HomeMy WebLinkAbout2009/02/17 Item 3
CITY COUNCIL
AGENDA STATEMENT
~('f:.. CITY OF
. "1- ~ CHUlA VISTA
FEBRUARY 17, 2009, Item~
ITEM TITLE:
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING THE EXISTING CITY
INVESTMENT POLICY At'ID GUIDELINES
INVESTMENT REPORT FOR THE QUARTER ENDED
DECEMBER 31, 2008
DIRECTOR OF FIN E/TREASURER r1 fv MIL--
CITY MAt"TAGE
ASSISTANT CITY
SUBMITTED BY:
REVIEWED BY:
4/5THS VOTE: YES D NO 0
SUMMARY
Per California Government Code Section 53646, the City Treasurer may annually present the
City's Investment Policy to the City Council to reaffIrm or make any changes to the existing
policy. The Investment Policy provides guidelines for the investment of idle funds and affords
the City various investment opportunities, as long as the investment is deemed prudent and is
allowable under Government Code Section 53600, et seq. The City received the CertifIcate of
Excellence Award from the Association of Public Treasurers United States and Canada (APT-
US&C) in August 2007 for its Investment Policy, and most .recently, the Policy was reviewed
and adopted by City Council on February 12, 2008. Adoption of the resolution approves
maintaining the existing City Investment Policy and Guidelines.
Transmitted herewith is the City's investment report for the quarter ended December 31, 2008. To
meet the reporting requirements set forth in the California Government Code Sections 53600 et seq.
and the City of Chula Vista Investment Policy, a separate report was distributed to the City Council
as an informational item.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance with
the California Environmental Quality Act (CEQA) and has deter;mined that the activity is not a
"Project" as defmed under Section 15378 (b)(4) of the State CEQA Guidelines; therefore,
pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to
CEQA. Thus, no environmental review is necessary.
3-1
FEBRUARY 17,2009, Item--3-
Page 2 of3
RECOMMENDATION
Council adopt the resolution and accept the report.
BOARDS/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
Investment Policv
The City's Investment Policy and Guidelines adopted on February 12, 2008 by Resolution 2008-54
intended to provide direction for the prudent investment of temporarily idle cash, and for
maximizing the efficiency of the cash management process. The stated goal is to enhance the
economic condition of the City while ensuring the safety of funds invested. The policy includes a
list of specific investment instruments available under the relevant California Government Code
sections, 53600 et seq. and 53635 et seq. Each investment transaction is made in the context of first
ensuring the "safety" of principal, second, investing only for that timeframe that the cash is not
needed for operational purposes ("liquidity"), and last seeking the highest return possible ("yield")
provided that the first two factors are met:
The Policy was amended in February 2008 to include a legislative change that no longer required
the City to submit its Investment Policy and quarterly reports to the California Debt and Investment
Advisory Commission (CDIAC). Also at that time, the Policy was amended to add Investment
Trust of Califomia (CalTRUST) to the list of authorized investments. No new amendments are
recommended at this time.
Quarterlv Investment Report
The total cash and investment portfolio as of December 31,2008 was $188,778,281. This is an
increase of approximately $18,895 from September 30, 2008 to December 31, 2008. For the
quarter ended December 31, 2008, the earned interest yield was 3.404%, a decrease from the
3.794% reported for the quarter ended September 30, 2008, reflecting reinvestment in a lower
interest rate environment and of maturing securities purchased in periods of higher interest rates.
The weighted average maturity as of December 31, 2008 was 2.11 years a decrease from the 2.43
years in the prior quarter. This is due to longer-term investments maturing or being called and
reinvested in shorter-term investments. The weighted average maturity remains sufficiently
liquid to enable the City to meet all operating requirements which might be reasonably
anticipated.
DECISION MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site
specific and consequently the 500 foot rule found in California Code of Regulations section
18704.2(a)(1) is not applicable to this decision.
FISCAL IMPACT
Considering the projected timing of cash receipts and disbursements, including the proceeds
from the Ta.x and Revenue Anticipation Note borrowing and the structure of the Pooled
3-2
FEBRUARY 17,2009, Item ">
~
Page 3 of3
Investment Portfolio, the City should be able to comfortably meet overall cash flow needs over
the next six months. There is no direct fiscal impact by this action.
Prepared by: N. Mandery, Treasury Manager, Finance Dept.
3-3
Item :3 B
~~~
~
~--~
~~"""I':;o..~
CITY OF
(HUlA VISTA
Finance Department
Investment Report for the Quarter Ended December 31, 2008
February 17, 2009
Honorable Mayor and City Council
I am pleased to present this report of investment activity for the quarter ended
December 31, 2008 in compliance with the reporting requirements as set forth in the
California Government Code Sections 53600 et seq. and the City of Chula Vista
Investment Policy. The information presented in this report highlights the investment
activity for the quarter ended as well as provides a comparison to the quarters ended
June 30, 2008 and December 31, 2007. .
Market Overview
The Federal Open Market Committee (FOMC) lowered key Fed Funds rate to a target
range of 0.00% to 0.25% which is the lowest. rate on record. It is expected that weak
economic conditions will keep this rate low for some time. Weak holiday sales, falling
home prices, and further job losses are all contributing factors. Two-year Treasuries
yielding 1.98% at the beginning of the quarter dropped dramatically to 0.76% at the end
of the quarter due to the economic uncertainties.
The Federal Reserve and the U.S. Treasury have instituted various programs to help
stabilize the financial industry such as increasing the FDIC insurance on bank deposits
and guaranteeing the timely payment of principal and interest on certain corporate
bonds issued under their Treasury Liquidity Guarantee Program (TLGP).
Portfolio Comoosition
The table below provides a summary of the City's total investment portfolio as of
December 31, 2008. The Investment Portfolio ($181,376,371) CashfTime Deposits
($7,401,910) and Bank Trustee/Fiduciary Funds ($151,830,682) continue to be invested
in accordance with the Government Code, bond covenants and the Council Investment
Policy as adopted on February 12, 2008.
3-4
Honorable Mayor and City Council
Investment Report Quarter ended 12/31/2008
Page 2 of 5
Summary of Cash and Investments as of December 31, 2008
% of
. Investment Type Par Value Market Value Book Value Portfolio
Investment Portfolio
Federal Securities 117,000,000 117,843,028 116,978,513 33.61%
Pooled Investments 62,403,598 62,588,621 62,403,598 17.93%
Corporate Bonds 2,000,000 2,067,700 1,994,260 0.57%
Subtotal 181,403,598 182,499,349 181,376,371 51.54%
CashlTime Deposits $7,401,910 $7,401,910 $7,401,910 2.13%
Total Cash & Investments Held by the City $188,805,508 $189,901,259 $188,778,281 54.24%
Held by Bank Trustee/Fiduciary Funds (1)
U. S. Government 58,109,566 68,800,538 58,109,566 1670%
Investment Agreements 26,597,072 26,597,072 26,597,072 7.64%
Mutual Funds 52,807,189 52,807,189 52,807,189 15.17%
Cash with Fiscal Agents 2,277 2,277 2,277 0.00%
Restricted Cash 14,314,577 14,314,577 14,314,577 4.11%
Total Held by Bank Trustee/Fiduciary Funds $151,830,682 $162,521,654 $151,830,682 43.63%
Total Portfolio $348,038,100 $359,824,823 $348,010,873 100.00%
(1) Reflects bond proceeds held by trustee in accordance with bond covenants.
The graph below provides a snapshot of the portfolio composition by investment type for
that portion of the portfolio not held by the bank trustee or in a fiduciary fund.
Portfolio Composition
as of December 31,2008
US Government
Agency
64.49%
~
Corporate
Coupon Bonds
1.10%
~ LAlF (State Pool)
33.85%
Portfolio Performance
Portfolio performance is provided in more detail in the attachments to the report. The
summary information provided below includes the total portfolio income recognized for
the last quarter as compared to the prior quarter and the same quarter one year ago.
3-5
Honorable Mayor and City Council
Investment Report Quarter ended 12/31/2008
Page 3 of 5
Total Portfolio Income Recognized
Accrual Basis
Total Portfolio
December 31, 2008
June 30, 2008
December 31,2007
Quarter-End
Net Interest Earnings
Net Gains (Losses) from Sales
Net Total Income Recognized
$ 1,501,602 $ 1,986,186 $ 2,076,031
0 0 0
$ 1,501,602 $ 1,986,186 $ 2,076,031
$ 3,493,652 $ 8,848,047 $, 4,900,508
0 0 0
$ 3,493,652 $ 8,848,047 $ 4,900,508
Fiscal Year-to-Date
Net Interest Earnings
Net Gains (Losses) from Sales
Net Total Income Recognized
Benchmark Comparison
The following graph compares the monthly earned interest yield of the City's Portfolio
Fund with the monthly average yields for the same period of the State of California
Local Agency Investment Fund (LAIF) and the two-year and three-year treasury from
December 2006 through December 2008.
Monthly Benchmark Comparison
6.0% -
2.0%
5.0% -
4.0% -','
3.0% -
1.0%
0.0% -
Dee-06
Mar-O?
Jun-O?
Sep-O?
Dee-O?
Mar-OB
Jun-OB
Sep-OB
Dee-OB
I-+-City _LAIF -'-2yrTreasury -iJ-3yrTreasury I
3-ro
Honorable Mayor and City Council
Investment Report Quarter ended 12/31/2008
Page 4 of 5
Per Section 16.1 of the City's Investment Policy, the two-year U.S. Treasury and the
Local Agency Investment Fund yields are the
performance benchmarks to be used when
determining whether market yields are being
achieved. The three-year U.S. Treasury is added as
an additional point of reference in order to provide
an upper range that is above the weighted average
maturity of the City's portfolio, which is at 770 days.
City
LAIF
2 Year Treasury
770
223
730
Investment Activitv
During the quarter, nine investments totaling $26,700,000 matured/expired or were
redeemed. These monies represent pooled cash received from various funding sources
such as sewer, RDA, TDIF, PAD, General Fund, etc. The majority of these funds were
reinvested through the purchase of seven Federal Agency Securities and one
Temporary Liquidity Guarantee Program (TLGP) Corporate bond totaling $24,000,000
using the City's Investment Policy guideline to ensure safety, liquidity and yield.
Although staff has been reluctant to purchase corporate bonds due to the uncertainties
of the market, the purchase of this corporate bond is through the TLGP, which is a
federally guaranteed program that offers the safety of a treasury note but with a higher
yield. This type of investment also allows for more diversification within the portfolio.
There is no further activity to report on other than routine investments in money market
mutual funds by the City's fiscal agents.
Conclusion
The total cash and investment portfolio as of December 31, 2008 was $188,778,281.
This is an increase of approximately $18,895 from September 30, 2008 to December
31, 2008. For the quarter ended December 31, 2008, the earned interest yield was
3.404%, a decrease from the 3.794% reported for the quarter ended September 30,
2008, reflecting reinvestment in a lower interest rate environment and of maturing
securities purchased in periods of higher interest rates.
The weighted average maturity as of December 31, 2008 was 2.11 years a decrease
from the 2.43 years in the prior quarter. This is due to longer-term investments
maturing or being called and reinvested in shorter-term investments. The weighted
average maturity remains sufficiently liquid to enable the City to meet all operating
requirements that might be reasonably anticipated.
