QUARTERLY INVESTMENT REPORT

For the Quarter Ended

August 31, 2014

Prepared byValley View Consulting, L.L.C.

/s/ Cynthia F. GilliamCynthia F. Gilliam, Vice Chancellor for Administration & Finance/CFO

/s/ Tammy CortesTammy Cortes, Associate Vice Chancellor for Administration & Finance

These reports were compiled using information provided by the Lone Star College System. No procedures were performed to test the accuracy or completeness of this information. The market values included in these reports were obtained by Valley View Consulting, L.L.C. from sources believed to be accurate and represent proprietary valuation. Due to market fluctuations these levels are not necessarily reflective of current liquidation values. Yield calculations are not determined using standard performance formulas, are not representative of total return yields and do not account for investment advisor fees.

The investment portfolio of the Lone Star College System is in compliance with the Public Funds Investment Act and the System's Investment Policy and strategies.

Strategy Summary:

Quarter End Results by Investment Category:

Asset Type Book Value Market Value Book Value Market Value Avg. YieldPools/DDA/MMA 111,259,708$ 111,259,708$ 77,478,883$ 77,478,883$ 0.18%Securities/CDs 101,656,840 101,652,576 91,604,902 91,600,891 0.35%

Totals 212,916,548$ 212,912,284$ 169,083,785$ 169,079,774$

Total Portfolio 0.27% Total Portfolio 0.25%

Rolling Three Month Treasury 0.03% Rolling Three Month Treasury 0.04%Rolling Six Month Treasury 0.06% Rolling Six Month Treasury 0.07%Rolling One Year Treasury 0.12% Rolling One Year Treasury 0.12%

TexPool 0.03%

Quarterly Interest Earnings 130,804$ YTD Interest Earnings 497,618$

(1) Average Quarterly Yield calculated using quarter end report average yield and adjusted book value.

The Federal Open Market Committee (FOMC) maintained the Fed Funds target range between 0.00% and 0.25% (actual Fed Funds traded <10 bps). The FOMC continued tapering the Quantitative Easing (QE3) program to $25 billion per month. Tapering is anticipated to eliminate the program in October. Second quarter 2014 GDP was a strong 4.2% and first quarter was revised up to (2.1%). Employment data remains key as the FOMC focuses on wage growth, under-employment and overall participation. The US stock markets again touched new highs. International economical and political struggles weigh on US interest rates. Financial institution deposit yields generally provide the best interest earnings opportunity, although spreads to security yields have tightened.

Average Quarterly Yield (1) Average Quarter End Yields - Fiscal Year

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0250500750

1,0001,2501,5001,7502,0002,250

S&P 500

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Detail of Investment Holdings

Coupon/ Maturity Settlement Original Face/ Purchase Book Market Market Life Description Rating Discount Date Date Par Value Price Value Price Value (days) Yield

SSB MMA MMA 0.19% 09/01/14 08/31/14 20,128,657 1.00 20,128,657 1.00 20,128,657 1 0.19%Capital One MMA MMA 0.30% 09/01/14 08/31/14 15,039,669 1.00 15,039,669 1.00 15,039,669 1 0.30%LOGIC LGIP AAAm 0.09% 09/01/14 08/31/14 405,416 1.00 405,416 1.00 405,416 1 0.09%LSIP - Corporate LGIP AAAm 0.12% 09/01/14 08/31/14 3,895,595 1.00 3,895,595 1.00 3,895,595 1 0.12%LSIP - Corporate Plus (3) LGIP AAAm 0.14% 09/01/14 08/31/14 32,449,511 1.00 32,449,511 1.00 32,449,511 1 0.14%LSIP - Government LGIP AAAm 0.05% 09/01/14 08/31/14 64,261 1.00 64,261 1.00 64,261 1 0.05%TexPool LGIP AAAm 0.04% 09/01/14 08/31/14 223,047 1.00 223,047 1.00 223,047 1 0.04%TexPool - Prime LGIP AAAm 0.06% 09/01/14 08/31/14 5,272,728 1.00 5,272,728 1.00 5,272,728 1 0.06%

