quarterly meeting · 12/1/2016 · • cost savings since inception through october 2016 =...

Quarterly MeetingParticipant Local Government Advisory Council (PLGAC)December 1, 2016

General Items / Update

Trustee Certification [F.S. 218.409(6)(a)1] on 12/6/16 agenda Rules update Auditor General Annual Financial Audit update Fee “Holiday” began on January 1, 2016:

• ~$150k offset each month• Cost savings since inception through October 2016 = $1,412,510.78

December 1, 2016 PLGAC Quarterly Meeting 2

Service Summary Quarter Ending 9/30/16

FINANCIAL TRANSACTIONS: 1,469 open accounts / 774 participants 4,060 total transactions:

– 2,253 deposits / 1,807 withdrawalsENROLLMENTS:

– 17 New Participants opening New Accounts– 20 New Accounts (among existing participants)– 37 Closed Accounts

3December 1, 2016 PLGAC Quarterly Meeting

Operations Line

4

July August September 3Q2016 3Q2015Transaction Inquiries 38 42 55 135 74

Performance Inquiries 6 5 1 12 7SBA Address 1 0 2 3 1

Financial Reporting 2 2 0 4 3PRIME Account Statement 6 4 6 16 22

Miscellaneous & Procedures 2 3 3 8 8Wiring Instructions 2 2 3 7 9

Statement Questions & Other 1 2 0 3 66Account Activity >1yr 0 0 0 0 0

ACH Transactions Inquiry 1 2 1 4 3Audit Confirmation 0 1 8 9 3

Wires / ACH 6 7 6 19 22

Participant Account Form (PAMF) 8 18 21 47 53Account Log-in Assistance 2 5 3 10 8

Posting Errors 0 0 0 0 0Federated /BNY Mellon Calls 8 6 10 24 9

Non Pool Calls 4 15 6 25 28Total Number of Calls 87 114 125 326 316

December 1, 2016 PLGAC Quarterly Meeting


Quarterly Fund Flows Quarter Ending 9/30/16

*Period July 2016 – September 2016

Cash Flows as of 9/30/2016 Third Quarter Fiscal YTD*Opening Balance $7,789,430,976 $7,789,430,976Participant Deposits $3,098,757,849 $3,098,757,849Gross Earnings $13,527,650 $13,527,650Participant Withdrawals ($3,885,842,609) ($3,885,842,609)Fees $0 $0Closing Balance (9/30/2016) $7,015,873,868 $7,015,873,868

Change ($773,557,108) ($773,557,108)

Monthly Fund Flows


$5.87

$7.13

$8.46$8.84 $8.87

$8.48 $8.44$8.06

$7.79 $7.82$7.36

$7.02

-$2

$0

$2

$4

$6

$8

$10

Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16

Billi

ons

Net Change Deposits Withdrawals Net Asset Value

Growth in Net Asset Value


$830,219,939.14

$-

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000


1 Year Change in NAV

Performance (as of 9/30/16)Stable NAV ($1.00) Products*


* 30 Day Average Net Yield

0.26 0.26

0.36

0.480.53

0.57 0.59 0.60 0.62 0.64

0.730.78

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90


30 D

ay N

et Y

ield

(ann

ualiz

ed)

Florida PRIME iMoneyNet First Tier Instit AvgFlorida Surplus Asset Fund Trust (FLSAFE) Florida Education Investment Trust Fund (FEITF)Florida Trust - Day to Day Fund (FL Trust Online) 3 Month T-Bill

Quarterly Update

December 1, 2016 9PLGAC Quarterly Meeting

Relationship Overview

3rd Quarter 2016 Event

August 18-20 Florida League of Cities 2016 Annual Conference(Hollywood)

Florida PRIME Assets: $7.0 billion (as of 9/30/16)771 Participants1,465 Accounts

Investment Manager Paige WilhelmSenior Vice President Senior Portfolio Manager Federated Investment Counseling

• Weekly Market Commentary• Monthly Newsletter• Quarterly Review• Marketing Support

4th Quarter 2016 Events

Oct. 3-5

Oct. 11-13

Nov. 7-10

Nov. 29 - Dec. 2

Council of Business Affairs (COBA) (Tampa)

Florida Association of School Business Officials (FASBO) 50th Anniversary Conference (St. Augustine)

Florida School Finance Officers Association (FSFOA) (Tampa)

Florida School Boards/ Superintendents Joint Conference (Tampa Bay)

PLGAC Quarterly Meeting 10December 1, 2016

Targeted Communication Efforts

Focus on Key Prospects

• In partnership with the SBA, 75 personalized letters encompassing 60 local governments were mailed in late October to highly-targeted prospects positioning Florida PRIME as aleading liquidity investment option.