. Considering the projected timing of cash receipts and disbursements, including the
proceeds from the Tax and Revenue Anticipation Note borrowing and the structure of
the Pooled Investment Portfolio, the City should be able to comfortably meet overall
cash flow needs over the next six months. There is no direct fiscal impact by this action.
3-7
Honorable Mayor and City Council
Investment Report Quarter ended 12/31/2008
Page 5 of 5
I certify that this report reflects the City of Chula Vista and related agencies pooled
investments and is in conformity with the State of California Government Code on
authorized investments and with the Investment Policy of the City of Chula Vista as stated
in Resolution No. 2008-54 dated February 12, 2008.
Respectfully submitted,
+~
MaMa Kachadoorian
Director of Finance/Treasurer
3-8
~u~
~
;l :.,r" ..}~'
~~:::;..~
",-..q;;,.......
CITY Of
CHUIA VISTA
vestments
lOaged Pool Account 1
maged Pool Account 2
deral Agency Coupon Securities
deral Agency Callables
~rporale Coupon Bonds
vestments
Par
Value
61,399,896.31
1,003,701.96
3,000,000.00
114,000,000.00
2,000,000.00
181,403,598.27
City of Chula Vista
276 Fourth Ave
Chula Vista CA 91910
(619)691-5250
Chula Vista Investment Pool
Portfolio Management
Portfolio Summary
December 31,2008
Market
Valuo
61,584,919.43
1,003,701.96
3,049,687.50
114,793,340.00
2,067,700.00
182,499,348.89
Book lllll of Days to YTM
Value Portfolio Term Maturity
61,399,896.31 33.85 1 1 2.353
1,003,701.98 0.55 1 1 2.210
2,998,500.00 1.85 1,093 904 4.288
113,980,012.50 82.84 1,433 1,182 3.983'
1,994,280.00 1.10 1,095 1,07.2 3.101
181,37,6,370.77 100.00% 931 770 3,404
)tal Earnings
ment Year
lereBe Daily Balance
feclive Rate of Return
CO '-
December 31 Month Ending
531,520.10
181,576,104.86
3.45%
"porting perIod 12101/2008-12131/2008
Ul Dale: 01/3012009 ~ 08:37
Fiscal Year To Date
3,493,651.63
187,832,970.46
3.69%
/-30-0J
Portfolio CHUL
CC
PM (PRf _PM1).SymRopI6.41.202b
Report Vef. 5.00
Chula Vista Investment Pool
Portfolio Management Page 2
Portfolio Details - Investments
December 31,2008
Average Purchase Stated Days to YTM Maturity
CUSIP Investment # Issuer Balance Data Par Value Market Value Book Value Rate Term Maturity Date
Managed Pool Accounl1
SYS10197 10197 Local Agency Investment Fund 61,399,898.31 81,584,919.43 61,399,898.31 2.353 2.353
---
Subtotal and Average 68,157,960.83 61,399,896.31 81,584,919.43 61,399,896.31 2.353
Managed Pool Account 2
SYS10507 10507 CalTrust SHort Term Fund 10/27/2008 1,003,701.96 1,003,701.96 1,003,701.96 2.210 2.210
---
Subtotal and Average 1,001,429.23 1,003,701.96 1,003,701.96 1,003,701.96 2.210
Federal Agency Coupon Securities
31396ASL7 10489 Federal Nat" Mlg. Assoc. 06/26/2008 3,000,000.00 3,049,687.50 2.998,500.00 4.2)50 1,093 904 4.288 06/24/2011
Subtotal and Average 2,999,025.54 3,000,000.00 3,049,687.50 2,996,500.00 1,093 904 4.268
Federal Agency Callables
c..:l133XPERl 10494 Federal Home Loan Bank 10/14/2008 3,000,000.00 3,004,687.50 3,013,562.50 3.500 479 400 3.670 02105/2010
1J128X67H3 10490 Federal Home Loan Mortgage Co. 07/0212008 3,000,000.00 3,008,700.00 2,990,825.00 3.250 818 433 3.440 03110/2010
-'
d128X67H3 10495 Federal Home Loan Mortgage Co. 1 a/I 0/2008 3,000,000.00 3,O08,709.90 2,999,125.00 3.250 516 433 3.467 03110/2010
3136F9SA2 10465 Federal Nal' Mtg. Assoc. 06/10/2006 3,000,000.00 3,032,812.50 3,000,000.00 3.265 730 525 3.265 06/10/2010
3128X6CX2 10433 Federal Home loan Mortgaoe Co. 06/15/2007 3,000,000.00 3,060,540.00 2,996,500.00 5.400 1,096 530 5.418 06/15/2010
31398ASH6 10486 Federal Nal'l Mlg. Assoc, 06/16/2008 4,000,000.00 4,052,500,00 3,984,600.00 3.550 730 531 3.749 06/16/2010
31398AQS4 10481 Federal Nal'l Mlg. Assoc. 04/28/2006 4,000,000.00 4,028,750.00 4,000,000.00 3.500 1,095 647 3.500 04/26/2011
31331YQ60 10462 Federal Farm Credil Bank OS/20/2006 4,000,000.00 4,042,500.00 4,000,000.00 3.600 1,095 669 3.600 OS/20/2011
3126X7TS3 10464 . Federal Home Loan Mortgage Co. OS/20/2008 3,000,000.00 3,031,530.00 2,994,900.00 3.600 1,095 669 3.660 OS/20/2011
3126X7TKO 10483 Federal Home Loan Mortgage Co. OS/27/2008 4,000,000.00 4,018,720.00 4,000,000.00 3.675 1,095 676 3.675 OS/27/2011
31331Y2T6 10491 Federal Farm Credit Bank 07/07/2008 4,000,000.00 4,066.250.00 4,000,000.00 4.100 1,095 917 4.100 07/07/2011
3133XRTNO 10492 Federal Home loan Bank 06/05/2008 3,000,000.00 3,009,375.00 3,000,000.00 4.150 1,095 946 4.150 06/05/2011
31331GHH5 10500 Federal Farm Credit Bank 12119/2006 3,000,000.00 3,008,437.50 3,000,000.00 3.000 1,095 1,062 3.000 12119/2011
3128X8CL4 10504 Federal Home Luan Mortgage Co. 12130/2006 3,000,000.00 3,004,710.00 3,000,000.00 2.100 1,095 1,093 2.100 12130/2011
3136F9Z55 10501 Federal Nal'l Mlg. Assoc. 12130/2008 4,000,000.00 4,003,750.00 4,000,000.00 3.000 1,095 1,093 3.000 12130/2011
31331YEB2 10452 Federal Farm CredllBank 11/16/2007 3,000,000.00 3,067,187.50 3,000,000.00 4.840 1,627 1,415 4.840 11/16/2012
3128X8VFO 10459 Federall-tome loan Mortgage Co. 12/1712007 4,000,000.00 . 4,056,516.00 4,000,000.00 4.750 1,827 1,446 4.750 1211712012
31398AKWl 10484 Federal Nal'l Mlg. Assoc. 01/0212008 4,000,000.00 4,000,000.00 4,000,000.00 4.750 1,627 1,462 4.750 01/0212013
3126X6XV3 10466 Federal Home loan Mortgage Co. 01107/2008 3,000,000.00 3,001,800.00 3,000,000.00 4.750 1,627 1,467 4.750 01/07/2013
3126X8Y J9 10467 F:edeml Home Loan Mortgage Co. 01/09/2008 4,000,000.00 4,002,400.00 4,000,000.00 4.500 1,627 1,469 4.500 01/09/2013
3133XNUF4 10463 Federal Home loan Bank 01/14/2008 4,000,000.00 4,005,000.00 4,000,000.00 4.700 1,627 1,474 4.700 01/14/2013
3133XP4T6 10466 Federal Home loan Bank 01/28/2008 4,000,000.00 4,006,750.00 4,000,000.00 4.200 1,627 1,466 4.200 01128/2013
3133XP3CB 10469 Federal Home loan Bank 01129/2008 4,000,000.00 4,085,000.00 4,000,000.00 4.000 1,627 1,489 4.000 01129/2013
3133XP6L3 10472 Federal Home Loan Bank 01/29/2008 5,000,000.00 5,009,375.00 5,000,000.00 4.200 1,627 1,469 4.200 01129/2013
Portfolio CHUL
CC
Run Data: 0112712009 - 16:51 PM (PRF _PM2) SymRepl 6.41.202b
Chula Vista Investment Pool
Portfolio Management
Portfolio Details - Investments
December 31,2008
Average Purchase
CUSIP Investment '# Issuer Balance Date Par Value Market Value
Federal Agency Callables
3133XPCV4 10473 Federal Harne Loan Bank 01130/2008 5,000,000.00 5,009,375.00
3128X6A63 10471 Federal Home Loan Mortgage Co. 02/04/2008 3,000,000.00 3,007,320.00
3133XPKV5 10474 Federal Homo Loan Bank 02/2012008 2,000,000.00 2,007,500.00
3128X63W4 10475 Federal Home Loan Mortgage Co. 02/28/2008 3,000,000.00 3,014,319.00
3133XQJX1 10478 Federal Horne Loan Bank 04/02/2008 3,000,000.00 3,012,187.50
3133XQJZ6 10477 Federal Home loan Bank 04/16/2008 3,000,000.00 3,037,500.00
3138F9LC5 10498 federal Nat'l Mtg. Assoc. 04/29/2008 3,000,000.00 3,072,167.50
3126X7LK6 10460 Federal Home Loan M0I1gage Co. 05/0112008 3,000,000.00 3,021,210.00
3133XSSD1 10503 Federal Home loan Bank 12/30/2008 3,000,000.00 2,973,750.00
Subtotal and Average 107,938,077 ,02 114,000,000.00 114,793,340.00
Corporate Coupon Bonds
EH6482706 10400 General Electric Cap 12/00/2008 2,000,000.00 2,087,700.00
Co<)
I Subtotal and Average 1,479,612.28 2,000,000.00 2,067,700.00
-'
-' Total and Average 181,576,104.86 181,403,598.27 182,499,348.69
Page 3
Stated Days to YTM Maturity
Book Value Rata Term Maturity Date
5,000,000.00 4.150 1,627 1,400 4.150 01130/2013
3,000,000.00 4.125 1,827 1,495 4.125 02/04/2013
2,000,000.00 4.000 1,827 1,511 4.000 02/20/2013
3,000,000.00 4.375 1,827 1,519 4.383 02/28/2013
3,000,000.00 4.000 1,828 1,552 4.000 04/02/2013
3,000,000.00 3.750 1,828 1,566 3.750 04/18/2013
3.000,000.00 4.000 1,626 1.579 4.000 04/29/2013
2,998,500.00 4.050 1,628 1,581 4.081 05101/2013
3,000,000.00 3.000 1,826 1,824 3.000 12/30/2013
---
113,980,012.50 1,433 1,182 3.963
1,994,260.00 3.000 1,095 1,072 3.101 12/09/2011
---
1,994,260.00 1,095 1,072 3.101
161,376,370.77 931 770 3.404
Run Date: 0112712009 -16:51
Portfolio CHUL
CC
PM (PRF _PM2) SymRepI6.41.202b
CUSIP
Investment II
o
770 3.404
Issuer
Total Cash and Invostments5
Average Balance
w
I
......
