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2009 11 04 IABt P.O. Box 1504 LA QutNrA, CALIFORNIA 92247-1504 7 8 - 4 9 5 CALIF. TANIPIC0 LA QUIN IA, C,vLIPOKNIA 92253 ADJOURNED MEETING AGENDA INVESTMENT ADVISORY BOARD Caucus Room 78-495 Calle Tampico- La Quinta, CA 92253 November 4, 2009 - 4:00 P.M. CALL TO ORDER a. Pledge of Allegiance b. Roll Call (760)777-7000 FAX (760) 777-7101 II PUBLIC COMMENT - It his the t, o id- aside for pa01i� •:omrne„t ,•n any matter not scheduled an the agenda.) III CONFIRMATION OF AGENDA IV CONSENT CALENDAR Approval of Minutes of Adjourned Meeting on October 7, 2009 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for September 2009 B. Continued Discussion of the Investment Advisory Board 2009/10 Work Plan VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - October 2009 B• Pooled Money Investment Board Reporis -Auqust 2009 and LAIF Confcren�e Materials VII BOARD MEMBER ITEMS VIII ADJOURNMENT PUBLIC NOTICES The La ouima Study Sesalun Room is handicapped accessibleif special eauipmera is needed to.- !he oaaring impaired, plaasa twenty-fuur i24; hours in advance of We me=trig and arxurn:nooatlons will '.)e call the Fnance Department at 777-7150, made. Any wctings or documents provided to a malouty of the Investmert Advisory Board regarding any i":em on thi: agenda vnil be made available for public inspection a- the City Clerk counter aL City Hall lo::eted at 78-495 Celle Tamplru, La Q. i^.te, CA 92263, during normal business hours. ADJOURNED INVESTMENT ADVISORY BOARD MEETING October 7, 2009 CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 4:00 p.m. by Chairman Ross, followed by the Pledge of Allegiance. PRESENT: Board Members Olander, Moulin, Ross and Park ABSENT: Board Member Rassi OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia, Senior Secretary 11 PUBLIC COMMENT — (This is the time set aside for public comment on any matter not scheduled on the agenda.)- None III CONFIRMATION OF AGENDA - Confirmed IV CONSENT CALENDAR Approval of Minutes of Meeting on September 9, 2009 for the Investment Advisory Board Board Member Olander requested that for further clarification the first sentence under board member items of page 5 read as follows: Board Member Olander suggested that with respect to the funds believed not to be distributed within 5 years ($8 million) and presently invested in 3 to 5 year treasuries that we consider extending the maturities to include the 10-year Treasury Note, which yields in the 3.2% to 3.5% range at present. Board Member Moulin requested that the following correction be made to page 2, last paragraph, second sentence: Mr. Falconer further advised that the City's petty cash is the only asset counted in-house, which was completed in the month of June; and SilverRock's inventory and cash [... ]. Chairman Ross requested that the following correction be made to page 2, last paragraph, first sentence: In response to Chairman Ross, Mr. Falconer advised that a portion of the audit reports are compiled based on the fiscal agent report received from the bank in addition to information received from the bond trustees, with the bank reconciliation compiled by staff. Chairman Ross requested the following corrections be made: Page 1, under "Consent Calendar" last sentence: Board member Moulin advised that the on [... I Page 3, under "FY 2009-2010 Work Plan" sixth paragraph: General discussion ensued amongst the Board regarding the CDAR's program and the Board concluded to the review [... ] MOTION: It was moved Board Members Moulin/Olander to approve the minutes of September 9, 2009 as amended. Motion carried unanimously. V Business Session A. Transmittal of Treasury Report for August 2009 Mr. Falconer presented and reviewed the staff report advising the Board of the decline in cash by $1.7 million ending the month slightly under $188 million. The portfolio yields also declined with pooled cash ending the rate at .64%, the bonds proceeds at .30% and the overall rate at .61 %. Mr. Falconer also advised that page 7 reflects the investment activity for the month of August, with the report reflecting a purchase of a CD from First Bank in addition to purchases in LAIF, due to the maturity of several investments. Page 5 reflects the Wells Fargo Sweep Account balance at $10.5 million; the unusual large account balance was due to the semi-annual bond debt -service payment which was due September 15` F) Due to the current market, investment percentages in LAIF remain high, with the overall LAIF balance declining slightly in September, due to cash needs. Mr. Falconer advised that the portfolio yields of .61 % compared favorably to the one year Treasury bill at .46%, the two year bill at 1 % and LAIF at 3%, with the yields remaining depressed with the current market. General discussion ensued amongst the Board regarding the current market yields. In response to Board Member Moulin, Mr. Falconer advised that the TLGP Goldman Sachs Note referenced on page 4 did not carry over to page 5 and staff would make the necessary correction accordingly. Mr. Falconer advised that the GE Capital Corporate Note reflected on page 4 matured on September 1", a $5 million GE Capital (TLGP issued note) was purchased with a December 2011 maturity. General discussion ensued amongst the Board regarding the purchase of TLGP pieces and its comparison to other commercial paper currently on the market. Also discussed was the affects of short-term paper on the U.S. market but also its affect on the global markets, in addition to a discussion pertaining to the current market and its affect on commercial real estate. MOTION - It was moved by Board Members Moulin/Park to approve, receive and file the Treasury Reports for August 2009. Motion carried unanimously. B. Continued Discussion of the Investment Advisory Board 2009- 2010 Work Plan Mr. Falconer advised that as a result of previous discussions and growing concerns about California's current economic state, staff and Chairman Ross investigated other possible alternatives to LAIF. Mr. Falconer further advised that currently in place is the City's Wells Fargo Sweep account. Mr. Falconer presented several alternatives to the Board for their consideration. The first alternative was a new investment vehicle to the market, CalTRUST a joint powers agency run by counties and water districts and managed by Wells Fargo, with the same day dollar -in, dollar -out portfolio (similar to LAIF). Also presented was the California Asset Management Program (CAMP) a 3 joint powers agency whose portfolio is managed by Public Finance Management, also with the same day dollar -in dollar -out feature. The last alternative was a list of Money Market Mutual Funds submitted by Chairman Ross. In response to Chairman Ross, Mr. Falconer advised that the current money market fund currently used by Wells Fargo is a Treasury Money Market Sweep Account. Chairman Ross advised that the handout included in the agenda packet is a list of Lipper Institutional US Government Money Market Funds Index and Institutional US Treasury Money Market Funds, with all funds institutional class shares. The list was submitted to familiarize the Board and staff with the current money market and U.S. treasury funds. General discussion ensued amongst the Board regarding the list of Lipper funds, current City invested funds, current investment policy requirements, in addition to continued discussion of alternate investments in lieu of LAIF. Discussion continued with Mr. Falconer suggesting to the Board that he investigate other alternatives with Wells Fargo in lieu of the current sweep account besides the current sweep account. In response to Chairman Ross, Mr. Falconer advised that the information regarding CalTRUST was obtained via their website and he would contact them for any additional information they could supply for the Board's review. Board concurred. Mr. Falconer advised that a presentation could be scheduled if there were any particular products that were of interest to the Board. MOTION — It was moved by Board Members Olander/Moulin to continue the discussion of the 2009-2010 work plan. Motion carried unanimously. C. IAB Scheduled Meeting of November 11 — City Holiday Due to the scheduled holiday in the month of November, it was the Board's recommendation to reschedule the November 11 `h meeting to November 4", 2009. 2 MOTION - It was moved by Board Members Moulin/Olander to advance the November 111", 2009 meeting to November 4" 2009. Motion carried unanimously. VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report — September 2009 Mr. Falconer presented and reviewed the month -end cash report advising that the large large sum for the month of September balance in the Wells Fargo Sweep account was due to the payment of the City Hall bond issues and an early payment to PERS (which will result in a savings of $600,000). Mr. Falconer further advised of the continual decline in the LAIF rate, with the current rate at .72%. Noted and Filed B. Pooled Money Investment Board Report — July 2009 Mr. Falconer advised that the average life for the pool stands at 180 days. Mr. Falconer also advised that he was not familiar with the NOW account reflected in the report and would follow-up at the LAIF conference to obtain information about the account. In response to Board Member Olander, Mr. Falconer advised that LAIF has an approved list of commercial paper from which they buy from and a large portion is invested in asset back commercial paper. Noted and Filed VII BOARD MEMBER ITEMS - None VIII ADJOURNMENT MOTION - It was moved by Board Members Olander/Park to adjourn the meeting at 5:05 p.m. Motion carried unanimously. Senior Secretary 5 INVESTMENT ADVISORY BOARD Business Session: A Meeting Date: November 4, 2009 ITEM TITLE: Transmittal of Treasury Report for September 30, 2009 BACKGROUND: Attached please find the Treasury Report for September 30, 2009. RECOMMENDATION: Review, Receive and File the Treasury Report for September 30, 2009. YJohnM. Falconer, Finance Director TWT44a" MEMORANDUM TO: La Quinta City Council FROM: John M. Falconer, Finance Director/Treasurer - SUBJECT: Treasurer's Report for September 30, 2009 DATE: October 31, 2009 Attached is the Treasurer's Report for the month ending September 30, 2009. 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 LAIF Certificates of Deposit US Treasuries (2) US Gov't Sponsored Enterprises (2) Commercial Paper (2) Corporate Notes Mutual Funds 55,157,586 1,209,000 107,911,391 - 12,111,722 2,300,000 10,000,000 5,000,000 1 (9,150,000) (10,000,000) (2,000,000) 19,129 0 0 175,072 0 48,307,586 1,209,000 107,930,520 0 0 15,286,794 0 (6,850,000) 0 19,129 0 0 3,175,072 0 Subtotal $ 176,389,699 $ 17,300 000 $ 21 150,000 $ 194,201 $ 172,733,900 $ 3,655,799 Cash 3 11,484,934 1 10 638,488 846,446 10,638.488 Total 1 $ 187,874,633 1 $ 17,300,000 j3i,788,48811 $ 194.201 1 $ 173580,346 $ 14.294,287 I certify that this report accurately reflects all pooled investments and is in compliance with the California Government Code; and is in conformity with the City Investment Policy. As Treasurer of the City of La Quinta, I hereby certify that sufficient Investment liquidity and anticipated revenues are available to meet the pools expenditure requirements for the next six months. The City of La Quinta used the Bureau of the Public Debt, U.S. Bank Monthly Statement and the Bank of New York Monthly Custodian Report to determine the fair market value of investments at month end. 10-2-97-2-QD7 John M. Falconer Date Finance Director/Treasurer Footnote (1) The amount reported represents the net Increase (decrease) of deposits and withdrawals from the previous month. (2) The amount reported in the other column represents the amortization of premium/discount for the month on 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. 2 Treasurer's Commentary For the Month of September 2009 Cash Balances - The portfolio size decreased by $14.3 million to end the month at $173.58 million. The major reason for the decrease was the semi annual debt service payment of $11 million and a one time retirement payment to CalPers of $1 .3 million. Investment Activity - The average maturity of the portfolio increased by 20 days to 112 days at the end of September. The Treasurer follows a buy and hold investment policy and purchased one (1) $5,000,000 Corporate Bond insured under the Federal Deposit Insurance Corporation (FDIC) Temporary Liquidity Guarantee Program (TLGP). The portfolio continues to not have direct investments in Government Sponsored Enterprises (GSE's) at this time. The sweep account earned $11 in interest income for the month of August and the bank fees for the month were $ 1,904 which resulted in a net decrease of $ 1,993 in real savings. Portfolio Performance - The overall portfolio performance decreased by eight (8) basis points from the prior month and ended at .53% for the month, with the pooled cash investments yielding .56%. The portfolio yield should continue to stay at these levels for the near future. At this time last year, the portfolio was yielding 2.64% which reflects the current interest rate environment. Looking Ahead While the liquidity crisis impacting financial and business institutions has somewhat waned, the Treasurer is still concentrating on safety first and foremost. In the short term, the Treasurer will be maintaining LAIF balances at the maximum allowable percentage because its rate declines slower in a declining rate environment. The Treasurer will not be investing in non-TLGP corporate notes, non-TLGP commercial paper or GSE's due to the current economic conditions affecting the financial markets; but instead will be investing in short term (up to two year) U.S. Treasury Bills. Bond proceeds will be laddered in three- and six-month Treasury bills as they mature. 3 C Z Z Z Z Z Z Z Z X$ W 3 � c E n T g a w c c o�w N C % QQ m j V E E m 0 U p C! 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Y_ ryA3,6k MR F�UNJJIFUUEF FUNJJdU C9O1.y o f $ gg �Y 2222 eniioo p Fih � N $�8 S�Q� � d. x8 $A*4'0 i 9f p p q 6 O' o� 35y> UULL � o �$R�p� n s a 0 s fp� g a§�p� I^ LL@ R Vim$= N Y I:S �Cry G' 3 it 4l City of La Quint, Comparative Rates of Interest Saptember30,2009 City Of LaCulnla Averege August 2006 4.11 6.01% 4.97% 40 4.97% SW 2006 4.98% 5.01% 4.9 53 6.00% OCT 20De 5.00% 5.02% 5.01% 67 4.96% 5.02% Nov 2006 5.04% 6.03% 5.03% 62 4.94% 5.10% Dec 2006 6,08% 504% 5.06% 80 4.90% 5,13% 6.13% Jan 2007 5.18% 6.12% 5.16% 64 4.98% SAM Feb 2007 6.19% 6.13% 5A7% 45 4.95% 5.18% Mar 2007 6.21% 5.03% 6.16% 87 488% 6.21% Apr 2007 5,20% 5.14% 6.15% 42 4,U% 522% May 2007 5.20% 5,06% SAM 32 4.81% 525% June 2007 5.19% 4.88% 5.10% 85 4,81% 5.25% FY 07108 July 2007 521% 4.90% 5.12% 129 4.80% 5,26% August 2007 5.17% 4.85% 5.08% 109 4,59% 525% Sept 2007 5.16% 488% 506% 129 4.W% 523% Od 2007 6.11% 4,85% 602% 116 3.95% 5.14% Nov2007 6.03% 4.83% 4,96% W 3.34% 4,96% Dec 20W 4.95% 3.43% 4.45% 123 3.39% 4,80% Jan 2008 4.56% 3.33% 4.22% 98 2.31% 462% Feb 2008 4.12% 3.24% 3.85% 86 2.07% 4.16% Mar 2008 4.07% 2.83% 3.67% 74 1.50% 3,78% Apr 2008 3.45% 3.27% 3.41% 82 170% 3.40% May 2006 3.14% 327% 3.17% 63 1.02% 307% June 2008 309X IN% 2.86% 80 2.14% 2,89% FY OW9 July 2008 2.99% 1.93% 277% 62 1.70% L88% 2.29054 2.76% 2.18% 279% August2008 3.16% 1.92% 2.88% 51 1,69% 1.09% 2.14% 2.38% 2,08% 2.78% Sept2008 2.81% 1.92% 161% 37 1,42% 1.79% 1.90% 2.00% 2.13% 2.77% 002008 2.66% 2.61% 2.61% 29 0.90% 1.40% 1,72% 1.50% 207% 271% Nov 2008 2.38% 2.36% 2.36% 64 0,15% 0.40% IN% 1.25% 1.45% 2,67% Dac 2o08 1.60% 0,18% tA2% 116 0.05% 0.26% 0.59% 0.88% 0,27% 2.35% Jan 2009 1.36% 0.18% 1.23% 82 0.15% 0.35% 0.43% 0.08% 0.31% 205% Feb 2009 123% 0.18% 1.11% 76 0.30% 0.60% 0.61% 0.88% 048% 1.87% Mar2009 1.26% 0.18% 1.13% 69 020% 0.42% 0.70% 0.88% 0.37% 1.82% Apr2009 0.94% 0.18% 0.85% 54 0,31% 0.33% 0.59% 0.58% 0.28% 1.61% May 2009 0.92% 0,18% 084% 80 0.18% 030% 0.53% 0.86% 0,23% 1,63% June 2M 0.85% 0.20% 0.80% 111 0.20% 0.35% 0.66% 1,13% 0.26% 1.38% FYMID July 2009 0.09% 0.30% 0,65% 111 0.19% 0.28% 0.47% 1.00% 0.28% IN% August 20091 0.64% 0.30% O.61%1 92 0.16% 0.26% 0.46% 100% 024% 093% 10 r i r I r r■ I I I r I r I ■ \ \ \ \ I / / I / / I I I I I i ■ I 0 0 0 o O W (O N O N a 0) O N m 0 n Q 11 INVESTMENT ADVISORY BOARD Business Session: B Meeting Date: November 4, 2009 TITLE: Continued Discussion of the Fiscal Year 2009/10 Work Plan BACKGROUND: Staff contacted several members at Wells Fargo regarding the Heritage Money Market Fund. The current fees under the CaITRUST program are 13 basis points. If the City were to invest directly in the Heritage Money Market Fund the fees would be 20 basis points. The city would have to commit $50 million dollars to receive the 13 basis point rate offered under the CaITRUST program. Staff has attached supporting documentation on the fund for your review. I f the Board would like pursue investigating this product further staff would recommend getting a detailed list of the investments. In addition, staff also researched the CAMP program and found the current yield is at .28%. RECOMMENDATION: Continued DMVA iscussion of the Investment Advisory Board 2009/10 Work Plan. 1�� John M. Falconer, Finance Director Lipper Institutional US Government Money Market Funds Index Page I of 2 Vianka Orrantia From: ted@theodoreross.com Sent: Wednesday, September 30, 2009 2:03 PM To: John Falconer Cc: Vianka Orrantia Subject: Lipper Institutional US Government Money Market Funds Index Hi John - I thought that it might be helpful to the Investment Advisory Board's discussion and consideration of an alternative to LAIF to be aware of the Lipper indices of Institutional US Government Money Market Funds and Institutional US Treasury Money Market Funds. The components of both indices and their ticker symbols are presented below. Thank you for including this information in the next meeting's packet. Regards, Ted Ross Lipper Institutional US Government Money Market Funds Index Active Assets Institutional Government Securities Trust AISXX Barclays Global Investors Funds: Government Money Market Fund; Institutional Class Shares BVIXX BlackRock Liquidity Funds: FedFund; Institutional Shares TFDXX Cash Account Trust: Government & Agency Securities Portfolio; DWS Government Cash Institutional Shares DBBXX Columbia Funds Series Trust: Columbia Government Plus Reserves; Capital Class Shares GGGXX Columbia Funds Series Trust: Columbia Government Reserves; Capital Class Shares CGCXX Dreyfus Government Cash Management Funds: Dreyfus Government Cash Management; Institutional Shares DGCXX Dreyfus Government Cash Management Funds: Dreyfus Government Prime Cash Management; Institutional Shares DIPXX Evergreen Select Money Market Trust: Evergreen Institutional US Govt Money Market Fund; Institutional Shares EGIXX Fidelity Colchester Street Trust: Government Portfolio; Class I Shares FIGXX Fidelity Money Market Trust: Retirement Government Money Market Portfolio FGMXX Fifth Third Funds: Fifth Third Institutional Government Money Market Fund; Institutional Shares KGIXX First American Funds, Inc: Government Obligations Fund; Class Y Shares FGVXX Funds For Institutions Series: FFI Government Fund MLGXX Goldman Sachs Trust: Financial Square Federal Fund; FST Shares FEDXX Goldman Sachs Trust: Financial Square Government Fund; FST Shares FGTXX HSBC Investor Funds: HSBC Investor US Government Money Market Fund; Class Y Shares RGYXX JPMorgan Trust I: JPMorgan Federal Money Market Fund; Institutional Class Shares JFMXX JPMorgan Trust Il: JPMorgan US Government Money Market Fund; Capital Shares OGVXX Legg Mason Partners Institutional Trust: Western Asset Institutional Govt Mny Mkt Fd; Inst Shares INGXX Money Market Obligations Trust: Government Obligations Fund; Institutional Shares GGIXX Money Market Obligations Trust: Government Obligations Tax -Managed Fund; Institutional Service Shares GTSXX Morgan Stanley Institutional Liquidity Funds: Government Portfolio; Institutional Class Shares MVRXX MTB Group of Funds: MTB US Government Money Market Fund; Institutional Class AKGXX 7 9/30/2009 tipper msnruuonai u� vovernment Money Market 1 unds Index Page 2 of 2 Northern Institutional Funds: Government Portfolio; Shares BNGXX Northern Institutional Funds: Government Select Portfolio; Shares BGSXX RidgeWorth Funds: Institutional US Government Securities Money Market Fund, Institutional Shares CRGXX SEI Daily Income Trust: Government II Fund; Class A Shares TCGXX State Street Institutional Investment Trust: State Street Institutional US Government Money Market Fund; Inst GVMXX Wells Fargo Funds Trust: Wells Fargo Advantage Government Money Market Fund, Administrator Class Shares WGAXX Lipper Institutional US Treasury Money Market Funds Index Barclays Global Investors Funds: Treasury Money Market Fund; Institutional Class Shares BRIXX BlackRock Liquidity Funds: T-Fund; Institutional Shares TSTXX BlackRock Liquidity Funds: Treasury Trust Fund; Institutional Shares TTTXX Columbia Funds Series Trust: Columbia Treasury Reserves; Adviser Class Shares NTRXX Dreyfus Institutional Reserves Funds: Dreyfus Institutional Reserves Treasury Fund; Premier Shares DRRXX Dreyfus Treasury & Agency Cash Management; Institutional Shares DTRXX Dreyfus Treasury Prime Cash Management; Institutional Shares DTRXX Evergreen Select Money Market Trust: Evergreen Institutional Treasury Money Market Fund; Institutional Shares EIMXX Evergreen Select Money Market Trust: Evergreen Instl 100% Treasury Money Market Fund, Institutional Shares EUXX Fidelity Colchester Street Trust: Treasury Only Portfolio; Class I Shares FSIXX Fidelity Colchester Street Trust: Treasury Portfolio; Class I Shares FISXX Fifth Third Funds: Fifth Third US Treasury Money Market Fund; Institutional Shares FQTXX First American Funds, Inc: Treasury Obligations Fund; Class D Shares FTDXX Funds For Institutions Series: FFI Treasury Fund MLTXX Goldman Sachs Trust: Financial Square Treasury Instruments Fund; FST Shares FTIXX Goldman Sachs Trust: Financial Square Treasury Obligations Fund; FST Shares FTDXX Goldman Sachs Trust: Institutional Liquid Assets Treasury Instruments Portfolio; ILA Admin Units IRAXX HSBC Investor Funds: HSBC Investor US Treasury Money Market Fund; Class I Shares HBIXX Investors Cash Trust: Treasury Portfolio; Institutional Class Shares ICTXX JPMorgan Trust I: JPMorgan 100% US Treasury Securities Money Market Fund, Institutional Class Shares JTSXX JPMorgan Trust ll: JPMorgan US Treasury Plus Money Market Fund, Institutional Shares IJTXX Legg Mason Partners Institutional Trust: Western Asset/Citi Institutional US Treasury Reserves; Class A Shares CIIXX Money Market Obligations Trust: Treasury Obligations Fund; Institutional Shares TOIXX Money Market Obligations Trust: US Treasury Cash Reserves, Institutional Shares UTIXX Morgan Stanley Institutional Liquidity Funds: Treasury Portfolio, Institutional Class Shares MISXX RidgeWorth Funds: Institutional US Treasury Securities Money Market Fund; Institutional Shares CIUXX RidgeWorth Funds: US Treasury Money Fund; Class I Shares CUSXX SSgA Funds: SSgA US Treasury Money Market Fund SVTXX UBS Money Series: UBS Select Treasury Institutional Fund SETXX Wells Fargo Funds Trust: Wells Fargo Advantage Treasury Plus Money Market Fund; Institutional Class Shares PISXX 9/30/2009 8 t_a111CUJ 1 LauncneJ v4uw 1v1VLcy 1viYri RUL VPLIVii"- League of California Cities l:Of�LIT�IA CME elty Advocate Weeks �1�1E� 2009 Issue #34 September 4, 2009 HOME CaITRUST Launches New Money Market Option CONTENTS CalTRUST just launched a new money market account in response to participant requests for a CalTRUST option with same day liquidity and a stable net asset value Editor's Note (NAV), or share price. This new account option is open to all CalTRUST participants Budget Clean -Up and has already has taken in over $100 million in assets in its first week. Expected on Prop. IA Securitization, HUTA The CalTRUST money market account gives participants access to the Wells Fargo Deferral and Redevelopment Advantage Funds Heritage Money Market Fund the Heritage Fund Select Class 9 9 Y ( 9 ) shares. The Heritage Fund was launched in June of 1995, and had over $24 billion Register Now for in assets as of Aug. 28. Prop. IA Securitization Workshops The new CalTRUST money market option gives participants everything they have Assembly Revises and been asking for in a stable value option: Approves New Prison Reform Package • Same -day liquidity for purchases and redemption requests received by 1 Opposition Letters p.m. PT; Needed on Bill to Limit Retention A stable $1 NAV; Proceeds . "AAA" and "Aaa" ratings from S&P and Moody's, respectively; American Recovery . Highly competitive money market rates; and Reinvestment Best available expense ratio of just 13 basis points (0.13 percent); and Act: Updates and Additional Funding • Full compliance with all provisions of Rule 2s(7) governing SEC -registered Opportunities money market funds. CalTRUST Launches New Money Market Option Money Market Account is Easy to Access State Water Resources Control Board Approves Participants can access information on their new money market account in the , Construction General same manner as they do their short-term and medium -term accounts via 24-hour Permit password -protected Web site. To ensure transparency, participants can view each CCS Partnership Local portfolio's securities holdings in virtual real-time, which represents actual values at Leadership Summit close of business the prior day. Toolkit to Support Regional Reform Participants Now Have Even Greater Flexibility Events State Auditor With the launch of the money market account option, CalTRUST participants now Releases Proposed Citizens Redistricting have three active account options: Commission Application for Public • Money Market, with a dollar -weighted average maturity of 90 days or less Comment and some -day liquidity; ILG Releases Updated . Short-term, an enhanced cash option with a target duration of 0-2 years and Public Service Ethics Pub Resource next -day liquidity; and Upcoming Events • Medium -term, with a target duration of 1.5-3.5 years with monthly liquidity. The flexibility afforded by these three account options provides local agencies with a highly efficient means of allocating funds across the fixed -income spectrum, and a cost-free means of reallocating funds among these options as circumstances warrant. 2 http://newsletter.cacities.org/e_article001534488.cfm?x=bl 1,0,w 9/30/2009 1 aiLLkVox L0.LLLlVllMJ 1Y\rW 1V'v"l.Y 14b'G L Vl L Experienced Public Officials Provide Strategic Direction and Oversight The CalTRUSTS board of trustees provides strategic direction and oversight for all aspects of the CalTRUST program. The board is comprised of experienced local agency treasurers and finance officials. These expert individuals have years of experience with the restrictions and limitations of the California Government Code, and are actively engaged in the determination of overall investment strategy for the CaITRUST portfolios. The current CaITRUST board of trusteesincludes: • Chuck Lomeli, treasurer -tax collector, Solano County, and president of the CalTRUST Board of Trustees; • Glenn Duncan, council member, city of Chino, vice-president of the CalTRUST board of trustees and a registered municipal securities principal; • Bill Pollacek, treasurer -tax collector, Contra Costa County; • Don Kent, treasurer -tax collector, Riverside County • Dave Ciapponi, assistant general manager and chief financial officer, Westlands Water District; • John Colville, senior investment officer, city of Sacramento; • Dan McAllister, treasurer -tax collector, San Diego County; and • Rob Boitano, assistant treasurer and chief investment officer, Sonoma County. Find Out More For additional information on the new CalTRUST money market account option or any aspect of the CalTRUST program, contact Lyle Defenbaugh, Wells Capital Management at (916) 441-6200 or vist the CalTRUST Web site. [PRINTER FRIENDLY VERSION] Published by League of California Cities Copyright Q 2009 League of California Cities. All rights reserved. Powered by IMN— E-MAIL TO A COLLEAGUE Im 3 http://newsletter.cacities.org/e_article001534488.cfm?x=bl 1,0,w 9/30/2009 Heritage Money Market Fund Seeks current income, while preserving capital and liquidity. Advisor. Wells Fargo Funds Management, LLC Inception Date: 06-29-95 Net Fund Assets: $24.6 Billion Fund Manager: David Sylvester Ticker Symbol: SHIXX CUSIP: 949917397 Net Expense Ratio: 0.20% Historical Performance' j Average Annual Total Returns as of 08-31-09 1 Year 3Year 5Year 10Year Since Inception 1.24% 3.41% 3.42% 3.29% 3.95% Total Returns 2002 2003 2004 2005 20,06 2007 2008 1.75% 1.07% 1.27% 330% 4,96% 5.24% 2.82% Portfolio Composition' %of Portfolio ® Commercial Paper: 65% Certificates of Deposit: 9% Time Deposits: 8% Repurchase Agreements: 6% _3 ® Municipal Bonds: 5% FloatingNariable Rate Bonds: 5% r Short Term Corporate Bonds:2% _. Total: 100%`�' Weighted Average Maturity 36 Days Moody's Money Market Fund Rating3 Aaa S&P Money Market Rating' AAAm NAIC Approval' Yes Dividend and Distribution Information as of08-31-09 7-Day 7-Day Current Current Yield 30-Day Month Dividend Yield Before Waivers Current Yield Mar 09 $0.0006 0.68% 0.63% 0.73% Apr 09 $0.0005 0.65% 0.60% 0.67% May 09 $0.0005 0.55% 0.51% 0.59% Jun 09 $0.0004 0.42% 0.37% 0.47% Jul 09 $0.0003 0.32% 0.26% 0.36% Aug 09 $0.0002 0.27% 0.22% 0,29% Figures quoted represent past performance, which is no guarantee of future results. Investment returns will fluctuate. The Fund's yield figures more closely reflect the current earnings of the Fund than the total return figures. Current performance may be lower or higher than the performance data quoted. Money market funds are sold without a front-end sales charge or contingent deferred sales charge. Other fees and expenses apply to an investment in the Fund and are described in the Funds current prospectus. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. The adviser has committed to certain fee waivers and/or expense reimbursements. These reductions may be discontinued. 'Portfolio composition is subject to change and may have changed since the date specified. 'Institutional Class shares incepted on March 31, 2000. Performance shown prior to the inception date of the Institutional Class reflects the performance of the Administrator Class shares, and includes expenses that are not applicable to and are higher than those of the Institutional Class shares. 'The ratings indicated are from Standard & Poor's and/or Moody's Investors Service (together"rating agencies'). Standard & Poor's is a trademark of McGraw-Hill, Inc., and has been licensed. The Fund is not sponsored, endorsed, sold, or promoted by these rating agencies, and these rating agencies make no representation regarding the advisability of investing in the Fund. "The National Association of Insurance Commissioners (NAIC) is the organization of insurance regulators from the 50 states, the District of Columbia, and the four U.S. territories. The NAIC provides a forum for the development of uniform policy when uniformity is appropriate. A fund is NAIC approved when it is on the List of Approved Mutual Funds pursuant to Part 4, Section 6 (d) of the Securities Valuation Office (SVO) Purposes and Procedures Manual of the NAIC. This fact sheet must be accompanied or preceded by a current prospectus for Institutional Class shares of the Wells Fargo Advantage Money Market Funds. Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for Wells Fargo Advantage Funds". Other affiliates of Wells Fargo & Company provide subad visory and other services for the Funds. The Funds are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company. NOT FDIC INSURED • NO BANK GUARANTEE " MAY LOSE VALUE C• 2009WelIs Fargo Funds Mauage,n+ nt, LLC. Ali rights ,,Eere'eci. 11174,n)909WVl1 Die WELLS FARGOm 1I E. as Wells Fargo Advantage Funds® — Money Market Funds Cash Investment Money Market Fund Heritage Money Market Fund These securities have not been approved or disapproved by the U.S. Securities and Exchange Commission (SEC), nor has the SEC passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. Fund shares are NOTdeposits or other obligations of, or guaranteed by, Wells Fargo Bank, N.A., its affiliates or any other depository institution. Fund shares are not insured or guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation or any other government agency. Table of Contents `The Funds jlnformatiorrabout each Fund you should know before investing, including., investment objective, ;principal investments, principal investment strategies, principal risks, performance history, fees =and expenses <organization and, Management of ,the Funds Information about the Funds' organization and the companies managing your money nformation about how Fund shares are priced ind how to buy and sell Fund shares Otheri nformation Information about distributions, taxes and financial highlights Key Fund Information Cash Investment Money Market Fund Heritage Money Market Fund Description of Principal Investment Risks Portfolio Holdings Information Organization and Management of the Funds About Wells Fargo Funds Trust The Investment Adviser The Sub -Adviser Dormant Multi -Manager Arrangement Compensation to Dealers and Shareholder Servicing Agents Pricing Fund Shares How to Buy Shares How to Sell Shares Account Policies 3 5 8 11 13 14 14 14 15 15 16 17 18 20 22 Distributions 23 Taxes 24 Financial Highlights 25 For More Information Back Cover Please find Wells Fargo Advantage Funds' Privacy Policy inside the back cover of this Prospectus. The information provided in this Prospectus is not intended for distribution to, or use by, any person or entity in any non-U.S. jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject Fund shares to any registration requirement within such jurisdiction or country. The Funds are distributed by Wells Fargo Funds Distributor, LLC, a member of FINRA/SIPC, and an affiliate of Wells Fargo & Company. Securities Investor Protection Corporation ("SIPC") information and brochure are available at www.SIPC.org or by calling SIPC at (202)371-8300. Key Fund Information This Prospectus contains information about certain Funds within the Wells Fargo Advantage Funds ®family and is designed to provide you with important information to help you with your investment decisions. Please read it carefully and keep it for future reference. In this Prospectus, "we"generally refers to Wells Fargo Funds Management, LLC (Funds Management) or the sub-adviser."We" may also refer to the Funds' other service providers. "You" refers to the shareholder or potential investor. Investment Objective, Principal Investments and Principal Investment Strategies The investment objective of each Fund in this Prospectus is non-fundamenta1;that is, it can be changed by a vote of the Board of Trustees alone.The objective and strategies description for each Fund tells you: what the Fund is trying to achieve; how we intend to invest your money; and what makes the Fund different from the other Funds offered in this Prospectus. This section also provides a summary of each Fund's principal investments and practices. Unless otherwise indicated,these investment policies and practices apply on an ongoing basis. Principal Risk Factors This section lists the principal risk factors for each Fund. A complete description of these and other risks is found in the "Description of Principal Investment Risks"section. It is possible to lose money by investing in a Fund. Key Fund Information About Wells Fargo Advantage Money Market Funds All Wells Fargo Advantage Money Market Funds seek to provide current income, while preserving capital and liquidity by investing in a portfolio of money market instruments. A Fund may have additional investment objectives or restrictions. Money market instruments are high quality, short-term investments that present minimal credit risk and may include securities such as U.S. Government obligations, bank obligations, corporate bonds, commercial paper, municipal securities, asset -and mortgage -backed securities, and repurchase agreements. All Wells Fargo Advantage Money Market Funds are managed to meet the requirements of Rule 2a-7 under the Investment Company Act of 1940,which provides that: • Each Fund will seek to maintain a net asset value of $1.00 per