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12-31-2017 Investment Performance ReviewVillage of North Palm Beach, Florida Investment Advisors 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 December 31, 2017 Steven Alexander, CTP, CGFO, CPPT, Managing Director Robert Cheddar, CFA, Chief Credit Officer, Managing Director Richard Pengelly, CFA, CTP, Director Cody Raulerson, Analyst VILLAGE OF NORTH PALM BEACH, FLORIDA For the Quarter Ended December 31, 2017 Table of Contents PFM Asset Management LLC Tab I Market Update Tab II Executive Summary Investment Portfolio Tab III Asset Allocation Chart Important Disclosures Tab I PFM Asset Management LLC QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2017 Fixed Income Management SUMMARY •The fourth quarter came to a close with an exclamation point from Washington, as lawmakers agreed on an historic tax cut bill. The tax overhaul is projected to provide an economic boost, for at least the near term, as the top corporate tax rate was slashed from 35% to 21% and personal tax levels were reduced across the board. While the long term impact is yet to be determined, immediate market reaction has been positive. •True to their “dot plot” forecasts, the Federal Open Market Committee (FOMC or Fed) raised the federal funds target rate by a quarter of a percent to a range of 1.25% to 1.50% at its December meeting. This marked the third time in calendar year 2017 that the Fed raised rates. The FOMC also provided projections that include three more expected hikes in 2018. Across the pond, the United Kingdom bumped its overnight rate back up to 0.50%, following a temporary cut to 0.25% following the 2016 Brexit vote. •Early 2018 will see a changeover at the Fed as Chair Janet Yellen will be replaced by Jerome Powell. As an existing Federal Reserve board member, Mr. Powell is viewed as a “Republican version of Yellen” and someone who is likely to follow a similar path for modest tightening of monetary policy amid stubbornly low inflation. Perhaps in contrast, he has voiced a preference for tailoring regulations to relieve the burden on smaller community banks. •While bond yields generally increased over the quarter, so did equity prices. The S&P 500 Index returned 6.6% for the quarter, setting multiple new record highs. The Dow Jones Industrial Average crossed both 23,000 and 24,000, levels never before breached, while the NASDAQ finished the year up over 30%. ECONOMIC SNAPSHOT •The U.S. economy notched back-to-back quarters of solid growth with GDP increasing at a 3.2% real rate for the third quarter, following a second quarter tally of 3.1%. 2017 capped the 8th straight year of recovery from the 2008-09 Great Recession – the third longest expansion of the past century. Initial fourth quarter estimates are for growth in the 2.5% to 3% range, with consumer spending and business investment fueling the growth. •The U.S. labor market remained strong, with the unemployment rate holding at a 15-year low of 4.1% during the quarter. Although job gains in December were disappointing, the economy added over 2 million net new jobs in 2017. At the same time, the labor force participation rate improved modestly, while wage growth over the past year was modest. •Prices remained well contained, running below the Fed’s desired 2% target for core inflation. But, oil and other commodities like copper, rebounded in the 2nd half of the year. •Outside of inflation, economic indicators have been strong: manufacturing, services and consumer confidence indexes reached multi-year highs, housing markets strengthened further and positive real GDP growth across the globe serve as positive backdrop for the new year. INTEREST RATES •Shorter-term Treasury yields (5 years and under) increased in the fourth quarter, largely on the run-up to the December FOMC rate hike. Long-term Treasury yields (10 years and longer) moved in the opposite direction, with the yield on a 30-year Treasury actually declining 12 basis points. This resulted in a much flatter yield curve. •In the cash and money market segment, yields on Treasury maturities less than one year increased 30 to 45 basis points in lockstep with the Fed’s expected rate hike trajectory. The increase of shorter Treasury yields led the market; yield increases on short credit (commercial paper and certificates of deposit) did not initially keep