N
Run Date: 01/2712009 -16:51
Average
Balance
0.00
181,576,104.86
Chula Vista Investment Pool
Portfolio Management
Portfolio Details - Cash
December 31,2008
Purchase
Dale
Par Value
Market Value
161,403,596.27
162,499,346.69
Slated
Book Value Rate
161,376,370.77
Page 4
Day. to
Term Malurlty
YTM
o
931
Portfolio CHUL
CC
PM IPRF _PM2) SymRepl 6.41.202b
Chula Vista Investment Pool
Portfolio Management
Activity By Type
December 1,2008 through December 31,2008
Page 5
Purchases Redemptions
or Deposits or Withdrawals
22,000,000.00 16,500,000.00
22,000,000.00 16,500,000.00
2,346.49 0.00
2,34B.49 0.00
Balance
Slated Transaction
CUSIP Investment # Issuer Rate' Date
Managed Pool Account 1 (Monthly Summary)
SYS10197 10197 Local Agency Investment Fund 2.353
Subtotal
Managed Pool Account 2 (Monthly Summary)
SYS10507 10507 CalTrus! SHort Term Fund 2.210
Subtotal
Federal Agency Coupon Securities
Subtotal
Federal Agency Callables
31331GHH5 10500 Federal Farm Credit [lank 3.000 12119/2006
t.l!>133XNJ26 10456 Federal Home Loan Bank 4.625 12119/2006
1l133XQLJ9 10478 Federal Home Loan Bank 4.250 1212212008
~133XSSDl 10503 Federal Harne Loan Bank 3.000 12130/2008
3128X6RZl 10455 Federal Home Loan Mortgage Co. 4.700 1210212008
3128X8SD9 10456 federal Home Loan Mortgage Co. 4.B75 1210512008
312BX7XU3 10486 Federal Home Loan Mortgage Co. 3.500 12110/2008
3128XBCL4 10504 Federal Home Loan Mortgage Co. 2.100 12130/200B
3136F9Z55 10501 Federal Nal'l MIg. Assoc. 3,000 12130/200B
Subtotal
Corporate Coupon Bonds
EH6482796 10499 General Electric Cap 3.000 12109/2008
Subtotal
Total
61,399,B96.31
1,003,701.96
2,99B,500.00
3,000,000.00 0.00
0.00 3,000,000.00
0.00 2,700,000.00
3,000,000.00 0.00
0.00 3,000,000.00
0.00 4,000,000.00
0.00 3,000,000.00
3,000,000.00 0.00
4,000,000.00 0.00
13,000,000.00 15,700,000.00
1,994,260.00 0.00
1,994,260.00 0.00
36,996,606.49 32,200,000.00
113,980,012.50
1,994,260.00
161,376,370.77
RUIl Dale: 01/27/2009 - 16:51
Portfolio CHUL
CC
PM IPRF _PM3) SymRepl 6.41.202b
Repor1 Ver, 5.00
Chula Vista Investment Pool
Portfolio Management Page 6
Activity Summary
December.2007 through December 2008
Yield to Maturity Managed Number Number
Month Number of Total 360 365 Pool of Investments of Investments Average Average
End Year Securities Invested Equivalent Equivalent Rate Purchased Redeemed Term Days to Maturity
December 2007 39 175,459,631.88 4.691 4.756 4.801 8 7 854 592
January 2008 43 202,229,132.70 4.569 4.632 4.620 8 4 975 776
February 2008 42 183,529,132.70 4.413 4.475 4.161 3 4 1,105 905
March 2008 40 176,229,132.70 4.318 4.378 3.770 0 2 1,118 919
April 2008 44 193,591,946.05 4.160 4.218 3.400 5 1 1,139 949
May 2008 44 207,023,816.05 4.061 4.117 3.400 4 4 1,056 894
June 2008 39 180,808,557.71 3.882 3.936 2.894 5 10 1,058 949
July 2008 39 200,338,582.40 3.690 3.741 2.787 2 2 960 855
August 2008 40 187,838,582.40 3.771 3.824 2.779 1 0 1,042 908
September 2008 38 183,108,249.07 3.742 3.794 2.774 0 2 1,035 886
October 2008 39 181,079,117.14 3.665 3.716 2.661 3 2 1,008 849
<.Jlovember 2008 37 176,580,470.61 3.597 3.647 2.568 0 2 982 B08
I December 2008 37 181,376,370.77 3.357 3.404 2.353 5 5 931 770
......
.j:>, Average 40 186,860,978.63 3.994% 4.049% 3.305 3 3 1,020 851
Run Dale: 01127/2009 -16:51
Portfolio CHUL
CC
PM (PRF _PM4) SymRepl 6.41.2029
Report Ver. 5.00
Chula Vista Investment Pool
Portfolio Management Page 7
Distribu.tion of Investments By Type
December 2007 through December 2008
December January February March April May June July August September October November December Average
Security Type 2007 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008 by Period
Managed Pool Account 1 39.8 36.2 30.8 30.2 29.4 33.5 29.4 36.3 30.4 31.9 31.2 31.7 33.9 32.7%
Short Term Pool Accounts
Managed Pool Account 2 0.6 0.6 0.1%
Federal Agency Coupon Securilles 1.7 1.5 1.6 1.6 1.7 1.7 1.7 0.9%
Federal Agency Callables 54.1 60.8 67.6 68.1 69.1 66.5 69.0 62.2 68.0 66.5 67.2 66.1 62.8 65.2%
Corporate Coupon Bonds 6.1 3.0 1.7 1'.7 1.6 1.1 1.2%
(.oJ
I
--"
U1
Run Dale: 0112712009 .16:51
Portfolio CHUL
CC
PM (PRF _PM5) SymRepI6,41.202b
RepOft Ver. 5.00
Chula Vista Investment Pool
Portfolio Management
Interest Earnings Summary
December 31,2008
Page 8
December 31 Month Ending
Fiscal Year To Date
CD/CouponlDiscount Investments:
Inlerest Collected
Plus Accrued Interest at End of Period
Less Accrued Interest at Beginning of Period
Less Accrued Interest at Purchase During Period
672,231.25
1,224,425.66
1,515,696.94)
0.00)
(
(
2,815,381.40
1,224A25.66
1,357,444.46)
58,583.33)
interest Earned during Period
Adjusted by Capital Gains or Losses
380,959.97
0.00
2,623,779.27
0.00
Earnings during Periods
380,959.97
2,623,779.27
(.0.)
I
Pass Through Securities:
Interest Collected
Plus Accrued Interest at End of Period
Less Accrued Interest at Beginning of Period
Less Accrued interest at Purchase During Period
0.00
0.00
0.00)
0.00)
0.00
0.00
0.00
0.00
0.00
( 0.00)
( 0.00)
0.00
0.00
0.00
0.00
972,861.39
406,077.33
509,066.36)
869,872.36
3,493,651.63
0.00
3,493,651.63
....
Ol
Interest Earned during Period
Adjusted by Premlurns and Discounts
Adjusted by Capltai Gains or Losses
Earnings during Periods
Cash/Checking Accounts:
Interest Collected
Plus Accrued Interest at End of Period
Less Accrued Interest at Beginning of Period
0.00
Interest Earned during Period
2,348.49
406,077.33
257,865.69)
150,560.13
531,520.10
0.00
Total Interest Earned during Period
Total Capital Gains or Losses
Total Earnings during Period
531,520.10
Run Dale: 01/27/2009 -16:51
Portfolio CHUL
CC
PM (PRF _PM6) SymRepl B.41.202b
Repoct Vef, 5.00
~u~
~~
~
"""""""'~~
Chula Vista Investment Pool
Received Interest
Sorted by Date Received - Grouped by Fund
Received December 1, 2008 - December 31, 2008
City of Chula Vista
276 Fourth Ave
Chula Vista CA 91910
(619)691-5250
ClIT OF
(HUlA VISTA
Date Received
Investment #
Security
Type
Par
Value
Current
Rale
Interest
CUSIP
Date Due Dale Received
Amount Due
Amount Received
Variance
Fund: Chula Vista Investment Pool
Decembor 2008
3128X6RZl 10455 MCl 0.00 4.700 1210212008 1210212008 70.500.00 70,500.00
3128X6SD9 10456 MCl 0.00 4.875 12105/2006 1210512008 97,500.00 07,500.00
3128X7XU3 10486 MCl 0.00 3.500 12110/2008 12110/2008 52,500.00 52.500.00
3136FOSA2 10485 MCl 3,000,000.00 3.285 12110/2008 12110/2008 48,975.00 48,075.00
3128X6CX2 10433 MCl 3,000,000.00 5.400 1211512008 1211512008 81,000.00 81,000.00
31306ASH6 10488 MCl 4,000,000.00 3.550 12118/2008 12116/2008 71,000.00 71,000.00
3128X6VFO 10459 MCl 4,000,000.00 4.750 1211712008 12117/2008 05,000.00 05,000.00
3133XNJ26 10458 MCl 0.00 4.625 12110/2008 1211012008 .69,375.00 69,375.00
3133XQLJ9 10478 MCl 0.00 4.250 1212212008 1212212008 22,631.25 22,631.25
31396ASL7 10489 FAC 3,000,000.00 4.250 12124/2008 . 12124/2006 63.750.00 63.750.00
Subtotal 672,231.25 672,231,25
Chula Vista Investment Pool Subtotal 672,231.25 672,231.25
Total 672,231.25 672,231.25
Total Cash Overpayment 0.00
Total Cash Shortfall 6.00
w
I
-'
-J
Run Dale: 01J2712009. 16:52
Portfolio CHUL
CC
RI (PRF _RI) SymRepI6.41.202b
Hepar1 Ver. 5.00
Chula Vista Investment Pool
Received Interest
Received December 1, 200B - December 31, 200B
Page 2
Dale Received
Cash Accounts
Investment #
Security
Type
Par Current
Value Rate
Interest
CUSIP
Date Received
Amount Received
Fund: Chula Vista Investment Pool
Subtotal
2.346.49
2,346.49
December 2008
SYS 1 0507
10507
PAl
1,001.353.47
2.210
12/31/2006
Chula Vista Investment Pool Subtotal
2,346.49
Total
2,346.49
c.u
I
->
00
Run Dale: 01/2712009 . 16:52
Portfolio CHUL
CC
RI (PRF _RI) SymRepI6.41.202b
RepOfI Vef. 5,00
~ Ut--
~
~---~~
~:~~~
CllY OF
CHULA VISTA
CUSIP
Investment #
Security
Type
Par
Value
Chula Vista Investment Pool
Accrued Interest
Sorted by Issuer - Investment Number
December 1"2008 - December 31,2008
Maturity
Date
CalTrust SHort Term Fund
SYS10507 10507 PAl 1,003.701.96
Subtotal 1,003,701.96
Federal Farm Credit Bank
31:i31YEB2 10452 MCl 3,000,000.00 11/1612012
31331YQBO 10462 MCl 4,000,000.00 05120/2011
31331Y2TB 10491 MCl 4,000,000.00 07/07/2011
31331GHH5 10500 MCl 3,000,000.00 12/19/2011
Subtotal 14,000,000.00
Federal Home Loan Bank
3133XNJ26 10458 MCl 0.00 12/19/2011
~133XNUF4 10463 MCl 4,000,000.00 01/1412013
--tl133XP4 T8 10468 MCl 4,000,000.00 01/28/2013
~133XP3C6 10469 MCl 4,000,000.00 01/29/2013
3133XP6L3 10472 MCl 5,000,000.00 01129/2013
3133XPCV4 10473 MCl 5,000,000.00 01/3012013
3133XPKV5 10474 MCl 2,000,000.00 02/2012013
3133XQJXl 10476 MCl 3,000,000.00 04102/2013
3133XQJZ6 10477 MCl 3,000,000.00 04116/2013
3133XQLJ9 10478 MCl 0.00 04111/2013
3133XRTNO 10492 MCl 3,000,000.00 08/05/2011
3133XPERl 10494 MCl 3,000,000.00 02/05/2010
3133XSSDl 10503 MCl 3,000,000.00 12/3012013
Subtotal 39,000,000.00
Federal Home Loan Mortgage Co.
