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09-30-2017 Investment Performance Review0 1 Pf M Village of North Palm Beach, Florida Investment Performance Review For the Quarter Ended September 30, 2017 Investment Advisors Steven Alexander, CTP, CGFO, CPPT, Managing Director Robert Cheddar, CFA, Chief Credit Officer, Managing Director Richard Pengelly, CFA, CTP, Director Rebecca Geyer, CTP, Senior Analyst Cody Raulerson, Analyst 1 of 48 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 VILLAGE OF NORTH PALM BEACH, FLORIDA Tab I • Market Update Tab 11 • Executive Summary • Investment Portfolio Tab III • Asset Allocation Chart • Important Disclosures PFM Asset Management LLC 2 of 48 For the Quarter Ended September 30, 2017 Table of Contents PFM Asset Management LLC Tab 3 of 48 QUARTERLY MARKET SUMMARY SUMMARY • For the first time since 2007, all 45 national economies in the OECD (Organisation for Economic Co-operation and Development) are expanding. Against the backdrop of historically low interest rates, reasonably favorable economic data, and positive consumer, business and investor optimism, the U.S. economy is on track to grow at a modest pace in the range of 2% to 2.5% annually. Although a slow rate of inflation remains a conundrum, the Federal Reserve (Fed) is pursuing monetary policy normalization. At its September meeting, the Federal Open Market Committee (FOMC) announced a tapering of its balance sheet securities holdings to begin in October under the terms of the previously released normalization principles and plans. In addition, the updated "dot plot" projection indicated an expectation for one additional rate hike in 2017. Slow progress on the policy front in Washington has somewhat tempered investors' earlier exuberance, but markets retain an air of complacency. Numerous geopolitical risks loom, however, including mounting nuclear tensions with North Korea, trade issues related to NAFTA and China, border and immigration issues, ongoing conflicts with Russia, and "Brexit" implementation in the UK. U.S. equity markets marched to new heights with the S&P 500 rising 4.5% during the quarter. All three major U.S. indices booked record highs, with the telecommunications, information technology, and energy sectors in the lead. ECONOMIC SNAPSHOT • Second quarter gross domestic product (GDP) accelerated to an annualized growth rate of 3.1 %, up from the prior quarter's 1.4% pace. Consumer spending and business investment led the increase. Heavy Gulf Coast damage from recent hurricanes are expected to handicap near-term growth and create "noise" in upcoming economic data, but weather-related impacts are usually transitory. The U.S. economy added less than 100,000 jobs per month (on average) in the third quarter, but the unemployment rate fell to 4.2%, the lowest rate since 2001. Jobless claims spiked following the hurricane disruption, but the uptick is expected to be temporary. In a positive sign, wage growth rose 2.9% year -over -year through September, but may also have been distorted by the hurricanes. • Inflationary pressures remained subdued. The personal consumption expenditures price index, excluding food and energy (core PCE) rose only 1.3% year -over -year in August, well short of the Fed's 2% target, the explanation for which continues to elude Fed officials. Absent evidence that the weakness is permanent, however, the Fed's outlook remains stable. On the global front, growth in Europe has picked up, with unemployment in some countries at record lows, while inflation (outside the UK) remains very muted. PFM Asset Management LLC For the Quarter Ended September 30, 2017 Fixed Income Management INTEREST RATES • Shorter -term Treasury yields (five years and under) rose in the third quarter on the expectation of further monetary policy tightening. Long-term Treasury yields (10 years and longer) rose just a couple basis points. This continued the trend of modest flattening of the Treasury yield cure since the beginning of the year. The two-year Treasury yield ended the quarter higher by 11 basis points (bps) (0.11 %) to 1.49% -- the highest level since 2008 — while the 10 -year Treasury yield rose only 2 bps (0.02%) over the quarter to close at 2.33%. In the money market space, federal debt ceiling concerns resulted in a temporary inversion of the short-term yield cure. The higher risk associated with Treasuries maturing in early October, the expected date for the U.S. Treasury to run out of borrowing capacity, translated into higher yields for those maturities. But, the yield cure quickly normalized after Congress passed an extension to the debt limit until December, along with a hurricane aid package, and a temporary resolution to fund the government for three months. In the short-term credit markets, yields on commercial paper and bank CDs rose in lockstep with expectations about future Fed rate hikes. SECTOR PERFORMANCE • U.S Treasury index returns were positive for the third quarter. Flattening of the yield cure caused longer maturities to outperform shorter ones, as the increase in short- term rates modestly detracted from returns for the quarter. Federal agencies outperformed comparable -maturity Treasuries, as the sector's already -narrow