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1999 06 09 IABT a 0 4hf 4 411114� 78-495 CALLE TAMPICO — LA QUINTA, CALIFORNIA 92253 — (760) 777-7000 FAX (760) 777-7101 AGENDA TDD (760) 777-1227 INVESTMENT ADVISORY BOARD Study Session Room 78-495 Calle Tampico- La Quinta, CA 92253 June 9, 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 May 12, 1999 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for April, 1999 B. Continued Consideration of Fiscal Year 1999/00 Investment Policy C. FY 1999/2000 Investment Advisory Board Workplan VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - May, 1999 B. Pooled Money Investment Board Reports - March, 1999 C. LAIF Answer Book Update D. Memorandum from Board Member Moulin regarding Comparison of the City Investment Policy to Three other Cities V11 BOARD MEMBER ITEMS Vill ADJOURNMENT MAILING ADDRESS — P.O. BOX 1504 — LA QUINTA, CALIFORNIA 92253 INVESTMENT ADVISORY BOARD Business Session: A Meeting Date: June 9, 1999 ITEM TITLE: Transmittal of Treasury Report for April 30, 1999 BACKGROUND: Attached please find the Treasury Report for April 30, 1999. RECOMMENDATION: Review, Receive and File the Treasury Report for April 30, 1999. J hn M. Falconer, Finance Director T a jhf 4 4a�rw MEMORANDUM TO: La Quinta City Council FROM: John Falconer, Finance Director/Treasurer SUBJECT: Treasurer's Report for April 30, 1999 DATE: June 3, 1999 Attached is the Treasurer's Report for the month ending April 30, 1999. 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 $444,026. due to the net effect of expenditures in excess revenues. State Pool: Increase of $83,360. due to the net effect of transfers to and from the cash and investment accounts. U.S. Treasury Bills, Notes, Government Agency Securities and Commercial Paper: Decrease of $2,938,187. due to the sale two Securities, one T-Note, the purchase of one Security and monthly adjustment in the amortized value of the investments. Mutual Funds: Increase of $2,949,412. due to the sale of one T-Note and interest earned. Total decrease in cash balances $349,441. 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 Re ort to determine the fair market value of investments at month end. ohn M. Falconer 'inance DirectorfT easurer ate E E E m O 7 tq N C 0 E W 0 c m o aEi w '9 O Q w 0) C d! N p� > O CD S a a) M c a �E m N M y8 a� 01 U� m � c p c Z c z C Z c Z C Z c Z c Z c z LL c o 3. c EN n p w 0 c c 8 a cc owl U U Q 0 0) W U LL U. C � N > I C N W N m d l0 O (cc 0.0 O C m 3 E l�0 >+ >+ m .O N 3 N ° N N (j N ° c 8 N a' m LL_ r=_ N O C C L IVI IVIZ I I N _7 c 3E aQ . apQ N O LO 3E � M 8 � v LQ z 7 of 8 � N $ C O (n O to C t0 N LO N O 9M N C9 O z g QLl E N � N D 00 8 g c°� M M g $ 00 Ole ON D z O S (CO, N Q Q 09 O 0000 O O pp (O N r- O M N C O z O w E 7 � pp (O a� m U) v `0 m v► Z CO — 00 o m� a�i o '$ N p C E��z m U J d m W N yt U) o y�r > O m= Z N v y U` m O T . 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(D m U c U U O c •a U LL 0) � 0) y Q L O cu c F-..x>0 C O_ =3060a`Z m C m c c U cm c �_ c c (> 4 mUnw m rn IM t .E- N~ CL c c U E�c�ad xcaa�icaaa�io m r c m in CL (n0M wCDIx000 IZI 0 Lul IZ oo M O 00 (V O M r T 00 N O (M M O N O T r O CO 00 M T 0000 r � NLOI (0 0 M '00 C0 LO CO f r M O 00 0 0 r O M MLOfMO r r to N L 0 00 N r M C CC) co O L ~ 00 r L CO V r 00 M It M O st I LO CO O 00 ti 0 M L"OOO M 0 M cM r,: O CIL Q' d H O E > d m =_ E c Im O '= o i c N L c �a c Q d m C Y u- 0) !C = L cu L O cu V U a�ia� O cc U c ca0 U O C a (L 0 0) ca N cm c 0) �cu 0) m M L O s U � 0) CO U) U c c LL o ai m z agmo w CITY OF LA QUINTA CITY CITY RDA RDA FA BALANCE SHEET 04/30/99 FIXED LONG TERM FIXED LONG TERM FINANCING LONG TERM GRAND CITY ASSETS DEBT RDA ASSETS DEBT AUTHORITY DEBT TOTAL ASSETS: POOLED CASH 6,585,137.17 6,497,068.58 (8,486.43) 13,073,719.32 LQRP INVESTMENT IN POOLED CASH 680,000.00 680,000.00 INVESTMENT T-BILUNOTES & OTHER 22,000,000.00 22,000,000.00 LQRP CASH 64,231.25 64,231.25 BOND REDEMPTION CASH 166,854.30 1.86 166,856.16 BOND RESERVE CASH BOND PROJECT CASH 15,161,643.73 581,776.54 15,743,420.27 BOND ESCROW CASH PETTY CASH 1,000.00 1,000.00 CASH & INVESTMENT TOTAL 28,586,137.17 22,569,797.86 573,291.97 51,729,227.00 INVESTMENT IN LAND HELD FOR RESALE ACCOUNTS RECEIVABLE 54,991.38 79,157.68 8,260,000.00 8,394,149.06 PREMIUM/DISCOUNT ON INVESTMENT 52,764.12 (62,685.46) (1,036.00) (10,957.34) LQRP-ACCOUNTS RECEIVABLE 39,436.48 39,436.48 INTEREST RECEIVABLE 142,955.80 142,955.80 LOAN/NOTES RECEIVABLE 129,362.49 2,528,967.76 2,658,330.25 DUE FROM OTHER AGENCIES DUE FROM OTHER GOVERNMENTS DUE FROM OTHER FUNDS 13,025.34 551,038.04 564,063.38 DUE FROM RDA 6,890,277.20 6,890,277.20 INTEREST ADVANCE -DUE FROM RDA 951,558.60 951,558.60 NSF CHECKS RECEIVABLE 1,755.63 1,755.63 ACCRUED REVENUE 833.40 833.40 TRAVEL ADVANCES 3,534.00 3,534.00 EMPLOYEE ADVANCES PREPAID EXPENSES --- RECEIVABLE TOTAL 8,097,268.76 3,279,703.70 8,258,964.00 19,635,936.46 WORKER COMPENSATION DEPOSIT 37,637.00 37,637.00 UTILITY DEPOSITS 75.00 75.00 MISC. DEPOSITS 2,100.00 2,100.00 DEPOSITS TOTAL 39,812.00 39,812.00 GENERAL FIXED ASSETS 1,098,865.00 15,008,708.00 11,438,745.05 27,546,318.05 ACCUMULATED DEPRECIATION (726,192.83) (726,192.83) AMOUNT AVAILABLE TO RETIRE L/T DEBT 3,395,117.03 3,395,117.03 AMOUNT TO BE PROVIDED FOR UT DEBT 1,944,070.34 96,331,460.63 8,260,000.00 106,535,530.97 TOTAL OTHER ASSETS 372,672.17 15,008,708.00 1,944,070.34 11,438,745.05 99,726,577.66 8,260,000.00 136,750,773.22 TOTAL ASSETS 37 095 890.10 15 008 708.00 1,944,070.34 25 849 501.56 11 438 745.05 99 726 577.66 8,832,255.97 8,260,000.00 208 155 748.68 LIABILITY ACCOUNTS PAYABLE (0.02) 22,139.53 22,139.51 DUE TO OTHER AGENCIES 656,166.35 656,166.35 DUE TO OTHER FUNDS (638.06) 551,038.04 13,159.32 563,559.30 INTEREST ADVANCE -DUE TO CITY ACCRUED EXPENSES 61 56,980.1 PAYROLL LIABILITIES 52,915.61 STRONG MOTION INSTRUMENTS 6,980.18 8,30.00 FRINGE TOED LIZARD FEES 38,300.00 ,. (6 SUSPENSE (6,106.33) ,106.33) DUE TO THE CITY OF LA QUINTA PAYABLES TOTAL 747,617.73 22,139.53 551,038.04 13,159.32 1,333,954.62 ENGINEERING TRUST DEPOSITS 58,224.09 58,224.09 SO. COAST AIR QUALITY DEPOSITS 448,267.01 ARTS IN PUBLIC PLACES DEPOSITS 448,267.01 15,395.99 LQRP DEPOSITS 15,395.99 920,726.58 DEVELOPER DEPOSITS 920,726.58 153,366.55 MISC. DEPOSITS 153,366.55 1,219,041.99 AGENCY FUND DEPOSITS 1,219,041.99 2,815,022.21 TOTAL DEPOSITS 2,799,626.22 15,395.99 DEFERRED REVENUE 11,250.23 8,260,000.00 8,271,250.23 OTHER LIABILITIES TOTAL 11,250.23 8,260,000.00 8,271,250.23 COMPENSATED ABSENCES PAYABLE 313,619.81 313,619.81 DUE TO THE CITY OF LA QUINTA 1,608,311.00 9,641,837.01 11,250,148.01 DUE TO COUNTY OF RIVERSIDE 12,601,591.90 12,601,591.90 DUE TO C.V. UNIFIED SCHOOL DIST. 10,068,148.75 10,068,148.75 DUE TO DESERT SANDS SCHOOL DIST. 67,415,000.00 8,260,000.00 75,675,000.00' BONDS PAYABLE TOTAL LONG TERM DEBT 1,921,930.81 99,726,577.66 8,260,000.00 109,908,508.47 TOTAL LIABILITY 3,558,494.18 1,944,070.34 566,434.03 99,726,577.66 8,273,159.32 8,260,000.00 122,328,735.53 EQUITY -FUND BALANCE TOTAL LIABILITY & EQUITY 33,537,395.92 15,008,708.00 25,283,067.53 11,438,745.05 559,096.65 85,827,013.15 37,095,890.10 15,008,708.00 1,944,070.34 25,849,501.56 11,438,745.05 99,726,577.66 8,832,255.97 8,260,000.00 208 155,748.68 INVESTMENT ADVISORY BOARD Business Session No. B Meeting Date: June 9, 1999 TITLE: Continued Consideration of Fiscal Year 1999/00 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. During the last several months, the Board has met to update the City Investment Policy. Pursuant to the Investment Policy, the Board meets with the City Manager and City Attorney to discuss the Investment Policy before they are forwarded to the City Council for their consideration. RECOMMENDATION: Forward the revised Investment Policy to the City Council for their consideration with an appropriate recommendation. J0ohn M. Falconer, Finance Director CITY OF LA QUINTA Investment Policy Table of Contents V Prudence VI Delegation of Authority VII Conflict of Interest VIII Authorized Financial Dealers and Institutions No. Broker/Dealers No. Financial Institutions IX Authorized Investments and Diversefication LiMRMII-ds X Investment Pools 'atera' ozat*on xi Go' Safekeeping and Custody 11 Interest Earning Distribution Policy Internal Controls #01411`lnennt; Auio XtV Benchmark V' Reporting Standards XVMWI.Investment of Bond Proceeds ,1I Investment Advisory Board - City of La Quinta *X)Wl Investment Policy Adoption 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. wtn tiafey,tqu�ty end re t+ Ot will end:aror t ta�in a��n a �dir+arfed P+ofoli47.1�1t by 'allo+atin7. sets betweenf+re types cif In. restrrensMW ih pol+cy Irnitat�ons. 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 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 Investment Policy 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. authorized investment vehicl 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 Investment Policy 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 Is 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 Investment Policy 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. 