ANNUAL INVESTMENT REPORT

FOR THE FISCAL YEAR ENDED MARCH 31, 2010

DORMITORY AUTHORITY OF THE STATE OF NEW YORK ANNUAL INVESTMENT REPORT FOR THE FISCAL YEAR ENDED MARCH 31, 2010
INDEX

INTRODUCTION SECTION I Dormitory Authority Investment Policy and Guidelines in Effect as of March 31, 2010

SECTION II Amendments to the Investment Policy and Guidelines Adopted or Effective During the Fiscal Year Ended March 31, 2010

SECTION III Explanation of the Authoritys Policies, Guidelines and Amendments

SECTION IV Dormitory Authority Basic Financial Statements as of and for the Years Ended March 31, 2010 and 2009 Report on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance With Government Auditing Standards for the Fiscal Year Ended March 31, 2010 Report on Compliance with the Requirements of Section 201.3 of Title Two of the Official Compilation of Codes, Rules, and Regulations of the State of New York for the Fiscal Year Ended March 31, 2010

SECTION V Dormitory Authority Investment Activity for the Fiscal Year Ended March 31, 2010

SECTION VI List of Total Fees, Commissions or other Charges for Investment, Trustee and Custodial Services for the Fiscal Year Ended March 31, 2010

INTRODUCTION As required by the Dormitory Authoritys Investment Policy and Guidelines (the Guidelines), first adopted by its Members on November 30, 1983, as amended, the Authority shall annually prepare and approve an Investment Report.

The organization of this report is structured to conform with the prescribed format specified in Section XVIII, Annual Investment and Other Reports, of the Guidelines. Section I contains the adopted Dormitory Authority Investment Policy and Guidelines, as amended and in effect as of March 31, 2010. Section II contains all amendments to the Guidelines adopted or effective during the fiscal year ended March 31, 2010. Section III is a concise explanation of the Guidelines and the current years amendments. Section IV contains a complete copy of the Authoritys Basic Financial Statements as of and for the years ended March 31, 2010 and 2009 including the opinion thereon and accompanying notes, as well as the Report on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed and in Accordance With Government Auditing Standards, the Report on Compliance with the Requirements of Section 201.3 of Title Two of the Official Compilation of Codes, Rules, and Regulations, and the Management Letter, which together constitute the annual independent audit of investments required by Section 2925 (3) of the Public Authorities Law, for the fiscal year ended March 31, 2010, submitted by the Authoritys independent auditors. Section V summarizes the recorded results of the Authoritys investment activity for the fiscal year ended March 31, 2010. Section VI lists the total fees, commissions or other charges for investment, trustee and custodial services for the fiscal year ended March 31, 2010. After the Authoritys Board has reviewed and approved this report, copies of same will be submitted, as required, to the Division of the Budget, Office of the State Comptroller, the Senate Finance Committee and the Assembly Ways and Means Committee in accordance with the law and the Authority Guidelines.

SECTION I

DORMITORY AUTHORITY INVESTMENT POLICY AND GUIDELINES IN EFFECT AS OF MARCH 31, 2010

Adopted November 30, 1983 Amended May 29, 1985 July 31, 1985 April 3, 1986 May 4, 1987 January 6, 1988 September 13, 1989 January 8, 1992 April 8, 1993 August 10, 1994 September 6, 1995 September 24, 1996 February 25, 1998 October 3, 2001 September 27, 2006 July 23, 2008

DORMITORY AUTHORITY INVESTMENT POLICY AND GUIDELINES

I.

