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September 16, 2021
Page 2
Finance Committee Meeting
I.CALL MEETING TO ORDER
II.ROLL CALL
III.PUBLIC COMMENTS
Public comments are invited on agenda and non-agenda items generally considered to be
within the subject matter jurisdiction of the Finance Committee. Speakers must limit comments
to three (3) minutes. Before speaking, we invite, but do not require, you to state your name for
the record. The Finance Committee has the discretion to extend or shorten the speakers’ time
limit on agenda or non-agenda items, provided the time limit adjustment is applied equally to all
speakers. As a courtesy, please turn cell phones off or set them in the silent mode.
IV.CONSENT CALENDAR
MINUTES OF MAY 27, 2021A.
Recommended Action:
Approve and file.
DRAFT MINUTES 05272021
4A1_CORRESPONDENCE_DRAFT MINUTES 05272021
V.CURRENT BUSINESS
ANNUAL REVIEW OF INVESTMENT PERFORMANCEA.
Summary:
The City's investment advisor, Chandler Asset Management, will report on the
performance of the City's investment portfolio for the fiscal year ending June 30,
2021.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
ATTACHMENT B
5A1_CORRESPONDENCE_09162021
5A2_PRESENTATION_09162021
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September 16, 2021
Page 3
Finance Committee Meeting
ANNUAL REVIEW OF INVESTMENT POLICYB.
Summary:
Staff will provide a presentation regarding any changes proposed to the City's
Investment Policy by staff or the City's investment advisor prior to the Investment
Policy being approved by the City Council.
Recommended Action:
Review and discuss this report and recommend that Council formally approve the
proposed changes by adopting a resolution. These changes are in furtherance of
the City’s investment objectives.
STAFF REPORT
ATTACHMENT A
5B1_CORRESPONDENCE_09162021
OVERVIEW OF HARBOR DEPARTMENT OPERATIONS, REVENUES, AND
OPERATING BUDGET
C.
Summary:
Staff from the Finance Department and the Harbor Department will provide the
Committee with an overview of the revenues generated in the Harbor and the
operating budget for the Harbor Department.
Recommended Action:
Receive and file.
5C1_STAFF PRESENTATION_09162021
INTERNAL AUDIT PROGRAM UPDATED.
Summary:
Bi-monthly progress update on the internal audit program.
Recommended Action:
Receive and file.
BUDGET AMENDMENTS FOR QUARTER ENDING JUNE 30, 2021E.
Summary:
Staff will report on the budget amendments from the prior quarter.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
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September 16, 2021
Page 4
Finance Committee Meeting
WORK PLAN REVIEWF.
Summary:
Staff and Finance Committee to review the proposed work plan and identify matters
that members would like placed on a future Agenda for discussion, action, or report.
Recommended Action:
Receive and file.
ATTACHMENT A
VI.ADJOURNMENT
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Finance Committee Meeting Minutes May 27, 2021
Page 1 of 5
CITY OF NEWPORT BEACH FINANCE COMMITTEE MAY 27, 2021 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:00 p.m. via teleconference. II. ROLL CALL PRESENT: Chair Will O’Neill, Mayor Brad Avery, Council Member Noah Blom,
Committee Member William Collopy, Committee Member John Reed, Committee Member Joe Stapleton, and Committee Member Larry Tucker ABSENT: None
STAFF PRESENT: City Manager Grace K. Leung, Finance Director/Treasurer Scott Catlett,
Deputy Director/Finance Steve Montano, Administrative Specialist to the Finance Director Marlene Burns, Senior Accountant Theresa Schweitzer, Budget Analyst Lisa Abbaszadeh, and Fire Administrative Manager Mary Locey
MEMBERS OF THE
PUBLIC: Esther Chang, Charles Klobe, Jim Mosher, and Nancy Scarbrough
OTHER ENTITY: Marc Davis, Partner, Davis Farr LLP III. PUBLIC COMMENTS
Jim Mosher advised he was misquoted in the minutes as praising the staff for placing a link to the City’s proposed budget on the City’s homepage and noted the link is still not listed on the site. He
noted it would be helpful to bring to the public attention that there is a City’s budget so they may provide comment. He requested a link or a notice be placed on the City’s homepage.
IV. CONSENT CALENDAR MINUTES OF MAY 13, 2021 Recommended Action: Approve and file.
Chair O’Neill called for public comments and hearing none, closed the public comments.
MOTION: Committee Member Collopy moved to approve the minutes as amended, seconded
by Council Member Blom. The motion carried 7 ayes – 0 noes V. CURRENT BUSINESS A. FINANCIAL STATEMENT AUDITOR'S COMMUNICATION WITH THE FINANCE COMMITTEE ACTING AS THE CITY'S AUDIT COMMITTEE Summary: The City's external auditors, Davis Farr LLP, will provide an overview presentation regarding
the audit process and request feedback from the Committee regarding any information that may assist them in their audit of the City's financial statements. Recommended Action: Receive and file
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Finance Committee Meeting Minutes May 27, 2021
Page 2 of 5
Finance Director/Treasurer Scott Catlett reported the City recently completed a Request for Proposals (RFP) for a new audit firm. He advised the City has utilized White Nelson Diehl Evans LLP for the last 10 years and noted they did a great job. He explained City Council Policy F-15 requires the City to rotate auditors every 10 years. He reported Davis Farr LLP was
selected as the City’s new external auditor. Marc Davis, Partner, Davis Farr LLP noted he wanted to take this opportunity to open the lines of communication between his firm and the Finance Committee. He provided a brief overview of the scope and timing of this year’s audit which will include an audit of the City’s federal expenditures under the Single Audit Act, performing some agreed-upon procedures applied to
the City’s Gann limit, and conducting the audit in two phases. He advised the interim portion of the audit will happen in June and the final portion will happen in early October. Mr. Davis reported the interim audit will primarily focus on internal controls to gain a better
understanding of the City’s controls as it relates to financial reporting. He advised an IT Audit Specialist will be brought on board to review the City’s information systems and underlying
controls around those systems to assess risk. He advised they will also be conducting preliminary work related to the Single Audit of federal expenditures. He advised a number of fraud inquiries will be conducted to help them assess the risk within the organization as a whole. He advised they will be sending a survey to a select number of management, staff, City Council
members, and Finance Committee members to help conduct the fraud inquiry.
Mr. Davis reported the final audit will take a deep dive into the numbers that will be appearing on the City’s financial statements. He reported General Accounting Standards Board (GASB)
Statement No. 84 is a new requirement for the City’s financial statements, which has to do with Fiduciary Activities for Agency Funds. He advised they will be reviewing the Agency Funds to
determine if they will continue to be reported as they are or if the reporting needs to change to comply with GASB 84.
Mr. Davis reported draft audit reports will be made available by mid-November for the City’s
review and comments and noted a final report will be issued by December 1, 2021. He noted their results will be presented to the Finance Committee at that time. He encouraged the
Finance Committee to reach out regarding any inquires they may have.
Chair O’Neill noted he looks forward to working with Davis Farr LLP through the process and thanked them in advance for their efforts.
Chair O’Neill called for public comments and hearing none, closed the public comments.
The item was received and filed.
B. COMMITTEE RECOMMENDATION TO COUNCIL FOR THE FISCAL YEAR 2021-22 BUDGET Summary:
Discussion of the Study Session earlier in the week and formulation of any recommendations to be presented to the City Council at the budget public hearing in June. Recommended Action: Receive and file.
Chair O’Neill introduced the item and thanked the Committee Members who were able to attend
the Special Joint Session of the City Council and Finance Committee on May 25, 2021. He thanked the Finance Committee for their work over the past difficult year and in trying to determine how to provide services in a very uncertain world. He noted the City will be looking towards the next year with some cautious optimism. He welcomed Finance Director/Treasurer
Catlett to his first City budget and thanked him for all that he has done.
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Finance Committee Meeting Minutes May 27, 2021
Page 3 of 5
Chair O’Neill explained the primary purpose of the Finance Committee is to make a recommendation to the City Council regarding its budget. He reminded residents it is the responsibility of the City Manager to present a budget to the City Council and it is ultimately their decision to adopt the budget as a whole or make modifications as they see fit. He advised it is the responsibility of the Finance Committee to make recommendations to the City Council
and is the purpose of this item. Chair O’Neill opened the item for discussion. Finance Director/Treasurer Catlett provided a brief overview of the FY 2021-22 Budget revisions made as a result of feedback received at the joint meeting of the Finance Committee
and the City Council. He also made a clarification to his comments at the joint meeting that the City’s assessed valuation for FY 2020-21 was $63.7 million, which is the second largest in Orange County behind Irvine at $90.1 billion and ahead of Anaheim at $51.1 billion. He reported the City has the largest amount of General Fund property tax revenue in the County but is the
second largest in assessed valuation.
Finance Director/Treasurer Catlett reported there was a $112,000 addition to the General Fund expenditure budget for the Better Beaches Initiative per City Council’s request. He advised the dissolution of the Balboa Village Area benefit District was approved by City Council and the second reading will happen at the same meeting as the budget is presented. He noted that the
net effect of those changes on the General Fund budget resulted in a small budget surplus of $32,000. Lastly, he advised the unrestricted fund balance is expected to be $11 million.
In response to Committee Member Collopy’s inquiry regarding the timeline for knowing the final
surplus amount, Finance Director/Treasurer Catlett advised it would likely be known in September as it takes approximately 60 days to close out accounts payable and make other
closing entries. He noted that the final year-end results should be before the City Council at the first meeting in October along with recommendations to put an additional $5 million towards
the pension liability with CalPERS. Lastly, he advised the first Finance Committee meeting after the recess will be in September.
Chair O’Neill opened public comments.
Jim Mosher inquired if the Finance Committee was not making the recommendation to put the
$5 million towards the unfunded liability with CalPERS at this time. He requested clarification from Finance Director/Treasurer Catlett regarding his comment that Irvine has a substantially
larger assessed valuation, but their revenue is less than that of Newport Beach. He inquired if that was presumably because Irvine’s tax rate areas are providing a smaller percentage of the
1%.
In response to Mr. Mosher’s inquiry regarding the property taxes, Finance Director/Treasurer Catlett explained the reason why Irvine’s revenue is less, is that their percentage of the property
tax is 9% compared to Newport Beach’s 17% and the main reason is that their fire service is provided by the Orange County Fire Authority (OCFA). He noted part of their property taxes go
directly to OCFA where Newport Beach’s go directly to the City since it provides its own fire service. In response to Mr. Mosher’s inquiry regarding the pension liability, Finance Director/Treasurer
Catlett explained the budget as proposed has $35 million towards the pension liability, which is consistent with the City Council’s direction last year. He advised the $5 million more would
come from the year-end surplus and formal approval would come as a formal budget amendment in October. Chair O’Neill thanked Mr. Mosher for his understanding of how important these meetings are,
for his attendance, and for providing comments.
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Finance Committee Meeting Minutes May 27, 2021
Page 4 of 5
Chair O’Neill closed public comments. MOTION: Committee Member Stapleton moved to make the recommendation that the City Council adopt the Fiscal Year 2021-22 Budget as proposed, seconded by Committee Member Reed. The motion carried 7 ayes – 0 noes
C. WORK PLAN REVIEW Summary: Staff and Finance Committee to review the proposed work plan and identify matters that members would like placed on a future Agenda for discussion, action, or report. Recommended Action:
Receive and file. Chair O’Neill reported the Finance Committee has accomplished its goals for the remainder of the fiscal year and the proposal is to meet again in September. He noted the Finance
Committee membership ends at the end of this fiscal year and is renewed at the beginning of the next fiscal year which means all citizen members would need to be re-nominated by their
respective City Council member who originally nominated them if they wish to continue serving on the Finance Committee. Chair O’Neill reported this will be Committee Member Tucker’s last year of service on the
Finance Committee and thanked him for his sound advice and years of dedicated service.
Committee Member Tucker remarked his life has had a great turn since moving to Newport Beach. He thanked his fellow Committee members for their efforts and thanked Chair O’Neill
for his dedication to the Finance Committee. He thanked the staff for their service to the Finance Committee.
Chair O’Neill opened public comments.
Mr. Mosher complimented the staff on the very detailed layout they presented for the next
year’s agenda items and noted it was a great improvement from last year.
Chair O’Neill closed public comments and noted this would be the last meeting for the fiscal year.
Chair O’Neill thanked the Finance Committee and staff for their service.
Hearing no objections, Chair O’Neill recessed the Finance Committee until September.
VI. FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-DISCUSSION ITEM)
None VII. ADJOURNMENT
The Finance Committee adjourned at 3:27 p.m. to the next regular meeting of the Finance Committee on September 16, 2021 at 3:00 p.m. The agenda for the Regular Meeting was posted on May 21, 2021, at 3:23 p.m., in the binder and on the City Hall Electronic Board located in the entrance of the Council Chambers at 100 Civic Center Drive.
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Finance Committee Meeting Minutes May 27, 2021
Page 5 of 5
Attest: ___________________________________ _____________________
Will O’Neill, Chair Date Finance Committee
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CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 5A
September 16, 2021 TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM: Finance Department
Scott Catlett, Finance Director/Treasurer 949-644-3123, scatlett@newportbeachca.gov SUBJECT: ANNUAL REVIEW OF INVESTMENT PERFORMANCE
EXECUTIVE SUMMARY This memorandum provides an overview of the structure and the performance of the City’s investment portfolio. As guided by the City’s investment policy objectives, the City
strives to maintain a portfolio emphasizing safety and liquidity while earning a market rate
of return commensurate with the City’s risk tolerance and investment restrictions imposed by the California Government Code. The City has complied with all the limiting parameters of both the California Government Code and the City’s Investment Policy Statement while earning a rate of return comparable to the City’s established
benchmarks, the Intercontinental Exchange Bank of America Merrill Lynch (ICE BAML)
1-3 Year US Treasuries Index and the ICE BAML 1-3 Year US Corporate / Government Rated AAA-A Index. DISCUSSION
Investment Portfolio Overview The City’s strategy continues to focus on identifying value from high quality, marketable securities among the full range of investment options, ensuring the portfolio continues to be well diversified.
As of June 30, 2021, the City’s entire investment portfolio totaled over $335 million. These investments are pooled assets of the City of Newport Beach, which includes the General Fund, special revenue funds, internal service funds, enterprise funds (e.g., water and wastewater), as well as various other funds.
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Annual Review of Investment Performance September 16, 2021 Page 2 Liquidity Portfolios
The City uses several accounts and carve-out portfolios to accomplish its investment objectives. For liquidity, the City uses a combination of demand deposit accounts (DDAs),
the Local Agency Investment Fund (LAIF), and a targeted-maturities portfolio to provide sufficient liquidity to meet its day-to-day cash flows. Municipal deposits in DDAs are 110 percent collateralized by bank assets, and the City receives a compensating balance credit that can only be used to offset banking fees but does not produce income beyond bank fees. The average compensating balance credit for the Fiscal Year ending June 30,
2021, amounted to approximately 0.17%, while LAIF produced an income return of approximately 0.56% during the Fiscal Year. Because of the current disparity in earnings potential between our DDAs and LAIF, only the bare minimums are maintained in the DDAs.
Funds needed to meet specific cash flows that can be invested at a rate higher than LAIF are accounted for in our targeted-maturities portfolio. For the Fiscal Year, the targeted-maturities portfolio provided an income return of approximately 0.33%. Because LAIF offered higher interest rates than the securities available to the targeted-maturities portfolio, LAIF was the preferred account for keeping funds needed for liquidity, and the
targeted-maturities portfolio’s balance decreased substantially. As of June 30, 2021, the targeted-maturities portfolio’s balance was about $574, with a yield-to-maturity at cost, a forward-looking measure, of about 0.01%. Should future interest rates available to the targeted-maturities portfolio improve relative to LAIF, the future balance of the targeted-maturities portfolio should increase as well. Generally, LAIF’s interest rate changes
slower than market interest rates. Therefore, LAIF’s interest rate will be higher than the market’s rate at the beginning of a falling rate environment. Conversely, at the beginning of a rising rate environment, LAIF’s rate will be lower than the market’s rate. Short-Term Portfolio
The City’s core investment portfolio of about $237 million is actively managed in accordance with the California Government Code and the City’s investment policy. The investments are held by a custody bank and are registered in the City’s name. The City accounts for and monitors the portfolio independently of the investment advisors, by a
direct feed from the custody bank and the use of third-party analytical software. The City’s core portfolio finished the twelve months ending June 30, 2021, with an income return of 1.83%. Performance Benchmarking
The City’s investment policy statement identifies the City investment objectives. The objectives are to preserve principal and liquidity while earning a market rate of return commensurate with the City’s investment risk tolerance, liquidity needs, and significant constraints imposed by the California Government Code Section 53601 as to the type
and quantity of securities that may be purchased by local agencies.
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Annual Review of Investment Performance September 16, 2021 Page 3 “Total return” is the accepted industry standard measure for comparing portfolio performance to established benchmarks. Total return benchmarks provide valuable information to those charged with governance of the investment portfolio by:
• Communicating a transparent risk profile and related investment strategy;
• Managing expectations of risk and return; and
• Providing relative variances that can be used to identify decisions made regarding portfolio durations, sector weighting, credit quality and maturity structure. The City uses total return to measure performance and risk against its benchmarks. Total
return is made up of both income return and unrealized gains and losses due to changing interest rate environments. The market value of bonds moves inversely to the direction of interest rates. As interest rates increase, the market value of bonds held in the portfolio decreases because they are paying a lower interest rate than comparable bonds in the market. Market interest rates trended slightly upward during the Fiscal Year. As shown
in the following chart, the core portfolio’s price return trended downward to -1.51%, offsetting the portfolio’s 1.83% income return, for a net 0.32% total return. While total return is useful for benchmarking, generally, the City’s securities are held to maturity, making the 1.83% income return a better indicator of the City’s cash flows from
these securities. At 1.83%, the core portfolio’s income return exceeds LAIF’s 0.56% income return. The City seeks higher income returns within the core portfolio whenever possible by avoiding selling securities before maturity due to liquidity needs. This is accomplished by holding sufficient liquid assets outside the core portfolio, primarily in LAIF, to meet these needs. Price risk from the core portfolio is mitigated by generally
holding securities to maturity. Liquidity risk from the core portfolio is managed by holding liquid assets outside of the core portfolio. Price risk from the core portfolio is managed by generally holding securities to maturity.
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Annual Review of Investment Performance September 16, 2021 Page 4
The core portfolio currently follows a short-term bond strategy. This portfolio aims to find value and maximize yield within the high-quality fixed income market within the duration range of the City’s strategic benchmarks. The City uses the ICE BAML 1-3 Year US Treasuries Index as one benchmark. The City also uses a second benchmark, the ICE
BAML 1-3 Year U.S. Corporate / Government Rated AAA-A Index, which is more
reflective of the portfolio’s risk and return characteristics. The use of two benchmarks provides a means to evaluate the added value high-quality corporate bonds bring to the portfolio.
As demonstrated in the table below, the City’s investment portfolio was positioned shorter
in duration than its benchmarks and outperformed the ICE BAML 1-3 Year US Treasuries Index by 24.7 basis points (bps).
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Annual Review of Investment Performance September 16, 2021 Page 5
Total return on the portfolio declined between Fiscal Year 2019-20 and Fiscal Year 2020-21, decreasing from 4.36% to 0.32%. The difference in total return between the two Fiscal Years is mostly related to the difference in bond price return between the two Fiscal Years. Bond prices move inversely to interest rates, and Fiscal Year 2019-20 had an overall decrease in interest rates, while Fiscal Year 2020-21 had an overall increase in
interest rates. The following charts of two-year Treasury yields illustrate these differing interest rate environments.
(Source: Federal Reserve Bank of St. Louis) Two-year Treasury rates started Fiscal Year 2019-20 at about 1.78% and ended at about 0.16%, about a 91% decrease. Fiscal Year 2020-21 differed, with 2-year Treasury rates
starting at about 0.17% and ending at about 0.25%, about a 47% increase. If interest
rates do not increase more substantially, future total returns from fixed income portfolios may be muted. Future income returns will continue to decrease as money is invested/reinvested at interest rates that, while increasing, are below the portfolio’s previous income return. Price return is not likely to be significantly positive if rates
continue to fluctuate higher, because bond prices move inversely with interest rates.
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Annual Review of Investment Performance September 16, 2021 Page 6 Consequently, it is reasonable to expect the City’s Fiscal Year 2021-22 total return to be lower than the City’s Fiscal Year 2020-21 total return. PORTFOLIO CHARACTERISTICS LOOKING FORWARD
As of June 30, 2021, the City’s net unrealized gains on the short-term investment portfolio were over $3 million. Although this is a good position to be in, the gain is simply a result of lower interest rates and realizing the gain immediately by selling securities would simply reduce future earnings. The City’s income return will continue to decrease as
maturing investments and earnings are reinvested at market rates, which though rising are still below the past income return of the City. Liquidating securities prior to their maturity date may result in realized gains that would otherwise have been unrealized by holding a security to maturity. That is not to say that the City automatically sells securities when unrealized gains arise. The City deploys an active investment strategy. Before
investments are sold, various factors are considered, such as the difference in yield between the market and the City’s portfolio. This is the primary difference between an active versus a passive investment strategy, which simply follows the attributes of a given benchmark. These strategies have served the City well in the current economic environment and over the long term, as demonstrated by the above-benchmark returns.
Prepared by: Submitted by:
/s/Jeremiah Lim
/s/Scott Catlett Jeremiah Lim Scott Catlett Senior Accountant Finance Director
Attachments: A. Financial Markets Overview B. Treasury Report for the Month Ended June 30, 2021
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ATTACHMENT A
FINANCIAL MARKETS OVERVIEW
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Financial Markets Overview Fiscal Year 2020-21 saw a slight upward trajectory for interest rates. At the start of July
2021, 2-year Treasuries had a yield of 0.17%. After some fluctuations, 2-year Treasuries
yielded 0.25% at the end of Fiscal Year 2020-21, which is a 47% increase from the start of the Fiscal Year. Yields on 2-year Treasuries have continued to fluctuate, but have remained below 0.30%.
2-Year Treasury Rate
(Source: Federal Reserve Bank of St. Louis)
The Federal Reserve’s target federal funds rate range has been similar during Fiscal Year 2020-21. Economic concerns related to the impact of the COVID-19 coronavirus and its variants resulted in the Federal Reserve reducing the target federal funds rate range to 0.00% - 0.25% in March 2020 with no change in the rate since. During Federal Reserve
Chair Powell’s July 28, 2021 press conference, Chair Powell said, “The effects of the
pandemic on the economy have continued to diminish, but risks to the economic outlook remain… We expect to maintain an accommodative stance of monetary policy until these employment and inflation outcomes are achieved… What we’ve seen, though, is with successive waves of COVID over the past year and some months now, there has tended
less in the way of economic implications from each wave.”
Information from the Bureau of Economic Analysis and the Bureau of Labor Statistics helps illustrate the economy over the last few months.
The Bureau of Economic Analysis (BEA) released its “advance” estimates of gross
domestic product (GDP) toward the end of July 2021. BEA’s “advance” estimate is that in the second calendar quarter of 2021, real GDP increased 6.5 percent annualized, following a 6.3 percent increase in the first calendar quarter of 2021. “T he increase in real GDP in the second quarter reflected increases in personal
consumption expenditures (PCE), nonresidential fixed investment, exports, and state and
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local government spending that were partly offset by decreases in private inventory investment, residential fixed investment, and federal government spending.”
