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2011 06 08 IABP.O. Box 1504 LA QUINrA, CALIFORNIA 9224.7-1504 78-495 CALLE TAMPICO LA QUINTA, CALIFORNIA 92253 AGENDA INVESTMENT ADVISORY BOARD Caucus Room 78-495 Calle Tampico- La Quinta, CA 92253 June 8, 2011 - 4:00 P.M. VIA CONFERENCE CALL: Kurt Mortenson 218 Main St., S.W. Menahga, MN 56464 CALL TO ORDER a. Pledge of Allegiance b. Roll Call (7 6 0) 7 7 7 - 7 0 0 0 FAX (760) 777-7101 11 PUBLIC COMMENT - (This is the time set aside for public comment on any matter not scheduled on the agenda.) III CONFIRMATION OF AGENDA IV CONSENT CALENDAR A. Approval of Minutes of Meeting'on May 11, 2011 for the Investment Advisory Board. V BUSINESS SESSION A. Transmittal of Treasury Report for April, 2011 B. Consideration of the Fiscal Year 2011/2012 Work Plan and Consideration of the Fiscal Year 2011/2012 Investment Policy VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - May, 2011 B. Pooled Money Investment Board Reports - March, 2011 VII BOARD MEMBER ITEMS Vill ADJOURNMENT PUBLIC NOTICES The La Quinto Caucus Room is handicapped accessible. If special equipment is needed for the hearing impaired, please call the Finance Department at 777-7150, twenty-four (24) hours in advance of the meeting and accommodations will be made. Any writings or documents provided to a majority of the Investment Advisory Board regarding any item on this agenda will be made available for public inspection at the City Clerk counter at City Hall located at 78-495 Calls Tampico, La Quinta, CA 92253, duri normal business hours. INVESTMENT ADVISORY BOARD Meeting May 11, 2011 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 Park followed by the Pledge of Allegiance. PRESENT: Board Members Mortenson, Blum, Park and Spirtos ABSENT: None OTHERS PRESENT: John Falconer, Finance Director, Lynn Love, Relations Manager, Wells Fargo Bank, Louise West, Accounting Manager, Diane Martin, Financial Services Assistant and Vianka Orrantia, Senior Secretary PUBLIC COMMENT - None III CONFIRMATION OF AGENDA - Confirmed IV CONSENT CALENDAR 1. Approval of Minutes of Meeting on April 13, 2011 for the Investment Advisory Board. Board Member Spirtos requested a correction be made to page 3, item B., fourth sentence to read, "possible alternative, since #-+&R Rid staff has come across another possible MOTION - It was moved by Board Members Spirtos/Mortenson to approve the Minutes of April 13, 2011 as amended. Motion carried unanimously. V BUSINESS SESSION A. Banking Services Presentation by Wells Fargo Bank Lynn Love, Relations Manager of Wells Fargo Bank gave a brief presentation of the proposed banking services and savings being offered for the extension of a three year contract between Wells Fargo Bank and the City of La Quinta. Mr. Falconer clarified for the Board that the existing contract with Wells Fargo Bank will expire on December 31, 2011. Mr. Falconer advised that staff, Louise West and Diane Martin work closely with Wells Fargo on a daily basis, and were present to address any concerns and/or answer any questions that the Board might have regarding Wells Fargo Bank. In response to Board Member Blum, Mr. Falconer advised that the last page of the staff report reflects the breakdown based on the City's current activity. The bank proposed an additional 25% savings from the City's current rates and a 55% discount over standard pricing. The current standard rate is at $2,600 a month, the City's current average is at $1,600 per month and under the new contract the rate will be $1,200 per month, with a savings of $5,000 per year or a total savings of $15,000 over the three years. General discussion ensued amongst the Board and staff regarding the various services provided by Wells Fargo Bank and the savings derived from some of the services being offered under the new contract. In response to Mr. Falconer, Ms. Love advised that the new rates being offered under the new contract would become effective immediately. Motion — It was moved by Board Members Mortenson/Blum to recommend to Council for approval a Banking Services Contract with Wells Fargo from January 1, 2012 through December 31, 2014. Motion carried unanimously. The Board thanked Ms. Love for her presentation and attendance, in addition to thanking Mrs. West and Mrs. Martin. B. Transmittal of Treasury Report for March 2011 Mr. Falconer presented and reviewed the staff report for the month of March advising the Board of a decrease in the cash balance by $6.80 million for the month due to $5.7 million for debt service payments, $4 million to Capital Improvement Projects of which $3.6 million for land in the Village between the Library and Old Town. Mr. Falconer stated that the land acquisition was a result of the potential closure of the Redevelopment Agency. IRA Mr. Falconer advised of a Commercial Paper purchase and a Federal Home Loan Bank Discount Note purchase as a result of maturing investments. He further advised that the portfolio remains at 50 basis points comparable to the previous y ear and the average maturity of the portfolio ended the month at 218 days. Mr. Falconer commented on staff's consideration of alternatives to LAIF, which he stated will be discussed later in the meeting. In response to Board Member Spirtos, Mr. Falconer advised that the Quimby funds have been budgeted as reflected on page 8. The funds were intended to fund a regional park with other neighboring cities and the County; however, due to current the economy, there have been no further discussions or plans for the park. Mr. Falconer further advised that the Park Equipment Replacement Fund was budgeted for items such as equipment replacement at the City parks and the City's pool renovation. Mr. Falconer commented that due to the declining general fund revenue the City has not been able to budget additional monies back into this particular fund. In response to Board Member Spirtos, Mr. Falconer clarified that the Landscape and Lighting Fund reflects a negative balance due to paying monthly maintenance fees but is reimbursed twice a year from the County. General discussion ensued amongst the Board and staff regarding the change in the City's landscaping from turf to desert scape. In response to Board Member Mortenson, Mr. Falconer advised that due to some settling in the economy staff feels at ease with investing in LAW at this time but would still consider other investment alternatives. General discussion ensued amongst the Board and staff regarding alternatives to LAIF. In response to Chairman Park, Mr. Falconer clarified as to why the City does not report the reimbursement monies received twice a year from the County for lighting and landscaping as a positive balance on the Distribution and Cash Balance report. MOTION — It was moved by Board Members Blum/Spirtos to review, receive, and file the Treasurers Report for March 2011. Motion carried unanimously. 3 C. Continued Discussion of the Investment Advisory Board 2011-2012 work Plan and Fiscal Year 2011-2012 Investment Policies Mr. Falconer advised of the process of the approval of a draft investment policy to be presented at the June meeting for discussion with the City Manager and City Attorney, upon approval of the draft policy by the Board, staff will forward the policy for final approval by the City Council. Mr. Falconer advised of his attendance to the annual CIVITA Conference and his efforts to seek out from other government entities other investment alternatives. Mr. Falconer advised that due to the low interest rates, mutual funds were not a suggested alternative at t his time. Mr. Falconer further advised that at the CMTA Conference other alternatives to LAIF such as the CAMP Program, Caltrust Program, and the County Pools were discussed. These three investments have been discussed by the Investment Advisory Board in the past and at the conference he was informed that the Government Code Section dealing with County pools states that the disbursement of funds could be delayed up to 30 days. In response to Board Member Blum, Mr. Falconer advised that he would investigate as to whether or not the 30 day delay applies to LAIF.. In response to Board Member Mortenson, Mr. Falconer summarized the CAMP investment tool and how it works. General discussion ensued amongst the Board and staff regarding possible alternative investment tools, including the interest bearing active bank deposit program with Rabobank. In response to Board Member Mortenson, Mr. Falconer advised that he would reconfirm the CUSIF numbers listed on the Union Bank Holdings - Reporting Trades sheets (custodian for Rabobank) for the Cook County, Illinois School District investment. MOTION - It was moved by Board Members Blum/Spirtos investigate further the Rabobank investment program. Motion carried unanimously. In response to Board Member Blum, Mr. Falconer advised that if directed by the Board, staff will further investigate the Rabobank investment program and will incorporate his findings into a staff report as well incorporate into the investment policy for the Board's consideration at the next scheduled meeting. El VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - April 2011 A general comment was made by Mr. Falconer on the decline of the T-Bills. Noted and Filed B. Pooled Money Investment Board Reports - February 2011 Noted and Filed C. Update on California Municipal Treasurers Association Conference Mr. Falconer updated the Board on the conference in San Diego, California that was attended by staff. Vil BOARD MEMBER ITEMS - None Vill ADJOURNMENT MOTION - It was moved by Board Members Mortenson/Blum to adjourn the meeting at 5:06 p.m. Motion carried unanimously. V S mi Vianka Senior Secretary 61 INVESTMENT ADVISORY BOARD Business Session: A Meeting Date: June 8, 2011 ITEM TITLE: Transmittal of Treasury Report for April 30, 2011 BACKGROUND: Attached please find the Treasury Report for April 30, 2011. RECOMMENDATION: Review, Receive and File the Treasury Report for April 30, 2011. A4 �1 +d'C-0� �-�John M. Falconer, Finance Director 4 MEMORANDUM TO La Quinta City Council FROM John M. Falconer, Finance DirectorrFmasurer SUBJECT Treasurers Report for April 30, 2011 DATE May 31 .2011 Attached is the Treasurer's Report for the month ending April 30, 2011. 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 morrth: Investment 6 innin I I I I I Sold/Matumd Ot er Endin Chan a LAIF $ 24,417,858 Certificates of Deposit 9 0 969,000 10,021,992 $ (3,351,659) 0 $ 31,088.191 6.670,333 US Treasuries 84.911,985 11 (2) 969,000 0 US Gov't Sponsored Enterprises 19,983,000 E146,732,115 (2) 9,316 84.921,301 9,316 Commercial Paper 4,997,149 (2) 2,818 19,985.818 2,818 Corporate Notes 10,073,092 (2) 1,112 4,998,261 1,112 Mutual Funds I -- 0 0 - 1 . 38 - , - 3 1 (9,521) 10,063,571 (9,521) $ $ 10,021, 2 $ 3,351, 1 lAn n1l 3,725 $ 153,406,173 0 '4.058 Cash 11U.49Z,687 I I M& (3)[4 j9,M,v4bjI 1 1 $ 692,742 (9,799,945) 'UW1 157 224 8-2 $ io,o21,g9;? — =1 4 J.,`ZO I -'J lb4,098,915 $ (3,125,8871 I cenny trial 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 antidpated revenues are available to meet the pools expenditure requirements for the next six months. The City of La Quints used the Bureau of the Public Debt, U.S. Bank Monthly Statement and the Bank of Now York Monthly Custodian Report to determine the fair market value of investments at month end. �,—hnM F -17 7, 1/ Z-o Finance Director/Treasurer Date 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 Premilurni'discount for the month on US Treasury, Commercial Paper and Agency investments. (3) The cash amount in ay reflect a negative balance. This negative balance will be offset with transferis from other investments before warrants am presented for payment by the payee at the bank. FF1 Treasurer's CommentarV For the Month of April 2011 Cash Balances - The portfolio size decreased by $3.13 million to end the month at $154 million. The major reason for the decrease was $213,000 spent on the La Quinta Sports Complex and $200,000 spent on the bridge widening project on Ave 50 at the All American Canal. In addition, $1.7 million was spent on the Riverside County Sheriff contract and $893,000 toward the new Garff Motors dealership relocation. Investment Activity - The investment activity resulted in an average maturity decrease of twenty six (26) days from the prior month to end the month of April. at 192 days. The Treasurer follows a buy and hold investment policy with no investments made in the month of April. The sweep account earned $9 in interest income for the month of April and the bank fees for the month were $ 2,004 which resulted in a net decrease of $1,995 in real savings. Portfolio Performance - The overall portfolio performance had a three (3) basis point increase from the prior month and ended at .48% for the month, with the pooled cash investments at .59%. The portfolio yield should continue to stay at these levels for the near future. At this time last year, the portfolio was yielding .48% which reflects the current interest rate environment. Looking Ahead The Treasurer is still concentrating on safety first and foremost. In the short term, the Treasurer will be investing in Commercial Paper as opposed to short term GSE's and US Treasury investments and has reduced the LAW RDA Account to zero until the Governor's budget proposal has been finalized. 3 cr E E > ED E E FL 0 a z 0 z 0 z 0 z 0 x z 2 > E2 0 v v E E ci C5 wi E E ap OUR 999 999i 9 0 E E oz E EL Lo > g0 0 FL Z zga 0 G 0 - 3 0 M ro E r 2: C3 La m =i E li 9 W il 3 i! , C6 9 15 0 1 2 e I E E E m m m www c c E 2�E sage eeeoggge z M20csg HC U u2 ig 0 0 �E 2�t 6 � u <4 All F i PSESE T - ------------------- ............. MMIMMMM . . . . . . . . .. ------------------- AM I -M I F LL 0 � 4) c < Cc E E > a c o z: i5 ;: 0 o > m -40) E E 7E L) U) 0 < CL 0 0 a � 8 " C4 c E P.- 7�5 -6 75 0 0 0 0- (L > V do IL Ja > c S— LL LL > r o Z < � M r EO W 4 oo�m CL 0 LO a 0 c r 0 0 0 0 0 0 0 0 120 a. 0. 0. 0. 0 loco co co V U) 32 a 0 r Ja c LL > Q 0 E LL LL LL LL 05 > C-4 0) C; C6 L) 2 z , 0 . Q. 