Loading...
HomeMy WebLinkAbout2007-12-18; City Council; 19271; Annual Report of Investment Portfolio for 2007CITY OF CARLSBAD - AGENDA BILL 20 ./ X. AB# 19-271 MTG. 12/18/07 DEPT. Treasury ANNUAL REPORT OF INVESTMENT PORTFOLIO cf\D VCAD cKincrt ii IMC in tnmrUK YtAK tIMUcU JUINC oil, e\l\jf DEPT. HEAD ^fM% CITYATTY. <&*' CITY MGR. (jJ-~ RECOMMENDED ACTION: Accept and file report. ITEM EXPLANATION: City Policy requires the City Treasurer to render an annual report of the City's investment portfolio. This report is for the fiscal year ended June 30, 2007 (FY 06-07). Assets in the investment portfolio totaled $557 million at the end of the fiscal year. The equity portion of the various funds at the amortized value of the total portfolio is summarized below: Fund Equity in Pooled Investments Cash Balance by Fund: General Special Revenue Debt Service Capital Projects Enterprise Internal Service Agency Funds Reconciling Adjustments Total Treasurer's Investment Portfolio at Amortized Cost 75,867,066 37,944,378 2,381 ,749 246,655,698 146,179,515 22,441,194 26,300,748 (671,173) 557,099,175 Fund equity balances are restricted for various purposes as listed above. This represents an increase of $40 million from the previous fiscal year. Cash and investments comprise an estimated 36% of the total assets reported by the City and its agencies. It is estimated that the investment portfolio will increase to $560 million by the end of FY07-08. For the last month of the fiscal year, the portfolio had a return of 4.47%. For the entire fiscal year, however, the portfolio averaged 4.37%. Cash interest income totaled $21.8 million in FY06-07 of which approximately $2.7 million went to the General fund. For the next fiscal year (FY07-08), it is expected that the average return for the portfolio will approximate 4.25%. EXHIBITS: 1. City Treasurer's Annual Report of Investment Portfolio for the fiscal year ended June 30, 2007. FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED DENIED CONTINUED WITHDRAWN AMENDED D D Dn D CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHER - SEE MINUTES Council received the report. D Dn D DEPARTMENT CONTACT: Nancy Sullivan 760-602-2473 nsull@ci.carlsbad.ca.us CITY TREASURER'S ANNUAL REPOR INVESTMENTS City Treasurer's Annual Report of Investments For Fiscal Year Ended June 30, 2007 TABLE OF CONTENTS Page Letter of Transmittal 1 Market Review FY 06-07 2 Portfolio Analysis 3 Preview FY 07-08 7 Appendices: A: Risk Management and Disclosure 9 B: Portfolio Activities for Year Ended June 30, 2007 12 1635 Faraday Avenue, Carlsbad, CA 92008 Website: www. ci. carlsbad. ca. us Prepared by the Treasury Department City of Carlsbad Office of the Treasurer November 2007 Honorable Mayor, City Council, And Citizens of the City of Carlsbad City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 City Treasurer Letter of Transmittal 2006-2007 Annual Report of Investments I am pleased to present the Annual Report of Investments for the City of Carlsbad for the fiscal year ended June 30, 2007 (FY 06-07). The report is intended to provide reliable information as a basis for reviewing portfolio performance and making management decisions. It also provides an archival reference. The City Treasurer is charged with the design of an effective cash management and investment program for the City of Carlsbad and all of its agencies. Among other activities, this includes arranging for banking services; forecasting all cash receipts and expenditures; investing all inactive cash; managing investment risk exposures; and reporting all investment activities. This report summarizes and analyzes the activities of the investment portfolio for FY 06-07. Total portfolio assets, investment portfolio relative to total city assets, source of portfolio assets, asset allocations, yield achieved, unrealized gains and losses, and cash revenues are presented. To give perspectives to these measurements, a summary of movements in global and U.S. economic, as well as market interest rates are provided for the fiscal year ended June 30, 2007. Comparisons are also made with the preceding fiscal years. Finally, a statement is offered regarding the prospects for the fiscal year 2007-2008 commencing July 1, 2007. Harold (Mac) McShercy Q'fy Treasurer / 1635 Faraday Avenue • Carlsbad, CA 92008-7314 • (76O) 602-2473 • FAX (760) 602-8556 