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CITY OF SANTA ANA STATEMENT OF INVESTMENT POLICY <br />JULY 1, 2017 — JUNE 30, 2018 <br />Page 5 <br />• Asset-backed securities (ABS) — securities supported by pools of installment loans <br />or leases or by pools of revolving lines of credit; <br />Derivatives — financial instruments which have a principal and/or interest payment <br />subject to uncertainty as to timing and/or amount including financial instruments <br />whose return profile is linked to, or derived from, the movement of one or more <br />underlying index or security, and may include a leveraging factor, or financial <br />contracts based upon notional amounts whose value is derived from an underlying <br />index or security (interest rates, foreign exchange rates, equities or commodities); <br />• Investment agreements — contracts regarding funds deposited by an investor often <br />separated into those offered by banks and those offered by insurance companies <br />commonly known as Guaranteed Investment Contracts (GICs) or Guaranteed <br />Investment Agreements (GIAs); <br />• Mortgage-backed securities — securities created when a mortgage or purchaser of <br />residential real estate mortgages creates a pool of mortgages and markets <br />undivided interests or participation in the pool, including principal only strips; <br />• Repurchase and Reverse Repurchase agreements — agreements involving the <br />borrowing of cash from a financial institution for the purchase of securities in which <br />a financial asset is instead pledged as a collateral for a loan and reverse purchase <br />agreements in which the roles of borrower and lender are reversed. <br />• Securities lending agreements — agreements allowing local agencies to earn <br />incremental income on their investment portfolio by loaning securities in their <br />portfolio to financial services companies for a limited time; <br />AUTHORIZED INVESTMENTS: <br />Santa Ana further restricts permitted investments to those listed below. Within this scope, the <br />City diversifies its investments by maturity dates and types of investments. Concentration limits <br />are 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 />55D-12 <br />