SCOPE

This Investment Policy and Guidelines app1ies to the investment of all moneys on the Authoritys own behalf or on behalf of any other entity or individual, including funds held by a trustee under a bond resolution. II. OBJECTIVES

The primary objectives of the Dormitory Authoritys investment activities are, in priority order, to: conform with all applicable federal, state and other legal requirements, including any applicable bond resolution (legal); adequately safeguard principal (safety); provide sufficient liquidity to meet the purposes for which the funds are being held (liquidity); and obtain a reasonable rate of return, subject to any applicable requirements imposed by Federal Tax Law (yield). III. DELEGATION OF AUTHORITY

The Boards responsibility for administration of the investment program is delegated to the Authoritys Office of Finance, which shall establish written procedures for the operation of the investment program consistent with this Investment Policy and Guidelines. Such procedures shall include an adequate internal control structure to provide a satisfactory level of accountability based on a database or records incorporating descriptions of all transactions, including amounts of investments, transaction dates, and other relevant information and that regulates the activities of employees. IV. PRUDENCE

All participants in the investment process shall act responsibly as custodians of the public trust and shall avoid any transaction that might impair public confidence in the Authoritys ability to effectively fulfill its responsibilities to its clients, bondholders and the State of New York. Investments shall be made in accordance with this Investment Policy and Guidelines using the judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the objectives set forth in Section II herein. 1

All participants involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. V. DIVERSIFICATION

It is the policy of the Authority, subject to the requirements of any applicable bond resolution and to the extent practicable, to diversify its deposits and investments by financial institution, by investment instrument, and by maturity. The cash flow requirements of the project or fund will be the primary determining factor in selecting investment securities. VI. INTERNAL CONTROLS

The Office of Finance is responsible for establishing and maintaining an internal control structure to provide reasonable, but not absolute, assurance that deposits and investments are made in accordance with this Investment Policy and Guidelines and are safeguarded against, among other things, loss from unauthorized use or disposition, that transactions are executed in accordance with managements authorization and recorded properly, and are managed in compliance with applicable laws and regulations. The organizational structure of the Authority's Office of Finance will provide for a separation of (i) authorization function and (ii) accounting function. Only those individuals authorized by Resolution of the Board will be able to make investments or cause the transfer of funds and investments. The Treasurer or an Assistant Treasurer shall review and approve investment transactions initiated by Authority staff for compliance with this Investment Policy and Guidelines. Evidence of this approval will be made by: (i) the Treasurer or an Assistant Treasurer initialing the investment instruction schedule that is prepared when certain investments (i.e. construction funds and operating funds) are made or (ii) the Treasurer or an Assistant Treasurer signing the investment authorization letter accompanying instructions to the trustee or custodian for the investment of the remainder of investments (i.e. reserve funds, redemption funds and debt service funds). VII. PERMITTED INVESTMENTS

Subject to the provisions of any applicable bond resolution, the Authority hereby authorizes the Office of Finance to invest moneys not required for immediate expenditure in the following types of investments: A. Obligations issued, or fully insured or guaranteed as to the payment of principal and interest, by the United States of America; B. Obligations issued, or fully insured or guaranteed as to the payment of principal and interest, by any agency or instrumentality of the United States of America that are rated in at least the second highest rating category by at least 2

