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XIV. DIVERSIFICATION <br /> Diversification of the overall portfolio will be maintained in accordance with the following diversification limits <br /> as determined at the time of purchase. <br /> Maximum Percent of Portfolio <br /> Financial Assets Except <br /> Security Type for Reserve Funds Reserve Funds <br /> US Government Treasury Obligations 100% 100% <br /> US Government Agencies and Instrumentalities 80% 80% <br /> Municipal, County and State Instruments 20% 20% <br /> Certificates of Deposit 30% 30% <br /> Issued by Institution 20% 20% <br /> Repurchase Agreements 30% 30% <br /> Flex Repurchase Agreements for Bond Proceeds 100% 100% <br /> Local Government Investment Pools 100% 100% <br /> Ownership of the Investment Pool 10% 10% <br /> Commercial Paper 40% 40% <br /> Limit Per Commercial Paper Issuer 10% 10% <br /> Money Market Mutual Fund 70% 70% <br /> Ownership of the Fund 10% 10% <br /> XV. INTERNAL CONTROLS <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 shall monitor, on no less than a weekly basis, the credit rating <br /> on all authorized investments in the portfolio based upon independent information from a nationally <br /> recognized rating agency. If any security falls below the minimum rating required by Policy, the Investment <br /> Officer or adviser shall notify the Director of Finance of the loss of rating, conditions affecting the rating and <br /> possible loss of principal with liquidation options available, within two weeks after the loss of the required <br /> rating. <br /> Monitoring FDIC Status <br /> The Investment Officer or Investment Adviser shall monitor, on no less than a weekly basis, the status and <br /> ownership of all banks issuing brokered CDs owned by the City based upon information from the FDIC. <br /> If any bank has been acquired or merged with another bank in which brokered CDs are owned, the <br /> Investment Officer or Adviser shall immediately liquidate any brokered CD which places the City above <br /> the FDIC insurance level. <br /> City of San Marcos Investment Policy 7 Rev 05.2025 <br />