HomeMy WebLinkAboutResolution 2010-079 N.C.S. 05/27/2010 Resolution No. 2010-079 N.C.S.
of the City of Petaluma, California
APPROVING THE CITY OF PETALUMA INVESTMENT POLICY
AND DELEGATING INVESTMENT AUTHORITY TO TIIE
CITY TREASURER FOR FISCAL YEARS 2009-2010 AND 2010-2011
WHEREAS, the City Treasurer has rendered to the City Council a Statement of
Investment Policy; and,
WHEREAS, the City Treasurer has the responsibility to invest the pooled idle cash from
all City funds pursuant to California Government Code Sections 53601 and 53635; and,
WHEREAS, the City Treasurer has developed a Statement of Investment Policy and
submitted said Policy to the City Council for review.
NOW, THEREFORE BE IT RESOLVED, that the City Council approves the City of
Petaluma Investment Policy and delegates investment authority to the City Treasurer for Fiscal
Years 2009-2010 and 2010-2011 as shown in Exhibit A attached.
Under the power and authority conferred upon this Council by the Charter of said City.
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the Ap ro d as to
Council of the City of Petaluma at a Special meeting on the 2T~ day of May, 2010, nn:
by the following vote:
City ttorney
AYES: Barrett, Vice Mayor Class, Harris, Rabbitt, Renee, Mayor Torliatt
NOES: Healy
ABSENT: None ~
ABSTAIN: None
ATTEST:
Deputy City Clerk Mayor
Resolution No. 2010-079 N.C.S. Page 1
EXHIBIT A
CITE' ~F PETALLJIVIA, CALIF®RNIA
STATEMENT ®F~ INVESTMENT P®LICY
For Fiscal Years 2009-2010 and 2010-2011
Sandra Sato
Interim Finance Director/City Treasurer
Resolution No. 2010-079 N.C.S. Page 2
1
2 CITY OF PETALUMA CALIFORNIA
3 STATEMENT OF INVESTIVIENT PbLICY FOR FISCAL YEA1~S
4 2009-2010 AND 2010-2011
5
6 POLICY
7
8 It is the policy of the City of Petaluma, CA (the "City") to manage public funds in a manner
9 consistent with the following objectives: comply with all laws of the State of California pertaining to
10 the investment of public funds; safeguard the principal of funds under its control, meet the daily cash
11 flow requirements and to achieve a reasonable rate of return with the maximum security.
12
13 SCOPE
14
15 This investment policy applies to all financial assets of the City. These funds are accounted for in
16 the City Comprehensive Annual Financial Report and include:
17
18 General Fund
19 Special Revenue Funds
20 Debt Service Funds
21 Capital Project Funds
22 Enterprise Funds
23 Internal Service Funds
24 Pernaanent and Private Purpose Trust Funds
25
26 This Policy shall also apply to funds of the Petaluma Community Development Commission
27 (PCDC), Petaluma Public Financing Authority, City of Petaluma Public Financing Corporation and
28 any other fund under the control ofthe City Treasurer.
29
30 PRUDENCE
3.l
32 Investments shall be made with care, skill, prudence, and diligence under the circumstances then
33 prevailing, including, but not limited to, the general economic conditions and the anticipated needs
34 of the City, that a pnident person acting in a like capacity and familiarity with those matters would
35 use in the conduct of funds of a like character and with like aims, to safeguard the principal and
36 maintain the liquidity needs of the City..
37
38 The City Treasurer and authorized individuals acting in accordance with written procedures and the
39 investment policy and exercising due diligence shall be relieved of personal responsibility for an
4o individual security's credit risk or market price changes, provided deviations from expectations are
41 reported in a timely fashion and appropriate action is taken to control adverse developments.
42
43 OBJECTIVE
44
45 The primary objective in priority order, of the City's investment activities shall be:
46
47 1. Safety: Safety of principal is the foremost objective of the investment program. Investments
48 of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in
49 the overall portfolio.
so
51 2. Liquidity: The City's investment portfolio will remain sufficiently liquid to enable the City
52 to meet all operating requirements which might be reasonably anticipated.
