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CITY OF SANTA ANA STATEMENT OF INVESTMENT POLICY <br />JULY 2009-2010 <br />1. Attain the highest ranking or the highest letter and <br />numerical rating provided by not less than two of the <br />three following: Moody's, S&P or Fitch, and <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 <br />money market funds with assets under management in excess <br />of five-hundred, million dollars ($500,000,000). The <br />purchase price of shares of beneficial interest, (mutual <br />funds) purchase pursuant to this subdivision shall not <br />include any commission that these companies may charge. <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 />DEPOSITORY SERVICES <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 />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 />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 two-hundred, fifty-thousand dollars ($250,000) <br />of a deposit is federally insured. It is to the City's advantage to <br />waive this collateral requirement for the first $250,000 because we <br />receive a higher interest rate. <br />19D-7 <br />