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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />December 18, 2017 <br />SUBJECT <br />Quarterly Investment Report for Period Ending September 30, 2017 <br /> <br />RECOMMENDATION <br />By motion, approve the City’s Quarterly Investment Report for the period ending September <br />30, 2017 <br /> <br />BACKGROUND <br />The City has an investment portfolio that consists of reserves and fund balances held by <br />the City for general operations, capital projects, utilities, and various other special purpose <br />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 City <br />hired an investment manager, PFM Asset Management LLC (PFM), to manage the City’s <br />funds pursuant to the newly adopted policy. The City’s primary investment objectives <br />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 September 30, 2017, funds <br />(excluding cash with fiscal agents) from all sources were invested producing an earnings <br />rate of 1.38%. The market value of the portfolio as of September 30 was <br />$233,915,845. This includes the funds held in the San Mateo County Treasurer’s <br />investment pool and with the State Treasurer’s investment pool. All of these investments <br />comply with the City’s investment policy as of September 30, 2017. The City has sufficient <br />liquid resources available 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 />$140,614,919, with yield at market of 1.68%, and an average maturity of 2.72 years. The <br />market benchmark selected, with consultation from the City 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 />benchmark, as of September 30, 2017. <br />6.1.A. - Page 1