Investment Philosophy:

The CalTRUST Short-Term, Medium-Term, and Long-Term Accounts have been created to facilitate the centralization of the investment management function on behalf of California local agencies. The CalTRUST Board of Trustees selected Metropolitan West Securities, LLC to serve as Investment Adviser to the Trust. Effective February 1, 2007, Metropolitan West Securities, LLC, became Wachovia Portfolio Services.

Following the investment policy direction established by the Board of Trustees, the primary objective of the investment manager shall be to safeguard the principal. The secondary objective shall be to meet the liquidity needs of the participants and the third objective shall be to maximize the yield in a manner consistent with the first two objectives. The objective of the investment policy is to obtain the best possible return commensurate with the degree of risk that participants are willing to assume in obtaining such return.

Wachovia Portfolio Services, a wholly-owned subsidiary of Wachovia Bank, is an investment advisory, asset management, and broker/dealer firm specializing in short-term fixed income asset management and securities lending. Wachovia Portfolio Services (formerly Metropolitan West Securities, LLC) was established in 1992 and has a national client base consisting of major institutional funds and corporate portfolios.

As of December 2006, Metropolitan West Securities, since renamed Wachovia Portfolio Services, had over $60.3 billion in assets under management. Wachovia Portfolio Services is responsible for the decision to buy and sell the securities for the Trust and arrange for the execution of security transactions on behalf of the accounts. Wachovia Portfolio Services' senior executives bring decades of public agency funds management experience and demonstrated success in the management of California public sector funds to the Trust.