2016-12-15T10:02:32-06:00 2016-05-31 135565207 KPMG LLP 1676 INTERNATIONAL DRIVE MCLEAN VA 22102 990 2015-06-01 520891669 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION NATI 7034671800 20701 COOPERATIVE WAY DULLES VA 20166 SHELDON PETERSEN GOVERNOR AND CEO 7034671800 2016-12-15 0 NANCY T MURPHY P00482451 7032868000 2015 2017-02-10 21:41:12Z SHELDON PETERSEN 20701 COOPERATIVE WAY DULLES VA 20166 1165142533 0 X WWW.NRUCFC.COOP X 1969 VA TAX EXEMPT COOPERATIVE ORGANIZATION PROVIDING FINANCING TO RURAL ELECTRIC COOPERATIVES 23 23 274 0 0 0 0 0 1116024363 1151024902 7906316 8189026 5091249 5413153 1129021928 1164627081 3018563 2330061 0 0 44083522 44950187 0 0 0 989305939 947593738 1036408024 994873986 92613904 169753095 22836360828 24218773492 21945902386 23421345166 890458442 797428326 X SEE SCHEDULE OTO BRIDGE THE FINANCIAL NEEDS OF THE RURAL ELECTRIC NETWORK WITH THE EXPECTATIONS OF THE GLOBAL CAPITAL MARKETS, ONE COOPERATIVE AT A TIME. NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION ("CFC") IS A MEMBER-OWNED COOPERATIVE ASSOCIATION FORMED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA IN APRIL 1969. CFC'S PRINCIPAL PURPOSE IS TO PROVIDE ITS MEMBERS WITH FINANCING TO SUPPLEMENT THE LOAN PROGRAMS OF THE RURAL UTILITIES SERVICE ("RUS") OF THE UNITED STATES DEPARTMENT OF AGRICULTURE. CFC MAKES LOANS PRIMARILY TO ITS RURAL ELECTRIC MEMBERS SO THEY CAN ACQUIRE, CONSTRUCT AND OPERATE ELECTRIC DISTRIBUTION, GENERATION, TRANSMISSION AND RELATED FACILITIES. CFC ALSO PROVIDES ITS MEMBERS WITH CREDIT ENHANCEMENTS IN THE FORM OF LETTERS OF CREDIT AND GUARANTEES OF DEBT OBLIGATIONS. 0 0 911821351 2330061 1156438055 LENDING SERVICESCFC PROVIDES LOANS TO ITS MEMBERS, RURAL ELECTRIC COOPERATIVES AND THEIR RELATED ORGANIZATIONS, AND GENERATES INTEREST INCOME FROM THESE LOANS. TO FUND ITS LENDING SERVICES, CFC RAISES FUNDS IN THE CAPITAL MARKETS OR PRIVATE THIRD PARTY TRANSACTIONS AND PAYS A RATE OF RETURN COMMENSURATE WITH CURRENT ECONOMIC CONDITIONS FOR THE USE OF THOSE FUNDS. THESE RAISED FUNDS PERMIT CFC TO MEET THE BORROWING NEEDS OF ITS MEMBERS SO THEY CAN CONTINUE TO PROVIDE ELECTRIC AND POWER SERVICE TO THE CONSUMERS AND BUSINESSES IN THE RURAL TERRITORIES SERVICED BY THOSE MEMBERS/BORROWERS. CFC OPERATES IN SUCH MANNER TO OBTAIN FUNDING BASED ON COST AVAILABLE TO IT AND PASSES THE COSTS AND RESULTING SAVINGS ALONG TO ITS BORROWERS. SEE SCHEDULE O FOR FUTHER INFORMATION.AS CFC IS A COOPERATIVE FORMED UNDER THE LAWS OF THE DISTRICT OF COLUMBIA, THE COMPANY IS REQUIRED TO ALLOCATE A PORTION OF ITS NET EARNINGS TO AN EDUCATIONAL FUND. CFC'S BYLAWS REQUIRE THAT IT ALLOCATE A MINIMUM OF 1/4 OF 1% OF ITS NET EARNINGS TO AN EDUCATIONAL FUND IN ORDER TO MAKE GRANTS IN SUPPORT OF EDUCATING THE PUBLIC ABOUT COOPERATIVE PRINCIPLES. THE EDUCATIONAL FUND GRANTS MADE BY CFC ARE MAINLY TO STATEWIDE MEMBERSHIP ORGANIZATIONS THAT USE THESE GRANTS TO EDUCATE CUSTOMERS AND CITIZENS ABOUT COOPERATIVE PRINCIPLES. ADDITIONALLY, CFC MANAGES A VOLUNTARY FUND ESTABLISHED FOR THE PURPOSE OF ASSISTING COOPERATIVES IN DEFENDING THEIR COOPERATIVE TERRITORIES AND PROTECTING COOPERATIVE PRINCIPLES.AS PART OF OUR NORMAL OPERATING ACTIVITIES AS A LENDER, WE MAY BE REQUIRED TO FORECLOSE ON ASSETS OR BUSINESS OPERATIONS OF BORROWERS WHO DEFAULT ON THEIR LOANS DUE TO US. OUR OBJECTIVE IS TO REHABILITATE THE FORECLOSED ASSETS OR BUSINESS OPERATIONS IN ORDER SELL THEM AT A PRICE THAT MAXIMIZES OUR RECOVERY ON THOSE DEFAULTED LOANS. THE INVESTMENT IN FORECLOSED ASSETS OR BUSINESS OPERATIONS DOES NOT REPRESENT A NEW OR SEPARATE LINE OF BUSINESS FOR CFC. THE RESULTS OF OPERATIONS OF FORECLOSED ASSETS REPRESENTS THE COMBINED OPERATING LOSSES OF CFC'S WHOLLY OWNED SUBSIDIARY CARIBBEAN ASSET HOLDINGS ("CAH")FOR THE FISCAL YEAR ENDED MAY 31, 2016. DURING FISCAL YEAR 2016, THE OPERATING COMPANIES OF CFC'S WHOLLY OWNED SUBSIDIARY CAH, HAD A $8,979,216 LOSS FROM OPERATIONS AND IMPAIRMENT. OPERATIONS INCLUDE TELECOMMUNICATIONS AND CABLE TELEVISION SERVICES IN THE U.S. VIRGIN ISLANDS, BRITISH VIRGIN ISLANDS AND ST. MAARTEN. 911821351 0 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 1 0 1 1 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 0 1 60 0 1 274 1 0 1 VI NN 0 0 0 0 X 23 23 0 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 0 0 AZ GA X ROBERT GEIER 7034671800 20701 COOPERATIVE WAY DULLES VA 20166 MIKE CAMPBELL VICE PRESIDENT-DIRECTOR 10.00 X X 56500 0 0 HARRY NPARK SECRETARY-TREASURER 15.00 X X 51500 0 0 RAY BEAVERS UNTIL 32016 PRESIDENT-DIRECTOR 10.00 X X 57500 0 0 RGRANT CLAWSON PRESIDENT-DIRECTOR 9.50 X X 57500 0 0 KIRK A THOMPSON DIRECTOR 8.00 X 51500 0 0 PATRICK L BRIDGES DIRECTOR 3.00 X 51500 0 0 MEL COLEMAN DIRECTOR 6.00 X 51500 0 0 ROMAN EGILLEN DIRECTOR 8.00 X 51500 0 0 ROBERT MHILL DIRECTOR 12.00 X 51500 0 0 CURTIN RRAKESTRAW II DIRECTOR 15.00 X 51500 0 0 KENT D FARMER DIRECTOR 8.00 X 51500 0 0 THOMAS L HAYES DIRECTOR 10.00 X 51500 0 0 LYLE KORVER UNTIL 32016 DIRECTOR 6.00 X 51500 0 0 STEPHEN C VAIL DIRECTOR 7.00 X 51500 0 0 PHILLIP A CARSON DIRECTOR 4.00 X 43500 0 0 DOYLE JAY HANSON DIRECTOR 3.00 X 43500 0 0 JIMMY A LAFOY DIRECTOR 9.20 X 43500 0 0 BRADLEY J SCHARDIN DIRECTOR 6.00 X 43500 0 0 MARK D SNOWDEN DIRECTOR 3.00 X 43500 0 0 DEAN R TESCH DIRECTOR 11.00 X 43500 0 0 TODD P WARE DIRECTOR 4.00 X 43500 0 0 GREGORY D WILLIAMS DIRECTOR 7.00 X 43500 0 0 ROBERT BROCKMAN BEGIN 102015 DIRECTOR 9.00 X 13750 0 0 DEBRA L ROBINSON BEGIN 32016 DIRECTOR 4.00 X 0 0 0 ALAN W WATTLES BEGIN 32016 DIRECTOR 3.00 X 0 0 0 SHELDON C PETERSEN GOVERNOR AND CEO 62.00 X 1900960 0 102095 JOHN T EVANS EVP & COO 61.00 X 767010 0 110104 STEVEN L LILLY SVP, SPECIAL ASSET MANAGEMENT 67.00 X 564832 0 83417 JONATHON ANDREW DON SVP AND CFO 65.00 X 530942 0 228117 ROBERTA B ARONSON SVP AND GENERAL COUNSEL 50.00 X 441640 0 166438 JOEL ALLEN SVP, MEMBER SERVICES GROUP 50.00 X 341967 0 136950 JOHN M BORAK SVP, CREDIT RISK MANAGEMENT 62.00 X 340816 0 92885 ROBIN REED SVP, MEMBER SERVICES GROUP 60.00 X 333381 0 121115 STEVEN M KETTLER SVP, STRATEGIC SERVICES 