ANNUAL INVESTMENT REPORT

Transcription

1 NORTH EAST I.S.D. ANNUAL INVESTMENT REPORT for the year ended June 30, ANNUAL INVESTMENT REPORT Tab: Title

2 i TABLE OF CONTENTS Investment Officers Certification 1 Investment Instruments 2 Portfolio Compliance Review 3 Review of Activities 4 Investment Controls 5 Investment Policies 5 Investment Strategies 6 Market Strategy 6 Enhancements and Recommended Improvements 6 Investment Plan for Portfolio Composition.. 8 Maturity Aging/Portfolio Performance 9 Cash Receipts and Investment Pool Performance 12 Purchases (by fund) 13 Maturities/Calls/Sales (by fund) 15 Changes in Managed Pool Balances (by fund) 17 Changes in Values (by fund) 19 Earnings/Yields (by fund) 22 Legal Investment Policies 28 Local Investment Policies 41 Resolution of the Board Regarding Review of the Investment Program ANNUAL INVESTMENT REPORT Tab: TOC (2) 10/30/2012

3 North East Independent School District Annual Investment Report June 30, 2012 Members of the Board: This report summarizes the portfolio and activity of the North East Independent School District for the year ended June 30, /30/2011 6/30/20 I 2 Book Value $ 320,716,010 $ 289,707,393 Market Value 321,883, ,056,215 Weighted Average Maturity (Days) Weighted Average Yield-to-Maturity of Portfolio 1.71% 0.72% Yield-to-Maturity of 90-Day T-Bill 0.11% 0.08% This quarterly report is presented in accordance with the Texas Government Code Title 10 Section and NEISD Policy. The investment officers hereby certify that, to the best oftheir knowledge on the date this report was created, North East Independent School District is in compliance with the provisions of Government Code 2256 and with the stated policies and strategies of the District. Brian Moy Associate Superintendent/CFO Senior Director, Budge and Financial Analysis District Treasurer

4 2 North East Independent School District Current Investment Instruments June 30, 2012 Local Governmental Investment Pools Local Governmental Investment Pools (LGIPs) serve as vehicles for the pooled investment of public moneys of state or local governmental entities. LGIPs serve as short-term investments for funds that may be needed on a day-to-day basis. Commercial Paper Commercial Paper is an unsecured short-term debt instrument issued by a corporation with maturities ranging from three (3) to nine (9) months. The District's investment policy restricts investments in Commercial Paper to the highest quality credits rated superior by Moody's (P1), S&P (A1) or Fitch (F1). Municipal Bonds Municipal Bonds are issued by a city, school, county or other governmental agency. Municipal bonds may be general obligations of the issuer or secured by specified revenues. U.S. Agency Securities U.S. Agency bonds are issued by a government-sponsored agency. These securities are purchased directly by the District from investment brokerage firms registered to do business with the District. The securities are issued in the District's name, cleared through the Federal Reserve Bank system, and held in safekeeping by Frost Bank. Certificates of Deposit (CDs) Certificates of Deposit are negotiable certificates in denominations of $10,000 or more. They are issued by commercial banks against funds deposited for specified periods and earn specified rates of interest.

5 3 North East Independent School District Monthly Compliance Review June 30, 2012 Category Compliant Comments Securities purchased were authorized by the Investments / Securities Public Funds Investment Act and the District's Yes approved local and legal investment policy. Certification from Broker/Dealers Yes Broker/Dealer Certifications on file. Training CFO, Treasurer, Treasury Accountant and Senior Yes Director of Budgets completed 10 hours Diversity Investment portfolio is diversified to reduce risk Yes of loss. Liquidity Maintain sufficient liquidity of portfolio to meet Yes anticipated cash flow requirements. Maturity Maximum maturities in all funds are within legal Yes limits of investment policies. In order of priority, investments are governed by Standard of Care the objectives of Safety of Principal, Liquidity and Yes Yield. Collateral pledges Pledged collateral provided in accordance with Yes local investment policy. Prudent measures are in place to liquidate a Required Credit Ratings downgraded investment. No investments were Yes downgraded. Internal Management Reports Monthly Investment Reports are approved by the Yes Board of Trustees.

6 4 ANNUAL INVESTMENT REPORT As required by NEISD s investment policies, the District s investment officers are required to prepare annually a comprehensive report on the investment program and investment activity to the Board of Trustees. This report is required to include NEISD s portfolio performance and recommendations of policies, strategies and improvements necessary to enhance the investment program. Finally, this report is required to include an investment plan for the ensuing year. Review of Activities During fiscal year NEISD s general operating fund received approximately $597.6 million in local, state, and federal cash receipts. Property Tax collections of $99.1 million for the Debt Service Fund are included in this amount as all deposits from the Bexar County Tax Assessor/Collector are received by the General Fund. These funds were actively managed throughout the year and invested in pools, money market funds, agency bonds, municipal bonds and highly rated commercial paper. The weighted average maturity of the General Fund as of June 30, 2012 was days. The yield earned by this fund over the fiscal year was.37%. As of June 30, 2012, the ending book value of North East s portfolio was $289,707,393. The yield earned for the District s portfolio was.72% with total interest earnings of $2,242,144, while the investment pools earned an average rate of.14% during the fiscal year. A comprehensive benchmark analysis of NEISD s portfolio begins on page 8 of this report. During February 2004, NEISD received the proceeds from the $300 million bond sale. The proceeds were invested in pools, agency bonds and discount notes, commercial paper, and municipal bonds. The fixed income securities were purchased with maturity dates to match the expected draw down schedule of the funds. As of June 30, 2012, projects were closed and all funds were depleted. During August 2005, NEISD received the proceeds from the $149 million bond sale. The proceeds were invested in pools, agency bonds and discount notes, and commercial paper. The fixed income securities were purchased with maturity dates to ensure availability of funds when payments are due as well as to maximize investment earnings. As of June 30, 2012, projects were closed and all funds were depleted. During July 2007, NEISD received the proceeds from the $498 million bond sale. The proceeds were invested in pools, agency bonds and discount notes, and commercial paper. The fixed income securities were purchased with maturity dates to match the expected draw down schedule of the funds. As of June 30, 2012, $27.6 million was in investment pools and the book value of the fixed income securities was $7.2 million. During November 2010, NEISD received the proceeds from the issuance of $37.5 million Limited Maintenance Tax Qualified School Construction Notes. The proceeds were invested in pools, agency bonds, municipal bonds and commercial paper. The fixed

