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<br />CITY OF LA PORTE, TEXAS
<br />Notes to the Financial Statements - Continued
<br />September 30, 2004
<br />2. Cash, Cash Equivalents and Investments - Continued
<br />The City's investments at year-end are summarized below and have been classified in credit risk categories.
<br />Credit risk categories are as follows:
<br />(1) Insured or registered, or securities are held by the City or its agent in the City's name,
<br />(2) Uninsured and unregistered, with securities held by the counter-party's trust department or agent in
<br />the City's name or
<br />(3) Uninsured and unregistered, with securities held by counter -party, or by its trust department or
<br />agent but not in the City's name.
<br />U.S. Government Agency Notes
<br />Investments not Subject to Categorization:
<br />TEXPOOL
<br />LOGIC
<br />TexStar
<br />Total Investments
<br />Investments Classified as Cash Equivalents
<br />Total Investments per Balance Sheet
<br />Credit Risk
<br />Carrying
<br />Fair
<br />Category
<br />Amount
<br />Value
<br />1
<br />$ 10,985,310
<br />$ 10,985,310
<br />N/A
<br />11,582,913
<br />11,582,913
<br />N/A
<br />3,848,296
<br />3,848,296
<br />3,025,677
<br />3,025,677
<br />29,442,196
<br />$ 29,442,196
<br />18,456,866
<br />$ 10,285,310
<br />The U.S. government securities were purchased through a broker/dealer and are held for safekeeping by
<br />the City's depository bank (independent agent), registered for the account of City of La Porte. The City
<br />generally holds all investments to maturity date. The City had no derivative investment products during the
<br />current year. The City did not have any reverse repurchase or repurchase agreement transactions. Fair
<br />values of investments are based on quoted market prices. The investments are reported by the City at fair
<br />values determined by quoted market prices. All realized gains/losses are reported in the financial
<br />statements. These calculations are independent of calculations of the net change in fair value of
<br />investments. The City has unrealized gains of $138 reported in the financial statements as of September
<br />30, 2004.
<br />Investment balances in public investment pools are not evidenced by underlying securities that exist in
<br />physical or book entry form and, therefore, are not subject to credit risk categorization.
<br />The City utilizes the pooled investment concept to maximize interest earnings. Interest earned on
<br />investments is distributed to each participating fund based on each individual fund's proportionate share of
<br />the pool and is done on a monthly basis. In accordance with GASB Statement No. 31, the City reports all
<br />investments at fair value, except for "money market investments" and "20-like pools". Pursuant to
<br />investment agreements approved by each participant with each pool, the business and affairs of the pools
<br />are required to be managed by each pool's Board of Trustees (the Board). The Board consists of members
<br />representing entities that have adopted the investment agreements. The duties of the boards include, but
<br />are not limited to, adopting investment policies, appointing investment officers, overseeing the selection of
<br />investment managers, custodian banks, investments consultants, and other service providers, monitoring
<br />compliance with the pools' investment policy, monitoring performance, and revising the investment policies
<br />to reflect changing conditions affecting the pools or the needs of the participants. Money - market
<br />investments, which are short-term highly liquid debt instruments that may include U.S. Treasury and agency
<br />obligations, are reported at amortized costs. Investment positions in external investment pools that are
<br />operated in a manner consistent with SEC's Rule 2a7 of the Investment Company Act of 1940, such as
<br />TexPool and LOGIC are reported using pool's share price.
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