2007 01 10 IABAGENDA
INVESTMENT ADVISORY BOARD
Study Session Room
78-495 Calle Tampico- La Quinta, CA 92253
January 10, 2007 - 5:30 P.M.
CALL TO ORDER
a. Pledge of Allegiance
b. Roll Call
11 PUBLIC COMMENT- (This is the time set aside for public comment on any matter not scheduled on the agenda.)
III CONFIRMATION OF AGENDA
IV CONSENT CALENDAR
A. Approval of Minutes of Meeting on December 13, 2006 for the
Investment Advisory Board.
V BUSINESS SESSION
A. Transmittal of Treasury Report for November 2006
B. Continued Consideration of the Fiscal Year 2006/07 Work Plan - Review
of Investment Policy
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report and other selected Financial Data -
December 2006
B. Pooled Money Investment Board Reports - October 2006
VII BOARD MEMBER ITEMS
Vill ADJOURNMENT
P.O. Box 1504 • LA QUINFA, CALIFORNIA 92247-1504
78-495 CALI.E TAMPICO • LA QUINTA, CALIFORNIA 92253
(760) 777-7000 -FAX (760)777-7101
INVESTMENT ADVISORY BOARD Business Session: A
Meeting Date: January 10, 2007
ITEM TITLE:
Transmittal of Treasury Report
for November 30, 2006
BACKGROUND:
Attached please find the Treasury Report November 30, 2006
RECOMMENDATION:
Review, Receive and File the Treasury Report for November 30, 2006
g' f�dX4�-�
John M. Falconer, Finance Director
EMDF,�¢w MEMORANDUM
TO:
La Quinta City Council
FROM:
John M. Falconer, Finance Directorrrreasurer
SUBJECT:
Treasurer's Report for November 30, 2006
DATE:
December 31, 2006
Attached is the Treasurer's Report for the month ending November 30, 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
Sold/Matured
Other
Ending
Change
Cash (3)
$ (582,525)
$ 991,716
(1)
$409,191
$991,71E
LAIF
21,530,025
17,700,000
(2,100,000)
0
37,130,025
15,600,00(
US Treasuries (2)
131,875,012
19,000,000
(35,000,000)
(39,806)
115,835,206
(16,039,80E
US Gov't Sponsored Enterprises (2)
29,847,577
51,020
29.898,597
51,02(
Commercial Paper (2)
16,919,258
5,000,000
(6,000,000)
26,841
15,946,099
(973,15E
Corporate Notes
2,914,230
3,599
2,917,829
3,59E
Mutual Funds
4,439,121
1
2,143,403
2,295,718
2,143,40:
Total
$ 206,942,698
$ 42,691,716
$ 45,243,403
$ 41,654
$ 204,432,665
$ 2,510,032
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 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 November 30, 2006, the market value of the investment
was $7,628,281 and the amortized cost plus accrued interest was $7,632,691 for an unrealized loss of $4,410.
Management intends to hold the investment to maturity.
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.
4'r 1 Zf ZA/ZoD�,
John M. Falconer Date
Finance Directorrrreasurer
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. This negative balance will be offset with transfers from other investments
before warrants are presented for payment by the payee at the bank.
Treasurer's Commentary
For the Month of November
Cash Balances — The portfolio size decreased by $2.5 million. The major reason for this
decrease was expenditures for capital projects, which is reflected in a $2.1 million decrease in
mutual funds in November.
Investment Activity — The Treasurer has been increasing the LAIF holdings in November to
take advantage of a 20 basis point advantage over US Treasuries. At month end, the sweep
had a $2,272,785 balance and yielded 4.68% which primarily consisted of outstanding
warrants. While this rate is lower than the LAIF rate of 5.13% for next day funds, the sweep
account allows the City to take advantage of earning interest on warrants that have been
released but have not been cleared by our bank. The sweep was instituted based upon the
raising interest rates and earned $ 6,462 in cash for the month. The bank fees for the month
were $ 1,858 which resulted in a net increase of $ 4,604 in real savings.
Portfolio Performance — The overall portfolio performance increased by two (2) basis points
and ended at 5.03% for the month. At the end of November, the portfolio yield was nine (9)
basis points over the benchmark which decreased by two (2) basis point from the previous
month to end at 4.94%. With the short average maturity of 62 days, the portfolio yield
should remain at these levels. The Treasurer will continue to invest in short term investments
based upon the yield curve. At this time last year, the portfolio was yielding 3.55% and the
benchmark was at 3.75% for a 41 point difference so we have made progress in meeting our
benchmark. The Treasurer has been investing more in LAIF and has not been investing in
longer than six months Treasury securities or in will be investing in longer than six months
GSE's based upon the yield curve to take advantage of yield spreads.
Future Thoughts
The Treasurer will continue to invest in short term maturities to take advantage of the
inverted yield curve — Commercial Paper with 45 to 60 day maturities and Bond proceeds will
continue to be reinvested in six month Treasury bills as they mature. GSE's will be rolled
over for no longer than six month maturities.
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INVESTMENT ADVISORY BOARD Business Session: B
Meeting Date: January 10, 1007
ITEM TITLE:
Continued Consideration of the Fiscal Year 2006107 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 along with a
strikeout version of the current policy.
In addition, Staff has included information on ISHARES from Barclays and ETF's
from Vanguard. Staff researched the list of Vanguard ETF Funds and did not find a
U.S. Treasury ETF Fund but did find a comparison of ETF Funds to Traditional
Mutual Funds.
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 M. Falconer, Finance Director
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CITY OF LA QUINTA
Investment Policy
Table of Contents
tion To is
Page
Executive Summary
2
General Purpose
4
Investment Policy
4
Scope
4
Objectives
4
► Safety
► Liquidity
► Yield
► Diversified Portfolio
Maximum Maturities
6
Prudence
6
Delegation of Authority
6
Conflict of Interest
7
Authorized Financial Dealers and Institutions
7
No. Broker/Dealers
No. Financial Institutions
Authorized Investments and Limitations
8
Investment Pools
13
Payment and Custody
13
Interest Earning Distribution Policy
14
Internal Controls and Independent Auditors
14
Benchmark
16
Reporting Standards
17
1 Financial Assets and Investment Activity Not Subject to this Policy
17
II Investment of Bond Proceeds
17
Professional Portfolio Manager
18
Investment Advisory Board - City of La Quinta
18
Investment Policy Adoption
18
endices: A. Summary of Authorized Investments and Limitations
19
B. Municipal Code Ordinance 2.70 - Investment Advisory Board
20
C. Municipal Code Ordinance 3.08 - Investment of Moneys and Funds
21
D. Segregation of Major Investment Responsibilities
23
E. Listing of Approved Financial Institutions
24
F. Broker/Dealer Questionnaire and Certification
25
G. Investment Pool Questionnaire
30
H. Request for Proposal for Portfolio Manager
44
I. Permissible Investment Chart
40
J. Glossary
41
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.
l;
The City Treasurer may use a professional investment manager engaged by the City
to assist the City Treasurer in managing the investment program.
Investment responsibilities carry added duties of insuring that investments are made
without improper influence or the appearance to a reasonable person of questionable or
improper influence.
The City of La Quinta Investment Policy maintains a listing of financial institutions
which are approved for investment purposes. All Broker/Dealers and financial
institutions selected by the Treasurer to provide investment services will be approved
by the City Manager subject to City Council approval.
The Treasurer will be permitted to invest only in City approved investments up to the
maximum allowable percentages or dollar limitations and, where applicable, through
the bid process requirements. Authorized investment vehicles and related maximum
portfolio positions are listed in Appendix A - Summary of Authorized Investments and
Limitations. At least two bids will be required of investments in the authorized
investment vehicles.
Collateralization will be required for Certificates of Deposits in excess of $100,000.
Collateral will always be held by an independent third party from the institution that
sells the Certificates of Deposit to the City. Evidence of compliance with State
Collateralization policies must be supplied to the City and retained by the City
Treasurer.
The City of La Quinta Investment Policy shall require that each individual investment
have a maximum maturity of tiros Jim
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 3 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.
CK
City of La Quinta
Statement of Investment Policy
July 1, 2005 through June 21, 2006
Adopted by the City Council on June 21, 2005
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:
► General
► Special Revenue
► Capital Projects
► Debt Service
► Enterprise
► Internal Service
► Trust and Agency
► Any new fund types and fund(s) that may be created.
IV OBJECTIVES
The primary objective, in order of priority, of the City of La Quinta's investment activity shall
be:
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
0
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.
r_�9=111VMNI
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;
No. Liquidity needs of the portfolio require that the security be sold.
3. Yield
The investment portfolio shall be designed with the objective of attaining a
market rate of return throughout budgetary and economic cycles, taking into
account the investment risk constraints and liquidity needs. Return on
investment is of least importance compared to the safety and liquidity objectives
described above. The core of investments are limited to relatively low risk
securities in anticipation of earning a fair return relative to the risk being
assumed
5
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 2005/06, the amount of such funds was $8
million. Funds up to that amount may be invested in U.S. Treasury bills, notes and
bonds maturing between -2'0 and 5 years. For all other funds, investments are
limited to twe, �hregi years maximum maturity.
VI
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
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
0
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.
VIII 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;
► Proof of National Association of Security Dealers Certification;
► Trading resolution;
► Proof of California registration;
► 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.
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.
7
The City Treasurer will also contact the following agencies during the
verification process:
IN. National Association of Security Dealer's Public Disclosure Report File - 1-
800-289-9999
No. State of California Department of Corporations 1-916-445-3062
All Broker/Dealers selected by the City Treasurer to provide investment services
will be approved by the City Manager subject to City Council approval. The City
Attorney will perform a legal review of the trading resolution/investment
contract submitted by each Broker/Dealer.
Each securities dealer shall provide monthly and quarterly reports filed pursuant to U.S.
Treasury Department regulations. Each mutual fund shall provide a prospectus and
statement of additional information.
2. Financial Institutions will be required to meet the following criteria in order to
receive City funds for deposit or investment:
A. Insurance - Public Funds shall be deposited only in financial
institutions having accounts insured by the Federal Deposit
Insurance Corporation (FDIC)
B. Collateral - The amount of City of La Quinta deposits or
investments not insured by the FDIC -shall be 1 10% collateralized
by securities' or 150% mortgages' market values of that amount
of invested funds plus unpaid interest earnings.
C. Disclosure - Each financial institution maintaining invested funds in
excess of the FDIC insured amount shall furnish the City a copy of
the most recent Annual Call Report.
The City shall not invest in excess of the FDIC insured amount in
banking institutions which do not disclose to the city a current
listing of securities pledged for collateralization in public monies.
X AUTHORIZED INVESTMENTS AND LIMITATIONS
The City Treasurer will be permitted to invest in the investments summarized in the
Appendix A.
K. 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
n
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 tyears, except the
projected annual dollar amount, as detailed in Section V, may be invested in
U.S. Treasury bills, notes and bonds maturing between 2 and 5 years.
State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in
Government Code Section 16429.1 and by LAIF procedures, local government
agencies are each authorized to invest a maximum of $40 million per account in
this investment 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 (a) through (n) as they pertain to surplus funds, this category
includes a wide variety of government securities which include the following:
• Local government bonds or other indebtedness and State bonds or other
indebtedness. The City of La Quinta Investment Policy does not allow
investments in local and state indebtedness
• U.S. Treasury bills, notes and bonds and Government National Mortgage
Association (GNMA) securities directly issued and backed by the full faith
and credit of the U.S. Government. The City of La Quinta Investment
Policy limits investments in U.S. Treasury issues and GNMA to 100% of
the portfolio.
• U.S. Government instrumentalities and agencies 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 f940 e h issuer a thoo
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0% tsf the por#faRO f vested- i€ - - • �" y 'y oz
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
E7
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 39 _ % 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 issueC fft ' � y allowx up to
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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 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
10
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.
► Eligible notes shall be rated "AA" or "AAA" on the date of acquisition.
No. Total investment shall not exceed 45 % of the portfolio, and
No. The maximum aggregate investment shall not exceed $0. 3 million face
amount for each issuljer.
