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HomeMy WebLinkAbout2024-0918C Adopting Amended and Restated Investment PolicyCERTIFICATE OF ORDER NO. 2024-0918C ADOPTING AMENDED AND RESTATED INVESTMENT POLICY THE STATE OF TEXAS COUNTIES OF DENTON AND TARRANT I, the undersigned District Secretary of Trophy Club Municipal Utility District No. 1 (the "District"), hereby certify as follows: 1. The Board convened in regular session, open to the public, on the 18th day of September 2024, at the regular meeting place thereof, and the roll was called of the members of the Board, to -wit: Kevin R. Carr President Ben Brewster Vice President Doug Harper Secretary/Treasurer William C. Rose Director James C. Thomas Director All members of the Board were present except the following, , thus constituting a quorum. Whereupon, among other business, the following was transacted at such meeting: ORDER NO. 2024-0918C ADOPTING AMENDED AND RESTATED INVESTMENT POLICY was duly introduced for the consideration of the Board. It was then duly moved and seconded that such Order be adopted; and, after due discussion, such motion, carrying with it the adoption of said Order, prevailed and carried by the following vote: AYES: NAYS: 0 ABSTENTIONS 2. A true, full, and correct copy of the aforesaid Order adopted at the meeting described in the above and foregoing paragraph is attached to and follows this Certificate; such Order has been duly recorded in said Board's minutes of such meeting; the above and foregoing paragraph is a true, full, and correct excerpt from the Board's minutes of such meeting pertaining to the adoption of such Order; the persons named in the above and foregoing paragraph are the duly chosen, qualified, and acting officers and members of the Board as indicated therein; each of the officers and members of the Board was duly and sufficiently notified officially and personally, in advance of the time, place, and purpose of such meeting and that such Order would be introduced and considered for adoption at such meeting and each of such officers and members consented, in advance, to the holding of such meeting for such purpose; such m ting was open to the public, as required by law, and public notice of the time, place anc,t510461Meetingwas given as required by Chapter 551, Government Code and Sectioi1/4�F dEr •Texasode, as amended. •2" ••p,RAIVT0 °• (r G• v /j • -+ • t •®_ . k.ve> (S • eer SIGHED ANIS SEALhe 18th day of September 20221az e a )>,*• TEXI'`.••,\�`� ////;//17.5 1.5T S\C) `�\\ 18111I 111110\\\ La rie Slaght, District Secret Order No. 2024-0918C Adopting Amended and Restated Investment Policy 1 of 21 ORDER NO. 2024-0918C TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 ADOPTING INVESTMENT POLICY THE STATE OF TEXAS COUNTIES OF DENTON AND TARRANT WHEREAS, V.T.C.A., Government Code, Chapter 2256, as amended (the "Public Funds Investment Act"), requires the governing body of political subdivisions to adopt a written investment policy concerning the investment of its funds and funds under its control; WHEREAS, Section 49.157(a) of the Texas Water Code, as amended, provides that all District deposits and investments shall be governed by Subchapter A, Chapter 2256, Government Code (Public Funds Investment Act); and, WHEREAS, Section 49.I57(b) of the Texas Water Code, as amended, provides that an authorized representative of the District may invest and reinvest the funds of the District and provide for money to be withdrawn from the appropriate accounts of the District for the investment on such terms as the board considers advisable. WHEREAS, the Board of Directors (the "Board") of Trophy Club Municipal Utility District No. I (the "District") has previously designated one or more investment officers and adopted a policy relating to the investment of District funds in accordance with the Public Funds Investment Act; and, WHEREAS, the Public Funds Investment Act requires that the Board of Directors of the District review the Investment Policy and its investment strategies not less than annually and make any changes thereto as determined by the Board of Directors to be necessary and prudent, and to adopt an order or resolution stating that it has reviewed the Investment Policy and investment strategies and recording any changes made thereto. NOW, THEREFORE, BE IT ORDERED BY THE BOARD OF DIRECTORS OF TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1, THAT: Section 1. The matters and facts recited in the preamble to this Order are found to be true and correct and the same are incorporated herein as a part of this Order. Section 2. The Board has reviewed its Investment Policy and the investment strategies set forth therein in accordance with the requirements of Section 2256.005(e) of the Public Funds Investment Act. Based upon such review, the Board finds and declares that the Investment Policy in the form attached hereto, including the written investment strategies set forth therein, is hereby approved and adopted, and such Policy shall replace and supersede in its entirety the prior Investment Policy of the District, together with any and all other resolutions or orders relating to the investment of the District's funds. The Investment Policy has been revised to update the District's authorized investment firms set forth in Exhibit "C". Order No. 2024-0918C Adopting Amended and Restated Investment Policy 2 of 21 Section 3. The General Manager is authorized to do all things necessary and proper to evidence the