66.00 X 327917 0 130402 GRACEANN CLENDENEN SVP, CORPORATE SERVICES 50.00 X 323533 0 202108 BRAD CAPTAIN SVP, CORPORATE RELATIONS 55.00 X 302305 0 76837 GREGORY STARHEIM SVP, BUSINESS & INDUSTRY DEVELOPMENT 60.00 X 279554 0 48303 JOHN J LIST UNTIL 915 SVP, CHIEF LENDING OFFICER 59.00 X 547215 0 27426 DANIEL W CAWOOD VP, PORTFOLIO MANAGEMENT 50.00 X 293388 0 23431 LAWRENCE SAUNDERS VP, PORTFOLIO MANAGEMENT 50.00 X 290407 0 57727 BRUCE E MACNEIL VP, CAPITAL MARKET FUNDING 45.00 X 265422 0 54844 AMY S LUONGO VP, PORTFOLIO MANAGEMENT 45.00 X 249378 0 57828 ALLYN J AMATO VP AND DEPUTY GENERAL COUNSEL 48.00 X 326171 0 130636 RICHARD PERREAULT VP AND CIO 40.00 X 310255 0 45515 KRISHNA MURTHY VP, ELECTRIC AND ENERGY INDUSTRY ANALYSIS 45.00 X 300258 0 93648 ROBERT E GEIER JR VP AND CONTROLLER 60.00 X 298047 0 93349 JOHN FREDERICK SUTER VP, CAPITAL MARKET RESEARCH AND ANALYSIS 51.00 X 295848 0 118572 10730996 0 2201747 142 0 1 0 NORTON ROSE FULBRIGHT US LLP PO BOX 844284 DALLAS TX 752844284 ATTORNEY FEES 1536651 KPMG LLP DEPT 0970 PO BOX 120970 DALLAS TX 753120970 AUDITOR 1504336 CASSIOPAE US INC 224 MAIN STREET STE 3A SALEM NH 03079 IT CONSULTANTS 1400732 MOODY'S INVESTOR SERVICE PO BOX 102597 ATLANTA GA 303680597 INVESTOR SERVICES 985000 HOGAN LOVELLS US LLP 555 13TH ST NW WASHINGTON DC 200041109 ATTORNEY FEES 861114 36 INTEREST FROM PSA 522299 992594031 992594031 DERIVATIVE CASH SETTLEMENTS 522299 136251933 136251933 OTHER INCOME-LOAN FEES 522299 21164195 21164195 RECOVERY FOR LOSSES 522299 1014743 1014743 1151024902 8646658 8646658 57820 515452 -457632 -457632 -457632 MANAGEMENT FEES 522299 4504000 4504000 INTEGRITY FUND COLLECTIONS FROM M 522299 909153 909153 5413153 1164627081 1156438055 0 8189026 2330061 2330061 7220470 7220470 28208255 28208255 5017135 5017135 2532581 2532581 1971746 1971746 809270 809270 1369195 1369195 8715013 8715013 854803 854803 1055468 1055468 3530654 3530654 2889200 2889200 2859308 2859308 4684912 4684912 902228308 902228308 7326621 7326621 704918 704918 FORECLOSED ASSETS 6899161 6899161 BANK FEES 360225 360225 DUES, SUBSCRIPTIONS & R 358957 358957 LOSS ON EARLY EXTINGUIS 333000 333000 2614725 30821 2583904 994873986 911821351 83052635 0 60261568 58222228 173756977 149062209 193423588 161415450 21408033881 23089635112 5468975 6000341 148154797 35592356 110539822 112562441 32321875 33690365 537150000 394250000 116507001 102967376 198897141 110967970 22836360828 24218773492 3266801643 3089268167 75579597 75394170 8708727153 14347801230 9470256315 5299823893 424537678 609057706 21945902386 23421345166 X 976000 974200 0 0 889482442 796454126 890458442 797428326 22836360828 24218773492 X 169753095 3468490 -266251701 X X 0 1 X 1 0 14051198 23795972 37847170 55611244 11751390 43859854 54696383 23840966 30855417 112562441 GUARANTEE LIABILITY 17108010 OTHER ACCRUED EXPENSES 11986240 CREDIT LOSSES ALLOWANCE 108000 MEMB APP FEES-MEMBERSHIP APPL 1000 DERIVATIVE LIABILITY 579854456 609057706 CENTRAL AMERICA AND THE CARIBBEAN - 1 5 INVESTMENTS 102967376 1 5 0 0 1 5 102967376 0 102967376 0 0 1 0 0 0 PART I, LINE 3 COLUMN (F) CFC FOLLOWS U.S. GAAP ACCOUNTING. THE AMOUNT REPORTED IN PART I, COLUMN (F) REPRESENTS THE CARRYING VALUE, NET OF EARNINGS AND/OR IMPAIRMENT CHARGES OF CFC'S INVESTMENT IN ORGANIZATIONS IN FOREIGN COUNTRIES AS OF THE END OF THE TAX YEAR AND DOES NOT REFLECT EXPENDITURES MADE BY CFC INTO THESE COUNTRIES. 1 AMICALOLA ELECTRIC MEMBERSHIP CORP 544 HIGHWAY 515 SOUTH JASPER GA 30143 580140201 501(C)(12) 6430 INTEGRITY FUND - TERRITORY THREAT BALDWIN COUNTY ELECTRIC MEMBERSHIP CORPORATION PO BOX 220 SUMMERDALE AL 365800220 630014658 501(C)(12) 25000 INTEGRITY FUND - TERRITORY THREAT BENCO ELECTRIC COOPERATIVE PO BOX 8 MANKATO MN 560020008 410155615 501(C)(12) 16387 INTEGRITY FUND - TERRITORY THREAT BLACK WARRIOR ELECTRIC MEMBERSHIP CORPORATION PO BOX 779 DEMOPOLIS AL 36732 630023263 501(C)(12) 25000 INTEGRITY FUND - TERRITORY THREAT CAPITAL ELECTRIC COOPERATIVE INC PO BOX 730 BISMARCK ND 585020730 450217628 501(C)(12) 43400 INTEGRITY FUND - TERRITORY THREAT THE CARROLL ELECTRIC MEMBERSHIP CORPORATION 155 NORTH HWY 113 CARROLLTON GA 301177501 580184715 501(C)(12) 27725 INTEGRITY FUND - TERRITORY THREAT CENTRAL TEXAS ELECTRIC COOPERATIVE INC PO BOX 553 FREDERICKSBURG TX 786240553 741095072 501(C)(12) 100000 INTEGRITY FUND - TERRITORY THREAT TENNESSEE VALLEY AUTHORITY CHEROKEE ELECTRIC COOPERATIVE PO BOX O CENTRE AL 35960 630040445 501(C)(12) 24567 INTEGRITY FUND - TERRITORY THREAT COLUMBIA BASIN ELECTRIC COOPERATIVE INC PO BOX 398 HEPPNER OR 978360398 930337164 501(C)(12) 8770 INTEGRITY FUND - TERRITORY THREAT COVINGTON ELECTRIC COOPERATIVE INC 18836 US HIGHWAY 84 ANDALUSIA AL 364211223 630462077 501(C)(12) 25000 INTEGRITY FUND - TERRITORY THREAT CULLMAN ELECTRIC COOPERATIVE PO BOX 1168 CULLMAN AL 350561168 630052772 501(C)(12) 25000 INTEGRITY FUND - TERRITORY THREAT DELTA-MONTROSE ELECTRIC ASSOCIATION PO BOX 910 MONTROSE CO 814020910 840185658 501(C)(12) 71734 INTEGRITY FUND - TERRITORY THREAT FEDERATED RURAL ELECTRIC ASSOCIATION PO BOX 69 JACKSON MN 561430069 410252540 501(C)(12) 14642 INTEGRITY FUND - TERRITORY THREAT FLORIDA ELECTRIC COOPERATIVE ASSOCIATION 2916 APALACHEE PARKWAY TALLAHASSEE FL 32301 590633990 501(C)(6) 37500 INTEGRITY FUND - TERRITORY THREAT GRAHAM COUNTY ELECTRIC COOPERATIVE INC PO DRAWER B PIMA AZ 855430290 860079733 501(C)(12) 11554 INTEGRITY FUND - TERRITORY THREAT INDIANA STATEWIDE ASSOCIATION OF RURAL ELECTRIC COOPERATIVES INC 720 N HIGH SCHOOL ROAD INDIANAPOLIS IN 46214 351499808 501(C)(6) 26000 INTEGRITY FUND - TERRITORY THREAT JOE WHEELER ELECTRIC MEMBERSHIP CORPORATION PO BOX 460 TRINITY AL 35673 630224987 501(C)(12) 25000 INTEGRITY FUND - TERRITORY THREAT KENERGY CORP PO BOX 18 HENDERSON KY 424190018 611345109 501(C)(12) 39759 INTEGRITY FUND - TERRITORY THREAT MARSHALL-DEKALB ELECTRIC COOPERATIVE PO BOX 724 BOAZ AL 35957 630132555 501(C)(12) 23476 INTEGRITY FUND - TERRITORY THREAT MEEKER COOPERATIVE LIGHT & POWER ASSOCIATION 1725 US HWY 12 E SUITE 100 LITCHFIELD MN 55355 