yield spreads tightened even further on the back of limited supply and persistent investor demand. Corporate yield spreads continued tightening, generating outperformance over comparable -maturity Treasuries for the quarter and even more so year-to-date. Strong earnings growth and balance sheets continue to provide a good foundation for the sector. Yield spreads are narrow, which limits their upside, but the incremental income on corporates is an important contributor to incremental return. After three straight quarters of underperformance, the mortgage backed securities (MBS) sector performed well in the third quarter, outperforming Treasuries and traditional agencies. High quality asset-backed securities (ABS) also performed positively relative to Treasuries. Further spread compression in the ABS sector is likely to be limited, given that current level spreads sit at historic tights. Short-term commercial paper and bank CDs continue to offer value relative to both short and intermediate-term government securities. 4 of 48 QUARTERLY MARKET SUMMARY Economic Snapshot For the Quarter Ended September 30, 2017 Fixed Income Management Unemployment Rate Sep'17 4.2% 4.4% 4.9% Unemployment Rate (left) vs. Change in Nonfarm Payrolls (right) Consumer Price Index Change In Non -Farm Payrolls Unemployment Rate CPI (YoY) Core CPI (YoY) 6% 450K Change In Non -Farm Payrolls Sep'17 -33,000 210,000 249,00 4% Retail Sales (YoY) Sep'17 4.4% 300K Average Hourly Earnings (YoY) Sep'17 2.9% 2.5% 2.7% 5% I 150K 1% 0% Existing Home Sales SAAR (month) Aug'17 5.35 mil. 5.51 mil. 5.47 mil. Jun '14 Dec'14 Jun '15 Dec'15 Jun '16 Dec'16 Jun '17 I I I I I I I I 0 Personal Income (YoY) Aug'17 2.8% 2.7% -1 oil Gold Futures (oz.) Sep 30 4% 150K Initial Jobless Claims (week) 10/7/17 243,000 250,000 247,000 Sep'14 Mar'15 Sep'15 Mar'16 Sep'16 Mar'17 Sep'17 Real GDP (QoQ SAAR) 2017Q2 3.1% 1.2%1 Real GDP (QoQ) 2.2% z Consumer Price Index 6% CPI (YoY) Core CPI (YoY) GDP Personal Consumption (QoQ SAAR) 2017Q2 3.3% 1.9%1 / 3.80 2.2% 1.6% 4% Retail Sales (YoY) Sep'17 4.4% 3.0% 3.1% ISM Manufacturing Survey (month) Sep'17 60.8 57.8 z% 51. 1% 0% Existing Home Sales SAAR (month) Aug'17 5.35 mil. 5.51 mil. 5.47 mil. Jun '14 Dec'14 Jun '15 Dec'15 Jun '16 Dec'16 Jun '17 Personal Consumption Expenditures (YoY) Aug'17 1.4% 1.4% 1.4% Consumer Price Index CPI (YoY) Core CPI (YoY) 3% Consumer Price Index (YoY) Sep'17 2.2% 1.6% z% Consumer Price Index Core (YoY) Sep'17 1.7% 1.7% 2.2% 1% 0% Crude Oil Futures (WTI, per barrel) Sep 30 $51.67 $46.04 $48. -1 oil Gold Futures (oz.) Sep 30 $1,282 $1,242 $1,313 Sep'14 Mar'15 Sep'15 Mar'16 Sep'16 Mar'17 1. Data as of First Quarter 2017. 2. Data as of Second 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 5 of 48 QUARTERLY MARKET SUMMARY For the Quarter Ended September 30, 2017 Fixed Income Management Interest Rate Overview U.S. Treasury Note Yields 3.0% ---- -------------------- 2.5% ---------------------------- ------ ---------------------------------- 2.0% ------------------------------------------------------------------------------------------ .. .. ...••... .. . }_ 1.5% ----------- ^--------------- ----- v ,^ ---- - ••-•--- :F-3- 1.0% -3 -1.0% — -------------------------------------------------------------------------------- 0.5% ------------------------------ -------------------------------------- 0.0% 3/31/17 6/30/17 9/30/17 2 -Year 5 -Year 10 -Year U.S. Treasury Yields Maturity _,&7 1.05% Jun'17 1.01% over e Quarter 0.04% Sep'16 0.28% ChangeChange over 0.77% 3-month 1 -year 1.29% 1.23% 0.06% 0.59% 0.70% 2 -year 1.49% 1.38% 0.11% 0.76% 0.73% 5 -year 1.94% 1.89% 0.05% 1.15% 0.79% 10 -year 2.33% 2.31% 0.02% 1.60% 0.73% 30 -year 2.86% 2.84% 0.02% 2.32% 0.54% Source: Bloomberg. PFM Asset Management LLC 6 of 48 U.S. Treasury Yield Curve 4% 3% ---------------------------------- -- -- - -- 1 °k ---------------------------------------------------------------------------- 0% W 3 O O O Maturity September 30, 2017 December 30, 2016 September 30, 2016 Yield Curves as of 9130117 4%----------------------------------------------------------------------------- - 3% '-- -------------------------------- — — — ------ I i d0� } 2% ---------e--- ---------------------------------------------------- 1% ---------------------------------------------------1%------------------------------------------------------------------- 0% W_NW T �I 0 Maturity U.S. Treasury Federal Agency N W Ul O Industrial Corporates, A Rated QUARTERLY MARKET SUMMARY BofA Merrill Lynch Index Returns As of 9/30/17 For the Quarter Ended September 30, 2017 Fixed Income Management Returns for Periods ended 9/30/17 U.S. Treasury 1.81 1.47% 0.24% 0.24% 0.76% Wederal AgencyAmmi 0.28% 0.50% 0.91% 1.43% 1.61% U.S. Corporates, A -AAA rated 1.84 1.93% 0.56% Agency MBS (0 to 3 years) 2.30 0 0.36% 0.42% 1.32% Taxable Municipals 1.79 2.12% 1.02% 1.67% 2.13% of U.S. Treasury 2.61 1.60% 0.29% (0.06%) 1.20% Aft�eral Agency 2. 