The cost basis and market values associated with the preneed cemetery merchandise and services trust assets as of July 31, 2011 are detailed below.


	July 31, 2011
			Unrealized		Unrealized
	Cost Basis		Gains		Losses			Market
Cash, money market and other short- term investments	$	9,138	$	—	$	—		$	9,138
U.S. Government, agencies and municipalities		2,085		88		—			2,173
Corporate bonds		2,657		147		(1	)		2,803
Preferred stocks		14,132		18		(1,167	)		12,983
Common stocks		117,630		2,233		(43,365	)		76,498
Mutual funds:
Equity		22,001		102		(5,291	)		16,812
Fixed income		54,806		718		(66	)		55,458
Commodity		6,157		2		(247	)		5,912
Real estate investment trusts		10,310		428		—			10,738
Master limited partnerships		97		6		—			103
Other long-term investments		581		5		—			586

Trust investments	$	239,594	$	3,747	$	(50,137	)	$	193,204

Market value as a percentage of cost										80.6	%

Accrued investment income									564

Trust assets								$	193,768

The cost basis and market values associated with the preneed cemetery merchandise and services trust assets as of October 31, 2010 are detailed below.


	October 31, 2010
			Unrealized		Unrealized
	Cost Basis		Gains		Losses			Market
Cash, money market and other short- term investments	$	12,719	$	—	$	—		$	12,719
U.S. Government, agencies and municipalities		5,655		667		(2	)		6,320
Corporate bonds		11,790		950		(13	)		12,727
Preferred stocks		20,132		139		(1,182	)		19,089
Common stocks		122,529		1,223		(45,792	)		77,960
Mutual funds:
Equity		30,291		50		(6,978	)		23,363
Fixed income		21,405		660		(6	)		22,059
Commodity		6,521		966		—			7,487
Other long-term investments		592		3		—			595

Trust investments	$	231,634	$	4,658	$	(53,973	)	$	182,319

Market value as a percentage of cost											78.7	%

Accrued investment income									470
Less trust investments of assets held for sale									(453	)

Trust assets								$	182,336

The estimated maturities and market values of debt securities included above are as follows:


	July 31, 2011
Due in one year or less	$	529
Due in one to five years		1,814
Due in five to ten years		2,164
Thereafter		469

	$	4,976

The Company is actively managing a covered call program on its equity securities within the preneed cemetery merchandise and services trusts in order to provide an opportunity for additional income. As of July 31, 2011 and October 31, 2010, the Company had outstanding covered calls with a market value of $61 and $128, respectively. These covered calls are included at market value in the balance sheet line “preneed cemetery receivables and trust investments.” For the three months ended July 31, 2011 and 2010, the Company realized trust earnings of approximately $61 and $9, respectively, related to the covered call program. For the nine months ended July 31, 2011 and 2010, the Company realized trust losses of $69 and $205, respectively, related to the covered call program. These trust earnings and losses are accounted for in the same manner as other cemetery merchandise and services trust earnings and losses and flow through cemetery revenue in the condensed consolidated statements of earnings as the underlying contracts are delivered. Although the Company realized losses associated with the covered call program for the nine months ended July 31, 2011 and 2010, it continues to hold the underlying securities against which these covered calls were issued. These underlying securities appreciated in value by $732 and $2,823 for the nine months ended July 31, 2011 and 2010, respectively.

Where quoted prices are available in an active market, investments held by the trusts are classified as Level 1 investments pursuant to the three-level valuation hierarchy. The Company’s Level 1 investments include cash, money market and other short-term investments, common stocks and mutual funds.

Where quoted market prices are not available for the specific security, then fair values are estimated by using quoted prices of securities with similar characteristics. These investments are U. S. Government, agencies and municipalities, corporate bonds, convertible bonds and preferred stocks, all of which are classified within Level 2 of the valuation hierarchy.

There are no Level 3 investments in the preneed cemetery merchandise and services trust investment portfolio.

The inputs into the fair value of the Company’s preneed cemetery merchandise and services trust investments are categorized as follows:


			Significant
	Quoted Market		Other		Significant
	Prices in Active		Observable		Unobservable
	Markets		Inputs		Inputs		Fair Market
	(Level 1)		(Level 2)		(Level 3)		Value
Trust investments—July 31, 2011	$	175,125	$	18,079	$	—	$	193,204
Trust investments—October 31, 2010	$	144,048	$	38,271	$	—	$	182,319

In connection with its revised investment policy, during the nine months ended July 31, 2011, the Company sold several Level 2 investments including corporate bonds and preferred stocks and increased its holdings in several Level 1 investments such as highly diversified mutual funds invested in fixed income securities and real estate investment trusts.

