Loading...
03-31-2013 Investment Performance Review Village of North Palm Beach, Florida North Pal Investment Performance Review Quarter Ended March 31, 2013 Investment Advisors PFM Asset Management LLC Steven Alexander, CTP, CGFO, Managing Director One Keystone Plaza, Suite 300 300 S. Orange Avenue, Suite 1170 D. Scott Stitcher, CFA, Senior Managing Consultant North Front& Market Streets Orlando, FL 32801 Richard Pengelly, CFA, Senior Managing Consultant Harrisburg, PA 1 71 01-2044 (407)648-2208 Gregg Manjerovic, CFA, Portfolio Manager 407 717-232-2723 •717-233-6073 fax ( Rebecca Geyer, CTP, Senior Analyst )648-1323 fax Village of North Palm Beach, Florida Investment Report-Quarter Ended March 31,2013 Table of Contents Tab I. Section A Market Review Tab II. Section A Quarterly Summary Report Section B Investment Portfolio & Performance Section C Asset Allocation Chart as of March 31 , 2013 Tab III. March 31 , 2013 PFM Month-End Statement (statements are available online at www.pfm.com) This material is based on information obtained from sources generally believed to be reliable and available to the public, however PFM Asset Management LLC cannot guarantee its accuracy,completeness or suitability.This material is for general information purposes only and is not intended to provide specific advice or recommendation.The information contained in this report is not an offer to purchase or sell any securities. Table of Contents Section i Village of North Palm Beach, Florida Investment Report-Quarter Ended March 31,2013 TAB I Village of North Palm Beach, Florida Investment Report — Quarter Ended March 31, 2013 Summary Interest Rates • In the first quarter of 2013, investors flocked to relatively riskier assets • Interest rates rose modestly during the quarter across longer-term (such as corporate bonds and equities) as loose global monetary policy maturities, while the flight to quality stemming from euro-zone fueled a search for additional yield. fears counteracted the move higher. • The U.S. housing market continued to strengthen, and the • The markets shrugged off the start of the federal budget unemployment rate fell to 7.6%. sequestration as they did the "fiscal cliff" in December, but if the • The domestic economy has continued to experience moderate growth, economy feels growing stress from budget cuts in the coming but some economists believe that the federal budget cuts that went months, interest rates may be pushed toward recent lows. into effect March 1 (also known as the sequestration) may lead to • The Federal Reserve (Fed) remained committed to keeping short- slower growth for the second half of the year. term rates at record-low levels, pegging short-term rates near Economic Snapshot zero. The Fed also continued to buy $45 billion in Treasuries each month in addition to its monthly purchases of$40 billion in Agency • Housing starts have averaged more than 900,000 a year in the first mortgage-backed securities (MBS). quarter, up more than 25% over 2012 but still much lower than in the Sector Performance boom years. Home sales and housing prices are also significantly above recession levels. • High-quality corporate bonds continued to perform well for the • According to the U.S. Commerce Department, consumer spending rose quarter, as spreads narrowed to post-credit-crisis lows. Security 0.7% in February—a fourth straight increase that was due in part to selection has been important, as certain corporate sectors (such as higher gas prices. Meanwhile, personal income grew by 1.1% in Financials) performed particularly well. February after a big downturn in the prior month. Both numbers were • After incurring losses in the fourth quarter of 2012 due to slightly above expectations. concerns that their tax-exempt status might be curtailed, • U.S. gross domestic product (GDP) grew by 0.4% in the fourth quarter municipal bonds roared back to life in the first quarter of 2013. of 2012, while forecasts for first-quarter growth are in the 2%-3% These securities, along with corporate bonds, were the top range. performers for the quarter. • Euro-zone economies struggled with recession and political • Supply scarcity and historically tight spreads resulted in Agencies uncertainty. The banking crisis in Cyprus, Italy's difficulties creating a contributing little or no additional performance when compared new government, and weakness in many European economies pushed with similar-maturity Treasuries. the euro lower against the U.S. dollar and supported U.S. Treasury • MBS recovered somewhat after their fourth-quarter prices. Once again, heightened concerns about the euro zone caused a underperformance, bolstered by the