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7.1.A. - Page 74 , <br /> Notes to the Basic Financial Statements <br /> For the year ended June 30, 2014 <br /> NOTE 2 — CASH AND INVESTMENTS (CONTINUED) <br /> investment contract with a maturity date in fiscal year 2035 authorized in the bond indenture and by <br /> City Council prior to purchase. <br /> D. External Investment Pools <br /> The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by <br /> California Government Code Section 16429 under the oversight of the Treasurer of the State of <br /> California. The City reports its investment in LAIF at the fair value amount provided by LAIF. The <br /> balance available for withdrawal is based on the accounting records maintained by LAIF, which are <br /> recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized <br /> mortgage obligation, mortgage- backed securities, other asset - backed securities, loans to certain state <br /> funds, and floating rate securities issued by federal agencies, government- sponsored enterprises, and <br /> corporations. These investments may include the following: <br /> Structured Notes - are debt securities (other than asset - backed securities) whose cash flow characteristics <br /> (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and /or that have <br /> embedded forwards or options. <br /> Asset - Backed Securities - the bulk of which are mortgage- backed securities, entitle their purchasers to <br /> receive a share of the cash flows from a pool of assets such as principal and interest repayments from a <br /> pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables. <br /> As of June 30, 2014, the City had $75,119,623 (estimated fair value) invested in LAIF. LAIF had invested <br /> 1.96% of the pool investment funds in Structured Notes and Asset - Backed Securities. LAIF determines <br /> fair value on its investment portfolio based on market quotations for those securities where market <br /> quotations are readily available and based on amortized cost or best estimate for those securities <br /> where market value is not readily available. The City valued its investments in LAIF as of June 30, 2014, <br /> by multiplying its account balance with LAIF times a fair value factor determined by LAIF. The fair value <br /> factor was determined by dividing all LAIF participants' total aggregate fair value by total aggregate <br /> amortized costs. <br /> Accordingly, as of June 30, 2014, the City's investment in LAIF at fair value amounted to $75,119,623 <br /> using a LAIF fair value factor of 1.00029875. The fair value of the City's position in the pool is materially <br /> equivalent to the value of the pool shares. <br /> The City is also a voluntary participant in the San Mateo County Investment Fund that is regulated by <br /> California Government Code Section 16429 under oversight of the Treasurer of the County of San <br /> Mateo. The City reports its investment in the San Mateo County Investment Fund at the fair value <br /> amount provided by County of San Mateo. Included in the San Mateo County Investment Fund <br /> investment portfolio are US Treasury Notes, Obligations issued by agencies of the United States <br /> Government, LAIF, Corporate Notes, Commercial Paper, collateralized mortgage obligations, mortgage - <br /> backed securities, other asset - backed securities, and floating rate securities issued by federal agencies, <br /> government- sponsored enterprises, and corporations. <br /> 46 <br />