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1998 04 08 IABT a • 4hf 4 78-495 CALLE TAMPICO - LA QUINTA, CALIFORNIA 92253 - (760) 777-7000 FAX (760) 777-7101 AGENDA TDD (760) 777-1227 INVESTMENT ADVISORY BOARD Study Session Room 78-495 Calle Tampico- La Quinta, CA 92253 April 8, 1998 - 5:30 P.M. I CALL TO ORDER a. Pledge of Allegiance b. Roll Call II PUBLIC COMMENT - (This is the time set aside for public comment on any matter not scheduled on the agenda.) III CONFIRMATION OF AGENDA IV CONSENT CALENDAR A. Approval of Minutes of Meeting on March 11, 1998 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for February, 1998 B. Fiscal Year 1998/99 Investment Policies C. Workplan for Fiscal Year 1998/99 VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - March, 1998 B. Pooled Money Investment Board Reports - January 1998 C. LAIF Percentages D. Collateralization of Certificates of Deposit VII BOARD MEMBER ITEMS Vill ADJOURNMENT MAILING ADDRESS — P.O. BOX 1.504 — LA QUINTA, CALIFORNIA 92253 2 U S y �xupa,nu OF fNtiv INVESTMENT ADVISORY BOARD April 8, 1998 BUSINESS SESSION A ITEM TITLE: Transmittal of Treasury Report for February 28, 1998 BACKGROUND: Attached please find the Treasury Report for February 28, 1998. RECOMMENDATION: Review, Receive and File the Treasury Report of February 28, 1998. ohn M. Falconer, Finance Director T 6 0 4hf 4 4 Q" MEMORANDUM TO: La Quinta City Council FROM: John Falconer, Finance Director/Treasurer SUBJECT: Treasurer's Report for February 28, 1998 DATE: April 1, 1998 Attached is the Treasurer's Report for the month ending February 28, 1998. 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 $3,107,851. due to the net effect of revenues in excess of expenditures. State Pool: Decrease of $2,674,999. due to the net effect of transfers to and from the cash and investment accounts. U.S. Treasury Bills, Notes, Securities and Commercial Paper: Decrease of $6,548,697. due to the net effect of the purchase of 1 Security the maturity of Prime Commercial Paper, 1 T-Note and the monthly adjustment in the amortized value of the investments. Mutual Funds: Increase of $5,292,300. due to the net effect of transfers for debt service payments and interest earned. Total decrease in cash balances $823,545. 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. The City of La Quinta used the Bureau of the Public Debt, First Trust of California Monthly Statement and Bank of New York Monthly Custodian Report to determine the fair market value of investments at month end. F41 ihn M. Falconer' nance Director/Treasurer --I o� > m tG(YV� o--c X^y fn c (n n A n ^y? -i COL 0 —4 25 �cO 3 c @ N N R 3 d d D 0g;' 3 c �I r o d 3 � 3 o m m 33 A n 0 3 =_' W v 3 3 ypCj '� 0 5, no, Np [hN� = y �, Nm7 A N 3 I' t o novi O d 3 a W N !nCL 3 7CL 0 O. 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W pN .-1Wi� W OW�S')V -� W Go y cn pp Cn O co N O A�crOOCOV c n 0 -4 CA � Ca) tD C)c0�� N -4 to O O N V -i O Ucnl V C. �D co N - E* O 60fl N OODCNO�CANO �(VTO�Ocn— CITY OF LA QUINTA CITY CITY RDA RDA FA BALANCE SHEET 02/28/98 FIXED LONG TERM FIXED LONG TERM FINANCING LONG TERM GRAND CITY ASSETS DEBT RDA ASSETS DEBT AUTHORITY DEBT TOTAL ASSETS: POOLED CASH 1,322,618.59 5,630,892.17 158,027.09 7,111,537.85 LQRP INVESTMENT IN POOLED CASH 470,000.00 470,000.00 INVESTMENT T-BILUNOTES & OTHER 15,000,000.00 15,000,000.00 LQRP CASH 4,903.75 4,903.75 BOND REDEMPTION CASH 1,684,117.80 774.44 1,684,892.24 BOND RESERVE CASH 529,687.03 529,687.03 BOND PROJECT CASH 10,239,434.96 598.112.92 10,837,547.88 BOND ESCROW CASH 2,665.99 2,665.99 PETTY CASH 1,000.00 1,000.00 CASH S INVESTMENT TOTAL 16,323,618.59 18,561,701.70 756,914.45 35,642,234.74 INVESTMENT IN LAND HELD FOR RESALE ACCOUNTS RECEIVABLE PREMIUM/DISCOUNT ON INVESTMENT LORP-ACCOUNTS RECEIVABLE INTEREST RECEIVABLE LOANINOTES RECEIVABLE DUE FROM OTHER AGENCIES DUE FROM OTHER GOVERNMENTS DUE FROM OTHER FUNDS DUE FROM RDA INTEREST ADVANCE -DUE FROM RDA NSF CHECKS RECEIVABLE ACCRUED REVENUE TRAVELADVANCES EMPLOYEE ADVANCES PREPAID EXPENSES RECEIVABLE TOTAL 8,804,815.27 3,255,178.75 219.69 12,060,213.71 86,319.85 86,319.85 58,150.97 81,257.68 139,408.65 (76,054.59) (419.00) 219.69 (76,253.90) 18,927.78 18,927.78 2,383.33 2,383.33 2,560,500.03 2,560,500.03 173,137.49 551, 038.04 724,175.53 6,890,277.20 6,890,277.20 1,749,796.16 1,749,796.16 4,101.71 4,101.71 43,874.22 43,874.22 3,023.00 3,023.00 WORKER COMPENSATION DEPOSIT 37,637.00 RENT DEPOSITS 37,637.00 UTILITY DEPOSITS 75.00 75.00 MISC. DEPOSITS 2,100.00 2,100.00 DEPOSITS TOTAL 39;812.00 39,812.00 GENERAL FIXED ASSETS 693,426.00 14,947,094.00 11,438,745.05 27,079,265.05 ACCUMULATED DEPRECIATION (92,351.96) (92,351.96) AMOUNT AVAILABLE TO RETIRE L!T DEBT 2,340,653.00 2,340,653.00 AMOUNT TO BE PROVIDED FOR UT DEBT 350,653.00 91,172,394.86 8,790,000.00 100,313,047.86 TOTAL OTHER ASSETS 601,074.04 14,947,094.00 350,653.00 11,438,745.05 93,513,047.86 8,790,000.00 129,640,613.95 TOTAL ASSETS 25 769 319.90 14,947,094.00 350,653.00 21,903,200.30 11 438 745.05 93 513 047.86 757 134.14 8,790,000.00 177 46 1194.25 LIABILITY ACCOUNTS PAYABLE (61,632.19) (61,632.19) DUE TO OTHER AGENCIES 577,771.42 577.771.42 DUE TO OTHER FUNDS 551,038.04 173,137.49 724,175.53 INTEREST ADVANCE -DUE TO CITY ACCRUED EXPENSES PAYROLL LIABILITIES 33,743.13 33,743.13 STRONG MOTION INSTRUMENTS 2,397.00 2,397.00 FRINGE TOED LIZARD FEES (2,984.24) (2,984.24) SUSPENSE 29,914.23 29,914.23 DUE TO THE CITY OF LA QUINTA PAYABLES TOTAL 640,841.54 489,405.85 173,137.49 1,303,384.88 ENGINEERING TRUST DEPOSITS 88,330.02 88,330.02 SO. COAST AIR QUALITY DEPOSITS ARTS IN PUBLIC PLACES DEPOSITS 226,801.82 226,801.82 LORP DEPOSITS 14,751.00 14,751.00 DEVELOPER DEPOSITS 811,627.30 811,627.30 MISC. DEPOSITS 76.191.12 76,191.12 AGENCY FUND DEPOSITS 1,053,737.20 1,053,737.20 TOTAL DEPOSITS 2,256,687.46 14,751.00 2,271,438.46 DEFERRED REVENUE OTHER LIABILITIES TOTAL COMPENSATED ABSENCES PAYABLE 350,653.00 350,653.00 DUE TO THE CITY OF LA QUINTA 8,572,573.99 8,572,573.99 DUE TO COUNTY OF RIVERSIDE 12,320,655.87 12,320,655.87 DUE TO C.V. UNIFIED SCHOOL DIST. 11,270,808.00 11,270,808.00 DUE TO DESERT SANDS SCHOOL DIST. 569,010.00 569,010.00 BONDS PAYABLE 60,780,000.00 8,790,000.00 69,570,000.00 TOTAL LONG TERM DEBT 350,653.00 93,513,047.86 8,790,000.00 102,653,700.86 TOTAL LIABILITY EQUITY -FUND BALANCE 2,897,529.00 22,871,790.90 14,947,094.00 350.653.00 504,156.85 93,513,047.86 173,137.49 8,790,000.00 106,228,524.20 21,399,043.45 11,438,745.05 583,996.65 71,240,670.05 TOTAL LIABILITY & EQUITY 25,769,319.90 14 947 094.00 350,653.00 21,903,200.30 11,438,745.05 93,513,047.86 757,134.14 8,790,000.00 177.469.194.25 / �..� 4 V S F [ OF TNtiO INVESTMENT ADVISORY BOARD Business Session No. B Meeting Date: April 8, 1998 TITLE: Fiscal Year 1998/99 Investment Policies BACKGROUND: Pursuant to State Legislation the City investment policies must be approved on an annual basis by the City Council. This approval is done in June of each year. Attached with changes is the 1998/99 Draft Investment Policy. RECOMMENDATION: Commence review of the Investment policies for approval by City Council in June 1998. O;J hn M. Falconer, Finance Director CITY OF LA QUINTA Investment Policy Table of Contents Section Topic Paae Executive Summary 2 1 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 8 X Investment Pools 11 XI Collateralization 12 XII Safekeeping and Custody 12 XIII Interest Earning Distribution Policy 12 XIV Maximum Maturities 13 XV Internal Controls 13 XVI Benchmark 15 XVII Reporting Standards 15 XVIII Investment of Bond Proceeds 15 XIX Investment Advisory Board - City of La Quinta 16 XX Investment Policy Adoption 16 Appendices Authorized Investments and Diversification 17 Municipal Code Ordinance 2.70 - Investment Advisory Board 18 Municipal Code Ordinance 3.08 - Investment of Moneys and Funds 19 Listing of Approved Financial Institutions 21 Broker/Dealer Questionnaire and Certification 22 Investment Pool Questionnaire 26 Segregation of Major Investment Responsibilities 30 Glossary 31 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 maximum security while meeting daily cash flow demands and the highest investment return 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. I t' i pr po o h supp�ff a thF ity a� re e ► .th+, (t 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 Agency 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. 3 City of La Quinta Statement of Investment Policy July 1, 1998 through June 30, 1999 Adopted by the City Council on june 24, 1997. 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 while meeting daily cash flow demands with the highest investment return . In addition, the Investment Policy will conform to all State and local statutes governing the investment of public funds. 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. -• 1110M 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. 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 M 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. Lei i Lei &A WnIWIiI 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 Citv Treasurer. 