AC 04-25-2022 Desk Items (2)
AC 04-25-2022
#1
Attachment A – Draft
Minutes
Desk Item
Page 1
City of Cupertino
Audit Committee Special Meeting
Minutes
February 24, 2022
CALL TO ORDER
At 4:04 p.m., Vice Chair Chen called the special meeting to order. This was a teleconference
meeting with no physical location.
ROLL CALL
Committee Members Present: Vice Chair Angela Chen, Mayor Darcy Paul, Councilmember
Moore, Committeemmber Song
City Staff Present: Zach Korach, Jim Throop, Chris Jensen, Thomas Leung
Absent: Chair Daisy Liang
Guests: Matt Geerdes (Crowe), Kathy Lai (Crowe), Mark Steranka (Moss Adams), Colleen
Rozillis (Moss Adams)
1. APPROVAL OF MINUTES
Vice Chair Chen moved to approve the regular meeting minutes of January 24, 2022 and January
25, 2022. Mayor Paul seconded and the motion carried unanimously by all members present with
Committee Member Song abstaining.
ORAL COMMUNICATIONS
None.
NEW BUSINESS
2. Appointment of Audit Committee Chair and Vice Chair
Mayor Paul nominated Councilmember Moore as Chair and Vice Chair Chen seconded the
motion. The motion carried unanimously by all members present.
Mayor Paul nominated Vice Chair Chen to continue as Vice Chair. Councilmember Moore
seconded and the motion carried unanimously by all members present. Vice Chair Chen handed
the meeting over to Chair Moore.
3. Audit Committee Regular Meeting Frequency
Korach noted that pursuant to the California Government Code and Cupertino Municipal Code
that the Treasurer’s Monthly report does fall under the Audit Committee to review, and staff
recommends increasing the number of regular meetings from 8 to 12 meetings to accommodate
the submission of the monthly report. Staff has amended three other proposed meeting dates
referencing the Treasurer’s Quarterly report to pertain to the City’s Investment Report because
they do not fall under the Audit Committee and recommends, as have been submitted in past
practice, that it be submitted directly to City Council. Korach also notes that Section 115 trust
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performance reports will be provided on a quarterly basis and submitted directly to the City
Council. Chair Moore asked that the OPEB and Section 115 reports stay at the Audit Committee
even though it doesn’t fall under the Committee’s duties, powers, and responsibilities. Mayor
Paul questions the recommendation and Korach clarifies that it is a revision to act in accordance
with the City’s municipal code and California Government Code. The monthly Treasurer’s report
refers to the receipts, disbursements, and fund balances and the investment reports do not fall
under the purview of the Audit Committee. Mayor Paul disagrees with the interpretation of the
municipal code from staff. Chair Moore maintains that we keep the quarterly reports under the
Audit Committee. Mayor Paul acknowledged that there was an obligation in the code that was
not met in the past, but Staff should have explained the new requirement as well as include it in
the staff report. Mayor Paul expressed that it was inappropriate not to include in the staff report
that staff in the prior Audit Committee meeting had indicated that the requirement was a
relatively new one when it was in fact a long-standing requirement. Mayor Paul also suggested
that the Audit Committee should work with staff on what can be feasibly delivered on a monthly
basis. Chair Moore agreed noting that there was no change of recent time to the reporting
requirements and OPEB and Section 115 Trust reports are done by outside consultants so it may
not be a significant load on staff. City Attorney Jensen notes that we should look at the different
authorizations and appropriate City Council delegation of authority. Mayor Paul asked for
clarification. City Attorney Jensen wants to ensure there is appropriate delegation of authority as
based on Audit Committee member comments the intent is for them to retain authority. Mayor
Paul asked if this is to make sure that there is a resolution to delegate authority for review and
City Attorney Jensen confirms. Chair Moore identifies the fund balances would include the OPEB
and Section 115 trust reports or the receipts being reported would be considered. Mayor Paul
wants to understand what staff can deliver. Chair Moore clarifies that an action should be
included in the recommendation. Committeemember Song inquired for preventive methods.
Chair Moore notes that this may come from our whistleblowing item in the future from Moss
Adams reports. Vice Chair Chen requests to move the March meeting to the last Monday in
March. No comments from the public. Mayor Paul motioned to accept the item with the change
of the March meeting. Vice Chair Chen seconded, and the motion carried unanimously by all
members present.
4. Treasurer’s Report for Quarter Ending December 31, 2021
Chair Moore notes that the recommended action is to receive the Treasurer’s Report for Quarter
Ending December 31, 2021. Korach notes that a modification was made on page 8 that references
the Investment authority delegated to the City’s Treasurer. Korach notes that the $10 million the
City received is still available and only at City Council’s direction to be classified or appropriated
for a specific purpose within the restrictions of the City’s Special Revenue Fund Park Dedication.
No comments from the public.
5. Review of FY 2020-21 ACFR and Supplemental Reports
Lai notes that based on their testing, they intend to issue an unmodified opinion which is the
highest level of assurance the City can receive. The opinion will state that the financial statements
are fairly stated in accordance with Generally Accepted Accounting Principles (GAAP). Lai
mentions that there is an emphasis of matter paragraph as it is very standard when you have a
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new accounting standard that has impact to the accounting and financial reporting. This year’s
standard is the GASB Statement 84, fiduciary activities related to accounting and financial
reporting for fiduciary activities such as investment trust funds, OPEB trust funds, and etc. Lai
turns it over to Geerdes to discuss the Investment AUP, GANN AUP, and Storm Drain AUP.