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SIR -,;8 --- -- ------- 926 97323 .......... ...... it 1! law 111d, i i 1 m Ag as g x IR g E City of La Ottki-inu cornparentive Fates of Interest April W. 2011 City of U Cunta Three Month AUgUStZO(A 4�% 6,01% 497% 48 497% 4.95% Sept 200 4 N% 501% 499% 53 6,00% 502% (XI 2006 500% 502% 501% 67 413(1% 510% Nov 2006 504% 503% 503% 62 494% 5 13% Det,2006 508% 504% 506% 80 40% 513% Jan 2007 518% 512% 516% 498% 516% Feb 2007 519% 513% 517% 45 495% 518% Ma,2007 521% 503% 615% 67 488% 521% A,2007 520% 514% 5 15% 42 4 8,1% 522% May 207 520% 605% 5A6% 32 481% 525% June 2007 619% 488% 510% 85 481% 525% FY D7/O8 July 2007 521% 4 90% 512% 129 4W% 626% tuugua(2007 517% 485% 508% IN 459% 525% Sept2007 5 16% 486% 506% 129 4043% 523% (XI 2007 511% 486% 602% 115 395% 514% N.,2007 5,03% 4S3% 4%% w 3 M% 4945% Dec, 2007 495% 343% 4,45% 123 339% 480% Jan 2008 458% 3,33% 422% N 231% 4.62% Feb 2008 412% 3.24% 385% N 2,07% 4 16% Mer 2008 4�07% 283% 3,67% 74 lN% 378% A,pr2008 345% 327% 341% B2 170% 340% Ma,20138 3,14% 3,27% 3 17% 0 1,92% 307% June 2008 309% IN% 286% 80 2,14% 289% FY OW9 Z00% 193% 2,77% 62 1 �70% 188% 2.29% 275% 218% 279% Augui 316% 192% 2.8 8% 51 1.69% 189% 2.14% 2.W% 208% 278% Sept 2008 2.81% 192% 2,U% 37 1.42% 179% 196% 2,00% 2.13% 277% W 2008 266% 261% 261% 29 0.90% 140% 1,72% I.W% 207% 271% Nov 2008 2M% 2,36% 2,W% U 0,15% 049% 104% 1.25% 145% 257% 0.2008 1,60% 0,18% 1A2% 116 0,05% 0,26% 0.59% ON% 097% 2,35% Jan 2009 136% 0,18% 1,23% U OA5% 036% 043% 0,88% 031% 206% Feb 2W9 123% 018% 1 11% 75 030% ON% 0.61% ON% 048% 187% Mor 2009 126% 018% 113% 69 0,20% 042% 0,70% ON% 037% IU% Apr2009 OfM% 018% 085% U D31% O�% 0 W% 0,88% 028% 161% May 2009 092% 018% 08,1% 80 0.18% O,W% 063% ON% 023% 153% June 2009 085% 029% ON% 111 020% 0,35% 055% 1,13% 026% 1.38% FY 09110 July 2009 069% ON% OA5% 111 019% 028% 047% 1,00% 028% 1 (ft% Augunut200i 064% 030% Oki% 92 0.16% 026% 046% 1 DO% 024% 093% Eiept 209 O,M% 0,31% 053% 112 012% 0,19% 041% IN% 019% 075% W 209 052% 031% OW% A 0.08% 0.19% 038% 1,00% 019% 065% Nov2fflg 056% 031% 0,53% 152 004% 0,14% 032% 075% 015% 061% Cat, 2009 056% 0,15% 051% 239 011% 020% 016% 1,00% 016% 057% Jan 2010 046% 015% 043% 179 006% 014% GU% 088% 013% 056% Feb 2010 051% 0 16% 048% 162 0,13% Olm 032% 0 N% 0 15% 058% Mar2010 050% 016% 047% 172 0 15% 024% 038% 10% 020% 055% Apr20lO 0,52% 0 16% 048% 162 0.15% 024% 049% IN% 023% 059% May 2010 0�% 016% 048% 116 0 17% 022% 037% 075% 028% Om% June 2010 059% 0 17% 0413% 1 � 016% 0.22% 032% 063% OK% 053% FN 10/11 July 20 10 050% 015% 047% 119 0,16% 0,20% 030% 083% 028% 053% Au,ust20lO 0,49% 0,15% O',fti% 108 015% 049% D.�% ON% 025% 051% Sept 2010 055% 015% 051% 107 0.16% O'l" 0.27% ON% 0,24% 050% W2010 0,65% 0,15% 0.51% m 013% 017% 023% 038% 023% 0.48% Nw2010 0.63% 0.15% 0 � 84 OA8% 0,21% 028% ON% 0,23% 045% Deu:2010 0,57% 0.14% 052% m 0.15% 0.19% 0,30% 0,63% 0 23% 046% Jan 2011 051% 0,14% 043% 206 0.16% 0.18% 0,28% 0.63% 024 O��% Feb 2011 055% 0 17% 00% 210 0.15% 0,17% 031% 063% 0 22 0,51% Mal,2011 0 �% OA7% 045% 218 005% 0,13% O,N% 0.75% 02Z OW% 10 CL E 16 E i2 -40) LL m x Z' 0 E m M m 0 < c m E (D a) 0 0 CL E tm U) C) CY 0 N C) CD CD a C) C) > co (I- co U') -It M 04 1 Q 0 ci 6 C5 ci 6 ci ci 6 6 z 11 INVESTMENT ADVISORY BOARD Meeting Date: TITLE: June 8, 2011 Business Session No. B Consideration of the Fiscal Year 2011/2012 Work Plan and Consideration of the Fiscal Year 2011/2012 Investment Policy BACKGROUND: The Investment Advisory Board has been meeting for several months to discuss the Investment Advisory Board Work Plan and the City Investment Policy for FY 2011/2012. Fiscal Year 2011/2012 Work Plan Attached please find a draft City Council Staff Report for July 5, 2011 outlining the FY 2011/12 Work Plan. Fiscal Year 2011/2012 Investment Pq!!gy Pursuant to State Legislation the City investment policies must be approved on an annual basis by the City Council. This approval is done in June of each year. At the May 2011 meeting, staff was asked to follow-up on the CUSIP No. for the Cook County Illinois School Bond issue that is used as collateral for the interest bearing active bank deposit program with Rabobank. Staff contacted the bank and the CUSIP No.is 213687GJ9. In addition, staff was asked to find out what the withdrawal policy is for LAIF and has attached a page from the LAIF Answer Book that sets forth the LAIF withdrawal policy. During the last several months, the Board has met to update the City Investment Policy. Pursuant to the Investment Policy, the Board meets with the City Manager and City Attorney to discuss the Investment Policy before they are forwarded to the City Council for their consideration. The Investment Policy is planned for the June 21, 2011 City Council Meeting. An Executive Summary of the proposed Fiscal Year 2011/2012 Investment Policy is attached as well as a redlined version. RECOMMENDATION: Forward the Fiscal Year 2011/2012 Work Plan to the City Council for their consideration at the July 5, 2011 meeting and forward the FY 2011/2012 Investment Policy to the City Council meeting of June 21, 2011 for their consideration with an appropriate recommendation. ceity/ 4 Qumrry AGENDA CATEGORY: BUSINESS SESSION: COUNCIL/RDA MEETING DATE: July 5, 2011 All! CONSENT CALENDAR: ITEM TITLE: Consideration of Investment Advisory III STUDY SESSION: Board 2011-2012 Work Plan Ill 91HH� 'HI PUBLIC HEARING: RECOMMENDATION: Approve the Investment Advisory, oard 2011 FISCAL IMPLICATIONS: Fiscal implications conlist of $4,500, and staff sup I I hl l6a - - - - - - - - - - - tit it i None. 'ji iij, Plan. WiM�ing expenses, budgeted at ,,, if tl� SectiorfF.70.030'sets forth the work plan items for the Investment for eachivlear as follows: The principal'I'U609#18f the board are: (1) review at least annually the city's investment poli # 111#fid recommend appropriate changes; (2) review monthly treasury report ndilhote compliance with the investment policy and adequacy of cash and investments for anticipated obligations; (3) receive and consider other reports provided by the city treasurer; (4) meet with the independent auditor after completion of the annual audit of the city's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls, and findings for cash and investment activities, and (5) serve as a resource for the city treasurer on matters such as proposed investments, internal controls, use of change of financial institutions, custodians, brokers and dealers. The Investment Advisory Board met on June 8, 2011 and is not recommending that any additional Work Plan Items be added to those outlined in the Municipal Code. FINDINGS AND ALTERNATIVES: The alternatives available to the City Council includl ,2 1 2 Wo 1. Approve the Investment Advisory Boar 012 fill 2. Do not approve the Investment Advio' 6 Board 20,11/2012 .41 3. Provide staff with alternative direction. i�ljlljil;!g Respectfully submitted, It John M. Approved for submission by: ; or Thomas P. Genovese, City Manager or Um �j 0 ma m 0 M� U) Cr 2 Um m m 0 E -0 0 I M" m � (D (D C o -t� 0 z z 0 'D 'T w E 0 cu c om Uj C%j E -G ;5 'c 'a a M 0 a) � .0 cc 6Z: LU I lu .0 V c in 0 -am cm 0 �o m c M -D 0 .0 = 0 a) 4) E z IL 0 E a Ln M 5 0) (D a , c E m '6 < x Uj U) E m 1 0 cd 0 c cu �5 (D .9s-6 a " 0 a) C 0 = � , Co 'D t: m a) -6 ;r_ 1: 0 0) CL a 'a 4) m .2 , 0) cc Z, a 2 C.) 'D (D C> a) m *k 0 > 0 CL 0 0 4) '0 z 0 VII Z 0 0 m o Q 0 -0 jo o 0 O)Z m o LU �z 0 z z z 9 �Lu w Ul cn LU C0 LU co LU 0) < 0 LU z z 0 0 IL w 0 Cl. 0 CL a) 0 Cl. z �o w Cl. Cl. 0 E cc m .0 c .0 Uj 2 (D -6 m 0 '0 m — m 0 0. 4) c Cl. N m w 0- LU QT) 0 m (D m a w E 0 0 M a) m I m E a) 0 a) CL 0 w 4) r 0 'a 0 'D cr 2 CL 0 a �o 1 z 0 �o E w cr E e 0 w < 0 0 0 2 cL 0 w w CL c CL m CL m 0 w a) M c w 0 w (L 0 ca z < < Cd U < 0 .6 co P-: o6 6 Revised June 30, 2009 PAGE EXECUTIVE SUMMARY 8,9, 18,24 Interest bearing active bank deposits investment with Rabobank N.A. The State Code has no maximum percentage limitation; the City policy maximum percentage is more restrictive at 60% or $40,000,000 whichever is less. CITY OF LA QUINTA Investment Policy Fiscal Year * Table of Contents Section Topkg Page Executive Summary 2 1 General Purpose 4 11 Investment Policy 4 III Scope 4 IV Objectives 4 ll� Safety of Principal 11� Provide Liquidity 1� Yield A Risk -Based Market Rate Of Return V Maximum Maturities 6 Vi Prudence 6 Vil Authority 7 Vill Ethics and Conflicts of Interest 7 IX Authorized Financial Dealers and Institutions 7 0. Broker/Dealers ll� Financial Institutions X Permissible Deposits and Investments 8 X1 Investment Pools 13 X11 Payment and Custody 13 Xill Interest Earning Distribution Policy 13 XIV Internal Controls and Independent Auditors 14 XV Reporting Standards 15 Xvi Financial Assets and Investment Activity Not Subject to this Policy 15 XVII Investment of Bond Proceeds 15 XIII Investment Advisory Board - City of La Quinta 16 XiX Investment Policy Adoption 16 Appendices 12R!q Page A Summary of Permissible Deposits and Investments 18 B City of La Quinta Municipal Code Ordinance 2.70 - Investment Advisory Board 20 C City of La Quinta Municipal Code Ordinance 3.08 - Investment of Moneys and Funds2l D Segregation of Major Investment Responsibilities 23 E Listing of Approved Financial Institutions 24 F Broker/Dealer Questionnaire and Certification 25 G Request for Proposal for Professional Portfolio Management Firm 29 H Permissible Investment Chart - Professional Portfolio Management Firm 35 1 Investment Management Process and Risk 36 J Glossary 37 1 CITY OF LA QUINTA Investment Policy Fiscal Year Executive Summary The general purpose of this Investment Policy is to provide the rules and standards that must be followed in administering the City of La Quinta's deposits and investments. The City's Investment Policy conforms to all state and local statutes and applies to all deposits and investments of the City of La Quinta, City of La Quinta Redevelopment Agency, and the City of La Quinta Financing and Housing Authorities (the"City"). It is the City's policy to deposit and invest public funds in a manner that shall provide: 1� Safety of principal; 1� Liquidity to meet all of the City's obligations and requirements that may be reasonably anticipated; 1� A risk -based market rate of return. It is the City's policy to hold securities and other investments until maturity. This buy -and -hold policy shall not prevent the sale of a security to minimize loss of principal when an issuer or backer suffers declining credit worthiness or when the liquidity needs of the portfolio require that a security be sold. Authority to manage the City's investment portfolio is derived from the City Ordinance. Management responsibility for the investment program is delegated to the City Treasurer, who shall establish and implement written procedures for the operation of the City's investment program consistent with the Investment Policy. The Treasurer shall establish and implement a system of internal controls to accomplish the following objectives: 0- Safeguard assets; 1� The orderly and efficient conduct of its business, including adherence to all City management policies; 1� Prevention or detection of errors and fraud; 1� The accuracy and completeness of accounting records; li� Timely preparation of reliable financial information. The System of Internal Controls developed by the City Treasurer shall be reviewed annually by the independent auditors in connection with the annual audit of the City's Financial Statements. The City Manager, 01*000,1#�Q"'- City Treasurer and city employees involved in the City's banking and investment process shall conduct the City's business in an ethical manner and refrain from any activity or relationship that may be, or have the appearance of, a conflict of interest. The City Treasurer maintains a listing of financial institutions which are approved for investment purposes. All Broker/Dealers and financial institutions that provide investment services will be subject to City Council approval. The Treasurer will be permitted to invest only in the permissible deposits and investments described in Section X and Appendix A up to the specified maximum allowable percentages IOJ and/or dollar limitations and, where applicable, through the bid process requirements. Permissible deposits and investments include, in general: 0, FDIC -insured Checking, Savings, and Sweep� Accounts; .............. Certificates of Deposit; U.S. Government Agency Securities and Federal Government Securities; Prime Commercial Paper; Local Agency Investmentfund (LAIF); Money Market Mutual Funds; 0, Corporate Notes; 1� Professionally Managed Accounts. The City's deposits and investments are generally limited to three years' maximum maturity. However, the projected amount of funds not expected to be disbursed within five years may be invested in U.S. Treasury bills, notes and bonds maturinq between three and five years. the City's Investment Policy does not specify a single benchmark as a goal or target yield for a rate of return on its investment portfolio. As a basis for comparison only, the Treasurer's monthly report will display the rates of return on the three-month Bill, six-month Bill, and the one and two-year U.S. Treasury Note, comparable -period rates for commercial paper, and the yield for the State Treasurer's Local Agency Investment Fund (LAIF). The Investment Policy shall be adopted by resolution of the La Quinta City Council on an annual basis. The Investment Policy will be adopted before the end of June of each year. This Executive Summary is only an overview of the City's Investment Policy. Reading this summary does not constitute a complete review, which can only be accomplished by reviewing all of the pages herein. City of La Quinta Statement of Investment Policy July 1, through June 30, Adopted by the City Council on GENERAL PURPOSE The general purpose of this document is to provide the rules and standards that must be followed in administering the City of La Quints's deposits and investments. 11 INVESTMENT POLICY It is the policy of the City of La Quinta to deposit and invest public funds in a manner that shall provide: )�- Safety of principal; )0, Liquidity to meet all of the City's obligations and requirements that may be reasonably anticipated; A risk -based market rate of return. The Investment Policy conforms to all State and local statutes governing the investment of public funds and sets forth the permissible deposits and investments of the City's funds and the limitations thereon. III SCOPE Except as further detailed in Section XVII, this Investment Policy applies to all deposits and investments of the City of La Quinta, City of La Quinta Redevelopment Agency and the City of La Quinta Financing and Housing Authorities (hereafter referred to in this document as the "City"). These funds are reported in the City's Comprehensive Annual Financial Report (CAFR) and include all funds within the following fund types: ll� General 1� Special Revenue ll� Capital Projects 10- Debt Service 1� Enterprise 1� Internal Service ll� Trust and Agency ll� Any new fund types and fund(s) that may be created. IV OBJECTIVES The objectives of the City's investment activity, in order of priority and importance, are: 1 . Safety of Principal Safety of principal is the foremost objective of the City's investment program. Ell Investments shall be undertaken in a manner that seeks to ensure the preservation of principal of the overall portfolio in accordance with the permissible deposits and investments. The City shall endeavor to preserve its investment principal by making only permissible deposits and investments, undertaken in a controlled manner to minimize the possibility of loss or misappropriation through malfeasance or otherwise. Investments not backed by the full faith and credit of the United States Government shall be diversified by allocating assets between different types of permissible investments, maturities, and issuers as a means to mitigate credit risk and interest rate risk. A. Credit Risk is the risk of loss from the failure of the security issuer or backer. Credit risk may be mitigated by: 1� Limiting investments to investment grade securities as permitted in Section X; ll� Diversifying the issuers of the securities in the investment portfolio so that potential losses due to issuer failure or individual securities downgrades may be minimized. B. Interest Rate Risk is the risk that market values of securities in the portfolio will decline due to changes in general interest rates. Interest rate risk may be mitigated by: I� Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and 1� Investing operating funds primarily in shorter -term securities. C. Liquidity Risk is the risk that a security cannot be liquidated because of its unique features or structure or because it is thinly traded. Liquidity risk is not a material issue for the City's portfolio because of the permissible deposits and investments (see Section X) and because the City maintains a buy -and -hold policy and holds securities and other investments to maturity. A discussion of the City's investment process and risk is presented in Appendix 1. 