upturn in housing values and flight to quality late in the quarter. expectations that the Fed's buying program would continue for the foreseeable future 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 cbange. Information is obtained from sourcesgenerally believed to be reliable and available to the public;however, PFMAM cannotguarantee its accuracy, completeness, or suitability. This material is forgeneral information purposes only and is not intended to provide specific advice or recommendation. The information contained in this report is not an offer to purcbase or sell any securities. PFM Asset Management LLC Section A-1 Village of North Palm Beach, Florida Investment Report - Quarter Ended March 31, 2013 Economic Snapshot Labor Market Latest Dec 2012 Mar 2012 Unemployment Rate Marl 3 7.6% 7.8% 8.2% Unemployment Rate(left)vs.Change in Nonfarm Payrolls(right) 11.0% 600K Change In Non-Farm Payrolls Mael3 88,000 219,000 205,000 �Unempl yrrienRaePayrdls 500K 10.0% 400K 9.0% 300K Average Hourly Earnings(YoY) Marl 1.8% 2.1% 2.1% 200K 8.0% 100K II I � I 1 111 Personal Income(YoY) Feb'l3 2.6% 7.1% 3.2% 7.0% 0 -100K -200K Initial Jobless Claims(week) Mar 29 385,000 372,000 368,000 3/31/10 9/30/10 3/31/11 9/30/11 3/31/12 9/30/12 • Real GDP (QoQ SAAR) 2012Q4 0.4% 3.1%1 2.0%' 5.0% Real GDP (QoQ) GDP Personal Consumption(QoQ SAAR) 2012Q4 1.8% 1.6%1 2.4%2 4.0% 3.0% - Retail Sales (YoY) Feb'l3 4.6% 4.8% 6.3% 2.0% ISM Manufacturing Survey(month) Mar l3 51.3 50.2 53.3 1.0% ' 0.0% Existing Home Sales(month) Feb'l3 4.98 mil. 4.90 mil. 4.46 mil. 12/31/09 6/30/10 12/31/10 6/30/11 12/31/11 6/30/12 12/31/12 Inflation Personal Consumption Expenditures(YoY) Feb'l3 1.3% 1.5% 2.2% consumer Price Index 5.0% CPI(YoY) CPI Core(YoY) Consumer Price Index (YoY) Feb'l3 2.0% 1.7% 2.7% 4.0% 3.0% Consumer Price Index Core(YoY) Feb'l3 1.7% 1.3% 2.8% 2.0% �^ Crude Oil Futures (WTI, per barrel) Mar 31 $97.23 $91.82 $103.02 1.0% 0.0% Gold Futures (oz) Mar 31 $1,595 $1,676 $1,669 2/28/10 8/31/10 2/28/11 8/31/11 2/29/12 8/31/12 1. Data as of Third Quarter 2012 2. Data as of First Quarter 2012 Source:Bloomberg Note: YoY=year over year, QoQ= quarter over quarter, SAAR=seasonally adjusted annual rate, WTI= West Texas Intermediate crude oil PFM Asset Management LLC Section A-2 Village of North Palm Beach, Florida Investment Report — Quarter Ended March 31, 2013 Interest Rate Overview U.S. Treasury Note Yields U.S. Treasury Note Yield Curve 2.5% 4% 2.0% 3% 1.5% �_ _d 6 2% / 1% / 0.5% / w 0.0% 0% W N W Ul J W 3/31/12 6/30/12 9/30/12 12/31/12 3/31/13 0 0 o 2-Year 5-Year 10-Year Maturity March 29,2013 December 31,2012 — — March 31,2012 U.S. Treasury Yields Yield Curves as of 3/31/2013 Change Change 5% Maturity 3/31/13 12/31/12 over 3/31/12 • 4% Quarter 3-month 0.07% 0.09% (0.02%) 0.11% (0.04%) a 3% Z 01 1-year 0.13% 0.14% (0.01%) 0.22% (0.09%) >- 2% .40 I 2-year 0.28% 0.27% 0.00% 0.35% (0.07%) 1% 5-year 0.79% 0.74% 0.05% 1.07% (0.28%) 0% WNW U7 �l N W O U7 O 10-year 1.93% 1.81% 0.12% 2.28% (0.35%) o 14 1414 14 14 Maturity 30-year 3.10% 1 2.94% 1 0.16% 1 3.33% 1 (0.23%) U.S.Treasury Federal Agency — — Industrial Corporates,A Rated Source:Bloomberg PFM Asset Management LLC Section A-4 Village of North Palm Beach, Florida Investment Report - Quarter Ended March 31, 2013 B of A Merrill Lynch Index Returns As of 3/31/2013 Returns for Periods ended 3/31/2013 Duration Yield 3 Month 1 Year 3 Years Indices 1-3 Year U.S. Treasury 1.87 0.25% 0.12% 0.64% 1.24% Federal Agency 1.71 0.32% 0.11% 0.67% 1.37% U.S. Corporates, A-AAA rated 1.99 0.90% 0.44% 2.75% 2.93% Agency MBS (0 to 3 years) 1.81 1.29% 0.01% 1.19% 2.84% Municipals 1.82 0.51% 0.45% 1.05% 1.63% Indices 1-5 Year U.S. Treasury 2.73 0.39% 0.15% 1.26% 2.36% Federal Agency 2.38 0.47% 0.14% 1.19% 2.04% U.S. Corporates, A-AAA rated 2.86 1.18% 0.58% 4.05% 4.23% Agency MBS (0 to 5 years) 2.81 1.96% (0.03%) 1.88% 3.82% Municipals 2.55 0.71% 0.65% 1.68% 2.48% Indices Master U.S. Treasury 5.95 1.01% (0.26%) 3.23% 5.41% Federal Agency 3.82 0.89% 0.05% 2.51% 3.72% U.S. Corporates, A-AAA rated 6.79 2.39% (0.18%) 6.88% 7.45% Agency MBS 3.23 2.02% (0.07%) 1.91% 4.17% Municipals 7.51 2.62% 0.52% 5.61% 6.56% Returns for periods greater than one year are annualized Source:Bloomberg PFM Asset Management LLC Section A-5 Village of North Palm Beach, Florida Investment Report-Quarter Ended March 31,2013 TAB II Village of North Palm Beach,Florida Investment Report-Quarter Ended March 31,2013 Quarterly Summary Report Total Portfolio Value'' March 31,20131 December 31,2012 Market Value $8,323,893.78 $8,317,772.03 Amortized Cost $8,303,089.76 $8,293,955.99 Quarterly Retu Annualized Last Last Last Since Inception Total Return'''°s`'a' March 