Item 10 - Adopt Resolution for Annual Statement of Investment Policy

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The Executive Director for FMSA and his/her designees are not required to invest in all the investment options authorized in this Statement of Investment Policy. Selection will be based on cash flow characteristics, exposure to market risk, rate of return, the technical ability of the staff responsible for administering the program, and the availability of time and tools for staff to engage in conservative, but effective, management of the City's investment portfolio. 9.0 PROHIBITED INVESTMENTS AND INVESTMENT PRACTICES 9.1 Ineliaible Investments - State Law Certain investments, however, are prohibited by California Government Code Section 53601.6. Accordingly, the City shall not invest in any inverse floaters, range notes, mortgage derived, or interest -only strips or other securities which could result in zero -interest accrual if held to maturity. However, prohibited securities that were purchased and are currently held in the City's portfolio, as of the date of this policy adoption, which were previously allowed under the California Government Code, yet are now prohibited due to changes in the Code may be held until their maturity dates. 9.2 Disallowed Investments - Higher Perceived Risk Besides investments prohibited by statute, this policy disallows investments in the following due to a higher perceived risk: • Investment agreements — contracts regarding funds deposited by an investor often separated into those offered by banks and those offered by insurance companies commonly known as Guaranteed Investment Contracts (GICs) or Guaranteed Investment Agreements (GIAs); • Securities lending agreements — agreements allowing local agencies to earn incremental income on their investment portfolio by loaning securities in their portfolio to financial services companies for a limited time; Unregistered securities — purchases of private resales of unregistered securities to institutions, such as Securities Act of 1933, Section 5, Rule 144A securities. 9.3 Prohibited Investment Practices Assets of the City shall not be invested pursuant to the following investment practices: Trading of securities strictly for speculation or solely for the realization of short-term trading gains. • A contract providing for the compensation of an agent or fiduciary solely based upon the performance of the invested assets. If a fiduciary or other third party with custody of public investment transaction records of the City fails to produce records within a reasonable City of Santa - Annual Page 13 July 1.2024 - Statement of Investment Policy June 30, 2025