Page 82 - 2018 Comprehensive Annual Financial Report - City of Winston-Salem

All investments are measured using the market approach: using prices and relevant information by market transactions
involving identical or comparable assets or a group of assets.
Level of fair value hierarchy:
Level 1 – Inputs to the valuation methodology are quoted prices available in active markets for identical investments
as of the reporting date.
Level 2 – Inputs to the valuation methodology are other than quoted prices available in active markets, which are
either directly or indirectly observable as of the reporting date, and fair value can be determined through
the use of models or other valuation methodologies.
Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s
investment policy limits direct investment of operating funds to securities maturing no more than ve years from the date
of purchase. Also, the City’s investment policy requires purchases of securities to be laddered with staggered maturity
dates to meet the operating requirements of each individual fund and cash ow requirements of the City’s overall
operations. Reserve funds invested by external asset managers are not required to meet liquidity needs within the short-
term and may have maturities generally consistent with benchmark indices established to monitor performance of the
assets managers. City investment policy requires that proceeds of general obligation, special obligation, revenue bonds,
and limited obligation bonds shall be invested in cash and short-term xed income securities since these funds are
required to be expended within 3 years.
Credit Risk. The City’s investment policy requires that all investments subject to NCGS 159-30 in bonds or notes, including
commercial paper, bear the highest ratings of at least one nationally recognized rating service and do not bear a rating
below the highest by any nationally recognized rating service which rates the particular obligation. The City’s investment
policy requires that investments in corporate bonds under its statutorily expanded investment authority for investments
not subject to NCGS 159-30 must be investment grade (BBB or higher). The City’s investments in the NC Capital
Management Trust Government Portfolio carried a credit rating of AAAm by Standard & Poor’s as of June 30, 2018. The
City’s investments in US Agencies are rated AA+ by Standard & Poor’s and Aaa by Moody’s Investors Service. All commercial
paper of the City is rated A1 by Standard & Poor’s and P1 by Moody’s.

76 2018 AN NUAL R E P O R T