7b supp
ITEM NO: ______7b_Supp_ DATE OF MEETING: March 12, 2013 Annual Treasury And Investment Portfolio Update for 2012 Commission Briefing Presented by Craig Kerr March 12, 2013 BACKGROUND Commission Resolution Approved Port Investment Policy 2.0 Target Duration Plus Or Minus 50 Basis Points Do Not Forecast Rates; Balance RETURN And RISK Over Cycles This Strategy Outperforms The Market When Rates Are Falling And Underperforms When Rates Are Rising Benchmark Bank of America Merrill Lynch Treasury/Agency 3 Year Index 2 PORTFOLIO COMPOSITION 12/31/2012 "HIGH GRADE" MORTGAGE- BACKED SECURITIES 0% REPURCHASE AGREEMENTS 17% TREASURY NOTES 30% FEDERAL AGENCIES 53% 3 INTEREST RATE TRENDS For 2012, Short And Medium Term Rates Fell Throughout the Year. The Federal Reserve Left Short Term Rates at 2010 Levels Throughout 2011 and 2012 [0.25%] Staff Monitors Market Conditions; but, Does Not Time the Market. Short and Medium Term Rates Are Expected to Stay Within a Narrow Trading Range for 2013. 4 2012 Rates do \0 -0-Fed Funds -l-2 Year Agency +5 Year Agency 5 Source: Bloomberg 6 2012 YIELD COMPARISON Benchmark Port's Pool Q1-2012 0.38% 1.46% Q2-2012 0.35% 1.02% Q3-2012 0.26% 0.85% Q4-2012 0.26% 0.76% ANNUAL 0.31% 1.02% 7 PORTFOLIO EARNINGS 2008 2012 Year 2012 1.02% $9,547,173 2011 1.67% $15,069,955 2010 2.17% $19,376,723 2009 2.76% $21,517,877 2008 4.04% $30,396,932 Interest Earnings - % Yield and $ 8 YIELD HISTORY Year Benchmark Port's Pool 2002 - 2006 3.13% 3.69% 2007 4.33% 4.78% 2008 2.01% 4.04% 2009 1.12% 2.76% 2010 0.72% 2.17% 2011 0.48% 1.67% 2012 0.31% 1.02% Eleven Years 2.24% 3.17% 9 YIELD HISTORY Benchmark Yield Port's Yield 5.2% 5.00% 4.78% 4.33% 4.45% 4.2% 4.07% 4.08% 4.04% 3.72% 3.57% 3.2% 2.50% 2.50% 2.76% 2.64% 2.2% 2.01% 2.17% 1.58% 1.67% 1.12% 1.2% 0.72% 1.02% 0.48% 0.31% 0.2% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 10 Port's Investment Portfolio Size Fluctuates Port's Investment Portfolio 12/31/2012 Was $944 Million Over The Past 5 Years, The Size Has Ranged From $639 Million to $976 Million Size Fluctuations Are Mostly Tied To Capital Spending: Capital Project Spending Reduces The Portfolio Size Bond Issues To Fund Projects Increase The Portfolio 11 Investment Pool Participating Funds Examples Minimum Operating Fund Balance: General & Airport Development = 9 months O&M expense Operating Funds Available for Capital: General, Airport, Tax Levy funds programmed to be spent over the next few years. Bond Funds: Capital projects Reserves & Security: Bond reserves, customer lease security Special Use (primarily for capital projects): Passenger & Customer Facility Charges, Transportation & Infrastructure 12
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