QUARTERLY PORTFOLIO REVIEW

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1 QUARTERLY PORTFOLIO REVIEW Quarter 2015 PAYDEN.COM LOS ANGELES BOSTON LONDON PARIS

2 LETTER FROM THE CEO Jauary 2016 Dear Cliet, As ivestmet maagers, we evaluate future treds i the ecoomy ad traslate them ito ivestmet decisios for your portfolios. Over the past several years, low-iterest rates ad cocers about whe iterest rates might rise domiated discussios. Well, o loger as the Federal Reserve Board raised its overight iterest rate i December. However, deeper questios remai: how fast ad how far will iterest rates rise ad what will be the impact o the global ecoomy? First, we thik the Federal Reserve Board will move slowly ad gradually. Remember, the much-aticipated rate hike was just ¼ of 1%. The US ecoomy is ot i perfect coditio ad iflatio is still low, so there is o urgecy for the Fed to move quickly. The broad cosesus view is that short-term iterest rates will ed 2016 aroud 1%. Secod, other global ecoomies face a rage of ecoomic ad political challeges ad global cetral baks seem i o rush to raise iterest rates. As a result, we thik low-iterest rates will cotiue to be a domiat global theme i However, we believe there are reasos for optimism for our loger-term prospects. For example, the Uited States is a leader i iovatio ad thigs are chagig quickly with breakthroughs like driverless cars, delivery droes, 3D priters ad 4D movies. Ultimately, iovatio will provide the seeds of future ecoomic growth ad employmet, though the jourey may be a difficult oe for workers who will eed to retool their skill sets for the 21st-cetury ecoomy. The most importat message we ca give our cliets is that we are thikig about how these factors impact fiacial markets. Sice the global ecoomy is so itercoected, fiacial markets have also coverged. Ivestors used to look oly to bods as their icome source. Today, ivestors look to a variety of tools icludig stocks, ad currecies as well as bods, to fid icome opportuities. We expect this tred to cotiue i the years ahead. We thak you for cotiuig to place your trust i us. Most importat, we wish health ad happiess for you ad your families i the New Year. Best wishes, Joa A. Payde Presidet & CEO

3 FLORIDA TRUST DAY TO DAY FUND Portfolio Review ad Market Update - 4th Quarter EMW LAM PORTFOLIO CHARACTERISTICS (As of 12/31/2015) Portfolio Market Value Weighted Average Credit Quality Weighted Average Duratio Weighted Average Days to Maturity SEC 30-Day Yield (et) $524.6 millio AAA 0.08 years 33.3 days 0.20% SECTOR ALLOCATION DURATION DISTRIBUTION 32% 28% 24% 20% 16% 12% 8% 4% 0% Repo Commercial Paper Credit Gov't Related Treasuries Govermet/Govermet-guarateed: 58% Agecies Asset-Backed Certificates of Deposit 100% 80% 60% 40% 20% 0% Years PORTFOLIO RETURNS - Periods Edig 12/31/2015 4th Quarter 2015 Trailig 3 Yrs Trailig 5 Yrs Sice Iceptio (1/13/09) FLORIDA TRUST DAY TO DAY FUND (gross) 0.06% 0.23% 0.20% 0.23% 0.26% FLORIDA TRUST DAY TO DAY FUND (et) 0.04% 0.14% 0.10% 0.12% 0.15% 3-moth U.S. Treasury Bill 0.00% 0.03% 0.04% 0.06% 0.08% Periods over oe year aualized Payde & Rygel 265 Frakli Street Bosto, Massachusetts (617)

Portfolio Review ad Market Update - 4th Quarter 2015 MARKET THEMES The Federal Reserve icreased the overight ledig rate for the first time sice 2006. Their decisio to move rates higher by 0.

4 Portfolio Review ad Market Update - 4th Quarter 2015 MARKET THEMES The Federal Reserve icreased the overight ledig rate for the first time sice Their decisio to move rates higher by 0.25% i December was based o stregth i the labor market ad improvemet i household spedig, busiess ivestmet, ad housig market coditios. The yield curve flatteed with shorter-maturity bod yields icreasig more tha loger-maturity bod yields. Credit markets were able to absorb higher rates ad robust ew issuace with spreads tighteig modestly. However, persistet commodity weakess ad icreased geo-political tesios limited credit performace. STRATEGY The portfolio holds a diversified mix of credit sectors for icome geeratio ad was positioed i aticipatio of risig short-term iterest rates, icludig our expectatio of a hike i the Federal Fuds rate before year-ed. After the mid-december rate hike, we bega to ivest i higher yieldig securities. We will cotiue to look for opportuity to exted weighted average days to maturity to capture the higher yields ow available. Corporate bods remai attractive, ad we aticipate maitaiig our exposure through the purchase of bods i the ew issue market. Withi the corporate sector, we maitaied our floatig-rate exposure to help mitigate iterest rate risk. We maitai our allocatio to high-quality asset-backed securities (ABS) with short duratio profiles for their yield ad diversificatio beefits. INTEREST RATES Treasury returs fell as short-maturity bods rose 38 basis poits o average durig the quarter, with most of the move happeig i November o the heels of strog employmet data. The portfolio s duratio positio was a modest performace egative, as yields rose across the curve. The loger-maturity corporate positios cotributed positively as price appreciatio from the modest spread tighteig ad the higher icome outweighed the egative price retur from risig yields. SECTORS Credit spreads tighteed led by fiacial ad auto compaies as the Federal Reserve displayed cofidece i the ecoomy by raisig rates. The portfolio s overweight to credit ad our security selectio added to performace. ABS spreads were mixed while the performace impact was positive due to the higher yields over Treasuries. Payde & Rygel 265 Frakli Street Bosto, Massachusetts (617)

