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12-31-2012 Investment Performance ReviewVillage of North Palm Beach, Florida pr North Palrp,- • ea Investment Performance Review Quarter Ended December 31, 2012 Investment Advisors PFM Asset Management LLC Steven Alexander, CTP, CGFO, Managing Director D. Scott Stitcher, CFA, Senior Managing Consultant Gregg Manjerovic, CFA, Portfolio Manager Rebecca Geyer, CTP, Senior Analyst One Keystone Plaza, Suite 300 North Front & Market Streets Harrisburg, PA 1 71 01 -2044 717 - 232 -2723 • 717 - 233 -6073 fax 300 S. Orange Avenue, Suite 1170 Orlando, FL 32801 (407) 648 -2208 (407) 648 -1323 fax Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 Table of Contents Tab I. Section A Market Review Tab II. Section A Quarterly Summary Report Section B Investment Portfolio & Performance Section C Asset Allocation Chart as of December 31, 2012 Tab III. December 31, 2012 PFM Month -End Statement (statements are available online at www.pfm.com) This material is based on information obtained from sources generally believed to be reliable and available to the public, however PFM Asset Management LLC cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or recommendation. The information contained in this report is not an offer to purchase or sell any securities. Table of Contents Section i Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 TAB I Village of North Palm Beach, Florida Summary • In the fourth quarter, the markets were impacted by U.S. politics and policies particularly the presidential election, the Federal Reserve's ( Fed's) new round of quantitative easing (QE), and fiscal cliff negotiations. • The U.S. housing market continued to show signs of improvement, and the unemployment rate was unchanged for the quarter at 7.8 %. • The domestic economy has seen modest growth over the past year, and while the resolution of the fiscal cliff talks has relieved investors, the federal debt ceiling must now be addressed. Economic Snapshot • New -home sales in the U.S. rose to their highest level in two - and -a -half years in November, jumping 15.3% higher from where they were a year ago. • The Consumer Price Index rose 1.8% year over year in November before seasonal adjustment. Wage increases have been subdued as evidenced by the change in hourly earnings, which has averaged less than 2% in recent months. • Fourth- quarter U.S. gross domestic product (GDP) growth is expected to be in a range of 1% to 2 %, which is slower than GDP growth experienced in the third quarter. • Hurricane Sandy, which blew through the East Coast in October, caused large amounts of damage, closed the markets for two days, and depressed economic activity in about a third of the nation. • European stock markets took an upward turn for the quarter, as the MSCI Europe Index rose 7.02% for the quarter in U.S. dollar terms. Investment Report - Quarter Ended December 31, 2012 Interest Rates • Interest rates rose slightly for the quarter across most maturities, while yield spreads on Agencies, corporates, and mortgage- backed securities (MBS) remained narrow. • Treasury yields fell in the first half of November, but then rose as investors turned away from fixed income to the rallying stock market. • The Fed announced that it will keep short -term rates at extremely low levels until the unemployment rate falls below 6.5 %, and the prospect remains for long -run inflation to stay below 2.5 %. The Fed also initiated further QE with an open - ended program to buy $45 billion in Treasuries each month in addition to its monthly purchases of $40 billion in Agency mortgage- backed securities. Sector Performance • Returns of high - quality corporate bonds (especially Financials) performed well for the quarter, as these issuers continued to be bolstered by global central bank support for financial markets. Security selection has been especially important when purchasing corporates. • The Fed's QE3 purchase program initially caused Agency MBS to appreciate sharply on value, but that quickly reversed and Agency MBS underperformed other fixed - income sectors for the quarter. • Municipal bonds struggled in the fourth quarter, as investors were uncertain whether their tax- exempt status would be changed as part of a fiscal cliff deal. • Supply reductions kept Agency spreads at historically tight levels, and Agencies became relatively less attractive over the quarter. The vies expressed mithin this material constitute the perspective and judgment of PPM Asset Management LLC (PPMAM) at the time of distribution and are subject to change. Information is obtained from