0� 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 which 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. ► 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 1 10% 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 collateralization in public monies. The City Treasurer will be permitted to invest in the investments listed in the Appendix entitled - Authorized Investments and Diversification. Es3 As provided in Sections 16429.1, 53601, 53601.1, and 53649 of the Government Code, the State of California limits the investment vehicles available to local agencies as summarized in the following paragraphs. Section 53601, as now amended, provides that unless Section 53601 specifies a limitation on an investment's maturity, no investments with maturities exceeding five years shall be made. The City of La Quinta Investment Policy has specified that no investment may exceed two years. State Treasurer's Local Agency Investment Fund (LAIR - As authorized in Government Code Section 16429.1 and by LAIF procedures, local government agencies are each authorized to invest a maximum of $20 million per account in this investment program administered by the California State Treasurer. The City of La Quinta has two accounts with LAIF. The City of La Quinta has a limitation of 35% of the portfolio. Government Agency Issues - As authorized in Government Code Sections 53601 (a) through (n) as they pertain to surplus funds, this category includes a wide variety of government securities which include the following: • Local government bonds or other indebtedness and State bonds or other indebtedness. The City of La Quinta Investment Policy does not allow investments in local and state indebtedness • U.S. Treasury notes or other indebtedness secured by the full faith and credit of the federal government. The City of La Quinta Investment Policy limits investments in U.S. Treasury issues to 75% • Other federal agency securities including but not limited to issued by the Government National Mortgage Association, Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. The City of La Quinta investment policy limits investments in federal agency securities to 75% with no one federal agency of one specific entity can exceed 25% of the portfolio. Bankers' Acceptances - As authorized in Government Code Section 53601 (f), 40% may be invested in Bankers' Acceptances, although no more than 30% of the portfolio may be invested in Bankers' Acceptances with any one commercial bank. Additionally, the maturity period cannot exceed 270 days; however, Bankers' Acceptances are seldom marketed with maturities in excess of 180 days. The City of La Quinta investment policy does not allow investment in Bankers' Acceptances. Commercial Paper - The City of La Quinta Investment Policy only allows investments in commercial paper to 30%, the dollar weighted average maturity does not exceed 31 days. As authorized in Government Code 9 Section 53601(g), 15% of the portfolio may be invested in commercial paper of the highest rating (A-1 or P-1) as rated by Moody's or Standard and Poor's, with maturities not to exceed 180 days. This percentage may be increased to 30% if the dollar weighted average maturity does not exceed 31 days. These are a number of other qualifications regarding investments in commercial paper based on the financial strength of the corporation and the size of the investment. ThWG . Qs nta. f a ale t.k.t�f,� Neaotiable Certificates of Deposit - As authorized in Government Code Section 53601(h), 30% maybe invested in negotiable certificates of deposit issued by commercial banks and savings and loan associations. The City of La Quinta investment policy does not allow investment in Negotiable Certificates of Deposit. Repurchase and Reverse Repurchase Agreements - As authorized in Government Code Section 53601(i), these investment vehicles are agreements between the local agency and seller for the purchase of government securities to be resold at a specific date and for a specific amount. Repurchase agreements are generally used for short term investments varying from one day to two weeks. There is no legal limitation on the amount of the repurchase agreement. However, the maturity period cannot exceed one year. The market value of securities underlying a repurchase agreement shall a at least 102% of the funds invested and shall be valued at least quarterly. The City of La Quinta Investment Policy does not allow investment in Repurchase Agreements. The term "reverse repurchase agreement" means the sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase such securities on or before a specific date and for a specific amount. As provided in Government Code Section 53635, reverse repurchase agreements require the prior approval of the City Council. The City of La Quinta Investment Policy does not allow investment in Reverse Repurchase Agreements. Corporate Notes and Diversified Management Companies - As authorized in Government Code Section 53601 (j) and (k), local agencies may invest in corporate notes for a maximum period of five years in an amount not to exceed 30% of the agency's portfolio. The notes must be issued by corporations organized and operating in the United States or by depository institutions licensed by the United States or any other state and operating in the United States. Local agencies are also authorized in invest in shares of beneficial interest issued by diversified management companies (mutual funds) in an amount not to exceed 20% of the agency's portfolio. There are a number of other qualifications and restrictions regarding allowable investments in corporate notes and shares of beneficial interest issued by mutual funds. The City of La Quinta investment policy does not allow corporate notes and limits the percentage of mutual funds to 20%. 10 Mortgage -Backed Securities - As authorized in Government code Section 53601(n), local agencies may invest in mortgage -backed securities such as mortgage pass -through securities and collateralized mortgage obligations for a maximum period of five years in an amount not to exceed 20% of the agency's portfolio. Securities eligible for investment shall have a "A" or higher rating. The City of La Quinta investment policy does not allow investment in Mortgage -Backed Securities. Financial Futures and Financial Option Contracts - As authorized in Government Code Section 53601.1, local agencies may invest in financial futures or option contracts in any of the above investment categories subject to the same overall portfolio limitations. The City of La Quinta Investment Policy does not allow investments in financial futures and financial option contracts. Certificates of Deposit - As authorized in Government Code Section 53649, Certificates of Deposit are fixed term investments which are required to be collateralized from 105% to 150% depending on the specific security pledged as collateral in accordance with Government Code Section 53652. The collateral pool as administered by the State, and is con-iposed of a wide ty of goveini-nent securities, as well as PI-0111133ory notes secured by f irst niai tgag proved residential property located in the State and ietteis oF ciedit issued by the Federal I lome Loan Bank of San Francisco. There are no portfolio limits on the amount of maturity for this investment vehicle. The City of La Quinta investment policy limits the percentage of Certificates of Deposit to 60%. Sweep Accounts - As authorized by the City Council, a U.S. Treasury Money Market Sweep Account with a $50,000 target balance may be maintained in conjunction with the checking account. 1 11VIA•• 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 11 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 Collateralization 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. �"�raaurr�r 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 withdrawals 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. 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 12 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. RVAIVA-F-1XVVIOUT, _ 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 Agency 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 Treasurer shall establish a system of internal controls to accomplish the 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. 13 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 shall be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and the safekeeping institution 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. .Z s 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. 14 i �• i \ ' l� i i� 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; ► Cost to market value comparisons of all investments by authorized investment category, except for LAIF which will be provided quarterly; ► Comparison of actual holdings to Investment Policy maximums; ► Twenty four (24) months history of cash and investments for trend analysis; ► Balance Sheet. FAME l /_ _ 1 • : • l l ' i • -- 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. 