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• <br /> 8. The City will not purchase securities that are considered highly sensitive. A <br /> 40 highly sensitive investment is a debt instrument with contract terms that make the <br /> investment's fair value highly sensitive to interest rate changes. Examples <br /> include range notes and index amortizing notes, step-up notes and bonds, <br /> variable-rate investments with coupon multipliers, and coupons that vary <br /> inversely with a benchmark index. <br /> 9. The City will not purchase securities that could expose the City to foreign <br /> currency risk. <br /> 10. The City will not purchase derivatives. <br /> 6. Safekeeping and Custody <br /> Investments may be held in safekeeping with: <br /> l. Any Federal Reserve Bank, <br /> 2. Any bank authorized under the laws of the United States or any state to exercise <br /> corporate trust powers, including but not limited to the bank from which the <br /> investment is purchased, <br /> 3. A primary reporting dealer in the United States government securities to the <br /> Federal Reserve Bank of New York, or <br /> 4. A securities broker-dealer having its principal executive office in Minnesota, <br /> Licensed pursuant to Minnesota Statutes Chapter 80A, or an affiliate of it, <br /> regulated by the securities and exchange commission and maintaining a combined <br /> capital and surplus of$40,000,000 or more, exclusive of subordinated debt. <br /> The City's ownership of all securities in which the fund is invested should be evidenced <br /> by written acknowledgments identifying the securities by: <br /> A. The names of issuers, <br /> B. The maturity dates, <br /> C. The interest rates, <br /> D. Any serial numbers or other distinguishing marks. <br /> The City shall not invest in securities that are both uninsured and not registered in the <br /> name of the City and are held by either: <br /> A. The counterparty or <br /> B. The counterparty's trust department or agent, but not in the name of the <br /> City. <br /> The Finance Director shall establish a system of internal controls, which shall be <br /> • reviewed with the independent auditor of the City. The controls shall be designed to prevent the <br /> \\Metro-inet\ArdenHills\Finance\Policies and Pr6cedures\Policies\Investment Policy.doc <br /> Last printed 9/7/2007 1:38 PM <br />