3 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. 0 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 the„ r rrtar-Y, i �y 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. III SCOPE This Investment Policy applies to all cash and investments of the City of La Quinta, City of La Quinta Redevelopment Agency and the City of La Quinta Financing Authority, hereafter referred in this document as the "City" . These funds are reported in the City of La Quinta Comprehensive Annual financial Report (CAFR) and include: All funds within the following fund types: No. General ► Special Revenue ► Capital Projects ► Debt Service ► Internal Service ► Trust and Agency ► Any new fund types and fund(s) that may be created. 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 be diversified and consist of securities with active secondary or resale markets. 0 3. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of least importance compared to the safety and liquidity objectives described above. The core of investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity with the following exceptions: ► A declining credit security could be sold early to minimize loss of principal; ► Liquidity needs of the portfolio require that the security be sold. 4 /wthn #han�kin tf $fiquidi I.ntliie tie CI tuill +en+dur 'itd rnanain +drr+esfd Pfa#+ bar e+tn ssee beef+er types + irremntsrlti 21 pc+ frit+ns.' 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 7 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. 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. ► 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. Vill AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The City of La Quinta Investment Policy 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. 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 deostor investment: A. Insurance - Public Funds shall be deposited only in financial institutions having aocount :.:insured by the Federal Deposit .. .. ... ..... ........_ Insurance Corporation {FCI B. Collateral - The amount of City of La Quinta deposits or investments not insured by the M402, of the federal governme, it shall be 1 10% collateralized by securities' or 150% mortgages' market values of that amount of invested funds plus unpaid interest earnings. must be co"aterafted ed by an agency of the federal The City shall not invest in excess of the Falb �naure ant in banking institutions which do not disclose to the city a E current listing of securities pledged for collateralization in public monies. III--��>■■l�J■1f�1�'1��1\'\'It+>■I I1M\'■LIw�w-AKIN1■L%1J1M v7;-."A: \, The City Treasurer will be permitted to invest in the investments +ic ed sumr ,J. in the Appendix ,XDiversifica I. 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. tJ.. arrmnt genc+assaur+ uit+� baled' prncil arid; in er s y f fu .8 ar r ii Ata k.1er t. � r nm r t It�nrta Ac1.atior� �CaA suchner►y. 'he pity► 10 La�tpROMof t�fouuanr#t BankGIB+rl Lrcar () r edl Int�errr eclat relit Bapk {) erguc isuer.R-1.he pity ;cif L Curti nstrxtrt Pal�py eI��t a rdlsuer artnriurhey Bankers' Acceptances - As authorized in Government Code Section 53601 (f), 40% of the pert € Ito, 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. 11 Neaotiable Certificates of Deposit - As authorized in Government Code Section 53601(h), 3 0 % f tea p rtft�lio may be 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 - As authorized in Government Code Section 53601 (j), 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. The City of La Quinta Investment Policy does not allow inueatn p in 'corporate notes. 12 invetin'r� tcuriti arcane rd rrurth' asst under, ,ma p.ga ment 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 1 10% 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 or maturity for this investment vehicle. 1 .. T City rurei" mry at -RN, e.c a depait ghat is federel'ly. insured. fde i The amount notederaii inre+ mall be 0°a ccallatraliizedy securities or 0°a ats. vale' of ttatmourt cif ingested funds nius unpa*d in earninga.' 13 The City of La Quinta Investment Policy limits the percentage of Certificates of Deposit to 60% df thy: portfop. 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 Investment Policy has -en authorized 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 $30 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 dpes riot eou ;does not have an investments with any other Investment Pool - County Pools or Third Party Pools. sr.T.:.T.T. R�11 r: l td r• 11 I�Ct � � NJ � �U'� 11 � �l� ld� � � � � lei! � VJ t�i�i ■ � � nf• l R�•Z�J � �lti �1�2�7 l R�7 � � <•�.<•1-�:Z•Z�l t'j ��1�/1�1�1� 14 X-H SAFEKEEPING AND CUSTODY All security transactions of the City of La Quinta Investment Policy 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, breaker or deal+'. Money market mutual funds and LAIF shall also operate on a DVP basis to be considered for investment. X*1-INTEREST EARNING DISTRIBUTION POLICY Interest earnings is generated from pooled investments and specific investments. 1. Pooled Investments - It is the general policy of the City to pool all available operating cash of the City of La Quinta, La Quinta Redevelopment Agency and La Quinta Financing Authority and allocate interest earnings, in the following order, as follows: A. Payment to the General Fund of an amount equal to the total annual bank service charges as incurred by the general fund for all operating funds as included in the annual operating budget. B. Payment to the General Fund of a management fee equal to 5% of the annual pooled cash fund investment earnings. C. Payment to each fund of an amount based on the average computerized daily cash balance included in the common portfolio for the earning period. 2. Specific Investments - Specific investments purchased by a fund shall incur all earnings and expenses to that particular fund. ,_ viod ..A . __ Id PRPqWmb2trW GO, �-,W, will W-- 15 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. 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 16 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 . sdhb r iew di Ann ua y'ti e r +dep r t nt di tc�r ire oran do 'with th en u l ud Qf tf pity The independent auditor's 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 auditor's letter. This '" -'- - '- - -"--- ----1 i- it-- ^'i--I- I --- A J-------- n-----1 1__ il---- Th, ragrt ettr�mengrtn tQak anvaIt mtt1111t1d t their +ride'tion ol�uir ti c�ti�r eh anrai audit, the it d+ p r d n auditor si 11 �+ et with th Inv sty+ nt f dvi ory r end dross the ausrtin�g .-pracedures parfi:ormd andi the r"eyiav�rl of rnternal + +6nrols for cash and rvetantctirt[» 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 Investment Policy will use the six month U.S. Treasury Bill as a benchmark when measuring the performance of the investment portfolio. VXVH REPORTING STANDARDS SB564 section 3 requires a quarterly report to the Legislative Body of Investment activities. The City of La Quinta Investment Advisdry tsar Policy 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 oh end investments under the s authority of the Treasurer. 17 The Treasurers Report shall consist of a narrative of significant changes cash balances and the followi sumMar'te osh ndrvestrnt cti�ty a�n+ +Iergesr M.1XV111 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. V'�KHE INVESTMENT ADVISORY BOARD -CITY OF LA QUINTA The Investment Advisory Board (IAB) consists of seven members of the community The appendices include City of La Quinta Ordinance 2.70 entitled Investment Advisory Board Provisions. V 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. The Investment Policies will be adopted before the end of June of each year. 19 Appendix A E D E co E a) « O aa)) a 7 N c C a) N C O N a w c o E N O O a) Cr a) C N V) N C O` - a 0-0 N L c m a'= CL a E •3 a`) a 5 E N O m U N y m c U 8 a) L a N C N °� N >• � S E `� 0 N > > O N O ° -0 1!6� C3 c c ao .O m 0 = U elf Q 'O c � ° to LU m U) U LL LL `m n `o `O U �a a) > U N C N N 0) C Co E E 7 N N U) N N m N N >. 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M. .�:". : .: . . 2.70.020 Board meetings and compensation. 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. Ai -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, ( *) monitor compliance with existing Investment Policy and procedures; and (44) review and make recommendations concerning Investment Policy and procedures, investment contracts, and investment consultants. B;# The Board will report to City Council after each meeting either in person or through correspondence at a regular City Council meeting. 21 Appendix C 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) 3.08.050 Reports. 