Page 131 - CityofBurlesonFY26Budget

Safety of Principal - All investments will be of high quality with no perceived default risk.
Market fluctuations may occur. However, by restricting the maximum maturity to three
years and by managing the Bond Proceeds and Capital Improvement Funds to balance the
short term and long term anticipated cash flow requirements, the market risk of the
portfolio will be minimized.

Liquidity - Selecting investment maturities that provide greater cash flow than the
anticipated needs and maintaining appropriate cash-equivalent balances will reduce the
liquidity risk of unanticipated expenditures.

Marketability - The balancing of short-term and long-term cash flow needs requires the
short-term portion of the Bond Proceeds and Capital Improvement Funds to have
securities with active and efficient secondary markets.

Diversification - Investment maturities should blend the short-term and long-term cash
flow needs to provide adequate liquidity, yield enhancement, and stability.

Yield - Attaining a competitive market yield for comparable investment-types and
portfolio structures is the desired objective, however this portfolio maintains an
investment strategy intended to comply with any applicable arbitrage or yield restriction
regulations.

(3) Debt Service Sinking Funds

Suitability - Any investment eligible in the Investment Policy is suitable for the Debt
Service Sinking Funds.

Safety of Principal - All investments shall be of high quality with no perceived default risk.
Market price fluctuations may occur. However, by managing Debt Service Sinking Funds
to not exceed the debt service payment schedule the market risk of the overall portfolio
will be minimized.

Liquidity - Debt Service Funds have predictable payment schedules. Therefore,
investment maturities should not exceed the anticipated cash flow requirements. Cash
equivalent investments may provide a competitive yield alternative for short term fixed
maturity investments. A singular repurchase agreement may be utilized if disbursements
are allowed in the amount necessary to satisfy any debt service payment. This investment
structure is commonly referred to as a flexible repurchase agreement.

Marketability - Securities with active and efficient secondary markets are not necessary
as the event of an unanticipated cash flow requirement is not probable.

Diversification - Market conditions influence the attractiveness of fully extending
maturity to the next “unfunded” payment date. Generally, if investment rates are
anticipated to decrease over time, the City is best served by locking in most investments.
If the interest rates are potentially rising, then investing in shorter and larger amounts

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