Palm Beach County School District

Transcription

1 Palm Beach County School District Investment Performance Review Quarter Ended June 30, 2014 Investment Advisors Steven Alexander, CTP, CGFO, CPPT, Managing Director D. Scott Stitcher, CFA, Senior Managing Consultant Richard Pengelly, CFA, CTP, Senior Managing Consultant Gregg Manjerovic, CFA, Portfolio Manager Rebecca Geyer, CTP, Senior Analyst PFM Asset Management LLC One Keystone Plaza, Suite 300 North Front & Market Streets Harrisburg, PA fax 300 S. Orange Avenue, Suite 1170 Orlando, FL (407) (407) fax

2 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Tab I. Section A Table of Contents Market Review Tab II. Section B Section C Tab III. Executive Summary & Investment Portfolio Performance Short Term Portfolio Performance Asset Allocation Chart June 30, 2014 PFM Month-End Statement (statements are available online at 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

3 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 TAB I

4 Palm Beach County School District Investment Report Quarter Ended June 30, 2014 Summary Treasury prices rose during the second quarter, marking two consecutive quarters of price rallies a pattern that has not occurred since Global central banks seem to be going their separate ways in terms of monetary policy, as the European Central Bank cut interest rates and added to bank liquidity in an effort to avoid deflation while the Federal Reserve (Fed) continued to scale back its quantitative easing program. Geopolitical uncertainty continued to be a primary focus for the markets, as tensions in Ukraine, Iraq, and Syria caused investors to move toward assets that are perceived to have less risk. Economic Snapshot First quarter gross domestic product (GDP) contracted at an annual rate of 2.9% the first downward move in three years. The harsh winter weather was a primary contributor. Most economists expect a recovery as 2014 further unfolds. The U.S. unemployment rate fell from 6.7% in March to 6.1% at the end of the second quarter. While the U.S. is adding jobs at a steady pace, the reduction in unemployment can also be traced to an increase in the number of Americans who are no longer actively looking for work. The housing market continued to show modest strength during the quarter. New home sales for May rose 18.6% from the prior month, marking a six year high, while existing home sales rose 4.9% from the prior month. However, the pace of housing starts remained well below pre recession levels. Mortgage applications for purchase are down 17.6% year over year, and mortgage applications for refinancing are down 56.5% year over year. Interest Rates The Fed continued to taper its bond buying program throughout the quarter, and at its June meeting, the Federal Open Market Committee (FOMC) cut bond purchases by another $10 billion, resulting in monthly purchases of $35 billion. The FOMC has continued to keep the federal funds target rate in a range of zero to 25 basis points. InflationtickedupduringthequarterastheConsumerPriceIndex rose at its fastest pace in more than a year in May increasing twice as much as economists had anticipated. Core prices (which exclude food and energy prices) gained 2% on an annual basis, marking the fastest price increase since February 2013 and matching the Fed s current target for inflation. The Treasury yield curve flattened over the quarter as intermediate and long maturity bond prices led the rally. This flattening expresses the current investor outlook that Fed tightening will be modest by historical standards and inflation will remain well contained in coming years. Sector Performance Portfolios maintained a modestly defensive maturity structure, with durations somewhat short of benchmarks. This structure is in place to reduce the effects of interest rate rises that normally occur when economic growth accelerates and the Fed moves to tighten credit. Federal Agency and corporate sector holdings generally contributed returns in excess of those on Treasuries. The excess resulted from the added income generated by these holdings and from spread narrowing, offsetting the drag on performance that resulted from the defensive duration position. Risk premiums on lower rated corporate bonds and on callable and mortgage backed securities narrowed further during the quarter to the point where there was diminished value relative to comparable Treasury benchmarks. PFM Asset Management LLC Section A-1