Percent Change of Real GDP from Preceding Calendar Quarter
(Source: U.S. Bureau of Economic Analysis)
(Seasonally adjusted annualized rates)
The Bureau of Labor Statistics (BLS) released July 2021’s employment data in August. BLS reported that, “Total nonfarm payroll employment rose by 943,000 in July … Notable job gains occurred in leisure and hospitality, in local government education, and in
professional and business services… The unemployment rate declined by 0.5
percentage point to 5.4 percent in July, and the number of unemployed persons fell by 782,000 to 8.7 million. These measures are down considerably from their highs at the end of the February-April 2020 recession. However, they remain well above their levels prior to the coronavirus (COVID-19) pandemic (3.5 percent and 5.7 million, respectively,
in February 2020).” Seasonally Adjusted Unemployment Rate
(Source: U.S. Bureau of Labor Statistics)
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Seasonally Adjusted Non-Farm Payroll Employment
(Source: U.S. Bureau of Labor Statistics)
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ATTACHMENT B
TREASURY REPORT FOR THE MONTH ENDED JUNE 30, 2021
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CITY OF Newport BeachAmortized Unrealized Market Accrued Market Value % YTM @ YTM @Operating PortfoliosCost Gains/(Loss) Value Interest Plus Accrued Total Cost Market NotesLiquidity PortfolioDemand Deposit Accounts 14,440,118$ -$ 14,440,118$ -$ 14,440,118$ 4.57% 0.15% 0.15% (1) Local Agency Investment Fund 63,999,079 - 63,999,079 - 63,999,079 20.26% 0.44% 0.41% (2) Targeted-Maturities Portfolio 574 - 574 - 574 0.00% 0.01% 0.01%Short-Term PortfolioCash Equivalents (331,124) - (331,124) 36 (331,087) -0.10% -0.01% -0.01%Marketable Securities 233,506,583 3,350,985 236,857,568 868,491 237,726,058 75.27% 1.50% 0.32%TOTAL OPERATING FUNDS 311,615,230$ 3,350,985$ 314,966,215$ 868,527$ 315,834,743$ 100.00%Bond Fund Portfolios2010 Civic Center COPs 7,699,124$ -$ 7,699,124$ -$ 7,699,124$ 39.07% 0.01% 0.01%Fire Station COPs 10,023,462 - 10,023,462 - 10,023,462 50.86% 0.40% 0.37% (2)Assessment Districts 1,984,482 - 1,984,482 - 1,984,482 10.07% 0.01% 0.01%TOTAL BOND FUNDS WITH FISCAL AGENT 19,707,068$ -$ 19,707,068$ -$ 19,707,068$ 100.00%TOTAL CASH & INVESTMENTS 331,322,298$ 3,350,985$ 334,673,283$ 868,527$ 335,541,810$ Notes:(1) Yield offsets bank fees(2) LAIF's yield is available quarterly for the prior quarter. Fire Station COPs are mostly invested in their own LAIF account.PortfoliosJune 30, 2021For the Month Ended TREASURER'S REPORT5%20%< 1%< 1%75%Composition of Operating PortfolioJune 30, 2021Demand DepositAccountsLocal Agency InvestmentFundTargeted‐MaturitiesPortfolioCash EquivalentsMarketable Securities4%24%3%< 1%69%Composition of Operating PortfolioJune 30, 2020Demand DepositAccountsLocal Agency InvestmentFundTargeted‐MaturitiesPortfolioCash EquivalentsMarketable Securities22
CITY OF Newport BeachSecurity Type Par Value Original CostAmortized CostUnrealized Gain/(Loss) Market ValueAccrued InterestMarket Value Plus Accrued% of PortfolioYTM @ CostYTM @ MarketCash Equivalents- (331,124) (331,124) - (331,124) 36 (331,087) -0.14% -0.01% -0.01%Marketable SecuritiesAgency 98,215,000 98,534,318 98,385,732 1,839,761 100,225,493 344,128 100,569,621 42.37% 1.62% 0.23%U.S. Government 70,450,000 70,260,689 70,514,332 725,439 71,239,771 218,160 71,457,930 30.12% 1.30% 0.29%Corporate Notes 43,090,000 43,434,438 43,556,799 654,244 44,211,043 267,291 44,478,334 18.69% 1.83% 0.48%Asset-Backed Securities 12,992,646 13,003,396 12,994,686 76,763 13,071,449 6,164 13,077,612 5.53% 1.16% 0.51%Supranational 5,915,000 6,076,574 6,055,034 (22,821) 6,032,212 17,562 6,049,774 2.55% 0.27% 0.42%Municipal Bonds 2,000,000 2,000,000 2,000,000 77,600 2,077,600 15,187 2,092,787 0.88% 2.01% 0.52%Total Marketable Securities232,662,646 233,309,416 233,506,583 3,350,985 236,857,568 868,491 237,726,058 100.14% 1.50% 0.32%GRAND TOTAL 232,662,646 232,978,293 233,175,459 3,350,985 236,526,444 868,527 237,394,971 100.00% 1.51% 0.32%*Periods greater than one year are annualizedShort-Term Portfolio by Security Typefor the Month EndedJune 30, 2021Prior Month Current MonthCurrent Fiscal Yearto DatePrior Fiscal Year Trailing Year Trailing 3 Years*Income Return0.128% 0.123% 1.826% 2.200% 1.826% 2.052%Price Return‐0.051%‐0.237%‐1.507% 2.161%‐1.507% 0.904%Total Return = Income Return + Price Return0.077%‐0.115% 0.320% 4.361% 0.320% 2.921%1‐3 yr Treasury Index Total Return0.076%‐0.154% 0.073% 4.065% 0.073% 2.681%1‐3 yr Gov./Corp Index Total Return0.095%‐0.148% 0.267% 4.176% 0.267% 2.848%‐2.000%‐1.000%0.000%1.000%2.000%3.000%4.000%5.000%Rate of ReturnPerformance History23
Cumulative Returns from the Beginning of the Trailing YearPeriod BeginPeriod EndTotal ReturnIncome ReturnPrice Return07/01/202007/31/20200.160%0.178%-0.018%07/01/202008/31/20200.199%0.352%-0.153%07/01/202009/30/20200.224%0.522%-0.297%07/01/202010/31/20200.192%0.688%-0.496%07/01/202011/30/20200.256%0.847%-0.591%07/01/202012/31/20200.334%1.002%-0.668%07/01/202001/31/20210.395%1.154%-0.759%07/01/202002/28/20210.296%1.297%-1.001%07/01/202003/31/20210.287%1.439%-1.152%07/01/202004/30/20210.358%1.574%-1.217%07/01/202005/31/20210.435%1.703%-1.268%07/01/202006/30/20210.320%1.826%-1.507%07/01/2020------------Cumulative Returns from the Beginning of the Trailing YearShort-Term Portfolio's Cumulative Returns During Trailing Year07/01/2020 - 06/30/202124
Index: ICE BofA 1-3 Year US Treasury Index.Index Comparison SummaryIndex Comparison DurationIndex Comparison Credit RatingIndex Comparison Market SectorComparison of Short-Term Portfolio with 1-3 Year U.S.Treasuries Index06/01/2021 - 06/30/202125
CITY OF Newport Beach BOND MARKET OVERVIEWFor the Month Ended June 30, 2021 DISCLAIMER: This report is provided for informational purposes only and should not be construed as specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. This report may contain forecasts and forward‐looking statements which are inherently limited and should not be relied upon as an indicator of future results. Past performance is not indicative of future results. The Federal Open Market Committee (FOMC) kept monetary policy unchanged. The federal funds target rate remains in the range of 0.0% to 0.25% The Fed continues to purchase $80 billion of Treasuries per month, and $40 billion of agency mortgage‐backed securities per month. The Consumer Price Index (CPI) was up 5.4% year‐over‐year in June versus up 5.0% in May. Core CPI (CPI less food and energy) was up 4.5% year‐over‐year in June, versus up 3.8% in May. 26
SummaryRisk MetricValueCash-439,135.30MMFund108,048.16Fixed Income237,726,058.43Duration1.826Convexity0.047WAL1.879Years to Final Maturity1.973Years to Effective Maturity1.878Yield0.317Book Yield1.506Avg Credit RatingAA+/Aa1/AA+Credit RatingSecurity TypeDurationMarket SectorIssuer ConcentrationRisk Summary of Short-Term Portfolio06/01/2021 - 06/30/202127
CITY OF Newport BeachStatus Policy Name Rules Compliant Rules Violating RulesCompliantStatement of Investment Policy 29 29 0Status Rule Basis Rule Requirements Rule LimitActualCompliantConcentration Bankers Acceptance Concentration 40.00% 0.00%CompliantConcentration Bankers Acceptances Rated Below (LT) A / A2 (ST) A-1/P-1 0.00% 0.00%CompliantConcentration CD 30.00% 0.00%CompliantConcentration Commercial Paper 25.00% 0.00%CompliantConcentration Corp Rated Below A- / A3 0.00% 0.00%CompliantConcentration CP and CDs Rated Below A/A2 or A1/P1 0.00% 0.00%CompliantConcentration Issuer Concentration Except for Agency, Repo, FDIC 5.00% 2.55%CompliantConcentration Max Concentration of Corps (%) 30.00% 18.74%CompliantConcentration Max Concentration of Funds Assets 10.00% 0.00%CompliantConcentration Max Concentration of MBS and ABS 20.00% 5.51%CompliantConcentration Max Concentration of MMF 20.00% 0.05%CompliantConcentration Max Concentration of Munis (%) 30.00% 0.88%CompliantConcentration Max Concentration of Supranationals 20.00% 2.55%CompliantConcentration Max Issuer Concentration of Corporate Bonds (%) 5.00% 1.44%CompliantConcentration Max Issuer Concentration of Supranationals 10.00% 2.55%CompliantConcentration Minimum Credit Rating for MBS of AAA0.00% 0.00%Compliant Concentration Minimum Issuer Size for CD's - In Billions 10Unavailable(1)Compliant Concentration Minimum Issuer Size for CP's - In Millions 500Unavailable(1)CompliantConcentration Minimum Rating for Supranational Securities AA0.00% 0.00%CompliantConcentration Munis Rated Below A/A2 0.00% 0.00%CompliantConcentration Repos 10.00% 0.00%CompliantConcentration Supranational is in USD 0.00% 0.00%CompliantMaturity Max Effective Maturity for Repos (in Years) 0.08 0.000CompliantMaturity Max Final Maturity (from Settle) for Munis 5.00 4.296CompliantMaturity Max Final Maturity for CP (in Years) 0.74 0.000CompliantMaturity Max Final Maturity From Settle Date (in Years) 5.00 4.964CompliantMaturity Max Final Maturity From Settle for Corp Excl CD 5.00 4.858CompliantMaturity Max Maturity CD 2.00 0.000CompliantMaturity Max Maturity of Bankers Acceptances 0.49 0.000I verify that this investment portfolio is in conformity with California laws and the City's Investment Policy. /S/ Scott CatlettScott CatlettFinance Director(1) The city's financial advisors have verified compliance based on the data available to them. That data may be for a month(s) prior to this treasury report.Short-Term & Targeted-Maturities Portfolios Compliance Statusfor the Month EndedJune 30, 202128
CITY OF Newport BeachBook Value 574.00 573.99Accrued Balance 0.00 0.00Book Value + Accrued 574.00 573.99Net Unrealized Gain/Loss 0.00 0.00Market Value + Accrued 574.00 573.99Begin Date 06/01/2021End Date 06/30/2021Net Amortization/Accretion Income 0.00Interest Income (0.01)Dividend Income 0.00Foreign Tax Withheld Expense 0.00Misc Income 0.00Allowance Expense 0.00Income Subtotal (0.01)Net Realized Gain/Loss 0.00Net Holding Gain/Loss 0.00Impairment Loss 0.00Net Gain/Loss 0.00Expense 0.00Net Income (0.01)Transfers In/Out 0.00Change in Unrealized Gain/Loss 0.00Values are provided by Clearwater Analytics.Income StatementTargeted-Maturities Portfolio Financialsfor the Month EndedJune 30, 2021Balance Sheet05/31/2021 06/30/2021
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CE * Grouped by: General Ledger Grouping. * Groups Sorted by: General Ledger Grouping.General Ledger Grouping,AccountIdentifier,DescriptionOriginal Units,Factorized UnitsCurrency,Security TypeBS Class,Trade DateSettle Date,Amort TargetDateMaturity Date,Accrued InterestBook Value,Net Unrealized Gain/LossMarket ValueCECNB-Chandler Ultra Short-Term38141W315GOLDMAN:FS TRS O ADM573.99573.99USDMMFUNDCE------------0.00573.990.00573.99CECNB-Chandler Ultra Short-Term38141W315GOLDMAN:FS TRS O ADM573.99573.99USDMMFUNDCE------------0.00573.990.00573.99GAAP GL Balance Sheet by Lot (Targeted-Maturities Portfolio)As of 06/30/202130
* Does not Lock Down. * Weighted by: Absolute Value of Principal. * MMF transactions are collapsed. * The Transaction Detail/Trading Activity reports provide our most up-to-date transactional details. As such, these reports are subject to change even after the other reports on the website have been locked down. While these reports can be useful tools in understanding recent activity,due to their dynamic nature we do not recommend using them for booking journal entries or reconciliation.AccountIdentifier DescriptionCurrent Units Currency Transaction Type Trade Date Settle Date FinalMaturityPricePrincipal Accrued InterestAmount---------0.00 ------------------0.000.000.00GAAP Trading Activity (Targeted-Maturities Portfolio)06/01/2021 - 06/30/202131
CITY OF Newport BeachBook Value 229,727,092.16 233,175,459.01Accrued Balance 1,016,919.35 868,527.20Book Value + Accrued 230,744,011.51 234,043,986.21Net Unrealized Gain/Loss 3,924,647.70 3,350,985.08Market Value + Accrued 234,668,659.21 237,394,971.29Begin Date 06/01/2021End Date 06/30/2021Net Amortization/Accretion Income (17,446.37)Interest Income 308,741.04Dividend Income 0.00Foreign Tax Withheld Expense 0.00Misc Income 0.00Allowance Expense 0.00Income Subtotal 308,741.04Net Realized Gain/Loss 8,680.03Net Holding Gain/Loss (573,662.61)Impairment Loss 0.00Net Gain/Loss (564,982.59)Expense 0.00Net Income (273,687.91)Transfers In/Out 3,000,000.00Change in Unrealized Gain/Loss 0.00Values are provided by Clearwater Analytics.Income StatementShort-Term Portfolio Financialsfor the Month EndedJune 30, 2021Balance Sheet05/31/2021 06/30/2021
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CEMSGeneral Ledger Grouping,AccountIdentifier,DescriptionOriginal Units,Factorized UnitsCurrency,Security TypeBS Class,Trade DateSettle Date,Amort TargetDateMaturity Date,Accrued InterestBook Value,Net Unrealized Gain/LossMarket ValueCECNB-Chandler60934N104FEDERATED HRMS GV O INST107,877.10107,877.10USDMMFUNDCE------------36.37107,877.100.00107,877.10CECNB-PFM60934N104FEDERATED HRMS GV O INST134.69134.69USDMMFUNDCE------------0.00134.690.00134.69CECNB-ChandlerCCYUSDPayable-469,760.30-469,760.30USDCASHPAY------------0.00-469,760.300.00-469,760.30CECNB-ChandlerCCYUSDReceivable30,625.0030,625.00USDCASHRCV------------0.0030,625.000.0030,625.00CE----------331,123.51-331,123.51USD------------------36.37-331,123.510.00-331,123.51General Ledger Grouping,AccountIdentifier,DescriptionOriginal Units,Factorized UnitsCurrency,Security TypeBS Class,Trade DateSettle Date,Amort TargetDateMaturity Date,Accrued InterestBook Value,Net Unrealized Gain/LossMarket ValueMSCNB-Chandler023135BW5AMAZON.COM INC1,835,000.001,835,000.00USDCORPLT05/10/202105/12/202105/12/202405/12/20241,123.941,832,441.48228.071,832,669.55MSCNB-Chandler02665WBF7AMERICAN HONDA FINANCE CORP2,000,000.002,000,000.00USDCORPST06/28/201806/29/201807/12/202107/12/202115,491.671,999,106.631,773.372,000,880.00MSCNB-Chandler02665WCT6AMERICAN HONDA FINANCE CORP500,000.00500,000.00USDCORPLT01/13/202001/15/202001/12/202401/12/20248,332.64518,274.5019,255.50537,530.00MSCNB-Chandler037833AK6APPLE INC1,000,000.001,000,000.00USDCORPLT04/11/201904/15/201905/03/202305/03/20233,866.67994,635.9642,864.041,037,500.00MSCNB-Chandler06051GHF9BANK OF AMERICA CORP1,565,000.001,565,000.00USDCORPLT04/26/202104/28/202103/05/202303/05/202417,901.861,641,033.593,171.061,644,204.65MSCNB-Chandler06051GJY6BANK OF AMERICA CORP1,000,000.001,000,000.00USDCORPLT06/10/202106/14/202106/14/202406/14/2024246.971,000,043.25-643.25999,400.00MSCNB-Chandler06406FAD5BANK OF NEW YORK MELLON CORP1,000,000.001,000,000.00USDCORPLT03/27/201903/29/201908/16/202308/16/20238,250.00988,104.2747,375.731,035,480.00MSCNB-Chandler084670BR8BERKSHIRE HATHAWAY INC1,000,000.001,000,000.00USDCORPLT12/20/201812/24/201803/15/202303/15/20238,097.22989,397.9648,282.041,037,680.00MSCNB-Chandler14913R2L0CATERPILLAR FINANCIAL SERVICES CORP2,910,000.002,910,000.00USDCORPLT05/10/202105/17/202105/17/202405/17/20241,600.502,906,258.56-3,097.062,903,161.50MSCNB-Chandler24422EUA5JOHN DEERE CAPITAL CORP1,500,000.001,500,000.00USDCORPLT07/24/201807/26/201801/06/202301/06/202319,687.501,485,090.3668,459.641,553,550.00MSCNB-Chandler24422EVN6JOHN DEERE CAPITAL CORP1,850,000.001,850,000.00USDCORPLT03/01/202103/04/202101/17/202401/17/20242,705.631,848,833.96-1,460.961,847,373.00MSCNB-Chandler3130A0F70FEDERAL HOME LOAN BANKS4,000,000.004,000,000.00USDAGCY BONDLT12/21/201812/24/201812/08/202312/08/20238,625.004,050,264.83244,455.174,294,720.00MSCNB-Chandler3130A3KM5FEDERAL HOME LOAN BANKS1,750,000.001,750,000.00USDAGCY BONDLT08/27/201808/28/201812/09/202212/09/20222,673.611,742,670.3565,692.151,808,362.50MSCNB-Chandler3130A3KM5FEDERAL HOME LOAN BANKS1,255,000.001,255,000.00USDAGCY BONDLT10/17/201910/18/201912/09/202212/09/20221,917.361,270,590.2626,263.991,296,854.25MSCNB-Chandler3130A7PH2FEDERAL HOME LOAN BANKS4,000,000.004,000,000.00USDAGCY BONDLT03/03/202003/04/202003/08/202403/08/202423,541.674,108,737.0846,102.924,154,840.00MSCNB-Chandler3130ADRG9FEDERAL HOME LOAN BANKS4,800,000.004,800,000.00USDAGCY BONDLT01/18/201901/22/201903/10/202303/10/202340,700.004,800,280.96205,975.045,006,256.00MSCNB-Chandler3130AEBM1FEDERAL HOME LOAN BANKS1,750,000.001,750,000.00USDAGCY BONDST06/13/201806/15/201806/10/202206/10/20222,807.291,748,512.5845,027.421,793,540.00MSCNB-Chandler3130AEBM1FEDERAL HOME LOAN BANKS1,250,000.001,250,000.00USDAGCY BONDST07/24/201807/25/201806/10/202206/10/20222,005.211,248,451.5932,648.411,281,100.00MSCNB-Chandler3130AFE78FEDERAL HOME LOAN BANKS2,500,000.002,500,000.00USDAGCY BONDLT12/20/201812/21/201812/09/202212/09/20224,583.332,508,188.6493,061.362,601,250.00MSCNB-Chandler313378CR0FEDERAL HOME LOAN BANKS600,000.00600,000.00USDAGCY BONDST09/15/201709/19/201703/11/202203/11/20224,125.00601,799.117,176.89608,976.00MSCNB-Chandler3133834G3FEDERAL HOME LOAN BANKS1,900,000.001,900,000.00USDAGCY BONDLT05/20/201905/21/201906/09/202306/09/20232,467.361,894,815.9669,594.041,964,410.00MSCNB-Chandler3133834G3FEDERAL HOME LOAN BANKS2,000,000.002,000,000.00USDAGCY BONDLT06/10/201906/11/201906/09/202306/09/20232,597.222,004,826.7462,973.262,067,800.00GAAP GL Balance Sheet by Lot (Short-Term Portfolio)As of 06/30/202133
General Ledger Grouping,AccountIdentifier,DescriptionOriginal Units,Factorized UnitsCurrency,Security TypeBS Class,Trade DateSettle Date,Amort TargetDateMaturity Date,Accrued InterestBook Value,Net Unrealized Gain/LossMarket ValueMSCNB-Chandler313383WD9FEDERAL HOME LOAN BANKS3,750,000.003,750,000.00USDAGCY BONDLT09/25/201809/26/201809/09/202209/09/202236,458.333,754,947.86128,439.643,883,387.50MSCNB-Chandler313383YJ4FEDERAL HOME LOAN BANKS1,600,000.001,600,000.00USDAGCY BONDLT04/05/201904/08/201909/08/202309/08/202316,950.001,634,003.9674,444.041,708,448.00MSCNB-Chandler313383ZU8FEDERAL HOME LOAN BANKS2,400,000.002,400,000.00USDAGCY BONDST11/28/201811/29/201809/10/202109/10/202122,200.002,400,219.8313,676.172,413,896.00MSCNB-Chandler3133EJ3B3FEDERAL FARM CREDIT BANKS FUNDING CORP4,000,000.004,000,000.00USDAGCY BONDST12/26/201812/27/201812/17/202112/17/20214,355.564,001,788.5148,811.494,050,600.00MSCNB-Chandler3133EJT74FEDERAL FARM CREDIT BANKS FUNDING CORP4,000,000.004,000,000.00USDAGCY BONDST12/11/201812/12/201811/15/202111/15/202115,588.894,002,636.3042,003.704,044,640.00MSCNB-Chandler3133EKHN9FEDERAL FARM CREDIT BANKS FUNDING CORP2,500,000.002,500,000.00USDAGCY BONDLT05/02/201905/03/201910/18/202210/18/202211,811.812,498,620.2672,679.742,571,300.00MSCNB-Chandler3133EKMX1FEDERAL FARM CREDIT BANKS FUNDING CORP2,000,000.002,000,000.00USDAGCY BONDLT07/30/201907/31/201902/23/202402/23/202415,857.782,016,418.8580,301.152,096,720.00MSCNB-Chandler3133EKSN7FEDERAL FARM CREDIT BANKS FUNDING CORP4,000,000.004,000,000.00USDAGCY BONDLT06/21/201906/26/201906/26/202306/26/2023983.333,990,588.77129,171.234,119,760.00MSCNB-Chandler3133EKUA2FEDERAL FARM CREDIT BANKS FUNDING CORP4,000,000.004,000,000.00USDAGCY BONDLT07/23/201907/24/201902/01/202302/01/202330,833.333,998,695.52107,824.484,106,520.00MSCNB-Chandler3133EKZK5FEDERAL FARM CREDIT BANKS FUNDING CORP2,000,000.002,000,000.00USDAGCY BONDLT08/09/201908/14/201908/14/202308/14/202312,177.781,998,610.9556,829.052,055,440.00MSCNB-Chandler3133EL3V4FEDERAL FARM CREDIT BANKS FUNDING CORP4,000,000.004,000,000.00USDAGCY BONDLT08/12/202008/18/202008/14/202308/14/20233,044.443,994,087.68-1,607.683,992,480.00MSCNB-Chandler3133ELNW0FEDERAL FARM CREDIT BANKS FUNDING CORP2,290,000.002,290,000.00USDAGCY BONDLT02/19/202002/21/202002/21/202302/21/202311,990.692,290,151.7447,457.362,337,609.10MSCNB-Chandler3135G04Q3FEDERAL NATIONAL MORTGAGE ASSOCIATION4,000,000.004,000,000.00USDAGCY BONDLT08/11/202008/12/202005/22/202305/22/20231,083.333,999,946.001,254.004,001,200.00MSCNB-Chandler3135G05G4FEDERAL NATIONAL MORTGAGE ASSOCIATION4,000,000.004,000,000.00USDAGCY BONDLT09/28/202009/30/202007/10/202307/10/20234,750.004,001,401.32-1,681.323,999,720.00MSCNB-Chandler3135G06H1FEDERAL NATIONAL MORTGAGE ASSOCIATION3,775,000.003,775,000.00USDAGCY BONDLT11/23/202011/25/202011/27/202311/27/2023891.323,771,553.69-2,480.443,769,073.25MSCNB-Chandler3135G0S38FEDERAL NATIONAL MORTGAGE ASSOCIATION1,600,000.001,600,000.00USDAGCY BONDST09/27/201709/28/201701/05/202201/05/202215,644.441,600,783.9715,008.031,615,792.00MSCNB-Chandler3135G0T94FEDERAL NATIONAL MORTGAGE ASSOCIATION1,600,000.001,600,000.00USDAGCY BONDLT10/04/201810/05/201801/19/202301/19/202317,100.001,582,692.4770,619.531,653,312.00MSCNB-Chandler3135G0W33FEDERAL NATIONAL MORTGAGE ASSOCIATION4,390,000.004,390,000.00USDAGCY BONDLT09/05/201909/06/201909/06/202209/06/202219,282.474,383,901.0869,227.124,453,128.20MSCNB-Chandler3137EAEV7FEDERAL HOME LOAN MORTGAGE CORP4,000,000.004,000,000.00USDAGCY BONDLT09/23/202009/24/202008/24/202308/24/20233,527.784,000,708.39-1,828.393,998,880.00MSCNB-Chandler3137EAEY1FEDERAL HOME LOAN MORTGAGE CORP3,280,000.003,280,000.00USDAGCY BONDLT10/14/202010/16/202010/16/202310/16/2023854.173,270,643.55-3,697.953,266,945.60MSCNB-Chandler3137EAEY1FEDERAL HOME LOAN MORTGAGE CORP1,900,000.001,900,000.00USDAGCY BONDLT10/19/202010/20/202010/16/202310/16/2023494.791,894,647.58-2,209.581,892,438.00MSCNB-Chandler3137EAEZ8FEDERAL HOME LOAN MORTGAGE CORP4,275,000.004,275,000.00USDAGCY BONDLT11/03/202011/05/202011/06/202311/06/20231,632.814,271,989.05-1,777.054,270,212.00MSCNB-Chandler3137EAFA2FEDERAL HOME LOAN MORTGAGE CORP3,050,000.003,050,000.00USDAGCY BONDLT12/02/202012/04/202012/04/202312/04/2023571.883,047,556.06-1,673.563,045,882.50MSCNB-Chandler43813RAC1HAROT 2020-1 A31,770,000.001,770,000.00USDABSLT02/19/202002/26/202009/21/202304/22/2024791.581,769,833.3424,854.971,794,688.31MSCNB-Chandler43814UAG4HAROT 2018-2 A3750,000.0042,676.40USDABSST05/22/201805/30/201808/15/202105/18/202246.3942,682.4082.9342,765.33MSCNB-Chandler43815HAC1HAROT 2018-3 A3670,000.00111,243.20USDABSLT08/21/201808/28/201812/21/202108/22/202291.16111,241.54587.08111,828.62MSCNB-Chandler43815NAC8HAROT 2019-3 A31,570,000.001,468,322.95USDABSLT08/20/201908/27/201901/15/202308/15/20231,161.611,468,319.1713,588.561,481,907.72MSCNB-Chandler44891VAC5HALST 21B A31,435,000.001,435,000.00USDABSLT06/08/202106/16/202106/17/202406/17/2024197.311,434,787.72-2,533.741,432,253.98MSCNB-Chandler44933LAC7HART 2021-A A3925,000.00925,000.00USDABSLT04/20/202104/28/202109/15/202409/15/2025156.22924,909.45-302.11924,607.34MSCNB-Chandler459058GQ0INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPM2,350,000.002,350,000.00USDSUPRANATIONALLT01/26/202101/28/202103/19/202403/19/202416,645.832,492,241.05-13,014.552,479,226.50GAAP GL Balance Sheet by Lot (Short-Term Portfolio)As of 06/30/202134
