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HomeMy WebLinkAboutCS 38-04PICKERING REPORT TO EXECUTIVE COMMITTEE Report Number: CS 38-04 Date: October 25, 2004 From; Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Investment Portfolio Activity for the Year ended December 31,2003 Recommendation: 1. It is recommended that Report CS 38-04 of the Director, Corporate Services & Treasurer be received by Council for information. Executive Summary: The following report and attachments represent a summary of the investment activity and year end balance in the portfolio. Investment activity for the year 2003 totaled approximately $133.9 million with a year end balance in the portfolio of approximately $29.9 million. Current Fund investments are limited to one year or less and Reserve Funds to 10 years or less under the Council approved policy. Financial Implications: None Background: The City's investment portfolio is comprised of two main areas: Reserve Funds, and balances available in the Current Fund when not required to meet current operating expenditures. This latter balance can vary greatly depending upon many factors including the timing of the receipt of property taxes and levy payments to the School Boards and the Region. Investments are undertaken as one consolidated pool of funds and interest earned is credited back to the appropriate funds. As the Treasurer of the City of Pickering there are certain information and opinions that I must report, under Provincial Regulation, to the Committee and Council. The attached schedules are also included as part of the information requirements. I feel that the portfolio performed well during 2003 with a weighted yearly rate of return of 3.16% on the combined short term and long term investments excluding interfund investments. The average return on interfund investments was 5.5%. As you are aware investment parameters are much narrower for the City than permitted for money market funds due to the Municipal Act and Regulations limiting the selection of qualified investments for municipal entities. However notwithstanding these restrictions, the annual return of 3.16% was comparable to the top 2003 annual return for the 202 Canadian Money Market Funds of 3.1%. These returns are tracked and analyzed by Morningstar Canada and is considered the standard for analysis of investment funds in the industry. Report CS 38-04 Subject: Investment Portfolio Activity for the Year Ended December 31, 2003 Date: October25,2004 Page 2 The emphasis of the City's investment strategy has been to increase the portion of long term investments to the overall portfolio, while retaining sufficient liquidity for current operations, to take advantage of more stable rates of return rather than fluctuating with the short term markets. This move towards a more balanced portfolio of short term and long term investments allowed the City to capitalize on higher rates of return for the portfolio when the short term rates were seeing a decline in the latter half of 2003. Of the year end total portfolio of some $29.9 million, approximately $7.2 million or 24.1% (2002 - 8.4%) were external long term investments and approximately $7.0 million or 23.4% (2002- 23.1%) were Interfund Investments (Internal Loans). With the current market environment this strategy has been advantageous to the City as the short term rates have continued to decline over the course of 2004 and were averaging around 2.0% for the third quarter of 2004. From a review of the City's investment portfolio performance report as of September 30, 2004, provided by BMO Nesbitt Burns, the City's portfolio continues to exceed the money market fund returns. The year to date rate of return for September 30, 2004 is 3.59% and the top comparable rate for the money market funds is 2.7%. It is my opinion that all investments were made in accordance with the Investment Policy approved by Council. Attachments: 1. Investment Activities for 2003 2. Outstanding Investments as at December 31, 2003 Prepared By: /K r~ii n-e-Senior- Manager, Accounting Services Approved / Endorsed By: Gillis A. Paterson Director, Corporate Services & Treasurer GAP:vvv Attachments Copy: Chief Administrative Officer ~iec~(~ rn~ nmge~O.,n of /.~Thomas J. Quirf~, Chief Administrative Officer ATTACHMENT # ! TOREPORT#("~' ~,~- 0,~ I-- Z M.I I-- ILl oogg gg googoo=ooooooo ~gg~oooo oooooo9999oooogoooooooooo9oooooo gggg§ggggggggggg§gggggSgggggggg§gggggggggggggggg~g 000000000000000000000000000000000000000000000000~0 0 ~~__~o~o~ oo oo_ Z LU ILl (%1 o ? z¥98 .... qq 0 0 qqq qqq ATTACHMENT # ,,,~.__ TO REPORT o~~6 0000 0000000 0~000~ 99999? 66666~ 99999? 000000 000000