College and University
Facility Loan Trust Two
================================================================================
Compiled Financial Statements
Six Months Ended May 31, 1997
<PAGE>
Accountants' Compilation Report
To the Owner Trustee of
College and University Facility
Loan Trust Two:
We have compiled the accompanying balance sheet of College and University
Facility Loan Trust Two, including the schedule of investments, as of May 31,
1997, 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, 1996,
1995, 1994, 1993, 1992, presented herein for comparative purposes, was audited
by other auditors whose report thereon dated December 27, 1996 expressed an
unqualified opinion.
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 28, 1997
<PAGE>
College and University
Facility Loan Trust Two
Balance Sheet
================================================================================
<TABLE>
<CAPTION>
May 31, 1997
===========================================================================================
(Unaudited)
<S> <C>
Assets
Investments, at amortized cost, net of allowance for possible loan
losses of $932,376 (Notes 1, 2, 6, 7 and 8 and Schedule of Investments) $199 699 835
Cash 87 602
Prepaid expenses 13 750
Interest receivable 1 867 006
Deferred bond issuance costs (Note 2) 904 113
- -------------------------------------------------------------------------------------------
Total assets 202 572 306
- -------------------------------------------------------------------------------------------
Liabilities
Bonds payable, net of unamortized discount (Notes 3 and 8) 174 975 706
Interest payable (Note 3) 4 601 827
Dividends payable (Note 5) 588 989
Payable for redemption of Class A Preferred Certificates (Note 5) 1 799 147
Accrued expenses and other liabilities 218 928
- -------------------------------------------------------------------------------------------
Total liabilities 182 184 597
- -------------------------------------------------------------------------------------------
Net Assets
Class A Preferred Certificates, par value $1 - authorized and outstanding-
6,830,733 certificates (preference as to annual dividends of 13.65%,
mandatory redemption and liquidation at par value) (Note 5) 6 830 733
- -------------------------------------------------------------------------------------------
Class B Certificates, par value $1 - authorized, issued
and outstanding - 1,763,800 certificates (Note 5) 1 763 800
Accumulated undistributed net investment income (Note 2) (764 116)
Paid-in capital (Note 2) 12 557 292
- -------------------------------------------------------------------------------------------
Total net assets applicable to Class B certificateholders 13 556 976
- -------------------------------------------------------------------------------------------
Total net assets $ 20 387 709
===========================================================================================
Net asset value per Class B certificate
(based on 1,763,800 certificates outstanding) $7.69
===========================================================================================
</TABLE>
See accompanying accountants' compilation report and notes to financial
statements.
3
<PAGE>
College and University
Facility Loan Trust Two
Statement of Operations
================================================================================
Six months ended May 31, 1997
================================================================================
(Unaudited)
Investment income:
Interest income (Note 2) $9 965 644
- --------------------------------------------------------------------------------
Expenses:
Interest expense (Note 3) 8 290 025
Servicer fees (Note 4) 116 399
Trustee fees (Note 4) 31 525
Other trust and bond administration expenses 97 876
- --------------------------------------------------------------------------------
Total expenses 8 535 825
- --------------------------------------------------------------------------------
Net investment income 1 429 819
Provision for possible loan losses (Notes 2 and 6) 100 000
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1 329 819
Dividends to Class A Preferred Certificateholders 588 989
- --------------------------------------------------------------------------------
Net increase in net assets applicable to Class B
certificateholders resulting from operations $ 740 830
================================================================================
See accompanying accountants' compilation report and notes to financial
statements.
4
<PAGE>
College and University
Facility Loan Trust Two
Statement of Cash Flows
================================================================================
Six months ended May 31, 1997
================================================================================
(Unaudited)
Cash flows from operating activities:
Interest received $ 4 968 634
Interest paid (4 877 489)
Operating expenses paid (301 261)
- --------------------------------------------------------------------------------
Net cash used for operating activities (210 116)
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Net decrease in funds held under investment agreements 3 983 379
Principal payments on Loans 11 880 688
- --------------------------------------------------------------------------------
Net cash provided by investing activities 15 864 067
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Principal repayments on Bonds (13 783 076)
Dividends on Class A Preferred certificates (672 570)
Redemptions of Class A Preferred certificates (1 224 622)
- --------------------------------------------------------------------------------
Net cash used for financing activities (15 680 268)
- --------------------------------------------------------------------------------
Net decrease in cash (26 317)
Cash, beginning of period 113 919
- --------------------------------------------------------------------------------
Cash, end of period $ 87 602
================================================================================
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 $ 1 329 819
Provision for possible loan losses 100 000
Decrease in interest receivable 242 896
Increase in prepaid expenses (13 750)
Decrease in accrued expenses and other liabilities (41 711)
Decrease in Bond interest payable (275 662)
Amortization of original issue discount on Bonds 3 614 519
Amortization of purchase discount on Loans (5 239 906)
Amortization of deferred Bond issuance costs 73 679
- --------------------------------------------------------------------------------
Net cash used for operating activities $ (210 116)
================================================================================
See accompanying accountants' compilation report and notes to financial
statements.
5
<PAGE>
College and University
Facility Loan Trust Two
Statements of Changes in Net Assets
(Note 2 (f))
================================================================================
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
May 31, November 30,
1997 1996
==================================================================================================================
(Unaudited)
<S> <C> <C>
From operations:
Net investment income $ 1 429 819 $ 3 082 976
Provision for possible loan losses (100 000) (200 000)
Dividends to certificateholders:
Class A Preferred Certificateholders
($.1365 per certificate annually)
From net investment income (588 989) --
As tax return of capital -- (1 391 528)
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Class B
certificateholders resulting from operations 740 830 1 491 448
- ------------------------------------------------------------------------------------------------------------------
Capital certificate transactions (Note 5):
Redemptions of Class A Preferred certificates (1,799,147 and
1,904,305 certificates in 1997 and 1996, respectively) (1 799 147) (1 904 305)
- ------------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from
capital certificate transactions (1 799 147) (1 904 305)
- ------------------------------------------------------------------------------------------------------------------
Net decrease in net assets (1 058 317) (412 857)
Net assets:
Beginning of period 21 446 026 21 858 883
- ------------------------------------------------------------------------------------------------------------------
End of period $20 387 709 $21 446 026
==================================================================================================================
</TABLE>
See accompanying accountants' compilation report and notes to financial
statements.
6
<PAGE>
College and University
Facility Loan Trust Two
Selected Financial Highlights for Each
Class B Certificate Outstanding
Throughout the Periods Indicated
(Notes 1 and 5)
================================================================================
<TABLE>
<CAPTION>
For the Six
Months Ended Years Ended November 30,
May 31, ------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
===================================================================================================================================
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 7.27 $ 6.42 $ 5.69 $ 4.77 $ 3.79 $ 2.90
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income .81 1.75 1.86 2.09 2.15 2.12
Provision for possible loan losses (.06) (.11) (.24) (.11) -- --
Dividends to Class A Preferred
Certificateholders:
From net investment income (.33) -- (.43) (.26) (1.17) (1.23)
As tax return of capital -- (.79) (.46) (.80) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.69 $ 7.27 $ 6.42 $ 5.69 $ 4.77 $ 3.79
===================================================================================================================================
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 $6 830 733 $8 629 880 $10 534 185 $11 857 751 $13 941 968 $15 435 727
Net assets applicable to Class
B Certificates, end of period $13 556 976 $12 816 146 $11 324 698 $10 039 426 $8 406 774 $6 677 348
===================================================================================================================================
Ratios and Supplemental Data:
Ratio of expenses to average
net assets applicable to
Class B Certificates 129.46%(b)(c) 150.97%(b) 186.94%(b) 237.22%(b) 311.15%(b) 419.67%(b)
Ratio of net investment income
to average net assets applicable
to Class B Certificates 21.69%(c) 25.54% 30.76% 40.16% 50.29% 63.33%
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
</TABLE>
(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 expenses to average net assets
applicable to Class B Certificates was 4.85(c)%, 5.43%, 6.54%, 7.28%,
11.11%, and 15.74% in 1997, 1996, 1995, 1994, 1993 and 1992, respectively.