410404900 501(C)(12) 15630 INTEGRITY FUND - TERRITORY THREAT NOBLES COOPERATIVE ELECTRIC PO BOX 788 WORTHINGTON MN 561870788 410443755 501(C)(12) 13895 INTEGRITY FUND - TERRITORY THREAT NORTHERN VIRGINIA ELECTRIC CO-OP PO BOX 2710 MANASSAS VA 201080875 540346923 501(C)(12) 100000 INTEGRITY FUND - TERRITORY THREAT PIONEER ELECTRIC COOPERATIVE INC PO BOX 468 GREENVILLE AL 36037 630033945 501(C)(12) 17662 INTEGRITY FUND - TERRITORY THREAT PKM ELECTRIC COOPERATIVE INC PO BOX 108 WARREN MN 56762 410484875 501(C)(12) 188409 INTEGRITY FUND - TERRITORY THREAT PRESQUE ISLE ELECTRIC & GAS CO-OP PO BOX 308 ONAWAY MI 49765 380941545 501(C)(12) 23972 INTEGRITY FUND - TERRITORY THREAT SAND MOUNTAIN ELECTRIC COOPERATIVE PO BOX 277 RAINSVILLE AL 35986 630182345 501(C)(12) 16730 INTEGRITY FUND - TERRITORY THREAT SOCORRO ELECTRIC COOPERATIVE INC PO BOX H SOCORRO NM 87801 850084968 501(C)(12) 93023 INTEGRITY FUND - TERRITORY THREAT SOUTH ALABAMA ELECTRIC COOPERATIVE PO BOX 449 TROY AL 360810449 630193841 501(C)(12) 25000 INTEGRITY FUND - TERRITORY THREAT SUMTER ELECTRIC COOPERATIVE INC PO BOX 301 SUMTERVILLE FL 335850301 590469125 501(C)(12) 138132 INTEGRITY FUND - TERRITORY THREAT TOMBIGBEE ELECTRIC COOPERATIVE INC 3196 COUNTY HIGHWAY 55 HAMILTON AL 35570 630211368 501(C)(12) 25000 INTEGRITY FUND - TERRITORY THREAT TRI-COUNTY ELECTRIC COOPERATIVE PO DRAWER 309 MT VERNON IL 628640008 370555013 501(C)(12) 100000 INTEGRITY FUND - TERRITORY THREAT TRI COUNTY ELECTRIC COOPERATIVE PO BOX 626 RUSHFORD MN 55971 410254835 501(C)(12) 16258 INTEGRITY FUND - TERRITORY THREAT WHEATLAND ELECTRIC COOPERATIVE INC PO BOX 1078 GARDEN CITY KS 67846 480532188 501(C)(12) 10561 INTEGRITY FUND - TERRITORY THREAT ALASKA POWER ASSOCIATION 703 WEST TUDOR ROAD SUITE 200 ANCHORAGE AK 995036650 920069880 501(C)(6) 14200 EDUCATION FUND - NRECA YOUTH TOUR OF WASHINGTON, DC ALABAMA RURAL ELECTRIC ASSOCIATION OF COOPERATIVES PO BOX 244014 MONTGOMERY AL 361244014 630264081 501(C)(6) 15600 EDUCATION FUND - AREA SUMMER CONFERENCE ASSOCIATION OF ILLINOIS ELECTRIC COOPERATIVES PO BOX 3787 SPRINGFIELD IL 627083787 370159736 501(C)(6) 22200 EDUCATION FUND - STATEWIDE SURVEY PROJECT ASSOCIATION OF MISSOURI ELECTRIC COOPERATIVES PO BOX 1645 JEFFERSON CITY MO 65102 430631824 501(C)(6) 30400 EDUCATION FUND - MO COOPERATIVE YOUTH CONFERENCE & YOUTH TOUR COLORADO RURAL ELECTRIC ASSOCIATION 5400 NORTH WASHINGTON STREET DENVER CO 80216 840411220 501(C)(6) 16400 EDUCATION FUND - DIRECTOR COURSES; WASHINGTON YOUTH TOUR ELECTRIC POWER ASSOCIATIONS OF MISSISSIPPI PO BOX 3300 RIDGELAND MS 391583300 640200697 501(C)(6) 15000 EDUCATION FUND - ELECTRIC COOPERATIVE YOUTH TOUR FLORIDA ELECTRIC COOPERATIVES ASSOCIATION INC 2916 APALACHEE PARKWAY TALLAHASSEE FL 32301 590633990 501(C)(6) 11000 EDUCATION FUND - FECA SUMMER LEADERSHIP CONFERENCE GEORGIA ELECTRIC MEMBERSHIP CORPORATION PO BOX 1707 TUCKER GA 300851707 580530279 501(C)(6) 25600 EDUCATION FUND - ELECTRIC CO-OPS OF GEORGIA EXHIBIT GOLDEN STATE POWER COOPERATIVE 14619 HAMLIN STREET VAN NUYS CA 91411 680441905 501(C)(6) 6000 EDUCATION FUND - ENERGY COOPERATIVE DEVELOPMENT & EDUCATION GRAND CANYON STATE ELECTRIC COOPERATIVE ASSOCIATION 120 NORTH 44TH STREET PHOENIX AZ 85034 866056759 501(C)(6) 13800 EDUCATION FUND - AZ/CA WASHINGTON YOUTH TOUR IDAHO CONSUMER OWNED UTILITIES ASSOCIATION 407 WEST JEFFERSON ST BOISE ID 83702 820502739 501(C)(6) 11600 EDUCATION FUND - ICUA YOUTH RALLY & ICUA MEMBERS CONFERENCE INDIANA STATEWIDE ASSOCIATION OF RURAL ELECTRIC COOPERATIVES INC PO BOX 24517 INDIANAPOLIS IN 46224 351499808 501(C)(6) 26800 EDUCATION FUND - EMPLOYEE TRAINING, BOARD DEVELOPMENT & MEMBER EDUCATION IOWA ASSOCIATION OF ELECTRIC COOPERATIVES 8525 DOUGLAS AVENUE STE 48 URBANDALE IA 503222992 420662488 501(C)(6) 26200 EDUCATION FUND - LIVING WITH ENERGY IN IOWA, ARTICLES KANSAS ELECTRIC COOPERATIVES INC PO BOX 4267 TOPEKA KS 666044267 480541902 501(C)(12) 20200 EDUCATION FUND - BACK TO BASICS EDUCATIONAL PROGRAM KAUAI ISLAND UTILITY COOPERATIVE 4463 PAHEE STREET SUITE 1 LIHUE KAUAI HI 967662000 990346113 501(C)(12) 8800 EDUCATION FUND - KIUC ZAPS ENERGY CLASSROOM/YOUTH TOUR KENTUCKY ASSOCIATION OF ELECTRIC COOPERATIVES INC PO BOX 32170 LOUISVILLE KY 402322170 610420165 501(C)(6) 15200 EDUCATION FUND - NEW EMPLOYEE AND DIRECTOR ORIENTATIONS MICHIGAN ELECTRIC COOPERATIVE ASSOCIATION 2859 W JOLLY ROAD OKEMOS MI 488641182 382214287 501(C)(6) 10000 EDUCATION FUND - RURAL ELECTRIC YOUTH TOUR TO WASHINGTON, D.C. MINNESOTA RURAL ELECTRIC ASSOCIATION 11640 - 73RD AVENUE NORTH MAPLE GROVE MN 55369 410417193 501(C)(6) 25200 EDUCATION FUND - 2015 BOARD LEADERSHIP CERTIFICATION (BLC) COURSES MONTANA ELECTRIC COOPERATIVES' ASSOCIATION PO BOX 1306 GREAT FALLS MT 59403 810229220 501(C)(6) 17600 EDUCATION FUND - THE TODAY'S MEMBERS PROGRAM NEBRASKA RURAL ELECTRIC ASSOCIATION PO BOX 82048 LINCOLN NE 68501 470394033 501(C)(6) 19200 EDUCATION FUND - NEBRASKA RURAL ELECTRIC WASHINGTON YOUTH TOUR NEVADA RURAL ELECTRIC ASSOCIATION PO BOX 365 WELLS NV 89835 880237046 501(C)(6) 8800 EDUCATION FUND - STATEWIDE SMART ENERGY PROGRAM NEW MEXICO RURAL ELECTRIC COOPERATIVE ASSOCIATION INC 614 DON GASPAR AVENUE SANTA FE NM 87501 850155370 501(C)(6) 11200 EDUCATION FUND - NRECA CREDENTIALED COOPERATIVE DIRECTOR COURSES NEW YORK STATE RURAL ELECTRIC COOPERATIVE ASSOCIATION INC 9 WILSON AVENUE HARTWICK NY 14810 161264464 501(C)(6) 6600 EDUCATION FUND - STUDENT PARTICIPATION - NRECA LEG. CONFERENCE NORTH CAROLINA ASSOCIATION OF ELECTRIC COOPERATIVES INC PO BOX 27306 RALEIGH NC 27611 561189186 501(C)(6) 17200 EDUCATION FUND - BRIGHT IDEAS EDUCATION GRANT PROGRAM NORTH DAKOTA ASSOCIATION OF RURAL ELECTRIC COOPERATIVES PO BOX 727 MANDAN ND 585540727 450231058 501(C)(6) 25600 EDUCATION FUND - NDAREC MENU OF EDUCATION PROGRAMS NORTHEAST ASSOCIATION OF ELECTRIC COOPERATIVES INC 9 WILSON AVENUE BATH NY 148101633 222153529 501(C)(12) 16200 EDUCATION FUND - CONTINUING EDUCATION FOR DIRECTORS AND EMPLOYEES OHIO RURAL ELECTRIC COOPERATIVES PO BOX 26036 COLUMBUS OH 432260036 510174617 501(C)(6) 