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2003 03 12 IAB..... ... Aft - *. P.O. Box 1504 78-495 CALLE TAMPICO (760) 777-7000 LA QUINTA, CALIFORNIA 92253 FAX (760) 777-7101 AGENDA INVESTMENT ADVISORY BOARD Study Session Room 78-495 Calle Tampico- La Quinta, CA 92253 March 12, 2003 - 5:30 P.M. Board Member Felice ( Video Conference Location) Cisco Systems 170 West Tasman Dr., Bldg. 17, San Jose, California, 95135 1 CALL TO ORDER a. Pledge of Allegiance b. Roll Call II PUBLIC COMMENT - (This is the time set aside for public comment on any matter not scheduled on the agenda.) III CONFIRMATION OF AGENDA IV CONSENT CALENDAR A. Approval of Minutes of Meeting on February 12, 2003 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for January 2003 B. Consideration of Fiscal Year 2003/04 Investment Policies C. California Municipal Treasurer's Conference — Indian Wells, CA April 30 — May 2, 2003 VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report and other selected Financial Data - February 2003 B. Pooled Money Investment Board Reports — December 2002 VII BOARD MEMBER ITEMS Vill ADJOURNMENT INVESTMENT ADVISORY BOARD Business Session: A Meeting Date: March 12, 2003 ITEM TITLE: Transmittal of Treasury Report for January 31, 2003 BACKGROUND: Attached please find the Treasury Report January 31, 2003 RECOMMENDATION: Review, Receive and File the Treasury Report for January 31, 2003 nance Director T0 Iry 4ht 4 64� Qu&rA MEMORANDUM TO: La Quinta City Council FROM: John M. Falconer, Finance Director/Treasurer SUBJECT: Treasurer's Report for January 31, 2003 DATE: March 5, 2003 Attached is the Treasurer's Report for the month ending January 31, 2003. The report is submitted to the City Council each month after a reconciliation of accounts is accomplished by the Finance Department. The following table summarizes the changes in investment types for the month: Investment Beginning Purchased Notes Sold/Matured Other Ending Change Cash $810,573 $12,610,030 (1) $13,420,603 $12,610,030 LAIF $14,478,739 4,196,418 18,675,157 4,196,418 US Treasuries (2) $57,811,616 33,988 57,845,604 33,988 US Gov't Agencies (2) $14,989,208 7.898,348 (3,000,000) (28,636) 19,858,920 4,869,712 Commercial Paper (2) $0 0 0 Mutual Funds $7,827,297 1 7,457,627 369,670 7,457,627 Total $95 917 433 $24 704 796 $10 457 627 $5,352 $110,169,954 $14,252,521 I certify that this report accurately reflects all pooled investments and is in compliance with the California Government Code; and is in conformity with the City Investment Policy. As Treasurer of the City of La Quinta, I hereby certify that sufficient investment liquidity and anticipated revenues are available to meet the pools expenditure requirements for the next six months. the City of La Quinta used the Bureau of the Public Debt, U.S. Bank Monthly Statement and the Bank of New York Monthly Custodian Report to determine the fair market value of investments at month end. 3 s o3 Date Footnote (1) The amount reported represents the net increase (decrease) of deposits and withdrawals from the previous month. 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cM W W W W W W .8 W W W d d d� o 2 2��� �e�q to to to •� W eo c c c m a to to c c c m c c c yLL c U=� dd�tnag dddtnag ���cnag RI CITY OF LA QUINTA CITY CITY RDA RDA FA BALANCE SHEET 01/31/03 FIXED LONG TERM FIXED LONG TERM FINANCING LONG TERM GRAND CITY ASSETS DEBT RDA ASSETS DEBT AUTHORITY DEBT TOTAL ASSETS: POOLED CASH 1.377.317.51 0.00 000 30.118.874 87 0.00 000 7.281 36 0 OC 3 ` 503 4'3 7a LORP INVESTMENT IN POOLED CASH 0.00 0.00 0.00 590,000.00 000 000 000 000 5W OOO Oi INVESTMENT T-BILL(NOTES A OTHER 48.000.000.00 0.00 000 000 0.00 000 000 000 48 OOL, M, 3, AUTO MALL CASH 0,00 0.00 CASH 0.00 0.00 0.00 1,103.93 0.00 0.00 000 000 0 IN,LORP 1 10383 BOND REDEMPTION CASH 0.00 0.00 0.00 4.539.66 0.00 000 339 7' 000 4 879 43 BOND RESERVE CASH 0.00 0.00 0.00 0.00 0.00 000 000 000 0 OC BOND PROJECT CASH 0.00 0.00 000 30.314.941.94 0.00 000 0 10 0 OC 30.314 94. )4 BOND ESCROW CASH 000 0.00 0.00 0 00 0.00 000 000 0 00 j 0, PETTY CASH 1.20000 0.00 0,00 000 000 0.00 000 000 1 2w 0i CASH i INVESTMENT TOTAL 49,378.517 51 000 0.00 61.029.460 30 0.00 000 62/ :3 0 OC 110 41$ !99 1i INVESTMENT IN LAND HELD FOR RESALE 0.00 0.00 0.00 000 000 000 0 00 000 0 0: ACCOUNTS RECEIVABLE 138.167.21 000 000 60.900 00 0.00 000 000 000 199 Oc,- 2, PREMIUMIDISCOUNT ON INVESTMENT (97.820.43) 0 00 0.00 (147.825 00) 000 000 0 00 0 OC 1245 645 43 LORP-ACCOUNTS RECEIVABLE 0.00 000 0 00 51,905.94 000 0 00 000 000 5 1. 905 94 INTEREST RECEIVABLE 220.844 75 000 000 000 000 000 000 000 220.8" ', S LOAN/NOTES RECEIVABLE (59.06) 0.00 0.00 13.215.683 11 000 000 000 000 13.215 624 05 DUE FROM OTHER AGENCIES 1.164,702.DO 227.833 02 1.392 535 02 DUE FROM OTHER AGENCIES - CVAG 2.299.096 69 000 000 000 000 000 000 2.299,096 69 CVAG ALLOWANCE (2.299,096 69) (2.299.096 691 DUE FROM OTHER GOVERNMENTS 30.600 37 0.00 000 000 0.00 000 000 000 30.600 3' DUE FROM OTHER FUNDS 0.00 0.00 171,662.53 0.00 000 000 000 171 662 53 DUE FROM RDA 8.497.550.20 000 000 000 0.00 000 000 000 8 49' 550 20 INTEREST ADVANCE -DUE FROM RDA 4,805.901.33 000 000 0,00 0.00 000 000 0 00 4 805.901 33 ADVANCES TO OTHER FUNDS 1.100.000.00 2.808.329.35 3 908.329 35 NSF CHECKS RECEIVABLE 3.648.86 0.00 0.00 0.00 000 000 0 00 0 00 3 648 86 ACCRUED REVENUE 0.00 0.00 0.00 0.00 0.00 000 000 0 00 0 OC FIXED ASSETS 000 308,622.199.00 308.612,199 00 ACCUMULATED DEPRECIATION 1.018.482.90 0.00 1 018.482 90 TRAVEL ADVANCES 0,00 0.00 0.00 0.00 000 000 000 000 000 EMPLOYEE ADVANCES 0.00 0.00 0.00 0.00 0.00 0.00 000 000 000 PREPAID EXPENSES 0.00 0.00 0.00 0.00 0.00 000 000 coo 000 RECEIVABLE TOTAL 16.882.018.13 308.622.199.00 0.00 16.388.488.95 0.00 000 000 0 00 3a 1.89:706 68 WORKER COMPENSATION DEPOSIT 148.445.00 0.00 0.00 0.00 0.00 000 000 0.00 148.445 00 RENT DEPOSITS 0.00 0.00 0.00 0.00 0.00 000 000 000 000 UTILITY DEPOSITS 75.00 ob() 0.00 0.00 0.00 000 000 000 7500 MISC DEPOSITS (951 79) 0.00 000 000 0,00 000 000 000 (951 791 DEPOSITS TOTAL 147.568.21 0.00 0.00 0.00 000 0,00 0 00 0 00 147 568 : 1 GENERAL FIXED ASSETS 0.00 0.00 0.00 000 52.094.306 00 000 000 000 52.094.306 00 ACCUMULATED DEPRECIATION 0,00 000 000 AMOUNT AVAILABLE TO RETIRE L/T DEBT 0.00 0.00 0.00 000 0.00 000 000 0 00 000 AMOUNT TO BE PROVIDED FOR L/T DEBT 0.00 0.00 1.694.231.51 0,00 0.00 160.998.172 00 000 7.475.000 00 170 167 403 51 TOTAL OTHER ASSETS 0.00 0.00 1,694,231. 1 000 52.094.306.00 160.998.172 00 000 ,4�000 00 222.261.709 51 TOTAL ASSETS 66.408,103.85 308.622.19900 1.694.231.51 77,417.949 25 52.094.306 00 160.998.172 00 7.621 23 7,475,00000 674 ' 17.582 84 LIABILITIES: ACCOUNTS PAYABLE 14.144 54 000 0,00 0.00 000 0 00 000 000 14 14454 DUE TO OTHER AGENCIES 949,388.54 000 000 0.00 0.00 000 000 000 949.388 54 DUE TO OTHER FUNDS 171,662.53 0,00 000 1.919,917 95 0,00 000 000 000 2.091.580 48 INTEREST ADVANCE -DUE TO CITY 2.808.329 35 000 0.00 12.483.537.00 000 000 000 000 15.291.866 35 ACCRUED EXPENSES 000 0,00 0.00 000 0.00 000 0.00 000 000 INTEREST PAYABLE 000 0,00 000 95.538 44 95,538 44 PAYROLL LIABILITIES 94.799 78 0.00 0.00 000 0.00 000 0 00 000 94.799 78 STRONG MOTION INSTRUMENTS 3,69956 0.00 000 0 00 0.00 000 000 000 369956 FRINGE TOED LIZARD FEES 74,040.00 0.00 0.00 000 0,00 000 000 000 74.040 00 SUSPENSE (77.981,55) 0.00 0.00 000 000 000 000 000 (77,981 55) DUE TO THE CITY OF LA QUINTA 000 000 0,00 000 000 000 000 000 000 PAYABLES TOTAL 4.038.082.75 0.00 0.00 14.498,993 39 000 000 000 0 00 t8.537.076 14 ENGINEERING TRUST DEPOSITS 1.40000 0.00 0,00 0,00 0.00 000 000 000 1.40000 SO. COAST AIR QUALITY DEPOSITS 0,00 000 000 000 000 0.00 000 000 000 LORP DEPOSITS 0,00 0.00 0.00 17,097 00 0.00 000 000 000 17,097 00 DEVELOPER DEPOSITS 1,040,626.29 0.00 0.00 18,014.50 0.00 0.00 0.00 000 1.058.640 79 MISC DEPOSITS 439.718.66 0.00 000 25,000.00 0.00 0.00 000 000 464,718 66 AGENCY FUND DEPOSITS 1.497,938,14 0.00 0.00 0.00 000 000 0.00 000 1.497.938 14 TOTAL DEPOSITS 2.979.683.09 0.00 0.00 60.11150 0.00 000 000 3.03T.T9V9 DEFERRED REVENUE 1.164,702.00 0.0o 0.00 11.079,695.08 0,00 000 000 000 12.244,397 08 OTHER LIABILITIES TOTAL 1.164.702.00 0.00 0.00 11.079.695.08 0.00 000 000 000 12.244 397-08 COMPENSATED ABSENCES PAYABLE 0.00 0.00 422,197 92 0.00 000 000 000 000 422.197 92 DEVELOPER AGREEMENT 000 0.00 743,722.59 0.00 000 000 000 000 743.722 59 DUE TO THE CITY OF LA QUINTA 000 000 528,311 00 000 000 000 000 000 528.311 00 DUE TO COUNTY OF RIVERSIDE 0.00 000 000 000 000 2.250,000 00 000 000 2.250.000 00 DUE TO C V. UNIFIED SCHOOL DIST 0.00 0 00 000 000 000 8.063,172 00 000 000 8.063.172 00 DUE TO DESERT SANDS SCHOOL DIST 000 000 000 000 000 000 000 000 000 BONDS PAYABLE 0 00 000 000 000 000 150.685.000 00 000 7 475 000 00 158.160,000 00 TOTAL LONG TERM DEBT 0.00 000 1,694.231 51 0,00 000 160.998.1 2 00 _ 0 00 7475.000 00 130.16700_3 5 ) TOTAL LIABILITIES 8.182,467 84 000 1,694.231.51 25.638.799 97 0.00 160.998.172 00 0.00 7,475.000 00 203.966,671 32 EQUITY -FUND BALANCE 58,225.636.01 308.622,199,00 0.00 51.779,149.28 52.094,306,00 0.00 7.62123 000 470.728.91152 TOTAL LIABILITY a EQUITY 66,408.103.85 308,622.199.00 1.694.231.51 77,417.949.25 52.094.306.00 160.998.172 00 7.621.23 7.475.000 00 674.717,582 84 (0.00) 0.00 0.00 (0 00) 0.00 0.00 0.00 000 (0606. 060 CASH 6 INVESTMENT TOTAL 110,415,599.04 PREMIUM/DISCOUNT ON INVESTMENT (245.645.431 TOTAL 110.169,953.61 IV INVESTMENT ADVISORY BOARD Business Session: C Meeting Date: March 12, 2003 TITLE: California Municipal Treasurer's Conference - Indian Wells, CA April 30 - May 2, 2003 BACKGROUND: Each year the City budgets funds for the Treasurer and two Investment Advisory Board members to attend the Treasurers Conference. Due to the conference location, Staff has $1,200 budgeted which would go toward conference registration. Extra early registration would allow one Staff and up to four Board Members the opportunity to attend the conference. Staff is requesting the names of those interested in attending be given at the Investment Advisory Board Meeting on the 121h so that registration materials may be turned in by the 14" for early registration. RECOMMENDATION: Select up to four Board members to attend the Treasurer's Conference. hn M. Falcone,, Finance Director S 3 Conference Registration Form Miramonte Resort April 28 — 29, 2003 Pre -Conference April 30 — May 2, 2003 Conference CALIFORNIA MUNICIPAL TREASURERS ASSOCIATION You must be a current CMTA Member (Active/Government Associate/Sustaining) to register. If you need to verify that your membership is current please contact Frances Medema at CMTA's Sacramento office at (916) 658-8209. If you have any questions regatding conference registration, call Mike Reynolds at the City of Redlands at (909) 798-7544. Please use a separate form for each registrant (photocopies accepted). (This form is not valid for Commercial Associate members.) Name (Please print or Type) _ Title Organization Mailing Address City State Zip Phone Fax E-Mail Address Name you prefer on Badge Spouse/Guest Name Is this your first CMTA Conference? (yes or no) Special dietary needs? --(yes or no) Will you be attending the Thursday evening Banquet? (yes or no) Registration Fees Pre -Conference Seminar [Active or Government Associates] Pre -conference Seminar only S 125.00 $ Pre -Conference Seminar if also attending conference S 115.00 $ Conference Postmarked Active or Government Associate Extra Early (on or before 3/14//03) $ 235.00 $ Includes all meals, receptions & Thursday Banquet Early (on or before 4/04/03) S 260.00 $ Regular (after 4/04/03) $ 290.00 $ Second registrant from same organization Extra Early (on or before 3/14/03) S 210.00 $ Includes all meals, receptions do Thursday Installation Banque Early (on or before 4/04/03) S 235.00 $ Regular (after 4/04/03) S 290,00 S Daily Conference Registration ❑ Wednesday 0 Thursday Daily Rate x $ 110.00 S Available only if another person from your same agency has paid full conference registration Includes breakfast tit lunch only Additional Meals Spouses & Guests Wednesday Lunch X S 25.00 $ Thursday Lunch X S 25.00 $ Thursday Banquet X S 60.00 $ Total Fees $.- Please make checks payable to "CMTA 2003 Conference". Mail to: Michael Reynolds, City Treasurer, P.O. Box 3005, Redlands, CA 92373- 1505.(A pre -addressed envelope has been included for your cone Advance registrants unable to attend may receive a refund of the registration fee less $25.00 processing fee by submitting a written request to CMTA at the same address or fax (909) 792-6623 by April 14, 2002. No refunds will be made if requested after hat date. Substitute attendees will be accepted at any time. IM rA CMTA ANNUAL CONFERENCE Draft Program Monday, April 28, 2003 9: 00 AM - 1: 00 PM Board Meeting (CMTA OFFICERS AND BOARD MEMBERS) Pre -Conference Workshop: - "Is It a Mirage?" (Active Government Associates only) Right Time -Right Choice? 1:00 PM -1:45 PM Opening Session Economist Speaker: 1:45 PM -2:00 PM Break 2:00 PM - 3:30 PM Callables and Interest Rates Trends - What lies ahead Speakers: Margaret Kerins, CFA - Bank One Fixed Income Group City of San Jose - Scott Johnson; City of Fresno - Ruthie Quinto; City of Apple Valley- Deb Sousa 3:30 PM - 3:45 PM Break 3:45 PM - 5:00 PM Investment Policies: Attention to Risk vs Yield in Today's Market Speakers: Investment Model Policy Highlights: Tom Kanarr - Palm Springs Credit Watch Issues - Moody's Rating Agency Tuesday, April 29, 2003 Pre -Conference Workshop: - "Is H a Mirage?" (Active Government Associates only) Fraud Prevention 8:00 AM -9:00 AM High Tech Fraud - Tales from the Frontline Speakers: Carol Donlon - Union Bank of California Mike Prandini - City of Clovis 9:00AM- 9:15AM 9:15 AM -10:15 AM Speaker: 10:15 AM -10:30 AM 10:30 AM -11:30 AM Speaker: 12:30 PM Break Identity Fraud J. FBI Special Agent Ron Weisse Break Employee Fraud in the Gov't Environment & How to Prevent it William Morgan - Deihl Evans & Co. LLP Golf Tournament sponsored by Union Bank of Caliomia 12:30 PM - 5: 00 PM Cash Handling Cash - MTA(additional fee) 6:00 PM - 7:00 PM Early Bird Reception 7:00 PM Free Evening I- CMTA 2003 ANNUAL CONFERENCE Draft P rog ram Wednesday, April 30, 2003 OASIS OF OPPORTUNITIES Early Risers 8:00 AM - 9:00 AM 9:00 AM - 9:15 AM 9:15 AM - 10:30 AM Personal Balance Basketball Morning Walk Breakfast 6:15 am in hotel lobby 6:30 am in hotel lobby Opening Session - Welcome "Lessons Learned by a Fighter Pilot" Opening Speaker: David Carey 10:30 AM -10:40 AM Break 10:40 AM -11:20 AM Business Session 11: 20 AM -11: 50 AM 12:00 -1:45 PM Certification Awards Luncheon Keynote Speaker., Honorable US Treasurer Rosario Marin (invited) 1:45 PM -2:00 PM Break 2:OOPM - 3:00 PM Government Sponsored Enterprises: Risks and Opportunities Speaker: Ron Garcia, Sr. Deputy Director - FNMA 3:00 PM - 3:15 PM Break 3:15 PM - 4:00PM Concurrent Sessions: o Round Tables ■ Listserve/Website - Jim Slobojan ■ CMTA Certification - Judy Oltman ■ Special Districts - Margaret Rutledge ■ CD/AC- Lisa Harris/Frank Moore o LA/F - Bill Sherwood / Eileen Parks o GSE - Ron Garcia, FNMA o CALPERS - Ken Marzion, Actuarial Div. Chief 4:00 PM -4:15 PM 4:15 PM - 5:00 PM 6:00 PM - 7:00 PM 7:00 PM Break Concurrent Sessions: o Round Tables ■ Listserve/Website - Jim Slobojan ■ CMTA Certification - Judy Oltman • Special Districts - Margaret Rutledge ■ CD/AC- Lisa Hards/Frank Moore o LAW - Bill Sherwood / Eileen Parks o GSE - Ron Garcia, FNMA o CALPERS - Ken Marzion, Actuarial Div. Chief Reception Free Evening I- W 2003 CMTA Conference Draft Program Thursday, May 11 2003 Oasis of opportunities Early Risers Personal Balance Basketball 6:15 am in hotel lobby Morning Walk 6:30 am in hotel lobby 7:30 AM - 9.00 AM Breakfast 9:00 AM - 10:15 AM General Session Speaker: Collaborative Communications between Cities, Agencies, Counties and School Districts) 10:15 AM -10:30 AM Break 10:30 AM - 11:45 AM Rightsizing, downsizing, capsizing Speaker: Teal Gaeb/er, Co -Author of Reinventing Government 12:00 AM -1:45 PM LUNCHEON Keynote Speaker: Ed Leamer - Director of UCLA Anderson Forecast Conference Sponsor Recognition 1:45 PM - 2:00 PM Break 2:00 PM - 3:00 PM Concurrent Sessions: • Direct Payments - John Good, Stop Processing Center • New Treasurer's Session - Handbook/ Educational Workshops - Dale Belcher / Christine Vuletich ■ Debt Issuance/Regulatory Requirements -Peter Schmitt - DPC Data Inc. 3:00 PM - 3:15 PM Break 3:15 PM - 4:15 PM Concurrent Session • Nuts & Bolts - Government Associates • Nuts & Bolts - Commercial Associates 4:15 PM - 5:00 PM Nuts & Bolts Wrap-up - Combined 5:45 PM - 6:15 PM Photo Session for Board and Certification Awardees 6:15 PM - 7:00 PM President's Reception 7:00 PM Dinner 8:00 pu Installation 8:30 AM - Midnight Hawaiian Party 2003 CMTA Conference Draft Program Friday, May 2, 2003 Early Risers Personal Balance Basketball 6:15 am in hotel lobby Morning Walk 6:30 am in hotel lobby 8:00 AM- 8:30AM Continental Breakfast 8:30 AM - 10:00 AM Retirement Now? Speaker: Girard Miller, President, ICMA