The URL can be used to link to this page

Home My WebLink AboutINVESTMENT ADVISORY BOARD ANNUAL REPORT TO CITY COUNCIL - 10 rs ay CITY OF HUNTINGTON BEACH` - INVESTMENT ADVISORY BOARD (IAB) ANNUAL REPORT TO THE CITY COUNCIL FOR THE PERIOD OCTOBER 1, 2005 TO SEPTEMBER 30, 2006 October 1,2006 Establishment of Board The TAB'was created to act,in an advisory capacity to the City Council and City Treasurer in matters pertaining to all of the City's investments by the City Council in May 1995 by Resolution#3284. The seven Board members are appointed by a member of the City Council and are as follows: Name Council Member Ed Bush(vacant as of 9-30-06) Cathy Green Joe Foye Debbie Cook Bob Glass Don Hansen Monica Hamilton Dave Sullivan Brian Olson Keith Bohr Diann Shelton Gil Goerper James Steinkirchner(Chair) Jill Hardy Board Activities The meetings of the Board for the fiscal year ended September 30, 2006 were open to the public as required by Government Code 54950 and held on the following dates inCity Hall: October 26,2005 January 25, 2006 April 19,2006 July 19,2006 In addition, a joint study session with the City Council is scheduled to be held on November20, 2006. The two major activities of the Board consisted of reviewing each monthly investment report and reviewing the City of Huntington Beach Investment Policy annually, prior to their presentation'at a City Council meeting': Investment Advisory Board Page Two Annual Report to the City Council October 1, 2006 As required under HB Municipal Code 2.110.040(b), the Board has reviewed matters pertaining to the City's investments in the following areas: • Reviewed the annual Investment Policy • Discussed the Management Letter from the City's independent financial auditor in conjunction with the annual financial audit and was advised that there were no comments relating to investments for the IAB to review. • Discussed Cash Management and ensured that there was sufficient liquidity to meet the next six month's estimated expenditures for all funds including the General Fund. • Reviewed Risk-Return Analysis as it relates to Safety,Liquidity,and Yield • Reviewed Long Term Investments and how cash flow forecasting enables the City to match investments to budgeted expenditures • Reviewed New Investment Sources,as appropriate • Reviewed Proposed State Legislation impacting the City's Investments • Reviewed any Anticipated Exposure to Loss by looking at liquidity, credit &market value of investments • Reviewed Quarterly and Monthly Reports prior to them being presented to the City Council • Reviewed Quarterly Compliance with Investment Policy and no exceptions were identified Based on the information reviewed by the Board for the period October 1, 2005 to September 30, 2006 it appears that the City Treasurer has maintained compliance with all requirements in the City's Investment Policy. Respectfully submitted, ames Steinkirchner Chair—Investment Advisory Board c: Shari L. Freidenrich,City Treasurer G:\treas\iab\iab annual report fy 0506:doc CITY OF HUNTINGTON BEACH _ INTERDEPARTMENTAL COMMUNICATION CITY TREASURER'S DEPARTMENT TO: Joan Flynn, City Clerk FROM: Shari L. Freidenrich, City Treasur DATE: November 20, 2006 SUBJECT: LATE COMMUNICATION — STUDY SESSION Attached is the Powerpoint Communication that will be presented to the City Council during the Study Session on November 20th titled Joint Study Session IAB/City Council. Thank you. SLF/Ine Cc: Penelope Culbreth-Graft CID Ln ol ON Joint 1AB/City Investment Advisory Board Members: James Steinkirchner, Chair; Joe Foye, Bob Glass, Monica Hamilton, Brian Olson, Diann Shelton 1 November 20, 2006 Study Session Topics • Overview of year - IAB report • Investment opportunities in an Easing interest rate environment 2 Overview of IAB Annual Report • Investment policy compliance • Broker/dealer review • Legislation impacting investments • Cash management Month ly/q uarterly investment report 3 Investment Outlook with an Expected Fed Policy Ease • Market Overview/Economic Forecast • Interest Rate Yield Curve • Investment Strategies for the City 4 Market Overview and Economic Forecast • Fed Funds (FF) rate raised to 5 . 