Item 24 - Annual Statement of Investment Policy

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City of Santa - Annual Page B July 1, 2021 - Statement of Investment Policy June 30, 2022 BROKER-DEALER: Broker-dealer is used in securities regulation parlance to describe stock and securities brokerages, because most act as both agents and principals. A brokerage acts as a broker (or agent) when it executes orders on behalf of clients and acts as a dealer, or principal, when it trades for its own account. A broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. [Referenced pages: 3, 8, 9, 24, 25] CALIFORNIA MUNICIPAL TREASURERS ASSOCIATION (CMTA): Is the professional society of active public treasurers of California counties, cities and special districts. It sets ethical standards for the treasury profession in state and local governments in California. The Association provides educational seminars and conferences, publications, policy and legislative information, and technical assistance to members. [Referenced pages: 6, 21] CERTIFICATE OF DEPOSIT/NEGOTIABLE CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Time certificates of deposit are collateralized in accordance with the State code. Large-denomination CD's are typically negotiable and non-collateralized. These instruments are issued by depository institutions such as commercial banks, savings institutions and credit unions against funds invested for a specified time period (typically between 0 to 5 years). The term “CD” by itself generally refers to negotiable certificates of deposit that can be resold to other parties. CDs, however, also may be nonnegotiable. Nonnegotiable CDs cannot be actively traded on the secondary markets and generally are held to maturity by the party that purchased them. Yields on CDs vary depending on liquidity, credit quality; and, for nonnegotiable CDs, whether they are collateralized. [Referenced pages: 11, 17, 18, 32] COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. [Referenced pages: 10, 11, 14, 16, 17, 32, 33, 35] COLLATERLIZED MORTGAGE OBLIGATION (CMO): Mortgage backed bond that separates mortgage pools into different maturity classes called traunches. CMO’s are issued by Federal National Mortgage Corp. and Federal National Mortgage Association and are usually backed with a government guarantee and have an AAA bond rating. Planned Amortization Class CMOs (PAC) have stable prepayment schedules that do not react unfavorably in wide market swings. [Referenced page: 35] COMMERCIAL PAPER (CP): An unsecured obligation issued by a corporation or bank to finance its short- term credit needs, such as accounts receivable, payroll, and inventory. Commercial paper is usually issued by companies with high credit ratings, meaning that the investment is almost always relatively low risk. Maturities typically range from 2 to 270 days. [Referenced pages: 10, 18, 30, 32] COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report of the (entity). It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. [Referenced page: 1] CONSTANT MATURITY TREASURY (CMT) RATE: CMT rate is an adjustment for equivalent maturity, used by the Federal Reserve Board to compute an index based on the average yield of various Treasury securities maturing at different periods. [Referenced pages: 5, 19] CORPORATE BOND: A debt security issued by corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. [Referenced page: 6]