Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
IOC Agenda Packet 5.10.18
CITY OF SAN LUIS OBISPO INVESTMENT OVERSIGHT COMMITTEE REGULAR QUARTERLY AGENDA May 10, 2018, 1:30 PM Council Hearing Room 990 Palm Street San Luis Obispo, California MISSION: As set forth in the Investment Management Plan, this committee is responsible for reviewing the City’s portfolio on an ongoing basis to determine compliance with the City’s investment policies and for making recommendations to the City Treasurer (Director of Finance) regarding investment management practices. OATH OF OFFICE Oath of Office Committee Members Alex Ferreira, Brigitte Elke, and Shay Stewart CALL TO ORDER: City Manager Derek Johnson ROLL CALL: Mayor Heidi Harmon; City Manager Derek Johnson; Interim Finance Director Brigitte Elke, Accounting Manager Controller Rico Pardo; Budget Manager Alex Ferreira; Committee Member Shay Stewart OTHERS PRESENT: Al Eschenbach, Independent Auditor and ex-officio member; Izac Chyou, Senior Managing Consultant for PFM Asset Management LLC PUBLIC COMMENT: At this time, the public is invited to address the Committee concerning items not on the agenda but are of interest to the public and within the subject matter jurisdiction of the Investment Advisory Committee. Time limit is three minutes. The Committee may not discuss or take action on issues that are not on the agenda other than to briefly respond to statements made or questions raised, or to ask staff to follow up on such issues. BUSINESS ITEMS 1. Minutes of the Investment Oversight Committee meeting of February 15, 2018. a. Recommend approval of the minutes 2. Presentation of the Quarterly Investment Report on Portfolio Performance a. Review and confirm investment policy compliance 3. Items to be addressed at a future meeting. 4. Review Investment Oversight Committee calendar. 5. Adjourn to the next meeting to be held on August 16, 2018 at 1:30 pm. _________________________________________________________________________ Investment Oversight Committee Regular Quarterly Agenda for May 10, 2018 The City of San Luis Obispo wishes to make all of its public meetings 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 City Clerk’s Office at (805) 781 -7100 at least 48 hours before the meeting, if possible. Telecommunications Device for the Deaf (805) 781-7107. Any writings or documents provide to the Committee regarding any item on this agenda will be made available for public inspection in the City Clerk’s Office located at 990 Palm Street, San Luis Obispo, during normal business hours. Minutes Investment Oversight Committee Thursday, February 15, 2018 Regular Meeting of the Investment Oversight Committee CALL TO ORDER A Regular meeting of the Investment Oversight Committee was called to order on Thursday, February 15, 2018 at 1:30 p.m. in the Council Hearing Room at 990 Palm Street, San Luis Obispo, California, by Chair Johnson. ROLL CALL Present: Committee Members Mayor Harmon, Steve Barasch, Derek Johnson, Rico Pardo, Chair Xenia Bradford, and Greg Hermann Absent: Others Present: Al Eschenbach, Independent Auditor and ex-officio member, Izac Chyou, PFM Asset Management LLC (City’s Investment Advisor); Kelly Medina, Finance Administrative Assistant & Recording Secretary PUBLIC COMMENT ON ITEMS NOT ON THE AGENDA None. ---End of Public Comment--- 1. REVIEW OF INVESTMENT OVERSIGHT COMMITTEE MEETING MINUTES OF NOVEMBER 6, 2017 ACTION: MOTION BY COMMITTEE MEMBER JOHNSON, SECOND BY COMMITTEE MEMBER HERMANN, CARRIED 6-0 to approve the Investment Oversight Committee Meeting minutes of November 6, 2017. City of San Luis Obispo, Title, Subtitle Minutes - Investment Oversight Committee Minutes of February 15, 2018 Page 2 2. PRESENTATION OF THE QUARTERLY INVESTMENT REPORT ON PORTFOLIO PERFORMANCE City Investment Advisor Izac Chyou reviewed the contents of the report and summarized the portfolio’s performance. Committee questions followed. Public Comment: None. ---End of Public Comment--- ACTION: MOTION BY COMMITTEE MEMBER JOHNSON, SECOND BY COMMITTEE MEMBER PARDO, CARRIED 6-0, to accept the Quarterly Investment Report for the period ending December 31, 2017 is in compliance with the City’s Investment Policy. 3. ITEMS TO BE ADDRESSED AT A FUTURE MEETING Possibility of PFM managing Pension Trust 4. DISCUSSION OF INVESTMENT OVERSIGHT COMMITTEE CALENDAR The next committee meeting is scheduled for May 10, 2018. Steve Barasch stated that this is his last meeting and Derek Johnson stated that Clerk’s Office is recruiting for a Citizen member to join the committee by the May meeting. ADJOURNMENT The meeting was adjourned at 2:08 pm. APPROVED BY INVESTMENT OVERSIGHT COMMITTEE: XX/XX/2018 Quarterly Investment Report As of March 31, 2018 May 10, 2018 This report presents the City’s investment portfolio for the quarter ending March 31, 2018. 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. 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 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 is able to 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. Investment Portfolio Benefits all Funds The City’s cash and investment portfolio represents money from all City funds, including the General Fund, enterprise funds, 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. In the General Fund, approximately $10 million is purposely held in reserve to meet the City’s reserve policy of 20% of operating expenditures. Quarterly Investment Report Current Cash and Investment Summary The following is a summary of the City’s cash and investments based on market value as of March 31, 2018 compared with the prior quarter: December 31, 2017 March 31, 2018 Percent of Total Cash and investments held by the City 42,164,768 45,453,808 36.13% Cash and investments managed by PFM 75,984,342 75,822,228 60.28% Cash and investments held by trustees 4,513,528 4,513,605 3.59% TOTAL 122,662,638 125,789,641 100% There are a number of factors which result in changes in cash and investment balances from month to month and quarter to quarter. Often they are the result of the receipt of revenues or a large disbursement. Some major City revenues are received on a periodic rather than a monthly basis. Property Tax, for example, is received in December, January, April and May of each year. Other revenues, such as Transient Occupancy Tax, are received monthly but vary considerably because they are seasonal. On the disbursement side, payments for bonded indebtedness or large capital projects can reduce the portfolio substantially in the quarter that they occur. Significant fluctuations of this type will be discussed in the following section of this report. 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 will impact the total value of the portfolio as reported. At March 31, 2018, the market value of the portfolio was $1,202,445 less than the cost basis. The portfolio’s yield on a market basis as of March 31, 2018 was 2.43%, and the yield on a cost basis was 1.70%. (These amounts do not reflect the returns on the assets held by the bond trustee.) As of March 31, 2018, the investment portfolio was in compliance with all State laws, the City's Statement of Investment Policy and the City’s Investment Management Plan. Summary of Activity for the Quarter and Future Liquidity Cash receipts and disbursements are generally 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, such as the Whale Rock Commission. Report Contents and Distribution. This report includes the following four schedules on the City’s portfolio as of March 31, 2018; summary of investments held or managed by the City, trustees or PFM; summary of investment portfolio liquidity; investment details; and detail of holdings for each investment. These schedules have not yet been reviewed by the City’s independent auditor. If you have any questions concerning this report, or require additional information, contact Brigitte Elke, Interim Director of Finance at (805) 781-7005. DISTRIBUTION LIST City Council Heidi Harmon, Mayor Dan Rivoire, Vice Mayor Aaron Gomez, Council Member Andy Pease, Council Member Carlyn Christianson, Council Member Investment Oversight Committee Heidi Harmon, Mayor Derek Johnson, City Manager Brigitte Elke, Interim Director of Finance Rico Pardo, Accounting Manager/Controller Alex Ferreira, Budget Manager Shay Stewart, Public Member Independent Auditor Allen E. Eschenbach, Glenn Burdette Attest Corporation PFM Asset Management Monique Skype, Portfolio Manager Izac Chyou, Senior Managing Consultant CITY OF SAN LUIS OBISPO SUMMARY OF INVESTMENTS As of March 31, 2018 Percent of Current Market Portfolio Yield Value Local Agency Investment Funds 50% 1.52% 22,588,997.34 Certificate of