Retirement Corp. 10:00 AM -10:15 AM Break 10:15 AM -11:30 AM State Budget 2003-04: Let the Games Begin?' Speaker: Elizabeth Hill, Legislative Analyst Office Vendor Passport Drawing at Conclusion of Session (Mut be present to win) 11:45 AM -1:00 PM Board Meeting (For CMTA Officers and Board Members) Roundtables 3:15 pm — 4:00 pm Listserv/Website: Learn how to subscribe to the CMTA listsery and see what resources are available on the CMTA website. CMTA Certification: Pick up the certification packet and find out how to be certified or re -certified. Special Districts: Open forum to discuss "hot topics for Special Districts. CDIAC: Obtain the latest results of the Cities investment summaries and ask what they do with the reports we send twice a year. LAIF: Find out what LAIF is doing to cope in this interest rate environment. GSE: Follow-up to general session and ask additional questions about GSE's. CALPERS: Find out the latest on PERS Actuarials and what your agency can expect. Thursday, May 2 Collaborative Communication between Cities, Agencies, Counties, and School Districts 9:00 am — 10:15 am A panel will discuss some of the tools they have used to collaborate and some ways to collaborate in the future. Rightsizing, Downsizing, Capsizing: 10:30 am — 11:45 am This speaker discusses some options to help your agency deal with the State's budget crisis. Luncheon Speaker Noon — 1:45 pm This noted economist from UCLA will discuss the California and US economy and where we go from here. Concurrent Sessions: 2:00 pm — 3:00 pm Direct Payments: Find out the benefits of direct payments and how it might apply to your agency. Are You In Compliance With Debt Issuance Reporting Rights? This speaker will discuss electronic options to satisfy your reporting requirements under NRMS. Nuts and Bolts Join fellow treasurers in an open dialogue about current issues and "hot topics". Friday, May 2 Retirement Now 8 : 3 0 am — 10: 00 am This speaker will discuss important issues to consider for retirement. State Budget 2003/04: Let The Games Begin 10: 15 am — 11: 30 amm A legislative analyst will discuss the latest budget numbers and steps the state has taken for the 03/04 budget. Monday. April 28 Pre -Conference Opening Speaker — Economist 1:00 pm — 1:45 pm Where is the US and California Economy Going? Callables and Interest Rates Trends — What Lies Ahead: 2:00 pm — 3:30 pm Should I be invested in government callable securities and what happens if rates are stable go lower or increase? A speaker is joined by a panel of treasurer's from four agencies and discusses current investment strategies. Investment Policies: Attention to Risk vs. Yield in Today's Market: 3 :45 pm — 5:00 pm An agency that had its investment policy certified by APT of the US and Canada will discuss key items to consider in your investment policy to protect agency assets. A credit agency will discuss what they look at in investments and how to protect your credit rating. Tuesday, April 29 High Tech Fraud: 8:00 am — 9:00 am This agency and bank will discuss tales from the frontline and how to protect your agency. Identify Fraud: 9:15 am — 10: 15 am The FBI will discuss identifying fraud and happens to you. current trends in what to do if it Employee Fraud in Agencies and How to Avoid It: • 10:30 am — 11:30 am The speaker will outline the most common fraud in the workplace and various controls to protect your agency Cash Handling Training Seminar: 12:30am-5:00am See attached flyer Wednesday, May 1 Lessons Learned by Fighter Pilot David Carey: 9:15 am — 10: 3 0 am This military pilot will discuss his experiences and similarities encountered in the Agency environment... Keynote Speaker: Noon —1:45 pm US Treasurer Rosario Marin Government Sponsored Enterprises — Risks and Opportunities: 2:00 pm — 3:00 pm This speaker will discuss the current status of GSE's and future outlooks. INVESTMENT ADVISORY BOARD Correspondence & Written Material Item A Meeting Date: March 12, 2003 TITLE: Month End Cash Report February 2003 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, Oinance Director _N O c 0 O LL W N r- O O. a) M O C a N 0'D N co W Z' N o£ w O � o m LLL r ^ ^ � CM p~ N O O M p 0 r p L 04 N � O O CA 00 M co) 0 0 0 CO CO N O r- 0)Ln O) 0 co N p 0 . N 00 COLo CV) CD r CD 0 0 04 o�? 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L m 0 N a) E .0 _� U.S >,0 0 0) a) (D a) a C CO 3 N � E � a) n a) a) O U >. cm 0 > U � � � � >� c N � ow - a �c ��� � �_ m om CS U a'5 � 3§ v W v a Q a ¢ y U o 0 c o O. c0 w � Q in 0 z o� LPL 2 <'S co cn 3 c � 0) X O U N O r O p W a) C ` E N r O O r to C CO >, L Co Y Ln Mp cv a) E c CD L m 'O V M w U N O= r My 0 C ~ c ° a'ai 'a aa) cco 7 CA Ln Q a) C r= YO cu Z C a)Y -0 C a) M O L N G W COD _ O N a) CDy 7 C a) O C M > C C Q aO O U L — O m N N O N N N O N w C 46 O U CU a) N 7 U N E y C LL O L C O O ~ `` O o N a c N E.Q 7 N a) o CL V Y Cl cuO cn L r m ~ O -E poo O 7 Q o�, N r N O CO `- y O. cu p Y O- «- O O C L O Y Oa n E (n L O O d "a O N w <n 03 E U N C cu C 0 •` a N " >+ o s 3Y - s c0 > Ca c. 0c Eo n. a� C O O a) E a) U Y � C N aL. cn m 0 E c N co Z C f Ncn o a a) a� ao. = c 0 O C E ocoi Ea N y c3 CL e N o O m to LL o -o M � y O a) cn y N O O- J f6 0 7 CNO Q U X y O ` U C� (m v y cn U) U 0 S O N O C co -a L" ;�� Ca) OOU� E C fn O 0 w O.O N (n U 0 0 a) O O CaO O O C0 p D_ IL H U H C Cn C O YO 2. FRB: H.15--Selected Interested Rates, Web -Only Daily Update --February 28, 2003 Page 1 of 3 Federal Reserve Stiehl Release HA 5 Selected Interest Rates anvi Release Date: February 28, 2003 Weekly release dates and ann-oun.cements I Ilistori-cal data I.About Daily update Other formats: Screen reader I ASCII The weekly release is posted on Monday. Daily updates of the weekly release are posted Tuesday throug H.15 DAILY UPDATE: WEB RELEASE ONLY For immediate release SELECTED INTEREST RATES February 28, 2003 Yields in percent per annum 2003 2003 2003 2003 Feb Feb Feb Feb Instruments 24 25 26 27 Federal funds (effective) 1 2 3 1.25 1.28 1.28 1.31 Commercial paper 3 4 5 6 Nonfinancial 1-month 1.23 1.24 1.24 1.25 2-month 1.24 1.24 1.28 1.23 3-month 1.23 Financial 1-month 1.25 1.25 1.25 1.25 2-month 1.25 1.24 1.25 1.26 3-month 1.25 1.25 1.26 1.26 CDs (secondary market) 3 7 1-month 1.27 1.27 1.27 1.27 3-month 1.27 1.27 1.26 1.26 6-month 1.27 1.27 1.26 1.26 Eurodollar deposits (London) 3 8 1-month 1.26 1.25 1.26 1.26 3-month 1.26 1.25 1.26 1.26 6-month 1.26 1.25 1.26 1.26 Bank prime loan 2 3 9 4.25 4.25 4.25 4.25 Discount window primary credit 2 10 2.25 2.25 2.25 2.25 U.S. government securities Treasury bills (secondary market) 3 4 4-week 1.19 1.23 1.24 1.22 3-month 1.19 1.18 1.19 1.19 6-month 1.19 1.18 1.18 1.18 Treasury constant maturities 11 1-month 1.21 1.25 1.26 1.24 3-month 1.21 1.20 1.21 1.21 6-month 1.21 1.20 1.20 1.20 1-year 1.28 1.27 1.27 1.27 2-year 1.60 1.58 1.57 1.58 3-year 2.00 1.98 1.96 1.96 5-year 2.82 2.77 2.75 2.75 7-year 3.38 3.34 3.30 3.29 10-year 3.86 3.81 3.78 3.76 http://www.federalreserve.gov/Releases/H15/update/ 3/3/2003 FRB: H.15--Selected Interested Rates, Web -Only Daily Update --February 28, 2003 Page 2 of 3 20-year 4.85 4.81 4.77 4.75 Treasury long-term average (25 years and above) 12 13 4.93 4.89 4.85 4.84 Interest rate swaps 14 1-year 1.39 1.37 1.38 1.40 2-year 1.85 1.82 1.83 1.85 3-year 2.38 2.34 2.36 2.37 4-year 2.84 2.78 2.80 2.81 5-year 3.21 3.14 3.15 3.16 7-year 3.75 3.68 3.69 3.69 10-year 4.27 4.21 4.20 4.21 30-year 5.13 5.11 5.08 5.08 Corporate bonds Moody's seasoned Aaa 15 5.95 5.92 5.89 5.86 Baa 7.03 6.99 6.96 6.96 State & local bonds 16 4.74 Conventional mortgages 17 See overleaf for footnotes FOOTNOTES 1. The daily effective federal funds rate is a weighted average of rates on brokered trades. 2. Weekly figures are averages of 7 calendar days ending on Wednesday of the current week; monthly figures include each calendar day in the month. 3. Annualized using a 360-day year or bank interest. 4. On a discount basis. 5. Interest rates interpolated from data on certain commercial paper trades settled by The Depository Trust Company. The trades represent sales of commercial paper by dealers or direct issuers to investors (that is, the offer side). See Board's Commercial Paper Web pages (http://www.federalreserve.gov/releases/cp) for more information. 6. The 1-, 2-, and 3-month rates are equivalent to the 30-, 60-, and 90-day dates reported on the Board's Commercial Paper Web page. 7. An average of dealer offering rates on nationally traded certificates of deposit. 8. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. 9. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered commercial banks. Prime is one of several base rates used by banks to price short-term business loans. 10. The rate charged for primary credit under an amendment to the Board's Regulation A, which became effective January 9, 2003. This rate replaces that for adjustment credit, which was discontinued after January 8, 2003. For further information, see www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate reported is that for the Federal Reserve Bank of New York. Historical series for the rate on adjustment credit is available at www.federalreserve.gov/releases/hlS/data.htm. 11. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Treasury. 12. Based on the unweighted average of the bid yields for all Treasury fixed -coupon securities with remaining terms to maturity of 25 http://www.federalreserve.gov/Releases/H15/update/ 3/3/2003 FRB: H.15--Selected Interested Rates, Web -Only Daily Update --February 28, 2003 Page 3 of 3 years and over. 13. A factor for adjusting the daily long-term average in order to estimate a 30-year rate can be found at http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/lt 14. International Swaps and Derivatives Association (ISDA) mid -market par swap rates. Rates are for a Fixed Rate Payer in return for receiving three month LIBOR, and are based on rates collected at 11:00 a.m. by Garban Intercapital plc and published on Reuters Page ISDAFIXI. Source: Reuters Limited. 15. Moody's Aaa rates through December 6, 2001 are averages of Aaa utility and Aaa industrial bond rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds only. 16. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Thursday quotations. 17. Contract interest rates on commitments for fixed-rate first mortgages. Source: FHLMC. DESCRIPTION OF THE TREASURY CONSTANT MATURITY SERIES Yields on Treasury securities at "constant maturity" are interpolated by the U.S. Treasury from the daily yield curve. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. These market yields are calculated from composites of quotations obtained by the Federal Reserve Bank of New York. The constant maturity yield values are read from the yield curve at fixed maturities, currently 1, 3 and 6 months and 1, 2, 3, 5, 7, 10 and 20 years. This method provides a yield for a 10-year maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity. Weekly release dates and announcements I 1-- istor:ical data I .about Daily update Other formats: Screen reader I ASCII Statistical releases Home I ]. conorriw research wid data Accessibility- I Contact US Last update: February 28, 2003 http://www.federalreserve.gov/Releases/H15/update/ 3/3/2003 LAIF Performance Report Page I of 2 Phil Angelides, State Treasurer Inside the State Treasurers Office Local Agency Investment Fund LAW Performance Report Reporting Date: 02/27/03 Effective Date: 02/26/03 Quarter Yield: 2.03% Daily: 1.91% Year: 2.35% Life: 168 Apportionment Rate: 2.31% Earnings Ratio: .00006335889804137 Fair Value Factor: 1.004029581 Monthly Average For January: 2.103% http://www.treasurer.ca-gov/laif/perfonnance.htm 3/3/2003 LAIF Performance Report Page 2 of 2 Conwnercial paw 21.57% Thm Depsit 9s .36%o Pooled Money Investment Account Potdollo Composition $58.0 Billion Otll,,03 Loans Treasurft 9.74% 11.77% Mortgages N Treasurft 0.01% ©its a Agencies 13 Time Deposits . . . . . . . . . gA . leJ0 wes eAat Bnkrs ccept l IN 24,59% nRepo, a Col�civd Paw Ytl 0 Corporate Bonds aLoans uire verses, n Adobe PDF version of LAIF Performance. in Help with Adobe Acrobat PDF hftp://www.treasurer.ca.gov/laif/performance.htm 3/3/2003 FRB:Commercial Paper Rates and Outstandings Page 1 of 3 Federal Reserve.Release o m m � e rcial Papje�41 :»:;p uf;oatc,tt Release I About I Outstanding I Historical discount rates I Historical outstandings Data as of February 28, 2003 Commercial Paper Rates and Outstandings Derived from data supplied by The Depository Trust Company Posted March 3, 2003 Discount rates AA AA A2/P2 Term financial nonfinancial nonfinancial Yield curve Monev market basis 0 Percent 1 7 15 30 60 00 [aye to Maturity Financial — — — Nonfinancial ..... A2/P 1.52 1.50 1.48 1.46 1.44 1.42 1.40 1.38 1.36 1.34 1.32 1.30 1.28 1.26 1.24 http://www.federalreserve.gov/Releases/CP/ V 3/3/2003 FRB:Commercial Paper Rates and Outstandings Page 2 of 3 Discount rate spread Thirty -day A2/P2 less AA nonfinancial commercial paper (daily) Basis points 150 140 1,30 120 110 100 90 8+0 70 60 50 40 30 20 10 01 J UL99 01 AN00 01 JUL00 01 AN01 01 JUL01 01 JAN02 01 JUL02 01 AN03 01 JUL03 — -- A2/P2 spread, 5—days rnorinq average Discount rate history Thirtv-dav commercial paper (daily) i -WIN Ao iww t *0 Percent 7 4 3 2 I r1 01 J UL99 01 LAN00 01 JUL00 01 JAN01 .01 JUL01 01 AN02 01 J UL02 016AN03 01 JU L03 Financial — — — Nordinanoial ..... A2/P2 Outstandings Weekly (Wednesday), seasonally adjusted Billions of dollars Billions of dollars http://www.federalreserve.gov/Releases/C,P/ 3/3/2003 FRB:Commercial Paper Rates and Outstandings Page 3 of 3 1300 1100 1000 Xk. 1(r4 0*\ P%,# & \U. 'IN.. W--%. 90 01 JUL99 01 ANOD 01 JU LOO 01 JAN01 01 JU L01 0* 300 200 100 01 JAN02 01 JU L02 41 J; NO3 01 J U L03 — Financial — — — Nonfinancial The daily commercial paper release will usually be available before 11:OOam EST. However, the Federal Reserve makes no guarantee regarding the timing of the daily commercial paper release. When the Federal Reserve is closed on a business day, yields for the previous business day will appear in the historical discount rates table. This policy is subject to change at any time without notice. Commercial paper outstanding Commercial paper outstanding, miscellaneous cate og ries Volume Statistics 2002:Q4 Release I About I Outstandings I Historical discount rates I Historical outstandings 1 .......... Home I Statistical releases Accessibilityl Contact Us Last update: March 3, 2003 http://www.federalreserve.gov/Releases/CP/ 3/3/2003 B a o a m oM O U U m o c .4: r E m Vi > rn 'd a t t °c U E c c o d E y (D � x L nL y yam_ O L Cf y V m.0 7 L o d Vl 0 d C c C N w 0) E? N 41 a _d z a a azaa�� N9 COON O,c O ^ O cM V an0O e0 O 0 � e0 c 04 .- cn N � > ... Nf ' Ho M� �L $cO oi co AO r-^ O .. c O N f- N a7 r' � M !n f� C6 a0 t0 �� NN ci N OO �� O� Q' C f0 O VN O 0 0 O 0 co O O O O p p 7 lA Y") of fd 4 r- W) O O aOp O� co N 2 to 1- O M 0 N CO 7 (p O Np CO)w co �� Mco �� NQ m m NN �A M N r' O 0 0 C N N 5 9 � Ci C4 co co O n co j c v Ln tO � a t'? A N ap M ao N A NNN N fC0 z� to (Do ti 1� L Q L H a. N E x N C w C U m N c C CO cm U c x xx tN H a C w 0 a w M �ad a Q m c aci �C > c N O a m =. 4 x cL Z H m m m CL x {{) • > y N m C C> •�_ wii)z N : a� (n000 oU aI-- z C O ^^^O O p^pO ^^p^p 0 0 0 0 0 0 0 0 0 n Lo O O_ M LO G O� 4 r 9 N � N � � � � O � � co N CC a d, N ...v V Z Z W LU d }° gig W LLLJ LLW�jWOa > to QOY�pU C9 as OZ=m LI LLj a, LLJZ C) g=jd0Z Z Q >- M o :) cF- wZt00D0=)OLL c7�c�U0.mUaw?� INVESTMENT ADVISORY BOARD Meeting Date: TITLE: March 12, 2003 Correspondence & Written Material Item B Pooled Money Investment Board Report for December 2002 BACKGROUND: The Pooled Money Investment Board Report for December 2002 is included in the agenda packet. This report is available on-line at www.treasurer.ca.gov. In addition, at last months meeting, Staff was asked to contact LAIF regarding the increase in pooled loans from $2.7 billion to $6 billion. Staff spoke with Elaine Parks, LAIF Administrator who stated that these funds were loans by the PMIA fund in advance of school bond debt issues and that the funds loaned were not from the LAIF fund. RECOMMENDATION: Receive & File John M. Falconer,) Finance Director NOTES TO MONTHLY SELECTED INVESTMENT DATA Reverse Repurchase - The temporary sale of owned securities, with the simultaneous agreement to repurchase the same securities at a predetermined cost and rate on a specified future date. The Pooled Money Investment Account from time to time enters into Reverse Repurchase Agreements with major pre -approved securities dealers. The intent is to earn incremental interest for pool partici- pants. Because it is viewed as incremental, earnings derived from reverses are never projected or anticipated. All reverses are in compliance with Government Code Sec. 16480.4, and are further discussed in the Treasurer's Statement of Investment Policies, Goals and Objectives. AB 55 Loans - Named for Assembly Bill 55, these loans are made from the Pool to state agencies which have pre -approved authority to issue bonds for specific projects. The AB 55 loan program allows an agency to borrow money for up -front and progress expenses when funding a specific project. Toward the end of the project construction, the already approved bond issue is brought to market, the proceeds of which are used to pay off principal and interest due on the AB 55 loan. This method eliminates the need for an arbitrage tracking system, had the bonds been sold "up front." The maximum term for AB 55 loans is 364 days, with many retired earlier. 