7 5 income securities were purchased with maturity dates to match the expected draw down schedule of the funds. As of June 30, 2012, $13.1 million was in the investment pools and the book value of the fixed income securities was $12.1 million. Investment Controls Many investment controls are in place to ensure the safety of NEISD s investments. The Board has adopted policies and strategies that comply with the Public Funds Investment Act and also provides management the flexibility needed to make day-to-day investment decisions. NEISD also has cash management and investment management procedures documented for the use and training of NEISD staff. These procedures are continually updated to account for changes in technology and processes. Contracts are in place between NEISD and its depository bank and safekeeping bank. Certifications are executed with each change in investment policies with the entities NEISD uses to invest securities -- such as the pools and brokers/dealers. NEISD keeps its investments at a third-party safekeeping bank. All trades settle on a delivery versus payment (DVP) basis which ensures that no funds leave the District s possession until a security is placed in the District s safekeeping account. Cash flow analyses are conducted to ensure funds are available when needed. The Office of the Treasurer receives and files original confirmations and receipts from each investment purchase and wire transaction. The Office of the Treasurer and the Accounting Services Office also ensure that clear separation of duties is provided for investment and cash management functions. Competitive bidding is always utilized, and usually bids from three to five brokers/dealers are received before a purchasing decision is made. Periodic investment reports are prepared by the District s investment officers and provided to the Board of Trustees. Investment Policies The policies included in this report continue to be the recommended investment policies for NEISD. The investment policies comply with the Public Funds Investment Act (PFIA). Per the PFIA, NEISD Investment Policy emphasis safety of principal, liquidity and address investment diversification, yield, and maturity and the quality and capability of investment management. Additionally, as required per the PFIA the policies include: 1. A list of the types of authorized investments in which the District s funds may be invested; 2. The maximum allowable stated maturity of any individual investment owned by the District; 3. For pooled fund groups, the maximum dollar-weighted average maturity allowed based on the stated maturity date of the portfolio; 4. Methods to monitor the market price and credit ratings of investments acquired with public funds; and

8 6 5. A requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis. Investment Strategies Each fund has a general strategy outlined within the investment policy of the District. The primary objectives of the District s operating funds are safety, liquidity, and maturity sufficient to meet anticipated cash flow requirements. The investment officers of the District will utilize a weekly cash flow requirement report during the year for the general operating fund budget to anticipate the cash needs. The cash budget enables the investment officers of the District to develop strategies based on interest rate forecasts to earn a higher yield than if the anticipated cash flows were not forecasted. Reasonable market yields will be earned by purchasing quality securities. All securities will be purchased with the intent to hold to maturity. The agency and debt service funds also have safety, liquidity, and maturity sufficient to meet anticipated cash flow requirements as their primary objectives. The debt service funds have limited cash outflows annually and the dates and amounts are known; therefore, investments of these funds are more easily matched to the actual cash outflow requirements. Diversification can be met through the use of an authorized investment pool. All securities will be purchased with the intent to hold to maturity. The investment strategy and primary objective for capital project fund portfolios is the assurance that anticipated cash flows are matched with adequate investment liquidity for the safety of the fund and the completion of the targeted projects. A diversified portfolio structured with maturities to match anticipated cash flow is used to provide a reasonable market yield. Maturities may extend beyond one year. Market Strategy The main goal of NEISD s investment program is to ensure its safety, as well as to obtain a reasonable financial return under current market conditions, in accordance with policies. The investment officers observe financial market indicators, study financial trends, and utilize available educational tools in order to maintain appropriate investment strategies. Investments are purchased with the expectation of holding to maturity, thereby ensuring the preservation of capital. Enhancements and Recommended Improvements The recommendation for the fiscal year is to continue to maintain an active management philosophy for the District s funds. Interest earnings can be gained by actively managing the portfolio. Evaluating and modifying cash flow forecasts can improve the yield of a portfolio when current and anticipated market conditions are taken into account. In a normal yield curve environment, with low interest rates at the short end of the curve, the investment officers will have to evaluate the value of marketable securities over investment pools that may be currently earning higher rates but have nonguaranteed yields, that over time, could fall below what could be earned in fixed income

9 7 securities. The treasury staff is continuing to work with other offices in the Finance Department to implement processes and procedures that, when implemented, will improve cash flow positions and payment terms. Ultimately, these projects should increase efficiency and aid investment performance. Investment Plan for The investment plan for fiscal year is a continuation of the plan which includes monitoring of market information, interest rates, forecasted and actual cash flows, and managing every fund in the portfolio on an individual, consistent, and frequent basis. Investment Officers must evaluate the market on an ongoing basis to determine where the District s funds are best utilized in the existing market. Procedures to monitor rating changes in investments as well as changes in the District s cash flow forecast will also be important in the coming year. The effective and efficient management of the portfolio can ensure a reasonable yield on the portfolio without exposing the District to unacceptable levels of risk.