share. • Each Fund will only buy securities that have remaining maturities of 397 days or less as determined under Rule 2a-7 • The dollar -weighted average maturity of each Fund will be 90 days or less. • Each Fund will invest only in U.S. dollar -denominated securities. • Each Fund will value its assets based on the total market value of all of the securities it holds using the amortized cost method. In order to obtain a rating from a rating organization, some Funds may observe additional investment restrictions. Under normal circumstances, the Funds will invest the majority of their assets in First Tier securities. Consistent with Rule 2a-7, a FirstTier security is any security that has received the highest possible short-term rating for debt obligations from any two nationally recognized statistical rating organizations (NRSRO), has received one such rating if rated by only one NRSRO,or is deemed by us to be of comparable quality if unrated. A Government security is considered a First Tier security. Temporary Guarantee Program On March 31, 2009,the U.S. Department of the Treasury (the"Treasury") announced a second extension of the Temporary Guarantee Program for Money Market Funds beginning on May 1, 2009 through September 18, 2009 (the"Extended Program"). On April 8, 2009,the Board of Trustees of Wells Fargo Funds Trust and Wells Fargo Variable Trust (collectively, the "Board") unanimously approved the participation of each money market fund in the Extended Program, except for the Treasury Plus Money Market Fund and 100%Treasury Money Market Fund (the "Funds"). Consistent with the Funds' participation in the initial three-month term and the first extension,the Extended Program applies only to shareholders of record of each Fund as of September 19,2008. Subject to certain conditions and limitations, in the event that the market -based net asset value per share of a Fund falls below $0.995 and the Fund liquidates its holdings, any shares held by an investor in the Fund as of the close of business on September 19, 2008, or held by the investor when the market -based net asset value per share of the Fund falls below $0.995, whichever is less, are insured against loss under the Extended Program.Shares acquired by investors after September 19, 2008 are generally not eligible for protection under the Extended Program. Participation in the Extended Program required a payment to the Treasury in the amount of either 0.015% or 0.023%, depending upon the market -based net asset value of a Fund as of September 19, 2008 (the"Program Participation Payment"). The Board has determined that the Program Participation Payment is an extraordinary expense that will be borne by each Fund without regard to the expense cap currently in effect for such Fund.The Program Participation Payment is borne by the current assets of each Fund as a whole, notwithstanding that the Extended Program applies to only shareholders of record as of September 19,2008,as described above. Key Fund Information Cash Investment Money Market Fund Investment Adviser Investment Objective The Cash Investment Money Market Fund seeks current income, while preserving capital Wells.Fargo Funds Management, LLC and liquidity. Sub -Adviser Principal Investments Wells Capital Under normal circumstances, we invest exclusively in high -quality, short-term, U.S. dollar - Management Incorporated i denominated money market instruments of domestic and foreign issuers. Fund inception: Principal Investment Strategies 10/14/1987 We actively manage a portfolio of high -quality, short-term, U.S. dollar -denominated money Select Class market instruments. We will only purchase First Tier securities.These include, but are not r Ticker:WFQXX - limited to, bank obligations such as time deposits and certificates of deposit, government Fund Number:3800 securities, asset -backed securities, commercial paper, corporate bonds and repurchase agreements.These investments may have fixed, floating, or variable rates of interest and may be obligations of U.S. or foreign issuers. We may invest more than 25%of the Fund's total assets in U.S.dollar-denominated obligations of U.S. banks. Our security selection is based on several factors, including credit quality, yield and maturity, while taking into account the Fund's.overall level of liquidity and average maturity. . Principal Risk Factors The Fund is primarily subject to the risks mentioned below. • Counter -Party Risk Market Risk Debt Securities Risk Money Market Fund Risk • Foreign Investment Risk • Regulatory Risk • Issuer Risk • U.S. Government Obligations Risk Management Risk These and other risks could cause you to lose money in your investment in the Fund and could adversely affect the Fund's net asset value, yield and total return.These risks are described in the"Description of Principal Investment Risks"section. Cash Investment Money Market Fund 5 Performance The following information shows you how the Fund has performed and illustrates the variability of the Fund's returns over time. Please remember that past performance is no guarantee of future results. 6.41 % 4:95% 1999 2000..2001. 2002 2003 2004 2005 2006 2007 2008 Best Quarter: Q4 2000 1.64% Worst Quarter: Q2 2004 0.23% The Fund's year-to-date performance through March 31, 2009, was 0.26%. To obtain a current 7-day yield for the Fund call toll -free 1-800-260-5969. Select Glass' 2.89% 3.48'Y0 d.a7 ro ' Select Class shares incepted on June 29, 2007. Performance shown prior to the inception of the Select Class shares reflects the performance of the Institutional Class shares, and includes expenses that are not applicable to and are higher than those of the Select Class shares. Performance shown prior to November 8,1999 for the Select Class shares reflects the performance of the Service Class shares, and includes expenses that are not applicable to and are higher than those of the Select Class shares. 6 Cash investment Money Market Fund Fees and Expenses These tables are intended to help you understand the various costs and expenses you will pay as a shareholder in the Fund. These tables do not reflect the charges that may be imposed in connection with an account through which you hold Fund shares.A broker -dealer or financial institution maintaining an account through which you hold Fund shares may charge separate account, service or transaction fees on the purchase or sale of Fund shares that would be in addition to the fees and expenses shown here. Maximum sales charge (load) imposed on purchases None (as o percentage of the offering price) Maximum deferred sales charge (load) None (as a percentage of the net asset value at purchase) Management Fees 0.10% Distribution (12b-1) Fees 0.00% Other Expenses°'? 0.11 % Total Annual Fund Operating;, Expenses 0.21 % Fee Walvers 0.08% Net Expenses3 0.13% ' Includes expenses payable to affiliates of Wells Fargo & Company. 2 Other Expenses have not been adjusted to take into account the Fund's participation in the U.S. Department of the Treasury's Temporary Guarantee Program for Money Market Funds. Such fees are not reflected in the table. Had these fees been taken into account, Other Expenses would have been 0.13%. 3 The adviser has committed through June 30, 2010, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's net operating expenses, excluding brokerage commissions, interest, taxes, and extraordinary expenses, do not exceed the net operating expense ratio shown. The committed net operating expense ratio maybe increased only with approval of the Board of Trustees. Example of Expenses This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.lt assumes: • You invest $10,000 in the Fund for the time periods indicated below and then redeem all of your shares at the end of these periods; • Your investment has a 5% return each year; • You reinvest all distributions; and • The Fund's operating expenses remain the same. The fee waivers shown in the Annual Fund Operating Expenses are only reflected in the first year of each of the following time periods. Although your actual costs may be higher or lowerthan those shown below, based on these assumptions your costs would be: 10 Yeats $260 Cash Investment Money Market Fund Heritage Money Market Fund Investment Adviser Wells Fargo Funds ;Management, LLC i Sub -Adviser Wells Capital _Management Incorporated Fund Inception 6/29/1995 Select Class TickerWFJXX - Fund Number:3801- Investment Objective The Heritage Money Market Fund seeks current income, while preserving capital and liquidity. Principal Investments Under normal circumstances, we invest exclusively in high -quality, short-term, U.S. dollar - denominated money market instruments of domestic and foreign issuers. Principal Investment Strategies We actively manage a portfolio of high -quality, short-term, U.S. dollar -denominated money market instruments. We will only purchase First Tier securities. These include, but are not limited to, bank obligations such as time deposits and certificates of deposit, government securities, asset -backed securities, commercial paper, corporate bonds and repurchase agreements.These investments may have fixed,floating, or variable rates of interest and may be obligations of U.S.or foreign issuers. We may invest more than 25% of the Fund's total assets in U.S. dollar -denominated obligations of U.S. banks. Our security selection is based on several factors, including credit qua Iity,yield and maturity, while taking into account the Fund's overall level of liquidity and average maturity. Principal Risk Factors The Fund is primarily subject to the risks mentioned below. • Counter -Party Risk • Market Risk • Debt Securities Risk • Money Market Fund Risk • Foreign Investment Risk • Regulatory Risk • Issuer Risk • U.S. Government Obligations Risk • Management Risk These and other risks could cause you to lose money in your investment in the Fund and could adversely affect the Fund's net asset value, yield and total return.These risks are described in the"Description of Principal Investment Risks"section. 8 Heritage Money Market Fund Performance The following information shows you how the Fund has performed and illustrates the variability of the Fund's returns over time. Please remember that past performance is no guarantee of future results. Best and Worst 6.39% Best Quarter: Q4 2000 1.65% 5.26% Worst Quarter: Q1 2004 0.23% 4.96% 4.96°% 3.10% 2,90°% 1.75% 1.07% 1.27% 1999 2000 2001k 2002 2003 2004 2005 2006 2007 2008 The Fund's year-to-date performance through March 31, 2009, was 0.25%. To obtain a current 7-day yield for the Fund call toll -free 1-800-260-5969. Select Class' 2.90% 3.49% 3.57% ' Select Class shares incepted on June 29, 2007. Performance shown prior to the inception of the Select Class shares reflects the performance of the Institutional Class shares, and includes expenses that are not applicable to and are higher than those of the Select Class shares. Performance shown prior to March 31, 2000 for the Select Class shares reflects the performance of the Administrator Class shares, and includes expenses that are not applicable to and are higher than those of the Select Class shares. Heritage Money Market Fund 9 Fees and Expenses These tables are intended to help you understand the various costs and expenses you will pay as a shareholder in the Fund. These tables do not reflect the charges that may be imposed in connection with an account through which you hold Fund shares.A broker -dealer or financial institution maintaining an account through which you hold Fund shares may charge separate account, service or transaction fees on the purchase or sale of Fund shares that would be in addition to the fees and expenses shown here. Maximum sales charge (load) imposed on purchases (as a percentage of the offering price) Maximum deferred sales charge (load) (as apercentage of the net asset value at purchase) None Management Fees u.1 U`Yo Distribution (12b-1) Fees 0.00% Other txpensesl,2 0.11 % Total Annual Fund Operating Expenses 0.21% Fee Waivers 0,08% NetExpenses3 0.13% ' Includes expenses payableto affiliates of Wells Fargo&Company. ' Other Expenses have not been adjusted to take into account the Fund's participation in the U.S. Department of the Treasury's Temporary Guarantee Program for Money Market Funds. Such fees are not reflected in the table. Had these fees been taken into account, Other Expenses would have been 0.13%. 3 The adviser has committed through June 30, 2010, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's net operating expenses, excluding brokerage commissions, interest, taxes, and extraordinary expenses, do not exceed the net operating expense ratio shown. -The committed net operating expense ratio maybe increased only with approval of the Board of Trustees. Example of Expenses This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes: • You invest $10,000 in the Fund for the time periods indicated below and then redeem all of your shares at the end of these periods; • Your investment has a S% return each year; • You reinvest all distributions; and • The Fund's operating expenses remain the same. The fee waivers shown in the Annual Fund Operating Expenses are only reflected in the first year of each of the following time periods. Although your actual costs may be higher or lower than those shown below, based on these assumptions your costs would be: 10 Heritage Money Market Fund Description of Principal Investment Risks Understanding the risks involved in mutual fund investing will help you make an informed decision that takes into account your risk tolerance and preferences. The factors that are most likely to have a material effect on a particular Fund as a whole are called "principal risks."The principal risks for each Fund have been previously identified and are described below. Additional information about the principal risks is included in the Statement of Additional Information. Counter -Party Risk When a Fund enters into a repurchase agreement, an agreement where it buys a security from a seller that agrees to repurchase the security at an agreed upon price and time, the Fund is exposed to the risk that the other party will not fulfill its contractual obligation. Similarly, the Fund is exposed to the same risk if it engages in a reverse repurchase agreement where a broker -dealer agrees to buy securities and the Fund agrees to repurchase them at a later date. Debt Securities Risk Debt securities, such as notes and bonds, are subject to credit risk and interest rate risk. Credit risk is the possibility that an issuer of an instrument will be unable to make interest payments or repay principal when due. Changes in the financial strength of an issuer or changes in the credit rating of a security may affect its value. interest rate risk is the risk that market interest rates may increase, which tends to reduce the resale value of certain debt securities, including U.S. Government obligations. Debt securities with longer durations are generally more sensitive to interest rate changes than those with shorter durations. Changes in market interest rates do not affect the rate payable on an existing debt security, unless the instrument has adjustable or variable rate features, which can reduce its exposure to interest rate risk. Changes in market interest rates may also extend or shorten the duration of certain types of instruments, such as asset -backed securities, thereby affecting their value and returns. Debt securities may also have, or become subject to, liquidity constraints. Foreign Investment Risk Investments in foreign obligations are subject to more risks than U.S. domestic obligations. These additional risks include potentially less liquidity and greater price volatility, as well as risks related to adverse political, regulatory, market or economic developments. Foreign companies may also be subject to significantly higher levels of taxation than U.S. companies, including potentially confiscatory levels of taxation, thereby reducing their earnings potential. In addition, returns realized on foreign securities may be subject to high levels of foreign taxation. Direct investment in foreign securities may involve foreign withholding and other taxes; trade settlement, custodial, and other operational risks; and the less stringent investor protection and disclosure standards of some foreign markets. In addition, foreign markets can and often do perform differently than U.S. markets. Issuer Risk The value of a security may decline for a number of reasons that directly relate to the issuer or an entity providing credit support or liquidity support, such as management performance, financial leverage, and reduced demand for the issuer's goods, services or securities. Management Risk We cannot guarantee that a Fund will meet its investment objective. We do not guarantee the performance of a Fund, nor can we assure you that the market value of your investment will not decline. We will not"make good"on any investment loss you may suffer, nor does anyone we contract with to provide services, such as selling agents or investment advisers, promise to make good on any such losses. Description of Principal Investment Risks II Market Risk The market price of securities owned by a Fund may go up or down, sometimes rapidly or unpredictably. Securities may decline in value or become illiquid due to factors affecting securities markets generally or particular industries represented in the securities markets. The value or liquidity of a security may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally.They may also decline or become illiquid due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. During a general downturn in the securities markets, multiple asset classes may decline or become illiquid in value simultaneously. Money Market Fund Risk Although each Fund seeks to maintain the value of your investment at $1.00 per share, there is no assurance that it will be able to do so, and it is possible to lose money by investing in a Fund. Generally, short-term funds such as money market funds do not earn as high a level of income as funds that invest in longer -term instruments. Because the Funds invest in