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1999 02 10 IABT 6 4tyl-I 4 78-495 CALLE TAMPICO - LA QUINTA, CALIFORNIA 92253 - (760) 777-7000 TDD (760) 777-1227 AGENDA INVESTMENT ADVISORY BOARD Study Session Room 78-495 Calle Tampico- La Quinta, CA 92253 February 10, 1999 - 5:30 P.M. I CALL TO ORDER a. Pledge of Allegiance b. Roll Call 11 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 January 13, 1999 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for December, 1998 B. Fiscal Year 1999/00 Investment Policy C. Fiscal Year 98/99 Treasurers Conference - Brea, CA VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - December, 1998 B. Pooled Money Investment Board Reports - November, 1998 C. Annual Pooled Money Investment Board Report VII BOARD MEMBER ITEMS VIII ADJOURNMENT MAILING ADDRESS - P.O. BOX 1504 - LA QUINTA, CALIFORNIA 92253 INVESTMENT ADVISORY BOARD Business Session: A Meeting Date: February 10, 1999 ITEM TITLE: Transmittal of Treasury Report for December 31, 1998 BACKGROUND: Attached please find the Treasury Report for December 31, 1998. RECOMMENDATION: Review, Receive and File the Treasury Report for December 31, 1998. hn M. Falcoher, Finance Director TO: FROM: SUBJECT: DATE: MEMORANDUM La Quinta City Council John Falconer, Finance Director/Treasurer Treasurer's Report for December 31, 1998 January 27, 1999 Attached is the Treasurer's Report for the month ending December 31, 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: Decrease of $603,960. due to the net effect of expenditures in excess of revenues. State Pool: Decrease of $400,000. due to the net effect of transfers to and from the cash and investment accounts. U.S. Treasury Bills, Notes, Securities and Commercial Paper: Increase of $73,142. due to the sale of 2 Securities, the purchase 2 T-Notes and monthly adjustment in the amortized value of the investments. Mutual Funds: Increase of $173,446. due to interest earned. Total decrease in cash balances $757,372. 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, U.S. Bank Monthly Statement and Bank of New York Monthly Custodian Report to determine the fair market value of investments at month end. Joho M. 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N 0) C)C) C)�0) 0 0 O 0co 0 0 C) LO 0 Cn O Cn CA 00 I� N C r- N Cn C) C) N- CA O O O O cq I, C:)O O co C) v I� CA O I- O � ' 0) LO d .0 «I E C a t�11 C d E Q m E O � W> N m C — LL C O c t C N N d CU d m C Y N O �- � dmc� t5 U rv(D O` E O O i V C O a Cr y a) C U O J m m U tm Q U) t tam (n o LL v — O o CSC N p d O— O N ILM2o- Z. agmo CITY OF LA QUINTA CITY CITY RDA RDA FA BALANCE SHEET 12/31198 FIXED LONG TERM FIXED LONG TERM FINANCING LONG TERM GRAND CITY ASSETS DEBT RDA ASSETS DEBT AUTHORITY DEBT TOTAL ASSETS: POOLED CASH 4,355,854.32 4,421,807.56 (6,803.58) 8,770,858.30 LQRP INVESTMENT IN POOLED CASH 605,000.00 605,000.00 INVESTMENT T-BILUNOTES & OTHER 18,000,000.00 18,000,000.00 LQRP CASH 58,270.82 58,270.82 BOND REDEMPTION CASH 39,200.99 498.68 39,699.67 BOND RESERVE CASH BOND PROJECT CASH 16,297,670.84 580,618.94 16,878,289.78 BOND ESCROW CASH PETTY CASH 1,000.00 1,000.00 CASH & INVESTMENT TOTAL 22,356,854.32 21,421,950.21 574,314.04 44,353,118.57 INVESTMENT IN LAND HELD FOR RESALE ACCOUNTS RECEIVABLE 57,406.02 81,257.68 8,505,000.00 8,643,663.70 PREMIUM/DISCOUNT ON INVESTMENT (59,990.32) 29,410.11 3,074.00 (27,506.21) LQRP-ACCOUNTS RECEIVABLE 31,975.12 31,975.12 INTEREST RECEIVABLE (9,765.62) 142,955.80 133,190.18 LOAN/NOTES RECEIVABLE 14,499.19 2,528,967.76 2,543,466.95 DUE FROM OTHER AGENCIES DUE FROM OTHER GOVERNMENTS DUE FROM OTHER FUNDS 13,663.40 551,038.04 564,701.44 DUE FROM RDA 6,890,277.20 6,890,277.20 INTEREST ADVANCE -DUE FROM RDA 1,665,302.32 1,665,302.32 NSF CHECKS RECEIVABLE 3,118.69 3,118.69 ACCRUED REVENUE (8,192.68) (8,192.68) TRAVEL ADVANCES 3,440.00 3,440.00 EMPLOYEE ADVANCES PREPAID EXPENSES 3,491.00 3,491.00 RECEIVABLE TOTAL 8,581,441.88 3,357,411.83 8,508,074.00 20,446,927.71 WORKER COMPENSATION DEPOSIT 37,637.00 37,637.00 RENT DEPOSITS 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 1,098,865.00 15,008,708.00 11.,438,745.05 27,546,318.05 ACCUMULATED DEPRECIATION (646,464.08) (646,464.08) AMOUNT AVAILABLE TO RETIRE L!T DEBT 3,395,117.03 3,395,117.03 AMOUNT TO BE PROVIDED FOR L/T DEBT 1,944,070.34 98,027,180.60 8,505,000.00 108,476,250.94 TOTAL OTHER ASSETS 452,400.92 15,008,708.00 1,944,070.34 11,438,745.05 101,422,297.63 8,505,000.00 138,771,221.94 TOTAL ASSETS 31,430,509.12 15 008 708.00 1,944,070.34 24 779 362.04 11 438 745.05 101 422 297.63 9,082,388.04 8,505,000.00 203 611 080.22 LIABILITY ACCOUNTS PAYABLE (0.02) 22,139.53 22,139.51 DUE TO OTHER AGENCIES 56,170.54 56,170.54 DUE TO OTHER FUNDS 551,038.04 13,663.40 564,701.44 INTEREST ADVANCE -DUE TO CITY ACCRUED EXPENSES PAYROLL LIABILITIES 18,113.13 18,113.13 STRONG MOTION INSTRUMENTS 6,213.65 6,213.65 FRINGE TOED LIZARD FEES 20,640.00 20.640.00 SUSPENSE DUE TO THE CITY OF LA QUINTA PAYABLES TOTAL 101,137.30 22,139.53 551,038.04 13,663.40 687,978.27 ENGINEERING TRUST DEPOSITS 58,224.09 58,224.09 SO. COAST AIR QUALITY DEPOSITS ARTS IN PUBLIC PLACES DEPOSITS 373,448.75 373,448.75 LQRP DEPOSITS 15,513.00 15,513.00 DEVELOPER DEPOSITS 742,170.05 742,170.05 MISC. DEPOSITS 204,145.80 204,145.80 AGENCY FUND DEPOSITS 936,480.01 936,480.01 TOTAL DEPOSITS 2,314,468.70 15,513.00 2,329,981.70 DEFERRED REVENUE 14,229.79 8,505,Q00.00 8,519,229.79 OTHER LIABILITIES TOTAL 14,229.79 8,505,000.00 8,519,229.79 COMPENSATED ABSENCES PAYABLE 313,619.81 313,619.81 DUE TO THE CITY OF LA QUINTA 1,608,311.00 9,355,580.73 10,963,891.73 DUE TO COUNTY OF RIVERSIDE 12,601,591.90 12,601,591.90 DUE TO C.V. UNIFIED SCHOOL DIST. 10,690,125.00 10,690,125.00 DUE TO DESERT SANDS SCHOOL DIST. BONDS PAYABLE 68,775,000.00 8,505,000.00 77,280,000.00 TOTAL LONG TERM DEBT 1,921,930.81 101,422,297.63 8,505,000.00 111,849,228.44 TOTAL LIABILITY 2,429,835.79 1,944,070.34 566,551.04 101,422,297.63 8,518,663.40 8,505,000.00 123,386,418.20 EQUITY -FUND BALANCE 29,000,673.33 15,008,708.00 24,212,811.00 11,438,745.05 563,724.64 80,224,662.02 TOTAL LIABILITY & EQUITY 31 430 509.12 15,008,708.00 1,944,070.34 24,779,362.04 11 438 745.05 101 422 297.63 9,082,388.04 8,505,000.00 203 611 080.22 09 INVESTMENT ADVISORY BOARD Business Session No. B Meeting Date: February 10, 1999 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. In order to meet this June deadline, the current investment policies have been attached for any changes or updates that may be considered appropriate. RECOMMENDATION: Commence review of the Investment policies for approval by City Council in June 1999. n M. Falconer, Finance Director CITY OF LA QUINTA Investment Policy Table of Contents Section Topic Page Executive Summary 2 I General Purpose 4 II Investment Policy 4 III Scope 4 IV Objectives 5 ► Safety ► Liquidity ► Yield V Prudence 6 VI Delegation of Authority 6 VII Conflict of Interest 7 VIII Authorized Financial Dealers and Institutions 7 ► Broker/Dealers ► Financial Institutions IX Authorized Investments and Diversification 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. The Treasurer will be permitted to invest only in City approved investments up to the maximum allowable percentages and, where applicable, through the bid process requirements. Authorized investment vehicles and related maximum portfolio positions are listed in Appendix - Authorized Investments and Diversification. At least two bids will be required of investments in the authorized investment vehicles. Collateralization will be required for Certificates of Deposits in excess of $100,000. Collateral will always be held by an independent third party from the institution that sells the Certificates of Deposit to the City. Evidence of compliance with State Collateralization policies must be supplied to the City and retained by the City Treasurer. The City of La Quinta shall require that each individual investment have a maximum maturity of two years unless specific approval is authorized by the City Council. In addition, the City's investment in the State Local 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, 1999 through June 30, 2000 Adopted by the City Council on GENERAL PURPOSE The general purpose of this document is to provide the rules and standards users must follow in administering the City of La Quinta cash investments. II INVESTMENT POLICY It is the policy of the City of La Quinta to invest public funds in a manner which will provide a diversified portfolio with safety of principal 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. M IV OBJECTIVES The primary objective, in order of priority, of the City of La Quinta's investment activity shall be: 1. Safety Safety of principal is the foremost objective of the investment program. Investments of the City of La Quinta shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio in accordance with the permitted investments. The objective will be to mitigate credit risk and interest rate risk. A. Credit Risk Credit Risk - is the risk of loss due to the failure of the security issuer or backer. Credit risk may be mitigated by: ► Limiting investments to the safest types of securities; ► Pre -qualifying the financial institutions, and broker/dealers, which the City of La Quinta will do business; and ► Diversifying the investment portfolio so that potential losses on individual securities will be minimized. B. Interest Rate Risk Interest Rate risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. Interest rate risk may be mitigated by: ► Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and ► By investing operating funds primarily in shorter -term securities. 2. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that sufficient liquid funds are available to meet anticipated demands. Furthermore .since all possible cash demands cannot be anticipated the portfolio should consist of securities with active secondary or resale markets. 5 3. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of least importance compared to the safety and liquidity objectives described above. The core of investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity with the following exceptions: ► A declining credit security could be sold early to minimize loss of principal; to. Liquidity needs of the portfolio require that the security be sold. V PRUDENCE The City shall follow the Uniform Prudent Investor Act as adopted by the State of California in Probate Code Sections 16045 through 16054.. Section 16053 sets forth the terms of a prudent person which are as follows: Investments shall be made with judgment and care - under circumstances then prevailing - which persons of prudence, discretion, and intelligence excerise in the professional management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. VI DELEGATION OF AUTHORITY Authority to manage the City of La Quinta's investment portfolio is derived from the City Ordinance. Management responsibility for the investment program is delegated to the City Treasurer, who shall establish written procedures for the operation of the investment program consistent with the Investment Policy. Procedures should include reference to safekeeping, wire transfer agreements, banking service contracts, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The City Manager or Assistant City Manager shall approve in writing, all purchases and sales of investments prior to their execution by the City Treasurer. on VII CONFLICT OF INTEREST Investment responsibilities carry added duties of insuring that investments are made without improper influence or the appearance of improper influence. Therefore, the City Manager, Assistant City Manager, and the City Treasurer shall adhere to the State of California Code of Economic Interest and to the following: ► The City Manager, Assistant City Manager, and the City Treasurer shall not personally or through a close relative maintain any accounts, interest, or private dealings with any firm with 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. No. 