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
collateralized from 1 10% to 150% depending on the specific security pledged
11
as collateral in accordance with Government Code Section 53652. There are
no portfolio limits on the amount or maturity for this investment vehicle.
Collateral ization will be required for Certificates of Deposits in excess of the
FDIC insured amount. The type of collateral is limited to City authorized
investments. Collateral will always be held by an independent third party from
the institution that sells the Certificates of Deposit to the City. Evidence of
compliance with State Collateral ization policies must be supplied to the City and
retained by the City Treasurer as follows:
Certificates of Deposits Insured by the FDIC.
The City Treasurer may waive collateralization of a deposit that is
federally insured.
2. Certificates of Deposit in excess of FDIC Limits.
The amount not federally insured shall be 1 10% collateralized securities
or 150% mortgages market value of that amount of invested funds plus
unpaid interest earnings.
The City of La Quinta Investment Policy limits the percentage of Certificates of
Deposit to 60% of the portfolio.
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s pownlair_sectisr .oaft for ft fuff _ ..:
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.
XII PAYMENT AND CUSTODY
The City shall engage qualified third party custodians to act in a fiduciary capacity to
13
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;
No. The accuracy and completeness of accounting records; and
No. Timely preparation of reliable financial information.
While no internal control system, however elaborate, can guarantee absolute assurance
that the City's assets are safeguarded, it is the intent of the City's internal control to
provide a reasonable assurance that management of the investment function meets the
City's objectives.
Ml
The internal controls shall address the following:
a. Control of collusion. Collusion is a situation where two or more employees are
working in conjunction to defraud their employer.
b. Separation of transaction authority from accounting and record keeping. By
separating the person who authorizes or performs the transaction from the
people who record or otherwise account for the transaction, a separation of
duties is achieved.
C. Custodial safekeeping. Securities purchased from any bank or dealer including
appropriate collateral (as defined by State Law) shall be placed with an
independent third party for custodial safekeeping.
d. Avoidance of physical delivery securities. Book entry securities are much easier
to transfer and account for since actual delivery of a document never takes
place. Delivered securities must be properly safeguarded against loss or
destruction. The potential for fraud and loss increases with physically delivered
securities.
e. Clear delegation of authority to subordinate staff members. Subordinate staff
members must have a clear understanding of their authority and responsibilities
to avoid improper actions. Clear delegation of authority also preserves the
internal control structure that is contingent on the various staff positions and
their respective responsibilities as outlined in the Segregation of Major
Investment Responsibilities appendices.
f. Written confirmation or telephone transactions for investments and wire
transfers. Due to the potential for error and improprieties arising from telephone
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
liN
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' and June 3o`" 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:
IN. A certification by City Treasurer.
► A listing of Purchases and sales/maturities of investments.
No. Cash and Investments categorized by authorized investments, except for
LAIF which will be provided quarterly and show yield and maturity.
► Comparison of month end actual holdings to Investment Policy
limitations.
01 Current year and prior year monthly history of cash and investments for
trend analysis.
► Balance Sheet.
► Distribution of cash and investment balances by fund.
P. A comparison of actual and surplus funds.
No. A year to date historical cash flow analysis and projection for the next six
months.
► A two-year list of historical interest rates.
ill
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.
XVIII INVESTMENT OF BOND PROCEEDS
The City's Investment Policy shall govern bond proceeds and bond reserve fund
investments. California Code Section 5922 (d) governs the investment of bond
proceeds and reserve funds in accordance with bond indenture provisions which shall
be structured in accordance with the City's Investment Policy.
Arbitrage Requirement
The US Tax Reform Act of 1986 requires the City to perform arbitrage calculations as
required and return excess earnings to the US Treasury from investments of proceeds
of bond issues sold after the effective date of this law. This arbitrage calculations may
be contracted with an outside source to provide the necessary technical assistance to
comply with this regulation. Investable funds subject to the 1986 Tax Reform Act will
be kept segregated from other funds and records will be kept in a fashion to facilitate
the calculations. The City's investment position relative to the new arbitrage
restrictions is to continue pursuing the maximum yield on applicable investments while
ensuring the safety of capital and liquidity. It is the City's position to continue
maximization of yield and to rebate excess earnings, if necessary.
XIX PROFESSIONAL PORTFOLIO M AG R
With the Approval of the City Council, the City may ep�cfage a professional investment
portfolio manager(s to assist the City Treasurer administer the delegated authority to
manage and invest the City's Funds. The investment portfolio managers will be
approved by City Council based upon a request for proposal process as outlined in
Appendix H. Before engage t b the City, except as may be specifically waived or
revised, the professional ages advisor shall commit to adhere to the provisions
of the City of La Quinta Investment Policy. Such managers may be granted the
discretion to purchase and sell investment securities in accordance with this
Investment Policy as outlined in Appendix I. Such managers shall have: (1) an
17
established professional reputation for asset or investment management; (2)
knowledge and working familiarity with State and Federal laws governing and
restricting the investment of public funds; (3) substantial experience providing
investment management services to local public agencies whose investment policies
and portfolio size are similar to those of the City; and (4) professional liability (errors
and omissions) insurance and fidelity bonding in such amounts as are required by the
City. Such managers shall be registered under the Investment Advisers Act of 1940.
XX 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
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.
XXI 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.
09
Appendix A
WILL BE UPDATED ACCORDINGLY
19
Appendix B
Chapter 2.70
INVESTMENT ADVISORY BOARD PROVISIONS
tions:
2.70.010 General Rules Regarding Appointment.
2.70.020 Board meetings.
2.70.030 Board functions.
2.70.010 General rules regarding appointment
k. Except as set out below, see Chapter 2.06 for General Provisions.
3. The Investment Advisory Board (the"board") is a standing board composed of five (5)
nbers from the public that are appointed by city council. La Quinta residency is required
apt for Board Members currently serving on the Board as of June 30, 2003.
1. Background in the investment field and/or related experience is preferred. Background
rmation will be required and potential candidates must agree to a background check and
fication.
D. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or <
time if a change in circumstances warrants, each board member will provide the City
incil with a disclosure statement which identifies any matters that have a bearing on the
ropriateness of that member's service on the board. Such matters may include, but are no
ted 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
stings upon the concurrence of the Board and the City Council. The specific meeting dates
be determined by the Board Members and meetings may be called for on an as needed ba,,
2.70.030 Board functions.
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 anticipat
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, inter
controls, and findings for cash and investment activities, and; (5) serve as a resource for tt
City Treasurer on matters such as proposed investments, internal controls, use or change c
financial institutions, custodians, brokers and dealers.
The Board will report to the City Council after each meeting either in person or through
correspondence at a regular City Council meeting.
KE
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)
21
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)
22
Appendix D
SEGREGATION OF MAJOR INVESTMENT RESPONSIBILITIES
Function Responsibilities
Develop formal Investment Policy City Treasurer
Recommend modifications to Investment Policy Investment Advisory Board
Review formal Investment Policy and recommend City Manager and
City Council action City Attorney
Adopt formal Investment Policy City Council
Review Financial Institutions & Select Investments City Treasurer
Approve investments City Manager or
Assistant City Manager
Execute investment transactions City Manager or Treasurer
Confirm wires, if applicable Accounting Manager or
Financial Services Assistant
Record investment transactions in City's Accounting Manager or
accounting records Financial Services Assistant
Investment verification - match broker confirmation City Treasurer and Financial
to City investment records Services Assistant
Reconcile investment records
- to accounting records and bank statements Financial Services Assistant
Reconcile investment records
- to Treasurers Report
of investments Accounting Manager
Security of investments at City Vault
Security of investments Outside City Third Party Custodian
Review internal control procedures External Auditor
23
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, CA
CitiGroup, San Francisco, 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
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
`zI
Appendix F
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
1. Name of Firm:
2. Address:
3. Telephone: O ( 1
4. Broker's Representative to the City (attach resume):
Name:
Title:
Telephone: O
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
% BA's
% Commercial Paper
% CD's
% Mutual Funds
% Agencies (specify):
25
• Repos
• Reverse Repos
% CMO's
% Derivatives
• Stocks/Equities
• Other (specify):
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
12.
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.
Has a client ever claimed in writing that you were responsible for an
investment loss? Yes No If yes, please provide
action taken
Has a client ever claimed in writing that your firm was responsible for an
investment loss? Yes No If yes, please provide
action taken
26
Do You have any current or pending complaints that are unreported to the
NASD?
Yes No If yes, please provide action taken
Does your firm have any current, or pending complaints that are unreported
to the NASD? Yes No If yes, please provide action
taken
13. Explain your clearing and safekeeping procedures, custody and delivery process.
Who audits these fiduciary responsibilities?
Latest Audit Report Date.
14. How many and what percentage of your transactions failed.
Last month? % $
Last year? % $
15. Describe the method your firm would use to establish capital trading limits for the
City of La Quinta.
16. Is your firm a member in the S.I.P.C. insurance program. Yes No
If yes, explain primary and excess coverage and carriers.
17. What portfolio information, if any, do you require from your clients?
27
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:
X Latest audited financial statements.
X Samples of reports, transaction confirmations and any other
research/publications the City will receive.
X Samples of research reports and/or publications that your firm regularly
provides to clients.
X Complete schedule of fees and charges for various transactions.
'CERTIFICATION'
I hereby certify that I have personally read the Statement of Investment Policy of the City
of La Quinta, and have implemented reasonable procedures and a system of controls
designed to preclude imprudent investment activities arising out of transactions
conducted between our firm and the City of La Quinta. All sales personnel will be
routinely informed of the City's investment objectives, horizons, outlooks, strategies and
risk constraints whenever we are so advised by the City. We pledge to exercise due
diligence in informing the City of La Quinta of all foreseeable risks associated with
financial transactions conducted with our firm.
By signing this document the City of La Quinta is authorized to conduct any and all
background checks.
Under penalties of perjury, the responses to this questionnaire are true and accurate to
the best of my knowledge.
Broker Representative
Date Title
Sales Manager and/or Managing Partner*
Date Title
29
Appendix G
INVESTMENT POOL QUESTIONNAIRE
Note: This Investment Pool Questionnaire was developed by the Government Finance
Officers Association (GFOA).
Prior to entering a pool, the following questions and issues should be considered.
SECURITIES
Government pools may invest in a broader range of securities than your entity invests in.
It is important that you are aware of, and are comfortable with, the securities the pool
buys.
1. Does the pool provide a written statement of Investment Policy and objectives?
2. Does the statement contain:
a. A description of eligible investment instruments?
b. The credit standards for investments?
c. The allowable maturity range of investments?
d. The maximum allowable dollar weighted average portfolio maturity?
e. The limits of portfolio concentration permitted for each type of security?
f. The policy on reverse repurchase agreements, options, short sales and futures?
3. Are changes in the policies communicated to the pool participants?
4. Does the pool contain only the types of securities that are permitted by your
Investment Policy?
INTEREST
Interest is not reported in a standard format, so it is important that you know how
interest is quoted, calculated and distributed so that you can make comparisons with
other investment alternatives.
Interest Calculations
1. Does the pool disclose the following about yield calculations:
a. The methodology used to calculate interest? (Simple maturity, yield to maturity,
et(,.)
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?
[Cie]
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)?
31
OPERATIONS
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?
STATEMENTS
It is important for you and the agency's trustee (when applicable), to receive statements
monthly so the pool's records of your activity and holding are reconciled by you and your
trustee.
32
1. Are statements for each account sent to participants?
a. What are the fees?
b. How often are they passed?
c. How are they paid?
d. Are there additional fees for wiring funds (what is the fee)?
2. Are expenses deducted before quoting the yield?
QUESTIONS TO CONSIDER FOR BOND PROCEEDS
It is important to know (1) whether the pool accepts bond proceeds and (2) whether the
pool qualifies with the U.S. Department of the Treasury as an acceptable commingled
fund for arbitrage purposes.
1. Does the pool accept bond proceeds subject to arbitrage rebate?
2. Does the pool provide accounting and investment records suitable for proceeds of
bond issuance subject to arbitrage rebate?
3. Will the yield calculation reported by the pool be acceptable to the IRS or will it have
to be recalculated?
