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Home My WebLink About11-14-2019 IOC Agenda PacketCity of San Luis Obispo, Agenda, Planning Commission Agenda INVESTMENT OVERSIGHT COMMITTEE Thursday, November 14, 2019 1:30 p.m. REGULAR MEETING Council Hearing Room 990 Palm Street San Luis Obispo, CA CALL TO ORDER: Chair Brigitte Elke ROLL CALL : Committee Members Heidi Harmon, Daniel Humphrey (Public Member) Derek Johnson, Debbie Malicoat, and Chair Brigitte Elke OTHERS PRESENT: Natalie Harnett, Staff, Monique S. Spkye, Managing Director for PFM Asset Management LLC, and Serenity Whorley, Recording Secretary PUBLIC COMMENT: At this time, people may address the Committee about items not on the agenda. Persons wishing to speak should come forward and state their name and address. Comments are limited to three minutes per person. Items raised at this time are generally referred to staff and, if action by the Committee is necessary, may be scheduled for a future meeting. CONSIDERATION OF MINUTES 1. Minutes of the Investment Oversight Committee of August 15, 2019. BUSINESS ITEMS 2. Presentation of the Quarterly Investment Report on Portfolio Performance Recommendation: Review and confirm investment policy compliance. Investment Oversight Committee Agenda for November 14, 2019 Page 2 COMMENT AND DISCUSSION 3. Staff Updates and agenda forecast ADJOURNMENT The next Regular Meeting of the Investment Oversight Committee is scheduled for Thursday , February 13 , 2020 at 1:30 p.m., in the Council Hearing Room, 990 Palm Street, San Luis Obispo, California. The City of San Luis Obispo wishes to make all of its public meet ings accessible to the public. Upon request, this agenda will be made available in appropriate alternative formats to persons with disabilities. Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such request to the Finance Department at (805) 781-7125 at least 48 hours before the meeting, if possible. Telecommunications Device for the Deaf (805) 781-7107. Meeting audio recordings can be found at the following web address: http://opengov.slocity.org/WebLink/1/fol/61037/Row1.aspx Minutes - Draft Investment Oversight Committee Thursday, August 15, 2019 Regular Meeting of the Investment Oversight Committee CALL TO ORDER A Regular meeting of the Investment Oversight Committee was called to order on Thursday, August 15, 2018, at 1:30 p.m. in the Council Hearing Room at 990 Palm Street, San Luis Obispo, California, by Chair Brigitte Elke. ROLL CALL Present: Committee Members Daniel Humphrey (Public Member), Derek Johnson, Debbie Malicoat, and Chair Brigitte Elke Absent: Committee Member Heidi Harmon Others Present: Natalie Harnett, Staff, Monique S. Spyke, Managing Director for PFM Asset Management LLC and Serenity Whorley, Recording Secretary PUBLIC COMMENT ITEMS NOT ON THE AGENDA None. --End of Public Comment-- APPROVAL OF MINUTES 1. Review of Minutes of the Investment Oversight Committee Meeting of August 15, 2019: ACTION: UPON MOTION BY COMMITTEE MEMBER HUMPHREY, SECONDED BY COMMITTEE MEMBER JOHNSON, CARRIED 4-0-0, to approve the June 6, 2019, minutes, as presented. PUBLIC COMMENT None. --End of Public Comment-- BUSINESS ITEMS 2. Presentation of the Quarterly Investment Report on Portfolio Performance City of San Luis Obispo, Title, Subtitle