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. Investable 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. 15 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 and make recommendations concerning investment policy and procedures=;:investment contracts and investment consultants. The appendices include City of La Quinta Ordinance 2.70 entitled Investment Advisory Board Provisions. 1. ' Lei 4 MOD 191 i ffel 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 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. 16 E N w m N c c E ro .- 3 m Q �m s C W N a y E 3 c a • of E V mCo w c E N 3 m a m a E $ y � m U � a 912 y i CD C E A a y Q c c g a .- _ ° m U ca Q5 U)N UI.L. 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Q 3 a ��i wm omo 0 w U) a 302 o cm�~m c a y m E m E> C ° o m n6�JM �cbZoEv€€ E 0 c ° E�Fy m co m ?7c o mZ2��i �2 c a� Q c a0 H m o 0 m�m c ° mom p0LLLLLLWLLLL m �o y$UO10 C L m N 06 M N E.... amI iE O >m (O .- M to Y � m H z W U) W z G N Ix O Q z m E r m E m 0 m �OlcO C's00 y m E m m V W yg- gC o mU—ca Z�m� Q�� m �CC� k D=�� Wm,tmn 0 a m w E N _ y MC c� m 2 7 y E a m c I E o W m 0 f� y y ° 4 m y iaLm. � m E c E mo _cc v m U m v o r$. 8 -5 o U > y 0 m m m L W. E w y C m N y y E m a U cm E Am y r V o U E i m m p ° U0m c v�c w�m CA ° %m 5 a > 2° H«mm vepp°C, o ID CEE9 OH E E> o o m :3� L v m c3 m u) m m g m O y m y Lm..c°- C q >, a w M m A W 'mO U)Y N m C '�-' m e y CY y pm •0 U p�o U)L y c : m $ E L E yo m C o m D y C i0 m r Y° cm - C a C m w y 7 m mo O U w LLm m N mc H O > 3 � L� U) o v L k O E � m 0. Tc 3 AD�p y U'O y 0.0 c °• O c .s m m E 2. l0 C m F m• _ aka a C H' y ¢JaE O w m V ILN m LO 1D v m o a m y m,gE mE 6m E y�QN O mOl E y y W C O CEm O, y C.�O �W5 gL'm Sao �r� r X �3Ec 0 -U)2 —m WE W O »QQ(Q�Qj xv;jQ III c y EL'Scc �m0c:ga m m y— «u !0 0 m ymCO � L me m L C y -EU) V y y y y ��E� 17 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 recommendations concerning investment policy and procedures, 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. 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, the 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) 19 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) 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) 20 LISTING OF APPROVED FINANCIAL INSTITUTIONS 1. Banking Services - Wells Fargo Bank 2. Custodian Services - Sink of N :W. : k 3. Deferred Compensation - International City/County Management Association Retirement Corporation 4. Broker/Dealer Services - Merrill Lynch, Indian Wells, CA Dean Witter, Newport Beach, CA Smith Barney, Newport Beach, CA 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 Trust 1994 RDA Project Area 1 - First Trust 1995 RDA Project Area 1 & 2 - First Trust Assessment Districts - First Trust No Changes to this listing may be made without City Council approval. 21 BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION 1. Name of Firm: 2. Address: 3. as Telephone: ( ) ( ) Broker's Representative to the City (attach resume): Name: Title: Telephone: ( ) 5. 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: 7. Telephone: ( ) ( ) 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 % BA's % Commercial Paper % CD's % Mutual Funds % Agencies (specify) : 22 % Repos % Reverse Repos % CMO's % Derivatives % Stocks/Equities % Other (specify) : 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 you 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 yQu have any current, or pending complaints that are unreported to the NASD? Yes No If yes, please provide action taken 23 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 No If yes, explain primary and excess coverage and carriers. 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 M 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' *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 25 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? 26 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)? 0A 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. U-01 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? l± o 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 Manager Record investment transactions in City's accounting records Accounting Manager 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 30 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. 31 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 32 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 Mortgage 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. 33 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 34 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 all cash and securities under the direction of the City Treasurer, including Bond Proceeds. 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. 35 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. SURPLUS FUNDS: Section 53601 of the California Government Code defines surplus funds as any money not required for immediate necessities of the local agency. The City has defined immediate neccesities to be payment due within one week. 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. 36 16 z F OF INVESTMENT ADVISORY BOARD Business Session No. C Meeting Date: April 8, 1998 TITLE: Workplan for Fiscal Year 1998/99 BACKGROUND: The purpose of this report is to obtain from the Investment Advisory Board issues and items that Staff should consider in developing a workplan and budget for Fiscal Year 1998/99. Staff has not identified any workplan items based upon past Board Member comments. RECOMMENDATION: vide Staff with further direction. hn M. Falconer, Finance Director / Z ceit,, 4 V � ti c� OF Tt'►ti0 INVESTMENT ADVISORY BOARD April 8, 1998 CORRESPONDENCE & WRITTEN MATERIAL A TITLE: Month End Cash Report - March 1998 BACKGROUND: This cash report is not a complete Treasury Report (exclude petty cash, deferred compensation and fiscal agent balances, ) but would report in a timely fashion selected cash balances. RECOMMENDATION: Information item only. J$hn M. Falconer, Finance Director 0 C O O LL O O O a O U o) Ci •a J w cM OL.. V ' o l0 622 M CD u) u6 _ V-cM o�N1--Od co Ito NOOd' OOP �pOCV000000 0) N00 oOc F-N C14 00~ �tf)0)C) coO �O O O O 0 C et M O rn� ti I` ti��u')0)a N N Nco �•- N N .N-. 'V Off' C� co � C� O cf) O ce) N 0 N c NM �� EO O cc) Net 1� h coCDNV N� MAN OtA��000� NO >N 0 � ~��N0il- �(OD v L OR co co O O o OR� o O O co O cocDc6 O O p u) cV _ u) 0�0 V O 00 CDN O O O O N Lqc�j M M M M M ti N CD N O O o co N v O O O (p U vi L ui I rn� M tl-N N 1-iNN�) C cc) N o co coN co o LL'N O O T- O u) U') u) u) O O 0)c c i O u) U) o ti d T- V- ui CO cM CV) M V) N co N N N N LL NN CCDN ti ti 0) t 00c0 O N N 0c0 N 00 N 0 C co O N 0 f- 0 O 0 0 o N V O N O 04 0 0) to 0 L — .0 �UL �f 0U') o U')� ... N N N U) �a 00 N O M 0 ` L M CY) Q o .0 L O , +N 0 MCL C M N m +' U)C (" O O +r c 0 m U. v) c o o c F-m m m L .0m 0 Em a.EO U 0= ~ N �Z, O N L V U) N V ,_ O O 7 .+ > U L O O L Om 0 cnw Q w 0Z0 °Li2< ca 0 O Q O Q tr-0 O CO�o ofl• E� � 10- U cn 04, cF- a0 V N •- O� N= O rn� tLC `Lto L' � �N E O� O L C .0 0 �OC a°--t 0 0 c 0.om4-OSQ N O •- fl._ +vi = 00-L OC�� ON O O O N LE0) =='C) CLM, "-x L-�LD Oo Q COCCp OU r aDoa NN o N OE N- ' U- EV O Mr-4' Uo = �C oE N=0 O•C > L LO� 0. O N wCDOGO N O 50) oc�rn 'C 7.0 E`h 0 a C8fl. CL OQ0C O �- O.• .0 An 0 0 C a) O 'a NE . oCL o 0 L •-N �C .V 3v QN� 0 7 C O �� _o .0Q 5 y oc v)� SEC �3�'c�-iQ L r- E:a s� CEO W0. o c EL rnxv) cCt 0-0 + O r00 N NCcmn 2Z o o-Co" Cl. m Q -0 0M O oEQ'M8 ONOQ0 x0 O� a�CM` o 4 -c�zMc E %c—Z., '-a�c — o ao =0N ZO v 0 00 4) r--0 -ovcm L' O D—r U. F—Q 2m 2C a m 75 O-c U) a00 0 "o �a�� •c9 � z V S fr� OF INVESTMENT ADVISORY BOARD Meeting Date: TITLE: • • ;1 Pooled Money Investment Board Report BACKGROUND: Correspondence & Written Material Item B The Pooled Money Investment Board Report for January, 1998 is included in the agenda packet. RECOMMENDATION: Receive & File n M. Falconer, Finance Director STATE OF CALIFORNIA STATE TREASURER'S OFFICE POOLED MONEY INVESTMENT BOARD REPORT JANUARY 1998 Table of Contents SELECTED INVESTMENT DATA....................................................................2 PORTFOLIO COMPOSITION...........................................................................3 INVESTMENT TRANSACTIONS......................................................................4 TIMEDEPOSITS................................................................................................18 DEMAND BANK DEPOSITS... POOLED MONEY INVESTMENT BOARD DESIGNATION ...:................22 POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF JANUARY 1998 WITH JANUARY 1997 (Dollars in Thousands) Total Time Deposit Transactions Amount $479,100 $261,500 + $217,600 Number 50 32 + 18 Average Workday Investment Activity $930,521 $918,264 + $12,257 Prescribed Demand Account Balances For Services $196,070 $132,412 + $63,658 For Uncollected Funds $202,93 8 $223,103 - $20,165 —1— MATT FONG STATE TREASURER STATE OF CALIFORNIA EWESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) Change in January 31,1998 Percent From Type of Security Amount Percent Previous Month Governments Bills $29324,474 7.59 + .84 Bonds 0 0 0 Notes 5,0341848 16.43 - 1.95 Strips 73,184 .24 - .01 Total Governments $794329506 24.26 - 1.12 Federal Agency Coupons $2,001,954 6.54 + .61 Certificates of Deposit 69723,995 21.95 - .62 Bank Notes 875,000 2.86 - 37 Bankers Acceptances 3299,414 1.07 - .05 Repurchases 100,000 .33 + .33 Federal Agency Discount Notes 1,1059-132 3.61 + .29 Time Deposits 191389,295 3.71 - .02 GNMA's 2,601 .01 0 Commercial Paper 891903,683 26.74 + IA5 FHLMC 24,760 .08 - .01 Corporate Bonds 19511,161 4.93 - .11 Pooled Loans 193959578 4.55 - .42 GF Loans 0 0 0 Reversed Repurchases -1979332 -.64 + .04 Total, All Types $309633,747 100 UiVESTMENT ACTIVITY January 1998 December 1997 Number Amount Number Amount Pooled Money 416 $ 189131,329 519 $ 239,303,772 Other 7 1229146 45 671,022 Time Deposits 50 4799100 56 6439490 TOTALS 473 $ 1897329,575 620 $ 24,6189284 PMIA Monthly Average Effective Yield 5.742 5.744 Year to Date Yield for Last Day of Month 5.712 5.707 -2- Commercial Paper 26.74% Repo 0. Ac Pooled Money Investment Account Portfolio Composition $30.6 Billion Corporate Loans Reverses Bonds 4.55% -0'64o 1.07% CD's/BN's 24.81 % 3suries -.26% Time Deposits 3.71 % Mortgages 0.09% :ncies .15% 1 /31 /98 C Treasuries IS Time Deposits ■ Mortgages ©Agencies; ■ CD's/BN's ■ Bankers Acceptances ■ Repo ® Commercial Paper ® Corporate Bonds * Loans ® Reverses -3- r V VLGL�s�l��?