Primary messages:

• Florida PRIME is a sound alternative in this era of low rates and money market reforms

• Florida PRIME offers stability of principal with competitive yields and daily liquidity

• Federated continues to follow up with personal phone calls and visits to discuss the value that Florida PRIME offers.

Response to Anticipated December Rate Hike

• High-impact communications and outreach in early January focused on:

• Rate comparison between Florida PRIME and bank competitors

• Ongoing potential for yield advantage as the Pool purchases new, highly-rated commercial paper

• Florida PRIME seeking to satisfy the dual need of liquidity and a competitive yield


Direct Mail and Digital Marketing

• Opportunity to Reach Florida School Officials

• As an advertiser in FASBO Magazine (Florida Association of School Business Officials), Federated was invited to deliver the Florida PRIME message to all superintendents and school districts in the State.

• Dual Message

– Florida PRIME is the Premier Cash Management Solution for Florida Public Entities.

– Right place and right time to invest as the Pool is managed to extract a competitive yield post money market reform.

• Over 2,500 Florida PRIME mailers will be delivered via U.S. Postal Service in early December.

• Mailer will be emailed along with the 2016 Fall/Winter digital issue of FASBO Magazine.


Tentative 2017 Conference Calendar

Date Event LocationEst. Number of Attendees

Federated/Florida PRIMEExhibit and/or Sponsorship

Jan. 18-20 Florida Council of Business Affairs (COBA) Daytona Beach 150

June 1-3 Florida City and County Management AssociationAnnual Conference Orlando 250

June 12-16 Florida Association of Special Districts Orlando 400

June 13-15 Florida Court Clerks & Comptrollers Summer Conference Panama City 300

June 24-28 Florida Government Finance Officers Association Annual Conference Hollywood 800

June (TBD) Florida School Finance Officers Association (FSFOA) Sanibel Island 250

Aug. 17-19 Florida League of Cities 2017 Annual Conference Orlando 1,000

Oct. (TBD) Florida Council of Business Affairs (COBA) Tampa 150

Oct. (TBD) Florida Association of School Business Officials (FASBO) 51st Anniversary Conference (TBD) 300

Nov. (TBD) Florida School Finance Officers Association Tampa 250

Nov. 28-Dec. 1 Florida School Boards/Superintendents Joint Conference Tampa 600


Florida PRIMEPortfolio Review

14PLGAC Quarterly MeetingDecember 1, 2016

The London interbank offered rate (Libor) and municipal money market rates moved substantially higher due to the volatile flow environment among tax-free money market funds heading into the deadline for implementation of the Securities and Exchange Commission’s (SEC) money market reform on Oct. 14. One-month Libor rose 6 basis points to 0.53%, three-month increased 20 basis points to 0.85% and six-month leapt 32 basis points to 1.24%. The short-end of the U.S. Treasury yield curve decreased 10 basis points to 0.16% for one-month bills and dipped 1 basis point to 0.25% for three-month bills.

Portfolio Composition

The Pool ended the third quarter of 2016 at $7.0 billion in assets under management down from $7.8 billion at the conclusion of the second quarter of 2016. Normal seasonal outflows account for the decrease in Pool assets. The Pool’s yield jumped from 67 basis points to 78 over the quarter. The weighted average maturity (WAM) increased from 39 days to 49.5 over the quarter, and the weighted average life (WAL) increased from 59 days to 70.

At quarter-end, the Pool held 43% in fixed rate commercial paper, 26% in variable rate instruments, 20% in fixed rate bank securities and 11% in overnight securities, including repurchase agreements and money market funds. This composition represents a 3% increase in variable rate securities versus last quarter, a 7% increase in fixed rate commercial paper and a 10% decline in overnight instruments.

Market CommentaryConcerns over the surprise Brexit vote that rattled the markets just as the third quarter was about to start subsided just as fast, as it quickly became clear the U.K.’s separation from the European Union could take years and would have little impact anytime soon on the U.S. As a result, investor focus during the July-September period quickly returned to the domestic economy.

A powerful rebound in June payrolls assuaged worries over an extremely weak May tally and signaled increasing wage pressures—raising expectations that the Federal Reserve (Fed) may soon begin to raise its target funds rate as it moved closer to its dual mandate of maximum employment and stable inflation. But, even as equity markets hit record highs, economic data outside of the labor market turned disparate as summer wore on. The housing market continued to improve, but auto sales appeared to plateau. Consumer confidence rose, yet retail sales were mixed and core producer and consumer prices tailed off. However, measures of second-quarter gross domestic product (GDP) were unequivocally poor. Hopes for a substantial rebound in growth from the first-quarter’s anemic 1.1% rate faded with the preliminary second-quarter reading of an extremely subpar 1.4%. All of this put a 2016 hike in doubt.