short- term instruments, the Fund's dividend yields may be low when short-term market interest rates are low. Regulatory Risk Changes in government regulations may adversely affect the value of a security. An insufficiently regulated market might also permit inappropriate practices that adversely affect an investment. U.S. Government Obligations U.S. Government obligations include U.S.Treasury obligations issued by the U.S. Government Risk and securities issued by U.S. Government agencies or government -sponsored entities. While U.S.Treasury obligations are backed by the"full faith and credit"of the U.S. Government, securities issued by U.S. Government agencies or government -sponsored entities may not be backed by the full faith and credit of the U.S. Government.The Government National Mortgage Association (GNMA),a wholly owned U.S. Government corporation, is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages insured by the Federal Housing Administration or the Department of Veterans Affairs. U.S.Government agencies or government -sponsored entities (i.e. not backed by the full faith and credit of the U.S.Government) include the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). Pass -through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but are not backed by the full faith and credit of the U.S.Government. FHLMC guarantees the timely payment of interest and ultimate collection or scheduled payment of principal, but its participation certificates are not backed by the full faith and credit of the U.S. Government. If a government -sponsored entity is unable to meet its obligations, the performance of a Fund that holds securities of the entity will be adversely impacted. U.S. Government obligations are subject to low but varying degrees of credit risk, and are still subject to interest rate and market risk. 12 Description of Principol Investment Risks Portfolio Holdings Information A description of the Wells Fargo Advantage Funds'policies and procedures with respect to disclosure of the Wells Fargo Advantage Funds' portfolio holdings is available in the Funds' Statement of Additional Information and on the Wells Fargo Advantage Funds' Web site at www.welisfargo.com/advantagefunds.In addition, Funds Management will, from time to time, include portfolio holdings information in quarterly commentaries for certain Funds.The substance of the information contained in such commentaries will also be posted to the Funds' Web site at www.wellsfargo.com/advantagefunds. Portfolio Holdings Information 13 Organization and Management of the Funds About Wells Fargo Funds Trust The Trust was organized as a Delaware statutory trust on March 10,1999.The Board of Trustees of the Trust (Board) supervises each Fund's activities, monitors its contractual arrangements with various service providers and decides on matters of general policy. The Board supervises the Funds and approves the selection of various companies hired to manage the Funds' operations. Except for the Funds' investment advisers, which generally may be changed only with shareholder approval, if the Board believes that it is in the best interests of the shareholders, it may change other service providers. The Investment Adviser Wells Fargo Funds Management, LLC, located at 525 Market Street, San Francisco, CA 94105, serves as the investment adviser for the Funds. Funds Management, an indirect, wholly owned subsidiary of Wells Fargo & Company, was created to assume the mutual fund advisory responsibilities of Wells Fargo Bank and is an affiliate of Wells Fargo Bank. Wells Fargo Bank, which was founded in 1852, is the oldest bank in the western United States and is one of the largest banks in the United States.As adviser, Funds Management is responsible for implementing the investment policies and guidelines for the Funds and for supervising the sub -adviser who is responsible for the day-to-day portfolio management of the Funds. For providing these services, Funds Management is entitled to receive fees as described in each Fund's table of Annual Fund Operating Expenses under the caption "Management Fees."A discussion regarding the basis for the Board's approval of the investment advisory and sub -advisory agreements for each Fund is available in the Funds' semi-annual report for the fiscal half -year ended August 31, 2008. Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage and consumerfinance services.The involvement of various subsidiaries of Wells Fargo & Company, including Funds Management, in the management and operation of the Funds and in providing other services or managing other accounts gives rise to certain actual and potential conflicts of interest. For example certain investments may be appropriate for a Fund and also for other clients advised by Funds Management and its affiliates,and there may be market or regulatory limits on the amount of investment, which may cause competition for limited positions. Also,various client and proprietary accounts may at times take positions that are adverse to a Fund. Funds Management applies various policies to address these situations, but a Fund may nonetheless incur losses or underperformance during periods when Wells Fargo & Company, its affiliates and their clients achieve profits or outperformance. Wells Fargo & Company may have interests in or provide services to portfolio companies or Fund shareholders or intermediaries that may not be fully aligned with the interests of all investors. Funds Management and its affiliates serve in multiple roles, including as investment adviser and, for most Wells Fargo Advantage Funds, sub -adviser, as well as administrator, principal underwriter, custodian and securities lending agent. These are all considerations of which an investor should be aware and which may cause conflicts that could disadvantage a Fund. Funds Management has instituted business and compliance policies, procedures and disclosures that are designed to identify, monitor and mitigate conflicts of interest. 14 Organization and Management of the Funds The Sub -Adviser The following sub -adviser performs day-to-day investment management activities for the Funds.The sub -adviser is compensated for its services by Funds Management from the fees Funds Management receives for its services as adviser to the Funds. Wells Capital Management Incorporated (Wells Capital Management), an affiliate of Funds Management, an indirect wholly owned subsidiary of Wells Fargo & Company, located at 525 Market Street, San Francisco, CA 94105, is the sub -adviser for the Funds. Accordingly, Wells Capital Management is responsible for the day-to-day investment management activities of the Funds. Wells Capital Management is a registered investment adviser that provides investment advisory services for registered mutual funds, company retirement plans, foundations, endowments, trust companies, and high net -worth individuals. Dormant Multi -Manager Arrangement The Board has adopted a "multi-manager"arrangement for the Heritage Money Market Fund. Under this arrangement, each Fund and Funds Management mayengage one or more sub -advisers to make day-to-day investment decisions for the Fund's assets. Funds Management would retain ultimate responsibility (subject to the oversight of the Board) for overseeing the sub - advisers and may, at times, recommend to the Board that the Fund: (1) change, add or terminate one or more sub -advisers; (2) continue to retain a sub -adviser even though the sub -adviser's ownership or corporate structure has changed; or (3) materially change a sub -advisory agreement with a sub -adviser. Applicable law generally requires a Fund to obtain shareholder approval for most of these types of recommendations, even if the Board approves the proposed action. Under the "multi -manager" arrangement approved by the Board,the Fund will seek exemptive relief, if necessary,from the SEC to permit Funds Management (subject to the Board's oversight and approval) to make decisions about the Fund's sub -advisory arrangements without obtaining shareholder approval.The Fund will continue to submit matters to shareholders for their approval to the extent required by applicable law. Meanwhile, this multi -manager arrangement will remain dormant and will not be implemented until shareholders are further notified. Organization and Management of the Funds 15 Compensation to Dealers and Shareholder Servicing Agents Additional Payments to Dealers In addition to dealer real lowances and payments made by each Fund for distribution and shareholder servicing, the Fund's adviser, the distributor or their affiliates make additional payments ("Additional Payments") to certain selling or shareholder servicing agents for the Fund, which include broker-dealers.These Additional Payments are made in connection with the sale and distribution of shares of the Fund or for services to the Fund and its shareholders.These Additional Payments, which may be significant, are paid by the Fund's adviser, the distributor or their affiliates, out of their revenues, which generally come directly or indirectly from fees paid by the entire Fund complex. In return for these Additional Payments, the Fund's adviser and distributor expect to receive certain marketing or servicing advantages that are not generally available to mutual funds that do not make such payments. Such advantages are expected to include, without limitation, placement of the Fund on a list of mutual funds offered as investment options to the selling agent's clients (sometimes referred to as"Shelf Space"); access to the selling agent's registered representatives; and/or ability to assist in training and educating the selling agent's registered representatives. Certain selling or shareholder servicing agents receive these Additional Payments to supplement amounts payable by the Fund underthe shareholder servicing plans. In exchange,these agents provide services including, but not limited to, establishing and maintaining accounts and records; answering inquiries regarding purchases, exchanges and redemptions; processing and verifying purchase, redemption and exchange transactions; furnishing account statements and confirmations of transactions; processing and mailing monthly statements, prospectuses, shareholder reports and other SEC -required communications; and providing the types of services that might typically be provided by each Fund's transfer agent (e.g.,the maintenance of omnibus or omnibus -like accounts, the use of the National Securities Clearing Corporation for the transmission of transaction information and the transmission of shareholder mailings). The Additional Payments may create potential conflicts of interests between an investor and a selling agent who is recommending a particular mutual fund over other mutual funds. Before investing, you should consult with your financial consultant and review carefully any disclosure by the selling agent as to what monies they receive from mutual fund advisers and distributors, as well as how your financial consultant is compensated. The Additional Payments are typically paid in fixed dollar amounts,or based on the number of customer accounts maintained by the selling or shareholder servicing agent,or based on a percentage of sales and/or assets under management, or a combination of the above.The Additional Payments are either up -front or ongoing or both.The Additional Payments differ among selling and shareholder servicing agents. Additional Payments to a selling agent that is compensated based on its customers'assets typically range between 0.05% and 0.30% in a given year of assets invested in the Fund by the selling agent's customers. Additional Payments to a selling agent that is compensated based on a percentage of sales typically range between 0.10%and 0.15%of the gross sales of the Fund attributable to the selling agent. In addition, representatives of the Fund's distributor visit selling agents on a regular basis to educate their registered representatives and to encourage the sale of Fund shares.The costs associated with such visits may be paid for by the Fund's adviser, distributor, or their affiliates, subject to applicable FINRA regulations. More information on the FINRA member firms that have received the Additional Payments described in this section is available in the Statement of Additional Information, which is on file with the SEC and is also available on the Wells Fargo Advantage Funds website at www.wellsfargo.com/advantagefunds. 16 Compensation to Dealers and Shareholder Servicing Agents Pricing Fund Shares The share price (net asset value per share or NAV) for a Fund is calculated each business day.To calculate a Fund's NAV, the Fund's assets are valued and totaled, liabilities are subtracted, and the balance, called net assets, is divided by the number of shares outstanding. We calculate the NAV at the following times each business day for the purpose of accepting purchase orders and redemption requests: Cash Investment Money Market 10:00a.m.,12:00p.m., 2:00p.m., 3:00p.m., 4:00p.m. and Heritage Money Market I 5:00p.m. (ET) Generally, the NAV is not calculated, and purchase and redemption orders are not accepted, on days that the New York Stock Exchange ("NYSE") is closed. If the markets close early, the Funds may close early and may value their shares at earlier times under these circumstances. An order will be priced at the next NAV calculated after the order is received in proper form by the Fund's transfer agent. Information on the timing of dividend accrual and settlement in connection with a purchase or a redemption of shares is referenced in the How to Buy Shares and How to Sell Shares sections on the following pages. Each Fund's assets are valued using the amortized cost method, in accordance with Rule 2a-7 under the 1940 Act. Portfolio securities are valued at their acquisition cost, adjusted for discounts or premiums reflected in their purchase price.This method of valuation is designed to enable each Fund to price its shares at $1.00 per share, although each Fund's share price may deviate from $1.00 per share. The Board has established procedures designed to monitor each Fund's price per share. Funds Management will report to the Board any deviations of more than 0.25%from the Fund's net asset value using the amortized cost valuation method. In the event that the Board determines that a deviation exists that may result in material dilution or other unfair results to shareholders, the Fund will take such corrective action as it deems necessary, including, but not limited to,establishing a net asset value per share (of less than or more than $1.00) solely by using available market quotations. See the Statement of Additional Information for further disclosure. Pricing Fund Shares 17 How to Buy Shares Typically, shares are offered primarily for direct investment by institutions such as pension and profit sharing plans, employee benefit trusts, endowments, foundations and corporations. Shares may also be offered through certain financial intermediaries that charge their customers transaction or other fees with respect to their customers' investments in the Funds. General Notes for Buying Shares • Minimum Investments. Institutions and other investors are required to make a minimum initial investment of $50,000,000 per Fund.There are no minimum subsequent investment requirements.The minimum initial investment may be waived or reduced in certain situations. Please see the Statement of Additional Information for details on minimum initial investment waivers. • Proper Form. If the transfer agent receives your application in proper order before the Fund's NAV is calculated,your transactions will be priced at the next calculated NAV. If your application is received after the Fund's last intra-day NAV is calculated, it will be priced at the next business day's first calculated NAV. Failure to complete an account application properly may result in a delay in processing your request. Shares begin earning dividends after the transfer agent receives your purchase order in proper form and the purchase amount is received by the Fund's custodian. Insufficient Funds. You will be charged a $25.00 fee for every check or Electronic Funds Transfer that is returned to us as unpaid. In the event that your purchase amount is not received by the close of the Federal Funds wire for purchases by wire or Electronic Funds Transfer,we reserve the right to hold you responsible for any losses, expenses or fees incurred by the Fund, its transfer agent or its custodian. Special Considerations When Investing Through Financial Intermediaries: If a financial intermediary purchases shares on your behalf, you should understand the following: • Minimum Investments and Other Terms of Your Account. Share purchases are made through a customer account at your financial intermediary following that firm's terms. Financial intermediaries may require different minimum and subsequent investment amounts and/or earlier transaction deadlines than those stated in this Prospectus. Please consult an account representative from your financial intermediary for specifics. • Records are Held in Financial Intermediary's Name. Financial intermediaries are usually the holders of record for shares held through their customer accounts.The financial intermediaries maintain records reflecting their customers' beneficial ownership of the shares. • Purchase/Redemption Orders. Financial intermediaries are responsible for transmitting their customers' purchase and redemption orders to the Funds and for delivering required payment on a timely basis. • Shareholder Communications. Financial intermediaries are responsible for delivering shareholder communications and voting information from the Funds, and for transmitting shareholder voting instructions to the Funds. All Investors Should Understand the Following: U.S. Dollars Only. All payments must be made in U.S.dollars and all checks must be drawn on U.S. banks. It is expected that purchases in the form of investment checks do not accrue dividends until the next business day after receipt. Right to Refuse an Order. We reserve the right to refuse or