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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />June 12, 2017 <br /> <br />SUBJECT <br />Quarterly Investment Report for the Period Ending March 31, 2017 <br /> <br />RECOMMENDATION <br />By motion, approve, the City’s Quarterly Investment Report for the period ending March <br />31, 2017 <br /> <br />BACKGROUND <br />In June 2016, the City Council adopted a new investment policy that requires staff to <br />provide a quarterly Investment report to Council at a public meeting. Additionally, the <br />City hired an investment manager, PFM Asset Management LLC (PFM), to manage the <br />City’s surplus funds pursuant to the newly adopted policy. The City’s primary investment <br />objectives continue to be safety, liquidity, and return on investment (yield), in that order. <br /> <br />The attached report represents all areas in which City invests funds, excluding trust <br />funds and bond proceeds held with a trustee. <br /> <br />ANALYSIS <br />The attached investment report indicates that, as of March 31, 2017, surplus funds <br />(excluding cash with fiscal agents) from all sources were invested and produced an <br />earnings rate of 1.15%. The market value of the portfolio as of March 31 was <br />$230,815,926. This includes funds held in the San Mateo County Treasurer’s <br />investment pool and the State Treasurer’s investment pool. All of these investments <br />comply with the City’s investment policy as of March 31. The City has sufficient liquid <br />resources available to meet expenditure requirements for the next six months. <br /> <br />The City’s portfolio portion that is managed by PFM has a market value of <br />$139,529,151, with yield at market of 1.49%, and an average maturity of 2.36 years. <br />The market benchmark selected, with consultation from the City Council Finance and <br />Audit Subcommittee, is the Bank of America Merrill Lynch 1-5 year U.S. Treasury Index. <br />Beginning with this quarter, the portfolio’s total return performance will be compared to <br />the benchmark’s total return performance. <br /> <br />Below is a table summarizing the City’s portfolio performance compared to the <br />benchmarks as of March 31. <br /> <br />6.1.A. - Page 1