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INVESTMENT COMMITTEE MEETING
11 /14/95
*Annual Review, FY 95
Introduction
I. Portfolio Summary
II. Performance Summary
III. Interest Income Summary
IV. Collateral Review
V. Broker Selection Process
VI. Summary
*Investment Policy Review
Addition of new legislative requirements
*Review Prudential Management Program
*Minutes Review
*General Discussion and Questions
INTRODUCTION
This report is written and submitted in accordance with Texas State law, specifically Tex.
Rev. Civ. Stat. Ann. Art. 4413 (34C) Section 4, which states that"at least once each year,
the investment officer of a state agency or political subdivision shall prepare a written report
concerning the agency's or subdivision's local funds investment transactions for the preceding
year and describing in detail the investment position of the agency or subdivision as of the
date of the report."
The City's investment policy designates the Director of Finance as the responsible manager
for the City's investment program and as such has delegated the daily investment
procedures to the Cash & Debt Department.
In compliance with the City's investment policy, the Cash & Debt Department fulfills four main
objectives: compliance, safety, liquidity and yield, in that order. Compliance is maintained
through regular reporting to City management on a monthly, quarterly and annual basis.
Safety is insured by 1) investing only in those securities allowed by Art. 842(a-2, V.T.C.S.)
entitled the "Public Funds Investment Act of 1987"with revisions in 1989, 1991, 1993 and 1995;
2) using delivery vs. payment for all purchases (payment for securities is made upon
delivery); 3) protecting all non-government securities. (cash and bank certificates of deposit)
with collateral in the form of government securities which are pledged to the City of Euless
and safekept at a third party institution; 4) diversifying investment purchases into different security
markets to minimize individual market risk. Liquidity is met by matching investment terms to future
operating cash needs such as payroll, accounts payables, debt service and capital improvement
disbursements. Furthermore, investment in money market funds and local government investment
pools provides the safety and daily liquidity needs of the City. The yield or rate of return which
the City receives is measured against the average 90 day treasury bill yield as set by the
investment policy. This year we have been able to exceed this benchmark by an average
of 43 basis points.
The information contained in this report will quantitatively and graphically explain the
achievement of these City objectives for fiscal year 1994-95.
y
I. PORTFOLIO SUMMARY
The City's investment portfolio at the end of the fiscal year, September 30, 1995, is summarized
by instrument and by maturity as shown below.
Distribution by Instrument
% of Average Avg. Yield
InstrumentCos t Portfolio Yield Prior Year
Agencies 11,626,695 53.4°x6 6.22°x6 4.62%
Treasuries 6,750,122 31.0% 6.80% 4.35%
Money Market 3414,496 15.7% 5.72°x6 4.55%
21,791,314 100.0%
This table shows that the majority of City funds, approximately 84% are invested in treasuries
and government agency securities which provide a great deal of safety. As of the date of
this report, the average yield on these instruments ranged from 6.22% to 6.80°x6. When
compared to prior years levels, the average yields have shown a large increase. The Federal
Reserve has raised the Fed Fund rate several times in the past year which is reflected in
the higher yields. However, in an attempt to control the economy the Federal Reserve is
beginning to ease. Their goal is to maximize growth and control inflation. Several leading
indicators also affect the growth of the economy, including housing sales and starts, retail
sales, vehicle purchases, and employment.
Distribution by Maturity
#of days $ Cost % of Portfolio
1 - 30 $5,956,534 27.3%
31 - 90 2,931,704 13.5%
91 - 180 4,434,866 20.4%
181-365 2,517,643 11.6%
Over 365 5,950,567 27.3%
$21,791,314 100.0%
This table reflects the degree of liquidity in the City's portfolio with the ability to access over
60% of the portfolio within six months. This strategy was followed not only to meet cashflow
needs, but also because this timeframe provided the best yields for the securities available
at the time of purchase. However, in the last quarter, our strategy has changed. In the past
few months the Federal Reserve began to ease. In order to lock in on higher yields, we have
laddered maturities and invested 27%, of the portfolio beyond one year. We were able to
comply with our investment policy by using water and sewer funds, reserve funds, escrow funds,
and bond proceeds for these investments.
By Instrument By=
Maturity
(13.5%)
(27.3%) � 1 -30
®Agencies , 31 -90
=Treasuries (20.4%) ® 91 - 180
�-(15.7%) =Money Market ,WEM 181-365
(31.0%) (11.6°x6) (27.3%) =Over 365
2
II. PERFORMANCE SUMMARY
Cash and Investments Balances - Full utilization of funds and minimization of idle cash is
necessary to pursue additional interest income revenues for the City. The average % of
invested funds is 100% for FY95 fulfilling that objective. The monthly data below shows a
greater utilization of City funds through investments.
Consolidated Invested Percentage
Cash Balance Invested
Oct. 93 $291,963 $11,956,004 98%
Nov. 130,163 12,365,269 99%
Dec. 44,757 12,898,051 100%
Jan 94 (230,220) 15,871,761 101%
Feb. 604,719 15,587,920 96%
Mar (134,037) 14,881,280 101%
Apr. (92,556) 15,702,965 101%
May (295,414) 15,847,747 102%
Jun. (433,300) 15,649,554 103%
Jul. (476,494) 14,591,447 103%
Aug. (16,387) 14,606,045 100%
Sept. (414,103) 22,979,382 102%
Average (85,076) 15,244,785 101%
Consolidated Invested Percentage
Cash Balance Invested
Oct. 94 ($870,133) $23,039,382 104%
Nov. 36,491 23,079,577 100%
Dec. 654,042 23,813,280 97%
Jan 95 (260,317) 27,415,806 101%
Feb. 138,189 26,906,643 99%
Mar 7,306 26,768,050 100%
Apr.
(129,123) 26,630,749 100°r6
May 125,778 26,848,717 100%
Jun. (842,438) 26,861,857 103%
Jul. 445,507 24,956,368 98%
Aug. 10,216 24,920,990 100%
Sept. 1 &M/53� 21,791,314 -e419W'
Average 5.9-7 '- 50: 2 25,252,728 100%
I
* In the past few years, our consolidated cash has maintained a negative average. However,
at the end of fiscal year 1995, a large amount of cash remained at the depository bank due
to outstanding checks and investment maturities late in the month.
3 '
l
This graph shows how a greater portion of the City's funds continue to be invested always i
9 p 9 p Y Y n
pursuit of 100%.
110%
a�
y 100% -- — — --
a�
y90°r6 ---- -- -- -
a
80%
1989 1990 1991 1992 1993 1994 1995
Fiscal Year
This graph shows that cash at the bank is minimized to allow for more investments.
1275
775
M
IM c
w �
m N
0
z o
(n L
N F—
U 275
I
-225
1989 1990 1991 1992 1993 1994 1995
Fiscal Year
The two graphs present how cash and investments are actively being managed resulting in
additional interest income revenues for the City.
4
Cash management performance- effectiveness of the cash management program has been
measured utilizing actual figures for FY95 as shown below:
Average City's Number Estimated
90 day Invested Days in Interest
Month TBill Yield Balance Month Earnings
Oct. 94 5.07% $23,039,382 31 99,208
Nov. 5.42% 23,079,577 30 102,815
Dec. 5.74% 23,813,280 31 116,091
Jan 95 5.85% 27,415,806 31 136,215
Feb. 5.92% 26,906,643 28 122,193
Mar 5:90% 26,768,050 31 134,134
Apr. 5.82% 26,630,749 30 127,390
May 5.84% 26,848,717 31 133,170
Jun. 5.63% 26,861,857 30 124,300
Jul. 5.58% 24,956,368 31 118,273
Aug. 5.55% 24,920,990 31 117,470
Sept. 5.43% 21J91 314 30 97255
Average
Average 5.65% 25,252,728 119,043
Estimated earnings at benchmark yields: $1,428,514
Actual FY95 interest income (pre-audit): $1,582,823
Earnings over benchmark: $154,309
The table above presents an estimated amount the city would have earned for the past year
on just matching the benchmark yield. The operational budget for Cash Management is
$47,248 for FY95. By utilizing the cash management program,we earned an additional
$107,061 or 43 basis points over our benchmark.
Key rate comparisons-an objective of the investment policy is for the City's average rate of return
to consistently exceed that of the three month U.S. Treasury Bill, as stated before. Therefore,
they have been presented for comparative purposes below.
Benchmark
90 day City's Avg.
