03-31-2011 VNPB Investment Performance ReviewInvestment Advisors
G,
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J
Village of North Palm Beach
Investment Performance Review
Quarter Ended March 31, 2011
PFM Asset Management LLC
Steven Alexander, CTP, CGFO, Managing Director 300 S. Orange Avenue, Suite 1170 One Keystone Plaza, Suite 300
Mel Hamilton, Senior Managing Consultant Orlando, FL 32801 North Front & Market Streets
David Jang, CTP, Senior Managing Consultant (407) 648 -2208 Harrisburg, PA 17101 -2044
Gregg Manjerovic, CFA, Portfolio Manager (407) 648 -1323 fax 717 - 232 -2723
Rebecca Dole, CTP, Consultant 717 - 233 -6073 fax
Village of North Palm Beach Investment Report - Quarter Ended March 31, 2011
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, 2011
Tab III. March 31, 2011 PFM Month -End Statement
(statements are available online at www.pfm.com)
This material is based on information obtained from sources general[; believed to be reliable and available to the public.
however PFM Asset Management LLC cannot guarantee its accuracy, complctcness 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 Investment Report - Quarter Ended March 31, 2011
Intermediate- and long -terns interest rates rose modestly for the second
consecutive quarter, driven by optimism for continued economic
growth. As a result, returns on most fixed- income benchmarks were
reduced by market value erosion that comes with rising rates. Despite
two quarters of rising rates, returns over the last 12 months for longer
fixed- income strategies were significantly higher than returns of cash -
equivalent and money market investments, which remain near zero.
Rates experienced significant intra- quarter volatility as the natural
disaster in ,Japan and geopolitical unrest temporarily counteracted the
upward trend. By the end of the quarter, however, the net result was an
increase of 20 to 30 basis points (0.20% to 0.30 %) in yields on
Treasury and Agency securities lodger than one year. Despite this rise,
the incremental income on longer -term investments and the impact of
"rolling down" the yield curve helped protect the market value of
portfolios.
The Economy
Behind the optimism was a slew of positive economic news. For
example, the economy created 478,000 jobs during the first quarter
with the headline unemployment rate dropping below 9% in February
for the first time in almost two years. Manufacturing strengthened, as
did retail sales and commodity and stock prices, while personal
income grew at a pace that would support modest to strong GDP
growth. Also fueling the continued recovery during the quarter were
the effects of Congress' move to extend the Bush era tax cuts along
with reductions in the payroll (Social Security) tax.
The pace of wholesale and broad consumer price increases accelerated,
but narrower inflation measures that focus on core prices remain
muted. However, bond investors remain skittish on the inflation front.
Thus comments from the Federal Reserve that it would complete the
second phase of its program of Quantitative Easing and maintain an
accommodative monetary policy put downward pressure on rates.
Volatility Rises
News of violent protests across the Middle East and North Africa,
resulting in a toppled government in Egypt, an ongoing civil war in
Libya, and great uncertainty surrounding the region all contributed to
market volatility sending investors to the safety of U.S Treasury
securities each time violence flared.
An earthquake and ensuing tsunami battered Japan in mid - March. The
environmental and economic uncertainty surrounding the damage to
nuclear reactors pushed yields to their lowest point during the quarter.
However, the strength of the economic recovery reemerged, sparking a
rally in yields that negated the effects of the flight to quality.
Interest Rates and Returns
By March 31, the rise in rates was most apparent in intermediate -term
Treasuries -the so- called belly of the yield curve -with the yield on a
2 -year U.S. Treasury note up 0.23% from its December 31, 2010 level
while 10 -year Treasury yields rose only 0.18% during the same period.
The increase in rates negatively impacted returns for the quarter as the
price and yield of a security are inversely related.
Short-term interest rates remained near historic lows throughout the
quarter as the Fed continued to hold the Fed Funds rate in the range of
zero to 25 basis points. Returns on investment strategies along most of
the yield curve hovered just above zero.
Summary of U.S. Treasury Security Yields
Date 3NI 6M ly 2Y 3Y 5Y 1
March 31, 2011 0.09 % 0.17% 0.27% 0.82% 1.30% 2.28% 3.47%
December 31, 2010
0.12%
0.18%
0.26%
0.59%
0.99%
2.01%
3.29%
Change over Quarter
-0.03%
-0.01%
0.01%
0.23%
0.31%
0.27%
0.18%
March 31, 2010
0.15%
0.23%
0.38%
1.02%
1.57%
2.54%
3.83%
Grange over Year
-0.06%
- 0,06%
-0.11%
-0.20%
-0.27%
-0.27%
-0.36%
Source data: Bloomhcrg
PFM Asset Management LLC Section A - 1
Village of North Palm Beach Investment Report — Quarter Ended March 31, 2011
2 -Year U.S. Treasury Note Yield U.S. Treasury Yields and Yield Curve Steepness
April 1, 2009 through March 31, 2011 March 2001 to Match 2011
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
Apr 09 Jul 09 Oct 09 .Ian 10 Apr 10 Jul 10 Oct 1.0 Jan I 1
Source data: Bloomberg
The yield curve steepened even more during the quarter as the spread
between shorter- and longer- maturity Treasuries rose. For example, as
the following chart shows, the spread between 2 -year and 10 -year U.S.
Treasury notes closed the quarter at 265 basis points, near the widest
levels since 2003, before the yield curve flattened as a result of 17
consecutive hikes in the Fed Funds rate. The positive slope of the yield
curve helps protect the market value of longer- duration portfolios. The
steep yield curve allows fixed- income investors to benefit from a
concept referred to as "rolling down the yield curve ". As securities
approach their maturity date, they will be priced as shorter, lower -
yielding securities. Pricing a security at a lower yield increases the
market price of the security helping to offset the negative effects of
rising yields.
