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<br />Fund Investments <br /> <br />.. Each Fund is specifically designed for Minnesola Municipalities. Accordingly. each Fund may <br />invest only in securities and instruments in which Municipalities are permitted to invest directly, as <br />delineated in Minnesota Statutes, Section 475.66 ("Permitted Investments"). Permitted Investments <br />include: <br /> <br />(a) Government bonds, notes, bills. mongages and other secunnes which are direct <br />obliga!ions or are guaranteed or insured issues of the United States. its agencies, its <br />instrumentalities. or organizations created by an Act of Congress. <br /> <br />(b) Any security which is a general obligation of the State of Minnesota or any of its <br />municipalities. <br /> <br />(c) Bankers' acceptances of United States banks eligible for purchase by the Federal <br />Reserve System. <br /> <br />(d) Commercial paper issued by United States corporations or their Canadian subsidiaries <br />that is of the highest quality and matures in 270 days or less. <br /> <br />. <br /> <br />(e) Deposits in a national bank or in a state bank or thrift institution insured by the Federal <br />Deposit Insurance Corporation. provided that any such deposit shall be insured. bonded. or <br />collateralized as required by law and that any such bank or thrift institution shall meet criteria <br />designated from time to time by the Trustees. <br /> <br />(f) Repurchase Agreements with "broker-dealers" (as more fully described below) and with <br />"banks" (as more fully described below). <br /> <br />1. Broker/Dealers: <br /> <br />a. The Funds may only enter into repurchase agreements with broker- <br />dealers which. in the judgment of the Investment Adviser (as defined below), <br />have a reputation for sound management and ethical business practices. <br /> <br />b. Each broker/dealer must be registered with the Securities and Exchange <br />COmmission and be a primary reponing dealer to the Federal Reserve Bank of <br />New York. <br /> <br />c. Broker/dealers must have at least $50 million in "Excess Capital". <br />"Excess Capital" is that ponion of a firm's permanent capital which is in excess <br />of the minimum capital required under the Uniform Net Capital Rule of the <br />Securities and Exchange Commission. Broker/dealer subsidiaries of companies <br />having at least $1 billion in net wonh shall also be considered creditwonhy, in <br />the event of a lack of publicly available financial information. The Investment <br />Adviser will use its best effons to monitor the creditwonhiness of <br />broker/dealers. <br /> <br />. <br /> <br />-4- <br />