1. FY 2007 ANNUAL INVESTMENT REPORT MARTHA O. HAYNIE, CPA COUNTY COMPTROLLER

2. 2 Investment Objectives Safety Liquidity Yield

3. 3 Agenda Highlights Benchmarks Portfolio & Fed Rates Treasury Yield Curves Economic Conditions Investment Committee Committee Discussions Recommendations FY 2006 Portfolio Composition FY 2007 Portfolio Composition SBA Crisis

4. 4 Highlights (in millions)20072006 Interest earned$67.2$48.8 Effective rate of return5.07%4.38% Average daily balance$1,325$1,115

5. 5 Benchmarks BenchmarkFY 2007VarianceFY 2006Variance Portfolio5.07%4.38% 3-Month Treasury4.86%0.21%4.57%-0.19% 6-Month Treasury4.96%0.11%4.78%-0.40% Merrill Lynch 0-1 Treasury Index4.93%0.14%4.66%-0.28% 1-Year Treasury4.86%0.21%4.76%-0.38% 2-Year Treasury4.67%0.40%4.72%-0.34% State Investment Pool5.43%-0.36%4.73%-0.35% Effective Federal Funds5.21%-0.14%4.65%-0.27% Committee Benchmark5.00%0.07%4.71%-0.33%

6. 6 Portfolio and Fed Rates

7. 7 Treasury Yield Curves

8. 8 Economic Conditions Deteriorating housing market Slower economic growth Decline in payrolls Low consumer spending growth rate Eroding consumer sentiment Federal Reserve reducing interest rates Tight credit conditions Recession concerns Rising Treasury prices Below trend GDP growth forecasted in 2008

9. 9 Investment Committee Community Volunteers Ed Manning Retired Managing Partner of Ernst and Young, CPA John Cheney, DBA Associate Professor of Finance, University of Central Florida

10. 10 Committee Discussions Pooling of enterprise funds Increased liquidity Inverted yield curve Asset allocation Sub-prime crisis Commercial paper markets

11. 11 Recommendations Increase maximum investment in the noncurrent portfolio Increase diversification Reduce SBA investment Add commercial paper (CP) Add bankers’ acceptances Limit financial CP maturities to 30 days or less

12. 12 FY 2006 Portfolio Composition

13. 13 FY 2007 Portfolio Composition

14. 14 Current Portfolio Composition

15. 15 SBA Crisis 10/31 – 3.4% of assets downgraded 11/14 – Bloomberg article 11/15 – Withdrew all County funds Asset quality concerns Lack of clear communications from SBA 11/29 – State froze pool 12/06 – Reopened with two funds Fund A: 86% of assets – High quality Fund B: 14% of assets – Riskier assets Redemption limit of the higher of $2 million or 15% of assets

16. 16 FY 2007 ANNUAL INVESTMENT REPORT Interest earned$67.2 million Effective rate of return 5.07% The 2008 effective rate of return?

17. 17 REPORT ONLINE FY 2007 ANNUAL INVESTMENT REPORT WWW.OCCOMPT.COM