Report For 4th Quarter 1998/99 Report Prepared by Fred Marsh, Finance Manager ATTACHMENTS: Quarterly Investment Report (June 30, 1999) Section I - Primary Investment Portfolio Section II - Listing of Supplemental Monies Under City Possession and/or Control '.i~Y RECOMMENDATION: Receive Report DESCRIPTION: The attached Investment Report details the City's investments as of June 30, 1999, in accordance with the Local Agency Investment Guidelines established by the State Treasurer. Section I of the Report focuses on the principal investment portfolio. Section II details funds held by Trustees and miscellaneous operating accounts. . The focus of the discussion in this report will be upon activity in the Primary Investment Portfolio. Changes in the investment portfolio and investment activity for the fourth quarter of Fiscal Year 1998/99 are discussed in the staff report below. INVESTMENT ACTIVITY IN FOURTH OUARTER FISCAL YEAR 1998/99 During the Fourth Quarter one security matured and two securities were removed from the portfolio due to early bond calls by the issuers. The following tables provide details on activity related to these investments: INVESTMENTS CALLED OR MATURED FOURTH QUARTER FISCAL YEAR 1998/99 ORIGINAL CALL INTEREST TYPE AMOUNT MATURITY DATE RATE Matured Federal Securities FNMA $1,000,000 4/11/99 N/A 6.430% Called Federal Securities FHLB $1,000,000 4/6/2000 4/6/99 5.750% FHLB $500,000 6/29/2001 6/29/99 6.250% As noted above FHLB exercised its rights to "call" the bond prior to the stated maturity date. The City received the full principal amount, as well as accrued interest through the date of the calls. However, this . results in the need to reinvest the funds at current market rates. COPIES TO: lTEMNO.~ K!-IG/cc-mtgslfonnslform-as.doc . ~ The proceeds from these investments, along with other available funds, were used to purchase three new securities during the period, as summarized in the table below: TYPE FEDERAL SECURITIES FHLB FHLMC FNMA INVESTMENTS PURCHASED FOURTH QUARTER FISCAL YEAR 1998/99 CALL INTEREST DATE RATE . AMOUNT MATURITY $2,000,000 $1,000,000 $1,000,000 12/10/2001 4/16/2003 4/5/2004 3/10/2000 N/A N/A 5.730% 5.700% 6.010% All of these securities were purchased at face value and one of the three had a call option, which means that it could be called by the issuer prior to the stated maturity date. If the security is called prior to the stated maturity date, the City receives the full face amount plus any accrued interest. The federal securities listed above are allowed under the City's current investment policy. The purchases extend the City portfolio in order to ladder the schedule of maturities. In the previous quarterly report the average maturity of all Government and Agency Securities was approximately 2.52 years. It is important to note that this relates solely to the portion of the portfolio which has investments with a stated term. The City maintains adequate funds in more liquid investments, which are deemed sufficient to meet cash flow needs. In the most recent quarter, the average maturity for the Federal Security portion of the portfolio increased to approximately 3.12 years as new federal securities with extended maturities were purchased. . DETAILED LISTING OF PRIMARY PORTFOLIO Government and Agency Securities represent approximately 29% of the Primary Portfolio. A detailed listing of each security is provided in Item 1. The market value of Federal Securities can fluctuate daily and values have been provided as reported by Union Bank of California as of June 30, 1999. The City portfolio assumes that the investments will be held to maturity and there is not an active attempt made to trade existing securities. The City has staggered the maturity dates within the portfolio and it is not anticipated that these funds will need to be called by the City prior to maturity. The Morgan Stanley Dean Witter US Government Securities Mutual Fund Investment represents approximately 4.7% of the City's total portfolio. The book value reported is based upon the "market value" as of June 30, 1998, as required by the Governmental Accounting Standards Board. During the 1998-99 Fiscal Year the City received $96,127 in dividends from this investment, resulting in an annualized yield of 5.877%. The market value of this investment fluctuates on a daily basis and as of June 30, 1999 was S60,982 less than the recorded 6/30/98 market value. The mutual fund may be redeemed without sales charges beginning in October of 1999. The Bank of America Pacific Horizons Money Market Mutual Fund has now been taken over by Nations Bank and is now called the Nations Bank Government Reserves Capital Fund. This is a money market fund which is allowed under the City's current investment policy. . '., -- ^.