HomeMy WebLinkAboutResolution - 2003-R0474 - Resolution Incorporating City Investment Strategy And Policy - 10/23/2003 (2)Resolution No. 2003-RO474
October 23, 2003
Item No. 21
RESOLUTION
WHEREAS, on August 25, 1995, the City Council of the City of Lubbock adopted
Resolution #4933 which established an investment policy for the City of Lubbock; and
WHEREAS, on December 18, 1997, the City Council of the City of Lubbock adopted
Resolution #5728 which revised the City's investment policy so as to comply with changes to the
Public Funds Investment Act (Chapter 2256 of the Texas Government Code); and
WHEREAS, on May 28, 1998, the City Council of the City of Lubbock adopted
Resolution #5867 which revised the City's investment policy so as to amend current practices
and strategies and clarify current provisions, which revisions comply with the Public Funds
Investment Act (Chapter 2256 of the Texas Government Code); and
WHEREAS, on November 4, 1999, the City Council of the City of Lubbock adopted
Resolution #6600 which revised the City's investment policy so as to make minor
"housekeeping" changes and bring the current investment policy into compliance with House Bill
3009; and
WHEREAS, on November 27, 2000, the City Council of the City of Lubbock adopted
Resolution #2000-R0418, which revised the City's investment policy so as to amend current
practices and strategies and clarify current provisions, which revisions comply with the Public
Funds Investment Act (chapter 2256 of the Texas Government Code); and
WHEREAS, on November 8, 2001, the City Council of the City of Lubbock adopted
Resolution #2001-R0471, which revised the City's investment policy so as to amend current
practices and strategies and clarify current provisions, which revisions comply with the Public
Funds Investment Act (Ch. 2256 of the Texas Government Code); and
WHEREAS, on February 13, 2003, the City Council of the City of Lubbock adopted
Resolution #2003-R0065, which revised the City's investment policy so as to amend current
practices and strategies and clarify current provisions, which revisions comply with the Public
Funds Investment Act (Chapter 2256 of the Texas Government Code); and
WHEREAS, the City Council has reviewed and approved the City of Lubbock Texas
Investment Policy and Investment Strategy and desires to make certain changes thereto so as to
amend current practices, which revisions comply with the Public Funds Investment Act (Chapter
2256 of the Texas Government Code); NOW THEREFORE;
IT IS HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the City of Lubbock investment policy and investment strategy, as reviewed and
amended in the attached document entitled "City of Lubbock, Texas, Investment Policy and
Investment Strategy" which is hereby incorporated in this Resolution as if fully set forth, BE
approved and adopted for the City of Lubbock, Texas, and shall be included in the minutes of the
Council.
Passed by the City Council this 23rd day of qFtober 2003.
ATTEST:
Rebecca Garza, City Secretary
AS
Interim
APPROVED AS TO
Assistant City
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October 8, 2003
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City of Lubbock, Texas
ANNUAL INVESTMENT REPORT
For Fiscal Year Ended September 30, 2003
Unaudited
Tommy Gonzalez
Interim City Manager
Investment Review Committee Members:
Beverly Hodges, CPA
Interim Chief Financial Officer
City of Lubbock
J. Robert Massengale
Retired Director of Finance
City of Lubbock
Quincy White
Assistant City Manager
City of Lubbock
Andy Burcham
Cash & Debt Manager
City of Lubbock
ANNUAL INVESTMENT REPORT
TABLE OF CONTENTS
TRANSMITTAL LETTER
Statutory and Policy Requirements
Economic Commentary
Investment Performance
Investment Advisers
Depository Banking Agreement
ANNUAL INVESTMENT REPORT
Public Funds Investment Act Compliance Report 1
Portfolio Summary by Market Sector - 4
Broker/Dealer Approved Listing for 2002-2003__—_— - T 5
Portfolio Summary by Broker/Dealer _ — 6
Portfolio Summary by Maturity- 7
Portfolio Summary by Fund Type u 8
Collateral Summary- Wells Fargo Bank, N.A. 9
Collateral Summary - American State Bank _ 10
Investment Yield Summary —� -� 11
Investment Purchases / Maturities 12
QUARTERLY INVESTMENT REPORTS
Quarterly Investment Report - September 30, 2003 _ __ 13
Quarterly Investment Report - June 30, 2003 _ _ _ 2_0
Quarterly Investment Report - March 31, 2003 —_ 27
Quarterly Investment Report - December 31, 2002 34
INVESTMENT POLICY AND INVESTMENT STRATEGY
City Council Resolution #2003-R0065
41
Policy
43_
Scope -
43
_ _ _
Objectives
- 43
Responsibility and Control -
— �- 44
Investment Portfolio
-�-
45
-
Authorized Financial Broker/Dealers and Institutions
_ _
48
_
Changes in Statutes, Ordinances or Procedure
50
_
Performance Review
_
50
Ethics and Conflicts of Interest
_ -� 51
_ _
Internal Controls
51
_
Policy Revisions �-
51
Glossary J
—� 52
FINANCE DIVISION
To: The Honorable Mayor and Members of the City Council
The Annual Investment Report provides the Council, City Management and Citizens of Lubbock
a comprehensive overview of the City's investment activities throughout the fiscal year 2002-
2003. This report is written in accordance with state statutes, specifically the Public Funds
Investment Act, Section 2256, of the Texas Government Code as amended in 2003.
I. Statutory and Policy Requirements
The funds of the City of Lubbock, Texas, are invested in compliance with Article 842(a-
1) entitled the "Public Funds Investment Act" (PFIA) of the Texas Government Code.
The PFIA requires that a governing body adopt a written investment policy regarding the
investment of its funds and funds under its control. On December 18, 1997, a resolution
was passed to adopt a formal investment policy for the City of Lubbock. The Investment
Policy is reviewed each year with the most recent revision being approved on February
13, 2003. The policy designates the Managing Director of Finance as being responsible
for the City's investment program. The Managing Director of Finance is also responsible
for establishing written procedures for the operation of the program. These procedures
include the explicit delegation of authority to persons who carry out the daily investment
transactions. The Managing Director of Finance has delegated the investment function
to the Cash & Debt Manager. The Cash & Debt Manager has the authority to invest all
City funds with the exception of funds contributed to the Texas Municipal Retirement
System (TMRS); the Lubbock Firemen's Relief and Retirement Fund (LFR&RF); other
funds established by the City for deferred employee compensation; and revenue bond
escrow funds. These funds are managed by outside investment managers and
administrators, and are monitored by the Cash & Debt Manager.
The Investment Review Committee (IRC) has been designated by the City Manager to
assist in monitoring the performance and structure of the City's investments. The IRC
meets quarterly to review transactions and performance of the City's portfolio for each
quarter. The Committee annually reviews the policy guidelines and objectives to ensure
compliance with the changes in state law and with the investment objectives adopted by
the City Council as summarized below in order of importance.
A. Safety — Preservation of capital and the protection of investment principal. 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.
B. Liquidity — Maintenance of sufficient liquidity to meet anticipated disbursements
and cash flows.
C. Yield — Attainment of a market rate of return equal to or higher than the performance
measure established by the Managing Director of Finance, or designee.
D. Compliance with all Federal, State, and other legal requirements (includes but is not
limited to Chapter 2256 "Public Funds Investment Act", as amended, and Chapter
2257, "Public Funds Collateral Act, as amended, of Vernon's Texas Civil Statutes).
Economic Commentary
Quarter I (October 2002 — December 2002): The fiscal year began with the marketplace
maintaining an excessively dour outlook for the U.S. economy. On November 6, 2002,
the Federal Reserve stunned the markets with a 50 basis point reduction in benchmark
interest rates. The rate reduction was much larger than investors had anticipated as rates
fell to their lowest levels since the early 1960s, and 2% below equivalent rates in Europe.
In December, the markets calmed as investors felt the Federal Reserve would take the
monetary sidelines and give their policies time to work. At the end of the first fiscal
quarter, many economists expected acceleration of economic growth, possibly leading to
modestly higher short-term interest rates late in 2003.
Quarter 2 (January 2003 — March 2003): The growing likelihood of a U.S.-led invasion
of Iraq began to cloud the markets in January. Short-term interest rates resumed a
downward trend as a result of uncertainty and the flight -to -quality in the Treasury sector.
Federal Reserve Chairman Alan Greenspan commented in February that businesses and
households had been reluctant to spend and invest in the current environment of profound
geopolitical anxiety. However, due to those geopolitical uncertainties, the Federal
Reserve was unable to make an informed judgment on the overall health of the economy
and decided to leave benchmark interest rates unchanged at its March Federal Open
Market Committee (FOMC) meeting.
Quarter 3 (April 2003 — June 2003): At the beginning of the quarter, short-term interest
rates fell as economists worried that a long war in Iraq would take a toll on the U.S.
economy. In May, weaker -than -expected economic data and a deflationary warning from
the Federal Reserve continued to take its toll on interest rates. In June, the Federal
Reserve again lowered benchmark interest rates by 25 basis points. After 13 rate
reductions and two tax cuts, many economists felt it was only a matter of time before the
monetary and fiscal measures taken by the FOMC would be felt in the economy.
Quarter 4 (July 2003 — September 2003): In July, Alan Greenspan indicated that further
cuts in benchmark interest rates were unlikely and the threat of deflation had dropped.
The FOMC maintained the federal funds rate at 1% in August as growing indications of a
strengthening economy continued. Many economists now feel that a sustainable
economic recovery is finally underway in the U.S, that inflation will remain tame for the
foreseeable future and that the Federal Reserve will keep the benchmark interest rates at
1 % until at least the V calendar quarter of next year.
Investment Performance
For the City of Lubbock, the actual interest earnings for 2003 are summarized below:
Operating Funds (internally managed) = $1.8 million
Bond Funds (internally managed) = $0.9 million
Bond Funds (externally managed) = $0.4 million
ii
Over the last four years, falling interest rates have had a dramatic effect on investment
earnings for all municipalities. The graph on the left depicts the impact on City revenues
as rates have fallen. The graph on the right plots the City's investment yields compared
to our benchmark yields (operating funds).
IV. Investment Advisers
Patterson & Associates has served as the City's investment adviser since August 1997.
The City's Investment Adviser must be registered with the Securities and Exchange
Commission and must be able to demonstrate experience in managing public funds. The
investment adviser acts solely in an advisory and administrative capacity within the
City's investment policy requirements.
The City's Investment Policy and the PFIA limit an investment advisory contract to a 2-
year term. The renewal or extension of that contract must be made by a resolution of the
City Council. The contract in effect for the 2002-03 fiscal year expired in August 2003.
Beginning September 1, 2003, the duties of the investment adviser have been brought in-
house and will be administered by the Investment Pool Department.
V. Depository Banking Agreement
State law requires a depository services contract for all municipalities. The City of
Lubbock entered into a depository services contract with Wells Fargo Bank, N.A. on
November 21, 2002 with a final expiration date of November 20, 2005. The current
(, contract was approved by the City Council on November 21, 2002 (Resolution #2002-
R0522).
Wells Fargo Bank, N.A. serves as the City's safekeeping institution and the Federal
Reserve Bank of Boston acts as the City's third party custodian. Chapter 2257,
"Collateral for Public Funds", governs collateralization requirements. Collateralization is
required on three types of investments: depository bank balances, certificates of deposit
and repurchase agreements. The City's depository contract requires that Wells Fargo
Bank, N.A. secure such deposits with approved securities at least equal to 102% of the
market value.
t
�! iii
The enclosed Annual Investment Report is in compliance with the investment objectives adopted
by the City Council as well as in accordance with the relevant provisions of the Texas
Government Code, Chapter 2256. The objectives adopted by the City Council will continue to
guide the investment program throughout the next fiscal year in order to achieve the maximum
protection of public funds.
. k'L' L" -
Andy Bur ham
Cash & Debt Manager
IV
CITY OF LUBBOCK
Investment Portfolio Report
For the Year Ended September 30, 2003
This annual report is in full compliance with the investment policy and strategy as established
for the operating and bond funds in the City's investment policy and exceeds the reporting
requirements mandated by the Public Funds Investment Act (Chapter 2256) as amended.
This report is in compliance with generally accepted accounting principles.
Prepared by:
City of Lubbock
V
Robert Massengale
Retired Director of Finance
City of Lubbock
quiney White
Assistant City anager
City of Lubbock
LL &,,&,
Andy Burcham
Cash & Debt Manager
City of Lubbock
1
ON of Lubbock, Texas
Annual Investment Report
October 1, 2002 - September 30, 2003
Portfolio Summary Management Report
Operating Funds
This annual report is in full compliance with the Investment Policy and Strategy established for the City
of Lubbock and the Public Funds Investment Act (Chapter 2256, Government Code). All due diligence
required by the Policy has been completed in preparation of this report.
