HomeMy WebLinkAboutMINUTES - 06102003 - C.82 To: BOARD OF SUPERVISORS ;� ""~r � �=t.� Contra
FROM- William J. Pollacek, Treasurer-Tax Collector Costa
DATE: June 17, 2003 `�°�� - County
G. AP-
SUBJECT. COUNTY TREASURER'S INVESTMENT POLICY AS OF
JUNE, 2003
SPECIFIC REQUEST{S}OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
ACCEPT the Treasurer's Investment Policy as of June, 2003.
BACKGR UNDIREASON S FOR RECOMMENDATION (S):
Pursuant to Government Cade section 27133, at the May 20, 2003 Treasury Oversight
Committee meeting, the Committee reviewed and recommended changes to the
policy. The changes update information and incorporate an approved permissible
investment vehicle pursuant to resolution number 2003/48 of the Board of Supervisors.
Copies of the Treasurer's Investment Policy dated June 2003 identifying the changes
are submitted to the Board of Supervisors for review and acceptance.
w.rn:CVJ:apl
Aftachment
CONTINUED ON ATTACHMENT: YES SIGNATURE:
- RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATPOFgf BOARD COMMITTEE
-- -APPROVE OTHER
SIGNATURE(S)'
ACTION OF BOA tD N ilum 10, 2003 APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT
COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF
X UNANIMOUS{ABSENT THE BOARD OF SUPERVISORS ON THE DATE SHOWN.
� �,.,,,�, }
AYES: NOES:
ABSENT: ABSTAIN:
Contact: -
"District III Seat VACANT**
Cc: Treasurer-Tax Collector's Ohre ATTESTED 10, W03
JOHN SWEETEN,CLERK OF THE BOARD OFSUPERVISORS
AND COUNTY ADMI ISTRATOR
BY: AeL" :s ' :` DEPUTY
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
OBJECTIVES AND STANDARDS
§53600.3.' Standard for Governing Bodies or Persons Authorized to Make
Investment Decisions for Local Agencies
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 and managing public
funds, a trustee shall act with care, skill, prudence and diligence under the
circumstances then prevailing, 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 to an
overallstrategy, a trustee is authorized to acquire investments as authorized by law.
463600.5. Trustee's Oblectives Regarding Funds
When investing, reinvesting, purchasing, acquiring, exchanging, selling and managing
public funds, the primary objective of a trustee shall be to safeguard the principal of
the funds under its control. The secondary objective shall be to meet the liquidity
needs of the depositor. The third objective shall be to achieve a return on the funds
under its controls.
' Number refers to Government Code number and section.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
INSTRUMENTS AUTHORIZED FOR INVESTMENT
§53601 Instruments Authorized for Investment
A. Bonds issued by the local agencies, including bonds payable solely out of the
revenues from a revenue-producing property, awned, controlled, or operated by the
local agency or by a department, board, agency or authority of the local agency.
B. United States Treasury notes, bonds, bills or certibcates of indebtedness, or
those for which the faith and credit of the United States are pledged for the payment
of principal and interest.
C. registered state warrants or treasury notes or bonds of this state, including
bonds payable solely out of the revenues from a revenue-producing property owned,
controlled, or operated by the state or by a department, board, agency or authority of
the state.
D. Bonds, notes, warrants or other evidences of indebtedness of any local
agency within this state, including bonds payable solely out of the revenues from a
revenue-producing property awned, controlled or operated by the local agency, or by
a department, beard, agency or authority of the local agency.
E. Federal agency 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.
F. Bankers acceptances otherwise known as bills of exchange or time drafts
drawn on and accepted by a commercial bank. Purchases of banker's acceptances
may not exceed 180 days' maturity or 40 percent of the agency's money that may be
invested pursuant to this section. However, no more than 30 percent of the
agency's money may be invested in the banker's acceptances of any one
commercial bank pursuant to this section. This subdivision does not preclude a
municipal utility district from investing any money in its treasury in any manner
authorized by the Municipal Utility District Act (Division 6, commencing with Section
11801, of the Public Utilities Code).
G. Commercial paper of "prime" quality of the highest ranking or of the highest letter
and numerical rating as provided for by Moody's Investors Service, Inc. (Moody's),
Standard and Poor's (S & P), or Fitch Financial Services, Inc. (Fitch). The
corporation that issues the commercial paper shall be organized and operating
within the United States and shall have total assets in excess of five hundred million
dollars ($500,000,000) and shall issue debt, other than commercial paper, if any,
that is rated "A" or higher by Moody's, S & P, or Fitch. Eligible commercial paper
shall have a maximum maturity of 270 days or less. A local agency that is a county,
or a city and county may invest in commercial paper pursuant to subdivision (g) of
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
Section 53601, except that the local agency shall be subject to the following
concentration limits (Government Code Section 53635, subdivision (a)):
1. Not more than 40 percent of the local agency's money may be invested in eligible
commercial paper.
2. Not more than 10 percent of the local agency's money may be invested pursuant
to this may be invested in the outstanding commercial paper of any single issuer.
3. No more than 10 percent of the outstanding commercial paper of any single
corporate issuer may be purchased by the local agency.
H. Negotiable certificates of deposit issued by a nationally- or state-chartered bank or
a savings association or federal association (as defined by Section 5102 of the
Financial Code), a state or federal credit union, or by a state-licensed branch of a
foreign bank. Purchases of negotiable certificates of deposit may not exceed 30
percent of the agency's money that may be invested pursuant to this section. For
purposes of this section, negotiable certificates of deposits do not come within
Article 2 (commencing with Section 53630), except that the amount so invested shall
be subject to the limitations of Section 53638. The legislative body of a local agency
and the treasurer or other official of the local agency having legal custody of the
money are prohibited from investing local agency funds, or funds in the custody of
the local agency, in negotiable certificates of deposit issued by a state or federal
credit union if a member of the legislative body of the local agency, or any person
with investment decision making authority in the administrative office manager's
office, budget office, auditor-controller's office, or treasurer's office of the local
agency also serves on the board of directors, or any committee appointed by the
board of directors, or the credit committee or the supervisory committee of the state
or federal credit union issuing the negotiable certificates of deposit.
