-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NHDtF+0g1V+XsgiDcU+bJLxB2eFxsO1+ThILwkSBJTjpv+EjB60zXU9aUSommeyO uOnFvryqN9DPJKqM8GjBgg== 0001145443-04-001226.txt : 20040818 0001145443-04-001226.hdr.sgml : 20040818 20040818105312 ACCESSION NUMBER: 0001145443-04-001226 CONFORMED SUBMISSION TYPE: N-CSR/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040817 FILED AS OF DATE: 20040818 EFFECTIVENESS DATE: 20040818 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLLEGE & UNIVERSITY FACILITY LOAN TRUST TWO CENTRAL INDEX KEY: 0000830977 IRS NUMBER: 042999011 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-CSR/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-05506 FILM NUMBER: 04983302 BUSINESS ADDRESS: STREET 1: C/O US BANK STREET 2: CORP TRUST DEPT ONE FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02105 BUSINESS PHONE: 6176036406 MAIL ADDRESS: STREET 1: C/O US BANK STREET 2: CORPORATE TRUST DEPT ONE FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 N-CSR/A 1 d15209.txt 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 ---------------------------------------------- (Exact name of registrant as specified in charter) c/o U.S. Bank One Federal Street Boston, MA 02110 ---------------------------------------------- (Address of principal executive offices) (Zip code) Bryan Calder U.S. Bank Corporate Trust Services One Federal Street Boston, MA 02110 ---------------------------------------------- (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 ================================================================================ 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 ------------------------------------- EX-99.906 2 ex99-906.txt CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350), the undersigned, as Owner Trustee of College and University Facility Loan Trust Two (the "Registrant"), hereby certifies that: 1. the Registrant's report on Form N-CSR (the "Report") for the period ended May 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: August 17, 2003 --------------- By: /s/ Bryan Calder ---------------------------- Executive Vice President A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. EX-99 3 ex99-cert.txt CERTIFICATION I, Bryan Calder, certify that: 1. I have reviewed this report on Form N-CSR of College and University Facility Loan Trust Two; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: August 17, 2004 [for period ended May 31, 2003] --------------- /s/ Bryan Calder ------------------------ Bryan Calder Executive Vice President -----END PRIVACY-ENHANCED MESSAGE-----