HomeMy WebLinkAbout1998-09-08; City Council; 14840; ANNUAL REVIEW OF CITY INVESTMENT POLICYball B
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CITY OF CARLSBAD -AGENDA BILL /7
AB# 14,840 TITLE: 1
RECOMMENDED ACTION:
Adopt Resolution No. 98-302 approving the City's investment policy.
ITEM EXPLANATION
The effective management of the City's investment portfolio plays an important role in
maintaining Carlsbad's fiscal health. The portfolio is made up of funds received from
many sources having a variety of restrictions, designations, or special uses. Among othc
responsibilities, it is the City Treasurer's job to ensure that these funds will be available
when needed, and to manage this resource in a prudent way to provide a acceptable rate
return on investment.
The Treasurer is guided in this process by the City's investment policy, which, among
other things, states investment objectives, establishes investment authority and
and provides for an investment review process.
Under section 53646(a) of the California Government Code the City Treasurer must
present an investment policy to the City Council on an annual basis for their review and
approval. This annual review also gives the Treasurer an opportunity to recommend
revisions to the investment policy, or to improve the plan to take advantage of market
changes.
The Treasurer has assembled an investment review committee made up of the Assistant
City Manager, Administrative Services Director, City Attorney, an outside financial
advisor, and himself to review the status of investments and potential changes to the
policy prior to recommending these changes to the City Council.
The principal change recommended by the City Treasurer at this time pertains to
identifying and measuring the level of market risk that has been established for City
investments. Market risk identifies changes in the value of investments caused by chang
in the market rate of interest. As market interest rates rise, the value of City investments
will decline. The opposite will occur when market interest rates fall. All investments
made by the City involve a degree of market risk.
The City's investment policy currently establishes the acceptable level of market risk by
prescribing maximum times for maturities and identifying types of investments that may
and may not be made. These parameters have been very effective in ensuring that the
level of market risk deemed appropriate for City investments is not exceeded. No change
responsibility, establishes the acceptable level of risk, stipulates reporting requirements,
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are recommended in these parameters. As a supplement to these parameters, however, t
City Treasurer is recommending that a single measurement be added that identifies the
market risk that is contained within all investments currently held. This single
measurement, referred to as “modified duration”, makes it easier to ensure that the mar:
risk of investments currently held does not exceed the acceptable level that has been
established.
Modified duration measures the exposure the investment portfolio has to market risk. I
a prospective measurement in that it identifies the potential change in value before the
change actually occurs, e.g., a modified duration of 1.5 indicates that when and if a 1 %
change in market interest rates occurs, a 1.5% change in the value of the investment
portfolio will result. Modified duration is increasingly used by financial analysts and
credit rating agencies in assessing the credit worthiness of investment portfolios.
(Paragraph 13.2)
FISCAL IMPACT:
The recommended changes will have little or no fiscal impact relative to the City’s CUR(
investment practices.
EXHIBITS:
1. Resolution No. 98-302 adopting a revised City investment policy.
2. Revised City Investment Policy.
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RESOLUTION NO. 98-302
RESOLUTION OF THE CITY COUNCIL
i OF THE CITY OF CARLSBAD, CALIFORNIA,
REVISING THE CITY'S INVESTMENT POLICY DATED SEPTEMBER 2,1997
WHEREAS, the City adopted an investment policy on January 2,
1985 as required by Section 53646 of the California Government Code; and
WHEREAS, Section 53646(a) of the California Government Code
requires the City Treasurer to render annually to the City Council a statement of
investment policy; and
WHEREAS, the City Council may from time to time revise this policy
as may be necessary to provide proper guidance to City staff and the City
Treasurer; and
WHEREAS, the City Treasurer has reviewed the existing investment
policy and has recommended modifications which improve the City's ability to
manage inactive funds; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Carlsbad, California as follows:
I. The attached investment policy, revised September 8, 1998
(Exhibit 2) is hereby adopted and shall become effective immediately.
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2. That the Council finds that the investment policy, revised
September 8, 1998, (Exhibit 2) is in conformance with Sections 53601 and
53635 of the California Government Code.
PASSED, APPROVED AND ADOPTED at a regular meeting of the
City Council on the Zhday of / , %8, by the following vote, to wit: Septemb
AYES: Council Members Lewis, Kulchin, Nygaard, Finnila & !