Minutes - Investment Oversight Committee Minutes of August 15, 2019 Page 2 Monique S. Spyke, Managing Director for PFM Asset Management LLC, provided a PowerPoint presentation and responded to Committee inquiries. Public Comment None. --End of Public Comment-- ACTION: UPON MOTION BY COMMITTEE MEMBER JOHNSON, SECONDED BY COMMITTEE MEMBER MALICOAT, CARRIED 4-0-0, recommendation. COMMENT AND DISCUSSION Finance Director Elke provided an agenda forecast. ADJOURNMENT The meeting was adjourned at 2:07 pm. The next Regular Meeting of the Investment Oversight Committee is scheduled for Thursday November 14 , 2019, at 1:30 p.m., in the Council Hearing Room, 990 Palm Street, San Luis Obispo, California. APPROVED BY INVESTMENT OVERSIGHT COMMITTEE: XX/XX/XXXX Quarterly Investment Report AS OF SEPTEMBER 30 , 2019 November 14, 2019 This report presents the City’s investment portfolio for the quarter ending September 30,2019.It has been prepared to comply with regulations contained in California Government Code Section 53646.The report includes all investments managed by the City on its own behalf as well as for other third-party agencies on a fiduciary basis such as the Whale Rock Commission.It also includes all City-related investments held by trustees for bond debt service obligations.As required,the report provides information on the investment type,issuer,maturity date,cost,and current market value for each security. 1 Market Themes Economic Data & Conditions •Inflation stubbornly continues to lag the Fed’s 2% target •Average monthly job growth has slowed throughout 2019 •Recent trade conflicts continue to weigh on the manufacturing sector •Consumer confidence remains historically high •S&P 500 ended the third quarter up 18.7% year-to-date •Investment grade corporate issuance broke records in September Market indicators are mixed, but a recession does not appear imminent The Fed elected to cut rates twice for the first time in over a decade U.S. economic growth expectations have declined throughout the quarter Capital Markets Federal Reserve Economic Growth 2 Market Considerations •A deteriorating U.S. economic outlook—made worse by ongoing trade tensions— prompted the Fed to cut rates by 50 basis points (0.50%) throughout the quarter, lowering their target rate to a range of 1.75-2.00%. •While Fed Chair Jay Powell characterized the move as a “mid- cycle policy adjustment,” the market expects at least one more rate cut in 2019. “…weak global growth…trade policy uncertainty…and muted inflation…” 0.5% 1.0% 1.5% 2.0% 2.5% Mar '17 Mar '18 Mar '19 Mar '20 Mar '21 Mar '22 Fed Funds Target Rate (mid-point) 9/30/19 Fed Funds Futures The market expects further rate cuts. 3 What we are watching… •The OCED projected the world growth outlook at 3.2% four months ago, and they recently revised this figure down to 2.9% for 2019. •“The global economy has become increasingly fragile and uncertain, with growth slowing and downside risks continuing to mount” –OECD, 9/19/19 •Rising uncertainties, weaker growth prospects and low inflation are keeping investors on edge. While a U.S. recession is not the immediate forecast, risks are rising including escalating U.S.