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Indian River County,Florida Notes To Financial Statements Year Ended September 30, 2009 NOTE 4-CASH AND CASH EQUIVALENTS - Continued C. Investments - Continued The Local Government Surplus Funds Trust Fund(Fund A) is a money market fund classified as a"2a- 7 like fund" using the SEC investment requirements for 2a-7 funds. The fund was established by Florida Statute 218.405 and is administered by the Florida State Board of Administration. At September 30, 2009, the County had $1,192,422 invested in Fund B Surplus Funds Trust Fund, a fluctuating net asset value pool. The State Board of Administration (SBA) determined a negative fair market value adjustment of 45.08% of the portfolio balance, or $537,602, was needed to represent the fair market value of the participation. Consequently,the net investment in Fund E is reported at$654,820. The Florida Local Government Investment Trust Fund is a pool of various securities with maturities of less than five years. The fund was established by Florida Statute 163.01, is administered by the Florida Association of Court Clerks, and is marked to market daily. Upon the refunding of the Water and Sewer Bonds, Series 1993A, the County combined the required sinking fund reserve, $3,139,285, of the 1993A issue and the Series 2009 reserve of$2,241,625 for a total of$5,380,910. These funds were invested in the Fidelity Treasury Money Market Fund. Interest Rate Risk The County's investment policy limits interest rate risk by attempting to match investment maturities with known cash needs and anticipated cash flow requirements. All investments must have stated maturities of ten (10) years or less and no more than 25% of the portfolio shall be invested in instruments with stated final maturities greater than five (5) years. The portfolio shall have securities with varying maturity and at least 10% of the portfolio shall be invested in readily available funds. All constitutional officers with the exception of the Tax Collector follow this policy. The Tax Collector's policy is to limit maturities to 12 months or less and maintain 95% of the portfolio in readily available funds. Credit Risks Florida Statutes Section 218.415 and the County's investment policy limit investments to the following: 1. Direct obligations of the United States Treasury; 2. Florida PRIME (formerly known as Fund A) and Fund B Surplus Funds Trust Fund(Fund B); 3. Florida Local Government Investment Trust Fund; 4. Interest-bearing time deposits or savings in qualified public depositories as defined in Section 280.02 Florida Statutes; 5. Federal agencies and instrumentalities; 6. Securities of, or other interests in, any open-end or closed-end management-type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations, and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian; 60