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B. Liquidity INVESTMENT POLICY Z <br /> The investment portfolio shall remain sufficiently <br /> . liquid to meet all operating requirements that may be <br /> reasonably anticipated. This is accomplished by <br /> structuring the portfolio so that securities mature <br /> concurrent with cash needs to meet anticipated demands. <br /> Furthermore, since all possible cash demands cannot be <br /> anticipated, the portfolio should consist of some <br /> securities with the greatest liquidity. A portion of <br /> the portfolio may be placed in money market funds that <br /> offer same day liquidity for short-term funds and are <br /> invested in those securities allowable by Minnesota <br /> Statue. <br /> C. Yield <br /> The investment ,portfolio shall be designed with the <br /> objective of attaining a market rate of return <br /> throughout budgetary and economic cycles, taking into <br /> account the investment risk constraints and liquidity <br /> needs. The core of investments are limited to <br /> relatively low risk securities in anticipation of <br /> earning a fair return relative to the risk being <br /> assumed. Securities shall be held to maturity with the <br /> following exceptions : <br /> 1. A security with declining value may be sold <br /> early to minimize loss of <br /> principal . <br /> 2 . A capital gain in principal can be realized. <br /> 3 . A security swap would improve the quality, <br /> yield or target duration in the portfolio. <br /> 4 . Liquidity needs of the portfolio require that a <br /> security be sold. <br /> III. Standards of Care <br /> The standard of care to be used by the investment official <br /> shall be the prudent person standard and shall be applied in <br /> the context of managing an overall portfolio. Investment <br /> officers, acting in accordance with written procedures and <br /> this investment policy and exercising due diligence shall be <br /> relieved of personal responsibility for an individual <br /> security' s credit risk or market price changes, provided <br /> deviations from expectations are reported in a timely <br /> fashion and the liquidity and the sale of securities are <br /> carried out in accordance with the terms of the City' s <br /> Investment Policy attachment to the broker notification and <br /> certifiction form. <br /> Investments shall be made with judgment and care, under <br /> . economic circumstances then prevailing with discretion and <br /> intelligence. <br /> 2 <br />