Nebraska Liquid Asset Fund

Nebraska Liquid Asset Fund Exclusively for School Districts, Educational Service Units, Community Colleges, Public Agencies and Other Governmental Subdivisions May 31, 2016 Sponsored by: Nebraska Council of School Administrators Nebraska Association of School Boards Annual Report

Table of Contents Message from the Board of Trustees........................... 1 Message from the Investment Adviser.......................... 2 About the Fund............................................ 4 Report of Independent Auditors............................... 6 Statement of Assets and Liabilities............................. 7 Schedule of Investments..................................... 7 Statement of Operations.................................... 11 Statements of Changes in Net Assets......................... 12 Financial Highlights........................................ 12 Notes to Financial Statements............................... 13 This information 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 in the Fund. This and other information about the Fund is available in the Fund s current Information Statement, which should be read carefully before investing. A copy of the Fund s Information Statement may be obtained by calling 1-877-667-3523 or is available on the Fund s website at www.nlafpool.org. While the Fund 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) (www.finra.org). PFM Fund Distributors, Inc. is a wholly owned subsidiary of PFM Asset Management LLC. Member SIPC.

Message from the Board of Trustees On behalf of the ( NLAF or the Fund ), the Board of Trustees are pleased to present to you the NLAF annual report for the Fund s fiscal year ending May 31, 2016. The Fund was launched in 1988 and has provided cash management and investment services tailored to the unique needs of Nebraska school districts, educational service units, community colleges, public agencies and other governmental subdivisions for more than a quarter of a century. Despite many challenges over the past few years, we re seeing signs of emerging from some of the most challenge times in the history of the Fund following the persistent near zero interest rate environment and budgetary pressures that have faced school and other government units across the state and across the nation. Since it was established, the Fund s primary objective has been safety of principal and the Fund has steadfastly maintained this focus over the past year. The Fund continues to hold a AAAm rating from Standard & Poor s ( S&P ). This rating is a testament to the paramount importance of adhering to the Fund s overall objective of safety of principal and not chasing more risky investments which could leave participant s assets invested in the Fund exposed to losses. As a Participant in NLAF, you also have convenient access to your account information 24 hours a day, seven days a week through EON (Easy Online Network). This service provided by the Fund s Administrator allows Participants access to downloadable check details, customized reports, up-to-the-minute online account balances and consolidated online electronic statements. Participants also are able to initiate transactions online up to six months in advance and can view current and previous monthly account statements and current yield information. In closing, the Board of Trustees would like to take this opportunity to thank our Participants for their dedication and continued loyalty to the Fund. The Board of Trustees and all of those associated with NLAF are continually working on ways to serve you better, and will work hard to maintain the safety of your investments while maximizing return and ensuring liquidity. Please feel free to contact us with any questions you may have. The NLAF Board of Trustees and Officers Annual Report May 31, 2016 1

Message from the Investment Adviser We are pleased to present the Annual Report for the ( NLAF or the Fund ) for the period ended June 30, 2016. Safety of principal and liquidity remain our top priorities when managing the Fund. Despite a continued lowinterest-rate environment, the Fund continues to generate relatively competitive yields. Economic Update Overall, the U.S. economy grew moderately over the past year, while decelerating in the first months of 2016. As compared to other areas of the developed world (such as Europe and Japan) that struggled with stagnation, U.S. gross domestic product ( GDP ) expanded at a decent pace in 2015, propelled largely by consumer spending. GDP growth slowed markedly in the first quarter of 2016, with a sluggish expansion at an annual rate of 1.1%, following the pattern of first-quarter slowdowns over the last few years, but also attributable to anemic business investment and a strong dollar that has led to a rise in imports and a decline in exports. Nonetheless, the U.S. labor market continues to do well, and although the pace of new job creation has slowed recently, the unemployment rate fell from 5.5% in May 2015 to 4.9% in June 2016. Global growth concerns precipitated by slowdown of the Chinese economy, and the sharp decline in commodity prices led by oil, played a significant role in the global economy strengthening the dollar while dampening inflation in the U.S. However, based on the recent recovery of oil prices, it appears that the short-term supply/demand dynamics could be approaching an equilibrium state. The most significant economic development of 2016 so far has been the unexpected result of the United Kingdom s ( UK s ) referendum in favor of Brexit (a British exit), where a majority of UK votes agreed that their country should leave the European Union ( EU ). As it will likely take at least two years before the departure takes place, it is too early to determine the long term impact on the global economy. The most direct impact could be a disruption in trade between the UK and EU, which may lead to a slowdown in both economies. Because of the decline in the value of the British pound and the euro, a slowdown in Europe could spill over to the U.S. economy by reducing exports, but the impact is expected to be modest. The global impact could be even greater if other countries attempt to follow the UK s lead in leaving the EU. Interest Rates The Federal Open Market Committee ( FOMC ) raised the federal funds target rate by 25 basis points (0.25%) at its December 2015 meeting, ending its seven-year zero interest rate policy. In doing so, the FOMC stressed its intention to normalize rates at a gradual pace. The move was triggered by a consistently strong labor market in 2015 that brought the unemployment rate below the Federal Reserve s ( Fed s ) target range (5.2%-5.5%). Rising wage growth led to improved expectations of future inflation that also contributed to the Fed rate hike. However, the rise in interest rates across the yield curve coincident with the rate hike was almost entirely reversed over the first quarter of 2016 due to widespread global economic concerns and a steep decline in commodity prices. Brexit put further downward pressure on yields around the world, causing the 10-year U.S. 2 Annual Report May 31, 2016

