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<br />establish a system of control. Each transaction will be acknowledged in writing <br />by one ofthe following officials within 48 hours: <br />1) City Administrator <br />2) Mayor or Acting Mayor <br /> <br />3. Investment Objectives <br /> <br />The City will invest idle funds based on the following objectives: <br /> <br />A. Safety - The primary objective is the preservation of capital and the <br />safeguarding of public funds by mitigating credit and interest rate risk. <br /> <br />a. Credit Risk - The City will minimize credit risk, which is the risk <br />of loss due to the failure of the security issuer or backer. <br /> <br />b. Interest Rate Risk - The City will minimize interest rate risk, <br />which is the risk that the market value of securities in the portfolio <br />will fall due to changes in the market interest rates. <br /> <br />B. Term - Investments will be scheduled to cover all expenditures. <br />Investments will not be longer than one year for cash flow and all excess <br />funds may be invested for longer than one year. <br /> <br />C. Liquidity - The portfolio shall remain liquid to meet all operating <br />requirements that may be reasonably anticipated. This is accomplished by <br />structuring the portfolio so that securities mature concurrent with cash <br />needs to meet anticipated demands. Furthermore, since all possible cash <br />demands cannot be anticipated, the portfolio should consist of securities <br />with active secondary or resale markets. Alternatively, a portion of the <br />portfolio may be placed in money market mutual funds or government <br />investment pools which offer same-day liquidity for short-term funds. <br /> <br />D. Yield - The investment portfolio shall be desigued with the objective of <br />attaining a market rate of return throughout budgetary and economic <br />cycles, taking into account the investment risk constraints and liquidity <br />needs. The benchmark to be used will be the 4M Plus Fund annual rate of <br />return. Return on investment is of secondary importance compared to the <br />safety and liquidity objectives. The core of investments are limited to <br />relatively low risk securities in anticipation of earning a fair return relative <br />to the risk being assumed. Securities shall generally be held until <br />maturity. <br /> <br />2 <br />