4. Will the pool accept transaction instructions from a trustee?
5. Are you allowed to have separate accounts for each bond issue so that you do not
commingle the interest earnings of funds subject to rebate with funds not subject to
regulations?
33
Appendix H
Request for Proposals
Investment Advisory Services
City of La Quinta, CA
The City of La Quinta, CA is soliciting Requests for Proposals (RFP) from interested firms
for the provision of a discretionary investment management services for City of La
Quinta, CA. The portfolio to be managed of the invested assets is estimated to be $10
million and will be invested between 0 - 5 years.
The investment of City of La Quinta, CA's funds is guided by the applicable State
statutes and the City of La Quinta, CA's investment policy. A copy of the investment
policy is attached for your information.
Questions regarding this RFP should be directed to:
Name:
John M. Falconer
Title:
Finance Director/Treasurer
City of:
La Quinta, CA
Address:
78-495 Calle Tampico
City, State
Zip Code: La Quinta, CA 92253
Phone Number:
(760)777-7150
I. CRITERIA FOR EVALUATION AND SELECTION
n Experience of the firm in providing services to public sector entities of
similar size and with similar investment objectives
■ Professional experience and qualifications of the individuals assigned to the
account
■ Portfolio management resources, investment philosophy and approach
m Responsiveness to the RFP, communicating an understanding of the overall
program and services required
m Reporting capabilities
m Fees
II. SELECTION TIMETABLE
A. [Month Day, Year] Proposals due by [Time] PST.
B. [Month Day, Year] Proposals evaluated: to be determined
C. [Month Day, Year] [City of La Quinta, CA] [Board/Council] approves
selection and awards contract.
34
III. FORMAT FOR PROPOSALS
Please format your response to this RFP in the following manner:
A. Organization
1. Describe your organization, date founded, ownership and other business
affiliations. Provide number and location of affiliated offices. Specify the
number of years your organization has provided investment management
service.
2. Describe your firm's revenue sources (e.g., investment management,
institutional research, etc.) and comment on your firm's financial condition.
3. Within the past three years, have there been any significant developments
in your organization (e.g., changes in ownership, new business ventures)?
Do you expect any changes in the near future?
4. Describe any U.S. Securities and Exchange Commission (SEC) censures or
litigation involving your organization, any officer, or employee at anytime in
the last ten years.
5. Describe the firm's fiduciary liability and/or errors and omissions insurance
coverage. Include dollar amount of coverage.
B. Personnel
1. Identify the number of professionals employed by your firm by
classification.
2. Provide an organization chart showing function, positions, and titles of all
the professionals in your organization.
3. Provide biographical information on investment professionals that will be
involved in the decision -making process for our portfolio, including number
of years at your firm. Identify the person who will be the primary portfolio
manager assigned to the account.
4. Describe your firm's compensation policies for investment professionals and
address any incentive compensation programs.
C. Assets Under Management
1. Summarize your institutional investment management asset totals by category
35
for your latest reporting period in the following table:
Number Operating Funds Number of Other Restrictive
of Clients Clients Funds
Govemrnental $ $
Governmental
Pension
Non Governmental
Pension
Corporate
High Net Worth Client
Endowrnental/Founda
tion
F4
„
2. Provide the number of separate accounts whose portfolios consist of
operating funds.
3. List in the following table the percentage by market value of aggregate
assets under all governmental accounts under management for your
latest reporting period:
Type of Asset
U.S. Treasury securities
Federal Agency obligations
Corporate securities rated AAA -AA
Corporate securities rated A
Corporate securities rated BBB or lower
Other
(specify )
Percent by Market
Value
4. Describe the procedures that your firm has in place to address the
potential or actual credit downgrade of an issuer and to disclose and
advise a client of the situation.
36
5. Provide data on account/asset growth over the past five years. Indicate the
number of government accounts gained and the number of government
accounts lost.
6. List your five governmental largest clients. Identify those that are
exclusively operating fund relationships and/or those that are other
relationships (e.g., bond fund, retirement fund).
7. Provide a copy of the firm's Form ADV, Parts I and II (including all
schedules).
8. Provide proof of State of California Registration, if your firm is not eligible
for SEC registration.
9. Provide a sample contract for services.
D. Philosophy/Approach
1, Describe your firm's investment philosophy for public clients, including your
firm's philosophy regarding average duration, maturity, investment types,
credit quality, and yield.
2. Describe in detail your investment process, as you would apply it to City of
La Quinta, CA's portfolio.
3. What are the primary strategies for adding value to portfolios?
4. Describe the process you would recommend for establishing the investment
objectives and constraints for this account.
5. Describe in detail your process of credit risk management, including how
you analyze credit quality, monitor credits on an ongoing basis, and report
credit to governmental accounts.
6. Describe your firm's trading methodology.
7. Describe your firm's decision -making process in terms of structure,
committees, membership, meeting frequency, responsibilities, integration of
research ideas, and portfolio management.
8. Describe your research capabilities as they would pertain to governmental
accounts. What types of analysis do you use?
9. Describe the firm's approach to managing relationships with the broker-
37
dealer community.
E. Portfolio Management
1. Are portfolios managed by teams or by one individual?
2. What is the average number of accounts handled per manager?
3. Which professional staff member will be the primary client contact for City
of La Quinta, CA?
4. How frequently are you willing to meet with us?
5. Describe procedures used to ensure that portfolios comply with client
investment objectives, policies, and bond resolutions.
F. Fees Charged
1. Please include a copy 'of your firm's fee schedule applicable to this RFP.
2. Identify any expenses that would not be covered through this fee
structure and would be required in order to implement the firm's
program.
3. Is there a minimum annual fee?
G. Performance Reporting
1. Please report on all accounts under $100 million.
2. Please provide performance history for governmental accounts for the
last five years.
3. Please provide risk measurements for governmental accounts for the last
five years.
4. Indicate whether your returns are calculated and compiled in accordance
with the Association for Investment Management and Research
(AIMR/CFA Institute) standards.
5. Do your reports conform to the State of California reporting standards? Are
you willing to customize your reports to meet our specifications?
6. How will you notify us of investment transactions?
7. Are confirmation of investment transactions sent directly by the
broker/dealer to the client?
8. Do your reports include rating information on investments which is
required by GASB 40?
H. References
Provide a list of at least five (5) client references in California. References should
be public agencies with portfolio size and investment objectives similar to City of
La Quinta, CA. Include length of time managing the assets, contact name, and
phone number.
I. Insurance Requirements
Exhibit A defines the insurance requirements that will need to be met prior to the
[Board/Councill's approval of any agreement for services.
J. Submittal of proposals
1. Seven (7) copies of the proposal shall be submitted in a sealed envelope
bearing the caption RFP for (City of La Quinta, CA) and addressed to:\
City of La Quinta, CA
78-495 Calle Tampico
La Quinta, CA 92253
Attention: John M. Falconer, Finance Director/Treasurer
2. Proposal must be received no later than [Time] PST on [Month, Day,
Year].
3. Proposals should be verified before submission. The City of La Quinta,
CA shall not be responsible for errors or omissions on the part of the
respondent in preparation of a proposal. The City of La Quinta, CA
reserves the right to reject any and all proposals, to wave any
irregularities, or informalities in the proposals, and to negotiate
modifications to any proposal.
Enclosures: Investment Policy
Treasurers Report
39
Appendix I
m
Appendix I
WILL BE UPDATED ACCORDINGLY
Appendix J
GLOSSARY
(Adopted from the Municipal Treasurers Association)
ie purpose of this glossary is to provide the reader of the City of La Quinta investment
dicies with a better understanding of financial terms used in municipal investing.
iENCIES: Federal agency securities and/or
vernment-sponsored enterprises.
WED: The price at which securities are offered
MKERS' ACCEPTANCE (BA): A draft or bill of
change accepted by a bank or trust company.
e acceptiing institution guarantees payment of
bill, as well as the issuer.
): The price offered by a buyer of securities.
(hen you are selling securities, you ask for a
1.) See Offer.
IOKER: A broker brings buyers and sellers
)ether for a commission.
ATIFICATE OF DEPOSIT (CD): A time deposit
th a specific maturity evidenced by a
rtificate. Large -denomination CD's are typically
gotiable.
)LLATERAL: Securities, evidence of deposit or
her property which a borrower pledges to
cure repayment of a loan. Also refers to
curities pledged by a bank to secure deposits of
blic monies.
)MMERCIAL PAPER: Short-term unsecured
Dmissory notes issued by a corporation to raise
Drking capital. These negotiable instruments
e purchased at a discount to par value or at par
lue with interest bearing. Commercial paper is
sued by corporations such as General Motors
:ceptance Corporation, IBM, Bank America, etc.
)MPREHENSIVE ANNUAL FINANCIAL REPORT
AFR): The official annual report for the City of
i Quinta. It includes five combined statements
r each individual fund and account group
41
prepared in conformity with GAAP. It al;
includes supporting schedules necessary
demonstrate compliance with finance -related leg
and contractual provisions, extensive introducto
material, and a detailed Statistical Section.
CONDUIT FINANCING: A form of Financing
which a government or a government agen(
lends its name to a bond issue, although it
acting only as a conduit between a specific proje
and bond holders. The bond holders can look on
to the revenues from the project being financ(
for repayment and not to the government
agency whose name appears on the bond.
COUPON: (a) The annual rate of interest that
bond's issuer promises to pay the bondholder (
the bond's face value. (b) A certificate attach(
to a bond evidencing interest due on a payme
date.
DEALER: A dealer, as opposed to a broker, acts
a principal in all transactions, buying and sells(
for his own account.
DEBENTURE: A bond secured only by the genes
credit of the issuer.
DELIVERY VERSUS PAYMENT: There are tv
methods of delivery of securities: delivery vers
payment and delivery versus receipt. Delive
versus payment is delivery of securities with
exchange of money for the securities. Delive
versus receipt is delivery of securities with
exchange of a signed receipt for the securities.
DERIVATIVES: (1) Financial instruments who
return profile is linked to, or derived from, t
movement of one or more underlying index
security, and may include a leveraging factor,
(2) financial contracts based upon notior
amounts whose value is derived from
underlying index or security (interest rates, forei
-hange rates, equities or commodities).
3COUNT: The difference between the cost
ce of a security and its maturity when quoted
lower than face value. A security selling
ow original offering price shortly after sale also
;onsidered to be at a discount.
3COUNT SECURITIES: Non -interest bearing
may market instruments that are issued a
count and redeemed at maturity for full face
ue, e.g., U.S. Treasury Bills.
✓ERSIFICATION: Dividing investment funds
long a variety of securities offering
lependent returns.
3. FLBs (Federal Land Bank Bonds) - Long-teri
mortgage credit provided to farmers by Feder
Land Banks. These bonds are issued
irregular times for various maturities rangir
from a few months to ten years. T1
minimum denomination is $1,000. They can
semi-annual coupons. Interest is calculated c
a 360-day, 30 day month basis.
9
DERAL CREDIT AGENCIES: Agencies of the
deral government set up to supply credit to
rious classes of institutions and individuals, 5.
I., S&L's, small business firms, students,
mers, farm cooperatives, and exporters.
FNMAs (Federal National Mortgage
Association) - Used to assist the home
mortgage market by purchasing mortgages
insured by the Federal Housing
ministration and the Farmers Home
ministration, as well as those guaranteed by
a Veterans Administration. They are issued in
rious maturities and in minimum denominations
$10,000. Principal and Interest is paid
mthly.
FHLBs (Federal Home Loan Bank Notes and
Bonds) - Issued by the Federal Home Loan
Bank System to help finance the housing
industry. The notes and bonds provide
liquidity and home mortgage credit to savings
and loan associations, mutual savings banks,
cooperative banks, insurance companies, and
mortgage -lending institutions. They are
issued irregularly for various maturities. The
minimum denomination is $5,000. The notes
are issued with maturities of less than one
year and interest is paid at maturity.
42
FFCBs (Federal Farm Credit Bank) - Del
instruments used to finance the short ar
intermediate term needs of farmers and tF
national agricultural industry. They are issue
monthly with three- and six-month maturitie
The FFCB issues larger issues (one to to
year) on a periodic basis. These issues ai
highly liquid.