NOES: None
ABSENT: N~~~
CLAUDE A. LEWIS, Mayor
ATTEST:
ALETHA L. MUTE NZ, City Clerk (SEAL)
KAREN R. KUNDTZ, Assistant City Cl.erk
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STATEMENT OF INVESTMENT POLICY
CITY OF CARLSBAD
Submitted by: Jim Stanton, City Treasurer
September 8, 1998
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TABLE OF CONTENTS
Introduction ......................................................................................................... 1
Policy .................................................................................................................. 1
Scope .................................................................................................................. 1
Pooled Investments ................................................................................... 1
Investments Held Separately .................................................................... 1
Objectives ........................................................................................................... 2
Safety ........................................................................................................ 2
Liquidity ..................................................................................................... 2
Return on Investment ................................................................................ 2
Duties & Responsibilities ..................................................................................... 2
Prudence ............................................................................................................. 3
Ethics and Conflicts of Interest ........................................................................... 3
Authorized Investments ...................................................................................... 3
Collaterization ..................................................................................................... 4
Unauthorized Investment / Investment Activity ................................................... 5
Investment Strategy ............................................................................................ 5
Diversification ...................................................................................................... 5
Maximum Maturities .............................. : ............................................................. 5
Selection of Financial Institutions and Brokers ................................................... 6
Purchase, Payment and Delivery ...................... ; ................................................. 7
Safekeeping and Custody ................................................................................... 7
Performance Standard for Pooled Investments .................................................. 7
Reporting ............................................................................................................. 8
Short Term Bonowing ......................................................................................... 9
Short Term Loan ....................................................................................... 9
Line of Credit ............................................................................................. 9
Exceptions .......................................................................................................... 9
Internal Control .................................................................................................... 9
Review ................................................................................................................ 9
Investment Policy Adoption ............................................................................... 10
Glossary ............................................................................................................ 11
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. CITY OF CARLSBAD
STATEMENT OF INVESTMENT POLICY
Approved by City Council Septemkr 2, ?99z
1.0 Introduction. The purpose of this document is to identify various policies and
procedures that enhance opportunities for a prudent and systematic investment policj
and to organize and formalize investment-related activities. Related activities whict
comprise good cash management include accurate cash projections, the expeditiou:
collection of revenue, the control of disbursements, cost-effective banking relations, anc
arranging for a short-term borrowing program which coordinates working capita
requirements and investment opportunities.
2.0 Policy. It is the policy of the City of Carlsbad to invest public funds not requirec
for immediate day-to-day operations in safe and liquid investments having a1
acceptable return while conforming to all state statutes and the City's lnvestmer
Policy governing the investment of public funds.
3.0 Scope. It is intended that this policy cover the investment activities of a
contingency reserves and inactive cash under the direct authority of the City.
3.1 Pooled Investments. Investments for the City and its component units wi
be made on a pooled basis, including the City of Carlsbad, the Housing authorit
of the City of Carlsbad, the Parking Authority of the City of Carlsbad, the City c
Carlsbad Public improvement Corporation, the Carlsbad Redevelopment Agenc)
and the Carlsbad Municipal Water District. , The City's Comprehensive Annu;
Financial Report identifies the fund types involved as follows:
0 General Fund
Special Revenue Funds
Debt Service Funds
Capital Project Funds
0 Enterprise Funds
0 Internal Service Funds
0 Redevelopment Funds
0 Trust Funds
0 Miscellaneous Special Funds
Any new funds created by the City Council, unless specifically exempted.
3.2 Investments held separately. Investments of bond proceeds will be he
separately when required by the bond indentures or when necessav to me
arbitrage regulations. if allowed by the bond indentures, or if the arbitra!
regulations do not apply, investments of bond proceeds will be held as part of tl
pooled investments.
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4.0 Objectives. Section 53600.5 of the California Government Code outlines thl
primary objectives of a trustee investing public money. The primary objectives, in orde
of priority, of the City's investment activities shall be:
4.1 Safety. Safety of principal is the foremost objective of the investmer
program. Investments of the City shall be undertaken in a manner that seek t ensure preservation of capital in the overall portfolio.
4.2 Liquidity. The City's investment portfolio will remain sufficiently liquid 1
enable the City to meet all operating requirements which might be reasonab
anticipated.