Southside Bank CD CD0252 0.30% 09/03/14 06/03/13 4,012,014 100.00 4,012,014 100.00 4,012,014 3 0.30%Southside Bank CD CD6191 0.40% 09/17/14 03/19/13 2,026,661 100.00 2,026,661 100.00 2,026,661 17 0.40%Comerica Bank CD CD9499 0.49% 10/01/14 01/25/13 4,534,985 100.00 4,534,985 100.00 4,534,985 31 0.49%Comerica Bank CD CD5507 0.20% 10/01/14 12/02/13 25,000,000 100.00 25,000,000 100.00 25,000,000 31 0.20%Texas Capital Bank CD CD112013R 0.25% 11/20/14 11/20/13 246,531 100.00 246,531 100.00 246,531 81 0.25%Green Bank CD CD0077R 0.55% 03/20/15 03/20/14 245,000 100.00 245,000 100.00 245,000 201 0.55%Southside Bank CD CD0841 0.42% 03/20/15 09/20/13 6,018,868 100.00 6,018,868 100.00 6,018,868 201 0.42%Cadence Bank CD CD5174 0.20% 07/01/15 03/24/14 2,037,754 100.00 2,037,754 100.00 2,037,754 304 0.20%Comerica Bank CD CD5515 0.27% 07/01/15 12/02/13 10,017,989 100.00 10,017,989 100.00 10,017,989 304 0.27%Inter National Bank CD5489 0.37% 07/22/15 07/22/14 2,000,000 100.00 2,000,000 100.00 2,000,000 325 0.37%Comerica Bank CD CD5911 0.23% 08/03/15 03/20/14 8,007,716 100.00 8,007,716 100.00 8,007,716 337 0.23%Dallas Wtrwrks & Swr - Muni 2354163T9 AAA 0.80% 10/01/15 03/25/14 2,400,000 100.00 2,410,309 100.35 2,408,448 396 0.40%Comerica Bank CD CD5671 0.44% 10/01/15 01/24/14 10,025,584 100.00 10,025,584 100.00 10,025,584 396 0.44%Comerica Bank CD CD9473R 0.40% 11/02/15 04/01/14 4,005,351 100.00 4,005,351 100.00 4,005,351 428 0.40%Houston Comm. College - Muni 442368KS4 Aa 0.62% 04/15/16 04/16/14 1,000,000 100.00 1,000,000 99.79 997,850 593 0.62%Comerica Bank CD CD050216 0.64% 05/02/16 05/29/14 10,016,140 100.00 10,016,140 100.00 10,016,140 610 0.64%

169,073,476$ 169,083,785$ 169,079,774$ 134 0.27%

August 31, 2014

(2) Weighted average yield to maturity - For purposes of calculating weighted average yield to maturity, realized and unrealized gains/losses, and Investment Advisor fees are not considered.

(1) Weighted average life - For purposes of calculating weighted average life, Bank Deposit, Local Government Investment Pool, and Money Market Mutual Fund investments are assumed to have a one day maturity.

(3) Original Face/Par Value - For reporting purposes, Purchase Price and Market Price are reported as $1.00 and Original Face/Par Value is adjusted accordingly. Actual Purchase Price and Market Price is $0.50, consequentially Original Face/Par Value would double.

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Certificates of Deposit

52%

MMA21%

LOGIC0%

LSIP22%

TexPool3%Securities

2%

Portfolio Composition

This chart describes the portfolio's portion of each investment pool or category.

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$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

Total Portfolio

Quarter End Book Value

This chart tracks the LSCS's Total Portfolio Book Value quarter-by-quarter to provide an historical perspective of the System's financial position.

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$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000Book Value Maturity Distribution

Maturity Date Call Date

This chart groups the portfolio's positions by maturity and call date. At this time there are no callable investments.

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Book Value Comparison

Coupon/ Maturity Original Face/ Original Face/Discount Date Par Value Book Value Purchases Maturities/Calls Par Value Book Value

SSB MMA 0.19% 09/01/14 20,119,472$ 20,119,472$ 9,184$ -$ 20,128,657$ 20,128,657$ Capital One MMA 0.30% 09/01/14 15,028,301 15,028,301 11,368 15,039,669 15,039,669 LOGIC 0.09% 09/01/14 2,404,930 2,404,930 (1,999,514) 405,416 405,416 LSIP - Corporate 0.12% 09/01/14 8,166,834 8,166,834 (4,271,239) 3,895,595 3,895,595 LSIP - Corporate Plus 0.14% 09/01/14 59,938,748 59,938,748 (27,489,236) 32,449,511 32,449,511 LSIP - Government 0.05% 09/01/14 94,953 94,953 (30,692) 64,261 64,261 TexPool 0.04% 09/01/14 223,029 223,029 18 223,047 223,047 TexPool - Prime 0.06% 09/01/14 5,283,441 5,283,441 (10,713) 5,272,728 5,272,728

