Fort Walton Beach Council agenda — 01-08-13--regular — reading text

T Physical Delivery. Delivery of readily available underlying assets at contract maturity. ca Portfolio. Collection of securities and investments held by an investor. uE Portfolio Manager. An individual or firm responsible for investing assets, implementing investment strategy, m and managing the day -to -day portfolio trading. Portfolio management can be active or passive. e Premium. The amount by which a bond or other financial instrument sells above its face value. See also Discount." Primary Dealer. Any of a group of designated government securities dealers designated by to the Federal m Reserve Bank of New York. Primary dealers can buy and sell government securities directly with the Fed. Primary dealers also submit daily reports of market activity and security positions held to the Fed and are subject to its informal oversight. Primary dealers are considered the largest players in the U. S. Treasury securities m market. n Prime Paper. Commercial paper of high quality. Highest rated paper is A- 1 + / A -1 by S & P and P -1 by Moody' s Ua Principal. Face value of a financial instrument on which interest accrues. May be less than par value if some principal has been repaid or retired. For a transaction, principal is par value times price and includes any 9 premium or discount. 0a Prudent Investor Standard. exchanging, g g selling, g or managing B gP Standard that requites that when investing reinvesting, purchasing, acquiring, public funds, a trustee shall act with care, skill, Pprudence, and diligence g under cuE m the circumstances then prevailing, including, but not limited to, the general economic conditions and the e anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters in would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain LL the liquidity needs of the agency. More stringent than the " prudent person" standard as it implies a level of N knowledge commensurate with the responsibility at hand. Qualified Public Depository - Per Florida Statute 280, means any bank, saving bank or savings association that: 1. Is organized and exists under the laws of the United Slates, the laws of this state or any other state or territory of the United States; E 2. Has its principal place of business in this state or has a branch office in this state which is authorized under the laws of this state or of the United States to receive deposits in this state. 3. Has deposit insurance under the provision of the Federal Deposit Insurance Act, as amended, 12 U. S. C. ss. 1811 seq. 4. Meets all requirements of F. S. 280 5. Has been designed by the Treasurer as a qualified public depository. Range Note. A type of structured note that accrues interest daily at a set coupon rate that is tied to an index. Most range notes have two coupon levels; a higher accrual rate for the period the index is within a designated Ommoo 1875. Adapted Jzn s, 2013 Packet Pg. 7A  12 .1 to City of Fort Walton Beach, FL INVESTMENT POLICY range, the lower accrual rate for the period [ hat the index falls outside the designated range. This lower rate may be zero and may result in zero earnings. Rate of Return. Amount of income received from an investment, expressed as a percentage of the amount invested. Real Purchasing Power. Also known as real rate of return, defined as returns in excess of inflation as defined by the Consumer Price Index (CPI) by the United States ( U. S.) Bureau of Labor Statistics ( BLS). Realized Gains ( Losses). The difference between the sale price of an investment and its book value. Gainsdosses are `realized" when the security is actually sold, as compared to- unrealized" gains /losses which are based on current market value. See " Unrealized Gains ( Losses)." Reference Bills: FHLMC' s short- term debt program created to supplement its existing discount note program by offering issues from one month through one year, auctioned on a weekly or on an alternating four -week basis depending upon maturity) offered in sizeable volumes ($ I billion and up) on a cycle of regular, standardized issuance. Globally sponsored and distributed, Reference Bill issues are intended to encourage active trading and market- making and facilitate the development of a term repo market. The program was designed to offer predictable supply, pricing transparency and liquidity, thereby providing alternatives to U. S. Treasury bills. FHLMC' s Reference Bills are unsecured general corporate obligations. This program supplements the corporation' s existing discount note program. Issues under the Reference program constitute the same credit standing as other FHLMC discount notes; they simply add organization and liquidity to the short- term Agency discount note market. Reference Notes: FHLMC' s intermediate -term debt program with issuances of 2, 3, 5, 10 and 30 -year maturities. Initial issuances range from $ 2 - $ 6 billion with re- openings ranging $ l - s4 billion. The notes are high -quality bullet structures securities that pay interest semiannually. Issues under the Reference program constitute the same credit standing as other FHLMC notes; they simply add organization and liquidity to the intermediate- and long -term Agency market. Repurchase Agreement ( Repo). A short- term investment vehicle where an investor agrees to buy securities from a couulerparty and simultaneously agrees to resell the securities back to the counterparty at an agreed upon time and for an agreed upon price. The difference between the purchase price and the sale price represents interest earned on the agreement. In effect, it represents a collateralized loan to the investor, where the securities are the collateral. Can be DVP, where securities arc delivered to the investor' s custodial bank, or " tri- party" where the securities are delivered to a third party intermediary. Any type of security can be used as " collateral," but only some types provide the investor with special bankruptcy protection under the law. Repos should be undertaken only when an appropriate BMA approved master repurchase agreement is in place. Reverse Repurchase Agreement ( Reverse Repo). A repo from the point of view of the original seller of securities. Used by dealers to finance their inventory of securities by essentially borrowing at short- term rates. Can also be used to leverage a portfolio and in this sense, can be considered risky if used improperly. Rolling Returns. The annualized average return for a period ending with the listed year. Rolling returns are useful for examining the behavior of returns for holding periods similar to those actually experienced by investors. Safekeeping. Service offered for a fee, usually by financial institutions, for the holding of securities and other valuables. Safekeeping is a component of custody services. Secondary Market. Markets for the purchase and sale of any previously issued financial instrument. Securities Lending. An arrangement between and investor and a custody bank that allows the custody bank to load" the investors investment holdings, reinvest the proceeds in permitted investments, and shares any profits Ordinance 1895, Adopted January x 2013 Paok@RP9. 7$  12. 1. b City of Fort Walton Beach, FL INVESTMENT POLICY with the investor. Should be governed by a securities lending agreement. Can increase the risk of a portfolio in that the investor takes on the default risk on the reinvestment at the discretion of the custodian. Sinking Fund. A separate accumulation of cash or investments ( including earnings on investments) in a fund in accordance with the terms of a trust agreement or indenture, funded by periodic deposits by the issuer ( or other entity responsible for debt service), for the purpose of assuring timely availability of moneys for payment of debt service. Usually used in connection with term bonds. mc Spread. The difference between the price of a security and similar maturity U. S. Treasury investments, expressed m in percentage terms or basis points. A spread can also be the absolute difference in yield between two securities. The securities can be in different markets or within the same securities market between different credits, sectors, N or other relevant factors. U Standard & Poor' s. One of several NRSROs that provide credit ratings on corporate and municipal debt issues. a STRIPS ( Separate Trading of Registered Interest and Principal of Securities). Acronym applied to U. S. d E Treasury securities that have had their coupons and principal repayments separated into individual zero- coupon m Treasury securities. The same technique and " snips" description can be applied to non -Treasury securities ( e. g. E FNMA strips'). Structured Notes. Notes that have imbedded into their structure options such as step -up coupons or derivative- based returns. N Standard Deviation. In finance, standard deviation is applied to the annual rate of remm of an