The primary objectives, in order of priority, of investment activity shall be:

A. Safety of principal. Safety of principal is the foremost objective of the investment program. Investment of village assets shall be undertaken in a manner that seeks to insure the preservation of capital in the portfolio. Credit risk is the risk of loss due to the failure of the security issuer or backer, and shall be mitigated by:

1. Limiting investments to the safest types of securities backed by the U.S. Government either directly or indirectly; and

2. Diversifying the investment portfolio so that potential losses on individual securities or investments will be minimized.

Interest rate risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, and shall be mitigated by:

1. Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to majority;

2. Investing operation funds primarily in short-term securities; and

3. Limiting all investments to a defined and stated maturity of not more than five years.

B. Liquidity. The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands. Furthermore, because all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets, or investment instruments which offer same-day liquidity.

C. Return on investments. The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of least importance compared to the safety and liquidity objectives described above. The core of investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity unless liquidity needs of the village require that the security be sold. (Ord. 1999-14 § 1 (part), 1999)