N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-09381

PayPal Funds

(Exact name of registrant as specified in charter)

2211 North First Street, San Jose, California	95131
(Address of principal executive offices)	(Zip code)

Omar J. Paz,

2211 North First Street,

San Jose, California 95131

(Name and address of agent for service)

Registrant’s telephone number, including area code: (408) 376-7400

Date of fiscal year end: 12/31

Date of reporting period: 12/31/2010

Item 1. Reports to Stockholders.

Attached is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1).

Shareholder Expenses (Unaudited)

PayPal Money Market Fund

As a shareholder of the PayPal Money Market Fund (the “Fund”), you incur ongoing costs, including management fees and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars and cents) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2010 to December 31, 2010.

Actual Expenses

The first line under the Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for the Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line under the Fund in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line under the Fund in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

Fund	Beginning Account Value (7/1/10)		Ending Account Value (12/31/10)		Annualized Expense Ratio†			Expenses Paid During Period* (7/1/10 to 12/31/10)
PayPal Money Market Fund
Actual	$	1,000.00	$	1,000.80		0.22	%	$	1.11
Hypothetical (5% return before expenses)		1,000.00		1,024.10		0.22			1.12

† This ratio includes the Fund’s share of expenses charged to the corresponding Master Portfolio.

* Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (365 days).

PayPal Money Market Fund

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2010

ASSETS
Investments:
In Money Market Master Portfolio (“Master Portfolio”), at fair value (Note 1)	$	488,170,252
Receivables:
Other receivable		96,008
Total Assets		488,266,260
LIABILITIES
Payables:
Due to PayPal Asset Management, Inc. (Note 2)		46,763
Accrued trustees’ fees		14,446
Accrued expenses		1,097
Total Liabilities		62,306
NET ASSETS	$	488,203,954
Net assets consist of:
Paid-in capital	$	488,173,367
Undistributed net investment income		1,208
Accumulated net realized gain		29,379
NET ASSETS	$	488,203,954
Shares outstanding		488,173,159
Net asset value and offering price per share	$	1.00

The accompanying notes are an integral part of these financial statements.

PayPal Money Market Fund

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2010

NET INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIO
Interest	$	1,664,374
Expenses (a)		(352,087	)
Net investment income allocated from Master Portfolio		1,312,287
FUND EXPENSES (Note 2)
Management fees		3,772,740
Trustees’ fees		57,982
Compliance fees		23,208
Insurance		12,290
Total fund expenses		3,866,220
Fees and expenses reimbursed by PPAM (Note 2)		(3,118,799	)
Total net expenses		747,421
Net investment income		564,866
REALIZED GAIN (LOSS) ALLOCATED FROM MASTER PORTFOLIO
Net realized gain		44,706
Net gain on investments		44,706
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	609,572

^(a) Net of investment advisory fee waivers by the Master Portfolio’s investment adviser in the amount of $158,307.

The accompanying notes are an integral part of these financial statements.

PayPal Money Market Fund

STATEMENTS OF CHANGES IN NET ASSETS

	For the year ended December 31, 2010			For the year ended December 31, 2009
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income	$	564,866		$	1,371,347
Net realized gain		44,706			16,669
Net increase in net assets resulting from operations		609,572			1,388,016
Distributions to shareholders:
From net investment income		(564,866	)		(1,371,339	)
Total distributions to shareholders		(564,866	)		(1,371,339	)
Capital share transactions (Note 3):
Proceeds from shares sold		4,869,859,950			4,572,195,413
Net asset value of shares issued in reinvestment of dividends and distributions		539,994			2,135,682
Cost of shares redeemed		(4,896,739,967	)		(4,747,974,350	)
Net decrease in net assets resulting from capital share transactions		(26,340,023	)		(173,643,255	)
Increase (decrease) in net assets		(26,295,317	)		(173,626,578	)
NET ASSETS:
Beginning of year		514,499,271			688,125,849
End of year	$	488,203,954		$	514,499,271
Undistributed net investment income included in net assets at end of year	$	1,208		$	1,208
SHARES ISSUED AND REDEEMED:
Shares sold		4,869,859,950			4,572,195,413
Shares issued in reinvestment of dividends and distributions		539,994			2,135,682
Shares redeemed		(4,896,739,967	)		(4,747,974,350	)
Net decrease in shares outstanding		(26,340,023	)		(173,643,255	)

The accompanying notes are an integral part of these financial statements.

PayPal Money Market Fund

Financial Highlights

(For a share outstanding throughout each period)

	Year ended Dec. 31, 2010			Year ended Dec. 31, 2009			Year ended Dec. 31, 2008			Year ended Dec. 31, 2007			Year ended Dec. 31, 2006
Net asset value, beginning of year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Income from investment operations:
Net investment income		0.00	(a)		0.00	(a)		0.03			0.05			0.05
Net realized and unrealized gain (loss)		0.00	(a)		0.00	(a)		(0.00	)(a)		0.00	(a)		0.00	(a)
Total from investment operations		0.00			0.00			0.03			0.05			0.05
Less distributions from:
Net investment income		(0.00	)(a)		(0.00	)(a)		(0.03	)		(0.05	)		(0.05	)
Total distributions		(0.00	)		(0.00	)		(0.03	)		(0.05	)		(0.05	)
Net asset value, end of year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total return		0.12	%		0.23	%		2.61	%		5.10	%		4.88	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	488,204		$	514,499		$	688,126		$	996,105		$	836,326
Ratio of expenses to average net assets(b)		0.22	%		0.33	%(c)		0.36	%(c)		0.36	%		0.33	%
Ratio of expenses to average net assets prior to waived fees		0.87	%		1.04	%(c)		1.11	%(c)		1.11	%		1.11	%
Ratio of net investment income to average net assets(b)		0.11	%		0.25	%(c)		2.65	%(c)		4.98	%		4.81	%
Ratio of net investment income (loss) to average net assets prior to waived fees(b)		(0.54	)%		(0.47	)%(c)		1.90	%(c)		4.23	%		4.03	%

^(a) Rounds to less than $0.01 or 0.01%.

^(b) These ratios include the Fund’s share of net expenses charged to the Money Market Master Portfolio.

^(c) These ratios include fees of 0.02% and 0.01% for the years ended December 31, 2009 and December 31, 2008, respectively, related to the U.S. Treasury’s Temporary Guarantee Program.

The accompanying notes are an integral part of these financial statements.

PAYPAL MONEY MARKET FUND

NOTES TO THE FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

PayPal Money Market Fund (the “Fund”) is a diversified series of PayPal Funds (the “Trust”), an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust was established as a Delaware statutory trust organized pursuant to a Declaration of Trust on June 3, 1999.

The investment objective of the Fund is to provide a high level of income consistent with stability of capital and liquidity.

Under the Fund’s organizational documents, the officers and trustees are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. 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.

The following significant accounting policies are consistently followed by the Trust in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Investment Policy and Security Valuation

The Fund’s investment in its Master Portfolio is valued pursuant to the pricing policy and procedures approved by the Board of Trustees of the Trust using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under Accounting Standards Codification 820 are as follows:

• Level 1 – Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date;

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means;

• Level 3 – Inputs that are unobservable for the asset or liability.

The Fund invests all of its assets in the Money Market Master Portfolio (the “Master Portfolio”), a series of Master Investment Portfolio (“MIP”). The Master Portfolio has the same or substantially similar investment objective as the Fund. The value of the Fund’s investment in the Master Portfolio reflects the

Fund’s interest in the net assets of the Master Portfolio (2.44% of total Master Portfolio assets as of December 31, 2010).

The determination of what constitutes an “observable” input may require significant judgment by the Fund. As of December 31, 2010, the Fund’s investment in the Master Portfolio was classified as Level 2. The level of a value determined for an investment within the fair value hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the Fund’s perceived risk of its investment in the Master Portfolio, nor the level of the investments held within the Master Portfolio.

The Fund believes more relevant disclosure regarding fair value measurements relate to the investment portfolios of the Master Portfolio, which can be found in the Master Portfolio’s Schedule of Investments, and are included elsewhere in this report.

The performance of the Fund is directly affected by the performance of the Master Portfolio. The financial statements of the Master Portfolio, including the Schedule of Investments, accompanied by an unaudited summarized tabular presentation, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements.

Security Transactions and Income Recognition

The Fund records daily its proportionate interest in the net investment income and realized and unrealized capital gains and losses of the Master Portfolio.

Dividends and Distributions to Shareholders

Dividends to shareholders from net investment income of the Fund are declared daily and distributed monthly. Distributions to shareholders from any net realized capital gains are declared and distributed annually, generally in December. Such distributions to shareholders are recorded on the ex-dividend date.

Due to the timing of dividends and distributions and the differences in accounting for income and realized gains (losses) for financial statement and federal income tax purposes, the fiscal year in which amounts are distributed may differ from the year in which the income and realized gains (losses) were recorded by the Fund.

Federal Income Taxes

The Fund has elected and intends to qualify each year as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). If so qualified, the Fund will not be subject to federal income tax to the extent it distributes its net income to shareholders.

The Fund is treated as a separate entity for federal income tax purposes. It is the policy of the Fund to continue to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined in the Code, and to distribute annually all of its investment company taxable income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended December 31, 2010.

As of December 31, 2010, the components of net accumulated earnings on a tax basis consisted of undistributed ordinary income of $30,587 and capital and other losses of $- for net accumulated earnings of $30,587.

The tax character of distributions paid during 2010 and 2009 for the Fund was as follows: ordinary income of $564,866 and $1,371,339, respectively.

As of December 31, 2010, the tax year-end of the Fund, the Fund had no tax basis net capital loss carryforwards. The capital loss carryforwards utilized for the year ended December 31, 2010 amounted to $15,327.

Management has reviewed the tax positions as of December 31, 2010, inclusive of the prior three open tax return years, and has determined that no provision for income tax is required in the Fund’s financial statements.

2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

PayPal Asset Management, Inc. (“PPAM” or “Adviser”), a wholly owned subsidiary of PayPal, Inc. (“PayPal”), serves as the Fund’s investment adviser. For both its advisory and administrative services, PPAM is paid a “unified” fee from the Fund at an annual rate of 0.75% of the Fund’s average daily net assets. Under an investment advisory agreement (“Advisory Agreement”) between the Trust and PPAM, PPAM provides, or arranges to be provided to the Fund, administration, transfer agency, pricing, custodial, auditing and legal services, and is responsible for payment of all of the operating expenses of the Fund, except Master Portfolio expenses, brokerage fees, taxes, interest, fees and expenses of the Independent Trustees, within the meaning of the 1940 Act, (and their legal counsel), the compensation of the Chief Compliance Officer (and certain fees and expenses of legal counsel relating to the Fund’s compliance program, if any), the Fund’s portion of any joint insurance premiums and extraordinary expenses. The Fund also pays a fee equal to 0.10% of the Fund’s average daily net assets payable at the Master Portfolio level to BlackRock Fund Advisors (“BFA”), the investment adviser to the Master Portfolio. Pursuant to a contractual expense limitation, which is in effect through April 30, 2012, BFA has agreed to reduce its fee to 0.07%. There can be no assurance that BFA will extend the expense limitation beyond such time.

PPAM and BlackRock Institutional Trust Company, N.A. (“BTC”), the parent company of BFA, have entered into a sub-administration agreement, pursuant to which BTC provides services to the Fund and its shareholders, including maintenance of books and records; preparation of reports; and other administrative support services. For the services under this sub-administration agreement, PPAM pays BTC a fee equal to 0.03% of the average daily net assets of the Fund.

