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State funds will be invested to

1. Preserve the value and safety of the principal,
2. Maintain liquidity appropriate for short term cash needs and
3. Optimize the rate of return on investments consistent with the goals of safety and liquidity.

When making individual investments, the primary considerations will be risk rating, liquidity, income and maturity. It is recognized that income is a product of yield to maturity, therefore; fixed income securities may be purchased either at a discount to minimize initial cash outlay and take advantage of capital appreciation, or at a premium to optimize cash flow when conditions warrant.

These guidelines apply to all operating funds under the supervision of the State Treasury. They do not apply to funds belonging to the New Hampshire Turnpike System or any trust or custodial funds, all of which have separate sets of investment guidelines.

1. The Treasurer is authorized to invest or direct the Deputy Treasurer or Assistant Treasurer to invest the State's funds within the established guidelines.
2. The Treasurer must be notified of purchases or sales of securities over 20 million dollars in a single day.
3. The Treasurer, Chief Deputy, Deputy Treasurer or Assistant Treasurer is authorized to approve purchases or sales of securities. No formal approval is required for investments in overnight or weekend repurchase agreements which would be transacted as part of an overnight sweep (investment) program.

1. The Treasurer or designate will document the rationale for each security transaction. Short term investments (less than one year) do not require such documentation.
2. The Treasurer or designate is responsible for ensuring the completion of all paperwork and transactions pertinent to the execution and confirmation of buy/sell orders; for instructing money market dealers with respect to arrangement for payment or collection of monies resulting from the purchase, sale or redemption of securities; and for the maintenance of all necessary records of current holdings. This paperwork shall include, but is not limited to appropriate accounting and internal documents required to track the movement of funds through the State's integrated financial system and the Treasury's banking system.
3. Upon recognition that the investment portfolio has fallen out of compliance with these guidelines, the Treasurer or designate has thirty days to take such corrective action to remedy any violations without loss of any principal.

The following are approved investment vehicles as defined in RSA 6:8, 387:6, 387:6-a, and 387:14:

Federal Agency Securities
Federal Farm Credit System, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Student Loan Marketing Association, and Tennessee Valley Authority.

Repurchase Agreements
The underlying security must be U.S. government or agency securities with a market value equal to 100% of principal, and executed through any New Hampshire or Massachusetts bank that meets the following criteria:

1. The issuing (parent) bank must have assets in excess of $500 million.
2. Equity capital to asset ratio must equal or exceed 5%.
3. Non-performing assets to equity ratio may not exceed 35%.
4. The maximum maturity should not be greater than 180 days.

Repurchase Agreements may also be executed through any of the primary government security dealers as designated by the Federal Reserve.

Money Market Funds
Shares of funds which hold diversified portfolios and follow standard rules for such funds as issued by the Securities and Exchange Commission.

Certificates of Deposit
CDs of State or federally chartered banking institutions within a branch in New Hampshire are approved. The maximum maturity of a CD will be one year and the bank must meet the following three requirements:

1. The issuing (parent) bank must have Veribanc Inc.'s highest classification with assets in excess of $500 million.
2. Equity capital to asset ratio must equal or exceed 5%.
3. Non-performing assets to equity ratio may not exceed 35%.

External Investment Advisors
External investment advisors can be used if the services to be provided are specified in a written agreement signed by the Treasurer and approved by the Governor and Council.

Foreign Currency
All investments will be denominated in United States Dollars.

Reverse Repurchase Agreements
Reverse Repos are not permitted under current statute. Securities lending is permitted in conjunction with an approved plan and a formal agreement with a custodian bank.

Investments in certain structured notes (not collateralized mortgage obligations), swaps, futures and options are permitted in conjunction with a formal risk management strategy and the explicit approval of the State Treasurer.

The Treasurer must review and approve the investment guidelines at least biennially.