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NOTE 2 — DEPOSITS AND INVESTMENTS (CONTINUED)
<br />C. Investments
<br />The City has the following investments at year end:
<br />Fair Value
<br />S redit Risk Measurements Interest Risk-Matiinty Duration in Years
<br />Investment Type Rating Agency Using Less Than 1 1 to 5 6 to 10 Total
<br />U S Agencies AA+ S&P Level 2 $ 75 $ 1,030 $ - $ 1,105
<br />U S Treasuries N/R N/A Level 1 7,432,425 - 7,432,425
<br />Municipal Bonds A -AAA Moodys Level 2 2,962,545 10,281,934 7,880,123 21,124,602
<br />Municipal Bonds A -AAA S&P Level 2 2,181,403 14,536,315 16,112,992 32,830,710
<br />Negotiable Certificates of Deposit N/A N/A Level 2 1,489,970 2,696,797 242,486 4,429,253
<br />Commercial Paper Al S&P Level 1 4,996,300 - - 4,996,300
<br />Investment pools
<br />Minnesota Municipal Money Market N/R N/A Amortized Cost 15,909,640 - - 15,909,640
<br />UBS Select Prime Institutional Fund AAA Moodys Net Asset Value 314,807 - - 314,807
<br />Total Investments $ 87,038,842
<br />The City's investments include investment pools managed by 4M, which is an external investment pool regulated by
<br />Minnesota Statutes and is not registered with the Securities and Exchange Commission (SEC) that follows the same
<br />regulatory rules of the SEC. The City's investments in this investment pool are measured at the net asset value per
<br />share provided by the pools, which are based on amortized cost methods that approximate fair value. The 4M Fund
<br />is sponsored by the League of Minnesota Cities. For this investment pool, there are no unfunded commitments,
<br />redemption frequency is daily, and there is no redemption notice required for the liquid class: the redemption period
<br />is 14 days for the Plus Class.
<br />The UBS Select Prime Industrial Fund includes investments primarily in short-term, high -credit -quality money market
<br />instruments that invest domestically and globally in both long and short-term common stocks across all market
<br />capitalizations. The fund aims to preserve capital, maintain liquidity and produce a competitive yield. This is an
<br />external investment pool that operates in conformity with the Securities and Exchange Commission's rules. There are
<br />no withdrawal restrictions related to the fund. The City's investments in this investment pool are measured at the net
<br />asset value per share provided by the pools that approximate fair value.
<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 counterparty
<br />to an investment transaction (typically a broker -dealer) the City would not be able to recover the value
<br />of its investments or collateral securities that are in the possession of an outside party. The City does
<br />not have a foiuial investment policy addressing this risk, but typically limits its exposure by purchasing
<br />insured or registered investments, or by the control of who holds the securities.
<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; general obligations rated "A" or better; revenue
<br />obligations rated "AA" or better; general obligations of the Minnesota Housing Finance Agency rated
<br />"A" or better; commercial paper issued by the United States corporations or their Canadian subsidiaries,
<br />rated of the highest quality category by at least two nationally recognized rating agencies, and maturing
<br />in 270 days or less; time deposits that are fully insured by the Federal Deposit Insurance Corporation
<br />or bankers acceptances of the United States banks and Guaranteed Investment Contracts guaranteed by
<br />a United States commercial bank or domestic branch of a foreign bank, or a United States insurance
<br />company, or their Canadian subsidiary, and with a credit quality in one of the top two highest categories
<br />by a nationally recognized rating agency. The City's investment policies do not further address credit
<br />risk.
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