21-1018DocuSign Envelope ID: 4893EEgB-5DDE-406E-AC19-D8238BES5g84
Attest
Saralt" L. l,tauu
Sata anwanng,City Clerk
Approved as to form
T. rdlu
hing, City Attorney
RESOLUTTON NO. 21-1018
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MENIFEE, CALIFORNIA,APPROVING THE FISCAL YEAR 20.21 INVESTMENT POLICY AND APPROVINGDELEGATION TO THE CITY TREASURER TO CARRY OUT SUCH POLICY
WHEREAS, Government code section 53607 permits the city councir to deregateits investment authority to the City Treasurer by resolution each fiscal yejr; and
WHEREAS, the city councir desires to make such deregatron in conjuncrion withthe approval of an investment policy,
_ _ - - Nqw THEREFORE, the cjly councir of the city of r\irenifee, carifornia, does herebyRESOLVE, DETERMTNE and ORDER as fo ows:
sEcrloN 1: The city councir hereby adopts the statement of rnvestment poricy,
attached and incorporated here as Exhibit ,,A,,.
sEcrloN 2: The city councir hereby deregates to the city Treasurer the city counci|sinvestment authority and authonzes^the city Treasurer to appoint deputies to assist 1n carrylngout this function for fiscal year 2020-21 .
PASSED, APPROVED AND AOOPTED rhis 5s day of May,202t
mmerman,Mayor
J
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1. PURPOSE
The purpose of this investment policy is to identify various policies and procedures thatwill foster a.prudent and systematic investment piogram designed to seek the City ofMenifee's objectives of safety, liquidity and return on investm6nt through a diversrfiedinvestment portfolio. This poricy arso serves to organize and formarizeihe city ofMenifee's investment-related activities, while complying with all applicable st;tutesgoverning the investment of public funds. This policy is written to incorporate industrybest practices and recommendations from sources such as the Government Financeofficers Association (GFoA), carifornia Municipar rreasurers Association (cMTA),california Debt and lnvestment Advisory commission (cDlAc) and the Association ofPublic Treasurers (APT).
This investment policy was endorsed and adopted by the city of Menifee's GoverningBody and is effective as ofthe sth day of May, 2021, and reflaces any previous
versions.
2. SCOPE / BA CKGROUND
. Proceeds of debt issuance shall be invested in accordance with the City of
Menifee's general investment philosophy as set forth in this policyt however, such
proceeds are to be invested pursuant to the permitted investment provisions of their
specifi c bond indentures.
Any other funds specifically exempted by the Governing Body
This policy covers all funds and investment activities under the direct authority of the city
of Menifee, as set forth in the State Government Code, Sectlons 53600 et seq., with the
following exceptions:
POOLING OF FUNDS
Except for cash in certain restricted and special funds, the City of Menifee will
consolidate cash and reserve balances from all funds to maximize investment earnings
and to increase efficiencies with regard to investment pricing, safekeeping and
administration. lnvestment income will be allocated to the various funds based on their
respective participation and in accordance with generally accepted accounting
principles.
CITY OF MENIFEE
City Council Policy
Policy Number: CC-11
Approving Authorjty:
ci Council
Effective Date: 1 0/'112008
Last Modified: 51512021lnvestment Policy (FY 2020-20211
Subject
Page I of 25
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city of Menifee
3. ROLES AND RESPO NSIBILITIES
Revision Histo
The Menifee city council is responsible for the management of the city of Menifee,sfunds, including the administration of this investment policy. Managementresponsibility for the cash management of the city of Menifee's funds is herebydelegated to the Treasurer. The Treasurer will be responsrble for all transactionsundertaken and will establish a system of procedures and controls to regulate theactivities of subordinate officials and employees.
Policy CC-11
Page 2 of 25lnvestment Policy
mmerman,Mayor
Revision
No.
Date
Approved
Approved
By:Comments
1011t2008 City Council 2008-2009 lnvestment Poficyi
Resolution No. 08-18
,1 814t2009 City Council 2009-2010 lnvestment Policy,
Resolution No. 09-1 10
2 City Council 201 1 -20 12 I nvestment Policy;
Resolutron No. '11-240
3 12t4t2012 City Council 20 1 2-201 3 lnvestment Policy;
Resolution No. 12-299
4 11t6t2013 City Council 201 3-201 4 lnvestment Policy;
Resolution No. '13-345
5 316t2019 City Council 201 8-201 I lnvestment Policy;
Resolution No. 19-775
6 5t5t2021 2020-2021 lnvestment Policy;
Resolution No.21-1018
0
11t15t2011
City Council
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City of Menifee Policy CC-1 1
Page 3 of 25
t.
II.
III.
IV.
VI.
VII.
VIII.
IX.
X.
xt.
XII.
XIII.
XIV.
XV.
XVI.
XVII.
XVIII.
xtx.
XX. Appendix A: Permifted Investments . .......
GLossARy or. INvTSTMENT TERMS... ................ . ..... .
INT ItoDUC oN
Scot,u...............
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OBJlic nvES . ......
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At-I tot zH) Ft,iANCIAI_ lNSl ttirloNS. DF.t,ost loR ,s. ANt) BROKI,R/DI At.t._Rs .
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INV[srMt]Nt Pool.s/Mrit r r^t. FIJNt)s ..............
Cot.t-A niRAt-tzA'l'toN .... ........ . . ....
DEt-rvDRy, SAI,I KDEptNC AND Cus tr)Dy . ..... . .
MAXTMUM MATURt ry
RISK MANACIiMUN I AND f)tvt RS ,lc'At roN ....... .. . . ..
REVILw of INVES tMr,NT PoRII,oLlo
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21
lN I RoDU(rrtoN
The purpose of this investment policy is to identify various policies and procedures that
will foster a prudent and systematic investment program designed to seek the City of
Menifee's objectives of safety, liquidity and retum on investmenl through a diversified
investment portfolio. This policy also serves to organize and lbrmalize the City of
Menifee's investment-related activities, while complying with all applicable sratures
J
lnvestment Policy
Crry or Mrxrnpr
INvESTMENT PoLICY
ADOP'I ED MA\'5, 202t
Conrerurs
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City of Menifee
I. ScopE
Policy CC-1'l
Page 4 of 25
lnvestment policy
goveming.the investment of public funds. This policy is written to incorporate industrybest practices and recommendations from sources such as the Government Financlofficers. Association (GFoA), california Municipal rreasurers Association (CMTA),
Califomia Debt and Investment Advisory commission (cDlAC) and the Association of
Public Treasurers (APT).
