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CITY OF ELK RIVER <br /> NOTES TO BASIC FINANCIAL STATEMENTS <br /> YEAR ENDING DECEMBER 31, 2016 <br /> NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED) <br /> C. Investments <br /> Minnesota Statutes and the City's investment policy authorize the City to invest in the <br /> following: <br /> a. Direct obligations or obligations guaranteed by the United States or its agencies. <br /> b. Shares of investment companies registered under the Federal Investment <br /> Company Act of 1940 and whose only investments are in securities described in <br /> (a) above. <br /> c. General obligations of the state of Minnesota or any of its municipalities. <br /> d. Bankers acceptances of United States Banks eligible for purchase by the Federal <br /> Reserve System. <br /> e. Commercial paper of the highest quality issued by United States corporations or <br /> their Canadian subsidiaries and maturing in 270 days or less. <br /> The City has the following investments at year-end: <br /> Primary <br /> Government <br /> Investments Measured at Fair Value Fair Value <br /> U.S.Treasuries with Maturities at Purchase of Greater Than 1 Year $ 20,951 <br /> Negotiable Certificates of Deposit with Maturities at Purchase <br /> of Greater Than 1 Year 10,243,800 <br /> Federal National Mortgage Association 12,864,776 <br /> Federal Farm Credit Bank Bond 500,630 <br /> Municipal Bonds 17,804,343 <br /> Total Investments Measured at Fair Value $ 41,434,500 <br /> Investments Measured at Amortized Cost Amortized Cost <br /> UBS Select Prime Institutional Money Market $ 994,781 <br /> Minnesota Municipal Money Market(4M Fund) 3,781,083 <br /> Other Money Market Funds 33,324 <br /> Total Investments Measured at Amortized Cost $ 4,809,188 <br /> Interest Rate Risk — This is the risk of potential variability in the fair value of fixed rate <br /> investments resulting from changes in interest rates (the longer the period for which an <br /> interest rate is fixed, the greater the risk). The City's investment policy uses <br /> diversification of maturity dates as a means of managing exposure to fair value by <br /> stating that no more than 30% of the City's investments may extend beyond a five-year <br /> maturity. <br /> Credit Risk — This is the risk that an issuer or other counterparty to an investment will <br /> not fulfill its obligations. Minnesota Statutes limit the City's investments in certain types <br /> of investments. The City's investment policy does not further limit the ratings of their <br /> investments. <br /> (49) <br />