2. Provide Liquidity The investment portfolio shall remain sufficiently liquid to meet all of the City's cash needs that may be reasonably anticipated. This is accomplished by structuring the portfolio so that sufficient liquid funds are available to meet anticipated demands. Furthermore, since all possible cash needs cannot be anticipated the portfolio should be diversified and consist of securities with active secondary or resale markets. The City's policy is to hold securities and other investments to maturity. Accordingly, securities shall not be sold prior to maturity with the following exceptions: I� A security with declining credit quality can be sold early to minimize loss of principal; ll� Unanticipated liquidity needs of the portfolio require that one or more securities be sold. 3. Yield A Risk -Based Market Rate Of Return The City's investment portfolio shall be structured with the objective of yielding a risk - based market rate of return throughout budgetary and economic cycles. Return on investment is less important than the safety and liquidity objectives described above. The City's Investment Policy does not specify a single benchmark as a goal or target yield for a rate of return on its investment portfolio. The portfolio's rates of return will be influenced by several factors, including actions by the Federal Reserve Board, the marketplace, and overall economic perceptions and conditions. These factors will not affect yield during the securities' holding period because the City's buy -and -hold policy fixes the securities' yield at the time of purchase. As a basis for comparison only, the Treasurer's monthly reports will display the rates of return on the three-month Bill, six-month Bill, and one and two-year U.S. Treasury Note, comparable -period rates for commercial paper, and the yield for the State Treasurer's Local Agency Investment Fund (LAIF). The Treasurer may use these or any other published rates of return that the Treasurer deems appropriate for comparison to the return on the City's investment portfolio. V MAXIMUM MATURITIES It is the City's policy to hold securities and other investments until maturity, thus avoiding the risk of market value fluctuations with overall market interest rates. This buy -and -hold policy shall not prevent the sale of a security to minimize loss of principal when an issuer or backer suffers declining credit worthiness or when the liquidity needs of the City require that a security be sold. The buy -and -hold policy requires that the City's investment portfolio be structured so that sufficient liquid funds are available from maturing investments and other sources to meet all reasonably -anticipated cash needs. To meet anticipated cash needs, it is essential that the Treasurer have reliable, diligently prepared cash flow projections. Annually, the Treasurer shall project the amount of funds not expected to be disbursed within ten years. t XV. A the amount of such funds is projected to be $30 million. Funds up to that amount may be invested in U.S. Treasury bills, notes and bonds Local Agency Obligations, and California Local Agency Obligations maturing between 3 and 10 years. For all other funds, investments are limited to three years maximum maturity, with no more than 25% of surplus funds invested in maturities exceeding two years and less than three years. VI PRUDENCE The City shall follow the Uniform Prudent Investor Act as adopted by the State of California in Probate Code Sections 16045 through 16054. Section 16053 sets forth the terms of a prudent person which are as follows: "Investments shall be made with judgment and care - under circumstances then prevailing - which persons of prudence, discretion, and intelligence exercise in the professional management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." 23 Vil AUTHORITY Authority to manage the City's investment portfolio is derived from sections 35607 and 35608 of City Ordinance 3.08.010. Management responsibility for the investment program is delegated to the City Treasurer for a period of one year pursuant to the City Council's annual adoption of the Investment Policy. The City Treasurer shall establish written procedures for the operation of the investment program consistent with the Investment Policy. Procedures should include reference to safekeeping, wire transfer agreements, banking service contracts, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of cont a activities of subordinate officials. The City Manager 0 , late th shall acknowledge in writing all purchases and sales of investments prior to their execution by the City Treasurer. Vill ETHICS AND CONFLICTS OF INTEREST 'Ir,�-;12�-M The City Manager, "W" City Treasurer and city employees involved in the City's banking and investment process shall conduct the City's business in an ethical manner and refrain from any activity or relationship that may be, or have the appearance of, a conflict of interest. Any questionable activity or relationship shall be reported immediately and in compliance with the procedures set forth in Section 1.40 - Conflicts of Interest and Acceptance of Gifts and other Gratuities of the City of La Quinta Personnel Manual. Reporting must be made in accordance with the personnel policies of the City and, until resolved, the officer or employee shall refrain from participating in the City's business related to the matter. The City Manager, City Treasurer and city employees may conduct personal business with banks, brokers, and other financial institutions that are authorized to conduct business with the City provided that the terms of the activity to the accountholder with the City are the same as those that are available to the public in general. IX AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The City Treasurer maintains a listing of financial institutions which are approved for direct investment purposes. In addition a list will also be maintained of approved broker/dealers selected by credit worthiness, who maintain an office in the State of California. 1 Broker/Dealers who desire to become bidders for direct investment transactions must supply the City with the following: Current audited financial statements; Proof of Financial Industry Regulatory Authority (FINRA) Certification; 1� Trading resolution; Proof of California registration; Resume of Financial broker; and 1� Completion of the City of La Quinta Broker/Dealer questionnaire (see Appendix F) which contains a certification of having read the City's Investment Policy. The City Treasurer shall evaluate the documentation submitted by the broker/dealer and independently verify existing reports on file for any firm and individual conducting investment related business. The City Treasurer will also contact the following agencies during the verification process: Financial Industry Regulatory Authority (FINRA) Public Disclosure Report File (1- 800-289-9999). State of California Department of Corporations (11 -916-445-3062). The City Treasurer maintains a listing of financial institutions which are approved for investment purposes. All Broker/Dealers and financial institutions that provide investment services will be subject to City Council approval. Each securities dealer shall provide monthly and quarterly reports filed pursuant to U.S. Treasury Department regulations. Each mutual fund shall provide a prospectus and statement of additional information. 2. Financial Institutions will be required to meet the following criteria in order to receive City funds for deposit or investment (see Appendix E, "Listing of Approved Financial Institutions"): A. Insurance - Public Funds shall be deposited only in financial institutions having accounts insured by the Federal Deposit Insurance Corporation (FDIC). B. Collateral - The amount of the City's deposits or investments not insured by the FDIC —shall be collateralized by securities with market values of 110%, or by mortgages with market values 150%, of the amount of invested funds plus unpaid interest earnings. C. Disclosure - Each financial institution maintaining invested funds in excess of the FDIC insured amount shall furnish the City a copy of the most recent Call Report. The City shall not invest in excess of the FDIC insured amount in banking institutions which do not disclose to the city a current listing of securities pledged for collateralization in public monies. X PERMISSIBLE DEPOSITS AND INVESTMENTS Permissible deposits and investments are summarized below. A more comprehensive list is included in Appendix A. Permissible Investments and Limitations (See Appendix A for Additional Information) Maximum Allocation Maximum Maturity Restrictions . Curre I nt / Sweep Account: Checking & Savings Accoun Is FDIC Insured & Sweep Accounts 85% Portfolio On Demand U.S. Treasuries and/or GSE's ri Permissible Investments and Limitations Maximum Maximum Restrictions (See Appendix A for Additional Information) Allocation Maturity Certificates of Deposit - FDIC Insured 60% Portfolio 3 Years — $250,000, including interest per institution <=$30,0000,000 U.S. Treasury Bills, Notes and Bonds, and Government National 100% Portfolio 3 Years maturing 3-10 Mortgage Association (GNMA) Securities Yrs. <=$30,0000,000 maturing 3-10 Local Agency Bonds/Califomia Local Agency Obligations 100% Portfolio 10 Years Yrs. Long term "A, A2, A" or better U.S. Government Agency Securities and Federal Government Securities (except collateralized mortgage obligations (CMO's) or structured notes which contain embedded rate options): - Federal National Mortgage Association (FNMA) $20,000,000 3 Years - Federal Home Loan Bank Notes & Bonds (FHLB) $25,000,000 3 Years - Federal Farm Credit Bank (FFCB) $30,000,000 3 Years - Federal Home Loan Mortgage Corporation (FHUMC) $20,000,000 3 years Prime Commercial Paper including Temporary Liquidity Guarantee 15% Portfolio 90 Days $5,000,000 per Program (TLGP) issuer maximum. Local Agency Investment Fund (LAIF) 30% Portfolio Current On Demand $40 million per account. Money market mutual funds regulated by the SEC that consist only of US 20% Portfolio Current / Maintain $1 per Treasury Securities or GSE's and maintain a par value at $1 per share On Demand share par value $5,000,000 max Corporate Notes 10% 3 Years per issuer AA rated or better $10,000,000 max Corporate Notes - Temporary Liquidity Guarantee Program CFLGP) 20% 3 Years per issuer, AA rated or better. Requires Professionally Managed Account 10% 3 Years City Council - I Approved RFP J Long -Term Scale S&P AAA, AA +, AA, AA-, A+, A Moody's Aaa, Aal, Aa2, Aa3, Al, A2 Fitch AAA, AA +, AA, AA-, A+, A Checking, Savings, and Sweep Accounts - The City will only maintain checking, savings, and sweep accounts with FDIC insured financial institutions. As authorized by the City Council, a U.S. Treasury and/or U.S. Agency Securities Money Market Sweep Account with a $50,000 target balance may be maintained in conjunction with the checking account. P Certificates of Deposi - As authorized in Government Code Section 53649, Certificates of Deposit are fixed term investments which are required to be collateralized from 110% to 150% depending on the specific security pledged as collateral in accordance with Government Code Section 53652. There are no portfolio limits on the amount or maturity for this investment vehicle. Collateral ization will be required for Certificates of Deposits in excess of the FDIC insured amount. The type of collateral is limited to City authorized investments. Collateral will always be held by an independent third party from the institution that sells the Certificates of Deposit to the City. Evidence of compliance with State Collateralization policies must be supplied to the City and retained by the City Treasurer as follows: A. Certificates of Deposits Insured by the FDIC: The City Treasurer may waive collateralization of a deposit that is federally insured. B. Certificates of Deposit in excess of FDIC Limits: The amount not federally insured shall be 110% collateralized securities or 1 mortgages market value of that amount of invested funds plus unpaid interest earnings. The City's Investment Policy limits the percentage of Certificates of Deposit to 60% of the portfolio. The City does not allow investments in CDAR's, or negotiable (secondary market) certificates of deposit. U.S. Treasury Bills, Notes, and Bonds and Government National Mortgage Associations (GNMA) securities - The City may invest in U.S. Treasury bills, notes, and bonds, and GNMA securities directly issued and backed by the full faith and credit of the U.S. Government. The City's Investment Policy limits investments in U.S. Treasury issues and GNMA's to 100% of the portfolio. > The City's Investment Policy does not allow investments in state indebtedness. 