PPAM has voluntarily agreed to limit the Fund’s net operating expenses, excluding the fees and expenses of the Independent Trustees (and their independent legal counsel), the compensation of the Chief Compliance Officer (and certain fees and expenses of legal counsel relating to the Fund’s compliance program, if any) and the Fund’s portion of any joint insurance premiums, to an annual rate of 0.35%. Effective August 4, 2009, the Adviser has voluntarily further reduced its management fee to limit the Fund’s annual operating expenses to less than the 0.35% voluntary expense limitation discussed above to improve the investment yield and total return of the Fund. With the prior approval of the Board of Trustees, PPAM may terminate the voluntary expense limit at any time. PPAM waived expenses totaling $3,118,799 or 0.62% of the Fund’s average daily net assets for the year ended December 31, 2010.

PPAM also serves as the Fund’s transfer agent and dividend distribution agent and provides shareholder services. PayPal serves as an agent for PPAM in providing shareholder services.

State Street Bank and Trust Company (“Administrator”) provides custodian and administrative services to the Fund. Services provided by the Administrator include, but are not limited to: general supervision of the non-investment operations and coordination of other services provided to the Fund, maintaining documents and records required to be kept by the Fund; preparing or assisting in the preparation of regulatory filings, prospectuses and shareholder reports; and preparing and disseminating materials for meetings of the Board of Trustees and shareholders. PPAM compensates the Administrator for services performed.

3. CAPITAL SHARE TRANSACTIONS

As of December 31, 2010, there was an unlimited number of shares of $0.01 par value capital stock authorized by the Fund. Transactions in capital shares for the Fund are disclosed in detail in the Statements of Changes in Net Assets.

4. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of

PayPal Money Market Fund:

In our opinion, the accompanying statement of assets and liabilities, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the PayPal Money Market Fund (the “Fund”), a series of PayPal Funds, at December 31, 2010, 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 accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

February 24, 2011

PAYPAL MONEY MARKET FUND

PROXY VOTING (Unaudited)

The Fund invests all of its assets in the Master Portfolio. Consequentially, the Fund did not hold any portfolio securities with respect to which it was entitled to vote during the period from July 1, 2009 through June 30, 2010. The Fund filed a Form N-PX, for the twelve months ended June 30, 2010, which is available (i) without charge, upon request, by calling the Fund toll-free at 1-888-215-5506, and (ii) on the SEC’s website at www.sec.gov. The proxy voting record for the Master Portfolio can be found in the MIP’s Form N-PX, which is available on the SEC’s website (www.sec.gov). MIP’s CIK # is 0000915092.

QUARTERLY FILING REQUIREMENT (Unaudited)

As the Fund invests substantially all of its assets in a series of the Master Portfolio, the Fund files the Master Portfolio’s complete Schedule of Portfolio Holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which when filed, will be available on the SEC’s website at www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

PayPal Money Market Fund

Management of the Fund (Unaudited)

The management and affairs of the Fund are supervised by the Board of Trustees of the Trust. The Trustees and officers of the Trust, their ages, principal occupations during the past five years (their titles may have varied during that period) and other directorships they hold, and the number of investment companies managed by PayPal they oversee are set forth below. Unless otherwise noted, the address of each Trustee and officer is c/o PayPal, Inc., 2211 North First Street, San Jose, CA 95131. Each officer holds office for his or her lifetime unless that individual resigns, retires or is otherwise removed or replaced.

Disinterested Trustees¹

Name (Age)	Position(s) Held with the Trust and Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen	Other Directorships Held
Kevin T. Hamilton (49)	Trustee and Chairman (since 1999 and 2004, respectively)	Managing Director, First Foundation Advisors (since 2010); President, Rice Hall James & Associates (investment advisor) (2002-2009).	One	None
Richard D. Kernan (65)	Trustee (since 2002) 2	Chief Financial Officer, Acacia Pacific Holdings, Inc. (private insurance services company) (2003-2007).	One	None
John P. McGonigle (55)	Trustee (since 2008)	Member of Board of Charles Schwab International Holdings (1999-2006); Vice President, Senior Vice President, and Executive Vice President of Charles Schwab & Co., Inc. (registered broker-dealer) (1989-2006).	One	One (Janus family of mutual funds)

¹ Disinterested Trustees are those Trustees who are not “interested persons” of the Trust as defined in the 1940 Act.

² Mr. Kernan served as an Advisory Trustee from January 2001 through August 2002.

Principal Officers

Name (Age)	Position(s) Held with the Trust	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years
Dana E. Schmidt (48)	President	Since 2010	Chief Compliance Officer, MicroPlace Inc. (since 2007); Lead Integration Manager, Wells Fargo Funds Management, LLC (2004-2005).
Omar J. Paz (40)	Treasurer and Chief Financial Officer	Since 2008	Director, Consumer Products, PayPal, Inc. (since 2010); President and Director, PayPal Asset Management, Inc. (since 2008); Assistant Treasurer and Director of Global Investments, eBay, Inc. and PayPal, Inc. (2007-2010); Principal, Corporate Cash Management Group of Piper Jaffray & Co. (2006-2007); Senior Vice President, Institutional Fixed Income Group of Citigroup Global Markets Inc (2002-2006).
John M. Muller (49)	Secretary and Chief Compliance Officer	Since 2001 and 2009, respectively	General Counsel, PayPal, Inc. (since 2000); Chairman and Director, PayPal Asset Management, Inc. (since 2001); Interim Chief Compliance Officer of the Trust (2006-2009).

Portfolio Information as of December 31, 2010

Money Market Master Portfolio

Portfolio Composition	Percent of Net Assets
Certificates of Deposit		27	%
U.S. Government Sponsored Agency Obligations		26
Commercial Paper		23
Repurchase Agreements		16
U.S. Treasury Obligations		5
Time Deposits		3
Total		100	%

Schedule of Investments December 31, 2010

Money Market Master Portfolio

(Percentages shown are based on Net Assets)

Certificates of Deposit	Par (000)		Value
Yankee(a)
Banco Bilbao Vizcaya Argentaria S.A., New York, 0.36%, 1/28/11 (b)	$	175,000	$	175,000,000
Bank of Montreal, Chicago, 0.36%, 11/22/11 (b)		300,000		300,000,000
Barclays Bank Plc, New York:
0.42%, 2/18/11		260,000		260,000,000
0.40%, 3/04/11		225,000		225,000,000
BNP Paribas S.A., New York, 0.50%, 12/12/11 (b)		200,000		200,000,000
Canadian Imperial Bank of Commerce, New York, 0.42%, 1/31/11 (b)		432,000		432,000,000
Credit Agricole Corporate & Investment Bank, New York:
0.32%, 2/14/11		300,000		300,000,000
0.41%, 4/08/11		195,000		195,000,000
Dexia Credit Local, New York, 0.56%, 6/29/11 (b)		157,000		157,000,000
DNB NOR Bank ASA, New York, 0.31%, 3/31/11		11,000		11,000,136
KBC Bank N.V., New York, 0.46%, 2/18/11		350,000		350,000,000
Lloyds TSB Bank Plc, New York:
0.62%, 2/11/11		270,000		270,000,000
1.27%, 5/06/11 (b)		75,000		75,000,000
Mizuho Corporate Bank, New York, 0.28%, 2/02/11		320,000		320,000,000
Rabobank Nederland N.V., New York:
0.27%, 1/10/11 (b)		110,000		110,000,000
0.57%, 1/18/11		185,000		185,000,000
Royal Bank of Canada, New York:
0.26%, 1/21/11 (b)		116,015		116,015,000
0.37%, 10/14/11 (b)		170,000		170,000,000
Royal Bank of Scotland Plc, Connecticut:
0.67%, 2/09/11 (b)		150,000		150,000,000
0.51%, 3/01/11 (b)		125,000		125,000,000
0.49%, 4/19/11		200,000		200,000,000
Societe Generale, New York:
0.39%, 2/03/11 (b)		130,000		130,000,000
0.40%, 2/14/11		200,000		200,000,000
1.49%, 5/05/11 (b)		110,000		110,000,000
Sumitomo Mitsui Banking Corp., New York, 0.28%, 1/21/11		200,000		200,000,000
UniCredit SpA, New York, 0.49%, 2/09/11		390,300		390,300,000
Total Certificates of Deposit—26.8%				5,356,315,136
Commercial Paper
Banco Bilbao Vizcaya Argentaria S.A., London, 0.42%, 1/25/11 (c)(d)		250,000		249,930,000
Bank of Nova Scotia, New York, 0.14%, 1/04/11 (d)		439,000		438,994,878
BNZ International Funding Ltd., 0.34%, 2/01/11 (c)		250,000		250,002,135
BPCE S.A.:
0.30%, 2/03/11 (c)(d)		500,000		499,853,333
0.54%, 3/23/11 (c)(d)		121,000		120,852,985
Ciesco LLC, 0.27%, 2/24/11 (c)(d)		75,000		74,969,625
CRC Funding LLC, 0.26%, 2/17/11 (d)		63,000		62,978,615
Credit Agricole North America Inc., 0.57%, 2/10/11 (d)		270,000		269,829,000
Danske Corp., 0.30%, 2/15/11 (c)(d)		400,000		399,850,000
Deutsche Bank Financial LLC:
0.23%, 1/04/11 (d)		350,000		349,993,292
0.28%, 2/28/11 (d)		393,808		393,630,349
European Investment Bank, 0.40%, 3/24/11 (d)		445,000		444,594,556
ING US Funding LLC, 0.43%, 4/06/11 (d)		250,000		249,716,319
Lloyds TSB Bank Plc, 0.45%, 3/25/11 (d)		55,000		54,942,938
NRW.BANK, 0.39%, 3/15/11 (d)		105,000		104,916,963
Societe Generale North America, Inc., 0.32%, 2/18/11 (d)		146,700		146,637,408
Westpac Securities NZ Ltd.:
0.26%, 2/08/11 (d)		51,000		50,986,003

Schedule of Investments (continued)

Money Market Master Portfolio

(Percentages shown are based on Net Assets)

