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4.0 OBJECTIVES <br />The primary objectives, in priority order, for the City of Santa Ana's investment activities <br />shall be Safety, Liquidity, and Yield: <br />4.1 Safety Of Principal <br />Safety of principal is the foremost objective of the City of Santa Ana, care <br />must be taken to ensure the preservation of capital and the protection of <br />principal. Each investment transaction shall be undertaken in a manner that <br />seeks to ensure preservation of capital in the overall portfolio. The objective <br />will be to mitigate credit risk and interest rate risk by following guideline listed <br />below. <br />A. Credit Risk <br />Credit Risk is the risk of loss due to the failure of the security issuer or <br />backer to redeem the outstanding debt at the stated maturity date. <br />Credit risk also applies to the overall market perception of the financial <br />strength and capacity of the issuer. The City of Santa Ana will minimize <br />credit risk by: <br />i. Limiting investments to authorized investments as set forth in <br />Section 10.0 of this investment policy; <br />ii. Pre -qualifying the financial institutions, broker -dealers, <br />intermediaries, and advisors with which the City will do business; <br />iii. Diversifying the investment portfolio so that potential losses on <br />individual securities will be minimized. <br />iv. Holding a minimum percentage of the total portfolio in highly <br />marketable short-term treasuries, checking with interest, <br />government pooled account, or a combination of all three. The <br />minimum percentage shall be set monthly by the FMSA <br />Investment Advisory Committee based on a rolling twenty-four <br />month analysis of the City's minimum cash position requirements <br />adjusted for any exceptional anticipated cash out flows. <br />B. Marketorinterest Rate Risk <br />Market or interest rate risk is the risk that the market value of <br />securities in the portfolio may fall due to changes in general interest <br />rates. The City of Santa Ana will minimize interest market interest <br />rates, by: <br />i. Structuring the Fund so that securities mature to meet cash <br />City of Santa - Annual page 3 July 1, 2020 - <br />Statement of Investment Policy June 30, 2021 <br />55A-9 <br />