UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05506
College and University Facility Loan Trust Two
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(Exact name of registrant as specified in charter)
c/o U.S. Bank One Federal Street Boston, MA 02110
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(Address of principal executive offices) (Zip code)
Bryan Calder
U.S. Bank Corporate Trust Services
One Federal Street
Boston, MA 02110
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(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 603-6406
Date of fiscal year end: November 30, 2003
Date of reporting period: May 31, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
College and University
Facility Loan Trust Two
================================================================================
Compiled Financial Statements
Six Months Ended May 31, 2003
Accountants' Compilation Report
To the Owner Trustee of
College and University Facility
Loan Trust Two
We have compiled the accompanying statement of assets and liabilities of College
and University Facility Loan Trust Two (the "Trust"), including the schedule of
investments, as of May 31, 2003, and the related statements of operations, cash
flows, changes in net assets and financial highlights for the six months then
ended, in accordance with standards established by the American Institute of
Certified Public Accountants. The financial information for the years ended
November 30, 2002, 2001, 2000, 1999 and 1998, presented herein for comparative
purposes, was audited by other auditors, whose report thereon dated January 10,
2003 expressed an unqualified opinion, except for the effect on the 2002
financial statements of accounting for investments under the amortized cost
method of accounting as described in Note 2 to the financial statements.
A compilation is limited to presenting in the form of financial statements
information that has been obtained from the books and records of the Trust. We
have not audited or reviewed the accompanying financial statements or
supplemental material and, accordingly, do not express an opinion or any other
form of assurance on them.
We are not independent with respect to College and University Facility Loan
Trust Two.
BDO Seidman, LLP
July 23, 2003
College and University
Facility Loan Trust Two
Statement of Assets and Liabilities
================================================================================
May 31, 2003
====================================================================================
Assets
Investments, at amortized cost, net of allowance for loan losses
of $1,432,376 (Notes 1, 2, 6, 7 and 8 and Schedule of Investments) $ 98,168,213
Cash 187,398
Prepaid expenses 13,750
Interest receivable 894,012
Deferred bond issuance costs (Note 2) 330,511
- ------------------------------------------------------------------------------------
Total assets 99,593,884
- ------------------------------------------------------------------------------------
Liabilities
Bonds payable, net of unamortized discount (Notes 1, 3 and 8) 82,979,346
Interest payable (Note 3) 2,101,083
Accrued expenses and other liabilities 205,488
Distributions payable to Class B certificateholders (Note 5) 926,002
- ------------------------------------------------------------------------------------
Total liabilities 86,211,919
- ------------------------------------------------------------------------------------
Net Assets
Class B Certificates, par value $1 - authorized, issued and
outstanding - 1,763,800 certificates (Note 5) 1,763,800
Accumulated deficit (Notes 2 and 5) (3,146,864)
Paid-in capital (Note 2) 14,765,029
- ------------------------------------------------------------------------------------
Total net assets $ 13,381,965
- ------------------------------------------------------------------------------------
Net asset value per Class B certificate
(based on 1,763,800 certificates outstanding) $ 7.59
====================================================================================
See accompanying accountants' compilation report and
notes to financial statements.
3
College and University
Facility Loan Trust Two
Statement of Operations
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Six months ended May 31, 2003
================================================================================
Investment income:
Interest income (Note 2) $5,081,073
- --------------------------------------------------------------------------------
Expenses:
Interest expense (Notes 2 and 3) 4,041,376
Servicer fees (Note 4) 59,571
Trustee fees (Note 4) 25,640
Other trust and bond administration expenses 124,628
- --------------------------------------------------------------------------------
Total expenses 4,251,215
- --------------------------------------------------------------------------------
Net investment income 829,858
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 829,858
================================================================================
See accompanying accountants' compilation report and
notes to financial statements.
4
College and University
Facility Loan Trust Two
Statement of Cash Flows
================================================================================
Six months ended May 31, 2003
================================================================================
Cash flows from operating activities:
Interest received $ 2,371,337
Interest paid (2,307,240)
Operating expenses paid (270,595)
- --------------------------------------------------------------------------------
Net cash used for operating activities (206,498)
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Net decrease in funds held under investment agreements 6,025,602
Principal payments on Loans 7,298,262
- --------------------------------------------------------------------------------
Net cash provided by investing activities 13,323,864
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Principal repayments on Bonds (10,307,851)
Distribution to Class B certificateholders (3,009,965)
- --------------------------------------------------------------------------------
Net cash used for financing activities (13,317,816)
- --------------------------------------------------------------------------------
Net decrease in cash (200,450)
Cash, beginning of period 387,848
- --------------------------------------------------------------------------------
Cash, end of period $ 187,398
================================================================================
Reconciliation of net increase in net assets resulting from
operations to net cash used for operating activities:
Net increase in net assets resulting from operations $ 829,858
Increase in prepaid expenses (13,750)
Decrease in interest receivable 116,792
Decrease in accrued expenses and other liabilities (47,006)
Decrease in Bond interest payable (206,157)
Amortization of original issue discount on Bonds 1,910,149
Amortization of purchase discount on Loans (2,826,528)
Amortization of deferred Bond issuance costs 30,144
- --------------------------------------------------------------------------------
Net cash used for operating activities $ (206,498)
================================================================================
See accompanying accountants' compilation report
and notes to financial statements.
5
College and University
Facility Loan Trust Two
Statements of Changes in Net Assets
(Note 2(f))
================================================================================
For the
Six Months
Ended Year Ended
May 31, November 30,
2003 2002
========================================================================================
From operations:
Net investment income $ 829,858 $ 2,419,380
- ----------------------------------------------------------------------------------------
Net increase in net assets applicable to Class B
certificateholders resulting from operations 829,858 2,419,380
- ----------------------------------------------------------------------------------------
Capital certificate transactions:
Distributions to Class B certificateholders (Note 5) (926,002) (3,980,969)
- ----------------------------------------------------------------------------------------
Net decrease in net assets (96,144) (1,561,589)
- ----------------------------------------------------------------------------------------
Net assets:
Beginning of period 13,478,109 15,039,698
- ----------------------------------------------------------------------------------------
End of period $ 13,381,965 $ 13,478,109
========================================================================================
See accompanying accountants' compilation report
and notes to financial statements.