Deposit 2% 1.09% 1,000,000.00 Money Market Account 2% 0.25% 1,016,824.59 Checking Account 46% 0.25% 20,847,985.92 Treasury Issues 0% 0.00% 0.00 Total Investments Held by the City 100% 0.90% $45,453,807.85 Percent of Current Portfolio Yield Value Federal Agency Issues 37% 1.34% 27,889,034.33 Commercial Paper 6% 1.69% 4,572,956.30 Money Market Fund 0% 0.00% 76,705.10 US Corporate Notes 15% 1.85% 11,351,434.14 Negotiable CD 17% 2.10% 13,255,064.36 Treasury Issues 25% 1.85% 18,677,034.08 Total Investments Managed by Public Financial Management 100% 1.69% $75,822,228.31 Percent of Current Market Trustee Portfolio Yield Value First American Treasury Funds 10.32% 1.09% 465,961.36 Other Money Market Accounts 0.24% 0.02% 10,839.12 Certificate of Deposit 0.00% 0.00% Guaranteed Investment Contracts 45.11% see below 2,036,092.50 Federal Agency Issues 12.61% 0.14% 569,191.95 Treasury Issues 31.72% Varies 1,431,519.61 Total Investments Held by Trustees 100% $4,513,604.54 Total of all Investments--Market Value $125,789,640.70 INVESTMENTS HELD AND MANAGED BY THE CITY INVESTMENTS OF THE CITY MANAGED BY PUBLIC FINANCIAL MANAGEMENT INVESTMENTS OF THE CITY HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS TOTAL CASH AND INVESTMENTS CITY OF SAN LUIS OBISPO SUMMARY OF INVESTMENT PORTFOLIO LIQUIDITY As of March 31, 2018 Managed Managed Percent of Market by City by PFM Portfolio Value On Demand 44,453,807.85 76,705.10 37% 44,530,512.95 Within Six Months 1,000,000.00 3,393,399.44 4% 4,393,399.44 Six Months to One Year 14,588,587.77 12% 14,588,587.77 Within One to Five Years 0.00 57,763,536.00 48% 57,763,536.00 Over Five Years 0% 0.00 TOTAL 45,453,807.85 $75,822,228.31 100% $121,276,036.16 Percent of Market Portfolio Value On Demand 11% 476,800.48 Within Six Months 0% 0.00 Six Months to One Year 0% 0.00 Within One to Five Years 17% 787,759.05 Over Five Years 72% 3,249,045.01 TOTAL 100% $4,513,604.54 Total of all Investments--Market Value $125,789,640.70 CITY OF SAN LUIS OBISPO INVESTMENT DETAIL As of March 31, 2018 Agency Investment Coupon Current Purchase Maturity Market (Broker) Description Rate Yield Date Date Value Local Agency Money Market Fund On Investment Fund City NA 1.52% Varies Demand 22,520,684.00 Local Agency Money Market Fund On Investment Fund CIB NA 1.52% Varies Demand 68,313.34 Bank of America and On JP Morgan Chase Checking Account NA 0.25% Varies Demand 20,847,985.92 Collateralized Pacific Premiere Bank Certificate of Deposit NA 1.09% 12/20/2013 12/20/2018 1,000,000.00 On Pacific Permiere Bank Money Market Account NA 0.25% 1/24/2012 Demand 1,016,824.59 TOTAL $45,453,807.85 INVESTMENTS HELD BY THE CITY AND THOSE MANAGED BY PUBLIC FINANCIAL MANAGEMENT (PFM) INVESTMENTS HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS TOTAL CASH AND INVESTMENTS INVESTMENTS HELD AND MANAGED BY THE CITY CITY OF SAN LUIS OBISPO INVESTMENT DETAIL As of March 31, 2018 Agency Investment Coupon Current Purchase Maturity Market (Broker) Description Rate Yield Date Date Value 2005 Refunding Lease Revenue Bonds U. S. Bank First American Corporate Trust Services Treasury Obligation N/A 1.09% Varies on demand 35,373.49 U. S. Bank United States Corporate Trust Services Treasury Bonds 6.00% 4.86% 6/26/96 2/15/26 725,603.76 2006 Lease Revenue Bonds U. S. Bank First American Corporate Trust Services Treasury Fund N/A 1.09% Varies on demand 28,136.26 Guaranteed FSA Capital Investment Contract Management Services LLC Treasury Fund 5.545% 5.545% 5/11/06 5/26/36 1,000,745.00 2006 Water Revenue Bonds U. S. Bank First American Corporate Trust Services Treasury Fund N/A 1.09% Varies on demand 28,111.05 Guaranteed FSA Capital Investment Contract Management Services LLC Treasury Fund 5.355% 5.355% 8/17/06 5/28/36 1,035,347.50 2009 Lease Revenue Bonds U. S. Bank First American Corporate Trust Services Treasury Fund N/A 1.09% Varies on demand $374,340.56 U. S. Bank Fed Home Loan Mort. Corp Corporate Trust Services Medium term Note 1.27% 1.27% 11/25/2014 8/1/2019 $78,967.20 U. S. Bank Corporate Trust Services U.S. Treasury Note 1.51% 1.51% 11/25/2014 2/28/2019 $69,611.50 U. S. Bank Federal Nat'l Mtge. Assoc. Corporate Trust Services Debenture 1.88% 1.88% 11/25/2014 9/18/2018 $34,980.75 U. S. Bank Corporate Trust Services U.S. Treasury Note 1.38% 1.38% 11/25/2014 6/30/2018 $69,924.40 U. S. Bank Corporate Trust Services U.S. Treasury Note 1.14% 1.14% 11/25/2014 5/31/2019 $79,031.20 U. S. Bank Corporate Trust Services Federal Nat'l Mtge. Assoc. 1.76% 1.76% 11/25/2014 3/29/2018 $49,644.00 2012 Water Revenue Refunding Bonds (Refunded 2002 Water Revenue Bonds) U. S. Bank U.S Bank Money Corporate Trust Services Market Account N/A 0.02% Varies on demand $10,093.88 U. S. Bank United States Corporate Trust Services Treasury Note 5.89% 5.89% Varies 2/15/13 $265,969.00 U. S. Bank United States Corporate Trust Services Treasury Note 2.03% 2.03% Varies 11/15/21 $221,379.75 2012 Revenue Refunding Bonds (Refunded 2001 Revenue Refunding Bonds) U. S. Bank U.S Bank Money Corporate Trust Services Market Account NA 0.02% Varies on demand $745.24 U. S. Bank U.S Bank Money Corporate Trust Services Market Account NA 0.20% Varies on demand $405,600.00 TOTAL $4,513,604.54 INVESTMENTS HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS CITY OF SAN LUIS OBISPO INVESTMENT DETAIL As of March 31, 2018 The City of San Luis Obispo maintains certain performance objectives for the investments that are managed by Public Financial Management. The overall performance objective for the portfolio is to earn a total rate of return over the market cycle that equals or exceeds the market index. In order to achieve this objective the portfolio invests in high-quality money market instruments, US Treasury securities, Agency securities, and high-grade corporate securities, with a maximum maturity of five years. To monitor the achievement of this objective, the City uses a “Benchmark” to compare to. The benchmark which is used is based on the BofA Merrill Lynch Index of 0-5 year Treasury securities. Below is a summary of the monthly results as compared to the benchmark. While the City strives to achieve this performance objective every month, the goal is assumed to be met on an annual basis. The City of San Luis Obispo is currently just under the benchmark goals in most categories. We feel that through market trends and current investing adjustments, our performance will meet or exceed the benchmarks by the end of the fiscal year. Benchmark Comparison for the Quarter Ended 3/31/2018 Benchmark 3/31/2018 Portfolio 12/31/2017 Average Maturity (yrs)2.2 2.09 2.16 Modified Duration 2.11 2.01 2.08 Average Purchase Yield N/A 1.70% 1.61% Average Market Yield 2.23% 2.43% 2.00% Average Quality AAA AA/Aa1 AA/Aa1 Total Market Value -$ 76,204,388$ 76,667,259$ The following pages provide a summary of the portfolio under management by Public Financial Management (PFM) as well as a detailed holding report for the month. MANAGED BY PUBLIC FINANCIAL MANAGEMENT © PFMCity of San Luis ObispoInvestment ReportFor the Quarter Ended March 31, 2018PFM Asset Management LLCwww.pfm.com50 California StreetSuite 2300San Francisco, CA 94111415-982-5544Monique Spyke, Managing Directorspykem@pfm.comIzac Chyou, Senior Managing Consultantchyoui@pfm.com © PFMTable of ContentsI.Market UpdateII.Portfolio ReviewIII.Appendix A.Consolidated Portfolio InformationB.Portfolio HoldingsC.Quarterly Transactions © PFMI. Market Update © PFMEconomic SummarySource: Bloomberg, data available as of 3/31/18. SAAR is seasonally adjusted annualized rate.0.0%0.5%1.0%1.5%2.0%2.5%Feb '13 Feb '14 Feb '15 Feb '16 Feb '17 Feb '18Inflation Measures(YoY)Core CPICore PCEFed's Long Term Inflation Target2.9%-2%0%2%4%6%Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q42013 2014 2015 2016 2017U.S. Real GDP(QoQ, SAAR)406080100120140Mar '13 Mar '14 Mar '15 Mar '16 Mar '17 Mar '18Consumer Confidence7.5%6.7%5.5%5.0%4.5%4.1%3%4%5%6%7%8%9%Mar '13 Mar '14 Mar '15 Mar '16 Mar '17 Mar '18Unemployment Rate1 © PFM2.27%0.00%0.50%1.00%1.50%2.00%2.50%3.00%3.50%Mar '08Mar '09Mar '10Mar '11Mar '12Mar '13Mar '14Mar '15Mar '16Mar '17Mar '182-Year Treasury YieldSource: Bloomberg, as of 3/31/2018.The 2-year Treasury yield continued to move higher throughout the first quarter of 2018, increasing 38 basis points (0.38%) to 2.27%, levels not seen since 2008.The first quarter marked the seventh straight quarterly rise in the 2-year yield as the U.S. economy remained strong and the Federal Reserve continued on its path of quantitative tightening, raising the federal funds target rate by 25 basis points to a range of between 1.50% to 1.75% at its March meeting.Short-Term Treasury Yields Continue to RiseAverage: 0.80%42-year low: 0.15%2 © PFMSource: Bloomberg, as of 3/31/2018.U.S. Treasury CurveCurrent3/31/18Year-End12/29/17Year-End12/30/163-month 1.70%1.38% 0.50%6-month 1.91%1.53% 0.61%1-year 2.08%1.73% 0.81%2-year 2.27%1.88% 1.19%3-year 2.38%1.97% 1.45%5-year 2.56%2.21% 1.93%0.0%0.5%1.0%1.5%2.0%2.5%3.0%3M1Y2Y3Y4Y5YYieldMaturityMarch 30, 2018December 29, 2017December 30, 20163 © PFMSource: Bloomberg, as of 3/31/2018.After beginning 2018 as 2017 ended, calm and complacent with the S&P 500 logging 14 new record highs in January, volatility roared back into financial markets in early February. After months near all-time record lows, the Chicago Board Options Exchange (CBOE)Volatility Index surged to a near five-year high as concerns surrounding possible trade wars, overheating of the economy given tax cuts and expansionary fiscal budget, and stretched valuations took investors’ focus.The Return of Market Volatility2,8732,581 2,400 2,475 2,550 2,625 2,700 2,775 2,850 2,925Sep '17Oct '17Nov '17Dec '17Jan '18Feb '18Mar '18S&P 50011.1%37.3%5%10%15%20%25%30%35%40%Sep '17Oct '17Nov '17Dec '17Jan '18Feb '18Mar '18Equity Market Volatility(VIX Index)4 © PFMSource: Bloomberg, Bank of America Merrill Lynch Indices, as of March 2018. OAS is Option Adjusted Spread.Credit Spreads Widen to Start 2018406080100120140160180Mar '15 Sep '15 Mar '16 Sep '16Mar '17Sep '17Mar '18Basis Points1-5 Year Investment Grade Corporate Yield Spreads (OAS)Credit spreads spiked after the equity market turmoil in early February and have continued to drift wider, increasing the value available in the sector. Although corporate securities have underperformed in the first quarter as a result of spread widening, they are now offered at their cheapest levels since May 2017. With the economy still improving and credit fundamentals still strong, this has been an opportunity to purchase credit investments with incremental value.5 © PFMSource: ICE BofAML 1-5 year Indices, as of 4/2/2018.Sector Yield Spreads Still Near Historically Tight Levels7821021352050100150200250300Agency Corporate(Investment Grade)Corporate (BBB) MBS ABS (AAA)Yield Spread (basis points)Current vs. Historical Yield Spreads 1-5 Year Indices5-Year RangeCurrent Spread6 © PFMSource: ICE BofAML Indices. MBS and ABS indices are 0-5 year, based on weighted average life. As of 3/31/2018.Sector Returns 1-5 Year Indices0.65%0.86%2.24%1.62%1.40%-0.38%-0.18%-0.80%-0.63%-0.11%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%U.S. TreasuryAgencyCorp (A-AAA)MBSABS (AAA)U.S. TreasuryAgencyCorp (A-AAA)MBSABS (AAA)20172018 Q17 © PFMSource: Federal Reserve and Bloomberg. Individual dots represent each Fed members’ judgement of the midpoint of the appropriate target range for the federal funds rate at each year-end. Fed funds futures as of 3/21/18.FOMC “Dot Plot” – March 20180%1%2%3%4%5%Fed Participants’ Assessments of “Appropriate” Monetary PolicyMar-18 FOMC ProjectionsMar-18 MedianFed Funds FuturesFed expects 2 more rate hikes in 2018, raises future projectionsHistory of RecentFed Rate HikesMar ’18 1.50 - 1.75%Dec ’17 1.25 - 1.50%Jun ’17 1.00 - 1.25%Mar ’17 0.75 - 1.00%Dec ’16 0.50 - 0.75%Dec ’15 0.25 - 0.50%201820192020Longer Term8 © PFMThe Impact of Rising RatesMarket ValueRealized EarningsFor fixed-income holdings, when interest rates rise. . . Market values of existing holdings decline, resulting in unrealizedmarket value losses and possibly negative total return; HOWEVERRealized earnings will increase over time as new securities are added at higher interest rates.9 © PFMSource: Bloomberg, U.S. Office of Budget and Management. U.S. fiscal year ends September 30 of each year. YTD FY 2018 is as of February 2018.U.S. Federal Budget Deficit on Track to Increase in 2018-$484-$439-$587-$666-$391-$800-$600-$400-$200$0Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug SepU.S. Budget Deficit: Cumulative Fiscal YTD (in billions)FY 2014FY 2015FY 2016FY 2017FY 201810 © PFMTrade Focus: U.S. International Trade (Exports + Imports)Record HighSource: U.S. Census Bureau and Bureau of Economic Analysis.11 © PFMTrade Focus: International Trade as a Share of State GDPSource: U.S. Census Bureau and Bureau of Economic Analysis (2017 data).12 © PFMII. Portfolio Review © PFMSecurities and funds in the internal portfolio are not rated.1. Effective duration used in place of modified duration. Effective duration is the approximate percentage change in price for each 1% change in interest rates. Modified duration is a similar risk measure but it ignores how changes in rates will impact cash flows on bonds with embedded options such as callable notes, MBS, or ABS. Effective duration takes into account the impact that changing interest rates has on cash flows (i.e., if interest rates fall and a callable bond is more likely to be called prior to its final maturity, the effective duration will decrease).Portfolio Characteristics — InternalFor the Quarter Ended March 31, 2018Portfolio Review3/31/2018 12/31/2017Average Maturity (yrs)0.020.03Effective Duration10.020.03Average Market Yield0.90%0.80%Total Market Value45,453,80842,164,76813 © PFM* Issuer is Pacific Premier Bank.Percentages based on market values excluding accrued interest.Sector Distribution — InternalFor the Quarter Ended March 31, 2018Portfolio ReviewLAIFMoney MarketRate AccountNegotiable CDs* Cash3/31/201849.7% 2.2% 2.2% 45.9%12/31/201753.6% 2.4% 2.4% 41.6%0%10%20%30%40%50%60%14 © PFMObjectivesInvestment ObjectivesThe 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.Performance ObjectivesThe performance objective for the portfolio is to earn a total rate of return over a market cycle that equals or exceeds the market index, the Bank of America Merrill Lynch Index of 0-5 Year Treasury securities.StrategyIn order to achieve this objective, the portfolio invests in high-quality money market instruments, U.S. Treasury securities, Federal Agency securities, and high-grade corporate securities, with a maximum maturity of five years.For the Quarter Ended March 31, 2018Portfolio Review15 First Quarter 2018 RecapA long list of positive economic data remains a key driver of economic growth, consumer confidence, and business optimism.•GDP posted an upward revision of fourth-quarter GDP to 2.9%.•Estimates for 2018 GDP call for growth in the range of 2.7% to 2.8%.•Jobs growth continued to strengthen, averaging over 200,000 per month in the first quarter.•The unemployment rate remained at 4.1%—a 17-year low.•Productivity hit a 2-year high.•Manufacturing reached a 3-year high.•Consumer confidence rebounded after a dampened fourth quarter and now sits at a 14-year high.•Inflation, while below the Fed’s target of 2%, inched higher by most measures.New Fed Chair Jerome Powell made his first public address at February’s semi-annual monetary policy report to Congress. His maiden testimony hinted at a continuance of gradual rate hikes while acknowledging that “the economic outlook remains strong” and the expectation for inflation to increase and closely approach the FOMC’s 2% objective remains intact.The Fed remained true to its stated course, raising short-term rates by ¼ percent in March, and interest rates continued their ascent over the quarter. As a result, we strategically positioned the portfolio with a defensive duration bias relative to the benchmark to help insulate market values in the well-choreographed interest rate environment. However, with rates at or near multi-year highs, there were also opportunities to capture higher yields selectively in some parts of the yield curve when rebalancing the portfolio.For the Quarter Ended March 31, 2018Portfolio Review© PFM16 © PFMFirst Quarter 2018 Recap cont.The combined effects of less predictable U.S. politics and policy (e.g., tariffs, trade wars, Facebook, global relations, budget deficits, etc.) created an environment of heightened volatility. The “risk off” sentiment triggered wider credit spreads.•Wider spreads caused corporate-related investments to underperform for the quarter. While portfolios typicallybenefit from increased credit allocations, returns in the first quarter were negatively affected.•Federal agency yield spreads remained very narrow throughout the quarter. New issue agencies continued to be ourpreferred—in some cases only—outlet to add exposure at relatively attractive yields. Generally, the agency sectoradded modest positive excess returns in the first quarter (returns in excess of similar-duration Treasuries) acrossmuch of the yield curve, benefiting portfolio performance.