Southside Bank CD 0.22% 06/19/14 2,026,201 2,026,201 (2,026,201) Comerica Bank CD 0.41% 07/01/14 5,027,309 5,027,309 (5,027,309) Southside Bank CD 0.65% 08/29/14 5,056,996 5,056,996 (5,056,996) Southside Bank CD 0.30% 09/03/14 4,008,982 4,008,982 3,031 4,012,014 4,012,014 Southside Bank CD 0.40% 09/17/14 2,024,620 2,024,620 2,041 2,026,661 2,026,661 Comerica Bank CD 0.49% 10/01/14 4,529,389 4,529,389 5,596 4,534,985 4,534,985 Comerica Bank CD 0.20% 10/01/14 25,000,000 25,000,000 - 25,000,000 25,000,000 Texas Capital Bank CD 0.25% 11/20/14 246,373 246,373 157 246,531 246,531 Green Bank CD 0.55% 03/20/15 245,000 245,000 - 245,000 245,000 Southside Bank CD 0.42% 03/20/15 6,012,503 6,012,503 6,365 6,018,868 6,018,868 Cadence Bank CD 0.20% 07/01/15 2,036,725 2,036,725 1,030 2,037,754 2,037,754 Comerica Bank CD 0.27% 07/01/15 10,011,175 10,011,175 6,815 10,017,989 10,017,989 Inter National Bank CD 0.37% 07/22/15 2,000,000 2,000,000 2,000,000 Comerica Bank CD 0.23% 08/03/15 8,003,075 8,003,075 4,640 8,007,716 8,007,716 Dallas Wtrwrks & Swr - Muni 0.80% 10/01/15 2,400,000 2,412,704 (2,395) 2,400,000 2,410,309 Comerica Bank CD 0.44% 10/01/15 10,014,474 10,014,474 11,111 10,025,584 10,025,584 Comerica Bank CD 0.40% 11/02/15 4,001,315 4,001,315 4,036 4,005,351 4,005,351 Houston Comm. College - Muni 0.62% 04/15/16 1,000,000 1,000,000 - 1,000,000 1,000,000 Comerica Bank CD 0.64% 05/02/16 10,000,000 10,000,000 16,140 10,016,140 10,016,140

212,903,844$ 212,916,548$ 2,081,533$ (45,914,295)$ 169,073,476$ 169,083,785$

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Market Value Comparison

Coupon/ Maturity Original Face/ Quarter End Original Face/Discount Date Par Value Market Value Change Par Value Market Value

SSB MMA 0.19% 09/01/14 20,119,472$ 20,119,472$ 9,184$ 20,128,657$ 20,128,657$ Capital One MMA 0.30% 09/01/14 15,028,301 15,028,301 11,368 15,039,669 15,039,669 LOGIC 0.09% 09/01/14 2,404,930 2,404,930 (1,999,514) 405,416 405,416 LSIP - Corporate 0.12% 09/01/14 8,166,834 8,166,834 (4,271,239) 3,895,595 3,895,595 LSIP - Corporate Plus 0.14% 09/01/14 59,938,748 59,938,748 (27,489,236) 32,449,511 32,449,511 LSIP - Government 0.05% 09/01/14 94,953 94,953 (30,692) 64,261 64,261 TexPool 0.04% 09/01/14 223,029 223,029 18 223,047 223,047 TexPool - Prime 0.06% 09/01/14 5,283,441 5,283,441 (10,713) 5,272,728 5,272,728

Southside Bank CD 0.22% 06/19/14 2,026,201 2,026,201 (2,026,201) Comerica Bank CD 0.41% 07/01/14 5,027,309 5,027,309 (5,027,309) Southside Bank CD 0.65% 08/29/14 5,056,996 5,056,996 (5,056,996) Southside Bank CD 0.30% 09/03/14 4,008,982 4,008,982 3,031 4,012,014 4,012,014 Southside Bank CD 0.40% 09/17/14 2,024,620 2,024,620 2,041 2,026,661 2,026,661 Comerica Bank CD 0.49% 10/01/14 4,529,389 4,529,389 5,596 4,534,985 4,534,985 Comerica Bank CD 0.20% 10/01/14 25,000,000 25,000,000 - 25,000,000 25,000,000 Texas Capital Bank CD 0.25% 11/20/14 246,373 246,373 157 246,531 246,531 Green Bank CD 0.55% 03/20/15 245,000 245,000 - 245,000 245,000 Southside Bank CD 0.42% 03/20/15 6,012,503 6,012,503 6,365 6,018,868 6,018,868 Cadence Bank CD 0.20% 07/01/15 2,036,725 2,036,725 1,030 2,037,754 2,037,754 Comerica Bank CD 0.27% 07/01/15 10,011,175 10,011,175 6,815 10,017,989 10,017,989 Inter National Bank CD 0.37% 07/22/15 2,000,000 2,000,000 2,000,000 Comerica Bank CD 0.23% 08/03/15 8,003,075 8,003,075 4,640 8,007,716 8,007,716 Dallas Wtrwrks & Swr - Muni 0.80% 10/01/15 2,400,000 2,410,080 (1,632) 2,400,000 2,408,448 Comerica Bank CD 0.44% 10/01/15 10,014,474 10,014,474 11,111 10,025,584 10,025,584 Comerica Bank CD 0.40% 11/02/15 4,001,315 4,001,315 4,036 4,005,351 4,005,351 Houston Comm. College - Muni 0.62% 04/15/16 1,000,000 998,360 (510) 1,000,000 997,850 Comerica Bank CD 0.64% 05/02/16 10,000,000 10,000,000 16,140 10,016,140 10,016,140