up. The result was tighter short-term credit spreads that persisted through quarter-end. SECTOR PERFORMANCE •U.S. Treasury benchmark returns, with the exception of the longest maturity benchmarks, were negative for the fourth quarter, as investment income was not able to fully offset the adverse impact of increasing interest rates on fixed income prices. •Federal agency securities performed in line with similar maturity Treasuries, as the sector’s narrow yield spreads provided little to no incremental income benefit, and relatively unchanged spreads over the quarter muted any additional excess return. •Corporate yield spreads tightened further, as spreads in the sector reached new post-recession tights. As a result, the corporate sector performed well in the quarter. Despite narrow spreads, corporate securities still offer risk-adjusted income pick-up. The sector is supported with a positive economic landscape and corporate fundamentals, and is poised for additional excess return potential over the near term. •The mortgage backed securities (MBS) sector performed well in the fourth quarter, generally outperforming Treasury and federal agency benchmarks; but, excess returns varied based on specific security structure. •High-quality asset-backed securities (ABS) also performed positively relative to Treasuries, as their yield spreads narrowed, and were near the top of the best performers for the quarter. •Short-term commercial paper and bank CDs continued to offer incremental value relative to both short and intermediate-term government securities. The incremental yield advantage offered in these sectors is a valuable return attribute in the face of rising rates. PFM Asset Management LLC QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2017 Fixed Income Management Economic Snapshot Labor Market Sep '17 Dec '16 Unemployment Rate Dec'17 4.1%4.2%4.7% Change In Non-Farm Payrolls Dec'17 148,000 38,000 155,000 Average Hourly Earnings (YoY)Dec'17 2.5%2.8%2.9% Personal Income (YoY)Nov'17 3.8%2.9%1.6% Initial Jobless Claims (week)1/6/18 261,000 258,000 241,000 Growth Real GDP (QoQ SAAR)2017Q3 3.2%3.1%2.8% GDP Personal Consumption (QoQ SAAR)2017Q3 2.2%3.3%2.8% Retail Sales (YoY)Dec'17 5.4%5.0%3.8% ISM Manufacturing Survey (month)Dec'17 59.7 60.8 54.5 Existing Home Sales SAAR (month)Nov'17 5.81 mil. 5.37 mil. 5.51 mil. Inflation / Prices Personal Consumption Expenditures (YoY)Nov'17 1.8%1.7%1.8% Consumer Price Index (YoY)Dec'17 2.1%2.2%2.1% Consumer Price Index Core (YoY)Dec'17 1.8%1.7%2.2% Crude Oil Futures (WTI, per barrel) Dec 31 $60.42 $51.67 $53.72 Gold Futures (oz.)Dec 31 $1,309 $1,282 $1,152 Latest 0 150K 300K 450K 4% 5% 6% Dec '14 Jun '15 Dec '15 Jun '16 Dec '16 Jun '17 Dec '17 Unemployment Rate (left) vs. Change in Nonfarm Payrolls (right) Change In Non-Farm Payrolls Unemployment Rate 0% 2% 4% 6% Sep '14 Mar '15 Sep '15 Mar '16 Sep '16 Mar '17 Sep '17 Real GDP (QoQ) -1% 0% 1% 2% 3% Dec '14 Jun '15 Dec '15 Jun '16 Dec '16 Jun '17 Dec '17 Consumer Price Index CPI (YoY)Core CPI (YoY) 2 2 1 1 1. Data as of Second Quarter 2017. 2. Data as of Third Quarter 2016. Note: YoY = year-over-year, QoQ = quarter over quarter, SAAR = seasonally adjusted annual rate, WTI = West Texas Intermediate crude oil. Source: Bloomberg. PFM Asset Management LLC QUARTERLY MARKET SUMMARY For the Quarter Ended December 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 9/30/17 0% 1% 2% 3% 4%3-mo1-yr2-yr3-yr5-yr7-yr10-yr30-yrYieldMaturity December 31, 2017 September 30, 2017 December 31, 2016 Maturity Dec '17 Sep '17 Change over Quarter Dec '16 Change over Year 3-month 1.38% 1.05% 0.33% 0.50% 0.88% 1-year 1.74% 1.29% 0.45% 0.81% 0.93% 2-year 1.89% 1.49% 0.40% 1.19% 0.70% 5-year 2.21% 1.94% 0.27% 1.93% 0.28% 10-year 2.41% 2.33% 0.08% 2.45%(0.04%) 30-year 2.74% 2.86%(0.12%)3.07%(0.33%) 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% 12/31/16 3/31/17 6/30/17 9/30/17 12/31/17Yield 2-Year 5-Year 10-Year PFM Asset Management LLC QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2017 Fixed Income Management Source: BofA Merrill Lynch Indices. December 31, 2017 Duration Yield 3 Month 1 Year 3 Years 1-3 Year Indices U.S. Treasury 1.80 1.88%(0.25%)0.42%0.62% Federal Agency 1.73 1.96%(0.19%)0.65%0.77% U.S. Corporates, A-AAA rated 1.84 2.29%(0.05%)1.67%1.54% Agency MBS (0 to 3 years)2.27 2.21%0.03%1.37%1.19% Taxable Municipals 1.55 