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Objectives _ Funds of the City will be invested in accordance with Minnesota Statutes, Council-approved fiscal l� � 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 overal] portfolio. .) .. so � 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. �, Dele�ation 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, sha]] s�� not be held personally responsible for a speciiic 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. � Monitorin� and Adjustin� the Portfolio �� The investment officer will routinely monitor the contents of the portfolio, the available markets and � the relative values of competing instruments and will adjust the portfolio accordingly. �� Internal Controls �� The Finance Director shall establish a system of internal controls, which shall be reviewed annually by : an independent auditor. The controls shall be designed to prevent loss of public funds due to fraud, s error, misrepresentation, unanticipated market changes, or imprudent actions. Investments shall be _ done on a pooled funds basis with interest allocated on a cash balance method. Those internal controls ., shall consist of competitive bids on investments, and division of duties among the staff including: � ❖ Investments made by the investment officer . ❖ Records maintenance by a finance staff inember other than the investment officer � ❖ Review and reconciliation by the assistant finance director Page 10 of 19