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HomeMy WebLinkAbout11-12-2014 Administration Committee Agenda Orange County Sanitation District SANITATION msrRicr Wednesday, November 12, 2014 Regular Meeting of the \ 5:30 P.M. Administration Committee I Administration Building Board Room 10844 Ellis Avenue Fountain Valley, CA (714) 593-7130 AGENDA PLEDGE OF ALLEGIANCE: DECLARATION OF QUORUM: PUBLIC COMMENTS: If you wish to speak, please complete a Speaker's Form and give it to the Clerk of the Board. Speakers are requested to limit comments to three minutes. REPORTS: The Committee Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Committee Members. These reports are for information only and require no action by the Committee. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: CONSENT CALENDAR: 1. Approve Minutes of the October 8, 2014, Administration Committee Meeting. 2. Recommend to the Board of Directors to: Authorize purchases of information technology computer and peripheral equipment using the U.S. Communities cooperative agreement #4400001195 with Insight Public Sector or agreement#4400001197 with UNICOM Government through the contract expiration date, April 30, 2016 for a total amount not to exceed $700,000, in accordance with Ordinance OCSD-44, Section 2.03(B): Cooperative Purchases. 11/12/14 Administration Committee Agenda Page 1 d 3 3. Recommend to the Board of Directors to: Authorize purchases of information technology Cisco networking equipment using the Western States Contracting Alliance (WSCA) cooperative agreement #AR233 (14-19), Addendum for CA#7-14-70-04, through the expiration date May 31, 2019 for a total amount not to exceed $250,000, in accordance with Ordinance OCSD-44, Section 2.03(B): Cooperative Purchases. 4. Recommend to the Board of Directors to: Receive and file Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2014. 5. Recommend to the Board of Directors to: Receive and file District purchases made under the General Manager's authority for the period of July 1, 2014—September 30, 2014. NON-CONSENT CALENDAR: 6. Recommend to the Board of Directors to: Receive and file the Sanitation District's Comprehensive Annual Financial Report for the year ended June 30, 2014, prepared by staff and audited by McGladrey, Certified Public Accountants, along with the following reports prepared by McGladrey: A. Report to the Administration Committee; and B. Report on Internal Controls; and C. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets. 7. Recommend to the Board of Directors to: Authorize the General Manager to issue new fixed rate Certificates of Participation (COP), to be referred to as Wastewater Refunding Revenue Obligations, Series 2015A, in an amount sufficient to refund up to $152,990,000 of COP Series 2007B. INFORMATION ITEMS: 8. Annual Strategic Plan Update and General Managers Work Plan Overview 9. Legislative Affairs Program 1111 V14 Administration Committee Agenda Page 2 of 3 OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: The next Administration Committee meeting is scheduled for Wednesday, December 10, 2014 at 5:30 p.m. Accommodations for the Disabled: Meeting Rooms are 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. Aoenda Posting: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board. NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting. Made E.Ayala Clerk of the Board (714)593-7130 mavala(a)ocsd.com For any questions on the agenda,Committee members may contact staff at: General Manager James Herberg (714)593-7300 iherbemRDomd.com Assistant General Manager Bob Ghirelli (714)593-7400 rohirellita)ocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 Itvner(docsd.com Administrative Services Director of Human Resources Jeff Reed (714)593-7144 ireed(cbocsd.com 11/12114 Administration Committee Agenda Page 3 of 3 ITEM NO. 1 MINUTES OF THE REGULAR MEETING OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, October 8, 2014, at 5:30 P.M. A regular meeting of the Administration Committee of the Orange County Sanitation District was held on September 10, 2014, at 5:32 p.m., in the Sanitation District's Administration Building. Director Carchio led the Flag Salute. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Brad Reese, Chair Jim Herberg, General Manager John Withers, Vice-Chair Bob Ghirelli, Assistant General Manager David Benavides Lorenzo Tyner, Director of Finance Joe Carchio &Administrative Services Tyler Diep Jeff Reed, Director of Human Resources Gene Hernandez Ed Torres, Director of Operations and Peter Kim Maintenance Prakash Narain Kelly Lore, Acting Clerk of the Board Teresa Smith Mike White Tom Beamish, Board Chair Mike Berdis John Nielsen, Board Vice-Chair Rich Castillon Marc Dubois COMMITTEE MEMBERS ABSENT: Norbert Gaia Steven Choi Al Garcia James Ferryman Dave Halversen Janet Nguyen Kathy Millea Carlos Quiroz Jim Spears OTHERS PRESENT: Brad Hogin, General Counsel Steven Center, Callan Investments PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Committee Chair Reese did not provide a report. 10/08/2014 Administration Committee Minutes Page 1 of4 REPORT OF GENERAL MANAGER: General Manager, Jim Herberg, notified the Committee that per direction from the Board of Directors, an item has been placed on the Groundwater Replenishment Steering Committee Meeting agenda of Monday, October 13, 2014, regarding cost sharing with Orange County Water District for additional security services. He further stated that any outcome would be brought back for the Board's consideration at a future meeting. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: Director of Finance and Administrative Services, Lorenzo Tyner did not provide a report. CONSENT CALENDAR: 1. MOVED, SECONDED, AND DULY CARRIED to: Approve Minutes of the September 10, 2014 Administration Committee Meeting. AYES: Beamish, Carchio, Diep, Hernandez, Kim, Narain, Nielsen, Reese and T. Smith NOES: None ABSTENTIONS: None ABSENT: Choi, Benavides, Ferryman, Nguyen and Withers NON-CONSENT CALENDAR: Director Benavides arrived at 6.37 p.m. Director of Finance and Administrative Services, Lorenzo Tyner stated that this item was continued from last month with a request for further information. Mr. Tyner provided a PowerPoint presentation and informed the Committee of current developments concerning our current Investment Portfolio Manager. He then responded to questions regarding: fees, final returns, PIMCO management structure, stability and performance of alternate managers and negotiation criteria. 2. MOVED, SECONDED, AND DULY CARRIED to: Recommend to the Board of Directors to: Approve the selection of Chandler Asset Management as the District's External Investment Portfolio Manager and authorize staff to negotiate a professional service agreement. 10/08/2014 Administration Committee Minutes Page 2 of 4 AYES: Beamish, Benavides, Carchio, Diep, Hernandez, Kim, Narain, Nielsen, Reese and T. Smith NOES: None ABSTENTIONS: None ABSENT: Choi, Ferryman, Nguyen and Withers Mr. Tyner informed the Committee that Item No. 3 was continued from the Board of Directors meeting and returned to this meeting for additional information and clarification. He provided a brief presentation regarding the quantities being purchased, warranties and the procurement process. Mr. Tyner, Engineering Manager, Dave Halversen and Engineering Supervisor, Riaz Moinuddin responded to questions regarding: plans to move to the next version of these controllers, transitioning periods and new programming standards. 3. MOVED, SECONDED, AND DULY CARRIED to: Recommend to the Board of Directors to: Approve a Purchase Order with PLC LTD, the lowest responsive and responsible bidder, for the purchase of Modicon computer equipment, Specification No. E- 2014-626, for an amount of$636,579. AYES: Beamish, Benavides, Carchio, Diep, Hernandez, Kim, Narain, Nielsen, Reese and T. Smith NOES: None ABSTENTIONS: None ABSENT: Choi, Ferryman, Nguyen and Withers Committee Vice-Chair Withers arrived at 5:48 p.m. INFORMATION ITEMS: 4. Informational Presentation on Wastewater Treatment Operations: Mike Berdis, Operations Supervisor provided a PowerPoint presentation regarding a broad overview of the treatment operations at Plants 1 & 2 including: water resource recovery processes; secondary treatment; primary clarification process; trickling filter operations; secondary final clarifier; biosolids recycling and recovery processes; anaerobic digesting; belt filter operations; methane gas recovery and uses; odor control issues and levels of service. 10/08/2014 Administration Committee Minutes Page 3 of 4 OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: Committee Chair Reese declared the meeting adjourned at 6:00 p.m., to the next regularly scheduled meeting of November 12, 2014. Submitted by: Kelly A. Lore Acting Clerk of the Board 10/08/2014 Administration Committee Minutes Page 4 of 4 ADMINISTRATION COMMITTEE Neelbng Dare TOBA.of Dir. 1 /12/14 11/19/14 AGENDA REPORT IternNumber Item Numbe z Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director, Finance and Administrative Services SUBJECT: COOPERATIVE PROCUREMENT WITH U.S. COMMUNITIES GENERAL MANAGER'S RECOMMENDATION Authorize purchases of information technology computer and peripheral equipment using the U.S. Communities cooperative agreement #4400001195 with Insight Public Sector or agreement #4400001197 with UNICOM Government through the contract expiration date, April 30, 2016 for a total amount not to exceed $700,000, in accordance with Ordinance OCSD-44, Section 2.03(B) Cooperative Purchases. SUMMARY In order to properly maintain and repair Orange County Sanitation District's (OCSD) facilities the Information Technology division has needs to purchase computers and peripheral parts and supplies. Such item requirements have been forecasted based upon projected obsolete equipment, historical product failure rates, and new items to address general capacity, redundancy, or security. Since technology changes so frequently, it is not appropriate to stock these items in OCSD's warehouses. OCSD wishes to select the US Communities cooperative agreement #4400001195 or #4400001197 as established by the County of Fairfax Virginia as the lead agency, as the primary providers of computer and peripheral equipment based on contract pricing, breadth of product offerings, availability and the ease of using online ordering systems. Large capital items will be procured through the bidding process. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION U.S. Communities is the leading national government purchasing cooperative, providing government procurement resources and solutions to local and state government agencies, school districts (K-12), higher education institutes, and nonprofits looking for the best overall supplier government pricing. The program is available to all State of California governmental entities (State agencies, cities, counties, special districts, Page 1 of 2 school districts, universities, etc.) that expend public funds for the acquisition of both goods and services. The U.S. Communities Government Purchasing Alliance is a government purchasing cooperative that reduces the cost of goods and services by aggregating the purchasing power of public agencies nationwide. U.S. Communities has over 55,000 participating agencies, from both the public and nonprofit sectors. The U.S. Communities Advisory Board is made up of key government purchasing officials from across the United States. The Advisory Board provides leadership and overall direction for the U.S. Communities Government Purchasing Alliance. The State of California Procurement Division (PD) is the central purchasing authority for all State departments and local government agencies. With a massive marketplace and billions of dollars in purchasing power they are able to offer a lower procurement cost to California's State, county, city, special district, education and other government entities through their Leveraged Procurement Agreements (LPAs). LPAs allow entities/agencies to buy directly from suppliers through existing contracts and agreements. One of the LPA's that the state offers to California governmental agencies is the US Communities for technology products, equipment and technology services, and solutions. CEQA N/A BUDGET / PURCHASING ORDINANCE COMPLIANCE This request complies with authority levels of the Sanitation District's Purchasing Ordinance. The items purchased through the process are budgeted in the yearly Joint Operating Budget. ATTACHMENT None. Page 2 of 2 ADMINISTRATION COMMITTEE Neelbng Dare TOBA.of Dir. 1 /12/14 11/19/14 AGENDA REPORT ern Number Item Numbe 3 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director, Finance and Administrative Services SUBJECT: COOPERATIVE PROCUREMENT WITH WESTERN STATES CONTRACTING ALLIANCE (WSCA) GENERAL MANAGER'S RECOMMENDATION Authorize purchases of information technology Cisco networking equipment using the Western States Contracting Alliance (WSCA) cooperative agreement #AR233 (14-19), Addendum for CA #7-14-70-04 through the expiration date, May 31, 2019 for a total amount not to exceed $250,000, in accordance with Ordinance OCSD-44, Section 2.03(B) Cooperative Purchases. SUMMARY In order to properly maintain and repair Orange County Sanitation District's (OCSD) facilities, the Information Technology division has needs to purchase Cisco networking parts and supplies. Such requirements have been forecasted based upon projected obsolete equipment, historical product failure rates, and new items to address network capacity, redundancy, or security. Since technology changes so frequently, it is not appropriate to stock these items in OCSD's warehouses. OCSD wishes to select the Western States Contracting Alliance (WSCA) cooperative agreement #AR233 (14-19), Addendum for CA #7-14-70-04 as the primary provider of Cisco networking equipment based on contract pricing, breadth of product offerings, availability and the ease of using online ordering systems. Large capital items will be procured through the bidding process. PRIOR COMMITTEE/BOARD ACTIONS April1992: Established Cisco Equipment as the Sanitation District's standard networking equipment. ADDITIONAL INFORMATION The Western States Contracting Alliance (WSCA) agreements are available to all State of California governmental entities (State agencies, cities, counties, special districts, school districts, universities, etc.) that expend public funds for the acquisition of both goods and services. Page 1 of 2 The State of California purchases a wide variety of goods and services ranging from pencils to temporary labor. Annual purchases total almost $10 billion. The Procurement Division (PD) is the central purchasing authority for all State departments and local government agencies. With a massive marketplace and billions of dollars in purchasing power they are able to offer a lower procurement cost to California's State, county, city, special district, education and other government entities through their Leveraged Procurement Agreements (LPAs). LPAs allow entities/agencies to buy directly from suppliers through existing contracts and agreements. One of the LPA's that the state offers to California governmental agencies is the Western State Contracting Alliance (WSCA) for Commodities, IT Goods & Services, and Telecommunication Goods and Services. CEQA N/A BUDGET / PURCHASING ORDINANCE COMPLIANCE This request complies with authority levels of the Sanitation District's Purchasing Ordinance. The items purchased through the process are budgeted in the yearly Joint Operating Budget. ATTACHMENT None. Page 2 of 2 ADMINISTRATION COMMITTEE Needng Dare TOBd.of Dir. 11/12/14 11/lg/14 AGENDA REPORT IternNumber Item Numbe a Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: CONSOLIDATED FINANCIAL REPORT FOR THE FIRST QUARTER ENDED SEPTEMBER 30, 2014 GENERAL MANAGER'S RECOMMENDATION Receive and file Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2014. SUMMARY Included in this consolidated report are the following quarterly financial reports for the period ended September 30, 2014: First Quarter Budget Review The Budget Review Summary provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the first quarter ended September 30, 2014. • Quarterly Treasurer's Report This section reports on financial portfolio performance with respect to the Sanitation District's funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the U.S. and global economic outlook from the Sanitation District's investment manager, Pacific Investment Management Company. • Certificates of Participation Quarterly Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. PRIOR COMMITTEE/BOARD ACTIONS N/A Page 1 of 2 ADDITIONAL INFORMATION N/A ATTACHMENT • Consolidated Financial Reports for the First Quarter Ended September 30, 2014 NOTE: The Executive Summary from the Comprehensive Quarterly Financial Report for the first quarter ended September 30, 2014 is included in hard copy; the entire report is available on-line at the OCSD website(www.ocsd.coml with the complete agenda package. Page 2 of 2 Executive Summary Consolidated Financial Reports For the First Quarter Ended September 30, 2014 Included in this consolidated report are the following quarterly financial reports for the period ended September 30, 2014: • First Quarter Budget Review: The Budget Review Summary provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the first quarter ended September 30, 2014. Contained within this Budget Review is the budget-to-actual status of the Collections, Treatment & Disposal Operations, the Capital Improvement Program, the Self-Insurance Program, and Debt Service Outlays. Also included is a Capital Assets Schedule as of September 30, 2014. Various detail information can be found in this report. In summary: a) Most major expense categories are anticipated to be at or below budget. b) Total revenues are at 26.7 percent mainly due to the receipts of $102.3 million from the issuance of Wastewater Refunding Revenue Obligations, Series 2014A during the first quarter of the fiscal year. The 2014A Obligations were used to refund a portion of Certificate of Participation Series 2007B. Excluding debt financing proceeds, total revenues are at 2.6 percent of the budget due to the timing of property tax and sewer fee distribution from the County that occurs mostly in the second and fourth quarters. These two revenue sources make up 86.6 percent of the District's total budgeted revenue. Except for Service Fees, Property Taxes, User Fees, Capital Assessments, Interest Earnings, and Other, all other major revenue sources are currently tracking close to or exceeding revenue estimates. Overall, total revenues are projected to exceed budget at year-end. More detailed information on District revenues is provided within Section 1 — Pages 3 through 5. c) Collection, Treatment and Disposal Costs: As indicated within the Budget Review Summary of this report, the net operating requirements through the first quarter of $35.6 million is currently tracking at 23.3 percent of the $152.5 million budget. In addition, net operating expenses have increased $1.9 million or 5.5 percent in comparison with the same period last year. Overall, staff expects the total operating costs to remain at or below budget throughout the remainder of the year. More detailed information on District operating expenses is provided within Section 1- Pages 1 through 3. Page 1 2014-15 First Quarter Review The total cost per million gallons is approximately $1,985.6 based on flows of 194.7 million gallons per day. This is $103.4, or 4.9 percent lower than the budgeted cost per million gallon per day. A further description of these costs and benchmarking with other agencies is contained within Section 1 — Pages 6 through 8. d) The total projected capital outlay cash flow of the Capital Improvement Program (CIP) for FY 2014-15 has been revised to $155.1 million, or 91.6 percent of the board approved cash outlay of$169.2 million. The actual cash outlay spending through the first quarter is $21.8 million, or 12.9 percent of the total budgeted outlay. More detailed information on the CIP budget review can be found in Section 3. Quarterly Treasurer's Report; This section reports on financial portfolio performance with respect to the Sanitation District's funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the national economic outlook from the Sanitation District's money manager (PIMCO). PIMCO reported that the Long-Term Portfolio returned 0.06 percent over the quarter, outperforming the Merrill Lynch 1-5 year Government Corporate Index by 1 basis points, while the Liquid Operating Monies Portfolio returned 0.03 percent over the quarter, outperforming its benchmark, the three-month Treasury Bill index, by two basis points. PIMCO further notes that Far from the third quarter was marked by geopolitical tension and diverging markets. Most developed market government yields were led lower by easy central bank policies, while credit markets backed up. Equity markets somersaulted their way to modest gains in the U.S., but were flat or slightly negative in many other regions as economic data varied. U.S. growth became more sure-footed, but the eurozone recovery sputtered and growth decelerated in parts of Asia. In addition to headline volatility around central bank actions and the Scottish independence referendum, geopolitical tensions flared in Ukraine and the Middle East. U.S. GDP growth was strong in the second quarter (4.6%), more than reversing the weather-induced weakness from the first quarter. A large upswing in business conditions and still high capacity utilization suggested companies will expand their investment in both capital and labor. Similarly, consumer confidence rose to the highest level in more than six years. Given this improvement in the outlook for growth, the Federal Reserve's (Fed) policy rate projections increased modestly and the U.S. dollar surged more than 7.5% versus its major trading partners. Nevertheless, with inflation running well-below target, the Fed continued to signal Page 2 Executive Summary a dovish bias as it re-affirmed that the policy rate will be at current levels for a "considerable time" after Quantitative Easing (QE) ends. News and data from Europe were front and center last quarter. A referendum for Scottish independence from Great Britain generated substantial interest from the public and markets, but concerns were laid to rest by a 55% vote against independence. The eurozone's economic recovery went from anemic to worrisome, as growth weakened (0% for the second quarter), German business confidence fell and geopolitical tensions created uncertainty. Importantly, inflationary expectations continued to fall, spurring European Central Bank President, Mario Draghi, to expand previous easing measures by cutting rates and launching a securitized debt buying program. Core rates fell to all-time lows (below 1% for the 10-year German Bund) and peripheral spreads also tightened. With a lingering threat of deflation and smaller than expected take-up of the first targeted longer-term refinancing operation tranche, expectations for full-scale QE continued to build. Further east, growth concerns developed in Asia's largest economies, China and Japan. While recent attempts by the Chinese government to stimulate the economy appeared to bear some fruit, markets grew concerned that the traditional policy tools were becoming less effective. In Japan, falling industrial production and mixed survey data after April's tax hike indicated that the economy's underlying strength may be lower than previously believed. Moreover, the slow progress on structural reform added to concerns about Prime Minister Abe's willingness and capacity to implement less popular growth-enhancing measures. In the emerging markets (EM), a number of headlines and country-specific events drove markets. Tensions over Ukraine pushed the U.S. and European Union to expand sanctions on Russia, where the economy is likely headed toward a recession and may eventually reduce growth for neighboring Eastern European countries. Brazil's upcoming presidential election grabbed market attention as support for opposition candidate Marina Silva, who entered the race following the tragic death of Eduardo Campos, became a credible threat to current president Dilma Rousseff. And lastly, Argentina defaulted on its debt for the second time since 2001 as the nation was barred from paying interest by a New York judge. Despite the inability of the government, the "hold-outs" and the U.S. courts to come to an agreement, bonds were up at quarter end. The following summarizes fixed income sector returns during the third quarter of 2014: • U.S. Treasuries returned 0.34% for the quarter and 3.06% year to d ate (Barclays U.S. Treasury Index). U.S. Treasuries rallied through mid- August as the market responded to heightened geopolitical risk and still easy Fed policies. Rates oscillated for the rest of the quarter as stronger Page 3 2014-15 First Quarter Review economic data and expectations that the Fed might raise rates sooner were countered by the return of geopolitical concerns later in the quarter. In the end, yields rose modestly at the front end of the curve on Fed hike expectations (2-year yields rose 11 basis points), while long-term yields remained anchored by low inflation expectations (10- and 30-year yields declined 4 and 16 basis points, respectively). Finally, the Barclays U.S. Aggregate Index returned 0.17% during the third quarter. • Agency mortgage-backed securities (MBS) returned 0.18% for the quarter and 4.26% year to date (Barclays Agency Fixed-Rate MBS Index). Agency MBS underperformed like-duration U.S. Treasuries during the quarter, driven largely by larger levels of issuance and increasing concerns of MBS demand once the Fed ends its purchase program in October. • U.S. investment grade credit returned -0.03% during the third quarter and 5.67% year to date, as measured by the Barclays U.S. Credit Index. The sector underperformed like-duration Treasuries by -0.67% during the quarter as spreads widened by 11 basis points to 1.07%. • Treasury Inflation-Protected Securities (TIPS) returned - 2.04% for the third quarter (based on the Barclays U.S. TIPS Index) and 3.67% year to date. TIPS posted negative returns as real yields in the U.S. increased and underperformed nominal Treasuries as inflation and inflation expectations both decreased. Inflation decelerated from the 2% level seen earlier this year as food and energy prices fell, as did prices for transportation. • Tax- exempt municipals returned 1.49% during the quarter and 7.58% yea r to date, based on the Barclays Municipal Bond Index. Taxable municipals also posted positive returns of 0.86% in the third quarter and 11.81% year to date, according to the Barclays Taxable Municipal Index. Municipal bonds posted positive returns and outperformed Treasuries. Consistent with the 2014 trend, returns were driven by lower Treasury rates, negative net new issue supply, and mutual fund inflows. Net supply continued to contract, as new issuance did not keep pace wit h seasonally high levels of maturing bonds. • Quarterly Certificates of Participation (COP) Report The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. Page 4 Orange County Sanitation District First Quarter Financial Report for the period ended September 30, 2014 I� -71 � I Mal a'1' r 1. 4�JNSV SANITgT O,I, N� $ I p ti 90 rECTT'Y9 THE ENJPo���2 Table of Contents ExecutiveSummary...................................................................................................1 Budget Review Section 1 — Budget Review Summary...................................................................................1 Section 2—Operating Budget Review Chart of the Cost per Million Gallons by Department—Budget and Actual..............1 Chart of the Net Expenses by Major Category— Budget and Actual........................1 Divisional Contributions to Cost Per Million Gallons ................................................2 Comparison of Expenses by Department.................................................................3 Summary of Collection, Treatment, and Disposal Expenses by Major Category.....4 Summary of District-Wide Revenues .......................................................................5 Summary of Collection, Treatment and Disposal Revenues....................................5 Summary of Collection, Treatment, and Disposal Expenses by Line Item...............6 Summary of Collection, Treatment, and Disposal Expenses by Process.................8 Chartof Staffing Trends...........................................................................................9 Section 3—Capital Improvement Program Budget Review Capital Improvement Program Graphs by Type and Funding Source......................1 Summary of Capital Improvement Construction Requirements - Current Year........2 Summary of Capital Improvement Construction Requirements - Project Life..........6 Section 4—Capital Assets Schedule & Debt Service Budget Review CapitalAssets Schedule ..........................................................................................1 Debt Service Budget Review....................................................................................1 Section 5—Self Insurance Budget Review General Liability and Property Fund Budget Review................................................1 Workers' Compensation Fund Budget Review.........................................................2 Quarterly Treasurers Repo rt........................................................................................1 QuarterlyCOP Repo rt.................................................................................................1 FY 2014-15 First Quarter Financial Report This Page Intentionally Left Blank Executive Summary Consolidated Financial Reports For the First Quarter Ended September 30, 2014 Included in this consolidated report are the following quarterly financial reports for the period ended September 30, 2014: • First Quarter Budget Review: The Budget Review Summary provides the Directors, staff, and the general public with a comprehensive overview of the financial results of the Sanitation District through the first quarter ended September 30, 2014. Contained within this Budget Review is the budget-to-actual status of the Collections, Treatment & Disposal Operations, the Capital Improvement Program, the Self-Insurance Program, and Debt Service Outlays. Also included is a Capital Assets Schedule as of September 30, 2014. Various detail information can be found in this report. In summary: a) Most major expense categories are anticipated to be at or below budget. b) Total revenues are at 26.7 percent mainly due to the receipts of $102.3 million from the issuance of Wastewater Refunding Revenue Obligations, Series 2014A during the first quarter of the fiscal year. The 2014A Obligations were used to refund a portion of Certificate of Participation Series 2007B. Excluding debt financing proceeds, total revenues are at 2.6 percent of the budget due to the timing of property tax and sewer fee distribution from the County that occurs mostly in the second and fourth quarters. These two revenue sources make up 86.6 percent of the District's total budgeted revenue. Except for Service Fees, Property Taxes, User Fees, Capital Assessments, Interest Earnings, and Other, all other major revenue sources are currently tracking close to or exceeding revenue estimates. Overall, total revenues are projected to exceed budget at year-end. More detailed information on District revenues is provided within Section 1 — Pages 3 through 5. c) Collection, Treatment and Disposal Costs: As indicated within the Budget Review Summary of this report, the net operating requirements through the first quarter of $35.6 million is currently tracking at 23.3 percent of the $152.5 million budget. In addition, net operating expenses have increased $1.9 million or 5.5 percent in comparison with the same period last year. Overall, staff expects the total operating costs to remain at or below budget throughout the remainder of the year. More detailed information on District operating expenses is provided within Section 1- Pages 1 through 3. Page 1 2014-15 First Quarter Review The total cost per million gallons is approximately $1,985.6 based on flows of 194.7 million gallons per day. This is $103.4, or 4.9 percent lower than the budgeted cost per million gallon per day. A further description of these costs and benchmarking with other agencies is contained within Section 1 — Pages 6 through 8. d) The total projected capital outlay cash flow of the Capital Improvement Program (CIP) for FY 2014-15 has been revised to $155.1 million, or 91.6 percent of the board approved cash outlay of$169.2 million. The actual cash outlay spending through the first quarter is $21.8 million, or 12.9 percent of the total budgeted outlay. More detailed information on the CIP budget review can be found in Section 3. • Quarterly Treasurer's Report: This section reports on financial portfolio performance with respect to the Sanitation District's funds. Both Long-Term and Liquid Operating Monies Portfolios are summarized. A performance summary table can be found on page 2 of this section. The report also contains information on the national economic outlook from the Sanitation District's money manager (PIMCO). PIMCO reported that the Long-Term Portfolio returned 0.06 percent over the quarter, outperforming the Merrill Lynch 1-5 year Government Corporate Index by 1 basis points, while the Liquid Operating Monies Portfolio returned 0.03 percent over the quarter, outperforming its benchmark, the three-month Treasury Bill index, by two basis points. PIMCO further notes that Far from the third quarter was marked by geopolitical tension and diverging markets. Most developed market government yields were led lower by easy central bank policies, while credit markets backed up. Equity markets somersaulted their way to modest gains in the U.S., but were flat or slightly negative in many other regions as economic data varied. U.S. growth became more sure-footed, but the eurozone recovery sputtered and growth decelerated in parts of Asia. In addition to headline volatility around central bank actions and the Scottish independence referendum, geopolitical tensions flared in Ukraine and the Middle East. U.S. GDP growth was strong in the second quarter (4.6%), more than reversing the weather-induced weakness from the first quarter. A large upswing in business conditions and still high capacity utilization suggested companies will expand their investment in both capital and labor. Similarly, consumer confidence rose to the highest level in more than six years. Given this improvement in the outlook for growth, the Federal Reserve's (Fed) policy rate projections increased modestly and the U.S. dollar surged more than 7.5% versus its major trading partners. Nevertheless, with inflation running well-below target, the Fed continued to signal Page 2 Executive Summary a dovish bias as it re-affirmed that the policy rate will be at current levels for a "considerable time" after Quantitative Easing (QE) ends. News and data from Europe were front and center last quarter. A referendum for Scottish independence from Great Britain generated substantial interest from the public and markets, but concerns were laid to rest by a 55% vote against independence. The eurozone's economic recovery went from anemic to worrisome, as growth weakened (0% for the second quarter), German business confidence fell and geopolitical tensions created uncertainty. Importantly, inflationary expectations continued to fall, spurring European Central Bank President, Mario Draghi, to expand previous easing measures by cutting rates and launching a securitized debt buying program. Core rates fell to all-time lows (below 1% for the 10-year German Bund) and peripheral spreads also tightened. With a lingering threat of deflation and smaller than expected take-up of the first targeted longer-term refinancing operation tranche, expectations for full-scale QE continued to build. Further east, growth concerns developed in Asia's largest economies, China and Japan. While recent attempts by the Chinese government to stimulate the economy appeared to bear some fruit, markets grew concerned that the traditional policy tools were becoming less effective. In Japan, falling industrial production and mixed survey data after April's tax hike indicated that the economy's underlying strength may be lower than previously believed. Moreover, the slow progress on structural reform added to concerns about Prime Minister Abe's willingness and capacity to implement less popular growth-enhancing measures. In the emerging markets (EM), a number of headlines and country-specific events drove markets. Tensions over Ukraine pushed the U.S. and European Union to expand sanctions on Russia, where the economy is likely headed toward a recession and may eventually reduce growth for neighboring Eastern European countries. Brazil's upcoming presidential election grabbed market attention as support for opposition candidate Marina Silva, who entered the race following the tragic death of Eduardo Campos, became a credible threat to current president Dilma Rousseff. And lastly, Argentina defaulted on its debt for the second time since 2001 as the nation was barred from paying interest by a New York judge. Despite the inability of the government, the "hold-outs" and the U.S. courts to come to an agreement, bonds were up at quarter end. The following summarizes fixed income sector returns during the third quarter of 2014: • U.S. Treasuries returned 0.34% for the quarter and 3.06% year to date (Barclays U.S. Treasury Index). U.S. Treasuries rallied through mid-August as the market responded to heightened geopolitical risk and still easy Fed policies. Rates oscillated for the rest of the quarter as stronger economic Page 3 2014-15 First Quarter Review data and expectations that the Fed might raise rates sooner were countered by the return of geopolitical concerns later in the quarter. In the end, yields rose modestly at the front end of the curve on Fed hike expectations (2-year yields rose 11 basis points), while long-term yields remained anchored by low inflation expectations (10- and 30-year yields declined 4 and 16 basis points, respectively). Finally, the Barclays U.S. Aggregate Index returned 0.17% during the third quarter. • Agency mortgage-backed securities (MBS) returned 0.18% for the quarter and 4.26% year to date (Barclays Agency Fixed-Rate MBS Index). Agency MBS underperformed like-duration U.S. Treasuries during the quarter, driven largely by larger levels of issuance and increasing concerns of MBS demand once the Fed ends its purchase program in October. • U.S. investment grade credit returned -0.03% during the third quarter and 5.67% year to date, as measured by the Barclays U.S. Credit Index. The sector underperformed like-duration Treasuries by -0.67% during the quarter as spreads widened by 11 basis points to 1.07%. • Treasury Inflation-Protected Securities (TIPS) returned -2.04% for the third quarter (based on the Barclays U.S. TIPS Index) and 3.67% year to date. TIPS posted negative returns as real yields in the U.S. increased and underperformed nominal Treasuries as inflation and inflation expectations both decreased. Inflation decelerated from the 2% level seen earlier this year as food and energy prices fell, as did prices for transportation. • Tax-exempt municipals returned 1.49% during the quarter and 7.58% year to date, based on the Barclays Municipal Bond Index. Taxable municipals also posted positive returns of 0.86% in the third quarter and 11.81% year to date, according to the Barclays Taxable Municipal Index. Municipal bonds posted positive returns and outperformed Treasuries. Consistent with the 2014 trend, returns were driven by lower Treasury rates, negative net new issue supply, and mutual fund inflows. Net supply continued to contract, as new issuance did not keep pace with seasonally high levels of maturing bonds. • Quarterly Certificates of Participation (COP) Report: The report includes a summary of each outstanding debt issuance and a comparative chart illustrating the COP rate history. Page 4 Budget Review Summary First Quarter Financial Report September 30, 2014 Financial Management is pleased to present the FY 2014-15 first quarter financial report. This report provides a comprehensive overview of the financial condition of the Sanitation District and reports on the status of all capital projects in progress. A summary of the sections contained within this report is provided below. Operating Budget Review., This section reports on collection, treatment and disposal net operating requirements. At September 30, 2014, 23.3 percent, or $35.6 million of the FY 2014-15 revised net operating budget of$152.5 million has been expended. Net operating expenses increased from the same period last year by $1.9 million, or 5.5 percent, mainly due to an increase of $542,000 in Salaries and Benefits, $116,000 in Administrative Expenses, $308,000 in Operating Materials and Supplies, $1.4 million in Repairs and Maintenance, and $229,000 in Utilities. These cost increases have been partially offset by decreases of$43,000 in Contractual Services, $61,000 in Professional Services, $88,000 in Other Operating Supplies, and an increase of $511,000 in indirect costs allocated out to capital projects. These and other variances that factor into this net increase in expenses are discussed in more detail below. Overall, staff expects the total operating costs to remain at or below budget throughout the remainder of the year. Significant operating results as of September 30, 2014 include the following: • Salaries. Wages and Benefits— Personnel costs of$22.7 million are below target at 22.9 percent of budget through the first quarter of FY 2014-15. Although the budget is based on a 3 percent vacancy factor, staffing is 43 full-time equivalents (FTE's), or 6.9 percent below the total 626 FTE's approved in the FY 2014-15 budget. Salary and benefit costs are 2.4 percent, or $542,000 higher than the $22.2 million incurred in the same period last year mainly due to the increase of retirement costs offset by a decrease in salaries and wages. Net operating personnel costs are expected to approximate budget throughout the remainder of the year. • Administrative Expenses — Administrative Expenses totaled $402,000, or 28.8 percent of the $1.4 million budget through September 30. These costs are $116,000 or 40.4 percent higher at September 30 in comparison with the prior year mainly due to an increase in purchases of small computer items and the timing of membership payments. It is anticipated that the administrative costs will approximate budget at year-end. • Printing and Publication Expenses — Printing and Publication Expenses totaled $74,000, or 17.2 percent of the $430,000 budget through September 30. These costs are $19,000 or 35.4 percent higher at September 30 in comparison with the Section 1 - Page 1 FY 2014-15 First Quarter Report prior year mainly due to the purchase of aluminum prints of the new core values and timing of payments for managed copy center services. It is anticipated that the printing and publication costs will be below budget at year-end • Training and Meetings — Training and meetings of $125,000 are below target at 12.0 percent of the $1.0 million budget. This account is lower than the proportionate budget due to the timing of training throughout the year. These costs have decreased over the same period last year by $3,000 or 2.0 percent. Total training and meeting costs are anticipated to be below budget at year-end. • Operating Materials and Supplies — Operating materials and supplies of $4.1 million is at target at 25.9 percent of budget through September 30. Operating Materials and Supplies have increased from the prior year by $308,000 or 8.1 percent, primarily due to increases in Chemical Coagulants of $195,000, Odor Control of $45,000, Gas, Diesel & Oil of $14,000, and Safety Equipment of$46,000. The increases are mainly brought about by timing of chemical deliveries and rate increases. Based on current processes, operating materials and supplies are anticipated to approximate budget at year-end. • Contractual Services — Overall costs for contractual services are below target at approximately $5.3 million or 21.7 percent of budget through September 30. Solids Removal costs, budgeted at $18.3 million, comprise the majority of this expense category. With a decrease of $3,000, or 0.1 percent lower than the prior year, solids removal costs totaled $4.4 million, or 24.0 percent of budget at September 30. Additional decreases include $132,000 in Other Contractual Services due to manhole rehabilitations and sewer line cleaning in the prior period, offset by increases of $58,000 in Grit & Screenings Disposal and $30,000 in Security Services. Overall, Contractual Services is lower by $43,000 or 0.8 percent, over the same period last year. Total contractual services costs are anticipated to approximate budget at year-end. • Professional Services — Professional services costs totaled $454,000 or 13.9 percent of the $3.3 million budget through September 30. Most professional service costs, such as Legal, Engineering, Environmental Consulting, Software Program Consulting Services, Industrial Hygiene Services, Labor Negotiation, and Other Services, are proportionately low through September 30 due to a variety of factors such as services being in the planning or request for proposal stage, services not being needed until later in the fiscal year, or the need for the service is being re- evaluated. These costs are $61,000 or 11.8 percent lower at September 30 in comparison with the prior year mainly due to timing of services performed. It is anticipated that the costs for this category will be at or below budget at year- end. • Research & Monitoring — Research and monitoring costs totaled $199,000, or 24.0 percent of the $830,000 budget through September 30. These costs are $2,000, or 1.2 percent lower at September 30 in comparison with the prior year. Section 1 - Page 2 Budget Review Summary Total Research & Monitoring costs are anticipated to approximate budget at year-end. • Repairs and Maintenance — Repair and maintenance costs totaled $3.3 million, or 24.9 percent of the $13.1 million budget through September 30. These costs are $1.4 million, or 71.8 percent higher at September 30 in comparison with the prior year, mainly due to current period additional unanticipated service repairs, such as Plant 1 Headworks repairs and carbon media installation in Plant 2 trickling filters. Additionally, several prepayments totaling $432,000 were made in the prior year for computer maintenance agreements recognized as expenses in the current year. It is anticipated that the costs for this category will approximate budget at year- end. • Utilities — Utilities costs totaled $2.4 million, or 32.0 percent of the $7.4 million budget through September 30. These costs are $229,000 or 10.6 percent higher at September 30 in comparison with the prior year, primarily due to an increase in electricity and gas charges totaling $323,000 as a result of increased rates, and usage primarily related to weather variations, offset by a decrease of $102,000 in Green Acres Project (GAP) water usage due to completion of Project J-109, Cengen Cooling Water System Replacement. The overall operating philosophy of the Central Generation facilities is to purchase electricity for power production rather than to purchase natural gas as a supplement to the digester gas needed to run the Central Generation facilities. This operating philosophy allows the Central Generation facilities to meet air emission requirements. It is anticipated that the costs will approximate budget at year-end. • Other Operating Supplies — Other operating supplies costs totaled $297,000, or 19.3 percent of the $1.5 million budget through September 30. These costs are $88,000 or 22.8 percent lower at September 30 in comparison with the prior year, primarily due to a decrease in general liability in-lieu premium charges based on the estimated amount required to maintain recommended reserve balances. It is anticipated that the costs will be below budget at year-end. • Other Non-Operating Expenses — Other Non-Operating costs totaled $15,000, or 22.8 percent of the $67,000 budget through September 30. These costs are 0.8 percent higher at September 30 in comparison with the prior year. It is anticipated that the costs will be at or below budget at year-end • Revenues — Service Fees & Property Taxes — Through September 30, revenues from service fees are at <$533,000>, or <0.2> percent of budget and Property taxes are $2.5 million, or 3.3 percent of budget. These items comprise the majority of the Sanitation District's revenues and are mostly collected by the County through the property tax roll and distributed to the Sanitation District throughout the year based on a set distribution schedule that begins in November of each year. The decrease in service fee revenue is due to an increase of $585,000 in user fee Section 1 - Page 3 FY 2014-15 First Quarter Report refunds issued in the current year. These revenues are expected to approximate budget at year-end. • Revenues — Permittee User Fees — Permittee User Fees are at $1.6 million, or 11.7 percent of the $13.7 million budget. The number of permittees fluctuates from year to year as businesses are established or close their operations. The revenues through the first quarter are $1.1 million or 40.6 percent lower in comparison with the same period last year due to a decrease in amount of discharge from the permittees. It is estimated that the permittee user charges will be at or below budget at year-end. • Revenues — Inter District Sewer Use - SAWPA — Inter District Sewer revenues- SAWPA are at $526,000, or 20.8 percent of the $2.5 million budget. This revenue is derived from charges to the Santa Ana Watershed Protection Agency (SAWPA) for treatment of flows. These revenues are expected to be at or below budget at year-end. • Revenues — Intra District Sewer Use — IRWD — Intra District Sewer revenues- IRWD are at $711,000, or 30.9 percent of the $2.3 million budget. This revenue is derived from charges to the Irvine Ranch Water District (IRWD) for treatment of flows. The revenues through the first quarter are higher than the same period last year by $268,000 or 60.7 percent mainly due to an increase in unit costs of various charges and a fluctuation of interest earnings of $120,000 allocated to IRWD. These revenues are expected to approximate budget at year-end. • Revenues - Sludge Disposal- IRWD - Sludge Disposal fees-IRWD are at $2.4 million, or 28.7 percent of the $8.4 million budget. The revenue is derived and fluctuated from flows discharged from IRWD to Sanitation District for the handling, treatment and disposal of solids. These revenues are expected to approximate budget at year-end. • Revenues — Capital Assessments- IRWD — Capital Assessments-IRWD are at <$1.2 million>, or <33.4> percent of the $3.5 million budget. The revenues through the first quarter are lower than the same period last year by $1.3 million or 805.6 percent mainly due to a reversal of$1.5 million from the prior year-end accrual for projects that have been placed in service during the year. Projects that are placed in service are accrued and depreciated at year-end and reversed in the beginning of the following year. It is estimated that the capital assessments will be below budget at year-end. • Revenues — Capital Facilities, Capacity Charges (CFCC) — CFCC are at $4.5 million, or 39.9 percent of the $11.4 million budget. The revenues through the first quarter are higher than the same period last year by $505,000 or 12.6 percent due to an increase in construction activity in the current year. These revenues are expected to exceed the budget at year-end. Section 1 - Page 4 Budget Review Summary • Revenues — Interest Earnings — Interest Earnings are at <$135,000> or <1.0> percent of the $13.1 million budget. The revenues through the first quarter are lower than the proportionate budget due to the total return of the Sanitation District's liquid and long-term operating investments being less than what was anticipated. It is estimated that the interest earnings will be at or below the budget amount at year-end. • Revenues — Wastehauler — Wastehauler revenues are at $148,000 or 22.4 percent of the $660,000 budget. This revenue is derived from fees charged to wastehaulers allowing them to dump waste into the Sanitation District's system. These revenues are expected to approximate budget at year-end. • Revenues — CNG Sales — CNG Sales revenues are at $109,000 or 32.9 percent of the $331,000 budget. The revenues through the first quarter are higher than the same period last year by $73,000 or 199.8 percent due to the compressed natural gas (CNG) fueling station located at the front entrance of Plant No. 1 being shut down in the prior year for 3 months from mid-August to November 2013 while gas lines were rerouted for the Sludge Dewatering and Odor Control Project (Project No. P1-101). These revenues are expected to approximate budget at year-end. • Revenues - Other — Other non-operating revenues are at $48,000 or 11.6 percent of the $410,000 budget. These revenues consist of charges to Sunset Beach Sanitary District for treatment of flows and other miscellaneous revenues. The revenues in the first quarter are $112,000, or 70.2 percent lower in comparison with the same period last year mainly due to $70,000 of purchasing card rebate credits received in the first quarter of the prior year. The rebate credit was $118,000 for the current year, but not received until the beginning of the second quarter. These revenues are expected to be below budget at year-end. Section 1 - Page 5 FY 2014-15 First Quarter Report Comparison of First Quarter Cost per Million Gallon Results with Budget Last Five Years I 2,075 2,000 2,o 9 1,925 2,01 7 1'%6 1,850 1,775 1,700 �• �.� 1,761 1,625 1,550 1,475 1,400 1,325 1,250 1,175 1,100 1,025 950 875 800 725 650 575 10-11 11-1 19:13 13-14 14-1 tat Annual tat Annual tat Annual tat Annual let Annual Qtr Budget Qtr Budget Qtr Budget Qtr Budget Qtr Budget As demonstrated in the preceding graph for each of the last four fiscal years, the cost per million gallons at the end of the first quarter has been 8.0 percent to 10.4 percent lower than the annual budget. The FY 2014-15 first quarter, although higher than previous years, continues with this trend with 4.9 percent lower when compared with this year's budget. Staff believes that overall operating costs will be below budget at year-end. The total cost per million gallons at September 30 is $1,985.6 based on flows of 194.7 million gallons per day. This is $103.4 or 4.9 percent lower than the budgeted cost per million gallons of $2,089.0. There is an inverse relationship between the amount of flows and the cost per unit of collection, treatment, and disposal. Consequently, the lower cost per million gallons is due to net expenses being 6.7 percent less than the proportionate budget through September 30, which is partially offset by flows of 194.7 million gallons per day being 2.6 percent lower than the budgeted flow of 200 million gallons per day. More detailed information on operating revenues, costs, and related information is provided within Section 2. Section 1 - Page 6 Budget Review Summary Following are data tables showing the last five years of Single Family Residential User Fees (SFR) and the cost per MG to collect, treat, and dispose of wastewater for OCSD and for similar agencies. The agencies used in the table were determined to be those that most closely resembled OCSD in terms of services provided and treatment levels. The summaries demonstrate that OCSD's SFR and cost per million gallons are each one of the lowest in their respective group. Benchmark Study Five-Year Single Family Rate Rates as of July 2010 2011 2012 2013 2014 Agency SFR SFR SFR SFR SFR Notes San Francisco $613.44 $636.00 $667.92 $701.40 $ 744.83 City of San Diego $608.04 $608.04 $572.58 $572.58 $ 572.58 Vallejo Sanitation/Flood Control District $464.52 $483.12 $495.12 $507.48 $ 520.20 Central Contra Costa Sanitary District $311.00 $341.00 $371.00 $405.00 $ 439.00 City of Los Angeles $359.64 $358.66 $391.56 $409.20 $ 435.40 Note 1 Dublin San Ramon Services District $299.46 $345.06 $355.44 $355.44 $ 372.96 East Bay MUD $271.84 $287.98 $305.10 $331.10 $ 358.14 Union Sanitary District $289.84 $304.33 $319.55 $337.76 $ 357.02 Sacramento County $240.00 $264.00 $288.00 $312.00 $ 348.00 City of Hayward $308.40 $317.64 $327.24 $327.24 $ 337.08 Orange County Sanitation District $244.00 $267.00 $294.00 $308.00 $ 316.00 City of Fresno $299.76 $299.76 $309.00 $309.00 $ 309.00 Irvine Ranch Water District $ 199.80 $202.80 $206.40 $220.80 $ 246.00 Note 2 Los Angeles County $ 141.00 $143.00 $149.00 $230.00 $ 245.00 Oro Loma Sanitary District $178.00 $183.00 $189.00 $195.00 $ 200.00 Notes: (1)-Data is for the typical SFR customer rate and is not the average rate. (2)-Data represents the maximum SFR rate and is not the average rate. Section 1 - Page 7 FY 2014-15 First Quarter Report Benchmark Study Five-Year Cost per MG FY 08-09 FY S10 FY 10-11 FY 11-12 FY 12-13 Agency Svc. Trt. Cost/MG Cost/MG CosUMG CostIMG Cost/MG Notes Vallejo Sanitation/Flood Control District B 3 $4,865.00 $4,911.00 $4,536.00 $5,176.00 $5,435.00 San Francisco B 3 $3,994.34 $4,339.32 $3,857.80 $4,778.96 $5,006.74 Note 3 Central Contra Costa Sanitary District B 4 $3,874.06 $4,136.89 $3,929.80 $4,203.43 $4,621.84 Union Sanitary District B 3 $2,83252 $2,964.94 $3,206.10 $3,267.06 $3,80540 City of San Diego B 2 $3,060.41 $3,583.70 $3,208.48 $3,242.30 $3,340.35 Note 5 East Bay MUD T 4 $2,081.36 $1,856.65 $2,000.31 $2,320.02 $2,359.40 Dublin San Ramon Services District B 3 $2,039.79 $1,905.99 $1,964.64 $2,009.57 $2,159.49 Sacramento County T 3 $1,791.44 $1,638.91 $1,591.75 $3,312.50 $2,143.16 Note City of Los Angeles B 4 $1,904.00 $1,880.00 $1,836.00 $1,935.00 $2,062.00 Note 1 Orange County Sanitation District B 2 $1,576.67 $1,598.72 $1,816.62 $1,871.47 $1,906.01 City of Fresno B 3 $1,227.68 $1,207.20 $1,263.50 $1,383.60 $1,411.89 Los Angeles County $1,096.00 $1,117.00 $1,078.00 $1,156.00 $1,008.00 Note Irene Ranch Water District $1,935A5 $1,962.02 WA NIA NIA Note 4 Legend for Service ProWed and Treatment Letel: B-Agency operates both collection and tretment facilities T-Agency proudes treatment services but not collection 2-Advanced primary or primary with some secondary treatment 3-Secondary treatment 4-Advanced secondary or secondary with some tertiary treatment Notes: (1)-In FY2003.04 the Cityapplied Engineers and Architects Association(EAR COLA which covered multiple}ears. (2)-Does not include source control or ohedhead costs. (3)-New dataset represents wastwater flows from finalized publiclyavailable audited documents. (4)-Cost of Wastewater Treatment,including Collections,Treatment and GenerallAdministrative Costs minus rederned water e)penses. (5)-Beginning in Fiscal Year200H9,cost per mg includes the Point Loma Wastewater Treament Plant and South Bay Water Redamation Plant. (6)-Mles of sewers number changed in 2012 to include parallel force main pipes per the 2011 State of the District Report. NIA-Not currently available. Section 1 - Page 8 Budget Review Summary Capital Outlay Review: $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 9130/14 Actual Projected 2014-15 2014-15 Capital Capital Outlay Capital Outlay Outlay Cashflow $21,847,000 $155,062,300 Budget $169,235,000 As depicted by the preceding chart, Capital Outlays totaled $21,847,000 or 12.9 percent of the capital outlay cash flow budget for FY 2014-15 as of September 30, 2014. Costs are proportionately low through the first quarter as some projects are still in the design phase or have experienced various delays. Examples as of September 30 are the Sludge Dewatering and Odor Control at Plant 1 which has a FY14-15 cash flow budget of $61.1 million but actual costs of only $6.4 million, and the Title 24 Access Compliance and Building Rehabilitation Project, which has a budget of $4.8 million but actual costs of only $134,000. Overall, the capital outlay costs of the capital improvement program are expected to approximate $155.1 million, or 91.6 percent of the capital outlay cash flow budget at year-end. More detailed information on the capital improvement program is provided within Section 3. Capital Assets Schedule & Debt Service Budget Review. Section 4 is the Capital Assets Schedule and Debt Service Section. This section shows the cost value of the Sanitation District's capital facilities at September 30, 2014, as well as the debt service costs resulting from the need to provide funding for the construction of capital facilities. The majority of principal payments on debt issues are due in August during the first quarter, and in February during the third quarter of each fiscal year. As of September 30 2014, 11.0 percent of the principal payments have been made through the end of the first quarter. Total principal payments are expected to approximate budget at year-end. Interest costs are expensed ratably throughout the fiscal year. Interest expense is anticipated to approximate budget at year-end. Section 1 - Page 9 FY 2014-15 First Quarter Report Self-Insurance Budget Reviews: Section 5 is the Self-Insurance Section. Through September 30, the Self-Insurance Fund revenues totaled $315,000, 24.6 percent of the budget, while expenses were $503,000, 22.9 percent of the budget. Separate fund accounting is used for recording the revenue and expenses incurred in managing these liability claims. The revenues to these funds represent charges to operating divisions. Expenses to these funds include actual claims paid, claims administration, and excess loss policies. Section 1 - Page 10 Operating Budget Review Cost per Million Gallons by Department Budget and Actual September 30, 2014 $1.300 $1.200 $1,100 $1,000 $900 $800 $700 E600 E599 $a00 E300 E299 $ioo $0 E E — z — E w � �Butlgei �Adual Collection,Treatment, & Disposal Expenses by Major Category Budget and Actual (in thousands) September 30, 2014 $65,000 $60,000 $56,000 $50,000 U5,000 EA0,000 $36,000 $30,000 $26,000 $20,000 $15,000 $10,000 $5.000 $Q y E N N a a F N h E g' m O m 2 C 5m - vQ �ButlBet �Aclual O Section 2-Page 1 2014-15 First Quarter Report Divisional Contributions to Cost Per Million Gallons For the Three Months Ended September 30,2014 2014-15 9/30112 9/30113 Annual 9130114 Actual Actual Budget Actual Flow in Million Gallons 18,912.00 18,635.08 73,000.00 17,915.60 Flow in Million Gallons per Day 205.57 202.56 200.00 194.73 Executive Management Department General Management Administration $ 22.62 $ 25.49 $ 36.43 $ 24.31 Board Services 6.03 7.57 9.03 5.57 Public Affairs 16.68 6.53 10.93 6.68 Subtotal 45.33 39.59 56.39 36.56 Human Resources Department Human Resources 49.48 47.58 65.25 50.48 Subtotal 49.48 47.58 65.25 50.48 Administrative Services Department Administrative Services 8.34 7.88 9.28 8.36 Financial Management 36.07 37.60 51.09 42.16 Contracts, Purchasing,&Materials Mgmt. 50.84 52.45 61.90 59.49 Information Technology 113.57 120.20 142.28 154.53 Risk Management 49.41 41.68 53.90 44.97 Subtotal 258.23 259.81 318.45 309.51 Facilities Support Services Department Facilities Support Administration 7.34 7.49 9.71 8.45 Facilities Support 6.29 6.13 6.72 6.65 Equipment Rebuild 18.66 19.65 22.62 24.65 Fleet Services 20.79 22.24 27.37 28.66 Facilities Engineering&Repair Services 59.43 35.76 53.04 39.11 NPDES Source Inspection 29.39 32.57 36.17 29.06 Odor and Corrosion Control 91.20 88.95 98.59 96.93 Collection Facilities O&M 54.61 46.67 55.33 58.63 Subtotal 287.71 259.46 309.55 292.14 Engineering Department Engineering Administration 5.51 5A4 5.69 8.79 Planning 38.20 42.13 50.17 41.06 Project Management Office 42.53 44.18 49.03 49.68 Engineering and Construction 113.88 112.52 125.29 114.57 Environmental Compliance 77.55 77.59 92.56 85.75 Subtotal 277.67 281.86 322.74 299.85 Operations&Maintenance Department Operations&Maintenance Administration 9.16 10.70 12.55 10.36 Plant No. 1 Operations 319.13 344.61 362.96 371.88 Plant No.2 Operations 291.05 290.39 310.58 313.66 Building, Grounds&Mechanical Maintenance 141.35 163.29 230.03 204.14 Instrumentation&Electrical Maintenance 175.41 184.87 216.73 193.08 Environmental Laboratory&Ocean Monitoring 98.77 99.40 113.11 112.18 Subtotal 1,034.87 1,093.26 1,245.96 1,205.30 Total Operating Expenses 1.953.29 1,981.56 2,318.34 2,193.84 Cost Allocation (192.11) (172.81) (229.34) (208.23) Net Operating Requirements $ 1,711.18 $ 1,808.75 $ 2,089.00 $ 1,985.61 Section 2-Page 2 Operating Budget Review Comparison of Expenses by Department For the Three Months Ended September 30, 2014 2014-15 9130112 9130/13 year to Date Budget% Department and Division Actual Actual Budget 9/30/14 Realized Executive Management Department General Management Administration $ 427,844 $ 475,084 $ 2,659,070 $ 435,580 16.38% Board Services 113,985 141,003 659,220 99,731 15.13% Public Affairs 315,398 121,617 798,200 119,695 15.00% Subtotal 857,227 737,704 4,116,490 655,006 15.91% Human Resources Department Human Resources 935,823 886,595 4,763,030 904,423 18.99% Subtotal 935,823 886,595 4,763,030 904,423 18.99% Administrative Services Department Administrative Services 157,791 146,781 677,510 149,838 22.12% Financial Management 682,094 700,717 3,729,300 755,290 20.25% Contracts, Purchasing,&Materials Mgmt. 961,429 977,396 4,518,800 1,065,857 23.59% Information Technology 2,147,916 2,239,878 10,386,290 2,768,527 26.66% Risk Management 934,484 776,733 3,934,910 805,719 20.48% Subtotal 4,883,714 4,841,505 23,246,810 5,545,231 23.85% Facilities Support Services Department Facilities Support Administration 138,814 139,537 709,130 151,457 21.36% Facilities Support 118,979 114,239 490,790 119,146 24.28% Equipment Rebuild 352,931 366,267 1,651,440 441,691 26.75% Fleet Services 393,216 414,371 1,997,800 513,519 25.70% Facilities Engineering&Repair Services 1,124,007 666,339 3,871,880 700,751 18.10% NPDES Source Inspection 555,831 606,908 2,640,360 520,712 19.72% Odor and Corrosion Control 1,724,845 1,657,536 7,196,980 1,736,597 24.13% Collection Facilities O&M 1,032,878 869,665 4,039,300 1,050,312 26.00% Subtotal 5,441,501 4,834,862 22,597,680 5,234,185 23.16% Engineering Department Engineering Administration 104,254 101,340 415,210 157,505 37.93% Planning 722,344 785,070 3,662,170 735,592 20.09% Project Management Office 804,238 823,327 3,579,510 890,090 24.87% Engineering and Construction 2,153,693 2,096,765 9,146,430 2,052.518 22.44% Environmental Compliance 1,466,694 1,445,942 6,757,090 1,536,320 22.74% Subtotal 5,251,223 5,252,444 23,560,410 5,372,025 22.80% Operations&Maintenance Department Operations&Maintenance Administration 173,203 199,309 916,210 185.645 20.26% Plant No. 1 Operations 6,035,328 6,421,854 26,496,250 6,662,415 25.14% Plant No.2 Operations 5,504,272 5,411,340 22,671,990 5,619,386 24.79% Building,Grounds&Mechanical Maintenance 2,673,277 3,042,961 16,792,130 3,657,346 21.78% Instrumentation&Electrical Maintenance 3,317,354 3,444,986 15,821,250 3,459.180 21.86% Environmental Laboratory&Ocean Monitoring 1,867,760 1,852,906 8,258,570 2,009,382 24.33% Subtotal 19,571,194 20,373,356 90,956,400 21,593,354 23.74% Total Operating Expenses 36,940,682 36,926,466 169,240,820 39,304,224 23.22% Cost Allocation (3,633,154) (3,220,325) (16,740,700) (3,730.868) 22.29% Net Operating Requirements $ 33,307,528 $ 33,706,141 $ 152,500,120 $ 35,573,356 23.33% Section 2-Page 3 2014-15 First Quarter Report Summary of Collection, Treatment, &Disposal Expenses by Major Category For the Three Months Ended September 30, 2014 Expense Expense Increase Increase Percent Budget Through Through (Decrease) (Decrease) Budget Remaining Description 2014-15 9130114 9/30/13 $ % Realized Budget Salary&Wages $ 63,460,100 14.958,814 15,089,551 $ (130,737) -0.87% 23.57% $48,501,286 Employee Benefits 35,708,700 7,788,032 7,114,954 673,078 9.46% 21,81% 27,920,668 Administrative Expenses 1,397,070 401,662 286,070 115,592 40.41% 28.75% 995,408 Printing&Publication 430,340 74,161 54,769 19,392 35.41% 17,23% 356,179 Training&Meetings 1,041,710 124,555 127,065 (2,510) -1.98% 11.96% 917,155 Operating Materials&Supplies 15,830,500 4,097,453 3,789,135 308,318 8.14% 25.88% 11,733,047 Contractual Services 24.278,170 5,257,651 5,300,881 (43,230) -0.82% 21.66% 19,020,519 Professional Services 3,269,370 454,072 514,685 (60,613) -11,78% 13.89% 2,815,298 Research&Monitoring 830,000 198,984 201,375 (2,391) -1.19% 23.97% 631,016 Repairs&Maintenance 13,063,210 3,254,607 1,894,989 1,359,618 71,75% 24,91% 9,808,603 Utilities 7,437,770 2,381,775 2,153,072 228,703 10.62% 32.02% 5.055,995 Other Materials,Supplies, and Services 2,493,880 312,458 399,920 (87,462) -21.87% 12.53% 2,181,422 Net Cost Allocation (16,740,700) (3,730,868) (3,220,325) (510,543) 15.85% 22.29% (13,009,832) Net Operating Requirements 152,600,120 35,573,356 33,706,141 1,867,215 5.54% 23.33% 116,926,764 Gallonage Flow(MG) 73,000.00 17,915.60 18.635.08 (719.48) -3.86% Gallonage Flow(MGD) 200.00 194.73 202.56 (7.83) -3.87% Gallonage Flow(Vs/MG) $27089000 $1,985.61 $1,808.75 $176.86 9.78% Section 2-Page 4 Operating Budget Review Summary of Revenues For the Three Months Ended September 30, 2014 Revenue Percent Revenue Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2014-15 9/30/14 Realized Budget 9130113 $ % Service Fees $ 288,946,000 $ (533,104) .0.18% $289,479,104 $ 14,282 $ (547,386) -3832.70% User Fees(Permits) 13,684,000 1,606,607 11.74% 12,077,393 2,702,972 (1,096,365) -40.56% Inter District Sewer Use-SAWPA 2,529,000 525.900 20.79% 2,003,100 642,582 (116.682) -18.16% Intra District Sewer Use-IRWD 2,302,140 710,569 30.87% 1,591,571 442,122 268,447 60.72% Sludge Disposal-IRWD 8,394,000 2.410.196 28]1% 5,983,804 1,788,461 621.735 34.76% Capital Assessments-IRWD 3,469,000 (1,158,624) -33.40% 4,627,624 164,194 (1,322,818) -805.64% Capital Facilities Capacity Charges 11,355,000 4,526,294 39.86% 6,828,706 4,021,097 505.197 12.56% Debt Proceeds - 102,251,006 N/A (102,251,006) - 102,251,006 100.00% Property Taaes 77,733,000 2,529,548 3.25% 75,203,452 2,118,777 410.771 19.39% Interest Earnings 13,143,000 (135,463) -1.03% 13,278,463 1,226,338 (1,361,801) -111.05% Wastehauler 660,000 147.839 22.40% 512,161 132,141 15,698 11.88% CNG Sales 331,000 108,905 32.90% 222,095 36,328 72,577 199.78% Rents&Leases 251,000 59,726 23.80% 191,274 58.555 1,171 2.00% Other 410,000 47,522 11.59% 362,478 159,246 (111,724) -70.16% Power Sales 4.000 7,267 181.68% (3,267) 1.380 5,887 426.59% Other Sales 9,000 1,643 18.26% 7,357 1,140 503 44.12% Total Revenues $ 423,220,140 $ 113,105,831 26.73% $310,114,309 $13,509,615 $ 99,596,216 737.22% Section 2-Page 5 2014-15 First Quarter Report Summary of Collection,Treatment, &Disposal Expenses by Line Item For the Three Months Ended September 30,2014 Expense Percent Expense Increase Increase Budget Through Budget Remaining Through (Decrease) (Decrease) Description 2014.15 9130116 Expensed Budget 950113 $ % Salaries.Wanes&Benefits Salaries&Wages $ 63,460,100 $ 14,958,814 23.57% $ 48,501,286 $ 15,089,551 $ (130,737) -0.87% Employee Benefits Retirement 25,398,200 5,340,009 21.03% 20,058,191 4,753,349 586,660 12.34% Group Insurances 8,965,000 2,146,180 23.94% 6,818,820 2,103,887 42,293 2.01% Tuition&Certlficaan Relmb 173,400 28,839 16.63% 144,561 48,077 (19,238) 40.01% Edu.degreea,Cad.