6
College and University
Facility Loan Trust Two
Financial Highlights
(Notes 1 and 5)
================================================================================
For the
Six Months
Ended Years Ended November 30,
May 31, ---------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
================================================================================================================================
Net asset value, beginning of
period $ 7.64 $ 8.53 $ 9.01 $ 10.05 $ 9.45 $ 8.17
Net investment income .47 1.37 1.15 1.34 1.38 1.63
Provision for loan losses -- -- -- (.17) -- (.01)
Dividends to Class A Preferred
certificateholders:
From net investment income -- -- -- -- -- --
As tax return of capital -- -- -- (.11) (.34)
Distribution to Class B
certificateholders:
As tax return of capital (.52) (2.26) (1.63) (2.21) (.67) --
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.59 $ 7.64 $ 8.53 $ 9.01 $ 10.05 $ 9.45
================================================================================================================================
Total investment return (a) N/A N/A N/A N/A N/A N/A
Net assets applicable to Class A
Preferred certificates,
end of period $ -- $ -- $ -- $ -- $ -- $ 2,585,848
================================================================================================================================
Net assets applicable to Class B
certificates, end of period $13,381,965 $13,478,109 $15,039,698 $15,898,314 $17,724,801 $16,673,598
================================================================================================================================
Ratios and Supplemental Data:
Ratio of operating expenses to
average net assets applicable
to Class B certificates 63.31%(b)(c) 70.03%(b) 69.21%(b) 73.02%(b) 78.42%(b) 99.83%(b)
Ratio of net investment income
to average net assets
applicable to Class B
certificates 12.36%(c) 16.97% 13.05% 14.10% 14.13% 18.57%
Number of Class B certificates
outstanding, end of period 1,763,800 1,763,800 1,763,800 1,763,800 1,763,800 1,763,800
(a) The Trust's investments are recorded at amortized cost as discussed in
Note 2. Accordingly, the financial statements do not reflect the market
value of such investments. For this reason, management believes that no
meaningful information can be provided regarding "Total Investment Return"
and has not included information under that heading.
(b) Excluding interest expense, the ratio of operating expenses to average net
assets applicable to Class B Certificates was 3.12%(c), 2.76%, 2.72%,
2.53%, 2.57% and 2.32% in 2003, 2002, 2001, 2000, 1999 and 1998,
respectively.
(c) Annualized.
See accompanying accountants' compilation report
and notes to financial statements.
7
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
1. Organization College and University Facility Loan Trust Two
and Business (the Trust) was formed on March 11, 1988 as a
business trust under the laws of the Commonwealth
of Massachusetts by a declaration of trust by U.S.
Bank, formerly the Bank of Boston (the Owner
Trustee) not in its individual capacity but solely
as Owner Trustee. The Trust is registered under
the Investment Company Act of 1940 (as amended) as
a diversified, closed-end, management investment
company.
The Trust was formed for the sole purpose of
raising funds through the issuance and sale of
bonds (the Bonds). The Trust commenced operations
on May 12, 1988 (the Closing Date) and issued
Bonds in four tranches in the aggregate principal
amount (at maturity) of $450,922,000. The Bonds
constitute full recourse obligations of the Trust.
The collateral securing the Bonds consists
primarily of a pool of college and university
facility loans (the Loans) to various
postsecondary educational institutions and funds
held under the indenture (the Indenture) and the
investment agreements. The Loans were originated
by or previously assigned to the United States
Department of Education (ED) under the College
Housing Loan Program or the Academic Facilities
Loan Program. The Loans, which have been assigned
to Bank One Trust Company, NA, formerly The First
National Bank of Chicago (The Bond Trustee), are
secured by various types of collateral, including
mortgages on real estate, general recourse
obligations of the borrowers, pledges of
securities and pledges of revenues. As of the
Closing Date, the Loans had a weighted average
stated interest rate of approximately 3.18% and a
weighted average remaining term to maturity of
approximately 18.77 years. Payments on the Loans
are managed by the Bond Trustee in various fund
accounts and are invested under investment
contracts (Note 2) as specified in the Indenture.
8
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
1. Organization All payments on the Loans and earnings under the
and Business investment agreements and any required transfers
(Continued) from the Expense and Liquidity Funds are deposited
to the credit of the Revenue Fund held by the Bond
Trustee, as defined within, and in accordance with
the Indenture. On each bond payment date, amounts
on deposit in the Revenue Fund are applied in the
following order of priority: to pay amounts due on
the Bonds, to pay administrative expenses not
previously paid from the Expense Fund, to fund the
Expense Fund to the Expense Fund Requirement and
to fund the Liquidity Fund to the Liquidity Fund
Requirement. Any funds remaining in the Revenue
Fund on such payment date will be used to further
pay down the Bonds to the extent of the maximum
principal distribution amount, after which any
residual amounts are paid to the
certificateholders.
On the Closing Date, certificates were issued by
the Trust to ED as partial payments for the Loans.
In December 1989, ED sold, through a private
placement, all of its ownership interest in the
Trust.
2. Summary of (a) College and University Facility Loans
Significant
Accounting The Loans were purchased and recorded at a
Policies discount below par. Pursuant to a "no-action
letter" that the Trust received from the
Securities and Exchange Commission, the Loans,
included in investments in the accompanying
statement of assets and liabilities, are being
accounted for under the amortized cost method of
accounting. Under this method, the difference
between the cost of each Loan to the Trust and the
scheduled principal and interest payments is
amortized, assuming no prepayments of principal,
and included in the Trust's income by applying the
Loan's effective interest rate to the amortized
cost of that Loan. When a Loan prepays, the
remaining discount is recognized as interest
income. The remaining balance of the purchase
discount on the Loans as of May 31, 2003 was
approximately $36,807,000. As a result of
prepayments of Loans in the six months ended May
31, 2003, additional interest income of
approximately $164,000 was recognized.