- . COMPOSITION OF PORTFOLIO - SOURCE OF FUNDS To provide an overview of the portfolio, the table shown on the following page shows the total investment balance as of June 30, 1999 by source. Comparison information is also shown for the previous quarter. Over 40% of the June 30th investment balance represented restricted Impact Fee Funds. It is important to keep in mind that this type of report is merely a snapshot on a particular day. Revenues as well as expenditures are not processed in equal monthly installments. PORTFOLIO COMPOSITION BY SOURCE OF FUNDS General Fund Current Quarter 6/30/99 Balance $18,010,409 % Total 52% Prior Quarter 3/31/99 Balance % Total 59% $17,684,746 Restricted - Special Revenue Funds (I.e. Gas Tax, Special Taxes) $1,526,239 4% $2,095,731 6% Restricted - Assessment District Funds (i.e. Landscape Maint & Debt Service) $359,013 1% $352,724 1% Restricted. Impact Fees $13,755,576 40% $10,844,613 31% Internal Service / Replacement Funds TOTAL $935,263 $34,586,500 3% 100% $864,671 $31,842,485 3% 100% . CHANGES IN THE TOTAL PORTFOLIO YIELD FROM THE PREVIOUS REPORT The total amount shown as invested in the Primary Investment Portfolio is $2,744,015 more than the amount shown at March 31, 1999. The amount invested in Federal Securities and Certificates of Deposit increased by approximately $1,496,015, while the City's combined investment in liquid investments including both the Local Agency Investment Fund (LAIF) and Pacific Horizons increased by $1,248,000. The increase primarily reflects the receipt of property taxes during the quarter. Overall, the combined rate for the total portfolio decreased slightly from 5.399% at March 31, 1999 to 5.332% at June 30, 1999. The decrease was attributable to the maturity and call ofthree federal securities with higher rates during the quarter. Due to market changes opportunities for investment produced a lower yield. This was also the case for the LAIF operated by the State Treasurer. The quarterly average for the City's LAIF investment was 5.099% as of June 30, 1999, which was lower than the 5.190% rate recorded for the quarter ending March 31, 1999. LAIF is a liquid investment, and the current LAIF rate remains very favorable compared to rates offered on investments, which have less flexibility. The City Treasurer believes that the schedule of investments, including the dates of maturity, contain adequate cash flow liquidity to meet anticipated expenditures over the next six months. The investments and the schedule of investments are in compliance with the City's investment policy and all applicable laws and regulations. . -'3- . . . /db y CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION I PRIMARY INVESTMENT PORTFOLIO ;2 '<1S t, CITY OF DUBLIN DETAILED LISTING OF INVESTMENTS INCLUDING RATE OF RETURN AS OF JUNE 30, 1999 . COUPON MATURITY VALUE AT INTEREST BOOK MARKET INVESTMENT DATE MA TURITY RATE YIELD VALUE VALUE (0' FEDERAL SECURITIES FNMA (Callable] ]/8/99) ] 1/8/00 ] ,000,000.00 6.220% 6.220% 1,003,750.00 1,000,940.00 FHLB (Callab]e 6/29/99) ] 2/29/00 ] ,000,000.00 5.1 00% 5.100% ] ,000,000.00 990,310.00 FHLB (Callab]e 3/10/2000) ]2/1 0/0] 2,000,000.00 5.730% 5.730% 2,000,000.00 1,985,620.00 FHLB (Callable] 1/26/98) 3/12/02 ] ,000,000.00 5.410% 5.750% ] ,000,000.00 985,940.00 FHLB (Callable] ]/26/98) 6/28/02 ] ,000,000.00 5.435% 5.435% 1,000,000.00 982,] 90.00 FHLMC 4/1 6/03 ] ,000,000.00 5.700% 5.700% ] ,000,000.00 982,500.00 FHLMC (Callable 4/13/99) 1/13/04 ] ,000,000.00 6.000% 6.000% ],000,000.00 981,090.00 FNMA (Callable 5/19/99) 2/1 9/04 ],000,000.00 6.000% 6.000% 1,000,000.00 982,660.00 FNMA 4/5/04 ] ,000,000.00 6.010% 6.010% 1,000,000.00 977,]90.00 TOTAL FEDERAL SECURITIES $10,000,000.00 5.768% $10,003,750.00 $9,868,440.00 CERTIFICATES OF DEPOSIT. FDIC INSURED First Republic Trust & Loan 3/7/2000 95,000.00 5.500% 5.500% 95,000.00 95,000.00 Sanwa Bank ] 2/9/99 99,000.00 5.600% 5.600% 99,000.00 99,000.00 TOTAL CERTIFICATES OF DEPOSIT $194,000.00 5.55]% $194,000.00 $194,000.00 MUTUAL FUNDS $5,00. Nations Bank Government Reserves 5,000.00 4.604% $5,000.00 Capital Fund Morgan Stanley Dean Witter U.S. Govt Securities See Note I 5.877% (2) $],635,749.56 $1,574,767.67 POOLED PUBLIC AGENCY INVESTMENTS State of CA.