2.45%0.06%2.15%1.99% 1-5 Year Indices U.S. Treasury 2.60 1.97%(0.38%)0.65%0.90% Federal Agency 2.14 2.01%(0.25%)0.86%0.98% U.S. Corporates, A-AAA rated 2.64 2.44%(0.10%)2.24%1.98% Agency MBS (0 to 5 years)3.22 2.51%(0.11%)1.74%1.40% Taxable Municipals 2.24 2.53%0.05%2.10%2.40% Master Indices (Maturities 1 Year or Greater) U.S. Treasury 6.34 2.20%0.11%2.43%1.46% Federal Agency 3.90 2.19%0.00%2.15%1.54% U.S. Corporates, A-AAA rated 7.19 2.98%1.07%5.68%3.50% Agency MBS (0 to 30 years)4.41 2.83%0.14%2.45%1.86% Taxable Municipals 10.87 3.63%2.34%10.12%5.17% As of 12/31/17 Returns for Periods ended 12/31/17 Returns for periods greater than one year are annualized. PFM Asset Management LLC BofA Merrill Lynch Index Returns QUARTERLY MARKET SUMMARY For the Quarter Ended December 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. PFM Asset Management LLC Tab II PFM Asset Management LLC VILLAGE OF NORTH PALM BEACH, FLORIDA For the Quarter Ended December 31, 2017 Executive Summary PFM Asset Management LLC The Investment Portfolio is of high credit quality and invested in U.S. Treasury,federal agency/GSE, federal agency/CMO, supranational,municipal,asset-backed, and corporate note securities. The Investment Portfolio’s quarterly total return performance of -0.15% outperformed the benchmark performance of -0.25% by 0.10%. The last 12 months total return performance for the Portfolio was 0.91% versus the benchmark’s return of 0.42%. In the quarter,economic data was generally favorable,the unemployment rate hovered near a 15-year low,inflation remained in check, and the Fed raised rates for a third time in 2017. At the same time,both consumer and business confidence remained high, and Congress passed large corporate and individual tax cuts. The strength of the U.S.economy coupled with the December Fed rate hike drove yields on all but the longest Treasuries higher in the quarter. As a result,fixed-income returns were generally muted for the quarter, but reinvestment opportunities became more attractive. As such,we generally employed a duration-neutral approach relative to benchmarks. Credit instruments and other “spread product”generated outperformance for the quarter relative to government securities. The primary driver of portfolio performance was diversification and asset allocation. Following a three-hike 2017,the dot plot released at the December 2017 FOMC meeting indicated an expectation for three more in 2018. As of year-end,the market-implied probability of a fed rate hike at the March 2018 FOMC meeting was 70%.Additionally,while incoming FOMC Chairman, Jerome Powell, is largely expected to continue the policy normalization path initiated by his predecessor, Janet Yellen, leadership changes have the potential for uncertainty. Generally,the economic themes that brought 2017 to a close will carry forward into 2018,including:moderate growth and job production, healthy personal consumption, and strong corporate fundamentals. NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Snapshot Portfolio Statistics As of December 31, 2017 $9,149,784 $9,144,052 $9,074,907 $31,367 $37,778 Accrued Interest: Cash: Par Value: Total Market Value: Security Market Value: $9,145,924 1.98% 1.53% AAAverage Credit: * Yield at Cost: Amortized Cost: Yield at Market: Effective Duration:1.74 Years Duration to Worst:1.85 Years Average Maturity:2.08 Years Credit Quality (S&P Ratings) 5.9% A 5.1% A- 9.9% A+ 2.6% AA 8.3% AA- 45.4% AA+ 16.6% AAA 0.4% BBB+ 5.9% 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 7.3% 41.5% 35.9% 12.0% 2.3%1.0% Maturity Distribution Sector Allocation 14.2% Asset-Backed 32.7% Corporate 0.3% Federal Agency/CMO 15.7% Federal Agency/GSE 2.0% Municipal 7.0% Supra-Sov / Supra-Natl Agency 28.1% U.S. Treasury 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. NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 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 1.74 -0.15%-0.91%0.90%0.75%1.03% BofA ML 1-3 Year U.S. Treasury Index 1.80 -0.25%-0.42%0.62%0.56%0.93% Difference 0.49% 0.10%0.28%0.19%-0.10% -0.4% -0.2% 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 -0.15% 0.91%0.90% 0.75% 1.03% -0.25% 0.42% 0.62%0.56% 0.93%Total ReturnNORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 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 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Performance Portfolio