9
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
2. Summary of (a) College and University Facility Loans
Significant (Continued)
Accounting
Policies The Trust's policy is to discontinue the accrual
(Continued) of interest on Loans for which payment of
principal or interest is 180 days or more past due
or for other such Loans that management believes
the collection of interest and principal is
doubtful. When a Loan is placed on nonaccrual
status, all previously accrued but uncollected
interest is reversed against the current period's
interest income. Subsequently, interest income is
generally recognized when received. Payments are
generally applied to interest first, with the
balance, if any, applied to principal. At May 31,
2003, no loans have been placed on nonaccrual
status.
Accounting principles generally accepted in the
United States of America (GAAP), requires that the
Loans be accounted for under the fair value method
of accounting. However, the amortized cost method
of accounting best serves the informational needs
of the users of the Trust's financial statements.
(b) Other Investments
Other investments, which are included in
investments in the accompanying statement of
assets and liabilities, consist of two investment
agreements issued by JP Morgan Chase Bank, bearing
fixed rates of interest of 7.05% and 7.75%. These
investments may take the form of repurchase
agreements (the underlying collateral of which
shall be as to form and substance acceptable to
each nationally recognized statistical rating
agency that rates the Bonds), time deposits or
other lawful investments at JP Morgan Chase Bank's
option. These investments are carried at amortized
cost. These investment agreements terminate on the
earlier of June 1, 2018 or the date on which the
Bonds are paid-in-full.
GAAP requires that the investments be accounted
for under the fair value method of accounting.
However, the amortized cost method of accounting
best serves the informational needs of the users
of the Trust's financial statements.
10
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
2. Summary of (c) Federal Income Taxes
Significant
Accounting It is the Trust's policy to comply with the
Policies requirements applicable to a regulated investment
(Continued) company under Subchapter M of the Internal Revenue
Code of 1986, as amended, and to distribute
substantially all of its investment company
taxable income to its certificateholders each
year. Accordingly, no federal or state income tax
provision is required.
For tax purposes, the Loans were transferred to
the Trust at their face values. Accordingly, the
accretion of the purchase discount creates a
permanent book-tax difference.
(d) Deferred Bond Issuance Costs
Deferred Bond issuance costs are being amortized
using the effective interest rate method over the
estimated lives of the Bonds, which are based on
the scheduled payments of the Loans. When Loan
prepayments occur, an additional portion of the
deferred issuance costs is expensed in the year
the prepayment occurred, so that the future
effective interest rate remains unchanged.
(e) Accounting for Impairment of a Loan and
Allowance for Loan Losses
The allowance for loan losses is based on the
Trust's evaluation of the level of the allowance
required to reflect the risks in the loan
portfolio, based on circumstances and conditions
known or anticipated at each reporting date.
The methodology for assessing the appropriateness
of the allowance consists of a review of the
following three key elements:
(1) a valuation allowance for loans identified as
impaired,
(2) a formula-based general allowance for the
various loan portfolio classifications, and
(3) an unallocated allowance.
11
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
2. Summary of (e) Accounting for Impairment of a Loan and
Significant Allowance for Loan Losses (Continued)
Accounting
Policies A loan is impaired when, based on current
(Continued) information and events, it is probable that the
Trust will be unable to collect all amounts due in
accordance with the contractual terms of the loan
agreement. Loans identified as impaired are
further evaluated to determine the estimated
extent of impairment.
The formula-based general allowance is derived
primarily from a risk-rating model that grades
loans based on general characteristics of credit
quality and relative risk. As credit quality for
individual loans deteriorates, the risk rating and
the allowance allocation percentage increases. The
sum of these allocations comprise the Trust's
formula-based general allowance.
In addition to the valuation and formula-based
general allowance, there is an unallocated
allowance. This element recognizes the estimation
risks associated with the valuation and
formula-based models. It is further adjusted for
qualitative factors including, among others,
general economic and business conditions, credit
quality trends, and specific industry conditions.
There are inherent uncertainties with respect to
the final outcome of loans and as such, actual
losses may differ from the amounts reflected in
the financial statements.
12
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
2. Summary of (f) Presentation of Capital Distributions
Significant
Accounting Capital distributions are accounted for in
Policies accordance with the American Institute of
(Continued) Certified Public Accountants Statement of Position
(SOP) 93-2, "Determination, Disclosure and
Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions
by Investment Companies." SOP 93-2 requires the
Trust to report distributions that are in excess
of tax-basis earnings and profits as a tax return
of capital and to present the capital accounts on
a basis that approximates the amounts that are
available for future distributions on a tax-basis.
As of November 30, 2002, all tax earnings and
profits have been distributed. Accordingly, all
accumulated undistributed net investment income
has been reclassified to paid-in capital. This
reclassification results from permanent book and
tax differences such as the receipt of tax-exempt
interest income on certain Loans, the related
interest expense on the Bonds, and the accretion
of purchase discount on the Loans. Amounts
deducted for the loan loss reserve are not
currently deductible for tax purposes and have
been reclassified as an accumulated deficit. These
reclassifications had no impact on the net
investment income or net assets of the Trust.
The Trust expects to have a tax return of capital
for the fiscal year ending November 30, 2003;
however, the amount cannot be reasonably estimated
at May 31, 2003.
13
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
2. Summary of (g) Use of Estimates
Significant
Accounting The preparation of financial statements in
Policies conformity with GAAP requires management to make
(Continued) estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of
the financial statements and the reported amounts
of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
The allowance for loan losses is a critical
accounting policy that requires estimates and
assumptions to be made in the preparation of the
Trust's financial statements. The allowance for
loan losses is based on Trust's evaluation of the
level of the allowance required in relation to the
estimated loss exposure in the loan portfolio. The
allowance for loan losses is a significant
estimate and is therefore regularly evaluated for
adequacy by taking into consideration factors such
as prior loan loss experience, the character and
size of the loan portfolio, business and economic
conditions and the Trust's estimation of future
losses. The use of different estimates or
assumptions could produce different provisions for
loan losses. See Note 2(e) for a detailed
description of the Trust's estimation process and
methodology related to the allowance for loan
losses.
14
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
3. Bonds The Bonds outstanding at May 31, 2003 consist of
the following:
Outstanding Unamortized Carrying
Interest Stated Principal Discount Amount
Type Rate Maturity (000s) (000s) (000s)
- --------------------------------------------------------------------------------
Sequential 4.00% June 1, 2018 $105,054 $22,075 $82,979
Interest on the Bonds is payable semiannually. On
June 1, 2003, the Trust made a principal payment
of $6,294,395 on the bonds.