Beginning Book Value $ 88,854,978
Beginning Market Value $ 89,397,429
WAM at Beginning Period Date 338 days
Ending Book Value
$
88,943,565
Ending Market Value
$
88,970,118
Accrued Interest Receivable
$
27,329
Unrealized Gain/Loss at End of Period
$
26,553
WAM at Ending Period Date
38 days
Change in Market Value
$
(427 311) 1
Annual Average Yield to Maturity for period 2.023%
Annual Average Benchmark Yield for Period (6 mo. TB) 1.152%
Annual Average Benchmark Yield for Period (1 yr. TB) 1.242%
Prepared by:
1 Economic events can influence market value changes, but did not contribute to the market value change during the year.
2
QU of Lubbock, Texas
Annual Investment Report
October 1, 2002 - September 30, 2003
Portfolio Summary Management Report
Bond Funds
This annual report is in full compliance with the Investment Policy and Strategy established for the
City of Lubbock and the Public Funds Investment Act (Chapter 2256, Government Code). All due
diligence required by the Policy has been completed in preparation of this report.
Beginning Book Value
Beginning Market Value
WAM at Beginning Period Date
Ending Book Value
Ending Market Value
Accrued Interest Receivable
Unrealized Gain/Loss at End of Period
WAM at Ending Period Date
Change in Market Value
Annual Average Yield to Maturity for period
Annual Average Benchmark Yield for Period (3 mo. TB)
Prepared jjy:
Beverly Hodges, InterinyChief Viinancial Officer
Andy Bftrcham, Cash & Debt Manager
$ 69,587,659
$ 69,616,538
18 Days
$ 109,841,301
$ 109,841,301
1 Day
$ 40,224,763 I
1.420%
1.121%
I Economic events can influence market value changes, but did not contribute to the market value change during the year. The increase
in balances was related to new bond issue proceeds of $82.5 million less bond fund expenditures of $43.2 million plus interest earned on
bond funds totalling $0.9 million.
3
Annual Investment Report
Portfolio Summary By Market Sector (book value)
Broker/Dealer
1st Quarter
Dec. 31, 2002
2nd Quarter
Mar. 31, 2003
3rd Quarter
June 30, 2003
4th Quarter
Sept. 30, 2003
U.S. Treasury Security
3,022,594
3,013,002
3,003,304
3,025,430
U.S. Federal Agency
49,034,663
26,016,350
16,003,504
8,000,699
Certificate of Deposit
-
6,005,435
24,059,630
93,594,440
Investment Pools / MMMF's
104,608,184
112,790,921
88,984,663
94,164,308
Total
156,665,441
147,825,708
132,051,101
198,784,876
The portfolio is restricted to investments as listed under "Eligible Investments" in the City's Investment Policy. As of
September 30, 2003, the portfolio consisted of U.S. Treasuries, U.S. Agencies, Bank Collateralized Certificates of Deposit, and
AAA -rated, constant dollar investment pools.
The investments are diversified by security type to protect the portfolio from the risk of principal loss in any one sector, and
further diversified by investing in maturity dates that compliment the City's cash flow.
Performance Policy
Indicators Benchmark
1st Quarter
Dec. 31, 2002
2nd Quarter
Mar. 31, 2003
3rd Quarter
June 30, 2003
4th Quarter
Sept. 30, 2003
Operating Funds:
Average Yield to Maturity
2.828%
2.280%
1.792%
1.483%
Policy Benchmark
1.530%
1.300%
1.150%
1.149%
Bond Funds:
Average Yield to Maturity
1.701%
1.424%
1.319%
1.200%
Policy Benchmark
1.370%
1.170%
1.060%
0.933%
Investment By Type
U.S. Treasuries
100%
1.93%
2.04%
2.27%
1.52%
U.S. Agencies
80%
31.30%
17.60%
12.12%
4.02%
Certificates of Deposit
50%
0.00%
4.06%
18.22%
47.08%
Investment Pools
100%
66.77%
76.30%
67.39%
47.37%
4
Annual Investment Report
Approved Broker/Dealer Listing
Effective October 30, 2002
BankofAmerica
..
Investment Services, Inc."
Coastal Securities
Sachs an
SALOMONSMITH BARNEY
Approved BrokeriDealer Listing
Effective August 4, 2003
Bankof America
Investment Services, Inc:
Coastal Securities
Sachs an
SALOMONSMITH BARNEY
5
Annual Investment Report
Portfolio Summary By Broker/Dealer (Par Value)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Broker/Dealer Dec. 31, 2002 Mar. 311, 2003 June 30, 2003 Sept. 30, 2003
Bank of America (BOA) - - - 3,000,000
Merrill Lynch (ML) 2,000,000 - - -
Mizuho (MZ) 3,000,000 - - -
Total 5,000,000 - - 3,000,000
The City utilizes multiple broker/dealers for investment transactions to assure that the City is receiving a
competitive market price. The City's Investment Review Committee has approved 10 brokerage firms which
are used for investment transactions (see listing on previous page). The Public Funds Investment Act requires
the approved dealers to certify that they have reviewed the City's Investment Policy. At least three approved
broker/dealers competitively bid every transaction for the City. This ensures maximum competition and lowest
price for the City's portfolio.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Performance Indicators Dec. 31, 2002 Mar. 31, 2003 June 30, 2003 Sept. 30, 2003
Highest Broker Percent
Broker/Dealer
60.0% n/a
MZ n/a
n/a 100.0%
n/a BOA
r*
Annual Investment Report
Portfolio Summary By Maturity (Book Value)
Maturity 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Time Frame Dec. 31, 2002 Mar. 31, 2003 June 30, 2003 Sept. 30, 2003
0 - 3 months
116,598,241
126,806,738
120,049,580
187,758,747
3 - 6 months
8,040,513
7,017,231
4,000,945
4,000,489
6 - 9 months
7,029,045
4,001,395
-
-
9 -12 months
4,001,841
2,000,000
-
-
1 - 2 years
12,996,238
4,999,491
8,000,576
7,025,640
2 - 3 years
7,999,563
3,000,853
-
-
Total
156,665,441
147,825,708
132,051,101
198,784,876
As of September 30, 2003
3-6 mos
1) not 1-2 yr.
Liquidity is the second most important investment objective for the City. To meet this objective, investment
maturities are typically matched with the disbursement requirements of the City. Generally, investment maturities
are laddered from 0 to 3 years, as illustrated in the above graph. Approximately ninety-six percent (96.5%) of our
investments mature within a six-month timeframe. Approximately four percent (3.5%) of the portfolio has a
maturity greater than one year but less than two.
In 2002-03, rates have been at extremely low levels in combination with a flat or inverted yield curve. This
investment environment has not provided compelling values in longer -dated securities. Therefore, the weighted
average maturity of the City's portfolio has dramatically shortened throughout the year. The portfolio typically
has a laddered structure, yet the current strategy has been to keep the majority of funds in liquid balances while
interest rates remain at historically low levels.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Performance Indicators Dec. 31, 2002 Mar. 31, 2003 June 30, 2003 Sept. 30, 2003
Weighted Average Maturity
Maturities < 30 days
119 days 57 days
68.0% 84.4%
38 days
87.9%
17 days
94.5%
7
Annual Investment Report
Portfolio Summary By Fund Type (Book Values)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Fund Type Dec. 31, 2002
Mar. 31, 2003
June 30, 2003
Sept. 30, 2003
Operating Fund 86,824,181
93,600,774
77,566,181
88,943,575
Bond Fund 69,841,260
54,224,934
54,484,920
109,841,301
Total 156,665,441 147,825,708 132,051,101 198,784,876
As shown in the graph above, slightly over half of the investments in the portfolio are in bond funds. The
weighted average maturity (WAM) of the operating funds has ranged from 206 to 38 days throughout 2002-03.
The WAM of the bond funds portfolio is much shorter than the operating funds. Bond funds require greater
liquidity needs than the City's operating funds as expenditures are typically made in a shorter period of time.
For 2002-2003, investment yields in the one-year sector were comparable (or lower) than the investment pool
yields. Therefore, the majority of bond funds were invested in overnight funds throughout this fiscal year.
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Performance Indicators
Dec. 31, 2002
Mar. 31, 2003
June 30, 2003
Sept. 30, 2003
WAM by Fund
Operating
206 days
89 days
63 days
38 days
Bond
10 days
3 days
1 day
1 day
8
Annual Investment Report
Collateral Review - Wells Fargo Bank N.A.
Coupon 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Security Rate Dec. 31, 2002 Mar. 31, 2003 June 30, 2003 Sept. 30, 2003
WELLS FARGO BANK, N.A.
Government National Mortgage Association II Single Family (G2SF)
Cusip 36202DY76 6.50% $ - $ 5,262,978
Cusip 36202DUJ8 6.00% - 329,297
Cusip 36202DM40 6.00% - -
Government National Mortgage Association Single Family (GNSF)
Cusip 36225BMGO 6.00% - 1,268,076
Cusip 36225BK49
6.50% -
Federal National Mortgage Association
- Callable (FNCL)
Cusip 31371E3S2
9.00% -
Cusip 31371KWJ6
6.00% -
Cusip 31384VPQ9
6.00% -
Cusip 31384WNK2
6.00% -
Cusip 31385HXE7
6.00% -
Cusip 31390VFF6
6.00% -
Cusip 31391 GZ90
6.00% -
Federal Home Loan Bank - Adjustable Rate Mortages (FHARM)
Cusip 3128HD3C1
4.25% -
Cusip 31342AYR4
3.64% -
Federal National Mortgage Association
- Adjustable Rate Mortgages (FNARM)
Cusip 31402BNX8
3.43% -
$ 4,377,199
290,530
297,574
1,101,983
192,052
$ 3,361,051
235,415
220,964
876,998
144,397
611,505
542,951
5,486,497
4,193,061
5,365,607
3,702,341
5,611,558
3,719,353
1,361,660
900,534
2,198,361
1,656,067
367,135
253,355
-
73,686,696
-
5,507,625
1,074,369
Total $ - $ 6,860,351 $ 27,261,661 $ 100,075,175
AS of September 30, 2003
FNARM G2SF GNSF
1% 4% 1%
FNCL
15%
oil
FHARM
79%
Collateralization requirements are governed by Chapter 2257 "Collateral for Public Funds". Collateralization is required on three types of
investments: depository bank balances, certificates of deposit and repurchase agreements. In order to anticipate market changes and provide a
level of security for all funds, the collateralization level will be 102% of market value of principal and accrued interest.
City of Lubbock collateral is limited to those investments that are approved in the City Investment Policy with a maturity less than 5 years.
Market value is priced at least daily for repurchase agreements and monthly for securities. As of September 30, 2003, the maturity of collateral
pledged by Wells Fargo was in non-compliance with the depository contract with the City. As stated above, the City's investment policy and
depository contract stipulates that all collateral have maturities less than 5 years. The collateral pledged against the Citys deposits as of
9/30/03 ranges from maturies of 25 to 29 years. The market value of the securities is more than sufficient to fully collateralize all of the City's
deposits. Wells Fargo has acknowledged their non-compliance with the contract and will be substituting Treasury securities with maturities
less than 5 years on or before October 7, 2003.
Other contract compliance issues during the year involved the collateral levels falling below the required 102%. After the second known
occurrence, the situation was promptly resolved through controls at Wells Fargo. The Investment Pool Department will be closely monitoring
the collateral in the future to avoid situations as those described above.
9
Annual Investment Report
Collateral Review - American State Bank
Coupon 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Security Rate Dec. 31, 2002 Mar. 31, 2003 June 30, 2003 Sept. 30, 2003
U.S. Treasury Note
Cusip 912827U83 6.50% $ 6,000,000 $ 6,000,000 $ 2,000,000 $ 2,000,000
Total $ 6,000,000 $ 6,000,000 $ 2,000,000 $ 2,000,000
As of September 30,2003
100%
Collateralization requirements are governed by Chapter 2257 "Collateral for Public Funds". Collateralization is required on three types of
investments: depository bank balances, certificates of deposit and repurchase agreements. In order to anticipate market changes and provide
a level of security for all funds, the collateralization level will be 102% of market value of principal and accrued interest.
City of Lubbock collateral is limited to those investments that are approved in the City Investment Policy with a maturity less than 5 years.
Market value is priced at least daily for repurchase agreements and monthly for securities.
Depository balances exceeded collateral coverage on five separate occasions throughout the 2002-03 fiscal year. The dates of these
occurrences were: 10/15, 11/12, 11/15, 12/26 and 01/23. The collateral coverage with American State Bank during this time frame was $6
million. When balances exceeded $6 million, the excess amount of deposits was not collateralized (the amount not collateralized was $0.4M,
$0.9M, $3.8M, $ I.OM and $0.6M respectively). American State Bank, did not monitor collateral coverage and the City was responsible for
making sure balances did not exceed the collateral target on a daily basis. This problem has been corrected with the Wells Fargo depository
relationship. Wells Fargo monitors collateral on a daily basis and adjusts the collateral amounts to ensure there is sufficient collateral to
insure the City's deposits.
