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INFORMATION Rivi� c MEMORANDUM TO: Mayor and Council Members FROM: Tim Simon, Finance Director DATE: January 14, 2013 SUBJECT: Quarterly Investment Report (October thru December, 2012) INTRODUCTION: The purpose of this report is to update the City Council on the status of the various investments that the city maintains. This report is as of December 31, 2012. BACKGROUND: The City Council adopted the original investment policy on April 28, 1998, with subsequent modifications on February 5, 2007. The policy generally follows the Government Finance Officers Association (GFOA) model and does comply with state statutes. The investment goals for the City of Elk River are passive in nature due to the allowable investments permitted under state statutes. The city has four objectives for investing. In order of importance, they are safety of principal, liquidity, return on investment, and maintaining the public trust. This means we are focused on not losing on the original investment, having sufficient funds on hand to meet ongoing operating cash needs, getting a market rate of return, and not purchasing speculative investments. State statutes limit the city's ability to invest in many risky types of investments. The city does not purchase stocks or mutual funds. The city is generally limited to federal and state government obligations or agencies backed by them. The city can invest in short -term commercial paper (highly rated), Certificates of Deposit or money market accounts (with collateralization if in excess of FDIC insurance amounts), and the rated debt of local governments. The city intends to hold investments until maturity, which means we will get the rate of return for which we invest our funds. Our goal is not to extend our maturities beyond five years unless we are matching cash flow to a specific debt service payment. P0WEREO Rf INATUR