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