•After yield spreads in the corporate sector reached another new post-recession low in January, we shifted ourgenerally constructive view of the corporate sector to a slightly more defensive posture by holding current positions(and letting them drift shorter over time) rather than adding to allocations. In the latter half of the quarter, the storyshifted abruptly as market volatility pushed credit spreads markedly wider through quarter-end. As a result, webegan to add corporate exposure (including negotiable CDs) more aggressively again in March.For the Quarter Ended March 31, 2018Portfolio Review17 © PFM•Performance is for the City of San Luis Obispo’s Operating Funds.•Performance on trade-date basis, gross (i.e., before fees), in accordance with the CFA Institute’s Global Investment Performance Standards (GIPS).•Performance for periods one year and greater are presented on an annualized basis.•Bank of America Merrill Lynch Indices provided by Bloomberg Financial Markets.•Inception date is December 31, 2014.Total Rate of ReturnFor the Quarter Ended March 31, 2018Portfolio Review-0.05% +0.16% +0.19% +0.15%Difference:3 Months 1 Year3 Years Since InceptionCity of San Luis Obispo-0.28% 0.30% 0.69% 0.84%0-5 Yr. Treasury Index-0.23% 0.14% 0.50% 0.69%-0.40%-0.20%0.00%0.20%0.40%0.60%0.80%1.00%18 © PFMEarnings for the City of San Luis Obispo’s Operating Funds.Portfolio EarningsFor the Quarter Ended March 31, 2018Portfolio ReviewMarket Value BasisAccrual (Amortized Cost) BasisBeginning Value (12/31/2017)$75,877,208$76,507,412Net Purchases/Sales$398,388$398,388Change in Value($530,073)($14,976)Ending Value (3/31/2018)$75,745,523$76,890,825Interest Earned$316,909$316,909Portfolio Earnings($213,164)$301,93319 © PFMCategoryStandardIn ComplianceTreasury Obligations5 year maximum maturityYesGovernment Sponsored Enterprise (GSE) Securities 5 year maximum maturityYesCorporate Notes5 year maximum maturityAt least two “A” rating; at least one “AA” for financials30% maximum, 5% per issuerYesLocal Government Investment Pool (LAIF)Up to maximum permitted by State LawYesNegotiable Certificates of Deposit5 year maximum maturityAt least a “AA” or “A-1”30% maximum, 5% per issuerYesCommercial Paper270 day maximum maturityAt least one “A-1” rating40% maximum, 10% per issuerYesCollateralized Bank Deposits25% maximum, 5% per issuerYesMoney Market Mutual FundsHighest rating category by 2 NRSROs20% maximum, 10% per issuerYesMaximum maturity10 years; 10% maximum of portfolio in Treasury and GSE obligations with maturity >5 yearsYesDuration limitDuration of portfolio equal duration of benchmark plus or minus 10%YesSocial responsibility No investments in companies involved in tobacco, electronic cigarettes, or the direct production or drilling of fossil fuelsYesApplies to aggregate portfolio. Source: City of San Luis Obispo Investment Management Plan, June 2015.Portfolio ComplianceThe portfolio complies with California Government Code and the City of San Luis Obispo’s Investment Policy in regards to credit quality, maturity, sector, and issuer limits.For the Quarter Ended March 31, 2018Portfolio Review20 © PFM1. The City of San Luis Obispo’s current benchmark is the ICE Bank of America Merrill Lynch (BAML) 0-5 Year U.S. Treasury Index.2. Effective duration used in place of modified duration. Effective duration is the approximate percentage change in price for each 1% change in interest rates. Modified duration is asimilar risk measure but it ignores how changes in rates will impact cash flows on bonds with embedded options such as callable notes, MBS, or ABS. Effective duration takes intoaccount the impact that changing interest rates has on cash flows (i.e., if interest rates fall and a callable bond is more likely to be called prior to its final maturity, the effective durationwill decrease).3. Total Market Value includes cash.Portfolio Characteristics — PFM ManagedFor the Quarter Ended March 31, 2018Portfolio ReviewPortfolioBenchmark2Average Maturity (yrs)2.092.20Effective Duration12.012.11Average Purchase Yield1.70%N/AAverage Market Yield2.43%2.23%Average QualityAA/Aa1AAATotal Market Value376,204,3883/31/201821 © PFMSector distribution based on market value and excludes accrued interest.Sector Distribution — PFM ManagedFor the Quarter Ended March 31, 2018Portfolio ReviewU.S.TreasuryFederalAgencyNegotiableCDsCommercialPaperCorporateNotesMoneyMarketFund3/31/201824.8% 36.8% 17.4% 6.0% 14.9% 0.1%12/31/201721.5% 38.8% 16.3% 7.5% 15.6% 0.1%0%5%10%15%20%25%30%35%40%45%22 © PFMCredit Industry Exposure — PFM ManagedFor the Quarter Ended March 31, 2018Portfolio Review* Issuer’s industry as defined by Bloomberg. Detail may not add to total due to rounding.Banks50%Financial Services8%Automobiles Manufacturing11%Communications Equipment1%Property & Casualty Insurance4%Railroad<1%Machinery Manufacturing3%Electrical Equipment Manufacturing2%Software & Services8%Consumer Products10%Mass Merchants1%Diversified Banks2%Industry ExposureIssuerIndustry*%American Honda FinanceAutomobiles Manufacturing 5.1%Toyota Motor Credit Corp.Automobiles Manufacturing 6.3%Bank of Montreal ChicagoBanks5.1%Bank of Nova Scotia HoustonBanks3.9%Bank of Tokyo Mitsubishi UFJBanks5.0%Canadian Imperial Bank NYBanks6.3%Credit Agricole CIB NYBanks5.1%Nordea Bank AB NYBanks4.0%Skandinaviska Enskilda Banken NYBanks4.6%Svenska Handelsbanken NYBanks9.2%Swedbank NYBanks3.1%Westpac Banking Corp. NYBanks3.4%Apple Inc.Communications Equipment 1.3%Proctor & Gamble Co.Consumer Products3.6%Unilever CapitalConsumer Products6.2%Wells Fargo & Co.Diversified Banks1.5%General ElectricElectrical Equipment Manufacturing 1.8%BNY MellonFinancial Services0.6%JP Morgan Securities LLCFinancial Services4.7%UBS AG Stamford CT Financial Services2.5%John Deere CapitalMachinery Manufacturing 3.4%Wal-Mart StoresMass Merchants1.1%Berkshire Hathaway Inc.Property & Casualty Insurance 3.7%Burlington North Corp.Railroad0.4%IBMSoftware & Services5.0%Microsoft Corp.Software & Services3.3%Total100%23 © PFMRatings by Standard & Poor’s.Credit Quality — PFM ManagedFor the Quarter Ended March 31, 2018Portfolio ReviewAAAAAAA-13/31/20181.4% 72.5% 13.3% 12.8%12/31/20171.4% 72.8% 14.3% 11.4%0%10%20%30%40%50%60%70%80%90%100%24 © PFMCallable securities in portfolio are included in the maturity distribution analysis to their stated maturity date, although they may be called prior to maturity.* Benchmark is composed of the ICE BAML 0-5 Year U.S. Treasury Index. Data from Bloomberg.Maturity Distribution — PFM Managed Portfolio vs. BenchmarkFor the Quarter Ended March 31, 2018Portfolio Review0-1 Year 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 YearsPortfolio23.9% 29.0% 19.9% 19.6% 7.5%Benchmark*23.5% 24.6% 20.5% 16.4% 15.0%0%5%10%15%20%25%30%35%25 © PFMIssuer Distribution — PFM ManagedFor the Quarter Ended March 31, 2018Portfolio ReviewRatings by Standard & Poor’s and Moody’s.* Financial securities rated “A” by S&P are rated “AA” by Fitch and /or Egan-Jones Rating Company.Issuer NameInvestment Type % of PortfolioS&PMoody'sU.S. TreasuryU.S. Treasury24.8%AA+AaaFNMAFederal Agency 23.4%AA+AaaFHLMCFederal Agency 8.4%AA+AaaFHLBFederal Agency 5.0%AA+AaaBank of Tokyo Mitsubishi UFJCommercial Paper 3.5%A-1P-1Bank of Montreal ChicagoNegotiable CD2.4%A-1P-1Svenska Handelsbanken NYNegotiable CD2.4%A-1+P-1BNY Mellon*Corporate Note2.4%AA1Swedbank NYNegotiable CD2.0%AA-Aa3Canadian Imperial Bank NYNegotiable CD2.0%A-1P-1Bank of Nova Scotia Houston*Negotiable CD2.0%A+A1Wal-Mart StoresCorporate Note1.9%AAAa2Skandinaviska Enskilda Banken NY* Negotiable CD1.9%A+Aa3General ElectricCorporate Note1.8%AA2Westpac Banking Corp. NYNegotiable CD1.7%AA-Aa3UBS AG Stamford CT* Negotiable CD1.5%A+Aa3Nordea Bank AB NYNegotiable CD1.5%AA-Aa3Toyota Motor Credit Corp.Corporate Note1.4%AA-Aa3Apple Inc.Corporate Note1.4%AA+Aa1JP Morgan Securities LLCCommercial Paper 1.3%A-1P-1Microsoft Corp.Corporate Note1.3%AAAAaaWells Fargo & Co.*Corporate Note1.3%A-A2Credit Agricole CIB NYCommercial Paper 1.2%A-1P-1IBMCorporate Note1.0%A+A1Burlington North Corp.Corporate Note0.7%A+A3Berkshire Hathaway Inc.Corporate Note0.6%AAAa2American Honda FinanceCorporate Note0.5%A+A2Proctor & Gamble Co.Corporate Note0.4%AA-Aa3John Deere CapitalCorporate Note0.2%AA2Unilever CapitalCorporate Note0.1%A+A1Dreyfus Prime Cash Management Fund Money Market Fund 0.1%AAAmAaaTotal/Average100%AAAa126 © PFMCurrent Outlook and StrategyFor the Quarter Ended March 31, 2018Portfolio ReviewThe economic themes of the previous quarter have carried over into 2018: healthy job production, consistent GDP growth, positive corporate guidance, and heightened consumer confidence. However, where complacency had characterized the global markets quarter after quarter, volatility roared back in the first quarter. While rising volatility increases some market risks, it can also create investment opportunities.Our outlook for each of the major investment-grade fixed income sectors is as follows:•In the corporate sector, our view is that recent yield spread widening represents a modest normalization of spreadsoff of post-recession lows as opposed to a weakening in fundamentals. As such, wider spreads present anopportunity to selectively add to allocations that have become less expensive. While corporate fundamentalsremain healthy and the outlook for the sector is still positive, careful issuer due diligence will drive selection. Inparticular, we are closely watching the supply/demand impacts of corporate profit repatriation (prompted by theDecember 2017 tax cuts) and signs of excessive balance sheet leverage in companies in certain industries.