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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 must <br />be taken to ensure the preservation of capital and the protection of principal. <br />Each investment transaction shall be undertaken in a manner that seeks to <br />ensure preservation of capital in the overall portfolio. The objective will be to <br />mitigate credit risk and interest rate risk by following guideline listed 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. Credit <br />risk also applies to the overall market perception of the financial strength <br />and capacity of the issuer. The City of Santa Ana will minimize credit risk <br />by: <br />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 Investment <br />Advisory Committee based on a rolling twenty-four month analysis <br />of the City's minimum cash position requirements adjusted for any <br />exceptional anticipated cash out flows. <br />B. Market or Interest Rate Risk <br />Market or interest rate risk is the risk that the market value of securities <br />in the portfolio may fall due to changes in general interest rates. The <br />City of Santa Ana will minimize interest market interest rates, by: <br />Structuring the investment portfolio so that securities mature <br />to meet cash requirements for ongoing operations, thereby <br />avoiding the need to sell securities on the open market prior to <br />maturity, and <br />Purchasing investments with the intent to hold until maturity; <br />and <br />City of Santa - Annual Page 3 July 1.2024 - <br />Statement of Investment Policy June 30, 2025 <br />