46 General Fund Loans - Loans made by the Pool to the General Fund in anticipation of evening out cash flow. The average life of these loans is well below 30 days. Unlike the on -going AB 55 loan program, General Fund loans are much more infrequently requested. Both AB 55 and General Fund Loans have the following characteristics: 1. Amount available for loans is determined by the State Controller and EXCLUDES certain trust monies, such as LAIF balances; 2. LAIF participants do share in the interest income paid to the Pool on each loan balance; 3. The decision to approve these loans rests in the authority of the Pooled Money Investment Board; 4. A predetermined maximum total loan balance is capped as a specific percentage of identified borrowable resources as determined by the State Controller. 5. No surplus monies may be loaned if such a loan would inhibit carrying out the purpose for which the monies were originally designated. U 6. Since the granting of these loans is not an investment function, the loans (AB 55, GF) are not included in records of daily investment activity. 7. Since interest is commingled with other investment revenue, both AB 55 and General Fund loans are included in Selected Data Reports and portfolio accountability. 8. The total monies in AB 55 and General Fund loans are figured into the Portfolio book value when reporting portfolio size and yield. 11 Revised Senternber 30. 199R Philip Angelides December 2002 STATE OF CALIFORNIA STATE TREASURER'S OFFICE POOLED MONEY INVESTMENT BOARD REPORT DECEMBER 2002 TABLE OF CONTENTS SUMMARY.................................................................. 01 SELECTED INVESTMENT DATA .................................... 02 PORTFOLIO COMPOSITION ........................................ 03 INVESTMENT TRANSACTIONS ..................................... 04 TIMEDEPOSITS........................................................ 17 BANK DEMAND DEPOSITS .......................................... 30 POOLED MONEY INVESTMENT BOARD DESIGNATION... 31 POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF DECEMBER 2002 WITH DECEMBER 2001 (DOLLARS IN THOUSANDS) >�EG�MBERRQD2; : DEG�MS�R2009: GRANGE Average Daily Portfolio $ 52,267,344 $ 48,332,244 $ +3,935,100 Accrued Earnings $ 97,703 $ 133,875 -36,172 Effective Yield 2.201 3.261 -1.060 Average Life -Month End (In Days) 202 183 +19 Total Security Transactions Amount $ 20,681,724 $ 22,084,111 -1,402,387 Number 439 477 -38 Total Time Deposit Transactions Amount $ 1,977,500 $ 1,563,750 +413,750 Number 100 113 -13 Average Workday Investment Activity $ 1,079,011 $ 1,182,393 -103,382 Prescribed Demand Account Balances For Services $ 861,486 $ 573,084 +288,402 For Uncollected Funds $ 141,786 $ 217,067 -75,281 1 PHILIP ANGELIDES TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) December 31, 2002 DIFFERENCE IN PERCENT OF PERCENT OF PORTFOLIO FROM TYPE OF SECURITY AMOUNT PORTFOLIO PRIOR MONTH Government Bills $ 497,500 0.88 -1.08 Bonds 0 0.00 0.00 Notes 6,902,063 12.28 -1.34 Strips 0 0.00 0.00 Total Government $ 7,399,563 13.16 -2.42 Federal Agency Coupons $ 4,496,563 8.00 -0.83 Certificates of Deposit 8,025,558 14.28 +0.01 Bank Notes 599,985 1.07 +0.08 Bankers' Acceptances 0 0.00 0.00 Repurchases 0 0.00 0.00 Federal Agency Discount Notes 9,103,479 16.19 -1.04 Time Deposits 5,284,195 9.40 -0.82 GNMAs 692 0.00 0.00 Commercial Paper 12,896,422 22.94 +0.16 FHLMC 6,029 0.01 0.00 Corporate Bonds 2,371,863 4.23 -0.49 Pooled Loans 6,027,363 10.72 +5.35 GF Loans 0.00 0.00 0.00 GF Loans 0.00 0.00 0.00 GF Loans $ 56,211,703 100.00 INVESTMENT ACTIVITY DECEMBER 2002 NOVEMBER 2002 NUMBER AMOUNT NUMBER AMOUNT Pooled Money 439 $ 20,681,724 661 $ 30,834,663 Other 35 376,833 31 460,011 Time Deposits 100 1,977,500 79 2,143,995 Totals 574 $ 23,036,057 771 $ 33,438,669 PMIA Monthly Average Effective Yield 2.201 2.301 Year to Date Yield Last Day of Month 2.474 2.535 4 Pooled Money Investment Account Portfolio Composition $56.2 Billion Loans Treasuries 10.72% 13.16% Col E 4 Commercial Paper 22.94% Time ueposits CD's/BN's 9.40% 15.35% ages 1% Agencies 24.19% '43 12/31 /02 8 Treasuries B Mortgages ® Agencies 15 C D's/B N's ® Time Deposits 0 Bankers Acceptances ■ Repo E3 Commercial Paper ® Corporate Bonds ❑ Loans El Reverses 12/01/02 REDEMPTIONS MTN CITICORP NO PURCHASES 12/02/02 REDEMPTIONS 8.625% 12/01 /02 6.798 $ 13,900 796 $ 2,109,802.71 6.716 BN WORLD 1.730% 12/02/02 1.750 50,000 47 114,233.06 1.774 BN WORLD 1.730% 12/02/02 1.750 50,000 47 114,233.06 1.774 CD BARCLAYS 1.760% 12/02/02 1.750 50,000 46 111,806.97 1.774 CD BARCLAYS 1.760% 12/02/02 1.750 50,000 46 111,806.97 1.774 CD NOVA SCOT 1.750% 12/02/02 1.750 50,000 96 233,333.33 1.774 CD NOVA SCOT 1.750% 12/02/02 1.750 50,000 96 233,333.33 1.774 CP HOUSEHOLD 12/02/02 1.950 50,000 26 70,416.67 1.979 CP HOUSEHOLD 12/02/02 1.950 50,000 26 70,416.67 1.979 CP MORG STAN 12/02/02 1.770 50,000 40 98,333.33 1.798 CP MORG STAN 12/02/02 1.770 50,000 40 98,333.33 1.798 CP AMER EXP 12/02/02 1.750 50,000 41 99,652.78 1.777 CP AMER EXP 12/02/02 1.750 50,000 41 99,652.78 1.777 CP GECC 12/02/02 1.760 50,000 46 112,444.44 1.788 CP GECC 12/02/02 1.760 50,000 46 112,444.44 1.788 CP GECC 12/02/02 1.760 50,000 46 112,444.44 1.788 CP GECC 12/02/02 1.760 50,000 46 112,444.44 1.788 CP MORG STAN 12/02/02 1.760 50,000 46 112,444.45 1.788 CP MORG STAN 12/02/02 1.760 50,000 46 112,444.45 1.788 CP MORG STAN 12/02/02 1.760 50,000 46 112,444.45 1.788 CP MORG STAN 12/02/02 1.760 50,000 46 112,444.45 1.788 CP GEN MILLS 12/02/02 2.000 41,500 47 108,361.11 2.033 CP MORG STAN 12/02/02 1.750 50,000 47 114,236.11 1.778 CP MORG STAN 12/02/02 1.750 50,000 47 114,236.11 1.778 CP MORG STAN 12/02/02 1.750 50,000 47 114,236.11 1.778 CP MORG STAN 12/02/02 1.750 50,000 47 114,236.11 . 1.778 CP DISNEY 12/02/02 1.910 50,000 47 124,680.56 1.941 CP GMAC 12/02/02 2.060 50,000 76 217,444.44 2.097 CP GMAC 12/02/02 2.060 50,000 76 217,444.44 2.097 CP GMAC 12/02/02 2.060 50,000 76 217,444.44 2.097 CP GMAC 12/02/02 2.060 50,000 76 217,444.44 2.097 CP CRC 12/02/02 1.750 50,000 80 194,444.44 1.781 CP CRC 12/02/02 1.750 50,000 80 194,444.44 1.781 CP CRC 12/02/02 1.750 50,000 80 194,444.44 1.781 CP SRAC 12/02/02 2.070 25,000 90 129,375.00 2.109 CP FMCC 12/02/02 2.060 25,000 90 128,750.00 2.099 CP FMCC 12/02/02 2.060 50,000 90 257,500.00 2.099 CP GMAC 12/02/02 2.060 50,000 90 257,500.00 2.099 CP GMAC 12/02/02 2.060 50,000 90 257,500.00 2.099 CP GMAC 12/02/02 2.060 50,000 90 257,500.00 2.099 CP GMAC 12/02/02 2.060 50,000 90 257,500.00 2.099 CP BEAR 12/02/02 1.730 50,000 102 245,083.33 1.762 CP BEAR 12/02/02 1.730 50,000 102 245,083.33 1.762 4 12/02/02 REDEMPTIONS (continued) CP BEAR 12/02/02 1.730 50,000 102 245,083.33 1.762 CP BEAR 12/02/02 1.730 50,000 102 245,083.33 1.762 CP GMAC 12/02/02 2.040 50,000 108 306,000.00 2.081 PURCHASES CP HOUSEHOLD 12/09/02 1.300 50,000 CP HOUSEHOLD 12/09/02 1.300 50,000 CP CONAGRA 12/12/02 1.330 50,000 CP DISNEY 12/13/02 1.450 32,341 CP FMCC 12/13/02 1.680 50,000 CP GECC 01/27/03 1.360 20,000 CP GECC 01/27/03 1.360 50,000 CP GECC 01/27/03 1.360 50,000 CP GECC 01/27/03 1.360 50,000 CP GMAC 03/04/03 1.940 50,000 CP GMAC 03/04/03 1.940 50,000 CP GMAC 03/04/03 1.940 50,000 CP GMAC 03/04/03 1.940 50,000 PURCHASE c/ TREAS BILLS 12/26/02 1.290 41,940 TREAS BILLS 01/02/03 1.290 35,000 TREAS BILLS 04/10/03 1.290 25,000 TREAS NOTES 2.875% 06/30/04 1.290 50,000 12/03/02 SALES c/ TREAS BILLS 04/10/03 1.290 25,000 1 873.33 1.307 TREAS BILLS 01/02/03 1.290 35,000 1 1,227.29 1.307 TREAS BILLS 12/26/02 1.290 41,490 1 1,470.64 1.307 TREAS NOTES 2.875% 06/30/04 1.290 50,000 1 1,803.74 1.307 PURCHASES CP GECC 12/04/02 1.250 50,000 CP GECC 12/04/02 1.250 50,000 12/04/02 REDEMPTIONS CP GECC 12/04/02 1.250 50,000 1 1,736.11 1.267 CP GECC 12/04/02 1.250 50,000 1 1,736.11 1.267 PURCHASES CP WYETH 01/29/03 1.820 50,000 CP BEAR 02/10/03 1.360 50,000 5 12/04/02 PURCHASES (continued) CP BEAR 02/10/03 1.360 50,000 CP GECC 02/20/03 1.350 50,000 CP GECC 02/20/03 1.350 50,000 CP GMAC 03/04/03 1.950 50,000 CP GMAC 03/04/03 1.950 50,000 CP GMAC 03/04/03 1.950 50,000 12/05/02 NO SALES NO PURCHASES 12/06/02 NO SALES NO PURCHASES 12/09/02 REDEMPTIONS CP HOUSEHOLD 12/09/02 1.300 50,000 7 12,638.89 1.318 CP HOUSEHOLD 12/09/02 1.300 50,000 7 12,638.89 1.318 CP GECC 12/09/02 1.540 50,000 33 70,583.33 1.563 CP GECC 12/09/02 1.540 50,000 33 70,583.33 1.563 CP AT & T 12/09/02 1.960 50,000 35 95,277.78 1.991 CP MORG STAN 12/09/02 1.750 50,000 42 102,083.33 1.777 CP MORG STAN 12/09/02 1.750 50,000 42 102,083.33 1.777 CP FCAR 12/09/02 1.760 50,000 47 114,888.89 1.788 CP GECC 12/09/02 1.770 50,000 48 118,000.00 1.798 CP GECC 12/09/02 1.770 50,000 48 118,000.00 1.798 CP GECC 12/09/02 1.770 50,000 48 118,000.00 1.798 CP GECC 12/09/02 1.770 50,000 48 118,000.00 1.798 PURCHASES CP GE 12/12/02 1.260 50,000 CP TEXT FIN 12/13/02 1.380 30,000 CP GE 12/13/02 1.260 50,000 CP BEAR 02/03/03 1.350 30,000 CP FCAR 02/11/03 1.340 45,000 CP GMAC 03/03/03 1.950 25,000 CP GMAC 03/03/03 1.950 50,000 MTN GECC 6.800% 11/01/05 3.014 18,750 12/10/02 REDEMPTIONS CP GECC 12/10/02 1.540 50,000 34 72,722.22 1.554 CP GECC 12/10/02 1.540 50,000 34 72,722.22 1.554 CP GECC 12/10/02 1.770 50,000 49 120,458.33 1.798 CP GECC 12/10/02 1.770 50,000 49 120,458.33 1.798 CP GECC 12/10/02 1.770 50,000 49 120,458.33 1.798 1.1 12/10/02 REDEMPTIONS (continued) CP GECC CP DFC CP DFC CP DFC CP DFC MTN GMAC MTN GMAC MTN GMAC PURCHASES CP DEERE CP HOUSEHOLD CP FMCC CP GECC CP GECC CP GECC CP GECC 12/11/02 REDEMPTIONS CP BARTON CP BARTON PURCHASES CP CITICORP CP CITICORP DISC NOTES FNMA 12/12/02 REDEMPTIONS CP GE CP CONAGRA PURCHASES 12/10/02 1.770 50,000 49 120,458.33 12/10/02 1.760 644 85 2,676.18 12/10/02 1.760 50,000 85 207,777.78 12/10/02 1.760 50,000 85 207,777.78 12/10/02 1.760 50,000 85 207,777.78 6.750% 12/10/02 5.540 25,000 627 2,120,687.50 6.750% 12/10/02 6.470 16,275 732 2,119,086.37 6.750% 12/10/02 6.868 20,000 805 3,023,040.17 02/03/03 1.580 50,000 02/03/03 1.550 50,000 04/01/03 1.960 50,000 05/28/03 1.340 50,000 05/28/03 1.340 50,000 05/30/03 1.340 50,000 05/30/03 1.340 50,000 1.798 1.791 1.791 1.791 1.791 5.485 6.459 6.869 12/11 /02 1.310 50,000 27 49,125.00 1.329 12/11 /02 1.310 50,000 27 49,125.00 1.329 03/03/03 1.340 50,000 03/03/03 1.340 50,000 06/27/03 1.270 50,000 12/12/02 1.260 50,000 3 5,250.00 1.277 12/12/02 1.330 50,000 10 18,472.22 1.348 CD UBS 1.330% 06/20/03 1.330 50,000 CD UBS 1.330% 06/20/03 1.330 50,000 CP SALOMON 03/10/03 1.330 50,000 CP SALOMON 03/10/03 1.330 50,000 CP CITICORP 03/21/03 1.330 50,000 CP CITICORP 03/21/03 1.330 50,000 CP CITICORP 03/21/03 1.330 50,000 CP GECC 05/28/03 1.330 50,000 CP GECC 05/28/03 1.330 50,000 CP GECC 05/30/03 1.330 50,000 m 12/12/02 PURCHASES (continued) CP GECC 05/30/03 1.330 50,000 12/13/02 REDEMPTIONS CP TEXT FIN 12/13/02 1.380 30,000 4 4,600.00 1.399 CP GE 12/13/02 1.260 50,000 4 7,000.00 1.277 CP DISNEY 12/13/02 1.450 32,341 11 14,328.86 1.470 CP FMCC 12/13/02 1.680 50,000 11 25,666.67 1.704 DISC NOTES FNMA 12/13/02 2.120 50,000 359 1,057,055.56 2.195 PURCHASES CD UBS 1.320% 06/20/03 1.320 35,000 CD UBS 1.320% 06/20/03 1.320 50,000 CP GMAC 01/02/03 1.940 25,000 CP MORG STAN 02/20/03 1.330 50,000 CP MORG STAN 02/20/03 1.330 50,000 CP CITICORP 04/11/03 1.330 50,000 CP CITICORP 04/11/03 1.330 50,000 CP ASCC 04/14/03 1.310 50,000 CP ASCC 04/14/03 1.310 50,000 CP BEAR 05/12/03 1.340 30,000 CP BEAR 05/12/03 1.340 50,000 MTN W/F 7.125% 08/15/06 3.470 10,000 12/16/02 NO SALES PURCHASES CD MONTREAL 1.320% 06/20/03 1.320 50,000 CD MONTREAL 1.320% 06/20/03 1.320 50,000 CD NOVA SCOT 1.310% 06/20/03 1.310 50,000 CD NOVA SCOT 1.310% 06/20/03 1.310 50,000 CD CIBC 1.350% 06/20/03 1.350 50,000 CP BRISTOL 01/17/03 1.380 49,150 CP MORG STAN 02/19/03 1.330 50,000 CP MORG STAN 02/19/03 1.330 50,000 CP MORG STAN 02/20/03 1.330 50,000 CP MORG STAN 02/20/03 1.330 50,000 CP SALOMON 02/28/03 1.330 50,000 CP SALOMON 02/28/03 1.330 50,000 CP SALOMON 02/28/03 1.330 50,000 CP GECC 02/28/03 1.340 50,000 CP GECC 02/28/03 1.340 50,000 CP GECC 02/28/03 1.340 50,000 CP GECC 02/28/03 1.340 50,000 CP GE 02/28/03 1.340 50,000 CP GE 02/28/03 1.340 50,000 E 12/16/02 PURCHASES (continued) CP GE 02/28/03 1.340 50,000 CP GE 02/28/03 1.340 50,000 CP CITICORP 04/28/03 1.320 50,000 CP CITICORP 04/28/03 1.320 50,000 CP CITICORP 04/28/03 1.320 50,000 CP NCAT 05/27/03 1.330 50,000 CP NCAT 05/27/03 1.330 50,000 TREAS NOTES 5.750% 11/15/05 2.315 50,000 TREAS NOTES 5.750% 11/15/05 2.315 50,000 12/17/02 NO SALES PURCHASES CP SALOMON 12/27/02 1.230 35,000 CP NCAT 05/12/03 1.330 40,000 CP GECC 05/12/03 1.330 50,000 CP GECC 05/12/03 1.330 50,000 CP GECC 05/12/03 1.330 50,000 CP GECC 05/12/03 1.330 50,000 CP FCAR 05/30/03 1.340 50,000 CP FCAR 05/30/03 1.340 50,000 CP FCAR 05/30/03 1.340 50,000 CP FCAR 05/30/03 1.340 50,000 FHLB 3.625% 11/15/05 2.651 25,000 FHLB 3.625% 11/15/05 2.655 50,000 12/18/02 NO SALES PURCHASES CD DEUTSCHE 1.250% 12/27/02 1.250 40,000 CD DEUTSCHE 1.250% 12/27/02 1.250 50,000 CD DEUTSCHE 1.250% 12/27/02 1.250 50,000 CD DEUTSCHE 1.250% 12/27/02 1.250 50,000 CD DEUTSCHE 1.250% 12/27/02 1.250 50,000 CD CIBC 1.250% 12/27/02 1.250 50,000 CD CIBC 1.250% 12/27/02 1.250 50,000 CD CIBC 1.250% 12/27/02 1.250 50,000 CD CIBC 1.250% 12/27/02 1.250 50,000 CP GECC 12/27/02 1.220 50,000 CP GECC 12/27/02 1.220 50,000 CP GECC 12/27/02 1.220 50,000 CP GECC 12/27/02 1.220 50,000 CP GECC 12/27/02 1.220 50,000 CP GECC 12/27/02 1.220 50,000 MTN GECC 6.800% 11/01/05 2.882 15,000 101 12/19/02 REDEMPTIONS TREAS BILLS 12/19/02 1.730 50,000 178 427,694.44 1.769 TREAS BILLS 12/19/02 1.730 50,000 178 427,694.44 1.769 TREAS BILLS 12/19/02 1.730 50,000 178 427,694.44 1.769 TREAS BILLS 12/19/02 1.730 50,000 178 427,694.44 1.769 TREAS BILLS 12/19/02 1.735 50,000 178 428,930.55 1.774 TREAS BILLS 12/19/02 1.735 50,000 178 428,930.55 1.774 TREAS BILLS 12/19/02 1.740 50,000 178 430,166.67 1.779 TREAS BILLS 12/19/02 1.740 50,000 178 430,166.67 1.779 TREAS BILLS 12/19/02 1.740 50,000 178 430,166.66 1.779 TREAS BILLS 12/19/02 1.740 50,000 178 430,166.66 1.779 TREAS BILLS 12/19/02 1.740 50,000 178 430,166.66 1.779 TREAS BILLS 12/19/02 1.740 50,000 178 430,166.66 1.779 TREAS BILLS 12/19/02 1.745 50,000 178 431,402.78 1.784 TREAS BILLS 12/19/02 1.745 50,000 178 431,402.78 1.784 TREAS BILLS 12/19/02 1.745 50,000 178 431,402.78 1.784 TREAS BILLS 12/19/02 1.745 50,000 178 431,402.78 1.784 TREAS BILLS 12/19/02 1.745 50,000 178 431,403.00 1.784 TREAS BILLS 12/19/02 1.745 50,000 178 431,403.00 1.784 TREAS BILLS 12/19/02 1.745 50,000 178 431,403.00 1.784 TREAS BILLS 12/19/02 1.745 50,000 178 431,403.00 1.784 PURCHASES BN WORLD 1.280% 03/26/03 1.300 50,000 BN WORLD 1.280% 03/26/03 1.300 50,000 CD CIBC 1.250% 12/27/02 1.250 50,000 CD CIBC 1.250% 12/27/02 1.250 50,000 CD LLOYDS 1.250% 12/27/02 1.250 50,000 CD LLOYDS 1.250% 12/27/02 1.250 50,000 CD LLOYDS 1.250% 12/27/02 1.250 50,000 CD LLOYDS 1.250% 12/27/02 1.250 50,000 CID NCAT 12/20/02 1.280 15,000 CID NCAT 12/20/02 1.280 50,000 CID NCAT 12/20/02 1.280 50,000 CID NCAT 12/20/02 1.280 50,000 CID NCAT 12/20/02 1.280 50,000 DISC NOTES FHLMC 06/19/03 1.280 50,000 DISC NOTES FHLMC 06/19/03 1.280 50,000 DISC NOTES FNMA 06/18/03 1.280 21,776 DISC NOTES FNMA 06/18/03 1.280 50,000 TREAS BILLS 05/01/03 1.195 50,000 TREAS BILLS 05/01/03 1.195 50,000 TREAS BILLS 05/01/03 1.195 50,000 TREAS BILLS 05/01/03 1.195 50,000 TREAS BILLS 05/29/03 1.205 50,000 TREAS BILLS 05/29/03 1.205 50,000 TREAS BILLS 05/29/03 1.205 50,000 TREAS BILLS 05/29/03 1.205 50,000 10 12/19/02 PURCHASES (continued) TREAS BILLS 05/29/03 1.205 50,000 TREAS BILLS 05/29/03 1.205 50,000 12/20/02 REDEMPTIONS CID NCAT 12/20/02 1.280 15,000 1 533.33 1.297 CID NCAT 12/20/02 1.280 50,000 1 1,777.78 1.297 CID NCAT 12/20/02 1.280 50,000 1 1,777.78 1.297 CID NCAT 12/20/02 1.280 50,000 1 1,777.78 1.297 CID NCAT 12/20/02 1.280 50,000 1 1,777.78 1.297 PURCHASES CID GE 12/23/02 1.290 50,000 CID GE 12/23/02 1.290 50,000 CID AMER EXP 12/26/02 1.200 50,000 CID AMER EXP 12/26/02 1.200 50,000 CID AMER EXP 12/27/02 1.200 50,000 CID AMER EXP 12/27/02 1.200 50,000 CID NCAT 12/27/02 1.210 50,000 CID NCAT 12/27/02 1.210 50,000 12/23/02 REDEMPTIONS CID GE 12/23/02 1.290 50,000 3 5,375.00 1.308 CID GE 12/23/02 1.290 50,000 3 5,375.00 1.308 PURCHASES CD SCOTLAND 1.330% 03/26/03 1.320 50,000 CD TORONTO 1.345% 06/20/03 1.335 50,000 CD TORONTO 1.345% 06/20/03 1.335 50,000 CID AMER EXP 12/30/02 1.250 50,000 CID AMER EXP 12/30/02 1.250 50,000 CID GE 03/10/03 1.320 50,000 CID GE 03/10/03 