Geerdes notes that these AUPs are not designed to provide assurance of any form, it was done so
at the request of management. Geerdes did not notice any exceptions or findings and upon receipt
of the management representation letter they will finalize the AUP. Lai notes that the Single Audit
or Uniform Guidance Audit is not included in the report as the Office of Management and Budget
was overwhelmed and the audit guidance was released late. Lai confirms that the American
Rescue Plan Act funds will be included in next year’s single audit; this year they are reviewing
the Coronavirus Relief Funds and Highway Planning and Construction grants but are awaiting
key materials from management. Once they receive the materials they will come back with the
draft report. No comments from the public. Vice Chair Chen questions the transmittal letter and
the $9.7M ARPA funding that was allocated to revenue losses, but the reports indicate a revenue
surplus. Lai notes that the final rule allowed organizations to take advantage of a $10 million
presumed revenue loss and clarified that under the federal guidance the City was given a
standard allowance of $10 million but it wasn’t considered as expended in Fiscal Year 2021, so it
is sitting in the financial statements as unearned revenue. Vice Chair Chen questions the
unrestricted fund balance of $92 million. Geerdes clarifies that it is the total unrestricted net
position between the governmental activities ($83 million) versus the business type activities ($9.3
million) which is the resource recovery. Geerdes notes that footnote #7 is the fund balances at the
fund level of reporting and when totaled it is $167 million, $49 million of that is unassigned or
unrestricted at modified accrual reporting. The $92 million is at a full accrual reporting and
includes items that have a different basis of accounting reporting. He notes that the unrestricted
fund balance is located in the General Fund because accounting rules state that unrestricted fund
balances are not allowed to be in special revenue funds or capital funds because those funds are
for a restricted, special assigned purpose. He further clarifies that on page 57 there is a description
of the unassigned fund balances and that it is available for any purpose but that it is subject to
appropriation and any expenditure needs to be in accordance with the budget and appropriation
laws and regulations. Chair Moore questioned the appropriation amounts between two different
departments and if they can be altered. Lai confirms that it is out of their scope. Chair Moore
requests in the heading for Audit Committee items if it is an action or informational item. Chair
Moore also requested for Attachment B to follow Huntington Beach’s calculation format as it was
simple and explained to the public the background of GANN. Korach identifies this item as an
informational item and City Attorney Jensen confirms there is no requirement that the committee
take action on this item.
6. Internal Audit – Procurement Review
Rozillis notes that the engagement began in September and was completed in January with the
purpose to look at the City’s procurement structure, function, how well it served the City, analyze
staffing, identify opportunities for performance improvement, compare procurement principles
with the City’s practice in terms of ethics and equity. Rozillis notes that the primary
recommendation is the city having a decentralized procurement environment and they met with
dozens of organizations to conduct interviews and focus groups with those involved in
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procurement. She notes that staff is looking forward to the results of the study and implementing
improvements in procurement. Rozillis notes 10 recommendations with the primary being an
increased level of centralization and oversight of procurement leadership. There are two
categories for their observations and recommendations, the first is enterprise considerations.
These are things that can be done citywide such a matrix to identify clarity in roles and
responsibilities, updated policy and procedures, alignment of procurement practices with State
law, and consistent training. The second is policies and procedures; being able to modernize
processes, technology support, training, and self-service tool kits. No comments from the public.
Vice Chair Chen questions the one time and ongoing resources for the recommendations and how
the City can prioritize the workplan. She notes that there are no resources allocated to the
procurement process but there is staff in each department working in procurement, is there a way
to rearrange resources to save the City money? Rozillis recommends that the City decide what
type of model they want to move forward with as well as what staffing would look like, then
identifying the portions of FTEs, and finding how to maximize the use of systems and adjust the
City’s policy and procedures. Vice Chair Chen asks where should the City start. City Manager
Throop mentions that he can pull a department head meeting to discuss this report and bringing
a recommendation forth to Council. City Manager Throop notes that it is odd that the City is
decentralized and recommends centralization with including a procurement officer and a
purchasing technician. Vice Chair Chen is concerned about the ongoing resources that City has
and wants to evaluate reallocating resources for procurement. Chair Moore requests that we
bring the City of Campbell to the table to look at their procurement operation and have an
implementation plan added to the agenda for Audit Committee before it goes to City Council.
Mayor Paul requests clarity on the structure of the procurement process for the public and what
are the potential issues are for a decentralized process. Rozillis clarifies that they did a risk
assessment of decentralized, centralized, and shared services models. Committeemember Song
recommends that management comes up with suggestions for procurement. Chair Moore
requests for information related to credit cards and how they assigned to the budget and codes
or policy that are associated with credit card use. Korach provides an overview of the Credit Card
use policy and notes that Finance receives a master statement for all the credit cards and will
reconcile department statements as well as transaction are tied to a GL account number.
Committeemember Song requests for a public report for purchases made. Korach notes detailed
accounts payable reports are submitted to the City Council.
7. Budget Format Review
Continued to the 3/28/2022 meeting – with appointment of the subcommittee.
8. Treasurer’s Report Definition and Process
Chair Moore requests for the City Attorney Jensen to review the code for the Committee to
continue to have jurisdiction over the reports. No public comments. Chair Moore requests for the
GANN reporting and calculation to be clearly defined and model it after Huntington Beach. City
Manager Throop notes that staff will include it in the budget book.
9. External/Internal Audit Process and Timing
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Mayor Paul motioned for this to be continued to the 3/28/2022 meeting. Vice Chair Chen
seconded. The motion carried unanimously by all members present.
OLD BUSINESS
None.
STAFF AND COMMITTEE REPORTS
10. Staff report out on City Council Workshop on Commissions and Committees Workshop
Mayor Paul motioned for this to be continued to the 3/28/2022 meeting. Vice Chair Chen
seconded. The motion carried unanimously by all members present.
FUTURE AGENDA SETTING
None.
ADJOURNMENT
The meeting adjourned at 6:00 p.m.
Recording Secretary:
Janet Liang, Administrative Assistant
AC 04-25-2022
#5
Attachment A – Investment
Policy (redline)
Desk Item
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City Investment Policy
Citywide Policy Manual
Attachments: N/A
Effective Date:
May 17, 2022May 18, 2021
Responsible Department:
Administrative Services
Related Policies & Notes:
Pension Investment Policy, OPEB Investment Policy
POLICY
Under authority granted by the City Council, the City Treasurer and Deputy Treasurer are
responsible for investing the surplus funds of the City.
