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12-31-2016 Investment Performance ReviewVillage of North Palm Beach, Florida n, North III u Investment Performance Review Quarter Ended December 31, 2016 Investment Advisors Steven Alexander, CTP, CGFO, CPPT, Managing Director Robert Cheddar, CFA, Chief Credit Officer, Managing Director D. Scott Stitcher, CFA, Director Richard Pengelly, CFA, CTP, Director Rebecca Geyer, CTP, Senior Analyst PFM Asset Management LLC One Keystone Plaza, Suite 300 North Front & Market Streets Harrisburg, PA 17101 -2044 717 - 232 -2723 • 717 - 233 -6073 fax © 2016 PFM Asset Management LLC Page 1 of 40 300 S. Orange Avenue, Suite 1170 Orlando, FL 32801 (407) 648 -2208 (407) 648 -1323 fax TABLE OF CONTENTS Tab I Market Update Tab 11 Executive Summary Investment Portfolio Tab III Asset Allocation Chart Important Disclosures © 2016 PFM Asset Management LLC Page 2 of 40 For the Quarter Ended December 31, 2016 Tab I © 2016 PFM Asset Management LLC Page 3 of 40 QUARTERLY MARKET SUMMARY Summary • Bond yields and equity prices soared following the U.S. presidential election in November, as President -elect Donald Trump's proposed policies and his intentions to ramp up government spending boosted inflation expectations and growth forecasts. Major stock indexes including the S &P 500, NASDAQ, and Dow Jones Industrial Average closed at record highs during the quarter. • On December 14, the Federal Open Market Committee (FOMC) raised the federal funds target range by 0.25% to a range of 0.50% to 0.75 %. The unanimous decision, in line with market expectations, was the first rate hike since December 2015. The FOMC also released updated economic forecasts and a new "dot plot," forecasting three rate hikes in 2017. • Central banks outside the U.S. continued to pursue accommodative monetary policy amid slow growth and low inflation. The European Central Bank (ECB) kept its benchmark interest rate at 0% and continued its asset purchase program, as did the Bank of England (BOE). At the same time, the Bank of Japan (BOJ) continued its quantitative easing programs aimed at keeping the 10 -year Japanese government bond yield near 0% and expanding money supply until inflation remains above the 2% target. • The Organization of the Petroleum Exporting Countries (OPEC) agreed in late November to a combined reduction in daily production. The agreement caused the price of oil to increase more than 10% during the fourth quarter. Economic Snapshot • The U.S. economy gained momentum during the latter half of the year. The labor market continued to show strength, booking a solid quarter of job gains. The housing market also strengthened in the fourth quarter as Americans continued to take advantage of historically low interest rates, driving home sales to decade -high levels. • U.S. gross domestic product (GDP) grew at a 3.5% rate in the third quarter, rebounding from modest growth during the first half of 2016. (Fourth quarter GDP data is not yet available.) Consumer spending and exports contributed to the pick -up in expansion, while private inventories grew for the first time since the start of 2015. • The unemployment rate fell to 4.6% during the fourth quarter— a post - recession low. In another positive sign, job openings remained near record highs, while initial unemployment filings remained near record lows. © 2016 PFM Asset Management LLC For the Quarter Ended December 31, 2016 Fixed Income Management December's addition of 156,000 jobs finished a year of solid job growth performance in which the U.S. added 2.2 million net new jobs. For the year, wages rose 2.9 %, the fastest pace since 2009. • Americans continued to feel more confident about the economy as the Conference Board's December reading climbed to a 15 -year high, and sentiment strengthened further as the University of Michigan's Consumer Sentiment Index reached its highest level since January 2004. Interest Rates • Interest rates surged in the fourth quarter, ending the year with net increases and a steeper yield curve. The two -year Treasury yield increased 43 basis points (bps) for the quarter, while the yield on the 10 -year Treasury rose 85 bps — a considerable rebound from July's record -low yield. In the money market space, shorter -term Treasury yields rose alongside expectations of a Federal Reserve rate hike. Money market reforms took effect in October, significantly altering the supply- demand dynamic in the money markets. Yields on short-term credit instruments, such as commercial paper and negotiable bank certificates of deposit (CDs), continued to remain elevated and offer