Policy 3160 – Investments of District Funds

The Board has an obligation to the citizens of the District to direct the management of District
funds. The primary objective of the District’s investment plan will be legality, safety, liquidity,
yield and the provision of a capital base for future needs. In the management of such funds, the
District adheres to the “prudent investor” rule. Investments will be made with judgment and
care, under the circumstances, which persons of prudence, discretion and intelligence exercise in
the management of their own investments. Funds will be managed for investment, not for
speculation considering the safety of the funds invested and the probable income to be derived.
District personnel, including Board members, who are involved in the investment of District
funds, will not engage in any personal business activity which could:

1. Impair their ability to make impartial decisions concerning investment of District funds;
2. Conflict with proper execution of the District’s investment program; or
3. Create an appearance of impropriety.

District employees and directors involved in investment of District funds will disclose any
material interests in financial institutions in which they conduct business. Such disclosure will
include, but not be limited to any personal financial/investment positions that could be related to
the performance of the District’s investment portfolio. Similarly, District employees and
directors involved in investment of District funds will not engage in personal investment
transactions with the same individual with whom business is conducted on behalf of the District.

Investments will be made through banks or securities dealers who have been approved by the
Investment Committee of the State Treasurer’s Office. Such banks and securities dealers will
have been subjected to an appropriate investigation by the staff of the State Treasurer’s Office.
This investigation will include, among other things, a written review •Of the firm’s financial
statements and the background of the sales representatives. All approved dealers must be fully
licensed and registered PINERA Brokers/Dealers or exempt banks. ‘Criteria used to select
securities dealers include:

1. Financial strength and capital adequacy of firm;
2. Services provided by firm;
3. Research service available;
4. Resume, reputation, and qualifications of sales representatives.
5. Due diligence and firm references; and
6. State government expertise.

The performance goals of the District’s active investment management program, over time,
should produce book yields which are greater than yields from low risk passive investments. In
analyzing the results of the District’s investment program, the District will calculate the book
yield and total rate of return on District funds compared to the appropriate security market
indexes.

The Superintendent/designee will direct the preparation of quarterly investment reports providing
a summary of the District’s current investment portfolio and all transactions executed since the
last report.

Such investment reports will be prepared by the appropriate bank(s) or security dealers for
review by the Board and the Superintendent. Investment reports are considered to be public
records and will be made accessible to the public.

Criteria and procedures implementing the District’s investment policy have been approved by the
Board and are contained in Regulation 3160.