sources generally believed to be reliable and available to the public; hoxeverr. PFAIM cannotguarantee its accuracy, completeness, or suitabilz'ty. This material is forgeneral information puvposes only and is not intended to provide specific advice or recommendation. The information contained in this report is not an offer to purchase or sell any securities. © 2012 PFM Asset Management LLC I Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 Economic Snapshot Labor Market Latest Sep 2012 Dec 2011 Unemployment Rate Dec 7.8% 7.8% 8.5% Unemployment Rate (left) vs. Change in Nonfarm Payrolls (right) 11.0% 600K Change In Non -Farm Payrolls Dec 155,000 10.0% 400K 9.0% 200K Average Hourly Earnings (YoY) Dec 2.1% 1.9% 2.1% 8.0% 0 Personal Income (YoY) 3.5% 7.0% V -200K 6.0 % -400K Initial Jobless Claims Dec 28 372,000 369,000 383,000 12/31/09 6/30/10 12/31/10 6/30/11 12/31/11 6/30/12 12/31/12 • Real GDP (QoQ SAAR) Q3 3.1% 1.3 %1 4.1 %z Real GDP (QoQ) 5.0 GDP Personal Consumption (QoQ SAAR) 2.0% z 4.0% ad 3.0% Retail Sales (YoY) Nov 3.7% 5.4% 6.8% 2.0% MEN 0. ISM Manufacturing Su 0.0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Existing Home Sales (millions) Nov 5.04 4.69 4.38 '09 '09 10 '10 '10 '10 '11 '11 '11 '11 '12 '12 '12 Inflation Prices Personal Consumption Expenditures (YoY) Nov 1.4% 1.6% 2.4% Consumer Price Index 5.0% _CPI (YoY) -CP I Core (YoY) Consumer Price Index (YoY) Nov 1.8% 2.0% 4.0% 3.0 Consumer Price Index Core (YoY) Nov 1.5% 2.1% 4.7% 20% Crude Oil Futures (WTI, per barrel) Dec 31 $91.82 $92.19 $98.83 1.0% 0.0% Gold Futures (oz) Dec 31 $1,676 $1,771 $1,567 11/30/09 5/31/10 11/30/10 5/31/11 11/30/11 5/31/12 11/30/12 1. Data as of Second Quarter 2012 2. Data as of Fourth Quarter 2011 Note: YoY = year over year, QoQ = quarter over quarter, SAAR = seasonally adjusted annual rate, WTI = West Texas Intermediate crude oil Source: Bloomber © 2012 PFM Asset Management LLC 2 Village of North Palm Beach, Florida U.S. Treasury Note Yields 2.5% 2.0% 1.5% m } 1.0% 0.5% 0 0% Investment Report - Quarter Ended December 31, 2012 Interest Rate Overview 12/31/11 3/31/12 6/30/12 9/30/12 12/31/12 - -2 -Year ......•• 5 -Year 10 -Year 4% 3% y 2% 1% 0% 361 2 3 5 7 mnY Y Y Y Y U.S. Treasury Note Yield Curve 10 30 Y Y Maturity December 31, 2012 September 30, 2012 - December 31, 2011 Yield Curves as of 12/31/12 5% 4% ------------- - - - - -- ------------------------------------------ . I D 2% ---- - - - - -- / - - - - -- +' ---------------------- 1% - - - - -- / -------------------------------------- 0% 361 2 3 5 7 mnY Y Y Y Y U.S. Treasury 10 Y Maturity Federal Agency 25 30 Y Y Industrial Corporates, A Rated Source: Bloomber © 2012 PFM Asset Management LLC 3 Change 3 -month 0.09% i 0.12% over Quarter (0.03 %) 12131111 0.02% Change over Year 0.07% 1 -year 0.14% 0.16% (0.02 %) 0.13% 0.01% 2 -year 0.27% 0.25% 0.03% 0.28% (0.00 %) 5 -year 0.74% 0.63% 0.11% 0.85% (0.11%) 10 -year 1.81% 1.70% 0.12% 1.96% (0.14 %) 30 -year 2.94% 2.82% 0.12% 2.91% 0.03% 4% 3% y 2% 1% 0% 361 2 3 5 7 mnY Y Y Y Y U.S. Treasury Note Yield Curve 10 30 Y Y Maturity December 31, 2012 September 30, 2012 - December 31, 2011 Yield Curves as of 12/31/12 5% 4% ------------- - - - - -- ------------------------------------------ . I D 2% ---- - - - - -- / - - - - -- +' ---------------------- 1% - - - - -- / -------------------------------------- 0% 361 2 3 5 7 mnY Y Y Y Y U.S. Treasury 10 Y Maturity Federal Agency 25 30 Y Y Industrial Corporates, A Rated Source: Bloomber © 2012 PFM Asset Management LLC 3 Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 B of A Merrill Lynch Index Returns As of 12/31/2012 Periods Ended 12/31/2012 Municipals Duration Yield 3 Month 1 Year 3 Years Year • U.S. Treasury 1.87 0.26% 0.07% 0.43% 1.44% al 0.85% 0.12% j U.S. Corporates, A -AAA Rated 1.94 0.95% 0.44% 4.02% 3.31% Agency MBS (0 to 3 years) 1.85 1. (0.31%) 1.60% 3.42% Municipals 1.81 0.61% 0.02% 1.03% 1.56% Year • U.S. Treasury 2.72 0.38% 0.04% 0.91% 2.62% Federal 2.36 0.44% 0.16% 1.38% 2.28% U.S. Corporates, A -AAA Rated 2.80 1.22% 0.55% 5.85% 4.70% Municipals 2.53 0.84% (0.10%) 1.63% 2.37% Master • - U.S. Treasury 5.99 0.96% (0.10%) 2.16% 5.89% al 0.85% 0.220 j 2.32% U.S. Corporates, A -AAA Rated 6.80 0.79% 9.19% 8.32% Agency MB "M 1 ■ (0.27%) 2.59% N° Municipals 7.47 2.59% 0.51% 7.26% 6.83% Returns for periods greater than one year are annualized Sourre: Bloombevg © 2012 PFM Asset Management LLC 4 Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 TAB II Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 Quarterly Summary Report Total Portfolio Value'' December 31,2012' September 30, 2012 Market Value $8,317,772.03 $8,311,077.27 Amortized Cost $8.293.955.99 $8.280.301.18 0.75% 0.50% E 0.25% 0.00% -0.25% -0.50% 0.50 Quarter Total Return Comparison Quarter Ended 12/31/12 1.00 1.50 2.00 2.50 3.00 Effective Duration (Years) Total Return Comparison Since Inception as of Quarter Ended 12/31/12 2.50 2.00 1.50% ML 1 -3 Year U.S. Treasury Index 1.46 % Investment Portfolio 1.00% 0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Effective Duration (Years) Quarterly Return Annualized Last , Last Last Since Inception Total Return' ' °'s'a' December 31, 2012 Quarter 12 Months 2 Years 3 Years June 30, 2009 Investment Portfolio 0.08% 0.32% 0.54% 0.98% 1.36% 1.43% Merrill Lynch 1 -3 Year U.S. Treasury Index 0.07% 0.27% 0.43% 0.99% 1.44 % 1.46% 0.75% 0.50% E 0.25% 0.00% -0.25% -0.50% 0.50 Quarter Total Return Comparison Quarter Ended 12/31/12 1.00 1.50 2.00 2.50 3.00 Effective Duration (Years) Total Return Comparison Since Inception as of Quarter Ended 12/31/12 2.50 2.00 1.50% ML 1 -3 Year U.S. Treasury Index 1.46 % Investment Portfolio 1.00% 0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Effective Duration (Years) Current Quarter Previous Quarter Current Quarter Previous Quarter Effective Duration(Years) ° December 31. 2012 September 30, 2012 Yields December 31, 2012 September 30. 2012 Investment Portfolio 1.81 1.82 Yield at Market 0.26% 0.25% Merrill Lynch 1 -3 Year U.S. Treasury Index 1.80 L 1.82 Yield at Cost � 0.47 % 0.50 Portfolio Duration % of Benchmark Duration 100% 100% 0.96 TD Bank Money Market Fund 0.75% 0.50% E 0.25% 0.00% -0.25% -0.50% 0.50 Quarter Total Return Comparison Quarter Ended 12/31/12 1.00 1.50 2.00 2.50 3.00 Effective Duration (Years) Total Return Comparison Since Inception as of Quarter Ended 12/31/12 2.50 2.00 1.50% ML 1 -3 Year U.S. Treasury Index 1.46 % Investment Portfolio 1.00% 0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Effective Duration (Years) Notes: 1. In order to comply with GASB accrual accounting reporting requirements. 2. End of quarter trade -date market values of portfolio holdings, including accrued interest. 3. Performance on trade date basis, gross (i.e., before fees), is in accordance with The CFA Institute's Global Investment Performance Standards (GIPS). 4. Merrill Lynch Indices provided by Bloomberg Financial Markets. 5. Quarterly returns are presented on an unannuali -c! basis. 6. Includes money market fund /cash in performance and duration computations. 7. Returns presented for 12 months or longer are presented on an annual basis. 8. Past performance is not indicative of future results. PFM Asset Management LLC Section A - 1 Current Quarter Previous Quarter Fiscal Year 2013 Fiscal Year 2012 Quarterly Interest Income December 31, 2012 September 30, 2012 Fiscal Year Interest Income Year to Date Year to Date Investment Portfolio $27,555.99 $10,908.74 Investment Portfolio $27,555.99 $82,633.24 TD Bank Money Market Fund 1.50 0.96 TD Bank Money Market Fund 1.50 5.47 Total $27,557.49 $10,909.70 Total $27,557.49 $82,638.71 Current Quarter Previous Quarter Fiscal Year 2013 Fiscal Year 2012 Quarterly Realized Gain /Loss on Cost December 31, 2012 September 30, 2012 Fiscal Year Realized Gain /Loss on Cost Year to Date Year to Date Investment Portfolio ($8,331.84 $6,018.77 Investment Portfolio ($8,331.84) $19,132.88 Notes: 1. In order to comply with GASB accrual accounting reporting requirements. 2. End of quarter trade -date market values of portfolio holdings, including accrued interest. 3. Performance on trade date basis, gross (i.e., before fees), is in accordance with The CFA Institute's Global Investment Performance Standards (GIPS). 4. Merrill Lynch Indices provided by Bloomberg Financial Markets. 5. Quarterly returns are presented on an unannuali -c! basis. 6. Includes money market fund /cash in performance and duration computations. 7. Returns presented for 12 months or longer are presented on an annual basis. 8. Past performance is not indicative of future results. PFM Asset Management LLC Section A - 1 Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 Executive Summary PORTFOLIO STRA ➢ The Village's Investment Portfolio is of high credit quality and invested in U.S. Treasury and Federal Agency securities. ➢ PFM continued to actively manage the Investment Portfolio during the fourth quarter and found value in the market, taking advantage of market inefficiencies or changes in economic outlook. As a result the Portfolio realized over $3,782 in gains on sales during the quarter. PFM is continually in the market monitoring for opportunities to add value to the Portfolio. ➢ The Investment Portfolio's quarterly