0.32% 0.38% 1.21% U.S. Corporates, A -AAA rated 2.69 2.13% 0.69% 1.37% 2.18% 0.01% 1.83% Agency MBS (0 to 5 years) 2.40% 0.58% Taxable Municipals 2.48 2.26% 0.88% 1.24% 2.59% IndicesMaster or U.S. Treasury 6.29 1.95% 0.39% (1.74%) 2.19% ederal Agency 1.97% 0.51% 0.02% U.S. Corporates, A -AAA rated 7.14 2.86% 2.69 1.18% 1.27% 3.83% nMMcy MBS (0 to 30 Agrs) Taxable Municipals 10.84 3.73% 2.52% 1.11% 5.90% Returns for periods greater than one year are annualized Source: BofA Merrill Lynch Indices. PFM Asset Management LLC 7 of 48 QUARTERLY MARKET SUMMARY DISCLOSURES For the Quarter Ended September 30, 2017 Fixed Income Management 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 0 Pfm 8 of 48 PFM Asset Management LLC Tab II 9 of 48 For the Quarter Ended September 30, 2017 VILLAGE OF NORTH PALM BEACH, FLORIDA Executive Summary 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 0.35% outperformed the benchmark performance of 0.24% by 0.11%. The last 12 months total return performance for the Portfolio was 0.72% versus the benchmark's return of 0.24%. After three rate hikes since December 2016, the Federal Reserve (Fed) shifted gears and announced the beginning of their program to reduce the central bank's enormous balance sheet. The plan is to gradually reduce the Fed's securities holdings by decreasing its reinvestment of the principal payments on its large holdings of Treasury and agency mortgage- backed securities. This had little impact on our strategy as the process was telegraphed well in advance and will be gradual and predictable. Although low inflation is a conundrum, recent signaling from Fed officials boosted expectations for another rate hike this year, raising the market -implied probability of a December hike from 30% mid -Q3 to over 70%. Strong investor appetite for high-quality bonds generally caused the yield spreads on investment-grade fixed income sectors (relative to U.S. Treasuries) to tighten over the quarter, resulting in strong relative performance for corporates, mortgage-backed (MBS), asset-backed (ABS), municipal, and supranational securities. Without a clear trend in the direction of interest rates, we maintained portfolio durations in line with those of benchmarks to minimize return volatility. PFM Asset Management LLC 10 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Statistics As of September 30, 2017 Par Value: $9,031,338 Total Market Value: $9,158,029 Security Market Value: $9,005,890 Accrued Interest: $26,388 Cash: $125,751 Amortized Cost: $9,030,891 Yield at Market: 1.63% Yield at Cost: 1.47% Effective Duration: 1.83 Years Not Rate d 6.4% BE 1. A 14. A 47. Credit Quality (S&P Ratings) A 6.3% A- A+ 9.2% i% 45% Duration to Worst: 1.93 Years 40% Average Maturity: 2.14 Years 35% Average Credit: * AA 30% 25% 20% 15% 10% 5% 0% 0-1Year *An average of each security's credit rating assigned a numeric value and adjusted for its relative weighting in the portfolio. U.S. Treasu 26.6 Supra -So Supra -Na Agency 7.1 Municip 2.0 Federa Age n cy/C 19.0% For the Quarter Ended September 30, 2017 Portfolio Snapshot Sector Allocation Asset -Backed 13.1% Maturity Distribution :orporate 31.9% ederal n cy/C M O 0.3% 1- 2 Years 2- 3 Years 3- 4 Years 4- 5 Years > 5 Years PFM Asset Management LLC 11 of 48 For the Quarter Ended September 30, 2017 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Performance Portfolio Performance (Total Return) 1.2% 1.0% 0.8% L 0.6% 0 ~ 0.4% 0.2% 0.0% Current Quarter 1 Year 3 Year ■ NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio performance is gross of fees unless otherwise indicated. **Since Inception performance is not shown for periods less than one year. 5 Year 10 Year Since Inception BofA ML 1-3 Year U.S. Treasury Index PFM Asset Management LLC 12 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio/Benchmark For the Quarter Ended September 30, 2017 Portfolio Performance Portfolio Performance (Total Return) Quarter Ended Annualized Return Effective Duration 09/30/17 06/30/17 03/31/17 12/31/16 1 Year 3 Year 5 Year NORTH PALM BEACH INVESTMENT PORTFOLIO 1.83 0.35% 0.34% 0.37% -0.34% 0.72% 1.02% 0.79% BofA ML 1-3 Year U.S. Treasury Index 1.81 0.24% 0.17% 0.26% -0.43% 0.24% 0.76% 0.63% Difference 0.11% 0.17% 0.11% 0.09% 0.48% 0.26% 0.16% 0.35% 0.34% 0.37% _ 0.24% 0.17% = 0.26% 09/30/17 06/30/17 03/31/17 ■ NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio performance is gross of fees unless otherwise indicated. 1.02% 0.72% 0 0.76% 0.79% _ 0.63% 0.24% -0.34% -0.43% 12/31/16 1 Year 3 Year BofA ML 1-3 Year U.S. Treasury Index 5 Year PFM Asset Management LLC 13 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Performance (Total Return) Quarter Ended Effective Portfolio/Benchmark Duration 09/30/17 06/30/17 03/31/17 12/31/16 For the Quarter Ended September 30, 2017 Portfolio Performance Annualized Return 1 Year 3 Year 5 Year NORTH PALM BEACH INVESTMENT PORTFOLIO 1.83 0.35% 0.34% 0.37% -0.34% 0.72% 1.02% 0.79% Net of Fees ** - 0.33% 0.32% 0.35% -0.36% 0.64% 0.94% 0.71% BofA ML 1-3 Year U.S. Treasury Index 1.81 0.24% 0.17% 0.26% -0.43% 0.24% 0.76% 0.63% Difference (Gross) 0.11% 0.17% 0.11% 0.09% 0.48% 0.26% 0.16% Difference (Net) 0.09% 0.15% 0.09% 0.07% 0.40% 0.18% 0.08% 1.2% 1.02% 1.0% 0.8% 0.72% 0.76% 0.79% 0.63% 0.6% L 0.4% 0.35% 0.34% 0.37% 0.24% 0.17% = 0.26% 0.24% 7a 0.2% 0 ~ 0.0% -0.2% -0.4% -0.6% -0.34% -0.43% 09/30/17 06/30/17 03/31/17 12/31/16 1 Year 3 Year ■ NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index Portfolio performance is gross of fees unless otherwise indicated. ** Fees were calculated based on average assets during the period at the contractual rate. 5 Year PFM Asset Management LLC 14 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Earnings Quarter -Ended September 30, 2017 Market Value Basis For the Quarter Ended September 30, 2017 Portfolio Performance Accrual (Amortized Cost) Basis Beginning Value (06/30/2017) $9,074,949.76 $9,100,903.30 Net Purchases/Sales ($68,130.89) ($68,130.89) Change in Value ($929.30) ($1,881.37) Ending Value (09/30/2017) $9,005,889.57 $9,030,891.04 Interest Earned $32,698.54 $32,698.54 Portfolio Earnings $31,769.24 $30,817.17 PFM Asset Management LLC 15 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector Allocation As of September 30, 2017 Sector Market Value ($) % of Portfolio Corporate 2,878,208 31.9% U.S. Trea,. 