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a bank default and filing for bankruptcy. All securities, excepting investments which are <br />not deliverable (such as LAIF, California CLASS Prime Fund, direct time certificates of <br />deposit, and money market mutual funds), will be received and delivered using standard <br />"delivery versus payment". Delivery versus payment refers to delivery of securities <br />with an exchange of money for the securities at the time of delivery, rather than delivery <br />of securities with an exchange of a signed receipt for the securities. <br />13.0 DIVERSIFICATION <br />The purpose of diversification is to reduce overall portfolio risk while attaining market rates <br />of return and to enable the City to meet all anticipated cash requirements. The investment <br />portfolio shall consist of various types of securities approved by state statute and this <br />Statement of Investments Policy. Investments shall vary in issuers, asset classes, industries <br />and maturities to meet City's financial obligations. Diversifying the investment portfolio will <br />help mitigate the loss of funds as a result of failure of any one issuer. Investments shall <br />further be diversified between structures and imbedded options within the security. <br />The investments shall be diversified by: <br />• Limiting investments to avoid over -concentration in securities of a specific <br />issuer (excluding treasury bills). <br />• Limiting investment in securities that have higher credit risks. <br />Limiting certificates of deposit to the maximum federally insured amount. <br />• Investing in securities with varying maturities. <br />• Investing a minimum percentage of the total portfolio as established by the <br />FMSA Investment Advisory Committee in highly marketable short-term <br />treasuries, checking accounts with interest, government pooled account, or a <br />combination of all three (See Section 4.1 (A)(iv)). <br />14.0 INTERNAL CONTROLS <br />The Executive Director for FMSA is responsible for establishing and maintaining an internal <br />control structure designed to ensure that the assets of the entity are protected from loss, <br />theft or misuse. The Finance Department, with oversight and approval of the Executive <br />Director for FMSA, has developed a system of internal investment controls and a <br />segregation of responsibilities of investment functions in order to assure an adequate <br />system of internal control over the investment function. No investment personnel may <br />engage in an investment transaction except as provided for under the terms of this policy <br />and the procedure established by the Executive Director for FMSA. <br />Internal control procedures address: <br />0 Control of collusion <br />City �f Santa -Annual Page 16 uly 1, 2024 <br />Statement of Investment Policy June 30., 2025 <br />