Treasury to hit an all-time low below 1.4%. It also caused significant flattening of the yield curve, and reduced the probability of a Fed rate hike for the remainder of 2016. Central banks around the world, some of which (including Europe and Japan) already have a negative interest policy in effect, have expressed their willingness to further ease the monetary policy if needed. The Bank of England ( BOE ) that seemed ready to raise rates leading up to Brexit, is now contemplating a cut in interest rates. Fund Strategy During the last months of 2015 we shortened the Fund s weighted average maturity ( WAM ) in anticipation of the Fed s December move. This preparation for higher rates enabled us to take advantage of the increase in short-term rates that accompanied the increase in the overnight rate. Investors expected that the central bank might raise rates three or four times in 2016, but this view quickly dissipated as the economy slowed in early 2016. In the first months of this year we extended the Fund s WAM to benefit from yields available in maturities of six months and longer. The Brexit vote extinguished the notion that the Fed would soon raise rates and the extension positioned the Fund very well as we had locked in attractive yields on investments with maturities of as long as a year. While yields for intermediate and long maturity bonds declined steadily in the first half of 2016 in some cases reaching historic lows yields of money market securities remain elevated due to uncertainty around the effects that money market reform and bank regulation will have on the short-term markets. In particular, the requirements that the Securities and Exchange Commission ( SEC ) has imposed on prime institutional money market funds to report net asset value on a floating basis, and the possibility that a money market fund may have to impose redemption fees and gates has diminished demand for many short-term securities that have in the past been purchased by these funds. Local government investment pools like the Fund are particularly advantaged in this environment as the SEC requirements to not apply to them. These circumstances should position the Fund to provide very competitive yields to its Investors in coming months while focusing on preservation of principal and meeting the liquidity requirements of its Investors in advance of any move by the Fed to raise overnight rates from their current levels. We are proud to be NLAF s Investment Advisor, and we remain committed to meeting the needs of its Investors. Respectfully, PFM Asset Management LLC June 30, 2016 Annual Report May 31, 2016 3

About the Fund The ( NLAF or the Fund ) was established as the Nebraska School District Liquid Asset Fund Plus on March 23, 1988 as an instrumentality of trust pursuant to the Nebraska Interlocal Cooperation Act. Under its original Declaration of Trust and Interlocal Agreement ( Declaration of Trust ) establishing the Fund, shares of the Fund were offered exclusively to Nebraska school districts, educational service units and technical community colleges. Under the Nebraska Interlocal Cooperation Act, Nebraska counties, cities, villages, school districts, learning communities, educational service units, community colleges, natural resource districts, public utilities, public libraries, mental health regions, drainage districts, sanitary and improvement districts or agencies of the state government or of the United States, or other municipal corporations, public offices or political subdivision of this state, and various other public entities or offices are all public agencies ( Participants ). NLAF offers Participants a professionally managed portfolio which offers a competitive money market rate. The Fund stresses "safety of principal" as its number one objective and is rated AAAm* by Standard and Poor's ( S&P ). Additional fixed income investment products are available through the Investment Adviser to assist NLAF Participants in seeking to maximize results. Public Focus Since it was established, the Fund s single focus has been serving the investment needs of its Participants. The Fund s activities are directed by a Board of Trustees, all of whom are representatives of Nebraska public agencies. The NLAF Board of Trustees contracts for services with professional service providers who are industry leaders in their fields. As a result, the Fund is accountable solely to its Participants. Investment Options Currently, NLAF offers Participants not only the Fund, which is rated AAAm by Standard & Poor's, but also certificates of deposit and individually managed portfolios, which are not a part of the Fund but are available under a separate agreement with the Fund's Investment Adviser. The Fund The NLAF fund is a short-term money market portfolio, which seeks to provide daily liquidity and earn a high level of income, consistent with its objectives of preserving principal. This pooled fund offers Participants: Standard & Poor s AAAm rating Daily liquidity Interest earned daily and credited monthly Competitive money market rates * The rating is based on S&P s analysis of the Fund s credit quality, market price exposure and management. According to S&P rating criteria, this rating signifies excellent safety of invested principal and a superior capacity to maintain a $1.00 per share net asset value. However, it should be understood that this rating is not a market rating or a recommendation to buy, hold or sell the securities. 4 Annual Report May 31, 2016