Performance (Total Return) Effective DurationPortfolio/Benchmark Annualized Return 09/30/17 03/31/1712/31/17 06/30/17 Quarter Ended 5 Year1 Year 3 Year NORTH PALM BEACH INVESTMENT PORTFOLIO 1.74 -0.15%0.91%0.90%0.75%0.35%0.34%0.37% BofA ML 1-3 Year U.S. Treasury Index 1.80 -0.25%0.42%0.62%0.56%0.24%0.17%0.26% Difference 0.49% 0.10%0.28%0.19%0.11%0.17%0.11% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 12/31/17 09/30/17 06/30/17 03/31/17 1 Year 3 Year 5 Year -0.15% 0.35%0.34%0.37% 0.91%0.90% 0.75% -0.25% 0.24% 0.17% 0.26% 0.42% 0.62%0.56%Total ReturnNORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index PFM Asset Management LLC Portfolio performance is gross of fees unless otherwise 61350001 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Performance Portfolio Performance (Total Return) 09/30/17 03/31/1712/31/17 06/30/17 Quarter Ended Annualized Return 5 Year1 Year 3 YearPortfolio/Benchmark Effective Duration 0.91%0.90%0.75%0.35%0.34%0.37%NORTH PALM BEACH INVESTMENT PORTFOLIO -0.15%1.74 0.83%0.82%0.67%0.33%0.32%0.35% Net of Fees **-0.17%- 0.42%0.62%0.56%0.24%0.17%0.26%BofA ML 1-3 Year U.S. Treasury Index -0.25%1.80 0.49% 0.10%0.28%0.19%0.11%0.17%0.11%Difference (Gross) Difference (Net) 0.08%0.09%0.15%0.09%0.41%0.20%0.11% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 12/31/17 09/30/17 06/30/17 03/31/17 1 Year 3 Year 5 Year -0.15% 0.35%0.34%0.37% 0.91%0.90% 0.75% -0.25% 0.24% 0.17% 0.26% 0.42% 0.62%0.56%Total ReturnNORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 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 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Performance Portfolio Earnings Quarter-Ended December 31, 2017 Market Value Basis Accrual (Amortized Cost) Basis Net Purchases/Sales Change in Value Interest Earned $9,005,889.57 $117,553.66 ($48,536.62) $34,559.42 ($13,977.20) $9,074,906.61 $9,030,891.04 $117,553.66 ($2,520.63) $34,559.42 $32,038.79 $9,145,924.07 Portfolio Earnings Beginning Value (09/30/2017) Ending Value (12/31/2017) PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Sector Allocation As of December 31, 2017 Market Value ($)% of PortfolioSector Corporate 2,974,517 32.7% U.S. Treasury 2,549,146 28.1% Federal Agency/GSE 1,421,428 15.7% Asset-Backed 1,287,466 14.2% Supra-Sov / Supra-Natl Agency 637,711 7.0% Municipal 179,611 2.0% Federal Agency/CMO 25,027 0.3% Total $9,074,907 100.0% 14.2% Asset-Backed 32.7% Corporate 0.3% Federal Agency/CMO 15.7% Federal Agency/GSE 2.0% Municipal 7.0% Supra-Sov / Supra-Natl Agency 28.1% U.S. Treasury PFM Asset Management LLC Detail may not add to total due to rounding. NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Sector Allocation As of December 31, 2017 Market Value ($)Sector % of Portfolio % of Benchmark - 32.7% 2,974,517 Corporate 100.0% 28.1% 2,549,146 U.S. Treasury - 15.7% 1,421,428 Federal Agency/GSE - 14.2% 1,287,466 Asset-Backed - 7.0% 637,711 Supra-Sov / Supra-Natl Agency - 2.0% 179,611 Municipal - 0.3% 25,027 Federal Agency/CMO $9,074,907 100.0% 100.0%Total 0% 20% 40% 60% 80% 100% 120% Asset-Backed Corporate Federal Agency/CMO Federal Agency/GSE Municipal Supra-Sov / Supra-Natl Agency U.S. Treasury 14.2% 32.7% 0.3% 15.7% 2.0%7.0% 28.1% 0.0%0.0%0.0%0.0%0.0%0.0% 100.0% NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index PFM Asset Management LLC Detail may not add to total due to rounding. NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Sector Allocation December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 % of TotalMV ($MM)Sector % of Total% of Total% of Total MV ($MM)MV ($MM)MV ($MM) Corporate 3.0 32.7% 2.9 31.9% 2.8 30.6% 2.4 26.4% U.S. Treasury 2.5 28.1% 2.4 26.6% 1.7 18.9% 1.3 14.9% Federal Agency/GSE 1.4 15.7% 1.7 19.0% 2.5 27.0% 3.3 36.4% Asset-Backed 1.3 14.2% 1.2 13.1% 1.2 13.5% 1.1 11.7% Supra-Sov / Supra-Natl Agency 0.6 7.0% 0.6 7.1% 0.7 7.4% 0.7 7.4% Municipal 0.2 2.0% 0.2 2.0% 0.2 2.0% 0.2 2.0% Federal Agency/CMO 0.0 0.3% 0.0 0.3% 0.1 0.6% 0.1 1.2% $9.1 100.0%$9.0 100.0%$9.1 100.0%$9.1 100.0%Total 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% December 2017 September 2017 June 2017 March 2017 Federal Agency/CMO Municipal Supra-Sov / Supra-Natl Agency Asset-Backed Federal Agency/GSE U.S. Treasury Corporate PFM Asset Management LLC Detail may not add to total due to rounding. NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Maturity Distribution As of