FEIT Fund. Portfolio Summary Report December 31, 2017

Transcription

1 FEIT Fund Portfolio Summary Report December 31, 2017

2 Economic Highlights Fixed Income Market Commentary After months of build-up and speculation, Congress passed a controversial tax cut bill in late December. This new legislation, the first major tax reform since 1986, lowers the corporate tax rate to 21% from 35%, while also lowering individual tax rates. Early assessments suggest a positive economic reaction for the near-term. Final tallies for second and third quarter U.S. gross domestic product (GDP) were 3.1% and 3.2%, respectively. This is the first time since 2014 that the U.S. economy grew at more than 3% in back-to-back quarters. Economists raised projections for growth over the next year to the 2.5-3% level with consumer spending and private investment bolstering those estimates. At its December meeting, the Federal Open Market Committee (FOMC) raised the overnight fed funds target rate for the third time in 2017, to a new range of 1.25% to 1.5%. Despite two dissenting votes to keep rates unchanged in December, Federal Reserve (Fed) Governors and many investors anticipate another three hikes in Inflation, which has the potential to be the primary deterrent to future Fed rate hikes, remains well below the Fed s target of 2%. Core personal consumption expenditures (PCE), year-over-year, have posted sub-two percent levels for consecutive months since May The December jobs report showed the economy added 148,000 jobs a disappointing result. Overall, 2017 averaged 171,000 jobs added per month, a bit below the 221,000 per year for the prior three years. Other key labor market indicators were unchanged including the low unemployment rate and the trend of modest wage growth. Bond Markets The U.S. Treasury yield curve continued to flatten in December. The combination of Fed rate hikes buoying the front end of the curve and tepid inflation restraining long-term Treasury rates has resulted in the least slope in the yield curve since Ten-year Treasury yields were unchanged in December at 2.41%, while two-year yields rose 10 basis points (bps) to 1.89%. Over the quarter, the 10-year yield was up 7 bps while the two-year yield rose 40 bps. The increase in short- and intermediate-term Treasury yields depressed returns for the month, as market price erosion offset income for maturities of less than seven years. However, benchmark Treasury notes for 10- and 30-year constant maturities exponentially outpaced their shorter counterparts, posting one-month unannualized returns of 0.26% and 2.07%, respectively. Corporate bonds finished the year on a strong note, as credit spreads narrowed further, yet again reaching new post-recession lows. Despite the Fed s ongoing balance sheet reduction measures, federal agency mortgage-backed securities (MBS) provided positive excess returns relative to Treasuries in December. Equity Markets Domestic and international stock markets finished the year on a strong note. The S&P 500 Index (S&P 500) returned 1.1% for the month, pushing the year-to-date performance up to 21.8%. The S&P 500 is 12- for-12 in terms of positive monthly total returns for the large-cap index for the first time ever, dating back to Page 2

3 Equity Markets Cont. Sector performance within the S&P 500 was mostly strong with eight of the 11 sectors posting positive returns. Telecom was the best performing sector for a second consecutive month, with a 5.8% return. The Utilities sector finished as the worst performing sector, declining 6.1%. The U.S. Dollar Index declined for the second consecutive month, continuing a somewhat surprising weakening trend in As a result, most global equity markets produced significantly stronger dollar denominated performance relative to their local currency returns for both December and the calendar year. PFMAM Outlook As we pass the ten-year anniversary of the official start of the nation s most recent recession (December 2007), the domestic economic landscape continues to show signs of resilience, breadth and positive momentum. Agency yield spreads remain incredibly tight and we expect them to remain so. What value exists is largely confined to price concessions when new issues are first traded. On the other hand, the supranational sector offers additional income benefit relative to both Treasury and agency securities and we view this as an opportunity to increase allocations to the sector. Corporate spreads, albeit tight, still offer a risk-adjusted yield benefit PFMAM Outlook Cont. relative to similar maturity government securities. We remain constructive on the sector, at least over the near term, as profits and balance sheets remain strong. The trajectory of corporate spread narrowing may slow in 2018, and we are cognizant of downside risks that may weigh on the sector later in the year. With the Fed scheduled to increase the pace of sales of its Treasuries and MBS holdings from $4 billion to $8 billion per month this quarter, we view the agency MBS sector as vulnerable to spread widening in Cash and money market yields are expected to rise in response to anticipated Fed moves. A good deal of this is already reflected in the yields available in Treasury bills and high-quality money market instruments with maturities of three- to six-months. Liquidity portfolios should continue to benefit from this. The views expressed within this material constitute the perspective and judgment of PFM Asset Management LLC (PFMAM) at the time of distribution and are subject to change. Information is obtained from sources generally believed to be reliable and available to the public; however, PFMAM cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or recommendation. The information contained in this report is not an offer to purchase or sell any securities. PFMAM, a part of the PFM Group, manages assets for state and local governments and non-profit institutions. PFMAM is registered with the Securities and Exchange Commission under the Investment Advisers Act of Page 3

