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<br />I <br /> <br />I <br /> <br />I <br /> <br />IV. OBJECTIVE AND STRATEGIES <br /> <br />All City funds will be pooled for investment purposes. The primary objectives, in priority order, of <br />the City's investment activities for all funds shall be: <br /> <br />1. Safety: Safety of principal is the foremost objective of the investment program. <br />Investments of the City shall be undertaken in a manner that seeks to ensure the <br />preservation of capital in the overall portfolio. <br />2. Liquidity: The City's investment portfolio will remain sufficiently liquid to enable the <br />City to meet all operating requirements, which might be reasonably anticipated. <br />3. Diversification: In order to meet the Safety objective, diversification is needed to <br />minimize credit and market risk and to reduce overall portfolio impact from potential <br />losses on individual securities. <br />4. Yield: The City's investment portfolio shall be designed with the objective of attaining a <br />market rate ofreturn in accordance with its designated benchmark based on the City's <br />cash flow requirements throughout budgetary and economic cycles, commensurate with <br />the City's investment risk constraints and the cash flow characteristics of the portfolio. <br /> <br />Strategy <br /> <br />The structure and management of the overall portfolio will address the varying needs, goals and <br />objectives of each fund. Investment strategies for General Fund, Special Revenue Funds, Capital <br />Projects Funds, Enterprise Funds, and Trust and Agency Funds are designed to assure that <br />anticipated cash flows are matched with adequate liquidity in each fund. The secondary strategy <br />objective is to create a portfolio structure that will experience minimal volatility during economic <br />cycles. This may be accomplished by purchasing high quality, short-to-medium term securities that <br />will complement each other in a laddered or barbell maturity structure and assure the marketability of <br />those investments should liquidity needs arise. Investments are to be chosen in a manner that <br />promotes diversity by market sector, credit and maturity. The maximum dollar weighted average <br />maturity of the portfolio will not exceed -l-&(}-270 days, dependent on market conditions, to <br />accomplish these goals. <br /> <br />Investment strategies for Debt Service Funds will primarily assure investment liquidity adequate to <br />cover the debt service obligation for each consecutive debt service payment. Investments shall <br />progressively fund each succeeding debt service. <br /> <br />Effective cash management is recognized as essential to good fiscal management. Cash management <br />is defined as the process of managing monies in order to ensure maximum cash availability to the <br />City for investment use. The City shall maintain a comprehensive cash management program that <br />includes collection of accounts receivable, prudent investment of its available cash, disbursement of <br />payments in accordance with invoice terms and the management of banking services. <br /> <br />City of San Marcos Investment Policy <br /> <br />Page 2 <br />