I. Investments in repurchase agreements or reverse repurchase agreements of
any securities authorized by this section, as long as the agreements are subject to
this subdivision, including the delivery requirements specified in this section.
1. "Repurchase agreement" means a purchase of securities by the local agency
pursuant to an agreement by which the counterparty seller will repurchase the
securities on or before a specified date and for a specified amount and the
counterparty will deliver the underlying securities to the local agency by book
entry, physical delivery, or by third-party custodial agreement. The transfer of
underlying securities to the counterparty bank's customer book-entry account
may be used for book-entry delivery.
a. "Securities," for purpose of repurchase under this subdivision, means
securities of the same issuer, description, issue date and maturity.
b. Investments in repurchase agreements may be made on any investment
authorized in this section when the term of the agreement does not exceed
one year. The market value of securities that underlay a repurchase
agreement shall be valued at 102 percent or greater of the funds borrowed
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
against those securities and the value shall be adjusted no less than
quarterly. Since the market value of the underlying securities is subject to
dally market fluctuations, the investments in repurchase agreements shall be
in compliance if the value of the underlying securities is brought back up to
102 percent no later than the next business day.
2. "Reverse repurchase agreement" means a sale of securities by the local
agency pursuant to an agreement by which the local agency will repurchase the
securities on or before a specified date and includes other comparable
agreements.
Reverse repurchase agreements may be utilized only when all of the following
conditions are met:
The security to be sold on reverse repurchase agreement has been owned and
fully paid for by the local agency for a minimum of 30 days prior to sale, the total
of all reverse repurchase agreements on investments owned by the local agency
does not exceed 20 percent of the base value of the portfolio; the agreement
does not exceed a term of 92 days, unless the agreement includes a written
codicil guaranteeing a minimum earning or spread for the entire period between
the sale of a security using a reverse repurchase agreement and the final
maturity date of the same security.
Investments In reverse repurchase agreements shall only be made with
primary dealers of the Federal Reserve Sank of New York, or with a nationally- or
state-chartered bank that has or has had a significant banking relationship with a
local agency..."Significant banking relationship" means any of the following
activities of a bank:
a. Involvement in the creation, sale, purchase, or retirement of a local agency's
bonds, notes, or other evidence of indebtedness.
b. Financing of a local agency's activities.
c. Acceptance of a local agency's securities or funds as deposits.
J. Medium-term motes of a maximum of five-years maturity issued by corporations
organized and operating within the United States or by depository institutions
licensed by the United States or any state and operating within the United States.
Notes eligible for investment under this subdivision shall be rated in a rating
category of "A" or its equivalent or better by a nationally-recognized rating service.
Purchases of medium-term notes may not exceed 30 percent of the agency's money
that may be invested pursuant to this section.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
K. 1. Shares of beneficial interest issued by diversified management companies
that invest in the securities and obligations as authorized by subdivisions (a) to
0), inclusive, or subdivision (m) or (n) and that comply with the investment
restrictions of this article and Article 2.
2. Shares of beneficial interest issued by diversified management companies that
are money market funds registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et
seq.).
3. If investment is in shares issued pursuant to paragraph (2), the company shall
have met the following criteria:
a. Attained the highest ranking or the highest letter and numerical rating
provided by not less than two nationally recognized statistical rating
organizations.
b. Retained an investment adviser registered or exempt from registration with
the Securities and Exchange Commission with not less than five years'
experience managing money market mutual funds with assets under
management in excess of five hundred million dollars ($500,000,000).
4. The purchase price of shares of beneficial interest purchased pursuant to this
subdivision shall not include any commission that the companies may charge
and shall not exceed 20 percent of the agency's money that may be invested
pursuant to this section. However, no more than 10 percent of the agency's
funds may be invested in shares of beneficial interest of any one mutual fund
pursuant to paragraph (1).
L. Moneys held by a trustee or fiscal agent and pledged to the payment of security of
bonds or other indebtedness, or obligations under a lease, installment sale, or other
agreement of a local agency, or certificates of participation in those bonds,
indebtedness, or lease installment sale, or other agreements, may be invested in
accordance with the statutory provisions governing the issuance of those bonds,
indebtedness, or lease installment sale, or other agreement, or to the extent not
inconsistent therewith or if there are not specific statutory provision, in accordance
with the ordinance, resolution, indenture, or agreement of the local agency
providing for the issuance,
M. Notes, bonds, or other obligations that are at all times secured by a valid first-
priority security interest in securities of the types listed by Section 53651 as
eligible securities for the purpose of securing local agency deposits having a market
value at least equal to that required by Section 53052 for the purpose of securing
local agency deposits. The securities serving as collateral shall be placed by
delivery or book entry into the custody of a trust company or the trust department of
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
a bank that is not affiliated with the issuer of the secured obligation, and the security
interest shall be perfected in accordance with the requirements of the Uniform
Commercial Code or federal regulations applicable to the types of securities in which
the security interest is granted.
N. Any mortgage pass-through security, collaterialized mortgage obligation,
mortgage-backed or other pay-through bund, equipment lease-backed
certificate, consumer receivable pass-through certificate, or consumer
receivable-backed bond of a maximum of five years' maturity. Securities eligible
for investment under this subdivision shall be issued by an issuer having an "A" or
higher rating for the issuer's debt as provided by a nationally recognized rating
service and rated in a rating category of "AA" or its equivalent or better by a
nationally recognized rating service. Purchase of securities authorized by this
subdivision may not exceed 20 percent of the agency's surplus money that may be
invested pursuant to this section.
0. Local Agency Investments -- LAIF - (All references in this section to the
Treasurer and the Controller pertain to the Mate Treasurer and the ,State
Controller).
§16305.9. (a) All money in the Local Agency Investment Fund shall be held in
trust in the custody of the Treasurer.
(b) All money in the Local Agency Investment Fund is nonstate money.
That money shall be held in a trust account or accounts. The Controller shall be
responsible for maintaining those accounts to record the Treasurer's
accountability, and shall maintain a separate account for each trust deposit in
the Local Agency Investment Fund.
(c) That money shall be subject to audit by the Department of Finance
and to cash count as provided for in Sections 13297,13298, and 13299. It may
be withdrawn only upon the order of the depositing entity or its disbursing
officers. The system that the director of Finance has established for the
handling, receiving, holding, and disbursing of state agency money shall also be
used for the money in the Local Agency Investment Fund.