26.6% U.S. Treasury 2,395,035 26.6% Federal Agency/GSE 1,706,576 19.0% Asset -Backed 1,177,029 13.1% Supra-Sov / Supra -Nati Agency 640,982 7.1% Municipal 180,770 2.0% Federal Agency/CMO 27,289 0.3% Total $9,005,890 100.0% Detail may not add to total due to rounding. PFM Asset Management LLC 16 of 48 Supra -Soy Supra -Na Agency 7.1% Municipal 2.0% Federal Agency/GSE 19.0% For the Quarter Ended September 30, 2017 Portfolio Composition Asset -Backed 13.1% Corporate 31.9% Federal gency/CMO 0.3% NORTH PALM BEACH INVESTMENT PORTFOLIO Sector Sector Allocation As of September 30, 2017 Market Value ($) % of Portfolio For the Quarter Ended September 30, 2017 Portfolio Composition % of Benchmark Corporate 2,878,208 31.9% - U.S. Treasury 2,395,035 26.6% 100.0% Federal Agency/GSE 1,706,576 19.0% - Asset -Backed 1,177,029 13.1% Supra-Sov / Supra -Nati Agency 640,982 7.1% Municipal 180,770 2.0% Federal Agency/CMO 27,289 0.3% Total $9,005,890 100.0% 100.0% 120% 100% 80% 60% 40% 20% 0% 31.9% 19.0% 13.1 0.0/° ° 0.0% 0.3% 0.0% M 0.0% 2.0% 0.0% Asset -Backed Corporate Federal Agency/CMO Federal Agency/GSE Municipal ■ NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index Detail may not add to total due to rounding. 7.1% - 0.0% Supra-Sov / Supra -Nati Agency 100.0% 26.6% U.S. Treasury PFM Asset Management LLC 17 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector Corporate U.S. Treasury Federal Agency/GSE Asset -Backed Supra-Sov / Supra -Nati Agency Municipal Federal Agency/CMO Total Detail may not add to total due to rounding. September 30, 2017 My ($MM) % of Tota 2.9 100% 2.4 90% Federal Agency/CMO 19.0% 1.2 80% ■ Municipal 7.1% 0.2 70% Supra-Sov / Supra -Nati 0.3% Agency 60% ■ Asset -Backed 50% Federal Agency/GSE 40% 30% ■ U.S. Treasury 20% Corporate 10% 0% Detail may not add to total due to rounding. September 30, 2017 My ($MM) % of Tota 2.9 31.9% 2.4 26.6% 1.7 19.0% 1.2 13.1% 0.6 7.1% 0.2 2.0% 0.0 0.3% $9.0 100.0% Sector Allocation June 30, 2017 1 My ($MM) % of Total 2.8 30.6% 1.7 18.9% 2.5 27.0% 1.2 13.5% 0.7 7.4% 0.2 2.0% 0.1 0.6% • $9.1 100.0% For the Quarter Ended September 30, 2017 Portfolio Composition March 31, 2017 My ($MM) % of Total 2.4 26.4% 1.3 14.9% 3.3 36.4% 1.1 11.7% 0.7 7.4% 0.2 2.0% 0.1 1.2% $9.1 100.0% September 2017 June 2017 March 2017 December 31, 2016 My ($MM) % of Total 2.2 23.9% 2.1 23.1% 3.6 39.5% 0.4 4.9% 0.5 5.3% 0.2 2.0% 0.1 1.3% $9.0 100.0% December 2016 PFM Asset Management LLC 18 of 48 For the Quarter Ended September 30, 2017 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Composition Maturity Distribution As of September 30, 2017 Portfolio/Benchmark Yield at Market Average 0-1 Maturity Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years >5 Years NORTH PALM BEACH INVESTMENT PORTFOLIO 1.63% 2.14 yrs 7.8% 42.3% 38.8% 7.1% 2.8% 1.1% BofA ML 1-3 Year U.S. Treasury Index 1.48% 1.93 yrs 2.9% 53.9% 43.1% 0.0% 0.0% 0.0% 60% 53.9% 50% 42.3% 43.1% 40% 38.8% 30% 20% 10% 7.8% 7.1% 2.9% 2.8% 0% 0.0% 0.0% 1.1% 0.0% 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years ■ NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index PFM Asset Management LLC 19 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio / Benchmark NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index 60% 50% 40% 30% 20% 10% 0% 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years ■ NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index Distribution by Effective Duration For the Quarter Ended September 30, 2017 Portfolio Composition Duration Distribution As of September 30, 2017 Effective 0-1 YEARS 1-2 YEARS 2-3 YEARS 3-4 YEARS 4-5 YEARS > 5 YEARS Duration 1.83 1.81 13.7% 46.1% 39.0% 1.2% 0.0% 0.0% 2.9% 54.7% 42.4% 0.0% 0.0% 0.0% Contribution to Portfolio Duration 60% 50% 40% 30% 20% 10% 0% 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years ■ NORTH PALM BEACH INVESTMENT PORTFOLIO BofA ML 1-3 Year U.S. Treasury Index PFM Asset Management LLC 20 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Credit Quality As of September 30, 2017 S&P Rating Market Value ($) % of Portfolio AA+ AAA A+ AA - Not Rated A A- AA BBB+ Totals Detail may not add to total due to rounding. PFM Asset Management LLC $4,254,093 $1,334,224 $824,015 $758,303 $573,375 $570,272 $376,042 $220,750 $94,814 $9,005,890 47.2% 14.8% 9.2% 8.4% 6.4% 6.3% 4.2% 2.5% 1.1% 100.0% 21 of 48 Not Rat 6. BE 1. A 14. A 47.2% For the Quarter Ended September 30, 2017 Portfolio Composition A .3% k- .2% ,+ .2% LA .5% LA - .4% NORTH PALM BEACH INVESTMENT PORTFOLIO Issuer UNITED STATES TREASURY FANNIE MAE FEDERAL HOME LOAN BANKS TOYOTA MOTOR CORP INTER -AMERICAN DEVELOPMENT BANK THE BANK OF NEW YORK MELLON CORPORATION HSBC HOLDINGS PLC JP MORGAN CHASE & CO AFRICAN DEVELOPMENT BANK AMERICAN EXPRESS CO FLORIDA ST HURRICAN CAT FUND CHEVRON CORPORATION I[ELLS FARGO & COMPANY BANK OF NOVA SCOTIA CARMAX AUTO OWNER TRUST WESTPAC BANKING CORP INTL BANK OF RECONSTRUCTION AND DEV APPLEINC PFM Asset Management LLC Issuer Distribution As of September 30, 2017 Market Value ($) 2,395,035 861,097 For the Quarter Ended September 30, 2017 Portfolio Composition % of Portfolio 26.6% 9.6% 22 of 48 149,594 1.7% 139,505 1.6% 138,051 125.193 1.4% NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended September 30, 2017 Portfolio Composition Issuer Market Value ($) % of Portfolio BANK OF AMERICA CO 124,968 1.4% FREDDIE MAC 123,553 1.4% HONDA AUTO RECEIVABLES CITIGROUP INC 100,096 1.1% LY AUTO RECEIVABLES TRUST 99,926 NISSAN AUTO RECEIVABLES 99,609 1.1% AMERICAN HONDA FINANCE 99,526 CANADIAN IMPERIAL BANK OF COMMERCE 99,427 1.1% ROYAL BANK OF CANADA 99,422 BANK OF MONTREAL 99,366 1.1% CNH EQUIPMENT TRUST 4 78 L i BP PLC 90,789 1.0% INTEL CORPORATION ASIAN DEVELOPMENT BANK 90,137 1.0% EE WALT DISNEY CORPORATION 89,886 MICROSOFT CORP 89,588 1.0% TORONTO -DOMINION BANK HYUNDAI AUTO RECEIVABLES 79,666 0.9% TOTAL SA PEPSICO INC 69,942 0.8% CATERPILLAR INC PFM Asset Management LLC 23 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended September 30, 2017 Portfolio Composition Issuer Market Value ($) % of Portfolio DEERE & COMPANY 60,208 0.7% FORD CREDIT AUTO OWNER TRUST 59,906 0.7% JOHN DEERE OWNER TRUST 59,853 0.7% VISA INC 50,511 0.6% HOME DEPOT INC 45,033 0.5% BERKSHIRE HATHAWAY INC 39,980 0.4% GOLDMAN SACHS GROUP INC 34,940 0.4% Grand Total PFM Asset Management LLC 24 of 48 9,005,890 100.0% NORTH PALM BEACH INVESTMENT PORTFOLIO Sector/Issuer Distribution As of September 30, 2017 Sector/Issuer For the Quarter Ended September 30, 2017 Portfolio Composition Market Value ($) % of Sector % of Total Portfolio Asset -Backed 79,666 ALLY AUTO RECEIVABLES TRUST 99,926 8.5% A. AMERICAN EXPRESS CO 99,699 8.5% 1.1% wBANK OF AMERICA V 65,094 13.1% 1.7% CARMAX AUTO OWNER TRUST 144,012 12.2% 1.6% �ITIGROUP INC 00, CNH EQUIPMENT TRUST 94,780 8.1% 1.1% R TRUST 906 5 1.1% HONDA AUTO RECEIVABLES 119 661 10.2% 1.3% HYUNDAI AUTO RECEIVABLES 79,666 JOHN DEERE OWNER TRUST 59,853 5.1% 0.7% NISSAN AUTO RECEIVABLES 99,609 TOYOTA MOTOR CORP 154,727 13.1% 1.7% Sector Total 1,177,029 100.0% 13.1% Corporate a ERICAN EXPRESS CO 85,193 3.0% AMERICAN HONDA FINANCE 99,526 3.5% 1.1% BANK OF AMERICA CO 59,875 2.1% 0.7% BANK OF MONTREAL 99,366 3.5% PFM Asset Management LLC 25 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO For the Quarter Ended September 30, 2017 Portfolio Composition Sector / Issuer Market Value ($) % of Sector % of Total Portfolio BANK OF NOVA SCOTIA BERKSHIRE HATHAWAY INC i BP PLC CANADIAN IMPERIAL BANK OF COMMERCE CATERPILLAR INC CHEVRON CORPORATION DEERE & COMPANY GOMPHS GROUP INC HOME DEPOT INC HSBC HOLDINGS PLC INTEL CORPORATION JP MORGAN CHASE & CO MICROSOFT CORP ROYAL BANK OF CANADA WE BANK OF NEW YORK MELLON CORPORATION THE WALT DISNEY CORPORATION TORONTO -DOMINION BANK TOTAL SA VISA INC WELLS FARGO & COMPANY WESTPAC BANKING CORP Sector Total PFM Asset Management LLC 149,594 5.2% 1.7% 39,980 1 f 0.4% 90,789 3.2% 1.0% 99,427 64,700 2.2% 0.7% 60,208 2.1% 0.7% 45,033 1.6% 0.5% 90,190 3.1% 1.0% 89,588 3.1% 1.0% �2 99,422 3.5% 1.1% 00, 89,886 3.1% 1.0% 79,685 75,574 2.6% 0.8% 50,511 1.8% 0.6% 139,505 4.8% 1.5% 26 of 48 2,878,208 100.0% 32.0% NORTH PALM BEACH INVESTMENT PORTFOLIO Sector/Issuer For the Quarter Ended September 30, 2017 Portfolio Composition Market Value ($) % of Sector % of Total Portfolio Federal Agency/CMO FANNIE MAE 27,289 100.0% 0.3% Sector Total 27,289 100.0% 0.3% Federal Agency/GSE FANNIE MAE 833,808 48.9% 9.3% FEDERAL HOME LOAN BANKS 749,215 43.9% 8.3% FREDDIE MAC 123,553 7.2% 1.4% Sector Total 1,706,576 100.0% 18.9% Municipal FLORIDA ST HURRICAN CAT FUND 180,770 100.0% 2.0% Sector Total 180,770 100.0% 2.0% Supra-Sov / Supra -Nati Agency AFRICAN DEVELOPMENT BANK 194,409 30.3% 2.2% ASIAN DEVELOPMENT BANK 90,137 14.1% 1.0% INTER -AMERICAN DEVELOPMENT BANK 218,385 34.1% 2.4% INTL BANK OF RECONSTRUCTION AND DEV 138,051 21.5% Sector Total 640,982 100.0% 7.1% U.S. Treasury UNITED STATES TREASURY 2,395,035 100.0% 26.6% PFM Asset Management LLC 27 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Sector/Issuer Sector Total Portfolio Total PFM Asset Management LLC 28 of 48 For the Quarter Ended September 30, 2017 Market Value ($) % of Sector 2,395,035 9,005,890 100.0% 100.0% Portfolio Composition % of Total Portfolio 26.6% 100.0% NORTH PALM BEACH INVESTMENT PORTFOLIO Quarterly Portfolio Transactions Trade Settle Maturity Date Date Par ($) CUSIP Security Description Coupon Date BUY 7/5/17�7/7/1-7� 265,000 NISSAN ABS 2016-C A3 PFM Asset Management LLC 29 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Trade Settle Date Date Par ($) CUSIP Security Description For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Yield Realized Coupon Date Amt ($) at Market G/L (BV) 7/15/17 7/15/17 50,000 BP