This investment policy was endorsed and adopted by the City of Menifee's Governing
Body and is efrective as ofthe 5th day of May, 2021, and replaces any previous versionsl
This policy covers all funds and investment activities under the direct authority ofthe cityof Menifee. as set forrh in the state covemment Code, Secrions 53600 et seq., with thefollowing exceptions:
Proceeds of debt issuance shall be invested in accordance with the city of Menifee'sgeneral investment philosophy as set fofth in this policy; however, such proceeds are
to be invested pursuant to the permitted investment provisions of their specific bond
indentures.
o Any other funds specifically exempted by the Governing Body.
PooLING oF FUNDS
Except for cash in certain restricted and special f'unds, the City of Menitbe will consolidate
cash and reserve balances from all f'unds to maximize investment earnings and to increase
efficiencies with regard to investment pricing, safekeeping and administration. lnvestment
income will be allocated to the various funds based on their respective participation and in
accordance with generally accepted accounting principles.
II. PRTJDf,NCE
Pursuant to California Govemment Code, Section 53600.3, all persons authorized to make
investment decisions on behalfofthe city of Menifee are trustees and therefore fiduciaries
subject to the Prudent Investor Standard:
". . .all govern ing bodies of local agencies or persons authorized to make investment
decisions on behalfofthose 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.
or managing public funds, a trustee shall act with care, skill, prudence, and
diligence under the circumstances then prevailing, including, but not limited to, the
general economic conditions and the anticipated needs ofthe City of Menifee. 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 City of Menifee. Within the
4
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City of Menifee
III. OBJECTIVEs
limitations of this section and considering individual investments as pa,t of an
overall strategy. investments may be acquired as authorized by law.,.
The Treasurer and other authorized persons responsible for managing City olMenifeefunds acting in accordance with written procedures and this invesiment policy and
exercising due diligence shall be relieved of personal responsibility for an individualsecurity's credit risk or market price changes provided that the Treasurer or other
authorized persons acted in good faith. Deviations from expectations ofa security's
credit or market risk should be reported to the goveming body in a timely fashion and
appropriate action should be taken to control adverse developments.
Policy CC-11
Page 5 of 25
lnvestment Policy
The City of Menifee's overall investment program shall be designed and managed with adegree of professionalism worthy of the public trust. The overriding objectiies of theprogram are to preserve principal, provide sufficient liquidity, and manage investment
risks, while seeking a market-rate of return.
SAFETv. Safety of principal is the fbremost objective of the investment program.
Investments will be undertaken in a rnanner that seeks to ensure the preservation of
capital in the overall portfolio. To attain this objective. the Ciry of Menifee will
diversify its investments by investing f'unds among a variety of securities with
independent retums.
LtQUIDITv. The investment portfolio will remain sufficiently liquid to meet all
operating requirements that may be reasonably anticipated.
RETURN oN INvEsrMENTs. The investment portfolio will be designed with the
objective of attaining a market rate of return throughout budgetary and economic
cycles, taking into account the investment risk constraints fbr safety and liquidity
needs.
IV. DELEGATION OF AT.]THORITY
Authority to manage the City of Menifee's investment program is derived from California
Government Code, Sections 41006 and 53600 et seq.
The Goveming Body is responsible for the management of the City of Menifee's funds,
including the administration of this investment policy. Management responsibility for the
cash management ofthe City of Menifee's funds is hereby delegated to the Treasurer.
The Treasurer will be responsible lor all transactions undertaken and will establish a system
ofprocedures and controls to regulate the activities ofsubordinate officials and employees.
Such procedures will include explicit delegation of authority to persons responsible for
5
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Page 6 of 25lnvestment Policy
V. ETHICS AND CoNFLICTS oF INTEREST
Employees and investment officials shall disclose to the City Manager any material
interests in financial institutions with which they conduct business, and ihey shall further
disclose any large personal financial/investment positions that could be related to theperformance of the investment portfolio. Employees and officers shall refrain from
undertaking any personal investment transactions with the same individual with whom
business is conducted on behalfofthe Citv of Menifee.
VL INTERNAL CoNTRor.s
The Treasurer is responsible for establishing and maintaining an internal control structure
designed to ensure that the assets ofthe entity are protected from loss, theft or misuse. The
intemal control structure shall be designed to provide reasonable assurance that these
objectives are met. The concept of reasonable assurance recognizes that (l) the cost ofa
control should not exceed the benefits likely to be derived; and (2) the valuation of costs
and benefits requires estimates and judgments by management.
Periodically, as deemed appropriate by the City of Menifee and/or the Goveming Body. an
independent analysis by an external auditor shall be conducted to review internal controls.
account activity and compliance with policies and procedures.
Investment transactions. No person may engage in an investment transaction except asprovided under the terms of this policy and the procedures established by the Treasurer.
The city of Menifee may engage the services ofone or more externar investment advisers.who are registered under the Investment Advisers Act of 1940, to assist in the managementof the City of Menifee's investment porttblio in a manner consistent with the -ity ofMenifee's objectives. External investment advisers may be granted discretion to purcirase
and sell investment securities in accordance with this investment policy.
The city of Menifee's overall investment program shall be designed and managed with a
degree ofprofessionalism that is worthy ofthe public trust. The city of Menifee iecognizesthat in a diversified portfolio, occasional measured losses may be inevitable and m-ust be
considered within the context of the overall portfolio's return and the cash flow
requirements of the City of Menifee.
All participants in the investment process shall act as custodians of the public trust.
Investment officials shall recognize that the investment portfolio is subject to public review
and evaluation. Thus employees and officials involved in the investment process shall
refrain from personal business activity that could create a conflict of inierest or the
appearance ofa conflict with proper execution ofthe investment program, or which could
impair their ability to make impartial investment decisions.
6
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lnvestment Policy
VII. AUTHORIZf,D FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS
To the extent practicable, the Treasurer shall endeavor to complete investment transactions
using a competitive bid process whenever possible. The City of Menifee,s Treasurer will
determine which financial institutions are authorized to provide investment services to thecity of Menifee. It shall be the City of Menifee's policy ro purchase securities only from
authorized institutions and firms.
The Treasurer shall maintain procedures lbr establishing a list ofauthorized broker/dealers
and financial institutions which are approved lor investment purposes that are selected
through a process ofdue diligence as determined by the City of Menifee. Due inquiry shall
determine whether such authorized broker/dealers, and the individuals covering the -ity of
Menifee are reputable and trustworthy, knowledgeable and experienced in Ruutic c;ty ot
Menifee investing and able to meet alloitheir tinancial obligations. These institutions may
include "primary" dealers or regional dealers that qualify under Securities and Exchangl
Commission (SEC) Rule l5c3-l (uniform net capital rule).
ln accordance with Section 53601 .5, institutions eligible to transacr investment business
with the City of Menifee include:
. Primary govemment dealers as designated by the Federal Reserve Bank and non-
primary government dealers.. Nationally or state-chartered banks.o The Federal Reserve Bank.o Direct issuers ofsecurities eligible for purchase.
