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2. Safekeeping and Custodial Agreements. Bedford shall contract with a safekeeping
agent for the safekeeping of securities owned by Bedford as part of its investment
portfolio. Securities owned by Bedford shall be held in Bedford’s account as evidenced
by safekeeping receipts of the institution holding the securities.

Bedford shall approve all third -party custodians for the holding of securities pledged to
Bedford as collateral to secure financial institution deposits. The custodial agreement is to
specify the acceptable pledged securities as collateral, including provisions relating to
possession of the collateral, the substitution or release of pledged securities, ownership
of securities, and the method of valuation of securities.

3. Collateral Policy . With the exception of deposits secured with irrevocable letters of
credit at 100% of principal plus anticipated interest, all deposits of Bedford funds with
financial institutions shall be secured by pledged collateral with a market value equal to
or greater than 102% of the principal plus accrued interest of the deposits, less any amount
insured by the FDIC. Repurchase agreements shall be documented by a specific
agreement noting the “purchased securities” in each agreement; such securities shall
comply with the PFIA. Collateral pledged and purchased securities shall be reviewed at
least monthly to assure the market value equals or exceeds the related Bedford
investment.

All financial institution deposits shall be insured or collateralized in compliance with
applicable State law. Bedford reserves the right, in its sole discretion, to accept or reject
any form of insurance or collateralization pledged towards financial institution deposits.
Financial institutions serving as Bedford Depositories will be required to sign a depository
agreement with Bedford. The collateralized deposit portion of the agreement shall define
Bedford’s rights to the collateral in case of default, bankruptcy, or closing and shall
establish a perfected security interest in compliance with Federal and State regulations,
including:

a. The agreement must be in writing;
b. The agreement must 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.

Bedford shall accept Public Funds Collateral Act authorized forms of collateral. All
collateral shall be subject to inspection and audit by Bedford or Bedford’s independent
auditors.

4. Repurchase Agreements. Repurchase agreements shall be consistent with the PFIA
and GFOA Recommended Practices on Repurchase Agreements.

VI. Investment Parameters.

1. Diversification . The investments shall be diversified by:
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