Current
Rate
Adjusted Acc'd Int.
at Purchase
During Period
. Beginning
Accrued Interest
2.210
2,348.49 0.00
2,346.49 0.00
6,050.00 0.00
4,400.00 0.00
65,600.00 0.00
0.00 0.00
76,050.00 0,00
62,437.50 0.00
71,544.44 0.00
57,400.00 0,00
54,222.22 0.00
71,166.67 0.00
69,743.08 0.00
22,444.44 0.00
19,666.67 0.00
14,062.50 0.00
15,937.50 0.00
40,116.67 0.00
33,833.33 0.00
0.00 0.00
532,575.00 0.09
4.840
3.800
4.100
3.000
4.625
4.700
4.200
4.000
4.200
4.150
4.000
4.000
3.750
4.250
4.150
3.500
3.000
City of Chula Vista
276 Fourth Ave
Chula Vlsla CA 91910
(619)691-5250
Interest Interest . Ending
Earned Received Accrued Interest
2,266.49 2.348.49 2.266.49
2,266.49 2,348.49 2,266.49
12,100.00 0.00 18,150.00
12.000.00 0.00 16,400.00
13,686.67 0:00 79,286.87
3,000.00 0.00 3,000.00
40,786.87 0.00 116,816.87
6,937.50 69,375.00 0.00
15,888.87 0.00 87,211.11.
14,000.00 0.00 71,400.00
13,333.34 0.00 67,555.56 '"
17,500.00 0.00 88,668.67
17,291.66 0.00 87,034.72
6,666.67 0.00 29,111.11
10,000.00 0.00 29,666.67
9,375.00 0.00 23,437.50
6,693.75 22,631.25 0.00
10,375.00 0.00 50,491.67
8,750.00 0.00 42,583.33
250.00 0.00 250.00
136,839.59 92,006.25 577,408.34
3128X8CX2 10433 MCl 3,000,000.00 06/15/2010 5.400 74,700.00 0.00 13,500.00 81,000.00 7,200.00
3128X6RZl 10455 MCl 0.00 12/02/2011 4.700 70,108.35 0.00 391.86 70,500.00 0.D1
3128X6SD9 10456 MCl 0.00 12/05/2012 4.875 95,333.33 0.00 2,166.87 97,500.00 0.00
3126X6VFO 10459 MCl 4,000,000.00 12/17/2012 4.750 86,555.56 0.00 15,833.33 95,000.00 7,388.89
3128X6XV3 10466 MCl 3,000,000.00 01107/2013 . 4.750 57,000.00 0.00 11,875.00 0.00 68,875.00
3128X6YJ9 10467 MCl 4,000.000.00 01109/2013 4.500 71,000.00 0.00 15,000.00 0.00 88,000.00
3128X6A63 10471 MCl 3,000,000.00 02/04/2013 4.125 40,218.60 0.00 10,312.50 0.00 50,531.10
3128X63W4 10475 MCl 3,000,000.00 02/28/2013 4.375 33,906.25 0.00 10,937.50 0.00 44,843.75
. Beginning Accrued may not include investments that redemed in the previous month that had outstanding accrued interest. Ending Accrued includes outstanding purchase interest.
Portfolio CHUL
CC
Run Dale: 01/27J2009 -16:52
AI (PRF _AI) SymRepl 6.41.202b
Report Ver. 5,00
Chula Vista Investment Pool
Accrued Interest
Sorted by Issuer - Investment Number Page 2
Adjusted Acc'd Int.
Security Par Maturity Current .. Beginning at Purchase Interest Interest .. Ending
CUSIP Investment # Type Value Date Rate Accrued Interest During Period Earned Received Accrued Interest
Federal Home Loan Mortgage CO.
3128X7LK8 10480 MCl 3,000,000.00 0510112013 4.050 10,125.00 0.00 10,125.00 0.00 20,250.00
3128X7TKO 10483 MC1 4,000,000.00 0512712011 3.8.,5 1,722.22 0,00 12,910.0" ,0.00 14,030.00
3128X7TS3 10484 MC1 3,000,000.00 OS/20/2011 3.800 3,300.00 0.00 9,000.00 0.00 12,300.00
3128X7XU3 10488 .MC1 0.00 08/10/2010 3.500 49,0"5.00 0.00 2,825.00 52,500.00 0.00
3128X87H3 10490 MC1 3,000,000.00 03/10/2010 3.250 21,937,50 0.00 0,125.00 0.00 30,082.50
3128X87H3 10495 MC1 3,000,000.00 03/10/2010 3.250 21,93".50 0.00 8,125.00 0.00 30,082.50
3128X8CL4 10504 MC1 3,000,000.00 12/30/2011 2.100 0.00 0.00 175.00 0.00 175.00
Subtotal 39,000,000.00 63",719.31 0.00 131,108.33 396,500,60 372,327.64
Federal Nat'l Mtg. Assoc.
31308AKW1 10464 MC1 4,000,000.00 01/02/2013 4..,50 '(8,838.89 0.00 15,833.33 0.00 94,4l2.22
31308AQS4 10481 MC1 4,000,000.00 04/28/2011 3.500 12,833.33 0.00 11,686.67 0.00 24,500.00
3138F9SA2 10485 MCl 3,000,000.00 08/10/2010 3.265 48,528.25 0.00 8,182.50 48,075.00 5,713.75
31308ASH8 10488 MCl 4,000,000.00 08/16/2010 3.550 65,083.33 0.00 11,833.34 71,000.00 5,018.0"
31308ASL7 10489 FAC 3,000,000.00 08/24/2011 4.250 55,604.17 0.00 10,625.00 63,750.00 2,479.17
3138F9LC5 10496 MCl 3,000,000.00 04/29/2013 4.000 10,688,67 0.00 10,000.00 0.00 20,666,67
tel3UFOZ55 10501 MC1 4,000,000.00 12/3012011 3.000 0.00 0.00 333.33 0.00 333.33
I
N Subtotal 25,000,600.00 . 269.352.64 0.00 86,454.17 183,725.00 154,081,81
e
General Electric Cap
EH8482798 10499 MC2 2,000,000.00 12/0912011 3.000 0.00 0.00 3,791.21 0.00 3,"01.21
Subtotal 2,000,000.00 0.00 0.00 3,791.21 0.00 3,791.21
Local Agency Investment Fund
SYS10107 10197 LAl 61,300,806.31 2.353 255,517.20 0.00 148,203.64 0.00 403,810.84
Subtotal 81,399,896.31 255,517.20 0.00 148,293.84 0.00 403,810.84
Total 181,403,598,27 1,773,582,64 0.00 531,520.10 674,579,74 1,830,503,00
. Beginning Accrued may not include investments that redemed in the previous month that had outstanding accrued Interest. Ending Accrued Includes outstanding purchase Interest.
Portfolio CHUL
CC
Run Oale: 01/2712009 - 16:52
AI (PRF _AI) SymRepl 6.4 1.202b
Rap0l1 Vcr. 5.00
~Jf?
~
~
~~~~
CllY OF
(HUlA VISTA
Investment II
lov.
Typa
Purchase
Date
Issuer
10455 MC1 12103/2007
Federal Home Loan Mortgage Co.
10456 MC1 12105/2007
Federal Home Loan Mortgage Co.
10486 MC1 06/10/2006
Federal Home Loan Mortgage Co.