Resolution No. 2010-079 N.C.S. Page 3
l
2 3. Return on Investments: The City's investments shall be designed with the objective of
3 attaining a rate of return throughout budgetary and economic cycles, commensurate with the
4 City's investment risk constraints and the cash flow characteristics of the portfolio.
5
6 DELEGATION OF AUTHORITY
7
8 Under the City Charter Section 24, the City Treasurer is appointed by the City Manager with the
9 approval of the City Council. The City Treasurer is also the City's Finance Director. Pursuant to
1 o the Government Code, the City Council delegates the authority to invest or to reinvest funds, or to
11 sell or exchange securities so purchased, to the City Treasurer for cone-year period. The City
12 Treasurer is charged with the responsibility for carrying out the policies of the City Council and
13 shall assume full responsibility for investment transactions until the delegation of authority is
14 revoked or expires.
15
16 The daily cash management, investment transactions and account reconciliations are the primary
17 responsibilities of the City Treasurer. These activities are also carried out by other members of the
18 Finance Department under the direction of the City Treasurer. The City Treasurer shall establish
19 procedures for the operation consistent with this investment policy.
20
21 ETHICS AND CONFLICT OF INTEREST
22
23 Officers and employees involved in the investment process shall refrain from personal business
24 activities that could conflict with proper execution of the investment program or which could impair
25 their ability to make impartial decisions. Officers and employees involved in the investment process
26 shall abide by the Conflict of Interest Code, (California Government Code Section 1090 et seq.) and
27 the California Political Reform Act (California Government Code Section 81000 et seq.).
28
29 PERMITTED INVESTMENTS
30
31 California Government Code Sections 53601 et. seq., and 53635 govern the investments permitted
32 for purchase by the City. Within the investments permitted by the Code, the City seeks to further
33 restrict eligible investments to the investments listed below.
34
35 Percentage limitations, where indicated, apply at the time of t11e purchase. Rating requirements
36 where indicated apply at the time of purchase. In the event a security held by the City is subject to a
37 rating change that brings it below the minimum specified rating requirement, the City Treasurer
38 shall notify the City Council of the change. The course of action to be followed will then be decided
39 on a case-by-case basis, considering such factors as the reason for the rate drop, prognosis for
40 recovery or further rate drops, and the market price of the security. Investment maturities shall be
4t based on review of cash flow forecasts. Maturities will be scheduled so as to permit the City to meet
42 all projected obligations.
43
44 No investment shall be made in any security, other than a security underlying a repurchase or
45 reverse repurchase agreement, that at the time of the investment has a term remaining to maturity in
46 excess of three years (except for bond proceeds), unless the City Council has granted express
47 authority to make that investment no less than three months prior to the investment.
48
49
Resolution No. 2010-079 N.C.S. Page 4
] ELIGIBLE INVESTMENTS
2
3 A. State of California Local Agency Investment Fund (LAIF). The City may invest in
4 LAIF. A maximum of $50 million may be invested in this category.
5
6 B. Sonoma County Investment Pool. The City may invest in the Sonoma County Investment
7 Pool. A maximum of $10 million may be invested in this category.
8
9 C. California Asset Management Program Trust (CAMP). The City may invest in the
l0 shares in the California Asset Management Trust, so long as the portfolio is rated among the
1 1 top two rating categories by one of the nationally recognized rating agencies. A maximum
12 of $50 million may be invested in this category.
13
l4 D. Certificates of Deposit. FDIC insured or fully collateralized time certificates of deposit in
15 financial institutions located in the United States including a Placement Service such as
16 Certificate of Deposit Account Registry Service (CDARS). Collateralized certificates of
17 deposit shall be handled in accordance with California Government Code section 53561.
18 The City, at its discretion, may waive the collateralization requirements for any portion of
19 the deposit that is covered by federal deposit insurance. As noted above the City may also
20 invest in fully insured certificates of deposit utilizing a placement service such as CDARS,
21 as provided under California Government Code section 53601.8. The maximum term for
22 certificates of deposit shall be two years. Investments in certificates of deposit are further
23 limited to 30% of surplus funds.
24
25 E. Banker's Acceptances. Banker's acceptances issued by domestic or foreign banks, which
26 are eligible for purchase by the Federal Reserve System. Purchases of banker's acceptances
27 may not exceed 180 days maturity. Eligible banker's acceptances are restricted to issuing
28 financial institutions with short-term paper rated in the highest category by one or more
29 nationally recognized rating services. Investments in banker's acceptances are further
30 limited to 40% of the portfolio with no more than 30% of surplus invested in the banker's
3 t acceptances of any one commercial bank.