two nationally recognized rating organizations. C. (i) Certificates or other instruments which evidence the ownership of or the right to receive the payment of the principal of or interest on obligations of the type enumerated in paragraphs A and B of this Section, and (ii) shares or interest in a mutual fund, partnership or other fund registered under the Securities Act of 1933, as amended, and operated in accordance with Rule 2a-7 of the Investment Company Act of 1940, as amended,wholly comprised of such obligations and whose objective is to maintain a constant share value of $1.00; D. Investment Agreements, in accordance with Section XII hereof; E. Certificates of Deposit, in accordance with Section XIII hereof; F. (i) Obligations of any state or territory of the United States of America, any political subdivision of any state or territory of the United States of America, or any agency, authority, public benefit corporation or instrumentality of such state, territory or political subdivision, the interest on which is excludable from gross income under Section 103 of the Internal Revenue Code, which is not a "specified private activity bond" within the meaning of Section 57 (a)(5) of the Internal Revenue Code ("Exempt Obligations"), and (ii) shares or interest in a mutual fund, partnership or other fund registered under the Securities Act of 1933, as amended, and operated in accordance with Rule 2a-7 of the Investment Company Act of 1940, as amended, wholly comprised of Exempt Obligations and whose objective is to maintain a constant share value of $1.00; provided however, that all Exempt Obligations shall be rated in at least the second highest rating category by at least two nationally recognized rating organizations; G. Commercial paper issued by a domestic corporation rated in the highest short term rating category by at least one nationally recognized rating organization and having maturities of not longer than 270 days from the date they are purchased; H. Bankers acceptances issued by a bank rated in the highest short term rating category by at least one nationally recognized rating organization and having maturities of not longer than 365 days from the date they are purchased; I. Shares or interest in a mutual fund, partnership or other fund registered under the Securities Act of 1933, as amended, and operated in accordance with Rule 2a-7 of the Investment Company Act of 1940, as amended, whose objective is to maintain a constant share value of $1.00 per share and that is rated in the highest short term rating category by at least one nationally recognized rating organization. In addition to the Permitted Investments set forth in this Section VII, the Board may, as it deems appropriate, also specifically authorize other investments that are consistent with the objectives enumerated in Section II hereof.

VIII. PERMITTED COLLATERAL Whenever this Investment Policy and Guidelines or a particular bond resolution require that Permitted Investments be secured by collateral, the following securities may be accepted for such purpose: A. Obligations issued, or fully insured or guaranteed as to the payment of principal and interest, by the United States of America; B. Obligations issued, or fully insured or guaranteed as to the payment of principal and interest, by any agency or instrumentality of the United States of America that are rated in at least the second highest rating category by at least two nationally recognized rating organizations. C. Commercial paper issued by a domestic corporation rated in the highest short term rating category by at least one nationally recognized rating organization and having maturities of not longer than 270 days from the date they are pledged D. Contracts of financial guaranty, surety or other similar bonds or other instruments purchased from an insurance company holding the highest rating (A+XII Best rating or higher or the highest rating afforded by any other nationally recognized rating organization), having a minimum equity capital of $125,000,000 and which regularly deal in such contracts, bonds or instruments; and E. Bankers acceptances issued by a bank rated in the highest short term rating category by at least one nationally recognized rating organization and having maturities not longer than 365 days from the date they are pledged. IX. SAFEKEEPING AND COLLATERALIZATION

Only those securities described in Section VIII hereof shall be used to collateralize deposits and investments. Such securities shall be held by a third-party bank or trust company pursuant to a written custodial agreement or held in trust under a bond resolution. Each such custodian or trustee shall be a banking organization authorized to do business in the State of New York having a minimum equity capital of $125,000,000, having unsecured or uncollateralized long term debt obligations, or obligations secured or supported by a letter of credit, contract, agreement or surety bond issued by any such entity, which at the time any trustee or custodial relationship is entered into by the Authority, a rating of at least A by at least one nationally recognized rating organization, and shall be a member of the Federal Reserve Bank or maintain accounts with member banks. A maximum of approximately forty five percent of all investments will be held in a single bank at any one time. The Authority will at all times have a minimum of two custodian banks.