1.320 50,000 CID GE 03/11/03 1.320 50,000 CID GE 03/11 /03 1.320 50,000 DISC NOTES FHLMC 06/19/03 1.270 50,000 DISC NOTES FNMA 06/11/03 1.280 25,000 DISC NOTES FNMA 06/18/03 1.285 34,813 DISC NOTES FNMA 05/30/03 1.285 43,921 DISC NOTES FNMA 05/30/03 1.285 50,000 DISC NOTES FNMA 06/11/03 1.280 50,000 DISC NOTES FNMA 06/11/03 1.280 50,000 DISC NOTES FNMA 06/18/03 1.285 50,000 MTN GECC 7.500% 05/15/05 2.520 10,480 11 12/24/02 NO SALES PURCHASES CD UBS 1.325% 03/10/03 1.300 35,000 CD UBS 1.325% 03/10/03 1.300 50,000 CP SAFEWAY 01/09/03 1.500 20,000 CP GECC 01/21/03 1.330 50,000 CP GECC 01 /21 /03 1.330 50,000 CP GECC 01 /21 /03 1.330 50,000 CP GECC 01 /21 /03 1.330 50,000 DISC NOTES FHLMC 03/27/03 1.275 48,300 DISC NOTES FNMA 03/26/03 1.270 50,000 DISC NOTES FNMA 03/26/03 1.270 50,000 DISC NOTES FNMA 03/26/03 1.270 50,000 DISC NOTES FNMA 03/26/03 1.270 50,000 DISC NOTES FNMA 05/29/03 1.260 50,000 12/26/02 REDEMPTIONS CP AMER EXP 12/26/02 1.200 50,000 6 10,000.00 1.216 CP AMER EXP 12/26/02 1.200 50,000 6 10,000.00 1.216 CP HOUSEHOLD 12/26/02 2.070 20,000 51 58,650.00 2.104 CP GECC 12/26/02 1.750 25,000 59 71,701.39 1.779 CP W/F 12/26/02 1.720 50,000 71 169,611.11 1.749 CP W/F 12/26/02 1.720 50,000 71 169,611.11 1.749 DISC NOTES FHLMC 12/26/02 1.690 36,578 70 120,199.37 1.719 DISC NOTES FHLMC 12/26/02 1.690 50,000 70 164,305.56 1.719 DISC NOTES FHLMC 12/26/02 1.690 50,000 70 164,305.56 1.719 PURCHASES BN BANC ONE 1.310% 06/27/03 1.310 50,000 BN BANC ONE 1.310% 06/27/03 1.310 50,000 CD SCOTLAND 1.350% 01/27/03 1.340 50,000 CD SCOTLAND 1.350% 01/27/03 1.340 50,000 CD HYPO 1.360% 01/27/03 1.360 50,000 CD HYPO 1.360% 01/27/03 1.360 50,000 CD W/F 1.320% 02/27/03 1.310 50,000 CD W/F 1.320% 02/27/03 1.310 50,000 CP GECC 12/27/02 1.300 50,000 CP GECC 12/27/02 1.300 50,000 CP GECC 12/27/02 1.300 50,000 CP GECC 12/27/02 1.300 50,000 CP GECC 12/27/02 1.300 50,000 CP GECC 03/03/03 1.330 50,000 CP GECC 03/03/03 1.330 50,000 CP GECC 03/04/03 1.330 50,000 CP GECC 03/04/03 1.330 50,000 DISC NOTES FNMA 06/25/03 1.270 50,000 12 12/26/02 PURCHASES (continued) DISC NOTES FNMA 06/25/03 1.270 50,000 12/27/02 REDEMPTIONS CD LLOYDS 1.250% 12/27/02 1.250 50,000 8 13,888.89 1.267 CD LLOYDS 1.250% 12/27/02 1.250 50,000 8 13,888.89 1.267 CD LLOYDS 1.250% 12/27/02 1.250 50,000 8 13,888.89 1.267 CD LLOYDS 1.250% 12/27/02 1.250 50,000 8 13,888.89 1.267 CD CIBC 1.250% 12/27/02 1.250 50,000 8 13,888.89 1.267 CD CIBC 1.250% 12/27/02 1.250 50,000 8 13,888.89 1.267 CD DEUTSCHE 1.250% 12/27/02 1.250 40,000 9 12,500.00 1.267 CD DEUTSCHE 1.250% 12/27/02 1.250 50,000 9 15,625.00 1.267 CD DEUTSCHE 1.250% 12/27/02 1.250 50,000 9 15,625.00 1.267 CD DEUTSCHE 1.250% 12/27/02 1.250 50,000 9 15,625.00 1.267 CD DEUTSCHE 1.250% 12/27/02 1.250 50,000 9 15,625.00 1.267 CD CIBC 1.250% 12/27/02 1.250 50,000 9 15,625.00 1.267 CD CIBC 1.250% 12/27/02 1.250 50,000 9 15,625.00 1.267 CD CIBC 1.250% 12/27/02 1.250 50,000 9 15,625.00 1.267 CD CIBC 1.250% 12/27/02 1.250 50,000 9 15,625.00 1.267 CD DEXIA 1.510% 12/27/02 1.500 50,000 51 106,251.50 1.520 CD DEXIA 1.510% 12/27/02 1.500 50,000 51 106,251.50 1.520 CD DEXIA 1.510% 12/27/02 1.500 50,000 51 106,251.50 1.520 CD DEXIA 1.510% 12/27/02 1.500 50,000 51 106,251.50 1.520 CD MONTREAL 1.720% 12/27/02 1.720 50,000 94 224,555.56 1.743 CD MONTREAL 1.720% 12/27/02 1.720 50,000 94 224,555.56 1.743 CD W/F 1.760% 12/27/02 1.760 50,000 101 246,888.89 1.784 CD W/F 1.760% 12/27/02 1.760 50,000 101 246,888.89 1.784 CID GECC 12/27/02 1.300 50,000 1 1,805.56 1.318 CID GECC 12/27/02 1.300 50,000 1 1,805.56 1.318 CID GECC 12/27/02 1.300 50,000 1 1,805.56 1.318 CID GECC 12/27/02 1.300 50,000 1 1,805.56 1.318 CID GECC 12/27/02 1.300 50,000 1 1,805.56 1.318 CID NCAT 12/27/02 1.210 50,000 7 11,763.89 1.227 CID NCAT 12/27/02 1.210 50,000 7 11,763.89 1.227 CID AMER EXP 12/27/02 1.200 50,000 7 11,666.67 1.216 CID AMER EXP 12/27/02 1.200 50,000 7 11,666.67 1.216 CID GECC 12/27/02 1.220 50,000 9 15,250.00 1.237 CID GECC 12/27/02 1.220 50,000 9 15,250.00 1.237 CID GECC 12/27/02 1.220 50,000 9 15,250.00 1.237 CID GECC 12/27/02 1.220 50,000 9 15,250.00 1.237 CID GECC 12/27/02 1.220 50,000 9 15,250.00 1.237 CID GECC 12/27/02 1.220 50,000 9 15,250.00 1.237 CP SALOMON 12/27/02 1.230 35,000 10 11,958.33 1.247 CID TEXT FIN 12/27/02 1.420 25,000 35 34,513.89 1.441 CID HOUSEHOLD 12/27/02 1.680 50,000 45 105,000.00 1.706 CID HOUSEHOLD 12/27/02 1.680 50,000 45 105,000.00 1.706 CID COUNTRY 12/27/02 1.790 50,000 67 166,569.44 1.820 CID COUNTRY 12/27/02 1.790 50,000 67 166,569.44 1.820 13 12/27/02 REDEMPTIONS (continued) CP COUNTRY 12/27/02 1.790 50,000 67 166,569.44 1.820 CP SAFEWAY 12/27/02 1.850 30,000 72 111,000.00 1.882 CP W/F 12/27/02 1.720 50,000 72 172,000.00 1.749 CP W/F 12/27/02 1.720 50,000 72 172,000.00 1.749 CP COUNTRY 12/27/02 1.800 50,000 72 180,000.00 1.831 CP COUNTRY 12/27/02 1.800 50,000 72 180,000.00 1.831 CP COUNTRY 12/27/02 1.780 50,000 73 180,472.22 1.811 CP COUNTRY 12/27/02 1.780 50,000 73 180,472.22 1.811 CP COUNTRY 12/27/02 1.770 25,000 85 104,479.17 1.802 CP COUNTRY 12/27/02 1.770 50,000 85 208,958.33 1.802 CP GECC 12/27/02 1.760 25,000 101 123,444.44 1.793 CP GECC 12/27/02 1.760 50,000 101 246,888.89 1.793 CP GECC 12/27/02 1.760 50,000 101 246,888.89 1.793 CP SRAC 12/27/02 2.070 20,000 129 148,350.00 2.114 DISC NOTES FHLMC 12/27/02 1.690 50,000 72 169,000.00 1.719 DISC NOTES FHLMC 12/27/02 1.690 50,000 72 169,000.00 1.719 DISC NOTES FHLMC 12/27/02 1.690 50,000 72 169,000.00 1.719 DISC NOTES FHLMC 12/27/02 1.690 50,000 72 169,000.00 1.719 PURCHASES CD MONTREAL 1.320% 01/15/03 1.320 50,000 CD MONTREAL 1.320% 01/15/03 1.320 50,000 CD CIBC 1.340% 01/21/03 1.340 50,000 CD CIBC 1.340% 01/21/03 1.340 50,000 CP GECC 12/30/02 1.320 50,000 CP GECC 12/30/02 1.320 50,000 CP GECC 12/30/02 1.320 50,000 CP GECC 12/30/02 1.320 50,000 CP HOUSEHOLD 01/15/03 1.520 50,000 CP HOUSEHOLD 01/15/03 1.520 50,000 CP GECC 01/15/03 1.330 50,000 CP GECC 01/15/03 1.330 50,000 CP GECC 01/15/03 1.330 50,000 CP GECC 01/15/03 1.330 50,000 CP GECC 01/21/03 1.330 50,000 CP GECC 01/21/03 1.330 50,000 CP GECC 01/21/03 1.330 50,000 CP GECC 01/21/03 1.330 50,000 CP BEAR 01/21/03 1.330 50,000 CP BEAR 01/21/03 1.330 50,000 12/30/02 REDEMPTIONS CP GECC 12/30/02 1.320 50,000 3 5,500.00 1.338 CP GECC 12/30/02 1.320 50,000 3 5,500.00 1.338 CP GECC 12/30/02 1.320 50,000 3 5,500.00 1.338 CP GECC 12/30/02 1.320 50,000 3 5,500.00 1.338 14 12/30/02 REDEMPTIONS (continued) CP AMER EXP CP AMER EXP PURCHASES CD W/F CD SCOTLAND CD W/F CP BEAR CP CRC CP CRC CP GECC CP GECC CP GECC CP GECC SBA FR SBA FR 12/31/02 REDEMPTIONS DISC NOTES FNMA DISC NOTES FNMA DISC NOTES FNMA DISC NOTES FNMA TREAS NOTES TREAS NOTES PURCHASES CD W/F CD W/F 12/30/02 1.250 50,000 12/30/02 1.250 50,000 1.300% 01 /21 /03 1.300 30,000 1.350% 01 /21 /03 1.310 50,000 1.300% 01 /21 /03 1.300 50,000 01 /21 /03 1.310 50,000 01 /21 /03 1.320 50,000 01 /21 /03 1.320 50,000 01 /21 /03 1.310 50,000 01 /21 /03 1.310 50,000 01 /21 /03 1.310 50,000 01 /21 /03 1.310 50,000 2.050% 11/25/27 2.050 10,807 2.050% 11 /25/27 2.050 11,248 7 12,152.78 1.267 7 12,152.78 1.267 12/31/02 1.670 50,000 76 176,277.78 1.699 12/31/02 1.670 50,000 76 176,277.78 1.699 12/31/02 1.670 50,000 76 176,277.78 1.699 12/31/02 1.670 50,000 76 176,277.78 1.699 5.125% 12/31/02 4.675 50,000 725 4,667,731.35 4.660 5.125% 12/31/02 4.675 50,000 725 4,667,731.35 4.660 1.290% 01 /21 /03 1.290 50,000 1.290% 01 /21 /03 1.290 50,000 15 a/ The abbreviations indicate the type of security purchased or sold; i.e., (U.S.) Bills, Bonds, Notes, Debentures, Discount Notes and Participation Certificates: Federal National Mortgage Association (FNMA), Farmers Home Administration Notes (FHA), Student Loan Marketing Association (SLMA), Small Business Association (SBA), Negotiable Certificates of Deposit (CD), Negotiable Certificates of Deposit Floating Rate (CD FR), Export Import Notes (EXIM), Bankers Acceptances (BA), Commercial Paper (CP), Government National Mortgage Association (GNMA), Federal Home Loan Bank Notes (FHLB), Federal Land Bank Bonds (FLB), Federal Home Loan Mortgage Corporation Obligation (FHLMC PC) & (FHLMC GMC), Federal Farm Credit Bank Bonds (FFCB), Federal Farm Credit Discount Notes (FFC), Corporate Securities (CB), US Ship Financing Bonds (TITLE XI'S), International Bank of Redevelopment (IBRD), Tennessee Valley Authority (TVA), Medium Term Notes (MTN), Real Estate Mortgage Investment Conduit (REMIC). b/ Purchase or sold yield based on 360 day calculation for discount obligations and Repurchase Agreements. c/ Repurchase Agreement. d/ Par amount of securities purchased, sold or redeemed. e/ Securities were purchased and sold as of the same date. f/ Repurchase Agreement against Reverse Repurchase Agreement. g/ Outright purchase against Reverse Repurchase Agreement. h/ Security "SWAP" transactions. 1 Buy back agreement. RRS Reverse Repurchase Agreement. RRP Termination of Reverse Repurchase Agreement. 16 NAME ALHAMBRA Bank of East Asia (USA) Bank of East Asia (USA) Grand National Bank Omni Bank Omni Bank Omni Bank Omni Bank ARROYO GRANDE Mid -State Bank Mid -State Bank Mid -State Bank Mid -State Bank Mid -State Bank Mid -State Bank BEVERLY HILLS City National Bank City National Bank City National Bank BREA Jackson Federal Bank Jackson Federal Bank CALABASAS First Bank of Beverly Hills FSB First Bank of Beverly Hills FSB First Bank of Beverly Hills FSB CAMARILLO First California Bank First California Bank TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 08/13/02 1.610 3,000,000.00 02/13/03 11/13/02 1.310 6,000,000.00 05/13/03 07/12/02 1.770 3,095,000.00 01 /14/03 08/27/02 1.720 3,000,000.00 02/25/03 09/05/02 1.710 3,000,000.00 03/07/03 10/21/02 1.730 2,000,000.00 04/23/03 11 /20/02 1.310 2,000,000.00 05/21 /03 07/16/02 1.750 5,000,000.00 01 /16/03 08/13/02 1.610 5,000,000.00 02/13/03 09/11/02 1.700 5,000,000.00 03/12/03 10/16/02 1.580 5,000,000.00 04/14/03 11/13/02 1.310 5,000,000.00 05/13/03 12/11 /02 1.310 5,000,000.00 06/13/03 09/09/02 1.640 10,000,000.00 03/10/03 12/09/02 1.260 10,000,000.00 03/13/03 10/17/02 1.620 25,000,000.00 04/15/03 07/22/02 1.780 10,000,000.00 01 /22/03 08/12/02 1.620 10,000,000.00 02/11/03 08/07/02 1.650 10,000,000.00 02/06/03 08/28/02 1.740 10,000,000.00 03/03/03 09/18/02 1.750 10,000,000.00 03/19/03 10/29/02 1.670 4,000,000.00 09/25/02 1.650 3,000,000.00 17 01 /30/03 03/24/03 NAME CAMERON PARK Western Sierra National Bank Western Sierra National Bank CHICO North State National Bank North State National Bank North State National Bank Tri Counties Bank Tri Counties Bank CHULA VISTA North Island Federal Credit Union CITY OF INDUSTRY EverTrust Bank EverTrust Bank CONCORD CA State 9 Credit Union DUBLIN Operating Engineers FCU Operating Engineers FCU Operating Engineers FCU EL CENTRO Valley Independent Bank Valley Independent Bank Valley Independent Bank ELSEGUNDO Hawthorne Savings FSB Hawthorne Savings FSB TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 07/16/02 1.770 7,000,000.00 01/16/03 08/15/02 1.650 6,000,000.00 02/14/03 07/26/02 1.680 5,000,000.00 01/24/03 08/16/02 1.630 1,500,000.00 02/14/03 09/11/02 1.710 1,000,000.00 03/12/03 12/16/02 1.260 10,000,000.00 03/18/03 12/09/02 1.270 10,000,000.00 03/18/03 12/23/02 1.270 5,000,000.00 03/26/03 07/29/02 1.710 6,000,000.00 01/27/03 12/10/02 1.290 6,000,000.00 06/12/03 11/18/02 1.290 10,000,000.00 02/20/03 08/13/02 1.610 5,000,000.00 02/13/03 10/10/02 1.580 5,000,000.00 04/08/03 12/11/02 1.290 10,000,000.00 06/13/03 10/28/02 1.710 20,000,000.00 04/28/03 11/20/02 1.320 32,500,000.00 05/21/03 12/19/02 1.330 20,000,000.00 07/08/03 10/01/02 1.660 30,000,000.00 01/06/03 07/09/02 1.770 30,000,000.00 01/09/03 18 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE EL SEGUNDO (continued) Hawthorne Savings FSB 12/20/02 1.250 50,000,000.00 03/24/03 Hawthorne Savings FSB 11 /15/02 1.270 25,000,000.00 05/14/03 Xerox Federal Credit Union 09/06/02 1.640 7,000,000.00 03/06/03 Xerox Federal Credit Union 11/15/02 1.290 20,000,000.00 05/16/03 FRESNO United Security Bank 08/05/02 1.700 15,000,000.00 02/05/03 United Security Bank 10/11/02 1.580 5,000,000.00 04/09/03 United Security Bank 11/14/02 1.310 20,000,000.00 05/13/03 FULLERTON Fullerton Community Bank 07/26/02 1.710 8,000,000.00 01/23/03 Fullerton Community Bank 11/13/02 1.320 9,000,000.00 05/13/03 GLENDALE The California Credit Union 11/25/02 1.290 5,000,000.00 02/27/03 Verdugo Banking Company 07/02/02 1.850 5,000,000.00 01/07/03 Verdugo Banking Company 10/01/02 1.630 5,000,000.00 04/02/03 GOLETA Pacific Capital Bank 07/25/02 1.740 45,000,000.00 01/23/03 Pacific Capital Bank 08/15/02 1.630 16,000,000.00 02/14/03 Pacific Capital Bank 09/09/02 1.630 10,000,000.00 03/14/03 Pacific Capital Bank 09/17/02 1.710 15,000,000.00 03/14/03 Pacific Capital Bank 10/01 /02 1.610 10,000,000.00 04/02/03 Pacific Capital Bank 10/11/02 1.560 10,000,000.00 04/02/03 Pacific Capital Bank 10/29/02 1.660 10,000,000.00 04/29/03 Pacific Capital Bank 12/05/02 1.330 25,000,000.00 06/09/03 Pacific Capital Bank 12/11/02 1.290 30,000,000.00 06/09/03 Pacific Capital Bank 12/09/02 1.310 30,000,000.00 06/09/03 GRANADA HILLS First State Bank of California 09/18/02 1.730 2,000,000.00 03/19/03 First State Bank of California 10/21/02 1.730 3,000,000.00 04/23/03 ` el NAME HUNTINGTON BEACH First Bank and Trust First Bank and Trust IRVINE Commercial Capital Bank Commercial Capital Bank IRVINE (continued) Commercial Capital Bank LA JOLLA Silvergate Bank Silvergate Bank LAKEPORT Lake Community Bank Lake Community Bank LODI Farmers & Merchant Bk Cen CA LOS ANGELES Broadway Federal Bank Broadway Federal Bank California Center Bank California Chohung Bank California Chohung Bank California Chohung Bank California Chohung Bank California Chohung Bank California Chohung Bank Cathay Bank Cathay Bank Cathay Bank Cathay Bank TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 08/26/02 1.680 2,000,000.00 02/24/03 09/09/02 1.650 12,000,000.00 03/11 /03 07/01 /02 1.810 6,000,000.00 01 /08/03 08/26/02 1.670 14,000,000.00 02/21 /03 12/16/02 1.290 10,000,000.00 06/18/03 08/02/02 1.760 5,000,000.00 01 /31 /03 09/11 /02 1.730 5,000,000.00 03/12/03 06/26/02 1.900 2,000,000.00 01/15/03 11 /25/02 1.320 1,500,000.00 05/29/03 07/10/02 1.790 10,000,000.00 01/10/03 07/08/02 1.800 2,500,000.00 01/09/03 09/09/02 1.660 3,000,000.00 03/11/03 10/01/02 1.660 10,000,000.00 01/06/03 07/17/02 1.750 1,000,000.00 01 /16/03 08/19/02 1.660 4,000,000.00 02/19/03 09/06/02 1.630 5,000,000.00 03/07/03 10/02/02 1.540 3,000,000.00 04/01 /03 10/16/02 1.580 800,000.00 04/14/03 10/02/02 1.540 2,500,000.00 04/14/03 09/25/02 1.660 19,000,000.00 03/24/03 10/09/02 1.590 19,000,000.00 04/07/03 11/12/02 1.310 15,000,000.00 05/13/03 12/10/02 1.290 30,000,000.00 06/12/03 20 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE LOS ANGELES (continued) Cedars Bank 08/19/02 1.690 2,000,000.00 02/19/03 Cedars Bank 09/06/02 1.650 4,500,000.00 03/05/03 Cedars Bank 10/04/02 1.560 5,000,000.00 04/03/03 Cedars Bank 10/24/02 1.750 4,000,000.00 04/22/03 Cedars Bank 12/12/02 1.310 4,500,000.00 06/12/03 Eastern International Bank 11/07/02 1.430 900,000.00 05/06/03 Eastern International Bank 12/10/02 1.310 1,000,000.00 06/12/03 Family Savings Bank 12/05/02 1.350 3,000,000.00 06/16/03 Hanmi Bank 07/18/02 1.760 25,000,000.00 01/17/03 Hanmi Bank 10/31 /02 1.610 20,000,000.00 01 /31 /03 Hanmi Bank 12/02/02 1.270 25,000,000.00 03/05/03 Hanmi Bank 09/19/02 1.710 25,000,000.00 03/18/03 Manufacturers Bank 07/31/02 1.760 10,000,000.00 01/27/03 Manufacturers Bank 09/20/02 1.700 20,000,000.00 03/10/03 Manufacturers Bank 09/09/02 1.650 30,000,000.00 03/10/03 Marathon National Bank 07/12/02 1.790 2,000,000.00 01/14/03 Marathon National Bank 08/05/02 1.700 2,000,000.00 02/05/03 Mellon First Business Bank 10/29/02 1.660 25,000,000.00 01/10/03 Mellon First Business Bank 07/10/02 1.780 25,000,000.00 01/10/03 Mellon First Business Bank 12/17/02 1.250 50,000,000.00 03/19/03 Nara Bank, NA 08/08/02 1.640 10,000,000.00 02/07/03 Nara Bank, NA 12/16/02 1.250 5,000,000.00 03/18/03 Nara Bank, NA 10/11 /02 1.560 5,000,000.00 04/23/03 Nara Bank, NA 10/21/02 1.710 15,000,000.00 04/23/03 Pacific Union Bank 07/02/02 1.830 10,000,000.00 01/07/03 Pacific Union Bank 09/04/02 1.650 20,000,000.00 03/06/03 Preferred Bank 07/16/02 1.780 6,000,000.00 01/16/03 Preferred Bank 08/08/02 1.670 4,000,000.00 02/07/03 Preferred Bank 08/29/02 1.750 7,000,000.00 02/26/03 Preferred Bank 09/10/02 1.730 9,000,000.00 03/05/03 Preferred Bank 09/18/02 1.740 9,000,000.00 03/21/03 Sae Han Bank 07/15/02 1.750 6,000,000.00 01/15/03 Western Federal Credit Union 10/21/02 1.710 30,000,000.00 04/23/03 Wilshire State Bank 08/06/02 1.680 4,000,000.00 02/05/03 Wilshire State Bank 08/26/02 1.680 4,000,000.00 02/24/03 Wilshire State Bank 12/17/02 1.250 8,000,000.00 03/19/03 Wilshire State Bank 10/11/02 1.590 3,000,000.00 04/09/03 Wilshire State Bank 11/06/02 1.470 4,000,000.00 05/06/03 Wilshire State Bank 05/14/02 2.420 2,000,000.00 05/13/03 Wilshire State Bank 11/22/02 1.320 5,000,000.00 05/29/03 21 NAME LOS ANGELES (continued) Wilshire State Bank Wilshire State Bank MANTECA Delta National Bank MERCED County Bank County Bank County Bank County Bank MODESTO Valley First Credit Union MONTEREY PARK Trust Bank FSB Trust Bank FSB NORTH HIGHLANDS Safe Credit Union Safe Credit Union OAKDALE Oak Valley Community Bank Oak Valley Community Bank Oak Valley Community Bank OAKLAN D Metropolitian Bank Metropolitian Bank Metropolitian Bank TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 12/17/02 1.310 2,000,000.00 06/19/03 07/12/02 2.060 4,000,000.00 07/10/03 07/10/02 1.810 1,000,000.00 01 /10/03 07/16/02 1.770 5,000,000.00 01 /16/03 08/26/02 1.680 5,000,000.00 02/24/03 10/16/02 1.600 5,000,000.00 04/14/03 12/10/02 1.330 10,000,000.00 06/11/03 10/04/02 1.560 4,000,000.00 04/10/03 07/01 /02 10/01 /02 07/15/02 08/15/02 07/12/02 12/09/02 03/22/02 09/25/02 10/28/02 11 /25/02 22 1.800 3,000,000.00 1.640 3,000,000.00 01 /02/03 04/01 /03 1.750 5,000,000.00 01 /15/03 1.630 20,000,000.00 02/14/03 1.770 2,500,000.00 01/14/03 1.270 1,500,000.00 03/11/03 2.640 2,000,000.00 03/20/03 1.650 1,000,000.00 03/24/03 1.700 1,000,000.00 04/28/03 1.300 1,000,000.00 05/28/03 NAME ONTARIO TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE Citizens Business Bank 11/07/02 1.440 10,000,000.00 02/06/03 Citizens Business Bank 11/12/02 1.260 20,000,000.00 02/11/03 Citizens Business Bank 09/25/02 1.640 30,000,000.00 03/24/03 Citizens Business Bank 10/04/02 1.550 25,000,000.00 04/03/03 Citizens Business Bank 11 /20/02 1.310 30,000,000.00 05/21 /03 Citizens Business Bank 12/06/02 1.360 25,000,000.00 06/04/03 PALO ALTO Bank of Petaluma 08/23/02 1.670 3,500,000.00 02/19/03 Bank of Petaluma 09/11/02 1.720 12,000,000.00 03/10/03 Bank of Santa Clara 08/23/02 1.670 20,000,000.00 02/19/03 Bay Area Bank 07/15/02 1.750 5,000,000.00 01/15/03 Bay Area Bank 10/28/02 1.720 5,000,000.00 04/28/03 Bay Bank of Commerce 10/28/02 1.710 5,000,000.00 04/28/03 Coast Commercial Bank 07/15/02 1.770 5,000,000.00 01/15/03 Coast Commercial Bank 08/23/02 1.680 20,000,000.00 02/19/03 Cupertino National Bank 07/15/02 1.780 10,000,000.00 01/15/03 Cupertino National Bank 07/30/02 1.730 35,000,000.00 01/28/03 Cupertino National Bank 08/23/02 1.680 20,000,000.00 02/19/03 Cupertino National Bank 09/11/02 1.730 10,000,000.00 03/10/03 Golden Gate Bank 08/23/02 1.680 9,000,000.00 02/19/03 Mid -Peninsula Bank 08/23/02 1.680 5,000,000.00 02/19/03 Mid -Peninsula Bank 09/11/02 1.730 10,000,000.00 03/10/03 Mid -Peninsula Bank 10/28/02 1.720 35,000,000.00 04/28/03 Mt. Diablo National Bank 09/11/02 1.730 10,000,000.00 03/10/03 Peninsula Bank of Commerce 08/23/02 1.680 15,000,000.00 02/19/03 PALOS VERDES ESTATES Malaga Bank 08/22/02 1.710 2,000,000.00 02/20/03 Malaga Bank 09/12/02 1.710 2,000,000.00 03/13/03 Malaga Bank 10/30/02 1.580 4,000,000.00 05/13/03 Malaga Bank 10/24/02 1.720 4,000,000.00 05/13/03 Malaga Bank 12/23/02 1.280 4,000,000.00 06/25/03 PASADENA Community Bank 07/11/02 1.780 20,000,000.00 01/10/03 Community Bank 10/23/02 1.720 5,000,000.00 04/15/03 23 NAME PASADENA (continued) Community Bank Community Bank Community Bank Wescom Credit Union PLACERVILLE El Dorado Savings Bank El Dorado Savings Bank El Dorado Savings Bank El Dorado Savings Bank El Dorado Savings Bank El Dorado Savings Bank PLEASANTON Valley Community Bank POMONA PFF Bank and Trust PFF Bank and Trust PORTERVILLE Bank of the Sierra RANCHO SANTA FE La Jolla Bank, FSB La Jolla Bank, FSB La Jolla Bank, FSB La Jolla Bank, FSB REDDING North Valley Bank TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 10/15/02 1.570 10,000,000.00 04/15/03 11/08/02 1.260 15,000,000.00 05/07/03 12/19/02 1.320 20,000,000.00 06/19/03 11 /13/02 1.330 10,000,000.00 05/13/03 02/08/02 2.250 5,000,000.00 02/07/03 03/07/02 2.390 5,000,000.00 03/07/03 03/22/02 2.640 5,000,000.00 03/20/03 04/12/02 2.640 10,000,000.00 04/10/03 05/02/02 2.390 5,000,000.00 04/30/03 06/10/02 2.360 20,000,000.00 06/10/03 09/12/02 1.750 5,000,000.00 03/13/03 08/30/02 1.720 8,000,000.00 02/27/03 12/09/02 1.330 20,000,000.00 06/11/03 10/21 /02 1.730 10,000,000.00 04/23/03 08/06/02 1.670 25,000,000.00 02/05/03 09/04/02 1.660 10,000,000.00 03/06/03 11 /19/02 1.310 25,000,000.00 05/21 /03 12/05/02 1.350 10,000,000.00 06/04/03 12/11/02 1.310 3,000,000.00 06/13/03 24 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE REDWOOD CITY Provident Central Credit Union 10/29/02 1.710 20,000,000.00 04/29/03 ROCKLIN Five Star Bank 10/01 /02 1.610 2,000,000.00 04/01 /03 RICHMOND Mechanics Bank 03/07/02 2.390 10,000,000.00 03/07/03 Mechanics Bank 04/05/02 2.710 10,000,000.00 04/01/03 Mechanics Bank 04/25/02 2.440 10,000,000.00 04/23/03 Mechanics Bank 06/12/02 2.340 10,000,000.00 06/12/03 Mechanics Bank 07/11/02 2.110 10,000,000.00 07/09/03 Mechanics Bank 08/13/02 1.710 10,000,000.00 08/08/03 Mechanics Bank 09/12/02 1.800 10,000,000.00 09/12/03 Mechanics Bank 10/15/02 1.580 10,000,000.00 10/15/03 Mechanics Bank 11 /07/02 1.510 10,000,000.00 11 /07/03 RIVERSIDE Provident Savings Bank 09/27/02 1.630 25,000,000.00 03/27/03 SACRAMENTO American River Bank 07/10/02 1.780 1,000,000.00 01 /10/03 American River Bank 01 /14/02 2.200 1,500,000.00 01 /14/03 American River Bank 08/29/02 1.720 2,000,000.00 02/26/03 American River Bank 09/25/02 1.680 2,000,000.00 03/27/03 American River Bank 10/11/02 1.560 1,500,000.00 04/09/03 American River Bank 12/23/02 1.280 1,000,000.00 06/25/03 Bank of Sacramento 08/12/02 1.610 1,500,000.00 02/11 /03 Bank of Sacramento 09/20/02 1.720 2,000,000.00 03/19/03. Bank of Sacramento 11/25/02 1.330 2,000,000.00 05/29/03 Golden One Credit Union 06/07/02 2.010 10,000,000.00 01/09/03 Merchants National Bank 07/23/02 1.750 2,000,000.00 01/22/03 Merchants National Bank 10/17/02 1.660 2,000,000.00 04/15/03 River City Bank 07/01/02 1.790 2,000,000.00 01/08/03 River City Bank 07/29/02 1.740 3,000,000.00 01/27/03 River City Bank 08/27/02 1.720 2,000,000.00 02/25/03 River City Bank 10/01 /02 1.630 4,000,000.00 04/02/03 25 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE SACRAMENTO (continued) U.S. Bank 07/03/02 1.810 100,000,000.00 01/08/03 U.S. Bank 08/02/02 1.750 25,000,000.00 01/31/03 U.S. Bank 11/06/02 1.480 50,000,000.00 02/06/03 U.S. Bank 08/23/02 1.670 25,000,000.00 02/19/03 Union Bank of California 10/17/02 1.640 150,000,000.00 01/17/03 Union Bank of California 11/05/02 1.450 150,000,000.00 02/06/03 Union Bank of California 12/16/02 1.250 100,000,000.00 03/20/03 Union Bank of California 12/18/02 1.270 4,000,000.00 03/20/03 Union Bank of California 12/18/02 1.270 46,000,000.00 03/20/03 SALINAS Community Bank of Central Cal 12/30/02 1.230 10,000,000.00 04/03/03 SAN BERNARDINO Business Bank of California 07/12/02 1.800 8,000,000.00 01/14/03 Business Bank of California 09/16/02 1.730 12,000,000.00 03/18/03 Business Bank of California 11/06/02 1.480 10,000,000.00 05/06/03 SAN DIEGO First Future Credit Union 08/30/02 1.710 5,000,000.00 02/27/03 First Future Credit Union 11/25/02 1.330 5,000,000.00 05/29/03 First Future Credit Union 12/05/02 1.360 10,000,000.00 06/04/03 First Future Credit Union 12/18/02 1.320 3,000,000.00 06/16/03 First United Bank 07/18/02 1.760 2,000,000.00 01/17/03 First United Bank 02/15/02 2.300 1,000,000.00 02/14/03 Neighborhood National Bank 08/22/02 1.730 2,000,000.00 02/21/03 SAN FRANCISCO America California Bank 10/30/02 1.650 2,000,000.00 01/08/03 America California Bank 09/27/02 1.710 2,000,000.00 01/08/03 Bank of Canton California 06/11/02 1.970 20,000,000.00 01/15/03 Bank of Canton California 03/08/02 2.390 20,000,000.00 03/07/03 Bank of Canton California 10/10/02 1.580 40,000,000.00 04/08/03 Bank of Canton California 08/30/02 1.920 20,000,000.00 08/28/03 Bank of the West 07/23/02 1.760 76,500,000.00 01/22/03 Bank of the West 11/18/02 1.260 242,000,000.00 02/20/03 26 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE SAN FRANCISCO (continued) Bank of the West 09/20/02 1.690 82,000,000.00 03/19/03 Bank of the West 12/30/02 1.250 134,000,000.00 04/04/03 California Federal Bank 10/16/02 1.590 100,000,000.00 04/14/03 Citibank (West) FSB 11 /21 /02 1.260 100,000,000.00 02/19/03 Citibank (West) FSB 12/30/02 1.230 50,000,000.00 04/04/03 Oceanic Bank 09/12/02 1.800 4,000,000.00 09/12/03 Trans Pacific National Bank 08/05/02 1.700 1,000,000.00 02/05/03 Trans Pacific National Bank 09/19/02 1.730 1,000,000.00 03/25/03 Trans Pacific National Bank 12/23/02 1.300 1,000,000.00 06/25/03 United Commercial Bank 07/10/02 1.800 30,000,000.00 01/10/03 United Commercial Bank 07/31/02 1.760 40,000,000.00 01/27/03 United Commercial Bank 08/30/02 1.750 30,000,000.00 02/28/03 United Commercial Bank 09/10/02 1.710 30,000,000.00 03/21/03 United Commercial Bank 09/10/02 1.710 35,000,000.00 03/21/03 United Commercial Bank 12/03/02 1.320 25,000,000.00 06/04/03 United Commercial Bank 12/30/02 1.310 25,000,000.00 07/01/03 SANJOSE Comerica Bank of California 10/15/02 1.640 71,000,000.00 01 /13/03 Comerica Bank of California 11/05/02 1.500 183,000,000.00 02/03/03 Comerica Bank of California 12/04/02 1.310 63,000,000.00 03/04/03 Heritage Bank of Commerce 08/15/02 1.640 2,000,000.00 02/14/03 Meriwest Credit Union 08/28/02 1.730 5,000,000.00 02/25/03 Meriwest Credit Union 10/18/02 1.710 5,000,000.00 04/16/03 Meriwest Credit Union 11/07/02 1.460 5,000,000.00 05/06/03 Meriwest Credit Union 12/17/02 1.330 5,000,000.00 06/19/03 San Jose National Bank 07/30/02 1.730 20,000,000.00 01 /28/03 San Jose National Bank 08/14/02 1.660 20,000,000.00 02/19/03 Santa Clara Co. Fed. C.U. 08/06/02 1.680 10,000,000.00 02/05/03 Santa Clara Co. Fed. C.U. 11/05/02 1.470 5,000,000.00 05/07/03 SAN LUIS OBISPO First Bank Of San Luis Obispo 11/12/02 1.270 6,000,000.00 02/11/03 First Bank Of San Luis Obispo 09/10/02 1.750 7,000,000.00 03/11/03 First Bank Of San Luis Obispo 09/24/02 1.690 5,000,000.00 03/26/03 Mission Community Bank 09/05/02 1.650 1,000,000.00 03/04/03 Mission Community Bank 10/10/02 1.600 2,500,000.00 04/08/03 Mission Community Bank 12/10/02 1.310 1,000,000.00 06/12/03 27 NAME SAN LUIS OBISPO (continued) San Luis Trust Bank San Luis Trust Bank SAN MARINO East West Federal Bank East West Federal Bank East West Federal Bank East West Federal Bank SAN RAFAEL Westamerica Bank Westamerica Bank Westamerica Bank Westamerica Bank SAN RAMON EBTEL Federal Credit Union SANTA MARIA Hacienda Bank SANTA ROSA National Bank of the Redwoods SONORA Central California Bank STOCKTON Pacific State Bank Pacific State Bank Union Safe Deposit Bank Union Safe Deposit Bank Union Safe Deposit Bank TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 07/11 /02 1.800 1,350,000.00 01 /10/03 10/23/02 1.740 1,000,000.00 01 /21 /03 07/09/02 1.780 42,000,000.00 01/09/03 02/07/02 2.260 35,000,000.00 02/07/03 09/10/02 1.700 35,000,000.00 03/11 /03 05/15/03 2.370 38,000,000.00 05/15/03 10/18/02 1.670 15,000,000.00 01 /16/03 10/18/02 1.670 10,000,000.00 01 /16/03 07/30/02 1.700 10,000,000.00 01 /28/03 04/09/02 2.570 35,000,000.00 04/10/03 07/18/02 1.790 750,000.00 01/17/03 09/09/02 1.670 1,000,000.00 03/10/03 10/24/02 1.710 10,000,000.00 01/22/03 12/23/02 1.270 5,000,000.00 03/26/03 07/02/02 1.860 1,000,000.00 01/07/03 10/11 /02 1.590 1,000,000.00 04/09/03 07/25/02 1.780 15,000,000.00 01/23/03 08/15/02 1.670 15,000,000.00 02/14/03 09/04/02 1.680 15,000,000.00 03/06/03 28 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE STOCKTON (continued) Union Safe Deposit Bank 10/10/02 1.610 10,000,000.00 04/15/03 Union Safe Deposit Bank 11/04/02 1.460 5,000,000.00 05/07/03 Union Safe Deposit Bank 11 /07/02 1.460 10,000,000.00 05/07/03 Union Safe Deposit Bank 12/11/02 1.320 10,000,000.00 06/13/03 Washington Mutual Bank 07/26/02 1.700 15,000,000.00 01/22/03 Washington Mutual Bank 07/23/02 1.740 60,000,000.00 01/22/03 Washington Mutual Bank 08/19/02 1.660 60,000,000.00 02/19/03 Washington Mutual Bank 12/16/02 1.310 45,000,000.00 06/18/03 TORRANCE China Trust Bank (USA) 07/19/02 1.790 30,000,000.00 01/22/03 China Trust Bank (USA) 11/15/02 1.270 20,000,000.00 02/13/03 China Trust Bank (USA) 12/11/02 1.270 35,000,000.00 03/14/03 South Bay Bank 10/01 /02 1.710 4,000,000.00 01 /06/03 South Bay Bank 10/22/02 1.740 7,000,000.00 01 /21 /03 TRACY Service 1st Bank 09/24/02 1.680 2,000,000.00 03/20/03 Service 1st Bank 09/17/02 1.750 2,000,000.00 03/20/03 TUSTIN First Fidelity Investment & Loan 11/06/02 1.470 15,000,000.00 02/05/03 Sunwest Bank 10/15/02 1.610 6,000,000.00 01/13/03 Sunwest Bank 11 /08/02 1.270 7,800,000.00 02/07/03 Sunwest Bank 12/09/02 1.280 1,000,000.00 03/13/03 VACAVILLE Travis Credit Union 08/28/02 1.730 40,000,000.00 02/25/03 WATSONVILLE Monterey Bay Bank 07//10/02 1.800 8,000,000.00 01/14/03 Monterey Bay Bank 09/06/02 1.650 6,000,000.00 03/04/03 Monterey Bay Bank 09/19/02 1.730 8,000,000.00 03/25/03 Monterey Bay Bank 10/10/02 1.600 3,000,000.00 04/10/03 Monterey Bay Bank 12/16/02 1.310 3,000,000.00 06/18/03 29 NAME WHITTIER TIME DEPOSITS DEPOSIT DATE Quaker City Bank 07/12/02 Quaker City Bank 10/04/02 Quaker City Bank 12/03/02 TOTAL TIME DEPOSITS DECEMBER 2002 30 PAR MATURITY YIELD AMOUNT ($) DATE 1.770 24,000,000.00 01/14/03 1.610 16,000,000.00 04/02/03 1.300 25,000,000.00 06/04/03 5,284,195,000.00 BANK DEMAND DEPOSITS DECEMBER 2002 ($ in thousands) DAILY BALANCES DAY OF BALANCES WARRANTS MONTH PER BANKS OUTSTANDING 1 $ 602,869 $ 3,961,928 2 839,448 5,410,327 3 871,607 5,174,474 4 465,524 5,146,282 5 754,414 5,084,012 6 973,182 5,074,335 7 973,182 5,074,335 8 973,182. 5,074,335 9 949,267 4,889,270 10 810,980 4,900,348 11 942,420 4,854,246 12 686,665 4,912,329 13 892,724 4,738,082 14 892,724 4,738,082 15 892,724 4,738,082 16 846,381 4,777,715 17 1,065,283 4,976,746 18 879,875 4,956,894 19 722,083 5,192,070 20 1,035,644 5,304,336 21 1,035,644 5,304,336 22 1,035,644 5,304,336 23 876,198 4,992,762 24 1,016,455 4,936,142 25 1,016,455 4,936,142 26 1,430,490 4,898,981 27 631,165 5,215,748 28 631,165 5,215,748 29 631,165 5,215,748 30 722,638 4,767,020 31 993,636 5,007,332 AVERAGE DOLLAR DAYS $ 873,898 a/ a/ The prescribed bank balance for December was $1,003,272. This consisted of $861,486 in compensating balances for services, balances for uncollected funds of $151,660 and a deduction of $9,874 for December delayed deposit credit. 31 DESIGNATION BY POOLED MONEY INVESTMENT BOARD OF TREASURY POOLED MONEY INVESTMENTS AND DEPOSITS In accordance with sections 16480 through 16480.8 of the Government Code, the Pooled Money Investment Board, at its meeting on December 18, 2002, has determined and designated the amount of money available for deposit and investment under said sections. In accordance with sections 16480.1 and 16480.2 of the Government Code, it is the intent that the money available for deposit or investment be deposited in bank accounts and savings and loan associations or invested in securities in such a manner so as to realize the maximum return consistent with safe and prudent treasury management, and the Board does hereby designate the amount of money available for deposit in bank accounts, savings and loan associ- actions, 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 No. 1642 $ 861,486,000 The active noninterest-bearing bank accounts designation constitutes a calendar month average balance. For purposes of computing the compensating balances, the Treasurer shall exclude from the daily balances any amounts contained therein as a result of nondelivery of securities purchased for "cash" for the Pooled Money Investment Account and shall adjust for any deposits not credited by the bank as of the date of deposit. The balances in such accounts may fall below the above amount provided that the balances computed by dividing the sum of daily balances of that calendar month by the number of days in the calendar month reasonably approximates that amount. The balances may exceed this amount during heavy collection periods or in anticipation of large impending warrant presentations to the Treasury, but the balances are to be maintained in such a manner as to realize the maximum return consistent with safe and prudent treasury management. 