10
Investment Yield Summary
Bond Fund Yields
2.2%
2.0%
1.8%
1.6%
1.4%
1.2%
1.0%
Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept
Bond Funds Budget -*-Avg Actual
Interest
Interest
Month
Earnings
Yield
Earnings
Bond Funds
Total
Oct
$ 217,114
2.868%
112,289
2.111%
329,403
Nov
203,242
2.799%
94,869
1.840%
298,111
Dec
194,117
2.695%
91,443
1.714%
285,560
Jan
190,495
2.403%
87,990
1.649%
278,485
Feb
170,900
2.292%
72,915
1.566%
243,815
Mar
167,594
2.008%
63,698
1.436%
231,292
Apr
132,382
1.803%
63,376
1.503%
195,758
May
121,123
1.730%
59,775
1.298%
180,898
June
117,431
1.802%
55,724
1.246%
173,155
July
112,339
1.626%
49,711
.1.113%
162,050
Aug
110,964
1.466%
43,964
1.178%
154,928
Sept
100,914
1.367%
104,640
1.256%
205,554
Actual
$ 1,838,615
2.023%
900,394 1.420%
2,739,009
Budget
$ 2,021,467
2.243%1
$ 877,980 1.502%1
$ 2,899,447
11
Investment Transaction Report
October 1, 2002 - September 30, 2003
Purchases
ID
Settle
Sec
Purchase
Purchase
Purchase
Purchase
Total
Number
Date CUSIP
Type
Par
Coupon Maturity
Price
Yield
Principal
Accr/Int
Settlement
7665
10/15/02 3128XOCC1
FHCAL
3,000,000.00
2.200% 10/15/04
99.97
2.216%
2,999,062.50
-
2,999,062.50
7691
11/13/02 3128XOGS2
FHCAL
2,000,000.00
2.625% 05/13/05
99.88
2.677%
1,997,500.00
-
1,997,500.00
7842
07/31/03 912828AQ3
T-NOTE
3,000,000.00
2.000% 11/30/04
100.97
1.264%
3,029,062.50
10,000.00
3,039,062.50
Totals
8,000,000.00
8,025,625.00
10,000.00
8,035,625.00
Maturities
Payment
Security
Type of
Coupon
Total
Date CUSIP
Type
Par
Coupon
Maturity
Payment
Amount
Payment
10/15/02 3133MHTL8
FHCAL
5,315,000.00
3.450%
10/15/03
Called
91,684.00
5,406,684.00
10/15/02 3134A3T48
FHLMC
1,500,000.00
6.250%
10/15/02
Maturity
46,875.00
1,546,875.00
11/15/02 3136F04Z2
FNCAL
3,000,000.00
3.400%
11/15/04
Called
51,000.00
3,051,000.00
11/27/02 3133MQPZ1
FHCAL
3,000,000.00
2.250%
02/27/04
Called
16,875.00
3,016,875.00
12/16/02 3136172HN1
FNCAL
4,300,000.00
3.375%
09/16/05
Called
36,281.00
4,336,281.00
12/28/02 3129241732
FMCAL
2,000,000.00
4.450%
12/28/04
Called
44,500.00
2,044,500.00
O1/13/03 3133MCUE3
FHLB
2,000,000.00
5.215%
01/13/03
Maturity
51,250.00
2,051,250.00
O1/23/03 3136F1EZ9
FNCAL
2,000,000.00
3.560%
01/23/04
Called
35,600.00
2,035,600.00
02/07/03 313588BP9
FNDN
5,000,000.00
0.000%
02/07/03
Maturity
-
5,000,000.00
02/13/03 3136KR93
FNCAL
2,000,000.00
5.500%
02/13/04
Called
55,000.00
2,055,000.00
02/14/03 3136F1JX9
FNCAL
3,000,000.00
4.100%
02/15/05
Called
61,158.00
3,061,158.00
03/15/03 3134A4DJO
FHCAL
5,000,000.00
4.750%
03/15/03
Maturity
118,750.00
5,118,750.00
03/20/03 3136F1SC5
FNCAL
2,000,000.00
3.750%
09/20/04
Called
37,500.00
2,037,500.00
03/28/03 3133MMBD4
FHCAL
2,000,000.00
4.260%
03/28/05
Called
42,600.00
2,042,600.00
04/25/03 3133MENT4
FHLB
6,000,000.00
4.500%
04/2003
Maturity
135,000.00
6,135,000.00
05/13/03 3128XOGS2
FHCAL
2,000,000.00
2.625%
5/2005
Called
26,250.00
2,026,250.00
05/15/03 3133MEUD1
FHLB
2,000,000.00
4.500%
05/2005
Maturity
45,000.00
2,045,000.00
07/29/03 31359MNM1
FNCAL
2,000,000.00
3.100%
10/29/04
Called
31,000.00
2,031,000.00
07/31/03 9128277A4
T-NOTE
3,000,000.00
3.875%
7/31/03
Maturity
58,125.00
3,058,125.00
08/15/03 3133MGV37
FHLB
2,000,000.00
4.125%
8/15/03
Maturity
41,250.00
2,041,250.00
08/20/03 31359MNV 1
FNCAL
2,000,000.00
2.700%
8/20/04
Called
27,000.00
2,027,000.00
09/15/03 3134A4HG2
FHLMC
2,000,000.00
3.500%
9/15/03
Maturity
35,000.00
2,035,000.00
Totals
63,115,000.00
1,087,698.00
64,202,698.00
Security Type Identification
FHCAL Federal Home Loan Bank - Callable
FHLB
Federal Home Loan Bank
FHLMC
Federal Home Loan Mortgage Corporation
FMCAL
Federal Home Loan Mortgage Corporation - Callable
FNCAL
Federal National Mortgage Association - Callable
FNDN
Federal National Mortgage Association - Discount Note
T-NOTE
U.S. Treasury Note
12
CITY OF LUBBOCK
Investment Portfolio Report
For the Quarter Ended September 30, 2003
This quarterly report is in full compliance with the investment policy and strategy as
established for the operating and bond funds in the City's investment policy and exceeds the
reporting requirements mandated by the Public Funds Investment Act (Chapter 2256) as
amended.
This report is in compliance with generally accepted accounting principles.
Prepared by:
Interim C ' rck
anc4 Officer
City of Lub
obert Massengale
etired Director of Finance
City of Lubbock
Quincy WhiKj
Assistant City Manager
City of Lubbock
"t"L,
AndyBulcharn
Cash & Debt Manager
City of Lubbock
QV of Lubbock, Texas
Quarterly Investment Report
July 1, 2003 - September 30, 2003
Portfolio Summary Management Report
Operating Funds
This quarterly report is in full compliance with the Investment Policy and Strategy established for the
City of Lubbock and the Public Funds Investment Act (Chapter 2256, Government Code). All due
diligence required by the Policy has been completed in preparation of this report.
Beginning Book Value $ 77,566,181
Beginning Market Value $ 77,659,434
WAM at Beginning Period Date 63 days
Ending Book Value
$
88,943,565
Ending Market Value
$
88,970,118
Accrued Interest Receivable
$
27,329
Unrealized Gain/Loss at End of Period
$
26,553
WAM at Ending Period Date
38 days
Change in Market Value
$
11,310,684 t
Quarterly Average Yield to Maturity for period 1.483%
Quarterly Average Benchmark Yield for Period (6 mo. TB) 1.006%
Quarterly Average Benchmark Yield for Period (1 yr. TB) 1.149%
Prepared yy:
everly
Andy
Cash &
Officer
I Economic events can influence market value changes, but did not contribute to the market value change during the quarter.
14
City of Lubbock, Texas
INVENTORY HOLDINGS REPORT -OPERATING FUNDS
For Quarter Ending September 30, 2003
Beginning
Beginning
Beginning
Ending
Ending
Ending
See
Yield to
Par
Book Value
Market Value
Par
Book Value
Market Value
Type
CUSIP Coupon Maturity Maturity
06/30/03
06/30/03
06/30/03
09/30/03
09/30/03
09/30/03
Treasuries:
T-Note
9128277A4 3.8750% 07/31/03 2.5490%
3,000,000
3,003,304
3,007,500
-
-
-
T-Note
912828AQ3 2.0000% 11/30/04 1.2640%
-
-
-
3,000,000
3,025,401
3,030,930
Agencies:
FHLB
3133MGV37 4.1250% 08/15/03 4.1760%
2,000,000
1,999,878
2,007,500
-
-
-
FHLMC
3134A4HG2 3.5000% 09/15/03 2.9840%
2,000,000
2,002,105
2,009,688
-
-
-
FNMA
31359MEG4 4.7500% 11/14/03 4.8200%
2,000,000
1,999,504
2,026,875
2,000,000
1,999,837
2,008,760
FHLMC
3134A4JH8 3.2500% 12/15/03 3.0860%
2,000,000
2,001,441
2,019,688
2,000,000
2,000,661
2,008,760
FNCAL
31359MNVI 2.7000% 08/20/04 2.7000%
2,000,000
2,000,000
2,004,467
-
-
-
FHCAL
3128XOCC1 2.2000% 10/15/04 2.2160%
3,000,000
2,999,725
3,009,375
3,000,000
2,999,963
3,001,080
FNCAL
31359MNMI 3.1000% 10/29/04 3.1010%
2,000,000
2,000,000
2,003,332
-
-
-
FNCAL
31359MMV2 4.4000% 05/07/05 4.2630%
1,000,000
1,000,851
1,011,636
1,000,000
1,000,245
1,003,130
Investment Pools:
TexPool
Liquid Funds 1.0351% 10/01/03 1.0351%
17,303,606
17,303,606
17,303,606
22,062,193
22,062,193
22,062,193
TexSTAR
Pool 1.0364% 10/01/03 1.0364%
20,477,957
20,477,957
20,477,957
30,999,719
30,999,719
30,999,719
TexPool
Reese 1.0351% 10/01/03 1.0351%
119,373
119,373
119,373
-
-
-
Wells Fargo
Sweep 0.3704% 10/01/03 0.3704%
620,671
620,671
620,671
-
-
-
Wells Fargo
MM 1.3416% 10/01/03 1.3416%
10,022,997
10,022,997
10,022,997
14,790,167
14,790,167
14,790,167
Wells Fargo
MM 1.5399% 10/01/03 1.5399%
10,014,770
10,014,770
10,014,770
10,065,378
10,065,378
10,065,378
TOTALS
77,559,374
77,566,181
77,659,434
88,917,458
88,943,565
88,970,118
15
City of Lubbock, Texas
TRANSACTION REPORT
For Quarter Ending September 30, 2003
PURCHASES:
Trade Settle Security Purchase Purchase Purch Total
Date Date CUSIP Type Par Coupon Maturity Price Principal Accr/Int Settlement
07/30/03 07/31/03 912828AQ3 T-Note 3,000,000
SALES:
2.000% 11/30/04 100 31/32 3,029,063 10,000 3,039,063
Trade Settle Security Sale Sale Sale Total
Date Date CUSIP Type Par Coupon Maturity Price Principal Accr/Int Settlement
No Transactions
MATURITIES AND COUPONS:
Fund
Payment Security
Date CUSIP Type
Par
Coupon
Maturity
Type of
Payment
Coupon
Amount
Total
Payment
Operating
07/29/03 31359MNMI FNCAL
2,000,000
3.100%
10/29/04
Called
31,000
2,031,000
Operating
07/31/03 9128277A4 T-NOTE
3,000,000
3.875%
7/31/03
Maturity
58,125
3,058,125
Operating
08/15/03 3133MGV37 FHLB
2,000,000
4.125%
8/15/03
Maturity
41,250
2,041,250
Operating
08/20/03 31359MNV1 FNCAL
2,000,000
2.700%
8/20/04
Called
27,000
2,027,000
Operating
09/15/03 3134A4HG2 FHLMC
2,000,000
3.500%
9/15/03
Maturity
35,000
2,035,000
16
ON of Lubbock, Texas
Quarterly Investment Report
July 1, 2003 - September 30, 2003
Portfolio summary Management Report
Bond Funds
This quarterly report is in full compliance with the Investment Policy and Strategy established for the
City of Lubbock and the Public Funds Investment Act (Chapter 2256, Government Code). All due
diligence required by the Policy has been completed in preparation of this report.
Beginning Book Value
Beginning Market Value
WAM at Beginning Period Date
Ending Book Value
Ending Market Value
Accrued Interest Receivable
Unrealized Gain/Loss at End of Period
WAM at Ending Period Date
Change in Market Value
Quarterly Average Yield to Maturity for period
Quarterly Average Benchmark Yield for Period (3 mo. TB)
$ 54,484,920
$ 54,484,920
1 Day
$ 109,841,301
$ 109,841,301
1 Day
$ 55,356,381 1
1.200%
0.933%
t Economic events can influence market value changes, but did not contribute to the market value change during the quarter. The `
increase in balances was related to new bond issue proceeds of $82.5 million less bond fund expenditures of $27.4 million plus interest
earned on the bond funds.