(d) All money in the Local Agency Investment Fund shall be deposited,
invested and reinvested in the same manner and to the same extent as if it were
state money in the State Treasury.
§16429.1. Existence and Appropriation of Fund; Investment and
Distribution of Deposits
(a) There is in trust in the custody of the Treasurer the Local Agency
Investment Fund, which fund is hereby created. The Controller shall maintain a
separate account for each governmental unit having deposits in this fund.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003 E
(b) Notwithstanding any other provisions of law, a local governmental
official, with the consent of the governing body of that agency, having money in
its treasury not required for immediate needs, may remit the money to the
Treasurer for deposit in the Local Agency Investment Fund for the purpose of
investment.
(c) Notwithstanding any other provisions of law, an officer of any nonprofit
corporation whose membership is confined to public agencies or public officials,
or an officer of a qualified quasi-governmental agency, with the consent of the
governing body of that agency, having money in its treasury not required for
immediate needs, may remit the money to the Treasurer for deposit in the Local
Agency Investment Fund for the purpose of investment.
(d) Notwithstanding any other provision of law or of this section, a local
agency, with the approval of its governing body, may deposit in the Local Agency
Investment Fund proceeds of the issuance of bonds, notes, certificates of
participation, or other evidences of indebtedness of the agency pending
expenditure of the proceeds for the authorized purpose of their issuance. In
connection with these deposits of proceeds, the Local Agency Investment Fund
is authorized to receive and disburse moneys, and to provide information, directly
with or to an authorized officer of a trustee or fiscal agency engaged by the local
agency, the Local Agency Investment Fund is authorized to hold investments in
the name and for the account of that trustee or fiscal agent, and the Controller
shall maintain a separate account for each deposit of proceeds.
(e) The local governmental unit, the nonprofit corporation, or the quasi-
governmental agency has the exclusive determination of the length of time its
money will be on deposit with the Treasurer.
(f) The trustee or fiscal agent of the local governmental unit has the
exclusive determination of the length of time proceeds from the issuance of
bonds will be on deposit with the Treasurer.
(g) The Local Investment Advisory Board shall determine those quasi-
governmental agencies which qualify to participate in the Local Agency
Investment Fund.
(h) The Treasurer may refuse to accept deposits into the fund if, in the
judgement of the Treasurer, the deposit would adversely affect the state's
portfolio.
(i) The Treasurer may invest the money of the fund in securities prescribed
in Section 16430. The Treasurer may elect to have the money of the fund
invested through the Surplus Money Investment Fund as provided in Article 4
(commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, '2003 ]
(j) Money in the fund shall be invested to achieve the objective of the fund,
that is to realize the maximum return consistent with safe and prudent treasury
management.
(k) All instruments of title of all investments of the fund shall remain in the
Treasurer's vault or be held in safekeeping under control of the Treasurer in any
federal reserve bank, or any branch thereof, or the Federal dome Loan Bank of
San Francisco, with any trust company, or the trust department of any state or
national bank.
(1) Immediately at the conclusion of each calendar quarter, all interest
earned and other increment derived from investments shall be distributed by the
Controller to the contributing governmental units or trustees or fiscal agents,
nonprofit corporations, and quasi-governmental agencies in amounts directly
proportionate to the respective amounts deposited in the Local Agency
Investment fund and the length of time the amounts remained therein. An
amount equal to the reasonable costs incurred in carrying out the provisions of
this section, not to exceed a maximum of one-half of one percent of the earnings
of this fund, shall be deducted from the earnings prior to distribution. The
amount of this deduction shall be credited as reimbursements to the state
agencies having incurred costs in carrying out the provisions of this section.
(m) The Treasurer shall prepare for distribution a monthly report of
investments made during the preceding month. 0
P. Investment Trust of California— CaITRLIST— Pursuant to Govemment Codes
6500 6502 53501 53630 and 53635 CaITRUST was established on January 9.
2003. The purpose of the trust is to serve as a vehicle for public agencies to iointf�r
exercise their common power to invest funds. including tax-exempt bond proceeds.
All investment activities will be in accordance with applicable Califomia laws
,governing the investment of funds by public a_ eg ncies.
Resolution Number 2003148 of the Board of Supervisors of the County of Contra
Costa has authorized the participation of the county in the Investment Trust of
Calfomia on January 28, 2003.
8
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
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9
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
TOBOARD OF SUPE=RVISORS Contra
FISC>Ni: William J. Pollacek,Treasurer Tax Collector
Costa
LATE- January 28,2003 sop County
56
SUBJECT: Authorizing the Contra Costa County Treasurer-"tax Collector to
Execute Joint Power Documents and Participate in the California
Investment Trust(CatTrust)
SPECIFIC REQUEST(S)DR NDA`)OWS)&BACKGROUND AMD Alsw7G4'r"
Recommendation,
APPROVAL of the Resolution of they Contra Costa Board of Supervisors, County of
Contra Costa,State.of C3alifornia,authorizing the Contra Costa County Treasurer--Tax
Collector to jtin with other public agencies as a participant of the California Investment
Trust(CaITRUST)and to invest in sham of the trust and in Individual portfolios.
FISCAL.IMPACT: None
WKGROUN€AEA8QN fS}FOR ISI-CCMiiMt-HbA"i"FON-(S)s
The Califf is Investment Trust (Cai"i'FiUST)is being created under provisions of the
California Joint Exercise of Powers Act to provide Calftmia Public Agencies with
investment management services for public furKfs and comprehensive investment
management,ac tenting and arbitrage calculation services for pro ds of tax-exempt
financing. This fund will offer investment opportunities that do not exist in the Several
funds currently availablefor public funds.
Four(4)counties and one Special District are scheduled to become the founding
member of the California Investment Trust(CrarMU T).Contra Costa County would
be one of the founding members,along with Solano, Riverside and Sonoma Counties,
and Westland Water District of Fresno,CA.
WJP;trr .