www.ci.carlsbad.ca.us CITY TREASURER ANNUAL REPORT OF INVESTMENT PORTFOLIO FOR THE FISCAL YEAR ENDED JUNE 30, 2007 FY06-07 MARKET REVIEW Federal Funds Target Rate FY 06-07 5.50% - 5.00% - 4.50% - 4.00% - 3.50% - 3.00% - X' 5.25% 5.25% 5.25% X Federal funds rate is a key money market rate that correlates with rates of other short term credit arrangements. It is the interest rate that banks charge each other for overnight loans. In fiscal year 06-07, the Federal Reserve maintained the federal funds rate at 5.25%. Changes in short- term market interest rates are usually affected by the actions of the Federal Reserve. Six-month, two year, and five year market rates fluctuated moderately over the course of the fiscal year. Longer term market rates were flat and relatively unaffected by the lack of action of the Federal Reserve. SHORT-TERM INTEREST RATES U.S. Treasury Instruments Fiscal Year 2006-2007 1 Percent I 5.00 ;^.J ~ .SO .UU i JUL AUG S —•—Five Year— • -Two Year— *— 6 Month A * A A * * A _ EP OCT NOV DEC JAN FEB MAR JUL AUG SEP OCT NOV DEC JAN FEB MAR 4.90 4.69 4.58 4.56 4.44 4.69 4.80 4.52 4.53 4.95 4.78 4.68 4.69 4.61 4.81 4.92 4.64 4.57 5.14 5.10 5.00 5.11 5.08 5.08 5.14 5.11 5.06 "*<**• — » APR MAY JUN APR MAY JUN 4.51 4.85 4.89 4.59 4.91 4.84 4.99 4.95 4.97 The yield curve is a graphic presentation of the difference between short-term and longer- term interest rates of U.S. Treasury instruments on a given day. Financial analysts use it to assess the market's expectation of recession or inflation. The normal shape of the yield curve has a moderately upward slope, with short-term rates lower than longer-term rates. If the upward slope steepens, the financial markets believe inflation may occur. An inverted yield curve is when short-term market rates are greater than longer-term market rates. An inverted curve indicates that the financial markets expect a slower economy, if not a recession. This relatively flat yield curve indicates indecisiveness in the financial markets. YIELD CURVE 7/01/06, 12/31/06, 6/30/07 | Market Rates | 4.5 - 3.5 3 Mth 2 Yr 5 Yr 3Mth 2Yr 5Yr 10 Yr —•—07/01/2006 4.976 5.150 5.093 5.136 —A- 12/3 1/2006 5.006 4.808 4.692 4.702 - • - 06/30/2007 4.864 4.841 4.889 4.989 10 Yr PORTFOLIO ANALYSIS INVESTMENT PORTFOLIO Dollar Amount of Assets (Fiscal Year End) $600 FY04-05 FY05-06 Total assets in the investment portfolio stood at $557 million at the end of the fiscal year 06-07. This increase includes but is not limited to interest earned, loan proceeds, and revenues in excess of expenses. CASH & INVESTMENTS RELATIVE TO TOTAL ASSETS OF CITY AND ITS AGENCIES* FY02-03 FY03-04 FY04-05 FY05-06 FY06-07 FY07-08 I Cash/lnvestm ents QTotal Assets :e: Comprehensive Annual Financial Report. Note: Total Assets of City and hi Agencies Is an estimated amount for FYS 07 - 08 The City publishes a Comprehensive Annual Financial Report (CAFR) at the end of each fiscal year. Among other information, CAFR presents a balance sheet showing the total assets owned by the City and all its agencies. At the end of FY 06-07, cash and investments managed by the City Treasurer represent 36% of all assets reported by the City and its agencies. OF POOL ASSETS (Dollar Amounts in IVIillions) 6/3O/O6 General $67.8 Special & Other $38.4 General Agency "<SE I; 75-9 6/3O/O7 Special & Other $ 39.6 229.6 apital a* Agency & Inte; $131._Enterprise Total Investments - $515.9 Million $ 146.2 Enterprise Total Investments - $557.1 Million The portfolio is an internal investment pool that uses the inactive cash from the various funds of all City agencies, including the City, the Water District, and the Redevelopment Agency. The top three sources of portfolio assets are the Capital Projects fund ($246.7 million, 44% of the total), followed by the Enterprise fund ($146.2 million, 26% of the total), and the General fund ($75.9 million, 14% of the total). Together, these three funds account for 84% of total portfolio assets. Investments are made in financial instruments authorized by the City's Investment Policy and the California State Government Code. With the exception of bank deposits and deposits in the California State Local Agency Investment Fund (LAIF), all investments are in fixed-income instruments with known maturity dates. ASSET ALLOCATION (Dollar Amounts in Millions) UUF/CASH$26.1 FEDERAL AGENCY $438.2 6/30/06 