General Ledger Grouping,AccountIdentifier,DescriptionOriginal Units,Factorized UnitsCurrency,Security TypeBS Class,Trade DateSettle Date,Amort TargetDateMaturity Date,Accrued InterestBook Value,Net Unrealized Gain/LossMarket ValueMSCNB-Chandler459058JM6INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPM1,565,000.001,565,000.00USDSUPRANATIONALLT11/17/202011/24/202011/24/202311/24/2023402.121,562,309.32-2,583.371,559,725.95MSCNB-Chandler459058JM6INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPM2,000,000.002,000,000.00USDSUPRANATIONALLT01/06/202101/08/202111/24/202311/24/2023513.892,000,483.55-7,223.551,993,260.00MSCNB-Chandler46647PAH9JPMORGAN CHASE & CO2,000,000.002,000,000.00USDCORPLT04/23/202104/27/202103/01/202403/01/202521,466.672,122,808.331,111.672,123,920.00MSCNB-Chandler46647PCH7JPMORGAN CHASE & CO1,000,000.001,000,000.00USDCORPLT05/26/202106/01/202106/01/202406/01/2025686.671,002,101.54-4,021.54998,080.00MSCNB-Chandler477870AC3JDOT 2019-B A3810,000.00568,960.85USDABSLT07/16/201907/24/201901/15/202312/15/2023558.85568,924.447,483.72576,408.15MSCNB-Chandler47788UAC6JDOT 2021 A3765,000.00765,000.00USDABSLT03/02/202103/10/202110/15/202409/15/2025122.40764,870.74-952.45763,918.29MSCNB-Chandler47789KAC7JDOT 2020 A31,285,000.001,285,000.00USDABSLT03/04/202003/11/202011/15/202308/15/2024628.221,284,960.739,926.711,294,887.43MSCNB-Chandler58769KAD6MBALT 2021-B A31,145,000.001,145,000.00USDABSLT06/22/202106/29/202111/15/202411/15/202425.441,144,913.69-607.101,144,306.59MSCNB-Chandler649791PP9NEW YORK ST2,000,000.002,000,000.00USDMUNILT10/29/201910/30/201902/15/202402/15/202415,186.672,000,000.0077,600.002,077,600.00MSCNB-Chandler65479JAD5NAROT 2019-C A31,675,000.001,675,000.00USDABSLT10/16/201910/23/201908/15/202307/15/20241,436.781,674,966.5820,930.891,695,897.47MSCNB-Chandler69353REY0PNC BANK NA1,000,000.001,000,000.00USDCORPST11/17/201711/21/201711/09/202112/09/20211,558.331,000,518.967,851.041,008,370.00MSCNB-Chandler69353RFB9PNC BANK NA750,000.00750,000.00USDCORPST12/27/201712/29/201701/17/202202/17/20227,328.13750,249.179,785.83760,035.00MSCNB-Chandler69353RFB9PNC BANK NA485,000.00485,000.00USDCORPST07/19/201807/23/201802/17/202202/17/20224,738.85482,870.538,618.77491,489.30MSCNB-Chandler69353RFB9PNC BANK NA500,000.00500,000.00USDCORPST07/19/201807/23/201802/17/202202/17/20224,885.42497,871.928,818.08506,690.00MSCNB-Chandler69371RP42PACCAR FINANCIAL CORP2,105,000.002,105,000.00USDCORPST08/06/201808/09/201808/09/202108/09/202126,154.632,104,975.646,528.812,111,504.45MSCNB-Chandler69371RQ41PACCAR FINANCIAL CORP1,000,000.001,000,000.00USDCORPLT10/31/201911/07/201902/07/202302/07/20237,600.00999,969.3725,240.631,025,210.00MSCNB-Chandler74005PBA1LINDE INC2,000,000.002,000,000.00USDCORPST05/15/201805/17/201802/15/202202/15/202218,511.111,990,044.7926,455.212,016,500.00MSCNB-Chandler78015K7C2ROYAL BANK OF CANADA2,500,000.002,500,000.00USDCORPLT05/19/202105/21/202111/01/202411/01/20249,375.002,624,135.45-10,135.452,614,000.00MSCNB-Chandler79466LAG9SALESFORCE.COM INC470,000.00470,000.00USDCORPLT06/29/202107/12/202107/15/202407/15/20240.00469,760.30555.54470,315.84MSCNB-Chandler808513BN4CHARLES SCHWAB CORP1,230,000.001,230,000.00USDCORPLT03/16/202103/18/202103/18/202403/18/20242,639.381,229,442.937,445.071,236,888.00MSCNB-Chandler808513BN4CHARLES SCHWAB CORP1,000,000.001,000,000.00USDCORPLT03/19/202103/23/202102/18/202403/18/20242,145.831,003,048.202,551.801,005,600.00MSCNB-Chandler89114QCA4TORONTO-DOMINION BANK2,000,000.002,000,000.00USDCORPLT04/23/202104/27/202106/12/202406/12/20242,797.222,117,521.99-241.992,117,280.00MSCNB-Chandler89231PAD0TAOT 2018-D A31,315,000.00566,442.79USDABSLT08/29/201908/30/201905/15/202203/15/2023800.57569,411.043,002.17572,413.21MSCNB-Chandler89236TEL5TOYOTA MOTOR CREDIT CORP1,000,000.001,000,000.00USDCORPLT09/07/201809/11/201801/11/202301/11/202312,750.00990,679.0445,430.961,036,110.00MSCNB-Chandler89236TFS9TOYOTA MOTOR CREDIT CORP1,000,000.001,000,000.00USDCORPLT06/14/201906/18/201901/08/202401/08/202416,098.611,022,940.6847,139.321,070,080.00MSCNB-Chandler89236TJH9TOYOTA MOTOR CREDIT CORP890,000.00890,000.00USDCORPLT06/15/202106/18/202106/18/202406/18/2024160.69888,953.36-2,771.46886,181.90MSCNB-Chandler89238EAC0TLOT-21A-A31,235,000.001,235,000.00USDABSLT04/13/202104/21/202104/20/202404/20/2024147.171,234,865.16700.961,235,566.12MSCNB-Chandler91159HHP8US BANCORP1,000,000.001,000,000.00USDCORPST01/24/201801/26/201801/24/202201/24/202211,447.92999,451.0212,198.981,011,650.00MSCNB-Chandler91159HHV5US BANCORP1,000,000.001,000,000.00USDCORPLT03/28/201903/29/201901/05/202402/05/202413,687.501,013,835.8657,154.141,070,990.00MSCNB-Chandler91159HHV5US BANCORP1,000,000.001,000,000.00USDCORPLT06/14/201906/18/201901/05/202402/05/202413,687.501,022,273.6248,716.381,070,990.00GAAP GL Balance Sheet by Lot (Short-Term Portfolio)As of 06/30/202135
SummaryGeneral Ledger Grouping,AccountIdentifier,DescriptionOriginal Units,Factorized UnitsCurrency,Security TypeBS Class,Trade DateSettle Date,Amort TargetDateMaturity Date,Accrued InterestBook Value,Net Unrealized Gain/LossMarket ValueMSCNB-Chandler9128282P4UNITED STATES TREASURY5,000,000.005,000,000.00USDUS GOVLT12/23/201912/24/201907/31/202207/31/202239,105.665,010,377.9285,322.085,095,700.00MSCNB-Chandler912828L24UNITED STATES TREASURY2,800,000.002,800,000.00USDUS GOVLT09/18/201809/20/201808/31/202208/31/202217,547.552,766,764.2390,439.772,857,204.00MSCNB-Chandler912828M80UNITED STATES TREASURY2,000,000.002,000,000.00USDUS GOVLT11/05/201911/06/201911/30/202211/30/20223,387.982,009,799.7442,000.262,051,800.00MSCNB-Chandler912828M80UNITED STATES TREASURY2,000,000.002,000,000.00USDUS GOVLT12/11/201912/12/201911/30/202211/30/20223,387.982,009,398.5342,401.472,051,800.00MSCNB-Chandler912828R28UNITED STATES TREASURY4,000,000.004,000,000.00USDUS GOVLT12/04/201912/05/201904/30/202304/30/202310,951.094,001,968.3499,591.664,101,560.00MSCNB-Chandler912828R69UNITED STATES TREASURY2,400,000.002,400,000.00USDUS GOVLT04/11/201904/15/201905/31/202305/31/20233,303.282,369,676.1893,515.822,463,192.00MSCNB-Chandler912828U65UNITED STATES TREASURY1,750,000.001,750,000.00USDUS GOVST10/19/201710/20/201711/30/202111/30/20212,593.921,749,037.3913,125.111,762,162.50MSCNB-Chandler912828V72UNITED STATES TREASURY1,800,000.001,800,000.00USDUS GOVST12/15/201712/18/201701/31/202201/31/202214,078.041,797,526.5921,319.411,818,846.00MSCNB-Chandler912828W55UNITED STATES TREASURY1,000,000.001,000,000.00USDUS GOVST10/20/201710/23/201702/28/202202/28/20226,266.98999,469.5912,480.411,011,950.00MSCNB-Chandler912828W55UNITED STATES TREASURY2,000,000.002,000,000.00USDUS GOVST12/11/201712/12/201702/28/202202/28/202212,533.971,997,190.7626,709.242,023,900.00MSCNB-Chandler912828W89UNITED STATES TREASURY3,000,000.003,000,000.00USDUS GOVST12/26/201712/28/201703/31/202203/31/202214,139.342,992,732.2547,587.753,040,320.00MSCNB-Chandler912828XW5UNITED STATES TREASURY1,500,000.001,500,000.00USDUS GOVST04/24/201804/25/201806/30/202206/30/202271.331,485,006.3339,608.671,524,615.00MSCNB-Chandler912828XW5UNITED STATES TREASURY2,000,000.002,000,000.00USDUS GOVST09/07/201809/10/201806/30/202206/30/202295.111,979,402.4753,417.532,032,820.00MSCNB-Chandler912828YA2UNITED STATES TREASURY5,000,000.005,000,000.00USDUS GOVLT12/24/201912/26/201908/15/202208/15/202228,176.804,989,650.4287,899.585,077,550.00MSCNB-Chandler912828YE4UNITED STATES TREASURY4,000,000.004,000,000.00USDUS GOVLT02/24/202102/25/202108/31/202408/31/202416,711.964,115,678.05-21,318.054,094,360.00MSCNB-Chandler912828YK0UNITED STATES TREASURY5,000,000.005,000,000.00USDUS GOVLT01/16/202001/17/202010/15/202210/15/202214,463.804,987,297.8491,602.165,078,900.00MSCNB-Chandler912828Z52UNITED STATES TREASURY3,000,000.003,000,000.00USDUS GOVLT02/16/202102/17/202101/31/202501/31/202517,206.493,106,712.03-24,692.033,082,020.00MSCNB-Chandler912828ZF0UNITED STATES TREASURY2,900,000.002,900,000.00USDUS GOVLT03/17/202103/18/202103/31/202503/31/20253,644.812,885,256.8611.142,885,268.00MSCNB-Chandler912828ZL7UNITED STATES TREASURY2,000,000.002,000,000.00USDUS GOVLT01/13/202101/14/202104/30/202504/30/20251,263.591,998,604.98-20,164.981,978,440.00MSCNB-Chandler912828ZL7UNITED STATES TREASURY3,000,000.003,000,000.00USDUS GOVLT04/22/202104/23/202104/30/202504/30/20251,895.382,976,976.24-9,316.242,967,660.00MSCNB-Chandler91282CBA8UNITED STATES TREASURY2,300,000.002,300,000.00USDUS GOVLT01/08/202101/11/202112/15/202312/15/2023125.682,294,491.20-6,888.202,287,603.00MSCNB-Chandler91282CBE0UNITED STATES TREASURY4,000,000.004,000,000.00USDUS GOVLT01/12/202101/15/202101/15/202401/15/20242,306.633,987,961.08-12,641.083,975,320.00MSCNB-Chandler91282CBV2UNITED STATES TREASURY5,000,000.005,000,000.00USDUS GOVLT04/23/202104/26/202104/15/202404/15/20243,944.675,007,890.67-14,940.674,992,950.00MSCNB-Chandler91282CCC3UNITED STATES TREASURY3,000,000.003,000,000.00USDUS GOVLT05/26/202105/27/202105/15/202405/15/2024957.882,995,462.20-11,632.202,983,830.00MSCNB-Chandler92826CAC6VISA INC1,000,000.001,000,000.00USDCORPLT12/20/201812/24/201812/14/202212/14/20221,322.22993,241.0239,948.981,033,190.00MSCNB-Chandler931142EK5WALMART INC2,000,000.002,000,000.00USDCORPLT04/29/201904/30/201905/26/202306/26/2023944.442,026,884.9689,655.042,116,540.00MSCNB-Chandler------235,020,000.00232,662,646.19USD------------------868,490.82233,506,582.523,350,985.08236,857,567.61General Ledger Grouping,AccountIdentifier,DescriptionOriginal Units,Factorized UnitsCurrency,Security TypeBS Class,Trade DateSettle Date,Amort TargetDateMaturity Date,Accrued InterestBook Value,Net Unrealized Gain/LossMarket Value------------234,688,876.49232,331,522.68USD------------------868,527.20233,175,459.013,350,985.08236,526,444.10GAAP GL Balance Sheet by Lot (Short-Term Portfolio)As of 06/30/202136
* Does not Lock Down. * Weighted by: Absolute Value of Principal. * MMF transactions are collapsed. * The Transaction Detail/Trading Activity reports provide our most up-to-date transactional details. As such, these reports are subject to change even after the other reports on the website have been locked down. While these reports can be useful tools in understanding recent activity,due to their dynamic nature we do not recommend using them for booking journal entries or reconciliation.AccountIdentifier DescriptionCurrent Units Currency Transaction Type Trade Date Settle Date FinalMaturityPricePrincipal Accrued InterestAmountCNB-Chandler06051GJY6 BANK OF AMERICA CORP1,000,000.00 USD Buy06/10/2021 06/14/2021 06/14/2024 100.0061,000,060.000.00 -1,000,060.00CNB-Chandler313378CR0 FEDERAL HOME LOAN BANKS-700,000.00 USD Sell06/23/2021 06/24/2021 03/11/2022 101.548-710,836.00-4,506.25715,342.25CNB-Chandler43814UAG4 HAROT 2018-2 A3-33,819.40 USD Principal Paydown 06/18/2021 06/18/2021 05/18/2022----33,819.400.0033,819.40CNB-Chandler43815HAC1 HAROT 2018-3 A3-27,727.66 USD Principal Paydown 06/21/2021 06/21/2021 08/22/2022----27,727.660.0027,727.66CNB-Chandler43815NAC8 HAROT 2019-3 A3-101,677.05 USD Principal Paydown 06/15/2021 06/15/2021 08/15/2023----101,677.050.00101,677.05CNB-Chandler44891VAC5 HALST 21B A31,435,000.00 USD Buy06/08/2021 06/16/2021 06/17/2024 99.9851,434,784.750.00 -1,434,784.75CNB-Chandler46647PCH7 JPMORGAN CHASE & CO1,000,000.00 USD Buy05/26/2021 06/01/2021 06/01/2025 100.2161,002,160.000.00 -1,002,160.00CNB-Chandler477870AC3 JDOT 2019-B A3-37,147.46 USD Principal Paydown 06/15/2021 06/15/2021 12/15/2023----37,147.460.0037,147.46CNB-Chandler58769KAD6 MBALT 2021-B A31,145,000.00 USD Buy06/22/2021 06/29/2021 11/15/2024 99.9921,144,913.550.00 -1,144,913.55CNB-Chandler60934N104 FEDERATED HRMS GV O INST4,480,374.70 USD Buy------06/30/2021 1.0004,480,374.700.00 -4,480,374.70CNB-Chandler60934N104 FEDERATED HRMS GV O INST-5,436,847.92 USD Sell------06/30/2021 1.000 -5,436,847.920.005,436,847.92CNB-Chandler79466LAG9 SALESFORCE.COM INC470,000.00 USD Buy06/29/2021 07/12/2021 07/15/2024 99.949469,760.300.00-469,760.30CNB-Chandler89231PAD0 TAOT 2018-D A3-71,232.72 USD Principal Paydown 06/15/2021 06/15/2021 03/15/2023----71,232.720.0071,232.72CNB-Chandler89236TJH9 TOYOTA MOTOR CREDIT CORP890,000.00 USD Buy06/15/2021 06/18/2021 06/18/2024 99.881888,940.900.00-888,940.90CNB-Chandler------4,011,922.50 USD ---------09/08/2022---4,001,705.99-4,506.25 -3,997,199.74GAAP Trading Activity (Short-Term Portfolio)06/01/2021 - 06/30/202137
CITY OF Newport Beach GLOSSARY OF TERMS Accrued Interest ‐ The interest that has accumulated on a bond since the last interest payment up to, but not including, the settlement date. Accrued interest occurs as a result of the difference in timing of cash flows and the measurement of these cash flows. Amortized Cost ‐ The amount at which an investment is acquired, adjusted for accretion, amortization, and collection of cash. Book Yield ‐The measure of a bond’s recurring realized investment income that combines both the bond’s coupon return plus it amortization. Average Credit Rating ‐ The average credit worthiness of a portfolio, weighted in proportion to the dollar amount that is invested in the portfolio. Convexity ‐ The relationship between bond prices and bond yields that demonstrates how the duration of a bond changes as the interest rate changes. Credit Rating ‐ An assessment of the credit worthiness of an entity with respect to a particular financial obligation. The credit rating is inversely related to the possibility of debt default. Duration ‐ A measure of the exposure to interest rate risk and sensitivity to price fluctuation of fixed‐income investments. Duration is expressed as a number of years. Income Return ‐ The percentage of the total return generated by the income from interest or dividends. Original Cost ‐ The original cost of an asset takes into consideration all of the costs that can be attributed to its purchase and to putting the asset to use. Par Value ‐ The face value of a bond. Par value is important for a bond or fixed‐income instrument because it determines its maturity value as well as the dollar value of coupon payments. Price Return ‐ The percentage of the total return generated by capital appreciation due to changes in the market price of an asset. Short‐Term Portfolio ‐ The city’s investment portfolio whose securities’ average maturity is between 1 and 5 years. Targeted‐Maturities Portfolio ‐ The city’s investment portfolio whose securities’ average maturity is between 0 and 3 years. Total Return ‐ The actual rate of return of an investment over a given evaluation period. Total return is the combination of income and price return. Unrealized Gains/(Loss) ‐ A profitable/(losing) position that has yet to be cashed in. The actual gain/(loss) is not realized until the position is closed. A position with an unrealized gain may eventually turn into a position with an unrealized loss, as the market fluctuates and vice versa. Weighted Average Life (WAL) ‐ The average number of years for which each dollar of unpaid principal on an investment remains outstanding, weighted by the size of each principal payout. Yield ‐ The income return on an investment. This refers to the interest or dividends received from a security and is expressed as a percentage based on the investment's cost and its current market value. Yield to Maturity at Cost (YTM @ Cost) ‐ The internal rate of return of a security given the amortized price as of the report date and future expected cash flows. Yield to Maturity at Market (YTM @ Market) ‐ The internal rate of return of a security given the market price as of the report date and future expected cash flows. Years to Effective Maturity – The average time it takes for securities in a portfolio to mature, taking into account the possibility that any of the bonds might be called back to the issuer. Years to Final Maturity ‐ The average time it takes for securities in a portfolio to mature, weighted in proportion to the dollar amount that is invested in the portfolio. Weighted average maturity measures the sensitivity of fixed‐income portfolios to interest rate changes. 38
September 16, 2021, Finance Committee Agenda Comments
These comments on an item on the Newport Beach Finance Committee agenda are submitted by: Jim
Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229)
Item IV.A. MINUTES OF MAY 27, 2021
Changes to the draft minutes passages shown in italics are suggested in strikeout underline format.
Page 1 (agenda packet page 5), Item Ill, sentence 2: "He noted it would be helpful to bring to the
public attention that there is a City!& City budget so they may provide comment."
Item V.A. ANNUAL REVIEW OF INVESTMENT PERFORMANCE
The Discussion in the last paragraph on the first page of the staff report ( agenda packet page 10)
says "These investments are pooled assets of the City of Newport Beach."
Does this mean none of the many funds and accounts listed in the budget are separately deposited
or invested? Or only that the present report is confined to describing the ones that are comingled?
If funds from different sources and dedicated to different purposes are coming led, what happens in
the invent of a financial disaster? Do some have priority over others when the recovered assets are
disbursed? Is this spelled out somewhere? Or is the possibility of such a disaster regarded as too
improbable to prepare for?
Item V.B. ANNUAL REVIEW OF INVESTMENT POLICY
1. On red lined policy page 10 (agenda packet page 51 ), regarding a limited-term increase to the
ceiling on investments in commercial paper, the paragraph proposed to be added to Section
G.1.i.iii could be more artfully worded so as to avoid having two sentences contradicting each
other.
2. In redlined policy page 13 (agenda packet page 55), I see nothing in the paragraph proposed to
be added to Section G.2 that says the zero or negative interest securities described in it would
be purchased only under the most "exigent" circumstances (as promised on agenda packet
page 39).
If the City does not want the investment manager to use this exception, why is it being added
without a cautionary note?
Does the January 1, 2026, sunset date mean such securities are allowed in the portfolio only
through that date? Or does Section G.3 ("Exceptions to Prohibited and Restricted
Investments") apply to them, such that any of them purchased prior to that date can be retained
to their maturity, even if beyond the sunset date?
Also, should this new paragraph be added to Section G.3 rather than Section G.2
("Investments Specifically Not Permitted")? It is, after all, an exception to an existing
prohibition, not itself a prohibition.
39
CHANDLER ASSET MANAGEMENT, INC. | 800.317.4747 | www.chandlerasset.com
INVESTMENT REPORT
Period Ending August 31, 2021
City of Newport Beach
40
SECTION 1 Economic Update
SECTION 2 Account Profile
SECTION 3 Consolidated Information
SECTION 4 Portfolio Holdings
SECTION 5 Transactions
Table of Contents As of August 31, 2021
1
41
SECTION |Section 1 |Economic Update
2
42
Economic Update
▪
▪
▪
While some pockets of the economy remain dislocated,US real gross domestic product (GDP) has recovered to pre-
pandemic levels. The recovery has been fueled by robust fiscal spending, accommodative monetary policy, and
vaccinations. These factors are beginning to moderate but should continue to provide tailwinds for the economy in the
coming quarters. The resurgence of the virus in the US is causing a modest disruption in economic activity and having a
negative impact on consumer sentiment. Supply chain and labormarket disruptions are also likely to continue while global
infection rates remain uncontained, putting ongoing upward pressure on transportation, input, and labor costs. Some
pandemic-related fiscal relief has started to phase out,but an infrastructure spending plan is on the horizon. Meanwhile,
the Federal Reserve remains accommodative and continues to facilitate further improvement in the labor market. Overall,
we believe the US economy continues to grow at a strong, above-trend, pace but we believe economic data will remain
somewhat choppy over the near-term.
Fed Chair Powell confirmed that rate hikes are not imminent, and he maintained a dovish tone during his speech at the
Jackson Hole economic symposium in late-August.He noted that the unemployment rate remains elevated and laborforce
participation remains well below pre-pandemiclevels.He also continues to believe that at least some of the factors driving
higher inflation will be transitory and cautioned that raising the fed funds rate too soon could be detrimental to the labor
market recovery. However,it seems that most Fed policymakers have decoupled their opinion about the fed funds rate
from their opinion on tapering asset purchases. Chair Powell noted thatthe conditions needed to justify an increase in the
fed funds rate would be much more rigorous than the conditions needed to start tapering asset purchases.We believe a
plateau or decline in new US virus infection rates, continued efficacy of existing vaccines, along with a solid September
employment report may catalyze the Fed to announce at the November Federal Open Market Committee meeting their
intent to begin tapering asset purchases. However,we expect the fed funds rate to remain near the zero lower bound
through 2022.
The Treasury yield curve steepened slightly in August. The 2-year Treasury yield increased nearly three basis points to
0.21% and the 10-year Treasury yield increased nearly nine basis points to 1.31%. Nevertheless, the yield curve remains
flatter than earlier this spring, driven by a decline in longer-term yields.At month-end, the 10-year Treasury yield was
down about 43 basis points from its high this year (at the end of March).We believe multiple factors have put downward
pressure on longer-term Treasury rates in recent months including rising concerns about the DeltaCOVID-19 variant, market
technicals, and uneven global vaccination and economic recovery rates.We believe some of the downward pressure on
longer-term rates has started to reverse and the Treasury yield curve is likely to steepen further over the intermediate-
term. 3
43
Source: US Department of Labor Source: US Department of Labor
Employment
Job growth underwhelmed in August as nonfarm payrolls increased by 235,000 compared to the Bloomberg consensus estimate of 733,000.
However, there were upward revisions to the prior months and the three-month moving average is a robust 750,000 compared to the six-
month moving average of 653,000, signaling momentum in the trend. Both the unemployment rate (U-3) and underemployment rate (U-6)
moved lower in August to 5.2% and 8.8%, compared to 5.4% and 9.2%in July, respectively. Average Hourly Earnings on a year-over-yearbasis
ticked higher to 4.3% versus 4.1% last month, foreshadowing the risk case of wage inflation remaining elevated over an intermediate time
horizon due to the pandemic related distortions between the demand and supply of workers.
-22,000
-18,000
-14,000
-10,000
-6,000
-2,000
2,000
6,000
MOM Change In (000's)Nonfarm Payroll (000's)
Non-farm Payroll (000's)
3 month average (000's)
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
24.0%
Unemployment Rate
Underemployment Rate (U6)
Unemployment Rate (U3)Rate (%)4
44
Initial Claims for Unemployment
310 345 354 349 377 387 399 424 368 386 368 416 418 374
2,783 2,805
2,908 2,865 2,899 2,980
3,296 3,262 3,265 3,367 3,484 3,412 3,528
-
1,000
2,000
3,000
4,000
5,000
6,000
In thousandsInitial Jobless Claims
Continuing Claims
Initial Claims For Unemployment June 04, 2021 -September 03, 2021
In the most recent week, the number of initial jobless claims was 310,000 versus 345,000 in the prior week. The level of continuing
unemployment claims (where the data is lagged by one week) was marginally better at 2.783 million versus 2.805 million in the prior week.
Continuing jobless claims have declined significantly from the peak of nearly 25 million in May 2020,but they remained above the 2019 (pre-
pandemic) average of 1.7 million.
