2006 12 13 IABP.O. Box 1504
p LA QutNTA, CALIFORNIA 92247-1504
Ivy OF�tt� 78-495 CALLE TAMPICO (760) 777-70(
LA QufNTA, CALIFORNIA 92253 FAX (760) 777-71(
AGENDA
INVESTMENT ADVISORY BOARD
Study Session Room
78-495 Calle Tampico- La Quinta, CA 92253
December 13 - 5:30 P.M.
CALL TO ORDER
a. Pledge of Allegiance
b. Roll Call
II PUBLIC COMMENT- (This is the time set aside for public comment on any matter not scheduled on the agenda.)
III CONFIRMATION OF AGENDA
IV CONSENT CALENDAR
Approval of Minutes of Meeting on November 8, 2006 for the Investment
Advisory Board.
V BUSINESS SESSION
A. Transmittal of Treasury Report for October, 2006
B. Continued Consideration of the Fiscal Year 2006/07 Work Plan - Review of
Investment Policy
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. City of La Quinta FY 05/06 Audited Financial Statements
B. Month End Cash Report - November, 2006
C. Pooled Money Investment Board Report - September, 2006
VII BOARD MEMBER ITEMS
Vill ADJOURNMENT
INVESTMENT ADVISORY BOARD
Meeting Date: December 13, 2006
ITEM TITLE:
Transmittal of Treasury Report
for October 31, 2006
BACKGROUND:
Business Session: A
Attached please find the Treasury Report October 31, 2006.
RECOMMENDATION:
Review, Receive and File the Treasury Report for October 31, 2006.
John M. Falconer, Finance Director
� ` I
MEMORANDUM
TO: La Quinta City Council
FROM: John M. Falconer, Finance Director/Treasurer
SUBJECT: Treasurer's Report for October 31, 2006
DATE: November 30, 2006
Attached is the Treasurer's Report for the month ending October 31, 2006, 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
Endino
Chance
Cash (3)
$ (1,636,471)
$ 1,053,946
(1)
($582,525)
$1,053,94
LAW
21,086,723
3,743,302
(3,300,000)
0
21,530,025
443.301
US Treasuries (2)
140,338,952
(9,000,000)
536,060
131,875,012
(8,463,94�
US Gov t Sponsored Enterprises (2)
34.783,863
(5,000,000)
63,714
29,847,577
(4,936.28i
Commercial Paper (2)
8,952,392
14,000,000
(6,000,000)
(33.134)
16,919,258
7,966,86�
Corporate Notes
3,000,000
(85,770)
2,914,230
2,914,23
Mutual Funds
4,422,571
16.550
1
4,439'121
16.55
Total
S 207,948,030
$ 21,613,798
$ 23,300,000
$ 480870
$ 206,942,698
$ t,005,33
1 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 except as follows:
The Federal Home Loan Bank maximum was exceeded on January 18, 2006. as reported on page 2, and
is expected to come into conformity on December 15, 2006. As of October 31. 2006, the market value of the Investment
was $7,592,343 and the amortized cost plus accrued interest was $7,603,591 for an unrealized loss of $11,248.
Management intends to hold the investment to maturity.
As Treasurer of the City of La Quints, I hereby certify that sufficient investment liquidity and anticipated
revenues are available to meet the pods 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 and. /
4-4
John M. Falconer Date
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 LIS Treasury, Commercial Paper and Agency investments.
(3) The cash account may reflect a negative balance. This negative balance will be offset with transfers from other Investments
before warrants are presented for payment by the payee at the bank.
Dasurer's Commentary
r the Month of October
ish Balances — The portfolio size decreased by $1.0 million. The major reason for th
crease was not attributable to any particular events other than normal cash receipts ar
sh disbursements.
vestment Activity — The Treasurer has been increasing the Commercial Paper holdings
;tober to take advantage of a 30 basis point advantage over US Treasuries. In addition, tt
easurer purchased a Corporate Note for eighteen months from GE Capital which wa
iproximately 10 basis points over GSE's. At month end, the sweep had a $986,982 balan<
id yielded 4.65% which primarily consisted of outstanding warrants. While this rate
over than the LAIF rate of 5.10% for next day funds, the sweep account allows the City
ke advantage of earning interest on warrants that have been released but have not be(
cared by our bank. The sweep was instituted based upon the raising interest rates at
irned $ 5,505 in cash for the month. The bank fees for the month were $ 2,005 whi4
suited in a net increase of $ 3,500 in real savings.
