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NOTE 2 —DEPOSITS AND INVESTMENTS (CONTINUED) Tnves}mero are.subject to various:risks, the following of which ale considered the most significant: Custodial Credit Risk — For investments, this -is the risk that in -the event of .a. failure :of the counterparty.to. an investment transaction (typically a broker -dealer), the City would not be able to recover the .value of its investments or collateral securities that are in the possession of an .outside party. The Ciget investment policy does not further address this risk: Credit Risk— This is the risk that anIssuer or otherr-counterparty to an investment will: not fulfill its-. obligations.. Minnesota Statutes limit:.the City's: investments to direct obligations or obligations. guaranteed by the United States or its agencies; shares. of investment companies registered udder the Federal: investment Company Act of 194.0 that receive the highest creditrating, are rated in one of the two highest rating categories by a statistical ratirig agency, and all of the. investments have a final maturity. of*13 months or 1ess;.general obligations rated*"A" or better; revenue obligations rated "AA" or bettec;,.gerteral dbiigatigns:of the Minnesota Housing Finance Agency rated "A'? or better; bankers' acceptances of United States banks. eligible for purchase. by the Federal Reserve System; :commercial paper issued by United States. corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or .less; Guaranteed Investment Contracts. guaranteed by a Unitedgtates commercial bank; domestic branch of a foreign bank, or a. United States insurance. company; -and with a credit quality .in one. of the. top two highest categories; repurchase or reverse purchase, agreements and securities lending; agreements with 'financial institutions. qualified. as a "depository by the government entity, with battkS that are .mgmbers of the .F.ederal Reserve System with capitalization exceeding $1.0,000,000; that are. a .primary reporting dealer in. U.S: governtttent securities to the Federal Reserve Bank of New York; or certain Minnesota securities brokerdealers. The C-Ity.i. investment policy does not further address credit: risk. Concentration Risk — This is the -risk `associated 'with investing a signifim. t portion ofthe -City- s investments (considered 5.0 percent or more) in the securities of a single issuer, excluding U:S. guaranteed investments (-such as treasuries); -itwestraent pools, and mutual funds. The City's investment policy states that. no more than 5.0 percent of the overall :portfolio may invested in the securities.of.a.single issuer, except fgr.tlte.securifies of the United:States government, .or an external investment pool. The. following is a list of investments; :wh'rcli individually comprise more flian 5.0percent.of the City"s total. investments: Goldman Sachs Bank — certificates of deposit $ 40,277 7:2%d Comewty Capital Bank- certificates of deposit $ 122,459 21:7%0 New York City. — municipal. bonds $. 159056 28..2%0 Texas LXch nge $ank'—:certificates of deposit. $ 241:783 42.9% Intemt Rate Risk— This'is the risk of potential variability'in the flair value: of fixed rate investments resulting from changes in interest rates (the longer the pejiod for which an. interest. rate is fixed, the .greater the. risk). The City's investment policy does -not further address interest rate.risk. -26