Principal payments on the Bonds will be made prior
to the respective stated maturities on each bond
payment date in an amount equal to the lesser of
either (1) amounts available in the Revenue Fund
after certain required payments of interest and
principal (at the stated maturity of the Bonds)
and administrative expenses after required
transfers to the Expense Fund and the Liquidity
Fund (such that the amounts on deposit are equal
to the Expense Fund Requirement and the Liquidity
Fund Requirement, respectively), or (2) the
Maximum Principal Distribution Amount, as defined
within the Indenture. These principal payments
will be applied to each class of Bonds in the
order of their stated maturities, so that no
payment of principal will be made on the Bonds of
any class until all Bonds having an earlier stated
maturity have been paid in full.
15
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
3. Bonds The estimated aggregate principal payments on the
(Continued) Bonds at May 31, 2003 after taking into
consideration actual Loan prepayments, Defaulted
Loans and the Maximum Principal Distribution
Amount, as defined in the Indenture, are as
follows:
Amount
Fiscal Year (000s)
==================================================
2003 $6,294
2004 12,135
2005 11,388
2006 9,911
2007 8,756
Thereafter 56,570
--------------------------------------------------
Total $105,054
==================================================
Actual Bond principal payments may differ from
estimated payments because borrowers may prepay or
default on their obligations. The Bonds are not
subject to optional redemption by either the Trust
or the bondholders.
In the event of negative cash flows, a Liquidity
Fund has been established and maintained such
that, on or before such payment date, the
Liquidity Fund may be used by the Bond Trustee to
make any required payments on the Bonds and to pay
operating expenses of the Trust. The original
issue discount is being amortized using the
effective interest rate method over the estimated
lives of the Bonds, which are based on the
scheduled payments of the Loans. Accordingly, loan
prepayments have the effect of accelerating bond
payments. When Bond payments occur sooner than
estimated payments, a portion of the original
issue discount is expensed in the year of
prepayment, so that the future effective interest
rate on the Bonds remains unchanged.
16
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
4. Administrative (a) Servicer
Agreements
As compensation for the services provided under
the servicing agreement, GMAC Commercial Mortgage
receives a servicing fee. The fee is earned each
date payments are received on each Loan and is
equal to 0.075 of 1% of the outstanding principal
balance of each Loan divided by the number of
payments of principal and interest in a calendar
year. For the six months ended May 31, 2003, this
fee totaled $49,701. GMAC Commercial Mortgage is
reimbursed by the Trust for out-of-pocket expenses
incurred in connection with the inspection of
buildings and property used as collateral for the
loans. For the six-month period ended May 31,
2003, out-of-pocket expenses totalled $9,870.
(b) Trustees
As compensation for services provided, the Owner
and Bond Trustees are entitled under the
Declaration of Trust and the Indenture to receive
the following fees:
o The Owner Trustee, in its capacities as
manager of the Trust and as Owner Trustee,
earned fees of $7,500 and $6,250,
respectively, for the six months ended May
31, 2003.
o The Bond Trustee is entitled to an annual fee
equal to 0.015 of 1% of the aggregate
outstanding principal of the Bonds on the
bond payment date immediately preceding the
date of payment of such fee. The Bond Trustee
is also reimbursed for out-of-pocket expenses
in an amount not to exceed 4% of the
applicable annual fee. In addition, the Bond
Trustee is reimbursed for other agreed-upon
related expenses. For the six months ended
May 31, 2003, total Bond Trustee fees and
out-of-pocket expenses amounted to $11,890.
17
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
5. Certificates Holders of each of the Class B certificates
receive amounts paid to the Owner Trustee pursuant
to the Declaration of Trust on a pro rata basis.
On June 2, 2003, a distribution of $926,002 was
made to the Class B certificateholders. This
payment is reflected as a liability in the
accompanying statement of assets and liabilities.
While the Bonds are outstanding, distributions to
the Class B certificateholders are made on the
second business day in each June and December (the
Distribution Date) and, after the Bonds are paid
in full, on the first business day of each
calendar month. The certificateholders shall each
be entitled to one vote per certificate.
6. Allowance For An analysis of the allowance for loan losses for
Loan Losses the six months ended May 31, 2003 is summarized as
follows:
Balance, beginning of period $ 1,432,376
Provision --
Charge-offs --
--------------------------------------------------
Balance, end of period $ 1,432,376
==================================================
At May 31, 2003, there were no recorded
investments in loans that are considered to be
impaired. See Note 2(e) for a discussion of the
Trust's impaired loan accounting policy.
18
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
7. Loans Scheduled principal and interest payments on the
Loans as of May 31, 2003, excluding payments for
Loans in Default, as defined in the Indenture, are
as follows:
Principal Interest
Payments Payments Total
Fiscal year (000s) (000s) (000s)
=============================================================
2003 $ 8,901 $ 1,955 $ 10,856
2004 14,001 3,524 17,525
2005 12,133 3,090 15,223
2006 10,690 2,720 13,410
2007 9,728 2,395 12,123
Thereafter 68,503 11,636 80,139
-------------------------------------------------------------
Total $123,956 $25,320 $149,276
=============================================================
Expected payments may differ from contractual
payments because borrowers may prepay or default
on their obligations. Accordingly, actual
principal and interest on the Loans may vary
significantly from the scheduled payments. As of
May 31, 2003, there were no Loans in Default.
19
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
7. Loans The following analysis summarize the
(Continued) stratification of the loan portfolio by type of
collateral and institution as of May 31, 2003:
Amortized
Number Cost
Type of Collateral of Loans (000s) %
================================================================
Loans secured by a
first mortgage 159 $52,295 60.0%
Loans not secured by
a first mortgage 83 34,854 40.0
----------------------------------------------------------------
Total Loans 242 $87,149 100.0%
================================================================
Amortized
Number Cost
Type of Institution of Loans (000s) %
----------------------------------------------------------------
Private 163 $52,909 60.7%
Public 79 34,240 39.3
----------------------------------------------------------------
Total Loans 242 $87,149 100.0%
================================================================
The ability of a borrower to meet future debt
service payments on a Loan will depend on a number
of factors relevant to the financial condition of
such borrower, including, among others, the size
and diversity of the borrower's sources of
revenues; enrollment trends; reputation;
management expertise; the availability and
restrictions on the use of endowments and other
funds; the quality and maintenance costs of the
borrower's facilities and, in the case of some
Loans to public institutions, which are
obligations of a state, the financial condition of
the relevant state or other governmental entity
and its policies with respect to education. The
ability of a borrower to maintain enrollment
levels will depend on such factors as tuition
costs, geographical location, geographic
diversity, quality of the student body, quality of
the faculty and the diversity of program
offerings.