7%
6%
5%
4%
b
2 3%
2%
1%
0%
3.0%
2.4%
1.8%
1.2%
Cn
0.6%
CL
0.0%
-0.6%
-1.2%
Mar Ol Mar 03 Mar 05 Mar 07 Mar 09 Mar 11
Spread (Right Axis) -2 -Year TSY - l0 -Year TSY
Source data: Bloomberg
As a result of the increase in interest rates during the quarter, longer -
duration fixed- income strategies slightly underperformed their shorter -
duration counterparts. As evidenced in the following chart, benchmark
returns were barely positive, with the 1- to 3 -year U.S. Treasury index
returning 0.03% (0.12% annualized) for the quarter versus a return on
the 3- to 5 -year index of 0.0 1 % (0.04% annualized).
However, as the following chart shows, year- over -year returns were
still much higher for longer - duration strategies as short -term returns
continue to be limited by the extremely low Fed Funds rate. For the 12
months ended March 31, 2011, the 3- to 5 -year U.S. Treasury index
returned 4.40% versus a return of 1.67% on the 1- to 3 -year index, an
outperformance of 273 basis points. Despite slightly better returns
during the quarter, the 12 -month performance of very short-term
strategies continued to lag the performance of longer strategies as the 3-
month U.S. Treasury benchmark returned only 0.16% over the prior 12
months.
PFM Asset Management LLC Section A - 2
Village of North Palm Beach Investment Report — Quarter Ended March 31, 2011
Total Returns of Merrill Lynch U.S. Treasury Indices
Quarterly and 12 -Month Total Return as of March 31, 2011
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
4.40%
!
o
3
r.
0.16%
0.03 °io 0.02% j
0.05% 0.01%
3mo 1 -3yr 1 -5yr 3 -5yr
Quarter ■ 1 Year
Source data: BankgfArneriea rllerrill Lynch; Bloomberg
Credit spreads continued to narrow despite beginning the quarter at
historically low levels, resulting in enhanced returns from Agency and
corporate bonds when compared with like - duration Treasuries. For
example, the spread between 10 -year Treasury debt and 10 -year
Agency debt narrowed by an additional four basis points to end the
quarter at 26 basis points.
In the short end of the yield curve, corporate credits were in demand as
signs of a strong economy improved corporate balance sheets and
investors' outlook for those credits. Increased appetite for credit risk,
along with reduced Federal Agency issuance, drove up prices on
corporate securities, propelling corporate indices higher than
comparable U.S. Treasury and Federal Agency indices.
Duration Adjusted Returns of Merrill Lynch 1 -3 Year Indices
Quarterly and 12 -Month Total Return as of March 31, 2011
4%
3%
2%
1%
0%
U.S. Treasury Federal Agency AA /AAA Corporate
0 Current Quarter ■ Past 12 Months
Source data: Bank ofAnreriea Merrill Lynch; Bloomberg
Duration - adjusted return incorporates an adjustment to the market value return
(but not the income return) of each benchmark to account.for their varied
durations. making it easier, for investors to assess the relative risk and return of
benchmarks of different lengths.
Economic Outlook
Positive economic data continues to show the economy is on a. path of
recovery despite a few remaining anchors.
One of those anchors is elevated unemployment and the large number
of jobs lost during the recession. Although unemployment remains
high, considerable improvement has been made since the
unemployment rate peaked at 10.1% in October 2009. Continued
improvement in the employment situation will be a key driver of a
sustained recovery.
PFM Asset Management LLC Section A - 3
O
cd
a
Village of North Palm Beach Investment Report — Quarter Ended March 31, 2011
The following chart shows the positive trend seen in recent
employment data releases.
500
300
100
(100)
(300)
(500)
(700)
(900)
U -3 Unemployment Rate and Non -Farm Payrolls
March 31, 2006 to March 31, 2011
I I
�' "III IN��IIII� rim
f
12' /,
10%
8%
�o
6%
4% ^
2%
0%
Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11
Non -Farm Payrolls U -3 Unemployment
Source, data: Bloomberg
The bleak housing market continues to be a concern going forward, as
prices fell further during the quarter. Median house prices in the
United States fell more than 8% over the prior 3 months to $1.56,100 in
February. Demand for existing and new homes remains weak as
buyers face tougher borrowing requirements and reservations about
when prices will bottom out. A reversal in the trend of falling home
prices and stagnant demand would accelerate economic growth,
possibly stoking inflation concerns.
A close eye will be kept on the situation in the Middle East and North
Africa. Higher oil prices as a result of the turmoil have the potential to
decrease disposable income and stall the economic recovery in the
United States. Despite the price of oil rising 1.6% to the highest levels
since September 2008, investors have set aside these concerns for the
time being and appear to be focused on brighter prospects for the
economy.
Markets will also be monitoring Japan's ability to rebound from its
environmental disaster. With Japan being the third - largest economy
and the largest consumer of U.S. exports, their ability to bounce back
will have a direct impact on the future of the U.S. recovery. The events
in Japan also renewed concerns about nuclear power as a viable
alternative to meet the growing demand for energy.
Investment Strategy
Although the economy continues to improve, the Federal Reserve
remains reluctant to raise short -term rates. Investors choosing cash
equivalent strategies should be reconciled to near -zero returns. Given
the recent back -up in rates and the steepness of the yield curve, we feel
that intermediate fixed - income securities offer value.