31 201 Quarter 12 Months 2 Years 3 Years June 30,2009 Investment Portfolio 0.11% 0.46% 0.64% 1.01% 1.18% 1.36% Merrill Lynch 1-3 Year U.S.Treasury Index 0.12% 0.48% 0.64% 1.03% 124% 1.40% Current Quarter Previous Quarter Current Quarter Previous Quarter Effective Duration(Yearsl° March 31,2013 December 31,2012 Yields March 31.2 013 December 31,2012 Investment Portfolio 1.77 1.81 Yield at Market 0.26% 0.26% Merrill Lynch 1-3 Year U.S.Treasury Index 1.79 1.80 Yield at Cost 0.44% 0.47% Portfolio Duration%of Benchmark Duration L 99% 100% Quarter Total Return Comparison Total Return Comparison Since Inception as of Quarter Ended 03/31/13 Quarter Ended 03/31/13 0.75% 2.50% 0.50% 2.00% E 025% 1.50% - L 1-3 Year U.S.Treasury Index g Investment Portfolio ML 1-3 Year U.S.Treasury Index g Investment Portfolio` 1.40% a) ° 0.11% 0.12% 1.00% 1.36% K 0.00/o ° -0.25% 1 - - -0.50% 0.00% 0.50 1.00 1.50 2.00 2.50 3.00 0.50 1.00 1.50 2.00 2.50 3.00 Effective Duration(Years) Effective Duration(Years) Current Quarter Previous Quarter Fiscal Year 2013 Fiscal Year 2012 Quarterly Interest Income March 31,2013 December 31,2012 Fiscal Year Interest Income Year to Date Year to Date Investment Portfolio $10,634.47 $27,555.99 Investment Portfolio $38,190.46 $82,633.24 TD Bank Money Market Fund r 1.47 1.50 TD Bank Money Market Fund 2.97 5.47 Total $10,635.94 $27,557.49 Total $38,193.43 $82,638.71 Current Quarter Previous Quarter Fiscal Year 2013 Fiscal Year 2012 Quarterly Realized Gain/Loss on Cost March 31,2013 December 31,2012 Fiscal Year Realized Gain/Loss on Cost Year to Date Year to Date Investment Portfolio 2,448.251 (8,331.84) Investment Portfolio (5,883.59) $19,132.88 Notes: 1.In order to comply with GASB accrual accounting reporting requirements. 2. End of quarter trade-date market values of portfolio holdings,including accrued interest. 3.Performance on trade date basis,gross(i.e.,before fees),is in accordance with The CFA Institute's Global Investment Performance Standards(GIPS). 4.Merrill Lynch Indices provided by Bloomberg Financial Markets. 5.Quarterly returns are presented on an unannualized basis. 6.Includes money market fund/cash in performance and duration computations. 7.Returns presented for 12 months or longer are presented on an annual basis. 8.Past performance is not indicative of future results. PFM Asset Management LLC Section A-1 Village of North Palm Beach, Florida Investment Report-Quarter Ended March 31,2013 Executive Summary PORTFOLIO STRATEGY The Village's Investment Portfolio is of high credit quality and invested in U.S. Treasury and Federal Agency securities. PFM continued to actively manage the Investment Portfolio during the first quarter and found value in the market, taking advantage of market inefficiencies or changes in economic outlook. In February PFM sold U.S. Treasuries maturing in less than a year and purchasing a 3 year U.S. Treasury. This trade extended the duration of the portfolio and picked up additional yield when rates were at their peak for the quarter. y The Investment Portfolio's quarterly total return performance was 0.11%, underperforming the benchmark's performance of 0.12% by 0.01%. The slight underperformance is due to a few specific issues that had negative performance during the quarter and dragged the overall Portfolio's performance down modestly. We expect the pricing of these securities to improve in the upcoming quarter. Over the past year, the Portfolio earned 0.64%, in-line with the benchmark. y Interest rates for short maturity Treasuries (3 years or less) barely budged during the quarter as the Federal Reserve's zero interest rate policy on overnight lending continued to anchor the front end of the yield curve. Yields on Two year Treasury Notes started the quarter at 0.25%, fluctuated no higher than 0.29% and no lower than 0.23%, before ending the quarter at 0.24% for a net change of -1 basis point. Intermediate maturity Treasuries (5 — 10 years) saw a little more intra-quarter volatility as stronger economic data in the U.S. encouraged yields higher and unfolding developments in the European debt crisis and consequent demand for safe assets drove bond yields lower. Five year Treasury Notes began the year at 0.72%, climbed as high as 0.91% on strong February Retail Sales and then fell back to 0.78% at the end of the quarter as the Cyprus bailout became more chaotic. Ten year yields reached 2% for the first time in a year. Moderate economic expansion has so far corresponded to job growth only slightly faster than population growth. Therefore the unemployment rate should only come down slowly and the consensus still expects the Fed to continue their monthly purchases