FICBs (Federal Intermediate Credit bar
Debentures) - Loans to lending institutior
used to finance the short-term ar
intermediate needs of farmers, such (
seasonal production. They are usually issue
monthly in minimum denominations of $3,OC
with a nine -month maturity. Interest
payable at maturity and is calculated on a 361
day, 30-day month basis.
6. FHLMCs (Federal Home Loan Mortgac
Corporation) - a government sponsored enti
established in 1970 to provide a seconda,
market for conventional home mortgage
Morgages are purchased solely from tF
Federal home Loan Bank System memb
lending institutions whose deposits are insurf
by agencies of the United States Governmen
They are issued for various maturities and
minimum denominations of $10,000. Princip
and Interest is paid monthly. Other feder
agency issues are Small Busine:
Administration notes (SBAs), Governmei
National Mortgage Association not(
(GNMAs), Tennessee Valley Authority note:
(TVAs), and Student Loan Association not(
(SALLIE-MAEs).
DERAL DEPOSITOR INSURANCE
IRPORATION (FDIC): A federal agency that
;ures bank deposits, currently up to $100,000
r deposit..
DERAL FUNDS RATE: The rate of interest at
rich Fed funds are traded. This rate is currently
gged by the Federal Reserve through open-
uket operations.
DERAL HOME LOAN BANKS (FHLB):
ivernment sponsored wholesale banks
urently 12 regional banks) which lend funds
d provide correspondent banking services to
;tuber commercial banks, thrift institutions,
;dit unions and insurance companies. The
ssion of the FHLBs is to liquefy the housing
ated assets of its members who must purchase
)ck in their district Bank.
DERAL OPEN MARKET COMMITTEE (FOMC):
insists of seven members of the Federal
:serve Board and five of the twelve Federal
!serve Bank Presidents. The President of the
:w York Federal Reserve Bank is a permanent
-tuber, while the other Presidents serve on a
Gating basis. The Committee periodically meets
set Federal Reserve guidelines regarding
rchases and sales of Government Securities in
e open market as a means of influencing the
lume of bank credit and money.
!DERAL RESERVE SYSTEM: The central bank of
e United States created by Congress and
,nsisting of a seven member Board of Governors
Washington, D.C., 12 regional banks and about
700 commercial banks that are members of the
stem.
3VERNMENT NATIONAL MORTGAGE
SSOCIATION (GNMA or Ginnie Mae): Securities
fluencing the volume of bank credit guaranteed
r GNMA and issued by mortgage bankers,
immercial banks, savings and loan associations,
id other institutions. Security holder is
otected by full faith and credit of the U.S.
43
Government. Ginnie Mae securities are backed t
the FHA, VA or FMHM mortgages. The teri
"passthrough" is often used to describe Ginn
Maes.
LAIF (Local Agency Investment Fund) - A speci
fund in the State Treasury which local agencir
may use to deposit funds for investment. There
no minimum investment period and the minimu
transaction is $5,000, in multiples of $1,OC
above that, with a maximum balance
$30,000,000 for any agency. The City
restricted to a maximum of ten transactions p
month. It offers high liquidity because deposi
can be converted to cash in 24 hours and r
interest is lost. All interest is distributed to tho:
agencies participating on a proportionate sha
basis determined by the amounts deposited ar
the length of time they are deposited. Interest
paid quarterly. The State retains an amount f
reasonable costs of making the investments, n
to exceed one -quarter of one percent of tl
earnings.
LIQUIDITY: A liquid asset is one that can I
converted easily and rapidly into cash without
substantial loss of value. In the money market,
security is said to be liquid if the spread betwei
bid and asked prices is narrow and reasonable si
can be done at those quotes.
LOCAL GOVERNMENT INVESTMENT POOL (LGII
The aggregate of all funds from politic
subdivisions that are placed in the custody of tl
State Treasurer for investment and reinvestmei
MARKET VALUE: The price at which a security
trading and could presumably be purchased
sold.
MASTER REPURCHASE AGREEMENT: A writt
contract covering all future transactions betwe
the parties to repurchase --reverse repurcha
agreements that establishes each party's rights
the transactions. A master agreement will
often specify, among other things, the right of t
buyer -lender to liquidate the underlying securiti
the vent of default by the seller -borrower
kTURITY: The: date upon which the principal or
ited value of an investment becomes due and
gable
)NEY MARKET: The market in which short-
) debt instruments (bills, commercial paper,
nder' acceptances, etc.) are issued and traded.
FER: The: price asked by a seller of securities.
'hen you are buying securities, you ask for an
`er.) See Asked and Bid.
'EN MARKET OPERATIONS: Purchases and
es of government and certain other securities
the open market by the New York Federal
serve Bank as directed by the FOMC in order
influence the: volume of money and credit in
economy. Purchases inject reserves into the
nk system and stimulate growth of money and
;dit; sales have the opposite effect. Open
irket operations are the Federal Reserve's most
portant and most flexible monetary policy tool.
IRTFOLIO: Collection of all cash and securities
der the direction of the City Treasurer,
;luding Bond Proceeds.
IIMARY DEALER: A group of government
curities dealers who submit daily reports of
arket activity and depositions and monthly
iancial statements to the Federal Reserve Bank
New York and are subject to its informal
ersight. Primary dealers include Securities and
change Commission (SEC) -registered securities
oker-dealers, banks and a few unregulated
MS.
JALIFIED PUBLIC DEPOSITORIES: A financial
>titution which does not claim exemption from
e payment of any sales or compensating use or
valorem taxes under the laws of this state,
hich has segregated for the benefit of the
immission eligible collateral having a value of
it less than its maximum liability and which has
:en approved by the Public Deposit Protection
ME
Commission to hold public deposits.
RATE OF RETURN: The yield obtainable on
security based on its purchase price or its currei
market price. This may be the amortized yield 1
maturity on a bond the current income return.
REPURCHASE AGREEMENT (RP OR REPO):
repurchase agreement is a short-term investmei
transaction. Banks buy temporarily idle fun(
from a customer by selling U.S. Government
other securities with a contractual agreement
repurchase the same securities on a future dat
Repurchase agreements are typically for one
ten days in maturity. The customer receive
interest from the bank. The interest rate reflec
both the prevailing demand for Federal funds ar
the maturity of the repo. Some banks will execu
repurchase agreements for a minimum
$100,000 to $500,000, but most banks have
minimum of $1,000,000.
REVERSE REPURCHASE AGREEMENTS (RRP
RevRepo) - A holder of securities sells the:
securities to an investor with an agreement
repurchase them at a fixed price on a fixed dat
The security "buyer" in effect lends the "selle
money for the period of the agreement, and tl
terms of the agreement are structured
compensate him for this. Dealers use RF
extensively to finance their positions. Exceptio
When the Fed is said to be doing RRP, it is lendii
money that is increasing bank reserves.
SAFEKEEPING: A service to customers renden
by banks for a fee whereby securities ai
valuables of all types and descriptions are held
the bank's vaults for protection.
SECONDARY MARKET: A market made for tl
purchase and sale of outstanding issues followii
the initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agen
created by Congress to protect investors
securities transactions by administering securiti
islation.
C RULE 15C3-1: See Uniform Net Capital Rule.
RUCTURED NOTES: Notes issued by
vernment Sponsored Enterprises (FHLB,
MAS, SL.MA, etc.) And Corporations which
✓e imbedded options (e.g., call features, step -
coupons, floating rate coupons, derivative-
sed returns) into their debt structure. Their
irket performance is impacted by the
ctuation of interest rates, the volatility of the
bedded options and shifts in the Shape of the
Id curve.
iRPLUS FUNDS: Section 53601 of the
lifornia Government Code defines surplus funds
any money not required for immediate
cessities of the local agency. The City has
fined immediate necessities to be payment due
thin one week.
EASURY BILLS: A non -interest bearing
count security issued by the U.S. Treasury to
ance the national debt. Most bills are issued to
iture in three months, six months or one year.
EASURY BONDS: Long-term coupon -bearing
S. Treasury securities issued as direct
ligations of the U.S. Government and having
tial maturities; of more than 10 years.
(EASURY NOTES: Medium -term coupon -bearing
S. Treasury securities issued as direct
ligations of the U.S. Government and having
tial maturities_; from two to 10 years.
IIFORM NET CAPITAL RULE: Securities and
change Commission requirement that member
-ns as well as nonmember broker -dealers in
curities maintain a maximum ratio of
lebtedness to liquid capital of 15 to 1; also
Iled net capital rule and net capital ratio.
iebtedness covers all money owed to a firm,
:luding margin loans and commitments to
rchase securities, one reason new public issues
) spread among members of underwriting
45
syndicates. Liquid capital includes cash ar
assets easily converted into cash.
UNIFORM PRUDENT INVESTOR ACT: The State r
California has adopted this Act. The Act contair
the following sections: duty of can
diversification, review of assets, cost!
compliance determinations, delegation r
investments, terms of prudent investor rule, ar
application.
YIELD: The rate of annual income return on e
investment, expressed as a percentage. (i
INCOME YIELD is obtained by dividing the currei
dollar income by the current market price for tt
security. (b) NET YIELD or YIELD TO MATURITY
the current income yield minus any premiui
above par of plus any discount from par
purchase price, with the adjustment spread ovi
the period from the date of purchase to the dal
of maturity of the bond.
Vanguard - Compare Vanguard E'FFs with tradttionat maex muntat iunus
vau lgltuw.
Previous page
View Features of Vanguard ETFs and Traditional Index Funds
Millions of investors are turning to exchange -traded funds (ETFs) for their low costs and potential
for tax efficiency.* While ETFs are index funds, there are key differences between Vanguard ETFs'"
and traditional Vanguard index funds. Use the chart below to compare the features.
Features a Vanguard Index Funds v _ Vanguard ETFs
'
Investment !Seek to closely track a benchmark Seek to closely track a benchmark
approach using index management. using index management.
Buying and
i Directly from Vanguard.
selling
Share price
Net asset value (NAV) typically
calculated at the close of each
trading day.
Trading
I Transactions processed at next
flexibility
closing NAV.
Through a brokerage service, such
as Vanguard Brokerage Services@.**
Fluctuating market prices throughout
the trading day.
Buy and sell at any time during the
trading day with the ability to use
stock -trading techniques.t
Operating Low operating expenses as a result Lower operating expenses than
expenses ! of index tracking. corresponding index funds.
Trading costs i None.tt Brokerage commissions and bid -ask
j spreads charged each time you buy
or sell ETFs.
Potential for tax Potential for high tax efficiency due i Potential for high tax efficiency due to
efficiency to low turnover resulting from index low turnover resulting from index
j management. management.
Reinvestment Provided by Vanguard. Availability and cost depend on
options broker.
Client services . Provided by Vanguard. Provided by broker.
Average cost 1 Provided by Vanguard. Provided by broker.
statement
* Vanguard ETFs are subject to stock market risk.
** Institutional investors authorized to create Vanguard ETF Shares for the marketplace can purchase a creation
unit of Vanguard ETFs directly from Vanguard.
t Investment strategies such as limit orders, buying on margin, and selling short can be difficult to execute
successfully and may expose investors to higher risks or tax costs than anticipated.
tt Some redemption fees may apply depending on the fund and how long you've held the investment.
« Previous page
m 1995-2006 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corp., Distrib. Terms & conditions of use I Obtain prospectus
https://flagsliip.vanguard.comNGApplhnwlcontent/FundsIFundsVIPERDifferencesMFC... 12/29/200
a
Lehman 1-3 Year Treasury Bond Fund (SHY)
Fund Inception Date: 7/22/2002
,tM VtEy! i2liiiTES & cHAtYTS
NAV as of 12/29/2006 Price as of 12/28/2006
Quality Ratings
as of 11/30/2006
Net Asset Value $79.86 Price $79.93
% of
Fund
% of
Fund
Change $0.00 Change $-0.06
(Moody's)
(S&P)
Change 0.00% Change -0.08%
U.S.
