1996 05 08 IABT a 0
4hf 4 4aw
INVESTMENT ADVISORY BOARD
AGENDA
Study Session Room
78-495 Cal le Tampico- La Qu i nta, CA 92253
May 8, 1996 - 5:30 P.M.
I CALL TO ORDER
a. Pledge of Allegiance
b. Roll Call
II CONFIRMATION OF AGENDA
III PUBLIC COMMENT -(This is the time set aside for public comment on any matter not scheduled on the agenda.)
IV CONSENT CALENDAR
A. Approval of Minutes of Special Meeting on March 28, 1996 for the
Investment Advisory Board.
B. Approval of Minutes of Meeting on April 10, 1996 for the Investment
Advisory Board.
V BUSINESS SESSION
A. Transmittal of Treasury Report for March 31, 1996
B. Consideration of approval of Investment Policy for the City of La Quinta.
VI BOARD MEMBER COMMENTS
VII INFORMATIONAL ITEMS
A. Information regarding Sweep Bank Account
B. The Local Agency Investment Fund ( LAIF) Answer Book.
C. LAIF Pooled Money Investment Board Report - February 1996 and 3/31/96
Market Valuation
D. City Attorney Opinion - Money Market Mutual Fund
VII ADJOURNMENT
02
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OF TNti
INVESTMENT ADVISORY BOARD MEETING: MAY 8, 1996
BUSINESS SESSION: A
ITEM TITLE
Transmittal of Treasury Report
for March 31, 1996
ISSUE AND DISCUSSION:
Attached please find the Treasury Report for March 31, 1996.
RECOMMENDATION:
Review, Receive and File the Treasury Report for March 31, 1996.
Approved for submission to the Investment Advisory Board:
ohn M. Falcorie
'inance Director
TO:
FROM:
SUBJECT
DATE:
MEMORANDUM
La Quinta City Council
John Falconer, Finance Director/Treasurer
Treasurer's Report for March 31, 1996
April 30, 1996
Attached is the Treasurer's Report for the month ending March 31, 1996. This report is submitted to the
City Council each month after a reconciliation of accounts is accomplished by the Finance Department.
Cash and Investments:
Increase of $406,306. due to the net effect of revenues in excess of expenditures.
State Pool:
ICMA:
Decrease of $1,050,000. due to the net effect of debt service payments and transfers to
and from the cash and investment accounts.
Increase of $153,909. due to contributions and interest earned.
Mutual Funds:
Decrease of $71,771. due to the net effect of debt service payments andinterest earned.
Total decrease in cash balances $561,556.
I certify that this report accurately reflects all pooled investments and is in compliance with the California
Government Code; and is in conformity with the City Investment policy.
As Treasurer of the City of La Quinta, I hereby certify that sufficient investment liquidity and anticipated
revenues are available to meet the pools expenditure requirements for the next six months.
Johr�M "Falconer'" u
Firta ce Director/Treasurer
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CITY OF LA QUINTA
CITY CITY
RDA RDA FA
- BALANCE SHEET 03/31/96
FIXED LONG TERM
FIXED LONG TERM FINANCING LONG TERM
CITY
ASSETS DEBT
RDA
ASSETS DEBT AUTHORITY DEBT
ASSETS:
POOLED CASH
12,397,703.60
7,079,587.71
LQHP CASH
(31,326.65)
BOND REDEMPTION CASH
27,672.99
14,987.53
BOND RESERVE CASH
518,460.97
689,731.40
BOND PROJECT CASH
13,697,544.69
BOND ESCROW CASH
10,187.69
PETTY CASH
1,000.00
BANK OF THE DESERT M/M
ICMA DEFERRED COMPENSATION
486,212.61
CASH & INVESTMENT TOTAL
12,884,916.21
21,302,127.40
704,718.93
ACCOUNTS RECEIVABLE
90,600.15
64,800.00
LOANINOTES RECEIVABLE
67,120.00
DUE FROM OTHER AGENCIES
(57,244.84)
DUE FROM OTHER GOVERNMENTS
DUE FROM OTHER FUNDS
551,038.04
DUE FROM RDA
6,048,957.20
INTEREST ADVANCE -DUE FROM RDA
453.671.82
NSF CHECKS RECEIVABLE
755.84
ACCRUED REVENUE
TRAVEL ADVANCES
1,430.00
EMPLOYEE ADVANCES
PREPAID EXPENSES
RECEIVABLE TOTAL
6,538,170.17
682,958.04
WORKER COMPENSATION DEPOSIT
RENT DEPOSITS
UTILITY DEPOSITS
75.00
MISC. DEPOSITS
2,000.00
'
DEPOSITS TOTAL
2,075.00
GENERAL FIXED ASSETS
16,150,822.00
5,879,910.05
AMOUNT AVAILABLE TO RETIRE LIT DEBT
2,340,653.00
AMOUNT TO BE PROVIDED FOR LIT DEBT
309,279.00
70,441,208.98 8,360,000.00
TOTAL OTHER ASSETS
16,150,822.00 309,279.00
5,879,910.05 72,781,861.98 8,360,000.00
TOTAL ASSETS
19425161.38 16,150,822.00 309,279.00
21,985,085.44
5,879,910.05 72,781,861.98 704,718.93 8,360,000.00
LIABILITY
ACCOUNTS PAYABLE
DUE TO OTHER AGENCIES
DUE TO OTHER FUNDS
551,038.04
INTEREST ADVANCE -DUE TO CITY
ACCRUED EXPENSES
12,272.60
PAYROLL LIABILITIES
(6,538.14)
STRONG MOTION INSTRUMENTS
3,256.68
FRINGE TOED LIZARD FEES
82,417.40
SUSPENSE
DUE TO THE CITY OF LA QUINTA
PAYABLES TOTAL
91,408.54
551,038.04
ENGINEERING TRUST DEPOSITS
59,423.93
SO. COAST AIR QUALITY DEPOSITS
ARTS IN PUBLIC PLACES DEPOSITS
204,703.44
DEVELOPER DEPOSITS
217,216.69
MISC. DEPOSITS
1,325.00
AGENCY FUND DEPOSITS
1,080,684.38
ICMA-DEFERRED COMP DEPOSITS
486,212.61
TOTAL DEPOSITS
2,049,566.05
DEFERRED REVENUE
OTHER LIABILITIES TOTAL
COMPENSATED ABSENCES PAYABLE
DUE TO THE CITY OF LA QUINTA
NOTE DUE TO MURPHY, DALES, LANE
DUE TO COUNTY OF RIVERSIDE
DUE TO C.V. UNIFIED SCHOOL DISTRICT
DUE TO DESERT SANDS SCHOOL DISTRIC
BONDS PAYABLE
TOTAL LONG TERM DEBT
TOTAL LIABILITY
EQUITY -FUND BALANCE
2,140,974.59
17,284,186.79 16,150,822.00
GRAND
TOTAL
19,477,291.31
(31,326.65)
42,660.52
1,208,192.37
13,697,544.69
10,187.69
1,000.00
486,212.61
34,891,762.54
155,400.15
67,120.00
(57.244.84)
551,038.04
6,048,957.20
453,671.82
755.84
1,430.00
75.00
2,000.00
2,075.00
22,030,732.05
2,340,653.00
79,110,487.98
103,481,873.03
145,596,838.78
551,038.04
12,272.60
(6,538.14)
3,256.68
82,417.40
642,446.58
59,423.93
204,703.44
217,216.69
1,325.00
1,080,684.38
486,212.61
2,049,566.05
309,279.00
309,279.00
6,502,630.23
6,502,630.23
11,572,687.00
11,572,687.00
12,271,884.75
12,271,884.75
1,904,660.00
1,904,660.00
40,530,000.00 8,360,000.00
48,890,000.00
309,279.00 72,781,861.98 8,360,000.00
81,451,140.98
309,279.00 551,038.04 72,781,861.98 8,360,000.00
84,143,153.61
21,434,047.40 5,879,910.05 704,718.93
61,453,685.17
TOTAL LIABILITY & EQUITY 19 425 161.38 16,150,822.00 309,279.00 21,985,085.44 5,879,910.05 72,781,861.98 704,718.93 8,360,000.00 145,596,838.78
04
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OF TNti
INVESTMENT ADVISORY BOARD MEETING: May 8, 1996
BUSINESS SESSION: B
ITEM TITLE
Consideration of Approval of Investment Policy of the City of La Quinta
ISSUE AND DISCUSSION:
Attached please find:
Changes made to the draft Investment policy based upon the April 10, 1996
meeting,
An Updated version of the investment policies based upon the changes made
during the last three months.
The review was performed to accomplish the following:
Updating the policies based upon recent legislation;
Updating the policies based upon the auditors comments;
Updating the policies based upon Staffs recommendation.
RECOMMENDATION:
Staff is requesting that the Investment Advisory Board forward the draft investment
policies, with any changes, to the City Manager and City Attorney for their review. Staff
also requests that an agenda item be placed on the June 12, 1996 IAB agenda to have
a joint meeting with the Investment Advisory Board, City Manager, City Attorney, and
City Treasurer to review the Investment Policies.
A roved r submission t the Investment Advisory Board:
Joh M. Falconer
Fi nce Director
T a 0
4tT 4 4 QUM&
1996 Board Changes
Executive Summary
Collateralization will be required for Certificates of Deposit in excess of $100,000.
The City of La Quinta shall require that each individual investment have a maximum
maturity of two years unless specific approval is authorized by the City Council. In
addition, the City's investment in the State Local Area Investment Fund (LAIF) is
allowable as long as the average maturity does not exceed two years, unless
specific approval is authorized by the City Council. The City's investment in Money
Market Mutual funds is allowable as long as the average maturity does not exceed
60 days.
X - Investment Pools
Each LAIF account is restricted to a maximum investable limit of $20 million. etnd
tln addition, LAIF will provide quarterly market value information to the City of La
Quinta.
XII - Safekeeping and Custody
Deposits and withdrawls of money market mutual funds and LAIF shall be made
directly to the entity and not to an investment advisor. Money market mutual
funds and LAIF shall also operate on a DVP basis to be considered for investment.
XIV - Maximum Maturities
The City of La Quinta shall require that each individual investment to have a
maximum maturity of two years unless specific approval is authorized by the City
Council. In addition, the City's investment in the State Local Area Investment Fund
(LAIF) is allowable as long as the average maturity does not exceed two years,
unless specific approval is authorized by the City Council. The City's investment in
Money Market Mutual funds is allowable as long as the average maturity does not
exceed 60 days.
XVIII - Investment of Bond Proceeds
It is a fiseally sound the City's position to continue maximization of yield and to
rebate excess earnings, if necessary.
Authorized Investments and Diversification - see attached
Segregation of Major Investment Responsibilites
Function 3 - City Manager and City Attorney
Function 6 - City Manager or Assistant City Manager
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D
CITY OF LA QUINTA
Investment Policies
Table of Contents
Section
Topic
Page
Executive Summary
2
I
General Purpose
4
II
Investment Policy
4
III
Scope
4
IV
Objectives
5
► Safety
► Liquidity
► Yield
V
Prudence
6
VI
Delegation of Authority
6
VII
Conflict of Interest
7
VIII
Authorized Financial Dealers and Institutions
7
► Broker/Dealers
► Financial Institutions
IX
Authorized Investments and Diversification
9
X
Investment Pools
9
XI
Collateralization
9
XII
Safekeeping and Custody
10
XIII
Interest Earning Distribution Policy
10
XIV
Maximum Maturities
10
XV
Internal Controls
10
XVI
Benchmark
12
XVII
Reporting Standards
12
XVIII
Investment of Bond Proceeds
13
XIX
Investment Advisory Board - City of La Quinta
13
XX
Investment Policy Adoption
13
Appendices Authorized Investments and Diversification 15
Municipal Code Ordinance 2.70 - Investment Advisory Board 16
Municipal Code Ordinance 3.08 - Investment of Moneys and Funds 17
Listing of Approved Financial Institutions 19
Broker/Dealer Questionnaire and Certification 20
Investment Pool Questionnaire 24
Segregation of Major Investment Responsibilities 28
Glossary 29
1
City of La Quinta
Investment Policy
Executive Summary
The general purpose of this Investment Policy is to provide the rules and standards
users must follow in investing funds of the City of La Quinta.
It is the policy of the City of La Quinta to invest all public funds in a manner which will
provide a diversified portfolio with the highest investment return and the maximum
security while meeting daily cash flow demands and in conformity to all state and local
statutes. This Policy applies to all cash and investments of the City of La Quinta, La
Quinta Redevelopment Agency and the La Quinta Financing Authority, hereafter
referred in this document as the "City".
The primary objectives, in order of priority, of the City of La Quinta's investment
activity shall be:
Safety of principal is the foremost objective of the investment program.
Investments of the City of La Quinta shall be undertaken in a manner that seeks
to ensure the preservation of capital in the overall portfolio
The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated.
The investment portfolio shall be designed with the objective of attaining a
market rate of return or yield throughout budgetary and economic cycles, taking
into account the investment risk constraints and liquidity needs.
Investments shall be made with judgment and care - under circumstances then
prevailing - which persons of prudence discretion, and intelligence exercise in the
management of their own affairs, not for speculation, but for investment, considering
the probable safety of their capital as well as the probable income to be derived.
Authority to manage the City of La Quinta's investment portfolio is derived from the
City Ordinance. Management responsibility for the investment program is delegated
to the City Treasurer, who shall establish and implement written procedures for the
operation of the City's investment program consistent with the Investment Policy. The
Treasurer shall establish and implement a system of internal controls to maintain the
safety of the portfolio. In addition, the internal control system will also insure the
timely preparation and accurate reporting of the portfolio financial information. The
adequacy of these controls will be reviewed and reported on annually by an
independent auditor.
2
Investment responsibilities carry added duties of insuring that investments are made
without improper influence or the appearance to a reasonable person of questionable
or improper influence.
The City of La Quinta maintains a listing of financial institutions which are approved
for investment purposes. All Broker/Dealers and financial institutions selected by the
Treasurer to provide investment services will be approved by the City Manager subject
to City Council approval.
The Treasurer will be permitted to invest only in City approved investments up to the
maximum allowable percentages and, where applicable, through the bid process
requirements. Authorized investment vehicles and related maximum portfolio positions
are listed in Appendix A. At least two bids will be required of investments in
government securities.
Collateralization will be required for Certificates of Deposit in excess of $100,000.
Collateral will always be held by an independent third party with whom the City of La
Quinta has a current custodial agreement. Evidence of ownership must be supplied
to the City and retained by the City Treasurer.
The City of La Quinta shall require that each individual investment have a maximum
maturity of two years unless specific approval is authorized by the City Council. In
addition, the City's investment in the State Local Area Investment Fund (LAIF) is
allowable as long as the average maturity does not exceed two years, unless specific
approval is authorized by the City Council. The City's investment in Money Market
Mutual funds is allowable as long as the average maturity does not exceed 60 days.
The City of La Quinta will use the six month U.S. Treasury Bill as a benchmark when
measuring the performance of the investment portfolio.
The Investment Policies shall be adopted by resolution of the La Quinta City Council
on an annual basis, The Investment Policies will be adopted before the end of June of
each year.
This Executive Summary is an overall review of the City of La Quinta Investment
Policies. Reading this summary does not constitute a complete review which can only
be accomplished by reviewing all the pages.
91
Qum&
OZ
V _
4
OF TNt
City of La Quinta
Statement of Investment Policy
July 1, 1996 through June 30, 1997
Adopted by the City Council on
GENERAL PURPOSE
The general purpose of this document is to provide the rules and standards users must
follow in administering the City of La Quinta cash investments.
II INVESTMENT POLICY
It is the policy of the City of La Quinta to invest public funds in a manner which will
provide a diversified portfolio with safety of principal and the highest investment return
while meeting daily cash flow demands. In addition, the Investment Policy will
conform to all State and local statutes governing the investment of public funds.
III SCOPE
This Investment Policy applies to all cash and investments of the City of La Quinta,
City of La Quinta Redevelopment Agency and the City of La Quinta Financing
Authority, hereafter referred in this document as the "City". These funds are reported
in the City of La Quinta Comprehensive Annual financial Report (CAFR) and include:
All funds within the following fund types:
► General
► Special Revenue
► Capital Project
► Debt Service
► Internal Service
► Trust and Agency
► Any new fund types and fund(s) that may be created.
0
IV OBJECTIVES
The primary objective, in order of priority, of the City of La Quinta's investment
activity shall be:
1. Safety
Safety of principal is the foremost objective of the investment program.
Investments of the City of La Quinta shall be undertaken in a manner that seeks
to ensure the preservation of capital in the overall portfolio in accordance with
the permitted investments. The objective will be to mitigate credit risk and
interest rate risk.
A. Credit Risk
Credit Risk - is the risk of loss due to the failure of the security issuer or
backer. Credit risk may be mitigated by:
► Limiting investments to the safest types of securities;
► Pre -qualifying the financial institutions, and broker/dealers, which
the City of La Quinta will do business; and
► Diversifying the investment portfolio so that potential losses on
individual securities will be minimized.
B. Interest Rate Risk
Interest Rate risk is the risk that the market value of securities in the
portfolio will fall due to changes in general interest rates. Interest rate
risk may be mitigated by:
► Structuring the investment portfolio so that securities mature to
meet cash requirements for ongoing operations, thereby avoiding
the need to sell securities on the open market prior to maturity;
and
► By investing operating funds primarily in shorter -term securities.
2. Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated. This is accomplished by
structuring the portfolio so that securities mature concurrent with cash needs
to meet anticipated demands. Furthermore since all possible cash demands
cannot be anticipated the portfolio should consist of securities with active
secondary or resale markets.
5
3. Yield
The investment portfolio shall be designed with the objective of attaining a
market rate of return throughout budgetary and economic cycles, taking into
account the investment risk constraints and liquidity needs. Return on
investment is of least importance compared to the safety and liquidity objectives
described above. The core of investments are limited to relatively low risk
securities in anticipation of earning a fair return relative to the risk being
assumed. Securities shall not be sold prior to maturity with the following
exceptions:
► A declining credit security could be sold early to minimize loss of
principal;
► Liquidity needs of the portfolio require that the security be sold.
V PRUDENCE
The City shall follow the Uniform Prudent Investor Act as adopted by the State of
California in Probate Code Sections 16045 through 16054..
Section 16053 sets forth the terms of a prudent person which are as follows:
Investments shall be made with judgment and care - under circumstances then
prevailing - which persons of prudence, discretion, and intelligence excerise in the
professional management of their own affairs, not for speculation, but for investment,
considering the probable safety of their capital as well as the probable income to be
derived.
VI DELEGATION OF AUTHORITY
Authority to manage the City of La Quinta's investment portfolio is derived from the
City Ordinance. Management responsibility for the investment program is delegated
to the City Treasurer, who shall establish written procedures for the operation of the
investment program consistent with the Investment Policy. Procedures should include
reference to safekeeping, wire transfer agreements, banking service contracts, and
collateral/depository agreements. Such procedures shall include explicit delegation of
authority to persons responsible for investment transactions. No person may engage
in an investment transaction except as provided under the terms of this Investment
Policy and the procedures established by the City Treasurer. The City Treasurer shall
be responsible for all transactions undertaken and shall establish a system of controls
to regulate the activities of subordinate officials. The City Manager or Assistant City
Manager shall approve in writing all purchases and sales of investments prior to their
execution by the City Treasurer.
G
VII CONFLICT OF INTEREST
Investment responsibilities carry added duties of insuring that investments are made
without improper influence or the appearance of improper influence.
Therefore, the City Manager, Assistant City Manager, and the City Treasurer shall
adhere, to the State of California Code of Economic Interest and to the following:
► The City Manager, Assistant City Manager, and the City Treasurer shall not
personally or through a close relative maintain any accounts, interest, or private
dealings with any firm with the City places investments, with the exception of
regular savings, checking and money market accounts, or other similar
transactions that are offered on a non-negotiable basis to the general public.
Such accounts shall be disclosed annually to the City Clerk in conjunction with
annual disclosure statements of economic interest.
IN. All persons authorized to place or approve investments shall report to the City
Clerk kinship relations with principal employees of firms with which the City
places investments.
Vlll AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The City of La Quinta maintains a listing of financial institutions which are approved
for investment purposes. In addition a list will also be maintained of approved
broker/dealers selected by credit worthiness, who maintain an office in the State of
California.
1. Broker/Dealers who desire to become bidders for investment transactions must
supply the City of La Quinta with the following:
► Current audited financial statements
► Proof of National Association of Security Dealers Certification
► Trading resolution
► Proof of California registration
► Resume of Financial broker
► Completion of the City of La Quinta Broker/Dealer questionnaire which
contains a certification of having read the City of La Quinta Investment
Policy
The City Treasurer shall evaluate the documentation submitted by the
broker/dealer and independently verify existing reports on file for any firm and
individual conducting investment related business.
7
The City Treasurer will also contact the following agencies during the
verification process:
► National Association of Security Dealer's Public Disclosure Report File -
1-800-289-9999
► State of California Department of Corporations 1-916-445-3062
All Broker/Dealers selected by the City Treasurer to provide investment services
will be approved by the City Manager subject to City Council approval. The City
Attorney will perform a legal review of the trading resolution/investment
contract submitted by each Broker/Dealer.
Each securities dealer shall provide monthly and quarterly reports filed pursuant to U.S.
Treasury Department regulations. Each mutual fund shall provide a prospectus and
statement of additional information.
2. Financial Institutions will be required to meet the following criteria in order to
receive City funds for investment:
A. Insurance - Public Funds shall be deposited only in financial
institutions insured by the Federal Deposit Insurance Corporation
B. Collateral - The amount of City of La Quinta deposits or
investments not insured by agency of the federal government shall
be 100% collateralized by securities' or 150% mortgages' market
values of that amount of invested funds plus unpaid interest
earnings.
C. Size - The amount of City of La Quinta deposits or investments
must be collateralized or insured by an agency of the federal
government.
D. Disclosure - Each financial institution maintaining invested funds
in excess of $100,000 shall furnish corporate authorities a copy
of all statements of resources and liabilities which it is required to
furnish to the State banking or savings and loan commissioners as
required by the California Financial Code.
The City shall not invest in excess of $100,000 in banking
institutions which do not disclose to the city a current listing of
securities pledged for collateral ization in public monies.
8
IX AUTHORIZED INVESTMENTS AND DIVERSIFICATION
The City Treasurer will be permitted to invest in the investments listed in the Appendix
entitled - Authorized Investments and Diversification.
X INVESTMENT POOLS
There are three (3) types of investment pools: 1) state -run pools, 2) pools that are
operated by a political subdivision where allowed by law and the political subdivision
is the trustee i.e. County Pool; and 3) pools that are operated for profit by third parties.
The City of La Quinta has an investment with the State of California's Treasurers
Office Local Agency Investment Fund commonly referred to as LAIF. LAIF was
organized in 1977 through State Legislation Section 16429.1, 2 and 3. Each LAIF
account is restricted to a maximum investable limit of $20 million. In addition, LAIF
will provide quarterly market value information to the City of La Quinta.
On an annual basis the City Treasurer will submit the Investment Pool Questionnaire
to LAIF.
Also, prior to opening any new Investment Pool account, which would require City
Council approval, the City Treasurer will require the completion of the Investment Pool
Questionnaire.
The City does not have an investment with any other Investment Pool - County Pools
or Third Party Pools.
XI COLLATERALIZATION
Collateral ization will be required for Certificates of Deposits. The type of collateral is
limited to City authorized investments.
1. Certificates of Deposits under $100.000.
The City Treasurer may waive collateralization of a deposit that is federally
insured.
2. Certificates of Deposit over $100,000.
The amount not federally insured shall be 1 10% collateralized by securities or
150% mortgages market value of that amount of invested funds plus unpaid
interest earnings.
Collateral will always be held by an independent third party with whom the City of La
Quinta has a current custodial agreement. Evidence of ownership must be supplied
to the City of La Quinta and retained by the City Treasurer.
0
XII SAFEKEEPING AND CUSTODY
All security transactions of the City of La Quinta shall be conducted on a delivery -
versus - payment (DVP) basis. Securities will be held by a third party custodian
designated by the City Treasurer and evidenced by safekeeping receipts. Deposits and
withdrawls of money market mutual funds and LAIF shall be made directly to the to
the entity and not to an investment advisor. Money market mutual funds and LAIF
shall also operate on a DVP basis to be considered for investment.
XIII INTEREST EARNING DISTRIBUTION POLICY
Interest earnings is generated from pooled investments and specific investments.
1 . Pooled Investments - It is the general policy of the City to pool all available
operating cash of the City of La Quinta, La Quinta Redevelopment Agency and
La Quinta Financing Authority and allocate interest earnings, in the following
order, as follows:
A. Payment to the General Fund of an amount equal to the total annual bank
service charges as incurred by the general fund for all operating funds as
included in the annual operating budget.
B. Payment to the General Fund of a management fee equal to 5 % of the
annual pooled cash fund investment earnings.
C. Payment to each fund of an amount based on the average computerized
daily cash balance included in the common portfolio for the earning
period.
2. Specific Investments - Specific investments purchased by a fund shall incur all
earnings and expenses to that particular fund.
XIV MAXIMUM MATURITIES
The City of La Quinta shall require that each individual investment to have a maximum
maturity of two years unless specific approval is authorized by the City Council. In
addition, the City's investment in the State Local Area Investment Fund (LAIF) is
allowable as long as the average maturity does not exceed two years, unless specific
approval is authorized by the City Council. The City's investment in Money Market
Mutual funds is allowable as long as the average maturity does not exceed 60 days.