- Local Agency Investment Fund (LAIF) $22,748,000.00 5.099% (3) $22,748,000.00 $22,748,000.00 TOTAL INVESTED PORTFOLIO 5.332% 534,586,499.56 534,390,207.67 NOTES: (I) A Mutual Fund investment does not have a stated date of maturity and shares may be sold at any time. The share price at the time of a sale may be either higher or lower than the original cost. The current City investment strategy assumes that approximately $1 million will be held through July I, 1999 and the remainder through October I, 1999 to avoid any deferred sales charge. (Original purchase cost was $1,699,995). The Book Value reflects the market value on June 30, 1998, as required by current governmental accounting rules. (2) Interest Rate shown is based on dividends received this fiscal year to date, which are annualized and then divided by the original investment. (3) Interest Rate shown is the monthly average as of June 30, 1999. (4) Market Value shown for the Federal Securities is as of June 30, 1999. . ITEM 1 ~ " . -'2 J' f:, /' -J CITY OF DUBLIN SUMMARY OF INVESTMENT PORTFOLIO COMPARISON BY INVESTMENT TYPE AS OF JUNE 30, 1999 e TYPE OF INSTRUMENT Federal Home Loan Bank (FHLB) Federal Home Loan Mortgage Corp (FHLMC) Federal National Mortgage Assn (FNMA) SUB -TOTAL GOVT/AGENCY Certificates of Deposit - FDIC Insured Mutual Funds - Morgan Stanley Dean Witter U.S. Govt Securities (.) Nations Bank Government Reserves Capital Fund eLA1F GRAND TOTAL NOTES: MARKET %OF MATURITY FACE VALUE BOOK VALUE VALUE PORTFOLIO YEARS 5,000,000.00 5,000,000.00 4,944,060.00 50.0% 2.42 2,000,000.00 2,000,000.00 1,963,590.00 20.0% 2.27 3,000,000.00 3,003,750.00 2,960,790.00 30.0% 3.59 10,000,000.00 10,003,750.00 9,868,440.00 (I) 28.9% 3.12 194,000.00 194,000.00 194,000.00 0.6% 0.56 1,635,749.56 1,635,749.56 1,574,767.67 (2) 4.7% 5()) 5,000.00 5,000.00 0.0% NIA 5,000.00 22,748,000.00 22,748,000.00 22,748,000.00 N/A 65.8% $34,582,749.56 $34,586,499.56 $34,390,207.67 100.0% (I) The City intends to hold the investments until maturity or until market values equal or exceed their face value. Market Value shown is as of June 30,1999. (2) Market value is based upon the shares invested at share price as of June 30, 1999. Ifthe shares were liquidated a deferred sales charge would apply. Face Value is shown as the value recorded in the General Ledger based on the market value 6/30/98. (3) As a mutual Fund shares can typically be liquidated at any time. The weighted average maturity stated in this chart was calculated by Dean Winer based upon all investment instruments owned by the U.S. Government Securities Mutual Fund as of June 30, 1998. This figure represents the duration factor for the Fund and it was reduced from the figure reported for 1997. (4) The current City investment strategy assumes that approximately $1 million will be held through July I, 1999 and the remainder through October I, 1999 to avoid any deferred sales charge. e ITEM 2 !P .. _ . tj~b . CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION II LISTING OF SUPPLEMENTAL MONIES UNDER CITY POSSESSION AND/OR CONTROL . OPERATING FUNDS . SPECIAL FUNDS HELD BY TRUSTEES . . . . . . City of Dublin Report of Operating Funds On Hand As of June 30, 1999 5~,b In accordance with the California Government Code, the City Treasurer must disclose on a quarterly basis all monies in its possession. Monies considered invested, and not immediately necessary for current operations, are presented in a separate listing as part of the quarterly report. In the case of Operating Funds in bank accounts, the amount presented relates to the balance reported by the Financial Institution. IT IS IMPORTANT TO NOTE THAT THIS AMOUNT MAY REFLECT FUNDS REQUIRED TO COVER PAYMENTS ALREADY ISSUED AND CHECKS WHICH HAVE NOT CLEARED AS OF THE LAST DAY OF THE QUARTER. Therefore, these balances will fluctuate throughout the year. These funds are not subject to a specified maturity and the par value would be equivalent to the amount stated. Miscellaneous Cash Balance 06/30/99 Non-Categorized - Cash Petty Cash - City Petty Cash - Recreation Cash Register - (4 Locations) Subtotal $200.00 $200.00 $275.00 $675.00 . OPERATING CASH BALANCES - FINANCIAL INSTITUTIONS Balance 06/30/99 Annualized Rate of Interest BANK OF AMERICA- Collateralized Public Money Deposits In Accordance With California Government Code $2,702,409.86 See Note 1 Cal Fed- Regular Savings Account: FDIC Insured $ 1,015.50 2.02% Grand Total Amount Cash Balances: $2.703.425.36 Note 1: The City operating account is a corporate checking account, which includes monthly interest earnings which are at a variable rate. The interest earnings are credited against account charges and fees required to maintain the accounts. All interest earnings in excess of account charges are paid to the City on a monthly basis. . - SPECIAL FUNDS HELD BY TRUSTEES CITY OF DUBLIN DETAiLED LIS-rING OF INVESTMENTS INCLUDING RATE OF RETURN FOR TIlE QUARTER ENDING JUNE 30, 1999 l\1A TURlTY V ALUE AT DATE MATURITY COUPON INTERES1' RATE YIELD - - - -- - - - MUTUAL FUNDS Dublin Blvd AssesS1Uellt District First American Govt Obligation Fund See Note 1 4.40% (I) ^ ;IulUal fund does nol bave a staled mawrit)' "'Ie and shares can be snld al any lime. No'rES: . - - BOOK VALUE $150,308.33 - - MARKET VALUE - $150,308,33 . ~ ~. 0'-