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11. Equity assets, including common stock, preferred stock, and interest-bearing obligations having an option to convert into common stock. VIL MATURITYAND LIQUIDITY The OPEB trust assets shall provide sufficient liquidity to meet the annual funding payment. VIII. PERFORMANCE MEASURES The expected long-term annual rate of return for the portfolio is targeted to be 6%, which is an actuarial assumption, until amended by the OPEB Trust Board. The portfolio will be split into two categories for investment and performance measurement purposes. The first category will include an amount equal to the expected pay-as-you-go payment for the upcoming 12-24 months (short-term portion) and the remainder will be included in the long-term category. The benchmark for investment of these OPEB funds will be based upon a blended, pro - rata portion of the appropriate indices of the funds. Ix PORTFOLIO COMPOSITION, RIS%AND DIVERSIFICATION The following are the guidelines for investments and limits on security issues, issuers and maturities as established by the OPEB Trust Board. The Investment Advisory Committee, as confirmed by the OPEB Trust Board, shall have the option to further restrict or increase investment percentages from time to time based on market conditions. Assets of the OPEB trust fund shall be invested in a broadly diversified portfolio consisting of equity, debt, and cash equivalents securities. The portfolio shall also be structured in a manner to provide broad diversification within each asset class. Additional contributions may be needed to pay near-term obligations of the OPEB Trust Fund. From time to time, the OPEB Trust Board will adopt asset allocation strategies within the ranges specified below: Short Term Investment Portion up to 100% of the portfolio: Cash and Cash Equivalents, with maturities of 180 days or less Long Term Investment Portion: Equities 0%-60%, consisting of a diversified portfolio of domestic small, mid and large cap equity funds and international equity funds Fixed Income 0%-60% Cash and Cash Equivalents 0%-100% The OPEB Trust Board is authorized by this policy to make asset allocation decisions to reallocate or redirect either contributions or investments held by the OPEB Trust Fund in order to take advantage of changing market conditions. Any move that will cause the allocation of the investment classes to vary from the above allocation percentages of any asset class requires approval by the OPEB Trust Board. 4 96