XV INTERNAL CONTROLS
The City Treasurer shall establish a system of internal controls to accomplish the
10
following objectives:
► Safeguard assets;
► The orderly and efficient conduct of its business, including adherence to
management policies;
► Prevention or detection of errors and fraud;
► The accuracy and completeness of accounting records; and,
► Timely preparation of reliable financial information.
While no internal control system, however elaborate, can guarantee absolute assurance
that the City's assets are safeguarded, it is the intent of the City's internal control to
provide a reasonable assurance that management of the investment function meets the
City's objectives.
The internal controls shall address the following:
a. Control of collusion. Collusion is a situation where two or more employees are
working in conjunction to defraud their employer.
b. Separation of transaction authority from accounting and record keeping. By
separating the person who authorizes or performs the transaction from the
people who record or otherwise account for the transaction, a separation of
duties is achieved.
C. Custodial safekeeping. Securities purchased from any bank or dealer including
appropriate collateral (as defined by State Law) shall be placed with an
independent third party for custodial safekeeping.
d. Avoidance of physical delivery securities. Book entry securities are much easier
to transfer and account for since actual delivery of a document never takes
place. Delivered securities must be properly safeguarded against loss or
destruction. The potential for fraud and loss increases with physically delivered
securities.
e. Clear delegation of authority to subordinate staff members. Subordinate staff
members must have a clear understanding of their authority and responsibilities
to avoid improper actions. Clear delegation of authority also preserves the
internal control structure that is contingent on the various staff positions and
their respective responsibilities as outlined in the Segregation of Major
Investment Responsibilities appendices.
f. Written confirmation or telephone transactions for investments and wire
transfers. Due, to the potential for error and improprieties arising from telephone
transactions, all telephone transactions should be supported by written
communications and approved by the appropriate person. Written
communications may be via fax if on letterhead and the safekeeping institution
11
has a list of authorized signatures. Fax correspondence must be supported by
evidence of verbal or written follow-up.
g. Development of a wire transfer agreement with the City's bank and third party
custodian. This agreement should outline the various controls, security
provisions, and delineate responsibilities of each party making and receiving wire
transfers.
In addition to the System of Internal Controls developed by the City, the Internal
Controls shall be reviewed annually by the independent auditor.
The independent auditors management letter comments pertaining to cash and
investments, if any, shall be directed to the City Manager who will direct the City
Treasurer to provide a written response to the independent auditors letter. This
response will also be directed to the City's Investment Advisory Board for their action.
XVI BENCHMARK
The investment portfolio shall be designed with the objective of obtaining a rate of
return throughout budgetary and economic cycles commensurate with the investment
risk constraints and the cash flow needs of the City. Return on investment is of least
importance compared to safety and liquidity objectives.
The City of La Quinta will use the six month U.S. Treasury Bill as a benchmark when
measuring the performance of the investment portfolio.
XVII REPORTING STANDARDS
SB564 section 3 requires a quarterly report to the Legislative Body of Investment
activities. The City of La Quinta has elected to report the investment activities to the
City Council on a monthly basis through the Treasurers Report.
The City Treasurer shall submit a monthly Treasurers Report to the City Council and
the Investment Advisory Board that includes all investments under the authority of the
Treasurer.
The Treasurers Report shall consist of a narrative of significant changes in cash
balances and the following:
► Changes in investments from the previous month;
► A certification statement from the City Treasurer;
► Purchases and sales of investments;
12
No. Cost to market value comparisons of all investments by authorized investment
category, except for LAIF which will be provided quarterly;
No. Comparison of actual holdings to Investment Policy maximums;
► Twenty four (24) mo-nths history of cash and investments for trend analysis;
ON. Balance Sheet.
XVIII INVESTMENT OF BOND PROCEEDS
The City's investment policy shall govern bond proceeds and bond reserve fund
investments. California Code Section 5922 (d) governs the investment of bond
proceeds and reserve funds in accordance with bond indenture provisions which shall
be structured in accordance with the City's investment policy.
Arbitrage Requirement
The US Tax Reform Act of 1986 requires the City to perform arbitrage calculations as
required and return excess earnings to the US Treasury from investments of proceeds
of bond issues sold after the effective date of this law. This arbitrage calculations may
be contracted with an outside source to provide the necessary technical assistance to
comply with this regulation. Investible funds subject to the 1986 Tax Reform Act will
be kept segregated from other funds and records will be kept in a fashion to facilitate
the calculations. The City's investment position relative to the new arbitrage
restrictions is to continue pursuing the maximum yield on applicable investments while
ensuring the safety of capital and liquidity. It is the City's position to continue
maximization of yield and to rebate excess earnings, if necessary.
XIX INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA
The Investment Advisory Board (IAB) consists of seven members of the community
that have been appointed by and report to the City Council. The IAB meets on a
monthly basis to 1) review account statements and verifications to ensure accurate
reporting as they relate to an investment activity, 2) monitor compliance with existing
Investment Policy and Procedures and 3) review investment contracts and investment
consultants.
The appendices include City of La Quinta Ordinance 2.70 entitled Investment Advisory
Board Provisions.
XX INVESTMENT POLICY ADOPTION
On an annual basis, the Investment policies will be initially reviewed by the Investment
Advisory Board and the City Treasurer. The Investment Advisory Board will forward
13
the Investment policies, with any revisions, to the City Manager and City Attorney for
their review and comment. A joint meeting will be held with the Investment Advisory
Board, City Manager, City Attorney, and City Treasurer to review the Investment
policies and comments, prior to submission to the City Council for their consideration.
The Investment Policies shall be adopted by resolution of the City of La Quinta City
Council on an annual basis. The Investment Policies will be adopted before the end
of June of each year.
14
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15
Chapter 2.70
INVESTMENT ADVISORY BOARD PROVISIONS
Sections:
2.70.010 General Rules Regarding Appointment and Terms.
2.70.020 Board meetings and compensation.
2.70.030 Board functions.
2.70.010 General rules regarding appointment and terms.
Except as set out below, see Chapter 2.06 for General Provisions.
The Investment Advisory Board (the "board") is a standing board composed of seven (7)
members from the public that are appointed by city council. La Quinta residency is preferred, but
not a requirement for board members. Recruitment for members may be advertised outside of the
city".
Background in the investment field and/or related experience is preferred. Background
information will be required and potential candidates must agree to a background check and
verification.
On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any
time if a change in circumstances warrants, each board member will provide the City Council with
a disclosure statement which identifies any matters on the board. Such matters may include, but
are not limited to, changes in employment, changes in residence, or changes in clients.
The Board members will serve for two year staggered terms beginning on July 1 of every other
year, commencing July 1, 1993. Initially, two members will be appointed for two year terms and
three members will be appointed for one year terms. These initial appointments will start their
yearly calculations from July 1, 1993.
2.70.020 Board meetings and compensation.
Board members will be reimbursed for meeting and related expenses at an amount of fifty dollars
($50) per meeting.
Initially, the Board should meet once a month, but this schedule may be extended to quarterly
meetings upon the concurrence of the Board and the City Council. The specific meeting dates will
be determined by the Board members and meetings may be called for on an as needed basis.
2.70.030 Board functions.
The Board will annually elect a Chairperson and Vice -chairperson at the first meeting held after
each June 30.
The following are functions of the Board that are to be addressed at each meeting: (1) review
account statements and verifications to ensure accurate reporting as they relate to an investment
activity; (ii) monitor compliance with existing Investment policy and procedures; and (iii) review and
make investment contracts, and investment consultants.
The Board will report to City council after each meeting either in person or through
correspondence at a regular City Council meeting.
16
Chapter 3.08
INVESTMENT OF MONEYS AND FUNDS
Sections:
3.08.010 Investment of city moneys and deposit of securities.
3.08.020 Authorized investments.
3.08.030 Sales of securities.
3.08.040 City bonds.
3.08.050 Reports.
3.08.060 Deposits of securities.
3.08.070 Trust fund administration.
3.08.010 Investment of city moneys and deposit of securities.
Pursuant to, and in accordance with, and to the extent allowed by, Sections 53607 and
53608 of the Government Code, the authority to invest and reinvest moneys of the city, to
sell or exchange securities, and to deposit them and provide for their safekeeping, is delegated
to the city treasurer. (Ord. 2 § 1 (part), 1982)
3.08.020 Authorized investments.
Pursuant to the delegation of authority in Section 3.08.010, th,e city treasurer is authorized
to purchase, at their original sale or after they have been issued, securities which are
permissible investments under any provision of state law relating to the investing of general
city funds, including but not limited to Sections 53601 and 53635 of the Government Code,
as said sections now read or may hereafter be amended, from moneys in his custody which
are not required for the immediate necessities of the city and as he may deem wise and
expedient, and to sell or exchange for other eligible securities and reinvest the proceeds of the
securities so purchased. (Ord. 2 § 1 (part), 1982)
3.08.030 Sales of Securities.
From time to time the city treasurer shall sell the securities in which city moneys have been
invested pursuant to this chapter, so that the proceeds may, as appropriate, be applied to the
purchase for which the original purchase money may have been designated or placed in the
city treasury. (Ord. 2 § I (part),
3.08.040 City bonds.
Bonds issued by the city and purchased pursuant to this chapter may be canceled either
in satisfaction of sinking fund obligations or otherwise if proper and appropriate; provided,
however, that the bonds may be held uncancelled and while so held may be resold. (Ord. 2 §
1 (part), 1982)
3.08.050 Reports.
The city treasurer shall make a monthly report to the city council of all investments made
pursuant -to the authority delegated in this chapter. (Ord. 2 § 1 (part), 1982)
17
3.08.060 Deposits of securities.
Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized
to deposit for safekeeping, the securities in which city moneys have been invested pursuant
to this chapter, in any institution or depository authorized by the terms of any state law,
including but not limited to Section 53608 of the Government Code as 'it now reads or may
hereafter be amended. In accordance with said section, the city treasurer shall take from the
institution or depository a receipt for the securities so deposited and shall not be responsible
for the securities delivered to and receipted for by the institution or depository until they are
withdrawn therefrom by the city treasurer. (Ord. 2 § 1 (part), 1982
3.08.070 Trust fund administration.
Any departmental trust fund established by the city council pursuant to Section 36523
of the Government Code shall be administered by the city treasurer in accordance with Section
36523 and 26524 of the Government code and any other applicable provisions of law. (Ord.
2 § 1 (part), 1982)
H
LISTING OF APPROVED FINANCIAL INSTITUTIONS
1. Banking Services - First Interstate Bank
2. Custodian Services - First Interstate Bank Institutional Trust
Services
3. Deferred Compensation - International City/County Management
Association
Retirement Corporation
4. Broker/Dealer Services -
5. Government Pool - State of California Local Agency Investment
Fund
City of La Quinta Account
La Quinta Redevelopment Agency
6. Bond Trustees - 1991 City Hall Revenue Bonds - First Trust
1991 RDA Project Area 1 - First Trust
1992 RDA Project Area 2 - First Interstate
Bank
1994 RDA Project Area 1 - First Trust
1995 RDA Project Area 1 & 2 - First
Interstate Bank
No Changes to this listing may be made without City Council approval.
19
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
1. Name of Firm:
2. Address:
3.
9
3
Telephone: ( ) ( )
Broker's Representative to the City (attach resume):
Name:
Title:
Telephone: ( )
Manager/Partner-in-charge (attach resume):
Name:
Title:
Telephone:
6. List all personnel who will be trading with or quoting securities to City
employees (attach resume)
Name:
Title:
Telephone: ( ) ( )
7. Which of the above personnel have read the City's investment policy?
8. Which instruments are offered regularly by your local office? (Must equal
100%)
% U.S. Treasuries % Repos
% BA's % Reverse Repos
% Commercial Paper % CMO's
% CD's % Derivatives
% Mutual Funds % Stocks/Equities
% Agencies (specify): % Other (specify):
20
9. References -- Please identify your most directly comparable public sector
clients in our geographical area.
Entity
Contact
Telephone ( )
Client Since
Entity
Contact
Telephone ( )
Client Since
10. Have any of your clients ever sustained a loss on a securities transaction
arising from a misunderstanding or misrepresentation of the risk
characteristics of the instrument? If so, explain.
11. Has your firm. or your local office ever been subject to a regulatory or state/
federal agency investigation for alleged improper, fraudulent, disreputable or
unfair activities related to the sale of securities? Have any of your employees
been so investigated? If so,
explain.
12. Has a client ever claimed in writing that yDu were responsible for an
investment loss? Yes No If yes, please provide
action taken
Has a client ever claimed in writing that your firm was responsible for an
investment loss? Yes No If yes, please provide
action taken
Do yDju have any current, or pending complaints that are unreported to the
NASD?
Yes No If yes, please provide action taken
21
Does your firm have any current, or pending complaints that are unreported
to the NASD? Yes No If yes, please provide action
taken
13. Explain your clearing and safekeeping procedures, custody and delivery
process.
Who audits these fiduciary responsibilities?
Latest Audit Report Date
14. How many and what percentage of your transactions failed.
Last month? % $
Last year? % $
15. Describe the method your firm would use to establish capital trading limits
for the City of La Quinta.
16.
Is your firm a member in the S.I.P.C. insurance program. Yes
If yes, explain primary and excess coverage and carriers.
No
17. What portfolio information, if any, do you require from your clients?
18. What reports and transaction confirmations or any other research
publications will the City receive?
19. Does your firm offer investment training to your clients? Yes No
22
20. Does your firm have professional liability insurance. Yes No
If yes, please provide the insurance carrier, limits and expiration date.
21. Please list your NASD Registration Number
22.
Do you have any relatives who work at the City of La Quinta?
Yes No If yes, Name and Department
23. Do you maintain an office in California. Yes No
24. Do you maintain an office in La Quinta or Riverside County? Yes No
25. Please enclose the following:
• Latest audited financial statements.
• Samples of reports, transaction confirmations and any other
research/publications the City will receive.
• Samples of research reports and/or publications that your firm regularly
provides to clients.
• Complete schedule of fees and charges for various transactions.
'CERTIFICATION'
I hereby certify that I have personally read the Statement of Investment Policy of
the City of La Quinta, and have implemented reasonable procedures and a system
of controls designed to preclude imprudent investment activities arising out of
transactions conducted between our firm and the City of La Quinta. All sales
personnel will be routinely informed of the City's investment objectives, horizons,
outlooks, strategies and risk constraints whenever we are so advised by the City.
We pledge to exercise due diligence in informing the City of La Quinta of all
foreseeable risks associated with financial transactions conducted with our firm.
By signing this document the City of La Quinta is authorized to conduct any and all
background checks.
Under penalties of perjury, the responses to this questionnaire are true and accurate
to the best of my knowledge.
Broker Representative
Date
Title
Sales Manager and/or Managing Partner*
Date Title
23
INVESTMENT POOL QUESTIONNAIRE
Note: This Investment Pool Questionnaire was developed by the Government Finance
Officers Association (GFOA).
Prior to entering a pool, the following questions and issues should be considered.
SECURITIES
Government pools may invest in a broader range of securities than your entity invests
in. It is important that you are aware of, and are comfortable with, the securities the
pool buys.
1. Does the pool provide a written statement of investment policy and objectives?
2. Does the statement contain:
a. A description of eligible investment instruments?
b. The credit standards for investments?
c. The allowable maturity range of investments?
d. The maximum allowable dollar weighted average portfolio maturity?
e. The limits of portfolio concentration permitted for each type of security?
f. The policy on reverse repurchase agreements, options, short sales and futures?
3. Are changes in the policies communicated to the pool participants?
4. Does the pool contain only the types of securities that are permitted by your
investment policy?
INTEREST
Interest is not reported in a standard format, so it is important that you know how
interest is quoted, calculated and distributed so that you can make comparisons with
other investment alternatives.
Interest Calculations
1. Does the pool disclose the following about yield calculations:
a. The methodology used to calculate interest? (Simple maturity, yield to maturity,
etc.)
b. The frequency of interest payments?
c. How interest is paid? (Credited to principal at the end of the month, each
quarter; mailed?)
d. How are gains/losses reported? Factored monthly or only when realized?
24
REPORTING
1. Is the yield reported to participants of the pool monthly? (If not, how often?)
2. Are expenses of the pool deducted before quoting the yield?
3. Is the yield generally in line with the market yields for securities in which you
usually invest?
4. How often does the pool report, and does that report include the market value of
securities?
SECURITY
The following questions are designed to help you safeguard your funds from loss of
principal and loss of market value.
1. Does the pool disclose safekeeping practices?
2. Is the pool subject to audit by an independent auditor?
3. Is a copy of the audit report available to participants?
4. Who makes the portfolio decisions?
5. How does the manager monitor the credit risk of the securities in the pool?
6. Is the pool monitored by someone on the board of a separate neutral party external
to the investment function to ensure compliance with written policies?
7. Does the pool have specific policies with regards to the various investment
vehicles?
a. What are the different investment alternatives?
b. What are the policies for each type of investment?
8. Does the pool mark the portfolio to its market value?
9. Does the pool disclose the following about how portfolio securities are valued:
a. The frequency with which the portfolio securities are valued?
b. The method used to value the portfolio (cost, current value, or some other
method)?
25
OPERA TIONS
The answers to these questions will help you determine whether this pool meets your
operational requirements:
1. Does the pool limit eligible participants?
2. What entities are permitted to invest in the pool?
3. Does the pool allow multiple accounts and sub -accounts?
4. Is there a minimum or maximum account size?
5. Does the pool limit the number of transactions each month? What is the number
of transactions permitted each month?
6. Is there a limit on transaction amounts for withdrawals and deposits?
a. What is the minimum and maximum withdrawal amount permitted?
b. What is the minimum and maximum deposit amount permitted?
7. How much notice is required for withdrawals/deposits?
8. What is the cutoff time for deposits and withdrawals?
9. Can withdrawals be denied?
10. Are the funds 100% withdrawable at anytime?
11. What are the procedures for making deposits and withdrawals?
a. What is the paperwork required, if any?
b. What is the wiring process?
12. Can an account remain open with a zero balance?
13. Are confirmations sent following each transaction?
STA TEMENTS
It is important for you and the agency's trustee (when applicable), to receive
statements monthly so the pool's records of your activity and holding are reconciled
by you and your trustee.
1. Are statements for each account sent to participants?
a. What are the fees?
b. How often are they passed?
c. How are they paid?
d. Are there additional fees for wiring funds (what is the fee)?
2. Are expenses deducted before quoting the yield?
QUESTIONS TO CONSIDER FOR BOND PROCEEDS
It is important to know (1) whether the pool accepts bond proceeds and (2) whether
the pool qualifies with the U.S. Department of the Treasury as an acceptable
commingled fund for arbitrage purposes.
1. Does the pool accept bond proceeds subject to arbitrage rebate?
2. Does the pool provide accounting and investment records suitable for proceeds of
bond issuance subject to arbitrage rebate?
3. Will the yield calculation reported by the pool be acceptable to the IRS or will it
have to be recalculated?
4. Will the pool accept transaction instructions from a trustee?
5. Are you allowed to have separate accounts for each bond issue so that you do not
commingle the interest earnings of funds subject to rebate with funds not subject
to regulations?
27
SEGREGATION OF MAJOR INVESTMENT RESPONSIBILITIES
Function Responsibilities
Develop formal Investment Policy City Treasurer
Recommend modifications to Investment Policy Investment Advisory Board
Review formal Investment Policy and recommend City Manager and
City Council action City Attorney
Adopt formal Investment Policy City Council
Review Financial Institutions & Select Investments City Treasurer
Approve investments City Manager or
Assistant City Manager
Execute investment transactions City Treasurer
Confirm wires, if applicable City Manager or Accounting
Supervisor
Record investment transactions in City's
accounting records Accounting Supervisor
Investment verification - match broker confirmation
to City investment records Account Technician
Reconcile investment records
to accounting records and bank statements
to Treasurers Report
of investments Account Technician
Security of investments at City Vault
Security of investments Outside City Third Party Custodian
Review internal control procedures External Auditor
W
GLOSSARY
The purpose of this glossary is to provide the reader of the City of La Quinta
investment policies with a better understanding of financial terms used in municipal
investing.
AGENCIES: Federal agency securities
ASKED: The price at which securities are
offered.
BANKERS' ACCEPTANCE (BA): Short-term
credit arrangements to enable businesses to
obtain funds to finance commercial
transactions. They are time drafts drawn on
a bank by an exporter or importer to obtain
funds to pay for specific merchandise. By its
acceptance, the bank becomes primarily
liable for the payment of the drafts at its
maturity. An acceptance is a high-grade
negotiable instrument. Acceptances are
purchased in various denominations for 30,
60 or 90 days, but no longer than 270 days.
The interest is calculated on a 360-day
discount basis similar to treasury bills. Local
agencies may not invest more than 40% of
their surplus money in bankers acceptances.
BID: The price offered by a buyer of
securities. (When you are selling securities,
you ask for a bid.) See Offer.
BROKER: A broker brings buyers and sellers
together for a commission.
CERTIFICATE OF DEPOSIT (CD): Time
deposits of a bank or savings and loan. They
are purchased in various denominations with
maturities ranging from 30 to 360 days. The
interest is calculated on a 360-day, actual -
day month basis and is payable monthly.
29
COLLATERAL: Securities, evidence of
deposit or other property which a borrower
pledges to secure repayment of a loan. Also
refers to securities pledged by a bank to
secure deposits of public monies.
COMMERCIAL PAPER: S h o r t- t e r m
unsecured promissory notes issued by a
corporation to raise working capital. These
negotiable instruments are purchased at a
discount to par value or at par value with
interest bearing. Commercial paper is issued
by corporations such as General Motors
Acceptance Corporation, IBM, Bank America,
etc.
COMPREHENSIVE ANNUAL FINANCIAL
REPORT (CAFR): The official annual report
for the City of La Quinta. It includes five
combined statements for each individual fund
and account group prepared in conformity
with GAAP. It also includes supporting
schedules necessary to demonstrate
compliance with finance -related legal and
contractual provisions, extensive introductory
material, and a detailed Statistical Section.
COUPON: (a) The annual rate of interest that
a bond's issuer promises to pay the
bondholder on the bond's face value. (b) A
certificate attached to a bond evidencing
interest due on a payment date.
DEALER: A dealer, as opposed to a broker,
acts as a principal in all transactions, buying
and selling for his own account.
DEBENTURE: A bond secured only. by the
general credit of the issuer.
DELIVERY VERSUS PAYMENT: There are
two methods of delivery of securities:
delivery versus payment and delivery versus
receipt. Delivery versus payment is delivery
of securities with an exchange of money for
the securities. Delivery versus receipt is
delivery of securities with an exchange of a
signed receipt for the securities.
DERIVATIVES: (1) Financial instruments
whose return profile is linked to, or derived
from, the movement of one or more
underlying index or security, and may include
a leveraging factor, or (2) financial contracts
based upon notional amounts whose value is
derived from an underlying index or security
(interest rates, foreign exchange rates,
equities or commodities).
DISCOUNT: The difference between the cost
price of a security and its maturity when
quoted at lower than face value. A security
selling below original offering price shortly
after sale also is considered to be at a
discount
DIVERSIFICATION: Dividing investment
funds among a variety of securities offering
independent returns.
FEDERAL CREDIT AGENCIES: Agencies of
the Federal government set up to supply
credit to various classes of institutions and
individuals, e.g., S&L's, small business firms,
students, farmers, farm cooperatives, and
exporters. The following is a listing:
1. FNMAs (Federal National Mortgage
Association) - Used to assist the home
mortgage market by purchasing
mortgages insured by the Federal Housing
30
Administration and the Farmers Home
Administration, as well as those
guaranteed by the Veterans
Administration. They are issued in
various maturities and in minimum
denominations of $10,000. Principal and
Interest is paid monthly.
2. FHLBs (Federal Home Loan Bank Notes
and Bonds) - Issued by the Federal Home
Loan Bank System to help finance the
housing industry. The notes and bonds
provide liquidity and home mortgage
credit to savings and loan associations,
mutual savings banks, cooperative banks,
insurance companies, and mortgage -
lending institutions. They are issued
irregularly for various maturities. The
minimum denomination is $5,000. The
notes are issued with maturities of less
than one year and interest is paid at
maturity. The bonds are issued with
various maturities and carry semi-annual
coupons. Interest is calculated on a 360-
day, 30-day month basis.
3. FLBs (Federal Land Bank Bonds) - Long-
term mortgage credit provided to farmers
by Federal Land Banks. These bonds are
issued at irregular times for various
maturities ranging from a few months to
ten years. The minimum denomination is
$1,000. They carry semi-annual
coupons. Interest is calculated on a 360-
day, 30 day month basis.
4. FFCBs (Federal Farm Credit Bank) - Debt
instruments used to finance the short and
intermediate term needs of farmers and
the national agricultural industry. They
are issued monthly with three- and six-
month maturities. The FFCB issues larger
issues (one to ten year) on a periodic
basis. These issues are highly liquid.
5. FICBs (Federal Intermediate Credit bank
Debentures).- Loans to lending institutions
used to finance the short-term and
intermediate needs of farmers, such as
seasonal production. They are usually
issued monthly in minimum
denominations of $3,000 with a nine -
month maturity. Interest is payable at
maturity and is calculated on a 360-day,
30-day month basis.