21800 EDUCATION FUND - NRECA COURSES, ASSOC. MGMT & ORIENTATION PROGRAMS OKLAHOMA ASSOCIATION OF ELECTRIC COOPERATIVES INC PO BOX 54309 OKLAHOMA CITY OK 731541309 730556236 501(C)(6) 18800 EDUCATION FUND - YOUTH TOUR PROMOTIONAL MATERIALS & T-SHIRTS OREGON RURAL ELECTRIC COOPERATIVE ASSOCIATION 1750 LIBERTY ST SE SALEM OR 97302 930593238 501(C)(6) 19000 EDUCATION FUND - LEGISLATOR OUTREACH PROGRAM & DIR. CONFERENCE PENNSYLVANIA RURAL ELECTRIC ASSOCIATION PO BOX 1266 HARRISBURG PA 171081266 236291530 501(C)(6) 20800 EDUCATION FUND - PREA COMMUNICATIONS WORKSHOP SOUTH DAKOTA RURAL ELECTRIC ASSOCIATION INC PO BOX 1138 PIERRE SD 57501 460231254 501(C)(12) 16600 EDUCATION FUND - YOUTH EXCURSION TENNESSEE ELECTRIC COOPERATIVE ASSOCIATION PO BOX 100912 NASHVILLE TN 37224 620461379 501(C)(6) 14000 EDUCATION FUND - YOUTH LEADERSHIP SUMMIT TEXAS ELECTRIC COOPERATIVES INC 1122 COLORADO ST STE 2400 AUSTIN TX 787012167 741007829 501(C)(6) 48000 EDUCATION FUND - EDUCATION AND TRAINING CATALOG THE ASSOCIATION OF LOUISIANA ELECTRIC COOPERATIVES INC 10725 AIRLINE HIGHWAY BATON ROUGE LA 708164299 720400467 501(C)(6) 10200 EDUCATION FUND - LOUISIANA ELECTRIC COOPERATIVES YOUTH TOUR THE ELECTRIC COOPERATIVES OF SOUTH CAROLINA INC 808 KNOX ABBOTT DRIVE CAYCE SC 29033 570308664 501(C)(6) 16600 EDUCATION FUND - NRECA TRAINING COURSES (STATEWIDE BASIS) UTAH RURAL ELECTRIC ASSOCIATION 10714 SOUTH JORDAN GATEWAY SOUTH JORDAN UT 84095 870402010 501(C)(6) 8800 EDUCATION FUND - LEGISLATOR EDUCATION/UREA YOUTH PROGRAM VA MD & DE ASSOCIATION OF ELECTRIC COOPERATIVES 4201 DOMINION BLVD SUITE 101 GLEN ALLEN VA 23060 540553861 501(C)(6) 19000 EDUCATION FUND - MEMBER COOPERATIVE DIRECTOR TRAINING WASHINGTON RURAL ELECTRIC COOPERATIVE ASSOCIATION PO BOX 7219 OLYMPIA WA 985077219 911236389 501(C)(6) 13800 EDUCATION FUND - WRECA ANNUAL MEMBERSHIP MEETING EDUC. MATERIAL WISCONSIN - COOPERATIVE NETWORK ELECTRIC DIVISION 1 SOUTH PINCKNEY STREET MADISON WI 537032869 391128018 501(C)(6) 22000 EDUCATION FUND - WECA YOUTH LEADERSHIP CONGRESS WYOMING RURAL ELECTRIC ASSOCIATION 2312 CAREY AVENUE CHEYENNE WY 820013627 830207211 501(C)(12) 10800 EDUCATION FUND - SPONSOR YOUTH TOUR & AG IN THE CLASSROOM NRECA 4301 WILSON BLVD FIN8-110 ARLINGTON VA 22203 530116145 501(C)(6) 272044 EDUCATION FUND - COOPERATIVE.COM 0 73 PART I, LINE 2: INTEGRITY FUND IN ORDER TO BE CONSIDERED FOR A GRANT FROM THE INTEGRITY FUND, A RURAL ELECTRIC SYSTEM MUST ESTABLISH THAT THERE IS AT LEAST ONE OF THE FOLLOWING THREE THREATS TO THE INTEGRITY OF ITS SYSTEM: (I) ALL, OR A SIGNIFICANT PORTION, OF ITS GEOGRAPHICALLY DEFINED TERRITORY OR SPECIFICALLY IDENTIFIED PRESENT OR ANTICIPATED CONSUMERS AND/OR ELECTRIC FACILITIES FACE A THREAT OF ACQUISITION BY A COMPETING ENTITY, (II) THE COOPERATIVE FACES A THREAT OF ITS RIGHT TO OFFER NON-ELECTRIC ENERGY SERVICES TO CONSUMERS, OR (III) THE COOPERATIVE IS FACING REGULATORY, JUDICIAL OR LEGISLATIVE CHALLENGES THAT THREATEN ITS EXISTENCE UNDER THE COOPERATIVE BUSINESS MODEL. EDUCATION FUND EACH STATEWIDE ASSOCIATION AND ELIGIBLE REGIONAL ASSOCIATIONS WILL SUBMIT (1) AN APPLICATION FORM DESCRIBING THE PROGRAM FOR WHICH THE GRANT WILL BE USED AND (2) A MEMBERSHIP LIST OF THE ASSOCIATION VERIFIED BY ITS GENERAL MANAGER. CFC USES THAT LIST AS WELL AS ITS OWN MEMBERSHIP LIST TO CALCULATE HOW MUCH EACH ASSOCIATION IS ALLOTTED DURING THE FISCAL YEAR. OUR FORMULA IS BASED UPON THE NUMBER OF SYSTEMS WITHIN AN ASSOCIATION, THE TOTAL NUMBER OF CO-OPS WHICH ARE MEMBERS OF CFC AND OF THE ASSOCIATION, AND THE NUMBER OF CO-OPS THAT ARE 100% CFC BORROWERS. THE SENIOR VICE PRESIDENT OF CFC'S STRATEGIC SERVICES GROUP APPROVES THE APPLICATIONS MADE BY THE ASSOCIATIONS. X X X X 0 0 X X X X X 0 1 0 0 0 0 0 1 0 SHELDON C PETERSEN GOVERNOR AND CEO 1567921 0 253435 0 79604 0 58309 0 27706 0 1986975 0 0 0 JOHN T EVANS EVP & COO 553659 0 154920 0 58431 0 75122 0 28906 0 871038 0 0 0 STEVEN L LILLY SVP, SPECIAL ASSET MANAGEMENT 436226 0 116551 0 12055 0 73471 0 20845 0 659148 0 0 0 JONATHON ANDREW DON SVP AND CFO 381688 0 121010 0 28244 0 210741 0 30274 0 771957 0 0 0 ROBERTA B ARONSON SVP AND GENERAL COUNSEL 304019 0 92063 0 45558 0 148065 0 7339 0 597044 0 0 0 JOEL ALLEN SVP, MEMBER SERVICES GROUP 252306 0 70687 0 18974 0 119788 0 28848 0 490603 0 0 0 JOHN M BORAK SVP, CREDIT RISK MANAGEMENT 213299 0 79011 0 48506 0 64214 0 12778 0 417808 0 0 0 ROBIN REED SVP, MEMBER SERVICES GROUP 239047 0 70000 0 24334 0 113138 0 14142 0 460661 0 0 0 STEVEN M KETTLER SVP, STRATEGIC SERVICES 231154 0 70200 0 26563 0 113026 0 27059 0 468002 0 0 0 GRACEANN CLENDENEN SVP, CORPORATE SERVICES 211400 0 67597 0 44536 0 169594 0 23082 0 516209 0 0 0 BRAD CAPTAIN SVP, CORPORATE RELATIONS 203888 0 63560 0 34857 0 73299 0 7918 0 383522 0 0 0 GREGORY STARHEIM SVP, BUSINESS & INDUSTRY DEVELOPMENT 179359 0 0 0 100195 0 9226 0 12492 0 301272 0 0 0 JOHN J LIST UNTIL 915 SVP, CHIEF LENDING OFFICER 385218 0 124051 0 37946 0 1397 0 19118 0 567730 0 0 0 DANIEL W CAWOOD VP, PORTFOLIO MANAGEMENT 184756 0 22154 0 86478 0 6432 0 19344 0 319164 0 0 0 LAWRENCE SAUNDERS VP, PORTFOLIO MANAGEMENT 227931 0 55301 0 7175 0 45514 0 19151 0 355072 0 0 0 BRUCE E MACNEIL VP, CAPITAL MARKET FUNDING 209741 0 46100 0 9581 0 37469 0 25798 0 328689 0 0 0 AMY S LUONGO VP, PORTFOLIO MANAGEMENT 185519 0 45409 0 18450 0 49747 0 13347 0 312472 0 0 0 ALLYN J AMATO VP AND DEPUTY GENERAL COUNSEL 239877 0 58257 0 28037 0 116810 0 26409 0 469390 0 0 0 RICHARD PERREAULT VP AND CIO 232319 0 52475 0 25461 0 28353 0 31925 0 370533 0 0 0 KRISHNA MURTHY VP, ELECTRIC AND ENERGY INDUSTRY ANA 192471 0 59188 0 48599 0 75316 0 8988 0 384562 0 0 0 ROBERT E GEIER JR VP AND CONTROLLER 217611 0 55220 0 25216 0 87519 0 9924 0 395490 0 0 0 JOHN FREDERICK SUTER VP, CAPITAL MARKET RESEARCH AND ANAL 203931 0 65595 0 26322 0 101197 0 25914 0 422959 0 0 0 PART I, LINE 1A THE PERQUISITES PROVIDED TO THE CEO ARE LIMITED TO AN ANNUAL AUTOMOBILE ALLOWANCE AS WELL AS AN ANNUAL SPOUSAL AIR TRAVEL ALLOWANCE. ADDITIONALLY, THE CEO MAY RECEIVE AN ANNUAL EXECUTIVE PHYSICAL