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03-31-2017 Investment Performance Review
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 Cody Raulerson, Analyst One Keystone Plaza, Suite 300 North Front & Market Streets Harrisburg, PA 17101-2044 717.232.2723 717.233.6073 fax PFM Asset Management LLC 300 South Orange Avenue Suite 1170 Orlando, FL 32801 407.648.2208 407.648.1323 fax Investment Performance Review For the Quarter Ended March 31, 2017 Village of North Palm Beach, Florida 1 of 45 TABLE OF CONTENTS For the Quarter Ended March 31, 2017 Tab I Market Update Tab II Executive Summary Investment Portfolio Tab III Asset Allocation Chart Important Disclosures 2017 PFM Asset Management LLC 2 of 45 Tab I 2017 PFM Asset Management LLC 3 of 45 QUARTERLY MARKET SUMMARY For the Quarter Ended March 31, 2017 Fixed Income Management SUMMARY •The “Trump trade” dominated markets for much of the quarter pushing interest rate and equity prices higher, as the Trump administration and the Republican Party continued to push a bold agenda that promised new jobs, lower taxes, deregulation, and massive infrastructure spending. •On March 15, with almost unanimous certainty from the market, the Federal Open Market Committee (FOMC) raised the federal funds target range by 0.25% to a range of 0.75% to 1.00%. The FOMC also released updated economic forecasts and a new “dot plot.” These were largely unchanged from the forecasts released in December. •Central banks in the developed world outside of the United States continued to apply highly accommodative monetary policies as economic growth and inflation remained subdued. As a result, sovereign bond yields were at or near historic lows, with yields throughout Europe and Japan below 0%. Emerging markets experienced a resurgence this past quarter, after reeling from lack of positive investor sentiment, turning in a strong begining to 2017. ECONOMIC SNAPSHOT •The pace of U.S. economic expansion slowed in the fourth quarter of 2016. Measurements of growth in the first quarter 2017 are forecasted to slow further, however, the labor market remained strong, consumer confidence continued to soar, business surveys picked up, and the housing market returned to near pre-crisis levels as the market continues to digest the size and scope of the Trump administration’s proposed policies. •U.S. gross domestic product (GDP) grew at a rate of 2.1% in the fourth quarter of 2016, a slowdown from the third quarter’s pace of 3.5%. The deceleration reflected downturns in exports and federal government spending, and a deceleration in business investment. First quarter estimates are calling for further slowing in the pace of expansion to below 1.5% as consumer spending declines and business investment remains muted. •The labor market added over 500,000 jobs in the first quarter as the unemployment rate declined to a decade low of 4.5% with the labor force participation rate rising to 63% for the first time in a year. Wage growth remained firm in the quarter, increasing at an annual rate of more than 2.5% during all three months. •Confidence among Americans grew as the Conference Board’s March reading increased to its highest level since the end of 2000. Manufacturing extended its expansion during the quarter with the ISM manufacturing PMI rebounding, after contracting over 2016 year-end, to its highest level since the end of 2014. On the housing front, existing home sales reached pre-crisis levels, selling at an annual rate of 5.69 million to start the year. INTEREST RATES •Short-term (under five years) yields ended the first quarter higher, reflecting the Fed’s March rate hike, while medium to long-term yields declined amid subdued inflation expectations. For much of the quarter, yields remained range bound until entering an upward trend at the start of March in anticipation of the expected FOMC March rate hike. They declined as the Fed reiterated its expectation for gradual tightening and the ability of the Trump administration to enact bold, pro-growth policies came into question. The 2-year Treasury yield ended the quarter only seven basis points over December 31, while the yield on the 10-year Treasury fell 6 basis