total return performance was 0.08 %, outperforming the benchmark's performance of 0.07% by 0.01 %. Over the past year, the Portfolio earned 0.54 %, versus 0.43% for the benchmark. ➢ Five year Treasury yields swung in a 24 basis point range. Yields were driven lower by economic disruption from Hurricane Sandy, a higher projection for Greek debt, President Obama's re- election and assured continuity of an accommodative Federal Reserve (Fed), an expansion of the Fed's bond purchase program, and fears the U.S. would go over the fiscal cliff. Bond yields were pushed higher by stronger than expected job reports for September and November, a Greek debt buyback program, the prospect of Presidential candidate Mitt Romney appointing a replacement for Ben Bernanke at the Fed, a global rally in stocks, and confidence that the fiscal cliff would be avoided. ➢ After all the ups and downs, Treasury yields finished the quarter modestly higher. Political turmoil may cause a transient flight -to- quality as has been seen this quarter and may be seen in the coming quarter. Yet, the larger, lasting effect is likely to come from the budding trend of equity fund inflows at the expense of bond fund outflows. The so- called "Great Rotation ", as it is popularly called, is the reversal of fund flows from the past 4 years. ➢ Facing high political and policy risks, which do not lend themselves well to fundamental economic analysis, we increased Treasury weightings to move closer to benchmarks in terms of both duration and sector allocations. In particular, Agency bonds at historically tight spreads, and consequently little remaining value, were shifted into Treasuries continuing the re- allocation of the past several quarters. ➢ Fiscal drag caused by tax hikes on the wealthy and resumption of full payroll taxes, and concern over a possible government shutdown may be supportive of a counter -trend rally in the bond market. While our longer term view is that yields will eventually drift gradually higher, we intend to keep durations close to neutral to protect the Village's portfolio against the regularly recurring flights into Treasuries. ➢ As always, we strive to maintain safety of principal and appropriate liquidity, while seeking opportunities to add value through active management. Our strategy will remain flexible and may change in response to changes in interest rates, economic data, market outlook or specific opportunities that arise. PFM Asset Management LLC Section B - 1 Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 Investment Portfolio Composition and Credit Quality Characteristics Security Type December 31, 2012 % of Portfolio September 30, 2012 % of Portfolio U.S. Treasuries $7,132,204.18 85.7% $6,930,825.46 83.4% Federal Agencies 1,130,543.35 13.6% 1,333,316.97 16.0% Commercial Paper 0.00 0.0% 0.00 0.0% Certificates of Deposit 0.00 0.0% 0.00 0.0% Bankers Acceptances 0.00 0.0% 0.00 0.0% Repurchase Agreements 0.00 0.0% 0.00 0.0% Municipal Obligations 0.00 0.0% 0.00 0.0% Corporate Notes /Bonds 0.00 0.0% 0.00 0.0% Corporate Notes /Bonds - FDIC Insured 0.00 0.0% 0.00 0.0% Mortgage Backed 0.00 0.0% 0.00 0.0% Money Market Fund /Cash 55,024.50 0.7% 46,934.84 0.6% Totals $8,317,772.03 100.0% $8,311,077.27 100.0% U.S. Treasuries 86% Portfolio Composition as of 12/31/12 Federal Agency Obligations 13% �y Market id /Cash 0.66% Notes: 1. End of quarter trade -date market values of portfolio holdings, including accrued interest. 2. Credit rating of securities held in portfolio, exclusive of money market fund /LGIP. Standard & Poor's is the source of the credit ratings. Credit Quality Distribution as of 12/31/12 AA+ 100% PFM Asset Management LLC Section B - 2 Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 loo °% o Investment Portfolio Maturity Distribution Maturity Distribution' December 31, 2012 September 30, 2012 Overnight (Monedy Market Fund) $55,024.50 $46,934.84 Under 6 Months 0.00 0.00 6 - 12 Months 1,823,056.40 186,431.57 1 - 2 Years 2,769,865.42 4,476,496.45 2 - 3 Years 3,669,825.71 2,897,193.09 3 - 4 Years 0.00 704,021.32 4 - 5 Years 0.00 0.00 5 Years and Over 0.00 0.00 Totals $8,317,772.03 $8,311,077.27 Notes: 1. Callable securities in portfolio are included in the maturity distribution analysis to their stated maturity date, although they may be called prior to maturity. PFM Asset Management LLC Section B - 3 Portfolio Maturity Distribution' loo °% o 90% ■December 31, 2012 80% ■September 30, 2012 —0-0 70% a 60% 54% 50% 44% 0 0 40% 330%/o 35% 30% c� 22% c 20% 0 8 /0 d10% 0% 1 % 1 % 0% 0% 2% 0% 0% 0% 0% 0% Overnight Under 6 Months 6 