20
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
7 Loans The collateral for Loans that are secured by a
(Continued) mortgage on real estate generally consists of
special purpose facilities, such as dormitories,
dining halls and gymnasiums, which are integral
components of the overall educational setting. As
a result, in the event of borrower default on a
Loan, the Trust's ability to realize the
outstanding balance of the Loan through the sale
of the underlying collateral may be negatively
impacted by the special purpose nature and
location of such collateral.
8. Fair Value Statement of Financial Accounting Standards No.
of Financial 107, "Disclosures about Fair Value of Financial
Instruments Instruments," allows for the use of a wide range
of valuation techniques; therefore, it may be
difficult to compare the Trust's fair value
information to independent markets or to other
fair value information. Accordingly, the fair
value information presented below does not purport
to represent, and should not be construed to
represent, the underlying market value of the
Trust's net assets or the amounts that would
result from the sale or settlement of the related
financial instruments. Further, as the assumptions
inherent in fair value estimates change, the fair
value estimates will change.
Current market prices are not available for most
of the Trust's financial instruments since an
active market generally does not exist for such
instruments. In accordance with the terms of the
Indenture, the Trust is required to hold all of
the Loans to maturity and to use the cash flows
therefrom to retire the Bonds. Accordingly, the
Trust has estimated the fair values of its
financial instruments using a discounted cash flow
methodology. This methodology is similar to the
approach used at the formation of the Trust to
determine the carrying amounts of these items for
financial reporting purposes. In applying the
methodology, the calculations have been adjusted
for the change in the relevant market rates of
interest, the estimated duration of the
instruments and an internally developed credit
risk rating of the instruments. All calculations
are based on the scheduled principal and interest
payments on the Loans because the prepayment rate
on these Loans is not subject to estimate.
21
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
8. Fair Value The estimated fair value of each category of the
of Financial Trust's financial instruments and the related book
Instruments value presented in the accompanying statement of
(Continued) assets and liabilities as of May 31, 2003 is as
follows:
Book Value Fair Value
(000s) (000s)
================================================================
Loans $ 85,717* $119,082
Investment Agreements:
Revenue Fund 10,068 11,098
Liquidity Fund 2,383 2,925
----------------------------------------------------------------
$ 98,168 $133,105
================================================================
Bonds $ 82,979 $102,715
================================================================
*Net of allowance for loan losses of $1,432,376.
22
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 2003
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return%(A) 1 and 2)
- ------------- ----------------------------------------------- ----------- ---------- ---------- -----------
COLLEGE AND UNIVERSITY LOANS (87.3%)
---------- ALABAMA --------
$215 Alabama Agricultural and Mechanical University 3.000-3.750 07/01/2005 10.254 $192
1,550 Alabama Agricultural and Mechanical University 3.000 05/01/2018 10.269 971
1,835 Auburn University 3.000 12/01/2018 9.1578 1,181
170 Huntingdon College 3.000 10/01/2008 10.6 137
28 Stillman College 3.750 02/01/2004 11.421 26
323 Talladega College 3.000 12/01/2012 10.238 230
1,240 University of Alabama in Birmingham 3.000 11/01/2008 7.9723 1,077
---------- ARIZONA --------
480 Arizona State University 3.000 04/01/2006 10.602 416
---------- ARKANSAS --------
16 Ouachita Baptist University 3.000 12/01/2006 10.038 13
120 University of Arkansas at Little Rock 3.000 11/01/2009 9.42 99
228 University of Central Arkansas 3.000 04/01/2005 10.687 211
---------- CALIFORNIA --------
169 Azusa Pacific University 3.750 04/01/2015 10.885 114
600 California Polytechnic State University 3.000 11/01/2006 10.052 509
185 California State University 3.000 11/01/2006 8.7533 166
980 California State University 3.000 11/01/2013 8.9288 735
2,283 California State University 3.000 11/01/2019 8.9949 1,502
440 Chapman College 3.000 10/01/2013 10.65 304
158 Chapman College 3.000 11/01/2005 10.628 142
138 Chapman College 3.000 11/01/2007 10.574 116
35 Gavilan College 3.000 04/01/2006 10.595 30
399 Lassen Junior College District 3.000 04/01/2020 10.272 238
243 Occidental College 3.000 10/01/2019 10.411 146
485 San Diego State University 3.000 11/01/2007 10.045 425
65 State Center Community College 3.000 10/01/2004 10.1 60
355 University of Santa Clara 3.625 04/01/2004 11.334 341
1,390 University Student Co-Operative Association 3.000 04/01/2019 10.696 847
13 West Kern Junior College District 3.625 04/01/2004 10.73 12
295 West Valley College 3.000 04/01/2009 10.504 232
---------- COLORADO --------
305 Fort Lewis College 3.000 10/01/2006 10.086 266
410 Regis College (Denver) 3.000 11/01/2012 10.471 295
---------- DELAWARE --------
166 Wesley College 3.375 05/01/2013 10.88 119
660 University of Delaware 3.000 11/01/2006 9.0807 588
564 University of Delaware 3.000 12/01/2018 8.8102 369
See accompanying accountant's compilation report and
notes to the financial statements.