points. •In the money market space, shorter-term Treasury yields rose as the expectation for a Fed rate hike gained certainty. Yields on commercial paper and certificates of deposit did not increase. However, yields on short-term credit instruments remained elevated and offered incremental yield. SECTOR PERFORMANCE •U.S. Treasury indexes posted positive returns in the first quarter of the year, the first positive quarter since the second quarter of 2016. Returns were largely generated by income rather than price appreciation as yields were little changed. •Federal agency yield spreads remained near historically tight levels throughout the quarter as the supply-demand imbalance continued. The sector outperformed comparable maturity Treasuries for the third quarter in a row. •Corporate yield spreads continued to tighten during the quarter, reaching multi-year lows, before drifting mildly wider at the end of March. The sector generated strong outperformance relative to comparable maturity Treasuries, as the sector turned in the sixth straight quarter of outperformance. •Mortgage-backed securities (MBS) generally underperformed Treasuries due to duration extensions, and headline risk surrounding the potential reduction in the Fed’s balance sheet holdings. •Asset-backed securities (ABS) strongly outperformed Treasuries, as AAA- rated tranches, in our view, continued to offer good value, adding to returns and diversification. © 2017 PFM Asset Management LLC 4 of 45 QUARTERLY MARKET SUMMARY For the Quarter Ended March 31, 2017 Fixed Income Management Economic Snapshot Labor Market Dec '16 Mar '16 Unemployment Rate Feb'17 4.7%4.7%5.0% Change In Non-Farm Payrolls Feb'17 235,000 155,000 225,000 Average Hourly Earnings (YoY)Feb'17 2.8%2.9%2.5% Personal Income (YoY)Feb'17 4.6%3.6%3.6% Initial Jobless Claims (week)3/24/17 258,000 241,000 275,000 Growth Real GDP (QoQ SAAR)2017Q4 2.1%3.5%0.9% GDP Personal Consumption (QoQ SAAR)2017Q4 3.5%3.0%2.3% Retail Sales (YoY)Feb'17 5.7%4.4%1.7% ISM Manufacturing Survey (month)Mar'17 57.2 54.5 51.7 Existing Home Sales SAAR (month)Feb'17 5.48 mil. 5.51 mil. 5.39 mil. Inflation / Prices Personal Consumption Expenditures (YoY)Feb'17 2.1%1.6%0.8% Consumer Price Index (YoY)Feb'17 2.7%2.1%0.9% Consumer Price Index Core (YoY)Feb'17 2.2%2.2%2.2% Crude Oil Futures (WTI, per barrel)Mar'17 $50.60 $53.72 $38.34 Gold Futures (oz.)Mar'17 $1,247 $1,152 $1,234 Latest Unemployment Rate (left) vs. Change in Nonfarm Payrolls (right) Real GDP (QoQ) Consumer Price Index -1% 0% 1% 2% 3% Feb '14 Aug '14 Feb '15 Aug '15 Feb '16 Aug '16 Feb '17 CPI (YoY)Core CPI (YoY) 0 125K 250K 375K 4% 5% 6% 7% Feb '14 Aug '14 Feb '15 Aug '15 Feb '16 Aug '16 Feb '17 Change In Non-Farm Payrolls Unemployment Rate -2% 0% 2% 4% 6% Dec '13 Jun '14 Dec '14 Jun '15 Dec '15 Jun '16 Dec '16 2 2 1 1 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. © 2017 PFM Asset Management LLC QUARTERLY MARKET SUMMARY 5 of 45 QUARTERLY MARKET SUMMARY For the Quarter Ended March 31, 2017 Fixed Income Management Source: Bloomberg. Interest Rate Overview U.S. Treasury Note Yields U.S. Treasury Yield Curve U.S. Treasury Yields Yield Curves as of 3/31/17 0% 1% 2% 3% 4%3-mo1-yr2-yr3-yr5-yr7-yr10-yr30-yrYieldMaturityMarch 31, 2017 December 31, 2016 March 31, 2016 Maturity March 31, 2017 December 31, 2016 Change over Quarter March 31, 2016 Change over Year 3-month 0.75%0.50% 0.25% 0.20% 0.55% 1-year 1.02%0.81% 0.21% 0.58% 0.44% 2-year 1.26%1.19% 0.07% 0.72% 0.54% 5-year 1.92%1.93%(0.01%)1.21% 0.71% 10-year 2.39%2.45%(0.06%)1.77% 0.62% 30-year 3.01%3.07%(0.06%)2.61% 0.40% 0% 1% 2% 3% 4% 5%3-mo1-yr2-yr3-yr5-yr7-yr10-yr25-yr30-yrYieldMaturity U.S. Treasury Federal Agency Industrial Corporates, A Rated 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Sep '16 Oct '16 Nov '16 Dec '16Yield 2-Year 5-Year 10-Year © 2017 PFM Asset Management LLC 6 of 45 QUARTERLY MARKET SUMMARY For the Quarter Ended March 31, 2017 Fixed Income Management Source: BofA Merrill Lynch Indices. March 31, 2017 Duration Yield 3 Month 1 Year 3 Years 1-3 Year Indices U.S. Treasury 1.89 1.27%0.26%0.25%0.72% Federal Agency 1.79 1.37%0.30%0.41%0.83% U.S. Corporates, A-AAA rated 1.93 1.92%0.60%1.32%1.41% Agency