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All security transactions, including collateral for repurchase agreements shall be conducted on a delivery <br />versus payment (DVP) basis to the City's depository or a City approved third party custodian. Securities <br />will be held by a third party custodian approved by the Investment Officer(s) and evidenced by proof of <br />ownership (original safekeeping receipts). <br />XIII. DIVERSIFICATION <br />Diversification of the overall portfolio will be maintained in accordance with the following diversification <br />limits. <br />Security Type <br />US Government Treasury Obligations <br />US Government Agencies and Instrumentalities <br />Municipal Instruments <br />Certificates of Deposit <br />Issued by institution <br />Repurchase Agreements <br />Flex repurchase agreements for bond proceeds <br />Local Government Investment pools <br />Ownership of the pool <br />Commercial Paper <br />Limit per commercial paper issuer <br />Money Market Mutual Fund <br />Ownership of the fund <br />XIV. INTERNAL CONTROLS <br />Maximum % of Portfolio <br />100% <br />80% <br />50% <br />30% <br />20% <br />30% <br />100% <br />100% <br />10% <br />40% <br />10% <br />50% <br />10% <br />The Investment Officer(s) shall establish a system of written internal controls that will be reviewed annually <br />with the City or independent auditor of the City along with quarterly investment reports. The controls will <br />be designed to prevent loss of public funds due to fraud, employee error, misrepresentation by third parties, <br />unanticipated market changes, or imprudent actions by employees, contracted investment managers or <br />financial counterparties of the City. <br />Loss of Rating <br />The Investment Officer or investment adviser / manager shall monitor, on no less than a weekly basis, the <br />credit rating on all authorized investments in the portfolio based upon independent information from a <br />nationally recognized rating agency. If any security falls below the minimum rating required by Policy, the <br />Investment Officer or adviser shall notify the City Manager of the loss of rating, conditions affecting the <br />rating and possible loss of principal with liquidation options available, within two weeks after the loss of the <br />required rating. <br />Monitoring FDIC Status <br />The Investment Officer or Investment Adviser / manager shall monitor, on no less than a weekly basis, the <br />status and ownership of all banks issuing brokered CDs owned by the City based upon information from <br />the FDIC. If any bank has been acquired or merged with another bank in which brokered CDs are owned, <br />the Investment Officer or Adviser shall immediately liquidate any brokered CD which places the City above <br />the FDIC insurance level. <br />XV. PERFORMANCE STANDARDS <br />The investment portfolio shall be designed with the objective of obtaining a rate of return throughout <br />City of San Marcos Investment Policy <br />