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Investment Policy/Mortgage Backed Securities <br /> The portfolio shall exclude High Risk Securities as defined in Minnesota Statues, <br /> Sections #I18A.04, 118A.05 and 118A.06 as follows: <br /> 1) Interest - only or Principal -only backed securities. <br /> 2) Any mortgage derivative security that: <br /> A. has an expected average life greater than ten years; <br /> B. has an expected average life which will extend more than four years <br /> as the result of an immediate and parallel shift in the yield curve of <br /> plus 300 basis; <br /> C. has an expected average life which will shorten by more than six <br /> years as the result of an immediate and sustained parallel shift in the <br /> . yield curve of minus 300 basis points; <br /> D. will have an estimated change in price of more than 17 percent, as the <br /> result of an immediate and sustained parallel shift in the yield curve <br /> of plus or minus 300 basis points. <br /> 3) In addition, the City of St. Anthony and Dain Bosworth, Inc., hereby <br /> agree that on the request of either party Dain Bosworth, Inc., shall re- <br /> purchase any and all securities, sold to the City of St. Anthony by a legal <br /> representative from Dain Bosworth, Inc., at full face value of the purchase <br /> price, which do not comply with Minnesota Statues #118A.04, 118A.05 and <br /> 118A.06 or the City of St. Anthony's Investment Policy. <br /> We agree to conduct your investment transactions in accordance with Minnesota Statues <br /> and the City of St. Anthony's Investment Policy's. <br /> Authorized Representative Date <br /> Dean Witter Reynolds, Inc. <br />