32
33 F. U.S. Government Issues. United States Treasury notes, bonds, bills, or certificates of
34 indebtedness, or those for which the faith and credit of the United States are pledged for the
35 payment of principal and interest.
36
37 G. Federal Agency Securities. Federal agency or United States government-sponsored
38 enterprise obligations, participations, or other instruments, including those issued by or fully
39 guaranteed as to principal and interest by federal agencies or United States government-
40 sponsored enterprises.
41
42 H. Repurchase Agreements. Repurchase agreements are to be used solely as short-term
43 investments not to exceed 30 days. The City may enter into repurchase agreements with
44 primary government securities dealers rated "A" or better by two nationally recognized
45 rating services. Counterparties should have (i.) a short-term credit rating of at least A-1/P-1;
46 (ii.) minimum assets and capital size of $25 billion in assets and $350 million in capital; (iii.)
47 five years of acceptable audited financial results; and (iv.) a strong reputation among market
48 participants.
49
Resolution No. 2010-079 N.C.S. Page 5
1 The following collateral restrictions will be observed:
2
3 Only U.S. Treasury securities or Federal Agency securities will be acceptable
4 collateral. All securities underlying repurchase agreements must be delivered to the
5 City's custodian bank versus payment or be handled under a properly executed tri-
`6 party repurchase agreement. The total market value of all collateral for each
'7 repurchase agreement must equal or exceed 102 percent of the total dollar value of
8 the money invested by the City for the term of the investment. For any repurchase
9 agreement with a term of more than one day, the value of the underlying securities
1 o must be reviewed on an on-going basis according to market conditions. Market value
11 must be calculated each time there is a substitution of collateral.
12
13 The City or its trustee shall have perfected first security interest under the Uniform
14 Commercial Code in all securities subject to repurchase agreement. The City shall
15 have properly executed a Professional Services Agreemerit with each counter party
16 with which it enters into repurchase agreements.
17
18 I. Money Market Funds. Shares of beneficial interest issued by diversified management
19 companies that are money market funds registered with the Securities and Exchange
20 Commission (SEC) under the Investment Company Act of 1.940 (15 U.S.C., Sec. 80a-1, et
2-1 seq.).
22
23 The City may invest in shares of beneficial interest issued by a company which shall have
24 met either of the following criteria:
25
26 a. Attained the highest ranking or the highest letter and numerical rating provided by
27 not less than two nationally recognized rating services.
28
29 (or)
30
31 b. Retained an inyesttnent adviser registered or exempt from registration with the SEC
32 with not less than five years experience in managing money market mutual funds
33 with assets under management in excess of five hundred million dollars
34 ($500,000,000).
35
36 The purchase price of shares of beneficial interest purchased pursuant to this subdivision
37 shall not include any commission that the companies may charge. Investments in Money
38 Market Funds are further limited to 20% of the portfolio.
39
40 J. Medium-Term Notes. Medium-term notes shall be limited to any current investments and
41 any new investments will be prohibited. Medium-term notes are defined as all corporate and
42 depository institution debt securities with a maturity of not more than 397 days, including
43 securities specified as "medium-term notes," as well as other debt instruments originally
44 issued with maturities longer than 397 days, but which, at time of purchase, have a final
45 maturity of 397 days or less. Eligible medium-term notes shall be issued by corporations
46 organized and operating within the United States or by depository institutions licensed by the
47 United States or any state, and operating within the United States.
48
Resolution No. 2010-079 N.C.S. Page 6
1 K. ELIGIBLE INVESTMENTS FOR BOND PROCEEDS
2
3 Bond Proceeds shall be invested in securities permitted by the applicable bond documents. If the
4 bond documents are silent as to the permitted investments, bond proceeds will be invested in
5 securities permitted by this Policy.
6
7 With respect to maximum maturities, the Policy authorizes investing bond reserve fund proceeds
8 beyond the five years if prudent in the opinion of the City Treasurer.
9
10 INELIGIBLE INVESTMENTS
11
l2 As provided in California Government Code section 53601.6 and this policy, the City shall not
13 invest any funds in:
14 m Inverse Floaters
t 5 Range Notes
16 Mortgage Derived Interest-Only Strips
t 7 Negotiable Certificates of Deposit
18 Commercial Paper
19 Medium Term Notes except as currently owned as of the date this policy is approved
20 o Any security that could result in zero interest accrual if held to maturity.
