Finance Highlights 2008 0729 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: July 29, 2008 TO: Finance Committee FROM: Perry Carter, Interim Finance Director SUBJECT: Investment Report -Quarter Ended June 30, 2008 RECOMMENDATION Staff recommends that the Committee review and accept the attached investment report for the quarter ended June 30, 2008. OVERVIEW At June 30, 2008, the City's investment portfolio had a market value of approximately $95.7 million. Of this amount, $58.6 million was with the Local Agency Investment Fund (LATE) and bank accounts and $37.1 million was in the Chandler Asset Management program. The rate of return for LAIF for the quarter was 3.11% and for Chandler managed funds, the Average Book Yield was 4.12%. For the most part, the City's portfolio exceeded the Investment Policy benchmark which is the rate of return on two and five year US Treasury securities, which was 2.62% and 3.34% respectively. The only shortfall to target is the LAIF 3.11 % return versus 5- year Treasury yield of 3.34%. Amounts invested with LAIF are essentially liquid and funds can be withdrawn with minimal notice. The rate of return earned by LAIF follows fixed income securities rates in general. For example, a year ago the LAIF rate was 5.23%, currently it is 3.11% and may continue to fall. Fannie Mae (FNMA) and Freddie Mac (FHLMC) City investments are in bond holdings only, not stock. Therefore, the unprecedented decline in the value of FNMA and FHLMC stock has not negatively impacted our investments. Currently, the City has approximately $17 million invested through Chandler in FNMA and FHLMC with maturity dates ranging from Augus"t 15, 2008 through March 15, 2010. The majority of maturities are scheduled to take place in 2009. LAIF, FNMA, and FHLMC holdings are approximately 14% of the $70 billion portfolio, statewide. The balance of the City's portfolio is under the Chandler management program. The attached report notes that the City is in compliance with all provisions of the City's Investment Policy. The basic strategy recommended by Chandler is to gradually lengthen the average maturity of the portfolio, to capture higher interest rates. As can be seen from the report the average maturity has gone from 1.33 years for the previous quarter to 1.38 years for the current quarter.