significant incremental yield. Sector Performance • U.S. Treasury indexes posted losses for the fourth quarter, declining for the second straight quarter as yields rose. For the year, returns were positive but muted. Shorter maturity issues outperformed longer maturities as the yield curve steepened. • Federal agency yield spreads drifted tighter during the quarter as supply diminished, leading to the sector's modest outperformance relative to comparable- maturity Treasuries. • Corporate yield spreads remained mostly unchanged until the November 8 presidential election, after which they tightened, reaching new lows for the year. Corporates outperformed Treasuries every quarter in 2016, resulting in the sector's best year since 2012. • Mortgage- backed securities (MBS) generally underperformed Treasuries amid increased extension risk due to the rise in interest rates. Asset - backed securities (ABS) outperformed Treasuries due to declining prepayment risk. Page 4 of 40 QUARTERLY MARKET SUMMARY Economic Snapshot For the Quarter Ended December 31, 2016 Fixed Income Management Labor Market Latest Sep 2016 Dec 2015 Unemployment Rate NoV16 4.6% 5.0% 5.0% Unemployment Rate( left) — Change in Nonfarm Payrol Is (right) r_ Chang? In Nonfarm Payrolls — Unenployment Rate 7% 400K Change In Non -Farm Payrolls NoV16 178,000 208,000 271,00 350K 60 300K 250K Aserage Hourly Earnings (YoY) NoV16 2.5% 2.7% 2.6% 200K 5% �I� 150K Personal Income (YoY NoV16 100K 50K 4% 0 Initial Jobless Claims (week) 12/24/16 265,000 246,000 285,000 12/31/13 6/30/14 12/31/14 6/30/15 12/31/15 6/30/16 Real GDP (QoQ SAAR) 2016Q3 3.5% 1.4 %1 2.0% z 6% ReaIGDP (QoQ) Person ift 3.0% 4% Retail Sales (YoY) NoV16 3.8% 3.3% 2.8% 2% 0% ISM Manufacturing Survey (month) NoV16 53.2 51 -2% Existing Home Sales SAAR (month) NoV16 5.61 mil. 5.49 mil. 5.45 mil. 9/30/13 3/31/14 9/30/14 3/31/15 9/30/15 3/31/16 9/30/16 Inflation Personal Consumption Expenditures (YoY) NoV16 1.4% 1.2% 0.6% Consumer Price Index —CPI(YoY) —Core CPI (YoY) 3% Consumer Price Index (YoY) 1.7% 2% - 010111 Consumer Price Index Core (YoY) NoV16 2.1% 2.2% 2.1% 1% 0% Crude Oil Futures (WTI, per barrel) Gold Futures (oz.) Dec 31 $1,152 $1,313 $1,060 12/31/13 6/30/14 12/31/14 6/30/15 12/31/15 6/30/16 1. Data as of Second Quarter 2016 2. Data as of Third Quarter 2015 Note: YoY = year over year, QoQ = quarter over quarter, SAAR = seasonally adjusted annual rate, WTI = West Texas Intermediate crude oil Source: Bloomberg. © 2016 PFM Asset Management LLC Page 5 of 40 QUARTERLY MARKET SUMMARY Interest Rate Overview U.S. Treasury Note Yields 3.0% – 2.5% 2.0 % v a 1.5% 1.0% — — 0.5% 0.0% 9/30/16 10/31/16 11/30/16 12/31/16 2 -Year ......•• 5 -Year 10 -Year U.S. Treasury Yields Source: Bloomberg. © 2016 PFM Asset Management LLC Page 6 of 40 4% 3% v 2% A r 1% 0% W NNW U1 V o Maturity December 31, 2016 -- September 30, 2016 For the Quarter Ended December 31, 2016 Fixed Income Management U.S. Treasury Yield Curve Yield Curves as of 12/31/16 5% 4% ------------------------- 3% ------------ - - - - -- r r 2% - - - --- -- - - - - - -- 1 % 0% N W N V U.S. Treasury W O December 31, 2015 �- ------- - - - - -- N W O U1 O Maturity Federal Agency — — Industrial Corporates, A Rated Change M atu rity 12/31/16 9/30/16 over 12/31/15 Change Quarter over Year 3 -month 0.50% 0.28% 0.22% 0.17% 0.33% 1 -year 0.81% 0.59% 0.22% 0.60% 0.21% 2 -year 1.19% 0.76% 0.43% 1.05% 0.14% 5 -year 1.93% 1.15% 0.78% 1.76% 0.17% 10 -year 2.45% 1.60% 0.85% 2.27% 0.18% 30 -year 3.07% 2.32% 0.75% 3.02% 0.05% Source: Bloomberg. © 2016 PFM Asset Management LLC Page 6 of 40 4% 3% v 2% A r 1% 0% W NNW U1 V o Maturity December 31, 2016 -- September 30, 2016 For the Quarter Ended December 31, 2016 Fixed Income Management U.S. Treasury Yield Curve Yield Curves as of 12/31/16 5% 4% ------------------------- 3% ------------ - - - - -- r r 2% - - - --- -- - - - - - -- 1 % 0% N W N V U.S. Treasury W O December 31, 2015 �- ------- - - - - -- N W O U1 O Maturity Federal Agency — — Industrial Corporates, A Rated QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2016 BofA Merrill Lynch Index Returns As of 12/31/16 Returns for Periods ended 12/31/16 Fixed Income Management Returns for periods greater than one year are annualized. Source: BofA Merrill Lynch Indices. © 2016 PFM Asset Management LLC Page 7 of 40 Duration Yield 3 Month 1 Year 3 Years Year • U.S. Treasury 1.89 1.18% (0.43%) 0.89% 0.68% Federal Agency 1.86 1.29% (0.34%) 0.78% 0.96% U.S. Corporates, A -AAA rated 1.85 1.89% (0.28%) 1.81% 1.35% Agency MBS (0 to 3 years) 2.10 1.95°/ 0.52% 1.09% Taxable Municipals 1.85 2.34% (0.40%) 2.47% 2.34% Year • U.S. Treasury 