MBS (0 to 3 years)2.08 1.98%0.38%0.40%1.13% Taxable Municipals 1.89 2.24%0.70%2.26%1.92% 1-5 Year Indices U.S. Treasury 2.70 1.48%0.37%(0.10%)1.14% Federal Agency 2.27 1.51%0.41%0.28%1.16% U.S. Corporates, A-AAA rated 2.77 2.19%0.80%1.29%1.96% Agency MBS (0 to 5 years)3.29 2.25%0.59%0.39%2.00% Taxable Municipals 2.67 2.36%0.61%2.12%2.49% Master Indices (Maturities 1 Year or Greater) U.S. Treasury 6.25 1.92%0.68%(1.47%)2.32% Federal Agency 3.91 1.84%0.74%0.11%2.00% U.S. Corporates, A-AAA rated 6.98 3.01%1.11%1.65%3.54% Agency MBS (0 to 30 years)4.90 2.81%0.46%0.18%2.66% Taxable Municipals 3.81 2.81%0.59%1.49%3.13% As of 3/31/17 Returns for Periods ended 3/31/17 Returns for periods greater than one year are annualized. © 2017 PFM Asset Management LLC BofA Merrill Lynch Index Returns 7 of 45 QUARTERLY MARKET SUMMARY For the Quarter Ended March 31, 2017 Fixed Income Management DISCLOSURES PFM is the marketing name for a group of affiliated companies providing a range of services. All services are provided through separate agreements with each company. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. Investment advisory services are provided by PFM Asset Management LLC which is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The information contained is not an offer to purchase or sell any securities. Additional applicable regulatory information is available upon request. For more information regarding PFM’s services or entities, please visit www.pfm.com. The views expressed within this material constitute the perspective and judgment of PFM Asset Management LLC 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, 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. © 2017 PFM Asset Management LLC. Further distribution is not permitted without prior written consent. © 2017 PFM Asset Management LLC 8 of 45 Tab II 2017 PFM Asset Management LLC 9 of 45 EXECUTIVE SUMMARY For the Quarter Ended March 31, 2017 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 0.37% outperformed the benchmark performance of 0.26%by 0.11 %.The last 12 months total return performance for the Portfolio was 0.58%versus the benchmark’s return of 0.25%. Yields remained within a narrow range through the first couple months before rising strongly in anticipation of the March FOMC rate hike as Fed officials made a concerted effort to telegraph expectations.Yields on the short-end of the curve ended the quarter higher, reflecting the rate hike,while long-term yields declined alongside future inflation expectations. We expect the Fed to remain on track to make two additional rate hikes in 2017,matching the three hikes projected for 2017 by the Committee’s “dot plot.”In addition,a potential reduction in the size of the Fed’s balance sheet later in the year could have significant implications for the markets. Since yields are currently stable and we expect no action at the next FOMC meeting in May,we are targeting portfolio durations to closely match that of benchmarks.We will continue to revisit this position regularly, especially in light of the potential for higher yields later in 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. 2017 PFM Asset Management LLC 10 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Snapshot Portfolio Statistics As of March 31, 2017 9,091,270 9,095,204 9,060,411 23,851 10,941 9,090,524 1.48% 1.31% AAAverage Credit: ** Yield at Cost: Accrued Interest: Cash: Par Value: Amortized Cost: Total Market Value: Yield at Market: Security Market Value: Effective Duration:1.79 Years Duration to Worst:1.88 Years Average Maturity:2.08 Years PFM - Credit Quality (S&P Ratings) 5.5% A 4.2% A- 4.9% A+ 2.4% AA 9.6% AA- 53.3% AA+ 15.1% AAA 5.0% Not Rated 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0 - 1 Year 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years 7.2% 41.9%42.6% 2.9%4.2% 1.2% Maturity Distribution Sector Allocation 11.7% Asset-Backed 26.4% Corporate 1.2% Federal Agency/CMO 36.4% Federal Agency/GSE 2.0% Municipal 7.4% Supra-Sov / Supra-Natl Agency 14.9% U.S. Treasury 2017 PFM Asset Management LLC * An average of each security’s credit rating assigned a numeric value and adjusted for its relative weighting in the portfolio. 