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<br />LJ <br /> <br />lJ <br />L' <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />i <br />LJ <br /> <br />CITY OF ELK RIVER, MINNE5OTA <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2007 <br />Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED <br />• Concentration risk -Concentration risk is the risk of loss attributed to the magnitude of an investment in a <br />single issuer. The City does not have a formal policy that limits the amount of investments in a single issuer. <br />As of December 31, 2007, more than 5% of the City's investments were held in the following U.S. Agencies: <br />Federal Home Loan Bank (29%), Federal National Mortgage Association (18%), and Federal Home Loan <br />Mortgage Corporation (10%). <br />• Interest rate risk - In accordance with its investment policy, the City diversifies its investment portfolio to <br />eliminate the risk of loss resulting from the over-concentration of assets in a specific maturity. The maturities <br />selected shall provide for stability of income and reasonable liquidity. <br />The Minnesota Municipal Money Market Fund (4M Fund) is an external investment pool allowable under Minnesota <br />Statutes and regulated by the Board of Directors of the League of Minnesota Cities. The 4M Fund is a customized cash <br />management and investment program for Minnesota public funds designed to address the daily and long term investment <br />needs of Minnesota cities and other municipal entities. The 4M Fund is an unrated 2a7-like pool and the fair value of the <br />position in the pool is the same as [he value of pool shazes. <br />As of December 31, 2007, the City had the following investments that are insured or registered, or securities held by the <br />Ciry or its agent in Che City's name. <br /> Fair Value <br />Credit Segmented and <br />Qualityi Time Carrying <br />Types of Invcsnnents Ratings (1) Distribution (2) Amount <br />Pooled investments: <br />Minnesota Municipal Money Market Fund N/A Less than 6 months $ 7,953,177 <br />von-pooled investments <br />U.S. Government Securities AAA Less than 6 months 3,584,715 <br /> AAA b to 12 months 8,202,410 <br /> AAA Ito 5 years 6,184,830 <br /> AAA More than 5 years 9,763,138 <br />Total L.S. Government Securities 27,735,093 <br />Commercial Paper PI Less than 9 months 6,673,024 <br />Negotiable CD's N/A Less than 6 months 2,650,000 <br /> 6 to 12 months 1,367,088 <br />Total negotiable CD's 4,017,088 <br />Money Market Funds N/A Less than 6 months 16.509 <br />Total investments 46,394,891 <br />Deposits 5,797,325 <br />Cash on hand 4,650 <br />Total cash and investments $ 52,196,866 <br />(1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk. <br />(2) Interest rate risk is disclosed using the segmented time distribution method. <br />N/A Indicates not applicable. <br />47 <br />