17
City of Lubbock, Texas
INVENTORY HOLDINGS REPORT
For Quarter Ending September 30,2003
Beginning
Beginning
Beginning
Ending
Ending
Ending
See
Yield to
Par
Book Value
Market Value
Par
Book Value
Market Value
Type CUSIP Coupon Maturity
Maturity
06/30/03
06/30/03
06/30/03
09/30/03
09/30/03
09/30/03
Investment Pools
TexPool Liquid Funds 1.0237% 10/01/03
1.0237%
39,390,301
39,390,301
39,390,301
22,245,261
22,245,261
22,245,261
TexSTAR Liquid Funds 1,0381% 10/01/03
1.0381%
11,072,757
11,072,757
11,072,757
18,857,135
18o857,135
18,857,135
Wells Fargo MM 1.5399% 10/01/03
1.5399%
41021,863
4,021,863
4,021,863
4,038,865
4,038,865
4,038,865
Wells Fargo MM 1.3416% 10/01/03
1.3416%
-
-
-
64,700,041
64,700,041
64,700,041
TOTALS
_14,484,920
109,841,301
109,841,301
109,841,301
18
City of Lubbock, Texas
TRANSACTION REPORT
For Quarter Ending September 30, 2003
PURCHASES:
ID Settle Security Purchase Purchase Purch Total
Number Date CUSIP Type Par Coupon Maturity Price Principal Accr/Int Settlement
No Transactions
SALES:
Trade Settle Security Sale Sale Sale Total
Date Date CUSIP Type Par Coupon Maturity Price Principal Accr/Int Settlement
No Transactions
MATURITIES AND COUPONS:
Payment Security Type of Coupon Total
Fund Date CUSIP Type Par Coupon Maturity Payment Amount Payment
No Transactions
19
CITY OF LUBBOCK
Investment Portfolio Report
For the Quarter Ended June 30, 2003
This quarterly report is in full compliance with the investment policy and strategy as
established for the operating and bond funds in the City's investment policy and exceeds the
reporting requirements mandated by the Public Funds Investment Act (Chapter 2256) as
amended.
This report is in compliance with generally accepted accounting principles.
Cash & Debt Manager
Quincy White
Assistant City Manager of Administrative Services
A,1�
o ert Massengale
West Texas Municipal Power Agency
Finance Director
20
City of Lubbock, Texas
Quarterly Investment Report
April 1, 2003 — June 30, 2003
Portfolio Summary Management Report
City of Lubbock — Operating Funds
This quarterly report is in full compliance with the Investment Policy and strategy
established for the City of Lubbock and the Public Funds Investment Act (Chapter 2256,
Government Code). All due diligence required by the Policy has been completed in
preparation of this report.
Prepared by:
Beginning Book Value $ 93,600,774
Beginning Market Value $ 93,792,613
WAM at Beginning Period Date 89 days
Ending Book Value
$
77,566,181
Ending Market Value
$
77,659,434
Accrued Interest Receivable
$
180,227
Unrealized Gain/Loss at End of Period
$
93,252
WAM at Ending Period Date
63 days
Change in Market Value
$
(16,133,179)1
Quarterly Average Yield to Maturity for period 1.792%
Quarterly Average Benchmark Yield for period (6 mo. TB) 1.070%
Quarterly Average Benchmark Yield for period (1 yr., TB) 1.150%
ly
Investment Advisor, City of`Lubbock, Texas
Linda T. Patterson, President, Patterson & Associates
Patterson & Associates has assisted in the preparation of this quarterly investment report with
additional input provided by Texpool, TexSTAR, LOGIC and the City of Lubbock.
' Economic events can also influence market value changes, but contributed very little to the market value
change during the quarter.
21
CITY -OF LUBBOCK, TEXAS
INVENTORY HOLDINGS REPORT -OPERATING FUNDS
For Quarter Ending June 30,
2003
Beginning
Beginning
Beginning
Ending
Ending
Ending
Sec
Yield to
Par
Book Value
Market Value
Par
Book Value
Market Value
Type
I CUSIP
Coupon
Maturity
Maturity
03/31/03
03/31/03
03/31/03
06/30/03
06/30/03
06/30/03
Treasuries:
T-Note
9128277A4
3.875%
07/31/03
2.549%
3,000,000
3,013,002
3,027,656
3,000,000
3,003,304
3,007,500
Agencies:
FHLB
3133MENT4
4.500%
04/25/03
4.087%
2,000,000
2,000,538
2,004,375
0
0
0
FHLB
3133MEUDI
4.500%
05/15/03
2.620%
2,000,000
2,004,527
2,008,125
0
0
0
FHLB
3133MGV37
4.125%
08/15/03
4.176%
2,000,000
1,999,635
2,021,875
2,000,000
1,999,878
2,007,500
FHLMC
3134A4HG2
3.500%
09/15/03
2.984%
2,000,000
2,004,594
2,021,250
2,000,000
2,002,105
2,009,688
FNMA
31359MEG4
4.750%
11/14/03
4.820%
2,000,000
1,999,174
2,043,750
2,000,000
1,999,504
2,026,875
FHLMC
3134A4JH8
3.250%
12/15/03
3.086%
2,000,000
2,002,221
2,028,750
2,000,000
2,001,441
2,019,688
FNCAL
31359MNV1
2.700%
08/20/04
2.700%
2,000,000
2,000,000
2,011,145
2,000,000
2,000,000
2,004,467
FHCAL
3128XOCCI
2.200%
10/15/04
2.216%
3,000,000
2,999,491
3,014,283
3,000,000
2,999,725
3,009,375
FNCAL
31359MNMI
3.100%
10/29/04
3.101%
2,000,000
2,000,000
2,012,339
2,000,000
2,000,000
2,003,332
FNCAL
31359MMV2
4.400%
05/07/05
4.263%
1,000,000
1,001,447
1,019,063
1,000,000
1,000,851
1,011,636
FHCAL
3128XOGS2
2.625%
05/13/05
2.677%
2,000,000
1,999,406
2,003,264
0
0
0
Investment Pools:
Texpool
Liquid Funds
1.197%
07/01/03
1.197%
57,431,053
57,431,053
57,431,053
17,303,606
17,303,606
17,303,606
TexSTAR
Pool
1.239%
07/O1/03
1.239%
8,916,265
8,916,265
8,916,265
20,477,957
20,477,957
20,477,957
Texpool
Reese
1.197%
07/01/03
1.197%
227,610
227,610
227,610
119,373
119,373
119,373
Wells Fargo
Sweep
0.440%
07/O1/03
0.440%
0
0
0
620,671
620,671
620,671
Wells Fargo
MM
1.750%
07/01/03
1.750%
2,001,812
2,001,812
2,001,812
10,022,997
10,022,997
10,022,997
Wells Fargo
MM
1.550%
07/O1/03
1.550%
0
0
0
10,014,770
10,014,770
10,014,770
Cenificates of Deposit:
TOTALS
23,576.2
23.600•27
Q .792.613
77. 59. 74
7.566.181
Z7,659.434
22
t
CITY OF LUBB0CK, TEXAS
Transaction Report --for Quarter Ending .Tune 30 2003
Operating Funds
PURCHASES:
ID Settle Sec Purchase Purchase Purchase Purch Total
Number Date CUSIP Type Par Coupon Maturity Price Yield Principal Accr/Int Settlement
r-
SALES:
Trade
Settle
Sec
Sale
Sale
Sale Total
Date
Date
CUSIP
Type
Par
Coupon
Maturity
Price
Principal
Accr/Int Settlement
MATURITIES AND COUPONS:
Payment
Security ty
Type of
Coupon
Total
Fund
Date
CUSIP
Type
Par
Coupon
Maturity
Payment
Amount
Payment
Operating
04/15/03
3128XOCCI
FHCAL
3,000,000
2.200%
10/15/04
Coupon
33,000
33,000
Operating
04/25/03
3133MENT4
FHLB
2,000,000
4.500%
04/25/03
Maturity
45,000
2,045,000
Operating
05/07/03
31359MMV2
FNCAL
1,000,000
4.400%
05/07/05
Coupon
22,000
22,000
Operating
05/13/03
3128XOGS2
FNCAL
2,000,000
2.625%
05/13/05
Called
26,250
2,026,250
Operating
05/15/03
3133MEUD1
FHLB
2,000,000
4.500%
05/15/03
Maturity
45,000
2,045,000
Operating
05/15/03
31359MEG4
FNMA
2,000,000
4.750%
11/14/03
Coupon
47,500
47,500
Operating
06/15/03
3134A4JH8
FHLMC
2,000,000
3.250%
12/15/03
Coupon
32,500
32,500
C
C,
23
t
City of Lubbock, Texas
Quarterly Investment Report
April 1, 2003 — June 30, 2003
Portfolio Summary Management Report
City of Lubbock — Bond Funds
This quarterly report is in full compliance with the Investment Policy and strategy
established for the City of Lubbock and the Public Funds Investment Act (Chapter 2256,
Government Code). All due diligence required by the Policy has been completed in
preparation of this report
Prepared by:
Beginning Book Value $ 54,224,934
Beginning Market Value $ 54,228,367
WAM at Beginning Period Date 3 Days
Ending Book Value $ 54,484,920
Ending Market Value $ 54,484,920
Accrued Interest Payable $ 0
Unrealized Gain/Loss at End of Period $ 0
WAM at Ending Period Date 1 Day
Change in Market Value $ 256,5531
Quarterly Average Yield to Maturity for period 1.319%
Quarterly Average Benchmark Yield for period (3 mo. TB) 1.060%
Beverly
A
Investment Advisor, ity of Lu ock, Texas
Linda T. Patterson, Pr , Patterson & Associates
Additional input provided by Texpool, TexSTAR, LOGIC and the City of Lubbock.
' Economic events can also influence market value changes, but contributed very little to the market value
change during the quarter.
W
t
t_
CITY OF LUBBOCK, TEXAS
INVENTORY HOLDINGS REPORT -BOND FUNDS
For Quarter Ending June 30, 2003
C
Beginning Beginning Beginning Ending Ending Ending
Sec Yield to Par Book Value Market Value Par Book Value Market Value
Type CUSIP Coupon Maturity Maturity 03/31/03 03/31/03 03/31/03 06/30/03 06/30/03 06/30/03 -
Agencies:
0
FHLB 3133MENT4
4.500%
04/25/03
2.515%
4,000,000
4,005,317
4,008,750
0
0
Commerical Paper:
C
Investment Pools:
Texpool Liquid Funds
1.197%
07/01/03
1.197%
35,178,150
35,178,150
35,178,150
39,390,301
39,390,301
39,390,30
TexSTAR . Liquid Funds
1.239%
07/01/03
1.239%
11,037,844
11,037,844
11,037,844
11,072,757
11,072,757
11,072,757
Wells Fargo MM
1.750%
07/01/03
1.750%
4,003,623
4,003,623
4,003,623
4,021,863
4,021,863
4,021,863
TOTALS
54,219,617
5� .224. 4
.218.367
,484,220
54.484.920
4 .484.920,
c
C
C
C
c
c
c
C
c
c
c
r,
f.
25
t,
.-JTY OF LUBBOCK, -TEXAS
ransaction Report - for Ouarter Ending Tune 30, 2003
fond Funds
PURCHASES:
ID Settle
Sec
Purchase
Purchase
Purchase
Porch Total
r jumber Date CUSIP
Type
Par Coupon Maturity
Price
Yield
Principal
Accr/Int Settlement Broker Safekept
No Transactions
SALES:
Trade Settle
Sec
Sale
Sale
Sale
Total
-'Date Date CUSIP
Type
Par Coupon Maturity
Price
Principal
Accr/Int
Settlement
No Transactions
ATURITIES AND COUPONS:
11> Payment
Security
Type of
Coupon
Total
-fund Date CUSIP
Type
Par Coupon Maturity
Payment
Amount
Payment
'Bond 04/25/03 3133MENT4 FHLB 4,000,000 4.500% 04/25/03 Maturity 90,000 4,090,000
26
CITY OF LUBBOCK
Investment Portfolio Report
For the Quarter Ended March 31, 2003
This quarterly report is in full compliance with the investment policy and strategy as
established for the operating and bond funds in the City's investment policy and exceeds the
reporting requirements mandated by the Public Funds Investment Act (Chapter 2256) as
amended.
This report is in compliance with generally accepted accounting principles.
Prepared by:
Andy Burcham
Cash & Debt Manager
Quincy White
Assistant City Manager of Administrative Services
J: obert Massengale
West Texas Municipal Power Agency
Finance Director
27
CLq of Lubbock, Texas
Quarterly Investment Report
January 1, 2003 — March 31, 2003
Portfolio Summary Management Report
City of Lubbock — Operating Funds
This quarterly report is in full compliance with the Investment Policy and strategy
established for the City of Lubbock and the Public Funds Investment Act (Chapter 2256,
Government Code). All due diligence required by the Policy has been completed in
preparation of this report.
Prepared by
Beginning Book Value $ 86,824,181
Beginning Market Value $ 87,191,991
WAM at Beginning Period Date 206 days
Ending Book Value
$
93,600,774
Ending Market Value
$
93,792,613
Accrued Interest Receivable
$
243,358
Unrealized Gain/Loss at End of Period
$
191,839
WAM at Ending Period Date
89 days
Change in Market Value
$
6,600,6221
Quarterly Average Yield to Maturity for period 2.280%
Quarterly Average Benchmark Yield for period (6 mo. TB) 1.190%
Quarterly Average Benchmark Yield for period (1 yr. TB) 1.300%
Linda T. Patterson, President, Patterson & Associates
Patterson & Associates has assisted in the preparation of this quarterly investment report with
additional input provided by Texpool, TexSTAR, LOGIC and the City of Lubbock.
1 Economic events can also influence market value changes, but contributed very little to the market value
change during the quarter. The quarter's increase is primarily due to property taxes collected.