6. FHLMCs (Federal Home Loan Mortal
Corporation) - a government sponsored
entity established in 1970 to provide a
secondary market for conventional home
mortgages. Mortgages are purchased
solely from the Federal Home Loan Bank
System member lending institutions
whose deposits are insured by agencies
of the United States Government. They
are issued for various maturities and in
minimum denominations of $10,000.
Principal and Interest is paid monthly.
Other federal agency issues are Small
Business Administration notes (SBAs),
Government National Mortgage
Association notes (GNMAs), Tennessee
Valley Authority notes (TVAs), and
Student Loan Association notes (SALLIE-
MAEs).
FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC): A federal agency that
insures bank deposits, currently up to
$100,000 per deposit.
FEDERAL FUNDS RATE: The rate of interest
at which Fed funds are traded. This rate is
currently pegged by the Federal Reserve
through open -market operations.
31
FEDERAL HOME LOAN BANKS (FHLB):
Government sponsored wholesale banks
(currently 12 regional banks) which lend
funds and provide correspondent banking
services to member commercial banks, thrift
institutions, credit unions and insurance
companies. The mission of the FHLBs is to
liquefy the housing related assets of its
members who must purchase stock in their
district Bank.
FEDERAL OPEN MARKET COMMITTEE
(FOMC): Consists of seven members of the
Federal Reserve Board and five of the twelve
Federal Reserve Bank Presidents. The
President of the New York Federal Reserve
Bank is a permanent member, while the other
Presidents serve on a rotating basis. The
Committee periodically meets to set Federal
Reserve guidelines regarding purchases and
sales of Government Securities in the open
market as a means of influencing the volume
of bank credit and money.
FEDERAL RESERVE SYSTEM: the central
bank of the United States created by
Congress and consisting of a seven member
Board of Governors in Washington, D.C., 12
regional banks and about 5,700 commercial
banks that are members of the system.
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA or Ginnie Mae):
Securities influencing the volume of bank
credit guaranteed by GNMA and issued by
mortgage bankers, commercial banks,
savings and loan associations, and other
institutions. Security holder is protected by
full faith and credit of the U.S. Government.
Ginnie Mae securities are backed by the FHA,
VA or FMHM mortgages. The term
"passthroughs" is often used to describe
Ginnie Maes.
LAIF (Local Agency Investment Fund) - A
special fund in the State Treasury which local
agencies may use to deposit funds for
investment. There is no minimum
investment period and the minimum
transaction is $ 5,000, in multiples of $1,000
above that, with a maximum balance of
$20,000,000 for any agency. The City is
restricted to a maximum of ten transactions
per month. It offers high liquidity because
deposits can be converted to cash in 24
hours and no interest is lost. All interest is
distributed to those agencies participating on
a proportionate share basis determined by
the amounts deposited and the length of time
they are deposited. Interest is paid quarterly.
The State retains an amount for reasonable
costs of making the investments, not to
exceed one -quarter of one percent of the
earnings.
LIQUIDITY: A liquid asset is one that can be
converted easily and rapidly into cash
without a substantial loss of value. In the
money market, a security is said to be liquid
if the spread between bid and asked prices is
narrow and reasonable size can be done at
those quotes.
LOCAL GOVERNMENT INVESTMENT POOL
(LGIP): The aggregate of all funds from
political subdivisions that are placed in the
custody of the State Treasurer for
investment and reinvestment.
MARKET VALUE: The price at which a
security is trading and could presumably be
purchased or sold.
MASTER REPURCHASE AGREEMENT: A
written contract covering all future
transactions between the parties to
repurchase --reverse repurchase agreements
that establishes each party's rights in the
32
transactions. A master agreement will often
specify, among other things, the right of the
buyer -lender to liquidate the underlying
securities in the vent of default by the seller -
borrower.
MATURITY: The date upon which the
principal or stated value of an investment
becomes due and payable
MONEY MARKET: The market in which
short-term debt instruments (bills,
commercial paper, banders' acceptances,
etc.) are issued and traded.
OFFER: The price asked by a seller of
securities. (When you are buying securities,
you ask for an offer.) See Asked and Bid.
OPEN MARKET OPERATIONS: Purchases and
sales of government and certain other
securities in the open market by the New
York Federal Reserve Bank as directed by the
FOMC in order to influence the volume of
money and credit in the economy. Purchases
inject reserves into the bank system and
stimulate growth of money and credit; sales
have the opposite effect. Open market
operations are the Federal Reserve's most
important and most flexible monetary policy
tool.
PORTFOLIO: Collection of securities held by
an investor.
PRIMARY DEALER: A group of government
securities dealers who submit daily reports of
market activity an depositions and monthly
financial statements to the Federal Reserve
Bank of New York and are subject to its
informal oversight. Primary dealers include
Securities and Exchange Commission (SEC) -
registered securities broker -dealers, banks
and a few unregulated firms.
RATE OF RETURN: The yield obtainable on a
security based on its purchase price or its
current market price. This may be the
amortized yield to maturity on a bond the
current income return.
REPURCHASE AGREEMENT (RP OR REPO):
A repurchase agreement is a short-term
investment transaction. Banks buy
temporarily idle funds from a customer by
selling U.S. Government or other securities
with a contractual agreement to repurchase
the same securities on a future date.
Repurchase agreements are typically for one
to ten days in maturity. The customer
receives interest from the bank. The interest
rate reflects both the prevailing demand for
Federal funds and the maturity of the repo.
Some banks will execute repurchase
agreements for a minimum of $100,000 to
$500,000, but most banks have a minimum
of $1,000,000.
REVERSE REPURCHASE AGREEMENTS - A
reverse repurchase agreement is the opposite
of a repurchase agreement. The City loans a
security to a bank in exchange for cash. The
City agrees to pay off the loan with interest
on a future date.
SAFEKEEPING: A service to customers
rendered by banks for a fee whereby
securities and valuables of all types and
descriptions are held in the bank's vaults for
protection.
SECONDARY MARKET: A market made for
the purchase and sale of outstanding issues
following the initial distribution.
33
SECURITIES & EXCHANGE COMMISSION:
Agency created by Congress to protect
investors in securities transactions by
administering securities legislation.
SEC RULE 15C3-1: See Uniform Net Capital
Rule.
STRUCTURED NOTES: Notes issued by
Government Sponsored Enterprises (FHLB,
FNMAS, SLMA, etc.) And Corporations
which have imbedded options (e.g., call
features, step-up coupons, floating rate
coupons, derivative -based returns) into their
debt structure, Their market performance is
impacted by the fluctuation of interest rates,
the volatility of the imbedded options and
shifts in the Shape of the yield curve.
TREASURY BILLS: Issued weekly with
maturity dates up to one year. They are
issued and traded on a discount basis with
interest figured on a 360-day basis, actual
number of days. They are issued in amounts
of $10,000 and up, in multiples of $5,000..
They are a highly liquid security.
TREASURY BONDS: Long-term coupon -
bearing U.S. Treasury securities issued as
direct obligations of the U.S. Government
and having initial maturities of more than 10
years.
TREASURY NOTES: Medium -term coupon -
bearing U.S. Treasury securities issued as
direct obligations of the U.S. Government
and having initial maturities from two to 10
years.
UNIFORM NET CAPITAL RULE: Securities
and Exchange Commission requirement that
member firms as well as nonmember broker -
dealers in securities maintain a maximum
ratio of indebtedness to liquid capital of 15
to 1; also called net capital rule and net
capital ratio.
Indebtedness covers all money owed to a
firm, including margin loans and
commitments to purchase securities, one
reason new public issues are spread among
members of underwriting syndicates. Liquid
capital includes cash and assets easily
converted into cash.
UNIFORM PRUDENT INVESTOR ACT: The
State of California has adopted this Act. The
Act contains the following sections: duty of
care, diversification, review of assets, costs,
compliance determinations, delegation of
investments, terms of prudent investor rule,
and application.
YIELD: The rate of annual income return on
an investment, expressed as a percentage.
(a) INCOME YIELD is obtained by dividing the
current dollar income by the current market
price for the security. (b) NET YIELD or
YIELD TO MATURITY is the current income
yield minus any premium above par of plus
any discount from par in purchase price, with
the adjustment spread over the period from
the date of purchase to the date of maturity
of the bond.
34
l000
�0i
02QUA&
V
OF TNt
INVESTMENT ADVISORY BOARD MEETING: May 8, 1996
INFORMATIONAL ITEMS: A
ITEM TITLE
Information Regarding Sweep Bank Account
ISSUE AND DISCUSSION:
The City currently has two bank accounts - Checking Account and Money Market Account.
The current practice is to make daily deposits into the Money Market Account which earns
approximately 3%. Funds are transferred from the money market account in the following
ways: to the checking account, transferred to LAIF, transferred to fiscal agents, transferred
to escrow accounts, will be transferred to the trust department to settle DVP . The Federal
government limits these transfers to six per month. If the City were to exceed the six
transfers for three out of the twelve calendar months, the bank is required to close the
money market account which would leave the City with the Checking account. The City
has exceeded the limit for January.
The City could amend the current practice of depositing funds in the money market account
and deposit funds in the checking account . However this would result in no interest
income. The LAIF, fiscal agent, and escrow account transfers could be made from the
checking account. The DVP payments must be made from the money market account.
Based on the current practice of depositing funds directly into the money market account,
in order to earn interest, the only way to reduce the number of transfers would be if the
Finance Director went down to the branch and filled out a withdrawal slip to transfer funds
from the money market account to the checking account.
The current advantage of these two accounts is that they are collaterally insured by the
bank by the amounts that are not FDIC insured.
As the City diversifies its portfolio and as wire transfers replace checks, staff believes that
the use of the money market account will limit the ability of the City to meet its need to
diversify its portfolio and the need to earn a return on its investment.
An alternative that the banking industry has available is a sweep account. We could
eliminate our money market account and convert our checking account into such an
account. The account, however would not have the collateralization of the bank as the
money market account currently has.
Attached please find the Corporate Cash Management Account Agreement. On a daily
basis the bank would sweep the funds into the investment alternatives listed on page four
that the City may want to consider. Please note that the agreement is with First Interstate
Bank. Our Wells Fargo Government Account Representative (Richard Babbe) stated that
Wells Fargo would honor this agreement.
Approved for submission to the Investment Advisory Board:
ohn M. Falcondr
'inance Director
Corporate
Management
Account Agreement
Irlist
6tMer'stafie
Bank
asF1rst Interstate Bank
as R
CORPORATE CASH MANAGEMENT ACCOUNT AGREEMENT
The First Interstate Bank that the undersigned (the "Customer" severally and collectively if more than one)
maintains its/their account(s) with hereunder (the "Account Bank") and First Interstate Bank of Arizona, N.A. or its
designate (the "Investment Bank") (severally and collectively, the "Banks") shall furnish to the Customer the
Corporate Cash Management Account service described below (the "-Service" ), subject to the following terms and
conditions and First Interstate Bank's Cash Management Services Terms and Conditions (the "CMS Terms and
Conditions"). Customer acknowledges receipt of and its agreement to the CMS Terms and Conditions. In the case
of inconsistency between the CMS Terms and Conditions and this Agreement, this Agreement shall prevail.
The Customer and Banks agree as follows:
1. Accounts. The Customer shall designate an account (the "Concentration Account") and may designate an
account for the receipt of investment earnings (the "Interest Account"). The Customer and Account Bank
shall jointly designate in Schedule A the desired target balance (the "Specified Balance") for the
Concentration Account.
2. Investment Sweep Option. On each Business Day, the Account Bank will compute the excess funds position
(the "Investment Sweep Amount") of the Concentration Account, based upon the Specified Balance. Only
collected balances above the Specified Balance will be swept. If the Investment Sweep Amount is greater
than zero, the Account Bank will debit the Account and sweep such amount to the Investment Bank. The
Investment Bank shall invest the resulting Investment Sweep Amount until the following Business Day in
accordance with the investment sweep options designated by the Customer (the "Designated Investment(s)"),
subject to the Designated Investment(s) being made available by the Investment Bank or its agents. The
Banks reserve the right to discontinue the availability of a particular investment option at any time without
notice to Customer. Customer shall complete a CCMA Designated Investments form identifying those
investments desired by Customer. The Investment Sweep Amount will not be swept until the Investment
Bank has received a properly executed CCMA Designated Investments form; upon the Account Bank's
receipt of such form, the Account Bank will begin sweeping the Investment Sweep Amount within ten (10)
Business Days of receipt of such form.
If the Designated Investment(s) are not available on any given Business Day, Customer instructs the
Investment Bank to invest the Investment Sweep Amount in a "Repurchase Transaction" as defined in the
Master Repurchase Agreement attached as Schedule B and incorporated herein by reference (the "Master
Repurchase Agreement"). The Investment Sweep Amount will be allocated by the Investment Bank each
Business Day among the Designated Investment(s) and any Repurchase Transactions by a proprietary
computer program based on preset criteria for the availability of investments. On the following Business
Day, whatever the specific allocation of Designated Investment(s), the Investment Bank will sweep the
Investment Sweep Amount to the Account Bank and the Account Bank will credit such amount to the
Concentration Account for the Customer's immediate use or reinvestment. However, the Investment Sweep
Amount will not be credited to the Concentration Account until after the close of business on the following
Business Day.
3. Designated nvestmengS). In providing this service to Customer, the Investment Bank makes available to
Customer certain investment options. Customer directs Investment Bank to sweep funds into the investments
designated by Customer. With respect to the investment options made available under this Agreement,
Investment Bank has various alternatives for where from and how the investments are obtained. The
Investment Bank may act as principal, as agent for the issuer or as agent for Customer in doing so. When
acting as agent for the issuer, the Investment Bank receives compensation from the issuer, which may
increase based on volume. Customer authorizes Investment Bank to act in any of the above capacities as
desired by Investment Bank. When the Investment Bank acts as agent for Customer for mutual fund
transactions, the Investment Bank represents numerous Customers as agent and such funds are held in the
Investment Bank's name for the benefit of Customers. The Investment Bank provides all subsidiary
accounting services on behalf of Customers for these purposes and is the only party authorized to effect
transactions in the fund accounts. Customer authorizes Investment Bank or its designee to transmit purchase
and redemption orders to the mutual funds, and otherwise interact with the mutual funds, consistent with the
terms of this Agreement.
If the Designated Investments of the Customer's choice are not available on a given day, the Investment
Sweep Amount will be invested in whole or in part in a Repurchase Transaction. The Master Repurchase
Agreement and this Agreement will apply to all such investments. If the Investment Sweep Amount is
invested in whole or in part in a Repurchase Transaction, the repurchase counterparty (the Investment Bank
or an Affiliate) will deliver to Harris Bancorp, or any affiliate or subsidiary thereof, ("Harris")) (or a similar
party as determined by the Investment Bank), serving as a third party custodian for the benefit of the
Customer and the repurchase counterparty, the securities serving as collateral pursuant to the Master
Repurchase Agreement and identified in the Customer's daily confirmation of investment 'transaction(s). In
the event of default by or insolvency of either the Investment Bank, the Account Bank or the repurchase
counterparty, Harris will contact the Customer for instructions as to disposition of such collateral securities
and distribution of any sale proceeds thereof. Customer expressly consents to Harris (or a similar party as
determined by the Investment Bank) serving as third party custodian.
4. Interest Earnings and Expenses. The Designated Investment(s) and any Repurchase Transactions will be
structured to earn interest on a daily basis. On transactions where the Investment Bank is acting as a
principal and for Commercial Paper investments where the Investment Bank is acting as principal or as agent
for the issuer, the interest rate is established by the Investment Bank and may be changed daily without prior
notice to the Customer. The Customer may obtain information on the current interest rate(s) by contacting
the Investment Bank. As full or partial compensation for performing the Service and in connection with
those Designated Investment(s) where the Investment Bank is acting as principal, the Investment Bank
reserves the right to take a markup on the sale of the Designated Investment(s) to the Customer. The amount
of interest earned by the Customer, net of any markups, will be identified in periodic statements to the
customer. The Account Bank will credit earnings to the Interest Account on each Business Day.
5. Periodic Statements. The Investment Bank will provide periodic statements to the Customer of investment
transactions detailing daily transactions, accrued investment earnings, and a summary of earnings credited.
The Customer must review the statements and notify the Account Bank of any errors, overcharges, improper
investments or other problems with the Service (collectively, "Error(s)") within ten (10) Business Days of the
Investment Bank's mailing of the first notice on which any such Errors) appears. If the Customer fails to
notify the Account Bank of such Error(s) within the time period set forth above, the confirmations and
statements will be deemed to be correct and conclusive as to Customer.
The Account Bank will accrue interest expense incurred under the Loan Sweep Option daily and will debit
the Interest Account at the month end or, if earlier, the termination date. In the event that the Customer has
exhausted its borrowing ability under the Loan Agreement, Customer agrees to immediately remit any
deficiencies in accrued interest due.
6. E=. Customer shall pay the Account Bank those fees set forth on Schedule C attached hereto and
incorporated herein by reference (the "Fees"). At its discretion, the Account Bank is authorized to debit the
Concentration Account for payment of the fees or, if the Customer is a Cash Management Customer, Account
Bank may charge Fees to the Customer's account analysis.
7. Disclaimer. In addition to the Disclaimer of Information and Warranties in the CMS Terms and
Conditions, the Banks are not providing any investment advice hereunder and make no representation
or warranty as to the suitability or safety of any of the investments made pursuant to this Agreement
2
or the Customer's choice of Designated Investment(s). As long as the Banks or their Affiliates invest
funds of the Customer in Designated Investment(s) or in a Repurchase Transaction as provided herein,
neither the Banks nor First Interstate Bancorp d Affiliates, or their employees, officers or directors
shall be liable to the Customer for any reason whatsoever related to the purchase of any Designated
Investment(s) or a Repurchase Transaction for the Customer's account.
8 CMS
Terms
and Conditions, Survival of Certain Provisions an_d Defined Terms. As previously noted, except
as otherwise inconsistent with the express terms of this Agreement, the CMS Terms and Conditions shall
apply, including but not limited to those provisions applicable to Limitation of Liability, Indemnification,
Disclaimer, Termination, Binding Arbitration Program and Assignment. The Limitation of Liability,
Disclaimer and Indemnification provisions shall survive the termination of this Agreement. In addition,
unless otherwise defined in this Agreement, capitalized terms used in this Agreement shall have the meaning
set forth in the CMS Terms and Conditions. More specifically, the defined terms herein, "Banks," "Service"
and "Customer" are included within the definitions of such terms (or their equivalent) in the CMS Terms and
Conditions.
9. Authorily of the Banks to Appoint genW- . The Banks are authorized to appoint agents, including Affiliates
or subsidiaries, to assist the Banks or Harris in the performance of their obligations under this Agreement.
10. Amendments and Changes. Except as otherwise provided, the Account Bank or the Investment Bank may
amend the terms of this Agreement (or of the attached Schedules) and the fees charged hereunder from time
to time by giving written notice to the Customer or by mailing a copy of the amended Agreement or Schedule
to the Customer. Changes to fees charged by the mutual funds are governed by their prospectuses, and
federal and state securities laws and regulations.
The Customer shall make any changes to its Designated Investment(s), or Specified Balances or accounts,
through the execution of a new Designated Investment(s) form or Schedule A, respectively, by any person
authorized by the Customer to execute this Agreement and the delivery of such form or schedule to the
Account Bank on any Business Day. Any such changes shall become effective no later than five (5) Business
Days following receipt by the Account Bank.
11. Schedules. All Schedules referenced in this Agreement are hereby incorporated by reference. In case of any
inconsistency between the Schedules and this Agreement, the Schedules will prevail. Capitalized terms used
in the Schedules shall have the meaning set forth in this Agreement, unless such terms are defined in the
Schedules.
12. Countelpa�rts. This Agreement may be executed in as many counterparts as may be deemed necessary or
convenient, each of which, when so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same agreement.
13. Notification. All written notices required by this Agreement shall be delivered or mailed to the other parties
at the addresses set forth below or to such other address as a party may specify in writing. Notices sent
hereunder shall be effective upon receipt, or if personally delivered, telexed or mailed as herein described, on
the earlier to occur of delivery or five (5) Business Days after the postmarked date (if mailed).
14. Multiple Signers. If this Agreement covers more than one legal entity, each such entity shall be included in
the term "Customer" and each such entity shall execute Schedule D pursuant to which they will agree to be
bound by the terms and conditions of this Agreement. Account Bank and Investment Bank may take
instructions and direction from any party signing this Agreement on behalf of all signers. All signers
authorize Account Bank and Investment Bank to act on such instructions and direction. Such authorization
shall include but not be limited to any changes or amendments to this Agreement or changes to Designated
Investments or any schedule. Whether or not indicated on such instructions or direction, such actions shall be
deemed to have been taken on behalf of all legal entities included in the term "Customer" hereunder. Notice
sent to a signer of this Agreement shall be deemed notice to all signers of Schedule D.
3
15. Governer Law: This Agreement shall be governed by and construed under the laws of the State of Arizona,
without giving effect to the conflict of laws principles of such state.
16. Disclosure of Customer Information: Customer consents to the disclosure of Customer information to First
Interstate Bancorp or any Affiliate or subsidiary,.
17. DISCLOSURE STATEMENT: IMPORTANT INFORMATION
* Funds deposited into the Concentration Account or the Interest Account are insured by the
Federal Deposit Insurance Corporation (FDIC), subject to the FDIC's terms for such insurance
but only until they are swept into investment instruments.
* Investment instruments offered, sold, or placed by the Banks are not deposits in or obligations of,
and are not guaranteed by, the Banks or any Affiliate (except for Repurchase Agreements, see
below); and are not insured by the FDIC, the Securities Investors Protection Corporation, the
United States of America or any agency or instrumentality thereof.
* Investment instruments offered, sold, or placed by the Banks are subject to investment risk
including possible loss of principal invested or the nonpayment of interest.
* Yields vary with market conditions. Past performance is no guarantee of future results.
FIRST INTERSTATE: The Banks, Affiliates or their subsidiaries may act as an investment advisor,
custodian, transfer agent or provide other services, for or on behalf of certain mutual funds and receive fees
for such services. Such relationships and the fees for such services are disclosed in the prospectuses for those
funds.
REPURCHASE AGREEMENTS: Repurchase Agreement transactions are obligations of, but not deposits
with, the repurchase counterparty (the Investment Bank or Affiliates).
COMMERCIAL PAPER AND MUTUAL FUNDS: The Investment Bank may act as agent for the issuer
or as agent for Customer for commercial paper transactions and act as agent for Customer for mutual fund
transactions. The Investment Bank may also act as principal for certain mutual fund transactions as well.
Commercial paper and mutual funds are unsecured obligations of the respective issuers. Money Market
Mutual Funds seek to maintain a stable net asset value of S 1.00/share; however, there is no assurance that this
objective will be met.
GOVERNMENT SPONSORFn ENTERPRISE CGSE"): The Investment Bank will act as principal for
all GSE transactions. Discount notes and other short term obligations issued by GSE's are obligations of
their respective issuers. The obligations of such issuers are not obligations of, nor are they guaranteed by, the
United States of America or any agency or instrumentality thereof.
PROSPECTUSES AND OTHER INVESTMENT INFORMATION: Prior to Customer's choice of
Designated Investment(s), Customer acknowledges having received and read current prospectuses or other
information regarding the Designated Investments, including but not limited to Offering Statements and
Information Statements, as applicable, describing the investments being offered.
N
This Agreement is entered into on this day of
,19
The° Customer acknowledges Customer has read and understands this Agreement, including the Disclosure
Statement, the Designated Investments Form and all Schedules.
ACCOUNT BANK
First Interstate Bank of , N.A.
Attn: Cash Management
P.O. Box
By:
Bank Oftiew
Title:
INVESTMENT BANK
First Interstate Bank of Arizona N.A.
100 W. Washington
P.O. Box 29751
Phoenix, AZ 85038-9751
By:
Title:
CUSTOMER
[Customer name and address]
Taxpayer ID No.:
By:
f ompmy off cw
Title:
CERTIFICATION
I certify that I am the Secretary or Assistant Secretary of the Customer, that the signature of the person(s) signing
above is .the genuine and authorized signature of that person and that he/she/they is authorized to sign in the
capacity indicated.
Signature of Secretary or Assistant Secretary
Date
5
Designated Investments Form
First Interstate
Corporate Cash Management Account Agreement
1. You may select multiple investment options. If you do, please rank them in the order that you wish to invest
your funds; for example, 1 for first, 2 for second, etc. Rank your Commercial Paper (CP) or Mutual Fund (MF)
choices higher than your Government Sponsored Enterprise (GSE) choices. If you do not wish to invest your
funds with a particular issuer, please leave that issuer line blank.
2. You may select the CP option or the MF option, or neither of those options.
3. You may not select both CP and MF options.
4. If you select CP or MF, then you must also select a GSE.
5. You must select at least one issuer under each of the investment options you have designated.
1. Commercial Paper Investment Option (Please complete statement of Accredited Investor below)
PacifiCorp
Weyerhaeuser Real Estate (not available in Idaho and Montana) or Weyerhaeuser Company,
whichever is available
2. Mutual Fund Investment Option
Pacifica Prime Money Market Fund
Pacifica Treasury Money Market Fund
Dreyfus Treasury Prime Cash Management
Government Sponsored Enterprise Investment Option (Must select at least one GSE)
Private Export Funding Corp. ("PEFCO")
Federal National Mortgage Association ("Fannie Mae")
Student Loan Marketing Association ("Sallie Mad')
4. STATEMENT OF ACCREDITED COMMERCIAL PAPER INVESTOR. (Complete this section
only if Commercial Paper is selected as an investment option). Customer, as a prospective purchaser of
commercial paper, hereby represents that the Customer is an "accredited investor" as defined in Rule 501
under the Securities Act of 1933, as amended. Customer has indicated below the category or categories
under which Customer qualifies as an accredited investor.
