Fort Walton Beach Resolution — 00-24-Investment Policy/Procedures — reading text

principal and sufficient liquidity to meet funding of capital or other special projects as required. Income is a secondary objective. B. Risk Tolerance: Some principal volatility is tolerated, but enough of the fund will be invested in nonvolatile, liquid investments to ensure payment for projects when due. Moderate income volatility is permitted. Financial risk is unacceptable, and because the investment time horizon of the fund is relatively short, exposure to interest rate and purchasing power risk will be minimal. C. Rates of Return: The annual time- weighted rate of return on this portfolio should' exceed the total return on six- month Treasury bills. 3. Surplus Funds Surplus funds that have no designated purpose and that may be set aside for contingencies or emergencies or may be used to supplement the other two funds as necessary: ~ ortfolio management is designed to generate income and preserve the principal so that it will be available when needed. A. Objective: The primary investment objective is to provide income ( and perhaps principal) for future uses. Preservation of principal is a close secondary objective. B. Risk Tolerance: Some volatility of principal is. acceptable in order to obtain additional income. Fin~ncial' risk is unacceptable, and interest rate risk and purchasing power risk will be minimal. C. Rate of Return: The rate of return should equal or exceed the return on an index of government securities with an equal duration measured over a complete market cycle. 5. 0 PERFORMANCE ~ On quarterly basis the Finance Director will provide to a the City Manager and the City Council a performance report indicating each type of investment instrument and their return. This information will be analyzed to guide the Finance Director in the mix of investments for the following quarter. 3 L- c:; than two years from the date o~ urchase. However the City may collateralize its repurchase agreements using longer dated investments not to exceed three years to maturity. Reserve funds may be invested in securities exceeding three years if the maturity of such investments are made to coincide as nearly as practicable with the expected use of the funds. 9. 0 PORri'OLIO COMPOSr.rION The following investment policy guidelines are adopted: 1. Collective Investment Assets of any of the funds may be invested in collective investment pools run and managed by other public bodies and banks .. Howev~ r, no such investment shall be made in a ' pool where the investment objectives and restrictions differ fram the investment objectives listed in Section 4. 1 of the statement of investment policy, nor should any investment be made in a fund that engages in market t; m; nq or anticipating_ nterest rate chang~s or that uses derivatives or other securities other than as a hedge against intere~t rate risk. 2. Imtual Funds/Yoney Markets lEvestment in money markets must be on a non~ fluctuating . basis ( do~~ in- dollar out) and should have a life of less uiaii n~ netydays. Money Market investors W111 suppry------. 1nformation on a weekly basis for oversight review to two major rating agencies, and on an a~ ual basis a formal review. Investment in shares of mutual investment funds may be made ifthe ~ nvestments meet the same restrictions as those of'- collective invegrm~nt pools described in ~Action 9. Paragraph 1. In addition, purchase of these funds must not result in payment of a purchase premium or commission. - rne- investment adviser must be registered with the SecuritIes and Exchange Commission ( SEC) as an investment advisor. 3. Cash Holdings Each portfolio will hold sufficient cash equivalent investments to ensure known obligations for the next six months. Idle cash will be invested to the fullest extent practicable in interest- bearing investments. 4. Operating Expense Portfolio Permissible investments . for the Operating Expense Portfolio are: a. Bank checking accounts, time deposits, or certificates of deposit subject to the $ 100, 000 Federal Deposit Insurance Corporation ( FDIC) limit or collateralized b. U. S. Treasury obligations with maturities of one year or less c. U. S. government agency paper with a maturity of one year or less 5  c:; d. Poor' Commercial paper s rated A1/ P~ Y Moody' s and Standard & e. Bankers acceptances f. Money market mutual funds that restrict investments to short- term U. S. Treasury and Agency securities g. State or other government agency collective investment pools, where the investment policies are compatible with those of the City of Fort Walton Beach The following types of transactions are optional, should be made with' appropriate restrictions): h. Loans with an agreement for the collateral to be repurchased by the borrower ( repurchase agreements from the perspective of the pul? lic body), with a maturity not tQ exceed six months; the amount of such instruments will not exceed 10 percent of the market value of the portfolio. Acceptable collateral for repos is U. S. Treasury and Agency securities. 5. CapitaJ: Expenditure Portfolio Permissible investments for the Capital Expenditure Fund are: a. All investments permitte~ for the Operating Expense Fund, except maturities may be e'~ ended to five years, provided the duration of the portfo~io does not exceed two years and sufficient liquidity is available to meet major outlays. 6. Surplus Funds Permissible investments for Surplus Funds are: a. All investments permitted for the Capital Expenditure Fund, except portfolio duration may not exceed five years. 7. Prohibited :Investments and :Investment Practices The following are prohibited: a. Purchases on margin or short sales. b. Derivative securities that are, in effect, a leveraged bet on future movements of interest rates or some price index. Collateralized mortgage obligations, because of their complexity and prepayment rate uncertainty, are prohibited. c. Lending securities ~ th an agreement to buy them back after a stated period of time ( reverse repurchase agreements from the perspective of the public body). 10. 0 RISK AND DIVERSIFICM:ION The investment portfolio will be diversified to avoid incurring concentration in securities of one type or undue securities of one financial institution, so that no single investment or class of investments can have a disproportion~te impact on the total portfolio. This restriction does not apply to U. S. TreasurY, securities. 6 II n__.._._.  o conformed to the investment The report should be provided to the City Manager, poO.!. and the City Council. 17. 0 ALTERNA7IVE INVESTMENT GUIDELINES In addition to, or in lieu of, the policy guidelines listed above, the City of Fort Walton Beach may invest in the following instruments at prevailing market rates/ prices: a. Local Government Surplus Funds Trust Fund, or any intergovernmental investment pool authorized through the Florida Interlocal Cooperation Act. b.SEC registered money market funds with the highest credit quality rating from a nationally recognized rating company. c. Savings accounts in state- certified, qualified public depositories.... d. Deposit ( CDS) Certificates of in state- certified, qualified public depositories.... e. Direct 9bligations of the U. S. Treasury.*.* f. Federal Agencies and instrumentalities..** Shall be invested to match investment maturities with known cash needs and anticipated cash- flow requirements. 18. 0 Repea1 Resolution 94- 9, adopted 29 March 1994, a copy of which is attached hereto, and made a part hereof by reference, is hereby repealed. The City of Fort Walton Beach' s Investment Policy shall be adopted by resolution of the City Council. Any modifications to this policy must be approved by the City Council. 19. 0 Effective Date That this