Federal (a) Obligations Federal Agency (b) Obligations Other Govt. Agency (c) Obligations Repurchase Agreement (d) Stock Funds   Value Leaders Fund (PYVLX) 0.00% 0.00% 0.00% 0.00% Market Return (PYMRX) 0.00% 1.84% 11.67% 0.00% U.S. Growth Leaders (PUGLX) 0.00% 0.00% 0.00% 0.00% Global Bond Funds   Emerging Markets (PYEMX) 0.14% 0.00% 0.00% 0.00% Global Fixed Income (PYGFX) 4.71% 0.07% 1.05% 0.00% Global Short Bond (PYGSX) 0.65% 1.97% 21.06% 0.00% U.S. Bond Funds   Core Bond (PYCBX) 7.50% 1.63% 17.54% 0.00% GNMA (PYGNX) 0.16% 0.27% 93.57% 0.00% High Income (PYHRX) 0.00% 0.00% 0.00% 0.00% Limited Maturity (PYLMX) 0.68% 6.39% 21.45% 0.00% Opportunity Bond (PYOBX) 4.55% 2.82% 19.17% 0.00% Short Bond (PYSBX) 7.16% 1.90% 19.56% 0.00% U.S. Government (PYUSX) 37.98% 4.88% 54.32% 0.00% Tax Exempt Bond Funds   CA Municipal Income (PYCRX) 0.00% 0.00% 0.00% 0.00% Tax Exempt Bond (PYTEX) 0.00% 0.00% 0.00% 0.00% Money Market Fund   Cash Reserves Money Market (PBHHX) 0.40% 11.60% 22.79% 64.64%

Depending on your state of residence, this information may be relevant to your tax reporting.  Please consult your tax advisor for proper treatment of this information in your state of residence.  

The above information is not intended to be a representation of percentages of U.S. Government income that may be earned by the Paydenfunds in the future.  The percentages are subject to change and should not be construed as an indication of future results.

• Such as U.S. Treasury bills, notes and bonds
• Such as Federal Home Loan Banks, Federal Farm Credit Banks, Student Loan Marketing Association and Federal Deposit Insurance Corporation
• Such as Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation
• Collateralized by U.S. Government obligations

For the Payden Core Bond Fund, 95.3% of the ordinary income distribution is designated as qualified interest income under the American Jobs Creation Act of 2004.

All of the income distributions paid by the California Municipal Income and the Tax Exempt Bond Funds qualify as exempt-interest dividends for federal income tax reporting.

The following information indicates, by state, the percentages of income earned by the Funds.  Any state not listed had no income for the period. 

	California Municipal Income Fund Tax Exempt Bond Fund Arizona 0.00% 5.37% California 94.89% 28.72% District of columbia 0.00% 3.38% Florida 0.00% 4.36% Georgia 0.00% 4.39% Maryland 0.00% 4.75% Massachusetts 0.00% 2.32% New Jersey 0.00% 6.08% New York 0.47% 10.35% North Carolina 0.00% 1.96% Ohio 0.00% 1.18% Oregon 0.00% 6.54% Pennsylvania 0.00% 0.78% Puerto Rico 4.64% 0.00% South Carolina 0.00% 8.88% Tennessee 0.00% 0.45% Texas 0.00% 8.06% Virginia 0.00% 1.41% Wisconsin 0.00% 0.86% Wyoming 0.00% 0.16%

Depending on your state of residence, this information may be relevant to your tax reporting.  Some states require that minimum amount of the income earned be from that state in order for any income to be state income tax exempt.  Please consult your tax advisor for proper treatment of this information in your state of residence.

The above information is not intended to be a representation of percentages of municipal income that may be earned by the Paydenfunds in the future. The percentages are subject to change and should not be construed as an indication of future results.

For the year ended December 31, 2007, 3.76% of the income earned by the California Municipal Income Fund and 9.49% of the income earned by the Tax Exempt Bond Fund is subject to alternative minimum tax.

In May of 2006, the Tax Increase Prevention Reconciliation Act was signed into law. This update to the Internal Revenue Code requires information return reporting for Tax-Exempt Interest Income including that which is paid through a mutual fund. Tax-Exempt Interest Dividends paid to you by the Paydenfunds will be reported on Form 1099-INT. In Box 8 of Form 1099, the Fund will report the gross Tax-Exempt Interest Dividends paid to you during the calendar year 2006. In Box 9 of Form 1099, the Fund will report the amount of the Tax-Exempt Interest Dividends subject to Alternative Minimum Tax. Please see your tax advisor in order to determine taxability of the income reported on Form 1099 INT.