5 Palm Beach County School District Investment Report Quarter Ended June 30, 2014 Economic Snapshot Labor Market Latest Mar 2014 Jun 2013 Unemployment Rate Jun'14 6.1% 6.7% 7.5% Change In Nonfarm Payrolls Jun'14 288, , ,000 Average Hourly Earnings (YoY) Jun'14 2.0% 2.1% 2.2% Personal Income (YoY) May'14 3.5% 3.3% 3.4% Initial Jobless Claims (week) Jul , , ,000 10% 8% 6% 4% Unemployment Rate (left) vs. Change in Nonfarm Payrolls (right) Change In Nonfarm Payrolls Unemployment Rate 2% 6/30/11 12/31/11 6/30/12 12/31/12 6/30/13 12/31/13 6/30/14 400K 350K 300K 250K 200K 150K 100K 50K 0 Growth Real GDP (QoQ SAAR) 2014Q1-2.9% 2.6% 2.5% GDP Personal Consumption (QoQ SAAR) 2014Q1 1.0% 3.3% 1.8% Retail Sales (YoY) Jun'14 4.3% 4.1% 5.9% % 4.0% 2.0% 0.0% Real GDP (QoQ) ISM Manufacturing Survey (month) Jun' Existing Home Sales SAAR (month) May' mil mil mil. -2.0% -4.0% 3/31/11 9/30/11 3/31/12 9/30/12 3/31/13 9/30/13 3/31/14 Inflation / Prices Personal Consumption Expenditures (YoY) May'14 1.8% 1.1% 1.3% Consumer Price Index (YoY) May'14 2.1% 1.5% 1.8% Consumer Price Index Core (YoY) May'14 2.0% 1.7% 1.6% 5.0% 4.0% 3.0% 2.0% Consumer Price Index CPI (YoY) Core CPI (YoY) Crude Oil Futures (WTI, per barrel) Jun 30 $ $ $96.56 Gold Futures (oz.) Jun 30 $1,322 $1,283 $1, % 0.0% 5/31/11 11/30/11 5/31/12 11/30/12 5/31/13 11/30/13 5/31/14 1. Data as of Fourth Quarter Data as of Second Quarter 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 Section A-2

6 Palm Beach County School District Investment Report Quarter Ended June 30, 2014 Investment Rate Overview U.S. Treasury Note Yields U.S. Treasury Yield Curve Yield 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 3/31/14 4/30/14 5/31/14 6/30/14 2-Year 5-Year 10-Year Yield 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 3/31/14 4/30/14 5/31/14 6/30/14 2-Year 5-Year 10-Year Maturity 6/30/14 3/31/14 U.S. Treasury Yields Change over Quarter 6/30/13 Change over Year 5% 4% Yield Curves as of 6/30/ month 0.02% 0.03% (0.01%) 0.03% (0.01%) 1-year 0.10% 0.11% (0.01%) 0.15% (0.05%) 2-year 0.46% 0.42% 0.04% 0.36% 0.10% Yield 3% 2% 5-year 1.63% 1.72% (0.09%) 1.40% 0.23% 1% 10-year 2.53% 2.72% (0.19%) 2.49% 0.04% 30-year 3.36% 3.56% (0.20%) 3.50% (0.14%) Source: Bloomberg 0% 3-yr 2-yr 1-yr 3-mo 5-yr 7-yr 10-yr Maturity U.S. Treasury Federal Agency Industrial Corporates, A Rated 25-yr 30-yr PFM Asset Management LLC Section A-3

7 Palm Beach County School District Investment Report Quarter Ended June 30, Year Indices BofA Merrill Lynch Index Returns U.S. Treasury % 0.27% 0.76% 0.63% Federal Agency % 0.24% 0.87% 0.75% U.S. Corporates, A-AAA rated % 0.49% 2.12% 2.10% Agency MBS (0 to 3 years) % 0.55% 2.68% 1.46% Municipals % 0.34% 1.40% 1.16% 1-5 Year Indices U.S. Treasury % 0.55% 1.16% 1.11% Federal Agency % 0.54% 1.52% 1.15% U.S. Corporates, A-AAA rated % 0.96% 3.45% 2.92% Agency MBS (0 to 5 years) % 1.71% 4.12% 2.52% Municipals % 0.60% 2.25% 1.78% Master Indices (Maturities 1 Year or Greater) As of 6/30/2014 Returns for Periods ended 6/30/2014 Duration Yield 3 Month 1 Year 3 Years U.S. Treasury % 1.56% 2.29% 3.03% Federal Agency % 1.24% 2.65% 2.18% U.S. Corporates, A-AAA rated % 2.37% 6.58% 5.42% Agency MBS (0 to 30 years) % 2.43% 4.68% 2.79% Municipals % 2.69% 6.54% 5.62% 1. Duration and yield are after the indices were rebalanced at month end. 2. Returns are rolling returns. Returns for periods greater than one year are annualized. Source: BofA Merrill Lynch Indices PFM Asset Management LLC Section A-4