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. VIII 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. F6 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. IX AUTHORIZED INVESTMENTS AND DIVERSIFICATION The City Treasurer will be permitted to invest in the investments listed in the Appendix entitled - Authorized Investments and Diversification. A. STATE OF CALIFORNIA AND CITY OF LA QUINTA LIMITATIONS 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 Paler - 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 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. The City of La Quinta has also required that no more than $1 million dollars may be invested in any one entity at any time. Negotiable 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. 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. X INVESTMENT POOLS There are three (3) types of investment pools: 1) state -run pools, 2) pools that are operated by a political subdivision where allowed by law and the political subdivision is the trustee i.e. County Pool; and 3) pools that are operated for profit by third parties. The City of La Quinta has an investment with the State of California's Treasurers Office Local Agency Investment Fund commonly referred to as LAIF. LAIF was organized in 1977 through State Legislation Section 16429.1, 2 and 3. Each LAIF account is restricted to a maximum investable limit of $20 million. In addition, LAIF will provide quarterly market value information to the City of La Quinta. On an annual basis the City Treasurer will submit the Investment Pool Questionnaire to LAIF. Also, prior to opening any new Investment Pool account, which would require City Council approval, the City Treasurer will require the completion of the Investment Pool Questionnaire. The City does not have an investment with any other Investment Pool - County Pools or Third Party Pools. 11 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 collateral ization 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. Collateralization will be required for Certificates of Deposits in excess of $100,000. Collateral will always be held by an independent third party from the institution that sells the Certificates of Deposit to the City. Evidence of compliance with State Collateralization policies must be supplied to the City and retained by the City Treasurer. X11 SAFEKEEPING AND CUSTODY All security transactions of the City of La Quinta shall be conducted on a delivery - versus - payment (DVP) basis. Securities will be held by a third party custodian designated by the City Treasurer and evidenced by safekeeping receipts. Deposits and 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. X111 INTEREST EARNING DISTRIBUTION POLICY Interest earnings is generated from pooled investments and specific investments. 1. Pooled Investments - It is the general policy of the City to pool all available operating cash of the City of La Quinta, La Quinta Redevelopment Agency and La Quinta Financing Authority and allocate interest earnings, in the following order, as follows: A. Payment to the General Fund of an amount equal to the total annual bank service charges as incurred by the general fund for all operating funds as included in the annual operating budget. B. Payment to the General Fund of a management fee equal to 5 % of the annual pooled cash fund investment earnings. C. Payment to each fund of an amount based on the average computerized daily cash balance included in the common portfolio for the earning period. 12 2. Specific Investments - Specific investments purchased by a fund shall incur all earnings and expenses to that particular fund. XIV MAXIMUM MATURITIES The City of La Quinta shall require that each individual investment 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. XV INTERNAL CONTROLS 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. 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. 13 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. XVI BENCHMARK The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles commensurate with the investment risk constraints and the cash flow needs of the City. Return on investment is of least importance compared to safety and liquidity objectives. The City of La Quinta will use the six month U.S. Treasury Bill as a benchmark when measuring the performance of the investment portfolio. XVII REPORTING STANDARDS SB564 section 3 requires a quarterly report to the Legislative Body of Investment activities. The City of La Quinta has elected to report the investment activities to the City Council on a monthly basis through the Treasurers Report. The City Treasurer shall submit a monthly Treasurers Report to the City Council and the Investment Advisory Board that includes all investments under the authority of the Treasurer. 14 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. XVIII INVESTMENT OF BOND PROCEEDS The City's investment policy shall govern bond proceeds and bond reserve fund investments. California Code Section 5922 (d) governs the investment of bond proceeds and reserve funds. in accordance with bond indenture provisions which shall be structured in accordance with the City's investment policy. Arbitrage Requirement The US Tax Reform Act of 1986 requires the City to perform arbitrage calculations as required and return excess earnings to the US Treasury from investments of proceeds of bond issues sold after the effective date of this law. This arbitrage calculations may be contracted with an outside source to provide the necessary technical assistance to comply with this regulation. 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. XIX INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA The appendices include City of La Quinta Ordinance 2.70 entitled Investment Advisory Board Provisions. 15 XX INVESTMENT POLICY ADOPTION On an annual basis, the Investment policies will be initially reviewed by the Investment Advisory Board and the City Treasurer. The Investment Advisory Board will forward 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. 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O O U)a) m E N L y E C C C N a) C M y m C E mZ5 o U m� U d N Z m o Q y a) Oy m U v E. m m C a) w y E a) Y > N C EE E C m N m U Y O p � U O m C) C) ,y00 -- a) U > C oUC .= 0 CD V L m N d W m 00 a y y C o `0 y 0 E c o tL m— c E p y c a) O. ° !A CD0 m U) U) m.6 �N C To a) m � c U) - U °a) C-) E a) a)� v > c ° E o y 0 Sao a m( j w E� me w0�+ vi C •O o C m a1 > nm O o L d a) Mw a> U) pU � c � L"0 3 c c°�O1 m CT y C 3m vm amino inmLm.c o aU 0c m fa C) O N Y d L C m N .w m 0) � Qw m y "' 'C p>p E .00 C a —°o E� U Om �lCpQ n. 'U CL m me L O -O a jZ a) �+ 0 c m p m a E ILL C m - y w y u) o m E U) U 3 O N y 0(D w y 0 cu c Zv -LL c m 0 v > Ea o 0 2 �00 p_ aQa .- o Y n 0a > �AD c a m '0 °r V5 c6 .2 `m E a m p m C 0) a � j .0 y 0 a u n m y H C N N_ QJ E U C m 2H m E y d v Q ILN 'O m co It to f0 m 00m� ac�m w0yc E 15 L w U)�'O y C-0 O m m to Emory (Zw-N > C Ca C 0 cc U)c O� O l°Om�C Cv o mE10 °a-D C-0 m�m O mo 0 0.0 T mQ>e?v «-°L7C C Qm O-LCmN n p)7 mT mvy0m C n U aht C 3 y C - U) oY va M!070W0 E EC we° ?>3�5 caov x - 5N a1 C yob) y EL°cc a7 y��w O v m N t0))- Sw O aE0 OE:E; E�rcm cu LCwCa) ya)cv= U E °•y in y y y mm=C4) PC Rc 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 - Bank of New York 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 - US Bank 1991 RDA Project Area 1 - US Bank 1992 RDA Project Area 2 - US Bank 1994 RDA Project Area 1 - US Bank 1995 RDA Project Area 1 & 2 - US Bank Assessment Districts - US Bank 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. 9 5. Telephone: ( ) ( ) Broker's Representative to the City (attach resume): Name: Title: Telephone: ( ) Manager/Partner-in-charge (attach resume): Name: Title: Telephone: 6. List all personnel who will be trading with or quoting securities to City employees (attach resume) Name: Title: Telephone: ( ) ( ) 7. Which of the above personnel have read the City's investment policy? 8. Which instruments are offered regularly by your local office? (Must equal 100%) % U.S. Treasuries % Repos % BA's % Reverse Repos % Commercial Paper % CMO's % CD's % Derivatives % Mutual Funds % Stocks/Equities % Agencies (specify): % Other (specify): 22 9. References -- Please identify your most directly comparable public sector clients in our geographical area. Entity Entity Contact Contact Telephone ( ) Telephone ( ) Client Since 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. 1 1 . 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 23 Do you have any current, or pending complaints that are unreported to the NASD? Yes No If yes, please provide action taken 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? 24 19. Does your firm offer investment training to your clients? Yes No 20. Does your firm have professional liability insurance. Yes No If yes, please provide the insurance carrier, limits and expiration date._ 21. Please list your NASD Registration Number 22. Do you have any relatives who work at the City of La Quinta? Yes No If yes, Name and Department 23. Do you maintain an office in California. Yes No 24. Do you maintain an office in La Quinta or Riverside County? Yes No 25. Please enclose the following: • Latest audited financial statements. • Samples of reports, transaction confirmations and any other research/publications the City will receive. • Samples of research reports and/or publications that your firm regularly provides to clients. • Complete schedule of fees and charges for various transactions. CERTIFICATION I hereby certify that I have personally read the Statement of Investment Policy of the City of La Quinta, and have implemented reasonable procedures and a system of controls designed to preclude imprudent investment activities arising out of transactions conducted between our firm and the City of La Quinta. All sales personnel will be routinely informed of the City's investment objectives, horizons, outlooks, strategies and risk constraints whenever we are so advised by the City. We pledge to exercise due diligence in informing the City of La Quinta of all foreseeable risks associated with financial transactions conducted with our firm. By signing this document the City of La Quinta is authorized to conduct any and all background checks. Under penalties of perjury, the responses to this questionnaire are true and accurate to the best of my knowledge. Broker Representative Date Title Sales Manager and/or Managing Partner* Date Title 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)? MA 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? 1 1 . 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? S TA 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. Me 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? 