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• MEMORANDUM DATE: February 2, 1994 TO: Thomas D. Burt, City Manager FROM: Roger Larson, Finance Director ITEM: PIPER CAPITAL INVESTMENT MANAGEMENT AGREEMENT In November of '93, the water filtration funds invested in the Piper Government Institutional Fund were liquidated due to projections that bond prices were going to decline.- Those predictions were accurate and the decision to sell reflected a nice gain in principal for the City of St. Anthony. Since the sale of this instrument, I researched several proposals from investment firms (Paine Webber, Norwest Banks, Juran & Moody and Piper Jaffray) to determine the best direction to take to re-invest these funds. After reviewing the alternatives, I feel Piper Capitals managed portfolio concept will provide St. Anthony the highest rate of return while maintaining the security and liquidity required for • this investment. The annual results of the managed portfolio are impressive (6.73% in 1992 & 8.55% in 1993) and compared to the other proposals, was the only option whose 'primary objective was to preserve principal while offering a yield of at least 2% above the 90 day Treasury Bill rate. The basic instruments invested in are conservative in nature and include: high quality T=Bills: T-Notes; T-Bonds; and occasional Commercial Paper with maturities of 5 years of less. The managed portfolio concept requires an Investment Management Agreement which is entered into by the Client and the Broker. It summarizes the restrictions imposed by the City and outlines the authority the broker is granted. I forwarded a copy to Bill Soth for him to review and we implemented additional language on behalf of the City. A simplified review of the managed portfolio agreement is as follows: 1) An agreement is entered into which allows the broker (Piper Capital) to buy and sell securities on behalf of the City. 2) These investments must comply with Minnesota Statutes which govern municipal investments. •