This report examines the performance of the public funds currently invested by the Will County Treasurer’s Office. This narrative covers investment activity and performance in September 2011.

Corporate Class C Fund

The Corporate Class C Fund is the principal operating account for the county. The Treasurer’s Office uses this fund to pay employees, vendors, and other operating liabilities.

As of September 30, 2011, Corporate Class C Fund had a total balance of $143.9-million. Of this total, we have invested 63.1% ($90.8-million). The total value of the Corporate Class C Fund increased approximately $1.25-million, month-over-month.

The active investment period for Corporate Class C Fund is closing for 2011. With the end of the tax levy collection, revenues to the county become flat. We will cover operating expenses with maturing investments in the coming months, taking advantage of the investment ladder we built through June 2012.

Overall performance of the fund continues to outpace our benchmarks, with a weighted average maturity of slightly more than 1-percent yield (1.03%) in September.

Treasurer’s Class C Fund

The Treasurer’s Class C Fund is the county’s capital improvements fund. The Treasurer’s Office holds proceeds from the county and township motor fuel tax, automation funds, and other revenue.

As of September 30, 2011, Treasurer’s Class C had a total balance of $168.8-million, an increase of $10.2-million month-over-month. Of this total, we invested $145.3-million (86.1%) in a variety of fixed income classes.

In September, the Finance Department transferred $25-million to Treasurer’s Class C Fund from Corporate Class C Fund as part of FY2011 Debt Service Payments. The Finance Department makes most of its accounting transfers at the beginning of the fiscal year. For this specific purpose, however, they wait until the annual levy collection ends.

Our office added $15-million to our long-term investment pool and kept $10-million in cash accounts.

Treasurer’s Class D Fund

The Treasurer’s Class D Fund holds all other county money not belonging in the Treasurer’s Class C Fund. Examples of holdings include our Sale in Error, Center Point Pass Through, and Special Trust Funds.

As of September 30, 2011, Treasurer’s Class D Fund had a total balance of $6,171,906. Of this total, we invested $1-million (16.2%) of our Special Trust Fund Money in municipal bonds.

On September 21, 2011, the Treasurer’s Office announced the results of its review of Harris Bank Accounts that included holdings in both Treasurer’s Class F Fund and Collector’s Class A Fund (Below). The office awarded MB Financial Bank (NASDAQ: MBFI) with seven accounts worth $9.6-million. MBFI will pay an interest rate that is nearly twice what the county received on deposits in 2010.

We anticipate stronger interest earnings in the next 24 months in these accounts, as a result, along with fewer expenses such as service fees. The Treasurer’s Office will continue to purchase check stock, deposit tickets, and other clerical supplies from these funds. However, we have significantly reduced operational overhead and unplanned budgetary expenses related to maintaining these accounts.

By the end of 2011, we will invest $3-million of the Special Trust Fund in instruments that mature every 30 days. Overall, this is about 45% of the total holdings in Treasurer’s Class D Fund. We expect yield in this fund will be lower than other funds because of shorter maturities.

Collector’s Class A Fund

The Collector’s Class A Fund holds all taxes and special assessments received by the County pending distribution to the various taxing districts in the county. The money in these funds is fiduciary holdings.

As of September 30, 2011, Collector’s Class A Fund had a total balance of $24.8-million. Of this total, we invested $2.5-million (1.0%) in commercial paper. The remainder is in money market funds for bi-weekly tax distribution.

Benchmark Tests

The Will County Treasurer’s Investment Policy sets two benchmarks to which we will compare investment performance:

  1. The 3-month average of the 90-day Treasury Bill as quoted by Bloomberg LP
  2. The Money Funds Report of all taxable 7-day simple yield as reported on www.IMoneyNet.com

As of October 3, 2011, both the Corporate Class C Fund and Treasurer’s Class C Fund exceed our policy benchmarks. The funds also exceed informal benchmarks against the 12-Month Treasury and 52-Week CDAR. For comparison to the broader market, both funds exceed the yield of the 5-Year Treasury.

October 3, 2011 Collector’s Class A Corporate Class C
7-Day Net Simple 0.0200 % 0.3600 % (Exceed) 1.0306 % (Exceed)
90-Day Treasury Bill 0.0100 % 0.3600 % (Exceed) 1.0306 % (Exceed)
12-Month Treasury 0.1000 % 0.3600 % (Exceed) 1.0306 % (Exceed)
52-Week CDAR 0.1300 % 0.3600 % (Exceed) 1.0306 % (Exceed)
October 3, 2011 Treasurer’s Class C Treasurer’s Class D
7-Day Net Simple 0.0200 % 1.7709 % (Exceed) 0.0200 % (Exceed)
90-Day Treasury Bill 0.0100 % 1.7709 % (Exceed) 0.0200 % (Exceed)
12-Month Treasury 0.1000 % 1.7709 % (Exceed) 0.0200 % (Below)
52-Week CDAR 0.1300 % 1.7709 % (Exceed) 0.0200 % (Below)

Summary

September was another stable month for our investment portfolio. While yield did fall slightly, we continue to hold $221,850 in unrealized gains from our fixed income holdings. The Investment Team addressed underperforming funds, such as Mobile Home Tax, Special Trust and others, by negotiating higher yields for cash deposits as well as making some short-term investment purchases.

In the coming month, we will continue to monitor fund performance with an eye towards earning higher yields as they become available. We will invest excess cash, where possible, to maximize performance.

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