CCP 03-26-2001 - Laserfiche WebLink

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The renort shall exnlain the total investment return and comnare the return and comnare . the return with budl!:etarv exnectations. The total return for 2000 was $835,514 on an average portfolio balance (including cash equivalents) of $13,987,888, which equates to an average yield of 5.97% for the year, This compares favorably to 2000 interest income expectations in the range of 5,0% to 5,5%, The 2000 yield also compares closely to the benchmark 2000 average rate for a two year U,S, Treasury note of 6,25%. 2000 interest income of$835,5l4 resulted in a $285,714 positive deviation (52,0%) against budget, The primary reasons for this performance were higher than expected yields and a larger than expected portfolio balance arising from construction start delays for the City Hall facility construction project and the approximate $2,200,000 Ingerson neighborhood street improvement project not moving forward, The report shall contain a discussion of the outlook for interest rates and the economic trend for the upcoming year investment strategies to be implemented, and budgetary expectations for investment income. The general outlook for interest rates in 2001 is for them to be lower than average 2000 levels, Many economists believe the United States economy will be negatively impacted by slow growth and by concerns in other international economies with Japan being the most noteworthy, Slower growth and lower import prices should keep inflation low and stable, around 2,5%, By year-end 2001, we may be seeing the yield curve for all maturities in the range of 4,0% to 4,75%, . The estimated annualized rate of return for 2001 should be in the range of 4.5% to 5.25%, 2001 interest was budgeted at $656,000 on an expected average portfolio balance of $13,500,000 with an expected yield of 4,90%, Attached Schedules Attached are related schedules for your further review: 1, Investment Portfolio Analysis, December 31, 2000 2, Annualized Investment Portfolio Return, 2000 3, Investment Ladder, Note and Zero Maturities by Year, 2001 - 2005 This report will be discussed with the Operations and Finance Committee at their April 2001 meeting, I herewith submit this annual report to the City Council pursuant to the annual rep~:~nt of the Investment Policy, Terrance R. Post City Treasurer 4 . (Enclosures)