-China trade tensions and slowing growth abroad. -4% -2% 0% 2% 4% 6% 8%Average Annual GDP GrowthThe current expansion is now the longest on record at 123 months. Average Annual Growth in Real GDP During U.S. Economic Expansions and Contractions 4 Current Cash & Investment Summary The following is a summary of the City’s cash and investments based on market value, as of September 30, 2019, compared with the prior quarter. Investment Entity September 30, 2019 June 30, 2019 Percent of Total City Held Cash & Investments $26,061,006 $29,015,340 20% LAIF Held Investments $24,039,591 $23,299,241 18% PFM Managed Investments*$80,377,095 $79,541,637 61% Trustee Held Investments $960,802 $967,488 1% TOTAL $131,438,495 $132,823,706 100% *Figures shown exclude accrued interest. 5 Current Cash & Investment Summary There are several factors which result in changes in cash and investment balances from month- to-month and quarter-to-quarter, dependent on the receipt of revenues or a large disbursement. •Some major City revenues are received on a periodic rather than a monthly basis. Property Tax is received in December, January, April, and May of each year. Transient Occupancy Tax is received monthly but varies considerably due to seasonality. •Payments for bonded indebtedness or large capital projects can reduce the portfolio substantially in the quarter in which they occur. •The City pays its CalPERS obligation in a lump sum at the beginning of the fiscal year to achieve interest savings. Factors 6 Securities Securities in the City’s portfolio are priced by IDC, an independent pricing service at the end of every month. In some cases, the City may have investments with a current market value that is greater or less than the recorded value. These changes in market value are due to fluctuations in the marketplace having no effect on yield, as the City does not intend to sell securities prior to maturity. Nevertheless, these market changes can impact the total value of the portfolio. Security Type Market Value % of Portfolio % Change vs. 6/30/19 Permitted by Policy In Compliance U.S. Treasury $34,867,157 43.4%+1.5%100%ü Federal Agency $15,597,231 19.4%-5.0%100%ü Municipal Obligations $226,433 0.3%+0.3%30%ü Negotiable CDs $9,076,113 11.3%+1.4%30%ü Corporate Notes $16,038,868 20.0%+1.3%30%ü Commercial Paper $1,492,631 1.9%-25%ü Asset-Backed Securities $2,934,281 3.7%+0.5%15%ü Securities Sub-Total $80,232,714 99.9% Money Market Fund $144,382 0.1%-20%ü Accrued Interest $363,310 Securities Total $80,740,405 7 Total Return Total return is calculated based on interest and both realized and unrealized changes in market value, expressed as a rate of return over a specified period of time based on cost, and is backward-looking. •Focused on long-term performance and growth •Affected by both yield and market value fluctuations •Reflects “true value” of the portfolio •Recommended approach by the Government Finance Officers Association PFM Managed 9/30/2019 6/30/2019 Average Maturity (Years)2.27 2.21 Effective Duration1 2.11 2.06 Average Market Yield 1.81 1.97% Total Rate of Return 3 Months 1 Year 3 Years Since Inception City of SLO 0.82%5.02%1.90%1.76% 0–5 Treasury Index 0.72%4.98%1.63%1.58% Variance +0.10%+0.04%+0.27%+0.19% 1Effective duration is the approximate percentage change in price for each 1% change in interest rates. 