0.37%, 10/03/11	486,000	486,000,000
Total Commercial Paper—23.3%		4,648,678,399
Time Deposits
Natixis, 0.15%, 1/03/11	200,000	200,000,000
Societe Generale, New York, 0.15%, 1/03/11	306,000	306,000,000
Total Time Deposits—2.5%		506,000,000
U.S. Government Sponsored Agency Obligations
Fannie Mae Discount Notes:
0.18%, 2/14/11 (d)	15,000	14,996,700
0.18%, 2/15/11 (d)	300,000	299,932,500
0.21%, 2/23/11 (d)	248,436	248,361,021
Federal Farm Credit Bank Variable Rate Notes:
0.25%, 5/26/11 (b)	62,225	62,222,487
0.24%, 4/27/12 (b)	144,460	144,430,843
0.38%, 7/13/12 (b)	58,020	58,011,016
0.34%, 10/12/12 (b)	75,000	75,000,000
Federal Home Loan Bank:
0.75%, 1/18/11	35,030	35,035,468
0.40%, 11/28/11	52,930	52,930,000
Federal Home Loan Bank Discount Notes:
0.17%, 2/10/11 (d)	179,750	179,716,047
0.18%, 5/04/11 (d)	85,000	84,947,725
Federal Home Loan Bank Variable Rate Notes, 0.23%, 10/06/11 (b)	187,000	186,942,113
Freddie Mac Discount Notes:
0.21%, 2/22/11 (d)	149,200	149,155,820
0.18%, 2/28/11 (d)	63,637	63,618,033
0.20%, 4/18/11 (d)	233,000	232,861,494
0.20%, 4/21/11 (d)	100,000	99,938,889
0.18%, 5/02/11 (d)	437,073	436,805,394
0.18%, 5/09/11 (d)	275,000	274,824,000
0.21%, 5/10/11 (d)	200,000	199,849,500
0.18%, 5/24/11 (d)	75,000	74,944,885
0.21%, 6/07/11 (d)	685,861	685,245,765
0.26%, 6/21/11 (d)	200,000	199,753,000
Freddie Mac Variable Rate Notes:
0.18%, 11/09/11 (b)	606,000	605,632,282
0.19%, 1/13/12 (b)	652,995	652,585,938
0.22%, 2/16/12 (b)	110,000	109,950,083
Total U.S. Government Sponsored Agency Obligations—26.1%		5,227,691,003
U.S. Treasury Obligations(d)
U.S. Treasury Bill:
0.19%, 5/19/11	900,000	899,348,525
0.23%, 6/30/11	125,000	124,859,375
Total U.S. Treasury Obligations—5.1%		1,024,207,900
Repurchase Agreements
Banc of America Securities LLC, 0.25%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $500,010,417, collateralized by non-U.S. government debt securities, 0.00% to 11.25%, 1/5/11 to 2/15/51, par and fair value of $760,263,328 and $523,963,755, respectively)	500,000	500,000,000
Banc of America Securities LLC, 0.30%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $228,005,700, collateralized by non-U.S. government debt securities, 0.00%, 4/1/11 to 6/7/11, par and fair value of $232,845,093 and $232,560,000, respectively)	228,000	228,000,000
Banc of America Securities LLC, 0.40%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $122,004,067, collateralized by non-U.S. government debt securities, 0.00% to 5.88%, 8/15/13 to 4/15/49, par and fair value of $179,061,836 and $130,540,000, respectively)	122,000	122,000,000

Schedule of Investments (continued)

Money Market Master Portfolio

(Percentages shown are based on Net Assets)

Banc of America Securities LLC, 0.52%, 2/22/11 (Purchased on 12/31/10 to be repurchased at $250,191,389, collateralized by non-U.S. government debt securities, 0.00% to 7.50%, 1/3/11 to 7/25/34, par and fair value of $432,442,582 and $257,229,934, respectively)	250,000		250,000,000
BNP Paribas Securities Corp., 0.27%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $425,009,563, collateralized by non-U.S. government debt securities, 1.00% to 11.25%, 2/1/11 to 9/15/28, par and fair value of $399,767,653 and $437,750,000, respectively)	425,000		425,000,000
Citigroup Global Markets Inc., 0.35%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $69,002,013, collateralized by U.S. government obligations, 1.27% to 5.00%, 3/20/36 to 9/25/40, par and fair value of $145,967,927 and $71,070,000, respectively)	69,000		69,000,000
Citigroup Global Markets Inc., 0.56%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $250,011,667, collateralized by non-U.S. government debt securities, 0.00% to 5.81%, 12/20/11 to 9/15/27, par and fair value of $280,591,755 and $276,538,645, respectively)	250,000		250,000,000
Citigroup Global Markets Inc., 0.65%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $190,010,292, collateralized by non-U.S. government debt securities, 0.00% to 8.00%, 1/1/11 to 4/1/57, par and fair value of $291,134,878 and $243,451,279, respectively)	190,000		190,000,000
Citigroup Global Markets Inc., 0.75%, 3/3/11 (Purchased on 12/31/10 to be repurchased at $80,103,333, collateralized by U.S. government obligations, 1.22% to 5.50%, 5/15/32 to 6/25/38, par and fair value of $223,601,980 and $82,400,000, respectively)	80,000		80,000,000
Deutsche Bank Securities Inc., 0.28%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $105,002,450, collateralized by U.S. government obligations, 7.00%, 10/1/38, par and fair value of $254,103,148 and $108,150,000, respectively)	105,000		105,000,000
Greenwich Capital Markets, 0.30%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $400,010,000, collateralized by non-U.S. government debt securities, 0.00% to 8.50%, 1/18/11 to 6/11/38, par and fair value of $418,796,149 and $440,001,769, respectively)	400,000		400,000,000
HSBC Securities (USA) Inc., 0.23%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $100,001,917, collateralized by non-U.S. government debt securities, 0.00% to 9.25%, 9/20/12 to 12/15/37, par and fair value of $95,037,000 and $102,893,979, respectively)	100,000		100,000,000
JPMorgan Securities Inc., 0.32%, 1/6/11 (Purchased on 12/31/10 to be repurchased at $50,002,667, collateralized by non-U.S. government debt securities, 5.05% to 6.61%, 6/15/15 to 7/15/20, par and fair value of $47,856,000 and $52,503,562, respectively)	50,000		50,000,000
JPMorgan Securities Inc., 0.50%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $320,013,333, collateralized by non-U.S. government debt securities, 0.00% to 9.88%, 4/25/11 to 6/1/56, par and fair value of $327,100,500 and $335,454,503, respectively)	320,000		320,000,000
Morgan Stanley & Co. Inc., 0.15%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $75,000,938, collateralized by U.S. Treasury obligations, 3.00% to 3.13%, 9/30/16 to 4/30/17, par and fair value of $73,617,300 and $76,500,093, respectively)	75,000		75,000,000
RBS Securities Inc., 0.50%, 1/3/11 (Purchased on 12/31/10 to be repurchased at $75,003,125, collateralized by non-U.S. government debt securities, 0.52% to 10.40%, 7/15/13 to 1/25/29, par and fair value of $141,610,000 and $82,501,871, respectively)	75,000		75,000,000
Total Repurchase Agreements—16.2%			3,239,000,000
Total Investments (Cost—$ 20,001,892,438*)—100.0 %			20,001,892,438
Other Assets in Excess of Liabilities —0.0%			5,664,207
Net Assets —100.0%		$	20,007,556,645

* Cost for federal income tax purposes.

(a) Issuer is a U.S. branch of a foreign domiciled bank.

(b) Variable rate security. Rate shown is as of report date.

Schedule of Investments (continued)

Money Market Master Portfolio

(Percentages shown are based on Net Assets)

(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(d) Rate shown reflects the discount rate at the time of purchase.

• Fair Value Measurements - Various inputs are used in determining the fair value of investments, which are as follows:

• Level 1 – price quotations in active markets/exchanges for identical assets and liabilities

• Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

• Level 3 – unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Master Portfolio’s own assumptions used in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. For information about the Master Portfolio’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Master Portfolio’s Notes to Financial Statements. The following table summarizes the inputs used as of December 31, 2010 in determining the fair valuation of the Master Portfolio’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Short-Term Securities1		—	$	20,001,892,438		—	$	20,001,892,438

¹ See above Schedule of Investments for values in each security type.

Statement of Assets and Liabilities

December 31, 2010	Money Market Master Portfolio
Assets
Investments at value - unaffiliated1	$	16,762,892,438
Repurchase agreements - unaffiliated2		3,239,000,000
Cash		317,883
Interest receivable		6,596,127
Total assets		20,008,806,448
Liabilities
Investment advisory fees payable		1,228,309
Professional fees payable		12,298
Trustees’ fees payable		9,196
Total liabilities		1,249,803
Net Assets	$	20,007,556,645
Net Assets Consist of
Investors’ capital	$	20,007,556,645
1        Investments at cost - unaffiliated	$	16,762,892,438
2        Repurchase agreements at cost - unaffiliated	$	3,239,000,000

See Notes to Financial Statements.

Statement of Operations

Year Ended December 31, 2010	Money Market Master Portfolio
Investment Income
Income	$	62,443,871
Expenses
Investment advisory		18,895,597
Professional		75,426
Independent Trustees		188,477
Total expenses		19,159,500
Less fees waived by advisor		(5,932,582	)
Total expenses after fees waived		13,226,918
Net investment income		49,216,953
Realized Gain
Net realized gain from investments		1,613,682
Net Increase In Net Assets Resulting from Operations	$	50,830,635

See Notes to Financial Statements.

Statements of Changes in Net Assets

	Money Market Master Portfolio
	Year Ended December 31, 2010			Year Ended December 31, 2009
Increase (Decrease) in Net Assets:
Operations
Net investment income	$	49,216,953		$	117,041,788
Net realized gain		1,613,682			780,894
Net increase in net assets resulting from operations		50,830,635			117,822,682
Capital Transactions
Proceeds from contributions		62,142,807,899			130,222,744,339
Value of withdrawals		(63,320,829,417	)		(131,694,780,219	)
Net decrease in net assets derived from capital transactions		(1,178,021,518	)		(1,472,035,880	)
Net Assets
Total decrease in net assets		(1,127,190,883	)		(1,354,213,198	)
Beginning of year		21,134,747,528			22,488,960,726
End of year	$	20,007,556,645		$	21,134,747,528

See Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

	Money Market Master Portfolio
	Year Ended December 31,
	2010			2009			2008			2007			2006
Total Investment Return
Total investment return		0.27	%		0.48	%		2.90	% 1		5.40	%		5.13	%
Ratios to Average Net Assets
Total expenses		0.10	%		0.10	%		0.10	%		0.10	%		0.10	%
Total expenses after fees waived		0.07	%		0.07	%		0.07	%		0.07	%		0.08	%
Net investment income		0.26	%		0.48	%		2.88	%		5.23	%		4.99	%
Supplemental Data
Net assets, end of year (000)	$	20,007,557		$	21,134,748		$	22,488,961		$	31,492,404		$	6,924,965

¹ For the year ended December 31, 2008, 0.01% of the total return consists of purchases of securities by BFA at prices in excess of the securities’ then current fair value. Excluding these items, total return would have been 2.89%.

See Notes to Financial Statements.

Notes to Financial Statements Money Market Master Portfolio

1. Organization and Significant Accounting Policies:

Master Investment Portfolio (“MIP”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a diversified, open-end management investment company. MIP is organized as a Delaware statutory trust. The financial statements and these accompanying notes relate only to Money Market Master Portfolio (the “Master Portfolio”). The Master Portfolio’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Master Portfolio:

Valuation: The Master Portfolio’s investments are valued under the amortized cost method which approximates current market value in accordance with Rule 2a-7 of the 1940 Act. Under this method, investments are valued at cost when purchased and thereafter, a constant proportionate accretion and amortization of any discounts or premiums are recorded until the maturity of the security. The Master Portfolio seeks to maintain its net asset value per share at $1.00, although there is no assurance that it will be able to do so on a continuing basis.

Repurchase Agreements: The Master Portfolio may invest in repurchase agreements. In a repurchase agreement, the Master Portfolio purchases a security from a counterparty who agrees to repurchase the same security at a mutually agreed upon date and price. On a daily basis, the counterparty is required to maintain collateral subject to the agreement and in value no less than the agreed repurchase amount. The agreements are conditioned upon the collateral being deposited under the Federal Reserve book entry system or held in a segregated account by the Master Portfolio’s custodian or designated sub-custodians under tri-party repurchase agreements. In the event the counterparty defaults and the fair value of the collateral declines, the Master Portfolio could experience losses, delays and costs in liquidating the collateral.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). For financial reporting purposes, contributions to and withdrawals from the Master Portfolio are accounted on a trade basis. Realized gains and losses on investment transactions are determined on the identified cost basis. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis.

Income Taxes: Money Market Master Portfolio is classified as a partnership for federal income tax purposes. As such, each investor in the Master Portfolio is treated as the owner of its proportionate share of net assets, income, expenses and realized and unrealized gains and losses of the Master Portfolio. Therefore, no federal income tax provision is required. It is intended that the Master Portfolio’s assets will be managed so an investor in the Master Portfolio can satisfy the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended.

