Finance Highlights 2011 0603 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: June 3, 2011 TO: Stephen Hollister, City Manager FROM: Tracy Vesely, Finance Director BY: Mary Ann Perini, Budget and Compliance Manager SUBJECT: Investment Report — Quarter Ended March 31, 2011 RECOMMENDATION Staff recommends that the Committee review and accept the attached investment report for the quarter ended March 31, 2011. OVERVIEW At March 31, 2011, the City's investment portfolio had a market value of $82.9 million an increase of $5.3 million from the previous quarter report attributed to property tax revenues collected in December and received by the City in January 2011. Of this amount, $55.0 million was with the Local Agency Investment Fund (LAIF) and bank accounts and $27.9 million was in the Chandler Asset Management program. The rate of return for LAIF for the quarter was 0.50% and for Chandler managed funds, the average book yield was 1.85 %. The City's investment policy establishes three bases for performance standards: the LAIF rate of return, and the rate of return on two and five year U.S. Treasury securities. Consequently, any amounts invested in LAIF meet the performance standards. The Chandler managed funds average book yield was 1.85% which exceeded the Investment Policy benchmark rate of return on the two year U.S. Treasury securities, of 0.78% and was below the five year U.S. Treasury security 2.22 %. Amounts invested with LAIF are essentially liquid and funds can be withdrawn with minimal notice.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 security rates in general. For example, a year ago the LAIF rate was 0.55 %, currently it is 0.50 %. The balance of the City's portfolio is under the Chandler Asset 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. Staff is generally in agreement with this approach, but will carefully monitor maturity dates to ensure that both short and long -term liquidity needs are met.