Month T- -e
bill�iel�d Portfolio yl-d Difference
Oct. 94 5.07% 4.92% -0.15%
Nov. 5.42% 5.27% -0.15%
Dec. 5.74% 5.67% -0.07%
Jan 94 5.85% 6.04% 0.19%
Feb. 5.92% 6.04% 0.12%
Mar 5.90% 6.42% 0.52%
Apr. 5.82% 6.43% 0.61%
May 5.84% 6.50% 0.66%
Jun. 5.63% 6.45% 0.82%
Jul. 5.58% 6.43% 0.85%
Aug. 5.55% 6.50% 0.95%
Sept. 5.43% 6.30% 0.87%
Average 5.65% 6.08% 0.43%
The economy's pace slowed down during the last 2 quarters which is reflected in the benchmark
rates. Therefore, the City's portfolio has enjoyed a wider spread in the last half of the fiscal year.
The last quarter of FY 95 marks the third consecutive quarter that the City's portfolio met and
exceeded the benchmark. Prior fiscal year enjoyed a much smaller spread.
5
1
III. INTEREST INCOME SUMMARY
FY92 Audit $873,288
FY93 Audit $508,975
FY94 Audit $688,661
FY95 Actual(Pre-Audit) $1,582,823
FY95 Revised Budget $1,388,175
Interest Income Received versus Revised Budget: 114%
Interest Income Summary
2000 -----
1500
C Cn
� c I
�j 1000
0
`• t
ayi �
500
c
0
FY92 Audit FY94 Audit
FY93 Audit FY95 Actual(Pre-Audit)
Interest income met and exceeded the budgeted level for fiscal year 1995. Early in FY 95 we
were able to take advantage of the increasing volatility in the market by locking in on higher
interest rates. As the market begins to decline, we will see a decrease in our spread compared
to the 90-day Treasury Bill.
Market rate outlook - Economic data suggest that the U. S. economy is continuing to slow at a
moderate pace. Moderate economic growth does not appear to be increasing inflationary fears.
If Congress can agree upon a deficit-reduction plan, the Fed would be likely to cut the Fed funds
rate a quarter point which would take the rate down to 51/2°x6.
6
Interest Income By Fund
For Fiscal Year Ending 1994
Fund FY 94 FY 95 FY 95 Less Fy 94 Plus FY 95 Total FY 95
Audi Rev. Budget Posted Accruals Accruals Pre-Audit Difference
1. General $207,625 $340,000 $333,461 $45,478 I $74,687 $362,670 $22,670
2. W&S 181,644 266,400 265,153 68,071 102,543 299,6251 33,225
4. GO Debt 18,770 37,910 44,140 1,097 43,043 5,133
8. W&S CIP 12,890 10,000 26,361 5,884 20,477 10,477
9. Escrow 27,563 57,000 41,145 139 28,373 69,379 12,379
12. Htl/Mtl 4,979 8,000 14,786 2,613 622 12,795 4,795
16. DEA Task 9,617 10,213 10,2131 596
17. Risk M mt 16,676 21,000 32,882 3,031 1,865 31,716 10,716
21. Equip Re I 7,192 12,000 19,352 3,810 15,543 3,543
23. Spec Prog 5,434 5,434 5,434
24. Drug Fund 1,316 8,000 13,187 13,187 5,187
26. Street CIP 10,954 4,000 16,843 4,517 12,325 8,325
29. Drainage 11,097 6,000 11,590 3,229 8,361 2,361
30. Cash Mgmt 47,981 47,248 47,248 47,2481 0
39. DUS CIP 13,980 0-1 0
40. Impact Fee 8,837 20,000 20,0891 770 7,691 27,009' 7,009
50. 1/2 Cent 36,838 541,000 389,435 13,822 185,174 560,787 19,787
90. W&S Res 80,319 43,010 43,0101 43,010
Total $688,661 $1,388,175 $1,334,329 $152,461 $400,9561 $1,582.8231 $194,648
114%
Note that interest earnings is being earned by all investable City funds and great efforts are pursued to
meet their budgeted level. This report also points out that the projected (pre-Audit) interest earnings for
the end of the fiscal year exceeds by far the budgeted level. This can be attributed to the radical move
up in interest rates over the prior year. For example, from January to March, the increase in the 90-day
T-Bill from prior year was an average of 2.46%(246 basis points) or 76% growth rate! (See details below)
Second 90 Tbill Yld
Quarte r 0 mth end Year ago Difference Growth %
Jan 5.80% 2.96% 2.84% 95.95%
Feb. 5.74% 3.33% 2.41% 72.37%
Mar 5.64% 3.50% 2.14% 61.14%
76.49% AVG*
Third
Quarter
Apr. 5.66% 3.85% 1.81% 47.01%
May 5.72% 4.23% 1.49% 35.22%
Jun. 5.46% 4.18% 1.28% 30.62%
37.62% AVG**
Fourth
Quarter
Jul. 5.47% 4.43% 1.04% 23.48%
Aug. 5.43% 4.98% 0.45% 9.04%
Sept. 5.14% 4.79% 0.35% 7.31%
13.27% AVG**
*The second quarter's purchases had a significant impact on this year's interest earnings when the market
rates increased.
**The third and fourth quarters' market rates reiterate the leveling off of market rates.
7
IV. COLLATERAL REVIEW
The first and most important objective of investing public funds is safety. One way to insure the
City's assets is to have them fully secured with "collateral". Acceptable collateral is defined
in the City's investment policy, but generally consists of types of securities the City would
invest in. Bank balances are monitored daily to assure their full coverage. The amount of
collateral required by the depository bank varies with the expected level of deposits (typically
correlates with large receipts such as property taxes, franchise taxes and investment
maturities).
City
of Euless
Collateral Analysis for
...........
Cash A C.
Investments
as of8129195
Pledging Safekeeping Pledged Sec. Security Market Value Inv. Value Difference
-Institution Location Description Par Value (wFE4Ctas-) @Mat'y (P,& I) Over/(Under);
Bank One $0 $100,000 $20,348 $79,652
$ Mkt $0
DDA $20,348
Landmark Bank Texas Indep Agency $900,000 $986,469 $1,352,616 ($366,147)i
Bank-Dallas 05/13/98 Payroll $10,197
01/13/97 Operating $1,342,419
Confirmation of$1 million maturity on Friday 9/29/95 held for investment purchase on Monday 10/02/95
and payroll on Tuesday 10/03/95.
Prepared by: Date:
8
I
V. BROKER SELECTION PROCESS
This section of the report is to provide a brief explanation of the process undertaken to select
the brokers with which the City invests. The broker/dealer list is reviewed annually and any
changes are made during this time unless it becomes necessary to make revisions prior to
the annual process. The process is outlined below:
1. Brokers express an interest in doing business with the City's investment portfolio
2. A questionnaire is sent to the broker which requests the necessary information for Cash
Management to review including references, capital adequacy ratios, etc.
3. The Cash Manager reviews all received questionnaires, summarizes the information and
recommends the desired list of brokers with explanatory notes.
4. The recommendation is presented to the Investment Committee at the next quarterly
meeting for discussion and final approval.
5. All brokers are notified after the selection is complete.
VI. SUMMARY
The primary objectives of compliance, safety, liquidity and yield have been achieved for the
reporting period as evidenced by this report. These objectives will continue to be pursued for
the City of Euless as provided by the investment policy. This year proved to be another
successful year for the investment program. The City of Euless, like all other local
governments, is faced with the challenge of meeting benchmark levels triggered by the Fed's
actions and meeting additional reporting requirements as stated by new legislation.
Therefore, the City's investment program will continue to seek new techniques, instruments,
etc. to enhance the return on the City's funds as well as the return of all City funds.
FY 95 was a very busy year for the investment program. Not only did we keep the City's funds
fully invested, we also completed some very large projects which include:
-Revising the Investment Policy to include new legislative requirements;
-Reviewing the broker/dealer list in order to track the progress of each broker
(We removed two companies, Merril Lynch and Southwest Securities, due to a
change in brokers handling our account. We added Banc One Capital and
Ahart& Bryan.);
-Approving Prudential Management Program to handle the bond proceeds
received in the Half-Cent Sales Tax Fund, which continues to show favorable
results;
-Reviewing the Investment Pool (LOGIC) to assure compliance with the amended
Public Funds Investment Act;
-Renewing Bank Depository with Landmark Bank-Mid Cities.
