4. Cash and Cash Equivalents and Investments:

Substantially all cash and cash equivalents of the governmental fund types and certain enterprise, fiduciary funds and component
units are maintained by the State Treasurer on a pooled basis. The State Treasurer's Office invests short-term cash balances on a daily
basis primarily in repurchase agreements, U.S. Government obligations and money market mutual funds. Under the State Finance
and Procurement Article of the Annotated Code of Maryland, Title 6, Subtitle 2, the State Treasurer may only invest in the following:

• Any obligation for which the United States Government has pledged its faith and credit for the payment of principal and interest.

• Any obligation that a United States agency issues in accordance with an act of Congress.

• Repurchase agreements that any of the above obligations secure.

• Certificates of deposits of Maryland financial institutions.

• Banker's acceptances.

• Money market mutual funds.

• Commercial paper.

• Maryland Local Government Investment Pool.

In addition, bond sale proceeds may be invested in Municipal securities. A significant portion of the investments maintained by the
State Treasurer consists of repurchase agreements. Collateral must be at least 102% of the book value of the repurchase agreements and
must be delivered to the State Treasurer's custodian for safekeeping. Investments maturing within 90 days of purchase are reported at
amortized cost in the financial statements as cash and cash equivalents.

Investments are classified as to credit risk by the three categories described below.

Category 1 Insured or registered, with securities held by the State or its agent in the State's name.

Category 2 Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the State's name.

Category 3 Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent, but not in
the State's name.

All of the State's investments held at year-end are subject to classification of credit risk except for those investments where the
State owns units of a whole rather than specific securities, which by their nature are not subject to risk categorization. The State's
pooled investments that are not subject to risk categorization include the Maryland Local Government Investment Pool, annuity
and guaranteed investment contracts, mutual funds, real estate, venture capital and investments held by borrowers under securities
loans with cash collateral.

A. Cash and Cash Equivalents:

The bank deposits of the governmental fund types, expendable trust, Mass Transit Administration Pension Plan and agency funds of
the Primary Government as of June 30, 2000, were insured or collateralized with securities held by the State or its agent in the State's name.

As of June 30, 2000, cash in the amount of $4,739,000 was maintained with fiscal agents and represents resources transmitted to
bond paying agents for which coupons have not been presented. This cash was invested in mutual funds that invest only in U.S.
Treasury and agency obligations.

Reported as cash and cash equivalents in the governmental fund types are repurchase agreements aggregating $1,955,769,000
(fair value of collateral of $2,252,219,000); a U.S. Treasury bill of $532,000 (fair value of $532,000) and FHLM notes totaling
$217,387,000 (fair value of $217,555,000). The collateral for the repurchase agreements is held by the State or its agent in the State's
name. Also, reported as cash and cash equivalents are money market mutual funds totaling $587,753,000.

The bank deposits of the enterprise funds of the primary government as of June 30, 2000, were entirely insured or collateralized
with securities held by the funds or its agents in the funds' names. Cash and cash equivalents of the enterprise funds as of June 30,
2000, was $186,383,000 which represented $9,658,000 in cash deposits insured by Federal depository insurance or collateralized by
securities held in trustee bank accounts in the enterprise funds' name and $176,725,000 in money market mutual funds.

As of June 30, 2000, cash and cash equivalents of the Pension Trust Funds, the agency funds, and the Deferred Compensation
Plan totaled $1,831,824,000, which represented cash deposits of $61,150,000 and cash equivalents of $1,770,674,000. These cash
equivalents, which are investments with original maturities of less than 90 days, consisted of $995,165,000 of commercial paper,
$10,017,000 of repurchase agreements and $765,492,000 in global pooled short-term funds carried at market. All cash equivalents
are categorized as category 1 for investment purposes except for the global pooled short-term investments which are not categorized
because they are not evidenced by securities that exist in physical or book entry form. Of the $61,150,000 carrying value of deposits
as of June 30, 2000, the amount of $18,389,000 was pooled by the State, $48,776,000 was the general fund advance to pay for
payroll taxes and fringe benefits and the bank balance of $91,537,000 was uninsured and uncollateralized and is a category 3 asset.

Cash and cash equivalents of the component units as of June 30, 2000, was $82,266,000 which is pooled by the State except for
$7,156,000. The bank balance of cash deposited with financial institutions was $11,710,000 of which $8,827,000 was insured by
Federal, private or foreign national government depository insurance, or was collateralized by a pledge of U.S. Treasury obligations
held by the component unit's agent in the component unit's name. The remaining $2,883,000 is categorized as risk category 3,
$2,329,000 of which is uninsured and unregistered, and collateralized with securities held by the pledging financial institutions
agent, but not in the component unit's name and $554,000 is uninsured and uncollateralized.

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