13. American Depositary Receipts, 144(a) securities (with and without registration rights), and Yankee (excluding sovereign bonds). 14. Exchange Traded Funds (ETF’s) traded on domestic exchanges, so long as consistent with the investment mandate, and guidelines. 15. Mortgage TBAs (“To Be Announced”) securities. These securities require an equivalent amount of cash equivalents set aside for future settlement of the forward agreement. 16. Derivatives: In general, the following uses of derivatives are approved for portfolio management purposes, although specific written permission must be granted to each manager on a case-by-case basis in formal written account guidelines. Substitute for physical Duration management Risk control Foreign currency hedging Before a derivative security or derivative strategy is used by an investment manager, one or more of the following benefits must be demonstrated to the Board: Increased liquidity. Stabilized and enhance portfolio returns. Lower transaction costs, including market impact costs. Reduction in the time required to change the mix of the portfolio. Before any such derivative strategy is used by an Investment Manager, written permission for such use must be obtained from the Executive Director of the Prepaid Board. Investment managers must keep in mind at all times the Board’s preference for safety and liquidity. PROHIBITED INVESTMENT VEHICLES AND INVESTMENT RESTRICTIONS Short selling of securities is prohibited. Maximum investment in the securities of any issuer, except U.S. Treasury, Agency, Agency Mortgage-Backed Securities, or
13. American Depositary Receipts, 144(a) securities (with and without registration rights), and Yankee (excluding sovereign bonds). 14. Exchange Traded Funds (ETF’s) traded on domestic exchanges, so long as consistent with the investment mandate, and guidelines. 15. Mortgage TBAs (“To Be Announced”) securities. These securities require an equivalent amount of cash equivalents set aside for future settlement of the forward agreement. 16. Derivatives: In general, the following uses of derivatives are approved for portfolio management purposes, although specific written permission must be granted to each manager on a case-by-case basis in formal written account guidelines. Substitute for physical Duration management Risk control Foreign currency hedging Before a derivative security or derivative strategy is used by an investment manager, one or more of the following benefits must be demonstrated to the Board: Increased liquidity. Stabilized and enhance portfolio returns. Lower transaction costs, including market impact costs. Reduction in the time required to change the mix of the portfolio. Before any such derivative strategy is used by an Investment Manager, written permission for such use must be obtained from the Executive Director of the Prepaid Board. Investment managers must keep in mind at all times the Board’s preference for safety and liquidity. PROHIBITED INVESTMENT VEHICLES AND INVESTMENT RESTRICTIONS Short selling of securities is prohibited. Maximum investment in the securities of any issuer, except U.S. Treasury, Agency, Agency Mortgage-Backed Securities, or
invitation-to-negotiate-16-02-audit-services-final.docx