R-2020-34 Amending the City of La Porte Investment Policy

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deposits that are guaranteed or insured by: the Federal Deposit Insurance Corporation or its successor; or the National Credit Union Share Insurance Fund or its successor. (Section 2256.009 (a) of the Act) The following are not authorized investments under Section 2256.009 (b) of the Act: • obligations whose payment represents the coupon payment on the outstanding principal balance of the underlying mortgage -backed security collateral and pays not principal (Interest only bonded); • obligations whose payment represents the principal stream of cash from the underlying mortgage -backed security collateral and pays no interest (Principal only bonds); • collateralized mortgage obligations that have a final stated maturity date of greater than 10 years; and • collateralized mortgage obligations, the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. B. CERTIFICATES OF DEPOSIT Fully collateralized certificates of deposit issued by a depository institution or an approved broker that has its main office or branch office in Texas, selected from a list adopted by the City, and guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National Credit Union Share Insurance Fund or its successor; secured by obligations authorized by this subchapter, or secured in any other manner and amount provided by law for deposits of the City. DIC insured, brokered certificates of deposit securities from a depository institution that has its main office or a branch office in Texas, delivered versus payment to the City safekeeping agent, not to exceed one year to maturity. Before purchase, the Investment Officer must verify the FDIC status of the bank on www.fdic.gov to assure that the bank is FDIC insured. (Section 2256.010 of the Act) C. MONEY MARKET MUTUAL FUNDS A no-load money market mutual fund is permitted as an authorized investment if it is registered with and regulated by the Securities and Exchange Commission; and complies with federal Securities and Exchange Commission Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated underthe Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.). The Fund must provide the City with a prospectus and other information required by the Securities and Exchange Act of 1934 (15 U.S.C. Section 78a et seq.) or the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.); In addition to a no-load money market mutual fund permitted as an authorized investment as described above, a no-load mutual fund is an authorized investment if the mutual fund is registered with the Securities and Exchange Commission; has an average weighted average maturity of less than two years; and either (1) has a duration of one year or more and is invested exclusively in obligations approved in Subchapter A of the Act, or (2) has a duration of less than one year and an the investment portfolio is limited to investment grade securities, excluding asset -backed securities.