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June 24, 1993
THE HONORABLE CllY COUNCIL
Plio Alto, California
INYESTMEHT~IJYlTY REPORT FOR MAY 1991
Members of the Couocil:
This is an 1nfarmational report and no Council act~on is necessary.
LIlliREST ! NCO!!E
Interest income on an accrual busis for the month of May was $874,877 and for the
first elev€n months {If 1992:-93 totaled S9.5 minion, 91 percent of the revised
annual target of $10.4 million. On a cash basis, receipts totalled $1,058,315
for ~arch, and $9.6 millien year to date. The effect;\lf annual rate of return
on an accrual hasis 1 S 5. Sl percent for the curT,:,nt fi seal year.
CURRENT poRTFOLIO
The par value of the City's portfolio is S177 million, which copsists of $144
million, or 81 percent, maturing within two years. Most of the investID€nts, $141
If,ill ion. or 80 percent, ire in United States Government securl t fes. lhe CLJrretit
marK.et value of the portfoliC! i) 100.9 penent Qf cost. HIe ave,:"a.ge life-of the
portfolio is 1.4 year$.
INTEREST RATES AN!l INVESTMENTS
In May, staff invested 56 million in flve~mor.th B.a:'1kers Acceptances, at a return
of approximatel)' 3.13 percent r and 55 million in two-year GO'llernmel1t agency
securities, at a return of approximatel,)" 4.08 percent.
Un1ted States TreCi:illry securities are used to benchmark. the rate of return of
'ltner money market seclJritie$ li"-.e Comi'flercial Paper and 8anker-:: Acc.epta('lxes.
Since the money market securities are considered risk.ier" li'westments compared to
t~e U. S. Treasuries? they must be offered .at a higher rate to be attractivE to
in'llestors. Staff has a~ internal policy of inv€sting in mOI1~Y market securities
only when the spread between the two securities is at least 5 basis pOints (.05
percent) above the equiva1ent maturity of a U. S. 'Treasury.
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During the current fiscal ye~r, th~ spread bet~~en the ~o~ey ma~ket securiti~s
and U, S. Treas.uries has MrroW'2C 1 u s.no",n in the graph below. Ne',erthele;;s~
t~is IltQnt'" staff was ab1e to purchase the 56 million in 8ank.ers Acceptances with
i spr~ad of 19 basis Doints to the e~~ivalent Treasury_ Staff will continue to
monitor th-e spreads and tak.e adv31"1tagE e,' a.ppropriate OpPol'tl.lnities.
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W1Pl!ANCE WllH INVESTMlNT POLICY
As of May 31, ]993, the investment portfolio 'Was "in cl1mpliance with all e-lements
of the City's investment policy. In June 1993, projections indicated receipts
will be $16.7 million; e~pendit~res will be 516.0 million and 518.1 million in
investments .. ill mature. On the basis of the above projection. there are
suff;~ient funds to meet Palo Altors expendjture requirements for the mont~ of
Jun€. B.ased upon the cash flow projections prepared by Treasury stiff for fiscal
year 199Z-93. there are sufficient funds frorr1 the revenues and maturing
;nyest~~nts to ~~et all expenditure requirements for the remainder of the fiscal
year.
Res ectf'lly submltted, ~
~. v:2!iJ~snlr£:L
Finance Director
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BY MTURID
Within 1 month
1-3 months
3-6 'M,ths
6·9 month'
9-12 months
1-2 years
With; n 2 years
2-5 years
S·IO y .. rs
10·20 yean
20-,0 years
O\oer 2 yeirs
TOTAL
nJ!!'t Of III'1ESTlIElIT
Local Agency Investme~t
Mutual Fuod
Certificates of Dep~s)t:
Collateralized
Banker~ AcceptancES
Commercial Paper
City of Palo Alto Bonds
U,S. Treasu.ry U.s. Agenty
M'ar\l..e-t Y'il1ue/Cost
CKR:34S:93
Pag.lofS
REPORT OF INVES~ENTS
MAY 31, 199'
Par Pou1iour.t 5/31/93 1992·S; 4/30/93
Un I Mil1 'iQn5~ -.l.1iol._ lli9.ll. 1%)
$ 18.10 10. Z1 , $6 I? ?4
16.0? 9.03 4.01
19.00 10.7Z 9.86
9.50 5.36 8.41
29.00 16.35 12.19
&.!!Q ll.,.U _n.±6
143.62 81. 00 ) $50 80.44
32.50 18.32 18.86
.00 .00 .00
.50 .28 .29
.. ......JQ ~ .......!l
33.70 19.00 19.56
111.32 IIjO.O% 100% 100.0%
Funo 15.00 8.46 8.70
.10 .06 < 15% .D6
12.00 6.17 9.28
&.00 3.38 < 30% .00
3.00 1.69 < 15% 1.74
.O~ . a 1 .01
I~. 00 41.73 42.94
61.10 1WQ 37.16
TOTAL 177.n 100.0% )00% 100.0%
$180.0/178.5 100.9% > 95% JOl.l%
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REPORT Of INVESTMENTS
MAY 31, 1993
Purchase Atcrual
Interest Maturity Par Market Unrea 11z.ed Pricp Basi s
~ ~-~-----'L'IlIL 'ili!!g y~ G.UiLlli.ll) 6.1ante [arninos
l~mIHENTS
J.g~J MonO Invost""nt ~ml
LAIF '.51 06-01-93 15,000,00 15,000,000 15,000,000 5:;,000 :,)
"vtu.l Fund (Q,Q~
fidelity Investments 2.77 06-01-93 100,000 100,000 100,000 141 I
Cert ifi cates of l1.'lJ12!.i t 16.77%).