(c) Annualized.
See accompanying accountants' compilation report and notes to financial
statements.
7
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
1. Organization College and University Facility Loan Trust Two (the
and Business 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 State Street Bank and Trust
Company, 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 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.
See accompanying accountants' compilation report.
8
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
1. Organization and All payments on the Loans and earnings under the
Business investment agreements and any required transfers from
(Concluded) 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 to the
credit of 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 in the order
of priority discussed in Note 5.
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 discount
Policies 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 balance sheet, 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. The remaining balance of
the purchase discount on the Loans as of May 31, 1997
was approximately $85,331,000. As a result of
prepayments of Loans in the six months ended May 31,
1997, additional interest income of approximately
$82,300 was recognized.
See accompanying accountants' compilation report.
9
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
2. Summary of (a) College and University Facility Loans (Continued)
Significant
Accounting
Policies The Trust's policy is to discontinue the accrual of
(Continued) interest on Loans for which payment of principal or
interest is 180 days or more past due or for such other
Loans as considered necessary by management if
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 recorded when received. Payments are applied
to interest first with the balance, if any, applied to
principal. At May 31, 1997, one loan has been placed on
nonaccrual status, as discussed in Note 6.
(b) Other Investments
Other investments, which are included in Investments on
the accompanying balance sheet, consist of two
investment agreements issued by Morgan Guaranty Trust
Company, 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 the
bank's option. These investments are carried at cost.
(c) Federal Income Taxes
It is the Trust's policy to comply with the requirements
applicable to a regulated investment 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.
See accompanying accountants' compilation report.
10
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
2. Summary of (d) Deferred Bond Issuance Costs
Significant
Accounting Deferred Bond issuance costs are being amortized using
Policies the effective interest rate method over the estimated
(Continued) 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 period the prepayment occurred, so that
the future effective interest rate remains unchanged.
(e) Accounting for Impairment of a Loan and Allowance
for Possible Loan Losses
The Trust accounts for credit losses in accordance with
Statement of Financial Accounting Standards (SFAS) No.
114, Accounting by Creditors for Impairment of a Loan,
as amended by SFAS No. 118 (hereafter collectively
referred to as SFAS 114). SFAS 114 requires that
impaired loans, as defined, be measured based on the
present value of the expected future cash flows
discounted at the loan's effective interest rate or the
fair value of the collateral if the loan is collateral
dependent.
Management is responsible for establishing an allowance
for possible loan losses based on its best estimate of
losses that might occur. Ultimate losses may vary from
the current estimate. This estimate is reviewed
periodically, and as a provision to the allowance for
possible loan losses becomes necessary, it is reported
in the period in which it becomes known. Allowances are
established for those loans that, in the opinion of
management, are deemed to be impaired and potentially
uncollectible.
The allowance for possible loan losses is based on
management's evaluation of the level of the allowance
required in relation to the estimated loss exposure in
the loan portfolio. Factors considered in evaluating the
adequacy of the allowance include previous loss
experience, current economic conditions and their effect
on borrowers, the performance of individual Loans in
relation to contract terms, adverse situations that may
affect the borrower's ability to pay and the estimated
fair values of collateral.
See accompanying accountants' compilation report.
11
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
2. Summary of (e) Accounting for Impairment of a Loan and Allowance
Significant for Possible Loan Losses (Continued)
Accounting
Policies The factors discussed above are inherently difficult to
(Continued) predict. Accordingly, the final outcome of these
estimates and the ultimate realization of amounts on
certain Loans may vary significantly from the amounts
reflected in the accompanying financial statements.
(f) Presentation of Capital Distributions
Capital distributors are accounted for in accordance
with the American Institute of Certified Public
Accountants Statement of Position 93-2, "Determination,
Disclosure and Financial Statement Presentation of
Income, Capital Gain and Return of Capital Distributions
by Investment Companies" (SOP 93-2). 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 all tax earning and profits have been distributed,
accumulated undistributed net investment income has been
reclassified as paid-in capital as of November 30, 1996.
These reclassifications result 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 and dividends payable 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, 1997; however, the
amount cannot be reasonably estimated at May 31, 1997.
Therefore, the current period net increase in net assets
of $740,830 has been offset against the accumulated
deficit and classified as accumulated undistributed net
investment income.
See accompanying accountants' compilation report.
12
<PAGE>
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 conformity
Policies with generally accepted accounting principles requires
(Concluded) management to make 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.
3. Bonds
The Bonds outstanding at May 31, 1997 consist of the
following:
<TABLE>
<CAPTION>
Outstanding Unamortized
Interest Principal Discount Carrying Value
Type Rate Stated Maturity (000s) (000s) (000s)
=======================================================================================================
<S> <C> <C> <C> <C> <C>
Sequential 4.0% June 1, 1999 $ 4 760 $ -- $ 4 760
Sequential 4.0% June 1, 2002 75 961 6 161 69 800
Sequential 4.0% June 1, 2018 149 370 48 954 100 416
- -------------------------------------------------------------------------------------------------------
$230 091 $55 115 $174 976
=======================================================================================================
</TABLE>
Interest on the Bonds is payable semiannually. On June
2, 1997, the Trust made a principal payment of
$4,760,364 on the sequential 4%, June 1, 1999 bonds and
$5,478,992 on the sequential 4%, June 1, 2002 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.
See accompanying accountants' compilation report.
13
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
3. Bonds The estimated aggregate principal payments on the Bonds
(Concluded) at May 31, 1997, after taking into consideration actual
Loan prepayments, Defaulted Loans and the Maximum
Principal Distribution Amount, as defined in the
Indenture, are as follows:
Fiscal Year Amount
(000s)
========================================================
1997 $ 10 239
1998 22 586
1999 21 227
2000 20 012
2001 18 795
Thereafter 137 232
--------------------------------------------------------
Total $230 091
========================================================
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 six months of
prepayment, so that the future effective interest rate
remains unchanged.
See accompanying accountants' compilation report.
14
<PAGE>
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, General Electric Capital
Corporation (GECC) receives a collection fee. The fee is
paid semiannually with respect to each Loan on each date
payments are received on each Loan. The fee is equal to
.075 of 1% of the outstanding principal balance of each
Loan divided by the number of payments of principal and
interest for each Loan in a calendar year. For the six
months ended May 31, 1997, this fee totaled $112,177.
GECC was also reimbursed for other related expenses of
$4,222.
(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, received fees of
$7,500 and $6,250, respectively, for the six
months ended May 31, 1997. In addition, the Owner
Trustee, in its capacity as manager, was
reimbursed $125 for out-of-pocket expenses.
o The Bond Trustee is entitled to an annual fee
equal to .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 fee is payable semiannually in arrears on
each bond payment date. The Bond Trustee is also
reimbursed for out-of-pocket expenses in an amount
not to exceed 4% of the applicable annual fee. For
the six months ended May 31, 1997, Bond Trustee
fees were $17,084. In addition, the Bond Trustee
was reimbursed $690 for out-of-pocket expenses.
