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Page 2 of 4 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org <br />ANALYSIS <br />The attached investment report indicates that as of June 30th, funds (excluding cash with fiscal agents) <br />from all sources were producing an average annual earnings rate of 4.12%, slightly up from 3.95% as of <br />March 31st. The market value of the portfolio as of June 30th was $427,367,817, up from $402,549,341 <br />as of the prior quarter. The investment balance of $427.3 million includes the funds managed by PFMAM, <br />funds held in the San Mateo County Treasurer’s investment pool, and funds with the State Treasurer’s <br />investment pool. All these investments comply with the City’s investment policy. The City has sufficient <br />liquid resources available to meet expenditure requirements for the next six months. <br />The portion of the City’s portfolio that is managed by PFMAM has a total market value of $283,773,124 <br />as of June 30th, down from $275,642,080 as of March 31st. As of June 30th , the portfolio was earning an <br />annual yield at cost of 4.05%, up from 3.83% as of March 31st, and the yield at market was 4.04% as of <br />June 30th, down from 4.17% as of March 31st. Yield at market is the yield that the portfolio would be <br />earning if the entire portfolio were purchased on June 30th, using current investment costs and yields. <br />The market benchmark, selected in consultation with the City Council Finance/Audit Sub-Committee, is <br />the ICE BofA 1-5 year U.S. Treasury Index. Below is a table summarizing the City’s portfolio performance <br />compared to the benchmark for the period ending June 30, 2025. <br />Portfolio/Benchmark <br />Total Return Quarter <br />Ended 6/30/25 <br />Total Return Since <br />Inception (12/31/16) <br />Effective <br />Duration (years) <br />Redwood City 1.53%2.05%2.51 <br />ICE BofA 1-5 year U.S. Treasury Index 1.36%1.76%2.48 <br />The second quarter 2025 investment market themes identified by PFMAM were: <br />U.S. economy is resilient but showing signs of cooling <br />Headline employment data belies underlying weakening <br />Inflation remained rangebound but does not yet reflect the full impact of tariffs <br />Fiscal policy uncertainty and volatile tariff rollouts weigh on consumer sentiment <br />Federal Reserve (Fed) remains on hold but may cut rates later this year <br />The Fed’s June “dot plot” implies 50 basis points of cuts in the back half of 2025, but members <br />are split between zero and two cuts this year <br />Fed Chair Powell stated the effect, size, and duration of tariffs are all highly uncertain making <br />staying on hold the appropriate thing to do as they wait to learn more <br /> Treasury yields whipsawed by tariff announcements in Quarter Two <br />Concerns over the budget bill, debt ceiling, and monetary policy added to volatility <br />The yield curve continued to steepen between two years and ten years <br />7.A. - Page 2 of 63 <br />12