10 8 PORTFOLIO COMPOSITION NORTH EAST I.S.D. As of 06/30/11 & 06/30/12 Portfolio Composition - 06/30/11 Book Value $320,716,010 FAMCA 2.9 FFCB 5.7% FNMA 3.9% FHLMC 2.9% MUNICIPAL BOND 8.7% FHLB 8.3% POOLS 55.8% COMMERCIAL PAPER 11.8% BLACKROCK MMF 0.1% Portfolio Composition - 06/30/12 Book Value $289,707,393 MUNICIPAL BONDS 23.7% FHLB 1.3% FHLMC.39% FFCB.34% FAMCA 0.48% COMMERCIAL PAPER 38.3% CDs 0.34% POOLS % Legend: CDs Fully insured and collaterallized Certificates of Deposit COMMERCIAL PAPER Short-term promissory notes issued by a corporation, Rated at least A-1, P-1 or F-1 FFCB Federal Farm Credit Bank Bonds FHLB Federal Home Loan Bank Bonds FHLB DISCOUNT Federal Home Loan Bank Discount Notes FHLMC Federal Home Loan Mortgage Corporation (Freddie Mac) Bonds FHLMC DISCOUNT Federal Home Loan Mortgage Corporation (Freddie Mac) Discount Notes FNMA Federal National Mortgage Association (Fannie Mae) Bonds FNMA DISCOUNT Federal National Mortgage Association (Fannie Mae) Discount Notes MUNICIPAL Municipal Bonds issued by state and local governments POOLS Various Investment Pools and Bank of America Sweep Account Note: Due to rounding, porfolio composition may not equal 100.0%

11 NORTH EAST I.S.D. As of 06/30/11 & 06/30/12 9 Maturity Aging - 06/30/11 vs. 06/30/12 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $ Days Days Days Days Days 1-4 Years 10+ Years Previous Period Current Period Weighted Average Maturity: days 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% NEISD Total Portfolio versus Investment Pools Yield Spread 7/31/07-06/30/12 7/31/2007 8/31/2007 9/30/ /31/ /30/ /31/2007 1/31/2008 2/29/2008 3/31/2008 4/30/2008 5/31/2008 6/30/2008 7/31/2008 8/31/2008 9/30/ /31/ /30/ /31/2008 1/31/2009 2/28/2009 3/31/2009 4/30/2009 5/31/2009 6/30/2009 7/31/2009 8/31/2009 9/30/ /31/ /30/ /31/2009 1/31/2010 2/28/2010 3/31/2010 4/30/2010 5/31/2010 6/30/2010 7/31/2010 8/31/2010 9/30/ /31/ /30/ /31/2010 1/31/2011 2/28/2011 3/31/2011 4/30/2011 5/31/2011 6/30/2011 7/31/2011 8/31/2011 9/30/ /31/ /30/ /31/2011 1/31/2012 2/29/2012 3/31/2012 4/30/2012 5/31/2012 6/30/ % 4.00% 3.00% 2.00% 1.00% 0.00% NEISD Total Portfolio versus T-Bills Yield Spread 07/31/07-6/30/12 7/31/2007 8/31/2007 9/30/ /31/ /30/ /31/2007 1/31/2008 2/29/2008 3/31/2008 4/30/2008 5/31/2008 6/30/2008 7/31/2008 8/31/2008 9/30/ /31/ /30/ /31/2008 1/31/2009 2/28/2009 3/31/2009 4/30/2009 5/31/2009 6/30/2009 7/31/2009 8/31/2009 9/30/ /31/ /30/ /31/2009 1/31/2010 2/28/2010 3/31/2010 4/30/2010 5/31/2010 6/30/2010 7/31/2010 8/31/2010 9/30/ /31/ /30/ /31/2010 1/31/2011 2/28/2011 3/31/2011 4/30/2011 5/31/2011 6/30/2011 7/31/2011 8/31/2011 9/30/ /31/ /30/ /31/2011 1/31/2012 2/29/2012 3/31/2012 4/30/2012 5/31/2012 6/30/ Day T-bill 90-Day T-bill 180-Day T-bill

12 % 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% NEISD Total Portfolio versus T-Notes Yield Spread 7/31/07-06/30/12 7/31/2007 8/31/2007 9/30/ /31/ /30/ /31/2007 1/31/2008 2/29/2008 3/31/2008 4/30/2008 5/31/2008 6/30/2008 7/31/2008 8/31/2008 9/30/ /31/ /30/ /31/2008 1/31/2009 2/28/2009 3/31/2009 4/30/2009 5/31/2009 6/30/2009 7/31/2009 8/31/2009 9/30/ /31/ /30/ /31/2009 1/31/2010 2/28/2010 3/31/2010 4/30/2010 5/31/2010 6/30/2010 7/31/2010 8/31/2010 9/30/ /31/ /30/ /31/2010 1/31/2011 2/28/2011 3/31/2011 4/30/2011 5/31/2011 6/30/2011 7/31/2011 8/31/2011 9/30/ /31/ /30/ /31/2011 1/31/2012 2/29/2012 3/31/2012 4/30/2012 5/31/2012 6/30/ Year T-Note 2 Year T-Note

13 11 MATURITY AGING/PORTFOLIO PERFORMANCE GENERAL FUND ONLY NORTH EAST I.S.D. As of 06/30/11 & 06/30/12 Maturity Aging - 06/30/11 vs. 06/30/12 $450,000,000 $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $ Days Days Days Days Days 1-4 Years 10+ Years Previous Period Current Period Weighted Average Maturity: days 1.50% NEISD General Fund versus Investment Pools Yield Spread 7/31/07-06/30/ % 0.50% 0.00% -0.50% -1.00% Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12

14 12 CASH RECEIPTS NORTH EAST I.S.D. For FY10, FY11, & FY12 $160,000,000 Fiscal Year to Date General Operating Cash Receipts $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 July August September October November December January February March April May June FY FY FY % INVESTMENT POOL PERFORMANCE NORTH EAST I.S.D. Daily 07/01/11 Rates of Investment - 06/30/12 Pools Fiscal Year % 0.60% 0.40% 0.20% 0.00% 7/1/11 7/15/11 7/29/11 8/12/11 8/26/11 9/9/11 9/23/11 10/7/11 10/21/11 11/4/11 11/18/11 12/2/11 12/16/11 12/30/11 1/13/12 1/27/12 2/10/12 2/24/12 3/9/12 3/23/12 4/6/12 4/20/12 5/4/12 5/18/12 6/1/12 6/15/12 6/29/12 TexPool TP Prime LOGIC Lone Star CLASS TexSTAR TexasDaily BlackRock MMF