29 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 I.oan 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 INVESTMENT ADVISORY BOARD Meeting Date: February 10, 1999 TITLE: CMTA Conference - April 19 - 23, 1999 Brea, California BACKGROUND: Business Session Item No. C The Annual California Municipal Treasurers Association Conference will be held April 19 - 23 in Brea. Account No. 101-151-637-000 Travel and Training contains $1400.00 for two Investment Advisory Board Members and $700.00 for Staff. Last year the conference was in Sacramento and Board Members Bulgrin and Osborne attended the conference. Attached please find the registration material and conference outline. RECOMMENDATION: Select up to two members to attend the CMTA Conference. o6n M. Falconer, Finance Director M A California Municipal Treasurers Association Dear Fellow CMTA Members: It gives me a lot of pleasure to invite you to join all our CMTA members and colleagues in California in attending the 40' Annual Conference in Brea, California. The City of Brea has put a lot of work and effort into making this year's conference one of the best. The conference theme, "Brea 1999 - Rich with Possibilities," represents the commitment of CMTA towards the professional interests of its members and the endless possibilities for growth and education offered to its members. In addition, the program committee has put together an outstanding and varied program that will challenge each and every one of us. Some of the highlights you won't want to miss are: • A pre -conference workshop to help you refine your cash management skills • Top notch keynote and motivational speakers each day • Concurrent sessions to address all areas of Treasury management • A blockbuster of an installation banquet and program • Leisure activities to suit every taste CMTA makes a commitment to present a conference that provides an opportunity for learning, sharing and networking with your fellow Treasury professionals. You will reap many benefits from being in attendance, so please get your registration in before April 2nd to take advantage of the discounted rates. I look forward to seeing each of you at "Brea 1999 - Rich with Possibilities." Sincerely, Carole Gierhart, CCMT CMTA President 1998-99 1400 K Street, Suite 400 • Sacramento, California 95814 9 (916) 658-8209 • Fax (916) 658-8240 -NEENN■` ■EENEEM■ C A L I F O R N I A City of Brea Dear CMTA Members and Associates: It is my pleasure to invite you to attend the 40t' Annual CMTA Seminar and Conference in Brea at the Embassy Suites Hotel, April 19 — 23, 1999. This year the pre -conference seminar will be held on Monday and Tuesday, April 19 —20, and the conference itself will begin on Wednesday, April 21, and conclude at noon on April 23, 1999. The topics, speakers and events assembled by President-elect Dale Belcher and the Program Committee are outstanding. Some of our featured speakers include Girard Miller, President/CEO of ICMA Retirement Corporation, motivational speaker Mary Ellen Drummond, and the energetic and entertaining Bill Harvey, author of the best-selling Spanish translation book "Spanish for Gringos." You will not want to miss this opportunity to visit Brea, located in sunny Southern California, learn a lot and have fun with other CMTA members and associates. We have two special events planned for the free afternoon on Tuesday, April 20 - the annual CMTA golf tournament which will be held at the Coyote Hills Golf Course, and a tour of the Richard Nixon Library. On Wednesday, the renowned Brea Art Gallery will open its doors to conference attendees for a sneak preview of the "Made in California" art exhibit. The Thursday night reception and installation banquet will start with an "evening of laughter and illusion" followed by two live bands, Dr. Sizzle and The Sophisti-Cats, bringing us the perfect mix of non-stop music for the evening. During your stay, I hope you get a chance between sessions to explore our fine city and its many shopping, dining and leisure opportunities. If art is your thing, be sure to check out Brea's nationally recognized Art -in -Public Places Program, the intimate 199 seat Curtis Theatre, the adjacent Art Gallery, or the Brea Improv. If you're fitness -minded, we invite you to drop -in at our new Community Center's Fitness Complex. Try an aerobics class or shoot some hoops. For those who would rather exercise their pocketbooks, the shopping choices are endless! I look forward to seeing you in April at the 1999 CMTA Conference. Sincerel Bill Gallar o Conference Chair City Council Marty Simonoff Bev Perry Lynn Daucher Roy Moore Steve Vargas Mayor Mayor Pro Tem Councilmember Councilmember Councilmember Civic & Cultural Center 0 1 Civic Center Circle 0 Brea, California 92821-5732 • 714/990-7600 9 FAX 714/990-2258 CALIFORNIA MUNICIPAL TREASURERS ASSOCIATION Annual Conference April 19-23, 1999 Monday, April 19, 1999 9:00 AM -1:00 PM Board Meeting for CMTA Officers and Boardmembers 1:00 PM - 5:00 PM Pre -conference Workshop: MTA CERTIFIED CASH HANDLING TRAINING Participants will receive MTA US & Cs Cash Handling Trainer Certificate of Completion and the Model Cash Handling Training Manual Speaker: Linda Patterson, President, Patterson & Associates and Advisor MTA US & C Subcommittee on Cash Handling 6:00 PM - 7:00 PM Pre -conference Welcome Reception 7:00 PM Free Evening Tuesday, April 20, 1999 7:00 AM - 8:00 AM Breakfast 8:00 AM - 9:15 AM Pre -conference Workshop: BANKING, 1999 AND BEYOND The Super Regional Banking System: On the Edge of the New Frontier A Comprehensive Discussion About the Products, Services and Service Levels You Can Expect from your Financial Institution Today and in the Next Millennium Speaker: TBA Break 9:30 AM —10:15 AM Fraud in the Banking System: It's Out There and It Could Happen To You! Steps You Need to Take to Protect Your Agency from Loss (or Loss is "On You") Speaker: Greg Litster, President, SafeChecks Break 10:30 AM —11:45 AM Increase the Effectiveness of Your Treasury Operation: A Banker's Perspective Panel Discussion from the Banking Industry 12:00 NOON FREE AFTERNOON Activities available: Golf Tournament Richard Nixon Library Tour 6:00 PM - 7:00 PM Early Bird Reception 7:00 PM Free Evening Wednesday. April 21, 1999 8:00 AM - 9:00 AM Breakfast 9:00 AM - 9:30 AM Opening Session Carole Gierhart, CCMT, President CMTA Investment/Revenue Officer, City of Oceanside 9:30 AM - 10:20 AM How to Bring Out the Star in Youl Speaker: Mary Ellen Drummond, Polished Presentations Break 10:30 AM - 11:15 AM Business Session 11:15 AM - 11:45 AM Certification Awards 11:45 AM - 11:50 AM Meet Your First Time Attendees! 12:00 Noon - 1:45 PM Lunch - Keynote Speaker: Girard Miller, President, ICMA Retirement Corporation Investment Perspective: Global Anxiety and the Deflation Tsunami 2:00 PM - 3:00 PM GASB 31 Going Forward Speakers: Joe Aguilar, Senior Manager, Vavrinek, Trine, Day & Co. Patricia A. Beal, Administrator, Local Agency Investment Fund Dan Dowell, Assistant Chief of Investments, State of California Jerry Rogers, Finance Director, City of Riverside Alan Setser, Section Manager GAAP Reporting, State of California Break 3:15 PM - 4:00 PM Concurrent Sessions: A. Internet Speaker: Pamela Carpenter, Director of Information Systems, San Diego Unified Port District B. Show Me the Money II Speaker: Mike Allen, MIS Manager, City of Visalia C. Performance Auditing Speakers: Joe Aguilar, Senior Manager Vavrinek, Trine, Day & Co. Jerry Silva, City Auditor, City of San Jose 4:10 PM - 5:00 PM Concurrent Sessions: A. Internet - Repeat B. Show Me the Money II - Repeat C. Special Districts — A New Outlook Facilitator: Patricia Elliott, Deputy Treasurer, Eastern Municipal Water District 6:00 PM - 7:00 PM Brea Gallery Reception 7:00 PM Free Evening Thursday. April 22.1999 8:00 AM - 9:00 AM Meet New Treasurers' Breakfast 9:00 AM - 9:45 AM The Revolution in Retirement Finance Speaker: Girard Miller, President, ICMA Retirement Corporation 9:50 AM - 10:45 AM Concurrent Sessions A. Debt Financing - Part I Speaker: Timothy Schaefer, Exec. Vice President, Fieldman, Rolapp & Associates B. Here's My Million, Now What? — Determining Relative Value Speakers: Guy Boccasile, Investment Officer, City of Ontario William Blackwill, Sr. Vice Pres., Salomon Smith Barney C. Roundtables (two topics) Certification: Judith Oltman, CCMT, City Treasurer, City of Hemet LAIF: Patricia A. Beal, Administrator, Local Agency Investment Fund Break 11:00 AM -11:50 AM Concurrent Sessions A. Debt Financing Part I - Repeat Speaker: Timothy Schaefer, Exec. Vice President, Fieldman, Rolapp & Associates B. Options/ideas for Portfolios $1 m-50m Speakers: Kay Chandler, President, Chandler Liquid Asset Management Karen Hornung, CCMT, City Treasurer, City of San Bruno C. Roundtables (two topics) Certification: Judith Oltman, CCMT, City Treasurer, City of Hemet LAIF: Patricia A. Beal, Administrator, Local Agency Investment Fund 12:00 Noon -1:45 PM Lunch - Keynote Speaker: William Harvey, MS, Language Services Institute More Than Just a Languagel 2:00 PM - 2:45 PM Nuts & Bolts - Members Speaker: Rose Bendas, CCMT, Deputy City Treasurer, City of Escondido Nuts & Bolts - Commercial Associates Speaker: Leslie G. Wells, Vice President, Union Bank of California 2:45 PM - 3:30 PM Nuts & Bolts Wrap -Up - Combined Session Rose Bendas and Leslie G. Wells Break 3:45 PM - 4:30 PM Concurrent Sessions A. Debt Financing - Part 11 Speaker: Timothy Schaefer, Exec. Vice President, Fieldman, Rolapp & Associates B. Investment Policies and Reports Speaker: Michele Lund, CCMT, Assistant Investment Officer, City of Oceanside C. Roundtables (two topics) State Mandated Cost Claims Speaker: TBA How to Lobby Speaker: Ernie O'Dell, City Treasurer, City of Redondo Beach 4:30 PM - 5:30 PM Photo Sessions for Board and Certification Awardees 6:00 PM President's Reception 7:00 PM Opening and Installation 7:30 PM Dinner 8:15 PM Show — Comedian Dana Daniels and his Parrot Luigi 9:15 - Midnight Dancing/Music provided by "The Sophist! -Cats" and "Dr. Sizzle" Friday. April 23.1999 8:00 AM - 9:00 AM Breakfast 9:00 AM - 9:45 AM Disaster Response Speakers: Eric Frost, CCMT, Administrative Services Director, City of Watsonville Bill Hays, Assistant Finance Officer, City of Watsonville Marissa Duran, Accountant, City of Watsonville Break 10:00 AM - 10:50 AM Let's Talk Moneyl Speaker: Frank Benest, Ed.D., City Manager, City of Brea 10:50 AM - 11:30 AM Y21K — The End is Near Speaker: Jon Fullinwider, Chief Information Officer, County of Los Angeles Conference Concludes — On to Concord in 20001 12:00 Noon - 2:00 PM Board Meeting for CMTA Officers and Boardmembers INVESTMENT ADVISORY BOARD Correspondence & Written Material Item A Meeting Date: February 10, 1999 TITLE: Month End Cash Report - January 1999 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. John M. Falconer, Finance Director a) 0 0 0 LL a) a) U) O Q a) 0) C O U C1 � of J w N 0 0 7 _ occ U � � . U) T— N 0 �0P-0 O 'IT O IT O 00 u? N No OO`- �O MONCD VL O od HMO�O MCD�p ( 00 Cr) 00Iq- C) M � V-cMT- IT L Nc)Oif) OoMa N co 'T Lo LO N `. N � c'M M M M O ( 0) O MO1l-(DOOM LO CO O O ON(D(D�M LO E� U)p O O MMf-OM(DC) 00~piOIZ�000 >� ti ti NMOt1)00(Dp C� NcoIgLOU)f- N N N N N CY)cc)ccoo coM p 0000 N N N O op � O V) 0N0 ONO ON0 nj O 0o 0o 00 N O Ili V IT � p co co coO 00 V 000 co cc)0 0) ccv (0D (D co CD M f- ti ti ti ti m cn C 00 ONO ONO co 'FO ' O T-: N e- N T- N W 0 CL LO LO Co LL N N LO L6 L6 '�M O 00 OD OOO S M L N N N o cn 0) C ^ 0) O� O f- O d CO L N N Co NLL � oo (DDIT 00(MDOD O 0 cn —� cM(D000)(0 O M ti j U (p (n N� M r- ao T" � d Cl) N U 0000 N_ O (0 N (7) � N M L- 0 � 00 ,nrnrn N N M In U') L a) LO ¢ 0 to C T L� M M LO (D cn a) OD L) N L U c0 Vi c* aoo rn C M 0 a? (o o m N C Y U.) LO a 0 `� p 0 m L (u m ;r rn ao)cy) � c a) H m Y coo v 70 a`) (D L n E oaC le UUS cc M °0 °? ni v E°)EE E :3 (Da)=� a? N N (a 3 O = c ''0 a n 7) Cl- U O N m �p om oco>UUw Q a ¢ w < 0 o z o ¢ CD p ti O cM (=i M O C:) (M M o � LO O ti O O C14 N N ti ~ o O M N T7 O CD N Tl- Cl) CO) cc U c a) O t 0) a) Q0 a) OQ O L a) L cu LL - ca)0c- co L O0- E�Q� OUcu O c: a) N CU .-:t > N 0)� N O C O O L L .� C H O QUO U co LL00 L- - O a) � ... 0 E -0 co O 0) V ��♦♦ Qom.... a) L W L O a) a) T L U �Q"L$ Cl) C (A QO Cl) a) 0 L a)C�L O'— 0c6 C p O�+ C CD- C: �OCC V O O Q.a) a)-D 0 0 LO(a EB cu C 0-E -0 a) L- .c 0 H C 0 c N >+ a) NE(D :3 O 0) CCO o•--a CL CU - Na) O 0 NO Q c a)o-0 OLN O� 0)� w a) co CU,C U a) Lc IL E-0 O O UQ ca L' coC0L L� E Q >+� L .-o 0 0 c �0co UtUa) 00 �! cb (v U ENE NO CU= �cu Cu :3 O • f 00>.0 U (n Eo O O �" O a) -c N`L- Q N (O Q �a/) (n N.. L 0 w (/) cn a) L (U a) Cl) Q Q cn aa)) c L 0 0-0 a) cn, 0 x ca 4.