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2004 07 14 IABP.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 Calls Tampico- La Quinta, CA 9225$ July 14, 2004 - 5:30 P.M. CALL TO ORDER a. Pledge of Allegiance b. Roll Call 11 APPOINTMENT OF OFFICERS A. Appointment of Investment Advisory Board Chairperson B. Appointment of Investment Advisory Board Vice -Chairperson III PUBLIC COMMENT - (This is the time set aside for public comment on any matter not scheduled on the agenda.) IV CONFIRMATION OF AGENDA V CONSENT CALENDAR A. Approval of Minutes of Meeting on June 9, 2004 for the Investment Advisory Board. VI BUSINESS SESSION A. Transmittal of Treasury Report for May 2004 B. FY 2004/2005 Meeting Schedule C. Consideration of Approval of Investment Advisory Board 2004/2005 Work Plan D. LAIF Conference VII CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - June 2004 - B. Pooled Money Investment Board Reports - April 2004 C. Distribution of Investment Policies for Fiscal Year 2004/2005. Vill BOARD MEMBER ITEMS IX ADJOURNMENT INVESTMENT ADVISORY BOARD Business Session: A Meeting Date: July 14, 2004 ITEM TITLE: Transmittal of Treasury Report for May 31, 2004 BACKGROUND: Attached please find the Treasury Report for May 31, 2004. RECOMMENDATION: Review, Receive and File the Treasury Report for May 31, 2004. Y54 hn M. Falconer, Finance Director MEMORANDUM TO: La Quinta City Council FROM: John M. Falconer, Finance Director/Treasurer SUBJECT: Treasurer's Report for May 31, 2004 DATE: July 6, 2004 Attached is the Treasurer's Report for the month ending May 31, 2004. 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 I Sold/Matured Other Ending Change Cash (3) $ (1,178,885) $ 1,551,084 (1) $372,199 $1,551,084 LAW 28,949,469 4,000,000 (3,700,000) 29,249,469 300,000 US Treasuries (2) 70,056,768 10,000,000 - (17,201) 80,039,567 9,982,799 US Gov't Agencies (2) 30,045,439 - (16,799) 30,028,640 (16,799) Commercial Paper (2) - 0 0 Mutual Funds 2,393,434 856 1 2,394,290 856 Total 1 $15,551,940 $3,700,000 $34,000 $142,084,165 1 $11,817,940 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. 7 6 zna� John M. Falconer Dale Finance Director/Treasurer Footnote (1) The amount reported represents the net increase (decrease) of deposits and withdrawals from the previous month. (2) The amount reported in the other column represents the amortization of premium/discount for the month on US Treasury, Commercial Paper and Agency investments. (3) The cash account may reflect a negative balance. 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DEPOSITS 1,073.21 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,073.21 DEPOSITS TOTAL 481,035.21 0.00 0.00 0.00 0.00 0.00 0.00 0.00 481,035.21 GENERAL FIXED ASSETS 0.00 0.00 0.00 0.00 52,066,306.00 0.00 0.00 0.00 52,066,306.00 ACCUMULATED DEPRECIATION 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 AMOUNT AVAILABLE TO RETIRE L/f DEBT AMOUNT TO BE PROVIDED FOR L/T DEBT 0.00 0.00 1,625,259.96 0.00 0.00 155,460,254.00 0.00 7,190,000.00 167,275,513.96 TOTAL OTHER ASSETS 0.00 0.00 1,626,259.96 0.00 52 066 306.00 158 460,254.00 0.00 7,190,000.00 219,341,819.96 TOTAL ASSETS 82,246,344.98 306 249 852.80 1,625259.98 107,038,381 29 52.068.308.00 158.480,254.00_ _ 4.982.65 7,190.000.00 714,881.181.48 LIABILITIES: ACCOUNTS PAYABLE 37,316.68 0.00 0.00 17,843.57 0.00 0.00 0.00 0.00 55,160.25 DUE TO OTHER AGENCIES 1,547,732.59 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,547.732.59 DUE TO OTHER FUNDS ADVANCES FROM OTHER FUNS 0.00 6,723,351.94 0.00 0.00 0.00 0.00 0.00 22,719,514.33 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 29,442,866.27 ACCRUED EXPENSES 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0•00 INTEREST PAYABLE PAYROLL LIABILITIES 0.00 171,388.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 171,388.35 STRONG MOTION INSTRUMENTS 6,728.91 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6,728.91 106,428.00 FRINGE TOED LIZARD FEES 106,428.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (94.00) SUSPENSE DUE TO THE CITY OF LA OUINTA (94.00) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 PAYABLES TOTAL 8,592,852.47 0.00 0.00 22,737,357.90 0.00 0.00 0.00 0.00 31,33OZ0.37 ENGINEERING TRUST DEPOSITS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 SO. COAST AIR OUALITY DEPOSITS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 18,664.00 LORP DEPOSITS DEVELOPER DEPOSITS 0.00 1.503,816.57 0.00 0.00 0.00 0.00 18,664.00 2,835.00 0.00 0.00 0.00 0.00 106,651.57 MISC. DEPOSITS 143,057.94 0.00 0.00 25,000.00 0.00 0.00 0.00 0.00 168,057.94 AGENCY FUND DEPOSITS 1,966,363.65 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,966.363.65 TOTAL DEPOSITS 3,613,238.16 0.00 0.00 46,499.00 0.00 0.00 0.00 0.00 3,659,737.16 DEFERRED REVENUE 3101 290 87 0.00 0.00 10 495 978.56 0.00 0.00 0.00 0.00 13,507,269.43 OTHER LIABILITIES TOTAL 3,101,290.87 0.00 0.00 10,495,978.56 0.00 0.00 0.00 0.00 13,597,269.43 COMPENSATED ABSENCES PAYABLE 0.00 0.00 462,260.37 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 462,260.37 684,688.59 DEVELOPER AGREEMENT 0.00 0.00 0.00 0.00 684,688.59 478,311.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 478,311.00 DUE TO THE CITY OF LA OUINTA DUE TO COUNTY OF RIVERSIDE 0.00 0.00 0.00 0.00 0.00 2,150,000.00 0.00 0.00 2,150,000.00 DUE TO C.V. UNIFIED SCHOOL DIST. 0.00 0.00 0.00 0.00 0.00 7,365,254.00 0.00 0.00 7,365,254.00 DUE TO DESERT SANDS SCHOOL DIST. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 BONS PAYABLE 0.00 0.00 0.00 0.00 0.00 148,945,000.00 0.00 7,190,000.00 156,135,000.00 TOTAL LONG TERM DEBT 0.00 0.00 1,625,259.96 0.00 0.00 158,460,254.00 0.00 7,190,000.00 167,275,513.96 TOTAL LIABILITIES 15,307,381.50 0.00 1.625,259.96 33,279,835.46 0.00 158,460,254.00 0.00 7,190,000.00 215,862,730.92 EQUITY -FUND BALANCE 66,938,963.40 306,249,652.60 0.00 73,758,545.83 52,066,306.00 0.00 4,982.65 0.00 499,018,450.48 TOTAL LIABILITY & EQUITY 82,246,344.90 306,249 652 60 1,625,259.96 107 038 381.29 52 066,306.00 156,460,354.00 4,982.65 7,190,000.00 714,881,181.40 0.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.08 CASH & INVESTMENT TOTAL 141,971,957.97 PREMR MfDISCOUNT ON INVESTMENT 112,207.44 TOTAL 142,084,165.41 12 INVESTMENT ADVISORY BOARD MEETING BUSINESS SESSION: B Meeting Date: July 14, 2004 ITEM TITLE Meeting Schedule for Fiscal Year 2004/2005 BACKGROUND: Attached find a list of meeting dates for Fiscal Year 2004/2005. Board Member Moulin has requested a change in the September meeting date due to the Labor Day holiday. (See attachment) RECOMMENDATION: Approve the meeting schedule of the Investment Advisory Board for Fiscal Year 2004/2005. . . Q 1.-1-4 /4,1 e I . .., John M. Falconer, Finance Director MEMORANDUM TO: Investment Advisory Board Members FROM: John M. Falconer, Finance Director DATE: July 14, 2004 RE: Schedule of Investment Advisory Board Meeting Schedule The City Ordinance specifies that the Investment Advisory Board usually will meet monthly unless the Board with Council concurrence believes less frequent meetings are considered necessary. In the past, the Board has met monthly except for the Month of August. Listed below are meeting dates for the Boards review. Monthly July 14, 2004 August 11, 2004 September 8, 2004 October 13, 2004 November 10, 2004 December 8, 2004 January 12, 2005 February 9, 2005 March 9, 2005 April 13, 2005 May 11, 2005 June 8, 2005 Quarterly September 8, 2005 December 8, 2005 March 9, 2005 June 8, 2005 Please consider the schedules for Fiscal Year 2004/2005 and give Staff direction. Jun 28 04 08:-31p Donald J. Moulin 1-760-564-1081 p.2 Memorandum Date: June 28, 2004 . To: John Falconer From: Don Moulin Subject: Date of IAB Meeting -in September 2004 As I mentioned to you, this September, the second Wednesday falls on the 8* following the Labor Day holiday celebrated on Monday the 6t . The timing is not good for me and may be a problem for you and others so I suggested deferring the meeting to the next Wednesday, September 15. You asked me to write and fax you a note on this matter. Thanks. N.e.Nd IYM Bmrd NO1k hbWb INVESTMENT ADVISORY BOARD Business Session: C Meeting Date: July 14, 2004 ITEM TITLE: Fiscal Year 2004/05 Work Plan BACKGROUND: Each year the Investment Advisory Board adopts a work plan, which is subsequently forwarded to the City Council for approval. In addition to the responsibilities listed in the ordinance, the Board may want to consider additional items to address during FY 04/05. Last year the work plan included a review of GSE's, LAIF, Commercial Paper and educational issues regarding portfolio managers. RECOMMENDATION: Review and approval of work plan items as deemed appropriate, for consideration by the City Council. hn M. Falconer, Finance Director INVESTMENT ADVISORY BOARD Business Session: D Meeting Date: July 14, 2004 TITLE: LAIF Conference — Sacramento, CA October 21 st & 22"d, 2004 BACKGROUND: The LAIF Conference Agenda has not been printed yet but will be held in Sacramento, California on October 21" and 22"d, 2004. LAIF Staff has sent the conference agenda to the printer and are not yet available. Staff will. provide the agenda to the Board as soon as it is available. - Last year Board Member Deniel attended the LAIF Conference. RECOMMENDATION: Select up to two Board members to attend the LAIF Conference. hn M. Falconer, Finance Director Lo The annual Local Agency Investment Fund Conference will be held on Thursday, October 21 at the Sacramento Convention Center in Sacramento. A post -conference tour of Investments/LAIF is scheduled the following day, Friday, October 22 at the State Treasurer's Office. It is anticipated the conference registration form will be posted on this website and mailed to participating Local Agency Investment Fund agencies two months prior to the event. Please check back as more information becomes available in coming weeks. INVESTMENT ADVISORY BOARD Correspondence & Written Material Item A Meeting Date: July 14, 2004 TITLE: Month End Cash Report - June 2004 BACKGROUND: This cash report is not a complete Treasury Report (exclude petty cash, deferred compensation and fiscal agent balances,) but would report in a timely fashion selected cash balances. RECOMMENDATION: Information item only. John M. Falcloner, Finance Director 0 5 8 N co Q: C N U COc O N J w C o �' o C mppppQsOQ�mN� pppp m ceht OI�0 cn m` O O O C N M co p N pppppp�tO�ONt��f�Metl�j O O O O M O N N ti N C 0 FO-�MC5C;8 .Cq NOS O O CO CD- p Cp N N m OCOC.�Op�tG . e� m ch r' C6N ��v`-� ui N O N O M in 0 N ��i-�rj CA M y «. M p CD O I- uj to <D W t0 .O^ Ip P� 40 NMNN�IN E� Go C1.A � CDOtCM OO7�C� MMmti0 � — O vC O O N 8880 QQLLN N N �p N L N M N O r. C6 C ti M M M O pp O O O O M M Ug0 N N N M CA I� N�Vao N N N N m M M N N M O e O O O 04 O C M N Ln CM N M N M N M p j . I� N Y ptA�p p_N�LLckCiq N yCUCNO �et wAO4mOco OD tipOMCOQNv• O CO. M OO NOO vvv r •- r m O m a 2 m C O m O N cvj N O �j 7 COO Y 7 O ... t0 — O C 0 s 04 M Q m y ¢ CU M CN y 0 y ` C y cic E �a5� �U a� 8 N L M= m C M m C C m y C O N N y❑ C. y C lC mcm C m ►• a. m L9 x m �m aEiaEi 2� y $'�i'' v y >>m�o oc�oao3v moia��aa�aw ¢a ¢ w �¢cn0z �U.2<2"Q y O E O o 38 O N g � C � g.. 0 O a CD >+ cc m N fl C E m � N�pp po � CO O v $ C c m a CL C > C N O N 7 0 ++ O O .y+ C CN M o M Mj .rL W. C 1 j �" C `� C y L N NNE �Q y C S C N O) C3 7 0 0y C V N N LL v� C O ` y Vj w f71 C w �o a¢ c M y H N \ N_' O a m CO 117N L m N 1 U �, O O) c p CO N N CL C y m w O c Q +• W `. 1— o y c U o w c y �►.. 01 vn Uc_ L M,m CL • u) E y L O N 0 C C C Cad c E O N ' C y r- C L N c CS C O y 0 H LL � C y N $ •-' CL � y .