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County of Ventura June 21, 2016 Page 2 of 2 " Our portfolio continues to outperform its benchmarks, further widening the gaps in reported yields. CalTrust reported increases of .2 basis points per month, iAIF reported increases of 3 basis points per month. The interest rate market has been somewhat volatile during the period covered by this report. Yields on US government securities in our sectors have actually declined as the belief that the Fed will raise rates has waxed or waned from week to week. This week the commentators are not only nearly certain that rates will not increase in June, but are nearly as certain that rates will not increase in July. The commentators are only 50-50 about September. The result to our pool has been that yields for 270 day commercial paper and Yankee certificates of deposit exceed the yields for 2.5 year federal agency and supranational issues. The Board will, therefore, notice a continued increase in the percentage of the pool in commercial paper and Yankee certificates of deposit A collateral benefit is that our duration will remain low, our weighted average days to maturity will maintain a respectful distance from the maximum level, and our monthly report to Standard & Poor's will continue to be unremarkable. One point of potentially extreme volatility Is the 23 June election date for Britain's possible exit from the European Union. It is enough to say that commentators are all over the place on the subject of what the results of the vote might mean economically for Great Britain and for the European Union. My opinion is that leaving the EU would be bad, economically, for both Great Britain and the EU. My sense is that ratings will be lowered and the cost of borrowing money will increase. As usual, neither BBC nor the British government have asked for my opinion. I have tried to shelter our pool by not purchasing EU -based investment instruments for several months, although some slight exposure remains. The outcome of the election is unpredictable, and the effect on the interest rate market is even more unpredictable. Accordingly, it is my intent to continue to manage the portfolio based on the cautious assumption that interest rates within our horizon will rise gradually, if at all, over the next several months. We will focus on commercial paper and Yankee certificates of deposit rather more than in previous months It is my opinion that the portfolio is approaching its maximum possible percentage and dollar yield (which I estimate to be 1 % annualized and $2 Million per month, respectively)., given the limits imposed by our Investment Policy, the policies of the Standard & Pool's rafing team, and the existing interest rate market. This letter has been reviewed and approved as to form by the County Executive Office, the Auditor-Controller`s Office, and County Counsel Please contact me at 654-3726 if you have any questions regarding this Item. Steven Hintz Treasurer -Tax Collector Exhibit 1— Market Values of Investments Exhibit 2 — Monthly Transactions Exhibit 3 — graphs