BOARD MEETING DATE: March 2, 2007
AGENDA NO. 22

REPORT:

Investment Oversight Committee

SYNOPSIS:

The Investment Oversight Committee met Friday, February 16, 2007 and discussed various issues detailed in the Committee report.  The next Investment Oversight Committee meeting is scheduled for Friday, May 18, 2007 at 12:00 noon in Conference Room CC8.

RECOMMENDED ACTION:

Receive and file.

Michael Antonovich, Chair
Investment Oversight Committee

Attendance:  Present were Committee members Michael Antonovich (via teleconference), Gary Burton and Paul Sundeen.  Absent was Committee member 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 2006, the AQMD’s weighted average yield on total investments of $314,661,435, from all sources, was 5.21%.  The allocation by investment type was 84.11% in the Los Angeles County Pooled Surplus Investment Fund (PSI); 12.71% in the State of California Local Agency Investment Fund (LAIF); and 3.18% in Negotiable Certificates of Deposit.  The Committee approved the quarterly report.

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 recommendations regarding: (1) changes in the Fitch rating system applicable to Bankers Acceptances and Negotiable Certificates of Deposits; and (2) Repurchase Agreement transactions which no longer require Public Securities Association master purchase agreements.  The committee also discussed AQMD’s renewal of its delegation of authority to its treasurer.  The committee approved the recommended actions regarding AQMD's Annual Investment Policy and the reauthorization of the Los Angeles County Treasurer to invest and reinvest AQMD funds.

Investment Committee Discussion Items:

Financial Market Update:  James Martling briefed the Committee on current economic and investment market conditions.  In summary, Mr. Martling stated that the DOW Jones is at an all time high; that Fed Chairman Ben Bernanke told the Senate panel that the economy should grow modestly despite slow housing and that he expects inflation to ease; and that the current inverted yield curve was attributed to a strong demand for long-term investments.  The recently submitted federal budget totals $2.9 trillion, with the federal deficit shrinking by 58% over the last three years.  The Congressional Budget Office predicts that the deficit should remain near or below 1% of GNP for the next two years, which is well below the 40 year average of 2.4%.

Other Business:  None

Public Comment:   None