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CURRENT INVESTMENT STRATEGY: The need for investing into the trust fund caused reinvestment activity to slow down in the quarter. Staff continues to invest in a mix of fixed income securities as excess cash is available while continuing to try and match maturities with future cash needs. The Federal reserve has continuously been increasing interest rates as we had anticipated, at this juncture we anticipate one more rate hike towards the end of the year. Our strategy of purchasing callable securities over the last 2 years has paid off handsomely as they are now behaving as bullets and providing a higher yield to the portfolio. We are deliberately not going too long on the maturity curve due to the current rate environment, in order to provide additional income and structure to the portfolio. In our current strategy we have been adding highly discounted callable securities (low coupon, below par purchase price) as a protection to call risk while at the same time gaining the extra pickup offered on yield. The yield curve currently is very flat on the longer end with little to no award for going long. This can be interpreted in different ways, some of which could indicate a heavier concentration on the short end of the curve while other indicators could be a possibility of a recession in the 12 to 18-month horizon. Stock markets are choppy and PE ratios are at all times highs that translates into higher risk. While we are well into 8 years of a recovery and upward moving economy caution needs to be taken in these uncertain times as most prior market cycles have revolved in the 5 to 10-year range. Additionally, staff is balancing the portfolio's credit exposure to pick up incremental yields while complying with the City's investment policy's mandate of safety, liquidity, and yield. This strategy is expected to be continuously monitored during FY 2018-19.