PAID FOR BY CFC. BECAUSE THE CEO IS FREQUENTLY REQUIRED TO TRAVEL TO MEMBER SITES IN RURAL PARTS OF THE COUNTRY, THE BOARD OF DIRECTORS HAS AUTHORIZED HIM TO OCCASIONALLY UTILIZE A PRIVATE PLANE SERVICE TO FACILITATE HIS EXTENSIVE BUSINESS TRAVEL. THIS SERVICE HAS BEEN USED INFREQUENTLY AND IS SOLELY FOR BUSINESS PURPOSES. IN ACCCORDANCE WITH A WRITTEN RELOCATION AGREEMENT, ONE OFFICER AND ONE KEY EMPLOYEE LISTED IN PART VII, SECTION A RECEIVED A GROSS UP PAYMENT REPRESENTING A TEMPORARY HOUSING ALLOWANCE AND TAXABLE RELOCATION REIMBURSEMENT FOR PERSONAL USE DUE TO A RELOCATION TO HEADQUARTERS. THESE PAYMENTS WERE TREATED AS TAXABLE COMPENSATION. PART I, LINE 1B THESE PAYMENTS WERE TREATED AS TAXABLE COMPENSATION. TO PROVIDE THE ANNUAL AUTOMOBILE AND SPOUSAL AIR TRAVEL PERQUISITES IN AN EFFICIENT FASHION, THE BOARD AUTHORIZES AN ANNUAL ALLOWANCE RATHER THAN PROVIDING UNLIMITED REIMBURSEMENT OR USE OF A COMPANY-OWNED VEHICLE. THE AMOUNT OF EACH ALLOWANCE IS AUTHORIZED ANNUALLY BY THE BOARD AND IS DETERMINED BASED ON THE ESTIMATED COST FOR OPERATION AND MAINTENANCE OF AN AUTOMOBILE AND THE ANTICIPATED COST OF AIR TRAVEL BY THE CEO'S SPOUSE. THESE PAYMENTS WERE TREATED AS TAXABLE COMPENSATION. CFC DOES NOT HAVE A FORMAL POLICY REGARDING PAYMENTS OR REIMBURSMENT OF THESE EXPENSES. PART I, LINE 4B CFC OFFERS A PENSION RESTORATION PLAN OR AN EXECUTIVE BENEFIT RESTORATION PLAN WHICH ARE SUPPLEMENTS TO THE RETIREMENT SECURITY PLAN TO ELIGIBLE EXECUTIVE OFFICERS OF THE COMPANY. BOTH 457(F)PLANS RESTORE THE VALUE OF THE RETIREMENT SECURITY PLAN FOR EACH OFFICER TO THE LEVEL IT WOULD BE IF THE IRS LIMITS ON ANNUAL PAY AND ANNUAL ANNUITY BENEFITS WERE NOT IN PLACE. THE BENEFIT AND PAYOUT FORMULA UNDER THESE RESTORATION COMPONENTS ARE SIMILAR TO THAT UNDER THE QUALIFIED PLAN COMPONENT. HOWEVER, FIVE OF THE EXECUTIVE OFFICERS PARTICIPATING IN THE PENSION RESTORATION PLAN HAVE SATISFIED THE PROVISIONS ESTABLISHED TO RECEIVE THE BENEFIT FROM THESE PLANS. SINCE THESE OFFICERS NO LONGER HAVE A RISK OF FORFEITURE OF THE BENEFITS UNDER THE PENSION RESTORATION PLAN, DISTRIBUTIONS ARE MADE FROM THE PLAN TO EACH EXECUTIVE OFFICER ANNUALLY SHOULD THEY HAVE AN ACCRUED BENEFIT. FOR 2015 THE FOLLOWING DISTRIBUTIONS WERE MADE: JOHN EVANS $ 81,439 STEVEN LILLY $ 36,515 JOHN LIST $ 112,057 SHELDON PETERSEN $645,750 CFC OFFERS A DEFERRED COMPENSATION PLAN WHICH IS A NONQUALIFIED 457(B) PLAN FOR A SELECT GROUP OF MANAGEMENT INCLUDING THE EXECUTIVE OFFICERS. PARTICIPANTS MAY ELECT TO DEFER A PORTION OF THEIR COMPENSATION UP TO THE IRS STATUTORY DOLLAR LIMIT IN EFFECT FOR THAT CALENDAR YEAR. WHEN AN EMPLOYEE CEASES TO BE AN EMPLOYEE FOR ANY REASON, DISTRIBUTION OF THE ACCOUNT WILL GENERALLY BE MADE IN ANNUAL PAYMENTS OR IN A LUMP SUM WHICHEVER THE PARTICIPANT CHOOSES. THE AMOUNT PAID IS BASED ON THE ACCUMULATED VALUE OF THE ACCOUNT AND THEIR ELECTION. FOR 2015 THERE WERE NO DISTRIBUTIONS MADE FROM THIS PLAN TO OFFICERS. PART I, LINE 7 WE PROVIDED ONE-TIME CASH PAYMENTS TO EACH OF THE EXECUTIVE OFFICERS AS PART OF OUR SHORT-TERM AND LONG-TERM INCENTIVE PROGRAMS. CFC'S SHORT-TERM CASH INCENTIVE PROGRAM IS A ONE-YEAR CASH INCENTIVE THAT IS TIED TO THE ANNUAL PERFORMANCE OF THE ORGANIZATION AS A WHOLE. WE BELIEVE THAT BY PAYING A SHORT-TERM INCENTIVE TIED TO THE ACHIEVEMENT OF ANNUAL OPERATING GOALS, ALL EMPLOYEES, INCLUDING EXECUTIVE OFFICERS, WILL FOCUS THEIR EFFORTS ON THE MOST IMPORTANT STRATEGIC OBJECTIVES WHICH HELP US TO FULFILL OUR MISSION TO OUR MEMBERS AND OUR OBLIGATIONS TO THE FINANCIAL MARKETS. THE SHORT-TERM INCENTIVE PROGRAM PROVIDES ANNUAL CASH INCENTIVE OPPORTUNITIES BASED UPON THE LEVEL OF THE POSITION WITHIN OUR BASE PAY STRUCTURE, RANGING FROM 15 PERCENT - 25 PERCENT OF BASE PAY. EXECUTIVE OFFICERS ARE ELIGIBLE TO RECEIVE SHORT-TERM CASH INCENTIVE COMPENSATION UP TO 25 PERCENT OF THEIR BASE PAY. KEY EMPLOYEES AND HIGHLY COMPENSATED EMPLOYEES ARE ELIGIBLE TO RECEIVE SHORT-TERM CASH INCENTIVE COMPENSATION UP TO 20 PERCENT OF THEIR BASE PAY. THE LONG-TERM INCENTIVE PROGRAM IS A THREE-YEAR PLAN THAT IS TIED TO CFC'S LONG-TERM STRATEGIC OBJECTIVES. THE LONG-TERM INCENTIVE PROGRAM WAS IMPLEMENTED TO CREATE DYNAMIC TENSION BETWEEN SHORT-TERM OBJECTIVES AND LONG-TERM GOALS. EXECUTIVE OFFICERS, KEY EMPLOYEES AND HIGHLY COMPENSATED EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN THE PLAN AND RECEIVE PERFORMANCE UNITS THAT ARE CALCULATED AT 20% - 25% OF BASE PAY. THE VALUE OF THE PERFORMANCE UNITS WILL RANGE FROM $0 TO $150 PER PERFORMANCE UNIT ACCORDING TO THE LEVEL OF NATIONAL RURAL'S ISSUER CREDIT RATINGS BY THE RATING AGENCIES. FORM 990, PART VI, SECTION A, LINE 6 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION IS A NON-STOCK, MEMBERSHIP ORGANIZATION. AS OF MAY 31, 2016, THERE WERE 1,026 MEMBERS AND ASSOCIATES. MEMBERSHIP INCLUDED: CLASS A. THERE WERE 839 CLASS A MEMBERS - COOPERATIVE OR NONPROFIT CORPORATIONS, PUBLIC CORPORATIONS, UTILITY DISTRICTS, AND OTHER PUBLIC BODIES, WHICH HAVE RECEIVED OR ARE ELIGIBLE TO RECEIVE A LOAN OR COMMITMENT FOR A LOAN FROM THE RUS OR ANY SUCCESSOR AGENCY, AND WHICH ARE ENGAGED OR PLANNING TO ENGAGE IN THE FURNISHING OF UTILITY SERVICES TO THEIR MEMBERS AND PATRONS FOR THEIR USE AS ULTIMATE CONSUMERS. CLASS B. THERE WERE 71 CLASS B MEMBERS - COOPERATIVE OR NONPROFIT CORPORATIONS WHICH ARE FEDERATIONS OF CLASS A MEMBERS OR OF OTHER CLASS B MEMBERS, OR BOTH, OR WHICH ARE OWNED AND CONTROLLED BY CLASS A MEMBERS OR BY OTHER CLASS B MEMBERS, OR BOTH, AND WHICH ARE ENGAGED OR PLANNING TO ENGAGE IN THE FURNISHING OF UTILITY SERVICES PRIMARILY TO CLASS A MEMBERS OR OTHER CLASS B MEMBERS. CLASS C. THERE WERE 66 CLASS C MEMBERS - STATEWIDE AND REGIONAL ASSOCIATIONS WHICH ARE WHOLLY-OWNED OR CONTROLLED BY CLASS A MEMBERS OR CLASS B MEMBERS, OR BOTH, OR WHICH ARE WHOLLY-OWNED SUBSIDIARIES OF A CFC MEMBER, AND WHICH DO NOT FURNISH UTILITY SERVICES BUT WHICH SUPPLY OTHER FORMS OF SERVICE TO THEIR MEMBERS. CLASS D THERE WAS 1 CLASS D MEMBER. CLASS D MEMBERS ARE NATIONAL ASSOCIATIONS OF COOPERATIVES COMPRISED OF