The investment committee met on November 14, 1995 and reviewed the presented data for
transmittal to City Council
Vi ki�LSmi�thAccountant II Diana G. Ortiz
Cash & Debt Department Director of Finance
9
Minutes -9/13/95 Investment Committee Meeting
Attendance: Joe Hennig, Assistant City Manager
Jim Hickerson, Accounting Manager
Diana Ortiz, Director of Finance
The Committee met to review the investment program for the third quarter. An overview of
all investment activity was presented by Diana Ortiz. In addition, there was a discussion of
the amendments to the Public Funds Investment Act which affects the contents of our Investment
policy.
It was motioned by Jim Hickerson to accept the previous minutes and to accept the report as
written. Joe seconded.
Jim motioned to adjourn the meeting. Joe seconded.
The meeting was adjourned.
10
•
� APPENDIX
•
•
City of Euless
Schedule of Purchases
For July,1995
Investment Type Institution
LOGIC Pool FNMA Fed,Nat'l Mort.Asso. FHLB Fed,Home Loan Bank RAUSCHER Rauscher Pierce BANC BancOne Capital MMSBW Masterson Moreland
TRILL Treasury Bio FFCB Fed.Farm Credit Bank FHLMC Fed.Home Loan Mort. PRUD Prudential Securities WAN Western Amer.Nail LM Landmark Bank
REPO Repllchase Agreement TNOTE Treasury Note FGIC Fin'I Guaranty Ins Co. A&B Ahart d Bryan
Cost Accrued Total P•1 @
Inw. Cusip Purchase Term Maturity Price Par Book Value Interest Total Yield To Coupon Interest Seller Maty Net of Total Cost
Type Number Date (in days) Date Per$100 Value (Prin.Only) maty Prin+Int Maturity Rate Purchased Inst. Discount Premium Fund Prem b IM Pur. of Investment
LOGIC 07/0695 100.0000 500,000.00 500,000.00 500,000.00 6.12% LOGIC venous 500.00000 500.00000
FFCB 3133114cb 07/1295 188 01/15496 99.7500 500,000.00 498,750.00 25,400.00 512.911.67 5.58% 5.08% 12,488.33 BANC ONE 1,250.00 1 512.91167 511.23833
FHLB 313391YX6 072595 720 072597 100.0000 1,000,000.00 1,000,000.00 123,200.00 1,123,200.00 6.16% 6.16% PRUD 2 1,123.200.00 1.000.000 00
FHLB 313391XRO 07/1895 720 07/4897 100.0000 1,000,000.00 1,000,000.00 127,200.00 1,127,200.00 6.26% 6.36% BANC ONE 2 1,127.200.00 1,000,00000
Totals: 3,000,000.00 2,998,750.00 275,800.00 3,263,311.67 12,488.33 0.00 3,263,311.67 3,011,23833
City of Euless
Schedule of Maturities
For July,1995
Investment Type Institution
CO Cart.of Dep. FNMA Fed.Nall Mod.Asso. FHLB Fed.Home Loan Bank RAUSCH ER Rauscher Pierce BK ONE Bank One MMSBW Masterson Moreland
TBILL Treasury Bill FFCB Fed.Farm Credit Bank FHLMC Fed.Home Loan Mort. PRUD Prudential Securities WAN Western Amer.Nall LM Landmark Bank
REPO Repurchase Agreement TNOTE Treasury Note FGIC Fin'I Guaranty Ins Co. PILP Prud Inv Ligy Ptfho SWSEC Southwest Securities
Cost Accrued Total P•I @
Inv. Inv.I.D. Purchase Tenn Maturity Price Par Book Value Interest Total Prin.+ Yield To Coupon Interest Seler Maty Net of Total Cost
Type Number Date (in days) Dale Per$100 Value (Pnn.0*) maty Int.@ Maly Maturity Rate Purchased Inst. Discount Premium Fund Prem&Int Pur. of Investment
FFCB 313312HTO 102494 254 079595 95.9713 1,000,000.00 959,712.78 40,287.22 1,000,000.00 5.71% RAUSCHER 1,2,17,24 1,000,000.00 959.712.78
LOGIC 07/1295 100.0000 800.000.00 800,000.00 0.00 800,000.00 5.83% k LOGIC various 600,00000 800,000.00
LOGIC 07/1895 100.0000 1,200,000.00 1,200.000.00 0.00 1.200,000.00 5.83% LOGIC various 1,200.000.00 1,200.000.00
FNMA 313588JN6 12/2394 213 072495 96.1660 500.000.00 480,830.00 19,170.00 500,000.00 6.80% RAUSCHER 4,12,40 500.000.00 480.830 00
LOGIC 072595 100.0000 1,000,000.00 1,000.000.00 0.00 1,000,000.00 5.80% LOGIC various 1,000,000.00 1.000.000.00
FHLB 31390RY4 072894 365 072895 99.9688 500,000.00 499.843.75 13,775.00 513,775.00 5.54% 5.51% RAUSCHEF 156.25 1 513,775.00 499.843 75
TOTAL-. 5,000,000.00 4,940,386.53 73,232.22 5,013,775.00 156.25 0.00 5,013,775,00 4.940.386 53
City of Euless
Schedule of Purchases
For August.1995
Investment Type Institution
LOGIC Pod FNMA Fed.Nall Mart.Asso. FHLB Fed.Home Loan Baric RAUSCHER Rausdur Pierce BANC BancOne Capital MMSBW Masterson Moreland
TBILL Treasury DR FFCB Fed.Farm Credt Baric FHLMC Fed.Home Loaf Mart. PRUD Prudential Searles WAN Western Amer.Natl LM Landmark Bart(
REPO Repurchase Agreement TNOTE Treasury Note FGIC Fin'!Guaranty Ins Co. A 8 8 Ahart 8 Bryan
Cost Accrued Total P+I @
Inv. Cusip Purchase Tenn Maturity Rice Per Book Value Interest Total Yield To Coupon Interest SMer Maty Net of Total Cost
Type fd(rnbor Date On days) Date Per$100 Value (Rin.Only) @ maty Rin+It Maturity Rate Purchased Inst. Disco(rt Premum Fwd Prem 8 Iry Pur. of Investment
LOGIC 08/0195 100.0000 500.000.00 500,000.00 500,000.00 5.88% LOGIC various 500.000.00 500,00000
FGIC 08)0195 100.0000 500,000.00 500,000.00 500,000.00 5.51% FGIC 50 500.000.00 500.000.00
FHLB 313391 F90 08)0795 720 08/795 100.0000 500,000.00 500,000.00 64.100.00 564,100.00 6.31% 6.41% Banc One 2 564.100.00 500.000.00
FHLB 313396LSO 08/1095 35 09/1495 99.4517 500.000.00 497,258.33 2,741.67 500,000.00 5.75% Rtprog 50 500.000.00 497.258.33
FNMA 313588LZ6 08/1795 35 092195 99.4497 850,000.00 845,322.64 4,677.36 850,000.00 5.77% Pr grog 50 850,00000 845.322.64 -
FNMA 313588LZ6 08/1895 34 092195 99.4654 500,000.00 497,327.22 2.672.78 500,000.00 5.77% Prwog 50 500.000.00 497.327.22
LOGIC 08/5195 100.0000 1,100,000.00 1,100,000.00 1,100,000.00 5.79% LOGIC Various 1.100.000.00 1.100,000.00
Totals: 4,450,000.00 4,439,908.19 74,191.81 4,514,100.00 0.00 0.00 4,514.100.00 4.439.908.19
ny
Cly of Euless
Schedule of Maturities
For/gust,1995
Investment Type Istltttion
CD Cert.of Dep. FNMA Fed.Nall Mort.Asso. FHLB Fed.Home Loan Bark RAUSCHER Rauscher Race BK ONE Baric One MMSdW Masterson Moreland
TBILL Treasury Bill FFCB Fed.Farm Credt Bark FHLMC Fed.Home Loan Mart, PRUD Prudential Securilies WAN Western Amer.Nall LM Landmark Ban(
REPO Repurchase Agreement TNOTE Treasury Note FGIC RO Guaranty Is Co. PILP Pt.d Inv Uqy Ptflio SWSEC Southwest Sewities
Cost Accrued Total P+I @