Although the longer -term trend is for higher rates, the Federal Reserve
does not look set to tighten monetary conditions anytime soon. This
fact will exert pressure to keep rates low for the time being and present
opportunities for intermediate -term securities to produce returns in
excess of cash. Until the Federal Reserve begins posturing to tighten
monetary policy, managing portfolios with a duration target that is
only slightly defensive has the potential to produce good performance,
especially when compared with the near zero level of short -term rates.
PFM Asset Management LLC Section A - 4
Village of North Palm Beach
Current Quarter
Previous Quarter
Current Quarter
Previous Quarter
Investment Report - Quarter Ended March 31, 2011
March 31. 2011
December 31 2010 Yields
March 31. 2011
December 31, 2010
Investment Portfolio
1.80
Quarterly Summary Report
0.75%
0.64%
Merrill Lynch 1 -3 Year U.S. Treasury Index
1.78
1.77 Yield at Cost
Total Portfolio Value!"
March 31,2011'
December 31, 2010
101%
99%
34.32
Market Value
$8,159,533.19
$8.156.617.70
Total
S59190.83
S108.836.13
Amortized Cost
$8,144,546.71
$8,111,766.24
Fiscal Year 2011
Fiscal Year 2010
Quarterly Realized Gain /Loss on Cost
March 31 2011
December 31. 2010
Fiscal Year Realized Gain /Loss on Cost
Year to Date
Year to Date
Quarterly Return
�
Annualized
Last
Last
Since Inception
Total Return" "° "'A'
March 31. 2011
uarter
12 Months
24 Months
June 30. 2009
Investment Portfolio
0.06%
0.24%
1.53%
NIA
1.77%
Merrill Lynch 1 -3 Year U.S. Treasury Index
0.03%
0.13%
1 67%
NIA
1,82%
Quarter Total Return Comparison
Quarter Ended 03/31/11
0.50% 1. _.
0.25%
Investment Portfolio
E +0.06%
0.00% 0.03
� ML 1 -3 Year U.S. Treasury Index
-0.25%
-0.50%
0.50 1.00 1.50 2.00 2.50 3.00
Effective Duration (Years)
Current Quarter
Previous Quarter
Current Quarter
Previous Quarter
Effective Duration(Years)
March 31. 2011
December 31 2010 Yields
March 31. 2011
December 31, 2010
Investment Portfolio
1.80
1.76 Yield at Market
0.75%
0.64%
Merrill Lynch 1 -3 Year U.S. Treasury Index
1.78
1.77 Yield at Cost
0.95% ` "a.
1.08%
Portfolio Duration % of Benchmark Duration
101%
99%
34.32
Total
Quarter Total Return Comparison
Quarter Ended 03/31/11
0.50% 1. _.
0.25%
Investment Portfolio
E +0.06%
0.00% 0.03
� ML 1 -3 Year U.S. Treasury Index
-0.25%
-0.50%
0.50 1.00 1.50 2.00 2.50 3.00
Effective Duration (Years)
Notes,
1. In order to comply wdh GASS accrual - tartng mooring req.iement.; forward setlfng terms are included in the monthly balances: lncludes 2 trades setting 1015110 for total S551,11A 77 fags 10 &11 of Monitdy Statement)
2. End of quarter trade -date market values afportfobo holdings, including accrued Merest.
3. The Imestmenl PodfoYo's core balance increased due to a 51 million CD maturing on 1211 8,09 and invested as pad of core balance.
C Performance on Ueda data basis. gross 0. is, before feas), is in accordance wOh The CPA lnstkuteS Global lmes6nent performance Standards (GIPS)
S. Morn Lynch Indices p-imal by abomberg Fnanvel Mantels
0. Quarlerly returns are pmwned on both an unannuahted and anmaFYed base The annualaed return assumes the quarterly mwm is compounded i t the same rate
for four quarbrs ands presented for reference only The actual annbsl mium welbe lhereault ofchabng the most miumt fourquartidy returns.
7. Includes money madmt fund /cash to performance and duration computations
8. Returns presented for 12 months or longer are presented on an annual basis.
9. Past performance is not indicasve of future results.
PFM Asset Management UC Section A - 1
Total Return Comparison Since Inception as of
Previous Quarter
Quarter Ended 03/31/11
3.50%
_.
3.00%
March 31. 2011
2.50
Fiscal Year Interest Income
Year to Date
Year to Date
af 2.00%
ML 1 -3 Year U.S. Treasury Index
$36,454.04
1.82 %* Investment Portfolio
*,Investment
1.50%
TD Bank Money Market Fund
12.84
1.00
0.50 1.00 1.50 2.00 2.50 3.00
Effective Duration (Years)
Notes,
1. In order to comply wdh GASS accrual - tartng mooring req.iement.; forward setlfng terms are included in the monthly balances: lncludes 2 trades setting 1015110 for total S551,11A 77 fags 10 &11 of Monitdy Statement)
2. End of quarter trade -date market values afportfobo holdings, including accrued Merest.
3. The Imestmenl PodfoYo's core balance increased due to a 51 million CD maturing on 1211 8,09 and invested as pad of core balance.
C Performance on Ueda data basis. gross 0. is, before feas), is in accordance wOh The CPA lnstkuteS Global lmes6nent performance Standards (GIPS)
S. Morn Lynch Indices p-imal by abomberg Fnanvel Mantels
0. Quarlerly returns are pmwned on both an unannuahted and anmaFYed base The annualaed return assumes the quarterly mwm is compounded i t the same rate
for four quarbrs ands presented for reference only The actual annbsl mium welbe lhereault ofchabng the most miumt fourquartidy returns.
