1. (a) Objectives. The portfolio shall be governed by the following investment objectives, in order of priority:

   1. (1) Preservation and safety of principal. The most important objective in investment of funds is preservation and safety of principal by looking at the investments of all funds in the portfolio rather than any single investment. In order to attain this objective, the board will diversify the portfolio so any potential loss on any individual security does not exceed the income generated from the remainder of the portfolio.
   2. (2) Liquidity. Investments will be purchased so funds in the portfolio are sufficiently available to meet all of the board's and authority's funding requirements as might be reasonably expected.
   3. (3) Yield/Return on Investments. The portfolio shall be designed with an objective of attaining a rate of return that maintains compliance with federal tax regulations and allows financial programs to continue a self-supporting status. The goal will be met by taking into consideration the investment risk constraints and the cashflow characteristics of each fund.

2. (b) Strategy by Fund.

   1. (1) Enterprise Fund--Investments in this fund will be used primarily to match cashflow needs for financial programs and for the payment of debt service. This objective will be accomplished by purchasing securities backed by the full faith and credit of the U.S. government and U.S. government agencies in a laddered structure or through the use of pooled funds of state agencies in the Texas State Treasury. Except for the reserve components of the enterprise fund, which may be invested under §365.17(b) of this title (relating to Maximum Maturities) for up to seven years, the maturities of each security in this fund will be 360 days or less, unless specific approval is received from the board.
   2. (2) Special Revenue Fund--Investments in this fund will be used primarily to match cashflow needs for financial programs. This objective will be accomplished by purchasing securities backed by the full faith and credit of the U.S. government and U.S. government agencies in a laddered structure or through the use of pooled funds of state agencies in the Texas State Treasury. The maturities of each security in this fund will be 360 days or less, unless specific approval is received from the board.
   3. (3) Debt Service--Investments in this fund will be used primarily to match cashflow needs for debt service payments. This objective may be accomplished by purchasing securities backed by the full faith and credit of the U.S. government and U.S. government agencies in a laddered structure or through the use of pooled funds of state agencies in the Texas State Treasury. Except for the reserve components of the debt service fund, which may be invested under §365.17(b) of this title (relating to Maximum Maturities) for up to seven years, the maturities of each security in this fund will be 360 days or less, unless specific approval is received from the board.

Source Note:The provisions of this §365.7 adopted to be effective June 6, 1996, 21 TexReg 4816.