15 13 PURCHASES NORTH EAST I.S.D. 07/01/11-06/30/12 Investment Investment Purchase Maturity Face Value Principal Yield to Number Description Date Date Invested Maturity GENERAL OPERATING ING Funding 07/20/11 04/13/12 $ 2,000, $ 1,993, % Prudential Funding 10/13/11 07/06/12 7,000, ,976, HSBC Finance Corp 10/25/11 04/23/12 5,000, ,986, Westpac Banking Corp 10/25/11 05/03/12 5,000, ,988, Abbey Nat NA LLC 10/28/11 05/02/12 10,000, ,966, UBS Finance 11/03/11 05/02/12 10,000, ,972, RaboBank USA Fin 01/09/12 07/09/12 25,000, ,921, FCAR Owner Trust CP 02/22/12 08/01/12 15,000, ,968, Abbey Nat NA LLC 03/23/12 12/17/12 10,000, ,929, FCAR OWNER TURST II 06/06/12 03/01/13 2,000, ,992, FFCB 12/12/11 12/12/14 1,000, ,000, FHLMC 12/19/11 12/19/14 1,000, ,000, North TX TWY Auth 07/25/11 09/01/13 1,000, ,031, N Vernon Econ 09/22/11 12/01/26 2,010, ,010, Univ of HI - Ser A 10/13/11 07/15/12 2,000, ,079, Lewisvile ISD 10/17/11 08/15/13 2,000, ,978, Jefferson SWR - D 10/28/11 08/01/12 2,500, ,587, Chicago TXBL Note 11/01/11 12/05/12 8,000, ,000, North TX TWY Auth 11/18/11 09/01/13 4,500, ,637, NJ Sports - Ref - B 12/02/11 03/01/14 610, , MS Small Enter 12/05/11 12/01/12 5,670, ,910, NJSHSG 01/09/12 10/01/13 535, , AL Wtr Polltn Ln 01/27/12 08/15/12 1,000, ,015, NJ Econ Dev Auth 01/30/12 09/01/12 1,540, ,553, HOUFAC 02/23/12 09/01/13 1,000, ,069, Miami-Dade Cnty 02/24/12 08/01/14 900, , Cook Cnty Ill 02/24/12 12/01/14 275, , Hudson Cnty NJ 02/27/12 09/01/14 680, , Illinois - TXBL 03/27/12 01/01/13 1,000, ,019, Central Sq CSD - R 05/03/12 05/15/13 2,750, ,790, Central Dauphin 05/22/12 12/01/13 4,095, ,254, Michigan HSG DEV Auth 06/15/12 11/01/13 1,870, ,888, GENERAL OPERATING TOTAL 136,935, ,693, SCHOOL NUTRITION SERVICES Discover Bank 06/13/12 06/13/13 248, , RABOBANK USA FIN 08/25/11 12/19/11 1,000, , Toyota Mtr Cred 09/14/11 01/12/12 1,000, , Chicago TXBL Note 11/01/11 12/05/12 1,000, ,000, NYC - TXB - F2 01/20/12 12/01/12 1,500, ,516, NYC 02/06/12 03/01/13 2,000, ,036, RI H/E Pub Schs 05/10/12 05/05/14 500, , SCHOOL NUTRITION SERVICES TOTAL 7,248, ,339, DEBT SERVICE RABOBANK USA FIN 08/25/11 12/19/11 2,000, ,998, Toyota Mtr Cred 09/14/11 01/12/12 5,000, ,994, Prudential Funding 10/13/11 07/06/12 1,000, , UBS Finance 11/03/11 05/02/12 2,000, ,994, ING Funding 01/18/12 07/30/12 15,000, ,949, Deutsche BK Fin 02/02/12 07/30/12 10,000, ,968, Credit Agri NA 03/22/12 07/26/12 10,000, ,980, Natixis US Fin 04/13/12 07/30/12 15,000, ,977, FHLMC 09/21/11 03/14/13 2,000, ,002, North TX TWY Auth 07/28/11 09/01/13 1,000, ,031,

16 14 PURCHASES NORTH EAST I.S.D. 07/01/11-06/30/12 Investment Investment Purchase Maturity Face Value Principal Yield to Number Description Date Date Invested Maturity Chicago TXBL Note 11/01/11 12/05/12 1,000, ,000, Corpus Christi ISD 12/05/11 08/15/13 750, , DEBT SERVICE TOTAL 64,750, ,689, QSCB Projects ING Funding 07/20/11 04/13/12 9,000, ,972, RABOBANK USA FIN 08/25/11 12/19/11 2,000, ,998, Prudential Funding 10/13/11 07/06/12 1,000, , FCAR OWNER TURST II 06/06/12 03/01/13 2,000, ,992, Cuyahoga Econ-TX 03/01/12 12/01/12 4,600, ,654, QSCB Projects TOTAL 18,600, ,614, CAPITAL PROJECTS $498 MILLION ING Funding 07/20/11 04/13/12 4,000, ,987, FCAR Owner TR 08/01/11 01/04/12 8,000, ,989, RABOBANK USA FIN 08/24/11 12/19/11 2,000, ,998, Toyota Mtr Cred 09/14/11 01/12/12 3,000, ,996, Prudential Funding 10/13/11 07/06/12 1,000, , FCAR OWNER TURST II 06/06/12 03/01/13 3,000, ,988, CAPITAL PROJECTS $498 MILLION TOTAL 21,000, ,958, HEALTH INSURANCE Goldman Sachs Bk 11/02/11 11/04/13 248, , RABOBANK USA FIN 08/25/11 12/19/11 250, , Toyota Mtr Cred 09/14/11 01/12/12 2,000, ,997, FCAR OWNER TURST II 06/06/12 03/01/13 1,000, , Harris Cnty Cultural 12/14/11 12/01/13 1,000, ,092, NYC - TXB - F2 01/20/12 12/01/12 1,500, ,516, Illinois - TXBL 03/27/12 01/01/13 1,000, ,019, OK Cap Impt - Ref 05/09/12 07/01/13 945, , HEALTH INSURANCE TOTAL 7,943, ,078, DENTAL Doral Bank 06/08/12 06/07/13 248, , Erie Pub Impt 10/19/11 12/01/11 320, , San Antonio Elec 01/19/12 02/01/14 575, , Garland ISD - CABS 03/27/12 02/15/23 100, , DENTAL TOTAL 1,243, ,259, WORKERS' COMPENSATION Beal Bank SSB TX 06/13/12 06/12/13 248, , RABOBANK USA FIN 08/25/11 12/19/11 250, , Fairfax Cnty Eco 10/21/11 05/15/12 210, , MD CTFS - A 01/20/12 09/01/13 640, , Philadelphia S/D 02/24/12 09/01/14 175, , Illinois - TXBL 03/27/12 01/01/13 1,000, ,019, WORKERS' COMPENSATION TOTAL 2,523, ,572, SUMMARY TOTALS: $ 260,242, $ 261,206,820.73

