Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2008-10 ADM
MINUTES OF THE REGULAR MEETING OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, October 8, 2008, at 5:00 P.M. A meeting of the Administration Committee of the Orange County Sanitation District was held on October 8, 2008, at 5:00 p.m., in the Sanitation District's Administrative Office. Following the Pledge of Allegiance, a quorum was declared present, as follows: ADMINISTRATION COMMITTEE STAFF PRESENT: MEMBERS: Jim Ruth, General Manager DIRECTORS PRESENT: Bob Ghirelli, Assistant General Manager Mark Waldman, Chair Lorenzo Tyner, Director of Finance and Phil Luebben, Vice Chair Administrative Services Jon Dumitru Lilia Kovac, Committee Secretary Jim Ferryman Norbert Gaia Don Hansen Jeff Reed Chris Norby Mike White, Controller Brad Reese Bob Geggie Christina Shea Juanita Skillman Sal Tinajero Jim Winder OTHERS PRESENT: Doug Davert, Board Chair Brad Hogin, General Counsel Larry Crandall, Board Vice Chair Derek Fan Rudy Pimentel DIRECTORS ABSENT: Ed Soong Darryl Miller Christine Telish E p p THFIl fflLERT THFEI BOARD ORANGE COUNTY SANITATION DISTRICT PUBLIC COMMENTS OCT 2 2 2000 There were no public comments. REPORT OF THE COMMITTEE CHAIR BY0 Chair Waldman did not give a report. REPORT OF THE GENERAL MANAGER General Manager, Jim Ruth, referred to a letter he recently sent to the directors addressing the current financial crisis and steps being taken to minimize the effects to the Sanitation District by imposing a hiring freeze; delay on debt issuance; deferral of CIP projects to help mitigate potential rate increases; defer operating equipment and materials; and reduction in travel. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES Lorenzo Tyner, Director of Finance and Administrative Services, introduced Christine Telish of Minutes of the Administration Committee October 8, 2008 Page 2 PIMCO, the District's Investment manager,who provided the Committee with an overview of the OCSD investment portfolio and answered questions regarding the current status of the financial markets. PIMCO noted that the District's investment portfolio Is traditional in nature and has done well against the applicable benchmarks. REPORT OF GENERAL COUNSEL Brad Hogin, General Counsel, did not give a report. (9) CONSENT CALENDAR ITEMS Consideration of motion to approve all agenda items appearing on the Consent Calendar not specifically removed from same, as follows: 1. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the September 10, 2008 meeting of the Administration Committee. 2. ADM08-31 MOVED, SECONDED AND DULY CARRIED: Authorize preparation of bond documents for the issuance of up to$200 million in fixed-rate certificates of participation (COP)debt; and, direct staff to report back to the Committee for final approval of the bond documents. END OF CONSENT CALENDAR INFORMATIONAL ITEMS a. ADM08-32 Alternative Billing Methodologies. Staff was directed to investigate alternative billing methods that might result in a more equitable billing methodology for sewer services to ratepayers. A more equitable basis for billing would be based on sewer effluent meters or metering readings of water consumption. After researching other public sewer agencies, none could be found that bill all of their customers based on sewer effluent alone. In addition, the cost to purchase, install, maintain, and perform periodic meter reads would exceed the savings. It was also determined that billing by metered water consumption was not feasible as the vast majority of the 17 water providers within the District's service area would not release water consumption data to the District without authorization from each individual water customer that totals approximately 650,000. (12) CLOSED SESSION There was no closed session. Minutes of the Administration Committee October 8, 2008 Page 3 (13) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were none. (14) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (15) ADJOURNMENT AND FUTURE MEETING DATES The Chair declared the meeting adjourned at 5:56 p.m. The next regular Administration Committee meeting is scheduled for November 12, 2008, at 5:00 p.m. Submitted by: &� Lilia Kovac Committee Secretary H^depMgendaWdmin G=rdttee%20081100B1100808 Admin MinuMAm Distributed at the Fin nce & Administration C� & t)Sz Meeting FISCAL YEAR 200$-Og Investment Policy L �R►r t$'T •� A� r • �T M I A t ,y $A Irgr �S 9 2 p Orange County Sanitation District -we protect public health and the environment by providing effective wastewater collection,treatment,and recycling.' oreCr/Ne THE EN�\Poa�� Q ORANGE COUNTY SANITATION DISTRICT INVESTMENT POLICY STATEMENT Proposed for Review and Approval By Administration Committee On July 9, 2008 And for Adoption By Board of Directors _ On July 23, 2008 Z y�}�///n/$ DO AssocuTioN Or Pt muc TREAstl>ttEm UNIteO SrAlei a CANADA ra April 25, 2005 Mr. Michael White, Controller Orange County Sanitation District PO Box 5127 Fountain Valley CA 92728 Dear Mr. White, Congratulations on your successful completion of the Investment Policy Certification process through the Association of Public.Treasurers-United States & Canada. A team of three reviewers from the Investment Policy Certification Committee reviewed your Investment Policy and have now approved your District's Policy for the APT-US&C Investment Policy Certlflcate of Excellence Award. You are invited to attond tho APT-US&C Annual Conference to receive your plaque. Your plaque will be presented by the President of APT and the Investment Policy Certification Chairman. Once again congratulations on creating an excellent policy and attaining this award. . The annual conference will be held in Chicago this year,from July 31 through August 3, we hope you will be able to attend. You will be receiving information on the conference from the APT-USSC in the near future. .. Congratulations on a Job well done[ .. Sincerely, Ernio O'Dcll investment Policy Certification Chairman 1029 Vei,vid Avenue.NW, Suite 710,Washington,DC 200D0 Phone 202.737-0060 fax 202-737.0002 vr+wvAptu9Gag TABLE OF CONTENTS Section Toolc page 1.0 Policy...................................................................................... 1 2.0 Scope..................................................................................... 1 3.0 Standard of Prudence ............................................................ 1 4.0 Investment Objectives............................................................2 5.0 Delegation of Authority...........................................................2 6.0 Ethics and Conflicts of Interest...............................................3 7.0 Authorized Financial Dealers and Institutions ........................3 r 8.0 Authorized and Suitable Investments.....................................5 r 9.0 Collateralization......................................................................9 10.0 Safekeeping and Custody......................................................9 11.0 Diversification.........................................................................9 r 12.0 Maximum Maturities..............................................................11 13.0 Internal Control......................................................................11 r 14.0 Performance Objectives and Benchmarks............................12 r 15.0 Reporting...............................................................................12 16.0 Investment Policy Adoption and Revision .............................13 r Appendix A. Summary of Investment Authorization B. Treasury Management Procedures C. Investment Manager Certification D. Investment Pool Questionnaire (LAIF) E. Board Resolution No. OCSD-08-13, Authorizing the Districts Treasurer to Invest and/or Reinvest District Funds, and Adopting Investment Policy and Performance Benchmarks r F. Monthly& Quarterly Investment Program Monitoring Reports r G. Sections of the California Government Code Pertinent to Investing Public Funds H. Glossary of Investment Terms r N r ORANGE COUNTY SANITATION DISTRICT INVESTMENT POLICY STATEMENT r 1.0 Policy: r It is the policy of the Orange County Sanitation District (OCSD)to invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonably r anticipated operating expenditure needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the investment of public funds. r 1.1. This Investment Policy is set forth by OCSD for the following purposes: 1.1.1. To establish a clear understanding for the Board of Directors, r OCSD management, responsible employees and third parties of the objectives, policies and guidelines forthe investment of the OCSD's idle and surplus funds. 1.1.2. To offerguidance to investment staff and any external investment advisors on the investment of OCSD funds (see Appendix "A"). r 1.1.3. To establish a basis for evaluating investment results. 1.2. OCSD establishes investment policies which meet its current investment goals. OCSD shall review this policy annually, and may change its policies as its investment objectives change. r _ 2.0 Scope: This Investment Policy applies to all financial assets of OCSD; except for the proceeds of OCSD's capital projects financing program, which are invested in accordance with r provisions of their specific bond indentures; and such otherfunds excluded by law or other Board-approved covenant or agreement. r These funds are accounted for by OCSD as Enterprise Funds as represented in OCSD's Comprehensive Annual Financial Report. r 3.0 Standard of Prudence: The standard of prudence to be used by OCSD internal staff, and any authorized investment advisor(s), shall be as described in Section 63600.3 of the California Government Code as follows: Except as provided in subdivision (a) of Section r 27000.3, all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent r investor standard.When investing, reinvesting, purchasing, acquiring,exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the r Page 1 of 14 r general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law. .r 4.0 Investment Obiectives: L+ The primary objectives of OCSDs investment activities, in priority order, and as described in Section 53600.5 of the California Government Code, shall be: 6W 4.1 Safety: The safety and preservation of principal is the foremost objective of the investment program of OCSD. Investments shall be selected in a L manner that seeks to ensure the preservation of capital in OCSD's overall portfolio. This will be accomplished through a program of diversification, more fully described in Section 11.0, and maturity limitations, more fully described in Section 12.0, in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 61 4.2 Liquidity:The investment program will be administered in a mannerthatwill ensure that sufficient funds are available for OCSD to meet its reasonably u anticipated operating expenditure needs. 4.3 Return on Investments: The OCSD investment portfolio will be structured and managed with the objective of achieving a rate of return throughout budgetary and economic cycles, commensurate with legal, safety, and liquidity considerations. u 5.0 Delegation of Authority: L. 5.1 Authority to manage OCSD's investment program is derived from the California Government Code Sections 53600 at seq. and Sections 53635 at seq. The Board of Directors hereby delegates management responsibility for the OCSD investment program to its Director of Finance and Administrative Services/Treasurer,who shall establish written procedures for the operation of the investment program, consistent with this Policy. The u Controller/Assistant Treasurer shall be responsible for day-to-day administration, monitoring, and the development of written administrative procedures forthe operation of the investment program, consistent with this 6+ Policy. The current treasury management procedures are presented in _ Appendix "B" No person may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Treasurer. The Treasurer shall be responsible for all transactions undertaken by OCSD internal staff, and shall establish a system of controls to regulate the activities of internal staff and external investment advisors L engaged in accordance with Section 5.3. w Page 2 of 14 L, 5.2 The administrative procedures for the operation of OCSD's investment program will provide for, but not be limited to, the following: 5.2.1 Formats for monthly and quarterly reports to the Administration Committee, and the Board of Directors. r 5.2.2 Compliance with generally accepted accounting principles of the Government Accounting Standards Board. 5.2.3 Establishment of benchmarks for performance measurement. _ 5.2.4 Establishment of a system of written internal controls. 5.2.5 Establishment of written procedures for competitive bids and offerings of securities that may be purchased or sold by internal OCSD staff. 5.2.6 Establishment of a Desk Procedures Manual for treasury operations and management. 5.3 The Board of Directors of OCSD may, in its discretion, engage the services of one or more registered investment advisors to assist in the management of OCSD's investment portfolio in a manner consistent with OCSD's objectives. Such external investment advisors, which shall be selected through a competitive process, shall be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such advisors must be registered under the Investment Advisers Act of 1940, or r be exempt from such registration. r 6.0 Ethics and Conflicts of Interest: 6.1 Officers and employees of OCSD involved in the investment process shall r refrain from personal business activities that could conflict with proper execution of OCSD's investment program,or which could impair their ability to make impartial investment decisions. Employees and investment officials r shall disclose to the General Manager any material financial interests in financial institutions that conduct business within OCSD's boundaries, and they shall further disclose any large personal financial/investment positions, r the performance of which could be related to the performance of positions in OCSD's portfolio. r 7.0 Authorized Financial Dealers and Institutions: 7.1 For investment transactions conducted by OCSD internal staff,the Treasurer will maintain a list of financial institutions authorized to provide investment r services to OCSD, including "primary"or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform Net Capital rule), and Federal or State of California chartered banks. No public deposit r Page 3 of 14 r 6 shall be made except in a qualified public depository as established by State law. All financial institutions which desire to become qualified bidders for investment transactions with OCSD must supply the following for evaluation by the Treasurer: V 7.1.1. Audited financial statements for the institution's three (3) most recent fiscal years. r 7.1.2. A statement,in the format prescribed by the Government Finance Officers Association (GFOA), certifying that the institution has reviewed L OCSD's Investment Policy and that all securities offered to the Districts shall _ comply fully and in every instance with all provisions of the California Government Code and with this Investment Policy. The current statement is 6+ presented in Appendix "C" 7.1.3. A statement describing the regulatory status of the dealer,and the �+ background and expertise of the dealer's representatives. Selection of financial institutions, broker/dealers, and banks authorized to 6 engage in transactions with OCSD shall be made through a competitive process. An annual review of the financial condition of qualified institutions will be conducted by the Treasurer. 6 7.2 Selection of broker/dealers used by external investment advisors retained by OCSD, shall be in compliance with contract provisions between OCSD and any external investment advisors,and shall be in substantially the following form: V Use of Securities Brokers: Neither the Investment Advisor nor any parent, subsidiary or related firm shall act as a securities broker with respect to any y purchases or sales of securities which may be made on behalf of OCSD, provided that this limitation shall not prevent the Investment Advisor from - utilizing the services of a securities broker which is a parent, subsidiary or related firm, provided such broker effects transactions on a "cost only" or "nonprofit" basis to itself and provides competitive execution. The Investment Advisor shall provide the Districts with a list of suitable u independent brokerage firms (including names and addresses)meeting the requirements of Government Code Section 53601.5, and, unless otherwise directed by OCSD, the Investment Advisor may utilize the service of any of L such independent securities brokerage firms it deems appropriate to the extent that such firths are competitive with respect to price of services and - execution. y u Page 4 of 14 u 8.0 Authorized and Suitable Investments: All investments shall be made in accordance with the California Government Code including Sections 16429.1 et seq., 53600 etseq., and 53684, and as described within this Investment Policy. Permitted investments under this Policy shall include: r 8.1 Securities, obligations, participations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by the US Government, a federal agency,or a US Government-sponsored enterprise pursuant to Section 53601 (a) of the California Government Code. Investment in mortgage-backed bonds and CMOs is not governed by this ,. Section 8.1, even if such bonds are issued by agencies of the US Government. See Section 8.2 for conditions of purchase of mortgage- backed securities. See Section 8.12 for conditions of purchase of CMOs. d 8.2 Mortgage-backed securities issued by an agency of the US Government, which are backed by pools of mortgages guaranteed by the full faith and credit of the U.S. Government,or an agency thereof. Purchase of mortgage derivatives, which include interest-only payments (IOs) and principal-only payments (POs); inverse floaters, and RE-REMICs (Real Estate Mortgage .. Investment Conduits), is hereby prohibited. 8.3 Commercial paper of "prime" quality and rated TV by Moody's Investor .. Services (Moody's), and rated"A1"by Standard&Poor s Corporation(S&P), and issued by a domestic corporation organized and operating in the United States with assets in excess of $500 million and having a rating of "A" or better on its long-term debt as provided by Moody's or S&P. Purchases of eligible commercial paper may not exceed 270 days to maturity from the date of purchase. Purchases of commercial paper shall not exceed 15% of the market value of the portfolio, except that a maximum of 25% of the market value of the portfolio may be invested in commercial paper, so long as the average maturity of all commercial paper in the portfolio does not exceed 31 days. No more than 5% of the market value of the portfolio, or 10% of the issuers outstanding paper, may be invested in commercial paper issued by any one (1) eligible corporation. r 8.4 Banker's acceptances issued by institutions, the short-term obligations of which are rated a minimum of TV by Moody's, or "Al" by S&P provided that: (a) the acceptance is eligible for purchase by the Federal Reserve System; (b)the maturity does not exceed 180 days; (c)no more than 40%of the total portfolio may be invested in bankers acceptances; and(d)no more than 30% of the total portfolio may be invested in the bankers acceptances of any one (1) commercial bank. 8.5 Medium term (or corporate) notes of a maximum of five(5)years maturity issued by corporations organized and operating within the United States, or issued by depository institutions licensed by the United States,or any state, and operating within the United States with assets in excess of$500 million, and which is rated in a rating category of"A"or better on its long-term debt Page 5 of 14 r as provided by Moody's or S&P. Notes eligible for investment under this section shall be rated at least "AX or better by Moody's, or"A-"or better by S&P. If,at the time of purchase, an eligible note is rated in a rating category of "A" or better by only one rating agency, the note shall also be rated at least "BBB" by the other rating agency. If, after purchase, the rating of an eligible note in a rating category of"A"or better, is downgraded to"BBB,"the v external investment advisor shall notify the District of the downgrade, and , shall present an analysis and recommendations as to the disposition of the note consistent with the investment objectives of this Investment Policy. The y above restrictions pertain to the "direct issuer" and do not extend to the parent corporation of the direct issuer. No more than 35% of the portfolio may be invested in both medium term notes, as described here in 8.5, and W notes, bonds, or other obligations, as described in 8.6. 8.6 Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by California Government Code Section 53651 as eligible securities for the purpose of L securing local agency deposits having a market value at least equal to that required by California Government Code Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank that is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordancewith the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. No more than 35%of the portfolio may be invested in securities described in L 8.5 and 8.6. 8.7 Shares of mutual funds investing in securities permitted under this policy and under Section 53601 (k)of the California Government Code. Such funds must either: (1) attain the highest ranking, or the highest letter and numerical rating, provided by not less than two of the three largest ` nationally recognized rating services; or(2) have an Investment Advisor registered with the Securities and Exchange Commission with not less than five (5) years of experience investing in the securities and obligations L authorized under this Policy and under California Government Code Section 53601, and with assets under management in excess of$500 million. The purchase price of shares of beneficial interest purchased w pursuant to this policy, and the California Government Code may not include any commission that the companies may charge, and shall not exceed 15% of the District's surplus money that may be invested pursuant to this section. However, no more than 10% of the District's surplus funds may be invested in shares of beneficial interest of any one (1) mutual fund pursuant to this section. d v Page 6 of 14 V 8.8 Certificates of deposit: 8.8.1 Secured (collateralized) time deposits issued by a nationally or state-chartered bank or state or federal savings and loan association, as defined by Section 5102 of the California Financial Code, and having a net .. operating profit in the two(2)most recently completed fiscal years. Collateral must comply with Chapter 4, Bank Deposit Law, Section 16500 at seq.,and Chapter 4.5, Savings and Loan Association and Credit Union Deposit Law, Section 16600 et seq., of the California Government Code. 8.8.2 Negotiable certificates of deposit(NCDs)issued bya nationally or state-chartered bank or state of federal savings and loan association, as defined by Section 5102 of the California Financial Code; and which shall have a rating of"A"or better on its long-term debt as provided by Moody's or S&P;or which shall have the following minimum short-term ratings by at least two (2) rating services: "P1" for deposits by Moody's, "Al" for deposits by S&P, or comparably rated by a nationally recognized rating agency which rates such securities; or as otherwise approved by the District's Board of Directors. 8.8.3 To be eligible to receive local agency money, a bank, savings association,federal association,orfederally insured individual loan company shall have received an overall rating of not less than "satisfactory"in its most recent evaluation by the appropriate federal financial supervisorial agency of its record of meeting the credit needs of California's communities, including low and moderate income neighborhoods, pursuant to Section 2906 of Title .. 12 of the United States Code. .. 8.9 Taxable or tax-exempt municipal bonds issued by any of the 50 United States. Such securities must be rated "A3" or higher by Moody's,or"A-"or higher by S&P; ores otherwise approved bythe Districts' Board of Directors. r 8.10 The State of California Local Agency Investment Fund(LAIF). The LAIF is an investment alternative for California's local governments and special districts managed by the State Treasurer's Office. LAIF is more fully described in the Glossary(See Appendix"H.") The District shall use LAIF as a short-term cash management facility. Investment of District funds in LAIF shall be subject to investigation and due diligence priorto investing,and on a continual basis to a level of review pursuant to Section 3.0, Standard of Prudence, of this Policy. See Appendix "D" for investment pool questionnaire. 8.11 The Orange County Treasurer's Money Market Commingled Investment Pool(OCCIP). The OCCIP is a money market investment pool managed by the Orange County Treasurer's Office. OCCIP is more fully described in the Glossary. (See Appendix"H") The District has no funds invested in OCCIP at this time. Investment of District funds in OCCIP would be subject to investigation and due diligence priorto investing, and on a continual basis to Page 7 of 14 6W a level of review pursuant to Section 3.0, Standard of Prudence, of this Policy. v 8.12 Collateralized mortgage obligations(CMOs)issued by agencies ofthe US Government which are backed by pools of mortgages guaranteed bythe full faith and credit of the U.S. Government, or an agency thereof, and asset- u backed securities rated "Aaa" by Moody's and "AAA" by S&P. Selection of mortgage derivatives, which include interest-only payments (IOs) and principal-only payments (POs); inverse floaters, and RE-REMICS (Real L Estate Mortgage Investment Conduits), is hereby prohibited. Securities eligible for purchase under this Section 8.11 shall be issued by an issuer having a rating on its unsecured long-term debt of"A" or higher. Combined W purchases of mortgage-backed securities, CMOs and asset-backed securities as authorized under within Section 8.0, may not exceed 20%of the L total Long-Term Operating Monies portfolio. 8.13 Repurchase agreements provided that: 8.13.1 All repurchase agreements shall be collateralized with securities eligible for purchase under this Policy. In order to anticipate market changes and to provide a level of security for all repurchase agreement transactions, collateralization shall be maintained at a level of at least 102%of the market value of the repurchase agreements, and shall be adjusted no less than weekly. 8.13.2 All repurchase agreements must be the subject of a Master Repurchase Agreement between OCSD and the provider of the repurchase agreement. The Master Repurchase Agreement shall be substantially in the L form developed by The Bond Market Association. 8.14 Reverse repurchase agreements provided that: i 8.14.1 No more than five percent (5%) of OCSD's portfolio shall be invested in reverse repurchase agreements, and there shall be no long-term L. reverse repurchase agreements unless otherwise authorized bythe Districts' Board of Directors. L 8.14.2 The maximum maturity of reverse repurchase agreements shall be ninety (90) days. 8.14.3 Reverse repurchase agreements shall mature on the exact date of a known cash flow which will be unconditionally available to repay the maturing reverse repurchase agreement. L 8.14.4 Proceeds of reverse repurchase agreements shall be used solely to supplement portfolio income or to provide portfolio liquidity, and shall not u be used to speculate on market movements. Page 8 of 14 L 8.14.5 All reverse repurchase agreements must be the subject of a Master Repurchase Agreement between OCSD and the provider of the reverse repurchase agreement. The Master Repurchase Agreement shall be substantially in the form developed by The Bond Market Association. 8.15 Sales of OCSD-owned securities in the secondary market may incur losses r in order to improve the risk or return characteristics of the portfolio, to prevent anticipated further erosion of principal,or when trading forsecurities _ that result in an expected net economic gain to OCSD. 8.16 If securities owned by the OCSD are downgraded by either Moody's or S&P to a level below the quality required by this Investment Policy, it shall be OCSD's policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. If a decision is made to retain the downgraded securities in the portfolio, their presence in the portfolio will be monitored and reported monthly to the OCSD General Manager, the Administration Committee and Board of Directors. r 9.0 Collateralization: Generally,the value to secure deposits under this Policy shall comply with Section 53652 of the California Government Code. Collateralization will be required for secured time r deposits, as more fully described in Section 8.7.1; and repurchase agreements, as more fully described in Section 8.12.1. Collateral will always be held by an independent third- party, as more fully described in Section 10.1. The right of collateral substitution is granted. .. 10.0 Safekeeping and Custody: 10.1 All securities transactions, including collateral for repurchase agreements, r entered into by, or on behalf of OCSD, shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by OCSD's third-party custodian bank, which shall be selected through a competitive r process, or that agent's representative, or in the agent's account at the Federal Reserve Bank, or within clearing corporations in the U.S., and evidenced by book entry statements. r 11.0 Diversification: r OCSD will diversify its investments by security type, issuer, and financial institution in accordance with the following: r 11.1 There is no limit on investment insecurities issued by or guaranteed by the full faith and credit of the U.S. government. r 11.2 No more than 20% of the portfolio maybe invested insecurities of a single r Page 9 of 14 r V agency of the U.S. government, which does not provide the full faith and credit of the U.S. govemment. i W 11.3 No more than 5% of the portfolio may be invested in securities of any one issuer,otherthan the U.S.govemment or its agencies. Investment in mutual funds is not governed by this Section 11.3. See Section 11.8 for conditions W of purchase of mutual funds. 11.4 No individual holding shall constitute more than 5% of the total debt Lr outstanding of any issuer. 11.5 No more than 40%of the portfolio may be invested in bankers acceptances. W 11.6 No more than 15% of the portfolio may be invested in commercial paper, except that 25% of the portfolio may be so invested so long as the average W maturity of all commercial paper in the portfolio does not exceed 31 days. 11.7 No more than 30% of the portfolio may be invested in medium-term W (corporate) notes. 11.8 No more than 15% of the portfolio may be invested in mutual funds. W However, no more than 10% of the District's portfolio may be invested in shares of beneficial interest of any one (1) mutual fund. L 11.9 No more than 30%of the portfolio may be invested in negotiable certificates of deposit. W 11.10 No more than 10% of the portfolio may be invested in eligible municipal bonds. L 11.11 No more than 20% of the Long Term Operating Monies portfolio may be invested in a combination of mortgage-backed securities, CMOs and asset- L backed securities. Mortgage-backed securities, CMOs and asset-backed securities may only be purchased by the Districts'extemal money managers, Pacific Investment Management Company (PIMCO), with prior Board L approval (authorized by Board Minute Order,January 22, 1997),and may not be purchased by the District's staff. 11.12 No more than the lesser of 15% of the portfolio or the statutory maximum W may be invested in LAIF. 11.13 No more than 15% of the portfolio may be invested in the Orange County W Investment Pool L 11.14 No more than 20% of the portfolio may be invested in repurchase agreements. L 11.15 No more than 5% of the portfolio may be invested in reverse repurchase Page 10 of 14 W agreements. r 12.0 Maximum Maturities: To the extent possible, OCSD will attempt to match its investments with reasonably anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow r forecast, which shall be updated quarterly. Based on this forecast, the Treasurer shall designate, from time-to-time, the amounts to be allocated to the investment portfolio. OCSD monies invested in accordance with this Policy are divided into two (2)categories: r 12.1 Liquid Operating Monies. Funds needed for current operating and capital. expenditures are known as Liquid Operating Monies. r 12.1.1 The maximum final stated maturity of individual securities in the Liquid Operating Monies account portfolio shall be one(1)year from the date ., of purchase. 12.1.2 The average duration of the Liquid Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts'cash flow requirements, but may never exceed 180 days. r 12.2 Long Term Operating Monies. Funds needed for longer term purposes are known as the Long Term Operating Monies. r 12.2.1 Except for the purchase of securities by the District's external money manger, PIMCO, the maximum final stated maturity of individual securities in the Long Term Operating Monies account portfolio shall be five r (5)years from the date of purchase. PIMCO may purchase any security that is permitted under Section 8.0 of this policy, including those which may have a stated maturity of more than five(5)years from the date of purchase when, r in the opinion of PIMCO, such an investment meets the investment objectives of this portfolio and the duration requirements are met below. r 12.2.2 The duration of the Long Term Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts'five- year cash flow forecast, but may never exceed 60 months. r 12.2.3 The duration of the Long Term Operating Monies account portfolio shall never exceed 120% of the duration as established in accordance with Section 12.2.2. 12.2.4 The duration of the Long Term Operating Monies account portfolio `tl shall never be less than 80% of the duration as established in accordance with Section 12.2.2 r r Page 11 of 14 r ;r 13.0 Internal Control: u 13.1 The Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures. The current treasury management Ly procedures are presented in Appendix "B." y 14.0 Performance Objectives and Benchmarks: 14.1 Overall objective. The investment portfolio of OCSD shall be designed with the overall objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with investment risk constraints and reasonably anticipated cash flow needs. 14.2 The Liquid Operating Monies. The investment performance objective for the Liquid Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index approved by the Administration Committee,and by the District's Board of Directors,when the duration of the portfolio is established. This market index is more fully described in Board Resolution No. OCSD-00-16 (see Appendix"E"). 14.3 The Long Term Operating Monies. The investment performance objective for the Long Term Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index selected by the Administration Committee and approved by the Districts' Board of Directors, when the duration of the portfolio is established. This market index is more fully described in Board Resolution No. OCSD-00-16 (See Appendix"E"). 15.0 Reoortina: 15.1 Quarterly investment reports shall be submitted by the Treasurer to the Administration Committee which shall forward the reports to the District's Board of Directors. The quarterly reports shall be submitted to the Administration Committee within 30 days of the end of the month in accordance with California Government Code Sections 53607, 53646, and this Investment Policy. The quarterly reports shall provide clear and concise status information on the District's portfolios at the end of each reporting period, including performance measures using the benchmarks described in 61 Section 14.0 of this Investment Policy. Sample quarterly reports are presented in Appendix"F"These reports shall contain listings of individual securities held at the end of each reporting period, and shall disclose, at a 61 minimum,the following information about the risk characteristics of OCSD's portfolio: V 15.1.1 Cost and accurate and complete market value of the portfolio. Page 12 of 14 V r 15.1.2 Modified duration of the portfolio compared to Benchmark. " 15.1.3 Dollar change in value of the portfolio for a one-percent (1%) change in interest rates. 15.1.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. 15.1.5 For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 days. r 15.1.6 Average portfolio credit quality. 15.1.7 Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities. 15.1.8 State that all investments are in compliance with this policy and the California Government Code, or provide a listing of any transactions or holdings which do not comply with this policy or with the California Government Code. 15.1.9 Time-weighted total rate of return for the portfolio for the prior three months, twelve months, year to date, and since inception compared to the Benchmark returns for the same periods. 15.1.10 State that sufficient funds are available for OCSD to meet its r operating expenditure requirements for the next six months, or if not, state the reasons for the shortfall. r 15.2 OCSD's Treasurer shall meet quarterly with the Administration Committee to review investment performance, proposed strategies and compliance with this Investment Policy. External investment advisors may be required to r attend said meetings at the discretion of the Chairman of the Administration Committee. r 16.0 Investment Policy Adoption and Revision: r 16.1 The Investment Policy of OCSD shall be reviewed by the Administration Committee and shall be adopted by resolution of the Board of Directors of OCSD. The Policy shall be reviewed on an annual basis in accordance with California Government Code Section 53646, and this Investment Policy, by the Administration Committee, which shall recommend revisions, as appropriate,to the Board of Directors. Any modifications made thereto shall be approved by the Board of Directors. r Page 13 of 14 r L 16.2 The Administration Committee shall serve as the oversight committee for the District's Investment program and shall adopt guidelines for the ongoing review of duration, quality and liquidity of the District's portfolio. L L L L L L y L u V L L 4 I V L L L Page 14 of 14 y r APPENDIX "A" SUMMARY OF INVESTMENT AUTHORIZATION INTERNAL AND EXTERNAL MANAGERS ,r SHORT TERM OPERATING FUND INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Mortgage-backed NO NO Commercial paper OK OK Banker's Accept. OK OK r Medium Term Notes Fixed coupon, fixed mat.* OK Mutual Funds Money Market Only** Money Market Only Negotiable CDs Fixed coupon, fixed mat.* OK r Municipal Bonds OK* NO LAIF OK NO OCIP OK NO CMOs NO NO Asset-backed NO NO Repurchase Agree. OK OK Reverse Repos OK* OK LONG TERM OPERATING PORTFOLIO INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Mortgage-backed NO OK Mutual Funds Money Market Only" OK Negotiable CDs Fixed coupon, fixed mat.* OK r Municipal Bonds OK* OK LAW OK NO OCIP OK NO CMOs NO With Board Approval Asset-backed NO With Board Approval Repurchase Agree. OK OK Reverse Repos OK* OK r *With prior approval of the Administration Committee. "Using financial institutions approved by the Administration Committee. r GMP DTMFIM MWNITBTR URY MGMNWESTMENT PoLICYVOp9p3J STKY.FINALGGL r Appendix "B" Revised: June 1, 2008 Orange County Sanitation District Treasury Management Procedures 1.0 Purpose r 1.1 The purpose of this policy is to establish uniform guidelines and proceduresfor use in the administration of the District's Treasury functions consistent with the California Government Code and the Districts adopted Investment Policy Statement. s 2.0 Authority to Investment and/or Reinvestment of District Funds: 2.1 Is delegated annually to the Director of Finance/Treasurer in accordance with California Government Code Section 53607. 3.0 Formal Investment Policy Statement: r 3.1 Is prepared by the Treasurer. 3.2 Is reviewed by the District's Finance, Administration & Human Resources Committee (FAHR), in its role as the finance oversight committee. 3.3 Is submitted to and adopted by the District's Board of Directors annually at a public meeting in accordance with California Government Code Section 53646. 4.0 Delegation of some or all of the investment portfolio management to one or more registered investment advisors (external money managers): 4.1 Is authorized by the District's Investment Policy; 4.2 Applies to the District's entire investment portfolio except for: r 4.2.1 A maximum of $40 million that is maintained within the State Local Agency Investment Fund (LAIF)for managing cash flows (i.e., deposits of large revenues, such as property tax and user fee proceeds, and the bi-weekly disbursements of payroll and accounts payable); " 4.2.2 A peg amount of approximately $600,000 is maintained within the District's checking account at Union Bank of California to serve as compensating balances to offset banking charges (note: the District's Board of Directors has selected Union Bank of California to serve as the District's commercial bank (the "Bank"); and 4.2.3 Based on a determination by the District's Treasurer on what is most advantageous to the District, the checking account residual amounts may be invested as follows: r V Orange County Sanitation District Treasury Management Procedures Revised: June 1,2008 Page 2 of 7 W 4.2.3.1 Bank balances exceeding the peg balance (as a result of outstanding accounts payable and payroll warrants) may be invested overnight under a repurchase agreement with the Bank; or 4.2.3.2 The District may electto receive earnings credit against bank charges on all bank balances including the peg amount equal to the 91 Day T-Bill Average. 5.0 Investment transactions involving the LAIF are approved by the Treasurer prior to their execution by the Controller. The approval function indicates that the transactions are in accordance with the District's Investment Policy. The Accounting Manager will serve w as backup for the approval function upon the absence of any either of these two employees. W 5.1 Specific Procedures involving LAIF include (note: all deposits and withdrawals of funds to/from LAIF may only be processed through the District's checking account with the Bank): 5.1.1 A"State Treasurer's Local Agency Investment Fund Authorization Form" L (see Attachment "A") must be completed prior to the execution of the transaction indicating: 5.1.1.1 The effective date of the transaction; 5.1.1.2 The dollar amount to be withdrawn from or deposited into LAIF; " 5.1.1.3 The date and signature approval by the Controller authorizing the transaction; and 5.1.1.4 The date and signature approval of the Treasurer approving L the transaction. 5.1.2 The execution of the transaction will be done in accordance with the V "State Treasurers Local Agency Investment Fund Wire Transfer Instructions"(see Attachment"B"). Key internal control features include: 5.1.2.1 The requirement of the District's Personnel Identification L Number (PIN)for either deposits or withdrawals, known only by the Treasurer and Controller. 5.1.2.2 Secondary confirmation requirement by the Bank for the withdrawals/deposits from/to the Bank or LAIF. The L confirmation can be made by the Controller or Treasurer(the L r r Orange County Sanitation District Treasury Management Procedures Revised: June 1, 2008 Page 3 of 7 person that didn't make the original request),the Accounting Manager, or the Principal Accountant. r 5.1.3 Each transaction is confirmed the next day by the Bank's Previous Day Reporting modem service by the Principal Accountant and Controller. 6.0 Investment transactions involving the District's external investment program and performed by the independent investment firms are as follows: r 6.1 The District's Board of Directors has selected Pacific Investment Management Company (PIMCO) to manage two portfolios: the Districts' Liquid Operating Monies Fund, and the Long-term Operating Monies Fund. 6.1.1 PIMCO has authorization to purchase and sell investment securities in accordance with the strict investment guidelines set forth in the District's Investment Policy (Section 8.0). 6.1.2 Hard copy confirmation reporting to the District is required on all transactions. r 6.2 The District's Board of Directors has selected Mellon/Boston Trust (the "Custodian")to serve as the District's master custodian and safekeeping bank. In their capacity as Custodian, Mellon/Boston Trust shall perform the following duties to settle purchases and sales and engage in other transactions in the administration of the Districts accounts: r 6.2.1 Upon execution of any transaction by PIMCO, all investment securities are recorded in book entry by the Custodian through either the r Depository Trust Company or the Federal Reserve Bank; 6.2.2 Hold the property in safekeeping facilities of the Custodian or of other r custodian banks or clearing corporations in the U.S.; 6.2.3 Collect all income payable to and all distributions due to the District's account and sign on the District's behalf all declarations, affidavits, and certificates of ownership required to collect income and principal payments; r 6.2.4 Collect all proceeds from securities, certificates of deposit or other investments which may mature or be called; 6.2.5 Submit or cause to be submitted to the District or the external money manager, as designated by the District, on a best effort basis all -• information received by the Custodian regarding the ownership rights r Orange County Sanitation District Treasury Management Procedures ►. Revised: June 1,2008 Page 4 of 7 pertaining to property held in the account; 6.2.6 Attend to involuntary corporation actions; 6.2.7 Determine the fair market value of the District's account on a monthly basis as of such dates as the Districts and the Custodian may agree upon, in accordance with methods consistently followed and uniformly applied; V 6.2.8 Render to District, with copies to the external money manager, monthly statements for securities held hereunder; and 6.2.9 Provide the District with copies of the Custodian's financial statements filed with the State of California,or any agencythereof,within thirty(30) days after such filing. 6.3 The District's Board of Directors has selected Callan Associates as the District's Independent Investment Advisor (the "Advisor"). In their capacity as Advisor, r Callan shall perform the following duties on behalf of the District: 6.3.1 Monitor and report on PIMCO's compliance with the investment .a requirements of the Districts' Investment Policy, using data from transaction reports prepared by Mellon/Boston Trust, on a quarterly basis; 6.3.2 Review PIMCO's investment strategy quarterly; L,. 6.3.3 Monitor and report on the performance of PIMCO against the performance benchmark standards established in the District's Investment Policy for both the Liquid Operating Monies Fund and the Long-term Operating Monies Fund on a quarterly basis; and 6.3.4 Review both Liquid and Long-term Operating Funds by asset allocation, asset flow,quarterly factors and cumulative results on a quarterly basis. 6.4 Specific procedures in depositing to or withdrawing funds from the investment portfolio managed by the District's external money manger include: (note: all deposits and withdrawals of funds from the District's investment portfolio V managed by PIMCO and Mellon/Boston Trust may only be processed through the District's checking account at the Bank): 6.4.1 A'Wire Transfer Form"(see Attachment"C")must be completed by the Controller prior to the execution of the transaction indicating: 6.4.1.1 The dollar amount to be withdrawn/deposited from/to the Bank L L. r d Orange County Sanitation District Treasury Management Procedures Revised: June 1, 2008 Page 5 of 7 checking account to/from the PIMCO Liquid Operating or PIMCO Long-term Operating Monies Funds; �* 6.4.1.2 The effective date of the transaction; 6.4.1.3 The date and signature review by the Controller; and 6.4.1.4 The date and signature approval of the Treasurer approving the transaction. r 6.4.2 The execution of the transaction requires a verbal confirmation call from the Custodian to the Controller at the time of the transaction, and a written confirmation the following day. 6.4.3 Each transaction is confirmed the next day by the Bank's Previous Day Reporting modem service by the Principal Accountant and Controller. 7.0 Recording of investment transactions: r 7.1 For investment transactions conducted by District staff with the IAIF, and with r the transfer/withdrawal of funds with the Custodian: 7.1.1 Is done by the Controller who maintains a file of all investment r transactions. 7.1.2 Is done within the accounting records by the Principal Accountant, who receives a signed copy of all investment transactions from the Controller. 7.2 For investment transactions conducted by the external money manager: 7.2.1 Is done by the Custodian who posts all investment transactions daily within their record keeping system and provides the District with a r monthly report that provides both a summary and detail listing of all investment transactions. 7.2.2 Is done on a monthly basis by the Accounting Manager within the accounting records at a summary level using Monthly Transaction Reports prepared by the Custodian. 8.0 Verification of external money manager transactions is performed by: r 8.1 The Custodian within their record keeping system (i.e., matching broker confirmations to custodian records), and is reported to the District and PIMCO on a monthly basis. r r Orange County Sanitation District Treasury Management Procedures �. Revised: June 1,2006 Page 6 of 7 8.2 PIMCO through their intemal compliance office and reported monthly to the L District as required by the District's Investment Policy. 8.3 The Principal Accountant through reconciliation of PIMCO's monthly investment ` transaction report against the monthly transaction report provided by the Custodian. 9.0 Safeguarding of Assets and Records: L 9.1 Reconciliation of investment records to the accounting records is done by the Principal Accountant, or in his absence, the Accounting Manager on a monthly basis. L 9.2 Reconciliation of investment records to bank statements is performed by the Principal Accountant(or in their absence,the Accounting Supervisor)within one L. week following the receipt of the bank statement. 9.3 Review of financial condition, safety, liquidity,and potential yields of investment N instruments and reputation and financial condition of investment brokers is done by the District's external money manager, who is authorized to utilize the services of independent securities brokerage firms as deemed appropriate,and .. which meets the requirements of Govemment Code Section 53601.5. 10.0 The periodic review of the investment portfolio, including investment types, purchase �+ price, market values, maturity dates, and investment yields as well as conformance to the stated Investment Policy will be performed monthly by the Controller, quarterly by the Advisor, and annually by the District's external independent auditors. �- 11.0 The District's Finance, Human Resources and Administration Committee(FAHR)will serve as the Oversight Investment Advisory Committee to assist the Board of Directors in monitoring treasury management activities. 11.1 The District's Treasurer submits a Monthly Treasurer's Report to the FAHR I" which includes, but is not limited to: a listing of the security transactions forthe month,the monthly interest earnings and rates of return,the market value and purchase price for each type of investment security, and the bank account balances at month end. 11.2 The District's Treasurer submits a Quarterly Investment Program Performance Report which includes, but is not limited to, the following information: 11.2.1 Quarterly interest earnings and rates of retum; 11.2.2 The market value of the portfolios; V y r Orange County Sanitation District Treasury Management Procedures Revised: June 1, 2008 Page 7 of 7 11.2.3 The annualized earnings of the portfolios; _ 11.2.4 Market recap; 11.2.5 Comparisons with pre-determined benchmarks; - 11.2.6 Market forecast; and 11.2.7 Proposed investment strategy for the upcoming quarter. r Internal Control Strengths 1. The specific responsibility for the performance of duties is assigned and lines of authority and reporting are clearly identified. r 2. Responsibilities are commensurate with the capabilities of the personnel assigned. ,y 3. Incompatible functions have been properly segregated to prevent errors or fraud. 4. All transactions are authorized by an appropriate responsible individual. r 5. Safeguards over assets and records are in place to ensure that recorded assets exist and are properly recorded. 6. Management controls are in place to ensure that significant transactions are properly performed and recorded. r HADEPTRM220\WHITEITREASURY MGNMWESTMENT POUCY000&MTREAS MGMT PROC.DOC r r r r r r r L ATTACHMENT"A" V Orange County Sanitation District L+ State Treasurer's Local Agency Investment Fund Transaction Authorization Form LAIF Account No. 70-30-006 Effective Date of Transaction W Confirmation Number LAIF Representative L UBOC Representative V Wire transfer deposit from Union Bank of California Checking Account#2740013230 in the amount of u Wire transfer (withdrawal) to Union Bank of California Checking Account#2740013230 in the amount of L Wire transfer transaction authorized by: Wire transfer transaction approved by: y Name Name L+ Controller Director of Finance/Treasurer Position Position L+ Date Date y i.. L H-.VEPTFIN¢201WHITMTREASURY MGMfINVESTMENT POLICYM"ATREAS MNGT LAIF AUTHAOC L I r ATTACHMENT`B^ State Treasurer's Local Agency Investment Fund Wiring Instructions Form r Deposits or withdrawals that are to take place by the end of the banking day must be made between 7:30 a.m. and 9:30 a.m.. r Deposits or withdrawals that are to take place on a future date can be made between 7:30 a.m. to r 9:30 a.m. or 11:00 a.m. to 4:00 p.m. You must be sure to give the effective date of the future transaction. r To Deposit Funds: Step 1: 1. Call LAIF at(916)-653-3001, and let them know: r a. That you would like to make a wire transfer deposit. b. The Districts LAIF account#70-30-006. C. Your PIN number. r d. The dollar amount of deposit. e. That the money will be coming from Union Bank Account No.274-0013-230. r 2. LAW will give you a confirmation number. Step 2: 1. Call Union Bank of California at 1-800-798-6466,and let them know: a. You're making a wire transfer from Account No.274-0013-230. b. The dollar amount of the wire transfer. r C. The transfer is going to the District's LAIF Account No. 70-30-006. d. The LAIF account ABA number at Union Bank is 121000496. r 2. The confirmation number of this transaction(see Step 1, Item 2 above). r Step 3: 1. Give the above information to the Principal Accountant who will confimm this transaction with Union Bank. r To Withdraw Funds: .. Step l: 1. Call LAIF at (916)-653-3001, and let them know: a. That you would like to make a wire transfer withdrawal. b. The Districts LAIF account#70-30-006. r C. Your PIN number. d. The dollar amount of withdrawal. C. The Union Bank account receiving the funds is No. 274-0013-230. r 2. LAIF will give you a confirmation number. r H]DEPTT M220 WHITE TREASURY MGMTNINVESTMENT POUCY000849\TREAS MNGT LAIF PROC.DOC r Orange County Sanitation District FAX ATTACHMENT"C" (Deposit) L TO: SEE DISTRIBUTION LIST FAX NO.: SEE DISTRIBUTION LIST FROM: Michael D. White, Controller FAX NO.: (714)962-3954 �I DATE: September 3, 2008 TIME: 8:30 a.m. -Pacific Time SUBJECT: RECEIPT AND INVESTMENT OF WIRE TRANSFER OF FUNDS IN THE AMOUNT OF$XX MILLION, FRIDAY, DAY MONTH 2O08 G PAGES: One (1) including this cover sheet. If you do not receive the number ofpages indicated,pease call Mike White at(714)593-7570. MESSAGE: La On Friday, Da Month 2008, you will receive a wire transfer of funds in the exact sum of $XX million, for immediate investment in the District's Liquid Operating Monies Portfolio, as follows: V FROM: Union Bank of California ABA No: 122-000-496 Debit to: General Account Account No: 2740013230 TO: Boston Safe Deposit& Trust ABA No: 011001234 Credit to: Mellon TrusVPIMCO-Liquid Operating Monies Account No: OCS F0751112 DDA No. 10-811-1 DATE: Friday, Day Month 2008 i. NOTE: WIRE TRANSFER MUST BE COMPLETED AND CONFIRMED NO - LATER THAN 9:30 A.M. ON Day Month 2008. Please confirm completion of transfer with Mike White. Wire transfer instructions reviewed by. V Michael White, Controller ale Wire transfer transaction approved by: Lorenzo I yner, Director or FinancerFreasurer DISTRIBUTION LIST _Reth Nop/RaWa Dennis,Mellon/Boston Trust 617-946-8274 _Nina Lentz, Mellon/Boston Trust 617-598-3489 Christine Telish, PIMCO 949-718-2613 _Jennifer Sticijaric, PIMCO 949-720-8692 L XbrolUnlaGbTlle\T,aevryMpmNnue,Nenl PtlIC�Z00BO9"Ire va,nlerlamrEepov,IM1�'�ryl.� V Orange County Sanitation District FAX ATTACHMENT"C" (Withdrawal) TO: SEE DISTRIBUTION LIST FAX NO.: SEE DISTRIBUTION LIST FROM: Michael D. White, Controller FAX NO.: (714) 962-3954 " DATE: September 3, 2008 TIME: 8:30 a.m. -Pacific Time SUBJECT: WIRE TRANSFER WITHDRAWAL OF FUNDS IN THE AMOUNT OF $XX r MILLION, FRIDAY, DAY MONTH 2O08 PAGES: One (1) including this cover sheet. r /f you do not receive the number ofpages indicated,please call Mike White at(714)593-7570. MESSAGE: r On Friday, Day Month 2008, you are instructed to wire transfer the exact sum of $XX million,from the District's Liquid Operating Monies Portfolio to the District's general bank account with Union Bank of California, as follows: FROM: Boston Safe Deposit &Trust ABA No: 011001234 Credit to: Mellon Trust/PIMCO-Liquid Operating Monies Account No: OCS F0751112 DDA No. 10-811-1 TO: Union Bank of California ABA No: 122-000-496 Debit to: General Account Account No: 2740013230 DATE: Friday, Day Month 2008 NOTE: WIRE TRANSFER MUST BE COMPLETED AND CONFIRMED NO LATER THAN 9:30 A.M. ON Day Month 2008. Please confirm completion of transfer with Mike White. Wire transfer instructions reviewed by: Michael i e, Controller —ate r Wire transfer transaction approved by: Lorenzo I yner, Directoro manc reasurer --D-aTe— r DISTRIBUTION LIST _Reth Nop/Rayya Dennis, Mellon/Boston Trust 617-946-8274 r _Nina Lentz, Mellon/Boston Trust 617-598-3489 Christine Telish, PIMCO 949-718-2613 _Jennifer Sticijaric, PIMCO 949-720-8692 r xWepMnv3mMiie�rroivv,yM®,+unwsomiva[ylWeafrvnm ue,"Ie,�mnwivanwai0^�x�wla« r P I M C O 840 Newpon Cmter Drive r suite 100 Newport Beach,CA 92W Tel: 949.720.6000 Fax:949.720.1376 r August 8, 2008 r r Mr. Mike White, CPA Controller Orange County Sanitation District r Administration Building 10844 Ellis Avenue Fountain Valley,CA 92708-70!8 r Dear Mike: r This letter is to confirm that in accordance with Section 4 of the Investment Management Agreement by and between the District and PIMCO we have received and reviewed a copy of the District's Investment Policy Statement and investment benchmarks for FY 2008-2009. r In our capacity as the District's investment manager, we will make only those investments on behalf of the District which are permitted as "authorized and suitable" investments under the District's Investment Policy, and which confirm to the requirement of California Government Code Sections 53600 through 53684. r Additionally, we will ensure that the Investment Policy diversification requirements are met, with regard to the assets in the District's investment portfolio, and that those assets conform to the investment categories under the District's Investment Policy. We will use r our best efforts in managing the District's portfolio to attain the performance benchmarks and objectives set forth in the District's Investment Policy. r Best regards, .-.� Christine Telish, CFA Vice President r r r r [ 1 I I 1 I 1 I I l 1 I I I I I I I 1 Frequently Asked Questions about LAW QUESTION YES NO EXPLANATION I. SECURITIES 1. Does the pool provide a written statement of investment policy and objectives? YES 2. Does the statement contain: a. a description of eligible investment instruments? YES b. the credit standards of investments? YES c. the allowable maturity range of investments? YES d. the maximum allowable dollar weighted average portfolio maturity? YES e. the limits of portfolio concentration permitted for each type of security? YES rA' I. the policy on reverse repos? YES 3. Are changes in the policies communicated to the pool participants? YES 4. Is the fund rated? NO II. INTEREST Interest Calculations 1. Does the pool disclose the following about yield calculations: a. Which methodology is used to calculate interest? (simple maturity, On dollars per day. m yield to maturity, etc.) $ b. What is the frequency of interest payments? Quarterly. 0 $ c. How is interest paid? (credited to principal at the end of the month,each Credited to principal at end of quarter. 3 quarter,mailed?) m d. How are gainsAosses reported? (factored monthly or only when realized?) I lWhen realized. N O O (n Frequently Asked Questions about LAIF QUESTION YES NO EXPLANATION Reporting 1. Is the yield reported to participants of the pool monthly?