Money Market Master Portfolio files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Master Portfolio’s US federal tax returns remains open for the four years ended December 31, 2010. The statutes of limitations on the Master Portfolio’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Master Portfolio are charged to the Master Portfolio.

2. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Master Portfolio for 1940 Act purposes, but BAC and Barclays are not.

MIP, on behalf of the Master Portfolio, entered into an Investment Advisory Agreement with BlackRock Fund Advisors (“BFA” or the “Manager”), the Master Portfolio’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Master Portfolio’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Master Portfolio. For such services, the Master Portfolio pays the Manager a monthly fee at an annual rate of 0.10% of the average daily value of the Master Portfolio’s net assets. The Manager has contractually agreed to waive 0.03% of its advisory fees through April 30, 2012. After giving effect to such contractual agreement, the advisory fee of 0.10% will be waived to 0.07%. The Manager has also voluntarily agreed to waive investment advisory fees to enable the Master Portfolio to maintain a minimum daily net investment income dividend. The Manager may discontinue the voluntary waiver at any time. For the year ended December 31, 2010, the amount included in fees waived by advisor in the Statement of Operations is $5,668,679.

The fees and expenses of the trustees of MIP who are not “interested persons” of MIP, as defined in the 1940 Act (“Independent Trustees”), counsel to the Independent Trustees and the MIP’s independent registered public accounting firm (together, the “independent expenses”) are paid directly by the Master Portfolio. The Manager has contractually agreed to cap the expenses of the Master Portfolio at the rate at which the Master Portfolio pays an advisory fee to the Manager by waiving the investment advisory fees paid by the Master Portfolio in an amount equal to the independent expenses, through April 30, 2012. The amounts waived are included in fees waived by advisor in the Statement of Operations. For the year ended December 31, 2010, such waiver amounted to $263,903.

MIP entered into an administration services arrangement with BlackRock Institutional Trust Company, N.A. (“BTC”), which has agreed to provide general administration services. BTC is not entitled to compensation for providing administration services to the Master Portfolio, for so long as BTC is entitled to compensation for providing administration services to corresponding feeder funds that invest substantially all of their assets in the Master Portfolio, or BTC (or an affiliate) receives investment advisory fees from the Master Portfolio. BTC has agreed to bear all costs of the Master Portfolio’s and MIP’s operations, other than brokerage expenses, advisory fees, 12b-1 distribution or service fees, independent expenses, litigation expenses, taxes or other extraordinary expenses. BTC may delegate certain of its administration duties to sub-administrators.

BTC has agreed to bear all costs of the Master Portfolio’s and MIP’s operations, other than brokerage expenses, advisory fees, 12b-1 distribution or service fees, independent expenses, litigation expenses, taxes or other extraordinary expenses.

Certain officers and/or trustees of MIP are officers and/or directors of BlackRock or its affiliates.

3. Concentration, Market and Credit Risk:

In the normal course of business, the Master Portfolio invests in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all of its obligations (issuer credit risk). The value of securities held by the Master Portfolio may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Master Portfolio; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Master Portfolio may be exposed to counterparty credit risk, or the risk that an entity with which the Master Portfolio has unsettled or open transactions may fail to or be unable to

perform on its commitments. The Master Portfolio manages counterparty risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Master Portfolio to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Master Portfolio’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Master Portfolio’s Statement of Assets and Liabilities, less any collateral held by the Master Portfolio.

Certain affiliates indirectly invest in the Master Portfolio through the SL Agency Shares of BlackRock Cash Funds. As of December 31, 2010, these affiliated investors represent a significant portion of the net assets of the Master Portfolio.

4. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Master Portfolio through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Interestholders and Board of Trustees of

Master Investment Portfolio:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Money Market Master Portfolio (the “Master Portfolio”), at December 31, 2010, 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 the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Master Portfolio’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

New York, New York

February 24, 2011

Officers and Trustees

Name, Address and Year of Birth	Position(s) Held with Trust/ MIP	Length of Time Served as a Trustee  2	Principal Occupation(s) During Past Five Years	Number of BlackRock – Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“ Portfolios”) Overseen	Public Directorships
Non-Interested Trustees 1
Ronald W. Forbes 55 East 52nd Street New York, NY 10055 1940	Co-Chair of the Board and Trustee	Since 2009	Professor Emeritus of Finance, School of Business, State University of New York at Albany since 2000.	36 RICs consisting of 95 Portfolios	None
Rodney D. Johnson 55 East 52nd Street New York, NY 10055 1941	Co-Chair of the Board and Trustee	Since 2009	President, Fairmount Capital Advisors, Inc. since 1987; Director, Fox Chase Cancer Center since 2004; Member of the Archdiocesan Investment Committee of the Archdiocese of Philadelphia since 2004; Director, The Committee of Seventy (civic) since 2006.	36 RICs consisting of 95 Portfolios	None
David O. Beim 55 East 52nd Street New York, NY 10055 1940	Trustee	Since 2009	Professor of Finance and Economics at the Columbia University Graduate School of Business since 1991; Trustee, Phillips Exeter Academy since 2002; Chairman, Wave Hill, Inc. (public garden and cultural center) from 1990 to 2006.	36 RICs consisting of 95 Portfolios	None
Dr. Matina S. Horner 55 East 52nd Street New York, NY 10055 1939	Trustee	Since 2009	Executive Vice President of Teachers Insurance and Annuity Association and College Retirement Equities Fund from 1989 to 2003.	36 RICs consisting of 95 Portfolios	NSTAR (electric and gas utility)
Herbert I. London 55 East 52nd Street New York, NY 10055 1939	Trustee and Member of the Audit Committee	Since 2009	Professor Emeritus, New York University since 2005; John M. Olin Professor of Humanities, New York University from 1993 to 2005 and Professor thereof from 1980 to 2005; President, Hudson Institute (policy research organization) since 1997 and Trustee thereof since 1980; Chairman of the Board of Trustees for Grantham University since 2006; Director, InnoCentive, Inc. (strategic solutions company) since 2005; Director, Cerego, LLC (software development and design) since 2005.	36 RICs consisting of 95 Portfolios	AIMS Worldwide, Inc. (marketing)

Cynthia A. Montgomery 55 East 52nd Street New York, NY 10055 1952	Trustee	Since 2009	Professor, Harvard Business School since 1989; Director, Harvard Business School Publishing since 2005; Director, McLean Hospital since 2005.	36 RICs consisting of 95 Portfolios	Newell Rubbermaid, Inc. (manufacturing)
Joseph P. Platt 55 East 52nd Street New York, NY 10055 1947	Trustee	Since 2009	Director, The West Penn Allegheny Health System (a not-for-profit health system) since 2008; Director, Jones and Brown (Canadian insurance broker) since 1998; General Partner, Thorn Partners, LP (private investment) since 1998; Partner, Amarna Corporation, LLC (private investment company) from 2002 to 2008.	36 RICs consisting of 95 Portfolios	Greenlight Capital Re, Ltd. (reinsurance company); WQED Multi-Media (public broadcasting not-for-profit)
Robert C. Robb, Jr. 55 East 52nd Street New York, NY 10055 1945	Trustee	Since 2009	Partner, Lewis, Eckert, Robb and Company (management and financial consulting firm) since 1981.	36 RICs consisting of 95 Portfolios	None
Toby Rosenblatt 55 East 52nd Street New York, NY 10055 1938	Trustee	Since 2009	President, Founders Investments Ltd. (private investments) since 1999; Director, College Access Foundation of California (philanthropic foundation) since 2009; Director, Forward Management, LLC since 2007; Director, The James Irvine Foundation (philanthropic foundation) from 1998 to 2008.	36 RICs consisting of 95 Portfolios	A.P. Pharma, Inc. (specialty pharmaceuticals)
Kenneth L. Urish 55 East 52nd Street New York, NY 10055 1951	Chair of the Audit Committee and Trustee	Since 2009	Managing Partner, Urish Popeck & Co., LLC (certified public accountants and consultants) since 1976; Chairman Elect of the Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants and Committee Member thereof since 2007; Member of External Advisory Board, The Pennsylvania State University Accounting Department since 2001; Trustee, The Holy Family Foundation from 2001 to 2010; President and Trustee, Pittsburgh Catholic Publishing Associates from 2003 to 2008; Director, Inter-Tel from 2006 to 2007.	36 RICs consisting of 95 Portfolios	None
Frederick W. Winter 55 East 52nd Street New York, NY 10055 1945	Trustee and Member of the Audit Committee	Since 2009	Professor and Dean Emeritus of the Joseph M. Katz School of Business, University of Pittsburgh since 2005 and Dean thereof from 1997 to 2005; Director, Alkon Corporation (pneumatics) since 1992; Director, Tippman Sports (recreation) since	36 RICs consisting of 95 Portfolios	None

2005; Director, Indotronix International (IT services) from 2004 to 2008.

¹ Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. The Board has approved one-year extensions in terms of Trustees who turn 72 prior to December 31, 2013.

² In connection with the acquisition of Barclays Global Investors by BlackRock, Inc. in December 2009, the Trustees were elected to the Trust’s/MIP’s Board. As a result, although the chart shows the Trustees as joining the Trust’s/MIP’s Board in 2009, each Independent Trustee first became a member of the boards of other funds advised by BlackRock Advisors, LLC or its affiliates as follows: David O. Beim, 1998; Ronald W. Forbes, 1977; Dr. Matina S. Horner, 2004; Rodney D. Johnson, 1995; Herbert I. London, 1987; Cynthia A. Montgomery, 1994; Joseph P. Platt, 1999; Robert C. Robb, Jr., 1999; Toby Rosenblatt, 2005; Kenneth L. Urish, 1999; and Frederick W. Winter, 1999.

Interested Trustees3
Richard S. Davis 55 East 52nd Street New York, NY 10055 1945	Trustee	Since 2009	Managing Director, BlackRock, Inc. since 2005; Chief Executive Officer, State Street Research & Management Company from 2000 to 2005; Chairman of the Board of Directors, State Street Research Mutual Funds from 2000 to 2005.	169 RICs consisting of 290 Portfolios	None
Henry Gabbay 55 East 52nd Street New York, NY 10055 1947	Trustee	Since 2009	Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.	169 RICs consisting of 290 Portfolios	None

³ Mr. Davis is an “interested person” as defined in the 1940 Act, of the Trust/MIP based on his position with BlackRock, Inc. and its affiliates. Mr. Gabbay is an “interested person” of the Trust/MIP based on his former positions with BlackRock, Inc. and its affiliates as well as his ownership of BlackRock, Inc. and The PNC Financial Services Group, Inc. securities. Trustees serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.

