(A) The city is only permitted to invest funds in those investments authorized by Indiana law, including but not limited to the Municipal Investment Act, which authorizations are hereby made a part of this policy. It is the policy of the city and this Council to limit allowable investments to the following types of securities:
(1) U.S. Treasury securities (e.g., bills, notes, bonds, SLGS, STRIPS and TIPS), which are backed by the full faith and credit of the U.S. government;
(2) Federal agency obligations (including both federally related institution securities and federally sponsored agency securities), including, but not limited to, Ginnie Mae, Fannie Mae, Freddie Mac, Farmer Mac, and Federal Home Loan Bank debt: Any full-faith-and-credit securities are permitted;
(3) Mortgage pass-through securities issued by Ginnie Mae, Fannie Mae or Freddie Mac: Any full-faith-and-credit securities are permitted;
(4) Municipal securities issued by an Indiana local government entity, a quasi-governmental entity related to the state, or a unit of government, municipal corporation or special taxing district in Indiana, so long as the issuer has not defaulted on any of its obligations within the past 20 years and the security is rated in one of the three highest rating categories by any one of Standard & Poor’s, Moody’s or Fitch or, if the security is not rated by any one of Standard & Poor’s, Moody’s, or Fitch, securities of such issuer having the same or materially similar pledged revenue source of re-payment have within the past two years been rated in one of the three highest categories by any one of Standard & Poor’s, Moody’s or Fitch. For avoidance of doubt, the three highest categories would include ratings in the AAA, AA and A categories, including any modifiers of + or - in the case of Standard & Poor’s or Fitch and 1, 2 or 3 in the case of Moody’s;
(5) Repurchase agreements, if at least 105% collateralized by any of the above;
(6) Money market mutual funds regulated by the Securities and Exchange Commission:
(a) Only open-end no-load funds are permitted (i.e., no commission or fee shall be charged on purchases or sales of shares);
(b) Permitted funds will be those that limit assets of the fund to U.S. Treasury securities, federal agency securities and repurchase agreements collateralized by the same; or that are rated in the highest rating category by one of the rating agencies;
(c) These funds seek to maintain a stable net asset value of $1 per share; and
(d) By definition these funds will meet the requirements for portfolio maturity, portfolio quality and portfolio diversification in Rule 2a-7 under the Investment Company Act of 1940.
(7) Time deposits in state or nationally chartered banks (who are designated as a depository under § 5 of the Municipal Investment Act) whose deposits are insured by the Federal Deposit Insurance Corporation, with balances not to exceed $250,000 per institution.
(B) Additional securities may be added to the above approved list with the approval of the Council.
(C) Investments are not permitted in certain derivatives, nor in certain mutual funds which invest primarily in such securities. Investments specifically prohibited are those characterized as being illiquid, highly volatile and difficult to value. Prohibited securities include, but are not limited to, mortgage derivatives such as Z-bonds, PAC-2s and Re-REMICS.
(Prior Code, § 2-535) (Ord. 13-33, passed 12-9-2013; Ord. 14-31, passed 7-14-2014)