22 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) 23 Appendix D 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 24 Appendix E LISTING OF APPROVED FINANCIAL INSTITUTIONS 1. Banking Services - Wells Fargo Bank,ovrnrr�r�t helices,; _. Ontario, afQri 2. Custodian Services - Bank of New Yorkr . ► i Oil: 5, t. f. ni 3. Deferred Compensation - International City/County Management Association Retirement Corporation 4. Broker/Dealer Services - Merrill Lynch, Indian Wells, CA I'o�gen dale Dean Witter, , Cyrn. 1=arciscs California al+c�rrc�r 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. 25 Appendix F BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION 1. Name of Firm: 2. Address: 3. 9 Telephone: ( ) ( ) Broker's Representative to the City (attach resume): Name: Title: Telephone: ( ) 5. Manager/Partner-in-charge (attach resume): Name: Title: Telephone: 6. List all personnel who will be trading with or quoting securities to City employees (attach resume) Name: Title: 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) : W 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. 11. Has your firm or your local office ever been subject to a regulatory or state/ federal agency investigation for alleged improper, fraudulent, disreputable or unfair activities related to the sale of securities? Have any of your employees been so investigated? If so, explain. 12. Has a client ever claimed in writing that you were responsible for an investment loss? Yes No If yes, please provide action taken Has a client ever claimed in writing that your firm was responsible for an investment loss? Yes No If yes, please provide action taken Do you have any current, or pending complaints that are unreported to the 27 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. Is your firm a member in the S.I.P.C. insurance program. Yes No If yes, explain primary and excess coverage and carriers. 17. What portfolio information, if any, do you require from your clients? 18. What reports and transaction confirmations or any other research publications will the City receive? 19. Does your firm offer investment training to your clients? Yes No 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 29 Appendix G 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? 30 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)? OPERA TIONS 31 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. 1. Are statements for each account sent to participants? a. What are the fees? 32 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? 33 Appendix H 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 afldar ASKED: The price at which securities are offered. BANKERS' ACCEPTANCE (BA): A draft car. orrpsrry�"le ac+eptig insitat' 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): A time deposit mitt s C.. o matur y eMI o+�+d a c rtif� to L rg+e-denarnir at1_ C 's r typ�+)re+ot)a)a,bank or "d Ltv, V • .:10 L• • .. • • I III a• 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 DISOUI"I SECt.1RiTIES: Ior� interest moonat ere d�set red Mm at rr1t'�ty ford oe (.i w ., Jw�» "�reego B DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL CREDIT AGENCIES: Agencies of 35 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 as a listinq-. 1. FNMAs (Federal National Mortaaae Association) - Used to assist the home mortgage market by purchasing mortgages insured by the Federal Housing 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 DEPOSITOR INSURANCE 36 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. FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. The mission of the FHLBs is to liquefy the housing related assets of its members who must purchase stock in their district Bank. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: the central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA or FMHM mortgages. The term "passthroughs" is often used to describe Ginnie Maes. LAIF (Local Agency Investment Fund) - A special fund in the State Treasury which local agencies may use to deposit funds for investment. There is no minimum investment period and the minimum transaction is $5,000, in multiples of $1,000 above that, with a maximum balance of $30,000,000 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. 37 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 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. U�lRIU I �SfiTR[S# A 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. Wo 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. 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 necessities to be payment due within one week. TREASURY BILLS: investments, terms of prudent investor rule, and application. 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 39 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. ATTACHMENT NO. 2 Board Member Moulin requested that the minutes explain his vote against approval of the Investment Policy for 1999/2000. He approves of the many changes to clarify and reorganize the policy. However, he believes, within the constraints of the state statutes on authorized investments, that the City's limitations of investments should be risk -based. Authorized investments should be ranked by risk and those with the least credit and liquidity risks would have the least restrictive investment limitations. The policy now clearly distinguishes between direct obligations of the U.S. government backed as to principal and interest by its full faith and credit and obligations of U.S. government agencies, instrumentalities and sponsored enterprises not backed by the full faith and credit of the U.S. government. However, in Board Member Moulin's opinion, the investment limitations do not adequately recognize this distinction. Specifically, the investment limitation is 75 % for both categories with a 25 % limitation on one issuer of non -government guaranteed "agency" obligations. He believes that the City subjects itself to unnecessary risk by concentrating up to 25% of its portfolio in the obligations of a single issuer of securities not guaranteed by the federal government. He favors a more restrictive limitation to lower the risk and diversify the portfolio. Furthermore, Board Member Moulin believes that Section XVII of the Policy and Section 2.70.030 of the City Ordinance should be revised to summarize more aptly the actual functions of the Investment Advisory Board He finds the first described function particularly inappropriate as the Board does not "review account statements and verifications" and does not perform any procedures "to ensure accurate reporting as they relate to an investment activity". INVESTMENT ADVISORY BOARD Meeting Date TITLE: June 9, 1999 Workplan for Fiscal Year 1999/00 BACKGROUND: Business Session No. C The purpose of this report is to obtain from the Investment Advisory Board issues and items that Staff should consider in developing a workplan and budget for Fiscal Year 1990/00. Based upon recent meetings, Staff has identified the following items that are in addition to the monthly recurring agenda items: • Request for Proposal for Banking/Custodian Services • Review of Board Functions in the City Ordinance RECOMMENDATION: ovidE Staff with further direction. hn M. Falconer, Finance Director INVESTMENT ADVISORY BOARD Correspondence & Written Material Item A Meeting Date: June 9, 1999 TITLE: Month End Cash Report - May 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. M. Falconer) Finance Director (1) O c O O LL N a� to O n N � N c m rn rn J W O 0 C� 0 cu 0) N M N 00 OCO ti ti r- M O^ Np 0) ti N�~ N OONO v C)U)A� r-\ p000 d•MO005 CO �p00 0) vp cO CO ONNvV OCOC' C'! p p(Dp p CDtONp M rc)U) Ij O �� ch It M d N N N N N 4 N O O N 0A N M0LO00IOoIt C C- M OOoo —tico V-M M Lo (LLO(DMO CO� CO N N N N N O O O CD p 0 O ti LL Q � � � � O O p N W (3 C v_W Mgr � � OV(D C:) ,� r.CR cri Cli N N V M 'qr 14, O O OA Op CA O °ram) CD n CDOp 0) o r- 0 It Lq U m V) Co rn O rn O rn O (0Nrn M T- e - a-- O T- , o� o 0 0 0 0 mC? LL N N N N T- 0 = Cc 2 0 0 Lo O O Ln O O O O O C O O N M 0 ti ti ti O ti N O O Q e- N O _ 2) O m c)O O N O O O O O 2 c LO LO ti L 'N LL O CO O CO O C10 CO Ct0 CO C10 CO O � O � 2 ti r E!) 0.ti 00 cNO CNO CNO Cc LL N O O C'M C7 M Vl 3 to M L( CM CA o0 O OD C l CEO N LO N N N c LO CN p C 7 O ti CO CO LL ;Y e- � CA p 0)N o0 (10 Cn N� LjcoO C:) O � O O ' U 5 co `_ (D N (O O M M Cq m rn N U OD N O 0 M t0 ` N U a) 00 Q 04 a) +. rn L c CO (D O a)Ch U U c a) U c N Cl) m No M `—° U) c m m U •� O c orn rn CL�UCa m m m a)cc U -c fl. �V C (V c m m m 0 to 0 N c E U` U— N to E c y m N N iT ()Y U N La 3 m •i "a c d C3 d O 'O «. c M 'L to m a) m n m O =a a) > a) Qm aU)IL w Q a ¢ w nLLQ Q 5a a) N c 0 : N 3 E O N ani �=m o.mt c xE E o U c O �cuN N 7 -c N NQ -a — cu �- -� C`oc� >% t E 00 0-0 mN(D �+ a) +• c U c 0 m m Z' nc'X n 'p "O -0 �c >NO 4-O OO QL Q m C ++ ~' CO (D �. 