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CITY OF ELK RIVER, MINNESOTA
<br />NOTES TO THE FINANCIAL STATEMENTS
<br />DECEMBER 31, 2018
<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 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 Company Act of 1940 and whose only
<br />investments are in securities described in (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 Reserve System.
<br />e. Commercial paper of the highest quality issued by United States corporations or their Canadian subsidiaries and
<br />maturing in 270 days or less.
<br />The City has the following investments at year-end:
<br />Fair Value
<br />Measurement
<br />Maturity
<br />Duration in Years
<br />Investment Type
<br />Rating
<br />Using
<br />Less than 1
<br />1 to 5
<br />More than 5
<br />Total
<br />Investments Measured at Fair Value
<br />Negotiable CertificatesofDeposit
<br />Not Rated
<br />Level
<br />$ 2,670,575 $
<br />6,523,850
<br />$ 461,573
<br />$ 9,655,998
<br />FNMA & FHLI3
<br />AAA
<br />Level2
<br />-
<br />494,880
<br />2,232,400
<br />2,727,280
<br />Municipal Bonds
<br />AA -to AAA
<br />Leve12
<br />1,149,720
<br />12,911,108
<br />5,042,599
<br />19,103,427
<br />Total Investments Measured at Fair Value
<br />3,820,295
<br />19,929,838
<br />7,736,572
<br />31,486,705
<br />Investments Measured at Amortized Cost
<br />UBS Select Prime Institutional Money Market
<br />Not Rated
<br />5,298,719
<br />4M Fund
<br />Not Rated
<br />4,675,057
<br />Other Money Market Funds
<br />Not Rated
<br />16,430
<br />Total Investments Measured at Amortized Cost
<br />9,990,206
<br />Total Investments
<br />$ 41,476,911
<br />Investments are subject to various risks, the following of which are considered the most significant:
<br />Custodial credit risk - For investments, the custodial credit risk is the risk that in the event of a failure of the
<br />counterparty to an investment transaction (typically a broker-dealer) the City would not be able to recover the value of its
<br />investments or collateral securities that are in the possession of an outside party. The City typically limits its exposure
<br />by purchasing insured or registered investments, or by the control of who holds the securities. As of December 31, 2018,
<br />all investments were insured or registered, or securities were held by the City or its agent in the City's name.
<br />Credit risk— This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.
<br />Minnesota statutes limit the City's investments in certain types of investments. The City's investment policy does not
<br />further limit the ratings of their investments.
<br />Concentration risk— This is the risk associated with investing a significant portion of the City's investment (considered
<br />5% or more) in the securities of a single issuer and no more than 50% of the City's total investment portfolio may be
<br />invested in certificates of deposit or commercial paper.
<br />At December 31, 2018, the following is a list of investments which individually comprise more that 5% of the City's
<br />total investments:
<br />UBS Select Prime Institutional Money Market $5,298,719 12.8%
<br />4M Fund $4,675,057 11.3%
<br />:
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