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<br />risk of loss resulting from one concentration of assets in a specific maturity, a specific issuer or <br />a specific class of securities. Diversification strategies shall be determined and revised <br />periodically by the Audit Committee. <br /> <br />In establishing specific diversification strategies, the following general policies and constraints <br />shall apply: <br /> <br />A. Portfolio maturities shall be staggered in a way that protects interest income from the <br />volatility of interest rates and that avoids undue concentration of assets in a specific maturity <br />sector. Securities shall be selected which provide for stability of income and reasonable <br />liquidity. <br /> <br />B. The Audit Committee shall establish strategies and guidelines for the percentage of the total <br />portfolio that may be invested in securities other than repurchase agreements, Treasury bill <br />and notes, or insured and collateralized certificates of deposits. The Audit Committee shall <br />conduct a semi-annual review of these guidelines, and shall evaluate the probability of <br />market and default risk in various investment sectors as part of its considerations. <br /> <br />VII. SELECTION OF BANKS AND DEALERS <br /> <br />BIDDING PROCESS Depositories shall be selected through the City's banking services <br />procurement process, which shall include a formal request for proposal (RFP) issued every two <br />(2) years. In selecting depositories, the credit worthiness of institutions shall be considered, and <br />the Director of Finance shall conduct a comprehensive review of prospective depositories credit <br />characteristics and financial history. <br /> <br />INSURABILITY Banks and Savings & Loans Associations seeking to establish eligibility for <br />the City's competitive certificate of deposit purchase program, shall submit financial statements, <br />evidence of Federal insurance and other information as required by the Director of Finance. <br /> <br />PRIMARY DEALERS AND APPROVED LIST For brokers and dealers of government <br />securities, Investment Officials shall select only those dealers reporting to the Market Reports <br />Division of the Federal Reserve Bank of New York, also known as "primary government <br />securities dealers," unless a comprehensive credit and capitalization analysis reveals that other <br />firms are adequately financed to conduct public business. Before engaging in investment <br />transactions with a broker/dealer, the Investment Official shall have received, from a Qualified <br />Representative of said firm, a signed Certification Form. (Exhibit B) This form shall attest that <br />the individual responsible for the City's account with that firm has reviewed the City's <br />Investment Policy and that the brokerage firm has implemented reasonable procedures and <br />controls in an attempt to preclude imprudent activities arising out of investment transactions <br />conducted between the City and the brokerage firm. The audit committee shall at least annually <br />review, revise, and adopt a list of qualified brokers that are authorized to engage in investment <br />transactions with the City. (Exhibit A) <br /> <br />VIII. SAFEKEEPING AND CUSTODY <br /> <br />INSURANCE OR COLLATERAL All bank deposits, certificates of deposit, and repurchase <br />agreements shall be secured by pledged collateral. Bank deposits and certificates of deposit <br />shall be collateralized with a market value equal to no less that 100% of the deposits plus <br />accrued interest less than an amount insured by FDIC. Repurchase agreements shall be <br />monitored daily. Evidence of the pledged collateral shall be maintained by the Director of <br />