of Treasury and Agency bonds through 2013 although the Fed may taper the amount somewhat. y Besides Fed purchases, ongoing issues in the Eurozone such as Italy's failure to form a government post-election will keep Treasury bonds bid among European investors as well as export-oriented economies in Asia with growing foreign-exchange reserves that require Treasury bonds to absorb their U.S. dollars. Treasuries and Agency bonds will benefit from rolldown as the yield curve is expected to steepen when yields on longer maturity bonds drift higher and shorter maturity yields are more or less tethered by the Fed's zero interest rate policy. At current yield spreads, however, Agencies offer little value over Treasuries. y As always, we strive to maintain safety of principal and appropriate liquidity, while maximizing value through careful, prudent active management. Our strategy will remain flexible and may change in response to changes in interest rates, economic data, market outlook or specific opportunities that arise. PFM Asset Management LLC Section B-1 Village of North Palm Beach, Florida Investment Report-Quarter Ended March 31,2013 Investment Portfolio Composition and Credit Quality Characteristics Security Type' March 31,2013 %of Portfolio December 31.2012 %of Portfolio U.S.Treasuries $6,869,656.42 82.5% $7,132,204.18 85.7% Federal Agencies 1,390,094.50 16.7% 1,130,543.35 13.6% Commercial Paper 0.00 0.0% 0.00 0.0% Certificates of Deposit 0.00 0.0% 0.00 0.0% Bankers Acceptances 0.00 0.0% 0.00 0.0% Repurchase Agreements 0.00 0.0% 0.00 0.0% Municipal Obligations 0.00 0.0% 0.00 0.0% Corporate Notes/Bonds 0.00 0.0% 0.00 0.0% Corporate Notes/Bonds-FDIC Insured 0.00 0.0% 0.00 0.0% Mortgage Backed 0.00 0.0% 0.00 0.0% Money Market Fund/Cash 64,142.86 0.8% 55,024.50 0.7% Totals $8,323,893.78 100.0% $8,317,772.03 100.0% Portfolio Composition Credit Quality Distribution as of 03/31/13 as of 03/31/13 AA+ 100% Federal Agency Obligations 17% U.S.Treasuries 82% Money Market Fund/Cash 0.77% Notes: 1.End of quarter trade-date market values of portfolio holdings,including accrued interest. 2.Credit rating of securities held in portfolio,exclusive of money market fund/LGIP.Standard&Poor's is the source of the credit ratings. PFM Asset Management LLC Section B -2 Village of North Palm Beach, Florida Investment Report - Quarter Ended March 31, 2013 Investment Portfolio Maturity Distribution Maturity Distribution' March 31, 2013 December 31, 2012 Overnight(Monedy Market Fund) $64,142.86 $55,024.50 Under 6 Months 0.00 0.00 6- 12 Months 1,593,153.36 1,823,056.40 1 -2 Years 3,860,377.96 2,769,865.42 2- 3 Years 2,159,801.21 3,669,825.71 3-4 Years 646,418.41 0.00 4- 5 Years 0.00 0.00 5 Years and Over 0.00 0.00 Totals $8,323,893.78 $8,317,772.03 loo°%° Portfolio Maturity Distribution' 90% ■March 31, 2013 80% ■December 31, 2012 —°0 70% o 60% a m 50% 46% 44% 0 ~ 40% 0 33% �, 30% 22% 26% 20% 19% m 10% 8% a 0% 1% 1% 0% 0% % 0% 0% 0% 0% Overnight Under 6 Months 6- 12 Months 1 -2 Years 2- 3 Years 3-4 Years 4- 5 Years 5 Years and Over Notes: 1.Callable securities in portfolio are included in the maturity distribution analysis to their stated maturity date,although they may be called prior to maturity. PFM Asset Management LLC Section B - 3 Village of North Palm Beach, Florida Investment Report- Quarter Ended March 31,2013 Investment Portfolio Maturity Distribution versus the Benchmark' 25.0% 20.0% 15.0% Cd x 10.0% 5.0% 0.0% --- I I t I�—][ 00 Years to Maturity ■ Investment Portfolio ■Merrill Lynch 1-3 Year U.S.Treasury Note Index Notes: 1. Due to the nature of the security,Mortgage-Backed Securities are represented based on their average life maturity rather than their final maturity. PFM Asset Management LLC Section B-4 Village of North Palm Beach,Florida' Asset Allocation as of March 31,2013* Security Type March 31,2013 March 31,2013 Notes Permitted by Policy Asset Allocation Florida SBA Prime Fund and Fund B 489,390.85 2.36% 2 25% as of March 31,2013 United States Treasury Securities 6,857,008.71 33.05% 100% Money Market Mutual Funds United States Government Agency Securities - 0.00% 100% 1.04% Interest Bearing Checking Federal Instrumentalities 1,381,938.19 6.66% 50% Federal Instrumentalities or Savings Account Mortgage-Backed Securities - 0.00% 50 6.66% 56.89 Certificates of Deposit - 0.00% 100% Repurchase Agreements - 0.00% 0% Commercial Paper - 0.00% 0% Corporate Notes - 0.00% 25% Bankers'Acceptances - 0.00% 0% United States Treasury Securities Money Market Mutual Funds 215,048.56 1.04% 50% 33.05 Intergovernmental Investment Pool - 0.00% 25% Florida SBA Prime Fund and Fund B Interest Bearing Checking or Savings Account 11,802,407.10 