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years 5 Years and Over Notes: 1. Callable securities in portfolio are included in the maturity distribution analysis to their stated maturity date, although they may be called prior to maturity. PFM Asset Management LLC Section B - 3 Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 Investment Portfolio Maturity Distribution versus the Benchmark' 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 00 Years to Maturity ■ Investment Portfolio ■ Merrill Lynch 1 -3 Year U.S. Treasury Note Index Notes: 1. Due to the nature of the security, Mortgage- Backed Securities are represented based on their average life maturity rather than their final maturity. PFM Asset Management LLC Section B - 4 Village of North Palm Beach' Asset Allocation as of December 31, 2012* Security Type December 31, 2012 December 31, 2012 Notes Permitted by Policy Florida SBA Prime Fund and Fund B 489,225.57 2.31% 2 25% United States Treasury Securities 7,117, 467.51 33.62% 100 United States Government Agency Securities - 0.00% 100% Federal Instrumentalities 1,121,463.98 5.30% 50% Mortgage - Backed Securities - 0.00% 50% Certificates of Deposit - 0.00% 100% Repurchase Agreements - 0.00% 0% Commercial Paper - 0.00% 0% Corporate Notes - 0.00% 25% Bankers' Acceptances - 0.00% 0% Money Market Mutual Funds 205,926.57 0.97% 50% Intergovernmental Investment Pool - 0.00% 25% Interest Bearing Checking or Savings Account 12,233,282.55 57.79% 2 100% Village Managed 12,873,410.19 60.82% PFM Managed 8,293,955.99 39.18% Total 21,167, 366.18 100.00 Individual Issuer Breakdom December 31, 2012 December 31, 2012 Notes Permitted by Policy Individual Issuer Breakdom December 31, 2012 December 31, 2012 Notes Permitted by Policy Government National Mortgage Association (GNMA) - 0.00% 100% Interest Bearing Checking or Savings Account - Wells Fargo 9,226,898.32 43.59% 2 50% US Export-Import Bank(Ex -Im) - 0.00% 100% Interest Bearing Checking or Savings Account - Chase 3,006,384.23 14.20% 50% Farmers Home Administration (FMHA) - 0.00% 100% Money Market Fund - TD Bank Sweep Account 55,024.50 0.26% 33% Federal Financing Bank - 0.00% 100% Money Market Fund - Wells Fargo Advantage Fund 150,902.07 0.71% 2 33% Federal Housing Administration (FHA) - 0.00% 100% Florida Prime 292,526.63 1.38% 2 25% General Services Administration - 0.00% 100% SBA Fund 196,698.94 0.93% 2 N/A New Communities Ad Debentures - 0.00 % 100% US Public Housing Notes & Bonds - 0.00% 100% US Dept. of Housing and Urban Development - 0.00% 100% Federal Farm Credit Bank (FFCB) - 0.00% 10% Federal Home Loan Bank (FHLB) 340,225.27 1.61% 10% Federal National Mortgage Association (FNMA) 379,234.47 1.79% 10% Federal Home Loan Mortgage Corporation (FHLMC) 402,004.24 1.90% 10% Notes: 1. All Assets. 2. These Accounts are managed by the Village. *PFM managed securities are shown on Amortized Cost plus Accrued Interest basis. PFM Asset Management LLC Section C - 1 Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 TAB III Village of North Palm Beach, Florida Investment Report - Quarter Ended December 31, 2012 Insert Month End Statement here to complete the report. Statements are available online at www.pfm.com login and click on the link to "Monthly Statements" on the left side of the screen. PF_ M' Customer Service PO Box 11813 INUT . Harrisburg, PA 17108 -1813 ACCOUNT STATEMENT Client Management Team Steven Alexander, CTP, CGFO Managing Director 300 South Orange Avenue, Suite 1170 Orlando, FL 32801 407 - 648 -2208 alexanders @pfm.com Gregg Manjerovic, CFA Director One Keystone Plaza, Suite 300 Harrisburg, PA 17101 717 - 232 -2723 manierovicg @pfm.com Rebecca Geyer, CTP Senior Analyst 300 South Orange Street, Suite 1170 Orlando, FL 32801 407 -648 -2208 doler @pfm.com Contents Cover /Disclosures Summary Statement Individual Accounts Accounts included in Statement NORTH PALM BEACH INVESTMENT PORTFOLIO VILLAGE OF NORTH PALM BEACH SAMIA JANJUA 501 US HIGHWAY 1 NORTH PALM BEACH, FL 33408 Online Access http: / /www.pfm.com Customer Service 1- 717 - 232 -2723 !Mli — � PFM' Important Disclosures This statement is for general information purposes only and is not intended to provide specific advice or recommendations. PFM Asset Management LLC ( "PFM ") is an investment advisor registered with the Securities and Exchange Commission, and is required to maintain a written disclosure statement of our background and business experience. If you would like to receive a copy of our current disclosure statement, please contact Service Operations at the address below. Proxy Voting PFM does not normally receive proxies to vote on behalf of its