COG Comprehensive Annual Financial Report

weighted average maturity of its investments to less than 3.5 years. Also, the City purchases securities in a structured ladder with stated maturity dates to limit interest rate risk. The State Treasurer’s STIF is unrated and had a weighted average maturity of 1.4 years at June 30, 2018. The State Treasurer’s BIF is unrated and had a weighted average maturity of 8.24 years at June 30, 2018. Credit Risk North Carolina General Statute 159-30 limits investments in U.S. Governmental Agencies and commercial paper to those with top ratings issued by NRSRS. The City has no formal investment policy regarding credit risk, however in practice, it follows NCGS 159-30, and in effect the City limits its investment types to those with top ratings issued by NRSRS. As of June 30, 2018, the City had investments in the NCCMT Government Portfolio, which is rated AAAm by Standard and Poor’s, and in U. S. Government Agencies, all of which were rated AAA by Standard and Poor’s. The City also had investments in the NCCMT Term Portfolio, which is not rated. Investments in commercial paper by the City are rated either A1/P1 by Standard and Poor’s or Moody’s Investors Service. The State Treasurer’s STIF is unrated and authorized under NC General Statute 147-69.1. The State Treasurer’s STIF is invested in highly liquid fixed income securities consisting primarily of short to intermediate term treasuries, agencies, and money market instruments. The BIF is unrated and authorized under NC General Statute 147-69.1 and 147-69.2. The State Treasurer’s BIF is invested in high quality debt securities eligible under G.S. 147- 69.2(b)(1)-(6). Custodial Credit Risk For an investment, the custodial risk is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City has no formal policy on custodial credit risk, but the City utilizes a separate third party custodial trust agent for all book-entry transactions, all of which are held in the City’s name. Concentration of Credit Risk The City’s investment policy does not restrict the level of investment in money markets or federal agencies, but it restricts investment in commercial paper or bankers’ acceptances of a single issuer to no more than 10% of the total investment portfolio. As of June 30, 2018, the City owned the following investments, which exceed 5% of the City’s total investments, along with the percentage noted for each compared to the total portfolio:

Commercial Paper

6.04% 8.18% 12.53% 32.01% 16.18% 17.29%

Federal National Mortgage Association

Federal Home Loan Bank

Federal Home Loan Mortgage Corporation

Federal FarmCredit Bank NCCMT Government Portfolio

At June 30, 2018, the City’s OPEB Trust had $20,553,581 invested in the State Treasurer’s Local Government Other Post- Employment Benefits (OPEB) Trust pursuant to G.S. 159-30.1. The State Treasurer’s OPEB Trust may invest in public equities and both long-term and short-term fixed income obligations as determined by the State Treasurer pursuant to the General Statutes. At year-end, the State Treasurer’s OPEB Trust was invested as follows: State Treasurer’s STIF 3.92%; State Treasurer’s BIF 31.21% and BlackRock’s MSCI ACWI EQ Index Non-Lendable Class B Fund 64.87% (the equities were split with 53.72% in domestic securities and 46.28% in international securities). The City’s LEOSSA Trust had $6,776,899 invested in the State Treasurer’s STIF at June 30, 2018. At year-end, the State Treasurer’s LEOSSA Trust was invested as follows: State Treasurer’s STIF 0.12%; State Treasurer’s BIF 37.35% and BlackRock’s MSCI ACWI EQ Index Non-Lendable Class B Fund 62.53%.

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