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County of Ventura Board of Supervisors February 5, 2019 Page 2of3 The weighted average days to maturity dropped to 131 days. The interest -rate sensitivity measure of effective duration ended at 0.348, reflecting the pool's very low sensitivity to interest rate changes. The three largest sectors, by percentage, were: Commercial Paper (29.38%), Yankee Certificates of Deposit (27.18%), and Government Agencies (16.65%.) The three largest individual issuers, by percentage, were: Federal Home Loan Bank (7.05%), National Bank of Kuwait (6.70%), and Korea Development Bank (6.16%). The portfolio has been managed with the stated objectives of safety, liquidity, and earning a competitive return, as outlined in the Statement of Investment Policy. In striving to maintain the primary objective, safety of principal, the County portfolio has for several years received a rating of AAAf/S1+ by Standard & Poor's, the highest rating given by that agency, re -affirmed on 16 January 2019. The rating reflects S&P's opinion that the pool is well-managed, credit -worthy, well - diversified, and has a low sensitivity to interest rate variations. The Standard & Poor's report, and the formal letter affirming the rating, are attached as Exhibits 10 and 11. Regarding the secondary objective of maintaining sufficient liquidity to meet cash flow needs, the portfolio maintains significant cash reserves in the County's bank, as well as significant holdings in LAIF and CalTrust. The pool has the ability to meet its participants' expenditure requirements for the next six months, pursuant to a daily study of projected cash flows. All of the pool's assets have a well-developed resale market, although of course it is our policy not to sell. Earning a competitive rate of return is reflected by our performance against our benchmarks, even though they each have less restrictive investment policies than ours. The portfolio will be managed on the assumption that interest rates within our investment policy horizon will not change significantly over the next few months. The portfolio is well-positioned to respond, whether rates rise, drop, or hold steady. We will continue to focus our new investments on issues with maturity dates of one year, or less, for at least the next three months. PART II --- Summary. Report of Investment Results for Calendar Year 2018 ' During 2018, the average daily portfolio balance rose from 2.563 Billion in January to $2.726 Billion in December. The lowest balance was $2.022 Billion in September; the highest, $2.726 Billion in December. The annualized percentage yield in January was 1.420%; in December, 2.483%; and for the year, 1.980%. The total net earnings for the calendar year 2018 were $47.168 Million. The weighted average days to maturity stayed within a narrow range from 131 days to 148 days. Effective duration similarly stayed within a narrow range from .309 to .382. During 2018 we developed the Investment Work Group Command Center, where we meet daily to discuss cash flows and investment possibilities. We invested in the Bloomberg software license that enhances the Group's ability to do independent research and reporting. 800 South Victoria Avenue, Ventura, California 93009-1290 wvw.vernurapropertytet" (805) 654.3734