7b Supp
ITEM NO. 7b_Supp DATE OF MEETING March 1, 2011 Annual Treasury And Investment Portfolio Update for 2010 Commission Briefing Presented by Craig Kerr March 1, 2011 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 12/31/2010 "HIGH GRADE" MORTGAGE-BACKED SECURITIES 3% REPURCHASE AGREEMENTS 18% TREASURY NOTES 32% FEDERAL AGENCIES 47% 3 INTEREST RATE TRENDS For 2010, Short And Medium Term Rates Stayed Within a Narrow Trading Range And Rose At Year-end. The Federal Reserve Left Short Term Rates Constant Throughout 2010 [0.25%] Staff Monitors Market Conditions; but, Does Not Time the Market. Short and Medium Term Rates Are Expected to Rise In The Fourth Quarter of 2011. 4 2010 Rates 3.5 3.0 2.5 2.0 Yield(%) 1.5 1.0 0.5 '1'. | | O 0 Q 5" Q9 6}- c; o oFederal Funds I 2 year Treasuries -5 year Agencies 5 Treasury Yield Curve 5.0 4.5 4.0 3.5 3.0 Yield 2.5 2.0 1.5 1.0 0.5 0.0 24 60 120 180 360 Months o12/29/2009 +12/3l/2010 6 2010 YIELD COMPARISON Benchmark Port's Pool Q1-2010 1.07% 2.38% Q2-2010 0.70% 2.34% Q3-2010 0.48% 2.39% Q4-2010 0.64% 1.55% ANNUAL 0.72% 2.17% 7 PORTFOLIO EARNINGS 2006 2010 2010 2.17% $19,376,723 2009 2.76% $21,517,877 Year 2008 4.04% $30,396,932 2007 4.78% $39,142,329 2006 3.72% $26,169,677 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% Nine Years 2.65% 3.58% 9 YIELD HISTORY 10 Port's Investment Portfolio Size Fluctuates Port's Investment Portfolio 12/31/2010 Was $954 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 Projects Reduce 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
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