CORPORATE 2.5 6/30/07 $44.9 FEDERAL Total $516,852,810 \ / \. S ^- - -^ Total $556,524,708 QLAIF/CASH •Corporate a Federal Agency At the end of FY 06-07 (June 30, 2007), 82% of portfolio assets were invested in federal agencies, 10% in corporate notes, and 8% in LAIF and cash. The allocation of assets to federal agencies decreased, while the allocation to cash and LAIF increased from the previous Within category fiscal year. the asset of federal agencies, investments in the Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and the Federal Farm Credit Bank, constituted 39%, 35%, 24%, and 2% of the total, respectively. Federal agencies are creations of the U. S. Congress and include agencies and government-sponsored enterprises. PORTFOLIO YIELDS With 6 Month T-Bill Yields . . -A FY01-02 FY02-03 FY03-04 FY04-05 FY05-06 FY06-07 FY01-02 FY02-03 5.28 4.24 2.16 1.28 FY03-04 FY04-05 FY05-06 FY06-07 3.43 3.55 3.98 4.37 1.11 2.59 4.45 5.06 The average return of the portfolio for FY 06-07 increased to 4.37% from 3.98% the year before. The portfolio yield is heavily influenced by changes in short-term market interest rates since approximately 21% of total investments were required to mature within one year. The average interest rate for six- month U.S. Treasury Bills increased to 5.06% from 4.45% the previous year. This graph shows the percent change in value of the portfolio over the last several years. Investments gain and lose value subsequent to purchase because of changes in market interest rates. When market interest rates decrease, investments made earlier at higher rates will gain value. The reverse is true when market interest rates increase. Accountants refer to these changes in value as unrealized gains and unrealized losses; newspapers report them as paper gains and paper losses. The gain/loss is not recognized until the investment is sold. Changes in value caused by changes in market interest rates are normal and are expected. Historical Unrealized Gains/Losses as Percent of Amortized Cost July 2002 - June 2007 4 AAO/.UUvo 3 RAO/ -.OUTo .00/0 * 2 RAO/ -.5070 2AAO/ -.00/0 1RAO/ ..OUTo IAAO/.OO/O ORAO/ -.OUTo O AAO/ -.OO/On RAO/ _-U.OU /O4 nno/ -•1 .UU /o 4 RAO/ -•l.DUvo O AAO/ --4.UU70 o RAO/ .-£.OU /o 1 AAO/ - /> /\/X ii i r^n Of>-* \f ^ ^s^. -•- Unreal GIL % \ t\J\^\ * \\ \ '^\\/ V^ \ s*\ /-*\ s \s ^\ s^^*^ ^~^^ ^**~~~^+-~ /'N* -O.UUyo Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 With a buy and hold policy, an objective of the City's Investment Policy is to achieve an average market rate of return over the economic cycle. The success in achieving this objective can be approximated with having unrealized gains and losses that are relatively equal over time. Tracking and measuring unrealized gains and losses could also reveal any presence of high-risk investments in the portfolio. The changes in asset values shown in the graph indicate that portfolio investments are within the acceptable interest rate risk identified in the City's Investment Policy. The total portfolio had less of an unrealized loss in FY 06-07 than in FY 05-06. This small unrealized loss occurred as investments with high interest rates matured and were reinvested in slightly lower market rates. It is likely that this gradual upward trend will continue in FY 07-08 as investments with higher interest rates are called and reinvested at today's lower market rates. Cash income from portfolio investments represents an annuity stream of revenues from the Treasury. This annuity stream totaled $21.76 million, an increase of approximately $3.9 million dollars from the previous fiscal year. Of the total cash interest revenues earned by the portfolio in FY 06-07, over $2.7 million was credited to the General fund. Cash income is a function of assets in the portfolio, the market interest rates at the time of the investments, and the interest payment schedules of the issues. ANNUITY STREAM FROM TREASURY (Cash Interest Revenue) For Fiscal Years Indicated $24.00 FV03-04 FWt-05 FVOS-06 FW6-07 FY 07-08 PREVIEW National and international economic forces are the primary influences on market interest rates. Global Economy The global economy is experiencing its strongest sustained growth in 30 years. Global growth remained above 5 percent in the first half of 2007. China's economy grew at 11.5% and, for the first time, was the largest