10456 MC1 12119/2007
Federal Home Laan Bank
10478 MC1
Federal Home Loan Bank
04/17/2006
w
I
N
-'
Run Date: 01/2712009 -16:53
Chula Vista Investment Pool
Realized Gains and Losses
Sorted By Maturity/Sale/Call Date
Sales/Calls/Maturities: December 1, 2008 - December 31,2008
City of Chuta Vista
276 Fourth Ave
Chula Vista CA 91910
(619}691-5250
Par Value Sale Date Days Held Total
Maturlty/Sala Realized Total Total
Current Rate Maturity Date Term Book Value Proceeds Gain/Loss Earnings Nat Earnings Yiald 365
3,000,000.00 1210212006 365 3,000,000.00 3,000,000.00 0.00 140,606.33 140,606.33 4.667
4.700 1210212011 1,460
4,000,000.00 12/0512006 366 4,000,000.00 4,000,000.00 0.00 185,000.00 195,000.00 4.662
4.675 1210512012 1,627
3,000,000.00 12110/2006 163 3,000,000.00 3,000.000.00 0.00 52,500.00 52,500.00 3.480
3.500 06/10/2010 730
3,000,000.00 12119/2006 366 3,000,000.00 3,000,000.00 0.00 136,750.00 136,750.00 4.612
4.625 12119/2011 1,461
2,700.000.00 1212212006 249 2,700,000.00 2.700.000.00 0.00 78,083.75 78,093.75 4.240
4.250 04111/2013 1,820
Total Realized Gains/losses 15,700,000.00 15,7.00,000.00 0.00 604,952.06 604,952.08 4.412
Pori folio CHUL
CC
CG (PRF _CGRt) SymRepI6.41.202b
Report Ver. 5.00
~3'il'>lT~~~1F"~B""j'~"""-r-~W~f"",~
. Jx.OO:J:.\1jli'f~"'i;;J.'t>.~ ~V~I,.1'JJU~:il'A.".n..mgl.~~.~.I\J,1~:i.~~l;t\!Il...i~n~i";4.1~!I;'{!.I.il,Jl'iiliiMlial
lan-08 4,166.67
(30,333.33) (30,333.33) Sep-08
(30,333.33) (30,333.33)
(1,912.50) (1,912.50) Oct-DB
20,125.00 20,125.00 Feb-09
8,125.00 8,125.00 Mar-09
28,250.00 (1,912.50) 26,337.50
--,,,;."."m~""'_".~.""''''''l''''"r:lfl'~~- rrw~"'~...>>:'<?tl!m!J~I1~:[fj
!"l t;~"\!"~""'~~~.~'t""'v,i" ;ii~<'~ ~"..y.,,, '" "I:!':,{.{,=r;n' , . ,~. . . ~
,f.I,;,'~)'~lS;l1~~jiR;ll.M.f;.t\~lr.,,;;'k ,tl.:' ~--r.1irR.,,).,"'. :~.~i:_~t~",!~-tA. ~U~"tl... ~ . :'~1. c ~~ : _~ ~ _ d.\l . to
Feb-OB No Change in Accrued Interest
Mar-OB No Change in Accrued Interest
Apr-08 04/11/2013 10478
May-DB No Change in Accrued Interest
Jun-08 06/11/2008 10460
Jun-OB 06/04/2010 10488
Jun-08 06/12/200B 10462
Jul-08 03/10/2010 10490
1,912.50
1,912.50
1,912.50
708.33
(416.67)
(3,750.00)
(4,166.67)
(416.67)
708.33
(3,750.00)
(3,458.34)
708.33
30,333.33
30,333.33
30,333.33
30,333.33
Aug-OB No Change In Accrued Interest
~p-OB 03/10/2010 10490
N
N
Apr-08 04/11/2013 10478
Oct-OB 02/05/2010 10494
Oct-OB 03/10/2010 10495
Nov-OB No Change in Accrued Interest
Feb-08
4,166.67
Mar-OB
4,166.67
Oct-08
~pr-08
6,079.17
Jun-08
Dee-08
Jun-08
May-08
X
6,079.17
X
lun-08
2,620.83
Sap-DB
lul-08
32,954.16
Aug-08
32,954.16
Sep-OB
2,620.83
X
Oct-08
28,958.33
28,958.33
Dec-OB
Dee-08
06/04/2010 10488
(708.33)
(708.33)
(708.33)
(708.33)
Nov-08
Dee-08
X
Dee-OB
28,250.00
Schedule of Cash/Investments with Fiscal Agent
as of December 31. 2008 Fiscal Maturity Purchase Contraclual Federal
Bond Issue Security Description Agent Type Dale Date Par Value Mkl Value Cost Yield
94 CV Pension Oblig Bd 1st American Trs Oblig CL 0 Corp Tr US Bank MF Mutual Funds 88 88 88 Var
COP 2000A Financing Proj Miiestone Treasury Oblig FD Prem Shr US Bank MF Mulual Funds 2,004,333 2,004.333 2.004,333 Var
Cash US Bank CFA Cash-Fiscal Agt 114 114 114
AIG-MF LLC Invest Agrmt US Bank IA Invtmnt Agrmt 27-Aug-20 11-0ct-00 6.340
RDA 2000 Tax Alloc Bonds AMBAC CAP Funding US Bank IA Invtmnt Agrmt 01-Sep-30 31-0cl-00 6.180
Miiestone Treasury Oblig FD Prem Shr US Bank MF Mutual Funds Var
CV Public Financing Authority Mileslone Treasury Oblig FD Prem Shr US Bank MF Mutual Funds 2,731,471 2,731,471 2,731,471 Var
2001-1/2001-2 RAD Trinity Plus Funding Co Invst Agrmt US Bank IA Invtmnt Agrmt 02-Sep-17 04-Sep-Ol 1,201,778 1,201,778 1,201,778 5.600
Trinity Plus Funding Co Invst Agrmt US Bank IA Invtmnt Agrmt 02-Sep-17 04-Sep-0 1 426,500 426,500 426,500 5.600
2002 COP Police Faciiities US Treasury US Bank USG US Trsy Noles 2,021,563 2,184,540 2,184,540 5.835
Milestone Treasury Oblig FD Prem Shr US Bank MF Mutual Funds 109.910 109,910 109,910 Var
CFD 06-llmprovemenl Area A Cash US Bank CFA Cash-Fiscal Agt
Milestone Treasury Oblig FD Prem Shr US Bank MF Mutual Funds 4,558,977 4,558,977 4,558,977 Var
Local Agency Investment Fund US Bank IA Invmnt Agrmt 4,718,547 4,718,547 4,718,547 Var
2003 Refunding Cert of Participation FSA Capital Mgmt Invst Agreement US Bank IA Invmnt Agrmt 01-Sep-12 l1-Jun-03 1,132,000 1,132,000 1,132,000 3.100
Miiestone Treasury Oblig FD Prem Shr US Bank MF Mutual Funds 215 215 215 Var
CFD 2001-2 McMillin-Olay Ranch 6 Mileslone Treasury Oblig FD Prem Shr US Bank MF Mutual Funds 1,139,257 1,139,257 1,139,257 Var
Cash US Bank CFA Cash-Fiscal Agt
CFD 08-1 Otay Ranch Viliage 6 Miiestone Treasury Oblig FD Prem Shr US Bank MF Mutual Funds 2.578.754 2,578,754 2,578,754 Var
LAIF US Bank IA Invmnt Agrml 2,404,360 2,404,360 2,404.360
Cash US Bank CFA Cash-Fiscal Agl
CFD 07-1 McMillin Otay Rnch Vlig 11 Milestone Treasury Oblig FD Prem Shr US Bank MF Mutuat Funds 475,735 475,735 475,735 Var
LAIF US -Bank IA Invmnt Agrmt 2.351,238 2,351,238 2,351,238
Cash US Bank CFA Cash-Fiscal Agt
CFD 06-1 Improvement Area B Miiestone Treasury Oblig FD Prem Shr US Bank MF Mulual Funds 2,033,972 2,033,972 2,033,972 Var
Cash US Bank CFA Cash-Fiscal Agt 0
W 2004 COP Civic Center Phase 1 Dreyfus Inst'l Res Treasury BNY MF Mutual Funds 1,005,713 1,005,713 1.005,713 Var
I FSA Capital Managemenl Services LLC BNY IA Invmnt Agrmt 01-Mar-34 16-Sep-04 2,395,911 2,395,911 2,395,911 5.205
N Cash BNY CFA Cash-Fiscal Agt
W 2006 COP Civic Cenler Phase II Dreyfus Inst'l Res Treasury BNY MF Mutual Funds 714,944 714,944 714,944 Var
FSA Investment A9reemenl BNY IA Invmnl Agrmt 01-Mar-36 17-Mar-2006 1,272,459 1,272,459 1,272,459 5.010
CVPF A 2005 Rev Refunding Ser A Miiestone Treasury Oblig FD Prem Shr US Dank MF Mutual Funds 13,157,300 13.157,300 13,157,300 Var
Citigroup GIC #871615.1 US Bank IA Invmnl Agrmt 01-Sep-2032 6,436,873 6,436,873 6,436,873 4.889
US Treasury US Dank USG US Trsy Notes 56.088,004 66,615,998 66,615,998 Var
Cash BNY CFA Cash-Fiscal Agl 2.163 2,163 2.163
CFD 01-1 Improvement Area D Miiestone Treasury Oblig FD Prem Shr US Dank MF Mutual Funds 7,816,945 7,816,945 7,816,945 Var
CFD 12-1 McMiliin Otay Rnch Vlig 7 Milestone Treasury Oblig FD Prem Shr US Dank MF Mutual Funds 4,077.007 4,077,007 4.077,007 Var
AIG Matched FOG Corp Invst Agrmt US Bank IA Invmnt Agrmt
CFD 13-1 Otay Ranch Vlig 7 Miiestone Treasury Oblig FD Prem Shr US Bank MF Mulual Funds 3,627,237 3,627,237 3,627,237 Var
LAIF US Dank IA Invmnt Agrmt 1,233,736 1,233.736 1,233.736
Cash US Bank CFA Cash-Fiscal Agl
CFD 07-IB McMillin Otay Rnch Vlig 11 Miiestone Treasury Oblig FD Prem Shr US Dank MF Mutual Funds 1,174,374 1,174;374 1.174.374 Var
LAIF US Bank IA Invmnt Agrml 991.358 991,358 991,358
Cash US Dank CFA Cash-Fiscal Agt
06 Sr. Tax Alioc Ref Bonds A Milestone Treasury PS Fund # M5 US Bank MF Mutual Funds 365 365 365 Var
Rabobank Internalional NY Branch US Bank IA Invmnt Agrmt 09-Aug-2027 l1-Sep-2006 1,027,949 1,027.949 1.027.949 4.980
06 Subordinate Tax Alioc Ref Bds Milestone Treasury PS Fund # M5 US Bank MF Mutual Funds 2,621 2,621 2,621 Var
CitiGroup Financial Products, Inc. GIC US Bank IA Invmnl Agrmt 26-Sep-2027 ll-Sep-2006 1,004.365 1,004,365 1,004,365 5.097
RDA 2008 Tax Alioc Ref Bonds Milestone Treasury PS Fund # M5 US Bank MF Mutual Funds 30-Sep-2036 22-Jul-2008 5,597,972 5,597,972 5,597,972 Var
CDBG Section 108 Loan Cash - Interest Bearing Acct BofA RC Restricted Cash 9,466,937 9,469,808 9,466,937 Var
Orange Tree MHP Cash - Interest Bearing Accl BofA RC Restricted Cash 590,561 590,561 - 590,561 Var
RDA Housing Program Cash - Interest Dearing Acct DofA RC Restricted Cash 3,886,445 3,886,445 3,886,445 Var
CDBG HOUSing Program Cash - Interesl Bearing Accl BofA RC Restricted Cash 370,633 370,633 370,633 Var
Grand Total as of December 31, 2008 151,830,682 162,524.524 162,521,654
Fiiename:J:\finance\data~nvest~nv09.xls
j:finance\dala\in\ll3st\tnv09.xls
City of Chura Vista
Cash and Investments
31-Dec-08
.. DRAFT ..
INVESTMENTS
Bank of New York Custodial Account
State of CA Local Investment Agency Fund
State of CA Local Investment Agency Fund
CalTrust Short Term Fund
Accrued Interest on Investment
UNREALIZED GAIN
Unrealized Gain on Fair Market Value
CASH IN BANK
Bank of America - General Account
Bank of America - Payroll Account
California Bank - Direct Deposit Account
Wells Fargo Bank-CV Workers Comp Account
CASH ON HAND
Petty Cash Fund
TIME DEPOSIT
Bank of America Time Deposit
Cash and Investments as of 12131/2008
CashlTime Deposits as of 12/31/2008
j:finance\data\Cash and Investments FY0809 Deoj3J z.~08.xls
Amount
118,944,523
23,403,600
37,996,297
1,003,702
(3,702)
181,344,419
339,377
339,377
6,780,068
94
3,813
302,134
7,086,110
5,800
5,800
310,000
310,000
189,085,706
7,401,910
Draft, as of 01/28/2009
CITY OF CHULA VISTA
INVESTlVIENT POLICY AND GUlDELTh-:ES
FISCAL YEAR 2008/2009
1.0 Pu rp os e: ............ ............ ...... .................... ...... ........... ............:.......... ............ ............... .............. 2
2.0 Po li cy: ............................ .................. .............. ........ ........... ......... ....... ................ .............. .......... 2
3.0 Sc 0 p e: ........................................... ........... ................................. .......... ........ ........... ................... 2
4.0 Pru den c e: ....... ..... ........... ............................. ......... .............. ............... .......... ..... .............. .......... 3
5.0 0 b j ectiv e: .... ........ ........ ........................ .......... ........................................................................... 3
6.0 D elega tion 0 f Au th 0 rity: ...... ....... ........... ................ ............................ ........ ........ ............ .......... 4
7.0 Ethics and Conflicts of Interest: ............................................................................................ 4
8.0 Authorized Financial Dealers and Institutions: ................................................................... 4
9.0 Authorized & Suitable Investments: ..................................................................................... 5
10.0 Portfolio Adjustments: ....................................... .................. ................................................ 8
11.0 Colla teraliza tio n: ......... ............ .......... ...............;......... .......................... ............ ..................... 9
12.0 Safekeeping and Custody: .................................................................................................... 9
13.0 D iv ers ifi ca ti 0 n: ............ ......... ............................................ ..................................................... 9
14.0 lVIaxim um Maturities: ........................................................................................................ 10
15.0 Internal Control:... ... ................................................................................................ ........... 10
16.0 Perfo rmance Standards: .................................................................................................... 10
17.0 Re po rtin g: ..... ......... ............... ........... ................ ...................... ........ ..... ............ ..................... 11
18.0 Investment Policy Ad 0 ptio n: ................................................. ............................................. 12
G L 0 SSAR Y...................... ...... .... ....................... ....... .............. .............. ................. .............. ........ 13
3-25
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELTh'ES
FISCAL YEAR 2008/2009
1.0 Purpose: .
This "Investment Policy and Guidelines" (the "Investment Policy") Policy is intended to provide
guidelines for the prudent investment of the City of Chula Vista's (the "City") cash balances, and
outline policies to assist in maximizing the efficiency of the City's cash management system,
while meeting the daily cash flow demands of the City. .