)rtfolio Performance — The overall portfolio performance increased by two (2) basis poin
id ended at 5.01 % for the month. At the end of October, the portfolio yield was five (
Isis points over the benchmark which decreased by four (4) basis point from the previo
onth to end at 4.96%. With the short average maturity of 67 days, the portfolio yie
could remain at these levels. The Treasurer will continue to invest in short term investmer
ased upon the yield curve. At this time last year, the portfolio was yielding 3.34% and t
enchmark was at 3.75% for a 41 point difference so we have made progress in meeting e
anchmark. The Treasurer has been investing more in commercial paper with sixty d
iaturities and has not been investing in longer than six months Treasury securities or in me
ian one year GSE's based upon the yield curve to take advantage of yield spreads.
uture Thoughts
he Treasurer will continue to invest in short term maturities to take advantage of t
averted yield curve — Commercial Paper and Bond proceeds will continue to be reinvested
ix month Treasury bills as they mature.
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INVESTMENT ADVISORY BOARD Business Session: B
Meeting Date: December 13, 2006
ITFM TITLF-
Continued Consideration of the Fiscal Year 2006/07 Work Plan — Review of
Investment Policy
BACKGROUND:
Attached, please find the City Treasurer's responses to the current review of the
investment policy as requested by the Board at the last meeting.
RECOMMENDATION:
Continued consideration of this item with a recommendation to the City Council of
any changes to the Fiscal Year 2006/07 Investment Policy.
John Falconer, Finance Director
City of La Quinta
City Treasurer's Responses to Review of the Investment Policy
FY 06/07
No.
Item
Yes/No
Details
1
Changing Buy and Hold Policy
No
2
Changing 2 Year Maximum Maturity to 3 years
Yes
3
Allow for callable GSE's
No
4
Increase the maximum amount for commercial paper
Yes
and corporate notes from $3 million to $5 million
Allow for the same issuer in commercial paper &
Yes
corporate notes
5
GSE dollar limitation change
Yes
10% of surplus funds per issuer
up to 30% of surplus portfolio
Limit of $10 million per purchase
6
Change in Commercial Paper
Yes
Decrease from 30% to 20% of surplus funds
7
Change in Corporate Notes
Yes
Decrease from 15% to 10% of surplus funds
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item A
Meeting Date: December 13, 2006
ITEM TITLE:
City of La Quints Fiscal Year 2005-06
Audited Financial Statement
BACKGROUND:
Mrs. Jennifer Christian, Mayer Hoffman McCann P.C., will review the City Cash
and Investments presented in the report and answer Board Members questions.
RECOMMENDATION:
Information item only.
yJr.hn—M.Falconer, Finance Director
INVESTMENT ADVISORY BOARD
Meeting Date: December 13, 2006
ITEM TITLE:
Month End Cash Report - November, 2006
BACKGROUND:
Correspondence & Written
Material Item B
This rash report is not a complete Treasury Report (exclude petty cash, deferred
compensation and fiscal agent balances), but would report in a timely fashion
selected cash balances.
RECOMMENDATION:
Information item only.
John M. Falconer, Finance Director
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Federal Reserve Release
Release I About I Outsta-ndings I Volume statistics. I Year-end I Data Download
Data as of December 1 2006 `Tfr Data
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Commercial Paper Rates and Outstanding ►
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Posted December 4, 2006
niannnnt rotas
Term
nonfinanctal
nonfinanctal
financial
asset -backed
1-day
5.26
5.32
5.21
5.29
7-day
5.25
5.33
5.23
5.28
15-day
5.20
5.37
5.23
5.28
30-day
5.19
5.35
5.23
5.29
60-day
5.19
5.39
5.24
5.27
90-day
n.a.