CLASS A, CLASS B AND CLASS C MEMBERS. IN ORDER TO BE ELIGIBLE FOR MEMBERSHIP TO CFC, A NATIONAL ASSOCIATION MUST HAVE, AT THE TIME OF ADMISSION TO CFC, MEMBER COOPERATIVES DOMICILED IN AT LEAST 80% OF THE STATES OF THE UNITED STATES. IN ADDITION TO MEMBERS, ASSOCIATES (NUMBERING 49) ARE NOT-FOR-PROFIT ENTITIES ORGANIZED ON A COOPERATIVE BASIS WHICH ARE OWNED, CONTROLLED OR OPERATED BY CLASS A, B OR C MEMBERS AND WHICH PROVIDE NON-ELECTRIC SERVICES PRIMARILY FOR THE BENEFIT OF CONSUMERS. ASSOCIATES ARE NOT ENTITLED TO VOTE AT ANY MEETING OF THE MEMBERS AND ARE NOT ELIGIBLE TO BE REPRESENTED ON OUR BOARD OF DIRECTORS. FORM 990, PART VI, SECTION A, LINE 7A CFC'S MEMBERS ARE DIVIDED INTO ELEVEN DISTRICTS. EACH DISTRICT APPOINTS TWO DIRECTORS. FOR DISTRICTS 1 THROUGH 10, THE TWO DIRECTORS MUST INCLUDE ONE DIRECTOR, WHO IS A TRUSTEE OR DIRECTOR OF A MEMBER ORGANIZED WITHIN THE DISTRICT, AND ONE, WHO IS A MANAGER OF A MEMBER ORGANIZATION WITHIN THE DISTRICT; PROVIDED THAT, EXCEPT FOR DISTRICT 11 WHICH CONTAINS OUR SOLE CLASS D MEMBER, AND IN THE CASE WHERE ONLY ONE STATE IS LOCATED IN A DISTRICT, NO TWO DIRECTORS CAN REPRESENT MEMBERS WITH THEIR HEADQUARTERS IN THE SAME STATE. EACH DIRECTOR SERVES FOR A TERM OF THREE YEARS. UPON EXPIRATION OF THE TERM OF A DIRECTOR, MEMBERS FROM THAT DISTRICT ELECT A DIRECTOR MEETING THE QUALIFICATIONS OUTLINED ABOVE TO REPRESENT THEM ON CFC'S BOARD. A DIRECTOR,OTHER THAN THE DIRECTORS FROM DISTRICT 11, MAY NOT BE ELECTED TO SERVE MORE THAN TWO CONSECUTIVE THREE YEAR TERMS ON THE CFC BOARD. IF THE BOARD OF DIRECTORS IN ITS DISCRETION SO DETERMINES, THEN THERE MAY BE ONE ADDITIONAL DIRECTOR ELECTED BY THE MEMBERS TO SERVE ON THE BOARD OF DIRECTORS FROM TIME TO TIME WHO MEETS THE QUALIFICATIONS AS MAY BE REQUIRED BY THE SECURITIES AND EXCHANGE COMMISSION, GOVERNMENTAL AGENCY OR AUTHORITY, OR NATIONAL STOCK EXCHANGE TO SERVE AS AN AUDIT COMMITTEE FINANCIAL EXPERT FORM 990, PART VI, SECTION A, LINE 7B PURSUANT TO THE BUSINESS ORGANIZATIONS CODE OF THE DISTRICT OF COLUMBIA, CFC MEMBERS MUST APPROVE THE SALE OR DISPOSITION OF MORE THAN 75% OF THE COMPANY'S ASSETS, MERGERS FOR WHICH THE COMPANY WILL NOT BE THE SURVIVING ENTITY, AND THE DISSOLUTION OF THE COMPANY. FORM 990, PART VI, SECTION B, LINE 11 THE BOARD OF DIRECTORS OF CFC REVIEWED THE 2015 FORM 990 FOR FISCAL YEAR ENDED MAY 31, 2016 AT A REGULARLY SCHEDULED BOARD MEETING PRIOR TO FILING THE FORM 990 WITH THE INTERNAL REVENUE SERVICE. A DRAFT OF THE FORM 990 WAS PREPARED BY CFC STAFF, REVIEWED BY INTERNAL COUNSEL AND SENIOR MANAGEMENT, REVIEWED BY EXTERNAL TAX ADVISORS, KPMG LLP, AND PRESENTED TO THE BOARD FOR REVIEW. A DETAILED PRESENTATION ABOUT THE FORM 990 WAS MADE BY CFC STAFF TO THE BOARD AT A REGULARLY SCHEDULED BOARD MEETING. FORM 990, PART VI, SECTION B, LINE 12C CONFLICTS OF INTERESTS ARE ADDRESSED BY CFC THROUGH ITS RELATED PERSON TRANSACTIONS AND RELATED CREDITS POLICY (THE "POLICY"). CFC ESTABLISHED THE POLICY IN MAY 2007, AS AMENDED FROM TIME TO TIME, TO FACILITATE DISCLOSURE WITH RESPECT TO TRANSACTIONS IN WHICH ITS EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES AND THEIR IMMEDIATE FAMILY MEMBERS ("RELATED PERSON") HAVE A SUBSTANTIAL INTEREST. A RELATED PERSONS TRANSACTION IS DEFINED AS ANY TRANSACTION IN WHICH (I) CFC WAS, IS, OR PROPOSES TO BE A PARTICIPANT, (II) THE AMOUNT INVOLVED EXCEEDS $120,000 AND (III) A RELATED PERSON HAD, HAS, OR WILL HAVE A DIRECT OR INDIRECT MATERIAL INTEREST IN THE TRANSACTION IN QUESTION. THE POLICY APPLIES TO ALL EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES OF CFC ("COVERED PARTIES") AND REQUIRES SIMILAR DISCLOSURE TO THAT REQUIRED BY ITEM 404 OF REGULATION S-K OF THE SECURITIES ACT OF 1933, AS AMENDED. ON A QUARTERLY BASIS, EACH COVERED PARTY IS REQUIRED TO REVIEW THE POLICY AND COMPLETE A RELATED PERSON DISCLOSURE IF HE OR SHE OR AN IMMEDIATE FAMILY MEMBER IS INVOLVED IN A TRANSACTION WITH CFC. OUTSIDE OF REGULARLY SCHEDULED BOARD MEETINGS, COVERED PARTIES ARE REQUIRED TO COMPLETE RELATED PERSON DISCLOSURE NOTICES WHENEVER THEY BECOME AWARE OF A POTENTIAL CONFLICT OF INTEREST. THE RELATED PERSON DISCLOSURE NOTICE REQUIRES A DESCRIPTION OF THE PARTIES INVOLVED IN THE TRANSACTION, THE APPROXIMATE DOLLAR AMOUNT OF THE TRANSACTION, AND ANY OTHER MATERIAL FACTS AND CIRCUMSTANCES, AS WELL AS AN UPDATE WITH RESPECT TO THE TIMING AND STATUS OF THE TRANSACTION. UPON RECEIPT OF A RELATED PERSON DISCLOSURE NOTICE, CFC'S GENERAL COUNSEL IS RESPONSIBLE FOR THE REVIEW, APPROVAL AND RATIFICATION OF ANY RELATED PERSON TRANSACTION IF IT MEETS THE CRITERIA BELOW. THOSE RELATED PERSON TRANSACTIONS INVOLVING A SUBSTANTIAL INTEREST OF CFC'S GENERAL COUNSEL ARE REQUIRED TO BE REFERRED TO THE BOARD FOR REVIEW, APPROVAL AND RATIFICATION. IN REVIEWING A RELATED PERSON TRANSACTION, THE GENERAL COUNSEL, AND WHEN APPLICABLE, THE BOARD, MUST REASONABLY DETERMINE, BASED ON A REVIEW OF THE AVAILABLE INFORMATION, THAT THE TRANSACTION IS FAIR AND REASONABLE TO CFC AND CONSISTENT WITH THE BEST INTERESTS OF CFC. IN THE EVENT THE GENERAL COUNSEL BECOMES AWARE OF A RELATED PERSON TRANSACTION THAT HAS NOT BEEN APPROVED UNDER THE POLICY PRIOR TO CONSUMMATION, THE GENERAL COUNSEL SHALL NOTIFY THE BOARD OF DIRECTORS AND TAKE SUCH OTHER ACTIONS AS MAY BE NECESSARY TO SUSPEND THE CONSUMMATION OF THE TRANSACTION PENDING BOARD OF DIRECTORS' REVIEW. RELATED PERSON TRANSACTIONS DO NOT INCLUDE COMPENSATION OR EXPENSE REIMBURSEMENT ARRANGEMENTS WITH DIRECTORS, OFFICERS OR KEY EMPLOYEES (NOTWITHSTANDING THAT OFFICER COMPENSATION MAY BE DISCLOSED IN "ITEM 13. RELATED-PERSON TRANSACTION" IN OUR ANNUAL REPORT ON FORM 10-K, ELSEWHERE IN THE CFC'S PERIODIC REPORTS FILED WITH THE SEC OR OTHERWISE DISCLOSED PUBLICLY AS A RELATED PERSON TRANSACTION); TRANSACTIONS WHERE THE RELATED PERSON'S INTEREST ARISES ONLY FROM THE PERSON'S POSITION AS A DIRECTOR OF ANOTHER ENTITY THAT IS A PARTY TO THE TRANSACTION; AND TRANSACTIONS DEEMED TO BE RELATED CREDITS. A RELATED CREDIT IS DEFINED AS THE EXTENSION OF CREDIT TO OR FOR THE BENEFIT OF COVERED