7. Includes money madmt fund /cash to performance and duration computations
8. Returns presented for 12 months or longer are presented on an annual basis.
9. Past performance is not indicasve of future results.
PFM Asset Management UC Section A - 1
Current Quarter
Previous Quarter
Fiscal Year 2011
Fiscal Year 2010
Quarterly Interest Income
March 31. 2011
December 31 2010
Fiscal Year Interest Income
Year to Date
Year to Date
Investment Portfolio
$22,714.50
$36,454.04
Investment Portfolio
$59,168.54
$108,801.81
TD Bank Money Market Fund
12.84
9.45
TD Bank Money Market Fund
22.29
34.32
Total
522.727.34
$36.463.49
Total
S59190.83
S108.836.13
Current Quarter
Previous Quarter
Fiscal Year 2011
Fiscal Year 2010
Quarterly Realized Gain /Loss on Cost
March 31 2011
December 31. 2010
Fiscal Year Realized Gain /Loss on Cost
Year to Date
Year to Date
Investment Portfolio
($681.27)
17,293.50
Investment Portfolio
$16,612.23
$21,419.26
Notes,
1. In order to comply wdh GASS accrual - tartng mooring req.iement.; forward setlfng terms are included in the monthly balances: lncludes 2 trades setting 1015110 for total S551,11A 77 fags 10 &11 of Monitdy Statement)
2. End of quarter trade -date market values afportfobo holdings, including accrued Merest.
3. The Imestmenl PodfoYo's core balance increased due to a 51 million CD maturing on 1211 8,09 and invested as pad of core balance.
C Performance on Ueda data basis. gross 0. is, before feas), is in accordance wOh The CPA lnstkuteS Global lmes6nent performance Standards (GIPS)
S. Morn Lynch Indices p-imal by abomberg Fnanvel Mantels
0. Quarlerly returns are pmwned on both an unannuahted and anmaFYed base The annualaed return assumes the quarterly mwm is compounded i t the same rate
for four quarbrs ands presented for reference only The actual annbsl mium welbe lhereault ofchabng the most miumt fourquartidy returns.
7. Includes money madmt fund /cash to performance and duration computations
8. Returns presented for 12 months or longer are presented on an annual basis.
9. Past performance is not indicasve of future results.
PFM Asset Management UC Section A - 1
Village of North Palm Beach
Executive Summary
PORTFOLIO STRATEGY
Investment Report - Quarter Ended March 31, 2011
`r The Village's Investment Portfolio is of high credit quality and maintains adequate liquidity. The portfolio is invested entirely in Federal Agency, U.S.
Treasury, and FDIC guaranteed corporate securities. The securities are allocated among high quality issuers rated AAA.
The U.S. economy continued to show signs of modest improvement in the first quarter of 2011. Fourth quarter 2010 GDP was released at $13.38 trillion,
surpassing the previous peak of $13.36 trillion in the second quarter of 2008.
Over the quarter, interest rates were volatile across the yield curve due to positive economic releases, such as the manufacturing and employment
reports, and significant developments abroad, such as the political turmoil in the Middle East and the earthquake in Japan. Despite the volatility,
intermediate -term yields finished the quarter 20 basis points higher than the previous quarter on signs of better growth prospects and higher inflation
expectation in the U.S.
Over the course of the quarter, we were able to use active management strategies to take advantage of the volatility in yields. In the Investment Portfolio
we made several sector swaps in addition to extension trades which resulted in the portfolio realizing over $14,000 in gains on sells.
The Village's Investment Portfolio performed well for the first quarter, especially in an environment of low yields and increased volatility. Keeping the
portfolio's duration over the quarter close to the benchmark's duration contributed positively to returns. Further, the portfolio's allocation to the federal
agency sector added additional value as credit spreads narrowed. The portfolio's return of 0.06 %, outperformed the benchmark's return of 0.03% by 3
basis points (0.03 %). In an interest rate environment where yields remain at or near record lows, we will continue to position the portfolio's duration
short or in -line with the benchmark's duration to reduce interest rate risk and the market value erosion that will occur if rates rise.
v PFM will continue to follow the prudent investment strategies that have safely provided the Village with favorable long -term performance during this
period of historic low interest rates.
Although interest rates have rebounded from all time lows, we believe the Federal Reserve is highly unlikely to change its policy in the short term.
Economists expect the second round of quantitative easing will run its course, through June. However, an internal debate over monetary policy among
the Fed Governors has been at the forefront of the conversation in Washington throughout the first quarter. Such heated debate may be a sign that
monetary policy change is on the horizon, although not in the near term. As long as the economy continues to stay the course, we expect the first
interest rate tightening to occur sometime after the first quarter of 2012.
While near -time events (Japan earthquake, continued Middle East uncertainty) could slow the pace of economic growth, the economy appears to be on
track for continued modest growth over the next several quarters. Many positive economic forces, such as strength in manufacturing, improving job
market, strong corporate earnings supporting continued rising stock prices, and solid retail sales indicate the economy is in the growth phase. In
anticipation of better opportunities in the near term, we plan to maintain a diversified portfolio with a duration slightly shorter or in -line with the
benchmark in order to position the portfolio to take advantage of yield increases in the future.
PFM Asset Management LLC Section B - 1
Village of North Palm Beach Investment Report - Quarter Ended March 31, 2011
Investment Portfolio Composition and Credit Quality Characteristics
Security Type
March 31, 2011
% of Portfolio
December 31, 2010
% of Portfolio
U.S. Treasuries
$5,523,508.15
67.7%
$4,177,874.09
51.2%
Federal Agencies
1,510,632.66
18.5%
2,310,983.25
28.3%
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
914,490.53
11.2%
1,516,588.63
18.6%
Mortgage Backed
0.00
0.0%
0.00
0.0%
Money Market Fund /Cash
210,901.85
2.6%
151,171.73
1.9%
Totals
$8,159,533.19
100.0%
$8,156,617.70
100.0%
Portfolio Composition
as of 03/31/11
Federal Agency
Obligations
I �\
fi
U.S. Treasuries Corporate
68% J Notes /Bonds -
\; FDIC Insured
11%
t
Money Market
Fund /Cash
2.58%
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.
