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6.1.C. - Page 1 <br />REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br />February 26, 2018 <br />SUBJECT <br />Quarterly Investment Report for Period Ending December 31, 2017 <br />RECOMMENDATION <br />By motion, approve the City's Quarterly Investment Report for the period ending <br />December 31, 2017 <br />BACKGROUND <br />The City has an investment portfolio that consists of reserves and fund balances <br />held by the City for general operations, capital projects, utilities, and various other <br />special purpose funds. <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 />The attached report represents all areas in which City invests funds, excluding trust <br />funds and bond proceeds held with a trustee. <br />ANALYSIS <br />The attached investment report indicates that as of December 31, 2017, funds <br />(excluding cash with fiscal agents) from all sources were invested producing an <br />earnings rate of 1.46°/x. The market value of the portfolio as of December 31 was <br />$246,100,459. 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 <br />investments comply with the City's investment policy as of December 31, 2017. The <br />City has sufficient liquid resources available to meet expenditure requirements for the <br />next six months. <br />The portion of the City's portfolio that is managed by PFM has a market value of <br />$139,977,256, with yield at market of 1.61%, and an average maturity of 2.67 years. <br />The market benchmark selected, with consultation from the Council Finance/Audit <br />Subcommittee, is the Bank of America Merrill Lynch (BofA ML) 1-5 year U.S. Treasury <br />Index. <br />Below is a table summarizing the City's portfolio performance compared to the <br />