ordinary meeting of council to be held on tuesday, 18 july 2006

Ordinary Meeting <strong>of</strong> Council - 18 July 2006 5 / 3
Item 5
S03537
6 July 2006
Investment Time Frame
The current Policy specifies investment time frames that vary for individual types <strong>of</strong>
investment. These time frames generally accord with the period over which the individual
investment type can <strong>be</strong> expected <strong>to</strong> deliver its maximum return.
Investment time frame should also consider prudent cash flow management over the short
and long term. Council funds should <strong>be</strong> categorised as available for short, medium or long
term investment and matched <strong>to</strong> types <strong>of</strong> investment which have the same time frames. This
can <strong>be</strong> assessed by reference <strong>to</strong> the Management Plan which sets out Council’s planned
income and expenditure.
o Short Term – funds which are required within the current financial year. This
requires detailed periodical cash flow forecasts <strong>to</strong> determine the maximum available
funds that can <strong>be</strong> invested in highly liquid investment products, such as bank
deposits and managed funds.
o Medium term – net funds planned <strong>to</strong> <strong>be</strong> withdrawn from investments within years 2
<strong>to</strong> 4 <strong>of</strong> the current Management Plan.
o Long Term – the remainder <strong>of</strong> the Investment Portfolio.
The proposed investment policy highlights investment time frame in the new section 1.6(E).
This incorporates timing references formerly in sections 1.6(A) and 1.6(B) <strong>of</strong> the current
policy.
Investment Performance Reporting
Investment in a wider range <strong>of</strong> products with different time horizons necessitates an
enhancement <strong>to</strong> current reporting. The revision <strong>to</strong> the Investment Policy (section 1.6(F))
requires that reports <strong>be</strong> based on the following principles and specifies items <strong>to</strong> <strong>be</strong> included:
‣ Performance is reported <strong>to</strong> Council each month
‣ Performance figures for each investment are calculated on the same basis. The
performance figure is:
o an annualised percentage return on the funds invested
o return is measured over a financial year <strong>to</strong> date period
o includes both returns on current investments and “expired” investments <strong>held</strong>
within the financial year
o net <strong>of</strong> any fees, and
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