Item 6b Supp

Annual Treasury and Investment
Portfolio Update for 2008
Commission Briefing
Presented by Craig Kerr
March 5, 2009

BACKGROUND
12/11/2001 Resolution No. 3476 authorized the Port to
become its own Treasurer
6/11/2002 Resolution No. 3487 adopted Port Investment
Policy
6/25/2002 Through a Competitive Process, Selected Bank
of America as the Port's Bank (On-line banking)
7/31/2002 Port Started Operating its Own Treasury
12/12/2006 Adopted Resolution No. 3569 Revising Port
Investment Policy
10/23/2007 Adopted Resolution No. 3589 Amending
Section 10 ("Diversification") of the Policy
2

INVESTMENT STRATEGY
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  Merrill Lynch Treasury/Agency 3
Year Index
3

PORTFOLIO COMPOSITION
"HIGH-GRADE"
MORTGAGE-  REPURCHASE
BACKED   AGREEMENTS
SECURITIES      3%
8%
TREASURY BILLS
17%


TREASURY
FEDERAL
NOTES
AGENCIES
7%
53%
DISCOUNT
NOTES
12%




4

INTEREST RATE TRENDS
For 2008, Short and Medium Term Rates Fell and
Continue to Fall.
The Federal Reserve Lowered Short Term Rates in Quarter
1, 2008 and Continued Lowering 7 Times throughout
2008 (4.25%  0.25%)
Staff Monitors Market Conditions; but Does Not Time the
Market.
Short Term Rates Are Expected to Stay at their present low
levels and Medium Term Rates will continue Falling for
2009.

5

2008 R ates
5.0
4.5
4.0
3.5
(% )   3.0
Y ield   2.5
2.0
1.5
1.0
0.5
0.0
Dec-07  J an-08  F eb-08  Mar-08  Apr-08  May-08  J un-08  J ul-08  Aug-08  S ep-08  Oct-08  Nov-08  Dec-08
F ed F unds     2y Tsy     5y Agy

6

Treas ury Yield C urve
5.0
4.5
4.0
3.5
3.0
Y ield 2.5
2.0
1.5
1.0
0.5
Months
0.0   3
24     60        120        180                           360
12/31/2007      12/31/2008
7

Actions Taken In Light of Current
Financial Environment
Enhanced Commercial Paper Monitoring
until Maturity in Early 2008
Did not Invest in any New Commercial
Paper from Early 2008 Maturities to Date
Re-bid an Investment Agreement to make
Allowable Securities More Conservative

8

2008 YIELD COMPARISON
Benchmark    Port's Pool
Q1-2008     1.92%      4.69%
Q2-2008     2.79%      4.01%
Q3-2008     2.42%      3.93%
Q4-2008     0.91%      3.51%
ANNUAL   2.01%    4.04%

9

PORTFOLIO YIELD 2004  2008
$45,000,000
4.78%
$40,000,000
$35,000,000
4.04%
$30,000,000
Interest Earnings                         3.57%        3.72%
$25,000,000
2.64%
Yield
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$-
2004         2005         2006         2007         2008
Year

10

YIELD DATA
Year      Benchmark    Port's Pool
2002      2.50%      4.45%
2003      1.58%      4.08%
2004      2.50%      2.64%
2005      4.06%      3.57%
2006      5.00%      3.72%
2007      4.33%      4.78%
2008      2.01%      4.04%
Seven Years   3.13%        3.90%
11

Port's Investment Portfolio Size
Fluctuates
Port's investment portfolio 12/31/2008 was
$692 Million
Over the past 5 years, the size has ranged
from $619 million to $926 million
Size fluctuations are mostly tied to capital
spending:
Capital projects reduce the portfolio size
Bond issues to fund projects increase the
portfolio
12

PORTFOLIO VALUE 2004 -2008
Par Value (000's)
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08
13

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