cancel a purchase or exchange order for any reason, including if we believe that doing so would be in the best interests of a Fund and its shareholders. Trade Requests. For the benefit of the Funds,we request that trades be placed as early in the day as possible 18 How to Buy Shares How to Buy Shares Directly: Select Class investors who are interested in purchasing shares directly from a Fund should contact Investor Services at 1-800-260-5969. Earnings Distributions. Assuming the purchase amount is received by the Fund's custodian no later than the close of the Federal Funds Wire which is normally 6:00p.m. (ET),dividends will accrue as follows: Cash Investment Money Market Heritage Money Market • By 5:00 p.m. (ET) Same Business Day • After 5:00 p.m. (ET) Next Business Day How to Buy Shares 19 How to Sell Shares Select Class shares must be redeemed according to the terms of your customer account with you r<financial intermediary. You should contact your investment representative when you wish to sell Fund shares. By Telephone / ToSell Some or All of Your Shares • To speak with an investor services representative call Electronic Funds Transfer (EFT) 1-800-260-5969 or use the automated phone system at 1-800-368-7550. • Redemptions processed by EFT to a linked Wells Fargo Bank account, and received by the deadlines listed in the "Redemption Orders"section below, will occur same day for Wells Fargo Advantage money market funds. • 'Transfers made to a Wells Fargo Bank Account are made available sooner than transfers to an unaffiliated institution. • Redemptions to any other linked bank account may post in two business days, please check with your financial institution for funds posting and availability. Note: Telephone transactions such as redemption requests made overthe phone generally require only one of the account owners to call unless you have instructed us otherwise. By Wire • To arrange for a Federal Funds wire, call 1-800-260-5969. • Be prepared to provide information on the commercial bank that is a member of the Federal Reserve wire system. • We reserve the right to charge a fee for wiring funds although it is not currently our practice to do so. Please contact your bank to verify any charges that it may assess for an incoming wire transfer. B Internet Visit our Web site at www.wellsfargo.com/advantagefunds. In Person Investors are welcome to visit the Investor Center in person to ask questions or conduct any Fund transaction.The Investor Center is located at 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051 General Notes for Selling Shares: • Proper Form. We will process requests to sell shares at the next NAV calculated after a request in proper form is received by the transfer agent. • Right to Delay Payment. We can delay the payment of a redemption for longer than one day if there is a non - routine closure of the Fedwire or Federal Reserve Bank or under extraordinary circumstances. We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check or through EFT, you may be required to wait up to seven business days before we will send your redemption proceeds. Our ability to determine with reasonable certainty that investments have been finally collected is greater for investments coming from accounts with banks affiliated with Funds Management than it is for investments coming from accounts with unaffiliated 20 How to 5eIl Shares banks. Redemption payments also maybe delayed'under extraordinary circumstances or as permitted by the SEC in order to protect remaining shareholders. Under the extraordinary circumstances discussed under Section 22(e) under the Investment Company Act of 1940, as amended, we may suspend the right of redemption or postpone the date of payment of a redemption for longer than one day. Generally, those extraordinary circumstances are when: (i) the New York Stock Exchange is closed or trading thereon is restricted; (ii) an emergency exists which makes the disposal by a Fund of securities it owns, or the fair determination of the value of the Fund's net assets not reasonable practical; or (iii) the SEC, by order, permits the suspension of the right of redemption for the protection of shareholders. • Redemption in Kind. Although generally we pay redemption requests in cash, we reserve the right to determine in our sole discretion, whether to satisfy redemption requests by making payment insecurities (known as a redemption in kind). In such case, we may pay all or part of the redemption insecurities of equal value as permitted under the 1940 Act, and the rules thereunder.The redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received. • Retirement Plans and Other Products. If you purchased shares through a packaged investment product or retirement plan, read the directions for selling shares provided by the product or plan.There may be special requirements that supersede the directions in this Prospectus. • Payment of Dividends. Requests for redemption proceeds by check or Electronic Funds Transfer that are received in proper form will be sent out by the next business day after receipt and will earn a dividend until the day such proceeds are sent. • Redemption Orders. Wire redemptions will be processed and earn dividends as listed in the table below. oP r re Dividends Cash Investment Money Market Heritage Money Market • By S:OOp.m.(ET) Same Business Day Not, earned on day of request • After 5:00 p.m. (ET) Next Business Day Earned on day of request Frequent Purchase and Redemption of Fund Shares Excessive trading by Fund shareholders can negatively impact a Fund and its long-term shareholders by increasing expenses or lowering returns. However, money market funds, which are typically utilized by investors for cash management purposes and invest in highly liquid securities, are not as susceptible to these negative effects as non -money market Funds. Moreover, because all money market Funds typically maintain a $1.00 net asset value, there is no significant financial incentive for an investor to attempt to market time investments into a money market Fund. Although the policies adopted by the Funds do not prohibit frequent trading between money market Funds, Funds Management will seek to prevent an investor from utilizing a money market Fund to facilitate frequent purchases and redemptions of shares in non -money market Funds. If Funds Management determines that an investor has engaged in timing activities in contravention of the Funds' policies (as described in the prospectus for the non -money market Fund), Funds Management will prevent such investor from investing in the non -money market Fund for a period of 30 calendar days. In addition, Funds Management reserves the right to accept purchases, redemptions and exchanges made in excess of applicable trading restrictions in designated accounts held by Funds Management or its affiliate that are used at all times exclusivelyfor addressing operational matters related to shareholder accounts, such as testing of account functions, and are maintained at low balances that do not exceed specified dollar amount limitations. How to Sell Shares 21 Account Policies Advance Notice of Large Transactions We strongly urge you to begin all purchases and redemptions as early in the day as possible and to notify us at least one day in advance of transactions in excess of $50,000,000.This will allow us to manage the Funds most effectively. When you give us this advance notice,you must provide us with your name and account number. Low Balance Account Redemptions We reserve the right to redeem certain accounts that fall below the minimum initial investment amount as the result of shareholder redemptions. Before doing so, we will give you approximately 60 days to bring your account above the minimum investment amount. Please call Investor Services at 1-800-260-5969 or contact your selling agent for further details Statements and Confirmations Statements summarizing activity in your account are mailed quarterly. Confirmations are mailed following each purchase, sale, exchange, or transfer of Fund shares, except generally for Automatic Investment Plan transactions, Systematic Withdrawal Plan transactions using Electronic Funds Transfer, and purchases of new shares through the automatic reinvestment of distributions. Upon your request and for the applicable fee,you may obtain a reprint of an account statement. Please call Investor Services at 1-800-260-5969 for more information. Statement Inquiries Contact us in writing regarding any errors or discrepancies noted on your account statement within 60 days after the date of the statement confirming a transaction. We may deny your ability to refute a transaction if we do not hear from you within those 60 days. Transaction Authorizations Certain Institutions may transact through a registered clearing agency, such as the National Securities Clearing Corporation (NSCC).Clearing agency privileges allow us to accept transaction instructions by anyone representing themselves as the shareholder and who provides reasonable confirmation of their identity. We use reasonable procedures to confirm that transactions through a clearing agency are genuine; we will not be liable for any losses incurred if we follow instructions we reasonably believe to be genuine.Contact us or your Institution immediately if you believe there is a discrepancy on your confirmation statement or if you believe someone has obtained unauthorized access to your account. USA PATRIOT Act In compliance with the USA PATRIOT Act, all financial institutions (including mutual funds) at the time an account is opened, are required to obtain,verify and record the following information for all registered owners or others who may be authorized to act on the account:full name,date of birth,taxpayer identification number (usually your Social Security Number), and permanent street address. Corporate,trust and other entity accounts require additional documentation.This information will be used to verify your identity.We will return your application if any of this information is missing, and we may request additional information from you for verification purposes. In the rare event that we are unable to verify your identity,we reserve the right to redeem your account at the current day's NAV.You will be responsible for any losses,taxes, expenses,fees, or other results of such a redemption. 22 Account Policies Distributions The Funds declare distributions of any net investment income daily, and make such distributions monthly. The Funds make distributions of any realized net capital gains annually.Your distributions will be automatically reinvested in additional shares, unless your Institution directs otherwise.Your other options are to receive checks for these payments, have them automatically invested in the same class of another Wells Fargo Advantage Fund, or have them deposited into your bank account.With the check payment option, if checks remain uncashed for six months or are undeliverable by the Post Office, we will reinvest the distributions at the earliest date possible, and future distributions will be automatically reinvested.To change the current option for payment of distributions, please contact your Institution. Distributions 23 Taxes The following discussion regarding federal income taxes is based on laws that were in effect as of the date of this Prospectus and summarizes only some of the important federal income tax considerations affecting the Funds and you as a shareholder. It does not apply to foreign or tax-exempt shareholders or those holding Fund shares through a tax -advantaged account, such as a 401(k) Plan or IRA.This discussion is not intended as a substitute for careful tax planning. You should consult your tax adviser about your specific tax situation. Please seethe Statement of Additional Information for additional federal income tax information. We will pass on to a Fund's shareholders substantially all of the Fund's net investment income and realized net capital gains, if any. Distributions of a Fund's ordinary income, if any, generally will be taxable to you as ordinary income.Although the Funds do not expect to realize any capital gain, distributions of a Fund's net short-term capital gain, if any,generally will be taxable to you as ordinary income and distributions of a Fund's net long-term capital gain, if any, generally will be taxable to you as long- term capital gain. Corporate shareholders should not expect to deduct a portion of their distributions when determining their taxable income. In general, distributions also will not qualify for reductions in federal income taxation of dividends payable to individuals from certain domestic and foreign corporations. Distributions from a Fund normally will be taxable to you when paid, whether you take distributions in cash or automatically reinvest them in additional Fund shares. Following the end of each year, we will notify you of the federal income tax status of your distributions for the year. In certain circumstances, Fund shareholders maybe subject to back-up withholding taxes. As long as a Fund continually maintains a $1.00 NAV, you ordinarily will not recognize a taxable gain or loss on the redemption or exchange of your Fund shares. 24 Taxes Financial Highlights The following tables are intended to help you understand each Fund's financial performance for the past 5 years (or for the life of a Fund, if shorter). Certain information reflects financial results for a single Fund share.Total returns represent the rate you would have earned (or lost) on an investment in each Fund (assuming reinvestment of all distributions). An independent registered public accounting firm has audited the information for each period.The information, along with the report of an independent registered public accounting firm and each Fund's financial statements, is also contained in each Fund's annual report, a copy of which is available upon request. Cash Investment Money Market Fund Select Class Shares — Commenced on June 29, 2007 For a share outstanding throughout each period ;period $ 1.00 $ 1.00 ;Income from investment operations: Net investment income (loss) 0.02 0.03 Net realized and unrealized gain (loss) on investments 0.00 0.00 Total from investment operations 0.02 0.03 Less distributions: Distributions from net investment income (0.02) (0.03) Distributions from net realized 'gain , 0.00 0.00 i` Total distributions (0.02) (0.03) ,Nef asset value, end of period $ 1.00 $ 1.00 4otafreturn' 2.40% 3.31 % (Ratios/supplemental data: Net assets, end of period (000s) ` $3,733,381 $3,025,485 Ratio ofnet investment income (loss) to average net assets3 - 2.29% 4.81 % Raticlof expenses to average net assets prior to waived fees and reimbursed expenses3 0.23%4 0.20% Waived fees and reimbursed - expenses' (0.08)% (0.07)% Ratio of expenses to average net assets after waived fees and reimbursed expenses3 0.15%" 0.13% ' Total return calculations would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. 3 During each period, various fees and expenses were waived and reimbursed, as indicated.The ratio of Gross Expenses to Average Net Assets reflects the expense ratio in the absence of any waivers and reimbursements. 6 The following represents expense ratios excluding expenses related to Temporary Government Guarantee program: For the period ended: Feb. 28, 2009 Gross Expenses 0,21% Net Expenses 0.13% Financial Highlights 25 Heritage Money Market Fund Select Class Shares — Commenced on June 29, 2007 For a share outstanding throughout each period !Income from investment operations: Net investment income (loss) 0.02 (0.03) Net realized and.unrealized gain (loss) on investments 0.00 0.06 Total from investment operations 0.02 0.03 Less distributions: Distributions from net investment income (0.02) (0.03) Distributions from net realized gain 0.00 0.00 Total distributions `' (0.02) (0.03) i l Netasse€value,`end of period , - $ 1.00 - $ 1.00 Total retum2 2.40% 3.30% Ratios/supplemental data: Net assets, end of period (000s) $6,066,768 $1,368,330 Ratio of net investment income (loss) to average net assets3 2.140k 4.58% Ratio of expenses to average net assets prior to waived fees and reimbursed expenses3 0.23%4 0.22% Waived fees and 'reimbursed - expenses3 (0.08)% (0.09)% Ratio of expenses to average net assets after waived fees and reimbursed expenses3 0.15%4 0.13% Forthe perioJune 29,2007, commencement ot operations) to Fe ruary29,2008. ' Total return calculations would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. 3 During each period,various fees and expenses were waived and reimbursed, as indicated.The ratio of Gross Expenses to Average Net Assets reflects the expense ratio in the absence of any waivers and reimbursements. 