5.2. SR 06-06-2011 - Laserfiche WebLink

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' CITY OF ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS ' DECEMBER 31, 2010 ' Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED Investments ' Minnesota Statutes and the City's investment policy authorize the City to invest in the following: a. Direct obligations or obligations guaranteed by the United States or its agencies. ' b. .Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above. ' c. General obligations of the State of Minnesota or any of its municipalities. d. Bankers acceptances of United States Banks eligible for purchase by the Federal Reserve System. ' e. Commercial paper of the highest quality issued by United States corporations or their Canadian subsidiaries and maturing in 270 days or less. The City's investment policy follows Minnesota State Statutes which reduces the City's exposure to credit, custodial ' credit and interest rate risks. Specific risk information for the City is as follows: • Custodial credit risk -For investments, custodial credit risk is the risk that in the event of a failure of the ' counterparty, the government would not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. As of December 31, 2010 all investments were insured or registered, or securities were held by the City or its agent in the City's name. ' • Credit risk -Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments in commercial paper that is rated in the highest quality category by at least two nationally recognized rating agencies. The City's investment policy does not further limit the ratings ' of their investments. • Concentration risk -Concentration risk is the risk of loss that may be caused by the city's investment in a single ' issuer. The City does not have a formal policy that limits the amount of investments in a single issuer. As of December 31, 2010, more than 5% of the City's investments were held in the following U.S. Agencies: Federal Home Loan Bank (27%), Federal National Mortgage Association (16%), and Federal Home Loan Mortgage ' Corporation (7%). • Interest rate risk - In accordance with its investment policy, the City diversifies its investment portfolio to eliminate the risk of loss resulting from the over-concentration of assets in a specific maturity. The maturities ' selected shall provide for stability of income and reasonable liquidity. The Minnesota Municipal Money Market Fund (4M Fund) is an external investment pool allowable under Minnesota Statutes and regulated by the Board of Directors of the League of Minnesota Cities. The 4M Fund is a customized cash management and investment program for Minnesota public funds designed to address the daily and long term investment needs of Minnesota cities and other municipal entities. The 4M Fund is an unrated Za7-like pool and the fair value of the position in the pool is the same as the value of pool shares. Financial statements of the 4M Fund can be obtained by ' contacting Voyageur Asset Management at 100 South Fifth Street Suite 2300, Minneapolis, MN 55402-1240. ' 45