Each custodial agreement shall provide that the collateral is (i) being held by the bank or trust company, as agent of and custodian for, the Authority or trustee; (ii) will be kept separate and apart from the general assets of the custodial bank or trust company; and (iii) will not, under any circumstances, be commingled with or become part of the backing for any other deposit or other liabilities. Each agreement shall also: (i) require the custodian to confirm the receipt, substitution or release of the securities; (ii) provide for the frequency of revaluation of eligible securities (iii) include all provisions necessary to provide the Authority a perfected first security interest in the collateral; and (iv) shall require the custodian bank to subordinate any claims it may have against the pledged collateral. Eligible securities that are pledged as collateral shall be physically delivered to the third party bank or trust company unless the securities are in book-entry form in which event the trustee's or custodian's interest, as trustee or custodian, shall be recorded on the records of the Federal Reserve Bank and the custodian shall evidence its receipt thereof by delivery of appropriate confirmation to the Authority and trustee. In connection with any Investment Agreement or Certificate of Deposit, the entity with which the Authority or trustee is making the investment (Trading Partner) shall enter into an agreement providing, among other things, that the eligible collateral is being pledged to secure the Authoritys investment, together with agreed upon interest, if any, and any costs or expenses arising out of the collection of such investment upon default. It shall also provide the conditions under which the collateral may be sold, presented for payment, substituted or released and the events that will enable the Authority to exercise its rights against the collateral. In the event that the collateral is not registered or inscribed in the name of the Authority, such securities shall be delivered in a form suitable for transfer or with an assignment in blank to the Authority, trustee or its custodial bank. The market value of the collateral security for a Certificate of Deposit or Investment Agreement, including the underlying securities for a repurchase agreement, shall be no less than the principal amount plus accrued interest thereon of the Certificate of Deposit, Investment Agreement or repurchase agreement at all times. Securities held as collateral for Certificates of Deposit or Investment Agreements shall be priced as set forth in each applicable resolution authorizing the issuance of a series of bonds, or a resolution supplemental thereto, but in any event at least weekly, by the Authority and at least weekly by either the trustee, custodian or Trading Partner and compared to the principal and accrued interest on the investment. Collateral deficiencies shall be cured within a reasonable cure period. Trustee or custodian banks shall provide the Authority with a monthly inventory of investments and collateral held. Securities held as collateral for investments must have a readily determinable market value. Trustee or custodian banks holding securities as collateral for investments shall notify the Authority of any substitutions of collateral. Telephone communications shall be confirmed in writing. Margin maintenance requirements (except in the case of yield protection 5

agreements) shall be based upon the following criteria: The size and terms of the transaction (including requirements of the applicable financing documents); The type of underlying collateral security; The maturity of underlying collateral security; The capitalization, financial status and type of the Trading Partner; and The method by which such margin will be maintained. Each agreement shall include a description of the events of default that would permit the Authority or its trustee or custodian to liquidate or purchase the underlying securities, provisions for reasonable cure periods for events of default, and provisions for the corrective measures to be taken in the event that any rating assigned to a Trading Partner by nationally recognized rating organizations shall be downgraded, which measures may include delivery of additional collateral. The agreement shall permit the liquidation or purchase of the underlying securities if any such measures are ineffective. X. AUTHORIZED FINANCIAL INSTITUTIONS AND DEALERS

The Office of Finance shall maintain a list of financial institutions and dealers approved for investment purposes and, if applicable, establish appropriate limits on the amount of investments that can be made with each financial institution or dealer. The Office of Finance is responsible for evaluating the creditworthiness and financial position and maintaining a listing of proposed depositaries, Trading Partners and custodians. In addition to the criteria included herein, any or all of the following criteria may be used in developing the list of Trading Partners; reputation for quality and reliability, years and amount of experience, prior transactions with the Authority, and ratings given by nationally recognized rating organizations. Any criteria listed herein for the selection of Trading Partners may be in addition to the requirements of any bond resolution pertaining to the funds to be invested under such bond resolution. Such listing shall be evaluated at least annually by the Office of Finance. Investment of funds, the bidding of which is performed by the Authority, will be made on a diversified basis with banks and brokers. Selected bidders lists for investments will be drawn from the list of banks and brokers established by the Office of Finance and such selected bidders list will be reviewed at least on a quarterly basis; provided, however, that any resolution authorizing a series of bonds, or any supplement thereto, may permit the consideration of banks and brokers not on such list, if appropriate under the circumstances, provided that such banks and brokers meet the criteria specified in this Investment Policy and Guidelines. XI. PURCHASE OF INVESTMENTS