(If not, how often?) YES 2. Are expenses of the pool deducted before quoting the yield? NO Expenses of the pool are deducted quarterly prior to interest allocation. 3. Is the yield generally in line with the market yields for securities in which you YES usually invest? Ill. SECURITY 1. Does the pool disclose safekeeping practices?(If yes,what are they?) YES Statute requires all instruments of title of all investments of the fund to remain vwi in the Treasurer's vault or be held in safekeeping under control of the Treasurer in any federal reserve bank, or any branch thereof,or the Federal Home Loan Bank of San Francisco, with any trust company,or the trust department of any state or national bank. 2. Is the pool subject to audit by an independent auditor? YES 3. Is the copy of the audit available to participants? YES 4. Who makes the portfolio decisions? State Treasurer, Investment Division p staff. 5. How does the manager monitor the credit risk of the securities in the pool? Written Statement of Policies, Goals, Objectives, annual independent market 'm valuation. 0 0 g I- I U C C I C F f C 117- I [ E I- C C C 1 I I t t I I I t I I I I I I I I l Frequently Asked Questions about LAIF QUESTION YES NO EXPLANATION 6. Is the pool monitored by someone on the board or a separate, neutral party YES Pooled Money Investment Board, Local external to the investment function to ensure compliance with written Agency Advisory Board,Auditor policies. General. 7. Does the pool have specific policies with regard to repurchase agreements? YES Government Code 16430/16480, Portfolio Management Goals, a. What are those policies? Objectives& Policies. 6. Does the pool report the portfolio's market value? YES Monthly. (Reporting purposes only, values are not adjusted for unrealized gains or losses.) 9. Does the pool disclose the following about portfolio valuations: a. The frequency with which the portfolio securities are valued? YES Quarterly. rn b. The method used to value the portfolio(cost,current value, or some other Amortized cost,current value. method)? IV. STATEMENTS 1. Are statements for each account sent to participants? YES a. Do statements show balances and transactions? YES 2. Does the pool distribute detailed reports of its holdings? (regularly or on YES On a regular monthly basis. request only?) V. FEES 1. Is there a written schedule of administrative costs? YES m a. What are the fees? Statute 16429.1 requires administrative costs not to exceed 1/2 of 1%of earnings quarterly. However,the fees are directly correlated to the costs of 0 ro operation only. 0 Frequently Asked Questions about LAIF QUESTION YES NO EXPLANATION b. HOW often are they assessed? Quarterly. c. How are they paid? Prior to interest allocation. d. Are there additional fees for wiring funds? NO 2. Are expenses deducted before quoting the yield? NO VI. OPERATIONS 1. Does the pool limit eligible participants? NO a. What enfities are permitted to invest in the pool? Local governmental units, non-profit corporation whose membership is confined to public agencies or public officials,qualified quasi-governmental agencies. 2. Does the pool allow multiple accounts and subaccounts? NO 3. Is there a minimum or maximum account size? YES "$40 million maximum $5 thousand minimum unless bond proceeds. 4. Does the pool limit the number of transactions each month? YES a. What is the number of transactions permitted each month? "15 transactions per regular account. 5. Is there a limit on transaction amounts for withdrawals and deposits? YES a. What is the minimum and maximum withdrawal amount permitted? "$40 million maximum $5 thousand minimum. X b. What is the minimum and maximum deposit amount permitted? "$40 million maximum $5 thousand minimum. 0 0 g l I 1 1 1 1 1 1 1 1 1 1 1 1 1 1 l Frequently Asked Questions about LAIF QUESTION YES NO EXPLANATION 6. Does the pool require one or more days notice for deposits andlor w8hdrewals? NO However,we ask that wdthdrawals of $10 million or more give 24 hour notice. 7. Is there a cutoff time for deposits and withdrawals? YES Call by 10:00 a.m.for same day credit. 8. Are the funds 100%withdrawable at any time? YES 9. Are there procedures for making deposits and withdrawals? YES a. What paperwork is required,if any? Once resolution is authorized by governing body, and banking information has been filed,authorized caller needs PIN#and sending bank name for deposits plus receiving bank name and account#to be credited for withdrawals. b. What are the wiring procedures? Authorized caller needs PIN#, receiving bank name and account# to be credited for interbmnch transfers or fed wires. 10. Can an account remain open with a zero balance? YES 11. Are confirmations sent following transactions? Included as part of monthly statement. A � '• BOND PROCEEDS HAVE NO MAXIMUM DEPOSIT AMOUNT AND ARE MAINTAINED ON THIRTY DAY INCREMENTS. SN A RESOLUTION NO. OOSD-08-13 AUTHORIZING THE ORANGE COUNTY SANITATION DISTRICTS TREASURER TO INVEST AND/OR REINVEST DISTRICTS FUNDS. AND ' ADOPTING DISTRICTS INVESTMENT POLICY STATEMENT AND PERFORMANCEBENCHMARKS .. A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT, AUTHORIZING THE DISTRICTS TREASURER TO INVEST AND/OR REINVEST DISTRICTS FUNDS, AND ADOPTING DISTRICTS INVESTMENT POLICY STATEMENT AND .. PERFORMANCE BENCHMARKS; AND REPEALING RESOLUTION NO. OCSD 07-17 WHEREAS, on July 18, 2007,the Board of Directors adopted Resolution No. 07-17, readopting the District's Investment Policy Statement, and establishing specific performance benchmarks and objectives, together with a schedule of frequency of investment performance s reports; and, WHEREAS, pursuant to California Government Code Section 53607, the Board of Directors may delegate authority to invest and/or reinvest District's funds to the Treasurer for a one-year period; and, WHEREAS, pursuant to California Government Code Section 53646, the District is required to review its Investment Policy annually and readopt its Policy at a public meeting, which Policy will establish speck performance benchmarks and objectives, and specific ,. monitoring and reports. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: r Section 1: That the authority of the Board of Directors to invest or reinvest District's .. surplus funds, or to sell or exchange securities so purchased, or to deposit for safekeeping the funds and investments of the Districts with depositories, as provided for in California Government Code Sections 53608 and 53630, is hereby delegated to the District's Treasurer for a one-year period commencing on the date this Resolution is adopted, as authorized by California Government Code Section 53607. w V V Section 2: That the Board of Directors hereby adopts the Investment Policy Statement of the Orange County Sanitation District, as set forth in Exhibit"A", attached hereto and incorporated herein by reference. u Section 3: That the Board of Directors hereby adopts the following specific performance benchmarks for their two investment funds In accordance with Section 14.0 of the District's Investment Policy: Ir LIQUID OPERATING MONIES: The Short-Term Operating Fund will be compared to L the three month T-Bill rate, and the Callan Active Cash Flow Income Style Group. The Callan Active Cash Flow Income Style Group represents a peer group of managers who V operate with a maximum maturity of one year. LONG-TERM OPERATING MONIES: The Long-Term Operating Fund will be compared 4 to the Merrill Lynch Government and Corporate One-to-Five Year Maturity Index and to the Callan Defensive Fixed Income Style Group. Section 4: That the Board of Directors hereby adopts a performance monitoring and L reporting schedule, as required by Section 15.0 of the District's Investment Policy, which schedule is attached hereto as Exhibit"B", and incorporated herein by reference. I Ir Section 5: That Resolution No. OCSD 07-17 is hereby repealed. W PASSED AND ADOPTED at regular meelin held July 3, 2008. L Chair I W ATTEST: Clerk of the Board V N:W"mo115mis11a5Vmlu nsV008be�13,1m Funm Potl y.d= I W W L r Exhibit "B" r FY 2008-09 Performance Monitoring 8 Reoortina Schedule r For the Administration Committee The Quarterly Investment and Board of Directors meetings of: Management Program Report to be .. resented for the period of: July 2008 August Board only) r September Aril —June 2008 October November Jul —Sept 2008 December Janua '09 Board only) February Oct—Dec 2008 r March April ,y May Jan —March 2009 June HMep�WTr.."Mgn . tft. xO wEnron ame r r r r r r r r r EXHIBIT "B" ORANGE COUNTY SANTIATION DISTRICT PERFORMANCE MONITORING & REPORTING FOR THE DISTRICT'S INVESTMENT PROGRAM POLICY REFERENCE PERFORMANCE CHARACTERISTIC REPORTING PARTY` _ PIMCO MELLON CALLAN 15.1.1 Cost and market value of the portfolio (monthly mark-to-market). M,Q M,Q Q 15.1.2 Modified duration of the portfolio compared to benchmark. M, Q Q 15.1.3 Dollar change in value of the portfolio for a 1%change in Interest rate. M, Q Q 15.1.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which M,Q matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. 15.1.5 For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 M, Q Q days. 15.1.6 Average portfolio credit quality. M,Q Q 15.1.7 Percent of portfolio with credit ratings below Why any rating agency,and a description M,Q Q of such securities. 15.1.8 Listing of any transaction or holdings which do not comply with this policy or with the M, Q California Government Code. 15.1.9 Time-weighted total rate of return for the portfolio for the prior three months, twelve M, Q Q months, year-to-date, and since inception compared to the benchmark returns for the same periods. ADDL" Comparison of portfolio performance to market index benchmark. M, Q Q ADDL" Comparison of Manager's performance to peergroup benchmark. Q ADDL" Monitoring of organizational and structural changes of investment management firm. Q ADD L" Audit portfolios for compliance with investment policy guidelines. Q 15.1.10 OCSD will report if sufficient funds are available for it to meet operating expenditure requirements for the next six months, or if not, state the reason for the shortfall. Notes •M = Monthly `Q = Quarterly "`ADDL=Monitoring of Additional Performance Characteristics H:ldeptlagendalFAHR%FAHR200610706\D6.06.53.lnvest Funds Resolution-Att 3.doc [ [-- F- I - I-- U- r- i- f- [ C- {- F - U - I [ - C- I- C b om August 14, 2008 r STAFF REPORT Quarterly Treasurers Report For the Three Months Ended June 30, 2008 SUMMARY _ Section 15.0 of the District's Investment Policy includes quarterly reporting requirements for the District's two investment portfolios. These two funds, the "Liquid Operating Monies,"and the "Long-Term Operating Monies" are managed by PIMCO, the District's external money manager. The ongoing monitoring of the District's investment program by staff and Callan Associates, the District's independent investment advisor, Indicates that the District's investments are in compliance with the District's adopted Investment Policy and the California Government Code, and that overall performance has tracked with benchmark r indices. In addition, sufficient liquidity and anticipated revenues are available for the District to meet budgeted expenditures for the next six months. The District's portfolios do not include any reverse repurchase agreements or derivative securities. r ADDITIONAL INFORMATION Performance Reports The Quarterly Strategy Review, prepared by PIMCO, and the Investment Measurement Service Quarterly Review, prepared by Callan Associates, are attached for reference. Also attached are Long-Term and Liquid Operating Monies Summary of Performance Data and Portfolio Statistics charts that depict the performance results, estimated yield and duration, credit quality, and sector diversification of the District's portfolios, as of March 31, 2008 and June 30, 2008. The Liquid Operating Monies portfolio, with an average maturity of 66 days, consists entirely of cash equivalent investments such as U.S. Treasuries and corporate discount notes. Portfolio Performance Summary The following table presents a performance summary of the District's portfolios as compared to their benchmarks for the period April 1 through June 30, 2008. r O D ♦ P.O.Box 6127 4 Fountaln Valley.CA 92]2"12] • (714)02-2411 Quarterly Treasurers Report For the Three Months Ended June 30, 2008 Page 2 of 3 :+ Portfolio Performance Summery Quarter Ended June 30,2008 Liquid Operating onles(%) Long—Term 0peratin8 Monlas( ) ar Total Rate Total Rate of of Return Benchmark0) Return Senchimarknr 3 Months .80 -1.0 6 Months 1.42 .11 2.14 W k•i 4. 3 Since Inception 30 Sept 95 4.25 3.85 5.W 5Wy Market Value .3 vemge Quality Current Yield I% 4J Estimated Meld to Maturity(%) 2.3 3. Quarterly Deposits rawals M Estimated Annual Income 1113.3M (1) Benchmarks: • Liquid Operating Portfolio: 3-Month Treasury Bill Index v1 • Long-Term Operating Portfolio: Merrill Lynch CorWGovt. 1-5 Year Bond Index Portfolio Market Values Comparative marked-to-market quarter-end portfolio values are shown in the following table, and in the >r attached bar chart. Liquid Long-Term Quarter Operating Operating Ending Monies($M) Monies($M) 30 Sep.07 30.8 145.5 I" 31 Dec 07 1032 257.3 31 Mar.08 97.7 264.9 '•' 30 Jun.08 98.3 313.7 r District's Investment Account Balances as of June 30, 2008 Book Balances Estimated Investment Accounts June 30,2008 Yield(9k) I State of Calif.LAIF $ 17.993.488 2.89 �+ Union Bank Checking Account 660,825 1.66 Union Bank Overnight Sweep Account 4.258.000 1.77 - PIMCO-Short-term Portfolio 97.981,827 227 PIMCO-Long-teen Portfolio 311,243,853 3.85 1r Petty Cash 4.000 WA TOTAL 3.42 L Debt Service Reserves w/Trustees $21R end d89 3.30 I ' L+ I : V Quarterly Treasurers Report For the Three Months Ended June 30, 2008 _ Page 3 of 3 District's Cost of Funds on Debt Issues as of June 30,2008 r Annual Cost of Foods Outdandng interest Issue Description CAP Bala Rare(%) 1993 Syn Fixed 6 26,9W,000 4.56 2000 VRDO 196,600,OW 1.24 ar 2003 Fixed 191,500,000 5.15 2006 VRDO 196,600,000 1.19 2007A Fixed 95,180,000 4.50 2007B Fixed 300,000,000 4.60 2008A Fixed 7 17 . 65.000 4.54 TOTAL e1. VAL 000 Weighted Avg Con of Funds 3.38 ATTACHMENTS r 1. Historical Yield Curve Graph 2. PIMCO Quarterly Report 3. Quarter End Portfolio Market Value Bar Chart 4. Summary of Performance Data and Portfolio Statistics—Liquid Operating Monies 5. Summary of Performance Data and Portfolio Statistics— L-T Operating Monies 6. Investment Transactions and Balances in LAIF 7. Asset Summary by Asset Type— Liquid Operating Portfolio 8. Asset Summary by Asset Type — Long Term Portfolio 9. Investment Listing of Liquid Operating and L-T Portfolios (Yield Analysis Report). 10. Investment Detail by Currency—Consolidated 11. Custody Transaction History — Consolidated 12. Callan Report 13. PIMCO Report 14. Rating Agency Comparisons r r Prepared by Finance, 8/19/2008, 4:47 PM HISTORICAL YIELD CURVE jj 5.50 -- 5.25 — --- - - - - 5.00 -- - --- -.— --- -- - 4.75 - - - - -- — 4.50 - 4.25 - - — 4.00 -- - -- 3.75 3.50 3.25 ° 3.00 Y 2.75 2.50 -- 2.25 2.00 - - - - - 1.75 - 1.50 - 1.25 -' 1.00 -- 0.75 - - - — - - 0.50 - O O T r T T T T T E E a M e N n o 0 0 CI f0 � N N --*-31-Dec-07 --t-31-Mar-08 -W-30-Jun-08 GioxodAkd kt12220\geggiAFinance\Historica[TREASURYybldaurvs r- r - [;-' r_ r _ t [- r- , t r- t c: r r r P I M C O ate Nnrpmt Qam Dnw r Newpon&eel.U 926m Tel 969na.W F¢ tt9TJa1376 July 30,2008 r Mr.Mice White,CPA Controller Orange County Sanitation District 10944 Ellis Avenue Fountain Valley, CA 92708-7018 Dear Mike: The following is a description of events in the bond markets during the second quarter of 2008 in addition to an analysis of the strategies undertaken in the Orange County Sanitation District's Long-Term and Liquid portfolios over the period We have also included a section on strategies to be pursued in your portfolio during the coming months. _ Bond Market Recap: Concern About the Global Financial Sy Rem and bulletin.Dominate the First Half of 2008 Street in the financial system arising from the 6vbprime debacle and concern about higher inflation r weighed on stuck and bond markets during the fast half of2008.Bonds held up borer than equities m gmeml.The lxhm®Brothers Aggregate Bond Index,a widely used index of U.S.high-glade bonds that includes Treasuries,managed to post again of 1.13 percent for the fast six months of the year despite the turbulence. During the second quarter most fixed income sectors lost ground under the pressure of rising interest rates associated with anxiety about inflation.The benchmark 10-year Treasury bond yielded 3.97 percent as of June 30,not far from where it started the year but 56 basis points higher than at the end ofthe fast quartet. After easing by 225 basis points and taking a number of exceptional steps to unfreeze credit markets during 2008,the Federal Reserve left the federal funds rate uncharged at its muting in June.The central r bank paused to reassess a U.S.economy buffeted by mothering presumes.On we side,hadb and other financial institutions burdened with subprime-related loom remained in dim need of liquidity,and the credit crisis spread to U.S.regional banks.Home prism were still in fieefall,covsomer confidence plunged and unemployment was on the rim.On the other side,of prima touched a record and other r commodity prices surged as well,helping push CPl inflation above 4 perm .Perhaps more importantly, higher energy man helped to min some indicators ofinflatiw expectations.A recent package oftax rebates had the potential to bolster U.S.growth but also add momentum to prim recreates. The movement of yield curves in the U.S.,the U.IC and Europe during the second quarter reflected r mereased nervoumest about inflation.These curves flanmed as investors anticipated that central banks would have to push short term rates higher in the near future. yr Mr.Mike White,CPA July 30,2008 Orange County Sanitation District Page 2 The following graph depicts recent movements in the Treasury yield curve: 1� y V.S.Treasury tleld Cvrve 5 V K 9s B —sensisr —i M7 —OYIWB _ —OQUONB a aT ?! SY tat art! y SOURCE:Bloomberg Financial Markets V Treasuries,TIPS Outperform During Feel Si:Mouths High quality bonds such w Treasuries and Treasuy Inflation Protected Securities(TIPS)outperformed most other fixed income sectors during the first half of 2008,though higher yielding bonds regained some ground versus Treasuries during the second quarter The following is a summary affixed income sector led performance: • High grade mortgage-backed securities(MBS)fared beam than other non-Treasury sectors during the first half ofthe year and outperformed Treasuries modestly an a like-duration basis in the second �+ quarto.Unleveed invasion were able to provide some support to the mortgage market during the second quarter but yield premiums in the sector remained near all-time wides.Balance sheet pressure — among banks and tepid interest from foreign twits]hanks weighed on the market b • Asset-backed securities(ABS),especially home equity ABS,which have been the focal point ofthe subprime collapse,performed poorly relative to like-duration Treasuries for the first six months ofthe year.Subprime-related assets continued m decline in value during the second quarto as home values plunged and collateral quality deteriorated. u • TIPS were among the best performing fixed income asset classes during the fast half ofthe year, benefiting from strong inflation accruals. TIPS gave back some oftheir gains in the second quarter as real yields reversed comae. r•V • Municipal bonds lagged their usable counterparts for the first six months cf2008 amid a dearth of liquidity in the market The biggest actors were lingering concern about the financial health of minters who serve the market,w well as the absence of institutional supporters ofthe municipal asset La class such as municipal specific hedge funds and Wall Street trading desks.Municipals recovered in the second quarter,however,outpacing enables,as retail investors returned to the market and municipals displayed their defensive characteristics amid rising rates. • Corporate bond markets lagged Treasuries for the first halfaf2008 amid generally poor economic •s dau,surging raw material primes and the same liquidity concerns that hurt all non-Treasury sectors. Corporate bonds fared relatively well against Treasuries during the second quarter as historically high credit premiums narrowed,especially in the high yield market,which outpaced high grade corporates during the quarto. Conditions in the corporate market worsened during June,however,as continued subprime related writs-downs at major banks and growing problems at smaller regional banks _ signaled the credit crisis was far from over u L 61 r Mr.Mike White,CPA July 30,2008 r Orange County Sanitation District Page 3 • Emerging market(EK bond returns held up better am other non-Treasury assets during the fuss half of 2008.Locally issued EM credits actually outpaced Treasuries timing the period though much of this was attributable to the soft U.S.dollar.During the second quarter both dollar denominated and locally issued EM bonds outperformed Treasuries • U.S.Treasuries outperformed government bonds of most other developed countries for the first half of 2008.Rater fell more in the U.S.than in moat other developed economies early in 2008 as the Fed moved aggressively to inject liquidity and reemre confidence in the U.S.financial system.Developed country bonds generally lost ground in the second quarter as rums rose worldwide.Treasuries outpaced government bonds in the UX and Europe,where rates rose more sharply than in the U.S. Performance AUribudon: r Long-Term Portfolio The Long-Term portfolio that PIMCO manages on behalf of Orange County Sanitation District v. -.80 percent over the quarter, outperforming the Merrill Lynch 1-5 year Government Corporate Index by 19 basis points. The following points summarize ran= for the quarter ended June 2008. • Your portfolio outperformed its benchmark for the second quarter and for the first half of 2009 PIMCO's transition to shorter duration and focus on attractively valued high quality assets .. protected portfolios during a difficult market in the fast half of • The following strategies helped returns in the second quarter: ➢ An underweight to dwation as yields rose r ➢ An emphasis on high quality mortgages,which modestly outpaced like-duration Treasuries doting the quarter The following strategies were negative for remm : D An underweight exposure to corporate bonds,which modestly outperformed Treasuries on a tile-duration basis Liquid Portfolio The Liquid portfolio that PIMCO manages on behalf of Orange County Sanitation District returned.55 percent over the quarter,outperforming the 3-mouth Treasury Bill Index by 16 basis •+ point The following points summarize returns for the period ending March 2008. • Your portfolio outperformed its benchmark for the quarter • PIMCO's transition away from U.S.interest rate strategies and focus on attractively valued high quality assets protected portfolios during a difficult market in the first half of 2008 The following strategies helped second quarter returns: ➢ An emphasis on high quality,short duration securities such as commercial paper and r agency coupons r r Mr. Mike White,CPA July 30,2008 Orange County Sanitation District Page 4 , ➢ Exposure to Corporate Floating Rate notes which outperformed Treasuries during the quarter V Economic Outlook. PIMCO's Secular Economic Outlook for 2008 PiMCO believes that secular economic,social and political trends exert the most powerful and j sustained influences on bond markets.We defeat"secular"as the next three to five years.Our 6/ secular outlook guides the way we structure portfolios in tams of durationi,yield curve positioning,sector exposure,credit quality and other risk measures.The following are the key themes in PIMCO's Secular Oudook: L • Emerging Economies to Lead Global Growth-Global growth will remain robust despite a cyclical downturn in the U.S.and other developed economies.Growth will be driven to a greater extent by emerging markets that we in the midst of a breakout development phase. L The global economy is evolving into a multi-polar growth world where countries such as Dina emphasize more balanced development paths that include enhanced consumption, market-based systems and more flexible exchange rates. L • Upward Trend in Inflation-Inflation pressures will spring from several sources.Time include:the spillover of global demand into commodities;gradually rising wages as well as policy shifts toward greater employment and social spending in developing economies;and Iowa U.S.monetary policy that lends to export inflation,especially to enraging economies V that align their currencies with the U.S.dollar • Lower Corporate Profits-Profits are likely to decline from current high levels,both overall and relative to labor,as low wages in emerging markets rise.In addition,as the financial sector works its way through the subprime crisis it will have to raise more capital,reduce leverage and tighten lending standards.White such measures will promote stability ova the j long run,they will have a depressing effect on profitability ova the next several years for V financial companies and the corporate sector overall. • Realignment of the Global Financial System-In developed economies,regulatory changes and balance sheet management will drive realignment Now that the Federal Reserve bas 6* opened its discount window to investment banks,these institutions are likely to face greater capital requirements and oversight.The f neacial sector to the developed world will be driven toward a business model with lower leverage and lower risk.Realignment will take a different form in emerging markets.Local capital markets in emerging economies will continue to develop as consumers and businesses demand a wider range of financial services. The influence of sovereign wealth foods will grow as they diversify risk profs of their 4 portfolios. Lr L L i L Mr.Mike White,CPA July 30,2008 a. Orange County Sanitation District Page 5 PIMCO's Cyclical Economic Outlook While the Secular Outlook is the foundation for PIMCO's portfolio strategies,we refine this outlook to account for expected developments over a cyclical,or 6 to 12-month time frame. Major aspects of our cyclical view are: r Fed Unlikely to Tighten in Near Term-The financial system is highly sensitive to shifts in monetary and fiscal policy amid constrained balance sheet liquidity and asset write-downs that continue to erode banks'capital.There is also growing evidence that fallout from the subptime debacle has now spread to the U.S.regional banking sector.In this euvimument, the Fed is unlikely to have the latitude to raise short-term interest rates ova the next several months despite growing inflation pressure. 0itl Heightened Volatility for Investment Strategies-PIMCO expects that the vulnerability of the global financial system to policy mistakes will make risk exposures in investment portfolios mom volatile.On the positive side,however,this volatility is also likely to create ,. more opportunities for estate investors to add value. investment Implications of Secular and Cyclical Outlook The following is a summary of broad investment themes that flow from PIMCO's Secular Outlook,w well as descriptions of how PIMCO expects to cx pre these themes. Limit Interest Rate Risk-PIMCO will look to reduce exposure to interest rates in the U.S. and elsewhere in the world,especially out the longer end of yield curves.Longer maturity rates are vulnerable to inflation risk and,in the case of the U.S.,the need to finance higher expected fiscal deficits and attract investors already heavily exposed to Treasuries.In the U.S.,we will target duration below the benchmark.With the U.S.yield curve likely to s remain steep,we will retain cur focus m relatively short maturities,a strategy that offers the potential for gains as bonds"roll down",or mature along the steep yield curve over time. Outside the U.S.,PIMCO will retain exposure to the front end of the U.1L yield curve, �+ though at reduced levels.The Bank of England faces the same constraints with respect to raising rates as does the Fed,which means that U.IC short rates are unlikely to rise as much as markets expect. • Own High Quality Assets With Attractive Yields-Debt reduction and balance sheet realignment,and the resulting dearth of liquidity,have contributed to a dramatic widening in risk premiums across a variety of fixed income assets.PIMCO will be discriminating as it r, pursues these opportunities.We believe that the best risk-adjusted returns will be found in the senior pat of the economy's capital structure.These securities include top quality corporates,municipals,mortgages and other asset-backed bonds where valuations have cheapened less for reasons of aedit weakness than because of system-wide liquidity r constraints. For example,PIMCO will retain an overweight to mortgage-backed bonds,especially those arranged by the major mortgage agencies,to capture yield premiums well above historical averages.Municipal bonds trading at yields above Treasuries are another high quality opportunity. r 1 Mr.Mike White,CPA July 30,2008 L Orange County Sanitation District Page 6 b • Look for Value in Finaocish-Realignment of the financial sector could create compelling I . opportunities for investors.Regulators will look to remove risks of institutional failure from L+ the battling system The cost of this regulatory reaction will be a lower return on capital that will likely tilt relative value in the direction of bondholders and away from stocks of finencial companies.While PIMCO will retain an overall underweight to the corporate Ld sector,we will continue to emphasize select high grade corporates where the credit crisis has produced attractive valuations,including bonds of banking and finance companies. Some of - these financial institutions may well be too big to fail,thus putting than under the"umbrella" of the Fed. i" • Position for Renewed U.S.Dollar Weakness-The U.S.dollar's decline is not over,but the currencies that carry the brunt of the appreciation versus the dollar will change.The gainers will no longer be dominated by countries with floating currencies,such as the euro,pound 6W and you. PIMCO will take modest positions that benefit when these currencies lose value versus the U.S. dollar.We will emphasize cmreames of emerging market countries(such as China and elsewhere in Asia)with relatively inflexible currency regimes that will be forced ✓r to In thew currencies rise against the U.S. dollar to combat inflation. Strmerrv: V The following list highlights the strategies that will be used in the Long Term portfolio in the coming months: — • Seek to safeguard assets amid market stress;prudently take advantage of attractive yields on b high quality assets • Target duration near to modestly below-index as rates are unlikely to fall further take - broader-than-index yield curve exposure in an effort to capture value along the curve 1 • Emphasize high quality mortgages,which offer historically compelling yield premiums with I� little or no default risk _ • Continue to insulate portfolios from the subprime crisis;look to own high quality short term asset-backed bonds with strong credit enhancement �+ • Retain underweight to corporates but focus on select high grade names where the credit crisis bas produced attractive valuations,especially in the financial sector r S ariory: The following list highlights the strategies that will be used in the Liquid portfolio in the coming 1.. months: • With the U.S.yield curve likely to remain steep,emphasize relatively short maturities to capture gains as bonds"roll down"or approach maturity along the steep curve • Focus on high quality assets at the top of the economy's capital structure;liquidity i* constraints in the financial system have created attractive valuations for these securities • Focus corporate exposure to select high grade names where the credit crisis has produced attractive valuations,especially in the financial sector I (r L Mr.Mike White,CPA July 30,3008 Orange County Sanitation District Page 7 r r We look forward to discussing these and other topics with you in the near future. Best Regards, r r John M.Miller,CFA Executive Vice President r r Christine Telish,CFA Vice President r r Derek Fan Account Manager r r w r r r Prepared by Finance, 8/1912008, 4:17 PM Monthly Investment Balances by Type- Last Six Months E400.000.000 E3W,OW,OW —.-- __ -- - - - - --- E2W,u0u,OW llmow'w m January 20CI0 Febmary 2006 Memh 2008 ApM 2008 May 2W8 June 2008 OPIWO-LYp4e OMMCO-e 4l amp pdA Ream. L. IF .B ftoe aPdty Casa H:Wept\asd1EXCEL.dta\220\geggie\m treas rpt\Monthly Investment Balances Graph May 2008 i i f i t I I I Summary of Performance Data and Portfolio Statistics Orange County Sanitation District Liquid Operating Portfolio 10-rear Return ea.stoneard oe daeen +o Total Portfolio E ° Nk+a x Before Fees 1%) 4.28 3.92 3.35 4.53 4.00 2.67 1.42 0.59 2 Yr. OMppyp y4 6 T.ury 1ON. AHer Feae(%) 4A3 3.77 3.18 4.35 3.00 2.55 1.37 0.55 Clligroup 3-Month Treasury Bill Index(%)' 3.86 3.47 3.06 4.11 3.32 2.11 1.11 0.39 4 !Fm6wa seb imn z 0 2 4 6 a 10 stma.re on.t�,m Ralunzlxl %of Market Value Duration in Yrs ir:� Total Market Value(USD In millions) 97.7 983 Government/Agency 27 14 0.1 0A Quarterly Contributions(USD In millions) -7.0 0.0 Mortgage 0 0 0.0 0o Eelimated Annual Income(USD In millions) 2.2 2.2 Invest.Grade Credit 1 3 0.0 0.0 Estimated Yield 10 Maturity(%) 2.0 2.3 High Yield Credit a 0 0.0 on Effective Duration(yrs) 0.2 0.2 Non U.S.Developed 0 0 0.0 0.0 Effective Maturity(yrs) 0.2 0.2 Emerging Markets 0 0 0.0 as Average Duality AAA AAA Municipal/Other 0 n 0.0 0.0 Average Coupon(%) 2.3 2.3 Net Cash Equivalents:' 72 03 0.1 GA Net Currency Exposure(%) 0.0 to Commercial Paper f STIF 72 63 0.1 0.1 Tracking Error(10 yrs,%)4' 0.1 0.1 ST GovernmenVAgency 0 0 co 0.0 Information Ratio(10 yrs)` 2.9 2.9 Certificates of Deposit 0 4 0.0 0.0 •Sae example of tracking error I Information ratio on U.S.Money Mkt FuturesfOamns 0 0 0.0 0.0 footnote page of the Appendix. Non-U.S.Money Markel Futures 0 0 0.0 so Other 0 16 0.0 0.0 Less:Liabilities 0 0 0.0 0.0 Total 100 too 0.2 0.2 See footnotes in Appendix. 2 Summary of Performance Data and Portfolio Statistics Onsi gs County Sanitation District Long Term Portfolio 1.Y-a.lmn...Sla.n.m o.m.n.. E i Pnnlam 4 lanG Tnlal Portfolio Al x Satan,Fees("/.) 5.67 5.32 3.83 4.95 7.79 4.82 2.14 -0.80 $ 4 After Foes 1%) 5.52 5.16 3.67 438 7.61 4.70 2.09 d1.83 a x LHIGMUP 4k, Morrill 1-6 Year GovLCarp.(%)' 548 5.17 3.38 4.56 7.09 4.32 1.79 4.02 � 2 3.4b 0 0 2 x 6 e St...13 l..nl R.u,nr(x) %of Market Value %of Duration Total Market Value(USD in millions) 264.9 313.7 GovemmonVAgency 65 56 70 59 Quarterly Contributions(USD in millions) 0.0 50.9 Mortgage 17 14 27 26 Esamaled Annual Income(USD in millions) 10.5 13.3 Invest.Grade Credit 0 6 0 13 Estimated Yeld to Maturity(%) 4.0 3.9 High Yield Credit 0 a 0 0 Effective Duration(yrs) 2.1 2.1 Nan U.S.Developed 0 0 0 a Benchmark Duration(yrs) 2.5 2A Emerging Markets 0 0 0 0 Effective Melurity,(yrs) 2.3 2.3 MunicipallOther 0 0 0 0 Average Quality AAA AA. Nei Cash Eguivalenls:3 18 24 3 2 Average Coupon(%) 4.1 4.3 Commercial Paper STIF 12 10 1 0 Net Currency Exposure(%) 0.0 to STGovernmenVAgency 6 2 1 0 Tracking Error(3 yrs.,%)e' 0.5 0.5 ST Mortgage 1 1 0 0 Infurme0on Ratio(3 yrs.)4' 0.7 0.7 ST Credit 8 15 1 2 'See example of tracking error I Information ratio on U.S.Money Market FutureslOpth 0 0 0 0 footnote page of the Appendix. Non U.S.Money Market Futures 0 0 0 0 Other 1 1 0 0 Less:Liabilities .10 .5 0 0 Total 100 100 100 100 Sea footnotes In Appendix. 2 Orange County Sanitation District Investment Transactions and Balances in the State of California Local Agency Investment Fund June 30, 2008 ti Par Value Book Value Market Value Rate Yield Balance June 1,2008 $15,893,488 $15,893,488 $15,893,488 2.89 2.89 Deposits: 6/4/2008 22,000.000 22,000,000 22,000,000 2.89 2.89 .. Total Deposits 22,000,000 22,000,000 22,000.000 2.89 2.89 Withdrawals: 6/12/2008 (2,500,000) (2,500,000) (2,5W,000) 2.89 2.89 6/16/2008 (2,100,000) (2,100,000) (2,100,000) 2.89 2.89 r 6/182008 (6,400,000) (6,400,000) (6,400,000) 2.89 2.89 6272008 (8,900,000) (8,900,000) (8,900,000) 2.89 2.89 Total Withdrawals (19,900,000) (19,900,000) (19,900,000) 2.89 2.89 Balance June 30,2008 $17,993.488 $17,993,488 $17,993,488 2.89 2.89 r w r Report To: GL8251 Asset Summary ll.e ca„eaep. UBD THE BANK OF NEW YORK MBLLON by Asset Type with Sectors E has Rate: UID OPBR-PDWCO-OMM51I103 F) 30 008 Statue: FINAL W CASH A C"R EQOIVALENTS U.B.DOLLAR CASH 1.338.00 1,338.00 0.00% 0.00 INTEREST 320.905.93 320,905.93 0.33% 0.00 CERTIFICATES OF DEPOSIT-DOMESTIC 3,500,000.000 3,500,000.00 3,500,000.00 3.56% 0.00 COMMERCIAL PAPER-DISCOUNT 12,600,000.000 12,461,898.54 12,461,898.54 12.68% 0.00 FED HM LOAN BNK-LESS THAN lYR 15,500,000.000 15,404,090.67 15,404,090.67 15.67% MUD FEDERAL HOME LOAN MORTGAGE-LESS THAN IYR 18,400,000.000 18,300,135.61 18,300,135.61 18.62% 0.00 FNMA ISSUES-LESS THAN LYR 15,771,000.000 15,634,628.35 15,634,620Z5 15.91% 0.00 MUTUAL FUNDS 116.264.730 116,264.73 116.264.73 0.12% 0.00 REPURCHASE AGREEMENTS 15,700,000.000 15,700,000.00 13.700.000.00 15.97% 0.00 TREASURY BILLS-LESS THAN IYR 7,300,000.000 7,262,824.84 7,252,824.84 7.39% 0.00 U.B.DOLLAR 69, "AS4.730 80,702,086.67 88,702,08647 90.25% 0.00 CASH IS CASR EQUIVALENTS 88,887A".730 88,702,086.67 08,702,046.47 90.2 0.00 FAD INCOME SECURITIES1 U.S.DOLLAR BANKING&FINANCE 3,1OD,000.000 3,094,431.00 3,076,048.00 3.13% -18.383.00 U.S.AGENCIES 6,100,000.000 6,148,103.00 6,106,598.00 6.21% -41.505.00 U.S. DOLLAR 9,200,000.000 9,242,534,00 9,182.646" 9.34% -69,888.00 FDIED INCOME SECURITIES 9,200,000.000 9,242,834.00 9,192A".00 9.34% 49,888.00 CONVERTIBLE BECURIT12% U.S. DOLLAR CONVERTIBLE BONDS 400,W0.000 400.200.00 398,000.00 0.40% -2,200.00 TOTAL ASSETS-BASE: 98,487,264.730 98,344,620.67 98,282,732.67 300.00% 42.088.00 7/24/2008 7:29:21PM EDT 1 V/ork6ench Asset Summary Report ID: GL8251 S..ai —,: USU THE SANKOF NEWYORK MELLON by Asset Type with Sectors AHemate BueC e¢ey: Exchaa8e Rate: LONG TERM OPEN PO4CO-OCSPOT522202 6 30 2008 etabu, FINAL Net Unrealized Cost Market Value 4 of Gain/Goss Description Share. Par Base Base Total Base CASH&CASH EQUIVALENTS U.B.DOLLAR PENDING TRADES 4,111,813J6 A.111,813.76 -1.31% OGO INTEREST 2,232,457.50 2,232,457.50 0.71% 000 COMMERCIAL PAPER-DISCOUNT 4,800.00D OOD 4,780,666.67 4,780,666.67 1.53% 0.00 FED HM LOAN BNK-LESS THAN In 2,700,000.000 2,695,359.00 2,695,359.00 0.86% Duo FEDERAL HOME LOAN MORTGAGE-LESS THAN I YR 22.400.000.000 22,318,638.50 22,318,638.50 7.12% 0.00 MUTUAL FUNDS 354,138.880 354,139.88 354,138.88 0.11% Goo U.B. DOLLAR 30,264,138.880 28,269,446.79 28,269,446.79 9.02% 0.00 GBH&CASH EQUNALEBTB 30,264,138.880 29,269,446.79 28,269,996.79 9.M% 0.00 FDOED DICOME BECUNITRB U.B.DOLLAR Ana-HOME EQUITY 808,974.480 796,334.27 726,813.01 0.23% -69,521.26 BANIUNG&FINANCE 64,150,000GUO 63,984,397.00 63,371,679.68 20.22% -612,717.32 CMO-U.S.AGENCIES 181,301.370 177,901.96 181,411.96 MG6% 3,510A0 COLLATERALIZED MORTGAGE OBLIGATION COMM/( 696,M7.570 6%,267.57 703,733.29 0.22% 7.465.72 FHLMC MULTICLL9S 1,2%,629.440 1,282,683.50 1,300,635.98 0.41% 17,952.48 FHLMC POOLS 24,344,943.640 24,486,055.85 24,305,127.37 7.75% -180,928.48 FNMA POOLS 17,818,120.010 18,115,021.28 17,734,586.86 5.66% -380,434.42 PNMA REMIC 389,810.460 375,611.80 385,480.93 0.12% 9.869.13 ONMA MULTI FAMILY POOLS 860,845.480 859,3T/.70 866,506.46 0.28% 7.128.76 GNMA SINGLE FAMILY POOLS 3,156.660 3,313.01 3.280.18 OAP% -32.83 PVT PLACEMENTS-MORE THN In 752,000.000 826,199.84 826,199.84 0.26% 0.00 U.S.AGENCIES 110,371,848.290 114,642,39C22 114,539,986.89 36.54% -102,407.33 U.S.GOVERNMENTS 57,716,354.230 58,897,313.63 58,664,256.00 18.71% -233,057.63 UTILITY-ELECTRIC 900,000" 900,wom 897,606.00 0.29% -2,394.00 UTILITY-TELEPHONE 700,000.000 700,000.00 699,559.00 0.22% -0 1.00 U.B.DOLMAN 280,990,261.630 786,742,871.63 285,206,863.45 90.98% -1,536,008.18 P D]SCONES BECURPITEB 280,990,161.630 256,742,871.63 285,206,863.45 90.98% -1,536,008.18 712412" 7.32:32PM EDT 1 Workbench r. Asset Summary Report ID: OLS251 Hue Cu nee: LED TItR BANK OF NEW YORK MELLON by Asset Type with Sectors Alte.nate ft.:Cerwmr: H h.,.Rate: LONO TERM OPBR-PMICO-OMM7a22202 6 30 2008 BtatRa: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description - Shares Par Base Base. Total Base TOTAL ARSF.Tfl -BASF,: 311,244,390.510 315,012.31H 42 813,19G,310.24 100,001. -1,536,008.18 7/24/2008 7:32:32PM EDT 2 Workbench Asset SummaryReport ID: DL8251 Pn.e Cuv....: USD 1NF PANKOF New YORR NIELION by Asset Type with Sectors Alt—..t. B...Currency: ,.h..,R.lv: ESCROW ACCOUNT-OCSM75SS502 6/30/2008 SW..: FMAL - NeC Unrallized Cost Market Value 46 of Gain/Loos D6scription Shares Par Base Base Total ease CABS 8.CASH EQUWALENTS U.S. DOLLAR INTEREST 57,745 N 57,745.09 1.51 nun FIRED MCOME 6ECURRIES U.S. DOLLAR U'S. GOVERNMENTS 3,6I0,000.000 3,707,867.10 3,765,245.13 99 4'M M 3'iH 01 TOTAL ASSETS-BASE: 3,61o,U0o.000 3,765,612.19 3,823,990.22 100.00% 58,379.03 7/24/2008 7:36-27FN EDT 1 Wwk6end, Yield Analysis Repoli ID: RAM234 Ease Co.. .": THE BANK OF NEW YORK MELLON OCSF07511102 6/30/2008 Uq ld Oper-Pimeo Unita'Held - - YTM/. Cp nt Moody's Market TotLj Cast %'Typt Option ,secuelty ID 8ecutlty DeEcNpt3an Call(EOP): Yield 4vallty' Price NtEcket Ya14e 4§r rlfet ASI}. Rating �aidE ONtatldu CASH h TEMPORARY Sum of Acmunl Rmcivablcs - 0,00 SUMRECV 320,906 AGENCY 2,2W.D00.0D FEDERAL HOME LN DK CONS DISC LOS AGY 99.98 2.196.390 2 4B 0.01 313384M3 MAT 07/02/2008 2,196,390 2.23 2,371,000.00 FEDERAL NATL MTG ASSN DISC W L89 AGY 99.21 2,337.053 2.64 0,41 313588R31 MAT 11/28/2008 2,337,053 2.38 1,400,MO.00 FEDERAL HOME LN HK CONS DISC 2.03 AGY 99.88 1,396,220 1.58 0.05 313384ZN2 MAT 07/18/2008 1.396,220 1,42 6,OOQ000.00 FEDERAL NATL MTG ASSN DISC NT 2.08 AGY 99.85 5,979,933 695 0.08 313588A39 MAT 07/31/2008 5.979.933 6.08 3,400,000N FEDERAL HOME LN MTG CORP DISC 2,16 AGY 99.77 3,376,623 3.81 0,10 313396B28 MAT 08/07/2008 3,376,623 3,44 15,000,MO.00 FEDERAL HOME LN MTG CORP DISC 2,20 AGY 99.75 14,923,513 16.84 0.11 313396H69 MAT 08/11/2008 14,923,513 15.18 6,300,000.00 FEDERAL NATL MTG ASSN DISCOUNT 2,33 AGY 99.48 6,236,501 7,04 0.21 31358SG33 MAT 09/17/2008 6,236,501 6.35 8,400,D00.00 FEDERAL HOME LN BK CONS DISC 2.33 AGY 99,46 8.352,797 9.42 0.22 313384052 MAT 09/19/20DS 8,352.797 8.50 900,000.00 FEDERAL NATL MTG ASSN DISC NT 2.74 AGY 97.99 881,907 0.99 0.73 313589DP5 MAT03/27/2009 881,907 0.90 71101200E 5:33:40PM EDT 1 Source:The Bank of New York Mellon Co.oomtwo Yield Analysis Repurt m: RAM234 B.Cvrteaey. MD THE BANK OF NEW YORK MELLON 0C 81110E 6/30/2008 PAquid Opn-POnm s ?ce 1 ✓f " "'Vow CUFRIIS - ffiOoily'e MBY&et l/'nRet Eft x3V'„ ,�0'PI Fi610 QB tq Pfi�Bz 1 �' J 1 3,500.000.00 FEDERAL HOME LN BK CONS DISC 2.76 AGY 98.82 3,458,684 3.90 0.42 313384R84 MAT 12/03/2008 3,458,684 3.52 20g000.00 FEDERAL NATL MTO ASSN DISC NT 6.87 AGY 98.87 199,233 0.22 0.16 31358SD85 MAT08/29/2008 199,233 0.20 CERFIPICATUS OF DEPOSIT 3,500,000.00 CITIBANK NA NY BRH INSTL C/D 2.80 2.80 - 100.00 3,SOQ0D0 3.95 0.21 173DD1VB7 2.800%09/15/2008 DO 06/I3/DS 3,500.000 3.56 Cprmoozcl l PAPER 3,900,000.D0 BANKAMERICA CORP DISC 2.89 P-1 99.31 3,873.284 4.37 0.24 066OPWQ7 09/24/2008 3,873,284 3.94 3.800,000,00 WELLS FARGO 8:CO DISC 5.71 - 99.89 3,795,783 4.28 OD2 94WPOG71 07/07/2008 3,795,783 3.86 1,400,00MOO GENERAL ELEC CAP DISC 7.73 P-1 98.65 I,3SI,032 1.56 0.17 36959NU24 09/02/2008 1,381,032 1.41 3,500,000.00 GENERAL ELEC CAP DISC 44.32 P-1 97.48 3,411,800 3.85 0.06 36959HGM3 07/21/2008 3,411,800 3.47 REPURCHASE AORBBMEBTB 15,700,000.00 LEHMAN CAT 1 REPO REPO 1.25 1.25 - 100.00 15,700.000 17.71 OAO 99ZAB4B83 1.250%07/01/2008 DD 06/30/08 15,700,000 15.97 TRBABORY 1,500,000.W USTREASURYBILL 1.46 UST 99.94 1,495,412 L69 0.07 912795F63 0.000%07/24/2008 DD 01/24/08 1,495,412 1.52 5,800,OOD.00 U 5 TREASURY BILL 1.71 UST 99.73 5,767,413 651 0.18 91279SG47 MMM 09/04/200B DO 03/06/08 5.767,413 5.87 US CASH 7/IO/200A 533:40PM ED7 2 Sourte:The Bar t ofN.Ywk mM.Co�t �. Yield Analysis Report ID: RAMIM4 Rue Curreney: UBD THE! BANK OP NEW YORK MELLON OCEy073llim 6/30/2008 u9uld Dime,M. ld - YTM/ Current Eoody'F Market xotal.GoR %Type Optlyn gHtj-Yu CanIEGPI Yield Quality Pric6 MArl4t Ypltie %AFatket AdJ . 6eenrlty,`Desedptloo. Rating. - irsilue Dnistlon _ IN US CASH - 0 0.00 0.00 999999USD OL PURE CASH 1,338 0.00 US CASH FUNDS 116,264.73 DREYFUS TREASURY CASH MOOT 1,41 1.41 AM 1t6,265 0.13 0.08 996085247 VAR RT 12/3I/2049 DD G4/09/97 116,265 0.12 TOTAL:CASH et TEMroRARY 3.90 1.m 88,3T9,343 Im.00 0.14 68,7m,0E7 F=D INCOME AGENCIES A OTHER OOYT OBL 500,000.00 FEDERAL NATL MTG ASSN DEB.% 2.17 3.87 AGY I00.O6 498,165 5.41 0.04 31359ME41 3.875%07/15/2008 DD 06/24/05 500,300 0.51 600,000.00 FEDERAL NATL MTG ASSN DESS 2.21 3.25 AGY 100.00 594.50,1 6.49 0.12 31359MSQ7 3.250%08/15/2008 DD 07/25/03 599,988 0.61 3,000,000.00 PEDERA,HOME LN BKS CONS BD 2.68 3.01 AOY 99.82 3,016,650 32.41 0.77 3133X4ZC8 3.000%04/151200I DO 03/l0/04 2.994.690 3.05 2,000,000.00 TENNESSEE VALLEY AUfH 2.76 5.34 AGY 100.58 2,039,784 21.77 0,37 88059IDB5 5.375%11/13/2008 DO 11/13/98 2,011,620 2.05 EMIR s FINANCE 3M.000.00 DEERE JOHN CAP CORP MEDIUM 2.98 2.98 A2 100.00 300,000 3.25 0.24 24422EQU VAR RT 09/25/2008 DO 09/25/07 300,000 0.31 90Q000.00 CREDIT SUISSE USA INC 3,20 2.77 Ml 99.69 895,806 9,71 0.19 225434BG3 VAR RT 06/05/2009 DO 06/07/06 897.183 0,91 400,000.00 WACHOVIA BK NATL ASSN MTN 3.30 2.66 AAI 99.78 399.768 4.32 0.01 92976F1379 VAR RT 10/03/2008 DD 04/05/07 399.124 OAI 7/10/2" 5:33a0PAf EDT 3 SourtF:]fie BaNa f X.Ymk Mello.Corpemtinn I I I I I I I I t Yield Analysis ID; R 34 Hose Cnnency: USD THE BANK OF NEW YORK MMUON oce 11102 6/30/2008 MqWd Opm P o 600,000.00 WACHOVIA CORP NEW SUB NT 3.45 2.54 Al 9972 599,172 6.47 OM 929903ASI VAR RT 10/28/2008 DO 10/28/05 598,308 0.61 900.000.00 WAMOVIA CORD NEW SUB NT 9.32 3.01 AA3 9794 899,685 9S4 0.08 92NMAQS VAR ICr 10/28/2008 DO 10/28/05 881433 0.90 TOTAL:MZD MD 3.39 3.49 9,242,534 100.00 0.38 9,182,"6 CONVPMIBLES DIVED RMKS 400,000.00 WELLS FARGO&CO NEW SR DES 3.55 3.57 mi 99.50 400,200 99.40 6.04 949T46PA4 VARRT 05/01/2033DD05/Ol/M 398.000 0.41 TOTAL-- 3.53 3.55 400.200 I00.00 6.00 398,000 Liquid Oper-p co 3.85 1.69 93,022,5w 100.00 0.18 98,282,733 7/10/2008 5 33:40pm EDT 4 S .The Bw fN.York Ma.Corpomf Yield Analysis Report ID; IRAM234 )0. a.. THE BANK OF NEW YORK MELLON 000VII7522202 6/30/2008 CASH 6 TEMPORARY Sum of Account Receivables 0,00 SUMRECV -1.979,356 AORaCY 2,M,WO.00 FEDERAL HOME LN PIK CONS DISC 1.91 AGY 99.92 2,695.359 10.33 0,03 313384ZF9 MAT07111/2008 2.695.359 086 5,300,000.00 MID&M HOME LN MTG CORP DISC 2.05 AOY 99.97 5,295.823 20.25 0.06 313396ZR7 MAT07121/20D8 5,285.823 1.69 17.100.=.00 ItEDERAJI,HOME LN MTG CORP DISC 2.08 AGY 99.93 17,M2,816 65.25 0.08 313396ZY2 0.000%07/28/2008 OD 07/30/07 17.1332,816 5.43 COMMERCIAL PAPER 4,800,000.00 BANKABi[ERICA CORP DISC 9.10 239 P-1 99.60 4,781111,667 18.31 0,04 0660MOG2 M11612008 4,780,667 1.53 MQMlIH L00 USD (UNITED STATES DOLLAR) 0 000 000 NA9123459 GL PAYABLES RECEIVABLES 0 0,00 Us CILBE FUNDS 354.138.88 DREYFUS TREASURY CASH MGMT 1,41 1,41 AAA 354,139 1,36 0.08 996085247 VARRT 12/3I/2()49DD04/09/97 354.139 0.11 TOTAL:IMASH&TRINPORAdIty 3.65 10.93 30,148'603 10111 0.07 28,269,"7 FEKW INCOME AGENCIES&VPIRZIR O W OSL 711012008 5.33:40FM EDT 5 source,Tile Bank of N. Y.,h AMID.C-P—ti- - f f -. U-, I— I r - C 1-- : U- U- C - 1 t C r- , I[- r- r- U- I 1 l I [ [ 1 [ 1 I l 1 1 1 l l 1 l 1 1 Yield Analysis ReFaR m: RAM234 Bane C. : Use THE BANK Of NEW YORK MELLON OCBFOY522202 6/30/2008 say Tb 0P Plmea L P 1,066,000.00 FEDERAL HOME LN MTG CORP MTN 2.12 3.06 AGY 99.99 1.015,532 0.37 0." 3128X1RX7 3.060%07115/20M DD 07/15/03 1,065,861 0.34 2,100,000.00 FEDERAL NATL MTG ASSN DEBS 2.94 6.37 AGY 103.99 2,030,133 0.76 1.15 31359MEY5 6.625%09/15/2009 DD 09/01/99 2,183.811 0.70 175,000.00 FEDERAL HOME LN BKS CONS BD 3.32 3.20 AGY 99.93 166.745 0.06 0.30 31339"F4 3.200%01/14/2009 DD 07/14/03 174,883 0.06 30,000,000.00 FEDERAL HOME 1N BK CONS BD 3.39 3.60 AGY 100.57 29,942,460 10.50 2.34 3133XNHZS 3,625%12/17/2010 DO 12/07/07 30,169,500 9.62 13,50D,000.00 FEDERAL NATL MTG ASSN DEBS 3.44 4.38 AGY 102.64 13,933.553 4.82 2.44 31359MF40 4.500%02/15/2011 DD01/20/06 13,855,934 4.42 DD0 FEDERAL HOME LN SSE CONS BD 3.53 3.53 AGY 100.00 0 0.00 0.56 31339YJD5 3.530%01/28/2009 DO 07/28/03 0 0.00 2,942,000.00 FEDERAL HOME LN MTG CORP MTN 3.54 3.54 AGY 100.01 2,780,650 1.02 0.27 312SX1NJ2 3.545%07/07/2010 DO 07/07/03 2.942,147 0.94 41,500,000.00 FEDERAL NAIL MTO ASSN DEBS 3.65 5.63 AGY 106.65 44.622,033 15.40 2.63 31359MJH7 6.000%05/15/2011 DO 05/25/01 44,259,750 14.12 14,000,000.00 FEDERAL HOME LN MTO CORP MTN 4.01 5.21 AGY 105.62 15,068,718 5.15 3.64 3137EMVI 5.50D%08/20/2012 DO 06/15/07 14,786,621 4.72 1,070,D00.00 FEDERAL HOME LN BKS CONS BD 4.43 4.28 AGY 99.16 1.007,020 0.37 1.76 31339Y3U4 4.240%07/02/2013 DD 07/02/03 1,061,012 0.34 2,SOO,000.00 FEDERAL HOME LN BKS CONS BD 4.71 5.02 AGY 100.59 2,539,844 0.88 0.59 3133XKS55 S.OSD%05/10/2010 DO OS/10/07 2,514,725 0.80 1,300,000.00 FEDERAL HOME LN BK CONS BD 4.76 4.98 AGY _ 100.40 1,316.859 0.45 0.45 3133XKEC5 5.00M04101/2010 DO 04/10/07 1,305,161 0.42 7/10/2608 5:33..40PM EDT 6 Sow The Bank a/New Ycr Maeon Cor mtin %�- Yield Analysis Reyes M. RAM234 Aw� aen CerRney. usn THE BANK OF NEW YORK MELION �gyg.1522702 6/30/2008 Lang Term Oyer Fimao 2,600,000.00 GENERAL ELEC CAP MTN TRW716 3.20 2.83 AAA 99.84 2,600,000 0.9D O.m W9620T53 VAR RT 12/12/2W8 DO 12/12/05 2,595,918 0.83 2,200,000.00 WACHOVIA BE MTN TR#SR OOOV 3.45 2.85 mi 99.56 2.2W,595 0.76 0.23 92976FBC6 VARRT 03/2312009DDW/23/06 2,190,364 0.70 4.7W,WO.W DEERE JOHN CAP CORP MTN W353 3.49 3.54 - WAR 4,7W,� 1.63 0.22 24422EQSI VAR RT 0 6110/2 011 DO%/12/08 4.694.830 1-50 900,000.00 BANK AMER N A CHARLOTTE N C 3.56 3.36 - 99.67 No," 0.31 0.24 060507IJ9 VAR RT M/23/2010 DD 06/23108 8W.039 0.29 3,100,OOD.00 CATERPILLAR PINL SVCS CORP MTN 3.64 3.56 99.86 3,100,000 im 0.26 14912L3X7 VAR RT 06/2412011 DD 0612610B 3,09S,629 0.% 4,7W.WO.W JP MORGAN CHASE&CO MTN 3.64 3.55 AA2 99.5B 4,7W,WO 1.63 0.23 46623EHY8 VAR RT N/13/2011 DO 06/13/08 4,680,166 1.49 3,ID0.0W.00 NATIONAL RURAL UTRS COOP MN 3.68 3.58 Al 99.91 3,IW.WO 1.08 0.26 637432LN3 VAR RT 07/0112010 GO 06/W/08 3,W7,M6 0.99 3,400,W0.W BANK AMEMCA N A CHARLOTTE N C 3.69 3.30 AAA 99.55 3,403,186 1.18 0.12 060SOTLI>! VAR RT OS/12/2010 DO 05112/08 3.384.554 I.GS 300.000.00 BEAR STEARNS COS WC 9MG0699 3.95 2.80 BAAI 98.84 289,236 0.10 0.14 073928R47 VAR RT 08121/2009 DO 08/22/06 2%,529 0.W 1,50D.D00.00 MORGAN STANLEY Nr 4.19 3.89 AA3 99.61 1,476,210 0.52 OS3 61746BAM 3.875%01/15/2009 DD 01/13104 1,494.135 0.48 2,000,000.W HSBC FIR CORP MTN#TR"07 4.23 3.03 w 97.97 1,997,220 0.68 0.11 4042WAG2 VAR RT 05/10/2010 DO 05110/05 1,959,360 0.63 7/10/20M 5.33.40PM EDT 7 77.Sm fm.Y.r me Grporanon Yield Analysis Repee6 ID: RAM234 Bvo Cvneney: USD THE BANK OF NEW YORK MELLON OCSF07B22202 6/30/2008 amq Term Opor Mmee r,:.� � b: I,O KLOOOOO( BEAR STEARNS COB INC GLOBAL NT 4.30 3.22 BAAl 97.05 917,420 0.34 0.07 073902KG2 VAR RT 01/31/2011DD01/31/05 970,460 0.31 2,100,000.00 CITIOROUP FOG INC MEDIUM TERM 4.34 3.85 AA3 99.22 2,100,000 0.73 0.11 173DTOFV6 VAR RT 05/07/2010 DO 05/07/08 2,083,578 0.66 4,700,OW.00 AMERICAN EXPRESS CR CORP MIN 4.40 3.91 AA3 99.19 4,700,000 1.62 0.08 0258MOCV9 VAR RT 05/27/2010 DO 05/27/08 4,661,789 1.49 2,350,WO.W GOLDMAN SACHS GRIP 4.61 3.19 AA3 97.22 2,3W.000 0.80 0.24 38143UBD2 VARRT 06/28/201ODD06128105 2,284,623 D.73 1,300.000.00 MORGAN STANLEY SR GLOBAL MTN 5.18 4.80 AA3 99.61 1,300,000 0.45 0.14 61746BDDS VAR RT 05/14/2010 DD 05/14/O8 1,29g917 0.41 1,600,000.00 MERRILL LYNCH 8:CO INC MEDIUM 5.41 4.52 NR 99.34 1.596.048 0.55 0.14 59019YQ46 VAR RT 05/20/2OD9 DD 05/20/08 1,589,488 0.51 3,200,D00.00 ALLSTATE LIFE GLOBAL FOG SECD 5.54 5.40 AAS 99.61 3,196,800 1.11 4.21 02003MBQ6 5.375%04/30/2013 DO 04/30/08 3.187,488 1.02 3,100,000.W BANK AMER PDO CORP MED TERM 5.64 5.06 AA2 96.90 3,091,444 1.05 4.25 0605IODW6 4.900%0 5101/2 0 13 DD 05/02/08 3,003,790 0.96 1,400,WO.00 GENERAL EIEC CAP CORP MEDIUM 5.93 5.82 AAA 96.70 1,396,262 0.47 7.36 3696203U6 5.62S%05/01/2018 DO 04/21/08 1,353,842 0.43 600,000.00 AMERICAN EXPRESS CR CORP MTN 6.01 5.91 AA3 99.44 597,942 0.21 4.18 0258MOCW7 5.875%05/02/2013 DO 06/02/08 596,624 0.19 4,20D,WO.00 CMOROUP INC GLOBAL SR NT 6.N 5.64 AA3 97.59 4,178,664 1.43 4.14 172967EQO 5.500%04/11/2013 DO 04/11/08 4,098,948 1.31 1,500,000.00 WACHOVIA CORP GLOBAL MEDIUM 6.24 5.75 AA3 9&70 1,496,610 0.50 4.19 92976WBJ4 5.500%05/01/2013 DO 04/25/08 1,435,545 0A6 711012" 5.33.40PM EDT 8 Soune.The BonkofNetv York Mellon CoWenation Yield Analysis ftp�W. UN234 >� Been C ncr. Use THE BANK OF NEW YORK MELLON 0,CSV07SX12W 6/3012008 L.g Tfenn Open Pimrn Tbu Z� "d 2,000.000.00 LEHMAN BROTHERS TR 400596 6.81 3.01 Al 99.63 2,D00,000 0.69 0.06 52517MSB VAR RT 10/22/2()I8 DO 10/24/05 1,992,500 0.64 4.200.000.00 MERRILL LYNCH&CO INC MEDIUM 6.89 6.35 Al 96.92 4,194.456 1.42 4.11 59018YN56 6.15D%04/25/2013 DO 04125/08 4,070,724 1.30 600.000.00 LEHMAN BROS HLDG8 INC MTN 6.94 5.94 Al 94.66 597,264 0.20 3.91 5252MOBZ9 5,625%01124/2013 DO 01122/08 557,936 0.18 1.800,000.00 SIM CORP MTN#M W067 7.99 3.14 BAA2 99.66 1,805,040 0.62 0.07 78442PCUO VAR FIT 07/25/2008 DO 07/26/04 1.793,808 0.57 CARS 00,000.00 PORD CR AUTO 08-B CL A-28 3.76 3.70 AAA 100.45 500.000 0.17 0.04 34528YACI VAR RT 12/15/2010DD04/22/08 502,243 0.16 FANNIE MAJI R-C 160,734.04 FNMA OTD REMIC P/T 03-113 PN 3.09 3.50 AGY 99.94 I56,954 0.06 0.26 3139372E5 3.500%02/25/2013 DO 10101103 160,644 0.05 23,770A2 PNMA GM REM IC P/T 03-92 KQ 3.41 3.50 AGY 99.90 23.160 0.01 0.43 31393TBC9 3.500%06/25/2023 DO 08/01/03 23,747 0.01 200,000.00 PNNA G71)REMIC P/T 07-114 A6 3.63 2.74 AGY 97.89 190,250 0.07 0,01 3139683Q5 VAR FIT 10/27/2037 DO 11/30/07 195,786 0.06 5.306.30 PWMA OTD REMIC P/T 3.71 4.25 AGY 99.96 5,247 0.00 0.38 313939SPS 4.250%04/2512020 DO 08/01103 5.304 0.00 F®-NC l9,=3.54 PHLMC GROUP 078-6064 4.15 6.28 AGY 101.02 18.755 Mul 0.78 313488WZ3 6.384%01/01/2028 DO 12/01/97 19,420 0.01 7/10/2008 5.33:4WM EDT 9 &un The ftllk ofNaw York Mellen cm mNon f- I I r_- t [-- f - U-- 1[ - r - I - V u - F - F-, r- U I - ►. Yield Analysis Report ID: RAM234 Base Cumeney: USn THE BANK OF NEW YORK MELLON OCBFOT8222O2 6/30/2008 Lan,Term ONer-Pietro Units Held- YTM/ C..t, Moody'. Market Total Cost %Type Option 9acurity ID Call (EDP) Yield Quality Price Musical;Value %Market Adj 8oevrity Dcacrlption Rating _. Valae .Duratlou 12,225,72D10 PHLMC POOL SOO-3811 5,78 5,57 AGY 98,68 12.204,707 4.20 4.51 3128MSR85 5.5WA 01/01/2038 DD 01/01/08 12,064,707 3.85 12,100,000.00 COMMIT TO PUR FHLMC GOLD 3PM 5.79 5.94 AGY I0L00 12,262,594 425 3.77 02RM0670 6.WM07/01/2038 DD07101/08 12,221,000 3.90 FNMA 875,244.38 FNMA MOL40823358 4.38 5.93 AGY 101,96 868.407 0,31 0.57 314%6 S VAR RT 02/01/2035 DD 04/01/05 891,498 0.28 1,138,419.75 FNMA POOLs0720369 4.92 5.00 AGY 100.08 1,172,572 D.40 2,89 31401WJNO 5.000%06/01/2018DD06/01/03 1,139,301 0.36 0.00 FNMA POOLa0743868 4.92 5.00 AGY 100.08 0 0.00 2.88 314038MR1 5.000%11/01/2018DDIG/01/03 0 0A0 435,472.69 FNMA POOL 00555621 492 5.00 AGY 100.08 440.372 GAS 295 31385X068 5.000%07/01/2018 DD 06/01/03 435,810 0.14 105,326.05 FNMA POOLs0702210 4.92 5A0 AGY 100.0E 108,486 0.04 2.95 31401ADP9 5.000%05/01/2018 DD 05/01/03 105,408 0.03 D01 PNMA POOL 00748400 4.93 SAO AGY 1D0.08 0 0.DO 3.00 31403GNR9 5.000%08/01/2018 DO 09/01/03 0 OAO 369,867,99 FNMA POOL#0751960 4,93 SAO AGY 100.08 374,607 D13 3.04 31403WHI 5D0D%12/01/2018 DD 11/01/03 370,154 0.12 7D6,129.71 PNMA POOL N0750380 4.93 5.00 AGY 100.08 715,177 0.25 2.99 31403JUD6 5.000%11/01/201B DO 11/01/03 706,677 0.23 429,59L74 FNMA POOL 00254987 4.93 5.00 AGY IDO.08 435,096 0,15 3.04 31371LF46 5.000%12/01/2018 DD 11/01/03 429924 0.14 71101200E 5.3340PM ELN' 10 Soon,76e Book cfNew York Mellon Corporation I.- Yield Analysis Rnn234 Jv� MD THE BANK OF NEW YORK MELLON OCRPo 22= 6/30/2008 Long Tenn 0pery Pietro MM-1, 1,026,68531 FNMA POOL#0750377 4.93 5.00 AGY 100.G8 1,039.840 0.36 3.00 31403JUA2 5.000%11/01/2018 DD 11/01/03 1,027,480 0.33 1,078.429.22 FNMA POOL 00740457 4.93 5.00 AGY 100.08 I.M,089 0.38 3.05 314 WTNS 5,000%10/01/2018 DO 10/01/03 1,079.264 0.34 0.01 FNMA POOL#0744316 4.93 5.00 AGY Imos 0 0.00 3.14 3140353n 5.D009609/01/2018DD09/01/03 0 0.00 0.00 FNMA POOL 00750445 4.93 5.00 AGY 100.08 0 0.00 3.03 31403JWE2 5.OWA 1110112018 DO 11/01/03 0 0.00 0.00 FNMA POOL ND738211 4.93 5.00 AGY 100.08 0 0.00 3.16 31402MQ2 5.000%10/01/2018 DO 10/01/03 0 0.00 518.407.90 FNMA POOL 00748899 4.93 SM AGY 100.08 525,050 0.18 3.21 31403G7 5.0 A 12/01/2018 DO 11/01/03 518,809 0.17 0.00 FNMA POOL#0740471 4.94 5.00 AGY 100.08 0 0.00 3.30 314NWQ 5.000%10/01/2018DD10/01/03 0 0.00 0.00 MA POOL#0723487 4.98 5.03 AGY 9937 0 0.00 3.% 3140 Q4 5.000%N/01/2018DD06/01/03 0 0.00 0.00 FNMA POOL#0732873 5.01 5.03 AGY 99.31 0 0.00 3.54 31402MMS 5.000%11/0112018 DO 10101/03 0 0.00 1,657,455.97 FNMA POOL 90725530 5.02 5.01 AGY 99.77 1,679,987 0.58 3.10 31402DA75 5.000%MID 1/20 19 DO 05/01/D4 1.653,651 0.53 0.03 FNMA POOL OM81334 5.12 5.03 AGY 99.44 0 0.00 2.99 31391Y4TI 5.000%02/01/20 18 DO 0 1101/03 a 0.00 246,371.39 FNMA POOL#0681309 5.13 5.03 AGY 99." 253,763 0.09 2.92 31391Y3S4 5-000%02/01/2018 DO 02/01/03 244,992 0.08 7/10/2008 5.'M.40PIf "m Bank of New York 'r, r - U - U-- t UL U f U r- U- I I a I I I I t Yield Analysis R.,.ft IM RAM234 Base C\art<acy: USD THE BANK OF NEW YORK MELLON OCS"7522202 6/30/2008 LORE Term Cpary Nm� T TM 70,505.64 PNMA POOL#0254631 5.13 5.03 AGY 99A4 72.621 0.02 2.91 31371KY47 5.000%02/01/2018 DO 01/01/03 70,111 0.02 273.463.80 PNUA POOL ND693834 5.13 5.03 AGY 9943 281.668 0.09 2.98 31400PY74 5.000%03/01/2018 DO W/01/W V1,894 0.09 136,553.72 PNMA POOL00685318 513 S.m AGY 99AJ I40,6SO 0.05 2.95 31400PPB7 5.D00%03/01/20I8DD03/01/03 135.WO 0.04 I53,630.07 PNMA POOL 0055S363 5.13 5.03 AGY 99A3 158,239 0.05 2,94 31385WSYI 5.WWA 04101/20 18 DO 03/01/03 152.748 0.05 127,982.30 PNRtA POOL#0555545 5.13 5.03 AGY 99.41 131.822 a." 2.99 31385XES2 5.00 W/O 1/2018 DO 05/01 tO3 127,231 0.04 90,552.83 PXMA POOL00685200 5.13 5.03 AGY "Al 91,713 o.w 301 31400EGH7 5.000%03/01/2018DD03/01/W 90,021 0.03 O.OD FNMA POOL 0695852 5.13 5.03 AGY 99.40 0 0.00 3.01 314WGBV0 S.00D%OS/01/2018 DO 05/0 1/03 0 0.00 379.207.17 PNMA POOL 00695S89 5.14 SM AGY 99A0 390-M 0.13 2,99 31400SC23 5.000%05/01/2018 DO 05/01/03 376,932 0.12 65,919.16 PIO3A POOL 00702328 5.14 5.03 AGY 99,40 6Q764 o.m 295 31401ARD2 5.000%05/01/20 18 DO 04101/03 65,524 0.02 65,334.35 PNMA POOL 006MM9 514 5,03 AGY 99.39 66.171 0.02 3.04 314WKMGB 5.000%05/01/2018 DO 05/01/03 64,933 o.m PNMA POOL 00254760 5.14 5.03 AGY 99.39 65,947 0.02 3.04 31371KSW 5.00D%06/01/2018 DO 05/011W W.633 0.02 108,308.45 PNMA POOL00709917 5.14 5,03 AGY 99.39 109,696 0." 299 3140LWJ4 5.000%M/01/2018DD06/01/03 107,643 0.03 7/10/2" 5=4m SOT 12 8eorv:7heB .fff.YorkAftffiaCbq.� Yield Analysis R" W: RAM234 >. Bw Ctr .., USb THE BANK Of NEW YORK MELLON OCSsm 6/30/2008 Lang 2bnn Open Norco 159.806.65 FNMA POOL 806M908 5.14 5.03 AGY 99.39 161,654 0.06 3.04 314 WRI 5.000%06/01/2018 DO 05/01/03 158,825 0.05 0.D2 FNMA POOL#0709826 5.14 5.03 AGY 99.39 0 O.w 2.96 31401JSN 5.000%06/0112018 DO 06/01/03 0 0.00 0.04 FNMA P0OL80744008 5.14 5.03 AGY 99.39 0 0.00 2.98 31403BR54 5.000%07/01/2018 DO 09/01/03 0 0.00 43,384.75 FNMA POOL#06BV39 3.14 5.03 AGY 99.39 44,686 0.02 3.01 31400JEL9 5.000%06/01/2018 DO 06/01/03 43.118 0.01 263.302.54 FNMA P00L10710235 5.14 SM AGY 99.37 271,202 0.09 3.06 3140IKIBU 5.000%06/01/2018 DO 06/01/03 MI."g 0.08 0.01 PUMA P0OL80357430 5.14 5.03 AGY 99.37 0 moo 3.04 31376KATI 5.000%09j01/20I8DD09/01/03 0 0.00 271,505.30 FNMA POOL W709360 5.14 5.03 AGY 99.37 274.984 0.09 3.09 3140IJB56 5.000%07/01/2018 DO 06/01/03 269JWO 0.09 127.079.84 FNMA POOL 00709148 5.14 5.0 AGY 99.37 I30,892 0.04 3.05 31401HZM7 5.000%06/01/2018 DO 06/01/03 126,282 0." 