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Home My WebLink About4.02 CT Invest Rpt 98/99 CITY CLERK File # [E][2][Q]-[3][Q] . AGENDA STATEMENT CITY COUNCIL MEETING DATE: (October 20, 1998) SUBJECT: City Treasurer's Investment Report For 1st Quarter 98/99 Report Prepared by: Paul S. Rankin, Assistant City Manager EXHIBITS ATTACHED: Quarterly Investment Report (September 30, 1998) Section I - Primary Investment Portfolio Section II - Listing of Supplemental Monies Under City Possession and/or Control RECOMMENDATION:~).Jf.X' Receive Report DESCRIPTION: The attached Investment Report details the City's investments as of September 30, 1998, in accordance with the Local Agency Investment Guidelines established by the State Treasurer. Section I of the Report focuses on the principal investment portfolio. Section II details funds held by Trustees and miscellaneous operating accounts. The focus of the discussion in this report will be upon activity in the Primary Investment Portfolio. Changes in the investment portfolio and investment activity for the first quarter of Fiscal Year 1998/99 are discussed in the staff report below. . INVESTMENT ACTIVITY IN FIRST QUARTER FISCAL YEAR 1998/99 During the First Quarter maturing investments totaled $891,000 and consisted of one federal security and four certificates of deposit. In addition, one federal security in the amount of $500,000 was removed from the portfolio due to an early bond call by the issuer. The following Table provides details on activity related to these investments: INVESTMENTS WHICH WERE CALLED OR MATURED JULY - SEPTEMBER 1998 ORIGINAL CALL INTEREST TYPE AMOUNT MATURITY DATE RATE Matured Federal Securities FHLMC $500,000 9/9/98 N/A 5.020% Called Federal Securities FNMA $500,000 12/30/98 7/15/98 5.890% . Matured Certificates of Deposit . Fremont Investment & Loan $99,000 7/30/98 N/A 5.560% Standard Pacific Savings $99,000 7/30/98 N/A 5.200% First Republic Trust & Loan $95,000 9/14/98 N/A 5.250% People's Bank of California $98,000 9/14/98 N/A 5.250% . The majority of these funds were invested in the City's LAIF account, with the exception of the renewal of one CD. Thee of the banks previously offering the certificates of deposits advised the City that they no longer accept deposits from public institutions for investments at this time. G :\INVSMl\'TS\sept98\AGNDSTMT.DOC COPIES TO: ITEM NO. 4.2 The LAIF rate was higher than rates being offered on federal securities in the marketplace. The.pr.ocee.ds from tqe certificate of Deposit at First Republic Trust & Loan were reinvested with the terms summarized below: TYPE Certificate of Deposit First Republic Trust & Loan INVESTMENT PURCHASED FIRST QUARTER FISCAL YEAR 1998/99 CALL INTERES DATE RATE AMOUNT MATURITY $95,000 3/7/2000 N/A ". 5.500% The Certificate of Deposit listed above is allowed under the City's current investment policy. The purchase extends the Ci'o/ portfolio in order to ladder the schedule of maturities. In the previous quarterly report the average maturity of all Government and Agency Securities was approximately 1.35 years. The average maturity for the Federal Security portion of the portfolio decreased to approximately 1.16 years as several of the remaining investments will mature during the next quarter. These investments are staggered in conjunction with cash flow needs for the final payment of the Civic Center COPs. DETAILED LISTING OF PRIMARY PORTFOLIO Government and Agency Securities represent approximately 40% of the Primary Portfolio. A detailed listing of each security is provided in Exhibit 1. The market value of Federal Securities can fluctuate daily and values have