December 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 1.98% 7.3% 41.5% 35.9% 12.0% 2.3% 1.0%2.08 yrs BofA ML 1-3 Year U.S. Treasury Index 1.89% 3.0% 54.1% 42.9% 0.0% 0.0% 0.0%1.92 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 7.3% 41.5% 35.9% 12.0% 2.3%1.0%3.0% 54.1% 42.9% 0.0%0.0%0.0% NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition As of December 31, 2017 Duration Distribution > 5 YEARS4-5 YEARS3-4 YEARS2-3 YEARS1-2 YEARS0-1 YEARSEffective DurationPortfolio / Benchmark NORTH PALM BEACH INVESTMENT PORTFOLIO 1.74 10.4% 48.7% 40.3% 0.6% 0.0% 0.0% BofA ML 1-3 Year U.S. Treasury Index 1.80 3.0% 55.3% 41.7% 0.0% 0.0% 0.0% 0% 10% 20% 30% 40% 50% 60% 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years 10% 49% 40% 1%0%0% 3% 55% 42% 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 2% 41% 55% 1%0%0%2% 44% 54% 0%0%0% Contribution to Portfolio Duration BofA ML 1-3 Year U.S. Treasury Index NORTH PALM BEACH INVESTMENT PORTFOLIO PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Credit Quality As of December 31, 2017 S&P Rating Market Value ($)% of Portfolio 45.4%$4,119,971AA+ 16.6%$1,502,241AAA 9.9%$899,021A+ 8.3%$754,745AA- 5.9%$533,459A 5.9%$531,950Not Rated 5.1%$459,318A- 2.6%$239,404AA 0.4%$34,796BBB+ Totals 100.0%$9,074,907 5.9% A 5.1% A- 9.9% A+ 2.6% AA 8.3% AA- 45.4% AA+ 16.6% AAA 0.4% BBB+ 5.9% Not Rated PFM Asset Management LLC Detail may not add to total due to rounding. NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Issuer Distribution As of December 31, 2017 Market Value ($)% of PortfolioIssuer UNITED STATES TREASURY 2,549,146 28.1% FANNIE MAE 855,381 9.4% FEDERAL HOME LOAN BANKS 468,029 5.2% TOYOTA MOTOR CORP 263,683 2.9% INTER-AMERICAN DEVELOPMENT BANK 217,508 2.4% JP MORGAN CHASE & CO 199,981 2.2% HSBC HOLDINGS PLC 199,939 2.2% AFRICAN DEVELOPMENT BANK 193,168 2.1% AMERICAN EXPRESS CO 183,664 2.0% FLORIDA ST HURRICAN CAT FUND 179,611 2.0% CHEVRON CORPORATION 178,971 2.0% CARMAX AUTO OWNER TRUST 164,410 1.8% WELLS FARGO & COMPANY 149,166 1.6% BANK OF NOVA SCOTIA 148,826 1.6% THE BANK OF NEW YORK MELLON CORPORATION 139,873 1.5% WESTPAC BANKING CORP 138,972 1.5% INTL BANK OF RECONSTRUCTION AND DEV 137,527 1.5% BANK OF AMERICA CO 124,540 1.4%Top 5 = 48.0% = 58.5% PFM Asset Management LLC Account 61350001 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Market Value ($)% of PortfolioIssuer APPLE INC 124,370 1.4% FREDDIE MAC 123,046 1.4% HONDA AUTO RECEIVABLES 119,254 1.3% CNH EQUIPMENT TRUST 119,234 1.3% CITIGROUP INC 99,777 1.1% ALLY AUTO RECEIVABLES TRUST 99,603 1.1% NISSAN AUTO RECEIVABLES 99,181 1.1% AMERICAN HONDA FINANCE 99,103 1.1% BANK OF MONTREAL 99,029 1.1% CANADIAN IMPERIAL BANK OF COMMERCE 98,969 1.1% ROYAL BANK OF CANADA 98,857 1.1% BP PLC 90,219 1.0% INTEL CORPORATION 89,587 1.0% ASIAN DEVELOPMENT BANK 89,509 1.0% THE WALT DISNEY CORPORATION 89,255 1.0% MICROSOFT CORP 89,109 1.0% HYUNDAI AUTO RECEIVABLES 79,365 0.9% TORONTO-DOMINION BANK 79,116 0.9% TOTAL SA 74,973 0.8% PEPSICO INC 69,801 0.8% CAPITAL ONE FINANCIAL CORP 69,558 0.8% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Market Value ($)% of PortfolioIssuer CATERPILLAR INC 64,241 0.7% DEERE & COMPANY 59,896 0.7% FORD CREDIT AUTO OWNER TRUST 59,625 0.7% JOHN DEERE OWNER TRUST 59,590 0.7% UNITED PARCEL SERVICE INC 54,709 0.6% VISA INC 49,961 0.6% HOME DEPOT INC 44,642 0.5% WAL-MART STORES INC 39,858 0.4% GOLDMAN SACHS GROUP INC 34,796 0.4% HONEYWELL INTERNATIONAL 24,868 0.3% PACCAR FINANCIAL CORP 24,810 0.3% BB&T CORPORATION 24,764 0.3% BERKSHIRE HATHAWAY INC 19,935 0.2% JOHNSON & JOHNSON 19,905 0.2% 9,074,907 100.0%Grand Total: PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition Sector/Issuer Distribution As of December 31, 2017 % of SectorSector / Issuer Market Value ($)% of Total Portfolio Asset-Backed ALLY AUTO RECEIVABLES TRUST 1.1% 7.7% 99,603 AMERICAN EXPRESS CO 1.1% 7.7% 99,140 BANK OF AMERICA CO 0.7% 5.0% 64,709 CAPITAL ONE FINANCIAL CORP 0.8% 5.4% 69,558 CARMAX AUTO OWNER TRUST 1.8% 12.8% 164,410 CITIGROUP INC 1.1% 7.7% 99,777 CNH EQUIPMENT TRUST 1.3% 9.3% 119,234 FORD CREDIT AUTO OWNER TRUST 0.7% 4.6% 59,625 HONDA AUTO RECEIVABLES 1.3% 9.3% 119,254 HYUNDAI AUTO RECEIVABLES 0.9% 6.2% 79,365 JOHN DEERE OWNER TRUST 0.7% 4.6% 59,590 NISSAN AUTO RECEIVABLES 1.1% 7.7% 99,181 TOYOTA MOTOR CORP 1.7% 12.0% 154,020 100.0% 14.2% 1,287,466 Sector Total Corporate AMERICAN EXPRESS