0.00 FNMA POOL#071336S 5.14 5.0 AGY 99.37 0 0.00 3.00 3140INQSI 5.000%07/01/2018DD07/01/0 0 0.00 0.03 FNMA POOL+ 0319 5.14 5.03 AGY 99.37 D 0.00 2.95 31401W045 5.000%07/01/201BOD07/01103 0 0.00 O.DD PNMA POOL 00721629 5.14 5.03 AGY 99.37 0 0.00 3.08 31401XVW4 5.000%07/01/2018 DO 06/01/03 0 0.00 198.1n.82 FNMA POOL 00729601 SAS 5.03 AGY 99.36 200,717 0.07 3.10 31402HRW3 5.000%0710112018 DO 07/01/03 196,904 0.06 7/10/2008 5.33:40PM EDT 13 Se.":7 h.Bank f N.Yo meff-OoymaNun JE -- F- u U r Yield Analysis ReyoelID: RAM234 Bur Corrrney: USD THE BANK OP NEW YORK MELLON MOM75223M 6/30/2008 Long Term Oper Pimro Units Held YTM/ Current Moody's Market Total Cost %Type Option Security,ID Can")EOP) Yield Quality Pike Market Vallee %Market Adj 8courtly Description Rating Value notation 28.139.96 FNMA POOL 00254866 SAS 5,03 AGY 99,34 28,984 0.01 3.12 31371LCB3 5.000%09/0l/2018 DO 08/01/03 27,955 0.01 0.00 FNMA POOL N0737130 5.15 5.03 AGY 99,34 0 (LOD 3.04 31402S4P9 5.000% 10/01/2018 DO 10/01/03 0 0.00 216,620.29 FNMA POOL 00254907 5.16 5.03 AGY 99,33 216,620 0.07 3.06 3137ILDLO 5.000%10/01/2018 DO 09/01/03 215,162 0.07 343.015.89 FNMA POOL 010740748 5.16 5.03 AGY 99.34 347,411 0.12 2.96 31M2WSM7 5.000%10/01/2018 DO 11/01/03 340,759 0.11 88,791.54 FNMA POOL#0738487 5.16 5.03 AGY 99.31 89.929 0.03 3A4 31402UNC2 &000%10/01/2018 DO 10/01/03 88,181 0.03 152,919.89 FNMA POOLM0254953 5.16 5.03 AGY 99.31 154,8Y9 0.05 307 31371L821 5.000%11/01/2018 DO 10/01/03 151,868 0.05 0.02 FNMA FOOLM0747914 5.16 5.03 AGY 99.31 0 0.00 3.08 31403FUO 5.000%11/01/2018 DO 11/01/03 0 0.m 291,727.32 FNMA POOL 00755165 5.16 5.04 AGY 99.30 295,465 0.10 3.13 31403Q6A3 5.000%12/01/2018 DD 11/01/03 289,676 0.09 393,139.73 FNMA FOOL#0753425 5.17 5.04 AGY 99.30 397,685 0.14 3.03 31403NA23 5.000% 11/01/2018 DO 11/01/03 390,376 0.12 545,276.84 FNMA POOL 40756372 5.17 5.04 AGY 99.30 551,582 0.19 2.99 3140 WRO S.OD3%11/01/2018 DO 11/01/03 541,444 0.17 510,174.23 PNMA FOOL#0794195 5.20 5.04 AGY 99.13 517,109 0.18 3.29 31405NK09 5.000% 11/01/2019 DO 11/0l/D4 505,756 0.16 513,548.76 FNMA POOL M0792432 5.20 SO4 AOY 99,15 520.530 0.18 3.20 31405LLM9 S. 0 10/01/2019 DO 10/01/04 509,178 0.16 711012" 5:33:40PM PDT 14 source The BaM of New York Mellon Corponvion Yield Analysis Repaet ID: RAM234 some Cueren": USD THE BANK OF NEW YORK MELLON OMM522202 6/30/2008 Len,Term Uper No- Valte Held - YTM/ Current Moody'. Market Total Cost %Type Option security ID See Can 1 'Call JEOP) Yield Quality Price Maeket'YOlue w18kevet AdJ Rating 111416 Duration 222,559.58 PNMA POOL#0800370 5.21 5.04 AGY 99,12 222,316 0.08 3.33 31405VFK8 5.000%12/01/2019 DO 11/01/04 220,599 0.07 531,255.83 FNMA POOL#0789670 5.21 5.04 AGY 99.12 538,478 0.18 3.23 31405HJP4 5.O 12/01/2019 DO 12/01/04 526,575 0.17 -6,4UQ0M1.00 COMMIT TO PUR FNMA SF MTG 5.27 5.06 AGY 98.88 -6,297,000 -2.20 3.73 01 M50478 5.000%07101/202 3 DO 07/01/08 -6,328,320 -2.02 274,763.40 FNMA POOL#0889579 5.66 5.92 AGY 101.39 280,774 0.10 3.80 31410K.IY1 6.000%05/01/2038 DO 05/01/08 277,027 0.09 170,644.19 FNMA POOL e0684798 5.71 5.57 AGY 98.81 170,498 0.06 4.82 31400DX31 5.500%03/01/2033 DO 03/01/03 166,619 0.05 465,030.76 FNMA POOLNM12427 5.75 5.58 AGY 98.54 456.457 0.16 5.28 31411 NVUS 5.500%02/01/2037 DO 02/01/07 458.246 0.15 246.625.49 PNMA POOL 00974715 5.76 5.58 AGY 98.49 247.281 0.08 5.47 31414SK44 5.500%04/01/2038 DD 04/01/08 242,906 0.08 7,278.31 FNMA POOL#0831697 5.76 5.94 AGY 100,98 7.279 0.00 3.71 31407H739 6.000%09/01/2036 DD 08/01/06 7,350 0.00 964,929.64 FNMA POOL 8089%22 5.77 5.58 AGY 98.52 956,487 0.33 4.68 31410W 5.500%07/01/2037 DO 07/01/07 9W.600 0.30 487,588.12 FNMA POOL#0256597 5.77 5.58 AGY 98.54 488,883 0.17 4.64 3137IM7J0 5.500%02/01/2037 DO 01/01/07 480.474 0.15 1,620,342.69 FNMA POOL N0956859 5.77 5.58 AGY 98.49 1,625.15.3 0.56 4.74 31413VQ" 5,S 02/01/20M DO 02/01/08 1,595.940 0.51 511,273.43 FNMA POOL80945886 5.78 5.58 AGY 98.51 512,631 0.18 4.52 31413W74 5.WM 08/01/2037 DD 08/01/07 503,666 0.16 7/10/2008 5:33:40PM EIV is Sewev:The Bank of New York Mellon Corporation Yield Analysis Report ID: RAM234 Base Cunene,: USD THE BANK OP NEW YORK MELLON 000M622202 6/30/2008 tang hnn 0pe,Flmoo IID Meld YTM/ C.nt Moody'. Market Total Coat %Type Option +� B,i"irld µ'�, Call jaOp) Yield Quality Price Market Vela. %Market Adj. 4A SARI' arts• Pnr:'. Rating Via" Oh(atlen eft j' 290,388.75 PNMA P0OLM0906269 598 5.58 AGY 98.55 291.251 0.10 4.57 31411E2A4 5.500%O1/O1/2037 DD 01/01/07 286,167 0.09 495,402.73 FNMA PO0Le0956362 5.78 5.58 AGY 98.50 496.719 M17 4.56 31413U5X3 5.500%12/01/2037 DD 01/01/08 487,967 0.16 712,407A6 PNMA POOL$0945798 598 5.58 AGY 98.52 7I4,300 0.24 4.75 31413HGF9 5.500%07/01/2037 DO 08/01/07 701,92R 0.21 461.732.36 FNMA POOL#0939553 5.70 5.58 AGY 98.52 457.999 0.16 4.42 31413AH63 5SWA 07/01/2037 DO 07/01/07 454,876 0.15 487,270.28 FNMA PO0L#0969833 5.79 5.58 AGY 98.50 488,565 0.17 4,79 31414L4S4 5.500%02/01/2038 DD 02/0 I/08 479,9M 0.15 4,000,000.00 COMMIT TO PUR FNMA SF MTG 5.79 5,95 AGY 100.88 .1.009,961 -0.35 3,81 OIF060675 6.000%07/O1/2038 DO 07/01/06 -I,008,800 -0.32 599,129.33 FNMA PO0L 00953017 5.82 5.95 AGY 100.82 609.614 0.21 4,47 31413RO26 6.000%10/01/2037 DO 10101107 604,036 0.19 SUQ000.41 PNMA POOLP0961639 5.84 5.95 AGY 100.80 506,075 0.18 4.76 314150BP5 6.000%06/01/2038DD05/O1/08 503,990 0.16 1,900,000.00 COMMU TO PUR FNMA SF MTG 5.07 AGY 98.66 1,864,375 0.66 3.80 OIKS0486 5.000%08/01/2023 DO 06/01/09 1.874.540 0.60 IRBDDIa MAC MULTICLAse 112,956.97 PHLMC MULnCLASS CTPS 2733 PA 3.23 4.W AGY 99.90 110,727 0.04 0.06 31394NUE6 4.000%01/15/2021DD01/01/04 112,838 0.04 25,004.27 PHLMC MULTICLASS MTG 3,29 4.00 AGY 100.06 24,W4 0.01 0.29 31394LVF6 4.00MOS/15/2016 DD 11/01/03 25,018 001 7/1012MB 5:33:40PM EDT 16 Soune:The Sunk of Ne York Mellon CorpomUon Yield Analysis R.P.ft ID; RAM234 >- ftu C ne : Me THE BANK OF NEW YORK MELLON OCSY97622= 6/30/2008 L..g Ykrm Cpw-A. 190.121." MWCMMnCLASSMTG3008JX 3.33 4.49 AOY 10M25 187,508 0.07 0.35 31395WQA9 4.500%1111512013 DO 07101/05 190,592 0.06 7,072.10 PHLIMC MWMCLASS CTFS 27S6 MA 3.63 5.00 AGY 100.00 7,045 0.00 0.14 31394PX24 5.000%06/15/2016 DD 02/01/04 7,072 0.00 368,900.69 PHLMC MULIICLASS CTFS 2891 LN 3.79 4.24 AGY I00.26 362,MO 0.13 0.80 313951Z90 4.250%06/15/M24 DO I 1/01/G4 369.845 0.12 120,183.5'1 MLMC MUUMCLASB CTPS 2950 W 3.85 4.24 AGY 100.27 118,592 0.04 0.98 3139SPX49 4.250%09/15/2024 DO 03/01/M 120,S13 0.04 48.606.B9 FHLMC MULTICLArS MTO 3.92 4.47 AGY IW.W 0,104 o.m 1.23 31395Vr" 4.500PA 12/25/2M5 DO 05/01/05 48.8" 0.02 33,506.26 FHLMC MULTICLASS CTFS 2905 UY 3.914 4.00 AGY 100.G8 33,009 Mol 0.83 31395KDT7 4.000%10/15/2023 DO 12/01/M 33,5M 0.01 390,276.79 MLMC MMnCLASS MTO SER E3 A 4.51 SM AGY 100.53 390,693 0.14 1.14 3133TCE95 VAR RT 08115/2032 DO 12/01/97 392.326 0.13 asMA 72,622.30 GNUA B POOL 4080088M 3.69 6.24 AGY 102.20 74,211 0.03 1.56 36225CC20 7.37S%06/20/2027 DO 06/01/97 74,220 0.02 337,437.93 ONMA n POOL 400 S 3.% 5.61 AGY I00.26 337,227 0.12 1.78 36225DCBB VAR RT 07/2012034 DO 07/01104 3M.315 0.11 63,109.79 GNMA U POOL#0080023 4.07 5.12 AOY I00.01 64,236 0.02 1.42 3622SCAZ9 VAR RT 12/20/=6 DO 12/01/96 63.194 0.02 346,948.34 OWA 11 POOL 8080408X 4.07 6.32 AGY 100.82 343,425 0.12 1.66 3622WMB VAR RT OSJ20/2030DDOS/01/00 349,7W 0.11 7/10/2008 53340PM EDT 17 The Ba fNm Y.*M.11.n [-- u-- t -- f- F t t 11 F- - I - t [ -- U- U-- I- U - t I I I I I I. I I t Yield Analysis Rop.d M. RAM234 B. USD THE BANK OF NEW YORK MELLON ccff""22 6/30/2008 Tj IRA,zAs 0 1 mm 40,647.12 GNMA 11 POOL 00OM95 4.07 6.32 AGY 100.82 40,279 0.01 1.66 36225CW4 VAR RT 04/20/2030 DD 04101/00 40,981 0.01 3.156.66 GNMA POOL00421389 5.60 6.26 AGY 103.91 3,313 0.00 3.62 36206UC23 6.500%04/15/2026 DO 04/01/96 3,280 Ow GNMA RRABc 218,848.29 ONMA OTD REMIC TR 2000-9 PH 2." 2.95 AGY 100.79 218,8" 0.08 0.24 3837H4NX9 VAR RT 02/16/2030 220,582 0.07 181,301.37 GNMA GM REMIC P/T 03-97 DU 2.82 4.W AGY I00.06 177,W2 o.m 0.18 39374EYK7 4,000%09116/2025DD 11101103 181,412 0.06 noms NQU WS,974." MORGAN STANLZY 07 HE7 CL A-2A 10.07 3.66 AAA 89.72 796.334 0.25 0.01 61756YAH9 VAR RT 07/25/2037 DD W/28/07 726,813 0.23 072MR CUD GOW AGESCM8 196,267.57 SBA GTD PAR7W CTFS SBIC-PS 01 5.25 6.47 N/A 102.66 196,268 0.07 L95 S31641DD4 6.640%02/10/20 11 DO 02121/01 201,488 olm 1,616,354.23 SBA OTD DEV PARTN 2001-20C 1 5.45 6.13 AGY 103.44 1,616.354 0.58 3.16 93162CWO 6.340%03/01/2021 1,671,876 0.53 TRLASWURS 38,100,000.00 U S TREASURY NOTES 2.36 3.93 un 101.91 39,273,459 13.51 1.13 912828HB9 4.000%08/31/2009 DD 08/31/07 38,827,710 12.39 15,600,000.00 u 3 TREASURY NOTES 2.38 3.09 UST 101.07 15,609,750 5.49 1.38 912828HJ2 3.12S%11/30/2009 DD 11130/07 15,766,920 5.03 2,400,000.00 U S TREASURY NOTES 2.63 2.87 UST 100.09 2,397,750 0.83 1.93 91282WCS 2.87S%06/30/20 10 DD 06/30/08 2,397.750 0.76 7/10/2" 5.33.40m EDP 18 So :The Bonk ofNew York Mellon Cbrpo &n Yield Analysis R.,.A ID; RAM234 > Rexe USD THE BANK OF NEW YORX MELLON OCRF07522202 6/30/2008 Long Tmn Open Ptmrn MEAN 0.00 U S TREASURY NOTES 3.32 4.07 UST 104.41 0 0.00 4-S2 912828SH2 4.250%08/15/2013 DO 08/15/03 0 0.00 VHLFURS 700,000.00 BEU.SOOTN Map Nr 3.26 2.78 A2 99.94 700,000 0.24 0.12 079860AM4 VAR 08/13j20D8DD0B/O7/O6 699.559 0.22 900.000.00 FLOMA P CORP SR M SER A 3.95 3.09 A3 99.73 9WODO 0.31 0.12 341D99CF4 VAR RT 11/14/2008 DD 12/13/05 897,606 0.29 TANKUKROWDS-CORPS 752,000.00 ARISUNAMERICA GLOBAL REGS 3.71 5.32 AM 109.87 826,200 0-29 0.09 UOD907AAO 5.850%08/01/2008DD08/08/01 826,200 0.26 TOTAL,FIXED mcom 3.90 4.49 286,742,872 100.00 2.13 285,206,863 TOTAL Le.9 T.Op. Pbaco 3.88 4.51 316,691,6T5 100.00 1.96 313,476,310 7/10/2008 &334" EDT 19 Sew :The BaN OfNew York MeHon Cerpom6e� U- U- t r Asset Detail Report ID: OL9013 a..Curteocy: Dan TNB BANK 01 NEW YORK MELLON by Currency wt°er°.m Sue cRrr°acT: R.te: OCSRCONSOLIUATEU-OC800DO1BD00 6/30/2OO8 Eah.".St.tus: FINAL --- - �' Net Unrealized Prlee Cost Market Value y,-or Gain/Loss -➢e5cripti0n Rase Shares Par Base Base Total Base U.S. DOLLAR CASK S CA811 BQUNALs111'B CASH 1,338.00 1,338.00 0.00% 0.00 RECEIVABLE FOR INVESTMENTS 1I,099,514.36 11,099,51436 2.67% 0.00 SOLD PAYABLE FOR INVESTMENTS -15,211,328.12 -15,211,328.12 -3.M% 0.00 PURCHASED INTEREST RECEIVABLE 2,611,108.52 2,611,108.52 0.63% 0.00 BANKAMERICA CORP DISC 99.5972 4,800,000.000 4,780,666.67 4,780,666.67 1.15% 0.00 071I6/2008 SEC ID:0660MG02 BANKAMERICA CORP DISC 99.3150 3,900,000.000 3,873,283.92 3,873,283.92 0.93% 0.00 09/24/20M SEC ID:06601ia1Q7 CITIBANK NA NY BRH INSTL CID 100.0000 3,500,000.000 3,500,000.00 3,500,000.00 0.84% 0.00 2.800%09/15/2W8 DO O6113/08 SEC ID: 1730DIVB7 FEDERAL HOME LN BK CONS DISC 99,4381 8,400,000.000 8.352,7W67 8,352,796.67 2.01% 0.00 MAT 09/19/2008 SEC 1D:313384O52 FEDERAL(TOME LN BK CONS DISC 98,8196 3,500,000.000 3,458,684.44 3,458,684.44 0.83% 0.00 MAT 12/03/2008 SEC ID:313384R84 FEDERAL HOME LN BK CONS DISC 99,8359 2,200,000A00 2,196,389.56 2,196,389.56 0.53% 0.00 MAT 07/02/2008 SEC ID:313384YW3 FEDERAL HOME LN BK CONS DISC 99.8281 2,70 .000.000 2,695,359.00 2,695,359.00 0.65% 0.00 MAT 07/11/2008 SEC ID:313384ZF9 FEDERAL HOME LN BK CONS DISC 99.7300 1,400,000.000 1.396,220M 1,396,220.00 0.34% LIM MAT 07/18/2008 SEC ID:313384ZN2 FEDERAL HOME LN MM CORP DISC 99.3124 3,400,000.000 3,376,623.11 3,376,623.11 0.81% 0.00 MAT 08/07/2008 SEC ID:313396/328 FEDERAL HOME LN MTO CORP DISC 99.4901 I5,00g000mo 14,923,512.50 14,923,512.50 3.59% 0.00 MAT 08/11/20DB SEC ID:3133%B69 FEDERAL HOME LN MTO CORP DISC 99.7325 5,300,000.000 5,285,822.50 5,285,822.50 1.27% 0.00 MAT 07/21/2009 SEC M:3133%ZR7 712412MB 7:34:44PM EIYI ] Werkhe h �- Asset Detail Rep oft GL8013 6aae Carre0e7: USD 1:SDCONSOURATED E RANK OV NEW YORK MELLON by Currency Alternate ease Currency: Exchange ante: UCR000010000 6/30/2008 Stama: FINAL Net Unrealized Price Coat Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base FEDERAL HOME LN MTO C ORI'DISC 99,6071 17,IM,000.000 17,032,816.00 17.032.816M 4.10% 0,00 0.000%07/25/2008 DO 07/30/07 SEC ID:313396ZY2 FEDERAL NATL MTO ASSN DISC NT 99.6656 6,OOg000.000 5,979,933.33 5,979,933.33 1.44% 0.00 MAT O'7/31/2008 SEC ID:313588A39 FEDERAL NATL MTG ASSN DISC NT 99.6167 200,000.000 199,233.33 199,233.33 0.05% 0.00 MAT 08/29/2008 SEC ID:313588D35 FEDERAL NATL MTO ASSN DISCOUNT 98.9921 6,300,000.000 6,236,501.25 6,236,501.25 1.50% 0.00 MAT 09/17/2008 SEC ID:313588033 FEDERAL NATL MM ASSN DISC NIT 9E.5683 2,371,000.000 2,337,053.21 2.337.053.21 0.56% 0.00 MAT 11/28/2008 SEC ID: 313588M I PROEM NATL MM ASSN DISC,NT 97.9897 900,000.000 881,907.23 881,907.23 0.21% 0.00 MAT 03/27/2009 SEC ID:313589DPS GENERAL ELEC CAP DISC 97.4800 3,500,000.000 3A11,800.00 3,411,800.00 0.82% 0.00 07/21/2008 SEC ID:3695911OM3 GENERAL ELEC CAP DISC 98.6451 1.400,000,000 1,381,031.56 1,381,02ILM 0.30% 0.00 09/02/2008 SEC IT:3695911,124 U S TREASURY BILL 99.6941 1,500,000.000 1,495,412.08 1,495,412AB 0.36% 0.00 0.000%07/2412008 DO 01/24/08 SEC ID:9127951763 U S TREASURY BILL 99.4332 5 800 000.000 5,767,412.76 5,767,412.76 1.39% O.DO 0.000%09/04/2008 DO 03/06/08 SEC ID:912795047 WELLS FARGO O CO DISC 99.a890 3,800,000.000 3,795,783.06 3,795,783.06 0.91% 0.00 07/07/2008 SEC ID:9497FOO71 LEHMAN CAT I REPO REPO 100.0000 15,7DO,000.000 15,700,000.00 15,700,000.00 3.78% 0.00 1.2WM.07/01/2008 DO 06/30/08 SEC ID:99ZAB4B83 DREYFUS TREASURY CASH MOMT 100.0000 470,403.610 470.403.61 470,403.61 0.11% 0.00 VARRT 12/31/2049DD04/09/97 SEC ID:9MMS247 TOTAL CASH 61 CASH EQUIVALENTS 119,141,403.610 117,029,278.66 117,029,278.66 28.16% 0.00 FDOLD INCONOF SECURITIES 712412008 7:34.441-M EDT 2 W.'U,"M 1 1 1 I 1 I 1 1 I l I 1 I I 1 i 1 1 I Asset Detail Report M GLOO13 Bane Currency: USE, 1T,CScCONSOUDATED HE BANK OF NEW YORK MELLOW by Currency Alteraete Hue Currency: Exchsu,,Rate: -OCaG0001o000 6/30/2008 st.fas: ]REAL et.Ullreallzed' Price - Cost Market Value % oi &AW/Loss. .d3Eagkiptioa. > Basd. - Shares Par Base Base Total Base AIO SUNAMERICA GLOBAL REG S 109.9670 752,000.000 826,199.84 826.199 84 0.20% 000 5.850%08/01/2008 DO 08/08/01 SEC ID:UN907MO COMMIT TO MR FNMA SF MTO 98.8800 -6,400,000.000 -6,297,000.00 -6,328,320,00 -1.52% .31,320.00 5.000%07/01/2023 DO 07/01/08 SEC ID:0IF050478 COMMIT TO PUR FNMA SF MTO 98.6600 1,900,000.000 1,864,375.00 1,874,540.00 0.45% 10,165.00 5.000%011/01/2023 DD 08/01/08 SEC ID:OIFOS0486 COMMIT TO PUR FNMA SF MTO 100.8800 -1,000.000000 -1,009,960.93 -1,008,800.00 -0.24% 1,160.93 6.000%07/01/2038 DO 07/01/08 SEC ID 01 F060675 COMMIT TO PUR FHLMC GOLD SFM 10LODOD 12,100,000.000 12,262,593.75 11,221,00000 2,94% -41,593.75 6.000%07/01/2038 DO 07/01/08 SEC ID:02R060670 ALLSTATE LIFE GLOBAL FDO SECD 99.6090 3,200,000.000 3,196,800.00 3,187,488.00 0.77% -9,312.00 5.375%0413012013 DO 04/30/08 SEC ID:02003MBQ6 AMERICAN EXPRESS CR CORP MTN 99AS70 4,700,000.000 4,700,000.00 4,661,789.00 1.12% .38,211.00 VAR RT 0512 7/2 0 1O DD 05/27/08 SEC ID:0258MOCV9 AMERICAN EXPRESS CR CORP MTN 99.4373 600,000.000 597,942.00 596,623.85 0.14% -1,318.15 5.875%05/02/2013 DD 06/02/08 SEC ID:0258MOCW7 BANK AMERICA N A CHARLOTTE N C 99.5460 3,400,000.000 3,403,186.00 3,384,56400 0.81% -18,622.00 VARRT 05/121201ODD05/12/08 SEC ID:06050TLF7 BANK AMER N A CHARLOTTE N C 99.6710 900,000.000 900,000.00 897,039.00 0,22% .2.961.00 VAR RT 06/23/2010 DO(M123108 SEC ID:06050TW9 BANK AMER FDG CORP MED TERM 96.8964 3,100,000.000 3,091,444,00 3,003,789.83 0.72% -87,654,17 4.900%05101/2013 DO 05/02/08 SEC 10:060510DW6 BEAR STEARNS COS INC GLOBAL Nf 97.0460 ] Wo G00 000 917,420.00 970.460.00 0,23% 53,040.00 VAR RT 01/31/2011DDUl/31/06 SEC 1D:073902KO2 BEAR STEARNS COS INC MTROO699 98.8430 300 00e O00 289.236.00 396,529.00 0.07% 7,293.00 VAR RT G8/21/2009 DO 08/22/06 SEC ID:07392BR47 BELLSOUTH CORP Nr 99.9370 700,00c000 700,000.00 699,559.00 0.17% -441.00 VARRT os/15/2008D008/07/U6 SEC ID:079860AM4 71241200E 7:34:44PM EDT 3 Work6 ch Asset Detail Report ID: GL8013 Boe C ncy: USD ECOBSOUDATED ANK OF NEW YORK MELLON by Currency Alternate Bue Ca .y: a Rxmf .Rate: -OCsa00010000 6/30/2008 st.t ; FINAL as . . '�: Net"VnTealled "Price Cost market Value % of 'Gain/Loss: P"cliption. ;Base Shares-Par. Mae - 11 Base Total Base CATERPILLAR FINL SVCS CORP MTN 99.8590 3,100,000.000 3,100,000.00 3,095,629.00 0.74% -4,37100 VAR RT O612412011 DO 06/26/08 SEC ID: 149121AX7 CITIGROUP INC OWBAL SR NT 97.5940 4,200,000,000 4,178,664.00 4,098,948.W 0.99% -79,716.00 5.500%04/11/2013 DD 04/11/08 SEC ID: 172967EQD CITIGROUP MG INC MEDIUM TERM 99.2180 2,100,000.000 2,IW,OW.W 2,083,578.00 0.50% -16,422.00 VAR RT O5/0712010 DO 05/07/08 SEC ID: 1730TOFV6 CREDIT SUISSE USA INC 99.6870 900.000 W0 895,806,00 897,183.00 0.22% 1,377.00 VAR RT 06/05/2009 DO 05/07/06 SEC ID:225434BG3 DREES JOHN CAP CORP MEDIUM 100,0000 300,000.000 300,OW.00 3W,OW.W 0.07% O.W VAR RT 09/25/2008 DD 09/25/07 SEC ID:24422EQXS DEERE J0HN CAP CORP MTN W353 99.8900 4,700,000.0W 4,700,000.00 4,694,830.00 1.13% -5,170.W VAR RT 06/10/2011 DO 06/12/08 SEC ID:24422EQSI FHLMC PO0L 400-3811 98.6830 12,225,720.100 12,204,707.14 12,064,707.37 2.90% -139,999.77 5.5W%01/01/2038 DD 01/01/08 SEC ID:3128MSRSS FEDERAL HOME LN MTG CORP MTN 100.0050 2,942,000.000 2,780,649.69 2,942,147.10 OJl% 161,497.41 3.545%07/07/2010 DO 07/07/03 SEC ID:3128XINJ2 FEDERAL HOME LN MTO CORP MTN 99.9870 1,%6,000.000 1,015,531.56 1,065,86142 0.26% 50.329.66 3.060%07/15/2W8 DO 07/15/03 SEC ID:3128XIRX7 FHLMC MULTICLASS MTG SER E3 A 100.5250 390,276,790 390,692.50 392,325.74 D.W% 1.633.24 VAR RT 08/15/2032 DO 12/01/97 SEC ID:3133ME95 FEDERAL HOME LN BK CONS BD 100.3970 1,3W,000.000 1,316,859.38 1,305,I6L00 0.31% -11,69828 SOW%04/01/2010 DD 04/10/07 SEC ID:3133XKEC5 FEDERAL HOME LN BKS CONS BD 100.5890 2,5W,W0.OUO 2,539,843.75 2,514,725.00 0.61% -25,119.75 5.050%05/10/2010 DD 05/10/07 SEC 113:3133XKS55 FEDERAL HOME LN SK CONS BD IW.S650 30,000,000.000 29,942,460.00 30,169,500.00 7.26% 227,040.00 3.625%12/17/2010 DD 12/07/07 SEC ID:3133MHZS FEDERAL HOME LN BKS CONS RD 99.8230 3,OW,000.000 3,016,650.00 2,994,690.00 0.72% -21,960.00 3.0001A 04/15/2009 DD 03/10104 SEC ID:3133X4ZC8 7/24/2008 7:34:44PM SOT 4 Workbench 1 I 1 I I 1 1 I 1 I I 1 1 1 1 1 1 1 1 31► Asset Detail Report M: GL5013 Rue COn.e.T: USE, ES�CONSOWMTED 8 BANX Of NEW YORK MELLON by Currency A1t.m t.B Ca.r.B.r: Z=h.nre R.t.: -OCB000010000 6/30/2008 St.W.: MAL 'P}ice Coat - Market Value % of- Gain"/Logs 'DEdQrlPticu 'Base Shares Par Base Bage: . Total Base FEDERAL HOME LN BKS CONS BD 99.1600 1070.000.000 1,007,019.80 1,961.012A0 0.26% 53.992.20 4.240%07/02/2013 DO 07/02/03 SEC ID:31339Y3U4 FEDERAL HOME LN BKS CONS BD 99.9330 175 000 D1E0 166,745.25 174.882.75 0.04% 8,137.50 3.200%01/14/2009 DD 07/14/03 SEC ID:31339Y6F4 PHLMC GROUP 478-6064 101.0220 19,223.540 18,754.96 19.420.00 0.D0% 665.04 6.384%01/0112028 DD 12/01/97 SEC ID:31348S WM FEDERAL NATL MTG ASSN DEBS 103.9910 2.100.000.000 2.030,133,00 2,183,811.00 0.53% 153.67800 6.625%09/15/2009 DO 09/01/99 SEC ID:31359MM FEDERAL NAIL AITG ASSN DEUS 100.0600 500.000." 498,16500 500,300.01E 0.12% 2,13500 3.875%07/1512008 DO 06/24/05 SEC ID:31359ME41 FEDERAL NATL MTO ASSN DENS 102.6366 13,500,000.000 13.933.552.50 13,855,934.25 3.M% -77.618.25 4.500%02/15/2011 DD Ol/20/06 SEC ID:31359MF40 FEDERAL NATL MTO ASSN DEBS 106.6500 41,500,000.000 44,622,033.00 44,259,750.00 10.65% -362,283.01E 6.000%05/15/2011 DD 05/25/01 SEC ID:31359MJH7 FEDERAL NATL MTO ASSN DEBS 99,9980 600.000.000 594,504.00 S99.988.00 0.14% 5,484.00 3.250%06/15/2008 UU 07/25/03 SEC ID:3I359MSQ7 FEDERAL HOME LN MM CORP MTN 105,6187 14,000,000.000 15,068,718.00 14,786,620.80 3.56% -282,097.20 5.500%08/20/2012 DO M/15/07 SEC ID:3137EAAVI PNMA POOL#0254631 99.4401E 70,505.640 72.620.83 70,110.81 0,02% -2,510.02 5.000%02/01/2018 DO 01101/03 SEC ID:31371KY47 FNMA POOL#0254760 99.3860 64,026.440 65,947.26 63.633.32 0.02% -2.313.94 5.000%06/01/2018 DO 05/01/03 SEC ID:31371K5V9 PNMA POOL#0254866 99.3420 28,139.960 28.984.15 27,954.81E 0.01% -1,029.35 5.000%09/01/2018 DD 08/01/03 SEC ID:31371LCB3 FNMA POOL#0254907 99.3270 216.620.290 216,620.29 215.16294 0.05% -1,457.95 5.000%10/01/2019 DO 09101/03 SEC ID:3137ILDLO PNMA POOLA0254953 99.3120 152,919.890 154,879.20 151.867.80 o.D4% -3.011.40 5.D00%11101/2018 DD 10/01/03 SEC M:31371LE21 7/24/2008 7:34:44PM EDT 5 Workbench Asset Detail Report M: GLOO13 Hue cE-e ; UBD IT.SD HY BANK OF NEW YORK MPLLON by Currency Alte.n.ee ass aarreeey: E heere Rmte: C0NS0GDATED-OCSG0001aD00 6/30/2008 statue: FINAL 16A UafEalized' Cost Market V21De % or OaiD/does'. .�escMPtion .Base Shares Par Base- Base Total Base FNMA PO0L#0254997 100.0775 429591740 435,09588 429,924,46 0.10% -5,171,42 S.OWA 12/01/2018 DO 11/01/03 SEC ID:31371IS46 FNMA PO0LM0256597 98.5410 487.588.120 488,883.28 480,474.21 0.12% -8,409.07 5.500%02/01/203T OD 01/01/OT SEC ID:3I371M7JO PNMA PO0L#0357430 99.3720 0010 0.01 0.01 0.0014 0.00 5.000%09/01/2018 DD 09/O1/03 SEC ID:31376KA71 FNMA PO01,400555363 99.4260 153.630.070 158.23897 152.748.23 M(M% -5,490.74 5.000%04/01/2018 DO 03/01/03 SEC ID:3I385WSY1 PNMA POOL 00555545 99.4130 127.982.300 131,821.80 127,231.04 0.03% -4,590.76 5.D00%06/01/2018 DO 05/01/03 SEC ID:31385XES2 PNMA PO0L 90555621 100.0TF5 435,472.690 440,371.74 435,809.97 0.10% 4,561]7 5.000%07/01/2018 DO 06/01/03 SEC ID:3138SX068 FNMA P0OL M0581309 99.4400 246,371.390 253.762.56 244,991,71 0.06% -3,770.85 5.000%02/01/2018 DD 02/O1/03 SEC ID:3139IY384 FNMA POOL M0681334 99.4400 0030 0.03 0.03 MOM 0.00 5.000%02/01/2018 DO 01/01/03 SEC ID:31391Y4T1 FNMA GTD REMIC PIT 99.9580 5,306.300 5,24744 5,304.07 0.00% MAZI 4.250%04/25/2028 DO O8/01/03 SEC ID:31393ESP5 FNMA GM REMIC PIT 03-92 KQ 99.9020 23.770.120 23.160.08 23.746.83 0.01% 586.75 3.500%06/25/2023 DO 09/01/03 SEC ID:31393TDC9 PNMA GM REMIC PIT 03-113 PN 99.9440 160,734.040 156.954.28 160,644.03 0.04% 3.689.75 3.500%02/2512013 DD 10/01/03 SEC ID:31393T2E5 FHLMC MULTICLASS MM 100.0550 25,004.270 24.504.19 25.018.02 0.01% 513.83 4.000%05/15/2016 DO 11/01/03 SEC ID:31394LW6 FHLMC MULTICLASS CTFS 2733 PA 99B950 112,9%.970 I10.727A6 112,838.37 0.03% 2.111.31 4.000%01/15/2021 DO 01/01/04 SEC R3:31394NUE6 PHLMC MULTICLASS CTFS 2756 MA 100.0030 7,072.1M 7.044.75 7.072.31 0.00% 27.56 S.fXX%06/15/2016 DD 02/01/04 SEC ID:31394PX24 7/24/2008 7.34 44PM EDT 6 Workbench 1 r Asset Detail Nepo6 ID: OLS013 Heeo(`erteuF7: Van THE BANK OF NF.W YORK MF LLON by Currency Alte.n�te B.Fe Ce. .T: F-1-.ee 1 to OCSDCONSOWDATPD-OCS000010000 6/30/2008 statue FINAL It Nct Unreali zedPrice Cost Market Value % of Gain/Loss Base Shares Par Base Base Total BaseFIH.MC M011 10C 95 CTFS 2891 I.N 100.2560 36A,900.690 362,502.56 369,84508 009% 7A42.52 4.250%06/IS/2024 DD 11/01/04 2 SEC ID:31395JZ90 0 FHLLIC MULTICLASS CFFS 2905 UY 100.0800 33,506.260 33,008.90 33,533.07 OV 1% 524.17 4 4.000%TO/15/2023 DD 12/O1/04 6 SEC ID:31395t= PHLMC MULTICIASS CTFS 29M NA I00.2740 120,183.570 118,592.07 120,512A7 0.03% 1,920.80 4.250%09/IS/2024 DD 03/01/05 SEC ID:3139SM49 6 FHLMC MULTIC2MS MTG IOO.fi010 48 606 890 98,103.75 48,899.02 0.01% 795.27 U EC ID' 1139SMS DD OS/Ol/OS 1 SEC ID:31395IfIK8 7 FHLMC MULTICLISS MM 3008 JK 100.2470 190.121.900 187.507.72 I90,591.50 0.05% 3,083.78 4.500%IT/15/2013 DD 07/01/05 SEC ID:31395WGA9 FNMA OTD REMIC P/T 07-114 A6 97.8930 200,000.000 190.250.00 195,786.00 0.05% 5,536.00 6 VAR RT 10/27/2037 DD t t/30/07 06 SEC ID:31J96XJQ5 PNMA POOL SM84798 98.8130 170,497.54 168,618.64 n(P$% -1,878.90 2 5.5 %03/01/2033 DD 03/01/03 170,fiH.190 SEC ID:31400DX31 PNMA POOL N0684908 99.3860 159,806.650 161,854.20 158.825.44 0.04% -3,028.76 3 S 6/01/2018 DD 05/01/03 D 5 SECC ID ID::3190003R3 FNMA POOL 00685200 99.4130 91.713.06 90,021.23 0.02% -1,691.78 e 5.000%03/01/2018 OD W/O1103 90,552.83U SEC ID:31400EGH7 FNMA POOL N068fi318 99.4260 136,553.720 140,650.32 135,769.90 0.03% 4.880.42 5.000%03/01/2018 DO 03/01/03 2 SEC ID:31400FPB7 0 PNMA POOL NO688739 99.3860 44,686.39 43,118.37 0.01% -1.567.92 4 43,384.750 6 S.00D%06/01/2018 DD 06/O1/03 SEC TV:31400JEL9 FNMA POOL N0689859 99.3360 65,334.350 66,171.42 64,933.20 0.02% -1,238.22 5.000%05/0 1/2018 DD 05/01/03 SEC ID:31400KMG8 FNMA POOL#0693834 99.4260 281,667.71 271,894.12 0.07% -9,773.59S.D 2 27J,463.I100 1 3/01/2018 DD 03/01/03 SEC EC TD m!3I400PY74 PNMA POOL 40695889 99.4000 379,207.170 390,583.39 376,931.93 0.09% -13,651.46 5.000%OS/Ol/211IB DD 05/01/03 SEC ID:31400SC23 III J. 7/24/2009 7:34:44PM EDT 7 Workbench Custody Transaction History Report ID: CUA356 THE BAHKOYNP.V/YORK MELLON THE I Baca Cmrene, Ban OCSI1C0NROUDATED 6/1/2008 - 6/30/2008 OCBD OCS000010000 OCBG� Trade/ Ell Date Unite ptincliUll Settle/ Pay Date Trade Price Commission 13Eecription Actual Settlement Date Misc. Expense TUcome FR Fee . Net Local Amount LEHMAN CAT REPO REPURCHASE AGP.UEI.1ENT PTO 06/13/200820800",A 6/16/2008 -15,500000.000 16.500,000.GO CLOSE FOR 1081650112837 6/16/2008 i0o.0000 0.00 FED El TRADING BROKER: LEHMAN GOVP SECS INC,NY 00000636 6/16/2008 0.00 286000 RECD CLEARING BROKER:LEHMAN LOW SECS INC,NY 00000636 0.m 16,502,860.00 TRACI CMS REF: 10816800D0078 CLEAF SEC ID:99ZAB2MXO REG:REPO CMS F HARBIN RELEASE-BUT SEC 11 FEDEI DREYFUS TREASURY CASH MANAGEMENT 6/16 0.00 RECD 0.0000 2,86 CL PA BOUGHT DREYFUS TREASURY CASH 6/l6/2008 U.00 RECD CMS REF: 1081680440463 0.00 TRACI SEC ID:996085247 REG:05 BOB -2,860.00 CLEAF DREYFUS TREASURY CASH MANAGEMENT 6/16/2008 0.000 -344,480.45 CMSF BOUGHT DREYFUS TREASURY CASH 6/16/2008 0D000 0.00 SEC 11 CMS REF: 1081680440464 6/16/2008 0.00 0.00 FEDEI SEC ID:996085247 REG:OS 0.00 -344.480.45 CL MA RECDTotal MARODI RELEASE-BDY 12) Tow TRAC -347,340.4E TRAD1 Teta1 ow lacvion: 0.00 CLEAF Total Income: 0.00 CMSF Total Nat: -347,340.45 SEC 11 FOREIGN HOLDER RELEASE-CD PEDEI FORD CR AUTO OWNER TR 2008-BNTCL A-2B VAR RATE 12/15/2010 6/16/2008 0.000 0.00 CL LN INTEREST ON S000OOB0 PAYABLE 06 ISM 6/16/2008 0.0000 0.00 RECD CMS REF: 1081680015959 6/16/2008 0.00 1,6SOA4 TRACT 000 1,65GIVI F CLEA SEC ID:34528YAC1 CMS F Total U.B. DOLLAR NSDI 118) Total Principal: f66,142.76 SEC I1 Total Commlc lan: 0.00 Taw 1awme: 66,142.76 RECD REDEI Total Bet 0.00 TRACI CLEAF 6/17/2008 CMS R 9.8.DOLLAR NSD) SEC IL RECEIVE VB PAY-BUY FEDEF RECD COMMITMENT TO PURCHASE"FNMA SINGLE FAMILY MORTGAGE 5% 6/11/20M 7,50g000.000 -7,394,82421 TRADI: 06/01/2023 6/17/20DB 98.5977 BOO CLEAR TRADING BROKER:CREDIT SUISSE,NEW YORK ICSFBUS33XXX1 00000355 6/17/20M 0.00 0.00 CMS R CLEARING BROKER:CREDIT SUISSE,NEW YORK ICSFBUS33XXXI 00000355 0.00 -7,394,824.21 SEC IL CMS REF: 1081630126517 CLIENT REP:W00203MO34760 SEC M:OIF050460 REG:PAIR 712412MB 7:38:26PM EDT 17 Wa.klo,v 7/24/2 1 1 1 1 , 1 Asset Detail Repoli ID: GM013 Base Currency: VSD THE BANK OF NEW YORE MELLON by Currency Altemxte Base Currency: OCSD CONSOLIDATED-OCSOOOO I0009 6/30/2008 Exrh.., Rate: 6tataa: FINAL —_ Net Uiuealizedt Prlce Cast Market Value % of Gain/Loss �ceFription Base Shares Par Base Base. Total Base FHLMC MULTICWSS C9'FS 2891 IN 100.2560 368,900.690 362,502.56 369,845.08 0.09% 7.342.52 4.25O%06/151202 4 DO 11/01/04 SEC ID:31395JZ90 PHLMC MULTICLASS CTFS 2905 UY 100.0800 33,506,260 33,008.90 33,533.07 0.01% 524.17 4.000%10/15/2M3 DD 12/01/04 SEC ID:31395KDT7 PHLMC MULTICLASS CTFS 2950 NA 100.2740 120,183.570 118,592.07 120,512.97 0.03% 1.920.80 4.250%09/15/2024 DO 03/01/05 SEC ID:3139SM49 PHLMC MULTICLASS MM 100.6010 48.606,890 48,103.75 40,899.02 0.01% 795.27 4,500%12/15/2025 DD 05/01/05 SEC 0l:3139SM68 PHLMC MULTICLASS MM 3008 JK 100.2470 190,121.900 187,507.72 190,591.50 0.05% 3,083.78 4.500%11/15/2013 DO 07/01/05 SEC ID:31395WGA9 FNMA OTD REMIC P/T 07-114 A6 97.8930 200,000.000 190,250.DO 195,786.00 0.05% 5.536.00 VAR RT 10/37/2037 DO 11/30/07 SEC ID:31396MQS FNMA POOL 00684798 98.8130 170,644.190 170,497.54 168,618.64 0,04% -1.878.90 5.50D%03/01/2033 DD 03/01/03 SEC 10:31400DX31 PNMA POOL 00684908 99.3860 159,BM,650 161,854.20 158,825.44 0.04% -3,028.76 5.000%06/01/2018 DD 05/01/03 SEC ID:31400133R1 PNMA POOL N06852M 99.4130 90,552.830 91,713.06 90,U21.28 0.02% -1,691.78 5.000%03/01/2018 DD 03/01/03 SEC ID:31400EOH7 FNMA POOLN0686318 99.4260 136,553.720 140,650.32 135,769.90 0.03% -4.880.42 5.000%03/01/2018 DD 03/01/03 SEC ID:31400FPB7 FNMA POOL#0688739 99.3860 43,3M.750 44,686.29 43,118.37 0.01% -1,567.92 5.000%O6/01/2018 DO D6/01/03 SEC 1D:31400JEL9 PNMA POOL 40689859 99.3860 65,334.350 66,171.42 64,933.20 0,02% -1,238.22 5.000%05/01/2018 DO 05/01/03 SEC ID:3140OKMOB PNMA POOL 00693834 99.4260 273,463.800 281.667.71 271,894.12 O.W% -9,773.59 5.000%03/01/2018 DD 03/01/03 SEC In 3140OPY74 FNMA POOL N0695889 99.4000 379,207.170 390.583.39 376,931.93 0.09% -13.651.46 5.000%05/01/2018 DO 05101/03 SEC ID:31400SC23 7/24/2008 7:34:44PM EDT 7 mrkbmcA Asset Detail Report m: GL8013 B.C9rreeey. UED THE BANK OF NEW YORK MELLON by Currency Altera.te ease carte : E=e nae Rate: OCSBCONSOLIDATDD-OCSGo0o10oo0 6/30/2008 Stataa: Ellin t4et UnrEaNiea Price Cost Market Value % of GRIn`/Cosa Description Base Shares Par .Base Base Total Base FNMA MOLOO702210 100.0775 105,326.050 108,485.81 105,407.63 0.03% -3,078,Ta 5.000%05/01/2018 DD 05/0 1/03 SEC ID:31401MM FNMA POOL#0702328 99.4000 65.919.160 66,763.76 65,523.65 0.02% -1,240.11 5.000%05/01/2018 DD 04/01/03 SEC ID:31401AIiD2 FNMA POOL K0709148 99.3720 127,079.84U 130,892.24 126,281.78 0.03% 4,610.46 5.000%06/01/2018 DD 06/01/03 SEC ID:31401HZM7 FNMA POOL#0709360 99.3720 271,505.300 274.983.98 269.800.25 0.06% -5,183.73 5.000%07/01/2018 DO 06/01/03 SEC ID:3140IJB56 FNMA POOL 40709826 99,3860 0020 0.02 0.02 0.00% 0.00 5.000%06/01/2018 OD 06/01/03 SEC iD:31401JSN FNMA MOL40709917 99.3860 108.308.450 109,6%616 107.643.44 0.03% -2.052.72 5.000%06/01/2018 DO 06/01/03 SEC ID:31401JVJ4 FNMA POOL N0710235 99.3720 263,302.540 271,201.63 261,649.00 U.O6% -9,552,63 5.000%06/01/2018 DO 06101/03 SEC N:31401KBC8 FNMA FOOL#0720319 99.3720 0.030 0.03 0.03 0.WA 0.00 5.OD0%07/01/2018 DO 07101/03 SEC ID:31401WG45 FNMA FOOL 40720369 100.0775 1,138,419.750 1,172,572.32 1.139,301.47 0.27% -33.270.85 S.D00%06/01/2018 DO 06/01/03 SEC ID:31401WJNO FNMA POOL#0725530 99.7704 1,657,455.970 1.67%98701 1,653,650.85 0.40% -26,336A6 5,000%06/01/2019 DO 05/01/04 SEC ID:31402DA75 FNMA POOL#0729601 99.3570 198.1T.820 200,717.00 1%.903.54 0.05% -3,813.46 5.000%07/01/2018 DO 07/01/03 SEC ID:31402HRM FNMA POOL NU738487 99,3120 88,791.540 89,929.20 88.180.65 0.02% -1,748.55 5.000%10/01/2018 DO 10/01/03 SEC ID:31402UNC2 PNMA POOL#0740457 100.0775 1078429220 1,093.089.12 1,079,264.47 0.26% -13,824.65 5.000%10101/2018 DD 10/01/03 SEC ID:31402W7N8 FNMA POOL#0740748 99.342D 343,015.890 347,410.76 340,759.85 0.08% -6,651.91 5.0DD%10/01/201O DD 11/01/03 SEC ID:31402WSH7 7/24/2" 7:34:44PM EDT 8 WorkL m 1 1 1 I l l f1 f t 1 1 7 f 1 1 1 1 1 I 1 1 1 1 1 1 1 1 1 1 1 1 1 I �I► Asset Detail @apart 10: OL8013 Baw Cenevey: Dan THE SANKOP NEW YORK MELLON by Currency Alternate Bus cumncy: OCE D-CONSOLIDATED-OCSODO01 noun 6/30/2009 Euhan6e Rnte: Flnlun: FINAL Net - ' a eii' Price Cost Market Value % of Gain/Loss �'�Ile¢CHptioa. Base Shares Par Base Base Total Base FNMA POOL#0714008 99.3860 0.040 0.04 0.04 0.00% Ono 5.000%07/01/2018 DO 09101/03 SEC ID:31403SR54 FNMA POOL 60744316 100.0775 0.010 0.01 0.01 0.00% 0.00 5.000%09/01/2018 DD 09/OI/O3 SEC ID:3140383Z4 FNMA P001,40747914 99,3120 0.020 0.02 0.02 0.00% 0.00 5.000%11/01/2018 DO 11101/03 SEC ID:31403P3K0 FNMA POOL 007484M 100.0775 0.010 0.01 0.01 0.00% 0.00 5.000%08/01/201S DO 09/01/03 SEC ID:31403ONR9 FNMA POOL#0748999 100.0775 518,407.900 525.049.99 518,809.41 0.12% -6,240.58 5.000% 12/01/2018 DO 11/01/03 SEC ID:3140307W FNMA POOLA0750377 100.0775 1,026.685.310 1.039,839.72 1,027,480.49 0.25% -12.359.23 5AD0%11/01/2018 DO 11/01/03 SEC ID:31403JUA2 FNMA POOL#0750380 100.0775 706,129.710 715,177,00 705,676.61 0.17% -8.500.39 5.000%11/01/2018 DO 11/01/03 SEC ID:31403JUD6 FNMA POOLNUS1960 100.0775 369,867,990 374,606.95 370,154.46 0.09% -4.452.49 5.00096 12/01/2018 DD 11/01/03 SEC 1D: 31403WH I FNMA POOL 40753425 99,2970 393,139.730 397.685.43 390,375.96 0.09% -7,309.47 5.000%11/01/2018 DO 11/01/03 SEC ID:31403NA23 FNMA POOL 00755165 99.2970 291,727.320 295,465.06 289,676.4E 0.07% -5.789.58 5.000%12/01/2018 DO 11/01/03 SEC ID:31403Q6A3 FNMA POOLs0756372 99.2970 545.276.840 551,581.62 541,443.54 0.13% -10,138.0E 5.000%11/01/2018 DO 11/01/03 SEC ID:31403WRO FNMA POOLOWS9670 99,1190 531,255.830 538,477.61 526,575.47 0.13% -11,902.14 5.000%12/01/2019 DO 12/01/04 SEC ID:3140SHJP4 FNMA POOL M0792432 99.1490 SI3,548.760 520.529.81 509,178.46 0.12% -11,351.35 5.000%10/01/2019 DO 10/01/04 SEC ID:31405LLM9 FNMA POOL 00794195 99.1340 510,174.230 517.109.42 505,756.12 0.12% -11,353.30 5.000%11/01/2019 DD 11/01/04 SEC ID:31405NK09 7/24/200 7:34:44PM EDT 9 RkrkLmch Asset Detail H.ye ID: M5013 Bue Cnnency: MD MR BANK W New roan MELLON by Currency AD`3°'1`suv C eney: H hems Rate: OCSBCONSOMDATED-OCB000010000 6/30/2008 But..: FINAL ' - - - , Net On eallzed. Priee Cost Market Value. % of Gain/Lbss �1Yddptioa Base Shares Par - Base Base Total Base FNMA POOL M0800370 99.I 190 222,559.580 222,316.15 220,598.83 005% -1.717.32 5.000%12/01/2019 DD 11/01/04 SEC 1D:31405VFK8 FNMA POOL#0823358 101.8570 875,244.380 868,406.53 891,497.67 0.21% 23,MA4 VARRT 02/01/2035DD04/01105 SEC ID:31406K BNMA POOL M0831697 100.9846 7,278.310 7,279.46 7,349.97 0.00% 70.51 6.000%09/01/2036 DD 08/01/06 SEC ID:314 l!7J9 FNMA POOL#0889579 100.8240 274.763.400 280.773.84 277,027.45 0.07% -3,746.39 6.000%05/01/2038 DO 05/01/08 SEC ID:314I0MY1 FNMA POOL 00899622 98.5150 964,929.640 956,486.51 950,600.43 0.23% -5.886.08 5.500%07/01/2037 DO 07/01/07 SEC ID:3141OWM FNMA POOL M0906269 98.5460 290,388.750 291,250.83 286,166,50 0.07% -5,084.33 5.500%01/01/2037 DD 01/01/07 SEC ID:31411E2A4 FNMA POOLM0912427 98.5410 465,030.760 456,456.76 458.245.96 0,11% 1.789.20 5.500%02/01/2037 DD 02/01/07 SEC ID:31411 NW8 FNMA POOL A0939553 98.5150 461,732.360 457.998.83 454,875.63 0.11% -3,123.20 5.500%07/01/2037 DO 07/01/07 SEC ID:314I3AH63 FNMA POOLM0945798 98.5150 712,407A60 714,299.50 701,82Z91 0.17% -12,471.59 5.500%07/01/2D37 DO 08/01/07 SEC ID:31413HGF9 FNMA POOL M0945886 98.5120 511,273.430 512.631.49 593,665.68 0.12% -8,965.81 5.500%08/01/2037 DO 08/01/07 SEC M:31413iW74 FNMA POOL#0953017 100.8190 599.129.330 609,614.10 604,036.20 0.15% -5,577.90 6.000%10/01/2037 DO 10/01/07 SEC ID:31413RO26 FNMA POOL M0956362 98.4990 495.402.730 496.718.64 487,9W74 0.12% -8,751.90 5.500% 12/01/2037 DD 01/01/08 SEC ID:314I3US% FNMA POOL M0956859 98.4940 1,620,342.690 1,625,153.09 1,595,940.33 0.38% -29,212.76 5.500%02/01/2038 DO 02/01/08 SEC ID:31413VQL4 FNMA POOL M0%9833 98.4990 487,270.280 488,564.60 479.956.35 0.12% -8,608.25 5.500%02/01/2038 DO 02/01/08 SEC ID:31414L4S4 7/24/2008 7,34:44PM EDT 10 Workbv Asset Detail Report IV: OLS013 Hue C9troo.y: Van TNO BANK OF NEW YORK ME LLON by Currency Alternate Bue C ...n.p B ha .Rate: oceacoNsoLrnAran-ocaao0010000 6/30/2008 Stet.: FINAL Pflee Coat Matket Value % of Gait¢LssN ,.:Base shares Par Base Base Total BANC FNMA POOL 40974715 98,4920 246,625.490 247,280.58 242,906.38 0,06% -4,37C20 5.500%04/01/2038 DD 04/01/08 SEC M:31414SK44 ENMA POOL 00981638 100.7980 SOg000.410 506,074.64 503,990.41 0,12% -2,084.23 6.000%06/0112038 DO 05101/08 SEC ID:31415BBPS FLORIDA MR CORE SR NT SER A 99.7340 900,000.000 900,000.00 897,6M.M 0.22% -2,394 00 VAR RT 11/14120M DO 12/13/05 SEC ID:341099CF4 FORD CR AMD 08-B CL A-2131 HO.4490 500.000.000 500.000.00 502.245.00 0.12% 2,245.00 VARRT 12/151201ODD04/22/08 SEC ID:34528YACI ONMA POOI.00421389 103.9130 3,156.660 3,313.01 3,280.18 0.00% -32.83 6.500%04/15/2026 DD 04/01196 SEC ID:36206UC23 ONMA II POOL M0080023 100.0060 63.189.790 64.136.37 63,193,58 0.02% -1,042,79 VAR RT 12/20/2026 DD 12/01/96 SEC ID:36225CAZ9 ONMA 11 POOL 0080088M 1022000 72,622.300 74.210.91 74,219.99 0.02% 9.0B 7.375%06/2012027 DO 06/01/97 SEC ID:36225CC20 ONMA 11 POOL#0080395 100.8210 40,647.120 40,278.76 40.980.83 0.01% 702.07 VAR RT 04/20/2030 DO M/01/00 SEC ID:36225CNM4 GNMA It POOL N0804WX 100,8210 346.948.340 343.424.64 349,796.79 0.08% 6,372.15 VARRT 05/20/2030 DD 05/01/00 SEC ID:36225CN28 ONMA 11 POOL#0080965 100.2600 337.437.930 337,227.02 338,315.27 0.08% 1.088.25 VAR RT 07/20/2034 DO 07/01/04 SEC ID:36225DCB8 GENERAL ELEC CAP MTN MM716 99,8430 2,600,000.000 2,600,000.00 2,595,918.00 0.62% -4,082.00 VAR RT 12/12/2008 DO 12/12/05 SEC ID:369620T53 GENERAL ELEC CAP CORP MEDIUM 967030 1,400,000.000 1,396,262.00 1,353,842.00 0.33% -42,420.00 5.625%05/01/2018 OD 04/21/08 SEC ID:3696203U6 GOLDMAN SACHS GRP 97.2180 2,350,000.000 2.350.000.00 2,284,623.00 0.55% -65,377.00 VAR RT 06/28/2010 DO 06/28/05 SEC ID:381431JB32 GNMA MD REMIC TR 20N-9 PH 100.7920 218.848,290 218,848.29 220,591.57 0.05% 1,733.28 VAR RT 02/16/2030 SEC ID:3837H4NK9 712412008 7:34:44PM EDT 11 W ilibe^v' -- --------- - --- --- - �!► Asset Detail Report IM GL8013 Bue Currency: USD Lr' RANKOF NEW YORK M E LLOR by Cuneney Alternate BaaeExchange Rate: D-CONSOLIDATED-OCSODOD10000 6/30/2008 Statue: FINAL Net Unrealized Pricc Cost MarIket Value % of Gain/Loss Description Base Bkares Par Base .Base Total . Base ONMA GTD REMIC P/T D3 97 DU 100.0610 181 301.370 177.901,96 181,411.96 0.04% 3,510.00 4.000%0911 6/2025 DO 11/01/03 SEC ID:38374EM HSBC FIN CORP MTN 4 TR Onto? 97.9680 2,000,000.000 1,997,220.00 1,959,360A0 0.47% -37,860.00 VAR RT 05/10/2010 DD OS/10/05 SEC ID:40429JA02 J P MORGAN CHASE h CO MTN 99.5780 4,700,000.000 4,700,000.00 4,680,166.00 1.13% -19,834.00 VAR RT 06/13/2011 DO 06/13108 SEC ID: 46623EHY8 LEHMAN BROTHERS TR 800596 99,6250 2.000.000.000 2,000,000.00 1,992,500.00 0,48% -7,500.00 VAR RT 10/22/2008 DO 10/24/05 SEC ID: 52517MSS LEHMAN BROS HLDOS INC MTN 94.6560 600,000,000 597,264.00 567,936.00 0.14% -29,328.00 5.625%01/24/2013 DO 01/22/011 SEC 10:5252MOBZ9 MERRILL LYNCH A,CO INC MEDIUM 96.9220 4,200,000,000 4,194,456A0 4,070,724.00 0.98% -123,732.00 6.150%04/25/2013 DD 04/25/08 SEC ID:5901SYN56 MERRIIL LYNCH 6:CO INC MEDIUM 99.3430 1,600,000.000 1,596,048.00 1,589,488.00 0.38% - ,560.00 VAR RT 05/20/2009 DO 05/20/G8 SEC 1D:59018YQ46 MORGAN STANLEY NT 99.6090 1,500,000.000 1,476,210.00 1,494,135.00 0.36% 17,925.00 3.875%01/15/2009 DO 01/13/04 SEC ID:61746BALD MORGAN STANLEY SR GLOBAL MTN 99.6090 1,300,000.000 1,300,000.00 1.294.917.00 0.31% -5,083.00 VARRT 05/14/201ODD05/14/08 SEC ID:61746BDD5 MORGAN STANLEY W HE7 CL A-2A 89.8438 808,974.480 796.334.27 726.813.01 0.17% .69,521.26 VAR RT 07/25/2037 DO 09/28/07 SEC ID:61756YAB9 NATIONAL RURAL UTILS COOP PIN 99.9060 3,100.000,000 3,100,000.00 3,097,086.00 0.75% -2,914.00 VAR RT 07/01/201ODD06/30/08 SEC ID:6374321,113 SLM CORP MTN N TR 00067 99.6560 I,800,000.000 1,805,040.00 1,793,808.00 0.43% -11,232.00 VAR RT 07/25/2008 DD 07/26/04 SEC ID:78442FCUO SBA OM DEV PARTS 2001-20C 1 103.4350 1,616,354.230 1,616,354.23 1,671,876.00 0.50% 55,521.77 6.340%03/01/2021 SEC ID:83162CLJO SBA OTD PARTN CTRS S81C-PS 01 102.6600 196,267.570 196,267.57 201,488.29 0.05% 5,22D.72 6.640%02/10/2011 DO 02/21/01 SEC 1D:M1641DD4 7/24/20M 7:34:44PM EDT 12 W� I I I I I t I I I I I I 1 I I I i I t 1 1 1 1 1 1 I I 1 1 I 1 I 1 I I I 1 1 �► Asset Detail Report ED: GL8013 Base C.,m.e : Use THs BANK OP N9 W PORK MBLLON by Currency AltevO tc B"e Cunene, OCS 4CONSOUDATED-ocamo0l0000 6/30/2008 Eahwsge Rae: stoat- PINAL . .. -..Nc$tlaitilaNzed -� Puce Cosh Market Value - % of Gain/Loan `ription Base Shares Par Base Base Total. Base TENNESSEE VALLEY AUTH 100.5810 2,000,000.000 2,038,784.00 2,011,62D00 0.48% -27.164,00 5.375%11/13/2008 DD I I/13/98 SEC ID:880591DUS U S TREASURY NOTES 104.3281 3,610,000.000 3,707,867.10 3,766,245.13 0.91% M.378.03 4.250%OR/15/2013 DO 08/15/03 SEC ID:9I2828BH2 U 8 TREASURY NOTES 101.9100 38,IDO,000.000 39,273,459.40 38,827,710.00 9.34% -445,749.40 4.000%08/31/2009 DO 08/31/07 SEC ID:91282SH89 U S TREASURY NOTES 101,0700 15,600,000.000 15,604,750.00 15,766,920.00 3.79% 157,17000 3.125%11/30/2009 DD 11/30/07 SEC ID:912828HJ2 U S TREASURY NOTES 99.9063 2,400,000.000 2,397,750.00 2,397,750.00 0.58% 0.00 2.875%06/30/2010 DD 06/30/08 SEC ID:91282MC5 WACHOVIA BE MTN TR ORR OW27 99.5620 2,200,000.000 2,200,595.00 2,190,364.00 0.53% -10.231.00 VAR RT 03/23/2009 DO 03/23/06 SEC ID:92976FBC6 WACHOVIA BK NATL ASSN MTN 99.7810 400,000,000 399,768.00 399,124.00 0.10% -644.00 VARRT 10/03/2008 DD 04/05/07 SEC ID:92976FBT9 WACHOVIA CORP GLOBAL MEDIUM 95.7030 1,500,000.000 1,496,610.00 1,435.54&00 0.35% -61,065.00 5.500%05/01/2013 DO 04/25/08 SEC ID:92976WW4 WACHOVLA CORP NEW SUB Nr 97.9370 900,000.000 899,685.00 881.433.00 0.21% -18,252.00 VAR RT 10/29/2008 DO 10/28/05 SEC ID:929903AQS WACHOVIA CORP NEW SUB Nf 99.7180 600,000.000 599.172.00 598,308.00 0.14% -864.00 VAR RT 10/28/2008 DO 10/28/05 SEC ID:929903ASI TOTAL FIXED INCOME SECURITIES 293,900,251.630 299,693,272.73 298,155,754.58 71.74% -1,537,518.15 CONVERTIBLE SECURITIES WELTS PAROO a CO NEW SR DEB 99.5000 400,000.000 400,200.00 398,000.00 OAO% -2.200.00 VAR RT 05/01/2033 DO 05/01/08 SEC ID:949746FA4 TDTAL ASSETS U.B.DOLLAR 413,341,655.240 4 77,122,751.29 415,583,033.13 loo 00% -1,539,716.15 TOTAL ASSE -BASE: 413,341,656.240 417,122,751.28 415,583,033.13 100.00% 4,639,719.15 7/24/2008 794:44PM EDT 13 Warkbe.ch Custody Transaction History Rapart ID: MA356 THE PANE OF NEW YORK MFLLON Ba Cmrencr: Van OCS&CONSOLTBATED 6/112008 - 6/30/2008 ocea000loaoo - - - - Trade/ Ex Date Units - Principal Settle/ Pay Date Trade Price Commisslan- .Descriptinn Actual Settlement Date Misc. Expense Income FX Fee Net Lncal Amount 6/2/2008 U.B.DOLLAR IUBDi RECEIVE VS PAY-BUY AMERICAN EXPRESS CR CORP MEDIUM TERM TITS BOOK ENTRY TRANCHE 0 5/2812MB 60 .000.000 -597.942.00 TRADING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YOM OW00274 6/2/2008 99.6570 0.00 CLEARING BROKER:CITIGROUP OHL MKTS/SALOMON,NEW YORK 00000274 6/2/2008 am 0.00 CMS REP: 1081490216398 CLIENT REP:000020300034460 0.00 -597,942.00 SEC ID:0258MOCW7 REG:DTC LEHMAN CAT 1 REPO REPURCHASE AGREEMENT DTD M/02/2008 2.2300% 6/2/2008 I9,000,UU0.000 -19,000,000.00 TRADING BROKER:LEHMAN GOUT SECS INC,NY 00000636 6/2/2008 1010000 0.00 CLEARING BROKER:LEHMAN GOUT SECS INC,NY 00000636 6/2/2008 TIM 0.00 CMS REF: ID81540162304 0.00 -19,OOgImB0 SEC TO:99ZAB091Z REG:REPO ToW RECENE YS PAY-BUT ill Total Prinelpal: -19,Sw,942.00 Total CommYa/oS: 0.00 To Income: 0.00 Tool N.L -19,597,942.00 DELIVER YB PAY-BELL CS FOB CAT 1 REPO REPURCHASE AGREEMENT DTD 05/30/2008 2.150G% 6/2/2008 -19,000,000.0m 19,000,000.00 CLOSE FOR 1081510153315 6/2/2008 100.0000 TIM TRADING BROKER:CREDIT SUISSE,NEW YOM ICSFBUS33XXX)00000355 6/2/2008 0.00 3,404.17 CLEARING BROKER:CREDIT SUISSE,NEW YORK(CSFSUS33XXXj ON00355 0M 19,003,404.17 CMS REF: 108154D000110 SEC ID:9MUI0430 REG:REPO nAROIN RELEASE-BUT DREYFUS TREASURY CASH MANAGEMENT 6/2/2008 0.000 -3,404.17 BOUGHT DREYFUS TREASURY CASH 6/2/2008 0.0000 0.00 CMS REP: 1081540388246 6/212MB 0.00 MIX) SEC ID:996085247 REG:05 TIM -3.404.17 SELL-CELL DREYFUS TREASURY CASH MANAGEMENT 6/2/2008 0.000 354,192.00 SOLD DREYFUS TREASURY CASH 6/2/2008 0.0000 0.00 CMS REP: IM1540388247 6/11200B 0.00 0.00 SEC ID:996085247 REG:05 0.00 354.192.00 MMGN HOLDER RELEASE-CD UNITED STATES TREASURY NOTES DTD 11/30/2007 3 1/8% 11/30/2DO9 6/212MB 0.000 0.00 REC INT ON 1%00000.000 UNITS PAY 06/02/08 RATE 0.015 6/2/2008 0.0000 0.m CMS REP: 1081540021189 6/2/2008 TIM 243,750,00 SEC ID:912828HJ2 0.00 243,750.00 712412008 7:38:26PM RUT 1 War 'xh 1 1 1 1 1 1 f 1 1 1 1 I 1 1 t 1 1 '1 Custody Transaction History Report ID: CUA356 THE SANE OF NEW YORK MELLON Buc Cortenry: BED oCR4CONImI2MTED 611/2008 - 6/30/2008 oC8R0001INNlo z n^+.i_ Trade/�R&bate - Qaife - Ffl Cip'31 t>4 - settle/ Pay Date Trade Mce Comml48ion• Yet _ Actual 36tudmcat Date MieC.HNgense 1 63um I�-Fee. .$ Tow U.B.BOLLAR(USD)(61 TcW Principal: -247,154.17 Taw Commlalov: 0.00 TeW l..- 247,164.17 TeW Net; 0.00 6/3/2008 U.B.DOLLAa(USDI RECEIVE W PAY-BUY FEDERAL HOM E LIT BE CONS DISC NTS MATURES JULY 182008 INCOME AT 6/3/2008 1,4W,DW.W0 -1,396,220.W MAT 6/3/2DU8 99.7300 O.W TRADING BROKER:JP MORGAN CHASE BAHK/HSBCI,NEW YOM()00)2467 6/3/2W8 0.00 0.00 CLEARING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YORK 00002467 0.00 -1.396,220.W CMS REF: I08I5W1W245 CLIENT REF:00006030DOI2671 SEC ID:313384ZM REG:FRB LEHMAN CAT 1 REPO REPURCHASE AGREEMENT DTD 06/03/2008 2.1500% 6/3/2008 19,500,000.000 -I9,500,0m.00 TRADING BROKER:LEHMAN GOUT SECS INC,NY WUm636 6/3/2008 100.0000 0.00 CLEARING BROKER:LEHMAN DOW SECS INC,NY DOOOW36 6/312WS Um 0.00 CMS REF: 1081550140829 0.m -19,5m,000.W SEC ID:99ZAB1E03 REG:REPO ToW RECEIVE W PAY-BUY 12) Tow Mn PLL -10,896,220.W TeW Cnmmivicn: 0.00 Tow Income: 0.00 TnW Net -20,896,220.00 DELIVER VS PAY-MT CG'1BANK NA NY BRH INSTL CTF DEP PROGRAM BOOK ENTRY DTD 6/3/2008 -1,9m,0m.000 1.900.000.00 03/03/2008 6/3/2008 100.0000 0.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 6/312WO 0.W 14,858.00 1,9m,000m0 0.00 1,914,855.00 TRADING BROKER:NON-HROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1081549Um110 SEC ID: 173ODlM REG:DTC DI LIVBR VS PAY-BELL LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/02/20082.2300% 6/3/2008 .19,000,000.000 19,000.Om.m CLOSE FOR 1081540162304 6/3/2W8 100.00m O.W TRADING BROKER LEHMAN DOW SECS INC,NY Wm0636 6/3/2008 LIM 1.176.94 CLEARING BROKER:LEHMAN DOW SECS INC,NY 00000636 0.00 19,W 1.176.94 CMS REF: I081550000098 SEC ID:99ZAB09L5 MG:REPO YAROIN RBLBABB-BUY 712412" 7.38:26PM EDT 2 Wa� Custody Transaction History Report ID: CUA356 TTiE BANK OF NEW YORK MELLON B.Cnrrevry: USE, OCSD NSOUDATED 6/1/2008 - 6/30/2008 OCE000010000 Trade/i Ex Date units'' Principal Settle/ Pay Date Trade Price Commission Actual Settlement Date Dee Misc. Expense Ineeme e$ Hon FX Fee Net LodllAtylQa'fit- DREYFUS TREASURY CASH MANAGEMENT 6/3/2008 0000 -20,086.43 BOUGHT DREYFUS TREASURY CASH 6/312MB 0,0000 0,00 CMS REF: 10815S0388055 6/3/2008 am 0.00 SEC ID:996095247 REG.05 0.00 -20.086.43 DREYFUS TREASURY CASH MANAGEMENT 6/3/2008 0.000 -9,685.43 BOUGHT DREYFUS TREASURY CASH 6/3/200S 0.0000 0.00 CMS REP: ID815503B8058 6/3/2008 0.00 0.00 SEC ID:996085247 REG:05 0.00 -9,685.43 Tow MARGIN SELEABE-BUY(2) ToW PYInelpvL -29,W I.86 TOW Comws[Won: 0.00 TeW lme : 0.00 TOW Net+ -29,771.86 FOREIGN HOLDER RELEASE-CID DREYFUS TREASURY CASH MANAGEMENT 6/3/2008 0.000 0.00 RECEIVED INTEREST DREYFUS TREASURY CASH MANAGEME 6/3/2MS 0.0000 0.00 CMS REF: 1081550177513 6/3/2M8 um 271.49 SEC ID:996085247 0.00 27L49 DREYFUS TREASURY CASH MANAGEMENT 6/3/2008 0.000 um RECEIVED INTEREST DREYFUS TREASURY CASH MANAGEME 6/3/2008 0.0000 0.00 CMS REP: 1081550177517 6/3/2008 0.00 9.685.43 SEC ID:996085247 0.00 9,685.43 TOW FOREIGN HOLDER RELEASE-CD 121 TOW R ,al: 0.00 TOW Com lon: 0.00 TOW Income: 9,966.92 TOW Net: 9,956.92 TOW U.S.DOLLAR JUBD)18) TOW Priaeip4 -25,991.36 ToW Commiuion: OAO T.W I...: 25,991.96 TOW Net: 0.00 6/4/2008 U.S.DOLLAR iUSDi RECEIVE VS PAY-BUY FEDERAL HOME LN BE CONS DISC NTS MATURES JULY 2,2008 INCOME AT 6/4/2008 2,20g00u000 -2,196.389.56 MAT 6/4/2008 99.8359 0.00 TRADING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YOU 000D2467 6/4/2008 0.00 0.00 CLEARING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YORK 00002467 0.00 -2,196,389.56 CMS REF: 1081560106206 CLIENT REF:0ON60300012681 SEC ID:313304YW3 REG:FEB 712412WA 7,38:26PM BUT 3 'f wbl� y 1 1 1 i 1 1 1 1 1 1 1 I f 1 1 1 1 I 1 1 i 1 1 I 1 1 1 1 I I 1 1 1 1 Custody Transaction History Fepart ID: CUA356 THE RANK OF NEW YORK MELLON Hose Carreacr: USD OCanC0MOU"TED 6/1/2008 - 6/30/2008 oceaSODtDDOD `? Trade/ Ex Date .Units Ptlltgitll: Settle/ Pay Date - Trade Price CDmmteilAlf Actual.Settlement Date Mine; Expense Ineotne DeecrlpHtln FX Fee Net LDcal.Amount CS FOB CAT RE11) REPURCHASE AGREEMENT DID 06/04/20082.0500% 6/4/2008 19,10(),V00.000 19,IOQ00U.00 TRADING BROKER:CREDIT SUISSE,NEW YORK(CSPDUS33XXX)OW00355 6/1/20n8 100M00 0,00 CLEARING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XXX)00000355 b!:/20oA O.w 0.e0 CMS RP.F: 1081560149626 0.00 -19,100,000.00 SEC ID:99ZABIK71 REG:REPO T etel RECEIVE VS PAY-9UY 121 Total Principal: -21,296,389.56 Total Ceatmluloa: 0.00 Total Bosoms: 0.00 T atel Met: .21,296.399.56 DELIVER VB PAY-MT FEDERAL NATL MTO ASSN DISCOUNT NT MATURES JUNE 4 2008 INC0ME AT 6/4/2008 -B,SOOJsxL 00 8,336,805.00 MAT 6/412MB 100.0000 0.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 6/4/2008 0.00 163,195.00 8,500,000.000 0.00 8,500,000.00 TRADING BROKER NON-BROKER TRADE,BOST0N 00009999 CLEARING BROKER:NON-BROKER TRADE,B0ST0N 00009999 CMS REP: 1081559000428 SEC ID:313588KS9 REG:FRB DELIVER VB PAY-BELL LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/03/20082.I500% 6/4/2008 -19,500,000.000 19,500.0O OO CLOSE FOR 1081550140829 6/4/2008 100.0000 oeo TRADING BROKER:LEHMAN OOVT SECS INC,NY 00000636 6/4/2008 0.00 1,164.58 CLEARING BROKER:LEHMAN DOW SECS INC,NY ON00636 0DO 19,501,164.58 CMS REP: 1081560000074 SEC ID:99ZABIF.0.8 REG: REPO MARODI RELEA6R-BUY DREYFUS TREASURY CASH MANAGEMENT 6/4/2008 0.000 -6,704,775.02 BOUGHT DREYFUS TREASURY CASH 6/4/2008 OMER) 0.00 CMS REP: 1081560327517 6/4/2008 0.00 0,00 SEC ID:996085247 REG:05 0.00 -6.704,775.02 Tend U.B.DOLLAR NBD)15) Total Ptenipd: -164,369.68 Total CemmWlev: 0.00 Tetd Income: 1"'369.55 Totd Net: 0.00 6/6/2008 U.B.DOLLAR LUBD1 REt5p1VE VS PAY-BUY 712412WS 7:38:26PM EDT 4 Custody Transaction History Reaart ID: CUA356 THE BANK OF NEW YORK MF.LLON Base Curte0eY: U8O OCSDCONSOUDATED 6/l/2008 - 6/30/2008 OCBG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Desetlptlon Actual Settlement Date Misc. Expense, Income; FX-Fee Net Local Amount) CREUIF SUISSE USA INC GLOBAL SR NT FLTG RATE.3 MNTH LIHOR DTI) 1/2/2008 900,000.000 -895,806.00 TRADING BROKER:GOLDMAN SACHS&CO,NY 00000005 6/5/2008 99.5340 ODO CLEARINO BROKER:GOLDMAN SACHS&CO,NY 000ON05 6/5/20M O.DO -6,930.00 CMS REF: 1081540218869 CLIENT REF:000060300012666 0.00 -902,736.00 SEC ID:225434BO3 REG:DTC FEDERAL NATL MTO ASSN DISCOUNT NT MATURES JULY 31 2008 INCOME AT 6/5/2008 6,OO ,000.000 -5.979,933.33 MAT 6/5/2008 99.6656 0.00 TRADING BROKER:JP MORGAN CHASE BANK/HSBCL NEW YORK 00002467 6/5/2008 Uw 0.00 CLEARING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YORK 00002467 0.00 -5,979,933.33 CMS REP 1081570098392 CLIENT REP:MW60300012689 SEC ID:31358BA39 REG:FRB CS FOB CAT I REPO REPURCHASE AGREEMENT DTD 06/05/2GU8 2.0500% 6/5/2008 19.000 0M000 -19,000.000.00 TRADING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XXXI 00000355 6/5/2008 I00.0000 0.00 CLEARING BROKER:CREDIT SUISSE,NEW YOM(CSFBUS33XXX)W000355 6/5/2008 0.00 0.00 CMS REF: 1OB1570110831 0.00 .19,000'Isso' 0 SEC ID:99ZABIP92 REG:REM Tatd RECEIVE V8 PAY-BUT 13) Tatd Prlsudi al: -25,875,739.33 Tow Gommiuloa: 0.00 Total faooaae: -6,930.00 Told Red .25,532,669.33 DELIVBR VB PAY-BELL CS FOB CAT I REPO REPURCHASE AGREEMENT DTI)O6/04/2008 2.050D% 6/5/2008 -191100.000.000 19,100,000,00 CLOSE FOR 1081560149626 6/5/2008 100.0000 0.00 TRADING BROKER:CREDIT SUISSE, NEW YORK ICSFBUS33XXX100000355 6/5/2008 U.GO 1,087.64 CLEARING BROKER:CREDIT SUISSE,NEW YOM ICSFBUS33XXXI 00000355 OM 19,101,087.64 CMS REF: 1081570000090 SEC ID:99ZABIK71 REG:REPO BELL-BELL DREYFUS TREASURY CASH MANAGEMENT 6/5/2008 0.000 6,781,581.69 SOLD DREYFUS TREASURY CASH 6/5/2008 0.0000 0.00 CMS REF: 1081570290479 6/5/2008 Uw 0.00 SEC ID:996085247 REG:05 0.00 6,781,581.69 Total U.S.DOLLAR 1USDI 151 Tetd 114,1aci3O: 5,542.36 Tatd Commluloa: OAO Total 3neene: -5,642.36 Tetd Set: 0.00 6/61200e U.B.DOLLAR 1USDI RECEIVE VS PAY-BUY 7/24/200A ]..38:26PM EDT $ Workbench Custody Transaction History Report ID: CUA356 THE BANK OF NP,W YORK MELLON Base Carreaey: UeD Man CONSOLIDATED 6/l/2008 - 6/30/2008 oCW000010000 .. - -" Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission k eacripti0n Actual Settlement Date Misc. Expense Income -FR Fee Net Local Amount FEDERAL HOME LN BK CONS DISC NTS MATURES JULY 7,2008 INCOME AT 6/5/2008 1,100,000.000 1.097,991,89 MAT 6/6/2008 99.8174 0.00 TRADING BROKER:BANC OF AMERICA SECS LUC,CHARLOTTE OOOOOT73 6/6/2008 0.00 0.00 CLEARING BROKER:BANC OF AMERICA SECS LLC,CHARLOTTE 00000T73 OAO -1,097,WI.89 CMS REP: 1081570160502 CLIENT REF:000020300034614 SEC In 3133MZBS REG:FRB FEDERAL HOME LN MTO CORP DISC NTS MATURES JULY 21,20U8 INCOME AT 6/5/2M8 5,300,000.000 -5,285,822.50 MAT 6/6/2008 99,7325 0.00 TRADING BROKER:JP MORGAN CHASE BANK/HSHCI,NEW YORK MM2467 6/6/2008 0.00 0.00 CLEARING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YOM DD002467 0.00 -5,285,822.50 CMS REP: 1081570159055 CLIENT REF:000020300034613 SEC ID:3133%ZR7 REG:FRB LEHMAN CAT 1 REPO REPURCHASE AGREEMENT DTD 06/06/2008 2.0500% 6/6/2M8 I9.M.DD0.000 -19.0001000.00 TRADING BROKER:LEHMAN GOUT SECS INC,NY 00000636 6/612MB 100.0000 MOB CLEARING BROKER:LEHMAN GOUT SECS INC,NY 000D0636 6/6/2W8 0.00 0.00 CMS REF: ID81580116427 0.00 -19,0DO,000.00 SEC ID:99MBIV04 REG:REPO Tool RScpVS VB PAY-BUT 131 Total Prinolpal: -25.383,814.39 Total Comm4aton: 0.00 Total income: 0.00 Total Net -25,393,814.39 DSLIVER VS PAY-MT' FEDERAL HOME LN BK CONS DISC NTS MATURES JUNE 6 20081NCOME AT 6/6/2008 -7,300.000A00 7,292,70a00 MAT 6/6/2008 - IMMIX) 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON WOM999 6/6/2008 OAO 7,300.00 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 OAO 7,300,000.00 CMS REP: 108I579000243 SEC ID:313384XU8 REG:FRB DMAVER VS PAY-WELL CS FOB CAT 1 REPO REPURCHASE AGREEMENT DTD 06/05/2008 2.0500% 6/6/2008 -19,000,00nwo I9,000,000.00 CLOSE MR 108IS70110831 6/6/2008 100.0000 0.00 TRADING BROKER:CREDIT SUISSE,NEW YORK(CERBUS33 00()00000355 6/612MB 0.00 1,081." CLEARING BROKER:CREDIT SUISSE,NEW YORK ICSFBUS33XX]Q 00000355 0.00 19,OOI,081.94 CM REF: 108158MOODIS SECID:992ABIM2 REG:REPO MARWN RELBAeS-EV4 DREYFUS TREASURY CASH MANAGEMENT 6/6/2008 OA ID -I,OBl.94 BOUGHT DREYFUS TREASURY CASH 6/6/2008 0.0000 0.00 CMS REP: 1081580341014 6/6/2008 0.00 0.00 0,00 -1,081.94 SEC ID:9%085247 REG:05 71241200E 7:38:26PM EDT 6 w,ld°rNA Custody Transaction History Repod ID: CUA366 THE HANH OF NEW YORE MELLON Hne CuexoveT: UBD OCB0C0N8OLmATED 6/1/2008 - 6/30/2008 0CB0OOOI0000 to Ouitp�: ''yAl>ij61jiA1 Be e/'Efly-0®te Tpa2i Puce Comm1e616n r n ActDa186ttlemenq Date MISCA44 nee income. eP Netr.Local,Aadtiunh DREYFUS TREASURY CASH MANAGEMENT 6/6/2008 0.000 -916,185.61 BOUGHT DREYFUS TREASURY CASH 6/6/2008 0.0000 0.00 CMS REP: 108ISS0341015 6/6/2008 0.00 0.00 SEC ID:996085247 REG:05 0.00 -916,185.61 Total MAROUI RELEASE-BUY 121 Total h Ipal: .917.267.55 Total Commleelan: 0.00 Total Inaoma: 0.00 Total Net: ,917,267.55 Total U.S.DOLLAR IUSDI 171 Total P alpal: -8,381.94 Total Covtmlulan: 0.00 Total lvaame: 8,381.94 Total Net: 0.00 6/9/2008 V.B.DOLLAR IUSDI RECEIVE VS PAT-BUT LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD D6/0912008 2.OB00% 6/9/2008 19,000,000.000 -19,000,000.00 TRADING BROKER:LEHMAN OOVT SECS INC,NY 000N636 6/9/2008 100.0000 0.00 CLEARING BROKER:LEHMAN DOW SECS INC,NY ODD00636 6/9/2008 0.00 0.00 CMS REF: 1081610212858 O.W -19,000,000.00 SEC ID:99ZAB1GY4 RF.O:REPO DELIVER VB PAY-BELL LEHMAN CAT I REP0 REPURCHASE AGREEMENT DTD 06/0612008 2.0500% 6/9/2008 -19,000.0m.000 19,000,000.OU CLOSE MR 1081580116427 6/9/2008 I0O.WOO 0.00 TRADING BROKER:LEHMAN DOW SECS INC,NY 00000636 6/9/2008 0.00 3,245.83 CLEARING BROKER:LEHMAN DOW SECS INC,NY 00000636 Goo 19,003,245.83 CMS REF: I08I6IUOOOI I0 SEC ID:99ZABIV04 REG:REPO MARGIN RELEASE-BUY DREYFUS TREASURY CASH MANAGEMENT 6/9/2008 0.000 -10,483.83 BOUGHT DREYFUS TREASURY CASH 6/9/2009 0.0000 0.00 CMS REF: 1081610396720 6/9/2008 G.DD 0.00 SEC 1D:996085240 REG:05 OAO -10.483,83 FOREI IN HOLDER RELEABB-CD CREDIT SUISSE USA INC OL06AL SR NT FLTO RATE 3 MNTH LIBOR DTD 6/9/2008 0.000 0.00 RECD INf ON 900000.000 UNITS PAY 06/09/08 RATE 0.0080 6/9/2008 OWOO 0.00 CMS REP: 1081610247350 6/9/2008 0.00 7,138.00 O.00 7,238.00 SEC ID:225434B03 7/24/2008 7:38.26PM EDT 7 Wbr hen h I 1 I 1 1 1 1 1 1 l I 1 1 1 I I 1 i I Custody Transaction History Report m: CUA356 THE BANKOF NEW YORE MELLON aue Currency: UBD OCBDLONSOLIDATED 6/1/2008 - 6/30/2008 OCBOOU0lonoll Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission 'Deag'tlption Actual Settlement Date Misc. Expcnsc Income FX Fee Net Local Amount Total D.B.DOLLAR IUSD)(41 Total Principal: -10,483.83 Total Commlxxlon: 0.00 Total l000mc 10,413.83 Total Net 0.00 6/10/2008 U.B.DOLLAR IUSD) RECEIVE VB PAY-BUY LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/10/20082.1400% 6/10/2008 19,000000.000 -19,000,000.00 TRADING BROKER:LEHMAN GOVr SECS INC,BY W000636 6/10/2008 IMMIX) 0.00 CLEARING BROKER:LEHMAN OOVT SECS INC,BY 00000636 6/10/2008 0.00 OUO CMS REP: ZABI7 0147260 0.00 .19,000,000.00 9E DELIVER VSP6 REG: REPO OBLIVBR VB PA4-BELL LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/09/2008 2.06M% 6/10/2008 -19,000 0coollo 19.000.000.00 CLOSE FOR 1081610212858 6/10/2008 foo0000 0.GO TRADING BROKER: LEHMAN GOW SECS INC,BY 00000636 611012MB 0.00 1,087.22 CLEARING BROKER:LEHMAN GOW SECS INC,NY OWN636 0.00 19,001,087.22 CMS REP: 1081620MM94 SEC ID:99ZAB IOY4 REG:REPO MAROBI RELEASE-BUT DREMUS TREASURY CASH MANAGEMENT 6/10/2008 000D -1,087.22 BOUGHT DREYFUS TREASURY CASH 6/10/2008 D.0e00 0.00 CMS REP: 10816203MR29 6/10/2008 0-00 0.00 SEC 10:996085247 REG:OS 100 -1,087.22 TPtAI U.B.DOLLAR NBDI 13) Total Principal: -1,087.22 Total Catarnaxlan: 0.00 Total Income: 1,057.22 Total Net: 0.00 6/1112WS U.B.DOLLAR(UBD) RECEIVE VB PAY-BUY LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/11/20082.1100% 6/11/2008 19,000,000.000 -19,000,000.00 TRADING BROKER:LEHMAN GOVr SECS INC,NY 00000536 611112MB I(in 000 0.00 CLEARING BROKER:LEHMAN COW SECS INC,NY W000636 6/11/2008 0.00 0.00 CMS REP: 108163DI33594 DM -19,00g000.00 SEC ID:99ZAB2BY0 REG:REPO DELIVER VS PAY-BELL 7/24/2" 7:38:26PM EDT 8 WorA6en-h Custody Transaction History Report M. COMES THE RANK OF NE W YORK MELLON Bane Currency: UBD OCSOCONSOUDATED 6/1/2008 - 6/30/2008 ()CB000010000 Trade/ Ex Date - - Unite - - Principal Settle/ Pay pate Trade Price Commission Dcsedptlon. Actual Settlement Date Misc. Expense .Income. [ -- FX Fee Net Local.Amount LEHMAN CAT I REM REPURCHASE AGREEMENT DTD 06/10/20082.1400% 6/11/2008 -19,00G,000A00 19,000,000,00 CLOSE FOR 1081620147260 6/11/2008 100.0000 0.00 TRADING BROKER:LEHMAN DOW SECS INC,NY MM0636 6/11/2008 0.00 1,129A4 CLEARING BROKER:LEHMAN DOW SECS INC,NY 00000636 0.00 19,001,129.44 CMS REP: 1081630000191 SECID:99ZAB17N REG: REPO MARGIN RELEASE-BUY DREYFUS TREASURY CASK MANAGEMENT 6/11/2008 0.000 -6.WI.40 BOUGHT DREYFUS TREASURY CASH 611112WO 0.0000 ODD CMS REF: 1081630335963 6/1112008 0.00 0.00 SEC ID:996085247 REG:05 0.00 b,001.40 FORRION HOLDER RELEASE-CD PERFORMANCE TRANSPORTATION SERVICES LETTER OF CREDIT DTD 6/11/2008 0.000 am 01/26/2007 6/11/2008 O.0000 0.00 INTEREST PAYMENT FOR PERFORM ANCE TRANSPORTATION LETTER OF 6/11/2008 MOO 1,598.55 CREDIT TL 0.00 1,598.55 REVERSAL INDICATORY CMS REF: 1081630328019 SEC ID:996159612 PERFORMANCE TRANSPORTATION SERVICES LETTER OF CREDIT DTD 6/11/2008 0.000 am 01/26/2007 6/11/2008 0.0000 u(s) INTEREST PAYMENT MR PERFORM ANCE TRANSPORTATION LETTER OF 6/11/2008 0.00 3,273.41 CREDIT TL 0.00 3,273.41 REVERSAL INDICATOR:Y CMS REF: 1081630328042 SEC ID:99615%12 Total FOREIGN HOLDER RELEASE-CD 121 Total Principal: 0.00 Total Commbelon: 0.00 Total Income: 4,971.96 Total Net: 4,871.96 raw U.S. DOLLAR NSD)15) Total Prinelpal: .6,001A0 Total Cemmlulon: 0.00 Total loeeme: 6,001.40 Total Net: 0.00 6/12/2008 U.S.DOLLAR luau) RNCEIVE VS PAY-BUY 7/24/2008 7:38:26PM EDT 9 WorkAench 1 1 1 1 1 1 1 1 I 1 1 1 1 1 1 1 1 1 I Custody Transaction History Report ID: CUA356 THE BANK Of NEW YORK MELLON Baas CvnaveY: UBD ocsacoNBouTaTsa 6/l/2008 - 6/30/2008 OCWDDOIDODO Trade/'Ex Date - Units - PrIatipal Settle/ Pay Date Trade Price Commission Actual Settlement Date Misc. Expense Income /� Npn F,X Fee, Net Local Amount COMMITMENT TO PURCHASE FNMA SINGLE FAMILY MORTGAGE 6% 6/5/2008 1,0011,000.000 1,012,617AS 06/01/2038 6/12/2008 101,2617 ODO TRADING BROKER:BANC OF AMERICA SECS LLC,CHARLOTTE 00000773 6/1212008 0.00 0.00 CLEARING BROKER:BANC OF AMERICA SECS LLC,CHARLOTTE 00000773 O.w -1,012,617,18 CMS REP: 1081570196919 CLIENT REF:000020300034641 SECID:01F060667 REG:PAIR COMMITMENT TO PURCHASE FHLMC GOLD SINGLE FAMILY MORTGAGE 6% 4/29/2008 I2,100,000.000 -12.323,093.75 TRADING BROKER:DEUTSCHE BE SECS INC,NY)NWSCUS33)OWW573 6/12/2DO8 101,0438 0.00 CLEARING BROKER:DEUTSCHE BK SECS INC.BY I WSCUS331 MD00573 6/12/2W8 uw Dan CMS REF: 10912MIBS917 CLIENT REP:W00203MO34094 000 -12,323,093.75 SEC ID:02RO60662 REG: PAIR DEERE JOHN CAP CORP MEDIUM TERM NTS BOOK ENTRY TRANCH X TR 6 9/2008 4.700.".000 -4,700,000.00 W353 6/ 2/2008 100.0000 0.D0 TRADING BROKER: BANC OF AMERICA SECS LLC,CHARLOTTE 00000773 6/12/2009 0.00 0.00 CLEARING BROKER:BANC0750 OF AMERICA SECS LLC.CHARLOTTE 000007]J 0.00 -4,70OD00.00 CMS REF: 102EQSI 60750 CLIENT REP:OOOD20J00034759 SEC ID:24422EQ31 REG: DTC FEDERAL NATL MTG ASSN GTD PASS THIRD CTF POOL 981638 6%611/203B 6%;5/2008 500,00.4100 -SD6,079.6640 TRADING BROKER:MERRILL LYNCH PIERCE FENNER SMITH INC BY 00000161 /1212MB 101.2148 0. -916.67 48 0 CLEARING BROKER: MERRILL LYNCH PIERCE FENNER SMITH INC NY 00000161 0.00 -506,991.31 CMS REF: 1081620167057 CLIENT REF:0OW203MO34757 SEC ID:31415BBP5 REG:FRB LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/12/200820800% 6/1212WB 19.000 DELON 19,000,00Oo0 TRADING BROKER:LEHMAN GOUT SECS INC,BY WOON36 6/12/2008 /0D.0000 0.00 CLEARING BROKER:LEHMAN GOUT SECS INC,BY OW00636 6/12/2008 0.00 0.00 CMS REF: 1081640ID9434 0.00 -19.0001maeo SEC ID:99ZAB2FT7 REG:REPO Te RBCRIVE V8 PAY-BUT 15) Total Prinelpal: .37,541,785.67 Total Ce noiulon: 0.00 Total Income: .916.67 Total Not: -37,542,702.24 DELIVER V0 PAT-BELL COMMITMENT TO PURCHASE FNMA SINGLE FAMILY MORTGAGE 6% 5//8/2008 1.000p00.000 1.022.343.75 06/01/2038 61 212008 102.23" 0.00 NET GAIN 9726.56 6/12/2008 am 0.00 TRADING BROKER: BANC OF AMERICA SECS LLC,CHARLOTTE 00000773 0.00 1.022.343.75 CLEARING BROKER:BANC OF AMERICA SECS LLC,CHARLOTTE 00000TI3 CMS REP: 1081570196923 CLIENT REF:0OW20300034642 SEC ID:0IM60667 REG:FAIR 7/2412W8 7:38:26PM EDT 10 Wo'k 'e Custody Transaction History Report ID: MM56 THE BANK OF NEW YORK MELLON Bsse C9rtency: No OCSQCONSOTJDATED 6/1/2008 - 6/30/2008 OCEGODIN0000 Trade/Ex Date - -Unite Principal Settle/.Pay Date Trade Price Commission U<scrlptioa Actual Settlement Date Misc. Expense ,Income FX Fee Net Local Amount COMMITMENT TO PURCHASE FHLMC GOLD SINGLE FAMILY MORTGAGE 6% 6/3/2008 -12,100,000.000 12,296.86L32 02100(K IB NET LOSS 26232.42 GLAI11569 DBG 6/12/2008 1OL6270 OAO TRADING BROKER:DEUTSCHE BK SECS INC,NY(NWSCUS33)OW W5T3 6/12/2008 0.00 0.00 CLEARING BROKER:DEUTSCHE BK SECS INC,NY(NWSCUS331000W573 0.00 12,296,861.32 CMS REF: 1081550199041 CLIENT REF:00002030OD34607 SEC HL 02R060662 REG:PAIR FEDERAL HOME LN BK CONS DISC NTS MATURES JUNE 13 20GB INCOME AT 6/1112MB -4,700,00MW0 4.692.329.66 MAT 6/12/2008 99.8368 O.W TRADING BROKER:CREDIT SUISSE,NEW YOM(CSFBUS33XMQ 000DO355 6/12/20)8 0.00 7.409.23 CLEARING BROKER:CREDIT SUISSE.NEW YORK ICSFBUS33X0CX)DOW0355 OM 4,699,738.99 CMS REF: IM16MI75560 CLIENT REF:0OW203MO34762 SEC ID:313384YB9 REG:FRB LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/11/2" 2.1 I0 6/12/2008 -19,OW,OW.OW I9,0W,OW.W CLOSE FOR 1081630133594 6/12/2008 IMMIX) 0.00 TRADING BROKER:LEHMAN GOVT SECS INC,NY WOON36 6/12/2008 0.00 1,113.61 CLEARING BROKER:LEHMAN GOV T SECS INC,NY OD000636 0.00 19,001,113.61 CMS REF: 108164MO4325 SEC ID:99ZAB28YO REO:REPO Total DELIVER VS PAY-SELL 141 Total Prtnoipal: 37,011,634.73 Total Cammlulov: 0.00 Tow Income: 8,522.84 Tatal Reb 37,02Q05257 MARGIN RELEASE-BUY DREYFUS TREASURY CASH MANAGEMENT 6/12/2008 0.000 -1,11361 BOUGHT DREYFUS TREASURY CASH 6/12/2W8 O.00m 0.00 CMS REF: 1081640373426 6/12/2008 0.00 OM SEC ID:996085247 REG:05 0.00 -1,113.61 BELL.SELL DREYFUS TREASURY CASH MANAGEMENT 6/12/208 ODW 504,215.31 SOLD DREYFUS TREASURY CASH 6/12/2008 0.0000 0.00 CMS REF: IN 1640373427 6/12/208 0.00 O.W SEC ID:996085247 REG:05 0.00 504.215.31 POREION BOLDER RELEASE-CD GENERAL ELEC CAP CORD MEDIUM TERM NTS BOOK ENTRY TRANCHE A TR 6/12/2008 (LOGO 0_ON W716 6/12/2008 0.0000 OM REC INT ON 2600000.OW UNITS PAY 06/12/O8 RATE 0.009 6/12/2008 0.00 19,542.9T UM 19,542 9T CMS REF: 1081640022793 SEC ID:36%20T53 7/24/2" 7r38:26PM EDT 11 Workbench i 1 1 1 1 f 1 1 1 1 1 1 1 1 1 1 I 1 1 1 1 1 1 I I 1 1 I 1 I 1 1 1 I 1 1 1 1 Custody Transaction History Report ID: CUA356 THE BANK OF NEW YORK MELLON B.Cvrrepep U6D OCBDCONSOLUMTSD 6/1/2008 - 6/30/2008 OCBD000f0000 Trade/.Ex Date Units Principal Settle/ Pay Date Trade Price Comm366ton Description _ Actual Settlement Date Misc. Expense Income FX Fee --.