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Indian River County, Florida Tax Collector Notes To Financial Statements Year Ended September 30, 2011 NOTE 2 - CASH AND INVESTMENTS - Continued B. Investments - Continued The Tax Collector participated in a capital lease program in which funds are deposited into an escrow account and drawn upon as equipment is purchased. At September 30, 2011, $3,064 of unspent capital lease proceeds remained in the escrow account. Concentration Risk The Tax Collector's investment policy limits portfolio composition to the following maximum guidelines: Local Government Surplus Funds Trust Fund 95% Florida Trust Day to Day Fund 95% Direct Obligations of the U.S. Government 25% Money Market, CD's, and Savings Accounts 50% Securities & Exchange Commission Money Funds 25% Bank Super NOW Accounts 95% Bank Repo Agreements 50% United States Government Agencies 25% The Tax Collector invests surplus funds in an external investment pool, the Local Government Surplus Funds Trust Fund (the "State Pool"). The State Pool is administered by the Florida State Board of Administration ("SBA"), who provides regulatory oversight. During fiscal year 2008, the SBA reported that the State Pool was exposed to potential risks due to indirect exposure in the sub -prime mortgage financial market. Consequently, the SBA placed some restrictions on how participants could access portions of their surplus funds and ultimately restructured the State Pool into two separate pools ("LGIP" and "Fund B"). The LGIP has adopted operating procedures consistent with the requirements for a 2a-7 like fund. The Tax Collector's investment in the LGIP is reported at amortized cost. The fair value of the position in the pool is equal to the value of the pool shares. At September 30, 2011, the LGIP held a rating of AAAm by Standard and Poor's and had a weighted average days to maturity of 38 days. The investment objective for Fund B is to maximize the present value of distributions to participants, to the extent reasonable and prudent, net of fees; thus weight is given not only to the realized value of security sales, but also to the speed with which monies are distributed (liquidity). As cash becomes available in Fund B, it is distributed among participant accounts in the LGIP, according to each participant's pro rata share of Fund B. All distributions from Fund B are 100% available liquid balance (ALB) upon transfer. Fund B is reported at fair value, determined by the fair value per share of the Pool's underlying portfolio. Fund B was unrated as of September 30, 2011. 362