&Lic. 295.800 69,535 23.51% 226,265 68.663 872 1.27% Untorm Rental 54,100 12,055 22.28% 42,045 11,242 813 7.23% Workers Compensation 755,000 188,750 25.00% 566,250 113,750 75,000 65.93% Unemployment nsurance 60,100 1,085 1.81% 59,015 14,407 (13,322) -92.47% EMT Supplemental Benefits 7,100 1,579 22.24% 5.521 1.579 0.00% Total Benefits 35,708,700 T,788,032 21.81% 27,920,668 7,114,954 673,078 9.46% Salaries,Wages&Barnette 99,168,800 22,746,846 22.94% 76,421,954 22,204,505 542,341 2.44% Mail.supply,&Services Administrative Expenses Memberships 576,240 238,200 41.34% 338,040 145.527 92,673 63.61 Office Exp-Supplies 67,840 8,297 12.23% 59,543 11.841 (3,544) -29.93% Postage 38,570 6,806 17.65% 31,764 11,574 (4,766) 41.20% Books&Publications 40,600 2,691 6.63% 37,909 5,426 (2,73,1) -50.40% Fortes 890 - 0.00% 890 - - NIA Small Computer Items 550.000 133,322 24.24% 416.678 90.342 42,980 47.57% Minor Furniture&Fixtures 122,930 12,346 10.04% 1101584 21,361 (9,015) 42120% Subtotal 1,397,070 401,662 28.75% 995,408 286,070 115,592 40.41% Printing&Publication Repro-In-House 378,640 63,908 16.88% 314,732 37,877 26,031 68.73% Printing-Oulside 26,330 6,616 25.13% 19,714 7,957 (1,341) -16.85% Nations&Ad. 25,110 3,418 13.61% 21,692 8,842 (5,424) -61.34% Photo Processing 260 219 84.23% 41 93 126 135.48% Subtotal 430,340 74,161 17.23% 355,179 54,169 19,392 35.41% Training&Meetings Meetings 189.970 25,873 13.62% 164,O97 23.648 2,225 9.41% Training 851,740 98,682 11.59% 753,058 103,417 (4,735) 4.58% Subtotal 1p41,710 124,555 11.96% 917,156 127,065 (2,610) -1.98% Operating Marls&Supplies Chemical Coagulants 5,785,000 1,678,584 29,02% 4,106,416 1,483,976 194,608 13.11% Odor Control 7,056,600 1,779,767 25.22% 5,276,833 1,734,844 44,923 2.59% Disinfection 425,000 70,348 16.55% 354,652 70,504 (1m) -0.22% Chemicals-Miss,&Cogan 68.000 2,400 3.53% 65.600 6.373 (3,973) -62.34% Gasoline,Diesel&Oil 665,800 135,934 20.42% 529,866 122,128 13,806 11.30% Tools 409,370 93,101 22.74% 316,269 85,677 7,424 8.67% Safety equlpmentlools 461,440 130,162 28.21% 331,278 83,693 46,469 55.52% Sol,Paints&Jan.Supplies 90.610 23,153 25.55% 67,457 21.096 2,057 9.75% Lab Chemicals&Supplies 690,770 154,664 22.39% 536,106 145,431 9,233 6.35% Other Operatng Supplies 161,220 29,340 18.20% 131,880 35,413 (6,073) -11.15% Property Tax Fees 16,690 0.00% 16,690 NIA Subtotal 15,830,500 4,097,453 25.88% 11,733.067 3789,135 308,318 8.14% Contractual Services Solids Removal 18,321,850 4,399,507 24.01% 13,922,343 4,402,307 (2,800) -0.06% Other Waste Disposal 831,450 211,50 25.45% 619,882 153,617 57,951 37.72% Groundskeeping 170,000 38,633 22.73% 131,367 49,406 (10,773) -21.81% Janitorial 459,940 126,853 27.58% 333,087 109,710 17,143 15.63% Outside Lab Services 239,400 40,609 16.96% 198,791 48,159 (7,550) -15.68% Oxygen Plant Oper 719.000 157,520 21.91% 561,480 170.205 (12,685) -7.45% County Service Fee 686,360 10,935 1.59% 675,425 8,690 2,245 25.83% Temporary Sernces 418,990 70,781 16.89% 348,209 55,997 14,784 26.40% Security Services 850,000 93,037 10.95% 756,963 62,709 30,328 48.36% Other 1,581,180 108,208 6.84% 1,472,972 240,081 (131,873) Subtotal 24,278,170 5,257,651 21.66% 19,020,519 5,300,881 (43,230) (Continued) Section 2-Page 6 Operating Budget Review Summary of Expenses by Line Item For the Three Months Ended September 30,2014 Expense Percent Expense Increase Increases Budget Through Budget Remaining Through (Decrease) (Decrease) Description 20W5 9/30/14 Expensed Budget 9I30/13 $ % Continued: Professional Services Legal 844,400 111,837 13.24% 732,563 173,000 (61.163) -35.35% Audit&Accounting 224,650 67,712 30.14% lm,938 75,830 (8,118) -10.71% Engineering 635,000 30,478 4.80% 604,522 90,714 (60,236) -66.40% Erwin,Saentific Consulting 67,500 5,569 8.25% 61,931 11,725 (6,156) -52.50% Soffware Prgm Consulting 420,000 79,462 18.92% 340,538 59,663 19,799 33.18% Advocacy Efforts 187,000 44,743 23.93% 142,257 21,000 23,743 113.06% Industrial Hygiene Services 50,000 380 0.76% 49,620 6,845 (6,465) -94.45% Labor Negotiation Services 119,080 7,348 6.17% 111,732 30,000 (22,652) -75.51% Other 721,740 106,543 14.76% 615,197 45,908 60,635 132.08% Subtotal 3,269,370 454072 13.89% 2,815,298 514,685 (60,613) -11.78% Research&Monitoring Environmental Monitoring 340,000 51,687 15.17% 288,413 100,610 (49,023) 48.73% Air Quality Monitoring 85,000 47,397 55.76% 37,603 765 46,632 6095.69% Research 405,000 100,000 24.69% 305,000 1001000 0.00% Subtotal 830,000 198,984 23.97% 631,016 201,375 (2,391) -1.19% Repairs&Maintenance Materials&Services 11,111.070 2,545,484 22.91% 8,565,586 1,534,949 110101535 65.84% Svc.Mb, Agreements 1,952,140 709,123 36.33% 1,243,017 360,040 349,063 96.96% Subtotal 13,063,210 3,25 ,607 24.91% 9,808,603 1,894,989 1,359,618 71]5% Utilities Telephone 320,000 67,043 20.95% 252,957 62,145 4,898 7.88% Diesel For Generators 23,230 10,766 46.35% 12,464 7,340 3,426 46.68% Natural Gas 400,500 193,725 48.37% 208,n5 117,647 76,078 64.67% Power 61003.200 11959,100 32.63% 4,044,100 1,712,408 246,692 14.41% Water 690,840 151,141 21.88% 539,699 253,532 (102,391) 40.39% Subtotal 7,437,770 2,381,775 37202% 5,055,995 2,153,072 228,703 10.62% Other Operating Supplies Outside Equip Rental 7,330 26,290 358.66% (18,960) 127 26,163 20600.79% Insurance Premiums 32,000 31,884 99.64% 116 31,862 22 0.07% Prop&Gen Liab Insurance 500,000 125,001 25.00% 374,999 227,250 (102,249) -0 .99% Freight 0,120 17,286 28.75% 42,834 12,17] 51109 41.96% Misc.Operating Expense 254,290 30,657 12.06% 223,633 35,663 (5,006) -14.04% Regulatory Operating Fees 688,000 66,063 9.60% 621,937 77,692 (11,629) -14.97% Subtotal 1,541,740 297,181 19.28% 1,244,559 384,771 (87,590) -22.76% General Mgr Contingency &Reappropriations 885,000 0.00% 885,000 N/A Other Non-Oper Expense Others 67,140 15,277 22.75% 51,863 15,149 128 0.84% Subtotal 67,140 15,2T/ 22.75% 5103 15,149 128 0.84% Total Materials, Supplies&Services 70,072,020 16,557,378 23.63% 53,514,642 14,721,961 1,835,417 12.47% Total Expenditures 169,24 ,820 39,304,224 23.22% 129,936,596 36,926,466 2,3T/,758 6.44% Cost Allocation (16,]40,]00) (3,730,868) 22.29% (13,009,832) (3,220,325) (510,543) 15.85% Net Operating Requirements $ 152,500,120 $ 35,573,356 23.33% $ 116,926.764 $ 33,706,141 $ 1,867.215 5.54% Section 2-Page 7 2014-15 First Quarter Report Summary of Collection, Treatment, &Disposal Expenses by Process For the Three Months Ended September 30,2014 Increase Increase Actual Actual (Decrease) (Decrease) 9/30/14 9/30/13 $ % Process: Preliminary Treatment $ 2,080,602 $ 2,053,127 $ 27,475 1.34% Primary Treatment 3,262,877 2,970,292 292,585 9.85% Secondary Treatment 1,842,014 1,763,375 78,639 4.46% Cryogenic Plant(Plant 2) 292,779 351,174 (58,395) -16.63% Ef0uent Disposal 168,348 196,013 (27,665) -14.11% Solids Handling 12,323,336 11,385.708 937,628 8,24% Cogeneration 3,894,820 4,136,242 (241,422) -5.84% Utilities 765,130 701,440 63,690 9,08% Electrical Distribution 508,104 602,977 (94,873) -15.73% Miscellaneous Buildings 1,882,638 1,527,427 355,211 23.26% External Location 796 230 566 245.95% Nedssa Vessel 38,817 395 38,422 9727.06% North County Yard 14 14 - 0.00% Laboratory 3,056,909 2,885,150 171,759 5.95% Collections 5,456,171 5,132,577 323,594 6.30% Net Operating Requirements $ 36,573,356 $ 33,706,141 $ 1,867,215 5.54% Section 2-Page 8 Operating Budget Review Staffing Trends Full Time Equivalents September 30,2014 700 650 641 637 628 626 626 600 6 43 550 500 450 6/30111 6/30/12 6/30113 6/30/14 9/30/14 DAdual DVawnt At September 30, 2014, the total head count was 592 employees, or a full time equivalency of 583. Section 2-Page 9 2014-15 First Quarter Report This Page Intentionally Left Blank Section 2- Page 10 CIP Budget Review Capital Improvement Program By Type and Funding Source For the Three Months Ended September 30,2014 @Collections Facllittea: 29.1% @Headwwks: 0a% @Primary Treatment 0.0% 3Secandary Treatment 1.2% @Solids Handling&nlgeston: 46.1% OOcean outlall S,mrna: o T% 131l410ty Systems: 131% @Process Related Special Pmjeds 0.6% @Infamlaton Management Systems: 3.2% @Strategic 8 Master Planning: 0.1% @Water Management Projects: 0.0% @Suppod Fadlites: 45% @ Pdor Year Treatment Projecta: 0.1% @Capital Equipment Purchases: 0.7% Total Capital Improvement Outlays -$21,847,000 Replacement/Rehabilitation: 52% Improved Treatment: 33% ❑Additional Capacity: 12% ■Support: 3% Total Capital Improvement Outlays -$21,847,000 Section 3- Page 1 FY 2014-15 First Quarter Report Summary of Capital Improvement Construction Requirements-Current Year For the Three Months Ended September 30,2014 2014-15 2014-15 2014-15 Cartons. Actual at Projected Budget 9/30/2014 Outlay Collection System Improvement Projects Collections Facilities Santa Ana Trunk Sewer Rehab. $ 3,359,755 $ 32,651 $ 3,365,000 SARI Realignment 405,332 58,352 594,600 SARI Rock Stabilizers Removal 211,746 2,222 123,800 Newhope-Placentia Trunk Grade Separation Replacement 3,396,918 28,132 3,203,200 Newhope-Placentia Trunk Replacement 38S,216 96,812 6,044,700 Lakeview Grade Separation Project 283,853 218 274,100 Tustin Rose DICTA Gratle Separation Project 452,914 30,411 336,800 Orangethorpe DICTA Gratle Separation Project 719,552 - 3,007,600 Rehabilitation of Magnolia Trunk Sewer - 17 100 Seal Beach Pumping Station Rehabilitation 663,829 11,944 588,5m Rehabilitation of Balboa Trunk Sewer 2,551,550 41,798 148,100 Bitter Point Force Main Rehabilitation 410,517 73,092 276,100 Newport Force Main Rehabilitation 20,079,397 4,045,652 18,321,200 Dover Drive Trunk Sewer Relief 4,639,536 1,483,245 2,150,500 District 6 Trunk Sewer Relief 720,854 54,892 376,800 Southwest Costa Mesa Trunk 436,125 91,737 557,300 Gisler-Redhill Trunk Improvements,Reach B 216,393 114,448 633,400 Master Facilities Engineering Projects-Collections 864,029 103,993 341,200 Bay Bridge Pump Station and Force Mains Rehabilitation Study 381,646 24 157,900 Collection System Master Planning 1,000,000 19,950 720,000 Additional Charges to CIP Closed at 6130114 (7.617) (7700) Subtotal-Collections Facilities 41,179,222 6,283,973 41,213,200 Revenue Area 14 Sifter Point Force Main Rehabilitation(1.65h) 6.888 1,226 4700 Newport Force Maln Rehabilitation(1.88%) 384.726 77,516 351.100 Subtotal-Revenue Area 14 391,614 78,742 355,800 Total Collection System Improvement Projects 41,570,836 6,362,715 41,569,000 (Continued) Section 3-Page 2 CIP Budget Review Summary of Capital Improvement Construction Requirements-Current Year For the Three Months Ended September 30,2014 2014-15 2014-15 2014-15 Cashflow Actual at Projected Budget 9/30/2014 Outlay Treatment&Disposal Protects Headworks Headwoiks Rehabilitation and Expansion at Plant 1 429,107 79,443 346,000 Truck Line Odor Control Improvements Pi 669,312 43,063 658,800 Headworks Improvements at Plant 2 15,261 36.100 Subtotal-Headworks 1,N8,419 137767 1,040,900 Primary Treatment Joint GWRS Microtiltration Backwash Redirection Project 5,219 2,407 11,100 Plant 1 Primary Treatment Upgrades 3,427,951 (29,690) 3.364,300 Primary Treatment Area Rehabilitation Study 578,376 129,500 Subtotal-Primary Treatment 4,011.548 (27,283) 3.504.900 Secondary Treatment New Secondary Treatment System at Plant No.1 139,159 232,254 687,000 Oxygen Plant Demolition at Plant No,2 1,829,561 21,122 1,455,500 Plant No.1 Secondary Treatment Asset Management Plan W5,015 - - Plant No.2 Secondary Oxygen Plant Asset Management Plan 93,567 Subtotal-Secondary Treatment 2,427,302 253.381 2,142,500 Solids Handling&Digestion Digester Rehabilitation at Plant 1 5,443,017 1,055,035 4,850,400 Sludge Dewatering and Odor Control at Plant 1 61,050,918 6,362,488 56,583,200 Digester Ferric Chloride System Rehabilitation 320,044 177,581 309,600 Solids Thickening and Processing Upgrades 6,315,445 1,988,665 5,519,000 Sludge Dawslering and Odor Control at Plant 2 1,402,322 477,484 2,514,000 Plant 2 DigesterslBoilers Plant Asset Management Plan 355,943 4,004 10019M Subtotal-Solids Handling&Digestion 74.887,689 10,065,263 69,871,100 Ocean Oudall Systems Final Effluent Sampler and Building Area Upgrades 488,290 82,925 51 Ouffall Land Section and OOBS Piping Rehabilitation 52,879 1,261 9,400 Ocean Ouffall System Rehabilitation 713,223 67,N9 458700 Subtotal-Ocean Outfall Systems 1,254,392 151,255 1,062,000 UOlity Systems Cengan Cooling Water System Replacement 284,249 11,106 18,600 Cengen Emissions Control Project 6,988,246 1,20il 7,M,400 Power Monitoring and Control Systems 286,319 128,696 320,200 Plant Water System Rehabilitation at Plant No.1 2,501,914 701,34S 2,578,300 Plant Water System Rehabilitation at Plant No.2 2,323,394 877,656 2,652,000 Boiler System Rehab&Scmbbers H&I Demolition at Plant 2 1,744766 42,058 1,751,100 Consolidated Demolition&Utility Improvements at Plant 2 227,821 42,082 480,400 Digester Gas Facilities Study for Plants 1 &2 314,397 6g287 269,900 Utility Water Systems Study 800,000 - 142,400 Plant Air System Master Plan 147,626 - 148,900 Electrical System Base Map 250,000 Subtotal-Utility Systems 15.868,732 2,872,763 15,410,200 (Continued) Section 3-Page 3 FY 2014-15 First Quarter Report Summary of Capital Improvement Construction Requirements-Current Year For the Three Months Ended September 30,2014 2014-15 2014-15 2014-15 Cashfi. Actual at Projili Budget 9/30/2014 Outlay Process Related Special Projects Fall Protection Improvements at Plants Nos.I and 50,436 726 800 Corrosion Management 2,000,766 115,522 1,649,200 Odor Control Master Plan 741,412 19,242 159.800 Subtotal-Process Related Special Projects 2,792,614 135,490 11809,800 Information Management Systems Programmable Control Panel Upgrades 1,689,364 175,519 1,482,900 Strategic Information Architecture(SIA) 750,222 114,044 344,100 InterneVlntranet Development 173,372 - 70,000 Geographic In eri ration System 365,026 75,763 195,800 Information Technology Equipment Upgrade 600,856 270,746 460,800 EAM Software and Process Implementation 833,913 40,096 1,000,100 PD82D Software Replacement 126,655 - - BoftwarsandComputerEquipmentReplacementProlect 746,895 31,218 631,300 Information Technology Master Plan 232,042 Subtotal-InformaSon Management Sya/ame 5,518,345 707,386 4,185,000 Strategic&Master Planning Facilities-Wide Safety Assessment 241,481 7,156 21,700 Landscape&Security Master Plan 111.423 - - Stomwater Mager Plan 38,018 - 3,300 Treatment Plant Hydraulic Assessment 168,726 18,880 18,9m Asset Management Program 54,641 47.300 Subtotal-Strategic a Master Planning 614.289 26,036 91,200 Water Management Projects Effluent Reuse Study 575,919 Subtotal-Water Management Projects 575.919 Support Facilities Master Facilities Engineering Projects-Plant 3,T11,179 548,104 2,416,200 Master Small Capital ReplacemenVRehabilbation-Plant 4.220,002 106,355 3,314,900 Operators Center Entrance/Building Repairs 35,247 - - Title 24 Access Compliance and Building Rehabilitation Project 4,846,207 134,115 4,644,000 South Perimeter Security&Storm Water Improvements at P1 40,938 13,896 66,4W Site and Security Improvements at Plant Nei 264.806 21,497 136,400 Public Address System Study 100,000 - icom Tunnels Systems Asset Management Plan 118,842 -Plant No.2 Administradve Building Master Plan 192,545 - - Administrative Facilities Implementation Planning 662,962 27,967 729,700 Ongoing Small Capital ReplacemenVRehabilitation 1,183,658 121.327 715700 Subtotal-Support Facilities 15,436,386 979,321 12,033,300 (Continued) Section 3-Page 4 CIP Budget Review Summary of Capital Improvement Construction Requirements-Current Year For the Three Months Ended September 30,2014 2014-15 2014-15 2014-15 Cashflow Actual at Projected Budget 9/30/2014 Outlay Other. Future Research Line Item 1,000,381 3,541 180,600 Capital Improvement Program Mgmt.Services 99,999 66.200 Subtotal-Others 1,100,380 3.541 246.800 Additional Charges to CUP Completed at 6/30114 20.958 21.000 Total Treatment and Disposal Projects 125.586.013 15,325,878 111,414,700 Capital Equipment Purchases 2,078,600 158,b07 2,078,600 Total Colledion,Treatment and Disposal Projects and Capital Equipment Purchases $169,235,449 $ 21,84],000 $ 155,062,300 Section 3-Page 5 FY 2014-15 First Quarter Report Summary of Capital Improvement Construction Requirements- Project Life For the Three Months Ended September 30,2014 Current Total Approved June 30,2014 Year Projected Remaining Project Accumulated Projected Coat at Future Budget Cost Cost June 30,2015 Budget Collection System Improvement Pro ects Collections Facilities Santa Ana Trunk Sewer Rehab. 7,676,000 3,154,323 3,365,000 6,519,323 1.156,677 Raid and Bristol Street Sewer Extension 10722,000 259,075 - 259,075 10.462,925 SARI Realignment 11,414,000 5,325711 594.600 5,920,311 5.483,689 SARI Rock Stabilizers Removal 3,092,000 26,666 123.800 154466 2.91 Taft Branch Improvements 3,143,000 12,083 - 12,083 3.130,917 Newhope-Placentia Trunk Grade Separation Replacement 5,966,000 559,207 3,203.200 3,762,407 2.203,593 Newhope-Placentia Trunk Replacement 104,890,000 51,792 6,044700 6,096,492 98793,508 Yoffie Linda Pumping Station Abandonment 4,694,000 - - - 4,694,000 Coyote Hills Golf Course Odor Control Station 8,365,000 - - - 8.365,000 Lakeview Grade Separation Project 330,000 4,142 274.100 278,242 51,758 Tustin Rose OCTA Grade Separation Project 586,000 36,228 336.800 373,028 212,972 Orangethorpe OCTA Grade Separation Project 31900,000 1(1 3,007,600 3,107.628 292,372 Rehabilitation of Magnolia Trunk Sewer 19,812,000 19,647,646 100 19,647.746 164,254 Miller-Holder Trunk Sewer Relief 17.324,000 - - - 17,324,000 Beach Trunk/Knott Interceptor Sewer Relief 27.599,000 - - - 27,599,000 Seal Beach Pumping Station Rehabilitation 62,041,000 - 588.500 5881500 61,452,500 Rehabilitation of Western Regional Sewers 112.222,000 - - - 112,222,000 Rehabilitation of Balboa Trunk Sewer 8,122,000 6,740,612 148,100 6,888,712 1,233,288 Biker Point Force Main Rehabilitation 44.866,287 30,783,269 276,100 31,059,369 13,806,918 Newport Force Main Rehabilitation 51,234,339 6,272,065 18,321,200 24,593,265 26.641,074 Dover Drive Trunk Sewer Relief 14,327,000 10,557.800 2,150,500 12,708,300 1.618,700 Crystal Cove Pumping Station Upgrade and Rehabilitation 7,817,000 - - - 7.817,000 Bay Bridge Pumping Station Rehabilitation 74,431,000 - - - 74.431,000 District 6 Trunk Sewer Relief 7,047,000 671,372 376.800 1,048,172 5.998,828 Southwest Costa Mesa Trunk 14,993,000 1,391.745 557,300 1,949.045 13.043,955 Gisler-Redhill Trunk Improvements,Reach 9 23,073,000 3,376.438 633,400 4,008.836 19.063,162 Browning Subtrunk Sewer Relief 13,439,000 - - - 13.439,000 Von Karman Trunk Sewer Relief 433,000 - - - 433,000 MacArthur Pump Station Rehabilitation 7,445,000 - - - 7.445,000 Main Street Pump Station Rehabilitation 40747,000 - - - 40747,000 Edinger/Balsa Chlca Trunk Improvements 6.030,000 - - - 6.030,000 Edinger Pumping Station Upgrade and Rehabilitation 13.629,000 - - - 13.629,000 Slater Avenue Pump Station Rehabilitation 13781,000 - - - 13781,000 Master Facilities Engineering ProlecLs-Collections 12,192,000 273,440 341,200 614,640 11,577,360 Bay Bridge Pump Station and Force Mains Rehabilitation Study 522,838 - 157,900 151,900 364,938 Collection System Master Planning 1.000,000 - 720.000 720,000 280,000 Collection System Odor Control Systems Study 700,000 - - - 700,000 Additional Charges to CIP Closed at 6130114 (7700) (7,700) 7,700 Subtotal-Collections Facilities 759,595,464 89,243,642 41,213,200 130,456,842 629,138,622 Revenue Area 14: Bitter Point Force Main Rehabilitation(1.65%) 752,714 516,445 4,700 521,145 231,568 Newport Force Main Rehabilitation(1.88%) 981,661 120,174 351,100 471,274 510,387 Subtotal-Revenue Area 14 1,234,374 636,619 355,800 992419 741,955 Total Collection System Improvement Projects 761,329,838 89,880,261 41,569,000 131,449,261 629,880,577 (Continued) Section 3-Page 6 CIP Budget Review Summary of Capital Improvement Construction Requirements - Project Life For the Three Months Ended September 30,2014 Current Total Approved June 30,2014 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2015 Budget Treatment&Disposal Projects Headworks Headworks Rehabilitation and Expansion at Plant 1 76,476,000 23,493 346,000 369,493 76,106,507 Headworks Expansion P1 222,804,000 - - - 222,804,000 Truck Line Odor Control Improvements P1 10,826,000 917.437 658,800 1,576,237 9,249,763 Heatlworks Improvements at Plant 2 258.724,000 258,135,521 36,100 258,171,621 552,379 Subtotal-Heatlworks 568,830,000 259,076,451 1,040,900 20,117,351 308,712,649 Primary Treatment Joint GWRS Microfiltration Backwash Redirection Project 387,000 359,168 11,100 370,268 16,732 Primary Scrobbm Rehabi@ation at Plant 1 50,708,000 - - - 50,708,000 Primary Effluent Pipeline Joint Repairs 3,246,000 - - - 3,246,000 Plant l Primary Treatment Upgrades 11,535,000 1,048737 3,364,300 4,413,037 7,121,963 Plant 2 Primary Treatment System Rehabilitation 43,210,000 - - - 43,210,000 Primary Treatment Area Rehabilitation Study 848,000 157.161 129,500 286.661 561,339 Subtotal-Primary Treatment 109.934.000 1.565.066 3.504.900 5,069,966 104.864.034 Secondary Treatment New Secondary Treatment System at Plant No.1 255,P1,000 254,397,212 687,000 255,084,212 686,788 Oxygen Plant Demolition at Plant No.2 4,051,000 539,982 1,455,600 1,995,482 2,065,518 Plant No.l Secondary Treatment Asset Management Plan 400,000 - - - 401 Plant No.2 Secondary Oxygen Plant Asset Management Plan 400,000 400,000 Subtotal-Secondary Treatment 260.622.000 254.931.194 2,142,500 257.0]9.694 3.542.306 Solids Handling&Digestion Digester Rehabilitated at Plant l 60,547,000 45,702,099 4,850,400 50,552,499 9,994,501 Sludge Dewatedng and Odor Control at Plant l 171,978,000 48,624,141 56.583,200 105,201 66,770,659 Digester Ferric Chloride System Rehabilitation 4,449,000 4,069,536 309,600 4,379,136 69,864 Plant No.2 Solids Storage Addition 37,604,000 - - - 37,601 Solids Thickening and Processing Upgrades 48,346,000 32,517,589 5,519,000 38,036,589 10,309,411 Plant No.2 Digester Facilities Rehabilitation 47,600,000 152.343 - 152.343 47,667,657 Sludge Dewatering and Odor Control at Plant 2 87,000,000 8,899,067 2,514,000 11413,067 75,586,933 Plant 2 Digestersfaoilers Plant Asset Management Plan 800,000 46,456 100,900 147,356 652.644 Subtotal-Solids Handling&Digestion 458,324,000 140,011,231 69,877,100 209.888,331 248,43S669 Ocean Outfall Systems Final Effluent Sampler and Building Area Upgrades 14,770,000 2,540,592 583,900 3,124,492 11,645508 Call Land Section and OOSS Piping Rehabilitation 20,466,000 19,653,161 9,400 19,662,561 803,439 fire-Inch Interplant Effluent Pipeline Rehabilitation 72.517,000 - - - 72,517,000 Ocean Oudall System Rehabilitation 48.194.000 37.154 458,700 495.854 47,698,146 Subtotal-Ocean Outfall Systems 155,947,000 22,230,907 1,052,000 23,282,907 132,664,093 bell Systems Cengen Cooling Water System Replacement 11,337,000 11,215,149 18,600 11,233,749 103,251 Cengen Emissions Control Project 24,950,000 3730,169 7.048,400 10.778,569 14,171,431 UPS System Upgrades 3,817,000 - - - 3,817,000 Digester Gas Facilities Rehabilitation 58,755,000 - - - 58,765,000 Electrical Power Distribution System Improvements 12,791,000 - - - 12,791,000 Power Monitoring and Control Systems 10,918,000 10,246,090 320,200 10,586,290 351,710 Plant Water System Rehabilitation at Plant No.1 8,000,000 3,763,229 2,578,300 6,341,529 1,658,471 (Continued) Section 3-Page 7 FY 2014-15 First Quarter Report Summary of Capital Improvement Construction Requirements- Project Life For the Three Months Ended September 30,2014 Current Total Approved June 30,2014 Year Projected Remaining Project Accumulated Projected Costal Future Budget Cost Cost June 30,2015 Budget Utility Systems Plant Water System Rehabilitation at Plant No.2 5,070,000 1,537,043 2,652.000 4,189,043 880,957 Boiler System Rehab&Scrubbers H&I Demolition at Plant 2 3,095,000 1,023,404 1,751.100 2,774,504 320,496 Consolidated Demolition&Utility Improvements at Plant 43,974,000 136,595 48(1 616,995 43,357,005 SCE Feed Reliability Improvements 22,490,000 - - - 22,490,000 Secondary Area Cable Tray Upgrades 2,154000 - - - 2,154,000 Headworks Cable Tray Upgrades 3,015,000 - - - 3,015,000 Digester Gas Facilities Study for Plants 1&2 750,000 420,565 269,900 690,465 59,535 Utility Water Systems Study 800,000 - 142,400 142,400 657,600 Plant Air System Master Plan 340,000 - 148,900 148,900 191,100 Electrical System Base Map 250,000 - - - 250,000 Sldestream Pumping System and Water Chamctedzation Study 250,000 250,000 Subtotal-Utility Systems 212,756,000 32,072,244 15,410,200 47,482,444 165,213,556 Process Related Special Projects Fall Prompted Improvements at Plants Nos.1 and 2 2,687,000 2,597,617 800 2,598,477 88,523 Corrosion Management 28,500,000 8,979,211 1,649,200 10,628.411 17,871,589 Odor Control Master Plan 1,600.000 772.885 159,800 932.685 667,315 Subtotal-Process Rdatad Spacial Projects 32.787,000 12,349,773 1,809,800 14,159.573 18.627,427 Information Management Systems Process SCADA Rsplaoement 24,680,000 - - - 24,680,000 Programmable Control Panel Upgrades 3,477,000 12,393 1,482,900 1,495,293 1,981,707 SCADA System and Network Upgrades 27,839,000 - - - 27,839,000 Strategic Information Architecture(SIA) 1,995,000 1,158,338 34s,100 1,502,438 492,562 Inlernetlintranst Development 650,000 42,062 70,000 112,062 537,938 Geographic Information System 4,047000 1,387p91 195,800 1,583,291 2,463,709 Information Technology Equipment Upgrade 4,148,000 2,862,842 464800 3,323,642 824,358 EAM Software and Process Implementation 6,500,000 3785,651 1,00(1,100 4,785,751 1,714,249 PDS2D Software Replacement 525,000 284,988 - 284,988 240,012 Software and Computer Equipment Replacement Project 5,050,000 1,294717 631,300 1,922,017 3,127983 Process SCADA Link to Pump Stations 271,000 19,083 - 19,083 251,917 Information Technology Master Plan 500,000 500,000 Subtotal-Information Management Systems 79,682,000 10,843,565 4,185,000 15,028,565 64,653,435 Strategic&Master Planning Facilities-Wide Safety Assessment 930,000 843,928 21,700 865,628 64,372 Landscape&Severity Master Plan 150,000 - - - 150,000 Climate Change Impact Study 100,000 - - - 100,000 Stormwater Master Plan 300,000 - 3,300 3,300 296,700 Treatment Plant Hydraulic Assessment 300,000 - 18,900 18,900 281,100 Settlement&Liquefaction Study 700,000 - - - 700,000 Asset Management Program 4,800,000 2,778,183 47,300 2,825,483 1,974,517 Subtotal-Strategic&Master Planning 7,280,000 3,622,111 91,200 3,713,311 3,566,689 Water Management Projects Effluent Reuse Study 2,800,000 21800,000 Subtotal-Water Management Projects 2,800,000 - - - 2,800,000 (Confined) Section 3-Page 8 CIP Budget Review Summary of Capital Improvement Construction Requirements- Project Life For the Three Months Ended September 30,2014 Current Total Approved June 30,2014 Year Projected Remaining Project Accumulated Projected Cost at Future Budget Cost Cost June 30,2015 Budget Support Facilities Master Facilities Engineering Projects-Plant 35,228,000 21,111,389 2,416,200 23,527,589 11,700,411 Master Small Capital Replacement/Rehabilitation-Plant 18,295,000 - 3,314,900 3,314,900 14,980I00 Operations Center EnbrancelBullding Repairs 2,648,000 526,383 - 526,383 2,121.617 Title 24 Access Compliance and Building Rehabilitation Project 17,437,000 3,459,355 4,644,000 8,103,355 9,333,645 South Perimeter Security B Storm Water Improvements at PI 3,005,000 - 66,400 66,400 2,938,600 Site and Security Improvements at Plant No.2 1,455,000 199,349 136.400 335,749 1,119,251 Public Address System Study 10g000 - 10.000 10,000 90,000 Tunnels Systems Asset Management Plan 20g000 - - - 200,000 Plant No.2 Administrative Building Master Plan 3W,000 - - - 300,000 Administrative Facilities Implementation Planning 80 ,000 31,927 729,700 761,627 38,373 Ongoing Small Capital Replacement/Rehabilitation 22,088,000 16,758,367 715,700 17,474,067 4,613,933 Subtotal-Support Facilities 1011556,000 42,086,770 12,033,300 54,120,070 47,435,930 Others Future Research Line Item 10,440,000 1,527,795 180,600 1,708,395 8,731.605 Capital Improvement Program Mgmt.Services 300.000 66,200 66,200 233.800 Subtotal-Others 10,74g000 1,527,795 246.800 1,T74,595 8,965,405 Additional Charges to CIP Completed at 6l30114 21,000 21,000 (21.000) Total Treatment and Disposal Projects 2.001.258.000 780,323,107 111,414,700 891,737,807 1,109,520,193 Capital Equipment Purchases 16,004000 4,171,413 2,078,600 6,250,013 9,749,987 Total Collection,Treatment and Disposal Projects and Capital Equipment Purchases $ 2,778,587,838 $874,374,781 $155,062,300 $1,029,437,081 $1,749,150,757 Section 3-Page 9 FY 2014-15 First Quarter Report This Page Intentionally Left Blank Section 3- Page 10 Capital Assets Schedule & Debt Service Budget Review Capital Assets Schedule For the Three Months Ended September 30,2014 Capital Facilities Budget Review Balance Yearto-Date Balance 07/01/14 Additions 09/30/14 CONSTRUCTION IN PROGRESS: Treatment Plant $ 218,812,539 $ 15,484,286 $ 234,296,825 Collection System 39,206,400 6,362,714 45,569,114 Subtotal 258,018,939 21,847,000 279,865,939 PROPERTY,PLANT&EQUIPMENT(at cost): Land and Property Rights 15,959,559 - 15,959,559 Collection Lines and Pump Stations 753,136,534 - 753,136,534 Treatment Facilities 2,220,814,179 - 2,220,814,179 Effluent disposal facilities 97,014,820 - 97,014,820 Solids disposal facilities 3,463,236 - 3,463,236 General and administrative facilities 224,717,092 - 224,717,092 Excess purchase price over book value on acquired assets 19,979,000 19,979,000 Subtotal 3,335,084,420 3,335,084,420 Total Property,Plant&Equipment&CIP $ 3,593,103,359 $ 21,847,000 $ 3,614,950,359 Debt Service Budget Review 2014-15 Year-to-Date Remaining Budget Payments %of Budget Budget Principal Payments by Debt Issue: 2007A COP 245,000 - 0.00% 245.000 2007E COP 6,450,000 - 0.00% 6,450.000 2008E COP 8,270,000 8,270,000 100.00% - 2009ACOP 3,865,000 - 0.00% 3,855.000 2010A BAB. - - N/A - 2010C BASs - - N/A - 2011ACOP 9,065,000 9,055,000 100.00% - 2012ACOP - - N/A - 20128 COP - - N/A - 2013ACAN. 129,625,000 - 0.00% 129,625,000 2014A COP N/A Subtotal Principal Payments 157,500,000 17,325,000 11.00% 140,175,000 Interest Expense by Debt Issue: 2007A COP 4,124,194 1,032,039 25.02% 3,092,155 2007E COP 13,162,962 3,324,269 25.25% 9,838,693 2008E COP 630,980 186.680 29.59% 444,300 2009A COP 8,999,175 2,249,788 25.00% 6,749,387 2010A BAB. 2,897,639 993.789 34.30% 1,903,850 2010C BASs 6,523,780 2,237,551 34.30% 4,286,229 2011ACOP 5,825,450 1,501,675 25.78% 4,323,775 2012A COP 3,735,900 934.050 25.00% 2,801,850 2012E COP 3,187,400 796.800 25.00% 2,390,600 2013A CANS 2,592,500 653.500 25.21% 1,939,000 2014A COP 802.857 N/A (802,857) Subtotal Interest Expense 51,679,980 14,712,998 28.47% 36,966,982 Total Debt Service $ 209,179,980 $ 32,037,998 15.32% $ 177,141,982 Section 4-Page 1 2014-15 First Quarter Report This Page Intentionally Left Blank Section 4- Page 2 Self Insurance Budget Review General Liability and Property Fund Budget Review For the Three Months Ended September 30,2014 Percent Actual of Budget Remaining Actual 2014-15 Through Through 2014-15 Through Increase Budget 9/30/14 9130114 Budget 9/30/13 (Decrease) Revenues: In-Lieu Premiums $ 500,000 $ 125,001 25.00% $ 374,999 $ 227,250 $ (102,249) Miscellaneous Other Revenue - - N/A - 129,808 (129,808) Service Department Allocations 24,100 1,374 5.70% 22,726 4,374 (3,000) Total Revenues 524,100 126,375 24.11% 397,725 361,432 (235,057) Expenses: Benefits/Claims 120,000 - 0.00% 120,000 45,000 (45,000) Contractual Services 1,200 - 0.00% 1,200 - - Legal Services 75,000 3,451 4.60% 71,549 (16) 3,467 Professional Services 51000 0.00% 5,000 Subtotal 201,200 3,451 1.72% 197,749 44,984 (41,533) Policy Premium Expense 1,300,000 275,468 21.19% 1,024,532 272,348 3,120 Total Expenses 1,501,200 278,919 18.58% 1,222,281 317,332 (38,413) Excess Revenue(Expense) (977,100) (152,544) $ (824,556) 44,100 (196,644) Beginning Reserves 56B74,500 56,802,224 56,904,863 (102,639) Ending Reserves $55, 997,400 $ 56, 449,680 $ 56, 448,963 $ (299,283) Section 5-Page 1 FY 2014-15 First Quarter Report Workers'Compensation Fund Budget Review For the Three Months Ended September 30,2014 Percent Actual of Budget Remaining Actual 2014-15 Through Through 2014-15 Through Increase Budget 9/30/14 9/30/14 Budget 9130113 (Decrease) Revenues: In-Lieu Premiums $ 755,000 $ 188,750 25,00% $ 566,250 $ 113,750 $ 75,000 Miscellaneous Other Revenue - - N/A - - - Service Department Allocations - - N/A - - - Total Revenues 755,000 186,750 25.00% 566,250 113,750 75,000 Expenses: Benefits/Claims 400,000 141,499 35.37% 258,501 104,182 37,317 Contractual Services - - N/A - - - Legal Services 100,000 26,848 26.85% 73,152 19,689 7,159 Professional Services 50,000 N/A 50,000 13,267 (13,267) Subtotal 550,000 168,347 30.61% 381,653 137,138 31,209 Policy Premium Expense 150,000 55,632 37.09% 94,368 49,467 6,165 Total Expenses 700,000 223,979 32.00% 476,021 186,605 37,374 Excess Revenue(Expense) 55,000 (35,229) $ 90,229 (72,855) 37,626 Beginning Reserves 1,940,900 1,771,820 2,238,580 (466,760) Ending Reserves $ 1,995,900 $ 1,736,591 $ 2,165,725 $ (429,134) Section 5-Page 2 a C�p October 30, 2014 STAFF REPORT Quarterly Treasurer's Report For the Three Months Ended September 30, 2014 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 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. 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 June 30, 2014 and September 30, 2014. The Liquid Operating Monies portfolio, with an average maturity of 37 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 July 1 through September 30, 2014. OOSD ♦ P.O.Box B127 ♦ Fountain Valley,LA 9272B-B127 ♦ (714)962-2411 Quarterly Treasurer's Report For the Three Months Ended September 30, 2014 Page 2 of 3 Portfolio Performance Summary Quarter Ended September 30,2014 Liquid Operating Monies %) Long-Tenn Operating Monies ° Total Rate Total Rate of of Return Senohmarkn Return Benohmarkn 3 Months 0.03 0.01 -0.06 -0.07 6 Months 0.06 0.02 0.72 0.66 9 Months 0.07 0.03 1.43 1.11 12 Months 0.07 0.04 1.05 1.25 Since inception 30 Sept.95 2.98 2.64 4.86 4.64 Market Value 58.9M WIAM Average Quality "AA+" "AA+- Current Yield(%) 0.8 1.1 Estimated Yield to Maturity(%) 0.1 1.0 Quarterly Deposits(Withdrawals) 27.OM - 44.3M Estimated Annual Income $0.4M $5.OM (1) Benchmarks: • Liquid Operating Portfolio: 3-Month Treasury Bill Index • Long-Teml Operating Portfolio: Merrill Lynch Corp/Govt. 1-5 Year Bond Index Portfolio Market Values Comparative marked-to-market quarter-end portfolio values are shown in the following table, and in the attached bar chart. Liquid Long-Term Quarter Operating Operating Ending Monies($M) Monies($M) 31 Dec.13 75.9 460.9 31 Mar.14 50.9 439.2 30 Jun.14 85.9 5W1 30 Sep.14 58.9 461.6 District's Investment Account Balances as of September 30, 2014 Book Balances Estimated Investment Accounts September 30,2014 Yield(%) Slate of Calif.LAIF $ 16,841,566 0.25 Union Bank Checking Account 56,763 0.01 Union Bank Overnight Sweep Account 522,000 0.00 Union Bank W/C Checking 63,235 0.00 PIMCO-Short-term Portfolio 58,836,408 0.13 PIMCO-Long-term Portfolio 460,195,963 0.92 Petty Cash 3,000 N/A BNY Mallon OCIP Reserve 3,606,509 0.37 TOTAL $540.12i444 0.80 Debt Service Reserves w/Tmstees A 43220 443 1.31 Quarterly Treasurer's Report For the Three Months Ended September 30, 2014 Page 3 of 3 District's Cost of Funds on Debt Issues as of September 30,2014 Annual Cost of Funds Outstanding Interest Issue Description COP Balance Raw(%) 2007A Fixed $92,385,000 4.50 2007B Fixed 173,325,000 4.71 2008B Fixed 17,315,000 296 2009A Fixed 184,090,000 4.72 2010A Fixed 80,000,000 3.68 2010C Fixed 157,000,000 4.11 2011A Fixed 121,290,000 2.61 2012A Fixed 100,645,000 3.54 2012B Fixed 66,395,000 1.50 2013A Fixed 129,625,000 0.17 2014A Fixed 85,090,000 2.34 TOTAL $1.207.160.000 Weighted Avg.Cost of Funds 3.38 ATTACHMENTS 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. Asset Summary by Asset Type — Owner Controlled Insurance Program Escrow Account 10. Investment Listing (Yield Analysis Report). 11. Asset Detail — Consolidated 12. Custody Transaction History -- Consolidated 13. Callan Quarterly Review 14. PIMCO Quarterly Review 15. Rating Agency Comparisons Prepared by Finance, 10/30/2014, 1:56 PM HISTORICAL YIELD CURVE 5.50 5.25 5.00 4.75 4.50 4.25 4.00 3.75 3.50 3.25 3.00 ° 2.75 w 2.50 } 2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 E 0 E N n a n n o 0 0 t+f t0 � N th 31-Mar-14 30Jun-14 30Sep14 G:\excel.dta\fin\2220\geggi\Finance\Historic ITREASURYyieldcuwe P I M C O 650 Newport Center Drive Newport Beach,CA 92660 Tel: 949.720.6000 Fax: 949.720.1376 October 29, 2014 Mr. Mike White,CPA Controller Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,CA 92708-7018 Dear Mike: The following is a description of events in the bond markets during the third quarter of 2014 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 portfolios during the coming months. Bond Market Recap Far from the typical summer lull,the third quarter was marked by geopolitical tension and diverging markets. Most developed market government yields were led lower by easy central bank policies,while credit markets backed up. Equity markets somersaulted their way to modest gains in the U.S., but were flat or slightly negative in many other regions as economic data varied. U.S.growth became more sure- footed, but the eurozone recovery sputtered and growth decelerated in parts of Asia. In addition to headline volatility around central bank actions and the Scottish independence referendum,geopolitical tensions flared in Ukraine and the Middle East. U.S.GDP growth was strong in the second quarter(4.6%),more than reversing the weather-induced weakness from the first quarter.A large upswing in business conditions and still high capacity utilization suggested companies will expand their investment in both capital and labor.Similarly,consumer confidence rose to the highest level in more than six years. Given this improvement in the outlook for growth,the Federal Reserve's(Fed) policy rate projections increased modestly and the U.S. dollar surged more than 7.5%versus its major trading partners. Nevertheless,with inflation running well- below target,the Fed continued to signal a dovish bias as it re-affirmed that the policy rate will be at current levels for a "considerable time'after Quantitative Easing(QE)ends. News and data from Europe were front and center last quarter.A referendum for Scottish independence from Great Britain generated substantial interest from the public and markets, but concerns were laid to rest by a 55%vote against independence.The eurozone's economic recovery went from anemic to worrisome,as growth weakened (0%for the second quarter),German business confidence fell and geopolitical tensions created uncertainty. Importantly, inflationary expectations continued to fall, spurring European Central Bank President, Mario Draghi,to expand previous easing measures by cutting rates and launching a securitized debt buying program.Core rates fell to all-time lows(below 1%for the 10-year German Bund)and peripheral spreads also tightened.With a lingering threat of deflation and smaller than expected take-up of the first targeted longer-term refinancing operation tranche, expectations for full-scale CIE continued to build. Further east,growth concerns developed in Asia's largest economies, China and Japan.While recent attempts by the Chinese government to stimulate the economy appeared to bear some fruit, markets Mr. Mike White,CPA October 29, 2014 Orange County Sanitation District Page 2 grew concerned that the traditional policy tools were becoming less effective. In Japan,falling industrial production and mixed survey data after April's tax hike indicated that the economy's underlying strength may be lower than previously believed. Moreover,the slow progress on structural reform added to concerns about Prime Minister Abe's willingness and capacity to implement less popular growth-enhancing measures. In the emerging markets(EM),a number of headlines and country-specific events drove markets. Tensions over Ukraine pushed the U.S.and European Union to expand sanctions on Russia,where the economy is likely headed toward a recession and may eventually reduce growth for neighboring Eastern European countries. Brazil's upcoming presidential election grabbed market attention as support for opposition candidate Marina Silva,who entered the race following the tragic death of Eduardo Campos, became a credible threat to current president Dilma Rousseff.And lastly,Argentina defaulted on its debt for the second time since 2001 as the nation was barred from paying interest by a New York judge. Despite the inability of the government,the"hold-outs"and the U.S. courts to come to an agreement, bonds were up at quarter end. Bond Returns Were Mixed as Yields Declined but Spreads Widened The following summarizes fixed income sector returns during the third quarter of 2014: • U.S. Treasuries returned 0.34% for the quarter and 3.06% year to date (Barclays U.S. Treasury Index). U.S. Treasuries rallied through mid-August as the market responded to heightened geopolitical risk and still easy Fed policies. Rates oscillated for the rest of the quarter as stronger economic data and expectations that the Fed might raise rates sooner were countered by the return of geopolitical concerns later in the quarter. In the end,yields rose modestly at the front end of the curve on Fed hike expectations (2-year yields rose 11 basis points), while long-term yields remained anchored by low inflation expectations (10- and 30-year yields declined 4 and 16 basis points, respectively). Finally,the Barclays U.S.Aggregate Index returned 0.17%during the third quarter. • Agency mortgage-backed securities (MBS) returned 0.18% for the quarter and 4.26% year to date (Barclays Agency Fixed-Rate MBS Index). Agency MBS underperformed like-duration U.S.Treasuries during the quarter, driven largely by larger levels of issuance and increasing concerns of MBS demand once the Fed ends its purchase program in October. • U.S. investment grade credit returned-0.03%during the third quarter and 5.67%year to date,as measured by the Barclays U.S. Credit Index.The sector underperformed like-duration Treasuries by- 0.67%during the quarter as spreads widened by 11 basis points to 1.07%. • Treasury Inflation-Protected Securities (TIPS) returned -2.04% for the third quarter (based on the Barclays U.S. TIPS Index) and 3.67%year to date. TIPS posted negative returns as real yields in the U.S. increased and underperformed nominal Treasuries as inflation and inflation expectations both decreased. Inflation decelerated from the 2% level seen earlier this year as food and energy prices fell, as did prices for transportation. • Tax-exempt municipals returned 1.49% during the quarter and 7.58% year to date, based on the Barclays Municipal Bond Index.Taxable municipals also posted positive returns of 0.86%in the third quarter and 11.81% year to date, according to the Barclays Taxable Municipal Index. Municipal bonds posted positive returns and outperformed Treasuries. Consistent with the 2014 trend, returns Mr. Mike White,CPA October 29, 2014 Orange County Sanitation District Page 3 were driven by lower Treasury rates, negative net new issue supply, and mutual fund inflows. Net supply continued to contract, as new issuance did not keep pace with seasonally high levels of maturing bonds. Performance Attribution Long-Term Portfolio The Long-Term portfolio that PIMCO manages on behalf of Orange County Sanitation District returned - 0.06 percent over the quarter, outperforming the Merrill Lynch 1-5 year Government Corporate Index by 1 basis point. The following points summarize returns for the quarter ended September 30, 2014. • The portfolio outperformed its benchmark for the quarter • The following strategies were positive for the quarter: ➢ An underweight to U.S. duration,particularly at 1-5 year maturities,as the U.S.yield curve steepened • The following strategies were negative or neutral for returns: ➢ Holdings of U.S. inflation-protected securities as inflation expectations decreased during the quarter Liquid Portfolio The Liquid portfolio that PIMCO manages on behalf of Orange County Sanitation District returned 0.03 percent over the quarter, outperforming its benchmark, the 3-month Treasury Bill Index, by 2 basis points. The following points summarize returns for the period ending September 30,2014. • The portfolio outperformed its benchmark for the quarter • The following strategies were positive for the quarter: ➢ Use of higher yielding securities with slightly longer maturities Economic Outlook We expect the U.S. to continue to be a bright spot in the global economy, with growth of 2.5-3%. This growth is likely to be driven by acceleration in capital expenditures, as corporations experience additional pricing power and better expected returns on their investments. Underlying this view, monetary policy remains supportive, as the Federal Reserve (Fed) looks to reflate the U.S. economy. Given the overall muted level of U.S. growth, compared to historical recoveries, we anticipate that the Fed is likely to raise policy rates only gradually. Our expectation is that the first rise in the federal funds rate will take place in mid-2015. One implication is that the continued intervention by monetary policy authorities, balanced with moderate GDP growth and strong corporate balance sheets, provides support for investments in bonds that trade at a spread to Treasuries. Additionally, given that maturities have been pushed out for a couple of more years, we expect it to be some time before there is a catalyst for a change in the financial cycle. Mr. Mike White,CPA October 29, 2014 Orange County Sanitation District Page 4 Strata The following list highlights the strategies that will be used in the Long Term portfolio in the coming months: • Plan to be largely underweight U.S.interest rate risk;focus on intermediate maturities • Selectively add exposure to short-dated credit in companies with strong growth and pricing power and in industries with high barriers to entry and improving fundamentals; focus on issuers within housing,healthcare,and energy • Maintain tactical allocations to Agency MBS; focus on security selection to capitalize on relative value opportunities within the coupon stack • Hold intermediate Treasury Inflation-Protected Securities(TIPS) as we believe inflation protection is attractively priced at these maturities • Retain exposure to high quality municipal bonds that offer attractive yields The following list highlights the strategies that will be used in the Liquid Portfolio in the coming months: • Concentrate on maturities just outside the money market space that offer better potential for price appreciation and "roll down"given continued dovish central bank policy Compliance Issues Long-Term Portfolio • July 2014: None • August 2014: None • September2014: None Defaulted bonds The account continues to hold$2 million face value of LEHMAN BROS HLDGS FRN 2008(cusip 52517PC58)that was purchased on 10/24/2005,which has had its rating withdrawn by S&P and Moody's as a result of Lehman's bankruptcy on 09/15/2008. The account also holds$600,000 face value of LEHMAN BROS HLDGS SR UNSEC(cusip 5252MOBZ9)that was purchased on 01/15/2008,which has had its rating withdrawn by S&P and Moody's as a result of Lehman's bankruptcy. The account received an initial partial payment of claims against Lehman in the amount of$36,267.83 and$120,464.84.The amount and timing of subsequent payments remains uncertain. Ultimate recovery value will depend upon how fast and when their remaining assets are liquidated. We are monitoring the situation closely and expect to get more clarity as Lehman continues moving through the bankruptcy process. Ratings The account holds approximately $10.7 million face value of mortgage backed securities and pass- throughs that were purchased following a coding error in our compliance system. Mr. Mike White,CPA October 29, 2014 Orange County Sanitation District Page 5 Your Investment Policy Statement requires that Collateralized mortgage obligations (CMOs) issued by agencies of the U.S. Government and asset-backed securities be rated "Aaa" by Moody's AND "AAA" by S&P. Currently, there are three securities that are not rated by both Moody's and S&P, one of which is rated below AA+ by S&P and unrated by Moody's, violating both rules. Twelve securities have minimum ratings from S&P and Moody's below AAA. All securities were compliant at the time of purchase. On 11/16/2012, S&P lowered its rating on certain classes of RMBS transactions from AAA to A+. The affected holding (cusip N83611MGS1) represents approximately 0.2% of the portfolio's total market value. We believe the position remains attractive despite the downgrade. Only 35% of the principal remains outstanding and the security does not have a history of delinquent or defaulted payments. We plan to hold the position unless directed otherwise. On 1/18/2013, S&P lowered its rating on certain classes of RMBS transactions from AAA to AA+. The affected holding (cusip #03215PFN4) represents approximately 0.03% of the portfolio's total market value. Only 1% of the principal remains outstanding and the security does not have a history of delinquent or defaulted payments. We plan to hold the position unless directed otherwise. On 11/14/2013, Moody's downgraded the senior unsecured debt of Goldman Sachs from A3 to Baal (cusip 38141GeG5 and 38141GFG4), and the senior unsecured debt of Morgan Stanley from Baal to Baal (cusip 61747VCE3). The downgrades came after the company concluded their comprehensive review of eight U.S. banks that began in August. The affected securities represent approximately 0.93% of the total market value of the portfolio. We plan to retain the positions unless directed otherwise. Liquid Portfolio • July 2014 Due to the client-directed withdrawal of$27,000,000 on July 31, the following maximum concentration rules were breached: • U.S.Agencies-exposure increased above the max 20%limit to 25.47%on July 31 • Corporates-exposure increased above the max 30%limit to 30.86%on July 31 • Repos-exposure increased above the max 20% limit to 29.03%on July 31 Compliance was subsequently restored in a prudent manner over the following trading days: • US Agencies-compliance was restored on August 13 • Corporates-compliance was restored on August 13 • Repos-compliance was restored on August 1 August 2014 Due to the client-directed withdrawal of$27,000,000 on July 31, the following maximum concentration rules were breached: Mr. Mike White,CPA October 29, 2014 Orange County Sanitation District Page 6 • U.S.Agencies-exposure increased above the max 20%limit to 25.47%on July 31 • Corporates-exposure increased above the max 30%limit to 30.86%on July 31 • Repos-exposure increased above the max 20% limit to 29.03%on July 31 Compliance was subsequently restored in a prudent manner over the following trading days: • US Agencies-compliance was restored on August 13 • Corporates-compliance was restored on August 13 • Repos-compliance was restored on August 1 September 2014: None We look forward to discussing these and other topics with you in the near future. Best Regards, /s/ /s/ Stephanie King,CFA Todd Staley,CFA Executive Vice President,Account Manager Vice President,Account Manager DDSD Investment Management Program Quarter End Portfolio Values (Marked4o-Market) $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 30 Jun 13 30 Sep 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sep 14 euy�Mo .re.-. 8w,Urr,oww,o M—. , Summary of Performance Data and Portfolio Statistics Orange County Sanitation District Liquid Operating Portfolio 10-Year Ferum vs.Standard DeWarrm 1R •• •-• ' 1 1 ��®®®��� t0 Total Portfolio e x Before Fees(%) 2.82 1.58 0.02 0.02 0.07 0.07 0.06 0.03 a chi 10- After Fees %) 2 82 1.58 0.02 -0.02 -0.O9 -0.05 -0.02 -0.02 a Yrfn ML 13 Yr,SHIP 1 s 4 vr.Treaaury Citi 3-Month Treasury Bill Index(%)° 264 1.51 0.08 0.05 0.04 0.03 0.02 0.01 g A = R9 Por la 0 Index -2 4 -R 0 R 4 8 0 10 1R mandem DevlceonaRMine s) %of Market Value Duration in Yrs Total Market Value(USD in millions) 85.9 58.9 Government-Related 40 5 003 0.01 Quarterly Contributions(USD In millions) 35.0 -27.0 Mortgage 0 0 000 0.00 Estimated Annual Income(USD In millions) 0.7 0.4 Invest.Grade Credit 21 18 0.12 0.06 Estimated Yield M Maturity(%) 0.1 0.1 High Yield Credit 0 0 010 0.00 Effective Duration(yra) 0.2 0.1 Non U.S.Developed 0 0 0.00 0.00 Effective Maturity(ym) 0.2 0.1 Emerging Markets 0 a 0.00 0.00 Average Quality AA+ AA+ Municipal 0 0 0.00 0.00 Average Coupon(%) 0.8 0.8 Other 0 0 0.00 0.00 Net Currency Exposure(%) 0.0 0.0 Net Cash Equivalents:° 39 ]] 0.06 0.06 Tracking Error(10 yes,%)x' 0.1 0.1 Commercial Paper/STIF 36 57 0.06 0.06 Information Ratio(10 ye l 2.8 2.9 ST Government-Related! 0 0 0.00 0.00 'See example of tracking error/Information ratio on Certificates of Deposit 0 0 0.00 0.00 footnote page of the Appendix. U.S.Money Mkt FutureslOptions 0 0 0.00 0.00 Non-U.S.Money Market Futures 0 0 0.00 0.00 Other 5 40 0.00 0.00 Less:Liabilities -2 .20 0.00 0.00 Total 100 100 0.21 0.14 Govemment-Related may include nominal and inflation-protected Treasuries,agencies,interest rate swaps, See footnotes in Appendix. Treasury futures and options,and FDIC-guaranteed corporate securities. 2 Summary of Performance Data and Portfolio Statistics Orange County Sanitation District Long Term Portfolio 10-Year as urn,n.smndeN o--anon 8 Total Portfolio' a: B CepInI U.S. Before Fees(%) 4.86 3.0 2.42 1.13 1.05 1.43 0.72 -0.06 a Aasrasam After Fees(%) 4.71 3.52 2.26 0.98 0.91 1.33 0.65 -0.10 5rc` A p Pammlio Bork Merrill Lynch U.S.Corporate/Government Index 1-5 Year Bond Index(%)� 4.64 3.33 226 1.35 1.25 1.11 bad -0.07 2 all a_ Ma 0 e2 4 a e SentlaN oevlz0oaaf lteWml(x) %of Market Value %of Duration 1 1 r r r r 1 1 • 1 1 Total Market Value(USD in millions) 506.2 461.6 Government-Related 25 30 68 62 Quarterly Contributions(USD In millions) 63.2 - .3 Mortgage 1 1 1 1 Estimated Annual Income(USD in millions) 5.9 5.0 Invest.Grade Credit 10 9 14 iT Estimated Yield to Maturity(%) 1.0 1.0 High Yield Credit 0 0 0 0 Effective Duredon(yrs) 2.5 2.2 Non U.S.Developed 0 0 0 0 Benchmark Duration(yrs) 2.7 2.7 Emerging Markets 0 0 0 0 Effective Matudly(yrs) 3.0 2.6 Municipal/Other 4 4 14 iT Average Quality M. AAe Net Cash Equivalents:' 60 56 3 3 Average Coupon(%) 1.2 1.1 Commercial Paper I STIF 35 31 3 2 Net Currency Exposure(%) 0.0 0.0 ST Government-Related 3 1 0 0 Tracking Error(10 yrs,%)r 0.8 0.8 ST Mortgage 1 1 0 0 Information Ratio(10 yis)d' 04 0.4 ST Credit 1 3 0 1 'See example of cracking error I information ratio on footnote page U.S.Money Market Futures/Options 0 0 0 0 of the Appendix. Non U.S.Money Market Futures 0 0 0 0 char 40 40 0 0 Less:Liabilities -20 40 0 0 Total 100 100 100 100 Govemment-Related may include nominal and inflation-protected Treasuries,agencies,interest rate swaps,Treasury futures and options,and FDIC-guaranteed corporate securities. See footnotes in Appendix. 2 Orange County Sanitation District Investment Transactions and Balances in the State of California Local Agency Investment Fund September 30, 2014 Par Value Book Value Market Value Rate Yield Balance September 1, 2014 $31,341,566 $31,341,566 $31,341,566 0.25 0.25 Deposits: Total Deposits 0 0 0 0.25 0.25 Withdrawals: 9/3/2014 (3,900,000) (3,900,000) (3,900,000) 0.25 0.25 9/11/2014 (3,600,000) (3,600,000) (3,600,000) 0.25 0.25 9/17/2014 (1,700,000) (1,700,000) (1,700,000) 0.25 0.25 9/25/2014 (5,300,000) (5,300,000) (5,300,000) 0.25 0.25 Total Withdrawals (14,500,000) (14,500,000) (14,500,000) 0.25 0.25 Balance September 30, 2014 $16,841,566 $16,841,566 $16,841,566 0.25 0.25 Asset Summary Report ID: G1,8251 '� Base Cwnenry: Can BNY MELLON by Asset Type with Sectors Alternate Base Currency: Exchange Rate: LI VID OPER-PIMCO-OCSFO7511302 9 30 2014 Status: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description Shares Par Base Base Total Base CASH&CASH EQUIVALENTS U.B.DOLLAR FEDERAL HOME LOAN BANK- I YR OR LESS 11,700,000.000 11,698,069.45 11,698,069.45 19.85% 0.00 FEDERAL HOME LOAN MORTGAGES- 1 YR OR LESS 10,130,000.000 10,128,713.21 10,129,065.21 17.19% 352.00 FNMA ISSUES- t YR OR LESS 11,300,000.000 11,299,172.62 11,299,172.62 19.18% 0.00 REPURCHASE AGREEMENTS 23,400,000.000 23,400,000.00 23,400,000.00 39.72% 0.00 SHORT TERM INVESTMENT FUNDS(US REGULATED) 535,336.630 535,336.63 535,336.63 0.91% 0.00 U.S.TREASURY BILLS- 1 YR OR LESS 2,900,000.000 2,899,928.44 2,899,928.44 4.92% 0.00 PENDING TRADES -11,700,000.00 -11,700,000.00 -19.86% 0.00 INTEREST 82,297.20 82,297.20 0.14% 0.00 U.S.DOLLAR 59,965,336.630 48,343,317.55 48,343,869.55 82.05% 352.00 CASH&CASH EQUIVALENTS 59,965,336.630 48,343,517.55 48,343,869.55 82.05% 352.00 FIXED INCOME SECURITIES U.S.DOLLAR BANKING&FINANCE 5,479,000.000 5,604,548.85 5,535,765.02 9.40% -68,783.83 CHEMICALS 672,000.000 697,247.04 686,172.48 1.16% -11,074.56 FOOD BEVERAGE&TOBACCO 2,150,000.000 2,209,981.59 2,175,101.25 3.69% -34,880.34 HEALTH CARE 1,050,000.000 1,089,927.68 1,071,231.00 1.82% -18,696.68 INDUSTRIAL 1,096,000.000 1,126,775.68 1,106,565.44 1.88% -20,210.24 U.S.DOLLAR 10,447,000.000 10,T28,480.84 10,574,835.19 17.95% ,153,646.65 FIRED INCOME SECURITIES 30,447,000W0 10,728,480.84 10,574,835.19 17.98% .153,64S.65 TOTAL ASSETS-BASE: 70,412,336.630 59,071,998.39 58,918,704.74 300.00% -153,293.65 101812014 6:12:I9PM EDT 1 Workbermh Asset Summary Report ID: GL8251 '� Base Cunenry: Can BNY MELLON by Asset Type with Sectors Alternate Base Currency: Exchange Rate: TANG TERM OPER-PIMCO-OCSF07522202 9 30 2014 Status: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description Shares Par Base Base Total Base CASH&CASH EQUNALENTS U.B.DOLLAR CASH EQUIVALENTS 104,812.500 104,812.50 43,890.23 0.01% -60,922.27 FEDERAL HOME LOAN BANK- 1 YR OR LESS 63,299,000.000 63,286,618.68 63,286,618.68 13.72% 0.00 FEDERAL HOME LOAN MORTGAGES- 1 YR OR LESS 51,900,000.000 51,890,413.74 51,890,413.74 11.25% 0.00 FNMA ISSUES- t YR OR LESS 29,200,000.000 29,193,242.28 29,193,242.28 6,33% 0.00 REPURCHASE AGREEMENTS 154,500,000.000 184,500,000.00 184,500,000.00 39.99% 0.00 SHORT TERM INVESTMENT FUNDS(US REGULATED) 603,537.280 603,537.28 603,537.28 0.13% 0.00 U.S.TREASURY BILLS- 1 YR OR LESS 100,000.000 99,969.16 99,969.16 0.02% 0.00 PENDING TRADES -92,297,680.16 -92,297,680.16 -20.00% 0.00 INTEREST 1,187,386.72 1,187,386.72 0.26% 0.00 U.B. DOLLAR 329,7O7,349.780 238,568,300.20 238,507,377.93 91.69% -60,922.27 CASH&CASH EQUNALENTS 329,7O7,349.780 238,568,300.20 238,507,377.93 51.69% -60,922.27 FIXED INCOME SECURITIES U.S.DOLLAR ABS-HOME EQUITY 446,200.610 384,149.67 433,893.22 0.09% 49,743.55 ABS-SMALL BUSINESS ADMINISTRATION 178,711.650 178,711.65 192,311.61 0.04% 13,599.96 ADS-STUDENT LOANS 52,247.280 52,035.30 54,151.17 0.01% 2,115.87 AUTOMOBILES&COMPONENTS 5,200,000.000 5,200,000.00 5,218,668.00 1.13% 18,668.00 BANKING&FINANCE 41,134,000.000 43,670,032.55 41,906,689.59 9.08% -1,763,342.96 COLLATERALIZED MORTGAGE OBLIGATION COMM/( 352,878.220 353,787.99 354,078.01 0.08% 290.02 FHLMC MULTICLASS 2,254,204.380 2,471,508.58 2,509,118.17 0.54% 37,609.59 FHLMC POOLS 2,892.390 2,821.90 2,909.46 0.00% 87.56 FNMA POOLS 2,738,069.920 2,884,388.56 2,995,781.60 0,65% 111,393.04 FNMA REMIC 1,282,799.830 1,288,858.51 1,300,336.67 0.28% 11,478A6 FOOD BEVERAGE&TOBACCO 1,600,000.000 1,854,144.00 1,809,520.00 0.39% -44,624.00 GNMA MULTI FAMILY POOLS 330,132.270 330,133.96 342,021.59 0.07% 11,887.63 GNMA REMIC 66,486.830 66,486.83 67,017.39 0.01% 530.56 HEALTHCARE 1,300,000.000 1,318,052.00 1,345,851.00 0.29% 27,799.00 INSURANCE 800,000.000 884,844.67 878,815.00 0.19% -6,029.67 REITS 1,000,000.000 996,050.00 1,089,290.00 0,24% 93,240.00 TAXABLE MUNICIPALS 16,440,000.000 16,738,875.89 19,876,798.60 4.31% 3,137,922.71 101812014 6:14:IOPM EDT 1 Workbench Asset Summary Repoft ID: GL8251 '� Base Cunenry: USD BNY MELLON by Asset Type with Sectors Alternate Ease Currency: Exchange Rate: TANG TERM 0PER-PIMC0-OCSF07522202 9 30 2014 Status: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description Shares Per Base Base Total Base U.S.TIPS 19,864,660.000 17,708,575.27 17,204,846.91 3.739% -503,728.36 US GOVERNMENTS 122,300,000.000 122,287,536.57 121,735,980.00 26.39% -551,556.57 UTILITY-ELECTRIC 2,697,000.000 2,983,751.61 2,873,521.64 0,62% -110,229.97 WHOLE LOAN-CMO-COLLATERALIZED MTG OBLIG 682,825.010 682,821.91 684,258.94 0.15% 1,43T03 U.B.DOLLAR 218,723,108.390 222,337,567.42 222,875,868.57 48.31% 538,291.15 FIXED INCOME SECURITIES 218,723,108.390 222,337,567.42 222,895,85B.59 48.31% 538,291.15 TOTAL ASSETS-BASE: 548,430,458.170 460,905,867.62 461,383,236.50 300.00% 477,368.80 101812014 6:14:I0PM EDT 2 Workbench Asset Summary Report ID: GL8251 Base Cuuenry: USD BNY MELLON by Asset Type with Sectors Alteenate Ease Cwrene . Exchange Rate: ESCROW ACCOUNT-OCSFOT555502 9 30 2014 Status: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description RL Shares par Base Base Total Base CASH&CASH EQUWALENTS U.B.DOLLAR INTEREST 595.68 595.68 0.02% 0.00 PUKED INCOME SECURITIES U.S.DOLLAR US GOVERNMENTS 3,594,000.000 3,603,596.33 3,599,319.12 99.98% -4,277.21 TOTAL ASSETS-BASE: 3,594,000.000 3,604,192.01 3,599,914.80 100.00% -4,277.21 101812014 6;15:48PM EDT 1 Workbench Yield Analysis Report ID: RAM234 Base Currency: BNY MELLON OCSF07511102 9/30/2014 Liquid Oper-Pimco Units Held YTM/ Current Moody's Market Total Coat %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market Adj Rating Value Duration CASH &.TEMPORARY Sum o(Acmuut Receivables - 0.00 SUMRECV -11,617,703 AGENCY 5,500,000.00 FEDERAL HOME LN BK CONS DISC 0.00 Aaa 100.00 5,499,278 11.39 0.00 313385J23 MAT 10/03/2014 5,499,278 9.33 100,000.00 FEDERAL HOME LN MTG CORP DISC 0.00 Asa IM.00 99,994 0.21 0.00 3133471495 MAT 10/02/2014 99,994 0.17 100,000.00 FEDERAL HOME LN MTG CORP DISC 0.00 Asa IM.00 99,993 0.21 0.01 313399JS1 MAT 10/06/2014 100,000 0.17 179,000.00 FEDERAL HOME LN MTG CORP DISC 0.00 Ass 100.00 178,984 0.37 0.03 313397K59 0.000%10/14/2014 DD 10/15/201 178,984 0.30 246,000.00 FEDERAL HOME LN MTG CORP DISC 0.01 Aaa 100.00 245,967 0.51 0.08 313397M99 0.000%11/03/2014 DO 11/04/201 245,967 0.42 5,500,000.00 FEDERAL HOME LN BK CONS DISC 0.01 Ana IM.00 5,498,898 11.39 0.08 313385M60 MAT 10/31/2014 5,498,898 9.33 515,000.00 FEDERAL HOME LN MTG CORP DISC 0.01 Asa 100.00 514,941 1.09 0.04 313397M24 MAT 10/27/2014 514,941 0.87 700,000.00 FEDERAL HOME LN BKS CONS DISC 0.02 lau 99.99 699,894 1.45 0.19 313385S80 DD 12/12/2013 0.00%12/12/2014 699,894 1.19 2,300,000.00 FEDERAL HOME LN MTG CORP DISC 0.02 Ana 99.99 2,299,609 4.77 0.12 31339MO MAT 11/17/2014 2,299,954 3.90 101812014 6:25:541M EDT 1 Source:The Bank fNew York Mellon Communion Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07511102 9/30/2014 Liquid Oper-Pim<o Units Held YTM/ Current Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market AQj Rating Value Duration 400,000.00 FEDERAL HOME LN MTG CORP DISC 0.02 Aaa 99.98 399,946 0.83 0.18 313397S44 MAT 12/08/2014 399,946 0,68 500,000.00 FEDERAL HOME LN MTG CORP DISC 0.02 Aaa 99.98 499,923 1.04 0.11 313397P21 0.000%11/12/2014 DD 11/12/201 499,923 0.85 200,000.00 FEDERAL NATL MTG ASSN DISC 0.02 Ann 99.99 199,984 0.41 0.30 313588AV7 MAT 01/20/2015 199,984 0.34 900,000.00 FEDERAL HOME LN MTG CORP DISC 0.03 Aaa 100.00 899,924 1.86 0.03 313397K69 MAT 10/15/2014 899,924 1.53 COMMERCIAL PAPER 690,000.00 FEDERAL HOME LN MTG CORD DISC 0.01 Aaa 99.99 689,923 1.43 0.09 3133971,74 MAT 10/24/2014 689,923 1.19 3,300,000.00 FEDERAL HOME LN MTG CORD DISC 0.02 Aaa 100.00 3,299,589 6.84 0.05 313399133 MAT 10/20/2014 3,299,589 &W OTHER 535,336.63 DREYFD THE AGY CSH MGT 521 INC - Aaa 535,337 1.11 0.08 996085247 VAR RT 12/31/2049 DD 04/09/97 535,337 0.91 REPURCHASE AGREEMENTS 11,700,000.00 JP MORGAN CP REP REPO 0.00 0.00 - 100.00 11,700,000 24.24 - 99ZALP9K1 0.000%10/01/2014 DD 09/29/14 11,700,000 19.86 11,700,000.00 JP MORGAN CP REP REPO 0.05 0.05 - 100.00 11,700,000 24.24 0.01 99ZALQB67 0.050%10/02/2014 DD 09/30/14 11,700,000 19.86 TREASURIES AND AGENCIES O 11,100,000.00 FEDERAL NATL ASSN DISCOUNT 0.01 Aaa 99.99 11,099,188 23.00 0.20 313589S89 MAT 12/12/2014 11,099,188 1&84 101812014 6:25:54PM EDT 2 Sourr Ma BakofNeu,Pork Mei/an Corporaran Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07511102 9/30/2014 Liquid Oper-Pim<o Units Held YTM/ Current Moody's Market Total Cost %Type Option Security ID Security Description can(EOP) Yield Quality Price Market Value %Market Adj Rating Value Duration 900,000.00 FEDERAL HOME LN MTG CORP DISC 0.03 A. 100.00 899,922 1.86 0.04 313397K75 0.000%10/16/2014 DO 10/16/201 899,922 1,53 TREASURY 900,000.00 U S TREASURY BILL 0.01 Aaa 100.00 899,993 1.86 0.14 912796EE5 0.000%11/20/2014 DO 05/22/14 899,993 1.53 2,000,000.00 U S TREASURY BILL 0.02 Asa 100.00 1,999,936 4.14 0.26 912796EM7 0.000%0 1/02/2015 DO 04/03/14 1,999,936 3.39 US CASH 1.00 USD(UNITED STATES DOLLAR) - - 0 0.00 - NA9123459 GLPAYABLES RECEIVABLES 0 0.00 TOTAL: CASH&TEMPORARY 0.02 0.01 59,961,220 100.00 0.12 49,343,870 FIXED INCOME BANKS&FINANCE 1,120,000.00 BANK OF NEW YORK MELLON CORP/T 0.50 1.20 Al 100.27 1,127,224 10.54 0.39 06406HCCI 1.200%02/20/2015 DD 02/21/12 1,123,024 1.91 1,135,000.00 CREDIT SUISSE USA INC 0.52 4.81 Al 101.27 1,168,832 10.99 0.29 22541LAR4 4.895%01/15/2015 DO 12/15/04 1,149,369 1.95 1,040,000.00 CITIGROUP INC 0.59 5.92 Baal 101.58 1,077,710 9.91 0.29 172967FA4 6.010%01/15/2015 DO 12/15/09 1,056,390 1.79 1,084,000.00 WACHOVIA BANK NA 0.61 4.81 Al 101.43 1,118,110 10.32 0.34 92976GAD3 4.895%02/01/2015 DO 0 1/31/05 1,099,480 1.89 INDUSTRIALS 101812014 6:25:54PM EDT 3 Sou¢ Ma BakofNew York Mei/an Corporad.n Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07511102 9/30/2014 Liquid Oper-Pim<o Units Held YTM/ Current Moody's Market Total Coat %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market Adj Rating Value Duration 1,096,000.00 EMERSON ELECTRIC CO 0.36 4.95 A2 100.96 1,126,996 10.39 0.21 291011AS3 &000%12/15/2014 DD 12/11/02 1,106,565 1,88 672,000.00 PRAXAIRINC 0.40 4.53 A2 102.11 697,247 6.44 0.50 74005PAR5 4.625%03/30/2015 DO 03/07/08 686,172 1.16 1,100,000.00 ,IPMORGAN CHASE&CO 0.43 1.86 A3 100.68 1,112,672 10.39 0.49 466231 JP5 1.875%03/20/2015 DD 03/21/12 1,107,502 1.88 1,050,000.00 UNITEDHEALTH GROUP INC 0.45 4.98 A3 102.02 1,089,928 10.05 0.46 91324PAM4 4.875%03/15/2015 DD 03/07/05 1,071,231 1.82 1,075,000.00 ANHEUSER-BUSCH INBEV WORLDWIDE 0.46 4.08 A2 101.09 1,101,983 10.20 0.29 03523TAMO 4.125%01/15/2015 DD 10/16/09 1,086,460 1.84 1,075,000.00 PEPSIAMERICAS INC 0.51 4.81 Al 101.27 1,107,999 10.22 0.29 91343PAA9 4.895%01/15/2015 DD 01/10/05 1,088,642 1.85 TOTAL:FU(Ru INCOME, 0." 4.12 10,'M8,481 100.00 0.34 10,574,835 TOTAL:Liquid Oper-Pleura 0.11 0.76 70,689,701 100.00 0.17 58,918,705 101812014 6:25:54PM EDT 4 Source:The Bank fNew York Meilan Corporaran Yield Analysis Report ID: RAM234 Base Currency: BNY MELLON OCSF07522202 9/30/2014 Long Term Oper-Pimeo Units Held YTM/ Current Moody's Market Total Coat %Type Option Security ID Security Description can(EOP) Yield Quality Price Market Value %Market AQj Rating Value Duration CASH &.TEMPORARY Sum o(Acmuut Receivables - 0.00 SUMRECV -91,110,293 AGENCY 18,100,000.00 FEDERAL HOME LN MTG CORP DISC 0.01 Aae 99.98 18,098,881 7.63 0.22 313397U25 0.000%12/22/2014 DO 12/23/201 18,098,881 3.92 7,099,000.00 FEDERAL HOME LN BK CONS DISC 0.01 Aes 99.99 7,096,201 2.99 0.07 313385M45 MAT 10/29/2014 7,096,201 1.54 100,000.00 FEDERAL HOME LN BK CONS DISC 0.01 Aas 99.99 99,993 0.04 0.21 313385T71 MAT 12/19/2014 99,993 0.02 45,800,000.00 FEDERAL HOME LN BKS CONS DISC 0.02 Aaa 99.99 45,793,049 19.29 0.19 313385S80 DID 12/12/2013 0.00%12/12/2014 45,793,049 9.93 10,300,000.00 FEDERAL HOME LN BK CONS DISC 0.02 Aas 99.98 10,297,376 4.34 0.28 313384AP4 MAT01/14/2015 10,297,376 2.23 3,300,000.00 FEDERAL HOME LN MTG CORP DISC 0.02 Aea 99.99 3,298,276 1.39 0.27 313396AH6 0.000%0 1/08/2015 DO 0 1/08/201 3,298,276 0.71 COMMERCIAL PAPER 9,200,000.00 FEDERAL NATL MTG ASSN DISC 0.00 Aaa 100.00 9,197,869 3.88 0.01 31358WS3 MAT 10/06/2014 9,197,869 1.99 2,500,000.00 FEDERAL HOMES LN MTG CORP DISC 0.01 Aaa 99.99 2,499,106 1.05 0.13 313347Q38 MAT 11/21/2014 2,499,106 0.54 28,000,000.00 FEDERAL HOME LN MTG CORP DISC 0.02 Aaa 100.00 27,994,151 11.80 0.05 313397M3 MAT 10/20/2014 27,994,151 6.07 101812014 6:25:54PM EDT 5 Source:The Bouck o FPew Pork Mellen Communion Yield Analysis Report ID: RAM234 Ease Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Oper-Pimco Units Held YTM/ Current Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market Adj Rating Value Duration OTHER 10 ,812.50 SLH PROXY LONG EXPOSURE - - 104,813 0.02 - 99WAEU30 SLHOPNTA4 43,890 0.01 603,537.28 DREYFU THE AGY CSH MGT 521 INC - Aaa 603,537 0.25 0.08 996085247 VARRT12/31/2049DD04/09/97 603,537 0.13 REPURCHASE AGREEMENTS 92,200,000.00 JP MORGAN CP REP REPO 0.00 0.00 - 100.00 92,200,000 38.85 - 99ZALP9K1 0.000%10/01/2014 DO 09/29/14 92,200,000 19.98 92,300,000.00 JP MORGAN CP REP REPO 0.05 0.05 - 100.00 92,300,000 38.89 0.01 99ZALpB67 0.050%10/02/2014 DO 09/30/14 92,300,000 20.01 TREASURIEB AND AGENCIES O 15,000,000.00 FEDERAL NATL WG ASSN DISC 0.00 Ann 100.00 14,996,475 6.32 0.00 313589H89 MAT 10/01/2014 14,996,475 3.25 5,000,000.00 FEDERAL NATL WG ASSN DISC 0.02 Asa 99.98 4,998,899 2.11 0.29 313588AE5 MAT01/05/2015 4,998,899 1.08 TREASURY 100,000.00 U S TREASURY BILL 0.02 Asa 100.00 99,969 0.04 0.22 912796EK1 0.000%12/18/2014 DO 06/19/14 99,969 0.02 US CASH 1.00 USD(UNITED STATES DOLLAR) - - 0 0.00 - NA9123459 GL PAYABLES RECEIVABLES 0 0.00 TOTAL:CASH&TEMPORARY 0.03 0.02 329,678,594 300.00 0.14 238,507,378 FEXED INCOME 101812014 6:25:54PM EDT 6 Sourr Ma DaNc. fNew York M,Sa Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Oper-Pimco Units Held YTM/ Current Moody's Market Total Coat %Type Option Security ID Security Description can(EOP) Yield QuaHty Price Market Value %Market Adj Rating Value Duration BANKS&FINANCE 5,200,000.00 TOYOTA MOTOR CREDIT CORP 0.30 0.52 As3 100.36 5,200,000 2.33 1.62 89236TAK1 VARRT 05/17/2016DD05/17/13 5,218,668 1.13 6,300,000.00 WELLS FARGO BANK NA 0.36 0.75 Aa3 100.32 6,297,795 2.82 0.80 94985H5F7 0.750%07/20/2015 DD 07/29/13 6,319,845 1.37 500,000.00 WELLS FARGO BANK NA 0.51 0.49 - 99.95 500,000 0.22 - 94988J2L0 VAR RT 06/15/2017 DD 06/12/14 499,725 0.11 2,000,000.00 GOLDMAN SACHS GROUP INC/THE 0.54 0.68 Baal 100.22 1,895,068 0.89 0.23 38141GEG5 VARRT 03/22/2016DD03/22/06 2,004,300 0.43 500,000.00 AFLAC INC 0.61 3.37 A3 102.48 499,630 0.23 0.86 001055AE2 3A50%08/15/2015 DD 08/09/10 512,380 0.11 700,000.00 MORGAN STANLEY 0.65 5.82 Baa2 103.08 737,361 0.32 0.56 61747YCE3 &000%04/28/2015 DD 04/28/08 721,567 OA6 600,000.00 BANK OF AMERICA NA 0.65 0.66 A2 100.02 600,000 0.27 0.10 06050TLX8 VAR RT 05/08/2017DD05/08/14 600,144 OAS 200,000.00 CITIGROUP INC 0.85 1.24 Baa2 100.52 198,352 0.09 1.28 172967GGO 1.250%01/15/2016 DD 0 1/10/13 201,032 0.04 500,000.00 JPMORGAN CHASE&CO 0.92 3.33 A3 103.56 506,326 0.23 1.39 46625HHX1 3A50%03/01/2016 DD 02/24/11 517,815 OA1 134,000.00 CITIGROUP INC 1.01 5.49 Baa2 100.19 142,584 0.06 0.04 172967UG 5.500%10/15/2014 DD 09/24/09 134,249 0.03 30Q000.00 JPMORGAN CHASE&CO 1.16 3.04 A3 103.46 299,658 0.14 1.71 46625HJA9 3.150%07/05/2016 DD 06/29/11 310,391 0.07 101812014 6:25:54PM EDT 7 Sou¢e:The Bank fNew Pork Meilan Corporation Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Opar Pimco Units Held YTM/ Current Moody's Market Total Coat %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market Adj Rating Value Duration 1,100,000.00 JPMORGAN CHASE BANK NA L93 5.37 A2 111.81 1,302,565 0.55 2.92 48121CYK6 &000%10/01/2017 DD 09/24/07 1,229,866 0,29 2,900,000.00 AMERICAN EXPRESS CO 1.99 6.00 A3 116.43 3,377,386 1.51 3.16 025816AY5 7.000%03/19/2018 DD 03/19/08 3,376,412 0.93 3,800,000.00 BANK OF AMERICA CORP 2.06 5.17 Baa2 111.29 4,334,014 1.89 2.90 060505DP6 5.750%12/01/2017 DD 12/04/07 4,228,260 0.92 3,200,000.00 BEAR STEARNS COS LLC/THE 2.13 4.26 A3 109.06 3,523,520 1.56 3.46 093902CD8 4.650%07/02/2018 DD 06/25/03 3,490,048 0.96 600,000.00 GOLDMAN SACHS GROUP INC/THE 2.18 5.31 Bael 111.95 692,806 0.30 3.02 38141GFG4 5.950%01/18/2018 DD 01/18/08 671,694 0.15 300,000.00 AMERICAN INTERNATIONAL GROUP I 2.25 6.45 Baal 122.15 385,215 0.16 3.41 026874BT3 8.250%08/15/2018 DD 02/15/09 366,435 0.08 2,800,000.00 MERRILL LYNCH&CO INC 2.55 5.88 Bae2 116.83 3,417,664 1.46 3.62 590188JN9 6.875%11/15/2018 DD 11/24/98 3,271,156 0.91 l W,000.00 JPMORGAN CHASE&CO 2.56 5.43 A3 115.99 112,124 0.05 3.98 46625HHL7 6.300%04/23/2019 DO 04/23/09 115,993 0.03 500,000.00 DANK OF AMERICA CORP 2A3 6.31 Baal 120.81 619,600 0.27 3.99 060510DZ9 7.625%06/01/2019 DO 06/02/09 604,030 0.13 1,000,000.00 SIMON PROPERTY GROUP LP 2E4 4.02 A2 108.93 996,050 0.49 5.91 828807CF2 4.375%03/01/2021 DO 08/16/10 1,089,290 0.24 1,000,000.00 JPMORGAN CHASE&CO 2.94 4.08 A3 107.75 1,104,074 0.48 5.18 46625HHS2 4.400%07/22/2020 DO 07/22/10 1,099,450 0.23 500,000.00 JPMORGAN CHASE&CO 3.03 3.98 A3 106.69 499,876 0.24 5.33 46625HHU7 4.250%10/15/2020 DD 10/21/10 533,460 0.12 101812014 6:25:54PM EDT 8 Sou¢ Ma BaNc. fNew Pork Meilan Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Oper-Pimco Units Held YTM/ Current Moody's Market Total Coat %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market AQj Rating Value Duration 5,600,000.00 MORGAN STANLEY 3A1 4.88 Baal 112.63 6,401,696 2.82 5.81 61747WAL3 5500%07/28/2021 DD 07/28/11 6,307,280 1,39 5,000,000.00 GOLDMAN SACHS GROUP INC/THE 3.93 3.65 Baal 99.27 5,007,200 2.22 7.21 38141GRD8 3.625%01/22/2023 DD 01/22/13 4,963,400 1.08 200,000.00 BANK OF AMERICA CORP 3.88 4.05 Baa2 101.91 206,082 0.09 7.80 06051GMO 4.125%01/22/2024 DD 01/21/14 203,822 0.04 2,000,000.00 LEHMAN BRTH HLD ESC 85.60 - 20.13 1,459,687 0.18 - 525ESCOY6 0.000%12/30/2016 DD 10/24/05 402,500 0.09 600,000.00 ESC LEHMAN BRTH HLD ESCROW - - 20.38 434,594 0.05 - 525ESCIB9 0.000%01/24/2013 DD 01/22/08 122,250 0.03 COMMERCIAL MORTGAGES 352,878.22 NCUA GUARANTEED NOTES TR Cl Al 0.00 1.59 - 100.34 353,788 0.16 - 62888XAA2 1.6U0%10/29/2020 DO 11/10/10 354,078 0.08 FAHNIE MAE REMIC 420,085.47 FNMA GTD REMIC P/T 10-Ml Al -30.21 3.23 Aaa 102.32 436,101 0.19 0.08 31398MGL4 3.305%06/25/2019 DO 02/01/10 429,815 0.09 200,000.00 FNMA GTD REMIC P/T 07-114 A6 0.42 0.37 Aaa 99.80 190,250 0.09 0.15 31396X3Q5 VAR RT 10/27/2037 DO 11/30/07 199,590 0A4 662,714.36 FNMA GTD REMIC P/T 11-3 FA 0.54 0.82 Asa 101.24 662,507 0.30 0.39 31397QRE0 VAR RT 02/25/2041 DO 01/25/11 670,932 0.15 FHLMC 2,892.39 FHLMC POOL#78-6064 1.96 2.24 Aae 100.59 2,822 0.00 0.35 31348SWZ3 VAR RT 01/01/2028 DD 12/01/97 2,909 0.00 FNMA 101812014 6:25:54PM EDT 9 Sou¢e:TAe Bank fNew York Meilan Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Opar Pimco Units Held YTM/ Current Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market Adj Rating Value Duration 242,223.98 FNMA POOL#0823358 0.25 2.06 Aaa 107.58 240,332 0.12 0.48 31406X 5 VAR RT 02/01/2035DD04/01/05 260,580 0.06 58,213.50 FNMA PO01,#0826080 2.05 4.53 Aae 110.49 62,580 0.03 2.34 31409BXH9 5.000%07/01/2035 DD 06/01/05 64,310 0.01 333,212.44 FNMA POOL#0357969 2.20 4.52 Aaa 110.62 358,203 0.16 2.35 31376XT22 5.000%09/01/2035 DD 09/01/05 368,600 0.08 9,399.46 FNMA POOL#0748678 2.23 4.52 Aaa 110.59 10,104 0.00 2.62 31403GXF4 5.000%10/01/2033 DD 10/01/03 10,395 0.00 311,560.86 FNMA POOL#0745580 224 4.52 Aaa 110.54 334,928 0.15 2.63 31403WZ3 5.000%06/01/2036 DD 05/01/06 344,387 0.07 631,726.82 FNMA POOL#0888336 2.31 4.52 Aaa 110.52 679,106 0.31 2.77 3141OF4V4 5.000%07/01/2036 DD 04/01/07 698,159 0.15 624,403.37 FNMA POOL#0815971 2.31 4.52 Aaa 110.63 671,234 0.31 2.58 31406POY8 5.000%03/01/2035 DD 03/01/05 690,752 0.15 35,612.86 FNMA POOLNOAL0869 2A0 4.17 Aaa 107.95 37,664 0.02 3.16 3138EG6F6 4.500%06/01/2029DD09/01/11 38,445 0.01 376,089.08 FNMA POOLN0466397 2A1 3.23 Aaa 105.12 367,950 0.18 5.26 31381PDA3 3.400%11/01/2020 DD 11/01/10 395,330 0.09 57,376.82 FNMA POOLd0257179 2A2 4.17 Aaa 107.95 60,682 0.03 3A8 31371N CT 4.500%04/01/2028DD03/01/08 61,940 0.01 58,250.73 FNMA P001,bOMA0022 2.42 4.17 Aaa 107.95 61,606 0.03 3.27 3141 TPAY3 4.500%04/01/2029DD03/01/09 62,883 0.01 FREDDIE MAC MULTICLASS 101812014 6:25:54PM EDT 10 Sou¢ Ma DaNc. fNew York Meilan Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Oper-Pimco Units Held YTM/ Current Moody's Market Total Coat %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market AQj Rating Value Duration 100,223.15 FHLMC MULTICLASS MTG E3 A 0.60 2.89 Aaa 104.29 100,328 0.05 0.68 3133ME95 VAR RT 08/15/2032 DD 12/01/97 104,519 0,02 900,000.00 MILK MULTICLASS MTG X006 A2 2.29 3.89 Aae 109.36 95I,047 0.44 4.69 31398VJ98 4.251%01/25/2020 DD 04/01/10 984,240 0.21 1,253,981.23 FHLMC MULTICLASS MTG 58 2A 2.61 5.94 Aaa 113.29 1,420,134 0.63 -0.25 31394JY35 6.500%09/25/2043 DD 09/01/03 1,420,359 0.31 ORMA 121,917.71 GNMA II POOL a0080965 0.15 1.58 Aaa 103.95 121,842 0.06 0.85 36225DCB8 VARRT 09/20/2034DD09/01/04 126,731 0.03 39,878.58 GNMA II POOL a080088M 0.56 1.58 Aaa 104.13 40,751 0.02 0.94 36225CC20 VARRT 06/20/2029DD06/01/97 41,524 0.01 14,394.67 GNMA II POOL s0080395 0.99 1.59 Aaa 103.26 14,264 0.01 0.65 36225CNM4 VARRT 04/20/2030DD04/01/00 14,864 0A0 120,278.52 GNMA II POOL s080408X 0.80 1.59 Aaa 103.26 119,057 0.06 0.99 36225CN28 VAR RT 05/20/2030DD05/01/00 124,197 0.03 33,662.79 GNMA II POOL#0080023 0.83 1.59 Aaa 103.10 34,220 0.02 0.35 36225CAE9 VAR RT 12/20/2026 DD 12/01/96 34,705 0.01 ORMA REMIC 66,486.83 GNMA GM REMIC P/T 00-9 FH 0.03 0.65 Aaa 100.80 66,487 0.03 0.15 3837114NX9 VAR RT 02/16/2030 69,019 0.01 HOME EQUITY 133,743.29 AMRESCO RESIDENTIAL SECURI 1 A 2.54 1.02 - 92.12 100,433 0.06 -0.03 03215PFN4 VAR RT 06/2512029 DD 10/20/99 123,198 0.03 101812014 6:25:54PM EDT 11 Sou¢ Ma HaNc. fNew York Meilan Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Oper-Pimco Units Held YTM/ Current Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market AQj Rating Value Duration 240,651.10 SOUNDVIEW HOME LOAN TR OPTS A4 2.85 0.46 - 99.06 212,455 0.11 0.02 83611MGS1 VARRT 11/25/2035DD09/30/05 238,395 0.05 71,800.22 WELLS FARGO HOME EQUNY 2 A16 3.87 4.90 Aaa 100.90 71,262 0.03 0.00 94980GAG6 VARRT 10/25/2034DD09/01/04 72,301 0.02 UiDUSTRIALS 1,000,000.00 SOUTHERN CO/THE 0.61 2.34 Baal 101.68 999,810 0.45 0.95 842587CGO 2.395%09/15/2015 DD 09/19/10 1,016,800 0.22 1,600,000.00 PHIMP MORRIS INTERNATIONAL IN 1.90 5.00 A2 113.10 1,854,144 0.81 3.29 718172AA7 5.650%05/16/2018 GO 05/16/08 1,809,520 0.39 1,300,000.00 AMGEN INC 2.81 3.33 Baal 103.53 1,318,052 0.60 5.41 031162BD1 3A50%10/01/2020 DD 09/16/10 1,345,851 0.29 OTHER=0 OOVT AGENCIES 682,825.01 NCUA GUARANTEED NOTES TR R2 lA 0.33 0.40 Asa 100.21 682,822 0.31 0.02 62888UAA8 VARRT 11/06/2017 DD 11/17/10 684,259 0.15 178,711.65 SBA GM PARTN CTFS 2001-20C 1 2.73 5.89 Aaa 107.61 178,712 0.09 2.08 83162CWO 6.340%03/01/2021 192,312 0.04 STUDENT 52,247.28 SLM STUDENT LOAN TRUST 200 9 A 1.18 1.67 Aaa 103.64 52,035 0.02 0.00 78445JAA5 VARRT 04/25/2023DD08/28/08 54,151 0.01 TD'8 0.00 US TREAS-CPI INFLAT 2.13 1.09 Asa 104.89 0 0.00 5.57 912828PP9 1.125%01/15/2021 DD 0 1/15/11 0 GAO 3,315,360.00 US TREAS-CPI UUTAT 2.34 0.13 Aae 97.62 3,322,803 1.44 9.12 912828MO O.125%07/15/2022 DD 07/15/12 3,236,355 O.70 TREASURIES 101812014 6:25:54PM EDT 12 Sou¢e:The Bank fNew Pork Meilan Corporndon Yield Analysis Report ID: RAM234 Base Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Oper-Pimco Units Held YTM/ Current Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market Adj Rating Value Duration 3,500,000.00 USTREASURY NOTE 0.08 0.11 Aaa 100.05 3,500,340 1.56 0.00 91282SD31 VAR RT 04/30/2016DD04/30/14 3,501,785 0.96 25,800,000.00 U S TREASURY NOTE 0.55 0.50 Aae 99.90 25,794,961 11.50 1.91 912828D64 0.500%08/31/2016 DO 08/31/14 25,773,684 5.59 52,900,000.00 U S TREASURY NOTE 1.74 1.63 Aaa 99.47 52,816,985 23.49 4.60 912828WS5 1.625%06/30/2019 DO 06/30/14 52,619,101 11.40 38,600,000.00 USTREASURY NOTE 1.76 1.64 Aaa 99.38 38,695,6,i1 17.12 4.68 912828WW6 1.625%07/31/2019 DO 07/31/14 38,358,750 8.31 1,500,000.00 U S TREASURY NOTE 2.19 2.02 Aaa 98.84 