Inn. Irw I.D. Purchase Term Maturity Rice Par Book Value Interest Total Pin.+ Yield To Coupon Interest Sella Maty Net of Total Cost
Type Number Dale On days) Date Per$100 Value (Pin.Orly) @ maty ki.@ Maty Maturity Rate Purchased Inst. Discort Premum Fund Prem d It Pur. of Investment
FFCB 31331 HAZO 072194 376 08)0195 999688 500,000.00 499.843.75 13,437.50 513.437.50 5.40% 5.38% PRUD 156.25 50 513.437.50 499.643.75
FFCB 31331 HAZO 072194 376 08)0195 99.9688 50,000.00 499,843.75 13,437.50 513,437.50 5.40% 5.38% PRUD 156.25 2 513.437.50 499.643.75
FGIC 08/1095 100.0000 497.258.33 497.258.33 0.00 497,258.33 5.65% FGIC 50 497,258.33 497.258.33
LOGIC 08/15/95 100.0000 400,000.00 400,000.00 0.00 400,0110.00 5.75% LOGIC 1 400.000.00 400.000.00
TBILL 912794u51 032395 147 08/1795 97.6276 845,000.00 824,953.08 20,046.92 845,000.00 6.03% PRUPROG 50 845.000.00 824953.08
FMAC 313396KP7 05/1995 91 06/1895 98.5187 815,000.00 $02,927.59 12.072.41 815,000.00 6.03% PRUPROG 50 815,000.00 802.927.59
FNMA 313588LC7 02/2395 189 08/3195 96.8060 1,000,00000 968,080.00 31,920.00 1,000,000.00 6.36% BANC ONE 1,2 1,000.000.00 968.08000
TOTAL. 4,557,258.33 4,492.906.49 90,914.34 4,584,133.33 312.50 0.00 4,584,133.33 4,492.906.49
v
Jill .1
City of Euless
SdwWe of Purchases
For September,1995
Investmerl Type ks8hdon
LOGIC Pod FNMA Fed.Nall Mat.Asso. FHLB Fed.Home Loan Bw* RAUSCHER Rausdw Pierce BANC BaneOne Capital MMSBW Masterson Moreland
TBILL Treasury 91 FFCB Fed.Farm Credit Bar* FHLMC Fed.Home Loan Mort. PRUD Prudential Securities WAN Western Amer.Nail LM Lardmark Bark
REPO Re dose A eemert TNOTE Treasury Note
W ? FGIC RM Guerarty,Ins Co. A 8 B Mart 8 Bryan
Cost Acond Total P.I @
kw. Cusip Purchase Term MaWlty Price Par Book Value I serest TotalYield To Coupon kteresl Seller Maty Net of Total Cost
Type Number Date (In days) Date Per$100 Value (PAn Orly) @ maty Prin•lit Maturity Rate Purchased Inst. Distort Premium Fuel Prem 8 Int Pur. of Investment
FHLB 313384RH4 09,0155 124 01/03196 98.1090 500,000.00 490,545.00 9,455.00 500,000.00 5.67% 5.49% BANC ONE CAPITAL 2 500,000.00 490.545.00
FNMA 31359CBW4 09/1555 180 03/15196 100.0000 500,000.00 500,000.00 14,150.00 514,150.00 5.54% 5.66% 0.00 BANC ONE CAPITAL 01 514,150.00 500,000.00
FNMA 313648KW9 W2055 360 092056 99.9688 500,000.00 499,843.75 28,000.00 528,000.00 5.63% 5.60% Prudential 01.12 528,000.00 499,843.75
FHLB 3133912E3 09/0555 540 022857 100.0000 1,000.000.00 1,000,000.00 91,875.00 1,091,875.00 6.12% 6.13% 1,190.97 Prudential 18.19 1,090.684.03 1001,190.97
FHLB 3133913J1 09/1955 720 09/19197 100.0000 500.000.00 500.000.00 62.000.00 562.000.00 5.75% 6.20% 13ANC ONE CAPITAL 01,02 562.000.00 500,00000
FHLB 3133917G3C 0926195 360 0926196 100.0000 500,000.00 500,000.00 28,950.00 528,950.00 5.79% 5.79% PRUDENTIAL 50 528,950.00 500,00000
FHLB 313391.71-1-1 0927195 360 0927196 99,9844 500,000.00 499,921.85 28,920.48 528,842.33 5.80% 5.79% MASTERSON 50 528.842.33 499,921.85
LOGIC WA 100.0000 15,532.88 15,532.88 893.14 16.426.02 5.75% LOGIC VARIOUS 16,426.02 15,532.88
FGIC WA 100.0000 4,142.54 4,142.54 234.05 4.376.59 5.65% FGIC 50 4,376.59 4,142.54
Totals, 4,019,675.42 4,009,986.02 264,477.67 4,274,619.94 1,190.97 0.00 4,273,428.97 4,011,176.99
City of Euless
Schedule of Maturities
For September,1995
kwestmert Type kstikdon
CD Certi.of Dep. FNMA Fed.Nall Mat,Asso. FHLB Fed.Home Lon Bark RAUSCHER Rausdw Pierce BK ONE Bark One MMS&W Masterson Moreland
TBILL Treasury&1 FFCB Fed.Farm Credit Baric FHLMC Fed.Home Lon Mat. PRUD Prudential Securities WAN Western Amer.Nall LM Landmark Bark
REPO Repurchase Agreement TNOTE Treasury Note FGIC Fnl Guaranty ks Co. PILP Rud kw Uqy Ptllo SWSEC SoLkwesl Securities
Cost Accrued Total P•I @
kw. kw.I.D. Purchase Term Maturity Rice Par Book Value I taest Total Rin.+ Yield To Capon kterest Seller Maly Net of Total Cost
Type Number Dale (in days) Date Per$100 Value (Rin.Orly) @ maty kt.@ Maty Maturity Rete Purchased I sl. Distort Premium Fund Rem 8 Ft Pur. of Irwestmerl
FHLB 313384LD9 01/09195 237 09,0155 95.6329 500,000.00 478,164.58 21,835.42 500,000.00 7.04% RAUSCHER 2 500,000.00 478,164.58
FHLB 313364LS6 02/23195 203 09/1455 96.5659 500.000.00 482.829.58 17,170.42 500,000.00 6.37% RAUSCHER 1,2 500.000.00 482.829.58
FNMA 313588LS2 06/1555 91 09/1455 98.5541 500,000.00 492.770.56 7,229.44 500,000.00 5.88% PRUPROG 50 500.000.00 492.77056
FNMA 313396LSO 08/1055 35 0911455 99.4517 500,000.00 497.258.33 2,741.67 500,000.00 5.75% PRUPROG 50 500,000.00 497,258.33
FHLB 313384LX5 01/0655 256 09/19195 95.2853 405,000.00 385,905.60 19,094.40 405,000.00 6.99% RAUSCHER 1 405,000.00 385.905.60
FNMA 313588LZ6 08/17195 35 09M/95 994497 850,000.00 845,32264 4.677.36 850.000.00 5.77% PRUPROG 50 850.000.00 845.322.64
FNMA 3/3588LZ6 08/1855 34 0921195 994654 500,000.00 497,327.22 2,672.78 500.000.00 5.77% PRUPROG 50 500.000.00 497.327.22
FNMA 313588ME2 032955 lei 0926195 97.0080 500.000.00 465.040.00 14,960.00 500,000.00 6.22% COMMERCE 1,9,24 500,000.00 485,040.00
FNMA 313588m07 05,05195 146 0928195 97.6234 1,000.00000 976.234.44 23,765.56 1,000,000.00 6.09% RAUSCHER 1 1,000,000.00 976,23444
FHLB 313390ull 09)02194 360 09,0259 1000000 1,000,000.00 1.000.000.00 35,250.00 1,035,250.00 7.05% 7.76% Prudential 01,18,19 1,035,250.00 1.000,000.00
Called after 1 year A"0952/95
LOGIC 092055 100.0000 $1.000,000.00 1,000.00000 1.000.00000 5.79% LOGIC 01,12,02.17 1.000,000.00 1,000,000.00
TOTAL. 7,20,000 00 7,140.85285 149.39705 7.290.250.00 000 000 7.290.250 00 7,140,85295
� Y
Cash&Debt Management 10/17/95
September, 1995 Diana G.Ortiz
September
1994 1995
Percent of funds invested 102°x6 95%
Consolidated Cash,Operating Account ($414,103) $1,305,957
44%of City funds are available for use within 30 days,of which 15%is accessible on a daily basis. This
degree of liquidity is due to the projected cash needs and to the availability of investable securities.
Investment maturities for September were$7,140,852.95(cost). Yields on these ranged from 5.75%to 7.05°x6.