• Q Q c cu 0 L Q�CD > �^ >..r O ` 3 c °'�,� CL cac'tea) cvcu o>c o- `)0 Eon �3�~°) Ems °) :3 Q- O � , a) E (0 C � a) .E, N CU co NL-0.2! R5 ON ` Oa) 4- ��� a) �L 2 a) (a ENNU0 a) 0= N -0 a) C.0 a)(nQ O- O C O+. L�a)co 0) CU L Quern UI- xo a) C a)c6_ �... 0-= O 40 d 3mo00 O C V- *M— c � .- c0_0 O =0E.'0Q m� O CL 0-0 000 +=0� +-� — a) a) 40a) o O L'0La) IL h- Q p Z i L�c N Q Cu _�•— O-5 U) .S CU CD :3 c INVESTMENT ADVISORY BOARD Meeting Date: February 10, 1999 TITLE: Pooled Money Investment Board Report for November 1998 and Annual Report BACKGROUND: Correspondence & Written Material Item B The Pooled Money Investment Board Report for November, 1998 is included in the agenda packet. In addition, the Annual Pooled Money Investment Board Report is included. RECOMMENDATION: Receive & File ohn M. Falcoher, Finance Director STATE OF CALIFORNIA STATE TREASURER'S OFFICE POOLED MONEY INVESTMENT BOARD REPORT NOVEMBER 1998 Table of Contents SUMMARY............................................................................................................1 SELECTED INVESTMENT DATA....................................................................2 PORTFOLIO COMPOSITION...........................................................................3 INVESTMENT TRANSACTIONS......................................................................4 TIMEDEPOSITS................................................................................................14 DEMAND BANK DEPOSITS............................................................................19 POOLED MONEY INVESTMENT BOARD DESIGNATION .....................20 POOLED MONEY INVESTMENT ACCOUNT SUMrVlARY OF INVESTMENT DATA A COMPARISON OF NOVEMBER 1998 WITH NOVEMBER 1997 (Dollars in Thousands) November 1998 November 1997 Change Average Daily Portfolio $31,560,864 $27,325,013 + $4,235,851 Accrued Earnings $142,463 $128,344 + $14,119 Effective Yield 5.492 5.715 - .223 Average Life —Month End (in days) 188 210 - 22 Total Security Transactions Amount $11,467,765 $15,217,885 - $3,750,120 Number 258 346 - 88 Total Time Deposit Transactions Amount $937,200 $518,200 + $419,000 Number 45 28 + 17 Average Workday Investment Activity $689,165 $925,652 - -$236,487 Prescribed Demand Account Balances For Services $271,033 $145,818 + $125,215 For Uncollected Funds $163,439 $151,586 + $11,853 —1— MATT FONG STATE TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMTMD) Change in November 30,1998 Percent From Twe of Security Amount Percent Previous Month Governments Bills $3,107,612 9.74 + 2.50 Bonds 0 0 0 Notes 4,7969837 15.02 - .61 Steps 0 0 0 Total Governments $7,9049449 24.76 + 1.89 Federal Agency Coupons $21,783,087 8.72 + .59 Certificates of Deposit 59,220,857 1635 + .79 - Bank Notes 1,830,980 5.73 + .26 Bankers Acceptances 65,410 .20 + .08 0 0 0 ,Repurchases Federal Agency Discount Notes 216999240 8.45 + 2.05 Time Deposits 1,877,390 5.88 - .05 GNI%IWs 2,046 .01 0 Commercial Paper 5,505,530 17.24 - 5.51 FHLMC 19,826 .06 0 Corporate Bonds 1,8541043 5.82 + .14 Pooled Loans 1,834,050 5.74 - .24 GF Loans 9807200 3.07 + .62 Reversed Repurchases -648,014 -2.03 + .62 Total, All Types $31,929,094 100 IIWESTMENT ACTIVITY November 1998 October 1998 Number Amount Number Amount Pooled Money 258 $ 11,467,765 431 $ 19,270,925 Other 92 $ 248,785 55 $ 317,887 Time Deposits 45 $ 937400 76 $ 1,1479790 TOTALS 395 $ 129,653,750 562 $ 20t736,602 PMIA Monthly Average Effective Yield 5.492 5557 Year to Date Yield for Last Day of Month 5.599 5.625 —2— Cor B 5. Commercia Paper 17.24% Banker: Acceptanc 0.20% Pooled Money Investment Account Portfolio Composition $31,9 Billion Reverses Loans -2.03% 8.81 % CD's/BN's 22.08% asuries J6% Time Deposits 5.88% Mortgages 0.07% :Is 6 11 /30/98 O Treasuries ® Time Deposits ■ Mortgages M Agencies ■ CD's/BN's ■ Bank Acceptances ® Repurchases Commercial Paper ® Corporate Bonds Loans in Reverses -3- 11/02/98 REDEMPTION CP Conagra 11/02/98 6.020 $35,000 3 17,558.33 6.106 CP GMAC 11/02/98 5.630 40,000 3 18,766.67 5.710 CP GMAC 11/02/98 5.630 50,000 3 23,458.33 5.710 CP GMAC 11/02/98 5.630 50,000 3 23,458.33 5.710 CP GMAC 11/02/98 5.630 50,000 3 23,458.33 5.710 CP FMCC 11/02/98 5.630 50,000 3 23,458.33 5.710 CP FMCC 11/02/98 5.630 50,000 3 23,458.33 5.710 CP FMCC 11/02/98 5.630 50,000 3 23,458.33 5.710 CP FMCC 11/02/98 5.630 50,000 3 23:458.33 5.710 CP Household 11/02/98 5.120 25,000 14 49,777.78 5.210 CD Bkrs Trst 5.630% 11/02/98 5.620 50,000 181 1,412,874.63 5.698 CD Bkrs Trst 5.630% 11/02/98 5.620 50,000 181 1,412,874.63 5.698 CD Bayer Lnds 5.630% 11/02/98 5.620 50,000 185 1,444,099.90 5.698 PURCHASE CD Montreal 5.180% 02/26/99 5.180 50,000 CD Montreal 5.180% 02/26/99 5.180 50,000 CP Conagra 11/03/98 5.900 20,000 CP Conagra 11/03/98 5.900 20,000 CP Conagra 11/03/98 5.900 20,000 CP GECC 11/03/98 5.600 50,000 CP GECC 11/03/98 5.600 50,000 CP GECC 11/03/98 5.600 50,000 CP Merrill 01 /29/99 5.190 50,000 CP Merrill 01/29/99 5.190 50,000 11/03/98 REDEMPTION CD Hypo 5.600% 11/03/98 5.590 20,000 180 559,027.19 5.667 CP Conagra 11/03/98 5.900 20,000 1 3,277.78 5.982 CP Conagra 11/03/98 5.900 50,000 1 8,194.44 5.982 CP Conagra 11/03/98 5.900 50,000 1 8,194.44 5.982 CP GECC 11/03/98 5.600 50,000 1 7,777.78 5.678 CP GECC 11/03/98 5.600 50,000 1 7,777.78 5.678 CP GECC 11/03/98 5.600 50,000 1 7,777.78 5.678 PURCHASE BA UB Calif 04/26/99 4.900 20,000 BA UB Calif 04/27/99 4.900 20,000 BA UB Calif 04/29/99 4.900 15,000 BN NationsBk 5.000% 05/27/99 5.000 50,000 BN NationsBk 5.000% 05/27/99 5.000 50,000 CD Mellon 5.000% 05/03/99 5.000 50,000 CP GECC 11/04/98 5.500 5,000 CP GECC 11/04/98 5.500 50,000 Disc Note FHLB 04/28/99 4.750 25,000 Disc Note FHLB 04/28/99 4.750 50,000 —4— 11/03/98 Treas Bill 10/14/99 4.135 50,000 Treas Bill 10/14/99 4.135 50,000 Treas Bill 10/14/99 4.140 50,000 Treas Bill 10/14/99 4.140 50,000 11/04/98 REDEMPTION - CP GECC 11/04/98 5.500 5,000 1 763.89 5.577 CP GECC 11/04/98 5.500 50,000 1 7,638.89 5.577 CP Conagra 11/04/98 5.620 50,000 7 54,638.89 5.704 CP Enron 11/04/98 5.580 25,000 13 50,375.00 5.668 CP Enron 11/04/98 5.580 50,000 13 100,750.00 5.668 FHLB 5.810% 11/04/98 5.852 10,000 365 585,022.60 5.852 PURCHASE CD CIBC 5.170% 03/08/99 5.170 50,000 CD CIBC 5.170% 03/08/99 5.170 50,000 CD U/B Calif 5.060% 05/27/99 5.060 50,000 CD U/B Calif 5:060% 05/27/99 5.060 50,000 CP GECC 11/05/98 5.250 45,000 CP GECC 11/05/98 5.250 50,000 CP Amer Exp 11 /18/98 5.180 50,000 CP Amer Exp 11 /18/98 5.180 50,000 Treas Bill 10/14/99 4.200 50,000 Treas Bill 10/14/99 4.200 50,000 Treas Bill 10/14/99 4.200 50,000 Treas Bill 10/14/99 4.200 50,000 11/05/98 REDEMPTION CP GECC 11/05/98 5.250 45,000 1 6,562.50 5.323 CP GECC 11/05/98 5.250 45,000 1 6,562.50 5.323 PURCHASE CD U/B Calif 5.130% 05/04/99 5.130 50,000 CD U/B Calif 5.130% 05/04/99 5.130 50,000 11/06/98 REDEMPTION BA U/B Calif 11/06/98 5.271 28,000 23 94,274.43 5.361 CP FMCC 11/06/98 5.100 50,000 16 113,333.33 5.182 CP FMCC 11/06/98 5.100 50,000 16 113,333.33 5.182 CP Country 11/06/98 5.320 30,00.0 38 168,466.67 5.424 CP Unocal 11/06/98 5.720 20,000 88 279,644.44 5.881 —5— 11/06/98 REDEMPTION MTN (CB) Chemical 5.880% 11/06/98 5.880 25,000 1096 4,410,000.00 5.961 CID Enron 11 /06/98 5.540 50,000 29 2-23,138.89 5.642 CID Enron 11 /06/98 5.540 50,000 29 223,138.89 5.642 PURCHASE CD U/B Calif 5.120% 05/05/99 5.120 50,000 CD Nova Scot 5.060% 05/06/99 5.060 50,000 CD RB Canada 5.060% 05/07/99 5.050 35,000 CD Svenska 5.760% 05/25/99 5.040 25,000 CID Heller 11 /24/98 5.500 50,000 11/09/98 REDEMPTION CD Montreal 5.600% 11/09/98 5.600 50,000 159 1,236,666.67 5.677 CID GMAC 11/09/98 5.100 50,000 19 134,583.33 5.184 CID GMAC 11/09/98 5.100 50,000 19 134,583.33 5.184 CID Country 11/09/98 5.320 47,000 41 284,767.78 5.426 CID S RAC 11/09/98 5.480 50,000 139 1,057,944.44 5.676 CID GECC 11/09/98 5.480 50,000 143 1,088,388.89 5.679 CID GECC 11/09/98 5.480 50,000. .143 1,088,388.89 5.679 PURCHASE CD Montreal 5.300% 02/09/99 5.300 50,000 CD Montreal 5.300% 02/10/99 5.300 50,000 CID GECC 11/10/98 5.030 50,000 CID Conagra 11 /08/98 5.520 47,600 CID Heller 12/08/98 5.500 50,000 Treas Bill 10/14/99 4.440 50,000 Treas Bill 10/14/99 4.440 50,000 11/10/98 REDEMPTION CID GECC 11/10/98 5.030 50,000 1 6,986.11 5.100 CID GECC 11/10/98 5.090 50,000 20 141,388.89 5.175 CID GECC 11/10/98 5.090 50,000 20 141,388.89 5.175 CID GECC 11/10/98 5.090 50,000 20 141,388.89 5.175 CID Hertz 11/10/98 5.180 50,000 22 158,277.78 5.268 CID Heller 11/10/98 5.450 50,000 32 242,222.22 5.552 CID Heller 11/10/98 5.450 10,0.00 32 48,444.44 5.552 CID Text Inc 11/10/98 5.650 16,000 32 80,355.56 5.757 CID Country 11/10/98 5.400 50,000 33 247,500.00 5.502 CID Country 11/10/98 5.400 6,250 33 30,937.50 5.502 —6— 11/10/98 PURCHASE CD Hypo 5.110% 04/09/99 5.100 35,000 CD Hypo 5.110% 04/09/99 5.100 50,000 CP Heller 11 /24/98 5.500 50,000 CP Salomon 02/26/99 5.200 50,000 CP Salomon 02/26/99 5.200 50,000 11/12/98 REDEMPTION CP Heller 11 /12/98 5.300 50,000 21 154,583.33 5.390 PURCHASE CP Heller 11/18/98 5.500 50,000 Treas Bill 05/27/99 4.430 50,000 Treas Bill 04/22/99 5.050 50,000 Treas Bill 04/22/99 5.050 29,151 11/13/98 RRS Treas Bill 12/10/98 3.630 50,000 Treas Bill 12/10/98 3.630 50,000 REDEMPTION CP Text Fin 11/13/98 5.650 20,000 30 94,166.67 5.755 CP SRAC 11/13/98 5.290 50,000 30 220,416.67 -5.387 CP Heller 11/13/98 5.400 50,000 22 165,000.00 5.493 Treas Bill 04/22/99 5.050 50,000 1 6,734.74 5.120 Treas Bill 04/22/99 5.050 29,151 1 3,926.37 5.120 PURCHASE g/ CP FMCC 12/10/98 5.110 50,000 CP FMCC 12/10/98 5.110 50,000 PURCHASE CP Amer Exp 11/18/98 5.190 50,000 CP Amer Exp 11/18/98 5.190 50,000 CP Amer Exp 11/18/98 5.190 50,000 11/15/98 REDEMPTION CB JP Morgan 7.625% 11 /15/98 5.609 4,000 1034 655,479.44 5.609 MTN Assoc . 5.750% 11 /15/98 5.750 19,205 1062 3,209,336.88 5.750 —7— 11/15/98 NO PURCHASES 11 /16/98 RRS Treas Note 5.750% 12/31/98 3.890 Treas Note 5.625% 11 /30/98 3.690 REDEMPTION CD CIBC 5.665% 11/16/98 5.600 PURCHASE g/ . CD WestDeut 5.090% 12/31/98 5.090 CD Wachovia 5.100% 12/31/98 5.090 CD World 5.190% 11 /30/98 5.190 PURCHASE Disc Note FHLB 06/30/99 4.720 Disc Note FHLB 06/30/99 4.720 11/17/98 NO REDEMPTIONS PURCHASE FHLB CP Assoc CP Assoc CP Salomon CP Salomon Disc Note FNMA Disc Note FNMA Disc Note FNMA 11/18/98 REDEMPTION CP Assoc CP Assoc CP Amer Exp CP Amer Exp CP Amer Exp CP Heller CP Conagra CP Amer Exp CP Amer Exp NO PURCHASES 4.980% 11 /17/00 4.900 11/18/98 5.130 01 /18/98 5.130 05/11 /99 5.050 05/11 /99 5.050 06/30/99 4.760 06/30/99 4.760 06/30/99 4.760 50,000 50,000 20,000 50,000 50,000 50,000 25,000 50,000 50,000 50,000 15,000 50,000 50,000 179 557,660.80 5.684 11/18/98 5.130 25,000 1 3,562.50 5.201 11/18/98 5.130 50,000 1 7,125.00 5.201 11/18/98 5.190 50,000 5 36,041.67 5.265 11/18/98 5.190 50,000 5 36,041.67 5.265 11 /18198 5.190 50,000 5 36,041.67 5.265 11/18/98 5.500 50,000 6 45,833.33 5.581 11/18/98 5.520 47,600 9 65,688.00 5.604 11/18/98 5.180 50,000 14 100,722.22 5.262 11/18/98 5.180 50,000 14 100,722.22 5.262 —8— 11/19/98 NO REDEMPTIONS PURCHASE BN NationsBk 4.920% 11 /19/99 4.920 BN NationsBk 4.920% 11 /19/99 4.920 CD U/B Switz 4.910% 08/23/99 4.900 CD U/B Switz 4.910% 08/23/99 4.900 11/20/98 REDEMPTION FHLB 5.710% 11 /20/98 5.791 PURCHASE CID FMCC 11/24/98 4.460 CID FMCC 11/24/98 4.460 CID FMCC 11/24/98 4.460 CID Household 11 /23/98 4.450 Treas Bill 11/12/99 4.333 Treas Bill 11/12/99 4.333 Disc Note FHLB 11 /15/99 4.540 Disc Note FHLB 11/15/99 4.540 11/23/98 REDEMPTION CID Household 11/23/98 4.450 PURCHASE Treas Bill 11/12/99 4.330 Treas Bill 11/12/99 4.330 Treas Bill 11/12/99 4.330 11/24/98 SALE Treas Bill 12/10/98 4.460 Treas Bill 01/07/99 4.240 REDEMPTION CD Deutsche 5.150% 11/24/98 5.150 CP FMCC 11/24/98. 4.460 CID FMCC 11/24/98 4.460 CID FMCC 11/24/98 4.460 CID Heller 11/24/98 5.500 co Heller 11/24/98 5.500 CID GECC 11/24/98 5.480 CID GECC 11/24/98 5.480 —9- 50,000 50,000 25,000 50,000 50,000 365 . 