Name, Address and Year of Birth	Position(s) Held with the Trust/ MIP	Length of Time Served	Principal Occupation(s) During Past Five Years
Trust/MIP Officers 4
John M. Perlowski 55 East 52nd Street New York, NY 10055 1964	President and Chief Executive Officer	Since 2010	Managing Director of BlackRock, Inc. since 2009; Global head of BlackRock Fund Administration since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009.
Richard Hoerner, CFA 55 East 52nd Street New York, NY 10055 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2000; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2002; Member of the Cash Management Group Executive Committee since 2005.
Brendan Kyne 55 East 52nd Street New York, NY 10055 1977	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2008 to 2009; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009, Co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008.
Simon Mendelson 55 East 52nd Street New York, NY 10055 1964	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2005; Co-head of the Global Cash and Securities Lending Group since 2010; Chief Operating Officer and head of the Global Client Group for BlackRock’s Global Cash Management Business since 2007; Head of BlackRock’s Strategy and Development Group from 2005 to 2007; Partner of McKinsey & Co. from 1997 to 2005.
Brian Schmidt 55 East 52nd Street New York, NY 10055 1958	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2004; Various positions with U.S. Trust Company from 1991 to 2003 including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 to 2003.
Christopher Stavrakos, CFA 55 East 52nd Street New York, NY 10055 1959	Vice President	Since 2009	Managing Director of BlackRock, Inc. since 2006; Co-head of BlackRock’s Cash Management Portfolio Management Group since 2006; Senior Vice President, CIO, and Director of Liability Management for the Securities Lending Group at Mellon Bank from 1999 to 2006.
Neal J. Andrews 55 East 52nd Street New York, NY 10055 1966	Chief Financial Officer	Since 2009	Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.
Jay M. Fife 55 East 52nd Street New York, NY 10055 1970	Treasurer	Since 2009	Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Assistant Treasurer of the Merrill Lynch Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.
Brian Kindelan 55 East 52nd Street New York, NY 10055 1959	Chief Compliance Officer	Since 2009	Chief Compliance Officer of the BlackRock-advised funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005.
Ira Shapiro5 55 East 52nd Street New York, NY 10055 1963	Secretary	Since 2010	Managing Director of BlackRock, Inc. since 2009; Managing Director and Associate General Counsel of Barclays Global Investors from 2008 to 2009 and principal thereof from 2004 to 2008.

⁴ Officers of the Trust/MIP serve at the pleasure of the Board.

⁵ Ira P. Shapiro served as Vice President and Chief Legal Officer of the Trust/MIP from 2007 to 2009.

Further information about the Trust/MIP Officers and Trustees is available in the Trust/MIP Statement of Additional Information, which can be obtained without charge by calling (877) 244-1544.

Effective September 24,2010, John M. Perlowski became President and Chief Executive Officer of the Trust.

Effective November 16, 2010, Ira Shapiro became Secretary of the Trust.

Investment Advisor	Custodian	Transfer Agent	Accounting Agent	Distributor	Independent Registered
BlackRock Fund Advisors	State Street	State Street	State Street	SEI Investments	Public Accounting Firm
San Francisco, CA 94105	Bank and Trust	Bank and Trust	Bank and Trust	Distribution Co.	PricewaterhouseCoopers LLP
	Company	Company	Company	Oaks, PA 19456	New York, NY 10017
	Boston, MA 02101	Boston, MA 02101	Boston, MA 02101
				Legal Counsel	Address of the Funds
				Sidley Austin LLP  New York, NY	c/o the Distributor One Freedom Valley Drive
				10019	Oaks, PA 19456

Item 2. Code of Ethics.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer, or persons performing similar functions. The registrant has not made any substantive amendments to any provisions its code of ethics during the period covered by this report, nor were there any waivers granted from any provision of the code of ethics. A copy of the registrant’s code of ethics is filed with this Form N-CSR.

Item 3. Audit Committee Financial Expert.

The registrant’s Board of Trustees has determined that its one audit committee financial expert, Richard D. Kernan, is “independent” for purposes of this Item.

Item 4. Principal Accountant Fees and Services.

The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related

services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

The following table details the aggregate fees billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.

	Fiscal Year Ended December 31, 2009		Fiscal Year Ended December 31, 2010
Audit fees	$	15,507	$	15,507
Audit related fees
Tax fees		4,857		4,857
All other fees

The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services performed for the registrant, including services provided to any entity affiliated with the registrant. All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant. (If more than 50 percent of the accountant’s hours were spent to audit the registrant’s financial statements for the most recent fiscal year, state how many hours were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.)

The following table indicates the non-audit fees billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser (and any other controlling entity, etc. — not the adviser to the master portfolio) for the last two years. The audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser and its affiliates is compatible with maintaining the principal accountant’s independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.

None-audit related fees	Fiscal Year Ended December 31, 2009		Fiscal Year Ended December 31, 2010
Registrant	$	0	$	0
Registrant’s investment adviser and its affiliates

Item 5. Audit Committee of Listed Registrants.

Not applicable to the Registrant.

Item 6. Schedule of Investments.

See Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to the Registrant.

Item 8. Portfolio Managers of Closed-End Management Companies.

Not applicable to the Registrant.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to the Registrant.

Item 10. Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees.

Item 11. Controls and Procedures.

(a) The President and the Principal Financial Officer have concluded that, based on their evaluation as of a date within 90 days of the filing date of this report, the disclosure controls and procedures of the Registrant (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are reasonably designed to achieve the purposes described in the attached certification, Section 4(a).

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) (1) Code of Ethics for Senior Officers that is the subject of Item 2 is attached.

(a) (2) Section 302 Certification letters are attached as Exhibit 99.CERT hereto.

(b) Section 906 Certifications are attached as Exhibit 99.906.CERT hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PayPal Funds
By:	/s/    Dana E. Schmidt
	Dana E. Schmidt, President and
	Principal Executive Officer
Date:	February 24, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/    Dana E. Schmidt
	Dana E. Schmidt, President and
	Principal Executive Officer
Date:	February 24, 2011

By:	/s/    Omar J. Paz
	Omar J. Paz, Treasurer and Chief Financial Officer
Date:	February 24, 2011

EX-99.CODEETH

EXHIBIT 99.CODE ETH

PAYPAL ASSET MANAGEMENT, INC.

PAYPAL FUNDS

JOINT CODE OF ETHICS

(Effective Date: November, 2010)

I. INTRODUCTION

This Joint Code of Ethics (this “Code”) has been adopted by PayPal Asset Management, Inc. (the “Advisor”) and PayPal Funds (the “Trust”). This Code is intended to satisfy the legal requirements applicable to the Trust¹ and the Advisor pursuant to Rule 17j-1 (“Rule 17j-1”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and to the Advisor pursuant to Section 204A (“Section 204A”) and Rule 204A-1 (“Rule 204A-1”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). However, this Code is not intended to describe in detail all possible areas of potential liability under the Investment Company Act, the Advisers Act, or other federal securities laws, and persons covered by this Code are expected to familiarize themselves with the rules and regulations applicable to them and are advised to seek advice before engaging in any transactions covered by this Code, whether or not such person may reasonably recognize a potential conflict of interest or appearance of a conflict of interest.

II. GENERAL

(a) Legal Requirements

Rule 17j-1 requires the Trust and the Advisor to have a written code of ethics containing provisions reasonably necessary to prevent Access Persons (as defined below) from engaging in any prohibited conduct, including any act, practice or course of business that operates or would operate a fraud or deceit on the Trust. In addition, Section 204A requires the Advisor to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material, nonpublic information by the Adviser or any person associated with the Advisor, and Rule 204A-1 requires the Advisor to establish, maintain, and enforce a written code of ethics that at a minimum includes, among other things, a standard or standards of business conduct reflecting the Advisor’s fiduciary obligations. Further, under Rule 204A-1 and Rule 17j-1, Access Persons of the Advisor and the Trust have certain reporting obligations, and certain personal trading activities of such Access Persons are subject to pre-approval requirements.

(b) Basic Principles

This Code is based on the following basic principles: (1) all directors, officers, and employees of the Advisor (collectively, the “Advisor Employees”) and all trustees and officers of

¹ Rule 17j-1 under the Investment Company Act provides that a money market fund or a fund that does not invest in Covered Securities (as defined therein) is not required to adopt a written code of ethics. As such, any reference to the Trust in this Code excludes the PayPal Money Market Fund.

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the Trust (each, a “Trust Person” and collectively, the “Trust Personnel”) must comply with applicable securities laws; (2) the interests of the Advisor’s clients or the Trust come before those of any Advisor Employee or Trust Person; (3) the professional activities and personal investment activities of each of the Advisor Employees or the Trust Personnel must be consistent with this Code and must be conducted in a way that avoids any abuse of such person’s position; and (4) each such person should avoid any actual or potential conflict between the interests of the Advisor’s clients or the Trust and the interests of such person.

(c) Implementation

This Code shall be implemented by the Chief Compliance Officer(s) of the Advisor and the Trust or such other persons so designated (together, if not the same person, the “CCO”). In the event that this Code is applied to the CCO, the Chief Executive Officer of the Advisor (or if the Chief Executive Officer of the Advisor is the CCO, then another executive officer of the Advisor) shall act in all respects in the manner prescribed herein for the CCO with respect to such transactions, Report (as defined below), or other obligations of the CCO under this Code.

In implementing this Code, the CCO shall have, without limitation, the following responsibilities:

(i) maintain and update a list of all Access Persons, including Investment Personnel (as defined below), and Covered Service Provider Personnel (as defined below);

(ii) circulate a copy of this Code (as amended) to each Advisor Employee, Trust Person, Access Person (which includes Investment Personnel), together with an acknowledgement of receipt, which acknowledgment shall be signed and returned to the CCO;

(iii) ensure that the reporting requirements under Section IV of this Code are adhered to by all persons covered by this Code;

(iv) ensure that the review requirements under Section IV of this Code are performed in a prompt manner;

(v) review pre-approval requests and grant or deny such requests with respect to prohibited transactions in accordance with Section V of this Code;

(vi) collect, review, and retain quarterly gift reports submitted by Advisor Employees; and

(vii) collect, review, and retain annual certifications of compliance with this Code submitted by Access Persons.

III. DEFINITIONS

(a) “Access Person” means any:

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(i) director (or trustee), officer, or general partner of the Trust or the Advisor (or other persons occupying a similar status or performing similar functions);

(ii) employee of the Advisor with access to information regarding any of the Advisor’s client’s (including the Trust’s) purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any Covered Fund or any investment company whose investment advisor or principal underwriter controls, is controlled by, or is under common control with the Advisor;

(iii) employee of the Advisor involved in making securities recommendations to any of the Advisor’s clients (including the Trust), or has access to such nonpublic recommendations;

(iv) director (or trustee), officer, general partner, or employee of the Trust or the Advisor (or of any company in a control relationship to the Trust or the Advisor) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of securities by the Trust, or whose functions relate to the making of any recommendations with respect to such purchases or sales;

(v) natural person in a control relationship to the Trust or the Advisor who obtains information concerning recommendations made to the Trust with regard to the purchase or sale of securities by the Trust; and

(vi) other employee or consultant whom the CCO determines should be an Access Person.

For purposes of the foregoing clauses (iv) and (v), “control relationship” is interpreted in accordance with the Investment Company Act.

(b) “Approval Security” means a Covered Security that is a fixed-income security or bond and that (i) is currently, or has been at anytime in the last twelve (12) months, held in a Covered Fund; (ii) relates to any microfinance or other poverty alleviation organization or issuer; or (iii) is otherwise a Covered Security eligible for investment by a Covered Fund.

(c) “Covered Security” means a security as defined in Section 2(a)(36) of the Investment Company Act that is not a

(i) direct obligation of the Government of the United States;

(ii) banker’s acceptance, bank certificate of deposit, commercial paper and high quality short-term debt instrument, including a repurchase agreement; or

(iii) share issued by an open-end fund registered under the Investment Company Act other than a Covered Fund.

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(d) “Covered Fund” means any investment company, or series thereof, registered under the Investment Company Act or any other type of pooled or collective investment trust or vehicle to which the Advisor serves as an adviser or sub-adviser. A Covered Fund does not include a money market mutual fund subject to Rule 2a-7 under the Investment Company Act.