0 N c E E4 7 0 C`Cf n _0 (n O O D¢ p > =.0 Q N•� U N — N M 4-C` OON �+E:3 NON ALL Oa s a�c c N o p.Q a) to 0 Q nw o U �o L"O Q O N m F•- -0 � ~U c Ta � ` cu nN CT Q o O �Cac O- NO U cL O�, o Ein to N '0 � s cc N O m E LL 'O c 0 `20 rn�mrn CO NQ c UN >,a) m �-0 La N 'MC Cn cu 0>. (32 :E Q•: E (D f° a 3�)� >, (D0c 0 0)Ev CCCmO O`V d a) 0-0p. a) Nam N N p a m > c E EL-rCTO to •= NN c Via) OCL .5QE(2 �, :� aD(>>+m 0o c3 n•C�c Nm�O mN c ` E a)Ovi CT—O m c N� N U-.'c.. CT O.N 'O O —0 M76 c en c N m N a 000�N mt NCCLNVV 70O c CL :Q aN X"a' QUO c�0 a) o-o r 0�c0 OX m 004) O N O N N U ' m C O mmvi0 mN U N M00 LL U �'O N INVESTMENT ADVISORY BOARD Meeting Date: TITLE: June 9, 1999 Pooled Money Investment Board Report for March 1999 BACKGROUND: Correspondence & Written Material Item B The Pooled Money Investment Board Report for March, 1999 is included in the agenda packet. RECOMMENDATION: Receive & File John M. Falco r, Finance Director STATE OF CALIFORNIA STATE TREASURER'S OFFICE POOLED MONEY INVESTMENT BOARD REPORT MARCH 1999 Table of Contents SUM1MIARY............................................................................................................1 SELECTEDINVESTMENT DATA..........................................:.........................2 PORTFOLIOCOMPOSITION...........................................................................3 INVESTMENTTRANSACTIONS......................................................................4 TIMEDEPOSITS................................................................................................19 DEMANDBANK DEPOSITS............................................................................24 POOLED MONEY INVESTMENT BOARD DESIGNATION .....................25 POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF MARCH 1999 WITH MARCH 1998 (Dollars in Thousands) Average Daily Portfolio Accrued Earnings Effective Yield Average Life --Month End (in days) Total Security Transactions Amount Number Total Time Deposit Transactions Amount Number Average Workday Investment Activity Prescribed Demand Account Balances For Services For Uncollected Funds $19,938,137 439 $828,600 73 $902,902 $226,642 $132,450 $16,987,472 377 $652,695 57 $801,826 $187,139 $1341490 +$2,950,665 +62 +175,905 +16 +$101,076 +$39,503 -$2,040 —1— PEM" ANGELIDES STATE TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) Change in March 31,1999 Percent From Type of Security Amount Percent Previous Month Governments Bills $3,1249855 934 - .08 Bonds 0 0 0 Notes $3,827,013 11A5 - 136 Strips 0 0 0 Total Governments $6,9519868 20.79 - 1.44 Federal Agency Coupons $3,532,054 10.56 + .60 Certificates of Deposit $4,862,141 14.54 + .92 Bank Notes $1,1189090 334 - .22 Bankers Acceptances $659424 .20 - .02 Repurchases 0 0 0 Federal Agency Discount Notes $3,989,178 11.93 - .73 Time Deposits $29093,640 6.26 + 38 GNMA's $19877 .01 0 Commercial Paper $7,913,496 23.67 + 32 FHLMC $17,720 .05 0 Corporate Bonds $198609767 5.56 + .26 Pooled Loans $19,968,478 5.89 - .21 GF Loans $5689200 1.70 + 1.70 Reversed Repurchases <1,505,315> <4.50> + 1.56 Total, All Types $33,437,618 100 INVESTMENT ACTIVITY Number Pooled Money 439 Other 77 Time Deposits 73 TOTALS 589 PMIA Monthly Average Effective Yield 5.136 Year to Date Yield for Last Day of Month - 5.435 March 1999 February 1999 Amount Number Amount $ 1999389137 339 $ 15,332,185 $ 1439884 12 $ 41,468 $ 8289600 67 $ 193299200 $ 209,910,621 418 $ 1697029853 —2— 5.210 5.474 Pooled Money Investment Account Portfolio Composition $33.4 Billion Loans Reverses Corporate 7.59% -4.50% Commercial Paper 23.67% Banl' Acceptc, 0.2C CD's/BN's 17.88% -3- cries R% Time Deposits 6.26% Mortgages 0.06% Gies 9% 03/31 /99 C Treasuries © Time Deposits ■ Mortgages ®Agencies ■ CD's/BN's ■ Bank Acceptances ■ Repurchases * Commercial Paper ® Corporate Bonds 13Loans ® Reverses 03/01/99 RRS Treas Bill 02/03/00 3.900 $31,000 Treas Bill 02/03/00 4.000 50,000 Treas Bill 02/03/00 4.000 50,000 REDEMPTION - CID Lehman 03/01/99 4.850 15,000 7 14,145.83 4.922 CID Lehman 03/01/99 4.850 50,000 7 47,152.78 4.922 CID Lehman 03/01/99 4.850 50,000 7 47,152.78 4.922 CID GECC 03/01/99 5.070 50,000 75 528,125.00 5.195 CID GECC 03/01/99 5.070 50,000 75 528,125.00 5.195 CID SRAC 03/01/99 5.070 50,000 81 570,375.00 5.199 CID Merrill 03/01/99 4.940 50,000 124 850,777.78 5.095 CID Assoc 03/01/99 4.970 50,000 145 1,000,902.78 5.141 CID Assoc 03/01/99 4.970 25,000 145 500,451.39 5.141 CID Salomon 03/01/99 5.370 50,000 178 1,327,583.33 5.593 MTN (FR) GMAC 5.350% 03/01/99 6.011 50,000 1097 8,750,366.60 5.832 Disc Note FNMA 03/01/99 5.330 50,000 300 2,220,833.33 5.655 Disc Note FNMA 03/01/99 5.330 50,000 300 2,220,833.33 5.655 Disc Note FNMA 03/01/99 5.330 50,000 300 2,220,833.33 5.655 PURCHASE g/ CD World 4.810% 03/15/99 4.810 50,000 CD World 4.810% 03/15/99 4.810 50,000 CID Barclays 03/15/99 4.810 30,000 PURCHASE CID GMAC 03/02/99 5.020 25,000 CID GMAC 03/02/99 5.020 50,000 CID GMAC 03/02/99 5.020 50,000 CID GMAC 03/02/99 5.020 50,000 CID GMAC 03/02/99 5.020 50,000 CID GMAC 03/02/99 5.020 50,000 CID Household 03/02/99 5.030 50,000 CID Household 03/02/99 5.030 50,000 CID Lehman 03/30/99 4.950 50,000 CID Lehman 03/31/99 4.950 50,000 CID Heller 04/01/99 4.950 50,000 CID SRAC 06/28/99 4.880 50,000 CID SRAC 06/30/99 4.880 50,000 —4— 03/02/99 REDEMPTION CP GMAC 03/02/99 5.020 25,000 1 3,486.11 5.090 CP GMAC 03/02/99 5.020 50,000 1 6,972.22 5.090 CP GMAC 03/02/99 5.020 50,000 1 6,972.22 5.090 CP GMAC 03/02/99 5.020 50,000 1 6,972.22 5.090 CP GMAC 03/02/99 5.020 50,000 1 6,972.22 5.090 CP GMAC 03/02/99 5.020 50,000 1 6,972.22 5.090 CP Household 03/02/99 5.030 50,000 1 6,986.11 5.100 CP Household 03/02/99 5.030 50,000 1 6,986._11 5.100 CP Amer Exp 03/02/99 5.000 50,000 75 520,833.33 5.122 CP Amer Exp 03/02/99 5.000 50,000 75 520,833.33 5.122 CP Amer Exp 03/02/99 5.000 50,000 75 520,833.33 5.122 CP GECC 03/02/99 5.070 50,000 77 542,208.00 5.196 CP GECC 03/02/99 5.070 50,000 77 542,208.33 5.196 CP Bear 03/02/99 5.180 50,000 78 561,166.67 5.311 CP Bear 03/02/99 5.180 50,000 78 561,166.67 5.311 CP GECC 03/02/99 5.070 50,000 78 549,250.00 5.197 CP GECC 03/02/99 5.070 50,000 78 549,250.00 5.197 CP GECC 03/02/99 5.050 25,000 81 284,062.50 5.178 CP GECC 03/02/99 5.050 50,000 81 568,125.00 5.178 CP SRAC 03-0299 4.930 50,000 125 855,902.78 5.085 CP Salomon 03/02/99 4.850 50,000 132 889,166.67 5.006 CP Assoc 03/02/99 4.970 50,000 146 1,007,805.56 5.142 CP Assoc 03/02/99 4.970 25,000 146 503,902.78 5.142 CP GECC 03/02/99 4.970 50,000 146 1,007,805.56 5.142 CP GECC 03/02/99 4.970 50,000 146 1,007,805.56 5.142 PURCHASE FHLB 5.375% 03/02/01 5.440 50,000 BN Fst Chic 4.930% 06/30/99 4.930 50,000 BN Fst Chic 4.930% 06/30/99 4.930 50,000 CD U/B Calif 4.980% 06/30/99 4.980 50,000 CD Rabo 4.925% 07/02/99 4.940 25,000 CP FMCC 03/03/99 4.850 50,000 CP FMCC 03/03/99 4.850 50,000 CP GECC 06/30/99 4.890 25,000 CP GECC 06/30/99 4.890 50,000 03/03/99 RRS Treas Note 4.625% 11 /30/00 4.550 50,000 Treas Note 4.625% 11 /30/00 4.550 50,000 Treas Note 4.625% 11 /30/00 4.550 50,000 Treas Note 4.625% 11 /30/00 4.550 50,000 SALE ! / _ Disc Note FHLB 03/03/99 4.660 50,000 Disc Note FHLB 03/03/99 4.660 50,000 —5- 03/03/99 REDEMPTION CP FMCC 03/03/99 -4.850 50,000 1 6,736.11 4.918 CP FMCC 03/03/99 4.850 50,000 1 6,736.11 4.918 CP GMAC 03/03/99 4.830 50,000 9 60,375.00 4.903 CP GMAC 03/03/99 4.830 50,000 9 60,375.00 4.903 CP Text Fin 03/03/99 5.050 35,000 57 279,854.17 5.161 CP FMCC 03/03/99 4.790 50,000 62 412,472.22 4.896 CP FMCC 03/03/99 4.790 50,000 62 412,472.22 4.896 CP GECC 03/03/99 5.070 50,000 79 556,291.67 5.198 CP GECC 03/03/99 5.070 50,000 79 5,456,291.67 5.198 RRP Treas Notes 4.625% 11/30/00 4.300 50,000 28 (168,267.35) -4.359 Treas Notes 4.625% 11/30/00 4.300 50,000 28 (168,267.35) -4.359 PURCHASE gL Disc Note FHLMC 04/14/99 4.810 50,000 Disc Note FHLMC 04/14/99 4.810 50,000 Disc Note FHLMC 04/14/99 4.810 50,000 Disc Note FHLMC 04/14/99 4.810 50,000 PURCHASE FHLB 5.060% 03/03/00 5.120 50,000 FHLB 5.060% 03/03/00 5.120 50;000 FHLB 5.100% 03/03/00 5.146 50,000 CD BNParis 4.925% 06/30/99 4.920 25,000 CD BNParis 4.925% 06/30/99 4.920 50,000 CD BNParis 4.925% 06/30/99 4.920 50,000 CP Assoc 06/30/99 4.840 50,000 CP Assoc 06/30/99 4.840 50,000 CP W/F 06/30/99 4.880 50,000 CP W/F 06/30/99 4.880 50,000 CP GECC 07/01/99 4.880 50,000 CP GECC 07/01/99 4.880 50,000 03/04/99 RRS Treas Bill 02/03/00 4.070 50,000 Treas Bill 02/03/00 4.070 50,000 SALE g/ Disc Note FHLB 03/04/99 4.700 44,450 14 81,244.72 4.774 Disc Note FHLB 03-0499 4.700 50,000 14 91,388.89 4.774 Disc Note FHLB 03/04/99 4.720 50,000 49 321,222.22 4.816 Disc Note FHLB 03/04/99 4.720 50,000 49 321,222.22 4.816 Disc Note FNMA 03/04/99 4.680 50,000 27 175,500.00 4.761 Disc Note FNMA 03/04/99 4.680 50,000 27 175,500.00 4.761 03/04/99 REDEMPTION CP GECC CID GECC Treas Bill Treas Bill RRP Treas Bill Treas Bill Treas Bill Treas Bill Treas Bill Treas Bill PURCHASE 9/ CD World CD World PURCHASE MTN GMAC CD Bkrs Trst CD Bkrs Trst CP Morg Stan CP Morg Stan CP Morg Stan CP Morg Stan 03/05/99 REDEMPTION CP FMCC CP FMCC PURCHASE CP Enron CID GECC CID GECC CP GECC CP GECC 03/08/99 RRS Treas Bill Treas Bill 03/04/99 5.070 50,000 78 549,250.00 5.197 03/04/99 