In the end, Fed policymakers held steady despite relatively hawkish statements from a few voting members of the policy-setting Federal Open Market Committee (FOMC) leading up to September’s meeting. However, the FOMC and Chair Janet Yellen in her post-meeting comments left open the possibility of action before the end of the year, which the market assigned to the December meeting given the presidential election on Nov. 8. On the municipal front, most local governments’ finances improved duringthe quarter as the pickup in housing, consumer spending and hiring boosted sales and income-tax collection and real-estate valuation.

3rd Quarter 2016 Strategy Review


0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

Jun-16 Jul-16 Aug-16 Sep-16 Oct-16

Florida Prime iMoneyNet First Tier Instit Avg

0.48

0.53

Prime Opportunity for Yield Advantage

• Local Government Investment Pools were not subject to the regulatory reforms that affected registered money market funds starting in October.

• Florida PRIME did not need to implement a floating net asset value.

• Florida PRIME maintained a longer WAM than money market funds. Lower expenses allows for the possibility of a higher net yield.

1 The participant yield reflects a 365-day basis and adjustments for realized earnings by participants, SBA fees, expenses and other accounting items.

1

Florida PRIME vs. iMoneyNet First Tier Institutional Average Monthly Net Yields

0.41 0.39

0.56

Money Market ReformOct. 14


Credit Quality

A-1+ 68.7%

A-1 31.3%

Top 10 Holdings (ex Repos)

Federated Institutional Prime Obligations Fund 9.8%

DZ Bank AG Deutsche Zentral-Genossenschaftsbank 5.2%

Royal Bank of Canada 5.1%

Anglesea Funding LLC 5.1%

BNP Paribas SA 5.1%

Mitsubishi UFJ Financial Group, Inc. 5.0%

Standard Chartered PLC 4.4%

Toronto Dominion Bank 4.0%

Bank of Nova Scotia, Toronto 3.9%

Antalis S.A. 3.8%

Total % of Portfolio 51.4%

Portfolio Characteristics Period Ending 9/30/16

Portfolio Composition

Maturity Schedule Weighted Average Maturity (WAM)

Weighted Average Life (WAL)

1-7 days 8-30 days 31-90 days 91-180 days 181+ days49.5 days 70.1 days

38.6% 19.9% 26.8% 7.9% 6.8%

Country Exposure

United States 38.1%

Canada 16.4%

France 10.5%

Germany 8.8%

Australia 7.3%

Japan 7.2%

United Kingdom 5.1%

Switzerland 3.4%

Luxembourg 2.0%

Sweden 1.2%

Total % of Portfolio 100%

PLGAC Quarterly Meeting 17

26.1%

19.8%

15.5%

14.4%

9.9%

6.5%

3.5% 3.2% 1.1%

Asset-Backed CP - FixedBank Instruments - FixedCorporate CP - FixedBank Instruments - FloatingMoney Market Mutual FundsCorporate Notes - FloatingCorporate CP - FloatingAsset-Backed CP - FloatingRepurchase Agreements

December 1, 2016

Performance vs. IndexPeriod Ending 9/30/16

Notes: Annualized 1-month and 3-month performance figures; S&P AAA & AA GIP All 30-Day Net Yield Index for all time periods shown.

Net Returns (%) as of 9/30/16

1-month 3-month 1-year 3-years 5 years 10-yearsSince

Jan. 1996

Florida PRIME 30-Day Average Net Yield 0.78 0.71 0.54 0.30 0.28 1.14 2.69

S&P AAA/AA Rated GIPAll 30-Day Net Index 0.45 0.42 0.30 0.14 0.11 1.01 2.48

Above (Below) Benchmark 0.33 0.29 0.24 0.16 0.17 0.13 0.21


Stress Test Results as of 9/30/16


Stress Test Results (continued) as of 9/30/16

B. Escalation Procedures:

If: (1) any deviation between the NAV and the market based NAV in excess of $0.0040 per share occurs, or (2) Weekly Liquid assets drop below 30%, Federated will enactescalation procedures for Florida PRIME.

C. Assessment of Pool's Ability to Withstand Events Reasonably Likely to Occur During the Following Year:

Unless highlighted above for further discussion, the Adviser has determined that the Pool is structured in such a way that the occurrence of the events, described more fully above, which the Adviser believes are reasonably likely to occur during the next 12 months would not result in the Pool’s Weekly Liquid Assets falling below 10% or the Pool failing to minimize principal volatility.