Certificate of Deposit Purchase Program The Board of Trustees approved the Investment Adviser making available to Participants a certificate of deposit ( CD ) purchase program. This program will allow Participants to individually invest in CDs permitted by Nebraska law. The Investment Adviser will offer investment advice on a non-discretionary basis and assist Participants in the purchase of these investments for an advisory fee, based upon factors such as the amount and complexity of the transaction. The CDs available through this program are usually issued in denominations up to the maximum amount insured by the FDIC and are not held as a part of the Fund, and, within the limits and to the extent of insurance provided by the FDIC, may be separately insured by the FDIC from any certificates of deposit which may be held by the Fund. Services To simplify investing, NLAF also offers a variety of cash management tools to assist Participants in effectively managing their cash, such as automatic transfers, which help Participants minimize the effort of transferring funds. Check writing is also available at an expense to Participants, which allows the Participants to keep their funds fully invested until the check clears. NLAF also provides unlimited sub-accounting, which allows Participants to easily track investments for different funds or entities. As a Participant in NLAF, you may access your account information 24 hours a day, seven days a week through EON, the Easy Online Network. This on-line service provided by the Administrator offers complete, up-to-date account and investment information, pertinent general information, transaction input up to six months in advance, current and previous monthly statements, and current yield information. NLAF s Investment Adviser also provides a number of specialized services for bond proceeds to help Participants comply with complex arbitrage rebate regulations. These services include expenditure tests and arbitrage rebate tracking. We Value Your Participation The Board of Trustees is committed to managing the Fund in a manner that meets the investment and associated record-keeping and cash management needs of its Participants. We are interested in your feedback. For additional information, please call us at 1-877-667-3523 or visit us online at www.nlafpool.org. Annual Report May 31, 2016 5

Report of Independent Auditors To the Board of Trustees of the We have audited the accompanying financial statements of the Nebraska Liquid Asset Fund (the Fund ), which comprise the statement of assets and liabilities, including the schedule of investments, as of May 31, 2016, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements and financial highlights that are free of material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the at May 31, 2016, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles. Philadelphia, Pennsylvania August 29, 2016 6 Annual Report May 31, 2016

Statement of Assets and Liabilities May 31, 2016 Assets Investments at Value (See Note B)................................... $ 273,230,139 Cash and Cash Equivalents (1)........................................ 60,893,391 Accrued Interest Receivable......................................... 280,032 Total Assets..................................................... 334,403,562 Liabilities Payable for Securities Purchased.................................... 9,999,250 Redemptions Payable.............................................. 41,300 Subscriptions Received in Advance.................................... 42,028 Investment Advisory Fees Payable................................... 28,286 Administration Fees Payable......................................... 22,629 Marketing Fees Payable............................................ 25,457 Consulting Fees Payable........................................... 16,972 Audit Fees Payable................................................ 25,870 Other Expenses Payable............................................ 14,988 Total Liabilities................................................... 10,216,780 Net Assets $ 324,186,782 Net Asset Value per Share (Applicable to 324,186,782 Outstanding Shares of Beneficial Interest, Unlimited Authorization) $1.00 (1) Includes cash and bank deposit accounts which are subject to a 1 day put. Guaranteed by Federal Home Loan Bank letters of credit. Schedule of Investments May 31, 2016 Yield to Maturity Face Maturity Date Amount Value (1) CERTIFICATES OF DEPOSIT (10.49%) Amalgamated Bank (NY) 0.95% 4/27/17......................... $ 238,500 $ 238,500 American National Bank & Trust Co. (VA) Armstrong Bank (OK) 0.60% 10/20/16......................... 243,500 243,500 AVB Bank (OK) 0.95% 4/27/17......................... 182,389 182,389 Avenue Bank (TN) Bank of America (NC) Bank of Blue Valley (KS) 0.70% 9/1/16......................... 198,592 198,592 Bank of China New York (NY) 0.75% 10/27/16......................... 246,000 246,000 Bank of Feather River (CA) 0.70% 9/1/16......................... 44,000 44,000 Bank of Ocean City (MD) 0.75% 10/27/16......................... 246,000 246,000 Bank of the West (CA) Bath Savings Institution (ME) Bofi Federal Bank (2) 0.60% 7/12/16......................... 5,000,000 5,000,000 0.68% 10/3/16......................... 5,000,000 5,000,000 The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2016 7