8 Summary of Activity for the Quarter & Future Liquidity As of September 30, 2019, the investment portfolio was in compliance with all State laws, the City's Statement of Investment Policy, and the City’s Investment Management Plan. Cash receipts and disbursements are consistent with past trends for the quarter. The cash management program contains enough liquidity to meet at least the next three months of expected expenditures by the City as well as by related parties. If you have any questions concerning this report, or require additional information, contact Brigitte Elke, Finance Director at (805) 781-7510. 9 CITY OF SAN LUIS OBISPO For the Quarter Ended September 30, 2019 Portfolio Activity Quarterly Portfolio Transactions Trade Date Settle Date Maturity DatePar ($)CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon BUY 7/1/19 7/3/19 1,875,000 912828XX3 US TREASURY N/B NOTES 6/30/24 1,894,641.65 1.78%2.00% 7/10/19 7/12/19 1,350,000 931142EL3 WALMART INC CORPORATE NOTES 7/8/24 1,391,089.50 2.21%2.85% 7/17/19 7/18/19 645,000 313384JW0 FEDERAL HOME LOAN BANKS DISC NOTE 8/1/19 644,458.20 2.16%0.00% 7/18/19 7/22/19 640,000 89236TEL5 TOYOTA MOTOR CREDIT CORP 1/11/23 649,334.40 2.29%2.70% 8/1/19 8/2/19 1,050,000 912796VT3 UNITED STATES TREASURY BILL 9/3/19 1,048,121.67 2.02%0.00% 8/1/19 8/2/19 1,075,000 9128282N9 US TREASURY N/B 7/31/24 1,090,157.35 1.83%2.12% 8/6/19 8/14/19 395,000 89238UAD2 TAOT 2019-C A3 9/15/23 394,996.76 1.91%1.91% 8/14/19 8/15/19 590,000 9128282N9 US TREASURY N/B 7/31/24 607,450.49 1.52%2.12% 8/27/19 8/29/19 1,145,000 65558TLL7 NORDEA BANK ABP NEW YORK CERT DEPOS 8/26/22 1,145,000.00 1.87%1.85% 8/29/19 9/3/19 1,200,000 83050PDR7 SKANDINAV ENSKILDA BANK LT CD 8/26/22 1,200,000.00 1.88%1.86% 9/11/19 9/12/19 285,000 912796WC9 UNITED STATES TREASURY BILL 11/5/19 284,168.94 1.95%0.00% 9/18/19 10/16/19 225,000 797272QN4 SAN DIEGO CCD, CA TXBL GO BONDS 8/1/23 225,000.00 2.00%1.99% 10,475,000 10,574,418.96Total BUY INTEREST 7/2/19 7/2/19 0 MONEY0002 MONEY MARKET FUND 121.80 7/5/19 7/5/19 2,235,000 3135G0S38 FANNIE MAE NOTES 1/5/22 22,350.00 2.00% 7/8/19 7/8/19 435,000 89236TFQ3 TOYOTA MOTOR CREDIT CORP CORP NOTES 1/8/21 6,633.75 3.05% 7/11/19 7/11/19 555,000 3135G0U92 FANNIE MAE NOTES 1/11/22 7,284.38 2.62% 7/15/19 7/15/19 275,000 14316LAC7 CARMX 2019-2 A3 3/15/24 614.17 2.68% 7/15/19 7/15/19 500,000 65479KAD2 NAROT 2019-A A3 10/15/23 1,208.33 2.90% 7/15/19 7/15/19 440,000 65479HAC1 NAROT 2019-B A3 11/15/23 916.67 2.50% 7/15/19 7/15/19 220,000 14042WAC4 COPAR 2019-1 A3 11/15/23 460.17 2.51% 7/15/19 7/15/19 335,000 44932NAD2 HYUNDAI AUTO RECEIVABLES TRUST 6/15/23 742.58 2.66% PFM Asset Management LLC 10 CITY OF SAN LUIS OBISPO For the Quarter Ended September 30, 2019 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 7/15/19 7/15/19 80,000 89239AAD5 TAOT 2019-A A3 7/15/23 194.00 2.91% 7/15/19 7/15/19 35,000 02004WAC5 ALLYA 2019-1 A3 9/15/23 84.88 2.91% 7/18/19 7/18/19 640,000 89236TBP9 TOYOTA MOTOR CREDIT CORP NOTES 7/18/19 6,800.00 2.12% 7/18/19 7/18/19 210,000 43814WAC9 HAROT 2019-1 A3 3/20/23 495.25 2.83% 7/21/19 7/21/19 410,000 43815MAC0 HAROT 2019-2 A3 6/21/23 861.00 2.52% 7/27/19 7/27/19 750,000 459200JQ5 IBM CORP BONDS 1/27/22 9,375.00 2.50% 7/30/19 7/30/19 1,465,000 3135G0T60 FNMA NOTES 7/30/20 10,987.50 1.50% 7/31/19 7/31/19 855,000 912828S92 US TREASURY NOTES 