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

March 2006
Ku-ring-gai Council
Investment Policy
(D) Performance Benchmarks
Investment
Cash
Cash Enhanced Funds/Direct
Investments
Fixed Interest Funds
Performance Benchmark
11am Cash Rate
UBSWA Bank Bill Index
UBSWA Composite Bond Index
(E)
Investment Time Frame
Council’s available investment funds must <strong>be</strong> categorised according <strong>to</strong> their intended period <strong>of</strong>
planned expenditure as designated in budget estimates contained within the currently approved
Management Plan. Such categories are:
• Short term – funds required within the current financial year. This is net funds (in excess
<strong>of</strong> current income) planned <strong>to</strong> <strong>be</strong> drawn from the portfolio <strong>of</strong> investments.
• Medium term – net funds planned <strong>to</strong> <strong>be</strong> withdrawn from investments within the 4 year
period <strong>of</strong> the current Management Plan.
• Long term – the remainder <strong>of</strong> the investment portfolio.
Funds allocated <strong>to</strong> each category must <strong>be</strong> reviewed upon approval <strong>of</strong> a new Management Plan.
When allocating funds <strong>to</strong> purchase investments, the maturity dates <strong>of</strong> the investments must <strong>be</strong>
aligned with the <strong>to</strong>tal funds in an investment category, eg if Council has determined that only
$5 million <strong>of</strong> its investment funds are long term, then only $5 million <strong>of</strong> securities with maturity
dates greater than 4 years (from the date <strong>of</strong> purchase) can <strong>be</strong> purchased. As time progresses,
investments will change from one category <strong>to</strong> another as their maturity dates <strong>be</strong>come closer.
(F)
Reporting
As required by legislation, a report must <strong>be</strong> presented <strong>to</strong> Council each month. The report must
detail, at minimum, the following matters concerning all investments:
‣ Performance figures for each investment calculated on the same basis. This is:
• an annualised percentage return on the funds invested,
• measured over a financial year <strong>to</strong> date period,
• includes both returns on current investments and “expired” investments <strong>held</strong>
within the financial year,
• net <strong>of</strong> any fees,
• incorporates both coupon interest payments and capital gains or losses from
marking short term investments <strong>to</strong> market. Medium and long term investments
and/or investments with capital guarantees at maturity, expected <strong>to</strong> <strong>be</strong> <strong>held</strong> <strong>to</strong>
maturity, are reported on the basis <strong>of</strong> coupon payments.
‣ Total investment earnings related <strong>to</strong> budget.
‣ All performance should <strong>be</strong> related <strong>to</strong> performance <strong>be</strong>nchmarks detailed in Section (E).
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