CAPITAL MARKETS PLC BONDS PFM Asset Management LLC 30 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Trade Settle Date Date Par ($) CUSIP Security Description For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Yield Realized Coupon Date Amt ($) at Market G/L (BV) 8/15/17 8/15/17 70,000 JP MORGAN CHASE CORP NOTES (CALLABLE) PFM Asset Management LLC 31 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Trade Settle Date Date Par ($) CUSIP Security Description For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Yield Realized Coupon Date Amt ($) at Market G/L (BV) 9/1/17 9/25/17 30,349 PFM Asset Management LLC TOYOTA ABS 2016-C A3 TOYOTA ABS 2017-A A3 BANK OF AMERICA ABS 2017-A1 Al HYUNDAI ABS 2016-B A3 1.76% 7/15/21 110.00 1.70% 6/15/21 42.50 1.44% 12/15/21 60.00 1.54% FHLB NOT 106.46 1.82% 10/15/21 86.45 1.78°/ 103.83 1.25% 6/15/20 31.25 1.18°/ 1.14% 8/15/20 1.95% 8/15/22 1.29% 4/15/21 47.50 105.63 43.00 AFRICAN DEVELOPMENT BANK NOTE 1.87% 3/16/20 984.38 HONDA ABS 2016-3 A3 AFRICAN DEVELOPMENT BANK NOTE 1.12% 9/20/19 506.25 HONDA ABS 2017-1 NOW 64.50 FNMA NOTES 1.00% 9/27/17 500.00 FHLB NOT 32 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Trade Settle Date Date Par ($) CUSIP Security Description Total INTEREST 7,795,363 For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Yield Realized Coupon Date Amt ($) at Market G/L (BV) 32,924.55 MATURITY 9/27/17 9/27/17 100,000 FNMA NOTES 1.00% 9/27/17 100,000.00 0.00 Total MATURITY 100,000 100,000.00 0.00 PAYDOWNS SELL 7/5/17 7/7/17 30,000 FEDERAL HOME LOAN BANKS AGCY 0.87% 6/29/18 174,535.62 1.26% (426.59) PFM Asset Management LLC 33 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Trade Settle Date Date Par ($) CUSIP Security Description For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Yield Realized Coupon Date Amt ($) at Market G/L (BV) 0/171 20,000 US TREASURY NOTES 1.37% 4/30/20 55,205.97 1.43% 158.89 Total SELL 1,375,000 PFM Asset Management LLC 34 of 48 1,375,314.15 1,786.23 NORTH PALM BEACH INVESTMENT PORTFOLIO Tran. Trade Settle Par ($) CUSIP Type Date Date Quarterly Portfolio Transactions Security Description For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Realized Coupon Date p Amt ($) Yield G/L (BV) MTERILT 7/1/1M/1/17 A0,000.00 HYUNDAI ABS 2017-A A3 1.76% 8/15/21 58.67 PFM Asset Management LLC 35 of 48 For the Quarter Ended September 30, 2017 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Activity Tran. Trade Settle Maturity Transact Realized Type Date Date Par ($) CUSIP Security Description Coupon Date Amt ($) Yield G/L (BV) INTEREST 7/15/17 7/15/17 50,000.00 US TREASURY NOTES PFM Asset Management LLC 36 of 48 1.44% 12/15/21 60.00 1.67% 6/15/21 83.50 ° 7,785.36 0.00 1.25% 1/16/19 406.25 6.50 1.22% 12/18/19 50.83 1.16% 72.50 1.50% 7/18/19 750.00 1.95% 7/23/19 (34,995.80) 1.96% 20,073.48 1.31% (24.98) 1.72% 7/21/21 64.50 1.50% 7/29/19 1.62% 7/31/20 2,153.13 NORTH PALM BEACH INVESTMENT PORTFOLIO Tran. Trade Settle Par ($) CUSIP Type Date Date Security Description INTEREST 7/31/17 7/31/17 125,000.00 BERKSHIRE HATHAWAY INC GLOBAL NOTES 1.15% 8/15/18 115.00 PFM Asset Management LLC 37 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Tran. Trade Settle Par ($) CUSIP Type Date Date Security Description For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Realized Coupon Date p Amt ($) Yield G/L (BV) INTEREST 8/15/17 8/15/17 45,000.00 US TREASURY NOTES 1.37% 8/31/20 1,375.00 PFM Asset Management LLC 38 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Tran. Trade Settle Par ($) CUSIP Security Description Type Date Date For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Realized Coupon Date p Amt ($) Yield G/L (BV) BUY 8/31/17 9/1/17 575,000.00 CARMAX ABS 2016-4 A2 1.21% 11/15/19 76.04 PFM Asset Management LLC 39 of 48 NORTH PALM BEACH INVESTMENT PORTFOLIO Tran. Trade Settle Par ($) CUSIP Type Date Date Security Description For the Quarter Ended September 30, 2017 Portfolio Activity Maturity Transact Realized Coupon Date p Amt ($) Yield G/L (BV) INTEREST - 9/15/17 9/15/17 100,000.00 AFRICAN DEVELOPMENT BANK NOTE 1.12% 9/20/19 506.25 PFM Asset Management LLC 40 of 48 For the Quarter Ended September 30, 2017 NORTH PALM BEACH INVESTMENT PORTFOLIO Portfolio Activity Tran. Trade Settle Par ($) CUSIP Security Description Coupon Maturity Transact Realized Yield Type Date Date Date Amt ($) G/L (BV) INTEREST 9/21/17 9/21/17 45,000.00 FHLB NOTES 1.37% 9/28/20 76.39 TOTALS 99,803.03 (1,786.23) PFM Asset Management LLC 41 of 48 PFM Asset Management LLC Tab III 42 of 48 VILLAGE OF NORTH PALM BEACH, FLORIDA' For the Quarter Ended September 30, 2017 Asset Allocation Asset Backed Securities- Corporate Notes 7.53% 18.47% Mortgage -Backed Securities 0.18% Supranationals 4.13% Municipal Obligations 1.16% Federal Agency (GSE) Money Market Mutual 10.99% Funds 0.80% United States Treasury Securities -Interest Bearing 15.37% Florida Prime (SBA) Checking or Savings Account ° 38.04% Amortized Cost Allocation Permitted In Security Type (Includes Interest) Percentage Notes by Policy Compliance Florida Prime (SBA) 519,960.83 3.32% 2 25% YES United States Treasury Securities 2,407,554.05 15.37% 100% YES Federal Agency (GSE) 1,721,830.33 10.99% 75% YES Supranationals 646,176.73 4.13% 