5.38
5.23
AA nonfinancial
5.25
rate for December 1, 2t
Tmda data Ineidenient
to su000rt calculation
of the 90-dav
Yield curve
Monev market basis
06.
--- AA nonfinancial
A21P21F2 nonftnnncial
—•—»— AA tin.ancial
.. - ,. 1\A a ,A hachM
------ ......
"-------------------
Percent
1 7 15 30 60 yu
Days to Maturity
5.5
5.3
Fit
http://www.federalreserve.gov/Releases/CP/ 12/4/200
Atli: commercial raper Kates ana umstanaings rage / vi J
Discount rate spread
Thirty -day A2/F2/F2 less AA nonfinancial commercial paper (daily) Basis points 120
— 5pad 100
—�-- spread. 5-day moving avS
80
60
40
20
1
0
2001 2002 2003 2004 2005 2006
Discount rate history
Thirty -day commercial paper (daily)
— — — AA nonfinancial
A21P21F: nonfinancial
--- AA financial
Percent
2001 2002 2003 2004 2005 2006
Outstandings
Weekly (Wednesday), seasonally adjusted
6
5
4
3
2
http://www.federalreserve.gov/Releases/CP/ 12/4/2001
FRB: Commercial Faper Kates ana vutstanamgs
rage �vi�
Billions of dollars
1
1 — — — Nonfinancial (right scale)
"{ ---^-- 111""cial'left
Aaa:+,ir4x,9;i,:;4.�.�ici
}1 L�Pt
Y L
\%A11v y"t}
�±b; . L .... [ 1t t r.h.M1•
i t 1 1 i 11� 1'1
Billions of dollars
il'
250
210
170
130
The daily commercial paper release will usually be available before 11:00am EST. However, the Federa
Reserve Board makes no guarantee regarding the timing of the daily commercial paper release. When
the Federal Reserve Board is closed on a business day, rates for the previous business day will be
available through the Federal Reserve Board's Data Download application. This policy is subject to
change at any time without notice.
Release I About I Outstandings I Volume statistics I Year-end I Data Download
Home I Statistical releases
Accessibility I Contact Us
Last update: December 4, 2006
http://www.federalreserve.gov/Releases/CP/ 12/4/200
Kecent tSill Auction Kesuits I ar,c ' "i
Recent Bill Auction Results
Security
Issue
Maturity
Discount
Investment
Price
CUSIP
Tenn
Date
Date
Rate %
Rate %
Per$100
91-DAY
12-07-2006
03-08-2007
4.870
4.999
98.768972
912795YWS
182-DAY
12-07-2006
06-07-2007
4.840
5.030
97.553111
912795ZKO
30-DAY
12-05-2006
12-15-2006
5,195
5.275
99.855694
912795TWI
14-DAY
12-01-2006
12-15-2006
5.215
5.298
99.797194
912795TW1
28-DAY
11-30-2006
12-28-2006
5.170
5,263
99.597889
912795YL9
91-DAY
11-30-2006
03-01-2007
4.905
5.036
98.760125
912795YV7
182-DAY
11-30-2006
05-31-2007
4.935
5.132
97.505083
912795Z33
27-DAY
11-24-2006
12-21-2006
5.160
5.252
99.613000
912795YKI
90-DAY
11-24-2006
02-22-2007
4.940
5.071
98.765000
912795YU9
181-DAY
11-24-2006
05-24-2007
4.940
5.136
97,516278
912795ZH7
28-DAY
11-16-2006
12-14-2006
5.150
5.243
99,599444
912795Y34
91-DAY
11-16-2006
02-15-2007
4.955
5.088
98.747486
912795YT2
182-DAY
11-16-2006
05-17-2007
4.955
5.153
97.494972
912795ZG9
1-DAY
11-15-2006
