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CITY OF ROSEVILLE, MINNESOTA NOTES TO FINANClAL STATEMENTS December 31, 2015 subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and inaturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States 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 iinancial institutions qualified as a "depository" by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000 that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers. The City's investment policy addresses credit risk beyond what is prescribed by State Statute. The City's investment policy restricts investments to only Repurchase Agreements with national or state charted banks, U.S. Treasury and U.S. Government Agencies. 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 City's investinent policy does not further address this risk, but the City typically limits its exposure by purchasing insured or registered investments, or by the control of who holds the securities. Concentration risk — This is the risk associated with investing a significant portion of the City's investment (considered 5 percent or more) in the securities of a single issuer, excluding U. S. guaranteed investments (such as Treasuries), investment pools, and mutual funds. The City's investment policy does not limit the concentration of investments. The City holds 51.4% with Federal Home Bank, 42.5% with Fannie Mae and 6.1% with Federal Farm Credit Bank. Interest rate risk — This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The City's investment policy does not address interest rate risk. The City holds all investments to maturity. 53