5.070 50,000 78 549,250.00 5.197 03/04/99 5.130 50,000 364 2,593,500.00 5.485 03/04/99 5.160 50,000 364 47,391,333.33 5.519 03/04/99 4.485 50,000 49 (303,377.95) -4.547 03/04/99 4.485 50,000 49 (303,377.95) -4.547 01 /06/00 4.360 50,000 27 (156,551.25) -4.420 01 /06/00 4.360 50,000 27 (156,551.25) -4.420 02/03/00 4.125 50,000 14 (76,679.17) -4.182 02/03/00 4.125 50,000 14 (76,679.17) -4.182 4.830% 03/19/99 4.830 50,000 4.830% 03/19/99 4.830 50,000 5.400% 02/26/01 5.750 36,360 4.960% 06/30/99 4.950 23,000 4.960% 06/30/09 4.950 50,000 03/08/99 4.800 50,000 03/08/99 4.800 50,000 03/10/99 4.800 50,000 03/10/99 4.800 50,000 03/05/99 4.790 50,000 64 03/05/99 4.790 50,000 64 03/08/99 4.780 40,000 03/08/99 4.710 10,000 03/08/99 4.710 50,000 03/08/99 4.710 50,000 03/08/99 4.710 50,000 01/06/99 4.500 50,000 01 /06/00 4.500 50,000 425,777.78 4.898 425,777.78 4.898 —7_ 03/08/99 REDEMPTION CD CIBC CD CIBC CID Enron CID GECC CID GECC CID GECC CID GECC CID Morg Stan CID Morg Stan CID SRAC CID Lehman CID Lehman CID Conagra CID GECC CID GECC CID GECC CID GECC CID GECC CID Bear CID Bear PURCHASES/ Disc Note FHLMC Disc Note FHLMC PURCHASE CB Assoc 03/09/09 RRS Treas Bill Treas Bill REDEMPTION CID Amer Exp CID Amer Exp CID Amer Exp MTN IBM PURCHASE S/ CD Barclays CD Barclays 5.170% 03/08/99 5.170 50,000 124 890,388.89 5.241 5.170% 03/08/99 5.170 50,000 124 890,388.89 5.241 03/08/99 4.780 40,000 3 15,933.33 4.848 03/08/99 4.710 10,000 3 3,925.00 4.777 03/08/99 4.710 50,000 3 19,625.00 4.777 03/08/99 4.710 50,000 3 19,625.00 4.777 03/08/99 4.710 50,000 3 19,625.00 4.777 03/08/99 4.800 50,000 4 26,666.67 4.869 03/08/99 4.800 50,000 4 26,666.67 4.869 03/08/99 4.880 50,000 11 74,555.56 4.955 03/08/99 4.900 50,000 11 74,861.11 4.975 03/08/99 4.900 50,000 12 81,666.67 4.976 03/08/99 4.920 36,533 14 69,899.81 4.997 03/08/99 5.070 50,000 75 528,125.00. 5.195 03/08/99 5.070 50,000 75 528,125.00 5.195 03/08/99 5.070 50,000 75 528,125.00 5.195 03/08/99 5.070 40,000 75 422,500.00 5.195 03/08/99 5.070 50,000 75 528,125.00 5.195 03/08/99 5.140 50,000 84 599,666.67 5.274 03/08/99 5.140 50,000 84 599,666.67 5.274 03/31 /99 4.750 50,000 03/31 /99 4.750 50,000 7.875% 09/30/01 5.770 11,975 05/27/99 4.600 50,000 05/27/99 4.600 50,000 03/09/99 5.170 50,000 179 1,285,319.44 5.380 03/09/99 5.170 50,000 179 1,285,319.44 5.380 03/09/99 5.170 25,000 179 642,659.72 5.380 5.690% 03/09/99 5.720 50,000 365 2,858,000.00 5.720 4.870% 05/27/99 4.860 50,000 4.870% 05/27/99 4.860 50,000 —8— 03/09/99 PURCHASE MTN W/F CP GECC 03/10/99 REDEMPTION CP GECC CP Morg Stan CP Morg Stan CP SRAC CP GECC CP GECC Disc Note FHLMC PURCHASE CD ABN Amro CD ABN Amro 03/11/99 REDEMPTION FNMA CD Dresdner PURCHASE 5.310% 04/03/00 5.360 50,000 03/10/99 4.800 50,000 03/10/99 4.800 50,000 1 6,666.67 4.867 03/10/99 4.800 50,000 6 40,000.00 4.870 03/10/99 4.800 50,000 6 40,000.00 4.870 03/10/99 4.850 50,000 65 437,847.22 4.960 03/10/99 5.080 50,000 82 578,555.56 5.210 03/10/99 5.080 50,000 82 578,555.56 5.210 03/10/99 4.780 12,070 63 100,965.55 4.887 4.930% 06/28/99 4.920 50,000 4.930% 06/28/99 4.920 25,000 5.530% 03/11 /99 5.625 50,000 365 5.330% 03/11/99 5.310 25,000 176 MTN Assoc 7.875% 09/30/01 5.750 15,000 CP GECC 03/12/99 4.790 50,000 CP GECC 03/12/99 4.790 50,000 CP GECC 06/28/99 4.800 50,000 CP GECC 06/28/99 4.800 50,000 CP GECC 06/30/99 4.800 50,000 CP GECC 06/30/99 4.800 40,000 CP Enron 06/25/99 4.950 45,000 CP Amer Exp 06/30/99 4.810 50,000 CP Amer Exp 06/30/99 4.810 50,000 CP Amer Exp 06/30/99 4.810 50,000 CP Amer Exp 06/30/99 4.810 50,000 03/12/99 SALE 9/ 2,811,000.00 5.627 649,530.14 5.387 Disc Note FHLMC 03/12/99 4.740 50,000 14 92,166.67 4.814 Disc Note FHLMC 03/12/99 4.740 50,000 14 92,166.67 4.814 Disc Note FHLMC 03/12/99 4.760 7,000 14 12,957.78 4.835 Disc Note FHLMC 03/12/99 4.760 50,000 14 92,555.56 4.835 03/12/99 REDEMPTION CP GECC 03/12/99 4.790 50,000 1 6,652.78 4.857 CP GECC 03/12/99 4.790 50,000 1 6,652.78 4.857 CP Morg Stan 03/12/99 5.260 25,000 171 624,625.00 5.469 CP Morg Stan 03/12/99 5.230 50,000 177 1,285,708.33 5.442 RRP Treas Bills 03/03/00 4.300 50,000 14 (79,878.61) -4.359 Treas Bills 03/03/00 4.300 50,000 14 (79,848.61) -4.359 Treas Bills 02/03/00 4.300 9,000 14 (14,372.75) -4.359 Treas Bills 02/03/00 4.300 50,000 14 (79,848.61) -4.359 PURCHASE CP Morg Stan 06/14/99 4.840 25,000 CP Morg Stan 06/14/99 4.840 50,000 CP Morg Stan 06/25/99 4.840 50,000 CP Morg Stan 06/25/99 4.840 50,000 CP Transam 06/28/99 4.820 50,000 03/15/99 SALE y/ CD World 4.810% 03/15/99 4.810 50,000 14 93,527.78 4.876 CD World 4.810% 03/15/99 4.810 50,000 14 93,527.78 4.87E Disc Note FNMA 03/15/99 4.730 20,000 33 86,716.67 4.816 Disc Note FNMA 03/15/99 4.730 50,000 33 216,791.67 4.816 REDEMPTION CP Barclays 03/15/99 4.810 30,000 14 56,116.67 4.885 BA Montreal 03/15/99 5.150 7,021 174 174,785.80 5.354 CP Morg Stan 03/15/99 5.200 15,000 178 385,666.66 5.411 CP Morg Stan 03/15/99 5.200 50,000 178 1,285,555.55 5.411 CP Morg Stan 03/15/99 5.200 50,000 179 1,292,777.78 5.412 RRP Treas Bills 01/06/00 4.000 20,000 33 (70,308.33) -4.055 Treas Bills 01/06/00 4.000 50,000 33 (175,770.83) -4.055 Treas Bills 02/03/00 3.900 31,000 14 (44,959.69) -4.055 Treas Bills 02/03/00 4.000 50,000 14 (74,355.56) -4.055 Treas Bills 02/03/00 4.000 50,000 14 (74,355.56) -4.055 —10— 03/15/99 PURCHASE CD Montreal CD Montreal CD Montreal CP Enron CP JC Penney CP Bear CP Hertz 03/16/99 RRS Treas Bills Treas Bills Treas Bills Treas Bills Treas Bills Treas Bills REDEMPTION MTN Transam PURCHASE g/ CD Stnrd Ch CD Stnrd Ch CD Barclays CD Barclays CP Morg Stan CP Morg Stan PURCHASE CP Allied CP FMCC CP FMCC 03/17/99 REDEMPTION BA Montreal PURCHASE MTN W/F 03/18/99 RRS Treas Bills Treas Bills 4.870% 06/30/99 4.870 10,000 4.870% 06/30/99 4.870 50,000 4.870% 06/30/99 4.870 50,000 06/28/99 4.910 10,000 06/28/99 4.950 40,000 06/28/99 4.850 50,000 06/30/99 4.820 50,000 02/03/00 4.620 50,000 02/03/00 4.620 50,000 05/27/99 4.540 50,000 05/27/99 4.540 50,000 05/27/99 4.550 10,000 05/27/99 4.550 50,000 7.610% 03/16/99 5.760 12,000 326 4.870% 06/14/99 4.870 50,000 4.870% 06/14/99 4.870 50,000 4.860% 05/27/99 4.850 50,000 4.860% 05/27/99 4.850 50,000 05/27/99 4.854 10,000 05/27/99 4.854 50,000 06/28/99 4.830 25,000 06/30/99 4.810 1,000 06/30/99 4.810 50,000 03/17/99 5.120 5,000 176 5.225% 04/10/00 5.260 48,900 02/03/00 4.500 50,000 02/03/00 4.500 50,000 627,446.67 5.763 125,155.56 5.324 —11- 03/18/99 PURCHASE 9/ Disc Note FHLB Disc Note FHLB 03/19/99 SALE g/ CD World CD World RRP Treas Bills Treas Bills PURCHASE MTN �FMCC CID GMAC CID GMAC CID GMAC 03/22/99 RRS Treas Bills Treas Bills REDEMPTION CID GMAC CID GMAC CID GMAC PURCHASE g/ CID Morg Stan CID Morg Stan PURCHASE CID Amer Exp CID Amer Exp CID GECC CID GECC 03/23/99 NO REDEMPTIONS 04/14/99 4.740 50,000 04/14/99 4.740 50,000 4.830% 03/19/99 4.830 50,000 15 100,625.00 4.897 4.830% 03/19/99 4.830 50,000 15 100,625.00 4.897 02/03/00 4.070 50,000 15 81,103.23 4.126 02/03/00 4.070 50,000 15 81,103.23 4.126 5.150% 03/19/02 5.150 50,000 03/22/99 4.680 5,000 02/22/99 4.680 50,000 03/22/99 4.680 50,000 02/03/00 4.500 50,000 02/03/00 4.500 50,000 03/22/99 4.680 5,000 3 1,950.00 4.746 03/22/99 4.680 50,000 3 19,500.00 4.746 03/22/99 4.680 50,000 3 19,500.00 4.746 05/26/99 4.850 50,000 05/26/99 4.850 50,000 06/28/99 4.800 50,000 06/28/99 4.800 50,000 06/30/99 4.800 50,000 06/30/99 4.800 50,000 i —12— 03/23/99 PURCHASE CP GECC CP GECC CP Morg Stan CP Morg Stan 03/24/99 RRS Treas Bills Treas Bills PURCHASE U/ Disc Notes FNMA Disc Notes FNMA PURCHASE CP Citigroup CP Assoc CP Assoc CP Amer Exp CP Amer Exp CP GMAC CP GMAC CP Salomon CP GECC CP GECC CP GECC CP GECC 03/25/99 SALES CP Heller CP GMAC CP B/A CP B/A MTN GMAC PURCHASE CP Assoc CP Assoc CP Assoc CP Assoc CP GECC CP GECC CP GECC CP GECC 06/28/99 4.800 50,000 ' 06/28/99 4.800 50,000 06/30/99 4.830 50,000 06/30/99 4.830 50,000 01 /06/00 4.400 20,000 01 /06/00 4.400 50,000 04/07/99 4.700 20,000 04/07/99 4.700 50,000 03/30/99 4.850 40,000 04/02/99 4.800 50,000 04/02/99 4.800 50,000 04/02/99 4.840 50,000 04/02/99 4.840 50,000 04/05/99 4.800 30,000 04/05/99 4.800 50,000 06/28/99 4.830 50,000 06/28/99 4.800 50,000 06/28/99 4.800 50,000 06/30/99 4.800 50,000 06/30/99 4.800 50,000 03/25/99 4.950 50,000 34 233,750.00 5.042 03/25/99 4.840 50,000 73 490,722.00 4.955 03/25/99 4.840 50,000 154 1,035,222.00 5.010 03/25/99 4.840 50,000 154 1,035,222.00 5.010 5.619% 03/25/99 5.718 50,000 730 5,730,612.00 5.741 03/26/99 4.800 50,000 03/26/99 4.800 50,000 03/26/99 4.800 50,000 03/26/99 4.800 50,000 03/26/99 4.840 50,000 03/26/99 4.840 50,000 03/26/99 4.840 50,000 03/26/99 4.840 50,000 —13— 03/25/99 PURCHASE CP Country 05/10/99 4.870 31,300 CP FMCC 05/26/99 4.820 25,000 CP FMCC 05/26/99 4.820 50,000 CP FMCC 05/26/99 4.820 50,000 CP FMCC 05/26/99 4.820 50,000 CP Morg Stan 06/28/99 4.830 50,000 CP Morg Stan 06/28/99 4.830 50,000 CP Morg Stan 06/30/99 4.830 50,000 03/26/99 RRS Treas Bills 06/24/99 4.455 50,000 REDEMPTION CD U/B Calif 5.030% 03/26/99 5.030 30,000 148 620,366.00 