Loading...
HomeMy WebLinkAbout2010-02-16; City Council; 20123; Annual Report of Investment Portfolio FY 06/30/09CITY OF CARLSBAD - AGENDA BILL 15 20.123AB# MTG. DEPT. Treasury 02/16/10 ANNUAL REPORT OF INVESTMENT PORTFOLIO FOR YEAR ENDED JUNE 30, 2009 DEPT. HEAD CITY ATTY. CITY MGR. 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, 2009 (FY 08-09). Assets in the investment portfolio totaled $567.7 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 73,392,667 46,457,900 5,218,256 277,016,839 124,814,864 26,088,798 20,054,637 (5,338,029) 567,705,932 Fund equity balances are restricted for various purposes as listed above. This represents an increase of $5 million from the previous fiscal year. Cash and investments comprise an estimated 33% of the total assets reported by the City and its agencies. It is estimated that the investment portfolio will decrease to $560 million by the end of FY09-10. For the last month of the fiscal year, the portfolio had a return of 2.97%. For the entire fiscal year, however, the portfolio averaged 3.7%. Cash interest income totaled $23.8 million in FY08-09 of which approximately $2.4 million went to the General fund. For the next fiscal year (FY09-10), it is expected that the average return for the portfolio will approximate 2.4%. EXHIBITS: 1. City Treasurer's Annual Report of Investment Portfolio for the fiscal year ended June 30, 2009. FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED DENIED CONTINUED WITHDRAWN AMENDED aaa D a CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHER -SEE MINUTES aa 5& Accepted Report DEPARTMENT CONTACT: Nancv.Sullivan@carlsbadca.gov 760-602-2473 City Treasurer's Annual Report of Investments For Fiscal Year Ended June 30, 2009 TABLE OF CONTENTS Page Letter of Transmittal 1 Market Review FY 08-09 2 Portfolio Analysis 3 Preview FY 09-10 7 Appendices: A: Risk Management and Disclosure 9 B: Portfolio Activities for Year Ended June 30, 2009 12 1635 Faraday Avenue, Carlsbad, CA 92008 Website: www.carlsbadca.aov Prepared by the Treasury Department City of Carlsbad Office of the Treasurer January 2010 Honorable Mayor, City Council, And Residents of the City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 City Treasurer Letter of Transmittal 2008-2009 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, 2009 (FY 08-09). 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 the fiscal year. 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, 2009. Comparisons are also made with the preceding fiscal years. Finally, a statement is offered regarding the prospects for the fiscal year 2009- 2010. Harold (Mac) McSherry7 City Treasurer 1635 Faraday Avenue • Carlsbad, CA 92008-7314 • (760) 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, 2009 FYOS-09 MARKET REVIEW Federal Funds Target Rate FY 08-09 3.00% i2.75% 2.50%2.25%2 on% 1 .75% 1.50% -1.25% 1.00% - 0.75% 0.50% - 0.25%0.00% - 2.00% 1.50% 1.00% | 0.25% Q.25% «*•"• ** <t* <X Federal flinds 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 08-09, the Federal Reserve reduced the federal funds rate from 2.00% to .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 decreased substantially over the course of the fiscal year. SHORT-TERM INTEREST RATES U.S. Treasury Instruments Fiscal Year 2008 - 2009 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN -*-Five Year -«• Two Year -*-6 Month JUL AUG SEP OCT NOV DEC J\N FEB MAR APR MAV JUIN 3.24 3.09 2.98 2.83 1.72 1.55 1.88 1.98 1.66 2.01 2.34 2.56 2.51 2.37 1.96 1.56 .90 .76 .95 .97 .80 .90 .92 1.11 1.86 1.95 1.61 .95 .33 .26 .34 .44 .42 .27 .28 .J4 YIELD CURVE 7/01/08, 12/30/08, 6/30/09 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. At fiscal year end the yield curve showed a relatively moderate upward slope. 10 Yr -07/01/2008 — 12/31/2008 —06/30/2009 1.731 .076 .178 2.616 .760 1.109 3.327 1.549 2.555 3.969 2.212 3.533 PORTFOLIO ANALYSIS INVESTMENT PORTFOLIO Dollar Amount of Assets (Fiscal Year End) $600.0 $550.0 $500.0 $450.0 $400.0 $350.0 $300.0 $250.0 $200.0 $150.0 $100.0 FY04-05 FY05-06 FY06-07 FY07-08 FY08-09 Total assets in the investment portfolio, based on cost, stood at $570.2 million at the end of the fiscal year; a $7.3 million increase. This increase includes interest earned, loan proceeds, and revenues in excess of expenses. CAS H& INVESTMENTS RELATIVE TO TOTAL ASSETS OF CITY AND ITS AGENCIES* FY 04-05 FY05-06 DTotal Assets FY06-07 FY07-08 FY08-W FY09-10 • Estimate• Cash Investments J *Source: Comprehensive Annual Financial Report - modified accmal basis. Note: Total Assets of City and Its