11 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Performance Portfolio Performance (Total Return) Effective DurationPortfolio/Benchmark Annualized Return 10 Year1 Year 3 Year 5 Year Since Inception (06/30/09) ** Current Quarter NORTH PALM BEACH INVESTMENT PORTFOLIO 1.79 0.37%-0.58%0.90% 0.74%1.06% BofA ML 1-3 Year U.S. Treasury Index 1.82 0.26%-0.25%0.72% 0.64%1.00% Difference 0.33% 0.11%0.18% 0.10%-0.06% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% Current Quarter 1 Year 3 Year 5 Year 10 Year Since Inception 0.37% 0.58% 0.90% 0.74% 1.06% 0.26%0.25% 0.72% 0.64% 1.00%Total ReturnNORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 2017 PFM Asset Management LLC Portfolio performance is gross of fees unless otherwise indicated. **Since Inception performance is not shown for periods less than one 61350001 12 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Performance Portfolio Performance (Total Return) Effective DurationPortfolio/Benchmark Annualized Return 12/31/16 06/30/1603/31/17 09/30/16 Quarter Ended 5 Year1 Year 3 Year NORTH PALM BEACH INVESTMENT PORTFOLIO 1.79 0.37%0.58% 0.90% 0.74%-0.34%-0.01%0.57% BofA ML 1-3 Year U.S. Treasury Index 1.82 0.26%0.25% 0.72% 0.64%-0.43%-0.11%0.53% Difference 0.33% 0.11%0.18% 0.10%0.09% 0.10% 0.04% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 03/31/17 12/31/16 09/30/16 06/30/16 1 Year 3 Year 5 Year 0.37% -0.34% -0.01% 0.57%0.58% 0.90% 0.74% 0.26% -0.43% -0.11% 0.53% 0.25% 0.72% 0.64%Total ReturnNORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 2017 PFM Asset Management LLC Portfolio performance is gross of fees unless otherwise 61350001 13 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Performance Portfolio Performance (Total Return) Effective DurationPortfolio/Benchmark 12/31/16 06/30/1603/31/17 09/30/16 Quarter Ended Annualized Return 5 Year1 Year 3 Year NORTH PALM BEACH INVESTMENT PORTFOLIO 1.79 0.37%0.58%0.90%0.74%-0.34% -0.01% 0.57% Net of Fees ** - 0.35%0.50%0.82%0.66%-0.36% -0.03% 0.55% BofA ML 1-3 Year U.S. Treasury Index 1.82 0.26%0.25%0.72%0.64%-0.43% -0.11% 0.53% 0.33% 0.11%0.18%0.10%0.09% 0.10% 0.04%Difference (Gross) Difference (Net) 0.09% 0.07% 0.08% 0.02% 0.25%0.10%0.02% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 03/31/17 12/31/16 09/30/16 06/30/16 1 Year 3 Year 5 Year 0.37% -0.34% -0.01% 0.57%0.58% 0.90% 0.74% 0.26% -0.43% -0.11% 0.53% 0.25% 0.72% 0.64%Total ReturnNORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 2017 PFM Asset Management LLC Portfolio performance is gross of fees unless otherwise indicated. ** Fees were calculated based on average assets during the period at the contractual 61350001 14 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Performance Portfolio Earnings Quarter-Ended March 31, 2017 Market Value Basis Accrual (Amortized Cost) Basis Net Purchases/Sales Change in Value Interest Earned $9,011,367.63 $42,957.09 $6,086.57 $27,541.35 $33,627.92 $9,060,411.29 $9,047,055.78 $42,957.09 $510.84 $27,541.35 $28,052.19 $9,090,523.71 Portfolio Earnings Beginning Value (12/31/2016) Ending Value (03/31/2017) 2017 PFM Asset Management LLC 15 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Sector Allocation As of March 31, 2017 Market Value ($) % of PortfolioSector Federal Agency/GSE 3,297,286 36.4% Corporate 2,389,385 26.4% U.S. Treasury 1,347,412 14.9% Asset-Backed 1,062,829 11.7% Supra-Sov / Supra-Natl Agency 670,805 7.4% Municipal 181,426 2.0% Federal Agency/CMO 111,269 1.2% Total 9,060,411 100.0% 11.7% Asset-Backed 26.4% Corporate 1.2% Federal Agency/CMO 36.4% Federal Agency/GSE 2.0% Municipal 7.4% Supra-Sov / Supra-Natl Agency 14.9% U.S. Treasury 2017 PFM Asset Management LLC Detail may not add to total due to rounding. 16 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Sector Allocation As of March 31, 2017 Market Value ($)Sector % of Portfolio % of Benchmark - 36.4% 3,297,286Federal Agency/GSE - 26.4% 2,389,385Corporate 100.0% 14.9% 1,347,412U.S. Treasury - 11.7% 1,062,829Asset-Backed - 7.4% 670,805Supra-Sov / Supra-Natl Agency - 2.0% 181,426Municipal - 1.2% 111,269Federal Agency/CMO 9,060,411 100.0% 100.0%Total 0% 20% 40% 60% 80% 100% Asset-Backed Corporate Federal Agency/CMO Federal Agency/GSE Municipal Supra-Sov / Supra-Natl Agency U.S. Treasury 11.7% 26.4% 1.2% 36.4% 2.0% 7.4% 14.9% 0.0%0.0%0.0%0.0%0.0%0.0% 100.0% NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 2017 PFM Asset Management LLC Detail may not add to total due to rounding. 