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
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Attachments
Copy: Chief Administrative Officer
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