BOARD MEETING DATE: December 5, 2003
AGENDA NO. 18

Investment Oversight Committee

SYNOPSIS:

The Investment Oversight Committee met Friday, November 21, 2003 and discussed various issues detailed in the Committee report. The next Investment Oversight Committee meeting is scheduled for Friday, February 20, 2004 at 12:00 noon in Conference Room CC8.

RECOMMENDED ACTION:

Receive and file this report.

Michael Antonovich, Chair
Investment Oversight Committee

Attendance: Present were Committee members Michael Antonovich, Gary Burton, and Paul Sundeen. Absent were Committee members Fred Aguiar, William S. Craycraft and David E. Ertel.

Investment Committee Action Items:

Quarterly Report of Investments: Reviewed the quarterly investment report to the Governing Board. For the month of September 2003, the AQMD’s weighted average yield on total investments of $252,849,581, from all sources, was 1.48%. The allocation by investment type was 76.6% in the Los Angeles County Pooled Surplus Investment Fund (PSI); 15.5% in the State of California Local Agency Investment Fund (LAIF); and 7.9% in Federal Agency securities. The Committee approved the quarterly report.

Investment Committee Discussion Items:

Financial Market Update: Terry McGuire (Sperry Capital) briefed the Committee on the current interest rate market. In summary, Mr. McGuire stated that the economy appears to be gaining strength as first time applications for job loss benefits for the latest week have declined with the four-week moving average declining to its lowest level since February 2001. Industrial production indicators and consumer confidence indicators have been rising steadily over the past two months. However, expectations for ongoing large federal deficit borrowing and trade deficits and the Federal Reserve’s commitment to keep the federal funds rate at 40-year low levels has weakened the dollar against most major foreign currencies. Expectations are that the Federal Reserve Board may start to increase the federal funds rate in the first quarter of 2004. With the uncertainty related to a number of factors, the entire yield curve is likely to remain in a relatively tight trading range around current levels for the next three months.

Calendar Year 2004 Committee Meeting Dates: For CY 2004 the Committee has scheduled Friday, February 20, Friday, May 21, Friday, August 20 and Friday, November 19 for the quarterly Investment Oversight meetings.

Other Business: None

Public Comment: None

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