N-Q 1 dnq.htm FORM N-Q Form N-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF

REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-09381

PayPal Funds

(Exact name of registrant as specified in charter)

2211 North First Street San Jose, CA 95131

(Address of principal executive offices)

Omar J. Paz

2211 North First Street, San Jose, CA 95131

(Name and address of agent for service)

Registrant’s telephone number, including area code: 408-967-7000

Date of fiscal year end: December 31, 2010

Date of reporting period: September 30, 2010

Item 1. Schedule of Investments.

PayPal Money Market Fund of PayPal Funds

 

Schedule of Investments September 30, 2010 (Unaudited)

    (Percentages shown are based on Net  Assets)

Mutual Fund

    Value
  

Money Market Master Portfolio of Master Investment Portfolio

    $ 486,999,587   
    

Total Investments (Cost—$486,999,587)—100.0%

      486,999,587   

Liabilities in Excess of Other Assets—(0.0)%

      (14,081 ) 
    

Net Assets—100.0%

    $ 486,985,506   
    

PayPal Money Market Fund (the “Money Market Fund”) seeks to achieve its investment objective by investing all of its assets in Money Market Master Portfolio (the “Master Portfolio”), which has the same investment objective and strategies as the Money Market Fund. As of September 30, 2010 the value of the investment and the percentage owned by the Money Market Fund of the Master Portfolio was $486,999,587 and 2.8%, respectively.

The Money Market Fund records its investment in the Master Portfolio at fair value. The Money Market Fund’s investment in the Master Portfolio is valued pursuant to the pricing policy and procedures approved by the Board of Trustees of the Master Portfolio.

 

  •  

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 Fund’s own assumptions used in determining the fair value of investments)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to the Fund’s most recent financial statements as contained in its semi-annual report.

As of September 30, 2010, the Money Market Fund’s investment in the Master Portfolio was classified as Level 2.

Schedule of Investments September 30, 2010 (Unaudited)    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:

                  

0.35%, 12/13/10 (b)

    $ 77,600       $ 77,600,000   

0.56%, 1/28/11 (b)

      175,000         175,000,000   

Banco Santander, New York, 0.85%, 11/01/10

      250,000         250,000,000   

Bank of Nova Scotia, Houston, 0.39%, 10/15/10

      100,000         99,999,806   

Bank of Tokyo-Mitsubishi UFJ Ltd., New York:

                  

0.46%, 10/18/10

      500,000         500,000,000   

0.30%, 11/12/10

      250,000         250,000,000   

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:

                  

0.42%, 11/03/10

      225,000         225,000,000   

0.38%, 12/01/10

      175,000         175,000,000   

Canadian Imperial Bank of Commerce, New York, 0.42%, 1/31/11 (b)

      432,000         432,000,000   

Credit Agricole Corporate and Investment Bank, New York, 0.59%, 10/12/10 (b)

      270,000         270,000,000   

Dexia Credit Local, New York, 0.46%, 6/29/11 (b)

      157,000         157,000,000   

DNB NOR Bank ASA, New York, 0.31%, 3/31/11

      11,000         11,000,000   

Intesa Sanpaolo, 0.31%, 10/15/10 (b)

      300,000         299,996,436   

KBC Bank N.V., New York, 0.62%, 11/22/10

      285,340         285,340,000   

Lloyds TSB Bank Plc, New York:

                  

0.49%, 10/26/10

      450,000         450,000,000   

0.62%, 2/11/11

      270,000         270,000,000   

0.76%, 5/06/11 (b)

      75,000         75,000,000   

Nordea Bank Finland Plc, New York, 0.39%, 10/14/10

      600,000         600,000,000   

Rabobank Nederland N.V., New York:

                  

0.26%, 1/10/11 (b)

      110,000         110,000,000   

0.26%, 1/13/11 (b)

      202,000         202,000,000   

0.57%, 1/18/11

      185,000         185,000,000   

Royal Bank of Canada, New York:

                  

0.26%, 10/01/10 (b)

      125,000         125,000,000   

0.26%, 1/21/11 (b)

      116,015         116,015,000   

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   

Societe Generale, New York:

                  

0.54%, 2/03/11 (b)

      130,000         130,000,000   

0.40%, 2/14/11

      200,000         200,000,000   

1.33%, 5/05/11 (b)

      110,000         110,000,000   

Sumitomo Mitsui Banking Corp., New York, 0.32%, 11/09/10

      250,000         250,000,000   

Unicredit Bank A.G., 0.62%, 12/23/10

      36,000         36,000,000   

Unicredit SpA, New York:

                  

0.53%, 11/10/10

      300,000         300,000,000   

0.68%, 11/10/10

      270,000         270,000,000   
             

Total Certificates of Deposit — 42.3%

               7,396,951,242   
             

Commercial Paper

                  

Abbey National North America LLC, 0.40%, 12/01/10 (c)

      350,000         349,762,778   

Banco Bilbao Vizcaya Argentaria S.A., London:

                  

0.45%, 10/12/10 (c)(d)

      185,610         185,584,479   

0.50%, 11/10/10 (c)(d)

      68,300         68,262,056   

0.37%, 11/18/10 (c)(d)

      200,000         199,901,333   

BNZ International Funding Ltd., 0.34%, 2/01/11 (b)(d)

      250,000         250,008,471   

BPCE S.A., 0.54%, 3/23/11 (c)(d)

      121,000         120,686,005   

Credit Agricole North America Inc., 0.57%, 2/10/11 (c)

      270,000         269,435,700   

Dexia Delaware LLC, 0.35%, 10/04/10 (c)

      368,680         368,669,247   

Grampian Funding LLC, 0.36%, 11/19/10 (c)(d)

      45,000         44,977,950   

Schedule of Investments (continued)    Money Market Master Portfolio
     (Percentages shown are based on Net Assets)

 

Intesa Funding LLC, 0.36%, 12/01/10 (c)

      300,645         300,464,154   

KBC Financial Products International Ltd.:

                  

0.50%, 10/04/10 (c)(d)

      33,100         33,098,621   

0.50%, 10/08/10 (c)(d)

      49,000         48,995,236   

Lloyds TSB Bank Plc, 0.45%, 3/25/11 (c)

      55,000         54,879,687   

Natexis Banques Populaires US Finance Co. LLC:

                  

0.14%, 10/01/10 (c)

      40,000         40,000,000   

0.30%, 11/01/10 (c)

      200,000         199,949,194   

NRW.BANK, 0.39%, 3/15/11 (c)

      105,000         104,812,312   

Royal Bank of Scotland Group Plc, 0.47%, 10/28/10 (c)(d)

      134,500         134,452,589   

Royal Park Investment Funding Corp., 0.53%, 10/08/10 (c)(d)

      150,000         149,984,542   

Santander Central Hispano Finance Delaware, Inc., 0.49%, 11/18/10 (c)

      180,000         179,882,400   

Unicredit Delaware, Inc., 0.65%, 11/16/10 (c)(d)

      50,000         49,958,472   
             

Total Commercial Paper — 18.0%

               3,153,765,226   
             

Time Deposits

                  

Citibank NA, New York, 0.23%, 10/01/10

      100,000         100,000,000   

Natixis, 0.22%, 10/01/10

      500,000         500,000,000   

US Bank NA, 0.10%, 10/01/10

      319,000         319,000,000   
             

Total Time Deposits — 5.3%

               919,000,000   
             

U.S. Government Sponsored Agency Obligations

                  

Fannie Mae Discount Notes, 0.21%, 2/23/11 (c)

      248,436         248,230,868   

Federal Farm Credit Bank Variable Rate Notes:

                  

0.25%, 5/26/11 (b)

      62,225         62,220,893   

0.24%, 4/27/12 (b)