Agencies is an estimated amoint for FY 09 & 10 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 08-09, cash and investments managed by the City Treasurer represent 33% of all assets reported by the City and its agencies. SOURCE OF POOL ASSETS (Dollar Amounts in JVIillions) 6/3O/O8 Special & Other$65.0Oeneral $69.0 $25.7 Agency & Int EnterpriseN/' $127.7 Total Investments - $562.4 Million C'apital 275 6/3O/09 Oeneral Special & Other* 73.3^-' A S 46.4 $ 46.2 ^^^vAAgency & Interr Knterprise $124.8 "apital $277 Total Investments - $567.7 Million The portfolio is an internal investment pool calculated 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 calculated at amortized costs are the Capital Projects fund 49%, the Enterprise fund 22%, and the General fund 13%. 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) 6/30/08 6/30/09 Corporate $879LAIF/Cash $72.3 Federal Ag $ 402.7 Total $562,862,745 a LAIF/Cash a Federal Agency LAIF/Cash $54.6 US Treasury $81.7 Corporate $116.3 Federal Agency $317.6 On June 30, 2009, 56% of portfolio assets were invested in federal agencies, 20% in corporate notes, 14% in US Treasuries and 10% in LAIF and cash. The allocation of assets to federal agencies and LAIF decreased while the allocation to US Treasuries and corporate notes increased from the previous year. Within the asset category of federal treasuries and agencies, investments in Treasuries, Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation*, the Federal National Mortgage Association*, and the Federal Farm Credit Bank, constituted 14%, 27.5%, 10%, 7%, and 7% of the total, respectively. Federal agencies are creations of the U. S. Congress and include agencies and government-sponsored enterprises. * (in conservatorship by Federal Housing Financing Agency) Total $570,194,074 • Corporate 6 - [Perc'en 5 4 3 ' 2 ^.-- 1 r FY03-04 PORTFOLIO YIELDS With 6 Month T-Bill Yields tj , . - - *v^ — ^-. — •- ^ ' '"' '"••^•"' FY04-05 FY05-06 FY06-07 FY07-08 FY03-04 FY04-05 FY05-06 FY06-07 FY07-08 i -^-Portfolio ] 3.43 3.55 3.98 4.37 4.45 -.-T-Bill J 1.11 2.59 4.45 5.06 2.93 -~--« ^ * "» FY08-09 FY08-09 3.72 .75 The average return of the portfolio decreased to 3.72% from 4.45% the year before. The portfolio yield is heavily influenced by changes in short-term market interest rates since 23% of total investments were required to mature within one year. The average interest rate for six-month U.S. Treasury Bills decreased to .75% from 2.93% 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; commonly referred to 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. 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% -1.50% -2.00% -2.50% Historical Unrealized Gains/Losses as Percent of Amortized Cost July 2003 - June 2009 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 a slight unrealized gain of 1.5% on June 30, 2009. If interest rates remain stable, unrealized gains and losses will remain near the 0.00%. However, a downward trend will continue if rates increase or when current investments with higher interest rates are called and reinvested at today's significantly lower market rates. 6 Cash income from portfolio investments represents an annuity stream of revenues from the Treasury. This annuity stream totaled $23.8 million, a decrease of $2.2 million from the previous fiscal year. Of the total cash interest revenues earned by the portfolio, approximately $2.4 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 FY04-05 FY05-06 FY06-07 FY07-08 FY08-09 FY 09-10 PREVIEW National and international economic forces are the primary influences on U.S. market interest rates. Global Economy The global economy experienced a very sharp decline earlier this year. The North and South American, European, and emerging economies slowed significantly. The International Monetary Fund forecast global growth to increase from 1.4% to 2.5% percent this year. The Organization for Economic Co-operation and Development forecasts 2010 growth at 1.9% and 2011 growth at 2.5% with the recovery led by China. China, India and Russia, the fastest growing Asian economies last year, slowed significantly during the spring of 2009, but are currently accelerating. The United States economy contracted about 2.5% in the first half of 2009, and is estimated to grow between 2.1% and 3.0% in 2010. Emerging market economies will grow faster than industrialized economies. Core inflation globally is nearly 1.3%, emerging nations about 1.0%, and the United States is currently negative at -.2%. Massive debt spending in the U.S., Europe, and