17 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Sector Allocation March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016 % of TotalMV ($MM)Sector % of Total% of Total% of Total MV ($MM)MV ($MM)MV ($MM) Federal Agency/GSE 3.3 36.4% 3.6 39.5% 3.2 36.1% 1.5 16.4% Corporate 2.4 26.4% 2.2 23.9% 2.2 25.1% 1.8 20.2% U.S. Treasury 1.3 14.9% 2.1 23.1% 2.3 26.0% 4.9 54.1% Asset-Backed 1.1 11.7% 0.4 4.9% 0.3 3.9% 0.1 0.6% Supra-Sov / Supra-Natl Agency 0.7 7.4% 0.5 5.3% 0.5 5.4% 0.3 2.8% Municipal 0.2 2.0% 0.2 2.0% 0.2 2.1% 0.2 2.0% Federal Agency/CMO 0.1 1.2% 0.1 1.3% 0.1 1.4% 0.1 1.4% Commercial Paper 0.0 0.0% 0.0 0.0% 0.0 0.0% 0.2 2.5% $9.1 100.0%$9.0 100.0%$8.9 100.0%$9.1 100.0%Total 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% March 2017 December 2016 September 2016 June 2016 Commercial Paper Federal Agency/CMO Municipal Supra-Sov / Supra-Natl Agency Asset-Backed U.S. Treasury Corporate Federal Agency/GSE 2017 PFM Asset Management LLC Detail may not add to total due to rounding. 18 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Maturity Distribution As of March 31, 2017 >5 Years 4-5 Years 3-4 Years 2-3 Years 1-2 Years 0-1 Years Yield at MarketPortfolio/Benchmark Average Maturity NORTH PALM BEACH INVESTMENT PORTFOLIO 1.48% 7.2% 41.9% 42.6% 2.9% 4.2% 1.2%2.08 yrs BofA ML 1-3 Year U.S. Treasury Index 1.27% 3.2% 53.5% 43.3% 0.0% 0.0% 0.0%1.94 yrs 0% 10% 20% 30% 40% 50% 60% 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years 7.2% 41.9%42.6% 2.9%4.2% 1.2%3.2% 53.5% 43.3% 0.0%0.0%0.0% NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 2017 PFM Asset Management LLC 19 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition As of March 31, 2017 Duration Distribution > 5 YEARS 4-5 YEARS 3-4 YEARS 2-3 YEARS 1-2 YEARS 0-1 YEARS Effective DurationPortfolio / Benchmark NORTH PALM BEACH INVESTMENT PORTFOLIO 1.79 9.27% 47.39% 43.34% 0.00% 0.00% 0.00% BofA ML 1-3 Year U.S. Treasury Index 1.82 3.17% 53.53% 43.30% 0.00% 0.00% 0.00% 0% 10% 20% 30% 40% 50% 60% 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years 9% 47% 43% 0%0%0% 3% 54% 43% 0%0%0% Distribution by Effective Duration NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 0% 10% 20% 30% 40% 50% 60% 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years 4% 39% 57% 0%0%0%2% 43% 56% 0%0%0% Contribution to Portfolio Duration BofA ML 1-3 Year U.S. Treasury Index NORTH PALM BEACH INVESTMENT PORTFOLIO 2017 PFM Asset Management LLC 20 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Credit Quality As of March 31, 2017 S&P Rating Market Value ($) % of Portfolio 53.3%$4,826,244AA+ 15.1%$1,368,604AAA 9.6%$867,513AA- 5.5%$500,138A 5.0%$454,468Not Rated 4.9%$446,389A+ 4.2%$375,697A- 2.4%$221,360AA Totals 100.0%$9,060,411 5.5% A 4.2% A- 4.9% A+ 2.4% AA 9.6% AA- 53.3% AA+ 15.1% AAA 5.0% Not Rated 2017 PFM Asset Management LLC Detail may not add to total due to rounding. 21 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Issuer Distribution As of March 31, 2017 Market Value ($)% of PortfolioIssuer FEDERAL HOME LOAN BANKS 1,881,361 20.8% UNITED STATES TREASURY 1,347,412 14.9% FANNIE MAE 1,003,498 11.1% FREDDIE MAC 523,696 5.8% INTL BANK OF RECONSTRUCTION AND DEV 257,368 2.8% HSBC HOLDINGS PLC 200,100 2.2% JP MORGAN CHASE & CO 200,045 2.2% BANK OF NEW YORK CO INC 199,963 2.2% AFRICAN DEVELOPMENT BANK 194,338 2.1% CISCO SYSTEMS INC 190,609 2.1% CARMAX AUTO OWNER TRUST 184,832 2.0% FLORIDA ST HURRICAN CAT FUND 181,426 2.0% CHEVRON CORP 179,407 2.0% HONDA AUTO RECEIVABLES 169,415 1.9% WELLS FARGO & COMPANY 149,526 1.7% BANK OF NOVA SCOTIA 149,049 1.7% WESTPAC BANK CORP NY 138,878 1.5% INTER-AMERICAN DEVELOPMENT BANK 128,708 1.4%Top 5 = 55.3%Top 2%2017 PFM Asset Management LLC Account 61350001 22 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Market Value ($)% of PortfolioIssuer TOYOTA MOTOR CORP 110,116 1.2% CITIBANK CREDIT CARD ISSUANCE 100,159 1.1% ALLY AUTO RECEIVABLES TRUST 99,961 