      144,460         144,425,277   

0.38%, 7/13/12 (b)

      58,020         58,009,537   

Federal Home Loan Bank, 0.75%, 1/18/11

      35,030         35,065,057   

Federal Home Loan Bank Variable Rate Notes, 0.47%, 10/06/11 (b)

      187,000         186,922,957   

Freddie Mac Discount Notes:

                  

0.17%, 11/16/10 (c)

      134,000         133,970,892   

0.21%, 2/22/11 (c)

      149,200         149,077,656   

0.25%, 6/02/11 (c)

      87,485         87,336,762   

0.26%, 6/07/11 (c)

      153,706         153,429,585   

0.26%, 6/21/11 (c)

      200,000         199,620,111   

Freddie Mac Variable Rate Notes:

                  

0.18%, 11/09/11 (b)

      730,075         729,501,363   

0.19%, 1/13/12 (b)

      652,995         652,486,114   

0.22%, 2/16/12 (b)

      110,000         109,938,910   
             

Total U.S. Government Sponsored Agency Obligations — 16.9%

               2,950,235,982   
             

U.S. Treasury Obligations(c)

                  

U.S. Treasury Bill:

                  

0.18%, 3/03/11

      200,000         199,847,000   

0.27%, 9/22/11

      175,000         174,541,403   
             

Total U.S. Treasury Obligations — 2.1%

               374,388,403   
             

Repurchase Agreements

                  

Banc of America Securities LLC, 0.35%, dated 9/30/10, due 10/1/10, maturity value $228,002,217 (collateralized by non-U.S. government debt securities, 0.00%, 1/3/11 to 4/1/11, par and fair value of $232,877,767 and $232,560,001, respectively)

      228,000         228,000,000   

Banc of America Securities LLC, 0.45%, dated 9/30/10, due 10/1/10, maturity value $122,001,525 (collateralized by non-U.S. government debt securities, 2.75% to 7.38%, 9/15/11 to 11/15/21, par and fair value of $116,050,974 and $128,100,000, respectively)

      122,000         122,000,000   

Banc of America Securities LLC, 0.55%, dated 9/30/10, due 10/1/10, maturity value $198,003,025 (collateralized by non-U.S. government debt securities, 0.00% to 8.00%, 11/15/15 to 12/26/45, par and fair value of $2,762,535,729 and $211,860,000, respectively)

      198,000         198,000,000   

 

Schedule of Investments (continued)    Money Market Master Portfolio
     (Percentages shown are based on Net Assets)

 

BNP Paribas Securities Corp., 0.32%, dated 9/30/10, due 10/1/10, maturity value $425,003,778 (collateralized by non-U.S. government debt securities, 0.82% to 12.75%, 10/22/10 to 10/15/26, par and fair value of $375,659,846 and $437,750,001, respectively)

      425,000         425,000,000   

Citigroup Global Markets Inc., 0.40%, dated 9/30/10, due 10/1/10, maturity value $69,000,767 (collateralized by U.S. government obligations and non-U.S. government debt securities, 0.00% to 5.00%, 4/16/21 to 3/25/40, par and fair value of $105,073,584 and $75,246,607, respectively)

      69,000         69,000,000   

Citigroup Global Markets Inc., 0.46%, dated 9/30/10, due 10/12/10, maturity value $250,038,333 (collateralized by U.S. government obligations and non-U.S. government debt securities, 0.00% to 5.00%, 4/16/21 to 3/25/40, par and fair value of $380,701,391 and $272,632,635, respectively)

      250,000         250,000,000   

Citigroup Global Markets Inc., 0.60%, dated 9/30/10, due 10/1/10, maturity value $80,001,333 (collateralized by U.S. government obligations, 3.10% to 6.00%, 7/15/19 to 7/15/36, par and fair value of $129,338,802 and $82,400,000, respectively)