98.49
98.49
Gov't/Agency
Premium Dismvnt Chart I NAV History1 Tracking Error Chart
Aaa/AAA
0.00
0.00
The performance quoted represents past performance and does not
0.00
guarantee future results. Investment return and principal value of an
Aal/AA+
0.00
investment will fluctuate so that an investor's shares, when sold or
Aa2/AA
0.00
0.00
redeemed, may be worth more or less than the original cost. Current
performance may be lower or higher than the performance quoted.
Aa3/AA-
0.00
0.00
This information must be accompanied by standardized returns. For
0.00
0.00
standardized returns and performance data current to the most recent
Al/A+
month end, click the "Returns" link in the left navigation.
A2/A
0.00
0.00
Profile as of 12/28/2006
A3/A-
0.00
0.00
Total Net Assets (000) $5,662,351 Moody's S&P
Baal/BBB+
0.00
0.00
Shares Outstanding 70,900,000 Fund Rating Govt Govt
Baal/BBB
0.00
0.00
Expense Ratio 0.15%
Baa3/BBB-
0.00
0.00
Bal/BB+
0.00
0.00
Fundamentals as of 11/30/2006
Bat/BB
0.00
0.00
Fund Index
Ba3/1313-
0.00
0.00
Number of Holdings 30 N/A
Other/NR
0.00
0.00
O Weighted Average Maturity 1.90 yr 1.83 yr
Average
Govt
Govt
O Weighted Average Coupon 3.92% 4.18%
MATURITY as
of 11/30/2006
Q Effective Duration 1.79 1.68
of Fund
0-1 Years
7.54
Yield its of 1.2/28/2006
90.95
Fund Index
1-5
5-10
0.00
O Distribution Yield 4.37% N/A
10-15
0.00
0) 30-Day SEC Yield 4.62% N/A
15-20
0.00
O Average Yield to Maturity 4.84% N/A
0.00
20-25
25 and Over
0.00
Top Holdings* () as of 12/28/2006
View All Holdings
Average
1.9 yr
% of Ratings
Fund Name Coupon Maturity (Moody's/S&P)
11.59% U.S. Treasury Note 3.75 5/15/2008 TSY /TSY
3.75% 5/15/2008
http://www.i shares.com/fund_info/detail.jhtml;jsessionid=l CQAQQ1013QDGRJUMTC... 12/29/200
7.71%
U.S. Treasury Note
3.00
2/15/2008
TSY /TSY
3.00% 2/15/2008
7.04%
Us Treasury N/B
4.88
8/15/2009
TSY/TSY
4.138% 8/15/2009
6.220/n
U.S. Treasury Note
4.12
8/15/2008
TSY /TSY
4.13% 8/15/2008
4.760%
U.S. Treasury Note
2.62
5/15/2008
TSY /TSY
2!63% 5/15/2008
4.39%
US Treasury Bill
4.88
5/15/2009
TSY /TSY
N/B 4.88%
5/15/2009
4.390%
U.S. Treasury Note
4.75
11/15/2008
TSY/TSY
4.75% 11/15/2008
4.330%
U.S. Treasury Note
3.25
1/15/2009
TSY/TSY
3.25% 1/15/2009
4.210/b
U.S. Treasury Note
2.62
3/15/2009
TSY /TSY
2.63% 3/15/2009
3.910/o
U.S. Treasury Note
4.50
2/15/2009
TSY /TSY
4.50% 2/15/2009
*Holdings are
subject to change.
Top Sectors as of 12/28/2006
Trading Information
98.91% Treasury
Related Index N/A
NAV per Share
SITY.NV
Und. Trading
SITY.IV
Value
Shares
SITY.SO
Outstanding
Est. Cash
SITY.EU
Total Cash
SITY.TC
CUSIP
464287457
Options
Available
Carefully consider the Funds' investment objectives, risk factors and charges and
expenses before investing. This and other information can be found in the Funds'
prospectuses, which may be obtained by calling 1-800-!Shares (1-800-474-2737) or click
here to view or download a prospectus. Read the prospectus carefully before investing.
There are risks involved with investing, including possible loss of principal.
The !Shares Funds ("Funds") are distributed by SEI Investments Distribution Co. (SET). Barclays Global Fund Advisors
(BGFA) serves as an advisor to the Funds. Barclays Global Investors Services (BGIS) assists in the marketing of the
Funds. BGFA and BGIS are subsidiaries of Barclays Global Investors, N.A., which is a majority -owned subsidiary of
Barclays Bank PLC, none of which is affiliated with SET.
An investment in the funds) is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
Bonds and bond funds will decrease in value as Interest rates rise.
Options !involve risk and are not suitable for all Investors. Prior to buying or selling an option, a person must receive a
copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker,
from any exchange on which options are traded or by contacting The Options Clearing Corporation, One North Wacker
Dr., Suite 500 Chicago, IL 60606 (1-800-678-4667). The document contains information on options Issued by The
Options Clearing Corporation. The document discusses exchange -traded options Issued by The Options Clearing
Corporation and is Intended for educational purposes. No statement in the document should be construed as a
recommendation to buy or sell a security or to provide Investment advice.
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If you need further information, please feel free to call the Options Industry Council Helpline. They will be able to
provide you with balanced options education and tools to assist you with your iShares options questions and trading.
The Options Industry Council Helpline phone number is 888-Options and their website is www.8880ptions.com.
Lehman Brothers, Lehman Brothers 1-3 Year US Treasury Index, Lehman Brothers 7-10 Year US Treasury Index,
Lehman Brothers 20+ Year US Treasury Index are trademarks of Lehman Brothers and have been licensed for use by
Barclays Global Investors, N.A. iShares Funds are not sponsored, endorsed, issued, sold or promoted by Lehman
Brothers. Nor does this company make any representation regarding the advisability of investing in iShares Funds.
Index data source: Lehman Brothers.
Shares of (Shares Funds are bought and sold at market price (not NAV). Brokerage commissions will reduce returns.
Certain sectors and markets perform exceptionally well based on current market conditions and iShares funds can
benefit from that performance. Achieving such exceptional returns involves the risk of volatility and investors should not
expect that such results will be repeated.
02006 Barclays Global Investors. All rights reserved. (Shares® is a registered trademark of Barclays Global Investors,
N.A.. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.
Glossal I Newsroom I Contact Us I Careers I Non -US Investors I Prospectus I Disclosure I Site Mao
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C Copyright 2006
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[ndex Returns Chart (Printable Version)
rage 1 In 4
Index Returns Chart
Time Period: Year To Date
INDEX CATEGORIES
Q Leaders / Trailers
O All Indexes and
Benchmarks
O My Benchmarks
Fixed Income
0 Market Capitalization
O Style
0 sector,( industry
0 Regional/Multi-Country
0 Single Country
Name
Income
Return 'A
Print [ Close Window
Lehman Brothers U.S.
Aggregate Index +4.58%
(12/15/2006)
iBoxx $ Liquid Investment
Grade Index +4.44%
(12/15/2006)
Lehman Brothers 1-3 Year
Treasury Index +3.9% 1
(12/15/2006)
Lehman Brothers 7-10 Year
Treasury Index +3.28% A
(12/15/2006)
Lehman Brothers 20+ Year
Treasury Index +1.94% 1
(12/15/2006)
Lehman Brothers U.S. 3
Treasury TIPS Index +1.47% I —fll
(12/15/2006)
0 Commodity Indexes
and Bench narks
Index returns are for illustrative purposes only and do not represent actual iShares Funds or iShares
Trusts performance. Index performance returns do not reflect any management fees, transaction costs
or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance
does not guarantee future results. For actual iShares Fund or iShares Trust performance, close this
window and visit "Product Information" or request a prospectus by calling 1-800-iShares (1-800-474-
2737).
The London Silver Fix Price refers to the price for an ounce of silver set by three market making members of the
London Bullion Market Association, minus all accrued fees, expenses and liabilities.
The iShares Funds registered with the United States Securities and Exchange Commission under the Investment
Company Act of 1940 ("Funds") are distributed by SEI Investments Distribution Co. ("SET"). Barclays Global Fund
Advisors ("BGFA") serves as an investment adviser to the Funds. BGFA is a subsidiary of Barclays Global
Investors, N.A., (BGI) a majority -owned subsidiary of Barclays Bank PLC, none of which is affiliated with SET.
Carefully consider the Funds' investment objectives, risk factors and charges and expenses before
investing. This and other information can be found in the Funds' prospectuses, which may be obtained
by calling i 1B00-iShares or clicking here. Read the prospectus carefully before investing.
1
0
17
There are risks involved with investing, including possible loss of principal. In addition to the normal risks
associated with investing, narrowly focused investments, investments in smaller companies and investments in
single countries typically exhibit higher volatility. International investments may involve risk of capital loss from
http://tools. ishares.com/tools/indextracker/printIndexTracker. j sp?cat=3&tp=7&tps=null&... 12/ 18/200
[ndex Returns Chart (Printable Version)
rage Z. Ul G
unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from
economic or political instability in other nations. Emerging markets involve heightened risks related to the same
factors, as well as increased volatility and lower trading volume.
If the chart/report includes London Silver Fix Price, COMEX Gold Spot Month Settlement Price and/or
GSCI Total Return Index, this information must be accompanied by current prospectus(es) for each
related iShares Product. For an iShares COMEX@ Gold Trust, iShares Silver Trust and iShares® GSCI®
Commodity -Indexed Trust, click here. Please read the prospectuses carefully before investing.
The iShares COMEX@ Gold Trust and iShares Silver Trust ("Precious Metals Trusts") are not investment
companies registered under the Investment Company Act of 1940 or commodity pools for purposes of
the Commodity Exchange Act. Because shares of the iShares COMEX Gold Trust and iShares Silver Trust are
created to reflect the price of the gold or silver held by each Precious Metals Trust, respectively, the market price
of the shares will be as unpredictable as the price of gold or silver has historically been. The price received upon
the sale of shares of the Precious Metals Trusts, which trade at market price, may be more or less than the value
of the gold or silver they represent.
The sponsor of the !Shares(p) COMEX Gold Trust is Barclays Global Investors, N.A. (BGI). The sponsor of the
iShares@ Silver Trust is Barclays Global Investors International, Inc. (BGII). Barclays Global Investors Services
(BGIS), a subsidiary of BGI, assists in the marketing of the Precious Metals Trusts and the GSCI Trust. BGI and
BGII are indirect subsidiaries of Barclays Bank PLC.
The GSCI@ Commodity -Indexed Trust ("GSCI Trust") is a commodity pool as defined in the Commodity Exchange
Act and the applicable regulations of the CFTC. The GSCI Trust is NOT an investment company registered
under the Investment Company Act. Investments in shares of the GSCI Trust are speculative and
involve a high degree of risk. You could lose all or a substantial portion of your investment in the
shares of the GSCI Trust. Before making an investment decision, you should carefully consider the risk
factors and other information included in the prospectus. Commodities markets have historically been
extremely vollatile. Shares may trade at, above, or below their NAV. The returns on the shares of the
GSCI Trust will not precisely correlate with the performance of the GSCI® Total Return Index. The
Sponsor of the GSCI Trust is BGII, a commodity pool operator registered with the CFTC.
The iShares Funds, Precious Metals Trusts and GSCI Trust ("Shares Products") are not sponsored, endorsed or
issued by Goldman, Sachs & Co., or Lehman Brothers nor are they sponsored, endorsed, issued, sold or promoted
by Cohen & Steers Capital Management, Inc., Commodity Exchange, Inc., Dow Jones & Company, Inc.,
FTSE/Xinhua Index Limited ("FXI"), KLD Research & Analytics, Inc., Morgan Stanley Capital International,
Morningstar Inc., The NASDAQ Stock Market, Inc., New York Stock Exchange, Inc., Frank Russell Company, or
Standard and Poor's ("Index Providers"), None of the Index Providers make any representation regarding the
advisability of investing in iShares Products. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the
Index Providers.
"$ InvesTop`", "$ InvesTop"" Index", ' GS $ InvesTopT"", "GSCI( ", "GSCI@ Index", "Goldman Sachs Commodity
Index" and "Goldman Sachs®" are trademarks of Goldman, Sachs & Co.
FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI.
"FTSE" is a trade and service mark of London Stock Exchange and The Financial Times; "Xinhua" is a trade and
service mark of Xinhua Financial Network Limited.