See accompanying accountants' compilation report.
15
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
5. Certificates The certificates comprise two classes, namely 13.65%
Class A Preferred and Class B. The Class A Preferred
certificates have preference over the Class B
certificates with respect to the payment of dividends,
rights of redemption and liquidation payments. Dividends
on the Class A Preferred certificates are payable in
cash on each Distribution Date (defined below) at the
rate of 13.65% per annum from amounts received by the
Owner Trustee pursuant to the Declaration of Trust. To
the extent that such amounts are not sufficient to pay
accrued dividends on any Class A Preferred certificates
on any Distribution Date, such dividends will be paid in
additional certificates of the Class A Preferred
certificates. The Class A Preferred certificates are
required to be redeemed by the Trust, in whole or in
part, on any Distribution Date to the extent of the
amount on deposit to the credit of the Revenue Fund, as
discussed in Note 1, and after all accrued but unpaid
dividends thereon have been paid in full. No
distributions on the Class B certificates may be made
until all Class A Preferred certificates have been fully
redeemed. Following the redemption in full of the Class
A Preferred certificates, on each Distribution Date, the
holders of the Class B certificates will receive amounts
paid to the Owner Trustee pursuant to the Declaration of
Trust, pro-rata, in the same proportion that the par
value of the certificates evidenced by each Class B
certificate bears to the sum of the par value of the
certificates evidenced by all of the Class B
certificates.
Dividends and other payments are distributed to the
certificateholders, while the Bonds are outstanding, 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.
On June 3, 1997, the Trust paid $2,388,136 to the
holders of the Class A Preferred certificates, of which
$588,989 was for payment of dividends and $1,799,147 was
a redemption of Class A Preferred certificates. These
payments are reflected as liabilities in the
accompanying balance sheet.
The certificateholders shall each be entitled to one
vote per certificate.
See accompanying accountants' compilation report.
16
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
6. Possible Loan An analysis of the allowance for possible loan losses
Losses for the six months ended May 31, 1997 is summarized as
follows:
Balance, beginning of period $832,376
Provision 100 000
Charge-off --
--------------------------------------------------------
Balance, end of period $932 376
========================================================
At May 31, 1997, the recorded investment in loans that
are considered to be impaired under SFAS 114 was
approximately $222,000 with a related allowance for
possible loan losses of $110,000.
The average recorded investment in impaired loans during
the six months ended May 31, 1997 was approximately
$231,000. For the six months ended May 31, 1997,
interest income recognized on impaired loans was
approximately $13,000.
The amortized cost of the Loan placed on nonaccrual
status is approximately $2,600 at May 31, 1997. See
"Accounting for Impairment of a Loan and Allowance for
Possible Loan Losses" for a discussion of the Trust's
impaired loan accounting policy.
See accompanying accountants' compilation report.
17
<PAGE>
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, 1997, excluding payments for Loans in
Default, as defined in the Indenture, are as follows:
Principal Interest
Payments Payments Total
Fiscal Year (000s) (000s) (000s)
=======================================================
1997 $ 14 739 $ 4 175 $ 18 914
1998 24 867 7 752 32 619
1999 23 508 6 963 30 471
2000 22 027 6 210 28 237
2001 20 607 5 498 26 105
Thereafter 157 761 33 437 191 198
-------------------------------------------------------
Total $263 509 $64 035 $327 544
=======================================================
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.
The following analyses summarize the stratification of
the loan portfolio by type of collateral and institution
as of May 31, 1997:
Amortized
Number Cost
Type of Collateral of Loans (000s) %
========================================================
Loans secured by a
first mortgage 314 $ 95 013 53.3%
Loans not secured by
a first mortgage 200 83 193 46.7
--------------------------------------------------------
Total Loans 514 $178 206 100.0%
========================================================
See accompanying accountants' compilation report.
18
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
7. Loans Amortized
(Continued) Number Cost
Type of Institution of Loans (000s) %
========================================================
Private 323 $ 94 380 53.0%
Public 191 83 826 47.0
--------------------------------------------------------
Total Loans 514 $178 206 100.0%
========================================================
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.
The collateral for Loans that are secured by a 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, where a restructuring of
debt service payments is not achieved, 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.
See accompanying accountants' compilation report.
19
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
7. Loans A number of borrowers are currently experiencing
(Concluded) financial difficulties due to declining enrollment,
increasing costs and a decline in endowments, grants,
private gifts, and State and Federal funding. Many of
these troubled borrowers are developing and implementing
strategic plans to improve their financial position; the
plans generally include taking actions to control costs
and increase revenues through tuition increases,
fundraising campaigns, higher enrollment and a reduction
of faculty.
Due to the special purpose nature of the borrowers'
properties, the ability of troubled borrowers to repay
their loans may ultimately be dependent upon the future
success of the institutions' programs.
8. Fair Value SFAS No. 107, "Disclosures About Fair Value of Financial
of Financial Instruments," allows for the use of a wide range of
Instruments 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.
See accompanying accountants' compilation report.
20
<PAGE>
College and University
Facility Loan Trust Two
Notes to Financial Statements
================================================================================
8. Fair Value Current market prices are not available for most of the
of Financial Trust's financial instruments since an active market
Instruments generally does not exist for such instruments. In
(Concluded) 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.
The estimated fair value of each category of the Trust's
financial instruments and its related book value
presented in the accompanying balance sheet as of May
31, 1997 is as follows:
Book Value Fair Value
(000s) (000s)
=======================================================
Loans $177 274* $206 515
Investment Agreements:
Revenue Fund 16 964 16 159
Liquidity Fund 5 462 4 877
-------------------------------------------------------
$199 700 $227 551
=======================================================
Bonds $174 976 $197 375
=======================================================
* Net of Allowance for Possible Loan Losses of $932,376.
See accompanying accountants' compilation report.
21
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
COLLEGE AND UNIVERSITY LOANS (88.8%)
------------------------------------
-------------- A --------------
<S> <C> <C> <C> <C> <C>
$620 Alabama Agricultural and Mechanical University 3.000-3.750 07/01/2005 10.25 $465
2,025 Alabama Agricultural and Mechanical University 3.000 05/01/2018 10.27 1,114
171 Albion College 3.000 10/01/2009 10.56 113
598 Albright College 3.000 11/01/2015 10.23 353
45 Alcorn State University 2.875 11/01/1999 10.11 40
44 Alcorn State University 3.500 11/01/2002 10.15 37
50 Allegheny College 3.000 07/01/2015 10.38 20
24 Allentown College of St. Francis De Sales 3.000 11/01/1998 10.98 22
325 Alma College 3.750 04/01/2002 11.52 265
99 American International College 3.375 10/01/2002 10.84 82
134 Anderson University 3.500 03/01/2003 11.42 104
290 Anderson University 3.000 03/01/2006 11.19 202
82 Appalachian State University 3.500 07/01/2001 10.28 69
32 Appalachian State University 3.000 06/01/1997 10.11 30
520 Arizona State University 3.125 09/01/2001 10.17 439
370 Arizona State University 3.375 10/01/2002 10.16 306
1,365 Arizona State University 3.000 04/01/2006 10.60 978
216 Arkansas State University 3.500 04/01/2001 10.97 184
210 Arkansas State University 3.375 10/01/2000 10.25 188
753 Arkansas State University 3.750 04/01/2005 10.75 569
41 Arkansas Technical University 2.875 10/01/1999 10.21 37
2,330 Auburn University 3.000 12/01/2018 9.16 1,341
229 Azusa Pacific University 3.750 04/01/2015 10.88 135
-------------- B --------------
333 Ball State University 3.000 07/01/1999 9.98 298
1,140 Baptist College at Charleston 3.000 03/01/2019 10.73 586
765 Baptist College at Charleston 3.000 03/01/2011 10.98 470
30 Bard College 2.750 10/01/1998 11.40 28
109 Barnard College 3.000 10/01/1997 11.06 104
247 Becker Junior College 3.000 04/01/2005 11.21 179
132 Bellarmine College 3.625 05/01/2004 11.34 102
32 Belmont Abbey College 3.000 11/01/1998 10.96 30
19 Benedict College 2.875 02/01/1999 11.83 17
163 Benedict College 3.750 11/01/2004 10.75 127
1,094 Benedict College 3.000 11/01/2006 10.61 792
1,970 Benedict College 3.000 11/01/2020 10.36 1,029
2,066 Bentley College 3.000 11/01/2007 10.57 1,442
9 Bethany College 2.875 05/01/1998 11.89 8
346 Bethany College 3.375 11/01/2012 10.54 221
305 Bethany College 3.000 11/01/2017 10.40 166
595 Bethany College 3.000 11/01/2012 10.40 366
23 Bethune-Cookman College 3.000 11/01/2002 10.74 19
</TABLE>
The Accompanying notes are an integral part of these financial statements.