A natural person with an individual net worth, or joint net worth with spouse, in excess of $1,000,000, or
with an individual income (excluding. income of his or her spouse) in excess of $200,000 in each of the
preceding two years and who reasonably expects an individual income in excess of $200,000 in the current
year, or with a joint income in combination with spouse, in excess of $300,000 in each of the preceding
two years and who reasonably expects a joint income in excess of $300,000 in the current year.
A corporation, non-profit corporation, partnership, or municipal corporation, not formed for the specific
purpose of acquiring the commercial paper offered, having total assets in excess of $5,000,000.
2
A bank (as defined in Section 3 (a)(2) of the Securities Act of 1933); or a savings and loan association (as
defined in Section 3 (a)(5) of the Securities Act of 1933); or an institution (as defined in Section 3
(a)(5)(A) of Securities Act of 1933); or an ,insurance company (as defined in Section 2 (13) of the
Securities Act of 1933).
A broker -dealer registered pursuant to Section 15 of the Securities Act of 1934; or an investment company
registered under the Investment Company Act of 1940; a business development coinpany (as defined in
Section 2 (a)(48) of the Investment Company Act of 1940); or a small business investment company
licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
An employee benefit plan within the meaning of Title I of the Employment Retirement Security Act of
1974 ("ERISA") (1) whose investment decision is made by a plan fiduciary, as defined in Section 3 (21) of
ERISA, which is either a bank, savings and loan association, insurance company or registered investment
adviser, or (2) having total assets in excess of $5,000,000 or (3) whose plan is self -directed, with
investment decisions made solely by persons that are accredited investors.
A director, executive officer, or general partner of any issuer of commercial paper available under the
Corporate Cash Management Account.
A private business development company as defined in Section 202(a)(22) of the Investment Advisor Act
of 1940.
A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the
commercial paper offered, and whose investment is directed by a sophisticated person as described in 17
CFR § 230.506(b)(2)(ii) (i ., an individual possessing such knowledge and experience in financial and
business matters so as to capably evaluate the merits and risks of the prospective investment).
A corporation, partnership or any other entity of which each of its equity owners satisfy one or more of the
proceeding.
Other:
5. SOPHISTICATED INVESTOR. Check this box only if Commercial Paper is selected as an investment
option, you do not qualify as an Accredited Investor and you, or your representative or agent, have the
ability to evaluate the merits and risks of such an investment based upon knowledge and experience in
financial and business matters or other financial criteria. Your investment sales representative will ask you
to answer certain questions to determine whether you qualify.
This form lists Customer's choice of investments for the Corporate Cash Management Account Agreement
(the "Agreement") between Customer and the Bank (as defined therein) and is subject to the terms of the
Agreement. Customer acknowledges having read and understood the Disclosure Statement in the
Agreement.
Customer Name
By:
Title:
Date:
7
Schedule A
First Interstate
Corporate Cash Management Account Agreement
Designated Accounts and Specified Balances
The Concentration Account, Interest Account and Specified Balance listed below are subject to the Corporate Cash
Management Account Agreement.
Concentration Account Name Account Number Specified Balance (if desired)
Interest Account Name Account Number
(May be the Concentration Account)
If this Schedule A is executed to replace an existing Schedule A to the Corporate Cash Management Account
Agreement, then the section below must be completed:
This new Schedule A replaces any existing Schedule A to the Corporate Cash Management Account Agreement.
Except for this change, the terms and conditions of the Corporate Cash Management Account Agreement (including
the Disclosure Statement, Designated Investment form and all Schedules) apply and are reaffirmed.
Customer Name
By:
Title:
Date:
9
Schedule B
Corporate Cash Management Account PSA
First Interstate Bank
of Arizona, N.A.
Master Repurchase Agreement
Between:
First Interstate Bank of Arizona, N.A.
and
Customer, as designated in that Corporate Cash Management Account Agreement ("CCMA Agreement") to
which this Agreement is attached and incoporated into by reference.
1) Applicability
From time to time the parties hereto may enter into transactions in which one party ("Seller") agrees to
transfer to the other ("Buyer") securities or financial instruments ("Securities") against the transfer of funds
by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a date certain or
on demand, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a
"Transaction" and shall be governed by this Agreement, including any supplemental terms or conditions
contained in Annex 1 hereto, unless otherwise agreed in writing.
2) Definitions
a) "Act of Insolvency",* with respect to any party, (i) the commencement by such party as debtor of any
case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law, or such party seeking the appointment of a receiver, trustee, custodian or similar official
for such party or any substantial part of its property, or (ii) the commencement of any such case or
proceeding against such party, or another seeking such an appointment, or the filing against a party of
an application for a protective decree under the provisions of the -Securities Investor Protection Act of
1970, which (A) is consented to or not timely contested by such party, (B) results in the entry of an
order for relief. Such an appointment, the issuance of such a protective decree or the entry of an
order having a similar effect, or (C) is not dismissed within 15 days, (iii) the making by a party of a
general assignment for the benefit of creditors, or (iv) the admission in writing by a party of such
parry's inability to pay such parry's debts as they become due.
b) "Additional Purchased Securities", Securities provided by Seller to Buyer pursuant to Paragraph 4(a)
hereof.
c) Buyers Margin Amount", with respect to any Transaction as of any date, the amount obtained by
application of a percentage (which may be equal to the percentage that is agreed to as the Seller's
Margin Amount under subparagraph (q) of this Paragraph), agreed to by Buyer and Seller prior to
entering into the Transaction, to the Repurchase Price for such Transaction as of such date.
d) "Confirmation", the meaning specified in Paragraph 3(b) hereof.
e) "Income", with respect to any Security at any time, any principal thereof then payable and all interest,
dividends or other distributions thereon.
11
f) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof.
g) "Margin Excess", the meaning specified in Paragraph 4(b) hereof.
h) "Market Value", with respect to any Securities as of any date, the price for such Securities on such
date obtained from a generally recognized source agreed to by the parties or the most recent closing
bid quotation from such a source, plus accrued income to the extent not included therein (other than
any income credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) as of such date (unless contrary to market practice for such Securities).
i) "Price Differential", with respect to any Transaction hereunder as of any date, the aggregate amount
obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such
Transaction on a 360 day per year basis for the actual number of days during the period commencing
on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of
determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer
with respect to such Transaction).
j) "Pricing Rate", the per annum percentage rate for determination of the Price Differential.
k) "Prime Rate", the prime rate of U.S. money center commercial banks as published in The Wall Street
Journal.
1) "Purchase Date", the date on which Purchased Securities are transferred by Seller to Buyer.
m) "Purchase Price", (i) on the Purchase Date, the price at which Purchased Securities are transferred by
Seller to Buyer, and (ii) thereafter, such price increased by the amount of any cash transferred by
Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash
transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller's
obligations under clause (iii) of Paragraph 5 hereof.
n) "Purchased Securities", the Securities transferred by Seller to Buyer in a Transaction hereunder, and
any Securities substituted therefor in accordance with Paragraph 9 hereof. The term "Purchased
Securities" with respect to any Transaction at any time also shall include Additional Purchased
Securities delivered pursuant to Paragraph 4(a) and shall exclude Securities returned pursuant to
Paragraph 4(b).
o) "Repurchase Date", the date on which Seller is to repurchase the Purchased Securities from Buyer,
including any date determined by application of the provisions of Paragraphs 3(c) or 11 hereof.
p) "Repurchase Price", the price at which Purchased Securities are to be transferred from Buyer to
Seller upon termination of a Transaction, which will be determined in each case (including
Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as
of the date of such determination, increased by any amount determined by the application of the
provisions of Paragraph 11 hereof.
q) "Seller's Margin Amount", with respect to any Transaction as of any date, the amount obtained by
application of a percentage (which may be equal to the percentage that is agreed to as the Buyer's
Margin Amount under subparagraph (c) of this Paragraph), agreed to by Buyer and Seller prior to
entering into the Transaction, to the Repurchase Price for such Transaction as of such date.
12
3) Initiation; Confu-mation; Termination
a) An agreement to enter into a Transaction may be made orally or in writing at the initiation of either
Buyer or Seller. On the Purchase Date for the Transaction, the Purchased Securities shall be
transferred to Buyer or its agent against the transfer of the Purchase Price to an account of Seller.
b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be agreed,
shall promptly deliver to the other party a written confirmation of each Transaction (a
"Confirmation"). The Confirmation shall describe the Purchased Securities (including CUSIP
number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price,
(iii) the Repurchase Date, unless the Transaction is to beterminable on demand, (iv) the Pricing Rate
or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the
Transaction not inconsistent with this Agreement. The Confirmation, together with this Agreement,
shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the
Transaction to which the Confirmation relates, unless with respect to the Confirmation specific
objection is made promptly after receipt thereof. In the event of any conflict between the terms of
such Confirmation and this Agreement, this Agreement shall prevail.
c) In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller,
no later than such time as is customary in accordance with market practice, by telephone or otherwise
on or prior to the business day on which such termination will be effective. On the date specified in
such demand, or on the date fined for termination in the case of Transactions having a fixed . term,
termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased
Securities and any Income in respect thereof received by Buyer (and not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against the
transfer of the Repurchase Price to an account of Buyer.
4) Margin Maintenance
a) If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in
which a particular party hereto is acting as Buyer is less than the aggregate Buyer's Margin Amount
for all such Transactions (a "Margin Deficit"), then Buyer may by notice to Seller require Seller in
such Transactions, at Seller's option, to transfer to Buyer cash or additional Securities reasonably
acceptable to Buyer ("Additional Purchased Securities") so that the cash and aggregate Market Value
of the Purchased Securities, including any such Additional Purchased Securities, will thereupon equal
or exceed such aggregate Buyer's Margin Amount (decreased by the amount of any Margin Deficit as
of such date arising from any Transactions in which such Buyer is acting as Seller).
b) If at any -time the aggregate Market Value of all Purchased Securities subject to all Transactions in
which a particular party hereto is acting as Seller exceeds the aggregate Seller's Margin Amount for
all such Transactions at such a time (a "Margin Excess"), then Seller may by notice to Buyer require
Buyer in such Transactions, at Buyer's option, to transfer cash or Purchased Securities to Seller, so
that the aggregate Market Value of the Purchased Securities, after deduction of any such cash or any
Purchased Securities so transferred, will thereupon not exceed such aggregate Seller's Margin
Amount (increased by the amount of any Margin Excess as of such date arising from any Transactions
in which such Seller is acting as Buyer).
c) Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as shall be
agreed upon by Buyer and Seller.
d) Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective
rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph may be exercised
only where a Margin Deficit or Margin Excess exceeds a specified dollar amount or a specified
13
percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be
agreed to by Buyer and Seller prior to entering into any such Transactions).
e) Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective
rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination
of a Margin Deficit or a Margin Excess, as the case may be, may be exercised whenever such a
Margin Deficit or Margin Excess exists with respect to any single Transaction hereunder (calculated
without regard to any other Transaction outstanding under this Agreement).
5) Income Payments
Where a particular Transaction's term extends over an income payment date on the Securities subject to
that Transaction, Buyer shall, as the parties may agree with respect to such Transaction (or, in the absence
of any agreement, as Buyer shall reasonably determine in its discretion), on the date such income is payable
either (i) transfer to or credit to the account of Seller an amount equal to such income payment or payments
with respect to any Purchased Securities subject to such Transaction or (ii) apply the Income payment or
payments to reduce the amount to be transferred to Buyer by Seller upon termination of the Transaction.
Buyer shall not be obligated to take any action pursuant to the preceding sentence to the extent that such
action would result in the creation of a Margin Deficit, unless prior thereto or simultaneously therewith
Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin
Deficit.
6) Security Interest
Although the parties intend that all Transactions hereunder by sales and purchases and not loans, in the
event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as
security for the performance by Seller of its obligations under each such Transaction, and shall be deemed
to have granted to Buyer a security interest in, all of the Purchased Securities with respect to all
Transactions hereunder and all proceeds thereof.
7) Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds.
All. Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or
shall be accompanied by duly executed instruments of transfer or assignment in blank and such other
documentation as the party receiving possession may reasonably request, (ii) shall be transferred on the
book -entry system of a Federal Reserve Bank, or (iii) shall be transferred by any other method mutually
acceptable to Seller and Buyer. As used herein with respect to Securities, "transfer" is intended to have the
same meaning as when used in Section 8-313 of the New York Uniform Commercial Code or, where
applicable, in any federal regulation governing transfers of the Securities.
8) Segregation of Purchased Securities
To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be
segregated from other securities in its possession and shall be identified as subject to this Agreement.
Segregation may be accomplished by appropriate identification on the books and records of the holder,
including a financial intermediary or a clearing corporation. Title to all Purchased Securities shall pass to
Buyer and, unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer
from engaging in repurchase transactions with the Purchased Securities or otherwise pledging or
hypothecating the Purchased Securities, but no such transaction shall relieve buyer of its obligations to
transfer Purchased Securities to Seller pursuant to Paragraphs 3, 4 or 11 hereof, or of Buyer's obligation to
credit or pay.Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof.
14
Required Disclosure for Transactions in which the
Seller Retains Custody of the Purchased Securities
Seller is not permitted to substitute other securities for those subject to this Agreement and therefore must
keep Buyer's securities segregated at all times, unless in this Agreement Buyer grants Seller the right to
substitute other securities. If Buyer grants the right to substitute, this means that Buyer's securities will
likely be commingled with Seller's own securities during the trading day. Buyer is advised that , during
any trading day that Buyer's securities are commingled with Seller's securities, they [will]* [may]** be
subject to liens granted by Seller to [its clearing bank]* [third parties]** and may be used by Seller for
deliveries on other securities transactions. Whenever the securities are commingled, Seller's ability to
resegregate substitute securities for Buyer will be subject to Seller's ability to satisfy [the clearing]* [any]**
lien or to obtain substitute securities.
* Language to be used under 17 C.F.R. §40 A(e) if Seller is a government securities broker or dealer other than a financial
institution.
** Language to be used under 17 C.F.R. §403.5(d) if Seller is a financial institution.
9) Substitution
a) Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for any
Purchased Securities. Such substitution shall be made by transfer to Buyer of such other Securities
and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall
be deemed to be Purchased Securities.
b) In Transactions in which the Seller retains custody of Purchased Securities, the parties expressly agree
that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have agreed to and
accepted in this Agreement substitution by Seller of other Securities for Purchased Securities provided
however, that such other Securities shall have a Market Value at least equal to Market Value of the
Purchased Securities for which they are substituted.
10) Representations
Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and
deliver this Agreement, to enter into the Transactions -contemplated hereunder and to perform its obligations
hereunder and has taken all necessary action to authorize such execution, delivery and performance, (ii) it
will engage in such Transactions as principal (or, if agreed in writing in advance of any Transaction by the
other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf
is duly authorized to do so on its behalf (or on behalf of any such disclosed principal), (iv) it has obtained
all authorizations of any governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect and (v) the execution, delivery
and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance,
charter, by-law or rule applicable to it or any agreement by which it is bound or by which any of its assets
are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all
the foregoing representations made by it.
11) Events of Default
In the event that (i) Seller fails to repurchase or buyer fails to transfer Purchased Securities upon the
applicable Repurchase Date, (ii) Seller or Buyer fails, after one business day's notice, to comply with
Paragraph 4 hereof, (iii) Buyer fails to comply with Paragraph 5 hereof, (iv) an Act of Insolvency occurs
with respect to Seller or Buyer, (v) any representation made by Seller or Buyer shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have been made or repeated, or (vi)
15
Seller or Buyer shall admit to other its inability to, or its intention not to, perform any of its obligations
hereunder (each an "Event of Default").
a) At the option of the nondefaulting party, exercised by written notice to the defaulting party (which
option shall be deemed to have been exercised, even if no notice is given, immediately upon the
occurrence of an Act of Insolvency), the Repurchase Date for each Transaction hereunder shall be
deemed immediately to occur.
b) In all Transactions in which the defaulting party is acting as Seller, if the nondefaulting party
exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph,
(i) the defaulting parry's obligations hereunder to repurchase all Purchased Securities in such
Transactions shall thereupon become immediately due and payable, (ii) to the extent permitted by
applicable law, the Repurchase Price with respect to each such Transaction shall be increased by the
aggregate amount obtained by daily application of (x) the greater of the Pricing Rate for ' such
Transaction or the Prime Rate to (y) the Repurchase Price for such Transaction as of the Repurchase
Date -as determined pursuant to subparagraph (a) of this Paragraph (decreased as of any day by (A)
any amounts retained by the nondefaulting party with respect to such Repurchase Price pursuant to
clause (iii) of this subparagraph, (B) any proceeds from the sale of Purchased Securities pursuant to
subparagraph (d)(i) of this Paragraph, and (C) any amounts credited to the account of the defaulting
parry pursuant to subparagraph (e) of this Paragraph) on a 360 day per year basis for the actual
number of days during the period from and including the date of the Event of Default giving rise to
such option to but excluding the date of payment of the Repurchase Price as so increased, (iii) all
Income paid after such exercise or deemed exercise shall be retained by the nondefaulting party and
applied to the aggregate unpaid Repurchase Prices owed by the defaulting party, and (iv) the
defaulting party shall immediately deliver to the nondefaulting party any Purchased Securities subject
to such Transactions then in the defaulting parry's possession.
c) In all Transactions in which the defaulting party is acting as Buyer, upon tender by the nondefaulting
party of payment of the aggregate Repurchase Prices for all such transactions, the defaulting parry's
right, title and interest in all Purchased Securities subject to such Transactions shall be deemed
transferred to the nondefaulting party, and the defaulting party shall deliver all such Purchased
Securities to the nondefaulting party.
d) After one business day's notice to the defaulting party (which notice need not be given if an Act of
Insolvency shall have occurred, and which may be the notice given under subparagraph (a) of this
Paragraph or the notice referred to in clause (ii) of the first sentence of this Paragraph), the
nondefaulting party may: (i) as to Transactions in which the defaulting party is acting as Seller, (A)
immediately sell, in a recognized market at such price or prices as the nondefaulting party may
reasonably deem satisfactory, any or all Purchased Securities subject to such Transactions and apply
the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the
defaulting parry hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such
Purchased Securities, to give the defaulting party credit for such Purchased Securities in an amount
equal to the price therefor on such date, obtained from a generally recognized source or the most
recent closing bid quotation from such a source, against the aggregate unpaid Repurchase Prices and
any other amounts owing by the defaulting party hereunder; and (ii) as to Transactions in which the
defaulting party is acting as Buyer, (A) purchase securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are not delivered by the defaulting party to the
nondefaulting party as required hereunder or (B) in its sole discretion elect, in lieu of purchasing
Replacement Securities, to be deemed to have purchased Replacement Securities at the price therefor
on such date, obtained from a generally recognized source or the most recent closing bid quotation
from such a source.
e) As to Transactions in which the defaulting party is acting as Buyer, the defaulting party shall be liable
to the nondefaulting party (i) with respect to Purchased Securities (other than Additional Purchased
16
Securities), for any excess of the price paid (or deemed paid) by the nondefaulting party for Replace-
ment Securities therefor over the Repurchase Price for such Purchased Securities and (ii) with respect
to Additional Purchased Securities, for the price paid (or deemed paid) by the nondefaulting party for
the Replacement Securities therefor. In addition, the defaulting party shall be liable to the
nondefaulting party for interest on such remaining liability with respect to each such purchase (or
deemed purchase) of Replacement Securities from the date of such purchase (or deemed purchase)
until paid in full by Buyer. Such interest shall be at a rate equal to the greater of the Pricing Rate for
such Transaction or the Prime Rate.
f) For purposes of this Paragraph 11, the Repurchase Price for each Transaction hereunder in respect of
which the defaulting party is acting as Buyer shall not increase above the amount of such Repurchase
Price for such Transaction determined as of the date of the exercise or deemed exercise by the
nondefaulting party of its option under subparagraph (a) of the Paragraph.
g) The defaulting party shall be liable to the nondefaulting party for the amount of all reasonable legal or
other expenses incurred by the nondefaulting party in connection with or as a consequence of an Event
of Default, together with interest thereon at a rate equal to the greater of the Pricing Rate for the
relevant Transaction or the Prime Rate.
h) The nondefaulting party shall have, in addition to its rights hereunder, any rights otherwise available
to it under any other agreement or applicable law.
12) Single Agreement
Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction
hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a
single business and contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such obligations shall constitute a
default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims
and apply property held by them in respect of any Transaction against obligations owing to them in respect
of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of
them in respect of any Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make
any such payments, deliveries and other transfers may be applied against each other and netted.
13) Notices and Other Communications
Unless another address is specified in writing by the respective party to whom any notice or other
communication is to be given hereunder, all such notices or communications shall be in writing or
confirmed in writing and delivered at the respective addresses set forth in Annex 11 attached hereto.
14) Entire Agreement; Severability
This Agreement shall supersede any existing agreements between the parties containing general terms and
conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate
and independent from any other provision or agreement herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.
15) Non -assignability; Termination
The rights and obligations of -the parties under this Agreement and under any Transaction shall not be
assigned by either party without the prior written consent of the other party. Subject to the foregoing, this
Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their
17
respective successors and assigns. This Agreement may be cancelled by either party upon giving written
notice to the other, except that this Agreement shall, notwithstanding such notice, remain applicable to any
Transactions then outstanding.
16) Governing Law
This Agreement shall be governed by the laws of the State of New York without giving effect to the
conflict of law principles thereof.
17) No Waivers, Etc.
No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other
Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right
to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement
and no consent by any party to a departure herefrom shall be effective unless and until such shall be in
writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the
failure to give a notice pursuant to subparagraphs 4(a) or 4(b) hereof will not constitute a waiver of any
right to do so at a later date.
18) Use of Employee Plan Assets
a) If assets of an employee benefit plan subject to any provision of the Employee Retirement Income
Security Act of 1974 ("ERISA") are intended to be used by either party hereto (the "Plan Party") in a
Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Parry
shall represent in writing to the other parry that the Transaction does not constitute a prohibited
transaction under ERISA or is otherwise exempt therefrom, and the other parry may proceed in
reliance thereon but shall not be required so to proceed.
b) Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall proceed
only if Seller furnishes or has fiunished to Buyer its most recent available audited statement of its
financial condition and its most recent subsequent unaudited statement of its financial condition.
c) By entering into a Transaction pursuant to this Paragraph, 'Seller shall be deemed (i) to represent to
Buyer that since the date of Seller's latest such financial statements, there has been no material
adverse change in Seller's financial condition which Seller has not disclosed to Buyer, and (ii) agree
to provide Buyer with future audited and unaudited statements of its financial condition as they are
issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party.
19) Intent
a) The parties recognize that each Transaction is a "repurchase agreement" as that term is defined in
Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Securities
subject to such Transaction or the term of such Transaction would render such definition inappli-
cable), and a "securities contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.
b) It is understood that either parry's right to liquidate Securities delivered to it in connection with
Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof, is a
contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the
United States Code, as amended.
18
20) Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
a) in the case of Transactions in which one of the parties is a broker or dealer registered with the
Securities and Exchange Commission ("SEC") under Section 15 of the Securities Exchange Act of
1934 ("1934 Act"), the Securities Investor Protection. Corporation has taken the position that the
provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other party
with respect to any Transaction hereunder;
b) in the case of Transactions in which one of the parties is a government securities broker or a
government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will
not provide protection to the other party with respect to any Transaction hereunder; and
c) in the case of Transactions in which one of the parties is a financial institution, funds held by the
financial institution, pursuant to a Transaction hereunder are not a deposit and therefore are not
insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation or the National Credit Union Share Insurance Fund, as applicable.
First Interstate Bank of Arizona, N.A. Customer:
By:
Title:
Date:
By:
Title:
Date:
19
Schedule D
First Interstate
Corporate Cash Management Account Agreement
Additional Signatories
The undersigned legal entities are included in the term "Customer" under and are signatories to that Corporate Cash
Management Account Agreement (the "Agreement") between Account Bank, Investment Bank and
dated
Customer Name
The undersigned acknowledges it/they has read and understands the Agreement, including the Disclosure Statement
contained therein, the Designated Investments form and all Schedules.
Customer Name
By:
Title:
Date:
CERTIFICATION
I certify that I am the Secretary or Assistant Secretary of the Customer, that the signature of the person(s) signing
above is genuine and authorized signature of that person and that he/she/they is authorized to sign in the capacity
indicated.
Signature of Secretary or Assistant Secretary Date
21
-T
1
OZ
U
CAV
OF TNti
INVESTMENT ADVISORY BOARD MEETING: May 8, 1996
Information Item B
ITEM TITLE
The Local Agency Investment Fund (LAIF) Answer Book
ISSUE AND DISCUSSION:
Attached please the Investment policies and other information that was provided to
Chairman Lewis, Board member Osborne and myself at a round table discussion
conducted by LAIF at the Treasurers Conference.
While at the conference, Board members and staff asked the following questions:
Matt Fong, State Treasurer was asked whether or not LAIF would consider being rated by
Moodys or Standard and Poors at a luncheon in which he replied that they would not.
