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CCP 09-16-1993
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CCP 09-16-1993
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<br />" , <br />. '!his future project funding would presently l:e invested in the following <br /> types of invesbnents: <br /> * Money Market Instruments $ 850,000 70.8% <br /> * Zero-Coupon Instruments 350.000 29.2% <br /> (1996 Maturity) <br /> $1,200,000 100.0% <br /> Reconunended Pro-iect Fundincr by Investment Cateaorv <br /> * Money Market Instruments $ 150,000 12.5% <br /> * Zero-Coupon Instruments 350,000 29.2% <br /> * Mutual Fund Investment 700.000 58.3% <br /> $1,200,000 100.0% <br /> '!his recommended investment funding mix would require an interiln <br /> deviation from the City's adopted investment policy. Specifically, <br /> in=easing the stake in !llUtual fund investments from the =ent <br /> $600,000 level to about $1,300,000 would result in this category <br /> representing approximately 30% of the City's entire investment portfolio <br /> as compared to the 15% category maxiImIm referenced in the policy. <br /> Assuming that interest rates are returning to historical levels and not <br /> those seen in the Seventies and Eighties, Money Market yields may be in <br />. the 2.50% - 3. 00% range in the next three years. '!he $700,000 <br /> invesbnent could generate approxilnately $60,000 in Money Market earnings <br /> over the next three years. <br /> An invesbnent in a quality, short-term govermnent security !llUtual fund <br /> mayl:e expected to approximate five-year treasury returns or about 5%. A <br /> $700,000 invesbnent in this option could generate approximately $110,000 <br /> in earnings over the next three years. <br /> Reauest for Interiln Deviation <br /> '!his estimated return premium for asstnning greater risk, while still <br /> maintaining liquidity, seems appropriate for an interiln (through 1996) <br /> period. I believe that this investment option prudently balances <br /> risk/reward considerations and is likely to result in a smaller PIR Fund <br /> contribution when the project begins. <br /> If you have any questions, please contact me. <br /> TRP/sjl <br />. <br />
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