clients. However, it does on occasion receive consent requests. In the event a consent request is received the portfolio manager contacts the client and then proceeds according to their instructions. PFM's Proxy Voting Policy is available upon request by contacting Service Operations at the address below. Questions About an Account PFM's monthly statement is intended to detail our investment advisory activity as well as the activity of any accounts held by clients in pools that are managed by PFM. The custodian bank maintains the control of assets and executes (i.e., settles) all investment transactions. The custodian statement is the official record of security and cash holdings and transactions. PFM recognizes that clients may use these reports to facilitate record keeping; therefore the custodian bank statement and the PFM statement should be reconciled and differences resolved. Many custodians use a settlement date basis which may result in the need to reconcile due to a timing difference. Account Control PFM does not have the authority to withdraw funds from or deposit funds to the custodian. Our clients retain responsibility for their internal accounting policies; implementing and enforcing internal controls and generating ledger entries or otherwise recording transactions. Market Value Generally, PFM's market prices are derived from closing bid prices as of the last business day of the month as supplied by Interactive Data, Bloomberg or Telerate. Where prices are not available from generally recognized sources the securities are priced using a yield -based matrix system to arrive at an estimated market value. Prices that fall between data points are interpolated. Non - negotiable FDIC - insured bank certificates of deposit are priced at par. Although PFM believes the prices to be reliable, the values of the securities do not always represent the prices at which the securities could have been bought or sold. Explanation of the valuation methods for money market and TERM funds is contained in the appropriate fund information statement. Amortized Cost The original cost of the principal of the security is adjusted for the amount of the periodic reduction of any discount or premium from the purchase date until the date of the report. Discount or premium with respect to short term securities (those with less than one year to maturity at time of issuance) is amortized on a straightline basis. Such discount or premium with respect to longer term securities is amortized using the constant yield basis. Important Disclosures Tax Reporting Cost data and realized gains / losses are provided for informational purposes only. Please review for accuracy and consult your tax advisor to determine the tax consequences of your security transactions. PFM does not report such information to the IRS or other taxing authorities and is not responsible for the accuracy of such information that may be required to be reported to federal, state or other taxing authorities. Financial Situation In order to better serve you, PFM should be promptly notified of any material change in your investment objective or financial situation. Callable Securities Securities subject to redemption prior to maturity may be redeemed in whole or in part before maturity, which could affect the yield represented. Portfolio The securities in this portfolio, including shares of mutual funds, are not guaranteed or otherwise protected by PFM, the FDIC (except for certain non - negotiable certificates of deposit) or any government agency. Investment in securities involves risks, including the possible loss of the amount invested. Rating Information provided for ratings is based upon a good faith inquiry of selected sources, but its accuracy and completeness cannot be guaranteed. Shares of some money market and TERM funds are marketed through representatives of PFM's wholly owned subsidiary, PFM Fund Distributors, Inc. PFM Fund Distributors, Inc. is registered with the SEC as a broker /dealer and is a member of the Financial Industry Regulatory Authority ( "FINRA ") and the Municipal Securities Rulemaking Board ( "MSRB "). You may reach the FINRA by calling the FINRA Regulator Public Disclosure Hotline at 1- 888 - 289 -9999 or at the FINRA Regulation Internet website address www.nasd.com. A brochure describing the FINRA Regulation Public Disclosure Program is also available from the FINRA upon request. Key Terms and Definitions Dividends on money market funds consist of interest earned, plus any discount ratably amortized to the date of maturity, plus all realized gains and losses on the sale of securities prior