8 Palm Beach County School District Investment Report Quarter Ended June 30, 2014 Disclosures 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 change. Information is obtained from sources generally believed to be reliable and available to the public; however, PFMAM 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. Further distribution is not permitted without prior written consent. PFM Asset Management LLC Section A-5

9 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 TAB II

10 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Executive Summary PORTFOLIO STRATEGY The School District s Investment Portfolio is of high credit quality and invested in U.S. Treasury, Federal Agency, high quality corporate, commercial paper, and municipal securities. PFM continued to actively manage the Investment Portfolio during the second quarter and found value in the market, taking advantage of market inefficiencies or changes in economic outlook. As a result the Portfolio realized $48,627 in gains on sales (based on amortized cost) during the quarter. PFM is continually in the market monitoring for opportunities to add value to the Portfolio. The Investment Portfolio s quarterly total return performance of 0.26% underperformed the benchmark performance of 0.27% by 0.01%. This slight underperformance is due to the fact the Portfolio s duration has been positioned to be defensively shorter than the benchmark s duration. While this strategy helps to protect the Portfolio in a rising interest rate environment, the strategy sacrifices a small amount of yield by selecting shorter maturing securities. At quarter end, the Portfolio s duration was 92% of the benchmark s duration. The Short Term Portfolio continues to provide the District with favorable yield relative to the benchmark. At quarter end, the portfolio had a Yield to Maturity at Cost of 0.14%, exceeding the Yield to Maturity of its benchmark the Merrill Lynch 3 Month U.S. Treasury Bill Index by 12 basis points (0.12%). The temporary disconnect between economic fundamentals and benchmark Treasury yields highlights the uncertainty in the timing of higher interest rates. So while strengthening economic activity directs PFM to keep the Portfolio positioned defensively, maintaining less interest rate risk as compared to their index, PFM is careful not to be too aggressive in underweighting longer maturities due to the uncertainty in the timing of rate increases. Spreads on financial companies remain wider relative to prerecession levels whereas spreads on industrial companies are now comparable to their prerecession levels. So within corporate bonds, the financial subsector can offer more value than the industrial subsector. In the third quarter of 2014, the Fed's monthly bond purchases will be less than half what they were in the third quarter of That reduction in demand and consequential rise in risk premium along with continued improvement in the labor market should nudge yields higher toward normalization. On the other hand, demand from foreign investors is expected to remain strong and keep yields from a disorderly shock. Most assuredly economic growth in the second half of the year will be stronger than the first half of An open question is will it be more of the muddling through recovery we have seen thus far, or will economic activity finally gain traction and push GDP toward or above 3%. Our view leans toward the latter and thus we will stay defensively positioned. PFM Asset Management LLC Section B - 1

11 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Investment Portfolio Performance Total Portfolio Value 1 June 30, 2014 March 31, 2014 Market Value $84,461, $84,239, Amortized Cost $84,377, $84,220, Quarterly Return Last Last Last Last Since Inception Total Return 2,3,4,5 June 30, Months 2 Years 7 Years 10 Years December 31, 1998 $ Investment Portfolio 0.26% 0.85% 0.61% 2.77% 2.91% 3.63% Merrill Lynch 1-3 Year U.S. Treasury Note Index 0.27% 0.76% 0.55% 2.49% 2.61% 3.40% Effective Duration (Years) 4,5 June 30, 2014 March 31, 2014 Yields June 30, 2014 March 31, 2014 Investment Portfolio Yield at Market 0.45% 0.45% Merrill Lynch 1-3 Year U.S. Treasury Note Index Yield at Cost 0.51% 0.53% Portfolio Duration % of Benchmark Duration 92% 95% 0.75% Quarter Total Return Comparison Quarter Ended 06/30/ % Since Inception Total Return Comparison Period Ended 06/30/ % 4.00% Return 0.25% % Investment Portfolio ML 1-3 Year U.S. Treasury Note Index 0.26% 0.27% Return 3.75% 3.50% Investment Portfolio 3.63% ML 1-3 Year U.S. Treasury Note Index 3.40% -0.25% 3.25% -0.50% Effective Duration (Years) 3.00% Effective Duration (Years) Notes: 1. In order to comply with GASB accrual accounting reporting requirements; forward settling trades are included in the monthly balances. End of quarter trade-date market values of portfolio holdings, including accrued interest. 2. Performance on trade date basis, gross (i.e., before fees), is in accordance with The CFA Institute s Global Investment Performance Standards (GIPS). Quarterly returns are presented on an unannualized basis. Returns presented for 12 months or longer are presented on an annual basis. Past performance is not indicative of future results. 3. Since Inception the benchmark has been the Merrill Lynch 1-3 Year U.S. Treasury Note. 4. Merrill Lynch Indices provided by Bloomberg Financial Markets. 5. Includes money market fund/cash in performance and duration computations. PFM Asset Management LLC Section B - 2