25% YES Mortgage -Backed Securities 27,468.57 0.18% 25% YES Asset Backed Securities 1,180,070.90 7.53% 25% YES Certificates of Deposit - 0.00% 50% YES Commercial Paper - 0.00% 3 50% YES Corporate Notes 2,893,205.38 18.47% 3 50% YES Municipal Obligations 180,973.35 1.16% 25% YES Money Market Mutual Funds 125,750.80 0.80% 50% YES Intergovernmental Investment Pool - 0.00% 4 100% YES Interest Bearing Checking or Savings Account 5,958,247.13 38.04% 2 100% YES Village Managed 6,603,958.76 42.17% PFM Managed 9,057,279.31 57.83% Total 15,661,238.07 100.00% 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 $15,046,051.83 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 43 of 48 VILLAGE OF NORTH PALM BEACH, FLORIDA' Individual Issuer Breakdown Government National Mortgage Association (GNMA) Federal Farm Credit Bank (FFCB) Federal Home Loan Bank (FHLB) Federal National Mortgage Association (FNMA) Federal Home Loan Mortgage Corporation (FHLMC) Florida State Hurricane Cat Fund Municipal Bonds American Express Company Corporate Notes American Honda Finance Corporate Notes Apple, Inc. Corporate Notes Bank of America Corporate Notes Bank of Montreal Corporate Notes Bank of New York Company Inc. Corporate Notes Bank of Nova Scotia Corporate Notes Berkshire Hathaway, Inc. Corporate Notes BP Capital Markets Corporate Notes Canadian Imperial Corporate Notes Caterpillar Corporate Notes Chevron Corporation Corporate Notes Goldman Sachs Corporate Notes Home Depot Corporate Notes HSBC Holdings plc Corporate Notes Intel Corporate Notes John Deere Corporate Notes JP Morgan Chase & Company Corporate Notes Microsoft Corporation Corporate Notes PepsiCo, Inc. Corporate Notes Royal Bank of Canada Corporate Notes The Walt Disney Company Corporate Notes Toronto Dominion Corporate Notes Total Capital SA Corporate Notes Toyota Motor Corporation Corporate Notes Visa Corporate Notes PFM Asset Management LLC For the Quarter Ended September 30, 2017 Amortized Cost Allocation Permitted (Includes Interest) Percentage Notes by Policy - 0.00% - 0.00% 756,163.72 4.83% 868,097.82 5.54% 125,037.36 0.80% 180,973.35 1.16% 85,237.12 0.54% 100,189.47 0.64% 125,456.30 0.80% 60,050.44 0.38% 100,246.75 0.64% 201,142.82 1.28% 150,991.20 0.96% 40,036.09 0.26% 90,901.31 0.58% 100,099.52 0.64% 65,026.77 0.42% 181,053.68 1.16% 35,123.22 0.22% 45,237.71 0.29% 200,287.85 1.28% 90,617.76 0.58% 60,264.53 0.38% 200,274.48 1.28% 90,128.06 0.58% 70,383.44 0.45% 100,188.99 0.64% 90,424.26 0.58% 79,989.28 0.51% 75,897.94 0.48% 110,693.26 0.71% 50,861.92 0.32% 44 of 48 40% 40% 40% 40% 40% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% Asset Allocation In Compliance YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES For the Quarter Ended September 30, 2017 VILLAGE OF NORTH PALM BEACH, FLORIDA' Wells Fargo & Company Corporate Notes 151,517.97 0.97% 5% Westpac Banking Corp Corporate Notes 140,883.24 0.90% 5% American Express ABS 100,061.59 0.64% 5% Ally Auto Receivables Trust ABS 100,068.54 0.64% 5% Bank of America ABS 65,039.40 0.42% 5% Carmax Auto Owner Trust ABS 144,152.02 0.92% 5% CitiBank Credit Card Issuance Trust ABS 100,357.67 0.64% 5% CNH Equipment Trust ABS 95,064.24 0.61% 5% Ford Auto Receivables ABS 60,044.34 0.38% 5% Honda Auto Receivables ABS 120,044.22 0.77% 5% Hyundai Auto Receivables ABS 80,047.19 0.51% 5% John Deere ABS 60,037.19 0.38% 5% Nissan Auto Receivables ABS 100,056.66 0.64% 5% Toyota Auto Receivables ABS 155,097.84 0.99% 5% African Development Bank 194,923.15 1.24% 10% Asian Development Bank 90,314.69 0.58% 10% Inter -American Development Bank 220,800.16 1.41% 10% International Bank of Recon and Dev Notes 140,138.73 0.89% 10% Money Market Fund - TD Bank Sweep Account 125,750.80 0.80% 33% Interest Bearing Checking/Savings Acct -Wells Fargo 4,402,267.51 28.11% 50% Interest Bearing Checking/Savings Acct-Flagler Bank 518,816.46 3.31% 50% Interest Bearing Checking/Savings Acct-BankUnited 1,037,163.16 6.62% 50% PFM Asset Management LLC 45 of 48 Asset Allocation YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES NORTH PALM BEACH INVESTMENT PORTFOLIO I►Tj116]:ire1►Yi1]6111 *' For the Quarter Ended September 30, 2017 Portfolio Activity This material is based on information obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management LLC cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. All statements as to what will or may happen under certain circumstances are based on assumptions, some, but not all of which, are noted in the presentation. Assumptions may or may not be proven correct as actual events occur, and results may depend on events outside of your or our control. Changes in assumptions may have a material effect on results. Past performance does not necessarily reflect and is not a guaranty of future results.The information contained in this presentation is not an offer to purchase or sell any securities. • Market values 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. • In accordance with generally accepted accounting principles, information is presented on a trade date basis; forward settling purchases are included in the monthly balances, and forward settling sales are excluded. • Performance is presented in accordance with the CFA Institute's Global Investment