CO 0.9% 2.8% 84,524 AMERICAN HONDA FINANCE 1.1% 3.3% 99,103 APPLE INC 1.4% 4.2% 124,370 BANK OF AMERICA CO 0.7% 2.0% 59,831 PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition % of SectorSector / Issuer Market Value ($)% of Total Portfolio BANK OF MONTREAL 1.1% 3.3% 99,029 BANK OF NOVA SCOTIA 1.6% 5.0% 148,826 BB&T CORPORATION 0.3% 0.8% 24,764 BERKSHIRE HATHAWAY INC 0.2% 0.7% 19,935 BP PLC 1.0% 3.0% 90,219 CANADIAN IMPERIAL BANK OF COMMERCE 1.1% 3.3% 98,969 CATERPILLAR INC 0.7% 2.2% 64,241 CHEVRON CORPORATION 2.0% 6.0% 178,971 DEERE & COMPANY 0.7% 2.0% 59,896 GOLDMAN SACHS GROUP INC 0.4% 1.2% 34,796 HOME DEPOT INC 0.5% 1.5% 44,642 HONEYWELL INTERNATIONAL 0.3% 0.8% 24,868 HSBC HOLDINGS PLC 2.2% 6.7% 199,939 INTEL CORPORATION 1.0% 3.0% 89,587 JOHNSON & JOHNSON 0.2% 0.7% 19,905 JP MORGAN CHASE & CO 2.2% 6.7% 199,981 MICROSOFT CORP 1.0% 3.0% 89,109 PACCAR FINANCIAL CORP 0.3% 0.8% 24,810 PEPSICO INC 0.8% 2.3% 69,801 ROYAL BANK OF CANADA 1.1% 3.3% 98,857 THE BANK OF NEW YORK MELLON CORPORATION 1.5% 4.7% 139,873 THE WALT DISNEY CORPORATION 1.0% 3.0% 89,255 TORONTO-DOMINION BANK 0.9% 2.7% 79,116 TOTAL SA 0.8% 2.5% 74,973 TOYOTA MOTOR CORP 1.2% 3.7% 109,663 PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition % of SectorSector / Issuer Market Value ($)% of Total Portfolio UNITED PARCEL SERVICE INC 0.6% 1.8% 54,709 VISA INC 0.6% 1.7% 49,961 WAL-MART STORES INC 0.4% 1.3% 39,858 WELLS FARGO & COMPANY 1.6% 5.0% 149,166 WESTPAC BANKING CORP 1.5% 4.7% 138,972 100.0% 32.8% 2,974,517 Sector Total Federal Agency/CMO FANNIE MAE 0.3% 100.0% 25,027 100.0% 0.3% 25,027 Sector Total Federal Agency/GSE FANNIE MAE 9.1% 58.4% 830,354 FEDERAL HOME LOAN BANKS 5.2% 32.9% 468,029 FREDDIE MAC 1.4% 8.7% 123,046 100.0% 15.7% 1,421,428 Sector Total Municipal FLORIDA ST HURRICAN CAT FUND 2.0% 100.0% 179,611 100.0% 2.0% 179,611 Sector Total Supra-Sov / Supra-Natl Agency AFRICAN DEVELOPMENT BANK 2.1% 30.3% 193,168 ASIAN DEVELOPMENT BANK 1.0% 14.0% 89,509 PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Composition % of SectorSector / Issuer Market Value ($)% of Total Portfolio INTER-AMERICAN DEVELOPMENT BANK 2.4% 34.1% 217,508 INTL BANK OF RECONSTRUCTION AND DEV 1.5% 21.6% 137,527 100.0% 7.0% 637,711 Sector Total U.S. Treasury UNITED STATES TREASURY 28.1% 100.0% 2,549,146 100.0% 28.1% 2,549,146 Sector Total 100.0% 9,074,907 Portfolio Total 100.0% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 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 10/4/17 10/5/17 200,000 US TREASURY N/B 12/31/20 225,413.09 1.95%1.75% 910,000 910,087.77Total BUY INTEREST 10/1/17 10/1/17 280,000 CNH ABS 2017-A A3 5/15/22 77.63 2.07% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($)CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 10/15/17 10/15/17 35,000 ALLY ABS 2017-1 A3 6/15/21 42.50 1.70% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($)CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 11/15/17 11/15/17 50,000 WALT DISNEY COMPANY CORP NOTES 6/5/20 805.50 1.80% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($)CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 12/14/17 12/14/17 50,000 US TREASURY N/B 12/31/20 1,968.75 1.75% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($)CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 6,929,734 30,781.37Total INTEREST PAYDOWNS 10/1/17 10/25/17 1,946 CARMAX ABS 2017-1 A2 2/15/20 5,980.53 0.00 1.54% 41,554 41,553.91 0.00Total PAYDOWNS SELL 10/4/17 10/5/17 150,000 US TREASURY NOTES 12/31/18 10,043.47 1.64%(31.67)1.50% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Trade Date Settle Date Maturity DatePar ($)CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon 12/7/17 12/8/17 225,000 US TREASURY NOTES 12/31/18 225,966.79 1.72%(864.15)1.50% 750,000 749,779.10 -2,664.83Total SELL PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 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 10/1/17 10/1/17 280,000.00 JOHN DEERE ABS 2017-B A3INTEREST 10/15/21 45.50 1.82% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 10/15/17 10/15/17 70,000.00 AMERICAN EXPRESS CREDIT (CALLABLE) CORPINTEREST 10/30/19 255.00 1.70% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 10/31/17 10/31/17 200,000.00 ALLY ABS 2017-1 A3INTEREST 6/15/21 42.50 1.70% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 11/15/17 11/15/17 50,000.00 CHEVRON CORP NOTESINTEREST 5/16/19 1,404.90 