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Home My WebLink AboutStaff Report 314-10TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DATE: JULY 26, 2010 REPORT TYPE: INFORMATION DEPARTMENT: ADMINISTRATIVE SERVICES CMR:314:10 SUBJECT: City of Palo Alto's Investment Activity Report for the FOUl·th Quarter, Fiscal Year 2010 BACKGROUND The pmpose of this report is to inform Council of the City's investment portfolio status as of the end ofthe fourth quarter. The City's investment policy requires that staff report quarterly to Council on the City's portfolio composition compared to Council-adopted policy, portfolio performance, and other key investment and cash flow information. DISCUSSION The City's investment pOltfolio is detailed in Attachment B. It is grouped by investment type and includes the investment issuer, date of maturity, current market value, the book and face (par) value, and the weighted average maturity of each type of investment and of the entire portfolio. The par value of the City's portfolio is $345.6 million; in comparison, last quarter it was $331.4 million. The growth in the portfolio of$14.2 million since the last quarter primarily results from the timing of cash flows and bond reimbmsement of expenditures on the library and community center projects. For example, due to the timing of payroll periods the fourth quarter expenditmes were lower and propcrty tax receipts higher than the prior quarter. The portfolio consists of$25.4 million in liquid accounts and $320.2 million in U. S. government treasmy investments, agency securities, and certificates of deposit. The $320.2 million includes $87.5 million in investments maturing in less than two years, comprising 27.3 percent of the City's investment in notes and secUl1ties. The investment policy requires that at least $50 million be maintained in securities maturing in less than two years. The current market value of the portfolio is 104.9 percent of the book value. The market value of securities fluctuates, depending on how interest rates perform, when interest rates decrease, the market value of the securities in the City'S portfolio wi11likely increase; likewise, when interest rates increase, the market value of the securities will likely decrease. For example, say the City buys a five year bond for $1 million with a 4 pereent coupon or interest rate; then interest rates rise to 5 percent. Theoretically, if the City wants to sell this bond, who would buy it, when it is paying 1 percent below CMR: 314:10 Page 1 of4 market rates (4% vs. 5%)7 The deal would have to be sweetened so the buyer gets a market rate for the bond. The bond interest rate can't be changed. That's fixed at 4 percent. The City, however, can change the price taken for the bond. In this example, the City would sell the security for less then the face value or $800,000 resulting in a principal loss of $200,000 on the bond sale. This security's market value is 0.80 percent of book value and the buyer would get a 5 pereent yield ($40,000/$800,000). Understanding and showing market values is not only a reporting requirement, but essential to knowing the principal risks in actively buying and selling securities. It is important to note, however, that the City's practice is to buy and hold investments until they mature so chan&es in market price do not affect the City's investment principal. The market valuation is provided by Union Bank of California, which is the City's safekeeping agent. The average life to maturity of the investment portfolio is 3.63 years eompared to 3.55 years last quarter and 3.45 years in the last quarter of fiscal year 2009. Investments Made During the Fourth Quarter During the fourth quarter, $40.1 million of government agency seeurities with an average yield of 3.9% pereent matured. During the same period, government securities totaling $49.0 million with an average yield of 2.8% percent were purchased. As higher yielding maturing investments are re invested at lower interest rates, the portfolio's yield is expected to further decline in coming quarters. The City's short-term money market and pool account increased by $5.3 million compared to the third qumter. Investment staff continually monitors the City's sholt-term cash flow needs and adjusts liquid funds to meet those needs. Availability of Funds for the Next Six Months Normally, the flow of revenues from the City'S utility billings and General Fund sourees is sufficient to provide funds for ongoing expenditures in those respeetive funds. Projeetions indicate receipts will be $197.5 million and expenditures will be $190.0 million over the next six months, indicating an overall growth in the portfolio of $7.5 million. As of June 30, 2010, the City had $25.4 million deposited in the Local Agency Investment Fund (LAIF) and a money market account that could be withdrawn on a daily basis. In addition, investments totaling $23.2 million will mature between July I, 2010 and Deeember 31, 20 I O. On the basis of the