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CITY OF LINO LAKES, MINNESOTA
<br />NOTES TO FINANCIAL STATEMENTS
<br />December 31, 2009
<br />Note 2 DEPOSITS AND INVESTMENTS (CONTINUED)
<br />B. Investments
<br />The City may also invest idle funds as authorized by Minnesota Statutes as follows:
<br />• Direct obligations or obligations guaranteed by the United States or its agencies
<br />• Shares of investment companies registered under the Federal Investment Company Act of 1940 and
<br />received the highest credit rating, is rated in one of the two highest rating categories by a statistical
<br />rating agency, and all of the investments have a finial maturity of thirteen months or less
<br />• General obligations rated "A" or better; revenue obligations rated "AA" or better
<br />• General obligations of the Minnesota Housing Finance Agency rated "A" or better
<br />• BANKER'S acceptances of United States banks eligible for purchase by the Federal Reserve System
<br />• Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of
<br />highest quality category by a least two nationally recognized rating agencies, and maturing in 270 days
<br />or less
<br />• Guaranteed investment contracts guaranteed by United States commercial banks or domestic branches
<br />of foreign banks or United States insurance companies if similar debt obligations of the issuer or the
<br />collateral pledged by the issuer is in the top two rating categories
<br />• Repurchase or reverse purchase agreements and securities lending agreements financial institutions
<br />qualified as a "depository" by the government entity, with banks that are members of the Federal
<br />Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S.
<br />government securities to the Federal Reserve Bank of New York, or certain Minnesota securities
<br />broker - dealers
<br />Investments Held with Broker —
<br />Interest Rate Risk
<br />Interest rate risk is the risk that changes in interest rates will adversely affect the market value of an
<br />investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its market
<br />value to changes in market interest rates. The City's policy to minimize interest rate risk includes investing
<br />primarily in short-term securities and structuring the investment portfolio so that securities mature to meet
<br />cash requirements for ongoing operations. Information about the sensitivity of the market values of the
<br />City's investments to market interest rate risk fluctuations is provided by the following table that shows the
<br />distribution of the City's investments by maturity:
<br />12 Months 13 to 24 25 to 60 More than
<br />Type Total or Less Months Months 60 Months
<br />Minnesota Municipal Money
<br />Market Trust Fund $ 2,158,304 $ 2,158,304 $ $ - $
<br />Federal Farm Credit Banks 310,500 310,500
<br />Federal Home Loan Bank 2,525,832 249,610 1,727,062 549,160
<br />Federal Home Loan Mortgage Corp. 1,591,014 1,591,014 -
<br />Federal National Mortgage Assn. 1,252,098 1,005,690 246,408
<br />Municipal Bonds 775,635 100,858 100,947 573,830 -
<br />Mutual Fund 273,184 273,184 - -
<br />Total $ 8,886,567 $ 2,532,346 $ 350,557 $ 5,208,096 $ 795,568
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