Schedule of Investments May 31, 2016 Yield to Maturity Face Maturity Date Amount Value (1) Bremer Bank (MN) 0.70% 9/1/16......................... $ 244,500 $ 244,500 Business First Bank (LA) 0.95% 4/27/17......................... 11,500 11,500 Capital Bank (MD) Cardinal Bank (VA) 0.60% 10/20/16......................... 243,500 243,500 Centier Bank (IN) Central Bank of Lake of the Ozarks (MO) Central Bank of Oklahoma (OK) Citizens Bank of Oklahoma (OK) 0.95% 4/27/17......................... 150,950 150,950 Community West Bank (CA) Customers Bank (PA) 0.75% 10/27/16......................... 246,000 246,000 Everbank (FL) Farm Bureau Bank (NV) 0.75% 10/27/16......................... 212,000 212,000 First Community Financial Bank (IL) First Foundation Bank (CA) 0.60% 10/20/16......................... 243,500 243,500 First Freedom Bank (TN) First National Bank Albany/Breckenridge (TX) First NBC Bank (LA) 0.70% 9/1/16......................... 176,458 176,458 0.95% 4/27/17......................... 62,042 62,042 First State Bank of Illinois (IL) Firstcapital Bank of Texas (TX) 0.60% 10/20/16......................... 52,000 52,000 0.95% 4/27/17......................... 186,500 186,500 Four Oaks Bank & Trust Company (NC) Genesee Regional Bank (NY) Interbank Bank (OK) Lake City Bank (IN) 0.95% 4/27/17......................... 45,046 45,046 Legacy Bank (CO) The accompanying notes are an integral part of these financial statements. 8 Annual Report May 31, 2016

Schedule of Investments May 31, 2016 Yield to Maturity Face Maturity Date Amount Value (1) LegacyTexas Bank (TX) 0.95% 9/1/16......................... $ 244,500 $ 244,500 Machias Savings Bank (ME) Mainstreet Bank (VA) Mechanics & Farmers Bank (NC) 0.60% 10/20/16......................... 243,500 243,500 Merrick Bank (UT) Metropolitan Bank (MS) 0.60% 10/20/16......................... 243,500 243,500 Metropolitan Capital Bank & Trust (IL) Mutual of Omaha Bank (NE) New Peoples Bank (VA) Optima Bank & Trust Company (NH) 0.95% 4/27/17......................... 23,000 23,000 Pentagon Federal Credit Union (2) 0.90% 1/17/17......................... 10,000,000 10,000,000 Peoplefirst Bank (IL) Pulaski Bank (MO) 0.75% 10/27/16......................... 50,000 50,000 Santander Bank (DE) 0.60% 10/20/16......................... 243,500 243,500 Seaside National Bank & Trust (FL) Signature Bank (NY) Sovereign Bank of Dallas (TX) Texas Gulf Bank (TX) The Bank of Edwardsville (IL) The Bank of Tioga (ND) The Cortland Savings and Banking Co. (OH) 0.60% 10/20/16......................... 243,500 243,500 The Park National Bank (OH) 0.60% 10/20/16......................... 243,500 243,500 Treynor State Bank (IA) Tristate Capital Bank (PA) Univest Bank and Trust Co. (PA) Valley National Bank (NJ) 0.70% 9/1/16......................... 179,950 179,950 The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2016 9

Schedule of Investments May 31, 2016 Yield to Maturity Face Maturity Date Amount Value (1) Washingtonfirst Bank (VA) 0.95% 4/27/17......................... $ 238,500 $ 238,500 Waterford Bank (OH) 0.95% 4/27/17......................... 91,573 91,573 Yadkin Bank (NC) Total Certificates of Deposit.......................................... 34,000,000 U.S. GOVERNMENT & AGENCY OBLIGATIONS (65.37%) Fannie Mae Notes 0.47% 9/15/16......................... 590,000 598,114 Federal Farm Credit Banks Notes 0.40% 8/25/16......................... 410,000 414,490 0.47% (3) 10/20/16......................... 3,000,000 3,000,000 0.42% (3) 11/9/16......................... 5,000,000 5,000,000 0.42% (3) 2/1/17......................... 10,000,000 9,996,612 0.47% (3) 3/29/17......................... 5,000,000 5,000,841 0.44% (3) 4/20/17......................... 6,250,000 6,248,320 0.56% (3) 9/14/17......................... 3,000,000 2,999,604 0.46% (3) 12/27/17......................... 1,000,000 997,712 Federal Home Loan Banks Discount Notes 0.30% 6/1/16......................... 22,490,000 22,490,000 0.39% 6/3/16......................... 17,000,000 16,999,628 0.35% 6/22/16......................... 2,000,000 1,999,592 0.35% 7/6/16......................... 5,000,000 4,998,323 0.29% 7/8/16......................... 15,000,000 14,995,529 0.30% 7/13/16......................... 10,000,000 9,996,500 0.35% 7/28/16......................... 9,450,000 9,444,763 0.42% 9/15/16......................... 10,000,000 9,987,633 0.48% 10/14/16......................... 5,000,000 4,991,056 0.49% 11/8/16......................... 5,000,000 4,989,222 Federal Home Loan Banks Notes 0.30% 6/10/16......................... 5,000,000 5,000,090 0.34% 6/24/16......................... 12,670,000 12,670,314 0.41% 8/22/16......................... 2,000,000 2,000,247 0.45% 9/14/16......................... 1,000,000 1,000,203 0.50% 10/28/16......................... 10,000,000 9,998,453 0.51% 11/2/16......................... 12,000,000 11,997,696 0.60% 12/16/16......................... 900,000 920,134 0.46% (3) 3/1/17......................... 10,000,000 9,999,250 Federal Home Loan Banks (callable) 0.83% 12/30/16......................... 3,000,000 2,999,516 Freddie Mac Notes......................... 0.44% (3) 7/21/16......................... 3,000,000 2,999,958 0.37% 8/25/16......................... 9,000,000 9,034,015 0.44% (3) 4/20/17......................... 100,000 99,986 U.S. Treasury Notes 0.63% 9/30/16......................... 8,000,000 8,062,338 Total U.S. Government & Agency Obligations............................ 211,930,139 The accompanying notes are an integral part of these financial statements. 10 Annual Report May 31, 2016