4.3 Return on investment. Investment return becomes a consideration on
after the basic requirements of safety and liquidity have been met. The City sh:
attempt to obtain an acceptable return provided that the requirements of safe
and liquidity are first met.
The City Treasurer shall strive to maintain the level of investment of all contingenc
reserves and inactive funds as close to 100% as possible. While the objectives
safety and liquidity must first be met, it is recognized that portfolio assets represent
potential source of significant revenues. It is to the benefit of the City that these asse
be managed to produce optimum revenues, consistent with state statutes and loc
ordinances.
5.0 Duties and Responsibilities. By the annual adoption of this policy, tt
management of inactive cash and the investment of funds identified in paragraph 3.1
the responsibility of the City Treasurer as directed by the City Council. Under tl
authority granted by the City Council, no person may engage in an investme
transaction covered by the terms of this policy unless directed by the City Treasurer.
In the execution of this delegated authority, the City Treasurer may establish accour
with qualified financial institutions and brokerddealers for the purpose of effectil
investment transactions in accordance with this policy. The criteria used to self
qualified financial institutions and brokersldealers are identified in paragraph 15 of tt
policy.
The City Treasurer may designate in writing a Deputy City Treasurer, who in t
absence of the City Treasurer, will assume the City Treasurer's duties a
responsibilities. The City Treasurer shall retain full responsibility for all transactio
undertaken under the terms of this policy.
In the endeavor to have all inactive cash invested all the time, the City Finance Direc
will assist the City Treasurer in the gathering of information to create cash flc
estimates.
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6.0 Prudence. Section 53600.3 of the California Government Code identifies' a
trustees those persons authorized to make investment decisions on behalf of a loci
agency. As a trustee, the standard of prudence to be used shall be the "prude1
investor" standard and shall be applied in the context of managing the overall portfolic
Investments shall be made with judgment and care--under circumstances the
prevailing--which persons of prudence, discretion, and intelligence exercise in tt
management of their own affairs, not for speculation, but for investment, considerir
the probable safety of their capital as well as the probable income to be derived.
Investment officers acting in accordance with written procedures and the investme
policy and exercising due diligence shall be relieved of personal responsibility for :
individual security's credit risk changes or market price changes, provided deviation
from expectations are reported in a timely manner and appropriate action is taken
control adverse developments.
7.0 Ethics and conflicts of interest. All participants in the City's investment proce
shall seek to act responsibly as custodians of the public trust. Officers and employel
involved in the investment process shall refrain from personal business activity tt
could conflict with proper execution of the investment program, or which could impl
their ability to make impartial investment recommendations and decisions. Investme
officials and employees shall make all disclosures appropriate under the Fair Politic
Practices Act and may seek the advice of the City Attorney and the Fair Politic
Practices Commission whenever there is a question of personal financial or investme
positions that could represent potential conflicts of interest.
8.0 Authorized investments.
8.1 Pooled investments. The City Treasurer may invest City funds in t
following instruments as specified in the California Government Code, Sectic
53601 I and as further limited in this policy.
8.1.1 Obligations of the U.S. Government, its agencies a
instrumentalities.
8.1.2 Bankers Acceptances that are eligible for purchase by the Fede
Reserve System. Purchases may not exceed 270 days maturity
25% of the portfolio.
8.1.3 Time Certificates of Deposit. Deposits should not exceed one yc
maturity. Deposits will be collateralized as specified in paragraph
of this Investment Policy.
8.1.4 Negotiable Certificates of Deposit issued by nationally or st2
chartered bank. Purchases may not exceed 30% of the portfolio.
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8.1.5 Prime Commercial Paper of the highest numerical rating of Moody'
Investment Services, Inc. or Standard & Poors Corporation. Furthe
eligible paper is limited to issuing corporations that are organized an
operating within the United States and having total assets in exces
issuer. Purchases may not exceed 180 d.ays maturity or 15% of th
paper of an issuing corporation.
of $500 million and having a "AA" or higher rating for other debt of th
poftfulio, and may not represent more than 5% of the outstandir
8.1.6 Repurchase Agreements with a maximum maturity of one week
Repurchase Agreements will only be with primary dealers of tt
Federal Reserve Bank of New York, and who have long-term de
rated in the "AAA" or "AA" categories of Moody's lnvestme
Services, Inc. or Standard and Poors Corporation. Investments u
be collateralized as specified in paragraph 9.0 of this lnvestme
Policy and may not exceed 5% of the portfolio.