2.0 Policy:
The investment practices and policies of the City of Chula Vista are based upon state law and
prudent money management. The primary goals of these practices are:
A. To ensure compliance with all Federal, State, and local laws governing the investment of
public funds under the control of the Director of Finance/Treasurer.
B. To protect the principal monies entrusted to the City's Finance Department.
C. Achieve a reasonable rate of return within the parameters of prudent risk management while
minimizing the potential for capital losses arising from market changes or issuer default.
3.0 Scope:
This Investment Policy applies to all financial assets of the City of Chula Vista, as indicated in
3.1 below. These funds are accounted for in the City's Comprehensive Annual Financial Report.
3.1 Funds:
The Director of Finance/Treasurer is responsible for investing the unexpended cash in the City
Treasury for all funds, except for the employee's retirement funds, which are administered
separately, and those funds which are managed separately by trustees appointed under indenture
agreements. The Director of Finance/Treasurer will strive to maintain the level of investment of
this cash as close as possible to 100%. These funds are described in the City's annual financial
\
report and include:
o General Fund
. Special Revenue Funds
. Capital Project Funds
. Enterprise Funds
e Trust and Agency Funds
o Any new fund created by the legislative body, unless specifically exempted
This Investment Policy applies to all transactions involving the financial assets and related
activity of the foregoing funds.
3-26
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
4.0 Prudence:
The standard of prudence to be used by the Director of Finance/Treasurer shall be the "prudent
investor standard". This shall be applied in the context of managing an overall portfolio.
The "prudent investor standard" is applied to local agencies, pursuant to California
Government Code Section 53600.3 which provides, in pertinent part:
" ... all governing bodies of local agencies or persons authorized to make
investment decisions on behalf of those local agencies investing public funds
pursuant to this chapter are trustees and therefore fiduciaries subject to the
prudent investor standard. When investing, reinvesting, purchasing, acquiring,
exchanging, selling, or managing public funds, a trustee shall act with care, skill,
prudence, and diligence under the circumstances then prevailing, including, but
not limited to, the general economic conditions and the anticipated needs of the
agency, that a prudent person acting in a like capacity and familiarity with those
matters would use in the conduct of funds of a like character and with like aims,
to safeguard the principal and maintain the liquidity needs of the agency. ..."
4.1 Personal Responsibility:
The Director of Finance/Treasurer, Assistant Director of Finance and Treasury Manager as
investment officers acting in accordance with written procedures and the Investment Policy and
exercising due diligence, shall be relieved of personal responsibility for an individual security's
credit risk or market price changes, provided deviations from expectations are reported to the
City Council in a timely fashion and appropriate action is taken to control adverse developments.
5.0 Objective:
Consistent with this aim, investments are made under the terms and conditions of California
Government Code Section 53600, et seq. Criteria for selecting investments and the absolute
order of priority are:
5.1 Safety:
Safety of principal is the foremost objective of the investment program. Investments of the City
of Chula Vista shall be undertaken in a manner that seeks to ensure the preservation of capital in
the overall portfolio. To attain this objective, diversification is required in order that potential
losses on individual securities do not exceed the income generated from the remainder of the
portfolio.
5.2 Liquidity:
The City of Chula Vista's investment po_rtfolio will remain sufficiently liquid to enable the City
to meet all operating requirements which might be reasonably anticipated and to maintain
3-27
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
compliance with any indenture agreement, as applicable. Liquidity is essential to the safety of
principal.
5.3 Return on Investments:
The City of Chula Vista's investment portfolio shall be designed with the objective of attaining a
market-average rate of return throughout budgetary and economic cycles (market interest rates),
within the City's Investment Policy's risk parameters and the City's cash flow needs. See also
Section 16.1.
6.0 Delegation of Authority:
The Dire~tor of Finance/Treasurer shall be responsible for all transactions undertaken and shall
establish a system of controls to regulate the activities of subordinate officials. The
responsibility for the day-to-day investment of City funds will be delegated to the Treasury
Manager under the general direction of the Assistant Director of Finance.
7.0 Ethics and Conflicts ofInterest:
In addition to state and local statutes relating to conflicts of interest, all persons involved in the
investment process shall refrain from personal business activity that could conflict with proper
execution of the investment program, or which could impair their ability to make impartial
investment decisions. Employees and investment officers are required to file annual disclosure
statements as required for "public officials who manage public investments" [as defined and
required by the Political Reform Act and related regulations, including Government Code
Sections 81000, et seq., and the rules, regulations and guidelines promulgated by California's
Fair Political Practices Commission (FPPC)].
8.0 Authorized Financial Dealers and Institutions:
The City's Director of Finance/Treasurer will maintain a list of the fmancial institutions and
brokers/dealers authorized to provide investment and depository services and will perform an
annual review of the fmancial condition and registrations of qualified bidders and require annual
audited fmancial statements to be on file for each company. The City will utilize Moody's
Securities or other such services to determine financially sound institutions with which to do
business. The City shall annually send a copy of the current Investment Policy to all fmancial
institutions and brokers/dealers approved to do business with the City.
As far as possible, all money belonging to, or in the custody of, a local agency, including money
paid to the City's Director of Finance/Treasurer or other official to pay the principal, interest, or
penalties of bonds, shall be deposited for safekeeping in state or national banks, savings
associations, federal associations, credit unions, or federally insured industrial loan companies in
this state selected by the City's Director of Finance/Treasurer; or may be invested in the
investments set forth in Section 9.0. To be eligible to receive local agency money, a bank,
savings association, federal association, or federally insured industrial loan company shall have
3-28
CITY OF CHULA VISTA
INVESTMENT POLICY Al~D GUIDELINES
FISCAL YEAR 200812009
received an overall rating of not less than "satisfactory" in its most recent evaluation by the
appropriate federal fmancial supervisory agency of its record of meeting the credit needs of
California's communities, including low- and moderate-income neighborhoods.
To provide for the optimum yield in the investment of City funds, the City's investment
procedures shall encourage competitive bidding on transactions from approved brokers/dealers.
In order to be approved by the City, the dealer must meet the following criteria: (i) the dealer
must be a "primary" dealer or regional dealer that qualifies under Securities and Exchange
Commission Rule 15C3-1 (Uniform Net Capital Rule); (ii)the dealer's institution must have an
office in California; (iii)the dealer must be experienced in institutional trading practices and
familiar with the C':Llifornia Government Code as related to investments appropriate for the 'City;
and (iv) all other applicable criteria, as may be established in the investment procedures. All
brokers/dealers and financial institutions who desire to become qualified bidders for investment
transactions must submit a "BrokerlDealer Application" and related documents relative to
eligibility including a current audited annual financial statement, U4 form for the broker, proof
of state registration, proof of National Association of Securities Dealers certification and a
certification of having read and understood the City's Investment Policy and agreeing to comply
with the Investment Policy. The City's Director of Finance/Treasurer shall determine if they are
adequately capitalized (i.e. minimum capital requirements of $10,000,000 and five years of
operation).
9.0 Authorized & Suitable Investments:
The City is authorized by California Government Code Section 53600, et. seq., to invest in
specific types of securities. Investments not specifically listed below are deemed inappropriate
and prohibited:
A. BANKERS' ACCEPTANCES, maximum 25% of portfolio (up to 40% with Council
approval). Maximum term 180 days.
Banks must have a short term rating of at least AlIPI and a long-term rating of A or higher as
. provided by Moody's Investors Service or Standard and Poor's Corp. No more than 30% of
the agency's money may be invested in the bankers' acceptances of anyone commercial bank
pursuant to this section.
B. NEGOTIABLE CERTIFICATES OF DEPOSIT, maximum 30% of portfolio. Maximum
term 3 years, (Up to 5 years with Council approval).
Banks must have a short term rating of AlIPI and a long term rating of at least a single A
from a nationally recognized authority on ratings.
C. COMMERCIAL PAPER, maximum 25% of portfolio. Maximum term 270 days.
Commercial paper of prime quality of the highest ranking or of the highest letter and number
rating as provided for by Moody's Investor Services, Standard & Poor's and Fitch Financial
Services. The issuing corporation must be organized and operating within the United States,
with total assets in excess of $500 million and shall issue debt, other than commercial paper,
3-29
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
that is rated "A" or higher by Moody's, S&P and Fitch. Split ratings (i.e. A2/PI) are not
allowable. No more than 10% of the outstanding commercial paper of any single corporate
issue may be purchased.
D. BONDS ISSUED BY THE CITY OR ANY LOCAL AGENCY WITHIN THE STATE OF
CALIFORt"\J"IA.
Bonds must have an "A" rating or better from a nationally recognized authority on ratings.
E. OBLIGATIONS OF THE UNITED STATES TREASURY
United States Treasury Notes, bonds, bills or certificates of indebtedness, or those for which
the faith and credit of the United States are pledged for the payment of principal and interest.
There is no limit on the percentage of the portfolio that can be invested in this category.
F. FEDERAL AGENCIES
Debt instruments issued by agencies of the Federal government. Though not general
obligations of the U.S. Treasury, such securities are sponsored by the government or related
to the government and, therefore, have high safety ratings. The following are authorized
Federal Intermediate Credit Bank (FICB). Federal Land Bank (FLB), Federal Home Loan
Bank (FHLB), Federal National Mortgage Association (FNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Government National Mortgage Association (GNMA),
Tennessee Valley Authorities (TV A). Student Loan Association Notes (SLJ.\iIA) and Small
Business Administration (SBA). There is no limit on the percentage of the portfolio that can
be invested in this category.
G. REPURCHASE AGREEMENT, ma'l:imum term 3 months.
Investments in repurchase agreements may be made, on any investment authorized in this
section, when the term of the agreement does not exceed 3 months. A Master Repurchase
Agreement must be signed with the bank or broker/dealer who is selling the securities to the
City.
H. REVERSE-REPURCHASE AGREEMENTS (Requires Council approval for each
transaction)
Reverse repurchase agreements or securities lending agreements may be utilized only when
all of the following conditions are met:
a) The security to be sold on reverse repurchase agreement or securities lending
agreement has been owned and fully paid for by the local agency for a minimum
of 30 days prior to sale.
b) The total of all reverse repurchase agreements and securities lending agreements
on investments owned by the local agency does not exceed 20% of the base value
of the portfolio.
c) The agreement-does not exceed a term of 92 days, unless the agreement includes a
written codicil guaranteeing a minimum earning or spread for the entire period
between the sale of a security using a reverse repurchase agreement or securities
lending agreement and the fmal maturity date of the same security.