[GxI'�'�� Y Ga7 I l9ICl�! 1-��I�.►�LiK 1 r C s ; - _...INAI't1RtTY it8 RAR DAYS •."Ei' '? .. 3"YD� ,,. �..i1L<r01�'!'tY1t�Y' � ar►w!i�r.. ..snrr:rs.. .... • rwwnr • �t>irr w . � 01/02/98 REDEMPTION REDEMPTION CD Soc Gen 5.630% 01/02/98 5.620 $24,000 129 483,336.98 5.698 CD Cr Agricole 5.660% 01/02/98 5.660 25,000 129 507,041.67 5.738 CD Bkrs Trst 5.630% 01/02/98 5.620 35,000 130 710,330.69 5.698 CD Bkrs Trst 5.630% 01/02/98 5.620 50,000 130 1,014,758.14 5.698 CID GMAC 01/02/98 6.200 50,000 4 34,444.44 6.290 CID GMAC 01/02/98 6.200 50,000 4 34,444.44 6.290 CID Hertz 01/02/98 6.400 21,000 9 33,600.00 6.499 CID FMCC 01/02/98 6.120 45,000 10 76,500.00 6.215 CP FMCC 01/02/98 6.120 50,000 10 85,000.00 6.215 CID Lehman 01/02/98 6.400 50,000 10 88,888.89 6.500 CID Lehman 01/02/98 6.400 50,000 10 88,888.89 6.500 CID Lehman 01/02/98 6.400 50,000 10 88,888.89 .6.500 CID Lehman 01/02/98 6.400 50,000 10 88,888.89 6.500 CID FMCC 01/02/98 6.080 50,000 11 92,888.89 6.281 CID Conagra 01/02/98 6.420 50,000 11 98,083.33 6.521 CID FMCC 01/02/98 5.710 50,000 44 348,944.44 5.829 CID FMCC 01/02/98 5.710 50,000 44 348,944.44 5.829 CID Conagra 01/02/98 5.630 30,000 91 426,941.67 5.790 CID GMAC 01/02/98 5.490 25,000 128 488,000.00 5.677 CID GMAC 01/02/98 5.490 50,000 128 976,000.00 5.677 CID GMAC 01/02/98 5.490 50,000 128 976,000.00 5.677 FHLB 4.950% 01/02/98 5.629 18,000 378 1,042,200.00 5.629 CID FMCC 01/02/98 5.630 50,000 53 414,430.56 5.755 CID FMCC 01/02/98 5.630 50,000 53 414,430.56 5.755 PURCHASE FFCB 5.650% 01/04/99 5.825 50,000 FFCB 5.650% 01 /04/99 5.825 50,000 CP GMAC 02/27/98 5.590 50,000 CP GMAC 02/27/98 5.590 50,000 CP GMAC 02/27/98 5.590 50,000 CP Hertz 01 /07/98 5.910 17,000 CID Amer Exp 02/09/98 5.570 50,000 CID Amer Exp 02/09/98 5.570 45,000 CID Unocal 02/04/98 5.770 18,600 CID Conagra 02/27/98 5.720 25,000 CD ANZ 5.820% 03/31/98 5.650 50,000 CD ANZ 5.820% 03/31 /98 5.650 50,000 CD Boston 5.700% 07101 /98 5.690 50,000 01/05/98 REDEMPTION BN B/A 5.860% 01/05/98 5.860 50,000 215 1,749,861.11 5.941 CID Country 01/05/98 6.500 15,000 6 16,250.00 6.597 CID Country 01/05/98 6.500 50,000 6 54,166.67 6.597 —4— 01/05/98 PURCHASE CD Cr Anstlt 5.660% 06/30/98 5.650 50,000 CD Cr Anstlt 5.660% 06/30/98 5.650 50,000 CD Cr Anstlt 5.570% 02/26/98 5.560 50,000 CD Cr Anstlt 5.570% 02/26/98 5.560 50,000 CD Stand Ch 5.590% 02/27/98 5.580 50,000 CD ABN Amro 5.630% 06/30/98 5.620 45,000 CD ABN Amro 5.630% 06/30/98 5.620 50,000 CD Rabo 5.680% 07/02/98 5.640 50,000 CP FMCC 01/06/98 5:660 50,000 CP FMCC 01/06/98 5.660 50,000 CP FMCC 01/06/98 5.660 50,000 CP FMCC 01/06/98 5.660 50,000 CP Text Fin 02/06/98 5.700 39,000 CP GECC 06/01/98 5.500 50,000 CP GECC 06/01/98 5.500 50,000 CP GECC 06/01/98 5.500 50,000 CP GECC 06/01/98 5.500 50,000 CP GECC 06/26/98 5.500 50,000 CP GECC 06/26/98 5.500 50,000 CP Bear 06/26/98 5.520 50,000 CP Bear 06/26/98 5.520 50,000 CP B/A 06/30/98 5.500 50,000 CP B/A 06/30/98 5.500 50,000 Disc Note FHLB 07/06/98 5.350 2,000 Disc Note FHLB 07/06/98 5.350 50,000 Treas Bill 11/12/98 5.135 50,000 Treas Bill 11/12/98 5.135 50,000 Disc Note FNMA 06/30/98 5.400 50,000 Disc Note FNMA 06/30/98 5.400 50,000 Treas Bill 12/10/98 5.100 50,000 Treas BIII 12/10/98 5.100 50,000 Treas Bill 12/10/98 5.093 50,000 Treas Bill 12/10/98 5.093 50,000 Treas Note 5.125% 12/31/98 5.479 20,000 Treas Note 5.125% 12/31 /98 5.479 50,000 01/06/98 REDEMPTION CP FMCC 01/06/98 5.660 50,000 1 7,861.11 5.739 CP FMCC 01/06/98 5.660 50,000 1 7,861.11 5.739 CP FMCC 01/06/98 5.660 50,000 1 7,861.11 5.739 CP FMCC 01/06/98 5.660 50,000 1 7,861.11 5.739 CP Conagra 01/06/98 6.210 20,000 19 65,550.00 6.316 —5— 01/06/98 PURCHASE BA Montreal 03/09/98 5.510 15,000 BA Montreal 03/11 /98 5.510 15,000 BA Montreal 03/23/98 5.510 10,300 CP FMCC 03/02/98 5.510 50,000 CP FMCC 03/02/98 5.510 50,000 CP U/B Calif 03/06/98 5.510 50,000 CP Conagra 03/31 /98 5.650 20,000 CP Conagra 03/31/98 5.650 22,000 CP FMCC 06/30/98 5.450 50,000 CP FMCC 06/30/98 5.450 50,000 FFCB 5.650% 01/04/99 5.575 18,305 FFCB 5.650% 01/04/99 5.575 50,000 PURCHASE r/ Treas Note 8.250% 07/15/98 5.450 41,000 Treas Note 6.000% 09/30/98 5.450 14,000 Treas Note 5.625% 11 /30/98 5.450 12,185 Treas Note 5.000% 01/31/99 5.450 45,000 Treas Note 8.875% 02/15/99 5.450 18,400 Treas Note 5.500% 12/31/00 5.450 18,000 01/07/98 REDEMPTION CP Hertz 01/07/98 5.910 17,000 5 13,954.17 5.997 CP Amer Exp 01/07/98 6.150 50,000 14 119,583.33 6.250 CP Amer Exp 01/07/98 6.150 50,000 14 119,583.33 6.250 SALE cL Treas Note 8.250% 07/15/98 5.450 41,000 1 6,400.72 5.525 Treas Note 6.000% 09/30/98 5.450 14,000 1 2,115.51 5.525 Treas Note 5.625% 11 /30/98 5.450 12,185 1 1,818.63 5.525 Treas Note 5.000% 01/31/99 5.450 45,000 1 6,783.28 5.525 Treas Note 8.875% 02/15/99 5.450 18,400 1 29920.29 5.525 Treas Note 5.500% 12/31 /00 5.450 18,000 1 29669.89 5.525 PURCHASE CD Nat W.Mstr 5.680% 07/06/98 5.570 45,000 CP GECC 01/08/98 5.380 509000 CP GECC 01/08/98 5.380 509000 CP GECC 05/07/98 5.450 509000 CP GECC 05/07/98 5.450 509000 CP GECC 05/08/98 5.450 35,000 CP GECC 05/08/98 5.450 50,000 01/07/98 PURCHASE CP FMCC 06/01/98 5.440 50,000 CP FMCC 06/01/98 5.440 50,000 CP FMCC 06/05/98 5.440 50,000 CP FMCC 06/05/98 5.440 50,000 01/08/98 REDEMPTION CD Montreal 5.580% 01/08/98 5.560 50,000 94 725,926.25 5.637 CD Montreal 5.580% 01/08/98 5.560 50,000 94 725,926.25 5.637 CP GECC 01/08/98 5.380 50,000 1 7,472.22 5.455 CP GECC 01/08/98 5.380 50,000 1 7,472.22 5.455 CP GMAC 01/08/98 6.160 50,000 10 85,555.56 6.256 CP GMAC 01/08/98 6.160 50,000 10 85,555.56 6.256 CP FMCC 01/08/98 6.150 50,000 15 128,125.00 6.251 CP FMCC 01/08/98 6.150 50,000 15 128,125.00 6.251 CP FMCC 01/08/98 6.150 50,000 15 128,125.00 6.251 CP SRAC 01/08/98 6.000 50,000 21 175,000.00 6.104 CP GMAC 01/08/98 5.640 50,000 62 485,666.67 5.774 CP GMAC 01/08/98 5.640 50,000 62 485,666.67 5.774 CP Conagra 01/08/98 5.770 50,000 62 496,861.11 5.908 CP Conagra 01/08/98 5.760 35,000 70 392,000.00 5.906 CP GMAC 01/08/98 5.620 50,000 70 546,388.89 5.761 CP GMAC 01/08/98 5.620 50,000 70 546,388.89 5.761 CP Morg Stan 01/08/98 5.510 50,000 94 719,361.11 5.668 CP Morg Stan 01/08/98 5.510 50,000 94 719,361.11 5.668 CP Bear 01/08/98 5.570 47,000 127 923,536.94 5.760 PURCHASE BN B/A 5.530% 06/30/98 5.530 50,000 BN B/A 5.530% 06/30/98 5.530 50,000 CD Tokyo-Mits 5.680% 03/26/98 5.680 50,000 CD Tokyo-Mits 5.680% 03/26/98 .5.680 50,000 CD PNC BK 5.550% 06/30/98 5.560 50,000 CD PNC BK 5.550% 06/30/98 5.560 50,000 CP GECC 01/09/98 5.350 50,000 CP GECC 01/09/98 5.350 50,000 CP GECC 01/09/98 5.350 50,000 CP Assoc 05/04/98 5.450 50,000 CP Assoc 05/04/98 5.450 50,000 CP GECC 05/08/98 5.440 50,000 CP GECC 05/08/98 5.440 50,000 CP SRAC 05/08/98 5.440 50,000 —7— 01/08/98 PURCHASE r/ Treas Note Treas Note Treas Note Treas Note Treas Note Treas Note 01/09/98 REDEMPTION CP GECC CP GECC CP FMCC CP FMCC CP FMCC CP FMCC CP Country CP Heller CP Heller SALE Treas Note Treas Note Treas Note Treas Note Treas Note Treas Note PURCHASE MTN (FR) GMAC MTN (FR) FMCC. CB Assoc 01/12/98 REDEMPTION BA Montreal BA B/A BN B/A BN B/A 6.250% 06/30/98 5.360 5.500% 11 /15/98 5.360 5.000% 02/15/99 5.360 7.750% 01 /31 /00 5.360 8.500% 11 /15/00 5.360 6.125% 12/31 /01 5.360 50,000 44,667 50,000 50,000 50,000 50,000 01/09/98 5.350 50,000 1 7,430.56 5.425 01/09/98 5.350 50,000 1 7,430.56 5.425 01/09/98 6.120 10,000 11 18,700.00 6.216 01/09/98 6.120 50,000 11 93,500.00 6.216 01/09/98 6.120 50,000 14 119,000.00 6.219 01/09/98 6.120 50,000 14 119,000.00 6.219 01/09/98 6.450 9,805 16 28,107.67 6.558 01/09/98 6.250 25,000 21 91,145.83 6.359 01/09/98 6.250 50,000 21 182,291.67 6.359 6.250% 06/30/98 5.360 50,000 1 7,330.40 5.434 5.500% 11 /15/98 5.360 44,667 1 6,564.81 5.434 5.000% 02/15/99 5.360 50,000 1 7,421.66 5.434 7.750% 01 /31 /00 5.360 50,000 1 7,886.64 5.434 8.000% 11 /15/00 5.360 50,000 1 7,977.76 