4 {FLORIDA EDUCATION INVESTMENT TRUST FUND_ } Florida Education Investment Trust Fund FEIT Portfolio Schedule of Investments For the Month Ending December 31, 2017 Maturity Maturity Final Yield to Date for (1) Date for (2) Maturity (3) Category of Investment / Issuer CUSIP Maturity WAM WAL Date Principal Value U.S. Treasury Debt (4) UNITED STATES TREASURY UR9 1.33% 02/28/ /28/ /28/ ,000, ,967, UNITED STATES TREASURY NW5 1.32% 03/15/ /15/ /15/ ,000, ,946, U.S. Government Agency Repurchase Agreement 55,000, ,914, CREDIT AGRICOLE CIB/US RP1D0KI % 01/02/ /02/ /02/ ,000, ,000, GOLDMAN SACHS & CO RP1D0KHW5 1.30% 01/02/ /02/ /02/ ,900, ,900, U.S. Government Agency Debt 61,900, ,900, FEDERAL HOME LOAN BANKS SE7 1.28% 01/24/ /24/ /24/ ,600, ,589, FEDERAL HOME LOAN BANKS SP2 1.29% 02/02/ /02/ /02/ ,000, ,982, FEDERAL HOME LOAN BANKS UV6 1.38% 03/28/ /28/ /28/ ,000, ,950, Other Instrument - Corporate Note 42,600, ,523, BERKSHIRE HATHAWAY FIN CF6 2.07% 03/07/ /07/ /07/2018 5,000, ,003, Non-Financial Company Commercial Paper 5,000, ,003, COCA-COLA COMPANY 19121BA % 01/04/ /04/ /04/ ,000, ,998, EXXON MOBIL CORP 30229BA % 01/03/ /03/ /03/ ,000, ,997, Financial Company Commercial Paper 41,000, ,996, BANK OF TOKYO MITSUBISHI UFJ LTD 06538CCD1 1.54% 03/13/ /13/ /13/ ,000, ,970, BNP PARIBAS NY BRANCH 09659CC % 03/07/ /07/ /07/ ,000, ,959, BNP PARIBAS NY BRANCH 09659CD % 04/02/ /02/ /02/2018 3,000, ,988, Page 4

