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<br />Investment Strategy <br />The overall strategy of the investment program is to earn a market rate ofretum, while maintaining <br />sufficient liquidity to meet operating cash requirements. This is accomplished by maintaining a <br />portfolio of allowable investment instruments that have acceptable credit quality standards with <br />maturities matching expected cash needs. The City does not actively trade securities in the open <br />market. We utilize a conservative approach, which is described as "buy and hold", and means that <br />once we purchase a security we hold the security until maturity. <br /> <br />Allowable Investment Instruments <br />The California Government Code restricts the type of investments that can be made by a municipal <br />government, and the City's investment policy further restricts the type of investment instruments <br />that are allowed. The California Government Code also restricts maturities of investments to be no <br />more than 5 years. The Government Code also restricts the percentage that certain investment <br />instruments can comprise of the portfolio and the City's investment policy mirrors those same <br />restrictions. The following table summarizes the investments allowed by the California <br />Government Code, and of those, the investments allowed by the recommended investment policy, <br />and the value of the each category in the current portfolio at February 28,2006. <br /> <br />Investments allowed by Allowed by Investment Portfolio Value at 2/28/06 <br />California Government Code Policy <br />Money Market Accounts YES $5,782,548 <br />Local Agency Investment YES $41,535,000 <br />Fund (LAIF) <br />u.S. Treasury issues YES $83,716,520 <br />Federal Agencies YES $86,668,429 <br />State of California Bonds, NO <br />Notes, or Registered State <br />warrants <br />California Local Agencies NO <br />Bonds, Notes, and warrants <br />Bankers' Acceptances YES <br />Commercial Paper YES <br />Certificates of Deposit YES <br />Repurchase Agreements YES <br /> <br />SR:06:112 <br />