Source: US Department of Labor
5
45
Source: US Department of Labor Source: US Department of Commerce
Inflation
The ConsumerPrice Index (CPI) was up 5.4% year-over-year in July, unchanged on ayear-over-yearbasis from June. Core CPI (CPI less food and
energy) was up 4.3% year-over-year in July (in line with expectations), versus up 4.5%in June. The Personal Consumption Expenditures (PCE)
index was up 4.2% year-over-year in July, versus up 4.0%in June. Core PCEwas up 3.6% year-over-year in July, versus up 3.5% year-over-year in
June. Current inflation readings are running well above the Fed’s longer-run target of around 2.0%. While the Fed believes many of the factors
fueling higher inflation will be temporary, the upward pressure on inflation from supply chain bottlenecks and pandemic-related disruptions is
likely to remain elevated over the near-term.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
Personal Consumption Expenditures (PCE)
PCE Price Deflator YOY % Change
PCE Core Deflator YOY % Change
YOY( %) Change0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
Consumer Price Index (CPI)
CPI YOY % Change
Core CPI YOY % Change
YOY( %) Change6
46
On a year-over-year basis, retail sales were up 15.8%in July versus up 18.7%in June. Year-over-year gains were fueled in part by the drop-off
in spending and activity during the pandemic last year. However,on a month-over-month basis, retail sales fell 1.1%in July (a biggerdecline
than the consensus forecast), following a 0.7% increase in June. Retail sales have been somewhat uneven on a monthly basis during the
pandemic due to the timing of fiscal stimulus and economic reopening.We believe the monthly decline in July sales reflects in part
consumers’shift in spending toward services. Amazon Prime Day was also in June this year and may have pulled some sales forward (analysts
estimate that Amazon recently eclipsed Walmart as the biggest US retailer in terms of sales). Looking ahead,we believe consumerspending
will be highly correlated with US labor market conditions. The Consumer Confidence index dropped to 113.8 in August from 125.1in July. The
index's decline was bigger than expected, driven by concerns about the continued surge in US virus infection rates and the recent uptick in
inflationary pressures.
Source: US Department of Commerce Source: The Conference Board
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Retail Sales YOY % Change
YOY (%) Change80
90
100
110
120
130
140
Index LevelConsumer Confidence
Consumer
7
47
Source: The Conference Board Source: Federal Reserve Bank of Chicago
Economic Activity
The Conference Board’s Leading EconomicIndex (LEI) increased 0.9% month-over-month in July (slightly above expectations), following a0.5%
increase in June.On a year-over-year basis, the LEI was up 10.6%in July. According to the Conference Board, even though month-over-month
growth slowed in June, the index suggests that economic growth will remain strong through year-end. The Conference Board is forecasting
6.0% GDP growth for 2021 and 4.0% GDP growth in 2022.Meanwhile, the Chicago Fed National Activity Index (CFNAI) jumped to 0.53 in July
from -0.01 in June.On a 3-month moving average basis, the CFNAI improved to 0.23 in July from 0.01 in June. A reading above zero signals
above-trend economic growth.
-8.00
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
Chicago Fed National Activity Index (CFNAI)3 Month Average-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
Leading Economic Indicators (LEI)MOM ( %) Change8
48
Source: US Department of Commerce Source: S&P
Housing
0
200
400
600
800
1000
1200
1400
1600
1800
2000
MOM Change (In Thousands of Units)Housing Starts
Multi Family Housing Starts
Single Family Housing Starts
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
S&P/Case-Shiller 20 City Composite Home Price Index YOY( %) ChangeTotal housing starts fell 7.0%in July to an annual pace of 1,534,000, missing expectations. Single-family starts declined 4.5%in July while multi-
family starts fell 13.1%.On a year-over-yearbasis, housing starts were up just 2.5%in July. There appears to be amodest slowdown underway
in the housing sector, albeit on the heels of very robust demand environment earlier this year and meaningful year-over-year home price
appreciation. According to the Case-Shiller20-City home price index, home prices were up 19.1% year-over-year in June versus up 17.1% year-
over-year in May. Low mortgage rates and tight supply continue to support prices.
9
49
Source: Institute for Supply Management Source: Federal Reserve
Manufacturing
The Institute for Supply Management (ISM) manufacturing index increased to 59.9 in August from 59.5 in July. The index points to strength in
manufacturing,as readings above 50.0are indicative of expansion in the manufacturing sector. New orders were particularly strong, increasing
to 66.7 in August from 64.9 in July, which The Industrial Production index was up 6.6% year-over-year in July, versus up 9.9%in June. The year-
over-yearrates are distorted by the effects of the pandemiclast year.On amonth-over-month basis, the Industrial Production index increased
0.9%in July, following a 0.2% increase in June. Capacity Utilization increased to 76.1%in July from 75.4%in June but remains well below the
long-run average of 79.8%. Chip shortages continue to weigh on activity in the manufacturing sector.
40
42
44
46
48
50
52
54
56
58
60
62
64
66
Institute of Supply Management Purchasing Manager
Index
EXPANDING
CONTRACTING
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Industrial Production
YOY( %) Change10
50
Source: US Department of Commerce Source: US Department of Commerce
9/20 12/20 3/21 6/21
25.5% 2.3% 7.4% 7.8%
11.7% 4.0% -0.4% -0.7%
-3.3% -1.7% -1.6% -0.2%
-0.3% -0.2% 0.8% -0.4%
0.1% 0.1% 0.0% 0.0%
33.8% 4.5% 6.3% 6.6%
Components of GDP
Federal Government Expenditures
State and Local (Consumption and Gross
Investment)
Net Exports and Imports
Total
Gross Private Domestic Investment
Personal Consumption Expenditures
-35.0%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Gross Domestic Product (GDP)
GDP QOQ % Change
GDP YOY % Change
Gross Domestic Product (GDP)
According to the second estimate, real US gross domestic product (GDP) grew at an annualized rate of 6.6%in the second quarter (revised up
slightly from the advance estimate of 6.5%), following 6.3% growth in the first quarter. During the second quarter, the US economy more than
recouped the output lost during the pandemic. As of the second quarter, GDP now stands 0.8% above the fourth quarter of 2019. The consensus
forecast for full year 2021 US gross domestic product growth has moderated but remains well above the long-run trend growth rate of about
1.8%. The current Bloomberg consensus estimates for 2021 and 2022 US GDP growth are 6.0% and 4.2%, respectively, following a 3.4% decline in
2020.
11
51
Federal Reserve
Source: Federal Reserve Source: Bloomberg
Lastyear, the Fed took awide range of aggressive actions to help stabilize and provide liquidity to the financial markets. The Fed lowered the
fed funds target rate to a range of 0.0%-0.25% and continues to purchase Treasury and agency mortgage-backed securities to support smooth
market functioning. Last year, policymakers reinstated the Commercial Paper Funding Facility and Money Market Mutual Fund Liquidity
Facility. The Fed also established the Primary Market Corporate Credit Facility, Secondary Market Corporate Credit Facility, TermAsset-Backed
Securities Loan Facility, Paycheck Protection Program Liquidity Facility, Main Street Lending Facility, and Municipal Liquidity Facility. The Fed
has also provided short-term funding through large-scale repo operations and lowered the reserve requirement for depository institutions.
Notably, many of the Fed's lending facilities expired at the end of 2020,including the Fed’s corporate credit, asset-backed securities, municipal
lending, and Main Street Lending programs.In June 2021,the Fed announced plans to gradually unwind its corporate credit facility and expects
to sell the full portfolio by year-end.
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
Effective Federal Funds Rate
Yield (%)3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
Federal Reserve Balance Sheet Assets
In$ millions12
52
Source: Bloomberg Source: Bloomberg
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
US Treasury Note Yields
2-Year
5-Year
10-Year
Yield (%)0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
US Treasury Yield Curve
Aug-21
May-21
Aug-20
Yield (%)Bond Yields
The treasury yield curve is steeper on a year-over-year basis.At the end of August, the 2-year Treasury yield was about eight basis points
higher and the 10-Year Treasury yield was about 60 basis points higher, year-over-year. However, the yield curve is less steep than the
historical average. The spread between the 2-year Treasury yield and 10-year Treasury yield was 110 basis points at August month-end
compared to the average historical spread (since 2002)of about 135 basis points. The Fed has signaled plans to keep the front end of the
Treasury yield curve anchored near zero until 2023. We believe longer-term rates are poised to move higher over the intermediate-term.
13
53
Section 2|SECTION |Section 2 |Account Profile
14
54
Objectives
Chandler Asset Management Performance Objective
The performance objective for the City of Newport Beach is to earn a return that equals or exceeds the
return on an index of 1-3 Year Treasury notes.
Investment Objectives
The investment objectives of the City of Newport Beach are first,to provide safety of principal to ensure
the preservation of capital in the overall portfolio;second,to provide adequate liquidity to meet all
requirements that may be reasonably anticipated;and third,to earn a commensurate rate of return.
Strategy
In order to achieve these objectives,we invest in high quality fixed income securities consistent with the
City’s investment policy and California Government Code.
As of August 31, 2021
15
55
Compliance As of August 31, 2021
Category Standard Comment
Treasury Issues No Limitation Complies
Federal Agencies No Limitation; Federal instrumentality (U.S. government-sponsored enterprises); Federal Agency Obligations Complies
Supranationals
"AA" rating category or higher by a Nationally Recognized Statistical Rating Organization ("NRSRO"); 20% maximum;
10% max per issuer; USD denominated senior unsecured unsubordinated obligations; Issued or unconditionally
guaranteed by International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC),
or Inter-American Development Bank (IADB)
Complies
Municipal Securities
"A" rating category or equivalent by a NRSRO; 30% maximum; 5% max per issuer; Include bonds issued by the City of
Newport Beach, State of California, local agency within the State of California; Registered bonds of any of the other 49
states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property
owned, controlled, or operated by a state, or department, board, agency, or authority of any of the other 49 states, in
addition to California.
Complies
Banker’s Acceptances "A-1" rated or equivalent by a NRSRO; "A" rating category or equivalent by a NRSRO, if the bank has senior debt
outstanding; 40% maximum; 5% max per issuer; 180 days max maturity Complies
Commercial Paper
"A-1" rated or equivalent by a NRSRO; "A" rated issuer or equivalent by a NRSRO, if any long-term debt; 25% maximum;
5% max per issuer; 270 days max maturity; Entity that issues the commercial paper shall either i: (1) be organized and
operating in the U.S. as a general corporation, (2) have assets >$500 million, and (3) have debt other than commercial
paper, if any, that is rated "A" category or equivalent by a NRSRO; or ii. (1) be organized within U.S. as a special
purpose corporation, trust, or limited liability company, (2) have program wide credit enhancements, including, but not
limited to, over collateralization, letters of credit or surety bond and (3) have commercial paper that is rated "A-1" or
equivalent by a NRSRO.
Complies
Negotiable Certificates of Deposit
(NCD)
"A" long-term debt rating category or equivalent by a NRSRO; or "A-1" short-term debt rated or equivalent by a NRSRO;
and having assets in excess of $10 billion; 30% maximum (combined NCDs, CDs); 5% max per issuer; 2 years max
maturity
Complies
Non-Negotiable Certificates of
Deposit
30% maximum (combined NCDs, CDs); 5% max per issuer; FDIC Insured; or Secured pursuant to California Government
Code; 2 years max maturity Complies
Medium Term Notes "A" rating category or equivalent by a NRSRO; 30% maximum; 5% max per issuer; Issued by corporations organized and
operating within the U.S. or by depository institutions licensed by the U.S. or any state and operating within the U.S.Complies
Assets managed by Chandler Asset Management are in full compliance with state law and the Client's investment policy.
City of Newport Beach, California Consolidated
16
56
Compliance As of August 31, 2021
Category Standard Comment
Asset-Backed Securities, Mortgage-
Backed Securities, Collateralized
Mortgage Obligations
"AAA" rated or equivalent by a NRSRO; 20% maximum (combined mortgage-backed, asset-backed securities, CMOs);
5% max per issuer; From issuers not defined in sections (a) US Treasuries, (b) Federal Instrumentalities, (c) Federal
Agency Obligations.
Complies
Money Market Mutual Funds and
Mutual Funds
Highest rating or "AAA" rated by two NRSROs; or SEC registered adviser with AUM >$500 million and experience
greater than 5 years; 10% per one Mutual Fund; 20% maximum in Money Market Mutual Funds; 20% maximum
combined of total portfolio in these securities
Complies
Repurchase Agreements; Reverse
Repurchase Agreements
"A-1" or equivalent short term rating; or "A" long term rating or equivalent; 10% maximum for reverse repurchase
agreements; 30 days max maturity; Collateralized by U.S. Treasuries or Federal Instrumentalities; Not used by
Investment Adviser
Complies
Local Agency Investment Fund (LAIF)Pursuant to California Govt Code Section 16429.1; Not used by Investment Adviser Complies
County Investment Funds 5% maximum; Los Angeles County Pool; Not used by Investment Adviser Complies
Prohibited Derivative structures such as Range Notes, Dual Index Notes, Inverse floaters, Leveraged or de-leveraged floating rate
notes; Interest-only strips from mortgaged backed securities; Zero interest accrual securities; Orange County Pool Complies
Credit Quality
In the event a security held by the City is the subject of a rating downgrade which brings it below accepted minimums,
or the security is place on negative credit watch, where downgrade could result in a rate drop below acceptable levels,
the investment adviser will immediately notify the Finance Director.
Complies
Max Per Issuer
5% of portfolio, except Governmental issuers, Supranationals, Investment pools, Mutual Funds, and Money Market
Funds, or unless otherwise specified in the investment policy. Restriction does not apply to any type of Federal
Instrumentality or Federal Agency Security
Complies
Maximum maturity 5 years Complies
Assets managed by Chandler Asset Management are in full compliance with state law and the Client's investment policy.
City of Newport Beach, California Consolidated
17
57
Portfolio Characteristics
City of Newport Beach, California
8/31/2021 5/31/2021
Benchmark*Portfolio Portfolio
Average Maturity (yrs)1.83 2.00 2.01
Average Modified Duration 1.80 1.81 1.85
Average Purchase Yield n/a 1.35%1.52%
Average Market Yield 0.20%0.27%0.22%
Average Quality**AAA AA+/Aa1 AA/Aa1
Total Market Value 247,807,078 234,731,391
*ICE BofA 1-3 Yr US Treasury Index
**Benchmark is a blended rating of S&P, Moody’s, and Fitch. Portfolio is S&P and Moody’s respectively.
As of August 31, 2021
18
58
Portfolio Allocation & Duration Changes
City of Newport Beach, California
As of August 31, 2021
Benchmark: ICE BofA 1-3 Yr US Treasury Index
100.4%
102.1%100.7%100.0%98.1%
104.3%
98.9%100.0%
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
110.0%
8/31/20215/31/20212/28/202111/30/20208/31/20205/31/20202/29/202011/30/2019
Duration as a % of the Benchmark
0.5%
0.9%
0.0%
2.6%
4.6%
17.6%
30.5%
43.3%
0.5%
0.8%
1.1%
3.5%
7.4%
16.9%
30.2%
39.6%
Money Market
Fund
Municipal Bonds
CMO
Supranational
ABS
Corporate
US Treasury
Agency
Portfolio Allocation
8/31/2021
5/31/2021
19
59
Duration Allocation As of August 31, 2021
City of Newport Beach, California
0 -0.25 0.25 -0.50 0.50 -1 1 -2 2 -3 3 -4 4 -5 5+
08/31/21 3.4%4.3%13.7%36.1%33.0%9.5%0.0%0.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 - 0.25 Years 0.25 - 0.5 Years 0.5 - 1 Years 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years 5+ Years
ABS
Agency
CMO
Corporate
Money Market Fund
Municipal Bonds
Supranational
US Treasury
20
60
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
0 - 0.25 0.25 - 0.50 0.50 - 1 1 - 2 2 - 3 3 - 4 4 - 5 5+
City of Newport Beach, California ICE BofA 1-3 Yr US Treasury Index
Portfolio Compared to the Benchmark as of August 31, 2021
0 -0.25 0.25 -0.50 0.50 -1 1 -2 2 -3 3 -4 4 -5 5+
Portfolio 3.4% 4.3% 13.7% 36.1% 33.0% 9.5% 0.0% 0.0%
Benchmark*0.0% 0.0% 2.6% 55.9% 41.5% 0.0% 0.0% 0.0%
*ICE BofA 1-3 Yr US Treasury Index
Duration Distribution
City of Newport Beach, California
As of August 31, 2021
21
61
Issue Name Investment Type % Portfolio
Government of United States US Treasury 30.17%
Federal Home Loan Bank Agency 13.18%
Federal Farm Credit Bank Agency 11.87%
Federal National Mortgage Association Agency 7.89%
Federal Home Loan Mortgage Corp Agency 6.66%
Intl Bank Recon and Development Supranational 2.45%
John Deere ABS ABS 1.44%
Deere & Company Corporate 1.38%
JP Morgan Chase & Co Corporate 1.27%
US Bancorp Corporate 1.27%
Honda ABS ABS 1.25%
Hyundai Auot Receivables ABS 1.23%
Toyota Motor Corp Corporate 1.21%
Caterpillar Inc Corporate 1.18%
PNC Financial Services Group Corporate 1.12%
Bank of America Corp Corporate 1.07%
Federal Home Loan Mortgage Corp CMO 1.07%
Royal Bank of Canada Corporate 1.07%
International Finance Corp Supranational 1.04%
Toyota Lease Owner Trust ABS 0.95%
Charles Schwab Corp/The Corporate 0.91%
Toronto Dominion Holdings Corporate 0.86%
Wal-Mart Stores Corporate 0.86%
Apple Inc Corporate 0.84%
State of New York Municipal Bonds 0.84%
Praxair Corporate 0.81%
Amazon.com Inc Corporate 0.74%
Paccar Financial Corporate 0.70%
GM Financial Automobile Leasing Trust ABS 0.68%
Nissan ABS ABS 0.61%
Hyundai Auto Lease Securitization ABS 0.58%
Federated GOVT Obligation MMF Money Market Fund 0.51%
Mercedes-Benz Auto Lease Trust ABS 0.46%
Berkshire Hathaway Corporate 0.42%
Bank of New York Corporate 0.42%
Visa Inc Corporate 0.42%
Honda Motor Corporation Corporate 0.22%
Salesforce.com Inc Corporate 0.19%
Issuers
City of Newport Beach, California –Account #10
As of August 31, 2021
22
62
Issue Name Investment Type % Portfolio
Toyota ABS ABS 0.17%
TOTAL 100.00%
Issuers
City of Newport Beach, California –Account #10
As of August 31, 2021
23
63
AAA AA A <A NR
08/31/21 8.7%73.9%13.7%0.0%3.7%
05/31/21 5.7%77.8%14.5%0.0%2.0%
Source: S&P Ratings
August 31, 2021 vs. May 31, 2021
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
AAA AA A <A NR
8/31/2021 5/31/2021
Quality Distribution
City of Newport Beach, California
As of August 31, 2021
24
64
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
12 months 2 years 3 years 5 years 10 years Since Inception
City of Newport Beach, California ICE BofA 1-3 Yr US Treasury Index
Total Rate of Return Annualized Since Inception 03/31/1991
Annualized
TOTAL RATE OF RETURN 3 months 12 months 2 years 3 years 5 years 10 years Since
Inception
City of Newport Beach, California 0.03%0.28%1.97%2.84%1.95%1.44%4.01%
ICE BofA 1-3 Yr US Treasury Index 0.00%0.15%1.78%2.63%1.67%1.16%3.73%
Total rate of return:A measure of a portfolio’s performance over time.It is the internal rate of return,which equates the beginning value of the portfolio with the
ending value;it includes interest earnings,realized and unrealized gains and losses in the portfolio.
Investment Performance
City of Newport Beach, California
As of August 31, 2021
25
65
Portfolio Characteristics
City of Newport Beach, California -Short Term
8/31/2021
Portfolio
5/31/2021
Portfolio
Average Maturity (yrs)0.00 0.00
Modified Duration 0.00 0.00
Average Purchase Yield 0.02%0.02%
Average Market Yield 0.02%0.02%
Average Quality*AAA/Aaa AAA/Aaa
Total Market Value 574 574
*Portfolio is S&P and Moody’s, respectively.
As of August 31, 2021
26
66
City of Newport Beach, California -Short Term
Sector Distribution
Money Market
Fund
100.0%
August 31, 2021 May 31, 2021
Money Market
Fund
100.0%
As of August 31, 2021
27
67
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
12 months 2 years 3 years 5 years 10 years Since Inception
City of Newport Beach, California - Short Term
Total Rate of Return Annualized Since Inception 12/31/2015
Annualized
TOTAL RATE OF RETURN 3 months 12 months 2 years 3 years 5 years 10 years Since
Inception
City of Newport Beach, California -Short Term 0.00%0.07%0.88%1.49%1.38%N/A 1.32%
Total rate of return:A measure of a portfolio’s performance over time.It is the internal rate of return,which equates the beginning value of the portfolio with the
ending value;it includes interest earnings,realized and unrealized gains and losses in the portfolio.
Investment Performance
City of Newport Beach, California -Short Term
As of August 31, 2021
28
68
SECTION |Section 3 |Consolidated Information
29
69
Portfolio Characteristics
City of Newport Beach, California Consolidated
8/31/2021 5/31/2021
Portfolio Portfolio
Average Maturity (yrs)2.00 2.01
Modified Duration 1.81 1.85
Average Purchase Yield 1.35%1.52%
Average Market Yield 0.27%0.22%
Average Quality*AA+/Aa1 AA/Aa1
Total Market Value 247,807,652 234,731,965
* Portfolio is S&P and Moody’s respectively.
As of August 31, 2021
30
70
City of Newport Beach, California Consolidated
Sector Distribution
ABS
7.4%
Agency
39.6%
Corporate
16.9%
Money Market
Fund
0.5%
Municipal Bonds
0.8%
Supranational
3.5%
US Treasury
30.2%
CMO
1.1%
August 31, 2021 May 31, 2021
ABS
4.6%
Agency
43.3%
Corporate
17.6%
Money Market
Fund
0.5%
Municipal Bonds
0.9%
Supranational
2.6%
US Treasury
30.5%
As of August 31, 2021
31
71
Issue Name Investment Type % Portfolio
Government of United States US Treasury 30.17%
Federal Home Loan Bank Agency 13.18%
Federal Farm Credit Bank Agency 11.87%
Federal National Mortgage Association Agency 7.89%
Federal Home Loan Mortgage Corp Agency 6.66%
Intl Bank Recon and Development Supranational 2.45%
John Deere ABS ABS 1.44%
Deere & Company Corporate 1.38%
JP Morgan Chase & Co Corporate 1.27%
US Bancorp Corporate 1.27%
Honda ABS ABS 1.25%
Hyundai Auot Receivables ABS 1.23%
Toyota Motor Corp Corporate 1.21%
Caterpillar Inc Corporate 1.18%
PNC Financial Services Group Corporate 1.12%
Bank of America Corp Corporate 1.07%
Federal Home Loan Mortgage Corp CMO 1.07%
Royal Bank of Canada Corporate 1.07%
International Finance Corp Supranational 1.04%
Toyota Lease Owner Trust ABS 0.95%
Charles Schwab Corp/The Corporate 0.91%
Toronto Dominion Holdings Corporate 0.86%
Wal-Mart Stores Corporate 0.86%
Apple Inc Corporate 0.84%
State of New York Municipal Bonds 0.84%
Praxair Corporate 0.81%
Amazon.com Inc Corporate 0.74%
Paccar Financial Corporate 0.70%
GM Financial Automobile Leasing Trust ABS 0.68%
Nissan ABS ABS 0.61%
Hyundai Auto Lease Securitization ABS 0.58%
Federated GOVT Obligation MMF Money Market Fund 0.51%
Mercedes-Benz Auto Lease Trust ABS 0.46%
Berkshire Hathaway Corporate 0.42%
Bank of New York Corporate 0.42%
Visa Inc Corporate 0.42%
Honda Motor Corporation Corporate 0.22%
Salesforce.com Inc Corporate 0.19%
Issuers
City of Newport Beach, California Consolidated –Account #13
As of August 31, 2021
32
72
Issue Name Investment Type % Portfolio
Toyota ABS ABS 0.17%
Goldman Sachs Financial Square Funds -Treasury Obligations Fund Money Market Fund 0.00%
TOTAL 100.00%
Issuers
City of Newport Beach, California Consolidated –Account #13
As of August 31, 2021
33
73
SECTION |Section 4 |Portfolio Holdings
34
74
Holdings Report
City of Newport Beach, California Consolidated -Account #13
CUSIP Security Description Par Value/Units Purchase Date
Book Yield
Cost Value
Book Value
Mkt Price
Mkt YTM
Market Value
Accrued Int.
% of Port.
