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N:\Public Bodies\Agenda Packets\07-20-2015\Final\xInform2 sr QuarterlyInvestmentReport.docx <br />Information <br /> <br />Memorandum <br /> <br /> <br /> <br /> <br /> <br />To: Mayor and City Council <br /> <br />From: Tim Simon, Finance Director <br /> <br />Date: July 20, 2015 <br /> <br />Subject: Quarterly Investment Report (April – June, 2015) <br />_______________________________________________________________________ <br /> <br />Introduction <br />The purpose of this report is to update the City Council on the status of the various <br />investments the city maintains. This report is as of June 30, 2015. <br /> <br />Background <br />The City Council adopted the original investment policy on April 28, 1998, with subsequent <br />modifications on February 5, 2007, & April 7, 2014. The policy generally follows the <br />Government Finance Officers Association (GFOA) model and does comply with state <br />statutes. <br /> <br />The investment goals for the City of Elk River are passive in nature due to the allowable <br />investments permitted under state statutes. The city has four objectives for investing, in <br />order of importance they are safety of principal, liquidity, return on investment, and <br />maintaining the public trust. This means we are focused on not losing on the original <br />investment, having sufficient funds on hand to meet ongoing operating cash needs, getting a <br />market rate of return, and not purchasing speculative investments. <br /> <br />State statutes limit the city’s ability to invest in many risky types of investments. The city <br />does not purchase stocks or mutual funds. The city is generally limited to federal and state <br />government obligations or agencies backed by them. The city can invest in short-term <br />commercial paper (highly rated), certificates of deposit or money market accounts (with <br />collateralization if in excess of FDIC insurance amounts), and the rated debt of local <br />governments. <br /> <br />The city intends to hold investments until maturity, which means we will get the rate of <br />return for which we invest our funds. Our goal is not to extend our maturities beyond 10 <br />years unless we are matching cash flow to a specific debt service payment. While the intent <br />is to hold to maturity the bonds are subject to interest rate risk as yields change in opposite <br />direction of the bond price. While we record at year-end unrealized gains and losses we hold