17 15 MATURITIES/CALLS/SALES NORTH EAST I.S.D. 07/01/11-06/30/12 Investment Investment Purchase Maturity Call Face Value Principal Yield to Number Description Date Date Date Invested Maturity GENERAL OPERATING Toyota Cred PR 01/26/11 09/12/11 Open $ 2,000, $ 1,995, % Credit Agri NA 02/10/11 11/07/11 Open 3,000, ,985, Natixis US FIN 02/16/11 07/22/11 Open 2,000, ,996, Intesa Funding 03/29/11 12/23/11 Open 1,000, , Natixis US Fin 03/29/11 07/29/11 Open 10,000, ,988, Abbey Nat NA LLC 04/12/11 01/06/12 Open 3,000, ,980, ING Funding 07/20/11 04/13/12 Open 2,000, ,993, Prudential Funding 10/13/11 07/06/12 Open 7,000, ,976, HSBC Finance Corp 10/25/11 04/23/12 Open 5,000, ,986, Westpac Banking Corp 10/25/11 05/03/12 Open 5,000, ,988, Abbey Nat NA LLC 10/28/11 05/02/12 Open 10,000, ,966, UBS Finance 11/03/11 05/02/12 Open 10,000, ,972, FHLB 04/01/10 09/09/11 Open 10,000, ,421, FHLB 10/28/10 09/20/12 Open 3,053, ,055, (0.53) Chester Indl 06/06/11 04/01/31 Open 7,165, ,165, N Vernon Econ 09/22/11 12/01/26 Open 30, , N Vernon Econ 09/22/11 12/01/26 Open 1,980, ,980, NJ Econ Dev Auth 01/30/12 09/01/12 Open 1,435, ,447, GENERAL OPERATING TOTAL 83,663, ,924, SCHOOL NUTRITION SERVICES Intesa Funding 03/29/11 12/23/11 Open 1,000, , RABOBANK USA FIN 08/25/11 12/19/11 Open 1,000, , Toyota Mtr Cred 09/14/11 01/12/12 Open 1,000, , Lwr Co Rvr Auth 06/08/11 05/15/12 Open 1,000, ,024, SCHOOL NUTRITION SERVICES TOTAL 4,000, ,017, DEBT SERVICE Natixis US Fin 03/29/11 07/29/11 Open 5,000, ,994, RABOBANK USA FIN 08/25/11 12/19/11 Open 2,000, ,998, Toyota Mtr Cred 09/14/11 01/12/12 Open 5,000, ,994, UBS Finance 11/03/11 05/02/12 Open 2,000, ,994, FHLMC 09/21/11 03/14/13 03/14/12 2,000, ,002, Florida Fin Ref-Envir 05/13/11 07/01/11 Open 2,000, ,015, Port Arthur - Ref 06/07/11 02/15/12 Open 520, , Long Hill TWP-BA 06/16/11 07/19/11 Open 3,684, ,686, Long Hill TWP-BA 06/16/11 07/19/11 Open DEBT SERVICE TOTAL 22,204, ,211, QSCB Projects Abbey Nat NA LLC 11/18/10 08/15/11 Open 3,000, ,983, Intesa Funding 11/22/10 08/16/11 Open 1,000, , Natixis US FIN 11/22/10 08/01/11 Open 1,000, , Credit Agri NA 02/10/11 11/07/11 Open 1,000, , Intesa Funding 03/29/11 12/23/11 Open 1,000, , ING Funding 07/20/11 04/13/12 Open 9,000, ,972, RABOBANK USA FIN 08/25/11 12/19/11 Open 2,000, ,998, FHLMC 11/19/10 10/25/13 07/25/11 1,000, ,000, FNMA 11/29/10 11/29/13 11/29/11 1,000, , FNMA 01/18/11 01/18/13 Open 1,000, ,001, Florida DOT TRNP 11/24/10 07/01/11 Open 500, , DALLAS RAPID TRN 11/23/10 12/01/11 Open 1,000, ,044, BELLAIRE - SER A 11/23/10 02/15/12 Open 500, ,