5.434 6.125% 12/31 /01 5.360 50,000 1 7,485.39 5.434 5.906% 04/29/02 5.691 10,000 6.158% 03/05/01 5.712 15,000 6.375% 08/25/99 5.810 7,500 01 /12/98 5.490 10,000 172 262,300.00 5.716 01 /12/98 5.480 13,000 178 342,242.23 5.710 5.690% 01 /12/98 5.690 50,000 182 1,438,305.56 5.769 5.690% 01 /12/98 5.690 50,000 182 1,438,305.56 5.769 01/12/98 PURCHASE MTN (FR) GMAC 5.906% 04/29/02 5.691 20,000 CP GMAC 05/08/98 5.360 50,000 CP GMAC 05/08/98 5.360 50,000 CP GECC 01/13/98 5.540 50,000 CP GECC 01/13/98 5.540 50,000 CP GECC 01/13/98 5.540 50,000 01/13/98 REDEMPTION CP Merrill 01/13/98 5.900 50,000 28 229,444.44 6.009 CP Merrill 01/13/98 5.900 50,000 28 229,444.44 6.009 CP Merrill 01/13/98 5.900 50,000 28 229,444.44 6.009 CP GMAC 01/13/98 6.150 50,000 18 153,750.00 6.254 CP GMAC 01/13/98 6.150 50,000 18 153,750.00 6.254 CP GMAC 01/13/98 6.150 50,000 18 153,750.00 6.254 CP GMAC 01/13/98 6.150 50,000 18 153,750.00 6.254 CP GECC 01/13/98 5.540 50,000 1 7,694.44 5.617 CP GECC 01/13/98 5.540 50,000 1 7,694.44 5.617 CP GECC 01/13/98 5.540 50,000 1 7,694.44 5.617 PURCHASE MTN (FR) GMAC 5.906% 04/29/02 5.687 15,000 CP GMAC 03/02/98 5.440 50,000 CP GMAC 03/02/98 5.440 50,000 CP GMAC 03/03/98 5.440 45,000 CP GMAC 03/03/98 5.440 50,000 CP Bear 04/28/98 5.400 50,000 CP Merrill 05/08/98 5.390 50,000 CP Merrill 05/08/98 5.390 50,000 PURCHASE Disc Note FHLMC 03/06/98 5.430 27,290 Disc Note FNMA 03/19/98 5.430 50,000 Treas Note 6.375% 04/30/99 5.430 49,685 01/14/98 REDEMPTION CD Montreal 5.670% 01/14/98 5.670 50,000 69 543,375.00 5.748 CP Country 01/14/98 5.980 21,160 28 98,417.51 6.091 CP Bear 01/14/98 5.720 30,000 54 257,400.00 5.849 CP SRAC 01/14/98 5.650 50,000 68 533,611.11 5.790 CP Enron 01/14/98 5.780 8,200 69 90,842.33 5.925 CP Enron 01/14/98 5.780 50,000 69 553,916.67 5.925 CP GECC 01/14/98 5.550 50,000 96 740,000.00 5.711 CP GECC 01/14/98 5.550 50,000 96 740,000.00 5.771 POOLEi�YtON��'��%E�E�1 01 /14/98 SALE r/ Disc Note FHLMC Disc Note FNMA Treas Note PURCHASE MTN Chrysler CD World CD. World CP Conagra CP GECC CP GECC CP GECC 01/15/98 REDEMPTION CB Chase PURCHASE MTN (FR) FMCC CP Morgan CP Morgan CP Morgan CP GMAC CP GMAC PURCHASE !c/ Treas Note Treas Note 01/16/98 REDEMPTION BA Montreal CP Conagra SALE r/ Treas Note Treas Note 03/06/98 5.430 03/19/98 5.430 6.375% 04/30/99 5.430 5.690% 06/30/99 5.690 5.520% 01 /28/98 5.540 5.520% 01 /28/98 5.540 01 /28/98 5.550 01 /28/98 5.480 01 /28/98 5.480 01 /28/98 5.480 6.625% 01 /15/98 6.410 6.176% 03/21 /91 5.578 01 /28/98 5.480 01 /28/98 5.480 01 /28/98 5.480 01 /28/98 5.480 01 /28/98 5.480 6.625% 06/30/01 5.580 6.625% 06/30/01 5.580 01 /16/98 5.480 01 /16/98 5.950 6.625% 06/30/01 5.580 6.625% 06/30/01 5.580 27,290 1 50,000 1 49,685 1 50,000 50,000 50,000 15,000 10,000 50,000 50,000 8,350 570 28,500 45,000 50,000 50,000 50,000 50,000 47,877 50,000 10,000 176 20,000 43 47,877 1 50,000 1 3,997.23 5.505 7,315.27 5.505 7,541.67 5.505 836,332.52 6.410 267,911.11 5.709 142,138.89 6.075 7,581.82 5.657 7,918.17 5.657 —10- 01/16/98 PURCHASE CP Conagra 01/28/98 5.530 46,700 CP GECC 01/28/98 5.470 50,000 CP GECC 01/28/98 5.470 50,000 CP GMAC 01/29/98 5.460 5,000 CP GMAC 01/29/98 5.460 50,000 CP GMAC 01/29/98 5.460 50,000 CP GE Co. 01/29/98 5.470 50,000 CP GE Co. 01/29/98 5.470 50,000 01/20/98 REDEMPTION MTN GMAC 8.250% 01 /20/98 5.820 240,000 372 1,448,500.00 5.830 PURCHASE CP Salomon 01/28/98 5.490 40,000 CP Salomon 01/28/98 5.490 50,000 CP GMAC 01/28/98 5.510 50,000 CP GMAC 01/28/98 5.510 50,000 CP Country 01/29/98 5.530 33,500 01/21/98 NO SALES PURCHASE CP GMAC 01/29/98 5.500 50,000 CP GMAC 01/29/98 5.500 50,000 CP Lehman 02/02/98 5.500 40,000 CP Lehman 02/02/98 5.500 50,000 CP Lehman 02/02/98 5.500 50,000 CP Amer Exp 02/02/98 5.460 50,000 CP Amer Exp 02/02/98 5.460 50,000 CP Amer Exp 02/02/98 5.460 50,000 CP Amer Exp 02/02/98 5.460 50,000 PURCHASE !c/ Treas Notes 5.375% 05/31 /98 5.450 50,000 Treas Notes 5.375% 05/31 /98 5.450 50,000 01/22/98 REDEMPTION MTN IBM 5.650% 01 /22/98 5.730 33,340 352 1,845,591.27 5.744 —11— 01 /22/98 SALE &I Treas Note Treas Note PURCHASE CID GECC CID Conagra CP Conagra CP Morg Stan CID Morg Stan 01/23/98 REDEMPTION CP GECC MTN GMAC PURCHASE FHLB FHLB CID GECC CID GECC CID GECC CID Morg Stan CID Morg Stan 01/26/98 REDEMPTION CID GECC CID GECC CID GECC. PURCHASE CID GECC CID GECC CID GECC CP GECC CID GMAC CID GMAC CP Amer Exp CP Amer Exp CP Amer Exp 5.375% 05/31 /98 5.450 5.370% 05/31 /98 5.450 50,000 1 50,000 1 01 /23/98 5.420 50,000 01 /27/98 5.530 379897 02/02/98 5.540 46,931 02/02/98 5.470 17,000 02/02/98 5.470 50,000 01 /23/98 5.420 50,000 1 5.250% 01 /23/98 6.490 15,000 576 5.370% 01 /04/99 5.418 37,000 5.370% 01 /04/99 5.418 50,000 01 /26/98 5.390 25,000 01 /26/98 5.390 50,000 01 /26/98 5.390 50,000 02/02/98 5.470 50,000 02/02/98 5.470 50,000 01 /26/98 5.390 25,000 01 /26/98 5.390 50,000 01 /26/98 5.390- 50,000 01 /27/98 5.560 50,000 01 /27/98 5.560 50,000 01 /27/98 5.560 50,000 01 /27/98 5.560 50,000 02/02/98 5.530 10,000 02/02/98 5.530 50,000 02/02/98 5.500 50,000 02/02/98 5.500 50,000 02/02/98 5.500 50,000 3 3 3 7,476.64 5.525 7,476.64 5.525 7,527.78 5.496 1,514,812.50 6.518 11,229.17 5.467 22,458.33 5.467 22,458.33 5.467 —12- 01/27/98 REDEMPTION CD Deutsche 5.600% 01/27/98 5.580 50,000 158 1,224,604.92 5.657 CD Deutsche 5.600% 01/27/98 5.580 50,000 158 1,224,604.92 5.657 CP GECC 01/27/98 5.560 50,000 1 7,722.22 5.638 CP GECC 01/27/98 5.560 50,000 1 7,722.22 5.638 CP GECC 01/27/98 5.560 50,000 1 7,722.22 5.638 CP GECC 01/27/98 5.560 50,000 1 7,722.22 5.638 CP Conagra 01/27/98 .5.530 37,897 5 29,107.00 5.611 CP GMAC 01/27/98 5.510 20,000 159 486,716.67 5.725 CP GMAC 01/27/98 5.510 50,000 159 1,216,791.67 5.725 PURCHASE FNMA 5.430% . 01/27/00 5.469 50,000 BN NationsBk 5.510% 06/30/98 5.510 50,000 01/28/98 REDEMPTION BN Fst Chic 5.580% 01/28/98 5.580 30,000 161 748,650.00 5.657 BN Fst Chic 5.580% 01/28/98 5.580 50,000 161 1,247,750.00 5.657 BN Fst Chic . 5.580% 01/28/98 5.580 50,000 161 1,247,750.00 5.657 CD World 5.520% 01/28/98 5.540 50,000 14 107,721.33 5.616 CD World 5.520% 01/28/98 5.540 50,000 14 107,721.33 5.616 CD ABN Amro 5.600% 01/28/98 5.590 50,000 160 1,242,276.09 5.667 CD ABN Amro 5.600% 01/28/98 5.590 50,000 160 1,242,276.09 5.667 CD ABN Amro 5.600% 01/28/98 5.590 50,000 160 1,242,276.09 5.667 CD Hong Kong 5.590% 01/28/98 5.590 50,000 160 1,242,222.22 5.667 CD Hong Kong 5.590% 01/28/98 5.590 50,000 160 1,242,222.22 5.667 CD Deutsche 5.600% 01/28/98 5.600 50,000 160 1,244,444.44 5.677 CD Deutsche 5.600% 01/28/98 5.600 50,000 160 1,244,444.44 5.677 CD Deutsche 5.600% 01/28/98 5.600 50,000 160 1,244,444..44 5.677 CD Deutsche 5.600% 01/28/98 5.600 50,000 160 1,244,444.44 5.677 CD Hong Kong 5.600% 01/28/98 5.600 40,000 166 1,032,888.89 5.677 CD Hong Kong 5.600% 01/28/98 5.600 50,000 166 1,291,111.11 5.677 CD Hong . 5.600% 01/28/98 5.600 50,000 166 1,291,111.11 5.677 CD Hong Kong 5.600% 01/28/98 5.600 50,000 166 1,291,111.11 5.677 CD World 5.590% 01/28/98 5.600 25,000 189 734,962.51 5.677 CP Salomon 01/28/98 5.490 40,000 8 48,800.00 5.573 CP GMAC 01/28/98 5.510 50,000 8 61- 000.00 5.573 CP GMAC 01/28/98 5.510 50,000 8--- 61:222.22 5.593 CP GMAC 01/28/98 5.510 50,000 8-' 61,222.22 5.593 CP GECC 01/28/98 5.470 50,000 12 91,166.67 5.606 CP Conagra 01/28/98 5.530 46,700 12 86,083.67 5.556 CP GECC 01/28/98 5.470 50,000 12 91,166.67 5.556 CP GECC 01/28/98 5.470 50,000 12 91,166.67 5.567 CP Morg Stan 01/28/98 5.480 45,000 13 89,050.01 5.567 CP Morg Stan 01/28/98 5.480 50,000. 13 98,944.45 5.567 CP Morg Stan 01/28/98 5.480 50,000 13 98,944.45 5.567 CP GMAC 01/28/98 5.480 50,000 13 98,944.44 5.567 —13— 01/28/98 REDEMPTION CID GMAC 01/28/98 5.480 50,000 13 98,944.44 5.567 CID Conagra 01/28/98 5.550 15,000 14 32,375.00 5.639 CID GECC 01/28/98 5.480 10,000 14 21,311.11 5.567 CID GECC 01/28/98 5.480 50,000 14 106,555.56 5.567 CID GECC 01/28/98 5.480 50,000 14 106,555.56 5.567 SALE Treas Note 5.625% 01 /31 /98 9.206 25,000 1807 691,661.01 5.565 Treas Note 5.625% 01 /31 /98 9.206 50,000 1821 1,383,322.01 5.541 Treas Note 5.625% 01 /31 /98 9.206 50,000 1821 1,383,322.01 5.541 Treas Note 5.625% 01 /31 /98 9.206 50,000 1821 1,383,322.01 5.541 Treas Note 5.625% 01 /31 /98 9.206 50,000 1821 1,383,322.01 5.541 Treas Note 5.125% 02/28/98 5.646 1,000 1794 255,000.86 5.205 Treas Note 5.125% 02/28/98 5.646 50,000 1786 12,624,024.14 5.169 Treas Note 5.125% 02/28/98 5.646 50,000 1785 12,710,810.82 5.217 Treas Note 5.125% 02/28/98 5.646 50,000 699 5,007,570.27 5.240 Treas Note 5.125% 02/28/98 5.646 50,000 699 5,095,037.77 5.341 Treas Bill 12/10/98 5.075 50,000 29 290,659.72 7.704 Treas Bill 12/10/98 5.075 50,000 29 290,659.72 7.704 PURCHASE SBA (FR) 6.000% 01/25/23 6.000 10,418 BN NationsBk 5.520% 06/30/98 5.520 50,000 BN NationsBk 5.520% 06/30/98 5.520 50,000 CD Deutsche 5.510% 06/30/98 5.510 50,000 CD Deutsche 5.510% 06/30/98 5.510 .50,000 CD WestDeut 5.510% 06/30/98 5.510 50,000 CD Marine 5.520% 06/30/98 5.500 50,000 CD Marine 5.520% 06/30/98 5.500 50,000 CID GMAC 01/29/98 5.650 50,000 CID GMAC 01/29/98 5.650 50,000 CID GMAC 01/29/98 5.650 50,000 CID GMAC 01/29/98 5.650 50,000 CID FMCC 03/27/98 5.460 50,000 CID FMCC 03/27/98 5.460 50,000 CID Lehman 04/01 /98 5.480 50,000 Treas Bill 01/07/99 5.040 50,000 Treas Bill 01/07/99 5.040 50,000 Treas Bill 01/07/99 5.040 50,000 Treas BIII 01/07/99 5.040 50,000 PURCHASE!