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Section 115 Trust Fund The City council recently approved the investment of$28 Million of reserves into a trust fund to help smooth the pension liabilities which are expected to grow considerable due to the reduction in the CALPERS discount rate from 7.5% to 7%. The investment is made into two separate portfolios, the first one for 6.7 Million into a Conservative portfolio to pay the annual unfunded liabilities, as the city currently has a heathy cash flow. We anticipate this investment to remain in place for a minimum of three years before being tapped upon if required. As of June 30th, 2018, this portfolio was fully funded with PARS the investment manager selected by the city. The second portfolio (Capital Growth) addresses the long term pension liabilities and is currently designed to have an initial investment of$21.3 Million, The focus of this portfolio is to earn a higher rate of return over the next ten years or so before we would need to draw upon it. As of June 30th, 2018, we have invested $5.35 Million into this portfolio. Since the capital growth portfolio is intended to consist of 70% in equities and 30% bonds we have agreed a strategy of periodical funding of this portfolio in order to smooth out any market volatility and average in the investment over a three to six-month time horizon. SAFEKEEPING OF SECURITIES: As of June 30, 2018, the two portfolios, were held in Third party safekeeping for the benefit of the City of Pleasanton at US Bank, US Bank is the contractual agent for PARS trust investments that are managed by Highmark capital Management.