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<br />4. Pooling of Funds <br /> <br />The City will consolidate (pool) cash and reserves balances from all funds, except for <br />those legally restricted by statutes, to maximize investment earnings and to increase efficiencies <br />with regard to investment pricing, safekeeping and administration. <br /> <br />5. Authorized Investments <br /> <br />The City of Arden Hills will invest only in securities authorized by Minnesota Statute S 118A.04 <br />and S1l8A.05. <br />1. Governmental bonds, notes, bills, mortgages and other securities, which are direct <br />obligations or are guaranteed or insured issues ofthe United States, its agencies, <br />its instrumentalities, or organizations created by an act of Congress, excluding <br />mortgage-backed securities defined as "high risk" (as defined below) or in <br />certificates of deposit secured by letters of credit issued by Federal Home Loan <br />Banks. <br /> <br />High risk mortgage-backed securities are as follows: <br />A) interest - only or principal- only mortgage-backed securities, <br />B) any mortgage derivative security that: <br />a) has an expected average life greater than ten years, <br />b) has an expected average life that: <br />i) will extend by more than four years as the result of <br />an irnmediate and sustained parallel shift in the <br />yield curve of plus 300 basis points: or <br />ii) will shorten by more than six years as the result of <br />an immediate and sustained parallel shift in the <br />yield curve of minus 300 basis points: or <br />c) will have an estimated change in price of more than 17 <br />percent as the result of an immediate and sustained parallel <br />shift in the yield curve of plus or minus 300 basis points. <br /> <br />2. Obligations of the United States or its agencies under a repurchase agreement if <br />the margin agreement under the repurchase agreement is 101 percent and with any <br />ofthe following institutions: <br />A) a bank qualified as depository of public funds, <br />B) any national or state bank in the United States which is a member ofthe <br />Federal Reserve System and whose combined capital and surplus equals or <br />exceeds $10,000,000, <br />C) a primary reporting dealer in the United States government securities to <br />the Federal Reserve Bank of New York, <br />D) a securities broker/dealer having its principal executive office in <br />Minnesota, licensed pursuant to Minnesota Statues Chapter 80A, or an <br />affiliate of it, regulated by the Securities and Exchange Commission and <br />maintaining a combined capital and surplus of$40,000,000 or more, <br />exclusive of subordinated debt. <br /> <br />3 <br />