1,479,609 0.66 6.29 912828WN6 2.000%05/31/2021 DO 05/31/14 1,482,660 0.32 14,549,300.00 US TREAS-CPI INFLATION INDEXED 2.59 0.13 Aaa 96.01 14,385,772 6.23 8.97 912828W O 0.125%07/15/2024 DO 07/15/14 13,968,492 3.03 US TAXABLE MUM BONDS 2,440,000.00 PORT AUTH OF NEW YORK&NEW JE 2.16 4.60 Aaa 115.33 2,507,634 1.26 4.57 73358WAG9 5.309%12/01/2019 DO 07/01/09 2,814,028 0.61 1,400,000.00 NEW YORK CITY NY TRANSITIONAL 2.55 3.75 Aal 108.55 1,400,000 0.68 5.42 64971M5E8 4.075%11/01/2020 DO 11/03/10 1,519,756 0.33 400,000.00 UNIV OF CALIFORNIA CA RUTS MED 3.05 4.50 Aa3 111.83 400,000 0.20 5.70 913366E,15 &035%05/15/2021 DO 11/18/10 447,332 0A0 1,200,000.00 TEXAS ST TRANSPRTN COMMISSION 3.26 4.37 Aae 115.05 1,200,000 0.62 8.07 88283LHT6 5.028%04/01/2026 DO 08/05/10 1,380,552 0.30 1,300,000.00 NEW YORK NY 3.82 4.81 Aa2 118.48 1,373,502 0.69 9.43 64966=0 5.698%03/01/2027 DO 03/30/10 1,540,240 0.33 101812014 6:25:54PM EDT 13 Soume:The E¢Nc. fNew Pork Meilan Corporndon Yield Analysis Report ID: RAM234 Ease Currency: Ban BNY MELLON OCSF07522202 9/30/2014 Long Term.Opar Pimco Units Held YTM/ Current Moody's Market Total Coat %Type Option Security ID Security Description can(EOP) Yield Quality Price Market Value %Market Adj Rating Value Duration 1,300,000.00 BAY AREA CA TOLL AUTH TOLL BRI 3.92 5.44 Al 124.95 1,300,000 0.93 Z98 092024NT5 6993%04/01/2030 DO 09/0 1/10 1,624,389 0.35 2,500,000.00 ILLINOIS ST TOLL HIGHWAY AUTH 4.12 4.90 Aa3 106.53 2,464,750 1.19 4.54 452252FJ3 5.293%01/01/2024 DO 05/21/09 2,663,350 0.58 300,000.00 MET TRANSPRTN AUTH NY REVENUE 4.21 4.98 A2 136.84 311,316 0.18 12.86 59259YGFO 6.814%11/15/2040 DO 12/29/10 410,532 0.09 1,500,000.00 CALIFORNIA ST 4.47 5.23 As3 140.43 1,509,825 0.94 12.63 13063BBU5 9.350%11/01/2039 DO 11/10/09 2,106,480 0.46 1,500,000.00 NEW JERSEY ST TURNPIKE AUTH 4.52 5.18 A3 143.22 1,634,565 0.96 13.54 646139W35 7.414%01/01/2040 DO 04/28/09 2,148,285 0.47 1,300,000.00 MASSACHUSETTS ST PORT AUTH FAC 4.59 5.38 A3 115.31 1,300,000 0.67 9.10 575898CS8 6.202%00/01/2031 DD 06/15/11 1,499,056 0.32 1,300,000.00 AMERICAN MUM MR-OHIO MC OH 5.01 5.84 A3 132.52 1,337,284 0.77 11.04 02765UEH3 7.734%02/15/2033 DD 12/21/10 1,722,799 0.37 =HIES 1,697,000.00 DOMINION RESOURCES MC/VA 1.11 5.12 Baa2 109.41 1,983,942 0.83 MO 25746UBB4 5.600%11/15/2016 DO 11/14/06 1,856,722 0.40 TOTAL:FTKED INCOME 1.95 2.21 222,337,567 100.00 4.44 222,875,859 TOTAL:Long Term Oper.Pimeo 0.96 1.08 552,016,161 100.00 2.75 461,383,237 101812014 6:25:54PM EDT 14 Sou¢e:The Bank fNew York Megan Corporndon Yield Analysis Report ID: NAM234 Base currency: BNY MELLON OCSF07555502 9/30/2014 O.C.S.Escrow Account Units Held YTM/ Current Moody's Market Total Cost %Type Option Security ID Security Description can(SOP) Yield Quality Price Market Value %Market Adj Rating Value Duration CASH &.TEMPORARY Sum o(Acmunt Receivables - 0.00 SUMRECV 596 TOTAL:CASH 6:TEMPORARY 0.00 0.00 300.00 596 FIXED INCOME TREASURIES 3,594,000.00 U S TREASURY NCTE 0.05 0.37 Asa 100.15 3,603,596 99.98 0.46 912828SK7 0.375h03/15/2015DD03/15/12 3,599,319 99.98 TOTAL:FIXED INCOME 0.05 0.37 3,603,S% 300.00 0.46 3,599,319 TOTAL:O.C.S.Escrow Account 0.05 0.37 3,603,596 100.00 0.46 3,599,915 101812014 6:25:54PM EDT 15 Source:The DaNc. fNew York McOm Communion Asset Detail Report ID: GL8013 �' Base Curtency: USD BNY ME LLON by Currency Alternate Base Currency: Exchange Rate: OCW CONSOMDATED-0CSGOOOl0O00 9/30/2014 Statue: FINAL Net Unrealized Price Cost Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base U.S.DOLLAR CASH a CASH EQUIVALENTS INTEREST RECEIVABLE 1,270,279.60 1,270,279.60 0.24% 0.00 RECEIVABLE FOR INVESTMENTS 2,319.84 2,319.84 0.00% 0.00 SOLD PAYABLE FOR INVESTMENTS -104,000,000.00 -104,000,000.00 -19.85% 0.00 PURCHASED FEDERAL HOME LN BK CONS DISC 99.9745 10,300,000.000 10,297,376.36 10,297,376.36 1.97% 0.00 MAT 01/14/2015 SEC TO 313384AP4 FEDERAL HOME LN BK CONS DISC 99.9869 5,500,OOOA00 5,499,278.13 5,499,278.13 1.05% 0.00 MAT 10/03/2014 SEC TO 313385J23 FEDERAL HOME LN BK CONS DISC 99.9606 7,099,000A00 7,096,200.63 7,096,200.63 1.35% 0.00 MAT 10/29/2014 SEC ID:31338SM45 FEDERAL HOME LN BK CONS DISC 99.9800 5,500,000.MO 5,498,897.56 5,498,897.56 1.05% 0.00 MAT 10/31/2014 SEC ID:313385M60 FEDERAL HOME LN BKS CONS DISC 99.9846 46,500,OOOA00 46,492,942.45 46,492,942.45 8.89% 0.00 DD 12/12/2013 0.000/, 12/12/2014 SEC ID:313385580 FEDERAL HOME LN BK CONS DISC 99.9930 100,000.000 99,993.00 99,993.00 0.02% 0.00 MAT 12/19/2014 SEC ID:313385T71 FEDERAL HOME LN MTG CORP DISC 99.9478 3,300,000.000 3,298,275.75 3,298,275.95 0,63% 0.00 0.000%O1/08/2015 DO O1/08/201 SEC ID:313396AH6 FEDERAL HOME LN MTG CORP DISC 99.9937 100,000.000 99,993.67 99,993.69 0,02% 0.00 MAT 10/02/2014 SEC ID:3133971-195 FEDERAL HOME LN MTG CORP DISC 100.0000 100,000.000 99,993.00 100,000.00 0,02% 7.00 MAT 10/06/2014 SEC ID:313397JSI FEDERAL HOME LN MTG CORP DISC 99.9910 179,000.000 178,983.84 198,983S4 0,03% 0.00 0.000%10/14/2014 DD 10/15/201 SEC ID:313397K59 FEDERAL HOME LN MTG CORP DISC 99.9915 900,000.000 899,923.50 899,923S0 0,19% 0.00 MAT 10/15/2014 SEC ID:313397K67 FEDERAL HOME LN MTG CORP DISC 99.9913 900,000.000 899,922.00 899,922.00 0.19% 0.00 0.000% 10/16/2014 DD 10/16/201 SEC ID:313397K75 101812014 6:22:38PM EDT 1 Workbench Asset Detail Report ID: GL8013 �' Base CurteaeF: LED, BNY ME LLON by Currency Alteraate Be..Cartency: Exchange Rate: OCW CONSOLIDATED-OCSG00030000 9/30/2014 Statue: FINAL Net Unrealized Price Cost Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base FEDERAL HOME LN MTG CORP DISC 99.9875 31,300,000.000 31,293,739,62 31,293,739,62 SA7% 0,00 MAT 10/20/2014 SEC ID:313397I 3 FEDERAL HOME LN MTG CORP DISC 99.9888 690,000.000 689,922.95 689,922A5 0,13% 0.00 MAT 10/24/2014 SEC ID:313341L74 FEDERAL HOME LN MTG CORP DISC 99.9886 515,000.000 514,941.42 514,94142 0.10% 0.00 MAT 10/2I/2014 SEC ID:313397M24 FEDERAL HOME LN MTG CORP DISC 99.9864 246,000.000 245,966.52 245,966.52 0.05% 0.00 0.000% 11/03/2014 DD 11/04/201 SEC ID:313397M99 FEDERAL HOME LN MTG CORP DISC 99.9846 500,000.000 499,923.19 499,923.19 0.10% 0.00 0.000%11/12/2014 DD 11/12/201 SEC ID:313399P21 FEDERAL HOME LN MTG CORP DISC 99.9980 2,300,000.000 2,299,609.00 2,299,954.00 0.44% 345.00 MAT 11/17/2014 SEC ID:313399P70 FEDERAL HOMES LN MTG CORP DISC 99.9642 2,500,000.000 2,499,105.56 2,499,105.56 0.48% 0.00 MAT 11/21/2014 SEC ID:313399Q38 FEDERAL HOME LN MTG CORP DISC 99.9864 400,000.000 399,945.61 399,945.61 0.08% 0.00 MAT 12/08/2014 SEC ID:313399S44 FEDERAL HOME LN MTG CORP DISC 99.9938 18,100,000.000 18,098,881.32 18,098,881.32 3.45% 0.00 0.000%12/22/2014 DD 12/23/201 SEC ID:313399U25 FEDERAL NATL MTG ASSN DISC 99.9780 5,000,000.000 4,998,898.61 4,998,898.61 0.95% 0.00 MAT01/05/2015 SEC ID:313588AE5 FEDERAL NATL MTG ASSN DISC 99.9922 200,000.000 199,984.31 199,984.31 0.04% 0.00 MAT 01/20/2015 SEC ID:313588AV9 FEDERAL NATL MTG ASSN DISC 99.9765 15,000,000.000 14,996,475.00 14,996,475.00 2.860% 0.00 MAT 10/01/2014 SEC ID:3135891189 FEDERAL NATL MTG ASSN DISC 99.9768 9,200,000.000 9,197,868.67 9,197,868.67 1.960% 0.00 MAT 10/06/2014 SEC ID:313589J53 FEDERAL NATL ASSN DISCOUNT 99.9927 11,100,000.000 11,099,188.31 11,099,188.31 2.12% 0.00 MAT 12/12/2014 SEC ID:313589S89 101812014 6:22:38PM EDT 2 Workbench Asset Detail Report ID: GL8013 �' Base Curteaey: LED BNY ME LLON by Currency Alternate Base Currency: Exchange Rate: OCSD CONSOLIDATED-OCSW0030000 9/30/2014 Statue: FINAL Net Unrealized Cost Market Value % of Gain/Loss Description Embies Par Base Base Total Base U STREASURY BILL 99.9992 900,000.000 899,992.88 899,992.88 0.19% 0,00 0,000% 11/20/2014 DD 05/22/14 SEC ID:912796EE5 U S TREASURY BILL 99.9692 100,060.000 99,969.16 99,969.16 0.02% 0.00 0.000% 12/18/2014 DO 06/19/14 SEC ID:912796EK1 U S TREASURY BILL 99.9968 2,000,000.000 1,999,935.56 1,999,935.56 0.38% 0.00 0.000%01/02/2015 DO 07/03/14 SEC ID:912996EM7 DREYFU THE AGY CSH MGT 521 INC 100.0000 1,138,873.910 1,138,873.91 1,138,873.91 0.22% 0.00 VAR RT 12/31/2049 DD 04/09/99 SEC ID:996085247 SLH PROXY LONG EXPOSURE 0.4188 104,812.500 104,812.50 43,890.23 0.01% -60,922.27 SLHOPNTA4 SEC ID:99WAEU30 JP MORGAN CP REP REPO 100.0000 103,900,000.000 103,900,000.00 103,900,000.00 19.83% 0.00 0.000% 10/01/2014 DD 09/29/14 SEC ID:99ZALP9K1 JP MORGAN CP REP REPO 100.0000 104,000,000.000 104,000,000.00 104,000,000.00 19.85% 0.00 0.050% 10/02/2014 DO 09/30/14 SECID:99ZALQB67 TOTAL cABe a cABe EQONALssrs 389,672,686.410 186,912,413.43 286,851,843.16 54.75% -60,570.27 FmD INCOME SECURITIES AFLAC INC 102.4760 500,000.000 499,630.00 512,380.00 0110% 12,750.00 3.450%08/15/2015 DD 08/09/10 SEC ID:001055AE2 AMERICAN EXPRESS CO 116.4280 2,900,000.000 3,377,385.79 3,376,412.00 0.64% -973.79 7.000%03/19/2018 DD 03/19/08 SEC ID:025816AY5 AMERICAN INTERNATIONAL GROUP I 122.1450 300,000.000 385,214.67 366,435.00 0.07% -18,799.67 8.250%08/15/2018 DD 02/15/09 SEC ID:026874BT3 AMERICAN MUM MR-OHIO INC OH 132.5230 1,300,000.000 1,337,284.00 1,722,799.00 0.33% 385,515.00 7.734%02/1512 033 DD 12/21/10 SEC ID:02I65UEH3 "GEN INC 103.5270 1,300,000.000 1,318,052.00 1,345,851.00 0.260% 27,799.00 3.450% 10/0112 020 DD 09/16/10 SEC ID:031162BD1 AMRESCO RESIDENTIAL SECURI I A 92.1150 133,743.290 100,432.85 123,197.63 0.02% 22,764.78 VAR RT 06/25/2029 DD 10/20/99 SEC ID:03215PFN4 101812014 6:22:38PM EDT 3 Workbench Asset Detail Report ID: GL8013 �' Ba..Curteney: LED BNY ME LLON by Currency Ahetnate Be..Curt.nU: Exchange Rate: OCW CONSOLIDATED-OCSG00030000 9/30/2014 Statue: FINAL Net Unrealized Price Cost Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base ANHEUSER-BUSCH INBEV 101.0660 1,075,000,000 1,101,982,50 1,086,459.50 0,21% -15,523.00 WORLDWIDE 4.125%01/15/2015 DD 10/16/09 SEC ID:03523TAM0 BANK OF AMEMCA CORP 111.2700 3,800,000.000 4,334,014.00 4,228,260.00 0.81% -105,T54.00 5.750% 12/01/2017 DD 12/04/07 SEC ID:060505DM BANK OF AMERICA NA 100.0240 600,000.000 600,000.00 600,144.00 0.11% 144.00 VAR RT 05/08/2017 DD 05/08/14 SEC ID:06050TLX8 BANK OF AMERICA CORP 120.8060 500,000.000 619,600.00 604,030.00 0.12% -15,570.00 7.625%06/01/2019 DD 06/02/09 SEC ID:06051GDZ9 BANK OF AMEMCA CORP 101.9110 200,000.000 206,082.00 203,822.00 0.04% -2,260.00 4.125%01/22/2024 DD 01/21/14 SECID:06051GFBO BANK OF NEW YORK MELLON 100.2700 1,120,000.000 1,127,224.00 1,123,024.00 0,21% -4,200.00 CORP/T 1.200%02/20/2015 DD 02/21/12 SEC ID:06406HCC1 BAY AREA CA TOLL AUTH TOLL BRI 124.9530 1,300,000.000 1,300,000.00 1,624,389.00 0.31% 324,389.00 6.793%04/0112 030 DD 07/01/10 SEC ID:072024NT5 BEAR STEARNS COS LLC/THE 109.0640 3,200,000.000 3,523,520.00 3,490,048.M 0.69% -33,472.00 4.650%07/0212018 DD 06/25/03 SEC ID:093902CD8 CALIFORNIA ST 140.4320 1,500,000.000 1,509,825.00 2,106,480.00 0.40% 596,655.00 7.350% 11/0112 039 DD 11/10/09 SEC ID: 13063BBU5 CITIGROUP INC 100.1860 134,000.000 142,384.04 134,249.24 0.03% -8,334.80 5.500% 10/15/2014 DD 09/24/09 SEC ID: 172967EM CITIGROUP INC 101.5760 1,040,000.000 1,077,710.40 1,056,390.40 0.20% -21.320.00 6.010%01/15/2015 DD 12/15/09 SEC ID: 172969FA4 CITIGROUP INC 100.5160 200,000.000 198,352.00 201,032.00 0.04% 2,680.00 1.250%01/15/2016 DD 01/10/13 SEC ID: 172967000 CREDIT SUISSE USA INC 101.2660 1,135,000.000 1,168,832.15 1,149,369.10 0.22% -19,463.05 4.875%01/15/2015 DD 12/15/04 SEC ID:22541LAR4 DOMINION RESOURCES INC/VA 109.4120 1,697,000.000 1,983,941.61 1,856,721.64 0.35% -127,219.97 5.600% 11/15/2016 DD 11/14/06 SEC ID:25746UBB4 101812014 6:22:38PM EDT 4 Workbench Asset Detail Report ID: GL8013 �' Base CurteaeF: LED BNY ME LLON by Currency Altente Be..Cartency: Exchange Rate: OCSW CONSOLIDATED-OCSW0030000 9/30/2014 Statue: FINAL Net Unrealized Price Cost Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base EMERSON ELECTRIC CO 100.9640 1,096,000A00 1,126,775,68 1,106,565,44 0.21% -20,210.24 5.000% 12/15/2014 DO 12/11/02 SECID:291011AS3 FHLMC MULTICLASS MTG E3 A 104.2860 100,223.150 100,327.98 104,518.71 0,02% 4,190.73 VAR RT OS/15/2032 DO 12/01/97 SEC ID:3133WE95 FHLMC POOL#78-6064 100.5900 2,892.390 2,821.90 2,909.46 0.00% 87.56 VAR RT 01/01/2028 DO 12/01/97 SEC ID:31348SWZ3 FNMA POOL#0257179 107.9530 57,376.820 60,681.59 61,940.00 0.01% 1,258.41 4.500%04/01/2028 DO 03/01/08 SEC ID:31371NUC1 FNMA POOL#0357969 110.6200 333,212.440 358,203.38 368,599.60 0.07% 10,396.22 5.000%09/01/2035 DO 09/01/05 SEC ID:31376=2 FNMA POOL#0466397 105.1160 376,089.080 367,950.28 395,329.80 0.08% 27,379.52 3.400% 11/0112 020 DO 11/01/10 SEC ID:3138IPDA3 FNMA POOL#0AL0869 107.9530 35,612.860 31,664.10 38,445.15 0.01% 781.05 4.500%06/0112 029 DO 09/01/11 SEC ID:3138EG6F6 FHLMC MULTICLASS MTG 58 2A 113.2680 1,253,981.230 1,420,133.72 1,420,359.46 0.27% 225.74 6.500%09/25/2G43 DD 09/01/03 SEC ID:31394 35 FNMA GTD REMIC P/T07-114 A6 99.7950 200,000.000 190,250.00 199,590.00 0.04% 9,340.00 VARRT 10/27/2037DD11/30/07 SEC ID:3139(M3QS FNMA GTD REMIC P/T 11-3 FA 101.2400 662,714.360 662,307.27 670,932.02 0.13% 8,424.75 VAR RT 02/25/2041 DO 01/25/11 SEC ID:31397QRE0 FNMA GTD REMIC P/T 10-MI Al 102.3160 420,085.470 436,101.24 429,814.65 0.08% -6,286.59 3.305%06/25/2019 DD 02/01/10 SEC ID:31398MGL4 FHLMC MULTICLASS MTG K006 A2 109.3600 900,000.000 951,046.88 984,240.00 0.19% 33,193.12 4.251%01/25/2020 DO 04/01/10 SEC ID:31398VJ98 FNMA POOL#0745580 110.5360 311,560.860 334,927.91 344,386.91 0.07% 9,459.00 5.000%06/01/2036 DO 05/01/06 SEC ID:31403Wn FNMA POOL#0748678 110.5930 9,399A60 10,104.41 10,395.14 0.00% 290.73 5,000% 10/01/2033 DD 10/01/03 SEC ID:31403GXF4 101812014 6:22:38PM EDT 5 Workbench Asset Detail Report ID: GL8013 �' Ba..CurteneF: LED BNY ME LLON by Currency Alternate Be..Currency: Exchange Rate: OCSW CONSOLIDATED-OCSG00030000 9/30/2014 Statue: FINAL Net Unrealized Price Coat Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base FNMA POOLk0815971 110.6260 624,403,370 671,233,62 690,452A7 0.13% 19,518,75 5,000%03/01/2035 DD 03/01/05 SEC ID:31406PQY8 FNMA POOL#0823358 107.5180 242,223A80 240,331.61 260,579.71 0.05% 20,248.10 VAR RT 02/01/2035 DD 04/01/05 SEC ID:31406XWT5 FNMA POOLk0826080 110.4730 58,213.500 62,579.51 64,310.20 0.01% 1,730.69 5.000%07/01/2035 DD 06/01/05 SEC ID:31407BXH9 FNMA POOLb0888336 110.5160 631,726.820 679,106.32 698,159.21 0.13% 19,052.89 5.000%07/01/2036 DD 04/01/07 SEC ID:31410F4V4 FNMA POOL bOMA0022 107.9530 58,250.730 61,605.83 62,883.41 0.01% 1,277.58 4.500%04/01/2029 DD 03/01/09 SEC TO 3141TFAY3 GNMA lI POOL#0080023 103.0970 33,662.790 34,220.33 34,705.33 0.01% 485.00 VAR RT 12/20/2026 DD 12/01/96 SEC TO 36225CAZ9 GNMA lI POOL F080088M 104.1260 39,878.580 40,750.95 41,523.97 0.01% 773.02 VAR RT 06/20/2027 DD 06/01/97 SEC ID:36225CC20 GNMA II POOL F080408X 103.2580 120,278.520 119,056.95 124,197.19 0.02% 5,140.24 VAR RT 05/20/203ODD05/01/00 SEC ID:36225CN28 GNMA II POOL#0080395 103.2610 14,394.670 14,264.21 14,864.08 0.00% 5W87 VAR RT 04/20/203ODD04/01/00 SEC ID:36225CNM4 GNMA II POOL#0080965 103.9480 121,917.710 121,841.52 126,731.02 0.02% 4,889.50 VAR RT 07/20/2034 DO 07/01/04 SEC ID:36225DCB8 GOLDMAN SACHS GROUP INC/THE 100.2150 2,000,000A00 1,895,068.00 2,004,30000 0,38% 109,232.00 VAR RT 03/22/2016 DO 03/22/06 SECID:38141GEG5 GOLDMAN SACHS GROUP INC/THE 111.9490 600,000.000 692,806.00 691,694.00 0,13% -21,112.00 5.950%01/18/2018 DO 01/18/09 SECID:38141GFG4 GOLDMAN SACHS GROUP INC/THE 99.2680 5,000,000.000 5,007,200.00 4,963,40000 0.95% -43,800.00 3.625%01/22/2023 DO 01122/13 SECID:38141GRD8 GNMA GM REMIC P/T 00-9 FH 100.7980 66,486.830 66,486.83 67,017.39 0.01% 530.56 VAR W 02/16/2030 SEC ID:3837H4NX9 101812014 6:22:38PM EDT 6 Workbench Asset Detail Report ID: GL8013 �' Base Curteaey: LED BNY ME LLON by Currency Alternate Base Currency: Exchange Rate: OCSD CONSOLIDATED-OCSW0030000 9/30/2014 Statue: FINAL Net Unrealized Price Cost Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base ILLINOIS ST TOLL HIGHWAY AUTH 106.5340 2,500,000.000 2,464,750,00 2,663,350.00 0.51% 198,600.00 5.293%01/01/2024 DO 05/21/09 SEC ID:452252FJ3 JPMORGAN CHASE&CO 100.6820 1,100,000.000 1,112,672.00 1,107,502.00 0.21% -5,170.00 1.895%03/20/2015 DO 03/21/12 SEC ID:46623EJP5 JPMORGAN CHASE&CO 115.9930 100,060.000 112,124.00 115,993.00 0.02% 3,869.00 6.300%04/23/2019 DO 04/23/09 SEC ID:46625HHL7 JPMORGAN CHASE&CO 107.7450 1,000,000.000 1,104,074.00 1,099,450.00 0.21% -26,624.00 4.400%07/22/2020 DO 09/22/10 SEC ID:46625HHS2 JPMORGAN CHASE&CO 106.6920 500,000.000 499,876.00 533,460.00 0.10% 33,584.00 4.250% 10/15/2020 DO 10/21/10 SEC TO 46625HHU9 JPMORGAN CHASE&CO 103.5630 500,000.000 506,326.00 517,815.00 0.10% 11,489.00 3.450%03/01/2016 DO 02/24/11 SEC TO 46625HHX1 JPMORGAN CHASE&CO 103.4638 300,000.000 299,658.00 310,391.35 0.06% 10,733.35 3.150%07/05/2016 DO 06/29/11 SEC ID:46625HJA9 JPMORGAN CHASE BANK NA 111.8060 1,100,000.000 1,302,565.00 1,229,866.00 0.23% -72,699.00 6.000% 10/01/2017 DO 09/24/07 SEC ID:48121CYK6 LEHMAN SETH HLD ESC 20.1250 2,000,000.000 1,459,687.31 402,500.00 0.08% -1,057,187.31 0.000% 12/30/2016 DD 10/24/05 SEC ID:525ESCOY6 ESC LEHMAN BRTH HLD ESCROW 20.3750 600,000.000 434,594.41 122,250.00 0.02% -312,344.41 0.000%01/24/2013 DD 01/22/08 SEC ID:525ESCIB7 MASSACHUSETTS ST PORT AUTH FAC 115.3120 1,300,000.000 1,300,000.00 1,499,05&00 0,29% 199,056.00 6.202%07/01/2031 DD 06/15/11 SEC IT, 575898CS8 MERRILL LYNCH&CO INC 116.8270 2,800,000.000 3,417,664.00 3,291,15&00 0,62% -146,508.00 6.895% 11/15/2018 DD 11/24/98 SEC IT, 590188JN9 MET TRANSPRTN AWH NY REVENUE 136.8440 300,000.000 311,316.00 410,532.00 0.08% 99,216.00 6.814% I1/15/2U40 DD 12/29/10 SEC IT, 59259YGM MORGAN STANLEY 112.6300 5,600,000.000 6,401,696.00 6,307,280MO 1,20% -94,416.00 5.500%07/28/2021 DD 07/28/11 SEC ID:6174TWAL3 101812014 6:22:3SPM EDT 7 Workbench Asset Detail Report ID: GL8013 �' Ba..Curteney: LED, BNY ME LLON by Currency Alternate Be..Cutt.nU: Exchange Rate: OCW CONSOLIDATED-OCSG00030000 9/30/2014 statue: FINAL Net Unrealized Price Cost Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base MORGAN STANLEY 103.0810 700,000.000 737,361,00 921,569.00 0.14% -15,994.00 6,000%04/28/2015 DD 04/28/08 SEC ID:61747YCE3 NCUA GUARANTEED NOTES TR R2 IA 100.2100 682,825.010 682,821.91 684,258.94 0.13% 1,437.03 VARRT 11/06/2017DDll/17/10 SEC ID:62888UAA8 NCUA GUARANTEED NOTES TR C1 Al 100.3400 352,878.220 353,787.99 354,078.01 0.07% 290.02 1.600% 10/29/2020 DD 11/10/10 SEC ID:62888XAA2 NEW JERSEY ST TURNPIKE AUTH 143.2190 1,500,000.000 1,634,565.00 2,148,285.00 0.41% 513,720.00 7.414%01/01/2040 DD 04/28/09 SEC ID:646139W35 NEW YORK NY 118.4800 1,300,000A00 1,373,502.00 1,540,240.00 0.29% 166,738.00 5.698%03/01/2027 DD 03/30/10 SEC ID:64966HYK0 NEW YORK CITY NY TRANSITIONAL 108.5540 1,400,000.000 1,400,000.00 1,519,756.00 0.29% 119,756.00 4.075% 11/01/2020 DD 11/03/10 SEC ID:64971M5E8 PEPSIAMERICAS INC 101.2690 1,075,000.000 1,107,999.09 1,088,641.75 0.21% -19,337.34 4.875%01/15/2015 DD 01/10/05 SEC ID:71343PAA9 PHILIP MORRIS INTERNATIONAL IN 113.0950 1,600,000.000 1,854,144.00 1,809,520.00 0.35% -44,624.00 5.650%05/16/2018 DD 05/16/08 SEC ID:718172AA7 PORT AUTH OF NEW YORK&NEW JE 115.3290 2,440,000.000 2,507,633.89 2,814,02Z60 0.54% 306,393.71 5.309% 12/01/2019 DD 07/01/09 SEC ID:73358WAG9 PRAXAIR INC 102.1090 672,000.000 697,247.04 686,172.48 0.13% -11,074.56 4.625%03/30/2015 DD 03/07/08 SEC ID:]4005PAR5 SLM STUDENT LOAN TRUST 2009 A 103.6440 52,247.280 52,035.30 54,15117 0,01% 2,115.87 VAR RT 04/25/2023 DD 08/28/08 SEC ID:78445JAA5 SIMON PROPERTY GROUP LP 108.9290 1,000,000.000 996,050.00 1,089,290.00 0,21% 93,240.00 4.375%03/01/2021 DD 08/16/10 SEC ID:828807CF2 SBA GTD PARTN CTFS 2001-20C 1 107.6100 178,711.650 178,711.65 192,31 L61 0.04% 13,599.96 6.340%03/01/2021 SEC ID:83162CWO SOUNDVIEW HOME LOAN TR OPTS A4 99.0600 240,657.100 212,455.11 238,394.92 0.05% 25,939.81 VARRT 11/25/2035DD09/30/05 SEC ID:83611MGS1 101812014 6:22:38PU EDT $ Workbench Asset Detail Report ID: GL8013 �' Ba..Curteaey: LED BNY ME LLON by Currency Ahetmte Be..Curt.nU: Exchange Rate: OCSD CONSOLIDATED-OCSW0030000 9/30/2014 Statue: FINAL Net Unrealized Price Coat Market Value % of Gain/Loss Description Base es Par Base Base Total Base SOUTHERN CO/THE 101.6800 1,000,000.000 999,810,00 1,016,800.00 0.19% 16,990.00 2,375%09/15/2015 DO 09/17/10 SEC ID:842587CGO TEXAS ST TRANSPRTN COMMISSION 115.0460 1,200,000.000 1,200,000.00 1,380,552.00 0.26% 180,552.00 5.028%04/01/2026 DD 08/05/10 SEC ID:88283LHT6 TOYOTA MOTOR CREDIT CORD 100.3590 5,200,000.000 5,200,000.00 5,218,668.00 1.00% 18,668.00 VAR RT 05/17/2016 DD 05/17/13 SEC ID:89236TAKI U S TREASURY NOTE 100.0510 3,500,000.000 3,500,340.41 3,501,785.00 0.67% 1,444.59 VAR RT 04/30/2016 DD 04/30/14 SEC ID:9I2828D31 U S TREASURY NOTE 99.8980 25,800,000A00 25,794,960.94 25,773,684.00 4.92% -21,276.94 0.500%08/31/2016 DD 08/31/14 SEC TO 9I2828D64 U S TREASURY NOTE 100.1480 3,594,000A00 3,603,596.33 3,599,319.12 0.69% -4,277.21 0.375%03/15/2015 DD 03/15/12 SEC ID:9I2828SK7 US TREAS-CPI INFLAT 97.6170 3,315,360.000 3,322,802.82 3,236,354.97 0.62% -86,447.85 0.125%07/15/2022 DD 07/15/12 SEC ID:912828TEO U S TREASURY NOTE 98.8440 1,500,000.000 1,479,609.38 1,482,660.00 0.28% 3,030.62 2.000%05/31/2021 DD 05/31/14 SEC ID:912828WN6 U STREASURY NOTE 99.4690 52,900,000.000 52,816,985.09 52,619,101.00 10.04% -197,884.09 1.625%06/30/2019 DO 06/30/14 SEC ID:9I2828WS5 US TREAS-CPI INFLATION INDEXED 96.0080 14,549,300.000 14,385,992.45 13,968,491A4 2.67% -417,280.51 0.125%09/15/2024 DO 09/15/14 SEC ID:912828WU0 U S TREASURY NOTE 99.3750 38,600,000.000 38,695,640.75 38,358,750.00 7.32% -336,890.75 1.625%07/31/2019 DD 07/31/14 SEC ID:9I2828W W6 UNITEDHEALTH GROUP INC 102.0220 1,050,000.000 1,089,927.68 1,091,231.00 0,20% -18,696.68 4.895%03/15/2015 DD 03/07/05 SEC ID:91324PAM4 UNIV OF CALIFORNIA CA ROTS MED 111.8330 400,000.000 400,000.00 447,332.00 0.09% 47,332.00 5.035%05/15/2021 DO 11/18/10 SEC ID:913366E.I5 WACHOVIA BANK NA 101.4280 1,084,000.000 1,118,110.30 1,099,479.52 0,21% -18,630.78 4.875%02/01/2015 DO 01/31/05 SEC ID:92976GAD3 101812014 6:22:38PM EDT 9 Workbench Asset Detail Report ID: GL8013 �' Base Curtency: LED BNY ME LLON by Currency Alternate Base Currency: Exchange Rate: OCSD CONSOLIDATED-OCSGOOOl0O00 9/30/2014 Statue: FINAL Net Unrealized Price Cost Market Value % of Gain/Loss Description Base Shares Par Base Base Total Base WELLS FARGO HOME EQUITY 2 AI6 100.6970 71,800.220 71,261.71 72,300.67 0.01% 1,038,76 VAR RT 10/25/2034 DD 09/01/04 SEC ID:94980GAG6 WELLS FARGO BANK NA 100.3150 6,300,000.000 6,297,795.00 6,319,845.00 1.21% 22,050.00 0.750%07/20/2015 DD 09/29/13 SEC ID:94985H5F9 WELLS FARGO BANK NA 99.9450 500,000MOO 500,000.00 499,725.00 0.10% -275.00 VAR RT 06/15/2017 DD 06/12/14 SEC ID:949SW2IA TOTAL FTKED INCOME SECURITIES 232,764,308.390 236,669,644.59 237,050,012.88 45.2s% 380,368.29 TOTAL ASSETS U.S.DOLLAR 622,436,794.900 523,582,058.02 523,901,856.04 100.00% 319,798.02 TOTAL ASSETS-BASE: 622,436,794.800 523,582,058.02 523,901,866.04 100.00Y. 319,798.02 101812014 6:22:38FM EDT 10 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON RaseCarrena,: USD OCSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCSGo0010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount 9/2/2014 U.S.DOLLAR(USD) FREE RECEIPT-SD US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 8/29/2014 192.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 01-SEP-2014 FACTOR OF 8/29/2014 0.ONO 0.00 9/2/2014 0.00 0.00 1.03644 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142450007312 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 8/29/2014 870.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 01-SEP-2014 FACTOR OF 8/29/2014 000000.00 9/2/2014 0..00 0.00 1.00398 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142450007313 SEC ID:912828WUO REG:FRB Total FREE RECEIPT-BD(21 Total Principal: 0.00 Total Commission: 0.00 Total I.e..: 0.00 Total Net 0.00 RECEIVE VS PAY-BUY UNITED STATES TREASURY BILL DTD 04/10/20140.000%10/09/2014 8/29/2014 2,000,000,000 -1,999,958.89 TRADING BROKER:DEUTSCHE BE SECS INC,NY NWSCUS33)00000573 9/2/2014 99.9979 0.00 ( 9/2/2014 0.00 0.00 CLEARING BROKER:DEUTSCHE BE SECS INC,NY)NWSCUS33)00000573 0.00 -1,999,958.89 CMS REF: 1142410203302 CLIENT REF:000060300022414 SEC ID:912796DZ9 REG:FEB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 8/29/2014 21,000,049.030 -21,000,049.03 OS/29/2014 0.0900% 9/2/2014 100.0000 0.00 9/2/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -21,000,049.03 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142410205229 CLIENT REF:000020300060871 SEC ID:99ZALKUV4 REG:REPO 101812014 6:24:19PM EDT 1 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ba.Carrent,: USD OCSO-CONSOLIDATED 9/1/2014 - 9/30/2014 oCsc000l0000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 8/29/2014 11,700,000.000 -11,700,000.00 08/29/2014 0.0900% 9/2/2014 100.0000 0.00 9/2/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -1I,900,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142410205242 CLIENT HER 000060300022413 SEC TO 99ZALKUV4 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTI) 8/29/2014 49,099,950.970 -49,099,950.97 08 29 2014 0.0900% 9/2/2014 100.0000 0.00 / / 9/2/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -49,099,950.97 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142410205451 CLIENT REF:000020300060870 SECID:99ZALKUV4 REG:REPO Total RECEIVE YS PAY-BUY(4( Total Principal: -83,799,958.89 Total Commission: 0.00 Total Income: 0.00 Total Net: -83,799,958.89 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/2/2014 -32A00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 02-SEP-2014 FACTOR OF 9/2/2014 0.0 0.00 9/2/2014 0..00 00 0.00 1.03643 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142450058102 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/2/2014 -290.MO 0.00 TO BRING ACCOUNT INTO BALANCE WITH 02-SEP-2014 FACTOR OF 9/2/2014 0.0 0.00 9/2/2014 0..00 00 0.00 1.00396 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142450058104 SEC ID:912828W O REG:FRB Total DELVER FREE-SW(2( Total Principal: 0.00 Total Comrniceion: Mw Total Income: null Total Net: 0.00 DBLIVBR VS PAY-MT 101812014 6:24:19PM EDT 2 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Easecavener: UNIT) OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG0001MIX) Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL HOME LN MTG CORP DISC NT DTD 09/03/2013 0.000% 9/2/2014 -29,200,000.000 29,194,667.3I 09/02/2014 9/2/2014 100.0000 0.00 9/2/2014 0.00 2,332.63 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 29,200,000.00 29,200,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142419000363 SEC ID:313397E31 REG:FRB UNITED STATES TREASURY NOTE DID 08/31/2012 0.250%08/31/2014 9/2/2014 -2,000,000.000 2,000,000.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 9 100.0 0.00 9//2/2014 2/2014 0..00 00 0.00 2,000,000.000 0.00 2,000,000.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROEER TRADE,BOSTON 00009999 CMS REF: 1142419001347 SEC ID:912828171,1 REG:FEB UNITED STATES TREASURY NOTE DTD 08/31/2012 0.250%08/31/2014 9/2/2014 -4,400,000,000 4,400,000.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 9/2/2014 100.0000 0.00 9/2/2014 0.00 0.00 4,400,000.000 0.00 4,400,000.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142419001348 SEC ID:912828TLt REG:FEB Total DELIVER VS PAY-MT(3) Total Principal: 35,597,667.37 Total Commission: 0.00 Total Income: 2,332.63 Total Net: 35,600,000.00 DELIVER VS PAY-PD SMALL BUSINESS ADMIN GM DEV PARTN CTF SER 2001-20C 1 6.340% 9/2/2014 -40,626.600 40,626.60 RECD PRINT AMORT FOR AUGUST RECD TNT FOR AUGUST ON 219,338.25 9/2/2014 100.0000 0.00 9/2/2014 0.00 6,953.02 UNITS 0.00 47,579.62 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142450001543 SEC ID:83162CWO REG:DTC DELIVER VS PAY-MIX 101812014 6:24:19PM EDT 3 Workbench i� Custody Transaction History Report ID: CUA356 BNY MELLON Ba.Carrener: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSGOo01MIX) Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Set Local Amount JP MORGAN CORPORATE REPURCHASE AGREEMENT DTD 08/28/2014 9/2/2014 -36,400,000.000 36,400,000.00 0.0800% 9/2/2014 100.0000 0.00 9/2/2014 0.00 323.56 CLOSE FOR 1142400180033 0.00 36,400,323.56 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142450000085 SEC ID:99ZALKL28 REG:REPO JP MORGAN CORPORATE REPURCHASE AGREEMENT DTD 08/28/2014 9/2/2014 -11,700,000,000 11,700,000.00 0.0800% 9/2/2014 100.0000 0.00 9/2/2014 0.00 ]04.00 CLOSE FOR 1142400180201 0.00 11,900,104.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142450000123 SEC ID:99ZALU28 REG:REPO Total DELIVER VS PAY-BELL(2) Total Principal: 48,100,000.00 Total Coramiadov: 0.00 Total Income: 427.56 Total Net 48,100,427.56 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/2/2014 2,645AI0 -2,645.11 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/2/2014 0.0 0.00 9/2/2014 0..00 00 0.00 CMS REF: 1142450648444 0.00 -2,645.11 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/2/2014 20,940.180 -20,940.18 BOUGHT DREYFUS TREAS 8:AGY CSH MGT 521 INC 9/2/2014 0.0000 0.00 9/2/2014 0.00 0.00 CMS REF: 1142450648445 0.00 -20,940.18 SEC ID:996085247 REG:05 Total MARGIN RELEASE-BUY(2) Total Peft eipal: -23,585.29 Total Commission: 0.00 Total Income: 0.00 Total Net: .23,585.29 FOREIGN HOLDER RELEASE-CD JPMORGAN CHASE EE CO SR UNSECURED 9/2/2014 0.000 0.00 REG INT ON 500000.000 UNITS PAY 09/02/14 RATE.0192500000 9/2/2014 0.0 .00 9/2/2014 0..00 00 8,625.00 CMS REF: 1142450023943 0.00 8,625.00 SEC ID:46625HHX1 101812014 6:24:19PM EDT 4 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON So.CaneneP: USD OCSACONSOLIDATED 9/1/2014 - 9/30/2014 OCSGD0ol0000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount NEW YORK NY BUILD AMERICA BONDS 9/2/2014 0000 0.00 REC INT ON 1300000.000 UNITS PAY 09/02/14 RATE G284900000 9/2/2014 0.0000 0.00 9/2/2014 0.00 37,037.00 CMS REF: 1142450023946 0.00 37,037.00 SEC ID:64966HYK0 SIMON PROPERTY GROUP LP SR UNSECURED 9/2/2014 0.000 0.00 REC INT ON 1000000.000 UNITS PAY 09/02/14 RATE.0218950000 9/2/2014 0.0000 0.00 9/2/2014 0.00 21,875.00 CMS REF: 1142450023940 0.00 21,875.00 SEC ID:828807CF2 UNITED STATES TREASURY NOTE DTD 08/31/20120.250%08/31/2014 9/2/2014 0.000 0.00 REC INT ON 2000000.000 UNITS PAY 09/02/14 RATE.0012500000 9/2/2014 0.0 0.00 9/2/2014 0..00 00 2,500.00 CMS REF: 1142450023934 0.00 2,500.00 SEC ID:9I2828TL4 UNITED STATES TREASURY NOTE DTD 08/31/2012 0.250%08/31/2014 9/2/2014 (LOGO 0.00 00 REC INT ON 4400000,000 UNITS PAY 09/02/14 RATE.0012500000 9/2/2014 0.0 0 9/2/2014 0..00 00 5,500G.0O CMS REF: 1142450023937 0.00 5,500.00 SEC ID:9I2828TL4 Total FOREIGN HOLDER RELEASE-CD(51 Total Principal: 0.00 Total Commission: 0.00 Total Income: 75,537.00 Total Net: 75,537.00 Total U.B.DOLLAR(USD)(21( Total Principal: -85,250.21 Total Comvniaaon: 0.00 Total Income: $5,250.21 Total Net: 0.00 9/3/2014 U.S.DOLLAR(USD( RECEIVE VS PAY-BUV JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/2/2014 49,(149,791.490 -49,049,791.49 9/3/2014 100.0000 0.00 09/02/2014 0.0900% 9/3/2014 OGO 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -49,049,791.49 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142460090807 CLIENT REF:000020300060944 SEC ID:99ZALK6J8 RED:REPO 101812014 6:24:19PM EDT 5 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea.Cunencr: USD OCSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/2/2014 21,050,208.510 -21,050,208.51 09/02/2014 0.0900% 9/3/2014 100.0000 0.00 9/3/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -21,050,208.51 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142460091555 CLIENT HER 000020300060945 SEC TO 99ZALK6,18 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT BTD 9/2/2014 11,700,000.000 -11,700,000.00 09 02 2014 0.0900% 9/3/2014 100.0000 0.00 / / 9/3/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142460091581 CLIENT REF:000060300022429 SECID:99ZALK608 REG:REPO Total RECEIVE YS PAY-xUY(3) Total Principal: -81,800,000.00 Total Commission: 0.00 Total Income: 0.00 Total Net: -81,800,000.00 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/3/2014 -64.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 03-SEP-2014 FACTOR OF 9/3/2014 0.0 0.00 9/3/2014 0..00 00 0.00 1.03641 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142460009071 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/3/2014 -145.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 03-SEP-2014 FACTOR OF 9/3/2014 0.0 0.009/3/2014 0..00 00 0.00 1.00395 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142460009073 SEC ID:912828W O REG:FRB Tote)DELIVER FREE-SW(2) Total Principal: O.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-SELL 101812014 6:24:19PM EDT 6 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ba.Canenc : USD WC CONSOMDATED 9/1/2014 - 9/30/2014 OCBGOOOl00oo Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT LOU 9/3/2014 -21,000,049.030 21,000,049.03 08/29/2014 0.0900% 9/3/2014 100.0000 0.00 9/3/2014 0.00 52.50 CLOSE FOR 1142410205229 0.00 21,000,10L53 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142460000029 SEC ID:99ZALKUV4 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/3/2014 -11,700,000,000 11,700,000.00 08/29/2014 OM900% 9/3/2014 100.0000 0.00 9/3/2014 0.00 29.25 CLOSE FOR 1142410205242 0.00 11,700,029.25 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142460000035 SEC ID:99ZALKW4 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/3/2014 -49,099,950.970 49,099,950.97 9/3/2014 100.0000 0.00 08/29/2014 0.0900% 9/3/2014 0.00 122.75 CLOSE FOR 1142410205451 0.00 49,100,073.72 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142460000095 SEC TO 99ZALKW4 REG:REPO Total DELIVER VS PAY-SELL(3) Total Principal: 81,800'"0.00 Total Co—iaaion: 0.00 Total Income: 204.50 Total Net: 81,800,204.50 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/3/2014 33.910 -33.91 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/3/2014 0.0 0.00 9/3/2014 0..00 00 .9 CMS REF: 1142460665758 0.00 -33.91 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/3/2014 183.760 -183.76 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/3/2014 0.0 0.00 9/3/2014 0..00 00 .00 CMS REF: 1142460685759 0.00 -18396 SEC ID:996085247 REG:05 101812014 6:24:19PM EDT 7 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON So.Carrenc : USD OCSACONSOLMATED 9/1/2014 - 9/30/2014 OCSGOoOIO000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total MARGIN RELEASE-BUY(2) Total Principal: -217.67 Total commission: 0.00 Total Income: 0.GO Total Net: -217.67 FOREIGN HOLDER RELEASE-CD DREYFU THE AGY CSH MGT 5211NC FUND 9/3/2014 0.000 0.00 RECEIVED INTEREST DREYFU THE AGY CSH MGT 521 INC FUND 9/3/2014 0.0000 0.00 9/3/2014 0.00 4.66 CMS REF: 1142460023848 0.00 4.66 SEC ID:996085247 DREYFU THE AGY CSH MGT 5211NC FUND 9/3/2014 (IM00 0.00 RECEIVED INTEREST DREYFU THE AGY CSH MGT 5211NC FUND 9/3/2014 0.0 . 9/3/2014 0..00 800 .5151 CMS REF: 1142460023849 0.00 8.51 SEC ID:996085247 Told FOREIGN HOLDER RELEASE-CD(2) Total Principal: 0." Total Commission: 0." Total Income: 13.17 Total Net: 13.17 Total U.S.DOLLAR(USD)(12) Total Principal: -217.67 Total Commisalon: 0.00 Total Income: 217.67 Total Net: 0.00 9/4/2014 U.S.DOLLAR(USD) RECEIVE VS PAY-BUY JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/3/2014 33,450,082.050 -33,450,082.05 09 03 2014 OM900% 9/4/2014 100,0000 0.00 / / 9/4/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -33,450,082.05 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470056206 CLMNT REF:000020300060949 SEC ID:99Z LLF49 REG:REPO 101812014 6:24:19PM EDT 8 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ba.Canencr: USD ocBD-CONSOMDATED 9/1/2014 - 9/30/2014 OCBG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Set Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/3/2014 8,300,000.000 -8,300,000.00 09/03/2014 OM900% 9/4/2014 100.0000 0.00 9/4/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -8,300,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142470056239 CLIENT HER 000060300022432 SEC ID:99Z 1,149 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/3/2014 49,049,917.950 -49,049,9IT95 09/03/2014 0.0900 0 9/4/2014 100.0000 0.00 9/4/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -49,049,9IT95 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470056329 CUE" REF:000020300060948 SEC ID:99ZALLF49 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/3/2014 3,400,000.000 -3,400,000.00 09/03/2014 0.0900Y 9/4/2014 100.0000 0.00 9/4/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -3,400,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470056338 CLIENT HER 000060300022431 SEC ID:99ZALLF49 REG:REPO Total RECEIVE VS PAY-BUY(4( Total Principal: -94,200,000.00 Total Cotnmiaslon: 0.00 Total Income: 0.00 Total Net: -94,200,000.00 DELIVER FREE-BW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/4/2014 -32.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 04-SEP-2014 FACTOR OF 9/4/2014 0.0000 0.00 9/4/2014 0.00 0.00 1.0364 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS HER 1142470011363 SEC ID:912828TEO REG:FRB 101812014 6:24:19PM EDT 9 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea.Cavener: USD OCBD-CONSOMDATED 9/1/2014 - 9/30/2014 OCBo00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/4/2014 -145M00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 04-SEP-2014 FACTOR OF 9/4/2014 0.0000 0.00 9/4/2014 0.00 0.00 1.00374 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142470011364 SEC ID:91282SWUO REG:FRB Total DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-MT FEDERAL HOME LN BK CONS DISC NT DTD 09/04/2013 0.000% 9/4/2014 -12,400,000.000 12,398,987.33 09/04/2014 9/4/2014 100.0000 0.00 9/4/2014 0.00 1,012.67 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 12,400,000.00 12,400,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142469000199 SEC ID:313385E51 REG:FRB DELIVER VS PAY-SELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/4/2014 -49,049,791.490 49,049,791.49 09/02/2014 0.0900% 9/4/2014 100.0000 0.00 9/4/2014 0.00 122.62 CLOSE FOR 1142460090807 0.00 49,049,914.11 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470000270 SEC ID:99ZALKW8 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/4/2014 -21,050,208.510 21,050,208.51 09/02/2014 0.0900% 9/4/2014 100.0000 0.00 9/4/2014 0.00 52.63 CLOSE FOR 1142460091555 0.00 21,050,261.14 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470000494 SEC ID:99ZALK6J8 REG:REPO 101812014 6:24:19PM EDT 10 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON So.Cunener: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/4/2014 -11,700,000.000 11,700,000.00 09/02/2014 0.0900Y 9/4/2014 100.0000 0.00 9/4/2014 0.00 29.25 CLOSE FOR 1142460091581 0.00 11,700,029.25 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470000504 SEC ID:99ZALK6J8 REG:REPO Total DELIVER VS PAY-BBLL(3) Total Principal: 81,800,000.00 Total Commission: 0.00 Total Income: 204.50 Total Net: 81,800,204.50 NAROIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/4/2014 29.250 -29.25 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/4/2014 0.0 0.00 9/4/2014 0..00 00 0.00 CMS REF: 1142470572364 0.00 -299.2525 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/4/2014 175.250 -175.25 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/4/2014 0.0 0.00 9/4/2014 0..00 00 0.00 CMS REF: 1142470572365 0.00 -1T5.2525 SEC ID:996085247 REG:05 Total IdARGIN RELEASE-BUY(2) Total Principal: -204.50 Total Commisaion: 0.00 Total Income: 0.00 Total Net: -204.50 Total U.S.DOLLAR(USD)(12) Total Principal: -1,217.17 Total Commission: 0.00 Total Income: 1,217.17 Total Net 0.00 9/5/2014 U.S.DOLLAR(USDI FREE RECEIPT-SD 101812014 6:24:19PM EDT 11 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ba.Cu.ner: USD WSD-CONSOLIDATED 9/1/2014 - 9/30/2014 oCBG000l0000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount UNITED STATES TREASURYNOTE DTD 03/15/2012 0.375%03/15/2015 3/6/2014 3,594,000.000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 3/6/2014 0.0000 0.00 9/5/2014 0.00 0.00 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 0.00 CMS REF: 1142480129150 SEC ID:912828SK7 RED:ANH RBCBIVB VS PAY-BUY FEDERAL HOME LN BE CONS DISC NT DTD 01/14/2014 0.000% 9/3/2014 10,300,000.000 -10,297,376.36 01 14 2015 9/5/2014 99.9745 0.00 / / 9/5/2014 0.00 0.00 TRADING BROKER:BARCLAYS CAPITAL INC,NEW YORK 00007256 0.00 -10,297,376.36 CLEARING BROKER:BARCLAYS CAPITAL INC,NEW YORK 00007256 CMS REF: 1142460260517 CLENT REF:000020300060951 SEC ID:313384AP4 PRO:FRB FEDERAL NATL MUG ASSN DISC NT DTD 01/11/2014 0.000%01/05/2015 9/3/2014 5,000,000.000 -4,998,898.61 TRADING BROKER:BARCLAYS CAPITAL INC,NEW YORK 00007256 9 99.9780 0.00 9//5/2014 5/2014 00 0 0.00 CLEARING BROKER:BARCLAYS CAPITAL INC,NEW YORK 00007256 0.00 4,998,898.6161 CMS REF: 1142460257109 CLIENT REF:000020300060950 SEC ID:3I3588AE5 REG:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/4/2014 49,M9 917.950 -49,049,91795 2014 0.1000% 9/5/2014 f00.0000 0.00 09/04 / 9/5/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -49,049,917.95 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470211648 CUE" REF:000020300060965 SEC ID:99ZALLK01 RED:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/4/2014 33,450,082.050 -33,450,082.05 09/04/2014 0.1000% 9/5/2014 100.0000 0.00 9/5/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -33,450,082.05 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470211863 CLIENT REF:000020300060966 SEC ID:99ZALLK01 RED:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/4/2014 11,700,000.000 -11,700,000.00 09 04 2014 0A000% 9/5/2014 100.0000 0.00 / / 9/5/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142470212116 CLIENT REF:000060300022439 SEC ID:99ZALLK01 RED:REPO 101812014 6:24:19PM EDT 12 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON BaseCarrencr: USD OCSO-CONSOLMATEn 9/1/2014 - 9/30/2014 OCB000o30000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total RECEIVE VS PAY-BUY(51 Total Principal: -109,496,274.97 Total Commission: 0.00 Total Income: 0.00 Total Net: -309,496,2T4.9T DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/5/2014 -128A00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 09-SEP-2014 FACTOR OF 9/5/2014 0.0 0.00 9/5/2014 0..00 00 0.00 1.03636 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142480011277 SEC ID:912828TEO RE@ FRB US TREASURY INFLATION INDEXED NOTKS 1/8%7/15/2024 9/5/2014 -580.MO 0.00 TO BRING ACCOUNT INTO BALANCE WITH 9/5/2014 FACTOR OF 9/5/2014 0.0 0.00 9/5/2014 0..00 00 0.00 1.0039 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142480011278 SEC ID:912828WUO REG:FEB Tote)DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-PD NCUA GUARANTEED NOTES TR R2 IA DM 11/17/2010 VAR RT 9/5/2014 -12,626.070 12,626.07 11/o6/zo1T 9/5/2014 100.0000 0.00 9/5/2014 0.00 305.36 RECD PRIN AMORT FOR SEPTEMBER RECD INT FOR SEPTEMBER ON 0.00 12,931.43 695,451.08 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142480000949 SEC ID:62888UAA8 REG:DTC DELIVER VS PAY-BELL 101812014 6:24:19PM EDT 13 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON xa.Canenc : USD OCSACORSOMDATRD 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount UNITED STATES TREAS BILL DTD 05/29/2014 0.000% 11/28/2014 9/3/2014 -13,300,000.000 15,299,286.00 TRADING BROKER:DEUTSCHE BK SECS INC,NY(NWSCUS33)00000573 9/5/2014 99.9953 0.00 9/5/2014 0.00 0.00 CLEARING BROKER:DEUTSCHE BK SECS INC,NY(NWSCUS33)00000573 0.00 15,299,286.00 CMS REF: 1142460227745 CLIENT REF:000020300060946 SEC ID:912796EF2 REG FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/5/2014 -33,450082.050 33,450,082.05 09/03/2014 0.0900% 9/5/2014 t00.0000 0.00 9/5/2014 0.00 83.63 CLOSE FOR 1142470056206 0.00 33,450,165.68 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142480001174 SECID:99ZALLF49 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/5/2014 -8,300,000.000 8,300,000.00 09/03/2014 0.0900% 9/5/2014 100.0000 0.00 9/5/2014 0.00 20.75 CLOSE FOR 1142470056239 0.00 8,300,020.75 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142480001323 SEC ID:99ZALLF49 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/5/2014 -49,049,917.950 49,049,917.95 09/03/2014 0.0900% 9/5/2014 100.0000 0.00 9/5/2014 0.00 122.62 CLOSE FOR 1142470056329 0.00 49,050,040.57 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142480001448 SEC ID:99ZALLF49 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/5/2014 -3,400,000.000 3,400,000.00 0.0900%09/03/2014 9/5/2014 100,0000 0.00 9/5/2014 0.00 8.50 CLOSE FOR 1142470056338 0.00 3,400,008.50 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142480001467 SEC ID:99ZALLF49 REG:REPO 101812014 6:24:19PM EDT 14 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON So.Carrenc : Dan OCSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total DELIVER VS PAY-SELL(5) Total Principal: 109,499,286.00 Total Commission: 0.00 Total Income: 235.50 Total Net: 109,499,521.50 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/5/2014 29.250 -29.25 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/5/2014 0.0 0.00 9/5/2014 0..00 00 0.00 CMS REF: 1142480595099 0.00 -29.2525 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/5/2014 16,148.710 -16,148.71 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/5/2014 0.0 0.00 9/5/2014 0..00 00 .00 CMS REF: 1142480595098 0.00 -16,148.71 SEC ID:996085247 REG:05 Total MARGIN RELEASE-BUY(2) Total Principal: .16,177.96 Total Commission: 0.00 Total Income: 0.00 Total Net: -16,177.96 Total U.S.DOLLAR(USD)(16) Total Principal: -540.86 Total Commission: 0.00 Total Income: 540.86 Total Net: 0.00 9/8/2014 U.S.DOLLAR(IISD) RECEIVE VS PAY-BUY UNITED STATES TREASURY BILL DTI)07/03/2014 0.000%01/02/2015 9/4/2014 2,000,000.000 -1,999,935.56 TRADING BROKER:MERRILL LYNCH PIERCE FENNER,CHARLOTTE 9/8/2014 99.9968 0.00 9/8/2014 0.00 0.00 00000773 0.00 -1,999,935.56 CLEARING BROKER:MERRILL LYNCH PIERCE FENNER,CHARLOTTE 00000773 CMS REF: 1142470151431 CLIENT REF:000060300022437 SEC ID:912796EM7 REG: FRB 101812014 6:24:19PM EDT 15 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON BaseCarren<r: USD ocaD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCBG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/5/2014 33,450,023.720 -33,450,023.72 09/05/2014 0MS00% 9/8/2014 100.0000 0.00 9/8/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -33,450,02392 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142510061763 CLIENT HER 000020300060984 SECID:99ZALLUJ9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/5/2014 11,900,000.OM -1 1,700,000.00 09/05/2014 0.0800% 9/8/2014 100.0000 0.00 9/8/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142510061766 CUE" REF:000060300022447 SEC ID:99ZALLUJ9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/5/2014 49,049,976.280 -49,049,976.28 09/OS/2014 0.0800% 9/8/2014 100.0000 0.00 9/8/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -49,049,976.28 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142510061781 CLIENT HER 000020300060983 SEC ID:99ZALLUJ9 REG:REPO Total RECBIYB YB PAY-BUY(4( Total Principal: -96,199,935.56 Total Conuniadon: 0.00 Total Income: 0.00 Total Net -96,199,935.56 DEUWR FREE-BW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/8/2014 -32.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 08-SEP-2014 FACTOR OF 9/8/2014 0.0000 0.00 9/8/2014 0.00 0.00 1.03635 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS HER 1142510011249 SEC ID:912828TEO REG:FRB 101812014 6:24:19PM EDT 16 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON BaseCanener: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSGOOo10000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/8/2014 -145M00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 08-SEP-2014 FACTOR OF 9/8/2014 0.0000 0.00 9/8/2014 0.00 0.00 1.00369 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142510011250 SEC ID:91282SWUO REG:FRB Total DELIVER FREE-SW(2) Total Principal: 0.00 Total Comvnission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-SELL UNITED STATES TREASURY BILL ETD 04/10/20140.000%10/09/2014 9/4/2014 -2,000,000.000 1,999,993.11 TRADING BROKER:DEUTSCHE BE SECS INC,NY(NWSCUS33)00000573 9/8/2014 99.9997 0.00 9/8/2014 0.00 0.00 CLEARING BROKER:DEUTSCHE BE SECS INC,NY(NWSCUS33)00000573 0.00 1,999,993.11 CMS REF: 1142470118624 CLIENT REF:000060300022436 SEC ID:9I2796DZ9 REG:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/8/2014 -49,049,917.950 49,049,917.95 09/04/2014 0.1000% 9/8/2014 100.0000 0.00 9/8/2014 0.00 408.75 CLOSE FOR 1142470211648 0.00 49,050,326.70 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142510000046 SEC ID:99ZALLK01 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/8/2014 -33,450,082.050 33,450,082.05 0.00 09/04/2014 0.1000% 9/8/ 000 2014 100.0.00 278.75 CLOSE FOR 1142470211863 0.00 33,450,360.80 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142510000076 SEC ID:99ZALLK01 REG:REPO 101812014 6:24:19PM EDT 17 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON as.Canancr: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ ER Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amoont JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/8/2014 -11,900,000.000 11,700,000.00 09/04/2014 0A000% 9/8/2014 100.0000 0.00 9/8/2014 0.00 97.50 CLOSE FOR 1142470212116 0.00 11,700,09T50 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142510000106 SECID:99ZALLK01 REG:REPO Total DELIVER VS PAY-SELL(4) Total Principal: 96,199,993.11 Total Commission: 0.00 Total Income: 785.00 Total Net: 96,200,778.11 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/8/2014 155.050 -155.05 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/8/2014 0.0000 0.00 9/8/2014 0.00 0.00 CMS REF: 1142510611186 0.00 -155.05 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/8/2014 687.500 -689.50 BOUGHT DREYFUS TREAS 8:AGY CSH MGT 521 INC 9/8/2014 0.0 0.00 9/8/2014 0..00 00 0. 0 CMS REF: 1142510611189 0.00 -687.50 SEC ID:996085247 REG:05 Total MARGIN RELEASE-BUY(2) Total Principal: -842.55 Total Commission: 0.00 Total Income: 0.00 Total Net: -842.55 Total U.B.DOLLAR(USD)(12) Total Principal: -785.00 Total Commission: 0.00 Total Income: 786.00 Total Net 0.00 9/9/2014 U.S.DOLLAR(USDI RECEIVE VS PAY-BUY 101812014 6:24:19PM EDT 18 Wcrkberoh Custody Transaction History Report ID: CUA356 BNY MELLON Ba«Curran.,: USD We CONSOMDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Set Local Amount UNITED STATES TREASURY NOTE DTD 08/31/20140.500%08/31/2016 9/8/2014 25,800,000.000 -25,794,960.94 TRADING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YORK 9/9/2014 99.9805 0.00 9/9/2014 0.00 -3,207.18 00000274 0.00 -25,798,168A2 CLEARING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YORK 00000274 CMS REF: 1142510153763 CLIENT REF:000020300061022 SEC ID:912828D64 REG:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/8/2014 49,058,668,220 -49,058,668.22 0.0900% 9/9/2014 100.0000 0.00 09/08/2014 9/9/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -49,058,668.22 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142520179625 CLIENT REF:000020300061024 SEC ID:99ZALIAR0 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/8/2014 33,441 331.780 -33,441,331.78 09/08/2014 0.0900% 9/9/2014 f00.0000 0.00 9/9/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -33,441,331.78 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142520179722 CLIENT REF:000020300061025 SEC ID:99Z TARO REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/8/2014 11,700,000.000 -11,700,000.00 09/08/2014 0.0700% 9/9/2014 100.0000 0.00 9/9/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142520179749 CLIENT REF:000060300022452 SECID:99ZALL4R0 REG:REPO Total RECEIVE VS PAY-BUY)4) Total Principal: ,119,994,960.94 Total Commission: 0.00 Total lncome: -3,207.19 Total Net: -119,998,168.12 DELIVER FREE-SW 101812014 6:24:19PM EDT 19 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea.Canencr: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCBG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/9/2014 -64M00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 09-SEP-2014 FACTOR OF 9/9/2014 0.0000 0.00 9/9/2014 0.00 0.00 1.03633 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520029262 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/9/2014 -290.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 09-SEP-2014 FACTOR OF 9/9/2014 000000.00 9/9/2014 0..00 0.00 1.00367 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520029269 SEC ID:912828WUO REG:FRB Total DELIVER FREE-BW(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-SEIM FEDERAL HOME LN BK CONS DISC NT DTD 09/24/2013 0.000% 9/9/2014 -24,800,000,000 24,799,896.67 24 2014 9/9/2014 99,9996 0.00 09 / / 9/9/2014 0.00 0.00 TRADING BROKER:JEFFERIES&CO INC,NEW YORK 00000019 0.00 24,799,896.67 CLEARING BROKER:JEFFERIES&CO INC,NEW YORK 00000019 CMS REF: 1142520181899 CLIENT REF:000020300061037 SEC ID:313385G91 REG FRB UNITED STATES TREASURY NOTE DTD 09/15/2011 0.250%09/15/2014 9/9/2014 -1,000000.000 1,000,039.06 000 TRADING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YORK 9/9/2014 I00.0 9/9/2014 0.00.00 1,2 . 00000274 0.00 1,001,2489.24 48.3030 CLEARING BROKER:CITIGROUP GEL MKTS/SALOMON,NEW YORK 00000274 CMS REF: 1142520190846 CLENT REF:000020300061038 SEC ID:912828RG1 REG:FRB 101812014 6:24:19PM EDT 20 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON as.Caneno,: USD OCSD-CONSOMDATED 9/1/2014 - 9/30/2014 0CSG00010000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/9/2014 -33,450,023920 33,450,02392 09/05/2014 0MS00% 9/9/2014 100.0000 0.00 9/9/2014 0.00 74.33 CLOSE FOR 1142510061763 0.00 33,450,098.05 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142520000222 SEC ID:99ZALLUJ9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/9/2014 -11,700,000.000 11,700,000.00 OS 2014 0.0800% 9/9/2014 100,0000 0.00 09 / / 9/9/2014 0.00 26.00 CLOSE FOR 1142510061766 0.00 11,700,026.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142520000237 SEC ID:99ZALLUJ9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/9/2014 -49,049,976.280 49,049,976.28 09 OS 2014 0.0800% 9/9/2014 100.0000 0.00 / / 9/9/2014 0.00 109.00 CLOSE FOR 1142510061781 0.00 49,050,083.28 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142520000278 SEC ID:99ZALLUJ9 REG:REPO Total DEL R VS PAY-SELL(5) Total Principal: 119,999,935.73 Total Commission: 0.00 Total Income: 1,418.57 Total Net: 120,001,354.30 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/9/2014 26.000 -26.00 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/9/2014 0.0000 0.00 9/9/2014 0.00 0.00 CMS REF: 1142520607945 0.00 -26.00 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/9/2014 3,160.180 -3,160.18 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/9/2014 0.0000 0.00 9/9/2014 0.00 0.00 CMSREF: 1142520607946 0.00 -3,160.18 SEC ID:996085247 REG:05 101812014 6:24:19PM EDT 21 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ba.Caneno,: USD OCSD-CONSOLUMTED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total MARGIN RELEASE-BUY(2) Total Principal: -3,186.18 Total Commission: 0.00 Total Income: 0.00 Total Net: -3,186.18 Total U.S.DOLLAR(USD)(13) Total Principal: 1,788.61 Total Commission: 0.00 Total Income: -1,788.61 Total Net 0.00 9/10/2014 U.S.DOLLAR NSIn RECEIVE VS PAY-BUY FEDERAL HOME LN MTG CORP DISC NT DTD 12/09/2013 0.000% 9/9/2014 400,000.000 -399,945.61 08 2014 9/10/2014 99.9864 0.00 12 / / 9/10/2014 0.00 0.00 TRADING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YORK 0.00 -399,945.61 00002467 CLEARING BROKER:JP MORGAN CHASE BANK/HSBCI,NEW YORK 00002467 CMS REF: 1142520321254 CLIENT REF:000060300022456 SEC ID:3I3397S44 REG:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/9/2014 11,700,000.000 -11,700,000.00 09/09/2014 0.0700% 9/10/2014 100.0000 0.00 9/10/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142520336472 CUE" REF:000060300022458 SEC ID:992 1,847 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/9/2014 34,499,720.730 -34,499,720.73 09/09/2014 O.OT00% 9/10/2014 100.0000 0.00 9/10/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -34,499,720.73 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142520336601 CLIENT REF:000020300061041 SEC ID:99Z 1,847 REG:REPO 101812014 6:24:19PM EDT 22 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Rase Carrencr: USD WSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCBGo0010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/9/2014 48,000,279.270 -48,000,279.27 09/09/2014 0.0900% 9/10/2014 100.0000 0.00 9/10/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -48,000,279.27 CLEARING BROILER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142520336609 CLIENT PER 000020300061040 SECID:99ZALL847 REG:REPO Total RECEIVE VS PAY-BUT(41 Total Principal: -94.599.946.61 Total Commission: 0.00 Total Income: 0.00 Total Net: -94.899.946.61 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/10/2014 -32.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 10-SEP-2014 FACTOR OF 9/10/2014 0.0000 0.00 9/10/2014 0.00 0.00 1.03632 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS PER 1142530011996 SEC TO 912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/10/2014 -145.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 10-SEP-2014 FACTOR OF 9/10/2014 0.0000 0.00 9/10/2014 0.00 0.00 1.00366 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS NET: 1142530011997 SEC ID:912828WUD REG:FRB Total DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: nw Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-MT 101812014 6:24:19PM EDT 23 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea.Cavener: USD OCSD-CONEOMDATED 9/1/2014 - 9/30/2014 OCSG(XK`Iw00 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL HOME LN BE CONS DISC NT DTD 09/10/2013 0.000% 9/10/2014 -400,000 000 399,967.33 09/10/2014 9/10/2014 100.0000 0.00 9/10/2014 0.00 32.67 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 400,000.00 400,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142529000334 SEC ID:313385F35 REG:FRB DELIVER VS PAY-BELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/10/2014 -49,058,668.220 49,058,668.22 09/08/2014 O.OT00% 9/10/2014 100.0000 0.00 9/10/2014 0.00 95.39 CLOSE FOR 1142520179625 0.00 49,058,763.61 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142530000145 SEC ID:99ZALL4RO REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/10/2014 -33,441,331.780 33,441,331.78 09/08/2014 O.oT00% 9/10/2014 100.0000 0.00 9/10/2014 0.00 65.02 CLOSE FOR 1142520179722 0.00 33,441,396.80 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142530000244 SEC ID:99ZALIAR0 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/10/2014 -11,700,000,000 11,700,000.00 09/08/2014 O.O700% 9/10/2014 100.0000 0.00 9/10/2014 0.00 22.75 CLOSE FOR 1142520179749 0.00 11,900,022.95 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142530000361 SEC ID:99ZALL4R0 REG:REPO Total DELVER VS PAY-SELL(3) Total Principal: 94,200,000.00 Total Commission: 0.00 Total Income: 183.16 Total Net: 94,200,183.16 MARGIN RELEASE-BUY 101812014 6:24:19PM EDT 24 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Us.Carrent,: USD OCSuCONSOLIDATRD 9/1/2014 - 9/30/2014 OCSGo0o10000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount DREYFU THE AGY CSH MGT 521 INC FUND 9/10/2014 79.140 -97.14 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/10/2014 0.0000 0.00 9/10/2014 0.00 0.00 CMS REF: 1142530655401 0.00 -77.14 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/10/2014 160.410 -160.41 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/10/2014 0.0000 0.00 9/10/2014 0.00 0.00 CMS REF: 1142530655405 0.00 -160.41 SEC ID:996085247 REG:05 Total MARGIN RELEASE-BUY(2) Total Principal: -230.55 Total Commission: null Total Income: 0.00 Total Net: -237.55 Total U.B.DOLLAR(USD)(12) Total Principal: -215.83 Tote)Cotamission: 0.00 Total Income: 215.83 Total Net 0.00 9/11/2014 U.S.DOLLAR(USDI RECEIVE VB PAY-BUV JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/10/2014 11,700,000.000 -11,700,000.00 09 10 2014 0.0600% 9/11/2014 100.0000 0.00 / / 9/11/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142530208885 CLIENT REF:000060300022464 SEC ID:99ZALMFQ8 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/10/2014 48,90Q016.360 -48,900,016.36 09/10/2014 0.O600Yo 9/11/2014 100.0mo 0.00 9/11/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -48,900,016.36 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142530208907 CLIENT NET 000020300061054 SEC ID:99ZALMFQ8 REG:REPO 101812014 6:24:19PM EDT 25 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Rase Carrenc : USD OCSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCBGo0o10000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/10/2014 33,599,983.640 -33,599,983.64 09/10/2014 0M600% 9/11/2014 100.0000 0.00 9/11/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -33,599,983.64 CLEARING BROILER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142530208921 CLIENT REF:000020300061055 SEC ID:99ZALMFQ8 REG:REPO Total RECEIVE VS PAY-BUT(31 Total Principal: -94.200.000.00 Total Commission: 0." Total Income: 0.00 Total Net: -94.200.000.00 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/11/2014 -32.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH I1-SEP-2014 FACTOR OF 9/11/2014 0.0000 0.00 9/11/2014 0.00 0.00 1.03631 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS PER 1142540020105 SEC TO 912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/11/2014 -145.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 1 1-SEP-2014 FACTOR OF 9/11/2014 0.0000 0.00 9/11/2014 0.00 0.00 1.00365 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS NET: 1142540020108 SEC ID:912828WUD REG:FRB Total DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: nw Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-SELL 101812014 6:24:19PM EDT 26 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base Carreno : USD WSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/11/2014 -11,900,000.000 11,700,000.00 09/09/2014 0.0900% 9/11/2014 100.0000 0.00 9/11/2014 0.00 2295 CLOSE FOR 1142520336472 0.00 11,900,02295 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142540000260 SEC ID:99ZALL849 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/11/2014 -34,499,720.730 34,499,720.73 09 2014 O.OT00% 9/11/2014 100,0000 0.00 09 / / 9/11/2014 0.00 67.08 CLOSE FOR 1142520336601 0.00 34,499,787.81 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142540000374 SEC ID:99ZALLS47 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/11/2014 -48,000,279.270 48,000,279.27 09 09 2014 0.0700% 9/11/2014 100.0000 0.00 / / 9/11/2014 0.00 93.33 CLOSE FOR 1142520336609 0.00 48,000,372.60 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142540000382 SEC ID:99ZALL847 REG:REPO Total DELIVER VS PAY-SELL(3) Total Principal: 94,200,000.00 Total Commission: 0.00 Total lnoome: 193.16 Total Net 94,200,183.16 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/11/2014 22.750 -22.75 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/11/2014 0.0000 0.00 9/11/2014 0.00 0.00 CMS REF: 1142540629650 0.00 -2295 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/11/2014 160.410 -160.41 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/11/2014 0.0000 0.00 9/11/2014 0.00 0.00 CMS REF: 1142540629651 0.00 -160.41 SEC ID:996085247 REG:05 101812014 6:24:19PM EDT 27 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ba.Carrano,: USD OCSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total MARGIN RELEASE-BUY(2) Total Principal: -183.16 Total Commission: 0.00 Total Income: 0.00 Total Net: -183.16 Total U.S.DOLLAR(USD)(10) Total Principal: -183.16 Total Commission: 0.00 Total Income: 183.16 Total Net 0.00 9/12/2014 U.S.DOLLAR NSDI RECEIVE VS PAY-BUY FEDERAL HOME LN BKS CONS DISC NTS DID 12/12/2013 0.000% 9/11/2014 45,800,000.000 -45,793,048.69 12 12 2014 9/12/2014 99.9848 0.00 / / 9/12/2014 0.00 0.00 TRADING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YORK 0.00 -45,793,048.69 00000274 CLEARING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YORK 00000274 CMS REF: 1142540242454 CLIENT REF:000020300061069 SEC ID:31338SS80 REG:FRB FEDERAL HOME LN BKS CONS DISC NTS DID 12/12/2013 0.000% 9/11/2014 700,000.000 -699,89396 12 12 2014 9/12/2014 99.9848 0.00 / / 9/12/2014 0.00 0.00 TRADING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YORK 0.00 -699,893.76 00000274 CLEARING BROKER:CITIGROUP GBL MKTS/SALOMON,NEW YORK 00000274 CMS REF: 1142540242457 CLIENT REF:000060300022470 SEC ID:3I3385S80 REG:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DID 9/11/2014 11,000,000.000 -11,000,000.00 09 11 2014 0.0700% 9/12/2014 100.0000 0.00 / / 9/12/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,000,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142550069919 CLIENT REF:000060300022469 SEC ID:99Z MRXO REG:REPO 101812014 6:24:19PM EDT 28 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Rase Canener: Ban WSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG0001MIX) Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/11/2014 36,700,000.000 -36,700,000.00 09/11/2014 0.0900% 9/12/2014 100.0000 0.00 9/12/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -36,700,000.00 CLEARING BROILER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142550069923 CLIENT REF:000020300061068 SECID:99ZALMRX0 REG:REPO Total RECEIVE VS PAY-BUY(4) Total Principal: -94,192,942.46 Total Conwiadon: 0.00 Total Income: 0.00 Total Net: -94,192,942.45 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/12/2014 -128.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 14-SEP-2014 FACTOR OF 9/12/2014 0.0000 0.00 9/12/2014 0.00 0.00 1.03627 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS HER 1142550019464 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/12/2014 -580.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 14-SEP-2014 FACTOR OF 9/ 0.0.00 0.00 9/12/2014 2/2014 0.00 0.00 1.00361 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142550019465 SEC ID:912828WUO REG:FEB Total DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-SELL 101812014 6:24:19PM EDT 29 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base Carreno : USD OCSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/12/2014 -11,900,000.000 11,700,000.00 09/10/2014 0M600% 9/12/2014 100.0000 0.00 9/12/2014 0.00 19.50 CLOSE FOR 1142530208885 0.00 11,900,019.50 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142550000132 SEC ID:99ZALMM8 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/12/2014 -48,900,016.360 48,900,016.36 10 2014 0.0600% 9/12/2014 100,0000 0.00 09 / / 9/12/2014 0.00 81.50 CLOSE FOR 1142530208907 0.00 48,900,097.86 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142550000199 SEC ID:99ZALMM8 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/12/2014 -33,599,983.640 33,599,983.10 09 10 2014 0.0600% 9/12/2014 100.0000 0.00 / / 9/12/2014 0.00 56.00 CLOSE FOR 1142530208921 0.00 33,WO,039.64 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142550000223 SEC ID:99ZALMMS REG:REPO Total DEL R VS PAY-SELL(3) Total Principal: 94,200,000.00 Total Commission: 0.00 Total lnoome: 157.00 Total Net 94,200,157.00 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/12/2014 125.740 -125.74 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/12/2014 0.0000 0.00 9/12/2014 0.00 0.00 CMS REF: 1142550590143 0.00 -125.74 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/12/2014 7,088.810 -7,088.81 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/12/2014 0.0000 0.00 9/12/2014 0.00 0.00 CMS REF: 1142550590144 0.00 -7,088.81 SEC ID:996085247 REG:05 101812014 6:24:19PM EDT 30 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON BaseCaneno,: USD OCSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCS0000I0000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total MARGIN RELEASE-BUY(2) Total Principal: -7,214.55 Total Commission: 0.00 Total Income: 0.00 Total Net: -7,214.55 Total U.S.DOLLAR(USD)(11) Total Principal: -157.00 Total Commission: 0.00 Total Income: 157.00 Total Net 0.00 9/15/2014 U.S.DOLLAR NSIn RECEIVE VS PAY-BUY JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/12/2014 11,100000.000 -11,100,000.00 09/12/2014 0.0800% 9/15/2014 t00.0000 0.00 9/15/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,100,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142580067992 CUE" REF:000060300022475 SEC ID:99ZALMYM6 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/12/2014 38,100,000.000 -38,100,000.00 09/12/2014 0.0800% 9/15/2014 100.0mo 0.00 9/15/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -38,100,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 0000018T CMS REF: 1142580068064 CLIENT REF:000020300061082 SECID:99ZALMYM6 REG:REPO Total RECEIVE Va PAY-BUY(2) Total Principal: -49,200,000.00 Total Commission: O.GO Total Income: 0.00 Total Net: -49,200,000.00 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/15/2014 -64.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 15-SEP-2014 FACTOR OF 9/15/2014 0.0000 0.00 9/15/2014 0.00 0.00 1.03625 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142580021101 SEC ID:912828TEO REG:FRB 101812014 6:24:19PM EDT 31 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea.Canencr: USD OCSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%9/15/2024 9/15/2014 -145.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 15-SEP-2014 FACTOR OF 9/15/2014 0.0000 0.00 9/15/2014 0.00 0.00 1.0036 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142580021102 SEC ID:912828WUO REG:FRB Total DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-MT CITIGROUP INC SUBORDINATED 9/15/2014 -1,350,000.000 1,350,000.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 9/15/2014 100.0 0.00 9/15/2014 0..00 00 0.00 1,350,000.000 0.00 1,350,000.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142559000245 SEC ID: 192967CQ2 REG:DTC DELPMR VS PAY.PD FEDERAL HOME LN MTG COST MULTICLASS MTG PAWN CTFS GTD SER 8/l/2014 -2,714.750 2,714.75 E3 CL A 9/15/2014 100.0000 0.00 9/15/2014 0.00 255.03 RECD PRIN AMORT FOR JULY RECD INT FOR JULY ON 107,878.00 UNITS 0.00 2,969.78 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142200048038 SEC ID:3133WE95 REG:FRB FEDERAL HOME LN MTG CORP PAWN CTFS POOL 78-6064 VAR RATE 8/1/2014 -16.400 16.40 1/1/2028 9/15/2014 100.0000 0.00 9/15/2014 0.00 5.51 RECD PRIN AMORT FOR JULY RECD INT FOR JULY ON 2,941.59 UNITS 0.00 21.91 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142200051906 SEC ID:31348SWZ3 REG: FRB 101812014 6:24:19PM EDT 32 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Haas Carrencr: Dan OCSACONSOLMATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total DELIVER VS PAY-PD(2) Total Prinoipal: 2,731.15 Total Commission: 0.00 Total Income: 260.54 Total Net: 2'"1.69 DELIVER Vs PAY-SELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/15/2014 -11,000,000.000 11,000,000.00 09/11/2014 0.0'/00% 9/15/2014 100.0000 0.00 9/15/2014 0.00 6a.17 CLOSE FOR 1142550069919 0.00 11,000,064.17 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142580000409 SEC ID:99ZALMRX0 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DM 9/15/2014 -36,700,000.000 36,700,000.00 09/11/2014 0.0900% 9/15/2014 100.00DO 0.00 9/15/2014 0.00 214.08 CLOSE FOR 1142550069923 0.00 36,700,214.08 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142580000420 SEC ID:99ZALMRX0 REG:REPO Total DELIVER VS PAY-BELL(2) Total Principal: 47,700,000.00 Total Commission: 0.00 Total Income: 278.25 Total Net: 47,700,278.25 SELL-SELL DREYFU THE AGY CSH MGT 521 INC FUND 9/15/2014 74,342.080 74,342D8 SOLD DRES TREAS&AGY CSH MGT 521 INC 9/15/2014 0.0000 0.00 YFU 9/I5/2014 0.00 0.00 CMS REF: 1142580981299 0.00 T4,342D82.08 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/15/2014 522.310 522.31 SOLD DREYFUS TREAS&AGY CSH MGT 521 INC 9/15/2014 0. 0.00 9/I5/2014 D00 0.00 0.00 CMS REF: 1142580981298 0.00 522.3131 SEC ID:996085247 REG:05 Total SELL-SELL(2) Total Principal: 74,864.39 Total Commission: 0.00 Total Income:. 0.00 Total Net: 74,864.39 101812014 6:24tl9PM EDT 33 workbench Custody Transaction History Report ID: CUA356 BNY MELLON BaseCanena,: ORD OCSACONEOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description RL Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FOREIGN HOLDER RELEASE-CD CITIGROUP INC SUBORDINATED 9/15/2014 0.000 0.00 REC INT ON 1350000.000 UNITS PAY 09/15/14 RATE.0250000000 9/15/2014 0.0 0.00 9/15/2014 0..00 00 33, 50.00 CMS REF: 1142580087858 0.00 33,750.00 SEC ID: 172967CQ2 SOUTHERN CO/THE SR UNSECURED A 9/15/2014 OMO 0.00 REC INT ON 1000000,000 UNITS PAY 09/15/14 RATE.0118750000 9/15/2014 0.0000 0.00 9/15/2014 0.00 11,875.00 CMS REF: 1142580087852 0.00 11,875.00 SEC ID:842587CGO UNITEDHEALTH GROUP INC SR UNSECURED 9/15/2014 0.000 0.00 REC INT ON 1050000.000 UNITS PAY 09/15/14 RATE.0243T50000 9/15/2014 0.0000 0.00 9/15/2014 0.00 25,593.75 CMS REF: 1142580087849 0.00 25,593.75 SEC ID:9I324PAM4 WELLS FARGO BANK NA SR UNSECURED BKNT 9/15/2014 0.000 0.00 REC INT ON 500000.000 UNITS PAY 09/15/14 RATE.00129384T0 9/15/2014 0.0000 0.00 9/15/2014 0.00 646.92 CMS REF: 1142580087856 0.00 646P2 SEC ID:949SW210 Total FOREIGN HOLDER RELEASE-CD(4) Total Principal: 0.00 Total Commission: 0.00 Total I.e..: 71,865.67 Total Net 71,865.67 Total U.S.DOLLAR(USD)(15) Total Principal: -72,404.46 Total Commission: 0.00 Total Income: 72,404.46 Total Net: 0.00 9/16/2014 U.B.DOLLAR(USDI FREE RECEIPT-SO UNITED STATES TREASURY NOTE DTD 03115/2012 0.375%03/15/2015 3/6/2014 3,594,000.000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 3/6/2014 0.0mo 0.00 9/16/2014 0.00 0.00 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 0.00 CMS REF: 1142590067588 SEC ID:9I2828SK1 RED:ANH RECEIVE VS PAY-BUY 101812014 6:24:19PM EDT 34 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base Canener: Ban We CONSOLIDATED 9/1/2014 - 9/30/2014 OCS00001o000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/15/2014 125,000.000 -125,000.00 09/15/2014 0.0800% 9/16/2014 100.0000 0.00 9/16/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -125,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 0000018T CMS REF: 1142590075111 CLIENT HER 000020300061099 SEC ID:99ZALM589 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/15/2014 11,100,000.000 -11,100,000.00 0.0800%09/15/2014 9/16/2014 100.0000 0.00 9/16/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,100,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142590075172 CLIENT REF:000060300022481 SECID:99ZALM589 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/15/2014 38,175,000.000 -38,175,000.00 09/15/2014 0.0800% 9/16/2014 100.0000 0.00 9/16/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -38,175,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142590075225 CLIENT REF:000020300061100 SEC ID:99ZALM589 REG:REPO Total RBCBIYB VS PAY-BUY(3( Total Principal: -49,400,000.00 Total Coaunission: 0.00 Total Income: MIX) Total Net: -49,400,000.00 DELIVER FREE-SW UNITED STATES TREASURY NOTE DTD 03/15/2012 0.375%03/15/2015 3/6/2014 -3,594,000.000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 3/6/2014 0.0000 0.00 9/16/2014 0.00 0.00 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 0.00 CMS RE7: 1142590067458 SEC ID:9I2828SK7 REG:ANH US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/16/2014 -32M00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 16-SEP-2014 FACTOR OF 9/16/2014 0.0 0.00 9/16/2014 0..00 00 0.00 1.03624 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142590018591 SEC ID:912828TEO REG:FRB 101812014 6:24:19PM EDT 35 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea«Carron.,: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%9/15/2024 9/16/2014 -290.