2,894,062.50 5.792 50,000 50,000 '50,000 20,000 50,000 50,000 7,000 50,000 20,000 3 50,000 50,000 50,000 50,000 336 50,000 300 35,000 39 50,000 4 50,000 4 50,000 4 50,000 14 50,000 18 50,000 154 50,000 154 7,416.67 4.513 2,460,222.22 5.633 2,148,888.89 5.493 195,270.83 5.221 24,777.78 4.524 24,777.78 4.624 24,777.78 4.524 106,944.44 5.588 137,500.00 5.591 1,172,111.11 5.689 1,172,111.11 5.689 11/24/98 REDEMPTION CP GECC CP GECC CP GECC CP GECC CP U/B Calif CP UB Calif PURCHASE MTN Assoc MTN (FR) GMAC MTN (FR) Chase Disc Note FNMA Disc Note FNMA Disc Note FNMA Disc Note FNMA 11/25/98 SALE Treas Note Treas Note Treas Note Treas Note REDEMPTION BN B/A BN B/A BN B/A BN B/A CD B/A PURCHASE FNMA FNMA FNMA FNMA FNMA CP Heller CP Heller CP Hertz CP GECC CP GECC CP GECC CP GECC Disc Note FHLB Disc Note FHLMC Disc Note FHLMC 11 /24/98 5.480 50,000 159 1,210,166.67 5.693 11 /24/98 5.480 50,000 159 1,210,166.67 5.693 11 /24/98 5.480 50,000 159 1,210,166.67 5.693 11 /24/98 5.480 50,000 159 1,210,166.67 5.693 11 /24/98 5.480 25,000 161 612,694.45 5.695 11 /24/98 5.480 50,000 161 1,225,388.90 5.695 7.500% 08/25/00 5.390 5,000 5.550% 11/27/00 5.550 50,000 5.500% 11 /30/00 5.500 50,000 11 /15/99 4.520 25,000 11 /15/99 4.620 50,000 11 /15/99 4.620 50,000 11 /15/99 4.620 50,000 5.750% 12/31/98 4.639 50,000 684 5,710,840.36 6.128 5.750% 12/31 /98 4.639 50,000 688 5,648,858.32 6.015 5.750% 12/31 /98 4.639 50,000 688 5,648,858.32 6.015 5.750% 12/31 /98 4.639 50,000 688 5,648,858.32 6.015 5.590% 11 /25/98 5.590 50,000 202 1,568,305.56 5.667 5.590% 11 /25/98 5.590 50,000 202 1,568,305.56 5.667 5.590% 11 /25/98 . 5.590 50,000 204 1,583,833.33 5.667 5.590% 11 /25/98 5.590 50,000 204 1,583,833.33 5.667 5.590% 11 /25/98 5.590 50,000 188 1,459,611.11 5.667 5.740% 12/23/99 4.882 50,000 5.740% 12/23/99 4.882 50,000 5.600% 03/27/00 5.000 .50,000 5.600% 03/27/00 5.000 50,000 4.840% 11 /27/00 5.000 25,000 12/04/98 5.250 50,000 12/08/98 5.250 50,000 03/29/99 5.120 50,000 05/24/99 4.880 35,000 05/24/99 4.880 50,000 05/24/99 4.880 50,000 05/24/99 4.880 50,000 05/26/99 4.770 24,850 04/01 /99 4.853 50,000 05/26/99 4.770 24,850 —10— 11/25/98 PURCHASE Disc Note FHLMC 04/01/99 4.853 50,000 Disc Note FHLMC 04/01/99 4.853 50,000 Disc Note FNMA 11/16/99 4.630 50,000 Disc Note FNMA 11/16/99 4.630 50,000 Treas Bill 11 /12/99 4.380 50,000 Treas Bill 11 /12/99 4.380 50,000 Treas Bill 11 /12/99 4.380 50,000 Treas Note 4.000% 10/31 /00 4.663 50,000 Treas Note 4.000% 10/31/00 4.663 50,000 11/30/98 SALE 9/ CD World 5.190% 11/30/98 5.190 50,000 14 100,916.67 5.262 REDEMPTION CD Hong Kong 5.210% 11/30/98 5.210 50,000 62 448,638.89 5.282 CD Hong Kong 5.210% 11/30/98 5.210 50,000 62 448,638.89 5.282 CD Svenska 5.610% 11/30/98 5.600 50,000 181 1,407,846.62 5.677 CD Svenska 5.610% 11/30/98 5.600 50,000 181 1,407,846.62 5.677 CD Mellon 5.625% 11/30/98 5.625 50,000 182 1,421,875.00 5.703 CD Mellon 5.625% 11/30/98 5.625 50,000 182 1,421,875.00 5.730 CP GMAC 11/30/98 5.460 50,000 161 1,220,916.67 5.674 CP GMAC 11/30/98 5.460 50,000 161 1,220,916.67 5.674 CP GMAC 11/30/98 5.450 50,000 168 1,271,666.67 5.669 CP GMAC 11/30/98 5.450 50,000 168 1,271,666.67 5.669 CP GMAC 11/30/98 5.450 50,000 168 1,271,666.67 5.669 CP GMAC 11/30/98 5.450 50,000 168 1,271,666.67 5.669 CP GECC 11/30/98 5.450 50,000 168 1,271,666.67 5.669 CP GECC 11/30/98 5.450 50,000 168 1,271,666.67 5.669 CP GECC 11/30/98 5.450 50,000 168 1,271,666.67 5.669 CP GECC 11/30/98 5.450 50,000 168 1,271,666.67 5.669 CP Merrill 11/30/98 5.500 30,000 178 815,833.33 5.732 CP Merrill 11/30/98 5.500 50,000 178 1,359,722.22 5.732 CP Merrill 11/30/98 5.500 50,000 178 1,359,722.22 5.732 CP U/B Calif 11/30/98 5.500 50,000 178 1,359,722.20 5.732 CP UB Calif 11/30/98 5.500 50,000 178 1,359,722.20 5.732 Treas Note 5.625% 11/30/98 5.692 50,000 724 5,641,130.11 5.695 RRP Treas Note 5.625% 11/30/98 3.690 50,000 14 (73,665.72) -3.741 PURCHASE BN NationsBk 5.000% 11 /30/99 5.000 50,000 BN NationsBk 5.000% 11 /30/99 5.000 50,000 CP GMAC 12/01/98 5.400 50,000 CP GMAC 12/01 /98 5.400 50,000 —11— 11/30/98 PURCHASE CID Conagra 12/02/98 5.500 24,470 CP Heller 12/04/98 5.250 50,000 CP Merrill 12/04/98 5.200 50,000 CP Merrill 12/04/98 5.200 50,000 —12— 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 (EXM, Bankers Acceptances (BA), Commercial Paper (CP), Government National Mortgage Association (GNMA), Federal Home Loan Bank Notes (FHI..B), Federal Land Bank Bonds (FLB), Federal Home Loan Mortgage Corporation Obligation (FHLMC PC) & (FHLMC GMC), Federal Farm Credit Bank Bonds (FFCB), Federal Farm Credit Discount Notes (FFC), Corporate Securities (CB), U.S. Ship Financing Bonds (TITLE XI'S), International Bank of Redevelopment (IBRD), Tennessee Valley Authority (TVA) Medium Term Notes (MTN). b/ Purchase or sale yield based on 360 day calculation for discount obligations and Repurchase Agreements. c/ Repurchase Agreement. d/ Par amount of securites purchased, sold, or redeemed. e/ Securities were purchased and sold as of the same date. f/ Repurchase Agreement against Reverse Repurchase Agreement. g/ Outright purchase against Reverse Repurchase Agreement. h/ Security "SWAP" transactions. i/ Buy back agreement. RRS Reverse Repurchase Agreement. RRP Termination of Reverse Repurchase Agreement. —13— NAME ALHAMBRA East West Bank TIME DEPOSIT DEPOSIT DATE 09/16/98 YIELD PAR 4.790 AMOUNT (S) MATURITY 12,000,000.00 DATE 01/19/99 East West Bank 10/07/98 4.170 35,000,000.00 01/06/99 East West Bank 10/15/98 4.170 15,000,000.00 01/14/99 East West Bank 11 /12/98 4.570 38,000,000.00 02/11 /99 BEVERLY HILLS City National Bank 02/18/98 5.270 20,000,000.00 02/18/99 City National Bank 07/29/98 5.230 10,000,000.00 01 /27/99 City National Bank 09/16/98 4.930 20,000,000.00 03/15/99 City National Bank 11 /02/98 4.360 25,000,000.00 05/04/99 CHICO North State National Bank 08/24/98 5.190 1,000,000.00 08/24/99 North State National Bank 09/09/98 4.890 500,000.00 12/09/98 Tri Counties Bank 09/10/98 4.900 10,000,000.00 12/10/98 Tri Counties Bank 09/15/98 4.840 10,000,000.00 12/17/98 North State National Bank 10/06/98 4.260 1,000,000.00 01/05/99 Tri Counties Bank 10/15/98 3.920 10,000,000.00 01/14/99 North State National Bank 10/06/98 4.380 1,000,000.00 04/05/99 FRESNO United Security Bank G ENDA E 10/15/98 3.980 5,000,000.00 01/14/99 Glendale Federal Bank 09/28/98 4.640 3,000,000.00 12/29/98 Glendale Federal Bank 10/15/98 4.050 100,000,000.00 01/14/99 Glendale Federal Bank 10/07/98 4.360 5,000,000.00 04/06/99 INGLEWOOD Imperial Bank 07/08/98 5.230 25,000,000.00 01/04/99 Imperial Bank 08/06/98 5.260 25,000,000.00 02/03/99 Imperial Bank 09/09/98 4.910 25,000,000.00 12/09/98 Imperial Bank 09/09/98 5.040 25,000,000.00 03/09/99 Imperial Bank 10/01 /98 4.490 18,000,000.00 12/30/98 Imperial Bank 09/09/98 5.040 25,000,000.00 03/09/99 Imperial Bank 09/16/98 4.990 11,000,000.00 03/16/99 Imperial Bank 08/11 /98 5.230 20,000,000.00 02/09/99 —14= INGLEWOOD (continued) Imperial Bank 10/07/98 4.200 25,000,000.00 01/06/99 Imperial Bank 10/19/98 3.890 25,000,000.00 01/20/99 Imperial Bank 10/01/98 4.710 18,000,000.00 04/01/99 Imperial Bank 11/05/98 4.530 25,000,000.00 02/23/99 Imperial Bank 11 /04/98 4.530 15,000,000.00 03/24/99 Imperial Bank 11/06/98 4.530 20,000,000.00 04/15/99 t-OS ANGELES Community Bank 06/17/98 5.300 10,000,000.00 12/15/98 Community Bank 06/22/98 5.350 5,000,000.00 12/22/98 Community Bank 07/15/98 5.230 20,000,000.00 01/11/99 Community Bank 08/11 /98 5.200 15,000,000.00 02/08/99 Preferred Bank 09/17/98 4.820 9,000,000.00 12/16/98 Preferred Bank 09/23/98 4.820 9,000,000.00 12/23/98 Preferred Bank 09/28/98 4.620 3,000,000.00 12/29/98 General Bank 09/24/98 4.800 15,000,000.00 01/12/99 General Bank 10/01 /98 4.460 15,000,000.00 01 /07/99 Preferred Bank 10/15/98 3.980 3,000,000.00 01/14/99 General Bank 10/20/98 3.860 25,000,000.00 02/08/99 General Bank 10/21 /98 3.880 10,000,000.00 02/18/99 General Bank 11 /06/98 4.550 28,000,000.00 02/17/99 Preferred Bank 11 /20/98 4.460 4,000,000.00 02/19/99 Preferred Bank 11 /24/98 4.460 2,000,000.00 02/23/99 POMONA Pomona First Federal S & L 09/10/98 5.300 10,000,000.00 03/09/99 Pomona First Federal S & L 11 /24/98 4.800 8,000,000.00 05/25/99 PETALUMA Bank of Petaluma 08/11/98 5.160 1,000,000.00 02/09/99 River City Bank 07/20/98 5.270 5,000,000.00 01 /20/99 Sanwa Bank of California 07/29/98 5.230 5,000,000.00 01/27/99 River City Bank 08/18/98 5.140 5,000,000.00 02/17/99 Sanwa Bank of California 08/17/98 5.170 50,000,000.00 02/17/99 Sanwa Bank of California 08/24/98 5.110 10,000,000.00 02/22/99 Union Bank of California 09/28/98 4.520 100,000,000.00 12/28/98 River City Bank 10/14/98 3.920 5,000,000.00 01/13/99 Sanwa Bank of California 10/16/98 4.000 10,000,000.00 01/15/99 Sanwa Bank of California 11/02/98 4.360 7,000,000.00 02/03/99 -15- SACRAMENTO Union Bank of California 10/29/98 4.310 50,000,000.00 01/27/99 Union Bank of California 11/02/98 4.450 100,000,000.00 02/02/99 Union Bank of California 11/17/98 4.550 50,000,000.00 02/17/99 SAN DIEGO San Diego First Bank 06/02/98 5.330 1,500,000.00 12/02/98 San Diego First Bank 06/23/98 5.350 1,500,000.00 12/22/98 San Diego First Bank 11 /05/98 4.530 1,000,000.00 05/06/99 SAN FRANCISCO Bank of Canton California 112/01/97 5.500 5,000,000.00 12/01/98 Bank of Canton California 12/15/97 5.450 5,000,000.00 12/15/98 Bank of Canton California 01/21/98 5.230 5,000,000.00 01/21/99 Bank of Canton California 02/11/98 5.300 5,000,000.00 02/11/99 Oceanic Bank 03/05/98 5.430 2,000,000.00 03/05/99 Bank of Canton California 06/04/98 5.320 5,000,000.00 12/04/98 Bank of Canton California 06/09/98 5.410 5,000,000.00 03/05/99 Bank of the West 06/08/98 5.440 25,000,000.00 06/08/99 Bank of the West 07/31 /98 5.220 25,000,000.00 01 /28199 Bank of the West 07/31 /98 5.230 26,500,000.00 01 /28/99 Bank of the West 07/13/98 5.350 25,000,000.00 07/13/99 Bank of Canton California 08/04/98 5.220 5,000,000.00 02/04/99 Bank of the West 08/26/98 5.110 27,000,000.00 02/24/99 Transpacific National Bank 09/16/98 5.100 800,000.00 03/15/99 Bank of the West 10/01 /98 4.460 14,000,000.00 01 /04/99 United Commercial Bank 10/02/98 4.400 20,000,000.00 01/06/99 Bank of the West 10/20/98 3.740 25,000,000.00 01/20/99 United Commercial Bank 11/10/98 4.670 20,000,000.00 02/09/99 Bank of the West 11/19/98 4.440 37,000,000.00 02/18/99 Bank of the West 11/24/98 4.530 25,000,000.00 02/23/99 Bay Bank of Commerce 10/07/98 4.180 1,000,000.00 01/06/99 Bay Bank of Commerce SAN LUIS OBISPO 10/07/98 4.180 4,000,000.00 01/06/99 First Bank of San Luis Obispo 10/06/98 4.270 1,000,000.00 10/05/99 First Bank of San Luis Obispo 10/28/98 4.090 1,000,000.00 01 /27/99 First Bank of San Luis Obispo 11/02/98 4.370 3,600,000.00 02/02/99 First Bank of San Luis Obispo 11 /12/98 4.580 2,000,000.00 02/10/99 First Bank of San Luis Obispo 11/24/98 4.540 2,500,000.00 02/23/99 -16- NAME SAN RAFAEL West America Bank TIME DEPOSIT DEPOSIT DATE 10/14/98 YIELD PAR 3.910 AMOUNT (SJ MATURITY 25,000,000.00 DATE 01/13/99 West America Bank 10/21 /98 3.740 ' 25,000,000.00 01 /20/99 West America Bank 10/22/98 3.740 25,000,000.00 01/21/99 West America Bank 10/29/98 4.180 25,000,000.00 01/27/99 West America Bank 11/09/98 4.690 50,000,000.00 02/09/99 SAN MATEO Boreal Bank and Trust 10/01 /98 5.080 95,000.00 04/01 /99 SANTA ANA Grand National Bank 06/30/98 5.300 95,000.00 01/04/99 Grand National Bank 09/08/98 4.880 1,500,000.00 12/08/98 Grand National Bank 09/08/98 5.010 1,500,000.00 03/09/99 Grand National Bank 10/15/98 3.990 2,000,000.00 01/14/99 Grand National Bank 10/15/98 4.180 1,000,000.00 10/15/99 SANTA BARBARA Santa Barbara Bank & Trust 09/15/98 4.800 5,000,000.00 12/15/98 Santa Barbara Bank & Trust 09/01/98 4.920 5,000,000.00 12/01/98 Santa Barbara Bank & Trust 10/06/98 4.270 5,000,000.00 01/05/99 Santa Barbara Bank & Trust 10/08/98 4.270 10,000,000.00 01/07/99 Santa Barbara Bank & .Trust 11/10/98 4.680 