Gain/Loss
Moody/S&P
Fitch
Maturity
Duration
ABS
43815HAC1 Honda Auto Receivables Trust 2018-3 A3
2.950% Due 08/22/2022
58,101.61 08/21/2018
2.98%
58,093.63
58,099.66
100.32
0.23%
58,285.44
47.61
0.02%
185.78
Aaa / NR
AAA
0.98
0.12
89231PAD0 Toyota Auto Receivables Trust 2018-D A3
3.180% Due 03/15/2023
423,432.03 08/29/2019
1.98%
432,479.59
427,350.54
100.79
0.19%
426,776.72
598.45
0.17%
(573.82)
Aaa / AAA
NR
1.54
0.27
43815NAC8 Honda Auto Receivables Trust 2019-3 A3
1.780% Due 08/15/2023
1,229,566.43 08/20/2019
1.79%
1,229,556.22
1,229,562.96
100.81
0.20%
1,239,561.58
972.72
0.50%
9,998.62
Aaa / AAA
NR
1.96
0.51
477870AC3 John Deere Owner Trust 2019-B A3
2.210% Due 12/15/2023
494,650.95 07/16/2019
2.23%
494,545.95
494,596.32
101.11
0.11%
500,160.87
485.86
0.20%
5,564.55
Aaa / NR
AAA
2.29
0.53
43813RAC1 Honda Auto Receivables 2020-1 A3
1.610% Due 04/22/2024
1,770,000.00 02/19/2020
1.62%
1,769,653.08
1,769,779.54
101.22
0.17%
1,791,606.39
791.58
0.72%
21,826.85
Aaa / NR
AAA
2.64
0.85
89238EAC0 Toyota Lease Owner Trust 2021-A A3
0.390% Due 04/22/2024
1,235,000.00 04/13/2021
0.40%
1,234,855.88
1,234,877.61
100.14
0.31%
1,236,752.47
147.17
0.50%
1,874.86
Aaa / AAA
NR
2.64
1.68
44891VAC5 Hyundai Auto Lease Trust 2021-B A3
0.330% Due 06/17/2024
1,435,000.00 06/08/2021
0.34%
1,434,784.75
1,434,804.94
100.06
0.30%
1,435,848.09
210.47
0.58%
1,043.15
Aaa / AAA
NR
2.80
1.72
65479JAD5 Nissan Auto Receivables Owner 2019-C A3
1.930% Due 07/15/2024
1,506,458.72 10/16/2019
1.94%
1,506,379.18
1,506,410.45
100.99
0.33%
1,521,392.25
1,292.21
0.61%
14,981.80
Aaa / AAA
NR
2.87
0.62
47789KAC7 John Deere Owner Trust 2020-A A3
1.100% Due 08/15/2024
1,285,000.00 03/04/2020
1.11%
1,284,921.49
1,284,947.64
100.77
0.20%
1,294,843.10
628.22
0.52%
9,895.46
Aaa / NR
AAA
2.96
0.85
89239CAC3 Toyota Lease Owner Trust 2021-B A3
0.420% Due 10/21/2024
1,125,000.00 07/27/2021
0.42%
1,124,984.81
1,124,985.32
100.16
0.34%
1,126,816.88
380.63
0.45%
1,831.56
Aaa / NR
AAA
3.14
2.05
36262XAC8 GM Financial Auto Lease Trust 2021-3 A2
0.390% Due 10/21/2024
1,690,000.00 08/10/2021
0.39%
1,689,977.02
1,689,977.38
100.06
0.36%
1,690,978.51
238.01
0.68%
1,001.13
NR / AAA
AAA
3.14
1.95
58769KAD6 Mercedes-Benz Auto Lease Trust 2021-B A3
0.400% Due 11/15/2024
1,145,000.00 06/22/2021
0.40%
1,144,913.55
1,144,919.50
100.14
0.33%
1,146,611.02
203.56
0.46%
1,691.52
NR / AAA
AAA
3.21
1.89
47788UAC6 John Deere Owner Trust 2021-A A3
0.360% Due 09/15/2025
765,000.00 03/02/2021
0.37%
764,852.97
764,872.54
100.04
0.34%
765,284.58
122.40
0.31%
412.04
Aaa / NR
AAA
4.04
1.95
44933LAC7 Hyundai Auto Receivables Trust 2021-A A3
0.380% Due 09/15/2025
925,000.00 04/20/2021
0.38%
924,902.69
924,913.71
99.99
0.38%
924,933.40
156.22
0.37%
19.69
NR / AAA
AAA
4.04
1.85
44934KAC8 Hyundai Auto Receivables Trust 2021-B A3
0.380% Due 01/15/2026
2,130,000.00 07/20/2021
0.39%
2,129,529.91
2,129,544.28
99.96
0.40%
2,129,226.81
359.73
0.86%
(317.47)
NR / AAA
AAA
4.38
2.22
47789QAC4 John Deere Owner Trust 2021-B A3
0.520% Due 03/16/2026
1,000,000.00 07/13/2021
0.52%
999,910.80
999,913.61
100.15
0.46%
1,001,468.00
577.78
0.40%
1,554.39
Aaa / NR
AAA
4.54
2.49
TOTAL ABS 18,217,209.74 0.88%
18,224,341.52
18,219,556.00 0.30%
18,290,546.11
7,212.62
7.38%
70,990.11
Aaa / AAA
Aaa
3.16
1.49
As of August 31, 2021
35
75
Holdings Report
City of Newport Beach, California Consolidated -Account #13
CUSIP Security Description Par Value/Units Purchase Date
Book Yield
Cost Value
Book Value
Mkt Price
Mkt YTM
Market Value
Accrued Int.
% of Port.
Gain/Loss
Moody/S&P
Fitch
Maturity
Duration
Agency
3133EJT74 FFCB Note
3.050% Due 11/15/2021
4,000,000.00 12/11/2018
2.87%
4,019,960.00
4,001,400.37
100.61
0.09%
4,024,312.00
35,922.22
1.64%
22,911.63
Aaa / AA+
AAA
0.21
0.21
3133EJ3B3 FFCB Note
2.800% Due 12/17/2021
4,000,000.00 12/26/2018
2.70%
4,011,120.00
4,001,095.62
100.80
0.08%
4,032,056.00
23,022.22
1.64%
30,960.38
Aaa / AA+
AAA
0.30
0.29
3135G0S38 FNMA Note
2.000% Due 01/05/2022
1,600,000.00 09/27/2017
1.90%
1,606,304.00
1,600,509.17
100.67
0.06%
1,610,675.20
4,977.78
0.65%
10,166.03
Aaa / AA+
AAA
0.35
0.34
313378CR0 FHLB Note
2.250% Due 03/11/2022
600,000.00 09/15/2017
1.81%
611,202.00
601,309.41
101.15
0.07%
606,899.40
6,375.00
0.25%
5,589.99
Aaa / AA+
NR
0.53
0.52
3130AEBM1 FHLB Note
2.750% Due 06/10/2022
3,000,000.00 Various
2.86%
2,987,747.50
2,997,593.20
102.07
0.08%
3,061,986.00
18,562.51
1.24%
64,392.80
Aaa / AA+
NR
0.78
0.77
3135G0W33 FNMA Note
1.375% Due 09/06/2022
4,390,000.00 09/05/2019
1.49%
4,374,722.80
4,384,842.55
101.33
0.07%
4,448,202.62
29,342.88
1.81%
63,360.07
Aaa / AA+
AAA
1.02
1.00
313383WD9 FHLB Note
3.125% Due 09/09/2022
3,750,000.00 09/25/2018
3.01%
3,765,750.00
3,754,068.39
103.07
0.11%
3,865,290.00
55,989.58
1.58%
111,221.61
Aaa / AA+
AAA
1.02
1.00
3133EKHN9 FFCB Note
2.330% Due 10/18/2022
2,500,000.00 05/02/2019
2.37%
2,496,400.00
2,498,826.58
102.55
0.08%
2,563,637.50
21,520.14
1.04%
64,810.92
Aaa / AA+
AAA
1.13
1.11
3130AFE78 FHLB Note
3.000% Due 12/09/2022
2,500,000.00 12/20/2018
2.77%
2,521,700.00
2,506,948.79
103.60
0.16%
2,590,050.00
17,083.33
1.05%
83,101.21
Aaa / AA+
AAA
1.27
1.25
3130A3KM5 FHLB Note
2.500% Due 12/09/2022
3,005,000.00 Various
2.30%
3,017,546.15
3,012,328.54
103.04
0.11%
3,096,261.85
17,111.81
1.26%
83,933.31
Aaa / AA+
NR
1.27
1.25
3135G0T94 FNMA Note
2.375% Due 01/19/2023
1,600,000.00 10/04/2018
3.10%
1,554,000.00
1,585,175.49
103.08
0.15%
1,649,280.00
4,433.33
0.67%
64,104.51
Aaa / AA+
AAA
1.39
1.37
3133EKUA2 FFCB Note
1.850% Due 02/01/2023
4,000,000.00 07/23/2019
1.87%
3,997,160.00
3,998,857.83
102.43
0.13%
4,097,104.00
6,166.67
1.66%
98,246.17
Aaa / AA+
AAA
1.42
1.40
3133ELNW0 FFCB Note
1.450% Due 02/21/2023
2,290,000.00 02/19/2020
1.45%
2,290,274.80
2,290,134.89
101.92
0.14%
2,333,935.94
922.36
0.94%
43,801.05
Aaa / AA+
AAA
1.48
1.46
3130ADRG9 FHLB Note
2.750% Due 03/10/2023
4,800,000.00 01/18/2019
2.75%
4,800,576.00
4,800,211.99
103.96
0.15%
4,989,849.60
62,700.00
2.04%
189,637.61
Aaa / AA+
NR
1.52
1.48
3135G04Q3 FNMA Note
0.250% Due 05/22/2023
4,000,000.00 08/11/2020
0.25%
3,999,920.00
3,999,950.40
100.14
0.17%
4,005,660.00
2,750.00
1.62%
5,709.60
Aaa / AA+
AAA
1.72
1.72
3133834G3 FHLB Note
2.125% Due 06/09/2023
3,900,000.00 Various
2.13%
3,899,157.00
3,899,693.23
103.44
0.18%
4,034,210.70
18,877.09
1.64%
134,517.47
Aaa / AA+
NR
1.77
1.74
3133EKSN7 FFCB Note
1.770% Due 06/26/2023
4,000,000.00 06/21/2019
1.89%
3,981,400.00
3,991,559.34
102.83
0.21%
4,113,212.00
12,783.33
1.66%
121,652.66
Aaa / AA+
AAA
1.82
1.79
As of August 31, 2021
36
76
Holdings Report
City of Newport Beach, California Consolidated -Account #13
CUSIP Security Description Par Value/Units Purchase Date
Book Yield
Cost Value
Book Value
Mkt Price
Mkt YTM
Market Value
Accrued Int.
% of Port.
Gain/Loss
Moody/S&P
Fitch
Maturity
Duration
3135G05G4 FNMA Note
0.250% Due 07/10/2023
4,000,000.00 09/28/2020
0.23%
4,001,920.00
4,001,283.16
100.09
0.20%
4,003,676.00
1,416.67
1.62%
2,392.84
Aaa / AA+
AAA
1.86
1.85
3133EKZK5 FFCB Note
1.600% Due 08/14/2023
2,000,000.00 08/09/2019
1.63%
1,997,420.00
1,998,742.67
102.64
0.24%
2,052,828.00
1,511.11
0.83%
54,085.33
Aaa / AA+
AAA
1.95
1.93
3133EL3V4 FFCB Note
0.200% Due 08/14/2023
4,000,000.00 08/12/2020
0.27%
3,991,680.00
3,994,570.27
99.92
0.24%
3,996,632.00
377.78
1.61%
2,061.73
Aaa / AA+
AAA
1.95
1.95
3137EAEV7 FHLMC Note
0.250% Due 08/24/2023
4,000,000.00 09/23/2020
0.24%
4,000,960.00
4,000,651.43
100.03
0.23%
4,001,236.00
194.44
1.61%
584.57
Aaa / AA+
AAA
1.98
1.97
313383YJ4 FHLB Note
3.375% Due 09/08/2023
1,600,000.00 04/05/2019
2.37%
1,666,896.00
1,630,546.69
106.30
0.25%
1,700,768.00
25,950.00
0.70%
70,221.31
Aaa / AA+
NR
2.02
1.94
3137EAEY1 FHLMC Note
0.125% Due 10/16/2023
5,180,000.00 Various
0.25%
5,160,792.60
5,166,387.63
99.78
0.23%
5,168,552.20
2,428.13
2.09%
2,164.57
Aaa / AA+
AAA
2.13
2.12
3137EAEZ8 FHLMC Note
0.250% Due 11/06/2023
4,275,000.00 11/03/2020
0.28%
4,271,152.50
4,272,205.65
100.00
0.25%
4,274,948.70
3,414.06
1.73%
2,743.05
Aaa / AA+
AAA
2.18
2.17
3135G06H1 FNMA Note
0.250% Due 11/27/2023
3,775,000.00 11/23/2020
0.29%
3,770,696.50
3,771,794.93
100.06
0.22%
3,777,242.35
2,464.24
1.53%
5,447.42
Aaa / AA+
AAA
2.24
2.23
3137EAFA2 FHLMC Note
0.250% Due 12/04/2023
3,050,000.00 12/02/2020
0.28%
3,046,980.50
3,047,727.79
99.97
0.26%
3,049,036.20
1,842.71
1.23%
1,308.41
Aaa / AA+
AAA
2.26
2.25
3130A0F70 FHLB Note
3.375% Due 12/08/2023
4,000,000.00 12/21/2018
2.84%
4,098,680.00
4,045,142.01
107.00
0.28%
4,280,092.00
31,125.00
1.74%
234,949.99
Aaa / AA+
AAA
2.27
2.19
3133EKMX1 FFCB Note
2.230% Due 02/23/2024
2,000,000.00 07/30/2019
1.91%
2,027,800.00
2,015,083.33
104.68
0.33%
2,093,568.00
991.11
0.85%
78,484.67
Aaa / AA+
AAA
2.48
2.42
3130A7PH2 FHLB Note
1.875% Due 03/08/2024
4,000,000.00 03/03/2020
0.85%
4,161,400.00
4,101,246.83
103.91
0.32%
4,156,256.00
36,041.67
1.69%
55,009.17
Aaa / AA+
NR
2.52
2.45
TOTAL Agency 95,815,000.00 1.58%
96,131,318.35
95,969,888.18 0.18%
97,677,458.26
446,297.17
39.60%
1,707,570.08
Aaa / AA+
Aaa
1.60
1.58
CMO
3137BFXT3 FHLMC K042 A2
2.670% Due 12/25/2024
2,500,000.00 08/19/2021
0.62%
2,653,906.25
2,652,748.09
106.15
0.67%
2,653,707.50
1,112.50
1.07%
959.41
Aaa / NR
NR
3.32
3.06
TOTAL CMO 2,500,000.00 0.62%
2,653,906.25
2,652,748.09 0.67%
2,653,707.50
1,112.50
1.07%
959.41
Aaa / NR
NR
3.32
3.06
Corporate
69353REY0 PNC Bank Callable Note Cont 11/09/2021
2.550% Due 12/09/2021
1,000,000.00 11/17/2017
2.40%
1,005,530.00
1,000,263.33
100.45
0.18%
1,004,472.00
5,808.33
0.41%
4,208.67
A2 / A
A+
0.27
0.19
As of August 31, 2021
37
77
Holdings Report
City of Newport Beach, California Consolidated -Account #13
CUSIP Security Description Par Value/Units Purchase Date
Book Yield
Cost Value
Book Value
Mkt Price
Mkt YTM
Market Value
Accrued Int.
% of Port.
Gain/Loss
Moody/S&P
Fitch
Maturity
Duration
91159HHP8 US Bancorp Callable Note Cont 12/23/2021
2.625% Due 01/24/2022
1,000,000.00 01/24/2018
2.72%
996,280.00
999,630.29
100.76
0.18%
1,007,593.00
2,697.92
0.41%
7,962.71
A2 / A+
A+
0.40
0.31
74005PBA1 Praxair Callable Note Cont 11/15/2021
2.450% Due 02/15/2022
2,000,000.00 05/15/2018
3.26%
1,943,080.00
1,993,061.58
100.46
0.19%
2,009,286.00
2,177.78
0.81%
16,224.42
A2 / A
NR
0.46
0.21
69353RFB9 PNC Bank Callable Note Cont 1/18/2022
2.625% Due 02/17/2022
1,735,000.00 Various
3.00%
1,713,723.60
1,732,182.37
100.94
0.14%
1,751,262.16
1,771.15
0.71%
19,079.79
A2 / A
A+
0.47
0.38
92826CAC6 Visa Inc Callable Note Cont 10/14/2022
2.800% Due 12/14/2022
1,000,000.00 12/20/2018
3.28%
982,250.00
994,262.75
102.89
0.21%
1,028,948.00
5,988.89
0.42%
34,685.25
Aa3 / AA-
NR
1.29
1.11
24422EUA5 John Deere Capital Corp Note
2.700% Due 01/06/2023
1,500,000.00 07/24/2018
3.38%
1,458,270.00
1,487,365.44
103.29
0.25%
1,549,326.00
6,187.50
0.63%
61,960.56
A2 / A
A
1.35
1.33
89236TEL5 Toyota Motor Credit Corp Note
2.700% Due 01/11/2023
1,000,000.00 09/07/2018
3.33%
974,710.00
992,059.93
103.28
0.28%
1,032,822.00
3,750.00
0.42%
40,762.07
A1 / A+
A+
1.36
1.34
69371RQ41 Paccar Financial Corp Note
1.900% Due 02/07/2023
1,000,000.00 10/31/2019
1.90%
999,950.00
999,977.95
102.20
0.36%
1,022,010.00
1,266.67
0.41%
22,032.05
A1 / A+
NR
1.44
1.42
084670BR8 Berkshire Hathaway Callable Note Cont 1/15/2023
2.750% Due 03/15/2023
1,000,000.00 12/20/2018
3.40%
974,780.00
990,840.99
103.41
0.26%
1,034,103.00
12,680.56
0.42%
43,262.01
Aa2 / AA
A+
1.54
1.34
037833AK6 Apple Inc Note
2.400% Due 05/03/2023
1,000,000.00 04/11/2019
2.70%
988,520.00
995,272.94
103.56
0.26%
1,035,637.00
7,866.67
0.42%
40,364.06
Aa1 / AA+
NR
1.67
1.64
931142EK5 Wal-Mart Stores Callable Note Cont 5/26/2023
3.400% Due 06/26/2023
2,000,000.00 04/29/2019
2.67%
2,055,840.00
2,023,732.94
105.51
0.22%
2,110,122.00
12,277.78
0.86%
86,389.06
Aa2 / AA
AA
1.82
1.69
06406FAD5 Bank of NY Mellon Corp Callable Note Cont 6/16/2023
2.200% Due 08/16/2023
1,000,000.00 03/27/2019
2.78%
976,220.00
989,394.80
103.43
0.28%
1,034,324.00
916.67
0.42%
44,929.20
A1 / A
AA-
1.96
1.77
89236TFS9 Toyota Motor Credit Corp Note
3.350% Due 01/08/2024
1,000,000.00 06/14/2019
2.41%
1,040,490.00
1,020,889.44
106.57
0.53%
1,065,745.00
4,931.94
0.43%
44,855.56
A1 / A+
A+
2.36
2.27
02665WCT6 American Honda Finance Note
3.550% Due 01/12/2024
500,000.00 01/13/2020
2.06%
528,405.00
516,813.11
106.89
0.61%
534,430.00
2,415.97
0.22%
17,616.89
A3 / A-
NR
2.37
2.27
24422EVN6 John Deere Capital Corp Note
0.450% Due 01/17/2024
1,850,000.00 03/01/2021
0.47%
1,848,686.50
1,848,913.14
100.05
0.43%
1,850,987.90
1,017.50
0.75%
2,074.76
A2 / A
A
2.38
2.36
91159HHV5 US Bancorp Callable Note Cont 1/5/2024
3.375% Due 02/05/2024
2,000,000.00 Various
2.63%
2,064,710.00
2,032,720.20
106.75
0.48%
2,134,982.00
4,875.00
0.86%
102,261.80
A2 / A+
A+
2.43
2.27
06051GHF9 Bank of America Corp Callable Note 1X 3/5/2023
3.550% Due 03/05/2024
1,565,000.00 04/26/2021
0.64%
1,648,852.70
1,633,223.35
104.42
0.60%
1,634,246.56
27,161.44
0.67%
1,023.21
A2 / A-
AA-
2.51
1.46
808513BN4 Charles Schwab Corp Callable Note Cont 2/18/2024
0.750% Due 03/18/2024
2,230,000.00 Various
0.71%
2,232,745.00
2,232,326.17
100.68
0.47%
2,245,143.93
7,572.71
0.91%
12,817.76
A2 / A
A
2.55
2.43
As of August 31, 2021
38
78
Holdings Report
City of Newport Beach, California Consolidated -Account #13
CUSIP Security Description Par Value/Units Purchase Date
Book Yield
Cost Value
Book Value
Mkt Price
Mkt YTM
Market Value
Accrued Int.
% of Port.
Gain/Loss
Moody/S&P
Fitch
Maturity
Duration
023135BW5 Amazon.com Inc Note
0.450% Due 05/12/2024
1,835,000.00 05/10/2021
0.50%
1,832,320.90
1,832,594.68
100.04
0.44%
1,835,673.45
2,500.19
0.74%
3,078.77
A1 / AA
AA-
2.70
2.67
14913R2L0 Caterpillar Financial Service Note
0.450% Due 05/17/2024
2,910,000.00 05/10/2021
0.50%
2,906,100.60
2,906,481.29
100.06
0.43%
2,911,850.76
3,783.00
1.18%
5,369.47
A2 / A
A
2.71
2.69
89114QCA4 Toronto Dominion Bank Note
2.650% Due 06/12/2024
2,000,000.00 04/23/2021
0.63%
2,124,500.00
2,110,654.55
105.71
0.58%
2,114,170.00
11,630.56
0.86%
3,515.45
A1 / A
AA-
2.78
2.68
06051GJY6 Bank of America Corp Callable Note Cont 6/14/2023
0.523% Due 06/14/2024
1,000,000.00 06/10/2021
0.50%
1,000,060.00
1,000,055.68
99.91
0.58%
999,052.00
1,118.64
0.40%
(1,003.68)
A2 / A-
AA-
2.79
1.78
89236TJH9 Toyota Motor Credit Corp Note
0.500% Due 06/18/2024
890,000.00 06/15/2021
0.54%
888,940.90
889,013.37
99.79
0.57%
888,164.82
902.36
0.36%
(848.55)
A1 / A+
A+
2.80
2.77
79466LAG9 Salesforce.com Inc Callable Note Cont 7/15/2022
0.625% Due 07/15/2024
470,000.00 06/29/2021
0.64%
469,760.30
469,771.42
100.22
0.37%
471,025.54
399.83
0.19%
1,254.12
A2 / A+
NR
2.87
0.87
69371RR40 Paccar Financial Corp Note
0.500% Due 08/09/2024
700,000.00 08/05/2021
0.52%
699,555.00
699,564.34
99.85
0.55%
698,966.80
213.89
0.28%
(597.54)
A1 / A+
NR
2.94
2.91
037833DM9 Apple Inc Callable Note Cont 8/11/2024
1.800% Due 09/11/2024
1,000,000.00 08/18/2021
0.58%
1,035,810.00
1,035,414.67
103.65
0.55%
1,036,463.00
8,500.00
0.42%
1,048.33
Aa1 / AA+
NR
3.03
2.85
78015K7C2 Royal Bank of Canada Note
2.250% Due 11/01/2024
2,500,000.00 05/19/2021
0.74%
2,628,225.00
2,617,743.12
104.86
0.69%
2,621,607.50
18,750.00
1.07%
3,864.38
A2 / A
AA-
3.17
3.05
46647PAH9 JP Morgan Chase & Co Callable Note 2X 3/1/2024
3.220% Due 03/01/2025
2,000,000.00 04/23/2021
0.89%
2,130,820.00
2,114,829.49
106.08
0.76%
2,121,620.00
32,200.00
0.87%
6,790.51
A2 / A-
AA-
3.50
2.38
46647PCH7 JP Morgan Chase & Co Callable Note Cont 6/1/2024
0.824% Due 06/01/2025
1,000,000.00 05/26/2021
0.71%
1,002,160.00
1,002,023.98
100.13
0.77%
1,001,338.00
2,060.00
0.40%
(685.98)
A2 / A-
AA-
3.75
2.71
TOTAL Corporate 40,685,000.00 1.64%
41,151,295.50
41,161,077.31 0.43%
41,785,372.42
193,422.95
16.94%
624,295.11
A1 / A+
A+
2.18
1.93
Money Market Fund
38141W323 Goldman Sachs Financial Square Treasury Obligation
Fund
573.99 Various
0.02%
573.99
573.99
1.00
0.02%
573.99
0.00
0.00%
0.00
Aaa / AAA
NR
0.00
0.00
60934N104 Federated Investors Government Obligations Fund 1,253,572.21 Various
0.01%
1,253,572.21
1,253,572.21
1.00
0.01%
1,253,572.21
0.00
0.51%
0.00
Aaa / AAA
AAA
0.00
0.00
TOTAL Money Market Fund 1,254,146.20 0.01%
1,254,146.20
1,254,146.20 0.01%
1,254,146.20
0.00
0.51%
0.00
Aaa / AAA
Aaa
0.00
0.00
As of August 31, 2021
39
79
Holdings Report
City of Newport Beach, California Consolidated -Account #13
CUSIP Security Description Par Value/Units Purchase Date
Book Yield
Cost Value
Book Value
Mkt Price
Mkt YTM
Market Value
Accrued Int.
% of Port.
Gain/Loss
Moody/S&P
Fitch
Maturity
Duration
Municipal Bonds
649791PP9 New York St Taxable-GO
2.010% Due 02/15/2024
2,000,000.00 10/29/2019
2.01%
2,000,000.00
2,000,000.00
103.88
0.42%
2,077,560.00
1,786.67
0.84%
77,560.00
Aa2 / AA+
AA+
2.46
2.40
TOTAL Municipal Bonds 2,000,000.00 2.01%
2,000,000.00
2,000,000.00 0.42%
2,077,560.00
1,786.67
0.84%
77,560.00
Aa2 / AA+
AA+
2.46
2.40
Supranational
459058JM6 Intl. Bank Recon & Development Note
0.250% Due 11/24/2023
3,565,000.00 Various
0.28%
3,562,215.25
3,562,948.36
99.92
0.29%
3,562,041.05
2,401.42
1.44%
(907.31)
Aaa / AAA
AAA
2.23
2.22
459058GQ0 Intl. Bank Recon & Development Note
2.500% Due 03/19/2024
2,350,000.00 01/26/2021
0.26%
2,514,359.00
2,483,380.34
105.39
0.37%
2,476,641.50
26,437.50
1.01%
(6,738.84)
Aaa / AAA
AAA
2.55
2.46
45950KCR9 International Finance Corp Note
1.375% Due 10/16/2024
2,500,000.00 07/12/2021
0.54%
2,567,250.00
2,564,480.88
102.69
0.51%
2,567,190.00
12,890.63
1.04%
2,709.12
Aaa / AAA
NR
3.13
3.05
TOTAL Supranational 8,415,000.00 0.35%
8,643,824.25
8,610,809.58 0.38%
8,605,872.55
41,729.55
3.49%
(4,937.03)
Aaa / AAA
Aaa
2.59
2.54
US Treasury
912828V72 US Treasury Note
1.875% Due 01/31/2022
1,800,000.00 12/15/2017
2.11%
1,783,125.00
1,798,295.68
100.73
0.11%
1,813,219.20
2,934.78
0.73%
14,923.52
Aaa / AA+
AAA
0.42
0.42
912828W89 US Treasury Note
1.875% Due 03/31/2022
3,000,000.00 12/26/2017
2.20%
2,960,156.25
2,994,590.07
101.04
0.09%
3,031,173.00
23,668.03
1.23%
36,582.93
Aaa / AA+
AAA
0.58
0.58
912828XW5 US Treasury Note
1.750% Due 06/30/2022
3,500,000.00 Various
2.79%
3,364,140.63
3,471,644.66
101.38
0.09%
3,548,398.00
10,485.74
1.44%
76,753.34
Aaa / AA+
AAA
0.83
0.83
9128282P4 US Treasury Note
1.875% Due 07/31/2022
5,000,000.00 12/23/2019
1.68%
5,024,609.38
5,008,626.24
101.64
0.09%
5,081,835.00
8,152.17
2.05%
73,208.76
Aaa / AA+
AAA
0.92
0.91
912828YA2 US Treasury Note
1.500% Due 08/15/2022
5,000,000.00 12/24/2019
1.69%
4,975,976.56
4,991,318.63
101.34
0.09%
5,067,190.00
3,464.67
2.05%
75,871.37
Aaa / AA+
AAA
0.96
0.95
912828L24 US Treasury Note
1.875% Due 08/31/2022
2,800,000.00 09/18/2018
2.92%
2,691,828.13
2,772,675.53
101.77
0.11%
2,849,436.80
145.03
1.15%
76,761.27
Aaa / AA+
AAA
1.00
0.99
912828YK0 US Treasury Note
1.375% Due 10/15/2022
5,000,000.00 01/16/2020
1.57%
4,973,242.19
4,989,077.90
101.42
0.11%
5,071,095.00
26,109.97
2.06%
82,017.10
Aaa / AA+
AAA
1.12
1.11
912828M80 US Treasury Note
2.000% Due 11/30/2022
4,000,000.00 Various
1.66%
4,040,390.63
4,016,671.15
102.34
0.12%
4,093,752.00
20,327.86
1.66%
77,080.85
Aaa / AA+
AAA
1.25
1.23
912828R28 US Treasury Note
1.625% Due 04/30/2023
4,000,000.00 12/04/2019
1.60%
4,003,593.75
4,001,753.47
102.43
0.16%
4,097,188.00
21,902.17
1.66%
95,434.53
Aaa / AA+
AAA
1.66
1.64
As of August 31, 2021
40
80
Holdings Report
City of Newport Beach, California Consolidated -Account #13
CUSIP Security Description Par Value/Units Purchase Date
Book Yield
Cost Value
Book Value
Mkt Price
Mkt YTM
Market Value
Accrued Int.
