BOARD MEETING DATE: June 6, 2003
AGENDA NO. 28

Investment Oversight Committee

SYNOPSIS:

The Investment Oversight Committee met Friday, May 16, 2003 and discussed various issues detailed in the Committee report. The quarterly meeting scheduled for August 15, 2003 has been cancelled. The next Investment Oversight Committee meeting is scheduled for Friday, November 21, 2003 at 12:00 noon in Conference Room CC8.

RECOMMENDED ACTION:

Receive and file this report.

William S. Craycraft, Vice-Chair
Investment Oversight Committee

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

Investment Committee Action Items:

Quarterly Report of Investments: Reviewed the quarterly investment report to the Governing Board. For the month of March 2003, the AQMD’s weighted average yield on total investments of $256,045,664, from all sources, was 2.02%. The allocation by investment type was 78.0% in the Los Angeles County Pooled Surplus Investment Fund (PSI); 15.2% in the State of California Local Agency Investment Fund (LAIF); and 6.8% in Federal Agency securities. The Committee approved the quarterly report.

Due to a light committee agenda, the regularly scheduled meeting for August 15, 2003 has been cancelled. The quarterly report on investments will be forwarded to the Board and Committee members in July. A meeting will be scheduled if any member of the Board or Committee wishes to discuss the investment report or has any other business for Committee consideration.

Investment Committee Discussion Items:

Cash Flow Forecast: Rick Pearce reported on the cash flows for the current year and projected for the next three years. AQMD Investment Policy limits its Special Purpose investments to 75% of the minimum amount of funds available for investment during the Cash Flow Horizon. That limit, which includes all funds (General, MSRC, Clean Fuels), is approximately $139.2 million.

Financial Market Update: Terry McGuire (Sperry Capital) briefed the Committee on the current interest rate market. In summary, Mr. McGuire stated that due to the lack of inflation (with deflation a real concern) there is a strong likelihood that the Federal Reserve at their June meeting will reduce interest rates further. Ongoing trends include: trade deficits remaining at record levels; persistent high unemployment; the strength of the dollar is declining; and a record budget deficit is forecast. The one bright spot in the economy is the positive rate of return in the equity market. Since the beginning of the year the NASDAQ has shown a 16.1% market rate of return

Other Business: None

Public Comment: None

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