Investment purchases for September were$4,011,176.99(cost). Yields on these ranged from 5.54%to 6.12%. This
evidences the leveling off of short term interest rates.
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost) l
08/31/95 % 09/30/95 %
Treasuries: $6,750,122 27.09% $6,750,122 30.98%
Agencies: 13,776,047 55.28% 11,626,695 53.35°x6
LOGIC: 3,487,959 14.00% 2,503,492 11.49%
FG1C: 906,862 3.64% 911.004 4418°/►
Total $24,920,990 100% $21.791.314 100%
The City's average yield on investments was 6.30%and the average 90 day T-Bill yield was 5.43%which is a
87 basis point spread over the benchmark. This equates to approximately$189,584. Total interest received
`k for August was$166,175.07.
Market Activity
Outlook for economic growth is moderate with little threat of inflation,which was a factor in the Fed's decision to leave
short term interest rates unchanged at its last meeting. The Fed's next move remains uncertain.
Economists forecasts include some strengthening in the weak industrial activity as inventory adjustments slow. Retail
sales have and will probably continue to level off due to current customer debt levels. Housing activity is picking up but
i
is still moderate compared to last year and is forecasted that the economy will continue to grow but at very modest
I pace.
E t
Kyy Rates September-28 Year Ago
Certificates of Deposit: 3 month 5.23% 4.62%
€ 6 month 5.29% 4.96%
Treasury Bill: 91 day 5.14% 4.79%
52 week 5.21% 5.38°x6
t
Interest Rae Outlook Nov 1 Jan 1 Awl-
Fed
pr 1Fed Funds 5.60% 5.40% 5.20%
30 day prime bank CD 5.70°x6 5.40% 5.20%
G 3 month TBill yield 5.40% 5.10% 5.00%
t
GFOA, Public investm1=06 95 Prudential Securities, Strategy Weekl LOGIC,
s Alex.Brown&Sons, Fixed Incomeltl�nthly:September 5, 1995. i
1
i
t
t
Cash*&Debt Management 09/12/95
August, 1995 Diana G.Ortiz
August
1994 1995
Percent of funds invested 100% 100%
Consolidated Cash,Operating Account ($16,387) $10,216
38%of City funds are available for use within 30 days,of which 18%is accessible on a daily basis. This
degree of liquidity is due to the projected cash needs and to the availability of investable securities.
Investment maturities for August were$4,492,906 (cost). Yields on these ranged from 5.40%to 6.36%.
Investment purchases for August were$4,439,908(cost). Yields on these ranged from 5.51%to 6.31%. This
evidences the leveling off of short term interest rates.
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
07/31/95 % 08/31/95 %
Treasuries: $7,575,075 30.35% $6,750,122 27.09%
Agencies: 14,206,833 56.93% 13,776,047 55.28%
LOGIC: 2,275,233 9.12% 3,487,959 14.00%
FGIC: 899.227 3.60% 906.862 3.64%
Total $24,956,368 100% $24,920,990 100%
The City's average yield on investments was 6.50% and the average 90 da T-Bill yield was 5.55%which is a
�Y 9 � 9 Y
95 basis point spread over the benchmark. This equates to approximately$236,749. Total interest received
® for August was$196,618.
Market Activity*
Outlook for economic growth is moderate with little threat of inflation,which was a factor in the Fed's decision to leave
short term interest rates unchanged at its last meeting. The Fed's next move remains uncertain.
Economists forecasts include growth falling for the remainder of 1995 attributed to collapse in single family housing,
motor vehicle production,and exports to Mexico. GDP is expected at 2%to 3%for the remainder of the year with
stronger growth in the first half of 1996.
Key Rates August 28 Year Ago
Certificates of Deposit: 3 month 5.26% 4.19%
6 month 5.33% 4.58%
Treasury Bill: 91 day 5.43% 4.98%
52 week 5.55% 5.36%
Interest Rate Outlook Oct 1 Dec 1 Mar 1
Fed Funds 5.60% 5.50% 5.30%
30 day prime bank CD 5.70% 5.70% 5.30%
3 month TBill yield 5.50% 5.40% 5.30%
*GFOA, Public Investor.9/1/95: Prudential Securities,Strategy Weekl�LOGIC,
Cash & Debt Management 08/10/95
July 1995 Vicki L. Smith
July
1994 1995
Percent of funds invested 103% 98%
Consolidated Cash, Operating Account ($476,494) $445,507
F
25% of City funds are available for use within 30 days, of which 12% is accessible on a daily basis.
Investment maturities for July were $4,940,387 (cost). Yields on these ranged from 5.54% to 6.80%.
Investment purchases for July were $3,011,238 (cost). Yields on these ranged from 5.58% to 6.26%.
k
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
/30/95 % 07131/95 %
Treasuries: $7,575,075 28.20%
$7,575,075 30.35%
Agencies: 13,635,981 50.76% 14,206,833 56.93%
i LOGIC: 4,755,814 17.70% 2,275,233 9.12%
FGIC: 894,987 3.33% 899,227 3_60%0
Total $26,861,857 100% $24,956,368 100%
The City's average yield on investments was 6.43% and the average 90 day T-Bill yield was 5.58%which is a
85 basis point spread over the benchmark. This equates to approximately $212,129. Total interest received
for July was $ 116,002.
I
Market Activity*
a
On July 6th, the Fed cut the Fed funds rate by 25 basis points to 5.75%. Since this cut, economic data has
been fairly upbeat. Consumer spending and industrial production rose slightly in July. While unemployment
was reduced to 5.6%. However the'econoMy will not expand rapidly. Even though retail sales are bouncing
back, they still show a slight decrease over 1994 levels. This reduces the probability of a recession
i
in the immediate future. However, economists feel that the Fed will not stop with only a single rate cut.
It is believed that another 25 basis points move in the funds rate lies ahead during the next FOMC meeting
in August.
Key RatesuJ ly 28 Year Ago
Certificates of Deposit: 3 month 5.23% 4.09%
6 month 5.23% 4.55%
a Treasury Bill: 91 day 5.47% 4.43%
52 week 5.38% 5.20%
Interest Rate Outlook Sep 1 Nov 1 Feb 1
Fed Funds 5.70% 5.50% 5.30%
30 day prime bank CD 5.80% 5.70% 5.60%
3 month TBill yield 5.60% 5.60% 5.50%
`(GFOA, Public Investor.7/7/95.)( Prudential Securities, Strategy Weekly)
(LOGIC Investment, July 1995)
4
I '
dash'& Debt Management 07/13/95
June 1995 - ^
Vicki L. Smith `:
June
1994 1995
Percent of funds invested 103% 103%
Consolidated Cash, Operating Account ($433,300) ($842,438)
28% of City funds are available for use within 30 days, of which 21% is accessible on a daily basis.
Investment maturities for June were $2,600,619 (cost). Yields on these ranged from 6.04% to 6.63%.
Investment purchases for June were $2,592,771 (cost). Yields on these ranged from 5.88% to 6.14%.
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
05/31/95 % 06/30/95 %
Treasuries: $7,575,075 28.21% $7,575,075 28.20%
Agencies: 15,443,830 57.52% 13,635,981 50.76%
LOGIC: 2,939,056 10.95% 4,755,814 17.70%
FGIC: 890,756 3.32% 894,987 3.33%
Total $26,848,717 100% $26,861,857 100%
e City's average yield on investments was 6.45% and the average 90 day T-Bill yield was 5.63%which is a
basis point spread over the benchmark. This equates to approximately $220,267. Total interest received
for June was $69,547.
Market Activit"
The latest reports continue to reveal that the economy is decelerating. Industrial outputs and housing sales are
falling and consumer spending remains subdued. Recent data indicates that economic activity is slowing more
quickly than anticipated. However, they do not point to a recession. Nevertheless, this puts the Fed in a situation
of determining when to ease as opposed to another round of tightening. Economists feel that the Fed will be more
cautious on the easing of rates than they were in the tightening. It is believed that if the Fed does cut the Fed
funds rate it will probably be around 25 basis points in July.