been provided as reported by Union Bank of California as of August 31, 1998. The City portfolio assumes that the investments will be held to maturity and there is not an active attempt made to trade existing securities. The City has staggered the maturity dates within the portfolio and it is not anticipated that these funds will need to be called by the City prior to maturity. . Due to a change in the required governmental accounting rules, the Fiscal Year 1997/98 year end audit accounted for differences in market values. This results in an "Unrealized Gain 1 Loss", since the City did not actually liquidate the investment. However, the required accounting rules indicate that the adjustment must be recorded against the interest revenue line item. Each year the Auditors will need to determine whether the difference in market value is material and would therefore require a similar "adjustment to market rates." As a result of this adjustment, the amounts reported as "book value" for both the Federal Securities and the Morgan Stanley 1 Dean Witter Mutual Fund, reflect the market value of these investments as of June 30, 1998. Previous reports had identified the "book value" as the original purchase cost incurred by the City. Staff will evaluate and report recorded changes to the values on an annual basis at the close of each fiscal year. The Morgan Stanley Dean Witter US Government Securities Mutual Fund Investment represents approximately 4.1 % of the City's total portfolio. The book value reported is based upon the "market value" as of June 30, 1998. Previous reports had presented the original cost of shares. The City is receiving its dividend shares on a monthly basis. During the first quarter of the 1998-99 Fiscal Year the City received nearly $24,834 in dividends from this investment, resulting in an annualized yield of approximately 6.073%. The market value of this investment fluctuates on a daily basis and as of September 30, 1998 was approximately $35,871 more than the recorded 6/30/98 market value. Any actual sale of this particular investment would also incur additional deferred sales charges. Portions of the . mutual fund may be redeemed without sales charges beginning in July of 1999 and no sales charges are applied to sales after October 1999. Since the original investment of approximately $1,699,995 was made in 1984, the City has collected over $500,000 in dividends, which more than offsets any recorded changes in the market value. -;J..- . . . . CHANGES IN THE TOTAL PORTFOLIO YIELD FROM THE PREVIOUS REPORT The total amount shown as invested in the Primary Investment Portfolio is nearly $ I ,881 ,202 more than the amount shown at June 30, 1998. The amount invested in Federal Securities and Certificates of Deposit decreased by approximately $1,304,552, while the City's investment in the Local Agency Investment Fund (LAIF) increased by $3,250,000. The increase reflects the receipt of sales tax revenues, impact fee deposits and other development related revenue during the quarter. Overall, the combined rate for the total portfolio increased slightly from 5.686% at June 30, 1998 to 5.691 % at September 30, 1998. The increase was attributable to recording a lower h~ok value for the Morgan Stanley Dean Witter Mutual Fund. Without that entry the overall yield would ~ave been slightly lower due to a lower overall yield on the City's investments in LAIF. The quarterly average for the City's LAIF investment was 5.649% as of September 30, 1998, which was lower than the 5.672% rate recorded for the quarter ending June 30, 1998. LAIF is a liquid investment, and the current LAIF rate remains very