Security Lending Program

In November, 1993 the Foundation began a security lending program with Firstar Trust Company. The program was expanded in October, 1996 to include international securities held by Chase Manhattan Bank. The program allowed the respective trustees to lend up to $75 million of securities in the domestic portfolio and $25 million in the international portfolio. The fee split between the Bradley Foundation and the custodian is 55% and 45%, respectively. No problems have occurred with the program to date.

Since inception and through June 30, 1998 revenue generated from the security lending program totaled $366,500.

A key issue regarding a security lending program relates to risk management and controls, some of which include:

-	Restricted broker lists

-	Annual credit analysis of brokers

-	Indemnification due to broker default

-	Strict collateral requirements and valuation

Mr. James Schoenike , Vice President Firstar Trust Company, will be in attendance at the meeting to discuss the risk management procedures employed with the existing security lending program and answer any questions of the Investment Committee.

The Foundation's portfolio has risen substantially since the security lending program was first implemented. Currently there are approximately $350 million of domestic securities and $100 million of international securities that are potentially available for the security lending program. We recommend the limits on the amount of securities on loan at any one time be increased to $150 million for domestic securities and $50 million for international securities.