� G. 0 C 0 y U y O �� .. C N N N d " �� C. C N cep p �X�J �+ _ C N y p C 3 N N � y Win. 0M Cny HG tvgC w H0 m CmCD N.., 2 Phil Angelides, State Treasurer Inside the State Treasurer,s Office Local Agency Investment Fund (LAIF) PMIA Performance Report 6/ 16/2004 1.48 1.43 166 6/17/2004 1.49 1.43 166 6/18/2004 1.49 1.44 168 6/19/2004 1.49 1.44 168 6/ 2012004 1.49 1.44 168 6/21 /2004 1.50 1.44 166 6/22/2004 1.51 1.44 169 6/23/2004 1.52 1.44 171 6/24/2004 1.52 1.44 170 6/25/2004 1.53 1.44 172 6/26/2004 1.53 1.44 172 6/27/2004 1.53 1.44 172 6/28/2004 1,52 1.44 193 6/29/2004 1.52 1.44 189 Commercial Paper 17.00% Tim Depo; 8.67 LAIF Performance Report Quarter Ending 03/31/04 Apportionment Rate: 1.47% Earnings Ratio: .00004028428658015 Fair Value Factor: 1.000754626 PMIA Average Monthly Effective Yields March 2004 1.474% April 2004 1.445% May 2004 1.426% Pooled Money Investment Account Portfolio Composition $64.9 Billion 05/31/04 Corporate Loans Treasuries Rands 7.89 % 12.78% CD's/BN's 20.87% rgages 01% Agencies 29.78% ■ Treasuries 0 Mortgages ®Agencies ■ CD's/BN's UTime Deposits ® Bankers Acceptances ■ Repo ■ Commercial Paper U Corporate Bonds 0 Loans ■ Reverses FRB: H.15--Selected Interested Rates, Web -Only Daily Update --June 30, 2004 Page 1 of 3 Federal. Reserve Statistical Release H+15 Selected Interest Fates (Daily) Skip to Con"It Release Date: June 30, 2004 Weekly.....release. dates and announcements I Historical.. 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 through Friday H.15 DAILY UPDATE: WEB RELEASE ONLY SELECTED INTEREST RATES Yields in percent per annum Instruments Federal funds (effective) 1 2 3 Commercial paper 3 4 5 Nonfinancial 1-month 2-month 3-month Financial 1-month 2-month 3-month CDs (secondary market) 3 6 1-month 3-month 6-month Eurodollar deposits (London) 3 7 1-month 3-month 6-month Bank prime loan 2 3 8 Discount window primary credit 2 9 U.S. government securities Treasury bills (secondary market) 3 4 4-week 3-month 6-month Treasury constant maturities Nominal 10 1-month 3-month 6-month 1-year 2-year 3-year 5-year 7-year 10-year For immediate release June 30, 2004 2004 2004 2004 2004 Jun Jun Jun Jul 28 29 30 1 1.09 1.13 1.24 1.25 1.29 1.34 1.43 1.28 1.31 1.35 1.36 1.45 1.48 1.30 1.32 1.53 1.56 1.82 1.88 1.29 1.29 1.51 1.53 1.80 1.86 4.00 4.00 2.00 2.00 1.08 1.17 1.36 1.36 1.74 1.71 1.12 1.38 1.77 2.30 2.86 3.32 3.97 4.37 4.76 1.19 1.38 1.75 2.20 2.83 3.28 3.92 4.33 4.70 .. 4 http://www.federalreserve.gov/Releases/H15/update/ 7/1/2004 FRB: H.15--Selected Interested Rates, Web -Only Daily Update --June 30, 2004 Page 2 of 3 20-year 11 Inflation -indexed 5-year 7-year 10-year Inflation -indexed long-term average Interest rate swaps 14 1-year 2-year 3-year 4-year 5-year 7-year 10-year 30-year Corporate bonds Moody's seasoned Aaa 15 Baa State & local bonds 16 Conventional mortgages 17 12 13 See overleaf for footnotes 5.46 5.41 1.52 1.50 1.90 1.87 2.23 2.20 2.49 2:46 2.46 2.47 3.25 3.26 3.76 3.77 4.13 4.14 4.42 4.43 4.82 4.84 5.21 5.22 5.78 5.79 6.03 5.98 6.80 6.76 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). 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 (www.federalreserve.gov/releases/cp). 6. An average of dealer offering rates on nationally traded certificates of 7. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. 8. 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. 9. The rate charged for discounts made and advances extended under the Federal Reserve's primary credit discount window program, 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/b&reg/2002/200210312/default.htm. deposit. hftp://www.federalreserve.gov/Releases/H15/update/ 7/1 /2004 FRB: H.15--Selected Interested Rates, Web -Only Daily Update --June 30, 2004 Page 3 of 3 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/hl5/data.htm. 10. Yields on actively traded non -inflation -index issues adjusted to constant maturities. Source: U.S. Treasury. 11. A factor for adjusting the daily nominal 20-year constant maturity in order to estimate a 30-year rate can be found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ltcompositeindey 12. Yields on Treasury inflation protected securities (TIPS) adjusted to constant maturities. Source: U.S. Treasury. Additional information on both nominal and inflation -indexed yields may be found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/index.html. 13. Based on the unweighted average bid yields for all Inflation Protected Securities with remaining terms to maturity of more than 10 years. 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 NOMINAL AND INFLATION -INDEXED CONSTANT MATURITY SERIES Yields on Treasury nominal securities at "constant maturity" are interpolated by the U.S. Treasury from the daily yield curve for non -inflation -indexed Treasury securities. 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. Similarly, yields on inflation -indexed securities at "constant maturity" are interpolated from the daily yield curve for Treasury inflation protected securities in the over-the-counter market. The inflation -indexed constant maturity yields are read from this yield curve at fixed maturities, currently 5, 7, and 10 years. Weekly_.._ release_ dates__ and announcements. I H Storic_al._data. I About Daily update Other formats: Screen reader I ASCII Sta.fis ical._releases Home I Economic research and data AccessihU41 Contact Us. Last update: June 30, 2004 http://www.federalreserve.gov/Releases/H15/update/ 7/1/2004 FRB:Commercial Paper Rates and Outstandings Page 1 of 3 Federal Reserve Release commercial Paper Release I About Outstandings I Historical discount rates I Historical outstandings Data as of June 29, 2004 Commercial Paper Rates and Outstandings Derived from data supplied by The Depository Trust Company Trade data insufficient to support calculation of the 90-day AA nonfinancial rate(s) for June 29, 2004. Posted June 30, 2004 Discount rates AA AA A2rn2 Term financial nonfinancial nonfinancial 1-day 1 1.12 1.12 1.21 7-day 1.26 1.20 =34 15-day 1.24 1.24 F 1.38 30-day 131 1.25 1=1 60-day 1.36 134 1.60 90.day 1.48 ND 1.66 Yield curve Money market basis - - Finial — — — Nonfinancial ........,.. A2 1 7. 15 30 Bays to Matunty http://www.federalreserve.gov/Releases/CP/ Percent 1.8 1.6 1A 1,? 1.0 90 .. 7 7/1/2004 FRB:Commercial Paper Rates and Outstandings Page 2 of 3 Discount rate spread Basis points l24 100 84 60 40 20 0 2001 2002 2003 2004 Discount rate history Thirty-dav commercial paper (daily) Financial — -- — Non nandai A 2001 2002 Outstandings Weekly (Wednesday), seasonally adjusted http://www.federalreserve.gov/Releases/CP/ 23 Percent - ,5 4 3 2 a 8 7/1/2004 FRB:Commercial Paper Rates and Outstandings Page 3 of 3 Bililons of dollars 1260 1240 1220 1200 2Qp2 2003 Billions of dollars 2'VQ X cc X III The daily commercial paper release will usually be available before 11:00am 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 categories Volume Statistics 2004 :Q1 Release I About ( Outstandinys I Historical discount rates I Historical outstandings Home I Statistical releases Accessibilitvj Contact Us Last update: June 30, 2004 http://www.federaireserve.gov/Releases/CP/ te E m a J Ol .� � C m E ~ 2 +� � w V E m m m L cxa `y N v� c 0 O 3 c y a) yCc m M cc a) a) m L 7 Z C C Q eC O c0 O � O :2 O d0 c (9)W NOON �f'tN co N � N cc m ON e0-� Cli ...... C la nj m O "tA C N O O M N OO WCp M M O �0 OM NCDN ISM I-�� Ow vN I�MCO 0�pP.R�A O� C > et�oMi ti 0 N MN .-ui �� V 7� 1 Q m co QQ _� cc � a �' V N NOM�pt+o OM NC MccocO00Cp) �C�c�CO M ~ a m tNg ON OCO vC'j ��pp �� E Ecc m 7 d NQ O N M N •- LA r. 1A .+ 4 w m m m CD U m �a a a a CO 00.�}) OCOA 00p0�pp) Nv �w�CO C) A P. I�NOpODt� CQCpp1 I�NCOM� � -CMOMt00M)COO.N CCOON— tt N ...� of Ncopp C' O 0 CNN 0� � N CN OD � C: w,CSLO) �CN �M��MM�� •.• `� � • � •.• N Ln NN �1n f�� f0 C m m� O L D L C O O E a) 0. 7 to a) co C Z ~ Z WC cc v — ~ CL E cxa 0 1° = m j v m W W W W: Z > W g}U' g00 W W L�wviLU_j x o Fes- N Q etas d= C) m aci m �p � CoW�Y�ZV�Q 7 c N C m m W E c o a� C c N m W— 2 C Y C W 0~ m Q Q— Z= 0 0 H0 x m H m 0 Oo� v CO m mtt� m �5 ��U=UZU=U2HZ=U WZWC7cnZ�WUaUZ c Q) v7 N �- C bia C: d N CM W C N a W ZQQ J J a H ZZQ .� H 02 Tam m ° �a mw m C 0 O Ww-O?»050LL�OZ Q aF- cn0� Wcn0OU a z zu'�o oC9UUu.maUaw?Qcn� 10 INVESTMENT ADVISORY BOARD Meeting Date: TITLE: July 14, 2004 Pooled Money Investment Board Report for April 2004 BACKGROUND: Correspondence & Written Material Item B As previously reported Bill Sherwood retired from LAIF on June 30, 2004. Attached is a letter from LAIF announcing his retirement and appointing his replacement. The Pooled Money Investment Board Report for April 2004 is included in the agenda packet. RECOMMENDATION: Receive & File John M. Falconer, Finance Director 9 DIRECTOR OF INVESTMENTS WILLIAM SHERWOOD RETIRES Daniel Dowell Appointed as Director of Investments and Christine Solich Appointed as Assistant Director of Investments After 34 years of service to the State Treasurer's Office under seven State Treasurers, Director of Investments William Sherwood will retire on June 30, 2004. Mr. Sherwood is highly regarded by the participants of the Local Agency Investment Fund (LAIF) program, the securities industry, his staff in the Investment Division, as well as the staff and his peers of the State Treasurer's Office and other State departments and agencies. Mr. Sherwood will be greatly missed. Treasurer Phil Angelides has selected Daniel Dowell to succeed Mr. Sherwood as the Director of In- vestments effective July 1, 2004. Mr. Dowell has been with the State Treasurer's Office for 30 years and has served as the Assistant Director of Investments for 27 years. As the Assistant Director of Investments, Mr. Dowell functioned as the senior security trader negotiating the purchase, sale, ex- change or loan of marketable securities, developed and implemented policy for the Time Deposit Pro- gram, managed bank, corporate, and new debt instrument research and analysis, as well as supervised divisional staff engaged in market activities. Mr. Dowell served as the Interim LAIF Administrator be- fore Eileen Park was assigned that position in July 2000. In addition, Mr. Dowell has had supervisory oversight over the LAIF program since its inception. Mr. Dowell, in his capacity as Director of Invest- ments, will plan, organize, and direct the activities of the Investment Division. Treasurer Angelides has also appointed Christine Solich as Assistant Director of Investments effective July 1, 2004. Ms. Solich has been with the State Treasurer's Office for 14 years, beginning her career in LAIF as an assistant to the LAIF Administrator. Ms. Solich moved to the Investment Operations side of the Investment Division where she has served as a securities trader, credit program manager, and as a pension investment officer, representing the Treasurer on various committees for the California Public Employees' Retirement System and the California State Teachers' Retirement System. The succession of positions and responsibilities with Mr. Sherwood's retirement will be seamless and transparent to Investments' and LAIF Operations. Mr. Dowell and Ms. Solich will carry out their roles and responsibilities following the same strategies for maintaining the goals of the investment portfolio -- safety, liquidity, and yield. Questions about Investment and LAIF operations can be directed to Dan Dowell, Christine Solich or Eileen Park at (916) 653-3001. Philip Angelides April 2004 STATE OF CALIFORNIA STATE TREASURER'S OFFICE POOLED MONEY INVESTMENT BOARD REPORT April 2004 TABLE OF CONTENTS SUMMARY................................................................. 