C.A.F.R., FY 2006-07 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2007 IV. Detailed Notes on All Funds and Component Unit (Continued) A. Deposits and Investments (Continued) As of September 30, 2007, the City and Component Unit had the following investments: Credit Weighted Average Type of Security Fair Value Rating Maturity (Years) Primary Government Mortgage Backed Securities: Government National Mortgage Corporation $ ~ 25,134 N/A 1.83 Federal Home Loan Mortgage Corporation 1,722,993 N/A 3.79 Federal National Mortgage Association 1,297,341 N/A 4.24 Notes: Federal Home Loan Mortgage Corporation 2,634,399 AAA 0.72 Federal National Mortgage Association 534,637 AAA 0.46 Federal Farm Credit Bank 1,008,250 AAA 0.75 Certificates of Deposit 131,337 N/A 0.42 Totals $ 7,354,491 2.04 Component Unit - PEDC Certificates of Deposit $ 490,941 N/A 0.29 Interest Rate Risk. It is the policy of the City to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the entity and conforming to all state and local statutes governing the investment of public funds. The City's investment portfolio will be designed with the objective of attaining a rate of return throughout budgetary and economic cycles, commensurate with the City's investment risk constraints and the cash flow characteristics of the portfolio. The City's investment strategy is active. Given this strategy, the basis used by the Finance Director to determine whether market yields are being achieved shall be the six-month U.S. Treasury Bill and the Average Fed Funds rate. No other formal policy related to interest rate risk is included in the City's adopted investment policy. Credit Risk is the risk that an issuer or other counter-party will not fulfill its obligations. Investing is performed in accordance with the City's investment policy adopted by the City Council complying with State law and the City Charter. City funds may be invested in securities authorized by Chapter 2256 of the State of Texas Government Code. Concentration of Credit Risk. The City's policy is to diversify its investments by security type and institution. With the exception of obligations of the United States or its agencies and authorized pools, no more than 50% of the City's. total investment portfolio will be invested in a single financial institution with the exception of its local depository. 34