Selection of financial institutions and broker/dealers authorized to engage in transactions
will be at the sole discretion of the City of Menifee, except where the City of Menifee
utilizes an external investment adviser in which case the City of Menifee may rely on the
adviser for selection.
All financial institutions which desire to become qualified bidders for investment
transactions (and which are not dealing only with the inveslment adviser) must supply the
Treasurer with audited financials and a statemenl certifying that the institution has
reviewed the California Govemment Code, Seclion 53600 et seq. and the City of Menifee's
investment policy. The Treasurer will conduct an annual review ofthe financial condition
and registrations ofsuch qualified bidders.
Selection of broker/dealers used by an extemal investment adviser retained by the City of
Menifee will be at the sole discretion of the adviser. Where possible, transactions with
broker/dealers shall be selected on a competitive basis and their bid or offering prices shall
7
Public deposits will be made only in qualified public depositories as established by Srate
law. Deposits will be insured by the Federal Deposit Insurance Corporation, or, to rhe
extent the amount exceeds the insured maximum. will be collateralized in accordance with
State law.
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City of Menifee
VIII. AlrTHoRrzED INvEs'r'MEN.t s
Policy CC-1 1
Page 8 of 25
lnvestment policy
be recorded. Ifthere is no other readily available competitive offering, best efforts will be
made to document quotations for comparable or alternative securities. when purchasing
original issue instrumentality securities, no competitive offbrings will be required as aii
dealers in the selling group offer those securities at the same original issue priie.
The City of Menifee's investments are governed by Califomia covernment Code, Sections
53600 el seq. within the investments permitted by rhe code, the city of Menifee seeks to
further restrict eligible investments to the guidelines listed below. In the event a
discrepancy is found between this policy and the code, the more restrictive parameters will
take precedence. Percentage holding limits listed in this section apply at the time the
security is purchased.
l. MuNrcrpAL SEcuRrrrEs include obligations of the City of Menifee, the State of
California and any local City of Menifee within rhe Stale of Califomia. provided that:
o The securities are rated in a rating category of"A" or its equivalent or better by at
least one nationally recognized statistical rating organizarion ("NRSRO").o No more than 5% ofthe portfolio may be invested in any single issuer.o No more than 30% of the portfolio may be in Municipal Securities.o The maximum maturity does not exceed five (5) years.
2. MuNrcrpAL SEctJRrTtEs (REcISTERED TREASURY NOTES OR BONDS) of any of the
other 49 states in addition to Califomia. including bonds payable solely out of the
revenues from a revenue-producing property owned, controlled, or operated by a state
or by a department, board, City of Menifee, or authority of any of the other 49 states.
in addition to Califomia.
. The securities are rated in a rating category of "A" or its equivalent or better by at
least one nationally recognized statistical rating organization ("NRSRO").o No more than 5% ofthe portfblio may be invested in any single issuer.o No more than 30% of the portfolio may be in Municipal Securities.. The maximum maturity does not exceed five (5) years.
8
Any investment currently held at the time the policy is adopted which does not meet the
new policy guidelines can be held until maturity, and shall be exempt from the currentpolicy. At the time of the investment's maturity or liquidation. such funds shall be
reinvested only as provided in the current policy.
An appropriate risk level shall be maintained by primarily purchasing securities that are of
high quality, liquid, and marketable. The portl'olio shall be diversified by security type and
institution to avoid incurring unreasonable and avoidable risks regarding specific security
types or individual issuers.
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The maximum maturity is five (5) years
4, FEDERAL AcENCtEs or United States Govemment-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. There are no limits on the dollar amount or percentage that the City of
Menifee may invest in Federal City of Menifee or Covemment-sponsored Enterprises
(CSEs), provided that:
o No more lhan 25yo of the portfolio may be invested in any single City of
Menifee/GSE issuer.o The maximum maturity does not exceed five (5) years.o The maximum percent of City of Menifee callable securities in the portfolio will be
20o/o.
5. BANKER'S AccEprANCEs, provided thal:
. They are issued by institutions which have short-term debt obligations rated "A- l"
or its equivalent or better by at least one NRSRO; or long-term debt obligations
which are rated in a rating category of"A" or its equivalent or better by at least one
NRSRO.o No more than 40yo ofthe potfolio may be invested in Banker's Acceptances.. No more than 5% ofthe portfolio may be invested in any single issuer.r The maximum maturity does not exceed 180 days.
. The issuer is a corporation organized and operating in the United States with assets
in excess of $500 million.o The securities are rated "A- l" or its equivalent or better by at least one NRSRO.. They are issued by corporations which have long-term obligations rated in a rating
category of"A" or its equivalent or better by at least one NRSRO.. City of Menifee may purchase no more than l0% of the outstanding commercial
paper of any single issuer.. No more than 25o/o of the portfolio may be invested in Commercial Paper.. No more than 5% ofthe portfolio may be invested in any single issuer.o The maximum maturity does nol exceed 270 days.
7. NEGoTTABLE CERTIFTcATES oF DEposrr (NCDs). issued by a nationally or state-
chartered bank, a savings association or a federal association, a state or federal credit
9
lnvesfunent Policy
3, U.S.TREAsunrns and other government obligations for which the full faith and credit
ofthe United Stales are pledged for the payment ofprincipal and interesr. There are no
limits on the dollar amount or percentage that the City of Menifee may invest in U.S.
Treasuries, provided that:
6. CoMMERCTAL PAPER, provided that:
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lnvestment Policy
union. or by a federally licensed or state-licensed branch of a foreign bank, provided
that:
. The amount of the NCD insured up to the FDIC limit does not require any credit
ratings.. Any amount above the FDIC insured limit must be issued by institutions which
have short-term debt obligations rated "A- l " or its equivalent or better by at least
one NRSRO; or long-term obligations rated in a rating category of '.A" or its
equivalent or better by at least one NRSRO.o No more than 30% of the total portfolio may be invested in NCDs (combined with
CDARS).o No more than 5% ofthe portfolio may be invested in any single issuer.o The maximum maturity does not exceed five (5) years.
8. Fsosnll-I"y INSURED TIME DEposrrs (Non-Negotiable Certificates of Deposit) in
state or federally chartered banks, savings and loans, or credit unions. provided that:
The amount per institution is limited to lhe maximum covered under federal
insurance.