"Commodity Exchange, Inc." and "COMEX" are trademarks of Commodity Exchange, Inc. and have been licensed
for use for certain purposes by BGI and the Gold Trust.
"Goldman Sachs", "GSCI®", "GSCIU Index", "GSCI® [Total/Excess/Spot] Return Index', and the "Goldman Sachs
Commodity Index" are trademarks of Goldman, Sachs & Co. and have been licensed for use by Barclays Global
Investors, N.A. for use in connection with the iShares GSCI Commodity -Indexed Trust and the iShares GSCI
Commodity -Indexed Investing Pool LLC (together, the "GSCI Funds"). The Funds are not sponsored, endorsed,
sold or promoted by Goldman, Sachs & Co., or any of its affiliates. Neither Goldman, Sachs & Co. nor any of its
affiliates make any representation regarding the advisability of investing in the GSCI Funds.
http://to Dls.ishares.comltools/indextrackerlprintlndexTracker jsp?cat=3&tp=7&tps=null&... 12/18/200
index Returns Chart (Yrintabie version)
. -I- . ...
Index Returns Chart
Time Period:,One Month
INDEX CATIEGORIES
0 Leaders / Trailers
0 All Indexes and
Benchmarks
0 My Benchmarks
Fixed Income
0 Market Capitalization
0 Style
0 Sector,( Industry
0 Regional/Multi-Country
0 Single Country
0 Commodity Indexes
and Benchmarks
Month To Date
Print I Close Window
Name Return
Fixed Income
Lehman Brothers 1-3 Year
Treasury Index
-0.02%
(12/15/2006)
Lehman Brothers U.S.
Aggregate Index
I -0.35%
(12/15/2006)
iBoxx $ Liquid Investment
Grade Index
1 -0.550/0
(12/15/2006)
Lehman Brothers 7-10 Year
Treasury Index
1 -0.71%
(12/15/2006)
Lehman Brothers U.S.
Treasury TIPS Index
(12/15/2006)
Lehman Brothers 20+ Year
Treasury Index
1 -1.78%
(12/15/2006)
Index returns are for illustrative purposes only and do not represent actual iShares Funds or iShares
Trusts performance. Index performance returns do not reflect any management fees, transaction costs
or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance
does not guarantee future results. For actual iShares Fund or iShares Trust performance, close this
window and visit "Product Information" or request a prospectus by calling 1-800-iShares (1-800-474-
2737).
The London Silver Fix Price refers to the price for an ounce of silver set by three market making members of the
London Bullion Market Association, minus all accrued fees, expenses and liabilities.
The iShares Funds registered with the United States Securities and Exchange Commission under the Investment
Company Act of 1940 ("Funds") are distributed by SEI Investments Distribution Co. ("SEI"). Barclays Global Fund
Advisors ("BGFA") serves as an investment adviser to the Funds. BGFA is a subsidiary of Barclays Global
Investors, N.A., (BGI) a majority -owned subsidiary of Barclays Bank PLC, none of which is affiliated with SEI.
Carefully consider the Funds' investment objectives, risk factors and charges and expenses before
investing. This and other information can be found in the Funds' prospectuses, which may be obtained
by railing 1-800-iShares or clicking here. Read the prospectus carefully before investing.
There are risks involved with investing, including possible loss of principal. In addition to the normal risks
associated with investing, narrowly focused investments, investments in smaller companies and investments in
single countries typically exhibit higher volatility. International investments may involve risk of capital loss from
L
I
http://tools.ishares.com/toolslindextrackerlprintIndexTracker jsp?cat=3&tp=3&tps=0&so... 12/18/200
Index Returns lhart (rnntame version)
unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from
economic or political instability in other nations. Emerging markets involve heightened risks related to the same
factors, as well as increased volatility and lower trading volume.
If the chart/report includes London Silver Fix Price, COMEX Gold Spot Month Settlement Price and/or
GSCI Total Return Index, this information must be accompanied by current prospectus(es) for each
related !Shares Product. For an iShares COMEX@ Gold Trust, iShares Silver Trust and iShares® GSCI@
Commodity -Indexed Trust, click here. Please read the prospectuses carefully before investing.
The iShares COMEX@ Gold Trust and iShares Silver Trust ("Precious Metals Trusts") are not investment
companies registered under the Investment Company Act of 1940 or commodity pools for purposes of
the Commodity Exchange Act. Because shares of the iShares COMEX Gold Trust and iShares Silver Trust are
created to reflect the price of the gold or silver held by each Precious Metals Trust, respectively, the market price
of the shares will be as unpredictable as the price of gold or silver has historically been. The price received upon
the sale of shares of the Precious Metals Trusts, which trade at market price, may be more or less than the value
of the gold or silver they represent.
The sponsor of the iShares@ COMEX Gold Trust is Barclays Global Investors, N.A. (BGI). The sponsor of the
iShares@ Silver Trust is Barclays Global Investors International, Inc. (BGII). Barclays Global Investors Services
(BGIS), a subsidiary of BGI, assists in the marketing of the Precious Metals Trusts and the GSCI Trust. BGI and
BGII are indirect subsidiaries of Barclays Bank PLC.
The GSCI@ Cornmodity-Indexed Trust ("GSCI Trust") is a commodity pool as defined in the Commodity Exchange
Act and the applicable regulations of the CFTC. The GSCI Trust is NOT an investment company registered
under the Investment Company Act. Investments in shares of the GSCI Trust are speculative and
involve a high degree of risk. You could lose all or a substantial portion of your investment in the
shares of the GSCI Trust. Before making an investment decision, you should carefully consider the risk
factors and other information included in the prospectus. Commodities markets have historically been
extremely volatile. Shares may trade at, above, or below their NAV. The returns on the shares of the
GSCI Trust will not precisely correlate with the performance of the GSCI@ Total Return Index. The
Sponsor of the GSCI Trust is BGII, a commodity pool operator registered with the CFTC.
The iShares Funds, Precious Metals Trusts and GSCI Trust ("iShares Products") are not sponsored, endorsed or
Issued by Goldman, Sachs & Co., or Lehman Brothers nor are they sponsored, endorsed, issued, sold or promoted
by Cohen & Steers Capital Management, Inc., Commodity Exchange, Inc., Dow ]ones & Company, Inc.,
FTSE/Xinhua Index Limited ("FXI"), KLD Research & Analytics, Inc., Morgan Stanley Capital International,
Morningstar Inc., The NASDAQ Stock Market, Inc., New York Stock Exchange, Inc., Frank Russell Company, or
Standard and Poor's ("Index Providers"). None of the Index Providers make any representation regarding the
advisability of investing in iShares Products. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the
Index Providers.
"$ InvesTop'", "$ InvesTop'm Index', ' GS $ InvesTopT ', "GSCI@°, "GSCI@ index", "Goldman Sachs Commodity
Index" and "Goldman Sachs@" are trademarks of Goldman, Sachs & Co.
FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI.
"FTSE" is a trade and service mark of London Stock Exchange and The Financial Times; "Xinhua" is a trade and
service mark of Xmhua Financial Network Limited.
"Commodity Exchange, Inc." and "COMEX" are trademarks of Commodity Exchange, Inc. and have been licensed
for use for certain purposes by BGI and the Gold Trust.
"Goldman Sachs", "GSCI@", "GSCI@ Index', "GSCI@ [Total/Excess/Spot] Return Index", and the "Goldman Sachs
Commodity Index" are trademarks of Goldman, Sachs & Co. and have been licensed for use by Barclays Global
Investors, N.A. for use in connection with the iShares GSCI Commodity -Indexed Trust and the iShares GSCI
Commodity -Indexed Investing Pool LLC (together, the "GSCI Funds"). The Funds are not sponsored, endorsed,
sold or promoted by Goldman, Sachs & Co., or any of its affiliates. Neither Goldman, Sachs & Co. nor any of its
affiliates make any representation regarding the advisability of Investing in the GSCI Funds.
http://tools.ishares.comltoolslindextrackerlprintlndexTracker jsp?cat=3&tp=3&tps=0&so... 12/18/200
iShare
,HARES" PRODUCTS
NOVEMBER 06
Tntlinge UndeO ng Blooff iolal EyenM
Tmdin99 Unde g ssomWg T
SMW lmdlnAalue Inden Sy Wi
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as S&P Domestic Index Funds
I
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Is S&P 1500
ISI
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SPR
0.20
iShares FTSE/Xinhua China 25
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FXIJV
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EWA
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018
iShares MSCI Belgium
EWK
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WE
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SVX
0.18
iShares MSCI Brazil
Eii
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!s S&P MldCap 400
IJH'
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MID
0.20
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EWC'
EWC.IV
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I1K`
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0.25
iShares MSCI France
EWO
EWQ.IV
IV
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IJJ'
IJJ.IV
MIDV
0.25
iShares MSCI Germany
EWG
EWG
NDDUHK
as S&P SmallCap 600
IJR`
11R.IV
SML
0.20
IShares MSCI Hang Kong
EWH'
EWH.IV
NDDUIT
as S&P SmallCap 600 Growth
lJT'
IJT.IV
SMLG
0.25
iShares MSCI Italy
EWI
EWLIV
NDDUIN
as S&P SmallCap 600 Value
IJS'
IJS IV
SMLV
0.25
iShares MSCI Japan
EWJ'
EW1.IV
iShares MSCI Malaysia
EWM
EWM IV
NDDUMAF
yes Domestic Sector Index Funds
iShares MSCI Mexico
EWW
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NDEUMXF
iShares MSCI Netherlands
EWN
OWN IV
NDDUNE
es Cohen & Steers Really Majors
ICF•
ICF IV
RMP
0.35
iShares MSCI Singapore
EWS
EWS.IV
NDDUSG
Ds Dow Jones U.S. Basic Materials Sector
IYM`
IYM.IV
DJUSBM
0.48
iShares MSCI South Africa
EZA
EZA.IV
NDUESSA
as Dow Jones U.S. Consumer Services Sector
IYC'
IYC.IV
DJUSCY
0.48
iShares MSCI South Korea
EWY
EWY.IV
NDUESKO
as Dow Jones U S. Consumer Goods Sector
IYK'
IYK.IV
DIUSNC
0.48
iShares MSCI Spain
EWP
EWP.IV
NDDUSP
as Dow Jones U.S. Energy Sector
IYE'
IYE.IV
DIUSEN
0.48
iShares MSCI Sweden
EWD
EWD.IV
NDDUSW
as Dow Jones U.S. Financial Sector
IYF'
IYF.IV
DJUSFN
0.48
iShares MSCI Switzerland
EWL
EWL.IV
NDDUSZ
as Dow Jones U.S. Financial Services
JYG'
IYG.IV
DIUSFV
0.48
iShares MSCI Taiwan
EWr'
EWT.IV
NDUESTW
as Dow )ones U.S. Healthcare Sector
IYH`
IYH.IV
DIUSHC
0.48
iShares MSCI United Kingdom
EWU•
EWU.IV
NDDUUK
as Dow Jones U.S. Industrial Sector
IYJ•
IYJ.IV
DJUSIN
0.48
iShares S&P/TOPIX 150
ITF'
ITF.IV
PI K ID0N
as Dow Jones U.S. Real Estate
IYR'
IYR.IV
DJUSRE
0.48
as Dow Jones U.S. Technology Sector
IYW'
IYW.IV
DJUSTC
0.48
iShares International Index Funds
as Dow Jones U.S. Telecommunications Sector
IYZ'
IYZ IV
DJUS IL
0.48
NDDUEAF
as Dow Jones Transportation Average
IYT
IYT.IV
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0.48
iShares MSCI EAFE
EFA'
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IV
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as Dow Jones U S. Utilities Sector
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EFG
es Dow Jones U.S. Total Market
IGE IV
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0.20
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EFV.IV
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es Goldman Sachs Natural Resources
jBE
IGE
IGEJV
GSR
0.48
iShares MSCI Emerging Markets
EEM'
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es Goldman Sachs Networking
IGN'
IGN.IV
GIP
0.48
iShares MSCI EMU
E u
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IGW'
IGW.IV
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i$hams MSCI Pacific ex -Japan
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as Goldman Sachs Software
IGV'
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0.48
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IEV'
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iShares S&P Latin America 40
ILF'
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ITA
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RXI
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iShares S&P Global Consumer Staples Sector
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IV
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1 ARES PRODUCTS (continued)
had and
Symbol T.04 Veue In0smaxill iorPa0 IPo%1.
