2020 Comprehensive Annual Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2020

NOTE 4 – DEPOSITS AND INVESTMENTS (CONTINUED)

B. Investments (Continued)

The Commission’s policy states they will minimize risk by only purchasing investments that are held in safekeeping with the Federal Reserve bank, United States Bank with corporate trust powers, a primary reporting dealer to the Federal Reserve Bank of New York, or a broker dealer having its principal executive office in Minnesota and that designated brokers have insurance through a SIPC (Securities Investor Protection Corporation). As of December 31, 2020 the City held investments that exceeded 5% of its total investments for all funds as noted in the table on the previous page. The component units’ investments noted in the table above exceeded 5% of its total investments as of December 31, 2020. Having all investments, other than those in direct obligations or agencies of the United States, secured by collateral or repurchase agreements, shall not exceed 50% of the aggregate investment portfolio. Mortgage backed securities shall not exceed 30% of the aggregate investment portfolio, at the time of investment. Limiting investments in any one corporation to 5% of the aggregate investment portfolio. Concentration of Credit Risk: This is the risk of loss attributed to the magnitude of an investment in a single issuer. According to the City’s investment policy, the aggregate investment portfolio shall be diversified by: Limiting investments to avoid over concentration in securities from a specific issuer or business sector (excluding securities backed by the U.S. government). Limiting investments in securities that have higher credit risks. Investing in securities with varying maturities. Continuously investing a portion of the portfolio in readily available funds, such as Local Government Investment Pools (LGIP), money market funds or repurchase agreements to ensure appropriate liquidity is maintained in order to meet ongoing obligations.

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