4 The following represents expense ratios excluding expenses related to Temporary Government Guarantee Program: - Fortheperiodended: Feb.28,2009 Gross Expenses 0.21% Net Expenses 0.13% 26 Financial Highlights Wells Fargo Advantage Funds' Privacy Policy Each of the Wells Fargo Advantage Funds (the "Funds") is a separate legal entity, owned by its respective shareholders.The Funds are advised and administered by Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company.The Funds'privacy policy applies to customer information of all current and former Fund shareholders whose account records are maintained by the Funds'transfer agent and who did not invest through a sales intermediary. Shareholders that have purchased Fund shares through sales intermediaries (for example, brokers, 401(k) accounts and variable insurance products) will be covered by privacy policies adopted by those intermediaries. a. We collect and maintain customer information as part of servicing your account and administering your customer relationship. In the course of serving you, we collect information about you from: • Information you provide to us on applications or forms, such as your income, risk preferences and investment goals; • Information about your transactions in your Fund accounts; and • Information that we receive from companies that assist us in servicing your account and marketing financial products to you to better serve your financial needs. b. The customer information we collect is used to service your accounts and help you achieve your financial goals. Information may be used or shared with other Funds and with banks and companies that are directly or indirectly owned or controlled by Wells Fargo & Company (the "Wells Fargo family'), as well as with authorized third parties, for a number of purposes such as: • To protect your accounts from unauthorized access or identity theft. • To process your requests, such as share purchase and sale transactions. • To service your accounts by issuing account statements and tax documents. • To keep you informed about the Funds'services that can meet your needs now and in the future. c. We may disclose all of the information we collect, as described above, with non-affiliated third parties outside the Wells Fargo family that are acting on our behalf or are acting jointly with us, including: • Companies that perform support services for us, such as data processors, technical systems consultants and programmers, or companies that help us market our own products to you. • Others as permitted or required by law such as government entities, in responding to subpoenas and other legal processes, and those with whom you have requested us to share information. • It is important to note that we do not share customer information with non-affiliated companies for the purpose of marketing their own products or services unless you specifically permit us to do so. Some state laws may impose additional restrictions on disclosure of information about customers in those states for certain purposes. d. We share information within the Wells Fargo family so that our affiliates can worktogether to meet your financial needs. We may disclose all of the information we collect,as described above,with our affiliates that provide financial products and services, such as consumer bankers, mortgage lenders, consumer lenders, securities broker -dealers, insurance agencies,and real estate brokerage companies so they can offer you other financial products and services. By law, information that helps us identify you or is derived from your transactions or experiences with us may be shared among the Wells Fargo family (a) for purposes other than direct marketing, and (b) unless you instruct us otherwise,for direct marketing purposes.You can instruct us not to share other personal financial information about you with the Wells Fargo THIS PAGE IS NOT PART OF THE PROSPECTUS Wells Fargo Advantage Funds' Privacy Policy (continued) family. In addition, if you select that option, we will not share any information about you with our affiliates for direct marketing purposes. You may also direct us not to contact you for marketing purposes by certain channels, or at all. We may disclose any of this information to administrative and service units within the Wells Fargo family for purposes such as servicing your accounts and preparing your account statements. e. We are committed to protecting customer information. We are committed to protecting the security and integrity of customer information through procedures and technology designed for this purpose. For example: • We limit employee access to customer information to those who we believe need to know this information in order to service customer relationships. • We maintain policies and procedures covering the proper physical security of workplaces and records. • Our physical, electronic and procedural safeguards comply with federal standards regarding the protection of customer information. • We require independent contractors and outside companies who work with us to adhere to strict security standards. • We use technological means (such as backup files, virus detection and eradication software, firewalls, and other computer software and hardware) to protect against unauthorized access or alterations to customer data. The policies and practices described in this disclosure are subject to change, but we will communicate any significant changes to you as required by applicable Iaw.The policies and practices described in this disclosure replace all previous notices or statements regarding this subject. You have choices regarding how information about you may be shared. If you would like to opt out of information sharing within the Wells Fargo family,your preferences will be honored, and will applyto all Wells Fargo Advantage Funds accounts linked to your Social Security Number. • You may notify us of your preferences at any time. • If you have a joint account, any account holder can opt out on behalf of the otherjoint account holders. How to Notify Us In order to opt out of sharing of account information, as described in section d of this Privacy Policy, please contact us at 1-800-260-5969 and instruct us to carry out one or both of the following: 1) Do not share other personal financial information about me other than Wells Fargo family's own transaction and experience information for any purpose and do not share any information about me for direct marketing purposes among the Wells Fargo family. 2) Do not contact me for marketing purposes by (a) telephone, (b) mail, or (c) any type of solicitation. THIS PAGE IS NOT PART OF THE PROSPECTUS Reduce clutter. Save trees. Sign up for electronic delivery of prospectuses and shareholder reports at www.welisfargo.com/advantagedelivery FOR MORE INFORMATION More information on each Fund is available free upon request, including the following documents: Statement of Additional Information (SAP Supplements the disclosures made bythis Prospectus.The SAl,which has been filed with the SEC, is incorporated by reference into this Prospectus and therefore is legally part of this Prospectus. Annual/Semi-Annual Reports Provide financial and other important information, including a discussion of the market conditions and investment strategies that significantly affected Fund performance overthe reporting period. To obtain copies of the above documents or for more information about Wells Fargo Advantage Funds, contact us: By telephone: Individual Investors:l-800-222-8222 Retail Investment Professionals:1-888-877-9275 Institutional Investment Professionals:1-866-765-0778 By e-mail: wfaf@wellsfargo.com By mail: Wells Fargo Advan tage Funds P.O. Box 8266 Boston, MA 02266-8266 On the Internet: www.wellsfargo.com/advantagefunds From the SEC: Visit the SEC's Public Reference Room in Washington, DC (phone 1-800-SEC-0330 or 1-202-551-8090) or the SEC's Internet site at www.sec.gov. To obtain information for a fee,write oremail: SEC's Public Reference Section 100 "F" Street, NE Washington, DC 20549-0102 publicinfo@sec.gov NOT FDIC INSURED • NO BANK GUARANTEE •MAY LOSE VALUE 0 2009 Wells Fargo Funds Management, LLC. All rights reserved. 40 Printed on Recycled paper 079MMSUP1212 (7-09) ICA Reg. No. 811-09253 t-urrenr t Hrvir tcaie rage i or i f.li'tlltNiA.-ASS t`1 iA`:lt;i �li:N'i 1'!t{><;RAM t 1t j k PU101C J(AXT „'( It1'IRs Al'1'fIt)It 9'P CA a Home a introduction a How to join a Resources a your Account o Contact Us a Site Map Current Pool Rate As of October 26, 2009 The CAMP Money Current Market Portfolio provides Annualized Yield* public agencies with daily liquidity and 0.28% competitive money yields Past pe ormance is not indicative of future results and yields may vary. *The "ct rrent annualized yield" of the Pool may, from time to time, be quoted 16 reports, literature and advertisements published by the Trust. Current annualized yield represents the net change, exclusive of capital change and income other than investment income, in the value of a hypoth tical account with a balance of one share (normally $1.00 per share) vera seven-day base period expressed as a percentage of the value of one share at the beginning of the seven-day period. This resulting net change in account value is then annualized by multiplying it by 365 and dividingithe result by 7. A summary of the CAMP Pool holdings as of the most recent month end is available upon request by calling 1-800-729-7665. This information does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the Trust's investment objectives, risks, charges and expenses before investing in the Trust. This and other information about the Trust is available in the Trust's current Information Statement, which should be read carefully before investing. A copy of the Trust's Information Statement may be obtained by calling 1-800-729-7665 or is available on the Trust's website at www,camponline.com. While the Trust seeks to maintain a stable net asset value of $1.00 per share, it is possible to lose money investing in the Trust. An investment in the Trust is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Shares of the Trust are distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.lnragrg). PFM Fund Distributors, Inc. is a wholly owned subsidiary of PFM Asset Management LLC. Member SIPC. © 2007 California Asset Management Program Home. Introduction How -to -Join Resources Your Account Contact Us Site Map http://www.camponline.com/Current%20Rate.htm 10/27/2009 Investment Uptlons Bona Yroceeas rage I oT t s C`. f:;lL.liaC>Iti"a' t`e4F'1' 1�41^v�(il:.RtI;NI' FRt)Crti31'I - t A PtJBlJ(, jOIN'P P'OWFItS I1'"I'll0i YFY a Home • Imroduct ion *Haw to join • Resources *Your Account o Correct Us a Site Map Investment Money Market Portfolio Options CAMP offers both a money market portfolio and individually managed portfolios to enable public agencies to have an investment solution tailored to meet their specific needs. The CAMP money market portfolio (rated AAAm by Standard & Poor's) offers public agencies a short-term liquid investment and cash management vehicle. The money market portfolio provides public agencies with • Daily liquidity • Competitive money market returns • Unlimited number of deposits and withdrawals • Transactions by wire, ACH and check • Free checking • Sub -accounting that allows an agency to keep separate investments for its different funds or entities Individually Managed Portfolios Individually managed investment portfolios, which are not a part of the Trust, are available under a separate agreement with PFM Asset Management LLC, the Program's investment advisor. An individually managed portfolio provides a public agency with • The investment advisory resources of PFM Asset Management LLC, a leading investment advisery firm • Investments tailored to meet the agency's liquidity needs and specific draw schedule • Professional portfolio management to enhance earnings and manage risk • Investment purchases determined by the agency's investment policy or bond documents • Third -party custody of all assets to provide the highest GASB 3 rating • Competitive shopping for every security to seek the most favorable price and execution • Investment management and custody services at a reasonable cost This information does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security Investors should consider the Trust's investment objectives, nsks, charges and expenses before investing in the Trust. This and other information about the Tmst is available in the Trust's current Information Statement, which should be read carefully before investing. A copy of the Trust's Information Statement may be obtained by calling 1-800-729-7665 or is available on the Trusts website at www camponl ne.com. While the Trust seeks to maintain a stable net asset value of $1.00 per share, it is possible to lose money investing in the Trust. An investment in the Trust is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Shares of the Trust art; distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.rynm org). PFM Fund Distributors, Inc is a wholly owned subsidiary of PFM Asset Management LLC. Member SIPC. p 2007 California Asset Management Program Home Introduction How tojoin Resources Your Account CoruotUs silo MAP http://www.camponline.com/investmentb/o20options.htm 10/27/2009 STANDARD FUND PROFULE &POOWS California Asset Management Program/Cash Resevee ROJEWJy ',wa, Portfolio About the Fund Fund Rating AAArn Fund Type Stable NAV Government Investment Pool Investment Adviser PFM Asset Management LLC Portfolio Manager Michael Varano Date Rating Assigned August 2001 Custodian BNY Western Trust Company Distributor PFM Fund Distributors Rationale The rating on California Asset Management Trust/Cash Reserve Portfolio is based on S&P's analysis of the portfolio's credit quality, investment policies, market price exposure, and management. The rating indicates the Fund has extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit, market, and/or liquidity risks Overview The CAMP Cash Reserve Portfolio is one of several funds managed by PFM Asset Management LLC. The investment objective of the CAMP Cash Reserve Portfolio is to provide as high a level of current income as is consistent with maintaining liquidity and stability of principal. The fund is designed as an investment vehicle for bond proceeds and operating funds of municipalities located in California. PFMAM, Inc., a wholly owned subsidiary of PFM Asset Management LLC, serves as the fund's distributor. Management The fund's investment adviser is PFM Asset Management LLC (PFM). As adviser, PFM manages the CAMP Cash Reserve Portfolio and is responsible for the purchase and sale of all portfolio assets. PFM and Public Financial Management Inc., which is under common ownership with PFM, have managed funds since 1981, The two firms act as financial advisor and/or investment advisor to cities, townships, boroughs, counties, school districts, authorities, and financial institutions throughout the country, providing its clients with financial, investment advisory, and cash management services. Portfolio Assets The fund invests primarily in U.S. Treasury and Federal agency securities and repurchase agreements secured by such obligations, and may March 26, 2009 RMi141fti Sr,\hrt\iffy Portfolio Composition as of March 26, 2009 REPO CP 14.3% _ GOV-AGCY 486% GOV-AGCY-Agerer and Government; BMK - BWt Dsposft CP- Commercial Paper', REPO -Repurchase Agreamend also invest in banker's acceptances, commercial paper and certificates of deposit. Repurchase agreements are conducted with highly credit worthy counterparties and generally comprise no more than 10% of total fund assets. These guidelines are consistent with California regulations concerning the investment of public funds. The fund manager seeks to comply with guidelines similar to those mandated for money market funds in Rule 2a-7 of the Investment Company Act of 1940. The Fund's weighted average portfolio maturity is generally kept low to maintain sufficient liquidity for redemptions and to limit market price exposure. Investors should consider the investment objectives, risks and charges and expenses of the fund before investingfie prospectus which can be obtained from your broker -dealer, contains this and other information about the fund and should be read carefully before investing. An investment in the Fund is not insured or guaranteed by the Federaf Deposit Insurance Corporation of any other government agency. Although the find seeks to preserve the value of your investment at $1,00 per share, it is possible to lose money by investing in the fund. 5 California Asset Management Program/Cash Reserve Portfolio AAAm Net Assets and Weighted Average Maturity (WAM) 3000 25M 0 a R R — uet n.en. -- welyx.enve.ve s,amlry Portfolio Credit Quality as of March 26, 2009 -As assessed by Standard& Poors W 75 60 45 30 15 0 40% 32% 2,4% 16% 0.8% 00% option Date ;....... March 1993. Portfolio Maturity Distribution as of March 26, 2009 me 00 eo 40 20 0 Deys m Portfolio 7 Day Yield Comparison' ® A I€ 1 ); k P 13 1 1 11 n x c s e e s $ ? s s & # X E 1 4 -- a6PRMee GlP,nbxW — Fwtl -S&P Money Fund Indices are calculated weekly by iMoneyflet, Inc., Mai we Comprised of funs rated or assessed by S&P to milkn Me speafic rating categories. The S&P Rated GIP lWiws are calculated weekly by S&P arM are ca ;Pr and of'A m ard'AAm' gow:mment investment pools. The yield quoted represents past performarim Past performance does not guarantee future results Current yield may be tow cr trrglier than tlfe yield quoted. Porformance data current to the most recent montirerid may be amlable by calving tine Pond at the phone number 6stedin tbe'AW the Pond" section on page 1. penoilic_ C-°iyz"S :Y o.:'« ".as'7,.....m'SI?_.uuu cn_cuuuvcs a'e' kuuxc xnulmauVn. f. • .... _. ,. r k , The Prinapal Stability Fund Rating for this fund Issued by Standard & Poor's can be found in the'About the Fund' section on page 1. The rating is current as of the date of this profile report. The fund's portfolio may have changed since this date and there is no guarantee that the fund will continue to have the same rating or perform in the future as rated. Not all money market funds have principal stability fund ratings and those that do may have paid for them. The fad that a fund has a rating is not an indication that it is more or less risky or volatile than a fund that does not. The fund or a third party participating in the marketing of fund shares paid Standard & Poor's for this rating. Standard & Poor's receives no payment for disseminating ratings, except for subscriptions to its publications. Analytic services provided by Standard & Pours Ratings Services ("Ratings Services") are the result of separate activities designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. Accordingly, any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision. Ratings are based on information received by Ratings Services. Other divisions of Standard & Poor's may have information that is not available to Ratings Services. Standard & Poor's is neither associated nor affiliated with the fund. The information in this report has been obtained by Standard & Poor's from sources believed by it to be reliable at the time the report is published. The information in this report, however, may be inaccurate or incomplete due to the possibility of human, mechanical, or other error by Standard & Poor's, its sources or others, or the information in this report may become inaccurate or incomplete due to the passage of time. Standard & Pools has no obligation to keep or to make the information in this report current, and it does not guarantee the accuracy, adequacy, or completeness of any information in this report. STANDARD & POOR'S MAKES NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR USE. In no event shall Standard & Pools, its affiliates or its third party licensors be liable for any direct, indirect, special or consequential damages in connection with the use of any data or information contained herein. Copyright ® 2009 Standard & Poor's, a division of The McGraw-Hill Companies. All rights reserved. Permissions: To reprint, translate, or quote Standard & Poor's publications, contact: Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-9823; or by email to: research reauestliastandardand000rsnom. In INVESTMENT ADVISORY BOARD Correspondence & Written Material Item A Adjourned Meeting Date: November 4, 2009 TITLE: Month End Cash Report — October 2009 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. a, 'M - '6"U� John M. Falconer, Finance Director / \«§a...6=eB § }\\ \ \ }\\\k\\\\\\\\ \ \/\ \ \ \\\\ §\ \ §\\ \ \ \ so o , ci !Io \ f�) 00 2,G 16 . ° #\ / § / §«( §a§k I°( !