3. A rating of "TSY" indicates the security is an obligation of, or explicitly guaranteed by the U. S. Government.
PFM Asset Management LLC Section B - 2
Village of North Palm Beach
Portfolio
Investment Report - Quarter Ended March 31, 2011
60%
Investment Portfolio Maturity Distribution
56%
Maturity Distribution' March 31, 2011
December 31, 2010
Overnight (Monedy Market Fund)
$210,901.85
$151,171.73
Under 6 Months
0.00
0.00
6 - 12 Months
0.00
1,361,186.92
1 - 2 Years
4,549,171.77
2,629,282.36
2 - 3 Years
3,399,459.57
4,014,976.69
3 - 4 Years
0.00
0.00
4 - 5 Years
0.00
0.00
5 Years and Over
0.00
0.00
Totals $8,159,533.19 $8,156,617.70
Notes:
1. Callable securities in portfolio are included in the maturity distribution analysis to their stated maturity date, although they may be called prior to maturity.
PFM Asset Management LLC Section B - 3
Portfolio
Maturity Distribution'
60%
56%
0
50 /o
49% o March 31, 2011
o December 31, 2010
42%
0 40%
0-
32%
io 30%
0
F-
m 20%
17%
0)
ca
10%
U
11
0%
3% o
2 /0 0% 0% 0%
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 Investment Report - Quarter Ended March 31, 2011
Investment Portfolio Maturity Distribution versus the Benchmark'
35.0% -
30.0%
25.0%
20.0%
8 15.0%
10.0%
5.0%
0.0%
17° `�`' o° `L t° `� o° N. e 1`'
Years to Maturity
C3 Investrnent Portfolio 0 Merrill Lynch 1 -3 Year U.S. Treasury Note Index
Notes:
1. Due to the nature of the security, Mortgage - Backed Securities are represented based on their average life maturity rather than their final maturity.
PFM Asset Management LLC Section B - 4
Village of North Palm Beach' Asset Allocation as of March 31, 2011*
Security Type
$10,670,185.37
March 31, 2011
March 31, 2011
Notes Permitted by Policy
Florida Prime (SBA)
43.29%
785,888.10
4.18%
2 25%
United States Treasury Securities
33%
5,528,996.95
29.39%
100%
United States Government Agency Securities
Government National Mortgage Association (GNMA)
-
0.00%
100%
US Export-Import Bank (Ex-Im)
-
0.00%
100%
Farmers Home Administration (FMHA)
Federal Instrumentalities
0.00%
1,500.830.35
7.98%
50%
Certificates of Deposit
100%
-
0.00%
100%
100%
General Services Administration
-
0.00%
100%
Repurchase Agreements
?.
-
0.00%
0%
-
k;
100
US Dept. of Housing and Urban Development
-
Commercial Paper
100%
-
0.00%
0%
10%
Federal Home Loan Bank (FHLB)
129,91134
0.69%
10%
Corporate Notes
-,
903.817.56
4.80%
25%
Mortgage - Backed Securities
; -:
-
0.00%
0%
0.00%
0%
Bankers' Acceptances
-
0.00%
0%
Money Market Mutual Funds
-
1,361,675.56
7.24%
50%
Intergovernmental Investment Pool
-
0.00%
25%
Interest Bearing Checking or Savings Account
8,733,523.56
46.42% ,..,
2 100%
Village Managed
$10,670,185.37
56.71%
Notes Permitted by Policy
PFM Managed
$8,144,546.71
43.29%
33%
Total
$18,814,732.08
100.00%
33%
Individual Issuer Breakdown
March 31, 2011
March 31, 2011
Notes Permitted by Policy
Government National Mortgage Association (GNMA)
-
0.00%
100%
US Export-Import Bank (Ex-Im)
-
0.00%
100%
Farmers Home Administration (FMHA)
-
0.00%
100%
Federal Financing Bank
-
0.00%
100%
Federal Housing Administration (FHA)
-
0.00%
100%
General Services Administration
-
0.00%
100%
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)
330,017.96
1.75%
10%
Federal Home Loan Bank (FHLB)
129,91134
0.69%
10%
Federal National Mortgage Association (FNMA)
738,926.09
3.93%
10%
Federal Home Loan Mortgage Corporation (FHLMC)
301,972.96
1.60%
10%
Student Loan Marketing Association (SLMA)
L_:,. -
0.00%
0%
Notes:
1. All Assets.
2. These Accounts are managed by the Village.
'PFM managed securities are shown on Amortized Cost plus Accrued Interest basis.