D. Test Descriptions:

Unusual Redemption Activity: Resulting NAV & liquidity levels following redemptions equal to 40% in 10% increments.

Change in Interest Rates: Resulting NAV & liquidity levels following a change in rates of 0.50%.

Credit Event: UK and Euro bank spreads widen by 0.50%.

Floater Spread Widening: Resulting NAV & liquidity levels following a widening of floater spreads off of the applicable index of 0.25%.

Combination: Change in Interest Rates, Credit Event, and Floater Spread Widening combined.

E. Redemption Funding Method:

Redemptions - Sell Daily Liquidity down to 0 percent then Weekly Liquidity down to 30 percent then based on Final Maturity Date.


Florida PRIME Risk vs. Return 5 Years Ending 9/30/16

Note: Peer group includes 179 money market funds within the iMoneyNet First Tier Institutional index as of September 2016.


0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.00% 0.01% 0.02% 0.03% 0.04% 0.05%

Annu

aliz

ed

Ret

urn

Annualized Standard Deviation

Florida PRIME

1 M LIBOR

S&P US AAA & AA Rated GIP All 30-Day Net

90-Day T-Bill

Return DistributionPeriods Ending 9/30/16


95th, 0.36%

95th, 0.18% 95th, 0.17%

75th, 0.23%

75th, 0.08% 75th, 0.07%

50th, 0.09%

50th, 0.03% 50th, 0.02%25th, 0.00%

25th, 0.00% 25th, 0.00%5th, 0.00%5th, 0.00% 5th, 0.00%

-0.10%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

1-Year 3-Year 5-Year

Rat

e of

Ret

urn

(%)

Return Distribution

FL PRIME S&P US AAA & AA Rated GIP All 30-Day Net 1 mo LIBOR Citigroup 90-day T-Bill


Risk DistributionPeriods Ending 9/30/16


95th, 0.01%

95th, 0.04% 95th, 0.04%

75th, 0.01%

75th, 0.03%

75th, 0.03%

50th, 0.00%

50th, 0.01%50th, 0.01%

25th, 0.00%

25th, 0.00% 25th, 0.00%

5th, 0.00%

5th, 0.00% 5th, 0.00%

-0.01%

0.00%

0.01%

0.02%

0.03%

0.04%

0.05%

0.06%

0.07%

1-Year 3-Year 5-Year

Stan

dard

Dev

iatio

n (%

)

Standard Deviation Distribution

FL PRIME S&P US AAA & AA Rated GIP All 30-Day Net 1 mo LIBOR Citigroup 90-day T-Bill


Open Agenda Items / Audience Comments


Name of Fund[inception date]

Type AUM($B) Benchmark Basis Point

Fee Rated DailyCutoff

# of Investors

Investment Manager(s) Sponsor

Florida PRIME™(Local Government Surplus Funds

Trust Fund) [10/77]2a-7 Like $8.5

S&P AAA/AA Government Investment Pool (GIP)

Net of Fees

3.0 AAAm 1pmEST 801 Federated Investors State Board of

Administration (SBA)

Florida Trust(Day to Day Fund3) [01/09] Non 2a-7 $0.6 3 Month

Treasury Bill 11 AAAm 11amEST 12 Payden & Rygel

Florida Association of Court Clerks &

Comptrollers (FACC)

Florida Education Investment Trust Fund (FEITF)

[10/10]

2a-7 Like(IRC Section 115 Qualified Trust)

$0.5 none publicly reported 131 AAAm 2pm EST 10 PFM Asset

Management LLC

Florida School Boards Association &

Florida Association of District Superintendents

Florida Surplus Asset Fund Trust

(FLSAFE) [02/08]

Non 2a-7 $0.1 S&PLGIP Index 221,2 AAAm 1pm

EST 25 Prudent Man Advisors , Inc.

Florida Management and Administrative Services

(FMAS)

(Florida Cooperative Liquid Assets Securities System (FLCLASS)

[08/15]Non 2a-7 n/a n/a 15 AAAm 3pm

EST n/a Public TrustAdvisors LLC

Intergovernmental Investment Pool, Administered by

Public TrustAdvisors LLC

Peer Funds Statewide Other funds offering Stable NAV ($1.00) Products

1 Net fund expense, including all temporary fee waivers. 2 Fund expense excluding custody, rating, and other operating charges not disclosed by fund.3

Fund’s website went dark in February 2014.


quarterly meeting · 12/1/2016 · • cost savings since inception through october 2016 =...

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