/ Treas Note 5.750% 12/31 /98 5.540 49,770 Treas Note 7.000% 04/15/99 5.540 50,000 —14— 01/29/98 REDEMPTION CP GMAC 01/29/98 5.650 50,000 1 7,847.22 5.729 CP GMAC 01/29/98 5.650 50,000 1 7,847.22 5.729 CP GMAC 01/29/98 5.650 50,000 1 7,847.22 5.729 CP GMAC 01/29/98 5.650 50,000 1 7,847.22 5.729 CP GMAC 01/29/98 5.500 50,000 8 61,111.11 5.583 CP GMAC 01/29/98 5.500 50,000 8 61,111.11 5.583 CP Country 01/29/98 5.530 33,500 9 46,313.75 5.614 CP GMAC 01/29/98 5.460 5,000 13 9,858.33 5.536 CP GMAC 01/29/98 5.460 50,000 13 98,583.33 5.536 CP GMAC 01/29/98 5.460 50,000 13 98,583.33 5.536 CP GE Co. 01/29/98 5.470 50,000 13 98,763.89 5.556 CP GE Co. 01/29/98 5.470 50,000 13 98,763.89 5.556 PURCHASE Treas Note 5.625% 12/31/99 5.491 50,000 BN Fst Chic 5.460% 06/30/98 5.460 25,000 BN Fst Chic 5.460% 06/30/98 5.460 50,000 CD Nat W.Mstr 5.500% 03/23/98 5.500 35,000 CD Montreal 5.520% 05/08/98 5.520 50,000 CD Montreal 5.520% 0508-98 5.520 50,000 CD WestDeut 5.510% 06/30/98 5.510 50,000 CD WestDeut 5.510% 06/30/98 5.510 50,000 CP GECC 01/30/98 5.600 50,000 CP GECC 01/30/98 5.600 50,000 CP GMAC 02/02/98 5.450 50,000 CP GMAC 02/02/98 5.450 50,000 CP GMAC 02/02/98 5.450 50,000 CP GMAC 02/02/98 5.450 50,000 CP Transam 02/02/98 5.550 33,000 CP Merrill 02/09/98 5.560 32,000 CP Country 02/09/98 5.540 36,348 CP Country 02/10/98 5.540 40,000 01/30/98 REDEMPTION BN Fst Chic 5.590% 01/30/98 5.590 50,000 161 1,249,986.11 BN Fst Chic 5.590% 01/30/98 5.590 50,000 161 1,249,986.11 CP GECC 01/30/98 5.600 50,000 1 7,777.78 CP GECC 01/30/98 5.600 50,000 1 7,777.78 CP Text Fin 01/30/98 6.170 50,000 43 368,486.11 CP Conagra 01/30/98 5.880 18,025 59 173,700.92 CP GMAC 01/30/98 5.650 25,000 .85 333,506.94 CP GMAC 01/30/98 5.650 50,000 85 667,013.89 MTN GMAC 01/30/98 5.599 6,000 745 708,041.67 5.667 5.667 5.678 5.678 6.302 6.019 5.805 5.805 5.599 —15— 01/30/98 PURCHASE Treas Note 5.625% 12/31/99 5.491 50,000 CP GECC 02/02/98 5.620 50,000 CP GECC 02/02/98 5.620 50,000 CP GECC 02/02/98 5.620 50,000 CP GECC 02/02/98 5.620 50,000 CP GECC 02/02/98 5.620 50,000 CP GECC 02/02/98 5.620 50,000 —16— 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 (EYF*1), 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 MIS), 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 securites purchased, sold, or redeemed. el 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. RRS Reverse Repurchase Agreement. RRP Termination of Reverse Repurchase Agreement. —17— NAME ALHAMBRA East West Bank DEPOSIT DATE 11 /10/97 YIELD 5.340 PAR AMOUNT (S) MATURITY DATE 02/01 /98 35,000,000.00 East West Bank 12/18/97 5.240 12,000,000.00 03/19/98 East West Bank 01/12/98 5.140 15,000,000.00 04/17/98 BEVERLY HILLS City National Bank 08/19/97 5.370 20,000,000.00 02/18/98 City National Bank 12/18/97 5.230 20,000,000.00 03/19/98 City National Bank 11/04/97 5.390 10,000,000.00 05/05/98 City National Bank CHICO 01/27/98 5.270 10,000,000.00 07/29/98 North State National Bank 08/26/97 5.350 1,000,000.00 02/25/98 North State National Bank 09/11 /97 5.370 500,000.00 03/11 /98 North State National Bank 10/06/97 5.290 2,000,000.00 04/07/98 Tri Counties Bank 01/13/98 5.070 10,000,000.00 04/16/98 Tri Counties Bank FRESNO 01/21/98 5.170 10,000,000.00 04/22/98 Kings River State Bank GL ENDAi E 01 /15/98 5.190 1,000,000.00 07/15/98 Glendale Federal Bank 12/29/97 5.360 3,000,000.00 03/31/98 Glendale Federal Bank 01/08/98 . 5.260 5,000,000.00 04/09/98 Glendale Federal Bank INGLEWOOD 10/20/97 5.340 100,000,000.00 04/17/98 Imperial Bank 11/03/97 5.250 10,000,000.00 02/03/98 Imperial Bank 11/06/97 5.250 20,000,000.00 02/05/98. Imperial Bank 11/13/97 5.390 20,000,000.00 02/11/98 Imperial Bank 12/10/97 5.340 25,000,000.00 03/11 /98 Imperial Bank 12/18/97 5.260 11,000,000.00 03/19/98 Imperial Bank 12/31/97 5.430 36,000,000.00 03/31/98 Imperial Bank 01/15/98 5.270 25,000,000.00 04/21/98 Imperial Bank L OS ANGEL ES 01/29/98 . 5.290 5,000,000.00 05/06/98 Preferred Bank 11 /20/97 5.290 4,000,000.00 02/18/98 Preferred Bank 11 /25/97 5.310 2,000,000.00 02/24/98 Preferred Bank 12/16/97 5.220 5,000,000.00 03/17/98 Preferred Bank 12/18/97 5.220 4,000,000.00 03/19/98 Preferred Bank 09/22/97 5.310 9,000,000.00 03/24/98 General Bank 12/04/97 5.300 10,000,000.00 03/30/98 General Bank 12/19/97 5.250 15,000,000.00 03/31/98 Preferred Bank 12/31/97 5.410 3,000,000.00 04/01/98 Community Bank 12/19/97 5.430 10,000,000.00 06/17/98 Community Bank 12/23/97 5.510 5,000,000.00 06/22/98 -18- NAME LOS ANGELES General Bank DEPOSIT DATE YIELD PAR 5.250 AMOUNT (J MATURITY DATE 04/13/98 01/08/98 25,000,000.00 Preferred Bank 01/05/98 5.190 ' 3,000,000.00 07/15/98 Community Bank 01/12/98 5.210 20,000,000.00 07/15/98 General Bank MANTECA 12/01 /97 5.480 28,000,000.00 11 /06/98 Delta National Bank 01/23/98 5.170 1,000,000.00 04/24/98 Delta National Bank POMONA 01/22/98 5.240 2,000,000.00 07/22/98 Pomona First Fed Bk & Trst PETALUMA 11 /25/97 5.550 8,000,000.00 05/27/98 Bank of Petaluma 08/12/97 5.460 1,000,000.00 02/11/98 . Union Bank of California 11/05/97 5.260 100,000,000.00 02/04/98 Union Bank of California 11/19/97 5.310 50,000,000.00 02/17/98 Sanwa Bank of California. 08/19/97 5.450 50,000,000.00 02/18/98 River City Bank 11 /21 /97 5.310 5,000,000.00 02/19/98 Sanwa Bank of California 08/26/97 5.350 10,000,000.00 02/25/98 Union Bank of Califomia 12/31/97 5.410 100,000,000.00 03/31/98 Sanwa Bank of California 11/05/97 5.390 7,000,000.00 05/06/98 River City Bank 01/12/98 5.130 5,000,000.00 04/13/98 Sanwa Bank of California SAN DIEGO 01/27/98 5.270 5,000,000.00 07/29/98 Bank of Commerce San Diego 12/18/97 5.230 14,000,000.00 03/19/98 San Diego First Bank 12/03/97 5.450 1,500,000.00 06/02/98 San Diego First Bank SAN FRANCISCO 12/22/97 5.450 1,500,000.00 06/23/98 Bank of Canton California 08/07/97 5.440 5,000,000.00 02/04/98 Bank of Canton California 08/13/97 5,480 5,000,000.00 02/11/98 TransPacific National Bank 09/16/97 5.650 800,00000 03/17/98 Bank of Canton California 12/04/97 5.420 5,000,000.00 06/04/98 Bank of Canton California . 12/09/97 5.440 5,000,000.00 06/09/98 Bank of Canton California 12/01/97 5.500 5,000,000.00 12/01/98 Bank of Canton Califomia 12/15/97 5.450 5,000,000.00. 12/15/98 Bank of Canton California SAN LEANDRO 01 /21 /98 5.230 5,000,000.00 01 /21 /99 Bay Bank of Commence 01/07/98 5.280 2,000,000.00 04/08/98 Bay Bank of Commerce 01/12/98 5.130 2,000,000.00 04/10/98 —19— SAN LUIS OBISPO First Bank of San Luis Obispo 11 /05/97 5.280 First Bank of San Luis Obispo 11/13/97 5.310 First Bank of San Luis Obispo 11/25/97 5.330 First Bank of San Luis Obispo 12/11/97 5.240 First Bank of San Luis Obispo 01/07/98 5.280 SAN RAFAEL West America Bank 01/13/98 5.120 West America Bank 01 /22/98 5.170 West America Bank 01/29/98 5.260 SANTA ANA Grand National Bank 12/09/97 5.410 Grand National Bank 12/10/97 5.310 Grand National Bank 12/31/97 5.480 STANISLAUS North Valley Bank TORRANCE 09/22/97 5.300 China Trust Bank (U.S.A.) 12/11 /97 5.270 China Trust Bank (U.S.A.) TUSTIN 12/31/97 5.410 Sunwest Bank 12/31/97 5.400 Sunwest Bank 01 /08/98 5.250 Sunwest Bank VAC ViI i E 01/14/98 5.240 Continental Pacific Bank 12/03/97 5.280 VICTORVILLE Citizens Business Bank 08/12/97 5.490 Citizens Business Bank 10/21 /97 5.190 Citizens Business Bank 09/11 /97 5.400 Citizens Business Bank 12/10/97 5.590 Citizens Business Bank 01/09/98 5.370 Citizens Business Bank. WALNUT CREEK 01=98 5.230 3,600,000.00 02/04/98 2,000,000.00 02/11 /98 2,500,000.00 02/24/98 1,000,000.00 03/12/98 1,000,000.00 04/08/98 25,000,000.00 04/17/98 25,000,000.00 04/24/98 25,000,000.00 04/30/98 1,500,000.00 03/10/98 1,500,000.00 03/11 /98 . 95,000.00 06/30/98 3,000,000.00 03/24/98 10,000,000.00 03/11 /98 5,000,000.00 03/31 /98 500,000.00 03/31 /98 2,800,000.00 04/09/98 1,000,000.00 04/21 /98 1,000,000.00 03/04/98 10,000,000.00 02/11 /98 5,000,000.00 02/19/98 10,000,000.00 03/11/98 10,000,000.00 06/09/98 10,000,000.00 07/09/98 5,000,000.00 08/06/98 Bank of the West 01 /30/98 5.270 26,500,000.00 07/31 /98 TOTAL TIME DEPOSITS AS OF JANUARY 31,1998 $101380295,000.00 —20— DEMAND BANK DEPOSITS JANUARY 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. AVERAGE DOLLAR DAYS (000 omitted) DAILY BALANCES PER BANKS $598,226 190349903 190349903 1,034,903 5899411 354,946 204,021 1419485 2199080 2199080 2199080 3259757 333,946 181,668 3449640 3129989 312,989 3129989 3129989 5949104 3589077 2349752 3529668 352,668 352,668 138,470 1879838 350,239 187,766 435,478 435,478 a/ $389497 WARRANTS OUTSTANDING 9179072 4699694 4699694 4699694 303412 63,937 1829735 34,120 1509381 150,381 150,381 88,869 53,516 2409884 2409884 227,884 227,164 227,164 227,164 1959047 166,130 311,868 4079491 4079491 407,491 211,354 112,166 61,458 2889003 1,297,002 19297,002 a/ The prescribed bank balance for January was $3999008.00. This consisted of $186,285.00 in compensating balances for services, $212,723.00 uncollected funds and a deduction of $9,786.00 for December delayed deposit credit. -21- DESIGNATION BY POOLED MONEY INVESTMENT BOARD OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS No. 1583 In accordance with sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board, at its meeting on January 21, 1998, 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 $156,665,000 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 heavy 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) 01 /19/98 01 /23/98 $ 567,100,000 (2) 01/26/98 01/30/98 $ (438,700,000) (3) 02/02/98 02/06/98 $ 1,054,600,000 (4) 02/09/98 02/13/98 $ (269,300,000) (5) 02/16/98 02/20/98 $ 1,001,500,000 Time Deposits in various Financial Institutions In Securities (sections 16503a Estimated (section 16430)* and 16602)* Total $ 29,636,205,000 $ 1,108,795,000 $ 30,745,000,000 $ 29,197,505,000 $ 1,108,795,000 $ 30,306,300,000 $ 30,252,105,000 $ 1,108,795,000 $ 31,360,900,000 $ 29,982,805,000 $ 1,108,795,000 $ 31,091,600,000 $ 30,984,305,000 $ 1,108,795,000 $ 32,093,100,000 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 $156,665,000. POOLED MONEY INVESTMENT BOARD: Dated: January 21, 1998 *Government Code Member -22- � z 000 V S tK�aqmi .