No more than 20o/o of the portfblio will be invested in a combination of federally
insured and collateralized time deposits.
The maximum maturity does not exceed five (5) years.
9. CoLLATERALTZED TrME DEposlrs (Non-Negotiable Certificates of Deposit) in state
or federally chartered banks, savings and loans. or credit unions in excess of insured
amounts which are fully collateralized with securities in accordance with Califomia
law, provided that:
No more than 20Yo of the portfolio will be invested in a combination of federally
insured and collateralized time deposits.
The maximum maturity does not exceed five (5) years.
10. CERrrFrcArE oF DEposrr PLACEMENT SERvrcE (CDARS), provided that:
No more than 30% of the total portfolio may be invested in a combination of
Certificates of Deposit, including CDARS.
The maximum maturity does not exceed five (5) years.
I l. CoLLATERALIZED BANK DEposrrs, City of Menifee's deposits with financial
institutions will be collateralized with pledged securities per Califomia Govemment
Code. Section 53651. There are no limits on the dollar amount or percentage that the
City of Menifee may invest in collateralized bank deposits.
12. REPURcHASE AcREEMENTS collateralized with securities authorized under Califomia
Government Code, maintained aI a level of at least l02o/o ol the market value of the
t0
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lnvestment Policy
Repurchase Agreement. There are no limits on the dollar amount or percentage that the
City of Menifee may invest, provided that:
Securities used as collateral for Repurchase Agreements will be delivered to an
acceptable third party custod ian.
Repurchase Agreements are subject to a Masler Repurchase Agreement between
the City of Menilee and lhe provider of the repurchase agreement. The Master
Repurchase Agreement will be substantially in the fbrm developed by the Securities
Industry and Financial Markets Association (SIFMA).
The maximum maturity does not exceed one ( I ) year.
13. SrArE oF CALTFoRNTA LocAL CrTy oF MENTFEE INVESTMENT FUND (LAIF),
provided that:
o The City of Menifee may invest up to the maximum amount permitted by LAIF.. LAIF's investments in instruments prohibited by or not specified in the City of
Menifee's policy do not exclude the investment in LAIF itself from the Cily of
Menifee's list of allowable investments. provided LAIF's reports allow the
Treasurer to adequately judge the risk inherent in LAIF's portfolio.
14. LocAL GovERNMENT INvESTMENT PooLS
o Other LGIPs permitted by client.. There is no issuer limitation lor Local Government Investment Pools
15. CoRpoRArE MEDTUM TERM NorEs (MTNs), provided that:
o The issuer is a corporation 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.. The securities are rated in a rating category of"A" or its equivalent or better by at
least one NRSRO.o No more than 30% of the total portfolio may be invested in MTNs.o No more than 5% ofthe portfolio may be invesled in any single issuer.o The maximum maturity does not exceed five (5) years.
I6. ASs0T-BACKED, MoRTGAcE-BACKED, MoRTCACE PAss-THRoUCH SECURI .IEs.
AND CoLLATERALIZED MoRTGACE OBLIGATIONS T.RoM IssUERs NoT DEFINED IN
SECTIONS 3 AND 4 OF THE AUTHORIZED INVESTMENTS SECTION OF THIS POLICY.
provided that:
The securities are rated in a rating category of "AA" or its equivalent or better by a
NRSRO.
No more than 20yo of the total portfolio may be invested in these securities.
il
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lnvestment Policy
No more than l0% ofthe total portfolio may be invested in shares ofany one
mutual fund.
o No more than 5% ofthe portfolio may be invested in any single Asset_Backed or
Commercial Mortgage security issuer.o The maximum legal final maturity does not exceed tive (5) years.
17. MUTUAL FUNDS AND MoNEY MARKET MUTUAL Fuxos that are registered with the
Securities and Exchange Commission under the lnvestment Company Act of 1940,
provided thar:
(i) Attained the highest ranking or the highest letter and numerical rating
provided by not less than two (2) NRSROs; or
(ii) Have retained an investment adviser registered or exempt from registration
with the Securities and Exchange Commission with not less than five years,
experience investing in the securities and obligations authorized by
California Government Code, Section 53601 and with assets under
management in excess of $500 million.
b. MoNoy MARKET MuruAL Fultos registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 and issued by diversified
management companies and meet either of the following criteria:
(i) Have attained the highest ranking or the highest letter and numerical rating
provided by not less than two (2) NRSROs; or
(ii) Have retained an investment adviser registered or exempt tiom registration
with the Securities and Exchange Commission with not Iess than five years'
experience managing money market mutual funds with assets under
management in excess of $500 million.
o No more than 20o/o ofthe total portfolio may be invested in the shares ofany
one Money Market Mutual Fund.
c. No more than 20o/o of the total portfolio may be invested in these securities.
18. SUPRANATToNALS, provided that:
Issues are US dollar denominated senior unsecured unsubordinated obligations
issued or unconditionally guaranteed by the International Bank for Reconstruction
and Development. Internalional Finance Corporation, or lnter-American
Development Bank.
t2
a. MuruAL FUNDS that invest in the securities and obligations as authorized under
California Government Code, Section 53601 (a) to (k) and (m) ro (q) inclusive and
that meet either of the following criteria:
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NRSRO.. No more than 30% ofthe total portfolio may be invested in these securities.o No more than l0% ofthe portfolio may be invested in any single issuer.o The maximum maturity does not exceed five (5) years.
. State law notwithstanding, any investments not specifically described herein are
prohibited, including, but not limited ro lutures and options.o [n accordance with Government Code, Section 53601 .6, investment in inverse floaters,
range notes, or mortgage derived interest-only strips is prohibited.. lnvestment in any security that could result in a zero interesl accrual if held to maturity
is prohibited.o Trading securities for the sole purpose ofspeculating on the future direction ofinterest
rates is prohibited.o Purchasing or selling securities on margin is prohibited.. The use of reverse repurchase agreements. securities lending or any other lorm of
borrowing or leverage is prohibited.o The purchase offoreign currency denominated securities is prohibited.
X. INvESTMENTPooLs/MurriAt,FUNDs
'l'he City of Menifee shall conduct a thorough investigation of any pool or mutual fund
prior to making an investment, and on a continual basis thereafter. The Treasurer shall
develop a questionnaire which will answer the following general questions:
o A description of eligible investment securities, and a written statement of
investment policy and objectives.o A description of interest calculations and how it is distributed, and how gains and
losses are treated.o A description of how the securities are safbguarded (including the settlement
processes), and how often the securities are priced and the program audited.o A description ofwho may invest in the program. how often, what size deposit and
withdrawal are allowed.. A schedule for receiving statements and portfolio listings.o Are reserves, retained earnings, etc. utilized by the pool/fund?. A fee schedule. and when and how is it assessed.o Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds?
