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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />May 21, 2018 <br />SUBJECT <br />Quarterly Investment Report for Period Ending March 31, 2018 <br /> <br />RECOMMENDATION <br />By motion, approve the City's Quarterly Investment Report for the period ending March <br />31, 2018 <br /> <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 /> <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 March 31, 2018, funds (excluding <br />cash with fiscal agents) from all sources were producing an annual earnings rate of <br />1.65%. The market value of the portfolio as of March 31 was $244,876,840. 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 March 31, 2018. The City has sufficient liquid resources <br />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 total market value at <br />quarter end of $139,576,985. As of March 31, the portfolio was earning an annual yield <br />at cost of 1.76% and the yield at market was 2.49%. The average maturity of the <br />portfolio was 2.60 years. <br /> <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 />6.1.B. - Page 1