25% in 11 /06 from 4% in 11 /05 • Bernanke- New Fed Chairman • Current Pause mode and Chairman 's rate policy is data dependent • Expect FF rate of 5% in first half 2007 s Economy Higher interest rates & gas prices slowing economy, housing prices , & consumer spending • Economic growth slow,supressing inflation fears • Jobless rate @ 4 .4%-Iowest since 5/01 . • Stock market in recovery-techs are back • Oil prices down , real wages up 6 Where does the market think rates headed ? are <HLLP> for explanation, <IENU> for similar functions. P143Ns : HELP DESK Enter all values and hit <GO , 15: 16 COUPON IMPLIED FORWARD RATES : USA YS TO NTUPIT`d F 11", 2 10 20 30 1 4� 50 4.4 4�49 4�40 _ . �1 4� 4 4� 5 4� _x' R --- -__�._ _---- _--_ � _-- _ YIELDS D 2 4.41 4m48 8 :, � , ._ 56 � 4. q$ ... ARE Y 3 4. 54 4� 51 4, 54 4. 56 � 4. 5'"? 9 4. 61 4. COMPOUND F 5,0 YIELD CURVES . 4 4. O-TODRYS 4. \, __ . - 5 YRS FWD 4,6 4, --- IYC CURVE # 12 3 4 5 7 10 20 30 7 Australia 61 2 9777 8600 Brazil 5511 3048 4500 Europe 44 20 7330 7500 Germany 49 69� 920410 Hong Kong 852 2977 6000 Japan 81 3 3201 8900 Singapore 65 6212 1000 U.S. 1 212 318 2000 Copyright 2006 Bloomberg L.P. G967-1-0 13-Nov-2006 15,30:57 Yield Cu rve Chart 1 1 /05� 1 1 /06 <HELP> for explanation. P143 Govt cis NEXT HISTORY DATE USED AS START DATE HISTORICAL YIELD CURVE G E 1 0 F 2 DATE RANGE NIFY RMGE 5,20 4 9 0 y E L D 4 ,K) 4,20 4�0- I 76 310-� 1 ,00 P R E 15,0 D . . . . . . . . - - - - - - 00 3 6 2 3 5 10 0 Australia 61 2 9777 8600 Brazil 5511 3048 4500 Europe 44 20 7330 7500 Germany 49 69 920410 Hong Kong 052 2977 6000 Japan 81 3 3201 8900 Singapore 65 6212 1000 U.S. 1 212 318 2000 Copyright 2006 Bloomberg L.P. G967-1-2 13-Nov-2006 14:55:16 Interest Yield "MiRM: ii:;: M r9 Qv- A W /�" 3 � x D@C- 9 Investment Strategies for the City • Short Term -Use LAIF, commercial paper & agency discount notes to invest cash needed within the year • Long Term — Invest in agency callables with 1 X calls and call protection of 6mo. to 2yrs to lock in rates . — Invest in agency bullets and US Treasuries with 3-5 year maturities to protect against the eventual decline in rates. 10 Disclaimer • Morgan Stanley including its subsidiaries and/or affiliates, usually make a market in the U.S.-traded over the counter securities and may sell to or buy from customers, as principal, securities mentioned herein. Morgan Stanley or employees preparing this presentation may have a position in securities or options of any company mentioned in this presentation. An employee of Morgan Stanley may be a director of a company in this presentation. Securities recommended, offered, or sold by Morgan Stanley: (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution and (iii) are subject to investment risks, includincq the possible loss of the principal amount invested. Although information has been obtained from and is based upon sources Morgan Stanley believes to be reliable, we do not guarantee its accuracy and it may be incompleteor condensed. All opinions and estimates constitute Morgan Stanley's judgment as of the date of this presentation and are subject to change without notice. This presentation is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any security. This is neither an offer to sell nor a solicitation of any offer to buy a new security. For further information, please contact your Morgan Stanley representative. 11