18 16 MATURITIES/CALLS/SALES NORTH EAST I.S.D. 07/01/11-06/30/12 Investment Investment Purchase Maturity Call Face Value Principal Yield to Number Description Date Date Date Invested Maturity TX TECH UNIV-7TH 11/23/10 02/15/12 Open 360, , THREE RVRS PK DI 12/09/10 02/01/12 Open 900, , Piscataway TWP N 01/27/11 02/01/12 Open 1,025, ,040, QSCB Projects TOTAL 25,285, ,344, CAPITAL PROJECTS $498 MILLION Abbey Nat NA LLC 04/12/11 01/06/12 Open 1,000, , ING Funding 07/20/11 04/13/12 Open 4,000, ,987, FCAR Owner TR 08/01/11 01/04/12 Open 8,000, ,989, RABOBANK USA FIN 08/24/11 12/19/11 Open 2,000, ,998, Toyota Mtr Cred 09/14/11 01/12/12 Open 3,000, ,996, FAMCA 08/28/07 07/15/11 Open 7,846, ,002, FFCB 08/28/07 01/03/12 Open 2,315, ,299, FFCB 08/28/07 08/09/11 Open 7,989, ,051, FFCB 08/29/07 09/19/11 Open 7,950, ,121, FHLB 08/28/07 12/09/11 Open 2,300, ,291, FHLB 08/24/07 06/08/12 Open 1,320, ,347, FHLB 08/24/07 03/09/12 Open 2,235, ,244, FHLB 09/29/08 06/08/12 Open 2,905, ,000, FHLMC 08/29/07 11/15/11 Open 5,750, ,686, FHLMC 09/29/08 04/27/12 Open 2,415, ,474, FNMA 08/24/07 10/15/11 Open 6,000, ,035, FNMA 08/28/07 02/16/12 Open 2,300, ,316, FNMA 08/28/07 05/18/12 Open 2,300, ,305, CAPITAL PROJECTS $498 MILLION TOTAL 71,625, ,141, HEALTH INSURANCE Intesa Funding 03/29/11 12/23/11 Open 1,000, , Abbey Nat NA LLC 04/12/11 01/06/12 Open 1,000, , RABOBANK USA FIN 08/25/11 12/19/11 Open 250, , Toyota Mtr Cred 09/14/11 01/12/12 Open 2,000, ,997, Detroit City SD 05/18/11 05/01/12 Open 1,000, ,037, HEALTH INSURANCE TOTAL 5,250, ,272, DENTAL Erie Pub Impt 10/19/11 12/01/11 Open 320, , DENTAL TOTAL 320, , WORKERS' COMPENSATION Abbey Nat NA LLC 04/12/11 01/06/12 Open 1,000, , RABOBANK USA FIN 08/25/11 12/19/11 Open 250, , Fairfax Cnty Eco 10/21/11 05/15/12 Open 210, , WORKERS' COMPENSATION TOTAL 1,460, ,458, SUMMARY TOTALS: $ 213,808, $ 216,692, Sold security prior to original maturity date with remaining unamortized premium recognized in current period; the total actual on this investment is.524%.

19 17 CHANGES IN MANAGED POOL BALANCES NORTH EAST I.S.D. 07/01/11-06/30/12 Investment Beginning Ending Change in Description Book Balance Book Balance Book Balance GENERAL OPERATING BlackRock - General Fund $ $ - $ (616.83) TexPool-General Operating 19,109, ,455, (12,653,752.83) LOGIC-General Operating 13,022, ,674, (347,722.69) MBIA CLASS , (101,435.14) TexPool-State Payments 1,723, , (1,704,712.17) TexasTERM-General Fund 3,000, ,000, (1,000,000.00) TexSTAR-General Operating 1, (1,574.40) TexPool Prime-Gen. Fund 12,016, ,547, (468,399.81) TexPool-General Operating 442, , , GENERAL OPERATING TOTAL 49,416, ,196, (16,220,359.49) SCHOOL NUTRITION SERVICES BlackRock - Food Service (81.38) TexPool-Food Service LOGIC-Food Service 5,155, ,841, (3,314,300.39) TexPool Prime-Food Svc 198, ,194, ,995, TexSTAR-Food Service (3.48) MBIA Class , (160,943.36) SCHOOL NUTRITION SERVICES TOTAL 5,515, ,036, (1,479,584.17) QSCB - Debt Service TexPool Prime-5019 Debt S - 27, , QSCB - DEBT SERVICE TOTAL - 27, , DEBT SERVICE BlackRock - Debt Service (607.47) TexPool-Debt Service LOGIC-Debt Service 60,893, ,715, (47,178,096.46) TexPool Prime-Debt Svc 3,754, ,395, ,640, TexSTAR-Debt Service 24, (24,433.87) MBIA CLASS ,396, (2,396,263.58) DEBT SERVICE TOTAL 67,069, ,111, (47,958,831.41) QSCB Projects TexPool Prime-6019 QSCB P 17,185, ,102, (4,083,351.00) QSCB Projects TOTAL 17,185, ,102, (4,083,351.00) CAPITAL PROJECTS $300 MILLION BlackRock - $300M (560.88) TexSTAR - Capital Project (445.99) MBIA CLASS , (153,849.84) LOGIC-Bond $300 Million 11, (11,397.35) CAPITAL PROJECTS $300 MILLION TOTAL 166, (166,254.06) CAPITAL PROJECTS $149 MILLION BlackRock - $149M 1, (1,640.71) TexPool-CP $149Million (795.23) TexPool Prime , (546,242.20) TexSTAR-Capital Projects (159.62)

20 18 CHANGES IN MANAGED POOL BALANCES NORTH EAST I.S.D. 07/01/11-06/30/12 Investment Beginning Ending Change in Description Book Balance Book Balance Book Balance CAPITAL PROJECTS $149 MILLION TOTAL 548, (548,837.76) CAPITAL PROJECTS $498 MILLION BlackRock - $498M Constru (737.40) TexPool-CP $498 Million 213, , TexPool Prime ,314, ,797, ,483, MBIA Class ,490, (17,490,442.26) CAPITAL PROJECTS $498 MILLION TOTAL 24,018, ,010, ,992, CAPITAL PROJECTS $498 MILLION BlackRock - $498M Purchas (674.48) TexPool Prime , , , MBIA CLASS , (987,791.28) CAPITAL PROJECTS $498 MILLION TOTAL 1,034, , (401,783.28) HEALTH INSURANCE BlackRock - Health Insura (93.74) TexPool-Health Insurance LOGIC-Health Insurance 9,791, ,422, (6,368,627.63) TexPool Prime-Health Ins. 9, , , TexSTAR-Health Insurance (247.57) MBIA CLASS , (654,263.14) HEALTH INSURANCE TOTAL 10,455, ,554, (6,901,426.14) DENTAL BlackRock - Dental (76.89) TexPool-Dental (77.40) LOGIC-Dental 1,899, , (1,218,942.18) TexPool Prime-Dental 3, , , TexSTAR-Dental (60.44) DENTAL TOTAL 1,903, , (1,200,970.72) WORKERS' COMPENSATION BlackRock - Workers' Comp (731.42) TexPool-Workers' Comp LOGIC-Workers' Comp 1,344, , (757,367.14) TexPool Prime-Work Comp 350, , (335,176.93) TexSTAR-Workers Compensat (183.25) WORKERS' COMPENSATION TOTAL 1,696, , (1,093,458.74) SUMMARY TOTALS: $ 179,011, $ 101,976, $ (77,035,446.42)