contributor to global growth. India grew at 9% and Russia at 8%. These three countries accounted for one-half of last year's global growth. The United States grew at about 2.25% in the first half of 2007, and is expected to grow about 1.9% in 2008. Global growth for 2008 has been revised down from 5.25% to 4.75%. Emerging market economies will grow faster than industrialized economies. Core inflation globally is about 2.25%, emerging nations about 2.5%, and the United States is currently just below 2%. Rising food and oil prices are contributing to lower economic growth and heightened inflation world wide. Food prices will continue to increase due in part, to the increasing use of corn and other foods for bio-fuel. U.S. Economy It is anticipated that domestic economic growth will decline. A number of economists are predicting negative growth (recession) in 2008. This will cause the Federal Reserve to lower the federal funds rate. It is widely anticipated that the Federal Reserve will decrease the fed funds rate 100 basis points by fiscal year ending June 30, 2008. Inflation increases, significant decrease in corporate tax revenues and increased borrowing by the U.S. may require the Federal Reserve to increase interest rates even if the economy slows. Short-term market rates will decrease faster than long term rates resulting in a lower, closer to normal, yield curve. Approximately $123 million of investments with fixed maturity dates will mature in. FY 07-08. An additional $173 million may be called, and due to declining interest rates, about $120 million will be called. Available proceeds from these investments will be reinvested at market rates approximating the maturing investments and significantly lower than the called investments. Yields on our LAIF investments will decrease sharply as interest rates decline. At the end of FY 06-07, LAIF investments had a yield of 5.24%, and all other investments had a yield of 4.32%. A 4.0% yield approximates the historic average. LAIF investment yield will likely decrease to 4.5% through December 2007 and then decrease to 4.0% by the end of the FY 07-08. Yields by fiscal year end on investments other than LAIF will decrease slightly due to the higher yielding investments being called and reinvested at lower yields. Throughout the fiscal year ending June 30, 2007 the yield of the total portfolio averaged 4.37%. During fiscal year ending June 30, 2008, the total portfolio is projected to have an average yield of 4.25%. Total assets in the investment portfolio stood at $557 million at the end of FY 06-07. This is expected to increase slightly by the end of FY 07-08. Interest revenue earned from portfolio investments in FY 07-08 should approximate $22 million. Property tax revenues are projected to increase by 11%. Sales tax and transient occupancy tax (TOT) revenues are expected to increase by 2% and 6% respectively. 8 APPENDICES TO ANNUAL REPORT OF INVESTMENT PORTFOLIO APPENDIX A: RISK MANAGEMENT AND DISCLOSURE All investments are exposed to risk of some type. The objective of risk management is to identify the risks involved and establish acceptable levels of risks that are consistent with the City's investment objectives. Risk management includes managing, measuring, monitoring, and reporting the various risks to which portfolio investments are exposed. Portfolio investments are exposed to the following types of risks: A. Credit risk. a. Custodial credit risk. a) Investments. b) Deposits. b. Default credit risk. c. Concentration credit risk. B. Interest rate risk. C. Event Risk. As of June 30, 2007, the portfolio had the following investments and cash in its internal investment pool. Investment Maturities U. S. agencies July 2007 - April 2012 Corporate Notes July 2007 - Feb 2012 Certif. of Deposit July 2007 - March 2008 LAIF Sweep accounts Cash accounts Total Market Value $454,216,500 54,496,553 504,092 35,965,629 7,545,418 873.513 $553.618.075 Market Value Gain (Loss) $(2,913,251) (567,848) (16,371) $ (3.497.747) Disclosures Custodial Credit Risk (Investments). The City uses a third party custody and safekeeping service for its investment securities. The Union Bank of California (UBC) is under contract to provide these custodial services. Custodial credit risk is the risk that the City will not be able to recover the value of its investments in the event