Board's adoption of this Order and to carry out the intent hereof. Upon execution, a permanent copy of this Order shall be filed in the permanent records of the District. ADOPTED, PASSED AND APPROVED by the Board of Directors of Trophy Club Municipal Utility District No. 1 on this I rday of September 2024. Kevin R. Carr, President Board of Directors ATTEST: Doug Harper, Secretary Board of Directors reasurer Laurie Slaght, District ecr Order No. 2024-0918C Adopting Amended and Restated Investment Policy 3 of 21 TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 INVESTMENT POLICY SEPTEMBER 18, 2024 I. STATUTORY AUTHORITY 1.01 Statutory Authority. This Policy has been adopted pursuant to, and in accordance with the requirements of, Chapter 2256 of the Texas Government Code (the Public Funds Investment Act) and Chapter 2257 of the Texas Government Code (the Public Funds Collateral Act). II. POLICY 2.01 Policy. It is the policy of Trophy Club Municipal Utility District No. 1 ("District") that after allowing for the anticipated cash flow requirements of the District and giving due consideration to the safety and risk of investment, all available funds shall be invested in conformance with these legal and administrative guidelines, seeking to optimize interest earnings to the maximum extent possible. 2.02 Cash Management. Effective cash management is recognized as essential to good fiscal management. Investment interest is a source of revenue to District funds. The District investment portfolio shall be designed and managed in a manner designed to be responsive to public trust, to be in compliance with legal requirements and limitations, and to maximize this revenue source. Investments shall be made with the primary objectives of: * Safety and preservation of principal * Maintenance of sufficient liquidity to meet operating needs • Public trust from prudent investment activities * Optimization of interest earnings on the portfolio III. PURPOSE 3.01 Purpose. The purpose of this investment policy is to comply with Chapter 2256 of the Government Code ("Public Funds Investment Act"), which requires the District to adopt a written investment policy regarding the investment of its funds and funds under its control. The Investment Policy addresses the methods, procedures and practices that must be exercised to ensure effective and judicious fiscal management of District funds. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 4 of 21 IV. SCOPE 4.01 Scope. This Policy applies to the investment of all funds of Trophy Club Municipal Utility District No. 1 (the "District") and funds under its control. The Board of the District shall review this Investment Policy and the investment strategies set forth herein not less than annually and shall make any changes thereto as determined by the Board of the District to be necessary and prudent for the management of District funds. Not less than annually, the Board shall adopt a written order or resolution stating that it has reviewed the Investment Policy and investment strategies and setting forth any changes made thereto. 4.02 This Policy shall govern the investment of all financial assets of the District. These funds are accounted for in the Basic Financial Statements and include: * General Fund * Capital Projects Funds * Debt Service Funds, including reserves and sinking funds, to the extent not required by law or existing contract to be kept segregated and managed separately * Any new fund created by the District, unless specifically exempted from this Policy by the District Board of Directors or by law. 4.03 The District consolidates fund cash balances to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. 4.04 This Policy shall apply to all transactions involving the financial assets and related activity for all the foregoing funds. However, this policy does not apply to the assets administered for the benefit of the District by outside agencies under deferred compensation programs. V. OBJECTIVES 5.01 Investment Objectives. Investment of funds shall be governed by the following investment objectives, in order of priority: Preservation and safety of principal - The foremost objective of the District's Investment Policy is to assure safety of the invested funds. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital while minimizing credit rate and interest rate risk. Investment for speculation is prohibited. ii. Liq uidity - Funds will be invested with maturities necessary to maintain sufficient liquidity to provide adequate and timely working funds. iii. Yield - Return on investment is of least importance compared to the safety and liquidity objectives described above. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 5 of 21 VI. INVESTMENT PARAMETERS 6.01. Investment Strategies. The District's overall investment strategy shall be to purchase high credit quality investments that preserve the safety of capital, maximize liquidity, promote diversification, and provide reasonable market yield (in that order of priority), based on the District's anticipated cash flows and the maintenance of a liquidity buffer for unanticipated liabilities. Investments are to be chosen in a manner which promotes diversity by market sector, credit, and maturity. The choice of high credit quality investments and high-grade money market instruments are designed to assure the marketability of those investments should liquidity needs arise. Detailed strategies by fund type are set forth in Exhibit "A" of this Policy. The Board of the District shall review annually the investment strategies and shall make any changes thereto as determined by the Board to be necessary and prudent for the management of the District's funds. 