1.1% NISSAN AUTO RECEIVABLES 99,538 1.1% AMERICAN HONDA FINANCE 99,273 1.1% CANADIAN IMPERIAL BA 99,111 1.1% ROYAL BANK OF CANADA NY 98,975 1.1% BANK ON MONTREAL CHI 98,957 1.1% CNH EQUIPMENT TRUST 94,684 1.1% BP PLC 90,752 1.0% ASIAN DEVELOPMENT BANK 90,390 1.0% MICROSOFT CORP 89,438 1.0% AMERICAN EXPRESS CO 84,901 0.9% HYUNDAI AUTO RECEIVABLES 79,697 0.9% TOYOTA AUTO RECEIVABLES 79,633 0.9% APPLE INC 70,277 0.8% BANK OF AMERICA CREDIT CARD TRUST 65,085 0.7% DEERE & COMPANY 60,096 0.7% FORD CREDIT AUTO OWNER TRUST 60,011 0.7% PEPSICO, INC 39,978 0.4% BERKSHIRE HATHAWAY INC 39,934 0.4% 2017 PFM Asset Management LLC 23 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Market Value ($)% of PortfolioIssuer JOHN DEERE OWNER TRUST 29,814 0.3% 9,060,411 100.0%Grand Total: 2017 PFM Asset Management LLC 24 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition Sector/Issuer Distribution As of March 31, 2017 % of SectorSector / Issuer Market Value ($)% of Total Portfolio Asset-Backed ALLY AUTO RECEIVABLES TRUST 1.1% 9.4% 99,961 BANK OF AMERICA CREDIT CARD TRUST 0.7% 6.1% 65,085 CARMAX AUTO OWNER TRUST 2.0% 17.4% 184,832 CITIBANK CREDIT CARD ISSUANCE 1.1% 9.4% 100,159 CNH EQUIPMENT TRUST 1.0% 8.9% 94,684 FORD CREDIT AUTO OWNER TRUST 0.7% 5.6% 60,011 HONDA AUTO RECEIVABLES 1.9% 15.9% 169,415 HYUNDAI AUTO RECEIVABLES 0.9% 7.5% 79,697 JOHN DEERE OWNER TRUST 0.3% 2.8% 29,814 NISSAN AUTO RECEIVABLES 1.1% 9.4% 99,538 TOYOTA AUTO RECEIVABLES 0.9% 7.5% 79,633 100.0% 11.7% 1,062,829 Sector Total Corporate AMERICAN EXPRESS CO 0.9% 3.6% 84,901 AMERICAN HONDA FINANCE 1.1% 4.2% 99,273 APPLE INC 0.8% 2.9% 70,277 BANK OF NEW YORK CO INC 2.2% 8.4% 199,963 BANK OF NOVA SCOTIA 1.6% 6.2% 149,049 BANK ON MONTREAL CHI 1.1% 4.1% 98,957 2017 PFM Asset Management LLC 25 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition % of SectorSector / Issuer Market Value ($)% of Total Portfolio BERKSHIRE HATHAWAY INC 0.4% 1.7% 39,934 BP PLC 1.0% 3.8% 90,752 CANADIAN IMPERIAL BA 1.1% 4.1% 99,111 CHEVRON CORP 2.0% 7.5% 179,407 CISCO SYSTEMS INC 2.1% 8.0% 190,609 DEERE & COMPANY 0.7% 2.5% 60,096 HSBC HOLDINGS PLC 2.2% 8.4% 200,100 JP MORGAN CHASE & CO 2.2% 8.4% 200,045 MICROSOFT CORP 1.0% 3.7% 89,438 PEPSICO, INC 0.4% 1.7% 39,978 ROYAL BANK OF CANADA NY 1.1% 4.1% 98,975 TOYOTA MOTOR CORP 1.2% 4.6% 110,116 WELLS FARGO & COMPANY 1.7% 6.3% 149,526 WESTPAC BANK CORP NY 1.5% 5.8% 138,878 100.0% 26.4% 2,389,385 Sector Total Federal Agency/CMO FANNIE MAE 0.8% 62.9% 70,020 FREDDIE MAC 0.5% 37.1% 41,250 100.0% 1.2% 111,269 Sector Total Federal Agency/GSE FANNIE MAE 10.3% 28.3% 933,479 FEDERAL HOME LOAN BANKS 20.8% 57.1% 1,881,361 FREDDIE MAC 5.3% 14.6% 482,446 2017 PFM Asset Management LLC 26 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Composition % of SectorSector / Issuer Market Value ($)% of Total Portfolio 100.0% 36.4% 3,297,286 Sector Total Municipal FLORIDA ST HURRICAN CAT FUND 2.0% 100.0% 181,426 100.0% 2.0% 181,426 Sector Total Supra-Sov / Supra-Natl Agency AFRICAN DEVELOPMENT BANK 2.1% 29.0% 194,338 ASIAN DEVELOPMENT BANK 1.0% 13.5% 90,390 INTER-AMERICAN DEVELOPMENT BANK 1.4% 19.2% 128,708 INTL BANK OF RECONSTRUCTION AND DEV 2.8% 38.4% 257,368 100.0% 7.4% 670,805 Sector Total U.S. Treasury UNITED STATES TREASURY 14.9% 100.0% 1,347,412 100.0% 14.9% 1,347,412 Sector Total 100.0% 9,060,411 Portfolio Total 100.0% 2017 PFM Asset Management LLC 27 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Quarterly Portfolio Transactions Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon BUY 1/3/17 1/5/17 250,000 912828H52 US TREASURY NOTES 1/31/20 249,369.05 1.51%1.25% 1/3/17 1/6/17 35,000 24422ETM1 JOHN DEERE CAPITAL CORP 10/15/18 34,977.25 1.69%1.65% 1/4/17 1/12/17 90,000 045167DT7 ASIAN DEVELOPMENT BANK 1/10/20 89,947.80 1.77%1.75% 1/18/17 1/25/17 60,000 34531EAD8 FORDO 2017-A A3 6/15/21 59,999.78 1.67%1.67% 1/19/17 1/26/17 100,000 17305EGA7 CCCIT 2017-A2 A2 1/17/21 99,980.85 1.75%1.74% 1/24/17 1/31/17 30,000 02007PAC7 ALLYA 2017-1 A3 6/15/21 29,997.38 1.70%1.70% 1/25/17 1/31/17 85,000 14314JAB6 CARMX 2017-1 A2 2/15/20 84,999.97 1.60%1.54% 1/30/17 2/6/17 30,000 594918BV5 MICROSOFT CORP 2/6/20 29,979.90 1.87%1.85% 2/1/17 2/3/17 130,000 912828J50 UNITED STATES