2. In accordance with law, for investment in securities authorized by section 16430, Government Code, or in term interest - bearing deposits in banks and savings and loan associations as follows: From To Transactions ( 1) 12/16/2002 12/20/2002 $ 2,113,600,000 (2) 12/23/2002 12/27/2002 $ 325,500,000 (3) 12/30/2002 1/3/2003 $ 966,200,000 (4) 1/6/2003 1/10/2003 $ 783,400,000 (5) 1/13/2003 1/17/2003 $ 1,227,300,000 (6) 1/20/2003 1/24/2003 $ 368,900,000 (7) 1/27/2003 1/31/2003 $ 1,850,400,000 (8) 2/3/2003 2/7/2003 $ 1,925,900,000 (9) 2/10/2003 2/14/2003 $ (747,200,000) (10) 2/17/2003 2/21/2003 $ 189,800,000 Time Deposits in Various Financial Institutions In Securities (sections 16503a Estimated (section 16430)* and 16602)* Total $ 45,304,405,000 $ 5,221,195,000 $ 50,525,600,000 $ 45,629,905,000 $ 5,221,195,000 $ 50,851,100,000 $ 46,596,105,000 $ 5,221,195,000 $ 51,817,300,000 $ 47,379,505,000 $ 5,221,195,000 $ 52,600,700,000 $ 48,606,805,000 $ 5,221,195,000 $ 53,828,000,000 $ 48,975,705,000 $ 5,221,195,000 $ 54,196,900,000 $ 50,826,105,000 $ 5,221,195,000 $ 56,047,300,000 $ 52,752,005,000 $ 5,221,195,000 $ 57,973,200,000 $ 52,004,805,000 $ 5,221,195,000 $ 57,226,000,000 $ 52,194,605,000 $ 5,221,195,000 $ 57,415,800,000 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 $ 861,486,000. POOLED MONEY INVESTMENT BOARD: Chairperson Member Dated: December 18, 2002 * Government Code Member INVESTMENT ADVISORY BOARD Business Session: B Meeting Date: March 12, 2003 TITLE: Consideration of Fiscal Year 2003/04 Investment Policies BACKGROUND: Each year at this time the Investment Advisory Board begins the process of reviewing the investment policy that will be put into place in the next fiscal year beginning July 1 ". At the June meeting, the City Council Manager, City Attorney and Staff will meet with the Board to discuss the changes, if any. The policy will then be forwarded to the City Council for their consideration. Typically, the Investment Advisory Board Chairman, or designee attends the City Council meeting and is available in the event the City Council has any questions regarding policies. Staff has attached the current investment policy. In addition, at the July meeting the Board added the following items to this years work plan which may want to be incorporated into the investment policy. • GSE'S • LAW • Commerical Paper RECOMMENDATION: Continued review of the Investment policies for approval by City Council in June 2003. ,,, M . Falconer, Finance Director 1 CITY OF LA QUINTA Investment Policy Table of Contents Section Topic Executive Summary I General Purpose II Investment Policy III Scope IV Objectives ► Safety ► Liquidity ► Yield ► Diversified Portfolio V Maximum Maturities VI Prudence Vll Delegation of Authority Vill Conflict of Interest IX Authorized Financial Dealers and Institutions ►Broker/Dealers ► Financial Institutions X Authorized Investments and Limitations XI Investment Pools XII Safekeeping and Custody XIII Interest Earning Distribution Policy XIV Internal Controls and Independent Auditors XV Benchmark XVI Reporting Standards XVII Investment of Bond Proceeds XVIII Investment Advisory Board - City of La Quinta IX Inves Y Adoption Investment Policy Appendices: A. B. C. D. E. F. G. 1 Summary of Authorized Investments and Limitations Municipal Code Ordinance 2.70 - Investment Advisory Board Municipal Code Ordinance 3.08 - Investment of Moneys and Funds Segregation of Major Investment Responsibilities Listing of Approved Financial Institutions Broker/Dealer Questionnaire and Certification Investment Pool Questionnaire Glossary 1 Page 2 5 5 5 6 1 i 10 13 14 14 14 16 16 17 17 17 19 20 21 23 24 25 30 34 1 7� 1 1 1 1 1 1 1 1 1 1 1 1 1 1 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. Within the constraints of safety, liquidity and yield, the City will endeavor to maintain a diversified portfolio by allocating assets between different types of investments within policy limitations. 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. 2 1 1 1 1 1 1 1 1 1 1 1 1 I 1 1 1 1 1 Authority to manage the City of La Quinta's investment portfolio is derived from the City Ordinance. Management responsibility for the investment program is delegated to the City Treasurer, who shall establish and implement written procedures for the operation of the City's investment program consistent with the Investment Policy. The Treasurer shall establish and implement a system of internal controls to maintain the safety of the portfolio. In addition, the internal control system will also insure the timely preparation and accurate reporting of the portfolio financial information. As part of the annual audit of the City of La Quinta's financial statements the independent auditor reviews the adequacy of those controls and comments if weaknesses are found. 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. The Treasurer will be permitted to invest only in City approved investments up to the maximum allowable percentages or dollar limitations and, where applicable, through the bid process requirements. Authorized investment vehicles and related maximum portfolio positions are listed in Appendix A - Summary of Authorized Investments and Limitations. At least two bids will be required of investments in the authorized investment vehicles. Collateralization will be required for Certificates of Deposits in excess of $100,000. Collateral will always be held by an independent third party from the institution that sells the Certificates of Deposit to the City. Evidence of compliance with State Collateralization policies must be supplied to the City and retained by the City Treasurer. The City of La Quinta Investment Policy shall require that each individual investment have a maximum maturity of two years unless specific approval is authorized by the City Council, except the projected annual dollar amount as detailed in Section V, may be invested in U.S. Treasury bills, notes and bonds maturing between 2 and 5 years. In addition, the City's investment in the State Local Agency Investment fund (LAIF) is allowable as long as the average maturity does not exceed two years, unless specific approval is authorized by the City Council. The City's investment in Money Market Mutual funds is allowable as long as the average maturity does not exceed 60 days. The City of La Quinta Investment Policy will use the six-month U.S. Treasury Bill as a benchmark when measuring the performance of the investment portfolio. 1 3 The Investment Policies shall be adopted by resolution of the La Quinta City Council on an annual basis. The Investment Policies will be adopted before the end of June of each year. This Executive Summary is an overall review of the City of La Quinta Investment Policies. Reading this summary does not constitute a complete review, which can only be accomplished by reviewing all the pages. 1 1 1 1 1 1 1 4 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 , Shining Brighter Than P.O. Box 1504 78-495 CALLE TAMPICO LA QUINTA, CALIFORNIA 92253 City of La Quinta Statement of Investment Policy July 1, 2002 through June 30, 2003 Adopted by the City Council on June 18, 2002 I GENERAL PURPOSE (760) 7 77-7000 FAX (760) 777-7101 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 as the primary objective 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: ► General ► Special Revenue ► Capital Projects ► Debt Service ► Internal Service ► Trust and Agency ► Any new fund types and fund(s) that may be created. W NN 1 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 Y g P 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. Securities shall not be sold prior to maturity ' with the following exceptions: ► A declining credit quality security could be sold early to minimize loss of principal; ► Liquidity needs of the portfolio require that the security be sold. 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 4. Diversified Portfolio Within the constraints of safety, liquidity and yield, the City will endeavor to maintain a diversified portfolio by allocating assets between different types of investments within policy limitations. V MAXIMUM MATURITIES It is the policy of the City of La Quinta to hold securities and other investments of cash in financial instruments until maturity, thus avoiding the risk that the market value on investments fluctuates with overall market interest rates. The hold until maturity policy shall not prevent the sale of a security to minimize loss of principal ' when the issuer or backer suffers declining credit worthiness. The hold until maturity policy requires that the City of La Quinta's investment portfolio is structured so that sufficient funds are available from maturing investments and other sources to meet anticipated cash needs. To meet anticipated cash needs, it is essential that the Treasurer have reasonably accurate, diligently prepared cash flow projections. Annually, the Treasurer shall project the amount of funds not expected to be disbursed within five years. For FY 2002/03, the amount of such funds was $10 million. Funds up to that amount may be invested in U.S. Treasury bills, notes and bonds maturing between 2 and 5 years. For all other funds, investments are limited to two years maximum maturity. VI 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. 1 VII 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 t transactions. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The City Manager or Assistant City ' Manager shall approve in writing all purchases and sales of investments prior to their execution by the City Treasurer. Vill CONFLICT OF INTEREST Investment responsibilities carry added duties of insuring that investments are made without improper influence or the appearance of improper influence. I 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 yees of firms with which theCity places investments. IX 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 I supply the City of La Quinta with the following: PP Y Y 9 1 ► Current audited financial statements ► Proof of National Association of Security Dealers Certification ► Trading resolution ► Proof of California registration iResume 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 deposit or investment: A. Insurance - Public Funds shall be deposited only in financial institutions having accounts insured by the Federal Deposit Insurance Corporation FDIC) B. Collateral - The amount of City of La Quinta deposits or investments not insured by the FDIC -shall be 1 10% collateralized ' by securities' or 150% mortgages' market values of that amount of invested funds plus unpaid interest earnings. C. Disclosure - Each financial institution maintaining invested funds in excess of the FDIC insured amount shall furnish the City a copy of the most recent Annual Call Report. The City shall not invest in excess of the FDIC insured amount in banking institutions which do not disclose to the city a current listingf o securities pledged for collateral ization in public monies. 9 1 X AUTHORIZED INVESTMENTS AND LIMITATIONS The City Treasurer will be permitted to invest in the investments summarized in the Appendix A. 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, except the projected annual dollar amount, as detailed in Section V, may be invested in U.S. Treasury bills, notes and bonds maturing between 2 and 5 years. ' State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in Government Code Section 16429.1 and by LAIF procedures, local government agencies are each authorized to invest a maximum of $40 million per account ' in this investment ram ro administered b the California State Treasurer. The program Y City's investment in the State Local Agency Investment Fund (LAIF) is allowable as long as the average maturity of its investment portfolio does not exceed two years, unless specific approval is authorized by the City Council. The City of La Quinta has two accounts with LAIF. The City of La Quinta Investment Policy has a limitation of 20% of the portfolio. U.S. Government and Related Issues - As authorized in Government Code ' Sections 53601 (a) through (n) as they pertain to surplus funds, this category includes a wide variety of government securities which include the following: • Local government bonds or other indebtedness and State bonds or other indebtedness. The City of La Quinta Investment Policy does not allow investments in local and state indebtedness • U.S. Treasury bills, notes and bonds and Government National Mortgage Association (GNMA) securities directly issued and backed by the full ' faith and credit of the U.S. Government. The City of La Quinta Investment Policy limits investments in U.S. Treasury issues and GNMA to 100% of the portfolio. • U.S. Government instrumentalities and agencies issuing securities not backed as to principal and interest by the full faith and credit of the U.S. Government. The Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Federal Land Bank (FLB) and Federal- Intermediate Credit Bank FICB are such issuers. The City of La Quinta Investment Policy ( ) Y Y 1 10 has a limitation of $5 million per issuer. Federal government sponsored enterprises (GSEs) issuing securities not backed as to principal and interest by the full faith and credit of the U.S. Government. These GSEs include Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Student Loan Marketing Association (SLMA) which are publicly owned. The City of La Quinta Investment Policy has a limitation of $5 million for FNMA, ' $5 million for FHLMC, and $3 million for SLMA. Bankers' Acceptances - As authorized in Government Code Section 53601 (f), 40% of the portfolio may be invested in Bankers' Acceptances, although no P Y P 9 more than 30% of the portfolio may be invested in Bankers' Acceptances with any one commercial bank. Additionally, the maturity period cannot exceed 180 days. The City of La Quinta Investment Policy does not allow investment in Bankers' Acceptances. Commercial Paper - As authorized in Government Code Section 53601(g), 15% ' of the portfolio may be invested in commercial paper of the highest rating (A-1 or P-1) as rated by Moody's or Standard and Poor's, with maturities not to exceed 270 days. This percentage may be increased to 30% if the dollar weighted average maturity does not exceed 31 days. There are a number of ' other qualifications regarding investments in commercial paper based on the financial strength of the corporation and the size of the investment. The City of La Quinta's Investment Policy follows The Government Code with the following additional limitations: (1) maximum maturity per issue of 90 days and (2) a maximum of $3 million per issuer. Negotiable Certificates of Deposit - As authorized in Government Code Section 53601(h), 30% of the portfolio 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 1 securities underlying a repurchase agreement shall be 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 1 11 J 1 1 1 1 1 1 1 1 1 1 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 investment in corporate notes. Diversified Management Companies - As authorized in Government Code Section 53601 (k), local agencies are authorized to invest in shares of beneficial interest issued by diversified management companies (mutual funds) in an amount not to exceed 20% of the agency's portfolio. There are a number of other qualifications and restrictions regarding allowable investments in corporate notes and shares of beneficial interest issued by mutual funds which include (1) .attaining the highest ranking or the highest letter and numerical rating provided by not less than two of the three largest nationally recognized rating services, or (2) having an investment advisor registered with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations and with assets under management in excess of five hundred million dollars ($500,000,000). The City of La Quinta Investment Policy only allows investments in mutual funds that are money market funds maintaining a par value of $1 per share that invests in direct issues of the U.S. Treasury and/or US Agency Securities with an average maturity of their portfolio not exceeding 90 days and the City limits such investments to 20% of the portfolio. 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 1 12 O 0 collateralized from 1 10 /o to 150 /o 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. Collateral ization will be required for Certificates of Deposits in excess of the FDIC insured amount. The type of collateral is limited to City authorized investments. 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 as follows: 1. Certificates of Deposits Insured by the FDIC. The City Treasurer may waive collateral ization of a deposit that is federally insured. 1 XI 2. Certificates of Deposit in excess of FDIC Limits. The amount not federally insured shall be 1 10% collateralized securities or 150% mortgages market value of that amount of invested funds plus unpaid interest earnings. The City of La Quinta Investment Policy limits the percentage of Certificates of Deposit to 60% of the portfolio. Sweep Accounts - As authorized by the City Council, a U.S. Treasury and/or U.S. Agency Securities Money Market Sweep Account with a $50,000 target balance may be maintained in conjunction with the checking account. Derivatives - The City of La Quinta Investment Policy does not allow investment in derivatives. 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 Cityof La Quinta Investment Policy has authorized investment with the State of Y 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 $40 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. 1 13 1 1 �I 1 1 1 1 1 71 1 1 1 1 1 1 1 The City does not allow investments with any other Investment Pool - County Pools or Third Party Pools. XII 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, broker or dealer. Money market mutual funds and LAIF shall also operate on a DVP basis to be considered for investment. XIII INTEREST EARNING DISTRIBUTION POLICY Interest earnings is generated from pooled investments and specific investments. 