22
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$234 Boston Architectural Center 3.750 11/01/2004 10.77 $185
215 Bradford College 3.375 10/01/2001 10.85 180
329 Brandeis University 3.000 11/01/2011 10.64 206
175 Brevard College 3.000 11/01/2004 10.71 138
88 Brevard College 3.000 05/01/2006 11.12 62
150 Bryan College 3.500 04/01/2003 11.39 117
44 Bucks County Community College 3.000 06/01/1997 10.11 34
34 Buena Vista College 3.500 02/01/2000 11.85 30
136 Buena Vista College 3.000 02/01/2006 11.23 95
-------------- C --------------
1,225 California Polytechnic State University 3.000 11/01/2006 10.05 876
420 California State University 3.000 11/01/2006 8.75 325
1,400 California State University 3.000 11/01/2013 8.93 925
2,848 California State University 3.000 11/01/2019 8.99 1,675
192 Calvin College 3.000 11/01/2000 10.83 166
2,670 Cameron University 3.000 04/01/2007 10.16 1,886
275 Canisius College 3.375 05/01/2002 11.48 225
1,730 Canisius College 3.000 11/01/2017 10.40 954
172 Canisius College 3.000 11/01/1999 10.89 154
59 Carnegie-Mellon University 3.000 05/01/1999 11.37 52
305 Carnegie-Mellon University 3.500 11/01/2001 10.52 259
310 Carnegie-Mellon University 3.000 05/01/2009 10.73 202
1,100 Carnegie-Mellon University 3.000 11/01/2017 10.51 604
217 Carroll College 3.125 06/01/2000 10.75 186
392 Carroll College 3.750 06/01/2014 10.46 241
181 Carroll College 3.000 06/01/2018 10.15 99
470 Carroll College 3.750 03/01/2015 10.93 277
295 Case Western Reserve University 3.500 04/01/2003 11.39 229
299 Catawba College 3.000 12/01/2009 10.27 197
150 Central Missouri State University 3.125 07/01/2000 10.24 130
330 Central Missouri State University 3.375 07/01/2001 10.27 280
754 Central Missouri State University 3.625 07/01/2004 10.29 590
1,180 Central Missouri State University 3.000 07/01/2007 10.18 830
37 Central Texas College 3.000 11/01/1997 10.15 36
23 Central Texas College 3.000 11/01/1998 10.14 21
175 Champlain College 3.000 12/01/2013 10.19 103
630 Chapman College 3.000 10/01/2013 10.65 371
435 Chapman College 3.000 11/01/2005 10.63 321
279 Chapman College 3.000 11/01/2007 10.57 195
1,790 Chateau Community Housing Association 3.000 10/01/2012 10.51 1,097
90 Cisco Junior College 3.000 11/01/2005 10.04 69
110 Cisco Junior College 3.000 07/01/2005 10.15 74
38 Claflin College 3.125 04/01/2001 11.59 32
11 Claflin College 3.000 11/01/1997 11.05 11
</TABLE>
The Accompanying notes are an integral part of these financial statements.
23
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$500 Clemson University 3.000 07/01/2005 9.51 $385
168 Coker College 3.000 12/01/2009 10.04 110
45 College of Notre Dame of Maryland 2.875 11/01/1997 10.61 43
126 College of Notre Dame of Maryland 3.375 11/01/2002 10.48 103
316 College of Our Lady of the Elms 3.375 10/01/2001 10.86 266
19 College of Saint Rose 2.875 04/01/1998 11.95 17
977 College of Saint Rose 3.000 05/01/2022 10.43 493
637 College of Saint Thomas 3.000 11/01/2009 10.53 422
82 College of Santa Fe 3.500 10/01/2001 10.86 69
274 College of Santa Fe 3.000 10/01/2005 10.66 202
663 College of Santa Fe 3.000 10/01/2018 10.43 362
175 College of the Holy Cross 3.500 10/01/1999 11.03 162
1,170 College of the Holy Cross 3.625 10/01/2013 10.60 740
980 College of the Holy Cross 3.000 10/01/2006 10.63 701
52 College of the Virgin Islands 3.000 11/01/2002 10.15 43
117 College of the Virgin Islands 3.000 10/01/2003 10.16 93
12 Columbia College 2.750 07/01/1997 11.16 11
316 Columbia College 3.625 07/01/2004 10.90 241
100 Columbia College 3.000 07/01/2006 10.80 72
163 Concordia College 3.000 04/01/2009 11.05 108
780 Concordia College 3.000 05/01/2019 10.65 404
158 Connecticut College 3.000 11/01/1999 10.89 141
80 Cornell College 3.000 10/01/2005 10.66 59
363 Cumberland University 3.000 08/01/2017 10.52 200
-------------- D --------------
118 Daemen College 3.125 04/01/2000 11.68 101
680 Daemen College 3.000 04/01/2016 10.77 373
209 Dakota Wesleyan University 3.000 10/01/2015 10.46 120
320 Dana College 3.000 04/01/2005 11.22 230
77 Dana College 3.500 04/01/2003 11.39 60
165 Dean Academy & Jr. College 3.500 10/01/1999 10.97 148
149 Dickinson College 3.000 05/01/2018 10.30 83
296 Dillard University 3.000 04/01/2008 11.09 200
146 Doane College 3.000 11/01/2000 10.83 126
755 Dormitory Authority State of NY (New York University) 3.000 07/01/2000 8.95 667
712 Dowling College 3.000 10/01/2010 10.75 453
142 Drexel University 2.875 05/01/2001 11.57 120
1,220 Drexel University 3.500 05/01/2014 10.53 707
25 Drury College 3.125 10/01/1999 11.32 22
314 Drury College 3.000 04/01/2015 10.63 181
574 Drury College 3.000 10/01/2010 10.75 366
1,168 D'Youville College 3.000 04/01/2018 10.90 609
</TABLE>
The Accompanying notes are an integral part of these financial statements.