Asia; a weaker dollar, rising food and fluctuating oil prices are contributing to heightened inflation concerns. High unemployment, under employment and lower capacity utilization are signs of slower economic growth and counterbalance inflation concerns. Food and medical costs continue to increase resulting in less disposable income for the consumer. Less developed countries experienced cuts in world food subsidies while developed nations increased food subsidies to their own citizens. U.S. Economy The U.S. appears to have reached the bottom of this recession. The federal stimulus and Federal Reserve actions, many unprecedented, have created a recovery during the second half of 2009 and will likely continue the first two quarters of 2010. Continued recovery through 2010 is questionable. Should the economy slip back into recession, local governments will be severely burdened. Another stimulus from the Federal government may be required, increasing burdens' on the national debt and taxpayers. This uncertainty will cause the Federal Reserve to maintain the current low federal funds rate through June 2010. The high unemployment and flat economy will decrease government tax revenues with continued increases in Congressional spending. The result is increased borrowing by the U.S. (and Europe) at higher rates of interest. The U.S. Treasury may have to pay higher interest rates even if the economy stagnates. If the economy significantly improves in 2010, long term interest rates will rise faster than short term rates. City of Carlsbad Approximately $194 million of investments with fixed maturity dates will mature in FY 09-10. An additional $66 million will likely be called due to current low interest rates. Available proceeds from these investments will be reinvested at market rates lower than the maturing and called investments resulting in less revenue to the City. Revenue from our LAIF investments will further decrease as its interest yields decline. The City's investments in LAIF are being reduced. I believe LAIF has an increased risk exposure. The State of California may change current law and borrow LAIF's monies to solve its own fiscal crisis. At the end of FY 08-09, LAIF investments had a yield of 1.5%, and all other investments had a yield of 3.0%. I anticipate LAIF investment yield will decrease to .45% by the end of this fiscal year. Revenues on investments other than LAIF will decrease significantly due to unprecedented low interest rates. On June 30, 2009 the yield of the total portfolio averaged 3.7%. In fiscal year ending June 30, 2010, the total portfolio is projected to have an average yield of 2.4%. Total assets in the investment portfolio stood at $570 million at the end of FY 08-09. I anticipate an $11 million portfolio decrease in FY 09-10 excluding unforeseen and unplanned loans the State of California may mandate. Interest revenue earned from portfolio investments will approximate $18.0 million. In FY 09-10, interest income will continue to decline; property tax revenues; sales tax and transient occupancy tax revenues are projected to decrease by 6%, 13% and 11% respectively. The Carlsbad economy is fragile at this time with revenue streams difficult to predict. Continued caution is prudent. 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, 2009, the portfolio had the following investments and cash in its internal investment pool. Market Value Investment Maturities Market Value Gain (Loss) U. S. agencies July 2009 - May 2014 $403,796,000 $6,460,000 Corporate Notes July 2009-May 2014 117,185,000 1,415,000 Certif. of Deposit July 2009-March 2010 33,000 LAIF 52,612,000 69,000 Sweep accounts 1,328,000 Cash accounts 696.000 - Total $575,650,000 $7,944,000 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 $250,000 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. Unless otherwise exempted, California state code limits investments 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, 2009, ten investments in corporate notes had a credit rating below the AA limit. These investments were made when the credit rating were 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 these investments in the portfolio until maturity unless events indicate a sale should be made. The default credit risk for corporate notes with a credit rating of single A is higher than U.S. Treasuries, federal agencies or LAIF, but is considered by the City Treasurer to be within acceptable limits for purposes of holding to maturity. 