City of Menifee policy CC-,11
Page '13 of 25
lnvestment Policy
. The securities are rated in a rating category of .'AA" or its equivalent or better by a
COLLATERA LIzATIoNxI.
tl
IX. PRoHIBITED INvEs lltENT VEIIICLES AND pRAC.t t(.t s
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city of Menifee Policy CC-11
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lnvesfunent policy
CERTIFICATEs oF DEposrr (cDs). 'fhe city ol Menifee shall require any commercial
bank or savings and loan association to deposit eligible securities wiih an city of Menifeeofa depository approved by the state Banking Department to secure any uniniured portionof a Non-Negotiable certificate of Deposit. The value of eligible securities as defined
pursuant to califomia covernment Code, Section 5365 l. pledged against a certificate of
Deposit shall be equal to I50% ofthe face value ofthe cD if the securities are classified
as mortgages and I l0% ofthe t'ace value ofthe CD for all other classes ofsecurity.
CoLLATERALTZATToN oF BANK DEposrrs, This is the process by which a bank orfinancial institution pledges securities, or other deposits for the purpose of securing
repayment of deposited funds. The City olMenifee shall require any bank or financial
institution to comply with the collateralization criteria defined in Califomia Govemment
Code. Section 5365 I .
REpURCHAsE AGREEMENTs. The city of Menifee requires that Repurchase Agreements
be collateralized only by securities authorized in accordance with c;lifbrnia Gtivernrnent
Code:
The securities which collateralize the repurchase agreement shall be priced at
Market Value, including any Accrued Interest plus a margin. The Market Value of
the securities that underlie a repurchase agreement shall be valued at 1O2o/o or
greater ofthe funds borrowed against those securities.
Financial institutions shall mark the value of the collateral to market at least
monthly and increase or decrease the collateral to satisfy the ratio requirement
described above.
The City of Menifee shall receive monthly statements of collateral.
XII. DELIvERY, SAFEKEEPING AND CUSToDY
DELtvERy-vERsus-PAyMENT (DVP). All investment transactions shall be conducted on a
delivery-versus-payment basis.
SAFEKEEPTNG AND CusToDy. To protect against potential losses due to flailure of
individual securities dealers. and to enhance access to securities, interest payments and
maturity proceeds, all cash and securities in the City of Menifbe's portfblio shall be held
in safekeeping in the City of Menifee's name by a third party cusrodian, acting as agent for
the City of Menifee under the terms of a custody agreement execuled by the bank and the
City of Menifee. All investment transactions will require a safekeeping receipt or
acknowledgment generated from the trade. A monthly report will be received by the City
of Menifee from the custodian listing all securities held in safekeeping with current market
data and other information.
The only exceptions to the foregoing shall be depository accounts and securities purchases
made with: (i) local government investment pools; (ii) time certificates ofdeposit, and, (iii)
money mutual funds, since the purchased securities are not deliverable.
1.1
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City of Menifee Policy CC-11
Page 15 of 25
lnvestment Policy
XIII. MAxtMr;MMATrIRtry
To the extent possible, investments shall be
requirements and known future liabilities.
rnalched with anticipated cash flow
'l'he City of Menifee will not invest in securities maturing more than five (5) years from
the date oftrade setllement. unless the Goveming Body has by resolution granted authority
to make such an investment.
XIV. RrsK MANAGEMENT AND DlvERStFtcATtoN
MTTTGATTNC CREDTT RrsK rN THE P0RTFoLro
Credit risk is the risk that a security or a portfolio will lose some or all its value due to a
real or perceived change in the ability ofthe issuer to repay its debt. The City of Menifeewill mitigate credit risk by adopting the following strategies:
o The diversification requirements included in the "Authorized Investments" section of
this policy are designed to mitigate credit risk in the porrfblio.
No more than 5% ofthe total portfolio may be deposited with or invested in securities
issued by any single issuer unless otherwise specified in this policy.
The C ity of Menifee may elect to sell a security prior to its maturity and record a capital
gain or loss in order to manage the quality, liquidity or yield ofthe portfolio in response
to market conditions or City of Menifee's risk preferences.
Ifthe credit ratings ofany security owned by the City of Menifee are downgraded to a
level below the quality required by this investment policy. ir will be the City of
Meni[ee's policy to review the credit situation and make a determination as to whether
to sell or retain such securities in the portfolio.
lf a security is downgraded, the Treasurer will use discretion in determining
whether to sell or hold the security based on its current maturity, the economic
outlook for the issuer. and other relevant faclors.
Ifa decision is made to retain a downgraded security in the portfolio, its presence
in the portfolio will be monitored and reported monthly to the Goveming Body.
MTTIGATING MARKET RIsK IN THE PoRTFoLIo
Market risk is the risk that the portfolio value will fluctuate due to changes in the general
level of interest rates. The City of Menifee recognizes that, over time, longer-term
portfolios have the potential to achieve higher returns. On the other hand, longer-term
portfolios have higher volatility of retum. The City of Menifee will mitigate market risk
by providing adequate liquidity for short-term cash needs. and by making longer-term
investments only with funds that are not needed for current cash flow purposes.
l5
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City of Menifee Policy CC-l1
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lnvestment Policy
The City of Menifee fufther recognizes thar certain types of securities, including variable
rate securities, securities with principal paydowns prior to maturity. and securities with
embedded options, will affect the market risk profile ofthe portfolio diflbrently in differenr
int€rest rate environments. The city of Menifee, therefore, adopts the following strategies
to control and mitigate its exposure to market risk:
o The City of Menifee will maintain a minimum of six months of budgeted operating
expenditures in short term investments to provide sullcient liquidity for .*p""t"d
disbursements.
The duration of the portfolio will generally be approximately equal to the duration
(typically, plus or minus 20Yo) of a Market Benchmark. an index selected by the City
of Menifee based on the City of Menifee's investment objectives, constraints and risk
tolerances.
XV. REvIEw oF INvESTMENT PoRTFoLIo
The Treasurer shall periodically, but no less than quarterly, review the portfolio to identity
investments that do not comply with this investment policy and establish protocols lor
reporting major and critical incidences ofnoncompliance to the Coverning Body.
XVI. PER},oRMANCEEVALT]ATIoN
The investment portfolio shall be designed to attain a market-average rate of return
throughout budgetary and economic cycles, taking into account the City of Menifee's risk
constraints, the cash flow characteristics of the portfolio, and state and local laws,
ordinances or resolutions that restrict investments.