(e) “Personal Account” of a person means any securities account (other than an account for the benefit of any of the Advisor’s clients), whether or not with a broker or dealer, over which such person has direct or indirect control or influence or in which such person has any direct or indirect beneficial interest, including securities account of (i) such person; (ii) the spouse or domestic partner of such person; (iii) any family member of such person living in the same household as such person; (iv) any child under the age of 22 of such person, whether or not residing in the same household as such person; and (v) any trust, partnership, or other entity that such person, or a family member of such person, has control or influence over security transaction decisions or has any beneficial interest. A Personal Account includes a retirement account such as an IRA or 401(k) plan.

(f) “Beneficial ownership” shall be interpreted in the same manner as it would be in determining whether a person is the beneficial owner of a security for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder.

(g) “Purchase or sale” of a security (including a Covered Security) includes, among other things, the writing of an option to purchase or sell such security (or Covered Security).

(h) “Investment Personnel” or, singly, an “Investment Person” means (i) any employee of the Trust or the Advisor (or of any company in a control relationship to the Trust or the Advisor) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Trust; or (ii) any natural person who controls the Trust or the Advisor and who obtains information concerning recommendations made to the Trust regarding the purchase or sale of securities by the Trust before those purchases or sales are effected. For purposes of the foregoing, “control” or “control relationship” is interpreted in accordance with the Investment Company Act.

IV. REPORTING REQUIREMENTS

(a) Initial Holdings Reports and Annual Holdings Reports

Each Access Person (including Covered Service Provider Personnel) must report to the CCO, within 10 days after the person becomes an Access Person (the “Initial Holdings Report”), a form of which is attached hereto as Exhibit A, and thereafter annually within 10 days of such annual reporting compliance date as may be set by the CCO (the “Annual Holdings Report”), a form of which is attached hereto as Exhibit B, the following information, which information shall be current as of a date no more than 45 days prior to (1) with respect to an Initial Holdings Report, the date the person becomes an Access Person; or (2) with respect to an Annual Holdings Report, the date the Annual Holding Report is submitted:

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(i) The title, type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares, and principal amount of each Covered Security in the Access Person’s Personal Account;

(ii) The name of any broker, dealer or bank with whom the Access Person maintains a Personal Account;

(iii) The date that the Initial Holdings Report or the Annual Holdings Report, as applicable, is submitted by the Access Person; and

(iv) A certification that (1) all of the reporting person’s holdings have been disclosed in the Initial Holdings Report or Annual Holdings Report, as applicable; and (2) the reporting person was in compliance with this Code during the reporting period (for Annual Holdings Reports only).

(b) Quarterly Transaction Reports

Each Access Person (including Covered Service Provider Personnel) must report to the CCO, within 30 days after the end of each calendar quarter (the “Quarterly Transaction Report”), the following information covering all transactions during the quarter on the form attached hereto as Exhibit C:

(i) With respect to any transaction during the quarter in a Covered Security in which the Access Person had direct or indirect beneficial ownership:

(1) The date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, interest rate and maturity date, number of shares, and the principal amount of each Covered Security involved;

(2) The nature of the transaction (i.e., purchase, sale, or any other type of acquisition or disposition);

(3) The price of the Covered Security at which the transaction was effected;

(4) The name of the broker, dealer, or bank with or through which the transaction was effected;

(5) The date that the Quarterly Transaction Report is submitted by the Access Person; and

(6) A certification that (x) all transactions in Covered Securities have been disclosed in the Quarterly Transactions Report (including transactions associated with an automatic investment program or other automatic share purchase program); and (y) the reporting person was in compliance with this Code during the reporting period.

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(ii) With respect to any Personal Account established by the Access Person during the quarter:

(1) The name of the broker, dealer, or bank with whom the Access Person established the account;

(2) The date the account was established; and

(3) The date that the Quarterly Transaction Report is submitted by the Access Person.

For periods in which no reportable transactions were effected or no reportable accounts were established, the Quarterly Transaction Report shall contain a representation that no transaction or account subject to the reporting requirements was effected or established during the relevant time period.

Any information required by Sections IV(b)(i) – (ii) above may be provided in the form of duplicate account statements to the CCO so long as (i) the reporting person provides any required information that is not contained in the duplicate account statements on a Quarterly Transaction Report; and (ii) the duplicate account statements and, if appropriate, the Quarterly Transaction Report are accompanied by a certification that (x) all transactions required to be reported by this Code for the reporting period have been disclosed in the duplicate account statements and/or the Quarterly Transaction Report (including transactions associated with an automatic investment program or other automatic share purchase program); and (y) the reporting person was in compliance with this Code during the reporting period.

(c) Policies Relating to Reports

(i) Any Initial Holding Report, Annual Holdings Report, or Quarterly Transaction Report (each, a “Report”) may contain a statement that the Report shall not be construed as an admission by the person making such Report that he or she has any direct or indirect beneficial ownership in the security to which the Report relates.

(ii) Copies of broker trade confirmations or account statements containing the information required for a Quarterly Transaction Report may be submitted to the CCO in lieu of the portion of such Report requiring the listing of transactions or holdings, provided that the reporting person furnishes all other required information of such Report, including the required certification, if any.

(d) Exceptions to Reporting Requirements

(i) Accounts with no Control. Any person covered by this Code need not make any Report under this Section IV with respect to transaction effected for, and Covered Securities held in, any account over which such person has no direct or indirect influence or control.

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(ii) Independent Trustees. Any trustee of the Trust who is not an “interested person” of the Trust within the meaning of Section 2(a)(19) of the Investment Company Act (the “Independent Trustees”), and who would be required to make a Report solely by reason of being a trustee of the Trust, need not make

(1) an Initial Holdings Report or Annual Holdings Report under Section IV(a); or

(2) a Quarterly Transaction Report under Section IV(b), unless such trustee knew or, in the ordinary course of fulfilling his or her official duties as a trustee of the Trust, should have known that during the 15-day period immediately before or after the trustee’s transaction in a Covered Security, the Trust purchased or sold the Covered Security, or the Trust or the Advisor considered purchasing or selling the Covered Security.

(iii) Service Provider Personnel. The reporting obligations under this Code of shareholders, officers, and employees of the Trust’s distribution agent, Funds Distributors, LLC (the “Selling Agent”), and the Trust’s administrator, State Street Bank and Trust Company (the “Administrator”) (collectively, the “Service Provider Personnel”), are as follows:

(1) Any Service Provider Personnel who does not serve as an officer or trustee of the Trust is not considered to be affiliated with the Trust and has no reporting obligations under this Code.

(2) Any Service Provider Personnel who serves as an officer or trustee of the Trust and who is otherwise subject to another code of ethics that complies with Rule 17j-1 has no reporting obligations under this Code, provided that the Selling Agent or the Administrator (x) provides an annual written certification that such person has remained in material compliance with that code of ethics over the prior year; and (y) undertakes to promptly notify the CCO of any material violation of that code of ethics by such person.

(3) Any service Provider Personnel who serves as an officer or trustee of the Trust but who is not otherwise subject to another code of ethics that complies with Rule 17j-1 (“Covered Service Provider Personnel”) is subject to the reporting obligations under this Code.

(e) Reporting of Violations

Any person covered by this Code must report any violation of this Code to the CCO promptly upon becoming aware of such violation. Failure to report any violation of this Code may result in discipline, up to and including termination of employment.

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(f) Review

(i) The CCO shall compare all Reports of personal securities transactions with completed and contemplated portfolio transactions of each of the Advisor’s clients to determine whether a violation of this Code may have occurred. Before making any determination that a material violation has been committed by any person, the CCO shall give such person an opportunity to supply additional explanatory material.

(ii) No person shall review his or her own Report. If personal securities transactions of the CCO are under consideration, then the Chief Executive Officer of the Advisor (or if the Chief Executive Officer is the CCO, another executive officer of the Advisor) shall act in all respect in the manner prescribed herein for the CCO with respect to such transactions.

(iii) If the CCO determines that a material violation of this Code has or may have occurred, the CCO shall, following consultation with counsel to the Trust, submit his or her written determination, together with the relevant Report and additional explanatory material submitted pursuant to Section IV(f)(i), to the Chief Executive Officer of the Advisor (or if the Chief Executive Officer is the CCO, then another executive officer of the Advisor), who shall make an independent determination of whether a material violation has occurred. If the Chief Executive Officer (or such other executive officer) of the Advisor independently determines that a material violation has occurred, the CCO shall notify the Trust’s Board of Trustees and the Advisor’s Board of Directors about such material violation.

(iv) The CCO shall be responsible for maintaining a current list of all Access Persons and shall take steps to ensure that all reporting Access Persons have submitted the required Reports in accordance with this Section IV.

V. PRE-APPROVAL OF PERSONAL TRADING ACTIVITIES

(a) Investments in IPOs and Limited Offerings

No Investment Personnel may directly or indirectly acquire beneficial ownership in any securities in an Initial Public Offering or in a Limited Offering without submitting a Security Transaction Pre-Approval Form, a form of which is attached hereto as Exhibit D (the “Pre-Approval Form”), and obtaining the prior written approval of the CCO. In addition, any proposed sale or other disposition of a security obtained in an Initial Public Offering or Limited Offering must be approved in advance by the CCO. For purposes of this Section V(a), an “Initial Public Offering” means an offering of securities registered under the Securities Act of 1933, as amended (the “Securities Act”), the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, and a “Limited Offering” means an offering that is exempt from registration under the

8

Securities Act pursuant to Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act.

(b) Other Prohibited Transactions

(i) No Investment Person may purchase or sell, directly or indirectly, any Approval Security in which such Investment Person has any direct or indirect beneficial ownership, unless (1) the transaction is exempted under Section V(c); or (2) the Investment Person has submitted a Pre-Approval Form to the CCO and obtained the CCO’s prior written approval of the transaction.

(ii) Unless otherwise determined by the CCO, the CCO will not approve a transaction if at the time of the proposed purchase or sale, any of the following is true:

(1) the Approval Security is being considered for purchase or sale by a Covered Fund;

(2) the Approval Security is being purchased or sold by a Covered Fund;

(3) the Approval Security was purchased or sold by a Covered Fund within the most recent 15 days;

(4) the transaction is otherwise prohibited under any internal policies of the Advisor;

(5) the transaction involves any breach of any Advisor Employee’s fiduciary duty to any client of the Advisor;

(6) the transaction is otherwise inconsistent with applicable law; or

(7) the transaction creates an appearance of impropriety.

(iii) The Advisor and the Trust reserve the right to require any Investment Person to reverse, cancel, or freeze, at such person’s expense, any transaction or position in a specific security if the Advisor or the Trust believes the transaction or position violates this Code or appears improper. The Advisor or the Trust will keep all such information confidential except as required to enforce this Code or to participate in any investigation concerning violations of applicable law.

(c) Exempted Transactions

The prohibitions of Section V(b)(i) shall not apply to, and no pre-approval is required for, the following:

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(i) Purchases or sales effected in any account over which the Investment Person has no direct or indirect influence or control.

(ii) Purchases or sales effected in accounts of spouses, children, or other dependents for which the Investment Person has certified in writing, which certification has been accepted by the CCO in writing, that (1) the Investment Person does not influence the investment decisions for the account; and (2) person(s) making the investment decision for the account do not make such decision, in whole or in part, upon information the Investment Person has provided.

(iii) Purchases or sales effected in accounts of other members of the Investment Person’s immediate family that reside in the same household as the Investment Person for which the Investment Person has made a written certification rebutting the presumption of beneficial ownership, which certification has been accepted by the CCO in writing.

(iv) Purchases or sales that are non-volitional on the part of either the Investment Person or the Trust (e.g., receipt of gifts).

(v) Purchases that are part of an automatic dividend reinvestment plan.

(vi) Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its Approval Security, to the extent such rights were acquired from such issuer, and sales of such rights so acquired.