Individual Issuer Breakdown
March 31, 2011
March 31, 2011
Notes Permitted by Policy
CD - BankA
-
0.00%
33%
CD - Bank B
-
0.00%
33%
Interest Bearing Checking or Savings Account - Wachom
8,733,52156
46A2%
2 50
Interest Bearing Checking or Savings Account - B
-
0.00%
50%
Cifigroup Corporate Notes - FDIC insured
497,896.78
2.65%
33%
Bank of America Corporate Notes - FDIC insured
405,920.78
2.16%
33%
Corporate Notes C
-
0.00%
33%
Corporate Notes D
-
0.00%
33
Corporate Notes E
-
0.00%
33
Money Market Fund - TD Bank Sweep Account
210.901.85
1.12%
33%
Money Market Fund - Wells Fargo Advantage Fund
°.,. 1,150,773.71
6.12%
2 33%
PFM Asset Management LLC Section C -1
Customer Service
= PO Box 11813
Harrisburg, PA 17108 -1813
�"` ACCOUNT STATEMENT
Client Management Team
Mel Hamilton
Senior Managing Consultant
300 South Orange Avenue, Suite 1170
Orlando, FL 32801
407 - 648 -2208
hamiltonm @pfm.com
Steven Alexander, CTP, CGFO
Managing Director
300 South Orange Avenue, Suite 1170
Orlando, FL 32801
407 - 648 -2208
alexanders @pfm.com
Gregg Manjerovic, CFA
Senior Portfolio Manager
One Keystone Plaza, Suite 300
Harrisburg, PA 17101
717- 232 -2723
manjerovicg @pfm.com
Rebecca Dole, CTP
Consultant
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
Online Access www.pfm.com
VILLAGE OF NORTH PALM BEACH
SAMIA JANJUA
501 US HIGHWAY 1
NORTH PALM BEACH, FL 33408
Customer Service 1- 717 - 232 -2723
Important Disclosures
This statement is for general information purposes only and is not
intended to provide specific advice or recommendations. PFM Asset
Management LLC ( "PFM ") is an investment advisor registered with the
Securities and Exchange Commission, and is required to maintain a
written disclosure statement of our background and business experience.
If you would like to receive a copy of our current disclosure statement,
please contact Service Operations at the address below.
Proxy Voting PFM does not normally receive proxies to vote on behalf of
its clients. However, it does on occasion receive consent requests. In the
event a consent request is received the portfolio manager contacts the
client and then proceeds according to their instructions. PFM's Proxy
Voting Policy is available upon request by contacting Service Operations
at the address below
Questions About an Account PFM's monthly statement is intended to
detail our investment advisory activity as well as the activity of any
accounts held by clients in pools that are managed by PFM. The custodian
bank maintains the control of assets and executes (i.e., settles) all
investment transactions. The custodian statement is the official record of
security and cash holdings and transactions. PFM recognizes that clients
may use these reports to facilitate record keeping; therefore the custodian
bank statement and the PFM statement should be reconciled and
differences resolved. Many custodians use a settlement date basis which
may result in the need to reconcile due to a timing difference.
Account Control PFM does not have the authority to withdraw funds from
or deposit funds to the custodian. Our clients retain responsibility for their
internal accounting policies; implementing and enforcing internal controls
and generating ledger entries or otherwise recording transactions.
Market Value Generally, PFM's market prices are derived from closing bid
prices as of the last business day of the month as supplied by Interactive
Data, Bloomberg or Telerate. Where prices are not available from
generally recognized sources the securities are priced using a yield -based
matrix system to arrive at an estimated market value. Prices that fall
between data points are interpolated. Non - negotiable FDIC - insured bank
certificates of deposit are priced at par. Although PFM believes the prices
to be reliable, the values of the securities do not always represent the
prices at which the securities could have been bought or sold. Explanation
of the valuation methods for money market and TERM funds is contained
in the appropriate fund information statement.
Amortized Cost The original cost of the principal of the security is
adjusted for the amount of the periodic reduction of any discount or
premium from the purchase date until the date of the report. Discount or
premium with respect to short term securities (those with less than one
year to maturity at time of issuance) is amortized on a straightline basis.
Such discount or premium with respect to longer term securities is
amortized using the constant yield basis.
Important Disclosures
Tax Reporting Cost data and realized gains / losses are provided for
informational purposes only. Please review for accuracy and consult your
tax advisor to determine the tax consequences of your security transactions.
PFM does not report such information to the IRS or other taxing authorities
and is not responsible for the accuracy of such information that may be
required to be reported to federal, state or other taxing authorities.
Financial Situation In order to better serve you, PFM should be promptly
notified of any material change in your investment objective or financial
situation.
Callable Securities Securities subject to redemption prior to maturity may
be redeemed in whole or in part before maturity, which could affect the yield
represented.
Portfolio The securities in this portfolio, including shares of mutual funds,
are not guaranteed or otherwise protected by PFM, the FDIC (except for
certain non - negotiable certificates of deposit) or any government agency.
Investment in securities involves risks, including the possible loss of the
amount invested.
Rating Information provided for ratings is based upon a good faith inquiry of
selected sources, but its accuracy and completeness cannot be guaranteed.
Shares of some money market and TERM funds are marketed through
representatives of PFM's wholly owned subsidiary, PFM Fund Distributors,
Inc. PFM Fund Distributors, Inc. is registered with the SEC as a
broker /dealer and is a member of the Financial Industry Regulatory
Authority ( "FINRA ") and the Municipal Securities Rulemaking Board
( "MSRB "). You may reach the FINRA by calling the FINRA Regulator Public
Disclosure Hotline at 1- 888- 289 -9999 or at the FINRA Regulation Internet
website address www.nasd.com. A brochure describing the FINRA
Regulation Public Disclosure Program is also available from the FINRA
upon request.
Key Terms and Definitions
Dividends on money market funds consist of interest earned, plus any
discount ratably amortized to the date of maturity, plus all realized gains and
losses on the sale of securities prior to maturity, less ratable amortization of
any premium and all accrued expenses to the fund. Dividends are accrued
daily and may be paid either monthly or quarterly. The monthly earnings on
this statement represent the estimated dividend accrued for the month for
any program that distributes earnings on a quarterly basis. There is no
guarantee that the estimated amount will be paid on the actual distribution
date.
