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<br /> <br />City of Santa - Annual Page F July 1, 2021 - <br />Statement of Investment Policy June 30, 2022 <br />MEDIUM TERM CORPORATE NOTES (MTN): Refers to all corporate and depository institution debt <br />securities with a maximum remaining maturity of five years or less, issued by corporations organized and <br />operating within the United States or by depository institutions licensed by the United States or any state and <br />operating within the United States. [Referenced pages: 12, 18] <br /> <br />MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers' <br />acceptances, etc.) are issued and traded. A money market mutual fund is a type of fixed income mutual fund <br />that invests in debt securities characterized by their short maturities and minimal credit risk. Money market <br />securities must be highly liquid and of the highest quality, thus money market mutual funds are among the <br />lowest-volatility types of investments. [Referenced pages: 4, 12, 13, 15, 17, 18, 34] <br /> <br />MONEY MARKET FUNDS: Seek to limit exposure to losses due to credit, market, and liquidity risks. Money <br />market funds in the United States are regulated by the Securities and Exchange Commission (SEC) under <br />the Investment Company Act of 1940. Rule 2a-7 of the act restricts the quality, maturity and diversity of <br />investments by money market funds. Under this act, a money fund mainly buys the highest rated debt, which <br />matures in under 13 months. The portfolio must maintain a weighted average maturity (WAM) of 60 days or <br />less and not invest more than 5% in any one issuer, except for government securities and repurchase <br />agreements. Unlike most other financial instruments, money market funds seek to maintain a stable value of <br />$1 per share. Funds are able to pay dividends to investors. [Referenced pages: 12, 34] <br /> <br />MUTUAL FUND: An investment vehicle that is made up of a pool of funds collected from many investors for <br />the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. <br />Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital <br />gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the <br />investment objectives stated in its prospectus. A money market mutual fund is a type of fixed income mutual <br />fund that invests in debt securities characterized by their short maturities and minimal credit risk. [Referenced <br />pages: 4, 13, 15, 17, 34] <br /> <br />MORTGAGE PASS-THROUGH SECURITY: These instruments are based on pooled home mortgages sold <br />by federal agencies and instrumentalities such as Ginnie Mae and Freddie Mac. The amount of principal and <br />interest paid to investors varies from month to month in part because homeowners may accelerate principal <br />payments on a mortgage. The anticipated pay down schedule of the securities will vary from mortgage pool <br />to mortgage pool. Mortgage pass-through securities are complex investment instruments that do not respond <br />to market forces like other, more standard investment instruments. In a declining interest rate environment, <br />mortgage pass-through investors face higher reinvestment risk and lower returns from their investment than <br />investors in other instruments because homeowners tend to refinance in lower interest rate environments, <br />accelerating the principal payments on their mortgages. Thus, the mortgage pass-through investor receives <br />the accelerated principal payments at par and must reinvest these earnings in a lower interest rate <br />environment. [Referenced page: 35] <br /> <br />NATIONAL ASSOCIATION OF STATE TREASURERS (NAST]: Provides advocacy and support that <br />enables member states to pursue and administer sound financial policies and programs benefiting the citizens <br />of the nation. The Association provides educational seminars and conferences, publications, policy and <br />legislative information, and technical assistance to members. [Referenced page: 6] <br /> <br />NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO]: A NSRO is a credit <br />rating agency (CRA] that issues credit ratings that the U.S. Securities and Exchange Commission (SEC] <br />permits other financial firms to use for certain regulatory purposes. [Referenced pages: 10, 12, 32, 34, 35] <br /> <br />OPTION: Right to buy or sell property that is granted in exchange for an agreed upon sum. If the right is not <br />exercised after a specified period, the option expires and the option buyer forfeits the money. [Referenced <br />page: 35]