Page 69 - City of Bedford FY21 Budget

a perfected security interest in compliance with Federal and State regulations, including:

a. The agreement must be in writing;

b. The agreement has to be executed by the Depository and BEDFORD
contemporaneously with the acquisition of the asset;

c. The agreement must be approved by the Board of Directors or designated committee
of the Depository and a copy of the meeting minutes must be delivered to
BEDFORD; and

d. The agreement must be part of the Depository’s “official record” continuously since
its execution.

X. Investment Strategies

In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not
exceed the anticipated cash flow requirements of the funds. Investment guidelines by fund-type are
as follows:

1. General, Enterprise, or Operating-type Funds

Suitability - Any investment eligible in the Investment Policy is suitable for General,
Enterprise, or Operating-type Funds.

Safety of Principal - All investments shall be of high quality with no perceived default
risk. Market price fluctuations will occur. However, managing the weighted average
days to maturity of each fund’s portfolio to less than 270 days and restricting the
maximum allowable maturity to the shorter of the anticipated cash flow requirement or
three years will minimize the price volatility of the portfolio.

Marketability - Securities with active and efficient secondary markets are necessary in
the event of an unanticipated cash flow requirement. Historical market “spreads” between
the bid and offer prices of a particular security-type of less than ten basis points point will
define an efficient secondary market.

Liquidity - General, Enterprise, or Operating-type Funds require the greatest short-term
liquidity of any of the fund-types. Financial institution deposits, short-term investment
pools and money market mutual funds will provide daily liquidity and may be utilized as
a competitive yield alternative to fixed maturity investments.

Diversification - Investment maturities should be staggered throughout the budget cycle
to provide cash flow based on the anticipated operating needs of BEDFORD.
Diversifying the appropriate maturity structure up to the three-year maximum will reduce
interest rate risk.

Yield - Attaining a competitive market yield for comparable investment -types and
portfolio restrictions is the desired objective. The yield of an equally weighted, rolling

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