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, 2009, the average maturity of the LAIF investments was 235 days. The State Treasurer is not required to contract for a credit rating to be assessed for LAIF. California state code section 16429.3 excludes LAIF deposits from being transferred, loaned, impounded or seized by any state agency or official. 10 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, 2009, approximately 20% 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, 2009, 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, 2009, the portfolio had a 1.0% gain 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 ($195,180,000). As of June 30, 2009, the modified duration of the portfolio was 1.478, within the required maximum of 2.2. Investments maturing within one year were $250,595,000, exceeding the required minimum of $130,120,000. The City's exposure to interest rate risk is within acceptable limits. Event Risk. Event risks include 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. Security risks are also within this category. 11 APPENDIX B: PORTFOLIO ACTIVITIES FOR FISCAL YEAR ENDED JUNE 30, 2009 The City's portfolio balance increased 1.3% from $562.9 million to $570.2 million in fiscal year 2008-09. The increase of $7.3 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 2008-09. Cash Flows: Bond Maturities $ 93,711,000 Bond Calls 139,916,000 Bond Sales LAIF Withdrawals 271,064,000 Sweep Withdrawals 562,914,000 Interest Income 23,858,000 Bond Purchases 261,119,000 LAIF Investments 253,562,000 Sweep Investments 560,674,000 Cash Investments (net) 31,000 Total $2.166.849.000 12 CITY TREASURER’S ANNUAL REPORT OF INVESTMENTS Fiscal Year Ended 6/30/09 (FY 08-09) U.S. MARKET REVIEW Fiscal Year Ended 6/30/09 Federal Funds Target Rate FY 08-09 2.00% 1.50% 1.00% 0.25% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 0.25% SHORT-TERM INTEREST RATES U.S. Treasury Instruments Fiscal Year 2008 -2009 0.000.501.001.502.002.503.003.504.004.505.005.50 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN Five Year Two Year 6 Month Percent JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN 3.24 3.09 2.98 2.83 1.72 1.55 1.88 1.98 1.66 2.01 2.34 2.56 2.51 2.37 1.96 1.56 .90 .76 .95 .97 .80 .90 .92 1.11 1.86 1.95 1.61 .95 .33 .26 .34 .44 .42 .27 .28 .34 YIELD CURVE 7/01/08, 12/31/08, 6/30/09 Market Rates 00.511.522.533.544.555.56 3 Mth 2 Yr 5 Yr 10 Yr 07/01/2008 12/31/2008 06/30/2009 3 Mth 2 Yr 5 Yr 10 Yr 1.731 2.616 3.327 3.969 .076 .076 1.549 2.212 .178 1.109 2.555 3.533 PORTFOLIO REVIEW INVESTMENT PORTFOLIO Dollar Amount of Assets (Fiscal Year End) $472.6 $512.0 $516.9 $556.5 $562.9 $570.2 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 $450.0 $500.0 $550.0 $600.0 FY03-04 FY04-05 FY05-06 FY06-07 FY07-08 FY08-09 Millions CASH & INVESTMENTS RELATIVE TO TOTAL ASSETS OF CITY AND ITS AGENCIES* $382 $390 $428 $468 $511 $503 $552 $561 $573 $560 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400 FY00-01 FY01-02 FY02-03 FY03-04 FY04-05 FY05-06 FY06-07 FY07-08 FY08-09 FY09-10 Cash/Investments Total Assets $1,730 $716 *Source: Comprehensive Annual Financial Report. Note: Total Assets of City and Its Agencies is an estimated amount for FY 09 & 10 $1,122 $1,548 $1,662 Estimate $ Millions $1,415 $1,712 $992$899 $789 Major Capital Project Expenditures FY 2008-2009 •Streets Poinsettia $ 1,553,000 Rancho Santa Fe Road 1,768,000 Pavement Management 2,503,000 Traffic Signals and Other 3,596,000 •Recycled Water N. Agua Hedionda Interceptor 2,695,000 Vista/Carlsbad Interceptor 1,070,000 Other 1,847,000 •Water Distributions 1,880,000 •Encina Water Pollution Control 1,434,000 •1st Repsponder Training Facility 1,191,000 SOURCE OF POOL ASSETS (Dollar Amounts in Millions) $69.0 $65.0 $ 275 $25.7 6/30/08 General Special & Other Capital Projects Enterprise Agency/Internal Total Investments -$562.4 Million $ 73.3 $ 46.4 $277 $124.8 $ 46.2 6/30/09 Total Investments -$567.7 Million $127.7 General Special & Other Capital Enterprise Agency & Internal General Special & Other Capital Enterprise Agency & Internal ANNUITY STREAM FROM TREASURY (Cash Interest Revenue) For Fiscal Years Indicated $18.37 $15.23 $15.68 $17.84 $21.76 $26.04 $23.80 $0.00 $3.00 $6.00 $9.00 $12.00 $15.00 $18.00 $21.00 $24.00 $27.00 FY02-03 FY03-04 FY04-05 FY05-06 FY06-07 FY07-08 FY08-09 Millions FY 09-10 PREDICTIONS •Short-term interest rates will decrease slightly •Yield curve will steepen •Average yield of portfolio for FY will be in 2.40% range (from 3.72%) •Investment portfolio will decrease 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 Questions Mac McSherry City Treasurer