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<br />.., . ~2109/99 1:.1::.10 <br />~ <br /> <br />G.-d. VI..., WCl't.e.. Use.-s <br /> <br />13032434El71 <br /> <br />141 0041009 <br />P.04 <br /> <br />'a' <br /> <br />"..... <br />.... <br />INVESTMENT <br /><< SERvICES <br /> <br />Norwe$t Inye:;tmenr Services, Inc. <br />:359 MaIn Street <br />Grand Junction, Colorado 81501.2408 <br />9701248-4859 <br />1-BOO.~Z7.5455 <br /> <br />October 21, 1 998 <br /> <br />Mr. Dick Proctor <br />Grand Valley Water Users Association <br />500 S. 10th Street . <br />Grand Jundion, CO 8150' <br /> <br />Dear Dick, <br /> <br />Per our recent telephone conversation, I am writing a brief overview of the <br />investments in U.S. Government Securities available through Norwest <br />Investment Services. Inc. U.S. Treasury billsl notes and bonds are all direct <br />obli~ations of the United States government. They are extremely liquid <br />securities and are considered the most secure debt instruments in the world. <br />The interest rates are determined by the market and are changing constantly. <br />Although the principle of U.S. Treasuries is extremely safe if held to maturity, the <br />market vslue will fluctuate with the movement of interest rates. <br /> <br />Treasury Bills (T -Bills) are short term debt instruments, always sold at a discount <br />from face value. and always maturing in one year or less. Buying bills at a <br />discount means you pay less than the face value, but receive the full face <br />amount at the time the security matures. Bills are traded by yield. For example, <br />if you by $10.000 of a one year bill at 6%, you will pay approximately $9,400. <br />Then, one year later, at maturity, you will receive $10,000. The difference <br />($600) between the amount you paid ($9400) and the maturing face value <br />amount (510,000) is the interest eamed, and is treated as ordinary income. <br />T -Bills have an excellent secondary market, making them extremely liquid. <br /> <br />Treasury notes and bonds have maturities from within a month out to 30 years. <br />"Notes" are issued with an original maturity of 10 years or less. "Bonds" are <br />issued with original maturities of beyond 10 years out to 30 years. These are <br />securities with a fixed face value.. specific maturities, and a stated coupon <br />interest rate. The coupon interest is always paid semi-annually at a consistent <br />rate throughout the life of the note or bond. Notes and bonds are sold by price, <br />net yield, and trade with accrued interest. They can be priced at a premium (you <br />may pay more than face value) or at a discount (you may pay less than face <br />value}, depending upon the current market situation. <br />