Current Yield is the net change. exclusive of capital changes and income
other than investment income, in the value of a hypothetical fund account
with a balance of one share over the seven -day base period including the
statement date, expressed as a percentage of the value of one share
(normally $1.00 per share) at the beginning of the seven -day period. This
resulting net change in account value is then annualized by multiplying it by
365 and dividing the result by 7. The yields quoted should not be considered
a representation of the yield of the fund in the future. since the yield is not
fixed.
Account Statement
For the Month Ending March 31, 2011
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.
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 from purchase date to maturity,
stated as a percentage.
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
Awli —
Managed Account Summary Statement
For the Month Ending March 31, 2011
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Transaction Summary - Managed Account
Cash
Account
Opening Market Value
$7,957,856.35
Transactions Summary
Maturities /Calls
- Managed
0.00
Maturities /Calls
0.00
Sale Proceeds
1,499,570.06
Principal Dispositions
(1,491,837.11)
Coupon /Interest Income
9,698.17
Principal Acquisitions
1,474,862.89
Principal Payments
0.00
Unsettled Trades
(1,633.59)
Security Purchases
(1,480,372.00)
Change in Current Value
(10,039.35)
Net Cash Contribution
0.00
Reconciling Transactions
0.00
Closing Market Value
$7,929,209.19
Earnings Reconciliation (Cash Basis) - Managed Account
Interest /Coupons Received
17,431.12
Cash Balance
Closing Cash Balance
$210,901.85
Less Purchased Interest Related to Interest /Coupons
(5,509.11)
Plus Net Realized Gains /Losses
(10,183.74)
Total Cash Basis Earnings
$1,738.27
Earnings Reconciliation (Accrual Basis)
Ending Amortized Value of Securities
Total
7,914,222.71
Ending Accrued Interest
19,422.15
Plus Proceeds from Sales
1,841,801.09
Plus Proceeds of Maturities /Calls /Principal Payments
0.00
Plus Coupons Received
9,698.17
Less Cost of New Purchases
(1,820,682.67)
Less Beginning Amortized Value of Securities
(7,930,361.26)
Less Beginning Accrued Interest
(24,152.58)
Total Accrual Basis Earnings $9,947.61
Account 61350001 Page 1
1'I'M Asset ManaI;elnent LIA"
--e--
Portfolio Summary and Statistics
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Account Summary
Description Par Value Market Value Percent
U.S. Treasury Bond / Note 5,520,000.00 5,514,840.78 69.55
U.S. Government Supported Corporate 890,000.00 906,599.73 11.43
Debt
Federal Agency Bond / Note 11500,000.00 1,507,768.68 19.02
Managed Account Sub -Total 7,910,000.00 7,929,209.19 100.00%
Accrued Interest 19,422.15
Total Portfolio 7,910,000.00 7,948,631.34
Unsettled Trades
57.22%
340,000.00 339,894.60
0 - 6 Months 6 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years Over 5 Years
US TSY Bond /
69.55%
For the Month Ending March 31, 2011
Fed Agy Bond /
Note
19.02%
US Govt Supported
Corp Debt
11.43%
Yield to Maturity at Cost
0.95%
Yield to Maturity at Market 0.75%
Duration to Worst 1.84
Weighted Average Days to Maturity 683
Account 61350001 Page 2
1'1"M Asset Management 1.11C
..
Managed Account Issuer Summary
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Total $7,929,209.19 100.000/0
—� P M
Asset Management I,IA'.
TSY
69.55%
For the Month Ending March 31, 2011
5%
Account 61350001 Page 3
Market Value
Issuer
of Holdings
Percent
BANK OF AMERICA CORP TLGP
407,330.40
5.14
CITIGROUP INC
499,269.33
6.30
FANNIE MAE
740,985.24
9.35
FEDERAL FARM CREDIT BANKS
330,228.69
4.16
FEDERAL HOME LOAN BANKS
131,970.15
1.66
FREDDIE MAC
304,584.60
3.84
UNITED STATES TREASURY
5,514,840.78
69.55
Total $7,929,209.19 100.000/0
—� P M
Asset Management I,IA'.
TSY
69.55%
For the Month Ending March 31, 2011
5%
Account 61350001 Page 3
PI `NI
SEEM
Managed Account Detail of Securities Held For the Month Ending March 31, 2011
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Security Type/ Description
S &P
Moody's
Trade
Settle
Original
YTM
Accrued
Amortized
Market
Dated Date /Coupon /Maturity
CUSIP
Par
Rating
Rating
Date
Date
Cost
at Cost
Interest
Cost
Value
U.S. Treasury :. Note
11/15/2010 0.500% 11/15/2013
Account 61350001 Page 4
PI 'M Asset Manaaenient LIA',
i
A� r
Managed Account Detail of Securities Held For the Month Ending March 31, 2011
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Security Type/ Description S &P Moody's Trade Settle Original YTM Accrued Amortized Market
Dated Date /Coupon /Maturity CUSIP Par Rating Rating Date Date Cost at Cost Interest Cost Value
U.S. Treasury Bond / Note
US TREASURY NOTES 340,000.00 TSY TSY 03/31/11 04/04/11 340,079.69 1.24 230.98 340,079.69 339,894.60
DTD 03/15/20111.250% 03/15/2014
Security Type Sub -Total 5,520,000.00 5,519,034.40 0.79 8,667.37 5,520,329.58 5,514,840.78
BANK OF AMERICA CORP (FDIC) GLOBAL
490,000.00 AAA Aaa 01/06/10 01/07/10 497,541.10 1.45 4,367.47 493,529.31 499,269.33
DTD 01/30/2009 2.125% 04/30/2012
Security Type Sub -Total
Federal Agency Bond / Note
890,000.00
902,712.30
1.49
7,890.80
895,926.76
906,599.73
06/2010 1.000% 09/23/2013
Security Type Sub -Total
1,500,000.00
1,497,546.94
1.19
2,863.98
1,497,966.37
1,507,768.68
Managed Account Sub -Total
7,910,000.00
7,919,293.64
0.95
19,422.15
7,914,222.71
7,929,209.19
Account 61350001 Page 5
M.,
_.�— PFM Asset Management
LLCI
''rte- -
.� PVM
Managed Account Detail of Securities Held
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Securities Sub -Total
$7,910,000.00
For the Month Ending March 31, 2011
$7,919,293.64 0.95% $19,422.15 $7,914,222.71 $7,929,209.19
Accrued Interest $19,422.15
Total Investments
Bolded items are forward settling trades.