12 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Investment Portfolio Composition and Credit Quality Characteristics Security Type 1 June 30, 2014 % of Portfolio March 31, 2014 % of Portfolio U.S. Treasuries $56,151, % $47,779, % Federal Agencies 11,638, % 16,529, % Commercial Paper 6,195, % 8,224, % Certificates of Deposit 0.0% 0.0% Bankers Acceptances 0.0% 0.0% Repurchase Agreements 0.0% 0.0% Municipal Obligations 2,354, % 283, % Corporate Notes/Bonds 7,731, % 11,305, % Corporate Notes/Bonds - FDIC Insured 0.0% 0.0% Mortgage Backed 0.0% 0.0% Money Market Fund/Cash 390, % 117, % Totals $84,461, % $84,239, % Money Market Fund/Cash 0.46% Corporate Notes/Bonds 9.15% Municipal Obligations 2.79% Commercial Paper 7.34% Federal Agency Obligations 13.78% Portfolio Composition as of 06/30/14 U.S. Treasuries 66.48% AA % Credit Quality Distribution² as of 06/30/14 AA 6.00% AAA 1.28% AA- 4.04% A-1 (Shortterm) 7.37% 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 - 3

13 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Investment Portfolio Maturity Distribution Maturity Distribution 1 June 30, 2014 March 31, 2014 Overnight (Money Market Fund) $390, $117, Under 6 Months 6,195, ,224, Months 516, ,625, Years 45,218, ,303, Years 32,140, ,757, Years 2,210, Years 5 Years and Over Totals $84,461, $84,239, Percentage of Total Portfolio 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Portfolio Maturity Distribution¹ June 30, 2014 March 31, % 43.6% 36.0% 38.1% 9.8% 7.3% 7.9% 0.5% 0.1% 0.6% 0.0% 2.6% 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 - 4

14 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Investment Portfolio Maturity Distribution versus the Benchmark % 20.0% Market Value 15.0% 10.0% 5.0% 0.0% 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 - 5

15 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Trade Analysis for April 4, 2014 Transaction Date: April 4, 2014 Transaction Security Maturity Date Par Value Price Yield at Market Benefit Gain/Loss Additional Earnings Sold FNMA NOTES 12/21/2015 $2,150,00 $ % $3, Purchased FHLB NOTES 3/27/2017 $2,075,00 $ % 0.883% 31, Total Estimated Benefit from Transaction to Original Maturity $35, Total Estimated Benefit from Transactions $35, Transaction Commentary: In accordance with Section III. Investment Objectives, of the District's Investment Policy, from time to time, securities may be traded for other similar securities to improve yield, maturity, or credit risk. For these transactions, a loss may be incurred for accounting purposes, provided any of the following occurs with respect to the replacement security: 1) The yield has been increased, 2) the maturity has been reduced, or lengthened, 3) or the quality of the investment has been improved. The transactions presented were executed in accordance with Section III Investment Objectives of the District's Investment Policy to 1) the yield of the portfolio has been increased and 2) the duration of the portfolio has been extended, as part of PFM's overall active management strategy for the District's Investment Portfolio, which should also increase the portfolio's total return. The performance of this portfolio should be evaluated based on the total return versus the District's Merrill Lynch 1-3 Year U.S. Treasury Index benchmark. PFM calculates the total return of the District's Investment Portfolio in a manner consistent with the CFA Institute's Global Investment Performance Standards. Notes: 1. The total estimated benefit from the transaction is based on the net of the benefit in yield and the gain or loss on the transaction. The benefit is calculated on a 30/360 day basis until the earlier of: 1) original maturity of the sold security, or 2) new maturity of the purchased security. Total purchase may not equal to proceeds from sold securities as a result of additional income included in purchase or from a portion of maturity not reinvested. Calculations based on lesser of amount sold or reinvested. PFM Asset Management LLC Section B - 6