11-16-2006
5.190
5.263
99.985583
912795YE5
15-DAY
11-15-2006
11-30-2006
5.170
5.253
99.784583
912795YGO
28-DAY
11-09-2006
12-07-2006
5,105
5,197
99,602944
912795YHB
91-DAY
11-09-2006
02-08-2007
4.955
5.088
98.747486
912795Y84
182-DAY
11-09-2006
05-10-2007
4.980
5.180
97.482333
912795ZFI
28-DAY
11-02-2006
11-30-2006
5,085
5.176
99.604500
912795YGO
91-DAY
11-02-2006
02-01-2007
4.975
5.108
98.742431
912795YR6
182-DAY
11-02-2006
05-03-2007
4.955
5,153
97.494972
912795ZE4
29-DAY
10-26-2006
11-24-2006
5.055
5.146
99.592792
912795YF2
91-DAY
10-26-2006
01-25-2007
4.990
5.124
98.738639
912795YQS
182-DAY
10-26-2006
04-26-2007
4 975
5,174
97.484861
912795ZD6
28-DAY
10-19-2006
11-16-2006
4.950
5.038
99.615000
912795YE5
91-DALY
10-19-2006
01-18-2007
4,940
5.072
98.751278
912795YPO
182-DAY
10-19-2006
04-19-2007
4.935
5.132
97.505083
912795ZCS
28-DAY
10-12-2006
11-09-2006
4.785
4.870
99.627833
912795YD7
91-DAY
10-12-2006
01-11-2007
4.850
4.978
98.774028
912795YN5
182-DAY
10-12-2006
04-12-2007
4.890
5,084
97.527833
912795ZBO
28-DAY
10-05-2006
11-02-2006
4.600
4,681
99.642222
912795YC9
91-DAY
30-05-2006
01-04-2007
4.765
4,890
98.795514
912795YM7
182-DAY
30-05-2006
04-05-2007
4.825
5.014
97.560694
912795ZA2
28-DAY
09-28-2006
10-26-2006
4,545
4.624
99.646500
912795YBI
91-DAY
09-28-2006
12-28-2006
4.770
4.895
98.794250
912795YL9
182-DAY
09-28-2006
03-29-2007
4.810
4.998
97.568278
912795YZS
28-DAY
09-21-2006
10-19-2006
4.640
4.721
99.639111
912795YA3
91-DAY
09-21-2006
12-21-2006
4.815
4.942
98.782875
912795YKI
182-DAY
09-21-2006
03-22-2007
4.920
5.116
97.512667
912795YY1
1-DAY
09-14-2006
09-15-2006
5.200
5.273
99,985556
912795TV3
Effective with the 11/2/98 auction, all bills are auctioned using the single -priced method.
http://www.treasurydirect.gov/RI/OFBills 12/4/2001
rlcn: n. t:)--iNeiecteu interest scares, wev-vruy Lacy Uyuatc--Lcccuivcr 1, zvvv
rar,c i vi -
Federal Reserve Statistical Release
H.15
Selected Interest Rates (Daily)
slop to Contem
Release Date: December 1, 2006
Weekly -release dates and announcements I Historical data I Data Download I About
Daily update Other formats: Screen reader I ASCII
iTry Data
Download
The weekly release is posted on Monday. Daily updates of the weekly re Lease arM
through Friday on this site. If Monday is a holiday, the weekly release will tie-F
after the holiday and the daily update will not be posted on that Tuesday.
FEDERAL RESERVE STATISTICAL RELEASE
H.15 DAILY UPDATE: WEB RELEASE ONLY
SELECTED INTEREST RATES
For use at 4:15 p.m. Eastern Time
Yields in percent per annum
December 1,
2006
2006
2006
2006
2006
Instruments
Nov
Nov
Nov
Nov
27
28
29
30
Federal funds (effective) 1 2 3
5.32
5.24
5.26
5.31
Commercial Paper 3 4 5
Nonfinancial
1-month
5.20
5.24
5.21
5.22
2--month
n.a.
5.24
n.a.
n.a.
3-month
n.a.
5.23
n.a.
n.a.