6.02 Maximum Maturities. The District will match its investments with anticipated cash flow requirements. To match anticipated cash flow requirements, the maximum weighted average maturity of the overall portfolio shall not exceed 365 days and a benchmark of the six- month and one-year Treasury Bills shall be used to measure risk in the portfolio. Unless matched to a specific cash flow requirement, the District will not directly invest in securities maturing more than 24 months from the date of purchase. 6.03 Diversification. The District will diversify its portfolio to reduce risk. The following table sets forth the minimum diversification standards by security type: Type of Investment Maximum Percentage of District Portfolio US Agencies/Instrumentalities 50% Certificates of Deposit/Share Certificates 90% Local Government Investment Pools 90% Money Market Accounts 90% 6.04. Competitive Bidding Requirement. All securities, including certificates of deposit, will be purchased, or sold after three (3) offers/bids are taken to verify that the District is receiving fair market value/price for the investment. Bids for certificates of deposit may be solicited orally, in writing, electronically, or by any combination of these methods. 6.05. Delivery versus Payment. All security transactions entered into by the District shall be conducted on a delivery versus payment (DVP) basis. Securities will be held by a third - party custodian designated by the Investment Officer and evidenced by safekeeping receipts. 6.06 Rating Declines or Loss of Rating. The Investment Officer shall monitor the credit rating on all authorized investments in the District's portfolio based on independent information from a nationally recognized rating agency. Ratings monitoring will be performed on a monthly basis for all authorized investments except mutual funds and commercial paper. Ratings monitoring will be performed on a weekly basis for mutual funds and commercial paper. If any security falls below the minimum rating required by this Policy (i.e. Public Funds Investment Act), the Investment Officer shall immediately solicit bids for and sell the security if possible, regardless Order No. 2024-0918C Adopting Amended and Restated Investment Policy 6 of 21 of a loss of principal. 6.07 Electronic Wire Transfers. The Investment Officer may use electronic means to transfer or invest funds collected or controlled by the District. Electronic transfers shall only be made with prior written approval by the General Manager. VII. DELEGATION OF INVESTMENT AUTHORITY 7.01 Appointment of Investment Officer. The person serving as General Manager is hereby appointed the Investment Officer of the District. The Investment Officer shall be responsible for the investment of District funds in accordance with this Investment Policy. If the Board has contracted with another investing entity to invest the District's funds, as authorized by the Public Funds Investment Act, the Investment Officer of the other investing entity is considered to be the Investment Officer of the District for such purposes. The authority hereby granted to the Investment Officer to invest the District's funds is effective until rescinded by the Board, until the expiration of the officer's term or the termination of the person's employment with the District, or if an investment management firm, until the expiration of the contract with the District. 7.02 Investment Training. The Board appointed General Manager/ Investment Officer, and Finance Manager shall attend at least one investment training session from an independent source and containing at least six (6) hours of instruction relating to investment responsibilities within 12 (twelve) months after taking office or assuming duties. The General Manager/Investment Officer, and Finance Manager shall also attend an investment training session within each two-year period that begins on the first day of the District's fiscal year and consists of the two consecutive fiscal years after that date after the first year and receive not less than four (4) hours of instruction relating to investment responsibilities from an independent source. Training must include education on investment controls, security risks, strategy risks, market risks, diversification of investment portfolio and compliance with the Public Funds Investment Act. Certificates and/or other documentation of completed training hours shall be maintained with this Policy as Exhibit "E". 7.03 Internal Controls. The Investment Officer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the District are protected from loss, theft, or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Accordingly, the Investment Officer shall establish a process for annual independent review by an external auditor to assure compliance with policies and procedures. The internal controls shall address the following points. • Control of collusion. • Separation of transactions authority from accounting and record keeping. • Custodial safekeeping. • Written confirmation for telephone (voice) transactions for investments and wire transfers. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 7 of 21 • Development of a wire transfer agreement with the depository bank or third -party custodian. 