7/31/23 5,343.75 1.25% 7/31/19 7/31/19 1,545,000 912828V72 US TREASURY NOTES 1/31/22 14,484.38 1.87% 7/31/19 7/31/19 580,000 912828H52 US TREASURY NOTES 1/31/20 3,625.00 1.25% 7/31/19 7/31/19 2,100,000 912828XQ8 US TREASURY NOTES 7/31/22 21,000.00 2.00% 7/31/19 7/31/19 795,000 9128282P4 US TREASURY NOTES 7/31/22 7,453.13 1.87% 7/31/19 7/31/19 350,000 912828WY2 US TREASURY NOTES 7/31/21 3,937.50 2.25% 7/31/19 7/31/19 685,000 912828XM7 US TREASURY NOTES 7/31/20 5,565.63 1.62% 8/2/19 8/2/19 0 MONEY0002 MONEY MARKET FUND 111.84 8/2/19 8/2/19 1,350,000 3135G0N33 FNMA BENCHMARK NOTE 8/2/19 5,906.25 0.87% 8/5/19 8/5/19 1,350,000 06370REU9 BANK OF MONTREAL CHICAGO CERT DEPOS 8/3/20 43,902.38 3.19% 8/5/19 8/5/19 440,000 3135G0V34 FANNIE MAE NOTES 2/5/24 5,408.33 2.50% 8/7/19 8/7/19 1,345,000 96121T4A3 WESTPAC BANKING CORP NY CD 8/3/20 13,786.25 2.05% 8/9/19 8/9/19 1,050,000 037833CM0 APPLE INC CORP NOTES 2/9/22 13,125.00 2.50% 8/12/19 8/12/19 1,000,000 594918AY0 MICROSOFT CORP (CALLABLE) NOTE 2/12/20 9,250.00 1.85% 8/13/19 8/13/19 120,000 3130AFW94 FHLB BONDS 2/13/24 1,483.33 2.50% 8/15/19 8/15/19 35,000 02004WAC5 ALLYA 2019-1 A3 9/15/23 84.88 2.91% 8/15/19 8/15/19 220,000 14042WAC4 COPAR 2019-1 A3 11/15/23 460.17 2.51% 8/15/19 8/15/19 500,000 65479KAD2 NAROT 2019-A A3 10/15/23 1,208.33 2.90% 8/15/19 8/15/19 335,000 44932NAD2 HYUNDAI AUTO RECEIVABLES TRUST 6/15/23 742.58 2.66% 8/15/19 8/15/19 275,000 14316LAC7 CARMX 2019-2 A3 3/15/24 614.17 2.68% 8/15/19 8/15/19 80,000 89239AAD5 TAOT 2019-A A3 7/15/23 194.00 2.91% 8/15/19 8/15/19 240,000 084664CK5 BERKSHIRE HATHAWAY INC CORPORATE NOTES 8/15/19 1,560.00 1.30% 8/15/19 8/15/19 355,000 3137EAEH8 FREDDIE MAC NOTES 8/15/19 2,440.63 1.37% PFM Asset Management LLC 11 CITY OF SAN LUIS OBISPO For the Quarter Ended September 30, 2019 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 8/15/19 8/15/19 525,000 9128283X6 US TREASURY N/B NOTES 2/15/21 5,906.25 2.25% 8/15/19 8/15/19 440,000 65479HAC1 NAROT 2019-B A3 11/15/23 916.67 2.50% 8/16/19 8/16/19 1,000,000 3137EAEL9 FREDDIE MAC NOTES 2/16/21 11,875.00 2.37% 8/17/19 8/17/19 960,000 06406HDD8 BNY MELLON CORP NOTE (CALLABLE)8/17/20 12,480.00 2.60% 8/17/19 8/17/19 1,000,000 3135G0N82 FNMA NOTES 8/17/21 6,250.00 1.25% 8/17/19 8/17/19 325,000 3135G0N82 FNMA NOTES 8/17/21 2,031.25 1.25% 8/17/19 8/17/19 760,000 3135G0N82 FNMA NOTES 8/17/21 4,750.00 1.25% 8/18/19 8/18/19 210,000 43814WAC9 HAROT 2019-1 A3 3/20/23 495.25 2.83% 8/20/19 8/20/19 1,145,000 65590ASN7 NORDEA BANK AB NY CD 2/20/20 15,572.00 2.72% 8/21/19 8/21/19 410,000 43815MAC0 HAROT 2019-2 A3 6/21/23 861.00 2.52% 8/22/19 8/22/19 775,000 023135AW6 AMAZON.COM INC BONDS 2/22/23 9,300.00 2.40% 8/26/19 8/26/19 520,000 3135G0J20 FNMA NOTES 2/26/21 3,575.00 1.37% 8/28/19 8/28/19 885,000 3135G0T29 FNMA NOTES 2/28/20 6,637.50 1.50% 8/31/19 8/31/19 365,000 912828J43 US TREASURY NOTES 2/28/22 3,193.75 1.75% 8/31/19 8/31/19 725,000 912828B90 US TREASURY NOTES 2/28/21 7,250.00 2.00% 8/31/19 8/31/19 500,000 912828D72 US TREASURY NOTES 8/31/21 5,000.00 2.00% 8/31/19 8/31/19 425,000 912828P79 US TREASURY NOTES 2/28/23 3,187.50 1.50% 9/3/19 9/3/19 1,145,000 90275DHG8 UBS AG STAMFORD CT LT CD 3/2/20 16,879.21 2.90% 9/4/19 9/4/19 0 MONEY0002 MONEY MARKET FUND 277.10 9/9/19 9/9/19 400,000 02665WBG5 AMERICAN HONDA FINANCE CORP