      80,000         80,000,000   

Citigroup Global Markets Inc., 0.70%, dated 9/30/10, due 10/1/10, maturity value $190,003,694 (collateralized by non-U.S. government debt securities, 0.00% to 8.00%, 6/1/11 to 4/1/57, par and fair value of $300,790,492 and $247,000,000, respectively)

      190,000         190,000,000   

Deutsche Bank Securities Inc., 0.28%, dated 9/30/10, due 10/1/10, maturity value $30,000,233 (collateralized by U.S. government obligations, 5.00% to 7.00%, 5/1/38 to 10/1/39, par and fair value of $64,873,038 and $30,900,000, respectively)

      30,000         30,000,000   

Greenwich Capital Markets, 0.35%, dated 9/30/10, due 10/1/10, maturity value $425,004,132 (collateralized by U.S. government obligations and non-U.S. government debt securities, 0.00% to 7.00%, 10/20/11 to 1/7/41, par and fair value of $609,978,408 and $443,214,029, respectively)

      425,000         425,000,000   

Greenwich Capital Markets, 0.35%, dated 9/30/10, due 10/1/10, maturity value $50,000,486 (collateralized by U.S. government obligations and non-U.S. government debt securities, 0.00% to 7.00%, 10/20/11 to 1/7/41, par and fair value of $71,762,166 and $52,142,827, respectively)

      50,000         50,000,000   

HSBC Securities (USA) Inc., 0.28%, dated 9/30/10, due 10/1/10, maturity value $100,000,778 (collateralized by non-U.S. government debt securities, 0.00% to 8.75%, 3/19/12 to 3/1/45, par and fair value of $96,555,000 and $105,006,513, respectively)

      100,000         100,000,000   

JPMorgan Securities Inc., 0.32%, dated 9/30/10, due 10/7/10, maturity value $50,003,111 (collateralized by non-U.S. government debt securities, 0.34% to 5.72%, 4/1/18 to 7/27/26, par and fair value of $51,707,750 and $52,503,410, respectively)

      50,000         50,000,000   

JPMorgan Securities Inc., 0.55%, dated 9/30/10, due 10/1/10, maturity value $320,004,889 (collateralized by non-U.S. government debt securities, 0.00% to 6.30%, 11/15/13 to 3/25/24, par and fair value of $386,728,000 and $336,000,536, respectively)

      320,000         320,000,000   

Morgan Stanley & Co. Inc., 0.20%, dated 9/30/10, due 10/1/10, maturity value $149,194,829 (collateralized by U.S. government obligations, 2.75% to 4.63%, 12/31/11 to 2/28/13, par and fair value of $143,215,300 and $152,177,942, respectively)

      149,194         149,194,000   
                  

Total Repurchase Agreements — 15.4%

               2,686,194,000   
                  

Total Investments (Cost — $ 17,480,534,853*) — 100.0%

               17,480,534,853   

Other Assets in Excess of Liabilities — 0.0%

               5,125,256   

Net Assets — 100.0%

             $ 17,485,660,109   
                  

 

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

 

Schedule of Investments (concluded)    Money Market Master Portfolio
     (Percentages shown are based on Net Assets)

 

•  

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 risk 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 the Master Portfolio’s most recent financial statements as contained in its semi-annual report.

The following table summarizes the inputs used as of September 30, 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

      —         $ 17,480,534,853         —         $ 17,480,534,853   
    
  
  
  

 

1

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

 

Item 2. Controls and Procedures.

(a) The Registrant’s Principal Executive Officer and Chief 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 controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 3. Exhibits.

(a) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto as Exhibits 3(a)(1) and 3(a)(2).

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.

(Registrant) PayPal Funds

 

By:

  

/s/ Dana E. Schmidt

   

Dana E. Schmidt

   

President and Principal Executive Officer

Date: November 26, 2010

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: November 26, 2010

 

By:

  

/s/ Omar J. Paz

   

Omar J. Paz

   

Treasurer and Chief Financial Officer

Date: November 26, 2010