Key Rate June 26 Year Aao
Certificates of Deposit: 3 month 5.23% 3.97%
6 month 5.18% 4.33%
Treasury Bill: 91 day 5.46% 4.18%
52 week 5.22% 5.03%
Interest Rate Outlook Aug 1 Oct 1 ,fan 1
Fed Funds 5.60% 5.50% 5.10%
30 day prime bank CD 6.00% 5.50% 5.20%
3 month TBill yield 5.50% 5.40% 5.20%
OGFOA, Public Investor,7/7/95,x( Prudential Securities, Interest Rate Weekly)
(Alex, Brown &Sons Incorporated, Fixed Income Monthly)
Cash & Debt Management 06/12/95
May, 1995 Diana G. Ortiz
MAY `v
1994 1995
Percent of funds invested 103% 100%
Consolidated Cash, Operating Account ($433,300) $125,778
21% of City funds are available for use within 30 days, of which 14% is accessible on a daily basis.
Investment maturities for May were $4,472,315 (cost). Yields on these ranged from 3.99% to 6.32%.
Investment purchases for May were $5,654,116 (cost). Yields on these ranged from 6.03% to 6.11%.
PORTFOLIO SUMMARY BY INSTRUMENT
} (at cost) '
04/30/95 14 05/31/95 %
Treasuries: $8,560,075 32.14% $7,575,075 28.21%
Agencies: 14,512,029 54.49% 15,443,830 57.52%
x LOGIC: 2,672,212 10.03% 2,939,056 10.95%
FGIC: 886.433 3.33% 890,756 3.32%
Total $26,630,749 100% $26,848,717 100%
f
The City's average yield on investments was 6.50% and the average 90 day T-Bill yield was 5.84% which is a
E 66 basis point spread over the benchmark. This equates to approximately$177,631. Total interest receive
May was $102,400.
Market Activity"'
E The economy is slowing from an above average rate of growth last year to a normal rate of growth this year.
Much of the decrease in economic indicators were in the major sectors of the economy such as motor
vehicles, parts and employment. Unemployment rose 5.8% and the index of leading indicators dropped.
However, housing starts rose in April mainly in response to lower mortgage rates. Although the producer
price index and consumer price index (inflationary measures) rose to the largest increase in five months,
economists maintain that inflation will continue to be moderate in the coming months. No big swings in
interest rates over the next several months, short term rates are expected to stay at about 5.75% for 90 day
treasuries and 6.00% for one year CDs.
`s
Key te May 26 Year Ago
Certificates of Deposit: 3 month 5.41% 3.88%
6 month 5.46% 4.27%
Treasury Bill: 91 day 5.72% 4.23%
52 week 5.54% 5.01%
Interest Rate Outlook Jull Sept1 Dec 1
Fed Funds 6.00% 6.00% 6.00%
30 day prime bank CD 6.00% 6.10% 6.20%
3 month TBill yield 5.80% 5.90% 6.20%
s
*GFOA Public lnvestor.6/2/9E Prudential Securities, Interest Rate Weekly)
I
CashB Debt Management 05/09/95
April, 1995 Diana G. Ortiz �
® APRIL
1994 1995
Percent of funds invested 101% 101%
Consolidated Cash, Operating Account ($92,556) ($129,123)
20% of City funds are available for use within 30 days, of which 13% is accessible on a daily basis_
Investment maturities for April were $1,207,022 (cost). Yields on these ranged from 6.14% to 6.51%.
Investment purchases for April were $1,055,000 (cost). Yields on these ranged from 5.51% to 5.99%.
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
03131/95 IQ 04/30/95 14
Treasuries: $8,560,075 31.98% $8,560,075 32.14%
Agencies: 15,519,051 57.98% 14,512,029 54.49%
LOGIC: 1,861,402 6.95% 2,672,212 10.03%
FGIC: 28 7.522 3.09% 886.433 3.33%
Total $26,768,050 100% $26,630,749 100%
The City's average yield on investments was 6.43% and the average 90 day T-Bill yield was 5.819%which is a
® 61 basis point spread over the benchmark. This equates to approximately $162,447. Total interest received for
April was $97,579.
Market Activity'
As introduced in last month's report, several recent economic reports reflect the shift to slower growth. Housing
sales and starts is one indicator that has clearly been depressed. There were a few indications however, that the
economy is still alive and well: inventory increases reflect confidence in the economy by manufacturers. The
most important sign of strength is probably the continued rise in employment.
Consumer spending has moderated in recent months but it continues at a decent pace. The Fed is on hold for
now due to the slower pace of economic activity; however, a rate hike is still possible depending on the strength
of the dollar and commodity price activity. Inflation is in check right now but requires close monitoring. The
possibility of another rate increase is the basis for remaining in very short term investments.
Key Rates Apr 30 Year Ago
Certificates of Deposit: 3 month 5.48% 3.53%
6 month 5.72% 3.94%
Treasury Bill: 91 day 5.66% 3.85%
52 week 5.90% 4.77%
Interest Rate Outlook Jun 1 Aua 11 Nov 11
Fed Funds 6.00% 6.10% 6.20%
30 day prime bank CD 6.10% 6.30% 6.40%
® 3 month TBill yield 5.80% 6.30% 6.50%
F A(Public Investor.5/5/95 Prudential Securities, Interest Rate Weekly)
r
Cash & Debt Management 04/10/95 1
March, 1995 Diana G. Ortiz
MARCH
19941995
Percent of funds invested 100% 100%
Consolidated Cash, Operating Account ($2,672) $7,306
14% of City funds are available for use within 30 days, of which 10% is accessible on a daily basis.
Investment maturities for March were $4,011,867 (cost). Yields on these ranged from 5.93% to 6.26%.
Investment purchases for March were $3,856,377 (cost). Yields on these ranged from 5.51% to 6.70%.
PORTFOLIO SUMMARY BY INSTRUMENT I
(at cost)
02/28/95 % 03/31/95 1Q
Treasuries: $7,735,122 28.75% $8,560,075 31.98%
Agencies: 15,914,495 59.15% 15,519,051 57.98%
LOGIC: 2,947,295 10.95% 1,861,402 6.95% i
FGIC: 309,7301 15% 827,522 3.09%
Total $26,906,643 100% $26,768,050 100%
The City's average yield on investments was 6.42% and the average 90 day T-Bill yield was 5.90% which is a
52 basis point spread over the benchmark. This equates to approximately $139,194. Total interest received for
.j
March was $77,220.
Market Activity!
The Fed was expected to raise rates this month by 50 basis points; however, this did not happen. The Fed
Funds rate continues to stand at 6.00%, and will most likely remain at this level until the Fed can ascertain that
the economy is slowing as a result of the tightening that has already taken place. Too much tightening will cause
the economy to sink into recession. Early 1995 has showed hints of decelerating growth in numerous indicators:
housing sales and starts, retail sales and vehicle purchases. However, employment figures suggests an
economy with upward momentum. Inflation has inched up but won't get out of hand. Additional deceleration and
gradual inflation will probably prevail for most of 1995.
Key Rates Mar 30 Year Ago
Certificates of Deposit: 3 month 5.56% 3.28%
6 month 5.82% 3.60%
Treasury Bill: 91 day 5.64% 3.50% i
52 week 6.16% 4.03%
Interest Rate Outlook May—1 Jul 1 Oct i
' 6.00/°
Fed Funds
4 ° 6.30% 6.30%
30 day prime bank CD 6.10% 6.50% 6.80%
`s 3 month TBill yield 5.90% 6.30% 6.50%
'GFOA(Public InvestorAM95 Prudential Securities, Interest Rate Weekly)
F
f
9S
f ,
k
fgy
t A
Cash & Debt Management
03/08/95
February, 1995 Diana G. Ortiz
FEBRUARY
1994 1995
Percent of funds invested 96% 99%
Consolidated Cash, Operating Account $604,719 $138,189
21% of City funds are available for use within 30 days, of which 12% is accessible on a daily basis.
Investment maturities for February were $6,434,214 (cost). Yields on these ranged from 3.92% to 6.05%.
Investment purchases for February were $6,000,000 (cost). Yields on these ranged from 5.94% to 6.65%.
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
01/31/95 02/28/95 %
Treasuries: $7,735,122 28.21% $7,735,122 28.75%
Agencies: 15,644,047 57.06% 15,914,495 59.15%
LOGIC: 3,228,204 11.77% 2,947,295 10.95%
FGIC: 808.433 2.95% 309.730 1.15%
Total $27,415,806 100% $26,906,643 100%
The City's average yield on investments was 6.04% and the average 90 day T-Bill yield was 5.92% which is a
12 basis point spread over the benchmark. This equates to approximately $32,288. Total interest received for
February was $90,705.