CITY OF LUBBOCK, TEXAS
INVENTORY HOLDINGS REPORT -OPERATING FUNDS
For Quarter
Ending March 31, 2003
Beginning
Beginning
Beginning
Ending
Ending
Ending
Sec
Yield to
Par
Book Value
Market Value
Par
Book Value
Market Value
Type
CUSIP
Coupon
I Maturity
Maturity
12/31/02
12/31/02
12/31/02
03/31/03
03/31/03
03/31/03
Treasuries:
T-Note
9128277A4
3.875%
07/31/03
2.549%
3,000,000
3,022,594
3,045,703
3,000,000
3,013,002
3,027,656
Agencies:
FHLB
3133MCUE3
5.125%
01/13/03
5.125%
2,000,000
2,000,365
2,002,562
0
0
0
FNDN
313588BP9
0.000%
02/07/03
2.454%
2,000,000
1,994,976
1,997,298
0
0
0
FHLMC
3134A4DJ0
4,750%
03/15/03
4.513%
5,000,000
5,002,254
5,034,953
0
0
0
FHLB
3133MENT4
4.500%
04/25/03
4.087%
2,000,000
2,002,473
2,019,719
2,000,000
2,000,538
2,004,375
FHLB
3133MEUD1
4.500%
05/15/03
2.620%
2,000,000
2,013,580
2,023,351
2,000,000
2,004,527
2,008,125
FHLB
3133MGV37
4.125%
08/15/03
4.176%
2,000,000
1,999,396
2,033,914
2,000,000
1,999,635
2,021,875
FHLMC
3134A4HG2
3.500%
09/15/03
2.984%
2,000,000
2,007,055
2,030,000
2,000,000
2,004,594
2,021,250
FNMA
31359MEG4
4.750%
11/14/03
4.820%
2,000,000
1,998,849
2,057,588
2,000,000
1,999,174
2,043,750
FHLMC
3134A4JH8
3.250%
12/15/03
3.086%
2,000,000
2,002,993
2,035,294
2,000,000
2,002,221
2,028,750
FNMA
3136F1EZ9
3.560%
O1/23/04
3.593%
2,000,000
1,999,336
2,003,125
0
0
0
FNCAL
31364KR93
5.500%
02/13/04
5.500%
2,000,000
2,000,000
2,010,000
0
0
0
FNCAL
31359MNVI
2.700%
08/20/04
2.700%
2,000,000
2,000,000
2,015,740
2,000,000
2,000,000
2,011,145
FNMA
3136F1SC5
3.750%
09/20/04
3.967%
2,000,000
1,997,642
2,010,000
0
0
0
FHCAL
3128XOCCI
2.200%
10/15/04
2,216%
3,000,000
2,999,260
3,015,000
3,000,000
2,999,491
3,014,283
FNCAL
31359MNM1
3.100%
10/29/04
3.101%
2,000,000
2,000,000
2,019,136
2,000,000
2,000,000
2,012,339
FNCAL
3136F1JX9
4.100%
02/15/05
4.117%
3,000,000
2,999,811
3,009,375
0
0
0
FHLB
3133MMBD4
4.260%
03/28/05
4.293%
2,000,000
1,999,553
2,013,000
0
0
0
FNCAL
31359MMV2
4.400%
05/07/05
4.263%
1,000,000
1,002,036
1,024,385
1,000,000
1,001,447
1,019,063
FHCAL
3128XOGS2
2.625%
05/13/05
2.677%
2,000,000
1,998,163
2,008,000
2,000,000
1,999,406
2,003,264
Investment Pools:
Texpool
Liquid Funds
1.330%
04/O1/03
1.330%
27,498,725
27,498,725
27,498,725
57,431,053
57,431,053
57,431,053
Texpool
Reese
1.330%
04/O1/03
1.330%
335,432
335,432
335,432
227,610
227,610
227,610
TexSTAR
Pool
1.329%
04/01/03
1.329%
13,891,788
13,891,788
13,891,788
8,916,265
8,916,265
8,916,265
Wells Fargo
MM
1.750%
04/01/03
1.750%
0
0
0
2,001,812
2,001,812
2,001,812
LOGIC
Liquid Funds
1.253%
04/O1/03
1.253%
4,487
4,487
4,487
0
0
0
LOGIC
SAS
1.253%
04/O1/03
1.253%
53,416
53,416
53,416
0
0
0
Certificates of Deposit:
TOTALS
86,783.842
87.19=
93•576.7_B
2 .Z
29
M
tCITY OF LUBBOCK, TEXAS
=Transaction Report - for Ouarter Ending March 31, 2003
Operating Funds
- PURCHASES-
ID Settle
Sec
Purchase
Purchase
Purchase
Purch Total
Number Date CUSIP
Type
Par Coupon Maturity Price
Yield
Principal
Accr/Int Settlement
-'SALES:
Trade Settle
Sec
Sale
Sale
Sale
Total
Date Date CUSIP
Type
Par Coupon Maturitv Price
Principal
Accr/Int
Settlement
,KATURITIES AND COUPONS:
Payment
Security
Type of
Coupon
Total
Fund
Date
CUSIP
Type
Par
Coupon
Maturity
Payment
Amount
Payment
-'Operating
01/13/03
3133MCUE3
FHLB
2,000,000
5.215%
01/13/03
Maturity
51,250
2051,250
,Operating
01/23/03
3136F1EZ9
FNCAL
2,000,000
3.560%
01/23/04
Called
35,600
2,035,600
Operating
01/29/03
31359MNM1
FNCAL
2,000,000
3.100%
10/29/04
Coupon
31,000
31,000
`"Operating
01/31/03
9128277A4
T-NOTE
3,000,000
3.875%
07/31/03
Coupon
58,125
58,125
,Operating
02/07/03
313588BP9
FNDN
2,000,000
0.000%
02/07/03
Maturity
0
2,000,000
,-Operating
02/13/03
3136KR93
FNCAL
2,000,000
5.500%
02/13/04
Called
55,000
2,055,000
Operating
02/14/03
3136F1JX9
FNCAL
3,000,000
4.100%
02/15/05
Called
61,158
3,061,158
" Dperating
02/15/03
3133MGV37
FHLB
2,000,000
4.125%
08/15/03
Coupon
41,250
41,250
.Operating
02/20/03
31359MNV 1
FNCAL
2,000,000
2.700%
08/20/04
Coupon
27,000
27,000
Operating
03/15/03
3134A4DJO
FHLMC
5,000,000
4.750% -
03/15/03
Maturity
118,750
5,118,750
)perating
03/15/03
3134A4HG2
FHLMC
2,000,000
3.500%
09/15/03
Coupon
35,000
35,000
{ Operating
03/20/03
3136F1SC5
FNCAL
2,000,000
3.750%
09/20/04
Called
37,500
2,037,500
Operating
03/28/03
3133MMBD4
FNCAL
2,000,000
4.260%
03/28/05
Called
42,600
2,042,600
r"
,r
r
i_j
``
30
City of Lubbock, Texas
Quarterly Investment Report
January 1, 2003 — March 31, 2003
Portfolio Summary Management Report
City of Lubbock — Bond Funds
This quarterly report is in full compliance with the Investment Policy and strategy
established for the City of Lubbock and the Public Funds Investment Act (Chapter 2256,
Government Code). All due diligence required by the Policy has been completed in
preparation of this report
Prepared by:
Beginning Book Value
Beginning Market Value
WAM at Beginning Period Date
Ending Book Value
Ending Market Value
Accrued Interest Payable
Unrealized Gain/Loss at End of Period
WAM at Ending Period Date
Change in Market Value
$ 69,841,260
$ 69,859,720
10 Days
$ 54,224,934
$ 54,228,367
$ 78,000
$ 3,433
3 Days
$ (15,631,353)t
Quarterly Average Yield to Maturity for period 1.424%
Quarterly Average Benchmark Yield for period (3 mo. TB) 1.170%
Linda T. Patterson, President, Patterson & Associates
Additional input provided by Texpool, TexSTAR, LOGIC and the City of Lubbock.
L_
' Economic events can also influence market value changes, but contributed very little to the market value
change during the quarter. Bond funds paid down significantly in the quarter.
31
CITY OF LUBBOCK, TEXAS
"INVENTORY HOLDINGS REPORT -BOND FUNDS
For Quarter Ending March 31, 2003
j Sec Yield to
Type CUSIP Coupon Maturity Maturity
agencies:
FNDN 313588BP9 0.000% 02/07/03 2.454%
FHLB 3133MENT4 4.500% 04/25/03 2.515%
ommerical Paper:
'nvestment Pools:
Texpool Liquid Funds 1.330% 04/01/03 1.330%
;,TexSTAR Liquid Funds 1.329% 04/01/03 1.329%
Wells Fargo MM 1.750% 04/01/03 1.750%
LOGIC Liquid Funds 1.253% 04/01/03 1.253%
--TOTALS
Beginning Beginning Beginning Ending Ending Ending
Par Book Value Market Value Par Book Value Market Value
12/31/02 12/31/02 12/31/02 03/31/03 03/31/03 03/31/03
3,000,000 2,992,463 2,995,947 0 0 0
4,000,000 4,024,460 4,039,438 4,000,000 4,005,317 4,008,750
45,179,381
45,179,381
45,179,381
35,178,150
35,178,150
35,178,150
17,633,471
17,633,471
17,633,471
11,037, 844
11,037,844
11,037,844
0
0
0
4,003,623
4,003,623
4,003,623
11,484
11,484
11,484
0
0
0
32
fi
CITY OF LUBBOCK, TEXAS
Transaction Report - for Ouarter Endine
March 31, 2003
f—
Bond Funds
PURCHASES:
ID Settle Sec
Purchase
Purchase
Purchase
Purch Total
Number Date CUSIP Type
Par Coupon Maturity
Price
Yield
Principal
Accr/Int Settlement Broker
Safeke t
No Transactions
SALES:
Trade Settle Sec
Sale
Sale
Sale
Total
Date Date CUSIP Type
Par Coupon Maturity
Price
Principal
Accr/Int
Settlement
No Transactions
a
C
C
MATURTTIES AND COUPONS:
Payment Security
Type of
Coupon
Total
Fund Date CUSIP Type
Par Coupon Maturity
Payment
Amount
Payment
Bond 02/07/03 313588BP9 FNDN 3,000,000 0.000% 02/07/03
Maturity
0
3,000,000
C
C
C
C
L�
t_
i
33
CITY OF LUBBOCK
Investment Portfolio Report
For the Quarter Ended December 31, 2002
This quarterly report is in full compliance with the investment policy and strategy as
established for the operating and bond funds in the City's investment policy and exceeds the
reporting requirements mandated by the Public Funds Investment Act (Chapter 2256) as
amended.
This report is in compliance with generally accepted accounting principles.
�. MN
NEEL
i i.
Quincy White
Assistant City Manager of Administrative Services
Robert assengale
West Texas Municipal Power Agency
Finance Director
34
City of Lubbock, Texas
Quarterly Investment Report
October 1, 2002 — December 31, 2002
Portfolio Summary Management Report
City of Lubbock — Operating Funds
This quarterly report is in full compliance with the Investment Policy and strategy
established for the City of Lubbock and the Public Funds Investment Act (Chapter 2256,
Government Code). All due diligence required by the Policy has been completed in
preparation of this report.
Prepared by:
Beginning Book Value $ 88,854,978
Beginning Market Value $ 89,397,429
WAM at Beginning Period Date 388 days
Ending Book Value
$
86,824,181
Ending Market Value
$
87,191,991
Accrued Interest Receivable
$
493,084
Unrealized Gain/Loss at End of Period
$
367,810
WAM at Ending Period Date
206 days
Change in Market Value
$
(2,205,438)1
Quarterly Average Yield to Maturity for period 2.828%
Quarterly Average Benchmark Yield for period (6 mo. TB) 1.390%
Quarterly Average Benchmark1ijeld for period (1 yr. TB) 1.530%
Investment✓A09or, City of Vubbock, 'I]'exas
Linda T. Patterson, President, atters & Associates
Patterson & Associates has assisted in the preparation of this quarterly investment report with
additional input provided by Texpool, TexSTAR, LOGIC and the City of Lubbock.
I Economic events can also influence market value changes, but contributed very little to the market value
change during the quarter.
