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City of Roseville — 2004 Budget ❑ The City includes interest earnings and investment summaries as part of the Comprehensive Annual Financial Report (CAFR). Implementation See Investment and Portfolio procedures. Investment and Portfolio Procedures Scope These investment and portfolio procedures apply to the activities of the City with regard to investing the financial assets of all funds, including the following: ❑ General Fund ❑ Special Revenue Funds ❑ Capital Project Funds ❑ Debt Service Funds ❑ Special Assessment Funds ❑ Internal Service Funds ❑ Trust and Agency Funds Objectives Funds of the City will be invested in accordance with Minnesota Statutes, 1999 fiscal policies and these administrative procedures. The City's investment portfolio shall be managed in a manner to attain a market rate of return throughout budgetary and economic cycles while preserving and protecting capital in the overall portfolio. The market rate of return shall be to the same rate as the target portfolio. Investments shall be made based on statutory and policy constraints. Funds held for future capital projects (i.e. bond proceeds) shall be invested to produce enough income to offset increases in construction costs due to inflation. Where possible, prepayment funds for long -term debt service shall be invested to ensure a rate of return at least equal to the interest being paid on the bonds. Delegation of Authority The finance director is designated as investment officer of the City and is responsible for investment decisions and activities, under the direction of the City manager. Prudence The standard of prudence to be applied by the investment officer shall be the "prudent investor" rule. This rule states, "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." The prudent investor rule shall be applied in the context of managing the overall portfolio. The investment officer, acting in accordance with written procedures and exercising due diligence, shall not be held personally responsible for a specific security's credit risk or market price changes, provided that these deviations are reported immediately and that appropriate action is taken to control adverse developments. Monitoring and Adjusting the Portfolio 116