21 19 CHANGES IN VALUES NORTH EAST I.S.D. 07/01/11-06/30/12 Investment Investment Purchase Maturity Face Value Beginning Ending Change in Beginning Ending Change in Int/Div Accrued Number Description Date Date Market Value Market Value Market Value Book Value Book Value Book Value in the Period GENERAL OPERATING Toyota Cred PR 01/26/11 09/12/11 $ 2,000, $ 1,999, $ - $ (1,999,921.10) $ 1,998, $ - $ 1, $ Credit Agri NA 02/10/11 11/07/11 3,000, ,999, (2,999,411.10) 2,993, (2,993,126.45) Natixis US FIN 02/16/11 07/22/11 2,000, ,999, (1,999,915.52) 1,999, (1,999,533.33) Intesa Funding 03/29/11 12/23/11 1,000, , (999,529.11) 996, (996,354.16) Natixis US Fin 03/29/11 07/29/11 10,000, ,999, (9,999,752.70) 9,997, (9,997,277.78) Abbey Nat NA LLC 04/12/11 01/06/12 3,000, ,998, (2,998,316.46) 2,986, (2,986,140.00) RaboBank USA Fin 01/09/12 07/09/12 25,000, ,998, ,998, ,996, ,996, FCAR Owner Trust CP 02/22/12 08/01/12 15,000, ,999, ,999, ,993, ,993, Abbey Nat NA LLC 03/23/12 12/17/12 10,000, ,993, ,993, ,955, ,955, FCAR OWNER TURST II 06/06/12 03/01/13 2,000, ,997, ,997, ,993, ,993, FFCB 12/12/11 12/12/14 1,000, ,001, ,001, ,000, ,000, FHLB 04/01/10 09/09/11 10,000, ,068, (10,068,300.00) 10,055, (10,055,287.41) FHLB 10/01/10 06/28/13 500, , , , , FHLB 10/28/10 09/20/12 3,053, ,962, (3,962,709.61) 3,981, (3,981,357.51) FHLMC 12/19/11 12/19/14 1,000, ,001, ,001, ,000, ,000, AZ Pwr - Crossover 05/16/11 10/01/12 1,485, ,572, ,502, (69,854.40) 1,572, ,502, (69,886.80) 19, Chester Indl 06/06/11 04/01/31 7,165, ,165, (7,165,000.00) 7,165, (7,165,000.00) North TX TWY Auth 07/25/11 09/01/13 1,000, ,016, ,016, ,017, ,017, , N Vernon Econ 09/22/11 12/01/26 1,980, ,980, (1,980,000.00) 1,980, (1,980,000.00) Univ of HI - Ser A 10/13/11 07/15/12 2,000, ,002, ,002, ,004, ,004, , Lewisvile ISD 10/17/11 08/15/13 2,000, ,987, ,987, ,986, ,986, Jefferson SWR - D 10/28/11 08/01/12 2,500, ,507, ,507, ,509, ,509, , Chicago TXBL Note 11/01/11 12/05/12 8,000, ,007, ,007, ,000, ,000, , North TX TWY Auth 11/18/11 09/01/13 4,500, ,574, ,574, ,589, ,589, , NJ Sports - Ref - B 12/02/11 03/01/14 610, , , , , , MS Small Enter 12/05/11 12/01/12 5,670, ,764, ,764, ,771, ,771, , NJSHSG 01/09/12 10/01/13 535, , , , , , AL Wtr Polltn Ln 01/27/12 08/15/12 1,000, ,002, ,002, ,003, ,003, , NJ Econ Dev Auth 01/30/12 09/01/12 105, , , , , NJ Econ Dev Auth 01/30/12 09/01/12 1,435, ,447, (1,447,958.05) 1,447, (1,447,958.05) HOUFAC 02/23/12 09/01/13 1,000, ,050, ,050, ,053, ,053, , Miami-Dade Cnty 02/24/12 08/01/14 900, , , , , , Cook Cnty Ill 02/24/12 12/01/14 275, , , , , Hudson Cnty NJ 02/27/12 09/01/14 680, , , , , , Illinois - TXBL 03/27/12 01/01/13 1,000, ,012, ,012, ,012, ,012, , Central Sq CSD - R 05/03/12 05/15/13 2,750, ,778, ,778, ,784, ,784, , Central Dauphin 05/22/12 12/01/13 4,095, ,238, ,238, ,243, ,243, , Michigan HSG DEV Auth 06/15/12 11/01/13 1,870, ,878, ,878, ,887, ,887, , GENERAL OPERATING TOTAL 141,108, ,695, ,064, ,368, ,673, ,058, ,385, , SCHOOL NUTRITION SERVICES Discover Bank 06/13/12 06/13/13 248, , , , , Intesa Funding 03/29/11 12/23/11 1,000, , (999,529.11) 996, (996,354.17) Lwr Co Rvr Auth 06/08/11 05/15/12 1,000, ,022, (1,022,250.00) 1,022, (1,022,958.34) Chicago TXBL Note 11/01/11 12/05/12 1,000, ,000, ,000, ,000, ,000, NYC - TXB - F2 01/20/12 12/01/12 1,500, ,507, ,507, ,508, ,508, , NYC 02/06/12 03/01/13 2,000, ,024, ,024, ,022, ,022, , RI H/E Pub Schs 05/10/12 05/05/14 500, , , , , , SCHOOL NUTRITION SERVICES TOTAL 7,248, ,021, ,317, ,295, ,019, ,316, ,297, , QSCB - Debt Service Leander ISD - CABS 06/30/11 08/15/26 715, , , , , , , San Antonio ISD 06/30/11 08/15/25 1,000, ,054, ,206, , ,000, ,000, ,165.00

