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CITY OF SAN LEANDRO MEMORANDUM DATE: April 28, 2006 TO: Finance Committee FROM: Jesse Baloca, Finance Direc� SUBJECT: Investment Report - Quarter Ended March 31, 2006 RECOMMENDATION Staff recommends Finance Committee acceptance of the attached investment report for the quarter ended March 31, 2006. OVERVIEW On March 31, 2006 the City's investment portfolio had a market value of $75.3 million, which is an increase of $15.9 million from December 31, 2006. Currently, the City's LAIF investments account for 34% of the City's total investments. The investment portfolio managed by Chandler had a March 31, 2006 average book yield of 3.53%, an increase from 3.40% on December 31, 2005. The average maturity of the Chandler portfolio for the March 31, 2006 remains under 2 years and is performance measured against 1-3 year government securities benchmark. As of April 26, 2006 the 2 -year Treasury rate environment (of 4.99%) is relatively the same as the 6 -month, 3 - year, and 5 -year Treasury rates of 4.98%, 4.99%, and 5.02%, respectively. As a result of the flattened yield, the City will continue with the strategy of purchasing shorter -term investments an effort to maintain liquidity and the option of reinvesting longer-term in the event that longer-term rates begin to rise above the shorter -term rates. Since inception (May 2004), the performance gain to the City, less the fees paid to Chandler for portfolio management services, is $167,117 and remains overall favorable as compared to LAIF. However, the March 31, 2006 LAIF yield of 4.03% currently exceeds the City's portfolio with Chandler of 3.53% resulting in a loss when considering the fees paid to Chandler. In response, the City will continue to evaluate upcoming maturities and its reinvestment into either LAIF, Chandler Asset Management, or with other investment managers with the intent of further reducing the average maturity and increasing yield opportunities. E:AInvestmentsInvestmentReport3-31-06.doc