3-30
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
d) Funds obtained or funds within the pool of an equivalent amount to that obtained
from selling a security to a counter party by way of a reverse repurchase
agreement or securities lending agreement, shall not be used to purchase another
security with a maturity longer than 92 days from the initial settlement date of the
reverse repurchase agreement or securities lending agreement, unless the reverse
repurchase agreement or securities lending agreement includes a written codicil
guaranteeing a minimum earning or spread for the entire period between the sale
of a security using a reverse repurchase agreement or securities lending agreement
and the fmal maturity date of the same security. Investments in reverse
repurchase agreements, securities lending agreements, or similar investments in
which the local agency sells securities prior to purchase with a simultaneous
agreement to repurchase the security shall only be made with primary dealers of
the Federal Reserve Bank of New York or with a nationally or state-chartered
bank that has or has had a significant banking relationship with a local agency.
e) For purposes of this chapter, "significant banking relationship" means any of the
following activities of a bank:
i. Involvement in the creation, sale, purchase, or retirement of a local
agency's bonds, warrants, notes, or other evidence of indebtedness.
11. Financing of a local agency's activities.
111. Acceptance of a local agency's securities or funds as deposits.
I. "NIEDIUM-TERM CORPORATE NOTES, ma'{imum 20% of portfolio (30% with Council
approval), with a maximum remaining maturity of five years or less.
Notes eligible for investment shall be "A" rated or its equivalent or better as determined by a
nationally recognized rating service.
J. TINIE DEPOSITS-CERTIFICATES OF DEPOSIT (non-negotiable certificates of deposit.)
Maximum of 3 years.
Deposits must be made with banks or savings & loan that have a short term rating of Al/PI or
a long term rating of at least a single A from a generally recognized authority on ratings.
K. OBLIGATIONS OF THE STATE OF CALIFOR1~IA
Obligations must be "A" rated or better from a nationally recognized authority on ratings.
L. MONEY MARKET FUNTIS, ma'{imum 15% of portfolio. (Requires Council approval for
each transaction)
No more than 10% of the agency's surplus funds may be invested in shares of beneficial
interest of anyone Money Market fund. Local agencies may invest in "shares of beneficial
interest" issued by diversified management companies which invest only in direct obligations
in U.S. Treasury bills, notes and bonds, and repurchase agreements with a weighted average
of 60 days or less. They must have the highest rating from two national rating agencies, must
maintain a daily principal per share value of $1.00 per share and distribute interest monthly,
and must have a minimum of $500 million in assets under management. The purchase price
of the shares may not include commission.
3-31
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
M. THE LOCAL AGENCY INVESTMENT FUND (LAlF)
LAIF is a special fund of the California State TreaSury through which any local government
may pool investments. The City may invest up to $40 million in this fund. Currently, the
City has established two (2) agency funds through which the Director of Finance/Treasurer
may invest the unexpended cash for all funds: The City of Chula Vista City Fund, and the
Chula Vista Redevelopment Agency Fund. Investments in LAIF are highly liquid and may
be converted to cash within 24 hours.
N. Investment Trust of California (CalTRUSn
The City may invest in shares of beneficial interest issued by the Investment Trust of
California (CalTRUST), a local government investment pool established by local entities as a
joint powers authority pursuant to California Government Code Sections 6509.7 and
53601(P), provided: .
CalTRUST investments are limited to the securities and obligations authorized for
local agency investment pursuant to Subdivisions (a) to (n), inclusive, of California
Government Code Section 53601; and
CalTRUST shall have retained an investment adviser that:
Is registered or exempt from registration with the Securities and Exchange
Commission;
Has not less than five years experience investing in the securities and obligations
authorized for local agency investment pursuant to subdivisions (a) to (n),
inclusive, of California Government Code Section 53601; and
Has assets under management in excess of five hundred million dollars
($500,000,000).
9.1 Investment Pools:
The City's Director of Finance/Treasurer or designee shall be required to investigate all local
government investment pools and money market mutual funds prior to investing and performing
at least a quarterly review thereafter while the City is invested in the pool or the money market
fund. LAIF is authorized under provisions in Section 16429.1 of the California Government
Code as an allowable investment for local agencies even though some of the individual
investments of the pool are not allowed as a direct investment by a local agency.
10.0 Portfolio Adjustments:
Should any investment listed in section 9.0 exceed a percentage-of-portfolio limitation due to an
incident such as fluctuation in portfolio size, the affected securities may be held to maturity to
avoid losses. When no loss is indicated, the Director of Finance/Treasurer shall consider
reconstructing the portfolio basing his or her decision on the expected length of time the
portfolio will be unbalanced. If this occurs, the City Council shall be notified.
3-32
CITY OF CnULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
11.0 Collateralization:
Under provisions of the California Government Code, California banks, and savings and loan
associations are required to secure the City's deposits by pledging government securities \'lith a
value of 110 % of principal and accrued interest. California law also allows fmancial institutions
to secure City deposits by pledging fIrst trust deed mortgage notes having a value of 150% of the
City's total deposits. Collateral will always be held by an independent third party. A clearly
marked evidence of o\'lnership (safekeeping receipt) must be supplied to the City and retained.
The market value of securities that underlay a repurchase agreement shall be valued at 102% or
greater of the funds borrowed against those securities and the value shall be adjusted no less than
quarterly. Since the market value of the underlying securities is subject to daily market
fluctuations, the investments in repurchase agreements shall be in compliance if the value of the
underlying securities is brought back up to 102% no later than the next business day. The
Director of Finance/Treasurer, at his or her discretion, may waive the collateral requirement for
deposits that are fully insured up to $100,000 by the Federal Deposit Insurance Corporation. The
right of collateral substitution is granted.
12.0 Safekeeping and Custody:
All City investments shall identify the City of Chula Vista as the registered owner, and all
interest and principal payments and withdrawals shall indicate the City of Chula Vista as the
payee. All securities shall be safe kept with the City itself or with a qualifIed fInancial
institution, contracted by the City as a third party. All agreements and statements will be subject
to review annually by external auditors in conjunction with their audit. In the event that the City
has a fInancial institution hold the securities, a separate custodial agreement shall be required.
All securities shall be acquired by the safekeeping institution on a "Delivery-Vs-Payment"
(DVP) basis. For Repurchase Agreements, the purchase may be delivered by book entry,
physical delivery or by third-party custodial agreement consistent with the Government Code.
The transfer of securities to the counter party bank's customer book entry account may be used
for book entry delivery.
13.0 Diversification:
The City's investment portfolio will be diversified to avoid incurring unreasonable and avoidable
risks associated with concentrating investments in specifIc security types, maturity segment, or in
individual fmancial institutions. With the exception of U.S. Treasury securities and authorized
pools, no more than 60% of the total investment portfolio will be invested in a single security
type or with a single fmancial institution. In addition, no more than 10% of the investment
portfolio shall be in securities of anyone issuer except for U.S. Treasuries and U.S. Government
Agency issues.
A. Credit risk, defined as the risk of loss due to failure of the insurer of a security, shall be
mitigated by investing in those securities with an "A" or above rating and approved in the
Investment Policy and by diversifying the investment portfolio so that the failure of anyone
issuer would not unduly harm the City's cash flow.
3-33
CITY OF CHULA VISTA
INVESTMENT POLICY Al~D GUIDELINES
FISCAL YEAR 200812009
B. Market risk, defined as the risk of market value fluctuations due to overall changes in the
general level of interest rates, shall be mitigated by structuring the portfolio so that securities
mature at the same time that major cash outflows occur, thus eliminating the need to sell
securities prior to their maturity. It is explicitly recognized herein, however, that in a
diversified portfolio, occasional measured losses are inevitable and must be considered
within the context of overall investment return. The City's investment portfolio will remain
sufficiently liquid to enable the City to meet all operating requirements which might be
reasonably anticipated.
14.0 Maximum Maturities:
To the extent possible, the City will attempt to match its investments with anticipated cash flow
requirements. . Unless matched to a specific cash flow, the City will not directly invest in
securities maturing more than five (5) years from the date of purchase, unless, the legislative
body has granted express authority to make that investment either specifically, or as a part of an
investment program approved by the City Council.
15.0 Internal Control:
The Director of Finance/Treasurer shall establish a system of internal controls designed to
prevent loss of public funds due to fraud, employee error, misrepresentation by third parties, or
unanticipated market changes. No investment personnel may engage in an investment
transaction except as provided for under the terms of this Investment Policy and the procedure
established by the Director of Finance/Treasurer.
The external auditors shall annually review the investments with respect to the Investment
Policy. This review will provide internal control by assuring compliance with policies and
procedures for the investments that are selected for testing. Additionally, account reconciliation
and verification of general ledger balances relating to the purchasing or maturing of investments
and allocation of investments to fund balances shall be performed by the Finance Department
and approved by ,the Director of Finance/Treasurer. To provide further protection of City funds,
written procedures prohibit the wiring of any City funds without the authorization of at least two
of the following four designated City staff:
1. Director of Finance/Treasurer
2. Assistant Director of Finance
3. Treasury Manager
4. Fiscal Operations Manager
16.0 Performance Standards:
This Investment Policy shall be reviewed at least annually by the Director of Finance/Treasurer
to ensure its consistency with the overall objective of preservation of principal, liquidity, and
return, and its relevance to current law and financial and economic trends. All financial assets of
all other funds shall be administered in accordance with the provisions of this Investment Policy.
3-34
CITY OF CHULA VISTA
INVESTl\'IENT POLICY AND GUIDELINES
FISCAL YEAR 200812009
The monies entrusted to the Director of Finance/Treasurer will be held in a passively managed
("hold to maturity") portfolio. However, the Director of Finance/Treasurer will use best efforts
to observe, review, and react to changing conditions that affect the portfolio, and to do so in a
manner that is consistent with this Investment Policy.
16.1 Market Yield (Benchmark):
The investment portfolio shall be managed to attain a market-average rate of return throughout
budgetary and economic cycles, taking into account the City's investment risk constraints and
cash flow. Investment return becomes a consideration only after the basic requirements of
investment safety and liquidity have been met. Because the investment portfolio is designed to
operate on a 'hold-to-maturity' premise (or passive investment style) and because of the safety,
liquidity, and yield priorities, the performance benchmark that will be used to determine whether
market yields are being achieved shall be the average of the monthly LAIF rate and the 12-month
rolling average 2 - Year Constant Maturity Treasury (CMT) rate. While the City will not make
investments for the purpose of trading or speculation as the dominant criterion, the Director of
Finance/Treasurer shall seek to enhance total portfolio return by means of ongoing portfolio and
cash management. The prohibition of highly speculative investments precludes pursuit of gain
or profit through unusual risk and precludes investments primarily directed at gains or profits
from conjectural fluctuations in market prices. The Director of Finance/Treasurer will not
directly pursue any investments that are leveraged or deemed derivative in nature. However, as
long as the original investments can be justified by their ordinary earning power, trading in
response to changes in market value can be used as part of on-going portfolio management.
