Fort Walton Beach Council agenda — 02-26-13--regular — reading text

v I. Purpose 2 v N II. Scope 2 U T III. Investment Objectives 2 a c IV. Authorized Investments, Maturity & Liquidity, and Portfolio Composition 2 EE V. Bid Requirement 4 Wc T VI. Risk and Diversification 5 v E VII. Rebalancing 5 Uw VIII. Master Repurchase Agreement 5 IX. Performance Measurements and Expected Rate of Return 5 N X. Reporting 6 M XI. Delegation of Authority 6 N XII. Standards of Prudence 6 n m XIII. Ethics and Conflicts of Interest 7 UUTU XIV.XIV. InternalInternal ControlsControls andand InvestmentInvestment ProceduresProcedures 77 a°a° caca XV.XV. EE ContinuingContinuing EducationEducation 77 aa XVI.XVI. AuthorizedAuthorized InvestmentInvestment AdvisorsAdvisors 77 TT b XVII.XVII. AuthorizedAuthorized PortfolioPortfolio Managers Managers R EN XVIIL Third -Party Custodial Agreements S M XIX. Voting of Proxies 99 NN c XX. Investment Policy Adoption 9 ATTACHMENT A Review and Evaluation of Investment Advisor 10 rUE ATTACHMENTATTACHMENT BB ReviewReview andand Evaluation Evaluation ofof PortfolioPortfolio ManagerManager 1111 Q ATTACHMENT C: Acknowledgement of Receipt of Current Investment Policy 12 Ordf ame 1876, Adopted March 12, 2013 . 4I  11. 1. a City of Fort Walton Beach, FL BEAL MEMORIAL CEMETERY INVESTMENT POLICY I. PURPOSE The purpose of this Investment Policy ( hereinafter " Policy ") is to set forth the investment objectives and parameters for the management of the City of Fort Walton Beach Beal Memorial Cemetery Perpetual Care Fund hereinafter " Fund "). This Policy is designed to ensure the prudent management of cemetery funds, an m investment return competitive with comparable benchmarks and financial market indices, and the availability of a operating and capital funds when needed. v II. SCOPE In accordance with Ordinance 526, this Policy applies to all funds controlled by the City for the maintenance of the Beal Memorial Cemetery in perpetuity after all cemetery lots are sold. Twenty percent ( 20 %) of cemetery lot sales is transferred annually to the Beal Memorial Cemetery Perpetual Care Fund. Current personnel, operating, and capital expenses are paid from current revenues ( e. g. the remaining 80% of lot sales). III. INVESTMENT OBJECTIVES The primary investment objective of the Fund is to achieve long -term growth of assets by maximizing long -term rate of return on investments and minimizing the risk of loss to fulfill the Fund' s current and long -term obligations. Investment objectives include: 1. Invest assets in a manner consistent with the following fiduciary standards: ( a) all transactions undertaken must be for the sole interest of the Fund, and ( b) assets are to be diversified in order to minimize the impact of large losses from individual investments. 2. Conserve and enhance the value of assets in real terms through asset appreciation and income generation, while maintaining a reasonable investment risk profile. 3. Provide for funding and anticipated withdrawals on an as needed basis as well as reasonable expenses of operation of the cemetery in perpetuity after all lots have been sold. 4. Minimize principal Fluctuations over the Investment Horizon ( as defined below). IV. AUTHORIZED INVESTMENTS, MATURITY & LIQUIDITY REQUIREMENTS, AND PORTFOLIO COMPOSITION Investment Horizon The Fund' s investment objectives are based on a 30 -year investment horizon. Interim Fluctuations should be viewed with appropriate perspective. A long -term investment horizon has been adopted such that the risks and duration of investment losses are carefully weighed against the long -term potential for appreciation of assets to ensure the cemetery' s maintenance and care in perpetuity. Liquidity and DiversiJo ation At this time, the Fund requires minimal liquid assets ( e. g. cash, cash equivalent, money market funds). Current operating expenses are paid from current operating revenues. Assets will be primarily invested in longer -term securities and shall be diversified with the intent to minimize the risk of long -term investment losses. The total portfolio will be constructed and maintained to provide diversification with regard to the concentration of holdings in individual issues, issuers, countries, governments or industries. Oedluii, e 1876, Adop of March 12, 2013  14;ta City of Fort Walton Beach, FL BEAL MEMORIAL CEMETERY INVESTMENT POLICY To the extent possible, an attempt will be made to match investment maturities with known cash needs and anticipated cash flow requirements. The portfolio should be structured in such a manner as to provide sufficient liquidity to pay obligations as they come due. Asset Allocation To achieve the greatest likelihood of meeting the Fund' s investment objectives and the best balance between risk and return for optimal diversification, the Fund should allocate assets into two broad classes: Investment Assets and Liquidity Assets. The Investment Assets will be invested in accordance with the targets identified for each asset class to achieve an average total annual rate of return that is equal to or greater than comparable benchmarks. The Liquidity Assets will be held and used to pay operations and maintenance ( not applicable until all lots are sold). The following matrix identifies the portfolio investment allocation limits based on asset class, as established by the City. The asset weighting is calculated based on the market value of each investment. The Finance Director or Investment Advisor( s) shall have the option to further restrict investment allocations from time to time based on market conditions, risk, and diversification investment strategies. INVESTMENT ASSETS Asset Weighting Asset Class Range Target m Domestic Equity 0 % - 50% 42% m International Equity