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<br />CITY OF SANTA ANA STATEMENT OF INVESTMENT POLICY <br />JULY 2006-2007 <br /> <br />Securities shall not be sold prior to maturity with the <br />following exceptions: <br />1) a declining credit security could be sold early to <br />minimize loss of principal; <br />2) a security swap would improve the quality, yield, or <br />target duration in the portfolioj or <br />3) liquidity needs of the portfolio require that the security <br />be sold. <br /> <br />The market-average rate of return is defined as the average <br />return on three-month U.S. Treasury Bills. <br /> <br />The City sLrives to maintain one hundred percent (100%) investment <br />of idle funds after consideration for a compensating balance to <br />cover the cost of services provided by the bank. The funds <br />available for investment are determined by cash flow projections <br />updated daily. Investments are monitored so that legal limits on <br />types of investments are not exceeded. <br /> <br />AUTHORIZED INVESTMENTS, <br /> <br />The Tlprudent person!1 standard shall be applied in the context of <br />managing the overall portfolio, Investment officers acting in <br />accordance with written procedures and this investment policy and <br />exercising due diligence shall be relieved of personal <br />responsibility for an individual security's credit risk or market <br />price changes, provided deviations from exceptions are reported in a <br />timely fashion and the liquidity and the sale of securities are <br />carried out in accordance with the terms of this policy. Investments <br />shall be made with judgement and care, under circumstances then <br />prevailing, which persons of prudence, discretion, and intelligence <br />exercise in the management of their own affairs, not for <br />speculation, but for investment, considering the probable safety of <br />their capital as well as the probable income to be derived. <br /> <br />The City is governed by the California Government Code, Sections <br />53600, 16429.1 and 53684 et seq. Santa Ana further restricts the <br />permitted investments to those listed below. Within this scope, the <br />City diversifies its investments by maturity dates and types of <br />investments, Concentration limits are indicated for all investment <br />categories except Treasury securities, which are considered the <br />safest investments. <br /> <br />A. United States Treasury Bills, Notes, and Bonds, for which the <br /> <br />full faith and credit of the United States <br />payment of principal and int.erest, Purchases <br />shall not exceed five years to maturity. <br />percentage limit in this category. <br /> <br />are pledged for <br />of this category <br />There i 8 no <br /> <br />B. <br /> <br />Obligations <br />Government <br /> <br />issued by <br />Sponsored <br /> <br />a Federal <br />Enterprise. <br /> <br />Agency or a United <br />Federal Agency <br /> <br />States <br />Issues <br /> <br />Resolution No. 2006-046 <br />Page 6 of 11 <br />