5 MARKET PERSPECTIVE So Much for that Peak Oil Theory The price of a barrel of oil tumbled to a 11 year low of $34 i December, ad oil s pluge impacted global markets i First we will look at the reasos behid the price declie ad the we will address the market impact. Both lower demad ad excess supply drove the declie i oil. Lower demad was drive by lackluster global ecoomic growth with the sum of goods ad services risig just over 2% i A key reaso for the slowdow i global growth was Chia. Ecoomic output rose less tha 7% i Chia (after years of growth rates closer to 10%) as the coutry attempted to realig its ecoomy away from maufacturig ad toward domestic cosumptio. From a supply perspective, the US ad other oil producers cotiued to geerate large quatities of oil ad ivetories of usold productio remaied large. All thigs cosidered, ad with the beefit of hidsight, lower oil prices make sese. History of the Price of Oil o Global Markets US Dollars Per Barrel* $120 $100 $80 $60 $40 $20 $61.2 $48.0 Log Term Average = $36.4 $21.8 $25.2 $22.1 $21.7 $21.9 $16.3 $17.0 $16.5 $13.4 $42.4 $61.1 $29.3 $59.0 $105.6 $37.9 $ Preset Sources: BP Statistical Review of Eergy, Bloomberg, Payde Calculatios * Decade averages: Iflatio adjusted i 2014 dollars But a importat questio remais: what is a ormal price for oil? May ivestors seem to thik low oil prices are somehow abormal. We have a differet poit of view. Oe of our favorite charts of 2015 (above) puts the dramatic oil price declie i proper perspective. Strippig out iflatio, the real price of a barrel of oil simply retured to its log-term average sice 1860 of $ Did the early part of this decade costitute a aomaly? We thik so. Oil s price declie goes a log way to explaiig lackluster 2015 returs i both stocks ad bods. The S&P 500 idex retur was a modest 1.4% for the year, dragged dow by the eergy sector which has falle more tha 20%. Globally, equity markets of coutries that import eergy fared far better tha those that export eergy. For example, Japa s Nikkei did better tha the MSCI Lati America idex.

6 OVER 30 YEARS OF INSPIRING CONFIDENCE WITH AN UNWAVERING COMMITMENT TO OUR CLIENTS NEEDS. LOS ANGELES BOSTON LONDON PARIS PAYDEN.COM US DOMICILED MUTUAL FUNDS CASH BALANCE Payde/Kravitz Cash Balace Pla Fud EQUITY Equity Icome Fud GLOBAL FIXED INCOME Emergig Markets Bod Fud Emergig Markets Corporate Bod Fud Emergig Markets Local Bod Fud Global Fixed Icome Fud Global Low Duratio Fud TAX-EXEMPT FIXED INCOME Califoria Muicipal Icome Fud US FIXED INCOME Absolute Retur Bod Fud Cash Reserves Moey Market Fud Core Bod Fud Corporate Bod Fud Floatig Rate Fud GNMA Fud High Icome Fud Limited Maturity Fud Low Duratio Fud Strategic Icome Fud US Govermet Fud DUBLIN DOMICILED UCITS FUNDS EQUITY World Equity Fud FIXED INCOME Absolute Retur Bod Fud Global Emergig Markets Bod Fud Global Emergig Markets Corporate Bod Fud Global Govermet Bod Idex Fud Global High Yield Bod Fud Global Iflatio-Liked Bod Fud Global Bod Fud Global Short Bod Fud Sterlig Corporate Bod Fud Ivestmet Grade US Core Bod Fud USD Low Duratio Credit Fud LIQUIDITY FUNDS Euro Liquidity Fud Sterlig Reserve Fud US Dollar Liquidity Fud For more iformatio about Payde & Rygel, cotact us at a locatio listed below. LOS ANGELES 333 South Grad Aveue Los Ageles, Califoria BOSTON 265 Frakli Street Bosto, Massachusetts LONDON 1 Bartholmew Lae Lodo EC2N 2AX Uited Kigdom + 44 (0) PARIS Represetative Office 54, 56 Aveue Hoche Paris, Frace

QUARTERLY PORTFOLIO REVIEW

QUARTERLY PORTFOLIO REVIEW Quarter 2015 PAYDEN.COM LOS ANGELES BOSTON LONDON PARIS LETTER FROM THE CEO Jauary 2016 Dear Cliet, As ivestmet maagers, we evaluate future treds i the ecoomy ad traslate them