Item 4 - Additional Materials posted 11-10-21November 16, 2021, Item #4M EM ORAN DLJ M City of Poway ADDITIONAL MATERIALS (Agenda Related Writings/Documents provided to City Council or Staff after distribution of the Agenda Packet for the November 16, 2021 Council Meeting) DATE: TO: FROM: CONTACT: SUBJECT: Summary: November 10, 2021 Honorable Mayor and Members of the City Council Aaron Beanan, Director of Finance ~ Aaron Beanan, Director of Finance (858) 668-4411 or abeanan@poway.org City's Investment Report as of September 30, 2021 The purpose of this memorandum is to update the amount listed in the Fiscal Impact section and Attachment A of the Agenda Report posted on November 9, 2021. Below is the red line reflecting these amendments. Fiscal Impact: The externally managed investment portfolio earned $183,070 $125,208 interest during September 2021, as well as $129,927 interest during August 2021, and $133,504 during July 2021. Fees for investment services during this period totaled $8,423. Attachment A: Accrued Interest Earned 135,086 Attachments: A. Updated Page 2 of Agenda Report B. Updated Investment Statistics Reviewed/ Approved By: Assistant City Manager 1 of 3 Reviewed By: Alan Fenstermacher City Attorney 129,421 --1&a-:07-G-125 208 Approved By: Chris Hazeltine City Manager
November 16, 2021, Item #4It is the City's practice to keep funds (including those identified to pay for Capital Improvement Projects) invested and earning interest until they are needed. In addition to changing market conditions, reductions in the fair value of the Investment Portfolio can also be reflective of payments for large capital projects. The attached portfolio report (Attachment B) and investment report (Attachment C) were prepared by the City's investment manager, Insight Investment, with input from the City's Finance Department. The portfolio report includes all investments while the investment report includes only those investments managed by Insight Investment. All City funds, including the General Fund, Water Fund, Wastewater Fund and others -except those identified in Attachment D, are pooled and invested, with earned interest allocated quarterly based on the average daily cash balance in each fund. The funds on deposit at LAIF and CalTRUST earn interest at variable rates. The interest rate for the month ending September 30, 2021, is estimated at 0.21% for LAIF, 0.14% for the CalTRUST short-term fund, and 0.30% for the CalTRUST medium-term fund. For fixed income securities, the difference between amortized cost and fair value is considered an unrealized gain or loss. A realized loss is when the principal of the security is redeemed before its maturity date at a fair value lower than its amortized cost value. The amortized cost value of the externally managed investment portfolio is $66,089,824; the fair value is $67,159,104 for an unrealized gain of $1,069,280 or 1.62% of the total amortized cost value. The source of the fair value information for the U.S. Treasury Notes, the U.S. Instrumentalities, Corporate Notes, and Municipal Bonds is Interactive Data Corporation. Also included with this report are recaps of the City's cash and investments held by fiscal agents, non-managed investments, and cash on hand. The total book value of the cash and investments held by our fiscal agent, U.S. Bank, at September 30, 2021, was $464,890. The source of the market value information for these investments was U.S. Bank. The total book value of the non-managed investments was $11,250 at September 30, 2021. The City's cash on hand at September 30, 2021, totaled $211,531. The September 30, 2021 balance of the City's Library Trust Fund was $258,936. Through the Fiscal Year 2021-22 period ending September 30, 2021, no transfer of interest earnings has been made to the General Fund. At the close of Fiscal Year 2021-22, 90% of the Library Trust Fund's interest earnings will be transferred to the General Fund to partially offset library operating expenses. Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: The externally managed investment portfolio earned $125,208 interest during September 2021, as well as $129,927 interest during August 2021, and $133,504 during July 2021. Fees for investment services during this period totaled $8,423. 2 of3 ATTACHMENT A
November 16, 2021, Item #4City of Poway Investment Statistics Separately Managed Investment Pools Fair Value: CalTRUST Short-Term Deposits CalTRUST Medium-Term Deposits Deposits at the Local Agency Investment Fund (LAIF) Total Fair Value Weighted Average Yield Effective Average Duration in days Weighted Average Maturity in days Externally Managed Investment Pools Fair Value: Cash U. S. Treasury Notes U. S. Instrumentalities Corporate Bonds Total Fair Value Amortized Cost Value: Cash U. S. Treasury Notes U. S. Instrumentalities Corporate Bonds Total Amortized Cost Value Unrealized Gain (Loss) Accrued Interest Earned Weighted Average Yield Effective Average Duration in years Weighted Average Maturity in years Total Fair Value of Portfolio Assets Weighted Average Yield Effective Average Duration in years Weighted Average Maturity in years Glossary of Yield Terminology September 2020 11,434,570 11,798,998 21,774,271 45,007,839 0.79% 1 1 10,841,160 38,487,404 21,765,412 71,093,976 10,425,075 37,468,630 21,066,088 68,959,793 2,134,183 135,086 1.94% 1.96 2.07 116,101,815 1.49% 1.20 1.27 June 2021 11,456,558 11,805,007 34,973,287 58,234,852 0.27% 1 1 11,712,717 35,038,689 21,515,934 68,267,340 11,465,215 34,472,188 21,011,252 66,948,655 1,318,685 129,421 1.64% 1.74 1.90 126,502,192 1.01% 0.94 1.03 Coupon: A bond's coupon is the periodic interest payment made to the holder of the fixed income security during the life of the bond. Coupon payments can be made monthly, quarterly, or annually. Book Yield: The Book Yield is that rate of return that will make the present value of the future cash flows of a fixed income security equal to the price paid for the security. This assumes that the security will be held to its maturity. Current Yield: Annual rate of return on an investment expressed as a percentage. Current Yield of a fixed income security is the annualized earnings (coupon) divided by the bond's market value as of the valuation date. One Year Total Yield: The One Year Total Yield or One Year Return represents the portfolio's percentage change over a year's time, factoring in interest payments, changes in market value and reinvestment of distributions. September 2021 11,461,249 11,814,225 22,195,881 45,471,355 0.22% 1 81,833 12,826,608 32,891,155 21,359,508 67,159,104 81,833 12,622,861 32,427,513 20,957,617 66,089,824 1,069,280 125,208 1.55% 1.61 1.78 112,630,459 1.01% 0.96 1.06 Weighted Average Yield: The total yield on a bond portfolio divided by the number of bonds contained in it, weighted for the size of each bond so that the yield of large holdings does not drown out the calculation of yields on small holdings. Yield to Maturity: The Yield to Maturity (YTM) or Market Yield to Maturity of a fixed income security is that rate of interest that will make the present value of the future cash flows equal to the market value as of the valuation date, assuming the bond is held to maturity. 3 of 3 ATTACHMENT B