NOTES 9/9/21 3,400.00 1.70% 9/12/19 9/12/19 1,570,000 3135G0U43 FANNIE MAE NOTES 9/12/23 22,568.75 2.87% 9/12/19 9/12/19 260,000 3135G0ZG1 FNMA NOTES 9/12/19 2,275.00 1.75% 9/15/19 9/15/19 1,100,000 717081ES8 PFIZER INC CORP NOTES 3/15/24 16,585.56 2.95% 9/15/19 9/15/19 275,000 14316LAC7 CARMX 2019-2 A3 3/15/24 614.17 2.68% 9/15/19 9/15/19 440,000 65479HAC1 NAROT 2019-B A3 11/15/23 916.67 2.50% 9/15/19 9/15/19 35,000 02004WAC5 ALLYA 2019-1 A3 9/15/23 84.88 2.91% 9/15/19 9/15/19 395,000 89238UAD2 TAOT 2019-C A3 9/15/23 670.62 1.91% 9/15/19 9/15/19 335,000 44932NAD2 HYUNDAI AUTO RECEIVABLES TRUST 6/15/23 742.58 2.66% 9/15/19 9/15/19 500,000 65479KAD2 NAROT 2019-A A3 10/15/23 1,208.33 2.90% 9/15/19 9/15/19 220,000 14042WAC4 COPAR 2019-1 A3 11/15/23 460.17 2.51% PFM Asset Management LLC 12 CITY OF SAN LUIS OBISPO For the Quarter Ended September 30, 2019 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 9/15/19 9/15/19 80,000 89239AAD5 TAOT 2019-A A3 7/15/23 194.00 2.91% 9/18/19 9/18/19 210,000 43814WAC9 HAROT 2019-1 A3 3/20/23 495.25 2.83% 9/21/19 9/21/19 410,000 43815MAC0 HAROT 2019-2 A3 6/21/23 861.00 2.52% 9/30/19 9/30/19 840,000 912828Q29 US TREASURY NOTES 3/31/23 6,300.00 1.50% 9/30/19 9/30/19 765,000 9128285D8 UNITED STATES TREASURY NOTES 9/30/23 10,996.88 2.87% 9/30/19 9/30/19 500,000 912828L57 US TREASURY NOTES 9/30/22 4,375.00 1.75% 9/30/19 9/30/19 1,300,000 912828W89 US TREASURY NOTES 3/31/22 12,187.50 1.87% 9/30/19 9/30/19 1,240,000 912828L57 US TREASURY NOTES 9/30/22 10,850.00 1.75% 9/30/19 9/30/19 1,200,000 912828W89 US TREASURY NOTES 3/31/22 11,250.00 1.87% 9/30/19 9/30/19 1,860,000 912828W89 US TREASURY NOTES 3/31/22 17,437.50 1.87% 9/30/19 9/30/19 2,085,000 912828W89 US TREASURY NOTES 3/31/22 19,546.88 1.87% 52,325,000 491,275.23Total INTEREST MATURITY 7/18/19 7/18/19 640,000 89236TBP9 TOYOTA MOTOR CREDIT CORP NOTES 7/18/19 640,000.00 0.00 2.12% 8/1/19 8/1/19 645,000 313384JW0 FEDERAL HOME LOAN BANKS DISC NOTE 8/1/19 645,000.00 0.00 0.00% 8/2/19 8/2/19 1,350,000 3135G0N33 FNMA BENCHMARK NOTE 8/2/19 1,350,000.00 0.00 0.87% 8/15/19 8/15/19 240,000 084664CK5 BERKSHIRE HATHAWAY INC CORPORATE NOTES 8/15/19 240,000.00 0.00 1.30% 8/15/19 8/15/19 355,000 3137EAEH8 FREDDIE MAC NOTES 8/15/19 355,000.00 0.00 1.37% 9/3/19 9/3/19 1,050,000 912796VT3 UNITED STATES TREASURY BILL 9/3/19 1,050,000.00 0.00 0.00% 9/12/19 9/12/19 260,000 3135G0ZG1 FNMA NOTES 9/12/19 260,000.00 0.00 1.75% 4,540,000 4,540,000.00 0.00Total MATURITY SELL 7/1/19 7/3/19 1,000,000 3135G0N33 FNMA BENCHMARK NOTE 8/2/19 1,002,570.14 2.23% (1,054.36)0.87% 7/1/19 7/3/19 275,000 3137EAEB1 FHLMC REFERENCE NOTE 7/19/19 275,928.43 2.24% (157.76)0.87% PFM Asset Management LLC 13 CITY OF SAN LUIS OBISPO For the Quarter Ended September 30, 2019 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 7/1/19 7/3/19 550,000 3137EADK2 FREDDIE MAC GLOBAL NOTES 8/1/19 552,473.78 2.24% (160.04)1.25% 7/10/19 7/12/19 1,385,000 912828XX3 US TREASURY N/B NOTES 6/30/24 1,396,994.08 1.83% (3,124.82)2.00% 7/18/19 7/22/19 640,000 9128283C2 US TREASURY N/B NOTES 10/31/22 646,936.96 1.80% 19,878.46 2.00% 8/7/19 8/9/19 350,000 912828WY2 US TREASURY NOTES 7/31/21 354,813.69 1.57% 1,409.69 2.25% 8/27/19 8/29/19 1,145,000 65590ASN7 NORDEA BANK AB NY CD 2/20/20 1,149,677.37 2.00% 3,898.77 2.72% 5,345,000 