above projeetions, staffis confident that the City will have more than sufficient funds or liquidity to meet expenditure requirements for the next six months. Staff will invest $13-$15 million of LAIF funds in longer-term investments during the first quarter of FY 2011. Compliance with City Investment Policy During the fourth quarter, staff complied with all aspects of the investment policy. Attachment C lists the restrictions in the City'S investment policy compared with the portfolio's actual performance. Investment Yields Interest income on an acerual basis for the fourth quarter was $3.2 million. This total is 8.6 pereent lower that what the City received in the fourth quarter of last fiscal year. This is a consequence of declining interest rates since last year. As of June 30, 2010, the yield to maturity of the City's pOltfolio was 3.68 pereent. This compares to a yield of 3.89 percent in the third quarter and 4.21 percent in the fourth qualter of2009. The portfolio yield is expected to deerease in future quarters as CMR: 314:10 Page 2 of 4 staff continues to re-invest higher-yielding maturing securities at lower interest rates. The City's portfolio yield of3.68 percent compares to LAIF's average yield for the quarter of 0.55 percent and an average yield on the two-year and five-year Treasury bonds during the fourth quarter of approximately 0.71 percent and 2.23 percent, respectively. Yield Trends In the last six quarters, the Federaf Open Market Committee (FOMC) maintained the historical low federal funds and discount rate at 0.25 and 0.75 percent, respectively. The FOMC has moderated its economic·outlook primarily due to European issues such as the Greek debt crisis and a slowing Euro zone economy. Domestically, the labor market has stabilized somewhat, business spending on equipment has increased, and inflation is under cqntroi. The FOMC still continues to believe, however, that lower rates are necessary for an extended period to stimulate the economy given the weak housing market, high employment, and businesses' reluctance to rehire workers. While most economists do not expect a "double-dip" recession, the economy remains weak and subject to downturn. Based on cun'ent interest rates, the City's portfolio's yield is expected to decline, in the near-term. Funds Held by the City or Managed Under Contract Attachment A is a consolidated report of all City investment funds, including those not held directly in the investment portfoHo. These include cash in the City's regular bank account with Wells Fargo. The bond proceeds, reserves, and debt service payments being hcld by the City's fiscal agents are subject to the requirements of the underlying debt indenture. 'Ibe trustees for the bond funds are U.S. Bank and Cafifornia Asset Management Program (CAMP). Bond funds with U.S. Bank are invested in federal agency and money market mutual funds that consist exclusively of U.S. Treasury securities. Bond funds in CAMP are invested in banker's acceptance notes, certificates of deposit, commercial paper, federal agency securities, and repurchase agreements. The most recent data on ftrnds held by the fiscal agent is as of June 30, 2010. FISCAL IMPACT This is an information report with no fiscaf impact resulting. ENVIRONMENTAL REVIEW There is no environmentaf review required for this report. ATTACHMENTS: A) Consolidated Report of Cash and Investments B) Investment Portfolio, as of June 30, 2010 C) Investment Policy Compliance CMR: 314:10 Page 3 of4 PREPARED BY: DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL:, CMR: 314:10 ~ TARUN NARAYAN Senior Financi l-Analyst L, .' Director, Adrbinistrative Services Page4of4 Consolidated Report City of Palo Alto Cash and Investments, Fourth Quarter, Fiscal Year 2009-10 (Unaudited) City Investment Portrollo (see Attachment B) Other Funds Held by the City Cash with Wells Fargo Bank (includes gcnernJ and imprest accounls) Investment wilb CAMP (University Ave. Parking Garages) Petty/Working Cash Total-Other Funds Held By City Funds Under Management of Third Party Trustees * (Debt Service Proceeds) US Bank Trust Services U 1995 Utility Revenue Bonds Debt Servjce Fund 1998 Golf Course Certificates of Participation Debt Service Lease Payment Funds 2002 Civic Center Certificates of Participation Reserve Fund $ Book Value 349,446,793 4,498,810 592,856 14,358 5,106,024 3 105 350,000 2002 Downtown Parking Impvt (Taxable) Certificates ofPartteipation Reserve Fund 237,950 Escrow Aecount for Partial Defeasance of Bonds 2002 Utmty Revenue Bonds Debt Servjec Fund 2009 Water Revenue Bonds (Build Ameriea Bonds) Project, Debt Serviee. Rcserye~ Cost ofIssllanec Funds 2010 General Obligation (Library) Bends Cost ofISSUflnec Fund Califomia Asset Mall.1gementProW.QJll {CAMP) ... 