01 SELECTED INVESTMENT DATA .................................... 02 PORTFOLIO COMPOSITION ........................................ 03 INVESTMENT TRANSACTIONS ..................................... 04 TIME DEPOSITS........................................................ 16 BANK DEMAND DEPOSITS .......................................... 28 POOLED MONEY INVESTMENT BOARD DESIGNATION... 29 POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF APRIL 2004 WITH APRIL 2003 (DOLLARS IN THOUSANDS) APRIL 2004 APRIL 2003 CHANGE'- Average Daily Portfolio $ 53,669,110 $ 55,618,682 $-1,949,572 Accrued Earnings $ 63,556 $ 84,925-21,369 � Effective Yield 1.445 1.868 -0.413 1 Average Life -Month End (In Days) 145 138 +7 I Total Security Transactions Amount $ 19,603,000 $ 20,754,969 $ -1,151,969 Number 406 446 -40 Total Time Deposit Transactions Amount $ 3,619,000 $ 2,729,600 $ +889,400 Number 147 147 0 Average Workday Investment Activity $ 1,055,545 $ 1,067,480 $ -11,935 Prescribed Demand Account Balances For Services $ 1,265,964 $ 921,914 $ +344,060 For Uncollected Funds $ 271,396 $ 283,524 -12,128 1 PHILIP ANGELIDES TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) TYPE OF SECURITY Government Bills Bonds Notes Strips Total Government Federal Agency Coupons Certificates of Deposit Bank Notes Bankers' Acceptances Repurchases Federal Agency Discount Notes Time Deposits GNMAs Commercial Paper FHLMC Corporate Bonds Pooled Loans GF Loans Reversed Repurchases Total (All Types) INVESTMENT ACTIVITY Pooled Money Other Time Deposits Totals PMIA Monthly Average Effective Yield Year to Date Yield Last Day of Month April 30, 2004 DIFFERENCE IN PERCENT OF PERCENT OF PORTFOLIO FROM AMOUNT PORTFOLIO PRIOR MONTH $ 2,089,070 0 6,127,228 0 $ 8,216,298 $ 4,191,614 11,735,093 1,174,975 0 0 11,633,484 5,595,295 487 11,104,674 3,428 1,770,164 5,255,508 0 0 $ 60,681,020 APRIL 2004 NUMBER AMOUNT 406 $ 19,603,000 22 548,403 147 3,619,000 576 $ 23,770,403 1.445 1.552 2 3.44 +1.33 0.00 0.00 10.10 -1.74 0.00 0.00 13.54 -0.41 6.91 -0.63 19.34 +4.05 1.94 +0.38 0.00 0 0.00 0 19.17 +1.51 9.22 -2.11 0.00 0 18.30 +2.85 0.01 0 2.91 -0.55 8.66 -3.30 0.00 -1.79 0.00 0.00 100.00 MARCH 2O04 NUMBER AMOUNT 426 $ 19,758,937 14 285,852 138 2,090,700 578 $ 22,135,489 1.474 1.564 Commercial Paper 18.30% Ti Del 9.; Pooled Money Investment Account Portfolio Composition $60.7 Billion 04/30/04 Loans 8.66% Treasuries Corporate 13.54% CD's/BN's 21.28% 3 tgages 01% encies i.08% ■ Treasuries Mortgages Agencies 0 CD's/BN's 0 Time Deposits M Bankers Acceptances 0 Repo 0 Commercial Paper 0 Corporate Bonds 0 Loans N Reverses 04/01/04 REDEMPTIONS BN WORLD 1.010% 04/01/04 1.030 50,000 34 48,637.97 1.047 BN WORLD 1.010% 04/01/04 1.030 50,000 34 48,637.97 1.047 BN WORLD 1.010% 04/01/04 1.030 50,000 34 48,637.97 1.047 CD LLOYDS 1.015% 04/01/04 1.015 50,000 35 49,340.28 1.032 CD LLOYDS 1.015% 04/01/04 1.015 50,000 35 49,340.28 1.032 CD LLOYDS 1.015% 04/01/04 1.015 50,000 35 49,340.28 1.032 CD LLOYDS 1.015% 04/01/04 1.015 50,000 35 49,340.28 1.032 CD RB SCOT 1.020% 04/01/04 1.020 50,000 35 49,583.33 1.037 CD RB SCOT 1.020% 04/01/04 1.020 50,000 35 49,583.33 1.037 CD RB SCOT 1.020% 04/01/04 1.020 50,000 35 49,583.33 1.037 CD CR AGRIC 1.010% 04/01/04 1.010 50,000 35 49,097.22 1.027 CD CR AGRIC 1.010% 04/01/04 1.010 50,000 35 49,097.22 1.027 CD CR AGRIC 1.010% 04/01/04 1.010 50,000 35 49,097.22 1.027 CD MONTREAL 1.010% 04/01/04 1.010 50,000 35 49,097.22 1.027 CD MONTREAL 1.010% 04/01/04 1.010 50,000 35 49,097.22 1.027 CD MONTREAL 1.010% 04/01/04 1.010 50,000 35 49,097.22 1.027 CD MONTREAL 1.010% 04/01/04 1.010 50,000 35 49,097.22 1.027 CD SOC GEN 1.025% 04/01/04 1.025 50,000 35 49,826.39 1.042 CD SOC GEN 1.025% 04/01/04 1.025 50,000 35 49,826.39 1.042 CD SOC GEN 1.025% 04/01/04 1.025 50,000 35 49,826.39 1.042 CD SOC GEN 1.030% 04/01/04 1.030 50,000 36 51,500.00 1.047 CD SOC GEN 1.030% 04/01/04 1.030 50,000 36 51,500.00 1.047 CP DISNEY 04/01/04 1.050 25,000 28 20,416.67 1.065 CP FCAR 04/01/04 1.020 35,000 31 30,741.67 1.035 CP FCAR 04/01/04 1.020 50,000 31 43,916.67 1.035 CP AMER EXP 04/01/04 1.010 50,000 31 43,486.11 1.025 CP AMER EXP 04/01/04 1.010 50,000 31 43,486.11 1.025 CP MERRILL 04/01/04 1.020 50,000 35 49,583.33 1.038 CP MERRILL 04/01/04 1.020 50,000 35 49,583.33 1.038 CP MERRILL 04/01/04 1.020 50,000 35 49,583.33 1.038 CP MERRILL 04/01/04 1.020 50,000 35 49,583.33 1.038 CP GMAC 04/01/04 1.240 50,000 37 63,722.22 1.262 CP MERRILL 04/01/04 1.010 50,000 37 51,902.78 1.028 CP MERRILL 04/01/04 1.010 50,000 37 51,902.78 1.028 CP JOHN DEERE 04/01/04 1.040 25,000 38 27,444.44 1.058 CP GMAC 04/01/04 1.270 50,000 58 102,305.56 1.294 CP BEAR 04/01/04 1.030 50,000 72 103,000.00 1.049 CP BEAR 04/01/04 1.030 50,000 72 103,000.00 1.049 DISC NOTES FNMA 04/01/04 1.100 50,000 147 224,583.33 1.123 DISC NOTES FNMA 04/01/04 1.100 50,000 147 224,583.33 1.123 04/01/04 PURCHASES BN WORLD 1.010% 07/01/04 1.030 50,000 BN WORLD 1.010% 07/01/04 1.030 50,000 BN WORLD 1.010% 07/01/04 1.030 50,000 BN WORLD 1.010% 07/01/04 1.030 50,000 CD CR AGRIC 1.030% 08/27/04 1.030 50,000 CD CR AGRIC 1.030% 08/27/04 1.030 50,000 CD CR AGRIC 1.030% 08/27/04 1.030 50,000 4 04/01/04 PURCHASES (continued) CD CR AGRIC 1.030% 08/27/04 1.030 50,000 CD MONTREAL 1.030% 08/27/04 1.030 50,000 CD MONTREAL 1.030% 08/27/04 1.030 50,000 CD MONTREAL 1.030% 08/27/04 1.030 50,000 CD MONTREAL 1.030% 08/27/04 1.030 50,000 CD SVENSKA 1.050% 08/27/04 1.050 50,000 CD SVENSKA 1.050% 08/27/04 1.050 50,000 CID GOLDMAN 05/11/04 1.030 50,000 CID GOLDMAN 05/11/04 1.030 50,000 CID GMAC 05/28/04 1.230 50,000 CID FCAR 08/09/04 1.050 50,000 CID FCAR 08/09/04 1.050 50,000 DISC NOTES FNMA 05/28/04 0.980 50,000 04/02/04 NO REDEMPTIONS 04/02/04 PURCHASES CID CITICORP 04/05/04 1.000 50,000 CID CITICORP 04/05/04 1.000 50,000 04/05/04 REDEMPTIONS CID CITICORP 04/05/04 1.000 50,000 3 4,166.67 1.014 CID CITICORP 04/05/04 1.000 50,000 3 4,166.67 1.014 04/05/04 PURCHASES CP CITIGROUP 04/06/04 1.010 40,000 CID CITIGROUP 04/06/04 1.010 50,000 CID FCAR 06/16/04 1.050 36,737 CID PREFCO 05/03/04 1.030 50,000 CID PREFCO 05/03/04 1.030 50,000 04/06/04 REDEMPTIONS CID CITIGROUP 04/06/04 1.010 40,000 1 1,122.22 1.024 CID CITIGROUP 04/06/04 1.010 50,000 1 1,402.78 1.024 CID DEERE 04/06/04 1.040 25,000 36 26,000.00 1.056 04/06/04 NO PURCHASES 04/07/04 NO REDEMPTIONS 04/07/04 PURCHASES CD US BANK 1.080% 08/27/04 1.080 50,000 CD US BANK 1.080% 08/27/04 1.080 50,000 CID CITI GLOBAL 05/10/04 1.020 50,000 CID CITI GLOBAL 05/10/04 1.020 50,000 5 04/07/04 PURCHASES (continued) DISC NOTES FNMA DISC NOTES FNMA DISC NOTES FNMA DISC NOTES FNMA 04/08/04 REDEMPTIONS CID CITI GLOBAL CID CITI GLOBAL 04/08/04 PURCHASES CD FORTIS CD FORTIS CD CR AGRIC CD CR AGRIC CID CITI GLOBAL CID CITI GLOBAL CID CITI GLOBAL CID CITI GLOBAL CID GECC CID GECC CID GECC CID GECC 04/09/04 REDEMPTIONS CID GECC CID GECC CID AMER EXP CID AMER EXP CID GECC CID GECC CID GECC CID GECC CID GECC 04109/04 NO PURCHASES 04/12/04 REDEMPTIONS BN WORLD BN WORLD BN WORLD BN WORLD CID BARTON CID GECC CID GECC CID GECC CID GECC 08/27/04 1.050 50,000 08/27/04 1.050 50,000 08/27/04 1.050 50,000 08/27/04 1.050 50,000 04/08/04 1.030 50,000 04/08/04 1.030 50,000 1.050% 07/26/04 1.050 50,000 1.050% 07/26/04 1.050 50,000 1.090% 08/27/04 1.090 50,000. 1.090% 08/27/04 1.090 50,000 07/12/04 1.050 50,000 07/12/04 1.050 50,000 07/13/04 1.050 50,000 07/13/04 1.050 50,000 08/27/04 1.080 50,000 08/27/04 1.080 50,000 08/27/04 1.080 50,000 08/27/04 1.080 50,000 55 78,680.55 1.049 55 78,680.55 1.049 04/09/04 1.020 50,000 29 41,083.33 1.035 04/09/04 1.020 50,000 29 41,083.33 1.035 04/09/04 1.010 50,000 30 42,083.33 1.025 04/09/04 1.010 50,000 30 42,083.33 1.025 04/09/04 1.130 50,000 135 211,875.00 1.154 04/09/04 1.130 50,000 135 211,875.00 1.154 04/09/04 1.130 50,000 135 211,875.00 1.154 04/09/04 1.130 50,000 135 211,875.00 1.154 04/09/04 1.130 50,000 155 243,263.89 1.154 1.040% 04/12/04 1.045 1.040% 04/12/04 1.045 1.040% 04/12/04 1.045 1.040% 04/12/04 1.045 04/12/04 1.020 04/12/04 1.130 04/12/04 1.130 04/12/04 1.130 04/12/04 1.130 I, 8,600 83 20,726.36 1.062 50,000 83 120,502.08 1.062 50,000 83 120,502.08 1.062 50,000 83 120,502.08 1.062 25,000 33 23,375.00 1.035 50,000 138 216,583.33 1.154 50,000 138 216,583.33 1.154 50,000 138 216,583.33 1.154 50,000 138 216,583.33 1.154 04/12/04 PURCHASES CP COUNTRY 06/01/04 1.060 30,000 CP CITICORP 07/01/04 1.040 50,000 CP CITICORP 07/01/04 1.040 50,000 CP CITI GLOBAL 07/01/04 1.040 50,000 CP CITI GLOBAL 07/01/04 1.040 50,000 CP CITICORP 07/02/04 1.040 50,000 CP CITICORP 07/02/04 1.040 50,000 CP CITI GLOBAL 07/02/04 1.040 50,000 CP CITI GLOBAL 07/02/04 1.040 50,000 CP GECC 08/27/04 1.080 50,000 CP GECC 08/27/04 1.080 50,000 CP FCAR 09/02/04 1.110 20,000 04/13/04 NO REDEMPTIONS 04/13/04 PURCHASES CD TORONTO 1.125% 09/28/04 1.120 50,000 CD UBS 1.125% 09/28/04 1.120 50,000 CP CITI GLOBAL 07/20/04 1.050 50,000 CP CITI GLOBAL 07/20/04 1.050 50,000 CP GECC 08/09/04 1.080 25,000 CP GECC 08/09/04 1.080 50,000 CP GECC 08/09/04 1.080 50,000 DISC NOTES FHLMC 08/16/04 1.060 50,000 DISC NOTES FHLMC 08/16/04 1.060 50,000 04/14/04 NO REDEMPTIONS 04/14/04 PURCHASES CD CR AGRIC 1.160% 09/28/04 1.160 50,000 CD CR AGRIC 1.160% 09/28/04 1.160 50,000 CD CR AGRIC 1.160% 09/28/04 1.160 50,000 CD STNRD CH 1.170% 09/28/04 1.170 50,000 CD STNRD CH 1.170% 09/28/04 1.170 50,000 CP GMAC 06/16/04 1.260 25,000 CP TEXT FIN 06/16/04 1.070 25,000 CP JP MORGAN 06/16/04 1.030 50,000 CP JP MORGAN 06/16/04 1.030 50,000 DISC NOTES FHMLC 09/28/04 1.100 50,000 DISC NOTES FHMLC 09/28/04 1.100 50,000 DISC NOTES FHLMC 09/28/04 1.100 50,000 DISC NOTES FHLMC 09/28/04 1.100 50,000 04/15/04 NO REDEMPTIONS 04/16/04 PURCHASES BN WORLD 1.010% 05/10/04 1.030 50,000 7 04/16/04 PURCHASES (continued) BN WORLD 1.010% 05/10/04 1.030 50,000 CD MONTREAL 1.035% 06/30/04 1.035 50,000 CD MONTREAL 1.035% 06/30/04 1.035 50,000 CD MONTREAL 1.035% 06/30/04 1.035 50,000 CD MONTREAL 1.035% 06/30/04 1.035 50,000 CD SOC GEN 1.140% 09/28/04 1.140 50,000 CD SOC GEN 1.140% 09/28/04 1.140 50,000 CD WASHINGTON 1.220% 09/28/04 1.220 50,000 CD WASHINGTON 1.220% 09/28/04 1.220 50,000 CD WASHINGTON 1.220% 09/28/04 1.220 50,000 CD WASHINGTON 1.220% 09/28/04 .1.220 50,000 CID GECC 05/10/04 1.020 50,000 CID GECC 05/10/04 1.020 50,000 CID GECC 05/10/04 1.020 50,000 CID GECC 05/10/04 1.020 50,000 CID GECC 05/10/04 1.020 50,000 CP GECC 05/10/04 1.020 50,000 CID GECC 05/10/04 1.020 50,000 CID CITICORP 07/26/04 1.060 50,000 CID CITICORP 07/26/04 1.060 50,000 CID FCAR 08/27/04 1.120 50,000 CID FCAR 08/27/04 1.120 50,000 DISC NOTES FNMA 06/30/04 1.005 50,000 DISC NOTES FNMA 06/30/04 1.005 50,000 DISC NOTES FNMA 09/10/04 1.100 50,000 DISC NOTES FNMA 09/10/04 1.100 50,000 DISC NOTES FNMA 09/28/04 1.100 50,000 DISC NOTES FNMA 09/28/04 1.100 50,000 DISC NOTES FHLMC 09/28/04 1.105 50,000 DISC NOTES FHLMC 09/28/04 1.105 50,000 04/16/04 NO REDEMPTIONS 04/16/04 PURCHASES CD CIBC 1.040% 07/26/04 1.040 50,000 CD CIBC 1.040% 07/26/04 1.040 50,000 CD ANZ 1.120% 09/28/04 1.120 50,000 CD ANZ 1.120% 09/28/04 1.120 50,000 CD STNRD CH 1.130% 09/28/04 1.130 50,000 CD STNRD CH 1.130% 09/28/04 1.130 50,000 CID W/F 06/30/04 1.020 50,000 CID W/F 06/30/04 1.020 50,000 CID W/F 06/30/04 1.020 50,000 CID GMAC 07/01/04 1.240 50,000 DISC NOTES FNMA 08/13/04 1.030 50,000 DISC NOTES FNMA 08/13/04 1.030 50,000 04/19/04 NO REDEMPTIONS El? 04/19/04 PURCHASES BN BANC ONE 1.120% 09/30/04 1.120 50,000 CD DEXIA 1.080% 08/27/04 1.075 50,000 CD