5 {FLORIDA EDUCATION INVESTMENT TRUST FUND_ } Florida Education Investment Trust Fund FEIT Portfolio Schedule of Investments For the Month Ending December 31, 2017 Maturity Maturity Final Yield to Date for (1) Date for (2) Maturity (3) Category of Investment / Issuer CUSIP Maturity WAM WAL Date Principal Value Financial Company Commercial Paper (4) CREDIT AGRICOLE CIB NY 22533UA % 01/02/ /02/ /02/ ,000, ,999, CREDIT AGRICOLE CIB NY 22533UE % 05/02/ /02/ /02/ ,000, ,919, CREDIT SUISSE NEW YORK 2254EBJ % 09/07/ /07/ /07/2018 6,511, ,420, HSBC USA INC 40434WBZ3 1.44% 01/08/ /06/ /06/ ,000, ,000, ING (US) FUNDING LLC 4497W1E % 05/01/ /01/ /01/ ,000, ,923, ING (US) FUNDING LLC 44988KDC0 1.51% 01/02/ /01/ /01/2018 3,000, ,000, ING (US) FUNDING LLC 44988KDP1 1.58% 01/12/ /12/ /12/2018 4,000, ,998, ING (US) FUNDING LLC 44988KCT4 1.62% 01/09/ /09/ /09/2018 5,000, ,000, ING (US) FUNDING LLC 44988KDM8 1.76% 01/31/ /31/ /31/2018 2,000, ,000, JP MORGAN SECURITIES LLC 46640EET1 1.59% 01/08/ /06/ /06/2018 3,000, ,000, JP MORGAN SECURITIES LLC 46640EFQ6 1.73% 01/25/ /25/ /25/ ,500, ,500, JP MORGAN SECURITIES LLC 46640EFC7 1.81% 03/22/ /22/ /22/ ,000, ,000, JP MORGAN SECURITIES LLC 46640QJE2 2.02% 09/14/ /14/ /14/2018 3,500, ,450, METLIFE SHORT TERM FUNDING 59157UCN8 1.58% 03/22/ /22/ /22/ ,000, ,958, PRICOA SHORT TERM FUNDING LLC 74154GD % 04/05/ /05/ /05/ ,000, ,961, TOYOTA MOTOR CREDIT CORP 89233HA % 01/02/ /02/ /02/ ,000, ,998, Certificate of Deposit 187,511, ,048, BANK OF AMERICA NA 06050FCJ9 1.63% 01/16/ /16/ /16/ ,000, ,000, BANK OF AMERICA NA 06052TYA2 1.49% 05/16/ /16/ /16/ ,000, ,000, BANK OF MONTREAL CHICAGO 06427KJS7 1.69% 01/12/ /12/ /12/2018 4,000, ,000, BANK OF MONTREAL CHICAGO 06427KZD2 1.63% 02/23/ /23/ /23/2018 3,000, ,000, BANK OF MONTREAL CHICAGO 06427KZS9 1.61% 03/05/ /04/ /04/2018 5,000, ,000, BANK OF MONTREAL CHICAGO 06371EQM2 1.56% 01/05/ /05/ /05/ ,000, ,000, BANK OF NOVA SCOTIA HOUSTON 06417GUK2 1.48% 01/18/ /18/ /18/2018 5,000, ,000, BANK OF NOVA SCOTIA HOUSTON 06417GVY1 1.59% 01/08/ /06/ /06/ ,000, ,000, BANK OF NOVA SCOTIA HOUSTON 06417GD % 01/08/ /07/ /07/ ,000, ,000, BANK OF TOKYO MITSUBISHI UFJ LTD 06538NJ % 04/04/ /04/ /04/2018 3,500, ,499, Page 5