4. U.S. Government Agency Securities and Federal Government Securities - The City may invest in securities issued by U.S. Government instrumentalities and agencies (commonly referred to as government sponsored enterprises or GSE's). These securities are not backed by the full faith and credit of the U.S. Government. Publicly owned GSE's include Federal National Mortgage Association IFNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Student Loan Marketing Association (SLMA). Non -publicly owned GSE's include the Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Federal Land Bank (FLB) and Federal Intermediate Credit Bank (FICB). The City's Investment Policy allows investment only in securities of FNMA, FHLMC, FHLB and FFCB. For Fiscal Year 2010/2011, the maximum face amount per issuer is $20 million for FNMA and FHLMC, $25 million for FHLB and $30 million for FFCB. In addition, no more than 30% of the portfolio surplus may be invested in all GSE's combined with a maximum $10 million face amount per purchase. Prime Commercial Paper - As authorized in Government Code Section 53601 (g), a portion of the City's portfolio may be invested in commercial paper of the highest rating (A-1 or P- 1) as rated by Moody's or Standard and Poor's. There are a number of other qualifications [us regarding investments in commercial paper based on the financial strength of the corporation and the size of the investment. The City's Investment Policy permits investments in commercial paper with the following limitations: A. Maximum 15% of the portfolio. B. Maximum maturity of 90 days. C. Maximum of $5 million per issuer. These limitations are more restrictive than the State code allowed amounts of 25% of the total portfolio with maturities up to 270 days with no per -issuer limitations. The City is also permitted to invest in commercial paper issued under the FDIC Temporary Liquidity Guarantee Program subject to the aforementioned commercial paper limitations. 6. State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in Government Code Section 16429.1 and by LAW procedures, local government agencies are each authorized to invest a maximum of $50 million per account in this investment program administered by the California State Treasurer. The City Treasurer may not invest more than $40 million per account in LAIF. The City's investment in LAW is allowable as long as the average maturity of its investment portfolio does not exceed two years, unless specific approval is authorized by the City Council. The City has two accounts with LAW and limits investment to 30% of the portfolio. Money Market Mutual Funds - As authorized in Government Code Section 53601 (k), local agencies are authorized to invest in shares of beneficial interest issued by diversified management companies (mutual funds) in an amount not to exceed 20% of the agency's portfolio. There are a number of other qualifications and restrictions regarding allowable investments in corporate notes and shares of beneficial interest issued by mutual funds which include (1) attaining the highest ranking or the highest letter and numerical rating provided by not less than two of the three largest nationally recognized rating services, or (2) having an investment advisor registered with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations and with assets under management in excess of five hundred million dollars ($500,000,000). The City's Investment Policy only allows investments in mutual funds that are money market funds maintaining a par value of $1 per share that invest in direct issues of the U.S. Treasury and/or US Agency Securities with an average maturity of their portfolio not exceeding 90 days and the City limits such investments to 20% of the portfolio. 8. Corporate Notes - As authorized in Government Code Section 53601 (j), local agencies may invest in corporate notes. The notes must be issued by corporations organized and operating in the United States or by depository institutions licensed by the United States or any other state and operating in the United States. The City's Investment Policy allows investment in corporate notes authorized by the Government Code with the following limitations: 1� Maturities shall not exceed three years from date of purchase. 1� Eligible notes shall be regularly quoted and traded in the marketplace. ll� Eligible notes shall be rated "AA"or better. Total investment shall not exceed 10% of the portfolio for non- Temporary Liquidity Guarantee Program (TLGP) Corporate Notes and 20% of the portfolio for 11 TLGP Corporate Notes, and The maximum aggregate investment shall not exceed $5 million face amount for each issuer. This is more restrictive than the State code allowed amounts of 30% of the total portfolio with maturities up to five years with no per -issuer limitations. The City is also permitted to invest in corporate notes issued under the FDIC Temporary Liquidity Guarantee Program subject to the aforementioned corporate note limitations, except that corporate notes issued under the Temporary Liquidity Guarantee Program or otherwise backed by the United States government shall be limited to 20% of the portfolio and the maximum aggregate investment for such notes shall not exceed $10 million face amount for each issuer. 9. Professionally Managed Account(s) - The City Treasurer may place up to 10% of the portfolio with a professional portfolio management firm ("PPMF"). The PPMF will be approved by the City Council based upon the City Treasurer's recommendation pursuant to completion of a request for proposal (RFP) as outlined in Appendix G. The PPMF shall have: (a) An established professional reputation for asset or investment management; (b) Knowledge and working familiarity with State and Federal laws governing and restricting the investment of public funds; (c) Substantial experience providing investment management services to local public agencies whose investment policies and portfolio size are similar to those of the City; (d) Professional liability (errors and omissions) insurance and fidelity bonding in such amounts as are required by the City; (e) Registration with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Before engagement by the City and except as may be specifically waived or revised, the PPMF shall commit to adhere to the provisions of the City's Investment Policy with the following exceptions: (f) The PPMF may be granted the discretion to purchase and sell investment securities in accordance with Appendix I of this Investment Policy; (g) The PPMF is not required to adhere to the buy -and -hold policy of the City's Investment Policy, and; (h) The PPMF does not need City Manager or City Treasurer approval to make permissible investments as detailed in column 8 of Appendix H of this Investment Policy. 10. Local Agency Bonds and California Local Agency Obligations - The City may invest in California local agency obligations pursuant to 56301 (a) and 53301 (a). 53601 (a) pertains to investing in bonds issued by a local agency, department, board, agency or authority of the local agency. 53601 (a) pertains to investing in bonds and other defined indebtedness of a local agency or department, board, agency or authority of the local agency within the State of California. The City's Investment Policy limits investments in Local Agency Bonds and California Local Agency obligations to 30% of the portfolio with up to a ten year maximum maturity. In addition, the Agency obligations must be invested in the long term rating of A, A2, A or better by S&P, Moody's or Fitch. 12 In the case of an initial public offering, including refinancings, the Treasurer may purchase directly from the Bond Underwriter. If the case of secondary issues, the Treasurer will rely on the approved Broker/Dealers. X1 INVESTMENT POOLS There are three (3) types of investment pools: 1� State -run pools (e.g., LAIF); 1� Pools that are operated by a political subdivision where allowed by law and the political subdivision is the trustee (e.g., County Pools); 1� Pools that are operated for profit by third parties. The City's Investment Policy permits investment only in pools authorized in Section X. X11 PAYMENT AND CUSTODY The City shall engage qualified third party custodians to act in a fiduciary capacity to maintain appropriate evidence of the City's ownership of securities and other eligible investments. Such custodians shall disburse funds, received from the City for a purchase, to the broker, dealer or seller only after receiving evidence that the City has legal, record ownership of the securities. Even though ownership is evidenced in book -entry form rather than by actual certificates, this procedure is commonly accepted as the delivery versus payment (DVP) method for the transfer of securities. X111 INTEREST EARNING DISTRIBUTION POLICY Interest earnings are generated from pooled investments and specific investments. 1 Pooled Investments - It is the general policy of the City to pool all available operating cash of the City of La Quinta, La Quinta Redevelopment Agency and La Quinta Financing and Housing Authorities and allocate interest earnings, in the following order, as follows: A. Payment to the General Fund of an amount equal to the total annual bank service charges as incurred by the general fund for all operating funds as included in the annual operating budget. B. Payment to the General Fund of a management fee equal to 5% of the annual pooled cash fund investment earnings. C. Payment to each fund of an amount based on the average computerized daily cash balance included in the common portfolio for the earning period. 2. Specific Investments - Specific investments purchased by a fund shall incur all earnings and expenses to that particular fund. 13 XIV INTERNAL CONTROLS AND INDEPENDENT AUDITOR The City Treasurer shall establish a system of internal controls to accomplish the following objectives: Safeguard assets; The orderly and efficient conduct of its business, including adherence to management policies; Prevention or detection of errors and fraud; The accuracy and completeness of accounting records; and Timely preparation of reliable financial information. While no internal control system, however elaborate, can guarantee absolute assurance that the City's assets are safeguarded, it is the intent of the City's internal control to provide a reasonable assurance that management of the investment function meets the City's objectives. The internal controls shall address the following: 1 Control of collusion. Collusion is a situation where two or more employees are working in conjunction to defraud their employer. 2. Separation of transaction authority from accounting and record keeping. By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved. 3. Custodial safekeeping. Securities purchased from any bank or dealer including appropriate collateral (as defined by State Law) shall be placed with an independent third party for custodial safekeeping. 4. Avoidance of physical delivery securities. Book entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities. 5. Clear delegation of authority to subordinate staff members. Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities as outlined in the Segregation of Major Investment Responsibilities appendices. 6. Written confirmation or teleDhone transactions for investments and wire transfers. Dueto the potential for error and improprieties arising from telephone transactions, all telephone transactions shall be supported by written communications or electronic confirmations and approved by the appropriate person. Written communications may be via fax if on letterhead and the safekeeping institution has a list of authorized signatures. Fax correspondence must be supported by evidence of verbal or written follow-up. 7. Development of a wire transfer agreement with the City's bank and third party custodian. This agreement should outline the various controls, security provisions, and delineate responsibilities of each party making and receiving wire transfers. The System of Internal Controls developed by the City, shall be reviewed annually by the independent auditor in connection with the annual audit of the City's Financial Statements. 14 The independent auditor's letter on internal control over financial reporting and compliance as it pertains to cash and investments, if any, shall be directed to the City Manager who will direct the City Treasurer to provide a written response to the independent auditor's letter. The auditor's letter, as it pertains, to cash and investment activities and the City Treasurer's response shall be provided to the City's Investment Advisory Board for their consideration. Following the completion of each annual audit, the independent auditor shall meet with the Investment Advisory Board and discuss the auditing procedures performed and the review of internal controls for cash and investment activities. See Appendix D, "Segregation of Major Investment Responsibilities." XV REPORTING STANDARDS The City Treasurer shall submit a monthly Treasurers Report to the City Council and the Investment Advisory Board that includes all cash and investments under the authority of the Treasurer. The Treasurer's Report shall summarize cash and investment activity and changes in balances and include the following: A certification by the City Treasurer. A listing of purchases and sales/maturities of investments. Cash and Investments categorized by authorized investments, except for LAW which will be provided quarterly and show yield and maturity. Comparison of month end actual holdings to Investment Policy limitations. Current year and prior year monthly history of cash and investments for trend analysis. Balance Sheet. Distribution of cash and investment balances by fund. A year to date historical cash flow analysis and projection for the next six months. 10, A two-year list of historical interest rates. XVI FINANCIAL ASSETS AND INVESTMENT ACTIVITY NOT SUBJECT TO THIS POLICY The City's Investment Policy does not apply to the following: 10. Cash and Investments raised from Conduit Debt Financing; 10 Funds held in trust in the City's name in pension or other post -retirement benefit programs; Do. Cash and Investments held in lieu of retention by banks or other financial institutions for construction projects; Short or long term loans made to other entities by the City or Agency; and Short term (Due to/from) or long term (Advances from/to) obligations made either between the City and its funds or between the City and Agency. XVII INVESTMENT OF BOND PROCEEDS The City's Investment Policy shall govern bond proceeds and bond reserve fund investments. California Code Section 5922 (d) governs the investment of bond proceeds and reserve funds in accordance with bond indenture provisions which shall be structured in accordance with the City's Investment Policy. 15 Arbitrage Requirement - The US Tax Reform Act of 1986 requires the City to perform arbitrage calculations as required and return excess earnings to the US Treasury from investments of proceeds of bond issues sold after the effective date of this law. These arbitrage calculations may be contracted with an outside source to provide the necessary technical assistance to comply with this regulation. Investable funds subject to the 1986 Tax Reform Act will be kept segregated from other funds.and records will be kept in a fashion to facilitate the calculations. The City's investment position relative to the new arbitrage restrictions is to continue pursuing the maximum yield on applicable investments while ensuring the safety of capital and liquidity. It is the City's position to continue maximization of yield and to rebate excess earnings, if necessary. XVIII INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA The Investment Advisory Board (IAB) is a standing board composed of five members from the public that are appointed by the City Council. Background information will be requested and potential candidates must agree to a background check and verification. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any time if a change in circumstances warrants, each board member will provide the City Council with a disclosure statement which identifies any matters that have a bearing on the appropriateness of that member's service on the board. All board members shall report annually to the City Clerk on Form 700, Statement of Economic Interests, any activities, interests, or relationships that may be, or have the appearance of, a conflict of interest. The IAB must meet at least quarterly, but usually meets monthly, to: 1 . Review at least annually the City's Investment Policy and recommend appropriate, changes; 2. 3. Review monthly treasury report and note compliance with the Investment Policy and adequacy of cash and investments for anticipated obligations; 4. Receive and consider other reports provided by the City Treasurer; 5. Meet with the independent auditor after completion of the annual audit of the City's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls and findings for cash and investment activities, and; 6. Serve as a resource for the City Treasurer on matters such as proposed investments, internal controls, use or change of financial institutions, custodians, brokers and dealers. The IAB will report to the City Council after each meeting either in person or through correspondence at a regular City Council meeting. See Appendix 13: "Investment Advisory Board Provisions". XIX INVESTMENT POLICY ADOPTION The City's Investment Policy will be reviewed annually by the City's Investment Advisory Board and the City Treasurer. The Investment Advisory Board will forward the Investment Policy with any revisions to the City Manager and City Attorney for their review and comment. A joint 16 meeting will be held with the Investment Advisory Board, City Manager, City Attorney, and City Treasurer to review the Investment Policy and any comments prior to submission to the City Council for their consideration. The Investment Policy shall be adopted by resolution of the City Council annually before the end of June of each year. I - 17 CL CL 21 z 5 U- 0 z LU LU z 0 CL LU a ui -i (n ui a- U- 0 cc (n 0 U) 2 CL cc S E 0 (D m 4) CL E E x ca E (D U) cc E E > E .9 1 Z E (a R 0) CU E 4) 0).r- c , ty 4) o '0-0 E �5 E CL — 4) .0 E < cu 'i (D a) E ty LD L, m! mw� LD Cc X1 0. 0 A jZ A mmo ov 12 Ir a -0 E2 0 m m m w w E 0 L La 8R Q. U) 0 S C E x M> 0 > m m x x 2 Ct 0 c; Ct C Q Ct wi 2 Ir v v .2 .2 .2 .2 .2 0 0 E o -00 .0 .0 .0 0 0 a_ 0 a. 0 CL 00 0 Q� 0 0 0 0. _0 U) L=L g 0 :9i .0 .2 .2 .2 .2 .0 .2 .2 3 0 8� E 0 1 0 0 0 a a 0 0 0 0 0 0 0 0 0. 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F -E 0 a IL 20 '00 080 E > o- we 0 0 M ME 0 av = � 0 ma 0 .2 2, ip o , B �' -a "s 0 m 0 - -� 0 -0 20 2 > a 0 M > c , 0 E 0 M -2 z E.S -0 0 V'a , - E . E LO 0 8 Z; 0 -6 0 > 0 0 7ro < 0 p E c wo 8 w E M E - c E 0 0- a M 0 0 E v 0 M 0 m .- -s� amw � M 0. , a M x , 10 So 0 c 0, wo OV �5 E wo a a 0 0 O.w w 2 =0 f C E 0 c M � E w M M M E 0 E 0 0 a t5 w !E 0 M U) a wo 0 S iR 0 2 E am, 0 U E E cc 0 0 a 0 0 z . �::s E � M -a 0 M Mv 0 0 m a 0 0 0 L) M m EM a , ci '�.gn .2 w w ma 0 M cc 2 , . a -a- S? 1 0 - I m - ME z mz� = - 0 0 0 MA a -0 .1 M 1 .9 c , 00 0-4 'w 0 M M zw 0 Ow Mao M - M CL 16 z 0 0 w al Appendix B City of La Quinta Municipal Code Chapter 2.70 INVESTMENT ADVISORY BOARD PROVISIONS Sections: 2.70.010 General Rules Regarding Appointment. 2.70.020 Board meetings. 2.70.030 Board functions. 2.70.010 General rules regarding appointment A. Except as set out below, see Chapter 2.06 for General Provisions. B. The Investment Advisory Board (the"board") is a standing board composed of five (5) members from the public that are appointed by city council. C. Applicants for the board should have a background in finance, preferably with knowledge and/or experience in markets, controls and accounting for securities. Background information will be requested and potential candidates must agree to a background check and verification. D. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any time if a change in circumstances warrants, each board member will provide the City Council with a disclosure statement which identifies any matters that have a bearing on the appropriateness of that member's service on the board. Such matters may include, but are not limited to, changes in employment, changes in residence, or changes in clients. E. To promote continuity, the expiration of the terms of the members of the board shall be staggered. The term of service is three years, with one or two terms expiring each year. 2.70.020 Board meetings. The Board usually will meet monthly, but this schedule may be extended to quarterly meetings upon the concurrence of the Board and the City Council. The specific meeting dates will be determined by the Board Members and meetings may be called for on an as needed basis. 2.70.030 Board functions. A. The principal functions of the Board are: (1) review at least annually the City's Investment Policy and recommend appropriate changes; (2) review monthly Treasury Report and note compliance with the Investment Policy and adequacy of cash and investments for anticipated obligations; (3) receive and consider other reports provided by the City Treasurer; (4) meet with the independent auditor after completion of the annual audit of the City's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls, and findings for cash and investment activities, and; (5) serve as a resource for the City Treasurer on matters such as proposed investments, internal controls, use or change of financial institutions, custodians, brokers and dealers. B. The Board will report to the City Council after each meeting either in person or through correspondence at a regular City Council meeting. 20 Appendix C City of La Quinta Municipal Code Chapter 3.08 INVESTMENT OF MONEYS AND FUNDS Sections: 3.08.010 Investment of city moneys and deposit of securities. 3.08.020 Authorized investments. 3.08.030 Sales of securities. 3.08.040 City bonds. 3.08.050 Reports. 3.08.060 Deposits of securities. 3.08.070 Trust fund administration. 3.08.010 Investment of city moneys and deposit of securities. Pursuant to, and in accordance with, and to the extent allowed by, Sections 53607 and 53608 of the Government Code, the authority to invest and reinvest moneys of the city, to sell or exchange securities, and to deposit them and provide for their safekeeping, is delegated to the city treasurer. (Ord. 2 § 1 (part), 1982) 3.08.020 Authorized investments. Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized to purchase, at their original sale or after they have been issued, securities which are permissible investments under any provision of state law relating to the investing of general city funds, including but not limited to Sections 53601 and 53635 of the Government Code, as said sections now read or may hereafter be amended, from moneys in his custody which are not required for the immediate necessities of the city and as he may deem wise and expedient, and to sell or exchange for other eligible securities and reinvest the proceeds of the securities so purchased. (Ord. 2 § 1 (part), 1982) 3.08.030 Sales of Securities. From time to time the city treasurer shall sell the securities in which city moneys have been invested pursuant to this chapter, so that the proceeds may, as appropriate, be applied to the purchase for which the original purchase money may have been designated or placed in the city treasury. (Ord.2 § I (part), 3.08.040 City bonds. Bonds issued by the city and purchased pursuant to this chapter may be cancelled either in satisfaction of sinking fund obligations,or otherwise if proper and appropriate; provided, however, that the bonds may be held uncancelled and while so held may be resold. (Ord. 2 § 1 (part), 1982) 21 3.08.050 Reports. The city treasurer shall make a monthly report to the city council of all investments made pursuant to the authority delegated in this chapter. (Ord. 2 § 1 (part), 1982) 3.08.060 Deposits of securities. Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized to deposit for safekeeping, the securities in which city moneys have been invested pursuant to this chapter, in any institution or depository authorized by the terms of any state law, including but not limited to Section 53608 of the Government Code as it now reads or may hereafter be amended. In accordance with said section, the city treasurer shall take from the institution or depository a receipt for the securities so deposited and shall not be responsible for the securities delivered to and receipted for by the institution or depository until they are withdrawn therefrom by the city treasurer. (Ord. 2 § 1 (part), 1982 3.08.070 Trust fund administration. Any departmental trust fund established by the city council pursuant to Section 36523 of the Government Code shall be administered by the city treasurer in accordance with Section 36523 and 26524 of the Government code and any other applicable provisions of law. (Ord. 2 § 1 (part), 1982) 22 SEGREGATION OF MAJOR INVESTMENT RESPONSIBILITIES Function Develop and Recommend Modifications to City's Formal Investment Policy Review City's, Investment Policy and Recommend City Council Action Adopt Formal Investment Policy Implement Formal Investment Policy Review Financial Institutions & Select Investments Acknowledge Investment Selections Execute Investment transactions Confirm Wires (if applicable) Record Investment Transactions in City's Accounting Records Investment Verification (match broker confirmation to City investment records) Reconcile Investment Records to Accounting Records and Bank Statements Reconcile Investment Records to Treasurers Report of Investments Security of Investments at City Security of Investments outside City Review Internal Control Procedures 23 Appendix D Responsible Parties Investment Advisory Board and City Treasurer City Manager and City Attorney City Council City Treasurer City Treasurer City Manager City Treasurer or City Manager Accounting Manager or Financial Services Assistant Accounting Manager or Financial Services Assistant City Treasurer and Financial Services Assistant Financial Services Assistant Accounting Manager Accounting Manager or Senior Secretary Third Party Custodian External Auditor Appendix E LISTING OF APPROVED FINANCIAL INSTITUTIONS 1. Banking Services Wells Fargo Bank, Government Services, Los Angeles, CA (Banking Services) 2. Custodian Services Bank of New York/Mellon, Los Angeles, CA 3. Deferred Compensation International City/County Management Association Retirement Corporation 4. Broker/Dealer Services Banc of America Securities/ Me0i San Francisco, CA Morgan Stanley, San Rafael, CA CitiGroup, Costa Mesa, CA 5. Government Pool State of California Local Agency Investment Fund City of La Quinta Account La Quinta Redevelopment Agency Account 6. Bond Trustees 1991 City Hall Revenue Bonds - US Bank 1991 RDA Project Area 1 -US Bank 1992 RDA Project Area 2 - US Bank 1994 RDA Project Area 1 - US Bank 1998 RDA Project Area 1 &2 - US Bank 2001 RDA Project Area 1 - US Bank 2002 RDA Project Area 1 - US Bank 2003 RDA Project Area 1 - US Bank Assessment Districts - US Bank No Changes to this listing may be made without City Council approval 24 Appendix F BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION 1 . Name of Firm: 2. Address: 3. Telephone: I—) 4. Broker's Representative to the City (attach resume): Name: Title: Telephone: 5. Manager/Partner-in-charge (attach resume): Name: Title: Telephone: 6. List all personnel who will be trading with or quoting securities to City employees (attach resume) Name: Title: Telephone: 7. Which of the above personnel have read the City's Investment Policy? 8. Which instruments are offered regularly by your local office? (Must equal 100%) % U.S. Treasuries % BA's • Commercial Paper • CD's % Mutual Funds —% Agencies (specify): • Repos • Reverse Repos % CMO's % Derivatives • Stocks/Equities • Other (specify): 9. References -- Please identify your most directly comparable public sector clients in our geographical area. Entity 25 Entity Contact Contact Telephone Telephone Client Since Client Since 10. Have any of your clients ever sustained a loss on a securities transaction arising from a misunderstanding or misrepresentation of the risk characteristics of the instrument? If so, explain. 11. Has your firm or your local office ever been subject to a regulatory or state/ federal agency investigation for alleged improper, fraudulent, disreputable or unfair activities related to the sale of securities? Have any of your employees been so investigated? If so, explain. 12. Has a client ever claimed in writing that you were responsible for an investment loss? Yes No If yes, please provide action taken Has a client ever claimed in writing that your firm was responsible for an investment loss? Yes No If yes, please provide action taken Do you have any current or pending complaints that are unreported to FINRA? Yes No_ If yes, please provide action taken Does your firm have any current, or pending complaints that are unreported to FINRA? Yes No If yes, please provide action taken 13. Explain your clearing and safekeeping procedures, custody and delivery process. Who audits these fiduciary responsibilities? 26 Latest Audit Report 14. How many and what percentage of your transactions failed? Last month? —% $ Last year? % $ 15. Describe the method your firm would use to establish capital trading limits for the City of La Quinta. 16. 17 Is your firm a member in the S.I.P.C. insurance program? Yes If yes, explain primary and excess coverage and carriers. What portfolio information, if any, do you require from your clients? M 18. What reports and transaction confirmations or any other research publications will the City receive? 19. Does your firm offer investment training to your clients? Yes No 20. 21. 22. 