21
22 The purchase of any security not listed above, but permitted by the California Government Code, is
23 prohibited unless the City Council approves the investment either specifically or as a part of an
24 investment program approved by the Board. Exclusion of these investment vehicles is consistent
25 with the City's overall objectives of achieving reasonable returns on public funds while minimizing
26 risk and capital losses. Although the potential exists for greater yields with these vehicles, there is
27 the potential level of risk that can exceed their benefits.
2$
29 BROKERS
30
31 To provide for the optimum yield in the City's portfolio, the City's procedures shall be designed to
32 encourage competitive bidding on transactions from an approved list of broker/dealers.
33
34 The City Treasurer, or the City's investment advisor, shall maintain a list of authorized
35 broker/dealers and financial institutions that are approved for investment purposes. This list will be
36 developed after a comprehensive credit and capitalization analysis indicates the firm is adequately
37 financed to conduct business with public entities. It shall be the policy of the City to purchase
38 securities only from those authorized institutions or firms.
39
40 SAFEKEEPING AND CUSTODY
4l
42 All security transactions entered into by the City of Petaluma, CA shall be conducted on a delivery-
43 versus-payment (DVP) basis. This procedure ensures that securities are deposited with the third-
44 party custodian prior to the release of funds. A third party custodian designated by the City
45 Treasurer and evidenced by safekeeping receipts will hold securities.
46
47 The only exceptions to the foregoing are Local Agency Investment Pools, Certificates of Deposit,
48 and money market funds since the purchased securities are not deliverable. In all cases, purchased
49 securities shall be held in the City's name.
50
Resolution No. 2010-079 N.C.S. Page 7
I INTERNAL CONTROL
2
3 The City Treasurer shall establish an annual process of independent review by an external auditor.
4 This review will provide internal control by assuring compliance with the Statement of Investment
5 Policy and procedures.
6
7 PERFORMANCE STANDARDS
8
9 The investment portfolio shall be designed with the objective of obtaining a reasonable rate of return
i o throughout budgetary and economic cycles, commensurate with the investment risk constraints and
1 I the cash flow needs.
12
13 The City will measure the portfolio's performance against a market benchmark that i.s commensurate
14 with the City's investment risk constraints and the cash flow characteristics of the portfolio.
15
16 REPORTING
17
18 The City Treasurer shall provide a quarterly investment report to the City Council, which provides a
t9 clear picture of the status of the current investment portfolio, including transactions. This report will
20 be formally submitted to the City Council each quarter at a public meeting.
21
22 Schedules in the quarterly Treasurer's Report will include the following:
23
24 • Listing of individual securities held at the end of the reporting period.
25 ° Realized and unrealized gains or losses resulting from appreciation or depreciation by listing
26 the cost and market value of securities over one-year duration that are not intended to be held
27 until maturity (in accordance with Governmental Accounting Standards Board (GASB)
28 requirements).
29 ° Average weighted yield to maturity of portfolio on investments as compared to applicable
30 benchmarks.
31 ° Listing of investment by maturity date.
32 • Percentage of the total portfolio which each type of investment represents.
33
34 The quarterly report shall state compliance of the portfolio to the investment policy, or manner in
35 which the portfolio is not in compliance. The quarterly report shall also include a statement
36 certifying the ability of the City to meet its expenditure requirements for the next six months.
37
38 POLICY REVIEW
39
40 The investment policy shall be reviewed at least annually to ensure its consistency with. the overall
41 objectives of preservation of principal, liquidity and yield, and its relevance to current law and
42 financial and economic trends. The investment policy shall be adopted by resolution of the City
43 Council on an annual basis. Any amendments to the policy shall be forwarded to the City Council
44 for approval.
45
Resolution No. 2010-079 N.C.S. Page 8
1 CITY OF PETALUMA
2 STATEMENT OF INVESTMENT POLICY FOR FISCAL YEARS
3 2009-2010 ANI) 2010-2011
4
5 GLOSSARY OF TYPES OF.INVESTMENTS
6 AVAILABLE TO LOCAL GOVERNMENTS
7
8 STATE INVESTMENT POOL (LAIF)
9
1 o The Local Agency Investment Fund (LAIF), a voluntary program created by statute, began in 1977
11 as an investment alternative for California's local governments and special districts and continues
12 today under the State of California_Treasurer's office. The enabling legislation for the LAIF is
13 Section 16429.1,2,3 of the California Government Code.
14 This program offers participating agencies the opportunity to participate in a major portfolio which
15 daily invests hundreds of millions of dollars, using the investment expertise of the Treasurer's Office
16 Investment staff at no additional cost to the taxpayer. This in-house management team is comprised
17 of civil servants who have individually worked for the State Treasurer's Office for over 20 years.