The Treasurer shall monitor and evaluate the portfolio's performance relative to the chosen
market benchmark(s), which will be included in the Treasurer's quarterly report. The
Treasurer shall select an appropriate, readily available index to use as a market benchmark.
XVII. R!:PoRTrN(l
MONTHLY REPORTS
Monthly transaction reports will be submitted by the Treasurer to the Governing Body
within 30 days of the end of the reporting period in accordance with Califomia Government
Code Section 53607.
i6
o The maximum stated final maturity of individual securities in the portfolio will be five
(5) years, except as otherwise stated in this policy.
DocuSign Envelope lD: 4893EEgB-5DDE-406E-AC19-D82388E55984
City of Menifee
2. Transactions for the period.
QUARTERLY REPoRTs
The Treasurer.will submit a quarterry invesrment report to the Governing Body whichprovides full disclosure of the city of Menifee's investment activities within 30 davs at-lerthe end_of the quarter. These reports willdisclose, at a minimum, the following information
about the City of Menifee's portfolio:
l. An ass€t listing showing par value, cost and independenr third-party fair market valueof each security as of the date of the reporr, the source of ihe'varuation, type ofinvestment, issuer, maturity date and interest rate.
Policy CC-l l
Page 17 ol 25lnvestment Policy
3. A description ofthe funds, investments and programs (including lending programs)
managed by contracted parties (i.e. LAIF; investment pools, outside ,on"y'n,u-nug..,
and securities Iending agents)
4. A one-page summary report that shows:a. Average maturity ofthe portlolio and modified duration ofthe portfolio;b. Maturity distribution of the portfolio:c. Percentage ofthe portfolio represented by each investment category;d. Average portfolio credit quality: and,e. Time-weighted total rate of retum lor the portfolio for the prior one month, three
months, twelve months and since inception compared to the City of Menilee.s
market benchmark returns for the same periods;
A statement of compliance with investment policy. including a schedule of any
transactions or holdings which do not comply with this policy or with the Califomia
Government Code, including a justification for their presence in the poftfolio and a
timetable for resolution.
5
6. A statement that the city of Menifee has adequate funds to meet its cash flow
requirements for the next six months.
ANNUAL REPoRTS
A comprehensive annual report will be presented to the Governing Board. This report will
include comparisons of the City of Menitbe's retum to the market benchmark return,
suggest policies and improvements that might enhance the investment program, and will
include an investment plan for the coming year.
XVIII. REvrEw oF INvESTMEN'r' PoLtcy
The investment policy will be reviewed and adopted at least annually within 120 days of
the end of the fiscal year, to ensure its consistency with the overall objectives of
preservation ofprincipal. liquidity and return, and its relevance to current law and financial
and economic trends.
t7
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City of Menifee Policy CC-l1
Page 18 of 25
Any recommended modifications or amendments shall be presented by Staff to the
Governing Body for their consideration and adoption.
lnvestment Policy
APPENDIX A
PERMITTED INVESTMENTS
Itt
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City of Menifee Policy CC-11
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lnvestment Policy
ALIOWASLT INVESTMENT INSTRUMENTS PER STATE GOVERNMTNTCODE
(As oF JANUARv 1,202L1o acelrcletr to lLt rocat lctlcrrs"
See "Table of Notes" on the next pate for rootnotes related to this table.
INVESTMENT TYPE REMAINING
MATURITY
MAXIMUM SPECIFIED
% Of PORTFOLIO
City ofMenifee Policy MINIMUM QUALITY
REOUIREMENTS
GOVERNMENT
CODE SECTIONS
Localagency Bonds 5 years s3601(a)
U-S. Treasury Obligations 5 years
State Obligationsr CA and Others s3601(d)
CA Local ABency Oblications 5 years None s3601(e)
u.S, ASency ObliSations None s3601(f)
Bankers Acceptance 180 days aoN'aox's3601(s)
Commercial Paper: Non-pooled Fundsr 270 days or less 25% of the a8encl's 2596 of the aSency's Highest letter and number
ratinc bv an NRsRoN
s3601th)(2)(c)
commer€ial Papel| Pooled Fundsl 270 days or less 40% of the aaency's 25% ofthe agency's Highest letter and number
retinp bv an NRsRoH s363s(a)(1)
NeSotiable Certficates of Deposit 5 years lovJ zoNt
Non-neSotieble Certificates of Oeposit 5 years None None 53630 et seq
Placement Service Deposlts :ox*:o**53601.8 and
5363s.8
Placement Service Certificates of Deposit 5 years 3o%'3o%*53601.8 and
53635.8
Repurchase ASreements None 51601(l)
Reverse Repurchase Agreements and
Securities Lendin8 A8reements
20% of the base value
of the pordolio
20x of the base value
ofthe portfolio s3601(l)
Medium Term NotesN 5 years or less 30%30%"A" rating cate8ory or its
equivalent or better 53601(k)
Mutual Funds and Money Market Mutual zo*o zo*o MultipleP'a s3601(l)and
s3601.6(b)
Collateralized Bank OepositsR 5 years ?o%53630 et seq. and
s3601(n)
Mortgage Pass-throuSh and asset Ba€ked
Securities 5 years or less 2A%20%"AA" ratinScategory or ats
equivalent or better S3601(o)
County Pooled lnvestment Funds 27133
Joint Powers Authority Pool None MultlpLes s3601(p)
Local Agency lnvestment Fund (LAlf )None 16429 1
Voluntary lnvestment Program Fundr N/A 16340
Supranational Obligation5u 5 years or less 30%3A%"AA" rating cateSory or its
equivalent or better s3601(q)
l9
s3601(b)
s3601li)
92 daysl
None
None
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DocuSign Envelope lDr 4893EE98-SODE-406E-AC j SD82388ESSg84
City of Menifee Policy CC-'l l
Page 21 ot 25
GLoSSARY oF INvESTMENT T0RMS
AGENCTES. shorthand market terminology for any obligation issued by a govemment-sponsored
entity (GSE), ot a federally related institution. Most obligations of GSEs are not guaianteeoby the full faith and credit of the US government. Examples are:
FFCB. The Federar Farm- credit Bank system provides credit and riquidity in theagricultural industry. FFCB issues discount notes and bonds.FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market.FHLB issues discount notes and bonds.
FHLMC. Like FHLB, the Federal Home Loan Mortgage corporation provides credit andliquidity in the housing market. FHLMC, arso ialed "FieddieMac" issues discountnotes, bonds and mortgage pass-through securities.
FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association wasestablished to provide credit and liquidity in the housing markEt.-FNMA, also knownas "FannieMae," issues discount notes, bonds and mortgage pass{hrough securities.GNMA. The Government Nationar Mortgage Association, rnown as "Ginnie-Mae," issuesmortgage pass{hrough securities, which are guaranteed by the full faith and credit ofthe US Government.
PEFCO. The Private Export Funding Corporation assists exporters. Obligations of pEFCO
are not guaranteed by the full faith and credit of the US government.
TVA. The Tennessee Valley Authority provides flood contiol and power and promotes
development in portions of the Tennessee, ohio, and Mississippi River valeys. TVAcurrently issues discount notes and bonds.
AssET BACKED sEcuRrrEs. securities supported by pools of installment loans or leases or bypools of revolving lines of credit.
AVERAGE L|FE. ln mortgage-related investments, including cMos, the average time to expected
_ receipt of principal payments, weighted by the amount of principal ex[ected.BANKER'S AccEPTANCE. A money market instrument created to facilitate international tradetransactions. lt is highly liquid and safe because the risk of the trade transaction is
transferred to the bank which "accepts" the obligation to pay the investor.
BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market
index, which reflects the mix of securities allowed under a specific investment policy.
BRoKER. A broker brings buyers and sellers together for a transaction for which ihe broker
receives a commission. A broker does not sell securities from his own posrtion.
CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its
maturity. The main cause of a call is a decline in interest rates. lf interest rates decline,
the issuer will likely call its cunent securities and reissue them at a lower rate of interest.
CERrlFlcArE oF DEPoslr (CD). A time deposit with a specific maturity evrdenced by a certificate.
CERTIFICATE oF DEPoSIT AccoUNT REGISTRY SYSTEM (CDARS). A private placement Service
that allows local agencies to purchase more than $250,000 in cDs from a single financial
institution (must be a participating institution of CDARS) while still maintaining FDIC
insurance coverage. CDARS is currently the only entity providing this service. CDARS
facilitates the trading of deposits between the California institution and other participating
institutions in amounts that are less than $250,000 each, so that FDIC coverage is
maintained.
lnvestment Policy
2l
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lnvestment Policy
CoLLATERAL. securities or cash pledged by a borrower to secure repayment of a loan orrepurchase agreement. Also, securities pledged by a financial institution to secure
deposits of public monies.
coLLATERALIZED BANK oEPOSIT. A bank deposit that is collateralized at least 100% (principal plus
interest to maturity). The deposit is collateralized using assets set aside by the issuer
such as Treasury securities or other qualified collateral to secure the deposit in excess of
the limit covered by the Federal Deposit lnsurance Corporation.
CoLLATERALIZED MORTGAGE OBLIGATTONS (CMO). Classes of bonds that redistribute the cashflows of mortgage securities (and whole loans) to create securities that have different
levels of prepayment risk, as compared to the underlying mortgage securities.
CoLLATERALIZED TIME DEPoslT. Time deposits that are collateralized at least 100% (principal plus
interest to maturity). These instruments are collateralized using assets set aside by the
issuer such as Treasury securities or other qualified collateral to secure the depoiit in
excess of the limlt covered by the Federal Deposit lnsurance Corporation.
CoMMERcTAL PApER. The short-term unsecured debt of corporations.
CoupoN. The rate of return at which interest is paid on a bond.
CREolr RlsK. The risk that principal and/or interest on an investment will not be paid in a timely
manner due to changes in the condition of the issuer.
DEALER. A dealer acts as a principal in security transactions, selling securities from and buying
securities for his own position.
DEBENTURE. A bond secured only by the general credit ofthe issuer.
DELTVERY vs. PAYMENT (DVP). A securities industry procedure whereby payment for a security
must be made at the time the security is delivered to the purchaser,s agent.
DERrvATrvE. Any security that has principal and/or interest payments which are subject to
uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any
security which represents a component of another security which has been separated from
other components ("Stripped" coupons and principal). A derivative is also defined as a
financial instrument the value of which is totally or partially derived from the value of
another instrument, interest rate, or index.
DtscoUNT. The difference between the par value of a bond and the cost of the bond, when the
cost is below par. Some short-term securities, such as T-bills and banker's acceptances,
are known as discount securities. They sell at a discount from par and return the par value
to the investor at maturity without additional interest. Other securities, whlch have fixed
coupons, trade at a discount when the coupon rate is lower than the current market rate
for securities of that maturity and/or quality.
DlvERslFlcATloN. Dividing investment funds among a variety of investments to avoid excessive
exposure to any one source of risk.
OuRATroN. The weighted average time to maturity of a bond where the weights are the present
values of the future cash flows. Duration measures the price sensitivity of a security to
changes interest rates.
FEDERAL DEposrr lNsuRANcE CoRpoRATtoN (FDIC). The Federal Deposit lnsurance Corporation
(FDIC) is an independent federal City of Menifee insuring deposits in U.S. banks and thrifts
in the event of bank failures. The FDIC was created in 1933 to maintain public confidence
and encourage stability in the financial system through the promotion of sound banking
practices.
FEDERALLY lNsuRED T|ME DEposrr. A time deposit is an interest-bearing bank deposit account
that has a specifled date of maturity, such as a certificate of deposit (CD). These deposits
are limited to funds insured in accordance with FDIC insurance deposit limits.
LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay earnings
at a rate hrgher than the cost of borrowing.
LreurDrry. The speed and ease with which an asset can be converted lo cash.
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DocuSign Envelope lD: 4893EEgB-5ODE406E-AC19-D823BBESSg84
City of Menifee Policy CC-11
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lnvestment Policy
LocAL ClTy oF MENTFEE INVESTMENT FUND (LAIF). A voluntary investment fund open to
government entities and certain non-profit organizations in California that is managed by
the State Treasurer's Office.
LocAL GovERNMENT INVESTMENT PooL. lnvestment pools that range from the state Treasurer's
Office Local City of Menifee lnvestment Fund (LAIF) to county pools, to Joint powers
Authorities (JPAS). These funds are not subject to the same SEC rules applicable to
money market mutual funds.
MAKE WHoLE CALL. A type of call provision on a bond that allows the issuer to pay off the
remaining debt early. Unlike a call option, with a make whole call provision, the issuer
makes a lump sum payment that equals the net present value (NpV) of future couponpayments that will not be paid because of the call. With this type of call, an investor is
compensated, or "made whole."
MARGIN. The difference between the market value of a security and the loan a broker makes using
that security as collateral.
MARKET RlsK. The risk that the value of securities will fluctuate with changes in overall market
conditions or interest rates.
MARKET VALUE. The price at which a security can be traded.
MATURrry. The final date upon which the principal of a security becomes due and payable.