Market Activity*
As expected, the Fed raised short-term interest rates for the seventh time in the past year to 6% ( totaling 300
basis points) in an effort to slow down economic growth which was 4.5% in 1994. This slowdown is expected in
the coming months as a result of these rate hikes. Chairman Greenspan has indicated that the Fed may refrain
from further interest rate hikes, but, he di¬ rule the possibility out. This was his first public hint that he thinks
the Fed may be nearing an end to rate increases that began a year ago. Inflation is expected to climb between
3-3.5% this year.
Key Rates Feb24 Year Ago
Certificates of Deposit: 3 month 5.52% 2.93%
6 month 5.77% 3.15%
Treasury Bill: 91 day 5.74% 3.33%
52 week 6.59% 3.59%
Interest Rate Outlook Mar 1 Jun 1 Sept-1
Fed Funds 6.00% 6.40% 6.50%
30 day prime bank CD 6.10% 6.30% 6.60%
3 month TBill yield 6.20% 6.70% 6.20%
(Source Public Investor.3/3/95 Prudential Securities, Interest Rate Weekly, and Wall Street Journal)
.40
Cash& Debt Management 02/07/95 '
January, 1995 Diana G. Ortiz
JANUARY
1994 1995
Percent of funds invested 101% 101%
Consolidated Cash, Operating Account ($230,220) ($260,317)
24% of City funds are available for use within 30 days, of which 15% is accessible on a daily basis.
Investment maturities for January were$10,375,334 (cost). Yields on these ranged from 3.54%to
5.71%.
Investment purchases for January were$13,935,772 (cost). Yields on these ranged from 5.43% to
7.32%. This month typically receives the largest portion of property taxes for the year.
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
i
s
12/31/94 01/31/95 %
Treasuries: $1,956,744 8.22% $7,735,122 28.21%
Agencies: 10,355,689 43.49% 15,644,047 57.06%
PILP: 301,848 1.27% 0 0.00%
j LOGIC: 2,614,025 10.98% 3,228,204 11.77%
FGIC: 8,584,974 36.05% 808,433 2.95%
Total $23,813,280 100%
$27,415,806 100%
A
The City's average yield on investments was 6.04% and the average 90 day T-Bill yield was 5.847%which
€ is a 19 basis point spread over the benchmark. This equates to approximately$52,000. The City's
average portfolio yield was enhanced utilizing the approved investment program through Prudential for
the Half Penny Sales Tax funds. The return on those investments have been maximized through detailed
planning and forecasting of the cash requirements for the related capital improvement projects. Total
interest received for January was $114,956.
s
Market Activity'
It is generally believed that the Fed still has some more tightening to do. The range of estimates is between 50 and
150 basis points of additional increases in the first part of the year. The Fed has raised the target Fed funds rate by
250 basis points and appears to be poised to raise rates at least another 50-100 basis points in the first half.
The key issue is how high do rates have to go and what is the lag time before rising rates really take a bite out of
the economy, the Fed has another round of tightening to do. We estimate around 100 basis points in two moves,
before the end of March.
E
Key Rates Dec 30 Year Aqo
i Certificates of Deposit: 3 month 5.54% 2.56%
6 month 5.97% 2.69%
Treasury Bill: 91 day 5.80% 2.96%
f 52 week 6.86% 3.52%
a
Interest Rate Outlook Feb 1
-Apr 1 Jul 1
Fed Funds 6.00% 6.30% 6.50%
30 day prime bank CD 6.20% 6.30% 6.60%
3 month TBill yield 6.20% 6.50% 6.90%
(Source Public Investor /3/95 Prudential Securities, Interest Rate Weekly)
s
Gush & Debt Management 01/09/95
December, 1994 Diana G. Ortiz
DECEMBER
1993 1994
Percent of funds invested 100% 97%
Consolidated Cash, Operating Account $44,757 $654,042
52%of City funds are available for use within 30 days, of which 48% is accessible on a daily basis. This
degree of liquidity is recommended due to the rising interest rates.
Investment maturities for December were$3,136,324(cost). Yields on these ranged from 4.69%to
5.46%.
Investment purchases for December were$3,816,019(cost). Yields on these ranged from 5.54% to
6.80%. This evidences the rising interest rate environment.
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
11/30/9 % 12/31/94 %
Treasuries: 1,956,744 8.48% 1,956,744 8.22%
Agencies: 9,375,994 40.62% 10,355,689 43.49%
PILP: 1,495,960 6.48% 301,848 1.27%
LOGIC: 1,702,703 7.38% 2,614,025 10.98%
FGIC: 8,548.17 37.04% 8,584.97 36.05%
Total $23,079,576 100% $23,813,280 100%
The City's average yield on investments was 5.67%. The average 90 day T-Bill yield was 5.74%.
This reversed spread in average yields has narrowed from 50 to 7 basis points as investments with lower
yields roll off the portfolio and securities at higher rates are purchased. Furthermore, the portfolio has
almost matured all but three instruments carrying the older lower rates. Total interest received for
December was$103,455.
Market Activity*
The economy is slowing down, however, it is pot slowing down fast enough. The fourth quarter should
reflect solid growth in the economy. More importantly,'it will be growth that is well above the Fed's target
non-inflationary growth rate of around 2.5%. Despite the tightening undertaken this year to date, the
economy will likely retain its momentum in early 1995 due to the long lag associated with monetary restraint.
As we go into 1995, it is almost a given that the Fed will tighten once again at least by late January with
further tightening actions likely in March or April estimated at 6.5%. After that tightening, it is reasonable to
expect the economy may then show signs of slowing. Once signs of a slowdown are assured, we still do not
expect rates to suddenly decline sharply, but a gradual decline in yields should occur. While higher rates are
still likely, the extraordinary increase in rates should be behind us.
Key Rates Dec 30 Year A94
Certificates of Deposit: 3 month 5.60% 2.68%
6 month 6.14% 2.78%
Treasury Bill: 91 day 5.56% 3.06%
52 week 6.75% 3.47%
Interest Rate Outlook Feb 1 Apr 1 Jul 1
Fed Funds 6.10% 6.40% 6.40%
30 day prime bank CD 6.00% 6.40% 6.90%
3 month TBill yield 6.10% 6.60% 7.00%
(Source Public Investor.1/619 Prudential Securities, Interest Rate Weekly)
Cash & Debt Management 12/10/94
November, 1994 Diana G. Ortiz
NOVEMBER
1993 1994
Percent of funds invested 99% 100%
Consolidated Cash, Operating Account $130,163 $36,491
60%of City funds are available for use within 30 days, of which 52% is accessible on a daily basis. This
degree of liquidity is recommended due to the rising interest rates.
Investment maturities for November were $3,682,136 (cost). Yields on these ranged from 3.63%to
4.99%.
i
j Investment purchases for November were $3,678,652 (cost). Yields on these ranged from 4.90%to
7.09%. This evidences the rising interest rate environment.
i
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
E
i l
10/31/94 11/30/94 %
f
Treasuries: 2,054,094 8.92% 1,956,744 8.48%
Agencies: 9,382,128 40.72% 9,375,994 40.62%
PILP: 3,088,038 13.40% 1,495,960 6.48%
LOGIC: 0 0.00% 1,702,703 7.38%
FGIC: 8,515,123 36.96% 8.548.175 37.04%
Total $23,039,382 100% $23,079,577 100%
The City's average yield on investments was 5.27%. The average 90 day T-Bill yield was 5.42%.
This reversed spread in average yields is narrowing as investments with lower yields roll off the I
portfolio and securities at higher rates are purchased. However, the benchmark rate continues to
i challenge our portfolio as it has been a "moving target"all year long. Total interest received for
November was $97,007.
i
ti Market Activity
I
The Fed raised short-term interest rates in mid-November when it increased both the Fed funds rate and the !
discount rate by 75 basis points, to 5.5% and 4.75% respectively. The Fed's aggressive move marks the
first time rates have been increased so much in over 13 years. Many analysts expect the Fed to continue
its battle against mounting inflationary pressures by raising short-term interest rates well into 1995, in an
attempt to curb stubborn economic growth. The trick now will be to contain inflation without forcing the
economy into a recession. Many borrowers have already felt the pinch of this tightening as many major
I banks have boosted their prime lending rates to 8.5%." I
I Key Rates Nov 30 Year Ago
Certificates of Deposit: 3 month 5.14% 2.74%
6 month 5.57% 2.83%
Treasury Bill: 91 day 5.40% 3.14%
s 52 week 6.48% 3.43%
I
Interest Rate Outloo Jan 1 mar—1 Jun 1
Fed Funds 5.60% 6.10% 6.50%
30 day prime bank CD 5.70% 6.20% 6.50%
3 month TBill yield 5.60% 6.30% 6.20%
(Source Public Investor.12/: Prudential Securities, Interest Rate Weekly)
Cash & Debt Management 11/08/94
October, 1994 Diana G. Ortiz\
<Y �
OCTOBER
1993 1994
Percent of funds invested 98% 104%
Consolidated Cash, Operating Account $291,963 ($870,133)
59% of City funds are available for use within 30 days, of which 50% is accessible on a daily basis.
