Finance Highlights 2008 1118 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: November 18, 2008 TO: Finance Committee FROM: Perry Carter, Interim Finance Director ~~ BY: Mary Ann Perini, Budget & Compliance Manager ~~6 SUBJECT: Investment Report for the Quarter Ended September 30, 2008 RECOMMENDATION Staff recommends that the Committee review and accept the attached investment report for the quarter ended September 30, 2008. OVERVIEW At September 30, 2008, the City's investment portfolio had a market value of $87.0 million. Approximately, 57% of the total portfolio is with Local Agency Investment Fund (LATE) and bank accounts for a total market value of $49.6 million. The balance of $37.4 million is with the Chandler Asset Management investment program that constitutes 43% of the total portfolio. The LAIF rate of return for the quarter was 2.77%, and the Chandler average book yield was 3.94%. The Chandler investments continue to exceed the City's Investment Policy benchmazks using the two and five year US Treasury securities of 1.98% and 2.98% respectively. The LAIF rate of return of 2.77% continues to miss the five-year Treasury yield of 2.98%. LAIF investments are essentially liquid and funds may be withdrawn with minimal notice. The rate of return earned by LAIF follows fixed income security rates in general. For example, a year ago the LAIF rate was 5.24% and currently it is 2.77% and may continue to diminish. 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. As of September 30`h, 2008 the City has approximately $15 million invested through Chandler in FNMA and FHLMC with maturity dates ranging from October 15, 2008 through Mazch 15, 2010. The majority of maturities are scheduled to occur in 2009. 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 continue to lengthen the average maturity of the portfolio to capture higher interest rates. The average maturity a year ago was 1.04 and now the City is at 1.32. Staff is generally in agreement with this approach and continues to carefully monitor maturity dates to ensure that both short-term and long-term liquidity needs are rnet.