2.71 1.42% (1.09 %) 1.09% 1.10% Federal Agency J06- 2.33 0 ) 10 1.. U.S. Corporates, A -AAA rated 2.72 3.31 2.20% 2.20% (0.95 %) (1.81 %) 2.19% 1.94% Agency MBS (0 to 5 years) 1.26% 2.12% Taxable Municipals 2.53 2.41% (0.80%) 3.15% 3.06% Indices Master or U.S. Treasury 6.23 1.90% (3.96%) 1.14% 2.63% Federal Agency 3.97 1.50% U.S. Corporates, A -AAA rated 6.91 4.88 3.03% (3.15 %) 4.23% 4.04% Agency MBS (0 to 30 years Taxable Municipals 3.86 2.96% (1.77 %) 3.64% 4.19% Returns for periods greater than one year are annualized. Source: BofA Merrill Lynch Indices. © 2016 PFM Asset Management LLC Page 7 of 40 QUARTERLY MARKET SUMMARY Disclosures For the Quarter Ended December 31, 2016 Fixed Income Management The views expressed within this material constitute the perspective and judgment of PFM Asset Management LLC (PFMAM) at the time of distribution and are subject to change. Information is obtained from sources generally believed to be reliable and available to the public; however, PFMAM cannot guarantee its accuracy, completeness, or suitability. This material is for general information purposes only and is not intended to provide specific advice or recommendation. The information contained in this report is not an offer to purchase or sell any securities. PFMAM is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. PFMAM's clients are state and local governments, non - profit corporations, pension funds, and similar institutional investors. www.pfm.com © 2017 PFM Asset Management LLC. Further distribution is not permitted without prior written consent. © 2016 PFM Asset Management LLC 0 Pfm Page 8 of 40 Tab II © 2016 PFM Asset Management LLC Page 9 of 40 EXECUTIVE SUMMARY For the Quarter Ended December 31, 2016 The Investment Portfolio is of high credit quality and invested in U.S. Treasury, Federal Agency /GSE, Federal Agency /CMO, Supranational, municipal, asset backed securities, and corporate note securities. The Investment Portfolio's quarterly total return performance of -0.34% outperformed the benchmark performance of -0.43% by 0.09 %. The last 12 months total return performance for the Portfolio was 1.16% versus the benchmark's return of 0.89 %. Yields surged in the post - election period as expectations for U.S. economic growth and inflationary expectations rose, and in anticipation of a December FOMC rate hike. As 2017 starts with the highest yields in several years, we plan to initially position the portfolio duration to be aligned with the benchmark. We will continue to monitor incoming economic data to assess and confirm the prospect for Fed rate hikes throughout the year. We will continue to monitor incoming economic data, Fed policy, and market relationships, adjusting portfolio positioning as needed. This will include monitoring and assessing the policies of the incoming Trump administration for their impact on economic and market conditions. © 2016 PFM Asset Management LLC Page 10 of 40 NORTH PALM BEACH INVESTMEl Portfolio Statistics As of December 31, 2016 Par Value: 91048,839 Total Market Value: 91061,576 Security Market Value: 9,011,368 Accrued Interest. 23,713 Cash: 26,495 PFM Amortized Cost: 9,047,056 Yield at Market: 1.35% Yield at Cost: 1.19% Effective Duration: 1.81 Years Duration to Worst: 1.87 Years Average Maturity: 1.94 Years Average Credit: ** AA Credit Quality (S &P Ratings) A Not Rated 4.9% 0.9% A- AAA �2.6% 9.9% �A+ 4.9% AA 2.5% AA- 9.6% AA+ 64.7% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 11.8% 41.7% I0- 1 Year 1- 2 Years *An average of each security's credit rating assigned a numeric value and adjusted for its relative :veighting in the portfolio. U.S. Treasu 23.1% Supra -Sov / Supra -Natl Agency 5.3% Municipal 2.0% For the Quarter Ended December 31, 2016 Portfolio Sna pshot Sector Allocation Asset - Backed de Maturity Distribution 44.0% 0.9% 2 - 3 Years 3 - 4 Years 1.5% a 4 - 5 Years 0.0% > 5 Years eral /CMO xal /GSE 2016 PFM Asset Management LLC Page 11 of 40 For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Por folio Performance Portfolio Performance (Total Return) Annualized Return 1.2% 1.0% 0.8% 0.6% 0.4% 04 0.2% cs 0 0.0% H -0.2% -0.4% -0.6% 1.16 ° /n Current Quarter 1 Year 3 Year 5 Year 10 Year Since Inception ■ NORTH PALM BEACH INVESTMENT PORTFOLIO ■ BofA ML 1 -3 Year U.S. Treasury Index Portfolio performance isgross of fees unless otherwise indicated. * *Since Inception performance is not shown for periods less than oneyear. 