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									                        KING COUNTY INVESTMENT POOL NEWSLETTER
                               Volume 13, Number 10                               October-2008                                                                            Page 1 of 2

The impaired securities have been removed from this report because earlier this year, the King County Executive Finance Commi ttee approved bifurcation of the investment pool
Portfolio Breakdown
The following is a breakdown of the Investment Pool holdings for October 2008
                                                                                  % of Average ($000)                % of Portfolio

U.S. Agency Securities                                                                          2,999,500                      73.5%
Commercial Paper                                                                                      -                          0.0%                               King County Pool Rating
Taxable Municipal Securities                                                                       17,335                        0.4%
Bankers Acceptances                                                                                   -                          0.0%
U.S. Agency Mortgage-backed Securities                                                             72,690                        1.8%
Repurchase Agreements                                                                              40,355                        1.0%                         In January 2008, the rating of the King County
Treasury Securities                                                                               297,929                        7.3%                        investment pool was temporarily suspended by
                                                                                                                                                              Standard & Poor’s pending further information
Certificates of Deposit                                                                           289,301                        7.1%
                                                                                                                                                             being available on the outcome of restructuring
Local Government Investment Pool                                                                  363,615                        8.9%                            proposals associated with each impaired
Reverse Repurchase Agreements                                                                         -                          0.0%                         investment. Three of four restructurings have
                                                                                                                                                              been completed in 2008 with one remaining in
                                                     Total                                    $4,080,724                                                    early 2009. King County has initiated discussions
                                                                                                                                                               with S&P to restore the pool's AAA rating and
                                                                                                                                                               anticipates action in late 2008 or early 2009.
                        *Average Pool Effective Duration:                                               0.52 Years
*Duration is a measure of the length of the portfolio’s expected cash flows and is a better measure of average portfolio life than maturity.

Investment Pool Performance (before Pool fees)




  0.03                                                                                                                                         0.02883621
                                                                                                                                                        KC Pool (1)
                                                                                                                                                        3 mo Bill
                                                                                                                                                        State Pool
             39386     39416     39447     39478      39507     39538     39568     39599      39629     39660     39691     39721     39752

(1) King County Pool Distribution rate has not been adjusted yet for realized losses from impaired commercial paper investments.

Pool Net Asset Fair Value on October 31, 2008

Net Assets (2)                                                                      4,829,370,680.08
Net Assets Consist of:
 Participant units outstanding ($1.00 par)                                          4,814,251,407.93
 Undistributed and unrealized gains(losses)                                            15,119,272.15
Net Assets                                                                          4,829,370,680.08
Net asset value at fair value price per share
          ($4,829,370,680.08 divided by $4,814,251,407.93 units)                         1.0031
(2) Excludes impaired assets that have been separated into a separate pool.

Performing Pool Comments: The majority of the portfolio is in short term discount notes in US agency obligations. Our investment financial consultant, Public
Financial Management (PFM) continues to view the senior debt of Fannie Mae and Freddie Mac as an appropriate investment for p ublic investment pools. The
federal government has established substantial support arrangements for the two agencies and federal officials have used stro ng language to communicate their

PFM concurs with our approach to maintain the effective duration of the pool at about six months and our continued acquisitio ns of short term US agency senior
debt obligations. We have been posting PFM’s quarterly portfolio reviews of the County’s investment pool as one of the “rela ted links” on the Treasury web site at: The next scheduled report will be posted in mid -December 2008.

The performing pool has no exposures to impaired investments. Specifically, there are no exposures to WaMu, AIG, Lehman’s, Merrill, auction rate securities or
others recently in the news. Note that the impaired pool has one remaining impaired commercial paper investment (Victoria) t hat is awaiting restructuring in early
2009 (see discussion on page 2).

We monitor market conditions daily and frequently check in with PFM on trends and changing conditions. We strongly believe w e are well positioned to weather
upcoming financial storms and our short-term approach will enable us to quickly set a new direction if required.

King County remains committed to sharing information with pool members about investment holdings and the impacts of the curre nt turmoil in global credit
markets. Please call the Treasury Operations number at 206-296-7326 if you have questions or need any additional information.
                      Volume 13, Number 10                   October-2008                                                                         Page 2 of 2

The impaired securities have been removed from this report because earlier this year, the King County Executive Finance Commi ttee approved bifurcation of the investment pool

                                                                          Impaired Pool Holdings Report

                                                                                         Current Book        Future Cash       Estimated Future
              Commercial Paper Issuer                               Status                  Value             Recovery         Unrealized Loss
Mainsail II (1)                                                Restructured               3,022,926.58          782,000.00        2,240,926.58
Cheyne Finance (1)                                             Restructured                 787,502.14          507,750.00          279,752.14
Rhinebridge (1)                                                Restructured               1,885,308.88        1,134,600.00          750,708.89
Victoria Finance (2)                                     Restructuring In Progress       52,879,463.00       26,916,500.00       25,962,963.00

                                                                               Total     58,575,200.60       29,340,850.00       29,234,350.61

                                                                                       Fair Value Ratio              0.5009

(1) These amounts are related to cash that was retained for DTC indemnifications and other reserves. It could be as long as 2014
before these "tail" amounts are returned to investors, and it is possible that the amount recovered may be less than estimated.

(2) Victoria Finance restructuring is not complete. Using market price to estimate cash recovery and unrealized loss.

Impaired Pool Comments: The King County Executive Finance Committee approved bifurcation of the investment pool so that the impaired
investments would be in their own impaired pool separate from the main pool of “performing” investments. The effective date of the
bifurcation was September 1, 2008 (this date was selected based on input from pool members). The reasons for bifurcating the pool were to:
(1) ensure the yield on the performing assets is not negatively impacted by the impaired investments; (2) enhance transparen cy about the
value of the performing pool and the impaired pool; (3) ease the implementation of the restructuring processes for the impair ed investments;
and (4) expedite the restoration of the Standard & Poor’s rating for the performing pool.

Beginning in September, your funds in the impaired pool will not earn interest on bifurcated amounts, nor be charged the inve stment pool
fee. The pool will continue to follow the holding period method in the impaired investment policy to account for realized and unrealized
losses on the impaired investments.

The bifurcated amount was placed in general ledger account 10108, Reserve - Impaired Investments. The amount bifurcated is equal to each
fund’s maximum risk of loss amount as of September 1, 2008.

The vast majority of the amount remaining bifurcated as of October 31st is associated with Victoria, the one investment wait ing for
restructuring. There are also “tail” payments from the other three completed restructurings (Cheyne, Rhinebridge and Mainsai l) that will
remain bifurcated until such time that we receive future cash payments and convert the remaining unrealized losses into reali zed losses.

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