EMPLOYEES OR RELATED ENTITIES THAT ARE MADE ON SUBSTANTIALLY THE SAME TERMS AND FOLLOW THE UNDERWRITING PROCEDURES THAT ARE NO LESS STRINGENT THAN THOSE PREVAILING AT THE TIME FOR COMPARABLE TRANSACTIONS GENERALLY OFFERED BY CFC. THE POLICY PROHIBITS CFC FROM EXTENDING CREDIT IN THE FORM OF A PERSONAL LOAN TO A COVERED EMPLOYEE. RELATED ENTITIES INCLUDE CFC'S MEMBER COOPERATIVES AS WELL AS ANY ENTITY FOR WHICH A RELATED PERSON (I) SERVES AS AN OFFICER, DIRECTOR, TRUSTEE, ALTERNATIVE DIRECTOR OR TRUSTEE OR EMPLOYEE (INCLUDING PART TIME EMPLOYEE), (II) CONTROLS THE ENTITY, OR (III) HAS A SUBSTANTIAL BENEFICIAL INTEREST IN THE ENTITY. THE BOARD HAS DELEGATED TO THE CEO, WITH AUTHORITY TO REDELEGATE TO SUCH OFFICER OF CFC AS THE CEO DEEMS APPROPRIATE, THE AUTHORITY TO APPROVE ALL RELATED CREDITS IN AN AMOUNT EQUAL TO OR LESS THAN $250,000 AND EMERGENCY AND CERTAIN OTHER LINES OF CREDIT. RELATED CREDITS IN EXCESS OF $250,000 MUST BE APPROVED BY THE BOARD. ALL RELATED PERSONS ARE REQUIRED TO ABSTAIN FROM PARTICIPATING, DIRECTLY OR INDIRECTLY, IN THE CREDIT APPROVAL PROCESS INVOLVING A RELATED CREDIT. ADDITIONALLY, ALL RELATED PERSONS ARE REQUIRED TO LEAVE THE BOARD MEETING OR DISCONNECT FROM THE CONFERENCE CALL WHILE THE RELATED CREDIT IS BEING CONSIDERED AND DISCUSSED AND RELATED PERSONS ARE NOT PROVIDED WITH ANY WRITTEN MATERIALS PERTAINING TO SUCH RELATED CREDIT. FORM 990, PART VI, SECTION B, LINE 15A CFC'S COMPENSATION COMMITTEE (THE "COMMITTEE"), WHICH IS COMPRISED OF CFC EXECUTIVE COMMITTEE BOARD MEMBERS, DETERMINES AND APPROVES THE COMPENSATION OF CFC'S CEO. THE COMMITTEE ANNUALLY REVIEWS AND APPROVES APPROPRIATE CORPORATE GOALS AND OBJECTIVES RELATED TO THE CEO'S COMPENSATION AND EVALUATES PERFORMANCE IN LIGHT OF THOSE GOALS AND OBJECTIVES. THE CEO'S COMPENSATION IS COMPRISED OF BASE PAY, SHORT AND LONG TERM INCENTIVE COMPENSATION AND PERQUISITES. IN FISCAL YEAR 2016, AN INDEPENDENT CONSULTANT WAS ENGAGED BY THE COMMITTEE TO CONDUCT A COMPENSATION SURVEY AND PROVIDE COMPENSATION DATA FOR THE CEO POSITION USING PEER ORGANIZATIONS IDENTIFIED BY THE INDEPENDENT CONSULTANT THROUGH DISCUSSIONS WITH THE COMMITTEE. THE INDEPENDENT CONSULTANT INCLUDED COMPANIES IN THE COMPENSATION COMPARISON GROUP THAT WERE SIMILAR TO CFC IN ASSET SIZE, INDUSTRY AND BUSINESS DESCRIPTION. THE GROUP INCLUDED FINANCIAL INSTITUTIONS THAT ARE PRIVATE MARKET, COMMERCIAL AND/OR MISSION-DRIVEN LENDERS, OFFERING FULL SERVICE FINANCING, INVESTMENT AND RELATED SERVICES. THE COMPANIES TARGETED AS PEER COMPANIES INCLUDED TWO MEMBERS OF THE FARM CREDIT SYSTEM AND 12 REGIONAL BANKS OR FINANCIAL SERVICES COMPANIES. THESE COMPANIES WERE CHOSEN BECAUSE THEIR BUSINESSES ARE SIMILAR TO CFC'S. ALTHOUGH CFC IS NOT FOCUSED ON PROFITS LIKE THE INSTITUTIONS IN THE PEER GROUP, THE COMMITTEE BELIEVES THAT THESE COMPANIES EMPLOY EXECUTIVES THAT HAVE SKILLS AND EXPERTISE CONSISTENT WITH WHAT CFC WOULD SEEK IF IT HAD TO REPLACE THE CEO. THE TARGETED COMPANIES HAD ASSETS RANGING FROM APPROXIMATELY 50 PERCENT TO 200 PERCENT OF CFC'S MAY 2015 TOTAL ASSETS OF $22.9 BILLION, AND INCLUDED EIGHT COMPANIES WITH GREATER TOTAL ASSETS THAN CFC'S. THE COMPARATOR GROUP CONSISTED OF THE FOLLOWING FINANCIAL SERVICES ORGANIZATIONS: NEW YORK COMMUNITY BANCORP, INC., ASTORIA FINANCIAL CORP., NELNET, INC., WEBSTER FINANCIAL CORP., FLAGSTAR BANCORP, PEOPLE'S UNITED FINANCIAL CORP., WASHINGTON FEDERAL INC., HUDSON CITY BANCORP INC., FIRST NIAGARA FINANCIAL GROUP, TFS FINANCIAL CORPORATION, EVERBANK FINANCIAL CORPORATION AND FEDERAL AGRICULTURAL MORTGAGE CORPORATION, AS WELL AS TWO FARM CREDIT SYSTEM PEERS. HUDSON CITY BANCORP INC. HAS AGREED TO A MERGER WITH M&T BANK CORP. THE INDEPENDENT CONSULTANT RECOMMENDED THAT THIS COMPANY REMAIN IN THE PEER GROUP FOR THIS YEAR AND WILL REEVALUATE THE PEER GROUP FOR NEXT YEAR'S ANALYSIS. THE INDEPENDENT CONSULTANT LED THE COMMITTEE THROUGH AN ASSESSMENT OF CEO COMPENSATION DATA AT THE COMPARISON GROUP COMPANIES. THE INDEPENDENT CONSULTANT'S DATA INCLUDED BOTH ACTUAL COMPENSATION AND TARGET COMPENSATION BASED ON INFORMATION OBTAINED FROM EACH COMPARATOR GROUP COMPANY'S MOST RECENT ANNUAL REPORT OR PROXY STATEMENT. THE ELEMENTS OF COMPENSATION REVIEWED INCLUDE CURRENT BASE SALARY AS WELL AS ANY ADDITIONAL BONUS, INCENTIVES OR SPECIAL AWARDS. THE COMMITTEE REVIEWED TOTAL COMPENSATION DATA FOR THE COMPARATOR GROUP FOR INFORMATIONAL PURPOSES AND USED THIS DATA SOLELY TO DETERMINE THE COMPETITIVENESS OF OUR CEO BASE PAY. CFC'S SHORT-TERM CASH INCENTIVE PROGRAM IS A ONE-YEAR CASH INCENTIVE THAT IS TIED TO THE ANNUAL PERFORMANCE OF THE ORGANIZATION AS A WHOLE. CORPORATE PERFORMANCE IS MEASURED USING A BALANCED SCORECARD APPROVED BY THE BOARD OF DIRECTORS PRIOR TO THE START OF THE FISCAL YEAR. THE BALANCED SCORECARD IS A PERFORMANCE MANAGEMENT TOOL THAT ARTICULATES THE CORPORATE STRATEGY INTO SPECIFIC, QUANTIFIABLE, MEASURABLE GOALS. THE SCORECARD IS DIVIDED INTO FOUR QUADRANTS, REFLECTING CRUCIAL AREAS OF BUSINESS PERFORMANCE. SPECIFIC GOALS ARE ESTABLISHED WITHIN THOSE QUADRANTS TO FOCUS ALL EMPLOYEES ON THE TARGET RESULTS AND MEASURES THAT MUST BE ACHIEVED IF CFC IS TO SUCCEED AT REALIZING ITS STRATEGIC PLAN. THE INTENT IS TO ALIGN ORGANIZATIONAL, DEPARTMENTAL AND INDIVIDUAL INITIATIVES TO ACHIEVE A COMMON SET OF GOALS. EVERY EMPLOYEE PARTICIPATES IN THE SHORT-TERM INCENTIVE PROGRAM, AND THE CORPORATE STRATEGIC GOALS ARE THE SAME FOR ALL EMPLOYEES,INCLUDING THE EXECUTIVE OFFICERS. THE BOARD OF DIRECTORS ESTABLISHES CORPORATE GOALS AND MEASURES THAT THEY BELIEVE ARE ACHIEVABLE ONLY IF EACH INDIVIDUAL PERFORMS WELL IN HIS OR HER ROLE AND CFC MEETS ITS INTERNAL BUSINESS PLAN GOALS. THE SHORT-TERM INCENTIVE PROGRAM PROVIDES ANNUAL CASH INCENTIVE OPPORTUNITIES BASED UPON THE LEVEL OF THE POSITION WITHIN CFC'S BASE PAY STRUCTURE, RANGING FROM 15% - 25% OF BASE PAY. THE CEO IS ELIGIBLE FOR AN ANNUAL INCENTIVE OPPORTUNITY AT 25% OF HIS BASE PAY. THE LONG-TERM INCENTIVE PROGRAM IS A THREE-YEAR PLAN THAT IS TIED TO CFC'S LONG-TERM STRATEGIC OBJECTIVES. THE MEASURE FOR