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HomeMy WebLinkAboutINVESTMENT ADVISORY BOARD (IAB) ANNUAL REPORT - 10-01-2006 t CITY OF HUNTINGTON BEACH INVESTMENT ADVISORY BOARD (IAB) ANNUAL REPORT TO THE CITY COUNCIL FOR THE PERIOD OCTOBER 1, 2006 TO SEPTEMBER 30, 2007 October 1, 2007 Establishment of Board The IAB 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 Christopher Palmer Cathy Green Joe Foye Debbie Cook Bob Glass Don Hansen Angela Rainsberger Joe Carchio 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, 2007 were open to the public as required by Government Code 54950 and held on the following dates in City Hall: October 25,2006 .January 24, 2007 April 25, 2007 July 18, 2007 In addition, a joint study session with the City Council is scheduled to be held on November 19, 2007. 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. <HELP> for explanation . Carp F FORWARD CURVE ANALYSIS US 1 1 r 6.0 J - - L - ' . . J . . . . . . . L . . . . 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J . t .,. . . . . . . ., _ _ - _ _ _ _ 5.2 . . _ .{r`X-ter+ - - - - - _ , - - - _ - . - - - - - - - - - - - - - - - - - 5.0 +:ram L , . . , . . . . , Jr . . . _ . _ . . . . . . l - - - - - - - S - - - - - - - - - - - - - - - - - - 4.8 - - - - - - - - - - - -- - - - - - - - -- - - - - - - - -- - - - - - - - - - - - - - - - - - - - 4.6 _-_ _ - - -.- - - - J , - - . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4.4 - - - - - - - - - - - � - - - - - - - - - - - - - - - - - - - - - - - 4.2 1w 1M 2M 3M 4M 5M 6M 9M 1Y 2Y 3Y 4Y 5Y 7Y 10 15 20 30 4.0 Graph Curves : ®COUPON ® / 4/08 — ® 5/ /08 ------ HII/ 33/0:3 ------ 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 2007 Bloomberg L.F 07-Nov-2007 15: 12:` Interest k Ay®®® Nov � -I $ `Oct- MN ®� .s �r ®v-^-'®� W4 > � v x p 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 3yrs to lock in rates. — Invest in agency bullets and US Treasuries with 2-5 year maturities to protect against the eventual decline in rates. 10 Conclusion • Ov erview of year - IAA report Cnvestment opportunities in an Easing interest rate environment 11 Investment Advisory Board Page Two Annual Report to the City Council October 1, 2007 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, 2006 to September 30, 2007 it appears that the City Treasurer has maintained compliance with all requirements in the City's Investment Policy. Respectfully submitted, James Steinkirchner Chair—Investment Advisory Board cc: Shari L. Freidenrich, City Treasurer CA\Documents and Settings\STEINJ01\Local Settings\Temporary Internet Files\0LKD6\IAB annual report fy 0607.doc t , o Joint Study Session 1AB/City Council Investment Advisory Board embers® James Steinkirchner, Chair; Joe Eoye, Bob Glass, Brian Olson, Angela Rainsberger, Diann Shelton 1 November 19, 2007 Study Session Topics • Overview of year - IAB report • Investment opportunities in an easing interest rate environment 2 Overview of 1AB 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 Market Overview and Economic Forecast • Fed Funds (FF) rate lowered to 4 . 50% in 10/07 from 5.25% • Bernanke- New Fed Chairman • Current lowering mode and Chairman 's rate policy is data dependent • Expect FF rate of 4 .25% in first half 2008 5 Economy Higher interest rates & gas prices slowing economy, housing prices, & consumer spending o Economic growth slow, suppressing inflation fears • Jobless rate @ 4.70% • Stock market mixed-techs are back, financials and homebuilders are down • Oil prices up, housing prices down 6 <HELP> for explanation . Msg ,- G , SHENTOl HISIFORICAL YIELD CURVE PAGE I OF DATE RANGE 1 3 1 1 3 0 MTY RANGE 5.20 �@ ; 10/31/07 103106 - J - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --- 5.00 - - -k - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4.80 - - - - - - - - - - - - - - J - - - - - - - - _ _ - - - - - - _ _ - - - - - - - - - _ _ _ - - - - - - - - - - - - - - - _ _ - - _ 4.40 , . - - - , - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4.20 - • - -, . . ..- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4.00 p _ _ RM _ _ _ - _ _ _ _ _ _ _ _ _ - - _ _ _ _ _ _ _ _ _ _ _ _ ®_ _ _ 00 r . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -,- .50 D '- - - - _ - _ - - - - - J - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -, -1 .00 -1 .50 3 6 2 3 5 10 30 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 2007 Bloomberg L.P. 07-Nov-2007 15: 13=5E