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need to sell securities on the open market prior to maturity, <br />and <br />ii. Purchasing investments with the intent to hold until maturity; <br />and <br />iii. By investing operating funds primarily in shorter -term <br />securities, money market mutual funds, or similar investment <br />pools and limiting the average maturity of the portfolio in <br />accordance with this policy. <br />4.2 Liquidity <br />The investment portfolio shall remain sufficiently liquid to meet all operating <br />requirements that may be reasonably anticipated. This is accomplished by <br />structuring the portfolio so that securities mature concurrent with cash needs <br />to meet anticipated demands (static liquidity). Furthermore, since all <br />possible cash demands cannot be anticipated, the portfolio should consist <br />largely of securities with active secondary or resale markets (dynamic <br />liquidity). The City's cash flow shall be updated on a daily basis and will be <br />considered prior to the investment of securities, which will reduce the <br />necessity to sell investments for liquidity purposes. <br />4.3. Yield <br />The City's investment portfolio shall be designed with the objective of <br />attaining a market -average rate of return throughout budgetary and <br />economic cycles taking into account the investment risk constraints and <br />liquidity needs. The return on investments is to be accorded secondary <br />importance compared to the safety and liquidity objectives described above. <br />The core of investments will focus on relatively low risk securities with an <br />expectation of earning a reasonable return relative to the risk being <br />assumed. It is the general policy of the City to hold investments until market <br />value equals or exceeds amortized cost or book value of the security. <br />Securities shall not be sold prior to maturity with the following exceptions: <br />A. a declining credit security could be sold early to minimize loss of <br />principal; <br />B. a simultaneous purchase of a security and the sale of another <br />(security swap) to enhance the quality, yield, or target duration in the <br />portfolio; or <br />C. a sale of a specific security prior to its maturity and a capital gain or <br />loss recorded in order to improve the credit quality, liquidity, or rate of <br />return of the portfolio in response to market conditions and/or City risk <br />preferences. <br />City of Santa - Annual pE July 1, 2018 - <br />Statement of Investment Policy 599 1 <br />0 <br />June 30, 2019 <br />