Schedule of Investments May 31, 2016 Yield to Maturity Face Maturity Date Amount Value (1) REPURCHASE AGREEMENTS (8.42%) Goldman Sachs & Co.......................... 0.28% 6/1/16......................... $ 27,300,000 $ 27,300,000 (Dated 5/29/16, repurchase price $27,300,212, collateralized by Government National Mortgage Association securities, 2.50%-4.50%, maturing 6/20/24-5/20/46, fair value $27,846,217) Total Repurchase Agreements........................................ 27,300,000 TOTAL INVESTMENTS (84.28%)..................................... 273,230,139 OTHER ASSETS IN EXCESS OF OTHER LIABILITIES (15.72%)............ 50,956,643 NET ASSETS (100.00%)............................................ $ 324,186,782 (1) See Note B. (2) Guaranteed by Federal Home Loan Bank Letter of Credit and subject to put with 1 day notice. (3) Adjustable rate instrument. Rate shown is that which was in effect May 31, 2016. Statement of Operations Year Ended May 31, 2016 Investment Income Interest Income................................................. $ 713,269 Expenses (see Note C) Investment Advisory Fees......................................... 245,438 Administration Fees............................................. 245,438 Marketing Fees................................................. 220,894 Consulting Fees................................................ 147,263 Banking Fees.................................................. 49,949 Legal Fees.................................................... 11,738 Audit Fees..................................................... 25,870 Other Expenses................................................ 16,646 Total Expenses................................................. 963,236 Less: Administration Fee Waivers................................ (168,251) Investment Advisory Fee Waivers............................ (60,972) Consulting Fee Waivers.................................... (74,466) Custodial Fee Waivers..................................... (7,200) Expenses Paid Indirectly................................... (26,798) Net Expenses................................................... 625,549 Net Investment Income............................................. 87,720 Net Realized Gain on Sale of Investments............................. 2,970 Net Increase in Net Assets Resulting from Operations.................. $ 90,690 The accompanying notes are an integral part of these financial statements. Annual Report May 31, 2016 11

Statements of Changes in Net Assets Year Ended Year Ended May 31, May 31, 2016 2015 INCREASE (DECREASE) IN NET ASSETS Operations Net Investment Income......................... $ 87,720 $ 26,337 Net Realized Gain on Sale of Investments......... 2,970 733 Net Increase in Net Assets..................... 90,690 27,070 Distributions Net Investment Income......................... (87,720) (26,337) Net Realized Gain on Sale of Investments......... (2,970) (733) Total Distributions............................ (90,690) (27,070) Capital Share Transactions (at $1.00 per share) Issued..................................... 479,056,046 399,972,013 Redeemed.................................. (473,102,906) (398,210,626) Distributions Reinvested....................... 90,690 27,070 Net Increase from Capital Share Transactions...... 6,043,830 1,788,457 Total Increase in Net Assets.................... 6,043,830 1,788,457 Net Assets Beginning of Year............................ 318,142,952 316,354,495 End of Year................................. $324,186,782 $318,142,952 Financial Highlights For a share outstanding throughout each year Year Ended May 31, 2016 2015 2014 2013 2012 Net Asset Value, Beginning of Year...... $1.0000 $1.000 $1.000 $1.000 $1.000 Operations Net Investment Income................0004.0001.0001.0001.0001 Total from Operations................0004.0001.0001.0001.0001 Distributions Net Investment Income............... (.0004) (.0001) (.0001) (.0001) (.0001) Total Distributions................. (.0004) (.0001) (.0001) (.0001) (.0001) Net Asset Value, End of Year........... $1.0000 $1.0000 $1.0000 $1.000 $1.000 Ratios/Supplemental Data Net Assets, End of Year (000)........... $324,187 $318,143 $316,354 $275,449 $256,606 Total Return........................ 0.04% 0.01% 0.01% 0.01% 0.01% Ratio of Expenses to Average Net Assets Before Fee Waivers and Expenses Paid Indirectly..................... 0.39% 0.39% 0.40% 0.40% 0.40% Ratio of Expenses to Average Net Assets After Fee Waivers and Expenses Paid Indirectly...................... 0.25% 0.13% 0.12% 0.21% 0.17% Ratio of Net Investment Income to Average Net Assets Before Fee Waivers and Expenses Paid Indirectly.......... -0.10% -0.25% -0.27% -0.18% -0.22% Ratio of Net Investment Income to Average Net Assets After Fee Waivers and Expenses Paid Indirectly.......... 0.04% 0.01% 0.01% 0.01% 0.01% The accompanying notes are an integral part of these financial statements. 12 Annual Report May 31, 2016