% of Port.
Gain/Loss
Moody/S&P
Fitch
Maturity
Duration
912828R69 US Treasury Note
1.625% Due 05/31/2023
2,400,000.00 04/11/2019
2.30%
2,336,250.00
2,373,053.25
102.54
0.17%
2,461,032.00
9,909.84
1.00%
87,978.75
Aaa / AA+
AAA
1.75
1.72
91282CBA8 US Treasury Note
0.125% Due 12/15/2023
2,300,000.00 01/08/2021
0.22%
2,293,441.41
2,294,872.26
99.66
0.27%
2,292,274.30
612.70
0.93%
(2,597.96)
Aaa / AA+
AAA
2.29
2.28
91282CBE0 US Treasury Note
0.125% Due 01/15/2024
4,000,000.00 01/12/2021
0.24%
3,985,781.25
3,988,754.85
99.61
0.29%
3,984,532.00
652.17
1.61%
(4,222.85)
Aaa / AA+
AAA
2.38
2.37
91282CBV2 US Treasury Note
0.375% Due 04/15/2024
5,000,000.00 04/23/2021
0.32%
5,008,398.44
5,007,407.66
100.10
0.34%
5,004,885.00
7,120.90
2.02%
(2,522.66)
Aaa / AA+
AAA
2.62
2.60
91282CCC3 US Treasury Note
0.250% Due 05/15/2024
3,000,000.00 05/26/2021
0.30%
2,995,312.50
2,995,731.95
99.73
0.35%
2,991,915.00
2,221.47
1.21%
(3,816.95)
Aaa / AA+
AAA
2.71
2.69
91282CCL3 US Treasury Note
0.375% Due 07/15/2024
3,500,000.00 07/13/2021
0.46%
3,490,703.13
3,491,110.29
99.98
0.38%
3,499,454.00
1,711.96
1.41%
8,343.71
Aaa / AA+
AAA
2.87
2.85
912828YE4 US Treasury Note
1.250% Due 08/31/2024
4,000,000.00 02/24/2021
0.33%
4,128,125.00
4,109,350.64
102.53
0.40%
4,101,248.00
138.12
1.66%
(8,102.64)
Aaa / AA+
AAA
3.00
2.95
912828YM6 US Treasury Note
1.500% Due 10/31/2024
4,500,000.00 08/05/2021
0.42%
4,655,917.97
4,652,488.30
103.37
0.43%
4,651,524.00
22,744.57
1.89%
(964.30)
Aaa / AA+
AAA
3.17
3.08
912828Z52 US Treasury Note
1.375% Due 01/31/2025
3,000,000.00 02/16/2021
0.37%
3,117,656.25
3,101,686.29
102.97
0.50%
3,089,064.00
3,586.96
1.25%
(12,622.29)
Aaa / AA+
AAA
3.42
3.34
912828ZF0 US Treasury Note
0.500% Due 03/31/2025
2,900,000.00 03/17/2021
0.64%
2,884,140.63
2,885,937.45
99.89
0.53%
2,896,714.30
6,101.09
1.17%
10,776.85
Aaa / AA+
AAA
3.58
3.54
912828ZL7 US Treasury Note
0.375% Due 04/30/2025
5,000,000.00 Various
0.50%
4,974,296.88
4,976,680.46
99.34
0.56%
4,967,190.00
6,317.93
2.01%
(9,490.46)
Aaa / AA+
AAA
3.67
3.63
TOTAL US Treasury 73,700,000.00 1.16%
73,687,085.98
73,921,726.73 0.26%
74,593,119.60
178,308.13
30.17%
671,392.87
Aaa / AA+
Aaa
2.04
2.01
TOTAL PORTFOLIO 242,586,355.94 1.35%
243,745,918.05
243,789,952.09 0.27%
246,937,782.64
869,869.59
100.00%
3,147,830.55
Aa1 / AA+
Aaa
2.00
1.81
TOTAL MARKET VALUE PLUS ACCRUALS 247,807,652.23
As of August 31, 2021
41
81
SECTION |Section 5 |Transactions
42
82
Transaction Ledger
City of Newport Beach, California Consolidated -Account #13
Transaction
Type
Settlement
Date CUSIP Quantity Security Description Price Acq/Disp
Yield Amount Interest
Pur/Sold Total Amount Gain/Loss
ACQUISITIONS
Purchase 06/01/2021 46647PCH7 1,000,000.00 JP Morgan Chase & Co Callable Note Cont
6/1/2024
0.824% Due: 06/01/2025
100.216 0.71%1,002,160.00 0.00 1,002,160.00 0.00
Purchase 06/14/2021 06051GJY6 1,000,000.00 Bank of America Corp Callable Note Cont
6/14/2023
0.523% Due: 06/14/2024
100.006 0.50%1,000,060.00 0.00 1,000,060.00 0.00
Purchase 06/16/2021 44891VAC5 1,435,000.00 Hyundai Auto Lease Trust 2021-B A3
0.33% Due: 06/17/2024
99.985 0.34%1,434,784.75 0.00 1,434,784.75 0.00
Purchase 06/18/2021 89236TJH9 890,000.00 Toyota Motor Credit Corp Note
0.5% Due: 06/18/2024
99.881 0.54%888,940.90 0.00 888,940.90 0.00
Purchase 06/29/2021 58769KAD6 1,145,000.00 Mercedes-Benz Auto Lease Trust 2021-B A3
0.4% Due: 11/15/2024
99.992 0.40%1,144,913.55 0.00 1,144,913.55 0.00
Purchase 07/12/2021 79466LAG9 470,000.00 Salesforce.com Inc Callable Note Cont 7/15/2022
0.625% Due: 07/15/2024
99.949 0.64%469,760.30 0.00 469,760.30 0.00
Purchase 07/14/2021 45950KCR9 2,500,000.00 International Finance Corp Note
1.375% Due: 10/16/2024
102.690 0.54%2,567,250.00 8,402.78 2,575,652.78 0.00
Purchase 07/15/2021 91282CCL3 3,500,000.00 US Treasury Note
0.375% Due: 07/15/2024
99.734 0.46%3,490,703.13 0.00 3,490,703.13 0.00
Purchase 07/21/2021 47789QAC4 1,000,000.00 John Deere Owner Trust 2021-B A3
0.52% Due: 03/16/2026
99.991 0.52%999,910.80 0.00 999,910.80 0.00
Purchase 07/28/2021 44934KAC8 2,130,000.00 Hyundai Auto Receivables Trust 2021-B A3
0.38% Due: 01/15/2026
99.978 0.39%2,129,529.91 0.00 2,129,529.91 0.00
Purchase 08/02/2021 89239CAC3 1,125,000.00 Toyota Lease Owner Trust 2021-B A3
0.42% Due: 10/21/2024
99.999 0.42%1,124,984.81 0.00 1,124,984.81 0.00
Purchase 08/06/2021 912828YM6 4,500,000.00 US Treasury Note
1.5% Due: 10/31/2024
103.465 0.42%4,655,917.97 17,975.54 4,673,893.51 0.00
Purchase 08/09/2021 69371RR40 500,000.00 Paccar Financial Corp Note
0.5% Due: 08/09/2024
99.935 0.52%499,675.00 0.00 499,675.00 0.00
Purchase 08/09/2021 69371RR40 200,000.00 Paccar Financial Corp Note
0.5% Due: 08/09/2024
99.940 0.52%199,880.00 0.00 199,880.00 0.00
May 31, 2021 through August 31, 2021
As of August 31, 2021
43
83
Transaction Ledger
City of Newport Beach, California Consolidated -Account #13
Transaction
Type
Settlement
Date CUSIP Quantity Security Description Price Acq/Disp
Yield Amount Interest
Pur/Sold Total Amount Gain/Loss
Purchase 08/18/2021 36262XAC8 1,690,000.00 GM Financial Auto Lease Trust 2021-3 A2
0.39% Due: 10/21/2024
99.999 0.39%1,689,977.02 0.00 1,689,977.02 0.00
Purchase 08/20/2021 037833DM9 1,000,000.00 Apple Inc Callable Note Cont 8/11/2024
1.8% Due: 09/11/2024
103.581 0.58%1,035,810.00 7,950.00 1,043,760.00 0.00
Purchase 08/23/2021 3137BFXT3 2,500,000.00 FHLMC K042 A2
2.67% Due: 12/25/2024
106.156 0.62%2,653,906.25 4,079.17 2,657,985.42 0.00
Subtotal 26,585,000.00 26,988,164.39 38,407.49 27,026,571.88 0.00
TOTAL ACQUISITIONS 26,585,000.00 26,988,164.39 38,407.49 27,026,571.88 0.00
DISPOSITIONS
Sale 06/24/2021 313378CR0 700,000.00 FHLB Note
2.25% Due: 03/11/2022
101.548 1.81%710,836.00 4,506.25 715,342.25 8,756.48
Sale 07/23/2021 912828W55 3,000,000.00 US Treasury Note
1.875% Due: 02/28/2022
101.105 2.02%3,033,164.06 22,163.72 3,055,327.78 36,086.12
Sale 08/20/2021 313383ZU8 2,400,000.00 FHLB Note
3% Due: 09/10/2021
100.164 2.95%2,403,936.00 32,000.00 2,435,936.00 3,873.99
Sale 08/20/2021 912828U65 1,750,000.00 US Treasury Note
1.75% Due: 11/30/2021
100.469 1.88%1,758,203.13 6,777.66 1,764,980.79 8,829.83
Subtotal 7,850,000.00 7,906,139.19 65,447.63 7,971,586.82 57,546.42
Maturity 07/12/2021 02665WBF7 2,000,000.00 American Honda Finance Note
1.65% Due: 07/12/2021
100.000 2,000,000.00 0.00 2,000,000.00 0.00
May 31, 2021 through August 31, 2021
As of August 31, 2021
Maturity 08/09/2021 69371RP42 2,105,000.00 Paccar Financial Corp Note
3.15% Due: 08/09/2021
100.000 2,105,000.00 0.00 2,105,000.00 0.00
Subtotal 4,105,000.00 4,105,000.00 0.00 4,105,000.00 0.00
TOTAL DISPOSITIONS 11,955,000.00 12,011,139.19 65,447.63 12,076,586.82 57,546.42
44
84
Important Disclosures
2021Chandler Asset Management,Inc,An Independent Registered Investment Adviser.
Information contained herein is confidential.Prices are provided by IDC,an independent pricing source.In the event IDC does not provide a price or if the price provided is not reflective of fair market
value,Chandler will obtain pricing from an alternative approved third party pricing source in accordance with our written valuation policy and procedures.Our valuation procedures are also disclosed in
Item 5 of our Form ADV Part 2A.
Performance results are presented gross-of-advisory fees and represent the client’s Total Return.The deduction of advisory fees lowers performance results.These results include the reinvestment of
dividends and other earnings.Past performance may not be indicative of future results.Therefore,clients should not assume that future performance of any specific investment or investment strategy
will be profitable or equal to past performance levels.All investment strategies have the potential for profit or loss.Economic factors,market conditions or changes in investment strategies,
contributions or withdrawals may materially alter the performance and results of your portfolio.
Index returns assume reinvestment of all distributions.Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the
deduction of an investment management fee,the incurrence of which would have the effect of decreasing historical performance results.It is not possible to invest directly in an index.
Source ice Data Indices,LLC ("ICE"),used with permission.ICE permits use of the ICE indices and related data on an "as is"basis;ICE,its affiliates and their respective third party suppliers disclaim any and
all warranties and representations,express and/or implied,including any warranties of merchantability or fitness for a particular purpose or use,including the indices,index data and any data included
in,related to,or derived therefrom.Neither ICE data,its affiliates or their respective third party providers guarantee the quality,adequacy,accuracy,timeliness or completeness of the indices or the
index data or any component thereof,and the indices and index data and all components thereof are provided on an "as is"basis and licensee's use it at licensee's own risk.ICE data,its affiliates and their
respective third party do not sponsor,endorse,or recommend chandler asset management,or any of its products or services.
This report is provided for informational purposes only and should not be construed as a specific investment or legal advice.The information contained herein was obtained from sources believed to be
reliable as of the date of publication,but may become outdated or superseded at any time without notice.Any opinions or views expressed are based on current market conditions and are subject to
change.This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as indicator of future results.Past performance is not indicative of
future results.This report is not intended to constitute an offer,solicitation,recommendation or advice regarding any securities or investment strategy and should not be regarded by recipients as a
substitute for the exercise of their own judgment.
Fixed income investments are subject to interest,credit and market risk.Interest rate risk:the value of fixed income investments will decline as interest rates rise.Credit risk:the possibility that the
borrower may not be able to repay interest and principal.Low rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk.Market risk:the bond market in
general could decline due to economic conditions,especially during periods of rising interest rates.
Ratings information have been provided by Moody’s,S&P and Fitch through data feeds we believe to be reliable as of the date of this statement,however we cannot guarantee its accuracy.
Security level ratings for U.S.Agency issued mortgage-backed securities (“MBS”)reflect the issuer rating because the securities themselves are not rated.The issuing U.S.Agency guarantees the full and
timely payment of both principal and interest and carries a AA+/Aaa/AAA by S&P,Moody’s and Fitch respectively.
As of August 31, 2021
45
85
Benchmark Disclosures
ICE BofA 1-3 Yr US Treasury Index
The ICE BofA 1-3 Year US Treasury Index tracks the performance of US dollar-denominated sovereign debt publicly issued by the US government in its domestic market.Qualifying securities must have at
least one year remaining term to final maturity and less than three years remaining term to final maturity,a fixed coupon schedule,and a minimum amount outstanding of $1 billion.Qualifying securities
must have atleast 18 months to final maturity at the time of issuance.
ICE BofA 1-3 Yr AAA-A US Corp & Govt Index
The ICE BofA 1-3 AAA-A Year US Corporate &Government Index tracks the performance of US dollar denominated investment grade debt publicly issued in the US domestic market,including US Treasury,
US agency,foreign government,supranational,and corporate securities.Qualifying securities must be rated AAA through A3 (based on an average of Moody’s,S&P and Fitch).In addition,qualifying
securities must have at least one year remaining term to final maturity and less than three years remaining term to final maturity,at least 18 months to final maturity at point of issuance,a fixed coupon
schedule,and a minimum amount outstanding of $1billion for US Treasuries and $250 million for all other securities.
As of August 31, 2021
46
86
CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 5B September 16, 2021
TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE
FROM: Finance Department Scott Catlett, Finance Director/Treasurer 949-644-3213, scatlett@newportbeachca.gov
SUBJECT: ANNUAL REVIEW OF INVESTMENT POLICY
SUMMARY: Consistent with Section K-2 of Council Policy F-1, Statement of Investment Policy (the Policy), the Finance Department has completed an annual review of the Policy to ensure
its consistency with the overall objectives of preservation of principal, liquidity, and return, as well as its relevance to current law and financial and economic trends. The investment of City funds is governed by the California Government Code (Sections 53600-53610), which prescribes the investment vehicles in which local agencies are permitted to invest available funds. Staff, working with the City’s investment advisor Chandler Asset
Management (Chandler), has completed a comprehensive review of the Policy including compliance with relevant sections of the Government Code, as well as, incorporating best investment practices. Staff is proposing a series of modifications to the Investment Policy as recommended by the City’s investment advisor, Chandler, and supported by the City’s Finance Director/Treasurer.
RECOMMENDED ACTION: Review and discuss this report and recommend that Council formally approve the proposed changes by adopting a resolution. These changes are in furtherance of the
City’s investment objectives. DISCUSSION: California Government Code Section 53600.5 mandates that the City Treasurer shall
follow three objectives when investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds. The primary objective of the City Treasurer shall be to safeguard the principal of the funds under his or her control. The secondary objective
87
Annual Review of Investment Policy September 16, 2021 Page 2
shall be to meet the liquidity needs of the City. The third objective shall be to achieve a return on the funds under his or her control. Guided by the Policy and constrained by California Government Code, the City’s core investment objectives are to provide safety
of the invested principal by maintaining a well-diversified, high-quality portfolio of liquid
assets while earning a market rate of return commensurate with the City’s conservative risk profile. Based on Chandler’s recent review of the City’s Investment Policy, the following
significant changes to the Investment Policy are recommended:
Authorized Investments – Federal Instrumentality (Section G.1.b, page 7) – Recommend adding a 30% per issuer limit per best practices and 20% maximum of the total portfolio that can be invested in callable agency securities to mitigate call risk in the
portfolio.
Authorized Investments – Prime Commercial Paper (Section G.1.i.iii, page 10) – SB 998, which became effective January 1, 2021, permits the purchase of up to 40% of the City’s investable assets in qualifying commercial paper until January 1, 2026, provided
that the City’s investable assets under management are greater than $100 million.
Investments Specifically Not Permitted (Section G.2, page 13) – Included language to allow for the purchase of U.S. Government securities with a zero or negative interest accrual if held to maturity. SB 998 permits the purchase of these securities until January
1, 2026. Only in exigent circumstance after all other options have been exhausted would
we consider purchasing these securities. The change would align the policy with the California Government Code. Credit Quality (Section H.3, page 14) – Updated downgrade policy to allow the
investment manager to act on a security that is downgraded below policy minimums in
the event that the Finance Director is unable to be reached. See the redline Statement of Investment Policy for the recommended changes included as Attachment A.
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Annual Review of Investment Policy September 16, 2021 Page 3
Conclusion Staff recommends that the Finance Committee review this report and recommend that
Council formally approve the proposed changes by adopting a resolution.
Prepared and Submitted by:
/s/ Steve Montano ____________________________
Steve Montano
Deputy Finance Director
Attachment:
A. Proposed Statement of Investment Policy F-1 (Redlined)
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ATTACHMENT A
PROPOSED STATEMENT OF INVESTMENT POLICY F-1 (REDLINED)
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F-1
STATEMENT OF INVESTMENT POLICY
PURPOSE:
The City Council has adopted this Investment Policy (the Policy) in order to establish the
scope of the investment policy, investment objectives, standards of care, authorized
investments, investment parameters, reporting, investment policy compliance and
adoption, and the safekeeping and custody of assets.
This Policy is organized in the following sections:
A. Scope of Investment Policy
1. Pooling of Funds
2. Funds Included in the Policy
3. Funds Excluded from the Policy
B. Investment Objectives
1. Safety
2. Liquidity
3. Yield
C. Standards of Care
1. Prudence
2. Ethics and Conflicts of Interest
3. Delegation of Authority
4. Internal Controls
D. Banking Services
E. Broker/Dealers
F. Safekeeping and Custody of Assets
G. Authorized Investments
1. Investments Specifically Permitted
2. Investments Specifically Not Permitted
3. Exceptions to Prohibited and Restricted Investments
H. Investment Parameters
1. Diversification
2. Maximum Maturities
3. Credit Quality
4. Competitive Transactions
I. Portfolio Performance
J. Reporting
K. Investment Policy Compliance and Adoption
1. Compliance
2. Adoption
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A. SCOPE OF INVESTMENT POLICY
1. Pooling of Funds
All cash shall be pooled for investment purposes. The investment income
derived from the pooled investment shall be allocated to the contributing
funds, net of all banking and investing expenses, based upon the proportion
of the respective average balances relative to the total pooled balance.
Investment income shall be distributed to the individual funds not less than
annually.
2. Funds Included in the Policy
The provisions of this Policy shall apply to all financial assets of the City as
accounted for in the City’s Comprehensive Annual Financial Report,
including;
a) General Fund
b) Special Revenue Funds
c) Capital Project Funds
d) Enterprise Funds
e) Internal Service Funds
f) Trust and Agency Funds
g) Permanent Endowment Funds
h) Any new fund created unless specifically exempted
If the City invests funds on behalf of another agency and, if that agency
does not have its own investment policy, this Policy shall govern the
agency’s investments.
3. Funds Excluded from this Policy
Bond Proceeds – Investment of bond proceeds will be made in accordance
with applicable bond indentures.
B. INVESTMENT OBJECTIVES
The City’s funds shall be invested in accordance with all applicable City policies
and codes, State statutes, and Federal regulations, and in a manner designed to
accomplish the following objectives, which are listed in priority order:
1. Safety
Preservation of principal is the foremost objective of the investment
program. Investments of the City shall be undertaken in a manner that
seeks to ensure the preservation of capital in the overall portfolio. The
objective shall be to mitigate credit risk and interest rate risk. To attain this
objective, the City shall diversify its investments by investing funds among
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several financial institutions and a variety of securities offering
independent returns.
a) Credit Risk
The City shall minimize credit risk, the risk of loss due to the
failure of the security issuer or backer, by:
Limiting investments in securities that have higher credit risks,
pre-qualifying the financial institutions, broker/dealers,
intermediaries, and advisors with which the City will do
business
Diversifying the investment portfolio so as to minimize the
impact any one industry/investment class can have on the
portfolio
b) Interest Rate Risk
To minimize the negative impact of material changes in the market
value of securities in the portfolio, the City shall:
Structure the investment portfolio so that securities mature
concurrent with cash needs to meet anticipated demands,
thereby avoiding the need to sell securities on the open
market prior to maturity
Invest in securities of varying maturities
2. Liquidity
The City’s investment portfolio shall remain sufficiently liquid to enable the
City to meet all operating requirements which might be reasonably
anticipated without requiring a sale of securities. Since all possible cash
demands cannot be anticipated, the portfolio should consist largely of
securities with active secondary or resale markets. A portion of the portfolio
also may be placed in money market mutual funds or LAIF which offer
same-day liquidity for short-term funds.
3. Yield
The City’s investment portfolio shall be designed with the objective of
attaining a benchmark rate of return throughout budgetary and economic
cycles, commensurate with the City’s investment risk constraints and the
liquidity characteristics of the portfolio. Return on investment is of
secondary importance compared to the safety and liquidity objectives
described above. The core of investments is limited to relatively low risk
securities in anticipation of earning a fair return relative to the risk being
assumed.
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C. STANDARDS OF CARE
1. Prudence
The standard of prudence to be used for managing the City's investment
program is California Government Code Section 53600.3, the prudent
investor standard, which states that “when investing, reinvesting,
purchasing, acquiring, exchanging, selling, or managing public funds, a
trustee shall act with care, skill, prudence, and diligence under the
circumstances then prevailing, including, but not limited to, the general
economic conditions and the anticipated needs of the agency, that a prudent
person acting in a like capacity and familiarity with those matters would
use in the conduct of funds of a like character and with like aims, to
safeguard the principal and maintain the liquidity needs of the agency.”
The City's overall investment program shall be designed and managed with
a degree of professionalism that is worthy of the public trust. The City
recognizes that no investment is totally without risk and that the
investment activities of the City are a matter of public record. Accordingly,
the City recognizes that occasional measured losses may occur in a
diversified portfolio and shall be considered within the context of the
overall portfolio's return, provided that adequate diversification has been
implemented and that the sale of a security is in the best long-term interest
of the City.
The Finance Director and authorized investment personnel acting in
accordance with established procedures and exercising due diligence shall
be relieved of personal responsibility for an individual security's credit risk
or market price changes, provided that deviations from expectations are
reported in a timely fashion to the City Council and appropriate action is
taken to control adverse developments.
2. Ethics and Conflicts of Interest
Elected officials and employees involved in the investment process shall
refrain from personal business activity that could conflict with proper
execution of the City’s investment program or could impair or create the
appearance of an impairment of their ability to make impartial investment
decisions. Employees and investment officials shall subordinate their
personal investment transactions to those of the City. In addition, City
Council members, the City Manager, and the Finance Director shall file a
Statement of Economic Interests each year as required by California
Government Code Section 87203 and regulations of the Fair Political
Practices Commission.
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3. Delegation of Authority
Authority to manage the City’s investment program is derived from the
Charter of the City of Newport Beach section 605 (j). The Finance Director
shall assume the title of and act as City Treasurer and with the approval of
the City Manager appoint deputies annually as necessary to act under the
provisions of any law requiring or permitting action by the City Treasurer.
The Finance Director may then delegate the authority to conduct
investment transactions and to manage the operation of the investment
portfolio to other specifically authorized staff members. No person may
engage in an investment transaction except as expressly provided under the
terms of this Policy.
The City may engage the support services of outside investment advisors
with respect to its investment program, so long as it can be demonstrated
that these services produce a net financial advantage or necessary financial
protection of the City's financial resources. Such companies must be
registered under the Investment Advisors Act of 1940, be well-established
and exceptionally reputable. Members of the staff of such companies who
will have primary responsibility for managing the City’s investments must
have a working familiarity with the special requirements and constraints of
investing municipal funds in general and this City's funds in particular.