24
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
-------------- E --------------
$188 East Texas State University 2.875 09/01/1999 8.94 $171
1,456 East Texas State University 3.500 03/01/2002 9.48 1,150
1,744 East Texas State University 3.000 03/01/2002 9.60 1,329
162 East Texas State University 3.000 11/01/2000 9.26 144
97 Eastern Oklahoma State College 3.125 05/15/1999 9.96 92
450 Elizabeth City State University 3.000 10/01/2017 10.02 262
590 Embry-Riddle Aeronautical University 3.000 09/01/2007 10.64 408
183 Emmanuel College 3.000 11/01/2013 10.45 109
334 Emory University 2.875 09/01/1998 11.00 307
-------------- F --------------
91 Fairleigh Dickinson University 3.125 11/01/1999 10.93 82
1,840 Fairleigh Dickinson University 3.000 11/01/2017 10.39 1,020
13 Findlay College 2.750 07/01/1998 11.04 12
5 Findlay College 3.000 07/01/1997 11.21 5
275 Florida Agricultural and Mechanical University 3.625 07/01/2004 10.29 214
293 Florida Atlantic University 3.500 07/01/2004 10.27 242
430 Florida Atlantic University 3.000 07/01/2006 10.18 299
226 Florida Institute of Technology 3.000 11/01/2009 10.53 149
93 Florida Southern College 3.000 11/01/1999 10.89 83
136 Florida State University 3.000 01/01/1999 9.20 124
305 Florida State University 3.500 06/01/2001 8.44 268
835 Florida State University 3.000 01/01/2009 9.40 587
73 Fort Hays State University 3.500 10/01/2001 10.19 63
158 Fort Hays State University 3.625 10/01/2002 10.18 131
200 Fort Hays State University 3.000 10/01/2007 10.08 142
705 Fort Lewis College 3.000 10/01/2006 10.09 517
-------------- G --------------
835 Gannon University 3.000 11/01/2011 10.49 526
219 Gannon University 3.000 12/01/2022 10.13 110
96 Gavilan College 3.000 04/01/2006 10.59 68
100 George Fox College 3.500 04/01/2001 11.25 84
853 George Fox College 3.000 07/01/2018 10.64 454
191 George Washington University 3.500 05/01/2000 11.30 165
1,118 George Washington University 3.500 11/01/2002 10.50 936
75 George Washington University 3.000 11/01/1998 10.58 70
81 Georgetown College 3.000 12/01/1999 10.02 70
587 Georgetown College 3.000 12/01/2008 10.04 393
1,020 Georgetown College 3.000 12/01/2009 10.05 666
3,086 Georgetown University 3.000 11/01/2020 10.36 1,612
7,795 Georgetown University 4.000 11/01/2020 10.52 4,460
1,512 Georgetown University 3.000 05/01/2005 10.86 1,122
833 Georgia Education Authority Board of Regents
of the University System of Georgia 3.375 01/01/2003 10.60 661
</TABLE>
The Accompanying notes are an integral part of these financial statements.
25
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$124 Grambling State University 3.000 10/01/1997 10.17 $119
19 Grambling State University 3.000 11/01/1999 10.12 17
166 Grambling State University 3.000 11/01/2000 10.11 145
-------------- H --------------
438 Hampshire College 3.000 07/01/2013 10.75 256
1,564 Hampshire College 3.000 02/01/2014 10.70 910
285 Harcum Junior College 3.375 11/01/2002 10.77 233
850 Harper Grace Hospital 3.625 04/01/2005 11.26 626
98 Henderson State University 3.125 04/01/1999 11.06 87
13 Hendrick Medical Center 3.000 10/01/1997 11.08 12
183 Hesston College 3.000 04/01/2006 11.14 128
378 High Point College 3.000 12/01/2010 10.26 238
2,199 Hinds Junior College 3.000 04/01/2013 10.42 1,345
131 Hiwassee College 3.375 01/01/2003 11.58 103
218 Hiwassee College 3.000 09/15/2018 10.58 116
2,288 Hofstra University 3.000 11/01/2012 10.61 1,395
23 Holy Family College 3.000 12/01/1997 10.00 21
328 Hood College 3.625 11/01/2014 10.54 203
445 Houston Tillotson College 3.500 04/01/2014 10.90 267
75 Huntingdon College 3.500 03/01/2002 11.54 60
315 Huntingdon College 3.000 10/01/2008 10.60 213
-------------- I --------------
67 Illinois Benedictine College 3.000 10/01/1998 10.98 62
258 Illinois Institute of Technology 3.000 03/01/2003 11.10 202
201 Indiana University 2.875 04/01/1998 10.10 187
112 Indiana University 2.875 04/01/1999 10.08 101
542 Indiana University 3.375 04/01/2001 10.06 464
1,160 Indiana University 3.500 04/01/2001 10.06 992
1,708 Indiana University 3.750 12/01/2003 8.84 1,417
565 Indiana University 3.000 07/01/1999 9.31 511
152 Inter American University of Puerto Rico 3.000 09/01/2007 10.66 107
2,726 Inter American University of Puerto Rico 3.000 01/01/2017 10.94 1,471
-------------- J --------------
2,045 James Madison University 3.000 06/01/2009 10.49 1,343
44 John Brown University 2.875 04/01/2000 11.64 37
443 Johnson & Wales College 3.000 11/01/2013 10.59 264
265 Johnson C. Smith University 3.000 05/01/2005 11.18 191
40 Judson College 3.750 07/01/2004 10.92 31
-------------- K --------------
286 Kansas State University 3.375 10/01/2002 9.12 245
775 Kansas State University 3.625 04/01/2004 9.77 587
134 Kendall College 3.375 10/01/2002 10.82 109
286 Kendall College 3.000 10/01/2008 10.59 193
576 Kent State University 3.500 12/01/2000 8.90 503
</TABLE>
The Accompanying notes are an integral part of these financial statements.
26
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$410 Knox College 3.000 04/01/2006 11.15 $286
-------------- L --------------
360 LaGrange College 3.000 03/01/2009 11.06 230
279 Lamar University 3.500 04/01/2003 10.76 221
439 Langston University 3.375 10/01/2003 10.15 354
1,215 Langston University 3.000 04/01/2007 10.56 845
499 Lassen Junior College District 3.000 04/01/2020 10.27 262
1,670 Leland Stanford Junior College 3.375 05/01/2003 11.33 1,297
224 Lenoir Rhyne College 3.000 12/01/2006 10.04 159
91 Linfield College 3.000 10/01/2017 10.44 50
196 Long Island University 3.000 10/01/1998 11.00 182
901 Long Island University 3.750 05/01/2005 11.22 670
252 Long Island University 3.000 11/01/2009 10.69 166
882 Long Island University 3.000 11/01/2009 10.69 579
495 Long Island University 3.750 04/01/2003 11.41 388
620 Long Island University 3.625 06/01/2014 10.49 378
21 Long Island University 3.750 05/01/1998 11.90 19
146 Long Island University 3.750 10/01/2004 10.79 113
533 Louisiana State University 3.500 07/01/2001 8.65 470
1,256 Louisiana State University 3.625 07/01/2004 9.04 1,022
503 Louisiana State University 3.000 07/01/2005 8.84 398
435 Louisiana State University 3.000 07/01/2006 8.87 338
144 Louisiana State University 3.000 05/01/1999 9.17 132
414 Louisiana State University 3.000 07/01/2001 8.62 359
90 Loyola University 3.000 11/01/1998 10.96 83
86 Loyola University - Mundelein Branch 3.750 11/01/1997 11.11 83
232 Lycoming College 3.500 05/01/2001 11.22 195
266 Lycoming College 3.625 05/01/2014 10.64 162
355 Lycoming College 3.750 05/01/2015 10.62 215
553 Lynchburg College 3.750 05/01/2015 10.64 339
700 Lynchburg College 3.000 05/01/2018 10.68 372
-------------- M --------------
610 MacAlester College 3.375 05/01/2002 11.41 488
483 MacAlester College 3.000 05/01/2020 10.46 254
30 Madison General Hospital 3.000 12/01/1999 9.67 26
610 Marian College 3.000 10/01/2016 10.45 344
56 Marian College 3.000 11/01/1999 10.89 50
57 Marist College 3.500 04/01/2000 11.73 50
99 Marquette University 3.000 07/31/2024 10.59 47
43 Mary Baldwin College 2.875 11/01/1999 10.94 40
468 Mary Baldwin College 3.375 05/01/2012 10.68 294
685 Marymount University 3.000 05/01/2016 10.52 383
10 McCook Community College 3.000 01/01/1998 11.16 9
970 McLennan Community College 3.000 04/01/2006 10.49 700
</TABLE>
The Accompanying notes are an integral part of these financial statements.
