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<br />CITY OF SANTA ANA STATEMENT OF INVESTMENT POLICY <br />JULY 2005-2006 <br /> <br />I. Shares of beneficial interest issued by diversified management <br />companies that are money market funds registered with the <br />Securities and Exchange Commission under the Investment Company <br />Act of 1940. The company shall have met either of the <br />following criteria: <br /> <br />1. At tained <br />numerical <br />following: <br /> <br />the highest ranking or the highest <br />rating provided by not less than <br />Moody's, S&P or Fitch, and <br /> <br />letter <br />two of <br /> <br />and <br />the <br /> <br />2. Retained an investment adviser registered or exempt from <br />registration with the Securities and Exchange Commission <br />with not less than five (5) years experience managing money <br />market funds with assets under management in excess of five- <br />hundred million, dollars ($500,000,000). The purchase price <br />of shares of beneficial interest, (mutual funds) purchase <br />pursuant to this subdivision shall not include any <br />commission that these companies may charge. <br /> <br />J. Ineligible investments. Investments not described herein are <br />ineligible investments. In accordance with Section 53631.5 of <br />the Government Code, the City shall not invest any funds in <br />inverse floaters, range notes, or interest only strips that are <br />derived from a pool of mortgages. In addition, the City shall <br />not invest any funds in any security that could result in zero <br />interest accrual if held to maturity. However, prohibited <br />securities that are in the City's portfolio, as of the date of <br />this policy adoption, may be held until their maturity dates. <br /> <br />DEPOSITORY SERVICES <br /> <br />Money must be deposited in state or national banks, state or federal <br />savings associations or state or federal credit unions in the state. <br />It may be in inactive deposits, active deposits or interest-bearing <br />active deposits. The deposits cannot exceed the amount of the <br />bank's or savings and loan's paid up capital and surplus. <br /> <br />The bank or savings and loan must secure the active and inactive <br />deposits with eligible securities having a market value of one- <br />hundred, ten percent (110%) of the total amount of the deposits. <br />State law also allows as an eligible security, first trust deeds <br />having a value of one-hundred, fifty percent (150%) of the total <br />amount of the deposits. A third class of collateral is letters of <br />credit drawn on the Federal Home Loan Bank (FHLB). <br /> <br />The treasurer may waive, at his discretion, security for that <br />portion of a deposit which is insured pursuant to federal law. <br />Currently, the first one-hundred, thousand ($100,000) of a deposit <br />is federally insured. It is to the City's advantage to waive this <br />collateral requirement for the first $100,000 because we receive a <br />higher interest rate. <br /> <br />f9B-10 <br /> <br />