1998 Golf Course Certificates of Partieipation Reserve Fund mOl University Ave. Parking Bonds Reserve Fund 2002 University Ave, Parking Bonds Reserve and Admin. Funds 2002 Utility Revenue Bonds Reserve Funds 2010 General Obligation (Library) Bond Projeet FlUld Total Under Trustee Management GRAND TOTAL 762,094 76,145 30,374,210 140,898 687,749 630,465 3,2Q7,327 1,861,921 54,276,713 92,605,580 $ 447,158,398 • These funds are subject tu the requirements of the underlying debt indenture . Attachment A Market Value 366,561,436 4,498,810 592,856 14,358 5,106,024 J 105 350,000 237,950 762,094 76,145 30,374,210 140,898 687,749 630,465 3,207,327 1,861,921 54,276,713 92,605,580 $ 464,273,040 .. U.S, Bank investments are in money market mutual funds that exclusively invest in U,S. Treasury seeurities . ••• CAMP investments are in money market mutual iliad whieh invest in bankers acceptance, certificate of deposit, commcreial paper, federal agency securities. and repurchase agnx:ments. CUSIP Investment #- Certificates of Deposit -Bank 9244804531 9244804549 673 674 Managed Pool AccoUn1s SYS158 SYS159 168 159 Foderal Agency Issues -Coupon 307S9PAAO 31315PGE3 307692AA1 307692AA1 307692AA1 307692AA1 31315PLRS 31315PMIl8 31315PES4 31315PEY1 31315PAT6 31331TKF7 31331VV91 31331V4E3 S1331VW$1 31331$3H4 31331VTY2 31331XSR4 31$31XWU2 31331XA36 31331XU75 Run Date: 07n 212010 ~ 13~54 S45 840 628 630 631 696 820 821 638 639 800 592 653 655 657 668 662 690 693 701 715 Issuer Certificate of Deposit Certificate of Depos[l: Fidelity Investments Local Agency Investment Fund Federal Agriculture Mortgage C Federa! Agriculture Mortgage C Federal Agriculture Mortgage C Federal Agriculture Mortgage C Federal Agriculture Mortgage C Federal Agriculture Mortgage C Federal Agricultural Mortgage Federal AgriOJlturai Mortgage Federal Agricultural Mortgage Federal Agricultural Mortgage Federal Agricultural Mortgage Federal Farm Ciedit Bank Federal Farm Credit Bank Federol Fann Credit Bank Federai Farm Credit Bank Federal Farm Credit Sank Federal Fann Credit Sank Fedem~ Fann CreO'tt Bank Federal Farm Credit Bank Fedeml Farm Credit Bank Federal Fann Credit Bank ATTACHMENT B City of Palo Alto Fund All -Portfolio listings Investments by Fund June 30,2010 Current YTM Purchase Date Book Value ParVaJue Markel: Value Rate 360 1112412006 11/24/2006 Subtotal and Average 07/0112008 07J01J200s Subtotal and Average 0712O!200S 01/19{2010 0511212006 0511812000 05/18/2008 05103/2007 0811112009 08/10/2009 1:?J30f2Q09 1213012009 05/1712010 0611412006 0912612006 10/1212008 1011612006 1011612006 11116/2006 0312712007 0412512007 0SI2SI2007 0812012007 173,730.87 166.6S0.94 340,611.81 2,760,576.27 22,597.574.69 25,358,150.96 1,999,263.55 2,000,000.00 3,968,953.46 1.994,604.20 3,989,023.82 2,000,000.00 2.000,000.00 2,000,000.00 2,.000.000.00 1,500,000.00 1,000,000.00 1,499,581.17 2,020,434.43 4,006, n1.48 2,040,835,$4 1,480,895.137 2,011,718.85 2,000,000.00 2,000,000,00 2,000,000.00 3,010,225.98 173,730J:)7 173,730.87 166,880.94 340,611.81 340,611.81 2,760,576.27 2,760,576.27 22,597.57'4.89 22,6:24,309.88 25,3.58.150.96 2.000,000.00 2,000,000,00 4,000,000.00 2,000,000,00 4.000,000.00 2,000,000.00· 2,000,000.00 2,000,000.00 2,000,000.00 1,500,000.00 1,000,000.00 1,500,000.00 2,000,000,00 4,000,000.00 2,039,000.00 1,500,000,00 2.000,000.00 2,000,000,00 2,000,000.00 2,000,000.00 3,000,000.00 25,384,885.95 2,101,540,00 2.187,840.00 4,108,752.00 2,054,376.00 4,108,752.00 2,0$4,378.00 2,076,260.00 2,058,100,00 2,063,300,00 1,579,980.00 1,065,380.00 1,520,625.00 2,241,860.00 4,550,000.00 2,312,343.34 1,671,570.00 2,217,500.00 2,240,620.00 2,071,260.00 2,082,500.00 3,402,180.00 4.020 4.020 0.010 0.520 5.500 4.125 4.875 4.675 4.676 4.876 3.250 2.100 2.820 4.500 3.750 4.180 6.280 5.180 5.200 4.750 5.200 4.875 4.s00 5.050 5.300 3.970 4.069 4.01. MO. 0.512 OAS8 5.485 4.059 5.389 5.375 5.385 4.806 3.205 2.071 2.781 4.438 3.1398 4.147 4.827 5.059 5.100 5.104 4.877 4.607 4.734 4.950 5.128 City of Palo Alto Administration Svcs. Dept 250 Hamilton Ave., 4th Floor Palo Alto, CA 94301 (650)329-2362 YTM Maturif¥ Days To 3S5 Date Maturity 4.025 09/2412010 4.126 09124/2011 4.075 0.010 0.520 0,464 5,541 0711512011 4.125 0111912017 5A64 ,01/1412011 5ASO 0111412011 5.400 0111412011 4.872 01/1412011 3.250 0811112014 2.100 05110/2012 2..820 1213012014 4.500 1213012019 3.750 0511712017 4.205 11105/2010 4.894 08I1S/2013 5.130 0911512014 5,171 0411712014 5.175 02r'1S12014 4.945 0312012013 4.674 0$/1412014 4.000 0412512011 5.050 0512512011 5.199 1l8i1312014 85 450 263 379 2,394 197 197 197 197 1,502 771 1,643 3,409 2612 127 1,142 1,537 1.388 1,328 993 1,362 298 328 1,504 Portfolio CPA AP PI (FlU' .1'1) 7.1.1 ~V~r.7.3.1 ~ ~ '" i ,... b:! CUSIP Investment '# Federal Agency Issues ~ Coupon 31331GLT4 788 31331GTT6 31331GL80 31331GU31 31331GZ44 31331G8D6 31331JFZ1 31331JKH5 31331JKW2 31331JQS2 31331YELO 31331JSJ3 31331JTR4 31SS1V1(47 31331XSSO 31331XCY6 31331XGX4 31331XNEa 31331XPB2 31331XV'H2 31331XZK1 31331XB27 31331XC26 31331XD74 31331XC26 31331)(K35 31331XI.42 31331X2JO 31331X2U5 31331XSHS 31331X5Y4 31331YER7 Run Date: 07t1212010 -13:54 796 Callable 823 825 826 835 850 858 Callable ass Callable 870 872 877 Callable sao Callable 040 859 660 66. 