(vii) Purchases and sales of shares of the Covered Funds.

(viii) Purchases and sales of Approval Securities that are issued by states or their instrumentalities, commonly known as “municipal securities.”

(ix) Purchases and sales of Approval Securities by Covered Service Provider Personnel.

VI. INSIDER TRADING

(a) Policy Statement Regarding Insider Trading

(i) This insider trading policy contained herein (this “Insider Trading Policy”) applies to all Advisor Employees. Each Advisor Employee should review this Insider Trading Policy carefully. Any questions regarding insider trading should be directed to the CCO.

(ii) While the law concerning insider trading is evolving, it is generally understood that the law prohibits:

(1) Trading in a security by an insider while in possession of material, nonpublic information relating to that security or its issuer;

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(2) Trading in a security by a non-insider while in possession of material, nonpublic information relating to that security or its issuer, where the information was either disclosed to the non-insider in violation of an insider’s duty to keep it confidential or was misappropriated; and

(3) Communicating material, nonpublic information or recommending a securities transaction, while in possession of material, nonpublic information relating to a security or its issuer, to a non-insider who trades on such information.

(iii) The Advisor prohibits any Advisor Employees from (i) trading either personally or on behalf of others, including clients of the Advisor, based on material, nonpublic information; (ii) communicating material, nonpublic information to others in violation of the law; or (iii) knowingly assisting others in activities described in clauses (i) and (ii).

(iv) All information relating to this Advisor’s activities, including investment analyses, investment recommendations, and proposed and actual trades for the Advisor or its clients, is proprietary to the Advisor and must be kept confidential. Where such information is material, it should be treated as material, nonpublic information, and Advisor Employees must not trade on it for their Personal Accounts and, without the approval of the CCO, must not disclose it to anyone inside or outside the Advisor who does not need the information in the course of the Advisor’s business.

(b) Background

Federal and state laws prohibit Advisor Employees from purchasing or selling any publicly traded security on the basis of material, nonpublic information (i.e., insider trading). In addition, the Advisor and Advisor Employees have a fiduciary obligation to the Advisor’s clients to protect the confidentiality of all proprietary, sensitive, or other confidential information communicated to the Advisor or such persons by the Advisor’s clients. Finally, because the Advisor and Advisor Employees are fiduciaries to the Advisor’s clients, the Advisor and such persons must also maintain the highest ethical standards and refrain from engaging in activities that may create actual or apparent conflicts of interest between the interests of the Advisor or such persons and the interests of the Advisor’s clients. The Advisor has adopted this Insider Trading Policy to ensure that insider trading laws are not violated, that client confidences are maintained, and that conflicts of interest are avoided.

(c) Key Terms

(i) Insider Trading. Insider trading refers generally to the purchase or sale of a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information relating to the security.

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(ii) Insider. The concept of “insider” is broad. It includes officers, directors, employees, and controlling shareholders of a company or other entity. In addition, a person can be considered a “temporary insider” of a company or other entity if he or she enters into a confidential relationship in the conduct of the company’s or entity’s affairs and, as a result, is given access to information that is intended to be used solely for such company’s or entity’s purposes. A temporary insider can include, among others, an entity’s attorneys, accountants, consultants, investment bankers, commercial bankers, and the employees of such organizations.

(iii) Material Information. Generally, information is “material” if there is a substantial likelihood that the disclosure of such information would have been viewed by a reasonable investor as important in making a decision to buy, sell, or hold a security or where the fact is likely to have a significant effect on the market price of the security. Information that should be considered material includes, but is not limited to, changes in dividend policies, earnings estimates, changes in previously released earnings estimates, manufacturing problems, executive turnover, significant merger or acquisition proposals or agreements, major litigation, liquidity problems, significant new products, services, or contracts, and the cancellation or loss of significant orders, products, services, or contracts. Material information can be positive or negative and can relate to virtually any aspect of a company’s business or to any type of security, debt or equity. Furthermore, material information does not necessarily relate to a company’s business; it can be significant market information. For example, a reporter for The Wall Street Journal was found criminally liable for disclosing to others the dates on which reports on various companies would appear in The Wall Street Journal and whether those reports would be favorable. Any questions concerning whether certain information is material should be referred to the CCO, who may contact the Advisor’s legal counsel before determining how to proceed. WHEN IN DOUBT, ALWAYS ASSUME THE INFORMATION IS MATERIAL.

(iv) Nonpublic Information. Information is “nonpublic” if it has not been previously disclosed to the public and is otherwise not available to the general public. In order for information to be considered public, it must be widely disseminated in a manner making it generally available to investors through such media as Dow Jones, Reuters Economic Services, The Wall Street Journal, Associated Press, or United Press International. The circulation of rumors, even if accurate and reported in the media, does not constitute effective public dissemination. In addition, even after a public announcement, a reasonable period of time must lapse in order for the market to react to the information. Generally, one should allow at least two trading days (whereby a trading day is any day that the New York Stock Exchange is open for trading) following publication as a reasonable waiting period before such information is deemed to be public.

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Any questions concerning whether certain information has become public should be referred to the CCO, who may contact the Advisor’s legal counsel before determining how to proceed.

(d) Legal Theories of Insider Trading

(i) Classical Theory. Under the classical theory, an insider may be liable for insider trading if the insider trades in a company’s securities on the basis of material, nonpublic information in breach of a fiduciary duty owed to the company’s shareholders.

(ii) Misappropriation Theory. Under the misappropriation theory, a person other than an insider can be found liable for insider trading if such person trades in a company’s securities on the basis of material, nonpublic information that was misappropriated from its source. Liability is premised on deception of those who entrusted the trader with access to confidential information. The trader must either abstain from trading or disclose his or her intention to trade to the source of the confidential information.

(iii) Tipper/Tippee Theory. Under the tipper/tippee theory, a tippee (the person who receives material, nonpublic information) may be found liable for insider trading if the tippee trades on material, nonpublic information received from a tipper (the person who discloses material, nonpublic information), who personally benefitted from disclosing the information and who the tippee knew or should have known disclosed the information in breach of a fiduciary duty. The tipper also has liability for the tippee’s trading. IF SOMEONE TIPS INFORMATION TO YOU, DO NOT DISCLOSE THE INFORMATION TO ANYONE EXCEPT AS REQUIRED BY THIS CODE. YOU AND THE ADVISOR MAY BE LIABLE IF ANYONE TRADES ON MATERIAL, NONPUBLIC INFORMATION RECEIVED FROM OR THROUGH YOU.

(e) Penalties for Insider Trading

(i) Civil Penalties

(1) Securities and Exchange Commission (the “SEC”) administrative sanctions through the administrative proceeding process, including cease and desist orders, suspensions or revocations of SEC registrations, bars from association with the securities industry, and bars from service as a corporate officer or director.

(2) Injunctions, which are court orders that prohibit violations of law under the threat of fines and imprisonment.

(3) Disgorgement of any illegal gains or losses avoided.

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(4) Civil fines of (x) up to three times the amount of the profit gained or loss avoided as a result of the unlawful purchase, sale, or communication on the person who committed the violation; or (y) up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided as a result of the violation on the employer or other controlling person(s).

(ii) Criminal Penalties

(1) Criminal fines of up to $5,000,000 for an individual or up to $25,000,000 for an entity.

(2) Imprisonment of up to 20 years for an individual.

(iii) Advisor-Imposed Sanctions. Any violations of this Insider Trading Policy may result in serious sanctions by the Advisor, including dismissal for cause, suspension without pay, loss of pay or bonus, loss of severance benefits, demotion or other sanctions, whether or not any such violation also constitutes a violation of law. Furthermore, the Advisor may initiate or cooperate in civil or criminal proceedings against any Advisor Employee relating to or arising from any such violation.

Any SEC investigation, even one that does not result in criminal or civil prosecution, can irreparably damage the Advisor’s reputation and an individual’s career. It is essential to avoid even the appearance of impropriety.

(f) Procedures to Implement the Advisor’s Policies Against Insider Trading

The following procedures have been established to aid Advisor Employees in avoiding insider trading and to aid the Advisor in preventing and detecting insider trading. Every Advisor Employee must follow these procedures. Any questions about these procedures should be directed to the CCO.

(i) Identification of Material Nonpublic Information

(1) An Advisor Employee must determine whether he or she is in possession of material, nonpublic information before making any trades.

(2) If an Advisor Employee believes that he or she may have come into possession of material, nonpublic information with respect to certain securities, such Advisor Employee should:

a. Immediately cease all trading in such securities, whether on behalf of the Advisor and its clients or in Personal Accounts;

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b. Immediately cease recommending (or making any comments that could be interpreted as recommending) any transaction in such securities to any other person, including clients of the Advisor, other Advisor Employees, and business associates, friends, or relatives of such Advisor Employee;

c. Not discuss the material, nonpublic information with anyone except as required by this Insider Trading Policy; and

d. Immediately inform the CCO.

(ii) Restricted Access to Material, Nonpublic Information

(1) Access to material, nonpublic information is limited to Advisor Employees on a need-to-know basis.

(2) Advisor Employees who are in a position to handle and analyze proprietary information concerning securities, whether or not it is known to contain material, nonpublic information, should take all steps necessary to protect those sensitive documents containing such proprietary information, including:

a. not removing such documents from the offices of the Advisor, making only necessary copies and distribution within the Advisor, keeping such documents off desk tops and conference tables when not in use, and shredding such documents on disposal;

b. restricting access to areas likely to contain confidential documents or material, non-public information, locking file cabinets and doors, and restricting movement of non-employees on Advisor’s premises;

c. implementing computer access security measures, such as passwords on files or limited access to terminals through which sensitive information can be obtained;

d. disguising the identity of the securities contained in electronic, mail, or facsimile communications among Advisor Employees and/or persons outside the Advisor where the documents may pass through the hands of persons with no need to know (e.g., faxes, email, letters, etc.); and

e. avoiding discussion of material, non-public information in places where it could be overheard by others such as in

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elevators, restrooms, hallways, restaurants, airplanes, or taxicabs.

(iii) Inquires from Third Parties. Inquiries from third parties, such as industry analysts or members of the media, should be directed to the CCO, who may contact the Advisor’s legal counsel before determining how to proceed.

(iv) Employees Serving on Boards of Directors

(1) No Advisor Employee may serve as a director of a publicly-held company without prior approval by the CCO.

(2) During those periods in which (x) an Advisor Employee serves as a director of a company in which the Advisor has a securities position to monitor, preserve, protect, or enhance the value of the position for the benefit of Advisor’s clients or for other similar purposes; or (y) family members of an Advisor Employee serve as directors, officers, or consultants for companies in which the Advisor has a securities position:

a. the Advisor will take additional precautions to ensure that inadvertent violations do not occur and to avoid the appearance of impropriety;

b. no Advisor Employee is permitted to trade in such securities, whether for Advisor client accounts or Personal Account, without the CCO’s advance approval; and

c. no Advisor Employee is permitted to trade in such securities, whether for Advisor client accounts or Personal Account, during any “black-out” period or similar period of trading restrictions established by such company that is applicable to its directors, officers, or consultants.

VII. OTHER RESTRICTIONS

(a) Client Priority. Advisor Employees may not execute any transactions for their Personal Accounts if such transactions conflict with the interests of any Advisor client and must give priority on all purchases and sales of securities to Advisor’s clients prior to executing transactions for their Personal Accounts. Advisor clients must always receive the better price in comparison to any Advisor Employees on same day transactions, and it is the Advisor’s policy to prohibit any Advisor Employee from:

(i) contemporaneously purchasing the same securities personally without making an equitable allocation of the securities to an Advisor client first;

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(ii) knowingly purchasing or selling securities, directly or indirectly, in such a way as to injure an Advisor client’s interests;

(iii) using knowledge of securities transactions of an Advisor client to profit personally, directly or indirectly; or

(iv) disclosing nonpublic information regarding contemplated, proposed, or current purchases or sales of securities by or for an Advisor client account, except to the extent necessary to effectuate such transactions.

