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CITY OF SANTA ANA STATEMENT OF INVESTMENT POLICY <br />JULY 2013-2014 <br />Page 3 <br />portfolio; or <br />3) liquidity needs of the portfolio require that the security be sold. <br />The market-average rate of return is defined as the average return on three-month U.S. <br />Treasury Bills. <br />The City strives to maintain one hundred percent (100%) investment of idle funds after <br />consideration for a compensating balance to cover the cost of services provided by the bank. <br />The funds available for investment are determined by cash flow projections updated daily. <br />Investments are monitored so that legal limits on types of investments are not exceeded. <br />AUTHORIZED INVESTMENTS: <br />The "prudent person" standard shall be applied in the context of managing the overall portfolio. <br />Investment officers acting in accordance with written procedures and this investment policy and <br />exercising due diligence shall be relieved of personal responsibility for an individual security's <br />credit risk or market price changes, provided deviations from exceptions are reported in a timely <br />fashion and the liquidity and the sale of securities are carried out in accordance with the terms of <br />this policy. Investments shall be made with judgment and care, under circumstances then <br />prevailing, which persons of prudence, discretion, and intelligence exercise in the management <br />of their own affairs, not for speculation, but for investment, considering the probable safety of <br />their capital as well as the probable income to be derived. <br />The City is governed by the California Government Code, Sections 16429.1 and Title 5, Division <br />2, Part1, Chapter 4, entitled Financial Affairs, commencing with section 53630. Santa Ana <br />further restricts the permitted investments to those listed below. Within this scope, the City <br />diversifies its investments by maturity dates and types of investments. Concentration limits are <br />indicated for all investment categories except Treasury securities, which are considered the <br />safest investments. <br />A. United States Treasury Bills, Notes, and Bonds, for which the full faith and credit of the <br />United States are pledged for payment of principal and interest. Purchases of this <br />category shall not exceed five years to maturity. There is no percentage limit in this <br />category. <br />B. Obligations issued by a Federal Agency or a United States Government Sponsored <br />Enterprise. Federal Agency Issues include, but are not limited to GNMA (Government <br />National Mortgage Association), FFCB (Federal Farm Credit Bank), FHLB (Federal Home <br />Loan Bank Board), FHLMC (Federal Home Loan Mortgage Corporation), FNMA (Federal <br />National Mortgage Association), SLMA (Student Loan Mortgage Administration), FHA <br />(Federal Housing Administration) and TVA (Tennessee Valley Authority). Although there <br />is no percentage limitation on these issues, the "prudent <br />55A-7