5.099 CP Assoc 03/26/99 4.800 50,000 1 6,666.00 4.867 CP Assoc 03/25/99 4.800 50,000 1 6,666.00 4.867 CP Assoc 03/26/99 4.800 50,000 1 6,666.00 4.867 CP Assoc 03/26/99 4.800 50,000 1 6,666.00 4.867 CP GECC 03/26/99 4.840 50,000 1 6,722.00 4.907 CP GECC 03/25/99 .4.840 50,000 1 6,722.00 4.907 CP GECC 03/26/99 4.840 50,000 1 6,722.00 4.907 CP GECC 03/26/99 4.840 50,000 1 6,722.00 4.907 CP Conagra 03/26/99 4.880 50,000 63 427,000.00 4.990 CP Amer Exp 03/26/99 4.800 50,000 70 466,666.00 4.912 CP Amer Exp 03/26/99 4.800 50,000 -70 466,666.00 4.912 CP GMAC 03/26/99 4.840 50,000 74 497,444.00 4.956 CP SRAC 03/26/99 4.850 30,000 80 323,333.00 4.970 CP GECC 03/26/99 4.950 50,000 86 591,250.00 5.078 CP GECC 03/26/99 4.950 50,000 86 591,250.00 5.078 Disc Notes FHLMC 03/26/99 4.840 50,000 178 1,196,555.00 5.027 Disc Notes FHLMC 03/26/99 4.840 50,000 178 1,196,555.00 5.027 Disc Notes FHLMC 03/26/99 4.900 30,365 178 735,676.00 5.091 PURCHASE 9/ CP FMCC 06/24/99 4.800 50,000 CP FMCC 06/24/99 4.800 50,000 PURCHASE CP Household 03/29/99 4.850 50,000 CP Household 03/29/99 4.850 50,000 CP Household 03/29/99 4.850 50,000 03/29/99 RRS _ Treas Bills 06/24/99 4.440 50,000 Treas Bills 06/24/99 4.440 50,000 —14— 03/29/99 REDEMPTION gN Fst Chic 4.910 0 � 03/29/99 4.910 50,000 88 600,111.00 4.978 BN Fst Chic 4.910% 03/29/99 4.910 50,000 88 600,111.00 4.978 CD CIBC 4.830% 03/29/99 4.830 30,000 60 241,500.00 4.897 CD CIBC 4.830% 03/29/99 4.830 50,000 60 402,500.00 4.897 CD Westdeut 4.840% 03/29/99 4.840 50,000 60 403,333.00 4.907 CD U/B 4.910°0% 03/29/99 4.910 50,0000 82 559,194.00 4.978 CD _Calif U/B Calif 4.910 /0 03/29/99 4.910 50,000 82 559,194.00 4.978 CD Montreal 4.930% 03/29/99 4.930 15,000 83 170,495.00 4.998 CD Montreal 4.930% 03/29/99 4.930 50,000 83 568,319.00 4.998 CD CIBC 4.940% 03/29/99 4.940 50,000 83 569,472.00 5.008 CD CIBC 4.940% 03/29/99 4.940 50,000 83 569,472.00 5.008 CID Household 03/29/99 4.850 50,000 3 20,208.00 4.919 Cp Household 03/29/99 4.850 50,000 3 20,208.00 4.919 CID Household 03/29/99 4.850 50,000. 3 20,208.00 4.919 CID Hertz 03/29/99 4.810 50,000 47 313,986.00 4.810 CID W/F 03/29/99 4.800 50,000 47 313,333.00 4.897 CID W/F 03/29/99 4.800 50,000 47 313,333.00 4.897 CID JP Morgan 03/29/99 4.760 50,000 60 396,666.00 4.864 CID JP Morgan 03/29/99 4.760 50,000 60 396,666.00 4.864 CID Amer Exp 03/29/99 4.770 50,000 60 397,500.00 4.875 CID Amer Exp 03/29/99 4.770 50,000 60 397,500.00 4.875 CID Assoc 03/29/99 4.780 50,000 69 458,083.00 4.891 CID Conagra 03/29/99 4.940 36,435 80 399,975.00 5.064 CID GMAC 03/29/99 4.800 50,000 81 540,000.00 4.919 CID GMAC 03/29/99 4.800 50,000 81 540,000.00 4.919 CID GMAC 03/29/99 4.800 50,000 81 540,000.00 4.919 CID GMAC 03/29/99 4.800 50,000 81 540,000.00 4.919 CID Assoc 03/29/99 5.000 50,000 102 708,333.00 5.142 CID Assoc 03/29/99 5.000 50,000 102 708,333.00 5.142 CID SRAC 03/29/99 5.000 50,000 102 708,333.00 5.142 CID Hertz 03/29/99 5.120 50,000 124 881,777.00 5.284 PURCHASE g/ Disc Notes FHLMC 06/24/99 4.700 50,000 Disc Notes FHLMC 06/24/99 4.700 50,000 PURCHASE CID Citigroup 03/30/99 4.920 50,000 CID Citigroup 03/30/99 4.920 50,000 CID Conagra 04/12/99 5.050 10,000 CID Conagra 04/12/99 5.050 50,000 CID Salomon 05/07/99 4.850 14,000 CP Salomon 05/07/99 4.850 50,000 CID Lehman 05/28/99 4.900 50,000 CID Kodak 06/17/99 4.820 40,000 CID Assoc 07/02/99 4.830 50,000 CID GECC 07/08/99 4.830 40,000 CP GECC 07/08/99 4.830 50,000 —15— 03/30/99 RRS Treas Bills 06/24/99 4.480 50,000 Treas Bills 06/24/99 4.480 50,000 REDEMPTION CID Citigroup 03/30/99 4.850 40,000 6 32,333.00 4.921 CID Lehman 03/30/99 4.950 50,000 29 199,375.00 5.038 CID Citigroup 03/30/99 4.920 50,000 1 6,833.00 4.989 CID Citigroup 03/30/99 4.920 50,000 1 6,833.00 4.989 PURCHASE g/ Disc Notes FHLMC 06/24/99 4.710 50,000 Disc Notes FHLMC 06/24/99 4.710 50,000 PURCHASE CID GECC 03/31/99 4.850 50,000 CID GECC 03/31/99 4.850 50,000 CID GECC 03/31/99 4.850 50,000 CID GECC 03/31/99 4.850 50,000 CID Amer Exp 04/01/99 5.000 50,000 CID Amer Exp 04/01 /99 5.000 50,000 CID Amer Exp 04/01 /99 5.000 50,000 CID Amer Exp 04/01 /99 5.000 50,000 CID FMCC 04/02/99 4.960 40,000 CID Morg Stan 04/09/99 4.900 50,000 CID Morg Stan 04/09/99 4.900 50,000 CID Salomon 04/27/99 4.850 50,000 CID Salomon 04/28/99 4.850 50,000. CID JP Morgan 06/28/99 4.830 14,526 CID JP Morgan .06/28/99 4.830 50,000 CID JP Morgan 06/28/99 4.830 50,000 CID JP Morgan 06/28/99 4.830 50,000 03/31/99 SALE ! / Disc Notes FHLMC 03/31/99 4.750 50,000 23 151,736.00 4.83 Disc Notes FHLMC 03/31/99 4.750 50,000 23 151,736.00 4.83 REDEMPTION BN Fst Chic 4.910% 03/31/99 4.910 50,000 90 613,750.00 4.978 BN Fst Chic 4.910% 03/31/99 4.910 50,000 90 613,750.00 4.978 CID GECC 03/31/99 4.850 50,000 1 6,736.00 4.918 CID GECC 03/31/99 4.850 50,000 1 6,736.00 4.918 CID GECC 03/31/99 4..850 50,000 1 6,736.00 4.918 CID GECC 03/31/99 4.850 50,000 1 66,736,00 4.918 CID Lehman 03/31/99 4.950 50,000 30 206,250.00 5.039 CID Lehman 03/31/99 4.950 50,000 30 260,250.00 5.039 —16— 03/31/99 REDEMPTION CP Assoc 03/31/99 4.830 50,000 34 228,083.00 4.919 CP SRAC 03/31/99 4.800 50,000 40 266,666.00 4.892 CP GMAC 03/31/99 4.810 50,000 40 267,222.00 4.903 CP GMAC 03/31/99 4.810 50,000 40 267,222.00 4.903 CP JP Morgan 03/31/99 4.760 50,000 62 409,888.00 4.866 CP JP Morgan 03/31/99 4.760 50,000 62 409,888.00 4.866 CP Assoc 03/31/99 4.780 50,000 71 471,361.00 4.892 RRP Treas Bills 01/06/00 4.500 50,000 23 (138,143.75) -4.562 Treas Bills 01 /06/00 4.500 50,000 23 (138,143.75) -4.562 PURCHASE CP Country 04/01/99 5.050 32,892 CP GECC 04/01/99 5.000 50,000 CP GECC 04/01/99 5.000 50,000 CP GECC 04/01/99 5.000 50,000 CP GECC 04/01/99 5.000 50,000 CP GECC 04/01/99 5.000 50,000 CP Merrill 04/05/99 4.900 25,000 CP Merrill 04/05/99 4.900 50,000 CP Amer Exp 04/06/99 4.920 40,000 —17— a/ The abbreviations indicate the type of security purchased or sold; i.e., (U.S.) Bills, Bonds, Notes, Debentures, Discount Notes, and Participation Certificates: Federal National Mortgage Association (FNMA), Farmers Home Administration Notes (FHA), Student Loan Marketing Association (SLMA), Small Business Association (SBA), Negotiable Certificates of Deposit (CD), Negotiable Certificates of Deposit Floating Rate (CD FR), Export Import Notes (EXE%), Bankers Acceptances (BA), Commercial Paper (CP), Government National Mortgage Association (GNMA), Federal Home Loan Bank Notes (FHLB), Federal Land Bank Bonds (FLB), Federal Home Loan Mortgage Corporation Obligation (FHLMC PC) & (FHLMC GMC), Federal Farm Credit Bank Bonds (FFCB), Federal Farm Credit Discount Notes (FTC), 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. —18— NAME ALHAMBRA East West Bank DEPOSIT, DATE 12/31/98 YIELD PAR 4.590 AMOUNT (S) MATURITY DATE 04/01/99 8,000,000.00 East West Bank 01/06/99 4.490 35,000,000.00 04/07/99 East West Bank 01/14/99 4.430 27,000,000.00 04/15199 East West Bank 02/11/99 4.530 38,000,000.00 05/13/99 BEVERLY HILLS City National Bank 11/02/98 4.360 25,000,000.00 05/04/99 City National Bank 02/18/99 4.560 20,000,000.00 05/19/99 City National Bank 03/15/99 4.630 20,000,000.00 06/15/99 City National Bank 01/27/99 4.480 10,000,000.00 07/27/99 City National Bank 03/31/99 4.740 50,000,000.00 03/31/00 CHICO North State National Bank 10/06/98 4.380 1,000,000.00 04/05/99 North State National Bank 01/05/99 4.550 1,000,000.00 04/06/99 North State National Bank 08/24/98 5.190 1,000,000.00 08/24/99 North State National Bank 03/02/99 4.760 1,000,000.00 08/30/99 North State National Bank 03/09/99 4.740 500,000.00 09/07/99 Tri Counties Bank 01/14/99 4.440 10,000,000.00 04/15/99 Tri Counties Bank 03/11/99 4.630 10,000,000.00 06/11/99 Tri Counties Bank 03/18/99 4.640 10,000,000.00 06/18/99 Tri Counties Bank 03/23/99 4.540 10,000,000.00 06/22/99 Glendale Federal Bank 10/07/98 4.360 5,000,000.00 04/06/99 INGLEWOOD Imperial Bank 10/01/98 4.710 18,000,000.00 04/01/99 Imperial Bank 11 /06/98 4.530 20,000,000.00 04/15/99 Imperial Bank 12/09/98 4.560 25,000,000.00 04/26/99 Imperial Bank 12/30/98 4.700 18,000,000.00 05/12/99 Imperial Bank 01/06/99 4.610 25,000,000.00 05/19/99 Imperial Bank 02/03/99 4.550 25,000,000.00 05/25/99 Imperial Bank 01 /20/99 4.510 25,000,000.00 06/09/99 Imperial Bank 02/09/99 4.570 20,000,000.00 06/14/99 Imperial Bank 01/04/99 4.760 25,000,000.00 06/28/99 Imperial Bank 03/09/99 4.640 50,000,000.00 07/15/99 Imperial Bank 03/16/99 4.650 11,000,000.00 08/12/99 Imperial Bank 03/24/99 4.550 15,000,000.00 08/12/99 Imperial Bank 02/23/99 4.690 25,000,000.00 08/23/99 -19- NAME LOS ANGELES Community Bank TIME DEPOSIT DEPOSIT DATE 12/15/98 YIELD 4.570 PAR AMOUNT (S) MATURITY 10,000,000.00 DATE 06/14/99 Community Bank 12/22/98 4.540 5,000,000.00 06/22/99 Community Bank 01 /11 /99 4.530 20,000,000.00 07/13/99 Community Bank 02/08/99 4.570 15,000,000.00 08/11/99 General Bank 01/12/99 4.480 15,000,000.00 04/16/99 General Bank 01/07/99 4.510 15,000,000.00 04/30/99 General Bank 02/18/99 4.550 10,000,000.00 05/27/99 General Bank 02/17/99 4.500 28,000,000.00 06/02/99 General Bank 02/08/99 .4.580 25,000,000.00 08/13/99 Preferred Bank 01 /14/99 4.420 3,000,000.00 04/15/99 Preferred Bank 02/19/99 4.550 4,000,000.00 05/20/99 Preferred Bank 02/23/99 4.600 2,000,000.00 05/25/99 Preferred Bank 03/17/99 4.590 9,000,000.00 06/15/99 Preferred Bank 03/24/99 4.520 9,000,000.00 06/22/99 Preferred Bank POMONA 03/30/99 4.520 3,000,000.00 06/28/99 PFF Bank and Trust 11/24/98 4.800 8,000,000.00 05/25/99 PFF Bank and Trust PETALUMA 03/09/99 4.800 10,000,000.00 06/08/99 Bank of Petaluma RICHMOND 02/09/99 4.600 1-,000,000.00 08/10/99 Mechanics Bank of Richmond SACRAMENTO 03/08/99 4.840 10,000,000.00 03/07/00 River City Bank 01/13/99 4.550 5,000,000.00 07/13/99 River City Bank 01/20/99 4.500 5,000,000.00 07/30/99 River City Bank 02/17/99 4.600 5,000,000.00 08/18/99 Sanwa Bank of California 01/05/99 4.430 10,000,000.00 07/15/99 Sanwa Bank of California 01/27/99 4.480 5,000,000.00 07/27/99 Sanwa Bank of California 02/03/99 4.590 7,000,000.00 08/03/99 Sanwa Bank of California 02/17/99 4.590 50,000,000.00 08/16/99 Sanwa Bank of California 02/19/99 4.650 10,000,000.00 08/23/99 Union Bank of California 01/27/99 4.480 50,000,000.00 04/29/99 Union Bank of California 02/02/99 4.510 100,000,000.00 05/04/99 Union Bank of Califomia 02/17/99 4.540 50,000,000.00 05/18/99 Union Bank of California 03/30/99 4.520 100,000,000.00 06/28/99 —20— Bank of Salinas 01/22/99 4.360 8,000,000.00 04/22/99 Bank of Salinas 03/15/99 4.630 12,000,000.00 06/15/99 SAN DIEGO Bay Bank of Commece 02/03/99 4.590 10,000,000.00 08/03/99 San Diego First Bank 11/05/98 4.530 1,000,000.00 05/06/99 San Diego First Bank 12/01 /98 4.520 1,500,000.00 06/01 /99 San Diego First Bank FRANCISCO 12/22/98 4.610 1,500,000.00 06/22/99 SAN Bank of Canton California 02/05/99 4.510 5,000,000.00 05/06/99 Bank of Canton California 02/11/99 4.520 5,000,000.00 05/13/99 Bank of Canton California 12/01/98 4.620 5,000,000.00 06/01/99 Bank of Canton California 12/04/98 4.500 5,000,000.00 06/02/99 Bank of Canton California 01/21/99 4.470 5,000,000.00 07/21/99 Bank of Canton California 03/05/99 4.750 5,000,000.00 09/01/99 Bank of Canton California 03/16/99 4.710 5,000,000.00 09/13/99 Bank of the West 09/28/98 4.600 20,000,000.00 04/01 /99 Bank of the West 01/04/99 4.590 14,000,000.00 04/06/99 Bank of the West 01 /20/99 4.480 25,000,000.00 04/22/99 Bank of the West 01/28/99 4.490 51,500,000.00 04/29/99 Bank of the West 05/15/98 5.450 10,000,000.00 05/13/99 Bank of the West 02/18/99 4.560 30,000,000.00 05/19/99 Bank of the West 02/23/99 4.610 25,000,000.00 05/26/99 Bank of the West 02/24/99 4.610 - 27,000,000.00 05/26/99 Bank of the West 02/25/99 4.610 35,000,000.00 05/26/99 Bank of the West 06/08/98 5.440 25,000,000.00 06/08/99 Bank of the West 07/13/98 5.350 25,000,000.00 07/13/99 California Federal Bank 01/14/99 4.500 100,000,000.00 04/15/99 California Federal Bank 03/31/99 4.550 3,000,000.00 06/29/99 Cupertino National Bank 01 /22/99 4.490 20,000,000.00 07/22/99 Mid -Peninsula Bank 01/27/99 4.490 15,000,000.00 07/27/99 Oceanic Bank 03/05/99 4.920 2,000,000.00 03/07/00 Oceanic Bank 03/12/99 4.780 2,000,000.00 03/15/00 Trans Pacific National Bank 03/15/99 4.800 800,000.00 09/13/99 United Commercial Bank 01/06/99 4.560 20,000,000.00 04/07/99 United Commercial Bank 02/09/99 4.550 20,000,000.00 05/11/99 United Commercial Bank 03/23/99 4.540 20,000,000.00 06/21/99 Bay Bank of Commece 01/06/99 4.500 5,000,000.00 04/07/99 IWAtD NAME SAN LUIS OBISPO First Bank of San Luis Obispo First Bank of San Luis Obispo First Bank of San Luis Obispo First Bank of San Luis Obispo First Bank of San Luis Obispo SAN RAFAEL Westamerica Bank Westamerica Bank Westamerica Bank Westamerica Bank Westamerica Bank Boreal Bank and Trust Grand National Bank Grand National Bank Grand National Bank Grand National Bank Santa Barbara Bank & Trust Santa Barbara Bank & Trust Santa Barbara Bank & Trust Santa Barbara Bank & Trust Santa Barbara Bank & Trust Santa Barbara Bank & Trust Coast Commercial Bank Coast Commercial Bank SHASTA North Valley Bank 01 /05/99 4.560 1,000,000.00 04/06/99 01 /27/99 4.440 1,000,000.00 04/28/99 02/02/99 4.530 3,600,000.00 05/04/99 02/10/99 4.560 2,000,000.00 05/12/99 02/23/99 4.620 2,500,000.00 05/24/99 01/13/99 4.500 25,000,000.00 04/14/99 01/20/99 4.440 25,000,000.00 04/21/99 01/21/99 4.440 25,000,000.00 04/22/99 01/27/99 4.430 25,000,000.00 04/28/99 02/09/99 4.540 50,000,000.00 05/11/99 10/01 /98 5.080 95,000.00 04/01 /99 01 /14/99 4.430 2,000,000.00 04/15/99 03/09/99 4.670 3,000,000.00 06/08/99 01 /04/99 4.610 95,000.00 07/07/99 10/15/98 4.180 1,000,000.00 10/15/99 01 /05/99 4.530 5,000,000.00 04/07/99 01 /07/99 4.500 10,000,000.00 04/09/99 01 /14/99 4.440 5,000,000.00 04/15/99 02/09/99 4.550 5,000,000.00 05/11 /99 03/02/99 4.730 5,000,000.00 06/01 /99 03/16/99 4.640 5,000,000.00 06/14/99 03/23/99 4.520 5,000,000.00 06/15/99 03/17/99 4.600 15,000,000.00 06/15/99 03/23/99 4.780 3,000,000.00 03/22/00 —22— STANISLAUS Oak Valley Community Bank 02/04/99 4.560 500,000.00 05/06/99 Oak Valley Community Bank 02/08/99 4.600 500,000.00 08/10/99 Oak Valley Community Bank 03/24/99 4.580 1,000,000.00 09/20/99 Oak Valley Community Bank 03/30/99 4.630 1,000,000.00 01/31/00 Oak Valley Community Bank 03/30/99 4.750 1,000,000.00 03/31 /00 TORRANCE China Trust Bank (USA) 01 /27/99 4.440 15,000,000.00 04/28/99 China Trust Bank (USA) 03/10/99 4.650 10,000,000.00 06/08/99 China Trust Bank (USA) 03/16/99 4.640 10,000,000.00 06/14/99 China Trust Bank (USA) 03/24/99 4.540 5,000,000.00 06/22/99 China Trust Bank (USA) 03/31 /99 4.550 10,000,000.00 06/29/99 South Bay Bank 12/15/98 4.640 2,000,000.00 06/15/99 South Bay Bank 01 /20/99 4.550 1,000,000.00 07/21 /99 TUSTIN Sunwest Bank 01 /06/99 4.550 3,300,000.00 04/07/99 Sunwest Bank 01/11/99 4.450 3,500,000.00 04/13/99 Sunwest Bank 01/19/99 4.480 1,000,000.00 04/21/99 VICTORVILLE Citizens Business Bank 10/08/98 4.360 10,000,000.00 04/07/99 Citizens Business Bank 12/16/98 4.570 10,000,000.00 06/16/99 Citizens Business Bank 01/05/99 4.640 5,000,000.00 07/07/99 Citizens Business Bank 02/08/99 4.580 10,000,000.00 08/10/99 Citizens Business Bank 03/09/99 4.850 5,000,000.00 03/08/00 Citizens Business Bank 03/23/99 4.780 10,000,000.00 03/22/00 WALNUT CREEK Saratoga National Bank 09/28/98 4.660 5,000,000.00 04/01/99 Saratoga National Bank 12/21 /98 4.610 1,750,000.00 06/22/99 TOTAL TIME DEPOSITS AS OF MARCH 31,1999 2,09396409000.00 —23— DEMAND BANK DEPOSITS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. AVERAGE DOLLAR DAYS (000 omitted) DAILY BALANCES PER BANKS $343,070 565,519 420,126 3029666 2749013 2749013 2749013 5509687 364,117 3329166 3819443 2429295 242495 242,295 2289096 188415 111450 3479276 416,305 416,305 4169305 384,487 485,887 4779739 1899353 3259405 325,405 3259405 5029411 364,933 251,884 a/ $340,819 WARRANTS OUTSTANDING $19923437 1,728,944 1,681,415 1,7769805 1,992,292 1,992,292 1,992,292 1,511,552 1,571,380 195119673 1,6459856 196549229 196549229 1,6549229 1,500,699 1,3669473 192419044 1,556,983 14069442 195069442 14069442 194779357 195719454 194399515 19460,329 1,551,918 14519918 1,551,918 1,4169237 1,432,089 1,864,006 a/ The prescribed bank balance for MARCH was $359,092, 000.00. This consisted of $215,912,000.00 in compensating balances for services, $143,180,000.00 uncollected -funds and a deduction of $10,730,000.00 for December delayed deposit credit. -24- DESIGNATION BY POOLED MONEY INVESTMENT BOARD OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS No. 1597 In accordance with sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board, at its meeting on March 17, 1999, has determined and designated the amount of money available for deposit and investment under said sections. In accordance with sections 16480.1 and 16480.2 of the Government Code, it is the intent that the money available for deposit or investment be deposited in bank accounts and savings and ban 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 $ 222,813,000 The active noninterest-bearing bank accounts designation constitutes a calendar month average balance. For purposes of computing the compensating balances, the Treasurer shall exclude from the daily balances any amounts contained therein as a result of nondelivery of securities purchased for "cash" for the Pooled Money Investment Account and shall adjust for any deposits not credited by the bank as of the date of deposit The balances in such accounts may fall below the above amount provided that the balances computed by dividing the sum of daily balances of that calendar month by the number of days in the calendar month reasonably approximates that amount The balances may exceed this amount during heavy collection periods or in anticipation of large impending warrant presentations to the Treasury, but the balances are to be maintained in such a manner as to realize the maximum return consistent with safe and prudent treasury management 2. In accordance with law, for investment in securities authorized by section 16430, Government Code, or in term interest - bearing deposits in banks and savings and loan associations as follows: From To ( 1) 03/15/99 03/19/99 (2) 03/22/99 03/26/99 (3) 03/29/99 . 