The investment of the funds of the City of Cupertino is directed to the goals of safety, liquidity
and yield. The authority governing investments for municipal governments is set forth in the
California Government Code, Sections 53600 et seq.
The primary objective of the investment policy of the City of Cupertino is SAFETY OF
PRINCIPAL. Investments shall be placed in those securities as outlined by type and maturity
sector in this document. Effective cash flow management and resulting cash investment practices
are recognized as essential to good fiscal management and control. The City’s portfolio shall be
designed and managed in a manner responsive to the public trust and consistent with state and
local law. Portfolio management requires continual analysis and as a result the balance between
the various investments and maturities may change in order to give the City of Cupertino the
optimum combination of necessary liquidity and optimal yield based on cash flow projections.
SCOPE
The investment policy applies to all financial assets of the City of Cupertino as accounted for in
the Comprehensive Annual Financial Report (CAFR). Policy statements outlined in this
document focus on the City of Cupertino’s pooled, surplus funds, but will also apply to all other
funds under the City Treasurer’s span of control unless specifically exempted by statute or
ordinance. This policy is applicable, but not limited to all funds listed below:
General Fund
Special Revenue Funds
Capital Project Funds
Enterprise Funds
Internal Service Funds
Trust and Agency Funds
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Any new fund unless specifically exempted
Investments of bond proceeds shall be governed by the provisions of the related bond indentures
and/or cash flow requirements and therefore may extend beyond the maturity limitations as
outlined in this document. Other post‐employment benefit (OPEB) and Pension trust investments
are governed by California Government Code Sections 53620 through 53622 and trust documents.
The trusts are governed by separate investment policies entitled Investment Policy Statement City
of Cupertino Investment Trust that were reviewed by the City of Cupertino Audit Committee on
September 27, 2021 and October 25, 2021 and City Council on December 7, 2021October 27, 2020
and November 17, 2020, respectively.
PRUDENCE
Pursuant to California Government Code, Section 53600.3, all persons authorized to make
investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the
Prudent Investor Standard:
“…all governing bodies of local agencies or persons authorized to make investment
decisions on behalf of those local agencies investing public funds pursuant to this
chapter are trustees and therefore fiduciaries subject to the prudent investor standard.
When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing
public funds, a trustee shall act with care, skill, prudence, and diligence under the
circumstances then prevailing, including, but not limited to, the general economic
conditions and the anticipated needs of the Agency, that a prudent person acting in a
like capacity and familiarity with those matters would use in the conduct of funds of
a like character and with like aims, to safeguard the principal and maintain the
liquidity needs of the Agency. Within the limitations of this section and considering
individual investments as part of an overall strategy, investments may be acquired as
authorized by law.”
It is the City’s intent, at the time of purchase, to hold all investments until maturity to ensure the
return of all invested principal dollars. However, it is realized that market prices of securities will
vary depending on economic and interest rate conditions at any point in time. It is further
recognized that in a well‐diversified investment portfolio, occasional measured losses are
inevitable due to economic, bond market, or individual security valuation fluctuations. These
occasional losses must be considered within the context of the overall investment program
objectives and the resultant long‐term rate of return. The City Treasurer and Deputy Treasurer,
acting within the intent and scope of the investment policy and other written procedures and
exercising due diligence, shall be relieved of personal responsibility and liability for an individual
security’s credit risk or market price changes, provided deviations from expectations are reported
in a timely manner and appropriate action is taken to control adverse developments.
OBJECTIVES
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The primary objectives, in order of priority, of the City of Cupertino’s investment activities shall
be:
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A. Safety of Principal
Safety of principal is the foremost objective of the City of Cupertino. Investments will be
undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
To attain this objective, the City will diversify its investments by investing funds among a
variety of securities with independent returns.
B. Liquidity
The City’s investment portfolio will remain sufficiently liquid to meet all operating
requirements which might be reasonably anticipated and provide the City with adequate cash
flows to pay its obligations over the next six months. Additionally, the portfolio should consist
largely of securities with active secondary resale markets.
C. Return
The City’s investment portfolio shall be designed with the objective of attaining a rate of
return throughout budgetary and economic cycles, commensurate with Cupertino’s
investment risk constraints and cash flow characteristics of the portfolio.
MAXIMUM MATURITIES
Maturities of investments will be selected based on liquidity requirements to minimize interest
rate risk and maximize earnings. Investment of surplus funds shall comply with the maturity
limits as set forth in the California Government Code 53600, et seq. Where this section does not
specify a limitation on the term or remaining maturity at the time of the investment, no
investment shall be made in any security that at the time of the investment has a term remaining
to maturity in excess of five years, unless the Council has granted express authority to make that
investment either specifically or as a part of an investment program approved by the Council no
less than three months prior to the investment. Reserve funds may be invested in securities
exceeding five years if the maturity of such investments is made to coincide as nearly as
practicable with the expected use of the funds.
PERFORMANCE EVALUATION
Investment performance is continually monitored and evaluated by the City Treasurer.
Investment performance statistics and activity reports are generated on a quarterly basis for
presentation to the oversight (audit) committee, City Manager and City Council. Yield on the
City’s investment portfolio is of secondary importance compared to the safety and liquidity
objectives described above. The City’s investment portfolio shall be designed to attain a market
average rate of return through economic cycles. The Treasurer shall monitor and evaluate the
portfolio’s performance relative to the chosen market benchmark(s), which will be included in
the Treasurer’s quarterly report. The Treasurer shall select an appropriate, readily available index
to use as a market benchmark. Whenever possible, and consistent with risk limitations as defined
herein and prudent investment principles, the Treasurer shall seek to augment return above the
market average rate of return. The City may select alternative benchmarks for identified pools of
City funds that have different objectives.
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DELEGATION OF AUTHORITY
Authority to manage the City’s investment program is derived from California Government
Code, Sections 41006 and 53600 et seq. The Treasurer is responsible for investment management
decisions and activities per City Council Resolution.
The Treasurer shall designate a staff person as a liaison/deputy in the event circumstances require
timely action and the Treasurer is not present.
No officer or designee may engage in an investment transaction except as provided under terms
of this policy and the procedures by the Treasurer and approved by the City Manager/Council.
The Treasurer shall be responsible for all transactions undertaken and shall establish a system of
controls to regulate the activities of subordinate officials.
If an investment adviser is retained by the City, the investment adviser, registered under the
Investment Advisers Act of 1940, must have at least five yearsʹ experience investing in the
securities and obligations authorized by California Government Code 53601 subdivisions (a) to
(k), inclusive, and subdivisions (m) to (q), inclusive, and with assets under management in excess
of five hundred million dollars ($500,000,000). External investment advisers may be granted
discretion to purchase and sell investment securities in accordance with this investment policy.
The City’s overall investment program shall be designed and managed with a degree of
professionalism that is worthy of the public trust. The City recognizes that in a diversified
portfolio, occasional measured losses may be inevitable and must be considered within the
context of the overall portfolio’s return and the cash flow requirements of the City.
OVERSIGHT COMMITTEE
An audit committee consisting of appropriate internal and external members, appointed by the
City Council, shall be established to provide general oversight and direction concerning the
policies related to management of the City’s investment pool, OPEB trust, and Pension Rate
Stabilization Program trust. The City Treasurer shall serve in a staff and advisory capacity. The
committee shall meet at least quarterly to review policy changes, new legislation and portfolio
status.
ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the investment process shall refrain from personal business
activity that conflicts with proper execution of the investment program, or impairs their ability
to make impartial investment decisions. Additionally the City Treasurer and the Deputy
Treasurer are required to annually file applicable financial disclosures as required by the Fair
Political Practices Commission (FPPC).
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SAFEKEEPING OF SECURITIES
To protect against fraud or embezzlement or losses caused by collapse of an individual securities
dealer, all securities owned by the City shall be held in safekeeping by a third party custodian
acting as agent for the City under the terms of a custody agreement. All trades executed by a
dealer will settle delivery versus payment (DVP) through the City’s safekeeping agent. In order
to verify investment holdings, an external auditor, on an annual basis, shall independently verify
securities held in custody for the City. Additionally, the City Treasurer shall include a listing of
holdings provided by the City’s custodian to the quarterly investment report as verification
between annual reviews by the external auditor.
The only exceptions to the foregoing shall be depository accounts and securities purchases made with: (i)
local government investment pools; (ii) time certificates of deposit, and, (iii) money mutual funds, since the
purchased securities are not deliverable. All other exceptions to this safekeeping policy must be approved
by the City Treasurer in written form and included in the quarterly report to City Council.
INTERNAL CONTROL
Separation of duties between the Treasurer’s function and Finance is designed to provide proper
internal controls to prevent the potential for converting assets or concealing transactions. Dual
transaction controls, separate and independent notifications, and reports provided by financial
institutions shall be used to help implement these controls.
Wire transfers shall be approved prior to being submitted to the financial institution. Wire
transfers initiated by Treasury staff must be reconfirmed by the appropriate financial institution
to Finance staff. Proper documentation is required for each investment transaction and must
include a broker trade confirmation and a cash disbursement wire transfer confirmation. Timely
bank reconciliation is conducted to ensure proper handling of all transactions. The investment
portfolio and all related transactions are reviewed and balanced to appropriate general ledger
accounts by Finance staff on a monthly basis.
An annual agreed‐upon procedures engagement in accordance with the attestation standards
established by the American Institute of Certified Public Accountants shall be conducted by an
auditor solely to assist management in determining the City’s compliance with this investment
policy. At the conclusion of such engagement, the agreed‐upon procedures report detailing all
procedures performed and findings noted (if applicable) shall be provided to the Audit
Committee of the City.
REPORTING
Monthly transaction reports will be submitted by the Treasurer to the City Council within 30 days
of the end of the reporting period in accordance with California Government Code Section 53607.
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The City Treasurer shall also prepare a quarterly investment report, including a succinct
management summary that provides a clear picture of the status of the current investment
portfolio. The report will be prepared in a manner that will report all information required under
this policy and as recommended by California Government Code. The Treasurer will submit the
report to Council no later than the second regular council meeting, or approximately 45 days
following the end of the quarter covered by the report.
AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND QUALIFIED
BROKER/DEALERS
To the extent practicable, the Treasurer shall endeavor to complete investment transactions using
a competitive bid process whenever possible. The City’s Treasurer will determine which financial
institutions are authorized to provide investment services to the City. It shall be the City’s policy
to purchase securities only from authorized institutions and firms.
The Treasurer shall maintain procedures for establishing a list of authorized broker/dealers and
financial institutions which are approved for investment purposes that are selected through a
process of due diligence as determined by the City. Due inquiry shall determine whether such
authorized broker/dealers, and the individuals covering the City are reputable and trustworthy,
knowledgeable and experienced in Public Agency investing and able to meet all of their financial
obligations. These institutions may include ʺprimaryʺ dealers or regional dealers that qualify
under Securities and Exchange Commission (SEC) Rule 15c3‐1 (uniform net capital rule).
In accordance with Section 53601.5, institutions eligible to transact investment business with the
City include:
Primary government dealers as designated by the Federal Reserve Bank and non‐primary
government dealers.
Nationally or state‐chartered banks.
The Federal Reserve Bank.
Direct issuers of securities eligible for purchase.
Selection of financial institutions and broker/dealers authorized to engage in transactions will be
at the sole discretion of the City, except where the City utilizes an external investment adviser in
which case the City may rely on the adviser for selection.
All financial institutions which desire to become qualified bidders for investment transactions
(and which are not dealing only with the investment adviser) must supply the Treasurer with
audited financials and a statement certifying that the institution has reviewed the California
Government Code, Section 53600 et seq. and the City’s investment policy. The Treasurer will
conduct an annual review of the financial condition and registrations of such qualified bidders.
Public deposits will be made only in qualified public depositories as established by State law.
Deposits will be insured by the Federal Deposit Insurance Corporation, or, to the extent the
amount exceeds the insured maximum, will be collateralized in accordance with State law.
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Selection of broker/dealers used by an external investment adviser retained by the City will be at
the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be
selected on a competitive basis and their bid or offering prices shall be recorded. If there is no
other readily available competitive offering, best efforts will be made to document quotations for
comparable or alternative securities. When purchasing original issue instrumentality securities,
no competitive offerings will be required as all dealers in the selling group offer those securities
at the same original issue price.
COLLATERAL REQUIREMENTS
CERTIFICATES OF DEPOSIT (CDS). The City shall require any commercial bank or savings and
loan association to deposit eligible securities with an agency of a depository approved by the
State Banking Department to secure any uninsured portion of a Non‐Negotiable Certificate of
Deposit. The value of eligible securities as defined pursuant to California Government Code,
Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of
the CD if the securities are classified as mortgages and 110% of the face value of the CD for all
other classes of security.
COLLATERALIZATION OF BANK DEPOSITS. This is the process by which a bank or financial
institution pledges securities, or other deposits for the purpose of securing repayment of
deposited funds. The City shall require any bank or financial institution to comply with the
collateralization criteria defined in California Government Code, Section 53651.
REPURCHASE AGREEMENTS. The City requires that Repurchase Agreements be collateralized
only by securities authorized in accordance with California Government Code:
The securities which collateralize the repurchase agreement shall be priced at Market
Value, including any Accrued Interest plus a margin. The Market Value of the securities
that underlie a repurchase agreement shall be valued at 102% or greater of the funds
borrowed against those securities.
Financial institutions shall mark the value of the collateral to market at least monthly and
increase or decrease the collateral to satisfy the ratio requirement described above.
The City shall receive monthly statements of collateral.
AUTHORIZED INVESTMENTS
Investment of City funds is governed by the California Government Code Sections 53600 et
seq. Within the context of the limitations, the following investments are authorized, subject
to the restrictions below. In the event a discrepancy is found between this policy and the
Code, the more restrictive parameters will take precedence. Percentage holding limits listed
in this section apply at the time the security is purchased.
Any investment currently held at the time the policy is adopted which does not meet the new
policy guidelines can be held until maturity and shall be exempt from the current policy. At
the time of the investment’s maturity or liquidation, such funds shall be reinvested only as
provided in the current policy.
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An appropriate risk level shall be maintained by primarily purchasing securities that are of
high quality, liquid, and marketable. The portfolio shall be diversified by security type and
institution to avoid incurring unreasonable and avoidable risks regarding specific security
types or individual issuers.
1. United States Treasury Bills, Bonds, and Notes or those for which the full faith and credit
of the United States are pledged for payment of principal and interest. There is no
percentage limitation of the portfolio that can be invested in this category, although a five‐
year maturity limitation is applicable.
2. Obligations issued by Federal agencies or United States Government‐Sponsored
Enterprise obligations, participations, or other instruments, including those issued by or
fully guaranteed as to principal and interest by federal agencies or United States
government‐sponsored enterprises. There are no limits on the dollar amount or
percentage that the City may invest in Federal Agency or Government‐Sponsored
Enterprises (GSEs), provided that:
No more than 25% of the portfolio may be invested in any single Agency/GSE
issuer.
The maximum maturity does not exceed five (5) years.
The maximum percent of agency callable securities in the portfolio will be 20%.
3. Banker’s Acceptances (bills of exchange or time drafts drawn on and accepted by
commercial banks) may not exceed 180 days to maturity or 40% of the portfolio.
They are issued by institutions which have short‐term debt obligations
rated “A‐1” or its equivalent or better by at least one NRSRO; or long‐term
debt obligations which are rated in a rating category of “A” or its
equivalent or better by at least one NRSRO.
No more than 5% of the portfolio may be invested in any single issuer.
4. Local Agency Investment Fund (LAIF), which is a State of California managed
investment pool, may be used up to the maximum permitted by California state law.
LAIF’s investments in instruments prohibited by or not specified in the City’s policy
do not exclude the investment in LAIF itself from the City’s list of allowable
investments, provided LAIF’s reports allow the Treasurer to adequately judge the risk
inherent in LAIF’s portfolio..
5. Commercial paper issued by corporations organized and operating in the
United States having assets in excess of $500,000,000, ranked “A‐1” or its
equivalent or better by at least one Nationally Ranked Statistical Rating
Organization (NRSRO), issued by corporations which have long‐term obligations
rated in a rating category of “A” or its equivalent or better by one NRSRO.
Purchases of eligible commercial paper may not exceed 270 days to maturity nor
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represent more than 10% of the outstanding paper of the issuing corporation.
Purchases of commercial paper may not exceed 25% of the portfolio. Under a
provision sunsetting on January 1, 2026, no more than 40% of the City’s portfolio
may be invested in Commercial Paper if the City’s investment assets under
management are greater than $100,000,000. No more than 10% of the total
investments may be invested the in commercial paper and medium term notes of
any single issuer.
6. Negotiable Certificates of Deposits issued by nationally or state‐chartered banks, state
or federal savings associations, or state or federal credit unions, or by a federally
licensed or state‐licensed branch of a foreign bank. Purchases of Negotiable
Certificates of Deposit may not exceed 30% of the portfolio. No more than 5% of the
portfolio may be invested in any single issuer. A maturity limitation of five years is
applicable. The amount of the NCD insured up to the FDIC limit does not require any
credit ratings. Any amount above the FDIC insured limit must be issued by
institutions which have short‐term debt obligations rated “A‐1” or its equivalent or
better by at least one NRSRO; or long‐term obligations rated in a rating category of
“A” or its equivalent or better by at least one NRSRO.
7. Repurchase agreements that specify terms and conditions may be transacted with banks
and broker dealers. The maturity of the repurchase agreements shall not exceed one year.
The market value of the securities used as collateral for the repurchase agreements shall
be monitored by the investment staff and shall not be allowed to fall below 102% of the
value of the repurchase agreement. A PSA Master Repurchase Agreement is required
between the City of Cupertino and the broker/dealer or financial institution for all
repurchase agreements transacted.
8. Reverse repurchase agreements are not authorized.
9. Certificates of Deposit (time deposits), non‐negotiable and collateralized in accordance
with the California Government Code, may be purchased through banks, savings and
loan associations, or credit unions. Within a limit of 30% of the portfolio, these institutions
may use a private sector entity to assist in the placement of the time deposits under the
conditions specified by the Government Code.
10. Medium Term Corporate Notes issued by corporations organized and operating in
the United States or by depository institutions licensed by the United States or any
state and operating within the United States, with a maximum maturity of five years
may be purchased. Securities eligible for investment shall be rated in the rating
category of “A” or better by at least one NRSRO. Purchase of medium term note s
may not exceed 30% of the portfolio. No more than 10% of the total investments may
be invested in the commercial paper and medium term notes of any single issuer.
11. Municipal securities, including obligations of the City, the State of California, and any
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local agency within the State of California, provided that:
The securities are rated in a rating category of “A” or its equivalent or better
by at least one NRSRO.
No more than 5% of the portfolio may be invested in any single issuer.
No more than 30% of the portfolio may be in Municipal Securities.
The maximum maturity does not exceed five (5) years.
12. Municipal securities (Registered Treasury Notes or Bonds) of any of the other 49 states
in addition to California, including bonds payable solely out of the revenues from a
revenue‐producing property owned, controlled, or operated by a state or by a
department, board, agency, or authority of any of the other 49 states, in addition to
California.
The securities are rated in a rating category of “A” or its equivalent or better
by at least one nationally recognized statistical rating organization
(“NRSRO”).
No more than 5% of the portfolio may be invested in any single issuer.
No more than 30% of the portfolio may be in Municipal Securities.
The maximum maturity does not exceed five (5) years.
13. Asset‐backed, mortgage‐backed, mortgage pass‐through securities, and collateralized
mortgage obligations, provided that:
The securities are rated in a rating category of “AA” or its equivalent or better by
a NRSRO.
No more than 20% of the total portfolio may be invested in these securities.
No more than 5% of the portfolio may be invested in any single Asset‐Backed or
Commercial Mortgage security issuer. There is no issuer limitation on any
Mortgage security where the issuer is the US Treasury or a Federal Agency/GSE.
The maximum legal final maturity does not exceed five (5) years.
14. Supranationals, provided that:
Issues are US dollar denominated senior unsecured unsubordinated obligations
issued or unconditionally guaranteed by the International Bank for Reconstruction
and Development, International Finance Corporation, or Inter‐American
Development Bank.
The securities are rated in a rating category of “AA” or its equivalent or better by
a NRSRO.
No more than 30% of the total portfolio may be invested in these securities.
No more than 10% of the portfolio may be invested in any single issuer.
The maximum maturity does not exceed five (5) years.
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15. Various daily money market funds administered for or by trustees, paying agents and
custodian banks contracted by the City of Cupertino may be purchased as allowed under
State of California Government Code. Only funds holding U.S. Treasury obligations,
Government agency obligations, or repurchase agreements collateralized by U.S.
Treasury or Government agency obligations can be utilized and may not exceed 20% of
the cost value of the portfolio.
16. Ineligible investments are those that are not described herein, including but not limited
to, common stocks and long‐term (over five years in maturity) notes and bonds are
prohibited from use in this portfolio. It is noted that special circumstances arise that
necessitate the purchase of securities beyond the five‐year limitation. On such occasions,
requests must be approved by City Council prior to purchase. Additionally:
State law notwithstanding, any investments not specifically described
herein are prohibited, including, but not limited to futures and options.
In accordance with Government Code, Section 53601.6, investment in
inverse floaters, range notes, or mortgage derived interest‐only strips is
prohibited.
Investment in any security that could result in a zero‐interest accrual if held
to maturity is prohibited. Under a provision sunsetting on January 1, 2026,
securities backed by the U.S. Government that could result zero‐ or
negative‐interest accrual if held to maturity are permitted.
Trading securities for the sole purpose of speculating on the future
direction of interest rates is prohibited.
Purchasing or selling securities on margin is prohibited.
The use of reverse repurchase agreements, securities lending or any other
form of borrowing or leverage is prohibited.
The purchase of foreign currency denominated securities is prohibited.
RISK MANAGEMENT AND DIVERSIFICATION
Mitigating Credit Risk in the Portfolio
Credit risk is the risk that a security or a portfolio will lose some or all its value due to a
real or perceived change in the ability of the issuer to repay its debt. The City will
mitigate credit risk by adopting the following strategies:
The diversification requirements included in the “Authorized Investments” section of
this policy are designed to mitigate credit risk in the portfolio.
No more than 5% of the total portfolio may be deposited with or invested in
securities issued by any single issuer unless otherwise specified in this policy.
The City may elect to sell a security prior to its maturity and record a capital gain
or loss in order to manage the quality, liquidity or yield of the portfolio in
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response to market conditions or City’s risk preferences.
If the credit ratings of any security owned by the City are downgraded to a level
below the quality required by this investment policy, it will be the City’s policy
to review the credit situation and make a determination as to whether to sell or
retain such securities in the portfolio.
If a security is downgraded, the Treasurer will use discretion in determining
whether to sell or hold the security based on its current maturity, the economic
outlook for the issuer, and other relevant factors.
If a decision is made to retain a downgraded security in the portfolio, its presence
in the portfolio will be monitored and reported monthly to the City Council.
Mitigating Market Risk in the Portfolio
Market risk is the risk that the portfolio value will fluctuate due to changes in the general
level of interest rates. The City recognizes that, over time, longer‐term portfolios have
the potential to achieve higher returns. On the other hand, longer‐term portfolios have
higher volatility of return. The City will mitigate market risk by providing adequate
liquidity for short‐term cash needs, and by making longer‐term investments only with
funds that are not needed for current cash flow purposes.
The City further recognizes that certain types of securities, including variable rate
securities, securities with principal paydowns prior to maturity, and securities with
embedded options, will affect the market risk profile of the portfolio differently in
different interest rate environments. The City, therefore, adopts the following strategies
to control and mitigate its exposure to market risk:
The City will maintain a minimum of six months of budgeted operating
expenditures in short term investments to provide sufficient liquidity for
expected disbursements.
The maximum stated final maturity of individual securities in the portfolio will
be five (5) years, except as otherwise stated in this policy.
The duration of the portfolio will generally be approximately equal to the
duration (typically, plus or minus 20%) of a Market Benchmark, an index selected
by the City based on the City’s investment objectives, constraints and risk
tolerances.
DEPOSITS
To be eligible to receive local agency money, a bank, savings association, federal association, or
federally insured industrial loan company shall have received an overall rating of not less than
“satisfactory” in its most recent evaluation by the appropriate federal financial supervisorial
agency of its record of meeting the credit needs of California’s communities.
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INTEREST EARNINGS
All moneys earned and collected from investments authorized in this policy shall be allocated
monthly to various fund accounts based on the cash balance in each fund as a percentage of the
entire pooled portfolio.
REVIEW OF INVESTMENT PORTFOLIO
The Treasurer shall periodically, but no less than quarterly, review the portfolio to identify
investments that do not comply with this investment policy and establish protocols for reporting
major and critical incidences of noncompliance to the City Council.
POLICY REVIEW
The City of Cupertino’s investment policy shall be adopted by resolution of the City Council on
an annual basis. This investment policy shall be reviewed at least annually to ensure its
consistency with the overall objectives of preservation of principal, liquidity, and yield, and its
relevance to current law and financial and economic trends.
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GLOSSARY OF INVESTMENT TERMS
AGENCIES. Shorthand market terminology for any obligation issued by a government‐
sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not
guaranteed by the full faith and credit of the US government. Examples are:
FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural
industry. FFCB issues discount notes and bonds.
FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market. FHLB
issues discount notes and bonds.
FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity
in the housing market. FHLMC, also called “FreddieMac” issues discount notes, bonds and
mortgage pass‐through securities.
FNMA. Like FHLB and Freddie Mac, the Federal National Mortgage Association was established
to provide credit and liquidity in the housing market. FNMA, also known as “Fannie Mae,” issues
discount notes, bonds and mortgage pass‐through securities.
GNMA. The Government National Mortgage Association, known as “Ginnie Mae,” issues
mortgage pass‐through securities, which are guaranteed by the full faith and credit of the US
Government.
PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not
guaranteed by the full faith and credit of the US government.
TVA. The Tennessee Valley Authority provides flood control and power and promotes
development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently
issues discount notes and bonds.
ASKED. The price at which a seller offers to sell a security.
ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by
pools of revolving lines of credit.
AVERAGE LIFE. In mortgage‐related investments, including CMOs, the average time to expected
receipt of principal payments, weighted by the amount of principal expected.
BANKER’S ACCEPTANCE. A money market instrument created to facilitate international trade
transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to
the bank which “accepts” the obligation to pay the investor.
BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market
index, which reflects the mix of securities allowed under a specific investment policy.
BID. The price at which a buyer offers to buy a security.
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BROKER. A broker brings buyers and sellers together for a transaction for which the broker
receives a commission. A broker does not sell securities from his own position.
CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its
maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an
issuer issues securities, it will likely call its current securities and reissue them at a lower rate of
interest. Callable securities have reinvestment risk as the investor may receive its principal back
when interest rates are lower than when the investment was initially made.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a
certificate. Large denomination CDs may be marketable.
CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SYSTEM (CDARS). A private placement
service that allows local agencies to purchase more than $250,000 in CDs from a single financial
institution (must be a participating institution of CDARS) while still maintaining FDIC insurance
coverage. CDARS is currently the only entity providing this service. CDARS facilitates the trading
of deposits between the California institution and other participating institutions in amounts that
are less than $250,000 each, so that FDIC coverage is maintained.
COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or
repurchase agreement. Also, securities pledged by a financial institution to secure deposits of
public monies.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds that redistribute the
cash flows of mortgage securities (and whole loans) to create securities that have different levels
of prepayment risk, as compared to the underlying mortgage securities.
COMMERCIAL PAPER. The short‐term unsecured debt of corporations.
COST YIELD. The annual income from an investment divided by the purchase cost. Because it
does not give effect to premiums and discounts which may have been included in the purchase
cost, it is an incomplete measure of return.
COUPON. The rate of return at which interest is paid on a bond.
CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely
manner due to changes in the condition of the issuer.
CURRENT YIELD. The annual income from an investment divided by the current market value.
Since the mathematical calculation relies on the current market value rather than the investor’s
cost, current yield is unrelated to the actual return the investor will earn if the security is held to
maturity.
DEALER. A dealer acts as a principal in security transactions, selling securities from and buying
securities for his own position.
DEBENTURE. A bond secured only by the general credit of the issuer.
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DELIVERY VS. PAYMENT (DVP). A securities industry procedure whereby payment for a
security must be made at the time the security is delivered to the purchaser’s agent.
DERIVATIVE. Any security that has principal and/or interest payments which are subject to
uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any
security which represents a component of another security which has been separated from other
components (“Stripped” coupons and principal). A derivative is also defined as a financial
instrument the value of which is totally or partially derived from the value of another instrument,
interest rate, or index.
DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the
cost is below par. Some short‐term securities, such as T‐bills and banker’s acceptances, are known
as discount securities. They sell at a discount from par, and return the par value to the investor at
maturity without additional interest. Other securities, which have fixed coupons, trade at a
discount when the coupon rate is lower than the current market rate for securities of that maturity
and/or quality.
DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid
excessive exposure to any one source of risk.
DURATION. The weighted average time to maturity of a bond where the weights are the present
values of the future cash flows. Duration measures the price sensitivity of a bond to changes in
interest rates. (See modified duration).