Performance Standards (GIPS). Unless otherwise noted, performance is shown gross of fees. Quarterly returns are presented on an unannualized basis. Returns for periods greater than one year are presented on an annualized basis. Past performance is not indicative of future returns. • Bank of America/Merrill Lynch Indices provided by Bloomberg Financial Markets. • Money market fund/cash balances are included in performance and duration computations. • Standard & Poor's is the source of the credit ratings. Distribution of credit rating is exclusive of money market fund/LGIP holdings. • Callable securities in the portfolio are included in the maturity distribution analysis to their stated maturity date, although, they may be called prior to maturity. • MBS maturities are represented by expected average life. PFM Asset Management LLC 46 of 48 For the Quarter Ended September 30, 2017 NORTH PALM BEACH INVESTMENT PORTFOLIO Appendix GLOSSARY • ACCRUED INTEREST: Interest that is due on a bond or other fixed income security since the last interest payment was made. • AGENCIES: Federal agency securities and/or Government-sponsored enterprises. • AMORTIZED COST: The original cost of the principal of the security is adjusted for the amount of the periodic reduction of any discount or premium from the purchase date until the date of the report. Discount or premium with respect to short-term securities (those with less than one year to maturity at time of issuance) is amortized on a straight line basis. Such discount or premium with respect to longer-term securities is amortized using the constant yield basis. • BANKERS' ACCEPTANCE: A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill as well as the insurer. • COMMERCIAL PAPER: An unsecured obligation issued by a corporation or bank to finance its short-term credit needs, such as accounts receivable and inventory. • CONTRIBUTION TO DURATION: Represents each sector or maturity range's relative contribution to the overall duration of the portfolio measured as a percentage weighting. Since duration is a key measure of interest rate sensitivity, the contribution to duration measures the relative amount or contribution of that sector or maturity range to the total rate sensitivity of the portfolio. • DURATION TO WORST: A measure of the sensitivity of a security's price to a change in interest rates, stated in years, computed from cash flows to the maturity date or to the put date, whichever results in the highest yield to the investor. EFFECTIVE DURATION: A measure of the sensitivity of a security's price to a change in interest rates, stated in years. EFFECTIVE YIELD: The total yield an investor receives in relation to the nominal yield or coupon of a bond. Effective yield takes into account the power of compounding on investment returns, while ominal yield does not. • FDIC: Federal Deposit Insurance Corporation. A federal agency that insures bank deposits to a specified amount. • INTEREST RATE: Interest per year divided by principal amount and expressed as a percentage. • MARKET VALUE: The value that would be received or paid for an investment in an orderly transaction between market participants at the measurement date. • MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. • NEGOTIABLE CERTIFICATES OF DEPOSIT: A CD with a very large denomination, usually $1 million or more, that can be traded in secondary markets. • PAR VALUE: The nominal dollar face amount of a security. PFM Asset Management LLC 47 of 48 For the Quarter Ended September 30, 2017 NORTH PALM BEACH INVESTMENT PORTFOLIO GLOSSARY • PASS THROUGH SECURITY: A security representing pooled debt obligations that passes income from debtors to its shareholders. The most common type is the mortgage-backed security. • REPURCHASE AGREEMENTS: A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. • SETTLE DATE: The date on which the transaction is settled and monies/securities are exchanged. If the settle date of the transaction (i.e., coupon payments and maturity proceeds) occurs on a non -business day, the funds are exchanged on the next business day. • TRADE DATE: The date on which the transaction occurred; however, the final consummation of the security transaction and payment has not yet taken place. • UNSETTLED TRADE: A trade which has been executed; however, the final consummation of the security transaction and payment has not yet taken place. • U.S. TREASURY: The department of the U.S. government that issues Treasury securities. Appendix • YIELD: The rate of return based on the current market value, the annual interest receipts, maturity value, and the time period remaining until maturity, stated as a percentage on an annualized basis. • YTM AT COST: The yield to maturity at cost is the expected rate of return based on the original cost, the annual interest receipts, maturity value, and the time period from purchase date to maturity, stated as a percentage on an annualized basis. • YTM AT MARKET: The yield to maturity at market is the rate of return based on the current market value, the annual interest receipts, maturity value, and the time period remaining until maturity, stated as a percentage on an annualized basis. PFM Asset Management LLC 48 of 48 Account 61350001