04/02/99 (4) 04/05/99 04/09/99 (5) 04/12/99 04/16/99 (6) 04/19/99 04/23/99 Transactions $ 1,229,200,000 $ 1,383,700,000 $ (2,239,100,000) $ (165,800,000) $ 1,774,300,000 $ 3,089,000,000 Time Deposits in various Financial Institutions In Securities (sections 16503a (section 16430)* and 16602)* $ 32,568,360,000 $ 2,031,640,000 $ 33,952,060,000 $ 2,031,640,000 $ 31,712,960,000 $ 2,031,640,000 $ 31,547,160,000 $ 2,031,640,000 $ 33,321,460,000 $ 2,031,640,000 $ 36,410,460,000 $ 2,031,640,000 Estimated Total $ 34,600,000,000 $ 35,983,700,000 $ 33,744,600,000 $ 33,578,800,000 $ 35,353,100,000 $ 38,442,100,000 From any of the amounts specifically designated above, not more than 30 percent in the aggregate may be invested in prime commercial paper under section 16430(e), Government Code. Additional amounts available in treasury trust account and in the Treasury from time to time, in excess of the amounts and for the same types of investments as specifically designated above. Provided, that the availability of the amounts shown under paragraph 2 is subject to reduction in the amount by which the bank accounts under paragraph 1 would otherwise be reduced below the calendar month average balance of $ 222,813,000. _ Dated: March 17, 1999 *Government Code -25- INVESTMENT ADVISORY BOARD Written Correspondence C Meeting Date: TITLE: June 9, 1999 LAIF Answer Book Update BACKGROUND: From time to time LAIF updates their answer book. No significant changes to the updated information was noted by staff. RECOMMENDATION: Receive and file. Jdhn M. Falcorybr, Finance Director LAIF EXTENDS SAME DAY WINDOW AND BUSINESS HOURS Beginning June 1, 1999, the LAIF is extending the "same day" transaction window to accept deposits and withdrawals from 7: 30 a.m. to 10:00 a.m. Transactions taken after 10:00 a.m. through 4:15 p.m. will be for the next day's business or for transactions up to ten days in advance. In addition, LAIF is extending its business hours and will remain open until 4:15 p.m. Monday through Friday. 1999 Local Agency Investment Fund ------------ Annual Conference The Annual Local Agency Investment Fund Conference will be held on October 1, 1999, from 9: 30 a.m. to 2:30 p.m. at the Sacramento Convention Center. This year's guest speakers will include State Treasurer Philip Angelides, William C. Dudley, Managing Director and Director of U.S. Economic Research for Goldman, Sachs and Co., Kristin Faust, Chief Deputy State Treasurer and Hugo Lopez, Executive Director of the California Debt & Investment Advisory Commission. The conference registration packet will soon be mailed to each participating agency. INVESTMENT ADVISORY BOARD Written Correspondence D Meeting Date: June 9, 1999 TITLE: Memorandum from Board member Moulin regarding Comparison of the City Investment Policy to Three other Cities BACKGROUND: Board Member Moulin has requested that this item be placed on the agenda for informational purposes. The Investment policies of the three other cities are on file in the Treasurers Office. RECOMMENDATION: Receive and file. J hn M. Falcoher, Finance Director MEMORANDUM May 19, 1999 To: City Treasurer and Members of the Investment Advisory Board From: Don Moulin Subject: Comparison of Certain Provisions in the Investment Policies of the Cities of La Quinta, Oceanside, San Bruno and Santa Rosa During my attendance at the California Municipal Treasurers' Association (CMTA) Annual Conference last month, I discussed the content of investment policies and reports with several city representatives responsible for them. After discussion of my intentions with John Falconer, I requested a copy of the investment policy from the Cities of Oceanside, San Bruno and Santa Rosa. These cities are somewhat comparable to La Quinta. However, I selected them primarily because their representatives are current officers of CMTA that are committed to WA policies and quality. Santa Rosa's investment policy was reviewed and certified by MTA this year. Oceanside and Santa Rosa also furnished a copy of their March 1999 investment report. I prepared a comparison of certain provisions of the investment policy of La Quinta's with the policy of the three other cities. That comparison is attached. Observations: - La Quinta's investment policy is substantially more comprehensive than the three others. For example, the other cities do not recite the state code covering authorized investments, instead limiting the discussion to their city's authorized investments and limitations. The other cities' policies do not cover banking arrangements, names of brokers and dealers, or a description of the separation of responsibilities of employees for internal control purposes. - Diversification is covered in each of the other investment policies but not as a separate objective. - Each of the other cities allows maximum maturities of up to 5 years, enabling a higher portfolio yield but with greater risk Although allowing a maturity of 5 years, San Bruno and Santa Rosa set limits on the extent of the portfolio with maturities over 1 year. San Bruno allows only 33 % of the portfolio to mature after 1 year, and Santa Rosa allows 50% with a decreasing percentage each additional year. At March 31, 1999, Oceanside's portfolio had an average maturity of 1,269 days and yield of 5.92%, and Santa Rosa's was 538 days and 5.38%, respectively. The portfolio yield of both cities exceeded LAIF's 5.12 % . La Quinta's yield was 4.87 %. - Each of the other cities authorizes investments in bankers' acceptances, medium term corporate notes (MTNs), and repurchase agreements that are not allowed by La Quinta. Of these three possible vehicles, Oceanside and Santa Rosa are currently investing only in MTNs to the extent of 8.19% and 20.8%, respectively, of the portfolio at March 31, 1999. San Bruno and Santa Rosa use credit ratings of MTNs to influence maturity limits, i.e., an AAA rating allows a maturity up to 5 years while an A rating maturity is limited to 2 years. None of the other cities has a fixed limitation on the amount of investment in U.S. Treasury and Agency obligations. Assessment and Recommendation: Overall, La Quinta's investment policy compares very favorably with the others. It is substantially more comprehensive and informative. La Quinta's more restrictive investment choices and the maturity limit of two years narrow opportunities for diversification, higher yields and risk -spreading. Our investment limitations are less risk -based than the others, and, in that regard, our policy may be somewhat riskier. I continue to favor a more risk -based approach to certain of the limitations on investments and recommend we reconsider that topic during our next review of our City's investment policy in 2000. INVESTMENT POLICIES COMPARISON OF CERTAIN PROVISIONS IN THE INVESTMENT POLICIES OF THE CITIES OF LA QUINTA, OCEANSIDE, SAN BRUNO AND SANTA ROSA Ma�y,1999 Topic La in Oceansi a San Bruno Santa Rosa Objectives in order of priority: 1. Safety of principal Yes Yes Yes Yes 2. Liquidity Yes Yes Yes (1) Yes 3. Return on investment Yes Yes Yes Yes 4. Diversification Yes Incl in 1 & 2. Incl in 1. Elsewhere Oversight body selected by: Council Treasurer None Manager Maximum maturities 2 yrs State State State 33% +lyr 50% +1 yr 35% +2 yrs 25 % +3 yrs 15 % +4yrs Authorized investment limits: U.S. Treasuries 75 % None None None U.S. Govt Agencies 75/25 % (2) Prud invstr Prud invstr None Bankers' acceptances Not auth 20/5% 40/10% 40/10% Commercial paper 30%/$1M 15/5% (3) 15/10% (3) 30/10% Medium term core notes Not auth 15/5% (3) 15/5% (3) 30/10% A to 2 yrs A to 2 yrs AA to 3 yrs AA to 4 yrs AAA to 5 yrs AAA to 5 yrs Mutual funds UST MW Not auth Not auth 15/ 10 % 20% 60 days Repurchase agreements Not auth 30% w/limits 30% w/limits 10% collatlzd Reverse repurchase agreements Not auth 10% Not auth Not auth Time deposits'- CDs 60% collatlzd 15% collatlzd 15% collatlzd FDIC insrd Negotiable CDs Not auth Not auth Not auth 30/10% Ato2yrs, AA to 4 yrs AAA to 5 yrs Investment pools - LAIF 35 % State State State - Other Not auth Not auth County 30/10% Specifically prohibited Derivatives Agency zeros Derivatives, Derivatives, leveraging interest only strips, zeros Benchmark 6 mo USTB 3 mo USTB Similar bodies LAIF-lyr TB No. of pages of policy - Basic 19 7 8 9 - Additional 20 8 None None Notes: (1) At least 50% of the portfolio is invested in "readily marketable" securities. (2) "75/25 %" means 75 % of the portfolio and 25 % by a single issuer, bank or fund (3) Single issuer limits on commercial paper and medium term notes are combined. (4) Oceanside's portfolio is actively managed and reacts to changing conditions. This comparison is derived from the respective City's investment policy and is abbreviated. See each City's investment policy for complete information.