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 16-SEP-2014 FACTOR OF 9/16/2014 0.0000 0.00 9/16/2014 0.00 0.00 1.00358 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142590018594 SEC ID:912828WUO REG:FRB Total DELIVER FREE-SW(3( Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-MT FEDERAL HOME LN MTG CORP DISC NT DTD 09/16/2013 0.000% 9/16/2014 -200,000.000 199,976.33 09/16/2014 9/16/2014 100.0000 0.00 9/16/2014 0.00 23.69 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 200,000.00 200,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142589000228 SEC ID:313397F99 REG:FRB DBLIVER VS PAY.PD GOVERNMENT NATL MTG ASSN GTD REMIC PASSTHRU SECS 2000-9 9/I6/22014 014 1 61 0000 1,612.91 REMIC TR CL 9/16/2014 0.00 37.17 RECD PRIN AMORT FOR SEPTEMBER RECD INT FOR SEPTEMBER ON 0.00 1,650.08 68,099.74 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142590001140 SEC ID:3839H4NX9 REG: FRB DELIVER VS PAY-SELL 101812014 6:24:19PM EDT 36 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON RaseCanener: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/16/2014 -11,100,000.000 11,100,000.00 09/12/2014 0MS00% 9/16/2014 100.0000 0.00 9/16/2014 0.00 24.67 CLOSE FOR 1142580067992 0.00 11,100,024.69 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142590000313 SEC ID:99ZALMYM6 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/16/2014 -38,100,000.000 38,100,000.00 12 2014 0.0800% 9/16/2014 100,0000 0.00 09 / / 9/16/2014 0.00 84.67 CLOSE FOR 1142580068064 0.00 38,100,084.67 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142590000377 SEC ID:99ZALMYM6 REG:REPO Total DELIVER VS PAY-BELL(2) Total Principal: 49.200,WnW Total Commission: 0.00 Total Income: 109.34 Total Net: 49,200,109.34 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/16/2014 24.670 -24.69 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/16/2014 0.0 0.00 9/16/2014 0..00 00 .00 CMS REF: 1142590638366 0.00 -24.67 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/16/2014 1,734,750 -1,734.75 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/ 0.0000 0.00 9/16/2014 fi/2014 0.00 .00 CMS REF: 1142590638367 0.00 -1,734.75 SEC ID:996085247 REG:05 Tote)MARGIN RELEASE-BUY(2) Total RIncipal: -1,759.42 Total Commission: 0.00 Total Income: 0.00 Total Net: .1,759.42 Total U.S.DOLLAR(UBD)(13) Total Principal: -170.19 Total Commission: 0.00 Total Income: 170.18 Total Net: 0.00 9/17/2014 101812014 6:24:19PM EDT 37 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON RasecaneneF: USD WSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSGGO3l0000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income Is FX Fee Net Local Amount U.S.DOLLAR(USDI RECEIVE VS PAY-BUY JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/16/2014 38,300,000.000 -38,300,000.00 09 16 2014 0.0700% 9/17/2014 100.0000 0.00 / / 9/17/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -38,300,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142590231280 CLIENT REF:000020300061115 SECID:99ZALM9W2 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/16/2014 11,100,000.000 -11,100,000.00 09/16/2014 O.OT00% 9/17/2014 100.0000 0.00 9/17/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,100,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142590231316 CLIENT REF:000060300022486 SEC ID:99ZALM9W2 REG:REPO Total RECEIVE VS PAY-BUY(2) Total Principal: -49,400,000.00 Total Commission: 0.00 Total Income: 0.00 Total Net: -49,400,000.00 DELIVER FREE-SW UNITED STATES TREASURY NOTE DTD 08/15/2003 4.250%08/15/2013 8/15/2014 -3,610,000,000 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 8/15/2014 0.0000 0.00 9/17/2014 0.00 0.00 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 0.00 0,00 CMS REF: 1142600057196 SEC ID:912828BH2 REG:ANH US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/17/2014 -64M00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 19-SEP-2014 FACTOR OF 9/1 0.0 0,00 9/I7/2014/2014 0..00 00 0.00 1.03622 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142600011745 SEC ID:912828TEO REG:FRB 101812014 6:24:19PM EDT 38 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea.Cavener: USD OCSD-CONEOLIDATED 9/1/2014 - 9/30/2014 OCSo0()0Iw O Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/17/2014 -145M00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 19-SEP-2014 FACTOR OF 9/17/2014 0.0000 0.00 9/17/2014 0.00 0.00 1.00357 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142600011746 SEC ID:91282SWUO REG:FRB Total DELIVER FREE-SW(3) Total Principal: 0.00 Total Coeunission: 0.00 Total Income: MW Total Net: 0.00 DELIVER VS PAY-SELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/17/2014 -125,000.000 125,000.00 09/15/2014 0.0800% 9/17/2014 100.0000 0.00 9/17/2014 0.00 0.28 CLOSE FOR 1142590075111 0.00 125,000.28 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142600000043 SEC ID:99ZALM589 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/17/2014 -11,100,000,000 11,100,000.00 0.0800% 9/17/2014 100,0000 0.00 09/15/2014 9/17/2014 0.00 24.67 CLOSE FOR 1142590075172 0.00 11,100,024.67 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142600000065 SEC ID:99ZALM589 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/17/2014 -38,175,000.000 38,175,000.00 9/17/2014 100.0000 0.00 09/15/2014 0.0800% 9/17/2014 0.00 84.83 CLOSE FOR 1142590075225 0.00 38,175,084.83 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142600000071 SEC ID:99ZALM589 REG:REPO 101812014 6:24:19PM EDT 39 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Baas C9rrenc : Dan OCSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total DELIVER VS PAY-BELL(3) Total Principal: 49,400,000.00 Total Commission: 0.00 Total Income: 109.78 Total Net: 49,400,109.78 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/17/2014 24.670 -24.67 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/ 0.0000 0.00 9/17/2014/2014 0.00 . 7 CMS REF: 1142600584153 0.00 -24.67 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/17/2014 85A10 -85.11 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/1 0.0000 0.00 9/I7/2014/2o14 0.00 0.00 CMS REF: 1142600584154 0.00 -85.1111 SEC ID:996085247 REG:05 Total MARGIN RELEASE-BUY(2) Total Principal: -109.78 Total Commission: O.OII Total Income: 0.00 Total Net: -109.78 Total U.S.DOLLAR(USD)(10) Total Principal: -109.78 Total Commission: 0.00 Total Income: 109.78 Total Net: 0.00 9/18/2014 U.S.DOLLAR(USDI RECEIVE VS PAY-BUY JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/17/2014 11,100,000.000 -11,100,000.00 1Y 2014 0.0600% 9/18/2014 100,0000 0.00 09 / / 9/18/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,100,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142600254462 CLIENT REF:000060300022491 SEC ID:99Z LNHT8 REG:REPO 101812014 6:24:19PM EDT 40 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Rase Carrencr: USD OCSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCBGo0o10000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/17/2014 46,800,000.000 -46,800,000.00 09/17/2014 0M600% 9/18/2014 100.0000 0.00 9/18/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -46,800,000.00 CLEARING BROILER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142600254498 CLIENT PER 000020300061128 SECID:99ZALNHT8 REG:REPO Total RECEIVE VS PAY-BUY(21 Total Principal: .57.900.000.00 Total Commission: 0." Total Income: 0.00 Total Net: -57,900,000.00 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/18/2014 -32.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 18-SEP-2014 FACTOR OF 9/18/2014 0.0000 0.00 9/18/2014 0.00 0.00 1.03621 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS PER 1142610011971 SEC TO 912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/18/2014 -145.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 18-SEP-2014 FACTOR OF 9/18/2014 0.0000 0.00 9/18/2014 0.00 0.00 1.00356 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS NET: 1142610011972 SEC ID:912828WUD REG:FRB Total DELIVER FREE-SW(a) Total Principal: 0.00 Total Commission: nw Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-MT 101812014 6:24:19PM EDT 41 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Eaee Canener: USD WSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL HOME LN MTG CORP DISC NTS 09/18/2014 INCOME AT MAT 9/18/2014 -8,500,000 000 8,498,44L69 PROCEEDS RECENED AS A RESULT OF A MATURITY FOR CASH AMOUNT 9/18/2014 100.0000 0.00 9/18/2014 0.00 1,558.33 8,500,000.000 0.00 8,500,000.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142609000453 SEC ID:313397G39 REG:FRB DELIVER VS PAY-SELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/18/2014 -38,300,000.000 38,300,000.00 09/16/2014 0.0900% 9/18/2014 100.0000 0.00 9/18/2014 0.00 74.47 CLOSE FOR 1142590231280 0.00 38,300,074.49 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142610000179 SEC ID:99ZALM9W2 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/18/2014 -11,100,000,000 11,100,000.00 0.0900%09 16 2014 9/18/2014 100.0000 0.00 / / 9/18/2014 0.00 21.58 CLOSE FOR 1142590231316 0.00 11,100,021.58 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142610000185 SEC ID:99ZALM9W2 REG:REPO Total DELIVER VS PAY-BELL(2) Total Principal: 49,400,000.00 Total Commiesion: 0.00 Total Income: 96.05 Total Net 49,400,096.05 MARGIN RELEASE-EUY DREYFU THE AGY CSH MGT 521 INC FUND 9/18/2014 21.580 -21.58 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/18/2014 0.0000 0.00 9/18/2014 0.00 0.00 CMS REF: 1142610576629 0.00 -21.58 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/18/2014 3,725.880 -3,725.88 BOUGHT DREYFUS TREAS 8:AGY CSH MGT 521 INC 9/18/2014 0.0000 0.00 9/18/2014 0.00 0.00 CMS REF: 1142610576630 0.00 -3,725.88 SEC ID:996085247 REG:05 101812014 6:24:19PM EDT 42 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base CYrrenc : USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 oCSGOoolO000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total MARGIN RELEASE-BUY(2) Total Prinoipal: -3,747.46 Total commission: O.W Total Income: 0.00 Total Net: -3,747.46 FOREIGN HOLDER RELEASE-CD CITIGROUP INC DEP SH REPSTG I/1000TH INT NON CUMULATIVE PM 9/18/2014 0.000 3,764.34 SER 9/18/2014 0.0000 0.00 9/18/2014 0.00 0.00 CITIGROUP BONDS CLASS ACT PROCEEDS FOR ACCOUWOCSF0752222 0.00 3,764.34 CMS REF: 1142610547614 SEC TO 172967556 CASH WITRDRAWAL-cur CITIGROUP INC DEP SH REPSTG I/1000M INT NON CUMULATIVE PFD 9/18/2014 0.000 0.00 SEE 9/18/2014 0.0000 0.00 9/18/2014 0.00 -112.93 CITIGROUP BONDS CLASS ACT PROCESSING FEE FOR 0.00 -112.93 ACCOUNTOCSF0752222 CMS REF: 1142610547610 SEC ID: 172967556 Total U.S.DOLLAR(USDI(11) Total Principal: -1,541.45 Tote)Commiallon: 0.00 Total Income: 1,641.45 Total Net: 0.00 9/19/2014 U.S.DOLLAR(USDj RECEIVE VS PAY-BUY JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/18/2014 11,100,000,000 -11,100,000.00 09 18 2014 0.0600% 9/19/2014 100.0000 0.00 / / 9/19/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000189 0.00 -11,100,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 0000018T CMS REF: 1142610219219 CLIENT REF:000060300022496 SEC ID:99Z NQ35 REG:REPO 101812014 6:24:19PM EDT 43 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ease Canency: USD OCSACONSOMDATED 9/1/2014 - 9/30/2014 OCBG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/18/2014 46,900,000.000 -46,900,000.00 09/18/2014 0M600% 9/19/2014 100.0000 0.00 9/19/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -46,900,000.00 CLEARING BROILER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142610219254 CLIENT REF:000020300061141 SEC ID:99ZALNQ35 REG:REPO Total RECEIVE VS PAY-BUY(21 Total Principal: -5s,000.000.o0 Total Commission: 0.00 Total Income: 0.00 Total Net: -5s,000,000.00 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/19/2014 -128.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 21-SEP-2014 FACTOR OF 9/19/2014 0.0000 0.00 9/19/2014 0.00 0.00 1.03617 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS PER 1142620014513 SEC TO 912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/19/2014 -580.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 21-SEP-2014 FACTOR OF 9/19/2014 0.0000 0.00 9/19/2014 0.00 0.00 1.00352 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS NET: 1142620014515 SEC ID:912828WUD REG:FRB Total DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: nw Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-SELL 101812014 6:24:19PM EDT 44 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ba.Cavener: Ilan 0can-00NS0MDATED 9/1/2014 - 9/30/2014 OGSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/19/2014 -11,100,000.000 11,100,000.00 09/17/2014 0M600% 9/19/2014 100.0000 0.00 9/19/2014 0.00 18.50 CLOSE FOR 1142600254462 0.00 11,100,0I&SO TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142620000071 SEC ID:99ZALNHT8 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/19/2014 -46,800,000.000 46,800,000.00 1T 2014 0.0600% 9/19/2014 100,0000 0.00 09 / / 9/19/2014 0.00 78.00 CLOSE FOR 1142600254498 0.00 46,800,078.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142620000075 SEC ID:99ZALNHT8 REG:REPO Total DELIVER VS PAY-BELL(2) Total Principal: 67,900,000.00 Total Commission: 0.00 Total Income: 96.50 Totai Net 57,90Q096.50 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/19/2014 6,757.250 -6,757.25 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/19/2014 0.0 0.00 9/19/2014 0..00 00 0.00 CMS REF: 1142620599264 0.00 -6,TST.2525 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/19/2014 1,578,000 -1,578.00 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/19/2014 0.0 0.00 9/19/2014 0..00 00 .00 CMS REF: 1142620599265 0.00 -1,57 8.00 SEC ID:996085247 REG:05 Tote)MARGIN RELEASE-BUY(2) Total Principal: -8,335.29 Total Commission: O.GU Total Income: 0.00 Total Net: .9,335.25 FOREIGN HOLDER RELEASE-CD AMERICAN EXPRESS CO SR UNSECURED 9/19/2014 0.000 0.00 REC INT ON 2900000.000 UNITS PAY 09/19/14 RATE.0350000000 9/19/2014 0.0 0.00 9/19/2014 0..00 00 101,500.00 CMS REF: 1142620009010 0.00 101,500.00 SEC ID:025816AY5 101812014 6:24:19PM EDT 45 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON So.Carrancy: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount UNITED STATES TREASURYBULDTD 10/17/2013 0.000%04/17/2014 9/19/2014 0.000 6,738.75 INTEREST 9/19/2014 0.0000 0.00 9/19/2014 0.00 0.00 CMS REF: 1142620546961 0.00 6,73895 SEC ID:912796CHO Total FOREIGN HOLDER RELEASE-CD(2) Total Principal: 6,738.75 Total Commission: 0.00 Total Income: 101,5U0.00 Total Net: 108,238.75 Total U.S.DOLLAR(USD)(10( Total Principal: -101,596.50 Tots)Commission: 0.00 Total Income: 101,596.50 Total Net 0.00 9/22/2014 U.S.DOLLAR[USD( RECEIVE V8 PAY-BUY FEDERAL NATL ASSN DISCOUNT NT DTD 12/17/2013 0.000% 12/12/2014 9/22/2014 11,100,000.000 -11,099,188.31 TRADING BROKER:DAIWA SECS AMER INC,NEW YORK 00000647 9/22/2014 99.9 0.00 9/22/2014 0.00.00 0.00 CLEARING BROKER:DAIWA SECS AMER INC,NEW YORK 00000647 0.00 -11,099,188.3131 CMS REF: 1142650085125 CLIENT REF:000060300022507 SEC ID:313589S87 REG:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/19/2014 48,849,741,250 -48,849,741.25 09 19 2014 OM500% 9/22/2014 100.0000 0.00 / / 9/22/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 0000018] 0.00 -48,849,741.25 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 0000018] CMS REF: 1142620206495 CLIENT REF:000020300061154 SEC ID:99ZALNYT9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/19/2014 11,700 000.000 -11,700,000.00 09/19/2014 0.0500% 9/22/2014 t00.0000 0.00 9/22/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142620206659 CUE" REF:000060300022501 SEC ID:99ZALNYT9 REG:REPO 101812014 6:24:19PM EDT 46 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Rase Cavener: Ban WSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG0001MIX) Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/19/2014 15,150,258.750 -15,150,258.95 09/19/2014 0.0500% 9/22/2014 100.0000 0.00 9/22/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -15,150,25895 CLEARING BROILER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142620206771 CLIENT REF:000020300061155 SEC ID:99ZALN 9 REG:REPO Totd RECEIVE VS PAY-RUY(4) Total Principal: -86,799,1S8.31 Total Conwiadon: 0." Total Income: 0.00 Total Net -86,799,188.31 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/22/2014 -32.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 22-SEP-2014 FACTOR OF 9/22/2014 0.0000 0.00 9/22/2014 0.00 0.00 1.03616 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS HER 1142650014796 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/22/2014 -290.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 22-SEP-2014 FACTOR OF 9/22/2014 0.0 0.00 9/22/2014 0..00 00 0.00 1.0035 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142650014797 SEC ID:912828WUO REG:FEB Told DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-MT 101812014 6:24:19PM EDT 47 Workbench i� Custody Transaction History Report ID: CUA356 BNY MELLON Rase Cavener: USD DCSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCSGOOD1o000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL NATLMTG ASSN DISCOUNT NTDTD 09/27/20130.000% 9/22/2014 -11,700,000000 11,699,172.60 09/22/2014 9/22/2014 100.0000 0,00 9/22/2014 0.00 2,827.50 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 1I,900,000.00 11,700,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142629000251 SEC ID:313589G92 REG:FRB FEDERAL NATL MTG ASSN DISCOUNT NT DTD 09/27/20130.000% 9/22/2014 -17,001,000.000 16,996,891.42 09/22/2014 9/22/2014 100.0000 0.00 9/22/2014 0.00 4,108.58 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 19,001,000.00 17,001,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142629000252 SEC ID:313589G92 REG:FRB Total DELIVER VS PAY-MT(21 Total Principal: 28,694,063.92 Total Canunieaion: 0.00 Total Income: 6,936.08 Total Net: 28,701,000.00 DELIVER VS PAY.PD COW NATL MTG ASSN 11 PASS THROUGH POOL 80023 VAR RATE 9/2/2014 -240A50 240.15 12/20/2026 9/22/2014 100.0000 0.00 9/22/2014 0.00 45.91 RECD PMN AMORT FOR AUGUST RECD INT FOR AUGUST ON 33,902.94 0.00 286.06 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520122558 SEC ID:36225CAZ9 REG:FRB 101812014 6:24:19PM EDT 48 Workbench i� Custody Transaction History Report ID: CUA356 BNY MELLON xaao Carron,: USD OCSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCS(30001MIX) Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount GOVT NATL MTG ASSN E1 PASS THROUGH POOL 080088 VAR RATE 9/2/2014 -304.950 304.93 6/20/2027 9/22/2014 100.0000 0.00 9/22/2014 0.00 66.97 RECD PRIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 40,183.53 0.00 391.92 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520122721 SEC ID:36225CC20 REG:FRB GOUT NATL MTG ASSN II PASS THROUGH POOL 080408 VAR RATE 9/2/2014 -574.060 574.06 5/20/2030 9/22/2014 100.0000 0.00 9/22/2014 0.00 163.65 RECD MIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 120,852.58 0.00 739.71 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520123239 SEC ID:36225CN28 REG:FRB GOUT NATL MTG ASSN II PASS THROUGH POOL 80395 VAR RATE 9/2/2014 -67.400 67.40 0 0.00 4/20/2030 9/22/2014 100.0.00 19.58 RECD PRIN AMORT FOR AUGUST REC ,INT FOR AUGUST ON 14,462.07 0.00 86.98 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520123168 SEC ID:36225CNM4 REG:FEB GOVT NATL MTG ASSN 11 PASS THROUGH POOL 80965 VAR RATE 9/2/2014 -440.590 440.59 9/20/2034 9/22/2014 100.0000 0.00 9/22/2014 0.00 165.69 RECD PEEN AMORT FOR AUGUST RECD INT FOR AUGUST ON 122,358.30 0.00 606.28 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520123727 SEC ID:36225DCB8 REG:FEB Total DELIVER VS PAY-PD(5( Total Principal: 1,627.15 Total Commission: 0.00 Total Income: 461.80 Total Net: 2,088.95 101812014 6:24:19PM EDT 49 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base Carrenc : LED OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSGGoo10000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount DELIVER VS PAY-SELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/22/2014 -11,100,000.000 11,100,000.00 09/18/2014 0.0600% 9/22/2014 100.0000 0.00 9/22/2014 0.00 55.50 CLOSE FOR 1142610219219 0.00 11,100,055.50 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142650000179 SEC ID:99ZALNQ35 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/22/2014 -46,900,000.000 46,900,000.00 09/18/2014 0.0600% 9/22/2014 100.0000 0.00 9/22/2014 0.00 234.50 CLOSE FOR 1142610219254 0.00 46,900,234.50 TRADING BROI(ER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142650000225 SEC ID:99ZALNQ35 REG:REPO Total DELIVER VS PAY-SELL(2) Total Principal: 58,000,000.00 Total Commission: 0.00 Total Income: 290.00 Total Net: 58,000,290.00 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/22/2014 11,179.690 -11,179.69 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/22/2014 0.0 0.00 9/22/2014 0..00 00 0.00 CMS REF: 1142650654203 0.00 -11,1T9.6969 SEC ID:996085247 REG:05 SELL-8ELL DREYFU THE AGY CSH MGT 521 INC FUND 9/22/2014 93,240.790 93,240.79 SOLD DREYFUS TREAS&AGY CSH MGT 521 INC 9/22/2014 0.0000 0.00 9/22/2014 0.00 0.00 CMS REF: 1142650654204 0.00 93,240.79 SEC TO 996085247 REG:05 FOREIGN HOLDER RELEASE-CD GOLDMAN SACHS GROUP INC/THE SR UNSECURED 9/22/2014 0.000 0.00 RECD INT ON 2000000.000 UNITS PAY 09 22 14 RATE.00YI1T8T80 9/22/2014 0.0000 0.00 / / 9/22/2014 0.00 3,435.76 CMS REF: 1142650629214 0.00 3,435.76 SEC ID:38141GEG5 101812014 6:24:19PM EDT 50 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON So.Canancr: USD OCSD-CONEOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JPMORGAN CHASE&CO SR UNSECURED MTN 9/22/2014 0.000 0.00 REC INT ON 1100000.000 UNITS PAY 09/22/14 RAM M93950000 9/22/2014 0.0000 0,00 9/22/2014 0.00 10,312.50 CMS REF: 1142650014082 0.00 10,312.50 SEC ID:466231JP5 Total FOREIGN HOLDER RELEASE-CD(21 Total Principal: 0.00 Total Commission: 0.00 Total Income: 13,748.26 Total Net: 13,748.26 Total U.S.DOLLAR(USD)(19( Total Principal: -21,436.14 Total Commission: 0.00 Total Income: 21,436.14 Total Net 0.00 9/23/2014 U.S.DOLLAa[USD( RECEIVE VS PAY-SW JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/22/2014 15,076 320.940 -15,096,320A4 09/22/2014 0.0500 0 9/23/2014 t00.0000 0.00 9/23/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -15,076,320.94 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142650224117 CUE" REF:000020300061172 SEC ID:99ZALN5H7 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/22/2014 11,700,000.000 -11,700,000.00 09/22/2014 O.OSOOYo 9/23/2014 100.0000 0.00 9/23/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142650224473 CLIENT REF:000060300022509 SEC ID:99ZALNSH7 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/22/2014 48,923,679.060 -48,923,679.06 09/22/2014 0.0500% 9/23/2014 100.0000 0.00 9/23/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -48,923,679.06 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142650224502 CLIENT REF:000020300061171 SEC ID:99ZALN5H7 REG:REPO 101812014 6:24:19PM EDT 51 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON BaseCarrencr: USD OCSO-CONSOLMATEn 9/1/2014 - 9/30/2014 OCBGOOol0000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total RECEIVE VS PAY-BUY(31 Total Principal: -75,700,000.00 Total Commission: 0.00 Total Income: 0.00 Total Net: -75,700,000.00 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/23/2014 -64.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 23-SEP-2014 FACTOR OF 9/23/2014 000000.00 9/23/2014 0..00 0.00 1.03614 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142660011994 SEC ID:912828TEO RE@ FRB US TREASURY INFLATION INDEXED NOTKS 1/8%7/15/2024 9/23/2014 -145.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 9/23/2014 FACTOR OF 9/23/2014 0.0 0.00 9/23/2014 0..00 00 0.00 1.00349 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142660011995 SEC ID:912828WUO REG:FEB Tote)DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-SELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DM 9/23/2014 -48,849,741.250 48,849,741.25 09/19/2014 0.0500% 9/23/2014 100.0000 0.00 9/23/2014 0.00 67.85 CLOSE FOR 1142620206495 0.00 48,849,809.10 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142660000305 SEC ID:99Z NYT9 REQ REPO 101812014 6:24:19PM EDT 52 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base Canener: USD OCSD-CONEOMDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/23/2014 -11,900,000.000 11,700,000.00 09/19/2014 OM500% 9/23/2014 100.0000 0.00 9/23/2014 0.00 16.25 CLOSE FOR 1142620206659 0.00 11,900,016.25 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142660000362 SEC ID:99ZALNYT9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/23/2014 -15,150,258.750 15,150,259.75 19 2014 0.0500% 9/23/2014 100,0000 0.00 09 / / 9/23/2014 0.00 21.04 CLOSE FOR 1142620206791 0.00 15,150,279.79 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142660000532 SEC ID:99ZALNYT9 REG:REPO Total DELIVER VS PAY-SELL(3) Total Principal: 75,700,000.00 Total Commission: 0.00 Total Income: 105.14 Total Net: 75,700,305.14 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/23/2014 16.250 -16.25 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/23/2014 0.0 0.00 9/23/2014 0..00 00 0.00 CMS REF: 11426606491T4 0.00 -166.2525 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/23/2014 88.890 -88.89 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/23/2014 0.0 0.00 9/23/2014 0..00 00 0.00 CMS REF: 1142660649175 0.00 -88.8989 SEC ID:996085247 REG:05 Total MARGIN RELEASE-BUY(2) Total Principal: -105.14 Total Commission: 0.00 Total Income: 0.00 Total Net: -105.14 Total U.S.DOLLAR(USD)(10) Total Principal: -105.14 Total Commission: 0.00 Total Income: 105.14 Total Net: 0.00 9/24/2014 101812014 6:24:19PM EDT 53 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON BaseCanener: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSGOOoIw00 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income Is FX Fee Net Local Amount U.S.DOLLAR(USDI RECEIVE VS PAY-BUY FEDERAL HOME LN MTG CORP DISC NT DTD 12/23/2013 0.000% 9/23/2014 18,100,000.000 -18,098,881.32 12 22 2014 9/24/2014 99.9938 0.00 / / 9/24/2014 0.00 0.00 TRADING BROKER:DEUTSCHE BE SECS INC,NY(NWSCUS33)00000573 0.00 -18,098,881.32 CLEARING BROKER:DEUTSCHE BE SECS INC,NY(NWSCUS33)00000573 CMS REF: 1142660212266 CLIENT REF:000020300061184 SEC ID:313397U25 REG:FRB UNITED STATES TREASURY BILL DTD 05/22/2014 0.000%11/20/2014 9/23/2014 900,000.000 -899,992.88 TRADING BROKER:JPMORGAN CHASE BK/RBS SEC INC,NEW YORK 9/24/2 9/24/200 14 99.914 0..0000 0.00 . 00 00002230 0.00 -899,992.8888 CLEARING BROKER:JPMORGAN CHASE BK/RBS SEC INC,NEW YORK 00002230 CMS REF: 1142660223666 CMENT REF:000060300022515 SEC ID:912196EE5 REG:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/23/2014 11,700,000.000 -11,700,000.00 09/23/2014 0.0500% 9/24/2014 100.0mo 0.00 9/24/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -1 I,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142660223966 CLIENT REF:000060300022514 SEC TO 99Z PBT9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/23/2014 49,649,973.070 -49,649,973.07 09/23/2014 0.0500% 9/24/2014 100.0000 0.00 9/24/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -49,649,973.07 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142660224007 CLIENT REF:000020300061186 SECID:99Z PBT9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/23/2014 42,550,026.930 -42,550,026.93 09/23/2014 0.0600% 9/24/2014 100.0000 0.00 9/24/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -42,550,026.93 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142660224180 CLIENT REF:000020300061187 SEC ID:99Z PBT9 REG:REPO 101812014 6:24:19PM EDT 54 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON xa.Canencr: UED OCSACONSOMDATRD 9/1/2014 - 9/30/2014 OCBG00010000 Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total RECEIVE VS PAY-BUY(51 Total PAvcipel: -122,898,974.20 Total Commission: 0.00 Total Income: 0.00 Total Net: -122,899,874.20 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/24/2014 -32.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 24-SEP-2014 FACTOR OF 9/24/2014 0.0000 0.00 9/24/2014 0.00 0.00 1.03613 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142670025314 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTKS 1/8%7/15/2024 9/24/2014 -145.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 9/24/2014 FACTOR OF 9/24/2014 0.0 0.00 9/24/2014 0..00 00 0.00 1.00348 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142670025315 SEC ID:912828WUO REG:FRB Tote)DELIVER FREE-SW(2) Total Principal: 0.00 Total Commisaton: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-MT FEDERAL HOME LN BE CONS DISC NT DTI)09/24/2013 0.000% 9/24/2014 -29,100,000.000 29,094,422.68 09/24/2014 9/24/2014 100.0000 0.00 9/24/2014 0.00 5,577.32 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 29,100,000.00 29,100,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142669000207 SEC ID:313385G91 REG:FRB 101812014 6:24:19PM EDT 55 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON So.Cavener: USD OCSuMASOLrDATED 9/1/2014 - 9/30/2014 OCSGOODIMIX) Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL HOME LN MTG CORP DISC NT DTD 09/24/2013 0.000% 9/24/2014 -900,000 000 899,962.50 09/24/2014 9/24/2014 100.0000 0.00 9/24/2014 0.00 37.50 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 900,000.00 900,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS PER: 1142669000227 SEC ID:313397G96 REG:FRB FEDERAL NATL MTG ASSN DISC NT DTD 09/30/2013 0.000%09/24/2014 9/24/2014 -17,200,000.000 17,197,635.00 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 9/24/2014 100.0000 0.00 9/24/2014 0.00 2,365.00 17,200,000.000 0.00 17,200,000.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142669000233 SEC ID:313589G98 REG:FRB Total DELIVER VS PAY-MT(31 Total Principal: 47,192,020.18 Total Commission: O.OD Total Income: 7,979.82 Total Net: 47,200,000.00 DELIVER VS PAY-SELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/24/2014 -15,076,320.940 15,076,320.94 09/22/2014 O.Os00Y 9/24/2014 100.0000 0.00 9/24/2014 0.00 20.94 CLOSE FOR 1142650224117 0.00 15,076,341.88 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142670001310 SEC ID:99ZALN5H7 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/24/2014 -11,700,000,000 11,700,000.00 09/22/2014 0M500% 9/24/2014 100.0000 0.00 9/24/2014 0.00 16.25 CLOSE FOR 1142650224473 0.00 11,700,016.25 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142690001995 SEC ID:99ZALNSH7 REG:REPO 101812014 6:24:19PM EDT 56 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON So.Carrencr: USD OCSuMNSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/24/2014 -48,923,679.060 48,923,679.06 09/22/2014 0.0500Y 9/24/2014 100.0000 0.00 9/24/2014 0.00 67.95 CLOSE FOR 1142650224502 0.00 48,923,74T01 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142670001808 SEC ID:99ZALN5H7 REG:REPO Total DELIVER VS PAY-SBLL(3) Total Principal: 75,700,000.00 Total Commisaion: 0.00 Total Income: 105.14 Total Net: 75,700,105.14 NAROIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/24/2014 23.370 -23.37 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/24/2014 0.0 0.00 9/24/2014 0..00 00 0.00 CMS REF: 1142670649459 0.00 -23.3737 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/24/2014 1,207.570 -1,207.57 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/24/2014 0.0 0.00 9/24/2014 0..00 00 0.00 CMS REF: 1142670649460 0.00 -1,207.5757 SEC ID:996085247 REG:OS Total MARGIN RELEASE-BUY(2) Total Principal: -1,230.94 Total Commission: 0.00 Total Income: 0.00 Total Net: -1,230.94 Total U.S.DOLLAR(USD)(15) Total Principal: -0,084.96 Total Commission: 0.G0 Total Income: 8,084.96 Total Net 0.00 9/25/2014 U.S.DOLLAR NSDI RECEIVE VS PAY-BUV 101812014 6:24:19PM EDT 57 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base Canencr: Ban WSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSGG0010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/24/2014 11,700,000.000 -11,700,000.00 09/24/2014 OM500% 9/25/2014 100.0000 0.00 9/25/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142680065503 CLIENT PER 000060300022521 SEC TO 99ZALPL01 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/24/2014 50,299,999.670 -50,299,999.67 0.0500 0 09/24/2014 9/25/2014 100.0000 0.00 / 9/25/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -50,299,999.67 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142680065519 CUE" REF:000020300061204 SEC ID:99ZALPL01 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT GTE 9/24/2014 41,900,000.330 -41,900,000.33 09/24/2014 O.Os00Y 9/25/2014 100.0000 0.00 9/25/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -41,900,000.33 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142680065577 CLIENT HER 000020300061205 SEC ID:99ZALPL01 REG:REPO IN,W RECEIVE VS PAY-BUY(3( Total Principal: -103,900,000.00 Total Commiaalon: 0.00 Total Income: 0.00 Total Net: -103,900,000.00 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/25/2014 -32.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 25-SEP-2014 FACTOR OF 9/25/2014 0.0000 0.00 9/25/2014 0.00 0.00 1.03612 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS HER 1142680023158 SEC ID:912828TEO REG:FRB 101812014 6:24:19PM EDT 58 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ease Cavener: uBD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCBo0()0Iw O Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/25/2014 -290A00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 25-SEP-2014 FACTOR OF 9/25/2014 0.0000 0.00 9/25/2014 0.00 0.00 1.00346 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142680023162 SEC ID:91282SWUO REG:FRB Total DELIVER FREE-SW(2) Total Principal: 0.00 Total Coeunission: 0.00 Total Income: MW Total Net: 0.00 DELIVER VS PAY-MT FEDERAL HOME LN MTG CORP DISC NTS DTD 09/25/2013 0.000% 9/25/2014 -200,000.000 199,990.53 09/25/2014 9/25/2014 100.0000 0.00 9/25/2014 0.00 9.44 PROCEEDS RECEIVED AS A RESULT OF A MATURITY FOR CASH AMOUNT 0.00 200,000.00 200,000.000 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142679000234 SEC ID:313397H2O REG:FRB DELIVER VS PAY-PD FEDERAL NATL MTG ASSN GM PASS THRU CTF POOL 257179 4 l/2% 9/2/2014 -2,232.680 2,232.68 4/1/2028 9/25/2014 100.0000 0.00 9/25/2014 0.00 223.54 RECD PON AMORT FOR AUGUST RECD INT FOR AUGUST ON 59,609.50 0.00 2,456.22 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520065706 SEC ID:31391NUC7 REG:FRB 101812014 6:24:19PM EDT 59 Workbench i� Custody Transaction History Report ID: CUA356 BNY MELLON xa.Cavan,: USD WSD-CONEOMDATED 9/1/2014 - 9/30/2014 OCSGO0030D00 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL NAIL MTG ASSN GM PASS THEO CTF POOL 357969 5% 9/2/2014 -4,042300 4,042,70 9/1/2035 9/25/2014 100.0000 0.00 9/25/2014 0.00 1,405.23 RECD PRIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 337,255.14 0.00 5,447.93 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520069746 SEC ID:31376=2 REG:FRB FEDERAL NATL MTG ASSN GTD PASS THEO CTF POOL 466399 3.4009S 9/2/2014 -540.280 540.28 11/1/2020 9/25/2014 100.0000 0.00 9/25/2014 0.00 1,102.58 RECD MIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 376,629.36 0.00 1,642.86 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520070431 SEC ID:31381PDA3 REG:FRB FEDERAL NATL MTG ASSN GM PASS THEO CTF POOL A10869 4 1/2% 9/2/2014 -982.260 982.26 6/1/2029 9/25/2014 100.0000 0.00 9/25/2014 0.00 13Z23 RECD PRIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 36,595.12 0.00 1,119.49 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520057958 SEC ID:3138EG6F6 REG:FRB FEDERAL HOME LN MTG CORP MULMCLASS MTG PARIN CTFS GTD SEE 9/2/2014 -30,700.450 30,700.45 58 CL 2A 9/25/2014 100.0000 0.00 9/25/2014 0.00 6,958.69 RECD PMN AMORT FOR AUGUST RECD INT FOR AUGUST ON 1,284,681.68 0.00 37,659.14 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142670007888 SEC ID:31394 35 REG:OTC 101812014 6:24:19PM EDT 60 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Rase Cavener: USD WSD-CONSOMDATEn 9/1/2014 - 9/30/2014 OCSGG0010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL NATL MTG ASSN GM REMIC PASSTHRU CTF REMIC TR 2011-3 9/25/2014 -16,]6].120 16,76I.12 CL FA 9/25/2014 100.0000 0,00 9/25/2014 0.00 452.81 RECD PRIN AMORT FOR SEPTEMBER RECD INT FOR SEPTEMBER ON 0.00 17,239.93 679,481.48 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142680008472 SEC ID:31397QMO REG:FRB FEDERAL NATL MTO ASSN GTD REMIC PASSTHRU CTF REMIC TR 2010-Ml 9/2/2014 -16,965.760 16,965.76 CL Al 9/25/2014 100.0000 0.00 9/25/2014 0.00 1,203.71 RECD PRIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 437,051.23 0.00 18,169.47 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142550008200 SEC ID:31398MGL4 REG:FRB FEDERAL NATL MTO ASSN GM PASS THRU CTF POOL 945580 5% 9/2/2014 -8,083.910 8,083.91 6/1/2036 9/25/2014 100.0000 0.00 9/25/2014 0.00 1,331.85 RECD PRIN AMORT FOR AUGUST REC ,INT FOR AUGUST ON 319,644.77 0.00 9,415.76 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520079508 SEC ID:31403D323 REG:FEB FEDERAL NATL MTG ASSN GM PASS THRU CTF POOL 748678 5% 9/2/2014 -35.640 35.64 10/1/2033 9/25/2014 100.0000 0.00 9/25/2014 0.00 39.31 RECD PRIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 9,435.10 0.00 74.95 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520080776 SEC ID:31403GXF4 REG:FEB 101812014 6:24:19PM EDT 61 Workbench i� Custody Transaction History Report ID: CUA356 BNY MELLON Rase Cavener: USD ocsD-rnxsouDarED 9/1/2014 - 9/30/2014 oGS0000loo00 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL NATL MTG ASSN GM PASS THRU CTF POOL 815971 5% 9/2/2014 -15,207.330 15,207.33 3/1/2035 9/25/2014 100.0000 0.00 9/25/2014 0.00 2,665.04 RECD PRIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 639,610.70 0.00 17,872.37 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520089156 SEC ID:31406MY8 REG:FRB FEDERAL NATL MTG ASSN GTD PASS THEO CTF POOL 823358 VAR RATE 9/2/2014 100.600 TT 8.60 2/1/2035 9/25/2014 0.00 462.72 RECD MIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 243,002.58 0.00 1,241.32 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520090476 SEC ID:31406 5 REG:FEB FEDERAL NATL MTG ASSN GTD PASS THEO CTF POOL 826080 5% 9/2/2014 -2,370.000 2,370.00 T/1/203s 9/25/2014 100.0000 0.00 9/25/2014 0.00 252.43 RECD PMN AMORT FOR AUGUST SECT,INT FOR AUGUST ON 60,583.50 0.00 2,622.43 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520091019 SEC ID:31409BM7 REG:FRB FEDERAL NATL MTG ASSN GM PASS THEO CTF POOL 888336 5% 9/2/2014 -19,826.530 19,826.53 9/1/2036 9/25/2014 100.0000 0.00 9/25/2014 0.00 2,714.81 RECD PRIN AMORT FOR AUGUST SECT,INT FOR AUGUST ON 651,553.35 0.00 22,541.34 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520101310 SEC ID:3I410F4V4 REG:FEB 101812014 6:24:19PM EDT 62 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea.Cavener: USD OCSD-CONSm.mATED 9/1/2014 - 9/30/2014 OCSn000I0000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL NATL MTG ASSN GM PASS THEO CTF POOL MA0022 4 1/2% 9/2/2014 -1,856 130 1,856 13 4/1/2029 9/25/2014 100.0000 0.00 9/25/2014 0.00 225.40 RECD PRIN AMORT FOR AUGUST RECD INT FOR AUGUST ON 60,106.86 0.00 2,081.53 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142520112316 SEC ID:3141WAY3 RE4.FRB SOUNDVIEW HOME LOAN TR OPT3 A4 DTD 09/30/2005 VAR RT 9/25/2014 -16,354.530 16,354.53 11/25/2035 9/25/2014 100.0000 0.00 9/25/2014 0.00 100.90 RECD MIN AMORT FOR SEPTEMBER RECD INT FOR SEPTEMBER ON 0.00 16,455.23 257,011.63 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142680014136 SECID:83611MG51 REG:DTC WELLS FARGO HOME EQUITY 2 AI6 DTD 09/01/2004 VAR RT 10/25/2034 9/2/2014 -19,191.910 19,191.91 RECD MN AMORT FOR AUGUST RECD INT FOR AUGUST ON 90,992.13 9/25/2014 100.0 . 9/25/2014 0..00 00 399.13 UNITS 0.00 19,ST1.0404 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142620006307 SEC ID:94980GAG6 REG:OTC Tote)DELIVER V8 PAY-PD(16) Total Principal: 155,935.83 Total Commission: MIX) Total Income: 19,675.18 Total Net: 175,611.01 DELIVER VS PAY-SELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/25/2014 -11,700,000.000 11,700,000.00 09/23/2014 O.OSOOW 9/25/2014 100.0000 0.00 9/25/2014 0.00 16.25 CLOSE FOR 1142660223966 0.00 11,700,016.25 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142680000223 SEC ID:99ZALPBT9 REG:REPO 101812014 6:24:19PM EDT 63 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base Carrencr: USD OCSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCSGOo010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT LOU 9/25/2014 -49,649,973.070 49,649,973.07 09/23/2014 0.0500Y 9/25/2014 100.0000 0.00 9/25/2014 0.00 68.96 CLOSE FOR 1142660224007 0.00 49,650,042.03 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142680000243 SEC ID:99ZALPBT9 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/25/2014 -42,550,026,930 42,550,026.93 0M500%09 23 2014 9/25/2014 100.0000 0.00 / / 9/25/2014 0.00 59.10 CLOSE FOR 1142660224180 0.00 42,550,086.03 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142680000369 SEC ID:99ZALPBT9 REG:REPO Total DELIVER VS PAY-BELL(3) Total Principal: 103,900,000.00 Total Commieslon: 0.00 Total Income: 144.31 Total Net 103,900,144.31 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/25/2014 200,016.250 -200,016.25 BOUGHT DREYFUS TREAS It AGY CSH MGT 521 INC 9/25/2014 0.0 0.00 9/25/2014 0..00 00 . 5 CMS REF: 1142680669120 0.00 -200,016.25 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/25/2014 179,053.430 -179,053.43 BOUGHT DREYFUS TREAS 8:AGY CSH MGT 521 INC 9/25/2014 0.0000 0.00 9/25/2014 0.00 0.00 CMS REF: 1142680669121 0.00 -179,05SA3 SEC ID:996085247 REG:05 Total MARGIN RELEASE-BUY(2) Total Principal: -379,069.68 Total Comtniasion: 0.00 Total Income: 0.00 Total Net: -379,069.68 FOREIGN HOLDER RELEASE-CD AMRESCO RESIDENTIAL SECURI 1 A DTD 1 012 0/19 99 VAR RT 06/25/2029 9/25/2014 0.000 0.00 000 INTEREST ON 9190463.00 PAYABLE 092514 9/25/2014 0.0 . 9/25/2014 0..00 00 126.1111 CMS REF: 1142680005004 0.00 126.11 SEC ID:03215PFN4 101812014 6:24:19PM EDT 64 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON BaseCaneneP: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCS000010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount FEDERAL HOME LN MTG CORP MULTTCLASS MTG PARTN CTFS GTD SEE 9/25/2014 0.000 0.00 K006 CL A2 9/25/2014 0.0000 0.00 9/25/2014 0.00 3,188.25 INTEREST DUE ON PAY DATE 09251 4 0.00 3,188.25 CMS REF: 1142680013601 SEC ID:31398VJ98 Total POEEIGN HOLDER RELEASE-CD(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 3,314.36 Total Net: 3,314.36 Total U.S.DOLLAR(USD)(29) Total Principal: -23,143.32 Total Commission: 0.00 Total lacome: 23,143.32 Total Net: 0.00 9/26/2014 U.S.DOLLAR(USDI RECEIVE VS PAY-BUY FEDERAL HOME LN UK CONS DISC PITS DTD 12/19/2013 0.000% 9/25/2014 100,000.000 -99,993.00 19 2014 9/26/2014 99.9930 0.00 12 / / 9/26/2014 0.00 0.00 TRADING BROKER:DEUTSCHE BE SECS INC,NY(NWSCUS33)00000573 0.00 -99,993.00 CLEARING BROKER:DEUTSCHE BE SECS INC,NY(NWSCUS33)00000573 CMS REF: 1142680229250 CLIENT REF:000020300061222 SEC ID:313385T11 RED:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/25/2014 50,349 992.520 -50,349,992.52 09/2s/2014 0.0500°h 9/26/2014 foo.0000 0.00 9/26/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -50,349,992.52 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142690061536 CLIENT REF:000020300061224 SEC ID:99ZALPPW3 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/25/2014 11,700,000.000 -11,700,000.00 09/25/2014 0.0500% 9/26/2014 100.0000 0.00 9/26/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,900,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 0000018Y CMS REF: 1142690061551 CLIENT REF:000060300022527 SEC ID:99ZALPTW3 RED:REPO 101812014 6:24:19PM EDT 65 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Rase Curren,: Ban OCSD-CONSOMDATED 9/1/2014 - 9/30/2014 OCSG0001MIX) Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/25/2014 41,850,007.480 -41,850,007.48 09/25/2014 0.0500% 9/26/2014 100.0000 0.00 9/26/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -4I,850,00748 CLEARING BROILER:JPMORGAN SECURITIES INC,NEW YORK 00000189 CMS REF: 1142690061585 CLIENT REF:000020300061225 SEC ID:99ZALPTW3 REG:REPO Totd RECEIVE VS PAY-BUY(4( Total Principal: -103,999,993.00 Total Cotamisdon: 0.00 Total Income: 0.00 Total Net -103,999,993.00 DELIVER FREE-SW US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/26/2014 -128.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 28-SEP-2014 FACTOR OF 9/26/2014 0.0000 0.00 9/26/2014 0.00 0.00 1.03608 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS HER 1142690010160 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/26/2014 -435.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 28-SEP-2014 FACTOR OF 9/26/2014 0.0 0.00 9/26/2014 0..00 00 0.00 1.00343 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142690010161 SEC ID:912828WUO REG:FEB Told DELIVER FREE-SW(2) Total Principal: 0.00 Total Commission: 0.00 Total Income: 0.00 Total Net: 0.00 DELIVER VS PAY-SELL 101812014 6:24:19PM EDT 66 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base C..m,: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/26/2014 -11,700,000.000 11,700,000.00 09/24/2014 OM500% 9/26/2014 100.0000 0.00 9/26/2014 0.00 16.25 CLOSE FOR 1142680065503 0.00 11,700,016.25 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142690000149 SECID:99ZALPL01 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/26/2014 -50,299,999.670 50,299,999.67 24 2014 0.0500% 9/26/2014 100,0000 0.00 09 / / 9/26/2014 0.00 69.86 CLOSE FOR 1142680065519 0.00 50,300,069.53 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142690000211 SEC ID:99ZALPL01 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/26/2014 -41,900,000.330 41,900,000.33 09 24 2014 0.0500% 9/26/2014 100.0000 0.00 / / 9/26/2014 0.00 58.19 CLOSE FOR 1142680065577 0.00 41,900,058.52 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142690000397 SEC ID:99ZALPL01 REG:REPO Total DELIVER VS PAY-SELL(3) Total Principal: 103,900,000.00 Total Commission: 0.00 Total Income: 144.30 Total Net: 103,900,144.30 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/26/2014 16.250 -16.25 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/26/2014 0.0000 0.00 9/26/2014 0.00 0.00 CMS REF: 1142690772974 0.00 -16.25 SEC ID:996085247 REG:05 SELL-SELL DREYFU THE AGY CSH MGT 521 INC FUND 9/26/2014 99,864.950 99,864.95 SOLD DREYFUS TREAS&AGY CSH MGT 521 INC 9/26/2014 0.0000 0.00 9/26/2014 0.00 0.00 CMS REF: 1142690772975 0.00 99,864.95 SEC ID:996085247 REG:05 101812014 6:24:19PM EDT 67 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Be.CarreneF: USD WSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG000Iww Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total U.S. DOLLAR(USD)(11) Total Principal: -144.30 Total Commission: 0.00 Total Income: 144.30 Total Net: 0.00 9/29/2014 U.S.DOLLAR(USDI RECEIVE VS PAY-BUY FEDERAL NATL MTG ASSN DISC NT DTD 01/27/2014 0.000%01/20/2015 9/29/2014 200,000.000 -199,984.31 TRADING BROKER:JEFFERIES&CO INC,NEW YORK 00000019 9/29/2014 99.9922 0.00 9/29/2014 0.00 0.00 CLEARING BROKER:JEFFERIES&CO INC,NEW YORK 00000019 0.00 -199,984.31 CMS REF: 1142720093844 CLIENT REF:000060300022534 SEC ID:313588AV9 REG:FRB JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/29/2014 11,700,000,000 -11,700,000.00 09 29 2014 0.0500E 9/29/2014 100,0000 0.00 / / 9/29/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000189 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 0000018T CMS REF: 1142720152859 CLIENT REF:000060300022536 SEC ID:99ZALP21,6 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/26/2014 49,649 973.070 -49,649,973.09 09/26/2014 0.0500E 9/29/2014 t00.0000 0.00 9/29/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -49,649,973.07 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142690236042 CLIENT REF:000020300061240 SEC ID:99ZALPZCO REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/26/2014 42,550,026.930 -42,550,026.93 09/26/2014 OG500% 9/29/2014 100.0mo 0.00 9/29/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -42,550,02&93 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 0000018Y CMS REF: 1142690236169 CLIENT REF:000020300061241 SECID:99ZALPZC0 REG:REPO Total RECEIVE VB PAY-BUY(4) Total Principal: -104,099,984.31 Total Commission: 0.00 Total Income: 0.00 Total Net: -104,099,984.31 DELIVER FREE-8W 101812014 6:24:19PM EDT 68 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Rase Canencr: USD OCSD-CONBULMA= 9/1/2014 - 9/30/2014 OCBG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/29/2014 -64.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 29-SEP-2014 FACTOR OF 9/29/2014 0.0000 0.00 9/29/2014 0.00 0.00 1.03606 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142720012269 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/29/2014 -290.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 29-SEP-2014 FACTOR OF 9/29/2014 0.0000 0.00 9/29/2014 0.00 0.00 1.00341 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142720012270 SEC ID:91282SWUO REG:FRB Tote)DELIVER FREE-SW(2) Total Principal: 0.00 Total Coaaaiedon: 0.00 Total Income: 0.00 Total Net nw DELIVER YE PAY-PD NCUA GUARANTEED NOTES TR CI Al DTI) 11/10/20101.600% 9/26/2014 -13,553470 13,553.47 10/29/2020 9/29/2014 100.0000 0.00 9/29/2014 0.00 488.58 RECD PRIN AMORT FOR SEPTEMBER RECD INT FOR SEPTEMBER ON 0.00 14,042.05 366,431.69 UNITS TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142720000820 SEC ID:62888XAA2 REG:DTC DELIVER VS PAY-BELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/29/2014 -50,349,992.520 50,349,992.52 09/25/2014 0.0500% 9/29/2014 100.0mo 0.00 9/29/2014 0.00 2N.79 CLOSE FOR 1142690061536 0.00 50,350,202.31 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142720000084 SEC ID:99ZALPTW3 REG:REPO 101812014 6:24:19PM EDT 69 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ea.Canencr: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCBGOM)IMI ) Trade/ Ex Date Unit$ Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT LOU 9/29/2014 -11,700,000.000 11,700,000.00 09/25/2014 0.0500Y 9/29/2014 100.0000 0.00 9/29/2014 0.00 48.75 CLOSE FOR 1142690061551 0.00 11,700,04895 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142720000092 SEC ID:99ZALPTW3 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/29/2014 -41,850,007,480 41,850,007.48 09 25 2014 OM500% 9/29/2014 100.0000 0.00 / / 9/29/2014 0.00 174.38 CLOSE FOR 1142690061585 0.00 41,850,18186 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS HER 1142720000114 SEC ID:99ZALPTW3 REG: REPO Total DELIVER VS PAY-BELL(3) Total Principal: 103,900,000.00 Total Commieslon: 0.00 Total Income: 432.92 Total Net 103,900,432.92 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/29/2014 14,487.360 -14,487.36 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/29/2014 0.0 0.00 9/29/2014 0..00 00 . 6 CMS REF: 1142720625091 0.00 -14,487.36 SEC ID:996085247 REG:05 SELL-SELLL DREYFU THE AGY CSH MGT 521 INC FUND 9/29/2014 199,935.560 199,935.56 SOLD DREYFUS TREAS&AGY CSH MGT 521 INC 9/29/2014 0.0 0.00 9/29/2014 0..00 00 0.00 CMS REF: 1142720625090 0.00 199,935.5656 SEC ID:996085247 REG:05 FOREIGN HOLDER RELEASE-CD FEDERAL NATL MTG ASSN GTD REMIC PASSTHRU UP REMIC TR 9/29/2014 0.000 0.00 2007-114 CL 9/29/2014 0.0000 0.00 9/29/2014 0.00 61.14 INTEREST DUE ON PAY DATE 09291 4 0.00 61.14 CMS REF: 1142720603677 SEC ID:31396K3Q5 101812014 6:24:19PM EDT 70 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Be.Carrene,: USD OCSO-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount Total U.S. DOLLAR(USD)(13) Total Principal: -982.64 Total Commission: 0.00 Total Income: 982.64 Total Net: 0.00 9/30/2014 U.S.DOLLAR(Usm RECEIVE VS PAY-BUY JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/29/2014 11,700 000.000 -11,900,000.00 09/29/2014 0.0000 0 9/30/2014 I00.0000 0.00 9/30/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -11,700,000.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142730125197 CUE" REF:000060300022557 SEC ID:99Z nK1 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/29/2014 48,200,077.000 -48,200,071.00 09/29/2014 0.0000% 9/30/2014 100.0000 0.00 9/30/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -48,200,077.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142730131918 CLIENT REF:000020300061291 SEC ID:99Z P9K1 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/29/2014 43,999,923.000 -43,999,923.00 09/29/2014 0.0000% 9/30/2014 100.0000 0.00 9/30/2014 0.00 0.00 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 0.00 -43,999,923.00 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142730145458 CLIENT REF:000020300061292 SEC ID:99Z 1?!)K1 REG:REPO Total RECEIVE VB PAY-BUY(3) Total Principal: -303,900,000.00 Total Commission: 0.00 Total Income: 0.00 Total Net: -103,900,000.00 DELIVER FREE-SW 101812014 6:24:19PM BUT 71 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Ease Canener: USD OCSD-CONSOMDA= 9/1/2014 - 9/30/2014 OCBG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2022 9/30/2014 -32M00 0.00 TO BRING ACCOUNT INTO BALANCE WITH 30-SEP-2014 FACTOR OF 9/30/2014 0.0000 0.00 9/30/2014 0.00 0.00 1.03605 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142730013013 SEC ID:912828TEO REG:FRB US TREASURY INFLATION INDEXED NOTES 1/8%7/15/2024 9/30/2014 -145.000 0.00 TO BRING ACCOUNT INTO BALANCE WITH 30-SEP-2014 FACTOR OF 9/30/2014 000000.00 9/30/2014 0..00 0.00 1.0034 0.00 0.00 TRADING BROKER:NON-BROKER TRADE,BOSTON 00009999 CLEARING BROKER:NON-BROKER TRADE,BOSTON 00009999 CMS REF: 1142730013014 SEC ID:912828WUO REG:FRB Total DELVER FREE-8W(2) Total Principal: 0.00 Total Conwiedon: 0.00 Total Income: 0.00 Totem Net: 0.G0 DELIVER VB PAY-BELL JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/30/2014 -11,700,000.000 11,700,000.00 29 2014 0.0500% 9/30/2014 100.0000 0.00 09 / / 9/30/2014 0.00 16.25 CLOSE FOR 1142720152859 0.00 11,700,016.25 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142730000728 SEC ID:99ZALP216 REG:REPO JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/30/2014 -49,649,973.070 49,&N,973.07 9/30/2014 100.0000 0.00 09/26/2014 0.0500% 9/30/2014 0.00 68.96 CLOSE FOR 1142690236042 0.00 49,650,042.03 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142730000015 SEC ID:99ZALPZC0 REG:REPO 101812014 6:24:19PM EDT 72 Workbench Custody Transaction History Report ID: CUA356 BNY MELLON Base Carrena,: USD OCSD-CONSOLIDATED 9/1/2014 - 9/30/2014 OCSG00010000 Trade/ Ex Date Units Principal Settle/ Pay Date Trade Price Commission Description Actual Settlement Date Misc. Expense Income FX Fee Net Local Amount JP MORGAN CORPORATE REPO REPURCHASE AGREEMENT DTD 9/30/2014 -42,550,026.930 42,550,026.93 09/26/2014 0.0500% 9/30/2014 100.0000 0.00 9/30/2014 0.00 59.10 CLOSE FOR 1142690236169 0.00 42,550,086.03 TRADING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CLEARING BROKER:JPMORGAN SECURITIES INC,NEW YORK 00000187 CMS REF: 1142730000031 SEC ID:99ZALPZC0 REG:REPO Total DELIVER VS PAY-BBLL(3) Total Principal: 103,900,000.00 Total Commission: 0.00 Total Income: 144.31 Total Net: 103,900,144.31 MARGIN RELEASE-BUY DREYFU THE AGY CSH MGT 521 INC FUND 9/30/2014 15,556.250 -15,556.25 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/30/2014 0.0 0.00 9/30/2014 0..00 00 0.00 CMS REF: 1142030648613 0.00 -15,556.2525 SEC ID:996085247 REG:05 DREYFU THE AGY CSH MGT 521 INC FUND 9/30/2014 128.060 -128.06 BOUGHT DREYFUS TREAS&AGY CSH MGT 521 INC 9/30/2014 0.0 0.00 9/30/2014 0..00 00 .0 CMS REF: 1142730648619 0.00 -128.06 SEC ID:996085247 REG:05 Total nARGM RELEASE-BUY(2) Total Principal: -15,684.31 Total Commission: 0.00 Total looms: 0.00 Total Net: -15,684.31 FOREIGN HOLDER RELEASE-CD PRAXAIR INC SR UNSECURED 9/30/2014 0A00 0.00 REC INT ON 672000,000 UNITS PAY 09/30/14 RATE.0231250000 9/30/2014 0.0000 0.00 9/30/2014 0.00 15,540.00 CMS REF: 1142730016992 0.00 15,540.00 SEC TO 7400SPARS Total U.S.DOLLAR(UBD)(11) Total Principal: .15,684.31 Total Commission: 0.00 Total looms: 15,684.31 Total Net: 0.00 101812014 6:24:19PM EDT 73 Workbench Callan September 30,2014 Orange County Sanitation District 7 Investment Measurement Service Quarterly Review The following report was prepared by Callan Associates Inc, ("CAI') using information from sources that include the following: fame truslee(sl: fund custodiardid;investment managerls);CAI computer eoflwad,CAI investment manager and fund sponsor database;third party data vendors:and other outside sources as directed by Me client.CAI assumes no responsibility for the accuracy or completeness of the information provided,or methodologies employed,by any information providers eidernal to CAI.Reasonable care has been taken to assure the accuracy of the CAI database and computer software.In preparing the following report, CAI has not reviewed the risks of Individual security holdings or the complia oscon-compliance of 'individual security holUMgs with investment policies and guidelines of a fund sponsor,nor has II assumed any responsibility to do so.Copyright 2014 by Callan Associates Inc. Table of Contents September 30, 2014 Capital Markel Review 1 Active Management Overview Market Overview 9 Domestic Fixed Income 10 Asset Allocation Investment Manager Asset Allocation 12 Investment Manager Returns 13 Asset Class Risk and Return 17 Manager Analysis PIMCO-Long Term Operating Fund 19 PIMCO-Liquid Ooerating Money 23 Callan Research/Education 25 Definitions 31 Disclosures 36 Callan CALLAN INVES Callan INST TUTENTS lit CMR Preview Third Quarter 2014 This "Preview" contains excerpts from the upcoming Capital Broad Market Quarterly Returns Market Review (CMR) newsletter, which will be published at the end of the month. U.S.Egwy(Russell WOO) 0.01% -588% — Non-US.EquIN(MSCI WE) Bigger is Better U.S.Fred!(BarelaysAggregate) t 8.1g% 5.38% - Ni need(Cid Non-U.S.) U.S. EQUITY I Lauren Mathias, CFA Cash(90-Dayaaills) 8.81% After a volatile three months, U.S. equities managed a posi- sourgas:Cereal augroup.Merrill L nm,Msci.Ruseen investment ensue tive return (S&P 500 Index +1.13%). Economic data in the U.S., including housing improvements, declining unemploy- ment, and tempered inflation, have instilled confidence. The All Eyes on Fixed Income U.S. Federal Reserve announced the end of tapering with a U.S. FIXED INCOME I Kevin Machin final $15 billion bond purchase in October. Though interest Risk aversion grew during the third quarter as global financial rates currently remain low,hikes are on the horizon. In its most market volatility increased significantly, geopolitical events recent estimate of U.S.GDP for the second quarter,the Bureau continued to create headwinds for investors, and the ECB Continued on pg.2 announced further measures to loosen monetary policy. The yield curve flattened for the third Consecutive quarter. Yield spreads reversed Course and began to widen across most non- My Kingdom for Stability Treasury sectors.The Barclays Aggregate Index landed just NON-U.S. EQUITY I Malt Lai Continued on pg.4 Global volatility pummeled the markets at summer's end: Negative Territory Intensified conflicts in Eastern Europe and the Middle East, the Umbrella Revolution in Hong Kong,and the alarming resur- NON-U.S. FIXED INCOME I KylC Fekete gence of Ebola,cast a pall over the markets.The MSCI ACWI There were few positive numbers in non-U.S.fixed income for ex USA Index dropped 5.19%(+0.39%YTD). the third quarter. Divergent economic trends throughout the globe, currency weakness, and increased geopolitical risks in Small cap stocks were hit particularly hard (ACWI ex USA the emerging markets heavily impacted non-U.S. bond mar- Small Cap Index: -6.72%). Energy (-10.01%) and Materials kets. The European and Japanese central banks loosened (-9.52%)bore the brunt of America's flourishing dollar and flag- their monetary policies in an attempt to stimulate their lacklus- ging Commodities. Notably, Brent Crude—a major Crude oil ter economies and fight off deflation.At home, the U.S. dollar benchmark—tumbled below$95 from a high of$116 in June, inched upward as the higher yields offered by long-term Trea- and looked to head to its mid-2012 lows. Only Health Care suries attracted global investors. The auto, yen, pound, and stocks(+0.94%)were positive this quarter. dollar bloc(Australia, New Zealand, and Canada)all declined Continued on pg.3 Continued on pg.5 Knowledge.Experience.Integrity. U.S. Equity: Bigger is Better Quarterly Performance of Select Sectors Continued from pg. 1 e Russell 1000 •Russell 20M 10%1 1 1 1 of Economic Analysis reported that the economy expanded to s%, 5.2% C3% 1 , a 4.6% annual rate, up from 4.2% last month and the stroll- ' gest since late 2011.Geopolitical concerns and conflicts in the a% -6% a.4x : d.4x a.6% Middle East and Ukraine weighed on markets in the quarter, , nox asX adding to pressure from the vote for Scottish independence I I I I and Argentina's selective default.The outcome was a wave of p%I uncertainty and a flight to safety. U.S. capital markets—par- ' ' 40.6% � ticularly larger companies—beneftted from this"risk off"trade. -25%I H.IM Oare InbrmaOGn utilities Energy Technology Large cap stocks easily led the pack (Russell 1000 Index, Source:Russell bvesMem Group +0.66%),and large growth companies overtook value(Russell 1000 Growth Index, +1.49% vs. Russell 1000 Value Index, -0.19%). Small cap (Russell 2000 Index, -7.36%) and mid Small and large cap sectors posted mostly negative quarterly cap(Russell Midcap Index,-1.66%)stocks landed in the red; results (the exceptions were large cap companies in Tele- value lost to growth in both capitalizations. Micro cap lagged communications, Information Technology, and Health Care). behind other capitalizations for the quarter(Russell Microcap Energy and Utilities were hit the hardest. Oil and commodity Index,-8.21%).The most pronounced distinction was between prices declined, pushing Energy—last quarter's top perform- large and small cap:the S&P 500 bested the Russell 2000 by ing sector—to the bottom of the heap. Utilities dropped with 8%,the widest spread in 15 years. just the hint of interest rates rising. Large cap Health Care and Technology posted positive results as the market's preference Rolling One-Year Relative Returns (vs.Russell 1000) for growth over value provided a tailwind for these sectors. Over the full quarter, investors generally showed a preference e Russell loon Gm h a Russell100o4eme a Russell low for high quality,low beta,and larger size. ax Active management did well against indices in the third quar- 20% ter; however, year to date very few active managers have 10%------ - - - - - - - - - - - - - - - - - - - outperformed.Mergers and acquisitions were prevalent along with some high-profile IPOs. Stock correlations continued 0% to trend downward, and the CBOE Markel Volatility Index 10%------ d --- - - - - - - - - - - - - - - . (VIX) increased from previous below-average levels. Froma style perspective, growth characteristics such as high ROE -2ax--------- ----- - - - - -- - - - - - - -- were rewarded over the previous three months while low P/E was not. 95 96 97 90 99 00 01 02 03 09 OS O6 07 OB 09 10 11 12 1314 Source'.Russell lnv srmeni Gmup 2 1 Callan Non-U.S. Equity: My Kingdom for Stability Regional Quarterly Performance (U.S.Dollar) Continued from pg. 1 -2.3Mh- MSCI Japan The MSCI Emerging Markets Index (-3.36%) bested its J.26% - MSCI Emer9lro Markets developed counterparts in the MSCI World ex USA Index d19x - MSCI ACWI ex USA (-5.74%). Canada (4.47%) trumped its colleagues across .5.38% - MSCIEAFE the pond in the MSCI EAFE Index (-5.88%). ACWI ex USA .590% - MSCI Pacific ex Japan Growth(-4.83%)edged ACWI ex USA Value(-5.55%)for the 700% - MSCI Europe quarter,though the latter has an 85 basis point lead YTD.The Source:MSCI dollar strengthened across the board, surging 8% against the sure and the yen. yen continued to fall, exports still declined 1.3% in August. Polarizing statements from Mario Draghi characterized a vola- Fears of stagnation plagued the Abe administration when tile quarter in Europe(MSCI Europe Index:-7.00%and-1.91% the nation's second-quarter 2014 GDP was revised down YTD). Draghi's optimism in spite of a weak sure spurred an 7.1% on an annualized basis, the worst contraction since the August rally, but an unexpected combination of a rate cut(to a first quarter of 2009. The only bright spots were Health Care record 0.05%)and an ASS buyback announcement sent stocks (+1.03%) and Information Technology (+0.75%) stocks. Aus- plummeting in September.Inflation fell to an estimated 0.3%in tralia (-7.93%) kept its 2.5% key rate, but was hampered by September, a decline from August and a troubling downward worsening unemployment, which rose to 6.1% in September. trend for the region. Health Care (+0.17%) scraped together New Zealand reelected Prime Minister John Key to a third a win, while Consumer Discretionary (-12.67%) and Energy term, but once again was the region's weakest link (-8.92%). (-11.69%) businesses suffered. The government of Portugal Singapore(-1.19%)landed in the red,but was nonetheless the (-24.95%) had to rescue mammoth lender Banco Espirito area's best performer. Santo, tanking the country's Financials sector(42.70%). Fin- land (-2.88% USD, +5.26% local) was the best-performing Emerging economies fared well, landing far ahead of regional country in Europe. peers (MSCI Emerging Markets Index: -3.36%, +2.75% YTD). Like the broad market,emerging Health Care(+9.85%) Japan(-2.30% USD, +5.79%local)boosted the MSCI Pacific counterbalanced Energy (-7.47%) and Materials (-8.16%). Index, which fell 3.64% to land at -0.63% YTD. Though the China (+1.53%) suffered from a slew of sour data, prompting Prime Minister Li Keqiang to ease property restrictions for the first time since 2009. Russia (-15.07%) suffered from more Rolling One-Year Relative Returns(vs.MSCI EAFE U.S.Dollar) sanctions, imposed due to the ongoing Ukraine (+2.32%)cri- •MSCI Pacnc a MSCI Eumpe •MSCIEAFE sis. Egypt(+28.21%)benefitted from promised tax reform and 40% accelerating business activity. Stable and oil-rich United Arab 30%----- - -- - - - - - - - - - - - - - - - - - - - - Emirates (+22.92%) had the region's strongest YTD perfor- 2096--- - ----- - - - - - - - - - - - - - - -- manco(+g5.11°/4),though the lMF warned that oil prim fluctua- 10% ____ _ __ _ _ _ _ _ _ _ _- bons could derail further growth. Mexico's(+2.09%)continued °% - ". . , success under reformist President Pena Nieto could not save -10% - -- - - - - - - Y MSCI EM Latin America Index (-5.44%), as every other -2096--- --------- - - - - - - - - - - - - - - - ' nation saw red. The MSCI Frontier Markets Index(+1.57%, 30% +22.44%YTD)outperformed the MSCI EM Index(-3.36%)for -40%r95 56 97 98 99 00 01 02 0 04 05 06 07 08 09 10 11 12 18 14 the sixth straight quarter. Source:MSCI Knowledge.Experience.Integrity. 1 3 U.S. Fixed Income: All Eyes on Fixed Fixed Income Index Quarterly Returns Continued from pg. 1 Ahsolnts Return Ramian Aggr goue o.t]% above zero at 0.17%for the quarter.The markets were abuzz -- - - -- - - - - - - - - ---- BerelaysTreasury 0.34% __ _ _ __ _ _ _ _ _ _ _ _ ____ after Janus Capital Group surprised investors with the news earneyaAgenciea oes% _ _ _ _ that Bill Gross was joining the firm and departing PIMCO. samisys crvtes a.28x ______ _ _ _ _ _ _ _ _ _ _ _ _ Barclays ABS 0.0- Bercloys MBS 0.18% The Fed has continued on the path toward eliminating its BemleysCredit______ _ _ _ _ _a_.o_3% ---- quantitative easing (QE) program by year end. October's pur- Bemlays Corp.High Yield ve]% _ _ chase will total$15 billion,down from$25 billion in September. -3% -z% -1% o% 1% Global risk aversion caused long-term rates to fall.The 20-and source'.Barclays 30-year yields dropped by 10 and 13 bps, respectively. Nev- ertheless, there were some signs that short-term rates could soon become unanchored.Two-year and five-year U.S. Trea- and quarter. Commercial mortgage-backed securities(CMBS) sury yields increased substantially, 11 and 16 bps,respectively. and asset-backed securities(ABS)dipped slightly against like- The result was a fattening of the yield curve that caught many duration Treasuries at 0.19% and 0.01%, respectively. Corpo- investors by surprise.Short-term rates remained stable,as the rate spreads widened,with a strong selloff in BBB-rated paper. Fed once again pegged the federal funds and discount rates During the quarter, Utilities, Financials, and Industrials under- at 0.00%-0.25%and 0.75%, respectively.The breakeven rate performed 0.69%,0.45%,and 0,90%,respectively. (the difference between nominal and real yields)on the 10-year Treasury fell significantly(31 bps)to 1.97%during the quarter, High yield Corporate bonds were one of the worst performers as TIPS underperformed nominal Treasuries. in the U.S.fixed income market, reversing a previous trend of strong returns.The Barclays Corporate High Yield Index fell Non-Treasury sectors generally underperformed like-dura- 1.87%. New issue activity is on pace with the record issuance tion Treasuries. Agency mortgage-backed securities (MBS) of 2013. Year-to-date, 544 high yield bonds totaling approxi- dropped0.39%on a relative basis,a reversal after a strong sec- mately$286 billion were issued. Historical 10-Year Ylelds U.S.Treasury Yield Curves •U.s.10-Yuo Treasury Yeld 1110-Year TIPS vdd •Breekeveningetbn Rate It September 30.2014 •June 30,2014 •September W,M13 5% e% 5% ____ _ _ _ _ _ _ _ _ _ _ - 4% 4%_ _ ______ ____ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - 3% 3% 2% 2% _____ _ _ _ _ _ _ _ _ _ _ _ ___________ - - - - - - - - - - - o% 1% n% 05 OB 07 � OB 08 10 H � 12 � 13 14 � B% , . Source'.Bloomberg 0 5 10 15 20 25 30 Mai(years) Source:Bloomberg 4 1 Callan Non-U.S. Fixed Income: Negative Territory Emerging Spreads Over Developed (By Region) Continued from pg. 1 e Emerging Prances a Emerging EMEAPumn Mid&EMPo ) a Emarging Asia too e a substantially against the U.S.dollar.The Citi Non-U.S.World Government Bond Index plunged 5.38% due to its currency exposure. The hedged version of this index, CIO Non-U.S. 400bps - - - - - - - - - - - - - - - - - WGBI-Hedged gained 2,01%, as yields dropped across the board. 200 bps Amid deflation concems, ECB President Mario Draghi announced a comprehensive stimulus package that included Obrs ' ' ' ' ' ' ' ' ' 10 it 12 13 14 cutting interest rates and purchasing asset-backed securities. source:Barclays The German 10-year bund declined 30 bps to 0.95% in the third quarter, 154 bps below U.S. Treasuries. Peripheral gov- emment bonds continued to outperform bunds. Spanish and 10-Year Global Government Bond Ylelds Italian yields both declined half a percentage point to 2.14% a U.S.TrasaMry a Ga.., •U.K. a Canada a Japan and 2.33%, respectively. 6% - - - --------------- 5% The Bank of Japan announced it would sustain its monetary easing policy after the country's GDP revision was lower than 4%- - - - - ------------- expected; the economy sank 7.1% in the second quarter, 3%----- - - - - - - - - - - ------ - - bringingonmoredeflationaryconcerns.The Japanese 10-year 2% note dropped 7.06%in dollar terms for the third quarter,follow- 1%_____ _ _ _ _ _ _ _ _ _ _ __ ing the yen's 5.1%drop in September—the steepest fall since January 2013. 0%. . . . . . . . . . . . . . . . . . . . . . . . . , . . . , . , 05 N 07 0B 09 10 11 12 13 14 Geopolitical risks continued to plague the emerging markets Change in 10-Yeeryields from 2014 to 3014 and further hampered growth.The JPM GBI-EM Global Diver- Abpe U.S,Treasury sifted Index,tracking government bonds that are denominated -30 bps Germany in local currencies, plummeted 5.66% given the broad-based -25bpa - U.K. currency weakness versus the U.S. dollar. The U.S. dollar- 4bpa Cana denominated JPM EMBI Global Diversified Index declined Ibps Japan 0.59%for the quarter. 40eps -3teps -PObps -10eps 0bps source:eioomeerg The Brazilian 10-year note tumbled 8.62%in U.S.dollar terms. In September, Moody's cut Brazil's credit rating to just above highest among developing Countries,amid the threat of default, "junk"status after GDP data showed that the country is now in Russia's sanctions pushed the country's dollar-denominated recession.The prospects of Brazilian President Dilma Rousseff debt down 3.31%,while local currency debt fell 15.88%in U.S. being reelected also disheartened investors after the death of dollar terms. The Ukrainian economy also continued to suffer reformist Candidate Eduardo Campos turned the election race as inflation remained elevated. Ukrainian dollar-denominated upside down. Venezuela's 10-year yield reached 15.93%, the debt declined 9.36%. Knowledge.Experience.Integrity. 1 5 This"Preview contains excerpts from the upcoming Capital Market Review(CMR)newsletter,which will be published at the end of the month.The CMR is a quarterly macroeconomic indicator newsletter that provides thoughtful insights on the economy and recent performance in the equity,fixed income,altent lives,international,real estate,and other Capital markets. If you have any questions or comments,please email institute@callan.com. Editor-in-Chief—Karen Wdham Performance Data—Alpay Soyoguz, CFA;Adam Mills Publication Layout—Nicole Silva,Jack!Hoagland About Callan Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative,customized investment solutions that are uniquely backed by proprietary research,exclusive data,ongoing education,and decision support.Today,Callan advises on more than$1.8 billion in total assets,which makes us among the largest independently owned invest- ment consulting firms in the U.S.We use a client-focused Consulting model to serve public and private pension plan sponsors,endowments,foundations,operating funds,smaller investment consulting firs, investment managers,and financial intermediaries.For more information,please visit wermcallan.com. About the Callan Investments Institute The Callan Investments Institute, established in 1980, is a source of continuing education for those in the institutional investment community.The Institute conducts Conferences and workshops and provides published research,surveys,and newsletters.The Institute strives to present the most timely and relevant research and education available so our clients and our associates stay abreast of important trends in the investments industry. ®zeta Callan eased at.Inc. Certain information herein has been compiled by Callan and is based on information dmaded by a variety of sources believed to be reliable for which Callan has not necessarily settled the accuracy or completeness of or updated.This report is for Informational purposes only and should not be construed as legal or tax advice on any matter Any investment decision you make on the belie of this roped Is your sole responsibility You should consult with legal and tar advisers before applying any of gas information to your particular mists,Reference In this abotto any product,service or entity should no he construed as a recommendation,approval, affiliation or endorsement of such product,service or entity by Callan.Past performance is no guarantee of future results.This report may consist of statements of opinion,which are made as of the fate they are expressed and are not statements of fact.The Callan Investments Institute(the'Institute-)Is,and will be,the sole center and copyright holder of all material prepared or costumed by the Institute.No parts has the right to reproduce,revise,resell,disseminate eMernally,disseminate to subsidiaries or parents,or post on Internal web sites any part of any materal aRparetl or developed by the Institute,without the Institute permission,institute clients only have the right to citrus such material Internally In their business. e 1 Callan Market Overview Active Management vs Index Returns Market Overview The charts below illustrate the range of returns across managers in Callan's Separate Account database over the most recent one quarter and one year time periods. The database is broken down by asset class to illustrate the difference in returns across those asset classes.An appropriate index is also shown for each asset class for comparison purposes.As an example, the first bar in the upper chart illustrates the range of returns for domestic equity managers over the last quarter. The triangle represents the S&P 500 return. The number next to the triangle represents the ranking of the S&P 500 in the domestic equity manager database. Range of Separate Account Manager Returns by Asset Class One Quarter Ended September 30,2014 6% 4% 2% (43)Ed el o% E � (2%) Y (4%) (6%) (68)� (93) (8%) Domestic Non-US Domestic Non-US Real Cash Equity Equity Fixed Income Fixed Income Estate Equivalents s vs nla 500 MSCI FA))FE Barclays Aggr Bd Cie N/on-U)S Gov NCREIF Index 3 Mon T43i11s 1 am 25M Percentile 0.85 1edian (1,31 (4]13) ((026 L(3.90) 3.08 0,09 15M Percent le (6.89� 1y 13) (10.84� (5�31) 0.82 0.02 90ih Percentile Index • 1.13 (5,88) 0.17 (5.38) 2,63 0,01 Range of Separate Account Manager Returns by Asset Class One Year Ended September 30,2014 zs% 20% (17) Is% M $ 10% 8) K 5% (62)H (62) 0% (83) (5%) Domestic Non-US Domestic Non-Us Real Cash Equity Equity Fixed Income Fixed Income Estate Equivalents s.Bap No MSCI EAFE Barclays Ager Bd Citi Non-US Gov NCREIF Indez 3 Mon T-Bills 10M Percentile 20.92 8.23 9.0 5.67 21.88 1.01 25m Percentile 18]9 )Ot 7.02 349 17.08 0.80 Median 14.69 5.23 4.52 0.84 11.98 0.37 751h Percentile 8.42 273 2.76 0.54 9.3T 0.19 901h Percentile 4.13 1.38 1.43 1.20 7.01 0.098 '� Index • 19.73 4.25 3% (0.99) 11.26 0.05 L.A3 r Change County Sanitation District g Domestic Fixed Income Active Management Overview Active vs.the Index The 10-year U.S.Treasury traded in a 29 by range in the 3rd quarter, hitting a low for the year(2.34%)on August 281h and an intro-quarter high of 2.63% on September 18th before closing the quarter at 2.52%. An improving U.S. economy put upward pressure on rates, but a significant yield advantage relative to other developed markets helped to dampen this effect. While the U.S.economy gained traction,news from Europe and Japan was far bleaker with euro zone GDP barely positive in the 2nd quarter versus a +4.6% print in the U.S. Foreign investors were lured to the relatively high yields in the U.S. market, propelling the dollar sharply higher. The Barclays Aggregate Index returned 0.2% in the 3rd quarter with U.S. Treasuries performing the best. Both corporates and mortgages underperformed like-duration Treasuries for the quarter. High yield corporate bonds sank nearly 2%as the sector endured heavy outflows amid concems over rich valuations. Bank loans,also hit by outflows, returned -0.5% as measured by the S&P/LSTA Index. TIPS underperformed nominal Treasuries by a significant margin as inflation expectations fell.The Barclays U.S.TIPS Index fell 2.0%versus a return of+0.3%for the U.S. Treasury Index. The curve continued to flatten with the 30-year yield dropping 13 bps and the 5-year yield rising 16 bps as investors contemplated the timing of eventual rate hikes. For the 3rd quarter, the median Core Bond manager returned 0.19%,essentially in line with the Barclays Aggregate Index(+0.17%). Intermediate as.Long Duration Longer duration managers outperformed intermediate and short duration strategies in the 3nd quarter.The median Extended Maturity manager returned 0.97% while the median Intermediate manager posted a flat return and the median Defensive manager returned 0.03%. Barclays Universal: (0,03%) Barclays Aggregate: 0.17% Separate Account Style Group Median Returns Barclays Mo gagaal 0.10% for Quarter Ended September 30,2014 Barclays High Yield: (1,67%) Barclays US TIPS: (2.04%) 2% I% ——————————————————————a . 