The Board shall, by separate Resolution, designate those officers and employees of the Authority that are authorized to contract for the purchase of investments and the

transfer of moneys or investments. Investments shall be purchased, sold or presented for redemption or payment by the trustee or custodial bank or trust company only in accordance with prior written authorization from an officer or employee authorized to make the investment. All such transactions shall be confirmed to the Authority, in writing, by the trustee or custodian bank or trust company. Such written confirmations may be in the form of a monthly statement of activity or individual confirmation statements. Any obligation held in the custody of the trustee shall be held in accordance with the applicable bond resolution and in all other instances by a bank or trust company pursuant to a written custodial agreement that complies with the requirements of Section IX of this Investment Policy and Guidelines. Payment of funds shall only be made (i) against the delivery of collateral or other acceptable form of security (ii) the delivery of obligations when such obligations are purchased outright or (iii) the delivery of the underlying securities when a repurchase agreement is involved; in each case either to the Authority or its duly authorized trustee or custodian. All certificated securities shall be held by the Authoritys custodian bank or banks or by trustees under bond resolutions. Transactions involving the purchase of a book-entry security shall be transferred to the Authority's trustee or custodian bank and the trustee's or custodian's interest, as trustee or custodian, recorded on the records of the Federal Reserve Bank. The Authority's trustee or custodian shall give written confirmation of the transaction and shall note the book entry nature of the transaction. Such written confirmations may be in the form of a monthly statement of activity or individual confirmation statements. The investment selection process requires competitive bidding at the direction of the Authority either by banks and brokers meeting the criteria specified herein or by banks and brokers selected by the government securities department of the Authority's trustee or custodian, except that such competitive bidding is not required for the purchase of U.S. Government or agency or instrumentality securities at their initial auction. The process of initiating and approving investment and funds transfer transactions will be documented. Each security purchase, disbursement of funds, transfer (and corresponding receipt of securities), or sale of securities (and corresponding receipt of funds) shall be authorized by an authorized officer or employee either orally, in writing or via fax, with approval of the Treasurer or an Assistant Treasurer. A written confirmation of each trade or funds transfer bearing the approval of the Treasurer or an Assistant Treasurer shall subsequently be transmitted to the trustee or custodian bank. A written bank or broker confirmation (when investing or selling directly) is required for each transaction. The purchase of Permitted Investments set forth in Section VII A, B, C, F, G, H, and I herein, are not required to be made pursuant to a written contract as it is not common business practice, however, each purchase must be confirmed in writing and be made in accordance with the provisions of this Investment Policy and Guidelines. Permitted Investments authorized by paragraphs A, B, F (i), G, and H of Section VII of this Investment Policy and Guidelines may only be purchased from securities brokers with minimum equity capital of $125,000,000 or on the Federal Reserve Bank of New Yorks list of primary government securities dealers and banking organizations 7

authorized to do business in the State of New York with a minimum equity capital of $125,000,000. Certificates or other instruments authorized by paragraph C (i) of Section VII of this Investment Policy and Guidelines may be purchased only if: offered by security brokers authorized to do business in the State of New York with a minimum equity capital of $125,000,000 and on the Federal Reserve Bank of New York's list of primary government securities dealers; and the underlying securities are held in a custodian bank, or agent thereof, authorized to do business in the State of New York. The custodian or any agent thereof shall have a minimum equity capital of $125,000,000. Shares or interest in a mutual fund, partnership or other fund whose objective is to maintain a constant share value of $1.00 authorized by paragraphs C (ii), F (ii), and I of Section VII of this Policy and Guidelines may be purchased only if: offered by financial institutions nationally recognized as offering such mutual funds, partnerships or other funds and such fund must have assets of at least $125,000,000; or offered by the trustee or custodian of the deposited moneys. XII. INVESTMENT AGREEMENTS