878 877 892 597 702 703 705 707 70S 711 717 719 720 721 724 Issuer Federal Farm Credit Bank Federal Farm Credit Bank Federal Farm Credit Bank Federal Farm Credit Bank Feoe~ Farm Credit BanK Federal Farm Credit Bank Federal Farm Crean Bank Federal Farm Crecflt Bank Federal Farm Credit Bank Fede1a1 Farm Credit Bank Federal Farm Credit Bank Federal Farm Credit Bank Federal Farm Credit Bank Federal Farm Credit -S & p Federal Fann Credit -S &-p Federal Farm Credit -S & p Federal Farm Cred'Jt -S & P Federal Farm Credit -S & p Federal Farm Credit -S & p Federal Farm Crecfrt -S & p Federal Farm Credit -S & p Federal. Farm Credit -S & p Federal Farm Credit -S & p Federal Farm Credit -S 8o.P Federal Farm Cradit -S & p Federal Farm Credit -S & p Federal Farm Credit -S & p Federal Farm Credit -S & p Federal Fann Ctedft -S & p Federal Farm Credit· S & p Federal Farm Cre<flt -S & p Federal Farm Cre<flt-S & p Fund ALL -Portfolio Listings Investments by Fund June 30, 2010 Purchase Date 1J3IOO2OO9 04J22i2009 OeI21/2009 09/2412009 1011S12OO9 12109/2009 03l08I2010 04/1212010 04I19J2010 06/0212010 0610412010 0612112010 08J2!l12010 0812!l120il6 1012512008 1110612006 12111t2006 0210112007 0210712007 0411212007 05l22}2007 0610512007 08IC512OO7 0611212007 0610812007 07l05l2007 07116iZOO7 0910412007 09/06f20a7 0911712007 1010312007 1112112007 Book Value 1.000,000.00 1,000,000.00 2,000,000.00 2,000,000.00 2,000.000.00 2,000,000,00 2,000,000.00 1,500,000.00 1,500,000.00 1,000,000.00 2,221,585,45 2,000,000.00 2,000,000.00 2,000,000.00 3,000,000.00 2,000.000.00 2,000,000.00 2,000,000.00 2.000,000.00 2,000,000.00 2,000,000.00 3,500,000.00 2,000,000.00 2,000,000.00 2,9n,247.91 2,000,000.00 2,000.000.00 2,000,000.00 1,500,000.00 1.500,000.00 1,$00,000.00 2,000,000.00 Par Value 1.000,000.00 1,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2.000,000.00 1,500,000.00 1,500,000.00 1,000,000,00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 3,000,000,00 2,000,000.00 2,000,000.00 2,000,000,00 2,000,000.00 2,000,000.00 2,000,000.00 3,500,000.00 2,000,000.00 2,000,000.00 3,000,000.00 2,000,000.00 2.000,000.00 2,000,000.00 1,500,000.00 1,500,000.00 1,500,000.00 2,000,000,00 Current Market Value ~ 1,065,310.00 1,000,630,00 2,099,380.00 2,040,620.00 2,029.380.00 2,008,780.00 2,104,380.00 1,537,965.00 1,553.910.00 1,017,810.00 2,258,760.00 2,013,120.00 2,011,sao.00 2,008,120.00 3,356,250.00 2,279,380.00 :2,148,120.00 2,()54.380.oo 2,208,780.00 2.148.120.00 2,021.260.00 3,912,335.00 2,257,500.00 2,261,880.00 3,388,250.00 2,096,260.00 2,004,380,00 2,175,620.00 1,575,000.00 1,689,375.00 1,699,695.00 2,104,380.00 3.750 4.000 Moo 1,800 1.S50 0.875 3,375 4.000 3,740 3.000 5,000 3,625 3]00 5.500 5.050 5.050 4.625 5.050 5.150 4.875 4.900 5.200 5.250 5.330 5,250 5,250 5.250 4,930 4.750 5.000 5,000 4,350 YTM 360 3.698 3.945 2.959 1.n5 1.528 0.863 3.328 3.945 3.688 2.958 3.027 3.575 3,1S49 5.426 4.979 4.980 4.561 4.980 5.079 4.608 4.834 5.130 5.178 5.257 5.409 5.178 5.17S 4.862 4.684 4.931 4.931 4,290 Page 2 YTM Maturity Days To 365 Date Maturity 3.749 01129J201S 4,000 0412212019 3.000 0012212014 1.BOO 0912412012 1.550 1011512012 0.875 12I00I2011 3.375 03/08/2017 4.000 0411212018 3.740 0411912017 3.000 00102/2017 3,070 1111512016 3.625 03/21/2018 3.700 12/26/2018 $,$01 0712612010 5.048 11/25/2013 5050 05/0612015 4.625 0611112012 5.050 02101/2011 5.150 02107/2013 4.875 04/1212012 4.902 09=010 5.201 081051:2013 5.250 0610512014 $.330 1211812013 5.484 06/05/2014 5.250 07/0512011 5,250 0711612010 4 930 09/0412012 4.750: 09/06/:2011 5.000 0911712014 5.000 10/0312014 4.350 1112112011 2,038 3,217 1,544 816 837 526 2,442 2,842 2,_ 2,528 2,329 2,620 3,102 27 1.,243 1,no 711 215 952 e51 "" 1,131 1,435 1,_ 1,435 369 15 795 432 1,539 1,555 508 Portfolio CPA AP FI (PRF ..,FI) 7.1.1 Report W:t 7.3.1 CUSIP Investmem.# Federal Agency Issues ~ Coupon 31331YH06 725 31331YSV3 31331Y2U3 31331GLM9 31331GPN3 31331YCJ7 31331VCQ7 31331SKH5 3133MCLA1 3133MRCM2 3133X06Q7 31339;x:MX9 3133MRCM2 3133X2BX2 3133X28X2 3133MDBT9 3133XFJY3 3133XG3V1f2 3133XF5T9 3133X9ZZS 31339Y7K2 3133XHBL5 3133XHW57 3133XJUT3 3133XGJ9!l 3133XGJ96 3133XLOG5 3133XLDGS 3133X?BA1 3133XPBA.1 3133XS?93 3133XTCS3 Ru!'I Date: r:rrJ12'12010. 13:54 747 766 Callable n9Callab!e 785 722 742 744 582 570 574 S82 584 585 S86 595 642 644 648 649 652 654 667 BSS 699 706 71. 