0.9]009% 0 % 00 % 00 % 0. 5% 0% 0.34% _MVN (2%) TIM? Actier%) Cash Defensive Interred Core Core BxleMetl Acgve Mortggage HIaw Cash Band Plus Maturity Duration Beck tl VIeM Barclays Universal: 4.30% Barclays Aggregate: 3.96% Separate Account Style Group Median Returns Barclays Morlga l 3.78% for One Year Ended September 30,2014 Barclays High Yield: 7.20% Barclays US TIPS: 1.59% 20% 15% 13.36% H E N � 7.36% S.S1% 3.59% 2.60% 0.76% 0% AGive Defensive Interned Core Core Extended Active Margin. High /'�,, 1,, Cal Bontl Plus Maturity Duration Backed Vieltl Callan change County Sanitation Diatd t 10 Investment Manager Asset Allocation The table below contrasts the distribution of assets across the Fund's investment managers as of September 30, 2014,with the distribution as of June 30,2014. The change in asset distribution is broken down into the dollar change due to Net New Investment and the dollar change due to Investment Return. Asset Distribution Across Investment Managers September 30,2014 June 30,2014 Market Value Weight Net New Inv. Inv.Return Market Value Weight Domestic Flva Income Long Term Operating Fund 461,383,236 Sa m% (44.300.000) (290,657) 505.913.893 85.49% Liquid ODeratind Monies 58,918,705 11.32% (27,000,000) 26,713 85,891,992 14.51% Total Fund 3520,301,941 100.0% $(71,300,000) S(263,944) 3591,8d5,885 100.0% Callan Orm,e County Sandation District 12 Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods ended September 30, 2014. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. Returns for Periods Ended September 30,2014 Last Last Last Last Last 3 5 7 Quarter Year Years Years Years Domestic Fixed Income Long Term Operating Fund (0.06%) 1.07% 1.12% 2.41% 3.59% Barclays GovtfCred 1-5 Year Idx (0.05%) 1.15% 1.32% 2.23% 3.28% ML1-5 Govt/Corp (0.07%) 1.25% 1.44% 2.31% 3.30% Liquid Operating Monies 0,05% 0,10% 0.14% 0,19% 0,72% Citigroup 3-Month Treasury Bill 0.01% 0.04% 0.05% 0.08% 0.47% Total Fund (0.04%) 0.93% 1.00% 2.02% 3.04% Target* (0.05%) 1.00% 1.17% 1.86% 2.74% Current Quarter Target=80.0%ML 1-5 Govl/Corp and 20.0%3mo T-Bills. Callan 0mr,e County Santle,Inn Dlstnd „ Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various lime periods ended September 30, 2014. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. Returns for Periods Ended September 30,2014 Last Last Last 10 15 19 Years Years Years Domestic Fixed Income Long Term Operating Fund 3.68% 4.48% 4.85% Barclays GovtfCred 1-5 Year Idx 3.34% 4.30% 4.63% ML 1-5 Govt/Corp 3.36% 4.29% 4.66% Liquid Operating Monies 1,77% 2.31% 2.98% Citigroup 3-Month Treasury Bill 1.51% 1.99% 2.64% Total Fund 3.32% 4.13% 4.57% Target` 2.99% 3.83% 4.26% Current Quarter Target=80.0%ML 1-5 GovVCorp and 20.0%3mo T-Bills. Callan Omrr Cnmrty Santle,Inn DlsNtl ,4 Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. 12/2013- 912014 2013 2012 2011 2010 Domestic Fixed Income Long Term Operating Fund 1.43% (1.77%) 3.06% 4.59% 4.42% Barclays GovtfCred 1-5 Year Idx 1.01% 0.28% 2.24% 3.14% 4,08% ML1-5 Govt/Corp 1.11% 0.32% 2.47% 3.10% 4.17% Liquid Operating Monies 0.08% 0.13% 0.17% 0.24% 0,25% Ciligroup 3-Month Treasury Bill 0.03% 0.05% 0.07% 0.08% 0.13% Total Fund 1.24% (1.49%) 2.70% 3.70% 3.68% Target` 0.89% 0.26% 1.99% 2.49% 3.36% Current Quarter Target=80.0%ML 1-5 GovVCorp and 20.0%3mo T-Bills. Callan 0mr,,e County santlerinnDist c ,s Investment Manager Returns The table below details the rates of return for the Fund's investment managers over various time periods. Negative returns are shown in red, positive returns in black. Returns for one year or greater are annualized. The first set of returns for each asset class represents the composite returns for all the fund's accounts for that asset class. 2009 2008 2007 2006 2005 Domestic Fixed Income Long Term Operating Fund 5.52% 5.37% 7.21% 4.41% 2.47% Barclays GovtfCred 1-5 Year Idx 4.62% 5,12% 7.27% 4,22% 1,44% ML1-5 Govt/Corp 4.88% 4.65% 7.27% 4.26% 1.43% Liquid Operating Monies 0.58% 2,40% 5.25% 5.05% 3,21% Ciligroup 3-Month Treasury Bill 0.16% 1.80% 4.74% 4.76% 3.00% Total Fund 4.65% 4.61% 6.84% 4.60% 2.59% Target` 3.93% 4.08% 6.76% 4.36% 1.75% Current Quarter Target=80.0%ML 1-5 GovVCorp and 20.0%3mo T-Bills. Callan 0mr,,e County santle,InnDISNtl ,a Asset Class Risk and Return The charts below show the seven year annualized risk and return for each asset class component of the Total Fund.The first graph contrasts these values with those of the appropriate index for each asset class.The second chart contrasts them with the risk and return of the median portfolio in each of the appropriate CAI comparative databases. In each case, the crosshairs on the chart represent the return and risk of the Total Fund. Seven Year Annualized Risk vs Return Asset Classes vs Benchmark Indices 4.0% 3.5% 3.0% 2.5% 2.0% N K 1.5% 1.0% 0.5% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 14% 1A% 18% 2.0% 2.2% 24% Standard Deviation Seven Year Annualized Risk vs Return Asset Classes vs Asset Class Median 3.5% 3.0% 2.5% o 2.0% N � LS% 10% }�� 05% 0.0% 0.4% 08% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% 20% 2.2% 2.4% Standard Deviation Callan Omrr County 6an8a11nn DIsfti „ PIMCO-Long Term Operating Fund Period Ended September 30, 2014 Investment Philosophy PIMCOs Low Duration strategy revolves around a simple core investment philosophy of extensive research analytics, and a highly effective decision making process. This strategy embodies three key principles: First, major shifts in portfolio strategy should be driven by longer term views, not by short-term aberrations in interest rates. Second, consistent investment performance is achieved by avoiding extreme swings in maturity/duration of the portfolio. Third,value can be added through advanced tools such as futures,options,and volatility analysis as well as through adjustments to traditional variables such as sector,coupon,and quality. Quarterly Summary and Highlights Quarterly Asset Growth • PIMCO-Long Term Operating Fund's portfolio posted a Beginning Market Value $505,973,893 (0.06)% return for the quarter placing it in the 98 percentile Net New Investment $44,300,000 of the CAI Defensive Fixed-Inc Style group for the quarter Investment Gains/(Losses) $-290,657 and in the 52 percentile for the last year. • PIMCO-Long Term Operating Fund's portfolio outperformed Ending Market Value $461,383,236 the ML 1-5 Govt(Corp by 0.01% for the quarter and underperformed the ML 1-5 Govt(Corp for the year by 0.18%. Performance vs CAI Defensive Fixed-Inc Style(Gross) 6% 5% 25)"B(2 25)C BtO ) 3% 22)"B12 g) B�2 ) ( 27j A112 1111 1% 43)®Al5 Bj"Nl6 ( B 0% Ag (1%) Laal quarts Land Laat3Yeara Laal5Yeam Laat]Yeam La A10Yedm Laati5Yeara Laatl9Years Year 10M Perpentile 0.16 201 2,41 3.08 3.56 363 4A5 415 250,Percentile 006 140 1,66 2,33 3,23 3.50 429 466 Median 0.03 1,10 1,19 1.79 2.85 3.17 3.92 434 75M Percentile 0.01 des 0,92 1.43 2.43 2.89 3.71 4.14 90M Pe.nllle (002) 084 0.68 1,20 221 2.64 350 401 PIMCO-Long Term Operating Fund *A (0.06) 1.07 1,12 2.41 3.59 3.68 448 465 Ba ,lara GoWCled 1-5 Year lux •B (0.05) 1.15 1,32 2.23 3.28 3.34 4.30 4,63 ML 1-5 G.WCmp ♦ (0.07) 125 1" 2.31 3.30 3.36 4.29 466 CAI Defensive Fixed-Inc Style(Gross) Relative Return vs ML 1-5 Govt/Corp Annualized Seven Year Risk vs Return 2.0% 4.5% 15% __ _______ __ _ _ E1.0% 3.5% •. . 0.5% - ____ __ _ E y 3.0% 15 00% _ 5% (OS%) _______ _ _ T1 (1.0%) __ _______ __ _ 2.0% (1.5%) 1.5% 07 2008 2009 2010 2011 2012 2013 2014 0 1 2 3 4 5 6 PIMCO-Long Term Operating Fund Standard Deviation Callan Orange County sanitation corned 19 PIMCO-Long Term Operating Fund Return Analysis Summary Return Analysis The graphs below analyze the manager's return on both a risk-adjusted and unadjusted basis.The first chart illustrates the manager's ranking over different periods versus the appropriate style group.The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager's ranking relative to their style using various risk-adjusted return measures. Performance vs CAI Defensive Fixed-Inc Style(Gross) 20% 15% 16% 16� ®B B0 A 0 � 8) (5%) (ID%) 12113-9/14 M13 2012 2011 2010 2009 2008 2007 2006 2005 10th Pementile 1.52 1.23 4.46 2.72 4.69 13.74 6.63 7.03 5.11 2.61 25th Percentile 1.06 0.79 2.60 228 4.01 sm 5.61 6.88 4.84 2.40 Median 0.86 0.0 1.81 1.85 3.18 5.91 3.75 6.39 4.64 2.16 75th Pemenele 0.63 0.39 1A6 162 2.73 2.53 (0.17) 5A2 4A6 1.97 sour Pemenlile 0.55 0.15 0.92 1.44 2.42 1.82 (347) 3.75 4.32 1.84 PIMCO-Long Term Operating Fund *A 1.43 (LA) 3.06 469 4,42 5.52 5.37 7.21 441 2.47 Barclays GOW/Gmd 1-5 Year 1& 0B 1.01 0.28 2.24 3.14 4.08 4.62 5.12 7.27 4.22 1.44 ML1-5 GOW/GOrp ♦ 1.11 0.32 2.47 3.10 4.17 4.88 4.65 7.27 4.26 1.43 Cumulative and Quarterly Relative Return vs MIL 1-5 Govt/Corp 6% 6% in �5 2% N a 0% v K (6%)- F 04 2005 2006 2007 2006 2009 2010 2011 2012 2013 2014 PIMCO-Long Term Operating Fund N Barclays GOWGred 1E Year Idx N CAI Defensive F-I We Risk Adjusted Return Measures vs ML 1-5 Govt/Corp Rankings Against CAI Defensive Fixed-Inc Style(Gross) Seven Years Ended September 30,2014 2.5 4 0 ®A�fi6 3 �BS933 A96 pp El I A5 (0 A 99 (05) g�g9g9 (2� Alpha Traynor (1"$) Information Sharpe Excess Return RMO RMie Re ie Ratio t On Percantile 1.27 5.73 loth Percentile 1.30 1.73 0.16 25th Percentile OA6 4.20 25th Percentile 0.80 1.50 (065) Median 0.50 3.54 Median 0.56 1.30 O.41) 751h Percentile 0.17 3.04 75m Percentile 0.18 1.08 30.68) son Percentile 0.W 2.82 son Percentile o" 0.98 0.87 PIMCO-Long Term PIMCO-Long Term Operating Fund •A (038) 2.46 Operating Fund •A (0.41) 1.15 0.27 Bemis,GOWGred Bed.,GOWCred /'� 1-5 Year Mx ■B (0.15) 2.62 1-5 Yearldx •B (0.62) 1.27 (0.09) Callan Odense County Sanitation District 20 PIMCO-Long Term Operating Fund Bond Characteristics Analysis Summary Portfolio Characteristics This graph compares the managers portfolio characteristics with the range of characteristics for the portfolios which make up the manager's style group. This analysis illustrates whether the manager's Current holdings are consistent with other managers employing the same style. Fixed Income Portfolio Characteristics Rankings Against CAI Defensive Fixed-Inc Style as of September 30,2014 4,0 3.5 30 2.5 fl)♦ (81 (161 2.0 1.5 1.0 (35) (64) 1801 0.5 0.0 (0.5) (t'o) Average Effective Coupon CA Qumran dr. Yield Rate Convealty 1 Oth Percen1le 2.10 2.67 2.71 3.40 0.08 25th Percentile 1.90 2.17 1.40 2.64 005 Median 1.85 1.97 1.03 1.97 0.02 75th Percenl i.64 1.88 0.89 1.53 (006) 901h Percen0le 1.39 i.fi9 0.67 1.08 0.22 PIMOO-Long Tam Operating Fund • 2.18 2.59 0.96 1.10 006 Bamlaye GO Cred 1-5 Ye ♦ 2.67 2.78 1.17 2.27 O07 Sector Allocation and Quality Ratings The first graph compares the managers sector allocation with the average allocation across all the members of the manager's style.The second graph compares the manager's weighted average quality rating with the range of quality ratings for the style. Sector Allocation Quality Ratings September 30,2014 ��� vs CAI Defensive Fixed-Inc Style �� rsy 6.0%--- Cash 1.2% oAo X 00- 2S. . % g m US Trsy 59.4% AA4 (32) 34) USacon, .1% AA 1 4.0% US Muni M 1.0% US was 1.3% A- US ASS 16.5% A weighty Average Quality Rating US E G Related IOn Percentile AAA 1S5% 25th Percentile M. Median M UB CMSS 5.9% 75th Percentile M- 901h Percentile A4 0% 10% 20% 30% 40% 50% 60% 70% 80% PIMCPLong Term OlC,Long FundTerm • M4 0 PIMCO-Lon9 Tenn Operetin9 Fund CAI Defensive Fixed-Inc Syle Bamlays /'� 0 Barclays GoWCred 1-5 Ye GoWCred 1-SYe ♦ M4 Callan Gramre County Sanitation Distdd 21 PIMCO-Long Term Operating Fund Portfolio Characteristics Summary As of September 30, 2014 Portfolio Structure Comparison The charts below compare the structure of the portfolio to that of the index from the three perspectives that have the greatest influence on return. The rest chart compares the two portfolios across sectors. The second chart compares the duration distribution.The last chart compares the distribution across quality ratings. Sector Allocation Cash US Trsy 56% 59% US RMBS 1% us$carp 9% US Muni 4us$ Govl Related 4% US Tray Us$corp 15% 30% 25% PIMCO-Long Term Operating Fund Barclays GoWCredit 1.5 Year Duration Distribution weighted Average: Deranon 60% 0PIMGO-Long Term Operating Fund 2.18 50%o AZ� Barelap GovWreUQ 1-5 Year: 2.67 E d 33.3% 3(41% 30% ———— ———— __ u L _____ 21.0% z0% ____ ____ __ __ __ ____ 12.0% 0% 0.0% 0.0% 3.0% 0.6% 1A% 0.0% 0.0% 0.0% '0 0-1 1-2 2-3 3-5 5-7 7-10 >10 Years Duration Quality Distribution weiehted Average. Gualiry 100% : PIMCG-Long Term Operating Fund AA+ 0 84.0% Barclays GovJGn,dil l-5 Year: AA+ p 60% OdaR a0% . ———— % ———9——— 60% _________ _____ ____ N20% �� 50% 6.9% 110% 9% 0 0.0% AAA AA A BBB Quality Rating Callan orange county Sandation Diana PIMCO-Liquid Operating Money Net Period Ended September 30, 2014 Investment Philosophy PIMCO utilizes a core investment philosophy in managing its short term portfolios, similar to all PIMCO's fixed income accounts. Key to the short term approach, where client objectives permit, is to often extend maturities beyond three months. Moving to slightly longer securities also greatly expands the opportunity set of investments, allowing PIMCO to effectively utilize its analytical capabilities to identify value without significantly differing the variability of returns. In particular, the value added in their short term accounts is enhanced by their ability to use non-traditional, short-term instruments, including floating rate securities, high coupon mortgages,short tranche CMO's,and callable corporate bonds. These can trade for extended time periods as essentially short term securities,while providing high yields.They emphasize extremely high credit quality in their short term accounts.Their view is that the reward for taking additional credit risk on a short term security is low,while the potential for loss, in the event of an issuer default,is significant. Quarterly Summary and Highlights Quarterly Asset Growth • PIMCO-Liquid Operating Money Net's portfolio posted a Beginning Market Value $85.891,992 0.01% return for the quarter placing it in the 14 percentile of Net New Investment $-27,000,000 the MF - Money Market Funds Database group for the quarter and in the 99 percentile for the last year. Investment Gains/(Losses) $26,713 • PIMCO-Liquid Operating Money Net's portfolio outperformed Ending Market Value $58,918,705 the Citigroup 3-Month Treasury Bill by 0.00%for the quarter and underperformed the Citigroup 3-Month Treasury Bill for the year by 0.09%. Performance vs MF-Money Market Funds Database(Net) 3.5% 3.5% 2. 37)Kn 0% 2.0% 311�112', 1.s% 41)®(24 1.0% 0.5% 57)®(30', dd% (0,5%)L Lest Last 3 Years Uotfi Years Lasl]Years LastlOYBars Les115Yeers Lest 19 Yet. Year 1 OT Percentile 0,01 ol0 0.11 0,11 0.73 1.76 2,18 285 25th Percentile 0.00 002 0.03 0.03 pad 1.60 2.03 2.70 Median 0.00 0.01 0.01 0.01 0.50 1.46 1.87 2.65 75M Percentile too ood out 0,01 0.38 1.33 114 z41 9m Perwntil, 000 too too 0,00 0.31 1.19 156 223 PIMC0.Uquld Operating Ali Net • 001 (005) (0,01) 0.04 0,57 1.61 2.16 283 CiOgroup 3-Month Treasury Bill ♦ 0.01 0.04 0,05 0.08 0.47 1.51 1.99 2.64 Relative Returns vs Cumulative Returns vs Citigroup 3-Month Treasury Bill Ciggroup 3-Month Treasury Bill 0.25% 1.2% - PIMCO-Liquid Operating Money Net 0 o%, -- ------- -- -- - in t0% - Money Market Fds OB E E 015% _ _ _______ __ __ _ X 0.8% Ae am _ 0 o.a%5% a0.0 % E (0.05% U ob% _ (0.10%) 07 2008 2009 2010 2011 2012 2013 2014 (02%) 07 2008 2009 2010 2011 2012 2013 2014 10 PIMCO-1-i itl operating Money Net Callan Orange County Sandation0istind 21 PIMCO-Liquid Operating Money Net Return Analysis Summary Return Analysis The graphs below analyze the manager's return on both a dsk-adjusted and unadjusted basis.The first chart illustrates the manager's ranking over different periods versus the appropnate style group.The second chart shows the historical quarterly and cumulative manager returns versus the appropriate market benchmark. The last two charts illustrate the manager's ranking relative to their style using various risk-adjusted return measures. Performance vs MF-Money Market Funds Database(Net) 6% 5% 5g�18 21�15 5% 3% 159�11 2% 60®36 0% (1%) 12111 wi4 2013 2012 2011 2010 2000 2008 2007 2006 2005 loth Percentile o.o0 0.09 0.19 0.08 0.15 0.53 2.78 5.22 4.95 3.07 25th PercenNe 0.01 0.02 0.03 003 0.05 0.29 2.46 5.01 479 2.88 Median 0.01 0.01 0.01 0.01 0.01 0.12 2.03 4.73 4.53 2.65 75th Percertile 0.00 0.00 0.00 0.00 0.01 0.03 1.46 4.39 4.23 2.38 9Mh Percentile 0.00 ow 0.00 0.00 0.00 0.01 1.06 3.99 3.87 2.03 PIMCO-Liquid Operating Money Net • (0.03) (0.02) 0.02 009 0.10 0.43 2.25 5.09 4.89 3.06 Ctlgroup 3-Month Treasury 6lll ♦ 0.03 0.05 0.07 0.08 0.13 0.16 1.80 4.74 4.76 3.00 Cumulative and Quarterly Relative Return vs Cltlgroup 3-Month Treasury Bill 2.0% 1.5% N 1.0% to 0.5% a > 0.0% (0.5%) it.0%) --- --- - ___ __ ___ (1.5%) 04 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 10 PIMC0.Liquitl Operating Money Ne[ Money Market Ftla DB Risk Adjusted Return Measures vs Cltlgroup 3-Month Treasury BIII Rankings Against MF-Money Market Funds Database(Nat) Seven Years Ended September 30,2014 0.40 1.5 0.30 1.0 (16) ago a5 9) 0.10 )3a) •I2s) 0.0 0.00 05) (0.10) (1.0) (0.20) (1 s) (0.30) Alpha Traynor (2'0) In(onna[ion Sharpe Eaceaa Return Red. Ratio Rise Ratio I on Percentile 0.23 0.34 1001 Percentile 093 028 101 250,Percentile 0A0 0.10 2511 Percentile am 0.10 0,66 Median 0.01 0.05 Manion 0.11 0.06 0.25 15th Percentile o 08 0.14 75th Percentile (1.12) 0.34 1 23) 901h Percentile 0.13 (0.16) grit,Percentile 0 W) do 5m) 166) PIMC0.Liquitl PIMCO-Li uitl operating Money NO • 0.07 0.06 Operating Money NM • 0." 0.06 0.82 Callan Orange County Santlation DiaNct 24 CALLAN Callan INST TUTENTS l THIRD QTR 2014 l Education Research and Educational Programs The Callan Investments Institute provides research that keeps clients updated on the latest industry trends while help- ing them learn through carefully structured educational programs. Below are the Institute's recent publications—all of which can be found at www.callan.cum/research. White Papers Saving Public Defined Benefit Plans:Talking Points The funded status of public employee defined benefit IDS)retirement plans continues to garner great debate in the industry and press.DB plans are the primary vehicle for ensuring retirement - income security for public workers,and Callan believes these plans are viable and necessary in this sector.This paper provides talking points to help to move the discussion forward around the importance of IDS plans. Fixed Income Benchmark Review This data-driven report is designed to aid in portfolio monitoring and evaluation by helping - readers assess the similarities and differences in coverage, performance,and characteristics of popular fixed income indices alongside comparable Callan manager style and database ---- groups.The indices cover most of the global bond markets. 2014 Nuclear Decommissioning Funding Study Nuclear decommissioning trusts have faced pressure in recent years in multiple areas, includ- ing challenging capital markets and unresolved waste burial issues. Despite rising costs and declining contributions,funding levels have improved over the past six years and currently stand at 73%.This study covers 27 investor-owned and 28 public power utilities with an ownership interest in the 100 operating nuclear reactors and nine of the non-operating reactors in the U.S. Private Equity Policy Benchmarking and Performance Attribution This paper focuses on the conundrum that private equity Introduces to total plan policy bench- marking and performance attribution. There are fundamental pdvale/public comparison mis- matches and a range of options available, which makes the choice of a private equity policy benchmark and attribution approach an inherently political decision that requires consensus and ongoing education.In this analysis,we explore the causes and review the available options that investors can consider. Quarterly Publications DC Observer&Callan DC Index-:A quarterly newsletter that offers Callan's observations on a variety of topics per- taining to the defined contribution industry.Each issue is updated with the latest Callan DC Index^" returns. Capital Market Review: A quarterly macroeconomic indicator newsletter that provides thoughtful insights on the economy as well as recent performance in the equity,fixed income,alternatives,international, real estate,and other capital markets. Hedge Fund Monitor.A quarterly newsletter that provides a current view of hedge fund industry trends and detailed quarterly performance commentary. Private Markets Trends:A seasonal newsletter that discusses the market environment,recent events,performance, and other issues involving private equity. Quarterly Data:The Market Pulse reference guide covers the U.S.economy and investment trends in domestic and international equities and fixed income, and alternatives. Our Inside Callan's Database report provides performance information gathered from Callan's proprietary database,allowing you to compare your funds with your peers. RealAssets Reporter.A recurring newsletter that offers Callan's data and insights on real estate and other real asset investment topics. Surveys 2014 Investment Management Fee Survey This survey captures institutional investment management fee payment practices and trends. We supplemented survey data(from 72 fund sponsors,$859 billion in assets and 211 invest- ment managers, $15 trillion in AUM)with information from Callan's proprietary databases to establish the trends observed in this report.Callan conducted similar surveys in 2004, 2006, 2009,and 2011. ® 2014 DC Survey le This annual survey presents findings such as: Plan sponsors made changes to target da in funds n 2013013 an and will continue to do so in 2014;Passive investment offerings are increasingly common in the core investment lineup;Plan fees continue to be subject to considerable down- ward pressure;Retirement income solutions made little headway in 2013;and much more. ® and t Cost of Doing Business Survey Callan compares the costs of administering funds and trusts across all types of tax-exempt and tax-qualified organizations in the U.S.,and we identify ways to help institutional investors manage expenses.We fielded this survey in April and May of 2013,The results incorporate responses from 49 fund sponsors representing$219 billion in assets. m, ■® 2013 Risk Management Survey The 2008 market crisis put risk in the Spotlight and prompted fund fiduciaries to look at risk management in a new light.Callan fielded this survey in November 2012. Responses came from 53 fund sponsors representing$576 billion in assets.The vast majority of this group has taken concrete steps in the past five years to address investment risks. Callan Callan Investments Institute Events Did you miss out on a Callan conference or workshop? If so, you can catch up on what you missed by reading our 'Event Summaries"and downloading the actual presentation slides from our webshe.Our most recent programs: 7�, ■a The 2014 National Conference Summary features a synopsis of our speakers:David Ger- gen,Janet Hill, Laura Carstensen,and the 2014 Capital Markets Panel.The Summary also reviews our three workshops:managing corporate pension risk,peripheral real asset strate- gies, and target date fund analysis. Slide-decks of the conference presentations are also available on our website. Our June 2014 Regional Workshop,Policy Implementation Decisions,discussed portfolio biases and the challenges therein.Welooked at the common biases,how they've worked(or not)for the portfolio,and evaluating time horizons.Our speakers were Callan's Jay Kloepfer, Andy Isen, and Mike Swinney. Check out the summary write-up of this workshop to get a good Overview of the session. Upcoming Educational Programs The 351h National Conference January 26-28,2015 in San Francisco Speakers include:Alan Simpson, Erskine Bowles, Olivia Mitchell, Gary Locke, Daniel Pink and the 2015 Capital Markets Panel.More speakers,as well as workshop topics,to be announced. Details will be sent to you via email and U.S. Mail in late October. Our research can be found at www.callan.com/research or feel free to contact us for hard copies. For more information about research or educational events,please contact Ray Combs or Gina Falsetto at institute@callan.com or 415-974-5060. Callan Callan Investments Institute 'CALLAN Callan COLLEGE" THIRD QTR 2014 Education The Center for Investment Training Educational Sessions This educational forum offers basic-to-intermediate level instruction on all components of the investment manage- ment process.The'Callan College"courses cover topics that are key to understanding your responsibilities,the roles of everyone involved in this process, how the process works,and how to incorporate these strategies and concepts into an investment program.Listed below are the 2015 dates. An Introduction to Investments April 14-15,2015 in Atlanta July 21-22,2015 in San Francisco October 27-28,2015 in Chicago This one-and-one-half-day session is designed for individuals who have less than two years'experience with institu- tional asset management oversight and/or support responsibilities.The session will familiarize fund sponsor trustees, staff,and asset management advisors with basic investment theory,terminology,and practices. Participants in the introductory session will gain a basic understanding of the different types of institutional funds, including a description of their objectives and investment session structures.The session includes: A description of the different parties involved in the investment management process, including their roles and responsibilities • A brief outline of the types and characteristics of different plans(e.g.,defined benefit,defined contribution, endowments,foundations,operating funds) An introduction to fiduciary issues as they pertain to fund management and oversight • An overview of capital market theory,characteristics of various asset classes,and the processes by which fiduciaries implement their investment sessions Tuition for the Introductory"Callan College"session is$2,350 per person.Tuition includes instruction, all materials, breakfast and lunch on each day,and dinner on the first evening with the instructors. Customized Sessions A unique feature of the"Callan College"is its ability to educate on a specialized level through its customized sessions. These sessions are tailored to meet the training and educational needs of the participants,whether you are a plan spon- sor or you provide services to institutional tax-exempt plans.Past customized"Callan College"sessions have covered topics such as:custody,industry trends,sales and marketing,client service,international,fixed income,and managing the RFP process.Instruction can be tailored to be basic or advanced. For more information please contact Kalh leen Currie,at 415.274.3029 or cu nnie@callan.com. Risk/Reward Statistics The risk statistics used in this report examine performance characteristics of a manager or a portfolio relative to a benchmark (market indicator) which assumes to represent overall movements in the asset class being considered. The main unit of analysis is the excess return, which is the portfolio return minus the return on a risk free asset (3 month T-Bill). Alpha measures a portfolio's return in excess of the market return adjusted for disk. It is a measure of the manager's contribution to performance with reference to security selection. A positive alpha indicates that a portfolio was positively rewarded for the residual risk which was taken for that level of market exposure. Beta measures the sensitivity of rates of portfolio returns to movements in the market index. A portfolio's beta measures the expected change in return per 1% change in the return on the market. If a beta of a portfolio is 1.5,a 1 percent increase in the return on the market will result,on average, in a 1.5 percent increase in the return on the portfolio. The converse would also be true. Downside Risk stems from the desire to differentiate between "good risk" (upside volatility) and "bad risk" (downside volatility). Whereas standard deviation punishes both upside and downside volatility, downside disk measures only the standard deviation of returns below the target. Returns above the target are assigned a deviation of zero. Both the frequency and magnitude of underperformance affect the amount of downside risk. Excess Return Ratio is a measure of risk adjusted relative return. This ratio captures the amount of active management performance (value added relative to an index) per unit of active management risk (tracking error against the index.) It is calculated by dividing the managers annualized cumulative excess return relative to the index by the standard deviation of the individual quarterly excess returns. The Excess Return Ratio can be interpreted as the manager's active riskireward tradeoff for diverging from the index when the index is mandated to be the"riskless"market position. Information Ratio measures the manager's market risk-adjusted excess return per unit of residual risk relative to a benchmark. It is computed by dividing alpha by the residual risk over a given time period. Assuming all other factors being equal, managers with lower residual risk achieve higher values in the information ratio. Managers with higher information ratios will add value relative to the benchmark more reliably and consistently. R-Squared indicates the extent to which the variability of the portfolio returns are explained by market action. It can also be thought of as measuring the diversification relative to the appropriate benchmark. An r-squared value of.75 indicates that 75% of the fluctuation in a portfolio return is explained by market action. An r-squared of 1.0 indicates that a portfolio's returns are entirely related to the market and it is not influenced by other factors. An r-squared of zero indicates that no relationship exists between the portfolio's return and the market. Relative Standard Deviation is a simple measure of a managers risk(volatility)relative to a benchmark. It is calculated by dividing the manager's standard deviation of returns by the benchmark's standard deviation of returns. A relative standard deviation of 1.20, for example, means the manager has exhibited 20% more risk than the benchmark over that time period. A ratio of .80 would imply 20% less risk. This ratio is especially useful when analyzing the risk of investment grade fixed-income products where actual historical durations are not available. By using this relative risk measure over rolling time periods one can illustrate the "implied" historical duration patterns of the portfolio versus the benchmark. Residual Portfolio Risk is the unsystematic risk of a fund,the portion of the total risk unique to the fund(manager)itself and not related to the overall market. This reflects the"bets"which the manager places in that particular asset market. These bets may reflect emphasis in particular sectors, maturities (for bonds), or other issue specific factors which the manager considers a good investment opportunity. Diversification of the portfolio will reduce or eliminate the residual risk of that portfolio. Callan 32 Risk/Reward Statistics Sharpe Ratio is a commonly used measure of risk-adjusted return. It is calculated by subtracting the "risk-free" return (usually 3 Month Treasury Bill)from the portfolio return and dividing the resulting"excess return" by the portfolio's risk level (standard deviation).The result is a measure of return gained per unit of risk taken. Sortino Ratio is a downside risk-adjusted measure of value-added. It measures excess return over a benchmark divided by downside risk. The natural appeal is that it identifies value-added per unit of truly bad risk. The danger of interpretation, however, lies in these two areas: (1)the statistical significance of the denominator,and (2) its reliance on the persistence of skewness in return distributions. Standard Deviation is a statistical measure of portfolio risk. It reflects the average deviation of the observations from their sample mean. Standard deviation is used as an estimate of risk since it measures how wide the range of returns typically is. The wider the typical range of returns,the higher the standard deviation of returns,and the higher the portfolio risk. If returns are normally distributed (ie. has a bell shaped curve distribution) then approximately 2/3 of the returns would occur within plus or minus one standard deviation from the sample mean. Total Portfolio Risk is a measure of the volatility of the quarterly excess returns of an asset. Total risk is composed of two measures of risk: market(non-diversifiable or systematic)risk and residual(diversifiable or unsystematic) risk. The purpose of portfolio diversification is to reduce the residual risk of the portfolio. Tracking Error is a statistical measure of a portfolio's risk relative to an index. It reflects the standard deviation of a portfolio's individual quarterly or monthly returns from the index's returns. Typically,the lower the Tracking Error, the more "Index-like"the portfolio. Traynor Ratio represents the portfolio's average excess return over a specified period divided by the beta relative to its benchmark over that same period. This measure reflects the reward over the risk-free rate relative to the systematic risk assumed. Note:Alpha,Total Risk,and Residual Risk are annualized. Callan 33 Fixed Income Portfolio Characteristics All Portfolio Characteristics are derived by first calculating the characteristics for each security, and then calculating the market value weighted average of these values for the portfolio. Allocation by Sector- Sector allocation is one of the tools which managers often use to add value without impacting the duration of the portfolio. The sector weights exhibit can be used to contrast a portfolio's weights with those of the index to identity any significant sector bets. Average Coupon-The average coupon is the market value weighted average coupon of all securities in the portfolio. The total portfolio coupon payments per year are divided by the total portfolio par value. Average Moody's Rating for Total Portfolio- A measure of the credit quality as determined by the individual security ratings. The ratings for each security, from Moody's Investor Service, are compiled into a composite rating for the whole portfolio. Quality symbols range from Aaa+ (highest investment quality-lowest credit risk)to C (lowest investment quality- highest credit risk). Average Option Adjusted(Effective)Convexity-Convexity is a measure of the portfolio's exposure to interest rate risk. It is a measure of how much the duration of the portfolio will change given a change in interest rates. Generally,securities with negative convexities are considered to be risky in that changes in interest rates will result in disadvantageous changes in duration. When a security's duration changes it indicates that the stream of expected future cash-flows has changed, generally having a significant impact on the value of the security. The option adjusted convexity for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-Flows for the security based on various interest rate scenarios. Expected cash-flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Option Adjusted(Effective)Duration- Duration is one measure of the portfolio's exposure to interest rate risk. Generally, the higher a portfolio's duration, the more that its value will change in response to interest rate changes. The option adjusted duration for each security in the portfolio is calculated using models developed by Lehman Brothers and Salomon Brothers which determine the expected stream of cash-Flows for the security based on various interest rate scenarios. Expected cash-Flows take into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Price-The average price is equal to the portfolio market value divided by the number of securities in the portfolio. Portfolios with an average price above par will tend to generate more current income than those with an average price below par. Average Years to Expected Maturity-This is a measure of the market-value-weighted average of the years to expected maturity across all of the securities in the portfolio. Expected years to maturity takes into account any put or call options embedded in the security, any expected sinking-fund paydowns or any expected mortgage principal prepayments. Average Years to Stated Maturity- The average years to stated maturity is the market value weighted average time to stated maturity for all securities in the portfolio. This measure does not take into account imbedded options, sinking fund paydowns,or prepayments. Current Yield-The current yield is the current annual income generated by the total portfolio market value. It is equal to the total portfolio coupon payments per year divided by the current total portfolio market value. Callan Fixed Income Portfolio Characteristics Duration Dispersion- Duration dispersion is the market-value weighted standard deviation of the portfolio's individual security durations around the total portfolio duration. The higher the dispersion, the more variable the security durations relative to the total portfolio duration ('barbellness"), and the smaller the dispersion, the more concentrated the holdings' durations around the overall portfolio's ('bulletness"). The purpose of this statistic is to gauge the 'bulletness" or 'barbellness'of a portfolio relative to its total duration and to that of its benchmark index. Effective Yield-The effective yield is the actual total annualized return that would be realized if all securities in the portfolio were held to their expected maturities. Effective yield is calculated as the internal rate of return, using the current market value and all expected future interest and principal cash flows. This measure incorporates sinking fund paydowns,expected mortgage principal prepayments,and the exercise of any"in-the-money"imbedded put or Call options. Weighted Average Life-The weighted average fife of a security is the weighted average time to payment of all remaining principal. It is calculated by multiplying each expected future principal payment amount by the time left to the payment. This amount is then divided by the total amount of principal remaining. Weighted average life is commonly used as a measure of the investment life for pass-through security types for comparison to non-pass-through securities. Callan 35 Callan Quarterly List as of September 30, 2014 List of Managers That Do Business with Callan Associates Inc. Confidential—For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilities to dients very seriously.The list below is compiled and updated quarterly because we believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm.As of 09130114, Callan provided educational, consulting, software, database, or reporting services to this list of managers through one or more of the following business units: InstiNtlonal Consulting Group, Independent Adviser Group, Fund Sponsor Consulting,the Callan Investments Institute and the "Callan College."Per stud policy these manager relationships do not affect the outcome or process by which any of Callan s services are conducted. Fund sponsor clients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests regarding fees are handled exclusively by Callan's Compliance Department. Clients should also be aware that Callan maintains an asset management division, the Trust Advisory Group (TAG).TAG specializes in the design, implementation and on-going management of multi-manager portfolios for institutional Investors.Currently TAG serves as the sponsor and advisor to a mulemanager small cap equity fund and as the non-discretionary adviser to a series of Target Maturity Funds known as the Callan GlidePatho Funds. We are happy to provide clients with more specific information regarding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG's Chief Investment Cultures. Manager Name--Educational services ' 1607 Capital Partners,LLC Y Aberdeen Asset Management Y Acadian Asset Management,Inc. Y Advisory Research '' Y = ' Affiliated Managers Group Y AllianceBemstein Y Allianz Global Investors U.S.LLC Y Y Allianz Life Insurance Company of North America Y Altnnsic Global Advisors,LLC Y American Century Investment Management I Apollo Global Management Y AQR Capital Management I 1� Area Management Y Adel Investments Anstotle Capital Management Y Aronson♦Johnson+Chi Artisan Holdings Y Atlanta Capital Management Co.,L.L.C. AxA Rosenberg Investment Management Y Babson Capital Management LLC Baillie Gifford International LLC Y Y Baird Ad isers Y Y Bank of America Y Banng Asset Management Y Barrow,Hanley,Mewhinney&Strauss,Inc. Y Y BlackRock BMO Asset Management Y BNP Paribas Investment Partners BNY Mellon Asset Management Y Y Boston Company Asset Management,LLC(The) Boston Partners(aka Robeco Investment Management) Y Y Bounces Investment Barrel L.P. Brandywine Global Investment Management,LLC Y Brown Brothers Harman&Company Cadence Capital Management Y Callan I Knowledge.Experience.Integrity. 1 List of Managers That Do Business with Callan Associates Inc.(continued) Confidential—For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilifies to clients very seriously.The list below is compiled and updated quarterly because vas believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm.As of 09130114, Callan provided educational, consulting, software, database, or morning services to this list of managers through one or more of the following business units Institutional Consulting Group,Independent Adviser Group,Fund Sponsor Consulting,the Callan Investments Institute and the "Callan College."Per aged policy these manager relationships do not affect the outcome or process by which any of Callan'a services are conducted. Fund sponsor dients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests depending fees are handled exclusively by Callan's Compliance Department. Clients should also be aware that Callan maintains an asset management division.the Trost Advisory Group (TAG).TAG specializes in the resign, implementation and on-going management of multi-manager portfolios for institutional investors.Currently TAG serves as the sponsor and advisor to is multi-manager small cap equity fund and as the non-discreoonary adviser to a series of Target Maturity Funds known as the Callan GlidePatha Funds. We are happy to provide clients with more specific information reganding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG's Chief Investment Office, Capital Group Y — CastleArk Management,LLC Y Causeway Capital Management V Central Plains Advisors,Inc. Y Chartwell Investment Panders — ClearBddga Investments,LLC like ClearBddge Advisors) Y Cohen&Steers Columbia Management Investment Advisors,LLC Y Y Columbus Circle Investors Corbin Capital Partners Y Cornerstone Capital Management Holdings like Madison Square) Cornerstone Investment Partners,LLC Y Cramer Rosenthal McGlynn,LLC Crawford Investment Council Y Crack Suisse Asset Management Crestline Investors Y Y Cutwater Asset Management DB Advisors Y Y Delaware Investments DePrince,Race&Zollo,Inc. Y Y Deutsche Mast &Wealth Management Diamond Hill Investments Y DSM Capital Farmers Duff&Phelps Investment Mgmt Y Y Eagle Asset Management,Inc. EARNEST Partners,LLC Y Eaton Vance Management Epoch Investment Partners Y Fayez Sarefim&Company Federated Investors Y First Eagle Investment Management First State Investments Y Fisher Investments Y Franklin Templeton Y Y Fred Alger Management Co.,Inc. V Fuller&Thaler Asset Management Y GAM(USA)Inc. GE Asset Management Y Y Geneva Capital Management Goldman Sachs Asset Management Y Y GrandJean Capital Management •i GMO Qka Grantham,Maya,Van Oftedoo&Co.,LLC) Y Great Lakes Advisors,Inc. The Guardian Life Insurance Company of America Y Guggenheim Investments Asset Management III Security Global) — GW&K Investment Management Y Callan I Knowledge.Experience.Integrity. 2 List of Managers That Do Business with Callan Associates Inc.(continued) Confidential—For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilities to clients very seriously.The list below is compiled and updated quarterly because vas believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm.As of 09130114, Callan provided educational, consulting, software, database, or morning services to this list of managers through one or more of the following business units Institutional Consulting Group,Independent Adviser Group,Fund Sponsor Consulting,the Callan Investments Institute and the "Callan College."Per aged policy these manager relationships do not affect the outcome or process by which any of Callan'a services are conducted. Fund sponsor dients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests depending fees are handled exclusively by Callan's Compliance Department. Clients should also be aware that Callan maintains an asset management division.the Trust Advisory Group (TAG).TAG specializes in the resign, implementation and on-going management of multi-manager portfolios for institutional investors.Currently TAG serves as the sponsor and advisor to is multi-manager small cap equity fund and as the non-discreoonary adviser to a series of Target Maturity Funds known as the Callan GlidePaths Funds. We are happy to provide clients with more specific information reganding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG's Chief Investment Officer. Harbor Capital — Hartford Investment Management Co. Y Y Heightened Capital Management Corporation JIM Henderson Global Investors Y Y Hogchkis&Wiley Y Impax Asset Management Limited Y Income Research&Management M A Industry Funds Management Y Insight Investment Management Institutional Capital LLC Y INTECH Investment Management Invesco Y Y Investment Management of Virginia Invested Asset Management Y Jacobs Levy Equity Management Janus Capital Group like Janus Capital Management,LLC) Y Y Jensen Investment Management J.M.Hartwell Y J.P.Morgan Asset Management KeyCorp Y Lazard Asset Management Lee Murder Capital Group Y Lincoln National Corporation J Logan Circle Partners,L.P. Y Longview Partners — Loomis,Sayles&Company,L.P. Y Y Lord Abbot&Company — Los Angeles Capital Management Y LSV Asset Management — Lyrical Partners Y MacKay Shields LLC Man Investments Y Manul ns Asset Management Martin Curie Y Marvin&Palmer Associates,Inc. Y Mellon Capital Management Y Metropolitan West Capital Management,LLC MFS Investment Management Y Y Mondrian Investment Partners Limited Montag&Caldwell,Inc. Y Y Morgan Stanley Alternative Investment Partners Morgan Stanley Investment Management Y Y Mountain Lake Investment Management LLC National Investment Services,Inc. Y Neuberger Berman,LLC(fim,Lehman Brothers) Newton Capital Management Y Callan I Knowledge.Experience.Integrity. 3 List of Managers That Do Business with Callan Associates Inc.(continued) Confidential—For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilifies to clients very seriously.The list below is compiled and updated quarterly because vas believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm.As of 09130114, Callan provided educational, consulting, software, database, or reporting services to this list of managers through one or more of the following business units Institutional Consulting Group,Independent Adviser Group,Fund Sponsor Consulting,the Callan Investments Institute and the "Callan College."Per aged policy these manager relationships do not affect the outcome or process by which any of Callan'a services are conducted. Fund sponsor dients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests depending fees are handled exclusively by Callan's Compliance Department. Clients should also be aware that Callan maintains an asset management division,the Trust Advisory Group (TAG).TAG specializes in the resign, implementation and on-going management of multi-manager portfolios for institutional investors.Currently TAG serves as the sponsor and advisor to is multi-manager small cap equity fund and as the non-discreoonary adviser to a series of Target Maturity Funds known as the Callan GlidePaths Funds. We are happy to provide clients with more specific information reganding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG's Chief Investment Officar. Northern Lights Capital Group I- Y Northern Trust Global Investment Services Y Y Nuveen Investments Institutional Services Group LLC I- Y Old Mutual Asset Management Y Y OppenheimerFunds,Inc. I �� O'Shaughnessy Asset Management,LLC Y Pacific Investment Management Company - Palisade Capital Management LLC Y Pammetec Portfolio Associates Peregrine Capital Management,Inc. Y Y Philadelphia International Advisors,LP - PineBridge Investments(formerly AIG) Y Pinnacle Asset Management Y - Pioneer Investment Management,Inc. Y PNC Capital Advisors(like Allegiant Asset Mgmt) a Poll Capital Management Y Post Advisory Principal Financial Group Y Principal Global Investors Private Advisors Y Prudential Fixed Income Management Prudential Investment Management,Inc. Y Y Putnam Investments,LLC Pymmis Global Advisors Y Rainier Investment Management RBC Global Asset Management(U.S.)Inc. Y Y Research Affiliates Regions Financial Corporation Y RCM Foredo Investment Management(aka Boston Partners) Y Y Rothschild Asset Management,Inc. RS Investments Y Russell Investment Management Santander Global Facilities Y Schroder Investment Management Norm America Inc. Scout Investments Y SEI Investments SEIX Investment Advisors,Inc. Y Select Equity Group Silvercrest Asset Management Company Y Smith Graham and Company Smith Group Asset Management Y Standard Life Investments Standish dill Standish Mellon Asset Management) Y State Street Global Advisors Callan I Knowledge.Experience.Integrity. 4 List of Managers That Do Business with Callan Associates Inc.(continued) Confidential—For Callan Client Use Only Callan Associates takes its fiduciary and disclosure responsibilil es to clients very seriously.The list below is compiled and updated quarterly because vas believe our fund sponsor clients should have a clear understanding of the investment management organizations that do business with our firm.As of 09130114, Callan provided educational, consulting, software, database, or reporting services to this list of managers through one or more of the following business units Institutional Consulting Group,Independent Adviser Group,Fund Sponsor Consulting,the Callan Investments Institute and the "Callan College."Per aged policy these manager relationships do not affect the outcome or process by which any of Callan'a services are conducted. Fund sponsor dients may request a copy of this list at any time. Fund sponsor clients may also request specific information regarding the fees paid to Callan by the managers employed by their fund. Per company policy, information requests depending fees are handled exclusively by Callan's Compliance Department. Clients should also be aware that Callan maintains an asset management division.the Trust Advisory Group (TAG).TAG specializes in the resign, implementation and on-going management of multi-manager portfolios for institutional investors.Currently TAG serves as the sponsor and advisor to is multi-manager small cap equity fund and as the non-discreoonary adviser to a series of Target Maturity Funds known as the Callan GlidePaths Funds. We are happy to provide clients with more specific information reganding TAG, including detail on the portfolios that it oversees. Per company policy these requests are handled by TAG's Chief Investment Officar. Stone Harbor Investment Partners,L.P. V V Systematic Financial Management T T.Rowe Price Associates,Inc. y y Taplin,Canida&Hallachg y (♦ — TCW Asset Management Company y Thompson,Siegel&Walmslay LLC �� (♦ UBS V V Union Bank of California —� Van Eck V Victory Capital Management Inc. (— Voya Investment Management like ING Investment Management) y y Vulcan Value Partners,LLC (— Waddell&Reed Asset Management Group V V Wall Street Associates — WCM Investment Management V WEDGE Capital Management — Wellington Management Company,LLP y Wells Capital Management (— Western Asset Management Company y William Blair&Co.,Inc. — Callan I Knowledge.Experience.Integrity. 5 P I M C O Your Global Investment Authority Strategy review Orange County Sanitation District 30 October 2014 ivO EM2013 For professional use only. III II Client-specific update- not for public distribution. A company of Ali Disclosures Past performance is not a guarantee or a reliable indicator of future results. Shares distributed by PIMCO Investments U.C. PIMCO and YOUR GLOBAL INVESTMENT AUTHORITY are trademarks or registered trademarks of Allianz Asset Management of America L.P. and Pacific Investment Management Company LLC, respectively, in the United States and throughout the world. The Morningstar Fixed-Income Fund Manager of the Year award (PIMCO Income, 2013)is based on the strength of the manager, performance, strategy and firm's stewardship. Morningstar Awards 20130. Morningstar,Inc.All Rights Reserved.Awarded to Dan Ivascyn and Alfred Murata for U.S. Fixed Income Fund Manager of the Year. PIMCO Your Global Investment Authority pg1 Biographical information Stephanie L. King, CFA Ms. King is an executive vice president and account manager in the Newport Beach office,focusing on U.S. institutional investors within the public client practice. Previously at PIMCO, she worked with a variety of institutional client types and co-headed the U.S. corporate client practice.Additionally, she led the firm's global recruiting function as part of PIMCO's business management group and worked on a variety of talent management initiatives.She currently serves on the steering committee for PIMCO's global inclusion, diversity and culture initiative. Prior tojoining PIMCO in 2001,she was with Morgan Stanley, Blue Capital Management and Bain &Company. She has 15 years of investment experience and holds an MBA from Stanford University Graduate School of Business and an undergraduate degree from the Wharton School of the University of Pennsylvania. P I M C O Your Global Investment Authority pg2 Agenda 1. Market review and performance 2. Outlook and strategy 3. Appendix P I M C O Your Global Investment Authority pg3 1 . Market review and performance P I M C O Your Global Investment Authority pg4 Geopolitics and economic data drove Q3 market sentiment Yellen cautions of "considerable time" 20 U.S.Treasury maturities ■H3'14 0Q3 '14 before first rate hike 0 19 n • Fed remains focused on data, citing low wage g -20 2 growth and ongoing labor market slack v • Short-end yields rose as markets brought forward rate hike expectations '�° -m u -80 • Expect increased volatility as the Fed transitions -77 -79 away from QE to forward guidance -100 96 Tyr Syr Tyr 10yr 30yr 2s-30s 55-30s spread spread Labor market and private sector are 6 —ISM Composite Index(RHS) ■Real GDP(LHS) 60 above 50 reflects expansion driving ongoing U.S. recovery s sa • 6-month average payrolls reached a 17-year high in ;, 3 ss a August amid a mid-cycle pick-up in employment a 2 0000 53 x • Q2 GDP revised up, driven by cap ex and net exports o so below 50 reflectscontraction -2 48 -3 4s 2012 2013 2014 As of 30 September 2014 SOURCE:Bloomberg, Haver,Barclays P I M C O I Your Global Investment Authority pg5 Central banks increase easing programs amid growth concerns ECB announces asset-purchase 1.0 Euro area GDP growth (QoQ) program as growth slows 0.s • ECB will buy covered bonds and ABS securities but 0.0 — , M ' ■ _ remains silent on total size a -0.5 • Euro area GDP growth weakened, driven partially by -1.0 new sanctions in Russia 2011 2012 2013 2014 Signs of short-term improvement in 104 Japan annual CP1 Japan, but secular risks persist 102 x a 100 • Japanese CPI picked up in Q3, but wages still lag inflation 98 96 • The April VAT hike weakened output and sales, 2008 2009 2010 2011 2012 2013 2014 hindering the case for structural fiscal reform —China industrial production(tHS) —China real quarterly GDP(RHS) Questions around China growth engine � 21 — 15 0 • China's slowdown has impacted industrial m 15 10 production and commodity pricesrs ".' A • China eased property restrictions in an attempt to 9 6 engineer a soft landing a 3 0 2008 2010 2011 2012 2013 2014 As of 30 September 2014 SOURCE:Bloomberg, Haver,J Morgan,Barclays P I M C O I Your Global Investment Authority pg 6 Central bank policies intensify as global market performance diverges Core fixed income Non-core fixed income Global fixed income and currency Equity and commodity 11 ■Q3 '14 ■YTD14 7 4 0 � 0 c E -4 i z -7 -11 -14 U.S. MTG IGC Treasuries Munis TIPS HY CMBS Global EM EM ($) USD($) Global U.S. EM Commodities bonds local equities equities equities • USTs rallied early in Q3 driven • Demand for high yield • EM local bonds • U.S. equities sold off in late July by geopolitical volatility amid decreased as prices rose, even underperformed, driven by on geopolitical concerns but the Fed's ongoing taper as default expectations remain currency effects as the USD later rallied amid better low strengthened domestic data • Agency MBS underperformed given more issuance and • Municipals outperformed • Global fixed income rallied • Negative Q3 commodities concerns on post-taper demand largely due to positive with incremental central bank performance offset prior gains supply/demand dynamics support in the EU and Japan driven by agriculture and energy sectors As of 30 September 2014 SOURCE:Barclays,Bloomberg, Federal Reserye,)PMorgan,PIMCO Barclays U.S.Aggregate;Barclays MBS Fixed Rate Mortgage;Barcays Investment Grade Credit Barclays U.S.Treasury;Barclays Municipal Bond;Barclays U.S.TIPS;BofA Merrill Lynch U.S.High Yield BB-B Rated;Barclays CMBS ERISA-Eligible;lPMorgan EMBI Global;lPMorgan GBI Global ex-U.S.USD Hedged Index,lPMorgan GBI-EM Global Diversified(Unhedged);Dollar Index Spot; MSCI World;S&P 500;MSCI EM;DJ-UBS Commodity USD($)measured relative to basket of seven currencies on a trade-weighted basis P I M C O I Your Global Investment Authority pg 7 Performance review Orange County Sanitation District— Long Term Portfolio $ 367,390,754 $ 88,900,000 Net Investment Earnings $ 5,265,352 Market value as of Sep 14 $ 461,556,106 Performance ■Portfolio(beforefees) ■Benchmark 10 8 6 4 E 2 0 MEN -2 -4 '00 101 '02 '03 '04 '05 '06 '07 '08 109 110 Ill '12 '13 YTD'14 Orange County Sanitation District Before fees (%) REEMEMER R After fees (%) 4.7 3.5 2.3 1.0 -0.2 0.9 0.7 -0.1 1.3 Benchmark(%) 4.6 3.3 2.3 1.4 0.7 1.3 0.7 -0.1 1.1 As of 30 September 2014 All periods longer than one year are annualized Benchmark:BofA Merrill 1-5 Year Gov[/Corp.prior,Performance Holiday from COB 12/19/2012 to COB 01/01/2013, BofA Merrill 1-5 Year Gov t/Corp.from 01/01/2013 P I M C O I Your Global Investment Authority I Pg 9 Performance review Orange County Sanitation District— Liquid Operating Portfolio $ 46,067,896 $ 12,800,335 $ 45,782 $ 58,914,013 Performance ■Portfolio(before fees) ■Benchmark 8 7 6 a? 5 E 4 Z z 3 2 1 0 100 101 '02 '03 '04 '05 '06 '07 '08 109 .10 Ill '12 '13 YTD '14 Orange County Sanitation District MEMEMEME M Before fees (%) 3.0 1.8 0.2 0.1 0.1 0.1 0.1 0.0 0.1 After fees (%) 2.8 1.6 0.0 0.0 0.0 -0.1 0.0 0.0 -0.1 Benchmark(%) 2.6 1.5 0.1 0.1 0.1 0.0 0.0 0.0 0.0 As of 30 September 2014 All periods longer than one year are annualized Benchmark:Citi 3-Month Treasury Bill Index P I M C O I Your Global Investment Authority pg9 Portfolio positioning Orange County Sanitation District- Long Term Portfolio Orange County Sanitation District- Liquid Operating Portfolio r Portfolio 2.8 2.5 2.2 1 Portfolio 0.1 0.2 0.1 Effective duration (yrs.) Index 2.7 2.7 27 Effective duration (yrs.) Index 0.2 0.2 0.2 Yield to maturity(%) 1.0 1.0 1.0 Yield to maturity(%) 0.0 0.1 0.1 Total curve duration': -0.8 Total curve duration': 0.0 031 Mar'14 030 Jun '14 031 Mar'14 030 Jun '14 3.0 Sector allocations-duration weighted ■30 Sep '14 ■Benchmark 10 Sector allocations-duration weighted ■30 Sep '14 ■Benchmark 25 0.8 2.1 2.0 L9 17 0.6 u 15 i 0.4 10 0.7 0.2 0.5 0.2 0.1 0.3 0.1 0.0 0.1 ITT 0.1 0.10.00.00.0 0.0 0.0 0.0` 0.0 0.0 + 0.0 0.0 0.0 Government Mortgage Credit Muni/Other Government Related* Credit Net Cash Equivalents/ Related* MY Futures** NOTE."Other is comprised of municipals,convertibles,euro/yankees,preferred stock ' In November 2011 PIMCO modified its duration calculation to account for the potential that holders of securities subject to credit risk may,in the event of default,recover a portion of their investment prior to maturity.The duration reflects the revised calculation. ' Measures a portfolio's price sensitivity relative to the benchmark to changes in the slope of the yield curve,measured between the 2-30 year government yields,holding the 7-year yield constant.For every one basis point of steepening(flattening),a portfolio with curve duration of one year will nse(fall)in price by one basis point relative to the benchmark. P I M C O I Your Global Investment Authority I pg 10 PIMCO has achieved its performance targets for OCSD in the Long-Term portfolio. . . ■OCSD Long-Term Portfolio ■ BAML 1-5 yr Gov/Corp Periods ended 30 Sep '14 ■Adj.benchmark' 6 5 4 3 2 1 0 51 10 yrs. 5 yrs. 3 yrs. 1 yr. 6 mos. YTD Sep '14 Orange County Sanitation District Long-Term Portfolio pnception:07 Sep '95) S.t 10 yrs. 5 yrs. 3 yrs 1 yr 6 mos YTD Sep '14 Performance vs. benchmark(bps) 22 35 16 -22 -20 6 32 Performance vs, adj. benchmark(bps) N/A 54 53 18 19 18 56 • PIMCO has achieved its performance objectives for OCDS's "long-term' portfolio over the 5-year, 10-year and since inception (1995) periods • OCDS's investment policy limits the investment opportunity set to CD's, CID, US Treasuries, US Federal Agencies and Corporate Notes (rated A or higher) • Given these investment limitations, target gross-of-fee alpha for the OCDS "long-term' portfolio is 20-30 basis points As of 30 September 2014 Performance is gross of fees.Fees are 15 bps.Primary benchmark-BAML 1-5 year Govt/Corp,performance holiday from COB 12/19/2012 to COB 01/01/2013 • Adjusted benchmark excludes 8138-rated securities,securities with non-U.S.countras of ask,perpetual bonds and 144A private placements to align with client guidelines P I M C O I Your Global Investment Authority I pg 11 . . .and the Liquid Operating portfolio ■OCSD liquid Operating portfolio Periods ended 30 Sep '14 ■Citi 3-month T-Bill 3.5 3 2.5 2 1.5 1 0.5 0 S.L 10 yrs. 5 yrs. 3 yrs. 1 yr. 6 mos. YTD Sep '14 Orange County Sanitation Liquid Operating portfolio (Inception:07 Sep '95) S.I. 10 yrs. 5 yrs. 3 yrs. 1 yr. 6 mos. YTD Sep '14 Performance vs. benchmark(bps) 34 24 10 a 3 4 4 As of 30 September 2014 Performance is gross of fees.Fees are 15 bps P I M C O I Your Global Investment Authority pg12 PIMCO's hallmark: Consistent outperformance over market cycles for the Long-Term portfolio. . . 10 OCSD portfolio vs benchmark' Outperformance 8 • MD LT portfolio outperformed its benchmark in 43 out of 57 rolling 5-year periods (75% of the time)' 0 6 Im v � a 4 r 2 Underperformance 0 ' 0 2 4 6 8 10 Benchmark' returns M 8 OCSD portfolio vs adj.benchmark2 Outperformance 6 • MD LT portfolio outperformed the adjusted a 90"" benchmark, which excludes prohibited investments, in 32 0 �; out of 32 rolling 5-year periods (100% of the time)2 g 4 �•� As of 30 September 2014 a Performance is gross of fees.Fees are 15 bps. 2 SOURCE:PIMCO Since inception:30 September1995;Benchmark:BAML1-5 Year Gov/Corp.Netoffeesthe portfolio has outperformed 63%of the time. Underperformance ' Since inception:31 December 2001;Adj.benchmark excludes BBB rated securities,non U.S. 0 countries of risk,144a private placements and perpetual bonds.Net of fees the portfolio has 0 2 4 6 8 outperformed 94%of the time. Ad'. benchmark' returns % P I M C O Your Global Investment Authoritypg 13 . . . and the Liquid Operating portfolio OCSD Liquid Operating portfolio vs.benchmark' • OCSD Liquid Operating portfolio outperformed its 10 benchmark in 57 out of 57 rolling 5-year periods (200% a Outperformance of the time)' 5 s 0 0 0 0 V on 0 O Underperformance -5 -5 0 5 30 Benchmark'returns (%) As of 30 September 2014 Performance is gross of fees.Fees are 15 bps SOURCE:PIMCO Since inception:30 September 1995;Benchmark:Citi 3-Month Treasury Bill Index P I M C O I Your Global Investment Authority pg 14 2. Outlook and strategy P I M C O Your Global Investment Authority pg15 PIMCO's global economic outlook � �' '�art• Russian sanctions impact Ma iS Eurozone trade linkages " ,� Fiscal tightening U.S.growth bolsters j keeps Bank of USD and Canadian/ ! ,—/'^ Japan engaged Mexican exports -1 Levered Chinese banking '�- system threatens growth Chinese slowdown impacts commodity exporters y. • ■ Monetary Policy Expansion • Monetary Policy Normalization ■ Commodity Related Slowdown ■ GeopolRical/Economic Risks As of 30 September 2014 P I M C O I Your Global Investment Authority pg 16 Global policy decoupling underscores multi-speed outlook U Private sector sets stage for Fed exit s 112 .S. GDP growth —Publicsector —Privatesector 108 • Pricing power and high capacity utilization should 6 104 drive business investment $ 100 Public sectorsupported private seRorposTcrisis • Fed's first rate hike (25 bps) likely to occur 96 Drog from public in Q2/Q3 2015 92 _ sectordiminishing 2007 Zoos 2009 2010 2011 2012 2013 2014 Monthly change Eurozone private credit flows —6-month moving average Eurozone growth will remain weak 300 — 200 • ECB to combat worryingly low inflation and tight `0 100 credit with more aggressive monetary easing a 0 1111111111101111111 mr • Stronger recovery contingent on bank -ino recapitalization and balance sheet policies -200 2006 2007 2008 2009 2011 2012 2013 70 major cities property prices ■Rising •Sta ble ■Dropping China poses largest cyclical risk 70 a • Government-directed, investment-led growth model o has fueled a real estate boom that is losing steam a 35 E • Over-leveraged banks and corporations are a source 0 of instability 2011 2012 2013 2014 As of 30 September 2014 SOURCE:Haver Analytict,PBOC P I M C O I Your Global Investment Authority pg 17 Low Duration portfolio strategy Interest rate strategies U.S. interest rate strategies Underweight U.S. interest rate exposure and seek opportunities abroad TIPS: Favor intermediate maturities Capture higher real yields and attractive break-even pricing Spread strategies Differentiate amongst MBS 1) Agency i valuations are stretched and remain sensitive to Fed tapering Favor shorter-dated credit 1) Focus on financials that are poised to benefit from the ongoing economic recovery 2) Seek "rising stars" where there is potential for rating upgrades Tactical strategies Currencies F As of 30 September 2014 P I M C O Your Global Investment Authority pg 18 3. Appendix P I M C O Your Global Investment Authority py19 PIMCO cyclical forum economic forecasts REAL GDP HEADLINE INFLATION ® 2.5% 2.5%to 3.0% 1.9% 1.75%to 2.25% ® 0.7% 0.75%to 1.25% 0.3% 0.75%to 1.25% ® 3.2% 2.5%to 3.0% 1.6% 1.75%to 2.25% ® -0.1% 1.0%to 1.5% 1.3% 0.75%to 1.25% ® 7.5% 6.0%to 7.0% 2.2% 2.5%to 3.5% ® 1.6% 1.5%to 2.5% 6.7% 5.5%to 6.5% As of 17 September 2014 SOURCE:BI°omberg, PIMCO calculations Current data for real GDP growth and inflation is actual and represents four quarters ending Q22014 Brazil/Russia/India/Mexico s Word is weighted average sum of countries listed in table above P I M C O I Your Global Investment Authority try20 Assets under management by strategy PIMCO manages $1.87 trillion in assets, including $1.47 trillion in third-party client assets Alternatives Billions(S) Liquid Absolute Return Unconstrained bond strategies,credit absolute return,other absolute return strategies 37.86 Hedge Funds Global macro, long/short credit, multi-asset volatility arbitrage strategies, relative value commodities 16.38 Opportunistic/Distressed Opportunistic strategies focusing on real estate related assets(residential,commercial),corporate credit 5.00 Asset Allocation Asset Allocation Strategies Global Multi Asset,All Asset EM Multi Asset Real Retirement Inflation-Response Multi Asset,DRA 77.87 Equity Strategies Combines enhanced equities and active equities 24.63 Real Return Strategies Combines inflation linked strategies,actively managed commodities,and real-estate linked exposure 86.58 Fixed Income Total Return' Total Return 233.57 Intermediate' Core Strategies,Moderate Duration 210.04 Credit Investment Grade Corporates, Bank Loans, High Yield Corporates,Convertibles 178.80 Long Duration Focus on long-term bonds;asset liability management 138.65 Global Non-U.S.and global multiple currency formats 119.04 Cash Management' Money Market,Short-Term, Low Duration 114.59 Income Income-oriented, insurance income 74.73 Emerging Markets Local debt,external debt currency 61.16 Mortgages Agency MBS,structured credit(non-Agency MBS,CMBS,and ABS) 37.81 Diversified Income Global credit combining corporate and emerging markets debt 26.89 Municipals Tax-efficient total return management 13.09 Other Custom mandates 11.76 Stable Value' Stable incomewith emphasis on principal stability 29.13 Tail-Risk Hedging' Pooled and customized portfolios of actively managed tail-risk hedges 4T26 As of 30 September 2014 SOURCE:PIMCO Assets reflect those managed on behalf of third-party clients and exclude affiliated assets.Fund of funds assets have been netted from each strategy. Potential differences in asset totals are due to rounding.Represents assets of strategy group in dedicated and non-dedicated portfolios. Total Return has been segregated to isolate the assets of PIMCO sponsored U.S.Total Return 1940-act fund and foreign pool fund accounts.All other U.S.Total Return portfolios are included in the Intermediate category. Stable value assets have not been netted from U.S.Total Return,U.S.Moderate Duration and U.S.Low Duration assets 3 Tail-risk hedging assets reflect total notional value of dedicated mandates and are not counted towards PIMCO total assets under management P I M C O I Your Global Investment Authority pg 21 PIMCO snapshot r . . Global presence • Founded in 1971 Employees 2,462 • Investment solutions include fixed • Investment professionals 758 Amsterdam 2 income, equities, alternatives and asset • Technical and support 1,704 Hong Kong 15 allocation London 131 • Assets under management: $1.87 trillion • Collaborative team-oriented approach ■ Milan 3 Highly experienced Avg Yrs Avg Yrs Munich 63 — $1A7 trillion in third-party Experience at PIMCO New York 120 client assets • All investment Newport Beach 358 — Full complement of vehicles to meet professionals 13 6 Rio de Janeiro 6 client needs (mutual funds, separate • Senior professionals 20 9 Singapore 10 accounts, _Ps, ETFs) Sydney 15 • Award-winning client service Tokyo 27 Toronto 4 Zurich 4 ii •• •i r i As of 30 September 2014 Effective 31 March 2012,PIMCO began reporting the assets managed on behalf of its parent's affiliated companies as part of its assets under management PIMCO Your Global Investment Authority pg22 Rating Agency Comparisons 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. Quality/Grade Moody's Standard & Poor's Fitch Best Quality Aaa AAA AAA High Quality Aal AA+ AA+ Aa2 AA AA Aa3 AA- AA- Upper Medium Grade Al A+ A+ A2 A A A3 A- A- Medium Grade Baal BBB+ BBB+ Baa2 BBB BBB Baa3 BBB- BBB1 Moody's - Investment Grade "Aaa" - Bonds rated Aaa are judged to be of the best quality. 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 elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. "Aa" - Bonds which are rated As are judged to be of high quality by all standards. Together with the Aaa 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 Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. "A" - Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. Mae" - Bonds which are rated Baa 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 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. Bonds in the Aa, A, and Bee are also assigned "1", "2", or "S' based on the strength of the issue within each category. Accordingly, "At" would be the strongest group of A securities and "AY would be the weakest A securities. 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; "Caa" 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. 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 capacity to pay interest and repay principal for debt in this category than in higher rated categories. Standard and Poor's - Speculative Grade Retina 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 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 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 is assigned an actual or implied "BB" or "BB" rating. 