Activity related to preneed cemetery merchandise and services trust investments is as follows:


	Three Months Ended July 31,						Nine Months Ended July 31,
	2011			2010			2011			2010
Purchases	$	27,460		$	9,739		$	79,354		$	20,874
Sales		27,557			3,054			75,330			15,823
Realized gains from sales of investments		2,165			170			5,488			1,429
Realized losses from sales of investments and other		(658	)		(281	)		(1,207	)		(1,799	)
Interest income, dividends and other ordinary income		1,897			1,461			5,307			3,851
Deposits		4,451			4,303			12,459			13,779
Withdrawals		5,341			4,472			14,813			13,201

The following tables show the gross unrealized losses and fair value of the preneed cemetery merchandise and services trust investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of July 31, 2011 and October 31, 2010.


	July 31, 2011
	Less than 12 Months					12 Months or Greater					Total
	Market		Unrealized			Market		Unrealized			Market		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Corporate bonds	$	73	$	(1	)	$	5	$	—		$	78	$	(1	)
Preferred stocks		—		—			10,189		(1,167	)		10,189		(1,167	)
Common stocks		3,415		(419	)		59,177		(42,946	)		62,592		(43,365	)
Mutual funds:
Equity		—		—			15,215		(5,291	)		15,215		(5,291	)
Fixed income		16,281		(34	)		6,404		(32	)		22,685		(66	)
Commodity		5,844		(247	)		—		—			5,844		(247	)

Total	$	25,613	$	(701	)	$	90,990	$	(49,436	)	$	116,603	$	(50,137	)


	October 31, 2010
	Less than 12 Months					12 Months or Greater					Total
	Market		Unrealized			Market		Unrealized			Market		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. Government, agencies and municipalities	$	517	$	(2	)	$	—	$	—		$	517	$	(2	)
Corporate bonds		627		(6	)		493		(7	)		1,120		(13	)
Preferred stocks		—		—			15,206		(1,182	)		15,206		(1,182	)
Common stocks		1,957		(139	)		66,544		(45,653	)		68,501		(45,792	)
Mutual funds:
Equity		—		—			22,582		(6,978	)		22,582		(6,978	)
Fixed income		2,677		(3	)		16		(3	)		2,693		(6	)

Total	$	5,778	$	(150	)	$	104,841	$	(53,823	)	$	110,619	$	(53,973	)

The unrealized losses in the preneed cemetery merchandise and services trust portfolio are not considered to be other than temporary. For each of these securities, the Company evaluates consensus analyst recommendations, ratings from established ratings agencies, concerns specific to the issuer of the securities and overall market performance. Of the total unrealized losses at July 31, 2011, 97 percent, or $48,656, were generated by common stock and mutual fund-equity investments. Most of the common stock investments are part of the S&P 500 Index, and the mutual fund-equity investments are invested in small-cap, mid-cap and international mutual funds that are highly diversified. The Company generally expects its portfolio performance to improve if the performance of the overall financial market improves, but would also expect its performance to deteriorate if the overall financial market declines. The Company believes these investments will recover in value and that it has sufficient liquidity from cash and cash equivalents within the trusts, cash deposits of future preneed sales and cash received from ordinary income to fund future services and allow the Company to hold these investments until they recover in value.

The Company’s policy for recognizing trust income follows the allocation of trust earnings to individual contracts as stipulated in the Company’s respective trust agreements for distributable income. In substantially all of the Company’s trusts, trust earnings, which include dividends and interest earned and net capital gains and losses realized by preneed cemetery trust or escrow accounts net of fees, are allocated to individual contracts when earned or realized. In these trusts, unrealized gains and losses are not allocated to individual contracts. The trust earnings allocated to individual contracts are recognized as components of revenue along with the original sales price when the underlying service or merchandise is actually performed or delivered. Principal and earnings are withdrawn only as the merchandise or services are delivered or contracts are cancelled, except in jurisdictions that permit trust earnings to be withdrawn currently.

Cash flows from preneed cemetery merchandise and services contracts are presented as operating cash flows in the Company’s condensed consolidated statements of cash flows.