5,000,000.00 02/09/99 SANTA CRUZ Coast Commercial Bank 09/17/98 4.820 15,000,000.00 12/16/98 SdA�IA North Valley Bank 09/22/98 4.750 3,000,000.00 03/23/99 STANISLAUS Oak Valley Community Bank 08/10/98 5.240 500,000.00 02/08/99 Oak Valley Community Bank 09/24/98 4.840 1,000,000.00 03/24/99 Oak Valley Community Bank 11/06/98 4.560 500,000.00 02/04/99 TORRANCE South Bay Bank 07/20/98 5.310 1,000,000.00 01/20/99 China Trust Bank (USA) 09/09/98 4.860 10,000,000.00 12/09/98 South Bay Bank 09/15/98 4.850 2,000,000.00 12/15/98 China Trust Bank (USA) 09/15/98 4.800 10,000,000.00 12/15/98 China Trust Bank (USA) 10/01 /98 4.470 5,000,000.00 12/30/98 —17— NAME TORRANCE (continued) China Trust Bank (USA) Sunwest Bank Sunwest Bank Sunwest Bank Citizens Business Bank Citizens Business Bank Citizens Business Bank Citizens Business Bank Citizens Business Bank Citizens Business Bank WALNUT CREEK Bank of the West Saratoga National Bank Bank of the West 10/28/98 4.190 15,000,000.00 01 /27/99 07/20/98 5.260 1,000,000.00 01/19/99 10/01 /98 4.460 500,000.00 01 /06/99 10/07/98 4.170 2,800,000.00 01/06/99 06/09/98 5.390 07/09/98 5.330 08/06/98 5.290 09/23/98 4.810 10/06/98 4.180 10/08/98 4.360 05/15/98 5.450 09/28/98 4.660 09/28/98 4.600 TOTAL TIME DEPOSITS AS OF NOVEMBER 30,1998 10, 000, 000.00 12/ 16/98 10,000,000.00 02/08/99 5,000,000.00 03/09/99 10,000,000.00 03/23/99 5,000,000.00 01/05/99 10,000,000.00 04/07/99 10,000,000.00 05/13/99 5,000,000.00 04/01/99 20,000,000.00 04/01 /99 $1,8779390,000.00 —18— DEMAND BANK DEPOSITS NOVEMBER 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. AVERAGE DOLLAR DAYS (000 omitted) DAILY BALANCES WARRANTS PER BANDS OUTSTANDING $261,345 $1,6319546 639,337 9479966 5589259 192779499 3659690 19142,959 4559951 195389139 5469792 195459420 546,792 195459420 5469792 195459420 2379561 197929225 3999125 1,355,008 3999,125 1,3559008 171;279 1,0649136 3389822 296939,539 3381,822 29693,539 3389822 29693439 4349879 295979,902 217401 295629852 475,858 296419644 4619763 29601,561 3959462 2,6139425 3959462 296139425 3959462 296139425 5699233 294709610 3819727 297209004 1859623 296389869 1859623 296389869 5329072 296381,869 5329072 2,6389869 5329,072 296389,869 666,335 296449106 a/ $4169845 a/ The prescribed bank balance for November was $434,472,000.00. This consisted of $270,617,000.00 in compensating balances for services, $163,855,000.00 uncollected funds and a deduction of $416,000.00 for October delayed deposit credit. —19— DESIGNATION BY POOLED MONEY INVESTMENT BOARD OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS No. 1593 In accordance with sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board, at its meeting on November 18, 1998, has determined and designated the amount of money available for deposit and investment undersaid 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 $177,619,000 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 tern interest - bearing deposits in banks and savings and loan associations as follows: From 11/16/98 11 /23/98 11 /30/98 12/07/98 12/14/98 To 11 /20/98 11/27/98 12/04/98 12/11/98 12/18/98 Transactions $ 924,300,000 $ (54,700,000) $ (1,146,600,000) $ 102,300,000 $ 2,386,800,000 Time Deposits in various Financial Institutions In Securities (sections 16503a (section 16430)' and 16602)• $ 28,487,010,000 $ 1,877,390,000 $ 28,432,310,000 $ 1,877,390,000 $ 27,285,710,000 $ 1,877,390,000 $ 27,388,010,000 $ 1,877,390,000 $ 29;774,810,000 $ 1,877,390,000. Estimated Total $ 30,364,400,000 $ 30,309,700,000 $ 29,163,100,000 $ 29,265,400,000 $ 31,652,200,000 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 $177,619,000. Dated: November 18, 1998 *Government Code -20- Pooled Money Investment Board 42nd ANNUAL REPORT - 1997/I998 During the 1997/98 fiscal year, program earnings totaled $1.672 billion. Approximately $629 million of this amount was credited to units of local government as a result of their deposits in our investment pool. This level of voluntary participation, which averaged $11.042 billion, reflects the confidence they have in our investment management capabilities. The magnitude of these investment earnings provide a significant reduction in the tax burden that otherwise would have been imposed on the citizens of California. Pooled Money Investment Board The Pooled Money Investment Board, created by the Legislature in 1955, is comprised of Matt Fong, State Treasurer, as chairman; Kathleen Connell, State Controller; and Craig L. Brown, Director of Finance. The purpose of the Board is to design an effective cash management and investment program, using all monies flowing through the Treasurer's bank accounts and keeping all available funds invested consistent with the goals of safety, liquidity and yield. This Board designates the amounts of temporarily idle money available for investment. The Treasurer is charged with making the actual investment transactions for this investment program. The law restricts the Treasurer to investments in the following categories: U.S. Government securities, securities of federally -sponsored agencies, domestic corporate bonds, interest -bearing time deposits in California banks and savings and loan associations, prime -rated commercial paper, repurchase and reverse repurchase agreements, security loans, banker's acceptances, negotiable certificates of deposit and loans to various bond funds. Pooled Money Investment Board Members Chairman MATT FONG State Treasurer Member KATHLEEN CONNELL State Controller Member CRAIG L. BROWN Director of Finance Table of Contents Page The Year in Review ............................... 1 ................................................................................ Investment Activity (FY 1989 through 1998)....................................................................... 1 1997/98 Investment Market Conditions................................................................................ 2 Monthly Yields on Money Market Securities....................................................................... 2 Pooled Money Investment Account Comparison of Earnings and Average Daily Portfolio FY 1989 through 1998....................................... 3 POOLED MONEY INVESTMENT ACCOUNT (PMIA).............................................. 4 The Year in Review......................................................................... 4 ...................................... DemandAccount Program..................................................................................................... 5 Rate Schedule for Banking Services..................................................................................... 6 Average Daily Balance in Demand Bank Accounts............................................................. 7 InvestmentProgram.............................................................................................................. 8 Earningsfor 1997/98............................................................................................................. 8 Schedule of Security Purchases - by Term............................................................................ 9 Analysis of the PMIA Portfolio............................................................................................ 9 Dollar Amount of Interest -Bearing Time Accounts.............................................................. 10 PMIA Summary of Investment and Earnings....................................................................... 11 Financial Community Coverage............................................................................................13 SURPLUS MONEY INVESTMENT FUND(SMIF)....................................................... 14 Earningsfor 1997/98............................................................................................................. 14 TheYear in Review............................................................................................................... 15 Participation..........................................................................................................................15 Resourcesof the SMIF.......................................................................................................... 16 LOCAL AGENCY INVESTMENT FUND (LAIF).........................................................17 Earningsfor 1997/98.............................................................................................................17 Participation.......................................................................................................................... 17 TheYear in Review............................................................................................................... 17 Resourcesof the LAIF.......................................................................................................... 18 Appendix A - PMIA Summary of Investments and Earnings, 1957 through 1998 .............19 Note To PMIA Summary of Investments and Earnings ............................... 20 Appendix B - Historical PMIA Yields........................................................................21-28 1 The Year In Review 0 . Average Daily Portfolio .............................. $29,344,5129316 Earnings.................................................::.... $196729382,102 Effective Yield ............................................ 5.70% INVESTMENT ACTIVITY FOR THE FISCAL YEARS ENDING JUNE 30 ($ In Billions) Amount $135.6 $149.5 $172.1 $169.8 $278.5 $210.1 $277.4 $237.4 $209.3 $301.6 Transactions 4.557 5.478 5,342 4,130 6,898 5,169 6,351 5,721 5,120 7,108 Investment Activities Fiscal Years Ending June 30 (S In Billions) $350.0 $300.0 $250.0 $200.0 $15" $100.0 1989 19" 1991 1992 1993 1994 1995 19% 1997 1998 Source: State Treasurer's Office, Division of Investment 2 1997/98 Investment Market Conditions To indicate prevailing market conditions during the 1997/98 fiscal year, the following table shows monthly money market rates, as computed from daily closing bid prices. The information was obtained from Federal Reserve Bulletins published by the Board of Governors, Federal Reserve System. Monthly Yield On Money Market Securities (Yield in Percent Per Annwn) , 1997..................... 5.52 5.07 5.50 5.53 5.12 5.26 6.00 ust.......................... 5.54 5.13 5.49 5.53 5.17 5.28 6.06 tember..................... 5.54 4.97 5.51 5.54 5.11 5.30 5.98 )ber......................... 5.50 4.95 5.55 5.57 5.09 5.20 5.84 ember ..................... 5.52 5.15 5.64 5.66 5.17 5.14 5.76 ember ..................... 5.50 5.16 5.70 5.75 5.24 5.18 5.74 Marv, 1998............... 5.56 5.09 5.44 5.48 5.07 5.07 5.38 mary....................... 5.51 5.11 5.45 5.46 5.07. 4.97 5.43 ch........................... 5.49 5.03 5.49 5.50 5.04 5.13 5.57 il............................. 5.45 5.00 5.48 5.48 5.08 5.12 5.58 +............................. 5.49 5.03 5.50 5.48 5.15 5.15 5.61 0.17 0.00 0.11 0.12 -0.07 -0.24 -0.52 Note: All securities above except Federal Funds and 3 year Treasury Issues are quoted on a discount basis Source: Board of Governors, Federal Reserve statistical release Subsequent sections of this report deal individually with the demand account and investment programs for which the Board has oversight responsibilities, and which the Treasurer directly administers. 