8.1.7 Medium-term Corporate Notes of a maximum of five years ur
maturity issued by corporations organized and operating within tt
United States and rated in the "AAA" or "AA" categories of Mood)
investment Services, Inc. and Standard and Poors Corporation
Purchases may not exceed 30% of the portfolio.
8.1.8 Money market funds (whose portfolio consists of one or more of tl
foregoing legal investments).
8.1.9 Sweep account for the investment of overnight funds when the fun1
are swept into investments allowed by this policy.
8.1.10 Local Agency Investment Fund (LAIF) of the State of CaliforniE
Investments will be made in accordance with the laws and regulatio
governing those Funds.
Investments will be made only in readily marketable securities actively traded in t secondary market.
8.2 Investments held separately. Investments of bond funds will be made
conformance with the trust indenture for each issue. Such investments will
held separately when required.
9.0 Collateralization. Investments in time certificates of deposit shall be fully insur
up to $100,000 by the Federal Deposit Insurance Corporation or the Federal Savings
Loan Insurance Corporation,'as appropriate. Investments in time certificates of depc
in excess of $100,000 shall be properly collateralized. Section 53652 of the Califorl
Government Code requires that the depository pledge securities with a market value
at least 10% in excess of the City's deposit as collateral in government securities, E
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50% in excess of the deposit as collateral in mortgage pools. Section 53649 of thc
California Government Code specifies that the City Treasurer is responsible for enterin!
into deposit contracts with each depository.
Investments in repurchase agreements must also be collateralized. In order ti
anticipate' market changes and provide a level of security for all funds, th
collateralization level will be 102% of market value of principal and accrued interest.
10.0 Unauthorized investmentdinvestment activities. Section 53601.6 of th
California Government Code disallows the following investments acquired after Januar
1 , 1996: inverse floaters, range notes, or interest-only strips that are derived from
pool of mortgages. In addition, and more generally, investments are further restricted a
follows:
10.1 No investment will be made that has either (I) an embedded option (
characteristic which could result in a loss of principal if the investment is held 1
maturity, or (2) an embedded option or characteristic which could seriously lin-
accrual rates or which could result in zero accrual periods.
10.2 No investment will be made that could cause the portfolio to be leveraged.
1 I .O Investment strategy.
11.1 Pooled Investments. A buy and hold strategy will generally be followec
that is, investments once made will usually be held until maturity. A buy and ho
losses as market interest rates ris
losses, ho ,w
diminish as the maturity dates of the investments are amroached or as markc
interest rates .. . A buy and ho
strategy requires that the portfolio be kept sufficiently liquid to preclude tt
undesired sale of investments prior to maturity. Occasionally, the City Treasurc
may find it advantageous to sell an investment prior to maturity, but this shou
only be on an exception basis and only when it is clearly favorable to do so.
11.2 Investments held separately. Investments held separately for bor
proceeds will follow the trust indenture for each issue.
12.0 Diversification. The portfolio will be diversified to avoid incurring unreasonab
and avoidable risks regarding specific security types or individual financial institutions
In addition to the limitations on specific security types indicated in paragraph 8.0 of tt
Investment Policy, and with the exception of U.S. Treasury/Federal agency securitic
and authorized pools, no more than 5% of the City's portfolio will be placed with a1
single issuer.
13.0 Maximum maturities
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13.1 Pooled Investments. A policy of laddered maturities will be followed fc
month end of each reporting period.
puled investments. The following maturity requirements will apply as of thl
13.1.1 At least 50% of the portfolio will be invested in instruments maturin
within one year from the current date. Of the remaining portion, no
more than 25% of the entire portfolio may have a maturity date
between 3 and 5 years from the current date. Investments having a
maturity greater than 5 years will not be made except as provided in
paragraph 13.1.3 of this Investment Policy.
13.1.2 The average portfolio investment maturity shall be 3 years or less.
dollar-weighted average will be used in computing the average
maturity of the portfolio.
13.1.3 Before an investment is made in securities that mature more than
years from the current date, the City Treasurer and the Financial
Management Director will review the City's long term cash needs.
Both must concur before such an investment is made. Investments
beyond 5 years will not be greater than 10% of the portfolio, and will
be counted in the percentage of the portfolio that may mature beyond
3 years. No investments will be made that mature beyond 10 years
from the current date.