27
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$108 McNeese State University 3.500 10/01/2001 10.18 $92
1,134 Memorial Hospital for Cancer and Allied Diseases 3.375 04/01/2012 10.68 712
113 Menlo College 3.125 04/01/2001 11.53 93
537 Mercer University 3.000 05/01/2014 10.58 317
1,660 Mercy College of Detroit 3.625 10/01/2013 10.59 1,034
28 Mercy Hospital (A) 3.000 10/01/1998 10.98 3
46 Merrimack College 3.000 04/15/2019 10.53 31
131 Merrimack College 3.000 04/15/2008 10.79 70
104 Middlebury College 3.375 10/01/2002 11.12 84
118 Midland Lutheran College 3.000 04/01/2005 11.20 85
40 Midland Lutheran College 3.000 10/01/1998 10.98 37
628 Millsaps College 3.000 11/01/2021 10.34 322
86 Mississippi State University 2.875 01/01/2000 10.99 73
1,685 Mississippi State University 3.000 12/01/2020 9.64 910
129 Mississippi Valley State University 3.500 07/01/2001 10.28 109
138 Molloy College 3.375 10/01/2002 10.81 112
18 Montreat-Anderson College 3.000 11/01/1998 10.96 17
258 Moravian College 3.375 11/01/2012 10.52 163
785 Morehouse College 3.000 07/01/2010 10.50 452
2,511 Morgan State University 3.000 11/01/2014 10.56 1,464
235 Morris Brown College 3.750 05/01/2007 11.12 166
2,123 Morris Brown College 2.750-3.750 05/01/2018 10.89 1,248
723 Morris College 3.000 11/01/2009 10.53 479
130 Muhlenberg College 3.000 11/01/2000 10.50 113
-------------- N --------------
171 New England College 3.000 04/01/2016 10.77 94
725 Newark Beth Israel Hospital 3.625 01/01/2014 11.06 428
78 NIACC Dormitories, Inc. 3.000 10/01/2012 10.27 48
107 Nicholls State University 3.000 09/01/1999 8.88 98
3,051 Norfolk State University 3.000 12/01/2021 9.77 1,606
697 North Carolina Agricultural and
Technical State University 3.000 05/01/2014 10.34 411
740 North Carolina State University 3.625 09/01/2004 7.97 627
366 North Carolina State University 3.125 09/01/2001 7.58 328
430 North Carolina State University 3.500 09/01/2001 7.63 387
200 North Greenville College 3.000 11/01/2003 10.72 160
266 Northeast Louisiana University 3.500 04/01/2001 10.28 228
478 Northeast Missouri State University 3.375-3.500 05/01/2002 10.75 391
148 Northeastern Oklahoma State University 3.000 06/01/1998 9.73 137
3,323 Northeastern University 3.000 05/01/2018 10.53 1,797
167 Northeastern University 3.000 05/01/2004 10.97 128
100 Northwestern State University 3.125 10/01/2000 10.15 87
460 Nova University 3.000 12/01/2007 10.04 317
</TABLE>
The Accompanying notes are an integral part of these financial statements.
28
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
-------------- O -------------
$28 Occidental College 3.000 10/01/1997 11.09 $27
303 Occidental College 3.000 10/01/2019 10.41 160
832 Oklahoma City University 3.000 04/01/2005 11.22 601
265 Olympic Community College 3.000 10/01/2008 10.07 184
82 Ouachita Baptist University 3.125 12/01/1999 10.03 71
37 Ouachita Baptist University 3.000 12/01/2006 10.04 26
-------------- P -------------
21 Pacific University 3.000 11/01/1999 10.89 19
1,040 Paine College 3.000 10/01/2016 10.45 584
25 Pan American University 3.000 10/01/1999 9.23 23
2,587 Philadelphia College of Art 3.000 01/01/2022 10.62 1,278
810 Pine Manor College 3.625 10/01/2003 10.80 643
32 Point Loma Nazarene College 2.875 04/01/1999 11.85 29
10 Point Loma Nazarene College 2.875 04/01/1998 11.89 9
195 Polytechnic University 3.375 10/01/2011 10.59 125
1,607 Portland Student Services Inc. 3.000 01/01/2011 10.36 1,023
230 Post College 3.000 04/01/2010 10.76 148
1,455 Purdue University 3.625 07/01/2004 9.33 1,169
418 Purdue University 3.000 07/01/2005 9.26 326
-------------- Q -------------
49 Queens College 3.000 07/01/1998 11.07 45
69 Queens College 3.500 11/01/2001 10.88 61
200 Queens College 3.625 07/01/2004 10.90 153
-------------- R -------------
355 Randolph-Macon College 3.000 05/01/2010 10.72 231
374 Randolph-Macon College 3.000 11/01/2000 10.50 324
600 Regis College (Denver) 3.000 11/01/2012 10.47 368
189 Regis College (Weston) 3.375 10/01/2002 10.85 158
290 Rhode Island College 3.000 10/01/2005 10.09 218
145 Rider College 3.500 05/01/2001 11.57 123
308 Rider College 3.375 05/01/2002 11.44 248
137 Rider College 3.125 11/01/2000 10.86 119
1,945 Rider College 3.625 11/01/2013 10.42 1,193
482 Rider College 3.000 05/01/2017 10.70 262
122 Rio Grande College 3.000 03/30/2009 10.93 82
70 Roberts Wesleyan College 3.000 11/01/2000 10.83 60
253 Roger Williams College 3.000 11/01/1999 10.89 226
81 Russell Sage College 3.000 10/01/1998 10.98 75
200 Rutgers, The State University 2.750 05/01/1999 8.84 183
730 Rutgers, The State University 3.750 05/01/2016 9.19 476
40 Rutgers, The State University 2.875 05/01/1999 8.80 37
745 Rutgers, The State University 3.125 05/01/2001 8.89 668
</TABLE>
The Accompanying notes are an integral part of these financial statements.