Financial
1--month
5.23
5.22
5.23
5.24
2-month
5.24
5.23
5.23
5.22
3-month
5.24
5.24
5.24
5.24
CDs (secondary market) 3 6
1-month
5.29
5.29
5.29
5.30
3-month
5.32
5.32
5.31
5.31
6-month
5.32
5.31
5.30
5.30
Eurodollar deposits (London) 3 7
1-month
5.32
5.32
5.35
5.35
3-month
5.37
5.36
5.36
5.36
6-month
5.36
5.33
5.33
5.33
Bank prime loan 2 3 8
8.25
8.25
8.25
8.25
Discount window primary credit 2 9
6.25
6.25
6.25
6.25
U.S. government securities
Treasury bills (secondary market) 3 4
4-week
5.16
5.18
5.17
5.14
3-month
4.92
4.91
4.91
4.90
6-month
4.94
4.93
4.93
4.91
Treasury constant maturities
Nominal 10
1-month
5.22
5.27
5.26
5.22
3-month
5.05
5.04
5.04
5.03
6-month
5.14
5.13
5.13
5.10
1-year
5.00
4.98
4.98
4.94
2-year
4.71
4.67
4.69
4.62
http://www.federaireserve.gov/Releases/H 15/update/ 12/4/2001
ruts: n.1J--oc1ccacu uucicsa macs, VV VU vaaay uMly vpuaw--uwa aaawa 1, ..vvv
...E,.......
3-year
5-year
7-year
10-year
20-year
30-year
Inflation indexed 11
5-year
7-year
10-year
20-year
Inflation -indexed long-term average
Interest rate swaps 13
1-year
2-year
3-year
4-year
5-year
7-year
10-year
30-year
Corporate bonds
Moody's seasoned
Aaa 14
Bea
State & local bonds 15
Conventional mortgages 16
n.a. Not available.
Footnotes
4.60
4.57
4.58
4.52
4.54
4.50
4.51
4.45
4.54
4.50
4.51
4.45
4.54
4.51
4.52
4.46
4.73
4.70
4.72
4.66
4.62
4.59
4.61
4.56
2.33
2.28
2.28
2.21
2.29
2.26
2.26
2.19
2.24
2.21
2.22
2.16
2.19
2.17
2.19
2.13
12 2.14
2.13
2.15
2.10
5.29
5.24
5.24
5.22
5.08
5.01
5.00
4.96
5.00
4.92
4.92
4.89
4.98
4.90
4.90
4.87
4.98
4.91
4.91
4.87
5.01
4.93
4.93
4.90
5.06
4.98
4.99
4.96
5.18
5.11
5.11
5.09
5.26
5.24
5.25
5.20
6.15
6.13
6.14
6.10
1. The daily effective federal funds rate is a weighted average of rates on broke
2. Weekly figures are averages of 7 calendar days ending on Wednesday of the curl
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 sett:
Depository Trust Company. The trades represent sales of commercial paper by deal(
issuers to investors (that is, the offer side). The 1-, 2-, and 3-month rates ar(
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 bid rates on nationally traded certificates of deposit.
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
commercial banks. Prime is one of several base rates used by banks to price shore
loans.
9. The rate charged for discounts made and advances extended under the Federal Ri
credit discount window program, which became effective January 9, 2003. This rat(
adjustment credit, which was discontinued after January 8, 2003. For further inf(
www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rat(
for the Federal Reserve Bank of New York. Historical series for the rate on adju:
http://www.federalreserve.gov/Releases/H15/update/ 12/4/200(
FRB: H.15--Selected Interest Rates, Web -Only Vatly Update --December 1, 2UU6 Yage .3 of
well as the rate on primary credit are available at www.federalreserve.gov/relea;
10. Yields on actively traded non -inflation -indexed issues adjusted to constant 1
30-year Treasury constant maturity series was discontinued on February 18, 2002,
on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Trees
factor for adjusting the daily nominal 20-year constant maturity in order to est.
nominal rate. The historical adjustment factor can be found at
www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ltcomposite.
Source: U.S. Treasury.
11. Yields on Treasury inflation protected securities (TIPS) adjusted to constan
Source: U.S. Treasury. Additional information on both nominal and inflation -index
found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ins
12. Based on the unweighted average bid yields for all TIPS with remaining terms
more than 10 years.
13. International Swaps and Derivatives Association (ISDA(R)) mid -market par swa
for a Fixed Rate Payer in return for receiving three month LIBOR, and are based
at 11:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters P
ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited.
14. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and
raters. As of December 7, 2001, these rates are averages of Aaa industrial bonds
15. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; T.
16. Contract interest rates on commitments for fixed-rate first mortgages. Sours
Note: Weekly and monthly figures on this release, as well as annual figures avai
Board's historical H.15 web site (see below), are averages of business days unle
Current and historical H.15 data are available on the Federal Reserve Board's we'.
(www.federalreserve.gov/). For information about individual copies or subscripti
Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-
elec:tronic access to current and historical data, call STAT-USA at 1-800-782-887
Description of the Treasury Nominal and Inflation -Indexed Constant Matur
Yields on Treasury nominal securities at "constant maturity" are interpolated by
from the daily yield curve for non -inflation -indexed Treasury securities. This c
the yield on a security to its time to maturity, is based on the closing market
actively traded Treasury securities in the over-the-counter market. These market
calculated from composites of quotations obtained by the Federal Reserve Bank of
constant maturity yield values are read from the yield curve at fixed maturities
and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yie
maturity, for example, even if no outstanding security has exactly 10 years rema
Similarly, yields on inflation -indexed securities at "constant maturity" are int
daily yield curve for Treasury inflation protected securities in the over -the -co
inflation -indexed constant maturity yields are read from this yield curve at fix
currently 5, 7, 10, and 20 years.
Weeklvrelease dates and announcements I Historical, data I About
http://www.federaireserve.gov/Releases/HI5/update/ 12/4/200
RB: H.1:5--Selected interest Kates, web-uniy carry upaale--Lecemoer 1, zvvo r agv � v-
daily update Other formats: Screen reader I ASCII
statistical releases
bone I Economic research and data
%ccessibility I Contact Us
Last update: December 1, 2006
http://www.federalreserve.gov/Releases4l15/update/ 12/4/200t
Phil Angelides, State Treasurer
Inside the State Treasurer's Office
Local Agency Investment Fund (WAIF)
PMIA Performance Report
11/16/2006
5.13
Quarter
5.10
Adage
tt
193
11/17/2006
5.14
5.10
197
11/18/2006
_
5.14
5.10
197
11/19/2006
5.14
5.10
197
11/20/2006
5.14
5.10
194
11/21/2006
5.14
5.10
193
11/22/2006
5.14
5.10
192
11 /23/2006
5.14
5.10
192
11 /24/2006
5.14
5.10
192
11/25/2006
5.14
5.10
192
11/26/2006
5.14
5.11
192
11/27/2006
5.14
5.11
186
11 /28/2006
5.12
5.11
193
11/29/2006
5.13
5.11
190
0-1
LAIF Performance Report
Quarter ending 9130/06
Apportionment Rate: 4.93%
Earnings Ratio: .00013498449593566
Fair Value Factor: .999335402
PMIA Average Monthly Effective Yields
October 2006 6.098%
September 2006 5.023%
August 2006 4.946%
Pooled Money Investment Account
Portfolio Composition
$59.9 Billion
10/31/06
Loans
16.62%
Corporate Bonds
0.98%
Commercial Paper
14.86%
Time Deposits
14.50%
Reverses Treasuries
-0.35% 3.59% Mortgages
1.79%
Agencies
24.36%
CDs/BNs
22.98%
0
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INVESTMENT ADVISORY BOARD
Meeting Date: December 13, 2006
TITLE:
Pooled Money Investment Board Report
for September 2006
BACKGROUND:
Correspondence
& Written Material Item C
The Pooled Money Investment Board Report for September 2006 is included in the
agenda packet.
