CCP 03-11-1996 - Laserfiche WebLink

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I . I Ie . Risk Characteristics The risk to principal due to credit quality is slight as almost all investments are either . insured by, or are an obligation of, the US Government. Fixed rate investments, and zero coupon investments are all subject to market risk if required to liquidate on short notice. In the case of fixed rate instruments coupon and zero instruments this market risk is mitigated . by a philosophy to hold for the duration of a maturity_ Accordingly, internal reports reflect original costs. . Maturity Philosophy I The concept of "Iaddering" maturities is a commonly used technique that, in this case, supports an objective that overall return will tend to more nearly approximate two year short term interest rates, as investments are made at then current five year intermediate I term rates with varying maturities. This also allows for a consistent stream of maturities and the opportunity for investing in smaller, more frequently available amounts than if large amounts were invested in "lumps". This is a source of liquid funds that can either be .. reinvested or used currently if appropriate. The report shall explain the total investment return and compare the return and I compare the return with budgetarY expectations. The total return for 1995 was $430,624 on an average portfolio balance (including cash) of I $6,589,938 which equates to an average yield of 6.53% for the year. This compares favorably to 1995 interest income expectations in the range of 5.5% to 6.0%_ The 1995 I yield compares favorably to the benchmark 1995 average rate for a two year US Treasury note of6.12%_ I 1995 interest income of $430,624 resulted in a $184,324 positive deviation (74-8%) against budget. The primary reasons for this performance were the reversal of 12/31194 valuation reserves for the Piper mutual fund investment, higher than expected yields and a . larger than expected portfolio balance_ . . .- 3 .