56.89% 2 100% 2.36 Village Managed 12,442,703.65 59.98% PFM Managed 8,303,089.76 40.02% Total 20,745,793.41 100.00% Individual Issuer Breakdown March 31,2013 March 31,2013 Notes Permitted by Policy Individual Issuer Breakdown March 31,2013 March 31,2013 Notes Permitted by Policy Government National Mortgage Association(GNMA) - 0.00% 100% Interest Bearing Checking or Savings Account-Wells Fargo 8,793,850.30 42.39% 2 50% US Export-Import Bank(Ex-1m) - 0.00% 100% Interest Bearing Checking or Savings Account-Chase 3,008,556.80 14.50% 50% Farmers Home Administration(FMHA) - 0.00% 100% Money Market Fund-TD Bank Sweep Account 64,142.86 0.31% 33% Federal Financing Bank - 0.00% 100% Money Market Fund-Wells Fargo Advantage Fund 150,905.70 0.73% 2 33% Federal Housing Administration(FHA) - 0.00% 100% Florida Prime 301,761.93 1.45% 2 25% General Services Administration - 0.00% 100% SBA Fund B 187,628.92 0.90% 2 N/A New Communities Act Debentures - 0.00% 100% US Public Housing Notes&Bonds - 0.00% 100% US Dept.of Housing and Urban Development - 0.00% 100% Federal Farm Credit Bank(FFCB) - 0.00% 10% Federal Home Loan Bank(FHLB) 341,429.75 1.65% 10% Federal National Mortgage Association(FNMA) 639,422.94 3.08% 10% Federal Home Loan Mortgage Corporation(FHLMC) 401,085.50 1.93% 10% Notes: 1. All Assets. 2. These Accounts are managed by the Village. `PFM managed securities are shown on Amortized Cost plus Accrued Interest basis. PFM Asset Management LLC Section C-1 Village of North Palm Beach, Florida Investment Report-Quarter Ended March 31,2013 TAB III Village of North Palm Beach, Florida Investment Report-Quarter Ended March 31,2013 Insert Month End Statement here to complete the report. Statements are available online at www.pfm.com login and click on the link to "Monthly Statements" on the left side of the screen. A � PFM Customer Service PO Box 11813 �r�rr Harrisburg, PA 17108 -1813 �'�` ACCOUNT STATEMENT Client Management Team Steven Alexander, CTP, CGFO Managing Director 300 South Orange Avenue, Suite 1170 Orlando, FL 32801 407 -648 -2208 alexanders @pfm.com Gregg Manjerovic, CFA Director One Keystone Plaza, Suite 300 Harrisburg, PA 17101 717 - 232 -2723 manjerovicg @pfm.com Rebecca Geyer, CTP Senior Analyst 300 South Orange Street, Suite 1170 Orlando, FL 32801 407 -648 -2208 doler @pfm.com Contents Cover/ Disclosures Summary Statement Individual Accounts Accounts included in Statement NORTH PALM BEACH INVESTMENT PORTFOLIO VILLAGE OF NORTH PALM BEACH SAMIA JANJUA 501 US HIGHWAY 1 NORTH PALM BEACH, FL 33408 Online Access http: / /www.pfm.com Customer Service 1- 717 - 232 -2723 MIZZ W_�� Important isc ro sures {' This statement is for general information purposes only and is not intended to provide specific advice or recommendations. PFM Asset Management LLC ( "PFM ") is an investment advisor registered with the Securities and Exchange Commission, and is required to maintain a written disclosure statement of our background and business experience. If you would like to receive a copy of our current disclosure statement, please contact Service Operations at the address below. Proxy Voting PFM does not normally receive proxies to vote on behalf of its clients. However, it does on occasion receive consent requests. In the event a consent request is received the portfolio manager contacts the client and then proceeds according to their instructions. PFM's Proxy Voting Policy is available upon request by contacting Service Operations at the address below. Questions About an Account PFM's monthly statement is intended to detail our investment advisory activity as well as the activity of any accounts held by clients in pools that are managed by PFM. The custodian bank maintains the control of assets and executes (i.e., settles) all investment transactions. The custodian statement is the official record of security and cash holdings and transactions. PFM recognizes that clients may use these reports to facilitate record keeping; therefore the custodian bank statement and the PFM statement should be reconciled and differences resolved. Many custodians use a settlement date basis which may result in the need to reconcile due to a timing difference. Account Control PFM does not have the authority to withdraw funds from or deposit funds to the custodian. Our clients retain responsibility for their internal accounting policies; implementing and enforcing internal controls and generating ledger entries or otherwise recording transactions. Market Value Generally, PFM's market prices are derived from closing bid prices as of the last business day of the month as supplied by Interactive Data, Bloomberg or Telerate. Where prices are not available