16 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Trade Analysis for April 11, 2014 Transaction Date: April 11, 2014 Transaction Security Maturity Date Par Value Price Yield at Market Benefit Gain/Loss Additional Earnings Sold APPLE INC CORPORATE NOTES 5/3/2016 $325,00 $ % $ Purchased U.S. TREASURY NOTES 6/15/2016 $325,00 $ % 0.021% Total Estimated Benefit from Transaction to Original Maturity $ Total Estimated Benefit from Transactions $ Transaction Commentary: In accordance with Section III. Investment Objectives, of the District's Investment Policy, from time to time, securities may be traded for other similar securities to improve yield, maturity, or credit risk. For these transactions, a loss may be incurred for accounting purposes, provided any of the following occurs with respect to the replacement security: 1) The yield has been increased, 2) the maturity has been reduced, or lengthened, 3) or the quality of the investment has been improved. The transactions presented were executed in accordance with Section III Investment Objectives of the District's Investment Policy to 3) the quality of the investment has been improved, as part of PFM's overall active management strategy for the District's Investment Portfolio, which should also enhance the safety of the portfolio. The performance of this portfolio should be evaluated based on the total return versus the District's Merrill Lynch 1-3 Year U.S. Treasury Index benchmark. PFM calculates the total return of the District's Investment Portfolio in a manner consistent with the CFA Institute's Global Investment Performance Standards. Notes: 1. The total estimated benefit from the transaction is based on the net of the benefit in yield and the gain or loss on the transaction. The benefit is calculated on a 30/360 day basis until the earlier of: 1) original maturity of the sold security, or 2) new maturity of the purchased security. Total purchase may not equal to proceeds from sold securities as a result of additional income included in purchase or from a portion of maturity not reinvested. Calculations based on lesser of amount sold or reinvested. PFM Asset Management LLC Section B - 7

17 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Trade Analysis for May 9, 2014 Transaction Date: May 9, 2014 Transaction Security Maturity Date Par Value Price Yield at Market Benefit Gain/Loss Additional Earnings Sold TOYOTA MOTOR CORPORATE NOTES 2/17/2015 $1,110,00 $ % $2, Purchased U.S. TREASURY NOTES 11/30/2017 $1,110,00 $ % 0.937% 8, Total Estimated Benefit from Transaction to Original Maturity $10, Total Estimated Benefit from Transactions $10, Transaction Commentary: In accordance with Section III. Investment Objectives, of the District's Investment Policy, from time to time, securities may be traded for other similar securities to improve yield, maturity, or credit risk. For these transactions, a loss may be incurred for accounting purposes, provided any of the following occurs with respect to the replacement security: 1) The yield has been increased, 2) the maturity has been reduced, or lengthened, 3) or the quality of the investment has been improved. The transactions presented were executed in accordance with Section III Investment Objectives of the District's Investment Policy to 1) the yield of the portfolio has been increased, 2) the duration of the portfolio has been extended, and 3) the quality of the investment has been improved, as part of PFM's overall active management strategy for the District's Investment Portfolio, which should also increase the portfolio's total return. The performance of this portfolio should be evaluated based on the total return versus the District's Merrill Lynch 1-3 Year U.S. Treasury Index benchmark. PFM calculates the total return of the District's Investment Portfolio in a manner consistent with the CFA Institute's Global Investment Performance Standards. Notes: 1. The total estimated benefit from the transaction is based on the net of the benefit in yield and the gain or loss on the transaction. The benefit is calculated on a 30/360 day basis until the earlier of: 1) original maturity of the sold security, or 2) new maturity of the purchased security. Total purchase may not equal to proceeds from sold securities as a result of additional income included in purchase or from a portion of maturity not reinvested. Calculations based on lesser of amount sold or reinvested. PFM Asset Management LLC Section B - 8