Notes to Financial Statements A. Description of the Fund The (the Fund ), was established on March 23, 1988 as the Nebraska School District Liquid Asset Fund Plus, pursuant to the Interlocal Cooperation Act and Article XV, Section 18 of the Nebraska State Constitution. Under its original Declaration of Trust and Interlocal Agreement ( Declaration of Trust ) establishing the Fund, shares of the Fund were offered exclusively to Nebraska school districts, educational service units and technical community colleges. The Declaration of Trust was amended, restated and readopted effective February 5, 2008 to change the name of the Fund to and to expand the authorized Participants of the Fund to add Nebraska public agencies and other political subdivisions. The objective of the Fund is to provide a high yield for the Participants while maintaining liquidity and preserving capital by investing only in instruments permitted by Nebraska law. The Fund commenced operations on May 27, 1988. B. Summary of Significant Accounting Policies The Fund follows the accounting and reporting guidelines for investment companies in conformity with U.S. generally accepted accounting principles ( GAAP ), but the Fund is not required to register as an investment company with the Securities & Exchange Commission ( SEC ). The following significant accounting policies are in conformity with GAAP: Use of Estimates in Financial Statement Preparation The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Valuation of Investments In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the Fund discloses the fair value of investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1 Quoted prices in active markets for identical assets. Level 2 Inputs other than quoted prices that are observable for the asset, including quoted prices for similar investments based on interest rates, credit risk and like factors. Level 3 Unobservable inputs for the assets, including the Fund s own assumption for determining fair value. Portfolio investments are assigned a level based upon the observability of the inputs which are significant to the overall valuation. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Money market securities are valued using amortized Annual Report May 31, 2016 13

cost. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, any such securities held by the Fund are categorized as Level 2. There were no transfers between levels during the year ended May 31, 2016. Accounting for Investments Securities are stated at fair value, which is determined by using the amortized cost method. This method involves valuing a portfolio security initially at its original cost and thereafter adjusting for amortization of premium or accretion of discount to maturity. Significant inputs to the amortized cost method include purchase cost of security, premium or discount at the purchase date and time to maturity. It is the Fund s policy to compare the amortized cost and market value of securities periodically throughout the month and as of the last business day of each month. Market value is determined by reference to quoted market prices. Security transactions are accounted for on trade date. Costs used in determining realized gains and losses on the sale of investment securities are those of specific securities sold. Interest income is recorded using the accrual method. Discounts and premiums are accreted and amortized, respectively, to interest income over the lives of the respective securities. The rates shown in the Schedule of Investments are the yield-to-maturity at original cost unless otherwise noted. The dates shown on the Schedule of Investments are the actual maturity dates. Income Tax Status The Fund is not subject to federal or state income taxes upon the income realized by it. Accordingly, no provision for federal income taxes is required in the financial statements. The Fund has evaluated this tax position to determine whether the tax position is more likely-than-not of being sustained by the applicable tax authority. Management has concluded that no provision for federal income tax is required for the Fund s financial statements. Repurchase Agreements Repurchase agreements entered into with broker-dealers are secured by U.S. Government or U.S. Government agency obligations. The Fund's custodian takes possession of the collateral pledged for investments in securities purchased under agreement to resell. The Fund also enters into tri-party repurchase agreements. Collateral pledged for tri-party repurchase agreements is held for the Fund by an independent third-party custodian bank until the maturity of the repurchase agreement. Securities purchased under agreement to resell are collateralized at 102% of the obligation's principal and interest value. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to delays from legal proceedings. GAAP requires balance sheet offsetting disclosures for derivatives, repurchase agreements, and securities lending transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting arrangement or similar agreement. The total market value of repurchase agreements held by the Fund at May 31, 2016 is $27,300,000 and they are collateralized by $27,846,217 of non-cash collateral. 14 Annual Report May 31, 2016