713 730 741 7T7 789 ISsuer Federal Farm Credit· S & P Federal Farm Credit ~ S & p . Federal Farm Credit -S & ? Federal Farm Credit -S & ? Federal Farm Credit ~ S & p Federal Farm Creon Bank ~ Moo Fed. Farm Credit Bank Fed. Farm Credit Sank Federal Home Loan Bank Federal Home loan Bank Federal Home loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home loan Sank Federal Home Loan Bank Federal Home loan Bank Federal Home loan Bank Federal Home loan Bank Federal Home lOan Bank Federal Home loan Bank Federal Home loan Bank Federal Home loan Bank Federal Home loan Bank Federal Home loan Bank Federal Home Loan Bank Federal Home loan Bank Federal H¢I'Ile Loan sank Federal Home Loan Bank Federal Home loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home loan Bank Fund ALL· Portfolio Listings Investments by Fund June 30, 2010 Purchase D", 12/1212007 0211112008 0710812008 01127/2009 0310412009 10/3012007 0113012008 0113012008 08/1aJ2004 1010512004 10108/2004 0112012005 0112712005 0112712005 0310112005 07/11/2005 07i0712006 07/1112006 OSl1212oo8 09/1212006 09/2SJ200S 1011ZI200S 1211412006 0212312007 0511612007 06l08I2007 0612812007 0Si2012C07 01125/2008 0113012000 0111612009 0311612009 Book Value- 2,000,000.00 1,500,000.00 2,000,000,00 2,000,000.00 1,500,000.00 2,000,000.00 2,072,255.46 1,024,824.04 1,509,087.26 1.000,666.66 1,500,000.30 1,997,900.97 1,500,976.09 2,000.EI28.93 1,999,209.31 2,017,704.23 1,994.888.47 2,001.515.97 1,998,499.50 1,983,966.50 2,004,131.S6 1,985,$83,01 2,000,000.00 2,000,000.00 2,012,650.59 994,753.42 2,500,000.00 3,020,103,94 2,000,000,00 2,948,269.58 3,054,576.97 2,000,000,00 ParV:a:lue- 2,000,000.00 1,500,000.00 2,000,000.00 2,000,000.00 1,500,000.00 2,000,000.00 2,000,000.00 1,000,000.00 1,SOO,OOO.oO 1.000,000.00 1,500,000.00 2,000,000.00 1,500,000,00 2,000,000.00 2,000,000.00 2,000,000.00 2,OQO,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,000,000.00 2,500,000.00 3,000,000.00 2,000,000.00 3,000,000.00 3,000,000.00 2,000,000.00 Current Market Value Rate 2,226,880.00 1,624,S95.00 2,001,880.00 2,085,000.00 1.559,070.00 2,272.500.00 2,260,620.00 1,114,060.00 1,535,625.00 1,005,310,00 1,507,035.00 2,016.860.00 1,507,965.00 2,029,380.00 2,029,380.00 2,006,880.00 2,086.880.00 2,093,760.00 2,103,120.00 2,116,880.00 2,216,120.00 2,246,260.00 2,228,760.00 2,145,620.00 2.242,500.00 1,121,250,00 2,842,200.DQ 3,410.040.00 2,135,000,00 3,202,500.00 3,170,640.00 2,105,000.00 4.825 3.850 4.625 4.000 2.600 4.900 4.800 4.500 6.625 4.750 4,125 3.660 4.750 4.250 4.250 5.875 5250 5.S00 5,000 4.500 5.000 4.875 4.875 5.000 5.250 5,250 5.375 5.375 3,500 3.500 3.125 3.000 YTM 3£() 4.561 3]97 4.561 3.944 2584 4,632 394$ 3.820 4.S54 4.044 4.067 4.083 4.053 4.096 4.310 4.201 5.483 5.435 5.002 5.040 4.850 5.020 4,806 4.929 4.943 5.369 5,300 5.099 3.451 3.869 2.794 2.958 Page 3 YTM Maturity Days To 365 Date Maturity 4.624 12115/2017 3.850 0211112015 4,625 07J0812013 3.999 0112512019 2.600 03/0412013 4.900 1013012017 4.000 10119/2015 3.873 01122t2015 4.718 11/15/2010 4.100 0811312010 4.123 08113/2010 4.140 09/3012010 4..120 08113/2010 4.153 11/1512010 4..370 11/15/2010 4.260 02115/2011 5.51$0 06/1012011 5.511 0et:2Sl2011 5.072 09i0912011 5.110 01106J2012 4.918 07/1612013 5.089 0611312014 4,873 1211312013 4.997 03109/2012 5.011 09l13i2013 5.444 0011312013 5.314 06/1312014 5.170 0611312014 3.499 03/131:2015 3.923 03/1312015 2.833 1211312013 2..999 0311312014 2,724 1,686 1,103 3,130 WI 2,678 1,936 1.666 137 43 43 91 43 137 137 229 344 362 435 554 1,111 1,443 1.261 617 1,170 1,170 1,443 1,443 1,716 1,716 1,26\ 1,351 Portfolio CPA AP Fl (PRF _fl) 7.1.1 Report Vet. 7,3.1 CUSIP Investment tI Federal Agency lssues ~ Coupon 3133XTFQ4 3133XTQH2 3133XTY'D2 3133XUCX9 3133XUMSS 3133XUMR1 3133XOTL5 3133XVR.J2 3133MJQFO 3133XW4W6 3133XWRQ4 3133XWXS3 31S3XV\tX95 3133)00-159 3133XWIN47 3133XXXK8 3133XEUG2 3133XHVS8 3133XYLN3 3133)(YVX0 3133XMl5 31S3X\fNU1 3133XUMR1 3133XWNB1 3133XBDM4 3133XHX'1N7 3133X?4Q4 3133XPTJ3 3133XSNCS 31$3XSZ50 3133XTFD3 3133XTHE9 Run Date: 07/1212010-13:54 793 917 818 819 B22 a27 830 832 833 637 843 Caftable 845 847 1:152 Callable 8$4 857 Callable 859 860 867 Callable 875 876ca1lable 878 a79 B83 885 663 729 Callable 751 Callable nOCallabie 781 792 794 Iss ..... Federal Horne Loan Sank Federal Home loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home loan Bank Federal Home Loan Bank Federal rbme Loan Sank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Sank Federal Home Loan Bank Federal Home Loan Bank Federal Home loan Sank Federal Home Loan Bank Fooeral Home Loan Bank Federal Home Loan Sank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank Federal Home Loan Bank. Federal Home Loan Bank FElderal Home loan Bank Federal HOTe Loan Bank Federal Home loan Bank -S .& p Federal Home Loan sank -S &0 P Federal Home Loan Bank -S & p Federol Home loan Bank ~ S 8. P Federal Home Loan Bank -S 8. P Federal Home Loan Bank -S & p Federal Home Loan Bank -S 8. p Fund ALL -Portfolio Listings Investments by Fund June 30. 