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 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. Cl -The rating "Cl" 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 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 "D" 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 a plus or minus sign to show relative standing within the major rating categories. 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. FY 2014-15 First Quarter Financial Report This Page Intentionally Left Blank a C7 q October 30, 2014 STAFF REPORT Certificates of Participation (COP) Quarterly Report for the Period Ended September 30, 2014 Summary The District began issuing Certificates of Participation (COPs) in 1990. These COPS were a part of our long-term financing plan that included both variable interest rate and traditional fixed rate borrowing. Following are the current outstanding debt issues of the District: In May 2007, the District issued $95.18 million of fixed rate COPs, Series 2007A refunding a portion of the Series 2003 fixed rate debt. The true interest cost for the issue is 4.5 percent. In December 2007, the District issued $300 million of fixed rate COPS, Series 2007E at a true interest cast of 4.71 percent for the issue. In September 2008, the District issued $27.8 million of fixed rate COPs, Series 2008B refunding the Series 1993 variable rate debt. The true interest cost for the issue is 2.96 percent. In May 2009, the District issued $200 million of fixed rate COPS, Series 2009A at a true interest cost of 4.72 percent for the issue. In May 2010, the District issued $80.0 million of fixed rate BABs, Series 2010A at a true interest cost of 3.6B percent for the issue. In December 2010, the District issued $157.0 million of fixed rate BABs, Series 2010C at a true interest cost of 4.11 percent for the issue. In October 2011, the District issued $147.595 million of fixed rate COPS, Series 2011A refunding a portion of the Series 2D00 variable rate debt and a portion of the Series 2003 fixed rate debt. The true interest cost for the issue is 2.61 percent. O D ♦ P.O.B 819 4 r unWin V.1l ,CA 82728-81 V ♦ (714)M.2411 Quarterly COP Report For the Three Months Ended September 30, 2014 Page 2 of 2 In March 2012, the District issued $100.645 million of fixed rate COPs, Series 2012A refunding the Series 2003 fixed rate debt. The true interest cost for the issue is 3.54 percent. In August 2012, the District issued $66.395 million of fixed rate COPS, Series 2012E refunding the Series 2000 variable rate debt. The true interest cost for the issue is 1.50 percent. With the issuance of Series 2012B, there remains no variable interest rate COPs at the District. In October 2013, the District issued $129.625 million of fixed rate CANS, Series 2013A paying the Series 2012C fixed rate debt. The true interest cost for the issue is 0.17 percent. In August 2014, the District issued $85.090 million of fixed rate COPS, Series 2014A, refunding a portion of Series 2007E debt. The true interest cost for the issue is 2.34 percent. Additional Information The graph entitled, "OCSD COP Rate History Report," shows the various fixed interest rates of the District's eleven debt issues. Attachments 1. Graph - OCSD COP Rate History Report Pmpamd by Finance, 11M2014,2:18 PM OCSD COP RATE HISTORY REPORT SEPTEMBER 2014 6.00 &00 4.00 X WQ C 3.00 2.00 1.00 0.00 DATE - x - � ^ y—W..2MB F..d W.20MFl.W —. Ms2012BF� SW.2011AFk. —�Smw 20 AFU �Wm2W]BFi� ~weftsWt Fn �SWW2010AFina1 r—S..20=Fi sal.mm Fustl �Se�ea 20tCA FveE Gbxcel.dtaVn22201geNl\Flnanme ATEHIST.97 FY 2014-15 First Quarter Financial Report This Page Intentionally Left Blank ORANGE COUNTY SANITATION DISTRICT FINANCIAL MANAGEMENT DIVISION 10844 Ellis Avenue Fountain Valley, California 92708-7018 714.962.2411 www.oGsewers.com 9/30/14 ADMINISTRATION COMMITTEE Meeting Date TOBE.Of Dir. nnvta 'Iisna AGENDA REPORT tennNumber Item Number s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: GENERAL MANAGER APPROVED PURCHASES GENERAL MANAGER'S RECOMMENDATION Receive and file District purchases made under the General Manager's authority for the period of July 1, 2014—September 30, 2014. SUMMARY In accordance with Board purchasing policies, Ordinance OCSD-44, the General Manager has authority to approve purchases between $50,000 and $100,000. Below is a summary of General Manager approved purchases exceeding $50,000 for the first quarter of fiscal year 2014-15. SUMMARY Vendor Name Amount Department Description/Discussion White Nelson Diehl Evans $75,000 Administrative Internal Auditing Services LLP Services Operations UPS/Battery Charger Camali Corp. $98,720 & Maintenance Maintenance Specification No. S-2014-619 Monterey Bay Aquarium Operations Ocean Acidification Mooring Research $73,236 & construction and servicing Maintenance CSL Services, Inc. $98,000 Engineering 2-72 Flow Monitoring Services Operations Rotating Rectifier Gierlich Mitchell Inc $66,279 & Sole Source#1087 Maintenance Operations Rebuild Sals Msp#4 Weir Specialty Pumps $62,323 & Sole Source#1048 Maintenance PRIOR COMMITTEE/BOARD ACTIONS None Page 1 of 2 ADDITIONAL INFORMATION N/A CEQA N/A ATTACHMENT None Page 2 of 2 ADMINISTRATION COMMITTEE Meeting Date TOBA.of Dir. 11/12/14 Il/Ig/14 AGENDA REPORT IemNumber Item Number 6 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ORANGE COUNTY SANITATION DISTRICT COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) FOR THE YEAR END JUNE 30, 2014. GENERAL MANAGER'S RECOMMENDATION Receive and file the Sanitation District's Comprehensive Annual Financial Report for the year ended June 30, 2014, prepared by staff and audited by McGladrey, Certified Public Accountants, along with the following reports prepared by McGladrey: A. Report to the Administration Committee; and B. Report on Internal Controls; and C. Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets. SUMMARY The Sanitation District's independent auditors, McGladrey, have completed their examination of the Sanitation District's financial statements for the year ended June 30, 2014, and have issued an unmodified opinion. Each year, the Administration Committee reviews the results of the audit and the corresponding Auditor's report. During their audit, McGladrey, noted no matters involving the internal control over financial reporting and its operations that they consider to be material weakness. McGladrey will attend the meeting to respond to any questions of Directors. Staff has prepared the Comprehensive Annual Financial Report, including the audited financial statements. As the Sanitation District has consistently earned the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA), this year's report will be submitted to GFOA for their review. Page 1 of 2 PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION N/A ATTACHMENTS The following attachment(s) are included in hard copy, and may also be viewed on-line at the OCSD website(www.ocsd.com) with the complete agenda package and attachments: • Report to the Administration Committee • Report on Internal Controls • Response to Recommendation from Auditor's Internal Control Report • Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets • Comprehensive Annual Financial Report for the Year Ended June 30, 2014. (Separately bound document) Page 2 of 2 Orange County Sanitation District Report to the Administration Committee October 30, 2014 McGladrey Assurance-Tax•Consulting M<Gledrcy LLV 18401 Von Kaanan,5"Floor Irvine,CA 92612-8531 McGladrey 0949.2556500 F949255.5091 w.ve.mcglatlrey.com October 30, 2014 Members of the Administration Committee Orange County Sanitation District Fountain Valley, CA We are pleased to present this report related to our audit of the financial statements of the Orange County Sanitation District(the District)as of and for the year ended June 30, 2014. This report summarizes certain matters required by professional standards to be communicated to you in your oversight responsibility for the District's financial reporting process. This report is intended solely for the information and use of the Administration Committee,the Board of Directors and management, and is not intended to be, and should not be, used by anyone other than these specified parties. It will be our pleasure to respond to any questions you have about this report.We appreciate the opportunity to continue to be of service to the District. /%CT-&� L�/� .. l-,Mux eI.1.1—m 1-1-1—k.1 mtltPe,tleM... tNs,n-n .—.,M1,— Contents Required Communications 1-2 Summary of Significant Accounting Estimates 3-4 Summary of Uncorrected Misstatements 5 Exhibit A—Letter Communicating a Significant Deficiency in Internal Control Over Financial Reporting Exhibit B—Significant Written Communication Between Management and Our Firm Representation Letter Required Communications Generally accepted auditing standards (AU-C 260, The Auditor's Communication With Those Charged With Governance)require the auditor to promote effective two-way communication between the auditor and those charged with governance. Consistent with this requirement, the following summarizes our responsibilities regarding the financial statement audit as well as observations arising from our audit that are significant and relevant to your responsibility to oversee the financial reporting process: Area Comments Our Responsibilities With Our responsibilities under auditing standards generally accepted in Regard to the Financial the United States of America have been described to you in our Statement Audit arrangement letter dated August 4, 2014. Overview of the Planned We have issued a separate communication regarding the planned Scope and Timing of the scope and timing of our audit and have discussed with you our Financial Statement Audit identification of, and planned audit response to, significant risks of material misstatement. Accounting Policies and Preferability of Accounting Policies and Practices Practices Under generally accepted accounting principles, in certain circumstances, management may select among alternative accounting practices. In our view, in such circumstances, management has selected the preferable accounting practice. Adoption of, or Change in, Accounting Policies Management has the ultimate responsibility for the appropriateness of the accounting policies used by the District. The District did not adopt any significant new accounting policies nor have there been any changes in existing significant accounting policies during the current period. Significant or Unusual Transactions We did not identify any significant or unusual transactions or significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Management's Judgments and Accounting Estimates Summary information about the process used by management in formulating particularly sensitive accounting estimates and about our conclusions regarding the reasonableness of those estimates is in the attached Summary of Significant Accounting Estimates. Audit Adjustments There were no audit adjustments made to the original trial balance presented to us to begin our audit. Uncorrected Misstatements Uncorrected misstatements are summarized in the attached Summary of Uncorrected Misstatements. 1 Area Comments Disagreements With We encountered no disagreements with management over the Management application of significant accounting principles, the basis for management's judgments on any significant matters,the scope of the audit, or significant disclosures to be included in the financial statements. Consultations with Other We are not aware of any consultations management had with other Accountants accountants about accounting or auditing matters. Significant Issues Following is a description of significant issues arising from the audit Discussed With that were discussed with management: Management • Significant deficiency for complex accounting matters,as described in Exhibit A • Capitalized costs and insurance recoveries identified in the Summary of Uncorrected Misstatements Significant Difficulties We did not encounter any significant difficulties in dealing with Encountered in Performing management during the audit. the Audit Letter Communicating a We have separately communicated a significant deficiency in internal Significant Deficiency in control over financial reporting identified during our audit of the Internal Control Over financial statements, and this communication is attached as Exhibit A. Financial Reporting Significant Written A copy of a significant written communication between our Firm and Communication Between the management of the District, the representation letter provided to Management and Our Firm us by management, is attached as Exhibit B. 2 Orange County Sanitation District Summary of Significant Accounting Estimates Year Ended June 30, 2014 Accounting estimates are an integral part of the preparation of financial statements and are based upon management's current judgment.The process used by management encompasses its knowledge and experience about past and current events, and certain assumptions about future events. You may wish to monitor throughout the year the process used to determine and record these accounting estimates.The following describes the significant accounting estimates reflected in the District's June 30, 2014 financial statements: Basis for Our Conclusions on Management's Reasonableness of Estimate Accounting Policy Estimation Process Estimate Useful Lives of Long- The estimated useful Management reviews We tested the Lived Assets lives of assets generally for changes in the reasonableness of have the following useful lives of long-lived information underlying ranges:sewage assets by evaluating management's collection facilities, prominent events or estimate. Based on our 50 years; sewage changes in procedures,we treatment facilities, circumstances affecting concluded that the 40 years; sewage capital assets to assigned useful lives of disposal facilities, determine whether capital assets are 40 years; and general impairment or change in reasonable. plant and administrative the useful life of a facilities, 11.5 years. capital asset has These assets are occurred.A capital depreciated using the asset is considered straight-line method. impaired if both the Construction in process decline in the service is not depreciated until utility of the capital ready for intended use. asset is large in magnitude and the event or change in circumstances is outside the normal fife cycle of the capital asset. Pension Obligations A pension or OPEB For OPEB, We tested the and Postemployment asset is recorded if management utilizes an reasonableness of the Benefits Other Than contributions exceed the actuarial consulting firm information underlying Pensions (OPEB) annual required to perform an evaluation the actuarial contribution. A pension using the entry age evaluations. Based on or OPEB liability is actuarial cost method. our procedures,we recorded if the Management reviewed concluded that the contributions are less and approved the pension and OPEB than the annual required actuarial assumptions costs recorded are contribution. and calculations used to reasonable. determine the postemployment benefit costs. 3 Basis for Our Conclusions on Management's Reasonableness of Estimate Accounting Policy Estimation Process Estimate Pension Obligations For pension obligation, and Postemployment management utilizes Benefits Other Than Orange County Pensions (OPEB) Employees' Retirement (Continued) System's (OCERS) actuaries for its defined benefit plan. Management reviewed and approved the actuarial assumptions and calculations used to determine the pension costs. For the Additional Retiree Benefit Account (ARBA)defined benefit plan obligation, management utilizes an actuarial consulting firm to perform an evaluation using the projected unit credit cost method. Management reviewed and approved the actuarial assumptions and calculations used to determine the AREA costs. 4 Orange County Sanitation District Summary of Uncorrected Misstatements Year Ended June 30, 2014 During the course of our audit, we accumulated uncorrected misstatements that were determined by management to be immaterial, both individually and in the aggregate,to the statements of financial position, results of operations and cash flows, and to the related financial statement disclosures. Following is a summary of those differences: Effect—Increase loser easa) Description Assets Liabilities Equity Revenue Expenditure Prior Year Misstatements • Error related to IRW D annual integration adjustment $ - $ - $ 9.468788 $ - $ 91 • Capitalized repair costs and accrual of loss contingency for Project 5-58 (6,011,098) 8,458,286 (14,469,384) - - • Unamoriized goodwill amortization related to the IRWD transactions (2,220,857) - (2,220,857) - - • Effects of additional capitalized Interest from the prior year 638,625 - 638,625 - - • Variance in premiums and discounts of long-term obligations between straight- line and the effective interest methods - (1,308,824) 1.308.824 - - Current Year Misstatements • Insurance recoveries received and netted against Project 5-58 13.600.000 - - 13,600,000 - • To reverse the capitalization of loss contingency for Project 5-58 (8,458,286) (8,458,286) - - - • Invoices not properly accrued in the current year - 164,483 - - 164,483 • Current year adjustment unamortized goodwill related to the IRWDtransactions 657,709 - - - (667,709) • Current year depreciation of additional capitalized interest from poor years (16,375) - - - 16,375 • Current year adjustment to premiums and discounts of long-tern obligations for the difference between straight-line and the effective interest methods - (382,636) - - (382,636) • Variance in the estimated amount for Incurred but not reported of claims liability - 568,100 - 568,100 Total effect 4,422,599 $ 13,600,000 $ 9,177,401 Balance sheet effect $ (1,810,282) $ (958,877) $ (851,405) 5 Exhibit A—Letter Communicating a Significant Deficiency in Internal Control Over Financial Reporting M<Gladmyl 18401 Von Karel 5"Floor Irvine,CA 92612-8531 • McGladrey 0949.2556500 F949255.5091 glatlrey.com To Management and Board of Directors Orange County Sanitation District Fountain Valley, CA In planning and performing our audit of the financial statements of the Orange County Sanitation District (the District)as of and for the year ended June 30, 2014, in accordance with auditing standards generally accepted in the United States of America,we considered the District's internal control over financial reporting(internal control)as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control.Accordingly,we do not express an opinion on the effectiveness of the District's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. Therefore,there can be no assurance that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as discussed below, we identified a certain deficiency in internal control that we consider to be a significant deficiency. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions,to prevent, or detect and correct, misstatements on a timely basis.A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency,or a combination of deficiencies, in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance.We consider the following deficiency to be a significant deficiency: Documentation of Complex Accounting Matters During our audit,we discussed with management significant accounting matters that had occurred during the period under audit. These matters include the corrections made by financial management to the Irvine Ranch Water District liability that was caused by a prior year error, and the accounting for insurance recoveries and certain capitalized costs.When significant accounting and reporting matters arise, the District's system of accounting controls needs to provide a means to better identify and ensure that these matters are accurately recorded within the financial records.The process should address all technical documentation requirements,the approval process, and communication with the Board of Directors and users of financial statements. This communication is intended solely for the information and use of management,the Board of Directors and others within the organization, and is not intended to be,and should not be, used by anyone other than /these specified parties. /yCaEl GLP Irvine, CA / October 23, 2014 MambrdNaa5Mln1erna11-1-1-1,.1lndpertlenl a¢ou ,lvanJ mnwk,gfirmt. Exhibit B—Significant Written Communication Between Management and Our Firm ServinV Orange County Sanitation District 10844 Ellis Avenue,Fountain Valley,CA 92706 Anaheim (714)962-2411Brea www.ocsE.wers.com October 23, 2014 Buena Park Cypress McGladrey LLP 18401 Von Karman Avenue, 5th Floor FounhalnValley Irvine, CA 92612 Fullerton Garden Goove This representation letter is provided in connection with your audit of the financial Huntington Beach ,t statements of the Orange County Sanitation District (the District) as of and for the year ended June 30, 2014 for the purpose of expressing an opinion on whether Invine a the financial statements are presented fairly, in all material respects, in LaHabm accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). La Palma We confirm, to the best of our knowledge and belief, that as of October 23, 2014: Los Alamitos Newport Beach Financial Statements Orange 1. We have fulfilled our responsibilities, as set out in the terms of the audit Placentia arrangement letter dated August 4, 2014, for the preparation and fair presentation of the financial statements referred to above in accordance with Santa Ana U.S. GAAP. SealBeach 2. We acknowledge our responsibility for the design, implementation and Stanton maintenance of internal control relevant to the preparation and fair Tustin presentation of financial statements that are free from material misstatement, Villa Park whether due to fraud or error. Yorba Linda 3. We acknowledge our responsibility for the design, implementation and OrangeCounty of maintenance of internal control to prevent and detect fraud. Costa Mesa, 4. Significant assumptions used by us in making accounting estimates, including Sanitary District those measured at fair value, are reasonable and reflect ourjudgment based on our knowledge and experience about past and current events and our Midway City SanitaryDistrict assumptions about conditions we expect to exist and courses of action we expect to take. Invine Ranch Water District 5. All events subsequent to the date of the financial statements, and for which U.S. GAAP requires adjustment or disclosure, have been adjusted or disclosed. 6. The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP. 7. Net interest costs of approximately $7.6 million were properly capitalized on projects of the District. All projects included in construction in progress for which interest is not being capitalized is due to the assets being ready for their intended use in accordance with U.S. GAAP. MP 8. There are no capital assets that have experienced permanent impairment as we protect public health and the environment by providing effective wastewater collection, treatment,and recycling. McGladrey LLP too October 23,2014 Page 2 indicated in Governmental Accounting Standards Board (GASS) Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries. 9. The amounts due to the Irvine Ranch Water District of$29,107,270 have been accurately calculated based on the applicable agreements. Additionally, the journal entry error of$9,468,768, which occurred for the year ended June 30, 2013, was corrected in the current year's financial statements, which results in nonoperating revenue being overstated by$9,468,768. Management concludes that the correction reported in the year ended June 30, 2014 report would not mislead a user of the financial statements. 10. The $8,458,286 in current year costs for Project 5-58 were anticipated as of June 30, 2013, and management considers these part of the overall project cost (i.e., capitalized costs versus expenses). As a result, management believes these costs were properly capitalized into construction in progress during the year ended June 30, 2014. In connection with this project, the District received $13,600,000 in insurance recoveries during the year ended June 30, 2014, which is netted against capitalized cost related to the project. Management believes the exclusion of the amount from nonoperating revenues is not a material misstatement to the June 30, 2014 financial statements. 11. There are no restatements of net position that should be reported as of June 30, 2014 and all uncorrected misstatements are immaterial to the financial statements. 12. There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with Statement of Financial Accounting Standards No.5 and/or GASS Statement No.10. 13. We have no direct or indirect, legal or moral obligation for any debt of any organization, public or private that is not disclosed in the financial statements. 14. We have complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance. In connection therewith, we specifically represent that we are responsible for determining that we are not subject to the requirements of the Single Audit Act and U.S. Office of Management and Budget Circular No. A- 133, because we have not received, expended, or otherwise been the beneficiary of the required amount of federal awards during the period of this audit. 15. We have informed you of all uncorrected misstatements. As of and for the year ended June 30, 2014, we believe that the effects of the uncorrected misstatements aggregated by you and summarized below are immaterial, both individually and in the aggregate, to the financial statements. For v Star, McGladrey LLP October 23,2014 Page 3 �• purposes of this representation, we consider items to be material, regardless of 1ME ea their size, if they involve the misstatement or omission of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. Even-Increase(Decrease) Destdpron Assert Liopltes Equity Revenue Expemdituna Prior Year Mlsstatememts •Emu related M IRWD annual m egral adjustment S S - S 9.468,788 S - S 9468.788 •Capitalized repair costs and accrual of his,roya ray la Prejed 558 (6011,098) 8.458.286 (14,469,384) - - •Unamorlized goccoll onontraaon related to the IRWD thansacrions (2720,857) - (2,220,857) - - • Effects of additional capitalized interest from the prior year 638625 - 638,625 - - Variance in premiums and discounts of long lerm oblgations Statement Still Ism aid the effec8.e interests IMS (1,308,824) 1,708B24 - - Cement Year Misstatement, •Irmaance moments received and needed agoersl Projects a 13.600,000 - - 13.600,000 •To reverse then cmpilolutlen of less con6ngancy for Project 5.58 (8.458.286) (8,458,286) - - - •are"..1 primary,accrued is the 'need Year - 164.483 - 164,483 •Cuuemtyearaljuslmenlunomnlded gooAeiX related to the lRWD eansaclwns 657,709 - - (657709) •Current Year depreciation of additional capitalized interest from prig years (18375) - - 16.375 •Current year adjustment to premiums and discounts of lorp.temn obligations for the difference bemoan straight line and the eBetlrve interest methods - (382,636) (382,636) •Vanance in the estimated amount for incurred thin had national of claims legally 568,100 568,100 Total effect 4,422,590 517600000 $ 9,177401 Balance sheet effect S (1810,282) S (958,877) $ (051405i Information Provided 16. We have provided you with: a. Access to all information of which we are aware that is relevant to the preparation and fair presentation of the financial statements such as records, documentation and other matters. b. Additional information that you have requested from us for the purpose of the audit. x ex,q, 4 McGladrey LLP October 23,2014 Page 4 ,• c. Unrestricted access to persons within the District from whom you determined it necessary to obtain audit evidence. d. Minutes of the meetings of the governing board and committees, or summaries of actions of recent meetings for which minutes have not yet been prepared. 17. All transactions have been recorded in the accounting records and are reflected in the financial statements. 18. We have disclosed to you the results of our assessment of risk that the financial statements may be materially misstated as a result of fraud. 19. We have no knowledge of allegations of fraud or suspected fraud affecting the District's financial statements involving: a. Management. b. Employees who have significant roles in internal control. c. Others where the fraud could have a material effect on the financial statements. 20. We have no knowledge of any allegations of fraud or suspected fraud affecting the District's financial statements received in communications from employees, former employees, analysts, regulators or others. 21. We have no knowledge of noncompliance or suspected noncompliance with laws or regulations whose effects were considered when preparing financial statements. 22. We have disclosed to you all known actual or possible litigation and claims whose effects should be considered when preparing the financial statements. 23. We have disclosed to you the identity of the District's related parties and all the related-party relationships and transactions of which we are aware. 24. We have informed you of all significant deficiencies, including material weaknesses, in the design or operation of internal controls that could adversely affect the District's ability to record, process, summarize and report financial data. 25. We are aware of no communications from regulatory agencies concerning noncompliance with, or deficiencies in,financial reporting practices. 26. During the course of your audit, you may have accumulated records containing data that should be reflected in our books and records. All such data have been so reflected. Accordingly, copies of such records in your possession are no longer needed by us. McGladrey LLP October 23,2014 Page 5 a Pa ORANGE COUNTY SANITATION DISTRICT J+'�� meserberg, General-M1annage,r J "✓ Lorenzo Tyne irector of Finance and Adm��inistrUtratt e Services �� Mike White, Controller M<Gladmyl 18401 Von Karel 5"Floor Irvine,CA 92612-8531 • McGladrey 0949.2556500 F949255.5091 glatlrey.com To Management and Board of Directors Orange County Sanitation District Fountain Valley, CA In planning and performing our audit of the financial statements of the Orange County Sanitation District (the District)as of and for the year ended June 30, 2014, in accordance with auditing standards generally accepted in the United States of America,we considered the District's internal control over financial reporting(internal control)as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control.Accordingly,we do not express an opinion on the effectiveness of the District's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. Therefore,there can be no assurance that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as discussed below, we identified a certain deficiency in internal control that we consider to be a significant deficiency. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions,to prevent, or detect and correct, misstatements on a timely basis.A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency,or a combination of deficiencies, in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance.We consider the following deficiency to be a significant deficiency: Documentation of Complex Accounting Matters During our audit,we discussed with management significant accounting matters that had occurred during the period under audit. These matters include the corrections made by financial management to the Irvine Ranch Water District liability that was caused by a prior year error, and the accounting for insurance recoveries and certain capitalized costs.When significant accounting and reporting matters arise, the District's system of accounting controls needs to provide a means to better identify and ensure that these matters are accurately recorded within the financial records.The process should address all technical documentation requirements,the approval process, and communication with the Board of Directors and users of financial statements. This communication is intended solely for the information and use of management,the Board of Directors and others within the organization, and is not intended to be,and should not be, used by anyone other than /these specified parties. /yCaEl GLP Irvine, CA / October 23, 2014 MambrdNaa5Mln1erna11-1-1-1,.1lndpertlenl a¢ou ,lvanJ mnwk,gfirmt. p ORANGE COUNTY SANITATION DISTRICT np Staff Report DATE: November 12, 2014 TO: Administration Committee FROM: Michael D. White, Controller SUBJECT: Response to Recommendation from Auditor's Internal Control Letter Dated October 23, 2014 The auditing firm McGladrey completed their audit of the District's financial statements as of and for the year ended June 30, 2014. Their audit took into consideration the District's internal controls over financial reporting in designing their audit procedures for the purpose of expressing an opinion on these statements. During their limited review of internal controls, they uncovered what they believe to be a significant deficiency, but not a material weakness, in the accounting and reporting of complex accounting matters. This finding is related to the two following instances: Annual Adjustment to Allocated Joint Capital Assets Finding The first instance involved an annual adjustment to allocate the joint capital assets within Revenue Area 14 based on their proportional share of the District. During the prior year's financial reporting process, a journal entry to record this adjustment was prepared incorrectly that erroneously increased the liability to the Irvine Ranch Water District (IRWD). However, this error was uncovered by Financial Management following the prior year end close during the annual reconciliation reporting to IRWD, and corrected during the current year. This was an accounting and financial reporting error and not a cash transaction error as no cash payments were made as a result of this error. Response Financial Management has now increased its oversight review on journal entries containing large dollar amounts by requiring a second approval process. Accounting for Insurance Recoveries and Certain Capitalized Costs Finding The second instance involved the accounting for insurance recoveries and certain capitalized costs. The District incurred construction failures related to Project 5-58— Bitter Point Force Main Rehabilitation. All costs related to the project, including the Response to Internal Audit Report on Accounting Policies and Procedures Issued on November 12, 2014 Page 2 of 2 costs incurred to correct the deficiencies, were capitalized as construction costs. When insurance recoveries were eventually received, they were recording as a reduction to the total project cost. According to generally accepted accounting principles (GAAP), the construction deficiencies, or repairs, should have been recorded as a non-operating expense as opposed to capital assets and the insurance recoveries as non-operating revenues as opposed to being a reduction to the capital asset. As all receipts and disbursements have been properly accounted for, the net effect in the recording of this capital asset is an overstatement of the capital asset, Project 5-58, and total equity by $869,000. Project 5-58 has accumulated $36.2 million in construction-in-progress at June 30, 2014. Response A procedure has been put into place where Financial Management will meet with Engineering at the end of each fiscal year to determine if any there are any existing projects that have impairments or construction defects that requires additional costs, or are subject to litigation or have potential insurance recoveries to ensure that the cost of these projects are properly accounted for. McGladmyLLP 19401 Von Kannan,5"Floor Irvine,CA 92612-8531 • McGladrey 094e255.6500 F949255.5091 w.ve.mcglatlrey.com Independent Accountant's Report on Applying Agreed-Upon Procedures Board of Directors Orange County Sanitation District Fountain Valley, CA We have performed the procedures enumerated below to the accompanying Appropriations Limit Calculation of the Orange County Sanitation District (the District) for the year ended June 30, 2014. These procedures, which were agreed to by the District and the League of California Cities (as presented in the publication entitled Agreed-Upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution), were performed solely to assist the District in meeting the requirements of Section 1.5 of Article XIII-B of the California Constitution. The District's management is responsible for the Appropriations Limit Calculation. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below, either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: 1. We obtained the completed internal calculations from management and compared the limit and annual adjustment factors included in those calculations to the limit and annual adjustment factors that were adopted by a resolution of the Board of Directors. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of the Board of Directors. Finding: No exceptions were noted as a result of our procedures. 2. For the accompanying Appropriations Limit Calculation, we added line A, last year's limit, to line E, total adjustments, and compared the resulting amount to line F, this year's limit. Finding: No exceptions were noted as a result of our procedures. 3. We compared the current year information presented in the accompanying Appropriations Limit Calculation to the supporting calculations described in item 1 above. Finding: No exceptions were noted as a result of our procedures. 4. We compared the prior year Appropriations Limit presented in the accompanying Appropriations Limit Calculation to the prior year Appropriations Limit adopted by the Board of Directors for the prior year. Finding: No exceptions were noted as a result of our procedures. M. LM,wu,RSM IM—n-1 nM,S ,kM ma MOM a—MMI,tMMA rem.minnnn.. We were not engaged to and did not conduct an audit, the objective of which would be the expression of an opinion on the accompanying Appropriations Limit Calculation of the District. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriations limit for the base year, as defined by Article XIII-B of the California Constitution. This report is intended solely for the information and use of the Board of Directors and management of the District, and is not intended to be, and should not be, used by anyone other than these specified parties. HHjo/�we'ver,this report is a matter of public record and its distribution is not limited. /`/G 112n G LP Irvine, CA / October 23,2014 Orange County Sanitation District Appropriations Limit Calculation Year Ended June 30,2014 Amount Source A. Last year's limit $ 85,833,923 B. Adjustment factors 1. Population change 1.0072 State Finance 2. Per capita change 1.0512 State Finance Total adjustment[(B.1 x B.2)-1.0] 0.0588 (B.1xB.2) C. Annual adjustment 5,044,343 (BxA) D. Other adjustments: 1. Loss responsibility(- ) - 2.Transfer to private (- ) - 3.Transfer to fees(- ) - 4.Assumed responsibility(+ ) Subtotal E. Total adjustments 5,044,343 (C+D) F. This year's limit $ 90,878,266 (A+E) Orange County Sanitation District Comprehensive Annual Financial Report for the period ended June 30, 2014 with comparative totals for June 30, 2013 y't: r z44 r J 1 ti r► Orange County, California ORANGE COUNTY SANITATION DISTRICT ORANGE COUNTY, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2014 WITH COMPARATIVE TOTALS FOR JUNE 30, 2013 Prepared By: Administrative Services Department Financial Management Division Michael D.White, CPA Controller (THIS PAGE LEFT INTENTIONALLY BLANK) ORANGE COUNTY SANITATION DISTRICT Comprehensive Annual Financial Report Table of Contents For the Year Ended June 30, 2014 With Comparative Totals for the Year Ended June 30,2013 Paae INTRODUCTORY SECTION: Letter of Transmittal i-vii GFOA Certificate of Achievement vill Boardof Directors........................................................................................................................ ix OrganizationChart...................................................................................................................... x Mapof Service Area.................................................................................................................... A FINANCIAL SECTION: Independent Auditor's Report...................................................................................................... 1-2 Management Discussion and Analysis—Required Supplementary Information. 3-8 Basic Financial Statements: Statement of Net Position 10 Statement of Revenues, Expenses, and Changes in Net Position 11 Statement of Cash Flows 12 Notes to Basic Financial Statements 13-37 Supplementary Information: Combining Area Schedule of Net Position.......................................................................... 40 Combining Area Schedule of Revenues, Expenses, and Changes in Net Position .......... 41 Combining Area Schedule of Cash Flows.......................................................................... 42 STATISTICAL SECTION: Net Position by Component—Last Ten Fiscal Years.................................................................. 44 Revenues and Gross Capital Contributions by Source—Last Ten Fiscal Years........................ 45 Expenses by Type—Last Ten Fiscal Years................................................................................ 46 Change in Net Position—Last Ten Fiscal Years......................................................................... 47 Cash and Investment Reserve Balances—Last Ten Fiscal Years............................................. 48 Sewer Service Fees—Last Nine Fiscal Years& Next Fiscal Year............................................. 49 Number of Accounts and Revenues by Customer Class—Last Ten Fiscal Years..................... 50 Principal Sewer Service Customers—Current Fiscal Year and Nine Years Ago....................... 51 Ratio of Annual Debt Service to Total Expenses—Last Ten Fiscal Years................................. 52 Debt Coverage Ratios—Last Ten Fiscal Years.......................................................................... 53 Computation of Direct and Overlapping Debt—Current Fiscal Year.......................................... 54 Ratios of Outstanding Debt—Last Ten Fiscal Years. 55 Comparison of the Volume of Wastewater Treated—Last Ten Fiscal Years. 56 Authorized Full-time Equivalents by Function—Last Ten Fiscal Years. 57 Biosolids Produced—Last Ten Fiscal Years............................................................................... 58 Capital Asset Statistics—Last Ten Fiscal Years......................................................................... 59 Demographic Statistics—Last Ten Fiscal Years......................................................................... 60 Estimated Population Served by Orange County Sanitation District—Current Fiscal Year....... 61 Principal Orange County Employers—Current Fiscal Year and Nine Years Ago....................... 62 OperatingIndicators.................................................................................................................... 63 OTHER DATA&TRENDS: Cash and Investment Portfolio—As of June 30, 2014................................................................ 66 Property Tax Rates—Direct and Overlapping Governments—Last Ten Fiscal Years............... 67 Assessed and Estimated Actual Value of Taxable Property—Last Ten Fiscal Years................ 68 Property Tax and User Fee Levies and Collections—Last Ten Fiscal Years. 69 Property Value and Construction—Last Ten Fiscal Years ......................................................... 70 Insurance in Force 71 (THIS PAGE LEFT INTENTIONALLY BLANK) Orange County Sanitation District Serving 30844 BIG Aerie.Fountain Valley.G192708 Anaheim 7149622411Cyaress . wwwo6ewescom Brea Butena Park October 23,2014 Fountain Valley Fullermin The Board of Directors of the Garden Grove Orange County Sanitation District, Orange County, California Hantiagon Beach Submitted herewith is the Comprehensive Annual Financial Report of the Orange County Sanitation Irvine District, Orange County, California for the fiscal year ended June 30, 2014. This report includes the La Habe financial position and activity of individual revenue areas, as described within the Governmental Structure below, as of June 30, 2014 and was prepared by the Financial Management Division of La Palm the Sanitation District's Administrative Services Department. LosAiamitte Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the Sanitation District. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a • a manner designed to present fairly the financial position and results of operations of the Sanitation Placenta District. All disclosures necessary to enable the reader to gain an understanding of the agency's financial activities have been included. Santa Ana Included within the accompanying financial statements are all of the organizations, activities, and Seal Beach functions controlled by the Sanitation District's Board of Directors in accordance with the Stanton Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting. For the purpose of this evaluation, control was determined by the Board's responsibility for: (1) adoption of the budget and user charges, (2) taxing authority, and (3) establishment of policies. The reporting entity and its services are described in further detail in Note Villa Pan, 1 of the financial statements. Yortua Linda An audit of the books, financial records and transactions of the Sanitation District is conducted countyoforarge annually by independent certified public accountants. The Sanitation District selected the accounting firm of McGladrey LLP to perform the audit for the year ended June 30, 2014. The Costs• auditors' report on the Sanitation District's basic financial statements and supplementary information Sanitary istrict is located on page 1 within the financial section of this report. This report renders an unmodified opinion on the Sanitation District's basic financial statements for the year ended June 30, 2014. MidwaySanitary r^ Management's discussion and analysis (MD&A) immediately follows the independent auditor's Iname Reach report and provides a narrative introduction, overview, and analysis of the basic financial DefunctWater statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. GOVERNMENTALSTRUCTURE The Orange County Sanitation District encompasses the Northern section of Orange County. The �g Sanitation District provides wastewater treatment for an area of the County covering 479 square miles and serving a population of approximately 2.5 million, or 81 percent of the County's population. The Sanitation District was originally incorporated in 1954 as nine separate public corporations, or districts. In April of 1998, at the Sanitation District's request, the Board of Supervisors of the County of Orange passed Resolution No. 98-140 ordering the consolidation of ,E these nine County Sanitation Districts into a new, single sanitation district, to be known as the Orange County Sanitation District, effective July 1, 1998. This action was recommended to the Board by the Local Agency Formation Commission in order to simplify governance structures, i We protect public health and the environment by providing effective wastewater collection, treatment,and recycling reduce the size of the Board, ease administrative processes, streamline decision-making and consolidate accounting and auditing processes. The boundaries of the nine previous districts had remained intact for the purpose of collecting sewer user fees at the previously established rate schedules, and were referred to as nine individual revenue areas through June 30, 2000. Effective July 1, 2003, all Revenue Areas, except Revenue Area 14, consolidated user fee rates and all enterprise fund accounting and budgeting activities and are now known as the Consolidated Revenue Area. The Sanitation District is managed by an administrative organization composed of directors appointed by the agencies or cities which are serviced by the Sanitation District. Each of the two remaining Revenue Areas, the Consolidated Revenue Area and Revenue Area 14, has its own budget and is responsible for the construction and maintenance of its own collection system. All Revenue Areas, except Revenue Area 14 and the portion of the Consolidated Revenue Area previously known as Revenue Area 13, receive their own share of the one-percent ad valorem property tax levy. In addition, all Revenue Areas except Revenue Area 14, collect user fees from property owners. Revenue Area 14 receives all of its revenues from service charges to the Irvine Ranch Water District. The purpose of the Sanitation District's wastewater management program is to protect the public's health, preserve the beneficial uses of the coastal waters, and maintain air quality. The objectives of operating the treatment plants are to process and dispose of the treated wastewater and the separated solids in accordance with Federal, state, and local laws including the Environmental Protection Agency. The Sanitation District sewerage system includes approximately 580 miles of sewers that convey wastewater generated within the Sanitation District's boundaries to the Sanitation District's two wastewater treatment plants, Reclamation Plant No. 1 located in the City of Fountain Valley, and Treatment Plant No.2located in the City of Huntington Beach. Plants No. 1 and No. 2 have secondary treatment capacities of 182 million gallons per day(mgd)and 150 mgd, respectively. Both plants are master-planned for a future primary and secondary treatment capacity of 235 mgd for a combined total of 470 mgd by the year 2070. After wastewater receives secondary treatment at Plant No. 1, it flows to the Groundwater Water Replenishment System (GWRS) at the Orange County Water District, located adjacent to the Sanitation District, where it undergoes a state-of-the-art purification process consisting of microfiltration, reverse osmosis, and ultraviolet light with hydrogen peroxide. The product water is near-distilled quality. Approximately 35 million gallons (132,500 cubic meters) per day of the GWRS water are pumped into injection wells to create a seawater intrusion barrier. Another 35 million gallons (132,500 cubic meters) are pumped daily to Orange County Water District's percolation basins in Anaheim where the GWRS water naturally filters through sand and gravel to the deep aquifers of the groundwater basin. Remaining outflows of treated wastewater from Plants 1 and 2 are combined and discharged to the ocean off the Huntington Beach coast through an ouffall pipe that is 120 inches in diameter and approximately five miles long. The last mile of the outfall pipe is a diffuser that dilutes the wastewater with seawater in a ratio of 148 parts seawater to one part treated wastewater at an average depth of 185 feet. ECONOMIC CONDITIONS AND OUTLOOK In April 2014, the Institute for Economic and Environmental Studies at the California State University Fullerton Mihaylo College of Business and Economics(CSUF)forecasts that the real U.S. gross domestic product will grow an average of 2.4 percent this year, less than originally anticipated due to the weather setbacks and the reduction of an inventory buildup in the first half of the year, and then rise to 3.1 percent in 2015. The CSUF forecast reports that Orange County payroll employment rose by 36,000 during 2013 for a 2.5 percent increase, approximately the same amount as in 2012. The two years of solid growth comes after a loss of 141,000 jobs during 2007-2010. Over the three-year period from 2010-2013, Orange County has regained approximately 88,000 jobs of all the total jobs lost during the devastation of the Great Recession. Job losses during the recession were concentrated in a handful of sectors with the largest decline occurring in Construction (-35,000) that shrank by an unprecedented 45 percent. In magnitude, this was followed by Manufacturing (-30,000), Professional & Business Service (-30,000), Financial Services (-24,000)and Retail Sales (-20,000). Some of these most hard-hit sectors have also rebounded over the past three years. The gains were led by Professional & Business Services (20,000), Leisure & Hospitality (19,000), Educational and Health Services (16,000), Construction (9,000), and Financial Services(9,000). CSUF expects Orange County payroll employment to increase by 38,000, or 2.7 percent in 2014 and by 41,000, or 2.8 percent in 2015. The Orange County average annual unemployment rate is forecasted to drop slightly below 6.0 percent in 2014 and to 5.5 percent in 2015. According to CSUF, housing construction has improved significantly but has a long way to go before getting to the pre-recession levels. Housing starts fell unexpectedly in 2013 but are showing better performance in early 2014 and are expected to continue to improve. Spending on residential and commercial developments continued to show healthy growth in 2013 and is expected to maintain that pace. A strengthening economy and lower inventory levels have been pushing up the prices of housing. The number of foreclosures has gone down substantially and there has been little addition to the stock of housing due to relatively slow improvement in construction. The annual increase on the basis of Corelogic data for Orange County housing price for an existing single-family home was 19.3 percent for 2013 to a level of$625,000. CSUF expects a 7-9 percent increase in 2014 and a 5-7 percent increase in 2015. MAJOR INITIATIVES Following are the District's current major initiatives as outlined in the General Manager's work plan for FY 2015-15: 1. Safety and Security— Prioritize and implement measures to reduce risk and provide a secure and safe workplace for our employees, as well as protecting our regional infrastructure. Complete Administrative or Engineering Controls for high priority items identified in the Safety Study (SP-145) by December 31, 2014. Develop an Implementation Plan for the standard Administration and Engineering Controls identified in the Safety Study by June 30, 2015. Complete a Vulnerability Self- Assessment and identify security improvements by December 31, 2014. 2. Future Water Recvclina — Work with Orange County Water District (OCWD) to jointly study improvements needed to support the Groundwater Replenishment System Final Expansion. Determine partnerships, needs, strategies, benefits and costs associated with recycling any remaining flows from Plant No. 2 effluent water. Issue Request for Proposals for SP-173 Effluent Reuse Study by January 2015 and update agreement with OCWD by June 2015. 3. Infrastructure Stability — Expand the current asset management program to enhance the maintenance of civil assets (concrete, structures, steel, etc.). Develop by June 30, 2015 a civil asset management plan including goals, implementation tasks and resource needs. 4. Operational Optimization — Continue to evaluate and optimize operations at the Sanitation District focusing on: • Efficiency — Effective Utility Management Model — Complete the review and self-assessment by December 31,2014. iii • Cost Savings — By June 30, 2015, continue stakeholder outreach efforts, submit request to re- open ocean discharge permit, negotiate removal of disinfection requirements, and discontinue use of disinfection chemicals for effluent discharge through the long outfall, realizing an annual cost savings of$425,000. • Best Management Practices — Develop business work Flows for implementing best practices for planning and scheduling maintenance, conduct training, and go-live with Maximo, the new computerized maintenance management system(CMMS)by June 30, 2015. • Shared Services— Explore and determine areas where shared services can improve performance and reduce costs for OCSD rate payers by consolidating functions. 5. Communication Strategy—Prepare a recommendation by June 30, 2015 for the Board of Directors on OCSD's corporate identity and the possibility of moving OCSD's brand from "wastewater' to a .resource recovery facility'. 6. Capital Budget Expenditure—Target 90 percent expenditure on major Engineering Capital Projects for FY 14115. 7. Workforce Planning and Workforce Development — Improve, increase, and implement tools to expand labor force capacity and staff skill levels by June 30, 2015. 8. Administrative Facilities — Prepare and present an Implementation Plan for the replacement of Plant No. 1 administrative facilities to the Board of Directors by June 30,2015. 9. Operational Resiliency — By June 30, 2015 complete a comprehensive review of the Integrated Emergency Response Plan with three table top drills exercises, complete a risk register and develop a scope of work for a business continuity plan to ensure OCSD is prepared to continue operations in the event of a significant event. 10. Odor Control Master Plan— Develop a recommendation on odor treatment technologies and levels of service goals for both plant facilities. Issue a request for proposal for SP-166, Plant Odor Control Master Plan by January 31, 2015. 11. Research — Finalize fuel cell research project and present findings with recommendations to the Board of Directors by December 31, 2014. Identify and propose two research opportunities to the Board of Directors by June 30, 2015. 12. Energy Efflciencv — Evaluate OCSD facilities, through an energy audit, to identify energy savings strategies that are economically and operationally feasible. Present findings and recommendations to the Board of Directors by June 30, 2015. Strategic Planning In November 2013, the Board of Directors approved the annual update to the rolling five-year strategic plan. This is a comprehensive strategic plan to steer OCSD's efforts and engage the organization to envision service levels and operational needs for the next five years. This annual process begins with the General Manager's Office initiating the planning effort with the Executive Management Team, and then soliciting input and ideas from managers and supervisors. A draft of the updated five-year strategic plan is then presented to the Board of Directors during a workshop, where Board Members discuss and deliberate changes and additions to the plan. Driven by the Sanitation District's mission, vision and core values, the 2014 Strategic Plan update maintains an aggressive effort to meet the sanitation, health, and safely needs of the 2.5 million people being served in a cost effective manner,while protecting the environment where we live. iv Since the implementation of the first strategic plan in 2007, 38 strategic goals have been established and completed. Following are the strategic goals included in the 2014 Strategic Plan: 1. Providing Exceptional Customer Service a. Completion of the Odor Control Master Plan. 2. Protecting the Public Health a. Development of Future Biosolids Management Options. b. Research new energy efficiency and conversion technologies. 3. Managing and Protecting the Public's Funds a. Cessation of Disinfection of Ocean Discharge. b. Ownership transfer of local sewers. 4. Stakeholder Understanding and Support a. Communicating the District's mission and strategies with those we serve and other stakeholders. b. Partnering with others to benefit our customers,this region, and our industry. 5. Organizational Effectiveness a. Creating the best possible workforce in terms of safety, productivity, customer service, and training. This strategic plan continues to chart a focused roadmap of success for the future of the Orange County Sanitation District. It addresses critical issues and challenges, and communicates clear and concise future direction to Sanitation District staff. SERVICE EFFORTS AND ACCOMPLISHMENTS In January 2014, the Sanitation District and with the Orange County Water District were named the recipients of the 2014 U.S. Water Prize for the Ground Water Replenishment System by the U.S. Water Alliance. This is award goes to those agencies that best promote the value of water and the power of innovating and integrating water sustainability. In February 2014, the Sanitation District received the Wastewater Treatment Project of the Year Award from the American Society of Civil Engineers, the Engineering Project of the Year Award from the Orange County Engineering Council, and the Project Achievement Award for Projects Over$100 million from the Construction Management Association of America for the Plant No.2 Headworks Replacement Project. In March 2014, the Sanitation District received the 2014 Plant Safety Award (for plants requiring 76 or more employees)from the Califomia Water Environment Association. In March 2014, the Sanitation District received the award for the Best Marketing/Communications Campaign from the California Association of Public Information Officers. In May 2014, the Sanitation District received the 2014 American In-house Design Award from Graphic Design USA for the Fats, Oils and Grease residential campaign. ACCOUNTING AND BUDGETARY CONTROLS The Sanitation District's accounting records are maintained on the accrual basis. In developing and evaluating the Sanitation District's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; v and (2)the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management. We believe that the Sanitation District's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Each year the Sanitation District's Board of Directors adopts an annual operating plan. A joint works budget is first prepared that identifies the specific capital projects and operating activities to be undertaken by the Sanitation District during the year. The budgetary level of control, the level at which expenses cannot exceed budget, is exercised at the individual district, or fund level. The Sanitation District has adopted a Uniform Purchasing Policy that identifies the agreed upon purchasing standards. ACCUMULATED FUNDS AND RESERVES POLICY The Board of Directors of the Orange County Sanitation District has established the following Accumulated Funds and Reserves Policy: Cash Flow Reserve: is established to fund operations, maintenance and certificates of participation expenses for the first half of the fiscal year, prior to the receipt of the first installment of the property tax allocation and the sewer service user fees which are collected as a separate line item on the property tax bill. The level of this reserve will be established as the sum of an amount equal to six months operations and maintenance expenses and the total of the annual debt (COP) service payments due in August each year. Operating Contingency Reserve: is established to provide for non-recurring expenditures that were not anticipated when the annual budget and sewer service fees were considered and adopted. The level of this reserve will be established at an amount equal to ten percent of the annual operating budget. Capital Improvement Reserve: is established to fund annual increments of the capital improvement program. The long-term target is for one half of the capital improvement program to be funded from borrowing and for one half to be funded from current revenues and reserves. With this program in mind, the target level of this reserve has been established at one half of the average annual capital improvement program through the year 2020. Levels higher and lower than the target can be expected while the long-term financing and capital improvement programs are being finalized. Catastrophic Loss or Self-Insurance Reserves: are established for property damage including fire, flood and earthquake; for general liability; and for workers' compensation. These reserves are intended to work with purchased insurance policies, FEMA disaster reimbursements and State disaster reimbursements. Based on the current infrastructure replacement value of$6.2 billion, the reserve level has been set to fund the District's non-reimbursed costs, estimated to be$57 million. Capital Replacement/Renewal Reserve Policy: is established to provide thirty percent of the funding to replace or refurbish the current collection and treatment and disposal facilities at the end of their useful economic lives. The current replacement value of these facilities is estimated to be $3.09 billion for the collection facilities and $3.11 billion for the treatment and disposal facilities. The initial reserve level was established at$50 million, which will be augmented by interest earnings and a small portion of the annual sewer user fees in order to meet projected needs through the year 2030. Debt Service Reserves: Provisions of the various Certificate of Participation (COP) issues require debt service reserves to be under the control of the Trustee for that issue. These reserve funds are not available for the general needs of the District and must be maintained at specified levels. The level of required COP service reserves at June 30, 2014 was $45.3 million. In addition, the District's Debt vi Service Reserve policy requires total debt service reserves to be ten percent of the total outstanding COP debt, or$131 million at June 30,2014. Accumulated funds exceeding the levels specified by District policy will be maintained in a rate stabilization fund. These funds will be applied to future years' needs in order to maintain rates or to moderate annual fluctuations. There is no established target for this reserve. _ As of June 30, 2014,the Sanitation District was in compliance with the Accumulated Funds and Reserves Policy with designated cash and investments totaling $673 million, and have been earmarked for the following specific purposes in accordance with the Sanitation District's reserve policy: Designated Cash and Investments Designated For Cash Flow Contingency $189 million Designated For Self-Insurance 57 million Designated For Capital Improvements 296 million Designated For Debt Service Requirements 131 million Total Designated Cash and Investments $_millb2i673 million CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING The Government Finance Officers' Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Orange County Sanitation District for the Sanitation District's comprehensive annual financial report for the year ended June 30,2013. This was the twentieth consecutive year that the Sanitation District has received this award. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program requirements and we are submitting it to GFOA to determine its eligibility for another certificate. ACKNOWLEDGMENTS This report could not have been accomplished without the dedicated services of the Financial Management Division staff, and I would like to especially express my appreciation to Line Hsiao, Accounting Supervisor, who assisted in its preparation. I would also like to thank the Sanitation District's Board of Directors, the General Manager, and the Director of Finance and Administrative Services for their interest and support in conducting the financial operations of the Sanitation District in a responsible and progressive manner. Resp�y su itt Michael D.White, CPA Controller vii G�9 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Orange County Sanitation District California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2013 Psccutice. Director/l viii ORANGE COUNTY SANITATION DISTRICT Board of Directors As of June 30, 2014 Aaencv Active Director Alternate Director Cities: Anaheim Lucille Kring Jordan Brandman Brea Brett Murdock Roy Moore Buena Park Fred Smith Steve Berry Cypress Prakash Narain Doug Bailey Fountain Valley Steve Nagel Michael Vo Fullerton Gregory Sebourn Jan Flory Garden Grove Steve Jones Kris Beard Huntington Beach Joe Carchio Dave Sullivan Irvine Steven Choi Christina Shea La Habra Tom Beamish Rose Espinoza La Palma Peter Kim Gerard Goedhart Los Alamitos Troy Edgar Richard Murphy Newport Beach Keith Curry Rush Hill Orange Teresa Smith Mark Murphy Placentia Scott Nelson Constance Underhill Santa Ana David Benavides Sal Tinajero Seal Beach Michael Levitt Gordon Shanks Stanton David Shawver Carol Warren Tustin John Nielsen Allan Bernstein Villa Park Brad Reese Greg Mills Yorba Linda Gene Hernandez John Anderson Sanitary Water Districts: Costa Mesa Sanitary District James M. Ferryman Robert Ooten Midway City Sanitary District Tyler Diep Allan P. Krippner Irvine Ranch Water District John Withers Douglas Reinhart County Areas: Member of the Board Janet Nguyen Shawn Nelson of Supervisors ix ORANGE COUNTY SANITATION DISTRICT Organizational Chart As of June 30, 2014 oenua Cpniex ompe FMD �� MD 0&mM BaaE Sas FFv,ml Mpnt. FaalAn&,W � w Ramp ROpFddaF Ca,axb. EpipieM RapW2 pwdm WMr,pa RabWf OD Off Mtupu rp Bun4' ap�ip6 FMM SwNm Oau 1 W ��� Hanatioi Mfd�A4id Trh,oMd� Fain Mu�FYm6 Enwan�Y E y,m�g EIerYCIMa Gmpbre Y q EmmnaY � IaEveby6 Owa�Mwibiq OCvd Gaimim Ca�eUvn X ORANGE COUNTY SANITATION DISTRICT Map of Service Area As of June 30, 2014 LA HABRA } BREA Orange County, FULLERTON Calrfomia map nma uaw VORBA LINDA PLA TIA A ARK ANAHEIM RE VILLA PARK LOS NTO ORANGE ITOS RD VE NS R SEAL BEACH A IVT 61 TUS P1 H TCN COST Pacific Oceav MESA P Outfalls BEACH N Service Area Boundary A DISCUIMER:Map prepared by Me Orange Cwnq - Reclamation Plant No. 1 (P1) sanitation Distm,.7hm map Ia Imende lwr Treatment Plant No. 2(P2) e,a0pal represenvtion only No level or aocuvaq Is aalmeol poisons of No,aenvea pipi,upl oontan unincorporated orange Count white areas 9ep,raphcal Inannawn copyNhud by Rand ng y( ) Mol 2013.An Rrehh Resents. Sewer pipelines Reused:oWm,e A (THIS PAGE LEFT INTENTIONALLY BLANK) xii MaGtadMLLP 18a01 Von Karman.5m Floor Irvine.CA 92612 8531 McGladrey mc56500 F9<92555091 vMwv � www.mrgfadreYctyn Independent Auditor's Report To the Board of Directors Orange County Sanitation District Fountain Valley, CA Report on the Financial Statements We have audited the accompanying financial statements of the Orange County Sanitation District (the District) as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District's basic financial statements, as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally aceepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the District as of June 30, 2014, and the changes in its financial position and its cash Flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. 1 Me mMr of the B SM Intern at Ienet nat—kal lnE Men armu Iing na antl mnsoh4gfirms. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that management's discussion and analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, which considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that comprise the District's basic financial statements. The separate"Combining Area" financial statements, introductory section, statistical section, and other data and trends are presented for purposes of additional analysis and are not a required part of the basic financial statements. The"Combining Area"financial statements are the responsibility of management and were derived from, and relate directly to, the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the"Combining Area"financial statements are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The introductory and statistical sections and other data and trends have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Report on Summarized Comparative Information We have previously audited the District's June 30, 2013 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated October 30, 2013. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2013 is consistent, in all material respects, with the audited financial statements from which it has been derived. �G�r![w�tzy GAP Irvine,CA October 23, 2014 2 Management Discussion and Analysis June 30,2014 This section of the financial statements of the Orange County Sanitation District (District) is management's narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, 2014. The information presented here is to be considered in conjunction with additional information provided within the letter of transmittal located in the Introductory Section of this report. Financial Highlights • As of June 30, 2014, the assets and deferred outflows of the District exceeded its liabilities by $1,822.3 million (net position). Of this amount, $617.6 million represents unrestricted net position, which may be used to meet the District's ongoing obligations to citizens and creditors. • The District's total net position increased$121.6 million,or 7.1 percent over the prior year. • Net Capital Assets, consisting of non-depreciable capital assets and depreciable capital assets net of accumulated depreciation,decreased $12.2 million, or 0.5 percent over the prior year. • Net investment in capital assets increased $24.4 million, or 2.1 percent. • Unrestricted Net Assets increased$97.2 million, or 18.7 percent from the prior year. • The District's total outstanding bonded debt decreased by$416.7 million over the prior year to $1.233 billion. Overview of the Basic Financial Statements The District operates as a utility enterprise and presents its financial statements using the economic resources measurement focus and the full accrual basis of accounting. As an enterprise fund, the District's basic financial statements are comprised of two components: financial statements and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. In accordance with the Governmental Accounting Standards Board (GASB)Codification of Governmental Accounting and Financial Reporting Standards, the District's financial statements include a Statement of Net Position; Statement of Revenues, Expenses and Changes in Net Position; and a Statement of Cash Flows. The Statement of Net Position includes all of the District's assets, deferred outflow of resources and liabilities; and provides information about the nature and amounts of investments in resources (assets) and the obligations to District creditors (liabilities). It also provides the basis for computing the rate of return, evaluating the capital structure of the District, and assessing the liquidity and financial flexibility of the District. The Statement of Revenues, Expenses, and Changes in Net Position accounts for the current year's revenues and expenses. This statement measures the success of the District's operations over the past year and can be used to determine the District's creditworthiness. It also highlights the District's dependency on property tax revenues in supplementing user fees and other charges for recovering total cost. The final required financial statement, the Statement of Cash Flows, reports cash receipts, cash payments, and net changes in cash resulting from operations and investments of the reporting period. Net Position As previously noted, net position increased $121.6 million, or 7.1 percent over the net position for FY 2012-13, to$1,822.3 million in Fiscal Year 2013-14. In comparison, net position increased $103.1 million, or 6.5 percent in FY 2012-13 over Fiscal Year 2011-12, to$1,700.7 million. 