As a matter of policy, the State Treasurer does not invest in Federal Farm Credit or World Bank Securities
and current Maryland law does not permit the State Treasurer to invest in commercial paper. A significant
portion of the investments maintained by the State Treasurer consist of repurchase agreements. Collateral,
which must be at least 102% of the face value of the repurchase agreement, must be delivered to the custodian
for the State Treasurer for safekeeping. Investments maturing within 90 days of purchase are reported in the
financial statements as cash and short-term investments.

Investments are classified as to credit risk by the three categories described below:

Category 1 Insured or registered, or securities held by the State or its agent in the State's name

Category 2 Uninsured and unregistered, with securities held by the counterparty's trust department or
agent in the State's name.

Category 3 Uninsured and unregistered, with securities held by the counterparty, or by its trust
department or agent but not in the State's name.

A. Governmental Fund Types, Expendable Trust and Agency Funds:

The bank deposits of the governmental fund types, expendable trust and agency funds as of June 30,1989
were entirely insured or collateralized with securities held by the State or its agent in the State's name.

At June 30,1989 cash in the amount of $3,004,000 was maintained with fiscal agents and represents funds
transmitted to bond paying agents for which coupons have not been presented. These funds were entirely
insured or collateralized with securities held by the State or its agent in the State's name.

Investments of the Deferred Compensation Plan are stated at market value. All other investments are
stated at cost, adjusted for amortization of premium and accretion of discounts. Repurchase agreements
aggregating $1,086,387,000 (market value of collateral of $1,179,149,000), bankers acceptances aggregating
$39,163,000 (market value of $39,163,000) and certificates of deposit aggregating $2,717,000 at June 30,1989,
are reported as cash and short-term investments in governmental fund types. Also reported as cash and short-
term investments in the special revenue fund is $12,269,000 of unexpended bond proceeds invested in a tax-
exempt money market trust. The collateral for the repurchase agreements is held by the State's agent in the
State's name. The certificates of deposit are held by the State.

The investments at June 30, 1989 for the governmental fund types, expendable trust and agency funds
are as follows (amounts expressed in thousands):

	Category	Carrying	Market
	1 2	3 Value	Value
U. S. Treasury and agency obligations ....	$ 754,776	$ 754,776	$ 823,569
Repurchase agreements ................	249,415	249,415	245,728
Other ................................	11,128	11,128	11,239
	$1,015,319	1,015,319	1,080,536
Deferred Compensation Plan ...........		329,101	329,101
Total .............................		$1,344,420	$1,409,637

B. Enterprise and Pension Trust Funds:

The bank deposits of the enterprise and pension trust funds as of June 30,1989 were entirely insured or
collateralized with securities held by the fund or its agent in the fund's name.

Investments of the enterprise funds are stated at cost, adjusted for amortization of premiums and accretion
of discounts. The investment policies for all enterprise funds, with the exception of the Community
Development Administration, are the same as those of the State Treasurer. The Community Development
Administration, an agency of the Department of Housing and Community Development, is authorized to
invest in obligations of the U. S. Treasury, U. S. Government agencies and corporations, political subdivisions
of the U. S., bankers acceptances, repurchase agreements, corporate debt securities and certificates of deposit
with foreign or domestic banks. Repurchase agreements aggregating $377,788,000 (market value of collateral
of $376,146,000), U.S. Treasury and agency obligations aggregating $1,088,000 (market value of $1,098,000)
and certificates of deposit aggregating $19,714,000 at June 30, 1989 are reported as cash and short-term
investments in enterprise funds. The certificates of deposit, U. S. Treasury and agency obligations and
collateral for the repurchase agreements are held by the fund's agent in the fund's name.

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