(IE(Ausal.Amounb ToW U.S. DOLLAR IUSD)1121 Told Prindpal: -27,149.14 Total Ca—f-u a: 0.GO Tetal Ineemc: 27,141.14 Tetd Net: 0.00 6/13/2008 U.B.DOLLAR IUSD) RECRIYE VS PAY-BUY BANK AMERICA N A CHARLOTTE N C MEDIUM TERM BK NTS BOOK ENTRY 6/10/2008 I,80Q000.000 -1,803,186.00 TRADING BROKER:LOOP CAP MM LLC,CHICAGO 00052330 6/13/2008 100.1770 0.00 CLEARING BROKER:RIDGE CLEARING&OUTSOURCING,NEW YOM 6/13/2008 0.00 -5,305.01 00000158 0.00 -1.808,491.01 CMS REP: 1081620142582 CLIENT REP:0ON203MG34755 SEC ID:06050TLF7 RED:DTC CHBANK NA NY BRH INSTL CT?DEP PROGRAM BOOK ENTRY DTD 6/13/2008 3,500,000.000 -3,500000.00 06/13/2008 6/13/2008 IO eom 0.00 TRADING BROKER:CITIGROUP GBL MKTS INC,NEW YORK 00000418 6/13/2009 am 0.00 CLEARING BROKER:CITIGROUP OBL METE INC,NEW YOM D0000418 0.00 -3,500,000.00 CMS REP: 1081650106689 CLIENT REF:000060300012727 SEC ID: 17300IVB7 RED:WC FEDERAL HOME LN BE CONS DISC NTS MATURES JULY 11 2008 INCOME AT 6/12/2008 B.100,000.000 8,086,D-/7.00 MAT 6/13/2008 99.8281 0.00 TRADING BROKER:CITIGROUP OBL MKTS/SALOMON,NEW YORK OW00274 6/13/2008 0.00 0.D0 CLEARING BROKER:CITIGROUP GSL MKTS/SAL0MON,NEW YOM MM0274 um 8,086,077.00 CMS REP: IN 1640191567 CLIENT REP:0000203MO34776 SEC ID:313384ZP9 RED:PER J P MORGAN CHASE&CO MEDIUM TERM NTS BOOK ENTRY TRANCHE 4 SR 6/6/2008 4,700,000.000 -4,700,000.00 00191 6/13/2008 10umoo 0.00 TRADING BROKER:CHASE SECURIDES,NEW YOM 00000187 6/13/2008 0.00 0.00 CLEARING BROKER:CHASE SECURITIES,NEW YORK WOOOI87 0.00 -4,700,000.00 CMS REP: 1081610193862 CLIENT REP:000020300034752 SEC ID:46623EHYS RED:DTC LEHMAN CAT I REPO REPURCWISE AGREEMENT DTD 06/13/20082.0800% 6/13/2008 16.500.m.000 -16,500,000.00 TRADING BROKER:LEHMAN DOW SECS INC,NY 00M0636 6/13/2008 100.00DO 0.00 CLEARING BROKER:LEHMAN DOW SECS INC,NY 00000636 6/13/2008 0.00 0.00 CMS REP: 1081650112837 0.00 46,500,000.00 EEC ID:99ZAB2MK0 REG-REPO Total RECEIVE VB PAY-BUY i51 Total Principal: -34,589,263.00 Total Commlaalon: 0.00 Totallmame: -S,3o5.01 Total Bet: -34,694,568.01 7/241200S 738:26PU EDT 12 Workbnch Custody Transaction History Report M CUA356 THE BANKOF NEW YORK MP.LLON Hue Certancy: URD OCSD-CONSOLIDATED 6/1/2008 - 6/30/2008 OCB000010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc..Expense Income FX Fee Net Local Amount DELIVER FREE-BW UNITED STATES TREASURY NOTES DTI)08/15/20034,250%08/15/2013 6/13/2008 -3.610,000.000 0.00 TRANSFER TO LEGACY BNY FOR LIBERTY MUTUAL 6/1312008 0.0000 0.00 TRADING BROKER:BANK OF NEW YOM.NEW YOM 00000901 6/13/2008 0,00 0.00 CLEARING BROKER:BANK OF NEW YORK.NEW YORK 00000901 0.00 0.00 CMS REP: 1081650070879 SEC ID:91282OB112 REG: FRB DELIVER VE PAY-MT FEDERAL HOME LN SEE CONS BD DTD 05/03/2006 5 1/8%06/13/2008 6/1312WS -1.000 000.000 1,000,000.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY MR CASH AMOUNT 6/13/2009 i00.0000 0.00 1,000,000.000 6/13/2008 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 1,000,00noc, CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 10816490OD317 SEC ID:3I33XFJX5 REO:I" FEDERAL HOME LN BK CONS DISC N3 MATURES JUNE 13 2008 INCOME AT 6/13/2008 .15,100t000.0000 00 15,075,357.00 MAT PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 6/13/2008 0.00 24,643.00 15,10o,00o.000 0.00 15,100,000.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REP: 1081649000399 SEC ID:3I3384YB9 REG:FRB Tat41 DELIVER VE PAY-MT 12) Total Principal: 16,075,357.00 Tdd Ceorminiau: 0.00 T4td In.: 24,643.00 Told Net: 16,L0o,000.00 DELIVER VB PAY-BELL LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/12/2008 2.0800% 6/13/2008 .19,000 000.000 19,000,000.00 CLOSE MR 1081640109434 6/13/2000 i00.0000 0.00 TRADING BROKER:LEHMAN DOW SECS INC,N 00000636 6/13/2008 0.00 1,097.78 CLEARING BROKER:LEHMAN OO Vr SECS INC,N 00000636 0.00 19,001,097.78 CMS REF: 1081650000011 SEC ID:99ZAB2FT7 REG:REPO MARGIN RELRABE-EUY DREYFUS TREASURY CASH MANAGEMENT 6/13/2008 0.000 46,722.78 BOUGHT DREYFUS TREASURY CASH 6/13/2008 0.0000 0.00 CMS REF: 1081650327802 6/13/2008 0.00 0.00 SEC ID:996085247 REG:05 0.00 -26.722.78 7/24/2008 7:38:26PM EDT 13 Workbench f 1 f 1 f 1 I 1 1 1 1 1 r ' f ' [ r I 1 Custody Transaction History Report ID: CUA356 THE RANKOF NEW YORK MELLON Haae Curren,: U6O OCEIFCONSOLIDATED 6/1/2008 - 6/30/2008 OCS000010000 Trade/ Ex Date Units F7AncipR1 Settle/ Pay Date Trade Price Comndssion Actual Settlement Date Misc. Expcnsc In mme FX Per Net local Amount DREYFUS TREASURY CASK MANAGEMENT 6/13/20OR 0.000 -505431.99 BOUGHT DREYFUS TREASURY CASH 6/13/2008 0.0000 0.00 CMS REF: 1051650327803 6/13/2008 0.00 0.00 SEC ID:996085247 REG:OS DUO -505,431.99 Tula)MAROM RELEASE-BUY 12) Total PdOoipal: -632,154.77 Total Cotuulwlov: 0.00 Total lve .: CLUB Tetal Not: -532,154.77 IN2 OR HOLDER RELEASE-CD FEDERAL HOME LN BKS CONS BD DTD 05/03/2006 5 1/8%06/1312008 fi/13/1008 0.000 0.00 REC INT ON I000000.000 UNITS PAY 06/13108 RATE 0.025 fi/13/2008 0,0000 0.00 CMS REP: 1U816500087S7 6/13/2008 Out) 23,625.00 SEC ID:3133XFJX5 0.00 25,625A0 TOW O.E.DOLLAR(USD)112) Total Principal: A6,060.Tr Total Commlaslon: 0.00 Total Income: 46,060.77 Total Ncl 0.00 6/l6/2008 O.S.DOLLAR(USD) RECEIVE VS PAY-BOY LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/16/2008 2.2 100% 6/16/2006 16,500,000.000 -16,5110,000.00 TRADING BROKER:LEHMAN DOW SECS INC,NY D0000636 6/16/2008 100.0000 0.00 CLEARING BROKER:LEHMAN OOVT SECS INC, NY 00000636 6/16/2008 0.00 0.00 CMS REF: 1081680145070 0.00 -16,5D0,DD000 SEC ID:99ZAB2T84 REG:REPO DELIVER VB PAY-PD FEDERAL HOME LN MTO CORP PARTN CTFS POOL 00-38115 1/2%111/2038 6/2/2008 -117244.870 117,244.87 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 12,342,964.97 UNITS 6/ 612008 f00.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/16/2008 0.00 56,571.92 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 173,916.79 CMS REF: 1081610029586 SEC to:3128MSRSS REG:PER FEDERAL HOME LN MTO CORP PARTN CTFS POOL 78-6064 VAR RATE 5 1/2008 -51.620 51.62 i/l/2028 6/�6/2008 100.0000 0.00 RECD PRIN AMORT POR APRIL RECD INT FOR APRIL ON 19,391.81 UNITS 6/16/2008 0.DO 102.18 TRADING BROKER:NON-BROKER TRADE, BOSTON 00009999 0.D0 153.80 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REP: 10812900116M SEC ID:31349SWZ3 REG:FRB 712412WB 7:38'26PM BUT 14 W.4hanrA Custody Transaction History Reparl ID: CUA356 THE BANK OF NEW YORK MELLON Base Currency USD oceacONSOLIDATED 6/1/2008 - 6/30/2008 oc:gwoolo00o Trade/ Ex Date Units Principal _ Settle/ Pay Date Trade Price Commission Desedptlon Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL HOME LN MTG CORP MULTICLASS MTG PARTN CTFS GTD 6/2/2008 -4,014.460 4,014.46 RECD PRIN AMORT FOR MAY RECD INT MR MAY ON 29,018.73 UNITS 6/1612MB 100.0000 0.00 TRADING BROKER.NON-BROKER TRADE,BOSTON 00009999 6/16120DO 0.00 96.73 CLEARING BROKER:NON-BROKER TRADE,BOSTON MM9999 0.00 4,111.19 CMS REF: 1081610055352 SEC ID:31394LM REG:FRB FEDERAL HOME LN MTO CORP MULTICLASS M70 PARTN CTFS GTD SER 2733 6/2/2008 -68,503.580 68,503.58 CL PA 6/16/2008 100.0000 0.00 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON IS 1,460.55 UNITS 6/16/2008 0.00 604.87 TRADING BROKER:NON-BROKER TRADE,BOSTON 000N999 0.00 69,108.45 CLEARING BROKER:NOWBROKER TRADE,BOSTON 00009999 CMS REF: 1081610055833 SECID:31394NUE6 REG-FRB FEDERAL HOME LN MM CORP MULTCLASS MTO PARTN CTFS OTD SER 2756 6/2/2008 -2,282.000 2,282.00 CI,MA 6/16/2008 I000000 0.00 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 9,354.10 UNITS 6/16/2008 0.00 38.98 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 2,320.98 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REP: 1081610056161 SEC ID;31394PX24 REG:FRB FEDERAL HOME LN MITI CORP MULTICLASS MTG PARTN CTFS OTD SER 2891 66/2/2008 21t065 .380 21,6599.3388 CL LN RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 390,560.07 UNITS 6/16/2008 0.00 1,383.23 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 23,042.61 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REP: 108161MS9470 SEC ID:31395JZ90 REG:FRB FEDERAL HOME LN MTG CORP MULTICLASS MTG PARTN CTFS GTD 6/2/2008 4 638.580 1,638.58 RECD PRIN AMORT FOR MAY RECD ANT FOR MAY ON 35,144.84 UNITS 6/16/2008 /00.00o0 0.00 TRADING BROKER NON-BROKER TRADE,BOSTON 00009999 6/16/2008 0.00 117.15 CLEARING BROKER:NON-BROKER TRADE,BOSTON W009999 am 1.755.73 CMS REP: 1081610059526 SEC ID:31395KDT7 REG:FRB FEDERAL HOME LN MTG CORP MULTICLASS MTG PARTN CTFS GTD 6/2/2008 -5 848.210 5,M8.21 RECD PRIM MOST FOR MAY RECD INT FOR MAY ON 126,031.78 UNITS 6/16/2008 t00.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/16/2008 0.00 446.36 CLEARING BROKER:NON-BROKER TRADE,BOSTON W009999 0.00 6,294.57 CMS REF: 1081610035792 SEC ID:31395PX49 REG:FRB 7/24/2008 7:.38:26PM EDT 15 Workbench I t 1 1 1 1 1 1 1 1 1 1 1 1 I 1 1 1 1 1 I I I 1 1 1 1 1 I Custody Transaction History Report ID: MA356 THB OANKOP NOW YORK MF.LLON Bue Curteeey: lleD OC804009012nATED 6/l/2006 - 6/30/2008 ocsa000la000 Trade/ Ex Date - Units Principal Settle/ Pay Date Trade Price Commission Actual Settlement Date Misc. Expense 'geiptioa Incoe FXFem FX Fee Net Local Amount FEDERAL HOME LN MTG CORP MULTICLASS MTG PARTN CTFS GTU SER 2977 62/2008 -1,136,820 1,136,82 CL PJ 6/16/200R 100A000 0.00 RECD PORN AMORT FOR MAY OECD INT FOR MAY ON 49.743.71 Dial °/ G/2.n08 0.00 186.54 TRADING BROKER:NOON-BROKER TRADE, , OSTONBOSTON 00000999 0.00 1,323.36 CLEARING BROKER:NON-BROKER TRADE,BOSTON OOOD9999 CMS REP: 1081610 SEC ID:31395IN58 REG REG:PRB FEDERAL HOME LN MTG CORP MULTICLASS MTG PARTN CTFS GTD SER 3008 6/2/2008 -19,879.560 19,879.56 CL JK 6/16/2008 100.0000 0.00 RECD PRIN WORT FOR MAY RECD INT FOR MAY ON 210,001.46 UNITS 6/16/2008 0.00 787.51 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 20,667.07 CLEARING BROKER:NON-BROKER TRADE,BOSTON O0009999 CMS REF: 1081610036715 SEC ID:31395WGA9 REG:PRB GOW NATL MTO ASSN GTO PASS THROUGH POOL 421389 6 1/2%4/15/2026 6/2/2008 -158 560 159.56 RECD PRIN WORT FOR MAY REGO INr FOR MAY ON 3,315.22 UMMS 6/16/2008 I00.0000 0.00 TRADINO BROKER:NON-BROKER TRADE,BOSTON OW09999 6/16/2008 0.00 17.96 CLEARING BROKER:NOWBROKER TRADE,BOSTON 00H09999 0.00 176.52 CMS REF: 1081610107133 SEC ID:36206UC23 REG:PRB GOVERNMENT NATL MTG ASSN OM REMIC PASS THRU SECS REMIC TR 6/16/2008 -3,800.130 3,800.13 2000-9 CL 6/16/2008 100.0000 0.00 OECD PRiN WORT FOR JUNE OECD INT FOR JUNE ON 222.648.42 UNITS 6/16/2008 0.00 557.55 TRADING BROKER: NOWBROKER TRADE,BOSTON W009999 non 4.357.68 CLEARING BROKER:NON-BROKER TRADE,BOSTON ON09999 CMS REF: 1081680008186 SEC ID:3837H4NX9 REG:FRB GOVERNMENT NATL MM ASSN OTD REMIC PASS THOU TR 2003-97 CL DU 4% 6/2/2008 -34,979,920 34.979.92 RECD PRIM WORT FOR MAY RECD INT FOR MAY ON 216,281.29 UNITS 6/16/2008 I00.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/16/2008 0.00 720.94 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 35,700.86 CMS REF: I081650002228 SEC ID:38374EYK7 REG:FOB Told D823VBR VB PAY-PD 1131 Tell PAoolpd: 281,197.69 Teml Cemmislee: 0.00 Told lv9eme: 61,631.92 Te Net: 342,929.62 DKLIVBK VB PAY-MIA, 712412008 7:38:26PM ROT 16 WerkNnch Custody Transaction History Report ID: CUA356 THE BANK OF NEW YOM MELLON Bone Cutmncy: U6D OCSf ONBDT✓DATED 6/1/2008 - 6/30/2008 OCRG000I0000 Yh MIN �- CO'S�t1tl308q�n 4A.'W .r L i A 8 Rl!t LoDffSP�PllD!'; LEHMAN CAT 1 REPO REPURCHASE AGREEMENT DTD 06/17/2008 2.0800% 6/I6/1008 -16,500,000.000 16,500,000D0 CLOSE FOR 1081650112337 6/l6/2008 100.0000 0.00 TRADING BROKER:LEHMAN OOVT SECS INC,NY 00000636 6/16/2008 0.00 2,960.00 CLEARING BROKER:LEHMAN OOVT SECS INC.NY 00000636 0,00 16,502,860.00 CMS REP. 1M168MOD78 SEC ID:992 MO REG:REPO MARGIN RELBMB-BUY DREYFUS TREASURY CASH MANAGEMENT 6/16/3008 0.000 -2.860.00 BOUGHT DREYFUS TREASURY CASH 6/16/2008 0.0000 0.00 CMS REP: 1081680440463 6/16/2D08 0.00 0.00 SEC W:996085247 REG:05 0.00 -2,860.00 DREYFUS TREASURY CASH MANAGEMENT 6/16/2008 0.000 -344,480.45 BOUGHT DREYFUS TREASURY CASH 6/16/20D8 0.0000 0.00 CMS REP: 108168044D464 6/16/2008 0.00 0.00 SEC ID:996085247 REG:05 0.00 -3".480.45 Tow MARGIN 1IRLMA86-BUT 121 TOWP Wpd: .]07,340. 6 Total CemmWlon: 0.w Tow Income. 0.00 Tow Net -847.840.48 PORBION HOLDER RBLBABB-CD FORD CR AUTO OWNER TR 2008-B NT CL A-213 VAR RATE 12/15/2010 6/1612WS 000D 01.00 INTEREST ON 500000.00 PAYABLE 061508 6/l6/200B 00000 0.00 CMS REP: ID51680DIS959 6/16120M 0.00 1.650.84 SEC ID:34528YACI 0,00 1,650.84 TetLL U.6.DOLLAR(UBD)1151 Tow Pr1.6,al: -66,142.76 Tow Commlanlvv: 0.00 TOW Ivcomc 66,142.7, Total Net mm 6/17/2009 U.B. DOLLAR)UND) RECEIVE VS PAY-BUT COMMITMENT TO PURCHASE PNMA SINGLE FAMILY MORTGAGE 5% 6/ll/2008 7,500,000.000 .7,394,824.21 06/01/2023 6/17/2008 98.5977 0.00 TRADING BROKER:CREDIT SUISSE,NEW YOM 1CSFSUS33XXIQ 00000355 6/17/20DB 0.D0 0.00 CLEARING BROKER:CREDIT SUISSE.NEW YOM(CSPBUS33XX)0 00000355 0.D0 -7,394,824.21 CMS REP: 1081630126517 CLIENT REP:0000203MD34760 SECID:0IP050460 REO:PAIR 7/24/2" 7.38:26PM BDT 17 N/orkbnxA Custody Transaction History Report to: CUA356 THE SANKOF NEW YORB MPLLON Boae Cuvency: VBD WfInCONSOLIDATED 6/l/2008 - 6/30/2008 Oca000O10000 Trade/ Ex Date "Units - 'P"rin`dpel' Settle/ Pay Date Trade Price Commission Actual Settlement Date Misc. Expense .Ineome; btiption PX Fee AOunt PEDERAL HOME I.N HK CONS DISC NTS MATURES JULY 2,2008 INCOME AT 6/16/2008 2,100,000.000 .2,098,180.00 MAT 6/17/2008 99.9133 0.00 TRADING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XXX)00000355 6/17/2008 0.00 0.00 CLEARING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XXX)OW00355 0.00 -2,098,18D.00 CMS REP: 1081680158048 CLIENT REP:00DO20300034789 SEC ID:313384YW3 REG: FRB CS POD CAT 1 REPO REPURCHASE AOREEMEM'DTD 06/17/2008 2oID0% 6/17/2D08 16,500,000.000 -I6,SOg000,M TRADING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XXX)00000355 6/1712008 100.0000 Sao CLEARING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33)000 ON00355 6/17/2008 0.00 0.00 CMS REP: 1081690136147 0.00 -16,500,000.00 SEC ID:99ZAB2YA7 MG:REPO T*W RECEIVE VB PAY-BUY(3) Total Prlveapat, -25,993.004.21 Tote)Co®batea: 0.00 Tow Imome: 0.00 Totes Net: -25,993,004.21 DELIVER VB PAY-BELL COMMITMENT TO PURCHASE PNMA SINGLE FAMILY MORTGAGE 5% 5/13/2008 -7,500,000.000 7,497,656.25 06/01/2023 6/17/2008 99.9688 0.00 NET GAIN 102832.03 6/1712MB 0.00 0.00 TRADING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XXX)ON00355 D.00 7,497,656.25 CLEARING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XXX)ON00355 CMS REP: 1081630126519 CLIENT REP:OGD020300034761 SECID:01p050460 REG:PAIR FEDERAL NATL MTG ASSN GTD PASS THRU CTP MOO 803923 5%12/l/2019 6/11/2008 -584,496.740 580,478.32 TRADING BROKER:CITIOROUP OBL MKTS/SALOMON,NEW YORK 00DOW74 6/17/20W 99.3125 0.00 CLEARING BROKER:CITLGROUP OBL MKTS/SALOMON,NEW YORK 00000274 6/17/2008 0.00 1,298.88 CMS REP: 1081640192396 CLIENT REF:000020300034778 am 581,7Tl.20 SEC ID:31406AD41 REG:Pan LEHMAN CAT 1 REPO REPURCHASE AGREEMENT DTD 06/16/2008 2.2100% 6/17/2008 -16,500,000.000 16,500,000.00 CLOSE FOR 1081680145070 6/17/2008 ID0.0000 0.00 TRADING BROKER:LEHMAN DOW SECS INC,NY 00000636 6/1712MB 0.00 1,012.92 CLEARING BROKER:LEHMAN DOW SECS INC,NY 00000636 0.00 16,5D1,012.92 CMS REP: 101690000096 SEC ID:99XAH2T134 REG:REPO Teta1 DELIVER VB PAY-BELL 13) Total Prtactpal: 24,579,134.57 Toted Cemmfaaten: 0.00 Total Income: 2,311.80 Total Net: 24,580,446.37 MARGIN RELEASE.-BUY 7/24/200H 7:38:96PM FDT 18 WorA wh Custody Transaction History Report ID: CUA356 THN BANK OP NEW YORE MBLLON B..Curtency: U8O OCS2LCONSOLRMTED 6/1/2008 - 6/30/2008 OC8000010000 Trade/ Ex Date Units - Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee '. Net Local Amount DREYFUS TREASURY CASH MANAGEMENT 6/17/2008 0.000 -1,012.92 BOUGHT DREYFUS TREASURY CASH 6/17/2008 0.0000 0.00 CMS REP: 1081690309945 6/17/2008 0.00 0.00 SEC ID:996085247 REG:OS 0.00 -1,012.92 BELL-BELL DREYFUS TREASURY CASH MANAGEMENT 6/17/2008 0.000 839.612A4 SOLD DREYFUS TREASURY CASH 6/17/2008 0.0000 0.00 CMS REP: 1081690309946 6/17/2008 0.00 0.00 SEC ID:996085247 REG:05 0.00 839,612.44 FOREIGN HOLDER RELEASE-CD FEDERAL HOME LN BK CONS BD DTD 12/07/2DO7 3 5/8%12/17/2010 6/17/2008 0.000 0.00 RECD INT ON 30D000D0.000 UNITS PAY MI17/08 RATE 0.0191 6/17/2008 0.0000 0.00 CMS REP: IN1690158676 6/17/2WS 0.00 573,958.32 SEC ID:3133X HZ5 0.00 573,958.32 TOW U.B.DOLLAR(USDI(9) Total Principal: 576,270.12 Total Cemmiasica: 0.00 Total Income: 576,270.12 TOW Net: 0.00 6/19/2008 U.B.DOLLAR(USDI DELIVER W PAY-BELL CS FOB CAT I REPO REPURCHASE AGREEMENT DTD 06/17/2W82.0100% 6/18/2008 46,500,000.000 16,500,W0.00 CLOSE FOR 1081690136147 6/18/2008 100.0DD0 0.00 TRADING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XK)g 00000355 6/18/2008 0.00 921.25 CLEARING BROKER:CREDIT SUISSE,NEW YOM(CSFBUS33XKKj 00000355 0.00 16,500.921.25 CMS REP: 1081700000088 SEC ID:99ZA132YA7 REG:REPO EIARODI RELEASE-BUY DREYFUS TREASURY CASH MANAGEMENT 6/18/2008 0.000 .16,500,921.25 BOUGHT DREYFUS TREASURY CASH 6/18/2008 0.0000 0.00 CMS REP: 10817MG06870 6/18/ZOOS 0.00 0.00 SEC ID:996085247 REG:05 0.00 -16,500,921.25 Total U.B.DOLLAR iUSDI 12) TOW Principal: -921.25 Told Commiuion: um ToW 1...: 921.25 TOW Net: 0.00 6/19/2008 7/24/2008 7:38:26PM EDT 19 Work6encA 1 I 1 1 I 1 1 I I 1 I I 1 1 1 1 1 i 1 Custody Transaction History Report ID: CUA356 THE BANE OF NEW YORK MELLON Boo Currency: UBD oca2rcoxaoLlnATan 6/1/2008 - 6/30/2008 oceB mimoo Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fed Net Local Amount U.B. DOLLAR(UBD) RECEIVE VS PAY-BUY WACHOVIA CORP NEW SUB W DTD 10/28/2005 VAR RATE 10/28/2008 6/19/2008 900,000.000 -899,685.00 TRADING BROKER: BNP PARIBAS SECS CP/FIXED INCOME,PA 00000630 6/19/2008 99.9650 0.00 CLEARING BROKER:BNP PARIBAS SECS CP/FIXED INCOME,PA 00000630 6/19/2008 GAO -3,686.73 CMS REF: 1081710076909 CLIENT REF:000060300012742 am -903,371.73 SEC ID:929903AQ5 REG:DTC LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/19/2008 L980WA 6/19/2008 IS,fi00000.000 -15,600.000.00 TRADING BROKER:LEHMAN DOW SECS INC,14Y W000636 6/19/2008 t00.0000 0.00 CLEARING BROKER:LEHMAN COW SECS INC,NY OW00636 6/19/2008 0.00 0.00 CMS REF: 1081710153581 0.00 -15.600,000.00 SEC ID:99ZA82766 REG:REPO Tote)RECEIVE VB PAY-BUY 121 Total Principal: -I6,499,6s3.w ToW C.--a-lee: 0.00 Total roeeme: -3,686.73 Total Net! -I6,603,E71.73 BELL-BELL DREYFUS TREASURY CASH MANAGEMENT 6/19/2008 0.000 16.503.371.73 SOLO DREYFUS TREASURY CASH 6/19/2008 0.0000 am CM9 REF: 1081710309121 6/19/2008 0.00 0.00 SEC ID:996085247 REG:05 0.00 16,503,371.73 FOREIGN HOLDER RELEASE-CDC PERFORMANCE.TRANSPORTATION SERVICES LETTER OF CREDIT DTD 6/11/2008 0.000 am 01/26/2007 6/11/2008 0.0000 MOD TO REVERSE ENTRY OF 06/11/08 INTEREST PAYMENT FOR PERFORM ANCE 6/19/2008 0.00 -3,273.41 TRANSPORTATION LETTER OF CREDIT TL 0.00 -3,273.41 CMS REF: 1081710307899 SEC ID:996159612 PERFORMANCE TRANSPORTATION SERVICES LETTER OF CREDIT DTD 6/11/2008 0.000 0.00 01/26/2007 6/11/2008 0.000 0.00 TO REVERSE ENTRY OF 06/11/08 INTEREST PAYMENT FOR PERFORM ANCE 6/19/2008 BOB -1,598.55 TRANSPORTATION LETTER OF CREDIT TL GAO -1.598.55 CMS REF: 1081710310011 SEC ID:996159612 TaW FOREION HOLDER REL6AAE-CDC 12) Total Pdoclpal: 0.00 Total Correelaalen: 0.00 Total income: 4,871.96 Total Net: 4,871.96 7124/2008 7:38:26PM EDT 20 Work6a'0, Custody Transaction History Report 1D: CUA356 THE BANK OF NEW YORK MELLON Bove Currency: USD OCSD-COA'SOLNLITBD 6/1/2006 - 6/30/2008 OCB000 iwo j - Trade/ EE.Date Unit. Principal Settle/ Pay Date Trade Price Commission D'e6eiiptina - Actual Settlement Date Misc. EBpen.e Income FX.FCe Net Local Amount Total U.S. DOLLAR IUSDI(5) Tal"Princlpnl: 3.686,73 Tafal Commiaeion: 0.00 Tat"lncomc: 8.558.69 Total Net: -4,371.96 6/2D/2008 U.B.DOLLAR(USDI RECEIVE Ve PAY-BUY FEDERAL HOME LN BE CONS DISC NTS MATURES DECEMBER 3,2008 6/20/2008 3,500,000.000 -3,458,684.44 INCOME AT 6/20/2008 98.8196 DOD TRADING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YOM 00000274 6/20/2008 DOD 0.00 CLEARING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YORK DOW0274 0.00 -3,458,684.44 CMS REF: 1081720073746 CLIENT REF:000060300012755 SEC ID:313384R84 REG:FRB WELLS FARGO A CO DISCOUNT NT DUE 07/07/2008 INCOME AT MAT 6/20/2008 3.800,000.DDD -3.795,793.06 TRADING BROKER:WELLS FARGO BROKERAGE SVCS LLC,MWNEAP 6/20/2008 99,8890 0.00 OUODDD25 6/20/2008 0.00 0.00 CLEARING BROKER:WELLS FARM BROKERAGE SVCS LLC,MINNEAP DOD -3,795,78.3.06 00000025 CMS REF: IG817200707M CLIENT REP:0000603OW12754 SEC ID:9497MG71 REO:DTC LEHMAN CAT 1 REPO REPURCHASE AGREEMENT DTD 06/20/2008 1.9500Ye 6/20/2008 15,600,000.000 -15.600,000,00 TRADING BROKER: LEHMAN DOW SECS INC,NY 00000636 6/20/2008 100,0000 0.110 CLEARING BROKER:UNMAN COW SECS INC,NY 00000636 6/20/2008 0.00 0.00 CMS REF: 1081720115952 0.00 -15,600,00000 SEC ID:99ZAB3DP5 RED:REPO Total RECEIVE VS PAY-BUY 131 Tot"Pdvcipal: -92,854,467.50 Total Cammi.elav: 0.00 Toth income: 0.00 Tot"Net -22,854,46Z50 DELIVER VS PAY-MT FEDERAL HOME LN BE CONS DISC STE MATURES JUNE 20 2D08 INCOME AT 6/20/2008 -3,5000DO.000 3,494,296,94 MAT 6/20/2008 i00.0000 0.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY POR CASH AMOUNT 6/20/2008 ow 5,703.011 3 500 000 000 MIND 3,500,000.00 TRADING BROKER:NON-BROIG?R TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REP: 10817I9000246 SEC ID:313384YJ2 REG: FES 7/24/2008 798:26PM EDT 21 Worklren<h 1 1 I 1 I 1 I I I 1 I I 1 I I I I Custody Transaction History Report TO: CUA356 THE BANK OF NEW YORK MELLON Due Curtency: U3D OCS"ORSOLIDATED 6/1/2008 - 6/30/2008 OC86OD01000e ' ..' Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission an - Actual Settlement Date Misc. Expense Income toft ;. FX Fee_ Not Local Amount WELLS FARGO A CO DISCOUNT Ny DUE 06/20/200B INCOME AT MAT 6/20/2008 -.1,800.000.000 3,791,640.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 6/2U/2008 100,0000 0.00 3,800,000.000 6/20/2008 0.D0 8,360.00 TRADING BROKER: NON-BROKER TRADE,BOSTON 00DO9999 O.UO 3,B0D,000.0o CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REP: 1081719DO0695 SEC ID:9497MFLI RED:DTC Told DELIVER V8 PAY-NT 121 Told Princlpd: 7,285,936.94 T.W Comm6ule0: 0.00 Total Income: 14,063.06 Totd Net: 7,300,000,00 DELIVER 4'8 PAT-PD DOW NATL MTG ASSN II PASS THROUGH POOL 80023 VAR RATE 12/20/2026 64212008 -170,650 170.65 RECD PRIN WORT MR MAY RECD INT MR MAY ON 63.360.44 UNITS 6/ 0/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 0ON9999 6/20/2008 GOO 270.60 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 441.25 CMS REF: 1081610104252 SEC ID:36225CAZ9 REG: MR DOW NATL MTG ASSN 11 PASS THROUGH POOL 080088 VAR RATE,6/20/2027 6/2/2008 I159.480 1,599.48 RECD PRIN AMORT FOR MAY RECD INI'MR MAY ON 74,221.78 UNITS 00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/20/2008 0.00 394.30 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 1,993.78 CMS REP: 1081630W2820 SEC ID:36225CC20 REG:FRB GOUT NATL MM ASSN 11 PASS THROUGH POOL 80395 VAR RATE 4/20/2030 6 Z/ZOaB -1 871.090 1,871.09 RECD PRIN WORT FOR MAY RECD INy FOR MAY ON 42.518.21 UNITS 6/ 012MB fo0.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON DD009999 6/20/208 0.00 225.88 CLEARING BROKER:NON-BROKER TRADE.BOSTON 0D009999 0.00 2,096.97 CMS REP: IN1610104699 SEC ID:36225CNM4 REG:PRB GOUT NATL MTG ASSN 11 PASS THROUGH POOL 080408 VAR RATE 5/20/2030 6/2/2008 -8 625.260 8.625.26 RECD PRIN WORT FOR MAY RECD INy FOR MAY ON 355,573.60 UNITS 6/20/2008 f0o.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/20/2008 0.00 1,888.98 CLEARING BROKER:NON-BROKER TRADE.BOSTON WOM999 am 10,514.34 CMS REP: ID81610104787 SEC ID:36225CNM8 REG:FRB GOUT NATL MTG ASSN II PASS THROUGH POOL 80965 VAR RATE 7/20/2034 6//2/2006 -16 245.650 16.245.65 RECD PRIN WORT FOR MAY RECD INy FOR MAY ON 353,683.M OHM 60/2" I00.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/20/2008 0.00 1.657.89 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 17.903.54 CMS REP: ID81630002851 SEC ID:36225DCBB REG:MR 7/24/2" 7.38:26PM EOT 22 Work4nrh Custody Transaction History Repart IP. CUA356 TILE BANKOF NEW YORK MELLON Bue CuvteveT: BED OCSPCONSOLIDATSD 6/1/2008 - 6/30/2008 OCB(i00010000 T9de/':Fk Date.- 62tFYe/Pay Date TtadE Price, Co ea ' a ADtl/al Settlement Date Minc;-Eltpeaee Vttstce ta3�ptioa; - . X - -F job Total DSLTVBR VS PAT-PD 151 TOW PrinelpaL 2E,512.13 ToW CnmmLalen: a.- Total ivcome: 4,43].66 Total Net 32,949.78 DSLTVRR V8 PAY-SELL LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/19/20081.98W% 6/20/2008 -15,600,000.000 15,6D0,000.00 CLOSE FOR 1081710153581 6/2012" 100.0000 0'M TRADING BROKER:LEHMAN GOW SECS INC,NY 00000636 6/20/2008 0.00 858.00 CLEARING BROKER:LEHMAN BOW SECS INC,NY 00000636 0.00 15,600,858.00 CMS REF: IN172NO0159 SEC TO 992AE2766 REG:REPO MARGIER a,&ABS-BUY DREYFUS TREASURY CASH MANAGEMENT 6/20/2008 0.000 41.518.54 BOUGHT DREYFUS TREASURY CASH 6/20/2008 0.0000 0.00 CMS REF: 1081720319031 6/20/2008 0.00 0.00 SEC TO:996085247 REG:05 0.00 -41,518.59 DREYFUS TREASURY CASH MANAGEMENT 6/20/2008 0.000 -32,949.78 SOUGHT DREYFUS TREASURY CASH 6/20/2008 0.0000 0.00 CMS REF: 1081720319032 612012MB 0.00 0.00 SEC ID:996085247 REG:05 0.00 -32,949.78 Total MARO®RRLeAss-BUY 121 ToW Principal: -T4,"S.32 Total C 0.00 Total Income: 0.00 Total Net: -74,469.32 TOW U.B.DOLLAR 1USD11131 Total PMdpat -14,4E6.Y5 Taw Cemmlaien: 0.00 TeW Income: 19,358.71 Total Net: 4,871.96 6/23/2008 U.S. DOLLAR 1USDI RECENS VS PAY-BUY BANK AMER N A CHARLOTTE N C MEDIUM TERM BE N1S BOOK ENTRY 6/16/2008 900,000.000 -900A00.00 TRANCHE 0 6/23/2008 100.0000 0.00 TRADING BROKER:BANC OF AMERICA SECS LW,CHARLOTTE 00000773 6/23/2008 0.00 000773 O.MI -900,000.00 CLEARING BROKER:BANC OF AMERICA SECS I ,CHARLO=00000773 CMS REF: 108175MB2367 CLIENT REF:00D02030W34805 SEC ID:06050TW9 REG'OTC 7/24/2008 733:26PM EDT 23 Wo,khnmh Custody Transaction history Repot m: Con356 THE SANK OF NEW YORK MP.LION Baae Cn.renoy: USD OCBDCONSOMIATED 6/l/2008 - 6/30/2008 Ocea000m000 LD Trade/ Ex Date Units principal Settle/ Pay Date Trade Price Commission Actual Settlement Date Mise. Expense Income scr+Ption -- FX Fee Net Local Amount LEHMAN CA'F I REPO REPURCHASE AGREEMENT UTD 06123/20091.9600% 6/23/2008 15,700,000,0011 -15,700,000.00 TRADING BROKER:LEHMAN DOW SECS INC,NY W000636 6/23/2008 WO 0000 0.00 CLEARINO BROKER:LEHMAN DOW SECS INC,NY D0000636 6/23/2n08 0.u0 0.00 CMS REF: 1081750104392 a00 -15.700,000.00 SEC ID:99ZAB3JJ3 REG:REPO TPtA RECEIVE W PAY-BUY(2) Total P>hmipal: ,16,600,000.00 Total Commlaeion: 0.00 Total Income: 0.00 Total Net -16,600,000.00 DELIVER YB PAY-PD FEDERAL HOME LN MTO CORP MULTICLASS MM PARTN CTFS OTO 5/l/2008 -5,772.300 5.772.30 RECD PRIN AMORT FOR APRIL RECD INT FOR APRIL 6/16/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/23/2008 0.00 1.859.58 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 _ 0.00 7,631.88 CM8 REF: 10817MOS6840 SEC ID:3133ME95 REO:FRB DELIVER YS PAY-BOLL FEDERAL HOME LN BK CONS DISC NTS MATURES JULY 2,2008 INCOME AT 6/20/2008 -800,000.000 799.306.67 MAT 6/23/2008 99.9133 0.00 TRADING BROKER:MERRILL LYNCH PIERCE PENNER SMITH INC NY 00000161 6/23/2008 0.00 273.33 CLEARING BROKER:MERRIIL LYNCH PIERCE FENNER SMITH INC NY 0.00 799,580.00 000MI61 CMS REF: 1081720147760 CLIENT REF:000020300034803 SEC ID:313384YW3 REG:PRB LEHMAN CAT 1 REPO REPURCHASE AGREEMENT DTD 06/20/2008 1.950D% 6123/20DS -15,600t000.000 15,600,0D0A0 CLOSE FOR 1081720115952 6/23/2008 0.00 2,530.00 TRADING BROKER:LEHMAN DOW SECS INC,NY M000636 CLEARING BROKER:LEHMAN GOUT SECS INC,NY OM00636 0.00 15,602,535.00 CMS REF: 1001750000114 SEC to:99ZAB3DP5 REG:REPO Total DBLNER Y8 PAY-88LL 12) Total Pdnclpal: 16,399,306.67 Total Commlaelan: 0.00 Total income: 2,808.33 Total Net: 16,402,115.00 BELL-BELL DREYFUS TREASURY CASH MANAGEMENT 6/2312008 00,000 97,465.00 SOLD DREYFUS TREASURY CASH CM8 REF: 1031750341480 6/23/2008 0.00 0.00 SEC ID:996085247 REO:05 0.00 97,465.00 7/24/2008 7:38:26PM EDT 24 Workbench )P-- Custody Transaction History Repoli ID: CUA356 THE BANK OP NEW YORK MELLON S.. USD OCSoOGNSOLIBATED 6/1/2008 6/30/2008 - NW A, ke, 1-1-i4l—;,-'. F3W a m 4 LZ MEMO DREYFUS TREASURY CASH MANAGEMENT 6�23/2008 0,000 78,274.99 SOLD DREYFUS TREASURY CASH 6 23/2WS 0.()000 0.00 CMS REF: 10817SU341481 6/23/2008 0.00 0.00 SEC ID:9960E5247 REG:05 0.00 79,274.99 T W BELL-SELL 121 Total Principal: 175,739." T.WCOm[nl�i..- 0.00 Total Income: 0.00 Total Net: 175,739." MRWOR ROLDVIR RELEASE-CD WACHOVIA UK INTL ASSN MEDIUM TERM SNR BK NTS BOOK ENTRY TRANCHE 6/2312008 0,000 0.00 0 SR 6/23/2008 00000 0.00 RECD INTON 2200DOO-000 UNITS PAY 06/23/08 RATE 0.0065 6/23/2008 0.W 14,513.13 CMS REF. 1081750333919 000 14,513A3 SEC ID:92976FBC6 TnW US,DOLLAR(USD)(81 Total Prig J'wt ToW Ccmminalon: 0.00 T.W 19,191.04 T.W Net: 0.00 6/24/2GW US.DOLLAR CUSDI RECEIVE V3 PAY-BUY LEHMAN CAT 1 REM REPURCHASE AGREEMENT DTD 06/24/2008 1.9200% 6/24/MOS 15,700,WO.000 -15.700.1100.00 TRADING BROKER:LEHMAN GOUT SECS INC,NY W000636 6/24/2008 100.0000 O-W CLEARING BROKER:LEKMAJN GOUT SECS INC,NY ONW636 6/24/2DO8 0'm 0-00 CMS REF. 1081760122380 0.00 .13,700,000.00 SEC M:99ZAB3PRE REXI:REPO DELIVER US PAT-BELL LEHMAN CAT 1 EMIG REPURCHASE AGREEMENT DTD 06/23/2W8 1.9600% 6/24/2008 -15,700,OW.000 15.700.000.00 CLOSE FOR IM1750104392 6/2412008 100.0000 0.00 TRADING BROKER-LEHMAN GOUT SECS INC.NY WOON36 6/24/2008 0.00 854.78 CLEARING BROKER--LEHMAN QOVT SECS INC.NY 00()OM36 0.00 15,700JI54.78 CMS REF: 10817600OD2W SEC ID;99ZAB3JJ3 REG:REPO DREYFUS TREASURY CASH MANAGEMENT 6/24/2008 O.ODO -854.78 BOUGHT DREYFUS TREASURY CASH 6 124/20M 0.0000 0.00 CMS SKY: IWI760318271 6/24/20011 OSD 0.00 SEC ID:996085247 PSG.US OSO .854.78 71WI20W 7.38.26M Eff 25 F- j[- u- t - F- u- I 1 1 1 1 1I II 1 i I I 1 1 1 Custody Transaction History Repoli m: CUA356 Tt18 RANK OF NEW YORK MELLON Bue Cartency: U8D ocBDcoxsormlTso 6/1/2008 - 6/30/2008 ocsao9olo000 Trade/ Ex Date 'Units Piiiicipal Settle/ Pay Date Trade P.riee Commission Descxiptiun Actual-Settlement Date Mise. Expense Income FX Fee Net Local Amount Tate)U.S. DOLLAR IUSD113I Total PAvelpel: -854.78 Tetra Co.vml..Inn: O.00 Total Ivcome: 654.18 T.W Net: 0.00 6/26/2008 U.S.DOLLAR IUSDI RECWE VS PAY-BOY BANKAMERICA CORP DISCOUNT NT DUE 09/24/2008 INCOME AT MAT 6/25/2000 3,9DQ000A00 -3,873,2M.92 TRADING BROKER:BANC OF AMERICA SECS LLC,CHARLOTTE OW WTT3 6/25/2008 99.3150 O.W CLEARING BROKER:BANC OF AMERICA SECS LLC,CHARLOTTE OWOU l3 6/25/2008 ON O.W CMS REP, IWITYOM3133 CLIENT REF:WW6030D012T/4 ON .3,873,2M.92 SEC ID:0660POIQ7 REG:OTC LEHMAN CAT 1 REPO REPURCHASE AGREEMENT DTD 06/25/2008 1.9300% 6/25/2W8 15,800,000.0m -15.am,000.m TRADING BROKER:LEHMAN GOUT SECS RIC,NY O0EW636 6/25/2W8 100.0000 0.00 CLEARING BROKER:LEHMAN GOUT SECS INC.BY 00000636 6/25/2008 0.00 0.00 CMS REF: 1081T10147534 O.W -15,8W,mDW SEC ID:99ZAB3VK6 REG:REPO Tn RECEDE VS PAY-BUT l2I Total Principal: -19,673,283.92 Total Commineicn: 0.00 Tate]Income: Mm Total Net: -19,673,283.92 DELIVER VB PAY-MT BANKAMERICA CORP DISCOUNT NT DUE 06/25/2008 INCOME AT MAT 6115/20DS -4,OW,WO.OW 3,974,350.m PROCEEDS RECEIVED AS A RESULT OF A MATLBtITY FOR CASH AMOUNT 6/25/2008 100.0000 0.00 4,W0,OW.0DO 6/2512MB MOU 25,650.00 TRADING BROKER NON-BROKER TRADE,BOSTON 000D9999 am 4,WO.OW.W CLEARING BROKER:NON-BROKER TRADE,BOSTON W009999 CMS REF: IM1769 8 SEC ID:OMOPGFR9 REG:DTC DELIVER VS PAY-PD FEDERAL NAIL MM ASSN OTD PASS THRO CTF POOL 2546315%211/2018 6//2/2006 -1,241.290 1.241.29 RECD PRIN MOM FOR MAY RECD INT FOR MAY ON 71,746.93 UNITS 6/25/2W8 100.OW0 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 O.W 298.95 CLEARING BROKER NON-BROKER TRADE.BOSTON 000099W 0.W I.540.24 CMS REF: IM1610025405 SEC ID:31371KY47 REG:FRB 7/24/2" 7:38:2dPM EDT 26 Custody Transaction History Report ID: CUA356 THE RANK OF NP W YORK MELLON Rue Cunene: U5O OCSRC.ONSOLIDATF,D 6/1/2008 - 6/30/2008 OC6G00010000 Trade/ Ex Date - Units MAmount Settle/ Pay Date Trade Price Actual Settlement Date Misc. Expense FX Fee Net L FEDERAL NATL MTG ASSN GTD PASS THRU CTF I'GOL 254760 5%6/1/2018 6/2/2008 -1,496.920 1.496.92 RECD MIN MOM FOR MAY RECD INT FOR MAY ON 65,523.36 UNITS 6/25/2008 IO0.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON WOM999 6/25/2D08 U.DO 273.01 CLEARING BROKER:NON-BROKER TRADE,BOSTON OW09999 0.00 1.769.93 CMS REF: 10816IM26288 SECID:31371KSV9 REG:FRS FEDERAL NATL MTO ASSN GM PASS THRU CTF MOL 254866 5%9/l/2018 6/2/2008 -441.300 441.30 RECD MIN MOM MR MAY RECD INT FOR MAY ON 20.581.26 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NOWBROKER TRADE,BOSTON 00009999 6/25/2008 0.00 119.09 CLEARING BROKER:NON-BROKER TRADE,BOSTON W009999 0.00 560.39 CMS REF: 108161M27072 SECID:31371LCB3 REG:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 2549D7 5%10/1/2018 6/2/2008 -3,079.220 3,079.22 RECD MIN MOM FOR MAY RECD INT MR MAY ON 219,699.51 UNITS 6/25/2008 100.0000 GM TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2DD8 0.00 915.41 CLEARING BROKER:NON-BROKER TRADE,BOSTON WOM999 0.00 3.994.63 CMS REF: 1081610027370 SEC ID:31371MW RED:FRB FEDERAL NATL MTO ASSN GM PASS THRU CTF POOL 2549535% ll/l/2018 6/2/2008 -2,778.85D 2,776.85 RECD MIN MOM MR MAY RECD IN!FOR MAY ON 155.698 74 UNITS 6/25/1008 100.0000 0.00 TRADING BROKER: NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 648.74 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 3,427.59 CMS REF: 108161M27644 SEC ID:31371LE21 REO:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 2549875%12/l/2018 6/2/2008 -8,645.050 8,645.05 RECD MIN MOM FOR MAY RECD INT FOR MAY ON 438,236.79 UNITS 6/25/20D8 I00.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 1.825.99 CLEARING BROKER:NON-BROKER TRADE,BOSTON WOM99 000 10,471.04 CMS REP: 10816IM27912 SEC ID:31371LF46 RED:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 256597 5 1/2% 6/2/2008 -5.843.420 5,843.42 2/1/2037 6/25/2008 100.0000 0.00 RECD MIN AMORT FOR MAY RECD INT FOR MAY ON 493,431.54 UNITS 6/25/2008 0.00 2.261.56 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 8,104.98 CLEARING BROKER:NON-BROKER TRADE,BOSTON WOM99 CMS REP: IW16IW32331 SECID:31371M7JO REG:FRB FEDERALNATLMTGASSNOTOPABSTHRUCTPPOOL3574305%9/1/2018 6/2/2008 -1,318.53U 1.319.53 RECD MIN MOM FOR MAY RECD INT FOR MAY ON 54,50008 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 227.10 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 1,545.63 CMS REF: 1081610040192 SEC ID:31376KA71 RED:FRB 712412MB 7:38:26PM EDT 27 Work6mch 1 1 1 t 1 1 1 1 I I I i i i I I f f t Custody Transaction History Report to: CUA356 THE RANG Of NEW YORK MI LLON Rue C..e ,: UBD oCaA NSOMMTSR 6/1/2008 - 6/30/2008 oeeo00010000 Trade/ Ex Date traits .... _. -PHiicip"d Settle/ Pay Date Trade Price Commisslon Actual Settlement Date Mise. Expense Income' Descriyti0n FSC Fee N_et.LocalAmount - FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 555363 5%4/1/2018 6/2/2008 -2,150M0 2,150.30 RECD MIN AMORT FOR MAY RECD INT FOR MAY ON 155,780.37 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 649.09 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0M 2,799.39 CMS REF: 5WSY3 KEG 3881610I 8478 REG SEC ID: 138 :PRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 555545 5%61112018 6/2/2008 -2,563.130 2,563.13 RECD MIN MOW FOR MAY RECD INT MR MAY ON 130,545.43 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER: NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 543.94 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 3.107.07 CMS REF: 1081610059098 SEC ID:3138SXE32 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 555621 5%7/l/2018 66/22008 7}000000 7,027.46 RECD MIN AMORT FOR MAY RECD INT FOR MAY ON 442,500.15 UNITS 6/25/2008 0.00 1,843.75 00 TRADINO BROKER: NON-BROKERTRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 B,871.21 CMS REF: 1081610059467 SEC ID:31385XG68 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 681309 50/62/l/2018 6 2/20ue -4 386.910 4,386.91 RECD MIN AMORT FOR MAY RECD INT FOR MAY ON 250,758.30 UNITS 6/ 512008 I0a"o am TRADING BROKER:NON-BROKER TRADE,BOSTON 00D09999 6/25/2008 0.00 1,044.83 CLEARINO BROKER:NON-BROKER TRADE,BOSTON OD009999 0.00 5,431.74 CMS REP: 1081610050615 SECID:31391Y354 REG:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 6813345%2/I/2018 6/2/2008 -281.650 281.65 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 31,542.75 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 000D9999 6/25/2008 0.00 131.43 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 am 413.08 CMS REF: 1081610050658 SECID:31391Y4T1 REO:FRB FEDERAL NATL MTO ASSN GTD REMIC PASSTHRU CTF REMIC TR 6/2/2008 -627.950 627.95 RECD MIN AMORT FOR MAY RECD INT MR MAY ON 5.934.25 UNITS 6/225/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 21.02 CLEARING BROKER:NON-BROKER TRADE,BOSTON ON09999 0.00 648.97 CMS REP: 1081640006013 SEC ID:31393ESP5 REG:FRB FEDERAL NATL MTG ASSN GTD MMIC PASSTHRU CTF REMIC TR 6/2/2008 -3 452.330 3,452.33 RECD MIN AMORT FOR MAY RECD INT FOR MAY ON 27,222.45 UNITS 6/25/2008 i00.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 79.40 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 am 3,531.73 CMS REF: 1081640006043 SEC ID:31393TBC9 REG:FRB 7/24/2008 7:38:26PM EDT 28 WO� Custody Transaction History R.,.A ID: CUA356 THE BANK OF NE9/YORK MELLON Bme Curtavcy: U8D OCSbCONBOLIDATRD 6/1/2008 - 6/30/2008 OCaOOW 10000 WE q S}'fin ,?•- . ! .. ;2�,.W1i .K. '. P 'jIt'Y;} .. g. FEDERAL NATL MID ASSN OTO REMIC PASSTHRU CTF RKMIC TR 6/2/2008 JO 966.920 30,966.92 RECD PON AMORT FOR MAY RECD INT FOR MAY ON 191,700.96 UNITS 6/25/2008 t00.001)o 0.00 TRADING BROKER NON-BROKER TRADE,BOSTON 0OW9999 6/25/200B O.W 559.13 CLEARING BROKER NON-BROKER TRADE,BOSTON 00009999 0.00 31,526.05 CM8 REP: 1081640DD6137 SEC ID:3139372E5 REG:FRB FEDERAL NATL MTO ASSN GM PASS THRU CTP POOL 684798 5 I/2% 642/2008 -2 192.860 2,192.86 3/1/2033 6/25/2008 /00.0000 0.00 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 172,07.05 UNITS 6/25/2008 O.W 792.17 TRADING BROKER:NON-BROKER TRADE,BOSTON(KOOM9 0.00 2,985.03 CLEARING BROKER:NON-BROKER TRADE,BOSTON OW09999 CMB REP: 1081610043264 SEC ID:314WDX31 REG:PRE FEDERAL NATL MTG ASSN OTD PASS THRU CTF POOL 6849085%6/t/2018 6 2/2008 -3753.180 3,753.18 REM PRIN AMORT FOR MAY RECD INT FOR MAY ON 163,S59.83 UNITS 6/�5/20M /00.0oo 0.00 TRADING BROKER NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 68 L50 CLEARING BROKER:NON-BROKER TRADE,BOSTON 000G9999 O.W 4,434.68 CM8 REP: 1081610043279 SECID:3140OD3Ri REG:FRS FEDERAL NATL MTO ASSN OM PASS THRU C77 POOL 685200 5%311/2018 6//2/2008 -1427.840 1,427.84 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 91,990.67 UNITS 6/25/20DB i00.0000 0.00 TRADING BROKER:NON-BROKER TRADE.BOSTON 00009999 6/25/2008 0.00 383.25 CLEARING BROKER:NON-BROKER TRADE,B037DN 00009999 0.00 1,81 109 CMS REF: I0016100434)1 SEC ID:31400EGH7 REG:FES FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 6863I85%3/l/2018 fi(/2/2008 .1189.730 1,189.73 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 137,743,45 UNITS 6/2512008 iW.W W 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 573.93 CLEARING BROKER:NON-BROKER TRADE,BOSTON W009999 0.00 1.763.66 CMS REP: 1081610043650 SEC W:31400PPB7 REG.PRE FEDERAL NATL MTG ASSN GM PASS THRU CTF POOL 688739 5%6/l/2018 6/2/2008 449.910 449.91 IN RECD PR AMORT FOR MAY RECD INT FOR MAY ON 43,834.66 UNITS 6/25/2008 1000D00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON W009999 6/25/2008 0.00 182.64 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 632.55 CMS REP: 1081610044153 SEC ID:31400) 9 REG:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 689859 S%5/1/2018 6//2/2W8 -548.590 548-59 HIT PRIN ANGST FOR MAY RECD f FOR MAY ON 65,882.94 UNITS 6/R5/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00DO9999 6/25/2008 O.W 274.51 CLEARING BROKER:NON-BROKER TRADE.BOSTON 00009999 0.00 823.10 CMS REP: 1081610044514 SEC ID:314000408 RED:FRB 7/24/2008 738:26Pd! EDT 29 W kb..k 1 1 1 1 1 1 1 1 1 l 1 1 1 1 7 1 1 1 1 Custody Transaction History Repent M: CUA356 THE BANK OF NEW YORE MELLON Bue CRaevey: VBD OCBQCONROLUl TRO 6/1/2008 - 6/30/2008 OCSGi 100W 14ad'e/"ESt irate 'Vtii[q. Settie4 PLy."Date 'Grade Price C6rd'dtiial0'a I�ap Actaai Bettiemel tDate - ,Mine.Fapease bgbafe FEDERAL NATL MTG ASSN GTD PASS THEO CTF POOL 693834 5%3/112018 6/2/2008 -2,338.720 2,338.72 RECD PON AMORT FOR MAY RECD INT FOR MAY ON 275,802.52 UNITS 6/25/2008 10M0000 0.00 TRADING BROKER:NON-BROKERTRADE,BOSTON W009999 6/2512WB O.W L149A8 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 O.W 3,487.90 CMS REF: 108161 SEC ID:319WPYT4 REG:REG:PRB FEDERAL NAIL MTG ASSN GTD PASS THRU CTF POOL 695852 5%5/1/2018 6/2/2W8 -1,128.500 1,128.50 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON It 1.158.12 UNITS 6/25/2008 100.W00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 0OW9999 6/25/2008 O.W 463.16 CLEARING BROKER:NON-BROKER TRADE.BOSTON OW W999 0.00 1.591.66 CMS REF: IGtlI6 4 SEC ID:314009005BVO V0 RE REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 695889 5%5/1/2018 6/212MB -7,I30.940 T,i W.94 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 386,338.11 UNITS 6/25/2W8 Im.WOO 0,00 TRADING BROKER:NOWSROKER TRADE,BOSTON OW09999 6/25/2008 0.00 1,609.74 CLEARING BROKER.NUN-BROKER TRADE,BOSTON 0W09999 0.00 8.70.68 CMS REF: 1081610045455 SEC ID:314WSC23 REG:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 7022105%5/112018 6/25/2008 100.WW 98576 RECD PRIN AMORT FOR MAY RECD tNT FOR MAY ON 106.311.81 UNITS TRADING BROKER:NOWBROKER TRADE,BOSTON MOW999 6/25/2008 ON 442.97 CLEARING BROKER:NON-BROKER TRADE,BOSTON W009999 O.W 1,428.73 CMS REF: 1081610046375 SEC ID:31401ADM REG:FEB FEDERAL NATL MTG ASSN GTD PASS THEO CTF POOL 7023285%5/112010 6/2/2008 -1,385.460 1.38546 RECD PRIN AMORT MR MAY RECD INT FOR MAY ON 67.304.62 UNITS 6/25/2008 1 W.W W 0.W TRADING BROKER:NON-BROKER TRADE,BOSTON 0OW9999 6/25/200B U.W 280.44 CLEARING BROKER:NON-BROKER TRADE,BOSTON GWW999 0.W 1,665.90 CMS REF: 108161M46396 SEC ID:31401AHD2 RED:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 709148 5%6/1/2018 6/2/2008 -2.456 420 2,456.42 RECD FERN AMORT MR MAY RECD INT FOR MAY ON 129,536.26 UNITS 6/25/2008 100.00(10 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON MOW999 6/25/2008 O.W 539.73 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 G W 2,9%.15 CMS REF: 1 W 161M4T5T6 SEC ID:3140IMM] REG:FRB FEDERALNATLMTGASSNGTDPASSTHRUCPFPOOL7W3605%7/1/2018 6/2/2008 -1.978.450 1.978.45 RECD MN AMORT FOR MAY RECD INT MR MAY ON 273,483.75 UNITS 6/25/2W8 100.0030 0.00 TRADING BROKER: NOWBROKER TRADE,BOSTON 00009999 6/2512MB O.W 1,139.52 CLEARING BROKER NON-BROKER TRADE,BOSTON 00009999 0.00 3,117.97 CMS REF: IOB161W47675 SECID:31401JB56 REG:FRB 7124120M 7:38:26PM EDT 30 Workbench Custody Transaction History ReportlD: CUA356 THE. BANK Of NEW YORB MELLON Base Cuvenry: UBD OCSbCON.SOLIDA TSD 6/1/2008 - 6/30/2008 OCBG00010000 Trade/Ex Date Units Principal A. Settle/ Pay Date Trade Price Commission 't'r`+ 5aFY. ,.v Actual Settlement Date Misc. Expense Income FX Fee Net Loc:1 Amount FEDERAL NATL WO ASSN GM PASS THRU CTF POOL 709826 5%6/1/2018 6/2/2008 -1,548.270 1,548.27 RECD PRIN AMORT MR MAY RECD INT FOR MAY ON 50,560.32 UNITS 6/25/2008 100.0000 0,00 TRADING BROKER:NON-BROKER TRADE,BOSTON 000N999 6/25/2008 0.00 210.67 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 1,758.94 CMS REF: 1081610047BD4 SEC ID:31401JSP4 REG:FRB FEDERAL NAIL MM ASSN GTD PASS THRU CTF POOL 709917 5%6/l/2018 %/2/2008 -2025.100 2,025.10 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 110,333.55 UNITS 6/R5/2008 IOO.000D 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 MUD 459.72 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 2,484.82 CMS REP: 1081610047870 SEC ID:31401JVJ4 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 710235 5%6/1/20V3 6//2/2008 .6,912.390 6,912.39 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 270,214.93 UNITS 6/35/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON D0009999 6/25/2008 0.00 1,125.90 CLEARING BROKER:NON-BROKER TRADE,BOSTON MM9999 D.00 A038.29 CMS REF: IM1610047930 SECID:31401KBCB REG:FRB FEDERAL NATL MM ASSN OTD PASS THRU CTF POOL 713365 5%7/112018 6/2/2008 -897.490 897.49 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 113,590.39 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 000N999 6/25/2008 0.00 473.29 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 D.00 1,370.78 CMS REP: 1081610048522 SECID:31401NQS1 REG:FRE FEDERAL NATL MTG ASSN GM PASS THRU CTF POOL 720319 5%7/1/2018 6/2/2008 -8,178,380 8.178.38 RECD PRIN AMORT FOR MAY RECD INT MR MAY ON 319,186.02 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 1,329.94 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 9,508.32 CMS REF: 108161M48928 SEC1D:31401WG45 REO:FRS FEDERAL NATL MID ASSN OM PASS THRU CTF POOL 720369 5%6/1/2018 6/2/2008 -35675.560 35,675.56 RECD PRIN AMORT FOR MAY RECD IW FOR MAY ON 1,174,095.31 UNITS 6/25/2008 i00.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 4,892.06 CLEARING BROKER:NON-BROKER TRADE,BOSTON W009999 0.00 40,567.62 CMS REF: 108161M48952 SEC ID:314D1WJNO REG:FRB FEDERAL NATL MID ASSN GTD PASS THRU CTF POOL 721629 5%7/l/2018 6/2/2008 -3.902.170 3,902.17 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 150,415.45 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 626.73 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 4,528.90 CMS REF: 1081610049304 SEC ID:31401KV W4 REG:FRB 7124120M 7:38:26PM EDT 31 Wv. ench I I - I ! 1 I i I 1 1 1 1 I I i 1 1 11 1 1 1 1 1 1 ! 1 1 1 1 1 I 1 1 1 1 1 1 Custody Transaction History Ro,art ID: CUA356 THE BANK OF NEW YORK MELLON Bee Currency: USE OCBECONeOL6tTaE 6/1/2008 - 6/30/2008 aceassBLoom Trade/ Ex Date 'Unite- Principal 4;"' - - Settle/ Pay Date Trade Price Commission ` Actual Settlement Date Misc. Expense Income. PX Pee Net Local Amount FEDERAL NATL 61TC ASSN GTD TABS THRU CTF POOL 7234875%6/1/201S 6/2/2008 -721,280 721.28 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 106,867.47 UNITS 6/25/2008 100,0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON MOm999 6/25/2008 ON 445.28 CLEARINO BROKER:NON-BROKER TRADE,BOSTON W009999 ON 1.166.56 CMS REP: 1081610049586 SEC ID:31402AKQ4 REG:FEB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 725530 5%611/2019 6/2/2008 -30,657.520 30.657.52 RECD PRIN AMORT FOR MAY RECD INT MR MAY ON 1,688,113.49 UNITS 6/25/2008 IOO.OWO 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON W009999 6/25/2008 0.00 7.033.81 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 000 37.691.33 CMS REP: 10816IMS35M SEC ID:31402DA75 REG:FRB FEDERAL NATL MTO ASSN OTD PASS THRU CTF POOL 7296015%7/1/2018 fi 2/2008 -2,897.4m 2,897.40 RECD MN AMORT FOR MAY RECD INT FOR MAY ON 201,075.22 UNITS 6/�5/2m8 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON W009999 6/25/2008 am 837.81 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 O.W 3,735.21 CMS REP: 108161 W56542 SECID:31402HRW3 REO:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 732873 5% 11/1/2018 6/2/2008 -11C720 114.72 RECD PRIN AMORT FOR MAY RECD INT MR MAY ON 18,841.19 UNITS 6/25/2008 1 W.Wm 0.00 TRADING BROKER NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 78,51 CLEARING BROKER:NON-BROKER TRADE,BOSTON OW09999 0.00 193.23 CMS REP: 108161MS71M SEC ID:31402MFNS REG: PRE FEDERAL NATLMTG ASSNOTD PASSTHRU CTF MOL7371305%10/1/2U18 6/2/2008 -7,944.680 7,944.68 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 275,411.85 UNITS 6/25/2008 100.0000 M00 TRADING BROKER:NON-BROKER TRADE,BOSTON Om09999 6/25/2008 O.W 1,147.55 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 am %D92.23 CMS REF: 108161 W61373 SEC ID:31402S4M REG: FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 738211 5%10/112018 6/2/2008 -6.243.780 6.243.78 RECD MN"On FOR MAY RECD INT MR MAY ON 262,127.55 UNITS 6/2512WO 100.0000 O.m TRADING BROKER: NON-BROKER TRADE,BOSTON 00009999 6/25/2008 ON 1,092.20 CLEARING BROKER:NOWBROKER TRADE,BOSTON OW09999 ON 7,335.98 CMS REF: 100161M61668 SE WI 31402UDQ2 REG:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 738487 5%1011/2018 6/2/2008 -2,W 1.090 2,061.09 RECD PRIN AMORT FOR MAY RECD IM FOR MAY ON 90.852.63 UNITS 6/25/2008 1 W.0000 ON TRADING BROKER NON-BROKER TRADE,BOSTON 0OW9999 6/25/2008 0.00 378.55 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 am 2.439.64 CMS REF: 1081610061729 SEC ID:31402UNC2 REG: FRB 7/24/2008 7:38:26PM EDT 32 Wor A Custody Transaction History Report ID: CUA356 THE RANK OF N6 W YORK MFLEON Bue Currovey: URB OCSn0ON8OUTMTBO 6/1/2008 - 6/30/2008 oc8000010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual.Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL NATI.MTU ASSN OTII PASS 9'IIRU CTF POOL 7404575%10/l/2018 6/2/2008 -19,869700 19,869.70 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 1,099,298.92 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 4.576.25 CLEARING BROKER:NON-BROKER TRADE,BOSTON DOOD9999 0.00 24,445.95 CMS REF: 1081610062384 SEC ID:31402WTN8 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF FOOL 740471 5%10/1/2018 6 2/2008 .2.207.420 2,207.42 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 336,049.93 UNITS 6/ 5/2008 100.0000 0.00 TRADING BROKER:NON.BROKER TRADE,BOSTON ON09999 6/25/2008 0.00 1,400.21 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 3,607.63 CMS REP: 1081610062411 SEC ID:31402WT40 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 740748 5%10/1/2018 6 2/2008 .2 536.110 2,536.11 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 345,552.00 UNITS 6/ 5/2008 /00.0000 0.00 TRADING BROKER:NON-BROKER TRADE, BOSTON 000N999 6/25/2008 0.00 1,439.80 CLEARING BROKER:NON-BROKER TRADE, BOSTON 00009999 0.00 3,975.91 CMS REF: 1081610062508 SEC ID:31402WSH7 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 743868 5%11/1120 18 6/2/2008 -125.090lon"o 1259 RECD PRIN MOST MR MAY RECD INT FOR MAY ON 17.787.96 UNITS 6/25 2008 2008 0.00 70.0.12 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 / CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 199.21 CMS REP: IOU 16100633M SECID:31403BMRI REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF FOOL 744008 5%7/1/2018 6/2/2008 -3 949.780 3,949.78 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 483,812.85 UNITS 6/25/2008 /00.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON OW09999 6/25/2008 0.00 2,0I5.89 CLEARING BROKER:NON-BROKER TRADE,BOSTON 0ON9999 0.00 5,965.67 CMS REF: 1081610063411 SEC ID:314D3BR54 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 744316 5%9/l/2018 6/2/2008 -553.880 553.80 RECD PRIN AMORT MR MAY RECD INT FOR MAY ON 75,675.13 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE.BOSTON 00009999 6/25/2008 0.00 315.31 CLEARING BROKER: NON-BROKER TRADE,BOSTON 0OW9999 0.00 869.19 CMS REF: 1081610063471 SEC ID:31403130 4 REG:FRB FEDERAL NATL MTO ASSN GM PASS THRU CTF POOL 747914 5%1111/2019 6/2/2008 -1 360.670 1,360.67 RECD PRIN MOW FOR MAY RECD INT FOR MAY ON 149,018.49 UNITS 6/925/2008 io0Ao00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 0OW9999 6/25/2008 am 620.91 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 1,901.58 CMS REF: 108161M70116 SEC ID:31403F3X0 REG:FRB 712412" 7:38'26PM EDT 33 Werk6eech Custody Transaction History Belmont ID: CUA356 THE BANK OF NEWYORK MELLON Bus Currency: USD OCS&CON30UDATED 6/1/2008 - 6/30/2008 OCBOOmlmon Trade/ Ex Date unite - Pti#lcipal. Settle/ Pay Date Trade Price Commission DSaoriptian Actual Settlement Date Misc. Expense lucome FR Fee Nct Local FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 7484005%8/I/2018 6/2/2008 -973.180 973.18 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 89.107,11 UNITS 6/25/2008 100MOD 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 ON 371.29 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 O.W 1,344.46 CMS REF: 108161M70241 SEC ID:31403GNR9 REG:FRB FEDERAL NATL MTO ASSN OM PASS THRU CTF POOL 748899 5%12/1120 18 6%/5/2W8 -4,475.020 4,475.02 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 522.882.92 UNITS22 12WB IOO.000II 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON MOm999 6/25/2W8 0.W 2,178.68 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 6,653.70 CMS REF: 1081610070428 SEC ID:31403G7W REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 7503Tl 5%I t/112018 6//2/21108 -21,388.590 21.388,59 RECD MIN AMORT FOR MAY RECD INT MR MAY ON 1,048,073.90 UNITS 6/25/2008 100.0000 0.00 TRADING BROKER: NON-BROKER TRADE,BOSTON 00009999 6/25/2WS 0.00 4,366.97 CLEARING BROKER: NON-BROKER TRADE,BOSTON 00009999 am 25,755.56 CMS REF: 10816100708" SEC ID:31403JUA2 REG:FRB FEDERAL NATL MTO ASSN OTD PASS THRU CTF POOL 750380 5%11/1/2018 625/2008 .6,311.500 6,311.50 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 712,441.21 UNITS 6 /20M 100.0000 O.W TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2W8 0.00 2,%8.51 CLEARING BROKER:NON-BROKER TRADE,BOSTON WON1999 O.W 9,MO.01 CMS REP: 1081610O7O806 SEC ID:314OWUD6 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTP POOL 750445 5% 11/1/2018 6/2/2006 -640.540 640.54 RECD PRIN AMORT POR MAY RECD INT FOR MAY ON 1 W,164.85 UNITS 6/25/2008 100.11000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON W009999 6/25/2008 BOO 417.35 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 am 1,057.89 CMS REF: ID81610070845 SEC ID:31403 2 REG:FRB FEDERAL NATL MTG ASSN GTD PASS THRU CTF POOL 7519605%12/l/2018 66/2/2m8 -10253foiL�U0 10,2533.57 RECD MIN AMORT MR MAY RECD INT MR MAY ON 380,121.56 UNITS am TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2m8 o.m 1,583.84 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 11,837.41 CM8 REF: 1081610071340 SECID:3I403LMH1 REO:FRB FEDERAL NATL MM ASSN GTD PASS THRU CTF POOL 753425 5%I1/1/2018 %/2/2m8 -2 872.340 2,872.34 RECD MIN AMORT MR MAY RECD INT MR MAY ON 396,012.07 UNITS 61 5/2008 i00.mm O.W TRADING BROKER: NON-BROKER TRADE,BOSTON 00009999 6/25/2008 O.W 1,650.05 CLEARING BROKER:NON-BROKER TRADE,BOSTON mm9999 O.W 4,522.39 CMS REF: 1081610071619 SEC ID:31403NA23 REG: FRB 7/24/W08 7:38:26PM EDT 34 Wsrh6 h ltk— lp— Custody Transaction History R'Pod ID CUA356 THE BANK OF NRW YORK MP.LLON llme Cwtency; USD OCS&COMQUIOTED 6/112008 6/30/2008 GCEGDmiomo I paywati kf"F-k A FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 755155 5%1211/2018 %2�2008 -2205.820 2.205.82 RECD MIN AMORT MR MAY RZCD INT FOR MAY ON 293,933.14 UNITS 6/ 5 2008 Y00.0000 0.00 TRADING BROKER'.NON-BROKER TRADE,BOSTON 000D9999 6/25/2008 0.00 1,224.72 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 3.430.54 CM8 REF: 108161OD72150 SEC ID:31403Q6A3 RED:ME FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 756372 5%It/l/20 18 %2/300S -Sj 05q9E30 3,S99.83 RECD MIN AMORT FOR MAY RECD INT FOR MAY ON 548,876.67 UNITS 6/ S/2DC)8 00.00 , 0.00 TRADING BROKER NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 2,286.99 CLEARING BROKER:NON-BROKER TRADE,130MM 0OW9999 0.00 5,885.82 CMS REF: 108161DO72532 SEC ID:31403SJM REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 789670 SIA 12/1/2029 642/2008 -3iS42.880 3,542:1 RECD MIN AMORT FOR MAY RECD INT FOR MAY ON 534,798.71 UNITS 6/ 512008 00 DOOO 000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/2S/2008 0.00 3,223.33 CLEARING BROKER:NON-BROKER TRADE,BOSTON 000099" ON 5,771.21 CMS REF: 1081610082657 SEC ID:31405HJP4 REG:MB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 792432 5%10/1/2019 5 2/2008� -10,041.290 10,04129 RECD MIN AMORT FOR MAY RECD INT FOR MAY ON 523,590.05 UNITS 6/ S12008 100.UD00 0:00 TRADING BROKER:NON-BROKER TRADE,BOSTON OODD9999 6/25/20DB 0.00 2,181.53 CLICARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 12,222.92 CMS REF: 1081610083365 SEC M:31405UM9 RED:PRB FROMM NATL MTO ASSN OTD PASS THRU CT?POOL 794195 594 1111/2019 66 3,175.06D 3,17506 142/2008 RECD PRIM AMORT FOR MAY RECD INT MR MAY ON 5 13,349.29 UNITS 5/2008 100,0000 0:00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/20DB 0.00 2.138.96 CIZ.-MNO BROKER:NON-BROKER TRADE,BOSTON 00009999 mo 5,314.02 CMS REP: 1081610083751 SEC ID:31405NK09 REG:FRB FEDERAL NATL MTO ASSN 07D PASS THRU CTF POOL 800370 5%12/l/2019 64 6 2/2008 -31728,460 3.MB.46 RECD MEN AMORT FOR MAY RECD INT FOR MAY ON 226,288.04 UNITS / 5/3008 00.0000 O.DD TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 942.87 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.m 4.671.33 CMS REP: 1081610085738 SEC ID:310SVFXS RICO:PRO FEDERAL NAM MTO ASSN OTD PASS THRU CTF POOL 803923 5%12/112019 2/20DII 6 -3,594.890 3,594.89 / RECD MIN AMORT FOR MAY RICCI)INT FOR MAY ON 588.091.63 UNITS 64 6/20DO 100.000D 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 2,450.38 CLEARING BROKER:NON-BIZOICER TRADE,BOSTON 00009999 0.00 6.045.27 CMS REF. ID91610086424 SEC ID:31406AD41 RICO:FEB 7/24/200B 73826W EDT 35 W.,*b ..h 1 1 1 1 1 1 1 / 1 1 1 1 1 1 1 1 1 1 1 Custody Transaction History Report ID: CUA366 THE RANK OF NEW YORK MELLON 9ua Curtevcr: BED OC9aCONaOLT2LLTED 6/l/2008 - 6/30/2009 ocsaaoot0000 .. .. Tmd6Y'EKDate VniG .. , Settle/'Pay bete Trade.Pricp Co `iiia tmn - Aoteal-Bettleateatbate, wiac.E, pace: !. FEDERAL NATL MTO ASSN OTD PASS THRU CTF POOL 823358 VAR KATE 61212MB -57,713.440 57,713.44 2/1/2035 6/25/2008 100.0000 0.00 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 932,957.92 UNITS 6/25/2008 0.00 4.707.55 TRADING BROKER: :NON-BROKER TRADE, ,BOSTON BOSTON 000OD999 0.00 62.420.99 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS D 31 06XWTS 5 EG ag SEC ID:3I406%WTS REO:FRB FEDERAL NATL MM ASSN GM PASS THRU CTF POOL 831697 6%9/112036 6/2/2008 -154.690 154.69 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 7,433.00 UNITS 6/ 5/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON W009999 6/25/2008 0.00 37.16 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 191.85 CMS REF: 107H7J9 70424 REG: SEC ID:31907HTJ9 REO:PRE FEDERAL NATL MTO ASSN OM PASS THEE CTF POOL 889579 6%511/2038 6 2/2008 .3.838.600 3.838.60 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 278,602.00 UNT19 6/�5/2008 100.0000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.00 1.393.01 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 5.231.61 CMS REF: 108176MI4656 SECID:31410KJY1 REO:FRB FEDERAL NATL MM ASSN OTD PASS THRU CTF POOL 899622 5 112% fi 2/2008 -6,473.170 6,473. 