23. Does your firm have professional liability insurance? Yes — If yes, please provide the insurance carrier, limits and expiration date. Please list your FINRA/NASD Registration Number Do you have any relatives who work at the City of La Quinta? Yes No If yes, Name and Department Do you maintain an office in California? No Yes No 24. Do you maintain an office in La Quinta or Riverside County? Yes No 25. Please enclose the following: Latest audited financial'statements. Samples of reports, transaction confirmations and any other research/publications the City will receive. Samples of research reports and/or publications that your firm regularly provides to clients. Complete schedule of fees and charges for various transactions. VOA ***CERTIFICATION*** I hereby certify that I have personally read the Statement of Investment Policy of the City of La Quinta, and have implemented reasonable procedures and a system of controls designed to preclude imprudent investment activities arising out of transactions conducted between our firm and the City of La Quinta. All sales personnel will be routinely informed of the City's investment objectives, horizons, outlooks, strategies and risk constraints whenever we are so advised by the City. We pledge to exercise due diligence in informing the City of La Quinta of all foreseeable risks associated with financial transactions conducted with our firm. By signing this document the City of La Quinta is authorized to conduct any and all background checks. Under penalties of perjury, the responses to this questionnaire are true and accurate to the best of my knowledge. Broker Representative Sales Manager and/or Managing Partner* Date Tit W Appendix G Request for Proposals Professional Portfolio Management Firm City of La Guinta, CA The City of La Quinta, CA is soliciting Requests for Proposals (RFP) from interested firms for the provision of a discretionary investment management services for City of La Quinta, CA. The portfolio to be managed of the invested assets is will be approximately 10% of the City's investment portfolio and will be invested between 0 - 3 years. The investment of City of La Quinta, CA's funds is guided by the applicable State statutes and the City of La Quinta, CA's investment policy. A copy of the investment policy is attached for your information. Questions regarding this RFP should be directed to: Name: Title: City of: Address: City, State, Zip Code: Phone Number: John M. Falconer Finance Director/Treasurer La Quinta, CA P.O. Box 1504 La Quinta, CA 92247-1504 (760)777-7150 1. CRITERIA FOR EVALUATION AND SELECTION • Experience of the firm in providing services to public sector entities of similar size and with similar investment objectives; • Professional experience and qualifications of the individuals assigned to the account; • Portfolio management resources, investment philosophy and approach; • Responsiveness to the RFP, communicating an understanding of the overall program and services required; • Reporting capabilities; • Fees. 11. SELECTION TIMETABLE A. [Month, Day and Year] Proposals due by [Time] PST. B. [Month, Day and Year] Proposals evaluated: to be determined C. [Month, Day and Year] [City of La Quinta, CA] [Board/Council] approves selection and awards contract. Ill. FORMAT FOR PROPOSALS Please format your response to this RFP in the following manner: A. Organization 29 Describe your organization, date founded, ownership and other business affiliations. Provide number and location of affiliated offices. Specify the number of years your organization has provided investment management service. 2. Describe your firm's revenue sources (e.g., investment management, institutional research, etc.) and comment on your firm's financial condition. 3. Within the past three years, have there been any significant developments in your organization (e.g., changes in ownership, new business ventures)? Do you expect any changes in the near future? 4. Describe any U.S. Securities and Exchange Commission (SEC) censures or litigation involving your organization, any officer, or employee at any time in the last ten years. 5. Describe the firm's fiduciary liability and/or errors and omissions insurance coverage. Include dollar amount of coverage. B. Personnel 1 . Identify the number of professionals employed by your firm by classification. 2. Provide an organization chart showing function, positions, and titles of all the professionals in your organization. 3. Provide biographical information on investment professionals that will be involved in the decision -making process for our portfolio, including number of years at your firm. Identify the person who will be the primary portfolio manager assigned to the account. 4. Describe your firm's compensation policies for investment professionals and address any incentive compensation programs. C. Assets Under Management 1. Summarize your institutional investment management asset totals by category for your latest reporting period in the following table: Governmental Governmental Pension Non Governmental Pension Other Restrictive Number Operating Funds Number of Funds of Clients Clients 30 N/A N/A N/A N/A Corporate $ N/A N/A High Net Worth Client $ N/A N/A Endowmental/Foun- $ N/A N/A dation 2. Provide the number of separate accounts whose portfolios consist of operating funds. 3. List in the following table the percentage by market value of aggregate assets under all governmental accounts under management for your latest reporting period: Type of Asset U.S. Treasury securities Federal Agency obligations Corporate securities rated AAA -AA Corporate securities rated A Corporate securities rated BBB or lower Other (specify Percent by Market Value 4. Describe the procedures that your firm has in place to address the potential or actual credit downgrade of an issuer and to disclose and advise a client of the situation. 5. Provide data on account/asset growth over the past five years. Indicate the number of government accounts gained and the number of government accounts lost. 6. List your five governmental largest clients. Identify those that are exclusively operating fund relationships and/or those that are other relationships (e.g., bond fund, retirement fund). 7. Provide a copy of the firm's Form ADV, Parts I and 11 (including all schedules). 8. Provide proof of State of California Registration, if your firm is not eligible for SEC registration. 9. Provide a sample contract for services. 31 D. Philosophy/Approach 1 Describe your firm's investment philosophy for public clients, including your firm's philosophy regarding average duration, maturity, investment types, credit quality, and yield. 2. Describe in detail your investment process, as you would apply it to City of La Quinta, CA's portfolio. 3. What are the primary strategies for adding value to portfolios? 4. Describe the process you would recommend for establishing the investment objectives and constraints for this account. 5. Describe in detail your process of credit risk management, including how you analyze credit quality, monitor credits on an ongoing basis, and report credit to governmental accounts. 6. Describe your firm's trading methodology. 7. Describe your firm's decision -making process in terms of structure, committees, membership, meeting frequency, responsibilities, integration of research ideas, and portfolio management. 8. Describe your research capabilities as they would pertain to governmental accounts. What types of analysis do you use? 9. Describe the firm's approbch to managing relationships with the broker -dealer community. E. Portfolio Management 1 . Are portfolios managed by teams or by one individual? 2. What is the average number of accounts handled per manager? 3. Which professional staff member will be the primary client contact for City of La Quinta, CA? 4. How frequently are you willing to meet with us? 5. Describe procedures used to ensure that portfolios comply with client investment objectives, policies, and bond resolutions. F. Fees Charged 1 Please include a copy of your firm's fee schedule applicable to this RFP. 2. Identify any expenses that would not be covered through this fee structure and would be required in order to implement the firm's program. 32 3. Is there a minimum annual fee? G. Performance Reporting 1 . Please report on all accounts under $100 million. 2. Please provide performance history for governmental accounts for the last five years. 3. Please provide risk measurements for governmental accounts for the last five years. 4. Indicate whether your returns are calculated and compiled in accordance with the Association for Investment Management and Research (AIMR/CFA Institute) standards. 5. Do your reports conform to the State of California reporting standards? Are you willing to customize your reports to meet our specifications? 6. How will you notify us of investment transactions? 7. Are confirmations of investment transactions sent directly by the broker/dealer to the client? 8. Do your reports include rating information on investments which is required by GASB 40? H. References Provide a list of at least five (5) client references in California. References should be public agencies with portfolio size and investment objectives similar to City of La Quinta, CA. Include length of time managing the assets, contact name, and phone number. 1. . Insurance Requirements Exhibit A defines the insurance requirements that will need to be met prior to the [Board/Councill's approval of any agreement for services. J. Submittal of proposals 1 Seven (7) copies of the proposal shall be submitted in a sealed envelope bearing the caption RFP for (City of La Quinta, CA) and addressed to: City of La Quinta, CA P.O. Box 1504 La Quinta, CA 92247-1504 Attention: John Falconer, Finance Director/Treasurer 2. Proposal must be received no later than [Time] PST on [Month, Day, and Year]. 33 3. Proposals should be verified before submission. The City of La Quinta, CA shall not be responsible for errors or omissions on the part of the respondent in preparation of a proposal. The City of La Quinta, CA reserves the right to reject any and all proposals, to wave any irregularities, or informalities in the proposals, and to negotiate modifications to any proposal. Enclosures: Investment Policy Treasurers Report 34 ZO 0 7: 0 0 0 CL 157 c 0 0 L) E 0 B E (D a. a p a a� E R a 0 E f 0 �m -,� ji 0 E 0 0 0 0 0 0 0 �j o z c zzzzzzz--'>�? >(? C, 22 IL 0 0 0 0 0 0 0 0 0 0 0 z z z z z z z f z z z z 0 0 & ME 0 0 0 0 0 0 0 0 a 0 o o z z z z z z z z z z z z z z .2 2 0 0 .0 g e o g .6 0 0 0 0 b a a 0 0 0 C) a a 0 0 e Z Z Z Z > z Z Z Z Z o Z z E :3 i: fi E LO 12 12 La a z o Z ? Z Z ? z 0 0 M E m LD E c o 0 0 0 Z 0 U) m 0 E L, < 0 c w E m 2 L'U < 0 co) E E E OC cn A Z 0 0 0 a co 3 < 0 0 C') E aD u a o ------------- 0 0 -0 0 E.2 E— .22 0 .0 2 z U) CV) Appendix I Investment Management Process and Risk Except as provided for in Section 27000.3, Government Code Section 53600.3 declares as a trustee each person, treasurer, or governing body authorized to make investment decisions on behalf of local agencies. As trustees are subject to the prudent investor standard. These persons shall act with care, skill, prudence, and diligence under the circumstances then prevailing when investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing funds. Section 53600.5 further stipulates that the primary objective of any person investing public funds is to safeguard principal; secondly, to meet liquidity needs of the depositor; and lastly, to achieve a return or yield on invested funds (Government Code Section 27000.5 specifies the same objectives for county treasurers and board of supervisors). Risk is inherent throughout the investment process. There is investment risk associated with any investment activity and opportunity risk related to inactivity. Market risk is derived from exposure to overall changes in the general level of interest rates while credit risk is the risk of loss due to the failure of the insurer of a security. The market value of a security varies inversely with the level of interest rates. If an investor is required to sell an investment with a five percent yield in a comparable seven percent rate environment, that security will be sold at a loss. The magnitude of that loss will depend on the amount of time until maturity. Purchasing certain allowable securities with a maturity of greater than five years requires approval of the governing board (see Government Code Section 53601). Part of that approval process involves assessing and disclosing the risk and possible volatility of longer -term investments Another element of market risk is liquidity risk. Instruments with unique call features or special structures, or those issued by little known companies, are examples of "story bonds" and are often thinly traded. Their uniqueness often makes finding prospective buyers in a secondary market more difficult and, consequently, the securities' marketability and price are discounted. However, under certain market conditions, gains are also possible with these types of securities. Default risk represents the possibility that the borrower may be unable to repay the obligation as scheduled. Generally, securities issued by the federal government and its agencies are considered the most secure, while securities issued by private corporations or negotiable certificates of deposit issued by commercial banks have a greater degree of risk. Securities with additional credit enhancements, such as bankers acceptances, collateralized repurchase agreements and collateralized bank deposits are somewhere between the two on the risk spectrum. The vast majority of portfolios are managed within a buy and hold policy. Investments are purchased with the intent and capacity to hold that security until maturity. At times, market forces or operations may dictate swapping one security for another or selling a security before maturity. Continuous analysis and fine tuning of the investment portfolio are considered prudent investment management. [ ... I The Government Code contains specific provisions regarding the types of investments and practices permitted after considering the broad requirement of preserving principal and maintaining liquidity before seeking yield. These provisions are intended to promote the use of reliable, diverse, and safe investment instruments to better ensure a prudently managed portfolio worthy of public trust. Chapter 11. Fund Management Local Agency Investment Guidelines 2010 Issued by California Debt and Investment Advisory Commission 36 Appendix J GLOSSARY (Adopted from the Municipal Treasurers Association) The purpose of this glossary is to provide the reader of the City of La Quinta investment policies with a better understanding of financial terms used in municipal investing. AGENCIES: Federal agency securities and/or Government -sponsored enterprises. ASKED: The price at which securities are offered BANKERS' ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) See Offer. BROKER: A broker brings buyers and sellers together for a commission. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large-denomi nation CD's are typically negotiable. COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMMERCIAL PAPER: Short-term unsecured promissory notes issued by a corporation to raise working capital. These negotiable instruments are purchased at a discount to par value or at par value with interest bearing. Commercial paper is issued by corporations such as General Motors Acceptance Corporation, IBM, Bank America, etc. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the City of La Quinta. It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance -related legal and contractual provisions, extensive introductory material, and a detailed Statistic - al Section. CONDUIT FINANCING: A.form of Financing in which a government or a government agency lends its name to a b�nd issue, although it is acting only as a conduit between a specific project and bond holders. The bond holders can look only to the revenues from the project being financed for repayment and not to the government or agency whose name appears on the bond. COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). DISCOUNT: The difference between the cost price of a security and its maturity when quoted at 37 lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non -interest bearing money market instruments that are issued a discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills. 3 DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L's, small business firms, students, farmers, farm cooperatives, and exporters. 5 1 FNMAs (Federal National Mortgage Association) - Like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder -owned corporation. The 'corporation's purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. 2. FHLBs (Federal Home Loan Bank Notes and Bonds) - Issued by the Federal Home Loan B ank System to help finance the housing industry. The notes and bonds provide liquidity and home mortgage credit to savings and loan associations, mutual savings banks, cooperative banks, insurance companies, and mortgage -lending institutions. They are issued irregularly for various maturities. The minimum denomination is $5,000. The notes are issued with maturities of less than one year and interest is paid at maturity. 3. FLBs (Federal Land Bank Bonds) - Long-term 38 mortgage credit provided to farmers by Federal Land Banks. These bonds are issued at irregular times for various maturities ranging from a few months to ten years. The minimum denomination is$ 1,000. They carry semi-annual coupons. Interest is calculated on a 360-day, 30 day month basis. FFCBs (Federal Farm Credit Bank) - Debt instruments used to finance the short and intermediate term needs of farmers and the national agricultural industry. They are issued monthly with three- and six-month maturities. The FFCB issues larger issues (one to ten year) on a periodic basis. These issues are highly liquid. FICBs (Federal Intermediate Credit Bank Debentures) - Loans to lending institutions used to finance the short-term and intermediate needs of farmers, such as seasonal production. They are usually issued monthly in minimum denominations of $3,000 with a nine -month maturity. Interest is payable at maturity and is calculated on a 360- day, 30-day month basis. 6. FHLMCs (Federal Home Loan Mortgage Corporation) - a government sponsored entity established in 1970 to provide a secondary market for conventional home mortgages. Mortgages are purchased solely from the Federal Home Loan Bank System member lending institutions whose deposits are insured by agencies of the United States Government. They are issued for various maturities and in minimum denominations of $10,000. Principal and interest is paid monthly. Other federal agency issues are Small Business Administration notes (SBA's), Government National Mortgage Association notes (GNMA's), Tennessee Valley Authority notes (TVA's), and Student Loan Association notes (SALLIE-MAE's). FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $250,000 per deposit through December 31, 2013. 1 FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open - market operations. FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. The mission of the FHLBs is to liquefy the housing related assets of its members who must purchase stock in their district Bank. FEDERAL OPEN MARKET COMMITTEE IFOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed bythe FHA, VA or FMHM mortgages. The term .pass-throughs" is often used to describe Ginnie Maes. LAIF 11-ocal Agency Investment Fund) - A special fund in the State Treasury which local agencies may use to deposit funds for investment. There is. no minimum investment period and the minimum transaction is $5,000, in multiples of $1,000 above that, with a maximum balance of $50,000,000 for any agency. The City is restricted to a maximum of ten transactions per 39 month. It offers high liquidity because deposits can be converted to cash in 24 hours and no interest is lost. All interest is distributed to those agencies participating on a proportionate share basis determined by the amounts deposited and the length of time they are deposited. Interest is paid quarterly. The State retains an amount for reasonable costs of making the investments, not to exceed one-half of one percent of the earnings. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase --reverse repurchase agreements that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer -lender to liquidate the underlying securities in the event of default by the seller -borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers' acceptances, etc.) are issued and traded. OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See Asked and Bid. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool. PORTFOLIO: Collection of all cash and securities under the direction of the City Treasurer, including Bond Proceeds. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) -registered securities broker -dealers, banks and a few unregulated firms. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money that is, increasing bank reserves. REVERSE REPURCHASE AGREEMENTS (RRP or RevRepo) - A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security"buyer" in effect lends the"seller" 40 money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RRP extensively to finance their positions. Exception: When the Fed is said to be doing RRP, it is lending money that is increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. SEC RULE 15C3-1: See Uniform Net Capital Rule. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, SLMA, etc.) and Corporations which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative -based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. SURPLUS FUNDS: Section 53601 of the California Government Code defines surplus funds as any money not required for immediate necessities of the local agency. The City has defined immediate necessities tj be payment due within one week. TREASURY BILLS: A non -interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months or one year. TREASURY BONDS: Long-term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. TREASURY NOTES: Medium -term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker -dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. UNIFORM PRUDENT INVESTOR ACT: The State of California has adopted this Act. The Act contains the following sections: duty of care, diversification, review of assets, costs, compliance determinations, delegation of investments, terms of prudent investor rule, and application. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. 41 INVESTMENT ADVISORY BOARD Correspondence & Written Material Item A Meeting Date: June 8, 2011 TITLE: Month End Cash Report - May 2011 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. This report also includes other statistical investment data for the Board to review. RECOMMENDATION: Information item only. F a 20 Z6 0 N6 w C6 Ld 16 no w moo w N v 0 40 0 o n ,gNwm'-, 0 0; 0 0 0 N S,6,6 .6 v; m co wwmwwmmwmwmN� .6 w o 00 0 16 N w Iq o n 16 0 e w c4 cli Iq N 0 c; ci On. P "0. N 0 N 'N ci i . 0 - i 8;� --; w 4 N c; N c4 N 2m Ro r B.; Mw mw M 't js M!§ mo a E E E m E 2 m `5- 0 2.. .0 0 m -5 . � 4 o0z 13L < w < 0 , Im IS 16 C- 0 R 0 0 0 0 E 00 E v E E E E 8 02 EO C g 0 0 8 cm E E z FA Bill Lockyer, State Treasurer Inside the State Treasurer's Office Local Agency Investment Fund (LAIF) PMIA Performance Report '4 5/12/2011 0.41 0.54 201 5/13/2011 0.42 0.54 202 5/14/2011 0.42 0.53 202 5/15/2011 0.42 0.53 202 5/16/2011 0.421 0.53 1991 5/17/2011 0.42 0.53 199 5/18/2011 0.42 0.52 199 5/19/2011 0.41 0.52 197 5/20/2011 0.41 0.52 197 5/21/2011 0.41 0.52 197 5/22/2011 0.41 0.51 197 5/23/2011 1 041 2 1 5/24/2011 0�411 0!�j 5, §12 1 i 01 rMO/N 11 1 0.411 0.511 19 Taily yield does not reflect capital gains or losses 0 LAW Performance Report Quarter ending 03/31/2011 Apportionment Rate: 0.51% Earnings Ratio: .00001390282087521 Fair Value Factor: 1.001262155 Daily: 0.45% Quarter To Date: 0.52% Average Life: 193 PMIA Average Monthly Effective Yields APR 2011 0.588% MAR 2011 0.500% FEB 2011 0.512% Pooled Money Investment Account Portfolio Composition $70 Billion 04/30/11 Loans Corporate Bonds 6.77% 0.00% Commercial 11.250, Time Deposits 5.51% CDs/BNs 12.69% Agencies Mortgages 15.84% 0.70% Treasuries 47.24% 3 Recent Bill Auction Results It �r" TreasuryDirect I ....... y,II , A,vyyar,a�P,�,,� DatO Eal.ftl t.111-11 Urt- pl�lit Oil Aultc.' R11�111 Recent Bill Auction Results ... Into." May -hut In—ument Myr, CUSIO I.rm ..a. ii Kau, late % $too 13-WEEK 06-02-20 09 01 Oil 0 060 OX61 99 9SIa31 9127953F6 26-WEE K 06 0 2 2 12 D 220 0 'q SI , DI, I 9127953VI 4 EEK 05 26-2011 06-23- ' 11 5 0 035 0 '1 ... 0 036 99 SOME 91 ' 795MO P3 WEEK as 26-2011 08-25 2 ' 11 0 055 0 056 99 9016097 9127952AB 26 C' K " 26 2ftl 11 25-2 ' 11 0,100 0,102 99 94 9 167 9127953U3 'I WEEK os-19 2011 06 16 2 0 11 0 025 0 .25 9 99 quO56 9127IISM 56 DAY 05 19 zati 07 14 2all 0,020 0 020 99096889 9127952Z3 13-WEEK 05-19 20 it 09 201� 0,03 0 0 99.9924�7 912795JE9 26 WEEK 05-19-2011 I �13 1 7 20 0 070 0031 0 71 99 MID 1 9 27952ps 4 WEEK 05-12-20 06-09-22� COPS 0.015 99.9988.13 9127952U4 13 -WEEK D 5 2 2 1 011 08-�l 20 0 , 0 2 5 0.0, 5 99,993681 DL27953DI 2D _WEE K 05 1 2 _ 2 at 1 , 1- 0 2 ' 0 DO ' DAE66 99 967139 912795376 4 WEEK DS -05 2011 06-02-2011 0,005 05 99 99 9 61 1 91279SW64 13 WEEK 05-05 20�1 08 04 21�1 OXID 01051 99 987361 9127953BS �6-WEEX .,_05-20 1 1 0 -20 1 a ING 0 1 02 99,949444 qI? n53RO 52-.EEK 05-05-2011 05-03-7012 a 200 a204 99.797773 9121953N9 4-WEEK 04-2 2 05-26 2011 0 030 0,030 99.997667 912799269 " -WEEK 04 2:-200 �l 1 07 _ 28-2011 0 065 0,066 99.983569 91279SX63 26-WEFK (14 In Ml to 27 201 0 115 0 117 99 941S6 1 9 127953Q? a -WEEK 04-21-2011 .549-2DII uO30 0.030 99,997667 9127952RI 13 WEEK 07-21-2011 0060 0.051 99 9MB33 9127953A7 26 EEX 04- -20 1 10 20-2011 0,110 0.112 99 944389 9111952KG 4-WEEX 04-la-2ml 05 12-2011 0,025 0,025 99 998056 9127952Q3 13 WEEK 04-14-2011 07 14-2011 0�050 0.051 99 987361 9127952Z3 26-WEEK 04-14-2011 10 13 2011 ull 0 0 112 9S 9.389 9127953P4 4 WEEK 04-07-2011 05 05-2011 uO50 0 051 99 996111 912795VES 1 3 -WEE K 04o 7-20 07 07 20 0 050 0 051 99 987361 9127952XB 26-WEEK 0 4-07-20 �j 10 6 2 a O;� 0 30 I 0 132 99,934278 9127953MI 52-WEEK 04-0 7-20 11 04- 0 5 2012 0�28a) OOOS 99,716869 912/953H2 4-WEEK 03-31-201 04-28-2011 0.045 0 046 99.996500 91Z/952NO 13 WEEK a 3 _ 31 2011 06-30 2011 Orion GAO2 99,974722 91279SX22 26-WEEK 03-31-2011 09-29-2011 0,170 0,173 99.914056 91279S3L3 4-WEEK 0 3-2 -201; 04- 1-2011 0 075 Oa76 99 994167 9127952M2 56-DAY 03 2:-20 C 5-'19-2011 0.055 0 056 99 9914" 9127�52kl 13 WEEK 03-24-2011 06-23-2011 0 095 0.097 99 975986 912795MO 26 WEEK 03 24-2011 09 22-2011 0 ISO . 153 99 924167 912795211 4 WEEK 03 11-2011 04-�4-20�1 0 0,0061 99 995333 91279s7k4 13-WEEK 03-�7 22� 06-16 2011 0060D 0 0 92 '9 , 77250 9127952V� 261VEEK .3 7 20 DO 5 _ 20 1 19 0 35 0,137 99 931750 9127953K5 4 WEEK 03 10 2.11 01-07 2all 0,070 0 all 99 994556 , 91279SVOC Effective with the 11/2/98 auction, all bills are auctioned using the single -priced method, Fitedoin 0 Inf,,MkOrl Act I 3�ldairCa I Privacy & Local NutEC11 I W,E,,t,, orri� & CoaditrPirs I ACCeSSP11hy I Data QOa1uY 11 �. DPIPITinent fthe TrPOSLO,, Urestj of tlh� Pittlic Dabt 4 http://www.treasurydirect.gov/RI/OFBills 5/31/2011 Recent Note, t3oncl, ana 1 1F6 Auction iwsuits i art,, i v. . TreasurryDirect Hcyi I ISISAIWarl I A i1SS.11 'a"IS, L)Ud & Rti I ISISt Auction Data , keyerst NTH,y 8011H, ifid TIPS A—rec ROSSRS Recent Note, Bond, and TIPS Auction Results Bre—ft, Her. T,p. Lee. ..,.it tr 1.1 .., Yr.1 C.SHP a Date E.I., 1. R.—Mr �'d " A I.H. 2 YEAR N07E 01r 31 2011 05 31-2013 0,500 O�S60 99,860535 9;2828QZ6 5 YEAR NOTE 05 3� 700� 05-3�-2D�6 I 1 5 R H.81 3 99, 700 V52 9 7828QPB 71YEAR M OTE H 3 2 � 0 5 3 -�a 8 , 375 �,29 99,654311 912S?RQQ6 0 YEAR 8 MONTH UPS 05 31 2.11 01-IS 2021 IA25 0 687 104 359972 912828 .9 3 YEAR NOTE D5 2011 05-15 2014 1,000 1.000 99 999967 91282BQMS 10 YEAR N GTE �6 P5 6-201 05 15-2 0 2 1 3 125 3121 0 99 2778 2 912828Q�3 3 0 YEAR BOND 05 16 2011 05-IS 20al 4 �75 H,380 III aIE7IT rT2310QQa 2 YEAR NOTE 05-02 2011 04 30 2013 0 625 0 673 19 905047 912826QC, 5 YEAR NOTE 05 G2 2011 04-30 2016 2.000 2 124 99 415214 912828Q,o 7 YEAR M OU 05 _02-2011 04 30-2018 2 625 2,712 99 4E8900 112828Q�8 5 YEAR UPS U-29-2011 04 15-20U, 0,125 -0 ISO 101.754296 U12828QDS 3 YEAR NOTE 04-11-1011 E4-11-1014 T 250 1 280 99.911962 912828QC7 9-YEAR R OTE 04-15 2011 01-IS-2021 3 625 3.494 101.075634 91282SPX2 29 YEAR IG-MONUI BOND 04 15 2011 02-15 2041 4 750 C531 103,55ZI79 9128mUNT 2-YEAR NOTE 03 31 2011 03 31-2013 C�n() 0,781 q9,922763 912828QL7 5-YEA� NOTE 0 3-31-2011 03-31-2016 2,250 2.260 99,952972 91282RQAT 7-YEAR NOTE 03 31-20HT 03-31 2018 2.875 2.895 99 87S(q4 91282SQ69 9 WA� 10-MONTH U PS 03-31-2011 01-15-2 0 21 1 1 25 0, 9 20 102 584550 9128?8Pn 3 YEAR NOTE 03 15 2011 GO 15 2014 L250 1.298 99 859215 91282SP77 9 YEAR 11 MONTH NOTE 03-15-2011 02 15-2021 3 625 � 4" 101 044608 M12.281S2 29 YEAR I MONTH BOND 03 15-2011 02-15 2041 4,750 4.569 102e29408 912610Q.1 2 YEAR NOTE 02-26-2011 02-28 2013 0,625 0 745 99 762218 912828QKI 5-YEAR NOTE 02 28 ZWI 02-29 2015 2.125 2.190 99 693745 912828QJ2 I YEAR NOTE 02 28 2011 02 28 2018 2 750 2,854 99,344316 q1262SPYG '30 YEAR UPS 02 28 2011 02 15 2041 2.125 2 190 98655406 912810QP6 3-YEAR NOTE 02 HS-2011 02 15 2014 1.250 1 3H9 99 709887 912828QI16 10-YEAR NOTE 02 15 2011 02 15 2021 3,625 3 665 99 667623 912926PX2 30-YEAR BOND 02 15-2011 02 15 2041 4 750 4 750 100.000000 912810QNI 21E�� NOTE 01-31-2011 01-31 2013 D.625 0 650 99 950404 912828P�5 5-YEAk NOTE 01-31 Z01I 01-31 4016 2.000 2 RAT 99 606052 912828PSO 7-YEAe NOTE 01-31 Z011 01-31-2018 2.625 2 744 99,246792 912828PTI 10-YEAR UPS 01 31 ZOII 01-15-2021 1,125 1 170 99 599898 91282SPPR 3 YEAR NOTE 01 IS 2011 01-15 20t4 1,000 1 D27 94920611 912828PQ7 9 YEAR 10 MONTH NOTE 01-18-2011 11-15 2020 2,625 3 388 93 664061 9t?828PCS 29 YEAR 10 MONTH BOND 01-18-2011 11 15 2(MG 4,250 4 515 95 669689 almociti; 2 YEAR NOTE 12-31 2010 12-31-2012 0,625 0�70 99 772112 91 VQ8PW4 5 YEAR NOTE 12-31 2010 11 2,125 2T49 99 866797 91 71EAR NOTE 12-31 2010 12 3J 2017 2,750 2,830 9!) H95202 912"81144 3 YEAR NOTE 12 15 7010 12 15-2013 150 0 867 99 B600IT 9082SPLa � YEAR It MONTH NOTE 12 t5 2010 11 15-2D20 2,625 ��340 )�,002822 i?11878�6 - DenoteS TIPS tt.