Al#achmex7,
COWINI.lEt3 ON AWAC t . Y^ YES sf 4TtIRE Y-
C47tPrtt( T R
APPROVE OT}I�R
Pi
SKaNATUFt£S
ACTION Or Oti J- APPROVEDASRECOMMENDED IC.. OTHER
y
VOTE OF SUPERVISORS I HEMSY CERTIFY THAT THIS IS A TRUE ANDECT
COPY OF AN ACTION TA#EN AND ENTERED ON H OF
THE BOARD OF SUPERVISORS ON THE DATE SHOWN.
y VRAMMOUS(ASSENT ( t }
AYES: _ NtlES:
ASSENT: ASVAIr1.
,-
Cc: Treasurer-Tax Co lor's Office ATTESTED JA�IARY 28,2 I�f}3 -
JOHN SWEETEN.CtCRK OF THE 80AItD OFSUPEFtVISORS
AND COUNTY ADIANISTRATOR
DEPUTY
10
_
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
The Trust will be govemed by a Board of up to nine trustees, all of whom are officers or
employees of public agencies. William J. Pollacek, Treasurer-Tax Collector will be
Contra Costa County's Trustee. The Trustees are responsible for setting overall policies
and procedures for the Trust and for hiring and supervising the activities of the
Investment Advisor.
The Board of Trustees met on Thursday,January 9, 2002 and selected California State
Association of Counties(CSAC)Finance Corp. as Fund Administrator;Metropolitan
West Securities, LLC, (MetWest)as Investment Advisor; Orrick, Herrington&Sutcliffe,
LLP as Counsel; and Wachovia as Custodian. forma Lammers;Executive Director,
CSAC Finance Corp was elected Secretary-Treasurer of the Board of Trustees.
MetV,Test,the Investment Advisor,currently has over$62 billion in assets under
management including$2 billion with.CalPERS,$425 million with the California State
University System,$750 million with the California Earthquake Authority, and$80
million with the City of Poway.
The initial drafting of all the legal documents was done by attorneys with Paul,Hastings,
Janofsky and Walker, LLP. The draft documents were then reviewed by attorneys with
Orrick,Herrington& Sutcliffe,LLP in their capacity as outside counsel to the CSAC
Finance Corp. Subsequently,Norma Lammers,Executive Director ofthe,Finance Corp.,
arranged for a working group of county counsels to review the documents,as well,prior
to their adoption by the CSAF Finance Corp. at its.Fall 2002 Meeting,
The Contra Costa County Treasurer-Tax Collector is requesting approval of the County's
participation in this Investment Trust to provide an additional investment option for the
County's Pooled Investment Portfolio. This Trust is very consistent with the Treasury
policy of preservation of principal whileseeking to attain a high level of current interest
income. The Trust purchases only investments that are permitted by California
Government Code statutes,with the exception that all leveraging of funds within the
portfolio are prohibited, The CaITRUST will serve as a highly liquid,account within our
investment asset allocation program,and offer two(2)additional investment options,a
medium term option with a target duration of 1.5--3.5 years and a long term option of
5 0 7 years.
Therefore, based upon the security that this CalTRUST ipvestment offers, the liquidity
and electronic access of the funds, and the cooperation and participation ofthe other four
(4)California public agencies, I am requesting approval of the Resolution to Participate
in the California Investment Trust and authorize the Contra Costa County Treasurer-Tax
Collector to execute the Declaration of Trust and all other documents required by the
Trust.
Boardorderldoc
_.
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
RESOLUTION#2003(48
Contra Costa County Administration Building
Martinez, California
RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF
CONTRA:COSTA,STATE OF CALIFORNIA,AUTHORIZING THE COUNTY
OF CONTRA COSTA"PUBLIC AGENCY"TO JOIN WITH OTHER PUBLIC
AGENCIES AS A PARTICIPANT OF THE INVESTMENT TRUST OF
CALIFORNIA,CARRYING ON BUSINESS AS-Ca/TRUST"
WHEREAS,Section 6502 of Title 1,Division 7,Chapter 5 of the Government
Code of the State of California(the"Joint Exercise of Powers,Act")provides that,if
authorized by their legislative or other governing bodies,two or more public agencies by
agreement may jointly exercise any power common to the contracting parties; and
WHEREAS,under Section 6500 ofthe Joint Exercise of Powers Act,a" uric
agency"includes but is not limited to the federal government or any federal department
or agency,the State of California,another State or any Statedepartment or agency, a
county,a county board of education,county superintendent of schools,city,public
corporation,public district,or regional transportation commission of the State of
California or another State,or any joint powers authority formed pursuant to the
California Joint Exercise of Powers Act;and
WHEREAS,public agencies which constitute local agencies,as that term is
defined in Section 53630 of Title 5,Division 2,Part 1,Chapter 4,Article 2 of the
Government Code of the State of California(the"California Oavetnment Code"), are
authorized pursuant to Section 53601 and/or 53635 thereof to invest all money belong to,
or in the custody of, the local agency in certain specified investments;and
WHEREAS, the Investment'Trust of California,carrying on business as
C'atMUST(the"Trust")was established,pursuant to and in accordance with the Joint
Exercise of Powers Act,by a Declaration of Trust,made as of January28 ,2003 (the
"Declaration of Trust"), as a vehicle for public agencies to jointly exercise their common
power to invest funds other than tax-exempt bond proceeds in accordance with applicable
California law governing the investment of funds by public agencies; and
WHEREAS,pursuant to and in accordance with the Joint Exercise of Powers
Act, the Public Agency desires to join the other public agencies which are or will be
Participants of the`frust by adapting and executing the Declaration of Trust, a form
which has been presented to this meeting; and
WHEREAS, the Public Agency is a public agency as that terse is defined in the
Joint Exercise of Powers Act and a local agency as that tern) is defined in Section 53630
of the California Government Code;
12
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
WHEREAS, the Public Agency is otherwise permitted to be a Participant of the
Trust and to invest funds in the Trust to be managed by the Investment Advisor to the
Trust, notwithstanding other investments held by the Public Agency or current
investment policies that otherwise may be in effect for the Public Agency so long as the
Trust invests in securities and other instruments permitted for investment by public
agencies pursuant to applicable Californla law;and
WHEREAS,there has been presented to this meeting an Information Statement
describing the Trust(the"Information Statement");
NOW,THEREFORE,BE IT RESOLVED by the governing body of the Public
Agency(the"Governing Body')as follows:
Section 1. The public agency shall join with other public agencies pursuant to and in
accordance with the Joint Exercise of Powers Act by executing the Declaration of Trust
and thereby becoming a Participant in the Trust,which Declaration of Trust is hereby
approved and adopted,notwithstanding other investments held by the Public Agency or
current investment policies that otherwise.may be in effect for the Public Agency so long
as the Trust invests in securities and other instruments permitted for investment by public
agencies pursuant to applicable California law. A copy of the Declaration of Trust shall
be filed',with the minutes of the meeting at which this Resolution was adopted. The
Governing Body is hereby authorized to execute, and the Attesting Officer of Governing
Body is hereby authorized to attest and deliver,the.Declaration of Trust, in substantially
the form presented at this meeting.