7 7/1/2037 6/ 5/2008 100.0000 0.00 RECD MIN AMORT FOR MAY RECO INT FOR MAY ON 971,402.01 UNITS 6/25/2008 0.00 4,451.26 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 10.925.43 CLEARING BROKER:NON.BROKER TRADE,BOSTON ON Y)999 CMS REP: 108161M67084 SEC ID:3141OWPP9 REG:PRE! FEDERAL NATL MTO ASSN OM PASS THRU CTF POOL 90626951/2% 6/2/2008 -1.929.280 1,929.28 1/l/2037 6/2512WS 100.0000 0.00 RECD PRIN AMORT FOR MAY RECD INT MR MAY ON 292.318.03 UNITS 6/25/2008 0.00 1,339.79 TRADING BROKER:NON.BROKER TRADE,BOSTON 00009999 0.00 3,269.07 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1081610071033 SF.CID:31411E2A4 REG:FRB FEDERAL NATL MM ASSN OTD PASS THRU CTF POOL 912427 5 1/2% %/2/2008 .3.373.750 3.373.75 2/1/2037 6/RS/2008 100.0000 0.00 RECD PRIN AMORT MR MAY RECD INT FOR MAY ON 468,404.51 UNITS 6/25/2008 0.00 2,146.85 TRADING BROKER: NON-BROKER TRADE,BOSTON 00009999 0.00 5,520.60 CLEARING BROKER:NON-BROKER TRADE,BOSTON W009999 CMS REF: IM16I 073630 SECID:31411NVU8 REO:FRB 712412" 7:38:26PM EDT 36 Custody Transaction History Report ID: CUA356 THE BANK OF NEW YORK MELLON Bee.Currency: USD OCSDCONSOLIMTED 6/1/2008 - 6/30/2008 OCa000o10000 Trade/ Ex Date Units Principal Settle/.Pay Date Trade Price Commission ik eberi tioa Actual Settlement Date Misc. Expense Income > p FX Fee Net Local Amount FEDERAL NA'rl.MT11 ASSN OTD PASS THRU CTF POUT.939553 5 1/2% 6/2/2008 -600,740 600.74 7/l/2037 6/25/2005 100.0000 0.O0 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 462,333.10 UNITS 6/25/2008 0.00 2,119.03 TRADING BROKER:NON-BROKER TRADE,BOSTON OOW9999 0.00 2,719.77 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 108161M80471 SEC ID:31413AH63 REG:FRB FEDERAL NATL MTO ASSN DID PASS THRU CTF POOL 945798 5 1/2% 6//2/2 WB -833.060 833.06 7/l/2037 6/23/2 08 100.0000 O.W RECD PRIN MOW FOR MAY RECD INT FOR MAY ON 713,240.22 UNITS 6/25/2008 O.D0 3,269.02 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 O.W 4.102.08 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1081610083206 SEC ID:31413HOF9 REG:FRB FEDERAL NATL MTO ASSN OTD PASS THRU CTF POOL 945886 5 1/2% 6 2/2008 -4,494,540 4,494.54 B/l/2037 6/ 5/2008 100.0000 0.00 RECD PRIN AMORT FOR MAY RECD INT MR MAY ON 515,767.97 UNITS 6/25/2008 0.W 2,363.94 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.0 6,858.48 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1081610083349 SEC ID:314I3HJ74 REG:FRB FEDERAL NATL MTO ASSN OTD PASS THRU CTF POOL 9530176%10/1/2037 6//2/2008 -3108,140 3.109.14 RECD PRIN AMORT FOR MAY RECD IRA FOR MAY ON 602,237.47 UNITS 6/75/2008 I00.0000 0.00 TRADING BROKER: NON-BROKER TRADE,BOSTON 00009999 6/25/2008 0.0 3,011.19 CLEARING BROKER: NON-BROKER TRADE,BOSTON 00009999 am 6,119.33 CMS REF: 108161008560 SEC to:31413RO26 REG:FRB FEDERAL NATL MTO ASSN OTD PASS THRU CTF POOL 956362 5 1/2% %/2/2W8 -2 823.860 2,823.86 12/l/2037 6/25/2008 100.0000 am RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 498,226.59 UNITS 6/25/2008 0.00 2.283.54 TRADING BROKER: NON-BROKER TRADE,BOSTON O00W999 0.00 5,107.40 CLEARING BROMR:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1081610086742 SEC ID:31413USX3 REG:FRB FEDERAL NATL MM ASSN GTD PASS THRU CTF FOOL 95685951/2% 6/25/200832145.880 32,14588 2/1/2038 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 1,652,488.57 UNITS 6/25/2008 0.00 7,573.91 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 39,719.79 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1081610086847 SEC ID:31413VQL4 REO:FRB 7/24/2005 7.38:26PM EDT 37 Work6errh r r r r r r r r r r r r r r i r r r r 1 1 1 1 1 I 1 1 I 1 I 1 1 1 1 I i 1 1 Custody Transaction History Report ID: CUA3S6 THE SANKOP NEW YORK MELLON Bme cun'.cy: IISD OCS&CONSOLiDATRD 6/1/2008 - 6/30/2008 ocSOOootoaao Trade/ Ex Date Unit. Principal Settle/ Pay Date Trade Price Commiasion Actual Settlement Date MR,, Expense Income 46ccrlptloa FR Fee Net,Local Amount FEDERAL NATI.MTG ASSN OTD PASS THRU CTF POOL 96983351/2% 6/2/2008 -10,659.390 10,659d9 2/l/2038 6/25/2008 100.0000 0.00 RECD PRIN AMORT FOR MAY RECD INT FOR MAY ON 497,929.67 UNITS 6/25/2008 0.00 2.282.18 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 12.941.57 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REP: 108161MO94M SEC ID:31414L434 REG:FRB FEDERAL NATL MTO ASSN GTD PASS THRU CTF POOL 974715 5 112% 6//2/2008 -259.68D 254.68 4/l/2038 6/35/2008 ]OD.0000 0.00 RECD FRIN AMORT MR MAY RECD INT FOR MAY ON 246,880.17 UNITS 6/25/2008 0.00 1.131.53 TRADING BROKER:NON-BROKER TRADE,BOSTON 000D9999 0.00 1.386.21 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1081610090383 SEC ID:31414SK44 REG:FRB MORGAN STANLEY ABS CAP I INC TR 2007 HE7 MTG PASS THRU CTF CL A-2A 6/25/2008 -15,981.860 15,981.86 RECD PRIN AMORT FOR JUNE RECD INT FOR JUNE ON 824,956.34 UNITS 6/25/2008 1010000 0.00 TRADING BROKER: NON-BROKER TRADE,BOSTON WOM999 6/25/20DO Milo 2.121.57 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 18,103.43 CMS REF: 1081770018187 SEC ID:61756YAB9 REG:OTC Total DSl.NSR W PAY-PD 1791 Total Prlaci,d: 464A15.11 Total Cam iaa: D.50 Total la...: 117,751.78 ToW Nat: 581,590.90 DELI96R PB PAY-BRILL LEHMAN CAT l REPO REPURCHASE AGREEMENT DTD 06/24/2008 L9200% 6/25/2008 -15,700000.000 15,7oBol .00 CLOSE FOR 10817601223M 6/25/2008 100.0000 0.00 TRADING BROKER: LEHMAN GOYT SECS INC,BY 00000636 6/25/2008 0.00 837.33 CLEARING BROKER:LEHMAN DOW SECS INC.NY 00000636 0.00 15,700,837.33 CMS REF: 1081770000004 SEC ID:99ZAB3PR8 REG:REM MARGIN RELEASE-BUY DREYFUS TREASURY CASH MANAGEMENT 6/25/2008 0.000 -29,683.79 BOUGHT DREYFUS TREASURY CASH 6/25/2008 0.0000 am CMB REP: IM1770388943 6/2512MB 0.00 0.00 SEC ID:996085247 REG:05 aOE -29,683.79 DREYFUS TREASURY CASH MANAGEMENT 6/25/200B 0,000 -582,590.90 BOUGHT DREYFUS TREASURY CASH 6/25/2008 0.0003 0.00 CMS REF: 1081770388944 6/25/2008 am 0.00 0.00 -582,590.90 SEC ID:9%085247 REG:05 7/24/2" 7:38:26PM BUT 38 Warkbn Custody Transaction History R<pert ID: COA356 THB BANK Of NEW YORK MELLON Bue Cormnry: USD OCSIICOHEOIJIMTED 6/1/2008 - 6/30/2008 OCBGOOOI0000 Trade/.Ex Date - Unite Principal Settle/ Pay Date Trade Price Commission DCs n -Actual Settlement Date Misc. Expense Income cri tlo FA.Fee Net Local Amount TOW MARGIN RELEASE BOY 121 ToW P`i.H,M: -612,274.69 Total COmmlfAon: 0.00 ToW Income: 0.00 TeW Net: -612,274.69 FOREIGN HOLDER RELEASE-CD DEERE JOHN CAP CORP MEDIUM TERM Mrs BOOK ENTRY TRANCHE M TR 6/25/2008 0.000 0.00 00346 DID 6/25/2008 0.0000 0.00 REC HIT ON 3000U0.000 UNITS PAY 06/25/08 RATE 0.007 612512MB 0.00 2,130.38 CMS REF: 10817 0007059 HMO 2,130.38 SEC ID:24422EQK8 Tow U.S.DOLLAR NOD)186) ToW P clpW: 446,370.49 Total COmmbslOn: 0.W Total lneome: 146,370.49 TeW Net: 0.00 6/2612MB U.E. DOLLAR(USD) RECBIVE W PAY-BUY FEDERAL HOME LN BK CONS DISC HIS MATURES SEPlEMBER 19 2008 6/26/2008 8,400,000M0 -9,352,796.67 INCOME 6/26/2008 99A381 0.00 TRADING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YORK OOM467 6/26/2008 0.00 0.00 CLEARING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YORK 00002467 0.00 -8,352,7W67 CMS REF: I0B1780074995 CLIENT REF:00D0603D0012762 SEC ID:313384GS2 REG:FRB LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/26/2008 2.000014 6/26/2008 15,BW,0O[I000 -15,8w,Ix,a00 TRADING BROKER:LEHMAN DOW SECS INC,MY MM0636 6/26/2008 100.0000 0,00 CLEARING BROKER:LEHMAN GOW SECS INC.NY 0WOM36 6/26/2008 0.00 0.00 CMS REF: 1081780151360 0.00 -15,800,000.00 SEC ID:99ZAB30J3 REG:REPO ToW RECEIVE W PAY-BUY)2) Total Comm6 I B&- -24,162,790 67 TeW Income: 0.00 ToW BeL -24,162,796.67 DELVER VB PAY-MT 7/24/2" 7.38:26PM BUT 39 Wo.kAcr,cA 1 I I 1 i 1 1 4 I 4 1 1 1 1 1 l 1 ! 1 1 1 1 1 Custody Transaction History Report ID: CUA356 TUN BANK OF NEW YORK MF.LLON Hone Curtrncy: U8O 017811,COASOLIM711D 6/1/2008 - 6/30/2008 ocsoo0U100o0 F cd b�Tx"'"i,,. - - - Trade/ Ex Date Unite Principal t Y )c Nlt ?• Settle/ Pay Date Trade Price Commi66ion y t F_ Actual Settlement Date mi... Expense Income �ll�9Cpipti, FA Fec Net Local Amount FEDERAL HOME 1.14 BK CONS DISC Ni'S MATURES.)UNF-262008 INCOME AT 6/26/2008 -8,400,000.DUO 8,377,600.00 MAT 6/26/2008 100.0000 0.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 6/26/2008 0.00 22.400.00 8,400,000.000 MW 8,400,000.OD TRADING BROKER:NOWSROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REP: ID81779000229 SEC ID:313384YQ6 REG: PEE DBLTPRR W PAY-SELL FEDERAL HOME LN BK CONS DISC NITS MATURES JULY 2,2008 INCOME AT 6/25/2008 -1,300,OD0.000 1,298,873.33 MAT 6/26/2008 99.9133 0.00 TRADING BROKER:MERRILL LYNCH PIERCE FENNER SMITH INC NY OD000161 6/26/2008 0.00 693.34 CLEARING BROKER:MERRILL LYNCH PIERCE FENNER SMITH INC NY D.00 1,299,566.67 00000161 CMS REF: 1081770195691 CLIENT REF:000020300034816 SEC ID:313384YW3 REG:FRB FEDERAL HOME LN SK CONS DISC NTS MATURES JULY 7,2008 INCOME AT 6/25/2D08 -I,10g000.000 1,097,991.89 MAT 6/26/2000 99.8174 0.00 TRADING BROKER: MERRILL LYNCH PIERCE FENNER SMITH INC NY 00000161 6/26/2008 0.00 1,285.47 CLEARING BROKER:MERRILL LYNCH PIERCE FENNER SMITH INC NY 0.00 1,099,277.36 00000161 CMS REP: 1081770188206 CLIENT REF:0000203NO34815 SEC ID:313384ZBB REG:FRB FEDERAL HOME LN BK CONS DISC WE MATURES JULY 112008 INCOME AT 6/25/2D08 ,100,000.000 99,828.11 MAT 6/26/2008 99.8281 0.00 TRADINO BROKER:MERRILL LYNCH PIERCE FENNER SMITH INC NY 000N161 6/26/2008 0.00 82.31 CLEARING BROKER:MERRILL LYNCH PIERCE FENNER SMITH INC NY 0.00 99,910.42 00DO0161 CMS REP: I D81770188170 CLIENT REP:00D020300034814 SEC ID:313384ZF9 REG:FRB LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/25/2008 1.930D% 6/26/2008 -15,800,000.00) 15,800,000.00 CLOSE FOR 1081770147534 6/26/2008 100.moo 0.00 TRADING BROKER:LEHMAN GOUT SECS INC,NY W000636 6/26/2008 0.00 847.06 CLEARING BROKER:LEHMAN DOW SECS INC,NY 00000636 MID 15,800,847.06 CMS REF: 1081780000099 SEC ID:99ZAB3VK6 REO: REPO Tote DELIVER W PAY-BELL(4) Total Principe: 18,296,693.33 Tote Commiulnn: 0.00 Total income: 2,909.19 Total Net- 18,299,601.61 MARGIN RELRABR-BUY 7/24/2008 7:38:26PM EDT 40 Wa.kbencA Custody Transaction History Report ID: CUA356 THIS BAHR OF NP.W YORK MP.LLON Bmv CwrencT: UBO ocsncoASounnrsn 6/1/2008 - 6/30/2008 OC1000010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense 'Income FX.FCC Net Local Amount DREYFUS TREASURY CA511 MANAGEMENT 6/26/2008 0.000 -48,050.39 BOUGHT DREYFUS TREASURY CASH 6/26/2008 0.0000 0,00 CMS REF: 1081780392394 6/26/2008 0.00 0.00 SEC ID:996085247 REG:05 0.00 -48,050.39 SELL-BELL DREYFUS TREASURY CASH MANAGEMENT 6/26/2008 0.000 601,245.55 SOLD DREYFUS TREASURY CASH 6/26/2008 0.0000 0.00 CMS REP: 1081780392395 6/26/2008 0.00 0.00 SEC ID:996D85247 REG:05 n n0 601,245.55 T9ta1 U.B.DOLLAR(USD)(9) Total Principal: 3,074,691.82 Total Coaun pion: 0.00 TatW$came: 25,308.18 Total Net: 3,100,000.00 6/27/2008 U.B.DOLLAR JUSD) RECEIVE Ve PAY-BUY CATERPILLAR PI NL SVCS CORP MEDIUM TERM NTS-BOOK ENTRY TRANCHE A 6/23/2008 3.100,000.000 -3,100,000.m BROKER FAILED TO DELIVER 6/26/2008 100,0000 0.00 TRADING BROKER:MERRILL LYNCH PIERCE FENNER SMITH INC NY 00000161 6/27/2008 0.00 0.00 CLEARING BROKER:MERRILL LYNCH PIERCE FENNER SMITH INC NY 0.00 -3,100,000.00 00000161 CMS REF: 1081760225398 CLIENT REF:0ON20300034810 SEC ID: 1491213X7 REG:DTC CS FOB CAT I REPO REPURCHASE AGREEMENT DTD 06/27/2008 2.100D% 6/27/2008 15,900 DW.000 -15,900,000.00 TRADING BROKER:CREDIT SUISSE,NEW YORK ICSFBUS33XXX)00000355 6/27/2008 f00."ll 0.00 CLEARING BROKER:CREDIT SUISSE.NEW YORK(CSFBUS33XXX)00000355 6/27/2008 0.00 Mw CMS REF: ID81790124378 0.00 -15,900,000.00 SEC ID:997AB32M4 REG:REPO Total RECEIVE VB PAY-BUY(2) Total Principal: -19,000,000.00 To W Cammlmlon: 0.00 TotW 1...: 0.00 Total Net: -19,000,000.00 DELIVER VS PAY-BELL LEHMAN CAT I REPO REPURCHASE AGREEMENT DTD 06/26/2008 2.0000% 6/27/2008 .15.800,000.000 16,800,000.00 CLOSE FOR 10817W151360 6/27/2008 100.0000 0.00 TRADING BROKER:LEHMAN DOW SECS INC,NY W000636 6/27/2M8 0.00 877.78 CLEARING BROKER:LEHMAN GOUT SECS INC,NY ON00636 0.00 15.800.877.78 CMS REF: 1081790000112 SEC ID:99ZAB3033 REG:REPO 7/24/2" 7:38:26PM EDT 41 Wcrkbrnch I I I I / I I 1 1 1 4 1 1 1 1 1 4 1 � I I I 1 1 1 t 1 1 1 1 7 1 1 1 1 1 1 1 1 I Custody Transaction History Report ID: CUA366 THE BANK Of NEW YORE MF.LLON Rose Curren": USD OCIMCOMOLIDAtED 6/l/2008 - 6/30/2008 GCSa00010001) "" -- Trade/ Ex Date Units - Prin0lpal Settle/ Pay Date Trade Price Commission LlegOtlptioa Actual Settlement Date -Mist. Expense. Income FX Fee Net Local Amount MARGIN RELEASE-BUY DREYFUS TREASURY CASK MANAGEMENT 6/27/200B O.00D -15.342.21 BOUGHT DREYFUS TREASURY CASH 6/27/2008 0.0000 0.00 CMS REP: IM1790383760 6/27/2008 0.00 0.00 SEC ID:996085247 REG:05 0.00 -15,342.21 SELL-SELL DREYFUS TREASURY CASH MANAGEMENT 6/27/2008 MIKE) 99.122.22 SOLD DREYFUS TREASURY CASH 612712MB 0.0000 0.00 CMS REP: 1081790-1837M 6/27/2008 OAO 0.00 SEC ID:996085297 REG:OS O.GO 99,122.22 FOREIGN BOILERS RELEASE-CD AMERICAN EXPRESS CR CORP MEDIUM TERM NTS BOOK ENTRY TRANCHE s 6/27/2008 0.000 0.Do RECD INT ON 4700000.ODD UNITS PAY 06/27/OB RATE 0.0032 6/2712MS EMS, 0.00 CMS REF: IN179NO6103 6/27/2008 0.00 15,342.21 SEC ID:0258MOCV9 0.00 15,342.21 Te D.S. DOLLAR IUSD)I6) T w Pr Ipoe -3.116,219.99 Tow Co®Iu1.n: 0.00 Tow Income: 16,219.99 Tow Net: a,100,000.00 6/30/2006 U.E.DOLLAR(RED) RECRNE VS PAY-BUY FEDERAL NAIL MM ASSN DISCOUNT NT MATURES AUGUST 292008 INCOME 6/30/2008 2N.000.000 -199.233.33 AT 6/30/2008 99.6167 0.00 TRADING BROKER: MORGAN STANLEY A CO INC,NY 00000050 6/30/2008 0.00 U00 CLEARING BROKER:MORGAN STANLEY A CO INC,NY 000000% GAO -199,233.33 CMS REP: 1081820176540 CLIENT REP:D00060300012794 SEC ID:313588D85 RED:FRB NATIONAL RURAL UT'113 COOP FIN CORP COLL TR BD DTD 06/30/2008 VAR 6/23/2008 3,100,000.000 -3,100,000.00 RT 613012MB 100.0000 0.00 TRADING BROKER:UM SECURITIES LLC,STAMFORD 00000642 6/30/200B 0.00 0.00 CLEARING BROKER:UBE SECURITIES LLC,STANFORD 00000642 0.00 .3,100,000.00 CMS REP: 1081750188334 CLIENT REP:000020300034808 SEC ID:637432LN3 REO:OTC UNITED STATES TREASURY NOTES DTD 06/30/2008 2 7/8%06/30/20 10 6/25/2008 2,400,D00.M0 -2.397,750.00 TRADING BROKER:BARCLAYS CAPITAL INC,NEW YOM DOW7256 6/30/2008 99.9063 0.00 CLEARING BROKER:BARCLAYS CAPITAL INC,NEW YOM 00007256 6/30/2008 0.00 0.00 CMS REP: 1081770201097 CLIENT REP:0OK20300034817 0.00 -2,397,750.00 SEC ID:912828JCS REO:FRB 712412WR 7:38:26PM EDT 42 Wo.kbrneM1 Custody Transaction History Report ID: CUA356 THE BANK OF NEW YORK MELLON Base Currency: USD OCSI CON80LIDATBD 6/1/2008 - 6/30/2008 OCB000010000 [D----pt-,-- Trade/ Ex Date Units Ptineipal' Settle/ Pay Date Trade Price Commission Actual Settlement Date Misc. se Income. ee Net Local Amount LEHMAN CAT I REM REPURCHASE AGREEMENT DTD 06/30/20081.2S00% 6/30/2008 15,700,000.000 -15.700.000.00 TRADING BROKER: LEHMAN GOUT SECS INC,NY"00636 6/30/2008 100.0000 0.00 CLEARING BROKER:LEHMAN DOVE SECS INC,NY 000U0636 6/30/2008 0.00 0.00 CMS REF: 1081820213W 0.00 -15,700,000.00 SEC ID:99ZAB4883 REG:REPO Total RECEIVE W PAY-BUY 141 Tatal Pstesa al: -21,396,983.33 Tah1 Commlmbe: 0.00 l'efBl lemma: 0.00 TaW Not: .21,396.993.33 DELIVER VS PAY-SUL FEDERAL HOME LN BK CONS DISC NTS MATURES JULY It 2008 INCOME AT 6/27/2008 -5.300,001000 5,290,889.89 MAT 6/30/2008 99.8281 0.00 TRADING BROKER:CHASE SECURITIES,NEW YORK 0000(187 6/30/2008 0.00 5,514.94 CLEARING BROKER:CHASE SECURITIES,NEW YOM DOOM187 0.00 5,296,404.83 CMS REF: 1081790189965 CLIENT REF:MM203MG34835 SEC ID:313384ZF9 RED:FRB CS FOR CAT 1 REPO REPURCHASE AGREEMENT DTD 06/27/2008 2.HKK h 6/30/2008 .15,9m.000A00 15,900,000.00 CLOSE FOR 1081790124378 6/30/2008 300.0000 0.00 TRADING BROKER:CREDIT SUISSE,NEW YORK iCSFHUS33XXX)00000355 6/30/2008 0.00 2,782.50 CLEARING BROKER:CREDIT SUISSE,NEW YORK(CSFBUS33XXX)00000355 0.00 15,902,782.50 CMS REF: 100192MOM49 SEC ID:99ZAB32M4 RED: REPO Tat l DELVER V8 PAY-BELL 121 Total Pdadpel: 21,190,889.89 Total Commission: 0.00 Total Income: 8,197A4 Total Net: 21,199,187.33 MARGIN RELEASE-SHY DREYPUS TREASURY CASH MANAGEMENT 6/30/2008 0.000 -3,549.17 BOUGHT DREYFUS TREASURY CASH 6/30/2008 0.0000 0.00 CMS REF: 1081820358390 6/30/2008 0.00 0.00 SEC ID:996085247 REG:05 0,00 .3.549.17 BELL-BELL DREYPUS TREASURY CASH MANAGEMENT 6/30/2008 0.000 182,694.78 SOLO DREYFUS TREASURY CASH 6/30/2008 0.0000 0.00 CMS REF: 1081820358392 6/30/2008 aw 0.00 SEC ID:9%085247 RED:05 0.00 182,694.78 POREIOB BOLDER RELEASE-CD 7/24/2" 7:38:26PM EOf 43 W.41,cnch 1 T- 1 9 1 [ r [ 4 1 1 1 1 1 1 1 / I 1 1 1 I 1 I 1 1 7 I ( 1 1 1 1 1 1 1 Custody Transaction History Report ID: CUA356 THE BANK Of NP.W YORK MELLON Buc Currency: USD O,S&CONSOLIDATED 6/1/2008 - 6/30/2008 OC9000910000 Trade/ Ex Date Unite Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Mix. Expenae Income FXFec Net.Local Amount FEDERAI.NATL MTG ASSN GTD REMIC PASSTHRU CTF REMIC TR 2007-111 CL 6/30/2008 0.0m 0.00 INTEREST DUE ON PAY DATE 06270 8 6/27/2008 0.0000 0.00 CMSREF: I0SI820D00017 6/30/2008 0.00 418.47 SEC In 3I396X3Q5 0.N 418.47 OOLDMAN SACHS GROUP INC SR NT DTD 06/28/2005 VAR RATE 06/28/2010 6/30/2008 0.000 0.00 REC INT ON 23500M1.000 UNITS PAY 06/30/08 RATE 0.007 6/30/2008 0.0000 0.00 CMS REP: 1OB182MI3608 6/30/2008 0.m 10,231.92 SEC ID:38143UBD2 OAO 18,231.92 Total yORElOR HOLDER RELEASE CD I2I Total Maeipa: 0.00 Total Commia4lau: 0.00 Total 1...: 19,650.39 Teter Net: 10,650.39 T.1sl U.S. DOLLAR(USDI 110) Tata Prlaolyal: -26,947,93 rota con,:at.aloa: 0.00 Total Income: 26,947.93 Total Net 0.00 7/241200ry 73N261W F01 44 Wmk6nmh rr r r Rating Agency Comparisons L L A summary of investment grade ratings are listed below. More complete descriptions of Moody's and Standard &Poor's ratings are included in the following pages. i N Quality/Grade Moody's Standard Fitch 3 paces 1✓ Best Quality Asa AAA AAA High Quality Aal AA- AA+ L As2 AA AA Aa3 AA- AA- L Upper Medium Grade At A+ A+ A2 A A A3 A- A- y Baal 088+ BBB+ L Medium Grade Baa2 BBB BOB Baa3 BBB- BBBI L Moody's—Investment Grade I V "Aaa"-Bonds aced Aaa are Judged to be of the best quetfry.They carry the smallest degree of Investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure.While the various protective L elements are likely to change,such changes as can be visualized are most unlikely to Impair the fundamentally strong position of such issues. I , "As"-Bonds which are rated As are judged to be of high quality by all standards. V Together with the Asia group they comprise what are generally known as high grade bonds.They are rated lower than the best bonds because margins of protection may not be as large as in Ass securities or fluctuation of protective elements may be of L, greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aas securities. "A"-Bonds which are rated A possess many favorable investment attributes and are to L be considered as upper medium grade obligations. Factors giving security to principal L L L r and interest are considered adequate,but elements may be present which suggest a susceptibility to impairment sometime in the future. "Ban"-Bonds which are rated Bea are considered as medium grade obligations; i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking r or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. r Bonds in the Aa. A. and gas are also assigned '1", '2'or"Y based on the strength of the issue within each category. Accordingly, "A1"would be the strongest group of A securities and "A3"would be the weakest A secunties. r Be,B,Caa, Ca, and C Bonds that possess one of these ratings provide questionable protection of interest and principal ("Be" Indicates some speculative elements; "B"indicates a general lack of characteristics of desirable Investment; "Cae" represents a poor standing; "Ca" represents obligations which are speculative in a high degree;and "C'represents the lowest rated class of bonds). "Caa'"Ca"and "C"bonds may be in default. Standard and Poor's—Investment Grade AAA-Debt rated 'AAA'has the highest rating assigned by S&P. Capacity to pay interest and repay principal Is extremely strong. AA-Debt rated "AA"has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree. r A- Debt rated 'A"has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes In circumstances and _ economic conditions than debt in higher rated categories. BBB-Debt rated 'BBB" Is regarded as having an adequate capacity to pay Interest and repay principal.Whereas It normally exhibits adequate protection parameters, adverse .� economic conditions or changing circumstances are more likely to lead to a weakened rapacity to pay interest and repay principal for debt in this category than in higher rated categories. Standard and Pmes—speculative Grade Rating Debt rated "BB",'B", "CCC", 'CC"and"C" is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. "BB'indicates the least degree of speculation and "C'the highest. While such debt will likely have some quality and protective characteristics these are outweighed by major uncertainties or major exposures to adverse conditions. BB-Debt rated "BB" has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely L i Ica L interest and principal payments. The"BB'rating category is also used for debt subordinated to senior debt that is assigned an actual or implied"BBB'rating. B- Debt rated-B-has a greater vulnerability to default but currently has the capacity to L meet interest payments and principal repayments. Adverse business,financial, or economic conditions will likely impair capacity or willingness to pay Interest and repay principal.The"B"rating category is also used for debt subordinated to senior debt that i is assigned an actual or implied"BB'or"BB"rating. V CCC-Debt rated"CCC"has a currently identifiable vulnerability to default,and is dependent upon favorable business,financial,and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, It is not likely to have the capacity to pay interest and repay principal.The*CCC'rating category Is also used for debt subordinated to senior debt that is assigned an actual or Implied'B'or'B" rating. CC-The rating *CC"typically is applied to debt subordinated to senior debt that is assigned an actual or implied "CCC"debt rating. C -The rating"C"typically is applied to debt subordinated to senior debt which is Lr assigned an actual or Implied'CCC"debt rating. The"C" rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. CI-The rating"CI"is reserved for Income bonds on which no interest is being paid. D-Debt rated *D"is in payment default. The"D'rating category Is used when interest 41 payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period.The 'Do rating also will be used upon the filing of a bankruptcy petition If debt service payments are jeopardized. Plus(+)or Minus(-):The ratings from 'AA'to"CCC"may be modified by the addition of L a plus or minus sign to show relative standing within the major rating categories. V NR- Indicates no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy. L. i Lr Wi L V L L r r APPENDIX"G" SECTIONS OF THE CALIFORNIA GOVERNMENT CODE PERTINENT TO r INVESTING PUBLIC FUNDS INTRODUCTION A requirement of Section 8,Authorized and Suitable Investments,of the District's Investment Policy r Statement, is that all investments shall be made in accordance with the California Government Code, including Section 16429.1 at seq., and 53600et seq. This appendix presents a copy of these sections for the reader's reference. r GOVERNMENT CODE SECTION 16429.1-16429:3 r 16429.1. There is in the State Treasury the Local Agency Investment Fund,which fund is hereby created. Notwithstanding Section 13340, all money in the fund is hereby appropriated without regard to fiscal years to carry out the purpose of this section. The Controller shall maintain a separate account for each governmental unit having deposits in this fund. r Notwithstanding any other provisions of law, a local governmental official,with the consent of the governing body of that agency,having money in its treasury not required for immediate needs,may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. r Notwithstanding any other provisions of law,an officer of any nonprofit corporation whose membership is confined to public agencies or public officials, or an officer of a qualified quasi-govemmental agency,with r the consent of the governing body of that agency, having money in its treasury not required for immediate needs, may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. Notwithstanding any other provision of law or of this section,a local agency,with the approval of its governing body,may deposit in the Local Agency Investment Fund proceeds of the issuance of bonds, notes, certificates of participation, or other evidences of indebtedness of the agency pending expenditure r of the proceeds for the authorized purpose of their issuance. In connection with these deposits of proceeds,the Local Agency Investment Fund is authorized to receive and disburse moneys, and to provide information, directly with or to an authorized officer of a trustee or fiscal agent engaged by the local agency,the Local Agency Investment Fund is authorized to hold investments in the name and for the account of that trustee or fiscal agent, and the Controller shall maintain a separate account for each deposit of proceeds. r The local governmental unit, the nonprofit corporation, or the quasi-governmental agency has the exclusive determination of the length of time its money will be on deposit with the Treasurer.The trustee or fiscal agent of the local governmental unit has the exclusive determination of the length of time proceeds from the issuance of bonds will be on deposit with the Treasurer. r The Local Investment Advisory Board shall determine those quasi-govemmental agencies which qualify to participate in the Local Agency Investment Fund.The Treasurer may refuse to accept deposits into the r fund if, in the judgment of the Treasurer, the deposit would adversely affect the state's portfolio. The Treasurer may invest the money of the fund in securities prescribed in Section 16430. The Treasurer r 7 r I may elect to have the money of the fund invested through the Surplus Money Investment Fund as I provided in Article 4 (commencing with Section 16470)of Chapter 3 of Part 2 of Division 4 of Title 2. 60 Money in the fund shall be invested to achieve the objective of the fund which is to realize the maximum return consistent with safe and prudent treasury management.All instruments of title of all investments of Ir the fund shall remain in the Treasurer's vault or be held in safekeeping under control of the Treasurer in any federal reserve bank,or any branch thereof,or the Federal Home Loan Bank of San Francisco,with any trust company,or the trust department of any state or national bank. V Immediately at the conclusion of each calendar quarter,all interest earned and other increment derived from investments shall be distributed by the Controller to the contributing governmental units or trustees or fiscal agents, nonprofit corporations,and quasi-governmental agencies in amounts directly L proportionate to the respective amounts deposited in the Local Agency Investment Fund and the length of time the amounts remained therein. An amount equal to the reasonable costs incurred in carrying out the provisions of this section, not to exceed a maximum of one-half of 1 percent of the earnings of this fund, shall be deducted from the earnings prior to distribution. The amount of this deduction shall be credited as reimbursements to the state agencies having incurred costs in carrying out the provisions of this section. The Treasurer shall prepare for distribution a monthly report of investments made during the preceding month. As used in this section, 'local agency,""local governmental unit,"and "local governmental official" L Includes a campus or other unit and an official, respectively,of the California State University who deposits moneys in funds described in Sections 89721, 89722,and 89725 of the Education Code. 16429.2. There is created the Local Investment Advisory Board consisting of five members. The r chairman shall be the State Treasurer or his or her designated representative. Two members who are qualified by training and experience in the field of investment or finance, shall be appointed by the State Treasurer. Two members who are treasurers,finance or fiscal officers or business managers, employed L by any county,city or local district or municipal corporation of this state, shall be appointed by the Treasurer.The term of office of each appointed member of the board is two years, but each appointed member serves at the pleasure of the appointing authority. A vacancy in the appointed membership, occurring other than by expiration of term, shall be filled in the same manner as the original appointment, �+ but for the unexpired term only. Members of the board who are not state officers or employees shall not receive a salary, but shall be L entitled to a per diem allowance of fifty dollars($50)for each day's attendance at a meeting of the board, not to exceed three hundred dollars($300)in any month. All members shall be enticed to reimbursement for expenses incurred in the performance of their duties under this part, including travel and other necessary expenses. L The board's primary purpose shall be to advise and assist the State Treasurer in formulating the I investment and reinvestment of moneys in the Local Agency Investment Fund, and the acquisition, 11 retention, management, and disposition of investments of the fund.The board,from time to time, shall review those policies and advise therein as it considers necessary or desirable. The board shall advise the Stale Treasurer in the management of the fund and consult the State Treasurer on any matter relating to the investment and reinvestment of moneys in the fund. 16429.3. Moneys placed with the Treasurer for deposit in the Local Agency Investment Fund by cities, counties,special districts, nonprofit corporations,or qualified quasi-govemmental agencies shall not be L subject to either of the following: Transfer or loan pursuant to Sections 16310, 16312,or 16313. Impoundment or seizure by any state official or state agency. L 1 b 2 L GOVERNMENT CODE SECTION 53600-53609 r 53600. As used in this article,'local agency"means county, city,city and county, including a chartered r city or county, school district,community college district,public district, county board of education, county superintendent of schools, or any public or municipal corporation. r 53600.3. Except as provided in subdivision (a)of Section 27000.3,all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor ,+ standard. When investing, reinvesting, purchasing, acquiring,exchanging,selling,or managing public funds,a trustee shall act with care,skill, prudence,and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims,to safeguard the principal and maintain the liquidity needs of the agency.Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law. r 53600.5. When investing, reinvesting, purchasing, acquiring, exchanging,selling, or managing public funds,the primary objective of a trustee shall be to safeguard the principal of the funds under its control. r The secondary objective shall be to meet the liquidity needs of the depositor.The third objective shall be to achieve a return on the funds under its control. 53600.6. The Legislature hereby finds that the solvency and creditworthiness of each individual local agency can impact the solvency and creditworthiness of the state and other local agencies within the state. Therefore, to protect the solvency and creditworthiness of the state and all of its political subdivisions,the Legislature hereby declares that the deposit and investment of public funds by local +� officials and local agencies is an issue of statewide concern. 53601. The legislative body of a local agency having money in a sinking fund of, or surplus money in, its treasury not required for the immediate needs of the local agency may invest any portion of the money that it deems wise or expedient in those investments set forth below. A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable,bearer, registered, or nonregistered r format, shall require delivery of the securities to the local agency, including those purchased for the agency by financial advisors,consultants, or managers using the agency's funds, by book entry, physical delivery,or by third party custodial agreement. The transfer of securities to the counterparty bank's r customer book entry account may be used for book entry delivery. For purposes of this section "counterparty"means the other party to the transaction. A counterparty bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. Where this section specifies a percentage limitation for a particular category of investment,that percentage is applicable only at the date of purchase. Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse r repurchase agreement or securities lending agreement authorized by this section,that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an investment program approved by the legislative body no less than three months prior to the investment: (a) Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned,controlled, or operated by the local agency or by a department, r board, agency, or authority of the local agency. (b) United States Treasury notes, bonds, bills, or certificates of indebtedness,or those for which the faith 3 I and credit of the United States are pledged for the payment of principal and interest. L (c) Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned,controlled, or operated by the state or by a department,board, agency, or authority of the state. I I V (d) Bonds, notes, warrants,or other evidences of indebtedness of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned,controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. jr (a) Obligations issued by banks for cooperatives,federal land banks,federal intermediate credit banks, federal home loan banks,the Federal Home Loan Bank Board,the Tennessee Valley Authority,or in obligations, participations, or other instruments of,or issued by, or fully guaranteed as to principal and LW interest by,the Federal National Mortgage Association;or in guaranteed portions of Small Business Administration notes; or in obligations, participations, or other instruments of,or issued by, a federal -- agency or a United States govemment-sponsored enterprise. V (f) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances. Purchases of bankers acceptances may not exceed 180 days maturity or 40 percent of the agency's surplus money that may be invested pursuant to this section. However,no more than 30 percent of the agency's surplus funds may be invested in the bankers acceptances of any one commercial bank pursuant to this section. i This subdivision does not preclude a municipal utility district from investing any surplus money in its L. treasury in any manner authorized by the Municipal Utility District Act(Division 6(commencing with Section 11501)of the Public Utilities Code). i Yd (g) Commercial paper of"prime"quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, Inc.,or Standard and Poor's Corporation. Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars($500,000,000)and having an"A"or v higher rating for the issuers debt,other than commercial paper, if any, as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corporation. Purchases of eligible commercial paper may not exceed 270 days maturity nor represent more than 10 percent of the outstanding paper of an issuing r corporation. Purchases of commercial paper may not exceed 15 percent of the agencys surplus money that may be invested pursuant to this section. An additional 15 percent, or a total of 25 percent of the agencys surplus money, may be invested pursuant to this subdivision. The additional 15 percent may be V so invested only if the dollar-weighted average maturity of the entire amount does not exceed 31 days, "Dollar-weighted average maturity"means the sum of the amount of each outstanding commercial paper investment multiplied by the number of days to maturity, divided by the total amount of outstanding commercial paper. V (h) Negotiable certificates of deposits issued by a nationally or state-chartered bank or a state or federal association(as defined by Section 5102 of the Financial Code)or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30 percent of the agencys surplus money which may be invested pursuant to this section. For purposes of this section, negotiable certificates of deposits do not come within Article 2(commencing with Section 53630), except that the amount so invested shall be subject to the limitations of Section 53638. U (i)(1) Investments in repurchase agreements or reverse repurchase agreements or securities lending I agreements of any securities authorized by this section,as long as the agreements are subject to this kit subdivision, including, the delivery requirements specified in this section. (2) Investments in repurchase agreements may be made, on any investment authorized in this section,when the term of the agreement _ does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be r, adjusted no less than quarterly. Since the market value of the underlying securities is subject to daily market fluctuations,the investments in repurchase agreements shall be in compliance if the value of the L 4 Ir underlying securities is brought back up to 102 percent no later than the next business day. (3)Reverse repurchase agreements or securities lending agreements may be utilized only when either of the following conditions are met: (A) The security was owned or specifically committed to purchase,by the local agency,prior to December 31, 1994,and was sold using a reverse repurchase agreement or securities lending agreement on December 31, 1994. (B) The security to be sold on reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale;the total of all reverse repurchase agreements and securities lending agreements on investments owned by the local agency not purchased or committed to purchase,prior to December 31, 1994,does not exceed 20 percent of the base value of the portfolio;and the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security. (4)After December 31, 1994,a reverse repurchase agreement or securities lending agreement may not be entered into with securities not sold on a reverse repurchase agreement or securities lending agreement and purchased, or committed to purchase, prior to that date, as a means of financing or paying for the security sold on a reverse repurchase agreement or securities lending agreement, but may only be entered into with securities owned and previously paid for a minimum of 30 days prior to the settlement of the reverse repurchase agreement or securities lending agreement, in order to supplement the yield on securities owned and previously paid for or to provide funds for the Immediate payment of a local agency obligation. Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty,by way of a reverse repurchase agreement or securities lending agreement,on securities originally purchased subsequent to December 31, 1994,shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement or securities lending agreement, unless the reverse repurchase agreement or securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security. Reverse repurchase agreements or securities lending agreements specified in subparagraph (B)of paragraph (3)may not be entered into unless the percentage restrictions specified in that subparagraph are met, including the total of any reverse repurchase agreements or securities lending agreements specified in subparagraph (A)of paragraph (3). (5) Investments in reverse repurchase agreements, or securities lending agreements, or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security, may only be made upon prior approval of the governing body of _ the local agency and shall only be made with primary dealers of the Federal Reserve Bank of New York. (6) (A)"Repurchase agreement"means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency .. by book entry, physical delivery,or by third party custodial agreement. The transfer of underlying securities to the counterparty bank's customer book-entry account may be used for book-entry delivery. (B)"Securities,"for purpose of repurchase under this subdivision, means securities of the same issuer, _ description, issue date,and maturity. (C)"Reverse repurchase agreement"means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements. (D)"Securities lending agreement" means an agreement under which a local agency agrees to transfer securities to a borrower who, in turn, agrees to provide collateral to the local agency. During the tern of the agreement,both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral. (E)For purposes of this section, the base value of the local agencys pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants,excluding any amounts obtained through selling securities by way of reverse repurchase agreements, securities lending agreements, or other similar borrowing methods. (F)For purposes of this section,the spread is the difference between the cost of funds �. obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds. Q)Medium-term notes,defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any stale and operating 5 i Lr within the United States. Notes eligible for investment under this subdivision shall be rated"A"or better by a nationally recognized rating service. Purchases of medium-term notes shall not Include other instruments authorized by this section and may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. (k)(1)Shares of beneficial interest issued by diversified!management companies that invest in the securities and obligations as authorized by subdivisions(a)to 0).inclusive,or subdivisions(m)or(n)and that comply with the investment restrictions of this article and Article 2 (commencing with Section 53630). However,notwithstanding these restrictions,a counterparty to a reverse repurchase agreement or securities lending agreement is not required to be a primary dealer of the Federal Reserve Bank of New York if the company's board of directors finds that the counterparty presents a minimal risk of default, and the value of the securities underlying a repurchase agreement or securities lending agreement may be LA 100 percent of the sales price if the securities are marked to market daily. (2)Shares of beneficial interest issued by diversified management companies that are money market fords registered with the Securities and Exchange Commission under the Investment Company Act of 1940(15 U.S.C.Sec. 80a- 1,at seq.). (3)If investment is in shares issued pursuant to paragraph (1),the company shall have met y either of the following criteria: (A)Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years'experience investing in the securities and obligations authorized by subdivisions (a)to 0). inclusive,or subdivisions(m)or(n)and with assets under management in excess of five hundred million dollars($500,000,000). (4) If investment is in shares issued pursuant to paragraph (2),the company shall have met either of the following criteria: LA (A)Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rafing organizations. (B)Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars($500,000,000). (5)The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge and shall not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. U However, no more than 10 percent of the agency's surplus funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph(1). I ' (1)Notwithstanding anything to the contrary contained in this section, Section 53635,or any other V provision of law, moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness,or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale,or other agreements,may be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness,or lease installment sale,or other agreement,or to the extent not inconsistent therewith or if there are no specific statutory provisions, in accordance with the ordinance,resolution, indenture,or agreement of the local agency providing for the issuance. V (m)Notes, bonds,or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing L local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not i affiliated with the issuer of the secured obligation,and the security interest shall be perfected in LJ accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. (n)Any mortgage passthrough security,collateralized mortgage obligation, mortgage-backed or other LW pay-through bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable-backed bond of a maximum of five years maturity. Securities eligible for investment under this subdivision shall be issued by an issuer having an"A"or higher rating for the issuer's debt as r provided by a nationally recognized rating service and rated in a rating category of"AA"or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision L 8 L may not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. r 53601.1. The authority of a local agency to invest funds pursuant to Section 53601 includes,in addition thereto, authority to invest in financial futures or financial option contracts in any of the investment categories enumerated in that section. 53601.5. The purchase by a local agency of any investment authorized pursuant to Section 53601 or 53601.1. not purchased directly from the issuer, shall be purchased either from an institution licensed by the state as a broker-dealer, as defined in Section 25004 of the Corporations Code,or from a member of a federally regulated securities exchange,from a national or stale-chartered bank,from a federal or state .. association(as defined by Section 5102 of the Financial Code)or from a brokerage firm designated as a primary government dealer by the Federal Reserve bank. r 53601.6. (a)A local agency shall not invest any funds pursuant to this article in inverse floaters, range notes,or mortgage derived interestonly strips. (b)A local agency shall not invest any funds pursuant to this article in any security that could result in zero interest accrual if held to maturity. However,a local agency may hold prohibited instruments until their maturity dales. The limitation in this subdivision shall not apply to local agency investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1940(15 U.S.C. Sec. 60a-1,and following) that are authorized for Investment pursuant to subdivision (k)of Section 53601. 53602. The legislative body shall invest only in notes, bonds, bills,certificates of indebtedness,warrants, or registered warrants which are legal investments for savings banks in the State, provided, that the board of supervisors of a county may,by a four-fifths vote thereof, invest in notes,warrants or other evidences of indebtedness of public districts wholly or partly within the county,whether or not such notes, warrants,or other evidences of indebtedness are legal investments for savings banks. 53603. The legislative body may make the investment by direct purchase of any issue of eligible securities at their original sale or after they have been issued. 53604. The legislative body may sell, or exchange for other eligible securities, and reinvest the proceeds .. of,the securities purchased. 53605. From time to time,the legislative body shall sell the securities so that the proceeds may be applied to the purposes for which the original purchase money was placed in the sinking fund or the treasury of the local agency. r 53606. The bonds purchased, which were issued by the purchaser, may be canceled either in satisfaction or sinking fund obligations or otherwise. When canceled,they are no longer outstanding, unless in its discretion,the legislative body holds then uncanceled. While held uncanceled,the bonds may be resold. 53607. The authority of the legislative body to invest or to reinvest funds of a local agency, or to sell or exchange securities so purchased, may be delegated for a one-year period by the legislative body to the treasurer of the local agency,who shall thereafter assume full responsibility for those transactions until the delegation of authority is revoked or expires,and shall make a monthly report of those transactions to the legislative body. Subject to review,the legislative body may renew the delegation of authority pursuant to this section each year. 7 53608. The legislative body of a local agency may deposit for safekeeping with a federal or state association(as defined by Section 5102 of the Financial Code), a trust company or a state or national bank located within this state or with the Federal Reserve Bank of San Francisco or any branch thereof L+ within this state,or with any Federal Reserve bank or with any state or national bank located in any city designated as a reserve city by the Board of Governors of the Federal Reserve System,the bonds, notes, bills,debentures, obligations,certificates of indebtedness,warrants, or other evidences of indebtedness in which the money of the local agency is invested pursuant to this article or pursuant to other legislative authority. The local agency shall take from such financial institution a receipt for securities so deposited. The authority of the legislative body to deposit for safekeeping may be delegated by the legislative body to the treasurer of the local agency;the treasurer shall not be responsible for securifies delivered to and receipted for by a financial institution until they are withdrawn from the financial institution by the treasurer. _ V 53609. Notwithstanding the provisions of this chapter or any other provisions of this code,funds held by a local agency pursuant to a written agreement between the agency and employees of the agency to defer a portion of the compensation otherwise receivable by the agency's employees and pursuant to a plan for such deferral as adopted by the governing body of the agency, may be invested in the types of investments set forth in Sections 53601 and 53602 of this code,and may additionally be invested in corporate stocks, bonds, and securities,mutual funds, savings and loan accounts,credit union accounts, life insurance policies, annuities,mortgages,deeds of trust,or other security interests in real or personal y property. Nothing herein shall be construed to permit any type of investment prohibited by the Constitution. - I Deferred compensation funds are public pension or retirement funds for the purposes of Section 17 of �+ Article XVI of the Constitution. GOVERNMENTCODE L SECTION 530W-53686 V 53630. As used in this article: (a)"Local agency"means county, city,city and county, including a chartered city or county,a V community college district,or other public agency or corporation in this state. (b)"Treasurer"means treasurer of the local agency. u (c)"Depository"means a state or national bank, savings association or federal association,a state or federal credit union,or a federally insured industrial loan company,in this state in which the moneys of a local agency are deposited. (d)"Agent of depository"means a trust company or trust department of a state or national bank located in this state, including the trust department of a depository where authorized, and the Federal Home Loan Bank of San Francisco,which is authorized to act as an agent of depository for the purposes of this article `+ pursuant to Section 53657. (a)"Security"means any of the eligible securities or obligations listed in Section 53651. L (f)"Pooled securities"means eligible securities held by an agent of depository for a depository and securing deposits of one or more local agencies. �r (g)"Administrator"means the Administrator of Local Agency Security of the State of California. L 8 j (h)"Savings association or federal association"means a savings association, savings and loan association, or savings bank as defined by Section 5102 of the Financial Code. r (i)"Federally insured industrial loan company"means an industrial loan company licensed under Division 7(commencing with Section 18000)of the Financial Code, the investment certificates of which ,r are insured by the Federal Deposit Insurance Corporation. 53630.1. The Legislature hereby finds that the solvency and creditworthiness of each individual local r agency can impact the solvency and creditworthiness of the stale and other local agencies within the state. Therefore,to protect the solvency and creditworthiness of the state and all of its political subdivisions,the Legislature hereby declares that the deposit and investment of public funds by local r officials and local agencies is an issue of statewide concern. 53630.6. (a)The definitions in Section 1700 of,and Chapter 1 (commencing with Section 99)of Division r 1 of,the Financial Code apply to this section. (b)In this article,for purposes of being a depository of moneys belonging to or being in the custody of a local agency,the phrases"state or national bank located in this state.""state or national bank;'state or national bank in this state,"and"state or national r banks in the state"include,without limitation, any of the following: (1)Any California branch office of a foreign (other state)state bank that the bank is authorized to maintain under the law of its domicile and federal law. (2)Any California branch office of a foreign(other state)national bank that the bank is authorized to r maintain under federal law. (3)Any California branch office of a foreign (other nation)bank that the bank is licensed to maintain under Article 3 (commencing with Section 1750)of Chapter 13.5 of Division 1 of the Financial Code. (4)Any California federal branch of a foreign(other nation)bank that the bank is authorized to maintain under federal law. r 53631. Under such conditions as the treasurer of a local agency fixes with the approval of the legislative body,he may deposit money necessary to pay the principal and interest of bonds in a bank within or without the State at the place where they are payable. This article does not apply to deposits for such r purposes. 53631.5. (a)A local agency shall not invest any funds pursuant to this article in inverse floaters, range r notes,or interest-only strips that are derived from a pool of mortgages. b)A local agency shall not invest any funds pursuant to this article in any security that could result in zero interest accrual If held to maturity. However,a local agency may hold prohibited instruments until their maturity dates. The r limitation in this subdivision shall not apply to local agency investments in shares of beneficial Interest issued by diversified management companies registered under the Investment Company Act of 1940(15 U.S.C. Sec.80a-1,and following)that are authorized for investment pursuant to subdivision (k)of Section 53601. r 53632. There are three classes of deposits: (a) Inactive deposits. (b)Active deposits. (c)Interest-bearing active deposits. r 53632.5. There are three classes of security for deposits: (a)Securities described in subdivision(m)of Section 53651. (b)Securities described in subdivision(p)of Section 53651. r (c)Securities enumerated in Section 53651,except for those described in subdivisions (m)and (p)of that section. 9 I V 53633. The treasurer shall determine the amounts of money to be deposited as inactive, active,and interest-bearing active deposits,except as otherwise provided in Section 53679. 53634. The treasurer may call in money from inactive deposits and place it in active deposits as current L demands require. When there is money in his possession for which(here is no demand as inactive deposits, he may place it as active deposits. i LL 53635. As far as possible, all money belonging to,or in the custody of,a local agency,including money paid to the treasurer or other official to pay the principal,interest,or penalties of bonds,shall be deposited L for safekeeping in state or national banks,savings associations or federal associations,credit unions, or federally insured industrial loan companies in this state selected by the treasurer or other official having the legal custody of the money; or,unless otherwise directed by the legislative body pursuant to Section 53601,may be invested in the investments set forth below. To be eligible to receive local agency money, L+ a bank,savings association,federal association, or federally insured individual loan company shall have received an overall rating of not less than"satisfactory'in its most recent evaluation by the appropriate federal financial supervisorial agency of its record of meeting the credit needs of California's communities, including low and moderate Income neighborhoods, pursuant to Section 2906 of Title 12 of the United 1" States Code. A local agency purchasing or obtaining any securities described in this section, in a negotiable, bearer, registered, or nonregistered format, shall require delivery of all the securities to the local agency, Including those purchased for the agency by financial advisors,consultants,or managers _ L, using the agency's funds,by book entry, physical delivery,or by third-party custodial agreement. The transfer of securities to the counterparty,bank's customer book entry account may be used for book-entry delivery. For purposes of this section,"counterparty' means the other party to the transaction. A counterparty bank's trust department or separate safekeeping department may be used for the physical ►� delivery of the security if the security is held in the name of the local agency. Where this section specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. V (a)Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned,controlled, or operated by the local agency or by a department, board,agency,or authority of the local agency. v (b)United States Treasury notes,bonds, bills, or certificates of indebtedness,or those for which the faith and credit of the United States are pledged for the payment of principal and interest. (c)Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned,controlled, or operated by the state or by a department,board,agency, or authority of the state. V (d)Bonds,notes,warrants,or other evidences of indebtedness of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned,controlled, L or operated by the local agency, or by a department, board,agency, or authority of the local agency. (a)Obligations issued by banks for cooperatives,federal land banks,federal intermediate credit banks, j federal home loan banks,the Federal Home Loan Bank, the Tennessee Valley Authority, or in Ir obligations,participations,or other instruments of,or issued by, or fully guaranteed as to principal and interest by,the Federal National Mortgage Association;or in guaranteed portions of Small Business Administration notes;or in obligations,participations,or other instruments of,or issued by,a federal L agency or a United States government-sponsored enterprise. (f)Bills of exchange or time drafts drawn on and accepted by a commercial bank,otherwise known as i bankers acceptances. Purchases of bankers acceptances may not exceed 270 days maturity or 40 it percent of the agency's surplus funds which may be invested pursuant to this section. However,no more than 30 percent of the agency's surplus funds may be invested in the bankers acceptances of any one V 10 ( L r commercial bank pursuant to this section. This subdivision does not preclude a municipal utility district from investing any surplus money in its treasury in any manner authorized by the Municipal Utility District `+ Act, Division 6(commencing with Section 11501)of the Public Utilities Code. (g)Commercial paper of"prime"quality of the highest ranking or of the highest letter and numerical .., rating as provided for by Moody's Investors Service, Inc.,or Standard and Poor's Corporation. Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars($500,000,000)and having an"A"or higher rating for the issuer's debt, other than commercial paper, 1 any, as provided for by Moody's Investors Service, Inc.,or Standard and Poor's Corporation. Purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation. Purchases of commercial paper may not exceed 15 percent of the agency's surplus money ,., which may be invested pursuant to this section. An additional 15 percent,or a total of 30 percent of the agency's money or money in its custody, may be invested pursuant to this subdivision. The additional 15 percent may be so invested only if the dollar-weighted average maturity of the entire amount does not exceed 31 days. "Dollar-weighted average maturity"means the sum of the amount of each outstanding commercial paper investment multiplied by the number of days to maturity, divided by the total amount of outstanding commercial paper. (h)Negotiable certificates of deposit issued by a nationally or state-chartered bank or a savings association or federal association or a state or federal credit union or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30 percent of the agencys surplus money which may be invested pursuant to this section. For purposes of this section, negotiable r certificates of deposit do not come within Article 2(commencing with Section 53630)of Chapter 4 of Part 1 of Division 2 of Tide 5, except that the amount so invested shall be subject to the limitations of Section 53638. For purposes of this section,the legislative body of a local agency and the treasurer or other official of the local agency having legal custody of the money are prohibited from depositing or investing local agency funds, or funds in the custody of the kcal agency, in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or an employee of the administrative officer, manager's office, budget office,auditor-controller's office,or treasurer's office of the local agency also serves on the board of directors,or any committee appointed by the board of directors, or the credit committee or supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit. r (i)(1) Investments in repurchase agreements or reverse repurchase agreements,or securities lending agreements of any securities authorized by this section, so long as the agreements are subject to this subdivision, including the delivery requirements specked in this section. (2) Investments in repurchase agreements may be made,on any investment authorized in this section,when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. Since the market value of the underlying securities is subject to daily market fluctuations,the investments in repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102 percent no later than the next business day. (3)Reverse repurchase agreements may be utilized only when either of the following conditions are met: (A)The r security was owned or specifically committed to purchase,by the local agency, prior to repurchase agreement on December 31, 1994, and was sold using a reverse repurchase agreement or securities lending agreement on December 31, 1994. (B)The security to be sold on reverse repurchase agreement r or securities lending agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale,the total of all reverse repurchase agreements and securities lending agreements on investments owned by the local agency not purchased or committed to purchase, prior to December 31, 1994,does not exceed 20 percent of the base value of the portfolio, and the agreement does not r exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security. (4)After r December 31, 1994, a reverse repurchase agreement or securities lending agreement may not be entered into with securities not sold on a reverse repurchase agreement or securities lending agreement and purchased, or committed to purchase, prior to that date, as a means of financing or paying for the 11 security sold on a reverse repurchase agreement or securities lending agreement, but may only be entered into with securities owned and previously paid for,for a minimum of 30 days prior to the settlement of the reverse repurchase agreement or securities lending agreement, in order to supplement the yield on securities owned and previously paid for or to provide funds for the Immediate payment of a local agency obligation. Funds obtained or funds within the pool of an equivalent amount to that obtained L from selling a security to a counterparty,by way of a reverse repurchase agreement or securities lending agreement,on securities originally purchased subsequent to December 31, 1994, shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement or securities lending agreement, unless the reverse repurchase y agreement or securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security. Reverse repurchase agreements and securities lending agreements specified in subparagraph(B)of paragraph (3)may not be entered into unless the percentage restrictions specified in that subparagraph are met, including the total of any reverse repurchase agreements or securities lending agreements specified in subparagraph (A)of paragraph(3), (5)Investments in reverse repurchase agreements,securities lending agreements, or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security, may only be made upon prior approval of the governing body of the local agency and shall only be made with primary dealers of the Federal Reserve Bank of New York. (6)(A)"Repurchase agreement"means a purchase of securities by the local agency pursuant to an agreement by which the counterparty,seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery,or by third party custodial agreement. The transfer of underlying r, securities to the counterparty bank's customer book-entry account may be used for book-entry delivery. (B)"Securities,"for purpose of repurchase under this subdivision, means securities of the same issuer, description, issue date,and maturity. (C)"Reverse repurchase agreement"means a sale of securities by L. the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date,and includes other comparable agreements. (D)"Securities lending agreement" means an agreement under which a local agency agrees to transfer securities to a borrower who, In turn, agrees to provide collateral to the local agency. During the term of the agreement, both the securities y and the collateral are held by a third party. At the conclusion of the agreement,the securities are transferred back to the local agency In return for the collateral. (E)For purposes of this section,the base value of the local agency's pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements or other similar borrowing methods. (F)For purposes of this section,the spread is the difference between the cost of funds obtained using the reverse repurchase agreement or securities lending agreement and the earnings obtained on the reinvestment of the funds. 