•Negotiable CDs remain an attractively priced credit sector, and we will continue to source new exposure.•Federal agency securities remain expensive, as spreads are in the low single digits across much of the yield curve;however, by quarter end, specific agency maturities (2- and 5-year) were more attractively priced, representing anopportunity to potentially increase allocations.•The short-term credit curve (under one year) steepened noticeably heading into the March Fed meeting andremained elevated through quarter end. With 6-month negotiable certificates of deposit spreads at 50 to 60 basispoints over comparable Treasury securities, the sector appears very attractive and compensates investors for atleast two more fed rate hikes in 2018.27 © PFMSource: Bloomberg, PFM Trading Desk, as of 4/2/18. Not a specific recommendation. 6-mo CP yield spread based on A1/P1 rated CP index. LAIF quarterly apportionment rate from California State Treasurer. Short-Term Credit Spreads Remain Attractive1.00%1.25%1.50%1.75%2.00%2.25%2.50%2.75%123456789101112Maturity in MonthsMoney Market Yield CurvesCD/CP AverageAgenciesTreasuriesLAIF28For the Quarter Ended March 31, 2018Portfolio Review © PFMYield Environment as of March 31, 2018Maturity TreasuryFederalAgencyAA Corporate A Corporate3-Month1.70%1.72%2.11%2.21%6-Month1.91%1.85%2.32%2.39%1-Year2.08%2.06%2.54%2.63%2-Year2.27%2.35%2.66%2.82%3-Year2.38%2.44%2.82%2.99%5-Year2.56%2.66%3.08%3.22%>3%!Source: Bloomberg BVAL yield curves for Treasury and Corporate. TradeWeb for Federal Agency yields. 3 and 6 month corporate yields from commercial paper; A-1+ for AA and A-1 for A. Yields are for indicative purposes only; actual yields may vary by issue.29For the Quarter Ended March 31, 2018Portfolio Review © PFMIII. Appendix © PFMA. Consolidated Portfolio Information © PFM1.Effective duration used in place of modified duration. Effective duration is the approximate percentage change in price for each 1% change in interest rates. Modified duration is a similar risk measure but it ignores how changes in rates will impact cash flows on bonds with embedded options such as callable notes, MBS, or ABS. Effective duration takes into account the impact that changing interest rates has on cash flows (i.e., if interest rates fall and a callable bond is more likely to be called prior to its final maturity, the effective duration will decrease).Portfolio Characteristics — ConsolidatedFor the Quarter Ended March 31, 2018Portfolio Review3/31/2018 12/31/2017Average Maturity (yrs)1.311.40Effective Duration11.261.35Average Purchase Yield1.40%1.32%Average Market Yield1.86%1.57%Average QualityAA/Aa1AA/Aa1Total Market Value121,658,196 118,832,02730 © PFMSector distribution based on market value and excludes accrued interest.Sector Distribution — ConsolidatedFor the Quarter Ended March 31, 2018Portfolio ReviewU.S.TreasuryFederalAgencyComm.PaperCorporateNotesNegotiableCDsMoneyMarketFundMoneyMarketRateAccountLAIF Cash3/31/201815.5% 23.1% 3.8% 9.3% 11.7% 0.1% 0.8% 18.6% 17.1%12/31/201713.9% 25.0% 4.9% 10.1% 11.4% 0.1% 0.9% 19.0% 14.8%0%5%10%15%20%25%30%31 © PFMCallable securities in portfolio are included in the maturity distribution analysis to their stated maturity date, although they may be called prior to maturity.Maturity Distribution — ConsolidatedFor the Quarter Ended March 31, 2018Portfolio ReviewOvernight -3 Months3 - 6Months6 Months -1 Year1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years3/31/201838.6% 0.8% 12.9% 18.2% 12.5% 12.3% 4.7%12/31/201737.0% 2.1% 5.6% 24.1% 14.8% 8.5% 7.9%0%10%20%30%40%50%32 © PFMIssuer Distribution — ConsolidatedFor the Quarter Ended March 31, 2018Portfolio ReviewRatings by Standard & Poor’s and Moody’s.* Financial securities rated “A” by S&P are rated “AA” by Fitch and /or Egan-Jones Rating Company.Issuer NameInvestment Type% of PortfolioS&PMoody'sLAIF18.6%NRNRCash17.1%NRNRU.S. Treasury15.5%AA+AaaFederal Agency14.6%AA+AaaFederal Agency5.3%AA+AaaFederal Agency3.1%AA+AaaCommercial Paper2.2%A-1P-1Negotiable CD1.5%A-1P-1Negotiable CD1.5%A-1+P-1Corporate Note1.5%AA1Negotiable CD1.2%AA-Aa3Negotiable CD1.2%A-1P-1Negotiable CD1.2%A+A1Corporate Note1.2%AAAa2Negotiable CD1.2%A+Aa3Corporate Note1.1%AA2Negotiable CD1.1%AA-Aa3Negotiable CD0.9%A+Aa3Negotiable CD0.9%AA-Aa3Corporate Note0.9%AA-Aa3Corporate Note0.9%AA+Aa1Money Market Rate Account0.8%NRNRNegotiable CD0.8%NRNRCommercial Paper0.8%A-1P-1Corporate Note0.8%AAAAaaCorporate Note0.8%A-A2Commercial Paper0.7%A-1P-1Corporate Note0.6%A+A1Corporate Note0.4%A+A3Corporate Note0.4%AAAa2Corporate Note0.3%A+A2Corporate Note0.3%AA-Aa3Corporate Note0.1%AA2Corporate Note0.1%A+A1LAIFCashU.S. TreasuryFNMAFHLMCFHLBBank of Tokyo Mitsubishi UFJBank of Montreal ChicagoSvenska Handelsbanken NYBNY Mellon*Swedbank NYCanadian Imperial Bank NYBank of Nova Scotia Houston*Wal-Mart StoresSkandinaviska Enskilda Banken NY* General ElectricWestpac Banking Corp. NYUBS AG Stamford CT* Nordea Bank AB NYToyota Motor Credit Corp.Apple Inc.Pacific Premier BankPacific Premier BankJP Morgan Securities LLCMicrosoft Corp.Wells Fargo & Co.*Credit Agricole CIB NYIBMBurlington North Corp.Berkshire Hathaway Inc.American Honda FinanceProctor & Gamble Co.John Deere CapitalUnilever CapitalDreyfus Prime Cash Management FundMoney Market Fund0.1%AAAmAaaTotal/Average100%AAAa133 © PFMB. Portfolio Holdings City of San Luis Obispo Holdings ReportFor the Quarter Ending March 31, 2018Security DescriptionSettle DateYTM at Cost Par Cost Value Amortized CostYTM at Market Market Value* Accrued Interest% of PortfolioUnreal G/LAmort CostS&P/Moody'sYears to Maturity DurationLAIFLOCAL AGENCY INVESTMENT FUND Various 1.52% 22,520,684.00 22,520,684.00 22,520,684.00 1.52% 22,520,684.00 - 18.52%- NRNR0.00 0.00Total LAIF1.52% 22,520,684.00 22,520,684.00 22,520,684.00 1.52% 22,520,684.00 - 18.52%- NRNR0.00 0.00Money Market FundDREYFUS PRIME CASH MANAGEMNT MONEY MARKET FUNDVarious 0.00% 76,705.10 76,705.10 76,705.10 0.00%76,705.10 - 0.06%- AAAAaa0.00 0.00Total Money Market Fund0.00%76,705.10 76,705.10 76,705.10 0.00%76,705.10 - 0.06%- AAAAaa0.00 0.00CashCASH ACCOUNT Various 0.25% 20,847,985.92 20,847,985.92 20,847,985.92 0.25% 20,847,985.92 - 17.15%- NRNR0.00 0.00CASH Pacific Premier Bank MONEY MARKET RATE ACCOUNTVarious 0.25% 1,016,824.59 1,016,824.59 1,016,824.59 0.25%1,016,824.59 - 0.84%- NRNR0.00 0.00Total Cash0.25% 21,864,810.51 21,864,810.51 21,864,810.51 0.25% 21,864,810.51 - 17.98%- NRNR0.00 0.00U.S. Treasury Bond/NoteUS TREASURY NOTES9128282P4 1.88% Due 7/31/202211/3/2017 2.01% 795,000.00 790,093.36 790,506.16 2.53%773,665.38 2,470.650.64% (16,840.78) AA+Aaa4.34 4.12US TREASURY NOTES912828B90 2.00% Due 2/28/202110/5/2016 1.15% 725,000.00 751,394.53 742,611.16 2.40%716,928.58 1,260.870.59% (25,682.58) AA+Aaa2.92 2.81US TREASURY NOTES912828C24 1.50% Due 2/28/201911/25/2014 1.43%70,000.00 70,188.91 70,041.53 2.11%69,611.71 91.30 0.06%(429.82) AA+Aaa0.92 0.90US TREASURY NOTES912828D72 2.00% Due 8/31/202112/5/2016 1.92% 1,575,000.00 1,580,537.11 1,579,054.77 2.46%1,551,313.58 2,739.131.28% (27,741.19) AA+Aaa3.42 3.27US TREASURY NOTES912828F96 2.00% Due 10/31/20211/5/2017 1.95% 1,000,000.00 1,002,226.56 1,001,682.63 2.47%983,906.00 8,397.790.81% (17,776.63) AA+Aaa3.59 3.40US TREASURY NOTES912828F96 2.00% Due 10/31/20214/5/2017 1.86% 1,145,000.00 1,152,111.52 1,150,627.32 2.47%1,126,572.37 9,615.470.93% (24,054.95) AA+Aaa3.59 3.40US TREASURY NOTES912828F96 2.00% Due 10/31/20213/5/2018 2.48% 1,400,000.00 1,376,867.19 1,377,327.76 2.47%1,377,468.40 11,756.91 1.13%140.64 AA+Aaa3.593.40US TREASURY NOTES912828J43 1.75% Due 2/28/20223/17/2017 2.14% 365,000.00 358,270.31 359,627.43 2.49%354,934.03 555.43 0.29% (4,693.40) AA+Aaa3.92 3.75US TREASURY NOTES912828K58 1.38% Due 4/30/20202/3/2016 1.25% 1,125,000.00 1,130,932.62 1,127,952.92 2.32%1,103,422.50 6,495.170.91% (24,530.42) AA+Aaa2.08 2.03US TREASURY NOTES912828L57 1.75% Due 9/30/202210/6/2017 1.93% 500,000.00 495,742.19 496,140.54 2.54%483,301.00 23.91 0.40% (12,839.54) AA+Aaa4.50 4.29US TREASURY NOTES912828R77 1.38% Due 5/31/20217/7/2017 