29
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
-------------- S -------------
$180 Saint Ambrose University 3.000 11/01/2001 10.78 $150
185 Saint Anselm College 3.375 10/01/2001 10.88 157
41 Saint Edward's University 3.125 04/01/2000 11.69 35
138 Saint John's University 3.000 10/01/2002 10.76 111
215 Saint Joseph Hospital 3.500 10/01/2001 10.87 181
228 Saint Louis College of Pharmacy 3.375 10/01/2004 10.74 175
116 Saint Louis University 3.125 10/01/2000 10.90 101
584 Saint Louis University 3.500 11/01/2002 10.80 480
128 Saint Mary's College 3.000 03/01/2005 11.25 92
452 Saint Mary's College 3.000 06/01/2020 10.14 236
45 Saint Mary's University of San Antonio 3.000 10/01/1998 10.98 41
2,194 Saint Michael's College 3.000 05/01/2013 10.60 1,323
331 Saint Norbert College 3.375 04/01/2002 11.52 270
262 Saint Norbert College 3.625 04/01/2004 11.33 198
448 Saint Norbert College 3.000 04/01/2007 11.10 305
549 Saint Paul's College 3.000 11/01/2014 10.56 320
115 Saint Peter's College 3.000 05/01/1999 11.70 101
705 Saint Vincent College 3.500 05/01/2013 10.86 429
60 Sam Houston State University 2.875 10/01/1997 8.74 58
430 Sam Houston State University 3.500 10/01/2001 9.10 376
1,115 San Diego State University 3.000 11/01/2007 10.04 819
1,345 Sangamon State University 3.000 11/01/2018 10.12 758
505 Seattle University 3.500 11/01/2001 10.84 429
613 Seattle University 3.000 11/01/2008 10.55 416
420 Seton Hall University 3.000 11/01/2000 10.83 362
375 Seton Hill College 3.625 11/01/2014 10.53 230
33 Siena College 2.875 10/01/1997 11.08 32
31 Sierra College 3.375 04/01/2002 10.87 26
356 Simpson College 3.000 07/01/2016 10.58 197
426 South Dakota School of Mines and Technology 3.000 04/01/2018 10.30 231
362 South Dakota School of Mines and Technology 3.625 04/01/2002 10.85 300
45 South Plains College 3.500 10/01/2002 10.18 37
108 South Plains College 3.625 10/01/2004 10.17 85
75 South Plains College 3.000 10/01/2005 10.10 57
530 Southeast Missouri State University 3.500 04/01/2002 10.82 431
1,366 Southeast Missouri State University 3.000 04/01/2007 10.58 962
855 Southeastern Oklahoma State University 3.000 04/01/2009 10.51 567
204 Southern Arkansas University 3.500 10/01/2002 10.23 169
666 Southern Methodist University 3.000 10/01/2007 10.61 463
288 Southern Nazarene University 3.750 04/01/2005 11.27 213
25 Southern University and
Agricultural and Mechanical College 2.875 04/01/1998 11.13 23
40 Southwest Missouri State College 2.875 10/01/1997 10.16 38
</TABLE>
The Accompanying notes are an integral part of these financial statements.
30
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$965 Southwest Missouri State College 3.375 10/01/2002 10.17 $810
2,625 Southwest Texas State University 3.000 10/01/2015 9.51 1,599
26 Southwestern Christian College 3.000 11/01/2000 10.83 22
66 Spalding University 3.125 09/01/2000 10.95 58
451 Spalding University 3.000 09/01/2007 10.66 319
57 Springfield College 3.500 11/01/1999 10.60 52
50 Springfield College 3.125 05/01/2000 11.29 43
528 Springfield College 3.500 05/01/2013 10.67 331
105 Springfield College 3.000 05/15/2005 10.11 81
240 State Center Community College 3.000 10/01/2004 10.10 185
78 Stephen F. Austin State University 2.875 10/01/1999 9.23 71
2,232 Stephen F. Austin State University 3.375-3.500 10/01/2012 9.57 1,488
223 Stetson University 3.000 01/01/2006 11.25 153
175 Stillman College 3.750 02/01/2004 11.42 132
433 Stonehill College 3.000 10/01/2006 10.64 311
56 Stonehill College 3.000 11/01/1998 10.96 52
175 SUNY, Mohawk Valley Community College 3.000 04/01/2005 10.26 110
102 Susquehanna University 3.125 05/01/2000 11.27 87
809 Syracuse University 3.000 05/01/2008 10.74 552
-------------- T -------------
76 Talladega College 3.375 12/01/2001 10.08 63
469 Talladega College 3.000 12/01/2012 10.24 286
314 Taylor University 3.000 10/01/2012 10.50 192
951 Taylor University 3.000 10/01/2013 10.49 572
126 Temple University 3.125 03/01/1999 10.70 113
260 Tennessee State University 3.375 01/01/1999 11.10 230
806 Texas A & I University 3.000 07/01/2009 9.57 555
90 Texas A & I University 3.000 06/01/1998 9.10 84
189 Texas Southern University 3.500 04/01/2001 10.89 160
550 Texas Southern University 3.500 04/01/2013 10.45 341
547 Transylvania University 3.000 11/01/2010 10.51 353
1,050 Trinity University 3.625 09/01/2004 10.82 809
502 Tufts University 3.375 10/01/2001 10.87 424
2,513 Tufts University 3.000 10/01/2021 10.39 1,283
101 Tulane University of Louisiana 2.875 10/01/1997 8.62 98
185 Tulane University of Louisiana 3.000 10/01/1998 8.74 103
925 Tulane University of Louisiana 3.375-3.500 10/01/2001 9.06 878
-------------- U -------------
64 Union College 3.000 11/01/2002 10.74 52
2,260 University of Alabama in Birmingham 3.000 11/01/2008 7.97 1,734
127 University of Alabama in Huntsville 3.000 05/01/1999 10.05 114
124 University of Alaska 3.500 04/01/2000 10.94 108
223 University of Alaska 3.375 04/01/2002 10.82 182
536 University of Alaska 3.500 04/01/2003 10.80 436
</TABLE>
The Accompanying notes are an integral part of these financial statements.
31
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$290 University of Alaska 3.000 10/01/1999 10.22 $265
313 University of Arizona 3.500 04/01/2003 10.82 255
166 University of Arkansas at Little Rock 3.500 04/01/2001 10.04 142
215 University of Arkansas at Little Rock 3.000 11/01/2009 9.42 153
573 University of Central Arkansas 3.000 04/01/2005 10.69 420
635 University of Central Florida 3.000 10/01/2007 10.08 451
355 University of Chicago 3.500 12/01/2001 10.10 291
113 University of Chicago 3.375 12/01/2001 10.08 92
42 University of Chicago 3.500 12/01/2002 10.11 34
75 University of Delaware 2.750 11/01/1997 8.54 73
200 University of Delaware 3.125 11/01/2000 8.84 180
318 University of Delaware 3.375 11/01/2000 8.81 292
1,510 University of Delaware 3.000 11/01/2006 9.08 1,152
729 University of Delaware 3.000 12/01/2018 8.81 430
2,565 University of Florida 3.000 07/01/2014 10.15 1,527
212 University of Hartford 3.000 11/01/2001 10.78 177
80 University of Hawaii at Manoa 2.875 10/01/1999 10.13 72
96 University of Hawaii at Manoa 3.500 10/01/2001 10.18 82
82 University of Lowell 3.000 11/01/2000 7.62 75
2,975 University of Michigan 3.750 10/01/2005 9.51 2,353
185 University of Michigan 3.000 04/01/1999 10.08 167
70 University of Missouri 3.000 05/01/1998 10.07 65
1,078 University of Missouri 3.375 05/01/2002 10.03 920
151 University of Missouri 2.875 11/01/2000 9.25 134
112 University of Missouri 3.000 05/01/1998 10.07 104
18 University of Missouri 3.000 05/01/1998 10.08 17
138 University of Montevallo 3.125 11/01/2000 9.27 123
261 University of Nevada at Reno 3.000 11/01/1999 10.12 235
982 University of North Carolina 3.000 11/01/2005 8.81 782
690 University of North Carolina 3.000 01/01/2008 9.50 487
61 University of North Carolina 3.000 01/01/2007 9.50 45
1,101 University of Notre Dame 3.000 02/15/2019 10.62 580
33 University of Portland 2.875 04/01/1998 11.96 30
885 University of Portland 3.375 04/01/2013 10.88 540
89 University of Portland 3.000 11/01/1998 10.98 83
53 University of Puerto Rico, Rio Piedras Campus 3.125 06/01/2000 9.17 48
2,049 University of Puerto Rico, Rio Piedras Campus 3.000 06/01/2011 9.39 1,358
60 University of Rhode Island 3.000 10/01/2001 9.68 51
68 University of Rochester 2.875 10/01/1998 11.04 64
716 University of Saint Thomas 3.000 10/01/2019 10.41 390
515 University of Santa Clara 3.125 04/01/2002 11.44 408
235 University of Santa Clara 3.375 04/01/2002 11.45 188
1,155 University of Santa Clara 3.625 04/01/2004 11.33 876
64 University of Scranton 3.125 11/01/2000 10.84 55
</TABLE>
The Accompanying notes are an integral part of these financial statements.
