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HomeMy WebLinkAboutCS 50-05PICKERING REPORT TO EXECUTIVE COMMITTEE Report Number: CS 50-05 Date: June 6, 2005 Fro m: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Investment Portfolio Activity for the Year Ended December 31,2004 Recommendation: 1. It is recommended that Report CS 50-05 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 2004 totaled approximately $132.9 million with a year end balance in the portfolio of approximately $41.2 million. Current Fund investments are limited to one year or less and Reserve Funds to 10 years or less under the Council approved policy. As discussed below and as confirmed by the attached Performance Report from BMO Nesbitt Burns, the return on the City's portfolio has once again outperformed comparative market benchmarks. 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. The portfolio has increased over prior year by approximately $11 million. The main contributing factors are the timing of receipt of debenture financing for ongoing capital projects, timing of supplementary taxes billed and collected at the end of the year and final remittance to the Region and School Boards, the overall increase in the Reserve Fund balances, primarily Development Charges Reserve Fund, and lastly the City's share of taxes from ©PG for properties that are still under assessment appeal. I feel that the portfolio performed well during 2004 with a weighted yearly rate of return of 4.39% on the Report CS 50-05 Subject: Investment Portfolio Activity for the Year Ended December 31,2004 Date: June 6,2005 Page 2 combined short term and long term investments excluding interfund investments. The average return on interfund investments was 5.4%. 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 4.39% continues to outperform the annual returns for the CIBC World Markets 91-Day T-Bill Index (2.3%) and the Cdn Money Market Fund Index (1.5%). These returns are deemed comparative benchmarks for reviewing the protfolio's performance and considered the standard for analysis of investment funds in the industry. 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 continual decline through the first half of the year. Of the year end total portfolio of some $41.2 million, approximately $11.1 million or 26.9% (2003 - 24.1%) were external long term investments and approximately $6.4 million or 15.5% (2003 - 23.4%) were Interfund Investments (Internal Loans). It is my opinion that all investments were made in accordance with the Investment Policy approved by Council. Attachments: 1. Correspondence, BMO Nesbitt Burns 2. Investment Activities for 2004 3. Outstanding Investments as at December 31, 2004 Report CS 50-05 Subject: Investment Portfolio Activity for the Year Ended December 31,2004 Date: June 6,2005 Page 3 Prepared By: ~stine Senior - Manager, Accounting Services Approved / Endorsed By: Gillis A. Paterson Director, Corporate Services & Treasurer GAP:vw Attachments Copy: Chief Administrative Officer Recommended for the consideration of Pickering ~~.~.__~_.~ City,~ouncil.~'~- /_~' , ,, ~.,, /_/%-,..-,...X'l I--... ?-,,-, ~" o¢"/' '~ Tl~ma~ J. Quinn, ~ief A~ninis~e Offid~r ATTACH~'IEt ~,, ~ ~ 'l~.~ REPORT# ooogooog~E~E~~~ooo~o~oooo~ 8 zzzzzz~~~ ~ ~~~ ooo~ , ~ ZZZ~ 0000~00000000000000000000000000000000 8 0 0 o o 0 o 0 o o o 0 0 o 0 0 0 o 0 UJ IJJ F- UJ UJ 000000 0 ~ ~Z 000000000 00~~ ZZ~~ 66o~Omm 000000000 0000000001 000000000 o ooooo, ii !1 O00000000l O0~O0000l oo~ .. oo~.~o~ O0 .~-~.~ 00~~ ~0~0 0000000 0000000 ~66666 ?