®!\ ) } :\!.!!�� #» {- _ - 7 !\/)!]|)\!ƒJ4 \ j \/ 2 Bill Lockyer, State Treasurer Inside the State Treasurer's Office • +•.MEMO= PMIA Performance Report - 'Quart rato UatetY16il� Average Maturity a s 1OM2009 0.65 0.69 250 10/8/2009 0.65 0.69 248 10/9/2009 0.65 0.68 248 10/10/2009 0.65 0.68 248 10/11/20091 0.65 0.681 248 10/12/2009 0.65 0.67 246 10/13/2009 0.65 0.67 243 10/14/2009 0.65 0.67 244 10/15/2009 0.62 0.67 255 10/16/2009 0.63 0.66 255 10/17/2009 0.63 0.66 255 10/18/2009 0.63 0.66 255 10/19/2009 0.63 0.66 255 110/20/20091 0.631 0.661 259 Oi, LAIF Performance Report Quarter ending 9/30/2009 Apportionment Rate: 0.90% Earnings Ratio: .00002459481708038 Fair Value Factor: 1.001560611 PMIA Average Monthly Effective Yields Sept 2009 0.750% Aug 2009 0.925% July 2009 1.035% Pooled Money Investment Account Portfolio Composition $61.9 Billion 09/30/09 Loans Corporate Bonds 9.40% 0.35% Commercial Paper 10.70% Now Accou 5.16% Time Depc 8.58% 22.58% Treasuries 35.16% Mortgages 1.53% 3 Recent Bill Auction Results Page 1 of 1 TrasuryDirect 11 -- , lire Muli lvi , A. lsi nr2 L,UA1a&RK II 11K51Auc Uel9 Ic,a t Lll A,clan KCMIID Recent Bill Auction Results Security Issue Maturity Discount Invtstment Price Term Date Date Rate 46 Rrte I Per§100 eusIC 42-DAY 10 29 2009 12 10 2009 0.060 0 061 99.9930DD 91279SR37 13-WEEK 10 29-2009 01-28 2010 0.025 0.026 99.901042 91279SS77 26-WEEK f0 29-2D09 04 29-2019 0.185 0.18A 99.906422 912295UM 4-WEEK 10-22-2009 11-19-2009 0.045 OA46 99,996500 912795551 13 WEEK 11-22 2009 0 21-2030 0.080 0.081 99.979778 91279SR94 26-WEEK 10-22-2009 04-22-2010 0.120 O.113 99,914056 912795UR9 52-WEEK 10-22-2009 10-21-2010 0,325 0.381 99,620833 912299UiI2 4 WEEK 10-15 2009 11-12-2009 0,050 0.051 99,996111 912295Q38 13 WtsK 10-15 HO 01-14 Zion pave 0.07l 99.902306 912795R86 26-WEEK 10-15-2009 04-15-2010 0,150 0.152 YY.92416> 91795uMr 15-DAY 10-13 2099 10-29-1009 0.040 0.091 99.998222 912Y95156 4-WEEK 10-08 2009 11-D5 2009 U.040 0.041 YY.996859 912/95Q20 13-WEEK 10-08 2009 01-O%-2010 0.075 0.016 Y9.98LU42 912795R78 26-WEEK 10-08 2009 04-90-2010 0.150 a 112 99924167 912795U33 4-WEEK 10-012009 10-29-21'01 OA40 0.041 99996889 91)v95M6 13 WEEK 10- OP. -2009 12-31-2009 0.115 0"1 99 910931 512>95R60 26-WEEK 10-01 2009 Oa 01-20m 0.190 0. 193 11 Ir3944 912195r0.3 4-WEEK 09 24-2009 10-22-2009 oaa0 0.041 99.996884 51219554a 13 WEEK 09-24 2009 12-24-2009 0. 100 R101 99.974722 9127950.52 26-WEEK 09-24 2009 03-25-2010 0. 190 0.113 99 903944 912795T84 52-WEEK 09-24-2009 09-23-2010 0.405 OAl2 99.590500 9t279A190 4 WEEK 09 17 2009 10 15 HO 0.030 0.030 99 991667 11v195470 13-WEEK 09-17 2009 12-17 2009 0.135 0. 137 99 965875 9 17111al 26-WEEK 09 17 2009 03-15 2010 0.210 0.2 t3 99,693833 912795T76 4 WEEK 09-1D 2009 10 08 2009 0."0 a 091 a, I'sW W. 912795A62 13 WEEK 09-10-2009 12-10-2009 0.140 0. 142 99.964611 91219Pi R3v 26-WEEK 09-10-2009 93-11-2010 0.229 0228 99 8862`30 91229ST60 300-DAY 09-19-2009 07-15-2010 0.385 0.391 99.670611 912795UY5 4-WLEK 09-03-2009 10-01-2009 0 U85 0.086 99.993389 %2195v5a 13-WEEK 09-03-2009 12-03-2009 0.150 U. 152 99.962083 91279SQ61 26-WEEK 09-03-2009 03-04-2010 0.240 0.244 99.876667 912295TSO 4-WEEK 08-27-2009 09-24-2009 OA20 0.122 99.990667 912295536 13-WEEK 08-27-2009 11-22-2009 OA60 U.162 99.959111 91279SQ53 j 26-WEEK 08-27-2009 02-25-2010 0,255 0.259 99.871083 9t2795143 SLWEEK 08 27-2009 OB-26-2010 0 460 0,168 91 5348A9 912795082 4-WEEK 08-20-2009 09-11 2009 0. 125 0,12Y 99.990278 912795,39 70-DAY O8Q0 2009 10-29-2009 0. 145 0.141 99.971606 91279S$K96 13-WEEK 08 20 2009 11 19 2009 a 180 0.183 99.954500 912715151 26-WEEK 08-20-2009 021A Q01D 0. 270 O.P4 99.B63500 912195T35 303-PAY us is 2009 06-12-2010 0.445 0.452 99,625458 91229500 Effective with the 11/2/98 auction, all bills are auEtioned using the single -priced method. rt>•eAe-9plrormaron. Act I La.9 ;i Idrrcp I Privacy a1 l Nutices I VtstWl Tern, & :qj�dtI Icc055il 1, I DornQ9e-n 1ly U.S. Departm-rc otme Treasnrv, bw,,, a1 the rumor neM http://www.treasurydirect.gov/RI/OFBills 10/26/2009 4 Recent Note, Bond, and TIPS Auction Results Page 1 of 1 H IrlL + I "r rit'.111l > A, Ia cI 'L,tall S Res Ift I _ I" Alc 1.IT . Re: I Jefe. Bo'0, a' 1 I T Aon Results Recent Note, Bond, and TIPS Auction Results security Term TYVQ ssaue Mam.nv Interest Ylee Pis ce rVsm ,.,a Date Rxle % A Per $10 4-YFAR 6-MONTH TIPS 10-30-2009 M-15 2014 1.250 0769 104. 115658 91232SKMI 3-YEAR NOTE ]0-15-2009 10-15 2012 1.375 1.445 99,795710 91282➢LR9 9-YEAR 9-MONTH TIPS 10-i5 2009 0]-15-]019 1875 1.510 104.28869] 912828LA6 ,-YEAR ID -MONTH NOTE 10 15 2009 Ca-I5-2019 3.625 3. d 10 103470013 912820L7 " YEAR 10-MONTH BOND 10 15 2009 08-15-2039 aSoo 4.009 108490231 91281OW5 2 YEAR NOTE 09-30-2009 09-30-2011 LOON 1.034 99.932870 912B28LW8 5'YEAR NOTE 09-30-2009 09-30-2014 2.375 2,420 99.555732 912826LQ1 YYEAR NOTE 09 30 2009 09-30-2016 3,000 3,005 99.968647 912820LP3 3-YEAR NOTE 09 15 2009 09-15 2012 1,325 1,482 99.672573 9128281M0 9-YEAR IT MONTH NOTE 09-154009 08-15-2019 3.625 3.510 100,951686 912628U2 29-YEAR 11-MONTH BOND 09-15-2009 08-15-2039 4.500 4336 109,412534 912810QC5 2-YEAR NOTC 08-31-1009 06 31-2011 1.000 1. 119 99.165292 91262OLVO 5-YEAR NOTE 08-31-4009 NS 31-"14 2,315 2494 99A43852 912626LK4 2-YEAR NOTE OB-31-2009 OB31-2016 3.000 3.(192 99.424898 912328LL2 3-YEAR NOTE 08-12-2009 08-15-2012 1. 150 1. 180 99.912808 912828LHI 10 YEAR NOTE 68-12-2009 08-15-2019 3.625 3./14 99.097347 9128281.:1, S 30-YEAR WND 08 I2 2009 08-15-2039 4500 4_C11 an 331TR6 9128I0005 2-YEAR NOTE 02-31-2009 02-31-2011 1,000 1.080 99.842137 9InTnIci3 5-YEAR NOTE 02-31-2009 02-31-2014 2.625 2 689 99 702444 912828,0 2-YEAR NOTE 02-31-2009 07-31.-2016 3,250 3,369 99,263422 9128281.DO '19 YEAR 6-MONTH TIPS 02 31-2009 01 15-2029 2.500 2.382 101,340316 91781OP75 3 YEAR NOTE 02-15-2001 07 15 2012 1,500 1 519 99.944485 9126281B4 9 YEAR 10 MONTH NOTE 07-15-7009 05 15 2019 1,125 3365 97,918222 912828KQ2 10 YEAR TIPS 02 15 2009 62-15-2019 1.825 11WIT 99 i92335 9UB2816 ' 29 YEAR 10 MONTH BOND 02-15 2009 05-15-2039 9.250 4 303 99-104142 91281 2 YEAR NOTE 06 30 2009 06-30-2011 1. 12S 1. I'll 99.948740 91282SLI'S 5-YEAR NOTE 063020U9 0630-2014 2.625 2700 99.65t404 912828KYS 2-YEAR MOTE 06 30-2009 06 30-2016 3.250 3.329 99.510316 912B28KZ2 3 YEAR NOTE 06 15-2009 06-15-2012 1.025 1.960 99 753523 912828KK2 9 YEAR 11-MONTH NOTE 06-15-2009 05-15-2019 3.125 3.990 92.968s8l 912828KQ2 ` 29 YEAR 11-MONTH DENY 06-15-2009 05-15-2039 4.250 9 120 92.501690 912810ca, 2-YEAR Nol'C 06-01-2UO9 05-31-2011 0,025 0.910 99.871615 912620KU3 5-YEAR NO3'[ 06-01-2009 05 31-2014 2.250 2.310 99.118203 912828KVI '2-YEAR NOTE 06-01 -2009 05-31-2016 3.250 3.300 99,681117 912628KW9 3-YEAR Poll, 05-15 2009 OS-15-2012 1.325 1.423 99.213432 912828KP4 10 YEAR NOTE 05-15-2009 05-15-2019 3.125 3,190 99447210 912828KQ2 30YEAR BOND 05-15-2009 05-15-2039 4.250 4.288 99.361980 912810QE2 2-YEAR NOTE 04-30-2009 04-30 2011 0.825 0,949 99.853139 9128281<0 5-YEAR TIPS 04-30-2009 04-15-2014 1,250 1,218 100 13235 91282wMI 5-YEAR NOTE 04-30-2009 M-303014 1.825 1 940 99.691687 912878KN9 ' Denotes TIPS bond; all other TIPS without asterisks are notes te,dc, (I 1em'atoA.A c I La', A GuMc I P1,11C, 0 LItI l Noacol. I cc", n•,s Clc'cHoc, I Acce.Pi9N 1, 1 clay. Q'�aRq u 5.-Del In,tI1.1 01 T , ButecuIIfIhY Pnbuc Oct, http://www.treasurydirect.gov/RI/OFNtebnd 10/26/2009 5 FRB: H. I 5--Selected Interest Rates, Web -Only Daily Update --October 23, 2009 rage t or j 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 October 23, 2009 2009 2009 2009 2009 Instruments Oct Oct Oct Oct 19 20 21 22 Federal funds (effective) 1 2 3 0.12 0.12 0.11 0.11 Commercial Paper 3 4 5 6 Nonfinancial 1-month 0.10 0.14 0.15 0.10 2-month 0.14 0.14 0.12 0.18 3-month 0.18 0.18 n.a. 0.16 Financial 0.17 0.16 0.17 0.16 1-month 2-month 0.17 0.17 0.18 0.15 3-month 0.19 0.22 0.23 0.21 3-month nonfinancial or financial Posted by CPFF 7 Without surcharge 1.17 1.17 1.17 1.16 With surcharge 2.17 2.17 2.17 2.16 CDs (secondary market) 3 8 1-month 0.20 0.20 0.19 0.19 3-month 0.25 0.25 0.24 0.24 6-month 0.32 0.31 0.32 0.32 Eurodollar deposits (London) 3 9 1-month 0.34 0.34 0.34 0.32 3-month 0.45 0.45 0.45 0.45 6-month 0.80 0.80 0.80 0.75 Bank prime loan 2 3 10 3.25 3.25 3.25 3.25 Discount window primary credit 2 11 0.50 0.50 0.50 0.50 U.S. government securities Treasury bills (secondary market) 3 4 4-week 0.06 0.05 0.05 0.02 3-month 0.08 0.08 0.07 0.06 6-month 0.18 0.17 0.17 0.15 1-year 0.34 0.38 0.39 0.37 Treasury constant maturities Nominal 12 1-month 0.06 0.05 0.05 0.02 3-month 0.08 0.08 0.07 0.06 6-month 0.18 0.17 0.17 0.15 1-year 0.36 0.39 0.40 0.38 2-year 0.99 0.95 1.00 0.97 3-year 1.50 1.44 1.51 1.50 5-year 2.36 2.30 2.38 2.39 7-year 2.98 2.93 3.01 3.03 10-year 3.41 3.35 3.42 3.44 20-year 4.19 4.14 4.20 4.22 30-year 4.21 4.16 4.22 4.24 http://www.federalreserve.gov/Releases/H 15/update/ Federal Reserve Statistical Release h H.15 Selected Interest Rates (Daily) Skip to content Release Date: October 23, 2009 Weekly release dates I Historical data I Data Download Program (DDP) I About I Announcements Daily update Other formats: Screen reader I ASCII I��i1 Prog Download The weekly release is posted on Monday. Daily updates of the weekly release are posted Tuesday through Friday on this site. If Monday is a holiday, the weekly release will be posted on Tuesday after the holiday and the daily update will not be posted on that Tuesday. 10/26/2009 6 FRB: H.15--Selected Interest Rates, Web -Only Daily Update --October 23, 2009 Page 2 of 3 Inflation indexed 13 5-year 7-year 10-year 20-year Inflation -indexed long-term average 14 Interest rate swaps 15 1-year 2-year 3-year 4-year 5-year 7-year 10-year 30-year Corporate bonds Moody's seasoned Aaa 16 Baa State 5 local bonds 17 Conventional mortgages 18 n.a. Not available. Footnotes 0.73 0.73 0.83 0.88 1.01 1.01 1.09 1.15 1.38 1.37 1.43 1.49 1.94 1.94 2.00 2.07 1.93 1.93 1.99 2.06 0.64 0.62 0.64 0.62 1.34 1.30 1.33 1.31 1.94 1.88 1.93 1.91 2.39 2.32 2.39 2.37 2.73 2.66 2.73 2.72 3.19 3.12 3.21 3.20 3.57 3.51 3.59 3.59 4.14 4.06 4.15 4.16 5.16 5.11 5.17 5.19 6.32 6.26 6.31 6.32 4.31 5.00 1. The daily effective federal funds rate is a weighted average of rates on brokered trades. 2. Weekly figures are averages of 7 calendar days ending on Wednesday of the current week; monthly figures include each calendar day in the month. 3. Annualized using a 360-day year or bank interest. 4. On a discount basis. 5. Interest rates interpolated from data on certain commercial paper trades settled by The Depository Trust Company. The trades represent sales of commercial paper by dealers or direct issuers to investors (that is, the offer side). The 1-, 2-, and 3-month rates are equivalent to the 30-, 60-, and 90-day dates reported on the Board's Commercial Paper web page (www.federalreserve.gov/releases/cp/). 6. Financial paper that is insured by the FDIC's Temporary Liquidity Guarantee Program is not excluded from relevant indexes, nor is any financial or nonfinancial commercial paper that may be directly or indirectly affected by one or more of the Federal Reserve's liquidity facilities. Thus the rates published after September 19, 2008, likely reflect the direct or indirect effects of the new temporary programs and, accordingly, likely are not comparable for some purposes to rates published prior to that period. 7. CPFF refers to the Federal Reserve's Commercial Paper Funding Facility. The rates are identical under the CPFF for financial and nonfinancial commercial paper. An issuer of commercial paper into the CPFF may avoid the surcharge by providing a collateral arrangement or indorsement that is acceptable to the Federal Reserve Bank of New York. Source: Federal Reserve Bank of New York. 8. An average of dealer bid rates on nationally traded certificates of deposit. 9. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. 10. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered commercial banks. Prime is one of several base rates used by banks to price short-term business loans. 11. The rate charged for discounts made and advances extended under the Federal Reserve's primary credit discount window program, which became effective January 9, 2003. This rate replaces that for adjustment credit, which was discontinued after January 8, 2003. For further information, see www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate reported is that for the Federal Reserve Bank of New York. Historical series for the rate on adjustment credit as well as the rate on primary credit are available at www.federalreserve.gov/releases/hl5/data.htm. 12. Yields on actively traded non -inflation -indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity series was discontinued on February 18, 2002, and reintroduced on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasury published a http://www.federalreserve.gov/Releases/H15/update/ 10/26/2009 7 FRB: H.15--Selected Interest Rates, Web -Only Daily Update --October 23, 2009 Page 3 of 3 factor for adjusting the daily nominal 20-year constant maturity in order to estimate a 30-year nominal rate. The historical adjustment factor can be found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ltcompositeindex_historical.shtmi. Source: U.S. Treasury. 13. Yields on Treasury inflation protected securities (TIPS) adjusted to constant maturities. Source: U.S. Treasury. Additional information on both nominal and inflation -indexed yields may be found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/index.html. 14. Based on the unweighted average bid yields for all TIPS with remaining terms to maturity of more than 10 years. 15. International Swaps and Derivatives Association (ISDA(R)) mid -market par swap rates. Rates are for a Fixed Rate Payer in return for receiving three month LIBOR, and are based on rates collected at 11:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters Page ISDAFIX(R)1. ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited. 16. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and Aaa industrial bond rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds only. 17. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Thursday quotations. 18. Contract interest rates on commitments for fixed-rate first mortgages. Source: Primary Mortgage Market Survey(R) data provided by Freddie Mac. ---------------------------------------------------------------------------------------------------- Note: Weekly and monthly figures on this release, as well as annual figures available on the Board's historical H.15 web site (see below), are averages of business days unless otherwise noted. Current and historical H.15 data are available on the Federal Reserve Board's web site (www.federalreserve.gov/). For information about individual copies or subscriptions, contact Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-728-5686). For paid electronic access to current and historical data, call STAT-USA at 1-800-782-8872 or 202-482-1986. Description of the Treasury Nominal and Inflation -Indexed Constant Maturity Series Yields on Treasury nominal securities at "constant maturity" are interpolated by the U.S. Treasury from the daily yield curve for non -inflation -indexed Treasury securities. This curve, which relates the yield on a security to its time to maturity, is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. These market yields are calculated from composites of quotations obtained by the Federal Reserve Bank of New York. The constant maturity yield values are read from the yield curve at fixed maturities, currently 1, 3, and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yield for a 10-year maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity. Similarly, yields on inflation -indexed securities at "constant maturity" are interpolated from the daily yield curve for Treasury inflation protected securities in the over-the-counter market. The inflation -indexed constant maturity yields are read from this yield curve at fixed maturities, currently 5, 7, 10, and 20 years. Weekly release dates I Historical data I Data Download.Prggram (DUI') I About I Announcements Daily update Other formats: Screen, reader I ASCII Statistical releases glom e I P_conomic. resemch and data Acecssibihty I cornact us Last update: October 23, 2009 http://www.federalreserve.gov/Releases/H15/update/ 10/26/2009 8 FRB: Commercial Paper Rates and Outstandings rage i or Federal Reserve Release Commercial Paper Release I About I Announcements I Outstandings I Volume statistics I Year-end I Maturity Distribution I Data Download Program (DDP) Data as of October 23, 2009 Commercial Paper Rates and Outstanding Derived from data supplied by The Depository Trust & Clearing Corporation Posted October 26, 2009 Discount rates II AA II A2/P2 I AA I AA Term nonfinancial nonfinancial financial asset -backed 1-day 7-day 0.09 0.08 0.24 0.24 0.09 0.11 0.14 0.16 0.18 0.22 0.32 0.44 0.42 0.27 0.35 0.32 15-day 30-day 60-day 90-day 0.08 0.13 0.14 0.15 0. 