Investment maturities for October were $21,951,751 (cost). Yields on these ranged from 3.30%to
4.73%. $17,000,000 were two $8,500,000 repo rollovers.
Investment purchases for October were $21,986,432cost . Yields on these ranged from 4.33%
0
( ) g to
5.99/o. $17,000,000 were two$8,500,000 repo rollovers.
PORTFOLIO SUMMARY BY INSTRUMENT
(at cost)
09/30/94 % 10/31/94 %
C.D.s: 100,000 0.44% 0 0.00%
Treasuries: 2,541,839 11.06% 2,054,094 8.92%
Agencies: 8,859,701 38.56% 9,382,128 40.72%
PILP: 2,977,841 12.96% 3,088,038 13.40%
Repurchase: 8,500,000 36.99% 0 0.00%
FGIC: 0 0.00% 8.515.123 36.96%
Total $22,979,382 100% $23,039,382 100%
The City's average yield on investments was 4.92%. The average 90 day T-Bill yield was 5.07%.
This reversed spread in average yields is narrowing as investments with lower yields roll off the
portfolio and securities at higher rates are purchased. Total interest received for October was $98,450.
Market Activit[*
The unemployment report this month confirmed that upward momentum in the economy continues. As long as the
economy is growing at its current pace,the€Fed will continue to be threatened to tighten. Expectations are for
the Fed to tighten or increase the Fed fundsFrate at least one more time this year in an attempt to guide the
economy to a slower growth path and to prevent a major acceleration of inflation. This move is expected to
occur at the November 15 meeting as this action was not taken in September. The level of this rate hike has
been projected at 50 basis points but could be as much as 100! A 50 basis point jump could also be applied to
the discount rate as well.
Keir Rates Oct 28 Year Aao
Certificates of Deposit: 3 month 4.75% 2.71%
6 month 5.25% 2.77%
Treasury Bill: 91 day 5.07% 3.08%
52 week 5.72% 3.38%
Interest Rate Outlook Dec 1 Feb 1 May 1
Fed Funds 5.30% 5.40% 5.40%
30 day prime bank CD 5.40% 5.40% 5.50%
3 month TBill yield 5.50% 5.50% 5.50%
(Source: Pylic Investor. 11/4/9 Prudential Securities, Interest Rate Weekly)
Portfolio Analysis
of Prudential Management Program
The following information is presented to show the benefits that the City of Euless has received
by utilizing the Prudential Management Program for half cent sales tax bond proceeds.
I have separated our portion of the portfolio from the portion being managed by Prudential I
F
Securities. Below, is a detail of my findings as of September 30, 1995:
Total Portfolio
Avg 90 day Basis Point Dollar
Total Investments Avg Yld TBILL Yld Spread Equivalent
$21,791,314 6.30% 5.43% 0.0087 $189,584
4
City of Euless Portion
i
City's Avg 90 day Basis Point Dollar
Total Investments Avg Yld TBILL Yld Spread Equivalent
$15,990,568 6.19% 5.43% 0.0076 $121,528
Prudential Management Program
Prudential's Avg 90 day Basis Point Dollar
*Total Investments Avg Yld TBILL Yld Spread E uivalen�
,
$5,800,746 6.83% 5.43% 0.014 $81,210
E
s
With the assistance of the Prudential Management Program, the City is able to obtain higher
yields while still maintaining ultimate control of the entire portfolio. By utilizing this program
we have increased our spread over the benchmark by 11 basis points. This equates to
approximately$23,970 in additional interest earnings. Not only has Prudential increased
our interest earnings, but they also provide arbitrage calculations at no additional cost.
* NOTE: The investment amount Prudential manages is on a declining level due to projects
completion progress. Therefore, their reported contribution is understated due to this factor.
Their overall contribution is described by the attached information.
S
i
f
• Z00•d TLZT •ON XH/XZ LT :TT S6/ET/TT
O .
Pruden ha Secures
Memorandum
To: Diana Ortiz
From: Michael E. Swan, Prudential Securities
Date: November 10, 1995
Subject: Portfolio Review of 1994 Sales Tax
Revenue Bonds - Managed Account
Diana:
We would like to review with you some specific results
that we produced since January 20, 1995 .
Our calculations are based upon the portfolio's status as
of September 30th and all calculations are shown on an
annualized basis.
Due to the required drawdowns, for comparison purposes we
are using the average monthly portfolio balance. The
average portfolio value from inception through September
30th is $8,748, 111 .00 . For the same reporting period the
total rate of return of the portfolio is approximately
7.23% . This would represents annualized income to the
portfolio of $632,488 .42 before fees. Our annual fee was
$30, 361. 00 for the same reporting period, therefore the
annualized income after fees would be $602, 127.00.
During this time the average yield on the three month
Treasury Bill was 5.701%. If the average balance of the
portfolio had been invested at this rate, the income
received would have been $498, 730.00 on an annualized
basis. By using the managed account approach, your
portfolio earned an additional $103 ,397 .00 net of fees
over your benchmark. This represents a spread of over 113
bps to the three month T-Bill after fees.
prudential Swuritim heorpasted.24401 Cale de la Louisa.l.gram Hub•CA 92663 Tel 714 769433 NMI 800 237-1949
Fax 714 707-4100
200 ' 39Ud -UNf qui IH I 1N3anad WOa3 10 :6 96. CT AON
£00'd TLZT•ON XH/XZ LT:TT 56/ET/TT '
g
In view of the success of this program, we would like to
suggest that the City of Euless extend the program to
j include the proceeds of your recent bond issue. As
before, we will work with you in developing a portfolio
that conforms with your Investment Policy, is flexible
and meets all of the required drawdowns . we will also
help coordinate the information necessary for the
arbitrage rebate calculations_ we would also like to
offer a lower fee schedule which will take into account
the combined balances of both the 194 and 195 bond
r proceeds . This new fee schedule will reduce the City' s
cost to maintain this program_ The schedule is as
p follows:
0 - 5,000,000 . 50 bps
5,000,001 - 10, 000, 000 .40 bps
10,000, 001 - 20, 000,000 . 35 bps
20,000,001 - 30, 000, 000 . 30 bps
Please call us if you have any questions . We look forward
to continuing to work with you in the future.
Mic ael E. Swan Howard N. Herring
a
3
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2
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NOV 10 195 15: 32 FROM PRUDENTIAL LAG HILLS PRGE . 004
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Start date shifted Enter *<PAGE> for table (1 Pgs Max).
Y'2ELI7 CaRAPH for GENERIC 3M0 B =LL
RANGE jRgffi= TO PERIOD LF (D-W-M-O-Y)
6.00
5.80
. .. . . . .. . . . . . . - .- - - - :. . . . . . . . .. . . . . . . - -, - - - .- - - - - - . . . . . .. . .. . - - - 5.70
. . . .. . . _ : - _ . _. , . . . . - - - - - - - - --- - - - - 5.60
- - - - - -- . . . . . . .. . - 5.60
BX�L'ttY�LOSEr!"fID' ._
Last 5,41& on 09-29,096
High 5.969 on 02710/95 . . . . • . . • • - - - a 5.40
Ave 5.701 : :
Loa $.338 on 09,0'�
. 5.30
10F� 24 10MAR 24 ?APR 21 5MAY 19 3JUN 16 30 14JUL 28 11AUQ 25 BSEP 22
BZoos6srg-olI rights reserved. Frankfurt•69-9204I0 Hong Kong B-$21-3000 London 171-330-7=0 Now Y9wk:212-318-8000
Prino&ton=609-279-3000 Singapore=226^3000 Sydney= -777-86DC1 TokyA-3201-6900 Hoshir+gton DC�2d2-434-1800
6202-55-0 12-Oct-95 11'31130
f
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11/10/95 17:38 TX/RX NO. 1264 P.004