5,379,394.45 20,689.94Total SELL PFM Asset Management LLC 14 Investment Portfolio Benefits All Funds The City’s cash and investment portfolio represents money from all City funds, including the General Fund, enterprise funds (Water, Sewer, Parking, Transit), special revenue funds (Tourism, Downtown Assessments) capital projects funds, and other funds which are restricted to specific purposes. In general, monies held by the City are either allocated by the City Council for spending or are purposefully retained in reserve. For example, the money in the Capital Outlay Fund has been identified to provide particular capital projects for the community, and there is a plan for spending down the cash balance as the projects progress. Balances held in reserve per the City’s financial policies equate to 20% of operating budget. For fiscal year 2019-20, they are as follows in the chart to the left. Fund FY 2019–20 General $ 10,230,000 Water $ 4,572,000 Sewer $ 2,844,000 Parking $539,000 Transit $820,000 Tourism $100,000 15 Investment Objectives The investment objectives of the City of San Luis Obispo are first, to provide safety of principal to ensure the preservation of capital in the overall portfolio; second, to provide sufficient liquidity to meet all operating requirements; and third, to earn a commensurate rate of return consistent with the constraints imposed by the safety and liquidity objectives. The City follows the practice of pooling cash and investments for all funds under its direct control. Funds held by outside fiscal agents under provisions of bond indentures are maintained separately. Interest earned on pooled cash and investments is allocated quarterly to the various Quarterly Investment Report funds based on the respective fund’s average quarterly cash balance. Interest earned from cash and investments with fiscal agents is credited directly to the related accounts. It is common for governments to pool the cash and investments of various funds to improve investment performance. By pooling funds, the city can benefit from economies of scale, diversification, liquidity, and ease of administration. The City uses the services of an investment advisor, PFM Asset Management, to manage a portion of the City’s portfolio. The City’s strategy is to retain approximately 25% of the portfolio to manage its day-to-day cash flow needs, while PFM’s focus is on longer-term investment management. In addition, the City has retained direct control of several investments that had been acquired before the City began to use investment advisors. All investments are held by the City in a safe keeping account with Bank of New York Mellon, except for investments held by trustees related to bond financings, which are held by either US Bank or Bank of New York Mellon. 16 Distribution List City Council Heidi Harmon Mayor Andy Pease Vice Mayor Aaron Gomez Council Member Erica A. Stewart Council Member Carlyn Christianson Council Member Investment Oversight Committee Heidi Harmon Mayor Daniel Humphrey Public Member Derek Johnson City Manager Brigitte Elke Director of Finance Debbie Malicoat Accounting Manager/Controller Natalie Harnett Principal Financial Analyst—Budget Independent Auditor Badawi & Associates PFM Asset Management Monique Skype Relationship Manager 17