RECOMMENDATION:
Receive & File
John M. Falconer, Finance Director
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF SEPTEMBER 2006 WITH SEPTEMBER 2006
(DOLLARS IN THOUSANDS)
SEPTEMBER 200611 SEPTEMBER 2005 CHANGE
Average Daily Portfolio
$ 57,084,758 $
61,811,038 $
+5,273,720
Accrued Earnings
$ 235,692 $
141,537 $
+94,155
Effective Yield
5.023
3.324
+1.699
Average Life -Month End (In Days) 160 169 -9
Total Security Transactions
Amount
$ 24,108,292
$
23,181,408
$
+926,884
Number
507
482
+25
Total Time Deposit Transactions
Amount
$ 2,735,500
$
2,106,500
$
+630,000
Number
162
148
+14
Average Workday Investment Activity
$ 1,342,190
$
1,204,138
$
+138,052
Prescribed Demand Account Balances
For Services
$ 266,120
$
341,004
$
-74,884
For Uncollected Funds
$ 191,772
$
156,921
$
+34,851
1
PHIL ANGELIDES
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
September 30, 2006
DIFFERENCE IN
PERCENT OF
PERCENT OF PORTFOLIO
FROM
TYPE OF SECURITY
AMOUNT PORTFOLIO
PRIOR MONTH
Government
Bills
$ 2,266,116 3.87
+0.68
Bonds
0 0.00
0.00
Notes
299,765 0.61
-1.07
Strips
0 0.00
0.00
Total Government
$ 2,555,881 4.38
-0.39
Federal Agency Coupons
$ 9,342,383
16.00
-0.69
Certificates of Deposit
11,835,066
20.27
-0.36
Bank Notes
1,250,039
2.14
-0.23
Bankers' Acceptances
0
0.00
0.00
Repurchases
0
0.00
0.00
Federal Agency Discount Notes
7,563,500
12.94
+0.20
Time Deposits
8,063,495
13.81
-0.35
GNMAs
232
0.00
0.00
Commercial Paper
8,872,727
15.20
+3.51
FHLMC/Remics
633,818
1.09
-0.04
Corporate Bonds
567,024
0.96
-0.33
AB 55 Loans
8,109,326
13.89
-0.74
GF Loans
0
0.00
0.00
Reversed Repurchases
-395,600
-0.68
-0.68
Total (All Types)
$ 58,377,890
100.00
INVESTMENT ACTIVITY
SEPTEMBER 2006
AUGUST 2006
NUMBER
AMOUNT
NUMBER
AMOUNT
Pooled Money
507
$ 24,108,292
508
$ 24,426,165
Other
14
94,603
5
5,244
Time Deposits
162
2,735,500
186
4,331,000
Totals
683
$ 26,938,295
699
$ 28,762,409
PMIA Monthly Average Effective Yield
5.023
4.946
Year to Date Yield Last Day of Month
4.937
4.897
2
Pooled Money Investment Account
Portfolio Composition
$58.4 Billion
Corporate Bc
0.96%
Commercial Paper
15.20%
Time Dc
13.8
09/30/06
Reverses Treasuries
0
Loans 0. 4.38% Mortgages
CDs/BNs
22.41 %
kgencies
28.94%
BOARD MEMBER ITEMS
Mayer Hoffman McCann P.C.
An Independent CPA Firm
Conrad Government Services Division
2301 Dupont Drive, Suite 200
Irvine, California 92612
949-474-2020 ph
949-263-5520 fx
www.mhm-pc.com
The Honorable Mayor and Members of City Council
City of La Quinta
78-495 Calle Tampico
La Quinta, California 92253
In planning and performing our audit of the City of La Quinta, California, for the year ended
June 30, 2006, we considered its internal control structure in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial statements and not to
provide assurances on the internal control structure.
Our consideration of the internal control structure policies and procedures would not necessarily
disclose all matters in the internal control structure that might constitute material weaknesses
under standards established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more of the internal
control structure elements does not reduce to a relatively low level the risk that errors or
irregularities that would be material to the financial statements may occur and not be detected
within a timely period by employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control structure and its operation that we consider to
be material weaknesses.
However, we noted certain matters involving the internal control structure and its operation
where improvements could be made. We offer the following recommendations for consideration
by the City to strengthen its internal control structure and to ensure compliance with government
regulations.
j 11 Compliance with Investment Policy
The investment policy, effective for the fiscal year ended June 30, 2006, limited
investments in each issuer of federal agency securities to $10 million. The Treasurer's
Report for the month ended June 30, 2006 detailed $17.5 million invested in Federal
Home Loan Bank agency securities. The noncompliance had been identified by
management and was disclosed on the Treasurer's Report that was provided to City
Council
Recommendation:
We recommend that the City evaluate the impact on compliance with their investment
policy prior to purchasing new investments.