Investments Agreements, which shall include repurchase agreements and yield protection agreements, shall, in addition to any requirements contained in the applicable bond resolution, be subject to the following requirements: All Investment Agreements shall be made pursuant to a written agreement which, among other things: (i) sets forth the terms of the transaction and the respective rights of the Authority and its Trading Partner; (ii) satisfies the security provisions required by Section IX herein; (iii) requires appropriate margin maintenance for any collateral; and (iv) if applicable, contains those provisions necessary to enable the Investment Agreement to constitute either a repurchase agreement for purposes of the Bankruptcy Code or a qualified financial contract for purposes of Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (FIRREA). Obligations purchased under such agreements or pledged as collateral shall be fully secured by Permitted Collateral as set forth in Section VIII herein, in accordance with the requirements of Section IX herein. No substitution of securities will be allowed except as permitted by the applicable agreement. Investment Agreements will be purchased only from the following eligible Trading Partners: A. a securities dealer, the liquidation of which is subject to the Securities Investors Protection Corporation or other similar corporation and which is on the Federal

Reserve Bank of New York's list of primary government securities dealers with unsecured or uncollateralized long term debt obligations which, at the time any Investment Agreement is entered into by the Authority, are rated in at least the second highest rating category by at least one nationally recognized rating organization, or in the absence of a long term rating, and if the nationally recognized rating organization and credit enhancement facility in connection with the related bond resolution under which moneys are invested, allows, is rated in the highest short term rating category by at least one nationally recognized rating organization; B. a bank, a trust company, a national banking association, a corporation subject to registration with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956 or any successor provisions of law, a federal branch pursuant to the International Banking Act of 1978 or any successor provision of law, a domestic branch or agency of a foreign bank which branch or agency is duly licensed or authorized to do business under the laws of any state or territory of the United States of America, a savings bank, a savings and loan association, an insurance company or association chartered or organized under the laws of any state of the United States of America; provided however, that the unsecured or uncollateralized long term debt obligations of which, or obligations secured or supported by a letter of credit, contract, agreement or surety bond issued by any such entity, at the time any investment agreement is entered into by the Authority, are rated in at least the second highest rating category by at least one nationally recognized rating organization; C. a corporation affiliated with or which is a subsidiary of any entity described in (A) or (B) above or which is affiliated with or a subsidiary of a corporation which controls or wholly owns any such entity or which is a subsidiary of a foreign insurance company; provided however, that the unsecured or uncollateralized long term debt obligations of which, or obligations secured or supported by a letter of credit, contract, agreement or surety bond issued by any such entity, at the time any Investment Agreement is entered into by the Authority, are rated in at least the second highest rating category by at least one nationally recognized rating organization; or D. the Government National Mortgage Association or any successor thereto, the Federal National Mortgage Association or any successor thereto, the Student Loan Marketing Association or any successor thereto, or any other federal agency or instrumentality approved by the Authority. E. a corporation whose obligations, including any investments purchased from such corporation for the accounts of the trustee under the applicable bond resolution, are insured by the applicable bond insurer. Each eligible Trading Partner described above must (i) have a minimum equity capital of $125,000,000 or (ii) have its obligations unconditionally guaranteed by an affiliate or parent having a minimum equity capital of $125,000,000. XIII. CERTIFICATES OF DEPOSITS

All deposits, including Certificates of Deposit, in excess of the amount insured under the provisions of the Federal Deposit Insurance Act shall be secured by Permitted Collateral specified in Section VIII hereof. In addition, as required by Section IX hereof, the Authority shall enter into a written security agreement with the depositary bank and a written custodial agreement with the custodian bank. Collateralized Certificates of Deposit will only be purchased from banking organizations authorized to do business in the State of New York with minimum equity capital of $125,000,000 and having unsecured or uncollateralized long term debt obligations, or obligations secured or supported by a letter of credit, contract, agreement or surety bond issued by any such entity, which at the time any Certificate of Deposit is entered into by the Authority, a rating in at least the second highest rating category by at least one nationally recognized rating organization. Uncollateralized Certificates of Deposit will only be purchased from banking organizations authorized to do business in the State of New York and whose deposits are insured by the FDIC. Certificates of Deposit, shall, in addition to any requirements contained in the applicable bond resolution, be made pursuant to a written agreement which, among other things: (i) sets forth the terms of the transaction and the respective rights of the Authority and its Trading Partner; (ii) satisfies the provisions required by Section IX, herein; and (iii) requires appropriate margin maintenance for any collateral. Such Collateralized Certificates of Deposit shall be fully secured by Permitted Collateral as set forth in Section VIII herein. No substitution of securities will be allowed except as permitted by the applicable agreement. XIV. ANNUAL APPROVAL OF INVESTMENT POLICY AND GUIDELINES; AMENDMENT The Authority shall annually review and approve this Investment Policy and Guidelines and may, from time to time, amend the same. XV. EFFECT OF NONCOMPLIANCE WITH INVESTMENT POLICY AND GUIDELINES