from generally recognized sources the securities are priced using a yield -based matrix system to arrive at an estimated market value. Prices that fall between data points are interpolated. Non - negotiable FDIC - insured bank certificates of deposit are priced at par. Although PFM believes the prices to be reliable, the values of the securities do not always represent the prices at which the securities could have been bought or sold. Explanation of the valuation methods for money market and TERM funds is contained in the appropriate fund information statement. Amortized Cost The original cost of the principal of the security is adjusted for the amount of the periodic reduction of any discount or premium from the purchase date until the date of the report. Discount or premium with respect to short term securities (those with less than one year to maturity at time of issuance) is amortized on a straightline basis. Such discount or premium with respect to longer term securities is amortized using the constant yield basis. Important Disclosures Tax Reporting Cost data and realized gains / losses are provided for informational purposes only. Please review for accuracy and consult your tax advisor to determine the tax consequences of your security transactions. PFM does not report such information to the IRS or other taxing authorities and is not responsible for the accuracy of such information that may be required to be reported to federal, state or other taxing authorities. Financial Situation In order to better serve you, PFM should be promptly notified of any material change in your investment objective or financial situation. Callable Securities Securities subject to redemption prior to maturity may be redeemed in whole or in part before maturity, which could affect the yield represented. Portfolio The securities in this portfolio, including shares of mutual funds, are not guaranteed or otherwise protected by PFM, the FDIC (except for certain non - negotiable certificates of deposit) or any government agency. Investment in securities involves risks, including the possible loss of the amount invested. Rating Information provided for ratings is based upon a good faith inquiry of selected sources, but its accuracy and completeness cannot be guaranteed. Shares of some money market and TERM funds are marketed through representatives of PFM's wholly owned subsidiary, PFM Fund Distributors, Inc. PFM Fund Distributors, Inc. is registered with the SEC as a broker /dealer and is a member of the Financial Industry Regulatory Authority ( "FINRA ") and the Municipal Securities Rulemaking Board ( "MSRB "). You may reach the FINRA by calling the FINRA Regulator Public Disclosure Hotline at 1- 888 - 289 -9999 or at the FINRA Regulation Internet website address www.nasd.com. A brochure describing the FINRA Regulation Public Disclosure Program is also available from the FINRA upon request. Key Terms and Definitions Dividends on money market funds consist of interest earned, plus any discount ratably amortized to the date of maturity, plus all realized gains and losses on the sale of securities prior to maturity, less ratable amortization of any premium and all accrued expenses to the fund. Dividends are accrued daily and may be paid either monthly or quarterly. The monthly earnings on this statement represent the estimated dividend accrued for the month for any program that distributes earnings on a quarterly basis. There is no guarantee that the estimated amount will be paid on the actual distribution date. Current Yield is the net change, exclusive of capital changes and income other than investment income, in the value of a hypothetical fund account with a balance of one share over the seven -day base period including the statement date, expressed as a percentage of the value of one share (normally $1.00 per share) at the beginning of the seven -day period. This resulting net change in account value is then annualized by multiplying it by 365 and dividing the result by 7. The yields quoted should not be considered a representation of the yield of the fund in the future, since the yield is not fixed. Account Statement For the Month Ending March 31, 2013 Average maturity represents the average maturity of all securities and investments of a portfolio, determined by multiplying the par or principal value of each security or investment by its maturity (days or years), summing the products, and dividing the sum by the total principal value of the portfolio. The stated maturity date of mortgage backed or callable securities are used in this statement. However the actual maturity of these securities could vary depending on the level