2016 PFM Asset Management LLC Page 12 of 40 For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Por folio Performance Portfolio Performance (Total Return) Quarter Ended Effective Portfolio/ Benchmark Duration 12/31/16 09/30/16 06/30/16 03/31/16 1 Year Annualized Return 3 Year 5 Year NORTH PALM BEACH INVESTMENT 1.81 -0.34% -0.01% 0.57% 0.95% 1.16% 0.82% 0.67% PORTFOLIO BofA ML 1 -3 Year U.S. Treasurylndex 9.82 -0.43% -0.11% 0.53% 0.90% 0.89% 0.68% 0.57010 Difference 0.09% 0.10% 0.04% 0.05% 0.27% 0.14% 0.10% c� 0 h 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% -0.2% -0.4% -0.6% 1.16% 12/31/16 09/30/16 06/30/16 03/31/16 1 Year 3 Year 5 Year ■ NORTH PALM BEACH INVESTMENT PORTFOLIO ■ BofA ML 9 -3 Year U.S. Treasury Index Portfolio _performance is gross offees unless otherwise indicated. 2016 PFM Asset Management LLC Page 13 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Performance (Total Return) Quarter Ended Effective Portfolio /Benchmark Duration 12/31/16 09/30/16 06/30/16 03/31/16 For the Quarter Ended December 31, 2016 Portfolio Performance Annualized Return 1 Year 3 Year 5 Year NORTH PALM BEACH INVESTMENT 1.81 -0.34% -0.01% 0.57% 0.95% 1.16% 0.82% 0.67% PORTFOLIO Net of Fees ** - -0.36% -0.03% 0.55% 0.93% 1.08% 0.74% 0.59% BofA ML 1 -3 Year U.S. Treasury Index 1.82 -0.43% -0.11% 0.53% 0.90% 0.89% 0.68% 0.57010 Difference (Gross) 0.09% 0.10% 0.04% 0.05% 0.27% 0.14% 0.10% Difference (Net) 0.07% 0.08% 0.02% 0.03% 0.19% 0.06% 0.02% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% O 0.0% -0.2% -0.4% -0.6% 12/31/16 09/30/16 06/30/16 03/31/16 1 Year 3 Year ■ NORTH PALM BEACH INVESTMENT PORTFOLIO ■ BofA ML 1 -3 Year U.S. Treasury Index Portfolio _performance isgross of fees unless otherwise indicated. ** Fees were calculated based on average assets during the period at the contractual rate. 5 Year 2016 PFM Asset Management LLC Page 14 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Earnings Quarter -Ended December 31, 2016 Market Value Basis For the Quarter Ended December 31, 2016 Portfolio Performance Accrual (Amortized Cost) Basis Beginning Value (09/30/ 2016) $8,913,142.81 $8,892,042.79 Net Purchases /Sales $154,427.67 $154,427.67 Change in Value ($56,202.85) $585.32 Ending Value (12/31/2016) $9,011,367.63 $9,047,055.78 Interest Earned $25,153.91 $25,153.91 Portfolio Earnings ($31,048.94) $25,739.23 2016 PFM Asset Management LLC Page 15 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector Allocation As ofDecember 31, 2016 Sector Market Value ($) % of Portfolio Federal Agency /GSE 3,566,589 39.5% U.S. Treas 23.1 ° /a Corporate 2,150,433 23.9% U.S. Treasury 2,082,937 23.1% Supra -Sov / Supra -Nad Agency 473,386 5.3% Asset - Backed 442,502 4.9/0 Municipal 181,456 2.0% Federal Agency /CMO 114,064 1.3% Total 9,011,368 100.0% Detail may not add to total due to rounding- 2016 PFM Asset Management LLC Supra -Sov Supra -Na1 Agency 5.3 °/a Municipal 2.0% Page 16 of 40 For the Quarter Ended December 31, 2016 Portfolio Composition Asset - Backed )rate 0 ral CMO xal /GSE 0 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector Allocation As of December 31, 2016 For the Quarter Ended December 31, 2016 Portfolio Composition Sector Market Value ($) % of Portfolio % of Benchmark Federal Agency /GSE 3,566,589 39.5% Corporate 2,150,433 23.9% - U.S. Treasury 2,082,937 23.1% 100.0% Supra -Sov / Supra -Nad Agency 473,386 5.3% - Asset- Backed 442,502 4.9% Municipal 181,456 2.0% Federal Agency /CMO 114,064 1.3% - Total 9,011,368 100.0% 100.0% 120% 100.0% 100% 80% 60% 40% 39.5% 23.9% 23.1% 20% 4.9% 0.0% 0.0% 1.3% 0.0% 0.0% 2.0% 0.0% 5.3% 0.0% 0% Asset - Backed Corporate Federal Federal Agency /GSE Municipal Supra -Sov / U.S. Treasury Agency /CMO Supra -Natl Agency ■ NORTH PALM BEACH INVESTMENT PORTFOLIO ■ BofA ML 1 -3 Year U.S. Treasury Index Detail may not add to total due to rounding. 2016 PFM Asset Management LLC Page 17 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector Federal Agency /GSE Corporate U.S. Treasury Supra -Sov / Supra -Natl Agency Asset - Backed Municipal Federal Agency /CMO Commercial Paper For the Quarter Ended December 31, 2016 Portfolio Composition Total $9.0 100.0% Sector Allocation • Commercial Paper 90% • Federal Agency /CMO December 31, 2016 September 30, 2016 June 30, 2016 60% March 31, 2016 MV ($MM) % of Total MV ($MM) % of Total MV ($MM) % of Total MV ($MM) % of Total 3.6 39.5% 3.2 36.1% 1.5 16.4% 0.8 8.7% 2.2 23.9% 2.2 25.1% 1.8 20.2% 1.5 16.8% 2.1 23.1% 2.3 26.0% 4.9 54.1% 6.1 68.0% 0.5 5.3% 0.5 5.4% 0.3 2.8% 0.1 1.3% 0.4 4.9% 0.3 3.9% 0.1 0.6% 0.0 0.6% 0.2 2.0% 0.2 2.1% 0.2 2.0% 0.2 2.0% 0.1 1.3% 0.1 1.4% 0.1 1.4% 0.0 0.0% 0.0 0.0% 0.0 0.0% 0.2 2.5% 0.2 2.6% Total $9.0 100.0% Detail may not add to total due to rounding. $8.9 100.0% $9.1 100.0% $9.0 100.0% December 2016 September 