Representations and Indemnifications In the normal course of business, the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience the Fund expects the risk of loss to be remote. Subsequent Events Evaluation The Fund has evaluated subsequent events through August 29, 2016, the date through which procedures were performed to prepare the financial statements for issuance. On July 27, 2016, the Fund s Board of Trustees adopted Government Accounting Standards Board ( GASB ) Statement No. 79, Certain External Investment Pools and Pool Participants, ( GASB 79 ) and authorized the investment advisor to manage the Fund in accordance with GASB 79 requirements, as applicable. Future financial statements of the Fund will be reported in a manner consistent with GASB standards. No other events have taken place that meet the definition of a subsequent event that requires adjustment or disclosure in these financial statements. C. Fund Expenses Investment Advisory Fees Pursuant to an Investment Advisory Agreement with the Fund, PFM Asset Management LLC ("PFM") provides investment advice and generally supervises the investment program of the Fund. PFM is paid a fee at an annual rate equal to 0.10% of the Fund s average daily net assets. Such fee is calculated daily and paid monthly. Administration Fees Under an Administration Agreement with the Fund, PFM services all Participant accounts, determines and allocates income of the Fund, provides administrative personnel, equipment and office space, determines the net asset value of the Fund on a daily basis and performs all related administrative services. The Administrator also pays the Fund s expenses for printing certain documents and for administrative costs of the Fund (such as postage, telephone charges and computer time). PFM is paid a fee at an annual rate equal to 0.10% of the Fund s average daily net assets. Such fee is calculated daily and paid monthly. Marketing Fee Under a Marketing Agreement with the Fund, PFM Fund Distributors, Inc., a wholly owned subsidiary of PFM, provides marketing services for which it is paid a fee at an annual rate equal to 0.09% of the Fund s average daily net assets. Such fee is calculated daily and paid monthly. Consulting Fees The Fund has separate consulting agreements with the Nebraska Council of School Administrators ( NCSA ) and Nebraska Association of School Boards ( NASB ), referred to as the Consultants. Pursuant to these agreements, the Consultants advise PFM, as a representative of the Fund, on applicable and pending state laws affecting the Fund, schedule and announce through their publications informational meetings and seminars at which representatives of the Fund will speak, provide mailing lists of potential Participants and permit the use of their logos. The Consultants are each paid a fee at an annual rate equal to 0.03% of the Fund s average daily net assets. Such fee is calculated daily and paid monthly. Annual Report May 31, 2016 15

Other Fund Expenses The Fund pays expenses incurred by its Trustees and officers (in connection with the discharge of their duties), fees of the Custodian ( U.S. Bank ), audit fees and legal fees. During the year ended May 31, 2016, the Custodian s fees were reduced by $26,798 as a result of earnings credits from cash balances. Fee Reduction Agreements Effective April 16, 2009, the Fund entered into separate Fee Reduction Agreements with PFM, the Custodian and each Consultant (each a Service Provider ) pursuant to which each Service Provider individually may, but shall not be obligated to, temporarily reduce a portion of its fees to assist the Fund in an attempt to maintain a positive yield. In the event that a Service Provider elects to initiate a fee reduction, such fee reduction shall be applicable to the computation of the net asset value ( NAV ) of the Fund on the business day immediately following the date on which the Service Provider gives notice to the Fund on the rate of the fee reduction to be applied in calculating the NAV. A fee reduction shall remain in effect until notice is provided to the Fund by the Service Provider regarding its intent to terminate its fee reduction or revise, upward or downward, the rate of its fee reduction. At any time after a fee reduction has been terminated, the relevant Service Provider may elect to have the amount of its accumulated reduced fees restored in whole or in part under the conditions described in the Service Provider s Fee Reduction Agreement with the Fund by way of a payment of fees in excess of the rate it was entitled to, prior to any fee reduction, all as set forth in the respective Fee Reduction Agreement. In all cases, the amount of accumulated reduced fees to be restored in a given month may not exceed 115% of the fees payable under the terms of each Service Providers related agreement with the Fund. The chart that follows depicts the fees waived by PFM, NCSA, NASB and U.S. Bank during the year ended May 31, 2016 and cumulatively since the inception of the Fee Reduction Agreements. The chart also includes the amounts reimbursed and the amounts deemed unrecoverable under the Plan both during the year ended May 31, 2016 and cumulatively, as well as the amounts which remain to be recoverable as of May 31, 2016 for each Service Provider. PFM NCSA NASB U.S. Bank Current Cumulative Current Cumulative Current Cumulative Current Cumulative Year Life-to-Date Year Life-to-Date Year Life-to-Date Year Life-to-Date Waived fees $229,223 $2,304,904 $37,233 $289,469 $37,233 $289,470 $7,200 $50,400 Amounts reimbursed Amounts unrecoverable (296,874) (1,101,462) (42,810) (132,704) (42,810) (132,704) (7,200) (28,800) Remaining recoverable $1,203,442 $156,765 $156,766 $21,600 Waivers not reimbursed become unrecoverable in fiscal year-end: 5/31/2017 $ 492,081 $ 55,605 $ 55,605 $ 7,200 5/31/2018 482,138 63,927 63,928 7,200 5/31/2019 229,223 37,233 37,233 7,200 Total $1,203,442 $156,765 $156,766 $21,600 16 Annual Report May 31, 2016

