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<br /> <br />\ <br />e <br /> <br /> Portfolio Maturities <br /> Maturities should be varied, with not more than twenty percent (20%) of the portfolio invested <br /> out five years (maximum term). <br /> Maturities ($ in OOO's) <br /> Annual Maturities Aggregate Maturities <br /> Investment By Cate~ory Annual Entire <br /> Xlll!r Cate~orv Amount Pct Amount Pet Portfolio <br /> 1999 Cash $ 7,630 100% <br /> FRl $ 1,195 19% <br /> Zero $ 568 18% $ 9,393 66% 66% <br /> 2000 FRl $ 1,190 22% <br /> Zero $ 271 21% $ 1,461 10% 76% <br /> 2001 FRl $ 1,100 23% <br /> Zero $ 382 20% $ 1,482 10% 86% <br /> 2002 FRl $ 896 18% <br /> Zero $ 280 20% $ 1,176 8% 94% <br />e 2003 FRl $ 490 18% <br /> Zero $ 346 21% $ 836 6% 100% <br /> ~]4.348 1l4.34:!!, <br /> <br />e <br /> <br />F.isk Characteristics <br /> <br />The risk to principal due to credit quality is low as almost all investments are either insured by, <br />or are an obligation of, the U.S. Government. Fixed rate investments, and zero coupon <br />investments, are all subject to market risk if required to liquidate on short notice. In the case of <br />fixed rate instruments and zero coupon instruments, this market risk is mitigated by an <br />investment policy to hold for the duration of a maturity. Accordingly, internal reports reflect <br />original costs. <br /> <br />Maturity Philosophy <br /> <br />. The concept of "laddering" maturities is a commonly used technique that, in this case, supports <br />an objective that overall return will tend to more nearly approximate two year Treasury Note <br />interest rates, as investments are made at then current five year intermediate term rates with <br />varying maturities. This also allows for a consistent stream of maturities and the opportunity for <br />investing in smaller, more frequently available amounts than if large amounts were invested in <br />"lumps." This is a source ofliquid funds that can either be reinvested or used for current needs <br />as appropriate. <br /> <br />3 <br />