favorable compared to rates offered on investments, which have less flexibility. The balance in the LAIF account will increase in the coming months, as this investment offers the safety of a professionally managed account and a competitive rate of return, for the short-term investment of proceeds to be used for the early retirement of the Civic Center Certificates of Participation. The City Treasurer believes that the schedule of investments, including the dates of maturity, contain adequate cash flow liquidity to meet anticipated expenditures over the next six months. The investments and the schedule of investments are in compliance with the City's investment policy and all applicable laws and regulations. -3- . . . /cl~ CITY OF DUBLIN. . QUARTERLY INVESTMENT REPORT SECTION I PRIMARY INVESTMENT PORTFOLIO /j ,,/ / I i.::; CITY OF DUBLIN DETAILED LISTING OF INVESTMENTS INCLUDING RATE OF RETURN FOR THE QUARTER ENDED SEPTEMBER 30, 1998 . COUPON MA TURITY VALUE AT INTEREST BOOK MARKET INVESTMENT DATE MA TURITY RATE YIELD vALUE VALUE (4' FEDERAL SECURITIES FNMA (Callable 10/15/96) 10/15/98 1,000,000.00 4:875% 4.889% 997,660.00 1,000,000.00 U.S. Treasury Note 10/31198 1,000,000.00 4.750% 5.101% 997,660.00 1,000,160.00 FHLB (Callable 11/3/94) 11/3/98 1,000,000.00 5.110% 5.110% 998,590.00 1,000,160.00 FNMA (Callable 12/10/96) 12/10/98 1,000,000.00 5.310% 5.311% 998,910.00 1,000,000.00 SLMA (Callable 12/18/97) 12/18/98 500,000.00 5.800% 5.800% 500,625.00 501,015.00 FHLB (Callable 1/12/95) 1111/99 2,000,000.00 5.460% 5.460% 1,999,380.00 2,003,120.00 FNMA. (Callable 2/12/96) 2/12/99 400,000.00 5.550% 5.564% 399,500.00 400,124.00 FNM~ (No Call Date) 4/11/99 1,000,000.00 6.430% 6.460% 1,005,780.00 1,008,280.00 FHLB (Callable 4/6/99) 4/6/00 1,000,000.00 5.750% 5.750% 997,190.00 1,004,380.00 FHLB (Callable 11/26/98) 5/26/00 1,000,000.00 6.000% 6.000% 999,530.00 1,001,720.00 FNMA (No Call Date) 11/8/00 1,000,000.00 6.220% 6.220% 1,003,750.00 1,014,060.00 FHLB (No Call Date) I 0/20/00 1,000,000.00 6.250% 6.250% 1,000,4 70.00 1,000,780.00 FHLB (No Call Date) I 0/20/00 ],000,000.00 6.240% 6.240% 1,000,470.00 1,000,620.00 FHLB (Callable 1/29/99) 1/29/0 I 1,500,000.00 5.630% 5.710% 1,489,920.00 1.503,045.00 FHLB (Callable 3/12/99) 3/12/0 I 1,000,000.00 5.750% 5.750% 996,090.00 1,003,590.00 FHLB (Callable 6/29/99) 6/29/01 500,000.00 6.250% 6.250% 501,015.00 504,765.00 TOTAL FEDERAL SECURITIES $15,900,000.00 5.712% $ I 5,886,540.00 $15,945,819.00 CERTIFICA TES OF DEPOSIT. FDIC INSURED . First Republic Trust & Loan 3/7/2000 95,000.00 5.500% 5.500% 95,000.00 95,000.00 Home Savings of America 10/1/98 99,000.00 5.600% 5.600% 99,000.00 99,000.00 Glendale Federal Bank 12/9/98 99,000.00 5.600% 5.600% 99,000.00 99,000.00 Sanwa Bank 12/9/99 99,000.00 5.600% 5.600% 99,000.00 99,000.00 TOTAL CERTIFICATES OF DEPOSIT $392,000.00 5.576% $392,000.00 $392,000.00 MUTUAL FUND Morgan Stanley Dean Witter U.S. Govt Securities See Note I 6.073% (2) $1,635,749.56 $1,671,621.26 POOLED PUBLIC AGENCY INVESTMENTS State ofCA.- Local Agency Investment Fund (LAIF) $21,450,000.00 5.649% (3) $21,450,000.00 $2 I ,450,000.00 TOTAL INVESTED PORTFOLIO 5.691 % $39,364,289.56 $39,459,440.26 NOTES: (I) A Mutual Fund investment does not have a stated date of maturity and shares may be sold at any time. The share price at the time of a sale may be either higher or lower than the original cost. The current City investment strategy assumes that approximately $1 million will be held through July 1, 1999 and the remainder through October I, 1999 to avoid any deferred sales charge. (Original purchase cost was $1,699,995). The Book Value reflects the market value on June 