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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />September 25, 2017 <br />SUBJECT <br />Quarterly Investment Report for Period Ending June 30, 2017 <br /> <br />RECOMMENDATION <br />Approve, by motion, the City’s Quarterly Investment Report for the period ending June <br />30, 2017 <br /> <br />BACKGROUND <br />The City has an investment portfolio of approximately $250 million, which consists of <br />reserves and fund balances held by the City for general operations, capital projects, <br />utilities, and various other special purpose funds. <br /> <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 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 June 30, 2017, funds (excluding <br />cash with fiscal agents) from all sources were invested producing an earnings rate of <br />1.27%. The market value of the portfolio as of March 31 was $250,189,700. This <br />includes the funds held in the San Mateo County Treasurer’s investment pool and with <br />the State Treasurer’s investment pool. All of these investments comply with the City’s <br />investment policy as of June 30, 2017. The City has sufficient liquid resources available <br />to meet expenditure requirements for the next six months. <br /> <br />The portion of the City’s portfolio that is managed by PFM has a market value of <br />$140,132,857, with yield at market of 1.62%, and an average maturity of 2.73 years. <br />The market benchmark selected, with consultation from the Council Finance/Audit <br />Subcommittee, is the Bank of America Merrill Lynch 1-5 year U.S. Treasury Index. <br /> <br />Below is a table summarizing the City’s portfolio performance compared to the <br />benchmarks, as of June 30, 2017. <br /> <br />6.1.C. - Page 1