2016 June 2016 March 2016 2016 PFM Asset Management LLC Page 18 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Maturity Distribution As of December 31, 2016 For the Quarter Ended December 31, 2016 Portfolio Composition 60% 50% 40% 30% 20% 10% 0% 0 -1 Years 1 -2 Years 2 -3 Years 3 -4 Years 4 -5 Years > 5 Years ■ NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1 -3 Year U.S. Treasury Index 2016 PFM Asset Management LLC Page 19 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio / Benchmark NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1 -3 Year U.S. Treasury Index 60% 50% 40% 30% 20% 10% 0% 0 -1 Years 1 -2 Years 2 -3 Years 3 -4 Years 4 -5 Years > 5 Years ■ NORTH PALM BEACH INVESTMENT PORTFOLIO ■ BofA ML 1 -3 Year U.S. Treasury Index Distribution by Effective Duration For the Quarter Ended December 31, 2016 Portfolio Composition Duration Distribution As of December 31, 2016 Effective 0 -1 1 -2 2 -3 3 -4 4 -5 > 5 Duration YEARS YEARS YEARS YEARS YEARS YEARS 1.81 11.82% 46.38% 41.81% 0.00% 0.00% 0.00% 9.82 3.05% 53.52% 43.43% 0.00% 0.00% 0.00% 60% 50% 40% 30% 20% 10% 0% 0 -1 Years 1 -2 Years 2 -3 Years 3 -4 Years 4 -5 Years > 5 Years ■ NORTH PALM BEACH INVESTMENT PORTFOLIO ■ BofA ML 1 -3 Year U.S. Treasury Index Contribution to Portfolio Duration 2016 PFM Asset Management LLC Page 20 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Credit Quality As of December 31, 2016 S &P Rating Market Value ($) % of Portfolio AA+ $5,833,723 64.7% AAA $895,694 9.9% AA- $866,344 9.6% A+ $445,270 4.9% A $439,922 4.9% A- $229,689 2.6% AA $221,338 2.5% Not Rated $79,388 0.9% Totals $9,011,368 100.0% Detail may not add to total due to rounding. 2016 PFM Asset Management LLC Not Rated 0.9% AAA 9.9% Page 21 of 40 AA+ 64.7% For the Quarter Ended December 31, 2016 Portfolio Composition A 4.9% A- 2.6% A+ 4.9% AA 2.5% AA- 9.6% For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Por folio Composition Issuer Distribution As of December 31, 2016 Issuer Market Value ($) % of Portfolio UNITED STATES TREASURY 2,082,937 23.1% FEDERAL HOME LOAN BANKS 1,900,984 21.1% FANNIE MAE 1,002,885 11.1% FREDDIE MAC 776,784 8.6% INTL BANK OF RECONSTRUCTION AND DEV 256,540 2.9% BANK OF NEW YORK CO INC 200,084 2.2% TP MORGAN CHASE & CO 199,982 2.2% HSBC HOLDINGS PLC 199,888 2.2% CISCO SYSTEMS INC 190,573 2.1% FLORIDA ST HURRICAN CAT FUND 181,456 2.0% CHEVRON CORP 179,261 2.0% WELLS FARGO & COMPANY 149,275 1.7% BANK OF NOVA SCOTIA 148,625 1.7% WESTPAC BANK CORP NY 138,527 1.5% INTER - AMERICAN DEVELOPMENT BANK 128,181 1.4% HONDA AUTO RECEIVABLES 124,458 1.4% TOYOTA MOTOR CORP 109,973 1.2% CARMAX AUTO OWNER TRUST 99,802 1.1% 2016 PFM Asset Management LLC Page 22 of 40 For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Por folio Composition Issuer Market Value ($) % of Portfolio CANADIAN IMPERIAI. BA 99,048 1.1% AMERICAN HONDA FINANCE 98,906 1.1% ROYAL BANK OF CANADA NY 98,735 1.1% BANK ON MONTREAL CHI 98,690 1.1% AFRICAN DEVELOPMENT BANK 88,665 1.0% APPLE INC 70,133 0.8% MICROSOFT CORP 59,193 0.7% TOYOTA AUTO RECEIVABLES 49,672 0.6% NISSAN AUTO RECEIVABLES 49,531 0.6% CNH EQUIPMENT TRUST 49,506 0.6% PEPSICO, INC 39,950 0.4% BERKSHIRE HATHAWAY IAWAY INC 39,882 0.4% HYUNDAI AUTO RECEIVABLES 39,678 0.4% TOHN DEERE OWNER TRUST 29,857 0.3% AMERICAN EXPRESS CO 29,707 0.3% Grand Total: 9,011,368 100.0% 2016 PFM Asset Management LLC Page 23 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector /Issuer Distribution As ofDecember31, 2016 For the Quarter Ended December 31, 2016 Portfolio Composition Sector / Issuer Market Value ($) % of Sector % of Total Portfolio Asset - Backed CARMAX AUTO OWNER TRUST 99,802 22.6% 1.1% CNH EQUIPMENT TRUST 49,506 11.2% 0.5% HONDA AUTO RECEIVABLES 124,458 28.1% 1.4% HYUNDAI AUTO RECEIVABLES 39,678 9.0% 0.4% TOHN DEERE OWNER TRUST 29,857 6.7% 0.3% NISSAN AUTO RECEIVABLES 49,531 11.2% 0.5% TOYOTA AUTO RECEIVABLES 49,672 11.2% 0.6% Sector Total 442,502 100.0% 4.9% Corporate AMERICAN EXPRESS CO 29,707 1.4% 0.3% AMERICAN HONDA FINANCE 98,906 4.6% 1.1% APPLE INC 70,133 3.3% 0.8% BANK OF NEW YORK CO INC 200,084 9.3% 2.2% BANK OF NOVA SCOTIA 148,625 6.9% 1.6% BANK ON MONTREAL CHI 98,690 4.6% 1.1% BERKSHIRE HATHAWAY IAWAY INC 39,882 1.9% 0.4% CANADIAN IMPERIAI, BA 99,048 4.6% 1.1% CHEVRON CORP 179,261 8.3% 2.0% CISCO SYSTEMS INC 190,573 8.9% 2.1% 2016 PFM Asset Management LLC Page 24 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector / Issuer For the Quarter Ended December 31, 2016 Portfolio Composition Market Value ($) % of Sector % of Total Portfolio HSBC HOLDINGS PLC 199,888 9.3% 2.2% TP MORGAN CHASE & CO 199,982 9.3% 2.2% MICROSOFT CORP 59,193 