D. Dividends and Distributions On a daily basis, the Fund declares dividends and distributions from its net investment and other income and net realized gains or losses from securities transactions, if any. Such dividends and distributions are payable to Participants of record at the time of the previous computation of the Fund s net asset value. E. Governmental Accounting Standards (unaudited) Under Governmental Accounting Standards ("GAS"), state and local governments and other municipal entities are required to disclose credit risk, concentration of credit risk, and interest rate risk for investment portfolios. Although the Fund is not subject to GAS, the following risk disclosures of its investment portfolio as of May 31, 2016 have been provided for the information of the Participants. Credit Risk The Fund s investment policy, as outlined in its Information Statement, limits the Fund s investments to certain fixed income instruments which school entities are permitted to invest in under Nebraska law. As of May 31, 2016, the Fund s investment portfolio was comprised of investments which were, in aggregate, rated by Standard & Poor s as shown in the chart to the right. The ratings of Issuer S&P Percent of Rating Portfolio AA+ 47.68% A-1+ 44.25% Exempt* 2.95% Not Rated** 5.12% * Represents investments in U.S Treasury securities, which are not considered to be exposed to overall credit risk per GAS. **Represents investments in certificates of deposit insured by the FDIC. Percent of Portfolio Federal Home Loan Bank 57.64% Federal Farm Credit Bank 12.32% Goldman Sachs Group* 9.99% * These issuers are counterparties to repurchase agreements entered into by the Fund. These repurchase agreements are collateralized by federal agency obligations. the Fund include the ratings of collateral underlying repurchase agreements in effect for the Fund at May 31, 2016. Concentration of Credit Risk The Fund s investment policy establishes certain restrictions on investments and limitations on portfolio composition. The Fund s investment portfolio at May 31, 2016 included the issuers shown to the right which individually represented greater than 5% of the Fund s total investment portfolio. Interest Rate Risk The Fund s investment policy limits its exposure to market value fluctuations due to changes in interest rates by requiring that the Fund s portfolio maintain a dollarweighted average maturity of not greater than one-hundred thirty-five days. The weighted average maturity of the Fund s entire portfolio at May 31, 2016 was 44 days. Annual Report May 31, 2016 17

The fair values and weighted average maturity of the Fund's types of investments at May 31, 2016 is as follows: Weighted Average Type of Investment Fair Value Maturity Cash and Cash Equivalents $ 60,893,391 1 Day Certificates of Deposit 34,000,000 85 Days Repurchase Agreements 27,300,000 1 Day U.S. Government Agency Bonds 102,975,555 62 Days U.S. Government Agency Discount Notes 100,892,246 44 Days U.S. Treasury Notes 8,062,338 122 Days $ 334,123,530 The weighted-average maturities shown above are calculated based on the stated maturity dates with the following exceptions: (1) floating or variable rate securities are assumed to have an effective maturity of the date upon which the security s interest rate next resets; (2) the effective maturity of callable securities is assumed to be its stated maturity unless the security had been called as of the reporting date, in which case the effective maturity would be assumed to be its called date; and (3) the effective maturity of cash and cash equivalents is assumed to be one day. 18 Annual Report May 31, 2016

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NEBRASKA LIQUID ASSET FUND Trustees and Officers Dr. Kenneth Fossen, Chairperson & Trustee Associate Superintendent for General Administration Millard Public Schools Dr. Liz Standish, Vice Chairperson & Trustee Associate Superintendent Lincoln Public Schools Virgil Harden, Treasurer & Trustee Executive Director of Business Grand Island Public Schools Dr. Michael Dulaney, Secretary Executive Director Nebraska Council of School Administrators Amy Poggenklass, Assistant Secretary Finance and Membership Coordinator Nebraska Council of School Administrators Jan Glenn, Trustee Director of Business Services Educational Service Unit #3 David Glover, Trustee School Board Member Kearney Public Schools Connie Knoche, Trustee Chief Financial Officer Omaha Public Schools Doug Lewis, Trustee Assistant Superintendent Papillion-LaVista Schools Chris Nelson, Trustee Director of Finance Kearney Public Schools Jeff Schneider, Trustee Director of Finance Hastings Public Schools Sponsoring Organizations Nebraska Association of School Boards John Spatz, Executive Director Nebraska Council of School Administrators Dr. Michael Dulaney, Executive Director Service Providers Investment Adviser & Administrator PFM Asset Management LLC One Keystone Plaza, Suite 300 North Front & Market Streets Harrisburg, Pennsylvania 17101-2044 Airport Corporate Center One Corporate Drive, Suite 101 Bohemia, New York 11716 Marketing Agent PFM Fund Distributors, Inc. One Keystone Plaza, Suite 300 North Front & Market Streets Harrisburg, Pennsylvania 17101-2044 77 West Port Plaza, Suite 220 St. Louis, Missouri 63101 Custodian U.S. Bank, N.A. One U.S. Bank Plaza St. Louis, Missouri 63101 Independent Auditors Ernst & Young LLP 2005 Market Street, Suite 700 Philadelphia, Pennsylvania 19103 General Counsel Perry, Guthery, Haase & Gessford, P.C. 1400 US Bank Building Lincoln, Nebraska 68508 Securities Counsel Gilmore & Bell, P.C. 450 Regency Parkway, Suite 320 Omaha, Nebraska 68114 4814 7/16 c/o Nebraska Council of School Administrators 455 South 11th Street, Suite A Lincoln, Nebraska 68508 1-877-667-3523 www.nlafpool.org