3 POOLED MONEY INVESTMENT ACCOUNT COMPARISON OF EARNINGS AND AVERAGE DAILY PORTFOLIO FISCAL YEARS ENDING JUNE 30, 1989 through 1998 Source: State Treasurer's Office, Division of Investment 4 Pooled Money Investment Account Source: State Treasurer's Office, Division of Investment Resources of the Pooled Money Investment Account averaged $29,681,288,000 per day during the fiscal year although the daily figures fluctuated widely with receipts and disbursements. High point for the year occurred June 25, 1998, when the total reached $37,382,794,000. Resources for the account were lowest on December 11, 1997, when balances totaled $26,475,687,000. A breakdown of an average day's resources during the fiscal year shows the. following: $336.8 million in non -interest -bearing bank accounts; $28,268.2 million -in securities and General Fund Loans; and $1,076.3 million in interest -bearing time deposits. On the closing day of the fiscal year, the following resources were on hand in the Pooled Money Investment Account: Demand bank account $ 669,808,012 Time bank account 1,544,890,000 Securities 30,271,777,331 Total Resources $329,4869475,343 5 Demand Account Program Investments of the PMIA are made from monies flowing through the Treasurer's demand (non -interest -bearing) bank accounts maintained in the five banks that serve as State depositories. Currently, the five depository banks are: Bank of America, Sanwa Bank, U.S. Bank, Union Bank of California, and Westamerica Bank. A small portion of these funds must remain in the accounts as compensating balances which consist of (1) a balance for uncollected funds and (2) a balance for banking services. Uncollected funds represent the total dollar amount of checks deposited by the State for which the banks give immediate credit, but for which they do not receive good funds until these checks are presented to the banks on which they are drawn. The Pooled Money Investment Board allows the banks an average balance for uncollected funds equivalent to 1.3 calendar days on all checks deposited other than cashier's checks and checks under the presort of deposit system. Under the presort of deposit system, the major revenue collecting agencies sort their checks by the five State depository banks and then deposit them directly in the banks on which they are drawn, thus avoiding the need for providing bank balances for uncollected funds. The remaining checks are deposited under a contract whereby the depository bank receives bank balances equivalent to 1.285 calendar days for the amount of such deposits. The balances allowed for banking services represent compensation for handling 387 thousand deposits, 58.0 million checks deposited, 404 thousand dishonored checks, $669.9 million in currency deposited, $4.8 million in coin deposited, 115.5 million warrants and 62 thousand checks paid. All amounts in excess of these compensating balances are promptly invested by the Treasurer. Intensive and expert analysis of receipts and disbursement data is used daily to estimate the State's rapidly shifting cash position in order to determine exactly how much money is available for investment. This results in maximum earnings consistent with prudent management. Compensating balances are determined by a formula which accounts for the estimated volume of each service item as well as its unit cost. The rate schedule for the compensating balance formula is determined through annual negotiations with the State's depository 'banks and the cost for any particular service may be raised or lowered as conditions warrant. Adjustments for the difference between actual and estimated work- 6 load for any fiscal year are made in the following fiscal year. The PMIB made no changes in the rate schedule for banking services for the 1997/98 fiscal year. In addition to the rates shown below, the Board agreed to include the costs of account reconciliation and electronic funds transfer services within the compensating balance formula starting in the 1991/92 fiscal year. The costs for these two services are paid (with balances) on a lagged, actual basis when billed by each bank. The Board approved the following rate schedule for the 1997/98 fiscal year: RATE SCHEDULE FOR BANKING SERVICES 1997/98 Fiscal Year I T E M Encoded Checks Deposited R A T E S (Dollars) "On Us" .......................................................... 0.040 "Other"........................................................... 0.053 Non -Encoded Checks Deposited ......................... 0.090 Warrants Paid ...................................................... 0.010 Checks Paid ......................................................... 0.120 Dishonored Checks .............................................. 2.75 Deposits............................................................... 1.20 Split Bags Deposits..............................................0.550 Coin Deposited .................................................... 11.00 per Thousand Currencv Deposited.............................................1.05 per Thousand Account Maintenance..........................................15.00 per Month ily Statements .................................................. 6.00 Source: State Treasurer's Office, Division of Cash Management Statement 7 AVERAGE DAILY BALANCE IN DEMAND BANK ACCOUNTS 1997/98 ($ In Thousands) Month Bank Balance Required for Banking Services Bank Balance Required for Uncollected Funds Less Net Delayed Deposit Credit Bank Balance Prescribed by PMIB Actual Average Daily Bank Balance Jul-97 $159,175 $129,607 $6,724 $282,058 $302,585 Aug-97 170,160 156,058 6,325 319,893 309,666 Sep-97 117,447 177,189 7,918 286,718 294,474 Oct-97 171,352 125,129 8,978 287,503 275,793 Nov-97 145,818 158,111 6,525 297,404 320,502 Dec-97 156,665 167,843 13,676 310,832 344,563 Jan-98 196,070 212,723 9,786 399,007 389,297 Feb-98 230,513 170,652 10,394 390,771 285,089 Mar-98 187,138 144,295 9,805 321,628 336,235 Apr-98 147,112 270,536 14,275 403,373 513,775 May-98 163,885 246,861 12,479 398,267 348,619 Jun-98 168,322 187,370 9,799 345,893 318,874 Weighted Average $167,543 $178,719 $99719 313301134J ;PJJo,/UY Average Balance In Demand Bank Accounts 1997/98 ($ In Thousands) 1 $550,000 I $450,000 1 $350,000 1 $250,000 $150,000 9 2• � 4 "Prescribed by PMIB'Average Daily Source: State Treasurer's Office, Division of Cash Management 8 Investment Program Although the Pooled Money Investment Board designates how much shall be invested in interest -bearing time accounts in California banks and savings and loan associations, and.in securities, it is the responsibility of the State Treasurer to administer the investment program on a day-to-day basis in line with overall Board policy. This entails a daily determination of amounts available for investment, or the need for liquidating securities to meet estimated warrant redemption requirements, while maintaining the approved compensating balance position. This means that the State Treasurer must continually adjust the estimates for receipts and disbursements to reflect current available information. For the 1997/98 fiscal year, investments in time deposits ranged from $560,295,000 to $1,544,890,000 and averaged $1,076,267,78 L' There were 527 transactions totaling $6,783,955,000 during the year. Banks and savings and loan associations receiving these State deposits must secure them with approved securities having a market value of at least 110 percent of the deposits or with approved promissory notes secured by mortgages or deeds of trust having a market value of at least 150 percent of the deposits. The same collateral requirements also apply to the State's demand accounts. At the end of fiscal year 1997/98, the interest -bearing time deposits were held by 36 banks and 2 savings and loan associations throughout California. For the fiscal year, PMIA holdings in time deposits had an average yield of 5.34 percent. The amount of money designated by the Board for investment in securities varies dramatically throughout the year. Such designations are made at least monthly, and again, the State Treasurer handles the actual investments, determining the issue and maturity of authorized securities to be bought or sold in accordance with cash needs and both current and projected market conditions. During fiscal year 1997/98, there were 3307 security purchase transactions and 3,274 security sales or redemption transactions, with a total investment activity of $294.8 billion. Earnings for 1997/98 Total earnings for the Pooled Money Investment Account in fiscal year 1997/98 were $1,672,382,102. These earnings were credited as follows: General Fund $280,342,493 Fish and Game Preservation Fund $ 380,245 Surplus Money Investment Fund $758,127,625 Local Agency Investment Fund $629,303,620 Public Employees Retirement Fund $ 2,125,883 State Teachers Retirement Fund $ 2,102,236 Earnings consisted of $1,601,602,802 from security investments at an average 5.70 percent yield, $57,451,730 from time deposits at an average 5.34 percent yield, and $13,327,570 from General Fund loans at an average 5.69 percent yield. The overall return on investment was 5.70 percent The portfolio holdings of the Pooled Money Investment Account for the 1997/98 fiscal year are illustrated in the following table. ,> a other a e� 'e, a•k3 E>.§ -,-'" z # f a• >r ,ix r »i V', a ,x«- 'k* Ca' 'a > � B.. ��'��.< .. .r,.sr �*z �� .- '.a° 9, :=;<� a �'�`��{ ��S _.a �'�,. , ,,�� vs'. r ae �',•� s ��«s 'M, 3 �� z " ,' ��' ;� ,.Z., .3w .s«».ha.0 a:.,�.sv,.�..w� a...> .+ss» ^°�- .�i*aa�z�`..":^ � ..✓swa+w�.nu...„�>s a .aw..Tw.;>w.�� °x'�x�w-. ws,.:.... MCI- ✓„2` n4'u�``�Ct..x x'$ fi� f a' k j sg g �` sue- C i -€: .c�•>ts;. xa cac1 1> w�'s`1 r "F,� : ,k• �, V 'Sv wze r>.a,:r �3, y "s=*�' a 6 4 s r ,£','& ®'sr e ,,ter•.. x Nam! .a \ will f at r t: iam aY,sm x ,_ as�c`@' rP w A w *•M �. s>�yvy a q r �"`'r.� �, - r "a'�3:z� t.,<;, n- �''�.p •' �^E-'a'a�` �,..n��'. �. xo ;�',b) a",. 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Average Daily Total Investments ($ In Millions) cell" cp$ee oe 011 of, 4ej 13 Financial Community Coverage The following firms conducted investment trAnsactions with the State Treasurer's Office during the 1997-96 Fiscal Year. American Express Artemis Capital Group Associates Corp. of North America Aubrey Lanston BA Securities Bank of Canton Bank of Commerce Bank of Montreal Bank of Nova Scotia Bank of Petaluma Bank of the West Bank of Tokyo -Mitsubishi Barclays de Zoete Webb Securities Bay Bank Commerce Bear, Stearns & Company Inc. Borel Bank and Trust BT Securities Canadian Imperial Bank of Commerce Cantor -Fitzgerald Securities Corp Chapman Company China Trust Bank Citizens Business Bank City National Bank Coast Commercial Bank Community Bank ConAgra, Inc. Continental Pacific Bank Credit Agricole CS First Boston Corp. Dean Witter Reynolds Inc. Delta NB Deutsche Bank Securities Corp. East West Bank Euro Brokers Maxcor Inc. Everen Securities, Inc. FB San Luis Obispo First Chicago Capital Markets First Southwest Company Ford Motor Credit Company Fuji Securities, Inc. Gardner Rich & Company Garvin Guy Butler Corp. General Bank General Electric Capital Corp. General Motors Acceptance Corp. Glendale Federal Bank Golden Gate Securities Goldman Sachs & Company Grand National Bank Heller Financial Company Household Finance Corp. HSBC Securities Inc. Imperial Bank J. P. Morgan Securities, Inc. Kings River State Bank Lehman Brothers Mellon Bank Merrill Lynch Capital Markets Mesirow Financial, Inc. Morgan Stanley & Company, Inc. NationsBank Nesbitt Burns Securities Inc Nikko Securities Company North State NB North Valley Bank Oak Valley Community Bank Oceanic Bank Paine Webber Paribas Corporation Pomona First Federal Bank & Trust Preferred Bank Prudential Securities Redwood Securities Group Inc River City NB Robert Van Securities Royal Bank of Canada Salomon Inc. San Diego Federal Bank Santa Barbara Bank Sanwa Bank of California Sanwa BGK Securities Sears Roebuck Acceptance Corp. Smith Barney Shearson Inc. South Bay Bank Southern California Bank Spear, Leeds and Kellogg Sunwest Bank Transpacific Bank Tri Counties Bank Union Bank, of California Westamerica Bank Westdeutsche Landesbank Western Sierra Bank Zions Bancorporation 14 Surplus Money Investment Fund The Surplus Money Investment Fund consists of the available cash of all