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2006 CAFR
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2006 CAFR
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CITY OF ROSEVILLE <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2006 <br />NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) <br />A. Deposits and investments (Continued) <br />3. Investments <br />The City has the following investments at year end: <br />Investments are subject to various risks, the following of which are considered the most significant: <br />Custodial credit risk — For investments, this is the risk that in the event of a failure of the counterparty <br />to an investment transaction (typically a broker - dealer) the City would not be able to recover the <br />value of its investments or collateral securities that are in the possession of an outside party. The City <br />does not have a formal investment policy addressing this risk, but typically limits its exposure by <br />purchasing insured or registered investments, or by the control of who holds the securities. <br />Credit risk — This is the risk that an issuer or other counterparty to an investment will not fulfill its <br />obligations. Minnesota Statutes limit the City's investments to direct obligations or obligations <br />guaranteed by the United States or its agencies; shares of investment companies registered under the <br />Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the <br />two highest rating categories by a statistical rating agency, and all of the investments have a final <br />maturity of thirteen months or less; general obligations rated "A" or better; revenue obligations rated <br />"AA" or better; general obligations of the Minnesota Housing Finance Agency rated "A" or better; <br />bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System; <br />commercial paper issued by Unite States corporations or their Canadian subsidiaries, rated of the <br />highest quality category by at least two nationally recognized rating agencies, and maturing in 270 <br />days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, <br />domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in <br />one of the top two highest categories; repurchase or reverse purchase agreements and securities <br />lending agreements with financial institutions qualified as a "depository" by the government entity, <br />with banks that are members of the Federal Reserve System with capitalization exceeding <br />$10,000,000 that are a primary reporting dealer in U.S. government securities to the Federal Reserve <br />Bank of New York, or certain Minnesota securities broker - dealers. The City does not have an <br />investment policy that further addresses credit risk beyond what is prescribed by State Statute. <br />57 <br />Interest Risk <br />- Maturity Duration in Years <br />Investment Type Rating Agency <br />1 to 5 <br />5 to 10 10 to 15 <br />Total <br />U. S. Treasuries n/a nla <br />$10M MOO 1 8,300 <br />$ 0 $ 0 <br />$ l 0,11 8,300 <br />U.S. Agencies Aaa Moody's <br />1,93 75618 <br />14,515,346 5,644,790 <br />22,097,754 <br />Total Investments <br />$12,0553918 <br />$14,515,346 $ 55644,790 <br />$32,2161054 <br />Investments are subject to various risks, the following of which are considered the most significant: <br />Custodial credit risk — For investments, this is the risk that in the event of a failure of the counterparty <br />to an investment transaction (typically a broker - dealer) the City would not be able to recover the <br />value of its investments or collateral securities that are in the possession of an outside party. The City <br />does not have a formal investment policy addressing this risk, but typically limits its exposure by <br />purchasing insured or registered investments, or by the control of who holds the securities. <br />Credit risk — This is the risk that an issuer or other counterparty to an investment will not fulfill its <br />obligations. Minnesota Statutes limit the City's investments to direct obligations or obligations <br />guaranteed by the United States or its agencies; shares of investment companies registered under the <br />Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the <br />two highest rating categories by a statistical rating agency, and all of the investments have a final <br />maturity of thirteen months or less; general obligations rated "A" or better; revenue obligations rated <br />"AA" or better; general obligations of the Minnesota Housing Finance Agency rated "A" or better; <br />bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System; <br />commercial paper issued by Unite States corporations or their Canadian subsidiaries, rated of the <br />highest quality category by at least two nationally recognized rating agencies, and maturing in 270 <br />days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, <br />domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in <br />one of the top two highest categories; repurchase or reverse purchase agreements and securities <br />lending agreements with financial institutions qualified as a "depository" by the government entity, <br />with banks that are members of the Federal Reserve System with capitalization exceeding <br />$10,000,000 that are a primary reporting dealer in U.S. government securities to the Federal Reserve <br />Bank of New York, or certain Minnesota securities broker - dealers. The City does not have an <br />investment policy that further addresses credit risk beyond what is prescribed by State Statute. <br />57 <br />
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