TRANSMITTAL LETTER FOR BOARD MEETING OF MAY 15, 2012
COMMITTEE ON FINANCE
Mr. David St. Pierre, Executive Director
Title
Report on the investment interest income during April 2012
Body
Dear Sir:
Attached is a report of cash investment interest income received by the District for the month of April 2012 and a comparison of income for the same period in 2011.
The District's inventory of investments at April 30, 2012, consisted of 239 items having a total par value of $ 1,043,688,179.25, an average annual yield of 1.256%, and total interest income to maturity of approximately $40.7 million. Inventory figures at the same date in 2011 were 166 items having a total par value of $760,294,919.85, an average annual yield of 1.254%, and total interest income to maturity of approximately $23.8 million .
Interest Forecast for 2012:
Expect short-term rates (0-5 years) to remain anchored by an artificially low Federal Funds rate for an extended period of time. On January 25, 2012, the Federal Open Market Committee updated their statement that current economic conditions are likely to continue to warrant exceptionally low interest rates at least through late-2014. The District will experience its fourth consecutive year of very low interest income on short-term investments.
The District has invested its longer-term holdings in callable government agency securities and municipal bonds, which will provide a significant portion of the interest income earned in 2012. These investments pay interest twice per year; therefore, the months of January and July will provide a majority of the interest income for the year. Income earned in other months will be minimal and would relate to short-term investments maturing throughout the year to meet the operating and capital needs of the District.
Respectfully Submitted, Mary Ann Boyle, Treasurer, MAB:st
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