Section 2. The Public Agency is hereby authorized to purchase shares in the Trust from
time to time with available funds of the Public Agency, and to redeem some or all of
those shares from time to time as such funds are needed,notwithstanding other
investments held by the Public Agency or current investment policies that otherwise may
be in effect for the Public Agency so long as the Trust invests in securities and other
instruments permitted for investment by public agencies pursuant to applicable California
law.
Section 3. The appropriate officers,agents,and employees of the Public Agency are
hereby authorized and directed in the name and on behalf of the Public Agency to take all
actions and to make and execute any and all certificates,requisitions, agreements,
notices,consents, warrants,and other documents,which they,or any of them,might
deem necessary or appropriate in order to accomplish the purposes of this Resolution.
Section 4. The Treasurer of the Public Agency is hereby delegated authority of the`
Governing Body of the Public Agency to take all actions and to make and execute any
and all instruments which he might deem necessary or appropriate in order to carry out
the purposes of the Governing Body in adopting this Resolution, including, without
limitation, the authority to extend the maturity of any investments made pursuant to this
Resolution in accordance with applicable California law.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
Section S. Nothing contained in this Resolution shall be deemed to infringe upon the
right of the Public Agency or the Governing Body or Treasurer of the Public Agency to
make other investments outside of the mandate of this Resolution in accordance with
applicable California law to the fullest extent permitted thereunder.
Section 6. This Resolution shall take effect at the earliest date permitted by law.
PASSED AND ADOPTED this 28th day of January,2003.
SUPERVISORS:
Gioia x Uilkerna x Gerber x - DeSauln er X Glover x
Ayes: I,II,II iv v Noes: mm Abstain: ibm Absent: t
SO ORDERED.
1 hereby certify that this 1s a true and correct
copy of an action taken and entered on the
minutes of the 8 and of Supervisors on the
date shown. ,
ATTESTED: UGt, .
JOHN SWWEETEN, of the rd
Of 5uervisora aPd County ministrator
13y - dam' ...3. Deputy
Board.calimst.Res.doc
14
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
FURTHER RESTRICTIONS/LIMITATIONS BY GOVERNMENT CODE AND COUNTY
TREASURER
Further Restrictions Set by Treasurer
A. Reverse repurchase agreements will be used strictly for the purpose of
supplementing income with a limit of 10 percent of the total portfolio without prior
approval of the Treasurer.
B. Swaps and Trades will each be approved on a per-trade basis by Treasurer or
Assistant Treasurer.
C. SBA loans require prior approval of the Treasurer in every transaction.
D. Repurchase Agreements will generally be limited to Wells Fargo Bank, Bank of
America or other institutions with whom the County treasury has executed tri-party
agreements. Collateral will be held by a third party to the transaction that may
include the trust department of particular banks. Collateral will be only securities
that comply with Government Code 53501.
E. Securities purchased through brokers will be held in safekeeping at the Bank of New
York or as designated by the specific contract(s) for government securities and tri-
party repurchase agreements.
F. Bank C.D.s or non-negotiable C.D.s will be collateralized at 105 percent by
government securities or 150 percent by current mortgages. There will be no waiver
of the first $100,000 collateral except by special arrangement with the Treasurer.
G. All investments purchased by the Treasurer's Office shall be of investment grade.
The minimum credit rating of purchased investments shall be as defined by
Government Code 53600 et. Seq. (As suggested by the Board of Supervisor's Finance
Committee meeting of Monday, February 3, 1997, 9:00 a.m.)
H. All legal securities issued by a tobacco-related company are prohibited. A tobacco-
related company is defined as an entity that makes smoking products from tobacco
used in cigarettes, cigars or snuff or for smoking in pipes or a company that has total
revenues of 15 percent or more from the sale of such products. The tobacco-related
issuers restricted from any investment are British American Tobacco, Gallaher
Group PLC, Imasco Ltd., Lowes Companies, ALTRIA Group, Inc., RJ Reynolds
Tobacco Holdings, Inc., Brooke Groupe LTD., LIST, Inc. and Universal Corp.
However, tobacco-related companies will not be limited to the foregoing list.
Additional companies will be prohibited as long as said entities fall within the
definition of tobacco-related companies.
1. Financial futures or financial option contracts will each be approved on a per trade
basis by the County Treasurer.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
-453601.6. Prohibited Investments by Government Cade
A. A local agency shall not invest any funds pursuant to this Article or pursuant to
Article 2 (commencing with Section 53630) in inverse floaters, range notes or
interest-only strips that are derived from a pool of mortgages.
B. A local agency shall not invest any funds pursuant to this article or pursuant to
Article 2 (commencing with Section 53630)in any security that could result in zero
interest accrual if held to maturity. However, a local agency may hold prohibited
instruments until their maturity dates. The limitation in this subdivision shall not
apply to local agency investments in shares of beneficial interest issued by
diversified management companies registered under the Investment Company Act
of 1940 (15 U.S.C. Sec. 80a-1,et seq.) that are authorized for investment pursuant to
subdivision (k) of Section 53601.
&53601. Instruments Authorized for Investments:Uptuity
When 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, other than a
security underlying a repurchase or reverse repurchase agreement authorized by this
section, that at the time of the investment has a term remaining to maturity in excess
of five years, unless the legislative body has granted express authority to make that
investment either specifically or as a part of an investment program approved by the
legislative body no less than three months prior to the investment.