18 The LAIF is part of the Pooled Money Investment Account (PMIA). The PMIA began in 1953 and
19 has oversight provided by the Pooled Money Investment Board (PMIB) and an in-house Investment
20 Committee. The PMIB Board members are the State Treasurer, Director of Finance, and State
21 Controller.
22 The LAIF has oversight by the Local Investment Advisory Board (LIAB). The Board consists of
23 five members as designated by Statute. The Chairman is the State Treasurer, or his designated
24 representative. Two members qualified by training and experience in the field of investment or
25 finance, and the State Treasurer appoints two members who are Treasurers, finance or fiscal officers
26 or business managers employed by any County, City or local district or Municipal Corporation of
27 this state. The term of each appointment is two years or at the pleasure of the appointing authority.
28 All securities are purchased under the authority of the Government Code Section 16430 and
29 16480.4. The State Treasurer's Office takes delivery of all securities purchased on a delivery versus
30 payment basis using a third party custodian. All investments are purchased at market, and market
31 valuation is conducted monthly.
32 Additionally, the PMIA has Policies, Goals, and Objectives for the portfolio to make certain that our
33 goals of Safety, Liquidity and Yield are not jeopardized and that prudent management prevails.
34 These policies are formulated by investment staff and reviewed by both the PMIB and the LIAB on
35 an annual basis.
36 The Bureau of State Audits on an annual basis audits the State Treasurer's Office. The resulting
37 opinion is included in the subsequent PMIB monthly report following its publication. The Bureau of
38 State Audits also has a continuing audit process throughout the year. The State Controller's Office as
39 well as an in-house audit process involving three separate divisions audit all investment and LAIF
40 claims on a daily basis.
41
42 There is a limitation of $50 million per legal entity within an agency. There is also a maximum of
43 fifteen transactions, deposits or withdrawals per month.
44
45 SONOMA COUNTY INVESTMENT POOL
46
47 The Sonoma County Treasurer maintains an investment pool in which the County, Schools, Special
48 Districts and Cities can participate. This investment pool operates in the same manner as the State
49 pool. The County Treasurer is subject to the same State Government Code regarding investments as
50 the City. As with the State investment fund, City funds can be withdrawn at any time and are
51 protected by State Law from seizure or impoundment by any County Officer. The City does not
52 participate in this pool but retains the option to do so.
53
Resolution No. 2010-079 N.C.S. Page 9
1 US TREASURY BILLS
2
3 Commonly referred to as T-Bills, these are short-term marketable securities sold as obligations of
4 the US Government. They are offered in three month, six month, nine month and one-year
5 maturities. T-Bills do not accrue interest but are sold at a discount, and pay the face value at
6 maturity.
7
8 US TREASURY NOTES
9
10 These are marketable, interest-bearing securities sold as obligations of the US Government with
11 original maturities of one to ten years. Interest is paid semi-annually.
12
13 US TREASURY BONDS
14
15 These are the same as US Treasury Notes except they have original maturities often years or longer.
16
17 FEDERAL AGENCY ISSUES
18
19 Many Federal Government Agencies are authorized to issue short term and long term obligations
20 that are used to finance various programs such as home loans, business loans, farnl loans, etc. These
21 Agencies were created by the Federal Government in the 1930's and have since become independent
22 quasi-public agencies. The security for their issues is the guarantee of the Agency to pay. The
23 Federal Government has only an implied liability to the extent that the Agency has an open credit
24 line to borrow from the U.S. Treasury. It is widely accepted that Federal Agency issues are almost
25 as secure as U.S. Government notes.
26
27 There is an active secondary market available to sell these issues prior to maturity. The issues are
28 fairly liquid depending on the prevailing market interest rates at the time of sale. Some of the more
29 common agency notes are issued by the Federal National Mortgage Association (Fannie Mae),
30 Federal Home Loan Banks, Federal Home Loan Mortgage Corporation (Freddie Mac), and the
31 Federal Farm Credit Banks.
32
33 REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS (REPOS)
34
35 A Repurchase Agreement is a short-term investment agreement to loan City funds for a fixed period
36 in return for a fixed interest rate and secured collateral, such as U.S. Treasuries or Agency Notes.
