(a) Preservation of Principal. The primary investment objective is preservation of principal. To meet this objective, portfolio diversification will be established and maintained with a goal of generating portfolio income that exceeds any losses in individual security values. It is recognized that occasional losses are inevitable, and such possibility will be considered in evaluating diversification decisions and investment strategy.
(b) Liquidity. The second investment objective is maintenance of liquidity of assets. This objective will be met by preparing a draw schedule for anticipated expenditures and matching investment maturities with anticipated expenditure dates whenever possible. Once cash flow requirements have been satisfied, maturity date selection will be determined by market conditions and interest rate forecasts. No unmatched investment will have a maturity date of more than five years from the settlement date. Investments made prior to September 27, 1996, that do not have a maturity date will be kept for no more than five years.
No investment will be made unless, at the time the investment is made, the Fiscal Officer reasonably believes that the investment can be held until maturity. However, an investment may be sold prior to maturity if the Fiscal Officer determines that such sale is prudent.
(c) Income Maximization. Income maximization is the third investment objective. To accomplish this objective, the investment portfolio will be managed with the goal of producing income returns within acceptable risk parameters. High financial risk is unacceptable. Thus, moderate income volatility will be permitted, but no investments which are expected to be subject to large interest rate fluctuations will be made.
(d) Minimization of Cost of Services. The fourth objective is to minimize transaction costs. To meet this objective, relationships with securities dealers, investment bankers and other entities providing investment services will be carefully managed to secure high quality services while simultaneously minimizing costs.
(Res. 213-96. Passed 12-6-96.)