6 {FLORIDA EDUCATION INVESTMENT TRUST FUND_ } Florida Education Investment Trust Fund FEIT Portfolio Schedule of Investments For the Month Ending December 31, 2017 Maturity Maturity Final Yield to Date for (1) Date for (2) Maturity (3) Category of Investment / Issuer CUSIP Maturity WAM WAL Date Principal Value Certificate of Deposit (4) BANK OF TOKYO MITSUBISHI UFJ LTD 06538NL % 04/18/ /18/ /18/2018 4,000, ,001, BMO HARRIS BANK NA 05574BHH6 1.51% 02/12/ /12/ /12/2018 2,000, ,000, BOFI FEDERAL BANK PP30418G6 1.21% 01/02/ /02/ /08/ ,000, ,000, BOFI FEDERAL BANK PP3044UA8 1.21% 01/02/ /02/ /08/ ,000, ,000, BOFI FEDERAL BANK PPE01BTA5 1.40% 01/02/ /02/ /18/ ,000, ,000, BOFI FEDERAL BANK PP304EDO5 1.26% 01/02/ /02/ /02/ ,000, ,000, BOFI FEDERAL BANK PPE01EK % 01/02/ /02/ /27/ ,000, ,000, CANADIAN IMP BK COMM NY 13606BNM4 1.61% 01/16/ /13/ /13/ ,000, ,000, CANADIAN IMP BK COMM NY 13606BHS8 1.60% 03/01/ /01/ /01/2018 8,000, ,000, CANADIAN IMP BK COMM NY 13606BQV1 1.56% 01/12/ /12/ /12/2018 7,000, ,000, CITIBANK NA 17305TTK8 1.51% 02/20/ /20/ /20/ ,000, ,000, CITIBANK NA 17305TTS1 1.66% 04/02/ /02/ /02/ ,000, ,000, COMMONWEALTH BANK OF AUSTRALIA NY 20271EMC0 1.64% 02/02/ /02/ /02/2018 6,000, ,000, CREDIT SUISSE NEW YORK 22549VT % 01/12/ /12/ /12/ ,000, ,000, CREDIT SUISSE NEW YORK 22549LAH8 1.47% 01/02/ /01/ /01/ ,000, ,000, DEXIA CREDIT LOCAL SA NY 25215FBL7 1.89% 01/09/ /09/ /09/2018 7,000, ,001, DNB NOR BANK ASA NY 23341VBJ9 1.38% 01/02/ /02/ /02/ ,000, ,000, MITSUBISHI UFJ FIN GRP 06538NL % 04/11/ /11/ /11/2018 1,000, ,000, MIZUHO BANK LTD/NY 60700AFU3 1.64% 01/09/ /09/ /09/ ,000, ,001, NORINCHUKIN BANK NY 65602UWX2 1.50% 04/09/ /09/ /09/ ,000, ,000, NORINCHUKIN BANK NY 65602UXJ2 1.72% 01/25/ /25/ /25/ ,000, ,000, NORINCHUKIN BANK NY 65602UYD4 1.60% 05/08/ /08/ /08/2018 3,000, ,000, PENTAGON FEDERAL CREDIT UNION PP0OBGBV9 1.10% 01/02/ /02/ /05/2018 5,000, ,000, ROYAL BANK OF CANADA NY 78009NW % 01/05/ /05/ /05/ ,000, ,000, SKANDINAVISKA ENSKILDA BANKEN AB 83050FTE1 1.65% 01/12/ /12/ /12/ ,800, ,799, SKANDINAVISKA ENSKILDA BANKEN NY 83050FD % 02/13/ /13/ /13/ ,000, ,999, SOCIETE GENERALE NY 83369YUC8 1.43% 01/31/ /31/ /31/ ,000, ,000, SOCIETE GENERALE NY 83369YYC4 1.75% 01/31/ /31/ /31/2018 7,000, ,000, SUMITOMO MITSUI BANK NY 86563YXV0 1.67% 01/16/ /16/ /16/ ,000, ,000, SUMITOMO MITSUI BANK NY 86563YS % 01/11/ /11/ /11/2018 7,000, ,000, Page 6

7 {FLORIDA EDUCATION INVESTMENT TRUST FUND_ } Florida Education Investment Trust Fund FEIT Portfolio Schedule of Investments For the Month Ending December 31, 2017 Maturity Maturity Final Yield to Date for (1) Date for (2) Maturity (3) Category of Investment / Issuer CUSIP Maturity WAM WAL Date Principal Value Certificate of Deposit (4) SUMITOMO MITSUI BANK NY 86563YQ % 01/03/ /03/ /03/2018 5,000, ,000, SVENSKA HANDELSBANKEN NY 86958JRS0 1.67% 01/26/ /26/ /26/ ,000, ,000, SVENSKA HANDELSBANKEN NY 86958JSY6 1.50% 01/03/ /03/ /03/ ,000, ,000, SVENSKA HANDELSBANKEN NY 86958JWH8 1.51% 01/02/ /02/ /02/2018 5,000, ,000, TORONTO DOMINION BANK 89113XPG3 1.49% 01/08/ /06/ /06/ ,000, ,000, TORONTO DOMINION BANK NY 89113XKS2 1.55% 04/24/ /24/ /24/ ,000, ,000, UBS AG STAMFORD CT 90275DGR5 1.76% 01/22/ /21/ /21/2018 5,000, ,001, WELLS FARGO BANK NA 94989RGL6 1.67% 02/06/ /06/ /06/2018 5,000, ,000, WELLS FARGO BANK NA 94989RPF9 1.52% 01/08/ /07/ /07/2018 9,000, ,999, WELLS FARGO BANK NA 94989RTS7 1.72% 01/29/ /11/ /11/ ,000, ,000, WELLS FARGO BANK NA 94989RNK0 1.64% 01/12/ /11/ /11/ ,000, ,000, WESTPAC BANKING CORP NY 96121T2N7 1.52% 01/12/ /12/ /12/2018 4,000, ,000, WESTPAC BANKING CORP NY 96121T2Z0 1.49% 02/23/ /23/ /23/2018 3,000, ,000, WESTPAC BANKING CORP NY 96121T3G1 1.49% 01/12/ /12/ /12/2018 8,000, ,000, WESTPAC BANKING CORP NY 96121T5Q7 1.73% 01/29/ /29/ /29/ ,000, ,000, Asset Backed Commercial Paper 556,300, ,306, BEDFORD ROW FUNDING CORP 07645RAT3 1.54% 03/01/ /01/ /01/2018 5,000, ,999, BEDFORD ROW FUNDING CORP 07644DEE4 1.52% 01/02/ /02/ /02/2018 4,000, ,000, GOTHAM FUNDING CORP 38346MB % 02/01/ /01/ /01/2018 8,000, ,989, GOTHAM FUNDING CORP 38346MCU6 1.83% 03/28/ /28/ /28/2018 8,000, ,965, MANHATTAN ASSET FUNDING CO 56274TCM7 1.66% 01/02/ /02/ /02/2018 5,000, ,999, OLD LINE FUNDING LLC 67983UA % 01/08/ /08/ /08/ ,000, ,997, ,000, ,951, Portfolio Totals 989,311, ,644, Page 7

