Item 24 - Annual Statement of Investment Policy

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City of Santa - Annual Page H July 1, 2021 - Statement of Investment Policy June 30, 2022 SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. [Referenced page: 4] SECURITIES ACT OF 1933, SECTION 5, RULE 144A SECURITIES: Unregistered securities – purchases of private resales of unregistered securities to institutions, by Securities And Exchange Commission defined Qualified Institution Buyers (QIBs) who are judged sophisticated enough to understand the complexities and risks inherent in private placements. Local Agencies that qualify as an accredited investor under the Rule 501(a) of the Securities Act are deemed QIBs provided that they can meet a $100 million in invested securities threshold. [Referenced page: 15] SECURITIES AND EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. [Referenced pages: 12, 13, 34, 35] SPECULATION: Assumption of risk in anticipation of gain but recognizing a higher than average possibility of loss. [Referenced page: 15] SWAP: Trading one asset for another. [Referenced page: 4] SUPRANATIONAL OBLIGATIONS: United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase or sale within the United States. [Referenced pages: 10, 18] TREASURIES: Negotiable U.S. Government debt obligations, backed by its full faith and credit, comprising of short-term Treasury Bills (maturity less than one year), medium-term Treasury Notes (maturity one to ten years), and long-term Treasury bonds (maturity from 10 to 30 years). [Referenced pages: 3, 5, 17] TREASURY BILLS (T-Bills): A non-interest bearing discount security issued by the US Treasury to finance the national debt. A T-Bill is a short-term debt obligation backed by the U.S. government with a maturity of less than one year, sold in denominations of $1,000 up to a maximum purchase of $5 million. T-bills are sold with maturities of four, thirteen, twenty-six and fifty-two weeks. They do not pay interest, but rather are sold a discount to their face value. Effective interest is earned at maturity. [Referenced pages: 9, 11, 17, 18] TREASURY BONDS (T-Bonds): Long-term coupon-bearing US Treasury securities issued as direct obligations of the US Government and having initial maturities of more than 10 to 30 years. Next to treasury bills (maturity less than one year), and treasury notes (maturity one to ten years) T-bonds are the safest form of marketable investment. [Referenced pages: 9, 11, 17, 18] TREASURY NOTES: Medium-term coupon-bearing US Treasury securities issued as direct obligations of the US Government and having initial maturities from one to 10 years. Treasury notes are available from the government with either a competitive or noncompetitive bid. [Referenced pages: 9, 11, 17, 18, 31] WEIGHTED AVERAGE MATURITY (WAM): The average maturity of all the securities that comprise a portfolio. According to SEC rule 2a-7, the WAM for SEC registered money market mutual funds may not exceed 90 days and no one security may have a maturity that exceeds 397 days. [Referenced page: 20] YIELD: The rate of annual income return on an investment, expressed as a percentage: (a) Income Yield is obtained by dividing the current dollar income by the current market price for the security; (b) Net Yield or Yield to Maturity is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. [Referenced pages: 3, 4, 5, 19, 21]