These firms must insure that the portion of the portfolio under their
management complies with various concentration and other constraints
specified herein, and contractually agree to conform to all provisions of
governing law and the collateralization and other requirements of this
Policy. Selection and retention of broker/dealers by investment advisors
shall be at their sole discretion and dependent upon selection and retention
criteria as stated in the Uniform Application for Investment Advisor
Registration and related Amendments (SEC Form ADV 2A).
4. Internal Controls
The Finance Director is responsible for establishing and maintaining a
system of internal controls. The internal controls shall be designed to
prevent losses of public funds arising from fraud, employee error, and
misrepresentation by third parties, unanticipated changes in financial
markets, or imprudent action by City employees and officers. The internal
structure shall be designed to provide reasonable assurance that these
objectives are met. The concept of reasonable assurance recognizes that (1)
the cost of a control should not exceed the benefits likely to be derived, and
(2) the valuation of costs and benefits requires estimates and judgments by
management.
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D. BANKING SERVICES
Banking services for the City shall be provided by FDIC insured banks approved
to provide depository and other banking services. To be eligible, a bank shall
qualify as a depository of public funds in the State of California as defined in
California Government Code Section 53630.5 and shall secure deposits in excess of
FDIC insurance coverage in accordance with California Government Code Section
53652.
E. BROKER/DEALERS
In the event that an investment advisor is not used to purchase securities, the City
will select broker/dealers on the basis of their expertise in public cash
management and their ability to provide service to the City’s account.
Each approved broker/dealer must possess an authorizing certificate from the
California Commissioner of Corporations as required by Section 25210 of the
California Corporations Code.
To be eligible, a firm must meet at least one of the following criteria:
1. Be recognized as Primary Dealers by the Federal Reserve Bank of New York
or have a primary dealer within their holding company structure, or
2. Report voluntarily to the Federal Reserve Bank of New York, or
3. Qualify under Securities and Exchange Commission (SEC) Rule 15c3-1
(Uniform Net Capital Rule).
F. SAFEKEEPING AND CUSTODY OF ASSETS
The Finance Director shall select one or more banks to provide safekeeping and
custodial services for the City. A Safekeeping Agreement approved by the City
shall be executed with each custodian bank prior to utilizing that bank's
safekeeping services.
Custodian banks will be selected on the basis of their ability to provide services
for the City's account and the competitive pricing of their safekeeping related
services.
The purchase and sale of securities and repurchase agreement transactions shall
be settled on a delivery versus payment basis. All securities shall be perfected in
the name of the City. Sufficient evidence to title shall be consistent with modern
investment, banking and commercial practices.
All investment securities, except non-negotiable Certificates of Deposit, Money
Market Funds and local government investment pools, purchased by the City will
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be delivered by book entry and will be held in third-party safekeeping by a City
approved custodian bank, its correspondent bank or its Depository Trust
Company (DTC) participant account.
All Fed wireable book entry securities owned by the City shall be held in the
Federal Reserve system in a customer account for the custodian bank which will
name the City as “customer.”
All DTC eligible securities shall be held in the custodian bank’s DTC participant
account and the custodian bank shall provide evidence that the securities are held
for the City as “customer.”
G. AUTHORIZED INVESTMENTS
All investments and deposits of the City shall be made in accordance with
California Government Code Sections 16429.1, 53600-53609 and 53630-53686. Any
revisions or extensions of these code sections will be assumed to be part of this
Policy immediately upon being enacted. The City has further restricted the eligible
types of securities and transactions. The foregoing list of authorized securities and
transactions shall be strictly interpreted. Any deviation from this list must be pre-
approved by resolution of the City Council. In the event an apparent discrepancy
is found between this Policy and the Government Code, the more restrictive
parameter(s) will take precedence.
Where this section specifies a percentage limitation or minimum credit rating for
a particular security type, that percentage or credit rating minimum is applicable
only at the date of purchase.
1. Investments Specifically Permitted
a) United States Treasury bills, notes, or bonds with a final maturity not
exceeding five years from the date of trade settlement. There is no
limitation as to the percentage of the City’s portfolio that may be
invested in this category.
b) Federal Instrumentality (government-sponsored enterprise)
debentures, discount notes, callable and step-up securities, with a
final maturity not exceeding five years from the date of trade
settlement. There is no limitation as to the percentage of the portfolio
that can be invested in this category. No more than thirty percent
(30%) of the portfolio may be invested in any single Federal
Instrumentality/GSE issuer. The maximum percentage of callable
Federal Instrumentality/GSE securities in the portfolio will be
twenty percent (20%.)
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c) Federal Agency Obligations for which the full faith and credit of the
United States are pledged for the payment of principal and interest
and which have a final maturity not exceeding five years from the
date of trade settlement. There is no limitation as to the percentage of
the portfolio that can be invested in this category.
d) Mortgage-backed Securities, Collateralized Mortgage Obligation
(CMO) and Asset-backed Securities from issuers not defined
sections a, b and c of the Investments Specifically Permitted section
of this investment policy are limited to bonds with a final maturity
not exceeding five years from the date of trade settlement. The
security itself shall be rated at least “AAA” or the equivalent by an
NRSRO. No more than five percent (5%) of the City’s total portfolio
shall be invested in any one issuer of mortgage-backed and asset-
backed securities listed above, and the aggregate investment in
mortgage-backed and asset-backed securities shall not exceed
twenty percent (20%) of the City’s total portfolio.
e) Medium-Term Notes issued by corporations organized and
operating within the United States or by depository institutions
licensed by the United States or any state and operating within the
United States, with a final maturity not exceeding five years from the
date of trade settlement, and rated in at least the “A” category or the
equivalent by an NRSRO. No more than five percent (5%) of the
City’s total portfolio shall be invested in any one issuer of medium-
term notes, and the aggregate investment in medium-term notes
shall not exceed thirty percent (30%) of the City’s total portfolio.
f) Municipal Bonds: including bonds issued by the City of Newport
Beach, including bonds payable solely out of the revenues from a
revenue-producing property owned, controlled, or operated by the
City or by a department, board, agency, or authority of the City.
State of California registered warrants or treasury notes or bonds,
including bonds payable solely out of the revenues from a revenue-
producing property owned, controlled, or operated by the state or
by a department, board, agency, or authority of the state.
Registered treasury notes or bonds of any of the other 49 states in
addition to California, including bonds payable solely out of the
revenues from a revenue producing property owned, controlled, or
operated by a state or by a department, board, agency, or authority
of any of the other 49 states, in addition to California.
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Bonds, notes, warrants, or other evidences of indebtedness of a local
agency within California, including bonds payable solely out of the
revenues from a revenue-producing property owned, controlled, or
operated by the local agency, or by a department, board, agency, or
authority of the local agency.
In addition, these securities must be rated in at least the “A” category
or the equivalent by a NRSRO with maturities not exceeding five
years from the date of trade settlement. No more than five percent
(5%) of the City’s total portfolio shall be invested in any one
municipal issuer. In addition, the aggregate investment in municipal
bonds may not exceed thirty percent (30%) of the portfolio.
g) Non-negotiable Certificates of Deposit and savings deposits with a
maturity not exceeding two years from the date of trade settlement,
in FDIC insured state or nationally chartered banks or savings banks
that qualify as a depository of public funds in the State of California
as defined in California Government Code Section 53630.5. Deposits
exceeding the FDIC insured amount shall be secured pursuant to
California Government Code Section 53652. No one issuer shall
exceed more than five percent (5%) of the portfolio, and investment
in negotiable and nonnegotiable certificates of deposit shall be
limited to thirty percent (30%) of the portfolio combined.
h) Negotiable Certificates of Deposit only with a nationally or state-
chartered bank, a savings association or a federal association (as
defined by Section 5102 of the Financial Code), a state or federal
credit union, or by a federally licensed or state-licensed branch of
a foreign bank whose senior long-term debt is rated in at least the
“A” category, or the equivalent, or short-term debt is rated at least
“A-1” or the equivalent by an NRSRO and having assets in excess of
$10 billion, so as to ensure security and a large, well- established
secondary market. Ease of subsequent marketability should be
further ascertained prior to initial investment by examining
currently quoted bids by primary dealers and the acceptability of the
issuer by these dealers. No one issuer shall exceed more than five
percent (5%) of the portfolio, and maturity shall not exceed two
years. Investment in negotiable and non- negotiable certificates of
deposit shall be limited to thirty percent (30%) of the portfolio
combined.
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i) Prime Commercial Paper with a maturity not exceeding 270 days
from the date of trade settlement that is rated “A-1”, or the
equivalent, by an NRSRO. The entity that issues the commercial
paper shall meet all of the following conditions in either sub-
paragraph i. or sub-paragraph ii. below:
i. The entity shall (1) be organized and operating in the United
States as a general corporation, (2) have total assets in excess
of $500,000,000 and (3) have debt other than commercial
paper, if any, that is rated in at least the “A” category or the
equivalent by an NRSRO.
ii. The entity shall (1) be organized within the United States as a
special purpose corporation, trust, or limited liability
company, (2) have program wide credit enhancements,
including, but not limited to, over collateralization, letters of
credit or surety bond and (3) have commercial paper that is
rated at least “A-1” or the equivalent, by an NRSRO.
iii. No more than five percent (5%) of the City’s total portfolio
shall be invested in the commercial paper of any one issuer,
and the aggregate investment in commercial paper shall not
exceed twenty-five percent (25%) of the City’s total portfolio.
Under a provision sunsetting on January 1, 2026, no more
than forty percent (40%) of the portfolio may be invested in
commercial paper if the City’s assets under management are
greater than $100,000,000.
j) Eligible Banker’s Acceptances with a maturity not exceeding 180
days from the date of trade settlement, drawn on and accepted by a
commercial bank whose senior long-term debt is rated in at least the
“A” category or the equivalent by an NRSRO at the time of purchase.
Banker’s Acceptances shall be rated at least “A-1”, or the equivalent
at the time of purchase by an NRSRO. If the bank has senior debt
outstanding, it must be rated in at least the “A” category or the
equivalent by an NRSRO. The aggregate investment in banker’s
acceptances shall not exceed forty percent (40%) of the City’s total
portfolio, and no more than five percent (5%) of the City’s total
portfolio shall be invested in banker’s acceptances of any one bank.
k) Repurchase Agreements and Reverse Repurchase Agreements with
a final termination date not exceeding 30 days collateralized by U.S.
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Treasury obligations or Federal Instrumentality securities listed in
items 1 and 2 above with the maturity of the collateral not exceeding
ten years. For the purpose of this section, the term collateral shall
mean purchased securities under the terms of the City’s approved
Master Repurchase Agreement. The purchased securities shall have a
minimum market value including accrued interest of one hundred and two
percent (102%) of the dollar value of the funds borrowed. Collateral shall
be held in the City's custodian bank, as safekeeping agent, and the market
value of the collateral securities shall be marked-to-the-market daily.
Repurchase Agreements and Reverse Repurchase Agreements shall
be entered into only with broker/dealers and who are recognized as
Primary Dealers with the Federal Reserve Bank of New York, or with
firms that have a Primary Dealer within their holding company
structure. Primary Dealers approved as Repurchase Agreement
counterparties shall have a short-term credit rating of at least “A-1”
or the equivalent and a long-term credit rating of at least “A” or the
equivalent. Repurchase agreement counterparties shall execute a
City approved Master Repurchase Agreement with the City. The
Finance Director shall maintain a copy of the City's approved Master
Repurchase Agreement and a list of the broker/dealers who have
executed same.
In addition, the City must own assets for more than 30 days before
they can be used as collateral for a reverse repurchase agreement.
No more than ten percent (10%) of the portfolio can be involved in
reverse repurchase agreements.
l) State of California’s Local Agency Investment Fund (LAIF), pursuant
to California Government Code Section 16429.1.
m) County Investment Funds: Los Angeles County provides a service
similar to LAIF for municipal and other government entities outside
of Los Angeles County, including the City. Investment in this pool is
intended to be used as a temporary repository for short-term funds
used for liquidity purposes. The Finance Director shall maintain on
file appropriate information concerning the county pool’s current
investment policies, practices, and performance, as well as its
requirements for participation, including, but not limited to,
limitations on deposits or withdrawals and the composition of the
portfolio. At no time shall more than five percent (5%) of the City’s
total investment portfolio be placed in this pool.
n) Mutual Funds and Money Market Mutual Funds registered under
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the Investment Company Act of 1940, provided that:
i. MUTUAL FUNDS that invest in the securities and obligations as
authorized under California Government Code, Section 53601 (a)
to (k) and (m) to (q) inclusive and that meet either of the
following criteria:
1) Attained the highest ranking or the highest letter and
numerical rating provided by not less than two (2) NRSROs;
or
2) Have retained an investment adviser registered or exempt
from registration with the Securities and Exchange
Commission with not less than five years’ experience
investing in the securities and obligations authorized by
California Government Code, Section 53601 and with assets
under management in excess of $500 million.
3) No more than 10% of the total portfolio may be invested in
shares of any one mutual fund.
ii. MONEY MARKET MUTUAL FUNDS registered with the Securities
and Exchange Commission under the Investment Company Act
of 1940 and issued by diversified management companies and
meet either of the following criteria:
1) Have attained the highest ranking or the highest letter and
numerical rating provided by not less than two (2) NRSROs;
or
2) Have retained an investment adviser registered or exempt
from registration with the Securities and Exchange
Commission with not less than five years’ experience
managing money market mutual funds with assets under
management in excess of $500 million.
3) No more than 20% of the total portfolio may be invested in
Money Market Mutual Funds.
iii. No more than 20% of the total portfolio may be invested in these
securities.
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o) Supranationals which are United States dollar denominated senior
unsecured unsubordinated obligations issued or unconditionally
guaranteed by the International Bank for Reconstruction and
Development (IBRD), International Finance Corporation (IFC), or
Inter-American Development Bank (IADB), with a maximum
remaining maturity of five years or less, and eligible for purchase
and sale within the United States. Investments under this paragraph
shall be rated in the "AA" category, its equivalent, or better by at least
one NRSRO.
No more than ten percent (10%) of the City’s total portfolio shall be
invested in any one issuer of supranational obligations. Purchases of
supranational obligations shall not exceed twenty percent (20%) of
the investment portfolio of the City.
2. Investments Specifically Not Permitted
Any security type or structure not specifically approved by this policy is
hereby prohibited. Security types, which are thereby prohibited include,
but are not limited to: “exotic” derivative structures such as range notes,
dual index notes, inverse floating rate notes, leveraged or de-leveraged
floating rate notes, interest only strips that are derived from a pool of
mortgages and any security that could result in zero interest accrual if held
to maturity, or any other complex variable or structured note with an
unusually high degree of volatility risk.
Under a provision sunsetting on January 1, 2026, securities backed by the
U.S. Government that could result in a zero or negative interest accrual if
held to maturity are permitted.
The City shall not invest funds with the Orange County Pool.
3. Exceptions to Prohibited and Restricted Investments
The City shall not be required to sell securities prohibited or restricted in
this policy, or any future policies, or prohibited or restricted by new State
regulations, if purchased prior to their prohibition and/or restriction.
Insofar as these securities provided no notable credit risk to the City,
holding of these securities until maturity is approved. At maturity or
liquidation, such monies shall be reinvested as provided by this policy.
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H. INVESTMENT PARAMETERS
1. Diversification
The City shall diversify its investments to avoid incurring unreasonable
risks inherent in over-investing in specific instruments, individual financial
institutions or maturities. As such, no more than five percent (5%) of the
City’s portfolio may be invested in the instruments of any one issuer, except
governmental issuers, supranationals, investment pools, mutual funds and
money market funds, or unless otherwise specified in this investment
policy. This restriction does not apply to any type of Federal Instrumentality
or Federal Agency Security listed in Sections G1 b and G1 c above.
Nevertheless, the asset allocation in the investment portfolio should be
flexible depending upon the outlook for the economy, the securities
markets and the City’s anticipated cash flow needs.
2. Maximum Maturities
To the extent possible, investments shall be matched with anticipated cash
flow requirements and known future liabilities. The City will not invest in
securities maturing more than five years from the date of trade settlement,
unless the City Council has by resolution granted authority to make such
an investment at least three months prior to the date of investment.
3. Credit Quality
Each investment manager will monitor the credit quality of the securities in
their respective portfolio. In the event a security held by the City is
downgraded to a level below the requirements of this policy, making the
security ineligible for additional purchases, the following steps will be
taken:
Any actions taken related to the downgrade by the investment
manager will be communicated to the Finance Director in a timely
manner.
If a decision is made to retain the security, the credit
qualitysituation will be monitored and reported to the City
Council.the subject of a rating downgrade which brings it below
accepted minimums specified herein, or the security is placed on
negative credit watch, where downgrade could result in a rate drop
below acceptable levels, the investment advisor who purchased the
security will immediately notify the Finance Director. The City
shall not be required to immediately sell such securities. The course
of action to be followed will then be decided on a case by case
basis, considering such factors as the reason for the rate drop,
prognosis for recovery or further drop, and market price of the
security. The City Council will be advised of the situation and
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intended course of action.
4. Competitive Transactions
Investment advisors shall make best effort to price investment transactions
on a competitive basis with broker/dealers selected consistent with their
practices disclosed in form ADV 2A filed with the SEC. Where possible, at
least three broker/dealers shall be contacted for each transaction and their
bid or offering prices shall be recorded. If there is no other readily available
competitive offering, the investment advisor shall make their best efforts to
document quotations for comparable or alternative securities. If qualitative
characteristics of a transaction, including, but not limited to, complexity of
the transaction, or sector expertise of the broker, prevent a competitive
selection process, investment advisors shall use brokerage selection
practices as described above.
I. PORTFOLIO PERFORMANCE
The investment portfolio shall be designed to attain a market rate of return
throughout budgetary and economic cycles, taking into account prevailing market
conditions, risk constraints for eligible securities, and cash flow requirements. The
performance of the City’s investments shall be compared to the total return of a
benchmark that most closely corresponds to the portfolio’s duration, universe of
allowable securities, risk profile, and other relevant characteristics. When
comparing the performance of the City’s portfolio, its rate of return will be
computed consistent with Global Investment Performance Standards (GIPS).
J. REPORTING
Monthly, the Finance Director shall produce a treasury report of the investment
portfolio balances, transactions, risk characteristics, earnings, and performance
results of the City’s investment portfolio available to City Council and the public
on the City’s Website. The report shall include the following information:
1. Investment type, issuer, date of maturity, par value and dollar amount
invested in all securities, and investments and monies held by the City;
2. A description of the funds, investments and programs;
3. A market value as of the date of the report (or the most recent valuation as
to assets not valued monthly) and the source of the valuation;
4. A statement of compliance with this Policy or an explanation for non-
compliance
K. INVESTMENT POLICY COMPLIANCE AND ADOPTION
1. Compliance
Any deviation from the policy shall be reported to Finance Committee as
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soon as practical, but no later than the next scheduled Finance Committee
meeting. Upon recommendation of the Finance Committee, the Finance
Director shall review deviations from policy with the City Council.
2. Adoption
The Finance Director shall review the Investment Policy with the Finance
Committee at least annually to ensure its consistency with the overall
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objectives of preservation of principal, liquidity and return, and its
relevance to current law and financial and economic trends.
The Finance Director shall review the Investment Policy with City Council
at a public meeting if there are changes recommended to the Investment
Policy.
This Policy was endorsed and adopted by the City Council of the City of
Newport Beach on September 28, 2021. It replaces any previous investment
policy or investment procedures of the City.
Adopted – April 6, 1959
Amended – November 9, 1970
Amended – February 11, 1974
Amended – February 9, 1981
Amended – October 27, 1986
Rewritten – October 22, 1990
Amended – January 28, 1991
Amended – January 24, 1994
Amended – January 9, 1995
Amended – April 22, 1996
Corrected – January 27, 1997
Amended – February 24, 1997
Amended – May 26, 1998
Reaffirmed – March 22, 1999
Reaffirmed – March 14, 2000
Amended & Reaffirmed – May 8, 2001
Amended & Reaffirmed – April 23, 2002
Amended & Reaffirmed – April 8, 2003
Amended & Reaffirmed – April 13, 2004
Amended & Reaffirmed – September 13, 2005
Amended – August 11, 2009
Amended & Reaffirmed – August 10, 2010
Amended & Reaffirmed – September 28, 2010
Reaffirmed – June 28, 2011
Amended & Reaffirmed – October 9, 2012
Amended – August 13, 2013
Amended – September 8, 2015
Amended – March 28, 2017
Amended – January 28, 2020
Amended – September 2021
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Glossary of Investment Terms
AGENCIES. Shorthand market terminology for any obligation issued by a government-
sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are
not guaranteed by the full faith and credit of the US government. Examples are:
FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the
agricultural industry. FFCB issues discount notes and bonds.
FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing
market. FHLB issues discount notes and bonds.
FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit
and liquidity in the housing market. FHLMC, also called “FreddieMac” issues
discount notes, bonds and mortgage pass-through securities.
FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was
established to provide credit and liquidity in the housing market. FNMA, also
known as “FannieMae,” issues discount notes, bonds and mortgage pass-
through securities.
GNMA. The Government National Mortgage Association, known as “GinnieMae,”
issues mortgage pass-through securities, which are guaranteed by the full faith
and credit of the US Government.
PEFCO. The Private Export Funding Corporation assists exporters. Obligations of
PEFCO are not guaranteed by the full faith and credit of the US government.
TVA. The Tennessee Valley Authority provides flood control and power and
promotes development in portions of the Tennessee, Ohio, and Mississippi River
valleys. TVA currently issues discount notes and bonds.
ASKED. The price at which a seller offers to sell a security.
ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or
by pools of revolving lines of credit.
AVERAGE LIFE. In mortgage-related investments, including CMOs, the average time to
expected receipt of principal payments, weighted by the amount of principal
expected.
BANKER’S ACCEPTANCE. A money market instrument created to facilitate international
trade transactions. It is highly liquid and safe because the risk of the trade transaction
is transferred to the bank which “accepts” the obligation to pay the investor.
BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial
market index, which reflects the mix of securities allowed under a specific
investment policy.
BID. The price at which a buyer offers to buy a security.
BROKER. A broker brings buyers and sellers together for a transaction for which the broker
receives a commission. A broker does not sell securities from his own position.
CALLABLE. A callable security gives the issuer the option to call it from the investor prior to
its maturity. The main cause of a call is a decline in interest rates. If interest rates
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decline since an issuer issues securities, it will likely call its current securities and
reissue them at a lower rate of interest. Callable securities have reinvestment risk as
the investor may receive its principal back when interest rates are lower than when
the investment was initially made.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a
certificate. Large denomination CDs may be marketable.
CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SYSTEM (CDARS). A private placement
service that allows local agencies to purchase more than $250,000 in CDs from a
single financial institution (must be a participating institution of CDARS) while still
maintaining FDIC insurance coverage. CDARS is currently the only entity providing
this service. CDARS facilitates the trading of deposits between the California
institution and other participating institutions in amounts that are less than $250,000
each, so that FDIC coverage is maintained.
COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or
repurchase agreement. Also, securities pledged by a financial institution to secure
deposits of public monies.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds that redistribute the
cash flows of mortgage securities (and whole loans) to create securities that have
different levels of prepayment risk, as compared to the underlying mortgage
securities.
COMMERCIAL PAPER. The short-term unsecured debt of corporations.
COST YIELD. The annual income from an investment divided by the purchase cost. Because
it does not give effect to premiums and discounts which may have been included in
the purchase cost, it is an incomplete measure of return.
COUPON. The rate of return at which interest is paid on a bond.
CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a
timely manner due to changes in the condition of the issuer.
CURRENT YIELD. The annual income from an investment divided by the current market
value. Since the mathematical calculation relies on the current market value rather
than the investor’s cost, current yield is unrelated to the actual return the investor
will earn if the security is held to maturity.
DEALER. A dealer acts as a principal in security transactions, selling securities from and
buying securities for his own position.
DEBENTURE. A bond secured only by the general credit of the issuer.
DELIVERY VS. PAYMENT (DVP). A securities industry procedure whereby payment for a
security must be made at the time the security is delivered to the purchaser’s agent.
DERIVATIVE. Any security that has principal and/or interest payments which are subject to
uncertainty (but not for reasons of default or credit risk) as to timing and/or amount,
or any security which represents a component of another security which has been
separated from other components (“Stripped” coupons and principal). A derivative
is also defined as a financial instrument the value of which is totally or partially
derived from the value of another instrument, interest rate, or index.
DISCOUNT. The difference between the par value of a bond and the cost of the bond, when
the cost is below par. Some short-term securities, such as T-bills and banker’s
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acceptances, are known as discount securities. They sell at a discount from par, and
return the par value to the investor at maturity without additional interest. Other
securities, which have fixed coupons, trade at a discount when the coupon rate is
lower than the current market rate for securities of that maturity and/or quality.
DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid
excessive exposure to any one source of risk.
DURATION. The weighted average time to maturity of a bond where the weights are the
present values of the future cash flows. Duration measures the price sensitivity of a
bond to changes in interest rates. (See modified duration).
FEDERAL FUNDS RATE. The rate of interest charged by banks for short-term loans to other
banks. The Federal Reserve Bank through open-market operations establishes it.
FEDERAL OPEN MARKET COMMITTEE. A committee of the Federal Reserve Board that
establishes monetary policy and executes it through temporary and permanent
changes to the supply of bank reserves.
LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay
earnings at a rate higher than the cost of borrowing.
LIQUIDITY. The speed and ease with which an asset can be converted to cash.
LOCAL AGENCY INVESTMENT FUND (LAIF). A voluntary investment fund open to
government entities and certain non-profit organizations in California that is
managed by the State Treasurer’s Office.
LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State
Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint
Powers Authorities (JPAs). These funds are not subject to the same SEC rules
applicable to money market mutual funds.
MAKE WHOLE CALL. A type of call provision on a bond that allows the issuer to pay off the
remaining debt early. Unlike a call option, with a make whole call provision, the
issuer makes a lump sum payment that equals the net present value (NPV) of future
coupon payments that will not be paid because of the call. With this type of call, an
investor is compensated, or "made whole."
MARGIN. The difference between the market value of a security and the loan a broker makes
using that security as collateral.
MARKET RISK. The risk that the value of securities will fluctuate with changes in overall
market conditions or interest rates.
MARKET VALUE. The price at which a security can be traded.
MARKING TO MARKET. The process of posting current market values for securities in a
portfolio.
