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The "prudent person" standard is understood to mean the following: investments shall be made with <br /> judgment and care,under circumstances then prevailing,which persons of prudence,discretion, and <br /> intelligence exercise in the management of their own affairs, not for speculation, but for investment, <br /> considering the probable safety of their capital as well as the probable income to be derived. <br /> All investments shall be limited to those permitted by Minnesota Statute �118A. <br /> The primary objectives,in priority order, of the City of Elk River's investment activities shall be: <br /> 1. Safety <br /> Investments shall be undertaken in a manner that ensures the preservation of capital in the overall <br /> portfolio. To attain this objective, diversification is required so that losses on individual securities <br /> do not exceed the income generated from the remainder of the portfolio. <br /> 2. Liquidity <br /> The investment portfolio will remain sufficiently liquid to enable the city to meet all operating <br /> requirements which might be reasonably anticipated. <br /> 3. Return on Investment <br /> The investment portfolio shall be designed with the objective of attaining a market rate of return <br /> throughout budgetary and economic cycles. The investment strategy will take into account the <br /> constraints on risk and cash flow characteristics of the investment portfolio. <br /> 4. Maintaining the Public's Trust <br /> All officials and employees who are part of the investment process shall seek to act responsibly as <br /> custodians of the public trust. Investment officials shall avoid any transaction that might impair <br /> public confidence in the municipality's ability to govern effectively. <br /> Authority to manage the City of Elk River's investment program is derived from Minnesota Statute §118A. <br /> Management responsibility for the investment program is hereby delegated to the Finance Director. No <br /> person may engage in an investment transaction except as provided under the terms of this policy and the <br /> procedures established by the Finance Director. The Finance Director shall be responsible for all <br /> transactions undertaken and shall establish a system of controls to regulate the activities of subordinate <br /> officials. <br /> Officers and employees involved in the investment process shall refrain from personal business activity <br /> that could conflict with the investment program, or which could reasonably cause others to question or <br /> doubt their ability to make impartial investment decisions. Employees and investment officials shall <br /> disclose to the Finance Director any material financial interests in financial institutions that conduct <br /> business within this jurisdiction, and they shall further disclose any large personal financial/investment <br /> positions that could be related to the performance of the City of Elk River's portfolio. <br /> The Finance Director will maintain a list of financial institutions authorized to provide investment <br /> services. In addition,a list will be maintained of approved security broker/dealers selected by credit <br /> worthiness,who maintain an office in the State of Minnesota. These may include "primary dealers" or <br /> Financial Management Policies Page 3 <br />