Later in the day, another Treasurer asked Pat Beal, LAIF Administer to explain LAIF's
position. Pat Beal stated that they have met with the rating agencies and do not believe
they need to be rated.
Pat Beal, LAIF Administer and Bill Sherwood, Chief Investment Officer were asked if Wells
Fargo would obtain a LAIF account which would reduce the paper staff must do to transfer
funds to LAIF. Wells Fargo and LAIF staff at the round table discussion indicated a
willingness to work toward opening an account within the next two to three months.
Pat Beal, LAIF Administer and Bill Sherwood, Chief Investment Officer were asked about
the maturity levels maintained by LAIF. Bill Sherwood stated that LAIF has adopted an
investment strategy that would maintain a average maturity of between six months and a
year and a half. LAIF was asked if a chart could be included in the Answer Book that
would give a historical listing of the average maturities by month.
Pat Beal, LAIF Administer and Bill Sherwood, Chief Investment Officer were asked why
LAIF would enter into reverse repurchase agreements. Bill Sherwood stated that this was
done to enhance yield and generated annually between $2 - 15 million in earnings to the
outlined the policies that were followed were in accordance with the policies in the answer
book.
For additional information on LAIF in this. agenda please see Informational item C.
Approved for submission to the Investment Advisory Board:
:)hn M. Falconer
inance Director
THE
LOCALAGENCY INVESTMENT FUND
ANSWER BOOK
March 1996
TABLE OF CONTENTS
III. PARTICIPATIO
IV.
V.
X. HOW TO CALA
AND APPORTI
........ 0......... 4
1
... 22
................................. 23
XI. POOL QUESTIONNAIRE...........................................0........0. 28
XII. DISCLOSURE STATEMENT ................................................. 33
XIII. LAIF PROCEDURES.............................................................. 37
THE F'UND
THE LOCAL AGENCY INVESTMENT FUND
The Local Agency Investment Fund (LAIF), a voluntary program, created by
statute, began in 1977 as an investment alternative for California's local governments
and special districts and continues today under Treasurer Matt Fong's Administration.
The enabling legislation for the LAIF is Section 16429.1.2.3 of the California Govern-
ment Code.
This program offers participating agencies the opportunity to participate in a
major portfolio which daily invests hundreds of millions of dollars, using the investment
expertise of the Treasurer's Office Investment staff at no additional cost to the taxpayer.
This in-house management team is comprised of civil servants who have individually
worked for the State Treasurer's Office for over 20 years.
The LAIF is part of the Pooled Money Investment Account (PMIA). The PMIA
began in 1953 and has oversight provided by the Pooled Money Investment Board
(P1VIIB) and an in-house Investment Committee. The PMIB Board members are the
State Treasurer, Director of Finance, and State Controller.
The LAW has oversight by the Local Investment Advisory Board. The LAIF
Board consists of five members as designated by Statute. The Chairman is the State
Treasurer, or his designated representative. Two members qualified by training and
experience in the field of investment or finance, and two members who are Treasurers,
finance or fiscal officers or business managers, employed by any County, City or local
district or municipal corporation of this state, are appointed by the State Treasurer. The
term of each appointment is two years, or at the pleasure of the appointing authority.
All securities are purchased under the authority of the Government Code Section
16430 and 16480.4. The State Treasurer's Office takes delivery of all securities pur-
chased on a delivery versus payment basis to a third party custodian. All investments
are purchased at market, and market valuation is conducted quarterly.
1
Additionally, the PMIA has Policies, Goals and Objectives for the portfolio to
make certain that our goals of Safety, Liquidity and Yield are not jeopardized and
prudent management prevails. These policies are formulated by investment staff and
reviewed by both the PMIB and the Local Investment Advisory Board on an annual
basis.
The State Treasurer's Office is audited by the Bureau of State Audits on an an-
nual basis. The resulting opinion is included in the subsequent Pooled Money monthly
report following its publication. The Bureau of State Audits also has a continuing
audit process throughout the year. All investment and LAIF claims are audited on a
daily basis by the State Controller's, Office as well as an in-house audit process involv-
ing three separate divisions.
It has been determined that the State of California cannot declare bankruptcy
under Federal regulations, thereby allowing the Government Code Section 16429.3 to
stand. This Section states that "money placed with the state treasurer for deposit in the
LAIF shall not be subject to impoundment or seizure by any state official or state
agency."
The LAIF has grown from 293 participants and $468 million in 1977 to 2,366
participants and $10.2 billion in 1996.
K
BOARD MEMBERS,
THE LOCAL AGENCY
ADVISORY BOARD
Chairman:
Designated
Chairman:
Current
Board Members:
State Treasurer
Matt Fong
Patricia A. Beal
Administrator
Local Agency
Investment Fund
Peggy Eckroth
Executive Vice President
Autumn Capital Investment
Services
THE POOLED MONEY
INVESTMENT BOARD
Chairman:
Member:
Member:
Patricia Elliott
Manager, Financial Resources
Eastern Municipal Water District
Karen Hornung
City Treasurer
City of San Bruno
Les Wells
Vice President
Investment Division
The Bank of California
State Treasurer
Matt Fong
State Controller
Kathleen Connell
Director of Finance
Craig Brown
3
LOCAL AGENCY INVESTMENT FUND
Participation as of 3/31/96
2,389 Agencies
109 TRUSTEES 100 BONDS 52 COUNTIES
5% 4% 2% 459 CITIES
� ooi
4
MATT FONG
STATE TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION
SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED)
Change in
March 31, 1996 Percent From
Type of Security Amount Percent Previous Month
Governments
Bills
Bonds
Notes
Strips
Total Governments
Federal Agency Coupons
Certificates of Deposit
Bankers Acceptances
Repurchases
Federal Agency Discount Notes
Time Deposits
- GNMA' s
Commercial Paper
FHLMC
Other
Corporate Bonds
Pooled Loans
Reverse Repurchases
GF Loans
Total, All Types
2,459,817
8.30
- .45
0
0
0
51891,908
19.87
- .65
846,551
2.85
- •22
91198,276
31.02
- 1.32
965,130
3.26
- •22
4,130,828
13.93
-. 2.51
256,867
.87
- .14
198,100
.67
- 2.40
11350,853
4.56
- 1.76
365,995
1.23
- .13
41824
.02
0
71789,833
26.27
- .79
37,373
.13
- -.01
0
0
0
11902,278
6.42
- .79
843,409
2.84
+ .06
-725,852
-2.45
+ .26
31331,000
11.23
+ 9.75
29,648,914
100
5
NOTES TO MONTHLY SELECTED INVESTMENT DATA
Reverse Repurchase - The temporary sale of owned securities, with the simultaneous agreement to
repurchase the same securities at a predetermined cost and rate on a specified future date.
The Pooled Money Investment Account from time to time enters into Reverse Repurchase Agreements
with major pre -approved securities dealers. The intent is to earn incremental interest for pool partici-
pants. Because it is viewed as incremental, earnings derived from reverses are never projected or
anticipated.
All reverses are in compliance with Government Code Sec. 16480.4, and are further discussed in the
Treasurer's Statement of Investment Policies, Goals and Objectives.
AB 55 Loans - Named for Assembly Bill 55, these loans are made from the Pool to state agencies
which have pre -approved authority to issue bonds for specific projects. The AB 55 loan program
allows an agency to borrow money for up -front and progress expenses when funding a specific
project. Toward the end of the project construction, the already approved bond issue is brought to
market, the proceeds of which are used to pay off principal and interest due on the AB 55 loan. This
method eliminates the need for an arbitrage tracking system, had the bonds been sold "up front."
The maximum term for AB 55 loans is 364 days, with many retired earlier.
General Fund Loans - Loans made by the Pool to the General Fund in anticipation of evening out
cash flow. The average life of these loans is well below 30 days. Unlike the on -going AB 55 loan
program, General Fund loans are much more infrequently requested.
Both AB 55 and General Fund Loans have the following characteristics:
1. Amount available for loans is determined by the State Controller and EXCLUDES certain trust
monies, such as LAIF balances;
2. LAIF participants do share in the interest income paid to the Pool on each loan balance;
3. The decision to approve these loans rests in the authority of the Pooled Money Investment Board;
4. A predetermined maximum total loan balance is capped as a specific percentage of identified
borrowable resources as determined by the State Controller.
5. No surplus monies may be loaned if such a loan would inhibit carrying out the purpose for which
the monies were originally designated.
6. Since the granting of these loans is not an investment function, the loans (AB 55, GO are not
included in records of daily investment activity.
7. Since interest is commingled with other investment revenue, both AB 55 and General Fund loans
are included in Selected Data Reports and portfolio accountability.
8. The total monies in AB 55 and General Fund loans are figured into the Portfolio book value when
reporting portfolio size and yield.
6
SOURCE OF FUNDS
Pooled Money Investment Account
as of 3/31/96
$29.649 Billion
Surplus Money
39_R2%.
OTHER
.28% General Fund
22.29%
Local Agencies
37.61 %
Office of the State Treasurer
Approved by Treasurer Matt Fong
on
February 9, 1996
1:1
STATE TREASURER'S OFFICE
STATEMENT OF PORTFOLIO MANAGEMENT GOALS,
OBJECTIVES AND POLICIES
POOLED MONEY INVESTMENT ACCOUNT-PMIA
.All state money held by the State Treasurer in Treasury trust accounts, and all
money in the State Treasury,..... is appropriated for the purpose of investment and deposit
.as provided in article 4.5, Section 16480 et. al. of the Government Code.
GOAL I. PORTFOLIO_ SAFETY/DIVERSIFICATION
The pool will be managed to insure the safety of the portfolio by investing in high
quality securities and by maintaining a mix of securities that will provide reasonable
assurance that no single investment or class of investments will have a disproportionate
impact on the total portfolio.
OBJECTIVE: In addition to the safety provided by investing in high quality
securities, the safety of the portfolio is enhanced three ways by maintaining a prudent mix
(i.e., diversity) of investments: 1) Spreading investments over different investment types
minimizes the impact any one industry/investment class can have on the portfolio; 2)
Spreading investments over multiple credits/issuers within an investment type minimizes
the credit exposure of the portfolio to any single firmlinstitution; and 3) Spreading
investments over various maturities minimizes the risk of portfolio depreciation due to a
rise in interest rates. An unforeseen liquidity.need allows no options if "all your eggs are
in one basket
POLICY. The portfolio shall contain a sufficient number and diversity of
marketable securities so that a reasonable portion of the portfolio can be readily converted
to cash without causing a material change in the value of the portfolio. Limitation and
eligibility as to specific investments are to be determined by the Pooled Money Investment
Board in the case of Commercial Paper, the Treasurer's Office Investment Committee in
cases of new dealer authorization and approval of new corporate investments, and the
Treasury Investment Division in all other matters.
GOAL II. LIQUIDITY
The pool will be managed to ensure that normal cash needs, as well as scheduled
extraordinary cash needs can be met. Further, adequate liquidity shall be maintained to
ensure the unforeseen cash needs, whether ordinary or extraordinary.
OBJECTIVE: The pool will maintain a "cash flow generated" portfolio balance
sufficient to cover specificallythe one month prepared cash forecast, as well as generally
February 9,1996
0
the six month prepared cash forecast. Further, sufficient marketable treasuries will be
maintained to cover unforeseen withdrawals or delayed deposits.
POLICY. First priority is given to maintaining specific calendar liquidity, as
dictated by the most recent cash forecast. Second priority is the maintenance of Treasury
Bill positions adequate to meet unscheduled needs and domiciled in the San Francisco
Depository to facilitate mid -day cash needs. Final consideration would be given to
"other" investments deemed appropriate to portfolio maintenance, enhancement, or
restructuring.
GOAL M. RATE OF RETURN
Pooled investments and deposits shall be made in such a way as to realize the
maximum return consistent with safe and prudent treasury management.
OBJECTIVE: The rate . of return will be maintained on a consistent level
representative of current market yield direction.
PO_ LICK Sales gains/losses will not be incurred to the point of radically altering
the final quarterly apportionment rate. Significant sales gains will be offset for
restructuring purposes to maintain consistent current return, as well as maximizing future
portfolio performance. Significant sales losses shall be incurred only by consent of the
Treasurer, or when sufficient profits negate the alteration of the apportionment rate.
iange bonds and inverse yielding securities are examples of the types of investments
which are precluded by the above stated objective.
CONFORMANCE
All of the foregoing goals, objectives and policies shall be observed -by the Chief of
Investments or his designee, monitored by the Treasurer's Investment Committee, and
reviewed continually by the Treasurer or his/ her assistant.
February 9,1996
10
STATE TREASURER'S OFFICE
STATEMENT OF PORTFOLIO MANAGEMENT GUIDELINES
POOLED MONEY INVESTMENT ACCOUNT-PMIA
The State Treasurer's Investment Division has set forth a general declaration of
portfolio goals, objectives and policies. Following are various guidelines necessary to the
good faith observance of these policies.
I. GUIDELINES FOR MAINTAINING SAFETY/DIVERSIFICATION
There are few statutory limitations placed on individual categories of authorized
investments. However, this does not entitle the investment staff to "carte blanche"
participation in these security types. In the absence of direct statutory limitations, the
"prudent man rule" shall be utilized by the investment staff. As market conditions
• change, . altering credit risk, marketability, yield spreads, and securities availability,
application of this rule shall govern any investment decision. This application shall be
discussed as soon as time permits with the Chief of Investments. At the Chief of
Investments determination, the situation may be discussed with the full investment
committee or brought directly to the attention of the Treasury Management.
Following are various considerations/limitations as they pertain to specific
investment types:
A. U.S. Treasury Securities
1) Maximum maturity: Statutory: 3 0 years.
Policy: 5 years.
2) Maximum par value, total portfolio: None.
3) Maximum par value per name: None.
4) Maximum par value per maturity: None.
5) Credit: Full faith and credit of the Federal Government.
Treasury Bills are maintained for liquidity, trading, and yield enhancement as the
underlying security in a Reverse Repurchase transaction. Treasury strips and full coupon
securities are purchased for average maturity preservation, liquidity, and trading.
February 9,1996
11
B. Federal Agency Securities
1) Maximum maturity: Statutory: 30 years.
Policy: 5 years.
2) Maximum par value, total portfolio: None.
3) Maximum par value per name: None.
4) Maximum par value per maturity: None.
5) Credit: Despite there being no statutory limitations concerning this
category, prudent investment practice necessitates constant credit analysis
of certain issuing agencies. Although there exists an implicit or explicit
government guarantee of the various agency issues, market perception
often limits the liquidity of these issues.
C. Bankers Acceptances-Donzest'cJForeign
1) Maximum maturity: Statutory: None.
Policy: .180 days.
(This maximum maturity is a criterion used to determine eligibility for purchase by
the Federal Reserve. Our authority is based on the eligibility as determined by the
Fed. However, since the Fed has discontinued its eligibility requirements and
purchases, this criterion is no longer applicable. Currently, a majority of
acceptances are created only for 180 days.)
2) Maximum par value, total portfolio: None.
3) Maximum par value per name: None.
4) Maximum par value per maturity: None.
5) Credit:
a) The history of the acceptance market is spotless on "Failures to
redeem " This is true even though the years of WW II.
b) Geopolitical location is of prime concern when considering
potential candidates. . Internal, as well as border political and
economic stability of the host country are of prime concern.
c) Liquidity as far. as both credit risk and marketability in the
secondary level are addressed.
February 9,1996
12
d) Although statutory authority does not limit eligibility according to
ranking or rating, previously listed general criteria eliminate lesser
credits.
D. Certificates of Deposits
1) Maximum maturity: Statutory: None.
Policy: 5 years. .
2) Maximum par value, total portfolio: None. '
3) Maximum par value per name: None.
4) Maximum par value per maturity: None.
5) Credit:
a) Criteria concerning loan make-up, LDC *exposure, geographic
location, market perceptions, and financial condition all serve to
eliminate lesser names.
b) Liquidity as far as both credit risk and marketability in the
secondary level are addressed. There must be a market for the
name in which a least three major dealers will bid or offer at a given
moment.
• E. Collateralized Time Deposits
1) Maximum maturity: Statutory: None.
Policy: 5 years.
2) Maximum par value, total portfolio: None.
3) Maximum par value per name: Statutory: Shall not exceed the
net worth of the
institution.
Policy: Same.
4) Maximum par value per maturity: None.
5) Credit: Institutions must be rated average or better, or above a "D ", by a
recognized rating service utilized by the State Treasurer's Office (STO)
Investment Division, and must pass a credit evaluation by the STO Staff
which may include such criteria as geographic location, market perception,
February 9,1996
13
loan diversity, management factors, overall fiscal soundness and the
Community Reinvestment Act Rating of the institution. If, while holding a
pool deposit, an institution is downgraded below acceptable levels by the
rating agencies, the following steps shall be taken:
a) Notify the Deposits Section to monitor collateral closely.
b) Review financials and update credit report.
c) Determine the appropriate plan of action which may include early
• termination of the time deposit, or allow the time deposit to mature.
6) Collateral must comply -with Government Code, Chapter 4, Bank Deposit
Law Section 16500 (et seq.). and the Savings and Loan Association and
Credit Union Deposit Law G:C. Section 16600 (et seq.).
F. Commercial Paper
1) Maximum maturity: Statutory: 180 days.
Policy: 180 days.
2) Maximum par value, total portfolio: Statutory: 30% of the current
portfolio.
Policy: Same.
3) Maximum par value per name: Statutory: 10% of outstanding
Policy: Same.
4) Maximum par value per maturity: None.
5) Credit:
a) Rated "Prime" quality as defined by a nationally recognized
organization which rates such securities.
b) Organized and operating within the United States.
c) Have total assets in excess of five hundred million dollars
($5002000,000).
d) Approved by the Pooled Money Investment Board.
February 9,1996
14
G. Corporate Bonds/Notes
1) Maximum maturity: Statutory: None.
Policy: 5 years.
2) Maximum par value, total portfolio: None. '
3) Maximum par value per name: None.
4) Maximum par value per maturity: None.
5) Credit: Securities eligible for investment under this subdivision must be
issued by corporations (including banks) organized and operating within
the United States and shall be within the top three ratings of a nationally
recognized rating service.
. H. Repurchases (RP) and Reverse Repurchase (RRP)
1) Maximum maturity: Statutory: None.
Policy: 1 year.
2) Maximum par value, total portfolio: Statutory:. None.
Policy: RRP is limited to 10%
of ._the current
portfolio.
3) Maximum par value per name: None.
4) Maximum par value per maturity: None..
5) Credit:
a) Must have on file, a signed Security Loan Agreement and/or
General Repurchase Agreement. (Repurchase Agreement may be
either STO General Agreement or PSA Standard Agreement.)
b) Reverses and reverse repurchases are only done with long
established and/or well capitalized broker -dealers.
The Reverse Repurchase Program is designed to augment the overall portfolio
yield in a safe- and prudent manner. It is not viewed as a tool with which to effect specific
portfolio moves .or plan major market strategy. The portfolio carries reversed securities at
negative book and the re -investment at positive book. As a result, the reported size of the
portfolio represents the true cash participation of its members. All reverses are cash
matched either to the maturity of the re -investment or an adequately positive cash flow
February 9,1996
15
date which is approximate to the maturity of the re -investment. For example, if cash flow
is positive on January 27 and negative on January 31, then the reverse may mature on the
27th, and the re -investment may be taken to the 31st. 'Cash flow is evened out, and a
positive spread is achieved. Only securities already held in the portfolio and
unencumbered may be reversed. No item purchased against reverse will. be used as a
reversible security while the original reverse is outstanding (i.e., the STO does not
leverage one liability with another). The against reverse re -investment will be limited to
maturities under one year, effectively limiting the appropriate securities to generic money
market issues. Because of the role played by the Reverse Program in this office,
customized or structured products* are not considered appropriate re -investment
candidates. All costs, earnings, and spreads are fixed at the beginning of each transaction.
II. GUIDELINES FOR MAINTAINING LIQUIDITY
First priority will be the cash flow needs as reported on both the monthly and six
month cash forecasts. These forecasts will be updated daily using the current investment
input, as well as adjustment information provided by Cash Management personnel.
Sufficient Treasury securities will be maintained for unscheduled cash needs. It
has been determined that Treasury Bills having maximum maturity of 1 year will be used
for this purpose. Domiciled in San Francisco, these securities are available throughout a
great portion of the business day to meet most emergencies. Because of their Government
guarantee, as well as the short maturity; the exposure to market risk is minimal.
Due to the make-up of the portfolio participants, an average maturity of six to
eighteen months will be maintained. '
III GUIDELINES FOR MAINTAINING RATE OF RETURN
Always keep in mind the need to provide a consistent rate of return not only to the
quarterly participants of the pool, but the longer term depositors as well. It is often the
case that investments made with long term deposits create the base rate to the portfolio.
Since sales gains/losses impact the portfolio on a quarterly basis, large gains/losses are to
be avoided. Failure to offset either gains or losses proportionately would result in a saw-
toothed apportionment rate history. For this reason, extreme positions or styles of trading
are prohibited.
An informal weekly meeting, with the Chief of Investments, Assistant Chief, and
Investment Manager, will be held to discuss current investment philosophies and
upcoming economic releases. Decisions of value and direction are made to accommodate
the occurrence of all those events which might be considered reasonable and probable.
Although securities trading is allowed for purposes of enhancing portfolio. return,
specific limitations have been established to protect the portfolio rate of return:
1) Prior to taking a position, apparent value and size will be discussed
between the Chief and Treasury Trader involved.
February 9,1996
16
2) During a " iPhen issued" (W.I.) period our long position shall never exceed
the amount we are willing to purchase:
3) Short positions will not be taken at any time.
4) Trading positions are to be reported daily to the Chief of Investments.
17
February 9,1996
SUMMARY OF DIFFERENCES BETWEEN UPDATED AND PRIOR STO "GOALS,
OBJECTIVES AND POLICES" FOR THE INVESTMENT OF FUNDS IN THE
POOLED MONEY INVESTMENT ACCOUNT
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Goals
Listed Rate of Return, first; Liquidity,
Lists Safety/Diversification, first;
second; & Diversification, third. All
Liquidity, second; & Rate of Return,
'.
three goals were considered when
third.. This listing more.accurately
making an investment and safety has
reflects our priorities.
always been our number one concern.
Safety/Diversification
Diversification emphasized.
Safety emphasized. Diversification just
one source of safety.
Rate of Return
Must be consistent with current market
Same. Specific examples of the types
yield direction.
of investments precluded by this
provision (i.e., inverse yield securities
and range bonds) are now included.
Security Description Format Non -standardized Standardized
Bank Notes
Implicitly allowed as a special type of
Explicitly mentioned as a special type
corporate bonds/notes.
of corporate bonds/notes.
Reverse Repurchase
Provisions contained in an addendum.
Moved addendum on Reverse
Repurchases into the body of the policy
on Repurchase and Reverse
Repurchases. There was no change in
the substance of these provisions.
February 9, 1996
18
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21
LOCAL AGENCY INVESTMENT FUND
ADMINISTRATIVE EARNINGS (COST)
QUARTER ENDING
09/30/90
PERCENTAGE OF
EARNINGS (COST)
0.20
12/31 /90
0.25
03/31 /91
0.21
06/30/91
0.25
09/30/91
0.25
12/31 /91
0.23
03/31 /92
0.25
06/30/92
0.22
09/30/92
0.23
12/31 /92
0.25
03/31 /93
0.25
06/30/93
0.26
09/30/93
0.23
12/31 /93
0.27
03/30/94
0.26
06/30/94
0.25
09/30/94
0.27
12/31 /94
0.26
03/31 /95
0.26
06/30/95
0.19
09/30/95
0.23
12/31 /95
0:25
3/31 /96
0.23
The law provides that reimbursements cannot exceed
one-half of 1 percent of the EARNINGS of the fund per
quarter. Listed above is the percentage of earnings
(costs) per quarter.
22
HOW TO CALCULATE QUARTERLY
EARNINGS & APPORTIONMENT
Following are three examples of how the apportionment of quarterly earnings
is computed, based on 3/31/95 quarter -ending portfolio information.
The first example simply equates the information to a mathematical formula
used to compute the earning rate for the entire pool. The formula is a true
yield annualized calculation, which is also adjusted to reflect leap year, when
necessary.
The second example, using the information derived from the portfolio and
verified by calculation, breaks the numbers down to a LAIF percentage par-
ticipation. As of 3/31/95, the LAIF balance represented 32.05316110% of the
total pool.
The third example carries the breakdown further to reflect the individual par-
ticipation; earnings, and apportionment of a single account in the LAIF. The
process of determining the weighted deposits, as well as the final dollars cred-
ited, is outlined and adjusted to reflect any appropriate charges.
23
QUARTERLY EARNINGS & APPORTIONMENT OOL
D = Number of days in the quarter
E = Interest income ± sales gain/loss
B = Average quarterly book total
R = Quarterly earnings rate
Quarterly earnings calculation
[E/D x *3651 / B = R (*366 in a leap year)
For example purposes, figures for quarter ending 3/31/95 will be used throughout as
follows:
D=90
E = 3833404,389.54 + 159,941.42 = 383,564,330.96
B = 2629373404,578.66
R = 5.775
or stated as a formula:
1383,564,330.96/90 x 365] / 26,937,404,578.66 = 5.775*
* Actual Apportionment Rate is figured after charges have been subtracted.
The subtraction of charges results in the 5.760 apportionment rate
reported 3/31/95 for LAIF.