Quality of Investment Instruments, Issuers and Sources
Regular financial review and analysis of issuers and sources of securities such as
banks and brokerage firms shall be performed. These will be based on credit-rating
services' evaluations, financial documents such as audits, Form 104 filings to the
Securities and Exchange Commission and other reliable financial information.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
SAFEKEEPING AND CUSTODY
-453601. Instruments Authorized for Investment
A local agency purchasing or obtaining any securities prescribed in this section, in a
negotiable, bearer, registered or non-registered format, shall require delivery of the
securities to the local agency, including those purchased for the agency by financial
advisors, consultants or managers using the agency's funds, by book entry, physical
delivery or by third-party custodial agreement. The transfer of securities to the
counterparty bank's customer book-entry account may be used for book-entry delivery.
For purposes of this section, "counterparty" means the other party to the transaction. A
counterparty bank's trust department or separate safekeeping department may be used
for the physical delivery of the security if the security is held in the name of the local
agency. Where this section specifies a percentage limitation for a particular category of
investment, that percentage is applicable only at the date of purchase. Where this
section does not specify a limitation on the term of remaining maturity at the time of the
investment, no investment shall be made in any security other than a security
underlying a repurchase or reverse repurchase agreement authorized by this section.
In compliance with this section, the securities of Contra Costa County and its agencies
shall be in safekeeping at Bank of New York, a counterparty bank's trust department or
as defined in the debt indenture and contract.
17
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
AUTHORIZED BROKERS AND DEALERS
Securities for Contra Costa County and its agencies shall be purchased from the
following:
• Primary dealers of the Federal Reserve Bank of New York and their subcontracts.
• Banks and financial institutions that sell and buy instruments authorized for
investments per Government Code 53600 et. seq. and their subcontracts.
• Issuers of securities authorized by Government Code 53601 et. seq.
Securities shall not be purchased from brokers, brokerages, dealers or securities firms
who within any 48-month period following January 1, 1896, made a political contribution
to the 'local treasurer, any member of the governing board of the local agency or any
candidate for those offices in an amount exceeding the limitations contained in Rule G-
37 of the Municipal Securities Rulemaking Board.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
LIMITS ON THE RECEIPT OF HONORARIA, GIFTS AND GRATUITIES
Gift Prohibitions
All state and local officials who are listed in Government Code Section 87200, and
candidates for those elective offices (except judges), are prohibited from accepting a gift
or gifts aggregating more than as stated in California Government Code §89602(a)
and §819603(f) in a calendar year from a single source.
Beginning on January 1, 1993, the State Fair Political Practices Commission shall
adjust the gift limitations in this section on January 1$t of each odd-numbered
year to reflect changes in the Consumer Price Index rounded to the nearest ten
dollars ($14). 89503(f)
Honorarium Prohibition
All state and local officials who are listed in Government Code Section 87200, and
candidates for those elective offices (except judges), are prohibited from accepting any
honorarium for any speech given, article published or attendance at any public or
private conference, convention, meeting, social event, meal or like gathering.
Exceptions
• The gift limit and honorarium prohibitions do not apply to a part-time member of the
governing board of a public institution of higher education unless the member is also
an elected official.
• For state board and commission members, the gift limit and honorarium prohibition
are applicable only if the member would be required to report the receipt of income
or gifts from the source on his or her statement of economic interests. The $10 gift
limit is applicable only to lobbyists and lobbying firms registered to lobby the board
or commission member's agency.
Disqualification
Public officials are, under certain circumstances, required to disqualify themselves from
making, participating in, or attempting to influence governmental decisions that will
affect any of their financial interests, not just those that they are required to disclose on
a statement of economic interests.
Enforcement
The Fair Political Practices Commission may impose penalties for statements of
economic interests that are filed late. The fine is $10 per day, beginning the day after
the filing deadline, up to a maximum of $100. Late-filing penalties can be reduced or
waived under certain circumstances.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 20103
In addition, the Fair Political practices Commission may initiate investigations with
respect to any suspected violation of the Political Reform Act. tither law enforcement
agencies (the Attorney General or District Attorney) may initiate investigations under
certain circumstances. If violations are found, the Commission may initiate
administrative enforcement proceedings that could result in the imposition of monetary
penalties of up to $5,000 per violation. In lieu of administrative prosecution, a civil
action may be brought for negligent or intentional violations by the appropriate civil
prosecutor (the Commission, Attorney General or District Attorney) where the measure
of damages for most violations is the amount of value not properly reported. Persons
who violate the conflict-of-interest disclosure provisions of the Political Reform Act can
also be subject to discipline by their agency, including dismissal.
Finally, a knowing or willful violation of any provision of the Political Reform Act is a
misdemeanor. Persons convicted of a misdemeanor may be disqualified for four years
from the date of the conviction from serving as a lobbyist or running for elective office in
addition to other penalties that may be imposed. The Act also provides for numerous
civil penalties, including monetary penalties and damages, and injunctive relief from the
courts.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
FURTHER AMENDMENTS TO THE CONFLICT OF INTEREST CODES
(Per a'Contra Costa County Board of Supervisors' Order dated February 6, 1996)
Amend all local Conflict of Interest Codes as follows:
Pursuant to Government Code Sections 87302 and 87306 et. seq., this Board hereby
amends every local Conflict of Interest Code previously approved by the Board of
Supervisors to add the following:
"All other provisions of this Code notwithstanding, the following provisions hereafter
apply:
1. No designated employee shall accept any honorarium.
Subdivisions (b), (c) and (e) of Government Code Section 89502 shall apply to the
prohibitions in this Section. This Section shall not limit or prohibit payments,
advances or reimbursements for travel and related lodging and subsistence
authorized by Government Code Section 89506.
2. No designated employee shall accept any gifts with a total value of more than three
hundred twenty dollars ($320) in a calendar year from any single source.
Subdivision (d) of Government Code Section 89504 shall apply to this Section."
This amendment is necessary to assure that all local codes comply with recent
amendments to Government Code Section 89502.
21
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
INVESTMENT REPORT
The Treasurer shall render a quarterly report "...to the Chief Executive Officer, the
Internal Auditor and the legislative body of the local agency..." (Government Code
53646).
The County shall submit copies of its second and fourth quarter reports to the California
Debt and Investment Advisory Commission within 60 clays after the close of the second
and fourth quarters of each calendar year(Government Code 53646(g)).
In addition the County Treasurer will provide "...the County Treasury Oversight
Committee with an investment report as required by the Board of Supervisors..."
