Item 17 - Annual Statement of Investment Policy

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9.0 PROHIBITED INVESTMENTS AND INVESTMENT PRACTICES 9.1 Ineligible Investments- State Law Certain investments, however, are prohibited by California Government Code Section 53601.6. Accordingly, the City shall not invest in any inverse floaters, range notes, mortgage-derived or interest-only strips, or other securities that could result in zero interest accrual if held to maturity. However, prohibited securities purchased and currently held in the City's portfolio as of the date of this policy's adoption, which were previously allowed under the California Government Code but are now prohibited due to changes in the Code, may be held until their maturity dates. 9.2 Disallowed Investments- Higher Perceived Risk Besides investments prohibited by statute, this policy disallows investments in the following due to a higher perceived risk: • Investment agreements- contracts regarding funds deposited by an investor are often separated into those offered by banks and those offered by insurance companies, commonly known as Guaranteed Investment Contracts (GICs) or Guaranteed Investment Agreements (GIAs); • Securities lending agreements- agreements allowing local agencies to earn incremental income on their investment portfolio by loaning securities in their portfolio to financial services companies for a limited time; • Unregistered securities- purchases of private resales of unregistered securities to institutions, such as the Securities Act of 1933, Section 5, Rule 14A securities. 9.3 Prohibited Investment Practices Assets of the City shall not be invested pursuant to the following investment practices: • Trading of securities strictly for speculation or solely for the realization of short-term trading gains. • A contract providing for the compensation of an agent or fiduciary solely based upon the performance of the invested assets. City of Santa-Annual Page 15 July 1. 2026 - Statement of Investment Policy June 30,2027