1.56% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 11/18/17 11/18/17 75,000.00 ALLY ABS 2017-1 A3INTEREST 6/15/21 42.50 1.70% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 12/15/17 12/15/17 63,196.80 US TREASURY NOTESINTEREST 6/30/20 1,990.63 1.62% PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Portfolio Activity Security DescriptionCUSIPPar ($) Settle Date Trade Date Tran. Type Maturity Date Transact Amt ($)Yield Realized G/L (BV)Coupon 12/31/17 12/31/17 225,000.00 US TREASURY N/BINTEREST 12/31/20 1,968.75 1.75% TOTALS (87,973.39)(2,664.83) PFM Asset Management LLC Tab III PFM Asset Management LLC For the Quarter Ended December 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)1,522,610.06 6.34%2 25%YES United States Treasury Securities 2,579,283.45 10.74%100%YES Federal Agency (GSE)1,444,297.06 6.01%75%YES Supranationals 646,886.69 2.69%25%YES Mortgage-Backed Securities 25,196.67 0.10%25%YES Asset Backed Securities 1,296,255.26 5.40%25%YES Certificates of Deposit - 0.00%50%YES Commercial Paper - 0.00%3 50%YES Corporate Notes 3,003,388.36 12.50%3 50%YES Municipal Obligations 181,946.70 0.76%25%YES Money Market Mutual Funds 33,818.15 0.14%50%YES Intergovernmental Investment Pool 5,015,194.77 20.88%4 50%YES Interest Bearing Checking or Savings Account 8,273,764.96 34.44%2 100%YES Village Managed 14,845,387.94 61.80% PFM Managed 9,177,254.19 38.20% Total 24,022,642.13 100.00% 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 $15,125,076 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. PFM Asset Management LLC Florida Prime (SBA) 6.34% United States Treasury Securities 10.74% Federal Agency (GSE) 6.01% Supranationals 2.69% Mortgage-Backed Securities 0.10% Asset Backed Securities 5.40% Corporate Notes 12.50% Municipal Obligations 0.76% Money Market Mutual Funds 0.14% Interest Bearing Checking or Savings Account 34.44% For the Quarter Ended December 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)476,126.13 1.98%40%YES Federal National Mortgage Association (FNMA)868,031.36 3.61%40%YES Federal Home Loan Mortgage Corporation (FHLMC)125,336.24 0.52%40%YES Florida State Hurricane Cat Fund Municipal Bonds 181,946.70 0.76%5%YES American Express Company Corporate Notes 85,419.93 0.36%5%YES American Honda Finance Corporate Notes 100,557.01 0.42%5%YES Apple, Inc. Corporate Notes 125,512.01 0.52%5%YES Bank of America Corporate Notes 60,399.64 0.25%5%YES Bank of Montreal Corporate Notes 100,629.81 0.42%5%YES Bank of New York Company Inc. Corporate Notes 140,241.04 0.58%5%YES Bank of Nova Scotia Corporate Notes 150,334.59 0.63%5%YES BB&T Corporate Notes 25,086.20 0.10%5%YES Berkshire Hathaway, Inc. Corporate Notes 20,094.03 0.08%5%YES BP Capital Markets Corporate Notes 91,355.88 0.38%5%YES Canadian Imperial Corporate Notes 100,501.03 0.42%5%YES Caterpillar Corporate Notes 65,331.98 0.27%5%YES Chevron Corporation Corporate Notes 180,351.23 0.75%5%YES Goldman Sachs Corporate Notes 35,294.38 0.15%5%YES Home Depot Corporate Notes 45,037.40 0.19%5%YES Honeywell Corporate Notes 25,058.43 0.10%5%YES HSBC Holdings plc Corporate Notes 201,112.75 0.84%5%YES Intel Corporate Notes 90,204.38 0.38%5%YES Johnson & Johnson Corporate Notes 20,034.87 0.08%5%YES John Deere Corporate Notes 60,262.53 0.25%5%YES JP Morgan Chase & Company Corporate Notes 201,129.87 0.84%5%YES Microsoft Corporation Corporate Notes 90,438.69 0.38%5%YES PACCAR Financial Corporate Notes 25,066.18 0.10%5%YES PepsiCo, Inc. Corporate Notes 70,145.43 0.29%5%YES Royal Bank of Canada Corporate Notes 100,573.57 0.42%5%YES The Walt Disney Company Corporate Notes 90,032.53 0.37%5%YES Toronto Dominion Corporate Notes 80,366.87 0.33%5%YES PFM Asset Management LLC For the Quarter Ended December 31, 2017 VILLAGE OF NORTH PALM BEACH, FLORIDA¹Asset Allocation Total Capital SA Corporate Notes 75,437.81 0.31%5%YES Toyota Motor Corporation Corporate Notes 110,556.47 0.46%5%YES UPS Corporate Notes 55,063.68 0.23%5%YES Visa Corporate Notes 50,543.75 0.21%5%YES Wal-Mart Corporate Notes 40,137.34 0.17%5%YES Wells Fargo & Company Corporate Notes 150,770.96 0.63%5%YES Westpac Banking Corp Corporate Notes 140,306.09 0.58%5%YES American Express ABS 100,062.43 0.42%5%YES Ally Auto Receivables Trust ABS 100,069.16 0.42%5%YES Bank of America ABS 65,040.27 0.27%5%YES Capital One ABS 70,056.71 0.29%5%YES Carmax Auto Owner Trust ABS 164,816.13 0.69%5%YES