DEXIA 1.080% 08/27/04 1.075 50,000 CP CITI GLOBAL 07/01/04 1.050 50,000 CP CITI GLOBAL 07/01/04 1.050 50,000 CP CITICORP 08/02/04 1.060 10,000 CP CITICORP 08/02/04 1.060 50,000 CP CITICORP 08/02/04 1.060 50,000 DISC NOTES FHLMC 07/20/04 1.010 40,000 DISC NOTES FHLMC 07/20/04 1.010 50,000 04/20/04 NO REDEMPTIONS 04/20/04 PURCHASES CD WASHINGTON 1.160% 09/28/04 1.170 50,000 CP CITICORP 08/02/04 1.060 50,000 CP CITICORP 08/02/04 1.060 50,000 CP CITICORP 07/26/04 1.060 50,000 CP CITICORP 07/26/04 1.060 50,000 04/21/04 NO REDEMPTIONS 04/21/04 PURCHASES BN BANC ONE 1.110% 08/27/04 1.110 50,000 BN BANC ONE 1.110% 08/27/04 1.110 50,000 BN BANC ONE 1.120% 09/01/04 1.120 50,000 BN BANC ONE 1.120% 09/01/04 1.120 50,000 CD SVENSKA 1.150% 09/28/04 1.155 50,000 CD SVENSKA 1.150% 09/28/04 1.155 50,000 CP GECC 08/02/04 1.070 50,000 CP GECC 08/02/04 1.070 50,000 CP GECC 08/02/04 1.070 50,000 CP CITI GLOBAL 07/12/04 1.060 50,000 CP GECC 08/02/04 1.070 50,000 04/22/04 NO REDEMPTIONS 04/22/04 PURCHASES BN WORLD 1.030% 07/01/04 1.060 25,000 BN WORLD 1.030% 07/01/04 1.060 50,000 BN WORLD 1.030% 07/01/04 1.060 50,000 CD- LLOYDS 1.080% 08/27/04 1.080 50,000 CD LLOYDS 1.080% 08/27/04 1.080 50,000 CD LLOYDS 1.080% 08/27/04 1.080 50,000 CD LLOYDS 1.080% 08/27/04 1.080 50,000 CD RABO 1.080% 08/27/04 1.070 50,000 CD RABO 1.080% 08/27/04 1.070 50,000 9 04/22/04 PURCHASES (continued) CD SVENSKA 1.158% 09/28/04 1.150 50,000 CID TEXT FIN 07/01/04 1.090 25,000 CID GECC 07/20/04 1.070 50,000 CID GECC 07/20/04 1.070 50,000 DISC NOTES FNMA 08/27/04 1.060 50,000 DISC NOTES FNMA 08/27/04 1.060 50,000 DISC NOTES FNMA 08/27/04 1.060 50,000 DISC NOTES FNMA 08/27/04 1.060 50,000 DISC NOTES FNMA 09/28/04 1.110 50,000 DISC NOTES FNMA 09/28/04 1.110 50,000 04/23/04 REDEMPTIONS CID SPARC 04/23/04 1.170 25,000 178 144,625.00 1.196 CID SPARC 04/23/04 1.170 50,000 178 289,250.00 1.196 MTN GECC 5.375% 04/23/04 3.920 10,000 735 802,272.22 3.887 04/23/04 PURCHASES CD ABN AMRO 1.115% 09/01/04 1.110 50,000 CD ABN AMRO 1.115% 09/01/04 1.110 50,000 CD ABN AMRO 1.115% 09/01/04 1.110 50,000 CD RABO 1.125% 09/01/04 1.120 50,000 CD RABO 1.125% 09/01/04 1.120 50,000 CD RB SCOT 1.110% 09/01/04 1.110 50,000 CD RB SCOT 1.110% 09/01/04 1.110 50,000 04/26/04 REDEMPTIONS BN WORLD 1.000% 04/26/04 1.020 50,000 56 79,330.87 1.034 BN WORLD 1.000% 04/26/04 1.020 50,000 56 79,330.87 1.034 04/26/04 PURCHASES CD LLOYDS 1.060% 07/30/04 1.055 50,000 CD LLOYDS 1.060% 07/30/04 1.055 50,000 CD NOVA SCOT 1.070% 09/01/04 1.070 50,000 CD NOVA SCOT 1.070% 09/01/04 1.070 50,000 CD NOVA SCOT 1.070% 09/01/04 1.070 50,000 CD NOVA SCOT 1.070% 09/01/04 1.070 50,000 CD SOC GEN 1.120% 09/03/04 1.120 50,000 CD RB SCOT 1.130% 09/07/04 1.130 50,000 CD RB SCOT 1.130% 09/07/04 1.130 50,000 CD US BANK 1.200% 09/27/04 1.200 50,000 CD US BANK 1.200% 09/27/04 1.200 50,000 CID CITICORP 07/12/04 1.060 50,000 CID CITICORP 07/12/04 1.060 50,000 CID CITICORP 07/12/04 1.060 50,000 CID CITICORP 07/12/04 1.060 50,000 DISC NOTES FNMA 06/27/04 1.070 50,000 10 04/26/04 PURCHASES (continued) DISC NOTES FNMA 08/27/04 1.070 50,000 DISC NOTES FNMA 08/27/04 1.070 50,000 DISC NOTES FNMA 08/27/04 1.070 50,000 DISC NOTES FNMA 09/27/04 1.120 50,000 DISC NOTES FNMA 09/27/04 1.120 50,000 DISC NOTES FHLMC 09/28/04 1.120 50,000 DISC NOTES FHLMC 09/28/04 1.120 50,000 DISC NOTES FNMA 09/28/04 1.120 50,000 DISC NOTES FNMA 09/28/04 1.120 50,000 DISC NOTES FHLMC 09/28/04 1.135 50,000 04/27/04 NO REDEMPTIONS 04/27/04 PURCHASES CD RB CANADA 1.220% 10/27/04 1.215 50,000 CD RB CANADA 1.220% 10/27/04 1.215 50,000 CD CIBC 1.220% 10/27/04 1.220 50,000 CD CIBC 1.220% 10/27/04 1.220 50,000 CD RABO 1.220% 10/27/04 1.210 50,000 CD RABO 1.220% 10/27/04 1.210 50,000 CD ABN AMRO 1.220% 10/27/04 1.210 50,000 CD ABN AMRO 1.220% 10/27/04 1.210 50,000 CID GOLDMAN 07/26/04 1.060 50,000 CID GOLDMAN 07/26/04 1.060 50,000 CID CITI GLOBAL 07/26/04 1.060 50,000 CID CITI GLOBAL 07/26/04 1.060 50,000 DISC NOTES FHLMC 08/27/04 1.050 50,000 DISC NOTES FHLMC 08/27/04 1.050 50,000 DISC NOTES FNMA 08/27/04 1.050 50,000 DISC NOTES FNMA 08/27/04 1.050 50,000 DISC NOTES FNMA 08/27/04 1.050 50,000 04/28/04 REDEMPTIONS CD W/F 1.020% 04/28/04 1.020 50,000 97 137,416.67 1.037 CD W/F 1.020% 04/28/04 1.020 50,000 97 137,416.67 1.037 CID GMAC 04/28/04 1.240 50,000 43 74,055.56 1.259 CID GMAC 04/28/04 1.240 50,000 43 74,055.56 1.259 CID GMAC 04/28/04 1.240 50,000 44 75,777.78 1.259 CID GMAC 04/28/04 1.240 50,000 44 75,777.78 1.259 CID GMAC 04/28/04 1.250 50,000 49 85,069.44 1.270 CID GMAC 04/28/04 1.250 50,000 49 85,069.44 1.270 CID GMAC 04/28/04 1.250 50,000 50 86,805.56 1.270 CID GMAC 04/28/04 1.250 50,000 50 86,805.56 1.270 CID GEN MILLS 04/28/04 1.080 25,000 65 48,750.00 1.100 CID JP MORGAN 04/28/04 1.020 50,000 85 120,416.67 1.039 CID JP MORGAN 04/28/04 1.020 50,000 85 120,416.67 1.039 CID GOLDMAN 04/28/04 1.150 30,000 177 169,625.00 1.176 CID GOLDMAN 04/28/04 1.150 50,000 177 282,708.33 1.176 11 04/28/04 REDEMPTIONS (continued) CID GOLDMAN 04/28/04 1.150 50,000 177 282,708.33 1.176 DISC NOTES FNMA 04/28/04 1.125 50,000 174 271,875.00 1.150 DISC NOTES FNMA 04/28/04 1.125 50,000 174 271,875.00 1.150 DISC NOTES FNMA 04/28/04 1.125 50,000 174 271,875.00 1.150 DISC NOTES FHLB 04/28/04 1.120 23,680 175 128,924.44 1.145 DISC NOTES FHLB 04/28/04 1.120 50,000 175 272,222.22 1.145 04/28/04 PURCHASES CID JP MORGAN 07/26/04 1.070 50,000 CID JP MORGAN 07/26/04 1.070 50,000 CID JP MORGAN 07/26/04 1.070 50,000 CID JP MORGAN 07/26/04 1.070 50,000 CID JP MORGAN 07/26/04 1.070 50,000 CID JP MORGAN 07/26/04 1.070 50,000 DISC NOTES FNMA 07/28/04 1.045 50,000 DISC NOTES FNMA 07/28/04 1.045 50,000 DISC NOTES FNMA 10/27/04 1.220 50,000 DISC NOTES FNMA 10/27/04 1.220 50,000 DISC NOTES FNMA 10/27/04 1.220 50,000 DISC NOTES FNMA 10/27/04 1.220 50,000 04/29/04 NO REDEMPTIONS 04129/04 PURCHASES SBA 1.300% 02/25/29 1.300 7,465 BN BANC ONE 1.260% 10/29/04 1.260 50,000 BN BANC ONE 1.260% 10/29/04 1.260 50,000 CD RB CANADA 1.220% 10/27/04 1.215 50,000 CD RB CANADA 1.220% 10/27/04 1.215 50,000 CD RB CANADA 1.220% 10/27/04 1.215 50,000 CD MONTREAL 1.220% 10/27/04 1.220 50,000 CD MONTREAL 1.220% 10/27/04 1.220 50,000 CD MONTREAL 1.220% 10/27/04 1.220 50,000 CD RB SCOT 1.245% 10/27/04 1.240 50,000 CD RB SCOT 1.245% 10/27/04 1.240 50,000 CD ANZ 1.240% 10/27/04 1.240 50,000 CD ANZ 1.240% 10/27/04 1.240 50,000 CD DEXIA 1.250% 10/27/04 1.245 50,000 CD DEXIA 1.250% 10/27/04 1.245 50,000 CD HSBC 1.260% 10/27/04 1.255 50,000 CD HSBC 1.260% 10/27/04 1.255 50,000 CD HSBC 1.260% 10/27/04 1.255 50,000 CD HSBC 1.260% 10/27/04 1.255 50,000 CD ABN AMRO 1.235% 10/27/04 1.230 50,000 CD ABN AMRO 1.235% 10/27/04 1.230 50,000 CD LLOYDS 1.240% 10/27/04 1.240 50,000 CD LLOYDS 1.240% 10/27/04 1.240 50,000 CD LLOYDS 1.240% 10/27/04 1.240 50,000 12 04/29/04 PURCHASES (continued) CD LLOYDS 1.240% 10/27/04 1.240 50,000 CID JP MORGAN 07/26/04 1.070 50,000 CID JP MORGAN 07/26/04 1.070 50,000 CID CITI GLOBAL 08/02/04 1.070 40,000 CID GMAC 08/02/04 1.330 50,000 CID GMAC 08/02/04 1.330 50,000 CID GMAC 08/02/04 1.330 50,000 CID GMAC 08/02/04 1.330 50,000 CID JP MORGAN 08/02/04 1.070 50,000 CID JP MORGAN 08/02/04 1.070 50,000 CID JP MORGAN 08/02/04 1.070 50,000 CID JP MORGAN 08/02/04 1.070 50,000 CID CITI GLOBAL 08/02/04 1.070 50,000 CID CITI GLOBAL 08/02/04 1.070 50,000 CID GMAC 08/09/04 1.330 50,000 CID GMAC 08/09/04 1.330 50,000 CID GECC 10/04/04 1.250 50,000 CID GECC 10/04/04 1.250 50,000 CID GECC 10/04/04 1.250 50,000 CID GECC 10/04/04 1.250 50,000 DISC NOTES FNMA 10/27/04 1.225 11,887 DISC NOTES FNMA 10/27/04 1.225 50,000 DISC NOTES FNMA 10/27/04 1.225 50,000 DISC NOTES FNMA 10/27/04 1.225 50,000 DISC NOTES FNMA 10/27/04 1.225 50,000 DISC NOTES FNMA 10/27/04 1.225 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 ' 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 TREAS BILLS 10/28/04 1.130 50,000 FHLB 2.375% 02/15/06 2.300 50,000 FHLB 2.375% 02/15/06 2.300 50,000 FNMA 2.500% 06/15/06 2.500 50,000 FNMA 2.500% 06/15/06 2.500 50,000 13 04/29/04 PURCHASES (continued) FHLB 2.875% 09/15/06 2.630 50,000 FHLB 2.875% 09/15/06 2.630 50,000 04/30/04 NO REDEMPTIONS 04/30/04 PURCHASES CP BEAR 05/03/04 1.050 50,000 CP BEAR 05/03/04 1.050 50,000 CP GECC 10/04/04 1.250 50,000 CP GECC 10/04/04 1.250 50,000 CP HOUSEHOLD 05/04/04 1.040 50,000 CP HOUSEHOLD 05/04/04 1.040 50,000 CP CITICORP 05/04/04 1.030 50,000 CP CITICORP 05/04/04 1.030 50,000 14 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. e/ Outright purchase against Reverse Repurchase Agreement. h/ Security "SWAP" transactions. V Buy back agreement. RRS Reverse Repurchase Agreement. RRP Termination of Reverse Repurchase Agreement. 15 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE ALHAMBRA Bank of East Asia (USA) 11/19/03 1.070 6,000,000.00 05/19/04 Bank of East Asia (USA) 01/14/04 1.020 3,095,000.00 07/14/04 Bank of East Asia (USA) 02/11/04 1.060 3,000,000.00 08/11/04 Omni Bank 02/13/04 0.980 2,000,000.00 05/14/04 Omni Bank 04/22/04 0.960 2,000,000.00 05/20/04 Omni Bank 11/20/03 1.090 2,000,000.00 05/20/04 Omni Bank 02/19/04 0.970 2,000,000.00 05/27/04 Omni Bank 03/03/04 1.000 6,000,000.00 06/02/04 Omni Bank 03/17/04 1.050 2,000,000.00 09/15/04 Omni Bank 04/02/04 1.050 2,000,000.00 10/01/04 ARROYO GRANDE Mid -State Bank 11/19/03 1.070 5,000,000.00 05/19/04 Mid -State Bank 12/12/03 1.060 5,000,000.00 06/11/04 Mid -State Bank 01/15/04 1.010 5,000,000.00 07/15/04 Mid -State Bank 02/11/04 1.050 5,000,000.00 08/11/04 Mid -State Bank 03/12/04 1.040 5,000,000.00 09/09/04 Mid -State Bank 04/14/04 1.090 5,000,000.00 10/13/04 BREA Jackson Federal Bank 02/18/04 0.970 10,000,000.00 05/19/04 Pacific Western National Bank 02/04/04 1.030 4,000,000.00 08/04/04 CALABASAS First Bank of Beverly Hills FSB 02/05/04 0.980 10,000,000.00 05/06/04 First Bank of Beverly Hills FSB 12/17/03 1.040 10,000,000.00 06/16/04 First Bank of Beverly Hills FSB 03/04/04 1.070 10,000,000.00 09/02/04 CAMARILLO First California Bank 12/05/03 1.090 2,000,000.00 06/04/04 First California Bank 01/28/04 1.030 2,000,000.00 07/28/04 First California Bank 01/28/04 1.030 4,000,000.00 07/28/04 First California Bank 03/24/04 1.060 6,000,000.00 09/22/04 CAMERON PARK Western Sierra National Bank 01/14/04 0.990 7,000,000.00 07/14/04 Western Sierra National Bank 02/11/04 1.030 6,000,000.00 08/11/04 CHICO Tri Counties Bank 03/18/04 1.010 20,000,000.00 06/18/04 ir^tl NAME CHULA VISTA North Island Federal Credit Union CITY OF INDUSTRY EverTrust Bank EverTrust Bank CONCORD Bank of the West Bank of the West Bank of the West Bank of the West DUBLIN Operating Engineers FCU Operating Engineers FCU Operating Engineers FCU EL CENTRO Valley Independent Bank Valley Independent Bank Valley Independent Bank EL SEGUNDO First Coastal Bank NA First Coastal Bank NA Hawthorne Savings FSB Hawthorne Savings FSB Hawthorne Savings FSB Hawthorne Savings FSB Hawthorne Savings FSB Xerox Federal Credit Union Xerox Federal Credit Union Xerox Federal Credit Union FAIRFIELD Westamerica Bank Westamerica Bank Westamerica Bank TIME DEPOSITS DEPOSIT PAR DATE YIELD AMOUNT ($) 04/09/04 0.980 5,000,000.00 12/11/03 1.070 6,000,000.00 01/29/04 1.030 6,000,000.00 MATURITY DATE 10/08/04 06/10/04 07/29/04 02/20/04 0.980 242,000,000.00 05/21/04 03/18/04 1.010 82,000,000.00 06/18/04 04/08/04 0.980 134,000,000.00 07/09/04 04/29/04 1.030 176,500,000.00 07/30/04 12/12/03 1.040 10,000,000.00 06/11 /04 02/11 /04 1.030 5,000,000.00 08/11 /04 04/07/04 0.970 5,000,000.00 10/06/04 04/08/04 1.010 20,000,000.00 07/01/04 04/16/04 1.030 20,000,000.00 07/16/04 04/23/04 1.070 32,500,000.00 07/23/04 01/22/04 1.020 2,000,000.00 07/21/04 03/03/04 