(Government Code 27133 (e)).
The County shall submit copies of its investment policy each calendar year to the
California Debt and Investment Advisory Commission. All subsequent policy
amendment(s) have to be submitted within 60 days.
PLEDGE REPORT
Any securities that are pledged or loaned for any purpose shall be reported in the
Quarterly Investment Report. The transaction detail will be provided, including purpose,
beginning and termination dates and all parties to the contract. The security
descriptions as to type, name, maturity date, coupon rate, CUSIP and other material
information will be included.
REVERSE REPURCHASE AGREEMENTS
All reverse repurchase agreements entered into, whether active or inactive by the end
of each quarter, shall be reported in the Treasurer's Quarterly Investment Report.
LOCAL AGENCY INVESTMENTS
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, including low- and moderate-income neighborhoods, pursuant
to Section 2906 of Title 12 of the United States Code. (Government Code 53635)
22
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
METHODOLOGY OF CALCULATING AND APPORTIONING TREASURY COSTS
Regular and Routine Investments
* $20 per investment transaction; i.e., $20 at placement and $20 at maturity.
* .00333 of interest income; i.e., $3.33 per $1,000 of interest income.
Charged quarterly by journal entry.
Special Reports and Research
Actual'staff time and materials.
Special Bank Transactions
Actual bank fee schedule.
-4$3684. Alternative Procedure for Investment of Excess Funds
B. The County Treasurer shall, at least quarterly, apportion any interest or other
increment derived from the investment of funds pursuant to this section in an
amount proportionate to the average daily balance of the amounts deposited
by the local agency and to the total average daily balance of deposits
in the investment pool. In apportioning and distributing that interest or
increment, the county treasurer may use the cash method, the accrual
method, or any other method in accordance with generally accepted accounting
principles. *
Prier to distributing that interest or increment, the County Treasurer may
deduct the actual costs incurred by the county in administering this section in
proportion to the average daily balance of the amounts deposited by the local
agency and to the total average daily balance of deposits in the investment pool.
C. The County Treasurer shall disclose to each local agency that invests funds
pursuant to this section the method of accounting used, whether cash,
accrual, or other, and shall notify each local agency of any proposed changes
in the accounting method at least 30 days prior to the date on which the proposed
changes take effect. *
* In Centra Costa County, the Auditor-Controller performs these functions for fiscal
controlpurposes.
23
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
NON-MANDATED DEPOSITS AND WITHDRAWALS IN THE TREASURY
Following are the terms and conditions for deposit of funds for investment purposes by
entities that are not legally required to deposit their funds in the County Treasury.
• Resolution by the County Board of Supervisors authorizing the acceptance of
outside participants by the County Treasury.
• Resolution by the legislative or governing body of the local agency authorizing the
investment of funds pursuant to Government Code 53884.
• Treasury investments will be directed transactions.
Withdrawal of funds in the Treasury shall coincide with investment maturities or
authorized sale of securities by the legislative or governing body of the local agency.
Except for funds in the California State Local Agency Investment Fund, a five-business-
days notification may be required when authorized sale of securities is involved.
However, the section on evaluation of request for withdrawal of funds for use outside
the County treasury pool by both mandated and non-mandated treasury pool
participants shall also apply.
WITHDRAWAL OF FUNDS BY MANDATED TREASURY PARTICIPANTS
The withdrawal of mandated deposits in the Treasury will coincide with investment
maturities and/or authorized sale of securities by authorized personnel of the local
agency. Except for funds in the California State Local Agency Fund, a five-business-
days notification may be required when authorized sale of securities is involved.
However, the section on evaluation of request for withdrawal of funds for use outside
the County treasury pool by both mandated and non-mandated treasury pool
participants shall also apply.
Evaluation of Request For WMdrawal of Funds For Use Outside the County
Treasury Pool by Both Mandated and Non-Mandated Treasury Pool Participants
Pursuant to Section 27138{a}:
"Notwithstanding any other provisions of law, any local agency, public agency, public
entity or public official that has funds on deposit in the County treasury pool and that
seeks to withdraw funds for the purpose of investing or depositing those funds outside
the County treasury pool shall first submit the request for withdrawal to the County
Treasurer before withdrawing funds from the County treasury pool."
The County Treasurer shall evaluate each proposed withdrawal and may request up to
30 days in order to assess the effect of the proposed withdrawal on the stability and
predictability of the investments in the County treasury and that the interests of the other
depositors will not be adversely affected.
24
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003 {
BROKERS AND ISSUERS
ABN AMBO, Incorporated
American Express Credit Corporation Lehman Brothers, Incorporated
Associates Corporation of North America Mechanics Bank
Associates First Capital Mellon Bank
Bank of America Merrill Lynch
Bank of the West Merrill Lynch Government Securities,
Bankers Trust Company Incorporated
Barclays Capital, Incorporated Morgan Stanley Dean Witter& Company
Bear Stearns & Company, Incorporated NationsBanc Corporation
California Arbitrage Management Program Norwest Banks
Chase Securities, incorporated Norwest Investment Services
Chevron Texaco Corporation Prudential Securities, Incorporated
Gitico Public Financial Management,
Civic tank of Commerce Incorporated
Credit Suisse First Boston Rauscher Pierce Refsnes, Incorporated
Deere'& Company Salomon Smith Barney, Incorporated
Donaldson, Lufkin & Jenrette Securities Sumitomo Bank of California
Corporation UBS Financial Services
ExxonMobil' Corporation and Subsidiaries Union Bank
First Commercial Bank US Bancorp
Ford Motor Credit Company Washington Mutual
General Electric Capital Corporation Wells Fargo Bank
General Electric Capital Services Westamerica Bank
General Electric Company
Gilford Securities, Incorporated
Goldman, Sachs & Company
Government Perspectives
John Deere Capital Corporation
Note: The County Treasury will not be limited to the above list. Others will be included as long as all
conditions for authorized brokers and dealers set forth in this policy are met. Additionally, deletions and
additions are based on the maintenance of required credit quality as rated by Standard and boor's,
Moody's, GFl (Gerry Findley Incorporated) and other recognized rating services and reliable financial
sources.