to maturity, less ratable amortization of any premium and all accrued expenses to the fund. Dividends are accrued daily and may be paid either monthly or quarterly. The monthly earnings on this statement represent the estimated dividend accrued for the month for any program that distributes earnings on a quarterly basis. There is no guarantee that the estimated amount will be paid on the actual distribution date. Current Yield is the net change, exclusive of capital changes and income other than investment income, in the value of a hypothetical fund account with a balance of one share over the seven -day base period including the statement date, expressed as a percentage of the value of one share (normally $1.00 per share) at the beginning of the seven -day period. This resulting net change in account value is then annualized by multiplying it by 365 and dividing the result by 7. The yields quoted should not be considered a representation of the yield of the fund in the future, since the yield is not fixed. Account Statement For the Month Ending December 31, 2012 Average maturity represents the average maturity of all securities and investments of a portfolio, determined by multiplying the par or principal value of each security or investment by its maturity (days or years), summing the products, and dividing the sum by the total principal value of the portfolio. The stated maturity date of mortgage backed or callable securities are used in this statement. However the actual maturity of these securities could vary depending on the level or prepayments on the underlying mortgages or whether a callable security has or is still able to be called. Monthly distribution yield represents the net change in the value of one share (normally $1.00 per share) resulting from all dividends declared during the month by a fund expressed as a percentage of the value of one share at the beginning of the month. This resulting net change is then annualized by multiplying it by 365 and dividing it by the number of calendar days in the month. YTM at Cost The yield to maturity at cost is the expected rate of return, based on the original cost, the annual interest receipts, maturity value and the time period from purchase date to maturity, stated as a percentage, on an annualized basis. YTM at Market The yield to maturity at market is the rate of return, based on the current market value, the annual interest receipts, maturity value and the time period remaining until maturity, stated as a percentage, on an annualized basis. Managed Account portfolio of investments managed discretely by PFM according to the client's specific investment policy and requirements. The investments are directly owned by the client and held by the client's custodian. Unsettled Trade A trade which has been executed however the final consummation of the security transaction and payment has not yet taken place. Please review the detail pages of this statement carefully. If you think your statement is wrong, missing account information, or if you need more information about a transaction, please contact PFM within 60 days of receipt. If you have other concerns or questions regarding your account you should contact a member of your client management team or PFM Service Operations at the address below. PFM Asset Management LLC Attn: Service Operations One Keystone Plaza, Suite 300 N. Front & Market Sts Harrisburg, PA 17101 Managed Account Summary Statement For the Month Ending December 31, 2012 NORTH PALM BEACH INVESTMENT PORTFOLIO 61350001 Transaction Summary - Managed Account Cash Transactions Summary - Managed Account Opening Market Value $8,254,468.27 Maturities /Calls 0.00 Maturities /Calls 0.00 Sale Proceeds 402,496.38 Principal Dispositions 0.00 Coupon /Interest /Dividend Income 6,807.60 Principal Acquisitions 0.00 principal Payments 0.00 Security Purchases 400,739.31 Unsettled Trades 0.00 ( ) Change in Current Value (3,199.75) Net Cash Contribution 0.00 Reconciling Transactions 0.00 Closing Market Value $8,251,268.52 Earnings Reconciliation (Cash Basis) - Managed Account 0 Cash Balance Interest /Dividends /Coupons Received 7,281.81 Closing Cash Balance $55,024.50 Less Purchased Interest Related to Interest /Coupons (471.34) Plus Net Realized Gains /Losses (642.33) Total Cash Basis Earnings $6,168.14 Earnings Reconciliatio , n (Accrual Basis) Total Ending Amortized Value of Securities 8,227,452.48 Ending Accrued Interest 11,479.01 Plus Proceeds from Sales 0.00 Plus Proceeds of Maturities /Calls /Principal Payments 0.00 Plus Coupons /Dividends Received 6,807.60 Less Cost of New Purchases 0.00 Less Beginning Amortized Value of Securities Less Beginning Accrued Interest (8,230,115.77) (12,374.33) Total Accrual Basis Earnings $3,248.99 .