212,903,844$ 212,912,284$ (43,832,510)$ 169,073,476$ 169,079,774$

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Book Value Allocated by Fund

Operating CIP CIP CIP I & SDescription Maturity Fund Fund Revenue Bonds MTN Bond Fund Total

SSB MMA 09/01/14 15,108,882$ -$ 5,019,775$ -$ -$ 20,128,657$ Capital One MMA 09/01/14 10,025,924 5,013,745 15,039,669 LOGIC 09/01/14 313,587 34,554 40,269 17,006 405,416 LSIP - Corporate 09/01/14 3 241,778 3,640,522 13,292 3,895,595 LSIP - Corporate Plus 09/01/14 19,244,070 13,205,441 32,449,511 LSIP - Government 09/01/14 63,722 538 64,261 TexPool 09/01/14 14,000 209,047 223,047 TexPool - Prime 09/01/14 4,895,202 377,526 5,272,728

Southside Bank CD 09/03/14 4,012,014 4,012,014 Southside Bank CD 09/17/14 2,026,661 2,026,661 Comerica Bank CD 10/01/14 4,534,985 4,534,985 Comerica Bank CD 10/01/14 25,000,000 25,000,000 Texas Capital Bank CD 11/20/14 246,531 246,531 Green Bank CD 03/20/15 245,000 245,000 Southside Bank CD 03/20/15 6,018,868 6,018,868 Cadence Bank CD 07/01/15 2,037,754 2,037,754 Comerica Bank CD 07/01/15 10,017,989 10,017,989 Inter National Bank CD 07/22/15 2,000,000 2,000,000 Comerica Bank CD 08/03/15 8,007,716 8,007,716 Dallas Wtrwks & Swr 10/01/15 2,410,309 2,410,309 Comerica Bank CD 10/01/15 10,025,584 10,025,584 Comerica Bank CD 11/02/15 4,005,351 4,005,351 Houston Community College 04/15/16 1,000,000 1,000,000 Comerica Bank CD 05/02/16 10,016,140 10,016,140

Total 96,226,379$ 653,858$ 53,704,210$ 40,269$ 18,459,070$ 169,083,785$

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Market Value Allocated by Fund

Operating CIP CIP CIP I & SDescription Maturity Fund Fund Revenue Bonds MTN Bond Fund Total

SSB MMA 09/01/14 15,108,882$ -$ 5,019,775$ -$ -$ 20,128,657$ Capital One MMA 09/01/14 10,025,924 5,013,745 15,039,669 LOGIC 09/01/14 313,587 34,554 40,269 17,006 405,416 LSIP - Corporate 09/01/14 3 241,778 3,640,522 13,292 3,895,595 LSIP - Corporate Plus 09/01/14 19,244,070 13,205,441 32,449,511 LSIP - Government 09/01/14 63,722 538 64,261 TexPool 09/01/14 14,000 209,047 223,047 TexPool - Prime 09/01/14 4,895,202 377,526 5,272,728

Southside Bank CD 09/03/14 4,012,014 4,012,014 Southside Bank CD 09/17/14 2,026,661 2,026,661 Comerica Bank CD 10/01/14 4,534,985 4,534,985 Comerica Bank CD 10/01/14 25,000,000 25,000,000 Texas Capital Bank CD 11/20/14 246,531 246,531 Green Bank CD 03/20/15 245,000 245,000 Southside Bank CD 03/20/15 6,018,868 6,018,868 Cadence Bank CD 07/01/15 2,037,754 2,037,754 Comerica Bank CD 07/01/15 10,017,989 10,017,989 Inter National Bank CD 07/22/15 2,000,000 2,000,000 Comerica Bank CD 08/03/15 8,007,716 8,007,716 Dallas Wtrwks & Swr 10/01/15 2,408,448 2,408,448 Comerica Bank CD 10/01/15 10,025,584 10,025,584 Comerica Bank CD 11/02/15 4,005,351 4,005,351 Houston Community College 04/15/16 997,850 997,850 Comerica Bank CD 05/02/16 10,016,140 10,016,140

Total 96,222,368$ 653,858$ 53,704,210$ 40,269$ 18,459,070$ 169,079,774$

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