Honorable Mayor and City Council
City of La Quinta
Page Two
(2) Deposits Payable
Developers must deposit funds with the City during the construction phase of their
projects for any improvements, repairs or changes that may need to be made to City
owned property. These deposits are drawn upon when expenditures are incurred by the
City. At times the deposits are diminished or insufficient to cover the expenditures and
the City has not approached the developer for additional funding as required.
Recommendation:
We recommend that the City maintain adequate developer deposits to pay for
improvements, repairs or changes that may result from the developer's project. When
deposit balances are low, City personnel should notify the developer of the need for
additional funding.
This letter is intended solely for the use of the City of La Quinta and pass -through entities and is
not intended to be and should not be used by anyone other than these specified parties.
Irvine., California
August 18, 2006
08 06 O2:21p Donald J. Moulin
1-760-564-1081 p.l
FOr, )2) I3/:7
Fannie reported net-indome of $4.97 17 ��
908 nuon for 2004, down from a restated I Fannie Mae Moves
B.OS billion in 2003.
Trying to cheer up
shareholders, Fan-
tle increased its quarterly dividend to 40 Toward Resolution
ents a common share from 26 cents-
The company's losses on derivatives
Ind morigage-P»hase commitments
Nereiess severe thanearlierexpoded•Fan- With Restatement
rile previously estimated that correcting un-
proper accounting would result In the M=_
nfhon of $10.8 billion of such tosses as of
the end of 2004, But the company said the
losses turned out to be V9 billion. The
value of such derivatives and comnnttments
fluctuates as interest rates rise and fall.
Fannie accounting woes were made
worse by what the company now admits
was inadequate investment in the Past in
nel to en -
computer systems and per
sure compliance with complex and ever -
changing accounting standards -
TO rectify those problems, Fannie has
spent more than $1.5 billion over the past
two years on consultants, comper re-
statement grades and other items related the and demands made by regula-
tors. The company currently is paying 2.600
outside accountants, lawyers and other con-
sultants to resolve these problems.
Fannie also agreed last May to Pay
flues of MW minion to settle charges of
accounting fraud bythe Securitiestine tian f
Exchange Commission
Oversight, or
Federal Housing Enterprise
ofheo. Fannie and some former top execa-
tives still are fighting lawsuits filed by
the comp nY'S past earning, statementwere misled s
the company' P
In all, the company's costs for clean-
ing up the accounting mess are likely to
total well over $2 billion -
The company's share price also has
taken a big bit. Ahead of the disclosure
yesterday, Fannie shares dosed at $58.50,
up 57 cents, in New York red withExchange
composite trading, comps a Peal'
of about $80 in February 2004, breg-
ulators found the accounting problems.
By JAMES R HAGertTr
Famde Mae took another step toward
resolving its accounting fiasco by an-
nouncing a restatement of results that
reduced retained earnings as of June 30,
2004, by $6.3 billion.
But the long-awaited restatement by
the government -sponsored increased stockholders' equity
y
by $4.1 billion as of the same date. That
Is because of big increases in the value of
mortgage securities held by Fannie that
were reclassified as being available for
sale as part of correcting past accounting
errors. Those
more UM ofset
he reduction ireined earnings.
A public Challenge
s A complaint by a Fannie Mae ex-
marmger highlights hurdles We mort-
gage -finance company faces In reor-
dering its house. Article on page CL
The restatement comes two years af-
ter regulators found that Fannie had vio-
tated more than a dozen accounting
rules, partly in an effort to make earn-
ings growth appear smoother and to trig-
ger maximum bonuses for executives.
The need to correct its accounting
practices and upgrade computer systems
had prevented Fannie from reporting re-
sults since mid-2004. The restatement pro-
vides results through 2004, but the com-
pany still must catch up on results for
20pr and 2W6. Fannie didn't say when it
will report those results.