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<br />APPENDIX A <br /> <br />GOVERNMENT FUND TYPES <br /> <br />The City of San Marcos maintains a portfolio that utilizes specific investment <br />strategy considerations designed to address the unique characteristics of the <br />government fund types represented in the portfolios: <br /> <br />Investment strategies for a commingled pool containing operating, special <br />projects, and special purpose funds, have as their primary objective to assure <br />that anticipated cash flows are matched with adequate investment liquidity. The <br />secondary objective is to create a portfolio structure that will experience <br />minimal volatility during economic cycles. This may be accomplished by <br />purchasing high quality, short-to medium-term securities that will complement <br />each other in a lateral or barbell maturity structure. <br /> <br />Inveotment otra.tegieo for Cenera.l debt oervice fundo oha.ll h~vc a.o the prima.ry <br />objective the a.ooura.nce of the inveotment liquidity ~dequatc to cover the debt <br />oervice oblig~tion on the required pa.yment date. 8ecuritieo purch~oed ohould not <br />ha.7e a. otated fina.l ma.turity da.te ',i'hich exceedo the debt oervice pa.yment da.te. <br />Investment strategies for debt service funds shall have as the primary objective <br />the assurance of investment liquidity adequate to cover the debt service <br />obligation for each consecutive debt service payment. Investments shall be made <br />in such a manner as not to exceed an "unfunded" debt service date with the <br />maturity of any investment. An unfunded debt service date is defined as a coupon <br />or principal payment date that does not have cash or investment securities <br />available to satisfy said payment. <br /> <br />Investment strategies for Cenera.l debt service reserve funds shall have as the <br />primary objective the ability to generate a dependable revenue stream to the <br />appropriate debt service fund from securities with a low degree of volatility. <br />Except as may be required by the bond ordinance specific to an individual issue, <br />securities should be of high quality, with short-to intermediate-term maturities. <br />Volatility shall be further controlled through the purchase of securities <br />carrying the highest coupon available, within the desired maturity and quality <br />range, without paying premium, if at all possible. Such securities will tend to <br />hold their value during economic cycles. <br /> <br />City of San Marcos Cash Management and Investment Policy <br />Page 9 of 24 <br />