77 0.29 0.36 0.44 Yield curve market vases — — — AA aonflomwial ••••••••• ` A2CP2 nonfinancial -- AA financial 1 7 15 30 Days to Maturity ELI 0.75 0.50 0.25 0.00 http://www.federalreserve.gov/Releases/CP/ 10/26/2009 9 FRB: Commercial Faper Kates ana vutstanamgs Discount rate spread Thirty -day A2/P2 less AA nonfinancial contnren:ial paper (i --- spread, 5-day moving avg Basis 2001 2002 2003 2004 2005 2006 2007 2008 2009 Discount rate history 2001 2002 2003 2004 2005 2006 2007 2008 2009 Outstandings Weekly (Wednesday), seasonally adjusted 800 700 600 500 400 300 200 100 0 7 6 5 4 3 2 1 0 http://www.federalreserve.gov/Releases/CP/ 10/26/2009 10 FRB: Commercial Paper Rates and Outstandmgs ragcJU1J 1210 1110 1010 910 810 710 610 510 410 Billions of dollars Billions of dollars 1290 2001 2002 2003 2004 2005 2006 2007 2008 2009 ME 210 170 130 The daily commercial paper release will usually be available before 11:00am EST. However, the Federal 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 Program (DDP). 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 Maturity Distribution J Data Download Program (DDP) Home Statistical releases Accessibility I Contact Us Last update: October 26, 2009 http://www.federalreserve.gov/Releases/CP/ 10/26/2009 11 City of La Quints Cash Flow Budget to Actual August 31, 2009 Cash Basis Budget Actual Accrual Adjusted Total Variance Account 9109 9/09 Adjustment 9109 Over Under Notes Property Tax/ Tax Increment - - TransientOccupancyTax 155,971 121,574 121,574 (34,397) Sales Tax 337,050 441,400 441,400 104.350 Triple Flip reversal M1n FY 0W09 SilverRock Golf 103,110 159,427 159,427 56.317 Library - 224 - (224) Riverside Co Transportation Commission - Otherrevenues 789747 1136449 1136449 346702 reirddusement Revenues 1,386,102 1,858,850 1,858,850 472,748 Expenditures Salaries B Fnnge Benefits 1,089.471 2,076,569 2.075.569 986,098 CalPers lump sum payment $1.3m Other expenditures 2641653 1820631 1.820631 821.022 Did not pay Police invoice 3731124 3896200 3.896200 165076 Subtotal 296.899 226.542 226,542 (70,358) Redevelopment Agency Debt Serviice(PrincipalAnterest/Pass Through) 11058665 11,155031 11155031 96366 Subtotal 11,355564 11381573 11381573 26009 808796 808796 808796 Capital Projects Total Expenditures 15,895,484 16,086,569 16.086,569 191,08' Net Revenues/Expentlltures 14,509,382 14,227,719 14,227,719 8838 NOTE 1: Expenditures are budgeted at 8.34%per month Difference between actual and budget (Underspenq DEPARTMENT Overspent Notes GENERAL GOVERNMENT (31,195) CITY CLERK 52,190 COMMUNITY SERVICES 231,957 FINANCE (299.519) BUILDING 8 SAFETY 218.960 PUBLIC SAFETY (1,423,195) Did not Pay Police Invoice PLANNING 65,095 PUBLIC WORKS: 1242282 Slurry Seal lxoject 56575 SUBTOTAL -GENERAL FUND Library Gas Tax Federal Assistance - JAG Grant Slesf(Cops) Revenue Indian Gaming Lighting 8 Landscaping RCTC Development Agreement CV Violent Come Task Force AS 939 (12,235) Quimby Infrastructure - Praposition 18 - South Coast Air Quality (2,219) Transportation - Parks 8 Recreation Civic Center Library Development Community Center Street Facility Park Facility - Fire Protection Arts In Public Places (4,627) Interest Allocation Equipment Replacement (98,350) Information Technology - (10.645) Pant Maintenance Facility (31.603) SilverRock Golf (57.076) SilverRock Reserve LQ Public Safety Officer (167) Finance Authority (1,316) Capital Improvement Total 761 663 12 INVESTMENT ADVISORY BOARD Correspondence & Written Material Item B Adjourned Meeting Date: November 4, 2009 TITLE: Pooled Money Investment Board Report for August 2009 and LAIF Conference Material BACKGROUND: The Pooled Money Investment Board Report for August 2009 is included in the agenda packet. Also enclosed are the LAIF Conference materials that were distributed at the October conference attended by Chairman Ross and the Treasurer. RECOMMENDATION: Receive & File �In�.�GON.G'll John M. Falconer, Finance Director POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF AUGUST 2009 WITH AUGUST 2008 (DOLLARS IN THOUSANDS) AUGUST2009 AUG UST 2008 CHANGE Average Daily Portfolio $ 62,966,584 $ 65,595,666 $ -2,629,082 Accrued Earnings $ 49,488 $ 154,797 $ -105,309 Effective Yield 0.925 2.779 -1.854 Average Life -Month End (In Days) 203 224 -21 Total Security Transactions Amount $ 28,886,787 $ 24,205,093 $ +4,681,694 Number 586 501 +85 Total Time Deposit Transactions Amount $ 2,608,000 $ 4,516,000 $ -1,907,000 Number 102 198 -96 Average Workday Investment Activity $ 1,499,752 $ 1,367,623 $ +132,129 Prescribed Demand Account Balances For Services $ 1,105,575 $ 695,353 $ +410,222 For Uncollected Funds $ 138,919 $ 145,658 $ -6,739 NOW Account Average Balance $ 2,112,094 $ 2,112,094 1 BILL LOCKYER TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) August 31, 2009 DIFFERENCE IN PERCENT OF PERCENT OF PORTFOLIO FROM TYPE OF SECURITY AMOUNT PORTFOLIO PRIOR MONTH Government Bills $ 13,470,642 21.58 +4.04 Bonds 0 0.00 0 Notes 3,560,567 5.70 -0.28 Strips 0 0.00 0 Total Government $ 17,031,209 27.28 +3.76 Federal Agency Debentures $ 5,444,320 8.72 -1.98 Certificates of Deposit 6,235,014 9.99 +2.58 Bank Notes 0 0.00 0 Bankers' Acceptances 0 0.00 0 Repurchases 0 0.00 0 Federal Agency Discount Notes 5,632,866 9.02 +5.23 Time Deposits 5,352,700 8.57 +0.10 GNMAs 120 0.00 0 Commercial Paper 8,580,649 13.74 +4.00 FHLMC/Remics - 963,721 1.54 +0.02 Corporate Bonds 282,291 0.45 -0.02 AB 55 Loans 4,421,844 7.08 -2.44 GF Loans 7,278,300 11.66 -8.12 NOW Accounts 917,000 1.47 -3.15 Other 300,000 0.48 +0.02 Reversed Repurchases 0 0.00 0 Total (All Types) $ 62,440,034 100.00 INVESTMENT ACTIVITY AUGUST 2009 JULY 2009 NUMBER AMOUNT NUMBER AMOUNT Pooled Money 586 $ 28,886,787 560 $ 27,812,203 Other 6 191,954 1 20,371 Time Deposits 102 2,608,000 175 4,422,700 Totals 694 $ 31,686,741 736 $ 32,265,274 PMIA Monthly Average Effective Yield 0.925 1.035 Year to Date Yield Last Day of Month 0.977 1.035 2 Pooled Money Investment Account Portfolio Composition $62.4 Billion Corporate Bonds 0.45% Commercial Paper 13.74% Now Accow 1.47% Tir 08/31 /09 i O.O / %0 CDs/BNs 9.99% Mortgages 1.54% es YO 3s �t i�{ er tsYs gilt. L.O<'KYIR Tm''.ASURHR S1 Sri ur (':V.nR)RNIA July 17, 2009 Dear Local Agency Investment fund Participants; You are cordially invited to attend the local Agency Investment Fund (LAIF) annual conference on Wednesday, October 21, 2009, at the Sacramento Convention Center in downtown Sacramento. You are also invited to a post -conference tour of the Investment Division/LAIF operations to be held on Thursday, October 22, 2009, at the State Treasurer's Office to observe the trading process with our Investment staff. We will conclude our post -conference tour with a trip to the State vault. This year's program features an economic outlook by Gary Zimmerman, Senior Economist with the Federal Reserve flank of San Francisco. Also included are sessions on the State's budget impact on local governments, the Pooled Money Investment Account goals and objectives, LAIF operations and a year in review. Please make plans to join us in Sacramento for this year's annual conference. Sincerely. f L�� BILL LOCKYFR California State Treasurer -.. 915 CArrun. M,%i.i , ko,,m I lo. SAr RA.w.N ru. CAI.u-rru%in Q5814 • (916) 653.2Q95 . FAX (916) 65 3125 2009 LOCAL AGENCY INVESTMENT FUND ANNUAL CONFERENCE Agenda Wednesday, October 21, 2009 Sacramento Convention Center 8:30 a.m. Registration (Activity Building, 2nd Floor) Conference participants check in and pick up conference materials. A continental breakfast will be served. 9:00 a.m. Welcome and Introductions (Room 202) Pledge of Allegiance — Local Investment Advisory Board Members Pam Milliron, LAIF Administrator State Treasurer's Office, Investment Division 9:15 a.m. An Economic Outlook and California... (Room 202) The Federal Reserve Bank of San Francisco's Senior Economist will provide an economic outlook for California and the nation. What are the Fed's monetary policy goals and how will this affect California now and in the future? Gary C. Zimmerman, Senior Economist Federal Reserve Bank of San Francisco 10:15 a.m. Break 10:30 a.m. An Overview of LAIF Operations and PMIA Goals and Objectives (Room 202) The State Treasurer's investment managers will provide an overview of performance and the goals and objectives of the Pooled Money Investment Account (PMIA). What impact did market events and government guarantee programs have on the Pool? An overview of Local Agency Investment Fund (LA IF) operations and why we do what we do. Christine Solich, Assistant Director State Treasurer's Office, Investment Division Pam Milliron, LAY Administrator State Treasurer's 0ffice, Investment Division 12:00 p.m. Lunch (Room 204) The lunch period will provide an opportunity to network with other attendees and speakers, and to learn more about the State Treasurer's Office functions and programs. Luncheon speaker — Bill Lockyer, California State Treasurer 1:30 p.m. An Update on the State Budget and its Impact on Local Agencies (Room 202) California is dealing with a record deficit; this session will provide an overview of this year's state budget and the financial status of the State. What is the impact of the State budget on local agencies and how does the State plan to rise from its fiscal difficulties? Marianne O'Malley Legislative Analyst's Office 2:30 p.m. Break 2:45 p.m. "Dear Mr. Dowell..." (Room 202) A look back at the questions, concerns, cares and suggestions raised by LAIF participants throughout the year. What caused the concerns and how did LAIF respond? Adjustments to policy and additions to authority. Daniel Dowell, Director State Treasurer's Office, Investment Division 3:45 p.m. Conference Adjournment and Evaluation Post -Conference Tour A post -conference tour will be held at the State Treasurer's Office, 915 Capitol Mall, Executive Conference Room 110, on Thursday, October 22, 2009. The tour is from 7:00 a.m. to 10:00 a.m. and will provide an opportunity for attendees to observe the trading process by the State Treasurer's Office Investment staff and will conclude with a trip to the State vault. Registration for the tour is open to LAIF participants only and is on a first come, first serve basis. Space is limited. About the Conference The one -day conference on October 21, 2009, and the post -conference tour on October 22, 2009, were developed to provide local public officials responsible for the investment of public funds with the opportunity to learn about the LAIF program. The program offers a unique experience for LAIF participants and those thinking about placing their funds with LAIF. Attendees will learn about investment operations and how their funds are commingled with the State's money in the PMIA. Who should attend Public officials from cities, counties, and special districts; their oversight boards and their staff involved in the investment of public funds. Current participants in the LAIF program and local agencies considering LAIF as an investment alternative for their funds are especially encouraged to attend. About LAIF In 1977, California Government Code Section 16429 created LAIF as a voluntary investment alternative for California's local governments and special districts. This program offers local agencies the opportunity to participate in a major portfolio which invests hundreds of millions of dollars daily, using the investment expertise of the State Treasurer's Office Investment staff at no additional cost to the taxpayer. LAIF is part of the PMIA and has grown from 293 participants and $468 million in 1977 to 2,746 participants and over $26 billion in 2009. a. �. .- V� 1. Current situation — recoverybegins: o Signs of improvement o Industrial production, housing, consumer attitudes, Improved credit conditions, global outlook o Yet still areas of weakness o labor market, commercial real estate, loan delinquencies, household balance sheet 2. Stance of Monetary Policy o Tools (conventional and new) o Recent readings from the FOMC 3. FRBSF national economic forecast These remarks represent my views and not necessarily those of my colleagues in the Federal Reserve System. o•77- ° Industrial Production Index Recession The U.S. economy sa xrox.sm va Officially II I) II peaked in and l the recession began in o December 2007. National Bureau of Economic Research ! NBER Business Cycle Dating n u m Committee, 11-2&200. ;U�2RM,rSITUpT16Nt dry °3041�rp�SQFlNI�R VEMEhf� + , 1. „S' Measures of Business7Acniaty: eofh' IVI ufa`cturi g and Non:ManufactUri (Sernces) Sectors Rebounding ISM Composite Indices: Manufacturing vs. Non -Manufacturing (Above 505ector is Expanding; Below 50 Sector is Contracting) Permits: New Private Housing Units (3-month Moving Average, SAI U.S. (left CA (right axis) So —as : B—au of Ou L.mu,/Hew, AnelY6o r Consumer Confidence Index and Components (Index Numbers) xw 60 p sp ep p 00 pl 03 p3 p/ OS O6 p) sou,ea. MCmlanm BwN/xaw�Aruly6,s pB a9 a M � ( Current 16O Situation Consumer 1 Confidence ep .S Future t 'O O Expectations a"i... S&P Case-Shiller Home Price Index (SA, January 2000 =100) sa— sar'nce ,o',� I r Light Vehicle Sales by Producer Type (millions of vehicles, SAAR) :a I a. ,p Total Vehicle I' „ Sales 16VAN 6 c' r . 1prW,4Domestic sales 1 e e Imported Sales I', x 6 p 90 96 60 0$ Sann, copsanm /H,wr Puulytiv o/, Yua I I I I I / I I I 1 Selected Interest Rates and Bond Yields Cretlit Rlsk Spnetls Nemxatl; Meh«s ExpeR Reb Inwem NeM Veer e« cwww ew,m Ray.,rwmeo � Morn.e=+ 6 4e[w�en 3py.w Lane�glw�al Mwig.ps 5 s to-r.wr.•«� n Iwlggm reelwm nr•« z rqw« ror wi ot ao ror wi LN npr rw oa r:� ror mi r zoos zoos zoto Real GDP Growth _ I% change year over year, annualized) — yO 8 6 q "clevelopinjg�economles 2 O -2 4 970 80 90 2000 70 r xaa 4nvnk agnm mme., c ram Na✓nb.�qq...n.r.n.u.w.r.«neo+pcnm...N. Monthly Change in Payroll Jobs (Thousands) Job loss Since Dec. 2007 = Over 7.2 Million Monthly Change In Payroll Jobs (Thousands) Job Loss Since Aug. 2007 = Approx. 0.97 Million 9ousm: SLSCSE00 /Xewr 1w1sioa Unemployment Rates (in percent) 3.5 12.5 10.0 10.0 5CA6 6.0 6 0 2.6 3.6 00 a'z National Natural Rate • • I •• • • • • I •• Industrial Availability Rate Office Vacancy Rate (in percent) (in percent) 1s 17.5 17.5 I p 13 . v'.'t 15.0 f SF U.S. an Sacramento 15.0 *�'I' n ¢s 1e �-3,,.. SF LA 10.0 126 " 12 • LA t 7.5 Sacramento 6 10.0 a 5.0 U.S. _ .%:. 7 5 �..••:.. 1 oz o5 • a......1.1 v.s o a Sourcaf: LB0.E /Xawr wisme 1 5 5 Sve' : CBXE /Ibv iw�vm MortgageDelinquency Rates: cornmercicil Real Estate: Prices Are Failing Spreading to Prime ARM Mortgages (Sea. Adj.) T81 Commercial Real Estate index by Property Type Conventional Mortgages Past Due (in Percent) by Loan Type (Ql 1994 =100) FIRM = Flmd Rate Mortgage ARM = Adjustable Rate Mortgage 330 330 30 ```aaaiyy- rv�... 30 United States Industrial Properties _I I� 3s0 360 as as Subprime ARM 330 �z"t z+o a0 r zo ,y. w x.. Subprime FRM �f 100 200 13 13 Ffice Properties •, 150 10 I 10 360 �a Retail Properties sso ��` sso Prime ARM/. R� s O Y.'.. o .o".x .o 0 9 00 O1 O1 03 S O6 O • 09 99 00 01 03 03 M OS Ofi 3 Oa 09 Yurtn. Mrt [aorta lu xeal [vud /Raver Malyuas aeryLoe s>urtea. MBP/Harca Fonspa Noe„T40.G5 ACTlkJ`I � Mortgage Delin4ue ncy Rates: Similar to the Bank Asset Quality: Increasesin -,CA Nation, Problems S ead I Beyond Subprime Loan Delinquency Rates In the Conventional Mortgages Past Due (in Percent) by Wan Type United States by Asset Type (%) so a 0 so zo Residential Re i�staY l0 zs . xo 10 Subprime FRM I W 6 K v s Credit Cards & I }• ARM a .. S s` 6 Commercial Real EstateJ. 99 Oo Ol 3 03 OS O6 O) OB 09 99 00 OI 1 03 OS O6 O) O. 09 Zvrcea. M./IYver aaiaxm burtea, ix3/Xavar aorysPv • Conducting monetary policy FOMC Fed Funds Target Rate I Dual goals: (1) maximum sustainable output and employment and (2) price stability ° • Tools ° —Conventional tool: federal funds rate • "Zero bound" — Nonconventional tools: Fed balance sheet • Size of the Fed balance relatively steady, but 1 1 ° changing composition ° 99 00 O1 03 03 W 09 O6 O) W 09 Swree. Wrx MXNv w/,sw • • I • I I• I'• I OEMI Provided Short -Term Liquidity (less than 90 days) • TAF, PDCF, ABCP MMMF, currency swaps between central banks Purchased Longer -Term Securities • Buying Treasuries and agency debt/mortgage- backed securities (MBS) Provided Targeted Credit to Borrowers and Investors • CPFF, TALF, and aiding troubled firms Y Conventional tools • Maintain low federal funds rate for an "extended period" e Unconventional tools • Decline in shorter -term liquidity and credit • Longer -term credit and asset purchases still rising • FOMC announces dates for completing LTAP ea.rr.rr.r •.+n.+rrn mne. a.[oa w,c s.arr[v LF) onecPmniiNr ti.wdWary ].apn (xm[r) [ .rnr:u.v llrwlr. r,-nB R.rBBV IR[IIn w nut ��rv�4N r. I aT�rt I a.ry trs[]I �1 E pvemlRl.r l[MIhR'R .51s9 T,lllbn: eIm[w ex MB5 Mx •$YA Trlilbn: "' - VSTrtssurka Y% Rr•nB% ' M65m0% os Tro[ux.[soox "Net Securities Holdings" Y00] �]OYrr• .I rvn .+l an ve 30M" h• [WmuWMbbpf •, I I I1• • Real GDP is ex cted to row Gross Domestic Product Pe g Senes Indexed to 10 at start of recession Percent Rea1GDP Percent changeatseasone0yadjusted anraraI rate Percent 10 FRBSF 8 Ran,,frm e o1953-1993 110 Forecast 6 /// 2 of 4 i 1969 1os 2 2 -2 too $ current 00 01 02 O$ 04 OS 06 0] 08 09 10 tt 12 95 0 1 0 3 4 5 B 9 10 11 12 k daa,$ of Odnber 13, 2009 Ouerlers since Stan of Recemwn k Avaa of September 10, 2009 Labor Compensation % Change - Year to Year Seurcee, Bureau of abor subebce Me— nnerynea iwuioe The recession has lowered core inflation PCE Price Inflation Percent changefrom fourquartemearlier Percent 5 4 O,rYnr., CE FRBSF 3 Price [ntlex FOrera9ts careP E Price Index l r 0 �I�la�f 1 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 kdV$aaa of Oaober 13, 2009 Job losses in Western States Sousa, Western Blue Chi,,ORaber 1, 3009 • Current situation — remains challenging • National forecast — slow recovery • Risks to the forecast — many: • Financial system stability • Shape of global recovery • Strength of consumer spending C� N O 42 O N � � O U d co: t.' � O cc Cd GA- 0 0 a LL o w o W 2 � O o I N W A cn 0) O O O O O O O 0 0 0 0 0 o o V co O OD O 00 00 N co W 00 A W co m co V 00 co Oo O O O CD . co N W A O cn O T Co V O co co co O O 0 0 N O Cl) O A O O O O 0 V 0 w 0 0 O Q. 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