24
QUARTERLY EARNINGS & APPORTIONMENT LAIF)
Dollar days of pool = Book value x # of days in the, quarter
26,937,404,578.66 x 90 = 2,424,366,412,079.40
2,424,366,412,079.40 dollar days = 100% of pool
• LAY is 32.05316110% of the pool = 777,086,071,718.09 dollar days
D =1 (Since the book value has been converted to 1 dollar day)
E = 32.05316110% x 383,564,330.96 = 122,944,492.92 (Less charges)
B = 777208620712718.09 (1 Dollar day)
R = 5.775 (Less charges)
or stated as a formula:
[EMx365]/B=R
[122,944,492.92 x 365) / 777,086,071,718.09 = 5.775
(Less charges)
25
QUARTERLY EARNINGS & APPORTIONMENT (LAIF/PARTICIPANT)
AGENCY: ABC Public Utility District
Beginning Balance:
' 01/01/95
325752000
.01109195
311981000
01/28/95
4262311000
02/02/95
5,0002000
03/02/95
429252000
03/19/95
520002000 _
Ending Balance:
52000,000
01/01/95 - 01/09/95
8 Days x 3,575,000
= 28,600,000
Dollar day
01/09/95 - 01/28/95
19 Days x 3,198,000
= 60,762,000
Dollar day
01/28/95 - 02/02/95
5 Days x 4,623,000
= 23,115,000
Dollar day
02/02/95 - 03/02/95
28 Days x 5,000,000
= 140,000,000
Dollar day
03/02/95 - 03/19/95
17 Days x 4,925,000
= 8327252000
Dollar day
03/19/95 - 03/31/95inc.
13 Days x 5,000,000
= 65,000,000
Dollar day
90 Days
401,2022000
Dollar day
D=1 '
E = .00051629 X 122,944,492.92 (% of LAIF x LAIF earnings) _
63,475.01 (Less charges)
B = 401,202,000 ' (1 Dollar day)
R = 5.775 (Less charges)
. [63,475.01 / 1 x 365] / 401,202,000 = 5.775 (Less charge)
26
LAIF CHARGES
Total charges for LAIF for the quarter were 315,423.00.
ABC Public Utility District is .051629% of LAIF.
ABC Public Utility District = .00051629 x 3152423.00 = 162.85
share of charges.
Apportionment will reflect this charge.
ABC Public Utility District computed earnings = 63,475.01
Less share of charges = 162.85
Apportioned earnings = 632312.16
Computed earning rate 5.775
Less 162.85 charges
Actual earning rate 5.76
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32
DISCLOSURE STATEMENT
PORTFOLIO HOLDINGS: DERIVATIVES
STRUCTURED NOTES, AND ASSET -BACKED SECURITIES
The Treasury Investment Division has received a number of inquir-
ies concerning our various portfolio holdings. Questions involving
structured notes, derivative products, and asset -backed securities are
themost notable. We have found that the lack of acceptable defini-
tions regarding these financial products has led to confusion and
disagreement with our reported positions.
In an effort to clarify the information provided in our monthly state-
ments, we would like to share with you our understanding of these
financial products, as defined by the U.S. General Accounting Office
(GAO).
In a recent survey of sales practices for these financial products the
GAO provided definitions and examples of what they considered 1)
plain vanilla OTC derivatives, 2) more complex OTC derivatives, 3)
structured notes, and 4) asset -backed securities. Following are the
GAO definitions, as well as the State of California Treasurer's hold-
ings in each category as of April 1,1996:
33
* 1. Plain Vanilla OTC Derivative Products
A derivative product is a financial instrument whose market value is de-
rived from a reference rate, index, or value of an underlying asset. OTC deriva-
tives are privately negotiated contracts and are not traded on organized ex-
changes.
U.S. $ 0 As of: 04/01 /96
*2. More Complex OTC Derivative Products
Other more complex OTC derivatives have at least one of the following
characteristics:
a. Their prices tend to be difficult to obtain because they are often
available from only a few dealers.
b. The payments required by the derivative contract are calculated on
the basis of more than one interest rate, currency, asset, or other factor.
C. The derivative contract has terms that are not determined until some
future date.
d. The contract involves a term that acts as a multiplier or increases
the leverage of the rate(s) used to compute payments.
e. The contract CAN entail potentially unlimited risk.
U.S. $ 0 As of: 04/01 /96
* The Pooled Money Investment Account Portfolio has not invested in, nor
will it invest in, Derivative Products as defined in General Accounting defini-
tions #1 & #2. The GAO separation of derivatives, structured notes, and asset --
backed securities is consistent with GASB 94-1.
34
3. Structured Notes
Structured notes are debt securities (other than asset -backed securities) whose cash -
flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon
one or more indices and/or that have embedded forwards or options. They are issued
by corporations and by government -sponsored enterprises such as the Federal National
Mortgage Association and the Federal Home Loan Bank System.
U.S. $1,100.72 million As of: 04/01/96
4. Asset -Backed Securities
Asset -backed securities, the bulk of which are mortgage -backed securities, entitle their
purchasers'to receive a share of the cash flows from a pool of assets such as principal
and interest repayments from a pool of mortgages (such as CMOs) or credit card re-
ceivables.
U.S. $297.129 million As of: 04/01 /96
Securities Accountability
1) Vanilla Derivatives. 0
2) Complex Derivatives 0
3) Structured Notes
a. Callable Agency $ 64.970 million
b. 3 month LIBOR Agency Floater $ 455.000 million
C. 3 month LIBOR Corporate Floater $ 554.500 million
d. 2 year CMT Corporate Floater $ 26.250 million
35
4) Asset -Backed
a. Small Business Association Pools $ 83.172 million
b. Agency CMOs $ 171.782 million
C. GNMA Pools $ 4.802 million
d. FHLMC PC Pools $ 37.373 million
Total Portfolio As of: 04/01 /96 $29269475887156.39
Financial Products as a percent of portfolio: 4.707%
36
How to Participate in the Local Agency
Investment Fund
Before any deposits will be accepted, the local governmental agency must file
with the State Treasurer a resolution and bank authorization form which will
contain. the following:
1. Name, address, and telephone number of agency.
2. A statement that the agency agrees to deposit or withdraw money in the
Local Agency Investment Fund in the State Treasury in accordance with the
provisions of Section 16429.1 of the Government Code for the purpose of
investment as stated therein.
3. The names and titles of the officials authorized by this resolution to order
the deposit or withdrawal of money in the Local Agency Investment Fund.
4. Resolution number and date passed by the governing body.
5. Signature (s) of the person (s) authorized to sign resolutions.
6. Banking information signed by a person authorized on the resolution.
7. Seal of the agency if one is usually affixed to resolutions.
Deposits or withdrawals must. be in multiples of one thousand dollars ($11000);
minimum transaction size is five thousand dollars ($5,000) and a cap of $20
million per account. Bond Proceeds also have a five thousand dollar ($5,000)
minimum with no cap. Ten transactions are allowed per month for each regular
account.
37
Bond Proceeds
In addition to a regular account, a participating Agency may open a Bond Proceed
account. There is no maximum on the amount of Bond Proceeds that may be
deposited. Each Bond issue is given a separate bond identification number, and
has its. own 30 day maturity.
How to Open a Bond Proceed Account- After verification that an Agency has a
regular LAIF account established, an Agency may make application to deposit
bond proceeds by completing and submitting a bond proceed application with an
Official Statement for each bond issue to be deposited.
LIQUIDITY
Bond Proceeds may be withdrawn every 30 calendar days from date of deposit. If
the maturity date falls on a Holiday or weekend, the withdrawal date will move to
the next business day and each 30 calendar day thereafter.
Trustees - Trustees may open an account for a participating Agency for the
purpose of depositing bond proceeds. These accounts are opened and maintained
by the Trustee. To open a Trustee account, an Agency must first establish a
regular LAIF account, and must submit a Trustee Bond Proceed Application signed
by the agency, a bank signature card signed by the Trustee, and an Official
Statement for each bond issue.
38
Procedures for Deposits and
Withdrawals for LAIF
The authorized government official or Trustee must notify, by telephone, the LAIF
at (916) 653-3001 and provide the following information:
♦ LAIF Pin Number
♦ LAIF Account Number
♦ Name of Agency
♦ Transfer Date
♦ Transfer Amount
♦ Deposits - Bank and Branch Number
♦ Withdrawals - Bank and Account Number
♦ Correspondent Bank When Applicable
♦ Transfers will be processed only through banks authorized by the agency in
writing and currently on file with the State Treasurer's Office.
♦ Telephone calls must be received by the LAIF by 9:30 a.m. to receive same
day credit for deposits or withdrawals. Telephone calls received after 9:30
a.m. will be for the next business day's credit.
♦ The Authorized Government Official or Trustee will instruct their Local
Bank to transfer to and/or receive funds from one of the following Banks:
Bank of America Union Bank of California
Bank of California U.S. Bank
Sanwa Bank
♦ To keep lines available for daily transfers, please make telephone calls
which pertain to rates only, account balances and/or general information
after 10:00 a.m.
39
Checklist for Transfers
Office hours same day credit 7:30 a.m. - 9:30 a.m.
Daily batch processing 9:30 a.m. - 10:30 a.m.
Office hours next business day credit 10:30 a.m. - 4:00 p.m.
Transactions may be made up to 10 days in advance.
A transfer must be made by an authorized person prior to the transfer of funds by
telephoning LAIF at (916) 65 3 - 3001.
What an authorized person will need to complete to a transfer:
LAIF Pin Number
LAIF Account Number
Name of Agency
Effective date of Deposit or Withdrawal
Amount of Deposit or Withdrawal
Originating Bank or Account Number
What an authorized person will need for their records:
Name of person at LAIF who took Deposit or Withdrawal
Date and time telephone Deposit or Withdrawal was done
Effective date of Deposit or Withdrawal
LAIF Confirmation Number
Name of person at originating or receiving bank you spoke with after LAIF
was telephoned
40
T a 0
4t!t 4 Qu&rA,
RENT ADVISORY BOARD MEETING: May 8, 1996
Information Item C
ITEM TITLE
LAIF Pooled Money Investment Board Report - February 1996 and 3/31 /96 Market
Valuation
ISSUE AND DISCUSSION:
Attached please the February 1996 LAIF Investment Report and 3/31/96 Quarterly LAIF
LAIF has begun to distribute the Investment Report on a monthly basis which we will
include in future agendas.
Approved for submission to the Investment Advisory Board:
ohn M. Falcone
'inance Director
Pooled
State of California
Money Investment Account
Market Valuation
3/31 /9 6
. .................... .....
:...:: ...:.:::::
:..:.......::::
United States Treasury:
Bills
$
2,459,817,380.56
$
2,508,300,673.35
NA
Strips
$
846,551,050.00
$
969,499,704.35
NA
Notes
$
5,891,908,365.36
$
5,839,716,562.50
$
68,475,088.92
Federal Agency:
Bonds
$
224,930,716.55
$
220,697,797.50
$
2,326,263.85
Floaters
$
454,882,868.05
$
453,476,951.00
$
3,360,026.00
MBS
$
172,247,134.67
$
167,636,817.69
$
1,016,462.31
TVA
$
29,896,050.57
$
30,133,432.50
$
214,522.00
GNMA
$
4,823,984.43
$
5,334,464.09
1
45,660.39
SBA
$
83,173,148.91
$
80,414,741.16
$
898,602.01
FHLMC PC
$
37,372,663.43
$
39,847,210.77
$
600,298.83
Discount Notes
$
1,350,853,373.10
$
1,365,322,626.84
NA
Bankers Acceptances
$
256,866,654.09
$
256,898,032.84
NA
Corporate:
Bonds
$
1,321,479,801.23
$
1,319,547,609.86
$
21,035,155.92
Floaters
$
580,798,358.50
$
580,505,360.00
$
2,579,967.45
CDs
$
3,795,616,488.24
$
3,794,883,786.18
$
2,154,629.46
Bank Notes
$
335,211,322.17
$
334,896,518.83
$
380,097.22
Repurchase Agreements
$
198,100,000.00
$
198,100,000.00
NA
Time Deposits
$
365,995,000.00
$
365,995,000.00
NA
AB 55 & GF Loans
$
4,174,409,364.00
$
4,174,409,364.00
NA
Commercial Paper
$
7,789,832,809.59
$
7,791,698,674.75
NA
Reverse Repurchase
$
25,852,500.00
$
25,852,500.00
$
2,430,098.54
TOTAL
$
29,648,914,033.45
$
29,771,462,828.21
$
100,656,675.82
Estimated Market Value Including Accrued Interest $ 29,872,119,504.03
NOTE: Repurchase Agreements, Time Deposits, AB 55 & General Fund loans, and
Reverse Repurchase agreements are carried at portfolio book value (carrying cost).
Certificates of Deposit (CDs), Bank Notes (BNs), and Commercial Paper (CPs) less
than 90 days are carried at portfolio book value (carrying cost). Interest accrued
from the date of purchase on CDs and BNs under 90 days is not included.
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N O 'V Nt
MATT FONG
February 1996
STATE OF CALIFORNIA
STATE TREASURER'S OFFICE
POOLED MONEY INVESTMENT BOARD REPORT
FEBRUARY 1996
Table of Contents
SUMMARY........................................................................................................ I
SELECTED INVESTMENT DATA.................................................................2
INVESTMENT TRANSACTIONS...................................................................3
TIMED.EPOSITS............................................................................................19
DEMAND BANK DEPOSITS.........................................................................21
POOLED MONEY INVESTMENT BOARD DESIGNATION .....................22
SUMMARY OF INVESTMENT DATA
FOR THE POOLED MONEY INVESTMENT ACCOUNT
A COMPARISON OF FEBRUARY 1996 WITH FEBRUARY 1995
(Dollars in Thousands)
FEBRUARY 1996 FEBRUARY 1995
AVERAGE DAILY
PORTFOLIO TOTAL
$28,4841590
TOTAL EARNINGS ON
ACCRUAL BASIS
$ 127,371
EFFECTIVE YIELD
5.643
AVERAGE LIFE OF PORTFOLIO ON
THE LAST DAY OF THE MONTH
(IN DAYS)
263
DOLLAR VALUE OF SECURITY
TRANSACTION
$19,469,454
DOLLAR VALUE OF
TIME DEPOSITS
$ . 242, 400
AVERAGE WORKDAY
INVESTMENT ACTIVITY
$ 1,037,466
NUMBER OF
SECURITY TRANSACTIONS
468
NUMBER OF
TIME DEPOSITS
23
AVERAGE PRESCRIBED DEMAND
COMPENSATING BANK BALANCES
FOR SERVICES
$ 129,388
AVERAGE PRESCRIBED DEMAND
BANK BALANCES FOR
UNCOLLECTED FUNDS
$ 1521210
$281122,451
$ 124,686
5.779
365
$36, 312, 945
$ 38,895
$ 2,0191547
819
14
$ 150,625
$ 254,914
CHANGE
+ $ 362,139
+ $ 2,685
go .136
102
$ 16,843,491
+ $ 203,505
$ 982,081.
351
+ 9
$ 21,237
- $ 102,704
-1-
MATT FONG
STATE TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION
SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000'OMITTED)
Change in
February 29, 1996 Percent From
Tyne of Security Amount Percent Previous Month
Governments
Bills
21407,489
8.75
+
1.10
Bonds
0
0
Notes
51644,697
20.52
-
1.94
Strips
846,551
3.07
-
1.14
Total Governments
81898,737
32.34
-
1.98
Federal Agency Coupons
958,781
3.48
+
.45
Certificates of Deposit
41520,920
16.44
+
1.58
Bankers Acceptances
278,682
1.01
+
.08
Repurchases
843,972
3.07
+
1.64
Federal Agency Discount Notes
11739,419
6.32
+
.79
Time Deposits
374,995
1.36
+
.07
GNMA,'s
41995
.02
0
Commercial Paper
71444,157
27.06
-
.24
FHLMC
38,070
.14
0
Other
0
0
0
Corporate Bonds
11982,963
7.21
+
.45
Pooled Loans
765,707
2.78
+
1.04
Reverse Repurchases
-745,155
-2.71
-
1.51
GF Loans
405,900
1.48
-
2.37
Total, All Types
27,5120143
100
INVESTMENT ACTIVITY
Pooled Money
Other
Time Deposits
TOTALS
PMIA Monthly Average
Effective Yield
Year to Date Yield for
L&5t Day of Month
February 1996
Number Amount
468 $ 19,469,454
13 $ 55,278
23 $ 242,400
504 $ 19,767,132
5.643
5.798 -2_
January 1996
Number Amount
389 $ 16,502,815
8 $ 161,101
20 $ 375,190
417 $ 17, 039,106
5.698
5.821
POOLED MONEY INVESTMENT ACCOUNT
a/ a/
TYPE DESCRIPTION
02-01-96
REDEMPTION
d/
MATURITY TRANS PAR DAYS
DATE I YIELD 000 HELD
AMOUNT EFFEC
EARNED YIELD
BA
Tokyo
Commerzbk
02-01-96
5.750% 02-01-96
5.800
5.600
$15,000
35,000
149
42
$360,083.33
228,815.42
6.025
5.680
CD
CP
Morg
Stan
02-01-96
02-01-96
5.850
5.850
50_1000
50,000
1
1
8,125.00
8,125.00
5.932
5.932
CP
CP
Morg
Morg
Stan
Stan
02-01-96
5.850
50,000
1
1
8,125.00
8,125.00
5.932
5.932
CP
CP
Morg
Morg
Stan
Stan
02-01-96
02-01-96
5.850
5.850
50,000
21000
1
325.00
5.932
CP
SRAC
02-01-96
02-01-96
5.710
5.710
50 A000
50,000
90
90
713,750.00
713,750.00
5.873
5.873
CP
CP
SRAC
Lehman
02-01-96
02-01-96
5.800
5.720
50,000
50,000
92
112
741,111.11
889,777.78
5.969
5.904
CP
SRAC
SALE c/
Treas
Note
7.5000
8.000%
12-31-96
08-15-99
5.470
5.450
49,695
8,115
7
10
53,180.56 5.545"
13,528.11 5.525
Treas
Treas
Note
Note
4.250%
05-15-96
5.450
31705
10
10
5,516.61 5.525
31,186.11 5.525
Treas
Note
Note
5.625%
7.000%
10-31-97
04-15-99
5.450
5.450
20,575
16,000
10
25,463.61 5.525
Treas
Treas
Bill
12-12-96
5.470
61705
10
10
9,548.19 5.545
71,198.13 5.545
Treas
Bill
Bill
12-12-96
12-12-96
5.470
5.470
50,000
50,000
10
71,198.13 5.545
Treas
RRS
Treas
Bill
04-25-96
4.960
15,000
PURCHASE
MTN (FR)
World
6.062%
02-18-98
5.425
11,000
Treas
Note
5.250%
01-31-01
5.239
50,000
CD
Commerzbk
5.250%
06-28-96
5.070
29,000
CD
RB Canada
5.070%
07-01-96
5.050
100,000
CP
GECC
05-29-96
5.030
25,000
CP
GECC
05-29-96
5.030
50,000
CP
Hertz
06-03-96
5.030
28,000
CP
SRAC
07-01-96
4.920
50,000
CP
SRAC
07-03-96
4.920
50,000
CP
SRAC
07-29-96
4.920
50,000
Disc Note
FHLB
06-28-96
4.890
50,000
Disc Note
FHLB
06-28-96
4.880
39,000
Disc Note
FNMA
07-03-96
4.880
48,000
Treas
Bill
05-02-96
4.895
15,000
•Treas
Bill
05-02-96
4.895
50,000
Treas
Bill
05-02-96
4.895
50,000
-3-
POOLED MONEY INVESTMENT ACCOUNT
a/
a_/ a/ MATURITY TRANS PAR DAYS
TYPE DESCRIPTION DATE YIELD 000 HELD
02-02-96
REDEMPTION
CD
Montreal
CD
Montreal
CD
Montreal
SALE
Treas
Note
PURCHASE
5.530% 02-02-96 5.530 $10,000
5.530% 02-02-96 5.530 50,000
5.530% 02-02-96 5.530 50,000
5.000% 04L-31-98 4.924
MTN (FR)
B/A
5.892%
03-31-97
5.425
MTN
Transam
6.750%
08-15-97
5.220
MTN
Gr Western
6.125%
06-15-98
5.379
MTN
GMAC
5.950%
12-30-98
5.480
MTN
GMAC
6.000%
12-30-98
5.480
Treas
Note
5.250%
01-31-01
5.231
CP
Salomon
02-05-96
5.350
CP
Merrill
02-05-96
5.200
CP
Merrill
02-05-96
5.200
02-05-96
REDEMPTION
BA Fuj i
CP Salomon.
CP Merrill
CP Merrill
FFCB
PURCHASE
50,000
50,000
5,000
12,000
10,000
20,000
50,000
20,000
30,000
50,000
AMOUNT
EARNED
EFFEC
YIELD
29 $44,547.22 5.606
29 222,736.11 5.606
29 222,736.11 5.606
2 13,736.26 6.501
02-05-96
5.760
10,000
166
265,600.00
5.999
02-05-96
5.350
20,000
3
8,916.67
5.426
02-05-96
5.200
30,000
3
13,000.00
5.274
02-05-96
5.200
50,000
3
21,666.67
5.274
4.090% 02-05-96
5.910
28,730
621
2,826,034.43
5.954
CD
CommerzBk
5.180% 06-03-96
5.080
19,000
CP
SRAC
02-06-96
5.220
30,00
CP
Lehman
02-06-96
5.250
50,000
CP
Assoc
02-06-96
5.220
100 000
CP
Merrill-
04-26-96
5.100
12,000
CP
Merrill
04-26-96
5.100
50,000
CP
FMCC
04-10-96
5.150
50,000
CP'
FMCC
04-10-96
5.150
50,000
CP
FMCC
04-10-96
5.150
50,000
-4-
POOLED MONEY INVESTMENT ACCOUNT
a/
a/ a/ MATURITY ,'TRANS° PAR DAYS
TYPE DESCRIPTION DATE YIELD (OOOY HELD
02-06-96
REDEMPTION
BA
Fu j i
CP
SRAC
CP
Lehman
CP
Assoc
Cp
Am Exp
CP
Am Exp
CP
Am Exp
CP
Am Exp
SALE
Treas Note
PURCHASE
02-06-96 5.760
02-06-96 5.220
02-06-96 5.250
02-06-96 5.220
02-06-96 5.570
02-06-96 5.570
02-06-96 5.570
02-06-96 5.570
AMOUNT EFFEC
EARNED YIELD
$20,000 167 $534,400.00 6.000
30,000 1 4,350.00 5.293
50,000 1 7,291.67 5.323
100,000 1 14,500.00 5.293
21000 138 42,703.33 5.770
50,000 138 1,067,583.33. 5.770
50,000 138 1,067,583.33 5.770
50,000 1.38 1,067,583.33 5.770
5.000%-01-31-98 4.940 50,000
BN
B/A
4.900%
02-06-97
4.900
Treas
Note
5.250%
01-31-01
5.300
CD
Bk Oregon
5.200%
04-10-96
5.200
CD
CommerzeBk
5.180%
06-03-96
5.050
CP
GECC
06-03-96
5.000
CP
GECC
06-03-96
5.000
CP
Lehman
06-06-96
5.100
CP
Am Exp
04-10-96
5.060
CP
Am Exp
04-10-96
5.060
02-07-96
REDEMPTION
CD
Sanwa
:p
Lehman
CP
Lehman
SALE
Treas
Note
Treas
Note
Treas
Note
I
Treas Note
Treas Note
25,000
50,000
50,000
25,000
50,000
50,000
50,000
50,000
50,000
6 95,896.29 11.667
5.480% 02-07-96
5.470
100,000
16
'243,112.19
5.545
02-07-96
5.730
25,000
97
385,979.17
5.900
02-07-96
5.730
50,000
97
771,958.33
5.900
5.000% 01-31-99 5.042
5.000% 01-31-99 5.056
5.000% 01-31-99 5.050
5.250% 01-31-01 3.450
5.250% 01-31-01 3.450
50,000 734 5,214,336.12 5.205
50,000 735 5,221,242.20 5.205
20,000 735 2,088,496.88 50205
50,000
50,000
-5-
POOLED MONEY INVESTMENT ACCOUNT
a/
a/ a/ MATURITY TRANS PAR DAYS
TYPE DESCRIPTION DATE YIELD 000 HELD
02-07-96
PURCHASE
FNMA (FR)
FNMA ( FR )
Treas
Note
Treas
Note
Treas
Note
Treas
Note
CP
Assoc
CP
GECC
CP
GECC
PURCHASE
c/
Treas
Note
Treas
Note
Treas
Note
02-08-96
REDEMPTION
CD
Deutsche
CP
Assoc
CP
Bear
CP
Merrill
CP
Merrill
SALE
Treas.
Note
Treas
Note
RRS
Treas
Note
Treas
Note
Treas
Note
Treas
Note
PURCHASE
Treas
Note
Treas
Note
CD
Bk Calif
CD
CIBC
5.152%
02-07-01
5.152
$50,000
5.152%
02-07-01
5.152
50,000
5.250%
01-31-01
5.274
20,000
5.250%
01-31-01
5.274
25,000
5.250%
01-31-01
5.264
50,000
5.250%
01-31-01
5.271
50,000
02-08-96
5.180
142,000
03-27-96
5.150
25,000
03-27-96
5.150
50,000
5.000%
01-31-98
5.200
50,000
5.000%
01-31-98
5.200
50,000
5.000%
01-31-98
5.200
1,746
AMOUNT
EARNED
EFFEC
YIELD
5.520%
02-08-96
5.510
50,000
31
$237,238.17
5.586
02-08-96
5.180
142,000
1
20,432.22.
