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CITY OF SAN LEANDRO <br /> INVESTMENT PRINCIPLES <br /> 1. Safety of Principal — Safety of principal is the primary objective of the City's <br /> investment program. The City invests in a manner that ensures the preservation of <br /> the principal value of the portfolio - investing only in securities having the highest <br /> quality ratings and little or no risk of default. The City employs diversification to <br /> ensure that potential losses on individual securities do not exceed the income <br /> generated by the remainder of the portfolio. <br /> 2. Liquidity — The City's investment portfolio will be structured to provide cash from <br /> maturing investments and interest income to meet City operating requirements that <br /> can be reasonably anticipated. Since emergency cash needs do arise on occasion. <br /> the portfolio will consist primarily of securities with established and active secondary <br /> resale markets. <br /> 3. Yield or Return on Investment - Yield Return becomes a consideration only after <br /> the safety and liquidity objectives have been met. The City's investment portfolio <br /> shall be designed with the objective of attaining a rate of return throughout <br /> budgetary and economic cycles. commensurate with the City's investment risk <br /> constraints and the cash flow characteristics of the portfolio. <br /> GLOSSARY OF INVESTMENT TERMS <br /> Agencies. Shorthand market terminology for any obligation issued by a government - <br /> sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are <br /> not guaranteed by the full faith and credit of the US government. Examples are: <br /> FDIC. The Federal Deposit Insurance Corporation provides insurance backed by <br /> the full faith and credit of the US government to certain bank deposits and debt <br /> obligations. <br /> FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the <br /> agricultural industry. FFCB issues discount notes and bonds. <br /> FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing <br /> market. FHLB issues discount notes and bonds. <br /> FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides <br /> credit and liquidity in the housing market. FHLMC, also called "FreddieMac" <br /> issues discount notes, bonds and mortgage pass- through securities. <br />