ALL ACTIVE LONG-TERM INCENTIVE PLANS IS THE ACHIEVEMENT OF BOND RATING TARGETS FOR CFC'S ISSUER CREDIT RATING BY RATING AGENCIES: S & P GLOBAL, FITCH RATINGS INC., AND MOODY'S INVESTORS SERVICE. ELIGIBLE PARTICIPANTS IN THE PLAN CYCLE WILL RECEIVE PERFORMANCE UNITS THAT ARE CALCULATED AT 15% - 25% OF BASE PAY, DIVIDED BY THE TARGET OBJECTIVE,CURRENTLY $100. THE CEO'S PERFORMANCE UNITS ARE CALCULATED AT 25% OF HIS BASE PAY DIVIDED BY THE TARGET OBJECTIVE. THE COMMITTEE ALSO CONSIDERS PERQUISITES FOR THE CEO IN CONNECTION WITH ITS ANNUAL REVIEW OF THE CEO'S TOTAL COMPENSATION PACKAGE DESCRIBED ABOVE. THE PERQUISITES PROVIDED TO CFC'S CEO ARE LIMITED TO AN ANNUAL AUTOMOBILE ALLOWANCE AS WELL AS AN ANNUAL SPOUSAL AIR TRAVEL ALLOWANCE. TO PROVIDE THESE PERQUISITES IN AN EFFICIENT FASHION, THE BOARD AUTHORIZES AN ANNUAL ALLOWANCE RATHER THAN PROVIDING UNLIMITED REIMBURSEMENT OR USE OF A COMPANY-OWNED VEHICLE. THE AMOUNT OF EACH ALLOWANCE IS AUTHORIZED ANNUALLY BY THE BOARD AND IS DETERMINED BASED ON THE ESTIMATED COST FOR OPERATION AND MAINTENANCE OF AN AUTOMOBILE AND THE ANTICIPATED COST OF AIR TRAVEL BY THE CEO'S SPOUSE. ADDITIONALLY, CFC'S CEO MAY RECEIVE AN ANNUAL EXECUTIVE PHYSICAL PAID FOR BY CFC. THE COMMITTEE DELEGATES THE POWER TO REVIEW AND APPROVE ALL EMPLOYEE COMPENSATION TO THE CEO, WHO EXERCISES HIS JUDGMENT TO SET THE ANNUAL BASE PAY FOR THE OTHER EXECUTIVE OFFICERS AND KEY EMPLOYEES, AS WELL AS EACH EMPLOYEE BASED ON GENERAL MARKET DATA, OVERALL PERFORMANCE AND LEADERSHIP ACCOMPLISHMENTS. IN DETERMINING THE BASE COMPENSATION PAID TO CFC'S EXECUTIVE OFFICERS AND KEY EMPLOYEES, THE CEO REVIEWED NATIONAL, CREDIBLE COMPENSATION SURVEYS FOR FINANCIAL SERVICES ORGANIZATIONS OF SIMILAR ASSET SIZE TO OBTAIN A GENERAL UNDERSTANDING OF CURRENT COMPENSATION PRACTICES AND TO ENSURE THAT THE BASE PAY COMPONENT IS COMPETITIVE, MEANING GENERALLY WITHIN THE 50TH PERCENTILE OF COMPARATIVE PAY FOR SIMILAR POSITIONS. THE CEO DID NOT REVIEW OR CONSIDER THE UNDERLYING ORGANIZATIONS COMPRISING THE SURVEY INFORMATION, BUT INSTEAD CONSIDERED ONLY THE AGGREGATE COMPENSATION DATA.EACH EXECUTIVE OFFICER AND KEY EMPLOYEE IS ELIGIBLE TO PARTICIPATE IN CFC'S SHORT TERM AND LONG TERM INCENTIVE PLANS AS DESCRIBED ABOVE WITH RESPECT TO CFC'S CEO. CFC DOES NOT PROVIDE SIGNIFICANT PERQUISITES OR PERSONAL BENEFITS TO ITS EXECUTIVE OFFICERS OR KEY EMPLOYEES. FORM 990, PART VI, SECTION C, LINE 19 CFC'S ARTICLES OF INCORPORATION AND BYLAWS, AS AMENDED, AND ANNUAL AND PERIODIC FINANCIAL STATEMENTS ARE AVAILABLE TO THE PUBLIC THROUGH THE SECURITIES AND EXCHANGE COMMISSION'S "SEC'S" WEBSITE. CFC'S ARTICLES OF INCORPORATION AND BYLAWS, AS AMENDED, ARE ALSO AVAILABLE ON CFC'S WEBSITE AT WWW.NRUCFC.COOP. CFC'S CONFLICT OF INTEREST POLICY, TITLED THE RELATED PERSONS TRANSACTIONS AND RELATED CREDITS POLICY, IS AVAILABLE ON CFC'S WEBSITE AT WWW.NRUCFC.COOP. CFC'S ARTICLES OF INCORPORATION ARE FILED AS EXHIBIT 3.1 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MAY 31, 2014 (FILED AUGUST 28, 2014). CFC'S BYLAWS ARE FILED AS EXHIBIT 3.2 TO THE FORM 10-Q FOR THE QUARTER ENDED FEBRUARY 28, 2011 (FILED ON APRIL 13, 2011). CFC'S ANNUAL AND PERIODIC FINANCIAL STATEMENTS ARE PERIODICALLY FILED WITH THE SEC ON FORM 10-K AND FORM 10-Q. FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL DISTRIBUTION -39,383,734. OTHER COMPREHENSIVE INCOME -6,491,002. DERIVATIVE FORWARD VALUE -220,827,229. NET MEMBERSHIP FEES -1,800. INTEGRITY FUND CONTRIBUTIONS -909,152. INTEGRITY FUND GRANTS 1,361,216. FORM 990, PART XII, LINE 2C WHILE THERE IS NO SEPARATE AUDIT PERFORMED OF THE CFC FINANCIAL STATEMENTS, THE CFC FINANCIAL STATEMENTS ARE CONSOLIDATED WITH THE STATEMENTS OF NATIONAL COOPERATIVE SERVICES CORPORATION AND RURAL TELEPHONE FINANCE COOPERATIVE. THE CONSOLIDATED FINANCIAL STATEMENTS ARE AUDITED. CFC'S AUDIT COMMITTEE IS SOLELY RESPONSIBLE FOR THE NOMINATION, APPROVAL, COMPENSATION, EVALUATION AND DISCHARGE OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS. THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS REPORT DIRECTLY TO THE AUDIT COMMITTEE AND THE AUDIT COMMITTEE IS RESPONSIBLE FOR THE RESOLUTION OF DISAGREEMENTS BETWEEN MANAGEMENT AND THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS. CONSISTENT WITH SEC REQUIREMENTS, THE AUDIT COMMITTEE HAS ADOPTED A POLICY TO PRE-APPROVE ALL AUDIT AND PERMISSIBLE NON-AUDIT SERVICES PROVIDED BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS. THE POLICY PROVIDES THAT PRE-APPROVAL IS NOT REQUIRED FOR TAX COMPLIANCE AND TAX PLANNING AND ADVICE ENGAGEMENTS FOR CFC AND ITS AFFILIATES PROVIDED THE FEES OF EACH SUCH ENGAGEMENT ARE NOT MORE THAN FIVE PERCENT OF TOTAL REVENUES PAID TO THE INDEPENDENT PUBLIC ACCOUNTANTS AND DO NOT IMPAIR THEIR INDEPENDENCE. THE COMMITTEE MEETS WITH OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, INTERNAL AUDITORS, CHIEF EXECUTIVE OFFICER AND FINANCIAL MANAGEMENT EXECUTIVES TO REVIEW THE SCOPE AND RESULTS OF AUDITS AND RECOMMENDATIONS MADE BY THOSE PERSONS WITH RESPECT TO INTERNAL AND EXTERNAL ACCOUNTING CONTROLS AND SPECIFIC ACCOUNTING AND FINANCIAL REPORTING ISSUES AND TO ASSESS CORPORATE RISK. THE BOARD HAS ADOPTED A WRITTEN CHARTER FOR THE AUDIT COMMITTEE WHICH MAY BE FOUND ON OUR WEBSITE, WWW.NRUCFC.COOP. THE PROCESS HAS NOT CHANGED FROM THE PRIOR PERIOD. FORM 990, PART VI, QUESTION 16B AS A LENDER, CFC, FROM TIME TO TIME, MAY HAVE TO FORECLOSE ON THE ASSETS OF A BORROWER. AS PART OF SUCH ACTIONS, THE COMPANY MAY RECEIVE INTERESTS IN JOINT VENTURES WITH TAXABLE ENTITIES. CFC TAKES SUCH INTERESTS ONLY IN ORDER TO MAXIMIZE ITS RECOVERY ON THE LOAN RECEIVABLE. CFC DOES NOT ENTER INTO JOINT VENTURES WITH TAXABLE ENTITIES AS PART OF ITS CORE LENDING BUSINESS. TO DATE, THE COMPANY'S INVESTMENT IN THESE JOINT VENTURES HAS BEEN NOMINAL. CFC HAS DEVELOPED A WRITTEN POLICY THAT REQUIRES THE COMPANY TO EVALUATE ITS PARTICIPATION IN JOINT VENTURE ARRANGEMENTS AND TAKE STEPS TO SAFEGUARD THE COMPANY'S 501(C)(4) TAX EXEMPT STATUS. 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