'es NYSE Index Funds !Shares Commodities and Precious Metals Products
Sramns
ymbo
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NYC IV
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0.25
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m NYSE 100
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!Shares GSCI Commodity -Indexed Trust GSG
.res Morningstar Index Funds
Consider investment objectives, risks, charges and expenses Sl
the i")
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is
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0.25
the !Shares' GSCI" Commodity -Indexed Trust (the "GSCI Trust') carefully b
as Morningstar Large Value
JKF
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MLVL
0.25
investing. To obtain prospectuses, which contain this and other information,
or call 1-800-474-2737. Please read the prospectuses caret
as Morningstar Mid Core
JKG
JKG.IV
MMCR
0.25
www.iShares.com
es Morningstar Mid Growth
1KH
JKHJV
MMGR
030
lhespol=cl of tt elShares' COMEX GO0T•us: a Barclays Global mes.,,-s. N A;BGI
as Morningstar Mid Value
JIG
JKLIV
MMVL
0.30
111 of the ISt,res, Si ve' Tvat = k7a.rlays Ginbcl IrvIT s In:e-na'^onal, too
as Morningstar Small Core
JKJ
JKLIV
MSCR
0.25
Ba-c ayn Global hwestors oerewea tBGlSl, a suo> tliav of BGl, ,s�s01 n the malke;
the Shoes ores o,,, nIA To dusts and the GSCI Tlu t BGI a'd BGII are sub; d 2I
'I
as Morningstar Small Growth
JKK
JKKAV
MSGR
0.30
Ba.elays Call < PLC I l+ Sow.: or of tr- GSOI Tryst .s BGII a c,,.,i I pool op
es Morningstar Small Value
)KL
JKL.IV
MSVL
0.30
reg 5tr,,,o w-r:re CI TIC
fully consider the !Shares Funds' investment
ctives, risk factors and charges and expenses
the investing. this and other information can be
d in the !Shares Funds' prospectuses, which may
obtained by calling 1-800-61tares (1-800-474-2737)
y visiting www.6hareocom. Read the prospectus
fully before investing.
'e are risks involved with investing in the Shares
Is, including possible loss of principal.
r;Seises Funds regis ereo ml:n lee Umtec States
aties a'd .xcher,ge CoTmssron under We Invesment
ipa-y Act or 1940 as iSha'es Inc, a •e Shoes Trull
"Slant 5 Funds'! are di5:r II Ov St IM0Srmfht5
Ib13v, Co (SEI) Ba eays Gobal Fuld Ado5ors (BGII
es os an on so, to tee Frinds Bnec lys Global ^vas'o's
'Cea iBGiS) a;6 stAm :he narke�ng ('!',•9 a -b^ BGFA
BGIS are subs tar as of tiart,ays G osal Investrre, N 4.
3lontyrowe9d subs n ary of BmClays Bank PLC, noire of
h e affllatud va u: S81
ons !evolve risk and le not sel le fo all rive"lle$ Paor
Lying or se Ing an opbrm, a ne,so" Plus-1esr d 1 a wpy
fa actewe,cs and Risks of S"anda of zed Optwns Conies
its docu ro- may be obtained 8o'r y'nur b'oke6 from any
a-ge or, ,vloh Colons are -laded cr by IT) "GLpng IPa
There are risks involved with investing, including possible loss of prin
The IShares precious metals trusts are not investment companies regis
under the Investment Company Act of 1940 or commodity pools for purl
of the Commodity Exchange Act. Hecalec stares et the Sra"es COtiILX Gold
and Shorea S it This: are rented �u wfibc¢ one puce of the gold 0I k, r aI
eaCb p oaoue meflo Oust, Iesptetne y the net ket ar Ce of the > mice .vdl
❑nflledic IdIr e as the ffldi cl 10 S lyei has h8:or cally been the Chloe raee'Ve'r
the sale of sf wts at;no!sf soiecrowmetals busts, .ahrzY:,ode atmarket p•ml
be mole m lets than thr, v,I or tI'0 RC d o el ve• rep'esenb�o ny ere 11
Tse Sr,sGSCI' Gorml ridex"d ITas• s a "on, rod I pool „s celned
Commoditf E>c+a: go Act ,rd ne eupl cable mgu es of :re CFTC The GSCI
is NOT an investment company registered under the Investment Compan,
Investments In shares of the GSCI Trust are speculative and involve a
degree of risk. You could lose all or a substantial portion of your investor
the shares of the GSCI Trust. Before making an investment decision, you s
carefully consider the risk factors and other information included in the prosy
Commodores markets have historically been extremely volatile. Shares may to
above,:" be o'v, IIITTA'd Ihenuarl,, I roc, I d,as of tle GSO1 ❑o- ell:ofoff
correlec, :nth the pertoi mace of rite I de,.
Optir"s Coates Capo-atun, One No ih la;sl fa ,Soda
50O C'linago. IL 006o;6:4 800-6?8 16e71 17e Occumcnr co"
tons nrcnnaton o^ cill Is,uto by lne 0pho's CRan g
Corpora.ion Inn documents fl •afable discuss excraege-
tr eeooptonslsmed by fie GrtiOIL and
one mended for educahona pwpo es No storerlent eI t"e
deeumenis suoulc oe con-heleo a a 'ewr ,lnsndaSoa to buy
or sel ' a ttounty er ce ora.•ide inves.nlefa o(e ce
The 31-nre3 Funds are ^ot sao.rome, andWsed o- sued
by Goeran, Sams If Co, a 1.0'9 l 13,i11- ror are
brey s-powl ed, enco,eed, Ifesuod, sole IT ;,'ell of, - ny
Co lra N 9 e•s Cautsl Nlanagrine.h. Pr, Gonnye.lhy
Lvcha-Ee, Inc Dow lone„ 6 C_ npa"y Ina , FTSF/ymhua
Ind x fLnited f'FXI'I, itAox, dA) R,,ex<Y ff A-, talcs, Inc
Msrean St',nley CoylyI Irnem-,L,.rul, PAC,, 'rdtr Ina , Toe
NASDAn E¢:rt Market he . New York stu„k ixrndb$e, na,
!-ra,4 er Sta^oatj &Pea='s- Ire SheraS'
COA'EX Gold T,dt s not .sf,ona.red, endorsed. sold of
a o*toted l:y Con
- I :why Elfoll eea Inc- hoof of these eom-
,,rics mate any repast^tetio I -ega-o ^g rite .avian ry of
,nvosnr,g in the Funds w!Pp Trust,, Nerhe SEI nor Barclay,
Global in,e.-to's, ^ol any Of trcl- atf l,.tas, are OfI atec matt
top, companies listed aoo,•e dbnxx s, leg s,cred traoe na,<
of Inter tat Cna' Index Ca -frail, I rled IXI dons •ct mate
and a3'un v rOgarC ^g'de FTSE/Xinrua can, Ail ,ghte m
Not FDIC Insured • No Bank Guarantee • May Lose Value
the F1SE/X, rim, Index vvat in FXI "Fl`BU ie e tfoe
servcemak of Lcndon Stock 1 sclra-ee are ire FIT
Iill 'Xrnhaa' is a bade- and se,,,onI If
F^a^viol Nctwo�kt T!,d `Conr'rodlo Utt"The In,
"COAyX' err baeenlaI-ks of 0,^,mmedry Lxcrange, It
r aye Caen I C,-se, for use hY certain ptaoses by B
Gluba` Irrvee,as .I'd the Trust. "Goldner Saes," "C
"GSCI,• Index' , ; the'Go'or an Sachs COT -Toni
an, t,adcn arks of Goldman, Sachs & Cle and
eensed ,o' use by Ba¢lays Ginhal l wars, IT fe
^onrectvm soth f,, Sra•es GSCI Co rmedl?<-I^tlexq
"CSC, P Sf ) TFe GSG Tru,I s oM rao'em cell. M,
'Ohl OI premoren „v Gciom= Sae.),,', & 1,:0 or an'
,rfhha;es No I'ae, GO'U.ra, Sachs & 0.n nor b :f II
tcel ma.e any IePiese-tabon rq,3ohng rf, adoea'
one! ms-tae GSCI That.
Ire KLD Seem Sl),l n Index aid Dome 400 Seca In
hauemaa ks,;sery cenays of KLD Roscoe" E All ytlCS. I
fave bce^ ace ,led for use by Baeloys Gobal forester
S;2U068amlays Gooal lnvesYers. Al rights •ase`-ed I:
s e res tiered fade a,ak of Ed, ela'yS ('00"al Inoestel
All Ct":I Cader-Sn.S, r,oIc n,3 rs or eg"s:ensa trad
.re t,e prn;xtrty of n,ell fvners 37S6I
50•J-20`'.P-KLD-i1/06
For more information visit our website
or call 1-800-IShares (1-800-474-2737)
riShareswww.iShares.com 40 BAl
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item A
Meeting Date: January 10, 2007
TITLE:
Month End Cash Report for December 2006 and
Other selected Financial Data
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.
MT14,674�
M. Falconer, Finance Director
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Phil Angelides, State Treasurer
Inside the State Treasurer's Office
Local Agency Investment Fund (LAIF)
PMIA Performance Report
� ^�
2112/2006
1
5.12
$ate Yteid
5.11
$e
ada
191
12/13/2006
5.12
5.11
190
12/14/2006
5.12
5.11
189
12/15/2006
5.13
5.11
191
12/16/2006
5.13
5.11
191
12/17/2006
5.13
5.11
191
12/18/2006
5.13
5.11
187
12/19/2006
5.13
5.11
187
12/20/2006
5.14
5.11
185
12/21/2006
5.14
5.11
189
12/22/2006
5.14
5.11
189
12/23/20061
5.14
5.11
189
12/24/2006
5.14
5.12
189
12/25/2006
5.14
5.12
189
LAW Performance Report
Quarter ending 9130106
Apportionment Rate: 4.93%
Earnings Ratio: .00013498449593566
Fair Value Factor: .999335402
PMIA Average Monthly Effective Yields
November 2006 5.125%
October 2006 5.098%
September 2006 5.023%
Pooled Money Investment Account
Portfolio Composition
$65.5 Billion
11 /30106
Treasuries
4.78% Mortgages
Loans 1 77%
Corporat(
Bonds
1.04%
Commercial
Paper
16.07%
Time ueposics
15.12%
gencies
2.69%
INs
2u.ti2%
RB: Commercial Paper Rates and Outstanding
Federal Reserve Release
,,ammerclal Pia
r
release About Announcements Outstandin s Volume statistics I Year-end I Data Download
—ad
am DDP)
announcement: The commercial aaper release will not be updated on Janua 1 or January 2. Data for
)ecember 29 will be posted on January I
data as of December 28, 2006
Comrnercial Paper Rates and Outstanding
)edved from data supplied by The Deposdory Trust Company
'osted December 29, 2006
Discount rates
AA 2
FT.]Lfinancial I nonfinancial (financial Iasset-backed
1-day 5.26 5.37 5.24 I 5.29
7-day C 5.27 5.40 5.28 5.35
15-day
C 5.28
5.39
5.24
5.33
55.26 30-day
IC 5.23
5.36
5.38
5.24
5.32
5.28
60-day
90-day
JC n•a•
C n.a.