1 . Pooled Investments - It is the general policy of the City to pool all available operating cash of the City of La Quinta, La Quinta Redevelopment Agency and La Quinta Financing Authority and allocate interest earnings, in the following order, as follows: A. Payment to the General Fund of an amount equal to the total annual bank service charges as incurred by the general fund for all operating funds as included in the annual operating budget. B. Payment to the General Fund of a management fee equal to 5 % of the annual pooled cash fund investment earnings. C. Payment to each fund of an amount based on the average computerized daily cash balance included in the common portfolio for the earning period. 2. Specific Investments - Specific investments purchased by a fund shall incur all earnings and expenses to that particular fund. XIV INTERNAL CONTROLS AND INDEPENDENT AUDITOR 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. 1 14 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 authoritv 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. Written confirmation or telephone transactions for investments and wire transfers. Due to the potential for error and improprieties arising from telephone transactions, all telephone transactions shall be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and the safekeeping institution has a list of authorized signatures. Fax correspondence must be supported by evidence of verbal or written follow-up. g. Development of a wire transfer agreement with the City's bank and third party custodian. This agreement should outline the various controls, security provisions, and delineate responsibilities of each party making and receiving wire transfers. The System of Internal Controls developed by the City, shall be reviewed annually by the independent auditor in connection with the annual audit of the City of La Quinta's 1 15 I Financial Statements. 1 1 1 1 1 1 1 LJ 1 1 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. The management letter comments pertaining to cash and investment activities and the City Treasurer's response shall be provided to the City's Investment Advisory Board for their consideration. Following the completion of each annual audit, the independent auditor shall meet with the Investment Advisory Board and discuss the auditing procedures . performed and the review of internal controls for cash and investment activities. XV 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. XVI REPORTING STANDARDS SB564 section 3 requires a quarterly report to the Legislative Body of Investment activities. The City of La Quinta Investment Advisory Board has elected to report the investment activities to the City Council on a monthly basis through the Treasurers Report. AB 943 requires that the December 31 st and June 30" Treasurers Reports be sent to the California Debt and Advisory Commission within sixty days of the end of the quarter. The City Treasurer shall submit a monthly Treasurers Report to the City Council and the Investment Advisory Board that includes all cash and investments under the authority of the Treasurer. ' The Treasurers Report shall summarize cash and investment activity and changes in balances and include the following: ► A certification by City Treasurer; ► A listing of Purchases and sales/maturities of investments; ' Cash and Investments categorized by authorized investments, except for LAIF which will be provided quarterly and show yield and maturity, ► Comparison of month end actual holdings to Investment Policy limitations; ► Current year and prior year monthly history of cash and investments for trend analysis; ' Balance Sheet; ► Distribution of cash and investment balances by fund; ► A comparison of actual and surplus funds; ► A year to date historical cash flow analysis and projection for the next six 1 16 months; 10, A two-year list of historical interest rates. E 1 1 1 17 1 1 1 1 1 1 XVII 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. XVIII INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA The Investment Advisory Board (IAB) consists of seven members of the community that have been appointed by and report to the City Council. The IAB usually meets on a monthly basis, but at least quarterly to (1) review at least annually :he City's Investment Policy and recommend appropriate changes; (2) review monthly Treasury Report and note compliance with the Investment Policy and adequacy of cash and investments for anticipated obligations; (3) receive and consider other reports provided by the City Treasurer; (4) meet with the independent auditor after completion of the annual audit of the City's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls and findings for cash and investment activities, and; (5) serve as a resource for the City Treasurer on matters such as proposed investments, internal controls, use or change of financial institutions, custodians, brokers and dealers. The appendices include City of La Quinta Ordinance 2.70 entitled Investment Advisory Board Provisions. I IX 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 1 17 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. AB 943 requires that the Investment Policies be sent to the California Debt and Investment Advisory Commission within sixty days of a change to the Investment ' Policy. 1 1 1 1 1 1 � ,e Appendix A 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 N C N � c0A i0 S mo9 Y'1 Y Y � O c c I 0 W U g m a $ g m N 0 V' � u u� u Y Y ag m m m V u� y1 V y1 m t m N N I N m Y N > O T >-.T T T T T N N N N N N N Im T N to N W co C9 I o � c m u 0 2 o 5 u I" -" u 3 u m uc o E II L i�op N mC>ou .52 o Y wn£t0 o jo E0 o c m 'aNu o]t 0) C 7to II CD c CV v c .L c Cl) W a 0 Q n Y o E y O IC W O' C OI O O f O I O EIN 7 t 0 0 t 0 t 0 O C o o 0 t 0 0 2 a a a a l a a 0. a u e e e e e e e e o O 0 O O 0 O _ •aGO 0 O I o M 0 O 0 N 0 O ^VG O Yt _ CO O CD O O O O O r OCLc O0 O t O`t1C7 CFN�N" 0 0 O a00000 NCaaa ao0 2 O m IeO eO D I e.O 0 C O O O 0Ln N Y7 7 M 0 IO Cl)mO OC. e i N io u u v ~ N I ( u > G m U 3 fn � 0 u O O C C N m -0 0 C Y 10 I C o E �� , oC� o U I uv N c L u0 W v v C .m U C _ c m u C C I V Q U V N N u u O N C > Y c Z Y q 0 0 0 LL N O (A Y r r c NI u C o m C9 C m "'O V 'l. J v v c c Y O V N O L D e Y uV v p m V C �Nm pELo ( ti �o 1U.1 0 i.CS Ii. C m U LL 2 < o du .- m Uo .m V N 01 N Y m U m V O g Tjm T� g O n C� N I" O mUaVZvLL.,.m aN C FYI 0I N E O Q cm N 5 '�. N o VI V) —Nc m O o m C v Cr- 5 V O on U u of mmYa m m N p `• - O CV U 4 O q mz o umV € u2 a I LL E N c N V1 0 O m o O O cw N u E > Y Z C 4 Q c m m' v'm` 0 m> U U Y O O Y Q v v v v o v. o U Y Q TN LOv Sa tl N E u L O p(�li L, LL LLLLLL05 0 C C C O V > r U U > M ► > E M a J O i 5 �f0 N N Y ff aN co M N W, J 0 E N E' N E c o >+ u N m CO Y Y Q U m N u c c u m '^ O— u u Sto2UaIn Y V N o v u t Cu , U v Z m J Y Y N Q u va "Ir u N m LL `m u c m Y? Q 0 V m V L N E V L C o u N m CA t m =_ m E c N W u E d; E .E u otn �O .n m ` C Im I N u a m o Q. Q a c o u u cL c m Cc u rr °—' 5 E > Y cu c Er- ccO 0 m EO 1C E`n NN.. CO O �. N to 111 U _N O U N O n V C U 6 O 0L O u U, v o C uy N V d ^ E c 0-0 c v m •� C Nm L t-a �°n u E m a $ o V u a N o v uV 'S � o m U E v V u E` E o u� N UOOE o n°' o y� c O c V V D E.2 U jC N N m C tL� Ol 00Y a Ca L> O C C C L CS�+U OU m d O a -0 L.0 T 10 �O V V o N C •U C- C L O m O C E U v m V CC 0' N O U E N m C N SC"t 0OL i 1 E o v Eailqcr p m °u u .0 0 o m o N a O m U v L 7 > m E� �_^m n n u m u Y c CC- N a O mEe no = wo 00 cm O DLL Eom .8 V uDv} uE > a V i c La _O N G Q WN ° mm oE =O c3 H Z 0 2Z L o •v mE 2 t �`° u L c vc2 Y45 C N N cmi 'S O U c O O �j u N m= �_ E V u W V o Y >, U w U~ L u Y5� u N 0 U O` - a m N M U O �� N7 a E co F� 0:2 a � V o0 LL Chapter 2.70 Appendix B INVESTMENT ADVISORY BOARD PROVISIONS Sections: ' 2.70.010 General Rules Regarding Appointment. 2.70.020 Board meetings. 2.70.030 Board functions. 2.70.010 General rules regarding appointment A. Except as set out below, see Chapter 2.06 for General Provisions. B. The Investment Advisory Board (the "board") is a standing board composed of seven (7) members from the public that are appointed by city council. La Quinta residency is preferred, but not a requirement for board members. Recruitment for members may be advertised outside of the city". C. Background in the investment field and/or related experience is preferred. Background information will be required and potential candidates must agree to a background check and verification. D. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any time if a change in circumstances warrants, each board member will provide the City Council with a disclosure statement which identifies any matters that have a bearing on the ' appropriateness of that member's service on the board. Such matters may include, but are not limited to, changes in employment, changes in residence, or changes in clients. 2.70.02013oard meetings. The Board usually will meet monthly, 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. 2.70.03013oard functions. 1 . The principal functions of the Board are: (1) review at least annually the City's Investment Policy and recommend appropriate changes; (2) review monthly Treasury Report and note compliance with the Investment Policy and adequacy of cash and investments for anticipated r reports provided b the City Treasurer; 14) meet obligations; (3) receive and consider other p p y y with the independent auditor after completion of the annual audit of the City's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls, and findings for cash and investment activities, and; (5) serve as a resource for the City Treasurer on matters such as proposed investments, internal controls, use or change of ' financial institutions, custodians, brokers and dealers. 2. The Board will report to the City Council after each meeting either in person or through correspondence at a regular City Council meeting. 20 1 1 1 k 1 1 1 1 0 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) 21 F", 1 1 3.08.050 Reports. The city treasurer shall make a monthly report to the city council of all investments made pursuant to the authority delegated in this chapter. (Ord., 2 § 1 (part), 1982) 3.08.060 Deposits of securities. Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized to deposit for safekeeping, the securities in which city moneys have been ' invested pursuant to this chapter, in an institution or depository authorized b the P P Y P Y Y 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) 1 1 1 1 1 1 22 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 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 Manager or Treasurer Confirm wires, if applicable Accounting Manager or Financial Services Assistant Record investment transactions in City's Accounting Manager or accounting records Financial Services Assistant Investment verification - match broker confirmation City Treasurer and Financial to City investment records Services Assistant Reconcile investment records - to accounting records and bank statements Financial Services Assistant Reconcile investment records - to Treasurers Report of investments Accounting Manager Security of investments at City Vault Security of investments Outside City Third Party Custodian Review internal control procedures External Auditor 23 1 1 1 1 1 1 1 1 1 1 1 1 Appendix E LISTING OF APPROVED FINANCIAL INSTITUTIONS 1. Banking Services - Wells Fargo Bank, Government Services, Los Angeles, California 2. Custodian Services - Bank of New York, Los Angeles, California 3. Deferred Compensation - International City/County Management Association Retirement Corporation 4. Broker/Dealer Services - Merrill Lynch, Indian Wells, CA Morgan Stanley, Los Angeles, California Salomon 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 1998 RDA Project Area 1 &2 — US Bank 2001 RDA Project Area i — US Bank 2002 RDA Project Area 1 — US Bank Assessment Districts — US Bank No Changes to this listing may be made without City Council approval 24 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Appendix F BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION 1. Name of Firm: 2. Address: 3. Telephone: ( ) ( ) 4. 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 cffice? (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): 25 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 9. References -- Please identify your most directly comparable public sector clients in our geographical area. Entity Contact Telephone Client Since Entity Contact Telephone Client Since 10. Have any of your clients ever sustained a loss on a securities transaction arising from a misunderstanding or misrepresentation of the risk characteristics of the instrument? If so, explain. 11. Has your firm or your local office ever been subject to a regulatory or state/ federal agency investigation for alleged improper, fraudulent, disreputable or unfair activities related to the sale of securities? Have any of your employees been so investigated? If so, explain. 12. Has a client ever claimed in writing that you were responsible for an investment loss? Yes No If yes, please provide action taken Has a client ever claimed in writing that your firm was responsible for an investment loss? Yes No If yes, please provide action taken 26 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Do you have any current, or pending complaints that are unreported to the NASD? Yes No If yes, please provide action taken Does your firm have any current, or pending complaints that are unreported to the NASD? Yes No If yes, please provide action taken 13. Explain your clearing and safekeeping procedures, custody and delivery process. Who audits these fiduciary responsibilities? Latest Audit Report Date 14. How many and what percentage of your transactions failed. Last month? % $ Last year? % $ 15. Describe the method your firm would use to establish capital trading limits for the City of La Quinta. 16. Is your firm a member in the S.I.P.C. insurance program. Yes No If yes, explain primary and excess coverage and carriers. 17. What portfolio information, if any, do you require from your clients? 18. What reports and transaction confirmations or any other research publications will the City receive? 27 1 �I u 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 an other P P Y research/publications the City wiil receive. '0 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 Cityof 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. 28 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Broker Representative Date Title Sales Manager and/or Managing Partner* Date Title 29 11 1 1 1 1 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 1 1 1 1 1 1 1 1 1 1 1 1 1 1 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? SECURI T Y 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)? 31 1 1 1 OPERA TIONS The answers to these questions will help you determine whether this pool meets your operational requirements: 1 . Does the pool limit eligible participants? 2. What entities are permitted to invest in the pool? 3. Does the pool allow multiple accounts and sub -accounts? 4. Is there a minimum or maximum account size? 5. Does the pool limit the number of transactions each month? What is the number of transactions permitted each month? 6. Is there a limit on transaction amounts for withdrawals and deposits? a. What is the minimum and maximum withdrawal amount permitted? b. What is the minimum and maximum deposit amount permitted? 7. How much notice is required for withdrawals/deposits? 8. What is the cutoff time for deposits and withdrawals? 9. Can withdrawals be denied? 10. Are the funds 100% withdrawable at anytime? 11. What are the procedures for making deposits and withdrawals? a. What is the paperwork required, if any? b. What is the wiring process? 12. Can an account remain open with a zero balance? 13. Are confirmations sent following each transaction? STA TEMENTS It is important for you and the agency's trustee (when applicable), to receive statements monthly so the pool's records of your activity and holding are reconciled by you and your trustee. 32 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1. Are statements for each account sent to participants? a. What are the fees? b. How often are they passed? c. How are they paid? d. Are there additional fees for wiring funds (what is the fee)? 2. Are expenses deducted before quoting the yield? QUESTIONS TO CONSIDER FOR BOND PROCEEDS It is important to know (1) whether the pool accepts bond proceeds and (2) whether the pool qualifies with the U.S. Department of the Treasury as an acceptable commingled fund for arbitrage purposes. 1. Does the pool accept bond proceeds subject to arbitrage rebate? 2. Does the pool provide accounting and investment records suitable for proceeds of bond issuance subject to arbitrage rebate? 