TREASURY NOTES 2/29/20 129,988.27 1.58%1.37% 2/8/17 2/13/17 90,000 05565QCX4 BP CAPITAL MARKETS PLC BONDS 2/13/20 90,789.30 2.01%2.31% 2/24/17 2/28/17 90,000 3135G0T29 FNMA NOTES 2/28/20 89,942.40 1.52%1.50% 2/28/17 3/3/17 55,000 0258M0EE5 AMERICAN EXPRESS CREDIT CORP NOTES 3/3/20 54,942.80 2.24%2.20% 3/7/17 3/15/17 30,000 89238MAD0 TAOT 2017-A A3 2/15/21 29,996.47 1.74%1.73% 3/8/17 3/16/17 105,000 00828ECA5 AFRICAN DEVELOPMENT BANK NOTE 3/16/20 104,844.60 1.93%1.87% 3/10/17 3/15/17 25,000 24422ETQ2 JOHN DEERE CAPITAL CORP CORP NOTES 3/13/20 24,980.50 2.23%2.20% 3/15/17 3/22/17 45,000 12636WAD8 CNH EQUIPMENT TRUST POOL 5/15/22 44,998.81 2.20%2.20% 3/21/17 3/28/17 45,000 43814TAC6 HAROT 2017-1 A3 7/21/21 44,997.32 1.72%1.72% 3/21/17 3/28/17 50,000 654747AD6 NAROT 2017-A A3 8/15/21 49,994.71 1.74%1.74% 3/21/17 3/29/17 70,000 02007HAC5 ALLYA 2017-2 A3 8/15/21 69,991.75 1.79%1.78% 3/22/17 3/29/17 40,000 44931PAD8 HART 2017-A A3 8/15/21 39,996.76 1.76%1.76% 3/23/17 3/30/17 65,000 05522RCW6 BACCT 2017-A1 A1 8/15/22 64,981.31 1.96%1.95% 1,520,000 1,519,696.98Total BUY INTEREST 2017 PFM Asset Management LLC 28 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 1/1/17 1/1/17 180,000 TOYOTA ABS 2016-C A3 8/15/20 47.50 1.14% 2017 PFM Asset Management LLC 29 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 2/15/17 2/15/17 100,000 ALLYA 2017-1 A3 6/15/21 42.50 1.70% 2017 PFM Asset Management LLC 30 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 3/15/17 3/15/17 100,000 US TREASURY NOTES 3/31/18 243.75 0.75% 6,159,221 25,411.23Total INTEREST PAYDOWNS 1/1/17 1/25/17 765 FHLMC SERIES KP03 A1 3/1/19 1,036.22 0.00 1.73% 2,569 2,569.10 0.00Total PAYDOWNS SELL 1/3/17 1/5/17 120,000 US TREASURY NOTES 8/31/17 85,194.65 0.69% 150.26 0.62% 2017 PFM Asset Management LLC 31 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($) CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 1/30/17 2/6/17 35,000 UNITED STATES TREASURY NOTES 2/29/20 44,855.48 1.52% 66.30 1.37% 1,475,000 1,476,162.49 -52.06Total SELL 2017 PFM Asset Management LLC 32 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Quarterly Portfolio Transactions Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 1/1/17 1/1/17 180,000.00 FNMA NOTESSELL 8/28/19 89,275.80 1.45%(923.17)1.00% 1/4/17 1/12/17 90,000.00 NISSAN ABS 2016-C A3INTEREST 1/15/21 49.17 1.18% 2017 PFM Asset Management LLC 33 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 1/16/17 1/16/17 65,000.00 FNMA SERIES 2016-M9 ASQ2INTEREST 6/1/19 104.13 1.78% 2017 PFM Asset Management LLC 34 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 2/1/17 2/25/17 43,074.90 HAROT 2016-3 A3 ABSINTEREST 6/18/19 72.50 1.16% 2017 PFM Asset Management LLC 35 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 2/22/17 2/22/17 50,000.00 US TREASURY NOTESSELL 9/30/17 95,098.00 0.97%(90.37)0.62% 2017 PFM Asset Management LLC 36 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 3/10/17 3/15/17 25,000.00 BACCT 2017-A1 A1BUY 8/15/22 (64,981.31) 1.96%1.95% 2017 PFM Asset Management LLC 37 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 3/24/17 3/28/17 200,000.00 US TREASURY NOTESINTEREST 3/31/18 243.75 0.75% TOTALS (15,554.16)(52.06) 2017 PFM Asset Management LLC 38 of 45 Tab III 2017 PFM Asset Management LLC 39 of 45 For the Quarter Ended March 31, 2017 VILLAGE OF NORTH PALM BEACH, FLORIDA¹Asset Allocation Security Type Amortized Cost (Includes Interest) Allocation Percentage Notes Permitted by Policy In Compliance Florida Prime (SBA)516,772.48 2.46%2 25%YES United States Treasury Securities 1,352,134.91 6.43%100%YES Federal Agency (GSE)3,322,347.47 15.81%75%YES Supranationals 675,817.62 3.22%25%YES Mortgage-Backed Securities 112,231.57 0.53%25%YES Asset Backed Securities 1,065,661.37 5.07%25%YES Certificates of Deposit - 0.00%50%YES Commercial Paper - 0.00%3 50%YES Corporate Notes 2,405,208.77 11.44%3 50%YES Municipal Obligations 180,973.35 0.86%25%YES Money Market Mutual Funds 10,941.10 0.05%50%YES Intergovernmental Investment Pool - 0.00%4 100%YES Interest Bearing Checking or Savings Account 11,374,589.91 54.12%2 100%YES Village Managed 11,902,303.49 56.63% PFM Managed 9,114,375.06 43.37% Total 21,016,678.55 100.00% 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. 