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LA PORTE AREA WATER AUTHORITY EXHIBIT B-4 <br />NOTES TO THE FINANCIAL STATEMENTS (continued) <br />Note 4 - Temporary Investments <br />Temporary investments represent the Authority's equity interest in the City's investment pool. At year end a <br />portion of the Authority's cash and temporary investments were restricted as follow: <br />The carrying amount for temporary investments, at September 30, 2012, was $1,212,769, which is fair <br />value. This represents 8.62% of the City's total portfolio. <br />Pooled investments with the City consist of obligations of the United States and its agencies, certificates of <br />deposit and investment pools in accordance with state statutes and the City's investment policies. Securities <br />are registered and held by their agent in the City's name. The Authority's portion of the investment pool is <br />4.023% Interest earnings are allocated on the same pro-rata basis. The investment pool is not registered <br />with the SEC or subject to any regulatory oversight. The fair value of the position in the pool is the same as <br />the value of pool shares. The City has adopted GASB Statement No. 31, which establishes accounting and <br />reporting standards for all of the City's investments. In accordance with Statement No. 31, the City reports <br />all investments at fair value, except for "money market investments" and "20-like pools". 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 the SEC's Rule 2a7 of the Investment Company Act of 1940, such as <br />TexPool and LOGIC, are reported using the pools' share price. <br />Interest Rate Risk <br />The Authority's investment policy specifies that the maximum stated maturity, from the date of purchase for <br />any individual investment may not exceed 5 years and the maximum dollar -weighted average maturity for <br />the pooled fund group may not exceed 2 years. At year end, the Authority's dollar -weighted average <br />maturity of the investment portfolio was as follows: <br />Investment Type <br />Logic <br />Texpool <br />Certificates of Deposit <br />Federal Home Loan Mortgage Corp (FHLMC) <br />Federal Home Loan Bank (FHLB) <br />Federal Farm Credit Bank (FFCB) <br />Portfolio Weighted Average Maturity <br />15 <br />Weighted Average <br />Maturity (Days) <br />50 <br />41 <br />74 <br />810 <br />271 <br />678 <br />144 <br />