25
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
PRIMARY GOVERNMENT SECURITIES DEALERS REPORTING TO THE MARKET
REPORTS DIVISION OF THE FEDERAL RESERVE BANK OF NEW YORK
BNP Paribas Securities Corp.
Banc of America Securities LLC
Banc One Capital Markets, Inc.
Barclays Capital Inc.
Bear, Stearns & Co., Inc.
CIBC World Markets Corp.
Credit Suisse f=irst Boston LLC
DaiwaSecurities America Inc.
Deutsche Bank Securities Inc.
Dresdner Kleinwort Wasserstein SecuritiesLLC
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
J.P. Morgan Securities, Inc.
Lehman Brothers Inc.
Merrill Lynch Government Securities Inc.
Mizuho Securities USA Inc. j
Morgan Stanley & Co. Incorporated
Nomura Securities International, Inc.
Salomon Smith Barney Inc.
UBS Financial Services
26
CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
GLOSSARY
Agencies A colloquial term for securities issued by the federal agencies.
Bankers Acceptances A time bill of exchange drawn on and accepted by a
commercial bank to finance the exchange of goods. When a bank "accepts" such a bill,
the time draft becomes, in effect, a predated, certified check payable to the bearer at
some 'future specified date. Little risk is involved for the investor because the
commercial bank assumes primary liability once the draft is accepted.
Basis Point One basis point is equal to 1/100 of one percent. For example, if interest
rates increase from 8.25% to 8.50'/0, the difference is referred to as a 25-basis-point
increase.
Blue Sky Laws Common term for state securities law, which vary from state to state.
Generally refers to provision related to prohibitions against fraud, dealer and broker
regulations and securities registration.
Book Value Refers to value of a held security as carried in the records of an investor.
May differ from current market value of the security.
Certificates of Deposit (C/Ds) Certificates issued against funds deposited in a
commercial bank for a definite period of time and earning a specified rate of return.
They are issued in two forms, negotiable and non-negotiable.
• Negotiable Certificates of deposit May be sold by one holder to another prior to
maturity. This is possible because the issuing bank agrees to pay the amount of the
deposit plus interest earned to the bearer of the certificate at maturity.
• Non-Negotiable Certificates of deposit These certificates are collateralized and
are not money market instruments since they cannot be traded in the secondary
market. They are issued on a fixed-maturity basis and often pay higher interest
rates than are permissible on other savings or time-deposit accounts.
Commercial Paper Short-term, unsecured promissory notes issued in either
registered or bearer form and usually backed by a line of credit with a bank. Maturities
do not exceed 270 days and generally average 30-45 days.
Coupon Rate The annual rate of interest payable on a security expressed as a
percentage of the principal amount.
CUSIP Numbers CUSIP is an acronym for Committee on Uniform Security
Identification Procedures. CUSIP numbers are identification numbers assigned each
maturity of a security issue and usually printed on the face of each individual security in
the issue. The CUSIP numbers are intended to facilitate identification and clearance of
securities.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
Inverse Floaters An adjustable interest rate note keyed to various indices such as
LIBOR, commercial paper, federal funds, treasuries and derivative structures. The
defined interest rate formula is the opposite or inverse of these indices. Interest rates
and pay dates may reset daily, weekly, monthly, quarterly, semiannually or annually.
Liquidity Usually refers to the ability to convert assets (such as investments) into
cash.
Mark to Market Valuing the inventory of held securities at its current market value.
Market Value Price at which a security can be traded in the current market.
Maturity The date upon which the principal of a security becomes due and payable to
the holder.
Medium-Term Notes (MTNs) Corporate debt obligations continuously offered in a
broad range of maturities. MTNs were created to bridge the gap between commercial
paper and corporate bonds. The key characteristic of MTNs is that they are issued on a
continuous basis.
Money Market Instruments Private and government obligations of one year or less.
Offer The price of a security at which a person is willing to sell.
Par Value The stated or face value of a security expressed as a specific dollar amount
marked on the face of the security; the amount of money due at maturity. Par value
should' not be confused with market value.
Premium The amount by which the price paid for a security exceeds par value,
generally representing the difference between the nominal interest rate and the actual
or effective return to the investor.
Range Notes A security whose rate of return is pegged to an index. The note defines
the interest rate minimum or floor and the interest rate maximum or cap. An example of
an index may be federal funds. The adjustable rate of interest is determined within the
defined range of the funds.
Repurchase Agreement or RP or REPO An agreement consisting of two
simultaneous transactions whereby the investor purchases securities from a bank or
dealer and the bank or dealer agrees to repurchase the securities at the same price on
a certain future date. The interest rate on a ISP is that which the dealer pays the
investor for the use of his funds. Reverse repurchase agreements are the mirror image
of the 'RPs when the bank or dealer purchases securities from the investor under an
agreement to sell them back to the investor.
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CONTRA COSTA COUNTY
INVESTMENT POLICY
JUNE, 2003
Settlement gate The date used in price and interest computations, usually the date of
delivery.
SLUGS An acronym for State and Local Government Series. SLUGS are special
United' States Government securities sold by the Secretary of the Treasury to states,
municipalities and other local government bodies through individual subscription
agreements. The interest rates and maturities of SLUGS are arranged to comply with
arbitrage restrictions imposed under Section 103 of the internal Revenue Code.
SLUGS are most commonly used for deposit in escrow in connection with the issuance
of refunding bonds.
STRIPS US Treasury acronym for "separate trading of registered interest and
principal of securities." Certain registered Treasury securities can be divided into
separate interest and principal components, which may then be traded as separate
entities.
SWAP Generally refers to an exchange of securities, with essentially the same par
value, but may vary in coupon rate, type of instrument, name of issuer and number of
days to maturity. The purpose of the SWAP may be to enhance yield, to shorten the
maturity or any benefit deemed by the contracting parties.
Treasury Securities Debt obligations of the United States Government sold by the
Treasury Department in the form of bills, notes and bonds:
• Bills Short-term obligations that mature in one year or less and are sold at a
discount in lieu of paying periodic interest.
• Notes Interest-bearing obligations that mature between one year and 10 years.
• Bonds Interest-bearing long-term obligations that generally mature in 10 years or
more.
Zero-Coupon Security A security that makes no periodic interest payments but
instead is sold at a deep discount from its face value.
A:investment policy.600
0312?102
29