7.04 Prudence. The standard of care to be used by the Investment Officer shall be prudent person standard and shall be applied in the context of managing the overall portfolio. These standard states that the person designated as the Investment Officer shall exercise the judgment and care, under prevailing circumstances, that a prudent person would exercise in the management of the person's own affairs. In determining whether the Investment Officer has exercised prudence with respect to an investment decision, the determination shall take into consideration (i) the investment of all funds over which the Investment Officer has responsibility rather than consideration as to the prudence of a single investment, and (ii) whether the investment decision was consistent with this Investment Policy. 7.05 Ethics. Officers and employees involved in the investment of District funds shall refrain from personal activity that could conflict with the proper execution and management of the District's investment program. Employees and investment officials shall disclose, in writing, any material interests, including personal business relationships, with any financial institution with which it is proposed that the District conduct business. For purposes of District investments, employees or investment officials have a personal business relationship with a business organization if: i. the individual owns 10 (ten) percent or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization; or ii. funds received by the individual from the business organization exceed 10 percent of the individual's gross income for the previous year; or iii. the individual has acquired from the business organization during the previous year investments with a book value of $2,500 or more for the personal account of the individual. 7.06 Limitation of Personal Liability. Authorized representatives of the District who invest the District's funds in accordance with this Policy shall have no personal liability for any individual security's credit risk or market price changes provided deviations from expectations are reported in a timely manner and appropriate action is taken to control adverse developments. VIII. INVESTMENT REPORTS 8.01 Internal Management Reports. The Investment Officer shall prepare and submit not less than quarterly to the Board of Directors of the District written reports of investment transactions for all funds of the District for the preceding reporting period. The quarterly reports shall comply with the requirements of Section 2256.023 of the Public Funds Investment Act. Specifically, the quarterly report shall: i. Describe in detail the investment position of the District. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 8 of 2l ii. Be prepared jointly by all Investment Officers. iii. Be signed by each Investment Officer. iv. Contain a summary statement of each pooled fund group that states the: (A) beginning market value for the reporting period; and (B) ending market value for the period; and (C) fully accrued interest for the reporting period; and (D) state the book value and market value of each separately invested asset at the end of the reporting period by the type of asset and fund type invested; and (E) state the maturity date of each separately invested asset that has a maturity date; and (F) state the account or fund or pooled group fund in the state agency or local government for which each individual investment was acquired; and (G) state the compliance of the investment portfolio of the District as it relates to: (i) the investment strategy expressed in this Policy; and (ii) relevant provisions of the Public Funds Investment Act. IX. COLLATERAL, SAFEKEEPING, AND CUSTODY REQUIREMENTS 9.01 Collateral Policy. Consistent with the requirements of the Public Funds Collateral Act, it is the policy of the District to require full collateralization of all District funds on deposit with a depository bank and for repurchase agreements. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 102% of market value of principal and accrued interest on the deposits or investments, less an amount insured by the FDIC. At its discretion, the District may require a higher level of collateralization for certain investment securities. Securities pledged as collateral shall be held by an independent third party with which the District has a current custodial agreement. The General Manager is responsible for entering into collateralization agreements with third party custodians in compliance with this Policy. The agreements are to specify the acceptable investment securities for collateral, including provisions relating to possession of the collateral, the substitution or release of investment securities, ownership of securities, and the method of valuation of securities. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the District and retained. Collateral shall be reviewed at least monthly to assure that the market value of the pledged securities is adequate. 