(b) Front-Running. Without the prior written approval of the CCO, no Advisor Employee may execute a transaction in a security for his or her Personal Account if such Advisor Employee is aware or should have been aware that an order for an Advisor client account for the same security to be executed the same way remains unexecuted or that the Advisor is considering same way trades in the same security for an Advisor client account. Transactions in options, derivatives, or convertible instruments for an Advisor Employee’s Personal Account that are related to a transaction in an underlying security for an Advisor client account (i.e., inter-market front running) are subject to the same restrictions.

(c) Manipulative Practices. Section 9(a)(2) of the Exchange Act makes it unlawful for any person, acting alone or with others, to effect a series of transactions in any security registered on a national securities exchange creating actual or apparent active trading in such security, or raising or depressing the price of the security, for the purpose of inducing the purchase or sale of such security by others. Accordingly, no Advisor Employee should, alone or with others, for either an Advisor client account or a Personal Account:

(i) engage in trading or apparent trading activity for the purpose of inducing purchases or sales by others; or

(ii) engage in trading or apparent trading activity for the purpose of causing the price of a security to move up or down, which in turn could allow such Advisor Employee to take advantage of such price movement by buying or selling at such “artificial” price level.

(d) Misappropriation of Advisor Client Funds. Misappropriation, stealing, or conversion of Advisor client funds constitutes serious fraudulent and criminal acts and therefore is strictly prohibited. Examples of such acts include (1) unauthorized wire or other transfers in and out of Advisor client accounts; (2) borrowing Advisor client funds; (3) converting Advisor client checks that are intended to be debited to existing accounts; and (4) taking liquidation values of securities belonging to Advisor clients.

(e) Gift. The receipt or giving of any gift of more than nominal value (i.e., $250/year) from any person or entity that does business with or on behalf of any Advisor client is prohibited, except as otherwise permitted by the CCO. To comply with this provision, all Advisor Employees on a quarterly basis should submit a Quarterly Gift Report, a form of which is attached hereto as Exhibit E, to the CCO.

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(f) Duties of Confidentiality. All information relating to Advisor clients’ portfolios and activities and proposed recommendations is strictly confidential. Consideration of a particular purchase or sale for an Advisor client account may not be disclosed, except to authorized persons.

VIII.  RECORDKEEPING REQUIREMENTS

(a) The Trust and the Advisor must, at its respective principal place of business, maintain records in the manner and to the extent set out in this Section VIII, and must make these records available to the SEC or any representative of the SEC at any time and from time to time for reasonable periodic, special, or other examination:

(i) A copy of this Code, as amended, that is in effect, or any code of ethics that at any time within the past five years was in effect, must be maintained in an easily accessible place;

(ii) A record of any violation of this Code, and of any action taken as a result of the violation, must be maintained in an easily accessible place for at least five years after the end of the fiscal year in which the violation occurs;

(iii) A copy of each Report made by an Access Person as required by this Code, including any information provided in lieu of the Reports under Section VI(c)(ii) of this Code, must be maintained for at least five years after the end of the fiscal year in which the Report is made or the information is provided, the first two years in an easily accessible place;

(iv) A record of all persons, currently or within the past five years, who are or were required to make Reports under Section VI of this Code, or who are or were responsible for reviewing these Reports, must be maintained in an easily accessible place; and

(v) A copy of each report required by Section (c)(2)(ii) of Rule 17j-1² must be maintained for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place.

(b) The Trust and the Advisor must maintain a record of any decision, and the reasons supporting the decision, to approve the acquisition by Access Persons of securities under Section V(a) of this Code, for at least five years after the end of the fiscal year in which the approval is granted.

² Section (c)(2)(ii) of Rule 17j-1 requires, subject to Section (c)(3) of Rule 17j-1 (which provides exceptions to certain principal underwriters), the Trust, the Advisor, and the Selling Agent to furnish to the Board of Trustees of the Trust, and the Board of Trustees of the Trust to consider, at lest annually, a written report that (a) describes any issues arising under this Code since the last report to the Board of Trustees of the Trust, including, but not limited to, information about material violations of this Code and sanctions imposed in response to the material violations; and (b) certifies that the Trust, the Advisor, and the Selling Agent, as applicable, has adopted procedures reasonably necessary to prevent Access Persons from violating this Code.

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IX. ANNUAL CERTIFICATION AND ACKNOWLEDGEMENT

(a) Annual Certification. Annually each Access Person must certify that he or she has read and understands this Code, that he or she recognizes that this Code applies to him or her, and that he or she has complied with all of the rules and requirements of this Code that apply to him or her. The CCO is charged with responsibility for the collection, review, and retention of the certifications submitted by Access Persons (a form of which is attached hereto as Exhibit B).

(b) Acknowledgement

I have received and reviewed this Joint Code of Ethics.

I fully understand and hereby agree to comply with this Joint Code of Ethics.

Date: ______________________________ Signature: 

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EXHIBIT A

INITIAL HOLDINGS REPORT

As of                     , 20    , I had a direct or indirect beneficial ownership in the following Covered Securities* in my Personal Account*:

Title of
Security Type of
Security Ticker Symbol
/ CUSIP # Number of
Shares Principal
Amount ($) Name of Broker,
Dealer, or Bank

* As defined in the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds. Note: Covered Securities include Covered Funds.

Certification

I certify that all of my holdings required to be reported on this Initial Holdings Report under the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds have been disclosed in this Initial Holdings Report.

Signature: 

Date: 

Print Name: 

A-1

EXHIBIT B

ANNUAL HOLDINGS REPORT

AND

JOINT CODE OF ETHICS ANNUAL CERTIFICATION

As of                     , 20__, I had a direct or indirect beneficial ownership in the following Covered Securities* in my Personal Account*:

Title of
Security Type of
Security Ticker Symbol
/ CUSIP # Number of
Shares Principal
Amount ($) Name of Broker,
Dealer, or Bank

* As defined in the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds. Note: Covered Securities include Covered Funds.

I certify that:

1. I have received and read the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds, and I understand the contents thereof.

2. Since the time I became subject to the Joint Code of Ethics, I have complied with all policies and procedures contained in the code.

3. I agree to continue to comply fully with the Joint Code of Ethics for as long as I am subject to the code.

4. All of my holdings required to be reported on this Annual Holdings Report under the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds have been disclosed in this Annual Holdings Report.

Signature: 

Date: 

Print Name: 

B-1

EXHIBIT C

QUARTERLY TRANSACTION REPORT

PayPal Asset Management, Inc.

PayPal Funds

Quarterly Transaction Report

Name:	Reporting Period:
Title:

(1) Transactions in Covered Securities (includes Shares of Covered Funds)

Trade
Date Nature of
Transaction Title of
Security Ticker
Symbol /
CUSIP # Purchase
Price per
Share ($) Sale Price
per Share ($) Number
of Shares Total
Transaction
Amount ($) Name of Broker,
Dealer, or Bank

(2) Account Established by the Access Person

Name of Broker, Dealer, or Bank Date Account was Established

¨ No transaction subject to the reporting requirements of the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds was effected during this reporting period.

¨ No account subject to the reporting requirements of the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds was established during this reporting period.

Completed by (print):	Reviewed by (print):
Signature:	Signature:
Date:	Date:

C-1

Certification

I certify that:

1. All transactions required to be reported for this reporting period under the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds have been disclosed in this Quarterly Transactions Report (including transactions associated with an automatic investment program or other automatic share purchase program).

2. During this reporting period, I was in compliance with the Joint Code of Ethics.

Signature: 

Date: 

Print Name: 

C-2

EXHIBIT D

SECURITY TRANSACTION PRE-APPROVAL FORM

To be Completed by Person Seeking Pre-Approval

Name:
Date of Intended Purchase or Sale:
Security Name:
Number of Shares:
Purchase or Sale:	¨   Purchase	¨   Sale
Purchase or Sale within the Past 30 Days:	¨   Yes	¨   No
Initial Public Offering* or a Limited Offering*:	¨   Initial Public Offering	¨   Limited Offering
	¨   Neither
Signature:
Date:

To be Completed by the CCO

Is this security a Covered Security*?	¨   Yes	¨   No
Is this security being considered for purchase or sale by a Covered Fund*?	¨   Yes	¨   No
Is this security being purchased or sold by a Covered Fund?	¨   Yes	¨   No
Was this security purchased or sold by a Covered Fund within the most recent 15 days?	¨   Yes	¨   No
Is this transaction otherwise prohibited under any internal policies of the Advisor*?	¨   Yes	¨   No
Does the transaction breach any fiduciary duty of any Advisor Employee* due to any Advisor client?	¨   Yes	¨   No
Is the transaction inconsistent with applicable law?	¨   Yes	¨   No
Does the transaction create an appearance of impropriety?	¨   Yes	¨   No
Is this transaction approved?	¨   Yes	¨   No
If denied, please list reason here:

Signature:

Date:

* As defined in the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds.

D-1

EXHIBIT E

QUARTERLY GIFT REPORT

For the quarter ended:                                              

I certify that for the quarter indicated above:

1. I have not given or received any gift of more than nominal value (i.e., $250/year) from any person or entity that does business with or on behalf of any Advisor* client, except as otherwise permitted by CCO*.

2. I have given or received the following gifts:

Recipient Giver Gift
Description Approx.
Value Date
Given or
Received

* As defined in the Joint Code of Ethics of PayPal Asset Management, Inc. and PayPal Funds.

Signature: 

Date: 

Print Name: 

E-1

EX-99.CERT

Exhibit 99.CERT

N-CSRS Exhibit for Item 12(a)(2): SECTION 302 CERTIFICATIONS

I, Dana E. Schmidt, certify that:

1. I have reviewed this report on Form N-CSR of PayPal Funds with respect to the PayPal Money Market Fund;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:	February 24, 2011	/s/    Dana E. Schmidt	President and Principal Executive Officer
		[Signature]	[Title]

Exhibit 99.CERT

N-CSRS Exhibit for Item 12(a)(2): SECTION 302 CERTIFICATIONS

I, Omar J. Paz, certify that:

1. I have reviewed this report on Form N-CSR of PayPal Funds with respect to the PayPal Money Market Fund;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:	February 24, 2011	/s/     Omar J. Paz	Treasurer and Chief Financial Officer
		[Signature]	[Title]

EX-99.906.CERT

Exhibit 99.906.CERT

N-CSRS Exhibit for Item 12(b): CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Certified Shareholder Report of the PayPal Funds (the “Trust”) on Form N-CSR for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), the undersigned hereby certifies to the best of her knowledge that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

Date:	February 24, 2011	/s/    Dana E. Schmidt	President and Principal Executive Officer
		[Signature]	[Title]

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the “Commission”) or its staff upon request.

This certification is being furnished to the Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR with the Commission.

Exhibit 99.906.CERT

N-CSRS Exhibit for Item 12(b): CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Certified Shareholder Report of the PayPal Funds (the “Trust”) on Form N-CSR for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (“the Report”), the undersigned hereby certifies to the best of his knowledge that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.

Date:	February 24, 2011	/s/     Omar J. Paz	Treasurer and Chief Financial Officer
		[Signature]	[Title]

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the “Commission”) or its staff upon request.

This certification is being furnished to the Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR with the Commission.