17.0 Reporting:
The Director of Finance/Treasurer shall submit a quarterly investment report to the City Council
and City Manager following the end of each quarter. This report will include the following
elements:
. Type of investment
· Institutional Issuer
. Purchase Date
. Date of maturity
· Amount of deposit or cost of the investment
o Face value of the investment
. Current market value of securities and source of valuation
· Rate of interest
. Interest earnings
. Statement relating the report to its compliance with the Statement of Investment Policy or
the manner in which the portfolio is not in compliance
· Statement on availability of funds to meet the next six month's obligations
. Monthly and Year-to-date Budget Amounts for Interest Income
· Percentage of Portfolio by Investment Type
3-35
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
. Days to Maturity for all Investments
o Comparative report on Monthly Investment Balances & Interest Yields
. Monthly transactions
This quarterly investment report shall be an information item for the City Council and City
Manager. In addition, a commentary on capital markets and economic conditions may be
included "With the report.
18.0 Investment Policy Adoption:
By virtue of a resolution of the City Council of the City of Chula Vista, the Council shall
acknowledge the receipt and filing of this annual statement of Investment Policy for the
respective fiscal year.
3-36
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
GLOSSARY
AGENCIES: Federal agency securities.
ASKED: The price at which securities are offered. (The price at which a firm will sell a security
to an investor.)
BANKERS' ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust
company. The accepting institution guarantees payment of the bill, as well as the issuer. The
drafts are drawn on a bank by an exporter or importer to obtain funds to pay for specific
merchandise. An acceptance is a high-grade negotiable instrument.
BASIS POINT: One one-hundredth ofa percent (i.e., 0.01 %)
BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a
bid.)
BROKER: A broker brings buyers and sellers together for a commission. He does not take a
position.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a
certificate. Large-denomination CDs are typically negotiable.
COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to
secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of
public monies.
COMMERCIAL PAPER: Short term unsecured promissory note issued by a corporation to
raise working capital. These negotiable instruments are purchased at a discount to par value or at
par value with interest bearing. Commercial paper is issued by corporations such as General
Motors Acceptance Corporation, IBM, Bank of America, etc.
COUPON: a). The annual rate of interest that a bond's issuer promises to pay the bondholder
on the bond's face value. b) A certificate attached to a bond evidencing interest due on a
payment date.
DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and
selling for his own account.
DEBENTURE: A bond secured only by the general credit of the issuer.
DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery
versus payment and delivery versus receipt. Delivery versus payment is delivery of securities
. with an exchange of money for the securities. Delivery versus receipt is delivery of securities
with an exchange of a signed receipt for the securities.
3-37
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
DISCOUNT: The difference between the cost price of a security and its maturity when quoted
at lower than face value. A security selling below original offering price shortly after sale also is
considered to be at a discount.
DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at
a discount and redeemed at maturity for full face value (e.g., U.S. Treasury Bills).
DIVERSIFICATION: Dividing investment funds among a variety of securities offering
independent returns.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit
to various classes of institutions (e.g., S&Ls, small business firms, students, farmers, farm
cooperatives, and exporters).
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A Federal agency that
insures bank deposits, currently up to $100,000 per deposit.
FEDERAL FUNDS RATE: The rate of interest at which Federal funds are traded. This rate is
currently pegged by the Federal Reserve though open-market operations.
FEDERAL HOME LOAN BANKS (FHLB): The institutions that regulate and lend to savings
and loan associations. The Federal Home Loan Banks playa role analogous to that played by the
Federal Reserve Banks vis-a-vis member commercial banks.
FEDERAL HOl\'IE LOA1~ MORTGAGE CORPORATION (FHLMC): Created to promote
the development of a nationwide secondary market in mortgages. It does this by purchasing
residential mortgages from fmancial institutions insured by an agency of the federal government
and selling its interest in them through mortgage backed securities. The interest and principal
payments from the mortgages pass through to the investors either monthly, semiannually or
annually.
FEDERAL LA1~D BANK (FLB): Long-term mortgage credit provided to farmers by Federal
Land Banks. These bonds are issued at irregular times for various maturities ranging from a few
months to ten years.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMP.., like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. FNMA is a Federal
corporation working under the auspices of the Department of Housing and Urban Development
(BUD). It is the largest single provider of residential mortgage funds in the United States.
Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The
corporation's purchases include a variety of adjustable mortgages and second loans, in addition
to fLxed-rate mortgages. FNMA's securities are higWy liquid and are widely accepted. FNMA
assumes and guarantees that all security holders will receive timely payment of principal and
interest.
3-38
CITY OF CHULA VISTA
INVESTMENT POLICY A1"ID GUIDELINES
FISCAL YEAR 200812009
FEDERAL OPEN lYIARKET COMMITTEE (FOMe): Consists of seven members of the
Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of
the New York Federal Reserve Bank is a permanent member, while the other presidents serve on
a rotating basis. The committee periodically meets to set Federal Reserve guidelines regarding
purchases and sales of Government Securities in the open market as a means of influencing the
volume of bank credit and money.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress
and consisting of a seven-member Board of Governors in Washington, D.C.; 12 regional banks
and about 5,700 commercial banks are members of the system.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA OR GINNIE
MAE): Securities influencing the volume of bank credit guaranteed by GNMA and issued by
mortgage bankers, commercial banks, savings and loan associations and other institutions.
Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae
securities are backed by the FHA or VA mortgages. The term "pass-through" is often used to
describe Ginnie Maes.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a
substantial loss of value. In the money market, a security is said to be liquid if the spread
between bid and asked prices is narrow and reasonable size can be done at those quotes.
LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from
political subdivisions that are placed in the custody of the State Treasurer for investment and
reinvestment. .
MARKET VALUE: The pnce at which a security IS trading and could presumable be
purchased or sold.
MARKET REPURCHASE AGREEMENT: A written contract covering all future
transactions between the parties to repurchase-reverse agreements that establish each party's
rights in the transactions. A master agreement will often specify, among other things, the right
of the buyer-lender to liquidate the underlying secUrities in the event of default by the seller-
borrower. .
MA TVRITY: The date upon which the principal or stated value of an investment becomes due
and payable.
NEGOTIABLE CERTIFICATES OF DEPOSIT: Unsecured obligations of the financial
institution, bank or savings and loan, bought at par value with the promise to pay face value plus
accrued interest at maturity. They are high-grade negotiable instruments, paying a higher
interest rate than regular certificates of deposit.
OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for
an offer).
3-39
CITY OF CHVLA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 2008/2009
OPEN MARKET OPERATIONS: Purchases and sales of government and certain other
securities in the open market by the New York Federal Reserve Bank as directed by the FOMC
in order to influence the volume of money and credit in the economy. Purchases inject reserves
into the bank system and stimulate growth of money and credit: Sales have the opposite effect.
Open market operations are the Federal Reserve's most important and most flexible monetary
Policy tool. .
PORTFOLIO: Collection of securities held by an investor.
PRIMARY DEALER: A group of government securities dealers who submit daily reports of
market activity and positions and montWy fmancial statements to the Federal Reserve Bank of
N ew York and are subj ect to its informal oversight. Primary dealers include Securities and
Exchange Commission (SEC)-registered securities broker/dealers, banks and a few unregulated
firms.
PRUDENT PERSON RULE: An investment standard. In some states, the law requires that a
fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody
state-the so - called "legal list" . In other states, the trustee may invest in a security if it is one that
would be bought by a prudent person of discretion and intelligence who is seeking a reasonable
income and preservation of capital.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its
current market price.
REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities
to an investor with an agreement to repurchase them at a fixed date. The security "buyer" in
effect lends the "seller" money for the period of the agreement, and the terms of the agreement
are structured to compensate him for this. Dealers use RP extensively to fmance their position.
Exception: when the Fed is said to be doing RP, it is lending money that is, increasing bank
reserves.
SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and
valuables of all types and descriptions are held in the bank's vaults for protection.
STUDENT LOAN ASSOCIATION NOTES (SLMA or SALLIE MAE): A U.S. Corporation
and instrumentality of the U.S. Government. Through its borrowings, funds are targeted for
loans to students in higher education institutions. SLMA securities are highly liquid and are
widely accepted.
SMALL BUSINESS ADMINISTRATION (SBA): The portion of these securities which are
guaranteed by the Federal government to provide financial assistance through direct loans and
loan guarantees to small businesses. Cash flows from these instruments may not be in equal
installments because of prepayments.
3-40
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
FISCAL YEAR 200812009
SECONDARY MARKET: A market made for the purchase and sale of outstanding issues
following the initial distribution.
SECURITIES & EXCHANGE COMlVIISSION: Agency created by Congress to protect
investors in securities transactions by administering securities legislation.
SEC RULE 15C3-1: See "Uniform Net Capital Rille".
TENNESSEE VALLEY AUTHORITIES (TVA): A U.S. Corporation created in the 1930s to
electrify the Tennessee Valley area; currently a major utility headquartered in Knoxville,
Tennessee. TV A securities are highly liquid and are widely accepted.
TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to
[mance the national debt. Most bills are issued to mature in three months, six months, or one.
year.
TREASURY BOND: Long-term U.S. Treasury securities having initial maturities of more than
10 years. .
TREASURY NOTES: Intermediate-term coupon bearing U.S. Treasury having initial
maturities of one year to ten years.
UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that
member firms as well as nonmember broker/dealers in securities maintain a maximum ratio of
indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio.
Indebtedness covers all money owed to a firm, including margin loans and commitments to
purchase securities, one reason new public issues are spread among members of underwriting
syndicates. Liquid capital includes cash and assets easily converted into cash.
YIELD: The rate of annual income return on an investment, expressed as a percentage. (a)
Income Yield is obtained by dividing the current dollar income by the current market price for
the security. (b) Net Yield or Yield to Maturity is the current income yield minus any premium
above par or plus any discount from par in purchase price, with the adjustment spread over the
period from the date of purchase to the date of maturity of the bond.
3-41
RESOLUTION NO. 2009-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING THE EXISTING CITY
INVESTMENT POLICY AND GUIDELINES
WHEREAS, the City of Chula Vista's "Investment Policy and Guidelines," adopted on
February 12, 2008, by Resolution No. 2008-054 intended to provide direction for the prudent
investment oftemporarily idle cash and to maximize the efficiency ofthe cash management process;
and
WHEREAS, the stated goal is to enhance the economic condition of the City while insuring
the safety of funds invested; and
WHEREAS, the Policy includes a list of specific investment instruments available under
California Government Code sections 53600, et seq. and 53635, et seq.; and
WHEREAS, each investment transaction is selected consistent with the following order of
priority: (i) ensuring the "safety" of principal; (ii) investing only for that time frame that the cash is
not needed for operational purposes (liquidity); and (iii) seeking the highest return possible (yield)
provided that the first two factors are met; and
WHEREAS, the Policy was amended in February 2008 to include a legislative change that
no longer required the City to submit its Investment Policy and quarterly reports to the California
Debt and Investment Advisory Commission; and
WHEREAS, also at that time, the Policy was amended to add Investment Trust of California
to the list of authorized investments; and
WHEREAS, no new amendments are recommended at this time; and
WHEREAS, City staff recommends that the existing Investment Policy and Guidelines be
readopted as is.
. NOW, THEREFORE, BE IT RESOLVED by the City Council ofthe City of Chula Vista
that it approves the existing City Investment Policy and Guidelines, on file in the Office of the City
Clerk.
Maria Kachadoorian
Director of Finance
Presented by
J:lAttomey\RESOLLiT10NS\FrNA:-lCE\Apprnvl: existing City Investment Policy:lIld Guid3ncs_42-09.dOC