35
CITY OF LUBBOCK, TEXAS
INVENTORY HOLDINGS REPORT -OPERATING FUNDS
For Quarter
Ending December 31, 2002
Beginning
Beginning
Beginning
Ending
Ending
Ending
Sec
Yield to
Par
Book Value
Market Value
Par
Book Value
Market Value
Type
CUSIP
Coupon
Maturity
Maturity
9/30/02
9/30/02
9/30/02
12/31/02
12/31/02
12/31/02
Treasuries:
T-Note
9128277A4
3.875%
07/31/03
2.549%
3,000,000
3,032,399
3,060,234
3,000,000
3,022,594
3,045,703
A encies:
FHLMC
3134A3T48
6.250%
10/15/02
3.901%
1,500,000
1,501,394
1,502,769
0
0
0
FHLB
3133MCUE3
5.125%
O1/13/03
5.125%
2,000,000
2,002,949
2,019,212
2,000,000
2,000,365
2,002,562
FNDN
313588BP9
0.000%
02/07/03
2.454%
2,000,000
1,982,811
1,988,011
2,000,000
1,994,976
1,997,298
FHLMC
3134A4DJ0
4.750%
03/15/03
4.513%
5,000,000
5,005,055
5,070,814
5,000,000
5,002,254
5,034,953
FHLB
3133MENT4
4.500%
04/25/03
4.087%
2,000,000
2,004,451
2,032,554
2,000,000
2,002,473
2,019,719
FHLB
3133MEUD1
4.500%
05/15/03
2.620%
2,000,000
2,022,835
2,035,691
2,000,000
2,013,580
2,023,351
FHLB
3133MGV37
4.125%
08/15/03
4.176%
2,000,000
1,999,151
2,041,151
2,000,000
1,999,396
2,033,914
FHLMC
3134A4HG2
3.500%
09/15/03
2.984%
2,000,000
2,009,570
2,032,988
2,000,000
2,007,055
2,030,000
FHLB
3133MHTL8
3.450%
10/15/03
3.400%
5,315,000
5,315,000
5,319,983
0
0
0
FNMA
31359MEG4
4.750%
11/14/03
4.820%
2,000,000
1,998,516
2,067,109
2,000,000
1,998,849
2,057,588
FHLMC
3134A4JH8
3.250%
12/15/03
3.086%
2,000,000
2,003,781
2,036,875
2,000,000
2,002,993
2,035,294
FNMA
3136F1EZ9
3.560%
01/23/04
3.593%
2,000,000
1,999,178
2.011,250
2,000,000
1,999,336
2,003,125
FNCAL
31364KR93
5.500%
02/13/04
5.500%
2,000,000
2,000,000
2,027,633
2,000,000
2,000,000
2,010,000
FHCAL
3133MQPZ1
2.250%
02/27/04
2.250%
3,000,000
3,000,000
3,002,261
0
0
0
FNCAL
31359MNVI
2.700%
08/20/04
2.700%
2,000,000
2,000,000
2,016,772
2,000,000
2,000,000
2,015,740
FNMA
3136FiSC5
3.750%
09/20/04
3.967%
2,000,000
1,994,896
2,020,005
2,000,000
1,997,642
2,010,000
FHCAL
3128XOCCI
2.200%
10/15/04
2.216%
0
0
0
3,000,000
2,999,260
3,015,000
FNCAL
31359MNMI
3.100%
10/29/04
3.101%
2,000,000
2,000,000
2,022,435
2,000,000
2,000,000
2,019,136
FNCAL
3136F04Z2
3.400%
11/15/04
3.241%
3,000,000
3,005,100
3,006,022
0
0
0
FHLMC
312924F32
4.450%
12/28/04
4.450%
2,000,000
2,000,000
2,013,438
0
0
0
FNCAL
3136F1JX9
4.100%
02/15/05
4.117%
3,000,000
2,999,433
3,026,719
3,000,000
2,999,811
3,009,375
FHLB
3133MMBD4
4.260%
03/28/05
4.293%
2,000,000
1,999,080
2,026,000
2,000,000
1,999,553
2,013,000
FNCAL
31359MMV2
4.400%
05/07/05
4.263%
1,000,000
1,002,638
1,029,063
1,000,000
1,002,036
1,024,385
FHCAL
3128XOGS2
2.625%
05/13/05
2.677%
0
0
0
2,000,000
1,998,163
2,008,000
FNCAL
3136172HN1
3.375%
09/16/05
3.344%
4,300,000
4,303,349
4,315,049
0
0
0
Investment Pools:
Texpool
Liquid Funds
1.463%
O1/02/03
1.463%
22,196,439
22,196,439
22,196,439
27,498,725
27,498,725
27,498,725
Texpool
Reese
1.463%
O1/02/03
1.463%
556,331
556,331
556,331
335,432
335,432
335,432
TexSTAR
Pool
1.392%
O1/02/03
1.392%
0
0
0
13,891,788
13,891,788
13,891,788
LOGIC
Liquid Funds
1.383%
01/02/03
1.383%
6,867,416
6,867,416
6,867,416
4,487
4,487
4,487
LOGIC
SAS
1.383%
O1/02/03
1.383%
53,205
53,205
53,205
53,416
53,416
53,416
Certificates of Deposit:
TOTALS
88288,320
88.854•228
R6.824.181
87.191.991
36
CITY OF LUBBOCK, TEXAS
Transaction Report - for Ouarter Ending December 31 2002
Operating Funds
PURCHASES:
ID Settle Sec
Number Date CUSIP Type Par
Purchase Purchase Purchase
Price Yield Principal
Purch Total
Accr/Int Settlement
7691
11/13/02
3128XOGS2
FHCAL
2,000,000
2.625%
5/13/05
99.88
2.677%
1,997,500.00 0.00
1,997,500.00
C
SALES:
Trade
Settle
Sec
Sale
Sale
Sale Total
Date
Date
CUSIP
Type
Par
Coupon
Maturity
Price
Principal
Accr/Int Settlement
f--
C
G
MATURITIES AND COUPONS:
Payment
Security
Type of
Coupon
Total
Fund
Date
CUSIP
T e
Par
Coupon
Maturity
Payment
Amount
Payment
Operating
10/15/02
3133MHTL8
FHCAL
5,315,000
3.450%
10/15/03
Called
91,684
5,406,684
Operating
10/15/02
3134A3T48
FHLMC
1,500,000
6.250%
10/15/02
Maturity
46,875
1,546,875
Operating
10/25/02
3133MENT4
FHLB
2,000,000
4.500%
04/25/03
Coupon
45,000
45,000
Operating
11/07/02
31359MMV2
FNCAL
1,000,000
4.400%
05/07/05
Coupon
22,000
22,000
1
Operating
11/15/02
3133MEUD1
FHLB
2,000,000
4.500%
05/15/03
Coupon
45,000
45,000
Operating
11/15/02
31359MEG4
FNMA
2,000,000
4.750%
11/14/03
Coupon
47,500
47,500
Operating
11/15/02
3136FO4Z2
FNCAL
3,000,000
3.400%
11/15/04
Called
51,000
3,051,000
Operating
11/27/02
3133MQPZ1
FHCAL
3,000,000
2.250%
02/27/04
Called
16,875
3,016,875
Operating
12/15/02
3134AQH8
FHLMC
2,000,000
3.250%
12/15/03
Coupon
32,500
32,500
Operating
12/16/02
3136F2HN1
FNCAL
4,300,000
3.375%
09/16/05
Called
36,281
4,336,281
Operating
12/28/02
312924F32
FMCAL
2,000,000
4.450%
12/28/04
Called
44,500
2,044,500
i
r
r_
37,
City of Lubbock, Texas
Quarterly Investment Report
October 1, 2002 — December 31, 2002
Portfolio Summary Management Report
City of Lubbock — Bond Funds
This quarterly report is in full compliance with the Investment Policy and strategy
established for the City of Lubbock and the Public Funds Investment Act (Chapter 2256,
Government Code). All due diligence required by the Policy has been completed in
preparation of this report
Prepared by:
Beginning Book Value $ 69,587,659
Beginning Market Value $ 69,616,538
WAM at Beginning Period Date 18 Days
Ending Book Value $ 69,841,260
Ending Market Value $ 69,859,720
Accrued Interest Payable $ 33,000
Unrealized Gain/Loss at End of Period $ 18,460
WAM at Ending Period Date 10 Days
Change in Market Value $ 243 1821
Quarterly Average Yield to Maturity for period 1.701 %
Quarterly Average Benchmark Yield for period (3 mo. TB) 1.370%
Investment dv' or, Ci y of Lu ck, Texas
Linda T. Patterson, Presi ent, Patterson & Associates
Additional input provided by Texpool, TexSTAR, LOGIC and the City of Lubbock.
I Economic events can also influence market value changes, but contributed very little to the market value
change during the quarter.
t
CITY OF LUBBOCK, TEXAS
INVENTORY HOLDINGS REPORT -BOND FUNDS
For Quarter Ending December 31, 2002
Beginning Beginning Beginning Ending Ending Ending
Sec Yield to Par Book Value Market Value Par Book Value Market Valu
Type CUSIP Coupon Maturity Maturity 9/30/02 9/30/02 9/30/02 12/31/02 12/31/02 12/31/02
Agencies:
FNDN
313588BP9
0.000%
2/7/03
2.454%
3,000,000
2,974,217
2,982,017
3,000,000
2,992,463
2,995,94'
FHLB
3133MENT4
4.500%
4/25/03
2.515%
4,000,000
4,044,029
4,065,108
4,000,000
4,024,460
4,039,438-
Commerical Paper:
t�
Investment Pools:
Texpool
Liquid Funds
1.463%
1/2/03
1.463%
44,994,337
44,994,337
44,994,337
45,179,381
45,179,381
45,179,38 -
TexSTAR
Liquid Funds
1.392%
1/2/03
1.392%
0
0
0
17,633,471
17,633,471
17,633,471
LOGIC
Liquid Funds
1.383%
1/2/03
1.383%
17,575,077
17,575,077
17,575,077
11,484
11,484
11,48
l
TOTALS
62,562,414
87.659
69.616.53g
69.824.336
69.841.260
i.
39
CITY OF LUBBOCK, TEXAS
Transaction Report - for Quarter Ending December 31, 2002
Bond Funds
PURCHASES:
ID Settle Sec Purchase Purchase Purchase Purch
Number Date CUSIP Type Par Coupon Maturity Price Yield Principal Accr/Int
No Transactions
SALES:
Trade Settle Sec Sale Sale Sale Total
Date Date CUSIP Type Par Coupon Maturity Price Principal Accr/Int Settlement
No Transactions
MATURITIES AND COUPONS:
Payment
Security
Type of
Coupon
Total
Fund Date CUSIP
Type
Par Coupon Maturity Payment
Amount
Payment
Bond 10/25/02 3133MENT4
FBLB
4,000,000 4.500% 04/25/03 Coupon
90,000
90,000
40
Resolution No. 2003-R0065
February 13, 2003
Item No. 42
RESOLUTION
WHEREAS, on August 25, 1995, the City Council of the City of Lubbock adopted
Resolution #4933 which established an investment policy for the City of Lubbock; and
WHEREAS, on December 18, 1997, the City Council of the City of Lubbock adopted
Resolution #5728 which revised the City's investment policy so as to comply with changes to the
Public Funds Investment Act (Chapter 2256 of the Texas Government Code); and
WHEREAS, on May 28, 1998, the City Council of the City of Lubbock adopted
Resolution #5867 which revised the City's investment policy so as to amend current practices
and strategies and clarify current provisions, which revisions comply with the Public Funds
Investment Act (Chapter 2256 of the Texas Government Code); and
WHEREAS, on November 4, 1999, the City Council of the City of Lubbock adopted
Resolution #6600 which revised the City's investment policy so as to make minor
"housekeeping" changes and bring the current investment policy into compliance with House Bill
3009; and
WHEREAS, on November 27, 2000, the City Council of the City of Lubbock adopted
Resolution #2000-R0418, which revised the City's investment policy so as to amend current
practices and strategies and clarify current provisions, which revisions comply with the Public
Funds Investment Act (chapter 2256 of the Texas Government Code); and
WHEREAS, on November 8, 2001, the City Council of the City of Lubbock adopted
Resolution #2001-R0471, which revised the City's investment policy so as to amend current
practices and strategies and clarify current provisions, which revisions comply with the Public
Funds Investment Act (Ch. 2256 of the Texas Government Code); and
WHEREAS, the City Council has reviewed and approved the City of Lubbock Texas
Investment Policy and Investment Strategy and desires to make certain changes thereto so as to
amend current practices and strategies and clarify current provisions, which revisions comply
with the Public Funds Investment Act (Chapter 2256 of the Texas Government Code); NOW
THEREFORE,
IT IS HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the City of Lubbock investment policy and investment strategy, as reviewed and
amended in the attached document entitled "City of Lubbock, Texas, Investment Policy and
Investment Strategy" which is hereby incorporated in this Resolution as if fully set forth, BE
approved and adopted for the City of Lubbock, Texas, and shall be included in the minutes of the
Council.
41
Passed by the City Council this 13th day of February 20
/MARC WDOUGAL, MAYOR
ATTEST:
C Q- - V-G� _ra
�, \- - -
Rebecca Garza, City Secretary
AS TO
Assistant City Attorney
JMK:mt CityatVJohn/InveshnentFolicy-4.Res & ccdocs
February 3, 2003
42
City of Lubbock, Texas, Investment Policy
is
CITY OF LUBBOCK, TEXAS
Investment Policy and Investment Strategy
POLICY
The Managing Director of Finance, or Designee, of the City of Lubbock, Texas, is charged with the responsibility to
prudently and properly manage any and all funds of the City. Time and demand deposits must be fully collateralized
and all transactions appropriately authorized. The following investment policy addresses the procedures, controls,
and practices, which must be exercised to ensure sound fiscal management. The statutory foundation for this Policy
is the Public Funds Investment Act (the "Act", Texas Government Code 2256) and the Public Funds Collateral Act,
(Texas Government Code 2257.)
