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CURRENT INVESTMENT STRATEGY: The effective rate of return on the portfolio for the recent month was 1 .24 percent, a decrease of 0.08 percent from 1 .32 percent from last quarter and a decrease of 0.32 percent from 1.56 percent reported at the same time last year, because of the pandemic negative impact. During the last quarter, as inflation continued to rise, and the Federal Reserve Open Market Committee doubled its pace of tapering, from $15 billion in its November announcement, to $30 billion in December announcement, bond yield has been increased. The current strategy is to take advantage of the rising rate environment, and purchase as many new investments at higher rates, as the City's cashflow forecast allows. However, the current higher rate also causes no calls of bonds, and only three bonds, for a total of $5.2 million will mature by the end of March 2022, leaving cash available for investment dependent on the City's upcoming revenue receipts. Staff will monitor closely to ensure cash is first available to meet all current obligations, and then investments. Section 115 Trust Fund In June 2018, the City Council approved the investment of $28 million of various reserves into a Section 115 Trust Fund to help smooth the pension liabilities which are expected to grow in the long run. The investment is made into two separate portfolios, the first one for $6.7 million into a Conservative portfolio which is available to pay the annual unfunded liabilities if necessary, and the second one for $21 .3 million into a long-term capital growth portfolio. In February 2020, City Council authorized Finance staff to deposit to and withdraw from the Conservative portfolio an additional amount up to the total annual required CaIPERS payment. In March and June 2020, two additional $5 million contributions were deposited to the Conservative portfolio for a total of $16.7 million deposited into the Conservative portfolio. As described in the chart below, the Conservative portfolio's balance was $18.66 million, a slight increase over the September 30, 2021 balance of $18.55 million. The Conservative portfolio's investment return for the quarter ending December 31 , 2021 was 0.7 percent.