2010 Purchase Date 04/0112009 05J22J2009 06/1612009 07r.2012009 08112/2009 10/21/2009 1 01211.1009 11/19/2009 11/191200$ 1211112009 02/1012010 0210312010 0211912010 0311712010 0311912010 04/1Sf2010 04/26f.20l0 04i26I2010 06/0812010 06!2912010 Q6/2912010 08/2312010 0612312010 06l29/2010 06f29/2010 1i!27J2006 01124/2008 0212812008 1211612008 0210612009 03/2712009 0411312009 Book Value 3,000,000.00 1,500,000.00 2,000,000.00 2,000,000.00 3,000,000.00 1,024,190.29 3.274,749.9:3 3,021,783.36 1.340,285.60 2:.000,000.00 2,000,000.00 2.000,000.00 2,000,000.00 1,500,000.00 2,117,082.83 1,500,000.00 1,623,596.10 1,630,237.94 1,500,000.00 2,000,000.00 2,000,000.00 3,084,79$,;23 1,574,888.50 1,552,276.30 2,236,555.34 2,000,000.00 1,000,000.00 1,500,000.00 1,000,000.00 2.000,000.00 2,000,000.00 2,000,000.00 Par Value 3,000,000.00 1,500,000.00 2,000,000.00 2,000,000.00 3,000,000.00 1,000,000.00 3,000,000.00 3,000,000.00 1,200,000.00 2,000,000.00 2.000,000.00 2,000,000.00 2,000,000.00 1.500,000.00 2,115,000.00 1,500,000.00 1,500,000.00 1,500.000.00 1,500,000.00 2,000,000.00 2,000,000.00 3,000.000.00 1,500.000.00 1,500,000.00 2,000.000.00 2,000,000.00 1,000,000.00 1,500,000.00 1,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 Current Market Value Rate 3,148,250.00 1,530,000,00 2,176,860.00 2,043.160.00 3,252,180.00 1,055,310.00 3,420,000.00 $,165,930.00 1,398,756.00 2,02M20.00 2,045,620.00 2,014,380.00 2,061,280.00 1.530,000.00 2,131,518.15 1,568,445.00 1,702,035.00 1,715,625.00 1,519.215.00 2,01Q,000.00 2,009,380.00 3,111,570.00 1,582,965.00 1,553,910.00 2,245,620,00 2,230,620.00 1,022,190,00 1,583,445.00 1,017,500.00 2.048,260.00 2,093,760,00 2,1)48,760.00 2.900 1,800 4.000 1.875 4,500 3.2:50 5.000 3.500 5.500 1.500 4.370 1.100 2.750 3,625 1.125 4.375 4,875 5.000 3.550 1.125 2.670 2.750 3.250 2.875 4.750 4.875 4.500 4.500 4.250 2.100 2.850 2.000 YTM 360 2.860 1.775 3.945 2.210 4.437 2.594 3,101 3.325 3.304 1.479 4,310 1.085 2.711 3.575 1.051 4.315 3.227 3.430 3.501 1.109 2.633 2:.052 1.975 2.099 2.022 4.808 4.438 4.421 4.191 2.071 2.810 1.972 Page 4 YTM MatlJrity Days 10 365 Date Maturity 2900 04/0112014 1.aoo 05l22J2012 4.000 OSJ161201S 2.240 07/231:2012 4.499 09/13/2019 2.631 09l12f2Q14 3,145 1212112015 3.372 12/09/2016 3.350 0811512016 1,500 12/1112012 4.370 02/10/2020 1.100 04/03/2012 2..749 03/13/2015 3,625 03/1712017 1.065 03109/2012 4.375 04/1£!2020 3,272 03/1112016 3,478 1210912016 3.550 08I0SI2017 1.125 10l29I2012 2.670 0612912015 2.081 12/1212014 2.003 0911212014 2.128 06112/2015 2.051 02113/2015 4.875 1112712013 4,500 01/2412018 4.482 02J28J201S 4.250 12/16/2013 2.100 02I06f2012 2.850 0312712014 2..000 07/1312012 1,370 691 1,811 753 3,381 1,534 1,999 2,353 2,237 884 3,511 642 1.nS 2,451 617 3.5n 2,080 2,353 2,534 851 1,824 1,625 1,534 1,807 1,688 1,245 2,764 2,799 1,264 585 1,385 743 Portfolio CPA AP Fj (PR"F _FI) 7.1.1 Reportvec 7.3.1 CUSIP Investment # Federal Agency Issues -Coupon 3133XTKX3 3133XTN44 3133XT'P26 3134A35H5 3'!2SX3M34 3134A4VB7 3128X1KG1 3128X1KG1 3134A4UM4 3128X8E73 3126X9FN5 3128X3SE1 3128X9VJ6 3128X9XF2 3128X9K33 3134G1DC5 3134G1GY4 312SX2RA.5 3126XBNS5 31364FBV2 31364KSSO 31398ANT5 3136FHGA7 31398AXSS 3136FHPX7 3136FHTB1 313S$MXX5 3138FJXY:2 31398AH39 313SFMTD5 313SFMUR3 3136FMVP6 RiX'l Date: 0711212010~ 13:54 8Q1 Callable 81 0 Callable 812 callable 563 579 594 679 682 714 aoa Callable 824 Callable 828 842 Gallable 844 Callable 848 CaJiable $64 Callable 873 CallablO 884 734 Callable 678 563 n5 790 Callable 798 Callable a05Cdilebie 811 Callable 829 S36 849 Callable 865 Callable sea Callao", 869 CaJlabfe Iss"", Federal Home Loan Bank. -S & P Federal Home Loan Bank. -S & p Fedeta! Home Loan Bank -S & p Fed. Home Loan Mortgage Corp. Fed. Home Loan Mortgage Corp. Fed, Home Loan Mortgage Corp. Fed. Horne Loan Mortgage Corp, Fed. Home Loan Mortgage Corp. Fed. Home Loan Mortgage Corp. Fed. Home Loan Mortgage Corp. Fed. Home loan Mortgage Corp, Fed. Home Loan Mortgage Corp. Fed. Home Loan Mortgage COrp. Fed. Home Loan Mortgage Corp. Feet Home Loan Mortgage Corp. Fed. Home Loan Mortgage COrp. Fed. Home Loan Mortgage Corp. Fed. Home Loan Mortgage Corp. Fed. Home Ln Mtg. S&P & Fitch ~deral National Mortgage As$O Federal National Mortgage Asso FeMl31 NatiOnal Mortgage Asso Federal National MortQage Asso ~deral National Mortgage Asso Federal National Mortgage Asso Federal NatiOnal Mortgage Asso Federal National Mortgage A$$O FedeJ13l NaliOIla' Mortgage N!so Federal National Mortgage Asso Federat National Mortgage Asso Federal Na.tional Mortgage Asso Federal National Mortgage Asso Fund ALL -Portfolio Listings Investments by Fund June 3D, 2010 Purchase Do'" 0511312009 05!13f2009 05120i2000 06l1ll12004 11119t..2004 07111/2005 021Q712oo7 02115/2007 0812012007 . 0511912009 10/0112009 1012112000 02.f03J2010 0212412010 03!23J2010 05119/2010 Q6130i2010 06J29t2010 011'31/2008 02/07/2007 O2I15f2Q07 01116/2009 0=009 0510512009 05114/2009 05128f2009 1012112009 12123i2009 03117/2010 05J261201 0 _312010 05117/2010 BpokVaJue 1,500,000.00 1,000,000.00 1,500,000.00 1,505,S34.09 1,000,000,00 1,499.979.39 1,459,582.17 1,948,007.74 1.963,930.05 1,500,000.00 2,000,000.00 2,194,284.99 2.000,000.00 2,000,000.00 2.000.000.00 1,500,000.00 1,500,000.00 4.594,563.78 1,500,000.00 2,055,106.51 1,416,561.75 3,144,719.54 1,000.000.00 1,500,000.00 1,500,000.00 1,500,000.00 2,191,865,56 1,$00,000.00 1,500,000.00 1,500,000.00 1,500,000.00 2,000,000.00 Par Value 1.500.000.00 1,000,000.00 1,500.000,00 1,500,000.00 1,000,000.00 1.500,000.00 1,500,000.00 2,000,000,00 2,000,000.00 1,500,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000.000.00 1,500,000.00 1,500,000,00 4,000,000.00 1,500,000.00 2,000,000.00 1,500,000.00 3,000,000.00 1,000,DOO.00 