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CITY OF SAN LEANDRO NOTES TO BASIC FINANCIAL STATEMENTS For The Year Ended June 30, 2022 NOTE 2 – CASH AND INVESTMENTS (Continued) Investments Authorized by the City’s Investment Policy and California Government Code The table below identifies the investment types that are authorized for the City by the City’s Investment Policy. The table also identifies certain provisions of the California Government Code that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of the related bond documents, or investments held in the PARS Section 115 pension trust. Investment Type Maximum Maturity Maximum Percentage of Portfolio U.S. Treasury Obligations 5 years None U.S. Agency Securities 5 years None Bankers Acceptances 180 days 40% Commercial Paper 270 days 25% Negotiable Certificate of Deposit 5 years 30% Repurchase Agreements 1 year 20% Reverse Repurchase Agreements 92 days 20% Medium-Term Notes 5 years 30% Mutual Funds N/A 20% Money Market Mutual Funds N/A 20% Local Agency Investment Fund (LAIF)N/A $75 million per account Passbook Accounts 5 years None City Issued Securities N/A None Supranational Securities 5 years 30% Asset Backed Securities 5 years 20% Mortgage Backed/Pass-Through Securities 5 years 20% Collateralized Mortgage Obligations 5 years 20% Other Investment Pools N/A None Investments in Local Agency Investment Fund The City invests in the Local Agency Investment Fund (LAIF), a State of California external investment pool. The fair value is calculated by multiplying the account balance with LAIF times a fair value factor of 0.987125414 which is determined by LAIF. This fair value factor was determined by dividing all LAIF participants’ total aggregate amortized cost by total aggregate fair value. The City’s investments with Local Agency Investment Funds (LAIF) at June 30, 2022, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments included the following: •Structured Notes are debt securities (other than asset-backed securities) whose cash-flow characteristics (coupon rate, redemption amount, or stated maturity) depend on one or more indices and/or that have embedded forwards or options. •Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as CMOs) or credit card receivables. 55