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<br />e <br /> <br />e <br /> <br />1. POLICY <br /> <br />It is the policy of the City of La Porte, Texas (the "City") to administer and invest its funds in a <br />manner which will preserve the principal and maintain the liquidity though limitations and <br />diversification while meeting the daily cash flow requirements of the City. The City will <br />conform to all statues governing the investment of the City's funds, including, but not by way of <br />limitation, the Public Funds Investment Act, Chapter 2256, Texas Government Code (the <br />"Act"). <br /> <br />II. SCOPE <br /> <br />The City will strive to earn a return on funds invested at the highest investment return possible <br />after taking in consideration the primary goals of preservation of principal and liquidity of funds <br />invested, consistent with the policy objectives described below. This investment policy applies <br />to the investment activities of the government of the City of La Porte, Texas. <br /> <br />FUNDS INCLUDED All financial assets of all funds managed by the City, including but not <br />limited to receipts of Tax Revenues, Charges for Services, Bond Proceeds, Interest Incomes, <br />Loans and Funds received by the City where the City performs a custodial function. <br /> <br />m. OBJECTIVES <br /> <br />SAFETY The primary objective of the City's investment activity is the preservation of capital <br />in the overall portfolio. Each investment transaction shall'seek first to ensure that capital losses <br />are avoided, whether they are from securities defaults or erosion of market value. <br /> <br />LIOUIDITY The City's investment portfolio will remain sufficiently liquid to enable the City to <br />meet operating requirements that might be reasonably anticipated. Liquidity shall be achieved <br />by matching investment maturities with forecasted cash flow requirements and by investing in <br />securities with active secondary markets. <br /> <br />YIELD The City's cash management portfolio shall be designed with the objective of regularly <br />exceeding the average rate of return on the three month U.S. Treasury Bill. The investment <br />program shall seek to augment returns above this threshold consistent with risk limitations <br />identified herein and prudent investment principles. <br /> <br />RISK OF LOSS All participants in the investment process shall seek to act responsibly as <br />custodians of the public trust. Investment Officials shall avoid any transaction that might impair <br />public confidence in the City's ability to govern effectively. The governing body recognizes that <br />in a diversified portfolio, occasional measured losses due to market volatility are inevitable, and <br />must be considered within the context of the overall portfolio's investment return, provided that <br />adequate diversification has been implemented. <br /> <br />N. OVERSIGHT RESPONSIBILITY <br /> <br />Oversight Responsibility for the investment activity of the City of La Porte shall rest with the <br />Audit Committee and the City Manager. <br /> <br />2 <br />