or prepayments on the underlying mortgages or whether a callable security has or is still able to be called. Monthly distribution yield represents the net change in the value of one share (normally $1.00 per share) resulting from all dividends declared during the month by a fund expressed as a percentage of the value of one share at the beginning of the month. This resulting net change is then annualized by multiplying it by 365 and dividing it by the number of calendar days in the month. YTM at Cost The yield to maturity at cost is the expected rate of return, based on the original cost, the annual interest receipts, maturity value and the time period from purchase date to maturity, stated as a percentage, on an annualized basis. YTM at Market The yield to maturity at market is the rate of return, based on the current market value, the annual interest receipts, maturity value and the time period remaining until maturity, stated as a percentage, on an annualized basis. Managed Account A portfolio of investments managed discretely by PFM according to the client's specific investment policy and requirements. The investments are directly owned by the client and held by the client's custodian. Unsettled Trade A trade which has been executed however the final consummation of the security transaction and payment has not yet taken place. Please review the detail pages of this statement carefully. If you think your statement is wrong, missing account information, or if you need more information about a transaction, please contact PFM within 60 days of receipt. If you have other concerns or questions regarding your account you should contact a member of your client management team or PFM Service Operations at the address below. PFM Asset Management LLC Attn: Service Operations One Keystone Plaza, Suite 300 N. Front & Market Sts Harrisburg, PA 17101 �P M° Managed Account Summary Statement For the Month Ending March 31, 2013 NORTH PALM BEACH INVESTMENT PORTFOLIO - .. Opening Market Value $8,245,962.89 Maturities /Calls 0.00 Maturities /Calls 0.00 Sale Proceeds 0.00 Principal Dispositions 0.00 Coupon /Interest /Dividend Income 6,009.85 Principal Acquisitions 0.00 principal Payments 0.00 Unsettled Trades (2,764.85) Security Purchases 0.00 Change in Current Value (4,057.41) Net Cash Contribution 0.00 Reconciling Transactions 0.00 Closing Market Value $8,239,140.63 Managed Earnings Reconciliation (Cash Basis) - . Interest/Dividends /Coupons Received 6,009.85 Closing Cash Balance $67,024.11 Less Purchased Interest Related to Interest /Coupons 0.00 Plus Net Realized Gains /Losses 0.00 Total Cash Basis Earnings $6,009.85 Earnings Reconciliation (Accrual Basis) TotJE Ending Amortized Value of Securities 8,218,336.61 Ending Accrued Interest 20,610.29 Plus Proceeds from Sales 386,600.79 Plus Proceeds of Maturities /Calls /Principal Payments 0.00 Plus Coupons /Dividends Received 6,009.85 Less Cost of New Purchases (386,172.61) Less Beginning Amortized Value of Securities (8,222,269.43) Less Beginning Accrued Interest (18,308.09) Total Accrual Basis Earnings $4,807.41 PFM Account Page 1 qu PFM Asset Management LLC P FN'S.. Portfolio Summary and Statistics NORTH PALM BEACH INVESTMENT PORTFOLIO - US TSY Bond / Note 83.15% For the Month Ending March 31, 2013 Fed Agy Bond / Note 16.85% Yield to Maturity at Cost 0.44% Yield to Maturity at Market 0.26% Duration to Worst 1.77 Weighted Average Days to Maturity 654 =PFM Account Page 2 VF PFM Asset Management LLC aff- - �iFM' Managed Account Issuer Summary NORTH PALM BEACH INVESTMENT PORTFOLIO - Issuer Summary Market Value Issuer of Holdings Percent FANNIE MAE 640,389.26 7.77 FEDERAL HOME LOAN BANKS 344,588.64 4.18 FREDDIE MAC 402,963.20 4.89 UNITED STATES TREASURY 6,851,199.53 83.16 Total PFM Asset Management LLC $8,239,140.63 100.000/0 AA+ 100.00% For the Month Ending March 31, 2013 Account Page 3 PFM' Managed Account Detail of Securities Held For the Month Ending March 31, 2013 NORTH PALM BEACH INVESTMENT PORTFOLIO - Security Type/ Description S &P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date /Coupon /Maturity U.S. Treasury :. Note CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value US TREASURY NOTES 125,000.00 AA+ Aaa 09/06/12 09/10/12 128,437.50 0.34 4.27 127,811.66 127,939.50 DTD 09/30/2010 1.250% 09/30/2015 CPFNI` Account Page 4 PFM Asset Management LLC q-P �LW w Managed Account Detail of Securities Held For the Month Ending March 31, 2013 NORTH PALM BEACH INVESTMENT PORTFOLIO - Security Type/ Description S &P Moody's Trade Settle Original YTM Accrued Amortized Market Dated Date /Coupon /Maturity CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value U.S. Treasury