32
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$257 University of South Dakota 3.500 10/01/2001 9.59 $222
1,120 University of South Florida 3.750 07/01/2005 10.30 853
381 University of Steubenville 3.125 04/01/2010 10.98 241
36 University of Tampa 2.875 11/01/1998 10.95 33
125 University of Texas at Arlington 3.000 07/01/1998 9.87 115
1,426 University of Vermont 3.000 07/01/2016 8.95 885
290 University of Vermont 3.375 07/01/2001 8.33 257
1,300 University of Vermont 3.000 07/01/2019 9.06 757
260 University of Washington 3.000 08/01/1999 8.82 237
380 University of Washington 3.500 08/01/2002 9.07 323
423 University of Washington 3.000 08/01/2003 9.06 345
1,680 University Student Co-Operative Association 3.000 04/01/2019 10.70 868
186 Ursinus College 3.000 10/01/2000 10.86 160
607 Utica College 3.000 11/01/2009 10.53 402
-------------- V -------------
570 Vermont State College 3.000 06/01/2008 9.02 412
291 Vermont State College 3.000 07/01/2014 9.30 182
1,255 Villanova University 3.000 04/01/2019 10.70 650
4,080 Vincennes University 3.000 06/01/2023 9.02 2,229
3,002 Virginia Commonwealth University 3.000 06/01/2011 10.01 1,921
1,360 Virginia Commonwealth University 3.000 06/01/2004 10.08 1,042
406 Virginia Wesleyan College 3.000 11/01/2009 10.54 273
232 Virginia Wesleyan College 3.000 11/01/2010 10.51 150
-------------- W -------------
39 Waldorf College 3.125 07/01/2000 10.97 33
301 Waldorf College 3.000 07/01/2005 10.77 219
69 Wartburg College 3.500 10/01/2001 10.87 58
177 Wartburg College 3.750 04/01/2011 11.00 114
875 Washington State University 3.625 04/01/2004 10.02 692
570 Washington State University 3.750 04/01/2004 10.03 454
985 Washington State University 3.375 04/01/2003 10.02 794
50 Washington State University 3.000 04/01/1999 10.08 45
164 Washington University 3.000 10/01/1998 11.05 155
497 Washington University 3.500 10/01/2001 10.91 428
107 Wayne State University 3.000 04/01/2000 11.69 99
251 Wesley College 3.375 05/01/2013 10.88 154
82 West Kern Junior College District 3.625 04/01/2004 10.73 63
550 West Valley College 3.000 04/01/2009 10.50 364
200 West Virginia State College 3.000 05/01/1998 11.05 185
168 West Virginia Wesleyan College 2.875 05/01/2000 11.56 145
497 West Virginia Wesleyan College 3.000 05/01/2015 10.75 280
504 Western Carolina University 3.625 05/01/2003 10.75 406
130 Western Washington University 3.125 10/01/1998 10.18 122
325 Western Washington University 3.500 10/01/2001 10.18 277
</TABLE>
The Accompanying notes are an integral part of these financial statements.
33
<PAGE>
COLLEGE AND UNIVERSITY FACILITY LOAN TRUST TWO
SCHEDULE OF INVESTMENTS
May 31, 1997
(Dollar Amounts in Thousands)
(Continued)
<TABLE>
<CAPTION>
Outstanding Stated Internal Amortized
Principal Interest Maturity Rate of Cost (Notes
Balance Description Rate % Date Return % 1 and 2)
------- ----------- ------ ---- -------- --------
<S> <C> <C> <C> <C> <C>
$790 Western Washington University 3.625 10/01/2004 10.18 $622
555 Western Washington University 3.750 10/01/2005 10.19 428
285 Westminster College of Salt Lake 3.000 11/01/2017 10.39 158
65 Westmoreland Hospital Association 3.500 07/01/2001 10.98 54
24 Wheaton College 2.875 04/01/1999 11.50 22
920 Wheaton College 3.500 04/01/2013 10.70 564
260 Wheeling College 3.500 05/01/2001 11.23 211
103 Wheeling College 3.000 11/01/2007 10.59 73
31 Wheelock College 3.000 05/01/2011 10.23 20
65 Wichita State University 3.000 10/01/2000 9.29 58
845 Wittenberg University 3.000 05/01/2015 10.76 474
263 Wittenberg University 3.000 11/01/2017 10.39 145
58 Wooster Business College 3.000 03/30/2009 10.88 39
47 Worcester Polytechnic Institute 2.750 10/01/1997 11.04 45
169 Worcester Polytechnic Institute 3.375 04/01/2001 11.57 141
754 Wright State University 3.000 05/01/2009 9.89 522
-------------- Y -------------
386 York Hospital 3.000 05/01/2020 10.64 198
- -------- ---------
$263,537 Total College and University Loans $178,206
- -------- Allowance for Possible Loan Losses ---------
Net College and University Loans 932
--------
$177,274
--------
<CAPTION>
INVESTMENT AGREEMENTS (11.2%)
-----------------------------
<S> <C> <C> <C> <C> <C>
Morgan Guaranty Trust Company -
$5,462 Liquidity Fund 7.750 06/01/2018 7.750 $5,462
Morgan Guaranty Trust Company -
16,964 Revenue Fund 7.050 06/01/2018 7.050 16,964
- -------- ---------
$22,426 Total Investment Agreements $22,426
- -------- ---------
$285,963 Total Investments (100.0%) $199,700
======== =========
</TABLE>
(A) This institution has filed for bankruptcy under Chapter 11 of the Federal
Bankruptcy Code and has been placed on nonaccrual status as more fully discribed
in Note 6.
The Accompanying notes are an integral part of these financial statements.
34
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains financial information extracted from the May 31, 1997
College and University Facility Loan Trust Two financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 199700
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 1867
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1005
<TOTAL-ASSETS> 202572
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 174976
<OTHER-ITEMS-LIABILITIES> 7208
<TOTAL-LIABILITIES> 182184
<SENIOR-EQUITY> 6831
<PAID-IN-CAPITAL-COMMON> 12557
<SHARES-COMMON-STOCK> 1763800
<SHARES-COMMON-PRIOR> 1763800
<ACCUMULATED-NII-CURRENT> (764)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 20388
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9966
<OTHER-INCOME> 0
<EXPENSES-NET> 8536
<NET-INVESTMENT-INCOME> 1430
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1330
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 589
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1058)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 12557
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 8290
<GROSS-EXPENSE> 8536
<AVERAGE-NET-ASSETS> 20917
<PER-SHARE-NAV-BEGIN> 7.27
<PER-SHARE-NII> .81
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .33
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.69
<EXPENSE-RATIO> .41
<AVG-DEBT-OUTSTANDING> 180060
<AVG-DEBT-PER-SHARE> 102.09
</TABLE>