special funds which do not have investment authority of their own; and all or a portion of the available cash of special funds having investment authority of their own, but which have elected to be included in the program. Cash balances in excess of needs in any of these participating funds are invested by the State Treasurer. The Pooled Money Investment Board is responsible for determining whether any. cash balances of the participating funds are in excess of current needs and available for investment, or whether it is necessary to liquidate previous investments to meet current requirements. This determination is operationally performed by the State Controller's Office by means of a continuing review of the cash balances of the participating funds. As a result of these determinations, the State Controller prepares a document for the Pooled Money Investment Board's approval which authorizes the State Controller to increase or decrease the contribution balances of the applicable funds. All of the resources of the Surplus Money Investment Fund are invested through the Pooled Money Investment Account. Prior to the 1967/68 fiscal year, the Surplus Money Investment Fund was a separate investment program. In 1967, legislation was enacted (Chapter 505, Statutes 1967) which provided that money in the Surplus Money Investment Fund shall be invested through the Pooled Money Investment Account. This legislation further provided that the Surplus Money Investment Fund would share in the interest earnings of the Pooled Money Investment Account based on the ratio that the dollar -day contributions of the Surplus Money Investment Fund bear to the dollar -day investments of the Pooled Money Investment Account. This legislation increased the potential investment earnings for both programs, since their high and low resource periods tend to complement each other. Consequently, under normal market conditions, more long-term, higher yielding securities may be purchased. Earnings ,for 1997/98 Gross earnings totaled $758,127,625 for the 1997/98 fiscal year. This represents an earning rate 5.70 percent for this investment program. SMIF earnings are computed on a dollar -day basis to guarantee equitable distribution among all member funds. An apportionment of the earnings is made by the Controller twice yearly as of December 31 and June 30. 15 Source: State Treasurer's Office, Division of Cash Management Participation One thousand one hundred eighty-one special funds and accounts were participating in the Surplus Money Investment Fund as of the last day of the fiscal year, June 30, 1998. Their combined deposits totaled $14,152,271,000. Large contributors as of June 30, 1998 were the: State Highway Account, $1,431,708,000; Unemployment Compensation Disability Fund, $1,081,990,000; Public Buildings Construction Fund, $547,610,000; Public Employee's Retirement Fund; $374,333,000; Compensation Insurance Fund, $373,947,000; Vets Farm/Home Building Act 1943, $318,768,000; Teachers Retirement System, $258,402,000. Monthly deposit balances are shown in the following table: 16 Resources of The Surplus Money Investment Fund 1997/98 Fiscal Year (Month -End Balances) $15,000,000 $10,000,000 Source: State Controllers Office, Report of Cash Assets of All Funds in The State Treasury 17 LocalAgency Investment Fund The Local Agency Investment Fund was established by Chapter 730, Statutes of 1976. This fund enables local governmental agencies or trustees to remit money not required for immediate needs to the State Treasurer for the purpose of investment. In order to derive the maximum rate of return possible, the State Treasurer has elected to invest these monies with State monies as a part of the Pooled Money Investment Account. Each participating agency determines the length of time its money will be on deposit with the State Treasurer with the exception of bond proceeds, which must remain for a minimum of 30 days. At the end of each calendar quarter, all earnings derived from investments are distributed by the State Controller to the participating government agencies in proportion to each agency's respective amounts deposited in the Fund and the length of time such amounts remained therein. Prior to the distribution, the State's reasonable costs of administering this program are deducted from the earnings. Earnings for 1997/98 Gross earnings for fiscal year 1997/98 totaled $629,303,620. This represented a 5.70 percent yield for this investment program. Participation As of June 30, 1998, there were 2,582 participants in the Local Agency Investment Fund consisting of 53 counties, 461 cities, 1,790 special districts, 149 trustees and 129 bond accounts. Deposits in the fund averaged $11.042 billion for the year. Source: State Treasurer's Office, Division of Investments (LAIF) The following table shows monthly resources of the Local Agency Investment Fund during the 1997/98 fiscal year. 18 $12,500,000 $11,000,000 $9,500,000 Resources of The Local Agency Investment Fund 1997/98 Fiscal Year (Month -End Balances) Source: State Treasurer's Office, Division of Investments (LAIF) 19 Appendix A POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENTS AND EARNINGS FISCAL YEARS ENDING JUNE 30, 1958 through 1998 ($ In Thousands) 1957-58 $ 594,306 $ 16,421 2.76 1958-59 544,868 15,762 2.89 1959-60 614,835 21,045 3.42 1960-61 736,204 28,139 3.82 3.23 1961-62 867,144 26,521 3.06 3.19 1962-63 910,863 30,548 3.35 3.31 1963-64 896,535 32,519 3.63 3.46 1964-65 966,592 38,004 3.93 3.56 1965-66 1,083,347 47,761 4.41 3.68 3.48 1966-67 1,057,800 52,540 4.97 4.06 3.62 1967-68 1,117,717 56,566 5.06 4.40 3.85 1968-69 1,301,302 78,174 6.01 4.88 4.17 1969-70 1,216,414 84,781 6.97 5.48 4.52 1970-71 1,264,894 77,527 6.13 5.83 4.75 4.32 1971-72 1,397,464 68,350 4.89 5.81 4.93 4.35 1972-73 2,254,401 125,116 5.55 5.91 5.15 4.54 1973-74 2,594,629 232,780 8.97 6.50 5.69 4.94 1974-75 2,749,431 238,298 8.67 6.84 6.16 5.29 1975-76 3,209,143 204,303 6.37 6.89 6.36 5.46 1976-77 4,460,487 261,657 5.87 7.08 6.45 5.65 1977-78 6,843,940 458,625 6.70 7.31 6.61 5.87 1978-79 8,123,266 692,417 8.52 7.22 6.86 6.20 1979-80 8,285,941 873,469 10.54 7.60 7.22 6.64 1980-81 7,298,693 786,877 10.78 8.48 7.69 7.07 1981-82 5,234,524 631,968 12.07 9.72 8.40 7.54 1982-83 5,254,589 549,229 10.45 10.47 8.89 7.90 1983-84 7,094,849 738,462 10.41 10.85 9.04 8.19 1984-85 11,903,660 1,275,503 10.72 10.89 9.24 8.44 1985-86 15,438,406 1,401,990 9.08 10.55 9.51 8.64 1986-87 19,167,196 1,425,047 7.43 9.62 9.67 8.81 1987-88 17,628,558 1,388,074 7.87 9.10 9.79 8.96 1988-89 17,496,405 1,516,767 8.67 8.75 9.80 8.94 1989-90 19,558,775 1,692,905 8.66 8.34 9.61 8.94 1990-91 20,754,895 1,663,140 8.01 8.13 9.34 9.05 1991-92 21,456,433 1,329,476 6.20 7.88 8.75 9.07 1992-93 23,051,543 1,085,126 4.71 7.25 8.18 8.94 1993-94 25,433,078 1,115,660 4.39 6.39 7.57 8.67 1994-95 26,802,123 1,482,574 5.53 5.77 7.05 8.33 1995-96 26,623,196 1,519,020 5.71 5.31 6.72 7.99 1996-97 28,264,069 1,582,443 5.60 5.19 6.53 7.56 1997-98 29.344,512 1,672,382 5.70 5.38 6.32 7.25 Source: The average investment portfolio, earnings and annual earnings rate were taken from the published Annual Report of the Pooled Monev Investment Board for each fiscal vear. Please see the followinx note. 20 NOTE TO PMIA SUMMARY OF INVESTMENTS AND EARNINGS TABLE The Pooled Money Investment Board was established as an agency of State government by Chapter 1703, Statutes of 1955, and became operational in April 1956. The 1956-57 fiscal year was the first full year for the Pooled Money Investment Account (PMIA). In 1957-58, the Surplus Money Investment Fund (SMIF) and the Condemnation Deposits Fund (CDF) were placed under the administration of the PMIB. Separate investment portfolios were managed for these two funds for a number of years. SMIF operated this way until the 1967-68 fiscal year, when legislation allowed this fund to be invested as a part of the PMIA. The CDF continued as a separate investment portfolio until 1975, when it also was combined with the PMIA. In order to make data for the early years in the table comparable to the later years (1975-76 and after), the average daily investment and the annual earnings for both SMIF and CDF were combined with those for the PMIA. The earning rates for these early years were computed using these combined figures. 21 HISTORICAL PNUA YIELDS (Yield In Percent Per Annum) Jan-77 5.77 Feb-77 5.66 Mar-77 5.66 5.68 Apr-77 5.65 May-77 5.76 Jun-77 5.85 5.87 5.78 5.79 Jul-77 5.93 Aug-77 6.05 Sep-77 6.09 5.84 Oct-77 6.39 Nov-77 6.61 Dec-77 6.73 6.45 6.18 Jan-78 6.92 Feb-78 7.05 Mar-78 7.14 6.97 Apr-78 7.27 May-78 7.39 Jun-78 7.57 6.70 7.35 7.17 Jul-78 7.65 Aug-78 7.82 Sep-78 7.87 7.86 Oct-78 8.11 Nov-78 8.29 Dec-78 8.77 8.32 8.09 Jan-79 8.78 Feb-79 8.90 Mar-79 8.82 8.81 Apr-79 9.08 May-79 9.05 Jun-79 9.22 8.52 9.10 8.98 Jul-79 9.20 Aug-79 9.53 Sep-79 9.26 9.26 Oct-79 9.81 Nov-79 10.22 Dec-79 10.22 10.06 9.66 - 22 HISTORICAL PARA YIELDS (Continued) (Yield In Percent Per Annum) Jan-80 10.98 Feb-80 11.25 Mar-80 11.49 11.11 Apr-80 11.48 May-80 12.02 Jun-80 11.80 10.54 11.54 11.38 Jul-80 10.21 Aug-80 9.87 Sep-80 9.95 10.01 Oct-80 10.06 Nov-80 10.43 Dec-80 10.96 10.47 10.21 Jan-81 10.99 Feb-81 11.69 Mar-81 11.13 11.23 Apr-81 11.48 May-81 12.18 Jun-81 11.44 10.78 11.68 11.69 Jul-81 12.35 Aug-81 12.84 Sep-81 12.06 12.40 Oct-81 12.40 Nov-81 11.89 Dec-81 11.48 11.91 12.19 Jan-82 11.68 Feb-82 12.04 Mar-82 11.84 11.82 Apr-82 11.77 May-82 12.27 Jun-82 11.99 12.07 11.99 11.93 Jul-82 12.24 Aug-82 11.91 Sep-82 11.15 11.74 Oct-82 11.11 Nov-82 10.70 Dec-82 10.40 10.71 11.26 23 HISTORICAL PXHA YIELDS (Continued) (Yield In Percent Per Annum) Jan-83 10.25 Feb-83 9.89 Mar-83 9.69 9.87 Apr-83 9.87 XUy-83 9.53 Jun-83 9.60 10.45 9.64 9.98 Jul-83 9.88 Aug-83 10.08 Sep-83 10.20 10.04 Oct-83 10.18 Nov-83 10.16 Dec-83 10.23 10.18 10.15 Jan-84 10.31 Feb-84 10.28 Mar-84 10.38 10.32 Apr-84 10.59 May-84 10.84 Jun-84 11.12 10.41 10.88 10.63 Jul-84 11.36 Aug-84 11.56 Sep-84 11.60 11.53 Oct-84 11.68 Nov-84 11.47 Dec-84 11.02 11.41 11.44 Jan-85 10.58 Feb-85 10.29 Mar-85 10.12 10.32 Apr-85 10.03 May-85 10.18 Jun-85 9.74 10.72 9.98 10.19 Jul-85 9.66 Aug-85 9.42 Sep-85 9.57 9.54 Oct-85 9.48 Nov-85 9.49 Dec-85 9.37 9.43 9.50 STORICAL PNUA YIELDS (Continued) (Yield In Percent Per Annum) Jan-86 9.25 TEN Feb-86 9.09 Mar-86 8.96 9.09 Apr-86 8.62 May-86 8.37 Jun-86 8.23 9.08 8.39 8.70 Jul-86 8.14 Aug-86 7.84 Sep-86 7.51 7.81 Oct-86 7.59 Nov-86 7.43 Dec-86 7.44 7.48 7.65 Jan-87 7.37 Feb-87 7.16 Mar-87 7.21 7.24 Apr-87 7.04 May-87 7.29 Jun-87 7.29 7.44 7.21 7.23 Jul-87 7.46 Aug-87 7.56 Sep-87 7.71 7.54 Oct-87 7.83 Nov-87 8.12 Dec-87 8.07 7.97 7.80 Jan-88 8.08 Feb-88 8.05 Mar-88 7.95 8.01 Apr-88 7.94 May-88 7.82 Jun-88 7.93 7.87 7.87 7.95 Jul-88 8.09 Aug-88 8.25 Sep-88 8.34 8.20 Oct-88 8.40 Nov-88 8.47 Dec-88 8.56 8.45 8.34 25 HISTORICAL PMJA YIELDS (Continued) (Yield In Percent Per Annum) 26 HISTORICAL PMIA YIELDS (Continued) (Yield In Percent Per Annum) 27 HISTORICAL PMIA YIELDS (Continued) (Yield In Percent Per Annum) Jan-95 5.61 Feb-95 5.78 Mar-95 5.93 5.76 Apr-95 5.96 May-95 6.01 Jun-95 6.00 5.53 5.98 5.87 Jul-95 5.97 Aug-95 5.91 Sep-95 5.83 5.89 Oct-0 5.78 Nov-95 5.81 Dec-95 5.75 5.76 5.83 Jan-96 5.70 Feb-96 5.64 Mar-96 5.56 5.62 Apr-96 5.54 May-96 5.50 Jun-96 5.55 5.71 5.52 5.56 Jul-96 5.59 Aug-96 5.57 Sep-96 5.60 5.57 Oct-96 5.60 Nov-96 5.60 Dec-96 5.57 5.58 5.57 Jan-97 5.58 Feb-97 5.58 Mar-97 5.58 5.56 Apr-97 5.61 May-97 5.63 Jun-97 5.67 5.59 5.63 5.59 Jul-97 5.68 Aug-97 5.69 Sep-97 5.71 5.68 Oct-97 5.71 Nov-97 5.72 Dec-97 5.74 5.71 5.69 28 HISTORICAL PMIA YIELDS (Continued) (Yield In Percent Per Annum) The State Treasurer's Office complies with the Americans With Disabilities Act (ADA). If you need additional information or assistance, please contact the State Treasurer's Pooled Money Investment Board at (916) 653-2917.