23
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 2003
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return%(A) 1 and 2)
- ------------- ----------------------------------------------- ----------- ---------- ---------- -----------
---------- FLORIDA --------
$295 Embry-Riddle Aeronautical University 3.000 09/01/2007 10.642 $245
75 Florida Agricultural and Mechanical University 3.625 07/01/2004 10.288 69
63 Florida Atlantic University 3.500 07/01/2004 10.272 59
190 Florida Atlantic University 3.000 07/01/2006 10.183 164
133 Florida Institute of Technology 3.000 11/01/2009 10.526 105
430 Florida State University 3.000 01/01/2009 9.4016 353
225 Nova University 3.000 12/01/2007 10.04 183
83 Stetson University 3.000 01/01/2006 11.254 70
315 University of Central Florida 3.000 10/01/2007 10.077 266
1,855 University of Florida 3.000 07/01/2014 10.147 1,275
415 University of South Florida 3.750 07/01/2005 10.302 373
---------- GEORGIA --------
131 Emmanuel College 3.000 11/01/2013 10.448 91
103 Georgia Education Authority Board of Regents
of the University System of Georgia 3.375 01/01/2003 10.60 103
195 LaGrange College 3.000 03/01/2009 11.057 150
378 Mercer University 3.000 05/01/2014 10.576 260
630 Morehouse College 3.000 07/01/2010 10.5 464
106 Morris Brown College 3.750 05/01/2007 11.123 89
1,336 Morris Brown College 2.750-3.750 05/01/2018 10.892 858
789 Paine College 3.000 10/01/2016 10.449 510
---------- ILLINOIS --------
156 Kendall College 3.000 10/01/2008 10.586 126
150 Knox College 3.000 04/01/2006 11.148 128
1020 Sangamon State University 3.000 11/01/2018 10.122 652
---------- INDIANA --------
105 Anderson University 3.000 03/01/2006 11.193 90
108 Indiana University 3.750 12/01/2003 8.8363 101
415 Purdue University 3.625 07/01/2004 9.3333 387
133 Purdue University 3.000 07/01/2005 9.26 122
215 Taylor University 3.000 10/01/2012 10.5 154
666 Taylor University 3.000 10/01/2013 10.495 467
864 University of Notre Dame 3.000 02/15/2019 10.616 521
3430 Vincennes University 3.000 06/01/2023 9.0239 2068
---------- IOWA --------
52 NIACC Dormitories, Inc. 3.000 10/01/2012 10.273 38
270 Simpson College 3.000 07/01/2016 10.577 172
109 Waldorf College 3.000 07/01/2005 10.769 97
112 Wartburg College 3.750 04/01/2011 10.999 84
See accompanying accountant's compilation report and
notes to the financial statements.
24
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 2003
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return%(A) 1 and 2)
- ------------- ----------------------------------------------- ----------- ---------- ---------- -----------
---------- KANSAS --------
$100 Fort Hays State University 3.000 10/01/2007 10.078 $85
67 Hesston College 3.000 04/01/2006 11.142 57
170 Kansas State University 3.625 04/01/2004 9.7723 159
---------- KENTUCKY --------
10 Bellarmine College 3.625 05/01/2004 11.336 9
319 Georgetown College 3.000 12/01/2008 10.043 252
600 Georgetown College 3.000 12/01/2009 10.045 460
201 Spalding University 3.000 09/01/2007 10.664 171
340 Transylvania University 3.000 11/01/2010 10.507 260
---------- LOUISIANA --------
131 Dillard University 3.000 04/01/2008 11.087 108
336 Louisiana State University 3.625 07/01/2004 9.0363 315
158 Louisiana State University 3.000 07/01/2005 8.8383 145
165 Louisiana State University 3.000 07/01/2006 8.8707 149
---------- MARYLAND --------
238 Hood College 3.625 11/01/2014 10.536 169
1793 Morgan State University 3.000 11/01/2014 10.562 1216
---------- MASSACHUSETTS --------
303 Hampshire College 3.000 07/01/2013 10.753 208
1100 Hampshire College 3.000 02/01/2014 10.701 747
67 Becker Junior College 3.000 04/01/2005 11.21 59
1023 Bentley College 3.000 11/01/2007 10.573 857
52 Boston Architectural Center 3.750 11/01/2004 10.766 49
210 Brandeis University 3.000 11/01/2011 10.636 155
815 College of the Holy Cross 3.625 10/01/2013 10.6 594
425 College of the Holy Cross 3.000 10/01/2006 10.633 367
2574 Northeastern University 3.000 05/01/2018 10.533 1596
26 Northeastern University 3.000 05/01/2004 10.971 25
130 Pine Manor College 3.625 10/01/2003 10.8 125
353 Springfield College 3.500 05/01/2013 10.673 257
29 Springfield College 3.000 05/15/2005 10.109 27
2067 Tufts University 3.000 10/01/2021 10.39 1190
635 Wheaton College 3.500 04/01/2013 10.696 450
19 Wheelock College 3.000 05/01/2011 10.228 14
---------- MICHIGAN --------
100 Albion College 3.000 10/01/2009 10.563 78
96 Concordia College 3.000 04/01/2009 11.048 80
615 Concordia College 3.000 05/01/2019 10.647 364
235 Harper Grace Hospital 3.625 04/01/2005 11.264 210
1190 Mercy College of Detroit 3.625 10/01/2013 10.589 854
1100 University of Michigan 3.750 10/01/2005 9.5114 1008
See accompanying accountant's compilation report and
notes to the financial statements.