4. A balance of $14,960,200 in the Florida Education Investment Trust Fund was excluded from calculation as it is a part of the Country Club Clubhouse bank loan and not governed by the investment policy allocation limits. © 2017 PFM Asset Management LLC Florida Prime (SBA)2.46% United States Treasury Securities 6.43% 3.22% Federal Agency(GSE) 15.81% Supranationals Mortgage-Backed Securities 0.53% Asset Backed Securities5.07% Corporate Notes 11.44%Municipal Obligations0.86% Money Market Mutual Funds0.05% Interest Bearing Checking or Savings Account 54.12% For the Quarter Ended March 31, 2017 VILLAGE OF NORTH PALM BEACH, FLORIDA¹Asset Allocation Individual Issuer Breakdown Amortized Cost (Includes Interest) Allocation Percentage Notes Permitted by Policy In Compliance Government National Mortgage Association (GNMA)- 0.00%40%YES Federal Farm Credit Bank (FFCB)- 0.00%40%YES Federal Home Loan Bank (FHLB)1,895,950.90 9.02%40%YES Federal National Mortgage Association (FNMA)1,011,125.00 4.81%40%YES Federal Home Loan Mortgage Corporation (FHLMC)527,503.14 2.51%40%YES Florida State Hurricane Cat Fund Municipal Bonds 180,973.35 0.86%5%YES American Express Company Corporate Notes 85,221.60 0.41%5%YES American Honda Finance Corporate Notes 100,179.44 0.48%5%YES Apple, Inc. Corporate Notes 70,118.09 0.33%5%YES Bank of Montreal Corporate Notes 100,230.70 0.48%5%YES Bank of New York Company Inc. Corporate Notes 201,139.79 0.96%5%YES Bank of Nova Scotia Corporate Notes 151,066.51 0.72%5%YES Berkshire Hathaway, Inc. Corporate Notes 40,032.95 0.19%5%YES BP Capital Markets Corporate Notes 91,033.22 0.43%5%YES Canadian Imperial Corporate Notes 100,096.51 0.48%5%YES Chevron Corporation Corporate Notes 181,053.68 0.86%5%YES Cisco Corporate Notes 190,910.09 0.91%5%YES HSBC Holdings plc Corporate Notes 200,337.77 0.95%5%YES John Deere Corporate Notes 60,121.83 0.29%5%YES JP Morgan Chase & Company Corporate Notes 200,263.75 0.95%5%YES Microsoft Corporation Corporate Notes 90,114.37 0.43%5%YES PepsiCo, Inc. Corporate Notes 40,207.99 0.19%5%YES Royal Bank of Canada Corporate Notes 100,169.94 0.48%5%YES Toyota Motor Corporation Corporate Notes 110,329.49 0.52%5%YES Wells Fargo & Company Corporate Notes 151,698.51 0.72%5%YES Westpac Banking Corp Corporate Notes 140,882.54 0.67%5%YES Ally Auto Receivables Trust ABS 100,018.83 0.48%5%YES Bank of America ABS 64,984.84 0.31%5%YES Carmax Auto Owner Trust ABS 185,107.28 0.88%5%YES CitiBank Credit Card Issuance Trust ABS 100,314.17 0.48%5%YES CNH Equipment Trust ABS 95,046.51 0.45%5%YES Ford Auto Receivables ABS 60,044.32 0.29%5%YES Honda Auto Receivables ABS 170,043.99 0.81%5%YES © 2017 PFM Asset Management LLC For the Quarter Ended March 31, 2017 VILLAGE OF NORTH PALM BEACH, FLORIDA¹Asset Allocation Hyundai Auto Receivables ABS 80,018.85 0.38%5%YES John Deere ABS 30,014.70 0.14%5%YES Nissan Auto Receivables ABS 100,024.10 0.48%5%YES Toyota Auto Receivables ABS 80,043.78 0.38%5%YES African Development Bank 194,881.25 0.93%10%YES Asian Development Bank 90,297.20 0.43%10%YES Inter-American Development Bank 130,230.94 0.62%10%YES International Bank of Recon and Dev Notes 260,408.23 1.24%10%YES Money Market Fund - TD Bank Sweep Account 10,941.10 0.05%33%YES Interest Bearing Checking/Savings Acct-Wells Fargo 8,829,732.93 42.01%50%YES Interest Bearing Checking/Savings Acct-Flagler Bank 1,512,089.51 7.19%50%YES Interest Bearing Checking/Savings Acct-BankUnited 1,032,767.47 4.91%50%YES © 2017 PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Portfolio Activity Important Disclosures 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. Dime ■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. 2017 PFM Asset Management LLC 43 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Appendix 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. ■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. 2017 PFM Asset Management LLC 44 of 45 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended March 31, 2017 Appendix Glossary ■PAR VALUE: The nominal dollar face amount of a security. ■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. 2017 PFM Asset Management LLC 45 of 45