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4.1 Safety - Investments of the Elk River Municipal Utilities shall be undertaken in a <br /> manner that seeks to ensure the preservation of capital in the overall portfolio. To <br /> attain this objective, diversification is required in order that losses on individual <br /> securities do not exceed the income generated from the remainder of the portfolio. <br /> 4.2 Liquidity-The Elk River Municipal Utilities' investment portfolio will remain <br /> sufficiently liquid to enable the Elk River Municipal Utilities to meet all operating <br /> requirements which might be reasonably anticipated. <br /> 4.3 Return on Investment- The Elk River Municipal Utilities' investment portfolio shall <br /> be designed with the objective of attaining a market rate of return throughout <br /> 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 /> 4.4 Maintaining the Public's Trust-All officials and employees who are part of the <br /> investment process shall seek to act responsibly as custodians of the public trust. <br /> Investment officials shall avoid any transaction that might impair public confidence <br /> in the municipality's ability to govern effectively. <br /> 5.0 Delegation of Authority <br /> Authority to manage the Elk River Municipal Utilities' investment program is derived from the <br /> following: Minnesota Statutes §118A. Management responsibility for the investment program <br /> is hereby delegated to a utility committee comprised of the Finance Director, Director of <br /> Operations, and a member of the board. No person may engage in an investment transaction <br /> except as provided under the terms of this policy and the procedures established by the <br /> committee. The committee shall be responsible for all transactions undertaken and shall <br /> establish a system of controls to regulate the activities of subordinate officials. <br /> 6.0 Ethics and Conflict of Interest <br /> Officers and employees involved in the investment process shall refrain from personal business <br /> activity that could conflict with the investment program, or which could reasonably cause others <br /> to question or doubt their ability to make impartial investment decisions. Employees and <br /> investment officials shall disclose to the Finance Director any material financial interests in <br /> financial institutions that conduct business within this jurisdiction, and they shall further disclose <br /> any personal financial/investment positions that could be related to the performance of the Elk <br /> River Municipal Utilities' portfolio. <br /> 7.0 Authorized Financial Dealers and Institutions <br /> The Finance Director will maintain a list of financial institutions authorized to provide <br /> investment services. In addition, a list will be maintained of approved security broker/dealers <br /> selected by credit worthiness,who maintain an office in the State of Minnesota. These may <br /> include"primary dealers" or regional dealers that qualify under Securities &Exchange <br /> Commission Rule 15c3-1 (uniform net capital rule). All brokers doing business with the Utilities <br /> shall have a Broker Certification form on file with the Finance Director in accordance with <br /> 2 <br /> 106 <br />