Fidelity Feder.l (Col1ator.l) 3.BO 07-30-93 3,000,000 3.000,000 3,000,000 ~,B17
Sacramento Bank (Collateral) 3.20 02-22-94 3,000,000 3,000,000 3,000,000 8,267
Sacramento Bank (Collateral) 3.30 04-08-94 3,000,000 3,000,000 3,000,000 8,5Z5
Sumltomo Rank (Collateral) 3.30 04-26-94 >,QQQ,QOQ ~,QQQ,QQQ ',QOQ,29..Q .Jl...lli
12,000,000 12,000,000 12,000,000 35,134
~rchl -.per la) Il~ (a) )
General Electric 3.13 08-02·93 3,000,000 2,960,614 2,960,6)4 B,086
~_OD~~tanc. 13,38%) (a)
Sumitomo Bank 3.10 09-30-93 3,000,000 2,961,508 2,961,508 1,033
Sanwa BanI( 3.08 10-29-93 1.QQQ.OOQ z.jIS4.5Zll W1ihlIQ l.lli "
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6,000,000 5,916,078 5,916,078 2,316 .~
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~Alto Improv~nt B9n~s (,01\)
Serie~ p
U_s, Treasury (41_73%)
Treasury Notes
Treasury Notes
Treasu,'y Notes
Treasury Notes
Treasury Notes.
Treasury Not@s
Treas.uty Notes
Treasury Notes
Treasurv Notes
Treasury Notes
Treasury Notes
CHR:345:93
REPORT OF INYlSTMEHTS
ItAY 31, 1993
Inter~st Maturity -.IW.!l __ --'1llL
10.95 07-02-93
8.13 06-30-93
8.00 OB-IS-93
8.25 09-30-93
7.75 il-lS~93
7.63 17-31-93
5.38 04-30-94
7.00 05-15-94
6.00 11-15-94
5.50 02-15-95
~ .13 11-15-95
4.6] 02-15-96
Par
.Yiill
20,000
3,000,000
7,000,000
4,000,000
8,000,000
2,000,000
12.000,000
6,000,000
5,000,000
7,000,000
14,000,000
6.QQQ,QQO
74,000,000
Market
WlIL
20,000
3,015,938
6,988,125
4,035,938
a.Oal.~63
2,016,875
12,252,OOG
6,072,000
5,141,071
7,155,875
14,236,000
..h'ill&Q2
75,009,385
Unrealized
Giln (Loal
89.437
16,172
130,842
~.m
245,045
Purchase
Prlce
B.J~
20,000
3,015,938
6,988,125
4,035,933
8,081,563
2,016,875
12,252,071
6,011,875
5,051,563
7,138,828
14,105,158
-.hqQli~Q~
74,764,340
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Pa~. 3 of 6
Accrual
Basl s
illaillU
~
1830
20,3D
46,667
21, SOO
51,667
12,708
53,750
35,000
25,000
32,083
59,792
-UJ.Zj
387,605
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,c--, . Page 4 of 6 r' REPORT OF INVESTMENTS
NAY 31, 1993
Purch.t~e Accrual
Interest Haturlty Par Market Unrealized Prtce Sd.sh
~ ~e~ filw: ~ .GAirLlilltl ~-fiAl:lJ.irm
\!cl.~EHCY m, 90%)
FHlB 7.15 07-26-93 1.000,000 998,750 996,7S0 6,458
fHlB 7.45 OB-~5-93 2,000,000 2,000,000 2,000,000 12,417 i)
fHl8 1.95 09-27-93 1.000,000 991,875 991,675 6,625 '
FHlB 12. 15 12-27-93 2,500,000 2,437,500 2,437,500 25,313
fHLB 1.55 01-25-94 2,000,000 2,003,125 2,003,125 12,583
FHLB 7.50 06-27-94 5,000,000 5,194,000 106,812 5,087,168 ~1.2S0
FNMA 7.45 07-11-94 3,000,000 3,117,000 80,203 3,036,791 18,625
FHlB 6.70 OB-25-94 6,000,000 8,265,000 18,750 6,246,250 44,661