of a UBC failure. All City investments held in custody and safekeeping by UBC are held in the name of the City and are segregated from securities owned by the bank. This is the lowest level of custodial credit risk exposure. Custodial Credit Risk (Deposits). The City maintains cash accounts at Wells Fargo Bank (WFB) and UBC. At the conclusion of each business day, balances in these accounts are "swept" into overnight investments. These overnight investments are pooled and collateralized with either U. S. government securities or U. S. agency securities. The California Code authorizes this type of investment. A small amount of cash is not swept from the WFB checking accounts to cover checks that may be presented for payment. Amounts up to $100,000 are FDIC insured. Default Credit Risk. Default credit risk is the risk that the issuer of the security does not pay either the interest or the principal when due. The debts of most U. S. agencies are not backed by the full faith and credit of the federal government; however, because the agencies are U. S. Government-sponsored, they carry AAA credit ratings. The default credit risk of these investments is minimal. California state code limits investments in medium-term corporate notes to the top three credit ratings (AAA, AA, and A). It is the City's policy, however, to limit investments to the top two credit ratings (AAA and AA). As of June 30, 2007, one investment equal to approximately .5% of the investments in medium-term corporate notes had a credit rating below the AA limit set by the City's Investment Policy. This investment was made when the credit rating was either AAA or AA. California state code and the City's Investment Policy allow the City Treasurer to determine the course of action to correct exceptions to the Policy. It is the intent of the City Treasurer to hold this investment in the portfolio until maturity unless events indicate it should be sold. The default credit risk for corporate notes with a credit rating of single A is lower than U. S. federal agencies or LAIF, but is considered by the City Treasurer to be within acceptable limits for purposes of holding to maturity. A credit rating of single A is within State code requirements. The Local Agency Investment Fund (LAIF) is an investment pool managed by the California State Treasurer. Its investments are short-term and follow the investment requirements of the State. As of June 30, 2007, the average maturity of the LAIF 10 investments was 167 days. The State Treasurer does not contract for a credit rating to be assessed for LAIF. California state code section 16429.3 specifically excludes LAIF deposits from being transferred, loaned, impounded or seized by any state agency or official. The default credit risk of LAIF is minimal. Concentration Credit Risk. Concentration credit risk is the heightened risk of potential loss when investments are concentrated in one issuer. The California state code does not identify a specific percentage that indicates when concentration risk is present for any one issuer. The state code does, however, require that total investments in medium-term corporate notes of all issuers not exceed 30% of the portfolio. As of June 30, 2007, approximately 10% of the City's total portfolio investments were in medium-term corporate notes. For concentration of investments in any one issuer, the City's Investment Policy requires that no more than 5% of investments in corporate notes be in any one issuer. There is no similar requirement in either the state code or the City's Investment Policy for U. S. agencies. As of June 30, 2007, no investments in any one corporate issuer exceeded 5% of total portfolio investments. Interest Rate Risk. Interest rate risk is the risk that investments will lose market value because of increases in market interest rates. A rise in market interest rates will cause the market value of investments made earlier at lower interest rates to lose value. The reverse will cause a gain in market value. As of June 30, 2007, the portfolio had a .6% loss in market value. The City's investment policy has adopted two means of limiting its exposure to market value losses caused by rising market interest rates: (1) Limiting total portfolio investments to a maximum modified duration of 2.2, and (2) requiring maturing investments within one year be equal