NOTES TO FINANCIAL STATEMENTS NOTE 2. DEPOSITS AND INVESTMENTS (CONTINUED) Retirement Plan for Employees of Georgia Ports Authority (Continued) Fair Value Measurements (Continued):The Plan also holds investments in immediate participation guarantee (IPG) contracts in the amount of $10,049 and $7,348 as of June 30, 2020 and 2019, respectively, consisting of both an annuity allocation amount (a minimum balance required by contract to provide for annuity benefits guaranteed by the insurance company) and an unallocated amount (the amount in excess of the annuity allocation). The Plan’s investment in IPG contracts is valued as described in Note 1 in accordance with GASB Statement No. 31, and is excluding from reporting in the fair value hierarchy. Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Plan will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. At June 30, 2020 and 2019, the Plan was not exposed to custodial credit risk with respect to its investments. Custodial credit risk for deposits is the risk that in the event of a bank failure, the Plan may not be able to recover its deposits. At June 30, 2020 and 2019, the Plan was not exposed to custodial credit risk with respect to its deposits. Rate of Return: For the years ended June 30, 2020 and 2019, the annual money-weighted rate of return on pension plan investments, net of pension investment expense, was 9.10% and 1.20%, respectively. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. At June 30, 2020 and 2019, the Plan had $325,170 and 289,263, respectively, invested in the following types of investments as categorized by credit risk and interest rate risk: Equities - $217,727 and $193,292, Fixed Income - $95,210 and $85,420, Alternative Funds - $2,184 and $3,203, and Immediate Participation (IPG) Contracts - $10,049 and $7,348. Each investment category does not have a credit quality rating or a weighted average maturity. Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the Plan. The Plan is subject to asset class restrictions and allocation maximums as defined under Georgia Code Section 47-20-80, et seq. As an eligible large retirement system, the Plan may invest up to 5% of Plan assets in “Alternatives” such as private placements or limited partnerships. It is the Plan’s investment policy that fixed income securities be limited to: (a) those rated as investment grade by a nationally recognized rating agency; (b) a maximum of 5% for a single security issue and a maximum of 15% for a single industry group; and (c) obligations of corporations that have a market capitalization of at least $100 million, or the remaining outstanding principal value of the issue must be at least $100 million. 29