$7,948,631.34
t Account 61350001 Page 6
PFM Asset Mana (yeiltent Ll.LC
Managed Account Fair Market Value & Analytics For the Month Ending March 31, 2011
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Security Type/ Description
Next Call Market
Market
Unreal G/L
Unreal G/L
Duration
YTM
Dated Date /Coupon /Maturity
U.S. Treasury Bond / Note
CUSIP
Par
Broker
Date Price
Value
On Cost
Amort Cost
to Worst
at Mkt
15/2011 1.2500/b 03/15/2014
•" Account 61350001 Page 7
131"M Asset Manaacment LIA:
AMM
Managed Account Fair Market Value & Analytics For the Month Ending March 31, 2011
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Security Type /Description Next Call Market Market Unreal G/L Unreal G/L Duration YTM
Dated Date /Coupon /Maturity CUSIP Par Broker Date Price Value On Cost Amort Cost to Worst at Mkt
Security Type Sub -Total 5,520,000.00 5,514,840.78 (4,193.62) (5,488.80) 1.95 0.78
Supported U.S. Government . p•
BANK OF AMERICA CORP (FDIC) GLOBAL
490,000.00 RBS_SEC 101.89 499,269.33 1,728.23 5,740.02 1.07 0.37
DTD 01/30/2009 2.125% 04/30/2012
Security Type Sub -Total
890,000.00
906,599.73
3,887.43
10,672.97
1.07
0.39
Federal :• Note
MAE GLOBAL NOTES
31398A2S0
540,000.00
HSBC
99.56
537,638.04
(920.16)
(964.88)
2.44
1.18
DTD 08/06/2010 1.000% 09/23/2013
Security Type Sub -Total
1,500,000.00
1,507,768.68
10,221.74
9,802.31
1.92
0.83
Managed Account Sub -Total 7,910,000.00 7,929,209.19 9,915.55 14,986.48 1.84 0.75
Securities Sub -Total
$7,910,000.00
$7,929,209.19 $9,915.55 $14,986.48 1.84 0.75%
Accrued Interest $19,422.15
Total Investments $7,948,631.34
Bolded items are forward settling trades.
�t -t tii
Account 61350001 Page 8
PFM Asset Management LIA"
Amilla-
+rrrra�
Managed Account Security Transactions & Interest For the Month Ending March 31, 2011
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Transaction Type Principal Accrued Realized G/L Realized G/L Sale
Trade Settle Security Description CUSIP Par Proceeds Interest Total Cost Amort Cost Method
03/02/11
TREASURY NOTES
912828MUl
190,000.00
0.00
950.00
950.00
DTD 03/31/2010 1.000% 03/31/2012
Transaction Type Sub -Total 2,220,000.00 0.00 9,698.17 9,698.17
Account 61350001 Page 9
131"m Asset i -1,111 uvillent LIA,
Managed Account Security Transactions & Interest
NORTH PALM BEACH INVESTMENT PORTFOLIO - 61350001
Transaction Type Principal Accrued
Trade Settle Security Description CUSIP Par Proceeds Interest
03/02/11 03/03/11 US TREASURY NOTES
340,000.00 341,713.28 517.75
DTD 01/31/2010 0.875%
01/31/2012
For the Month Ending March 31, 2011
Transaction Type Sub -Total 1,820,000.00 1,833,550.39 8,250.70 1,841,801.09 (10,396.24) 3,469.83
Managed Account Sub -Total 18,607.81 12,208.78 30,816.59 (10,396.24) 3,469.83
Total Security Transactions
Bolded items are forward settling trades.
$18,607.81 $12,208.78 $30,816.59 ($10,396.24) $3,469.83
z , Account 61350001 Page 10
PFM Asset Management 1.1,(:
Realized G/L
Realized G/L
Sale
Total
Cost
Amort Cost
Method
539.718.09
(4,028.91)
(3,771.86)
FIFO
9,994.78
(85.93)
(79.68)
FIFO
343,309.90
2,839.00
2,508.58
FIFO
112,972.89
(1,871.10)
638.98
FIFO
493,574.40
(7,036.80)
4,277.99
FIFO
342,231.03
(212.50)
(104.18)
FIFO
Transaction Type Sub -Total 1,820,000.00 1,833,550.39 8,250.70 1,841,801.09 (10,396.24) 3,469.83
Managed Account Sub -Total 18,607.81 12,208.78 30,816.59 (10,396.24) 3,469.83
Total Security Transactions
Bolded items are forward settling trades.
$18,607.81 $12,208.78 $30,816.59 ($10,396.24) $3,469.83
z , Account 61350001 Page 10
PFM Asset Management 1.1,(: