HomeMy WebLinkAbout0280.094~) J • • ,-
May 12, 1994
THE HOIIDRABL& CITY COUNCIL
Palo Alto l California
Attention: Finance'Committoe
Members of "the Council:
Report i!LQ):.:ief
BUDGET C) ! II.! -95
The city of Palo Alto statement of Investment policy ,Attachment A)
requires review by Council annually I as part of thn budget process.
Staff is proposing changes to the current policy for the 1994··95
Budget.
The current city of Palo Alto Statement of Investment Policy limits
the Treasury Hanager to making transfers of no more than $3 million
in a day from the City's general account to anyone financial
institution. It also Ihdts the: investment authority of tho
Tr~asury Division Financial Analyst. In order to increase the
effectiveness of the Treasury Division, staff is recommendinq an
incr~ase in the Treasury Manager and Treasury Financial Analy~t's
trans.fer authorization limit to $5 million and to authorize thG
Financial Analyst to purchas-=, securities with the same limitations
as the Treasury Manager. In addition, under the Specific
Investment Strategy section of the Investment Policy, staff
recommends illcluding a limit of no more than 10 percent of the
portfolio in government agency step-up securities.
Background
The city of Palo Alto statement of Investment Policy (CNR:563:93)
stipulates that,
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Ulrhe Director of Finc:lnce 01' desi9neo is al..lthori?cd to make all
investment transactions allowed by the Statement of Investment
Policy. He or she may authorize the Treasury Manager or
Financial Analyst to enter into investments within clearly
~peclfied parameters.
''In all circumstances approval from the Director of Finance is
required b_efore se.11ing securities tro[T1. the City's pcrrtfolio.
Tha: Treasury Manager may also transfer no more than $3 inilJ.ion
in a day from the City's (jeneral account to anyone financial
institution, without the prior approval of the Director of
Finance. '
"The Financial Analyst I!lay transfer up to $1 million between
the City's gener«l account, the Local Agency Investment Fund
(I.J\If') and any approved mutual fund in any day."
Th& second paragraph of this portion of the Investment Policy
limits the Treasury Manager to transfers of no more than $3 million
in a day from the City's general account to anyone financial
institution, without thp-prior approval of the Director of Finance.
The last paragraph limits the authority of the Financial Analyst to
transfers of $1 mil Lion to LAU' or an approved mutual fund. All
other investment decisions must be made by the Treasury Manager.
F.2rt(oliQ Size
The size of the portfolio has increased from $120 million in May
199:t, to $170 million in April 1994. The increase has reSUlted in
large amounts of money (over $3 million) maturing, or accumulating
_in a short period of' time. consequently, many of the City's
investments are over the $3 million limitation. Many times, this
results in staff having to invest over a t\li'o-to-three day period.
spreadIng the investment over several days increases the cost of
securities purchased. Often, cost increases are as much as $313
per nillion tor each extra day, because the brokers want to protect
themselves froUt financial movements in the -market. In addition,
spreading the investments increases the effort involved in
administ.t"ation of the invest.ment "process. There is the need to
move invested funds to overnight money market accounts temporarily,
to avoid having lat'ge balances in the city's bank account, thereby
losing interest-earning opportunities. Thi5 requires additional
paperwork to document each transaction, the need to make additional
wire transfers, and the need to reconcile additional securities.
To ensure the City does not incur excess cost as a result of
investing over several days and to minimize the administrative
effort involved in each investment transaction, staff recommends
council increase the transfer limit to $5 million.
CMR:280:94
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Durin9 the Uughes, Heiss organizational Revie~ ... , the position
responsibilities 1n the 'l'reasury Division were (lvaluated. Althouqh
the Financo Depat"trnoht has not finalized any associated
or9~n12at1onal chan9~sf it became apparent that some immediate
changes could ba DAde to position responsibilities to improve the
operation of ths Tre~sury Division.
The Treasury Division financial Analyst is currently responsible
for the analysis of investment instruments, including the review of
tho finfiinoial stnbiUty of sacurities. The Financial Analyst is
also tespon$lblc (or obtaIning quotes and neqotiatinq rates with
tinanoial institutions and broK.ers on investmont instl·u~.ents. The
Financial Analyst, however, does not have the authority to purchase
securities ~s~d on his or her knowledge of the associated
..£nvest~ant: instruments and the rates negotiated. The Financial
1\n.tlilyst nust review the quotes wLth tho Treasury Manager, who is
then al.lthoriz.ed to purchase the security. Staff believes that this
pr(}Cess could be inproved bj+ allowing the Financial Analyst the
authority to obtain quotes, negotiat,e rates, and purchase
securltic$, in accordan-ce with the Investment Pollcy parameters.
All invostM.onts nade by the Fill2l;ncial Analyst .... ·ill be reviewed by
the Assi$tant FinAnce DiL"ector to :r:1oni tor cOlilpliance with the
City's rnvost~ent Policy.
T.ha current Investment. policy lit1lits callable agency securities to
no more than 10 perc,.mt of the portfolio. Callable securities are
defined 88 fi~ed intel'cot rate government agency secIJrities that
qivQ \::he issuing ;;H}flOcy tho option of returning the invested funds
at a spocific point in ti~Q.
In early 1994, multi stop-up securities were introduced to
investors.. These are qoveri\lltent agency securities wl,ere interest
rates increase (listep-upil at pre-set intervals) either semi
annually or annually. These seclIl'ities have a cal.1able feature
that allows the issuing age.ncy to return t.he invested funds a·t each
pre-set interval, "but beoau·se they also have built-in rate
increases, they do not follow the traditional definition of
callable securities. III order to recognize this new investment
instrui":'Ient introduced into the marketplace, staff recommends the
addition of a R?:parate limitation in the Investment Policy of no
more th"n 10 percent of the portfolio for investment in multi step
ups.
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IPPlot ot Hodityin~~
The increase in transfer lImitations to $5 million will not change
the city'. investmont strategies or practices, It will sbply
facilitate the investment of larger-ataounts of :monay, needed m01'e
frequently} due to the increased si~e of t.he portfolio. In
addition, the reconmended n'.cdif1catioll to the, authorlty of the
Treasury }'.inancial lHHlIlyst will allow both the Troasury Jianagar and
the Financial Analyst to enter into inv<tstnents, in accordanco wlth
policy paramet~rs, This will Increase flexibility in tho Treasury
oivision, and eliminate, duplicAte efforte bet .... een the Treasury
Manager and the Financial lmC11yst. This 1Il.e>d1tlcation wl11 not
chango the safeguards containaQ In the Investment Policy to ensure
tho safety and liquidity of inYsAtnent&. AU cont.rols cur-r&ntly in
place regarding the Treasury. Hana91!H' would also .opply to tho
Financial Analystl including the review by tho Accountinq Division
of ,all investMent transactions.
The limitation of no More than 10 percent of the port.tolio in ::'Iulti
step-up government agency securiti.es ""ill help to ensure that the
Investment policy suppot'ts divorsifi(:lIt.lo~l of tho Cit.y's portfolio
and, at the salno ti~e, protects the portfolio fron intorest i'ate
movements.
staff recommends that COUncil approve the statc~ent of ,Investnont
Policy, which will incroase the ,transfer authorization lil':lit of the
Treasury Manager and Treasury t~lnancial lmal)!st to no more than $5
Million in a day frol!l the City's general accQunt to tiny one
financial institution. staft also recommends removing the
paragr(\ph limiting th~ invostFU(lnt authority of t.ho Financial
Analyst, as shown on pago 2 of Atta,chroent-A. and tho nddition of a
limit of no more than 10 percent of the por-tfoiio in Huiti step-up
gove:rnttlent agency s~curities.
Respectfully submitted,
,~~ -(Q C "-V"<-q; J
MELiSSA CAVALLO
Assistant Finance Dire'ctor
C)!R'280:94
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At.tachment A: City of Palo Alto Statement of Investment Policy
Related Staff Reports; CMR;563:93
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AnACHMENT A
CITY OF PAr.o ALTO
statement of Investment Policy
A$ a charter city, Palo Alto oporates its pooled idle cash
investments under the prudent investor rule and in conformance with
california law. Investments are made with" the judgement and care,
under the. circumstances then prevailing, which investors with
prudence, discretion, and intelliqence' would make considerinq the
safety of their"capital as well as probable income. This affords
the City a broad spectrum of investment opportunities, 50 long as
the investment is deemed prudent and is allowable unde~ current
legislation of the state of California and the charter. of the City
of Palo Alto.
Palo Alto strives to maintain the level of investment of all idle
funds as near 100 percent as possible, through daily and projected
cash flow determinations. Investments are made so that maturities
match or precede cash nneds of the city.
PHILOSOPHY
The basic premise underlying Palo Alto's investment philosophy is
to insure that SUfficient money is always available to meet current
expenditures.
The city is able to take advantage of the relatively large reserve
balances maintained by its utilities, Which. allow it to take
advantage of the general tendency of the market to provide a higher
return for longer-term investTllents ,known as liquidity preference) •
up to 20 percent of the portfolio may be in investments maturing in
more than five years. Consequently, in the long run, the City
shOUld average a higher total return tharl most cities without such
reserves to invest.
~he economy, the money n'larkets, and various financial institutions
(such as t~e Federal Reserve System) are monitored carefully to
assess the probable course of interest rates. In a market with
increasing interest rates, the City will tend to invest new cash in
securities with t'elativety shQrter maturities. This will allo ..... the
funds to be available for other investments when the interest rates
are higher.
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MmJ.2lUZ.EQ INVESTMENT PERSOJjl!£1
Idle cash management and .l.nvestment transactions are the
responsibility of the Finance Department.
The Departnent of Finance is und~r the control of the DIrector of
Finance, ~ho is accountable to the city Manager. The department is
CO~po8Qd of tha divisions of Administration, Accounting, Treasury,
BU,dgot, Purchasing, and Real Estate, as set forth in sections
2.00.130 through 2.08~190 of the Palo Alto Municipal Code.
The Treasury Division is under the supervision of 8 Treasury
Hanaqar, .... ho is accountable to the Director of Finance. The dL1ties
ot the Treasury Manager include managing the city's portfolio of
treasury investments, remaining accountable for the city's treasury
balance, developing and monitoring the city's cash flow model and
doveloping long-term revenue and financing strategies and
forecasts.
A Financial An~lyst reports to the T.t>casury Manager. The Financial
Annlyst assists the Treasury Manager in the purchase and sale of
aecut'lties. The Financial Analyst also prepares the monthly
report, and dai ly records all illvestment transactions as to the
type of investment, amount, yield! and maturity. Cash flow
projections are prepared as needed.
'i'h~ Director of Finance or desig.)ee is authoriz.ed to make all
investment transactions allowed by the Statement of Investment
Policy. He or she may authorize the Treasury Manager or Financial
.1malyst to enter into investments within clearly specifie.d
paral!'letars.
In all circul'llstances approval from the Director of l,'inance is
required before sellin9 securities from the City's portfolio. The
Tre.asury M"nagor may also transfer no more than $3 million in a da'y
fro~ the City's general account to anyone financial institution,
without the prior ~pproval of the Director of Finance.
The Financial Analyst may transfer up to $1 million between the
C.lty/s general account, the Local Agency Investment Fund {LAIF) ana
any approved l1mtual .fund in any day.
No other person has authority to make investment transactions
without the written authority of the Finance Director.
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Investments are linited to tho follo~ing media,
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9.
10.
Securities of the u.s. GoYornment, or its aq:oncies
Certific.tes ot Deposit (oi' tb,,, Deposits) (CD)
Negotiable certificat •• of Uoposit (NCO)
Banker's Accept~nce Notes (SAl
Comnercial Pap~r
Local Agenoy Inv.stRent FUnd (LAIF)
Short-tcr~ Repurchase Agree=ents (REPO)
City of Palo Alto Pond.
~oney Market Accounts; And
.Mutual t-Uhds IIhich arc 1 hoitQd essentiBlly to the abovt!
investae:ntG end "fur the': dotined in note 9 of Appendix A.
~ppondlx A prQv!des a ~ore dotailed description of each investment
vehicle and its security and liquidity features. Most of the
city's short .. tern Invcstcents \lill bo in securities which pay
principal upon 1~a.tUl·itYI lo:hile long-tern investments :rnay be in
securities which periodically rep"y principal as ,"'al} as interest.
Most of the Cily's invostnents will be at a fixed rate. However,
SQme o£ tho. investr'JGnts: 1!lt'lY be at B v.lriable rate.
criteria for solecting investments are (1n order of importance):
1. Safoty I
2. Liquidity. and
3. Yield.
~eof 8r9kers.~~~eX~
ThQ Financ& Departeent maintains a list of acceptable brokers and
daalera. Any brokor or dealer l'\ust have at least three years
experienca operatinq with California Runicipa}ities, maintain an
inventory of trading. secur1ties of at loast $10 million, and be
approved by the finance Director boforo baing added to the City's
list-of opprove"d bro)o;;ers and dealers. A broker or dealer will be
removed froJl the list should there develop -d history of problems,
(i.e., fail to' doliver securities as pro~iscd, failure to honot
transactions as quoted, or failure to provide reasonable
information) .
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~iew Bnd Rep~ting on Investne~
Monthly, the Finance Department will revle~ perfor~a~ce in relation
to the Council-adopted policy. Monthly, the Depart.ont will ropo"t
to the Council t in a manner approved by the Coullci 1, its
performance-in relation to this policy und fJxplain any devlati.on
from the policy and reco-mmend<:ltions for chzJnges, if 8ny~ Thu
Council will revi.", this policy annually as part of the Budgot
Process. All changes in policy i'I'Iust be approved by the Council
prior to implernontation.
Depending upon the City's financIal situation and condItions in thCl
money markets l the investment strate9Y vill change t~ achieve the"
appropriate balance of safety, liquidity and yield~
Safety
olio mora than 10 percent of the portfolio in collatora
lized CDs of any institution.
-An institution Jllust be ft'derally insured; and
-Have been in operation tor at least three ye~rs, ~ith
positive earnings fOl" at least three of the past four
quarters of operatioh; and
-Report equity in exeC-S5 of 3 pGrcent or assets; and
Report scheduled items not in excess of 1.5 porcont of
assets.
o No more than 30 percent of tho portfolio In neqotiable CDs,
No more than $2 ltdl~J-=-l1 'With anyone ins.titution.
-No negotiable CDs/with tllaturities heyond 90 days.
-An institution"must meet the sa-me safety teste as
collateralized CDs.
o No more than 30% of the portfolio in Banker'S Acceptance
Notes.
No more than $5 million with anyone institution.
o No more than 15 percent of the portfo] io in COlf,mercial
Paper.
No more than $3 million 'With anyone institution.
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o Limit investments exclusively to those stipulated under
typas of investments (specifically, there will be no
investments involving Reverse Purchase Agreements) .
o No new Farm credit securities.
o No more than 2 percent of the portfolio 1n the Guaranteed
Portion of Small Blloiness Administration Notes.
o No more than 15 percent of pot'tfolio in Mutual Funds.
o No more tha.n 10 pe'rcent of portfolio in callable agency
securities.
Liqyidity
Any investment must be eval~'>ated on its market-rate and illterest
rate risk. If the security must be liquidated, it may have a s~all
market and need to be sold at a loss, and if i.ntercst rates
increasft J tha value of an investment may go do ..... n.
The maJ':'kct rate risk is very low for U.S. agencies and BAs since
there is an active market in these securities. It is more
difficult to find a purchaser of NCDs or commercial paper, and most
COs cannot be liquidated without a substantial loss of interest.
Usually, the longer term the investment the larger degree of
interest rate risk. If interest rates increase, it is likely that
the long-term investments would de.crease in value. This is
primarily a factor for securities which have maturities itl e>.:cess
of two years, Since almost all of the investments held by the City
of Palo Alto with maturities in excess of two years are U.S.
government securities, it is possible to maintain fairly accurate
records on the market value of these secuJ:"ities and show the market
value and potential loss to interest rate risk. This risk Is a
part of all long-term investment portfolios and does not become an
important factor unless there is a need for the cash, and the loss
(if any) must be realized.
The followinq are' liquidity constraints:
. c Liquidity Elnough to ,meet one month's cash needs.
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At .least $5'0 million maturing in less than 2 years.
No more than 20 percent of the portfolio shall be in
investments maturing in more than five years.
Any security purchased with a maturity greater than 10
years may pay principal as well as interest on a periodic
hasis.
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o Market value of the portfolio will exceed 95 percent' of
the cost basis of the portfolio.' Should the ratio fall
below 95" percent the Finance Department will restrict
future lnvest[!1ents to those maturing in one year or less
and/or-liquidate securities 8S deemed flnancially prudent
until the ratio is achieved.
o Commitments to purchase new securities shall be made no
bore than three (3) working days before pricing.
Yield, which ,is def.ined as the return on an investment, will be the
third criteria for investments, after safety and liquidity.
Whenever possible I the City will obtain three or more bids on the
purchase or sale of securities and t~ke the higher yield on
purchase or higher price on sale. This rule will not apply to new
issues which are purchased at market no :more than three (3) working
days before pricing, IAIF J City of Palo Alto bondS, money market
accounts or mutual f\mds, which shall be evaluated separately.
Adopted by city Council October 221 1984.
Monthly reporting effective January 1985.
Amen.ded and Adopted by City Conncil June 24, 1985.
Amended by City Council December 2, 1985.
Amended by City Council June 23, 1986.
Amended by city Council June 22, 1987.
Amended by city Council August 8, 19S8
A~end~d by City Council November 28 1 1988.
Amended by City Council June 26, 1989.
Amended by City Council May 14, 1990.
Amended by City Council June 24, 1991.
Amended by City Council June 22, 1992.
Amended by 'City Council June 23, 1993.
Amended by Cit}'" Coulleil !~ovember 1&, 1993.
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APPENDIX A
I1XPLMIII'l'ION OF JlLLOflJl8LE IIIVES'l'HENTS
y,s Coyernme0t.......A9.e..nQy securities. U. s. Govfll'nment Agency
ObligatiQns inolude the se.curities of the Federal National
Mortgage As~oc1.tio" (FilM), Federal Land Banks (FLB) , Federal
Interaediate Credit Banks (FICB), aemks for cooperatives,
F~deral' Home l.,Q,z!In Banke-(FHLB), Government National Mortgaqe
Association (GN"MJ;.), Federal Home Loan Mortgage corporation
(FIIUle), St"dent wan Market.ing Associ"tion (SLMJ\). small
Businoss Administration (SUA) Hnd Tennessee Valley Authority
(TVA). federal Agency securities are debt obligations th~t
essentially result frQ:r.I lending programs of the Government.
federal agency securities differ from other types of
secul."ities DB woll as 81'1100q themselves. Their characteristics
dep~nd on the i6suin9 agency. It is possible to dtstinguish
three typos of issues: (A) participntion certificates (pooled
G8cur-ltl(9), (8) Certificate of Interest (pooled loans), (e)
notes, bonds, and debentures. The securities of a few
agencies are explicitly hacked by the full faith and credit of
the u.s. Covernment. All issues, however, have dcfacto
bl'lcldrHl fr.on the fedoral government, and it is highly unlikely
that tho gov~rnment would let any agency default on its
obl1q.!'otions.
~J:.t11j~~.t.~~ Deposit ..... A certificate of Deposit (CD) is a
receipt tor funds deposited in a bank, savings bank, or
sayings and loan association for a specified period of time at
a specified rate of irlt~rest. Denominations are $100,000 and
up. 'l'he -fit'st $100,000 of a Certificate of Deposit is
quaranteed by tlH~ Federal Oepos! t lnsurance corporatlon (FDIC)
if the deposit is with a bank or savings banxJ or the Savings
Association JnsUl"anCe Fund (SAIF) if the deposit is with a
sbvJnqs and loan. COs with a face value in excess of $100,000
can be collaterali2cd by U.S. GOVernment Agency and Treasury
Department securities or first mortgage loans. Government
securities lIIuat be at least 110 percont of the face value of
the CD collaterali2ed in e~cess of the first $100,000. The
value, 'of first, mortgages must be at least 150 percent of the
face v.esluo of the CD b.:lliance insured 1<1 excess of the first
$100 /000. Generally, COs are issued for l'Ilore than 30 days and
the maturity can be selected by the purchaser.,
:I. HQgQ.tiable CertiLt~il~.....QJ __ ~osit. Negotiable Certificates of
Deposit (l~COs) are-usually supported only by the strength of
the issuing_institution, but can be sold at any time and thus
provide liquidity.
4. !}~.LS' l\cc@.1.a~~" A Banker's Acceptance is a negotiable
time draft or bill of exchange drawn on and accepted by a
col':'tr.1.crcial bank. Acceptance of the draft irrevocably
obligates the bank to pay the bearer the face amount of the
draft at l1latui'ity. BAs are usually created to finance the
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ill1port and export of goOds, the shiplllont of goods ""J.thin the
United States and stOt'iHJO of xondily ;aarketablo staple
commodities.
In ovar 70 yearo of usago in the United states, thcr.o has beon
no known .l.nst-ance of principal loss to any investor in BAs.
In addition to the qUf\rantec by the accepting hank t the
transactiotl is identified with • sp~cific comroodity.
Warehouse recoipts verify that the plodged conmQditios ~xist,
and, by definitlon, thesQ cOF\modlt ies are l'eadl1y I':u~t''''otablc.
The sale of the undorlying goods generates the nocessllt'y fUnds
to liquidate the indebt'edne.".
B~s enjoy ... rl<etabll1ty since ther"der.l lle~erv. Bonk 1s
authorized to buy and sell primo BAs with ~aturltle9 of up to
nine months. The Federal Ros~rve Bank enters into repurchase
agreeMents in tho nor-Qa} course of open E:ar)c,et operolltions 1.'ith
B,' dealers.
BAs are Gold at-a discount ft'()!l par. "n acceptance is tied to
a specific loan tl'ansaction; therefore, the et':ount and
maturity of the Dccept~nco is fixed .
. (QlNriQ!·.G.j.J!LJ?_~.I:l. COThme);'cial pdpcr notes are unsecured
promissory notes of industrial corporations, utilities, and
bank holding cornpanie5. II)tcrest is' discounted fL.'"Ol"l par and
calculated using actuel nunber of days 0)) a 3,60-day year. 'i'he
notes are in bearer for", with rnatur ities [rol'!l one to 210 dayp
selected by the purchasor, and denominations generally start
at '$100,000. Thore is a small secondary filnrkot for commercial
paper notes and'an investor may s~ll 3 note prior to maturity.
Commercial paper notes are backed by unused linos oC credit
from lllajor banks. So=.e issuer/::;. notes are insured while Game
are backed by irrevocable lotte):s ot credit from r:;ajor banks.
state law limits a City to in'lcstcl!nts in United statea
corporations having assets in e~c~ss of five hundred million
dollars 'With an ",VI or higooX'" ratinq for the iSSUQ~'6
debentures. Cities may riot in ..... est lnore than 30 pe:rcent of
idle cash in commercial papor.
Local Mency InyeGt.a!Ult....rYlliL~~_M Deposit. The Local Agency
Investment Fund (LAIY) was established by the state to enable
treasurers to place funds in a pool for invest~ents. The City
.i.s limited to an investnent of the amount allowed by LAIF
(currently $15 million). LAIr has been parttcularly
beneficial to those jurisdictions ~ith s~all portfolios. Palo
Alto uses this fund for short~term investment, liquidity, and
yield.
7. R~...!lEJli!~~_~_g!:~_~~ A "Repurchase l\g;a:"{H_~t:te"t (RRPOS) is not
a secut"ity, but a contractual .. ·H:·rangemcnt be-tween a financial
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institution or dealer and an investor. The dqreemant nor~ally
can run for one or more days. The investor puts up funds tor
a certain number of days at a stated yield.' In return the
Investor takes title to a given block of securl ties as
collateral. At maturity tha securities are repurchased and
the ,funds repaid plus interest. Usually, amounts are $500,000
or more, but soma repurchase agreements can be smaller.
B. Mone.y Mnxket ACC9U.nlli. Money Market nepos it Accounts are
market-sensitive bank accounts, which are available to
depositors at any time without penalty. The interest rate is
generally comparable to ra,tes on Rloney market lIutual funds,
. though any individual b~nk'B rate lIIay be higher or lower.
These accounts are insured by the Federal Deposit Insurance
Corporation or the Savings Association Inouranca Fund.
9. Mutual Fu~ Mutual Funds are shares of beneficial interest
issued by dive"rsified management companies, as defined by
section 23701 M of the Revenue and Taxation Code.' To, bo
eligible for investmeni:, these funds must:
a. Attain the highest ranking in the highest letter and
numerical rating provided by not l(!ss than two of the
three largest nationally recognized rating services; Ol"
b~ Have an investment. adviaor registered with the securities
and Exchange Commission with not less than fiYe years
experience investing in the securities and obliqations as
autnorized by subdi.visions {a) to (m) r inclusive, of
Section 5:1601 of the California Government Code, .and '.11th
assets under management i-."I excess of live Ilundred ~illion
dollars; and
c. Invest solely in those securiti~s and obligatiollS
authorized by Sections 53601 and 53635 of the California
Government code. Where the Investment Policy of t.ho City
of Palo Alto may be more restrictive than the Stc'\te Code,
the 'policy authorizes investments in 'mutual funds 'Which
shall have minimal investment in securities otherwisQ
restricted by the City's policy. Minimal invc-stJ!1ent is
defined as 1$88 than 5 perc(lnt of the mutual fund
portfolio; and
d. The pur-chase price of shares of beneficial interest
purchased shall not include any cOrn7llission that these
companies may charge.
TII:EAS/IIiV(ST)I£1rj J: 1 "I'iI'Ot93. ~
1-03-94
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