BOARD MEETING DATE: March 3, 2006
AGENDA NO. 22

Investment Oversight Committee

SYNPOSIS:

The Investment Oversight Committee met Friday, February 17, 2006 and discussed various issues detailed in the Committee report. The next Investment Oversight Committee meeting is scheduled for Friday, May 18, 2006 at 12:00 noon in Conference Room CC8.

RECOMMENDED ACTIONS:

Receive and file this report.

Gary Burton,
Investment Oversight Committee

Attendance: Present were Committee members Gary Burton and Paul Sundeen. Absent were Committee members Michael Antonovich 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 December 2005, the AQMD’s weighted average yield on total investments of $305,586,724, from all sources, was 3.83%. The allocation by investment type was 80.76% in the Los Angeles County Pooled Surplus Investment Fund (PSI); 13.02% in the State of California Local Agency Investment Fund (LAIF); and 6.22% in Federal Agency securities and Negotiable Certificates of Deposit. This report was accepted by the Committee Members present. Owing to the lack of a quorum, a Committee recommendation was not made.

Approval of Annual Investment Policy and Delegation of Authority to Appointed Treasurer to Invest AQMD Funds: The Committee reviewed the Annual Investment Policy, which included a recommend change regarding investment agreements for fully flexible repurchase agreements, and discussed the renewal of its delegation of authority to its treasurer. Due to the lack of a quorum, a Committee recommendation regarding the AQMD Annual Investment Policy and the reauthorization of the Los Angeles County Treasurer to invest and reinvest AQMD funds was not made.

Investment Committee Discussion Items:

Financial Market Update: Terry McGuire briefed the Committee on the current interest rate market. In summary, Mr. McGuire stated that the economy appears to have traction both in new jobs and manufacturing, while the consumer and retail sales are continuing to do well. As expected, the Federal Reserve has continued to increase the Federal Funds Rate for the 14th time in twenty months by 25 basis points to the current level of 4.5%. Another 25 basis points increase is expected at the next meeting in March, the first meeting chaired by the new Fed Chairman Bernanke. The slight inversion of the yield curve is likely to continue, but the entire curve is expected to shift upward if current fiscal and monetary policies continue. Iraq, Iran, terrorism threats, high oil prices and growing budget and trade deficits are the major uncertainties facing the economy, while continued consumer spending and the housing “bubble” are the real wild cards.

Other Business: None

Public Comment: None

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