9.02 Authorized Collateral for Time and Demand Deposits. The District shall accept only the following securities as collateral for time and demand deposits: Order No. 2024-0918C Adopting Amended and Restated Investment Policy 9 of 21 i. FDIC insurance coverage. ii. Obligations of the United States, its agencies or instrumentalities, or other evidence of indebtedness of the United States guaranteed as to principal and interest. iii. Obligations of Texas or other states or of a county, city or other political subdivision of a state having been rated as not less than "A" or its equivalent by two nationally recognized rating agencies. iv. A letter of credit issued by a federal home loan bank. 9.03 Authorized Collateral for Repurchase Agreements. The District shall accept as collateral for repurchase agreements only obligations of the United States, its agencies, or instrumentalities. X. AUTHORIZED INVESTMENTS 10.01 Authorized Investments. The following are authorized investments for the District's funds, as further described and restricted by the Public Funds Investment Act: i. Obligations of, or guaranteed by, the United States. Obligations of the United States, its agencies, and instrumentalities, excluding mortgage-backed securities, and that are authorized investments under Section 2256.009 of the Public Funds Investment Act. ii. State Obligations. Obligations of the State of Texas or any state of the United States or their respective agencies and instrumentalities, agencies, counties, cities, and other political subdivisions rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, and that are authorized investments under Section 2256.009 of the Public Funds Investment Act. iii. Other Governmental Obligations. Obligations, the principal, and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States. iv. Certificates of Deposit/Share Certificates. (a) Fully insured or collateralized certificates of deposit or share certificates that are approved investments under Section 2256.010 of the Public Funds Investment Act: (i) from a depository institution that has its main office or a branch office in the State of Texas; and (ii) that are guaranteed or insured by the Federal Deposit Insurance Corporation or its successor, or by the National Credit Union Share Insurance Fund or its successor, as applicable. Authorized certificates of deposit shall include such certificates purchased through the CDARS program with a Texas bank. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 10 of 21 (b) Fully insured certificates of deposit purchased from a broker or a bank that has its main office or a branch office in the State of Texas and is selected from the list of qualified brokers attached to this Investment Policy. All investments in such brokered certificates of deposit shall be made on a delivery versus payment basis to the District's safekeeping agent, and the Investment Officer shall verify that the bank is fully insured by the Federal Deposit Insurance Corporation prior to purchase. In the event any bank from which the District has purchased a brokered certificate of deposit merges with, or is acquired by, another bank in which brokered certificates of deposit are owned by the District, the Investment Officer shall immediately contact the banks and liquidate any brokered certificate that exceeds FDIC insurance levels. v. Repurchase Agreements. Fully collateralized repurchase agreements with a defined termination date executed with a primary dealer as defined by the Federal Reserve or a financial institution doing business in this state, and that are authorized investments under Section 2256.011 of the Public Funds Investment Act. vi. Mutual Funds. Money Market Mutual funds that: 1) are registered and regulated by the Securities and Exchange Commission, 2) have a dollar weighted average stated maturity of 90 days or less, 3) seek to maintain a net asset value of $1.00 per share, and 4) are rated AAA by at least one nationally recognized rating service. vii. Investment Pools. AAA -rated, constant -dollar local government investment pools that meet the requirements set forth in the Public Funds Investment Act for the investment of public funds, including Sections 2256.016, .017, .018, and .019, and provided further that such investments must be approved by the Board of Directors of the District by separate resolution. viii. Interest bearing accounts of any FDIC bank in Texas. XI. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS 11.01 Authorized Financial Dealers and Institutions. The Board may contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of public funds; provided, that a contract may not be for a term longer than two years, and any renewal or extension thereof must be made by the Board by order or resolution. XII. MISCELLANEOUS 12.01 Policy to be presented to Investment Officer. The Investment Officer shall be presented a copy of this Investment Policy and shall execute a written instrument substantially in the form attached hereto as Exhibit "B" to the effect that the Investment Officer has: Order No. 2024-0918C Adopting Amended and Restated Investment Policy 11 of 21 i. received and thoroughly reviewed a copy of this Investment Policy; and ii. implemented procedures and controls to comply with the Investment Policy. 