2.8% 0.7% PEPSICO, INC 39,950 1.9% 0.4% ROYAL BANK OF CANADA NY 98,735 4.6% 1.1% TOYOTA MOTOR CORP 109,973 5.1% 1.2% WELLS FARGO & COMPANY 149,275 6.9% 1.7% WESTPAC BANK CORP NY 138,527 6.4% 1.5% Sector Total 2,150,433 100.0% 23.9% Federal Agency /CMO 1,900,984 53.3% 21.1% FANNIE MAE 70,161 61.5% 0.8% FREDDIE MAC 43,903 38.5% 0.5% Sector Total 114,064 100.0% 1.3% Federal Agency /GSE FANNIE MAE 932,724 26.2% 10.4% FEDERAL HOME LOAN BANKS 1,900,984 53.3% 21.1% FREDDIE MAC 732,881 20.5% 8.1% Sector Total 3,566,589 100.0% 39.6% Municipal FLORIDA ST HURRICAN CAT FUND 181,456 100.0% 2.0% 2016 PFM Asset Management LLC Page 25 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector / Issuer For the Quarter Ended December 31, 2016 Portfolio Composition Market Value ($) % of Sector % of Total Portfolio 2016 PFM Asset Management LLC Page 26 of 40 For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Por folio Activity Quarterly Portfolio Transactions Trade Settle 500,000 MONEY MARKET FUND 1.11 2016 PFM Asset Management LLC Page 27 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Trade Settle Date Date Par ($) CUSIP Security Description For the Quarter Ended December 31, 2016 Portfolio Achvio Maturity Transact Yield Realized Coupon Date Amt ($) at Market G/L (BV) 11/1/16 11/1/16 30,000 HAROT 2016 -3 A3 ABS 1.16% 6/18/19 72.50 2016 PFM Asset Management LLC Page 28 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Trade Settle Date Date Par ($) CUSIP Security Description For the Quarter Ended December 31, 2016 Portfolio Achvio Maturity Transact Yield Realized Coupon Date Amt ($) at Market G/L (BV) 12/21/16 12/21/16 40,000 US TREASURY NOTES 1.50% 12/31/18 1,162.50 Total INTEREST 4,595,944 19,315.80 MATURITY 10/11/16 10/11/16 100,000 JOHN DEERE CAPITAL CORP 1.05% 10/11/16 100,000.00 0.00 Total MATURITY 100,000 100,000.00 0.00 PAYDOWNS 10/1/16 10/25/16 855 FHLMC SERIES KP03 Al 1.73% 3/1/19 848.60 0.00 Total PAYDOWNS 12,216 12,216.12 0.00 SELL 10/3/16 10/5/16 50,000 US TREASURY NOTES 1.50% 12/31/18 60,836.72 1.14% 103.52 Total SELL 805,000 805,928.76 - 147.02 2016 PFM Asset Management LLC Page 29 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Tran. Type INTEREST INTEREST INTEREST PAYDOWNS INTEREST BUY SELL SELL INTEREST INTEREST MATURITY INTEREST INTEREST INTEREST INTEREST INTEREST INTEREST INTEREST BUY BUY Quarterly Portfolio Transactions Trade Settle Date Date Par ($) CUSIP Security Description Coupon For the Quarter Ended December 31, 2016 Portfolio Achvio Maturity Transact Realized Amt Date At ($) Yield G/L (BV) 10/1/16 10/1/16 500,000.00 AMERICAN EXPRESS CREDIT CORP 1.70% 10/30/19 (29,964.30) 1.74% 2016 PFM Asset Management LLC Page 30 of 40 0.00 129.89 (11.80) ■ For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Por folio Activity Tran. Trade Settle Maturity Transact Realized Type Date Date Par ($) CUSIP Security Description Coupon Date Amt ($) Field G/L (BV) INTEREST 10/30/16 10/30/16 40,000.00 US TREASURY NOTES 1.50% 11/30/19 (575,837.23) 1.46% 2016 PFM Asset Management LLC Page 31 of 40 0.00 For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Por folio Activity Tran. Trade Settle Maturity Transact Realized Type Date Date Par ($) CUSIP Security Description Coupon Date Amt ($) Field G/L (BV) SELL 12/1/16 12/5/16 545,000.00 US TREASURY NOTES 1.50% 12/31/18 1,162.50 2016 PFM Asset Management LLC Page 32 of 40 For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Por folio Activity TOTALS (134,041.83) (147.02) 2016 PFM Asset Management LLC Page 33 of 40 Tab III © 2016 PFM Asset Management LLC Page 34 of 40 For the Quarter Ended December 31, 2016 VILLAGE OF NORTH PALM BEACH, FLORIDA Asset Allocation Money Market Interest Bearing Mutual Funds Checking or Savings 0.10% Account Municipal N 58.10% Obligations 0.79% Corporate Notes 9.46% Asset Backed Securities 1.94% Security Type Florida Prime (SBA) United States Treasury Securities Federal Agency (GSE) Supranationals Mortgage- Backed Securities Asset Backed Securities Certificates of Deposit Commercial Paper Corporate Notes Mortgage- Backed ----' 1 i� Securities Supranationals 0.50% 2.10% Amortized Cost (Includes Interest) 515,504.05 2,084,356.31 3,594,989.59 480,468.36 114,918.80 445,188.43 2,168,900.52 Florida Prime (SBA) 2.25% United States Treasury Securities 9.09% — Federal Agency (GSE) 15.68% Allocation Percentage 2.25% 9.09% 15.68% 2.10% 0.50% 1.94% 0.00% 0.00% 9.46% Notes 2 3 3 Municipal Obligations 181,946.70 0.79% Money Market Mutual Funds 22,632.76 0.10% Intergovernmental Investment Pool - 0.00% Interest Bearing Checking or Savings Account 13,324,294.67 58.10% 2 Village Managed 13,862,431.48 60.39% PFM Managed 9,093,401.47 39.61% Total 22,955,832.95 100.00% Notes: 1. All assets are included. PFM managed securities are shown on Amortized Cost plus Accrued Interest basis. 