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I CITY OF MONTE VISTA, COLORADO <br /> NOTES TO THE BASIC FINANCIAL STATEMENTS <br /> December 31, 2011 <br /> I <br /> INVESTMENTS <br /> IThe City's investments are subject to interest rate, credit risk, and concentration of credit risk. <br /> I The types of investments which are authorized to be made with City funds are controlled by state statute and the <br /> investment policies of the City. Colorado statutes and the City's investment policies specify investment <br /> instruments meeting defined rating and risk criteria in which the City may invest: <br /> I • Obligations of the United States and certain U.S. government agency securities <br /> • Certain international agency securities <br /> • General obligation and revenue bonds of U.S. local government entities <br /> I • Bankers'acceptances of certain banks <br /> • Commercial paper <br /> • Local government investment pools <br /> I • Repurchase agreements <br /> • Money market funds <br /> • Guaranteed investment contracts <br /> I • Corporate or bank debt issued by eligible corporations or banks. <br /> Credit Risk <br /> I The City's investment policy calls for investment diversification within the portfolio to avoid unreasonable risks <br /> inherent in over investing in specific instruments, individual financial institutions or maturities. The City's <br /> investment policy allows for the City to invest in local government investment pools. As of December 31, 2011, <br /> I the local government investment pool(COLOTRUST) in which the City had invested, was rated AAAm by <br /> Standard&Poor's. <br /> Cash on Hand and in Bank $ 4,065,610 <br /> ICOLOTRUST 170,000 <br /> Total Deposits and Investments $ 4,235,610 <br /> I Governmental Business-Type <br /> Activities Activities Total <br /> Cash and Cash Equivalents $ 915,765 $ 1,234,708 $ 2,150,473 <br /> IRestricted Cash and Cash Equivalents 1,655,870 429,267 2,085,137 <br /> Total Cash and Cash Equivalents $ 2,571,635 $ 1,663,975 $ 4,235,610 <br /> IInterest Rate Risk <br /> Colorado Revised Statutes limit investment maturities to five years or less from the date of purchase. This limit on <br /> I investment maturities is a means of limiting exposure to fair values arising from increasing interest rates. The City <br /> has no investments with maturities past five years. <br /> I The Colorado Government Liquid Asset Trust(COLOTRUST) is an investment vehicle established for local <br /> government entities in Colorado pursuant to Part 7 of Article 75 of Title 24 of the Colorado Revised Statutes,to <br /> pool surplus funds for investment purposes. COLOTRUST operates similarly to a money market fund and each <br /> I share is equal in value to $1.00. The fair value of the position in the pool is the same as the value of the pool <br /> shares. The designated custodial bank provides safekeeping and depository services in connection with the direct <br /> investment and withdrawal functions. Substantially all securities owned by the pool are held by the Federal <br /> I Reserve Bank in the account maintained for the custodial bank. The custodian's internal records identify the <br /> investments owned by the pool. Investments of the pool consist of U.S. Treasury bills, notes and note strips and <br /> repurchase agreements collateralized by U.S. Treasury Notes. <br /> I 31 <br />