0)Medium-term notes,defined as all corporate and depository institution debt securities with a maximum life of five years or less, Issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated"A"or better by a nationally recognized rating service. Purchases of medium-term notes shall not include other instruments authorized by this section and may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. (k)(1)Shares of beneficial interest issued by diversified management companies that Invest in the securities and obligations as authorized by subdivisions(a)to 0), inclusive, or subdivision (1)or(m)and 6d that comply with the investment restrictions of this article and Article 1 (commencing with Section 53600). However, notwithstanding these restrictions,a counterparty to a reverse repurchase agreement or securities lending agreement is not required to be a primary dealer of the Federal Reserve Bank of New York V the company's board of directors finds that the counterparty presents a minimal risk of default,and the value of the securities underlying a repurchase agreement or securities lending agreement may be 100 percent of the sales price if the securities are marked to market daily. (2)Shares of beneficial interest issued by diversified management companies that are money market funds registered with the `+ Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 at seq). (3) If investment is in shares issued pursuant to paragraph (1),the company shall have met 12 V r either of the following criteria: (A)Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B)Retained an ' investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years'experience investing in the securities and obligations authorized by subdivisions(a)to 0),inclusive, or subdivision(1)or(m)and with assets under management in excess of r five hundred million dollars ($500,000,000). (4) If investment is in shares issued pursuant to paragraph (2),the company shall have met either of the following criteria: (A)Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an Investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars($500,000,000). (5)The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge and shall not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. However, no more than 10 percent of the agency's surplus funds may be invested in shares of beneficial Interest of any one mutual fund pursuant to paragraph(1). r (1)Notes,bonds,or other obligations which are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation,and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. (m)Any mortgage passthrough security,collateralized mortgage obligation,mortgage-backed or other pay-through bond, equipment lease-backed certificate,consumer receivable passthrough certificate, or consumer receivable-backed bond of a maximum of five years maturity. Securities eligible for investment under this subdivision shall be Issued by an issuer having an"A"or higher rating for the issuers debt as r provided by a nationally recognized rating service and rated in a rating category of"AA"or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision may not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. 53635.5. The purchase by a local agency of any investment authorized pursuant to Section 53635, not purchased directly from the issuer, shall be purchased either from an institution licensed by the state as a r broker-dealer, as defined in Section 25004 of the Corporations Code,or from a member of a federally regulated securities exchange,from a national or state-chartered bank,from a savings association or a federal association, or from a brokerage firm designated as a primary government dealer by the Federal r Reserve bank. 53635.7. In making any decision that involves borrowing in the amount of one hundred thousand dollars r ($100,000)or more,the legislative body of the local agency shall discuss,consider,and deliberate each decision as a separate item of business on the agenda of its meeting as prescribed in Chapter 9 (commencing with Section 54950). As used in this section,"borrowing"does not include bank overdrafts. 53636. Money so deposited is deemed to be in the treasury of the local agency. w 53637. The money shall be deposited in any bank,savings association or federal association,state or federal credit union,or federally insured industrial loan company with the objective of realizing maximum return,consistent with prudent financial management, except that money shall not be deposited in any ' state or federal credit union if a member of the legislative body of a local agency, or any person with investment decision-making authority of the administrative office, manager's office,budget office,auditor- 13 L controllers office, or treasurer's office of the local agency, also serves on the board of directors,or any committee appointed by the board of directors,or the credit committee or supervisory committee,of the tr state or federal credit union. 53638. (a)The deposit shall not exceed the shareholders equity of any depository bank. For the L purposes of this subdivision,shareholder's equity shall be determined in accordance with Section 118 of the Financial Code, but shall be deemed to include capital notes and debentures. r (b)The deposit shall not exceed the total of the net worth of any depository savings association or federal association, except that deposits not exceeding a total of five hundred thousand dollam($500,000) may be made to a savings association or federal association without regard to the net worth of that depository,if such deposits are insured or secured as required by law. (c)The deposit to the share accounts of any regularly chartered credit union shall not exceed the total of the unimpaired capital and surplus of the credit union,as defined by rule of the Commissioner of ,r Financial Institutions,except that the deposit to any credit union share account in an amount not exceeding five hundred thousand dollars($500,000)may be made if the share accounts of that credit union are insured or guaranteed pursuant to Section 14858 of the Financial Code or are secured as required bylaw. (d)The deposit in investment certificates of a federally insured industrial Ivan company shall not exceed the total of the unimpaired capital and surplus of the insured industrial loan company. 53639. Except as otherwise provided in Section 53682,the depository shall bear the expenses of transportation of money to and from the depository. 53640. Except as otherwise provided in Section 53682,the depository shall handle, collect,and pay all checks, drafts, and other exchange without cost to the local agency. 53641. When money is deposited in a depository,the treasurer or other authorized official shall take and preserve a receipt, certificate of deposit,or other evidence of the deposit as he or she requires. u 53642. The money deposited may be drawn out by check or order of the treasurer or other official authorized to make such deposit. V 53643. The treasurer may deposit any part of the money as agreed upon between the treasurer and the depository. L 63644, If an agreement is not made: I (a)Active deposits and interest thereon are subject to withdrawal upon the demand of the treasurer or 4 other authorized official, subject to any penalties which may be prescribed by federal law or regulation. (b) Inactive deposits are subject to notice of at least thirty days before withdrawal. L 53645. Interest shall be computed and paid by the depository,as follows: L (a) For active deposits upon which interest is payable, interest shall be computed on the average daily balance for the calendar quarter,and shall be paid quarterly. LY (b) For inactive deposits, interest shall be computed on a 360-day basis, and shall be paid quarterly. L 14 1 L 53646. (a)(1) In the case of county government,the treasurer may annually render to the board of supervisors and any oversight committee a statement of investment policy,which the board shall review and approve at a public meeting. Any change in the policy shall also be reviewed and approved by the board at a public meeting. (2) In the case of any other local agency, the treasurer or chief fiscal officer of the local agency shall annually render to the legislative body of that local agency and any oversight committee of that local agency a statement of investment policy,which the legislative body of the local agency shall consider at a public meeting. Any change in the policy shall also be considered by the legislative body of the local agency at a public meeting. (b)(1)The treasurer or chief fiscal officer may render a quarterly report to the chief executive officer,the internal auditor,and the legislative body of the local agency. The quarterly report shall be so submitted within 30 days following the end of the quarter covered by the report. Except as provided in subdivisions (a)and(f),this report shall include the type of investment, issuer, date of maturity par and dollar amount invested on all securities, investments and moneys held by the local agency, and shall additionally include a description of any of the local agency's funds, investments,or programs,that are under the management of contracted parties,including lending programs. With respect to all securities held by the local agency, and under management of any outside party that is not also a local agency or the State of California Local Agency Investment Fund,the report shall also include a current market value as of the date of the report, and shall include the source of this same valuation. (2)The quarterly report shall state compliance of the portfolio to the statement of investment policy,or manner in which the portfolio is not in compliance. (3)The quarterly report shall include a statement denoting the ability of the local agency to meet its pool's expenditure requirements for the next six months,or provide an explanation as to why sufficient money shall,or may, not be available. (4) In the quarterly report, a subsidiary ledger of investments may be used in accordance with accepted accounting practices. (c) Pursuant to subdivision (b),the treasurer or chief fiscal officer shall report whatever additional information or data may be required by the legislative body of the local agency. (d)The legislative body of a local agency may elect to require the report specified in subdivision (b)to r be made on a monthly basis instead of quarterly. (a)For local agency investments that have been placed in the Local Agency Investment Fund,created r by Section 16429.1, in National Credit Union Share Insurance Fund-insured accounts in a credit union, in accounts insured or guaranteed pursuant to Section 14858 of the Financial Code, or in Federal Deposit Insurance Corporation-insured accounts in a bank or savings and loan association,in a county investment pool,or any combination of these, the treasurer or chief fiscal officer may supply to the �+ governing body, chief executive officer,and the auditor of the local agency the most recent statement or statements received by the local agency from these institutions in lieu of the information required by paragraph(1)of subdivision (b) regarding investments in these institutions. r (f)The treasurer or chief fiscal officer shall not be required to render a quarterly report,as required by subdivision(b),to a legislative body or any oversight committee of a school district or county office of education for securities, investments,or moneys held by the school district or county office of education in r individual accounts that are less than twenty-five thousand dollars($25,000). (g) Except as provided in subdivisions(h)and(1),each city, county, or city and county shall submit _ copies of its second and fourth quarter reports to the California Debt and Investment Advisory Commission within 60 days after the close of the second and fourth quarters of each calendar year. Any city,county,or city and county not required to submit a report pursuant to subdivision(h)or(i) shall file with the commission a written statement within 60 days of the end of the second and fourth r quarters of the calendar year stating the distribution and amount of its investment portfolio and that it is therefore not subject to this reporting requirement. This subdivision shall become inoperative on January 1,2007. (h)A city shall not be required to submit a quarterly report to the commission if, during the entire reporting period,the city has maintained 100 percent of its investment portfolio in (1)the 15 r treasury of the county in which it is located for investment by the county treasurer pursuant to Section I 53684, (2)the Local Agency Investment Fund created by Section 16429.1, (3)National Credit Union y Share Insurance Fund-insured accounts in a credit union, in accounts insured or guaranteed pursuant to Section 14858 of the Financial Code,or in Federal Deposit Insurance Corporation-insured accounts in a bank or savings and loan association,or(4)in any combination of these. V (1)A county or city and county shall not be required to submit a quarterly report to the commission if, during the entire reporting period,the county has maintained 100 percent of its investment portfolio in(1) the Local Agency Investment Fund created by Section 16429.1, (2)National Credit Union Share `,j Insurance Fund-insured accounts in a credit union, in accounts insured or guaranteed pursuant to Section 14858 of the Financial Code,or in Federal Deposit Insurance Corporation-insured accounts in a bank or savings and loan association, or(3)in any combination of these. L p)The city,county, or city and county investor of any public funds,no later than 60 days after the close of the second quarter of each calendar year and 60 days after the subsequent amendments thereto, shall I provide the statement of investment policy required pursuant to this section,to the California Debt and y Investment Advisory Commission. (k) In recognition of the state and local interests served by the actions made optional in subdivisions (a) and(b),the Legislature encourages the local agency officials to continue taking the actions formerly mandated by this section. However, nothing in this subdivision may be construed to impose any liability on a local agency that does not continue to take the formerly mandated action. 53647. (a)Interest on all money deposited belongs to, and shall be paid quarterly into the general fund of,the local agency represented by the officer making the deposit, unless otherwise directed by law. v (b)Notwithstanding the provisions of subdivision (a), and except as otherwise directed by law, if the governing body of the local agency represented by the officer making the deposit so directs,such interest shall be paid to the fund which contains the principal on which the interest accrued. 53647.5. Notwithstanding any other provision of law, interest earned on any bail money deposited in a bank account pursuant to Section 1463.1 of the Penal Code and Section 53679 of this code shall, if the L. board of supervisors so directs,be allocated for the support of the courts in that county. 53648. Notwithstanding this article,the treasurer may deposit moneys in,and enter into contracts with, a state or national bank,savings association or federal association,federal or state credit union, or federally insured industrial loan company,pursuant to a federal law or a rule of a federal department or agency adopted pursuant to the law if the law or rule conflicts with this article in regulating the payment of interest L. on deposits of public moneys by any of the following: (a)Banks which are Federal Reserve System members or whose deposits are insured by the Federal V Deposit Insurance Corporation. (b)Savings associations or federal associations which are federal home loan bank members or whose I deposits are insured by the Federal Savings and Loan Insurance Corporation. LA (c)State or federal credit unions whose accounts are insured by the National Credit Union Share Insurance Fund or guaranteed by the California Credit Union Share Guaranty Corporation or insured or guaranteed pursuant to Section 14858 of the Financial Code, unless a member of the legislative body of a local agency,or any person with investment decision-making authority of the administrative office, manager's office, budget office, auditor-controller's office, or treasurers office of the local agency,also serves on the board of directors,or any committee appointed by the board of directors,or the credit J committee or supervisory committee,of the stale or federal credit union. I 60 16 I r r (d)A federally insured industrial loan company. r 53648.5. Upon the removal by federal law of the conflicting federal law or rule the agreement between the treasurer or other authorized official and a depository may be terminated by either party. r 53649. The treasurer is responsible for the safekeeping of money in his or her custody and shall enter into any contract with a depository relating to any deposit which in his or her judgment is to the public advantage. The depository, and the agent of depository to the extent the agent of depository has been notified of deposits and the amount thereof, are responsible for securing moneys deposited pursuant to such a contract in accordance with Section 53652. One copy of each contract shall be filed with the ,r auditor, controller, secretary, or corresponding officer of the local agency. The contract shall: (a)Fix the duration of deposits, if appropriate. (b)Fix the interest rate, if any. (c)Provide conditions for withdrawal and repayment. r (d)Provide for placement of pooled securities in a named agent of depository in accordance with Section 53666. 'r (a)Grant authority for agent of depository to place securities for safekeeping in accordance with Section 53659. r (f)Set forth in accordance with Section 53665 the conditions upon which the administrator shall order pooled securities converted into money for the benefit of the local agency, and the procedure therefor. (g)Provide for compliance in all respects with the provisions of this article and other applicable provisions of law- (h)Provide, upon notice to the treasurer from the administrator,that a treasurer may withdraw deposits r in the event a depository fails to pay the assessments,fines,or penalties assessed by the administrator or may withdraw authorization for the placement of pooled securities in an agent of depository in the event that the agent of depository fails to pay the fines or penalties assessed by the administrator. r 53651. Eligible securities are any of the following: r (a)United States Treasury notes, bonds, bills or certificates of indebtedness,or obligations for which the faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of small business administration loans, so long as the loans are obligations for which the faith and credit of the United States are pledged for the payment of principal and interest. r (b)Notes or bonds or any obligations of a local public agency(as defined in the United States Housing Act of 1949)or any obligations of a public housing agency(as defined in the United States Housing Act of 1937)for which the faith and credit of the United States are pledged for the payment of principal and interest. (c)Bonds of this state or of any local agency or district of the State of California having the power, r without limit as to rate or amount,to levy taxes or assessments to pay the principal and interest of the bonds upon all property within its boundaries subject to taxation or assessment by the local agency or district,and in addition, limited obligation bonds pursuant to Article 4(commencing with Section 50665)of Chapter 3 of Division 1, senior obligation bonds pursuant to Article 5(commencing with Section 53387)of r Chapter 2.7, and revenue bonds and other obligations payable solely out of the revenues from a revenue- producing property owned,controlled or operated by the state, local agency or district or by a department, r 17 i L board, agency or authority thereof. V (d)Bonds of any public housing agency(as defined in the United States Housing Act of 1937,as amended)as are secured by a pledge of annual contributions under an annual contribution contract between the public housing agency and the Public Housing Administration if such contract shall contain V the covenant by the Public Housing Administration which is authorized by subsection (b)of Section 22 of the United States Housing Act of 1937,as amended, and if the maximum sum and the maximum period _ specified in the contract pursuant to that subsection 22(b)shall not be less than the annual amount and j the period for payment which are requisite to provide for the payment when due of all installments of principal and interest on the obligations. (a)Registered warrants of this state. (f)Bonds,consolidated bonds,collateral trust debentures,consolidated debentures,or other obligations u issued by the United States Postal Service,federal land banks or federal intermediate credit banks established under the Federal Farm Loan Act,as amended,debentures and consolidated debentures L issued by the Central Bank for Cooperatives and banks for cooperatives established under the Farm Credit Act of 1933,as amended,consolidated obligations of the federal home loan banks established under the Federal Home Loan Bank Act,bonds, debentures and other obligations of the Federal National Mortgage Association or of the Government National Mortgage Association established under the National Housing Act,as amended, bonds of any federal home loan bank established under that act, bonds, debentures and other obligations of the Federal Home Loan Mortgage Corporation established under the Emergency Home Finance Act of 1970,and obligations of the Tennessee Valley Authority. y (g)Notes, tax anticipation warrants or other evidence of indebtedness issued pursuant to Article 7 (commencing with Section 53820),Article 7.5(commencing with Section 53840)or Article 7.6 IL (commencing with Section 53850)of this Chapter 4. (h)State of California notes. (1)Bonds, notes,certificates of indebtedness,warrants or other obligations issued by: (1)any state of L the United States(except this state),or the Commonwealth of Puerto Rico,or any local agency thereof - having the power to levy taxes,without limit as to rate or amount,to pay the principal and interest of such obligations, or(2)any state of the United States(except this state),or the Commonwealth of Puerto Rico, Ir or a department, board,agency or authority thereof except bonds which provide for or are issued pursuant to a law which may contemplate a subsequent legislative appropriation as an assurance of the continued operation and solvency of the department,board, agency or authority but which does not L constitute a valid and binding obligation for which the full faith and credit of such state or the Commonwealth of Puerto Rico are pledged,which are payable solely out of the revenues from a revenue- producing source owned,controlled or operated thereby; provided the obligations issued by an entity I described in (1),above,are rated in one of the three highest grades, and such obligations Issued by an Lr entity described in(2), above, are rated in one of the two highest grades by a nationally recognized investment service organization that has been engaged regularly in rating state and municipal issues for a period of not less than five years. r, (D Obligations issued,assumed or guaranteed by the International Bank for Reconstruction and Development, Inter-American Development Bank,the Government Development Bank of Puerto Rico,the Asian Development Bank, the International Finance Corporation, or the African Development Bank. L (k)Participation certificates of the Export-Import Bank of the United States. (1)Bonds and notes of the California Housing Finance Agency issued pursuant to Chapter 7 L (commencing with Section 51350)of Part 3 of Division 31 of the Health and Safety Code. I (m) Promissory notes secured by first mortgages and first trust deeds which comply with Section L 53651.2. i Yr 18 L r (n)Any bonds, rrotes,warrants or other evidences of indebtedness of a nonprofit corporation issued to finance the construction of a school building or school buildings pursuant to a lease or agreement with a school district entered into in compliance with the provisions of Section 39315 or 81345 of the Education Code, and also any bonds,notes, warrants, or other evidences of indebtedness Issued to refinance those bonds, notes,warrants,or other evidences of indebtedness as specified in Section 39317 of the r Education Code. (o)Any municipal securities,as defined by Section 3(a)(29)of the Securities Exchange Act of June 6. 1934, (15 U.S.C. Sec. 78,as amended),which are issued by this slate or any local agency thereof. (p)With the consent of the treasurer, letters of credit issued by the Federal Home Loan Bank of San r Francisco which comply with Section 53651.6. 53651.2. (a)To be an eligible security under subdivision (m)of Section 53651,a promissory note placed in a securities pool on or after January 1, 1987,shall comply with all of the following provisions: (1) Each promissory note shall be secured by a first mortgage or first trust deed on improved 1 to 4 unit residential real property located in Califomia, shall be fully amortized over the term of the note, and shall have a term r of no more than 30 years. Any first mortgage or first trust dead which secures a promissory note providing for negative amortization shall be removed from the securities pool and replaced with an eligible security under subdivision(m)of Section 53651 if the loan to value ratio exceeds 85 percent of the original appraised value of the security property as a consequence of negative amortization. (2) Each promissory note shall be eligible for sale to the Federal National Mortgage Association,the Govemment National Mortgage Association,or the Federal Home Loan Mortgage Corporation; provided,however,that up to 25 percent of the total dollar amount of any promissory note securities pool established pursuant to ,r Section 53658 may consist of promissory notes with loan amounts which exceed the maximum amounts eligible for purchase by the Federal National Mortgage Association, the Government National Mortgage Association,or the Federal Home Loan Mortgage Corporation, but which do not exceed: (i)five hundred thousand dollars($500,000)in the case of a single family dwelling; (ii)one million dollars($1,000,000)in the case of a 2,3, or 4 unit dwelling. (b)The following shall not constitute eligible securities under subdivision(m)of Section 53651: (1)Any promissory note on which any payment is more than 60 days past due. (2)Any promissory note secured by a mortgage or deed of trust as to which there is a lien prior to the mortgage or deed of trust. For the purposes of this paragraph, no lien specified in Section 766 of the Financial Code shall be considered a prior encumbrance unless any installment or payment thereunder(other than a rental or royalty under a lease) is due and delinquent. (3)Any promissory note secured by a mortgage or deed of trust as to which a notice of default has been recorded pursuant to Section 2924 of the Civil Code or an action has been commenced pursuant to Section 725a of the Code of Civil Procedure. r (c)The depository may exercise,enforce,or waive any right granted to it by the promissory note, mortgage, or deed of trust. r (d) For purposes of this article, the market value of a promissory note which is an eligible security under subdivision(m)of Section 53651, shall be determined in accordance with the regulations adopted by the Treasurer under paragraph(2)of subdivision(m)of Section 53651, as the regulations and statute were in effect on December 31, 1986. However, if and when regulations on the subject are adopted by the administrator,the market value shall be determined in accordance with those regulations of the administrator. r 53651.4. (a)A depository that uses eligible securities of the class described in subdivision (m)of Section 53651 shall,within 90 days after the close of each calendar year or within a longer period as the administrator may specify, file with the administrator a report of an independent certified public accountant regarding compliance with this article and with regulations and orders issued by the administrator under this article with respect to eligible securities of that class. The report shall be based 19 L upon the audit,shall contain the information, and shall be in the form the administrator may prescribe. The depository shall provide a copy of the report to the treasurer on request. (b) If a depository that is a state bank files with the administrator, not less than 90 days before the beginning of the calendar year,a notice that it elects to be examined by the administrator instead of filing L a report of an independent certified public accountant under subdivision (a)for that calendar year,the depository shall be exempt from subdivision (a)for that calendar year and shall for that calendar year be subject to examination by the administrator regarding compliance with this article and with regulations and orders under this article with respect to eligible securities of the class described in subdivision(m)of (J Section 53651. The administrator shall provide a report to a treasurer with deposits in the examined state bank upon request of the treasurer. (c)A national bank may apply to the administrator to be examined, and the administrator, in his or her V discretion, may examine a national bank for the purposes of satisfying the requirements of subdivision _ (a). The administrator shall provide a report to a treasurer with deposits in the examined national bank upon request of the treasurer. y (d)Whenever the administrator examines a depository pursuant to subdivision(b)or(c),the depository shall pay,within 30 days after receipt of a statement from the administrator, a fee of seventy-five dollars ($75)per hour for each examiner engaged in the examination. L+ 53651.6. (a)To be an eligible security under subdivision(p)of Section 53651. a letter of credit shall be in such form and shall contain such provisions as the administrator may prescribe,and shall include all of the following terms: (1)The administrator shall be the beneficiary of the letter of credit. (2)The letter of credit shall be clean and irrevocable and shall provide that the administrator may draw upon it up to the L total amount in the event of the failure of the depository savings association or federal association or if the depository savings association or federal association refuses to permit the withdrawal of funds by a treasurer. L 53652. To secure active or inactive deposits a depository shall at all times maintain with the agent of depository eligible securities in securities pools, pursuant to Sections 53656 and 53658, in the amounts l specified in this section. Uncollected funds shall be excluded from the amount deposited in the depository when determining the security requirements for the deposits. (a) Eligible securities,except eligible securities of the classes described in subdivisions (m)and(p)of L Section 53651,shall have a market value of at least 10 percent in excess of the total amount of all deposits of a depository secured by the eligible securities. (b) Eligible securities of the class described in subdivision (m)of Section 53651 shall have a market L value at least 50 percent in excess of the total amount of all deposits of a depository secured by those eligible securities. L (c)Eligible securities of the class described In subdivision(p)of Section 53651 shall have a market value of at least 5 percent in excess of the total amount of all deposits of a depository secured by those eligible securities. For purposes of this article,the market value of a letter of credit which is an eligible security under subdivision (p)of Section 53651 shall be the amount of credit stated in the letter of credit. V 53653. When in his or her discretion local conditions so warrant, the treasurer may waive security for the V portion of any deposits as is insured pursuant to federal law,notwithstanding this article. For deposits equivalent to and not less than the maximum amount insured pursuant to federal law for which a treasurer has waived security under this section,a treasurer at his or her discretion may also waive security for the interest accrued on the deposits which,when added to the deposits,would cause the sum of the interest and deposits to exceed the maximum amount insured pursuant to federal law, provided L 20 L that the interest is computed by the depository on the average daily balance of the deposits, paid monthly and computed on a 360-day basis. 53654. (a)The depository may add securities to the pool or substitute securities of equal value for those in the pool at any time, but shall not interchange classes of security, as defined in Section 53632.5. without prior approval of the treasurer. (b)Withdrawal of securities from the pool without replacement at equal value may be ordered only by two duly authorized officers or employees of the depository who satisfy the requirements as may be set by the administrator. (c)The agent of depository is responsible for the safekeeping and disbursement of securities placed in its custody by a depository. It shall release securities only upon presentation by the depository of the most reasonably current statement of the total deposits subject to this article held by the depository, such statement to be verified and countersigned by two duly authorized officers, other than those who ordered the withdrawal of securities. A copy of this statement shall be forwarded to the administrator concurrently by the agent of depository. r 53655. A placement of securities by a depository with an agent of depository pursuant to this article shall have the effect of perfecting a security interest in those securities in the local agencies having deposits in that depository notwithstanding provisions of the Uniform Commercial Code to the contrary and notwithstanding that the agent of depository may be the trust department of the depository. 53656. (a)At the time the treasurer enters into a contract with the depository pursuant to Section 53649, he or she shall authorize the agent of depository designated by the depository,but including the trust department of the depository only when acceptable to both the treasurer and the depository,to hold securities of the depository in accordance with this article to secure the deposit of the local agency. r (b)Only those cost companies and trust departments,or the Federal Home Loan Bank of San Francisco,which have been authorized by the administrator pursuant to Section 53657 shall be a, authorized by treasurers to act as agents of depository. (c)The securities are subject to order of the depository in accordance with Section 53654 except when the provisions of subdivision (1)of Section 53661 and Section 53665 are in effect. r (d)An agent of depository shall not release any security held to secure a local agency deposit in a depository unless the administrator issues an order authorizing the release where either of the following ,r occurs: (1)A state or federal regulatory agency has taken possession of the depository. (2)A conservator,receiver,or other legal custodian has been appointed for the depository. •' 53657. (a)No person shall act as an agent of depository unless that person is a trust company located in this state,the trust department of a bank located in this state, or the Federal Home Loan Bank of San Francisco,and is authorized by the administrator to act as an agent of depository. s (b)(1)An application for authorization shall be in such form,shall contain such information,shall be signed in such manner, and shall (if the administrator so requires)be verified in such manner, as the administrator may prescribe. (2)The fee for filing an application for authorization with the administrator shall be five hundred dollars($500). (3) If the administrator finds,with respect to an application for authorization,that the applicant is competent to act as an agent of depository and that it is reasonable to believe the applicant will comply with all applicable provisions of this article and of any regulation or order y issued under this article,the administrator shall approve the application. If the administrator finds otherwise,the administrator shall deny the application. (4)When an application for authorization has been approved,the applicant shall file with the administrator an agreement to comply with all applicable 21 L provisions of this article and of any regulation or order issued under this article. The agreement shall be j in such form,shall contain such provisions,and shall be signed in such manner as the administrator may LI prescribe. (5)When an application for authorization has been approved,the applicant has complied with paragraph (4),and all conditions precedent to authorizing the applicant to act as agent of depository have been fulfilled,the administrator shall authorize the applicant to act as agent of depository. 53658. An agent of a depository may hold and pool securities to secure deposits for one or more depositories pursuant to Section 53656, but shall maintain a separate pool for each said depository. L' Each local agency shall have an undivided security interest in the pooled securities in the proportion that the amount of its deposits bears to the total amount of deposits secured by the pooled securities. L 53659. Whenever an agent of depository accepts securities pursuant to Section 53656 it may,with the authorization of the depository, place such securities for safekeeping with a Federal Reserve Bank or I branch thereof or with any bank located in a city designated as a reserve city by the Board of Governors of the Federal Reserve System or with the Federal Home Loan Bank of San Francisco or with a trust company located in this state. Authority for such placement together with the names of the banks or, - including the Federal Home Loan Bank of San Francisco,trust companies to be so used, shall be contained in the contract between the treasurer and the depository required in Section 53649. 53660. When deposits of a local agency are secured by pooled securities pursuant to Section 53656, the L agent of depository shall make available to the treasurer for review at a mutually agreed upon time and location all of the following information which may be in the form of a copy of the report required in subdivision(a)of Section 53661: V (a)A certification that there are securities in the pool in the amounts required by Section 53652 to _ secure deposits. L (b)A certified report of the individual securities then on deposit in the pool with the location and total market value thereof. (c)The total amount of deposits than reported by the depository to be secured by the pool. iJ 53661. (a)The Commissioner of Financial Institutions shall act as Administrator of Local Agency Security j f and shall be responsible for the administration of Sections 53638,53651, 53651.2, 53651.4, 53651.6, 53652, 53664,53655,53656,53657,53658,53659, 53660, 53661, 53663, 53664, 53665, 53666, and 53667. (b)The administrator shall have the powers necessary or convenient to administer and enforce the sections specified in subdivision(a). (c)(1)The administrator shall issue regulations consistent with law as the administrator may deem necessary or advisable in executing the powers, duties,and responsibilities assigned by this article. The regulations may include regulations prescribing standards for the valuation, marketability, and liquidity of the eligible securities of the class described in subdivision (m)of Section 53651, regulations prescribing L procedures and documentation for adding, withdrawing,substituting,and holding pooled securities,and regulations prescribing the form,content,and execution of any application,report,or other document called for in any of the sections specified in subdivision (a)or in any regulation or order issued under any L of those sections. (2)The administrator,for good muse, may waive any provision of any regulation adopted pursuant to paragraph(1)or any order issued under this article,where the provision is not necessary in the public interest. u (d)The administrator may enter into any contracts or agreements as may be necessary, including joint underwriting agreements,to sell or liquidate eligible securities securing local agency deposits in the event 22 of the failure of the depository or if the depository fails to pay all or part of the deposits of a local agency. .. (e)The administrator shall require from every depository a report certified by the agent of depositary listing all securities,and the market value thereof,which are securing local agency deposits together with the total deposits then secured by the pool,to determine whether there is compliance with Section 53652. r These reports may be required whenever deemed necessary by the administrator,but shall be required at least four times each year at the times designated by the Comptroller of the Currency for reports from national banking associations. These reports shall be filed in the office of the administrator by the r depository within 20 business days of the date the administrator calls for the report. (f)The administrator may have access to reports of examination made by the Comptroller of the Currency insofar as the reports relate to national banking association trust department activities which are r subject to this article. (g)(1)The administrator shall require the immediate substitution of an eligible security, where the substitution is necessary for compliance with Section 53652, if(i)the administrator determines that a security listed in Section 53651 is not qualified to secure public deposits,or(ii)a treasurer,who has deposits secured by the securities pool, provides written notice to the administrator and the administrator confirms that a security in the pool is not qualified to secure public deposits. (2)The failure of a r depository to substitute securities,where the administrator has required the substitution, shall be reported by the administrator promptly to those treasurers having money on deposit in that depository and, in addition,shall be reported as follows: (A)When that depository is a national bank,to the Comptroller of the Currency of the United States. (B) When that depository is a slate bank,to the Commissioner of Financial Institutions. (C)When that depository is a federal association,to the Office of Thrift Supervision. (D)When that depository is a savings association,to the Commissioner of Financial Institutions. (E)When that depository is a federal credit union, to the National Credit Union r Administration. (F)When that depository is a state credit union or a federally insured industrial loan company, to the Commissioner of Financial Institutions. (h)The administrator may require from each treasurer a registration report and at appropriate times a report stating the amount and location of each deposit together with other information deemed necessary by the administrator for effective operation of this article. The facts recited in any report from a treasurer to the administrator are conclusively presumed to be true for the single purpose of the administrator ,r tutfilling responsibilities assigned to him or her by this article and for no other purpose. (1)(1)If,after notice and opportunity for hearing,the administrator finds that any depository or agent of depository has violated or is violating,or that there is reasonable cause to believe that any depository or agent of depository is about to violate,any of the sections specified in subdivision (a)or any regulation or order issued under any of those sections, the administrator may order the depository or agent of depository to cease and desist from the violation or may by order suspend or revoke the authorization of the agent of depository. The order may require the depository or agent of depository to take affirmative action to correct any condition resulting from the violation. (2)(A) If the administrator makes any of the findings set forth in paragraph(1)with respect to any depository or agent of depository and,in addition, finds that the violation or the continuation of the violation is likely to seriously prejudice the interests of r treasurers,the administrator may order the depository or agent of depository to cease and desist from the violation or may suspend or revoke the authorization of the agent of depository. The order may require the depository or agent of depository to take affirmative action to cored any condition resulting from the violation. (B)Within five business days after an order is issued under subparagraph(A),the depository or agent of depository may file with the administrator an application for a hearing on the order. The administrator shall schedule a hearing at least 30 days, but not more than 40 days,after receipt of an application for a hearing or within a shorter or longer period of time agreed to by a depository or an agent of depository. If the administrator fails to schedule the hearing within the specified or agreed to time period,the order shall be deemed rescinded. Within 30 days after the hearing, the administrator shall affirm, modify,or rescind the order;otherwise, the order shall be deemed rescinded. The right of a depository or agent of depository to which an order is issued under subparagraph (A)to petition for judicial review of the order shall not be affected by the failure of the depository or agent of depository to apply to the administrator for a hearing on the order pursuant to this subparagraph. (3)Whenever the 23 .l administrator issues a cease and desist order under paragraph(1)or(2).the administrator may in the I order restrict the right of the depository to withdraw securities from a security pool; and,in that event, both L1 the depository to which the order is directed and the agent of depository which holds the security pool shall comply with the restriction. (4)In case the administrator issues an order under paragraph(1)or(2) suspending or revoking the authorization of an agent of depository,the administrator may order the agent of depository at its own expense to transfer all pooled securities held by it to such agent of depository as the administrator may designate in the order. The agent of depository designated in the order shall accept and hold the pooled securities in accordance with this arlicle and regulations and orders issued under this article. it 0) In the discretion of the administrator,whenever it appears to the administrator that any person has violated or is violating,or that there is reasonable cause to believe that any person is about to violate,any L of the sections specked in subdivision (a)or any regulation or order issued thereunder,the administrator may bring an action in the name of the people of the State of California in the superior court to enjoin the violation or to enforce compliance with those sections or any regulation or order issued thereunder. Upon I a proper showing a permanent or preliminary injunction, restraining order,or writ of mandate shall be La granted, and the court may not require the administrator to post a bond. (k) In addition to other remedies, the administrator shall have the power and authority to impose the L following sanctions for noncompliance with the sections specified in subdivision (a)after a hearing if requested by the party deemed in noncompliance. Any fine assessed pursuant to this subdivision shall be paid within 30 days after receipt of the assessment. (1)Assess against and collect from a depository L a fine not to exceed two hundred fifty dollars($250)for each day me depository fails to maintain with the agent of depository securities as required by Section 53652. (2)Assess against and collect from a depository a fine not to exceed one hundred dollars($100)for each day beyond the time period specified in subdivision(b)of Section 53663 the depository negligently or willfully fails to file in the office of the L administrator a written report required by that section. (3)Assess against and collect from a depository a fine not to exceed one hundred dollars ($100)for each day beyond the time period specified in subdivision (a)that a depository negligently or willfully fails to file in the office of the administrator a I written report required by that subdivision. (4)Assess and collect from an agent of depository a fine not L to exceed one hundred dollars($100)for each day the agent of depository fails to comply with any of the applicable sections specified in subdivision (a)or any applicable regulation or order Issued thereunder. L (1)(1) In the event that a depository or agent of depository fails to pay a fine assessed by the administrator pursuant to subdivision(k)within 30 days of receipt of the assessment,the administrator may assess and collect an additional penalty of 5 percent of the fine for each month or part thereof that the payment is delinquent. (2) If a depository fails to pay the fines or penalties assessed by the L administrator,the administrator may notify local agency treasurers with deposits in the depository. (3)If an agent of depository fails to pay the fines or penalties assessed by the administrator,the administrator may notify local agency treasurers who have authorized the agent of depository as provided in Sections 53649 and 53656, and may by order revoke the authorization of the agent of depository as provided in V subdivision(i). (m)The amendment to this section enacted by the Legislature during the 1999-2000 Regular Session �y shall become operative on January 1,2001. 53663. (a)Each agent of depository shall report in writing to the administrator within two business days V after any withdrawal,substitution or addition of pooled securities and shall state the name and market value of the securities withdrawn,substituted or added together with the total deposits then secured by the pool. This information shall be available from the administrator to the treasurer upon request. (b) Each depository shall report in writing to the administrator weekly,giving the total amount of all deposits held by such depository pursuant to this article. Such report shall be as of close of business on j Wednesday of each week and shall be delivered to the office of the administrator or deposited in the Y� United States mail, postage prepaid, addressed to the office of the administrator,within five business L 24 L r days. Where there has occurred no change in the deposits required to be held by the depository r pursuant to this article,the report required by this subdivision need only state that fact. 53664. The individual reports specified in Sections 53654,53660, 53661,and 53663 are not public r documents and are not open to inspection by the public. 53665. If a depository fails to pay all or part of the deposits of a local agency secured by pooled ` securities in accordance with the contract provided for in Section 53649.and on demand of its treasurer or other authorized official and the treasurer files a report with the administrator,or if the depository fails: r (a)In case the pooled securities consist of securities other than securities of the class described in subdivision(p)of Section 53651,the administrator shall order the agent of depository holding the pooled securities to convert into money that portion of the pooled securities necessary to produce an amount equal to the sum of(i)the deposits of the local agency, (ii)any accrued interest due on the deposits, and ni the reasonable expenses of the agent of depository in complyingwith the order of the administrator (���) P 9 P rY � and to pay the sum of items(i)and(ii)to the treasurer in satisfaction of the deposits. The agent of depository shall be reimbursed out of the proceeds of the conversion for its reasonable expenses in r complying with the order of the administrator,as approved by the administrator. Any excess moneys resulting from the conversion shall be retained by the agent of depository as part of the securities pool until the depository substitutes for the excess moneys securities having a market value sufficient to bring the total of pooled securities up to the amount required by Section 53652. r (b)In case the pooled securities consist of a security of the class described in subdivision (p)of Section 53651,the administrator shall draw on the letter of credit an amount equal to the sum of(1)the deposits of r, the local agency, (ii)any accrued interest on the deposits,and(III)the reasonable expenses of the administrator in paying the deposits and pay the sum of items(1)and(ii)to the treasurer in satisfaction of the deposits. r 53666. The only liability that shall attach to the administrator as the result of the operation of this article is that which would attach as a result of other laws of this state. r 53667. (a) Expenses incurred by the administrator in carrying out the duties and responsibilities assigned to the administrator by the sections specified in subdivision (a)of Section 53661, shall be bome by the Local Agency Deposit Security Fund,which is hereby created and continuously appropriated to the administrator for the administration of the sections specked in subdivision (a)of Section 53661. This fund shall consist of fines levied pursuant to Section 53661,fees collected pursuant to the sections specified in subdivision (a)of Section 53661,and assessments levied pursuant to this section. (b) Each fiscal year the administrator shall levy an assessment on a pro rate basis on those depositories which at any time during the preceding flscel year held local agency deposits. The total " assessment levied on all of these depositories shall be in an amount which,when added to the amount of fines and fees that the administrator estimates will be collected during the fiscal year when the assessment is levied, is sufficient in the judgment of the administrator to meet the expenses of the r administrator in administering the sections specified in subdivision (a)of Section 53661 and to provide a reasonable reserve for contingencies. The basis of the apportionment of the assessment among the depositories assessed shall be the proportion that the average amount of local agency deposits held by each of those depositories bears to the average total amount of local agency deposits held by all of those r depositories as shown by the reports of depositories to the administrator for the preceding fiscal year,as required in subdivision(a)of Section 53661; provided, however,that the amount of the assessment levied on each of those depositories shall be not less than twenty-five dollars($25). r (c)The administrator shall notify each depository by mail of the amount levied against it. The depository shall pay the amount levied within 20 days after such notice into the Local Agency Deposit 25 r L Security Fund for the administration of the sections specified in subdivision (a)of Section 53661. If payment is not made to the administrator within such time, the administrator shall assess and collect, in L addition to the annual assessment,a penalty of 5 percent of the assessment for each month or part thereof that the payment is delinquent. If a depository fails to pay the assessment or penalties assessed by the administrator,the administrator may notify local agency treasurers with deposits in the depository. 53669. The treasurer or other authorized official is not responsible for money while it is deposited pursuant to this article. L 53676. The treasurer is not responsible for securities delivered to and receipted for by any bank, savings and loan association, credit union,federally insured industrial loan company,or trust company. Ind 53678. The charges for the handling and safekeeping of any such securities are not a charge against the L treasurer but shall be paid by the depository owning the securities. 53679. So far as possible, all money belonging to a local agency under the control of any of its officers or L employees other than the treasurer or a judge or officer of a municipal court shall, and all money coming into the possession of a judge or officer of a municipal court may, be deposited as active deposits in the state or national bank, inactive deposits in the state or national bank or state or federal association, federal or state credit union,or federally insured industrial loan company in this state selected by the officer,employee,or judge of the court. For purposes of this section, an officer or employee of a local agency and a judge or officer of a municipal court are prohibited from depositing local agency funds or L money coming into their possession into a state or federal credit union If an officer or employee of the local agency, or a judge or officer of a municipal court,also serves on the board of directors,or any committee appointed by the board of directors,or the credit committee or supervisory committee,of the particular state or federal credit union. Such money is subject to this article except: L (a)Deposits In an amount less than that insured pursuant to federal law are not subject to this article. For deposits in excess of the amount insured under any federal law a contract in accordance with Section 53649 is required and the provisions of this article shall apply. V (b)Interest is not required on money deposited in an active deposit by a judge or officer of a municipal I court. V (c) Interest is not required on money deposited in an active deposit by an officer having control of a revolving fund created pursuant to Chapter 2(commencing with Section 29300)of Division 3 of Title 3. (d)Interest is not required on money deposited in an active deposit by an officer having control of a special fund established pursuant to Articles 5(commencing with Section 29400)or 6(commencing with L Section 29430)of Chapter 2 of Division 3 of Title 3. 