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CITY OF LINO LAKES <br />INVESTMENT POLICY <br />I. Scope <br />This policy applies to the investment of all municipal funds. <br />1. Pooling of Funds Except for cash in certain restricted and special funds, the City of <br />Lino Lakes will consolidate cash balances from all funds to maximize investment earnings. <br />Investment income will be allocated to the various funds based on their respective participation <br />and in accordance with generally accepted accounting principles. <br />II. General Objectives <br />The primary objectives, in priority order, of investment activities shall be safety, liquidity, and <br />yield: <br />1. Safety Safety of principal is the foremost objective of the investment program. <br />Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the <br />overall portfolio. The objective will be to mitigate credit risks and interest rate risk. <br />a. Credit Risk The City of Lino Lakes will minimize credit risks, the risk of loss <br />due to the failure of the security issuer or backer, by: <br />* Limiting investments to those investments specified in Minnesota Statutes <br />118A <br />* Annually appointing the financial institutions, broker/dealers, <br />intermediaries, and advisers. <br />* Diversifying the investment portfolio so that potential losses on <br />individual securities will be minimized. <br />b. Interest Rate Risk The City of Lino Lakes will minimize the risk that the <br />market value of securities in the portfolio will fall due to changes in general interest rates, by: <br />* Structuring the investment portfolio so that securities mature to meet <br />cash requirements for ongoing operations. <br />* Investing municipal funds primarily in shorter -term securities. <br />2. Liquidity The investment portfolio shall remain sufficiently liquid to meet all <br />operating requirements that may be reasonable anticipated. This is accomplished by structuring <br />the portfolio so that securities mature concurrent with cash needs to meet anticipated demands. <br />Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist <br />largely of securities with active secondary or resale markets. <br />1 <br />