CitiBank Credit Card Issuance Trust ABS 100,792.67 0.42%5%YES CNH Equipment Trust ABS 120,087.32 0.50%5%YES Ford Auto Receivables ABS 60,044.36 0.25%5%YES Honda Auto Receivables ABS 120,045.32 0.50%5%YES Hyundai Auto Receivables ABS 80,047.68 0.33%5%YES John Deere ABS 60,037.47 0.25%5%YES Nissan Auto Receivables ABS 100,057.24 0.42%5%YES Toyota Auto Receivables ABS 155,098.50 0.65%5%YES African Development Bank 195,689.51 0.81%10%YES Asian Development Bank 90,712.84 0.38%10%YES Inter-American Development Bank 220,036.96 0.92%10%YES International Bank of Recon and Dev Notes 140,447.38 0.58%10%YES Money Market Fund - TD Bank Sweep Account 33,818.15 0.14%33%YES Interest Bearing Checking/Savings Acct-Wells Fargo 6,714,275.80 27.95%50%YES Interest Bearing Checking/Savings Acct-Flagler Bank 519,981.89 2.16%50%YES Interest Bearing Checking/Savings Acct-BankUnited 1,039,507.27 4.33%50%YES Florida Education Investment Trust Fund 5,015,194.77 20.88%50%YES PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 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 Ã Market values that 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. Ã 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. Ã 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. Ã Bank of America/Merrill Lynch Indices provided by Bloomberg Financial Markets. Ã Money market fund/cash balances are included in performance and duration computations. Ã Standard & Poorʼs is the source of the credit ratings. Distribution of credit rating is exclusive of money market fund/LGIP holdings. Ã Callable securities in the portfolio are included in the maturity distribution analysis to their stated maturity date, although, they may be called prior to maturity. Ã MBS maturities are represented by expected average life. PFM Asset Management LLC Account NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Appendix GLOSSARY Ã ACCRUED INTEREST: Interest that is due on a bond or other fixed income security since the last interest payment was made. Ã AGENCIES: Federal agency securities and/or Government-sponsored enterprises. Ã 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. Ã 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. Ã COMMERCIAL PAPER: An unsecured obligation issued by a corporation or bank to finance its short-term credit needs, such as accounts receivable and inventory. Ã 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. Ã 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. Ã EFFECTIVE DURATION: A measure of the sensitivity of a security’s price to a change in interest rates, stated in years. Ã 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 ominal yield does not. Ã FDIC: Federal Deposit Insurance Corporation. A federal agency that insures bank deposits to a specified amount. Ã INTEREST RATE: Interest per year divided by principal amount and expressed as a percentage. Ã MARKET VALUE: The value that would be received or paid for an investment in an orderly transaction between market participants at the measurement date. Ã MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. Ã NEGOTIABLE CERTIFICATES OF DEPOSIT: A CD with a very large denomination, usually $1 million or more, that can be traded in secondary markets. Ã PAR VALUE: The nominal dollar face amount of a security. PFM Asset Management LLC NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended December 31, 2017 Appendix GLOSSARY Ã 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. Ã 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. Ã SETTLE DATE: The date on which the transaction is settled and monies/securities are exchanged. If the settle date of the transaction (i.e., coupon payments and maturity proceeds) occurs on a non-business day, the funds are exchanged on the next business day. Ã TRADE DATE: The date on which the transaction occurred; however, the final consummation of the security transaction and payment has not yet taken place. Ã UNSETTLED TRADE: A trade which has been executed; however, the final consummation of the security transaction and payment has not yet taken place. Ã U.S. TREASURY: The department of the U.S. government that issues Treasury securities. Ã 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. Ã 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. Ã 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. PFM Asset Management LLC