53679.1. Notwithstanding any other provision of law,the accounting practices of each county utilized L prior to the effective date of this section relating to interest on trust funds shall be deemed appropriate and to have been made under the direction of the board of supervisors of that county. This section is declaratory of the law in existence prior to the enactment of this section. V 53680. A tax collector of a local agency shall immediately deposit with the treasurer all money under his control, unless he deposits the money in a depositary pursuant to this article under permission and L instructions of the treasurer having authority to make such deposit. L 26 L r 53681. An officer or employee of a local agency who deposits money belonging to,or in the custody of, the local agency in any other manner than that prescribed in this article is subject to forfeiture of his office or employment. ,r 53682. Notwithstanding any other provision in this article except Section 53652, the treasurer may deposit moneys in and enter Into contracts with any depository, as defined in subdivision(c)of Section 53630,for services to be rendered by that depository that in the treasurers judgment are to the public advantage. One copy of each contract entered into under this section shall be filed with the auditor or r corresponding officer of the local agency. The contract shall: (a) Fix the duration of compensating deposits,if any. r (b)Fix the interest rate of that compensating deposit, if any. (c)Specify the services to be rendered by the depository. r (it) Indicate whether the depository shall bear the expenses of transportation of the money to and from the depository. (a) Fix the consideration payable by the agency for such services. (f)Specify who may deposit moneys into the treasurer's active account and how those persons are to 'r make those deposits. r 53683. Notwithstanding any other provision in this article,the consideration payable by the agency as specified in subdivision (a)of Section 53682 shall be paid by the treasurer by applying such consideration as costs applied on a pro rate basis against the Interest earned by all the agencies for which the treasurer invests. 53684. (a) Unless otherwise provided by law,if the treasurer of any local agency, or other official r responsible for the funds of the local agency, determines that the local agency has excess funds which are not required for immediate use,the treasurer or other official may, upon the adoption of a resolution by the legislative or governing body of the local agency authorizing the investment of funds pursuant to this section and with the consent of the county treasurer, deposit the excess funds in the county treasury r for the purpose of investment by the county treasurer pursuant to Section 53601 or 53635. (b)The county treasurer shall,at least quarterly,apportion any interest or other increment derived from r the investment of funds pursuant to this section in an amount proportionate to the average daily balance of the amounts deposited by the local agency and to the total average daily balance of deposits in the investment pool. In apportioning and distribution that interest or increment,the county treasurer may use the cash method, the accrual method, or any other method in accordance with generally accepted r accounting principles. Prior to distributing that interest or increment,the county treasurer may deduct the actual costs incurred by the county in administering this section in proportion to the average daily balance of the amounts deposited by the local agency and to the total average daily balance of deposits in the r investment pool. (c)The county treasurer shall disclose to each local agency that invests funds pursuant to this section the method of accounting used,whether cash,accrual, or other,and shall notify each local agency of any r proposed changes in the accounting method at least 30 days prior to the date on which the proposed changes take effect. (d)The treasurer or other official responsible for the funds of the local agency may withdraw the funds of the local agency pursuant to the procedure specified in Section 27136. 27 L (a)Any moneys deposited in the county treasury for investment pursuant to this section are not subject I to impoundment or seizure by any county official or agency while the funds are so deposited. Lj (f)This section is not operative in any county until the board of supervisors of the county, by majority vote,adopts a resolution making this section operative in the county. L (g) It is the intent of the Legislature in enacting this section to provide an alternative procedure to Section 51301 for local agencies to deposit money in the county treasury for investment purposes. Nothing in this section shall,therefore,be construed as a limitation on the authority of a county and a city L to contract for the county treasurer to perform treasury functions for a city pursuant to Section 51301. 53686. (a)Any audit conducted relating to the investment of local agency funds and other funds by the county treasurer in the county fund maintained pursuant to Section 53684 shall be rendered to the depositary,the auditor,the controller,the secretary,or the corresponding officer of the local agency,the treasurer or other official responsible for the funds of any local agency that has funds on deposit in the y county treasury,and the presiding judge of any superior court that has ordered, pursuant to Section 3412, Section 3413,or Section 3611 of the Probate Code,that assets of an estate be deposited with the county treasurer for deposit or investment. IL (b)Any report rendered pursuant to Section 53646 shall be provided to the treasurer or other official responsible for the funds of any local agency that has funds on deposit in the county treasury. L Source: West's Annotated California Codes, 2000 y G9wp.dWVIM220twh11e\Treasury Mgmbinvestment Policy12008-09\GovY Cate Sactlons.doc 61 1 V L L L L L l L L 28 Li APPENDIX "H" GLOSSARY OF INVESTMENT TERMS ACCRUED INTEREST. The amount of interest that is earned but unpaid since the r last interest payment date. ADJUSTABLE RATE NOTE. (See Floating Rate Note) r AMORTIZED COST. Measure of the cost of a security whereby the cost value will change over time as the discount or premium paid for the security is gradually r incorporated into the principal value as interest payments are received. ASKED PRICE. The price at which a seller offers to sell a security. r ASSET-BACKED SECURITIES. Securities collateralized with consumer receivables, such as automobile loans, credit card receivables, or home equity loans, which are owned by the issuer, but placed with a trustee for the benefit of the investor. AVERAGE LIFE. In mortgage-related investments, including CMOs, the average time r to expected receipt of principal payments, weighted by the amount of principal expected. BANKER'S ACCEPTANCE. A highly liquid draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, r as well as the issuer. BASIS POINT. When a yield is expressed as 7.32%, the digits to the right of the decimal point are known as basis points. One basis point equals 1/100 of one percent. Basis points are used more often to describe changes in yields on bonds, notes and other fixed-income securities. r BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index which reflects the mix of securities allowed under a specific r investment policy. BID PRICE. The price offered by a buyer of securities. (When you are selling r securities, you ask for a bid.) See Offer. BOOK ENTRY. The system, maintained by the Federal Reserve, by which most money market securities are "delivered"to an investors custodian bank. The Federal Reserve maintains a computerized record of the ownership of these securities, and records any changes in ownership corresponding to payments �+ made over the Federal Reserve wire (delivery versus payment). These securities do not receive physical certificates. BOOK VALUE. The original cost of the investment, plus accrued interest and amortization of any premium or discount. Page 1 of 11 r L BROKER. A broker brings buyers and sellers together for a transaction for which the j broker receives a commission. A broker does not sell securities from his own L position. BULLET STRUCTURE. A portfolio strategy in which a manager overweights both the L short and long end of the yield curve, and underweights the middle part of the curve. L CALLABLE BONDS. Bonds which may be redeemed by the issuing company prior to the maturity date. L CAPITAL GAIN/LOSS. The profit or loss realized from the sale of a capital asset. I CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced y by a certificate. Large denomination CDs may be marketable. L COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies. COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds which redistribute the cash flows of mortgage securities (and whole loans) to create L, securities which have different levels of prepayment risk, as compared to the underlying mortgage securities L COMMERCIAL PAPER. The short-term unsecured debt of corporations. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR). The official annual r1 financial report for the District. It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with 6w finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. it CONDITIONAL PREPAYMENT RATE (CPR). A measure of mortgage prepayment activity. It assumes that a constant fraction of the principal prepays each month i and is based on the previous month's remaining balance. The rate is expressed 6W as an annualized percentage. For instance, a CPR of 6% indicates that each month 6% of the remaining principal balance prepays on an annualized basis. L CONSUMER RECEIVABLE-BACKED BONDS. (See Receivable-Backed Securities) . i CONVEXITY. The rate of change in a bond's price as duration changes. It is a L" particularly important component of price change for longer term bonds, or for large changes in interest rates. V COST YIELD. The annual income from an investment divided by the purchase cost. Because it does not give effect to premiums and discounts which may have been L Page 2 of 11 1 r included in the purchase cost, it is an incomplete measure of return. r COUPON. (a)The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b)A certificate attached to a bond .. evidencing interest on a payment date. CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer. CURRENT YIELD. The annual income from an investment divided by the current r market value. Since the mathematical calculation relies on the current market value rather than the investor's cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity. CUSTODIAN. A bank or other financial institution that keeps custody of stock certificates and other assets. r DEALER. A dealer, as opposed to a broker, acts as a principal in security transactions buying and selling securities for his own account. r DEBENTURE. A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT (DVP). Delivery of securities with a simultaneous exchange of money for the securities. DERIVATIVE. Any security that has principal and/or interest payments which are subject to uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any security which represents a component of another security which has been separated from other components ("Stripped" coupons and principal). A derivative is also defined as a financial instrument the value of which is totally or partially derived from the value of another instrument, interest rate or index. DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker's acceptances, are known as discount securities. They sell at a r discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons trade at a discount when the coupon rate is lower than the current market rate for r securities of that maturity and/or quality. r Page 3 of 11 DIVERSIFICATION. Dividing investment funds among a variety of securities offering independent returns to avoid excessive exposure to any one source of risk. DOLLAR-WEIGHTED AVERAGE MATURITY. A calculation that expresses the ..average maturity" of an investment portfolio using each investment's maturity 1••� weighted by the size of that investment. DURATION. The weighted average time to maturity of a bond where the weights are L the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration and L effective duration). EFFECTIVE DURATION. Measures the price volatility of a fixed income security that V contains embedded options. A more accurate measure of price volatility when the cash flow characteristics of the bond change when interest rates shift. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC). A federal agency that L insures bank deposits, currently up to $100,000 per deposit. Lr FEDERAL FUNDS RATE. The rate of interest charged by banks for short term loans to other banks. It is established by the Federal Reserve Bank through open-market operations. FEDERAL OPEN MARKET COMMITTEE (FOMC). A committee of the Federal Reserve Board which sets Federal Reserve guidelines regarding purchases and L sales of Government Securities, and establishes monetary policy and executes it through temporary and permanent changes to the supply of bank reserves. Ir FEDERAL RESERVE SYSTEM. The central banking system of the U.S. created by Congress, which has supervisory powers over the 12 Federal Reserve regional banks and about 6,000 member banks. FIXED-INCOME SECURITIES. Securities which return a fixed income over a specified period. L FLOATING RATE NOTE. A debt security whose interest rate is reset periodically (monthly, quarterly, annually) and is based on a market index (e.g. Treasury bills, V LIBOR, etc.). I INTEREST. The amount earned while owning a debt security, generally calculated as a percentage of the principal amount. LADDER STRUCTURE. A portfolio strategy in which a manager attempts to weight securities equally across the yield curve. L L Page 4 of 11 L LEVERAGE. Borrowing funds in order to invest insecurities which have the potential to s, pay earnings at a rate higher than the cost of borrowing. LIQUIDITY. The speed and ease with which an asset can be converted to cash without .. a substantial loss of value.. LOCAL AGENCY. County, city, city and county, including a chartered city or county, school district, community college district, public district, county board of education, county superintendent of schools, or any public or municipal corporation. LOCAL AGENCY INVESTMENT FUND (LAIF). The LAIF is an investment alternative for California's local government and special districts authorized under Sections 16429.1, 2, and 3, of the California Government Code (the "Code"). The LAIF is managed by the State Treasurers Office, with oversight by the Local Agency Investment Advisory Board. All securities in LAIF are purchased under the authority of Code Sections 16430 and 16480.4. The State Treasurer's Office receives all securities on a delivery versus payment basis using a third party custodian. All securities are purchased at market, with market valuation conducted monthly. MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates. MARK-TO-MARKET. The market valuation for every security in a portfolio used in determining Net Asset Value (NAV). MARKET VALUE. The price at which a security can be traded (i.e., purchased or sold). MASTER REPURCHASE AGREEMENT. A written contract covering all future transactions between the parties to repurchase or reverse repurchase agreements that establishes each party's rights in the transactions. A master s, agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower. MATURITY. The final date upon which the principal or stated value of a security becomes due and payable. .. MEDIUM TERM NOTES (MTN). Debt securities issued by a corporation or depository institution with a maturity ranging from nine months to five years. The term "medium-term notes" refers to the time it takes for an obligation to mature, and includes other corporate debt securities originally issued for maturities longer than five years, but which have now fallen within the five year maturity range. MTNs issued by banks are also called "bank notes." MODIFIED DURATION. Measures the percentage price volatility of a fixed income security or portfolio. Modified duration approximates the change in price for Page 5 of 11 L small changes in interest rates, assuming that the cash flow characteristics do not change when the yield curve shifts. MONEY MARKET. The market in which short term debt instruments (T-bills, discount L notes, commercial paper and banker's acceptances) are issued and traded. MORTGAGE PASS THROUGH SECURITIES. Securities collateralized with residential mortgage loans, the principal and interest payments of which are distributed, or "passed-through"to the investor. Many of these securities are issued by agencies of the federal government, including GNMA and FHLMC. � MONEY MARKET MUTUAL FUNDS. An investment company that pools money from investors and invest in a variety of short-term money market instruments. The G Net Asset Value (NAV) of these funds should remain at $1.00; however, it is not guaranteed. L MOODY'S INVESTORS SERVICE, INC. (See Nationally Recognized Rating Services) MUNICIPAL DEBT. Issued by public entities to meet capital needs. NATIONALLY RECOGNIZED RATING SERVICES. Firms that review the creditworthiness of the issuers of debt securities, and express their opinion in the form of letter ratings (e.g. AAA,AA, A, BBB, etc.)The primary rating agencies include Standard & Poor's Corporation; Moody's Investor Services, Inc.; Fitch Investors Service; Duff& Phelps Investment Service; Thompson BankWatch and International Bank Credit Analyst. NEGATIVE CONVEXITY. A phenomenon associated with bonds which have �+ embedded call options, it measures the rate at which duration of a callable bond gets smaller as interest rates fall. Negative convexity is an undesirable characteristics in bonds. V NEGOTIABLE CO. (See Certificates of Deposit) I Lr NET ASSET VALUE (NAV). A per-share valuation of a mutual fund based on total assets minus total liabilities. L� NON-CALLABLE. Bond that is exempt from any kind of redemption for a stated time period. u OFFER PRICE. The price asked by a seller of securities. L v L Page 6 of 11 1 L OPTION ADJUSTED SPREAD. A measure of the value of a bond relative to a ., benchmark security, which takes into account the value of the embedded option inherent in any bond that has uncertain cash flows (i.e., callable bonds). ORANGE COUNTY TREASURER'S MONEY MARKET COMMINGLED INVESTMENT POOL (OCCIP). A money market investment pool consisting of funds deposited by various entities required to do so by statute, as well as those entities voluntarily depositing monies in accordance with California Government Code Section 53684. The OCCIP is managed by the Orange County Treasurer's Office, with oversight by the Orange County Treasury Advisory Committee. .. PAR VALUE. The amount of principal which must be paid at maturity. Also referred to as the face amount of a bond, normally quoted in $1,000 increments per bond. PHYSICAL DELIVERY. The delivery of an investment to a custodian bank in the form of a certificate and/or supporting documents evidencing the investment (as opposed to "book entry" delivery). PORTFOLIO. A collection of securities held by an investor. PRICE RISK. The risk that the price of a bond sold prior to maturity will be less than the price at which the bond was originally purchased. PRIMARY DEALER. A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York, and are subject to its informal oversight. PREMIUM. The difference between the par value of a bond and the market value of the bond, when the market value is above par. PREPAYMENT SPEED. A measure of how quickly principal is repaid to investors in mortgage securities. PREPAYMENT WINDOW. The time period over which principal repayments will be received on mortgage securities at a specified prepayment speed. ,., PRUDENT INVESTOR RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as "Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes." .. PRIME RATE. The interest rate banks charge the biggest borrowers with the best credit ratings. PRINCIPAL. The face value or par value of an investment. Page 7 of 11 L PSA MASTER REPURCHASE AGREEMENT. A written contract covering all future L' transactions between the parties to repurchase agreements that establishes each party's rights in the transactions. RATE OF RETURN. The yield obtainable on a security based on its purchase price or J its current market price. This may be the amortized yield to maturity on a bond the current income return. L REALIZED RETURN. The change in value of the portfolio due to interest received and interest earned and realized gains and losses. It does not give effect to changes in market value on securities which have not been sold from the portfolio. RECEIVABLE-BACKED SECURITIES. Securities collateralized with consumer L receivables, such as automobile loans, credit card receivables, or home equity loans, which are owned by the issuer, but placed with a trustee for the benefit of the investor. L RECEIVABLE PASS-THROUGH CERTIFICATE. A debt obligation that is backed by a portfolio of receivables, normally issued by a bank of financial institution. The y interest and principal of the obligation is paid out of the cash flow generated by the receivables portfolio. L REGISTERED STATE WARRANT. A short-term obligation of a state governmental body issued in anticipation of revenue. REINVESTMENT RISK. The risk that coupon payments (or other payments received) L cannot be reinvested at the same rate as the initial investment. v REPURCHASE AGREEMENT (RP OR REPO). The purchase of securities, on a temporary basis, with the seller's simultaneous agreement to repurchase the securities at a later date at a specified price that includes interest for the buyer's V holding period. In essence, this is a collateralized investment whereby the security"buyer' lends the "seller' money for the period of the agreement. 1 REVERSE REPURCHASE AGREEMENT (REVERSE REPO). A short-term I• transaction in which an investor (seller) sells a government security it owns to a bank or dealer(buyer) under an agreement in which the buyer agrees to sell the u security back to the investor on a specified date, at an agreed-upon interest rate. L RULE G-37 OF THE MUNICIPAL SECURITIES RULEMAKING BOARD. Federal regulations to sever any connection between the making of political contributions and the awarding of municipal securities business. L L i Page 8 of 11 L SAFEKEEPING. A service to bank customers whereby securities are held for protection by the bank in the customer's name. SCENARIO ANALYSIS. A portfolio management technique that measures the performance of the portfolio under varying scenarios including, but not limited to, interest rate movements, spread changes and nonparallel yield curve shifts. SECONDARY MARKET. A market made for the purchase and sale of outstanding issues following the initial sale and distribution. .. SECURITIES & EXCHANGE COMMISSION (SEC). The federal agency responsible for supervising and regulating the securities industry. .. SECURITIES LENDING AGREEMENT. An agreement under which a local agency agrees to transfers securities to a borrower who, in turn, agrees to provide collateral to the local agency. During the term of the agreement, both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral. SEC RULE 150-1. Uniform Net Capital Rule. STANDARD & POOR'S CORPORATION. (See Nationally Recognized Rating Services) STANDARD PREPAYMENT MODEL (TBMA). A measure of mortgage prepayment activity. The model is expressed as a monthly series of annual .. prepayment rates. The series begins at .2% per year in the first month, and increases by .2%a per year in each successive month until month 30, where it levels out at 6%u per year until maturity. This series is labeled 100 PSA. 200 PSA doubles this series, and 50 PSA would cut the series in half. STRUCTURED NOTE. A complex, fixed income instrument which pays interest based r on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters,"which pay interest based on the relationship between two other interest rates -for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements. THE BOND MARKET ASSOCIATION (TBMA). A trade association representing more .. than 260 securities fines and banks that underwrite, trade and sell debt securities. The TBMA, formerly known as the Public Securities Association, provides a forum through which industry professionals can respond to current issues and foster improvements in the legislative, regulatory, educational and market practices in the bond market. Page 9 of 11 r V THIRD-PARTY CUSTODIAL AGREEMENT. (See Custodian) v TOTAL RATE OF RETURN. A measure of a portfolio' performance over time. It is the internal rate of return which equates the beginning value of the portfolio with the ending value, and includes interest earnings and realized and unrealized gains and losses on the portfolio. TRADE DATE. The date and time corresponding to an investors commitment to buy or sell a security. i U. S. GOVERNMENT AGENCY SECURITIES. Debt securities issued by U.S. 61 Government sponsored enterprises and federally related institutions. These government agencies include: Federal Home Loan Banks (FHLB); Federal Home Loan Mortgage Corporation (FHLMC, or "Freddie Mac"); Federal National Mortgage Association (FNMA, or "Fannie Mae"); Federal Farm Credit Banks (FFCB); Resolution Trust Corporation (RTC); and Tennessee Valley Authority L (TVA). U.S. TREASURY SECURITIES. Securities issued by the U. S. Treasury and backed L by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other L securities in the U.S. and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds. Treasury Bills. Non-interest-bearing discount securities with maturities under V one year issued by the U. S. Treasury to finance the national debt. Treasury Notes. Interest-bearing obligations of the U. S. Treasury with 16. maturities ranging from two to ten years from date of issue. Treasury Bonds. Interest-bearing obligations issued by the U. S. Treasury with maturities that range from ten to thirty years from date of issue. UNIFORM NET CAPITAL RULE. Requirement of the Securities and Exchange Commission that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. �+ VARIABLE RATE NOTE. (See Floating Rate Note) L VOLATILITY. The rate at which security prices change with changes in general economic conditions or the general level of interest rates. L YIELD TO MATURITY (YTM). The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost. L Yield to maturity (at market). The discount rate that equates the present value of the promised cash flow (interest payments and redemption value)to the V Page 10 of 11 L market price, assuming that all cash flows are invested at the YTM rate. Yield to maturity (at purchase cost). The YTM that equates to the purchase price of the security. YIELD. The annual rate of return on a debt Investment computed as though held to maturity expressed in %. r ZERO-COUPON BONDS/U.S. TREASURY STRIPS. A bond which represents ownership of a single coupon or principal payment due on a U.S. Treasury bond. .. "Zeros"or"strips" mature at face value at a specified date in the future and make no payments until that date. They always sell at a discount from face value. r r r r r r Page 11 of 11 ORANGE COUNTY SANITATION DISTRICT 10844 Ellis Avenue Fountain Valley, California 92708-7018 (714) 962-2411 www.ocsd.com 7/08 i • • (D w in • o --jc o Ul r • • • ruo i • iti • ice .- . i C) NL • In c T • OD T l _ N \ � r 1 - I 10 1ft • • • N � tC x- • • • • • • db db Ab • A company of Alllanz @ cmmi imp:m� Past perlonnance is no guarantee of future results.Shares distributed by Allianz Global Investors Distributors LLC. Investment Management Program Orange County Sanitation District Strategy Review for the Period star- June 30, 2008—September 30, 2008 Three-time fundMorn Manager P of the 12 Wntl M,1998l of the Year IY097.1000,1999) Illillllllllllllllllllll ( lllll ( Illllllllllll Biographical Information Derek Fan Mr. Fan is an account manager in the Newport Beach office with a focus on institutional client servicing. Prior to joining PIMCO in 2007,he was a financial consultant with Triage Consulting Group and also founded Study Solutions,an academic enrichment company based in Los Angeles. He has one year of investment experience and holds an MBA from the Kellogg School of Management at Northwestern University and an undergraduate degree from the University of California,Los Angeles. Rudy Pimentel,CFA Mr. Pimentel is a senior vice president and product manager in the Newport Beach office responsible for credit products, including investment-grade corporates,high-yield,bank loans,convertibles and absolute return credit strategies. Prior to joining PIMCO in 2003.he was with the global crude oil trading group of Chevron Corporation. He has seven years of investment experience and holds an MBA from the Kellogg School of Management at Northwestern University. He received an undergraduate degree from the University of California, Los Angeles. Christine Telish,CFA Ms.Telish is a vice president and account manager in the Newport Beach office focused on institutional client servicing. She is also a member of PIMCO's municipal bond team,providing specialized servicing for tax-sensitive accounts. She has 20 years of investment experience and holds an MBA from the Paul Merage School of Business at the University of California, Irvine. She has an undergraduate degree from California Stale Polytechnic University. Ms.Telish joined PIMCO in 1994. Agenda I. Performance Results & Market Recap if. Economic Outlook & Strategy III. PIMCO Update • IIIIIl11111111111111111111111111111111111 ( 11 Strong Performance Despite Periods of Volatility As of September 30,2008 Total Return vs. Standard Deviation 12 Performance 7 (Since Inception) Annual ■Orange County YTD 10 Sanitation District Orange County Merrill Lynch Corp/Govt 6 Sanitation District 1-5 year Bond Index c E e 5 Merrill Lynch Corp/Govt c 6 1-5 year Bond Index w 4 � z r� Ilr► h � �� a3 0 2 98 99 00 01 02 03 04 05 06 07 08 0 1 2 3 4 5 6 7 8 9 10 Standard Deviation of Return (%) Orange County Sanitation District LoPortfolio Market Value as of Sep. 2008 $ 246,969,829 Since Inception t• Before Fees (%) 5.5 4.8 3.6 4.6 4.0 1.4 -0.7 Merrill Lynch Corp/ Govt 1-5 year Bond Index (°%) 5.4 4.8 3.3 4.5 4.1 1.6 -0.2 All periods longer than one year are annualized. Preliminary performance as of 10/02/08. 3 P I M C 0 l ( lllllllllllI ( lllllllllllllllllll ( llllillll Portfolio Structure Orange County Sanitation District Long-Term Portfolio 09 • t' Effective Duration(yrs.) Portfolio 2.2 2.1 2.2 Underweight duration: - Index 2.4 2.5 2.5 Emphasis on mortgages: + Underweight to corporate sector + Average Portfolio Duality AAA AA+ PA+ Security selection within corporate sector - 100 Sector Allocations - Duration Weighted 90 12/31/07 80 70 006/30/08 70 64 ■09/30/08 5958 BVAO 60 w 50 u 40 34 30 27 28 1313 20 11= �� 0 0 _ _ 0 0 10 2 3 2 1 0 0 .a.a.. 0..! 0a... '"Will Gov't/ Mortgage Corp Dev Non-US$/ Emig Mkt Muni/ Cash & TIPS Backed Non-U.S. MM Other Equivalents/U.S. Futures** MM Futures** ' Measures a porlfollo's once sensitivity relative to the benchmark to changes In the slope of the yield curve,measured between the 2-30 year Government yields,holding the 10 year yield constant. For every 1 basis point of steepening(flattening).a portfolio with curve duration of 1 year will rise Xeip in price by 1 basis point relative to the benchmark. " Boxed portion represents Money Market Futures 4 P I M C 0 111l ( ( 11111 ( 1111 ( ( 1llllllllllllllll ( ll Performance Review As of September 30,2008 Total Return vs. Standard Deviation 6 (Since Inception) 5 Orange County • • I • Sanitation District - Liquid Operating Portfolioc Market Value as of Sep. 2008 S43,702,903 OCltlgroup 3-Month Treasury 3 Bill Index a 2 0 1 2 3 4 5 6 7 B Standard Deviation of Return (%) Since Inception 09/30195 10 Before Fees (%) 4.2 3.8 3.4 4.4 3.2 2.0 0.5 Citigroup 3-Month Treasury Bill Index 1%) 3.8 3.4 3.1 4.0 2.6 1.6 0.4 All periods longer than one year are annualized. Preliminary performance as of 10/0008. 5 P I M C 0 ( lll ( ( l ( ll ( l ( ( ( ( ( ( ( ( ( ( I ( II ( ( ( ( ( ( ( ( I ( ( ( 11 ( llf An Historic Time on Wall Street Market Shifts of Epic Proportions' 1300 © © 7.00 1275 6.00 1250 5.00 1225 0 4.00 D n 1200 m '^ 3.00 � 1175 2.00 1150 1125 1.00 1100 0.00 9/2 9/3 9/4 9/5 9/8 9/10 9/11 9/12 9/15 9/17 9/18 9/19 9/22 9/23 9/25 9126 9/29 9/30 —S&P 500 (LHS) —U.S. 1-Month Treasury Yield (RHS) —LIBOR USD Overnight(RHS) 1. /: 1: 1• 1: 1• 1: 1• 1: 1• 1: 1• . 1: 1• 1: 11 /: • Gov't seizes control of • Lehman files for bankruptcy, Merrill • I-banks convert to banks— - • Citigroup acquires Fannie and Freddie sold to Bank of America on Sunday Morgan Stanley&Goldman Wachovia's banking • Fed takes over AIG,taking 80% • Goldman raises$10B;$5B operations through FDIC stake for$858 loan from Buffet brokered deal • Paulson,Bernanke meet with leaders • WaMu seized by FDIC and Bailout plan voted down by Congress in congress regarding bailout plan; assets sold to JPMorgan stocks rebound • S&P drops 8.8%,largest drop • SEC forbids short selling in 799 since'87 financial stocks • Dow down 777.68pts,worst SOURCE:Bloomberg,Investor's Business Daily loss in history Snapshot of 911 —9/30 Market Activity 10-Minute High-Low Close This matenal has been distributed for informational purposes only.Information contained herein has been obtained from sources believed to be reliable,but not guaranteed. It is hot possible to invest directly in an unmanaged index.No part of this material may be reproduced in any form,or referred to in any other publication,without express written permission.Pacific Investment Management Company LLC,840 Newport Center Drive,Newport Beach,CA 92660.02008,PIMCO, 6 P I M C 0 III l ( ll ( ( ( ( 1 ( ( 111 ( ( ( 1 ( 11 ( 1 ( ( I ( 1 ( It ( ( 1 ( ( III 1 ( ( ( 1 ( ( A Systemic Crisis Requires A Portfolio Positioned For Safety • Transformations in the global economy and investment landscape require a keen understanding and vigilant monitoring of risks • PIMCO remains focused on protecting capital during market turmoil • Our approach continues to be grounded in the firm's Secular and Cyclical process, our intellectual capital, global reach, record of innovation and investment culture While we will not always be correct, PIMCO's strategy emphasizes safety during these volatile times 7 P I M C 0 Global Leverage Unwinds: Implications Across All Capital Markets As of September 30,2008 U.S. Fixed Income Returns • Investors flocked to nominal Treasuries as 10 a MTD 09/30/08 the capital markets seized 5 ■YTD 09/30/08 • Agency MBS provided high quality returns 0 as government guarantee became explicit v ` 5 when the Treasury took control of Fannie/Freddie -10 U.S. Bonds TIPS MTG MY Investment Grade Credit • EM returns were down sharply in 10 Global Returns September but have held up better than MTD 09/30/OB most developed credit markets for the a 5 •YTD 09/30/08 year-to-date ° • After prolonged bout of weakness versus -5 developed currencies, U.S. dollar regained some positive momentum as financial -lo ions read to UK and Eurozone Global Emerging Currignencies Emerging contagion p Markets (LC) Currencies Markets ($) Equity and Commodity Returns • Global equity markets plummeted as 0 panic gripped the financial system in the •`''% s. mpg aftermath of Lehman bankruptcy filing -10 c -20 n MTD 09/30/08 • Fear of a prolonged global recession ■YTD 09/30/08 caused commodity prices to fall sharply z -30 -ao S&P 500 Russell 2000 MSCI EAFE Commodities SOURCE:Lehman Brothers,Federal Reserve.JPMorgan,PIMCO Lehman Brothers Aggregate;Lehman Brothers US TIPS;Lehman Brothers MBS Fixed Rate Mortgage;Merrill Lynch U.S.High Yield Be B Rated Constrained:Lehman Brothers Investment Grade Credit;JP Morgan Non-US Hedged;JP Morgan EMBI Global;JP Morgan GBI-EM Global Diversified;Real Broad Trade-Weighted Exchange Value of the U.S.Dollar;S&P 500;Russell 2000;MSCI EAFE;DJ AID Commodity:CSFB/Tremont Hodge Fund Index. 8 P I M C 0 n t ( I ( 111111 ( II ( III ( IlllI ( 1111 ( 1 ( ( I ( l Market Deleveraging Impacted All Sectors, Particularly Financials As Contagion Spread As of September 30, 2008 • Bid/Ask spreads on credit sensitive products skyrocketed as trading essentially halted • Financials were worst performing area of IG market, as worldwide banking system seized up following Lehman collapse • Spreads and subsequent prices difficult to asses given bankruptcies, bailouts, and takeovers • Fannie/Freddie conservatorship returned some stability to MBS Subprime Crisis Credit & Liquidity Crisis Systemic Threats 675 Financials 600 ASS 525 s 450 IGC a 375 n. 300 8 MBS 0 i 225 n 150 75 0 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 SOURCE:Lehman Brothers Spreads for MBS,Investment Grade Corporate,Ass,HY and CMBS are nominal spreads over Treasuries.MBS spreads are represented by the Lehman Brothers Agency Fixed Rate MBS Index;Investment Grade Corporate spreads are represented by Lehman Brothers U.S.Corporate Investment Grade Index:ABS spreads are represented by the Lehman Brothers Asset-Backed Securities Index;High Yield spreads are represented by Lehman Brothers Corporate High Yield Index;CMBS spreads are represented by the Lehman Brothers CMBS Index. s P I M C 0 Illlllllltll ( Il ( llll11 ( ( I ( llllllI ( II ( llillll Steep Yield Curve Persisted in Anticipation of Additional Monetary Support As of September 30, 2008 6 U.S. Treasury Yield Curve • Markets turned course and priced 5 potential Fed easing given credit and y liquidity constraints c 3 —12/31/07 • Despite Treasuries giving back gains 5: 2 —O6/30/08 from 10, yield curve remains steep 1 —09/30/08 D 3m 2Y 5Y toy 30Y 3M Libor- 3M U.S.Treasuries • Inter-bank lending halted on extreme 3.5 counterpartyfears 3 z.s 2 1.5 1 0.s D Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Global 10-Year Government Yields 6 • Global yields were not protected from extreme volatility 5 • Inflation pressures played second w UK EUR fiddle to economic stress ' a us 3 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 SOURCE:Bloomberg Financial Markets 10 P I M C 0 Iltl ( Illlllll ( ( llll ( ll ( lllillllllllllllll ( Il Opportunity In Financials: Relative Attractiveness As of September 30, 2008 Lehman Brothers Investment Grade Credit by Sector 600 June 30, 1989 -September 30, 2008 • During the crisis of 2001-2002, industrials and utilities experienced substantially Soo —Invest. Grade: Financial Institutions - OAS more spread widening than financials —Invest. Grade: Industrial - OAS 400 -Invest. Grade: Utility - OAS 300 • This time around, financials have suffered far more than either industrials or utilities 200 100 a 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Lehman Brothers Investment Grade Credit by Sector 600 December 31, 2006 - September 30, 2008 • Since late 2007, the average spread on financials has been above those on other 500 -Invest. Grade: Financial Institutions - OAS corporate sectors, and since 0801 the 400 -Invest. Grade: Industrial -OAS gap has been at extreme levels —Invest. Grade: Utility - OAS 300 • Thus, while we have been neutral on 200 credit generally, we have been 100 overweight financials relative to credit more generally 0 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 SOURCE:Lehman Brothers 11 P I M C 0 Illllll ( IIIllllllllllllIIII ( I111111111 ( I1111 Opportunity In Financials: Proportionally Cheaper versus Pre-Crisis Levels As of September 30, 2008 Compared to other spread sectors, financials have experienced vastly more relative spread widening since the subprime crisis hit last year 600 Percent Change in Spread Level Since June 30, 2007 Soo —Investment Grade Credit- Financials Only —Bank Capital 400 —Mortgage Backed Securities —Investment Grade Credit 300 High Yield —Emerging Market c m p o. 200 100 0 .-:?`",;•"'tom;--% -100 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Aug-08 SOURCE: Lehman Brothers,JPMorgan Spreads are the average option adjusted spread for the Lehman Brothers Mortgage Index,Lehman Brothers Corporate Investment Grade Index,Lehman Brothers Global Capital Securities Index,Lehman Brothers Corporate High Yield Index.Emerging Market spreads are the strip spreads for the J.P.Morgan EMBI Global Index. The treasuries outperformed against the LB MSS Index,LB Global Capital Securities index.and the LB High Yield index during the same time period.The JP EMBI Global index outperformed against the treasuries during the same time period. 12 P I M C 0 wlllllllllllllllllll ( llllllllillllllllllllll Opportunity In Financials: Policy Focus Unprecedented A Summary of the New Lending Facilities Term Discount 90 days Same as Primary Window Program 8/17/07 (up from original 30) Funds Discount Window Depository Institutions Term Auction Same as Primary Facility 12/12/07 28 days Funds Discount Window Depository Institutions Single Tranche U.S.Treasuries, Primary Program Open 3/07/OB 28 days Funds Market Operations agencies,agency MBS Dealers U.S.Treasuries, agencies, agency Term Securities 3/ U.S Primary Lending Facility 3/2 /O8-0/08 28 days Treasu.ries MBS, AAA private-label RMBS and Dealers CMBS,agency CMO U.S.Treasuries, agencies,agency Primary Dealer MBS, investment grade securities Primary Credit Facility3/16/OB Overnight Funds (corporate, municipals, MBS and Dealers ASS) Term Discount Same as Fannie Mae& Window Program 7/13/08 TBD Funds Discount Window Freddie Mac Grant the US Treasury the authority TARP (Troubled October to purchase$700 billion in mortgage Asset Relief Act) 2008? related securities from banks and other financial companies Since mid-2007, the Fed and Treasury have shown a strong desire to keep the banking system liquid SOURCE:PIMCO 13 P I M C 0 ( ( I ( 11111111111111111 ( llllllllllllllllllllll What We Got Right: Home Price Decline As of September 30, 2008 14 OFHEO Home Price Index YoY Change • We have been calling for a 12 housing-led slowdown since 2006 10 i 8 • While we were clearly early, the v 6 pullback in housing is now 4 unfolding in dramatic fashion a 2 0 -2 _y 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 20 S&P/Case-Shiller Home Price Index: Composite 20 YoY Change • Indeed, the housing meltdown 15 has been more severe than even we predicted 10 � s a 0 • While the pace of price declines � _5 will likely slow in coming months, a 10 we don't anticipate a bottoming in prices before late 2009 -15 -20 01 02 03 04 05 06 07 08 SOURCE:Bloomberg Financial Markets 14 P 1 M C 0 What We Got Wrong: Financial Linkages Create a Systemic Crisis As of September 30, 2008 • We underestimated the extent to which off-balance sheet entities would become contingent liabilities • We are now facing the paradox of deleveraging; unless an unencumbered balance sheet is introduced into the equation, the vicious cycle of falling asset prices and forced deleveraging will continue until all assets have been sold 120 Stock Price Level of 12 Largest U.S. Financial Institutions —AIG —Bank of America 100 —Bear Stearns _ �/ Cltlgroup 80 n —Goldman Sachs 10 JP Morgan 0 60 N —Lehman Brothers m 40 Merrill Lynch —Morgan Stanley —Wachovia 20 —Washington Mutual 0 —Wells Fargo Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 SOURCE:Bloomberg Financial Markets 15 P I M C 0 \ } _ • \ 7{ ƒ _ CD 3 0 CD \ �) / ( ° / / ( \ kCD \ CD - ` /\ � } f ` CD - | ! 7 ( & } \ . lIl ( l ( Illllllllllilll ( llllllllllll ( lll ( ll ( ( l What We Got Wrong: Policy Makers Slow to Respond Holistically JPM Takeover ®®® NY Fed a vvith troubled assets and facilitated 'shotgun" mccur with absorbed g JPM Conserwtorship ■■■■ Treasury seized both institutions, made implicit guarantee explicit, but wipetl out all equity(including preferred) Bankruptcy ■■■■ Bar filed for bankruptcy after tailing to find a buyer.but Barclays bought all the best assets cheaply with coon apprmel BoA Takeover MEN■ Merrill tlrne into the arms of 60A, though the deal was surprisingly good one for Merrill shareholders Govemment Loan AIG forced to accept government bailout on onerous terms; future remains unclear Recei No FDIC seized WAMU and sold its assets to JPM, stripping vership creditors of any asset cover Cili TakeoverME FDIC facilitated sale of its assets to Citigroup, but did so on an "open bank'basis • Each institutional crisis has been met with a different response, leaving investors uncertain as to the rules of the game, or even the nature of the playing field • Policy response has shifted from piecemeal, reactive approach to a more holistic one, but depth of the crisis means it could still prove too little too late SOURCE:PIMCO 17 P I M C 0 Illllllllll ( lllllil ( ll ( I ( 11 ( llllilllllllllll Financial Holdings: Lehman Events • Lehman, fourth largest global investment bank, was forced into bankruptcy after failing to find buyer • Counterparty exposure unwind led to chaos in markets, intricate web of claims in court • Full implications of financial fragility clear to policymakers in retrospect, but too late for policy miscalculation to be undone Outlook • LEH holdings nearly all at senior unsecured level; still, much of the losses likely permanent • Assuming fairly steep asset haircuts, traditional analysis suggests recovery far above current prices of 10 to 15 cents • But, importance of Lehman as derivatives counterparty means large but still uncertain client claims for costs of terminating/replacing contracts • Final recovery, assuming reasonable range of counterparty claims, between 10-40 cents is P I MCO l ( Illllllllllllllllll ( Illlll ( Illll ( lllllllll The PIMCO Secular Outlook Long-Term Destination: Balanced Global Growth... But Danger Lurks Along The Journey Secular Themes Risk Factors • Emerging economies power global growth • U.S. consumer weakness • Global inflation trends upward on • Lack of systemic redundancies enhance financial shocks commodities demand, EM wages • Difficult environment for global policy response • Corporate profits decline as deleveraging continues • Regulatory changes drive institutional re-alignments • EM countries recognize need for domestic Global capacity to recapitalize vulnerable consumption and flexible currencies sectors remains intact Secular Stabilizers 20 P I M C 0 111111111 ( 1111 ( Ill ( Illlllllll ( lllllllllll ( II Current Monetary & Fiscal Response Necessary, But May Not Be Sufficient, to Counter Systemic Deleveraging As of September 30,2008 bdn 'l /21aES U.S. Global • Widespread deleveraging necessitates • Developed economies slowing more use of governmental balance sheet not than U.S., with timid policy response constrained by profit motives from central banks • Fannie/Freddie conservatorship should • Emerging markets slowdown more slow pace of housing price declines mild, indicating future decoupling • Anemic growth to persist due to • With strong growth and capital, China weaker employment and consumption can cyclically accelerate investment in infrastructure to offset any trade shock U.S. Europe U.K. Japan China •• Was �• 2.2 2.4 1.4 4.1 1.6 4.4 1.0 2.4 10.1 6.3 'A — A 1 f5-2 0—''A 2 'A-23a AA — -14 2-214 -lG-16 Yz-1 915-10 6 i5-7 SOURCE:Bloomberg,PIIJCO ' Inflation YoY:U.S.Inflation is Cora PCE(note Core PCE is usually about 50 bps lower than core CPI),Eurozone inflation Is EuroArea 13 HICP(headline),U.K.inflation is the Consumer Price Index(headline),Japan inflation is CPI ex lood:China inflation is Consumer Price Index. Refer to appendix for additonal opinion,outlook and strategy information. Forecasts as of September 5,2008. 21 P I M C 0 Credit Crunch Hits Main Street as Banks Severely Limit Credit to Businesses and Consumers Commercial & Industrial Loans 80 • Tight lending standards for 60 businesses match levels not seen t ao since '01 and '90 recessions 2 20 xa 0 D) C A a -20 -a0 02 03 05 06 08 Commercial and Residential Real Estate 100 • Lending standards for commercial and =0 80 —CRE residential real estate far exceed levels of a 60 —Residential the past two recessions 40 20 " P 0 mo m w -20 -a0 02 03 05 06 08 Credit Cards and Other Consumer Loans 80 • With home equity depleted, consumers a 60 —Credit Cards turn to other avenues, but face similar 2, —Other consumer Loans qualification challenges 9 40 " 20 `9 0 -20 02 03 05 06 08 SOURCE:Federal Reserve Board Haver Analytics 22 P I M C 0 Portfolio Strategy: High Quality Focus for Volatile Markets U.S. Non-U.S. • Maintain focus on short-term rates • Focus on select front end curves for better relative yields • Neutral to overweight U.S. duration • Overweight duration in Europe and U.K. StrategiesSector . . - • Mortgages: Maintain existing overweight to U.K. and Europe: Focus on front end high quality Agency MBS positioning in anticipation of coordinated policy response to crisis • Corporates: Focus on security selection in sectors likely to benefit from Europe: De-emphasize region as governmental action inflation-focus dominates policy • Treasuries: Remain underweight to reduce Australia: Emphasize short-term securities price exposure to low yields given significant yield advantage vs. U.S. • Municipals: Tactically add positions with EM: Tactically employ currencies and rates in sector yielding over 100% of Treasuries select countries • Currency: Maintain relatively flat currency exposure overall. with small tactical positions 23 P I M C 0 llllfill ( iilllllllllllill ( Illlllllllll ( lllll Assets Under Management by Strategy PIMI expertise spans all asset classes to provide effective solutions to meet investor needs Absolute Return Strategies LIBOR based vehicles:enhanced cash or pure alpha $13,980 Commodities Commodity-linked exposures enhanced with active bond portfolios 18.654 Real Estate Real Estate-linked exposure backed by inflation index bonds 110 Real Return TIPS and other inflation-hedging strategies 56,111 Tactical Allocation Tactical allocation among PIMCO funds,All Asset,All Asset All Authority* 18,490 Diversified Income Global credit combining corporate and emerging markets debt 12,812 CBO/CLO Collateralized bonds/loan obligations 6,936 U.S. Market Combines derivatives-based equity exposure with active bond management 28,063 Large Cap SlocksPLUS0 Small Cap StocksPLUS°Total Return International: Stocks PLUS®PARS Japan, Europe StocksPLUS®Long Duration Global, International Fundamental IndexPLUS`/Fundamental Advantage Long Duration Focus on long-term bonds;asset liability management 55,353 Intermediate" Total Return,Moderate Duration 339,185 Cash Management" Low Duration,Enhanced Cash, Money Market 61,444 Credit Investment Grade Corporates,High Yield 37,968 Mortgages Emphasis on managementof mortgage pass-throughs 60,566 Global Non-U.S.and global multiple currencyformats 81,432 Emerging Markets Focus on solid credits with improving economic fundamentals 21,611 Municipals Tax-efficient total return management 11,353 Other 5,390 Total Assets Under Management: $ 829,467 M Assets as of June 30,2008.PIMCO now includes the assets that it manages for third-party clients of its German affiliate,Allianz Dresdner Global Investors Germany. Potential differences in asset totals are due to rounding. All Asset strategies are invested in PIMCO Funds:these assets are not included in the individual strategies. Stable Value assets have not been neded from US Total Return, US Moderate Duration and US Low Duration assets.As of June 30,2008.total Stable Value assets egual S20.761 MM, 25 P I M C 0 M1V Se N11li I ,l ORANGE COUNTY SANITATION DISTRICT •9 f en- i HE MJ 0d.Fd F. xisb, u NOTICE OF MEETING 927M M19 .P9 Box he°"gAd°� ADMINISTRATION COMMITTEE . °" "I"""'� `7 Finance, Human Resources and Information Technology s2�Wile, 1 9Y .opEod . Plwne [71419622411 Fax ORANGE COUNTY SANITATION DISTRICT [714)9624AM gemAn' WEDNESDAY, OCTOBER 8, 2008 - 5:00 P.M. Aneheen s,Nd DISTRICT'S ADMINISTRATIVE OFFICES emend Park 10844 ELLIS AVENUE [yplcaa FOUNTAIN VALLEY, CALIFORNIA 92708 roan.",Valldy WWW.0CSD.00M Fukl " C.enldo once Hur"mpnm 8"1 e,7n, A regular meeting of the Administration Committee of the Orange Le kftu .d County Sanitation District will be held at the above location, date Le PeL,lx and time. re Alai lJe'.1 Feenlr Lienge FW,ceoua 5enw And $.991 eP.Bl'Ir Bison Tlretln Mlle Perk 19me in,dd Loam M.E. 9ennery Oiem,x M,U,vay LRy Spri l L' sc":t /',one RenrAl M. LAevr i CawW W Llengd We prcuier public beets and the emirnnmen[by p ding effx b wastewater collection,beetmeot. and mb cling. ADMINISTRATION COMMITTE MEETING DATES Meeting Date Board Meeting Dates October 8, 2008 Octob r 22, 2008 November 12, 2008 'Nov ber19, 2008 December 10, 2008 'Dece her 17, 2008 January 2009 - Dark Janua 28, 2009 February 11, 2009. Febru ry 25, 2009 March 11, 2009 March 25, 2009 April 8, 2009 April , 2009 May 13, 2009 May 2 , 2009 June 10, 2009 June , 2009 July 8, 2009 July 2 , 2009 August 2009 - Dark Augus 26, 2009 September 9, 2009 Septe ber 23, 2009 October 14, 2009 Octob r28, 2009 *Meetings being held the third Wednesday of th month. October 1, 2008 WE M_QJLAAD_" TO: Chair and Board of Directors Orange County Sanitation District FROM: Ji ueGeneral Manager Orange County Sanitation District SUBJECT: Response to Crisis in the Financial Markets In response to the ongoing worldwide financial crisis and in an effort to minimize impacts to the Sanitation District, I will be implementing the following measures: • Hiring Freeze Requests to fill any budgeted position must be approved by me or my designee. Only"critical need" positions will be approved, regardless of whether the position is an O&M or capital position. In addition, all vacant positions will be reviewed before any recruitment will be initiated. • Debt Financing Currently, we are managing a Capital Improvement Program in excess of $2 billion. The financing for the CIP is heavily supported through our comprehensive debt financing program. However, as a result of the present challenging financial market conditions, public agencies throughout the country are finding it increasingly more difficult to issue debt to support their programs (see the attached article). Financial conditions are so constrained that even extremely credit worthy agencies with AAA credit ratings such as OCSD may be impacted by the short-term credit markets and may be unable to issue bonds or will have to pay much higher interest rates on borrowing. At present, staff plans to request authorization to proceed with our regularly scheduled debt issuance at the October Administration Committee. However, this actual debt issuance may be delayed into the next year based on changes to the credit market. • Capital Improvement Plan Review and Deferral Over the last few years, Engineering staff has made great strides to reduce or defer capital projects to help mitigate potential rate increases. We have reduced or delayed projects while maintaining an acceptable risk level. The Chair and Board of Directors r 4 Page 2 October 1, 2008 Given that we are currently spending about a million doll rs a day on capital improvements, we must take the proactive actions listed bove to stretch our funds as long as possible, as well as reduce our ongoing operating expenditures. Therefore, I have asked staff to complete a similar revie of our current and up- coming capital programs. Any proposed changes to the IP that result in significant impacts to our level of risk, or level of service ill be presented to the Board for approval. • Review and Defer Operating Equipment and Material I have directed staff to review all large equipment and m terial purchases to ensure that only critical purchases are made over the ne t 12 months. • Reductions in Travel I have directed staff managers to reduce travel costs with n their respective departments. We will reduce the number of attendees at meetings, ensuring that only essential personnel attend. We recognize that the Sanitation District and all of our constituer is are impacted by the financial crisis that has occurred and that we will make every effc rt and we must act now to safeguard our financial position, minimize and protect the fund s that have been entrusted with us. I will provide additional updates as necessary. JDR:LT:gg r,.umr•,.•,wna�a..,wua raaaw.e.wmT,w,a e,.m.m aoo,.e.sm�wma w e,. Attachment I THE BOND BUYER—The Daily Newspaper of Public Finance Munis Weaker;Several Sales,Delayed or Reduced--09.18.2008—By Michael Scarchilli and lack Herman The municipal market was weaker yesterday,and close to two dozen issues were either postponed or decreased in size due to continuing market volatility. Market participants yesterday were dealing with the news that the Federal Reserve had decided to save Insurer American International Group Inc.,and that Barclays Capital has signed a definitive agreement to acquire substantially all of the North American businesses and operating assets of Lehman Brothers. Traders said tax-exempt yields yesterday were higher by about five basis points. "Everyone's just focused on really short paper,and pre-refunded bonds.Anything super safe,"a trader in Los Angeles said. "it doesn't seem like anyone wants to move" Given the dramatic amount of turmoil in the market this week,traders are not surprised to see deals being pulled."I've barely seen a deal this week,"a trader in New York said. 'This would be just about the absolute worst time to bring one." In the new-Issue market yesterday,Goldman,Sachs&Co. priced about$100 million of special tax obligation refunding loan bonds for Connecticut,chopping down what was to be a$479 million sale. The deal was cut by almost$300 million due to market conditions. "We're going to continue to monitor the market,and because it was a refunding, it was flexible in size in any event, but we're going to continue to monitor the market about maybe refunding some of the other bonds we had hoped to do in the future,"an official from the state treasurer's office said. "We had good retail orders and we wanted to fill them,we didn't want to turn them back,"the official said. The bonds mature from 2012 through 2018,with term bonds in 2021 and 2022.yields range from 2.54%with a 3%coupon in 2012 to 4.26%with a 4.125%coupon in 2022.The bonds,which are callable at par in 2018, are rated Al by Moody's Investors Service,AA by Standard&Poor's,and AA-minus by Fitch Ratings. Also,the Los Angeles Convention Center Authortty delayeda$250 million fixed-rate lease-revenue bond refunding from the market yesterday,fearing a lack of buyers.The bonds are being issued to refinance variable rate demand obligations that are insured by Ambac Assurance Corp.and to terminate an outstanding swap on the debt.The VRDOs have been remarketing with rates in the 6%to 7%range,almost twice what the city was paying before Ambac lost its triple-A credit ratings. Natalie Brill,debt manager for the nation's second largest city,said LA will watch the market over the next few days to see If the surge in rates is a new equilibrium or a temporary disruption."We're going to wait,"she said."We are going to see if we can sell(today).We don't think so because the stock market Is down." Brill is juggling a lot of competing market crises as she tries to bring her deal-a remedy for an earlier crisis- to market. Merrill Lynch&Co.,sold in a fire sale to Bank of America over the weekend,is the city's underwriter.She's determined that doesn't matter.The swap termination fees on her existing debt are rising with short rates rose in the reference index.AIG,taken over by the Federal Reserve earlier in the week,is one of the biggest holders of her outstanding debt and could flood the market with her paper if it decided to liquidate the position.She also already sent out a 30-day redemption notice on Its outstanding VRDOs, though she can withdraw that up to five days before the redemption. "We'll do the deal when we see the market is able to handle it." That could be today,but she wasn't making any promises. Her only prediction;"We'll refund this debt before the end of the year." In addition to those,numerous other upcoming transactions were either postponed or moved to the day-to- day calendar yesterday due to market turmoil. The New York City Transitional Finance Authority announced that it will delay its planned$700 million new money building aid revenue bond deal,originally scheduled for next week.The bonds will now be delayed "far one to two weeks,subject to market conditions," according to a press release. Merrill Lynch will price the bonds. The Boston Water&Sewer Commission rescheduled a$115.1 million bond sale,which was scheduled for competitive bids today.The deal is now slated for Oct.7. Illinois'Community College District No.525 completed a preliminary pricing on a$30 million deal yesterday, priced by Raymond lames&Co., before pulling the sale from the market.It has been moved to the day-to-day calendar. Long Beach,Calif.,removed a$49 million tax and revenue anticipation note sale from the Sept.23 competitive calendar,and moved it to day-to-day. Also,at least 16 other issues have been moved to the day-today calendar,most prominently a$250 million Los Angeles Convention Center Authority deal,a$191 million Indiana Finance Authority transaction,and a$185 million deal for Pasco County,Fla. Other deals include$190 million for Chicago over two issues,$188 million for the Las Vegas Redevelopment Agency over two issues,and$143 million for the University of Colorado Board of Regents. Also,The Bond Buyer's one-year note index is up 32 basis paints yesterday,to 1.93%.This is the highest level for the index since May 7. The Treasury market, however,showed more flight-to-quality gains yesterday.The yield on the benchmark 30-year Treasury note, which opened at 3.44%,was recently quoted at 3.38%.The yield on the two-year note was quoted recently at 1.62%after opening at 1.80%.The yield on the 30-year Treasury was quoted recently at 4.07%after opening at 4.09%. Additionally,the Treasury Department yesterday sold$40 billion 35-day cash management bills,due Oct.23, at a 0.300% high tender rate.The bid to cover ratio was 2.45.Tenders totaled$98,002,170,000 and the Treasury accepted$40,000,050,000,including$18,870,000 non-competitive. In economic data released yesterday, housing starts for August came in at 895,000,after a revised 954,000 the previous month. Economists polled by IFR Markets had predicted 950,000 housing starts. Building permits for August came in at 854,000,after 937,000 the previous month. Economists polled by IFR had predicted 920,000 building permits. ROLL CALL ADMINISTRATION COMMITTEE Finance, Human Resources and Information Technology Meeting Date: October 8, 2008 Time: 5:00 p.m. Adjourn: COMMITTEE MEMBERS (13) Mark Waldman Chair Phil Luebben Vice Chair Jon Dumitru Jim Ferryman Don Hansen Darryl Miller Chris Norb Brad Reese Christina Shea Sal Tina ero Jim Winder Doug Davert Board Chair Larry Crandall Board Vice Chair OTHERS Brad Ho in, General Counsel STAFF Jim Ruth, General Manager Bob Ghirelli, Assistant General Manager Nick Arhontes, Dir. of Operations & Maintenance Jim Herberg, Director of Engineering Ed Torres, Director of Technical Services Lorenzo Tyner, Director of Finance and Administrative Services Lille Kovac, Committee Secretary Jeff Reed, Human Resources and Employee Relations Mana er Mike White, Controller C.1 umeMs and Sftg6serexLLocalSedings%Teaaporary IMennel F11a3CaMeM.0udoaUPNK1KUW2 Rall Celldoes AGENDA REGULAR MEETING OF THE ADMINISTRATION COMMITTEE ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, OCTOBER 8, 2008, AT 5:00 P.M. ADMINISTRATIVE OFFICE 10844 Ellis Avenue Fountain Valley, California 92708 www.ocsd.com PLEDGE OF ALLEGIANCE DECLARATION OF QUORUM PUBLIC COMMENTS REPORT OF COMMITTEE CHAIR REPORT OF GENERAL MANAGER REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES • Investment Overview/PIMCO • Financial Overview REPORT OF GENERAL COUNSEL CONSENT CALENDAR ITEMS (1) 1. Approve minutes of the September 10, 2008, meeting of the Administration Committee. ACTION ITEMS (1) 2. ADM08-31 Authorize preparation of bond documents for the issuance of up to $200 million in fixed-rate certificates of participation (COP) debt; and, direct staff to report back to the Committee for final approval of the bond documents. (Book Page 8) INFORMATIONAL ITEMS (1) 3. ADM08-32 Alternative Billing Methodologies (Book Page 24) Book Page I October 8, 2008 Page 2 CLOSED SESSION During the course of corWucting the business set Torth on this agenda as a regular meeting of the Committee, the Chair may convene the Committee in closed session to consider matters of pending real estate negotiations, pending or potential litigation,or personnel matters, pursuam to Government Code sections 54956.8,54956.9, 54957 or 54957.6,as noted. - Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c) employee actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Committee during a permitted dosed session and are not available for public inspection. At such time as final actions are taken by the Committee on any of these subjects,the minutes will reflect all required.disclosures of information. Convene in closed session. Reconvene in regular session. Consideration of action,if any, on matters considered in closed session. 