2. These Accounts are managed by the Village. 3. Maximum allocation to all corporate and bank credit instruments is 50% combined. © 2016 PFM Asset Management LLC Page 35 of 40 Permitted In by Policy Compliance 25% YES 100% YES 75% YES 25% YES 25% YES 25% YES 50% YES 50% YES 50% YES 25% YES 50% YES 50% YES 100% YES Page 36 of 40 For the Quarter Ended December 31, 2016 VILLAGE OF NORTH PALM BEACH, FLORIDA Asset Allocation Amortized os Allocation Permitted In Individual Issuer Breakdown (Includes Interest) Percentage Notes by Policy Compliance Government National Mortgage Association (GNMA) - 0.00% 40% YES Federal Farm Credit Bank (FFCB) - 0.00% 40% YES Federal Home Loan Bank (FHLB) 1,915,491.39 8.35% 40% YES Federal National Mortgage Association (FNMA) 1,013,316.24 4.42% 40% YES Federal Home Loan Mortgage Corporation (FHLMC) 781,100.76 3.41% 40% YES Florida State Hurricane Cat Fund Municipal Bonds 181,946.70 0.79% 5% YES American Express Company Corporate Notes 30,052.74 0.13% 5% YES American Honda Finance Corporate Notes 100,537.01 0.44% 5% YES Apple, Inc. Corporate Notes 70,414.61 0.31% 5% YES Bank of Montreal Corporate Notes 100,597.81 0.44% 5% YES Bank of New York Company Inc. Corporate Notes 200,338.31 0.87% 5% YES Bank of Nova Scotia Corporate Notes 150,484.80 0.66% 5% YES Berkshire Hathaway, Inc. Corporate Notes 40,173.91 0.18% 5% YES Canadian Imperial Corporate Notes 100,495.03 0.44% 5% YES Chevron Corporation Corporate Notes 180,351.23 0.79% 5% YES Cisco Systems, Inc. Corporate Notes 190,123.68 0.83% 5% YES HSBC Holdings plc Corporate Notes 201,212.32 0.88% 5% YES JP Morgan Chase & Company Corporate Notes 201,108.48 0.88% 5% YES Microsoft Corporation Corporate Notes 60,208.61 0.26% 5% YES PepsiCo, Inc. Corporate Notes 40,082.60 0.17% 5% YES Royal Bank of Canada Corporate Notes 100,535.57 0.44% 5% YES Toyota Motor Corporation Corporate Notes 110,748.07 0.48% 5% YES Wells Fargo & Company Corporate Notes 151,131.05 0.66% 5% YES Westpac Banking Corp Corporate Notes 140,304.69 0.61% 5% YES Carmax Auto Owner Trust ABS 100,048.69 0.44% 5% YES CNH Equipment Trust ABS 50,022.48 0.22% 5% YES Honda Auto Receivables ABS 125,038.84 0.55% 5% YES Hyundai Auto Receivables ABS 40,017.88 0.17% 5% YES John Deere ABS 30,014.55 0.13% 5% YES Nissan Auto Receivables ABS 50,021.87 0.22% 5% YES Toyota Auto Receivables ABS 50,024.12 0.22% 5% YES Money Market Fund - TD Bank Sweep Account 22,632.76 0.10% 33% YES r\ ')All' nlDIt Ar A --- It X-- _ --- - T T d- Page 36 of 40 Notes: 1. These Accounts are managed by the Village. 2. A large distribution of the ad- valorem tax was received in December. In February the funds were transferred out to different accounts. © 2016 PFM Asset Management LLC Page 37 of 40 For the Quarter Ended December 31, 2016 VILLAGE OF NORTH PALM BEACH, FLORIDA Asset Allocation Amortized os Allocation Permitted In Individual Issuer Breakdown (Includes Interest) Percentage Notes by Policy Compliance Interest Bearing Checking /Savings Acct -Wells Fargo 12,283,202.26 53.56% 1,2 50% NO Interest Bearing Checking /Savings Acct - Flagler Bank 509,637.01 2.22% 1 50% YES Interest Bearing Checking /Savings Acct- BankUnited 531,455.40 2.32% 1 50% YES International Bank of Recon and Dev Notes 260,395.96 1.14% 5% YES Inter - American Development Bank 129,874.77 0.57% 5% YES African Development Bank 90,197.63 0.39% 5% YES Notes: 1. These Accounts are managed by the Village. 2. A large distribution of the ad- valorem tax was received in December. In February the funds were transferred out to different accounts. © 2016 PFM Asset Management LLC Page 37 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Important Disclosures For the Quarter Ended December 31, 2016 Portfolio Achvio 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 a specific recommendation. All statements as to what will or may happen under certain circumstances are based on assumptions, some but not all of which are noted in the presentation. Assumptions may or may not be proven correct as actual events occur, and results may depend on events outside of your or our control. Changes in assumptions may have a material effect on results. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in this presentation is not an offer to purchase or sell any securities. ■ Market values which include accrued interest, 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. ■ In accordance with generally accepted accounting principles, information is presented on a trade date basis; forward settling purchases are included in the monthly balances and forward settling sales are excluded. ■ Performance is presented in accordance with the CFA Institute's Global Investment Performance Standards (GIPS). Unless otherwise noted, performance is shown gross of fees. Quarterly returns are presented on an unannualized basis. Returns for periods greater than one year are presented on an annualized basis. Past performance is not indicative of future returns. ■ Bank of America /Merrill Lynch Indices provided by Bloomberg Financial Markets. ■ Money market fund /cash balances are included in performance and duration computations. ■ Standard & Poor's is the source of the credit ratings. Distribution of credit rating is exclusive of money market fund /LGIP holdings. ■ Callable securities in portfolio are included in the maturity distribution analysis to their stated maturity date, although they may be called prior to maturity. ■ MBS maturities are represented by expected average life. 2016 PFM Asset Management LLC Page 38 of 40 NORTH PALM BEACH INVESTMENT PORTFOLIO Glossary ■ ACCRUED INTEREST: Interest that is due on a bond or other fixed income security since the last interest payment was made. ■ AGENCIES: Federal agency securities and /or Government - sponsored enterprises. For the Quarter Ended December 31, 2016 Appendix ■ 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 straight line basis. Such discount or premium with respect to longer term securities is amortized using the constant yield basis. ■ BANKERS' ACCEPTANCE: A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the insurer. ■ COMMERCIAL PAPER: An unsecured obligation issued by a corporation or bank to finance its short -term credit needs, such as accounts receivable and inventory. ■ CONTRIBUTION TO DURATION: Represents each sector or maturity range's relative contribution to the overall duration of the portfolio measured as a percentage weighting. Since duration is a key measure of interest rate sensitivity, the contribution to duration measures the relative amount or contribution of that sector or maturity range to the total rate sensitivity of the portfolio. ■ DURATION TO WORST: A measure of the sensitivity of a security's price to a change in interest rates, stated in years, computed from cash flows to the maturity date or to the put date, whichever results in the highest yield to the investor. ■ EFFECTIVE DURATION: A measure of the sensitivity of a security's price to a change in interest rates, stated in years. ■ EFFECTIVE YIELD: The total yield an investor receives in relation to the nominal yield or coupon of a bond. Effective yield takes into account the power of compounding on investment returns, while nominal yield does not. ■ FDIC: Federal Deposit Insurance Corporation. A federal agency that insures bank deposits to a specified amount. ■ INTEREST RATE: Interest per year divided by principal amount, expressed as a percentage. ■ MARKET VALUE: The value that would be received or paid for an investment in an orderly transaction between market participants at the measurement date. ■ MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. ■ NEGOTIABLE CERTIFICATES OF DEPOSIT: A CD with a very large denomination, usually $1 million or more that can be traded in secondary markets. ■ PAR VALUE: The nominal dollar face amount of a security. 2016 PFM Asset Management LLC Page 39 of 40 For the Quarter Ended December 31, 2016 NORTH PALM BEACH INVESTMENT" PORTFOLIO Appendix Glossary ■ PASS THROUGH SECURITY. A security representing pooled debt obligations that passes income from debtors to its shareholders. The most common type is the mortgage- backed security. • REPURCHASE AGREEMENTS: A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. • SETTLE DATE: The date on which the transaction is settled and monies /securities are exchanged. If the settle date of the transaction occurs on a non - business day (i.e. coupon payments and maturity proceeds, the funds are exchanged on the next business day. • TRADE DATE: The date on which the transaction occurred however the final consummation of the security transaction and payment has not yet taken place. • UNSETTLED TRADE: A trade which has been executed however the final consummation of the security transaction and payment has not yet taken place. ■ U.S. TREASURY: The department of the U.S. government that issues Treasury securities. ■ YIELD: 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. ■ 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. 2016 PFM Asset Management LLC Page 40 of 40