25
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 2003
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return%(A) 1 and 2)
- ------------- ----------------------------------------------- ----------- ---------- ---------- -----------
---------- MINNESOTA --------
$1,215 Chateau Community Housing Association 3.000 10/01/2012 10.509 $872
373 College of Saint Thomas 3.000 11/01/2009 10.526 294
99 College of Santa Fe 3.000 10/01/2005 10.661 89
519 College of Santa Fe 3.000 10/01/2018 10.429 324
385 MacAlester College 3.000 05/01/2020 10.464 230
---------- MISSISSIPPI --------
1449 Hinds Junior College 3.000 04/01/2013 10.417 1037
516 Millsaps College 3.000 11/01/2021 10.341 298
1350 Mississippi State University 3.000 12/01/2020 9.6396 811
---------- MISSOURI --------
199 Central Missouri State University 3.625 07/01/2004 10.288 184
585 Central Missouri State University 3.000 07/01/2007 10.178 490
225 Drury College 3.000 04/01/2015 10.63 151
346 Drury College 3.000 10/01/2010 10.747 262
541 Southeast Missouri State University 3.000 04/01/2007 10.58 459
---------- MONTANA --------
290 Carroll College 3.750 06/01/2014 10.464 203
142 Carroll College 3.000 06/01/2018 10.155 88
---------- NEBRASKA --------
32 Midland Lutheran College 3.000 04/01/2005 11.205 28
---------- NEW HAMPSHIRE --------
127 New England College 3.000 04/01/2016 10.767 80
---------- NEW JERSEY --------
1430 Fairleigh Dickinson University 3.000 11/01/2017 10.39 906
515 Newark Beth Israel Hospital 3.625 01/01/2014 11.056 350
1460 Rider College 3.625 11/01/2013 10.418 1059
362 Rider College 3.000 05/01/2017 10.703 225
555 Rutgers, The State University 3.750 05/01/2016 9.1927 403
276 Seton Hill College 3.625 11/01/2014 10.53 194
---------- NEW YORK --------
1345 Canisius College 3.000 11/01/2017 10.4 851
804 College of Saint Rose 3.000 05/01/2022 10.428 457
505 Daemen College 3.000 04/01/2016 10.767 322
429 Dowling College 3.000 10/01/2010 10.752 325
901 D'Youville College 3.000 04/01/2018 10.897 541
1525 Hofstra University 3.000 11/01/2012 10.609 1092
250 Long Island University 3.750 05/01/2005 11.225 224
143 Long Island University 3.000 11/01/2009 10.69 112
499 Long Island University 3.000 11/01/2009 10.692 391
455 Long Island University 3.625 06/01/2014 10.492 316
41 Long Island University 3.750 10/01/2004 10.786 38
See accompanying accountant's compilation report and
notes to the financial statements.
26
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 2003
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return%(A) 1 and 2)
- ------------- ----------------------------------------------- ----------- ---------- ---------- -----------
$734 Memorial Hospital for Cancer and Allied Diseases 3.375 04/01/2012 10.678 $537
165 SUNY, Mohawk Valley Community College 3.000 04/01/2005 10.26 148
355 Utica College 3.000 11/01/2009 10.528 279
---------- NORTH CAROLINA --------
161 Catawba College 3.000 12/01/2009 10.265 122
330 Elizabeth City State University 3.000 10/01/2017 10.019 215
224 High Point College 3.000 12/01/2010 10.258 165
94 Lenoir Rhyne College 3.000 12/01/2006 10.041 79
205 North Carolina State University 3.625 09/01/2004 7.9654 195
54 Queens College 3.625 07/01/2004 10.903 50
35 Saint Mary's College 3.000 03/01/2005 11.25 31
360 Saint Mary's College 3.000 06/01/2020 10.141 212
322 University of North Carolina 3.000 11/01/2005 8.8114 298
345 University of North Carolina 3.000 01/01/2008 9.4971 285
25 University of North Carolina 3.000 01/01/2007 9.4992 21
---------- OHIO --------
61 Rio Grande College 3.000 03/30/2009 10.931 48
224 University of Steubenville 3.125 04/01/2010 10.983 169
615 Wittenberg University 3.000 05/01/2015 10.76 402
204 Wittenberg University 3.000 11/01/2017 10.391 129
29 Wooster Business College 3.000 03/30/2009 10.88 23
389 Wright State University 3.000 05/01/2009 9.8884 317
---------- OKLAHOMA --------
1180 Cameron University 3.000 04/01/2007 10.16 995
59 Langston University 3.375 10/01/2003 10.155 57
525 Langston University 3.000 04/01/2007 10.562 438
80 Southern Nazarene University 3.750 04/01/2005 11.27 72
---------- OREGON --------
664 George Fox College 3.000 07/01/2018 10.64 406
71 Linfield College 3.000 10/01/2017 10.44 45
590 University of Portland 3.375 04/01/2013 10.876 420
---------- PENNSYLVANIA --------
438 Albright College 3.000 11/01/2015 10.227 300
170 Carnegie-Mellon University 3.000 05/01/2009 10.728 132
842 Carnegie-Mellon University 3.000 11/01/2017 10.507 531
113 Dickinson College 3.000 05/01/2018 10.3 71
960 Drexel University 3.500 05/01/2014 10.531 677
545 Gannon University 3.000 11/01/2011 10.487 404
179 Gannon University 3.000 12/01/2022 10.126 99
See accompanying accountant's compilation report and
notes to the financial statements.
27
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 2003
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return%(A) 1 and 2)
- ------------- ----------------------------------------------- ----------- ---------- ---------- -----------
$189 Lycoming College 3.625 05/01/2014 10.637 $132
265 Lycoming College 3.750 05/01/2015 10.619 183
177 Moravian College 3.375 11/01/2012 10.525 130
2129 Philadelphia College of Art 3.000 01/01/2022 10.618 1187
485 Saint Vincent College 3.500 05/01/2013 10.86 342
985 Villanova University 3.000 04/01/2019 10.7 581
307 York Hospital 3.000 05/01/2020 10.636 179
---------- RHODE ISLAND --------
105 Rhode Island College 3.000 10/01/2005 10.09 95
---------- SOUTH CAROLINA --------
900 Baptist College at Charleston 3.000 03/01/2019 10.73 528
465 Baptist College at Charleston 3.000 03/01/2011 10.975 339
44 Benedict College 3.750 11/01/2004 10.752 41
451 Benedict College 3.000 11/01/2006 10.609 394
1600 Benedict College 3.000 11/01/2020 10.356 946
165 Clemson University 3.000 07/01/2005 9.5075 150
98 Coker College 3.000 12/01/2009 10.04 75
88 Columbia College 3.625 07/01/2004 10.9 81
40 Columbia College 3.000 07/01/2006 10.802 34
423 Morris College 3.000 11/01/2009 10.53 333
11 North Greenville College 3.000 11/01/2003 10.72 11
---------- SOUTH DAKOTA --------
155 Dakota Wesleyan University 3.000 10/01/2015 10.463 103
330 South Dakota School of Mines and Technology 3.000 04/01/2018 10.301 204
---------- TENNESSEE --------
273 Cumberland University 3.000 08/01/2017 10.522 170
170 Hiwassee College 3.000 09/15/2018 10.576 104
---------- TEXAS --------
78 Cisco Junior College 3.000 07/01/2005 10.153 72
305 Houston Tillotson College 3.500 04/01/2014 10.9 210
340 McLennan Community College 3.000 04/01/2006 10.489 295
330 Southern Methodist University 3.000 10/01/2007 10.609 276
1955 Southwest Texas State University 3.000 10/01/2015 9.513 1358
1522 Stephen F. Austin State University 3.375-3.500 10/01/2012 9.5673 1156
471 Texas A & I University 3.000 07/01/2009 9.5737 378
380 Texas Southern University 3.500 04/01/2013 10.449 272
572 University of Saint Thomas 3.000 10/01/2019 10.411 344
---------- VERMONT --------
121 Champlain College 3.000 12/01/2013 10.186 82
1491 Saint Michael's College 3.000 05/01/2013 10.598 1053
310 Vermont State College 3.000 06/01/2008 9.0204 259
211 Vermont State College 3.000 07/01/2014 9.2985 151
See accompanying accountant's compilation report and
notes to the financial statements.
