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NOTE 3
<br />CITY OF ELK RIVER, MINNESOTA
<br />NOTES TO BASIC FINANCIAL STATEMENTS
<br />DECEMBER 31, 2020
<br />DEPOSITS AND INVESTMENTS (CONTINUED)
<br />C. Investments (Continued)
<br />The City has the following investments at year-end
<br />Primary
<br />Government
<br />Investments Measured at Fair Value
<br />Fair Value
<br />U.S. Treasuries with Maturities at Purchase of Greater Than 1 Year
<br />$
<br />7,081,830
<br />Negotiable Certificates of Deposit
<br />3,723,465
<br />Municipal Bonds
<br />27,967,309
<br />Total Investments Measured at Fair Value
<br />$
<br />38,772,604
<br />Investments Measured at Amortized Cost
<br />Amortized Cost
<br />U.S. Treasuries with Maturities at Purchase of Less Than 1 Year
<br />$
<br />49,722
<br />Negotiable Certificates of Deposit with Maturities at Purchase
<br />of Less Than 1 Year
<br />2,397,796
<br />UBS Select Prime Institutional Money Market
<br />10,194,066
<br />Minnesota Municipal Money Market (4M Fund)
<br />25,638,743
<br />Other Money Market Funds
<br />2,071,375
<br />Total Investments Measured at Amortized Cost
<br />$
<br />40,351,702
<br />The 4M Fund is regulated by Minnesota Statutes and the Board of Directors of the
<br />League of Minnesota Cities and is an external investment pool not registered with the
<br />Securities and Exchange Commission (SEC) that follows guidance under GASB
<br />Statement No. 79. The City's investment in the 4M Fund is measured at an amortized
<br />cost method that approximates fair value. The City's investment policy does not place
<br />any further limitations beyond the state statute requirements for the risk categories
<br />described below. Investments are subject to various risks, the following of which are
<br />considered the most significant.
<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 />A schedule of the maturities and ratings of the City's investments as of December 31,
<br />2020 is as follows:
<br />Maturity Duration in Years
<br />Investment Type
<br />Total
<br />Less Than 1
<br />1 to 5
<br />More Than 5
<br />No Maturity
<br />Rating
<br />U.S. Treasury Notes
<br />$ 7,131,552
<br />$ 49,722
<br />$ 7,081,830
<br />$ -
<br />$ -
<br />Not Rated
<br />Negotiable Certificates of Deposit
<br />6,121,261
<br />1,165,139
<br />4,956,122
<br />-
<br />-
<br />Not Rated
<br />Municipal Bonds
<br />27,967,309
<br />2,905,559
<br />12,426,785
<br />12,634,665
<br />-
<br />AA -to AAA
<br />UBS Select Prime Institutional Money Market
<br />10,194,066
<br />-
<br />-
<br />-
<br />10,194,066
<br />Not Rated
<br />Minnesota Municipal Money Market (4M Fund)
<br />25,638,743
<br />-
<br />-
<br />-
<br />25,638,743
<br />Not Rated
<br />Other Money Market Funds
<br />2,071,375
<br />2,071,375
<br />Not Rated
<br />Total Investments
<br />79,124,306
<br />41120,,720
<br />24,4 44,737
<br />12,6 44,665
<br />77,904,184
<br />(49)
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