MEDIUM TERM NorEs. Unsecured, investment-grade senior debt securities of major corporations
which are sold in relatively small amounts on either a continuous or an intermittent basis.
MTNS are highly flexible debt instruments that can be structured to respond to market
opportunities or to investor preferences.
MoDTFTED DURAT|oN. The percent change in price for a 1oo-basis point change in yields. Modified
duration is the best single measure of a portfolio's or security's exposure to market risk.
MoNEy MARKET. The market in which short{erm debt instruments (T-bills, discount notes,
commercial paper, and banker's acceptances) are issued and traded.
MoNEY MARKET MUTUAL FUND. A mutual fund that invests exclusively in short-term securities.
Examples of investments in money market funds are certificates of deposit and U.S.
Treasury securities. Money market funds attempt to keep their net asset values at g1 per
share.
MoRTGAGE PASS-THRoUGH SEcuRrrES. A securitized participation in the interest and principal
cash flows from a specified pool of mortgages. Princapal and interest payments made on
the mortgages are passed through to the holder of the security.
MuNrcrpAL SEcuRrTrEs. Securities issued by state and local agencies to finance capital and
operating expenses.
MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a set of
securities which is specifically defined in the fund's prospectus. Mutual funds can be
invested in various types of domestic and/or international stocks, bonds, and money
market instruments, as set forth in the individual fund's prospectus. For most large,
institutional investors, the costs associated with investing in mutual funds are higher than
the investor can obtain through an individually managed portfolio.
NATIoNALLY REcoGNtzED STAT|ST|cAL RATTNG ORGANtzATtoN (NRSRO),
A credit rating City of Menifee that the Securities and Exchange Commission in the
United States uses for regulatory purposes. Credit rating agencies provide assessments
of an investment's risk. The issuers of investments, especially debt securities, pay credit
rating agencies to provide them with ratings. The three most prominent NRSROs are
Fitch, S&P, and Moody's.
NEGoTTABLE CERTTFTCATE oF DEpoSrT (CD). A shortterm debt instrument that pays interest and
is issued by a bank, savings or federal association, state or federal credit union, or state-
licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market and
are payable upon order to the bearer or initial depositor (investor).
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Policy CC-l'l
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PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal Reservein its execution of market operations to carry out u.s. moretary poricy, and (2) ihatparticipates for statistical reporting purposes in compiling data on activity in tne U.s.Government securities market.
PRUDENT PERSoN (PRUDENT INVESToR) RULE. A standard of responsibility which applies tofiduciaries. ln California, the rule is stated as "lnvestments shall be managed withihe care,skill, prudence and diligence, under the circumstances then prevailin!, that a prudentperson, acting in a like capacity and familiar with such mafters, would uie in the conductof an enterprise of like character and with like aims to accomplish similar purposes.,,
REPURcHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement tosell the securities back at a higher price. From the seller's point of viewl the sametransaction is a reverse repurchase agreement.
SAFEKEEPTNG. A service to bank customers whereby securities are held by the bank in thecustomer's name.
sEcuRrrEs AND ExcHANGE coMMrssroN (sEc). The u.s. securities and Exchange commission(sEC) is an independent federal government city of Menifee responsibl6 for protecting
investors, maintaining fair and orderly functionrng of securities markets and iacilitatingcapital formation. lt was created by Congress in 1934 as the first federal regulator oisecurities markets. The sEC promotes full public disclosure, protects investo[ againstfraudulent and manipulative practices in the market, and monitors corporate tak-eoveractions in the United States.
sEcuRrrEs AND EXCHANGE coMMrssroN sEc) RULE 1sc3-1. An sEc rule setting capitalrequirements for brokers and dealers. under Rule 15c3-1, a broker or dealer m-ust havesufficient liquidity in order to cover the most pressing obligations. This is defined as havinga certain amount of liquidity as a percentage of the broker/dealer's total obligations. lf thepercentage falls below a certain point, the broker or dealer may not be allowed to take onnew clients and may have restrictions placed on dealings with current client.
STRUcTURED NorE. A complex, fixed income instrument, which pays interest, based on a formulatied to other interest rates, commodities or indices. Examples include inverse floating rate
notes which have coupons that increase when other interest rates are falling, and which
fall when other interest rates are rising, and "dual index floaters," which pay interest basedon the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. lssuers of such notes lock in a reduced cost of
borrowing by purchasing interest rate swap agreements.
supRANATroNAL. A supranational is a multi-national organization whereby member states
transcend national boundaries or interests to share in the decision making to promote
economic development in the member countries.
ToTAL RATE oF RETURN. A measure of a portfolio's performance over time. lt is the internal rateof return, which equates the beginning value of the portfolio with the ending value; rt
includes interest earnings, realized and unrealized gains, and losses in the portfolio.
u.s. TREASURY oBLtGAroNs. securities issued by the u.s. Treasury and backed by the full faith
and credit of the United States. Treasuries are considered to have no credit risk and arethe benchmark for interest rates on all other securities in the US and overseas. The
Treasury issues both discounted securities and fixed coupon notes and bonds.
TREASURY BlLLs. All securities issued with initial maturities of one year or less are issued as
discounted instruments and are called Treasury bills. The Treasury currently issues three-
and six-month T-bills at regular weekly auctions. lt also issues "cash management" bills
as needed to smooth out cash flows.
TREASURY NoTES, All securities issued with initial maturities of two to ten years are called
Treasury notes and pay interest semi-annually.
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DocuSign Envelope lD: 4893EEgB-5DDE4O6E-AC19D82388E55984
City of Menifee
DocuSign Envelope ID: 4893EE98-5DDE-406E-AClgOB2388E5S984
Gity of Menifee Policy CC-l1
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TREASURY BoNDs. All securities issued with initial maturities greater than ten years are calledTreasury bonds. Like Treasury notes, they pay interest iemi_annually.
YIELD To MATURITY. The annualized internal rate of return on an Investment which equates theexpected cash flows from the investment to its cost.
lnvestment Policy
25
DocuSign Envelope lD: 4893EEgB-5DDE-406E-AC19-D82388E55984
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF MENIFEE
l, Sarah A. Manwaring, City Clerk of the City of Menifee, do hereby certify that the
foregoing Resolution No. 21-1018 was duly adopted by the City Council of the City of
Menifee at a meeting thereof held on the 5th day of May 2021 by the following vote:
Ayes: Deines, Karwin, Liesemeyer, Sobek, Zimmerman
Noes: None
Absent: None
Abstain: None
)
)ss
)
Sualt I luzruwrttu4
Sarah A anwaring, City Clerk
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