SCOPE
This policy shall apply to the investment of all financial assets and all funds of the City of Lubbock (hereinafter
referred to as the "City") over which it exercises financial control. In order to effectively make use of the City's cash
resources, all moneys, with the exception of certain bond proceeds which must be segregated and accounted for
separately ("Bond Funds"), shall be pooled into one investment account ("Operating Funds"). The investment
income derived from this account shall be distributed to the various City funds in accordance with the existing City
Policy.
These funds are accounted for in the City of Lubbock Comprehensive Annual Financial Report (CAFR) and include:
General Fund
Special Revenue Funds
Debt Service Funds
Capital Projects Funds
Enterprise Funds
Internal Service Fund
Trust & Agency Funds
The Bond Funds Portfolio includes bond proceeds recorded in Capital Project Funds and Enterprise Funds, while the
Operating Portfolio includes all other resources in Capital Project Funds and Enterprise Funds as well as all other
funds listed.
OBJECTIVES
The City's principal investment objectives are listed in order of priority:
A. SAFETY: Preservation of capital and the protection of investment principal. 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.
r B. LIQUIDITY: Maintenance of sufficient liquidity to meet anticipated disbursements and cash flows.
C. YIELD: Attainment of a market rate of return equal to or higher than the performance measure established by
the Managing Director of Finance, or Designee.
D. COMPLIANCE with all Federal, State, and other legal requirements (includes but is not limited to Chapter
2256 "Public Funds Investment Act, as amended and Chapter 2257 "Public Funds Collateral Act, as amended, of
r Vernon's Texas Civil Statutes)
43
City of Lubbock, Texas, Investment Policy
RESPONSIBILITY AND CONTROL
Delegation of Authority
The ultimate responsibility and authority for investment transactions involving the City resides with the Managing
Director of Finance, or Designee. The Managing Director of Finance, or Designee, has delegated the investment
function to the Cash & Debt Manager and both are designated as Investment Officers. (2256.005(f)) The Cash &
Debt Manager is charged with executing the day-to-day investment functions for the City following the guidance and
recommendations of the City's Investment Review Committee.
Investment Review Committee
The City will establish an Investment Review Committee to assist in monitoring the performance and structure of the
City's investments. The Investment Review Committee shall be composed of the Managing Director of Finance, or
Designee, the Cash & Debt Manager, and three other persons specifically designated by the City Manager. The
Investment Review Committee shall be responsible for the investment strategy decisions, activities, and the
establishment of written procedures for the investment operations consistent with this policy. Monitoring of the
portfolio shall be performed by the Investment Review Committee no less than quarterly and verified by the City's
independent auditor at least annually. The City Council will receive the quarterly reports from the Committee. The
Investment Review Committee shall discuss investment reports, investment strategies, and investment and banking
procedures.
Investment Advisers
The Managing Director of Finance, or Designee, may in his/her discretion, with Council approval, appoint one or
more investment advisers, registered with the Securities and Exchange Commission under the Investment Advisers
Act of 1940 (15 U.S.C. Section 80b-1 et seq.), to assist in the management of a portion of the City's assets. To be
eligible for consideration, an investment adviser shall demonstrate to the Investment Review Committee knowledge
of cash management as well as familiarity and experience in managing public funds. Selection of any investment
adviser shall be based upon their expertise in public cash management. An appointed investment adviser may be
granted limited investment discretion within the guidelines of this Investment Policy with regard to the City's assets
placed under its management. A contract made under authority of the Act may not be for a term longer than two
years on the original contract term. A renewal or extension of the contract must be made by the City Council by
order, ordinance or resolution. (2256.003)
Prudence
The standard of prudence to be used for managing the City's assets is the "prudent person" rule (2256.006), which
states, "Investments shall be made with judgment and care --under circumstances then prevailing --which persons of
prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for
investment, considering the probable safety of their capital as well as the probable income to be derived."
Investment officers acting in accordance with written procedures and exercising due diligence, shall not be held
personally liable for a specific security's credit risk or market price changes, provided deviations from expectations
are reported in a timely fashion and appropriate action is taken to control adverse developments. The City will
perform a compliance audit of management controls on investments and adherence to investment policies annually.
In accordance with the Act (2256.008), the Investment Officers shall attend 10 hours of investment training within
'12 months of assuming duties and 10 hours within every succeeding two years . The investment training session
shall be provided by an independent source approved by the Investment Review Committee. Training must include
44
City of Lubbock, Texas, Investment Policy
education in investment controls, security risks, strategy risks, market risks, diversification of investment portfolio,
and compliance with theAct.
INVESTMENT PORTFOLIO
Authorized Investments
The following are authorized investments for the City and all are authorized and further defined by the Act:
• Obligations of the United States or its agencies and instrumentalities, which have a liquid market with a readily
determinable market value. (2256.009(1))
• Direct obligations of this state or its agencies and instrumentalities (2256.009(2))
• Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by
the full faith and credit of, this state or the United States or their respective agencies and instrumentalities
(2256.009(4))
• Obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to
investment quality by a nationally recognized investment rating fain not less than A or its equivalent
(2256.009(5))
• Fully collateralized certificates of deposit issued by a state or national bank doing business in Texas and
guaranteed, or insured by the Federal Deposit Insurance Corporation or its successor, secured by obligations
authorized by this subchapter, or secured in any other manner and amount provided by law for deposits of the
investing entity (2256.0010)
• Fully collateralized repurchase agreements with a defined termination date; and secured by obligations
authorized bythe Act (Section 2256.009(a)(1)); such collateral pledged to the City, held in the City's name, and
deposited at the time the investment is made with the City or with an independent third party selected and
approved by the City. Repurchase agreements must be purchased through a primary government securities
dealer, as defined by the Federal Reserve, or a bank doing business in this state. The term of any reverse
repurchase agreements may not exceed 90 days after the date the reverse security repurchase agreement is
delivered. Money received by the City under the terms of a reverse security repurchase agreement shall be used
to acquire additional authorized investments, but the term of the authorized investments acquired must mature
not later than the expiration date stated in the reverse security repurchase agreement.(2256.011)
• Bankers' acceptances with a stated maturity of 270 days or fewer from the date of its issuance; and liquidated in
full at maturity; and eligible for collateral for borrowing from a Federal Reserve Bank; and accepted by a bank
organized and existing under the laws of the United States or any state, if the short-term obligations of the bank,
or of a bank holding company of which the bank is the largest subsidiary, are rated not less than A-1 or P-1 or an
equivalent rating by at least one nationally recognized credit rating agency (2256.012)
• Commercial paper with a stated maturity of 270 days or fewer from the date of its issuance, and rated not less
than A-1 or P-1 or an equivalent rating by at least two nationally recognized credit rating agencies (2256.013)
• No-load money market mutual funds regulated by the Securities and Exchange Commission, and with a dollar -
weighted average stated maturity of 90 days or fewer, and whose investment objectives include the maintenance
of a stable net asset value of $1 for each share (2256.014(a))
• AAA -rated, constant dollar, investment pools authorized by the CityCouncil and as further defined by the Act,
which invests in eligible securities as authorized by this subchapter (2256.016)
45
City of Lubbock, Texas, Investment Policy
The following investments are prohibited by the Act (2256.009(b)):
• Obligations whose payment represents the coupon payments on the outstanding principal balance of the
underlying mortgage -backed security collateral and pays no principal, i.e. interest -only collateralized mortgage
obligations (IO's).
• Obligations whose payment represents the principal stream of cash flow from the underlying mortgage -backed
security collateral and bears no interest, i.e. principal -only collateralized mortgage obligations (PO's).
• Collateralized mortgage obligations that have a stated final maturity date of greater than 10 years.
• Collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to
the changes in a market index, i.e. CMO inverse floaters.
• Investment in the aggregate of more than 80 percent of the entity's monthly average fund balance, excluding
bond proceeds and reserves and other funds held for debt service, in money market mutual funds or mutual
funds; investment in the aggregate of more than 15 percent of its monthly average fund balance, excluding bond
proceeds and reserves and other funds held for debt service, in mutual funds; investment of any portion of bond
proceeds, reserves, and funds held for debt service, in mutual funds; and investment of its funds or funds under
its control, including bond proceeds and reserves and other funds held for debt service, in any one mutual fund
in an amount that exceeds 10 percent of the total assets of the mutual fund (2256.014)
Investment Diversification
It is the intent of the City to diversify the investment instruments within the portfolio to avoid incurring unreasonable
risks inherent in over -investing in specific instruments, individual financial institutions or maturities. The asset
allocation in the portfolio should, however, be flexible depending upon the outlook for the economy and the
securities markets. When conditions warrant, the guidelines below may be exceeded by approval of the Investment
Review Committee.
The City may invest to the following limits as a percentage of its total portfolio:
100% in United States Treasury Obligations
50% in Certificates of Deposit
80% in Federal Instrumentalities or Agencies
30% in Repurchase Agreements collateralized by Federal Instrumentalities, or
100% in Repurchase Agreements collateralized by United States Treasury Obligations
25% in Commercial Paper (no more than 10% in any one issuer)
20% in Banker's Acceptances
Investment Pools
In accordance with the Act (2256.016) investment pools must be continuously rated no lower than AAA, with a
weighted average maturity of less than 60 days. The pool must have an advisory board. A thorough investigation of
the pool is required prior to investing, and on a continual basis, as due diligence, and shall include but is not limited
to, the following topics:
• A description of eligible investment securities, and a written statement of investment policy and objectives.
• A description of interest calculations, method of distribution, and treatment of gains and losses.
• A description of the method used to safeguard securities (including the settlement processes), and the frequency
and method by which securities are priced.
• The frequency of audit of the program.
• A description of eligible participants along with allowable frequency and size of deposits and withdrawals.
• A schedule for receiving statements and portfolio listings.
• The policy under which reserves, retained earnings, etc. may be utilized by the pool.
• A fee schedule, and when and how it is assessed.
46
City of Lubbock, Texas, Investment Policy
• Information related to the fund's eligibility for accepting bond proceeds.
Investments in a qualifying Investment Pool (in accordance with City Resolution dated May 28, 1992) should be
limited to no more than 5% of the total assets in the pool.
Investment Strateev
The City of Lubbock maintains portfolios which utilize four specific investment strategy considerations, designed to
address the unique characteristics of the fund groups represented in the investment portfolios. The policies detailed
below are subject to an annual review to occur prior to the annual City Council action regarding the Investment
Policy. (2256.005(d))
(1) Operating Funds and Commingled Pools Containing Operating Funds
The investment strategy for the portfolio containing operating funds, the Operating Portfolio, has as its primary
objective to assure that anticipated cash flows are matched with adequate investment liquidity. Investment maturities
shall be matched against liabilities including debt service requirements.
The secondary objective of the Operating Portfolio is to create a portfolio structure which will experience minimal
volatility during economic cycles. This will be accomplished by purchasing high quality, short- to medium -term
securities which will complement each other in a laddered maturity structure.
The City shall maintain a dollar -weighted average maturity of two (2) years or less based on the stated final maturity
dates of each security in its Operating Portfolio. The City shall at all times maintain at least 10% of its operating
investment portfolio in instruments maturing in 120 days or less.
(2) Debt Service Funds
The investment strategy for debt service funds shall have as the primary objective the assurance of investment
liquidity adequate to cover each succeeding debt service obligation on the required payment date. Securities
purchased shall not have a stated final maturity date which exceeds any unfunded debt service payment date. The
maximum weighted average maturity shall not exceed one (1) year.
(3) Debt Service Reserve Funds
The investment strategys for debt service reserve funds shall have as the primary objective the ability to generate a
dependable revenue stream to the appropriate debt service fund from securities with a low degree of volatility.
Except as may be required by the bond ordinance specific to an individual issue, securities should be of high quality
with short- to intermediate -term maturities. The maximum weighted average maturity shall not exceed one (1) year.
Volatility shall be further controlled through the purchase of securities carrying the highest coupon available within
the desired maturity and quality range using a laddered maturity structure. Such securities will tend to hold their
value during economic cycles.
(4) Bond Funds
The investment strategy for bond funds will have as their primary objective to assure that anticipated cash flows are
matched with adequate investment liquidity. These portfolios should include at least 10% in highly liquid securities
to allow for flexibility and unanticipated project outlays. The stated final maturity dates of securities held shall not
exceed the estimated project completion date. The maximum weighted average maturity shall not exceed two (2)
years.
47
City of Lubbock, Texas, Investment Policy
A cash flow analysis shall be reviewed and updated no less than semi-annually, in connection with revised budget
and proposed budget reviews. This cash flow analysis is the basis for matching liabilities or obligations with security
maturities as outlined in the strategies previously listed.
Maximum Maturity
The maximum maturity of any individual security the City may invest in shall be 5 years.
Derivatives
A derivative is any security whose cash flow characteristics (coupon, redemption amount, or stated and estimated
maturity) depend upon one or more indices or that have embedded futures or options. They can be linked to
different market sectors or interest rate scenarios including: 1) increasing or decreasing interest rates, 2) U.S.
Treasury yield curve, 3) foreign yield curves, 4) relationship between two different yield curves, 5) foreign exchange
rates 6) equity price movements, and 7) commodity price movements.
The City shall define a derivative for purposes of investment as any mortgaged backed security to eliminate possible
extension, volatility and reinvestment risk. The City will not invest in any mortgage -backed securities (MBS)
whether a straight pass -through mortgage backed or further derived mortgage backed security (CMO).
