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Comprehensive Annual Financial Report 12/31/2009
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Comprehensive Annual Financial Report 12/31/2009
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Comprehensive Annual Financial Report
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12/31/2009
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w <br />CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2009 <br />Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) <br />Credit Risk <br />Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of <br />the investment. The City's policy to minimize credit risk includes limiting investing funds to those <br />allowable under Minnesota Statute 118A, annually appointing all financial institutions where investments <br />are held, and diversifying the investment portfolio. This is measured by the assignment of a rating by a <br />nationally recognized statistical rating organization. The following chart summarizes year -end ratings for <br />the City's investments as rated by Moody's Investors Service: <br />Credit <br />Type Quality Rating Amount <br />Minnesota Municipal Money Market Trust Fund Aa2 $ 2,158,304 <br />Federal Farm Credit Banks Aaa 310,500 <br />Federal Home Loan Bank Aaa 2,525,832 <br />Federal Home Loan Mortgage Corp. Aaa 1,591,014 <br />Federal National Mortgage Assn. Aaa 1,252,098 <br />Municipal Bonds Aaa 775,635 <br />Mutual Fund Not Rated 273,184 <br />Total $ 8,886,567 <br />The Minnesota Municipal Money Market Fund Trust is a common law trust organized in accordance with <br />the Minnesota Joint Powers Act, which invests only in investment instruments allowable under Minnesota <br />statutes as described on the previous page. Its investments are valued at amortized cost, which <br />approximates market value in accordance with Rule 2a -7 of the Investment Company Act of 1940. The <br />amortized cost method of valuation values a security at its cost on the date of purchase and thereafter <br />assumes a constant amortization to maturity of any discount or premium, regardless of the impact of <br />fluctuating interest rates on the fair value of instruments. <br />The Minnesota Municipal Money Market Trust Fund does not have its own credit rating. MBIA, Inc., who <br />administers the Minnesota Municipal Money Market Fund Trust holds an organization credit rating of Aa2. <br />For an investment, custodial credit risk is the risk that, in the event of failure of the counterparty, the City <br />will not be able to recover the value of its investment or collateral securities that are in the possession of an <br />outside party. The City's investment policy doesn't specifically address custodial credit risk. <br />
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