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
State Treasurer's custodian for safekeeping. Investments maturing within 90 days of purchase are reported in the
financial statements as cash and cash equivalents.

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.

All of the State's investments held at year-end are subject to classification of credit risk except for those
investments where the State owns units of a whole rather than specific securities, such as the Deferred
Compensation Plan, annuity contracts, and mutual funds, which by their nature are not required to be
categorized.

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

The bank deposits of the governmental fund types, expendable trust and agency funds at June 30,1992, were
entirely insured or collateralized with securities held by the State or its agent in the State's name.

At June 30,1992, cash in the amount of $2,350,000 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 premiums and accretion of discounts. Repurchase agreements aggregating
$754,924,000 (market value of collateral of $825,852,000) and certificates of deposit aggregating $7,137,000
(market value of $7,137,000) at June 30,1992, are reported as cash and short-term investments in governmental
fund types. Also reported as cash and short-term investments is $18,078,000 of unexpended bond proceeds
invested in tax-exempt money market trusts. The collateral for the repurchase agreements is held by the State's
agent in the State's name. The certificates of deposit are covered by federal depository insurance.

The investments at June 30,1992, 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 .........................	$559,124			$ 559,124	$ 681,963
Other ...................................................	17,722			17,722	19,053
	$576,846			576,846	701,016
Deferred Compensation Plan ................................				469,612	469,612
Total ..................................................				$1,046,458	$1,170,628

At June 30,1992, investments of the Deferred Compensation Plan included approximately $13,700,000 in a
guaranteed investment contract with Executive Life Insurance Company (Executive Life). Executive Life was
placed in conservatorship by the California Insurance Commissioner. The Deferred Compensation Board believes
there is a substantial possibility that Executive Life will not pay cost plus contractually accrued interest on this
investment. Such a failure will require adjustments to participant balances and the financial statements of the
Deferred Compensation Plan. At June 30, 1992, no such adjustment has been made as the amount of the
adjustment, if any, has not been determined.

B. Enterprise and Pension Trust Funds:

The bank deposits of the enterprise funds at June 30, 1992, were entirely insured or collateralized with
securities held by the fund or their agents in the fund's name.

The Pension Trust Fund's (Fund) cash deposits (including cash equivalents) are also categorized to give an
indication of the level of risk assumed at year-end. Category 1 includes deposits that are insured or collateralized
with securities held by the Fund's custodian in the name of the Fund. Category 2 includes deposits which are

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