2004-09-13 Regular Meeting and Workshop Meeting

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