A. Investments in any security with a variable or floating interest rate are prohibited unless reset is at least annually.

B. Investments in any security classified as a “derivative product” are prohibited.

C. Investments made in short-term commercial promissory notes (commercial paper) must be rated A1/P1 or better by a nationally recognized rating firm. In addition, the long-term credit rating of the issuing organization must be at A- or better.

D. Investments in all other short-term and long-term reserve debt securities must be rated AA- or better by a nationally recognized rating firm.

E. Reserve assets may not be invested in securities which are termed “Private Placements.”

F. All investments in repurchase agreements must be fully collateralized at 102 percent of the amount of the investment with United States Treasury securities held in trust under a custody and safekeeping arrangement at a third party financial institution. In addition, a master repurchase agreement must be executed for each separate co-party with whom an investment in a repurchase agreement is made.

G. Any investments made in certificates of deposit must be made with banks which are members of the Federal Deposit Insurance Corporation (FDIC) and must be insured by the FDIC up to an aggregate of $100,000. Any investments made in certificates of deposit over an aggregate amount of $100,000 with any financial institution insured by the FDIC must be collateralized at 102 percent of the amount of the investment with United States Treasury securities held in trust under a custody and safekeeping arrangement at a third party financial institution.

H. Any investments made in money market mutual funds must be made with funds which invest in securities not otherwise prohibited by this section. Such funds must maintain a stable net asset value (NAV) of $1.00 per share price at all times.

I. If a debt security which was of an acceptable credit rating at the time of purchase has the rating subsequently downgraded at a later date, the debt security can be retained in the portfolio as long as the revised credit rating is not lower than one grade below the minimum allowable credit rating for purchase. If such a security is subsequently downgraded again, or placed on credit watch for further downgrade, it may be held pending direction from the assembly.

J. If the aggregate value of the long-term reserve investments of the borough are projected to fall below an annualized average three months’ operating costs, or exceed the annual costs of operating the borough, the manager shall cause the mayor and assembly to review the matter and take appropriate action (i.e., transfer funds and/or securities, or invest in the permanent fund).

K. Agents of the borough may not participate in any financial transactions or practices which would have the effect of leveraging the portfolio. These prohibited financial transactions and practices include purchasing on margin, borrowing money for the expressed purpose of investing, and engaging in reverse repurchase agreements. (Ord. 07-08-164 § 4)