5.252
02-08-96
5.550
30,000
9
4.11625.00
5.634
02-08-96
5.550
50,000
10
77,083.33
5.635
02-08-96
5.550
50,000
10
77,083.33
5.635
5.000%
01-31-99
5.036
30,000
736
3,136,821.41
5.204
5.000%
01-31-99
-5.036
50,000
736
5,228,035.68
5.204
5.250%
01-31-01
3.400
50,000
5.250%
01-31-01
3.400
50,000
5.250%
01-31-01
3.480
25,000
5.250%
01-31-01
3.480
50,000
5.250%
01-31-01
5.264
30,000
5.250%
01-31-01
5.264
50,000
5.250%
03-27-96
5.250
115,000
5.220%
03-27-96
5.220
100,000
mm
POOLED MONEY INVESTMENT ACCOUNT
a/
a/ a/ MATURITY 'TRANS PAR DAYS AMOUNT EFFEC
TYPE DESCRIPTION DATE YIELD 000 HELD EARNED YIELD
02-08-96
PURCHASE c/
CP
Morg Stan
CP
Morg Stan
PURCHASE
g/
Treas
Note
Treas
Note
Treas
Note
02-09-96
REDEMPTION
02-29-96 5.235
02-29-96 5.235
6.625% 03-31-97 5.230
6.125%05-31-97 5.230
6.125% 05-31-97 5.230
BA
Fuji
02-09-96
5.840
CD
NB Detroit
5.530% 02-09-96
5.510
CP
Unocal
02-09-96
5.950
CP
GMAC
02-09-96
5.750
CP
GMAC
02-09-96
5.750
NO PURCHASES
02-13-96
REDEMPTION
BA Union
CP GECC
CP Am Exp
CP Am Exp
Disc Note FNMA -
Disc Note FNMA
SALE
Treas Note
PURCHASE
$50, 000
50,000
24,475
24,850
24,850
20,000
155
50,000
31
18,600
53
50,000
85
50,000
85
$502,888.89
6.073
237,240.22
5.586
162,930.83
6.085
678,819.44
5.910
678,819.44
5.910
02-13-96
5.560
91000
147
204,330.00
5.768
02-13-96
5.650
30,000
132
621,500.00
5.849
02-13-96
5.560
50,000
148
1,142,888.89
5.769
02-13-96
5.560
50,000
148
1,142,888.89
5.769
02-13-96
5.530
50,000
124
952,388.89
5.715
02-13-96
5.530
50,000
126
967,750.00
5.717
5.000% 01-31-99 5.007 50,000 736 5,430,597.68 5.428
CD B N Paris 5.250% 04-08-96 5.200
CP GMAC 04-02-96 5.230
CP GMAC 04-02-96 5.230
10,000
30,000
50,000
-7-
POOLED MONEY INVESTMENT ACCOUNT
a/
a/ a/ MATURITY TRANS PAR DAYS AMOUNT
TYPE DESCRIPTION DATE YIELD 000 HELD EARNED
02-14-96
REDEMPTION
EFFEC
YIELD
CD
Bk Calif
5.750%
02-14-96
5.750
$50,000
61
$487,152.78
5.829
CB
Exxon
7.750%
02-14-96
6.900
71000
448
596,942.50
6.990
CP
Salomon
02-14-96
5.600
50,000
26
202,222.22
5.700
CP
Salomon
02-14-96
5.600
50,000
26
202,222.22
5.700
CP
SRAC
02-14-96
5.700
50,000
76
601,666.67
5.849
CP
SRAC
02-14-96
5.700
50 000
76
601 666.67
5.849
CP
Chemical
02-14-96
5.670
87,000
133
1,822,432.50
5.871
CP
SRAC
02-14-96
5.550
50,000
149
1,148,541.67
5.759
CP
SRAC
02-14-96
5.550
50,000
149
1,148,541.67
5.759
CP
Am Exp
02-14-96
5.560
50,000
149
1,150,611.11
5.770
CP
Am Exp
02-14-96
5.560
50,000
149
1,150,611.11
5.770
Disc Note
FHLB
02-14-96
5.460
10,000
155
235,083.33
-5.669
Disc Note
FHLB
02-14-96
5.460
50,000
155
1,175,416.67
5.669
SALE
Treas
Note
4.750%
08-31-98
4.854
25,000
877
544,814.56
4.748
Treas
Note
4.750%
08-31-98
4.854
50,000
877
1,089,629.12
4.748
Treas
Note
4.750%
08-31-98
4.854
50,000
877
1,089,629.12
4.748
Treas
Note
5.250%
01-31-01
5.130
20,000.
7
40,384.62
10.979
Treas
Note
5.250%
01-31-01
5.130
30,000
6
60,576.92
9.072
PURCHASE
MTN
FNMA
5.410%
02-13-01
5.307
50,000
CD
ABN Amro
5.120%
05-09-96
5.090
500,000
CD
CommerzBk
5.070%
06-10-96
5.020
50 000
CD
NB Detroit
5.010%
07-08-96
5.000
45,000
CP
Assoc
02-15-96
5.330
55,000
Disc Note
FNMA
07-16-96
4.790
50,000
CP
Salomon
03-27-96
5.440
50,000
CP
Salomon03-27-96
5.440
500,000
CP
Gr Western
03-27-96
5.220
25,000
CP
Am Home
04-02-96
5.210
33,963
CP
Merrill
04-02-96
5.200
50,000
CP
Merrill
04-01-96
5.200
50000
CP
Merrill
04-03-96
5.200
50,000
CP
Unocal
04-03-96
5.290
10,000
CP
Bear
04-25-96
5.150
30,000
CP
GMAC
04-25-96
5.200
50,000
CP
GMAC
04-25-96
5.200
50,000
CP
Am Exp
03-01-96
5.150
50,000
CP
Am Exp
03-01-96
5.150
50,000
-8-
POOLED MONEY INVESTMENT ACCOUNT
a
a/ a/ MATURITYv,- BRANS''' PAR DAYS AMOUNT EFFEC
TYPE DESCRIPTION DATE YIELD 000 HELD EARNED YIELD
02-15-96
REDEMPTION
BA
Dai Ichi
02-15-96
5.790
$11,000
160
$283,066.66
6.025
CP
Assoc
02-15-96
5.330
55,000
1
8,143.06
5.404
MTN
Treas
Assoc
Strip
4,500%
Cpns
02-15-96
02-15-96
6.280
6.010
5,000
50,000
514
518
434,500.00
4,021,000.00
6.420
6.162
Treas
Strip
Cpns
02-15-96
5.665
15,000
1170
2,458,050.00
-6.114
Treas
Strip'Cpns
02-15-96
5.665
50,000
1170
8,193,500.00
6.114
Treas
Strip
Cpns
02-15-96
02-15-96
5.693
5.693
50,000
50,000
1171
1171
8,236,500.00
8,236,500.00
6.147
6.147
Treas
Treas
Strip
Strip
Cpns
Cpns
02-15-96
5.210
50,000
1203
7,791,000.00
5.600
Treas
Strip
Cpns
02-15-96
5.235
20,000
1203
3,130,000.00
5.629
Treas
Treas
Strip
Strip
Cpns
Cpns
02-15-96
02-15-96
5.235
5.040
50,000
25,000
1203
1213
7,825,000.00
3,808,750.00
5.629
5.408
Treas
Strip
Cpns
02-15-96
5.040
25,000
1213
3,808,750.00
5.408
PURCHASE
MTN
B/A
5.600%
02-15-01
5.600
50,000
BA
Union
05-09-96
5.030
10,000
BA
Montreal
07-03-96
4.890
6,500
CD
Sanwa
5.260%
03-01-96
5.250
50,000
CD
Sanwa
5.260%
03-01-96
5.250
50,000
CD
Montreal
5.250%
03-01-96
5.250
50,000
CD
Montreal
5.250%
03-01-96
5.250
50,000
CD
Hong Kong
5.060%
05-10-96
5.060
40,000
CD
Hong Kong
5.060%
05-10-96
5.060
50,000
CD
CommerzBk
5.080%
06-06-96
5.030
10,000
CD
Deutsche
5.070%
06-10-96
5.020
50,000
CP
Bkrs Trst
05-17-96
5.030
50,000
CP
Bkrs Trst
05-17-96
5.030
50,000
Disc Note
FHLB
05-08-96
4.980
15,710
Disc Note
FHLB
.07-09-96
4.820
38,730
Disc Note
FHLMC
05-03-96
4.980
19,440
CP
Am Exp
02-21-96
5.220
40,000
PURCHASE c/
Treas
Bill
12-12-96
5.375
50,000
.Treas
Bill
02-06-97
5.375
50,000
Treas
Bill
5.000%
02-15-99
5.375
50,000
Treas
Bill
5.000%
02-15-99
5.375
50,000
TVA
6.000$
11-01-00
5.375
71680
POOLED MONEY INVESTMENT ACCOUNT
d/
a/ a/ MATURITY TRANS PAR DAYS
TYPE DESCRIPTION DATE YIELD 000 HELD
02-16-96
SALE c/
AMOUNT
EARNED
EFFEC
YIELD
Treas
Bill
12-12-96
5.375
$50,000
1
$7,036.02
5.449
Treas
Bill
02-06-97
5.375
50,000
1
6,983.77
5.449
Treas
Note
5.000% 02-15-99
5.375
50,000
1
7,334.64
5.449
Treas
Note
5.000% 02-15-99
5.375
50,000
1
7,334.64
5.449
TVA
6.000% 11-01-00
5.375
71680
1
1,172.05
5.449
PURCHASE
CD
Deutsche
5.070$ 06-07-96
5.030
25,000
CP
Household
05-03-96
5.060
45,000
CP
GMAC
05-08-96
5.080
25,000
CP
Am Exp
05-03-96
5.050
50,000
CP
Am Exp
05-03-96
5.050
50,000
CD
CommerzBk
5.210% 03-29-96
5.190
25,000
CD
CommerzBk
5.210% 03-29-96
5.190
50,000
CP
GECC
05-08-96
5.040
50,000
CP
GECC
05-08-96
5.040
50,000
CP
GECC
05-08-96
5.040
51000
02-20-96
REDEMPTION
BA
Bk NYC
02-20-96
.5.440
13,000
41
80,542.22
5.549
BA
Bk Tokyo
02-20-96
5.750
7,050
165
185,796.87
5.987
CD
ABN Amro
5.450% 02-20-96
5.440
50,000
29
219,112.87
5.515
CD
ABN Amro
5.450% 02-20-96
5.440
50,000
29
219,112.87
5.515
CD
Bk Oregon
5.450% 02-20-96
5.450
30,000
46
208,916.67
5.525
CP
Textron
02=20-96
5.600
25,000
32
124,444.45
5.706
CP
Textron
02-20-96
5.600
50,000
32
248,888.90
5.706
CP
Conagra
02-20-96
5.570
50,000
39
301,708.33
5.681
CP
W/F
02-20-96
5.480
25,000
46
175,055.56
5.593
CP
GECC
02-20-96
5.440
50,000
47
355,111.11
5.555
CP
GECC
02-20-96
5.440
56,000
47
355,111.11
5.555
Disc
Note FNMA
02-20-96
5.525
50 000
92
705,972.22
5.681
Disc
Note FNMA
02-20-96
5.525
50,000
92
705,972.22
5.681
-10-
POOLED MONEY INVESTMENT ACCOUNT
a/
a/ a/ MATURITY TRANS PAR DAYS AMOUNT EFFEC
TYPE DESCRIPTION DATE YIELD 000 HELD EARNED YIELD
02-20-96 -
PURCHASE
Treas
Note
5.250%
01-31-01
5.274
$50,000
Treas
Note
5.250%
01-31-01
5.282
50,000
CP
Conagra
04-25-96
5.200
50,000
CP
Conagra
04-25-96
5.200
25,000
CP
SRAC
04-25-96
5.120
50,000
CP
SRAC
04-25-96
5.120
50,000
CP
SRAC
04-26-96
5.120
50,000
CP
SRAC
04-26-96
5.120
50,000
Disc Note
FHLMC
05-17-96
4.980
28,300
Treas
Bill
02-06-97
4.645
50,000
Treas
Bill
02-06-97
4.645
50,000
PURCHASE
c/
Treas
Note
6.625%
03-31-97
5.150
49,535
Treas
Note
6.625%
03-31-97
5.150
50,000
Treas
Bill
01-09-97
5.150
50,000
Treas
Bill
01-09-97
5.150
50,000
Treas
Bill
01-09-97
5.150
41610
02 -21-9 6
REDEMPTION
CD
IBJ
5.500% 02-21-96
5.500
100,000
26
$397,222.22
5.576
CP
Am Exp
02-21-96
5.220
40,000
6
34,800.00
5.297
CP
GMAC
02-21-96
5.410
50,000
22
165,305.56
5.503
CP
GMAC
02-21-96
5.410
50,000
22
165,305.56
5.503
CP
Assoc
02-21-96
5.410
100,000
22
330,611.11
5.503
CP
Country
Gr Western
02-21-96
02-21-96
5.460
5.470
30,000
25,000
22
22
100,100.00
83,569.44
5.554
5.564
CP
CP
Am Exp
02-21-96
5.400
50,000
22
165,000.00
5.493
CP
Am Exp
02-21-96
5.400
50,000
22
165,000.00
5.493
CP
FMCC
02-21-96
5.410
40,000
23
138,255.56
5.504
SALE c/
Treas
Note
6.625% 03-31-97
5.150
50,000
1
7,313.71
5.221
Treas
Note
6.625% 03-31-97
5.150
49,535
1
7,245.70
5.221
Treas
Bill
01-09-97
5.150
50,000
1
6,716.46
5.221
Treas
Bill
01-09-97
5.150
50,000
1
6,716.46
5.221
Treas
Bill
01-09-97
5.150
41610
1
619.26
5.221
Doc
POOLED MONEY INVESTMENT ACCOUNT
d/
a/ a/ MATURITY TRANS PAR DAYS
TYPE DESCRIPTION DATE YIELD 000 HELD
02-21-96
PURCHASE
MTN
FNMA
5.360%
02-16-01
5.550
$10,000
CD
RB Canada
5.020%
08-01-96
5.010
20,000
BA
RaboBank
03-04-96
5.170
15,000
BA
B/A
05-08-96
5.050
50,000
CD
Midland
5.125%
05-31-96
5.125
50,000
CD
Midland
5.125%
05-31-96
5.125
50000
CP
Merrill
05-29-96
5.080
50,000
CP
Bear
05-29-96
5.090
50,000
CP
Bkrs Trst
.07-29-96
5.050
25,000
CP
Bkrs Trst
07-29-96
5.050
50,000
Treas
Bill
02-06-97
4.820
50 000
Treas
Bill
02-06-97
4.820
50,000
CP
GECC
03-08-96
5.180
50,000
CP
GECC
03-08-96
5.180
50,000
02-22-96
SALE
Treas
Bill
04-04-96
4.740
MTN(FR)
GMAC
4.7750%
02-22-96
4.910
PURCHASE
Disc Note
FNMA
04-04-96
5.060
BA
B/A
04-25-96
5.100
BA
Union
05-01-96
5.050
BA
RNB NYC
05-01-96
5.020
BA
Deutsche
05-08-96
5.040
CD
Bk Oregon
5.125%
04-25-96
5.125
CD
Bk Oregon
5.125%
04-25-96
5.125
CD
Bk Oregon
5.125%
04-25-96
5.125
CD
CommerzBk
5.160%
05-29-96
5.120
CD
Montreal
5.120%
05-29-96
5.120
CD
Montreal
5.120%
05-29-96
5.120
CP
Am Exp
04-25-96
5.080
02-23-96
NO REDEMPTIONS
-12-
AMOUNT EFFEC
EARNED YIELD
33,000 224$11095,196.67 5.625
25,000 582 2,465,687.31 6.201
33,000
10,000
5,000
30,100
5,000
5,000
50,000
50,000
40,000
50,000
50,000
25,000
POOLED MONEY INVESTMENT ACCOUNT
a/
a/ a/ MATURITY TRANS PAR DAYS
TYPE DESCRIPTION DATE YIELD 000 HELD
02-23-96
PURCHASE
CD
RaboBank
5.090%
05-29-96
5.070
$251000
CD
ABN Amro
5.100%
05-29-96
5.090
50,000
CD
ABN Amro
5.100%
05-29-96
5.090
50,000
Cp
Country
04-25-96
5.170
34,000
Cp
Am Exp
04-25-96
5.060
50,000
02-26-96
REDEMPTION
BA Tokyo 02-26-96 5.830
PURCHASE
BA
B/A
05-20-96
5.020.
BA
B/A
05-20-96
5.020
CD
Nt West BK
5.195%
04-26-96
5.180
CD
Nt West BK
5.195%
04-26-96
5.180
CD
ABN Amro
5.100%
05-29-96
5.090
CD
ABN Amro
5.100%
05-29-96
5.090
Disc Note
FHLB
04-25-96
5.050
Disc Note
FHLB
04-25-96
5.050
Disc Note
FHLB
04-25-96
5.050
Disc Note
FNMA
04-29-96
5.070
Disc Note
FNMA
04-29-96
5.070
PURCHASE
c/
Treas
Bill
05-09-96
5.170
Treas
Bill
07-25-96
5.170
Treas
Bill
10-17-96
5.170
Treas
Bill
01-09-97
5.170
AMOUNT EFFEC
EARNED YIELD
21,450 178 $618,320.08 6.086
12,000
12,000
50,000
50,000
50,000
50,000
34,000
50,000
50,000
50,000
50,000
48,300
28,460
40,000
19,000
-13-
POOLED MONEY INVESTMENT ACCOUNT
a/
a/ a/ MATURITY TRANS PAR DAYS AMOUNT EFFEC
TYPE DESCRIPTION DATE YIELD 000 HELD EARNED YIELD
02-27-96
REDEMPTION
BA
Fuji
02-27-96
5.740
$8,200
166
$217,035.78
5.977
CD
RaboBank
5.620%
02-27-96
5.610
50,000
160
11246,72-0.73
5.687
CP
GECC
02-27-96
5.440
.50,000
54
408,000.00
5.560
CP
GECC
02-27-96
5.440
50,000
54
408,000.00
5.560
CP
Bear
02-27-96
5.470
50,000
54
410,250.00
5.591
CP
Bear
02-27-96
5.470
50,000
54
410,250.00
5.591
CP
Conagra
02-27-96
5.800
50,000
89
716,944.44
5.966
CP
Bkrs Trst
02-27-96
5.670
50,000
103
811,125.00
5.843
CP
Bear
02-27-96
5.650
21000
105
32,958.33
5.824
CP
Bear
02-27-96
5.650
50,000
105
823,958.35
5.824
CP
Bkrs Trst
02-27-96
5.600
50,000
155
1,205,555.56
5.818
CP
Bkrs Trst
02-27-96
5.600
25,000
155
602,777.78
5.818
SALE c/
Treas
Bill
05-16-96
5.170
48,300
1
6,726.89
5.241
Treas
Bill
05-16-96
5.170
28,460
1
3,926.33
5.241
Treas
Bill
10-17-96
5.170
40,000
1
5,454.92
5.241
Treas
Bill
01-09-97
5.170
19,000
1
2,561.30
5.241
RRS
Treas
Note
5.250%
01-31-01.
3.700
50,000
Treas
Note
5.250%
01-31-01
3.700
50,000
Treas
Note
5.250%
01-31-01
3.700
50,000
PURCHASE
CD
Nt West Bk
5.200%
04-26-96
5.185
20,000
CD
Nt West Bk
5.200%
04-26-96
5.185
50,000
CP
Merrill
03-04-96
5.240
15,000
CP
Bear
03-04-96
5.220
50,000
CP
Household
03-04-96
5.220
50,000
CP
"=P
Household
03-04-96
5.220
50 000
GMAC
04-26-96
5.220
50,000
CP
Conagra
04-26-96
5.250
50,000
CP
Am Exp
03-04-96
5.180
25,000
PURCHASE
c/
FHLB
5.240%
07-20-98
5.200
50,000
FHLB
5.240%
07-20-98
5.200
50,000
FHLMC
6.290%
10-13-00
5.200
20,500
FNMA
5.250%
05-13-98
5.200
30,000
-14-
POOLED
MONEY INVESTMENT ACCOUNT
a/
a/
a/
MATURITY
TRANS
PAR
DAYS
AMOUNT
EFFEC
TYPE
DESCRIPTION
DATE
YIELD
000
HELD
EARNED
YIELD
02-28-96
REDEMPTION
BA
Fuji
02-28-96
5.790
$5,000
182
$146,358.33
6.047
CD
IBJ
5.560%
02-28-96
5.560
100,000
40,000
40
49
617,777.78
296,189.78
5.637
5.515
CD
W/F
Unocal
5.470%
02-28-96
02-28-96
5.440
5.730
19,250
153
468,785.62
5.954
CP
CP
Unocal
02-28-96
5.620
5.842
10,000
14,475
166
153
259,144044
355,542.19
5.849
5.956
FNMA
6.720%
02-28-96
SALE
-
MTN(FR)
GMAC
5.825%
07-05-96
07-05-96
5.761
5.761
25,000
50,000
525
559
218,437.50
436,875.00
6.301
6.277
MTN(FR)
GMAC
5.825%
PURCHASE
MTN(FR)
GMAC
5.350%
03-01-99
6.011
50,000
CP
FMCC
04-25-96
5.130
51000
CP
FMCC
04-25-96
5.130
50,000
CP
Smith Barn
04-25-96
5.150
50,000
CP
Smith Barn
04-25-96
5.150
50,000
CP
Assoc
06-07-96
5.120
100,000
PURCHASE
c/
Treas
Note
6.125%
07-31-00
5.375
61000
Treas
Note
6.125%
09-30-00
5.3,75
39,625
Treas
Note
6.125%
09-30-00
5.375
50,000
Treas
Note
6.125%
09-30-00
5.375
50,000
Treas
Note
6.125%
09-30-00
5.375
50,000
Treas
Note
5.750%
09-30-97
5.400
49,030
Treas
Note
5.750%'09-30-97
5.400
50,000
-15-
POOLED MONEY INVESTMENT ACCOUNT
d/
a/ a/ MATURITY TRANS PAR DAYS AMOUNT EFFEC
TYPE DESCRIPTION DATE YIELD 000 HELD EARNED YIELD
02-29-96
REDEMPTION
CD
Bk Tokyo
5.480%
02-29-96
5.480
$75,000
36
$411,000.00
5.556
CD
HSBC
5.720%
02-29-96
5.720
50,000
157
11247,277.78
5.799
CD
HSBC
5.720%
02-29-96
5.720
50,000
157
11247,277.78
5.799
CD
Midland
5.720%
02-29-96
5.720
50,000
157
11247,277.78
5.799
CD
Midland
5.720%
02-29-96
5.720
50,000
157
11247,277.78
5.799
CD
Union
5.680%
02-29-96
5.680
50,000
162
1 278 000.00
5.758
CD
Union
5.680%
02-29-96
5.680
50,000
162
11278,000.00
5.758
CD
RahoBank
5.620%
02-29-96
5.610
50,000
163
11270,097.75
5.687
CD
Deutsche
5.630%
02-29-96
5.630
100,000
163
11549,138.89
5.708
CD
Cr Suisse
5:630%
02-29-96
5.620
106,000
163
21697,406.87
5.698
CD
Bk Calif
5.750%
02-29-96
5.750
25,000
167
666,840.28
5.829
CD
Bk Calif
5.750%
02-29-96
5.750
35,000
175
978,298.61
5.829
CP
Merrill
02-29-96
5.670
15,000
134
316,575.00
5.872
CP
Merrill
02-29-96
5.670
50,000
134
11055,250.00
5.872
CP
GECC
02-29-96
5.560
50,000
156
11204,666.67
5.776
CP
GECC
02-29-96
5.560
51000
156
120,466.67
5.776
CP
Am Exp
02-29-96
5.560
50,000
156
1,204,666.67
5.776
CP
Am Exp
02-29-96
5.560
50,000
156
11204,666.67
5.776
CP
Am Exp
02-29-96
5.560
50,000
156
11204,666.67
5.776
CP
Am Exp
02-29-96
5.560
50,000
156
11204,666.67
5.776
CP
Chemical
02-29-96
5.600
50,000
157
1,221,111.11
5.819
CP
Merrill
02-29-96
5.550
50,000
161
1,241,041.67
5.770
CP
Merrill
02-29-96
5.550
50,000
161
11241,041.67
5.770
CP
Bkrs Trst
02-29-96
5.550
50,000
161
11241,041.67
5.770
CP
Bkrs Trst
02-29-96
5.550
50,000
161
1,241,041.67
5.770
CP
GECC
02-29-96
5.540
50,000
162
1,246,500.00
5.760
CP
GECC
02-29-96
5.540
50,000
162
1,246,500.00
5.760
CP
GECC
02-29-96
5.540
50,000
162
1,246,500.00
5.760
CP
GECC
02-29-96
5.540
50,000
162
11246,500.00
5.760
CP
GECC
02=29-96
5.500
50,000
168
11283,333.33
5.723
CP
GECC
02-29-96
5.500
50,000
168
1,283,333.33
5.723
Disc Note
FNMA
02-29-96
5.450
50,000
184
1,392,777.78
5.684
Disc Note
FNMA
02-29-96
5.450
50,000
184
11392,777.78
5.684
Treas
Note
4.625%
02-29-96
5.044
25,000
706
21425,356.66
5.044
Treas
Note'
4.625%
02-29-96
5.018
50,000
707
41833,559.78
5.018
Treas
Note
4.625.%
02-29-96
4.500
50,000
731
41506,500.00
4.500
Treas
Note
4.625%
02-29-96
4.500
50,000
731
41506,500.00
4.500
Treas
Note
4.625%
02-29-96
4.550
50,000
731
41554,000.00
4.550
Treas
Note
4.625%
02-29-96
4.560
50,000
731
4,563,500.00
4.560
Treas
Note
4.625%
02-29-96
4.575
50,000
731
4,577,500.00
4.575
Treas
Note
4.625%
02-29-96
4.575
50,000
731
41577,500.00
4.575
Treas
Note
4.625%
02-29-96
4.580
50,000
731
41582,500.00
4.580
Treas
Note
4.625%
02-29-96
4.580
50,000
731
4,582,500.00
4.580
Treas
Note
4.625%
02-29-96
4.580
50,000
731
4,582,500.00
4.580.