18 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Trade Analysis for June 3, 2014 Transaction Date: June 3, 2014 Transaction Security Maturity Date Par Value Price Yield at Market Benefit Gain/Loss Additional Earnings Sold U.S. TREASURY NOTES 11/30/2017 $1,110,00 $ % $5, Purchased U.S. TREASURY NOTES 1/31/2017 $1,110,00 $ % % (11,100.31) Total Estimated Benefit from Transaction to Original Maturity ($5,999.37) Transaction Security Maturity Date Par Value Price Yield at Market Benefit Gain/Loss Additional Earnings Sold FNMA NOTES 3/16/2015 $3,360,00 $ % $6, Purchased 5/31/2016 $3,360,00 $ % 0.387% 10, Total Estimated Benefit from Transaction to Original Maturity $16, Transaction Security Maturity Date Par Value Price Yield at Market Benefit Gain/Loss Additional Earnings Sold FNMA NOTES 5/27/2015 $1,485,00 $ % $6, Purchased 5/31/2016 $1,485,00 $ % 0.259% 3, Total Estimated Benefit from Transaction to Original Maturity $10, Transaction Security Maturity Date Par Value Price Yield at Market Benefit Gain/Loss Additional Earnings Sold GENERAL ELECTRIC NOTES 1/9/2015 $2,100,00 $ % $24, Purchased 5/31/2016 $2,155,00 $ % 0.138% 1, Total Estimated Benefit from Transaction to Original Maturity $26, Total Estimated Benefit from Transactions $47, Total Estimated Benefit from All Second Quarter Transactions $93, Transaction Commentary: In accordance with Section III. Investment Objectives, of the District's Investment Policy, from time to time, securities may be traded for other similar securities to improve yield, maturity, or credit risk. For these transactions, a loss may be incurred for accounting purposes, provided any of the following occurs with respect to the replacement security: 1) The yield has been increased, 2) the maturity has been reduced, or lengthened, 3) or the quality of the investment has been improved. The transactions presented were executed in accordance with Section III Investment Objectives of the District's Investment Policy to 1) the yield of the portfolio has been increased, 2) the duration of the portfolio has been extended, and 3) the quality of the investment has been improved, as part of PFM's overall active management strategy for the District's Investment Portfolio, which should also increase the portfolio's total return. The performance of this portfolio should be evaluated based on the total return versus the District's Merrill Lynch 1-3 Year U.S. Treasury Index benchmark. PFM calculates the total return of the District's Investment Portfolio in a manner consistent with the CFA Institute's Global Investment Performance Standards. Notes: 1. The total estimated benefit from the transaction is based on the net of the benefit in yield and the gain or loss on the transaction. The benefit is calculated on a 30/360 day basis until the earlier of: 1) original maturity of the sold security, or 2) new maturity of the purchased security. Total purchase may not equal to proceeds from sold securities as a result of additional income included in purchase or from a portion of maturity not reinvested. Calculations based on lesser of amount sold or reinvested. PFM Asset Management LLC Section B - 9

19 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Short Term Portfolio Statistics Amortized Cost 1,2,3 Amortized Cost 1,2,3 Market Value 1,2,3 Market Value 1,2,3 Duration (Years) Account Name June 30, 2014 March 31, 2014 June 30, 2014 March 31, 2014 June 30, 2014 Short Term Portfolio $90,070, $359,943, $90,077, $359,999, Yield to Maturity Yield to Maturity Yield to Maturity Yield to Maturity at Cost 4 at Cost 4 at Market at Market Duration (Years) Account Name June 30, 2014 March 31, 2014 June 30, 2014 March 31, 2014 March 31, 2014 Short Term Portfolio 0.14% 0.22% 0.08% 0.12% 0.20 Benchmarks June 30, 2014 March 31, 2014 Merrill Lynch 3 Month U.S. Treasury Bill Index % 0.03% Notes: 1. End of quarter trade-date market values of portfolio holdings, including accrued interest. 2. In order to comply with GASB accrual accounting reporting requirements; forward settling trades are included in the monthly balances. 3. Excludes any money market fund/cash balances held in custodian account. 4. Past performance is not indicative of future results. 5. Month end yield, source Bloomberg. Benchmark is pursuant to the Investment Policy. PFM Asset Management LLC Section C - 1

