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1. Safety of Principal — Safety of principal is the primary objective of the City's investment <br /> program. The City invests in a manner that ensures the preservation of the principal value of <br /> the portfolio - investing only in securities having the highest quality ratings and little or no <br /> risk of default. The City employs diversification to ensure that potential losses on individual <br /> securities do not exceed the income generated by the remainder of the portfolio_ <br /> 2. Liquidity — The City's investment portfolio will be structured to provide cash from maturing <br /> investments and interest income to meet City operating requirements which can be <br /> reasonably anticipated. Since emergency cash needs do arise on occasion, the portfolio will <br /> consist primarily of securities with established and active secondary resale markets. <br /> 3. Yield or Return on Investment - Yield becomes a consideration only after the safety and <br /> liquidity objectives have been met. The City's investment portfolio shall be designed with <br /> the objective of attaining a rate of return throughout budgetary and economic cycles, <br /> commensurate with the City's investment risk constraints and the cash flow characteristics of <br /> the portfolio. <br /> V. Investment Criteria <br /> The City invests its funds in accordance with the following criteria: <br /> 1. Insure that funds not needed for current City obligations are fully <br /> invested at all times. <br /> 2. Actively manage the portfolio and take advantage of the changing <br /> nature of the economy, the U.S. Government Securities market and <br /> the national money market in order to maximize total return. <br /> 3. Guarantee that funds are always available when needed. <br /> 4. Insure that yield - restricted funds are monitored to ensure compliance <br /> with federal arbitrage rebate requirements. <br /> 5. Insure that the specific requirements outlined in the Bond Indentures <br /> of Trust are maintained. <br /> VI. Ethics and Conflicts of Interest <br /> Officers and employees involved in the investment process will refrain from personal business <br /> activity that would conflict with the proper execution of the investment program, or would <br /> impair their ability to make impartial investment decisions. Employees and investment officials <br /> will disclose to the Finance Director any material interests in financial institutions that conduct <br /> business with the City of San Leandro. Furthermore, they will disclose any large personal <br /> financial /investment positions that could be related to the financial performance of the City, <br /> particularly at the time of investment purchases and sales. Investment officers and employees <br /> who fail to comply with this disclosure requirement will be subject to administrative action. <br /> Page 3 of 12 <br />