Res 2017-092/adopting revised Investment Policies for Operating Funds and Reserve Funds

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ownership (original safekeeping receipts). XIII. DIVERSIFICATION Diversification of the overall portfolio will be maintained in accordance with the following diversification limits. Security Type Maximum %of Portfolio US Government Treasury Obligations 100% US Government Agencies and Instrumentalities 80% Municipal Instruments 40% Certificates of Deposit 40% Issued by institution 20% Repurchase Agreements 25% Flex repurchase agreements for bond proceeds 100% Constant dollar investment pools 100% Ownership of the pool 10% Commercial Paper 25% Limit per commercial paper issuer 10% Money Market Mutual Fund 50% Ownership of the fund 10% XIV. INTERNAL CONTROLS The Investment Officer(s)shall establish a system of written internal controls that will be reviewed annually with the City or independent auditor of the City along with quarterly investment reports. The controls will be designed to prevent loss of public funds due to fraud, employee error, misrepresentation by third parties, unanticipated market changes, or imprudent actions by employees, contracted investment managers or financial counterparties of the City. Loss of Rating The Investment Officer or investment adviser/manager shall monitor, on no less than a weekly basis, the credit rating on all authorized investments in the portfolio based upon independent information from a nationally recognized rating agency. If any security falls below the minimum rating required by Policy, the Investment Officer or adviser shall notify the City Manager of the loss of rating, conditions affecting the rating and possible loss of principal with liquidation options available,within two weeks after the loss of the required rating. Monitoring FDIC Status The Investment Officer or Investment Adviser/manager shall monitor, on no less than a weekly basis, the status and ownership of all banks issuing brokered CDs owned by the City based upon information from the FDIC. If any bank has been acquired or merged with another bank in which brokered CDs are owned, the Investment Officer or Adviser shall immediately liquidate any brokered CD which places the City above the FDIC insurance level. XV. PERFORMANCE STANDARDS The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and cash flow needs of the City. A benchmark for performance of the portfolio will be included in the quarterly reports based on the portfolio's maximum weighted average maturity of 360 days. The periodic total return of the six-month U.S. Treasury Bill will be used as the City's operating benchmark. City of San Marcos Investment Policy Page 6