12.02 Policy to be presented to Investment Firms. A written copy of the Investment Policy shall be presented to any business organization offering to engage in an investment transaction with the District. For purposes of this Policy, a "business organization" is an investment pool or investment management firm under contract with the District to invest or manage the District's investment portfolio that has accepted authority granted by the District under the contract to exercise investment discretion in regard to the District's funds. The qualified representative of the business organization offering to engage in an investment transaction with the District shall execute a written instrument in a form acceptable to the District and the business organization substantially to the effect that the business organization has: i. Received and reviewed the Investment Policy of the District; and ii. Acknowledged that the business organization has implemented procedures and controls in an effort to preclude investment transactions conducted between the District and the organization that are not authorized by the District's Investment Policy, except to the extent that this authorization is dependent on an analysis of the makeup of the District's entire portfolio or requires an interpretation of subjective investment standards. The Investment Officer may not acquire or otherwise obtain any authorized investment described in the Investment Policy from a person who has not delivered to the District the written instrument set forth in Exhibit "B" hereof. The District shall maintain a copy of each of the executed written statements described in Sections 12.01 and 12.02 for the auditor and include them as Exhibit "D" of this policy. At any time that the District amends this Investment Policy, the Investment Officer shall present the amended Investment Policy to all persons and/or business organizations at which funds of the District are invested and shall obtain a new written instrument as described in Section 10.01(B) hereof. 12.03 Annual Financial Audit. The District, in conjunction with its annual financial audit, shall perform a compliance audit of management controls on investments and adherence to the District's established investment policies. 12.04 Selection of Authorized Brokers. The District shall annually review, revise and adopt a list of qualified brokers that are authorized to engage in investment transactions with the District. Approved Investment Brokers are those listed in Exhibit C of this Policy. 12.05 Repeal of Prior Orders. Any and all prior orders or resolutions relating to the investment of District funds are hereby repealed and this Policy shall supersede any such prior orders or resolutions as of the date of its adoption by the Board of Directors. 12.06 Effective Date. This Policy shall be effective as of September 18, 2024. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 12 of 21 EXHIBIT "A" INVESTMENT STRATEGY Operating Funds Suitability - All investments authorized in the Investment Policy are suitable for Operating Funds. Preservation and Safety of Principal - All investments shall be high quality securities with no perceived default risk. Liquidity - Investment strategies for the pooled operating funds have as their primary objective to assure that anticipated cash flows are matched with adequate investment liquidity. The dollar -weighted average maturity of operating funds, based on the stated final maturity date of each security, will be calculated, and limited to one year or less. Constant $1 net asset value investment pools and money market mutual funds shall be an integral component in maintaining daily liquidity. Investments for these funds shall not exceed an 18 -month period from date of purchase. Marketability - Securities with active and efficient secondary markets will be purchased in the event of an unanticipated cash requirement. Diversification - Maturities shall be staggered throughout the budget cycle to provide cash flows based on anticipated needs. Investment risks will be reduced through diversification among authorized investments. Yield - The District's objective is to attain a competitive market yield for comparable securities and portfolio constraints. The benchmark for Operating Funds shall be the 91 -day Treasury bill. Reserve and Deposit Funds Suitability - All investments authorized in the Investment Policy are suitable for Reserve and Deposit Funds. Preservation and Safety of Principal - All investments shall be high quality securities with no perceived default risk. Liquidity - Investment strategies for reserve and deposit funds shall have as the primary objective the ability to generate a dependable revenue stream to the appropriate reserve fund from investments with a low degree of volatility. Except as may be required by the bond ordinance specific to an individual issue, investments should be of high quality, with short -to - intermediate -term maturities. The dollar -weighted average maturity of reserve and deposit funds, based on the stated final maturity date of each security, will be calculated, and limited to two years or less. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 13 of 21 Marketability - Securities with active and efficient secondary markets will be purchased in the event of an unanticipated cash requirement. Diversification - Maturities shall be staggered throughout the budget cycle to provide cash flows based on anticipated needs. Investment risks will be reduced through diversification among authorized investments. Yield - The District's objective is to attain a competitive market yield for comparable securities and portfolio constraints. The benchmark for Reserve and Deposit Funds shall be the ninety- one (91) day Treasury bill. Bond and Certificate Capital Project Funds and Special Purpose Funds Suitability - All investments authorized in the Investment Policy are suitable for Bond and Certificate Capital Project Funds and Special Purpose Funds. Preservation and Safety of Principal - All investments shall be high quality securities with no perceived default risk. Liquidity - Investment strategies for bond and