28
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 2003
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return%(A) 1 and 2)
- ------------- ----------------------------------------------- ----------- ---------- ---------- -----------
---------- VIRGINIA --------
$205 Randolph-Macon College 3.000 05/01/2010 10.725 $158
1200 James Madison University 3.000 06/01/2009 10.495 935
398 Lynchburg College 3.750 05/01/2015 10.638 278
540 Lynchburg College 3.000 05/01/2018 10.68 330
303 Mary Baldwin College 3.375 05/01/2012 10.68 222
510 Marymount University 3.000 05/01/2016 10.523 330
2511 Norfolk State University 3.000 12/01/2021 9.7672 1478
392 Saint Paul's College 3.000 11/01/2014 10.563 266
1967 Virginia Commonwealth University 3.000 06/01/2011 10.012 1469
370 Virginia Commonwealth University 3.000 06/01/2004 10.082 341
228 Virginia Wesleyan College 3.000 11/01/2009 10.541 183
144 Virginia Wesleyan College 3.000 11/01/2010 10.505 110
---------- WASHINGTON --------
145 Olympic Community College 3.000 10/01/2008 10.069 119
334 Seattle University 3.000 11/01/2008 10.548 271
68 University of Washington 3.000 08/01/2003 9.0603 65
140 Washington State University 3.625 04/01/2004 10.024 131
90 Washington State University 3.750 04/01/2004 10.032 84
220 Western Washington University 3.625 10/01/2004 10.176 206
205 Western Washington University 3.750 10/01/2005 10.185 186
---------- WEST VIRGINIA --------
231 Bethany College 3.375 11/01/2012 10.54 171
245 Bethany College 3.000 11/01/2017 10.402 156
397 Bethany College 3.000 11/01/2012 10.399 286
49 Wheeling College 3.000 11/01/2007 10.594 41
---------- WISCONSIN --------
370 Carroll College 3.750 03/01/2015 10.933 257
460 Marian College 3.000 10/01/2016 10.451 298
84 Marquette University 3.000 07/31/2024 10.594 44
42 Saint Norbert College 3.625 04/01/2004 11.325 39
191 Saint Norbert College 3.000 04/01/2007 11.102 158
---------- DISTRICT OF COLUMBIA --------
2506 Georgetown University 3.000 11/01/2020 10.356 1483
6460 Georgetown University 4.000 11/01/2020 10.522 4101
412 Georgetown University 3.000 05/01/2005 10.86 375
---------- PUERTO RICO --------
70 Inter American University of Puerto Rico 3.000 09/01/2007 10.661 59
2049 Inter American University of Puerto Rico 3.000 01/01/2017 10.94 1281
1339 University of Puerto Rico, Rio Piedras Campus 3.000 06/01/2011 9.3906 1023
See accompanying accountant's compilation report and
notes to the financial statements.
29
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 2003
(Dollar Amounts in Thousands)
(continued)
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return%(A) 1 and 2)
- ------------- ----------------------------------------------- ----------- ---------- ---------- -----------
---------- VIRGIN ISLANDS --------
$18 College of the Virgin Islands 3.000 10/01/2003 10.16 $17
- -------------- -----------
123,956 Total College and University Loans 87,149
- -------------- -----------
Allowance for Loan Losses 1,432
-----------
Net Loans of the Trust 85,717
-----------
INVESTMENT AGREEMENTS (12.7%)
2,383 JPMorgan Chase Bank - Liquidity Fund 7.750 06/01/2018 7.750 2,383
10,068 JPMorgan Chase Bank - Revenue Fund 7.050 06/01/2018 7.050 10,068
- -------------- -----------
12,451 Total Investment Agreements 12,451
- -------------- -----------
$136,407 Total Investments (100.0%) $98,168
============== ===========
(A) Represents the rate of return based on the contributed cost and the
amortization to maturity.
See accompanying accountant's compilation report and
notes to the financial statements.
30
ITEM 2. CODE OF ETHICS
Not applicable when filing a Semi-Annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable when filing a Semi-Annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable when filing a
Semi-Annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable to the registrant.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable to the registrant.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) The registrant's Owner Trustee has concluded that as of a date within 90
days of the filing of this report there were no significant deficiencies in the
design or operation of the disclosure controls and procedures of the registrant
which would have adversely affected the ability of the registrant to record,
process, summarize and report the subject matter contained in this report.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
10(b)(1) Certification of the Owner Trustee Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
10(b)(2) Certification of the Owner Trustee Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): College and University Facility Loan Trust Two
----------------------------------------------
By: US Bank, not in its individual capacity, but solely as Owner Trustee under
a Declaration of Trust dated March 11, 1988 and Amended and restated on
May 12, 1988, and December 4, 1989.
By: /s/ Bryan Calder
-------------------------------------
Executive Vice President
Date: August 17, 2003
-------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: US Bank, not in its individual capacity, but solely as Owner Trustee under
a Declaration of Trust dated March 11, 1988 and Amended and restated on
May 12, 1988, and December 4, 1989.
By: /s/ Bryan Calder
-------------------------------------
Executive Vice President
Date: August 17, 2003
-------------------------------------