�d; .11 Otbe, TIPS eithoaft aStiartsks SIB Potes Fee,Iv,,rA1rfy?r)atmr,A,t I Lcv�Gursayce I Prrvacy& Legal Not CeS I I ACCISSSI'ARY I cm"Qiau, DiTar 5 http://www.treasurydirect.gov/RI/0FNtebnd 5/31/2011 Printer Version -Board ot(jovernors ot the reaerai twserve;nysiwrn ra6v i vL � Selected Interest Rates (Daily) - H. 15 Current Release Release Dates Daily Update Historical Data About Announcements DaRyjJp4ate..._ _ ..... ---------- -- -- --- ------- ------ ------- -------- ----- --------- - - ----- ------ -- - --- ------ - --------- - Relcase Date: May 27, 2011 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. May 27,2011 Selected Interest Rates Yields in percent per annum Instruments 2011 May 23 2011 May 24 2011 May 2S 2011 May 26 Federal funds (effective) 1 2 3 0.10 0.10 0.09 0.09 Commercial Paper 3456 Nonfinancial 1-month 0.11 0.13 0.11 0.10 2-month 0.15 0.11 0.11 0.15 3-month 0.18 0.15 0.17 0.12 Financial 1-month 0.12 0.11 0.12 0.11 2-month 0.15 0.16 0.13 0.13 3-month 0.20 0.16 0.17 0.16 CDs (secondary market) 3 7 1-month 0.16 0.16 0.16 0.16 3-month 0.20 0.21 0.20 0.20 6-month 0.29 0.30 0.29 0.29 Eurodollar deposits (London) 38 1-month 0.26 0.26 0.26 0.26 3-month 0.38 0.38 0.38 0.38 6-month 0.53 0.53 0.53 0.53 Bank prime loan 2 3 9 3.25 3.25 3.j=3 25 6 http://www.federalreserve.gov/Releases/H I 5/update/ 5/31/2011 Printer Version - i3oarct or tjovernors or ine reucrui isuwivv OybLU111 . �E. . �. , 2 10 Discount window primary credit 0.75 0.75 0.75 0.75 U.S. government securities Treasury bills (secondary market) 34 4-week 0.03 0.04 0.04 0.04 3-month 0.06 0.06 0.06 0.05 6-month 0.10 0.11 0.10 0.10 1-year 0.18 0.18 0.17 0.16 Treasury constant maturities Nominal 11 1-month 0.03 0.04 0.04 0.04 3-month 0.06 0.06 0.06 0.05 6-month 0.10 0.11 1 0.10 0.10 I -year 0.20 0 *20 0.20 0.18 0.18 2-year 0.55 0.56 0 56 0.54 0.48 3-year 0.91 0.91 091 r2.47 0.90 0.83 5-year 1.80 1.81 1.81 1.72 7-year 2.47 2.47 2.40 10-year 3.13 3.12 3.13 3.07 20-year 3.97 3.96 3.99 3.93 30-year 4.27 4.26 4.28 4.23_ inflation indexed 12 5-year -0.23 -0.26 -0.27 -0.34 7-year 0.38 0.31 0.34 10-year 0.84 0.79 0.80 0.76 20-year 1.53 1.49 1.50 1.50 30-year 1.84 1.80 1.82 1.78 Inflation -indexed long-term average '3 1.56 1.52 1.53 1.49 Interest rate swaps 14 I -year 0.37 0.38 0.37 0.37 2-year 0.71 0.73 0.72 0.68 3-year 1.15 1.18 1.16 1.12 4-year 1.59 1.63 1.61 1.55 5-year 2.00 2.03 2.01 1.96 7-year 2.63 2.66 2.64 2.59 10-year 3.20 3.23 3.21 1 3.1 7 http://www.federaireserve.gov/Releases/H 1 5/update/. 5/31/2011 Printer Version - Board ot (jovernors or tne reaeral IwSerVC oysmill I Qr,� � �. , 30-year 4.03 4.04 4.02 3.97 Corporate bonds Moody's seasoned '5 4.95 4.95 4.97 4.92 Aaa Bee 5.75 5.74 5.77 5.71 1 State& local bon s 16 4.52 Conventional mortgages 17 Footnotes 1. The daily effective federal funds rate is a weighted average of rates on brokered trades. 2. Weekly figures are averages of 7 calendar days ending on Wednesday of the current week; monthly figures include each calendar day in the month. 3. Annualized using a 360-day year or bank interest. 4. On a discount basis. 5. Interest rates interpolated from data on certain commercial paper trades settled by The Depository Trust Company. The trades represent sales of commercial paper by dealers or direct issuers to investors (that is, the offer side). The 1, 2, and 3-month rates are equivalent to the 30, 60, and 90-day dates reported on the Board's Commercial Paper Web page (wxN w-.federaireserve.goy/releases/ep/). 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. An average of dealer bid rates on nationally traded certificates of deposit. 8. Source: Bloomberg and CTRB ICAP Fixed Income & Money Market Products. 9. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered commercial banks. Prime is one of several base rates used by banks to price short-term business loans. 10. The rate charged for 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 wiN �N tederalreserve gov/boorddocs,pres 'bcre,-,L�002/200210312/del,�iLill.litfii. 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 w�v%v.federiilreserve.gov"releises/h I 5/dala.htm. 11. 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, 8 http://www.federalreserve.gov/Releases/Hl 5/update/ 5/31/2011 rrinter vicrsion - Douru vi uuvviiiuib ui uiv 1 uu�lw oya-111 . �r" , �� , the U.S. Treasury published a factor for adjusting the daily nominal 10-year constant maturity in order to estimate a 30-year nominal rate. The historical adjustment factor can be found at www,tre-,,i,s-ur�,.Lt)v!'resoiirce-ceni-ei,,idat,,a-e-hart-cenier/irit-eresl-rates". Source: U.S. Treasury. 12. Yields on Treasury inflation protected securities (TIPS) adjusted to constant maturities. Source: U.S. Treasury. Additional information on both nominal and inflation -indexed yields may be found at www.trmslil*y..o-�-,'re,gource-ceiiter,�d,,tt�t-chart- center./interest-rates/. 13. Based on the unweighted average bid yields for all TIPS with remaining terms to maturity of more than 10 years. 14. International Swaps and Derivatives Association (ISDAV) 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 am. Eastern time by Garban Intercapital plc and published on Reuters Page ISDAFIX@ L ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited. 15. Moody's Aaa rates through December 6, 200 1, are averages of Aaa utility and An industrial bond rates. As of December 7, 200 1, these rates are averages of Aaa industrial bonds only. 16. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Thursday quotations. 17. Contract interest rates on commitments for fixed-rate first mortgages. Source: Primary Mortgage Market SurveylD 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.fiedemIreservc.gov/). For information about individual copies or subscriptions, contact Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-728-5886). 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. 9 http://www.federalreserve.gov/Releases/H I 5/update/ 5/31/2011 Printer Version - Board ot uovemors or me retterai A.CSUM: 3ySLUIII I VI Commercial Paper Summary Rates Volume -Statistics Outstanding Year-end Maturity Distribution About Announcements Commercial Paper Rates and Outstanding Summary Derived from data supplied by The Depository Trust & Clearing Corporation ... . ...... I - ------ I I --- --- -- -- - ------ ....... ......... __ Data as of May 27, 2011 Posted May 31, 2011 The commercial paper release will usually be posted daily at 9:45 a.m. However, the Federal Reserve Board makes no guarantee regarding the timing of the daily posting. This policy is subject to change at any time without notice. Rates Period AA nonfinancial 1- day 0.31 0.31 0.31 0.31 A2/P2 nonfinancial 1- day 7- day 1 IS- day 30- day 60- day 90- day 7- day is- day 30- day 60- day 90- day May 24 0.07 CIAT00.11 0.131 0.11 0.15 0.29 0.33 0.32 0.36 n.a. May 25 0.07 0.06 0.10 0.11 0.11 0.17 0.34 0.32 0.34 0.38 n.a. May 26 0.07 0.10 0.10 0.10 0.15 0.12 0.29 0.28 0.33 0.34 0.29 May 27 0.07 0.08 0.08 0.11 0.16 n.a. 0.33 0.32 0.36 n. a. n.a. May 30 in.a. n.a. n. a. n. a. n.a. in.a. in.a. n.a. n. a. n.a. n.a. n.a. Note; n.a. indicates that trade data was insufficient to support calculation of the particular rate. Period AA financial 1- day 0.16 0.16 0.16 0.17 n.a. I AA asset -backed 1- day 7- day is- day 30- day 60- day 90- day 7- day 15- day 30- day 60- day go - day May 24 0.07 0.08 0.10 0.11 0.16 0.16 0.17 0.18 0.20 0.25 0.21 May 25 0.08 0.07 0.11 0.12 0.13 0.17 0.26 0.22 0.19 0.26 0.23 May 26 0.08 0.07 0.10 0.11 0.13 0.16 0.30 0.22 0.21 0.20 0.24 May 27 0.081 0.081 0.11 1 0.11 0.174 0.17 0.17 0.32 1 0.21 0.22 0.26] May 30 n. a. n. a. n.a. n.a. n. a. n.a. n.a. n. a. n.a. n A. n.a. Note: n.a. indicates that trade data was insufficient to support calculation of the particular rate. Outstanding Levels Seasonally adjusted Billions of dollars 10 http://www.federalreserve.gov/Releases/CP/ 5/31/2011 Printer Version - Board ot uovernors ot tne r ecterai Keserve 3y stem rar,� � vi � Period Total 771; Nonfinancial Financial Asset - I backed Other Total Dom stic Foreign Total Domestic I Foreign Monthly -end levels 2010-Dec. 1,035.9 133.2 100.0 33.2 524.0 307. a 216.2 378.7 .0 2011-Jan. 978.9 131.5 92.3 39.2 500.6 191.4 346.8 .1 Feb. 1,030.8 138.0 98.6 39.4 527.7 V309.2 313.3 214.4 364.9 .2 Mar. 1,075.1 155.9 107.9 48.0 547.5 320.3 227.2 371.3 .4 Apr. 1 1,166.0 165.5 120.3 45.2 617.0 381.5 235.5 382.4 1.1 Weekly (Wednesday) levels Apr. 27 1,105.7 168.5 122.2 46.3 576.9 349.9 227.1 359.3 1.0 May 4 1,129.9 167.3 122.7 44.6 592.5 364.4 228.1 368.7 1.3 May 11 1,158.9 170.0 124.7 45.3 614.0 380.3 233.7 373.4 1.4 May IS 1,183.2 174.1 127.3 46.8 623.6 386.7 236.9 384.0 1.5 May 25 1 1,198.0 1 177.9 1 125.6 1 52.3 1 626.1 1 381.4 244.7 392.3 1.6 Not seasonally adjusted Billions of dollars Period al Tot - " - Nonfinancial Financial Asset- ssot backed Other I FTo t5a Domestic Foreign Total Domestic Foreign Monthly -end levels 2010-Dec. 1,057.5� 119.9 82.9 37.0 555.6 3428 212.7 382.0 .0 2011-Jan. 1,078.0 143.7 103.4 40.3 549.1 336.1 213.0 385.0 .2 Feb. 1,122.9 156.8 115.9 41.0 572.0 345.6 226.3 393.7 .4 Mar. 1,131.2 159.1 110.5 48.7 578.7 356.7 222.0 393.0 .4 Apr. 1,161.1 177.4 128.4 49.0 595.3 369.5 225.7 387.4 1.1 Weekly (Wednesday) levels Apr. 27 _:::ij�50.7177.9 129.21 48.7 589.3 370.5 218.8 382.4 1.1 May 4 1,161.8 177.. 129.8 47.8 597.8 376.1 221.7 385.0 1.4 May 11 +1'172.2 182.9 130.8 52.1 605.5 380.7 224.8 382.4 1.4 May 18 1,162.4 191.7 137.5 54.1 5891.8 369.8 220.0 379.4 1.5 May 25 1,149.4 185.1 128.3 56.8 583.5 366.6 216.9 379..2 1.6 Return to.top http://www.federalreserve.gov/Releases/CP/ 5/31/2011 City of Le Comte Cash Flo. Budget to Actual April 30. 2011 Cash Basis Budget Actual Accrual Adjusted Total Variance Account 4/11 4/11 Adjustment 4/11 OverfUnder) Notes Property Teo' Tax Increment 522,720 _ 552.294 552,294 29,574 Transient Occupancy Tax 637,650 727,178 (9.355) 717,823 80,173 Hotels had higher co,uponoy then mi Sales Tax 351,416 394.600 39,1,600 40,18il SilverRock Golf 546,191 536,616 5W,616 (9,575) Library - - - Sate of Lane $4 Pro, Received film less in Fire Other everinits 3,027,052 6,758.414 6,758,414 3,731,362 Service color ifian aricipated Revenues 5,085,029 8,969,102 (9,355) 8,959,747 3,871,718 Expenditures Salaries & Fringe Benefits 1,148,454 1,169.178 1,169178 20,724 Paid for 2 months Police invoices. Paid for Museum Consultant $136, for Jul, -March. Other expenditures 2.882, 4,330,375 1,448.350 Buick, Point S1201k, 4030,479 5,499.553 5,499,553 1,469.074 Subtotal 489,881 421.385 421,385 (68,497) Redevelopment Agency Debt Service (Principal/InterestEass, Through) 120 435 120.435 120,435 (0) 610316 541,820 541 820 (68.497) Subtotal 941 943 941.943 941,943 Capital Prc,ects Total Expendituress 5,582,738 6,963,316 6,983,316 1,400,5781 Net Revenues/Expenditures (491 1,985,786 1 (91351 1,976,431 5,272,296 NOTE 1: Expenditures are budgeted at 8.34% per month Difference between actual and budget (Underspent) DEPARTMENT Overspent Notes GENERAL GOVERNMENT 59,967 CITY CLERK (1,359) COMMUNITY SERVICES 280.280 Museum Consultant - County of Riveresone FINANCE 24,196 BUILDING & SAFETY 139,242 Building Memorial $501, overbudijet. Code Compliance $201, verbudget PUBLIC SAFETY 601,504 Paid fier Iva monthe Police invoices PLANNING (31,492) PUBLIC WORKS: 54,653 1,126,991 SUBTOTAL - GENERAL FUND Library Gas Tax Federal Assistance JAG Grant Slerf (Cops) Revenue CMAQ Lighting & Landscaping RCTC Development Agreement AS 939 (8.867) Quimby Infrastructure Proposition 113 South Coast Air Quality 7.665 Transportation Parks & Recreation Civic Center Library Development Community Center Street Facility Park Factlity, Fire Protection AMs In Public Places (16,177) Interest Allocation Equipment Replacement (12,341) Information Technology (5,082) Park Maintenance Facility 7,613 SilverRock Golf 10238 SilverRock Reserve - LO Public Safety Officer (167) Housing Authority (93776) Finance Authority (36,306) Capital Improvement Total ih INVESTMENT ADVISORY BOARD Meeting Date: TITLE: June 8, 2011 Pooled Money Investment Board Report for March 2011 BACKGROUND: Correspondence & Written Material Item B The Pooled Money Investment Board Report for March 2011, summary pages have been attached for the Board's review. A complete copy is available for review upon request. RECOMMENDATION - Receive & File John M. Falconer, Finance Director POOLED MONEY INVESTMENT ACCOUNT SUMMARY OF INVESTMENT DATA A COMPARISON OF MARCH 2011 WITH MARCH 2010 (DOLLARS IN THOUSANDS) MARJCH�26w J MARCH 2010 Average Daily Portfolio $ 66,930,284 $ 66,650,259 $ +280,026 Accrued Earnings $ 28,397 $ 30,947 $ -2,650 Effective Yield 0.600 % 1 0.547% -0.047% Average Life -Month End (in Days) 193 213 -20 Total Security Transactions Amount $ 27,241,149 $ 24,322,331 $ +2,918,818 Number 660 492 +68 Total Time Deposit Transactions Amount $ 2,512,000 $ 2,685,000 $ -173,000 Number 126 143 -17 Average Workday Investment Activity $ 1,362,416 $ 1,227,606 $ +124,810 Prescribed Demand Account Balances For Services $ 1,690,870 $ 1,383,890 $ +306,980 1 BILL LOCKYER TREASURER STATE OF CALIFORNIA INVESTMENT DIVISION SELECTED INVESTMENT DATA ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO (000 OMITTED) MARCH 31, 2011 DIFFERENCE IN PERCENT OF PERCENT OF PORTFOLIO FROM TYPE OF SECURITY ANIOUN PORTFOUO PRIOR MONTH Government Bills $ 25,427,575 37.19 +1.13 Bonds 0 0.00 Notes 7,600,585 11.11 +2.38 Strips 0 0.00 Total Government $ 33,028,160 +3.51 Federal Agency Debentures $ 2,119,775 3.10 +0.04 Certificates of Deposit 6,675,001 9.76 -0.88 Bank Notes 650,000 0.96 -0.56 Bankers'Acceptances 0 0.00 0 Repurchases 0 0.00 0 Federal Agency Discount Notes 8,676,516 12.69 +0.14 Time Deposits 3,803,640 5.56 +0.06 GNMAs 63 0.00 0 Commercial Paper 6,635,607 9.70 -2.21 FHLMC/Remics 505,713 0.74 -.01 Corporate Bonds 0 0.00 0 AB 55 Loans 343,210 0.50 -0.02 GF Loans 5,640,400 8.25 -0.08 NOW Accounts 0 0.00 0 Other 300,000 0.44 +0.01 Reversed Repurchases 0 0.00 0 Total (All Types) $ 68,378,075 100.00 MARCH 2011 FEBRUARY 2011 NUMBER AMOUNT NUMBER AMOUN Pooled Money 650 $ 27,241,149 367 $ 18,113,820 Other 14 804,876 2 $ 2,980 Time Deposits 126 2,512,000 91 $ 1,514,480 Totals 690 $ 30,558,025 460 $ 19,631,280 PMIA Monthly Average Effective Yield 0.500 0.612 Year to Date Yield Last Day of Month 0.499 0.499 Pooled Money Investment Account Portfolio Composition $68.4 Billion 03/31/11 Loans Corporate Bonds 8.75% n nno/. Commercial Pe 9.70% Time Deposits 5.56% CDs/BNs 10.72% Agencies 16.23% Mortgages 0.74% Treasuries 48.30%