Treas
Note
4.625%
02-29-96
4.580
50,000
731
41582,500.00
4.580
Treas
Note
4.625%
02-29-96
4.580
50,000
731
41582,500.00
4.580
Treas
Note
4.625%
02-29-96
4.660
50,000
731
4,658,000.00
4.660
Treas
Note
4.625%
02-29-96
4.660
50,000
731
416581000.00
4.660
1WsZ
_v.T.. _ _. ...
POOLED MONEY INVESTMENT ACCOUNT
a/
a / a / MATURITY" ` � TRANS PAR DAYS
TYPE DESCRIPTION DATE YIELD 000 HELD
02-29-96
REDEMPTION g/
CP
Morg Stan
CP
Morg Stan
SALE c/
Treas
Note
Treas
Note
Treas
Note
Treas
Note
Treas
Note
Treas
Note
PURCHASE
Treas
Note
Treas
Note
Treas
Note
CD
Union
CP
Trans
CP
GECC
CP
GECC
CP
Bear
CP
Assoc
PURCHASE
c/
Treas
Note
Treas
Note
Treas
Note
Treas
Note
Treas
Note
Treas
Bill
Treas
Bill
Treas
Note
RRP
Treas
Note
Treas
Note
Treas
Note
Treas
Note
Treas
Note
Treas
Note
AMOUNT EFFEC
EARNED YIELD
02-29-96
5.235
$50,000
21
$152,687.50
5.323
02-29-96
5.235
50,000
21
152,687.50
5.323
6.625%
03-31-97
5.230
24,475
21
76,270.83
5.302
6.125%
6.125%
05-31-97
05-31-97
5.230
5.230
24,850
24,850
21
21
76,270.83
76,270.83
5.302
5.302
5.000%
5.000%
01-31-98
01-31-98
5.200
5.200
50,000
5.01000
22
22
156,162.36
156,162.36
5.272
5.272
5.000%
01-31-98
5.200
11746
22
5,453.07
5.272
5.125%
02-28-98
5.333
50,000
5.125%
02-28-98
5.240
50,000
5.625%
02-28-01
5.625
50,000
5.250%
04-25-96
5.250
50,000
04-25-96
5.200
25,000
04-25-96
5.190
50,000
04-25-96
5.190
50,000
04-26-96
5.190
50,000
05-31-96
5.150
35,000
6.125%
09-30-00
5.500
11,110
6.125%
09-30-00
5.500
50,000
6.125%
09-30-00
5.500
50,000
6.125%
09-30-00
5.500
50,000
5.750%
10-31-00
5.500
36,000
10-17-96
5.500
31728
10-17-96
5.500
50,000
5.125%
12-31-98
5.500
50,000
5.250%
01-31-01
3.450
3.450
50,000
50,000
22
22
_105,416.67
105,416.E
-3.497
-3.497
5.250%
5.250%
01-31-01
01-31-01
3.400
50,000
21
- 99,166.67
-3.447
5.250%
5.250%
01-31-01
01-31-01
3.400
3.480
50,000
25,000
21
21-
- 99,166.67
- 50,750.00
-3.447
-3.528
5.250%
01-31-01
3.480
50,000
21
-101,500.00
-3.528
-17-
a/ The abbreviations indicate the type of security purchased
or sold; i.e., (U.S) Bills, Bonds, Notes, Debentures,
Discount Notes, and Participation Certificates: Federal
National Mortgage Association (FNMA), Farmers Home
Administration Notes (FHA), Student Loan Marketing
Association (SLMA), Small Business Association (SBA),
Negotiable Certificates of Deposit (CD), Negotiable
Certificates of Deposit Floating Rate (CD FR), Export
Import Notes (EXIM), Bankers Acceptances (BA), Commercial
Paper (CP), Government National Mortgage Association (GNMA),
Federal Home Loan Bank Notes (FHLB), Federal Land Bank Bonds
(FLB), Federal Home Loan Mortgage Corporation Obligation
(FHLMC PC) & (FHLMC GMC), Federal Farm Credit Bank Bonds
(FFCB), Federal Farm Credit Discount Notes (FFC), Corporate
Securities (CB), U.S. Ship Financing Bonds (TITLE XI'S),
International Bank of Redevelopment (IBRD), Tennessee Valley
Authority (TVA) Medium Term Notes (MTN).
b/ Purchase or sale yield based on 360 day calculation for
discount obligations and Repurchase Agreements.
c/ Repurchase Agreement.
d/ Par amount of securities purchased, sold, or redeemed.
e/ Securities were purchased and sold as of the same date.
f/ Repurchase Agreement against Reverse Repurchase Agreement.
g/ Outright purchase against Reverse Repurchase Agreement.
h/ Security "SWAP" transactions.
i/ Buy back agreement.
RR3 Reverse Repurchase Agreement.
RRP Termination of Reverse Repurchase Agreement.
-18-
TIME DEPOSIT
NAME
DEPOSIT
YIELD
PAR AMOUNT
MATURITY
BEVERLY HILLS
City National
Bank
01-23-96
5.150
10,000,000
04-25-96
City National
Bank
02-07-96
5.050
10,000,000
05-08-96
City National
Bank
02-20-96
4.940
10,000,000
05-20-96
Great Western
Bank
01-23-96
5.150
50,000,000
04-19-96
Great Western
Bank
01-26-96
5.150
75,000,000
04-24-96
BUTTE
Tri-Counties
Bank
12-07-95
5.490
91000,000
03-06-96
CHICO
North St National
Bank
02-15-96
4.940
500,000
05-17-96
INGLEWOOD
Imperial Bank
12-05-95
5.510
11,000,000
03-04-96
Imperial Bank
12-12-95
5.560
15,000,000
03-12-96
Imperial Bank
01-03-96
5.170
10,000,000
04-02-96
Imperial Bank
01-10-96
5.230
20,000,000
04-09-96
Imperial Bank
02-07-96
5.060
51000,000
05-08-96
Imperial Bank
02-08-96
5.020
10,000,000
05-08-96
Imperial Bank
02-14-96
4.970
15,000,000
06-13-96
Imperial Bank
02-20-96
4.970
11,000,000
06-21-96
LOS ANGELES
Preferred Bank
12-20-95
5.290
51000,000
03-22-96
Preferred Bank
01-16-96
5.210
11000,000
04-15-96
East West Federal
Bank 01=17-96
5.230
21000,000
04-16-96
Preferred Bank
01-18-96
5.210
21000,000
04-17-96
Preferred Bank
02-26-96
4.990
21000,000
05-29-96
OAKDALE
Oak Valley Comm. Bank 09-27-95 5.560 500,000 03-29-96
-19-
TIME DEPOSIT
NAME
DEPOSIT
YIELD
PAR AMOUNT
MATURITY
PETALU1 A
Bank of Petaluma
11-15-95
5.540
11000,000
05-13-96
REDDING
North Valley Bank
09-25-95
5.500
31000,000
03-25-96
SACRAMENTO
Sanwa Bank of Calif
01-26-96
5.150
51000,000
07-31-96
Sanwa Bank of Calif
02-22-96
5.100
50,000,000
08-20-96
Sanwa Bank of Calif
02-27-96
5.100
10,000,000
08-26-96
SAN FRANCISCO
Trans Pacific NB
12-18-95
5.530
800,000
03-22-96
SAN LUIS OBISPO
1st Bk San Luis Obispo
02-07-96
5.050
21600,000
05-08-96
1st Bk San Luis Obispo
02-15-96
4.950
11000,000
05-15-96
1st Bk San Luis Obispo
02-28-96
5.030
11500,000
05-29-96
SAN RAFAEL
West America Bank
01-23-96
5.150
25,000,000
04-24-96
SANTA ANA
Grand National Bank
01-04-96
5.320
95,000
07-02-96
VACAVILLE
Continental Pacific Bk
12-08-95
5.550
11000,000
03-07-96
TOTAL TIME DEPOSITS AS OF FEBRUARY 28,
1996
$374,995,000
-20-
DEMAND BANK DEPOSITS
(000 omitted)
DAILY BALANCES
WARRANTS
FEBRUARY
PER BANKS
OUTSTANDINGS
1.
247,464
11093,926
2.
340,955
1,293,875
3.
340,955
11293,875
4.
340,955
11293,875
5.
390,974
1,197,805
6.
333,331
11087,600
7.
229,738
985,543
S.
144,505
11162,348
9.
84j.199
11136, 673
10.
84,199
11136,673
11.
84,199
1,1361673
12.
163,403
11136,673
13.
179,820
880,502
14.
176,599
777,386
15.
115,869
804,432
16.
97,204
962,695
17.
97,204
962,695
18.
97,204
962,695
19.
97,204
9621695
20.
250,374
11003,883
21.
235,644
951,228
22.
185,139
864,712
23.
155,727
11071,221
24.
15S1727
1,071,221
25.
155,727
11071,221
26.
159,132
11030,820
27.
2561229
11035,262
28.
218,566
936,024
29.
87,037
11298,996
a/
AVERAGE DOLLAR DAYS $ 189,837
a/ The prescribed bank balance for February was $281,598,000.00.
This consisted of $129,388,000.00 in compensating balances for
services, $156,839,000.00 uncollected funds and a deduction of
$4,629,000.00 for November delayed deposit -credit.
-21-
DESIGNATION BY POOLED MONEY INVESTMENT BOARD
OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS
No. 1556
In accordance with Sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board,
on January 26, 1996, has determined and designated the amount of money available for deposit and investment
under said sections. In accordance with Sections 16480.1 and 16480.2 of the Government Code, it is the intent that the
money available for deposit or investment be deposited in bank accounts and savings and loan associations or invested in
securities in such a manner so as to realize the maximum return consistent with safe and prudent treasury management,
and the Board does hereby designate the amount of money available for deposit in bank accounts, savings and loan associ-
ations, and for investment in securities and the type of such deposits and investments as follows:
1. In accordance with law, for deposit in demand
bank accounts as Compensating Balance for Services $145,490.000
The active noninterest-bearing bank accounts designation constitutes a calendar -month average balance. For purposes
of computing the compensating balances, the Treasurer shall exclude from the daily balances any amounts contained therein
as a result of nondelivery of securities purchased for "cash" for the Pooled Money Investment Account and shall adjust
for any deposits not credited by the bank as of the date of deposit. The balances in such accounts may fall below the
above amount provided that the balances computed by dividing the sum of daily balances of that calendar month by the
number of days in the calendar month reasonably approximates that amount. The balances may exceed this amount during he
collection periods or in anticipation of large impending warrant presentations to the Treasury, but the balances are to be
maintained in such a manner as to realize the maximum return consistent with safe and prudent treasury management.
2. In accordance with law, for investment in securities authorized by Section 16430, Government Code, or in term interest -
bearing deposits
in banks and
savings and loan associations
as follows:
Time Deposits in
various Financial
Institutions.
In Securities
(Sections 16503a
Estimated
From
To
Transactions
(Section 16430)`
& 16602)-
Total
( 1)
01/22/96
01/26/96
$ 947,800.000
$ 30,721,565,000
$ 360,195,000
$
31,081,760,000
(2)
01/29/96
02/02/96
$ (39,100,000)
$ 30,682,465,000
$ 360,195,000
$
31,042,660,000
(3)
02/05/96
02/09/96
$ 4,500.000
$ 30,686,965,000
$ 360,195,000
$
31,047,160.000
(4)
02/12/96
02/16/96
$ 173,100,000
$ 30,860,065,000
$ 360,195,000
$
31,220,260,000
(5)
02/19/96
02/23/96
$ 1.170,000,000
$ 32,030,065,000
$ 360,195,000
$
32,390,260,000
From any of the amounts specifically designated above, not more than 30 percent in the aggregate may be invested in
prime commercial paper under Section 16430(e), Government Code.
Additional amounts available in treasury trust account and in the Treasury from time to time, in excess of the
amounts and for the same types of investments as specifically designated above.
Provided, that the availability of the amounts shown under paragraph 2 is subject to reduction in the amount by
which the bank accounts under paragraph 1 would otherwise be reduced below the calendar month average balance
of $145,490,000.
Dated: January 26, 1996
'Government Code
POOLED MONEY INVESTMENT BOARD:
Chairpersoh
`42 -
Mem r
Member
—22—
DESIGNATION BY POOLED MONEY INVESTMENT BOARD
OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS
No. 1557
in accordance with Sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board,
on February 7, 1996, has determined and designated the amount of money available for deposit and investment
under said sections. In accordance with Sections 16480.1 and 16480.2 of the Government Code, it is the intent that the
money available for deposit or investment be deposited in bank accounts and savings and loan associations or invested in
securities in such a manner so as to realize -the' maximum return consistent with safe and prudent treasury management,
and the Board does hereby designate the amount of money available for deposit in bank accounts, savings and loan associ-
ations, and for investment in securities and the type of such deposits and investments as follows:
1. In accordance with law, for deposit in demand
bank accounts as Compensating Balance for Services
$145,490,000
The active noninterest-bea ring bank accounts designation constitutes a calendar -month average balance. For purposes
of computing the compensating balances, the Treasurer shall exclude from the daily balances any amounts contained therein
as a result of nondelivery of securities purchased for "cash" for the Pooled Money Investment Account and shall adjust
for any deposits not credited by the bank as of the date of deposit. The balances in such accounts may fall below the
above amount provided that the balances computed by dividing the sum of daily balances of that calendar month by the
number of days in the calendar month reasonably approximates that amount. The balances may exceed this amount during he
collection periods or in anticipation of large impending warrant presentations to the Treasury, but the balances are to be
maintained in such a manner as to realize the maximum return consistent with safe and prudent treasury management.
2. In accordance with law, for investment in securities authorized by Section 16430, Government Code, or in term interest -
bearing deposits in banks and savings and loan associations as follows:
Time Deposits in
various Financial
Institutions.
In Securities (Sections 16503a Estimated
From To Transactions (Section 16430)' & 16602)' Total
(1) 01/29/96 02/02/96 $ (39,100,000) $ 30,679,865,000 $ 362,795,000 $ 31.042,660,000
(2) 02'05/96 02/09/96 $ 4.500,000 $ 30,684,365,000 $ 362,795,000 $ 31,047,160,000
(3) 02/12/S6 02/16/96 $ 173,100,000 $ 30,857,465,000 $ 362,795,000 $ 31,220,260,000
(4) 02/19/96 02/23/96 $ 1,170,000,000 $ 32,027.465,000 $ 362,795,000 $ 32,390,260,000
From any of the amounts specifically designated above, not more than 30 percent in the aggregate may be invested in
prime commercial paper under Section 16430(e), Government Code.
Additional amounts available in treasury trust account and in the Treasury from time to time, in excess of the
amounts and for the same types of investments as specifically designated above.
Provided, that the availability of the amounts shown under paragraph 2 is subject to reduction in the amount by
which the bank accounts under paragraph 1 would otherwise be reduced below the calendar month average balance
of $145,490,000.
Dated: February7, 1996
'Government Code
POOLED MONEY INVESTMENT BOARD:
Chairperson
Member
Member
—23—
DESIGNATION BY POOLED MONEY INVESTMENT BOARD
OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS
No. 1558
In accordance with Sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board,
on February 8, 1996, has determined and designated the amount of money available for deposit and investment
under said sections. In accordance with Sections 16480.1 and 16480.2 of the Government Code, it is the intent that the
money available for deposit or investment be deposited in bank accounts and savings and loan associations or invested in
securities in such a manner so as to realize the maximum return consistent with safe and prudent treasury management,
and the Board does hereby designate the amount of money available for deposit in bank accounts, savings and loan associ-
ations, and for investment in securities and the type of such deposits and investments as follows:
1. In accordance with law, for deposit in demand
bank accounts as Compensating Balance for Services
$145.490,000
The active noninterest-bearing bank accounts designation constitutes a calendar -month average balance. For purposes
of computing the compensating balances, the Treasurer shall exclude from the daily balances any amounts contained therein
as a result of nondelivery of securities purchased for "cash" for the Pooled Money Investment Account and shall adjust
for any deposits not credited by the bank as of the date of deposit. The balances in such accounts may fall below the
above amount provided that the balances computed by dividing the sum of daily balances of that calendar month by the
number of days in the calendar month reasonably approximates that amount. The balances may exceed this amount during he
collection periods or in anticipation of large impending warrant presentations to the Treasury, but the balances are to be
maintained in such a manner as to realize the maximum return consistent with safe and prudent treasury management.
2. In accordance with law, forrinvestment in securities authorized by Section 16430, Government Code, or in term interest -
bearing deposits in banks and savings and loan associations as follows:
From To
Transactions
Time Deposits in
various Financial
Institutions.
In Securities (Sections 16503a
(Section 16430)- & 16602)-
Estimated
Total
(1)
02/05/96
02/09/96
$
4.500,000
$
30,674.365,000
$
372,795,000
$
31,047,160,000
(2)
02/12/96
02/16/96
$
173,100,000
$
30,847,465.000
$
372,795,000
$
31,220,260,000
(3)
02/19/96
02/23/96
$
1,170.000,000
$
32,017,465,000
$
372,795,000
$
32,390,260,000
From any ot the amounts specifically designated above, not more than 30 percent in the aggregate may be invested in
prime commercial paper under Section 16430(e), Government Code.
Additional amounts available in treasury trust account and in the Treasury from time to time, in excess of the
amounts and for the same types of investments as specifically designated above.
Provided, that the availability of the amounts shown under paragraph 2 is subject to reduction in the amount by
which the bank accounts under paragraph 1 would otherwise be reduced below the calendar month average balance
of $145,490,000.
Dated: February 8, 1996
'Government Code
POOLED MONEY INVESTMENT BOARD:
Chairperson
Member
Member
-24-
DESIGNATION BY POOLED MONEY INVESTMENT BOARD
OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS
No. 1559
In accordance with Sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board,
on February15, 1996, has determined and designated the amount of money available for deposit and investment
under said sections. In accordance with Sections 16480.1 and 16480.2 of the Government Code, it is the intent that the
money available for deposit or investment be deposited in bank accounts and savings and loan associations or invested in
securities in such a manner so as to realize the maximum return consistent with safe and prudent treasury management,
and the Board does hereby designate the amount of money available for deposit in bank accounts, savings and loan associ-
ations, and for investment in securities and the type of such deposits and investments as follows:
1. In accordance with law, for deposit in demand
bank accounts as Compensating Balance for Services
$145,490,000
The active noninterest-bearing bank accounts designation constitutes a calendar -month average balance. For purposes
of computing the compensating balances, the Treasurer shall exclude from the daily balances any amounts contained therein
as a result of nondelivery of securities purchased for "cash" for the Pooled Money Investment Account and shall adjust
for any deposits not credited by the bank as of the date of deposit. The balances in such accounts may fall below the
above amount provided that the balances computed by dividing the sum of daily balances of that calendar month by the
number of days in the calendar month reasonably approximates that amount. The balances may exceed this amount during he
collection periods or in anticipation of large impending warrant presentations to the Treasury, but the balances are to be
maintained in such a manner as to realize the maximum return consistent with safe and prudent treasury management.
2. In accordance with law, for investment in securities authorized by Section 16430, Government Code, or in term interest -
bearing deposits in banks and savings and loan associations as follows:
Time Deposits in .
various Financial
Institutions.
In Securities
(Sections 16503a
Estimated
From To Transactions (Section 16430)'
& 16602)'
Total
(1) 02/12/96 02/16/96 $ 173,100,000 $ 30,846.765,000
$ 373,495,000
$ 31,220,260,000
(2) 02/19/96 02/23/96 $ 1.170,000,000 $ 32,016,765,000
$ 373,495,000
$ 32,390,260,000
From any of the amounts specifically designated above, not more than 30 percent in the aggregate may be invested in
prime commercial paper under Section 16430(e), Government Code.
Additional amounts available in treasury trust account and in the Treasury from time to time, in excess of the
amounts and for the same types of investments as specifically designated above.
Provided, that the availability of the amounts shown under paragraph 2 is subject to reduction in the amount by
which the bank accounts under paragraph 1 would otherwise be reduced below the calendar month average balance
of $145,490,000.
POOLED MONEY INVESTMENT BOARD:
Chairperson
Member
Dated: February 15, 1996
*Government Code
Member
-25-
DESIGNATION BY POOLED MONEY INVESTMENT BOARD
OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS
No. 1560
In accordance with Sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board, at its
meeting on February 21, 1996, has determined and designated the amount of money available for deposit and investment
under said sections. In accordance with Sections 16480.1 and 16480.2 of the Government Code, it is the intent that the
money available for deposit or investment be deposited in bank accounts and savings and loan associations or invested in
securities in such a manner so as to realize the maximum return consistent with safe and prudent treasury management,
and the Board does hereby designate the amount of money available for deposit in bank accounts, savings and loan associ-
ations, and for investment in securities and the type of suchAeposits and investments as follows:
1. In accordance with law, for deposit in demand
bank accounts as Compensating Balance for Services $142,500,000
The active noninterest-bearing bank accounts designation constitutes a calendar -month average balance. For purposes
of computing the compensating balances, the Treasurer shall exclude from the daily balances any amounts contained therein
as a result of nondelivery of securities purchased for "cash" for the Pooled Money Investment Account and shall adjust
for any deposits not credited by the bank as of the date of deposit. The balances in such accounts may fall below the
above amount provided that the balances computed by dividing the sum of daily balances of that calendar month by the
number of days in the calendar month reasonably approximates that amount. The balances may exceed this amount during he
collection periods or in anticipation of large impending warrant presentations to the Treasury, but the balances are to be
maintained in such a manner as to realize the maximum return consistent with safe and prudent treasury management.
2. In accordance with law, for investment in securities authorized by Section 16430, Government Code, or in term interest -
bearing deposits in banks and savings and loan associations as follows:
From
To
Transactions
( 1)
02/19/96
02/23/96
$ 989,300,000
(2)
02/26/96
03/01/96
(2,899,500,000)
(3)
03/04/96
03/08/96
(607,200,000)
(4)
03/11/96
03/15/96
987,400,000
(5)
03/18/96
03/22/96
676,600,000
(6)
03/25/96
03/29/96
(2,461,100,000)
(7)
04/01/96
04/05/96
416,600,000
(8)
04/08/96
04/12/96
835,400,000
(9)
04/15/96
04/19/96
3,032,600,000
Time Deposits in
various Financial
Institutions.
In Securities
(Sections 16503a
(Section 16430)`
& 16602)`
$ 29,115,805,000
$ 373,495,000
26,216,305,000
373,495,000
25,609,105,000
26,596,505,000
27,273,105,000
24,812,005,000
25,228,605,000
26,064,005,000
29,096,605,000
373,495,000
373,495,000
373,495,0010
373,495,000
373,495,000
373,495,000
373,495,000
Estimated
Total
$ 29,489,300,000
26, 589, 800, 000
25,982,600,000
26,970,000,000
27,646,600,000
25,185.500,000
25,602,100,000
26,437,500,000
29,470,100, 000
From any of the amounts specifically designated above, not more than 30 percent in the aggregate may be invested in
prime commercial paper under Section 16430(e), Government Code.
Additional amounts available in treasury trust account and in the Treasury from time to time, in excess of the
amounts and for the same types of investments as specifically designated above.
Provided, that the availability of the amounts shown under paragraph 2 is subject to reduction in the amount by
which the bank accounts under paragraph 1 would otherwise be reduced below the calendar month average balance
of $142,500,000.
POOLED MONEY INVESTMENT BOARD:
Chairpers n
Member
Dated: February 21, 1996
'Government Code Member
-26-
T a 0
4hf 4 4 a"
MEMORANDUM
TO: Members of the Investment Advisory Board
FROM: John M. Falconer, Treasurer
DATE: May 8, 1996
RE: Diversification of Portfolio
The purpose of this memorandum is to report the efforts made to diversify the
portfolio. y
On May 7, 1996, after meeting with the Assistant City Manager and Director of
Community Development, $5,000,000 in money market mutual funds were sold.
$2,000,000 in three month and $3,000,000 in six month Treasury Bills were
purchased. These transactions will be recorded in the May Treasurers Report. The
YTM for the three month bills was 5.09769% and the six month 5.32516%.
The City is the process of obtaining signed agreements for diversification of the Cit 's
portfolio. Government securities will be purchased and LAW investments will be sold
as soon as the signed agreements are in place and the accounts established. Staff is
anticipating making these trades by the end of May.