37 This type of investment is usually done for overnight or very short term (7 days) investment of funds
38 left in the general operating checking account. Reverse Repurchase agreements is a short-term
39 investment, which is used to take advantage of market interest rate changes and increase the size of
4o the portfolio. State law was amended in 1996 to limit the use of both repurchase and reverse
41 repurchase agreements.
42
43 COMMERCIAL PAPER (CP)
44
45 Commercial Paper is defined as an unsecured promissory note of industrial corporations, utilities
46 and bank holding companies. The notes are in bearer fornl in amounts starting at $100,000. State
47 law limits the City to investments in United States corporations having assets in excess of five
48 hundred million dollars with an "A" or higher rating. State Law also permits cities to invest in Asset
49 Back Commercial Paper (ABCP) from issuers organized within the United States as a special
50 purpose corporation, trust or limited liability company. ABCP issuers must have program wide
51 credit enhancements including, but not limited to, over collateralization, letters of credit, or surety
52 bond. Cities may not invest more than 25% of the portfolio in commercial paper nor purchase more
Resolution No. 2010-079 N.C.S. Page 11
1. than 10 percent of the outstanding commercial paper of any single issuer. The maximum maturity of
2 the commercial paper may not exceed a term of 270 days.
3
4 MEIDIUM TERM N®TES (MTN)
5
6 Debt securities issued by a corporation or depository institution with a maturity ranging for nine
7 months to five years. The term "medium-term note" refers to the time it takes for an obligation to
8 mature and includes other corporate securities originally issued for maturities longer than five years,
9 but which have now fallen within the five year maturity range. MTNs issued by banks are also
10 called bank notes.
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
MUTUAL FUNDS
An investment company that pools money and can invest in a variety of securities, including fixed-
income securities and money market instruments, cities may invest in Mutual Funds or Money
Market fiends that receive the highest ranking or the highest letter and numerical rating by two of the
three largest nationally recognized rating services. The Mutual Funds must abide by the same
investment restrictions and regulations that apply to public agencies in California. Money Market
Funds must follow regulations specified the Security and Exchange Commission under the
Investment Company Act of 1940. Mutual Funds have floating Net Asset Values (NAV), which
means the amount received at redemption may be more or less than the amount originally invested.
Money Market Funds strive to maintain a constant NAV.
GUARANTEED INVESTMENT CONTRACT (GIC)
This is an agreement acknowledging receipt of funds for deposit, specifying terms for withdrawal
and guaranteeing a rate of interest to be paid. The investment follows all state laws for the
investment of public funds. GIC's are only permitted for bond proceeds.
Resolution No. 2010-079 N.C.S. Page 12~
1 than 10 percent of the outstanding commercial paper of any single issuer. The maximum maturity of
2 the commercial paper may not exceed a term of 270 days.
3
4 MEDIUM TERM NOTES (MTN)
5
6 Debt securities issued by a corporation or depository institution with a maturity ranging for nine
7 months to five years. The term "medium-term note" refers to the time it takes for an obligation to
8 mature and includes. other corporate securities originally issued for maturities longer than five years,
9 but which have now fallen within the five year maturity range. MTNs issued by banks are also
10 called bank notes.
12 MUTUAL FUNDS
13
14 An investment company that pools money and can invest in a variety of securities, including fixed-
15 income securities and money market instruments, cities may invest in Mutual Funds or Money
16 Market funds that receive the highest ranking or the highest letter and numerical rating by two of the
17 three largest nationally recognized rating services. The Mutual Funds must abide by the same
18 inveshnent restrictions and regulations that apply to public agencies in California. Money Market
19 Funds must follow regulations specified the Security and Exchange Commission under the
20 Investment Company Act of 1940. Mutual Funds have floating Net Asset Values (NAV), which
21 means the amount received at redemption may be more or less than the amount originally invested.
22 Money Market Funds strive to maintain a constant NAV.
23
24 GUARANTEED INVESTMENT CONTRACT (GIC)
25
26 This is an agreement acknowledging receipt of funds for deposit, specifying terms for withdrawal
27 and guaranteeing a rate of interest to be paid. The investment follows all state laws for the
28 investment of public funds. GIC's are only permitted for bond proceeds.
Resolution No. 2010-079 N.C.S. .Page 12