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NOTE 2 —DEPOSITS AND INVESTMENTS (CONTINUED) <br />C. Investments <br />The City has the following investments at year-end: <br />Interest Risk <br />—Maturity Duration in Years <br />Fair Value <br />No <br />Credit <br />Risk <br />Measurements <br />Maturity <br />Less <br />Investment Type <br />Rating <br />Agency <br />Using <br />Date <br />Than 1 <br />1 to 5 <br />Total <br />Municipal bonds <br />AA <br />Moody's <br />Level <br />$ — <br />$ — <br />$ 144,163 <br />$ 144,163 <br />Municipal bonds <br />AA <br />S&P <br />Level 2 <br />— <br />523,104 <br />— <br />523,104 <br />Negotiable certificates of deposit <br />N/R <br />N/A <br />Level 2 <br />— <br />— <br />399,210 <br />399,210 <br />U.S agency securities <br />N/R <br />N/A <br />Level 2 <br />— <br />— <br />549,533 <br />549,533 <br />Investment pools/mutual funds <br />Aaa <br />Moody's <br />NAV <br />30,575 <br />— <br />— <br />30,575 <br />Total investments <br />$ 30,575 <br />$ 523.104 <br />S 1.092.906 <br />S 1.646,585 <br />N/R — Not Rated <br />N/A — Not Applicable <br />NAV — Net Asset Value, No Unfunded Commitments, No Redemption Restrictions <br />Investments are subject to various risks, the following of which are considered the most significant: <br />Custodial Credit Risk — For investments, this is the risk that in the event of a failure of the <br />counterparty to an investment transaction (typically a broker -dealer), the City would not be able to <br />recover the value of its investments or collateral securities that are in the possession of an outside <br />party. The City's investment policy does not further address this risk. <br />Credit Risk — This is the risk that an issuer or other counterparty to an investment will not fulfill its <br />obligations. Minnesota Statutes limit the City's investments to direct obligations or obligations <br />guaranteed by the United States or its agencies; shares of investment companies registered under the <br />Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the <br />two highest rating categories by a statistical rating agency, and all of the investments have a final <br />maturity of 13 months or less; general obligations rated "A" or better; revenue obligations rated "AA" <br />or better; general obligations of the Minnesota Housing Finance Agency rated "A" or better; bankers' <br />acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial <br />paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality <br />category by at least two nationally recognized rating agencies, and maturing in 270 days or less; <br />Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of <br />a foreign bank, or a United States insurance company, and with a credit quality in one of the top <br />two highest categories; repurchase or reverse purchase agreements and securities lending agreements <br />with financial institutions qualified as a "depository" by the government entity, with banks that are <br />members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a <br />primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or <br />certain Minnesota securities broker -dealers. The City's investment policy does not further address <br />credit risk. <br />►112 <br />