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Arizona State Treasurer Doug Ducey's Inside the Vault

Arizona State Treasurer Doug Ducey's Inside the Vault

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Published by Barbara Espinosa
Arizona State Treasurer’s Quarterly Update
Arizona State Treasurer’s Quarterly Update

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Published by: Barbara Espinosa on Mar 21, 2013
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03/21/2013

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The health and sustainability of ourpension systems is of criticalimportance to everyone in Arizona.These benefits are funded from taxdollars and from the employeesthemselves. The State of Arizonasponsors four retirement systemsthat currently cover more than581,000 employees, retirees, orformer employees who have yetto retire.Much of the discussion surroundingany pension system revolves aroundcomplicated financial formulas.There is an equally important humanelement that must always be in theforefront; these pensions are for those who teach our children, police our streets, putout the fires, respond to medical emergencies, and keep the basic functions of government running.As of June 30, 2012, Arizona’s pension plans have unfunded liabilities ranging from$18.4 billion to $39.6 billion depending on what discount rate is used, and using themarket valuation of the plans’ assets. In addition to a growing unfunded liability, thenumber of retired members in each of the four retirement systems is growing fasterthan the number of new workers entering.Arizona’s retirement plans are professionally and competently managed. We arefortunate that our pensions are in far better shape than many other states. That said,there are issues that require attention. Several reform options were explored by theStudy Committee for policy makers to consider so Arizona can continue tostrengthen and enhance those plans in order to protect the benefits to currentretirees and employees that have earned them, as well taxpayers now and inthe future.The final report, as well as all the meeting minutes, presentations and researchmaterials can be accessed by visitinghttp://www.aztreasury.gov/defined-contribution-retirement-study-committee/.
 
Arizona’s Pension Systems: Final Report
OFFICE OF THE
A
RIZONA
 S
TATE
 T
REASURER 
 
H
ON
.
D
OUG
D
UCEY
T
REASURER 
I
NVESTMENT
 P
HILOSOPHY
 
SAFETY
 
before 
 
LIQUIDITY
before 
 
YIELD
Treasurer Doug DuceyArizona State Capitol1700 W. Washington St.Phoenix, AZ 85007(602) 542-7800toll free (877) 365-8310info@aztreasury.govwww.AZTreasurer.gov
Inside the Vault
The Arizona State Treasurer’s Quarterly Update
Q1 2013Volume I1I, Issue 1
 
 
AT A GLANCE
$1.36 Billion in assetswith Net Asset Value at$1.000 as of 12/31/2012.
Diversified investmentsweighted to highly ratedCommercial Paper first,Repurchase Agreementssecond and Agencies/Treasuries third.
Continues to maintainthe highest rating of AAAF/S1+.
Weighted AverageMaturity is 23 days.
We expect a choppyquarter as the marketdigests money movingfrom banks into funds,plus ongoing financialpolicy debates.
LGIP Pool 5: Short-term fundLGIP Pool 500: Medium-term fund
Page 2 Local Government Investment Pools (LGIP & LGIP-GOV)
Pool 5 YTDNet Yieldhas beaten itsbenchmark by13 basis points
AT A GLANCE
$275Million in assetswith Floating Net AssetValue at $1.0434 as of 12/31/2012.
Diversified fundcontaining Treasuries,Agencies, CorporateBonds and Mortgages.
The effective durationis 1.21 years.
Keeping the fund shortwith 76.8% of theinvestments maturingunder two years.
Maximum exposure toany credit at 2.5%.
Weighted AverageRating of all thesecurities is AA.
Pool 500 YTDhas beaten itsbenchmark by56 basis points
DISCLAIMER
: Historical returns are not indicative of future performance. The NAV will float due to fluctuating marketNo investment pools offered by the Arizona State Treasurer are insured and returns are not guaranteed.
 
Pool 7 LGIP-GOV: Short-term fund
Page 3FY 2013 Q2 Performance Update
AT A GLANCE
$1.36 Billion Assets withNet Asset Value at$1.00 as of 12/31/2012.
Invested in highly liquid,low-risk securities thatare backed by the fullfaith and credit of theU.S. Government.
 
Overall rating is AA+,which reflects the S&Pdowngrade of U.S. debt.
Weighted AverageMaturity is 45 days.
We expect rates todecline for the quarteras the federal fiscalissues have causedsupply and demandimbalances in theovernight repo market.
Pool 700 LGIP-GOV: Medium-term fund
Pool 700 YTDhas beaten itsbenchmark by65 basis points
conditions and could result in the loss of money. Pools are susceptible to investment risk and market volatility by design.
THIS IS NOT A PROSPECTUS
.
AT A GLANCE
$222.9 Million in assetswith Floating Net AssetValue at $1.0169 as of 12/31/2012.
All securities arebacked by the full faithand credit of U.S.Government includingTreasuries, FDIC paperand GNMA Mortgages.
The effective durationis 1.44 years.
Keeping the fund shortwith 86% of theinvestments maturing inunder two years.
Weighted AverageRating of all thesecurities is AA+.
Pool 7 YTDNet Yieldhas beaten itsbenchmark by5 basis points

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