30, 1998, as required by current governmental accounting rules. (2) Interest Rate shown is based on dividends received this fiscal year to date, which are annualized and then divided by the original investment. (3) Interest Rate shown is the quarterly average as of September 30, 1998. . (4) Market Value shown for the Federal Securities is as of September 30, 1998. EXHIBIT 1 ,....., I -) --, ~ J . CITY OF DUBLIN SUMMARY OF INVESTMENT PORTFOLIO COMPARISON BY INVESTMENT TYPE FOR QUARTER ENDED SEPTEMBER 30, 1998 MARKET %OF MA TURITY TYPE OF INSTRUMENT FACE VALUE BOOK VALUE VALUE PORTFOLIO YEARS U.S. Treasury Notes $1,000,000.00 $997,660.00 $1,000,160.00 6.3% 0.08 Student Loan Marketing Assn (SLMA) 500,000.00 500,625.00 501,015.00 3.1% 0.22 Federal Home Loan Bank (FHLB) 10,000,000.00 9,982,655.00 10,022,180.00 62.9% 1.53 Fed Home Loan Mortgage Corp (FHLMC) 0.00 0.00 0.00 0.0% 0.00 Federal National Mortgage Assn (FNMA) 4,400.000.00 4,405,600.00 4.422,464.00 27.7% 0.69 . SUB -TOTAL GOVT/AGENCY 15,900,000.00 15,886,540.00 15,945,819.00 (I) 40.4% 1.16 Certificates of Deposit - FDIC Insured 392,000.00 392,000.00 392,000.00 1.0% 0.70 Mutual Funds - Morgan Stanley Dean Witter U.S. GOyt Securities (4) 1,635,749.56 1,635,749.56 1,671,621.26 (1) 4.2% 4.6 (3) LAIF 21,450;000.00 21,450,000.00 21,450,000.00 54.4% NtA GRAND TOTAL $39,377,749.56 $39,364,289.56 $39,459,440.26 100.0% NOTES: (1) The City intends to hold the investments until maturity or until market values equal or exceed their face value. Market Value shown is as of September 30,1998. (2) Market value is based upon the shares invested at share price as of September 30, 1998. If the shares were liquidated a deferred sales charge would apply. Face Value is shown as the value recorded in the General Ledger based on the market value 6/30/98. (3) As a mutual Fund shares can typically be liquidated at any time. The weighted average maturity stated in this chart was calculated by Dean Witter based upon all investment instruments owned by the U.S. Government Securities Mutual Fund as of June 30, 1998. This figure represents the duration factor for the Fund and it was reduced from the figure reported for 1997. (4) The current City investment strategy assumes that approximately $1 mi1lion will be held through July 1, 1999 and the remainder through October 1, 1999 to avoid any deferred sales charge. . EXHIBIT 2 1/..// , ,,( 'Y . CITY OF DUBLIN QUARTERLY INVESTMENT REPORT SECTION II . LISTING OF SUPPLEMENTAL MONIES UNDER CITY POSSESSION AND/OR CONTROL · OPERATING FUNDS · SPECIAL FUNDS HELD BY TRUSTEES . City of Dublin Report of Operating Funds On Hand As of September 30, 1998 -- ~ ....:::' . In accordance with the California Government Code, the City Treasurer must disclose on a quarterly basis all monies in its possession. Monies considered invested, and not immediately necessary for current operations, are presented in a separate listing as part of the quarterly report. In the case of Operating Funds in bank accounts, the amount presented relates to the balance reported by the Financial Institution. IT IS IMPORTANT TO NOTE THAT THIS AMOUNT MAY REFLECT FUNDS REQUIRED TO COVER PAYMENTS ALREADY ISSUED AND CHECKS \VHICH HAVE NOT CLEARED AS OF THE LAST DAY OF THE QUARTER. Therefore, these balances will fluctuate throughout the year. These funds are not subject to a specified maturity and the par value would be equivalent to the amount stated. Miscellaneous Cash Balance 9/30/98 Non-Cate2:orized - Cash Petty Cash - City Petty Cash - Recreation Cash Register - (4 Locations) Subtotal $200.00 $200.00 $275.00 $675.00 . 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