MATURITY. The final date upon which the principal of a security becomes due and payable.
MEDIUM TERM NOTES. Unsecured, investment-grade senior debt securities of major
corporations which are sold in relatively small amounts on either a continuous or an
intermittent basis. MTNs are highly flexible debt instruments that can be structured
to respond to market opportunities or to investor preferences.
MODIFIED DURATION. The percent change in price for a 100 basis point change in yields.
Modified duration is the best single measure of a portfolio’s or security’s exposure
to market risk.
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MONEY MARKET. The market in which short-term debt instruments (T-bills, discount notes,
commercial paper, and banker’s acceptances) are issued and traded.
MORTGAGE PASS-THROUGH SECURITIES. A securitized participation in the interest and
principal cash flows from a specified pool of mortgages. Principal and interest
payments made on the mortgages are passed through to the holder of the security.
MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and
operating expenses.
MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a
set of securities which is specifically defined in the fund’s prospectus. Mutual funds
can be invested in various types of domestic and/or international stocks, bonds, and
money market instruments, as set forth in the individual fund’s prospectus. For most
large, institutional investors, the costs associated with investing in mutual funds are
higher than the investor can obtain through an individually managed portfolio.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO).
A credit rating agency that the Securities and Exchange Commission in the United
States uses for regulatory purposes. Credit rating agencies provide assessments of
an investment's risk. The issuers of investments, especially debt securities, pay
credit rating agencies to provide them with ratings. The three most prominent
NRSROs are Fitch, S&P, and Moody's.
NEGOTIABLE CD. A short-term debt instrument that pays interest and is issued by a bank,
savings or federal association, state or federal credit union, or state-licensed branch
of a foreign bank. Negotiable CDs are traded in a secondary market.
PREMIUM. The difference between the par value of a bond and the cost of the bond, when
the cost is above par.
PREPAYMENT SPEED. A measure of how quickly principal is repaid to investors in mortgage
securities.
PREPAYMENT WINDOW. The time period over which principal repayments will be received
on mortgage securities at a specified prepayment speed.
PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal
Reserve in its execution of market operations to carry out U.S. monetary policy, and
(2) that participates for statistical reporting purposes in compiling data on activity
in the U.S. Government securities market.
PRUDENT PERSON (PRUDENT INVESTOR) RULE. A standard of responsibility which applies
to fiduciaries. In California, the rule is stated as “Investments shall be managed with
the care, skill, prudence and diligence, under the circumstances then prevailing, that
a prudent person, acting in a like capacity and familiar with such matters, would use
in the conduct of an enterprise of like character and with like aims to accomplish
similar purposes.”
REALIZED YIELD. The change in value of the portfolio due to interest received and interest
earned and realized gains and losses. It does not give effect to changes in market
value on securities, which have not been sold from the portfolio.
REGIONAL DEALER. A financial intermediary that buys and sells securities for the benefit of
its customers without maintaining substantial inventories of securities and that is
not a primary dealer.
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REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous
agreement to sell the securities back at a higher price. From the seller’s point of view,
the same transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the
customer’s name.
STRUCTURED NOTE. A complex, fixed income instrument, which pays interest, based on a
formula tied to other interest rates, commodities or indices. Examples include
inverse floating rate notes which have coupons that increase when other interest
rates are falling, and which fall when other interest rates are rising, and "dual index
floaters," which pay interest based on the relationship between two other interest
rates - for example, the yield on the ten-year Treasury note minus the Libor rate.
Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate
swap agreements.
SUPRANATIONAL. A Supranational is a multi-national organization whereby member states
transcend national boundaries or interests to share in the decision making to
promote economic development in the member countries.
TOTAL RATE OF RETURN. A measure of a portfolio’s performance over time. It is the internal
rate of return, which equates the beginning value of the portfolio with the ending
value; it includes interest earnings, realized and unrealized gains, and losses in the
portfolio.
U.S. TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the full
faith and credit of the United States. Treasuries are considered to have no credit risk,
and are the benchmark for interest rates on all other securities in the US and
overseas. The Treasury issues both discounted securities and fixed coupon notes and
bonds.
TREASURY BILLS. All securities issued with initial maturities of one year or less are issued
as discounted instruments, and are called Treasury bills. The Treasury currently
issues three- and six-month T-bills at regular weekly auctions. It also issues “cash
management” bills as needed to smooth out cash flows.
TREASURY NOTES. All securities issued with initial maturities of two to ten years are called
Treasury notes, and pay interest semi-annually.
TREASURY BONDS. All securities issued with initial maturities greater than ten years are
called Treasury bonds. Like Treasury notes, they pay interest semi-annually.
VOLATILITY. The rate at which security prices change with changes in general economic
conditions or the general level of interest rates.
YIELD TO MATURITY. The annualized internal rate of return on an investment which equates
the expected cash flows from the investment to its cost.
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Overview of Harbor Department Operations and FinancesFinanceCommitteeMeetingSeptember 16, 2021114
Harbor Department Services and Activities2City of Newport Beach – Harbor Department
115
City of Newport Beach – Harbor Department3Brief History of the Harbor Department• July 2017 -the City assumed responsibility for mooring management from the OC Sheriff’s Dept.• Harbor Operations Division initially assigned to the Public Works Dept.• Jan. 2018 -Harbor Operations Division transferred to the City Managers Office.• July 2018 -City Council created a standalone Harbor Dept.• 2020 - Title 17 updated to reflect new arrangement/responsibilities 116
City of Newport Beach – Harbor Department4Harbor Department Mission•Clean•Safe•Well Enjoyed•Services delivered in favor of:1. Residents2. Businesses3. Visitors
117
City of Newport Beach – Harbor Department5Services•Mooring Management•Code Enforcement•Harbor Events Permitting•Safety/Rescue Operations•Marina Park/Hospitality•Pump out equipment maintenance and upgrades•Impounds and auctions•Public Relations/Concierge118
City of Newport Beach – Harbor Department6Mooring Management Services•Wholesale audit and update of mooring permits•Ongoing permit requirement maintenance•Overhauls•Vessel registration and insurance•Transfers•Live-aboard program (moorings and slips)•Mooring sub-permitting•Off-shore•On-shore (new this season!)•Incident documentation and resolution119
City of Newport Beach – Harbor Department7Code Enforcement Services•Marine Activities Permits for commercial operators•Sea lion deterrent/abatement•Dye tab testing•Speed/boating safety•Bridge jumping•Multiple berthing inspections•VTIP/SAVE grant implementation and admin120
City of Newport Beach – Harbor Department8Harbor Events Permitting•Parades•Regattas•Large vessel stays•Raft-ups•Temporary moorings•Coordination with OCSD and USCG121
City of Newport Beach – Harbor Department9Harbor Events Permitting122
City of Newport Beach – Harbor Department10Safety/Rescue Operations •NYT article on accidents•July 2 rescue•September 4 rescue•Daily paddle board rescues•CPR (re)certification123
City of Newport Beach – Harbor Department11Marina Park Management and Harbor Hospitality•Slip stays (full service)•MP mooring stays •Offshore sub-permit stays•On-shore sub-permit stays•Large vessel stays•“Ship Shape” light maintenance and cleaning program for mooring permittees124
City of Newport Beach – Harbor Department12Public Relations/Outreach and Concierge•Signage and wayfinding•Service provider identification•Public presentations and education•Support for other harbor adjacent/connected City services•New layer within GIS for harbor adjacent public restrooms and conveniences•Trash and debris removal125
City of Newport Beach – Harbor Department13Service Statistics18‐19 19‐20 20‐21Anchorage Contact20 346 217Anchorage Dye Tab26Assisting Vessels Over 20'130 26 41Assisting Vessels under 20'81 145 44Bridge Jumpers73 295 213Daily Anchorage Check/Count867 1514 1168Discharge/Pollution31 30 17Dock/Pier/Bridge Issue85 116 27Emergency833General Assist365 297 298Hazards/Debris172 184 93Impound125 86 108Incident79 80Mooring Assist119 258 170Mooring Check604 2898 2211Noise61116Paddleboard/Kayak526 597 97Public Contact136 787 307Public Dock Enforcement147 3857 6595Pump Out133 145Registration & Insurance 990 396Sea Lions252 460 173Speeding328 378 459Swim Line13 16 9Trash1898 2244 997Harbor Department StatisticsFiscal Year18‐19 19‐20 20‐21Rentals - Marina Park Slips1150 972 1428# of nights3296 2753 4441Rentals - MP Sand Lines38082 210# of nights1667 306 539Mooring Sub-permittee1166 392 543# of nights8484 2557 3178Code Enforcement New Cases 827 1093 1211 Closed Cases 552 1102 830 Verbal Warning 426 246 Warning Notices 1242 987Admin Cites89 103MAPS Issued32 47Harbor Department StatisticsFiscal Year126
Harbor Department Finances14City of Newport Beach – Harbor Department
127
City of Newport Beach – Harbor Department15Historical Harbor Department Revenues• Harbor Department revenues have grown steadily in recent years• 2020-21 Revenues reached an all-time highRevenue Type 2015 Actual 2016 Actual 2017 Actual 2018 Actual 2019 Actual 2020 Actual 2021 Actual 2022 Budget Balboa Yacht Basin Slips 960,162$ 1,014,663$ 1,030,354$ 1,077,196$ 1,145,780$ 1,189,478$ 1,232,185$ 1,193,800$ Mooring Permits ‐ Off Shore 1,673,547 1,164,337 1,113,604 758,503 1,100,072 1,135,389 1,150,122 1,194,811 Marina Park Slips‐ 45,274 133,461 208,407 223,735 252,576 406,973 265,000 Guest Moorings 100,259 183,210 179,080 214,239 242,623 171,650 235,217 250,000 Mooring Permits ‐ On Shore 182,989 132,703 120,064 92,360 144,234 159,302 160,759 147,462 Mooring Transfers‐ ‐ 22,327 58,626 52,384 47,130 78,083 55,000 Other Revenues 228,240 25,539 31,349 16,905 71,872 56,944 80,948 77,628 Total $ 3,145,197 $ 2,565,726 $ 2,630,239 $ 2,426,236 $ 2,980,700 $ 3,012,469 $ 3,344,287 $ 3,183,701 128
City of Newport Beach – Harbor Department16Historical Harbor Department Staffing• Initial staffing model contemplated one full-time Harbormaster supplemented by part-time Harbor Services Workers• Code enforcement staffing added in fiscal year 2020-21• Permitting staffing added in fiscal year 2021-22Position Classification FY 2017‐18 FY 2018‐19 FY 2019‐20 FY 2020‐21 FY 2021‐22Harbormaster 1.00 1.00 1.00 1.00 1.00 Harbor Services Worker 7.00 8.14 8.14 7.39 7.39 Department Assistant‐ 0.75 0.75 0.50 0.50 Code Enforcement Supervisor‐ ‐ ‐ 1.00 1.00 Code Enforcement Trainee‐ ‐ ‐ 1.50 1.50 Permit Technician‐ ‐ ‐ ‐ 1.00 Total 8.00 9.89 9.89 11.39 12.39 129
City of Newport Beach – Harbor Department17Historical Harbor Department Expenditures• Although there have been variations, expenditures are not significantly higher today than they were prior to the formation of the Harbor Department• Budgeted amounts have always been higher than actual amounts as can be seen in the data for fiscal year 2020-21Expenditure Category 2015 Actual 2016 Actual 2017 Actual 2018 Actual 2019 Actual 2020 Actual 2021 Actual 2021 Budget 2022 Budget Salaries and Benefits 465,962$ 515,857$ 527,821$ 844,049$ 710,889$ 650,495$ 962,549$ 1,052,317$ 1,194,822$ Contract ServicesProperty Management 164,040 164,040 164,040 82,020 150,370 164,040 165,637 165,000 181,175 Mooring Management 329,355 335,396 334,560 ‐ ‐ ‐ ‐ ‐ ‐ Marina Park Management‐ 98,300 183,600 183,600 59,719 ‐ ‐ ‐ ‐ Other Contract Services 347,691 372,309 414,624 415,835 376,962 157,288 327,828 366,672 370,018 Maintenance and Repair 70,333 261,636 301,716 308,226 344,971 210,712 156,929 351,377 329,056 Other Non‐Personnel Expenses 69,483 79,028 99,432 139,751 113,039 116,470 99,209 121,500 125,560 Internal Service Charges 128,464 78,744 83,754 83,819 162,467 85,517 141,478 141,478 170,311 Capital Purchases 11,984 2,496 827 754 4,625 129 1,086 10,000 10,000 Total $ 1,587,312 $ 1,907,806 $ 2,110,374 $ 2,058,054 $ 1,923,042 $ 1,384,651 $ 1,854,715 $ 2,208,344 $ 2,380,942 Note: Certain harbor‐related contracts under the management of the Public Works Department totaling approximately $450,000 per year or less are included in these numbers.130
City of Newport Beach – Harbor Department18Questions?131
CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 5E
September 16, 2021 TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM: Finance Department
Scott Catlett, Finance Director/Treasurer 949-644-3123, scatlett@newportbeachca.gov SUBJECT: BUDGET AMENDMENTS FOR QUARTER ENDING JUNE 30, 2021
EXECUTIVE SUMMARY
The purpose of this memorandum is to report on the budget amendments for the fourth quarter of Fiscal Year 2020-21. All budget amendments are in compliance with City Council Policy F-3, Budget Adoption and Administration. DISCUSSION
City Council Policy F-3, Budget Adoption and Administration, identifies how appropriations can be transferred, increased or reduced. The Finance Committee reviews a quarterly report of City Council and City Manager budget amendments including their effect on the fund balance. Please find the list of budget amendments included as Attachment A.
Prepared by: Submitted by:
/s/ Walid Harding
/s/ Scott Catlett
Walid Harding Scott Catlett Budget Analyst Finance Director
Attachment: A. Budget Amendments Fiscal Year 2020-21 Quarter Ending June 30, 2021
132
ATTACHMENT A
BUDGET AMENDMENTS FISCAL YEAR 2020-21 QUARTER ENDING JUNE 30, 2021
133
BA #Date Type Fund Revenues Expenditures
Net Effect on Fund
Balance Increase/(Decrease)Department Explanation
034 4/13/2021 City Council GENERAL FUND 40,000.00 40,000.00 - Recreation & Senior Services To increase revenue estimates and expenditure
appropriations from the grant reimbursement contribution from the State of California, Department of Parks and
Recreation, Division of Boating and Waterways, for the cost of two Zodiak Pro Classic Safety Boats for the Marina
Park Sailing Program.
GENERAL FUND - (31,764.00) (31,764.00)
IT ISF 81,764.00 - 81,764.00
IT STRATEGIC FUND - (50,000.00) (50,000.00)
036 3/29/2021 City Manager GENERAL FUND - 13,337.39 - Finance To transfer expenditure appropriations from salary savings to professional services for temp A/P staffing.
GENERAL FUND - 165,000.00 (165,000.00)
ASSESSMENT DIST #120 165,000.00 165,000.00 -
GENERAL FUND - 169,162.00 (169,162.00)
NEIGHBORHOOD ENHANCEMENT 169,162.00 169,162.00 -
MEASURE M-COMPETITIVE FUND (2,349,600.00) (2,349,600.00) -
CONTRIBUTIONS FUND 2,349,600.00 2,349,600.00 -
040 5/5/2021 City Manager GENERAL FUND - 40,285.00 - Finance To transfer expenditure appropriations within the Finance Department across classifications for the procurement of a
new postage machine.
MEASURE M-COMPETITIVE FUND - 780,000.00 -
PARKS & COMMUNITY CENTERS - 419,237.35 -
042 5/5/2021 City Manager GENERAL FUND - 25,455.00 - Finance To transfer expenditure appropriations from salary savings
to professional services for temporary purchasing staffing.
City of Newport Beach
Fiscal Year 2020-21 Budget Amendments
Quarter Ending June 30, 2021
To transfer existing expenditure appropriations to the Information Technology Fund to fund the Lifeguard Tower
Wireless Phone System.
FireCity Council4/13/2021035
037 To increase expenditure appropriations from Assessment
District #120 with an advance from General Fund unappropriated fund balance for the engineering design
work.
To increase expenditure appropriations from
unappropriated fund balance to award a contract agreement to AToM Engineering Construction, Inc. for the
Dover Shores Traffic Calming Improvement Project. The project's proposal includes installing speed cushions and
signing and striping improvements on roads in the Mariners and Dover Shores neighborhoods.
The contract award follows a comprehensive City Council
approved neighborhood traffic calming study.
Public WorksCity Council4/27/2021038
Public WorksCity Council4/13/2021
5/5/2021041
To adhere to the qualifications of Measure M and transfer
the OCTA Bicycle program to the appropriate fund. This project is funded by federal funds administered through
OCTA/Caltrans, but not tied to Measure M Comp.
Public WorksCity Manager4/30/2021039
To transfer expenditure appropriations for the West Coast Hwy Intersection Improvements and Pedestrian Bridge
Project into its own unique project, 21R16, rather than combined with the Superior Ave Bridge/Pedestrian
Overcrossing project, 15T09.
Public WorksCity Manager
134
BA #Date Type Fund Revenues Expenditures
Net Effect on Fund
Balance Increase/(Decrease)Department Explanation
City of Newport Beach
Fiscal Year 2020-21 Budget Amendments
Quarter Ending June 30, 2021
GENERAL FUND 993,552.80 265,285.80 728,267.00
GENERAL FUND CAPITAL PROJECTS - 265,285.80 -
800 MHZ RADIO FUND - 446,656.00 (446,656.00)
CIOSA BONDS AGENCY FUND - 281,611.00 (281,611.00)
044 5/26/2021 City Manager GENERAL FUND - 5,447.00 - Finance To transfer funds from M&O to Capital for the purchase of a scanner.
GENERAL FUND - 16,876,073.00 (16,876,073.00)
GENERAL FUND CAPITAL PROJECTS 1,537,059.00 - 1,537,059.00
TIDELANDS HARBOR CAP FUND 4,500,000.00 - 4,500,000.00
FACILITIES FINANCING PLAN 8,500,000.00 8,500,000.00
NEIGHBORHOOD ENHANCEMENT 2,339,014.00 2,339,014.00
046 5/27/2021 City Manager WATER ENTERPRISE FUND - 35,000.00 - Utilities City Council approved an amendment for the BCR floating
cover repairs project on May 11, 2021. Given the recent increase and inflation in material costs, transfer existing
appropriations from Water Conservation Activities to Equipment N.O.C to help cover costs for the BCR floating
cover repairs project.
047 6/3/2021 City Manager GENERAL FUND 4,500.00 4,500.00 - Library To increase revenue estimates and expenditures appropriations and accept funding from the California State
Library for Literary Services (CLLS) annual grant program.
048 6/15/2021 City Manager TIDE & SUBMERGED LANDS FUND - 5,000.00 - Harbor To transfer expenditure appropriations within the Harbor
Department to purchase two laptops.
CONTRIBUTIONS FUND 527,520.00 527,520.00 -
WATER CAPITAL FUND - (527,520.00) 527,520.00
043 To transfer existing unappropriated 800 MHz fund balance
back to the General Fund. The City is no longer required to charge General Fund contributions to acquire replacement
equipment since the County is now funding all future capital equipment purchases in its annual membership fee.
To transfer General Fund expenditure appropriations from
unused Homeless Shelter CIP project funds to City Manager Outreach Services for ongoing homeless
outreach operating costs.
To transfer existing unappropriated CIOSA Bond fund balance back to the General Fund. Following a good faith
effort to return excess special tax funds and the expiration of the statute of limitations, remaining funds will be swept
into the General Fund and the City of Newport Beach Special Improvement District No. 95-1 will be closed out.
FinanceCity Council5/25/2021
6/8/2021045 To restore Fiscal Year 2020-21 tiered budget reductions in General Fund Capital Projects, Tidelands Harbor Capital
Fund, Facilities Financing Plan Fund, and the Neighborhood Enhancement Fund.
FinanceCity Council
To transfer expenditure appropriations and revenue
estimates related to the Grant Assistance Agreement with the U.S. Bureau of Reclamation for the Advanced Meter
Project from the Water Fund to the Contributions Fund.
Utilities0507/14/2021 City Manager
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9/10/21
Scheduled Date Agenda Title Report Type Agenda Description
Thursday, September 16, 2021 Annual Review of Investment Performance Presentation
The City's investment advisor, Chandler Asset Management, will report on the
performance of the City's investment portfolio for the fiscal year ending June 30,
2021.
Annual Review of Investment Policy Presentation
Staff will provide a presentation regarding any changes proposed to the City's
Investment Policy by staff or the City's investment advisor prior to the
Investment Policy being approved by the City Council.
Overview of Harbor Department Operations, Revenues, and Operating Budget Presentation
Staff from the Finance Department and the Harbor Department will provide the
Committee with an overview of the revenues generated in the Harbor and the
operating budget for the Harbor Department.
Internal Audit Program Update Verbal Update Bi-monthly progress update on the internal audit program.
Budget Amendments for Quarter Ending June 30, 2021 Receive and File Staff will report on the budget amendments from the prior quarter.
Thursday, October 14, 2021 Overview of Historical Funding Provided to Visit Newport Beach Presentation
Staff will provide the Committee with historical information on the transient
occupancy tax revenues generated in the City, as well as the portion passed
through to Visit Newport Beach, to inform a discussion regarding the resources
currently allocated to tourism marketing. Representatives from Visit Newport
Beach will also be present to discuss the ways in which these resources are
allocated in their budget to various categories of expenditures.
Year-End Budget Results Presentation Staff will provide a presentation regarding the year-end budget results for FY
2020-21.
Revenue Audit Program Update Presentation
Staff will provide an update on audits conducted by the Revenue Division to
verify transient occupancy tax (hotels, agents and residential owners), charter
boat company, waste hauler, etc. revenue collections.
Budget Amendments for Quarter Ending September 30, 2021 Receive and File Staff will report on the budget amendments from the prior quarter.
Newport Beach Finance Committee Work Plan
October 2021
September 2021
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9/10/21
Scheduled Date Agenda Title Report Type Agenda Description
Newport Beach Finance Committee Work Plan
Thursday, November 4, 2021 CalPERS Update Presentation
Staff will provide the Committee with an overview of the data from the latest
actuarial reports from CalPERS as well as their impact on prior projections of
the paydown of the City's unfunded pension liability.
First Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected FY
2021-22 budget performance.
Credit Card Fees Discussion Presentation
Staff will provide the Committee with an overview of the costs associated with
processing credit card transactions, as well as the various types of payments for
which the City currently accepts credit cards. The purpose of this item is to
receive the Committee's feedback on whether it would make sense to
recommend to the City Council that the City collect a service fee for any or all
credit card transactions.
Long Range Financial Forecast (LRFF) Update Presentation Staff will brief the Committee regarding the results of the updated LRFF
analysis.
Internal Audit Program Update Verbal Update Bi-monthly progress update on the internal audit program.
Thursday, January 13, 2022 Financial Statement Audit Results and Related Communication Presentation The City’s external auditors will meet with the Finance Committee to discuss the
results of their audit for the fiscal year ending June 30, 2021.
Internal Audit Program Reports Presentation Presentation of reports, findings, and recommendations from the FY 2020-21
audit program.
Internal Audit Program Work Plan Review Presentation Selection of audit topics for the FY 2021-22 audit program.
Tidelands Fund Budget Presentation Options Presentation
Staff will provide the Committee with an overview of the current method of
reflecting cost allocations to the Tidelands Fund in the City's budget and several
recommended options to improve transparency in the budget document relative
to these interfund allocations.
Budget Amendments for Quarter Ending December 31, 2021 Receive and File Staff will report on the budget amendments from the prior quarter.
December 2021
January 2022
November 2021
Committee Recess
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9/10/21
Scheduled Date Agenda Title Report Type Agenda Description
Newport Beach Finance Committee Work Plan
Thursday, February 10, 2022 Fee Study Update Presentation Staff will present the Master Fee Schedule to the City Council prior to
presenting it to the City Council.
Facilities Financial Plan (FFP), Harbor & Beaches Master Plan, and Capital
Improvement Program (CIP) Update Presentation
Staff from Public Works and Finance will provide an update on the current
status of FFP and Harbor & Beaches Master Plan funding, as well as what is
planned for inclusion in the FY 2022-23 CIP.
Internal Service Funds Update Presentation Staff will provide the Committee with an update on the health of the City's
insurance, vehicle, equipment, and other internal service funds.
Second Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected FY
2021-22 budget performance.
Thursday, March 10, 2022 OPEB Actuarial Valuation Report Update Presentation Staff will provide the Committee with an overview of the latest actuarial
valuation report prepared by the City's actuary.
Overview of Revenue Projections Presentation
Staff will provide the Committee with an overview of the assumptions utilized to
prepare revenue projections for the City's major funds as part of the FY 2022-23
budget preparation process.
Internal Audit Program Update Verbal Update Bi-monthly progress update on the internal audit program.
Thursday, April 14, 2022 Proposed FY 2022-23 Budget Overview Presentation Staff will provide the Committee with an overview of the expenditure budget for
FY 2022-23 that will be presented to the City Council in May.
Budget Amendments for Quarter Ending March 31, 2022 Receive and File Staff will report on the budget amendments from the prior quarter.
Thursday, May 12, 2022 Third Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected Fiscal
Year 2021-22 budget performance.
Follow-Up Discussion of Proposed FY 2022-23 Budget Discussion
Staff will provide the Committee with a copy of the Fiscal Year 2022-23
proposed budget document. Should the Committee wish to continue April's
discussion of the Fiscal Year 2022-23 budget, this is also an opportunity to do
so.
Internal Audit Program Update Verbal Update Bi-monthly progress update on the internal audit program.
Thursday, May 26, 2022 Financial Statement Auditor's Communication with the Finance Committee acting
as the City's Audit Committee Presentation
The City's external auditors, Davis Farr LLP, will provide an overview
presentation regarding the audit process and request feedback from the
Committee regarding any information that may assist them in their audit of the
City's financial statements.
Committee Recommendation to Council for the FY 2022-23 Budget Discussion
Discussion of the Study Session earlier in the week and formulation of any
recommendations to be presented to the City Council at the budget public
hearing in June.
May 2022
February 2022
March 2022
April 2022
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Scheduled Date Agenda Title Report Type Agenda Description
Newport Beach Finance Committee Work Plan
Committee Recess
June 2022
Committee Recess
July 2022
Committee Recess
August 2022
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