certificate capital project funds, special projects and special purpose funds' portfolios will have as their primary objective to assure that anticipated cash flows are matched with adequate investment liquidity. The stated final maturity dates of investments held should not exceed the estimated project completion date or a maturity of no greater than three years. The dollar -weighted average maturity of bond and certificate capital project funds and special purpose funds, based on the stated final maturity date of each security, will be calculated, and limited to two years or less. Marketability - Securities with active and efficient secondary markets will be purchased in the event of an unanticipated cash requirement. Diversification - Maturities shall be staggered throughout the budget cycle to provide cash flows based on anticipated needs. Investment risks will be reduced through diversification among authorized investments. Yield - The District's objective is to attain a competitive market yield for comparable securities and portfolio constraints. The benchmark for Bond and Certificate Capital Project Funds and Special Purpose Funds shall be the ninety-one (91) day Treasury bill. A secondary objective of these funds is to achieve a yield equal to or greater than the arbitrage yield of the applicable bond or certificate. Debt Service Funds Suitability - All investments authorized in the Investment Policy are suitable for Debt Service Funds. Preservation and Safety of Principal - All investments shall be high quality securities with no perceived default risk. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 14 01'21 Liquidity - Investment strategies for debt service funds shall have as the primary objective the assurance of investment liquidity adequate to cover the debt service obligation on the required payment date. Securities purchased shall not have a stated final maturity date which exceeds the debt service payment date. The dollar -weighted average maturity of debt service funds, based on the stated final maturity date of each security, will be calculated, and limited to one year or less. Marketability - Securities with active and efficient secondary markets will be purchased in the event of an unanticipated cash requirement. Diversification - Maturities shall be staggered throughout the budget cycle to provide cash flows based on anticipated needs. Investment risks will be reduced through diversification among authorized investments. Yield - The District's objective is to attain a competitive market yield for comparable securities and portfolio constraints. The benchmark for Debt Service Funds shall be the ninety-one (91) day Treasury bill. Order No. 2024-0918C Adopting Amended and Restated Investment Policy 15 of 21 EXHIBIT "B" INVESTMENT OFFICER AND INVESTMENT FIRM CERTIFICATION OF RECEIPT AND REVIEW OF INVESTMENT POLICY THE STATE OF TEXAS COUNTY OF DENTON I, of do hereby certify that I have been presented a copy of the Amended and Restated Investment Policy for Trophy Club Municipal Utility District No. 1 dated . I have thoroughly reviewed the Investment Policy and acknowledge that has implemented procedures and controls to comply with the Investment Policy. WITNESS MY HAND THIS day of , 2024. Name: Title: Order No. 2024-0918C Adopting Amended and Restated Investment Policy 16 of 2l EXHIBIT "C" APPROVED INVESTMENT FIRMS Name of Bank Phone Number Address Town State Zip Prosperity Bank 817-378-2210 217 North Main Keller TX 76248 First Financial 817-329-8615 95 Trophy Club Dr Trophy Club TX 76262 TexPool 866-839-7665 1001 Texas Avenue Suite 1400 Houston TX 77002 Order No. 2024-0918C Adopting Amended and Restated Investment Policy 17 of 21 EXHIBIT "D" EXECUTED CERTIFICATIONS OF RECEIPT AND REVIEW OF INVESTMENT POLICY Order No. 2024-0918C Adopting Amended and Restated Investment Policy 18 of 21 EXHIBIT "E" TRAINING CERTIFICATES FOR INVESTMENT OFFICER Order No. 2024-09180 Adopting Amended and Restated Investment Policy 19 of 21 ' j4., uL|'[-u =^ Investment Public g � North Central Texas Council of Governments uest et A cf Training a^ ^1. Government Trea5urers' /-lrganization of Texa5 � Co -Sponsored byAVVBDand TVVCA ~- �������ance Certificate of Attendance Regina g~naan Dyke October 12, 2023 6 hours Zoom INSTRUCTOR: Patrick ShinNc SPONSOR NUMBER: 010174 We are registered with the Texas State Board of Public Accountancy as a CPE sponsor. This reyistmhondoes not con��ituteanendorsement bythe board astothe quality ofour CPE Pmgmm. ` n'—' Inaccordance with the standards ofthe National Registry ofCPE 5ponsooand the m|esfor CPE ~ promulgated by the TSBPA, CPE credits have been granted based on a 50 -minute hour. Order No. 2024-09! 8C Adopting Amended and Restated Investment Po!icy zo"fz/ Public Funds Investment Act Trainingi, North Central Texas Council of Governments and Government Treasurers' Organization of Texas Co -Sponsored by AWBD, TRWA, and TWCA Certificate of Attendance .Alan yourmentin May 22, 2024 4 hours Zoom INSTRUCTOR: Patrick Shinkle SPONSOR NUMBER: 010174 We are registered with the Texas State Board of Public Accountancy as a CPE sponsor. This = registration does not constitute an endorsement by the board as to the quality of our CPE Program. In accordance with the standards of the National Registry of CPE Sponsors and the rules for CPE -- promulgated by the TSBPA, CPE credits have been granted based on a 50 -minute hour. Order No. 2024-09I8C Adopting Amended and Restated Investment Policy 21 of 21