Failure by the Authority to comply with the provisions of this Investment Policy and Guidelines shall not be deemed to alter, affect the validity of, modify the terms of or impair any contract, agreement or investment of funds. XVI. AUDIT PROCEDURES The Dormitory Authority Investment Policy and Guidelines is subject to review and may be revised as necessary by the Board to reflect changes in market conditions. Review of compliance with the Dormitory Authority Investment Policy and Guidelines and related procedures shall be part of the annual certification by independent auditors. This shall include confirmation letters from each bank verifying the obligations

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securing Authority deposits. Testing of the investment practices and controls (including proper execution and completion of required documentation) shall be done by the Authority's independent auditors and the Authoritys Internal Auditor. Collateral shall be verified at the Authority's fiscal year end and at least once on a surprise basis during the fiscal year by the Authority's independent auditors. XVII. INVESTMENTS ACQUIRED PURSUANT TO THE HEALTHCARE FINANCING CONSOLIDATION ACT OF 1995 Notwithstanding the foregoing, the applicability of this Investment Policy and Guidelines with respect to certain investments acquired pursuant to Chapter 83 of the Laws of 1995 are hereby modified to permit the continued investment in, and operations with respect to, such investments. Where an investment agreement entered into by the Medical Care Facilities Finance Agency (MCFFA) does not meet the minimum requirements of this Investment Policy and Guidelines, such agreement shall be deemed to be approved by the Board as an exception to this Investment Policy and Guidelines. Funds or securities held in the custody of the Commissioner of Taxation and Finance or the State Comptroller shall be deemed to be held in conformity with this Investment Policy and Guidelines. XVIII. ANNUAL INVESTMENT AND OTHER REPORTS Annually, the Authority shall prepare and approve an Investment Report that shall include the following: A. This Investment Policy and Guidelines, including a list of resolutions authorizing the issuance of a series of bonds, or any supplement thereto, containing additional or different permitted investments; B. Amendments to this Investment Policy and Guidelines since the last Investment Report; C. An explanation of this Investment Policy and Guidelines and amendments; D. The results of the annual independent audit; E. The investment income record of the Authority; and F. A list of the total fees, commissions or other charges paid to each investment banker, broker, dealer or other investment advisor, including trustee and custodian fees, since the last Investment Report. The Annual Investment Report shall be submitted to the Division of the Budget and copies thereof shall be submitted to the Department of Audit and Control, the Senate Finance Committee and the Assembly Ways and Means Committee. Copies of the Annual Investment Report shall also be made available to the public upon reasonable request. The Office of Finance shall annually provide the Members with a list of banks, trust companies and brokers with which the Authority is authorized to make investments and with which the Authority has made investments during the preceding year. The

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Members shall also annually receive a list showing the names of all institutions authorized to serve as trustees and custodians for the Authority and any trustees and custodians considered for new business. The Treasurer will provide to the Executive Director and the Board, a quarterly report detailing any new investments, the inventory of existing investments and the selection of brokers, agents or dealers. In addition, the report will include a quarterly listing of all investment purchases of other than full faith and credit obligations of the United States made by Authority staff and a listing of all funds containing investments of other than full faith and credit obligations of the United States.

