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<br />CITY OF SAN LEANDRO <br />MEMORANDUM <br />DATE: October 20, 2009 <br />TO: Finance Committee <br />FROM: Perry Carter, Interim Finance Director <br />BY: Mary Ann Perini, Budget & Compliance Manager i~~ <br />SUBJECT: Investment Report -Quarter Ended June 30, 2009 <br />RECOMMENDATION <br />Staff recommends that the Committee review and accept the attached investment report for the <br />quarter ended June 30, 2009. <br />OVERVIEW <br />At June 30, 2009, the City's investment portfolio had a market value of approximately $106.9 <br />million. Of this amount, $78.4 million was with the Local Agency Investment Fund (LATE) and <br />bank accounts and $28.5 million was in the Chandler Asset Management program. The rate of <br />return for LAIF for the quarter was 1.51% and for Chandler managed funds, the Average Book <br />Yield was 3.25%. For the most part, the City's portfolio exceeded the Investment Policy <br />benchmark which is the rate of return on two and five year US Treasury securities, which was <br />1.11% and 2.56% respectively. The only shortfall to target is the LAIF 1.51% return versus 5- <br />year Treasury yield of 2.56%. <br />Amounts invested with LAIF are essentially liquid and funds can be withdrawn with minimal <br />notice. The rate of return earned by LAIF follows fixed income securities rates in general. For <br />example, a year ago the LAIF rate was 3.11 %, currently it is 1.51 % and may continue to fall. <br />The balance of the City's portfolio is under the Chandler management program. The attached <br />report notes that the City is in compliance with all provisions of the City's Investment Policy. <br />The basic strategy recommended by Chandler is to gradually lengthen the average maturity of <br />the portfolio, to capture higher interest rates. Staff is generally in agreement with this approach, <br />but will carefully monitor maturity dates to ensure that both short and long-term liquidity needs <br />are met. <br />