� CFI OF ' fNtiO INVESTMENT ADVISORY BOARD Correspondence & Written Material - C Meeting Date: TITLE: LAIF Percentages BACKGROUND: April 8, 1998 Attached please find an analysis of LAIF balances from 7/1 /96 to 1 /31 /98. Between these months the actual LAIF balances ranged between 12.35% - 35.95% and surplus LAIF balances ranged between 1 1.25% and 37.77%. The LAIF average actual and surplus percentages were 23.22% and 23.80% respectively. 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O -1 CD N OD O O o N O 0 O 0 O o J r' 0 o Wca o CDP l w 0 rn �a 00 v 0 0 o w o 0 o c o 0 0 00 e 0 o 0 o p ' 0 o 0 0 v o N;D- QJ cop �p O O (OD to 0 O O O O O O C to W ` D 0 o N c 0 o o O WO N C\O c Of w V O v o O 0 C o N c o`o W o N c O 0 co O O O W V O O O O C V 0 0 0 -4 o V 1.10 0 o 0 o �" \ o o o 0 w o y to 0 n O� m m 8 N C g d �Q y (Np C m m N 1 D s .00 00, � oz V S F y Ixua�a�nu .� OF TNtiO INVESTMENT ADVISORY BOARD Business Session No. D Meeting Date: April 8, 1998 TITLE: Collateralization of Certificates of Deposit BACKGROUND: At the March 1998 Board Meeting Staff was directed to report the policies and practices Wells Fargo Bank maintains for the collateral ization of Certificates of Deposit. Attached please find the policies and practices Wells Fargo follows in collateralizing Public Funds. RECOMMENDATION: he E cutive u ary of the Investment Policy reflects the changes. 61-11hn M. Falconer, Finance Director Z0 ' d 0060 TV6 606 : Y OHI QRA I RORH 2i7 : 60 86-LZ-OO Cash Management Collateraiization of Public Funds Wells Fargo Bank fully collateralize collected balances in the Public Funds's accounts pursuant to the Califomia Government Code_ Wells Fargo Bank maintains two collateral pools for our public funds customers - a securities pool and a real estate note pool. The securities pool is comprised of government securities, and the real estate note pool is comprised of promissory notes secured by first mortgages and first trust deeds on improved real estate property in California_ Wells Fargo Bank will comply with all depository regulations prescribed by state or federal laws_ The Bank shall meet the collateral requirements specified in Title 5, Chapter 4, Article 2 of the Government Code by the continuous and uninterrupted participation in the pooled collateral system administered by the State of California. Guarantee collateralization of public funds in accordance with California law. Califbrnia Govenunem Code specifies that all local agency deposits, in excess of the first $100;000 in demand deposits and the first $100,000 in time deposits which is covered by MIC" insurance, must be collateralized by the depository bank. Uncollected funds are Cxcluded from this requirement. Section 53651 and 53 65 1.2 of the Government Code provide a list of securities that are eligible for collateral }purposed_ Wells Fargo Bank maintains two collateral pools: The Security Pool_consists of U-S. treasuries, agencies, and municipal bonds. The market value of securities must be at least 10% in excess of the total animmt of the deposits secured by this pool. The Real Estate Note Pool consists of promissory notes secured by first mortmes or first trust deeds on improved residen .l property in the State of California.. The market value or principal balance must be at least 50% in excess of the total zunount of the deposits secured by this pool. The securities and notes in both pools are held in custody by a third party as our agent_ Therefore, the Bank does not have custody of the collateral itself. If you wish to inquire about the amounts pledged to your deposits, your account officer veil forward your request to the proper department within the, $arils. The Government Code also requires that -lie Bank report total deposits with the related collateral for each pool to the Administrator of Local Agmicy Security weekly as of every Wednesday. At quarter -cad, the Bawls repents the aggregated balance for each individual local agency and the related pool directly, as well. Please feel free to contact the Adm ini &trator's office to verify your holdings with Wells Fargo Rwk. Wells Fargo. At the frontier of financial innovation. �O/M 'd 0060 I V6 606 'ON XVd 080H ADS WV 9V : B0 I Nd 66-Le-NdW IVR-27-98 FRI 10:27 AM COMM BANKING O MPLIANCE , FAX HO. 415 646 9226 Staw Trrwww GlD #1536 gecurnfes C1Noring section Local Agency security March 26,1998 P.O. Box 942M emamerto, CA 9e209Ap01 Aft; CNrft Vance Weekly Kurt of Local Agency Deposit for wells Fargo Dark as of. March 25,1998 Pool #1 Pool 92 General ledger ONance $225,835,676.09 $65,504,130,00 Less unc:olWod Funds 5,340,292.00 9 ,708,177-00 Net Collected Balance: 0,495,584.09 $63,795,953.00 Less Deposits Subject to Waiver 89,5W,730.04 12,668,279,00 Total 30m"d Deposits $130,931,854.05 $51,237,674,00 Secured Deposits x110% x150% 144,026,039.46 76,556,511.00 The se wifies fir Poot #1 am deposited with BW Westem Trust Company, agent of depositc". The mortgages (RENs) for Pool #2 are deposited with SNY Westem Trust Company, eiprA of depositwy. Report prepared by: Melinda PiAzzano- Moorley Telephone Number: Assistant Virg President (415) 222-3309 EVA d .. ' • f •� Tommy L. may, Vice Pr akint Donald E. 09". 14190 PnWdeM Melinda Puliziono-Mmday, AVP P�wMed on 1IMer3ye�C hva► P. 03 EO/£0'd 0060 M 606 'ON XVA OSON ADS WV V1:11 M 86-zZ-8VW ]LIAR-27-98 FRI 10' 27 AAl CM BANKING- COMFLIANCE FAX NO, 415 846 9228 F. 02 " �aaccoair_�� �wc. 18 February, 1998 t RE; Wells Fargo Bank Amount # 3817'l3 ' C 0 #1535 This is to certify that as of December 3f,1997, we BNY Western Trust CwMany, me Agent of Depository held the securities as listed on the attached statement for the Depository, Wells Fargo Bank. We also certify that as of December $1, JW71 the total market value of $203,975,621.51 on the. security pool exceeded by at least 10% the total of the secured local agency deposits of S 162,394,578.00_ BNY Western Trust company Agent of Depository By: w and M leilan Account Aditdnietmtor EO/K 'd S" ice my Strap, Suitt bW * San F+Andxv. Caltr*mia 44 t 08-2527 0060 M 606 'ON XVA 080E ADS WV £i;It M 86-ZZ-EVW (d) Provide for placement of pooled securities in a named agent of depository in accordance with Section 53656. (e) Grant authority for agent of depository to place securities for safekeeping in accordance with Section 53659. (f) Set forth in accordance with Section 53665 the conditions upon which the administrator shall order pooled securities converted into money for the benefit of the local agency, and the procedure therefor. (9) Provide for compliance in all respects with the provisions of this article and other appli- cable provisions of law. (h) Provide, upon notice to the treasurer from the administrator, that a treasurer may with- draw deposits in the event a depository fails to pay the assessments, fines, or penalties assessed by the administrator or may withdraw authorization for the placement of pooled securities in an agent of depository in the event that the agent of depository fails to pay the fines or penalties assessed by the administrator. (Added by Stats.1949, c. 81, p. 291, Sec. 1. Amended by Stats.1953, c. 670, p. 1938, Sec. 4; Stats.1969, c. 1483, p. 3034, Sec. 2, operative July 1, 1970; Stats.1970, c. 84, p. 96, Sec. 2, eff. April 30, 1970, operative July 1, 1970; Stats.1972, c. 756, p. 1350, Sec. 1; Stats.1983, c. 105, Sec. 9; Stats.1986, c. 1132, Sec. 12; Stats.1987, c. 841, Sec. 1.) Sec. 53651. Eligible securities Eligible securities are any of the following: (a) United States Treasury notes, bonds, bills or certificates of indebtedness, or obligations for which the faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of small business administration loans, so long as the loans are obligations for which the faith and credit of the United States are pledged -for the pay- ment of principal and interest. (b) Notes or bonds or any obligations of a local public agency (as defined in the United States Housing Act of 1949) [FN1] or