The City shall not define United States Agency and Instrumentality debentures as derivatives. Debentures have a
defined maturity date which can not extend regardless of their structure. These will be restricted to a maximum
maturity of three (3) years. Floating rate debentures may only float on the U.S. Treasury rates and not exceed one
(1) year in maturity.
The Investment Officers will monitor the development of new financial instruments and may present to the
Investment Review Committee amendments to the above definition.
Other Investment Guidelines and Controls
All investment transactions must be executed with broker/dealers and financial institutions that have been authorized
by the City and each transaction must be competitively transacted with at least three authorized broker/dealers or
financial institutions. In addition, before any repurchase agreements shall be executed with an authorized
broker/dealer or financial institution, a Master Repurchase Agreement must be signed between the City and that
broker/dealer or financial institution. The Investment Officer shall maintain a file of all executed Master Repurchase
Agreements.
The City seeks an active, rather than passive, management of its portfolio assets. Assets may be sold at a loss only if
the Investment Officers feel that the sale of the security is in the best long-term interest of the City. Supporting
documentation shall be maintained by the Investment Officer for all sales of securities in which there is a book loss
or where a security is sold in order to simultaneously purchase another security.
AUTHORIZED FINANCIAL BROKER/DEALERS AND INSTITUTIONS
As defined by the Act (2256.005(k)) the City shall maintain a list of authorized broker/dealers and financial
institutions, which are approved by the Investment Review Committee for investment purposes. It shall be the policy
of the City to purchase securities only from those authorized institutions and firms. The Committee will review and
approve the list at least annually.
48
City of Lubbock, Texas, Investment Policy
�y
To be eligible for authorization, each broker/dealer or financial institution shall:
1. complete and submit to the City a Broker/Dealer Questionnaire, which includes the firm's most recent financial
' statements.
2. provide a written instrument certifying that they have received and thoroughly reviewed the City's investment
policy and have implemented reasonable procedures and controls and understand the parameters set by the City
of Lubbock.
3. be a member of the FDIC (Financial Institutions only)
4. be a "primary" dealer or regional dealer that qualifies under Securities & Exchange Commission Rule 150-1
(uniform net capital rule). All broker/dealers must submit: (a) audited financial reports (b) proof of National
Association of Security Dealers certification, and (c) proof of state registration (Broker/Dealers only).
5. Provide competitive offers, resulting in the sale of a security, to the City. If there are no sales from a particular
broker/dealer over a 12-month period, this broker/dealer will be removed from the approved broker/dealer
l' listing (Broker/Dealers only).
- The Investment Officer, shall maintain a file of all Broker/Dealer Questionnaires. Broker/dealers and other financial
institutions will be selected on the basis of their expertise in cash management and their ability to provide service to
the City's account.
The Investment Officers shall exercise due diligence in monitoring the activities of other officers and subordinate
staff members engaged in transactions with the City. Employees of any firm or financial institution offering
securities or investments to the City of Lubbock shall be trained in the precautions appropriate to public -sector
investments and shall be required to familiarize themselves with the City's investment objectives, policies and
constraints. In the advent of a material adverse change in the financial condition of the firm or financial institution,
g- the City will be informed immediately by telephone and in writing.
Selection of Financial Institutions
Depositories shall be selected through the city's banking services procurement process, which shall include a formal
request for application. In selecting depositories, the services available, service costs, and credit -worthiness of
institutions shall be considered, and the Investment Officers, shall conduct a comprehensive review of prospective
depositories' credit characteristics and financial history.
The City shall select financial institutions from which the City may purchase certificates of deposit in accordance
with the Act and this Policy. The City of Lubbock will have a written depository agreement with any financial
institution with whom the City of Lubbock has time or demand deposits. The Investment Officer shall monitor the
financial condition of financial institutions where certificates of deposit are held and report quarterly to the
Investment Review Committee.
Collateralization/Safekeeping
Collateralization requirements are governed by Texas Government Code Chapter 2257 Public Funds Collateral Act.
Collateralization will be required on three types of investments: time deposits, demand deposits, and repurchase
agreements. In order to anticipate market changes and provide a level of security for all funds, the required
minimum collateral level will be 102% of market value of principal and accrued interest monitored and maintained
by the financial institution. The City of Lubbock chooses to limit collateral to the following:
Underlying collateral shall be composed of those investments approved in this policy and mortgage -backed securities
as defined in Texas Government Code Chapter 2257.002 . The maturity of the collateral security shall be no longer
than 5 years for time or demand deposits or 10 years for repurchase agreements. Market value of the collateral shall
be priced at least daily for repurchase agreements and monthly for time and demand deposits (including mortgage -
backed securities).
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City of Lubbock, Texas, Investment Policy
Collateral shall always be held by an independent third party with whom the City of Lubbock has a current custodial
agreement. A safekeeping receipt must be supplied to the City of Lubbock for any transaction involving
sales/purchases/maturities of securities and/or underlying collateral, which the City of Lubbock will retain. The right
of collateral substitution is granted provided the substitution has prior approval of the City and is followed by the
delivery of an original safekeeping receipt to the City of Lubbock.
Delivery versus Payment
All security transactions, including collateral for repurchase agreements, entered into by the City of Lubbock shall be
conducted on a delivery -versus -payment (DVP) basis, and held in third party safekeeping by a Federal Reserve
member financial institution designated as a City depository. The trust department of the institution designated as
depository will be considered to be a third party for the purposes of safekeeping securities.
Securities purchased by the City that are wireable via the Federal Reserve System shall be held by the City's
depository bank in their Customer Account (02). Collateral pledged to the City securing Certificates of Deposit shall
be held in joint custody at the Federal Reserve Bank (07). It is the intent of the City that all securities be perfected in
the name of the City.
Reporting
Investment reports shall be prepared on a quarterly and annual basis and be signed and submitted by the Investment
Officers, in a timely manner. A written record shall be maintained of all bids and offerings for securities transactions
in order to insure that the City receives competitive pricing.
The Investment Review Committee will meet no less than quarterly to review the investment activity. The quarterly
reports should include listings of all the investments held by the City, the current market valuation of the
investments, transactions summaries, and performance results and in full compliance with the Act..
Within a reasonable time after the end of each quarter, the Investment Officers shall prepare and submit to the City
Manager, and City Council a written report of the quarter's investment activity. This report must be signed by each
official member of the Investment Review Committee. This report shall describe in detail the investment position of
the City, disclose the market value and book value of each fund group as well as each separate investment, and state
the maturity date of each security and accrued interest for the reporting period. It must also express the compliance
of the portfolio to the investment strategy contained in the City's Investment Policy, the Act, and Generally Accepted
Accounting Principles (GAAP). Market pricing information is obtained through the use of appropriate software
available either externally such as through investment advisers, or internally. An independent auditor will review
quarterly investment reports on an annual basis, as required by the Act.
CHANGES IN STATUTES, ORDINANCES OR PROCEDURE
This policy is designed to operate within the restrictions set forth in applicable State of Texas and Federal laws and
statutes, but it does not permit all activity allowed by those laws. Changes to state or federal laws which restrict a
permitted activity under this policy shall be incorporated into this policy immediately upon becoming law. Changes
to state or federal laws which do not further restrict this policy shall be reviewed by the Investment Review
Committee and recommended to the City Council when appropriate.
PERFORMANCE REVIEW
The Investment Review Committee shall meet no less than quarterly to review the portfolio's adherence to
appropriate risk levels and to compare the portfolio's total return to the established investment objectives and goals.
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City of Lubbock, Texas, Investment Policy
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v
The Investment Officers, shall periodically establish a benchmark yield for the City's investments which shall be
equal to the average yield on the United States Treasury security which most closely corresponds to the portfolio's
actual weighted average maturity. When comparing the performance of the City's portfolio, all fees and expenses
involved with managing the portfolio should be included in the computation of the portfolio's rate of return.
ETHICS AND CONFLICTS OF INTEREST
Investment Officers, officers and employees 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 officials shall disclose to the City Manager, any
material financial interests in financial institutions that conduct business within this City, and they shall further
disclose any large personal financial/investment positions that could be related to the performance of this City's
portfolio. Employees and officers shall subordinate their personal investment transactions to those of the City
particularly with regard to the timing of purchases and sales.
INTERNAL CONTROLS
The Investment Officers, shall establish a system of internal controls, which shall be documented in writing. The
internal controls shall be reviewed by the Investment Review Committee and with the independent auditor on an
annual basis. The controls shall be designed to prevent losses of public funds arising from fraud, employee error,
misrepresentation by third parties, unanticipated market changes, or imprudent actions by employees and officers of
the City.
POLICY REVISIONS
The City Council shall adopt a written instrument by rule, order, ordinance, or resolution stating that it has reviewed
the investment policy and investment strategies and that the written instrument so adopted shall record any changes
made to either the investment policy or investment strategies (2256.005(e)). The Investment Policy and Investment
Strategies will be reviewed annually by the Investment Review Committee. The Investment Review Committee shall
forward modifications to the Policy or a resolution stating there are no changes to the City Council annually for City
Council action.
AUTHORITY/DATE ISSUED:
City Council Resolution # 5728/December 18, 1997
5 City Council Resolution # 5867/May 28, 1998
City Council Resolution #6600/November 4, 1999
City Council Resolution #2000-R0418/November 27, 2000
�- City Council Resolution #200 1 -R047 I/November 8, 2001
City Council Resolution #2003-R0065/February 13, 2003
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City of Lubbock, Texas, Glossary to Investment Policy
GLOSSARY
AGENCIES: Federal agency securities and/or
Government -sponsored enterprises.
ASKED: The price at which securities are offered.
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.
BROKER: A broker brings buyers and sellers
together for a commission.
CERTIFICATE OF DEPOSIT (CD): A time deposit
with a specific maturity evidenced by a certificate.
Large -denomination CD's 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.
COMPREHENSIVE ANNUAL FINANCIAL
REPORT (CAFR): The official annual report for
the City of Lubbock, Texas. It includes combined
financial statements for all fund types and account
groups as well as combining financial statements, as
applicable, and footnotes prepared in conformity
with GAAP. It also includes supporting schedules
necessary to demonstrate compliance with finance -
related legal and contractual provisions, extensive
introductory material, and a detailed Statistical and
Supplemental Information Section.
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.
DERIVATIVES: (1) Financial instruments whose
return profile is linked to, or derived from the
movement of one or more underlying index or
security, and may include a leveraging factor, or (2)
financial contracts based upon notional amounts
whose value is derived from an underlying index or
security (interest rates, foreign exchange rates,
equities or commodities).
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 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 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 Fed funds are traded. This rate is currently
pegged by the Federal Reserve through open market
operations.
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 that are members of the
system.
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
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City of Lubbock, Texas, Glossary to Investment Policy
Z.C)u 5 - r--u 9 1 1 LJ
subdivisions that are placed in the custody of the
State Treasurer for investment and reinvestment.
MARKET VALUE: The price at which a security is
trading and could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT: A
written contract covering all future transactions
between the parties to repurchase —reverse
repurchase agreements that establishes each parry'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 even of default by the seller -borrower.
MATURITY: The date upon which the principal or
stated value of an investment becomes due and
payable.
MONEY MARKET: The market in which short-term
debt instruments (bills, commercial paper, bankers'
acceptances, etc.) are issued and traded.
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 monthly financial
statements to the Federal Reserve Bank of New
York and are subject 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 which would be
bought by a prudent person of discretion and
intelligence who is seeking a reasonable income and
preservation of capital.
QUALIFIED PUBLIC DEPOSITORIES: A
financial institution which does not claim exemption
from the payment of any sales or compensating use
or ad valorem taxes under the laws of this state,
which has segregated for the benefit of the
commission eligible collateral having a value of not
less than its maximum liability and which has been
approved by the Public Deposit Protection
Commission to hold public deposits.
RATE OF RETURN: The yield obtainable on a
security based on its purchase price or its current
market price. This may be the amortized yield to
maturity on a bond the current income return.
REPURCHASE AGREEMENT (RP OR REPO): A
holder of securities sells these securities to an
investor with an agreement to repurchase them at a
fixed price on 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 finance their positions.
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.
SECURITIES & EXCHANGE COMMISSION:
Agency created by Congress to protect investors in
securities transactions by administering securities
legislation.
SEC RULE 15C3-1: See Uniform Net Capital Rule.
TREASURY BILLS: A non -interest bearing discount
security issued by the U.S. Treasury to finance the
national debt. Most bills are issued to mature in
three months, six months, or one year.
TREASURY BONDS: Long-term coupon -bearing
U.S. Treasury securities issued as direct obligations
of the U.S. Government and having initial maturities
of more than 10 years.
TREASURY NOTES: Medium -term coupon -bearing
U.S. Treasury securities issued as direct obligations
of the U.S. Government and having initial maturities
from two to 10 years.
UNIFORM NET CAPITAL RULE: Securities and
Exchange Commission requirement that member
firms as well as nonmember broker -dealers in
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City of Lubbock, Texas, Glossary to Investment Policy
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
the purchase price, with the adjustment spread over
the period from the date of purchase to the date of
maturity of the bond.
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