Finance Highlights 2011 0909 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: September 9, 2011 TO: Lianne Marshall, Interim City Manager FROM: Jim O'Leary, Interim Finance Director BY: Mary Ann Perini, Budget and Compliance Manager SUBJECT: Investment Report, Quarter Ended June 30, 2011 RECOMMENDATION Staff recommends that the Finance Committee review and accept the attached investment report for the quarter ended June 30, 2011. OVERVIEW At June 30, 2011, the City's investment portfolio had a market value of $92.0 million, an increase of $9.2 million from the previous quarter report. The increase is attributed to Property Tax revenues collected in April and received in June 2011, higher Sales and Use Tax receipts, and new Transaction and Use Tax revenues collected effective April 1, 2011. Of the total $92.0 million, $63.9 million was placed with the Local Agency Investment Fund (LAIF) and bank accounts and $28.1 million was placed in the Chandler Asset Management portfolio. The rate of return for LAIF for the quarter was 0.48 %, while the average book yield for the Chandler managed funds was 1.76 %. The City's investment policy establishes three bases for the performance standard: the LAIF rate of return and the rate of return on 2- and 5 -year U.S. Treasury securities. Consequently, amounts invested in LAIF meets this performance standard. The Chandler managed funds average book yield was 1.76 %, which exceeded the Investment Policy benchmark rate of return on the two - year U.S. Treasury securities of 0.46% and the five year U.S. Treasury security benchmark of 1.75 %. Amounts invested with LAIF are essentially liquid and funds can be withdrawn with minimal notice as City operations require. The rate of return earned by LAIF generally follows fixed income security rates. For example, a year ago the LAIF rate was 0.56% and it was 0.48% as of June 30, 2011. The balance of the City's portfolio is with Chandler Asset Management. These investments range from one to four years in maturity. 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 in order to gain higher interest rates. Staff is in agreement with this approach, but carefully monitors maturity dates to ensure that both short and long -term liquidity needs are met.