1.060 2,000,000.00 09/01/04 11/20/03 1.090 25,000,000.00 05/20/04 04/08/04 0.980 60,000,000.00 07/01/04 01/07/04 1.080 50,000,000.00 07/07/04 04/14/04 0.970 35,000,000.00 07/14/04 02/05/04 1.060 15,000,000.00 08/05/04 11/20/03 1.100 20,000,000.00 05/20/04 03/04/04 1.080 20,000,000.00 09/02/04 03/10/04 1.040 7,000,000.00 09/09/04 04/09/04 0.980 60,000,000.00 07/09/04 04/15/04 0.990 30,000,000.00 07/15/04 04/14/04 0.990 35,000,000.00 07/15/04 17 NAME FRESNO United Security Bank FULLERTON Fullerton Community Bank Fullerton Community Bank GOLETA Pacific Capital Bank Pacific Capital Bank Pacific Capital Bank GRANADA HILLS First State Bank of California First State Bank of California HAWTHORNE Western Federal Credit Union IRVINE Commercial Capital Bank Commercial Capital Bank Commercial Capital Bank Commercial Capital Bank Commercial Capital Bank Commercial Capital Bank Commercial Capital Bank Commercial Capital Bank LA JOLLA Silvergate Bank LAKEPORT Lake Community Bank LODI Bank of Lodi Bank of Lodi Farmers & Merchant Bk Cen CA TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE 04/21/04 1.150 40,000,000.00 10/20/04 11/19/03 1.080 9,000,000.00 05/19/04 01 /23/04 1.020 8, 000, 000.00 07/23/04 12/10/03 1.030 85,000,000.00 06/09/04 02/13/04 1.050 61,000,000.00 08/13/04 04/01/04 1.050 78,000,000.00 10/01/04 03/19/04 1.030 2,000,000.00 09/17/04 04/22/04 1.170 3,000,000.00 10/21/04 04/22/04 1.070 30,000,000.00 07/23/04 11/20/03 1.070 20,000,000.00 05/20/04 12/17/03 1.020 10,000,000.00 06/16/04 01/08/04 1.060 10,000,000.00 07/08/04 07/29/04 1.010 10,000,000.00 07/29/04 04/29/04 1.010 20,000,000.00 07/30/04 02/19/04 1.010 15,000,000.00 08/19/04 02/26/04 1.060 14,000,000.00 08/26/04 04/ 15/04 1.090 10, 000, 000.00 10/ 14/04 03/12/04 1.060 5,000,000.00 09/10/04 01/14/04 0.990 2,000,000.00 07/14/04 06/17/04 1.020 5,000,000.00 06/17/04 03/24/04 1.080 5,000,000.00 09/22/04 04/08/04 1.080 10, 000, 000.00 10/07/04 18 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($j DATE LOS ANGELES Broadway Federal Bank 01/09/04 1.070 2,500,000.00 07/09/04 Broadway Federal Bank 03/12/04 1.050 3,000,000.00 09/10/04 Cathay Bank 02/18/04 1.030 15,000,000.00 08/18/04 Cathay Bank 03/03/04 1.050 17,000,000.00 09/01/04 Cathay Bank 03/10/04 1.030 30,000,000.00 09/09/04 Cathay Bank 04/08/04 1.100 38,000,000.00 10/07/04 Cedars Bank 01/07/04 1.080 5,000,000.00 07/07/04 Cedars Bank 02/20/04 1.040 2,000,000.00 08/20/04 Cedars Bank 03/12/04 1.050 4,500,000.00 09/10/04 Center Bank 12/23/03 1.000 5,000,000.00 06/23/04 Center Bank 01/22/04 1.010 5,000,000.00 07/21/04 Center Bank 03/17/04 1.050 40,000,000.00 09/15/04 Center Bank 04/08/04 1.080 10,000,000.00 10/07/04 CHB America Bank 11/21/03 1.060 4,000,000.00 05/21/04 CHB America Bank 03/03/04 0.980 2,000,000.00 06/02/04 CHB America Bank 01/15/04 0.990 1,000,000.00 07/15/04 CHB America Bank 04/14/04 1.090 3,300,000.00 07/15/04 CHB America Bank 03/05/04 1.030 2,000,000.00 09/01/04 CHB America Bank 03/31/04 1.050 3,000,000.00 09/29/04 Eastern International Bank 11/05/03 1.080 900,000.00 05/05/04 Eastern International Bank 12/11/03 1.050 1,000,000.00 06/10/04 Hanmi Bank 02/04/04 0.990 25,000,000.00 05/05/04 Hanmi Bank 03/05/04 1.020 25,000,000.00 06/03/04 Hanmi Bank 03/17/04 1.010 25,000,000.00 06/17/04 Hanmi Bank 04/16/04 1.010 25,000,000.00 07/16/04 Mellon First Business Bank 03/18/04 1.010 50,000,000.00 06/18/04 Mellon First Business Bank 04/09/04 0.980 50,000,000.00 07/09/04 Mirae Bank 04/16/04 1.160 4,000,000.00 10/15/04 Nara Bank, NA 11/14/03 1.110 5,000,000.00 05/13/04 Nara Bank, NA 02/19/04 0.970 5,000,000.00 05/19/04 Nara Bank, NA 03/12/04 1.010 10,000,000.00 06/11/04 Nara Bank, NA 04/23/04 1.020 5,000,000.00 07/22/04 Nara Bank, NA 04/23/04 1.020 10,000,000.00 07/22/04 Nara Bank, NA 04/22/04 1.020 10,000,000.00 07/22/04 Nara Bank, NA 02/04/04 1.050 10,000,000.00 08/04/04 Nara Bank, NA 04/08/04 1.080 5,000,000.00 10/07/04 Pacific Union Bank 12/15/03 1.040 20,000,000.00 06/16/04 Pacific Union Bank 01/08/04 1.080 10,000,000.00 07/08/04 Pacific Union Bank 04/29/04 1.030 10,000,000.00 07/30/04 Pacific Union Bank 03/04/04 1.070 20,000,000.00 09/02/04 Preferred Bank 02/06/04 0.990 4,000,000.00 05/07/04 Preferred Bank 03/19/04 1.060 31,000,000.00 09/17/04 Sae Han Bank 02/13/04 0.980 2,000,000.00 05/14/04 Sae Han Bank 02/20/04 0.980 12,000,000.00 05/14/04 State Bank of India (California) 11/20/03 1.000 2,000,000.00 05/20/04 State Bank of India (California) 01/07/04 1.090 3,000,000.00 07/07/04 Wilshire State Bank 11/14/03 1.110 2,000,000.00 05/13/04 19 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE LOS ANGELES (continued) Wilshire State Bank 11/14/03 1.110 6,000,000.00 05/13/04 Wilshire State Bank 12/15/03 1.040 1,000,000.00 06/17/04 Wilshire State Bank 12/17/03 1.040 2,000,000.00 06/17/04 Wilshire State Bank 12/15/03 1.040 4,000,000.00 06/17/04 Wilshire State Bank 12/17/03 1.040 5,000,000.00 06/17/04 Wilshire State Bank 02/05/04 1.060 8,000,000.00 07/30/04 Wilshire State Bank 02/25/04 1.060 7,000,000.00 08/25/04 Wilshire State Bank 03/05/04 1.070 3,000,000.00 09/03/04 Wilshire State Bank 03/19/04 1.050 8,000,000.00 09/17/04 Wilshire State Bank 04/09/04 1.080 7,000,000.00 10/08/04 MERCED County Bank 12/03/03 1.100 5,000,000.00 06/02/04 County Bank 04/16/04 1.010 10,000,000.00 07/16/04 County Bank 03/10/04 1.040 10,000,000.00 09/09/04 MONTEREY PARK Trust Bank FSB 12/19/03 1.050 2,000,000.00 07/01/04 Trust Bank FSB 01/07/04 1.080 3,000,000.00 07/07/04 Trust Bank FSB 04/01/04 1.050 3,000,000.00 10/01/04 NORTH HIGHLANDS Safe Credit Union 02/13/04 0.980 20,000,000.00 05/14/04 Safe Credit Union 04/16/04 1.000 5,000,000.00 07/16/04 OAKDALE Oak Valley Community Bank 04/16/04 1.000 2,500,000.00 07/16/04 Oak Valley Community Bank 03/18/04 1.060 3,500,000.00 09/16/04 OAKLAND Metropolitian Bank 12/04/03 1.100 1,000,000.00 06/03/04 Metropolitian Bank 01/23/04 1.010 1,000,000.00 07/23/04 metropolitian Bank 04/28/04 1.010 500,000.00 07/29/04 Metropolitian Bank 04/28/04 1.010 1,000,000.00 07/29/04 Metropolitian Bank 02/26/04 1.060 1,000,000.00 08/26/04 Metropolitian Bank 03/24/04 1.050 2,000,000.00 09/22/04 ONTARIO Citizens Business Bank 11/20/03 1.090 30,000,000.00 05/20/04 Citizens Business Bank 12/05/03 1.080 25,000,000.00 06/04/04 01 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE ONTARIO (continued) Citizens Business Bank 02/06/04 1.060 30,000,000.00 08/06/04 Citizens Business Bank 03/24/04 1.050 30,000,000.00 09/22/04 Citizens Business Bank 04/02/04 1.050 25,000,000.00 10/01/04 PALO ALTO Bank of Petaluma 02/19/04 1.040 3,500,000.00 08/19/04 Bank of Petaluma 03/11/04 1.050 12,000,000.00 09/09/04 Bank of Santa Clara 02/19/04 1.040 20,000,000.00 08/19/04 Coast Commercial Bank 01/14/04 1.030 5,000,000.00 07/14/04 Coast Commercial Bank 02/19/04 1.050 20,000,000.00 08/19/04 Cupertino National Bank 11/21/03 1.090 20,000,000.00 05/21/04 Cupertino National Bank 01/14/04 1.020 10,000,000.00 07/14/04 Cupertino National Bank 03/11/04 1.050 10,000,000.00 09/09/04 Golden Gate Bank 11/21/03 1.110 9,000,000.00 05/21/04 Mid -Peninsula Bank 04/28/04 1.010 95,000,000.00 07/29/04 Mid -Peninsula Bank 02/19/04 1.030 5,000,000.00 08/19/04 Mid -Peninsula Bank 03/11/04 1.040 10,000,000.00 09/09/04 Mt. Diablo National Bank 03/11/04 1.050 10,000,000.00 09/09/04 Peninsula Bank of Commerce 02/19/04 1.030 15,000,000.00 08/19/04 San Jose National Bank 11/21/03 1.100 20,000,000.00 05/21/04 PALOS VERDES ESTATES Malaga Bank 11/14/03 1.090 7,000,000.00 05/13/04 Malaga Bank 12/17/03 1.020 4,000,000.00 06/16/04 Malaga Bank 12/17/03 1.020 5,000,000.00 06/16/04 Malaga Bank 02/20/04 1.020 10,000,000.00 08/20/04 Malaga Bank 03/05/04 1.050 4,000,000.00 09/03/04 PASADENA Community Bank 11/06/03 1.090 15,000,000.00 05/06/04 Community Bank 12/17/03 1.040 10,000,000.00 06/16/04 Community Bank 01/09/04 1.070 10,000,000.00 07/09/04 Community Bank 03/17/04 1.050 10,000,000.00 09/15/04 Community Bank 04/08/04 1.080 10,000,000.00 10/07/04 Community Bank 04/14/04 1.090 15,000,000.00 10/13/04 Wescom Credit Union 11/19/03 1.090 10,000,000.00 05/19/04 Wescom Credit Union 04/28/04 1.030 25,000,000.00 07/29/04 Wescom Credit Union 03/24/04 1.070 25,000,000.00 09/22/04 PASO ROBLES Hacienda Bank 03/10/04 21 1.010 1,000,000.00 06/09/04 NAME PLACERVILLE 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 La Jolla Bank, FSB REDDING North Valley Bank REDWOOD CITY Provident Central Credit Union ROCKLIN Five Star Bank Five Star Bank RICHMOND Mechanics Bank Mechanics Bank Mechanics Bank Mechanics Bank Mechanics Bank Mechanics Bank Mechanics Bank TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($j DATE 06/10/03 1.100 20,000,000.00 06/04/04 04/30/04 1.560 5,000,000.00 04/29/05 03/19/04 1.070 6,000,000.00 09/17/04 12/10/03 1.050 20,000,000.00 06/09/04 02/27/04 1.070 8,000,000.00 08/27/04 04/22/04 1.170 10, 000,000.00 10/21 /04 11/20/03 1.070 25,000,000.00 05/20/04 03/04/04 1.000 10,000,000.00 06/03/04 02/04/04 1.030 25,000,000.00 08/04/04 02/13/04 1.030 15,000,000.00 08/13/04 03/05/04 1.050 10,000,000.00 09/02/04 12/12/03 1.040 3,000,000.00 06/11/04 10/28/04 1.210 20,000,000.00 10/28/04 01/28/04 1.000 2,000,000.00 07/28/04 03/31/04 1.030 2,000,000.00 09/29/04 06/12/03 1.090 10,000,000.00 06/09/04 07/09/03 1.110 10,000,000.00 07/08/04 08/08/03 1.370 10,000,000.00 08/04/04 09/12/03 1.290 10,000,000.00 09/10/04 10/15/03 1.260 10, 000, 000.00 10/15/04 10/31 /03 1.300 10, 000, 000.00 10/29/04 11 /07/03 1.380 10, 000, 000.00 11 /05/04 22 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT {$) DATE RICHMOND (continued) Mechanics Bank 03/03/04 1.260 10,000,000.00 03/03/05 Mechanics Bank 04/01/04 1.260 10,000,000.00 04/01/05 Mechanics Bank 04/21/04 1.450 10,000,000.00 04/21/05 RIVERSIDE Provident Savings Bank 03/25/04 1.050 25,000,000.00 09/23/04 SACRAMENTO American River Bank 12/19/03 1.030 1,000,000.00 06/18/04 American River Bank 01/09/04 1.050 1,000,000.00 07/09/04 American River Bank 01/29/04 1.010 1,500,000.00 07/29/04 American River Bank 02/27/04 1.050 2,000,000.00 08/27/04 American River Bank 03/19/04 1.030 1,250,000.00 09/17/04 American River Bank 03/25/04 1.030 2,000,000.00 09/23/04 American River Bank 04/07/04 0.970 1,500,000.00 10/06/04 Bank of Sacramento 12/19/03 1.050 2,000,000.00 06/18/04 Bank of Sacramento 02/11 /04 1.060 1,500,000.00 08/11 /04 Bank of Sacramento 03/03/04 1.060 2,000,000.00 09/01/04 Merchants National Bank 01/22/04 1.010 2,000,000.00 07/21/04 Merchants National Bank 04/14/04 1.090 2,000,000.00 10/13/04 River City Bank 02/26/04 1.010 2,000,000.00 05/27/04 River City Bank 04/30/04 1.030 3,000,000.00 07/30/04 River City Bank 04/07/04 1.000 2,000,000.00 10/06/04 U.S. Bank 01/08/04 1.090 100,000,000.00 07/08/04 U.S. Bank 02/04/04 1.050 25,000,000.00 08/04/04 U.S. Bank 02/11/04 1.050 50,000,000.00 08/11/04 U.S. Bank 02/20/04 1.040 50,000,000.00 08/20/04 Union Bank of California 02/04/04 0.990 150,000,000.00 05/05/04 Union Bank of California 03/18/04 1.020 150,000,000.00 06/18/04 Union Bank of California 04/16/04 1.000 175,000,000.00 07/16/04 SAN DIEGO First Future Credit Union 12/03/03 1.090 15,000,000.00 06/02/04 First Future Credit Union 12/17/03 1.040 3,000,000.00 06/16/04 First Future Credit Union 12/17/03 1.040 5,000,000.00 06/16/04 First Future Credit Union 02/27/04 1.070 5,000,000.00 08/27/04 First United Bank 02/13/04 1.060 1,000,000.00 08/13/04 First United Bank 04/15/04 1.120 2,000,000.00 10/14/04 Mission Federal Credit Union 01/15/04 1.020 10,000,000.00 07/15/04 Mission Federal Credit Union 03/03/04 1.060 10,000,000.00 09/01/04 Neighborhood National Bank 02/20/04 1.020 2,000,000.00 