1.81% 1,480,000.00 1,456,123.44 1,460,500.91 2.43%1,432,478.68 6,820.601.18% (28,022.23) AA+Aaa3.17 3.06US TREASURY NOTES912828SX9 1.13% Due 5/31/201911/25/2014 1.50%80,000.00 78,684.64 79,652.12 2.18%79,031.28 301.65 0.06% (620.84) AA+Aaa1.17 1.15US TREASURY N/B912828U65 1.75% Due 11/30/202111/3/2017 1.92% 750,000.00 745,107.42 745,585.73 2.48%730,898.25 4,399.040.60% (14,687.48) AA+Aaa3.67 3.50US TREASURY NOTES912828V72 1.88% Due 1/31/20227/11/2017 1.90% 1,545,000.00 1,543,370.51 1,543,625.06 2.50%1,509,996.48 4,801.451.24% (33,628.58) AA+Aaa3.84 3.66US TREASURY NOTES912828VF4 1.38% Due 5/31/202012/4/2015 1.56% 600,000.00 595,195.31 597,641.72 2.33%587,929.80 2,765.11 0.48% (9,711.92) AA+Aaa2.17 2.11US TREASURY NOTES912828VK3 1.38% Due 6/30/201811/25/2014 1.21%70,000.00 70,407.66 70,028.71 1.80%69,924.40 241.95 0.06% (104.31) AA+Aaa0.25 0.25US TREASURY NOTES912828W89 1.88% Due 3/31/202212/5/2017 2.10% 1,200,000.00 1,188,796.88 1,189,608.91 2.51%1,171,266.00 61.48 0.96% (18,342.91) AA+Aaa4.00 3.82US TREASURY NOTES912828W89 1.88% Due 3/31/20221/4/2018 2.18% 1,300,000.00 1,284,105.47 1,284,979.50 2.51%1,268,871.50 66.60 1.04% (16,108.00) AA+Aaa4.00 3.82US TREASURY NOTES912828WL0 1.50% Due 5/31/201911/14/2016 1.06%95,000.00 96,039.06 95,479.24 2.18%94,257.86 477.61 0.08% (1,221.38) AA+Aaa1.17 1.14US TREASURY N/B912828WY2 2.25% Due 7/31/202111/23/2016 1.78% 685,000.00 699,556.25 695,481.31 2.45%680,692.04 2,554.560.56% (14,789.27) AA+Aaa3.343.18US TREASURY NOTES912828XM7 1.63% Due 7/31/20203/30/2016 1.27% 685,000.00 695,275.00 690,600.29 2.33%674,002.33 1,844.960.55% (16,597.96) AA+Aaa2.34 2.27US TREASURY NOTES912828XQ8 2.00% Due 7/31/20229/1/2017 1.74% 2,100,000.00 2,126,003.91 2,123,063.06 2.52%2,055,129.30 6,961.331.69% (67,933.76) AA+Aaa4.34 4.11Total U.S. Treasury Bond/Note1.85% 19,290,000.00 19,287,029.85 19,271,818.78 2.46% 18,895,601.47 74,702.97 15.54% (376,217.31) AA+Aaa3.51 3.3534 City of San Luis Obispo Holdings ReportFor the Quarter Ending March 31, 2018Security DescriptionSettle DateYTM at Cost Par Cost Value Amortized CostYTM at Market Market Value* Accrued Interest% of PortfolioUnreal G/LAmort CostS&P/Moody'sYears to Maturity DurationFederal Agency Bond/NoteFHLB NOTES3130AA3R7 1.38% Due 11/15/201911/17/2016 1.38% 1,395,000.00 1,394,679.15 1,394,824.37 2.27% 1,375,157.52 7,246.251.13% (19,666.85) AA+Aaa1.63 1.58FHLB NOTES3130AAE46 1.25% Due 1/16/201912/8/2016 1.25% 1,270,000.00 1,269,949.20 1,269,979.20 2.11%1,261,440.20 3,307.29 1.04% (8,539.00) AA+Aaa0.80 0.78FEDERAL HOME LOAN BANK AGENCY NOTES3130ABF92 1.38% Due 5/28/20195/12/2017 1.47% 455,000.00 454,140.05 454,509.26 2.18%450,812.64 2,137.55 0.37% (3,696.62) AA+Aaa1.16 1.14FEDERAL HOME LOAN BANK AGENCY NOTES3130ABF92 1.38% Due 5/28/20195/16/2017 1.40% 735,000.00 734,661.90 734,805.69 2.18%728,235.80 3,452.97 0.60% (6,569.89) AA+Aaa1.16 1.14FNMA NOTES3135G0A78 1.63% Due 1/21/20204/30/2015 1.54% 580,000.00 582,233.00 580,873.98 2.29%573,258.66 1,832.64 0.47% (7,615.32) AA+Aaa1.81 1.76FNMA BENCHMARK NOTE3135G0H63 1.38% Due 1/28/20191/8/2016 1.40% 1,440,000.00 1,439,107.20 1,439,754.38 2.07%1,431,794.88 3,465.00 1.18% (7,959.50) AA+Aaa0.83 0.81FNMA BENCHMARK NOTE3135G0H63 1.38% Due 1/28/20192/16/2016 0.96% 335,000.00 339,043.45 336,142.08 2.07%333,091.17 806.09 0.27% (3,050.91) AA+Aaa0.83 0.81FNMA NOTES3135G0J20 1.38% Due 2/26/20215/19/2016 1.42% 520,000.00 518,850.80 519,293.35 2.47%504,188.88 695.14 0.41% (15,104.47) AA+Aaa2.91 2.82FNMA BENCHMARK NOTE3135G0J53 1.00% Due 2/26/20195/16/2016 0.96% 375,000.00 375,420.00 375,138.06 2.18%371,070.00 364.58 0.31% (4,068.06) AA+Aaa0.91 0.89FNMA BENCHMARK NOTE3135G0J53 1.00% Due 2/26/20196/2/2016 1.11% 305,000.00 304,112.45 304,704.31 2.18%301,803.60 296.53 0.25% (2,900.71) AA+Aaa0.91 0.89FNMA BENCHMARK NOTE3135G0J53 1.00% Due 2/26/20196/6/2016 0.96% 3,980,000.00 3,984,338.20 3,981,454.85 2.18%3,938,289.60 3,869.443.24% (43,165.25) AA+Aaa0.91 0.89FNMA BENCHMARK NOTE3135G0N33 0.88% Due 8/2/20198/2/2016 0.93% 2,350,000.00 2,346,052.00 2,348,228.41 2.25%2,307,737.60 3,369.971.90% (40,490.81) AA+Aaa1.34 1.31FNMA NOTES3135G0N82 1.25% Due 8/17/20218/19/2016 1.33% 1,045,000.00 1,040,767.75 1,042,107.16 2.52%1,002,402.67 1,596.530.82%(39,704.49) AA+Aaa3.38 3.27FNMA NOTES3135G0N82 1.25% Due 8/17/20218/19/2016 1.32% 325,000.00 323,888.18 324,240.11 2.52%311,752.03 496.53 0.26% (12,488.08) AA+Aaa3.38 3.27FNMA NOTES3135G0N82 1.25% Due 8/17/20219/2/2016 1.38% 1,000,000.00 993,880.00 995,787.01 2.52%959,237.00 1,527.780.79% (36,550.01) AA+Aaa3.38 3.27FANNIE MAE NOTES3135G0S38 2.00% Due 1/5/20226/29/2017 1.85% 2,235,000.00 2,249,281.65 2,246,975.53 2.57%2,189,537.87 10,678.33 1.80% (57,437.66) AA+Aaa3.77 3.58FNMA NOTES3135G0T29 1.50% Due 2/28/20202/28/2017 1.52% 885,000.00 884,433.60 884,636.79 2.31%871,641.81 1,216.880.72% (12,994.98) AA+Aaa1.92 1.87FNMA NOTES3135G0T60 1.50% Due 7/30/20208/1/2017 1.60% 1,465,000.00 1,460,561.05 1,461,530.57 2.39%1,435,631.15 3,723.541.18% (25,899.42) AA+Aaa2.33 2.27FANNIE MAE GLOBAL NOTES3135G0YM9 1.88% Due 9/18/201811/25/2014 1.39%35,000.00 35,626.29 35,077.97 1.98%34,980.82 23.70 0.03%(97.15) AA+Aaa0.470.46FNMA NOTES3135G0ZE6 1.75% Due 6/20/20198/5/2014 1.74% 350,000.00 350,227.50 350,059.33 2.18%348,206.60 1,718.40 0.29% (1,852.73) AA+Aaa1.22 1.19FNMA NOTES3135G0ZE6 1.75% Due 6/20/201910/2/2014 1.77% 500,000.00 499,630.00 499,902.68 2.18%497,438.00 2,454.86 0.41% (2,464.68) AA+Aaa1.22 1.19FNMA NOTES3135G0ZE6 1.75% Due 6/20/201911/21/2014 1.71% 100,000.00 100,157.00 100,043.12 2.18%99,487.60 490.97 0.08% (555.52) AA+Aaa1.22 1.19FNMA NOTES3135G0ZG1 1.75% Due 9/12/20192/9/2015 1.36% 260,000.00 264,505.80 261,450.73 2.25%258,149.32 240.14 0.21% (3,301.41) AA+Aaa1.45 1.42FNMA NOTES3135G0ZG1 1.75% Due 9/12/201911/25/2014 1.73%50,000.00 50,034.65 50,010.90 2.25%49,644.10 46.18 0.04% (366.80) AA+Aaa1.45 1.42FREDDIE MAC NOTES3137EADG1 1.75% Due 5/30/20193/3/2017 1.46% 1,000,000.00 1,006,440.00 1,003,372.84 2.16%995,343.00 5,881.94 0.82% (8,029.84) AA+Aaa1.16 1.14FREDDIE MAC GLOBAL NOTES3137EADK2 1.25% Due 8/1/20199/15/2014 1.88% 1,050,000.00 1,019,077.50 1,041,269.46 2.24%1,036,444.50 2,187.50 0.85% (4,824.96) AA+Aaa1.34 1.31FREDDIE MAC GLOBAL NOTES3137EADK2 1.25% Due 8/1/201911/25/2014 1.70%80,000.00 78,388.80 79,528.53 2.24%78,967.20 166.67 0.06% (561.33) AA+Aaa1.34 1.31FREDDIE MAC GLOBAL NOTES3137EADM8 1.25% Due 10/2/201912/30/2015 1.65% 700,000.00 689,857.00 695,867.92 2.27%689,504.20 4,350.69 0.57% (6,363.72) AA+Aaa1.51 1.47FREDDIE MAC NOTES3137EADZ9 1.13% Due 4/15/20193/21/2016 1.14% 810,000.00 809,732.00 809,907.67 2.17%801,372.69 4,201.88 0.66% (8,534.98) AA+Aaa1.04 1.02FREDDIE MAC NOTES3137EADZ9 1.13% Due 4/15/20193/29/2016 1.12%70,000.00 70,004.90 70,001.66 2.17%69,254.43 363.13 0.06% (747.23) AA+Aaa1.04 1.02FHLMC REFERENCE NOTE3137EAEB1 0.88% Due 7/19/20197/20/2016 0.96% 1,275,000.00 1,271,914.50 1,273,651.13 2.22%1,253,101.88 2,231.251.03% (20,549.25) AA+Aaa1.30 1.2835 City of San Luis Obispo Holdings ReportFor the Quarter Ending March 31, 2018Security DescriptionSettle DateYTM at Cost Par Cost Value Amortized CostYTM at Market Market Value* Accrued Interest% of PortfolioUnreal G/LAmort CostS&P/Moody'sYears to Maturity DurationFHLMC AGENCY NOTES3137EAEF2 1.38% Due 4/20/20204/20/2017 1.49% 1,165,000.00 1,161,015.70 1,162,254.79 2.33%1,142,782.29 7,163.940.94% (19,472.50) AA+Aaa2.06 2.00FREDDIE MAC NOTES3137EAEH8 1.38% Due 8/15/20197/19/2017 1.45% 355,000.00 354,478.15 354,653.74 2.24%350,866.74 623.72 0.29% (3,787.00) AA+Aaa1.38 1.35Total Federal Agency Bond/Note 1.34% 28,495,000.00 28,456,489.42 28,482,037.58 2.27% 28,052,626.45 82,228.01 23.07% (429,411.13) AA+Aaa1.69 1.64Negotiable CDPacific Premier Bank YANKEE CD0.25% Due 12/20/201612/20/2015 1.09% 1,000,000.00 1,000,000.00 1,000,000.00 1.09% 1,000,000.00 18.33 0.82%- NRNR0.72 0.72BANK OF NOVA SCOTIA HOUSTON LT CD06417GUE6 1.91% Due 4/5/20194/6/2017 1.91% 1,500,000.00 1,500,000.00 1,500,000.00 1.50%1,491,606.00 14,165.83 1.23% (8,394.00) A+A11.01 1.01BANK OF MONTREAL CHICAGO CERT DEPOS06427KRC3 1.88% Due 2/7/20192/9/2017 1.90% 1,850,000.00 1,850,000.00 1,850,000.00 1.94%1,848,264.70 5,217.00 1.52% (1,735.30) A-1P-10.86 0.85CANADIAN IMPERIAL BANK NY CD13606A5Z7 1.76% Due 11/30/201812/5/2016 1.78% 1,500,000.00 1,498,830.00 1,499,607.86 2.13%1,495,815.00 8,873.33 1.23% (3,792.86) A-1P-10.67 0.65NORDEA BANK AB NY CD65590ASN7 2.72% Due 2/20/20202/22/2018 2.72% 1,145,000.00 1,145,000.00 1,145,000.00 2.89%1,141,531.80 3,373.93 0.94% (3,468.20) AA-Aa31.89 1.82SKANDINAV ENSKILDA BANKEN NY CD83050FXT3 1.84% Due 8/2/20198/4/2017 1.85% 1,500,000.00 1,499,415.00 1,499,607.86 2.75%1,454,564.12 4,446.671.20% (45,043.74) A+Aa31.34 1.30SVENSKA HANDELSBANKEN NY LT CD86958JHB8 1.89% Due 