4. Other business and communications or supplemental agenda items, if any. 5. Adioumment: The next regular Administration Committee meeting is scheduled for Wednesday, November 12, 2008, at 5 p.m. Book Page 2 October 8, 2008 Page 3 Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted in the main lobby of the District's Administrative offices not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda hem, including any public records distributed less than 72 hours prior to the meeting to all, or a majority of all, of the members of District's Board, are available for public inspection in the office of the Clerk of the Board, located at 10844 Ellis Avenue, Fountain Valley, California. Items Not Posted: In the event any matter not listed on this agenda is proposed to be submitted to the Committee for discussion and/or action, it will be done in compliance with Section 54954.2(b) as an emergency item or because there is a need to take immediate action, which need came to the attention of the Committee subsequent to the posting of agenda, or as set forth on a supplemental agenda posted in the manner as above, not less than 72 hours prior to the meeting date. Public Comments: Any member of the public may address the Administration Committee on specific agenda items or matters of general interest. As determined by the Chair, speakers may be deferred until the specific item is taken for discussion and remarks may be limited to three minutes. Matters of interest addressed by a member of the public and not listed on this agenda cannot have action taken by the Committee except as authorized by Section 54954.2(b). Consent Calendar: All matters placed on the consent calendar are considered as not requiring discussion or further explanation, and unless a particular item is requested to be removed from the consent calendar by a Director of staff member,there will be no separate discussion of these items. All items on the consent calendar will be enacted by one action approving all motions,and casting a unanimous ballot for resolutions included on the consent calendar. All items removed from the consent calendar shall be considered in the regular order of business. The Committee Chair will determine if any items are to be deleted from the consent calendar. Items Continued: Items may be continued from this meeting without further notice to a Committee meeting held within five(5)days of this meeting per Government Code Section 54954.2(b)(3). Meeting Adiournment: This meeting may be adjourned to a later time and items of business from this agenda may be considered at the later meeting by Order of Adjournment and Notice in accordance with Government Code Section 54955(posted within 24 hours). Accommodations for the Disabled: The Board of Directors Meeting Room is wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at(714) 593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Notice to Committee Members: For any questions on the agenda or to place any items on the agenda, Committee members should contact the Committee Chair or Clerk of the Board ten days in advance of the Committee meeting. Committee Chair: Mark Waldman (714)827-1989 Committee Secretary: Lilla Kovac (714)593-7124 IkovacAocsd.com General Manager: Jim Ruth (714)593.7110 mahPlocsd.com Assistant General Manager Bob Ghirelli (714)593.7400 mhirelli(aocsd.com Director of France and Lorenzo Tyner (714)593-7550 Itvnerrdocsd.com Administrative Services Human Resources and Employee Jeff Read (714)593-7144 ireediilocsd.com Relations Manager H:ldeprlasd%2101CR NMDMINISTnATION COMMITTEEWDMIN 20081committee_fnels\1008103.100e08 Admin Agenda.dacx Book Page 3 S? po ADMINISTRATION COMMITTEE AGENDA CALENDAR Item Action November Comprehensive Annual FnandalRepod Pcfion November Employee RaoWiionProgram Information Book Page 4 MINUTES OF THE REGULAR MEETING OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, September 10, 2008, at 5:00 P.M. A meeting of the Administration Committee of the Orange County Sanitation District was held on September 10, 2008, at 5:00 p.m., in the Sanitation District's Administrative Office. (2) Following the Pledge of Allegiance, a quorum was declared present, as follows: ADMINISTRATION COMMITTEE STAFF PRESENT: MEMBERS: Jim Ruth, General Manager DIRECTORS PRESENT: Bob Ghirelli, Assistant General Manager Mark Waldman, Chair Lorenzo Tyner, Director of Finance and Phil Luebben, Vice Chair Administrative Services Jim Ferryman Lilia Kovac, Committee Secretary Chris Norby Wes Bauer Brad Reese Rich Castillon Douglas Reinhart (Alt.) Norbert Gala Christina Shea Jeff Reed Sal Tinajero Rich Spencer Jim Winder Mike White, Controller Doug Davert, Board Chair OTHERS PRESENT: DIRECTORS ABSENT: Brad Hogin, General Counsel Jon Dumitru Debby Cherney Don Hansen Ed Soong Larry Crandall, Board Vice Chair (3) APPOINTMENT OF CHAIR PRO TEM No appointment was necessary. (4) PUBLIC COMMENTS There were no public comments. (5) REPORT OF THE COMMITTEE CHAIR Chair Waldman did not give a report. (6) REPORT OF THE GENERAL MANAGER General Manager, Jim Ruth, did not give a report. (7) REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES Lorenzo Tyner, Director of Finance and Administrative Services, did not give a report. Book Page 5 Minutes of the Administration Committee September 10, 2008 Page 2 (8) REPORT OF GENERAL COUNSEL Brad Hogin, General Counsel, did not give a report. (9) CONSENT CALENDAR ITEMS Consideration of motion to approve all agenda items appearing on the Consent Calendar not specifically removed from same, as follows: a. MOVED, SECONDED AND DULY CARRIED: Approve minutes of the July 9, 2008 meeting of the Administration Committee. b. ADM08-25 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board of Directors to adopt Resolution No. OCSD 08-_, Adoption of District's 2008 Conflict of Interest Code, and Repealing Resolution No. OCSD 06-23. C. ADM08-26 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board of Directors to approve a pay grade change for the Senior CIP Project Manager classification from pay grade 90 to pay grade 92. END OF CONSENT CALENDAR (10) ACTION ITEMS a. ADMO8-27 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board of Directors to approve the Debt Financing Policy dated September 17, 2008. b. ADM08-28 MOVED, SECONDED AND DULY CARRIED: Recommend to the Board of Directors to: 1)Approve an agreement with OCB Reprographics for Reprographics and Related Services, Specification No. S-2008-385BD, for a three-year period from October 1, 2008 to September 30, 2011, for an amount not to exceed $400.000 per year; 2)Approve the option of two additional one-year renewals for an amount not to exceed $400,000 per year; and, 3)Authorize a $40,000 contingency(10%) per year. Book Page 6 Minutes of the Administration Committee September 10, 2008 Page 3 (11) INFORMATIONAL ITEMS a. ADMO8-29 Succession Management Program Update A brief update was provided to the committee members on the progress and success of the program implemented in 2007 with the goal to meet future staffing needs through coaching, leadership development, and training. b. ADM08-30 Safety and Health Program Update Directors were updated on the Safety and Health department's activities and achievements, followed by safety performance metrics. (12) CLOSED SESSION There was no closed session. (13) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were none. (14) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (15)ADJOURNMENT AND FUTURE MEETING DATES The Chair declared the meeting adjourned at 6:02 p.m. The next regular Administration Committee meeting is scheduled for October 8, 2008, at 5:00 p.m- Submitted by:: Lilia Kovac Committee Secretary H:WepNgendaVWmin Commidee1200BT9081091008 Admin MmWes.dou Book Page 7 ADMINISTRATION COMMITTEE FMeeting Dare FT.Bd.of Dlr. 10/OB/08 AGENDA REPORT IIem 08108 Rem Number ADMOB BI Orange County sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ISSUING UP TO $200 MILLION IN NEW CERTIFICATES OF PARTICIPATION (COPS) GENERAL MANAGER'S RECOMMENDATION Authorize preparation of bond documents for the issuance of up to $200 million in fixed- rate certificates of participation (COP) debt; and, direct staff to report back to the Committee for the final approval of the bond documents. SUMMARY In support of the District's Strategic Plan capital improvement program, the Board approved the issuance of$200 million of new Certificates of Participation (COP) debt with the adoption of the FY 2008-09 Budget. Approval of the recommended action above will direct staff to begin the process of issuing up to $200 million of fixed-rate debt. Staff will continue to work with the financial advisory firm of Public Resources Advisory Group (PRAG) and the bond counsel firm of Fulbright and Jaworski, both who are under existing contracts. ADDITIONAL INFORMATION In accordance with the District's Board-adopted Debt Policy, the District will restrict long-term borrowing to capital improvements that provide long-term benefits to the District, and before any new debt is issued, the impact of debt service payments on total annual fixed costs will be analyzed. This policy will assist in the leveling out of user fee rates over time and avoid any spiked increases in the short term. All costs involved in the COP issuance, including costs for PRAG and for Fulbright& Jaworski will be paid from the proceeds of the new issue. Stratenv The District's proposed strategy is explained in detail in the attached Capital Improvement Program Financing Plan prepared by the District's financial advisor, PRAG. Following is a summary of the proposed plan. The most recent Strategic Plan capital improvement program requires approximately $1.074 billion over the next five years, of which approximately $550 million is to be financed through long-term borrowings in accordance with the District's long-term debt fiscal policy and cash flow projections. FomI No.0 I W.3 Rmlw .OWIN7 Page 1 Book Page 8 f The issuance of$200 million of COP debt this fiscal year has been slated for a portion of capital improvements to be constructed over the next year. A total of up to $550 million in COP debt issuance is being proposed over the next five years with a new issuance scheduled approximately once a year over this time period. These financings are needed early in this current 10-year capital improvement program because the bulk of the construction is scheduled during the next six years. The issuance of fixed rate debt will provide the District with a balanced overall debt portfolio consisting of a mix of fixed rate and variable rate debt. Staff is proposing this new COP issue be a fixed rate debt issue because a) of the limited, or no, availability of bank liquidity required in issuing variable rate debt; b)the current pricing for any bank capacity, if available, is at least 4-5 times higher in cost than the Series 2006 COPS for a much shorter term (1-3 years, instead of 7 years with 4 %z years remaining); c) banks are requiring more onerous terms and conditions for bank facilities; d) bank capacity in the future may be limited; e) the District's percentage of variable rate exposure is already relatively high compared to other wastewater agencies; f) the variable rate markets have recently undergone unprecedented uncertainty with tax-exempt short-term rates approaching 10%. Staff is also requesting the flexibility to issue the $200 million of COP debt this fiscal year in one or more issuances. Given the recent turmoil in the financial markets, tax- exempt interest rates have soared and the ability to sell municipal issuances has been severely curtailed with very few issues of significant size being successfully sold. In addition, an arbitrage analysis estimates approximately $1.5 million of net savings to the District if the issuance of$100 million were delayed for six months. Timeline October ➢ Develop legal documents • Develop disclosure documents(Official Statement) n Develop rating agency presentation November ➢ Conduct rating agency presentations ➢ Finalize debt service and cash flow modeling • Finalize legal and disclosure documents Marketing and Sale of the COPS through a Competitive Sale Process,assuming market conditions stabilize December ➢ Execute up to$200 million Fixed-Rate COP issue > Investment of Bond Proceeds Debt Atlministration ATTACHMENTS 1. Capital Improvement Program Financing Plan prepared by PRAG. JDR:LT:MW:lc Form No ow im 3 ewixC:OlLtq] Page 2 Book Page 9 Capital Improvement Program Financing Plan OJNSV SANIrq ¢= 9 ¢ n 0 F�TiNG THE ENV\Ppd for the Orange County Sanitation District Certificates of Participation, Series 2008C - PRAG Public Resources Advisory Group October 1, 2008 Hook Page 10 Orange County Sanitation District Page 1 CIP Financing Plan— COPs, Series 2008C October 1, 2008 Background The Orange County Sanitation District (the "District") adopted a long-term capital improvement program ("CIP") as part of its strategic planning initiatives. The CIP includes a number of different projects which will provide new treatment and disposal capacity and expand the collection system for the District. In addition, the District expects to fund other replacement, rehabilitation, and refurbishment projects to properly maintain the operation of existing facilities. It is anticipated the District will use a combination of ongoing revenues and new debt issuances to finance the CIP through fiscal year 2019-20. The following chart shows the most recent projected funding of capital costs between revenues and debt proceeds. ($mm) Estimated Sources of CIP Funding 400 350 E Ongoing Revenues 300 []Debt Financed 250 200 150 100 50 0 m o N rn a in o n ao m o O N O O O O O O O O O O O O N N N N N N N N N N N N The long period over which expenditures are expected to be made, the magnitude of those expenditures, and the goal of minimizing the already substantial (on a percentage basis) rate increases, all support the decision to finance a substantial portion of the CIP through a series of bond financings through fiscal year 2012-13. Assuming a series of debt issuances requires that long-term strategic considerations must be examined on an aggregate basis with each future issuance providing the District with the opportunity to be flexible and make adjustments. In addition, a series of debt issuances should reduce the risk associated with timing the market for the lowest interest cost. The timing and sizes of subsequent debt issuances are estimated in the following table. Fiscal Year Approximate Size Ratio to CIP Needs 2008-09 200,000,000 53.5% 2009-10 120.000,000 52.4 2010-11 90,000,000 49.6 2011-12 60,000,000 36.0 2012-13 80,000,000 67.8 Total $550,000,000 51.5% The District has engaged Public Resources Advisory Group ("PRAG") to provide recommendations pertaining to the management of existing debt and the issuance of additional debt in connection with the CIP. In 2005, PRAG provided an initial report summarizing our debt management recommendations and subsequently updated the report in 2007 (collectively, the "Prior Reports") based on information which was available at the time, including the District's financial projections, PRAG Book Page I I Orange County Sanitation Distract Page 2 CIP Financing Plan—COPs, Series 2008C October 1, 2008 data on market conditions, historical interest rates, best practices among municipal issuers, credit issues, and the District's outstanding debt. The recommendations were formulated as guidelines for a long-term financing plan that balances lowering interest cost and risk. This report applies the principles outlined in the Prior Reports to the upcoming issuance of the District's bonds and updates certain recommendations based on the District's current financial position (and projections), modifications to the Debt Policy of the District, and recent developments in market conditions. The District's Current Outstanding Debt Currently, the District has approximately $1.07 billion of outstanding long-term debt, comprised of seven different series of certificates of participation ("COPs"). The seven series of COPS include traditional fixed rate and variable rate COPS, which were issued to fund new capital improvements and to refund then outstanding debt. Additional detailed information pertaining to the COPS is shown in the following table. Original Par Outstanding Final Maturity Interest Series Issued Par Fiscal Year) Rate Mode Purpose of Issuance Variable Refunded Series A, B and C I I 2000 $218,600,000 $195,800,000 2031 COPS($179.7 million)and (Daily reset) funded ca ital improvements 2003 280,000,000 191,500,000 2033 Fixed Funded capital improvements I 2006 200,000,000 196,600,000 2036 Variable(Daily reset) Funded capital improvements 2007A 1 95,180,000 93,655,0001 2030 1 Fixed Refunded a portion of Series 2003 COPs($88.5 million) I 2007B 300,000,000 300,000,000 2037 Fixed Funded capital improvements 2008A 77,615,000 61,665,000 2014 Fixed Refunded 1992 COPS $77.3 million 2008E 27,800,000 27,800,000 2017 Fixes Refunded$26.8 million) COPS Total $1,199,195,000 $1,067,020,000 On an aggregate basis, as shown in the graphic on the following page, approximately 37% of the District's outstanding debt portfolio (i.e., $392.4 million) is in variable rate mode. This exposure to fluctuations in short-term interest rates is offset to some degree by the District's short-term investment assets. According to the District's most recent Quarterly Treasurer's Report for the Three Months Ended June 30, 2008 (the "Treasurer's Report"), the District's investment account balances totaled $432.1 million, which was available to hedge against short-tern interest rate movements. PRAG estimates that this balance of taxable investments would be able to effectively hedge oneand-a-half times the amount of, or in other words on a three-to-two basis ("3-to-2 Basis"), tax-exempt variable rate bonds. (Note that this reflects the implied three-to-two basis originating from the top-bracket marginal federal income tax rate of 35%.) It is worthy to note that the vast majority of the District's investment portfolio is held in longer term bond funds and such investment earnings are less responsive (than their short-term bond fund counterparts) to short- tern interest rate movements. Over time, it is expected that the District's current variable rate debt exposure should be substantially hedged by the investment portfolio of the District. PRAG Book Page 12 Orange County Sanitation District Page 3 CIP Financing Plan— COPS, Series 2008C October 1, 2008 Breakdown of Outstanding COPS Fixed, $674.6mm, 63.2% Variable, $392.4mm, 36.8% The aggregate debt service profile of the COPS is nearly level, after taking into account the releases of debt service reserves to pay debt service for each given series. From fiscal year 2008-09 through fiscal year 2031-32, net annual debt service associated with the outstanding COPS is approximately $67 million; there is an increase for fiscal year 2032-33 to approximately $77 million. Thereafter, net annual debt service declines to approximately $38 million through fiscal year 2035-36 and finally $20 million in fiscal year 2036-37. The following chart illustrates the aggregate debt service profile of the District's outstanding COPS. 126'" Aggregate Debt Service l Sarks 2000 =Series 2003 100 =Series 2006 =Series 2007A =Series 2007E =Series 2008A =Series 2008B —Net Debt Svc. 80 60 40 20 0 m ah n ri m � v+ r to n n r O N N N N N Cf 17 OI l'1 O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N Variable versus Fixed Rate A fundamental strategic consideration of a long-term financing plan for a multi-year capital improvement program is the ratio that represents the variable versus fixed rate debt relationship of an outstanding debt portfolio (the "Variable/Fixed Ratio"). The Variable/Fixed Ratio is calculated as the ratio of variable rate debt divided by total debt. The overall target Variable/Fixed Ratio set by the District should be based on (1)the amount of and the type of interest rate risk the District is willing to accept and (2)the expected cost benefit of variable rate debt over fixed rate debt. Prior to each debt issuance, the District has a choice of issuing fixed rate, variable rate, or a combination of fixed and variable to reach the overall target Variable/Fixed Ratio. The District should evaluate each component (fixed or variable) on a net hedged basis by considering the amount of outstanding hedges (e.g., investment portfolio) that mitigate or offset variable rate risk, as well as the market conditions prevalent at the time of the issuance. PRAG Book Page 13 Orange County Sanitation District Page 4 CIP Financing Plan— COPs, Senes 2008C October 1, 2008 Interest Cost DiNerential � Historically, short-tern variable rates have been lower than long-term fixed rates. The following chart compares long-term BondBuyer 25 Revenue Bond index (BBI-25Rev) to the Securities Industry and Financial Market Association (SIFMA), formerly known as Bond Market Association (BMA), swap index (a composite index for over 300 highly-rated, tax-exempt variable rate demand obligations). The SIFMA/BMA swap index has historically been an accurate indicator for the variable interest cost of the District's debt. BBI.25Revenue (long-term tax-exempt)versus SIFMA/BMA (short-term tax-exempt) 10% 9'% BBI85Rev Rate BBI-25Rev Average �0 —SIFMABMA Rate 7.96% (current) 7% rr,, . SIFMAIBMA Average 5% ry �� 5.56% (current) p'�r�'1 /( I ��M 2% �ti.,i�)I)i I fli % 1Q`#A1 ' 3.07°hf Mw t4 11i r g°� p rV Vp e N l7 V� T q W g 0 0 0 0 0'rm m m w F p p p R p N N N N N N N N If the average of short-term tax-exempt variable rates is lower, there is an expected cost benefit which is one of the primary reasons to issue variable rate rather than fixed rate debt. The risk of variable rate debt is that periodic short-term interest rate spikes, which exceed long-term fixed rates, can and have occurred in the past. Also, variable rate debt requires additional costs for credit enhancement and remarketing which effectively increase the cost of borrowing. The credit crisis since mid-2007 has negatively affected nearly all financial markets, including the municipal bond market. The impact has been especially notable for variable rate municipal bonds, as interest rate resets have increased in response to (1) investors focusing solely on preservation of capital by exclusively purchasing U.S. Treasury securities, (2) degradation of credit enhancement providers, (3) significant net redemptions from money market funds, and (4) increases in bank facility costs. In fact, the recent net cost of borrowing using variable rate municipal bonds is higher than the net cost of borrowing for fixed rate municipal bonds, as shown in the following chart. Em PRAG Book Page 14 Orange County Sanitation District Page 5 C/P Financing Plan— COPs, Series 2008C October 1, 2008 Comparison of Net Borrowing Cost 0% 0.12 8% 7% f3.snl 6% 5% 0 4% 0.07 3% 0.07 2% 1% 0% 9126/07 3126108 9/25/08 020Y MMD DSIFMA 0 Liquidity o Remarketing Hedges The Variable/Fixed Ratio of the District is limited by (1)the amount of outstanding hedges (i.e., investments), (2)the expected ability to withstand interest rate spikes and (3) rating agency guidelines. To calculate the unhedged (or net) Variable/Fixed Ratio, the amount of variable rate assets (and fixed payer swaps) is subtracted from the outstanding variable rate debt and the result is divided by total outstanding debt ("Net Variable/Fixed Ratio"). The following table provide simplified examples on how asset-to-liability hedging works by assuming a 3-to-2 Basis for the relationship of taxable interest earnings to tax-exempt interest earnings. Annual Taxable Annual Tax-Exempt Incremental Investment Incremental Interest Earnings Variable Rate Earnings Rate Investment Net Annual Rate Change Debt Cost Change Income Income I(Cost) Example One-$200 million Variable Rate Debt and$200 million Assets +100 bps ($2,000,000) +150 bps $3,000,000 $1,500,000 -100 bps $2,000,000 -150 bps ($3,000,000) ($1,000,000) Example Two-$300 million Variable Rate Debt and$200 million Assets +100 bps ($3,000,000) +150 bps $3,000,000 $0 -100 bps $3,000,000 -150 bps ($3,000,000) $0 Example Three-$400 million Variable Rate Debt and$200 million Assets +100 bps ($4,000,000) +150 bps $3,000,000 ($1,000,000) -100 bps $4,000,000 -150 bps ($3,000,000) $1,000,000 As shown by Example Two in the table above, which assumes a 3-to-2 Basis, perfect hedging occurs when variable rate debt is one-and-a-half times the amount of assets which neutralizes the impact of any interest earnings rate movements on net income/cost. If the amount of debt is equal to the amount of assets (bverhedged", as in Example One), net income would change in the same direction as interest earnings rates (as interest earnings rates increase, net income increases and vice versa). If the amount of debt is more than one-and-a-half times the amount of assets (Example Three), net income would change in inverse proportion to the direction of interest earnings rates. In other words, not only can the issuance of a large amount of variable rate bonds ME PRAG Book Page 15 Orange County Sanitation District Page 6 CIP Financing Plan- COPs, Series 2008C October 1, 2008 introduce interest rate risk, but also the seemingly conservative choice of targeting a low Variabla/Fixed Ratio(i.e., having mostly or all fixed rate debt)can introduce overall net interest risk. In addition, for the District's multi-year CIP, the future fixed rate borrowing cost of the District will vary, creating long-term interest rate risk to the District. As described above, the District currently has significant investment assets which substantially hedges of the District's variable rate debt exposure. Currently, the Districts Debt Policy limits the aggregate amount of variable rate COPS to no more than one-and-a-half times (previously, one times) its reserves. This policy is an effective management tool for mitigating variable rate risk to the District. The District's $432.1 million of investment assets substantially hedges the current $392.4 million of variable rate COPS outstanding, if not "overhedges° when considering the theoretical 3-to-2 Basis between taxable and tax-exempt short-term interest rates. Ultimately, the effectiveness of investments to hedge variable rate debt exposure is reflected in a comparison between investment income and variable rate interest cost. As long as the performance of investment income supercedes the variance in variable rate interest cost, an issuer does not suffer rash flow shortfalls. This principle is illustrated in the following table. Example One Two Four Investment Amount $432,100,000 $432,100,000 $432,100,000 Variable Rate Debt 392,400,000 432100,000 648,150,000 - Investment Rate 4.5%. 4.5% 4.5% -- . - - --------- Variable Bond Rate 3.0% -- - 4.5% 3.09 Investment Income $19.444,500_ $1.9,444,500 $19,444,500 Variable Rate Interest 11 772 000 9 444 500 19 444 500 Cash Flow $7.672,000 $0 $0 Example One shows the potential for positive rash flow assuming a 3-to-2 Basis between taxable and tax-exempt short-tern interest rates based on the current level of investment assets and variable rate debt. However, if(1)tax-exempt rates were to equal taxable rates and (2)the amount of variable rate debt is equal to the investment assets, Example Two illustrates no cash flow differential. Example Three shows no cash flow differential if(1)the amount of variable rate debt is one-and-a-half times the investment assets assuming a 3-to-2 Basis between taxable and tax- exempt short-term interest rates. Other Risks In addition to interest rate risk, the use of variable rate COPs could also result in other risks to the District. Foremost among these risks are bank facility renewal risk and bank facility provider credit risk. The conversion of municipal auction rate securities an masse to variable rate demand bonds in response to events related to the subprime mortgage crisis has led to a significant increase in demand for bank facilities, while eroding capital positions of banks which has decreased the supply for these facilities. As a result, availability for, and pricing of, bank facilities has been adversely affected. In addition, as with other credit enhancement products used in conjunction with variable rate bonds, the use of a bank facility also exposes the District to the impact of changes in the creditworthiness of the provider of the credit enhancement. Credit Rating Impact Credit ratings from rating agencies can impact the borrowing costs for fixed rate debt and also credit enhancement costs for variable rate debt. Among many factors, financial and non-financial, PRAG Book Page 16 Orange County Sanitation District Page 7 CIP Financing Plan—COPs, Series 2008C October 1, 2008 the Variable/Fixed Ratio is one of the factors that credit rating analysts review when assigning credit ratings. For a given rating, the Variable/Fixed Ratio acceptable to rating agencies varies depending on the available liquidity to the issuer, volatility of revenues, flexibility of an issuer to adjust revenues, variability of other (i.e., not interest—related) expenses, and an issuers ability to understand and manage interest rate risk. Moody's Investors Service ("Moody's") has "assign[ed] high-grade long- and short-term ratings to some issuers, typically well endowed colleges or cash flush states, public authorities and hospitals, with as much as 30% to 50% of their debt in variable rate mode." Standard & Poor's ("S&P") states that "[Issuers with competitive rates, tax advantages, or significant short-term assets can handle variable and short-term debt well in excess of 80% of total debt, some even with 100%, when backed by accompanying risk management programs." Based on these general assessments, as well as the rating agencies' specific statements when rating the District's COPS, PRAG believes that the District's Variable/Fixed Ratio could be increased with minimal, if any, negative credit rating consequences. Instead, the decision to adjust its Variable/Fixed Ratio should be a function of economics and other risks (e.g., interest rate, bank facility renewal or bank facility provider credit risks) associated with the expanded use of variable rate bonds. Structure of Debt Issuance Fixed versus Variable Rate Bonds Structuring considerations for each debt issuance should be based not only on the aggregate target capital structure of the District, but also on the market conditions at the time of the issuance. The current market is characterized by numerous conditions (resulting from the current credit crisis)which make it undesirable to issue variable rate bonds at this time. These include: 1. Limited, or no, availability of bank liquidity facilities required in issuing variable rate bonds; 2. Pricing for any bank liquidity facility, if available, is at least four to five times higher in cost than the facility secured by the District for its Series 2006 COPs for a much shorter term (e.g., one to three years instead of the original seven years of which four-and-a-half years are remaining); 3. Banks are requiring more onerous terms and conditions in bank facility agreements; 4. Current outlook for future bank facility capacity continues to appear scarce with high demand; and 5. Variable rate markets have recently undergone unprecedented uncertainty with tax-exempt short-term rates of certain quality issuers approaching 10% in September 2008 (see comparison of net borrowing cost between fixed and variable rate debt on page 5). In addition to the above market-driven factors, the District's current Variable/Fixed Ratio is relatively high compared to the Variable/Fixed Ratios of other similar municipal wastewater utilities, as shown in the following chart. PI AG Book Page 17 Orange County Sanitation District Page 8 CIP Financing Plan—COPs, Series 2008C October 1, 2008 Comparison of Variable/Fixed Ratio for Large California Wastewater Municipal Utilities 70% 60% eE m Gross ■Net' A A 50% X X a e 3 m o 40% W. A n 30% N 20% a e 10% X 0 0 0% e o OCSD ocso OCSD EBMUD LA(Clty) LA SRCSD (Current) (5200mm (S200mm (County) Fixed) Variable) Net of interest rate hedges only and not net of cash investment hedges. Based on all of the above factors, PRAG believes that the District should issue traditional fixed rate bonds for the upcoming sale. At the same time, the District should continue to evaluate its long- term capital structure and make adjustments based on the market conditions prevalent at the time of each future sale. Arbitrage Analysis In addition, events related to the current credit crisis have negatively impacted the pricing of long- term municipal fixed rate bonds. In particular, significant losses among leveraged financial institutions and hedge funds has reduced the attractiveness of municipal bonds for these purchasers and the anticipated liquidation of a significant portion of the $50-70 billion municipal bond portfolio of AIG provide a dire outlook on near-term future municipal bond prices. Over the past two weeks, U.S. Treasury yields have rallied to multi-year lows while the yields on long-term municipal bonds have risen between 40 and 80 basis points across the yield curve, as illustrated in the chart on the following page. Change in Long-Term Municipal Interest Rates (AAA GO MMD) During Past Two Weeks 6% 120 O Change 5% —9/12/2008 100 —912612008 4% 80 om K 3% 60 c 2% 40 2 t� 1% 20 0% 0 1 5 10 15 20 25 30 PRAG Book Page 18 Oge CO�*Sanitation District p nxaB Plan—Cops, Sena,2008C Page 9 October 1, Me In response to the weak Investor demand in the municipal bond market, the number of primary offerings has diminished significantly. Last week, only two transactions of notable size (i.e., greater than $50 million) were sold, as well as over $6 billion of municipal bond offerings Postponed from the prior week. Given the liquidity problems in the municipal bond market, it may be desirable to market the District's $200 million of new money COPs across more than a single sale. A multi-sale structure would (1)reduce negative arbitrage and (2) mitigate potential size penalty amidst current weak market conditions. Based on an arbitrage analysis, it is estimated that the District would net approximately $1.5 million of savings through a two-tranche issuance approach (net of $350,000 in additional fixed costs of issuance) due to the reduction in negative arbitrage. To further mitigate negative arbitrage, the District may consider removal of a debt service reserve fund requirement from the pending issuance. Based on preliminary discussions with Fitch Ratings and Standard & Poor's, there would be no expected impact on the issue's credit rating. If this approach were adopted together with a change in the District's informal reserve policy, it would reduce the overall issuance and thereby improve the District's debt service coverage ratio. Even if there was no change in the policy, the District would benefit from (1) increased flexibility as the money set aside would constitute unrestricted, rather than restricted, funds and (2) a slight delay in the requirement for the issuance of future debt. Principal Amortization Another structuring consideration for the District's forthcoming new money COP issuance is the method for amortizing principal. The District's current Debt Policy provides for the issuance of COPS to achieve level debt service on either a series-by-series basis or in aggregate. Under this guideline, it is possible to amortize principal in a number of different ways. In addition to the traditional level debt service and wrapped debt service scenarios, it may be desirable to structure the current COP issuance to accelerate the amortization of principal primarily among the shortest maturities. In the current market, this structure would take advantage of the steep yield curve as well as relatively strong retail demand among those maturities. The demand from retail buyers has not suffered from the difficulties experienced by other segments of the municipal market. As described above, events related to the credit crisis has significantly impacted the participation of large institutional investors and this structuring approach would take advantage of the most price- insensitive market segment amidst difficult market conditions. Subsequent issuances would then extend the District's principal amortization to achieve an overall aggregate level debt service profile together with the accelerated series. In addition to the overall cost of borrowing, the amortization structures would also impact near-term debt service coverage ratios. The following table compares the estimated interest cost for each principal amortization structure under current market conditions and projected near-term debt service coverage ratios for the District's COPS, including future debt issuances through fiscal year 2012-13. PRAG Page 10 Orange County Sanitation District October 1, 2008 LIP Financing Plan—COPS, Series 2008C Principal Level Debt Wrapped Debt Accelerated Amortization Service Service Amortization Estimated TIC 5.43% 5.58% 4.15% m FY2009 2.61x 2.61x 2.00x 2.00 FY2010 2.18 2.22 2 00 T FY2011 2.06 2. vFY2012 2.11 2.17 2•00 8 FY2013 2.19 2.24 2.00 2 FY2014 2.30 2.37 2.00 m FY2015 2.36 2.44 1 2.00 N FY2016 2.36 2.44 - o FY2017 2.43 2.52 1 2.00 FY2018 2.36 1 2.45 1 2.00 The final determination as to the method of principal amortization should depend on market conditions at the time of the sale. However, under current market conditions, an accelerated principal amortization approach could generate significant benefits for the District. Capital Improvement Program Financing Strategy The CIP of the District is expected to be funded by a series of bond issuances over the next five years. As noted in the Prior Reports, a step-by-step financing implementation plan would be ideal; however, it would inevitably be inaccurate without the specific knowledge of future market trends and conditions. (The recent dislocation in the variable rate market helps to illustrate this principle.) Therefore, the District should focus its long-term planning on global strategic considerations, such as the timing of the financings and the target Variable/Fixed Ratios and debt service coverage ratios. Implementation strategies should be analyzed on an issue-by-issue basis subject to market conditions at the time of each sale. Consistent with this approach, the specific steps outlining a potential financing strategy have been amended to take into account changes in the District's financial condition, projections for future performance and general market conditions. As in the Prior Reports, the preliminary financing strategy assumes the District believes that (1)future fixed interest rates are difficult to predict, (2)the interest cost of variable rate bonds may ultimately be less than that of fixed rate bonds although there are additional associated risks, and (3)the District will have sufficient liquidity to absorb any additional interest costs associated with potential variable rate interest spikes. The following considerations and steps outline an updated potential financing strategy for the District: 1) Determine target financial ratios based on the District's (a) current outstanding debt, (b) projected funding needs, (c) projected financial results, (d) acceptable levels of risk, and (a)current Debt Policy. 2) Assumes the issuance of next$200 million of COPS will be fixed rate obligations. A fixed rate issuance seems to be appropriate when analyzing current market conditions, especially the limitations and heightened costs and risks associated with variable rate debt. 3) With subsequent issuances, re-evaluate the District's Debt Policy and the target financial ratios based on market conditions at the time. Of course, the target ratios will likely change as the CIP unfolds and matures, and as market conditions evolve. IN PRAG Book Page 20 Orange County Sanitation District Page 11 CIP Financing Plan— COPs, Series 2008C October 1, 2008 Current market conditions dictate the next sale of $200 million of COPs should be fixed rate obligations. Aker the issuance of these fixed rate COPS, there remains flexibility for the District to continue to adjust its target financial ratios. The following graph illustrates the extent to which the District may affect its aggregate Variable/Fixed Ratios through the issuance of either fixed or variable rate COPs in future years. Potential Variable/Fixed Ratios 50% —Estimated 45% —Minimum 40% —Maximum 35% 30% 25% 2o% Current 2009 2010 2011 2012 2013 2014 Over time, the District can prudently manage its target financial ratios to optimize its CIP funding program and without jeopardizing its current credit ratings. To do so, It would be necessary to periodically revisit the Distd&s financial projections and make appropriate adjustments accordingly. On the following page is a preliminary CIP financing plan to illustrate current projections related to the program. Em PRAG Book Page 21 Orange County Sanitation District Page 12 CIP Financing Plan- COPS, Series 2008C October 1, 2008 Orange County Sanitation District Preliminary Financing Plan' -Estimated Financial Ratios (Amounts In $millions) Fiscal Year 2gi9 2009-10 201(Ml 011-12 201 -1 2013-14 2014-15 2015-16 2 1�7 2017-18 2018-19 19-20 Beginning Outstanding Balance Traditional Fixed $689.2 SS68.6 $964.6 $937.6 $981.2 $961.5 $928.5 $906.0 $882.4 $857S $841.0 $823.7 Traditional Variable 389.1 384.7 380.1 465.4 447.6 510.5 489.9 470.2 449.7 423.8 391.9 358.7 Scheduled Principal Repayment Traditional Fixed 20.7 24.0 27.0 184 19.7 33.0 22S 23.6 24.8 16.5 17.3 18.2 Traditional Variable 4.3 4.6 4.8 17.8 17.0 20.6 19.7 20.5 25.9 31.9 33.2 34.6 New Bond Issuance Traditional Fixed 200.0 120.0 0.0 60.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Traditional Variable 0.0 0.0 90.0 0.0 80.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 W Ending Outstanding Balance o Traditional Fixed 868.6 964.6 937.6 981.2 961.5 928.5 906.0 882.4 857.5 S41.0 823.7 805.5 F Tradiberal Variable(Hedged) 384.7 380.1 465.4 447.6 510.5 489.9 470.2 449.7 423.8 391.9 358.7 324.1 v m � Percentage of Overall Debt N Traditional Fixed 69.3% 71.7% 66.8% 68.7% 65.3% 65.5% 65.8% 66.2% 66.9% 68.2% 69.7% 71.3% h3 Traditional Variable 30.7 28.3 332 31.3 34.7 34.5 342 33S 33.1 31.8 30.3 28.7 Variable Rate Debt CapacitY2 $648.2 $554.3 $565.5 $600.8 $632.0 $685.8 $645.4 $660.1 $695.1 $719.0 $7422 $742.2 (OveryUnder Var.Rate Debt Cap? 263.4 174.1 100.2 153.3 121.5 195.9 175.2 210.4 271.3 327.1 383.5 418.1 Estimated Debt Service Cownage3 2.61x 2.18x 2.06x 2.11x 2.19x 2.29x 2.36x 2.36x 2.43x 2.36x 2.34x 2.36x 1 For projection purposes only. Includes only COP issuances through 2012-13. Future ratios will vary depending on ongoing evaluation of appropriate targets and nmrket conditions at the time of each sale. 2 Calculated based on a 3-to-2 Basis and the District's projected total reserves less debt service reserves. 3 Based on level debt service principal amorilaations. PRAG Orange County Sanitation District Page 13 CIP Financing Plan— COPs, Series 2008COctober 1, 2008 As the District moves forward with its CIP, its debt service obligations are expected to increase significantly. However, the District can mitigate the debt service costs of additional capital needs through pro-active management of its debt portfolio. The following table illustrates the rapid rise of aggregate net debt service due to these future issuances, assuming level debt service issuances. 1251EMM) Aggregate Net Debt Service ■Current OSeries2008C E3 Additional Future Financings 100 75 50 25 0 O O N n O N N N N N l'1 Vf N �'^1 l00 O d O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N Mi PRAG Nook Page 23 ADMINISTRATION COMMITTEE Meeting Date To Bd.or Mr. r0/08/0e AGENDA REPORT rw'n NumOa RIM Number ADMOS-32 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ALTERNATIVE BILLING METHODOLOGIES GENERAL MANAGER'S RECOMMENDATION Informational item. SUMMARY The Orange County Sanitation District(OCSD) bills sewer service user fees for all of its customers, except for high-strength dischargers, based on flat wastewater service charges established by property use classification as determined by the State Water Resources Control Board. These fees are included as a line item on the County property tax bill and collected by the County on behalf of OCSD. In November 2007, the OCSD approved a five-year strategic plan and the related funding schedule to support this plan. During this process, the issue of rate equity was raised, specifically as it pertains to the use of a flat fee for all single-family residences. As a result, staff was directed to review previous rate equity efforts, outreach efforts, and internal and external studies regarding this matter, and to provide an overview to the Administration Committee. In July 2008, staff presented an information item that reviewed the alternative billing methodologies results of prior studies, which focused on developing a more equitable method of billing for actual sewer use. These studies indicated that the options presented at the time were found to be financially ineffective. Following this presentation, staff was given direction to research billing processes used by other agencies and to provide additional information at a future committee meeting. Over the last two months, staff has contacted other public sewer utilities outside the OCSD service area on the types of billing methodologies and collection methods used. Following are the agencies contacted along with their responses: Agency Collection Method Basis City of San Diego Utility Bill Water Consumption City of Los Angeles Utility Bill Water Consumption Central Contra Costa Sanitary District Property Tax Bill Flat Fee Los Angeles County Property Tax Bill Flat Fee East Bay MUD Utility Bill Water Consumption Sacramento County Utility Bill Flat Fee City of Fresno Utility Bill Flat Fee Oro Loma Sanitary District Property Tax Bill Flat Fee Union Sanitary District Property Tax Bill Flat Fee Irvine Ranch Water District Utility Bill Water Consumption Page 1 Book Page 24 All Agencies surveyed that are a part of an existing water utility enterprise with one water supplier were able to place their fees on the utility bill. Agencies surveyed that are independent of a water utility enterprise, like OCSD, include their fees as part of the local county property tax bill. In addition, staff could find no other public sewer utility that bills all of their customers based on sewer effluent alone. Based on staff research, approximately 600,000 sewer effluent meters would have to be installed at a cost of$755 per meter, plus a minimum of$500 per installation, meter reading equipment and software, and the cost to perform periodic meter reads (monthly, bi-monthly, etc.), in order to bill all of OCSD's existing 550,000 parcels currently being billed on the County property tax bill that is based on parcel usage(and building square footage for non- residential parcels). The City of Los Angeles bills approximately 540,000 residences and 110,000 commercial properties for water and sewer services bi-monthly and monthly, respectively, based on water consumption at an annual utility billing cost of$2.8 million. Assuming a linear relationship between the number of customers and billing cost, OCSD would incur annual utility billing costs of approximately$2.6 million to bill its customers for sewer service based on sewer effluent measured by sewer meters. Staff also contacted the 16 public agencies who provide retail water to customers located within OCSD's service area, and Golden State Water Company, who provides water service for Cypress, Los Alamitos, Placentia and Stanton. Following are speck questions asked of these agencies: • Number of customer accounts? • Would your agency consider billing for sewer services on behalf of the District? • Would your agency be willing to provide water consumption data to the District? In total, the agencies represent approximately 470,000 individual accounts. The responses received from these agencies are summarized as follows: • Only the cities of Buena Park, La Habra, Newport Beach, and Santa Ana would consider billing customers for sewer service on behalf of OCSD. Each of these cities stated that they would have to implement franchise and administrative fees on top of the sewer service fee charged by OCSD. • Only the cities of Newport Beach, Santa Ana, Tustin, and Yorba Linda would unilaterally provide water consumption data for customers located within OCSD's service area. All other agencies would require the authorization from each customer to release water consumption data to OCSD. Conclusion Based on the research conducted by staff, staff concludes that the current billing methodology based on flat rates is the most cost-effective and accurate billing methodology available to OCSD. • The cost to implement a sewer metering system for every parcel is cost-prohibitive. One-time costs of installing 600,000 sewer meters would total $753.0 million ($755 per meter+ $500 per installation x 600,000 parcels). Annual operating costs to bill 600,000 customers would approximate$2.6 million. The County billing and collection cost charged to OCSD for FY 2008-09 is $502,115. By implementing a in-house billing Page 2 Book Page 25 system based on sewer effluent, the annual residential sewer service fee would have to increase by a one-time additional $816.43, or 269.4 percent in the first year to cover the $753.0 million in implementation costs, and by an ongoing increase of$2.27, or 1.0 percent beginning in the first year to cover the increase in operating expenses of$2.6 million. • The majority of water providers within OCSD's service area are not willing to provide water consumption data for all customers unequivocally. Therefore, billing based on water consumption and utilizing existing records is not a viable option. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION In March 1992, OCSD engaged a consultant (James M. Montgomery) to review proposed alternatives to the existing flat rate billing system used for single-family residences (SFR). While different methodologies were discussed, it was concluded that the cost of implementing a system that initially appeared to be more fair and equitable would result in costs that far exceed the equity benefits. In 1998, a Rate Advisory Committee (RAC)was established to discuss the advantages and disadvantages of moving to a water meter-based system for sewer user charges. This RAC reviewed internal policies, methodologies of other agencies and solicited public input. Based on the recommendation of the RAC, 8 was determined that benefits of moving to a water-metered based system did not appear to outweigh the costs of implementing such a system. Staff was directed to continue to implement the existing flat rate fee system. Subsequently, all revenue areas were consolidated and financial plan was established. The flat rate system continued to remain in effect. Following are two excerpts from the RAC feedback to Board and public input: 1) Discuss pros and cons of water metered-based annual sanitary sewer user charges: Over the years we have studied various forms of water meter based charges. It would seem fair at first glance that sewer use could be directly related to water use, and that it would be easy to use. Water meters are accurate and direct use of the data seems reasonable. However, for our agency, which has about 40 local wafer agencies in the service area, it becomes more complicated. Many of these agencies do not have a standardized approach to billing. Some agencies use account numbers, water meters, owner addresses, etc. for billing. To translate and eventually standardize the various billing methods would be a monumental task. It would require considerable up-front cost and staff time. It would also require cooperation from the water retailers, who remain un-open to the idea of having their bills increased to reflect sewer charges. Another problem with direct collection of water bills is that the cities(or water agency) would not be able to enforce the collection. If a customer paid only the water charge and not the regional sewer fee, the water could not be turned off. A second way to address the water meter-based fees is to collect them on the property tax bill, which must be paid, this would ensure enforcement. However, this method of collection would also require an increase in the cost of collecting the fee, Page 3 Book Page 26 and the water agencies would have to be reimbursed for their added work. The coordination between the many water agencies and the Sanitation Districts would continue to be great. In the long run, the added benefits of the water meter-based annual charges would be greatly offset by the added cost in collections. Finally, there is the issue of accuracy. Would water meter based flow increase accuracy? Landscaping, pools and car washing probably take a large proportion of the delivered water as opposed to sanitary sewer service, particularly in a one or two person dwelling units. Therefore, those with heavy landscaping would request exemptions and adjustments, increasing the cost of collection. While a flat residential change cannot be fair to all, neither can a water meter based charge. The question of collection type and benerds of accuracy must be balanced against the size of the change versus the cost of added collection efforts. 2) Discuss the ratios between the multi-family and single-family annual sanitary sewer service charges. What are the actual values: Currently, the annual sewer service charges vary between districts with $73 per year per single family housing unit, an approximate average of all the districts that collect annual fees. The annual fee for multi-family housing units is now 60%of the fee for single family housing units in each of the districts based on metering and experience. Historically, sewer use and water use decrease per dwelling unit as densities increase. The reason for this is typically more services are provided outside of the dwelling unit, such as greater use of restaurant and commercial laundries. However, our most recent population projections and flow metering indicate that multi-family densities are now higher and the ratio may need to be updated based on new information. Additionally, the study provided the following comments in its"Conclusion and Recommendations" section of the report: EPA regulations require rates to be fair and equitable. There is no unique set of rates that will be fair and equitable to all customers. If such a system could be designed, the cost of implementing it would far exceed any benefits. With this perspective in view, it should be noted that the existing system of rates is acceptable. It could be improved if costs can be spread more equitably by reclassifying customers depending upon their lbw and strength and making improvements to the allocation methodology. Rates impacting residential customers, who account for over 90 percent of users in the System, would be minimally impacted. Commercial customers such as restaurants, hotels, supermarkets, would experience significant increases in charges. Adjusting the allocation may help to dampen the impact on the higher strength users to some extent. Our conclusions and recommendations regarding existing rates and the proposed alternatives are summarized below. RESIDENTIAL RATES On average, the flat rate user charges assessed to the residential sector, both single- family and multi-family, fairly and equitably reflect the costs of service. Efforts to increase fairness and equitability in the residential sector would require that CSDOC (OCSD)review each user's water bills or keep a count of the number of people in each residence. Both of these practices would be unworkable. It is therefore recommended that no change be made to the manner in which residential user charges are assessed. Page 4 Book Page 27 In April 2005, OCSD staff evaluated implementing rebate programs. It was determined that these programs were not cost-effective. An excerpt of the staff report that was present to the Committee and the Board is shown below: We have had single-family residence owners ask if we have a low income or low- usage program. The homeowners are generally elderly or retired homeowners who may use less water than an average single-family residence. We have investigated the reduced rate program used by the CSDLAC. CSDLAC SFR rate assumes an average discharge of 260 gallons per day. A homeowner within their service area may submit water consumption for a one year period and, if the consumption is 200 gpd or less, they qualify for a reduced rate that is equal to the apartment sewer service fee rate (currently 60% of the SFR rate at LA County). Currently, we assume 253 gallons per day for a single family residence. The Board may adopt a reduced rate program where a homeowner that proves they use less than 200 gallons per day would qualify for a reduced rate equal to the District's apartment sewer service fee rate, or 70%of the SFR rate. The financial impact of implementing such a program is unknown at this time. Although the individual refund amount under the current fee structure would only amount to$34.50 a year(30 percent of the current annual SFR rate), or$2.88 per month, the broad base of homeowners qualifying for refunds could be great. The SFR rate may have to be increased even further down the road to absorb the loss in revenues resulting from refunds. Also, such a program would probably generate a substantial increase in the number of refund claims submitted, requiring additional staffing resources. In addition, many, if not most of the same refunds would be generated annually since the user fee on the property tax bill would not change. Due to the relatively small inequities amongst all single-famiy residences, staff believes the additional costs to implement, monitor and administer a low-income or low-usage program outweighs the positive benefits to be derived. ATTACHMENTS 1. Rate Advisory Study- Executive Summary JDR:LT:AB:lc Page 5 Book Page 28 ORANGE COUNTY SANITATION DISTRICT (714) 962-2411 www.ocsd.com Mailing Address: P.O. Box 8127 Fountain Valley, California 92728-8127 Street Address: 10844 Ellis Avenue Fountain Valley, California 92708-7018