to an amount that is not less than 2/3 of the current operating budget ($171,800,000). As of June 30, 2007, the modified duration of the portfolio was 1.686, within the required maximum of 2.2. Investments maturing within one year were $167,046,000, exceeding the required minimum of $115,000,000. The City's exposure to interest rate risk is within acceptable limits. Event Risk. Event risk is the chance that something unexpected will impede the ability of an issuer of a security to meet its obligations. These types of risks are usually short in duration, but can impair the city's ability to communicate with or use banking services. Such an event could cause a delay in collecting securities which have matured. 11 APPENDIX B: PORTFOLIO ACTIVITIES FOR FISCAL YEAR ENDED JUNE 30, 2007 The City's portfolio balance increased 7.7% from $516.9 million to $556.5 million in fiscal year 2006-07. The increase of $39.6 million does little to show the volume of cash that flows in and out of the portfolio in the course of one fiscal year. The following table illustrates that the City Treasurer managed over two billion dollars of cash inflows and cash outflows which prompted investment decisions during fiscal year 2006-07. Cash Flows: Bond Maturities $ 97,268,000 Bond Calls 16,000,000 Bond Sales LAI F Withdrawals 152,121,000 Sweep Withdrawals 724,427,000 Interest Income 21,758,000 Bond Purchases 135,498,000 LAIF Investments 171,597,000 Sweep Investments 722,321,000 Cash Investments (net) (307.000) Total $2.040.683.000 12 ANNUAL REPORT OFINVESTMENTSFiscal Year Ended 6/30/07(FY 06-07)CITY TREASURER’S U.S.MARKET REVIEWFiscal Year Ended 6/30/07 Federal Funds Target RateFY 06-075.25%5.25%5.25%3.00%3.50%4.00%4.50%5.00%5.50%06/30/0612/13/0606/29/07 SHORT-TERM INTEREST RATESU.S. Treasury InstrumentsFiscal Year 2006 - 20073.003.504.004.505.005.50JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUNFive YearTwo Year6 MonthPercentJUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN4.90 4.69 4.58 4.56 4.44 4.69 4.80 4.52 4.53 4.51 4.85 4.894.95 4.78 4.68 4.69 4.61 4.81 4.92 4.64 4.57 4.59 4.91 4.845.14 5.10 5.00 5.11 5.08 5.08 5.14 5.11 5.06 4.99 4.95 4.97 YIELD CURVE7/01/06, 12/31/06, 6/30/07Market Rates11.522.533.544.555.563 Mth2 Yr5 Yr10 Yr07/01/200612/31/200606/30/20073 Mth 2 Yr 5 Yr 10 Yr4.976 5.150 5.093 5.136 5.006 4.808 4.692 4.7024.864 4.841 4.889 4.989 PORTFOLIO REVIEW INVESTMENT PORTFOLIODollar Amount of Assets (Fiscal Year End)$430.8$472.6$512.0$556.5$516.9$100.0$150.0$200.0$250.0$300.0$350.0$400.0$450.0$500.0$550.0$600.0FY02-03FY03-04FY04-05FY05-06FY06-07Millions CASH & INVESTMENTS RELATIVE TOTOTAL ASSETS OF CITY AND ITS AGENCIES*$428$468$511$503$557$560$0$200$400$600$800$1,000$1,200$1,400$1,600$1,800$2,000$2,200FY02-03 FY03-04 FY04-05 FY05-06 FY06-07 FY07-08Cash/InvestmentsTotal Assets$899$899$992$992$1,122$1,122$1,548$1,548$2,040$2,040Estimate*Source: Comprehensive Annual Financial Report. Note: Total Assets of City and Its Agencies is an estimated amount for FYS 07 - 08$ Millions$1,415 Major Capital Project ExpendituresFY 2006-2007•Encina Water Pollution Control5,446,000•Recycled Water Projects 2,857,000•StreetsCFD #3 Melrose/Palomar 5,296,000 Rancho Santa Fe Road 2,687,000Poinsettia Road 4,309,000Pavement Management 3,305,000 Traffic Signals and Other 6,130,000 •Parks Golf Course22,023,000Pine Avenue 1,057,000Other1,900,000•Storm, Sewer & Water Distrib5,875,000 SOURCE OF POOL ASSETS(Dollar Amounts in Millions)6/30/06$67.8$38.4$48.6$ 229.6GeneralSpecial & OtherCapital ProjectsEnterpriseAgency/InternalTotal Investments - $515.9 Million6/30/07$ 75.9$ 39.6$ 146.2$ 48.7$246.7Total Investments - $557.1 Million$131.5GeneralSpecial & OtherCapitalEnterpriseAgency & Internal GeneralSpecial & OtherCapitalEnterpriseAgency & Internal ANNUITY STREAM FROM TREASURY(Cash Interest Revenue)For Fiscal Years Indicated $18.37$15.23$15.68$21.76$17.84$0.00$3.00$6.00$9.00$12.00$15.00$18.00$21.00FY02-03 FY03-04 FY04-05 FY05-06 FY06-07Millions FY 07-08 PREDICTIONS• Short-term interest rates will decrease slightly• Yield curve will steepen slightly • Average yield of portfolio for FY will be in 4.25% range (from 4.37%)• Investment portfolio will increase to $560 million To Access Monthly and Annual Investment Reports• Go to: www.ci.carlsbad.ca.us• Click on: City Hall• Click On: City Treasurer QuestionsMac McSherryCity Treasurer