1/10/20191/12/2017 1.91% 1,850,000.00 1,850,000.00 1,850,000.00 2.48%1,840,905.40 7,867.13 1.51% (9,094.60) A-1+P-10.78 0.77SWEDBANK (NEW YORK) CERT DEPOS87019U6D6 2.27% Due 11/16/202011/17/2017 2.30% 1,525,000.00 1,525,000.00 1,525,000.00 2.95%1,500,340.75 12,981.56 1.23% (24,659.25) AA-Aa32.63 2.51UBS AG STAMFORD CT LT CD90275DHG8 2.90% Due 3/2/20203/6/2018 2.93% 1,145,000.00 1,145,000.00 1,145,000.00 2.54%1,153,268.05 2,398.14 0.95% 8,268.05 A+Aa31.92 1.86WESTPAC BANKING CORP NY CD96121T4A3 2.05% Due 8/3/20208/7/2017 2.05% 1,345,000.00 1,345,000.00 1,345,000.00 2.50%1,328,768.54 4,135.881.09% (16,231.46) AA-Aa32.35 2.32Total Negotiable CD2.03% 14,360,000.00 14,358,245.00 14,359,215.72 2.29% 14,255,064.36 63,477.80 11.72% (104,151.36) AA-Aa31.38 1.34Commercial PaperBANK OF TOKYO MITSUBISHI UFJ COMM PAPER06538CD24 0.00% Due 4/2/201810/3/2017 1.50% 500,000.00 496,254.31 499,979.31 3.24%499,910.00 - 0.41%(69.31) A-1P-10.01 0.01BANK OF TOKYO MITSUBISHI UFJ COMM PAPER06538CF48 0.00% Due 6/4/201812/4/2017 1.66% 1,000,000.00 991,658.33 997,066.67 2.19%996,053.00 - 0.82% (1,013.67) A-1P-10.18 0.18BANK TOKYO MITSUBISHI UFJ LTD COMM PAPER06538CK18 0.00% Due 10/1/20181/5/2018 1.98% 1,200,000.00 1,182,515.00 1,188,105.00 2.48%1,184,953.20 - 0.97% (3,151.80) A-1P-10.50 0.50CREDIT AGRICOLE CIB NY COMM PAPER22533UDA8 0.00% Due 4/10/201810/11/2017 1.42% 900,000.00 893,619.75 899,682.75 1.98%899,504.10 - 0.74% (178.65) A-1P-10.03 0.03JP MORGAN SECURITIES LLC COMM PAPER46640QGL9 0.00% Due 7/20/201810/24/2017 1.70% 1,000,000.00 987,446.67 994,866.66 2.44%992,536.00 - 0.82% (2,330.66) A-1P-10.30 0.30Total Commercial Paper1.69% 4,600,000.00 4,551,494.06 4,579,700.39 2.40%4,572,956.30 - 3.76%(6,744.09) AA+Aa10.24 0.24Corporate NoteAMERICAN HONDA FINANCE CORP NOTES02665WBA8 1.70% Due 2/22/20192/23/2016 1.71% 390,000.00 389,922.00 389,976.37 2.71%386,560.20 718.25 0.32% (3,416.17) A+A20.90 0.88APPLE INC BONDS037833CK4 1.90% Due 2/7/20202/9/2017 1.92% 1,050,000.00 1,049,485.50 1,049,678.44 2.54%1,037,951.25 2,992.500.85% (11,727.19) AA+Aa11.86 1.80BNY MELLON CORP NOTE (CALLABLE)06406HDD8 2.60% Due 8/17/20206/8/2016 1.81% 960,000.00 990,316.80 977,213.89 2.91%953,114.88 3,050.670.78% (24,099.01) AA12.38 2.27BONY MELLON CORP NOTE (CALLABLE)06406HDF3 2.45% Due 11/27/20208/18/2016 1.70% 865,000.00 891,564.15 881,528.74 3.04%851,971.37 7,299.640.70% (29,557.37) AA12.66 2.52BERKSHIRE HATHAWAY INC NOTES084664CG4 1.70% Due 3/15/20193/15/2016 1.73% 195,000.00 194,851.80 194,951.97 2.43%193,669.52 147.33 0.16% (1,282.45) AAAa20.96 0.94BERKSHIRE HATHAWAY INC CORPORATE NOTES084664CK5 1.30% Due 8/15/20198/15/2016 1.33% 240,000.00 239,767.20 239,892.39 2.65%235,651.68 398.67 0.19% (4,240.71) AAAa21.38 1.34BURLINGTON NRTH CORP12189TBC7 4.70% Due 10/1/20196/8/2016 1.48% 500,000.00 551,950.00 523,832.99 2.78%514,001.00 11,750.000.42%(9,831.99) A+A31.50 1.4136 City of San Luis Obispo Holdings ReportFor the Quarter Ending March 31, 2018Security DescriptionSettle DateYTM at Cost Par Cost Value Amortized CostYTM at Market Market Value* Accrued Interest% of PortfolioUnreal G/LAmort CostS&P/Moody'sYears to Maturity DurationJOHN DEERE CAPITAL CORP NOTES24422ETS8 1.95% Due 6/22/20206/22/2017 1.97% 180,000.00 179,890.20 179,917.97 2.84%176,567.04 965.25 0.15% (3,350.93) AA22.23 2.15GENERAL ELECTRIC CO CORPORATE NOTE36962G2T0 5.55% Due 5/4/20209/27/2017 1.83% 1,300,000.00 1,422,486.00 1,398,894.19 3.23%1,360,474.70 29,461.25 1.12% (38,419.49) AA22.10 1.93IBM CORP BONDS459200JQ5 2.50% Due 1/27/20222/3/2017 2.45% 750,000.00 751,575.00 751,226.17 3.05%735,129.00 3,333.330.60% (16,097.17) A+A13.83 3.60MICROSOFT CORP (CALLABLE) NOTE594918AY0 1.85% Due 2/12/20204/13/2015 1.58% 1,000,000.00 1,012,570.00 1,004,829.83 2.31%991,573.00 2,518.060.82% (13,256.83) AAAAaa1.87 1.81THE PROCTER & GAMBLE CO CORP NOTES742718FA2 1.90% Due 10/23/202010/25/2017 1.95% 320,000.00 319,510.40 319,579.42 2.63%314,252.16 2,634.67 0.26% (5,327.26) AA-Aa32.57 2.46TOYOTA MOTOR CREDIT CORP NOTES89236TBP9 2.13% Due 7/18/20192/15/2017 1.80% 1,075,000.00 1,083,299.00 1,079,485.90 2.61%1,068,395.20 4,632.200.88% (11,090.70) AA-Aa31.30 1.27UNILEVER CAPITAL CORP BONDS904764AV9 1.80% Due 5/5/20205/5/2017 1.91% 105,000.00 104,665.05 104,764.19 2.68%103,129.64 766.50 0.08% (1,634.55) A+A12.102.02WAL-MART STORES INC CORP NOTE931142EA7 1.90% Due 12/15/202010/20/2017 1.95% 1,500,000.00 1,497,825.00 1,498,141.01 2.65%1,470,763.50 12,745.83 1.21% (27,377.51) AAAa22.71 2.59WELLS FARGO & COMPANY NOTES94974BGR5 2.55% Due 12/7/20206/8/2016 2.02% 975,000.00 997,191.00 988,478.32 3.22%958,230.00 7,873.130.79% (30,248.32) A-A22.69 2.55Total Corporate Note1.85% 11,405,000.00 11,676,869.10 11,582,391.79 2.81% 11,351,434.14 91,287.28 9.34% (230,957.65) AA-Aa32.20 2.10Total Portfolio 1.40% 122,612,199.61 122,792,327.04 122,737,363.87 1.85%121,589,882.33 311,696.06 100.00% (1,147,481.54) AAAa11.31 1.26Total Market Value Plus Accrued121,901,578.39 *Generally, PFM’s market prices are derived from closing bid prices as of the last business day of the month as supplied by Interactive Data, Bloomberg or Telerate. Where prices are not available from generally recognized sources the securities are priced using a yield-based matrix system to arrive at an estimated market value. Prices that fall between data points are interpolated. Non-negotiable FDIC-insured bank certificates of deposit are priced at par. Although PFM believes the prices to be reliable, the values of the securities do not always represent the prices at which the securities could have been bought or sold.37 © PFMC. Quarterly Transactions CITY OF SAN LUIS OBISPO OPERATING FUNDS For the Quarter Ended March 31, 2018 Portfolio Activity Quarterly Portfolio Transactions Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon BUY 1/3/18 1/4/18 1,300,000 912828W89 US TREASURY NOTES 3/31/22 1,290,534.04 2.18%1.87% 1/4/18 1/5/18 1,200,000 06538CK18 BANK TOKYO MITSUBISHI UFJ LTD COMM PAPER 10/1/18 1,182,515.00 1.98%0.00% 2/20/18 2/22/18 1,145,000 65590ASN7 NORDEA BANK AB NY CD 2/20/20 1,145,000.00 2.72%2.72% 2/22/18 2/22/18 360,000 313385A55 FEDERAL HOME LOAN BANKS DISC NOTE 8/3/18 357,067.80 1.82%0.00% 3/1/18 3/5/18 1,400,000 912828F96 US TREASURY NOTES 10/31/21 1,386,535.70 2.48%2.00% 3/2/18 3/6/18 1,145,000 90275DHG8 UBS AG STAMFORD CT LT CD 3/2/20 1,145,000.00 2.93%2.90% 6,550,000 6,506,652.54Total BUY INTEREST 1/3/18 1/3/18 0 MONEY0002 MONEY MARKET FUND 107.97 1/5/18 1/5/18 2,235,000 3135G0S38 FANNIE MAE NOTES 1/5/22 22,350.00 2.00% 1/10/18 1/10/18 1,850,000 86958JHB8 SVENSKA HANDELSBANKEN NY LT CD 1/10/19 17,871.00 1.89% 1/13/18 1/13/18 490,000 89236TCP8 TOYOTA MOTOR CREDIT CORP 7/13/18 3,797.50 1.55% 1/16/18 1/16/18 1,530,000 3130AAE46 FHLB NOTES 1/16/19 9,562.50 1.25% 1/18/18 1/18/18 1,075,000 89236TBP9 TOYOTA MOTOR CREDIT CORP NOTES 7/18/19 11,421.88 2.12% 1/19/18 1/19/18 1,275,000 3137EAEB1 FHLMC REFERENCE NOTE 7/19/19 5,578.13 0.87% 1/21/18 1/21/18 580,000 3135G0A78 FNMA NOTES 1/21/20 4,712.50 1.62% 1/27/18 1/27/18 750,000 459200JQ5 IBM CORP BONDS 1/27/22 9,375.00 2.50% 1/28/18 1/28/18 1,440,000 3135G0H63 FNMA BENCHMARK NOTE 1/28/19 9,900.00 1.37% 1/28/18 1/28/18 335,000 3135G0H63 FNMA BENCHMARK NOTE 1/28/19 2,303.13 1.37% 1/30/18 1/30/18 1,465,000 3135G0T60 FNMA NOTES 7/30/20 10,926.46 1.50% 1/31/18 1/31/18 795,000 9128282P4 US TREASURY NOTES 7/31/22 7,453.13 1.87% 1/31/18 1/31/18 1,545,000 912828V72 US TREASURY NOTES 1/31/22 14,484.38 1.87% 1/31/18 1/31/18 685,000 912828WY2 US TREASURY N/B 7/31/21 7,706.25 2.25% PFM Asset Management LLC 38 CITY OF SAN LUIS OBISPO OPERATING FUNDS For the Quarter Ended March 31, 2018 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 1/31/18 1/31/18 685,000 912828XM7 US TREASURY NOTES 7/31/20 5,565.63 1.62% 1/31/18 1/31/18 2,100,000 912828XQ8 US TREASURY NOTES 7/31/22 21,000.00 2.00% 2/1/18 2/1/18 1,050,000 3137EADK2 FREDDIE MAC GLOBAL NOTES 8/1/19 6,562.50 1.25% 2/2/18 2/2/18 1,500,000 83050FXT3 SKANDINAV ENSKILDA BANKEN NY CD 8/2/19 13,953.33 1.84% 2/2/18 2/2/18 0 MONEY0002 MONEY MARKET FUND 202.46 2/2/18 2/2/18 2,350,000 3135G0N33 FNMA BENCHMARK NOTE 8/2/19 10,281.25 0.87% 2/7/18 2/7/18 1,345,000 96121T4A3 WESTPAC BANKING CORP NY CD 8/3/20 13,786.25 2.05% 2/7/18 2/7/18 1,050,000 037833CK4 APPLE INC BONDS 2/7/20 9,975.00 1.90% 2/7/18 2/7/18 1,850,000 06427KRC3 BANK OF MONTREAL CHICAGO CERT DEPOS 2/7/19 17,390.00 1.88% 2/12/18 2/12/18 1,000,000 594918AY0 MICROSOFT CORP (CALLABLE) NOTE 2/12/20 9,250.00 1.85% 2/15/18 2/15/18 355,000 3137EAEH8 FREDDIE MAC NOTES 8/15/19 2,793.16 1.37% 2/15/18 2/15/18 240,000 084664CK5 BERKSHIRE HATHAWAY INC CORPORATE NOTES 8/15/19 1,560.00 1.30% 2/17/18 2/17/18 960,000 06406HDD8 BNY MELLON CORP NOTE (CALLABLE)8/17/20 12,480.00 2.60% 2/17/18 2/17/18 