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., banker's acceptances,
repurchase agreements, corporate debt securities and certificates of deposit with foreign or domestic banks. The
U.S. Treasury and agency obligations and collateral for the repurchase agreements are held by the enterprise fund's
agent in the enterprise fund's name.

The Pension Trust Fund (Fund), in accordance with State Personnel and Pensions Article Section 21-123 of the
Annotated Code of Maryland, is permitted to make investments subject to the terms, conditions, limitations, and
restrictions imposed by the Board of Trustees of the State Retirement and Pension System of Maryland. The law
further provides that not more than 15% of the assets that are invested in common stocks may be invested in non-
dividend paying common stocks. The Fund's investments are commingled in four combined investment accounts.
Two investment accounts consist principally of bonds and other fixed income investments, another consists of
pooled real estate funds, real estate investment trusts and directly owned real estate, and the fourth investment
account consists principally of common stocks. Investments of the Fund are stated at cost, adjusted for
amortization of premiums and accretion of discounts.

The investments as of June 30,1995, for the enterprise and pension trust funds of the Primary Government are
as follows (amounts expressed in thousands).

		Category		Carrying	Market
	1	2	3	Value	Value
U.S. Treasury and agency obligations .......................................................	$ 726,659			$ 726,659	$ 774,285
Repurchase agreements ................................................................................	523,306			523,306	523,306
Bonds..............................................................................................................	8,578,936			8,578,936	8,999,601
Corporate equity securities .........................................................................	5,877,304			5,877,304	7,606,921
	$15,706,205			15,706,205	17,904,113
Annuity and guaranteed investment contracts ........................................				61,808	61,808
Mutual funds..................................................................................................				823,559	965,912
Real estate......................................................................................................				388,473	295,259
Pooled Short-term investments ..................................................................				393,669	393,669
Total.............................................................................................................				$17,373,714	$19,620,761

The Fund participates in a securities lending program under which specified securities are loaned to
independent brokers, in return for collateral of greater value. All loaned securities are reported as assets on the
balance sheet and are included in the preceding categorization of custodial credit risk.

Borrowing brokers must transfer collateral valued at a minimum of 102% of the market value of domestic
securities and international fixed income securities, or 105% of the market value of international equity securities
on loan. Collateral is marked-to-market daily. If the market value of the pledged collateral falls below the specified
levels, additional collateral is required to be pledged by the close of the next business day. In the event of default
by a borrowing broker, the Fund's custodial bank is obligated to indemnify the Fund if, and to the extent that, the
market value of collateral is insufficient to replace the loaned securities. The Fund has not experienced any loss
due to credit or market risk on security lending activity since inception of the program. Further, as of June 30,
1995, the Fund had no credit risk exposure to borrowers because the market value of collateral held, exceeded the
market value of securities loaned. At June 30,1995, the market value of loaned securities and the related collateral
were as follows (amounts expressed in thousands):

	Market		Percent
Securities	Value	Collateral	Collateralized
International Equity.........................................................................................................................................	$ 279,825	$ 295,957	106%
Domestic and International Fixed.................................................................................................................	1,386,135	1,412,407	102
Total..................................................................	$1,665,960	$1,708,364

The Fund may invest in derivatives as permitted by guidelines established by the Board of Trustees.
Compliance with these guidelines is monitored by Fund staff. At times, the Fund invests in foreign currency
forward contracts, options, futures, collateralized mortgage obligations, mortgage backed securities, interest only
securities, and principal only securities. No derivatives were purchased with borrowed funds.

Derivatives were used to hedge against foreign currency risk, improve yield, adjust the duration of the fixed
income portfolio, or hedge against changes in interest rates. These securities are subject to changes in value due to

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