13.3 Investments Held Separately. Maturities for investments held separately will conform with the trust indenture for each issue.
14.0 Selection of financial institutions and brokerddealers. Investments shall
purchased only through well established, financially sound institutions. The (
Treasurer shall maintain a list of financial institutions and brokeddealers approved
investment. All financial institutions and broker/dealers who desire to become qualif
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bidders for investment transactions will be given a copy of the City's Investment Policy
and a return cover letter which must be signed indicating that the investment policy ha!
been read and understood. Qualified financial institutions and brokeddealers mus
supply the City Treasurer with the following:
14.1 Financial Institutions.
Current audited financial statements.
Depository contracts, as appropriate.
0 A copy of the latest FDIC call report or the latest FHLBB report, a
0 Proof that commercial banks, savings banks, or savings and loa
appropriate.
associations are state or federally chartered.
14.2 Broker/Dealers.
Current audited financial statements.
Proof that brokerage firms are members in good standing of
national securities exchange.
Commercial banks, savings banks, and savings and loan associations must maintain
minimum net worth to asset ratio of 3% (total regulatory net worth divided by tot
assets), and must have had a positive net earnings for the last reporting period.
15.0 Purchase, Payment, and Delivery. A competitive bid process, when practic;
will be used to place all investment transactions. When two or more investme
opportunities offer essentially the same maturity, liquidity, yield, and quality, priority \~r
be given first to the financial institutions based in the City of Carlsbad, and second
other financial institutions in the State of California.
Purchases on margin will not be made. Payment for securities will be done on
Delivery Versus Payment (DVP) basis via the City's custodian. Delivery of securitit
will be made to the City in accordance with the third party custodial agreement.
16.0 Safekeeping and custody. All security transactions, including collateral f
repurchase agreements, entered into by the City shall be conducted on a delivery+*
payment basis. All securities owned by the City will be held by a third-party custodi
custodian. All securities will be held in the nominee name of the custodian. Collate
for time deposits in savings and loans will be held by the Federal Home Loan Bank
an approved Agent of Depository. Collateral for time deposits in banks will be held
the City's name in the bank's Trust Department or in the Federal Reserve Bank.
17.0 Performance standard for pooled investments. Laddered maturities and a I:
and hold strategy for pooled investments will cause the investment portfolio to attair
market-average rate of return throughout budgetary and economic cycll
commensurate with the investment risk constraints and the cash flow needs. Since
least 50% of the portfolio must mature within 1 year, the rate of return will be mc
designated by the City Treasurer and evidenced by a monthly statement from t
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closely related to, but lag behind, changes in short-term market rates, The rate c
return of the investment portfolio will be based on the maturity value of the investment!
A dollar-weighted average of yields to maturity will be used in calculating the rate c
return of the entire portfolio.
18.0 Reporting. Sections 53607 and 53646 of the California Government Code
require reports of investments and transactions to the City Council, City Manager, an
internal auditor (or the Finance Director in the absence of an internal auditor).
18.1 Pooled investments. The investment report shall be submitted monthly t
the City Treasurer within 30 days following the end of the month covered by th
report. The monthly report shall include the following elements:
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Itemized listing of portfolio investments by type, date of maturity, yield '
maturity, and issuer.
Par value, dollar amount invested, lxmkeiw a,mQ&zgd::@sj, and curre'
market value as of the date of the report will be given for the total of
securities, investments, and moneys held by the City and its compone
units. The source of the market values will be cited.
Credit ratings of corporate notes
Accrued income
Weighted average yield of the portfolio
Weighted average days to maturity of the portfolio from the date of tl
report
~~~g~€~~~~age~rn~~~~~~,u , XI_ x .I. <n'ilZ~ '~ !$I Percent of portfolio maturing within one year
Percent of portfolio maturing between one and 3 years
Percent of portfolio maturing between 3 years and 5 years
Percent that each type of investment represents in the portfolio
Investment transactions for the reporting period
Fund source of investments when available
Statement that the investment portfolio has the ability to meet the Cit
Statement of compliance of the portfolio with the City's Investment Polic
When applicable, any material exceptions will be noted.
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..""5S"W%* :$-& --<**;?pe~$'":~ -7.it.i" I-,- , ' ',', *,'*E
cash flow demands for the next six (6) months
An annual report for pooled investments will also be made to the City Council follow
the close of the fiscal year. Among other items, the annual report will include
analysis of the composition of the portfolio with regard to fund source; a review
trends regarding the size of the fund, portfolio yields, and cash income; and a statem
regarding anticipated fund activity in the next fiscal year.
18.2 Investments held separately. A report of investments held separatl
including deferred compensation balances, shall be made quarterly within 30 d
following the end of the quarter and submitted as an exhibit in the City Treasurl
monthly report. The quarterly report shall contain the information required
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Section 53646 when available.
19.0 Short-term borrowing. The City is permitted by law to borrow money to meet
current short-term cash flow needs. These needs may arise either because projected
accounts may be temporarily overdrawn due to the efforts lo invest 100% of inactive
funds at all times. To provide for these contingencies the City Treasurer is authorized
to take the following actions:
cash disbursements exceed projected cash receipts, or because the City's cash
19.1 Short-term loan. When there is a shortfall between projected cast-
revenues and projected cash disbursements, the City Treasurer will secure a lox
in the amount that would equal the cash deficit plus projected cash disbursements
for one month. Any such loan will be repaid within one year.
19.2 Line of credit. The City Treasurer may maintain a line of credit with the
City's bank in an amount to cover sums temporarily overdrawn because of effort!
to invest all inactive funds at all times.
20.0 Exceptions. Occasionally, exceptions to some of the requirements specified il
this Investment Policy may occur for pooled investments because of events subsequen
to the purchase of investment instruments, e.g., the rating of a corporate note held il
the portfolio is downgraded below an "AA" rating, or total assets in the portfolio declinc
causing the percentage invested in corporate notes to rise above 30%, or a1
unforeseen expenditure causes investments maturing within one year to fall below 500,
of the portfolio.
State law is silent as to how exceptions should be corrected. Exceptions may bc
temporary or more lasting; they may be self-correcting or require specific action. I
would correct exceptions to move the portfolio into compliance with State and Cit
requirements. Decisions to correct exceptions should not expose the assets of th
portfolio to undue risk, and should not impair the meeting of financial obligations as the
fall due. Any subsequent investments should not extend existing exceptions.
Exceptions, and the decisions to correct the exceptions, will be reviewed with th
Investment Review Committee referred to in paragraph 22.0 below.
21.0 Internal control. This policy and the strategy for and conduct of the investme!
of City funds will be reviewed by an Investment Review Committee as set forth belo
and by the City's auditors in the conduct of their annual audit of the City.
22.0 Review. An Investment Review Committee is hereby established to condu
reviews of the City's investment portfolio, the strategy being utilized for the investme
of City funds, and the City's investment policy. This Committee will be composed of tt
City Treasurer (acting as the Chair), the City Attorney, the Assistant City Manager, tk
Administrative Services Director, and the Deputy City Treasurer (when not one of tk
foregoing). Additionally, an outside financial advisor may be included as an advis
specific action is required, the City Treasurer should determine the course of action tha
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without a vote. The Committee will convene periodically as necessary or desirable but
no less frequently than once each quarter.
23.0 Investment policy adoption. Section 53646(a) of the California Governmeni
Code requires the City Treasurer to render to the City Council and the Investmeni
Review Committee a statement of investment policy no less frequently than once eact
year. The City's investment policy and any modifications thereto shall be considered a'
a public meeting. Adoption shall be made by resolution of the City Council.
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Nominee Name: registered owner of a stock or bond if different from the
beneficial owner, who acts as holder of record for securities and other assets.
Typically, this arrangement is done to facilitate the transfer of securities when it
is inconvenient to obtain the signature of the real owner, or the actual owner may
not wish to be identified. Nominee ownership simplifies the registration and
transfer of securities.
Pooled Investment: grouping of resources for the common advantage of the
participants.
Range Note: investment whose coupon payment varies (e.g. either 7% or 3%)
and is dependent on whether the current benchmark (e.9. 30 year Treasury) falls
within a pre-determined range (e.g. between 6.75% and 7.25%).
Repurchase Agreement: contract to purchase and subsequently sell securities
at a specified date and price
Sweep Account: short-term income fund into which all uninvested cash
balances from the non-interest bearing checking account are automatically
transferred on a daily basis.
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Zero Accrual Periods: a period of time in which an investment accumulates no
interest.
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