08/20/04 23 NAME SAN FRANCISCO TIME DEPOSITS DEPOSIT PAR MATURITY DATE YIELD AMOUNT ($) DATE American California Bank 01/08/04 1.090 4,000,000.00 07/08/04 American California Bank 03/05/04 1.080 2,000,000.00 09/03/04 Citibank (West) FSB 01/08/04 1.108 150,000,000.00 07/08/04 Citibank (West) FSB 01/15/04 1.050 100,000,000.00 07/15/04 Citibank (Vilest) FSB 01/22/04 1.050 100,000,000.00 07/21/04 Citibank (West) FSB 01/28/04 1.050 25,000,000.00 07/28/04 Oceanic Bank 09/12/03 1.260 4,000,000.00 09/10/04 Trans Pacific National Bank 12/23/03 1.010 1,000,000.00 06/23/04 Trans Pacific National Bank 02/05/04 1.070 1,000,000.00 08/05/04 Trans Pacific National Bank 03/25/04 1.060 1,000,000.00 09/23/04 United Commercial Bank 02/26/04 1.010 20,000,000.00 05/27/04 United Commercial Bank 12/05/03 1.090 25,000,000.00 06/04/04 United Commercial Bank 12/12/03 1.070 25,000,000.00 06/11/04 United Commercial Bank 04/09/04 0.990 55,000,000.00 07/09/04 United Commercial Bank 01/14/04 1.020 50,000,000.00 07/14/04 United Commercial Bank 01/28/04 1.030 40,000,000.00 07/28/04 United Commercial Bank 03/03/04 1.060 50,000,000.00 09/01/04 United Commercial Bank 03/19/04 1.060 65,000,000.00 09/17/04 United Commercial Bank 04/08/04 1.090 40,000,000.00 10/07/04 SAN JOSE Comerica Bank of California 04/08/04 1.000 25,000,000.00 07/01/04 Heritage Bank of Commerce 02/11/04 1.060 2,000,000.00 08/11/04 Heritage Bank of Commerce 02/11/04 1.060 2,000,000.00 08/11/04 Meriwest Credit Union 03/17/04 1.080 5,000,000.00 09/15/04 Meriwest Credit Union 04/14/04 1.100 10,000,000.00 10/13/04 Meriwest Credit Union 01/22/04 1.040 5,000,000.00 07/21/04 Santa Clara Co. Fed. C.U. 02/06/04 1.000 5,000,000.00 05/07/04 Santa Clara Co. Fed. C.U. 02/06/04 1.080 10,000,000.00 08/06/04 SAN LUIS OBISPO First Bank Of San Luis Obispo 12/05/03 1.090 4,500,000.00 06/04/04 First Bank Of San Luis Obispo 02/11/04 1.060 6,000,000.00 08/11/04 First Bank Of San Luis Obispo 03/17/04 1.060 7,000,000.00 09/15/04 First Bank Of San Luis Obispo 03/26/04 1.050 5,000,000.00 09/24/04 Mission Community Bank 12/11/03 1.080 1,000,000.00 06/10/04 Mission Community Bank 03/04/04 1.080 1,000,000.00 09/02/04 Mission Community Bank 04/07/04 0.990 2,500,000.00 10/06/04 Mission Community Bank 04/28/04 1.220 2,500,000.00 10/27/04 San Luis Trust Bank 04/21/04 1.110 1,700,000.00 10/20/04 SAN MARINO East West Federal Bank 11 /20/03 24 1.090 38,000,000.00 05/20/04 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE SAN MARINO (continued East West Federal Bank 01/09/04 1.070 42,000,000.00 07/09/04 East West Federal Bank 02/06/04 1.060 35,000,000.00 08/06/04 East West Federal Bank 03/12/04 1.050 35,000,000.00 09/10/04 SANTA ROSA National Bank of the Redwoods 01/22/04 1.010 10,000,000.00 07/21/04 National Bank of the Redwoods 02/11/04 1.050 5,000,000.00 08/11/04 National Bank of the Redwoods 04/29/04 1.210 5,000,000.00 10/28/04 North Coast Bank 12/16/03 1.040 1,250,000.00 06/17/04 SONORA Central California Bank 03/26/04 1.040 5,000,000.00 09/24/04 STOCKTON Pacific State Bank 01/08/04 1.090 1,000,000.00 07/08/04 Pacific State Bank 04/07/04 0.990 1,000,000.00 10/06/04 Union Safe Deposit Bank 02/05/04 0.990 15,000,000.00 05/06/04 Union Safe Deposit Bank 02/13/04 0.990 15,000,000.00 05/14/04 Union Safe Deposit Bank 03/05/04 1.020 15,000,000.00 06/03/04 Union Safe Deposit Bank 03/11/04 1.010 10,000,000.00 06/10/04 Union Safe Deposit Bank 04/16/04 1.010 10,000,000.00 07/16/04 Union Safe Deposit Bank 04/23/04 1.050 15,000,000.00 07/23/04 Washington Mutual Bank 12/17/03 1.040 45,000,000.00 06/16/04 Washington Mutual Bank 01/22/04 1.010 75,000,000.00 07/21/04 Washington Mutual Bank 02/20/04 1.040 60,000,000.00 08/20/04 TORRANCE China Trust Bank (USA) 02/13/04 0.990 20,000,000.00 05/14/04 China Trust Bank (USA) 03/12/04 1.020 35,000,000.00 06/11/04 China Trust Bank (USA) 04/16/04 1.010 40,000,000.00 07/16/04 China Trust Bank (USA) 04/23/04 1.050 30,000,000.00 07/23/04 TRACY Service 1 st Bank 03/17/04 1.030 4,000,000.00 06/17/04 TUSTIN Sunwest Bank 02/11/04 0.960 7,800,000.00 05/12/04 Sunwest Bank 03/10/04 0.970 1,000,000.00 06/09/04 Sunwest Bank 04/16/04 0.980 6,000,000.00 07/16/04 25 TIME DEPOSITS DEPOSIT PAR MATURITY NAME DATE YIELD AMOUNT ($) DATE VACAVILLE Travis Credit Union 12/04/03 1.090 40,000,000.00 06/02/04 WHITTIER Quaker City Bank 12/05/03 1.080 25,000,000.00 06/04/04 Quaker City Bank 01/14/04 1.010 24,000,000.00 07/14/04 Quaker City Bank 03/31/04 1.050 16,000,000.00 09/29/04 TOTAL TIME DEPOSITS APRIL 2004 5,695,296,000.00 K1. BANK DEMAND DEPOSITS April 2004 ($ in thousands) DAILY BALANCES DAY OF BALANCES WARRANTS MONTH PER BANKS OUTSTANDING 1 $ 1,749,766 $ 2,658,689 2 1,751,244 2,755,104 3 1,751,244 2,755,104 4 1,751,244 2,755,104 5 1,561,584 2,294,902 6 1,620,097 2,314,700 7 1,667,471 2,302,676 8 1,282,896 2,490,607 9 1,589,651 2,349,060 10 1,589,651 2,349,060 11 1,589,651 2,349,060 12 1,764,782 2,254,427 13 1,761,777 2,332,977 14 1,603,118 2,161,355 15 1,523,196 2,600,178 16 1,623,707 2,800,483 17 1,623,707 2,800,483 18 1,623,707 2,800,483 19 1,514,691 2,671,073 20 1,640,295 2,191,147 21 1,872,133 2,257,397 22 1,368,313 2,480,102 23 2,089,949 2,496,444 24 2,089,949 2,496,444 25 2,089,949 2,496,444 26 1,728,359 2,168,946 27 1,675,838 2,324,161 28 2,212,568.1 2,300,867 29 968,633 3,218,226 30 2,204,311 3,636,236 AVERAGE DOLLAR DAYS $ 1,688,779 a/ The prescribed bank balance for April was $1,537,360. This consisted of $1,265,964 in compensating balances for services, balances for uncollected funds of $272,672 and a deduction of $1,276 for April delayed deposit credit. 28 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 April 21,2004, 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. 1658 $ 1,265,964,000 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: Time Deposits in Various Financial Institutions In Securities (sections 16503a Estimated From To Transactions (section 16430)* and 16602)* Total ( 1) 04/19/04 04/23/04 $ 1,945,614,000 $ (1,020,681,000) $ 5,612,295,000 $ 4,591,614,000 (2) 04/26/04 04/30/04 $ 2,669,155,000 $ 1,648,474,000 $ 5,612,295,000 $ 7,260,769,000 (3) 05/03/04 05/07/04 $ (756,139,000) $ 892,335,000 $ 5,612,295,000 $ 6,504,630,000 (4) 05/10/04 05/14/04 $ 7,035,280,000 $ 7,927,615,000 $ 5,612,295,000 $ 1,3,539,910,000 (5) 05/17/04 05/21/04 $ 281,420,000 $ 8,209,035,000 $ 5,612,295,000 $ 13,821,330,000 (6) 05/24/04 05/28/04 $ (550,400,000) $ 7,658,635,000 $ 5,612,295,000 $ 13,270,930,000 (7) 05/31/04 06/04/04 $ (345,108,000) $ 7,313,527,000 $ 5,612,295,000 $ 12,925,822,000 (8) 06/07/04 06/11/04 $ 5,421,628,000 $ 12,735,155,000 $ 5,612,295,000 $ 18,347,450,000 (9) 06/14/04 06/18/04 $ (8,880,800,000) $ 3,854,355,000 $ 5,612,295,000 $ 9,466,650,000 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 $ 1,265,964,000. Dated: April 21,2004 * Government Code POOLED MONEY INVESTMENT BOARD: Signatures on file at STO and SCO Chairperson Member Member INVESTMENT ADVISORY BOARD MEETING Meeting Date: July 14, 2004 ITEM TITLE Distribution of Investment Policies for Fiscal Year 2004/2005 BACKGROUND: Correspondence and Written Material: C On June 15, 2004 the City Council approved the Investment Policies for Fiscal Year 2004/2005 which are attached. RECOMMENDATION: Receive and File. YJ . Falc ner, Finance Director E City of La Quinta Investment Policy Fiscal Year 2004-2005 CITY OF LA QUINTA Investment Policy Table of Contents Section Topic Page -- Executive Summary 2 1 General Purpose 4 II Investment Policy 4 III Scope 4 IV Objectives 4 ► Safety ► Liquidity ► Yield ► Diversified Portfolio V Maximum Maturities 6 VI Prudence 6 VII Delegation of Authority 6 Vill Conflict of Interest 7 IX Authorized Financial Dealers and Institutions 7 -- ► Broker/Dealers ► Financial Institutions X Authorized Investments and Limitations 8 _ XI Investment Pools 12 XI1 Payment and Custody 13' XIII Interest Earning Distribution Policy 13 XIV Internal Controls and - Independent Auditors 13 XV Benchmark 15 �. XVI Reporting Standards 15 XVII Financial Assets and Investment Activity Not Subject to this Policy 16 XVIII Investment of Bond Proceeds 16 -- IX Investment Advisory Board - City of La Quinta 16 XX Investment Policy Adoption 17 Appendices: A. Summary of Authorized Investments and Limitations 18 B. Municipal Code Ordinance 2.70 - Investment Advisory Board 19 C. Municipal Code Ordinance 3.08 - Investment of Moneys and Funds 20 D. Segregation of Major Investment Responsibilities 22 _ E. Listing of Approved Financial* Institutions 23 F. Broker/Dealer Questionnaire and Certification 24 G. Investment Pool Questionnaire 29 H. Glossary 33 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. 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. — 2 - Investment responsibilities carry added duties of insuring that investments are made without improper influence or the appearance to a reasonable person of questionable or improper influence. The City of La Quinta Investment Policy maintains a listing of financial institutions which are approved for investment purposes. All Broker/Dealers and financial institutions selected by the Treasurer to provide investment services will be approved by the City Manager subject to City Council approval. 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 Armendix A - Summary of Authorized Investments and Limitations. At least two bids will be required of investments in the authorized investment vehicles. Collateral ization 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. The Investment Policies shall be adopted by resolution of the La Quinta City Council on an annual basis. The Investment Policies will be adopted before the end of June of each year. This Executive Summary is an overall review of the City of La Quinta Investment Policies. Reading this summary. does not constitute a complete review, which can only be accomplished by reviewing all the pages. 3 's. f � Y P.O. Box 1504 78-495 CALLE TAMPICO LA QUINTA, CALIFORNIA 92253 (760) 777-7000 FAX (760) 777-7101 City of La Quinta Statement of Investment Policy July 1, 2003 through June 30, 2004 Adopted by the City Council on June 17, 2003 GENERAL PURPOSE The general purpose of this document is to provide the rules and standards users must follow in administering the City of La Quinta cash investments. II INVESTMENT POLICY It is the policy of the City of La Quinta to invest public funds in a manner which will provide a diversified portfolio with safety of principal 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, except as further detailed in Section XVII of the City of La Quinta, City of La Quinta Redevelopment Agency and the City of La Quinta Financing Authority, hereafter referred in this document as the "City". These funds. are reported in the City of La Quinta Comprehensive Annual financial Report (CAFR) and include: All funds within the following fund types: NO. General No. Special Revenue ► Capital Projects ► Debt Service ► Enterprise ► Internal Service No. Trust and Agency ► Any new fund types and fund(s) that may be created. IV OBJECTIVES The primary objective, in order of priority, of the City of La Quinta's investment activity, shall be: _ 4 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 with; and ► Diversifying the investment portfolio so that potential losses on individual securities will be minimized. B. Interest Rate Risk Interest Rate risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. Interest rate risk may be mitigated by: ► Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and ► By investing operating funds primarily in shorter -term securities. 2. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that sufficient liquid funds are available to meet anticipated demands. Furthermore since all possible cash demands cannot be anticipated the portfolio should be diversified and consist of securities with active secondary or resale markets. 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 5 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 2004/05, the amount of such funds was $ 5 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 exercise 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. 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 C1 investment program consistent with the Investment Policy. Procedures should include reference to safekeeping, wire transfer agreements, banking service contracts, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The City Manager or Assistant City Manager shall approve in writing all purchases and sales of investments prior to their execution by the City Treasurer. VI11 CONFLICT OF INTEREST Investment responsibilities carry added duties of insuring that investments are made without improper influence or the appearance of improper influence. Therefore, the City Manager, Assistant City Manager, and the City Treasurer shall adhere to the State of California Code of Economic Interest and to the following: ► The City Manager,. Assistant City Manager, and the City Treasurer shall not personally or through a close relative maintain any accounts, interest, or private dealings with any firm with which the City places investments, with the exception of regular savings, checking and money market accounts, or other similar transactions that are offered on a non-negotiable basis to the general public. Such accounts shall be disclosed annually to the City Clerk in conjunction with annual disclosure statements of economic interest. ► All persons authorized to place or approve investments shall report to the City Clerk kinship relations with principal employees of firms with which the City places investments. IX AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The City of La Quinta Investment Policy maintains a listing of financial institutions which are approved for direct 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 direct investment transactions must supply the City of La Quinta with the following: ► Current audited financial statements; No. Proof of National Association of Security Dealers Certification; ► Trading resolution; ► Proof of California registration; No. Resume of Financial broker; and ► Completion of the City of La Quinta Broker/Dealer questionnaire which contains a certification of having read the City of La Quinta Investment Policy. 7 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 110% 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 listing of securities pledged for collateral ization in public monies. 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,1 bills, notes and bonds maturing between 2 and 5 years. State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in Government Code Section 1 '6429.1 and by LAIF procedures, local government agencies are each authorized to invest a maximum of $40 million per account in this investment program administered by the California State Treasurer. The 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 25 % of the portfolio. U.S. Government and Related Issues As authorized in Government Code Sections 53601 '(c-0 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 commonly referred to as government sponsored enterprises (GSEs), issuing securities not backed as to principal and interests by the full faith and credit of the U.S. Government. Publicly owned GSEs include Federal National Mortgage Association .(FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Student Loan Marketing Association (SLMA). Non -publicly owned GSEs include the Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Federal Land Bank (FLB) and Federal Intermediate Credit Bank (FICB). The City of La Quinta Investment Policy allows investment only in securities of FNMA, FHLMC, FHLB and FFCB and has a limitation of $10 million face amount for each issuer. 0 Bankers' Acceptances - As authorized in Government Code Section 53601* (f), 40% of the portfolio may be invested in Bankers' Acceptances, although no more than 30% of the portfolio may be invested in Bankers' Acceptances with any one commercial bank. Additionally, the maturity period cannot exceed 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 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 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 10 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 allows investment in corporate notes authorized by the Government Code with the following limitations: ► Maturities shall conform with Section V. ► Eligible notes shall be regularly quoted and traded in the marketplace. No. Eligible notes shall be rated "AA" or "AAA" on the date of acquisition. ► Total investment shall not exceed 15 % of the portfolio, and ► The maximum aggregate investment shall not exceed $3 million face amount for each issurer. 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 11 collateralized from 110% to 150% depending on the specific security pledged _ as collateral in accordance with Government Code Section 53652. There are no portfolio limits on the amount or maturity for this investment vehicle. Collateralization 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 Collateral ization 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. 2. Certificates of. Deposit in excess of FDIC Limits. The amount not federally insured shall be 110% 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. XI INVESTMENT POOLS There are three (3) types of investment pools: 1) state -run pools, 2) pools that are operated by a political subdivision where allowed by law and the political subdivision is the trustee i.e. County Pool; and 3) pools that are operated for profit by third parties. The City of La Quinta Investment Policy has authorized investment with the State of California's Treasurers Office Local Agency Investment Fund commonly referred to as LAIF. LAIF was organized in 1977 through State Legislation Section 16429.1, 2 and 3. Each LAIF account is restricted to a maximum investable limit of $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. 12 XII PAYMENT AND CUSTODY The City shall engage qualified third party custodians to act in a fiduciary capacity to maintain appropriate evidence of the City's ownership of securities and other eligible _ investments. Such custodians shall disburse funds, received from the City for a purchase, to the broker, dealer or seller only after receiving evidence that the City has legal, record ownership of the securities. Even though ownership is evidenced in book - entry form rather than by actual certificates, this procedure is commonly accepted as the delivery versus payment (DVP) method for the transfer of securities. XIII INTEREST EARNING DISTRIBUTION POLICY Interest earnings are 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. 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 13 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. _ f. Written confirmation or telephone transactions for investments and wire transfers. Due to the potential for error and improprieties arising from telephone transactions, all telephone transactions shall be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and the safekeeping institution has a list of authorized signatures. Fax correspondence must be supported by evidence of verbal or written follow-up. .g. Development of a wire transfer agreement with the City's bank and third party custodian. This agreement should outline the various controls, security provisions, and delineate responsibilities of each party making and receiving wire transfers. 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 Financial Statements. 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 14 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 30th 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 LAW 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 months. ► A two-year list of historical interest rates. 15 XVII FINANCIAL ASSETS AND INVESTMENT ACTIVITY NOT SUBJECT TO THIS POLICY The City's Investment Policy does not apply to the following: • Cash and Investments raised from Conduit Debt Financing; • Funds held in trust in the City's name in pension or other post -retirement benefit programs; • Cash and Investments held in lieu of retention by banks or other financial institutions for construction projects; • Short or long term loans made to other entities by the City or Agency; and Short term (Due to/from) or long term (Advances from/to) obligations made — either between the City and its funds or between the City and Agency. XVI11 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. -- IXX INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA The Investment Advisory Board (IAB) consists of five 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 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 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 16 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. XX INVESTMENT POLICY ADOPTION On an annual basis, the Investment policies will be initially reviewed by the Investment Advisory Board and the City Treasurer. The Investment Advisory Board will forward the Investment policies, with any revisions, to the City Manager and City Attorney for their review and comment. A joint meeting will be held with the Investment Advisory Board, City Manager, City Attorney, and City Treasurer to review the Investment policies and comments, prior to submission to the City Council for their consideration. The Investment Policies shall be adopted by resolution of the City of La Quinta City Council on an annual basis. The Investment Policies will be adopted before the end of June of each year. 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. 17 Appendix A E a a t a H � s � r a $ E E E ' � H U �a H �a N i 7 aC � Q iQ5 7�S EQQitQQS7Q52¢S � �oaoo N x • $$ M $ null • ♦ E w Pl Pf Iff al 45 18 Appendix B Chapter 2.70 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 five (5) members from the public that are appointed by city council. La Quinta residency is required except for Board Members currently serving on the Board as of June 30, 2003 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. 2.70.020 Board 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. 2.70.030 Board 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 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. 2. The Board will report to the City Council after each meeting either in person or through correspondence at a regular City Council meeting. 19 Appendix C Chapter 3.08 INVESTMENT OF MONEYS AND FUNDS Sections: 3.08.010 Investment of city moneys and deposit of securities. 3.08.020 Authorized investments. 3.08.030 Sales of securities. 3.08.040 City bonds. 3.08.050 Reports. 3.08.060 Deposits of securities. 3.08.070 Trust fund administration. 3.08.010 Investment of city moneys and deposit of securities. Pursuant to, and in accordance with, and to the extent allowed by, Sections 53607 and 53608 of the Government Code, the authority to invest and reinvest moneys of the city, to sell or exchange securities, and to deposit them and provide for their safekeeping, is delegated to the city treasurer. (Ord. 2 § 1 (part), 1982) 3.08.020 Authorized investments. . Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized to purchase, at their original sale or after they have been issued, securities which are permissible investments under any provision of state law relating to the investing of general•city funds, including but not limited to Sections 53601 and 53635 of the Government Code, as said sections now read or may hereafter be amended, from moneys in his custody which are not required for the immediate necessities of the city and as he may deem wise and expedient, and to sell or exchange for other eligible securities and reinvest the proceeds of the securities so purchased. (Ord. 2 § 1 (part), 1982) 3.08.030 Sales of Securities. -- From time to time the city treasurer shall sell the securities in which city moneys have been invested pursuant to this chapter, so that the proceeds may, as appropriate, be applied to the purchase for which the original purchase money may have been designated or placed in the city treasury. (Ord.2 § I (part), _ 3.08.040 City bonds. Bonds issued by the city and purchased pursuant'to this chapter may be canceled either in satisfaction of sinking fund obligations or otherwise if proper and appropriate; ._., provided, however, that the bonds may be held uncancelled-and while so held may be resold. (Ord. 2 § 1 (part), 1982) 3.08.050 Reports. 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) 20 3.08.060 Deposits of securities. Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is _ authorized to deposit for safekeeping, the securities in which city moneys have been invested pursuant to this chapter, in any institution or depository authorized by the terms of any state law, including but not limited to Section 53608 of the Government Code as it now reads or may hereafter be amended. In accordance with said section, the city treasurer shall take from the institution or depository a receipt for the securities so deposited and shall not be responsible for the securities delivered to and receipted for by the institution or depository until they are withdrawn therefrom by the city treasurer. (Ord. 2 § 1 (part), 1982 3.08.070 Trust fund administration. Any departmental trust fund established by the city council pursuant to Section 36523 of the Government Code shall be administered by the city treasurer in 'accordance with Section 36523 and 26524 of the Government code and any other applicable provisions of law. (Ord. 2 § 1 (part), 1982) 21 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 22 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, Los Angeles, CA Morgan Stanley, Los Angeles, California CitiGroup, 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 1 - US Bank 2002 RDA Project Area 1 - US Bank _.. 2003 RDA Project Area 1 - US Bank Assessment Districts - US Bank — No Changes to this listing may be made without City Council approval 23 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 office? (Must equal 100%) % U.S. Treasuries. % Repos % BA's % Reverse Repos % Commercial Paper % CMO's % CD's % Derivatives % Mutual Funds % Stocks/Equities % Agencies (specify): % Other (specify): 24 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 25 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? Q/o $ 15. Describe the method your firm would use to establish capital trading limits for the City of La auinta. 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 trom your clients 26 18. What reports and transaction confirmations or any other research publications will the City receive? 19. Does your firm offer investment training to your clients? Yes No 20. Does your firm have professional liability insurance. Yes No If yes, please provide the insurance carrier, limits and expiration date. 21. Please list your NASD Registration Number 22. Do you have any relatives who work at the City of La Quinta? Yes No If yes, Name and Department 23. Do you maintain an office in California. Yes No 24. Do you maintain an office in La Quinta or Riverside County? Yes No 25. Please enclose the following: ❑ Latest audited financial statements. ❑ Samples of reports, transaction confirmations and any other research/publications the City will receive. ❑ Samples of research reports and/or publications that your. firm regularly provides to clients. ❑ Complete schedule of fees and charges for various transactions. ***CERTIFICATION*** I hereby certify that I have personally read the Statement of Investment Policy of the City of La Quinta, and have implemented reasonable procedures and a system of controls designed to preclude imprudent investment activities arising out of transactions conducted between our firm and the City of La Quinta. All sales personnel will be routinely informed of the City's investment objectives, horizons, outlooks, strategies and risk constraints whenever we are so advised by the City. We pledge to exercise due diligence in informing the City of La Quinta of all foreseeable risks associated with financial transactions conducted with our firm. By signing this document the City of La Quinta is authorized to conduct any and all background checks. 27 Under penalties of perjury, the responses to this questionnaire are true and accurate to the best of my knowledge. Broker Representative Date Title Sales Manager and/or Managing Partner* Date Title 28 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? W REPORTING 1. Is the yield reported to participants of the pool monthly? (If not, how often?) 2. Are expenses of the pool deducted before quoting the yield? 3. Is the yield generally in line with the market yields for securities in which you usually invest? 4. How often does the pool report, and does that report include the market value of securities? SECURITY The following questions are designed to help you safeguard your funds from loss of principal and loss of market value. 1. Does the pool disclose safekeeping practices? 2. -is the pool subject to audit by an independent auditor? 3. Is a copy of the audit report available to participants? 4. Who makes the portfolio decisions? 5. How does the manager monitor the credit risk of the securities in the pool? 6. Is the pool monitored by someone on the board of a separate neutral party external to. the investment function to ensure compliance with written policies? 7. Does the pool have specific policies with regards to the various investment vehicles? a. What are the different investment alternatives? b. What are the policies for each type of investment? 8. Does the pool mark the portfolio to its market value? 9. Does the pool disclose the following about how portfolio securities are valued: a. The frequency with which the portfolio securities are valued? b. The method used to value the portfolio (cost, current value, or some other method)? 30 OPERA TONS 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. 31 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? 32 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. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the City of La Quinta. It includes five combined statements 33 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. CONDUIT FINANCING: A form of Financing in which a government or a government agency lends its name to a bond issue, although it is acting only as a conduit between a specific project and bond holders. The bond holders can look only to the revenues from the project being financed for repayment and not to the government or agency whose name appears on the bond. COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing _interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment .is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities): DISCOUNT: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non -interest bearing money market instruments that are issued a discount. and redeemed at maturity for full face value, e.g., U.S. Treasury Bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. are issued with maturities of less than one year and interest is paid at maturity. 3. FLBs (Federal Land Bank Bonds) - Long-term mortgage credit provided to farmers by Federal Land Banks. These bonds are issued at irregular times for various maturities ranging from a few months to ten years. The minimum denomination is $1,000. They carry semi-annual coupons. Interest is calculated on a 360-day, 30 day month basis. 4. FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, 5. e.g., S&L's, small business firms, students, farmers, farm cooperatives, and exporters. 1. FNMAs (Federal National Mortgage Association) - Used to assist the home mortgage market by purchasing mortgages insured by the Federal Housing FFCBs (Federal Farm Credit Bank) - Debt instruments used to finance the short and intermediate term needs of farmers and the national agricultural industry. They are issued monthly with three- and six-month maturities. The FFCB issues larger issues (one to ten year) on a periodic basis. These issues are highly liquid. FICBs (Federal Intermediate Credit bank Debentures) - Loans to lending institutions used to finance the short-term and intermediate needs of farmers, such as seasonal production. They are usually issued monthly in minimum denominations of $3,000 with a nine -month maturity. Interest is payable at maturity and is , calculated . on a 360-day, 30-day month basis. Administration and the Farmers Home Administration, as well as those guaranteed by 6. FHLMCs (Federal Home Loan Mortgage the Veterans Administration. They are issued in Corporation) - a government sponsored entity various maturities and in minimum denominations established in 1970 to provide a secondary of $10,000. Principal and Interest. is paid market for conventional home mortgages. monthly. Morgages are purchased solely from the Federal home Loan Bank System member 2. FHLBs (Federal Home Loan Bank Notes and lending institutions whose deposits are insured Bonds) - Issued by the Federal Home Loan by agencies of the United States Government. Bank System to help finance the housing They are issued for various maturities and in industry. The notes and bonds provide minimum denominations of $10,000. Principal liquidity and home mortgage credit to savings and Interest is paid monthly. Other federal and loan associations, mutual savings banks, agency issues are Small Business cooperative banks, insurance companies, and Administration notes (SBAs), Government mortgage -lending institutions. They are National Mortgage Association notes issued irregularly for various maturities. The (GNMAs), Tennessee Valley Authority notes minimum denomination is $5,000. The notes 34 (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. 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, 35 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 "passthrough" 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. 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, bander' 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 and depositions and monthly financial statements to the Federal Reserve Bank of ,New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) -registered securities broker -dealers, banks and a few unregulated firms. 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 36 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 hold 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 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.§. 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. 37 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.