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institutions the City may do business with pursuant to the Government Code Section 53601.5 has been added. If the City engages a professional investment adviser, the City may rely on that adviser to select the brokers to do business with on behalf of the City. • Authorized and Suitable Investments: This section has been updated to add more specific language indicating that the City's investment program is governed by the Government Code but seeks to restrict investments further. When discrepancies are found between the Government Code and the City's Policy, the more restrictive parameters shall be in place. For municipal securities, the requirement that the bonds be solely general obligations or revenue bonds from water, sewer, and public power has been removed and augments the credit requirements, making the minimum credit quality the entire rating category of"A". This change will provide the City a wider selection when investing in states, departments, and other agencies. Concentration limit has been added for medium-term notes, federal agency securities, and supranational organizations securities. Passthrough securities (asset-backed and mortgage-backed securities) allowed by the Government Code have been added as suitable investments. • Prohibited Investment Vehicles and Practices: This new section has been added to outline those activities and assets that are not allowed by the Government Code or are to be avoided as a best practice. • Risk Management and Diversification: This section replaces the Diversification section in the current policy and contains language outlining the requirements and procedures the City will undertake to mitigate credit and market risk to the investment program. Allowable Investment Instruments The California Government Code restricts the type of investments that can be made by a municipal government, and the City's investment policy further restricts the type of investment instruments that are allowed. The Government Code also restricts the maturities of investments to no more than five years and restricts the percentage of certain investment instruments in the portfolio. The City's policy mirrors those same restrictions. The following table summarizes the investments allowed by the Government Code, and of those the investments allowed by the recommended City investment policy. It also lists the value of each category in the current portfolio as of April 30, 2023. CITY VERSUS GOVERNMENT CODE ALLOWABLE INVESTMENTS Allowed by California Allowed by City Policy Portfolio Value as of Government Code 4/30/2023 Local Agency Investment YES $64,123,171 Fund (LAIF) Federal Agency Obligations YES $147,150,941 Certificates of Deposit YES $491,207 Page 3 of 5