1,500,000.00 1,500,000,00 1,500,000.00 2.000,000.00 1,500.000.00 1,500,000.00 1,500.000.00 1,5oo,OOD.00 2,000,000.00 Current Market Value Rate 1.500,455.00 1,004,380,00 1,518,285.00 1,521,090.00 1,015,540.00 1,501.875.00 1,625,160.00 2,168,850.00 2,210,000.00 1,520,670.00 2,000,000.00 2.264,420.00 2,006,980.00 2,010,120.00 2,011,180.00 1,507,440.00 1,512,825,00 4,616,040.00 1,648,065.00 2.236,440.00 1,531,875.00 3,240,000.00 1,021,880.00 1,527,195.00 1,524,375.00 1,509,375.00 2.252,500.00 1,525,785.00 1,502,340.00 1,520,150.00 1,505,160.00 2,018,760.00 4.125 4.300 4.080 6.87$ 4.400 4.125 4.000 4.000 4.500 2.170 4.500 5.050 4,500 4.000 4.500 4.500 3.000 5.300 4.300 6A10 2.000 4.250 3.250 2.800 2125 4,500 5.000 4.200 1.550 4.000 2.000 3.000 YTM 360 4,068 4.241 4.024 4.600 4.339 4.117 5.010 4.970 5.033 2.140 4,438 2.713 4.438 3.945 4.438 4.438 2.958 2.327 4.241 4.967 4.958 2,298 3.206 2.761 2.095 4.438 2.736 4.142 1.528 3.945 4.327 4.036 Page 5 YTM Maturity Days To 36S DoW Maturity 4.125 0511312019 4.300 0511312019 4.080 OS/20/2019 4.610 0911512010 4.400 11/1912010 4.114 07/12/2010 5.080 M/12J2013 5.040 06112/2013 5.103 01/1512014 2.110 11/19/2012 4.500 10/01/2019 2.751 01126J2015 4.500 02/03!202O 4.000 08/241'2011 4.500 03/23/2020 4.500 05I19J2020 3.000 MJ3012016 2.360 1210112015 4.300 0113112015 5.036 0912512012 5.025 0811712012 2.330 0212512013 3.250 1212312014 2.800 0510512014 2.125 05/1412014 4.500 0512a12019 2.n4 03/0212015 4.200 1212312019 1.550 0911712012 4.000 111'2612018 4,387 1210312018 4.092 1211712016 3,238 3,= 3,245 78 141 11 1,On 1,on 1,294 an 3,379 1,671) 3,504 2,611 3,553 3,610 2,Hi1 1,979 1,675 817 ns 970 1,636 1,404 1,413 3,253 1.705 3,462 809 3,070 3,On 3,091 Portfblio CPA AP FI (PRF ]1) 7.1.1 Report Ver. 7.3.1 Fund ALL -Portfolio Listings Investments by Fund June 30, 2010 PufCl1ase CUSIP loveiStmeot # Issuer 0a!Ja BookVaJue Par Value Federal Agency Issues ~ Coupon 3136F6Mn 731 Callable Fed, Not Mortg, Assoc.-S&P 02lO7f2<)OS 2,000,000.00 2,000,000,00 31398APNS 761 Callable Fed, Not Mortg,Assoc.-S&P 04f08J200a 1,000,000.00 1,000,000.00 3136F9ESS 763 Callable Fed, Not Mortg, Assoc.-s&P 0410212008 1.000,000,00 1,000,000.00 313SFHVC6 814C_ Fed. Nat Mortg. Assoc.~S&P 0512lV2009 1,000,000.00 1,000,000,00 3136FHXF7 $16 Callable Fed. Nat Mortg. Assoc.~S&P 06110/2009 2,000,000.00 2,000,000,00 313586UB3 743 Fed.Nation~MortgageAss~ 0113012008 3,874,281.63 3,000,000.00 8605910T6 643 Tennessee Valley Authority 0710712006 2,039,459.62 2,000,000.00 880591CWO 656 Tennessee valley Authori1y 1011812006 1.529,907.16 1,500,000,00 860591CWO 661 Tennessee Valley Authority 1111612005 3,076,404,54 3,000,000,00 SS05910L3 684 Tennessee Yal'ey AUthority 0211512007 1,553,844.94 1,500,000,00 880591DY5 715 Tennessee Valley Authority 0012012007 2,898,040,01 3.000,000.00 680591EAS 861 Tennessee Valley Authority 0412612010 2,226,867.47 2,000,000.00 880591DT6 863 Tennessee Valley Authority 0510412010 2,211,373.86 2,000,000.00 Subtotal and Average 315,127,183.57 311,854,000,00 Treasury Securities ~ Coupon 912828HK9 769 U.S. Treasury 0810012008 2,011,373,45 2,000,000,00 912828MQO 855 U.S. Treasury 0311912010 1,997,4$4,89 2,000,000,00 91282SML1 562 U.S. Treasury 0412812010 2,002,789.09 2,000,000.00 912828ML1 671 U.S. Treasury 0610412010 2.009,219.69 2,000,000.00 Subtotal and Average 8,020,847.12 8,000,000.00 TotaIlnvestJnents and Average 349,446,193.4S 345,552,762,77 Rvo Oaw: om2J2O'lO~ 13:54 Current YTM YTM Market Value Rate 360 365 2,041,260.00 4.125 4,066 4,125 1,079.690.00 4.000 3.945 4,000 1,075,940.00 4.000 3,945 4,000 1,005,630,0(} 4,100 4.043 4.100 2,013,120.00 2.000 1.972 2,000 ~229,070,OO 10.350 3.987 4.043 2,223,500.00 6.790 5,476 5:553 1,693,6:20.00 6.000 5.054 5.125 3,387,240,00 6.000 4,625 4,692 1,673,505,00 7,140 4.892 4.960 3.312,060.00 4.315 5.163 5,235 2,327,980.00 5.500 3.602 3.652 2,223,500.00 6.790 1.114 1.130 ------ 332,668,538..49 3.945 4.000 2,127,500.00 3,375 3.078 3,120 2,010,700.00 0,875 0.938 0,952 2.014,600.00 1.000 0,893 0.905 2,014.600.00 1,000 0,680 0.690 8,167,400.00 1.399 1.419 366.561.436..25 3.&34 3,_ Page 6 Maturity Days To Dow Maturity 0210712016 2,778 0410812013 1,012 0410212013 1,006 OSI28J2019 3,253 12110/2012 893 1211012015 1,S88 0512312012 692 0311512013 986 03115/2013 988 05l23J2012 692 06/15/2015 1,810 0711812017 2,574 05123/2012 892 1,451 1113012012 863 02/29/2012 608 1213112011 54. 