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SECTION II

AMENDMENTS TO THE INVESTMENT POLICY AND GUIDELINES ADOPTED OR EFFECTIVE DURING THE FISCAL YEAR ENDED MARCH 31, 2010

There were no amendments to the Authoritys Investment Policy and Guidelines during the fiscal year ended March 31, 2010.

In accordance with Section VII of the Authoritys Investment Policy and Guidelines, the Board may, as it deems appropriate, also specifically authorize other investments that are consistent with the objections enumerated in Section II of the Guidelines. There were no such specific authorizations during the year.

SECTION III

EXPLANATION OF THE AUTHORITYS POLICIES, GUIDELINES AND AMENDMENTS

The Investment Policy and Guidelines of the Dormitory Authority in effect as of March 31, 2010, are based upon the principles and precepts of investment safety and control contained in the requirements of Part 201.3 of Title Two of the New York Code of Rules and Regulations issued by the State Comptroller. The Authority Guidelines contained in Section I of this report follow, and elaborate upon, the requirements of the State Comptroller and, as such, are considered self-explanatory.

SECTION IV

DORMITORY AUTHORITY BASIC FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED MARCH 31, 2010 AND 2009

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS FOR THE FISCAL YEAR ENDED MARCH 31, 2010

REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 201.3 OF TITLE TWO OF THE OFFICIAL COMPILATION OF CODES, RULES, AND REGULATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 2010

SECTION V

DORMITORY AUTHORITY INVESTMENT ACTIVITY FOR THE FISCAL YEAR ENDED MARCH 31, 2010

The Dormitory Authority of the State of New York earned $46,034,000 in investment income for the fiscal year ended March 31, 2010 on the investment of new bond and note issue proceeds and the reinvestment of existing funds. Investment income was comprised of $16,380,000 which was earned from construction funds and $29,654,000 which was earned from all other funds. Total investments were

$5,212,924,000 as of March 31, 2010, which consisted of obligations of the United States of America, Federal agency securities, and funds invested under collateralized investment agreements and certificates of deposit. Money market funds totaling $887,151,000, as of March 31, 2010, are classified as cash equivalents in the basic financial statements.

SECTION VI

LIST OF TOTAL FEES, COMMISSIONS OR OTHER CHARGES FOR INVESTMENT, TRUSTEE AND CUSTODIAL SERVICES FOR THE FISCAL YEAR ENDED MARCH 31, 2010

Fees The following lists floor-ceiling agreement fees paid during the fiscal year ended March 31, 2010. Under tax law, such fees are considered a reduction to interest income. Floor-ceiling agreements are a form of investment agreement whereby the Authority has invested certain bond issue reserve funds in long term U.S. Treasury Securities for which the floor-ceiling provider, for a fee, has guaranteed the accreted value of the securities. The guarantee of the accreted value removes any market risk associated with liquidating the securities in the event of a bond default. The current form of collateralized investment agreement used by the Authority has no explicit fee but rather the market risks taken by the provider in providing a long term guaranteed fixed rate are reflected in the investment agreement rate. All investment agreements, including floorceiling agreements, were competitively bid. The floor-ceiling fees paid during the fiscal year ended March 31, 2010 are as follows: Floor/ Ceiling Fees $43,893.44 $43,893.44

Provider J.P. Morgan Chase/Morgan Guaranty TOTAL Commissions and Other Charges

The Authority pays no commissions or other charges associated with the investment of funds. Trustee and Custodial Services The following lists fees paid by the Authority for trustee and custodial services during the fiscal year ended March 31, 2010. In addition, some trustee fees are paid directly by private institutions and are not listed below. Trustee/ Custodian Fees $276,498.59 165,425.00 153,029.53 106,644.09 61,850.00 6,625.00 205,349.66 $975,421.87

Trustee/Custodian Bank of New York Mellon Manufacturers & Traders Trust Co. Key Bank/Victory Capital Management Deutsche Bank Trust Company U.S. Bank National Association Wells Fargo New York State TOTAL