9
Strategy – Previous & Current Quarter
Strategy for Prior Quarter
Strategy for Current Quarter
Benchmarks
Duration % Target
Benchmarks
Duration % Target
Purpose
N/A
N/A
Capital / Operating / Debt Long Term Reserves (1) General
Matched Funding
N/A
Matched Funding
N/A
100% 100%
100% 100%
50% ML 1-3 YR & 50% ML 3-5 YR ~3 Yrs U.S. Treasury Strips 1-13 YR ~7 Yrs
50% ML 1-3 YR & 50% ML 3-5 YR ~3 Yrs U.S. Treasury Strips 1-13 YR ~7 Yrs
M&O Reserve
(1) - Unrestricted cash in the combined General & M&O Reserve that exceeds the $400 million target is transferred to the Capital account to fund capital expenditures.
Matched Funding Accounts: Policy and Trust Agreement Directives/Limitations o Capital (Pay-Go & Bond Proceeds), Operating & Debt Service Accounts – Investment maturities precede or coincide with expected spending. Returns: Investment returns are a function of prevailing interest rates for short-term investments such as Money Market Mutual Funds, MLGIP, Agency/Supranational Discount Notes, and Commercial Paper.
Total Return Accounts: Board Approved Benchmarks o M&O Reserve – Staggered maturities, 0-15 years o General Account – Staggered maturities, 0-5-years
Returns: Longer duration indices benefit from higher average annual returns over multiyear periods and experience greater return volatility associated with mark-to-market relative to shorter-term duration indices.
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