8 Daily liquidity Optimize Cash Flow Needs With FEITF Unlimited investments and redemptions Board of Trustees and Investment Advisory Committee control and oversight Only investment option sponsored by the Florida School Boards Association (FSBA) and the Florida Association of District School Superintendents (FADSS) AAAm rating from S&P See footnote (3) at end of this report Page 8

9 For more information on FEITF, including information on how to invest, please contact PFM Asset Management LLC For account information or transactions, please contact the FEITF Client Services Group at (877) FEITF is also available online at Page 9

10 All data as of December 31, Footnotes and Disclaimers (1)Weighted Average Life: Calculated by the final maturity for a security held in the portfolio and the date of the next demand feature. This is a way to measure a fund s sensitivity to potential interest rate changes that does not refer to when interest rate readjustments. (2)Weighted Average Maturity: Calculated by the final maturity for a security held in the portfolio and the interest rate reset date. This is a way to measure a fund s sensitivity to potential interest rate changes. (3)Standard & Poor s fund ratings are based on analysis of credit quality, market price exposure, and management. According to Standard & Poor s rating criteria, the AAAm rating signifies excellent safety of investment principal and a superior capacity to maintain a $1.00 per share net asset value. However, it should be understood that the rating is not a market rating nor a recommendation to buy, hold or sell the securities. For a full description on rating methodology, visit Standard & Poor s website ( (4) End of month trade-date amortized cost of portfolio. As of December 31, The current annualized yield of the FEITF Portfolio may, from time to time, be quoted in reports, literature and advertisements published by the Trust. Current annualized yield, or current 7-day yield, represents the net change, exclusive of capital changes and income other than investment income, in the value of a hypothetical account with a balance of one share (normally $1.00 per share) over a seven-day base period expressed as a percentage of the value of one share at the beginning of the seven-day period. This resulting net change in account value is then annualized by multiplying it by 365 and dividing the result by 7. Past performance is not indicative of future results and yields may vary. The yields shown may reflect fee waivers by service providers that subsidize and reduce the total operating expenses of the Fund. Fund yields would be lower if there were no such waivers. Guaranteed by Federal Home Loan Bank Letters of Credit. This information is for institutional investor use only, not for further distribution to retail investors, and does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the Fund's investment objectives, risks, charges and expenses before investing. This and other information about the Fund is available in the Fund's Information Statement, which should be read carefully before investing. Copies of the Fund's Information Statement may be obtained by calling or are available on the Fund's website at While Florida Education Investment Trust Fund ("FEITF") seeks to maintain a stable net asset value of $1.00 per share, it is possible to lose money investing in the Fund. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Fund are distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) ( and Securities Investor Protection Corporation (SIPC) ( PFM Fund Distributors, Inc. is a wholly owned subsidiary of PFM AssetManagement LLC. Page 10