FEDERAL FUNDS RATE. The rate of interest charged by banks for short‐term loans to other
banks. The Federal Reserve Bank through open‐market operations establishes it.
FEDERAL OPEN MARKET COMMITTEE. A committee of the Federal Reserve Board that
establishes monetary policy and executes it through temporary and permanent changes to the
supply of bank reserves.
LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay
earnings at a rate higher than the cost of borrowing.
LIQUIDITY. The speed and ease with which an asset can be converted to cash.
LOCAL AGENCY INVESTMENT FUND (LAIF). A voluntary investment fund open to
government entities and certain non‐profit organizations in California that is managed by the
State Treasurer’s Office.
LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State
Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers
Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market
mutual funds.
MAKE WHOLE CALL. A type of call provision on a bond that allows the issuer to pay off the
remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a
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lump sum payment that equals the net present value (NPV) of future coupon payments that will
not be paid because of the call. With this type of call, an investor is compensated, or ʺmade whole.ʺ
MARGIN. The difference between the market value of a security and the loan a broker makes
using that security as collateral.
MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market
conditions or interest rates.
MARKET VALUE. The price at which a security can be traded.
MARKING TO MARKET. The process of posting current market values for securities in a
portfolio.
MATURITY. The final date upon which the principal of a security becomes due and payable.
MEDIUM TERM NOTES. Unsecured, investment‐grade senior debt securities of major
corporations which are sold in relatively small amounts on either a continuous or an intermittent
basis. MTNs are highly flexible debt instruments that can be structured to respond to market
opportunities or to investor preferences.
MODIFIED DURATION. The percent change in price for a 100 basis point change in yields.
Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.
MONEY MARKET. The market in which short‐term debt instruments (T‐bills, discount notes,
commercial paper, and banker’s acceptances) are issued and traded.
MORTGAGE PASS‐THROUGH SECURITIES. A securitized participation in the interest and
principal cash flows from a specified pool of mortgages. Principal and interest payments made
on the mortgages are passed through to the holder of the security.
MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and
operating expenses.
MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a set
of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested
in various types of domestic and/or international stocks, bonds, and money market instruments,
as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs
associated with investing in mutual funds are higher than the investor can obtain through an
individually managed portfolio.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO).
A credit rating agency that the Securities and Exchange Commission in the United States uses for
regulatory purposes. Credit rating agencies provide assessments of an investmentʹs risk. The
issuers of investments, especially debt securities, pay credit rating agencies to provide them with
ratings. The three most prominent NRSROs are Fitch, S&P, and Moodyʹs.
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NEGOTIABLE CD. A short‐term debt instrument that pays interest and is issued by a bank,
savings or federal association, state or federal credit union, or state‐licensed branch of a foreign
bank. Negotiable CDs are traded in a secondary market and are payable upon order to the bearer
or initial depositor (investor).
PREMIUM. The difference between the par value of a bond and the cost of the bond, when the
cost is above par.
PREPAYMENT SPEED. A measure of how quickly principal is repaid to investors in mortgage
securities.
PREPAYMENT WINDOW. The time period over which principal repayments will be received on
mortgage securities at a specified prepayment speed.
PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal
Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that
participates for statistical reporting purposes in compiling data on activity in the U.S.
Government securities market.
PRUDENT PERSON (PRUDENT INVESTOR) RULE. A standard of responsibility which applies
to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care,
skill, prudence and diligence, under the circumstances then prevailing, that a prudent person,
acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise
of like character and with like aims to accomplish similar purposes.”
REALIZED YIELD. The change in value of the portfolio due to interest received and interest
earned and realized gains and losses. It does not give effect to changes in market value on
securities, which have not been sold from the portfolio.
REGIONAL DEALER. A financial intermediary that buys and sells securities for the benefit of its
customers without maintaining substantial inventories of securities and that is not a primary
dealer.
REPURCHASE AGREEMENT. Short‐term purchases of securities with a simultaneous
agreement to sell the securities back at a higher price. From the seller’s point of view, the same
transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the
customer’s name.
STRUCTURED NOTE. A complex, fixed income instrument, which pays interest, based on a
formula tied to other interest rates, commodities or indices. Examples include inverse floating
rate notes which have coupons that increase when other interest rates are falling, and which fall
when other interest rates are rising, and ʺdual index floaters,ʺ which pay interest based on the
relationship between two other interest rates ‐ for example, the yield on the ten‐year Treasury
note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing
interest rate swap agreements.
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SUPRANATIONAL. A Supranational is a multi‐national organization whereby member states
transcend national boundaries or interests to share in the decision making to promote economic
development in the member countries.
TOTAL RATE OF RETURN. A measure of a portfolio’s performance over time. It is the internal
rate of return, which equates the beginning value of the portfolio with the ending value; it
includes interest earnings, realized and unrealized gains, and losses in the portfolio.
U.S. TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the full
faith and credit of the United States. Treasuries are considered to have no credit risk, and are the
benchmark for interest rates on all other securities in the US and overseas. The Treasury issues
both discounted securities and fixed coupon notes and bonds.
TREASURY BILLS. All securities issued with initial maturities of one year or less are issued as
discounted instruments, and are called Treasury bills. The Treasury currently issues three‐ and
six‐month T‐bills at regular weekly auctions. It also issues “cash management” bills as needed to
smooth out cash flows.
TREASURY NOTES. All securities issued with initial maturities of two to ten years are called
Treasury notes, and pay interest semi‐annually.
TREASURY BONDS. All securities issued with initial maturities greater than ten years are called
Treasury bonds. Like Treasury notes, they pay interest semi‐annually.
VOLATILITY. The rate at which security prices change with changes in general economic
conditions or the general level of interest rates.
YIELD TO MATURITY. The annualized internal rate of return on an investment which equates
the expected cash flows from the investment to its cost.
Revisions:
City Manager’s signature: _______________________________
Date: _______________________________
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Revisions:
City Manager’s signature: _______________________________
Date: _______________________________