�- =PFti" Account 61350001 Page 1 WF PFM Asset Management LLC �PFNI Portfolio Summary and Statistics NORTH PALM BEACH INVESTMENT PORTFOLIO 61350001 Description Par Value Market Value Percent U.S. Treasury Bond / Note 7,040,000.00 7,122,062.46 86.31 Federal Agency Bond / Note 1,120,000.00 1,129,206.06 13.69 Managed Account Sub -Total 8,160,000.00 8,251,268.52 100.00% Accrued Interest 11,479.01 Total Portfolio 8,160,000.00 8,262,747.53 Unsettled Trades wilvn. 0.00 0.00 0 - 6 Months 6 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years Over 5 Years US TSY Bond / 86.31% For the Month Ending December 31, 2012 Fed Agy Bond / Note 13.69% Yield to Maturity at Cost 0.47% Yield to Maturity at Market 0.26% Duration to Worst 1.81 Weighted Average Days to Maturity 667 PF-'vL Account 61350001 Page 2 WPFM Asset Management LLC �fi Managed Account Issuer Summary NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001 Market Value Issuer of Holdings Percent FANNIE MAE 380,113.20 4.61 FEDERAL HOME LOAN BANKS 345,813.66 4.19 FREDDIE MAC 403,279.20 4.89 UNITED STATES TREASURY 7,122,062.46 86.31 Total $8,251,268.52 100.000/0 AA+ 100.00% For the Month Ending December 31, 2012 NI Account 61350001 Page 3 qu PFM Asset Management LLC Aid PFM WFManaged Account Detail of Securities Held For the Month Ending December 31, 2012 NORTH PALM BEACH INVESTMENT PORTFOLIO- 61350001 Security Type/ Description S &P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date /Coupon /Maturity CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value U.S. Treasury Bond / Note US TREASURY NOTES 330,000.00 AA+ Aaa 07/30/12 07/31/12 343,986.33 0.33 2,416.71 342,019.30 342,065.46 DTD 08/02/2010 1.750% 07/31/2015 -PFN1 Account 61350001 Page 4 PFM Asset Management LLC .P < 1 ' Managed Account Detail of Securities Held For the Month Ending December 31, 2012 NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001 Security Type/ Description S &P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date /Coupon /Maturity U.S. Treasury :. Note CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value 30/2010 1.375% 11/30/2015 Security Type Sub -Total Federal Agency Bond / Note 7,040,000.00 7,122,744.15 0.42 10,141.72 7,107,325.79 7,122,062.46 16/2012 0.375% 12/21/2015 Security Type Sub -Total 1,120,000.00 1,120,691.20 0.81 1,337.29 1,120,126.69 1,129,206.06 Managed Account Sub -Total 8,160,000.00 8,243,435.35 0.47 11,479.01 8,227,452.48 8,251,268.52 Securities Sub -Total $8,160,000.00 $8,243,435.35 0.47% $11,479.01 $8,227,452.48 $8,251,268.52 Accrued Interest $11,479.01 Total Investments $8,262,747.53 Account 61350001 Page 5 PFM Asset Management LLC Managed Account Fair Market Value & Analytics For the Month Ending December 31, 2012 NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001 Security Type/ Description Next Call Market Market Unreal G/L Unreal G/L Effective Duration YTM Dated Date /Coupon /Maturity CUSIP Par Broker Date Price Value On Cost Amort Cost Duration to Worst at Mkt .0 01/2010 1.250% 10/31/2015 � N1, Account 61350001 Page 6 PFM Asset Management LLC PFM ivManaged Account Fair Market Value & Analytics For the Month Ending December 31, 2012 NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001 Security Type/ Description Next Call Market Market Unreal G/L Unreal G/L Effective Duration YTM Dated Date /Coupon /Maturity U.S. Treasury Bond / Note CUSIP Par Broker Date Price Value On Cost Amort Cost Duration to Worst at Mkt 16/2012 0.375% 12/21/2015 Security Type Sub -Total 1,120,000.00 1,129,206.06 8,514.86 9,079.37 1.97 1.97 0.28 Managed Account Sub -Total 8,160,000.00 8,251,268.52 7,833.17 23,816.04 1.81 1.81 0.26 Securities Sub -Total $8,160,000.00 $8,251,268.52 $7,833.17 $23,816.04 1181 1.81 0.26% Accrued Interest $11,479.01 Total Investments $8,262,747.53 � vg` Account 61350001 Page 7 iv PFM Asset Management LLC PFM' Managed Account Security Transactions & Interest For the Month Ending December 31, 2012 NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001 Transaction Type Principal Accrued Realized G/L Realized G/L Sale Trade Settle Security Description CUSIP Par Proceeds Interest Total Cost Amort Cost Method 11/29/12 12/ 10/15/2010 0.500% 10/15/2013 Transaction Type Sub -Total 400,000.00 402,022.17 474.21 402,496.38 (642.33) 1,053.04 Managed Account Sub -Total 1,754.20 6,810.47 8,564.67 (642.33) 1,053.04 Total Security Transactions $1,754.20 $6,810.47 $8,564.67 ($642.33) $1,053.04 PFM: Account 61350001 Page 8 qu PFM Asset Management LLC