3 (Dollars in thousands) Percentage June 30, June 30, Increase Increase 2014 2013 (Decrease) (Decrease) Assets and deferred outflow of resources Assets Current and other assets $ 755,807 $ 691,853 $ 63,954 9.2% Net Capital assets 2,420,005 2,432,214 (12,209) -0.5% Total assets 3,175,812 3,124,067 51,745 1.7% Deferred outflow of resources 18,173 20,723 (2,550) -12.3% Total Assets and deferred outflow of resources 3,193,985 3,144,790 49,195 1.6% Liabilities Current liabilities 113,987 278,265 (164,278) -59.0% Noncurrent liabilities 1,257,703 1,165,800 91,903 7.9% Total liabilities 1,371,690 1,444,065 (72,375) -5.0% Net position: Net investment in capital assets 1,204,706 1,180,298 24,408 2.1% Unrestricted 617,589 520,427 97,162 18.7% Total net position E 1,822,295 $ 1,700,725 $ 121,570 7.1% Current and other assets increased $64.0 million, or 9.2 percent, due primarily to net cash provided by operations of $134.6 million, proceeds from property taxes of $75.1 million, receipt of capital facilities capacity charges of $12.5 million, and other government repayments of $10.7 million offset by capital outlays of$75.3 million, interest expense of$53.4 million, and bonded debt retirements of$39.3 million. Net Capital assets decreased $12.2 million, or 0.5 percent, due mostly to the ongoing capital improvement program construction in progress additions of $87.5 million less depreciation of $98.8 million. Included in total capital outlay additions is the Sludge Dewaterng and Odor Control Project at Plant No. 1 with a total project budget of$172.0 million. This project constructs primary sludge thickening facilities to improve solids handling capacity, replace aging sludge dewatering facilities, reduce biosolids handling and disposal, and rehabilitate obsolete solids handling odor control equipment. In FY 2013-14, the District incurred project costs of$21.9 million bringing the total cost-to-date to $48.6 million. Another solids handling project underway is the Solids Thickening and Processing Upgrades at Plant No. 2. This project consists of the rehabilitation and upgrades to the four existing dissolved air flotation thickeners (DAFTs) to treat the current activated sludge plant solids as well as the additional solids that will be generated from the new secondary trickling filterlsolids contractor process. In FY 2013-14, $15.1 million of the total project budget of $48.1 million was incurred bringing the cost-to-date to $32.5 million with completion in FY 2017-18. Two large collection system projects; Dover Drive Trunk Sewer Relief, with total project budget of$13.8 million; and Balboa Trunk Sewer Rehabilitation, with a total project budget of $8.1 million; incurred significant outlays in FY 2013-14. The Dover Drive project is being built to increase the hydraulic capacity for 7,300 lineal feet of existing 15-inch to 18-inch sewer line located in the City of Newport Beach. In FY 2013-14, the District incurred project costs of$7.8 million bringing the total cost-to-date to $10.6 million. The Balboa project consists of the rehabilitation of the existing Balboa Trunk Sewer, also in the City of Newport Beach, that includes a new protective lining in approximately 12,000 feet of sewer pipeline. In 4 FY 2013-14, the District incurred project costs of$5.0 million bringing the total cost-to-date to$6.7 million. See page 7 for the Schedule of Capital Assets and listing of other major capital additions for FY 2013-14. Current Liabilities decreased $164.3 million, or 59.0 percent over the prior year due primarily to the refunding of the $129.6 million Certificates of Anticipation Notes (CANS) Series 2013A, maturing in October 2014, and being replaced with the non-current two-year$120.9 million CANS Series 2014B. Net Investment in capital assets increased $24.4 million, or 2.1 percent over the prior year primarily as a result of the net reduction in capital assets of$12.3 million offset by the $36.6 million decrease in related debt. The net reduction in capital assets consists of the $87.5 million increase in construction in progress offset by capital asset depreciation for the year of$99.8 million. Unrestricted net position increased $97.2 million, or 18.7 percent due to the overall increase in net position of$121.6 million offset by the increase in net investment in capital assets of$24.4 million. Changes In Net Position Net position increased $121.6 million in FY 2013-14, a 7.1 percent increase over the prior year. (Dollars in thousands) Percentage June 30, June 30, Increase Increase 2014 2013 (Decrease) (Decrease) Revenues: Operating revenues Service Charges $ 300,611 $ 303,400 $ (2,789) -0.9% Permit and inspection fees 848 1,176 (328) -27.9% Total operating revenues 301,459 304,576 (3,117) -1.0% Non-operating revenues Property taxes 74,944 79,240 (4,296) -5.4% Investment and interest income 6,498 (3,913) 10,411 266.1% Contrib.from other government 11,278 2,064 9,224 449.1% Other 1,317 1,727 (410) -23.7% Total non-operating revenues 94,037 79,108 14,929 18.9% Total revenues 395,496 383,684 11,812 3.1% Expenses: Operating expense other than depreciation and amortization 146,447 149,817 (3,370) -2.2% Depreciation and amortization 99,805 63,907 35,898 56.2% Non-operating expense 41,767 79,650 (37,883) 47.6% Total expenses 288,019 293,374 (5,355) -1.8% Income before capital contributions 107,477 90,310 17,167 19.0% Capital facilitites capacity charges 14,093 12,797 1,296 10.1% Increase in net position 121,570 103,107 18,463 17.9% Beginning net position 1.700.725 1,597,618 103,107 6.5% Ending net position $ 1,822,295 $ 1,700,725 121,570 7.1% 5 Sources of Revenue Functional 6rpenses III Collections June 30,2014 June 30,2014 '111j( 14% 9% ■Treatment& III Disposal ■User Fees ❑Depreciation& Amortization ❑Other ❑Taxes Levied 40% ❑Interest 35% Expense ■Other As previously stated, an enterprise fund is used to account for the operations of the District, which is financed and operated in a manner similar to private business enterprises. This allows the District to determine that the costs (expenses, including depreciation and amortization) of providing wastewater management services on a continuing basis are financed or recovered primarily through user charges. Sewer service user fees are evaluated annually based primarily on budget requirements for total operation and maintenance expenses and capital outlays for providing wastewater management services. Property tax revenues are dedicated for the payment of debt service. In FY 2013-14, operating revenues decreased $3.1 million, or 1.0 percent over the prior year that is reflective of a $16.2 million decrease in the solids capital lease revenue from IRWD that is mostly offset by the increase in service charges from $288.6 million in FY 2012-13 to $302.1 million in FY 2013-14, or a $13.5 million or 4.7 percent increase. The increase in service charges is primarily due to the 4.8 percent increase in the average sewer user fee rate over the prior year. The decrease in solids capital lease revenue is mostly due to the adjustments made to the estimated solids capital lease revenue previously recorded for the past three years against the final reconciliation when all relevant construction and laboratory data became available. The $14.9 million, or 18.9 percent increase in non-operating revenues primarily consists of a $10.4 million, or 266.1 percent increase in investment and interest income, a $9.2 million, or 449.1 percent increase in contributions from other governments that is partially offset by a $4.3 million, or 5.4 percent decrease in property tax revenues, and a $0.4 million, or 23.7 percent decrease in other non-operating revenues. The increase in investment and interest income is attributable to higher yields earned on investments and higher cash and investments balances. Yields earned on investments increased from a 0.6 percent loss in FY 2012-13 to a gain of 1.1 percent in FY 2013-14 while cash and investment balances increased from $600 million to $673 million. The increase in contributions from other governments is reflective of the increase in capital contributions from IRWD. The decrease in property tax revenue is primarily the result of the receipt of $8.7 million in one-time redevelopment dissolution proceeds in the prior year. Discounting this one-time receipt, property taxes increased 4.4 percent over the prior year, approximating the year-to-year increase in total assessed valuations of 4.1 percent. The decrease in other non-operating revenues is mostly reflective of the $500,000 earned from a State grant in the prior year. Operating expense before depreciation and amortization decreased $3.4 million or 2.2 percent over the prior year. The majority of this decrease is attributable to the $5.2 million decrease in feasibility studies conducted in FY 2013-14 over the prior year. In addition, supplies, repairs and maintenance decreased $0.8 million, or 3.3 percent due to reductions in disinfection chemicals of$0.4 million,or 56.0 percent, and in chemical coagulants of $0.3 million, or 5.3 percent, due primarily to decreased disinfection requirements and optimization of chemical dosing. Contractual services also decreased $0.6 million or 2.2 percent, as research and monitoring costs were lowered by $0.4 million, or 38.1 percent, due to planned streamlining on these efforts during the FY 2013-14 budget process, and legal costs decreased 6 $0.3 million, or 18.5 percent, as legal arbitration costs of the prior year did not exist for fiscal year 2013- 14. These decreases were partially offset by the increase in operating salaries and benefits of$2.3 million to $79.2 million, a 3.0 percent increase over the prior year. The operating salaries and benefits costs are part of the overall increase of $1.3 million in total salaries and benefits when including the salaries and benefits capitalized within the capital improvement program. Overall, total District salaries and benefits were $91.9 million, a 1.4 percent increase over the prior year total of $90.6 million. This increase is mostly attributable to the $1.9 million, or 6.6 percent increase in benefits, as salaries and wages alone decreased $0.6 million, or 1.0 percent. Meetings and training expenses also increased $0.2 million, or 29.5 percent primarily due to expanded efforts being placed towards safety and electrical maintenance training. Non-operating expense decreased $37.9 million, or 47.6 percent, and is primarily reflective of the decrease in capital distribution back to the Irvine Ranch Water District (IRWD) as none was owed in FY 2013-14 but $26.6 million of capital distribution was owed back to IRWD in FY 2012-13. The decline in FY 2013-14 was reflective of the decline in IRWD's equity share ownership based on decreased flows discharged to the District. The flow level in FY 2013-14 had leveled out from the large decreases in prior years. In addition, the loss on asset disposal of assets declined $9.4 million, or 49.1 percent from the prior year primarily due to the write-off of the obsolete odor master plan and design totaling$8.1 million in the prior year. A new odor master plan and project designs are currently underway. Capital Facility Capacity Charges increased $1.3 million, or 10.1 percent over the prior year due to the rebound in the economy and the increase activity in construction as total the total building permit valuation in Orange County increased 21.8 percent in Fiscal Year 2013-14 over the prior year. Capital Assets At June 30, 2014, the District had a net investment of$2.420 billion in capital assets. This represents a net decrease (including additions and deletions)of$12.2 million or 0.5 percent over the prior year. (Dollars in thousands) Percentage June 30, June 30, Increase Increase 2014 2013 (Decrease) (Decrease) Land $ 15,960 $ 15,960 $ - 0.0% Construction in Progress 258,019 1,197,777 (939,758) -78.5% Sewage collection facilities 453,824 351,731 102,093 29.0% Sewage treatment facilities 1,568,340 738,893 829,447 112.3% Effluent disposal facilities 39,314 40,902 (1,588) -3.9% Solids disposal facilities 326 336 (10) -3.0% General and administrative facilities 82,659 84,394 (1,735) -2.1% Assets acquired in excess of book value 1,563 2,221 (658) -29.6% Capital assets, net $ 2,420,005 $ 2,432,214 $ (12,209) -0.5% Major capital asset additions for the current fiscal year included the following: • $21.9 million-Sludge Dewatering and Odor Control at Plant No. 1 • $15.1 million-Solids Thickening and Processing Upgrades at Plant No.2 • $ 7.8 million-Dover Drive Trunk Sewer Relief • $ 7.7 million-Sludge Digester Rehabilitation at Plant No. 1 • $ 5.0 million-Replacement of the Bitter Point Pump Station 7 More detailed information about the District's capital assets is provided in Notes 1 and 3 of Notes to the Financial Statements. Debt Administration At June 30, 2014, the District had $1.275 billion outstanding in COP debt, a net decrease of$42.0 million, or 3.3 percent over the prior year. This reduction consisted of the accumulation of principal payments made in accordance with the schedule of debt service payments. In addition, Revenue Refunding Certificate Anticipation Notes, Series 2013A Certificates of Anticipation Notes (CANS)fixed rate debt was issued in the amount of$129.6 million in October 2013 to refund the $131.7 million outstanding principal balance of the CANS Series 2012C fixed rate debt. Both Standard and Poor's Corporation and Fitch Ratings reaffirmed their AAA rating of the Orange County District in the past fiscal year. The District's long-range financing plan is designed to maintain this high rating. Over the next five years, the District is projecting an additional $1.0 billion in future treatment plant and collection system capital improvements. In accordance with the District's long-term debt fiscal policy, the District will restrict long-tern borrowing to capital improvements that cannot be financed from current revenue. However, no new debt issuances are being proposed over the next five years to assist with the funding of the system improvements scheduled over this time period. For more information on long-term debt activities, see Note 4 of the Notes to Basic Financial Statements. Economic Factors and Next Year's Budgets and Rates • The unemployment rate within the County of Orange is currently 5.4 percent, a decrease from the rate of 6.1 percent a year ago. • Inflation for Orange County in 2013 increased 1.1 percent based on the actual percentage change in the consumer price index according to the June 2014 Economic and Business Review report prepared by Chapman University. • The actual rate of return on investments increased from the-0.6 percent earnings rate in FY 2012-13 to 1.1 percent for FY 2013-14. All of these factors were considered in preparing the District's biennium budget beginning July 1, 2014. The District's user fee schedule was increased by 2.6 percent for FY 2014-15 over the prior year. The annual fee applicable to the District's largest customer base and the underlying basis for all other user rates: the single-family residential fee, increased by $8.00, from $308.00 to $316.00. This rate increase was necessary to finance the District's cash flow needs as capital improvement outlays alone are projected to be $186.4 million in FY 2014-15 and are projected to total $2.3 billion over the next 10 years in order to rehabilitate and upgrade existing facilities and provide for full secondary treatment standards. Requests for Information The financial report is designed to provide a general overview of the District's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Financial Management Division, Orange County Sanitation District, 10844 Ellis Avenue, Fountain Valley, CA 92708-7018. 8 ORANGE COUNTY SANITATION DISTRICT BASIC FINANCIAL STATEMENTS 9 ORANGE COUNTY SANITATION DISTRICT Statement of Net Position June 30, 2014 (With Comparative Data for June 30, 2013) 2014 2013 Current assets: Cash and cash equivalents $ 215,296,895 $ 208,278,072 Investments 412,473,309 339,152,573 Accounts receivable, net of allowance for uncollectibles$29,452 7,829,997 9,757,514 Accrued interest receivable 1,396,378 1,596,362 Connection fees receivable 3,204,465 1,565,534 Property tax receivable 1,206,314 1,363,536 Inventories 5,837,424 5,689,074 Prepaid expenses 707,365 600,214 Prepaid retirement 20,113,512 17,555,710 Total current assets 668,065,659 585,558,589 Noncurrent assets: Restricted: Cash and cash equivalents 28,360,917 36,118,018 Investments 16,940,965 16,940,965 Accrued interest receivable 224,383 230,648 Unrestricted: Non-depreciable capital assets 273,978,498 1,213,736,882 Depreciable capital assets, net of accumulated depreciation 2,146,026,324 1,218,477,069 Prepaid insurance on outstanding debt payable 1,582,280 1,658,521 Due from other governmental agency 40,623,151 51,336,000 Other noncurrent assets, net 10,344 10,344 Total noncurrent assets 2,507,746,862 2,538,508,447 Total assets 3,175,812,521 3,124,067,036 Deferred outflow of resources: Deferred charges on refunding debt 18,172,646 20,722,872 Total assets and deferred outflow of resources 3,193,985,167 3,144,789,908 Current liabilities: Accounts payable 11,922,059 11,485,962 Accrued expenses 7,295,661 8,123,120 Retentions payable 2,821,953 8,286,811 Interest payable 22,619,300 23,153,100 Due to other governmental agency 29,107,270 48,700,573 Current portion of long-term obligations 40,221,191 178,515,737 Total current liabilities 113,987,434 278,265,303 Noncurrent liabilities: Noncurrent portion of long-term obligations 1,257,703,009 1,165,799,690 Total liabilities 1,371,690,443 1,444,064,993 Net position: Net investment in capital assets 1,204,705,609 1,180,297,943 Unrestricted 617,589,115 520,426,972 Total net position $ 1,822,294,724 $ 1,700,724,915 See Accompanying Notes to Basic Financial Statements. 10 ORANGE COUNTY SANITATION DISTRICT Statement of Revenues, Expenses, and Changes in Net Position For the Year Ended June 30, 2014 (With Comparative Data for the Year Ended June 30, 2013) 2014 2013 Operating revenues: Service charges $ 300,611,253 $ 303,399,529 Permit and inspection fees a48,060 1,176,106 Total operating revenues 301,459,313 304,575,635 Operating expenses other than depreciation and amortization: Salaries and benefits 79,178,740 76,878,551 Utilities 6,381,394 6,403,013 Supplies, repairs and maintenance 23,306,317 24,093,927 Contractual services 26,212,348 26,791,095 Directors'fees 157,715 144,713 Meetings and training 931,679 719,521 Feasibility studies 5,421,882 10,646,100 Other 4,857,006 4,140,333 Total operating expenses other than depreciation and amortization 146,447,081 149,817,253 Operating income before depreciation and amortization 155,012,232 154,758,382 Depreciation and amortization 99,804,966 63,906,B48 Operating income 55,207,266 90,851,534 Non-operating revenues: Property taxes 74,943,941 79,239,497 Investment and interest income 6,497,653 (3,912,925) Contributions from other government 11,278,421 2,054,154 Other 1,317,047 1,727,320 Total non-operating revenues 94,037,062 79,108,046 Non-operating expenses: Interest 40,450,377 42,314,928 Contributions to other government - 26,590,533 Other 60,455 54,549 Loss on disposal of assets 1,256,400 10,689,755 Total non-operating expenses 41,767,232 79,649,765 Income before capital contributions 107,477,096 90,309,815 Capital Contributions; Capital facilities capacity charges 14,092,713 12,797,483 Change in net position 121,569,809 103,107,298 Total net position-beginning 1,700,724,915 1,597,617,617 Total net position-ending $ 1,822,294,724 $ 1,700,724,915 See Accompanying Notes to Basic Financial Statements. 11 ORANGE COUNTY SANITATION DISTRICT Statement of Cash Flows For the Year Ended June 30,2014 (With Comparative Data for the Year Ended June 30,2013) 2014 2013 Cash flows from operating activities: Receipts from customers and users $ 283,783,166 $ 305,300,505 Payments to employees (78,952,182) (77,697,268) Payments to suppliers (72,736,404) (68,387,501) Net cash provided by operations 132,094,580 159,215,736 Cash flows from noncapital financing activities: Proceeds from property taxes 75,101,164 79,418,183 Proceeds from various resources 1,255,229 1,674,942 Net cash provided by noncapital financing acfivities 76,356,393 81,093,125 Cash flows from capital and related financing activities: Capital facilities capacity charges 12,453,782 11,879,435 Additions to capital assets (72,852,832) (109,353,843) Interest paid (53,434,264) (51,970,472) Principal payments on debt obligation (171,290,000) (259,070,000) Proceeds from debt issuances 131,991,954 216,506,206 Debt issuance costs (262,462) (838,884) Contribution from other government 651 Net cash used in capital and related financing activities (153,393,171) (192,847,558) Cash flows from investing activities: Proceeds from the sale of investments 5,764,356,629 8,932,206,118 Purchases of investments (5,828,672,603) (8,896,971,673) SARI project(advanceypayments 10,712,849 (20.483,710) Interest received (2,192,955) 10,627,896 Net cash provided by(used in)investing activities (55,796,080) 25,378,631 Net increase(decrease)in cash and cash equivalents (738,278) 72,839,934 Cash and cash equivalents,beginning of year 244,396,090 171,556,156 Cash and cash equivalents,end of year $ 243,657,812 $ 244,396,090 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 55,207,266 $ 90,851,534 Adjustments to reconcile operating income to net cash provided by operations: Depreciation and amortization 99,804,966 63,906,848 Bad debt expense(Net recoveries) 10,361 11,398 Feasibility studies - 6,058,284 (Increase)/decrease in operating assets: Accounts receivable 1,917,156 (316,323) Inventories (250,624) (30,340) Prepaid and other assets (2,664,953) (2,359,320) Increase/(decrease)in operating liabilities: Accounts payable (2,068,622) (746,578) Accrued expenses (816,828) 733,795 Due to other governmental agency (19,593,303) 1,041,192 Pension/OPEB/Catastrophe leave payable 257,493 347,732 Compensated absences (116,222) (136,296) Other payable 79,774 (277,285) Claims and judgments 318,116 131,095 Net cash provided by operations $ 132,094,580 $ 159,215,736 Noncash Activities: Unrealized gain(loss)on the fair value of investments $ 9,004,762 $ (14,438,658) Contributions from(to)other government 11,277,770 (24,536,380) Capital assets acquired through accounts payable 2,494,717 7,450,400 Feasibility studies with no cash effect - 6,032,722 See Accompanying Notes to Basic Financial Statements. 12 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 (11 Summary of Siqnificant Accountina Policies Reporting Entity The Orange County Sanitation District(OCSD) is a public agency which owns and operates certain wastewater facilities in order to provide regional wastewater collection, treatment, and disposal services to approximately 2.5 million people in the northern and central portion of the County of Orange, California. OCSD is managed by an administrative organization comprised of directors appointed by the agencies and cities which are serviced by OCSD. OCSD's service area was originally formed in 1954 pursuant to the County Sanitation District Act and consisted of seven independent special districts. Two additional districts were formed and additional service areas were added in 1985 and 1986. These special districts were jointly responsible for the treatment and disposal facilities which they each used. In April of 1998, the Board of Supervisors of Orange County passed Resolution 98-140 approving the consolidation of the existing nine special districts into a new, single sanitation district. This action was taken in order to simplify the governance structures, reduce the size of OCSD's Board of Directors, ease administrative processes, streamline decision-making and consolidate accounting and auditing processes. Pursuant to the Resolution and Government Code Section 57500, the predecessor special districts transferred and assigned all of their powers, rights, duties, obligations, functions and properties to OCSD, including all assets, liabilities, and equity. Effective July 1, 1998, the organization became known as the Orange County Sanitation District. The boundaries of one of the previous districts, now known as Revenue Area No. 14, have been maintained separately because their use of OCSD's collection, treatment, and disposal system is funded by the Irvine Ranch Water District(IRWD). The boundaries of the other eight districts have been consolidated and are collectively referred to as the Consolidated Revenue Area. OCSD utilizes joint operating and capital outlay accounts to pay joint treatment, disposal, and construction costs. These joint costs are allocated to each revenue area based on gallons of sewage Flow. The supplemental schedules and statements show internal segregations and are not intended to represent separate funds for presentation as major or non-major funds in the basic financial statements. The accompanying financial statements present OCSD and its blended component unit, the Orange County Sanitation District Financing Corporation. The Corporation is a legally separate entity although in substance it is considered to be part of OCSD's operations. OCSD is considered to be financially accountable for the Corporation which is governed by a board comprised entirely of OCSD's board members. There is no requirement for separate financial statements of the Corporation; consequently, separate financial statements for the Corporation are not prepared. The Corporation had no financial activity during the fiscal year ended June 30, 2014, other than principal and interest payments on outstanding certificates of participation/revenue obligations and notes(see Note 4). OCSD is independent of and overlaps other formal political jurisdictions. There are many governmental entities, including the County of Orange, that operate within OCSD's jurisdiction; however, financial information for these entities is not included in the accompanying financial statements in accordance with the Governmental Accounting Standards Board (GASS) Codification of Governmental Accounting and Financial Reporting Standards. Comparative Information The financial statements include partial prior-year comparative information. Such information does not include all of the information required for a presentation in conformity with accounting principles 13 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the government's financial statements for the year ended June 30, 2013, from which such partial information was derived. Measurement Focus and Basis of Accounting OCSD operates as an enterprise activity. Enterprise funds account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the Board of Directors is that the costs (expenses, including depreciation and amortization) of providing services to the general public on a continuing basis be financed or recovered primarily through user charges. Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Enterprise funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting, whereby revenues are recognized when earned and expenses are recognized when incurred, regardless of the timing of related cash flows. The accounting policies of the District conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles in the United States. Operating Plans Each year, OCSD staff prepares an annual operating plan which is adopted by the Board of Directors. The annual operating plan is used to serve as a basis for monitoring financial progress, estimating the levy and collection of taxes, and determining future service charge rates. During the year,these plans may be amended as circumstances or levels of operation dictate. Cash and Cash Equivalents Investments with original maturities of three months or less when purchased are considered to be cash equivalents. Investments All investments are stated at fair value (the value at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale). Changes in fair value that occur during the fiscal year are reported as part of investment and interest income. Investment and interest income includes interest earnings and realized and unrealized gains or losses in fair value. Accounts Receivable Accounts receivable is shown net of the allowance for uncollectible receivables. Uncollectible receivables were $29,452 at June 30, 2014. Unbilled sewer services through June 30, 2014 are recorded as revenue and receivables. Management determines the allowance for uncollectible receivables by evaluating individual accounts receivable at least one year past due and considering a customer's financial condition, credit history and current economic conditions. Accounts receivables are written off when deemed uncollectible. Recoveries of accounts receivables previously written off are recorded when received. 14 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Inventories Inventories, which is held for consumption and not resale, is stated at cost on a weighted-average basis, and then is expensed when used. Capital Assets Outlays for property, plant, equipment, and construction in progress are recorded in the revenue area which will use the asset. Such outlays may be for individual revenue area assets or for a revenue area's share of joint assets. Capital assets of property, plant, and equipment are defined as assets with an initial, individual cost of more than $5,000 and an estimated useful life of at least three years. Such assets are recorded at cost, except for assets acquired by contribution, which are recorded at fair market value at the time received. Cost includes labor; materials; outside services;vehicle and equipment usage; other ancillary costs consisting of direct charges such as engineering, purchasing, supervision, or fringe benefits. Interest costs, net of interest earnings, are capitalized on projects. During the fiscal year ended June 30,2014, net interest costs of$7,598,770 were capitalized. Depreciation of plant and equipment is provided for over the estimated useful lives of the assets using the straight-line method in accordance with generally accepted accounting principles. OCSD also considers the guidelines of estimated useful lives as recommended in the State of California Controller's Uniform System of Accounts for Waste Disposal Districts, which range from 3 to 75 years. The following are estimated useful lives for major classes of depreciable assets: Sewage collection facilities — 50 years, Sewage treatment facilities — 40 years, Sewage disposal facilities—40 years, and General plant and administrative facilities—11.5 years. Amortization Amortization of the excess purchase price over the book value of assets acquired is provided using the straight-line method over an estimated useful life of 30 years. Premiums and discounts on certificate anticipation notes and wastewater refunding revenue obligations are amortized to interest expense over the respective terms of the installment obligations based on the effective interest method (Note 4). Restricted Assets Certain assets are classified as restricted because their use is limited by applicable debt covenants. Specifically, the assets are restricted for installment payments due on certificates of participation and revenue obligations or are maintained by a trustee as a reserve requirement for the certificates of participation and revenue obligations. When both restricted and unrestricted resources are available for use, it is OCSD's policy to use restricted resources first, then unrestricted resources as they are needed. Deferred Outflows of Resources For advance refundings resulting in defeasance of debt, the difference between the reacquisitions price and the net carrying amount of the old debts (i.e. defamed charges)is reported as a deferred outflow of resources and amortized to interest expense based on the effective interest method over the remaining life of the old debt or the life of the new debt, whichever is shorter. OCSD's defamed charges on the refunding debts at June 30, 2014 are$18,172,646. 15 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Net Position Net position represents the total of assets and deferred outflows of resources less liabilities,and is classified into two categories: Net Investment in Capital Assets—This amount consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets and excludes unspent debt proceeds. Deferred outflows of resources that are attributable to the acquisition, construction or improvement of those assets or related debt also should be included in this component of net position. Unrestricted—This amount represents the residual of amounts not classified in the other category and represents the net equity available for the District. Compensated Absences OCSD's employees, other than operations and maintenance personnel, are granted vacation and sick leave in varying amounts with maximum accumulations of 200 hours and 560 hours for vacation and sick days earned but unused, respectively. Operations and maintenance personnel accrue between 80 and 250 personal leave hours per year depending on years of service. Personal leave can be accumulated up to a maximum of 440 hours. Vacation and sick leave benefits and personal days are recorded as an expense and liability when earned by eligible employees. The distribution between current and long-term portions of the liability is based on historical trends. Claims and Judgments OCSD records estimated losses when it is probable that a claim liability has been incurred and when the amount of the loss can be reasonably estimated. Claims payable includes an estimate for incurred but unreported claims. The distribution between current and long-term portions of the liability is based on historical trends. Property Taxes The County is permitted by State law (Proposition 13) to levy taxes at one percent of full market value (at time of purchase) and can increase the assessed value no more than two percent per year. OCSD receives a share of this basic levy, proportionate to what was received in the 1976 to 1978 period. Property taxes are determined annually as of January 1 and attached as enforceable liens on real property as of July 1 and are payable in two installments which become delinquent after December 10 and April 10. The County bills and collects the property taxes and remits them to OCSD in installments during the year. Property tax revenues are recognized when levied for. The Board of Directors has designated property tax revenue to be used for the annual debt service requirements prior to being used as funding for current operations. Capital Facilities Capacity Charges Capital facilities capacity charges represent fees imposed at the time a structure is newly connected to the District's system, directly or indirectly, or an existing structure or category of use is increased. This charge is to pay for District facilities in existence at the time the charge is imposed or to pay for new facilities to be constructed that are of benefit to the property being charged. 16 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Operatino and Non-operating Revenues and Expenses Operating revenues and expenses result from collecting,treating, and disposing of wastewater and inspection and permitting services. OCSD's operating revenues consist of charges to customers for the services provided. Operating expenses include the cost of providing these services, administrative expenses,and depreciation and amortization expenses. All revenues and expenses not meeting these definitions and which are not capital in nature are reported as non-operating revenues and expenses. Construction Commitments OCSD has active construction projects to add additional capacity, improve treatment, or replace/rehabilitate existing assets. At June 30, 2014, the outstanding commitments with contractors totaled $177,291,471. Self-Insurance Plans For the year ended June 30, 2014, OCSD was self-insured for portions of workers' compensation, property damage, and general liability. The self-insurance portion of the workers' compensation exposure is the$750,000 deductible per occurrence under the outside excess insurance coverage to statutory levels. The self-insurance portion of the property damage exposure covering fire and other perils is the $250,000 per occurrence deductible (for most perils) under the outside excess property insurance coverage to $1 billion. The self-insurance portion of the property damage exposure covering flood is the $100,000 per occurrence deductible with outside excess property insurance coverage to $300 million. OCSD is self-insured for virtually all property damage from the peril of earthquake. The self-insurance portion of the boiler & machinery exposure is the deductible ranging from $25,000 to $350,000 under the outside excess boiler & machinery insurance coverage to $100 million per occurrence combined limit. The self-insurance portion of the general liability exposure is the$250,000 per occurrence deductible ($500,000 for employment practices liability) under the outside excess liability coverage to $30 million per occurrence and aggregate. The self-insurance portion of the pollution liability exposure is the $100,000 per loss deductible under the outside pollution liability insurance coverage to $10 million. There were no significant changes in insurance coverage during the fiscal year ended June 30, 2014. During the past three fiscal years there have been no settlements in excess of covered amounts. Claims against OCSD are processed by outside insurance administrators. These claims are charged to claims expense based on amounts which will ultimately be paid. Claims incurred but not yet reported have been considered in determining the accrual for loss contingencies. OCSD management believes that there are no unrecorded claims as of June 30, 2014 that would materially affect the financial position of OCSD. Deferred Compensation Plan OCSD offers its employees a deferred compensation plan established in accordance with Internal Revenue Code Section 457. The plan permits all employees of OCSD to defer a portion of their salary until future years. The amount deferred is not available to employees until termination, retirement, death or for unforeseeable emergency. The assets of the plan are held in trust for the exclusive benefit of the participants and their beneficiaries. Since the plan assets are administered by an outside party and are not subject to the claims of OCSD's general creditors, in accordance with GASS Statement 32, the plan's assets and liabilities are not included within OCSD's financial statements. 17 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 (2) Cash and Investments Cash and investments as of June 30, 2014 are classified within the accompanying Statement of Net Position as follows: Statement of Net Position: Current, Unrestricted: Cash and cash equivalents $215,296,895 Investments 412,473,309 Subtotal -current, unrestricted 627,770,204 Restricted: Cash and cash equivalents 28,360,917 Investments 16,940,965 Subtotal -restricted 45,301,882 Total cash and cash equivalents and investments $673,072,086 Cash and investments consist of the following as of June 30, 2014: Cash on hand $ 3,000 Deposits with financial institutions 2,436,803 Managed portfolio-cash and investments 625,330,401 Subtotal -unrestricted cash and investments 627,770,204 Monies held by trustees: Cash and cash equivalents $ 28,360,917 Investment contracts 16,940,965 Subtotal -monies held by trustees 45,301,882 Grand total cash and investments $673,072,086 Investments Authorized by the California Government Code and OCSD's Investment Policv The following table identifies the investment types that are authorized by the California Government Code and OCSD's investment policy. This table, and the subsequent tables on pages 19-23 also identifies certain provisions of either the California Government Code or OCSD's investment policy (whichever is more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. 18 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Authorized Maximum by OCSD's Maximum Investment Investment Type-Authorzed by the Investment Maximum Percentage in a Single California Government Code Policy? Maturity(g(3) of Portfolio to Issuer(„ Local Agency Bonds Yes 5 years 10% (2) 10% (2) U.S. Treasury Obligations Yes 5 years No limit No limit California State Treasury Obligations Yes 5 years No limit No limit U.S. Agency Securities Yes 5 years No limit No limit Bankers Acceptances Yes 180 days 40% 30% Commercial Paper Yes 270 days/31 days 15%/25% (2) 10% Negotiable Certificates of Deposit Yes 5 years 30% 30% Repurchase Agreements Yes 1 year 20% (2) 20% (2) Reverse Repurchase Agreements Yes 90 days (2) 5% (2) 5% (2) Corporate Medium-Term Notes Yes 5 years 30% 30% Mutual Funds Yes N/A 15% (2) 10% Money Market Mutual Funds Yes N/A 15% (2) 15% (2) Mortgage Pass-Through Securities/CMO Yes 5 years 20% 20% County Investment Pools Yes N/A 15% (2) 15% (2) Local Agency Investment Fund (LAIF) Yes N/A 15% (2) 15% (2) Nolen (1)ResNctions are in accomance with the CMifomia Govemment Code unless indicated otherwise. (2)The restriction is in accomance with OCSD's investment Policy which is more restrictive then the CelRomia Govemment Code. (3)As allowed by California Govemment Code Section 53501,the Boa d of Directors has adopted a policy of no maximum maturty for investments purchased by OCSD's external money managerforthe long-term investment portfolio. However the duration of the long-term invastmanl pomolio can newmexceed 60 months. investments purchased forth.short-Wornportfolio are subjectlo the maturity restrictions noted in thistable. Investments Authorized by Debt Agreements The investment of debt proceeds held by trustees is governed by provisions of the debt covenant agreements, rather than the general provisions of the California Government Code or OCSD's investment policy. The following table identifies the investment types that are authorized for investments held by OCSD's debt trustees. This table, and the subsequent tables on pages 20-23 also identifies certain provisions of the debt covenant agreements that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maximum Investment Type-Authorized by the Maximum Percentage Investment in a Debt Covenant Agreement Maturity of Portfolio Single Issuer State and Local Agency Bonds 5 years No limit No limit U.S. Treasury Obligations 5 years No limit No limit U.S. Agency Securities 5 years No limit No limit Bankers Acceptances 180 days 40% 30% Commercial Paper 270 days 40% 10% Negotiable Certificates of Deposit 5 years 30% 10% Repurchase Agreements 1 year No limit No limit Corporate Medium-Term Notes 5 years 30% 30% Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 20% Local Agency Investment Fund (LAIF) N/A No limit No limit Guaranteed Investment Contracts N/A No limit No limit 19 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Disclosures Relatina to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer an investment has before maturity, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that OCSD manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time, as necessary to provide the cash flow and liquidity needed for operations. OCSD monitors the interest rate risk inherent in its managed portfolio by measuring the modified duration of its portfolio. The duration of monies held for shorter term purposes is recommended by OCSD's Treasurer and is based on OCSD's cash flow requirements in meeting current operating and capital needs. The average duration of monies invested for shorter term purposes may never exceed 180 days. The duration of monies held for longer term purposes is recommended annually by OCSD's Treasurer and is based on OCSD's five-year cash flow forecast. The average duration may not exceed 120 percent nor be less than 80 percent of the recommended duration. The average duration of monies invested for longer term purposes may never exceed 60 months. There is no stated maximum maturity for the Money Market Mutual Funds. The money market mutual funds for Blackrock Institutional Fund and the US Bank Money Market Fund are daily liquid funds available on demand. Following is a table which summarizes OCSD's managed portfolio investments by purpose with the modified duration as of June 30, 2014. 20 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Modified Modified Duration Duration Investment Type Fair Value (in years) (in months) Short-Term Portfolio: U.S. Treasury Bills $ 32,498,971 0.085 1.02 U.S. Agency Securities 30,594,140 0.158 1.90 U.S. Treasury Notes 2,000,540 0.168 2.02 Corporate Medium-Tenn Notes 18,235,027 0.602 7.22 Repurchase Agreements 1,800,000 0.002 0.02 Local Agency Investment Fund (LAIF) 31,231,595 0.636 7.63 Money Market Mutual Funds 558,613 0.083 1.00 Short-term portfolio subtotal $ 116,918,886 0.332 3.98 Long-Term Portfolio: U.S. Treasury Bills $ 99,969 0.468 5.62 U.S. Treasury Notes 125,988,566 5.680 68.16 U.S. Treasury Inflation-Protected Securities (TIPS) 18,212,525 9.141 109.69 U.S. Agency Securities 179,139,271 0.273 3.27 U.S. Govt. Backed Mortgage Pools (GNMA)* 355,315 3.464 41.57 Taxable Municipal Bonds 19,933,910 8.572 102.87 Corporate Medium-Tenn Notes 57,056,092 3.458 41.49 Repurchase Agreements 101,000,000 0.002 0.02 Money Market Mutual Funds 618,354 0.077 0.92 Mortgage Pass-Through Securities/CMO ' 6,007,513 2.922 35.07 Long-tens portfolio subtotal $ 508,411,515 2.593 31A2 Total Portfolio $ 625,330,401 'Includes highly sensitive securities. OCSD monitors the interest rate risk inherent in its other investments using specific identification of the investments. Following is a table of these investments all held by trustees, as of June 30, 2014. Fair Value Maturities Cash equivalents held by fiscal agents: US Bank Cash $ 25 N/A Money Market Mutual Funds: Blackrock Institutional Funds 42,286 45 days US Bank Money Market Fund 64,548 N/A Local Agency Investment Fund (LAIF) 28,254,058 232 day average Investments held by fiscal agents: Guaranteed Investment Agreements: FSA Capital Management Services LLC-2007A COP 9,518,000 January 29, 2030 Bayerische Landesbank Girozentrale-2009A COP 7,422,965 August 1, 2016 Total Fair Value of Investments Held by Fiscal Agents $ 45,301,857 21 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Investments with Fair Values Hiahly Sensitive to Interest Rate Fluctuations OCSD's investments (including investments held by trustees) include the following investments that are highly sensitive to interest rate Fluctuations (to a greater degree than already indicated in the information provided above): Mortgage-backed securities: These securities are subject to early payment in a period of declining interest rates. The resulting reduction in expected total cash Flows affects the fair value of these securities, making them highly sensitive to change in interest rates. At fiscal year end, the fair value of investments in mortgage-backed securities totaled $9,635,002 including $6,007,513 of mortgage pass-through securities, $3,272,174 of U.S. agency securities, and $355,315 of U.S. government backed mortgage pools. Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following table presents the minimum rating as required by the California Government Code, OCSD's investment policy, or debt agreements, and the actual rating as of year-end for each investment type: 22 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Investment Type and the Low est Rating Reported at Year End Fair Value Investments w th no legal ninimum rating&no required disclosure: U.S.Treasury Obligations $ 178,800,571 U.S.Govt.Backed Mbngage Pools(GNMW) 355,315 Subtotal $ 179,155,886 Investments w ilh no legal mninum rating: U.S.Agency Securities(other than GNM): Rating of AA+(Standard&Poor's) 209,733,411 Municipal Bonds: Rating of Aaa(Mbody's) 1,397,748 Rating of Aal (Mbody's) 1,506,148 Rating of Aa2(Mbody's) 1,539,473 Rating of Aa3(Mbody's) 5,964,179 Rating of Al (Wwdy's) 1,611,779 Rating of A(Fitch) 2,145,960 Rating of A2(Mbody's) 404,754 Rating of A3(Mbody's) 5,363,869 Repurchase Agreements: Not rated 102,800,000 Local Agency hvestnent Fund(LAF): Not rated 59,485,653 Investments w fth fiscal agents-Guaranteed Investment Contracts: Rating of A3(Mbody's) 7,422,965 Rating of A2(Mbody's) 9,518,000 Subtotal 408,893,939 Investments w 8h a legal mininum rating(or its equivalent)of A: Corporate MlediumTerm Notes: Rating of Aa3(Mbody's) 6,326,145 Rating of Al (Wwdy's) 3,655,306 Rating of A(Fitch) 8,842,775 Rating of A2(Mbody's) 9,227,026 Rating of A31Mbody's)" 10,049,406 Rating of R2(Mbody's)' 1,300,563 Rating of Baal (Mbody's)' 9,097,983 Rating of BBB+(Standard&Poor's)' 3,448,535 Rating of Baal(MbodY's)' 19,613,477 Rating of BBB(Rich)' 1,359,501 Rating of Saa3(MbadY's)' 1,361,947 Not rated 1,008,455 Money Mlarket Mutual Funds: Rating of Aaa(Mbody's) 1,129,801 Not rated 47,166 invested w ith fiscal agents: Rating of Aaa-rrt(Mbody's) 42,286 Rating of P-1 (Mbody's) 64,548 Subtotal 75,574,920 Investments w ilh a legal Minimum rating(or its equivalent)of AA: Mbrtgage Pass-Through Securities/C100: Rating of Aaa(Mbody's) 126,035 Rating of AA-(Standard&Poor's) 5,482,155 Rating of BBB(Mtch)' 399,323 Subtotal 6,007,513 Total $ 670,632,258 Investment w as in compliance w ith legal requirements at the time it w as purchased. 23 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Concentration of Credit Risk Limitations on the amount that OCSD is allowed to invest in any one issuer have been identified previously in the section "Investments Authorized by the California Government Code and OCSD's Investment Policy" and in the section "Investments Authorized by Debt Covenant Agreements." OCSD follows whichever guideline is the most restrictive. Custodial Credit Risk Custodial credit risk for deposits is the risk that in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code and OCSD's investment policy contain legal requirements that limit the exposure to custodial credit risk for deposits as follows: a financial institution must secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Custodial credit risk for investments is the risk that in the event of the failure of the counlerparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and OCSD's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments. As of June 30, 2014, in accordance with OCSD's investment policy, none of OCSD's investments were held with a counterparty. All of OCSD's investments were held with an independent third party custodian bank registered in the name of the District. OCSD uses Bank of New York(BNY) Mellon as a third party custody and safekeeping service for its investment securities. Investment in State Investment Pool OCSD is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of OCSD's investment in this pool is reported in the accompanying financial statements at amounts based upon OCSD's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are mortgage-backed securities, other asset-backed securities, loans to certain state funds, securities with interest rates that vary according to changes in rates greater than a one-for-one basis, and structured notes. The amounts invested in LAIF are recorded as cash and cash equivalents at June 30, 2014. 24 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 (3) Capital Assets Capital asset activity for the year ended June 30, 2014 is as follows: Balance at Additions/ Deletions/ Balance at June 30,2013 Transfers Transfers June 30,2014 Capital assets not depreciated: Cost: Land $ 15,959,559 $ - $ - $ 15,959,559 Construction in progress 1,197,777,323 87,504,402 (1,027,262,786) 258,018,939 Total nondepreciable assets 1,213,736,882 87,504,402 (1,027,262,786) 273,978,498 Depreciable capital assets: Cost: Sewage collection facilities 634,548,135 118,953,611 (365,212) 753,136,534 Sewage treatment facilities 1,315,220,114 905,616,584 (22,519) 2,220,814,179 Effluent disposal facilities 97,014,820 - - 97,014,820 Solids disposal facilities 3,463,236 - - 3,463,236 General and administrative facilities 219,801,240 5,107,864 (192,012) 224,717,092 Excess purchase price over book value on acquired assets 19,979,000 19,979,000 Subtotal 2,290,026,545 1,029,678,059 (579,743) 3,319,124,861 Accumulated depreciation: Sewage collection facilities (282,817,318) (16,860,467) 365,212 (299,312,573) Sewage treatment facilities (576,326,904) (76,169,503) 22,519 (652,473,888) Effluent disposal facilities (56,112,931) (1,588,008) - (57,700,939) Solids disposal facilities (3,127,097) (9,719) - (3,136,816) General and administrative facilities (135,407,083) (6,843,398) 192,012 (142,058,469) Excess purchase price over book value on acquired assets (17,758,143) (657,709) (18,415,852) Subtotal (1,071,549,476) (102,128,804) 579,743 (1,173,09 S 7) Netdepreciable assets 1,218,477,069 927,549,255 2,146,026,324 Netcapital assets $2,432,213,951 $1,015,053,657 $(1,027,262,786) $2,420,004,822 25 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 (4) Long-Term Liabilities The following is a summary of the changes in long-term liabilities for the year ended June 30,2014: Due within Long-term Balance,Jury 1 Additions Deletions Balance,June 30 one year amount Arbitrage Payable $ V9,987 $ 79,775 $ - $ 209,762 $ - $ 209,762 Compensated Absences 7.465,066 6,422,467 (6,535,758) 7,351,775 (6,787,498) 564,277 Claims and Judgments 1,578,036 989,463 (671,347) 1,896,152 (423,590) 1,472,562 Certificates of Participation/Revenue Obligations and Notes 1,274,990,000 129,625,000 (171,290,000) 1,233,325,000 (27,875,000) 1,205,450,000 Unanorlized (Discount)/Premium 50,938,512 2,366,953 (7,632,341) 45,673,124 (5.135,M) 40,538.021 Net Pension Obligation 8,629,918 1,087,975 (454,120) 9.263,773 - 9,263,773 Net Old Obligation 583,908 744,667 (1,123,961) 204,614 204,614 Totals $1,344,315,427 $M1,3'16,300 $(187,707,527) $ 1,297,924,200 $ (40,221,191) $1,25],]03,009 Arbitrage Payable The Tax Reform Act of 1986 (the Act) requires OCSD to calculate and remit rebatable arbitrage earnings to the Internal Revenue Service. Certain of OCSD's debt and interest earnings on the proceeds thereof are subject to the requirements of the Act. OCSD's liability at June 30, 2014 is $209,762. Compensated Absences OCSD's policies related to compensated absences are described in Note 1. OCSD's liability at June 30, 2014 is$7,351,775 with an estimated $6,787,498 to be paid or used within the next fiscal year. Claims and Judgments Payable OCSD is self-insured in a number of areas as described in Note 1. The following is a summary of the change in claims and judgments payable for the years ended June 30, 2014 and 2013: 2013-14 2012-13 Claims and judgments payable at July 1 $1,578,036 $1,446,941 Claims incurred during the fiscal year 989,463 298,026 Payments on claims during the fiscal year (671,347) (166,931) Claims and judgments payable at June 30 1,896,152 1,578,036 Less: current portion (423,590) (416,720) Total long-ton claims and judgments payable $1,472,562 $1,161,316 Certificates of Participation/Revenue Obligations and Notes OCSD issues certificates of participation, revenue obligations and notes in order to finance construction of the treatment facilities. Each issuance represents a direct and proportionate interest in the semi-annual interest payments. Installment payments for the issues are payable 26 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 from any source of lawfully available funds of OCSD. Certificates of participation, revenue obligations,and notes at June 30,2014 are summarized as follows: Amount 2007A refunding certificates of participation $ 92,385,000 2007B certificates of participation 267,255,000 2008B refunding certificates of participation 25,585,000 2009A certificates of participation 184,090,DDD 2010A wastewater revenue obligations 80,000,000 2010C wastewater revenue obligations 157,000,000 2011A wastewater refunding revenue obligations 130,345,000 2012A wastewater refunding revenue obligations iD0,645,000 2012B wastewater refunding revenue obligations 66,395,000 2013A revenue refunding certificate anticipation notes 129,625,000 Total certificates of participation, revenue obligations, and notes $1,233,325,000 Outstanding Certificates of Participation/Revenue Obligations and Notes All of the outstanding debt of OCSD is senior lien debt with rate covenants that require a minimum coverage ratio of 1.25. The minimum coverage ratio is the ratio of net annual revenues available for debt service requirements to total annual debt service requirements. As of June 30, 2014, the coverage ratio for senior lien debt was 2.68. May 2007 Refunding Certificates of Participation. Series 2007A On May 22, 2007, OCSD completed the sale of $95,180,000 of refunding certificates of participation. The certificates were issued to refund $88,500,000 of the outstanding principal balance of the 2003 Series certificates of participation. The interest rate on the refunding certificates is fixed and will range from 4.00 percent to 4.5 percent. Annual principal payments are due on February 1, beginning February 1, 2008 through February 1, 2030. The trust agreement for the certificates requires the establishment of a reserve which was funded from certificate proceeds. The June 30, 2014 reserve of$9,518,000 is held by Union Bank, the trustee,and meets the reserve requirement. December 2007 Certificates of Participation. Series 2007E On December 20, 2007, OCSD completed the sale of $300,000,000 of certificates of participation. The certificates were issued to finance and to reimburse OCSD for the acquisition, construction, and installation of additional improvements made to the wastewater system. The interest rate on the refunding certificates is fixed and will range from 4.00 percent to 5.25 percent. Annual principal payments are due on February 1, beginning February 1, 2008 through February 1, 2037. The trust agreement for the certificates requires the establishment of a reserve which was funded from certificate proceeds. The June 30, 2014 reserve of$19,840,045 is held by Union Bank, the trustee,and meets the reserve requirement. 27 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 September 2008 Refundina Certificates of Participation. Series 2008B On September 11, 2008, OCSD completed the sale of$27,800,000 of refunding certificates of participation. The certificates were issued to refund the $26,900,000 outstanding principal balance of the 1993 Series certificates of participation. The interest rate on the refunding certificates is fixed and will range from 2.80 percent to 3.0 percent. Annual principal payments are due on August 1, beginning August 1, 2009 through August 1,2016. The trust agreement for the certificates requires the establishment of a reserve which was funded from certificate proceeds. The June 30, 2014 reserve of $2,781,581 is held by US Bank, the trustee,and meets the reserve requirement. May 2009 Certificates of Participation. Series 2009A On May 7, 2009, OCSD completed the sale of $200,000,000 of certificates of participation. The certificates were issued to finance and to reimburse OCSD for the acquisition, construction, and installation of additional improvements made to the wastewater system. The interest rate on the certificates is fixed and will range from 3.00 percent to 5.00 percent. Annual principal payments are due on February 1, beginning February 1, 2010 through February 1, 2039. The trust agreement for the certificates requires the establishment of a reserve which was funded from certificate proceeds. The June 30, 2014 reserve of $13,118,005 is held by US Bank,the trustee, and meets the reserve requirement. May 2010 Wastewater Revenue Obligations, Series 2010A On May 18, 2010, OCSD completed the sale of $80,000,000 of wastewater revenue obligations under the federally taxable Build America Bonds program. The obligations were issued to finance and to reimburse OCSD for the acquisition, construction, and installation of additional improvements made to the wastewater system. The stated interest rate on the obligations is fixed and will range from 5.56 percent to 5.58 percent, however, in accordance with their designation as Build America Bonds, OCSD expects to receive a cash subsidy from the United States Treasury equal to 35 percent of the interest payable with respect to these revenue obligations. The expected net interest rate on the obligations is fixed and will range from 3.614 percent to 3.627 percent. Annual principal payments are due on February 1, beginning February 1, 2034 through February 1,2040. The trust agreement for the revenue obligations does not require the establishment of a reserve. December 2010 Wastewater Revenue Obligations, Series 2010C On December 8, 2010, OCSD completed the sale of $157,000,000 of wastewater revenue obligations under the federally taxable Build America Bonds program. The obligations were issued to finance and to reimburse OCSD for the acquisition, construction, and installation of additional improvements made to the wastewater system. The stated interest rate on the obligations is fixed and will range from 6.35 percent to 6.40 percent, however, in accordance with their designation as Build America Bonds, OCSD expects to receive a cash subsidy from the United States Treasury equal to 35 percent of the interest payable with respect to these revenue obligations. The expected net interest rate on the obligations is fixed and will range from 4.1275 percent to 4.16 percent. Annual principal payments are due on February 1, beginning February 1, 2031 through February 1,2044. 28 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 The trust agreement for the revenue obligations does not require the establishment of a reserve. October 2011 Wastewater Refunding Revenue Obligations, Series 2011A On October 3, 2011, OCSD completed the sale of $147,595,000 of wastewater refunding revenue obligations. The obligations were issued to refund $89,800,000 of the outstanding principal balance of 2000 Series A and B refunding certificates of participation, and $83,320,000 of the outstanding principal balance of 2003 certificates of participation. The stated interest rate on the obligations is fixed and will range from 3 percent to 5 percent. Annual principal payments are due on August 1 and February 1, beginning August 1, 2012 through February 1, 2026. The trust agreement for the revenue obligations does not require the establishment of a reserve. March 2012 Wastewater Refunding Revenue Obligations, Series 2012A On March 22, 2012, OCSD completed the sale of $100,645,000 of wastewater refunding revenue obligations. The obligations were issued to refund the $108,180,000 outstanding principal balance of the 2003 certificates of participation. The stated interest rate on the obligations is fixed and will range from 3 percent to 4 percent. Annual principal payments are due on February 1, beginning February 1,2031 through February 1, 2033. The trust agreement for the revenue obligations does not require the establishment of a reserve. August 2012 Wastewater Refunding Revenue Obligations, Series 2012B On August 16, 2012, OCSD completed the sale of $66,395,000 of wastewater refunding revenue obligations. The obligations were issued to refund the remaining $91,900,000 outstanding principal balance of the Series 2000A and 2000B refunding certificates of participation. The stated interest rate on the obligations is fixed and will range from 3 to 5 percent. Annual principal payments are due on February 1, beginning February 1, 2019 through February 1, 2026. The trust agreement for the revenue obligations does not require the establishment of a reserve. October 2013 Revenue Refunding Certificate Anticipation Notes, Series 2013A On October 16, 2013, OCSD completed the sale of $129,625,000 of revenue refunding certificate anticipation notes. The notes were issued to refund the $131,700,000 outstanding principal balance of the 2012 Series C revenue refunding certificate anticipation notes. The interest rate on the notes is fixed at 2.0 percent. The notes will mature on October 16, 2014. OCSD expects the principal and interest on the notes to be paid from proceeds of the sale, prior to the maturity date, of a future series of certificates of participation, notes or other obligations. The aggregate difference in debt service between the refunding debt and the refunded debt is a negative amount of approximately $20,000. The total future payments for the new debt provide a net present value loss of approximately$298,000 to refund the old debt. The trust agreement for the certificates does not require the establishment of a reserve. 29 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Annual Amortization Requirements The annual requirements to amortize all debt related to certificates of participation, revenue obligations, and anticipation notes as of June 30, 2014, including the Revenue Refunding Certificate Anticipation Notes, Series 2013A that currently matures in October 2014,are as follows: Year Ending June 30, Principal Estimated Interest Total 2015 $ 157,500,000 $ 51,679,980 $ 209,179,580 2016 29,405,000 47,899,830 77,304,830 2017 35,575,000 46,530,755 82,105,755 2018 33,170,000 44,994,888 78,164,888 2019 32,735,000 43,855,263 76,590,263 2020-2024 164,955,000 194,736,813 359,691,813 2025-2029 190,270,000 153,582,322 343,852,322 2030-2034 301,655,000 101,292,106 402,947,106 2035-2039 217,975,000 40,204,384 258,179,384 2040-2044 70,085,000 6,378,600 76,463,600 Total $1,233,325,000 $ 731,154,940 $ 1,964,479,940 (5) Pension Benefits OCSD has two pension plans for retirees: a defined benefit pension plan maintained through and by the Orange County Employees' Retirement System (OCERS)and the Additional Retiree Benefit Account(ARBA)administered directly by OCSD. Pension Plan OCSD participates in the Orange County Employee's Retirement System (OCERS), a cost-sharing multiple-employer, defined benefit pension plan which is governed and administered by a nine member Board of Retirement. OCERS was established in 1945 under the provisions of the County Employees Retirement Law of 1937, and provides members with retirement, death, disability, and cost-of-living benefits. OCERS issues a stand-alone comprehensive annual financial report which can be obtained from OCERS at 2223 Wellington Avenue, Santa Ana, California 92701. Benefits: All OCSD employees except for interns and the Board of Directors participate in OCERS. Employees who retire at or after age 50 with five or more years of service are entitled to an annual retirement allowance. The amount of the retirement allowance is based upon the member's age at retirement, the member's"final compensation"as defined in Section 31462 of the Retirement Law of 1937, the total years of service under OCERS, and the Plan under which the employee is covered. OCERS also provides death and disability benefits. Eligible employees are covered under one of four plans, depending on their entry date into the plan. Plans G and H provide 2.5% of final average compensation per year of service at age 55; Plan B provides 1.667% per year of service at age 57.5; Plan U provides 2.5% per year of service at age 67. Plan G members' retirement benefit are calculated using the highest single year of compensation, while Plans B and H are based on the average of the highest three consecutive years of compensation. Plan U retirement benefits are based on the highest three consecutive years of compensation, with a cap for each year equal to 120% of the maximum wages subject to Social Security Tax for that calendar year. 30 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Contributions: As a condition of participation under the provisions of the County Employees Retirement Law of 1937, members are required to contribute a percentage of their annual compensation to OCERS. Employees covered by Plans B, G, H, and U are required to contribute 6.11% - 12.04%, 8.72% - 15.05%, 8.33% - 15.05%, and 6.25% - 12.25%, respectively, of their annual compensation to OCERS. OCSD is required to make periodic contributions to OCERS in amounts that are estimated to remain a constant percentage of covered employees'compensation such that, when combined with covered employees' contributions, will fully provide for all covered employees' benefits by the time they retire. For the fiscal years ended June 30, 2014, 2013, and 2012, the "Annual Required Contribution' equaled the contributions actually made. Required contributions,which are actuarially determined, are set by OCERS. The following table provides salary and contributions requirements for the two previous fiscal years and the current year: Forthe Fiscal Year Ending June 30,2012 June 30,2013 June 30,2014 Total payroll costs $62,603,878 $61,878,748 $61,245,924 Payroll costs of employees covered by OCERS 60,419,910 59,832,408 59,360,635 Contribution requirements: Contributed byemployees 4,566,386 4,462,869 4,822,540 Contributed bythe Disincton behalf of employees 2,089,868 1,923,875 1,841,851 Total employee required contribution 6,656,254 6,386,744 6,664,391 District required contribution 15,767,050 16,363,917 18,920,212 Total contribution $22,423,304 $22,750 661 $25,584,602 Total actual contribution as a percent of the "Annual Required Contribution(ARC)" 100.00% 100.00% 100.00% Employee required contribution as a percent of covered payroll 11.02% 10.67% 11.23% District required contribution as a percentof covered payroll 26,10% 27.35% 31.87% Total contribution as a percent of all participating entities'contributions 3.60% 3.90% 3.80% Additional Retiree Benefit Account(ARBA) The OCSD ARBA plan is a single-employer defined benefit plan which was administered by OCERS until February 29, 2008, when OCSD began direct administration. This benefit was established by the OCSD Board of Directors on October 25, 1992. It provides a monthly payment to retirees towards the premium costs of health insurance for the retiree and eligible dependents. The retiree is not required to use this amount for health insurance premium or to remain on the OCSD medical plan. The plan is currently paying benefits to 222 retirees. The plan is included in OCSD's financial statements; stand-alone financial statements are not issued for the plan. Benefits: Employees who retire receive $10 per month for every year of service up to a maximum of 25 years, or $250 per month. This amount is independent of salary and is fixed at retirement. Because the District cannot ensure the use of the benefit for payment of eligible health insurance expenses, the benefit is taxable to the retiree. Survivor benefits are provided in the event that a retiree pre-deceases his/her spouse. For retirees hired prior to July 1, 1988, OCSD provides health insurance coverage for 2%months per year of service (see Note 7—Other Postemployment 31 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Benefits). ARBA benefits begin immediately after this benefit ends. For those hired on or after July 1, 1988, ARBA benefits begin immediately upon retirement and continue for life. Employees hired into the OCEA bargaining group after August 1, 2011 are ineligible for this benefit. Funding: There are no employee contributions for this plan; OCSD covers 100% of the cost. An actuarial evaluation was performed as of July 1, 2013, using the Projected Unit Credit Cost method. This method represents the present value of benefits earned to date assuming that an employee earns benefits ratably over his/her career. An investment rate of return of 4.0% per year and an inflation rate of 2.5% were used; no salary adjustment was used due to the flat dollar nature of the benefit. The unfunded actuarial liability was amortized on a level dollar basis over an open period of 30 years. OCSD utilizes a pay-as-you-go method for funding the plan. Trend Information and Funding Progress: Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. The District's trend information follows. Annual Pension Cost Fiscal Year Annual Pension Percentage of Net Pension Ending Cost(APC) APC Contributed Obligation 6/30/12 978,398 37.5% 8,082,368 6/30/13 969,200 43.5% 8,629,918 6/30114 1,087,975 41.7% 9,263,773 The Schedule of Funding Progress shows the recent history of the actuarial value of assets, actuarial accrued liability, their relationship, and the relationship of the unfunded actuarial accrued liability to payroll. This schedule presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Actuarial Actuarial Actuarial UAAL as a Valuation Accrued Value of Unfunded Funded Covered Percentage of Date Liability (AAL) Assets AAL(UAAL) Ratio Payroll Covered Payroll 71112009 8,904,499 - 8,904,499 0.0% 57,681,058 15.4% 7/1/2011 10,753,718 - 10,753,718 0.0% 59,787,560 18.0% 7/1/2013 13,735,277 - 13,735,277 0.0% 59,832,408 23.0% 32 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 The annual pension cost and net pension obligation for the years ended June 30, 2014, 2013 and 2012 were as follows: For the Fiscal Year Ending June 30, 2014 June 30, 2013 June 30, 2012 Annual required contribution $ 1,241,847 $ 1,090,849 $ 1,090,849 Interest on net pension obligation 345,197 404,118 373,559 Adjustment to annual required contribution (499,069) (525,767) (486,010) Annual pension cost 1,087,975 969,200 978,398 Contributions made (454,120) (421,650) (367,210) Increase in net pension obligation 633,855 547,550 611,188 Net pension obligation, beginning of year 8,629,918 8,082,368 7,471,180 Net pension obligation, end of year $ 9,263,773 $ 8,629,918 $ 8,082,368 The net pension obligation is reported in the noncurrent portion of long-term obligations on the Statement of Net Position. (61 Other Postemolovment Benefits OCSD offers medical insurance to active and retired employees, as well as their qualified dependents. This is a single-employer defined benefit plan administered by OCSD. All retirees may choose coverage in an OCSD medical plan, with retirees paying the full premium. However, for employees hired prior to July 1, 1988, medical benefits begin immediately at retirement with OCSD paying 2.5 months of premium for each year of continuous service toward the cost of coverage under OCSD medical plans. At the termination of this period the retiree may elect to continue coverage at his/her own expense. This plan was established and may be modified only by action of the OCSD Board of Directors. The plan is included in the OCSD financial statements; stand-alone financial statements are not issued. As of the date of the latest actuarial valuation (711/13), there were 593 active employees, 58 retirees paying premiums, and 71 retirees whose premium is fully paid by OCSD. Premiums ranged between $174 and $3,256 per month, depending on the plan and number of dependents covered. Funding Policy., There are no employee contributions to this plan; OCSD covers 100% of the cost for qualifying employees as stated above. Retirees opting to remain with the plan after employment pay 100% of the premium cost, except for those for whom the District pays for a period (see above). An actuarial evaluation was performed as of July 1, 2013, using the Projected Unit Credit Cost method. This method represents the present value of benefits earned to date, assuming that an employee earns benefits ratably over his/her career. An investment rate of return of 4.0% per year was used. The rate of increase for healthcare premium was set at 8.0%. The unfunded actuarial liability was amortized on a level dollar basis over an open period of 30 years. OCSD utilizes a pay-as-you-go method for funding the plan. For fiscal year 2013-14, OCSD contributed$1,123,961 and retirees contributed $506,811 to cover current year expenses. Annual OPEB Cost and Net OPEB Obligation: The annual OPEB cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in 33 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize the unfunded actuarial liabilities over 30 years. The following OPEB cost and net OPEB obligation was determined for the years ended June 30, 2014, 2013, and 2012: For the Fiscal Year Ending June 30, 2014 June 30, 2013 June 30, 2012 Annual required contribution $ 755,078 $ 900,035 $ 900,035 Interest on net OPEB obligation 23,356 39,260 51,784 Adjustment to annual required contribution (33,767) (51,078) (67,373) Annual OPEB cost 744,667 888,217 884,446 Contributions made (1,123,961) (1,089,516) (1,134,925) Increase (decrease)in net OPEB obligation (379,294) (201,299) (250,479) Net OPEB obligation, beginning of year 583,908 785,207 1,035,686 Net OPES obligation, end of year $ 204,614 $ 583,908 $ 785,207 The District's annual OPEB cost contributed and the net OPEB obligation for the years ended June 30, 2014, 2013, and 2012 are shown in the following table. Annual OPES Cost Fiscal Annual Percentage of Year OPES Actual OPEB Cost Net OPEB Ending Cost Contributions Contributed Obligation 6/30/12 884,446 1,134,925 128.3% 785,207 6130/13 888,217 1,089,516 122.7% 583,908 6/30/14 744,667 1,123,961 150.9% 204,614 The net OPEB obligation is reported in the noncurrent portion of long-term obligations on the Statement of Net Position. Funded Status and Progress: The funding status of the plan as of the most recent actuarial valuation dates are as follows: Actuarial Actuarial Actuarial UAAL as a Valuation Accrued Value of Unfunded Funded Covered Percentage of Date Liability (AAL) Assets AAL (UAAL) Ratio Payroll Covered Payroll 7/1/2009 8,799,624 - 8,799,624 0.0% 57,681,058 15.26% 7/1/2011 10,706,789 - 10,706,789 0.0% 59,787,560 17.91% 7/1/2013 10,650,711 - 10,650,711 0.0% 59,832,408 17.80% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented above, compares whether the actuarial values of plan assets are increasing or decreasing overtime relative to the actuarial liabilities for benefits. 