FHI.8 6.5B 09-26-94 4,000,000 4,135,000 30,312 4,104,688 21,933
fHLB 5.94 02-27-95 6,000,000 6,180,000 161,075 6,UIB,I25 29,700
FHLB 6.45 03-27-95 6.000,000 8,315,000 250,000 8,065,000 <J,aoa
FHlB 6.0' 04-25-95 6,000,000 6,188,000 188,625 5,999,375 30,200
FHMA 3,84 05-02-'5 2,000,000 1,985,000 (6,25Ol 1,991,250 2,347
FHLB 3.79 05-26-95 3,000,000 2,977,000 (6,594 2,983,594 1,579
fHLB (b) 7.95 12-26-95 3,000,000 3,054,000 54,000 3,000,000 19,675
FNMA (c) 7.70 01-12-96 2,000,000 2,046,000 48,500 1,997,500 12,833
FNMA 7.60 01-10-97 2,000,000 2,165,000 162.187 2,002,813 12,667
FlB 7.35 01-20-97 536,000 536,000 36,000 500,000 3,063 ) FNMA 6.05 01-12~98 5,000,000 5,113,OOO 125,345 4,997,655 25.208
FHLMC (P&I) 10.00 02-01-09 290,156 321 ,~QO 47,248 273,751 1,418
F~lMC (P&I Semi-Annually) 11.45 09-15-09 103,000 139,000 17 ,375 Z21,625 l,106
GNHA (P&1) 9.00 11-15-16 -1.2hW! l~MQQ 'J,Q~3 /,4,91l ~
67,197,156 69,029,250 1,337,471 67.691. 779 370.147
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MA1Yred and Sold Invest~
Sumitomo Sank (Coll.toral)
fNMA
fIdelIty Foderal (Coll.teral)
FHLB
REPORT OF INV£ST"ENTS
MY 31, 199J
Intere,t Maturity
---Ril1e Dill_
3.35
10.75
4.45
10.75
05-06-93
05-10-93
05-19-93
05-25-93
rar
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Market
YillIL
Unrealized
Gain CLoss}
Purchase
Pric@
bli~.!&_
T':"~'~f,' T
',S't"",,' "~
rage 5 of 6
Accrual
Bas.is
I!l!ll.1Jm
I,m iJ
2,986
4,691
7,465
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TOTAL INVESTMENTS(IOO%) $111,317,156 $180,035,327 $1,582,516 $178,452,811 $614,877
(P&I) Principal and interest payments monthly.
Investments with maturities of less th~n one year are valued at cost.
Purchases since last r~pot"t are shown -J., bold type,
(a) Figure r~presents the discount rate.
(bJ FHI.B has • c.I1a~le option, beginning on 12.27.93.
(cJ FNMA has a callabl. option, beginning on 02-12-94.
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IHT[~EST INCOME (ACC~UAL BASIS)
NoY 31, 1993
~ork To Date
Unit 1991-91
Interest Income $ 9,411,OOl
Effective Annual
Rate Df Re-turn
On Investme~ts ~ 7.83
Interest Rates as of May 1. 1993
Prime Rate:
3-month Treasury Bill:
3-month Bankers Acceptance:
3-month Commercial Paper:
3-month Certificates of Deposit:
2-year Treasury Not~:
2-year Agency:
Sourc.: Wall Street Journal 6/01/93
CMR:346:93
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To Oat.
1992-93
9,505,838
6.51
6.00%
3.06\
3.14%
3.21"
2.70%
4.20%
4.28%
Increase
(Decre05o)
Im-93
94,835
(1 .32)
Page 6 of 6
% Of
Target
Target To Date
10,400,000 91.40
6.5 100.15
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