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At the end of thefirstquarter, the City’s portfolio consisted of 73% of the portfolio maturing overnight,7% <br />of the City’s portfolio matures in 1-12months,7% maturing in 12-24 monthsand 13% maturing beyond two <br />years. <br />Currently, the 3-month T-Bill is at0.07%; 2-year, at0.34%; 5-year, at1.58%; and, the 20-year is at3.63% <br />(see yield curve below).A year ago, the 20-year treasury was yielding slightly below2.5%.While rates <br />have seen some movement on the long end, there is not much yield to be gained on shorter term investments. <br />Yield Curve <br />4.00% <br />3.00% <br />2.00% <br />1.00% <br />0.00% <br />Treasury Bills <br />3 months agocurrent <br />The mostcurrent overnight rate was set on December 16, 2008 at 0.00% to 0.25%.Economic growth has <br />picked up over the last 3 months.Rates should begin to increase in 2014; however, short term rate increases <br />will most likely be moderate.The U.S. yield curve will begin to steepenover the next two years.The target <br />funds rate will most likely remain unchanged through 2014. We will continue to focus on laddering the <br />portfolio to maintain a constant cash flow and a liquid position. <br />2 <br /> <br />