34 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Actuarial methods and assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing the benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The ARC for the current year was determined as part of the Julyl, 2013 actuarial valuation using the Projected Unit Credit cost method. The actuarial assumptions include a 4.0% investment rate of return, an annual rate of inflation of 2.5%, and an annual healthcare cost trend rate of 8.0%. The UAAL is being amortized ratably over 30 years. Inflation assumptions are included as part of the healthcare cost trend. No benefit increase is anticipated and the benefit is unaffected by changes in salary. (7) Transactions with Irvine Ranch Water District—Revenue Area No. 14 Formation of Revenue Area No. 14&Excess Purchase Price Over Book Value of Acquired Assets On July 1, 1985, Revenue Area No. 14 was formed as an independent special district as a result of a negotiated agreement between OCSD and Irvine Ranch Water District (IRWD). At the time of Revenue Area 14's creation, OCSD consisted of eight independent special districts (see Note 1 — Reporting Entity). The eight existing districts sold a portion of the joint treatment facilities and land to the newly created district and recorded capacity rights revenue at the time of the sale. In accordance with the negotiated agreement between OCSD and IRWD, IRWD paid OCSD $34,532,000 for an initial 15,000,000 gallons per day capacity in OCSD's joint treatment facilities (with an ultimate collection capacity of 32,000,000 gallons per day) and for a pro-rata interest in real property (based on flow of 32,000,000 gallons per day). The book value of the assets acquired was determined to be $14,553,000 as of June 30, 1986; these assets were recorded at book value in Revenue Area 14. The excess of the purchase price over the assets' book value was$19,979,000 and was recorded as an intangible asset in Revenue Area 14. The excess of the purchase price over the assets' book value is being amortized over the remainder of the useful lives of the original assets acquired. As of June 30, 2014, after recognizing current year amortization of$657,709,the unamortized amount of the excess of purchase price over the assets' book value was$1,563,148. 35 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Annual Transactions IRWD entered into a separate agreement with Revenue Area 14 on January 1, 1986 whereby IRWD agreed to fund quarterly payments of Revenue Area 14's proportionate share of OCSD's joint capital outlay revolving fund budget requirements and certain capital improvements during the term of the agreement,which contribution of$5,339,376 was recorded in 2014. IRWD also agreed to fund the annual integration adjustment of Revenue Area 14's equity share in OCSD's Joint Works Treatment Facilities based on the Flows discharged to OCSD. Capital contributions of $5,938,394 to Revenue Area 14 was recognized and reported as contributions from other government in 2014. This amount included a capital contributions adjustment of$9,468,788 from the prior year resulting in a reduction of due to other governmental agency. These capital contributions received from or credited to IRWD for their agreed-upon share of capital assets and equity share in OCSD's Joint Works Treatment Facilities are calculated as prescribed in the agreements. In addition, a separate agreement for transfer of IRWD's wastewater solids residuals to OCSD was entered on April 28, 2010. IRWD agreed to pay OCSD a charge for interim solids handling charge which include annual capital and quarterly operating expense components designed to compensate OCSD for IRWD's share of the cost of operating and maintaining the existing facilities for the treatment of solids. As a result, a total of $1,475,657 in annual solids capital handling charges was reported as operating revenue in Consolidated Revenue Area, and $9,335,455 in solids quarterly operating and maintenance charges were reported as operating revenue in Revenue Area No. 14 in 2014. Any amounts credited to IRWD are not refunded in cash but are held as a credit to satisfy future contributions required of IRWD resulting in a balance due to other governmental agency of $29,107,270 as of June 30, 2014. Annual Cash Reserve Requirement The cash reserve contribution requirement from IRWD at June 30, 2014; in accordance with Amendment No. 2 to the Agreement between IRWD and OCSD Acquiring Ownership Interests, Assigning Rights, and Establishing Obligations; is $8.2 million. This rash reserve requirement is recognized as a liability to IRWD. (8) Commitments. Due From Other Governmental Agency. and Contingencies Relocation of the Santa Ana Regional Interceptor: On June 29, 2010, the District entered into an agreement to lend the Orange County Flood Control District(OCFCD)60 percent of the amount of the contract awarded to design and construct the relocation of the Santa Ana Regional Interceptor, but not to exceed $72 million. On December 18, 2012, a new agreement was executed that superseded the prior agreement and reduced the District's maximum loan obligation to $59,036,400 based on lower than expected construction costs. OCFCD agrees to repay the loan from any subvention funds received by OCFCD, with the total balance repaid by no later than July 1, 2022. Repayment installments will be made within 30 days equal to 60 percent of any subvention funds received by OCFCD. Interest shall aocme on the unpaid balance from July 1, 2018 at an annual interest rate of two percent until the unpaid balance has been repaid. As of June 30, 2013, $51,336,000 had been loaned to OCFCD, leaving the District with an outstanding obligation to loan an additional amount not to exceed $7,700,400. During the fiscal year ended June 30, 2014, the District received loan repayments totaling $10,712,849, leaving an outstanding loan receivable balance of$40,623,151. 36 ORANGE COUNTY SANITATION DISTRICT Notes to Basic Financial Statements For the Year Ended June 30, 2014 Local Sewer Facilities Transfer: On February 27, 2014, the District entered into an agreement to transfer 174 linear miles of local sewer facilities in the unincorporated area of Area 7 and in the City of Tustin, to East Orange County Water District (EOCWD). The transfer is contingent upon receiving Orange County Local Agency Formation Commission (OC LAFCO) approval of EOCWD's request to activate EOCWD's latent powers to provide wastewater services and to slightly adjust EOCWD's boundary, solely for local sewer service, which is not currently within EOCWD's water service area. If approved by OC LAFCO, the proposed transfer may then proceed. In addition to the transfer of the sewer facilities, the agreement also provides for the transfer of $25,000,000 of accumulated capital repair and replacement reserve funds from the District to EOCWD payable in two installments. The first payment of$15,000,000 is due within five days following OC LAFCO's approval of EOCWD's request and the remaining $10,000,000 is due on July 1, 2018. As of June 30, 2014, no transactions have occurred. Litigation: Certain claims involving disputed construction costs have arisen in the ordinary course of business. Additionally, the District is a defendant in lawsuits. Although the outcome of these matters is not presently determinable, management does not expect that the resolution of these matters will have a material adverse impact on the financial condition of the District. (9) Subsequent Events On August 7, 2014, the District issued Wastewater Refunding Revenue Obligations, Series 2014A (Series 2014A), in the amount of$85,090,000. The obligations were issued to refund a portion of the Certificates of Participation, Series 2007E (Series 2007B). The debt was issued at a premium of$17,161,006. The total proceeds of$102,251,006, along with $2,048,651 in 2007E reserves, were used to refund $93,930,000 of the$267,255,000 outstanding 2007E obligations. The interest rate on the Series 2014A obligations is 5.00%with a final maturity date of February 1, 2027. On October 8, 2014, the District issued Revenue Refunding Certificate of Anticipation Notes (CANS), Series 2014B, in the amount of$120,850,000. The notes were issued to pay off all of the CANS Series 2013A. The true interest cost on the CANS Series 2014B, maturing on November 15, 2016, is 0.411076%. In July 2014, the OCSD Board of Directors approved the pay down on the District's unfunded actuarial accrued liability within the Orange County Employee's Retirement System (OCERS) in the amount of$125 million.This payment is expected to be made in November 2014. 37 (THIS PAGE LEFT INTENTIONALLY BLANK) 38 ORANGE COUNTY SANITATION DISTRICT SUPPLEMENTARY INFORMATION 39 ORANGE COUNTY SANITATION DISTRICT Combining Area Schedule of Net Position June 30,2014 Wdh Comparative Totals for June 30,2013 Revenue Consolidated Totals Area No.14 Revenue Area 2014 2013 Current assets: Cash and cash equivalents $ 9,982,482 $ 205,314,413 $ 215,296,895 $ 208,278,072 Investments 19,124,788 393,348,521 412,473,309 339,152,573 Accounts receivable,net of allowance for uncollectibles$29,452 - 7,829,997 7,829,997 9,757,514 Accrued interest receivable - 1,396,378 1,396,378 1,596,362 Connection fees receivable - 3,204,465 3,204,465 1,565,534 Property tax receivable - 1,206,314 1,206,314 1,363,536 Inventories - 5,837,424 5,837,424 5,689,074 Prepaid expenses - 707,365 707,365 600,214 Prepaid retirement 20,113,512 20,113,512 17,555,710 Total current assets 29,107,270 638,958,389 668,065.659 585.558,589 Noncurrent assets: Restricted: Cash and cash equivalents - 28,360,917 28,360,917 36,118,018 Investments - 16,940,965 16,940,965 16,940,965 Accrued interest receivable - 224,383 224,383 230,648 Unrestricted: Non-depreciable capital assets 4,831,074 269,147,424 273,978,498 1,213,736,882 Depreciable capital assets,net of accumulated depreciation 51,135,545 2,094,890,779 2,146,026,324 1,218,477,069 Prepaid insurance on outstanding debt payable - 1,582,280 1,582,280 1,658,521 Due from other governmental agency - 40,623,151 40,623,151 51,336,000 Other noncurrent assets,net 10,344 10,344 10,344 Total noncurrent assets 55,966,619 2,451,780,243 2.507,746,862 2,538.508,447 Total assets 85,073,889 3,090,738,632 3,175,812,521 3,124,067,036 Deferred outflow of resources: Deferred charges on refunding debt 18.172,646 18,172,646 20,722,872 Total assets and deferred outflow of resources 85,073,889 3,108,911,278 3,193,985.167 3,144.789,908 Current liabilities: Accounts payable - 11,922,059 11,922,059 11,485,962 Accrued expenses - 7,295,661 7,295,661 8,123,120 Retentions payable - 2,821,953 2,821,953 8,286,811 Interest payable - 22,619,300 22,619,300 23,153,100 Due to other governmental agency 29,107,270 - 29,107,270 48,700,573 Current portion of long-term obligations 40,221,191 40,221,191 178,515,737 Total current liabilities 29,107,270 84,880,164 113,987,434 278.265,303 Noncurrent liabilities: Noncurrent portion of long-term obligations 1,257,703.009 1.257,703,009 1,165.799,690 Total liabilities 29,107.270 1,342,583,173 1,371,690.443 1,444.064,993 Net position: Net investment in capital assets: Collection system 19,388,638 440.936,358 460,324.996 508,994,825 Treatment and disposal-Land 406,846 4.068,905 4,475,751 4,475,751 Treatment and disposal system 36,171,135 1,919,032,940 1,955,204.075 1,918.743,375 Capital assets related debt (1,215,299,213) (1,215,299.213) (1,251.916,008) Subtotal 55,966,619 1,148,738,990 1,204,705.609 1,180.297,943 Unrestricted 617,589,115 617,589.115 520,426,972 Total net position $ 55,966,619 $ 1,766,328,105 $ 1,822,294.724 $ 1,700.724,915 40 ORANGE COUNTY SANITATION DISTRICT Combining Area Schedule of Revenues,Expenses,and Changes in Net Position For the Year Ended June 30,2014 With Comparative Totals for June 30,2013 Revenue Consolidated Totals Area No.14 Revenue Area 2014 2013 Operating revenues: Service charges $ 9,826,969 $ 290,784,284 $ 300,611,253 $ 303,399,529 Permit and inspection fees 5,004 843,056 848,060 1,176,106 Total operating revenues 9,831,973 291,627,340 301,459,313 304,575,635 Operating expenses other than depreciation and amortization: Salaries and benefits $ 1,096,399 $ 78,082,341 79,178,740 76,878,551 Utilities 128,790 6,252,604 6,381,394 6,403,013 Supplies,repairs and maintenance 648,410 22,657,907 23,306,317 24,093,927 Contractual services 9,551,628 16,660,720 26,212,348 26,791,095 Directors'fees 512 157,203 157,715 144,713 Meetings and training 11,236 920,443 931,679 719,521 Feasibility studies 69,454 5,352,428 5,421,882 10,646,100 Other 815,618 4,041,388 4,857,006 4,140,333 Total operating expenses other than depreciation and amortization 12,322,047 134,125,034 146,447,081 149,817,253 Operating income(loss)before depreciation and amortization (2,490,074) 157,502,306 155,012,232 154,758,382 Depreciation and amortization 3,008,840 96,796,126 99,804,966 63,906,848 Operating income(loss) (5,498,914) 60,706,180 55,207,266 90,851,534 Non-operating revenues: Property taxes 2,135,797 72,808,144 74,943,941 79,239,497 Investment and interest income 346,535 6,151,118 6,497,653 (3,912,925) Contributions from other government 11,277,770 651 11,278,421 2,054,154 Other 8,670 1,308,377 1,317,047 1,727,320 Total non-operating revenues 13,768,772 80,268,290 94,037,062 79,108,046 Non-operating expenses: Interest - 40,450,377 40,450,377 42,314,928 Contributions to other government - - - 26,590,533 Other 743 59,712 60,455 54,549 Loss on disposal of assets 21,843 1,234,557 1,256,400 10,689,755 Total non-operating expenses 22,586 41,744,646 41,767,232 79,649,765 Income before capital contributions 8,247,272 99,229,824 107,477,096 90,309,815 Capital Contributions: Capital facilities capacity charges - 14,092,713 14,092,713 12,797,483 Change in net position 8,247,272 113,322,537 121,569,809 103,107,298 Total net position-beginning 47,719,347 1,653,005,568 1,700,724,915 1,597,617,617 Total net position-ending $ 55,966,619 $ 1,766,328,105 $1,822,294,724 $1,700,724,915 41 ORANGE COUNTY SANITATION DISTRICT Combining Area Schedule of Cash Flows For the Year Ended June 30,2014 With Comparative Totals for June 30,2013 Revenue Consolidated Totals Area No.14 Revenue Area Eliminations 2014 2013 Cash flows from operating activities: Receipts from(refunds to)customers and users $ (9,761,330) $ 293,544,498 $ - $ 283,783,166 $ 305,300,505 Payments to employees (1,096,911) (77,855,271) - (78,952,182) (77,697,268) Payments to suppliers (11,225,136) (61,511,268) (72,136,4N) (68.387,501) Net cash provided by operations (22,083,3T1) 154,177,957 132,04,580 159,215,736 Cash flows from noncapital financing activities: Proceeds from property taxes 2,136,797 72,965,367 - 75,101,164 79,418,183 Proceeds from various resources 6,566 1,248,663 1,255,229 1,61 Net cash provided by noncapital financing activities 2,142,363 74,214,030 76.356,393 1 Cash flows from capital and related financing activities: Capital facilities capacity charges - 12,453,782 - 12,453,782 11,879,435 Additions to capital assets (11,276,594) (81,041,794) 19,465,556 (72,852,832) (109,353,843) Disposal of capital assets - 8.187,786 (8,187,786) -Interest paid - (53,434,264) - (53,434,264) (51,970,472) Principal payments on debt obligation - (171,290,000) - (171,290,000) (259,070,000) Proceeds from debt issuances - 131,991,954 - 131,1 216,506,206 Debt issuance vests - (262,462) - (262.462) (838,886) Contnbution from other government 11,277,770 651 (11,277,770) 651 Net cash used In capital and related financing activities 1,176 (153,394,W) (153,393,171) (192,847.558) Cash flows from Investing activities: Proceeds form the sale of investments 302,898,079 5,461,458,550 - 5,764,356,629 8,932,206,118 Purchases of investments (291,433,630) (5,537,238,973) - (5,828,672,603) (8,896,971,673) SARI project(advance)Ipayments - 10,712,849 - 10,712,849 (20,483,710) Interest received (70,981) (2,121,974) (2,192,955) 10,627,896 Net cash provided by fund in)investing activities 11,393,488 (67,189,548) (55,796,080) 25,378,631 Net increase(decrease)in cash and cash equivalents (8,546,370) 7,808,092 - (738,278) 72,839,934 Cash and cash equivalents,beginning of year 18,528,852 226.867,238 24g396,090 171,556,156 Cash and cash equivalents,end of year $ 9,982,482 $ 233,675,330 $ $ 243,657,812 $ 244,396,090 Reconciliation of operating income(loss)to net cash provided by operating activities: Operating income(ion) $ (5,498,914) $ 60706,180 $ - $ 55,207,266 $ 90,851,534 Adjustments to reconcile operating Income(loss) to net cash provided by operations: Depreciation and amortization 3,008,840 96,796,126 - 99,804,966 63,906,848 Bad debt exper.(Net recoveries) - 10,361 - 10.361 11.398 Feasibility studies - - - 6,058,286 (Increase)Idecrease in operating assets: Accounts receivable - 1,917,156 - 1,917,156 (316,323) Inventories - (250,624) - (250,624) (30,340) Prepaid and other assets - (2,664,953) - (2,664,953) (2,359,320) Increasai(decrease)in opem8ng liabilities: Accounts payable - (2,058,622) - (2,058,622) (746,578) Accrued expanses - (816,828) - (816.828) 733.795 Due to other governmental agency (19,593,303) - - (19,593,303) 1,131 PensionlOPEBICaUstrophe leave payable - 257,493 - 257,493 34],]32 Compensated absences - (116,222) - (116,222) (136,296) Otherpayable - 79774 - 79.774 (277.285) Claims and judgments 318,116 318.116 131.095 Net cash provided by operations $ (22D83,3]]) $ 154,177,957 $ $ 132p94,580 $ 159,215,736 Noncash Activities: Unrealized gain(loss)on the fair value of investments $ 417516 8,587,246 $ 9,004,762 $ (14,438,658) Contributions from(to)other government 11271790 - 11,277,770 (24,536,380) Capital assets acquired through accounts payable - 2,494,217 2,494717 7,450,400 Feasibility studies woo no cash effect - - - 6,032,722 42 ORANGE COUNTY SANITATION DISTRICT STATISTICAL SECTION This part of the comprehensive annual financial report of the Orange County Sanitation District (OCSD) presents detailed information as a content for understanding what the information in the financial statements, note disclosures, and required supplementary information says about OCSD's overall financial health. Contents Pages Financial Position and Trends These schedules contain current and trend information to help the reader understand OCSD's financial position and how OCSD's financial performance and well-being have changed over time. 44-48 Revenue Capacity These schedules contain information to help the reader assess OCSD's most significant revenue source of sewer service fees. 49-51 Debt Capacity These schedules present information to help the reader assess the affordability of OCSD's current levels of outstanding debt and OCSD's ability to issue additional debt in the future. All of OCSD's debt is recorded in a proprietary fund; consequently,many 52-55 of the schedules which are applicable to governmental funds are not presented. Operating Information These schedules contain data to help the reader understand how the information in OCSD's financial report relates to the services it provides and the activities it performs. 56-59 Demographic and Economic Factors These schedules offer demographic information to help the reader understand the environment within which OCSD's financial activities take place. 60-63 43 ORANGE COUNTY SANITATION DISTRICT Net Position by Component (Dollars in Thousands) Last Ten Fiscal Years $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,00) $400,00) $200,00) $0 2004-06 2008-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 a Net investment in Capital Assets ■Restncted for Debt Senrm&Capital Acquisition OUnrestricted Restricted for Debt Service Net Investment In &Capital Fiscal Year Capital Assets Acquisition Unrestricted Total Net Position 2004-05 $ 558,391 $64,514 $ 418,342 $1,041,247 2005-06 664,060 3,003 422,036 1,089,099 2006-07 886,463 3,904 299,370 1,189,737 2007-08 B47,426 - 428,561 1,275,987 2008-09 948,869 - 399,452 1,348,321 2009-10 1,121,057 - 310,016 1,431,073 2010-11 1,131,063 - 379,423 1,510,486 2011-12 1,125,966 - 471,651 1,597,617 (1) 2012-13 1,180,298 - 520,427 1,700,725 2013-14 1,204,706 - 617,589 1,822,295 I'I Beginning net position restated due to implementation of GASS 65. Source: Orange County Sanitation Distncl's Financial Management Division. 44 ORANGE COUNTY SANITATION DISTRICT Revenues and Gross Capital Contributions by Source (Dollars in Thousands) Last Ten Fiscal Years $325,000 $300,000 $275,000 $250,000 $225,000 $200,000 $175,000 $150,000 $125,000 $100,000 $75,000 $50,000 $25,000 $6 -$25,000 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 GOperating Revenue ■Non-Operating Revenue ■Capital Contnbutions Operating Revenue Non-Operating Revenue Permit& Total Fiscal Service Inspection Total Property Non- Capital Year Charges Fees Operating Taxes Interest Other Operating Contributions 2004-05 $ 120,917 $ 498 $ 121,415 $ 35,764 $ 15,118 $ 1,051 $ 51,933 $19,350 2005-06 154,291 874 155,165 39,958 10,426 3,477 53,861 32,990 2006-07 167,790 1,866 169,656 60,565 22,243 1,068 83,876 50,207 2007-08 184,180 1,196 185,376 65,210 20,235 13 85,458 35,408 2008-09 206,422 895 207,317 66,427 14,836 1,634 82,897 17,937 2009-10 225,059 629 225,688 64,759 19,166 6,939 90,864 (2,406) 2010-11 244,465 784 245,249 64,307 10,092 11,015 85,414 9,800 2011-12 259,491 1,030 260,521 67,882 15,747 8,486 92,115 8,936 2012-13 303,400 1,176 304,576 79,240 (3,913) 3,781 79,108 12,797 2013-14 300,611 848 301,459 74,944 6,498 12,595 94,037 14,093 Source: Orange County Sanitation District's Financial Management Division. 45 ORANGE COUNTY SANITATION DISTRICT Expenses by Type (Dollars in Thousands) Last Ten Fiscal Years $250,000 $225,000 $200,000 $175,000 $150,000 $125,000 $100,000 $75,000 $50,000 $25,000 $0 2004-05 2005-06 2006 07 2007-03 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 •Operating Expense ■Non-Opeating Expense Operating Expense Non-Operating Expense Fiscal Salaries& Maint& Depr& Total Interest Total Non- Year Benefits Utilities Other Amon Operating Expense Other Operating 2004-05 $ 53,048 $ 6,473 $ 42,325 $ 48,095 $ 149,941 $ 17,470 $ 8,172 $ 25,642 2005-06 53,246 7,563 44,823 49,887 155,519 20,078 18,567 38,645 2006-07 57,802 8,072 46,281 53,111 165,266 21,747 16,089 37,836 2007-08 67,629 8,092 56,169 47,767 179,657 22,517 17,818 40,335 2008-09 67,498 7,242 89,816 32,520 197,076 24,899 13,842 38,741 2009-10 69,652 6,934 61,499 52,036 190,121 27,537 13,736 41,273 2010-11 73,112 6,948 63,328 49,288 192,676 29,129 39,245 68,374 2011-12 75,642 7,405 89,272 56,051 228,370 28,700 8,433 37,133 111 2012-13 76,878 6,403 66,536 63,907 213,724 42,315 37,335 79,650 2013-14 79,179 6,381 60,887 99,805 246,252 40,450 1,317 41,767 (1) Non-operating expense restated due to implementation of GASS 65. Source: Orange County Sanitation District's Financial Management Division. 46 ORANGE COUNTY SANITATION DISTRICT Change in Net Position (Dollars in Thousands) Last Ten Fiscal Years $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 2004-06 2006-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Ending Net Position by Fiscal Year Fiscal Total Total Change in Beginning Ending Year Revenues Expenses Net Position Net Position Net Position 2004-05 $192,698 $ 175,583 $ 17,115 $1,024,133 $ 1,041,248 2005-06 242,016 194,164 47,852 1,041,248 1,089,100 2006-07 303,739 203,102 100,637 1,089,100 1,189,737 2007-08 306,242 219,992 86,250 1,189,737 1,275,987 2008-09 308,151 235,817 72,334 1,275,987 1,348,321 2009-10 314,146 231,394 82,752 1,348,321 1,431,073 2010-11 340,463 261,050 79,413 1,431,073 1,510,486 2011-12 361,572 265,503 96,069 1,501,549 (1) 1,597,618 2012-13 396,481 293,374 103,107 1,597,618 1,700,725 2013-14 409,589 288,019 121,570 1,700,725 1,822,295 nl Beginning net position restated due to implementation of GASS 65. Source: Orange County Sanitation District's Financial Management Division. 47 ORANGE COUNTY SANITATION DISTRICT Cash and Investment Reserve Balances (Dollars in Millions) Last Ten Fiscal Years Capital Debt Cash Flow Self- Improvement Service Fiscal Year Contingency Insurance Program Requirements Total 2004-05 $ 71 $ 57 $ 242 $ 65 $ 472 2005-06 132 57 196 105 490 2006-07 132 57 104 79 372 2007-08 149 57 219 108 533 2008-09 172 57 172 133 534 2009-10 185 57 102 129 473 2010-11 187 57 176 141 561 2011-12 196 57 186 138 577 2012-13 174 57 234 135 600 2013-14 189 57 296 131 673 Notes: The Cash Flow Contingency Reserve is to fund operations, maintenance, and certificates of participation debt service expenses for the first half of the fiscal year, prior to the receipt of the first installment of the property tax allocation and sewer service user fees. The Self-Insurance Reserve is to provide requirements for property damage including fire,flood and earthquake,general liability and workers'compensation. The Capital Improvement Program Reserve is to fund annual increments of the capital improvement program with a target level at one half of the average annual capital improvement program through the year 2020. The Debt Service Required Reserves are monies held and controlled by a trustee pursuant to the provisions of certificates of participation issues, and the monies are not available for the general needs of the District. Source: Orange County Sanitation District's Financial Management Division. 48 ORANGE COUNTY SANITATION DISTRICT Sewer Service Fees Single Family Residence Rate Last Nine Fiscal Years and Next Fiscal Year Sewer service fees are comprised of three categories: residential customers, commercial customers, and industrial customers. Although the majority of sewer service fee revenues are from residential and commercial customers(see the schedule of Number of Accounts and Revenues by Customer Class), the fee paid by each residential and commercial customer is less than the individual fees paid by industrial customers. The rates for commercial and industrial customers are derived from the base sewer service fee charged for a single-family residence and are based on the type of business and the strength and volume of waste that is discharged into the sewer system. Due to the complexity of the rate structure for commercial and industrial customers and since the rates are derivatives of the single-family residence rate, only the single-family residence rate is presented within the statistical section. Sewer Service Fiscal Year Charge 2005-06 $ 151.00 2006-07 165.80 2007-08 182.00 2008-09 201.00 2009-10 221.00 2010-11 244.00 2011-12 267.00 2012-13 294.00 2013-14 308.00 2014-15 316.00 Annual Sewer Service Fees Single Family Residence 350 300 LL 250 200 LL 150 M 100 50 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 201&14 2014-15 Fiscal Year Source: Orange County Sanitation Districfs Financial Management Division. 49 ORANGE COUNTY SANITATION DISTRICT Number of Accounts and Revenues by Customer Class (Dollars in Millions) Last Ten Fiscal Years Residential/Commercial Industrial Number of Total Percentage Total Percentage Equivalent Sewer Svc. of Sewer Number of Sewer Svc. of Sewer Single-Family Charge Service Charge Customer Charge Service Charge Fiscal Dwellings Revenue Revenues Accounts Revenue Revenues 2004-05 860,634 99.0 90% 568 10.5 10% 2005-06 872,859 132.0 92% 557 12.2 8% 2006-07 867,035 143.8 91% 531 13.4 9% 2007-08 875,739 159.4 93% 520 12.1 7% 2008-09 882,747 177.4 95% 515 9.9 5% 2009-10 875,442 193.5 95% 487 10.8 5% 2010-11 874,130 213.3 95% 479 10.1 5% 2011-12 869,709 232.2 96% 516 9.5 4% 2012-13 879,443 258.6 96% 527 10.8 4% 2013-14 869,461 267.8 95% 489 14.4 5% $300,000,000 $250,000,000 $200,000,000 $150,000,000 MEMO $100,000,000 $50,000,000 $0 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 ■Residential/Commercial Users ■Industrial Users Source: Orange County Sanitation District's Financial Management Division. 50 ORANGE COUNTY SANITATION DISTRICT Principal Sewer Service Customers For the Current Fiscal Year and Nine Years Ago Fiscal Year Ended 6130114 Fiscal Year Ended 6130/05 Industrial Industrial Permittee %to Total Pennittee %to Total Service Service Charge Service Service Charge User Charges Rank Revenue Charges Rank Revenue House Foods America Corp. $ 1,096,791 1 0.36% $ 540,548 6 0.45% Kimberly-Clark Worldwide, Inc. 1,059,850 2 0.35% 727,318 3 0.60% Stremicks Heritage Foods, LLC 971,832 3 0.32% 591,308 4 0.49% MCP Foods, Inc. 898,925 4 0.30% 881,089 1 0.73% Dean Foods Co.of CA Inc. 585,374 5 0.19% Nor-Cal Beverage Co. Inc(NCB) 577,261 6 0.19% Jazz Semiconductor 475,299 7 0.16% Amerlpec Inc. 420,365 8 0.14% Pepsi-Cola Bottling Group 402,513 9 0.13% Pulmuone Wildwood, Inc. 383,365 10 0.13% Alstyle Apparel-Activewear Mfg. 793,035 2 0.66% Disneyland Resort 569,661 5 0.47% Disneyland Resort--DCA 411,368 7 0.34% Van Law Food Products, Inc. 359,771 8 0.30% Seven-Up Bottling Company 235,146 9 0.19% Expo-Dyeing 8 Finishing, Inc. 218,959 10 0.18% $ 6,871,575 2.27% $ 5,328,203 4.41% Although the majority of sewer service fee revenues are from residential and commercial customers (see the schedule of Number of Accounts and Revenues by Customer Class), the fee paid by each residential and commercial customer is less than the individual fees paid by industrial customers. Consequently, this schedule shows the largest sewer service fee customers. Source: Orange County Sanitation Districts Financial Management Division. 51 ORANGE COUNTY SANITATION DISTRICT Ratio of Annual Debt Service to Total Expenses (Dollars in Thousands) Last Ten Fiscal Years 70% 60% 50% 40% 30% 20% 10% 0% 200 05 2005 06 2006 07 2007 08 2008 09 2009 10 2010-11 2011-12 2012-13 201314 Ratio of Debt Total Service to Total Fiscal Principal Total Debt Operating Operating Year (1) Interest Service(3) Expenses(2) Expenses 2004-05 $ 12,040 $ 25,871 $ 37,911 $ 101,846 37.22% 2005-06 12,755 29,563 42,318 105,632 40.06 2006-07 13,465 32,673 46,138 112,155 41.14 2007-08 11,025 36,484 47,509 131,890 36.02 2008-09 21,305 40,840 62,145 164,556 37.77 2009-10 24,030 46,052 70,082 138,085 50.75 2010-11 25,895 49,426 75,321 143,388 52.53 2011-12 14,370 50,975 65,345 172,319 37.92 2012-13 23,965 53,640 77,605 149,817 51.80 2013-14 39,590 53,163 92,753 146,447 63.34 Notes (1)-Excludes principal reductions due to advanced refunding. (2)-Excludes depreciation and amortization expense. (3)-Debt consists of certificates of participation, revenue obligations, and anticipation notes. Source: Orange County Sanitation District's Financial Management Division. 52 ORANGE COUNTY SANITATION DISTRICT Debt Coverage Ratios (Dollars in Millions) Last Ten Fiscal Years The Orange County Sanitation District has no legal debt limits as imposed by State legislation. The District does have contractual covenants within the existing Certificates of Participation indenture agreements which require minimum coverage ratios of 1.25. The coverage ratio is calculated as the ratio of net annual revenues available for debt service payments to total annual debt service requirements. 3.50 3.00 2,50 2.00 1.50 1,00 0,50 2004-05 2005-06 2906-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Fiscal Year Ending June 30, M05 2006 2007 2008 Mae 2010 2011 M12 2013 2014 0pemtin9 8 Non-operating Revenues: Service Charges,Net of Refunds-Regional $ 99.0 $ 132.0 $ 143.8 $ 159.4 $ 177.4 $ 193.6 $213.3 $ 232.2 $ 258.6 $ 267.8 Service Charges,Net of Refunds-Local - - - - 5.6 5.6 5] 5] 5.8 S.T Industrial Sewer Service Charges 10.5 12.2 13.4 12.1 9.9 10.8 10.1 9.5 10.8 14.4 Revenue Area No,14 Fees 6.9 5.3 5.2 7.1 10.3 10.2 21.4 18.0 12.5 23.6 Ad Valorem Taxes 35.8 40.0 60.6 66.2 66.4 64.8 64.3 6]9 T1.3 72.8 Interest Earnings 15.1 10.4 228 20.2 14.8 19.2 10.1 15.7 (3.6) 6A Other Revenues 6.1 9.2 0.3 6.9 5.8 12.5 5] 3.6 22.3 5.1 Total Revenues 173.4 209.1 253.5 270.9 290.2 316.6 330.6 352.6 383.7 395.5 Operaling Expenses(1) 1018 105.6 112.2 131.9 164.6 13sl 1434 1723 149-8 1464 Net Revenues $ 71.6 $ 103.5 $ 141.3 $ 139.0 $ 125.6 $ 178.5 $ 181.2 $ 180.3 $ 233.9 $ 249.1 Debt Service Requirements Principal Payments 12.0 12a 13.5 119 21.3 24a 259 144 24a 39.6 Interest Payments 25.9 29.1 35.3 318 36.3 43.1 46.5 51.0 53.6 532 Total Debt Samoa Requirements $ 37.9 $ 41.9 $ 48.8 $ 42.8 $ 57.6 $ 67.1 $ 72.4 $ 65.4 $ 77.6 $ 92.8 Coverage Ratios 189 247 2,90 3.25 2.18 2.66 259 276 3.01 2.68 Ending Reserves(2) $ 4070 $ 385.0 $ 293.0 $ 425.0 $ 401.0 $ 344.0 $420.0 $ 4390 $ 465.0 $ 642.0 Notes (1)-Operating expenses exclude depreciation and annunciation expenses. (21-Excludes debt service reserves In accoriance with the District's reserve policy. Source:Orange County Sanitation Districts Financial Management Division. 53 ORANGE COUNTY SANITATION DISTRICT Computation of Direct and Overlapping Debt June 30,2014 2013-14 Assessed Valuation(Land R Improvements Ook): S329.285,498,672 OVERLAPPING TAX AND ASSESSMENT DEBT(Based no all omeor m sweated valuation OfS 332.843,667,456) T.WDMI DbtticPs San"Of 6130/14 lY A oDea6M(1) Debt 6/30/I4 Metlopolitew W&W District of Somhem Calif is S133:75000 152201. S 20,132,255 Coast Conwuoin'College District 632.413698 99.354 628,323,306 North Oreuge Comm,Joint Commmity College District 201,239.001 91432 1%,091,183 Rancho Senl.go Commmity College District 285,430.201 98996 282,56ga32 Bien-Olindaand Laguna B each Unified School Districts 47.834M9 99.999A 15.204 23,698,542 Gneden Grace Unified School District 244,995,160 100.000 244,995,160 Los A hmitos Unified School District School Facilities lmprmxment District No. 1 100,990,124 96.554 97,510,004 Necpoa Mesa Unified School District 236,334,150 100.000 M6,854,150 Placentia-Yoda Linda Unified School District 257,071,375 99.949 254,366,914 Rua land Unified School District 208,566,229 0.135 281,564 Saddleback title'Unified School District 126,840,W0 11.990 15,081,276 Santa Ana Unified School District 239,561,562 100.000 2a9,561,562 Tustin Unified School District School Facilities lmptm'ement District]o.200}1 53,319,6a5 99.961 53,298,950 Tustin Unified School District School Facilities lmprm'ement District No.2008.1 72,13$,WO 99.960 72,lofla6 Tustin Unified School District School Facilities loncroo dent District No.201-1 35,WO,WO 99974 34,M,M Anaheim Union Hipb Scbool District 100,323,955 100.000 100,323,955 Full.Jowl Union HiEh School District 50,237,910 91.479 45,957,138 Huntington Beach Union High School District 206,874,998 99.991 24]4,787,629 School Distric6 425,492,392 99.339-100.0W 424,WS,T89 Cim,of Anaheim LSS5,W0 99.209 1,9'J9,220 Irvine Reach Water District lmprm'ament Districts 509,537,480 Various 509,536,259 Roxmoor C ommmitc Satires District Special Tax Obligations 2W,WO MOW 2W.M Boni.Canyon Communim,Facilities District No.96-1 36,355,WO 100.000 36,355,000 [mine Unified School District Commuvin FaciBties Dishicle 411,492,332 1W.OW 411,492,332 Toad.Unified School District Commuvim Facilities Districts 244,707,675 1W.OW 244,707,675 Cim of Taste Commmib-Facilities D iscic. TT,ITO,WO 100000 77,170,000 Oder Commml.][ecifities Dishic. 315,853,077 99822-1000W 315,808,143 OreageCweNAssexmmlDuhids 83,815,000 Italian 83815,f100 Ci.of Wine 1915 Act Bonds 831,924,000 Mount W1,924,Oa0 Oda 1915 Act bonds I5,796,6T0 MAN IST96.690 TOTAL OVERLAPPNG TAX AND ASSESSMENT DEBT S5,754,583,174 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Orange Custom Gen ml Fond Obligatious S145p6,000 95230% S 109,441,595 0.,Counn'P...Obligafinos 32,195,299 75.230 24,=,515 Ocut Count,Boats of Education Cafificata of Paiticipatiov 15,500,W0 75.230 11,W,650 Bonnm-Clinch Unified School District Cmificates ofPadicip.lio. 22,96S,W0 99.979 23,960,177 Ormge Unified School District Certificates of Participation and Benefit Obligations 119,856,560 97.897 117,335,976 PBcesh.-Yotba Linda Unified School District Certificates of Participstino 107,23$,670 98948 I06,107,551 Sao.Ava Uoifled School District Certificates ofPuticipstiva 76,291,353 100.000 76,291,353 Other Unified School District Certificates;of Pa.icipa4m 60,704,9223 Various 54,228,509 UnionHleh School District Certificates of Participation 119,354,185 Various 115,953.232 School District Cenificates of Participation 75,736,299 Various 95,2W,056 City of Anaheim General Food Obligations 729,677,465 99.209 723,905,716 Cu, of Costa Mesa G metal Fund Obligations 28,130,W0 100.000 28,130,000 Co, of Garden come Gene.l Food Obligations 17,830,W0 lOOOW 17,830,000 Co, of Hunting too Bach General Fund and Judgment Obligations 45,679,W0 96.7.21 415,094,71% Citr of La Habra General Food OO ligation, lif"it W0 MOW 18,aa0,000 Ci.of San.Ana Gmaal Fund Obligations 83,250,000 MOW 82,250,000 Oder Cth General Food Obligations 221,938,253 Vanous 20),429,739 Ore.ge CouK Seek.flues Dhlrtct 0 1410000 0 (2) Municipal Wcone District of O.nge County Water Facilities Coryo.fino T,TS,WO 70419 5.475.000 TOTAL GROSS OV ERLA"No GENERAL FLIND DEBT $1,934,934,935 Lea: Cinrof Aveheim xlf-anppanwp oblipatlava 716,484,883 Other City self oopponing obligations 18,799,613 MWDOCWaterFacilities Capo.fim(100%xlf-mpg g) 5475.OW TOTAL NET OVERLAPPING GENERAL FUND DEBT $1,094,1116,339 OVERLAPPING TAX INCREMENT DEBT: $1,184,766,565 36.4661W.000% $1,178,055,011 GROSS COMBINED TOTAL DEBT S8,767,573,020 (3) NET COMBINED TOTAL DEBT S8,026,$N,524 lU ThepemmlMe deyalappv{deb appli<etleled<6strict is ndmamd vrivpmWle arsnsedprapatyydve. ApdicY,lepercmlya was admated by daermiviv{de por8av dde m'erlapPOE dimids nrnudr'W e tWt it aidiv de bomdmin of M1e rmitadov datdct drihdbY de 6am<6 mtd turtle usened rdve. Q) Eatlud<swmewma memeceritlirnes dperd<ipatlm. Proioudytlmi6ed<adfiues dpmtidprtim have hem redmu6edD district ramvuappmWis400 ud vo induct true.debtivdedebtnemmmt (3) Eadvdes.ma md.omv<miiupmiovvom.mleryrisemmve.mort[a[e rnmuemdvm-bovdedupiW lame dli[edom.Qudified Zme Aced®y Bonds reiv<Ivded bsed oar ptiv<gd O.m mamdp. Rana is Total Overlapping Tex end Aaseament increment Debt Gross Combined Total Debt Net Combined To.l Debt Land andlmPim'ement A ssased Valuation 1.75% 2.66% 244% All"arm ADessed Valentino NA 2.63% 241% RederelOpment lndemen.I Valuation($41,656,805,T16) 2.83% NA NA Smm.Cdifmoia Mi u<ipd Seadsfics 54 ORANGE COUNTY SANITATION DISTRICT Ratios of Outstanding Debt Last Ten Fiscal Years Debt as a (5) (3) Percentage Total Median of Median (4) Debt Fiscal Outstanding Family Family Population per Year Debt Income(1) Income Estimate(2) Capita 2004-05 $ 620,520,145 $ 75,700 0.012°% 2,467,850 251.44 2005-06 807,809,704 78,300 0.010% 2,481,540 325.53 2006-07 801,389,769 78,700 0.010% 2,505,180 319.89 2007-08 1,096,049,542 84,100 0.008% 2,522,820 434.45 2008-09 1,262,936,747 86,100 0.007% 2,539,990 497.22 2009-10 1,306,255,753 87,200 0.007% 2,563,170 509.63 2010-11 1,427,792,453 84,200 0.006% 2,457,571 580.98 2011-12 1,376,404,782 85,300 0.006% 2,472,122 556.77 2012-13 1,325,928,512 84,100 0.006% 2,491,268 532.23 2013-14 1,278,998,124 84,900 0.007% 2,521,803 507.18 Notes & Data Sources (1)- Data is for the entire County of Orange. (2)- Data is for the estimated population served by the Orange County Sanitation District. (3)- Data Source: U.S. Department of Housing and Urban Development. (4)- Data Source: Demographic Research Unit, California Department of Finance. (5)- Data Source: Orange County Sanitation District. Debt includes certificates of participation, revenue obligations, and anticipation notes and is presented net of original issuance discounts and premiums. 55 ORANGE COUNTY SANITATION DISTRICT Comparison of the Volume of Wastewater Treated With Revenues and Expenses Last Ten Fiscal Years Millions of Gallons of Collection, Waste- Treatment water &Disposal Total Total Total Total Treated Cost per Operating Non-Operating Operating Non-Operating Fiscal Per Million Costs Costs Revenues Revenues Year Day Gallons (In Thousands) (In Thousands) (In Thousands) (In Thousands) 2004-05 243 1,095.79 $ 149,941 $ 25,642 $ 121,415 $ 51,933 2005-06 235 1,216.77 155,519 38,645 155,165 53,861 2006-07 229 1,268.38 165,266 37,836 169,656 83,876 2007-08 221 1,541.18 179,657 40,335 185,376 85,458 2008-09 211 1,576.67 197,076 38,741 207,317 82,897 2009-10 196 1,588.72 190,121 41,273 225,688 90,864 2010-11 207 1,816.62 192,676 68,374 245,249 85,414 2011-12 201 1,871.47 228,370 37,133 260,521 92,115 2012-13 200 1,906.01 213,724 79,650 304,576 79,108 2013-14 198 1,936.64 246,252 41,767 301,459 94,037 A Facilities Master Plan to the year 2030 was completed in December 2009 that projects wastewater treatment flows to increase to 279 millions of gallons per day(mgd) in 2020,to 286 mgd in 2025, and to 294 mgd in the year 2030. The anticipated need to meet the projected flows is included in the overall CIP program of$2.0 billion out to 2021-22. Total expenses in FY 2013-14 increased$112.4 million,or 64.0 percent since FY 2004-05, primarily as a result of OCSD's decision beginning in FY 2002-03 to maximize existing secondary treatment facilities as OCSD moved from a 50/50 mix of primary and secondary effluent treatment to meeting secondary treatment standards as of December 31,2012. Maintenance, chemicals, utilities,and other operating costs represent 16 percent of the increase,primarily due to the increase in the levels of treatment referred to above. Depreciation expense represents another 46 percent of the increase as a result of the previous expansion in capital facilities and the financing associated with the expansion. In FY 2013-14, personnel expenses rose 3.0 percent over the prior year. This increase is mainly due to increases in health insurance and retirement premiums. The full-time equivalent positions authorized decreased by 2 in FY 2013-14. As depicted from the chart above, actual wastewater treatment flows have generally remained between 221 mgd and 243 mgd in the past. Due to unusually dry weather conditions during the last six years, FY 2008-09, FY 2009-10, FY 2010-11 FY 2011-12, FY 2012-13 and FY 2013-14 had flows of only 211 mgd, 196 mgd, 207 mgd, 201 mgd 200 mgd and 198 mgd respectively. Source: Orange County Sanitation District. 56 ORANGE COUNTY SANITATION DISTRICT Authorized Full-lime Equivalents by Function Last Ten Fiscal Years 300 250 zoo 150 100 50 0 2005 2006 200 09 2010 2011 2012 2013 2014 GGeneral Management ■Human Resources oAdministrdlive Services GFacilities Support Services wTechnical Services •Engineering •Operations and Maintenance Fiscal Year Ending June 30, 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General Management 17 2 25 30 30 15 15 13 14 14 Human Resources 27 28 19 16 16 17 27 20 16 18 Administrative Services 96 117 83 82 81 92 85 111 111 110 Facilities Support Services 62 62 51 57 68 71 70 84 81 78 Technical Services 112 114 119 109 107 105 102 - - - Engineering 95 99 98 93 98 96 112 128 125 123 Operations and Maintenance 220 222 249 247 241 245 230 281 281 283 Total FTE's 629 644 644 634 641 641 641 637 628 626 Source: Orange County Sanitation District's Financial Management Division. 57 ORANGE COUNTY SANITATION DISTRICT Biosolids Produced Last Ten Fiscal Years 300,000 250,000 200,000 150,000 100,000 50,000 01 UU1111CLiii 2004-05 2005-06 2000-07 2007-08 2009-09 2009-10 2010-11 2011-12 2012-13 2013-14 DWet Tonnage DDry Tonnage Fiscal Year Wet Tonnaae Dry Tonnage 2004-05 246,194 51,700 2005-06 233,996 49,554 2006-07 236,460 49,184 2007-08 248,717 50,884 2008-09 249,202 51,342 2009-10 245,668 50,799 2010-11 253,557 49,133 2011-12 280,572 47,556 2012-13 274,957 43,365 2013-14 279,362 50,764 Source:Orange County Sanitation District's Environmental Compliance Division. 58 ORANGE COUNTY SANITATION DISTRICT Capital Asset Statistics Last Ten Fiscal Years Miles of Number Primary Secondary Trunk& of Treatment Treatment Fiscal Subtrunk Pump Capacity Capacity Year Sewers Stations (1) (1) 2004-05 620 18 306 170 2005-06 584 16 366 200 2006-07 581 16 372 200 2007-08 568 17 372 200 2008-09 582 17 372 212 2009-10 579 17 372 212 2010-11 587 17 372 212 2011-12 572 17 372 332 2012-13 572 17 372 332 2013-14 580 17 372 332 Notes (1) -Capacity is presented as million gallons treated per day. Source: Orange County Sanitation District 59 ORANGE COUNTY SANITATION DISTRICT Demographic Statistics Covering The Entire County of Orange (1) Last Ten Fiscal Years Total (5) (8) (2) Personal Per Capita Median Public (7) Fiscal Population Income Personal Family School Unemployment Year Estimates (in thousands) Income Income Enrollment Rate 2004-05 3,047,000 $ 139,408,948 (3) $ 45,753 $ 75,700 514,000 3.9% 2005-06 3,072,000 150,598,354 (3) 49,023 78,300 510,114 3.7% 2006-07 3,090,000 153,446,641 (3) 49,659 78,700 503,955 3.9% 2007-08 3,108,000 155,925,156 (3) 50,169 84,100 503,492 5.3% 2008-09 3,135,000 145,247,447 (3) 46,331 86,100 504,136 9.3% 2009-10 3,166,000 147,138,449 (3) 46,475 87,200 502,239 9.5% 2010-11 3,030,000 154,131,535 (3) 50,868 84,200 502,903 9.2% 2011-12 3,056,000 161,743,800 (4) 52,927 85,300 502,195 7.9% 2012-13 3,082,000 168,778,500 (4) 54,763 84,100 501,801 6.1% 2013-14 3,114,000 177,412,900 (4),(a) 56,973 84,900 500,487 5.2% Notes and Data Sources (1) - The Orange County Sanitation District services 479 square miles or 60% of the total 799 square miles that make up the boundaries of the County of Orange. (2)-Data Source: Demographic Research Unit, California Department of Finance. (3)-Data Source: Bureau of Economic Analysis, U.S. Department of Commerce. (4)-Data Source:A. Gary Anderson Center for Economic Research, Chapman University. (5)-Data Source: U.S. Department of Housing and Urban Development. (6)-Data Source: California Department of Education, Educational Demographics Unit. (7)-Data Source: State of California, Employment Development Department as of June 30 of each fiscal year. (8)-Forecasted number. 60 ORANGE COUNTY SANITATION DISTRICT Estimated Population Served by the Orange County Sanitation District June 30, 2014 Population as of January 1,2014 Anaheim 348,305 Brea 42,397 Buena Park 82,344 Costa Mesa 111,846 Cypress 48,886 Fountain Valley 56,702 Fullerton 140,131 Garden Grove 173,953 Huntington Beach 195,999 Irvine 242,651 La Habra 61,717 La Palma 15,896 Los Alamitos 11,729 Newport Beach 86,874 Orange 139,279 Placentia 52,094 Santa Ana 331,953 Seal Beach 24,591 Stanton 38,963 Tustin 78,360 Villa Park 5,935 Westminster 91,652 Yorba Linda 67,069 Subtotal Cities I'I 2,449,326 Estimated Population Served in Unincorporated Areas(2) 72,477 2,521,803 Data Sources: (1) Demographic Research Unit, State of California Department of Finance (2) Center for Demographic Research, California State University, Fullerton. 61 ORANGE COUNTY SANITATION DISTRICT Principal Orange County Employers(1) Forthe Current Fiscal Year and Nine Years Ago Fiscal Year Ended 6130/14 Fiscal Year Ended 6/30/05 Percentage of Percentage of Number of Total County Number of Total County Employers Employees(2) Rank Employment(3) Employess(2) Rank Employment(4) Walt Disney Co. 25,000 1 1.64% 21,000 1 1.38% University of California, Irvine 22,253 2 1.46% 15,500 3 1.02% County of Orange 18,035 3 1.19% 17,597 2 1.15% St.Joseph Health System 12,062 4 0.79% 8,975 5 0.59% Boeing Co. 6,890 5 0.45% 11,160 4 0.73% Kaiser Permanents 6,040 6 0.40% Bank of America Corp. 6,000 7 0.39% Walmart 6,000 8 0.39% Memorial Care Health System 5,635 9 0.37% Target Corp. 5,400 10 0.36% 5,436 10 0.36% Albertsons Inc. 8,700 6 0.57% Tenet Healthcare Corp. 8,389 7 0.55% YUMI Brands Inc. 6,500 8 0.43% SBC Communications, Inc. 5,658 9 0.37% Total 113,315 7.44% 108,915 7.15% Notes&Data Sources (1)-Data is for the entire County of Orange. (2)-Data Sources: Orange County Business Journal Book of Lists,County of Orange (3)-Data Source:State of California,Employment Development Department. -Percentage is calculated by dividing employees by total employment of 1,520,100 as of June 2014. (4)-Data Source: Stale of California, Employment Development Department. -Percentage is calculated by dividing employees by total employment of 1,525,700 as of June 2005. 62 ORANGE COUNTY SANITATION DISTRICT Operating Indicators June 30, 2014 District Organization: The Orange County Sanitation District is one consolidated district made up of two revenue areas which service unincorporated county areas and twenty-three cities and related special districts, as follows: Consolidated Revenue Area County of Orange(unincorporated areas) Cities: Anaheim Huntington Beach Santa Ana Brea Irvine Seal Beach Buena Park La Habra Stanton Costa Mesa La Palma Tustin Cypress Los Alamitos Villa Park Fountain Valley Newport Beach Westminster Fullerton Orange Yorba Linda Garden Grove Placentia Special Districts: Midway City Sanitary Districl Costa Mesa Sanitary District Revenue Area No. 14 County of Orange(unincorporated areas) Cities: Irvine Orange Tustin Special District: Irvine Ranch Water District Governing Body: 25-member Board of Directors Authorized Full-Time Equivalent Employees: 626 Operational Date: July 1, 1954 Authority: California Health & Safely Code Section 4700 at. seq. Services: Wastewater collection,treatment, and disposal Service Area: 479 square miles Population Served: 2.5 million Total Miles of Sewers (including force mains): 580 miles Number of Pumping Stations: 17 Wastewater System Treatment Capacities (Million Gallons per Day) Existing Primary Existing Secondary Actual Flows Treatment Capacity Treatment Capacity Plant 1 96 204 182 Plant 2 102 168 150 Total 10- M Source: Orange County Sanitation District's Financial Management Division. 63 (THIS PAGE INTENTIONALLY LEFT BLANK) 64 ORANGE COUNTY SANITATION DISTRICT OTHER DATA &TRENDS Information within this section consists of other data and trends including additional annual disclosures as required by the Sanitation Districts debt covenants beyond what is allowed to be reported in the Statistical Section. 65 ORANGE COUNTY SANITATION DISTRICT Cash and Investment Portfolio As of June 30,2014 Net Unrealized Cost Mad<et Value Gain1(LOss) Shares Par Base Base %of Total Base INVESTMENT PORTFOLIO: CASH&CASH EQUIVALENTS(U.S.DOLLAR): CASH EQUIVALENTS $ 104,812.50 $ 104,812.50 $ 47,165.63 0.01% $ (57,646.87) FEDERAL HOME LOAN BANK-1 YR OR LESS 115,99%000.00 115,980,915.54 115,980,915.54 19.52% - FEDERAL HOME LOAN MORTGAGES-1 YR OR LESS 16,300,000.00 16,295,191.87 16,295,191.67 2.74% - FNMA ISSUES-1 YR OR LESS 74,201,000.00 74,185,129.42 74,185,12942 12.49% - OTHER BONDS-1 YR OR LESS 1,300,000.00 1,300,563.00 1,300,563.00 on REPURCHASE AGREEMENTS 205,800,000.00 205,800,000.00 205,800,000.00 34.64% - SHORTTERMINVESTMENTFUNDS(US REGULATED) 1,129,800.27 1,129,800.27 1,129,800.27 0.19% - U.S.TREASURY BILLS-1 YR OR LESS 32,600,000.00 32,598,939.99 32,598,939.99 5,49%PENDING TRADES (102,97,657.38) (102,997,667.38) -17.34% SUBTOTAL-CASH&CASH EQUIVALENTS 447,434,612.77 344397,695.21 344,340,048.34 57.96% (57,646,87) FIXED INCOME SECURITIES(U.S.DOLLAR): ABS-HOME EQUITY 638,297.29 471,293.70 625,357.43 0.09% 54,063.73 ASS-SMALL BUSINESS ADMINISTRATION 219,338,25 219.338.25 237.444,62 0,04% 18.106.37 ASS-STUDENT LOANS 53,904.94 63,686.23 55,741.48 0.01% 2,055.25 AUTOMOBILES&COMPONENTS 5,200,000.00 5.200.000.00 5,216,692.00 0,88% 16.692.00 BANKING&FINANCE 51,463,000.00 54,2]8,5]7.39 52,902,596.41 8.90% (1,375,980.98) CHEMICALS 672,000,00 697,247,04 693,403.20 0,12% (3,843,84) COLLATERALIZED MORTGAGE OBLIGATION COMMIC 379,1n.05 380,15,1.62 381,391.44 0.06% 1,236.82 FHLMC MULTICLASS 2,315,272.92 2.539.662.45 2,599,133.27 0.44% 59.470.82 FHLMC POOLS 2,941.59 2,869.90 2,956.59 0.00% 86.69 FNMA POOLS 2,979767.43 3,140,865.50 3,269,199.62 0.55% 128,334.12 FNMA REMIC 1,392,415.12 1,400,469.28 1,414,384.31 0.24% 13,915.03 FOOD BEVERAGE&TOBACCO 4,750,000.00 5,092,024.00 5,057,344.75 0.85% (34,679.25) GNMA MULTI FAMILY POOLS 342,705.49 342,665.04 355,315.36 0.06% 12,650.31 GNMA REMIC 71,013.68 71.013.68 71,593.86 0,01% 580.18 HEALTH CARE 2,950,000.00 3,030,795.50 3,062,862.00 0.52% 32,066.50 INDUSTRIAL 2,096,000,00 2,154,855,68 2,139,911.20 0.36% (14,944.48) INSURANCE 800,000.00 884,844.67 889,198.00 0.15% 4,353.33 REITS 11000.000,00 996.050100 1,099,480.00 0,19% 103,430,00 TAXABLE MUNICIPALS 16,440,000.00 16,738,875.89 19,933,909.80 3.36% 3,195,033.91 U.S.TIPS 17,575,416.00 18,049,401,68 18,212,524.83 3,07% 163.123.15 US GOVERNMENTS 128,810,000.00 127,421,758.65 127,989,106.00 21.54% 567,347.45 UTILITY-ELECTRIC 2,727,000.00 3.013.791.51 2,929,069.65 0,49% (84721.86) WHOLE LOAN-CMO-COLLATERALIZED MTG OBLIG 718,582.06 718,57879 720,141.38 0.12% 1,562.59 SUBTOTAL-FIXED INCOME SECURITIES 243,496,831.82 246,898,819.35 249,758,757.19 42.04% 2,859,937.84 TOTAL INVESTMENT PORTFOLIO $690,931,444.59 591,296,514.66 594,098,805.53 100.00% $ 2,802.290.97 DEMAND DEPOSITS AND CASH ON HAND 2.439.802.78 2,439,802.78 MONIES HELD WITH FISCAL AGENTS 45,301,882.29 45,301,882.29 MONIES WITH THE LOCAL AGENCY INVESTMENT FUND 31.222,267,53 31,231,595.48 TOTAL CASH AND INVESTMENTS $670.200,46716 $6➢3,0➢2.086.08 Sourv, BNYMellon Toon and Orange Count,Sanitation Dialnota Fitamial Management 0msion. 66 ORANGE COUNTY SANITATION DISTRICT Property Tax Rates-Direct and Overlapping Governments Last Ten Fiscal Years Tax Rate OCSD 1958 OCSD's General Average Fiscal Basic Obligation Total Share of Year Levy Bonds Tax Rate Basic Levy 2004-05 1.00% 0.00% 1.00% 1.67% 2005-06 1.00% 0.00% 1.00% 1.65% 2006-07 1.00% 0.00% 1.00% 1.65% 2007-08 1.00% 0.00% 1.00% 1.63% 2008-09 1.00% 0.00% 1.00% 164% 2009-10 1.00% 0.00% 1.00% 1.63% 2010-11 1.00% 0.00% 1.00% 1.64% 2011-12 1.00% 0.00% 1.00% 1.64% 2012-13 1.00% 0.00% 1.00% 1.64% 2013-14 1.00% 0.00% 1.00% 1.65% Notes In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount of assessed value. This 1.00% is shared by all taxing agencies within which the subject property resides. In addition to the 1.00% fixed amount, property owners were charged taxes as a percentage of assessed property values for the payment of OCSD general obligation bonds (which were paid in full in fiscal year 1998-99). Source: County of Orange Auditor-Controller's Office. 67 ORANGE COUNTY SANITATION DISTRICT Assessed and Estimated Actual Value of Taxable Property (Dollars In Thousands) Last Ten Fiscal Years axso,mo.000 Esw,mo.000 Exw,mo.000 $1.0,0,000 SrOo,�O 000 Ew,mo 0m 2004-05 200506 2006-07 2007-08 2000-09 2009-10 2010-11 2011-12 2012-13 2013-14 .Secured ourd.cured Percent Change in Fiscal Assessed Year Secured Unsecured Total Value 2004-05 214,529,000 4,743,000 219,272,000 8.85% 2005-06 236,826,573 5,023,423 241,849,996 10.30% 2006-07 264,241,033 6,452,111 270,693,144 11.93% 2007-08 288,051,467 4,681,838 292,733,305 8.14% 2008-09 301,717,479 5,894,003 307,611,482 5.08% 2009-10 299,038,654 6,116,530 305,155,184 -0.80% 2010-11 298,099,034 6,238,834 304,337,868 -0.27% 2011-12 302,526,970 6,163,979 308,690,949 1.43% 2012-13 310,451,986 5,901,040 316,353,026 2.48% 2013-14 323,064,994 6,220,505 329,285,499 4.09% In 1978,the voters of the Stale of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an inflation factor which is limited to a maximum increase of 2%. With few exceptions, property is only reassessed at the time that it is sold to a new owner. Al that point, the new assessed value is reassessed at the purchase price of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Consequently,the assessed and estimated values are the same. Source: Orange County Auditor-Controllers Office. 68 ORANGE COUNTY SANITATION DISTRICT Property Tax and User Fee Levies and Collections (Dollars in Thousands) Last Ten Fiscal Years $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ 99 2004-06 2005-06 2006-07 2W7-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 OTdal Taxand User Fee Le, ItTolal Tax and User Fee Calllentan (1) Total Tax Current Tax Percent Total Tax %of Total %of Pass. Fiscal and User ERAF III and User Fee of Levy Delinquent and User Fee Collection ods Delinquencies Through Year Fee Levy Deduction Collection Collected Collection Collection tom Delinquencies to Tax Levy Payments 2004-05 $153,187 $(16,198) $ 152,745 99.71 $ 92 $ 152,837 99.77 $ 257 0.17 $ - 200546 191,711 (16,198) 191,290 99.78 122 191,412 99.84 421 0.22 - 2006-07 209,766 - 209,206 99.73 215 209,421 99A4 560 0.27 - 2007-08 228,622 - 228,635 100.01 329 228,964 100.15 (13) (0.01) - 2008-09 254,092 - 254,106 100.01 395 254,501 100.16 (14) (0.01) - 2009-10 272,050 - 272.110 100.02 226 272,336 100.11 (60) (0.02) - 2010-11 292,646 - 292,689 100.01 120 292,809 1W06 (43) (0.01) - 2011-12 314,077 - 314,133 100.02 121 314,254 100.06 (56) (0.02) 3,116 2012-13 340,298 - 340,156 99.96 64 M,220 99.98 142 0.04 14,687 2013-14 356,607 - 356.108 99.86 76 356,184 99.88 499 0.14 7,274 Notes (1)Upon dissolution of California redevelopment agencies during fiscal year 2011-12,property tax increment formerly remitted to OCSD by its member city redevelopment agencies was instead deposited into the newly formed Redevelopment Property Tax Trust Fund(RPTTF)from which the Auditor/Controller makes disbursements on behalf of the successor agencies. There is no tax levy associated with these collections; thus,they have been excluded from the"%of Total Collection to Levye calculation. Source:Orange County Auditor-Controller's Office. 69 ORANGE COUNTY SANITATION DISTRICT Property Value and Construction Covering The Entire County of Orange(1) (Dollars In Thousands) Last Ten Fiscal Years Non- Assessed Residential Residential Property Value(2) Construction (3) Construction(3) Total Fiscal Calendar No.of Construction Year Value Year Value Units Value Value(3) 2004-05 $ 311,802,395 2005 $ 1,494,759 7,206 $ 2,100,436 $ 3,595,195 2005-06 342,576,859 2006 2,400,569 8,371 2,316,948 4,717,517 2006-07 381,007,391 2007 2,005,198 7,072 1,792,270 3,797,468 2007-08 412,669,779 2008 1,439,120 3,159 1,037,713 2,476,833 2008-09 428,809,224 2009 952,480 2,200 855,193 1,807,673 2009-10 422,965,596 2010 1,151,929 3,091 1,029,407 2,181,336 2010-11 420,751,575 2011 1,300,019 4,807 1,236,973 2,536,992 2011-12 424,769,642 2012 1,265,430 6,163 1,560,509 2,825,939 2012-13 432,902,274 2013 1,521,280 10,453 2,653,728 4,175,008 2013-14 447,749,156 2014 1,617,693 9,634 2,555,847 4,173,540 (4) Notes and Data Sources (1) -The Orange County Sanitation District services 479 square miles or 60% of the total 799 square miles that make up the boundaries of the County of Orange. (2)-Data Source: Orange County Auditor-Controller's Office. (3)-Data Source: A. Gary Anderson Center for Economic Research, Chapman University. (4)-Forecasted numbers. 70 ORANGE COUNTY SANITATION DISTRICT Insurance in Force As of June 30, 2014 Type Insurer Deductible Limit All-Risk Property Fire and Other Perils Public Entity Property $250,000 per $1 billion/occurrence Insurance Program occurrence (Lexington and others) Flood Public Entity Property $100,000 per $300 million/occurrence Insurance Program occurrence Earthquake Not Applicable Not Applicable Self-insured Boiler&Machinery Public Entity Property $25,000 to $100 million/occurrence Insurance Program $350,000 (Lexington and others) Crime Insurance National Union Fire $25,000 $5 million Excess Security National Insurance $250,000 $30 million/occurrence General Liability (first$10 million layer); $500,000 for and annual aggregate Berkley National EPLI ($20 million layer excess$10 million) Travel&Accident Chubb Group of Insurance None Accidental Death&Dismemberment: Companies Class 1: Elected Officials, $500,000 per occurrence Class 2: Employees, 10X annual salary, up to$500,000 per occur. Excess Workers' CSAC Excess Insurance $750,000 Unlimited statutory coverage Compensation Authority Program Each Accident each accident,each employee $4.25 million employer's liability Pollution Liability CSAC Excess Insurance $100,000 $10,000,000 per loss Authority Program Watercraft Liability Atlantic Specialty $15,000 $10 million Hull&Machinery Atlantic Specialty $15,000 $1.3 million Pollution Liability Great American Ins. Co, None $5 million OCIP Main Basket("OCIP"=Owner Controlled Ins. Program for Construction) Workers Comp. Liberty Mutual $250,000/occur. Unlimited statutory coverage General Liability Liberty Mutual $250,000/occur. $2 million/occurrence;$4 million agg. OCIP Excess Liability AIG $10,000 $100 million OCIP Pollution Liability Liberty Surplus $250,000 $10 million Source: Orange County Sanitation Districts Risk Management Office. 71 (THIS PAGE INTENTIONALLY LEFT BLANK) 72 ORANGE COUNTY SANITATION DISTRICT FINANCIAL MANAGEMENT DIVISION 10844 Ellis Avenue Fountain Valley, California 92708-7018 714.962.2411 www.oGsewers.com 06/30/14 ADMINISTRATION COMMITTEE Neetng Dare TOBt.of Dir. 11/12/14 11/19/14 AGENDA REPORTItem Number Item Number Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: WASTEWATER REFUNDING REVENUE OBLIGATIONS, SERIES 2015A GENERAL MANAGER'S RECOMMENDATION Authorize the General Manager to issue new fixed rate Certificates of Participation (COP), to be referred to as Wastewater Refunding Revenue Obligations, Series 2015A, in an amount sufficient to refund up to $152,990,000 of COP Series 2007B. SUMMARY Tax-exempt interest rates have decreased significantly during 2014 due to the lack of municipal new issuance volume this year and a reversal of outflows from (inflows to) municipal bond funds, along with greater bond redemptions than new issuance. This drop in interest rates is shown in the recent rate history for the AAA GO Municipal Market Data Index for 18-year (which reflects the average life of the potential refunding candidates described below) maturities below: 18-Year Maturities AAA MMD January 1, 2014 to Present 4.0% 3.5% 3.0% 2.5% V Pe 2.0% v a v a a a a a a a v Date With the decline in interest rates, there is the potential opportunity to refinance the outstanding callable COP Series 2007B maturities to reduce interest costs for the Sanitation District. Under current market conditions, the remaining ten callable maturities of the COP Series 2007B, equal to $152,990,000, may be advance refunded generating in excess Page 1 of 4 of 3.0% present value savings (the minimum percentage required by the Sanitation District's debt policy). The savings are contingent on market conditions at the time of the refunding sale. The outstanding amount of COP Series 2007B is currently $173.3 million which includes $20.3 million of non-callable COPS. Approval of the recommended actions above will direct staff to begin the process of refunding a portion of the outstanding $173.3 million COP Series 2007B debt utilizing the assistance of Public Resources Advisory Group (PRAG), as financial advisor, and the bond counsel firm of Fulbright & Jaworski. PRIOR COMMITTEE/BOARD ACTIONS September 2014 — Adopt Resolution No. OCSD 14-12, authorizing the execution and delivery by the Orange County Sanitation District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2014B, authorizing the execution and delivery of such Notes evidencing principal in an aggregate amount of not to exceed $135,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Notes and authorizing the execution of necessary documents and related actions. June 2014 — Adopt Resolution No. OCSD 14-08, authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement, an Escrow Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Wastewater Refunding Revenue Obligations, Series 2014A, authorizing the execution and delivery of such Revenue Obligations evidencing principal in an aggregate amount of not to exceed $225,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Revenue Obligations and authorizing the execution of other necessary documents and related actions. ADDITIONAL INFORMATION The Sanitation District currently has eleven series of debt issuances outstanding in the par amount of $1.20 billion. The table below lists each issuance, the outstanding amount, and the interest rate mode. Outstanding Interest Rate Par Amountq) Mode eries 2014B CANs(4) $ 120,850,000 Fixed Rate (two-year) eries 2014A Refunding(7) 85,090,000 Fixed Rate eries 2012B Refunding(2) 66,395,000 Fixed Rate Page 2 of 4 eries 2012A Refunding(3) 100,645,000 Fixed Rate eries 2011A Refunding(2X3) 121,290,000 Fixed Rate eries 20100) 157,000,000 Fixed Rate eries 2010Atfi) 80,000,000 Fixed Rate eries 2009A Refunding(3) 184,090,000 Fixed Rate eries 2008B Refunding(6) 17,315,000 Fixed Rate eries 2007B(3) 173,325,000 Fixed Rate eries 2007A Refunding(3) 92,385,000 Fixed Rate Total : $1,198,385,000 (1) As of November 1,2014 (2) Refunded a portion of Series 20M (3) Refunded a portion of Sodas 2003 (4) Sodas 2014B are fixed two-year certificate of anticipation notes (CANS), that refunded the Series 2013A CANS (one-year), that refunded the Series 2012C CANS, that refunded the Series 2011B CANS, that refunded the 2010E CANS, that refunded the Series 2009B CANS, that refunded the 2008C CANS that were issued to refund the Series 2006 Daily Variable Rate that were supported by a weak liquidity facility bank. (5) New money debt issue (6) Sedes 2008B refunded the Series 1993 Synthetic Variable-to-Fixed Rate Debt issues that were supported by a failing insurance provider. Series 1993 and 1992 refunded the Series 1986 and a portion of the Series W COPs. (7) Refunded a portion of Series 2007B Refunding Strategv Depending on market conditions, staff is proposing to refund $152,990,000 of COP Series 2007B maturing in years 2028 through 2037 with annual coupon rates of 5.00%, as shown in the chart below. A refunding of these maturities would produce $16.2 million in present value savings (10.6% of refunded par) in the current market. Maturity Princi al Am Call Da 02/01/28 $ 12,165,000 5.00% 02/01/17 02/01/29 12,770,000 5.00% 02/01/17 02/01/30 13,410,000 5.00% 02/01/17 02/01/31 14,080,000 5.00% 02/01/17 02/01/32 14,785,000 5.00% 02/01/17 02/01/33 15,525,000 5.00% 02/01/17 02/01/34 16,300,000 5.00% 02/01/17 02/01/35 17,115,000 5.00% 02/01/17 02/Ol/31 17,970,000 5.00% 02/01/11 02/01/37 18,870:000 5.00% 02/01/97 Total : $ 152,990,000 Page 3 of 4 Timeline Since the proposed refunding is a fixed-rate debt issuance, staff is proposing to issue the refunding through a competitive sale because it is the most expeditious way to access the market and it is expected to provide the lowest interest cost for this given structure. ➢ Board approval of legal and disclosure documents December ➢ Financing Corporation approval of legal and disclosure documents ➢ Rating Agency discussions, if any ➢ Publish Notice of Intention to Sell January ➢ Marketing and Sale through a Competitive Sale Process February ➢ Closing ➢ Begin debt administration All costs involved with the refunding, including costs for PRAG and Fulbright & Jaworski will be paid from the proceeds of the new refunding issue. CEQA N/A BUDGET/PURCHASING ORDINANCE COMPLIANCE N/A ATTACHMENT N/A Page 4 of 4 ADMINISTRATION COMMITTEE Meeting Dare To ad.of Dir. u/tz/t4 AGENDA REPORT Item Number Item Number e Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Robert Ghirelli, Assistant General Manager SUBJECT: ANNUAL STRATEGIC PLAN UPDATE & GENERAL MANAGER'S WORK PLAN OVERVIEW GENERAL MANAGER'S RECOMMENDATION Informational Only. SUMMARY Strategic Plan - In November 2013, the Board of Directors adopted the 2014-2019 5-Year Strategic Plan after going through a collaborative effort to develop the Plan that contains the Board of Director's new Vision, articulates the values of the organization through a set of core values, outlines the risks facing the Sanitation District, lays out a series of targets that define our Levels of Service, and a number of strategic goals designed to support the service levels. General Managers Work Plan — In September, 2014 the Board of Directors approved the FY 2014-2015 General Manager's Work Plan. The Board has requested an overview of the plan that was approved. PRIOR COMMITTEE/BOARD ACTIONS Strategic Plan September 2013 - The Board of Directors participated in a Strategic Planning Workshop to create a new Board Vision and review past strategic goals and progress. October 2013 - The Board of Directors participated in a second Strategic Planning Workshop to review recommended strategic goals. November 2013 - The Board of Directors Adopted the 2014-2019 5-Year Strategic Plan. FY 14/15 General Manager's Work Plan August 2014 - Presented the proposed General Manager's FY 2014 -15 Work Plan to the Steering Committee for review. Page 1 or 2 September 2014 - The Board of Directors approved the Fiscal Year 2014-2015 General Manager's Work Plan. ADDITIONAL INFORMATION Staff will provide an update on progress made with the Strategic Goals and levels of service and provide an overview of the FY 14/15 General Manager's Work Plan. CEQA N/A BUDGET/PURCHASING ORDINANCE COMPLIANCE N/A ATTACHMENT None Page 2 of 2 ADMINISTRATION COMMITTEE Neebng Dare To ad.of Dir. 11,12,14 -- AGENDA REPORT Item Number Item Number 9 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Robert Ghirelli, Assistant General Manager SUBJECT: INFORMATIONAL PRESENTATION ON THE LEGISLATIVE AFFAIRS PROGRAM GENERAL MANAGER'S RECOMMENDATION Information Only. SUMMARY As part of the ongoing Board Member Orientation effort, OCSD staff will provide a general presentation on specific topics that the Board of Directors requested via a survey conducted in October 2013. Each month a different topic will be presented to both the Operations Committee and Administration Committee. This presentation will provide a brief and general overview of the Legislative Program. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION The following informational presentations have been provided to both Operations and Administration Committees: • February - OCSD Budget and Finances • March -Water Quality and OCSD's Disinfection Program • April - Community Outreach Program • May- Reserves, Investments and Financial Policies • June - Collections • July- Procurement Process • September- Cessation of Disinfection of Ocean Discharge • October- Wastewater Treatment CEQA N/A Page 1 of 2 BUDGET/PURCHASING ORDINANCE COMPLIANCE N/A ATTACHMENT: None Page 2 of 2 ORANGE COUNTY SANITATION DISTRICT Agenda Terminology Glossary Glossary of Terms and Abbreviations AQMD Air Quality Management District ASCE American Society of Civil Engineers BOD Biochemical Oxygen Demand CARB California Air Resources Board CASA California Association of Sanitation Agencies CCTV Closed Circuit Television CEQA California Environmental Quality Act CRWQCB California Regional Water Quality Control Board CWA Clean Water Act CWEA California Water Environment Association EIR Environmental Impact Report EMT Executive Management Team EPA U.S. Environmental Protection Agency FOG Fats, Oils, and Grease FSSD Facilities Support Services Department gpd Gallons per day GWR System Groundwater Replenishment System (also called GWRS) ICS Incident Command System IERP Integrated Emergency Control Plan LOS Level of Service MGD Million gallons per day NACWA National Association of Clean Water Agencies NPDES National Pollutant Discharge Elimination System NWRI National Water Research Institute O&M Operations and Maintenance OCCOG Orange County Council of Governments OCHCA Orange County Health Care Agency OCSD Orange County Sanitation District OCWD Orange County Water District GOBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration POTW Publicly Owned Treatment Works ppm Parts per million RFP Request For Proposal RWQCB Regional Water Quality Control Board SARFPA Santa Ana River Flood Protection Agency Glossary of Terms and Abbreviations SARI Santa Ana River Inceptor SARWQCB Santa Ana Regional Water Quality Control Board SAWPA Santa Ana Watershed Project Authority SCADA Supervisory Control and Data Acquisition system SCAP Southern California Alliance of Publicly Owned Treatment Works SCAQMD South Coast Air Quality Management District SOCWA South Orange County Wastewater Authority SSMP Sanitary Sewer Management Plan SSO Sanitary Sewer Overflow SWRCB State Water Resources Control Board TDS Total Dissolved Solids TMDL Total Maximum Daily Load TSS Total Suspended Solids WDR Waste Discharge Requirements WEF Water Environment Federation WERF Water Environment Research Foundation Activated-sludge process — A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved nutrients in the wastewater. Benthos— The community of organisms, such as sea stars, worms and shrimp, which live on, in, or near the seabed, also know as the benthic zone. Biochemical Oxygen Demand (BOD)—The amount of oxygen used when organic matter undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in water. Biosolids — Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farm land or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities. Coliform bacteria—A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere used as indicators of sewage pollution. E. coli are the most common bacteria in wastewater. Collections system — In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water. Certificate of Participation (COP) —A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Glossary of Terms and Abbreviations Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (D!f) — the dilution at which the majority of the people detect the odor becomes the DrT for that air sample. Greenhouse gases — In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse effect"). Groundwater Replenishment (GWR) System — A joint water reclamation project that proactively responds to Southern California's current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons a day of drinking quality water to replenish the local groundwater supply. Levels of Service (LOS)—Goals to support environmental and public expectations for performance. NDMA— N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP) — An alliance of the National Association of Clean Water Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S. Environmental Protection Agency (EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation in order to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. Plume—A visible or measurable concentration of discharge from a stationary source or fixed facility. Publicly-owned Treatment Works (POTW)— Municipal wastewater treatment plant. Santa Ana River Interceptor (SARI) Line — A regional brine line designed to convey 30 million gallons per day (MGD) of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer — Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban run-off. South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment — Biological wastewater treatment, particularly the activated-sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge—Untreated solid material created by the treatment of wastewater. Total suspended solids (TSS)—The amount of solids floating and in suspension in wastewater. Trickling filter — A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Glossary of Terms and Abbreviations Urban runoff — Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed —A land area from which water drains to a particular water body. OCSD's service area is in the Santa Ana River Watershed.