Bond / Note US TREASURY NOTES 365,000.00 AA+ Aaa 03/27/13 04/01/13 383,107.42 0.38 3,065.19 383,107.42 383,050.35 DTD 05/02/20112.000% 04/30/2016 Security Type Sub -Total 6,760,000.00 6,865,541.03 0.38 18,456.89 6,838,551.82 6,851,199.53 Federal Agency Bond / Note FEDERAL HOME LOAN BANK GLOBAL NOTES 260,000.00 AA+ Aaa 02/14/13 02/15/13 259,703.60 0.54 3.61 259.715.31 260,299.26 DTD 02/15/2013 0.500% 03/30/2016 Security Type Sub -Total 1,380,000.00 1,380,394.80 0.76 2,153.40 1,379,784.79 1,387,941.10 Managed Account Sub -Total 8,140,000.00 8,245,935.83 0.44 20,610.29 8,218,336.61 8,239,140.63 � '41 Account Page 5 PFM Asset Management LLC PFW Managed Account Detail of Securities Held NORTH PALM BEACH INVESTMENT PORTFOLIO - For the Month Ending March 31, 2013 Securities Sub -Total $8,140,000.00 0 $8,245,935.83 0.44% $20,610.29 $8,218,336.61 $8,239,140.63 Accrued Interest $20,610.29 Total Investments Bolded items are forward settling trades. $8,259,750.92 .r �PFM' Account Page 6 PFM Asset Management L LC PPM= iw Managed Account Fair Market Value & Analytics For the Month Ending March 31, 2013 NORTH PALM ;BEACH INVESTMENT PORTFOLIO - Security Type/ Description Next Call Market Market Unreal G/L Unreal G/L Effective Duration YTM Dated Date /Coupon /Maturity U.S. Treasury Bond / Note CUSIP Par Broker Date Price Value On Cost Amort Cost Duration to Worst at Mkt US TREASURY NOTES 390,000.00 BARCLAYS 102.38 399,292.92 (975.05) 158.30 2.53 2.53 0.32 DTD 11/01/2010 1.250% 10/31/2015 1 Account Page 7 PFM Asset Management L.LC PF "I Managed Account Fair Market Value & Analytics For the Month Ending March 31, 2013 NORTH PALM BEACH INVESTMENT PORTFOLIO - Security Type/ Description Next Call Market Market Unreal G/L Unreal G/L Effective Duration YTM Dated Date /Coupon /Maturity CUSIP Par Broker Date Price Value On Cost Amort Cost Duration to Worst at Mkt US TREASURY NOTES 365,000.00 CITIGRP 104.95 383,050.35 (57.07) (57.07) 2.98 2.98 0.38 DTD 05/02/20112.000% 04/30/2016 Security Type Sub -Total 6,760,000.00 6,851,199.53 (14,341.50) 12,647.71 1.73 1.73 0.24 Federal Agency Bond / Note FEDERAL HOME LOAN BANK GLOBAL 260,000.00 CITIGRP 100.12 260,299.26 595.66 583.95 2.97 2.97 0.46 DTD 02/15/2013 0.500% 03/30/2016 Security Type Sub -Total 1,380,000.00 1,387,941.10 7,546.30 8,156.31 1.96 1.96 0.32 Managed Account Sub -Total 8,140,000.00 8,239,140.63 (6,795.20) 20,804.02 1.77 1.77 0.26 Securities Sub -Total $8,140,000.00 $8,239,140.63 ($6,795.20) $20,804.02 1.77 1.77 0.260/a Accrued Interest $20,610.29 Total Investments $8,259,750.92 Bolded items are forward settling trades. Account Page 8 PFM Asset Management LLC PFM' Managed Account Security Transactions & Interest For the Month Ending March 31, 2013 NORTH PALM BEACH INVESTMENT PORTFOLIO - Transaction Type Principal Accrued Realized G/L Realized G/L Sale Trade Settle Security Description CUSIP Par Proceeds Interest Total Cost Amort Cost Method 03/27/13 04/01/13 US TREASURY N/B 9128280FO 365,000.00 (383,107.42) (3,065.19) (386,172.61) DTD 05/02/2011 2.0000/b 04/30/2016 Transaction Type Sub -Total INTEREST 365,000.00 (383,107.42) (3,065.19) (386,172.61) 03/01/13 03/01/13 MONEY MARKET FUND MONEY0002 0.00 0.00 0.47 0.47 03/15/13 03/15/13 US TREASURY NOTES 912828RG7 470,000.00 0.00 587.50 587.50 DTD 09/15/20110.250% 09/15/2014 03/15/13 03/15/13 US TREASURY NOTES 912828SK7 525,000.00 0.00 984.38 984.38 DTD 03/15/2012 0.375% 03/15/2015 03/15/13 03/15/13 US TREASURY NOTES 912828SK7 30,000.00 0.00 56.25 56.25 DTD 03/15/2012 0.375% 03/15/2015 03/22/13 03/22/13 FREDDIE MAC GLOBAL NOTES 3134G2WG3 400,000.00 0.00 1,500.00 1,500.00 DTD 08/05/20110.750% 09/22/2014 03/30/13 03/30/13 FANNIE MAE GLOBAL NOTES 3135GOVA8 260,000.00 0.00 162.50 162.50 DTD 02/15/2013 0.500% 03/30/2016 03/31/13 03/31/13 US TREASURY NOTES 912828NZ9 125,000.00 0.00 781.25 781.25 DTD 09/30/2010 1.250% 09/30/2015 03/31/13 03/31/13 US TREASURY NOTES 912828NZ9 310,000.00 0.00 1,937.50 1,937.50 DTD 09/30/2010 1.250% 09/30/2015 Transaction Type Sub -Total 2,120,000.00 0.00 6,009.85 6,009.85 03/27/13 04/01/13 US TREASURY NOTES 912828PU8 385,000.00 385,872.27 728.52 386,600.79 4,180.86 1,565.61 SPEC LOT DTD 11/15/20100.500% 11/15/2013 Transaction Type Sub -Total 385,000.00 385,872.27 728.52 386,600.79 4,180.86 1,565.61 Managed Account Sub -Total 2,764.85 3,673.18 6,438.03 4,180.86 1,565.61 Total Security Transactions $2,764.85 $3,673.18 $6,438.03 $4,180.86 $1,565.61 �PF` I Account Page 9 WF PFM Asset Management LLC �x Managed Account Security Transactions & Interest For the Month Ending March 31, 2013 NORTH PALM BEACH INVESTMENT PORTFOLIO - Bolded items are forward settling trades. 1 =PF1 Account Page 10 PFM Asset Management LLC