1213112011 54. S4S 1,326 / Portfolio CPA AP Ft(PRF]l)7.1.1 Report Ver. 7.3.1 Investment Policy Compliance As of June 30,2010 Attachment C 1 ! General Investment Guidelines: "'1 2 3 a) The max, stated final maturity of individual securities in the portfolio should be 10 years, b) A max, of30 percent of the par value ofthe portfolio sball be invested in securities with maturities beyond 5 years, c) The City shaU maintain a minimum of one month's cash needs in shOit term investments. d) At least $50 million shall be maintained in securities maturing jn less than 2 yenl's, P'us two managed pool aecounts which provide instant liquidity: -Local Agency Investment Fund (LAIF) -maximum investment limit is $40 million -Fidelity Investments e) Should murket value of the portfolio fall below 95 percent of the book value, report this fact within a reasonable time to the City Council and evaluate if there are fisk of holding securities to maturity. d) Commitments to purchese securities newly introduced on the market shall be made no mOre than three (3) working days before pricing, Full Compliance : 27_1% i Full Compliance , ; $87,5 million: $22,6 million $2,8 million 104,9% Full Compliance f) Whenever possible, the City will obtain three or more quotations on the purchase or sale of comparable securities (excludes new issues, LAIF, City of Palo Alto bonds, money market accounts, and mutual funds). r--.. -.. ---. .....:-..... --... --'-... ---.--.. -~--... --.--... ---'----Full Compliance --+--'--_ ... - U.S. Government Seeuritie8~ a) There is no limit on purchase of these securities. b) Securities will not exceed 10 years maturity, ---- U.S. Government Agency Securities: a) There is no limit On purchase ofthese sCl:urities. except for: Callable and Multi-stop-up securities provided that: ~ The potential call dates are known at the time ofpurchase~ '" the interest rates at which they H step_up 1' are known at the time of purchase; and -the entire fare value of the secul'ity is redeemed at the caH date. -No more than 20 percent of the par value of portfolio, Full Complianee : Full Compliance Full Compliance Full Complianee Full Compliance 17_7% b) Securities will not exceed 10 years maturity. c---.... --------------1--------- 4 CertificAtes of Deposit: Full Compliance 5 6 a) May not exceed 20 percent of the par value of the portfolio; b) No more than 10 percent of the par value ofthe portfolio in eollateralized CDs in any institution, c) Purchase collateralized deposits only from federally insured large banks that arC rated by a nationally recognized mting agency (e,g, Moodys, Standard & Poor's, cte,), d) For non-rated banks, deposit should be limited to amounts federally insured (ForC) 0.1% e) Rollovers are not permitted without specific instruction from authorized City stan: ..... ----, ... ------t ......... -...... --... '" Banker's Acceptance Notes: None Held a) No more than 30 percent of the par value ofthe portfolio. b) Notto exceed 180 days maturity, c) No more than $5 million with anyone institution. C----... :-:........------..... --,----.. ------...... -----...... -----..... -----+ ... ~.--..... ~ Commercial Paper~ None Held a) No more than 15 percent of the par value of the portfolio. b) Having highest letter or numerical rating from a nationally recognt2'.ed rating service. c) Not to exceed 270 days maturity, d) No more than $3 minion or 10 percent of the outstanding commerciul paper of llny one institution, whichever is lesser. 7 8 9 Investment Policy Compliance As of June 30, 2010 Shu. ,·T.,m Repurchase Agreement (REPO): a) Not to exceed I year. Attachment C None Held • i b) Market value of securities that underlay a repurchase agreement shalt be valued at 102 percent or greater of me funds borrowed against those securities. t 1 Money Market Depo,it Accounts ... -.. ~ ... -~ .. ~.-~ .. -~ .. ~-----Fult Compliance . a) Liquid bank account.1i which seek to maintain a net asset value of$I,OO. , r-.. --... -"-~ ... -.-.. ~~ .. --~ .. -' -~ --~ .~----~~I Mutunl Funds: I None Held ' a) No more Ihan 20 percent of the par value of the portfolio. b) No more than 10 percent of the par value with anyone institution. 10 Negotiable Certificates otDeposlt (NCD): None Held 11 a) No more than 10 pereeryt ofthe par value of the portfolio. b) No more than $5 million in anyone institution. I~-":"""-'--~'---~ .-..:. ... -~. -"-'-'''-''--... ----.---.. - -~·····~-···I·--··----.. ···----l Medium-Term Corponde Notes: a) No more than 10 percent of the par value ofthe portfolio. b) Not to exceed 5 years maturity. c) Securities eligible tor investment shall have a minimum rating of AA from a nationally recognized rating service. d) No more than $5 million of the par value may be invested in seeurities of any single issuer, other than the U.S. Govemment~ Its agencies and instrumentality. oj If securities owned by thc City are downgraded by either rating agencies to • level below AA it shall be the City!s poticy to review the credit situation and make a determination as: to whether , None Held to sell or retain such secw'ities. __ "'~,,~ ______ ~~~~~ __ .. _~ _~ _____ "_.,, __ ~ ____ _ 12 Prohibited Investment., ! Full Compliance a) Reverse Repurchase Agreements None Held b) Derivatives as defined in Appendix B ofthe Investment Policy 13 Ali securities shaU be delivered to the City's safekeeping custodian, and held in the name of the Full Compliance I, City, with thc .ex. ee._p_!_iO~n O __ f ... :. ___ .. ~ _____ ... __ . .. .. ___ ... _____ ~~~ ... _ .. _._ .... ______ .. ______ .. __ ....... _ ..... _ .. !_ .. __ . __ .. _ ... _ .. ....J ~ • Certificai<:s of Deposit, Mutual Funds, and LAIF