[Adopted 12-8-2009 by Ord. No. 2009-12 (§ 2.19 of the 1961 Code)
The Village of Fox Point Investment Policy shall be operated in conformance with federal, state, and other legal requirements, including § 66.0603, Wis. Stats.
Scope. This policy applies to the investment of all funds, excluding the investment of employees' retirement funds.
Pooling of funds. Except for cash in certain restricted and special funds, the Village of Fox Point will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.
The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield.
Safety. Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk.
Credit risk. The Village of Fox Point will minimize credit risk, which is the risk of loss due to the failure of the security issuer or backer, by:
Pre-qualifying the financial institutions, brokers/dealers, intermediaries, and advisers with which the Village of Fox Point will do business in accordance with § 67-25.
Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from any one individual issuer will be minimized.
Interest rate risk. The Village of Fox Point will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates.
Liquidity. The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated.
Yield. 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 secondary 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.
Those with responsibility for the investment of Village funds shall exercise the following standards of care in its handling of the Village's investments.
Prudence. The standard of prudence to be used by investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. The "prudent person" standard states that "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." Investment officers acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy.
Ethics and conflicts of interest. Village officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the Village of Fox Point.
Delegation of authority. Authority to manage the investment program is granted to the Village Clerk/Treasurer, hereinafter referred to as "investment officer." The investment officer shall act in accordance with established written procedures and internal controls for the operation of the investment program consistent with this investment policy. Procedures should include reference to safekeeping, delivery versus payment, investment accounting, repurchase agreements, wire transfer agreements, and collateral/depository agreements. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the investment officer. The investment officer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials.
[Amended 12-14-2010 by Ord. No. 2010-18]
A list will be maintained of financial institutions and depositories authorized to provide investment services. This list shall not apply to deposits and re-deposits made pursuant to § 34.05(4), Wis. Stats., which may be made in such institutions and in such manner as is described therein. In addition, a list will be maintained of approved security broker/dealers selected by creditworthiness (e.g., a minimum capital requirement of $10,000,000 and at least five years of operation). These may include primary dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1. An annual review of the financial condition and registration of all qualified financial institutions and broker/dealers will be conducted by the investment officer. All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following, as appropriate:
Audited financial statements. Audited financial statements demonstrating compliance with state and federal capital adequacy guidelines.
Proof of National Association of Securities Dealers (NASD) certification.
Proof of state registration.
Certification of having read and understood and agreeing to comply with the Village of Fox Point's investment policy.
Evidence of adequate insurance coverage.
The investment officer shall establish a system of internal controls, which shall be documented in writing. The internal controls shall be reviewed by the Audit Committee, where present, and with the independent auditor. The controls shall be designed to prevent the loss of public funds arising from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial markets, or imprudent actions by employees and officers of the Village of Fox Point.
The following types of investments will be permitted by this policy and are those defined by state and local law, where applicable:
United States Treasury obligations, which carry the full faith and credit guarantee of the United States government and are considered to be the most secure instruments available. These funds must have a maximum maturity of five years and be placed in safekeeping in a segregated account in the Village of Fox Point's name at any designated public depository or approved financial institution.
United States government agency and instrumentality obligations where principal and interest are guaranteed by the federal government. These funds must be placed in safekeeping in a segregated account in the Village of Fox Point's name at any designated public depository or approved financial institution.
Certificates of deposit and other evidences of deposit at financial institutions maturing within three years or less from the date of investment issued by any banks, savings and loan associations or credit unions. Such investments must be collateralized by U.S. Government securities having a market value of at least 110% of the investment unless such collaterization shall have been waived or modified by the Village Board.
Repurchase agreements made in securities which are direct obligations of or guaranteed as to principal and interest by the federal government; and securities which are obligations of an agency, commission, board or other instrumentality of the federal government, where principal and interest are guaranteed by the federal government. Securities purchased by a repurchase agreement must be placed in safekeeping in a segregated account in the Village of Fox Point's name at any designated public depository or approved financial institution.
Local Government Investment Pool of the State of Wisconsin.
Deposits and re-deposits as authorized by § 34.05(4), Wis. Stats.
[Added 12-14-2010 by Ord. No. 2010-18]
It is the policy of the Village of Fox Point to diversify its investment portfolio. The investment officer shall establish strategies and guidelines for the percentage of the total portfolio that may be invested in securities other than repurchase agreements, treasury bills or collateralized certificates of deposit. The Village Board shall conduct a periodic review of these guidelines and evaluate the probability of market and default risk in various investment sectors as part of its review. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds, such as the Local Government Investment Pool of the State of Wisconsin, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations.
The investment officer shall submit periodically an investment report that summarizes recent market conditions, economic developments and anticipated investment conditions. The report shall summarize the investment strategies employed in the most recent reporting period, and describe the portfolio in terms of investment securities, maturities, risk characteristics and other features. The report shall explain the total investment return and compare the return with budgetary expectations. The report shall include the disclosure of all transactions during the reporting period. The report shall be in compliance with state law and shall be distributed to the Village Board and others as required by law. Each report shall indicate any areas of policy concern and suggested or planned revision of investment strategies.
Copies shall be provided to the Village's independent auditor. Within 60 days of the end of the fiscal year, the investment officer shall present an annual report on the investment program and investment activity. The annual report shall include twelve-month and separate quarterly comparisons of return and shall suggest policies and improvements that might be made in the investment program.