22 20 CHANGES IN VALUES NORTH EAST I.S.D. 07/01/11-06/30/12 Investment Investment Purchase Maturity Face Value Beginning Ending Change in Beginning Ending Change in Int/Div Accrued Number Description Date Date Market Value Market Value Market Value Book Value Book Value Book Value in the Period QSCB - DEBT SERVICE TOTAL 1,715, ,409, ,621, , ,342, ,383, , , DEBT SERVICE Natixis US Fin 03/29/11 07/29/11 5,000, ,999, (4,999,876.35) 4,998, (4,998,638.89) Prudential Funding 10/13/11 07/06/12 1,000, , , , , ING Funding 01/18/12 07/30/12 15,000, ,999, ,999, ,992, ,992, Deutsche BK Fin 02/02/12 07/30/12 10,000, ,999, ,999, ,994, ,994, Credit Agri NA 03/22/12 07/26/12 10,000, ,999, ,999, ,996, ,996, Natixis US Fin 04/13/12 07/30/12 15,000, ,999, ,999, ,993, ,993, Leander ISD - CABS 12/16/10 08/15/15 1,000, , , , , , , Bartow Cnty 05/11/11 08/01/12 1,000, ,047, ,003, (44,190.00) 1,046, ,003, (43,249.09) 20, Florida Fin Ref-Envir 05/13/11 07/01/11 2,000, ,000, (2,000,000.00) 2,015, (2,015,020.00) Port Arthur - Ref 06/07/11 02/15/12 520, , (524,128.80) 524, (524,832.98) Long Hill TWP-BA 06/16/11 07/19/11 3,684, ,685, (3,685,326.24) 3,685, (3,685,466.90) Long Hill TWP-BA 06/16/11 07/19/ (750.27) (750.30) North TX TWY Auth 07/28/11 09/01/13 1,000, ,016, ,016, ,017, ,017, , Chicago TXBL Note 11/01/11 12/05/12 1,000, ,000, ,000, ,000, ,000, Corpus Christi ISD 12/05/11 08/15/13 750, , , , , , DEBT SERVICE TOTAL 66,954, ,201, ,779, ,577, ,185, ,713, ,528, , QSCB Projects Abbey Nat NA LLC 11/18/10 08/15/11 3,000, ,999, (2,999,926.02) 2,997, (2,997,300.00) Intesa Funding 11/22/10 08/16/11 1,000, , (999,974.80) 999, (999,361.11) Natixis US FIN 11/22/10 08/01/11 1,000, , (999,983.01) 999, (999,586.67) Credit Agri NA 02/10/11 11/07/11 1,000, , (999,803.70) 997, (997,708.82) Intesa Funding 03/29/11 12/23/11 1,000, , (999,529.11) 996, (996,354.16) Prudential Funding 10/13/11 07/06/12 1,000, , , , , FCAR OWNER TURST II 06/06/12 03/01/13 2,000, ,997, ,997, ,993, ,993, FAMCA 01/14/11 08/10/12 1,400, ,428, ,402, (25,676.00) 1,422, ,402, (19,879.88) 11, FHLMC 11/19/10 10/25/13 1,000, ,000, (1,000,600.00) 1,000, (1,000,000.00) FNMA 11/29/10 11/29/13 1,000, ,002, (1,002,390.00) 999, (999,753.33) FNMA 01/18/11 01/18/13 1,000, ,000, (1,000,210.00) 1,000, (1,000,885.78) Florida DOT TRNP 11/24/10 07/01/11 500, , (500,000.00) 503, (503,900.00) FL TPK-REF-DEPT 11/24/10 07/01/12 1,000, ,046, ,000, (46,450.00) 1,040, ,000, (40,604.51) 25, NY TWY BRDG TR 11/24/10 04/01/13 200, , , (8,778.00) 214, , (8,399.44) 2, LOWER CO RIV AUT 11/24/10 05/15/13 165, , , (6,590.10) 176, , (5,902.66) 1, DALLAS RAPID TRN 11/23/10 12/01/11 1,000, ,019, (1,019,230.00) 1,018, (1,018,248.64) Beeville ISD 11/23/10 08/15/12 335, , , (16,016.35) 350, , (13,942.67) 6, BELLAIRE - SER A 11/23/10 02/15/12 500, , (514,675.00) 513, (513,133.39) TX TECH UNIV-7TH 11/23/10 02/15/12 360, , (370,454.40) 369, (369,341.10) THREE RVRS PK DI 12/09/10 02/01/13 715, , , (7,579.00) 726, , (7,051.82) 5, THREE RVRS PK DI 12/09/10 02/01/12 900, , (906,948.00) 906, (906,518.67) New Jersey St 12/14/10 07/01/13 240, , , (4,756.80) 250, , (5,402.59) 4, Leander ISD - CABS 12/16/10 08/15/13 500, , , , , , , Piscataway TWP N 01/27/11 02/01/12 1,025, ,032, (1,032,267.25) 1,033, (1,033,929.33) Cuyahoga Econ-TX 03/01/12 12/01/12 4,600, ,627, ,627, ,630, ,630, , QSCB PROJECTS TOTAL 26,440, ,043, ,212, (6,831,663.00) 18,999, ,194, (6,805,644.96) 64, CAPITAL PROJECTS $498 MILLION Abbey Nat NA LLC 04/12/11 01/06/12 1,000, , (999,438.82) 995, (995,380.00) Prudential Funding 10/13/11 07/06/12 1,000, , , , , FCAR OWNER TURST II 06/06/12 03/01/13 3,000, ,996, ,996, ,989, ,989, FAMCA 08/28/07 07/15/11 7,846, ,862, (7,862,084.30) 7,847, (7,847,569.08) FFCB 08/28/07 01/03/12 2,315, ,367, (2,367,782.00) 2,313, (2,313,147.76) FFCB 08/28/07 08/09/11 7,989, ,031, (8,031,102.03) 7,990, (7,990,662.91) 0.00