5.37
5.24
5.26
Trade data insufficient to support calculation or the eu-oay'w nonnnai mini a� a�-tea, �•• • •^
Yield curve;
ncial rates for December 28, 2008.
http://www.iFederalreserve.gov/Releases/CP/ 12/29/200
iZB: Commercial Paper Rates and Outstandmgs -
Percent
vioney mamv,L uaalo
— — — AA nonfinancial
A21P2li=2 nonfinancial
--= AA financial
-- -` Ado .xsc7beCf.�d
1 7 15 30 uu
Days to Maturity
Discount rate spread
2001 2002 2uu3 LUW `'" ----
Discount rate history
5.5
5.3
5.1
120
100
80
60
40
20
0
http://www.federalreserve.gov/Releases/CP/ 12/29/20C
RB: Commercial Paper Rates and Uutstanamgs
narwr (dnilvl
Percent
0
— — — AA nonfinancial
A21i'2112 nonfinancial
--- AA financial
A %; ..,.�.:�„
K�
2001 2002 2UU3
Dutstandings
Weekly (Wednesday), seasonally adjusted
n:tr.....o nrelntlnre
LUU4 LwJ
Billions of dollars
Nonfinancial (tight scale) ,.,'
Financint(len scales
i
t`
1
.t}gr.h�Mt{(''VI�Y
�. ',,..".A,4k It
..1t1 fi JVVI.4.
2001 2002Y'1 1'1 1,1 • "
01
250
210
170
130
90
The daily commercial paper release will usually be available before 11:OOam 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 Announcements I Outstandings I Volume statistics I Year-end I Data Download
Pro ram(DIM
Home I Statistical releases
Accessibility I Contact Us
http://www.federalreserve.gov/Releases/CP/ 12/29/200
n: Commercial Paper Rates and Outstandmgs
ast update: December 29, 2006
http://www,federalreserve.gov/Releases/CP/
12/29/20(
.ecent Bill Auction Results
Tr asUrvD►ir+ect.
Recent (Bill Auction Results
Security
Issue
Maturity
Discount
Investment
Price
CUSIP
Term
Date
Date
Rate %
4.660
Qate 74 %
gPer 63$100
912795VQ8
28-DAY
12-28-2006
01-25-2007
91-DAY
12-28-2006
03-29-2007
4.875
5.004
98.767708
912795YZS
182-DAY
12-28-2006
06-28-2007
4.900
5.094
97.522778
912795ZN4
28-DAY
12-21-2006
01-18-2007
4.740
4.824
99,631333
912795YPO
91-DAY
12-21-2006
03-22-2007
4.825
4.952
98.780347
912795YV1
182-DAY
12-21-2006
06-21-2007
4.885
5.078
97.530361
912795ZM6
28-DAY
12-14-2006
01-11-2007
4.760
4.844
99.629778
912795YN5
91-DAY
12-14-2006
03-15-2007
4.800
4.926
98.786667
912795YK3
182-DAY
12-14-2006
06-14-2007
4.865
5.057
97.540472
912795ZLS
28-DAY
12-07-2006
01-04-2007
4.760
4.844
99.629778
912795YM7
91-DAY
12-07-2006
03-08-2007
4.870
4.999
98.768972
912795YW5
182-DAY
12-07-2006
06-07-2007
4.840
5.030
97.553111
912795ZKO
10-DAY
12-05-2006
12-15-2006
5.195
5.275
99,855694
912795TW1
14-DAY
12-01-2006
12-15-2006
5.215
5.298
99.797194
912795TWI
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
912795YK1
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-DAN
11-15-2006
11-30-2006
5.170
5.253
99.784583
912795YGO
28-DAY
11-09-2006
12-07-2006
5.305
5.197
99.602944
912795YH8
91-DAY
11-09-2006
02-08-2007
4.955
5.088
98.747486
932795V54
182-DAY
11-09-2006
05-10-2007
4.980
5.180
97.482333
912795ZF1
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
912795VF2
91-DAY
10-26-2006
01-25-2007
4.990
5.124
98.738639
912795YQ8
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-DAY
10-19-2006
01-18-2007
4.940
5.072
98.751276
912795YPO
182-DAY
10-19-2006
04-19-2007
4.935
5.132
97.505083
912795ZCB
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
Effective with the 1112198 auction, all bills are auctioned using the single -priced method.
http://www.,treasurydirect.gov/RI/0FBills 12/29/200
RB: H.15--Selected Interest Rates, Web -only vany upaine--Liruci vui
. 1- - ---
Federal Reserve Statistical Release
H.15
Selected Interest Rates (Daily)
;kip to Cnntem
Release Date: December 28, 2006
Weekly release dates I Historical data I Data Download Program (DDP) I About I Announcements
Daily update Other formats: Screen reader I ASCII
--
-'AII��tMwnto.a
The weekly release is posted on Monday. Daily updates of the weekly release are p
through Friday on this site. If Monday is a holiday, the weekly release will be p
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
28,
2006
2006
2006
2006
Instruments
Dec
Dec
Dec
25*
26
27
Federal funds (effective) 1 2 3
5.24
5.29
5.17
Commercial Paper 3 4 5
Nonfinancial
1--month
5.25
5.29
2--month
n.a.
n.a.
3--month
n.a.
n.a.
Financial
5.25
5.26
1--month
5.22
5.25
2--month
3--month
5.23
5.24
CDs (secondary market) 3 6
1-month
5.32
5.34
5.32
5.33
3-month
5.32
5.33
E-month
Eurodollar deposits (London) 3 7
5.34
5.35
1-month
5.34
5.36
3-month
5.34
5.36
6-month
2 3 8
8.25
8.25
8.25
Bank prime loan
Discount window primary credit 2 9
6.25
6.25
6.25
U.S.. government securities
'.Treasury bills (secondary market) 3 4
4.70
4.66
4-week
4.87
4.85
3-month
4.91
4.91
6-month
Treasury constant maturities
Nominal 10
1-month
4.81
4.75
3-month
4.99
4.97
6-month
5.11
5.10
4.97
4.99
1-year
4.71
4.77
2-Year
http://www.federalreserve.gov/Releases/HI5/update/ 12/29/20C
RB: H.15--Selected interest Kates, wen-Vlny L'any Uputtio--uo ...v1- .a,_
3-year
4.63
4.69
5-year
4.58
4.64
7-year
4.59
4.64
10-year
4.61
4.66
20-Year
4.82
4.87
30-Year
4.73
4.78
Inflation indexed 11
5-Year
2.37
2.44
7-Year
2.37
2.43
10-year
2.34
2.39
20-year
2.34
2.39
Inflation -indexed long-term average 12
2.31
2.36
Interest rate swaps 13
5.29
5.31
1-yeas
5.06
5.10
2-yeas
4.99
5.03
3-year
4.98
5.02
4--year
4.99
5.03
5-year
5.03
5.06
7-year
5.09
5.12
10-year
5.23
5.26
30-year
Corporate bonds
Moody's seasoned
Asa 14
5.37
5.42
6.27
6.32
Baa
State & local bonds 15
Conventional mortgages 16
* Markets closed.
n.a. Not available.
Footnotes
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 curs
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
(wwHF.fe(deralreserve.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 0
commercial banks. Prime is one of several base rates used by banks to price shor
loans.
9. The rate charged for discounts made and advances extended under the Federal R
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
12/29/200
http://www.federaireserve.gov/Releases/Hl5/update/
RB: 11.15--Selected Interest Kates, web-Umy liauy upaate--ucucuiuu, moo, 4VVV _ -5-
for the Federal Reserve Bank of New York. Historical series for the rate on adjus
well as the rate on primary credit are available at www.federalreserve.gov/releas
10. Yields on actively traded non -inflation -indexed issues adjusted to constant m
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. Treasu
factor for adjusting the daily nominal 20-year constant maturity in order to esti
nominal rate. The historical adjustment factor can be found at
www.treas5.gov/offices/domestic-finance/debt-management/interest-rate/itcompositei
Source: U.S. Treasury.
11. Yields on Treasury inflation protected securities (TIPS) adjusted to constant
Source: U.S. Treasury. Additional information on both nominal and inflation -index
found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ind
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 swap
for a Fixed Rate Payer in return for receiving three month LIBOR, and are based o
at 1I.:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters Pa
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 A
rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds o
15. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Th
16. Contract interest rates on commitments for fixed-rate first mortgages. Source
Note: Weekly and monthly figures on this release, as well as annual figures avail
Board's historical H.15 web site (see below), are averages of business days unles
Current and historical H.15 data are available on the Federal Reserve Board's wet
(www.fecteralreserve.gov/). For information about individual copies or subscriptic
Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202
electronic 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 ci
the yield on a security to its time to maturity, is based on the closing market I
actively traded Treasury securities in the over-the-counter market. These market
calculated from composites of quotations obtained by the Federal Reserve Bank of
constantmaturity 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.
http://www.)Federalreserve.gov/Releases/H15/update/ 12/29/200
'RB: H.l:)--Selected Interest scares, W eD-Vnly Ldlly V} uALc-- /cwuiwa —o
Weekly release dates I Historical data I Data Dowuload Program (DDP) I About I Announcements
daily update i� Qr formats: Screen reader I ASCII
Statistical releases
-tome I Economic research and data
lccessibility I Contact Us
Last update,: December 28, 2006
http://www_federalreserve.gov/Releases/H15/update/ 12/29/200
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INVESTMENT ADVISORY BOARD
Meeting Date: January 10, 2007
TITLE:
Pooled Money Investment Board Report
for October 2006
BACKGROUND:
Correspondence
& Written Material Item B
The Pooled Money, Investment Board Report for October 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 OCTOBER 2006 WITH OCTOBER 2005
(DOLLARS IN THOUSANDS)
OCTOBER 200611 OCTOBER 2005 CHANGE
Average Daily Portfolio
$ 55,749,223 $
50,410,419 $
+5,338,804
Accrued Earnings
$ 241,381 $
148,061 $
+93,320
Effective `(laid
5.098
3.458
+1.64
Average Life -Month End (In Days) 190 177 +13
Total Security Transactions
Amount
$ 26,374,691
$
26,231,481
$
+143,110
Number
561
546
+15
Total Time Deposit Transactions
Amount
$ 5,502,190
$
4,264,190
$
+1,238,000
Number
214
155
+59
Average Workday Investment Activity
$ 1,517,942
$
1,524,783
$
-6,841
Prescribed Demand Account Balances
For Services
$ 251,164
$
311,591
$
-60,437
For Uncollected Funds
$ 164,828
$
148,521
$
+6,307
1
PHIL ANGELIDES
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
October 31, 2006
DIFFERENCE IN
PERCENT OF
PERCENT OF
PORTFOLIO FROM
IrYPE OF SECURITY
AMOUNT PORTFOLIO
PRIOR MONTH
Government
Bills
$ 1,860,990 3.27
-0.60
Bonds
0 0.00
0.00
Notes
199,955 0.35
-0.16
Strips
0 0.00
0.00
Total Government
$ 2,060,945 3.62
-0.76
Federal Agency Coupons
$ 9,646,777
16.96
+0.96
Certificates of Deposit
11,903,277
20.94
+0.67
Bank Nodes
1,250,028
2.20
+0.06
Bankers' Acceptances
0
0.00
0.00
Repurchases
0
0.00
0.00
Federal Agency Discount Notes
4,307,370
7.57
-5.37
Time Deposits
8,303,495
14.60
+0.79
GNMAs
230
0.00
0.00
Commercial Paper
8,508,930
14.96
-0.24
FHLMC/Remics
1,006,192
1.77
+0.68
Corporate Bonds
560,870
0.99
+0.03
AB 55 Loans
8,420,192
14.81
+0.92
GF Loans
1,097,300
1.93
+1.93
Reversed Repurchases
-198,520
-0.35
-0.33
Total (All Types)
$ 66,867,086
100.00
INVESTMENT ACTIVITY
Pooled Money
Other
Time Deposits
Totals
PMIA Monthly Average Effective Yield
Year to Date Yield Last Day of Month
OCTOBER 2006
NUMBER AMOUNT
661 $ 26,374,591
12 130,312
214 52502,190
787 $ 32,007,093
5.098
4.976
04
SEPTEMBER 2006
NUMBER
AMOUNT
507
$ 24,108,292
14
94,503
162
1,735,500
683 $ 26,938,295
5.023
4.937
Pooled Money Investment Account
Portfolio Composition
$56.9 Billion
10/31 /06
Reverses Treasuries
none 0.35% 3.62% Mortgages
Corporate Boni
0.99%
Commercial Paper
14.96%
Time
14.tiu%
23.14%
3encies
4.53%
BOARD MEMBER ITEMS