1,045,000 3135G0N82 FNMA NOTES 8/17/21 6,531.25 1.25% 2/17/18 2/17/18 325,000 3135G0N82 FNMA NOTES 8/17/21 2,031.25 1.25% 2/17/18 2/17/18 1,000,000 3135G0N82 FNMA NOTES 8/17/21 6,250.00 1.25% 2/22/18 2/22/18 390,000 02665WBA8 AMERICAN HONDA FINANCE CORP NOTES 2/22/19 3,315.00 1.70% 2/26/18 2/26/18 520,000 3135G0J20 FNMA NOTES 2/26/21 3,575.00 1.37% 2/26/18 2/26/18 375,000 3135G0J53 FNMA BENCHMARK NOTE 2/26/19 1,875.00 1.00% 2/26/18 2/26/18 305,000 3135G0J53 FNMA BENCHMARK NOTE 2/26/19 1,525.00 1.00% 2/26/18 2/26/18 3,980,000 3135G0J53 FNMA BENCHMARK NOTE 2/26/19 19,900.00 1.00% 2/28/18 2/28/18 885,000 3135G0T29 FNMA NOTES 2/28/20 6,637.50 1.50% 2/28/18 2/28/18 365,000 912828J43 US TREASURY NOTES 2/28/22 3,193.75 1.75% 2/28/18 2/28/18 725,000 912828B90 US TREASURY NOTES 2/28/21 7,250.00 2.00% 2/28/18 2/28/18 1,575,000 912828D72 US TREASURY NOTES 8/31/21 15,750.00 2.00% 3/2/18 3/2/18 0 MONEY0002 MONEY MARKET FUND 271.25 3/12/18 3/12/18 260,000 3135G0ZG1 FNMA NOTES 9/12/19 2,275.00 1.75% 3/15/18 3/15/18 195,000 084664CG4 BERKSHIRE HATHAWAY INC NOTES 3/15/19 1,657.50 1.70% 3/31/18 3/31/18 500,000 912828L57 US TREASURY NOTES 9/30/22 4,375.00 1.75% 3/31/18 3/31/18 1,300,000 912828W89 US TREASURY NOTES 3/31/22 12,187.50 1.87% PFM Asset Management LLC 39 CITY OF SAN LUIS OBISPO OPERATING FUNDS For the Quarter Ended March 31, 2018 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 3/31/18 3/31/18 1,200,000 912828W89 US TREASURY NOTES 3/31/22 11,250.00 1.87% 45,480,000 372,199.41Total INTEREST MATURITY 1/3/18 1/3/18 1,200,000 06538CA35 BANK OF TOKYO MITSUBISHI COMM PAPER 1/3/18 1,200,000.00 0.00 0.00% 1/3/18 1/3/18 1,200,000 09659CA32 BNP PARIBAS NY BRANCH COMM PAPER 1/3/18 1,200,000.00 0.00 0.00% 2,400,000 2,400,000.00 0.00Total MATURITY SELL 2/20/18 2/22/18 1,500,000 65558LWA6 NORDEA BANK FINLAND NY CD 11/30/18 1,501,255.00 2.16% (4,905.00)1.76% 3/1/18 3/5/18 700,000 3130A9AE1 FHLB GLOBAL NOTES 10/1/18 698,105.14 2.01% (4,383.96)0.87% 3/2/18 3/6/18 490,000 89236TCP8 TOYOTA MOTOR CREDIT CORP 7/13/18 489,873.55 2.27% (1,194.65)1.55% 3/2/18 3/5/18 360,000 313385A55 FEDERAL HOME LOAN BANKS DISC NOTE 8/3/18 357,282.00 1.81% 15.10 0.00% 3/2/18 3/6/18 400,000 3130A9AE1 FHLB GLOBAL NOTES 10/1/18 398,946.94 2.01% (2,485.48)0.87% 3/2/18 3/6/18 260,000 3130AAE46 FHLB NOTES 1/16/19 258,561.19 2.11% (1,885.57)1.25% 3,710,000 3,704,023.82 -14,839.56Total SELL PFM Asset Management LLC 40 © PFMImportant DisclosuresThis material is based on information obtained from sources generally believed to be reliable and available to the public, however PFM Asset Management LLC cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. All statements as to what will or may happen under certain circumstances are based on assumptions, some but not all of which are noted in the presentation. Assumptions may or may not be proven correct as actual events occur, and results may depend on events outside of your or our control. Changes in assumptions may have a material effect on results. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in this presentation is not an offer to purchase or sell any securities.•Market values which include accrued interest, are derived from closing bid prices as of the last business day of the month assupplied by Interactive Data, Bloomberg or Telerate. Where prices are not available from generally recognized sources thesecurities are priced using a yield based matrix system to arrive at an estimated market value.•In accordance with generally accepted accounting principles, information is presented on a trade date basis; forward settlingpurchases are included in the monthly balances and forward settling sales are excluded.•Performance is presented in accordance with the CFA Institute’s Global Investment Performance Standards (GIPS). Unlessotherwise noted, performance is shown gross of fees. Quarterly returns are presented on an unannualized basis. Returns forperiods greater than one year are presented on an annualized basis. Past performance is not indicative of future returns.•Bank of America/Merrill Lynch Indices provided by Bloomberg Financial Markets.•Money market fund/cash balances are included in performance and duration computations.•Standard & Poor’s is the source of the credit ratings. Distribution of credit rating is exclusive of money market fund/LGIP holdings.•Callable securities in portfolio are included in the maturity distribution analysis to their stated maturity date, although they may becalled prior to maturity.•MBS maturities are represented by expected average life.41 © PFMGlossary•ACCRUED INTEREST: Interest that is due on a bond or other fixed income security since the last interest payment was made.•AGENCIES: Federal agency securities and/or Government-sponsored enterprises.•AMORTIZED COST: The original cost of the principal of the security is adjusted for the amount of the periodic reduction of any discount or premium from thepurchase date until the date of the report. Discount or premium with respect to short term securities (those with less than one year to maturity at time ofissuance) is amortized on a straight line basis. Such discount or premium with respect to longer term securities is amortized using the constant yield basis.•BANKERS’ ACCEPTANCE: A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as wellas the insurer.•COMMERCIAL PAPER: An unsecured obligation issued by a corporation or bank to finance its short-term credit needs, such as accounts receivable andinventory.•CONTRIBUTION TO DURATION: Represents each sector or maturity range’s relative contribution to the overall duration of the portfolio measured as apercentage weighting. Since duration is a key measure of interest rate sensitivity, the contribution to duration measures the relative amount or contribution ofthat sector or maturity range to the total rate sensitivity of the portfolio.•DURATION TO WORST: A measure of the sensitivity of a security’s price to a change in interest rates, stated in years, computed from cash flows to thematurity date or to the put date, whichever results in the highest yield to the investor.•EFFECTIVE DURATION: A measure of the sensitivity of a security’s price to a change in interest rates, stated in years.•EFFECTIVE YIELD: The total yield an investor receives in relation to the nominal yield or coupon of a bond. Effective yield takes into account the power ofcompounding on investment returns, while nominal yield does not.•FDIC: Federal Deposit Insurance Corporation. A federal agency that insures bank deposits to a specified amount.•INTEREST RATE: Interest per year divided by principal amount, expressed as a percentage.•MARKET VALUE: The value that would be received or paid for an investment in an orderly transaction between market participants at the measurement date.•MATURITY: The date upon which the principal or stated value of an investment becomes due and payable.•NEGOTIABLE CERTIFICATES OF DEPOSIT: A CD with a very large denomination, usually $1 million or more that can be traded in secondary markets.•PAR VALUE: The nominal dollar face amount of a security.42 © PFMGlossary•PASS THROUGH SECURITY: A security representing pooled debt obligations that passes income from debtors to its shareholders. The most common typeis the mortgage-backed security.•REPURCHASE AGREEMENTS: A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixeddate.•SETTLE DATE: The date on which the transaction is settled and monies/securities are exchanged. If the settle date of the transaction occurs on a non-business day (i.e. coupon payments and maturity proceeds), the funds are exchanged on the next business day.•TRADE DATE: The date on which the transaction occurred however the final consummation of the security transaction and payment has not yet taken place.•UNSETTLED TRADE: A trade which has been executed however the final consummation of the security transaction and payment has not yet taken place.•U.S. TREASURY: The department of the U.S. government that issues Treasury securities.•YIELD: The rate of return based on the current market value, the annual interest receipts, maturity value and the time period remaining until maturity, statedas a percentage, on an annualized basis.•YTM AT COST: The yield to maturity at cost is the expected rate of return, based on the original cost, the annual interest receipts, maturity value and the timeperiod from purchase date to maturity, stated as a percentage, on an annualized basis.•YTM AT MARKET: The yield to maturity at market is the rate of return, based on the current market value, the annual interest receipts, maturity value and thetime period remaining until maturity, stated as a percentage, on an annualized basis.43 Thank You