3. Will the yield calculation reported by the pool be acceptable to the IRS or will it have to be recalculated? 4. Will the pool accept transaction instructions from a trustee? 5. Are you allowed to have separate accounts for each bond issue so that you do not commingle the interest earnings of funds subject to rebate with funds not subject to regulations? 33 1 1 1 1 1 1 1 1 1 1 0 1 Appendix H GLOSSARY (Adopted from the Municipal Treasurers Association) 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 and/or Government -sponsored enterprises. ASKED: The price at which securities are offered. BANKERS' ACCEPTANCE (BA): A draft or bill of exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. 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 with a specific maturity evidenced by a certificate. Large -denomination CD's are typically negotiable. 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: Short-term 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. 34 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). 1 DISCOUNT: The difference between the cost bonds are issued with various maturities and price of a security and its maturity when quoted carry semi-annual coupons. Interest is at lower than face value. A security selling calculated on a 360-day, 30-day month basis. below original offering price shortly after sale also is considered to be at a discount. 3. FLBs (Federal Land Bank Bonds) - Long-term mortgage credit provided to farmers by Federal ' DISCOUNT SECURITIES: Non -interest bearing Land Banks. These bonds are issued at money market instruments that are issued a irregular times for various maturities ranging discount and redeemed at maturity for full face from a few months to ten years. The value, e.g., U.S. Treasury Bills. minimum denomination is $1,000. They carry semi-annual coupons. Interest is calculated on DIVERSIFICATION: Dividing investment funds a 360-day, 30 day month basis. ' among a variety of securities offering independent returns. 4. FFCBs (Federal Farm Credit Bank) - Debt instruments used to finance the short and ' FEDERAL CREDIT AGENCIES: Agencies of the intermediate term needs of farmers and the Federal government set up to supply credit to national agricultural industry. They are issued various classes of institutions and individuals, monthly with three- and six-month maturities. e.g., S&L's, small business firms, students, The FFCB issues larger issues (one to ten farmers, farm cooperatives, and exporters. year) on a periodic basis. These issues are highly liquid. ' 1. FNMAs (Federal National Mortgage Association) - Used to assist the home 5. FICBs (Federal Intermediate Credit bank mortgage market by purchasing mortgages Debentures) - Loans to lending institutions ' insured by the Federal Housing used to finance the short-term and intermediate needs of farmers, such as Administration and the Farmers Home Administration, as well as those guaranteed by seasonal production. They are usually issued monthly in minimum denominations of $3,000 the Veterans Administration. They are issued in with a nine -month maturity. Interest is various maturities and in minimum denominations payable at maturity and is calculated on a 360- of $10,000. Principal and Interest is paid day, 30-day month basis. monthly. 6. FHLMCs (Federal Home Loan Mortgage ' 2. FHLBs (Federal Home Loan Bank Notes and Corporation) - a government sponsored entity Bonds) - Issued by the Federal Home Loan established in 1370 to provide a secondary Bank System to help finance the housing market for conventional home mortgages. ' industry. The notes and bonds provide Mortgages are purchased solely from the liquidity and home mortgage credit to savings Federal Home Loan Bank System member and loan associations, mutual savings banks, lending institutions whose deposits are insured cooperative banks, insurance companies, and by agencies of the United States Government. mortgage -lending institutions. They are They are issued for various maturities and in issued irregularly for various maturities. The minimum denominations of $10,000. minimum denomination is $5,000. The notes Principal and Interest is paid monthly. are issued with maturities of less than one year and interest is paid at maturity. The Other federal agency issues are Small Business Administration notes (SBAs), Government National Mortgage Association 35 17 1 I 17 1 I I L 1 1 1 1 1 1 f] notes (GNMAs), Tennessee Valley Authority notes (TVAs), and Student Loan Association notes (SALLIE-MAEs). FEDERAL DEPOSITOR INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $100,000 per deposit. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open - market operations. 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. 001 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. 1� L I 1 1 1 1 1 1 1 1 1 1 1 1 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 37 broker -dealers, banks and a few unregulated firms. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hoid public deposits. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REPURCHASE AGREEMENT (RP OR REPO): A repurchase agreement is a short-term investment transaction. Banks buy temporarily idle funds from a customer by selling U.S. Government or other securities with a contractual agreement to repurchase the same securities on a future date. Repurchase agreements are typically for one to ten days in maturity. The customer receives interest from the bank. The interest rate reflects both the prevailing demand for Federal funds and the maturity of the repo. Some banks will execute repurchase agreements for a minimum of $100,000 to $500,000, but most banks have a minimum of $1,000,000. REVERSE REPURCHASE AGREEMENTS (RRP or RevRepo) - A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RRP extensively to finance their positions. Exception: When the Fed is said to be doing RRP, it is lending money, that is, increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in 1 1 1 1 1 1 1 1 1 1 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: A non -interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months or one year. TREASURY BONDS: Long-term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. TREASURY NOTES: Medium -term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker -dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. UNIFORM PRUDENT INVESTOR ACT: The State of California has adopted this Act. The Act contains the following sections: duty of care, diversification, review of assets, costs, compliance determinations, delegation of investments, terms of prudent investor rule, and application. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par of plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. F i e'- : 1 J t-11 t-K h'KUVtN I 1 HL 1 NU i HN WL54 i `..104b T U r r' l 1 05 P . 02 WAS STORY rVrt FNN! ;i/(' (S,)iirc:e. XgpbXDJ) .714 uioY.l 09:11 nVIC DJ Fed's Poole -3: ,-51C 'IroublCc Could S/D.J I l Very 4 i If. SYM13OLSt n1% FRF I/FI9 IINICNk NIXDJEN N/r.79PIC.jjrJYY`NIECONs-j IH11N/MON N/D3RT N/ACN N/W)N "1r5K bt/mnA 9/30T N/TPC V/WET M/FYN M/tMD o. RiOC Ri NMF. 1/US RI'?CE RlJSS yr; VA ,W'�SRIb1GTIRN (Dow Jui)asJdiehMacnchouldyt,Pekmed• and those{a(?an,^Cebo like Fannin brae end F1r srioulci a;.so be rs"iren. r.c) hold more capital. F+✓c�eral :1Ccervo Bank of n;r.. LOuib President Wil-i9r, 1"UUle said Monday "I;% the r^asw om f the (governent spQnaorcd ontorpri Res) , tl+c enax:nouE acalc ct their } �alri7.itica could rrPr,t:e a :udssive problem in r.t:w credit suaritet3, " Poo:.a Sal M ill prepared text tnr del�.v�1:v before a germ n:�t at tr.p office of Federal HNIAP. Eiil.Ccpri3e Ovorgight • sharply, be;,au9e of "it rrP maixet value of 'P nPbt were to G3Z3 andacout rhR ambiguity abn»r the r1rianci�al eoandnaag u. _ he debt, wear would willingnCOE of t:�edfPdi-do nc��.ek,�vwntto and neithezvritrfl anyone else •" nRj�j�Ari2" PVc/�.a 331 Because of the uncertainty over this backing and cd:1>~rtIt w(-Wld mesn during 3 time of rn lati.fyaixcoratatio�RniputulLheJGUO, poc.e cai :j. SILL ild takC atvps ro?Dlen ?�n(i rail✓ G3Es naod to tarp step* Lhem3elvee to enct,r �! Lh#t any p that Mtn A,-iae can be batter dealt with - „various Rspecl,* of federal spnn.snrrsl:iy that tho market reda3 na providing an implied Uta;;dntC Of�;tiuuld endViteolinaslcnflai�1C1todFannia SAP nhe T4easury d-partMOn ar.0 »reddie ,Sac, t'ooia said. nvPznmrc,t He sdcxad that. the relative sms111 time of the actual g k►aHe aci for Ont4Y'rri5a5 such as F'arinie And r1wddie could easily hr rop.dc;eJ by other aources. VoclP i.a a nonvoting msm wr of L1ie�Federal reopen kG �arketnCvmmut,ion, of which next MOPts wi M#r..h 18. His rr •p• the currant stare of Ltic L'•0, economy. (MORE) Dvw Jone3 Newswires 03-lU-o! 0901ET 09 01 AM EAT 03-10-03 Tho St, LOOM Fed president said h- rellvveb that in oraer n, ulldiu dgaxn3t market snnrk�. Lhe Gove_nmant src,ntinred lwusinq P 4r,c„�1J also bo:ctor th�air capi�.al levelo. "t�VRY 1 Li of otir th period of 3evaial year✓, tna t;�Fg ,:2jvuid add to the amount of napiLdl they hold," �r_o1 P Baia. "Capital provhe s a c,asliivn against mistakRx slid uniorcasoablA r.i rc:c.,nstencc:•," he said, and irr is paLLicu,,,Iy im.pvrtanr tur Fannie and Fr4mdiP beceuae of the largo ai7w or their aroxt-term nhl.i.yations. p•:�,� "n market crisis could bCCQMQ #cur. P in a tljdttc,- of days, of couror" and bettQt rRpiLalication at the I;fiFS cuulcl change that, Yong' "The utily wflY for finanr..ial. ins LiL,ationa to insure �r.4t�ility in t c event or ne5nguasiLiliable GhaoY.s is ?r.r Lliv:n to maibtz3naa $ltcs`antifll extra capita) nushiU:l abeve ti,at aaemed 'tip(.cssary y g"4lLtifiablo risk., " hP sdid. -By beicnaml S. Derby, Dow .Ongc Nt�wawire3i 201-438-a'lyi; micbacl . derby®dnwJ cuttb - 0Om (F,ND) Dow Joncv N*wswlro.g a.'J'*d We$ PoMn I Wim TOTAL PAGE.Oc ** Investor Relations: Current Issues: Fannie Mae Weighs in on Comments by William Poole Page 1 of 3 Hoene Current s►s ues Investor Relations Financial Information Fannie Mae Weighs in on In Current Issues Current Stock Information Comments by William Poole Financial Annual Reports & Proxy Statements Interest Rate Risk Quarterly Reports & Earnings March 10, 2003 Management Monthly Financial Surnmary Policy & Regulatory Information Statements After a full review of the speech today by Credit Risk Management Investor/Analyst Reports St. Louis Federal Reserve President Investor information William Poole expressing his personal opinions regarding the GSEs, we would Related Links In: Investor FAQ offer the following comments. Current Issues Investor Resources Remarks by Chuck Current Issues • Capital requirements. The greener, SVP Speeches speech suggests that Mr. Poole Communications Direct Investment does not understand the capital regime that Congress put in place a decade ago for Fannie Mae Securities Trading and Freddie Mac. First, our minimum capital requirement, which Information addresses quantifiable risks, has proven to be well more than E-maile -n�a€] Subscription Sub adequate, despite significant interest rate volatility in the past Contact Investor Relations 10 years. Our minimum capital level reflects the fact that our main asset -- the conventional, conforming mortgage -- is relatively low risk, heavily collateralized by the property and owner's equity, often backed by mortgage insurance, and geographically dispersed. Second, the non -quantifiable risks we face -- the focus of Mr. Poole's remarks today -- are expressly addressed by our risk -based capital test in a way that is not true of bank capital standards. That test has two key aspects. It encompasses very extreme changes in interest rates and credit losses -- economic conditions more severe than any faced by the entire country in the last century. Additionally, the test imposes a 30 percent additional capital requirement for non -quantifiable operations risk. This is a test that few if any other financial institutions could meet. In addition, we have continuous on -site supervision at a level that is comparable to the largest and most complex banking organizations. Comparison to bank capital requirements. Poole also compared Fannie Mae's capital to that of banks. If Fannie Mae operated and invested in the types of assets banks do, we should be -- and would be -- required under current law to hold additional capital. First, by law Fannie Mae is restricted to one asset class: US residential mortgages. Banks, in contrast, hold a wide variety of assets, including credit card debt, commercial loans and others, many of which are far riskier than mortgages. And even when banks do hold mortgages, their credit losses are 30 times higher than Fannie Mae's credit losses on mortgages. Second, Fannie Mae takes steps to further reduce our exposure to risk and our capital requirement under the risk -based capital standard, including holding mortgage insurance against riskier loans, and closely hedging the funding of our mortgages. Mr. Poole seems to be suggesting a "one size fits all" approach for capital requirements for financial institutions, precisely the opposite direction from which the Basel Committee is headed in seeking to link capital more closely to risk. Liquidity. Mr. Poole also seems to be unaware of the substantial discussions Fannie Mae and Freddie Mac had with senior Executive Branch policymakers in 2000. Those discussions file://C :\Documents%20and%20Settings\j falcone\Local%20Settings\Temporary%20Intern.... 3/ 11 /2003 Investor Relations: Current Issues: Fannie Mae Weighs in on Comments by William Poole Page 2 of 3 resulted in Fannie Mae's commitment to establish and maintain a liquidity plan to deal with any potential loss of market access. Under that plan, Fannie Mae is prepared to operate for three months at a minimum without any access to the debt markets. Short-term obligations. Mr. Poole asserts that Fannie Mae should be required to raise additional capital "because their short-term obligations are large." Those concerns are directly addressed by the liquidity plan mentioned above. In addition, Fannie Mae's use of interest rate swaps and options to convert our short-term debt to effective long term and callable debt addresses funding risk. When that is done, our short-term variable rate debt as a percent of our funding drops from 40 percent to 26 percent -- of which 15 percent is capped. GSE Status. Mr. Poole asserts that "no one should underestimate the potential importance of the ambiguity over the financial status of the GSE's," saying "The market prices the GSE's debt as if there were a federal guarantee, or a high probability of a guarantee, standing behind their entire outstanding obligations." To the contrary, a glance at a quote screen will confirm that Fannie Mae's debt costs are much closer to (and in some cases higher than) swap rates than U.S. Treasury rates. As of this morning our cost of five- and ten-year debt was roughly 26 and 42 basis points, respectively, above comparable maturity Treasury securities. Systemic issues. Mr. Poole's comment that an unforeseen event poses a systemic risk to the financial system is unremarkable because it could be said about any large financial institution in the United States. Even the OFHEO systemic risk study that Mr. Poole cites states that any systemic risk to the financial system posed by Fannie Mae and Freddie Mac is "remote." And several studies, including a paper just published by a former U.S. Comptroller of the Currency, Eugene Ludwig, have found that our regulatory and capital protections are so rigorous that disaster scenarios that could fatally harm the company are highly improbable. The remarkable fact is that Mr. Poole is asking policy questions that policymakers asked, answered and addressed years ago. The result is a state-of-the-art capital regime, a robust liquidity plan, and a continuous on -site examination program, all of which ensures that Fannie Mae can carry out its public mission with the highest standard of safety and soundness. We are grateful however, for Mr. Poole's comment that there is no issue regarding Fannie Mae's financial disclosures and that we provide ample disclosure about our operations. Fannie Mae is a New York Stock Exchange company and the largest non -bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. Fannie Mae is working to shrink the nation's "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided $4.5 trillion of mortgage financing for more than 49 million families. Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now file://C:\Documents%20and%20Settings\jfalcone\Local%20Settings\Temporary%20Intern... 3/11 /2003 Investor Relations: Current Issues: Fannie Mae Weighs in on Comments by William Poole Page 3 of 3 listed on the NYSE as "Fannie Mae. " In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae. " @ 998-2003 Fannie Mae Contact Us FAQ Site Map Search Legal file: //C :\Documents%20and%20Settings\j falconeTocal%20Settings\Temporary%20Intern... 3/ 11 /2003