any obligations of a public housing agency (as defined in the United States Housing Act of 1937) [FN2] for which the faith and credit of the United States are pledged for the payment of principal and interest. (c) Bonds of this state or of any local agency or district of the State of California having the power, without limit as to rate or amount, to levy taxes or assessments to pay the principal and interest of the bonds upon all property within its boundaries subject to taxation or assessment by the local agency or district, and in addition, limited obligation bonds pursuant to Article 4 (com- mencing with Section 50665) of Chapter 3 of Division 1, senior obligation bonds pursuant to Article 5 (commencing with Section 53387) of Chapter 2.7, and revenue bonds and other obliga- tions payable solely out of the revenues from a revenue- producing property owned, controlled or operated by the state, local agency or district or by a department, board, agency or authority thereof. (d) Bonds of any public housing agency (as defined in the United States Housing Act of 1937, as amended) [FN3] as are secured by a pledge of annual contributions under an annual contribu- tion. contract between the public housing agency and the Public Housing Administration if such contract shall contain the covenant by the Public Housing Administration which is authorized by subsection (b) of Section 22 of the United States Housing Act of 1937, as amended, and if the maximum sum and the maximum period specified in the contract pursuant to that subsection B-102 22(b) shall not be less than the annual amount and the period for payment which are requisite to provide for the payment when due of all installments of principal and interest on the obligations. (e) Registered warrants of this state. (f) Bonds, consolidated bonds, collateral trust debentures, consolidated debentures, or other obligations issued by the United States Postal Service, federal land banks [FN4] or federal interme- diate credit banks [FN5] established under the Federal Farm Loan Act, as amended, [FN6] deben- tures and consolidated debentures issued by the Central Bank for Cooperatives [FN7] and banks for cooperatives established under the Farm Credit Act of 1933, [FN8] as amended, consolidated obligations of the federal home loan banks established under the Federal Home Loan Bank Act, [FN9] bonds, debentures and other obligations of the Federal National Mortgage Association [FN10] or of the Government National Mortgage Association [FN11] established under the National Housing Act, as amended, [FN12] bonds of any federal home loan bank established under that act, bonds, debentures and other obligations of the Federal Home Loan Mortgage Corporation established under the Emergency Home Finance Act of 1970, [FN13] and obligations of the Tennessee Valley Authority. [FN 14] (g) Notes, tax anticipation warrants or other evidence of indebtedness issued pursuant to Article 7 (commencing with Section 53820), Article 7.5 (commencing with Section 53840) or Article 7.6 (commencing with Section 53850) of this Chapter 4. (h) State of California notes. (i) Bonds, notes, certificates of indebtedness, warrants or other obligations issued by: (1) any state of the United States (except this state), or the Commonwealth of Puerto Rico, or any local agency thereof having the power to levy taxes, without limit as to rate or amount, to pay the principal and interest of such obligations, or (2) any state of the United States (except this state), or the Commonwealth of Puerto Rico, or a department, board, agency or authority thereof except bonds which provide for or are issued pursuant to a law which may contemplate a subsequent legislative appropriation as an assurance of the continued operation and solvency of the depart- ment, board, agency or authority but which does not constitute a valid and binding obligation for which the full faith and credit of such state or the Commonwealth of Puerto Rico are pledged, which are payable solely out of the revenues from a revenue -producing source owned, controlled or operated thereby; provided the obligations issued by an entity described in (1), above, are rated in one of the three highest grades, and such obligations issued by an entity described in (2), above, are rated in one of the two highest grades by a nationally recognized investment service organiza- tion that has been engaged regularly in rating state and municipal issues for a period of not less than five years. Q) Obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, Inter -American Development Bank, the Government Development Bank of Puerto Rico, the Asian Development Bank, the International Finance Corporation, or the African Development Bank. (k) Participation certificates of the Export -Import Bank of the United States. (1) Bonds and notes of the California Housing Finance Agency issued pursuant to Chapter 7 (commencing with Section 51350) of Part 3 of Division 31 of the Health and Safety Code. (m) Promissory notes secured by first mortgages and first trust deeds which comply with Sec- tion 53651.2. (n) Any bonds, notes, warrants, or other evidences of indebtedness of a nonprofit corpora- tion issued to finance the construction of a school building or school buildings pursuant to a lease or agreement with a school district entered into in compliance with the provisions of Section 39315 B-103 or 81345 of the Education Code, and also any bonds, notes, warrants or other evidences of indebt- edness issued to refinance those bonds, notes, warrants, or other evidences of indebtedness as specified in Section 39317 of the Education Code. (o) Any municipal securities, as defined by Section 3(a)(29) of the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec. 78, as amended), which are issued by this state or any local agency thereof. (p) With the consent of the treasurer, letters of credit issued by the Federal Home Loan Bank of San Francisco which comply with Section 53651.6. (Added by Stats.1949, c. 81, p. 291, Sec. 1. Amended by Stats.1951, c. 437, p. 1419, Sec. 2; Stats.1955, c. 1953, p. 3584, Sec. 1; Stats.1963, c. 1374, p. 2916, Sec. 2; Stats.1965, c. 293, p. 1291, Sec. 2; Stats.1968, c. 26, p. 170, Sec. 1; Stats.1969, c. 1483, p. 3034, Sec. 3, operative July 1, 1970; Stats.1970, c. 944, p. 1703, Sec. 2; Stats.1971, c. 223, p. 344, Sec. 3, eff. June 28, 1971; Stats.1971, c. 434, p. 841, Sec. 1; Stats.1972, c. 756, p.1350, Sec. 2; Stats.1973, c. 464, p. 935, Sec. 4; Stats.1975, 1st Ex.Sess., c. 1, p. 3856, Sec. 4; Stats.1975, c. 894, p. 1976, Sec. 1; Stats.1976, c. 633, p. 1498, Sec. 1; Stats.1977, c. 60, p. 454, Sec. 5, eff. May 18, 1977; Stats.1978, c. 1021, p. 3153, Sec. 4; Stats.1979, c. 1084, p. 3915, Sec. 3; Stats.1980, c. 1288, p. 4368, Sec. 4; Stats.1982, c. 844, Sec. 2; Stats.1984, c, 997, Sec. 5, eff. Sept. 11, 1984; Stats.1986, c. 1132, Sec. 14; Stats.1987, c. 841, Sec. 2; Stats.1988, c. 1112, Sec. 1; Stats.1991, c. 1206 (S.B.1015), Sec. 7.) Sec. 53651.2. Eligible security (a) To be an eligible security under subdivision (m) of Section 53651, a promissory note placed in a securities pool on or after -January 1, 1987, shall comply with all of the following provisions: (1) Each promissory note shall be secured by a first mortgage or first trust deed on im- proved 1 to 4 unit residential real property located in California, shall be fully amortized over the term of the note, and shall have a term of no more than 30 years. Any first mortgage or first trust deed which secures a promissory note providing for negative amortization shall be removed from the securities pool and replaced with an eligible security under subdivision (m) of Section 53651 if the loan to value ratio exceeds 85 percent of the original appraised value of the security property as a consequence of negative amortization. (2) Each promissory note shall be eligible for sale to the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mort- gage Corporation; provided, however, that up to 25 percent of the total dollar amount of any promissory note securities pool established pursuant to Section 53658 may consist of promis- sory notes with loan amounts which exceed the maximum amounts eligible for purchase by the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation, but which do not exceed: (i) five hundred thousand dollars ($500,000) in the case of a single family dwelling; (ii) one million dollars ($1,000,000) in the case of a 2, 3, or 4 unit dwelling. (b) To be an eligible security under subdivision (m) of Section 53651, a promissory note which was placed in a securities pool on or before December 31, 1986, and which remains in that securities pool continuously thereafter shall comply with all the requirements of subdivision (m) of Section 53651, as in effect on December 31, 1986, and of the regulations of the administrator adopted under that subdivision (m), as in effect on December 31, 1986. (1) Any promissory note subject to the provisions of this subdivision shall be removed from the securities pool when any payment on the note is more than 60 days past due. B-104