20 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Short Term Composition and Credit Quality Characteristics Security Type 1 June 30, 2014 % of Portfolio March 31, 2014 % of Portfolio Cash/ Money Market Fund $ 0.0% $ 0.0% U.S. Treasuries 0.0% 0.0% Federal Agencies 90,077, % 90,051, % Commercial Paper 0.0% 269,948, % Certificates of Deposit 0.0% 0.0% Bankers Acceptances 0.0% 0.0% Repurchase Agreements 0.0% 0.0% Mortgage Backed 0.0% 0.0% Corporate Notes/Bonds 0.0% 0.0% Totals $90,077, % $359,999, % Federal Agency Obligations 10% Portfolio Composition as of 06/30/14 Credit Quality Distribution as of 06/30/14² A-1+ (Shortterm) 10% 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 C - 2

21 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 Short Term Maturity Distribution Maturity Distribution 1 June 30, 2014 March 31, 2014 Overnight $ $ Under 6 Months 90,077, ,009, Months 9,990, Years 2-3 Years 3-4 Years 4-5 Years 5 Years and Over Totals $90,077, $359,999, % Portfolio Maturity Distribution¹ June 30, % 100% 97% March 31, 2014 Percentage of Total Portfolio 80% 60% 40% 20% 0% 0% 3% 0% 0% 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 C - 3

22 Palm Beach County School District Asset Allocation as of June 30, 2014* Fixed Income Money Market Mutual Funds 0.14% State and/or Local Government Debt 0.57% Corporate Notes 1.87% Intergovernmental Investment Pools FEITF 19.63% Bank Cash 38.13% Florida SBA Fund and Fund B 0.01% United States Treasury Securities 13.57% Commercial Paper 1.50% Federal Instrumentalities 24.59% Security Type 1 Amortized Cost (Includes Interest) Allocation Percentage Notes Permitted by Policy In Compliance Florida SBA Fund and Fund B 36, % 2 25% YES United States Treasury Securities 56,108, % 100% YES United States Government Agency Securities - % 50% YES Federal Instrumentalities 101,683, % 3 80% YES Mortgage-Backed Securities - % 3 20% YES Certificates of Deposit or Savings Accounts - % 25% YES Repurchase Agreements - % 50% YES Commercial Paper 6,194, % 35% YES Corporate Notes 7,714, % 15% YES Bankers' Acceptances - % 35% YES State and/or Local Government Debt 2,356, % 20% YES Fixed Income Money Market Mutual Funds 591, % 75% YES Short Term Bonds Funds - % 25% YES Intergovernmental Investment Pools - FEITF 81,155, % 25% YES Bank Cash 157,650, % 2 100% YES Notes: 1. End of month trade-date amortized cost of portfolio holdings, including accrued interest. 2. Managed by the School District. 3. The combined total of Federal Instrumentalities and Mortgage Backed Securities cannot be more than 80%. The combined total as of June 30, 2014 is 24.59%. * No Bond Proceeds PFM Asset Management LLC 1

23 Palm Beach County School District Asset Allocation as of June 30, 2014* Amortized Cost (Includes Interest) Allocation Percentage Permitted by Policy In Compliance Individual Issuer Breakdown Notes Government National Mortgage Association (GNMA) - % 25% YES Federal Farm Credit Bank (FFCB) - % 50% YES Federal Home Loan Bank (FHLB) 37,858, % 50% YES Federal National Mortgage Association (FNMA) 2,584, % 50% YES Federal Home Loan Mortgage Corporation (FHLMC) 61,240, % 50% YES BNP Paribas Finance Inc. Commercial Paper 4,146, % 10% YES Bank of Tokyo Mitsubishi Commercial Paper 2,048, % 10% YES Toyota Corporate Notes 890, % 5% YES Berkshire Hathaway Corporate Notes 1,123, % 5% YES IBM Corporate Notes 2,497, % 5% YES Wal-Mart Corporate Notes 570, % 5% YES Apple Inc. Corporate Notes 574, % 5% YES Exxon Mobil Corporate Notes 1,077, % 5% YES Chevron Corporate Notes 530, % 5% YES Coca-Cola Corporate Notes 450, % 5% YES Mississippi State Taxable GO Municipal Bond 281, % 20% YES Regional Trans Authority, IL Taxable Revenue Bonds 2,075, % 20% YES Florida PRIME 30, % 25% YES Florida SBA Fund B 5, % N/A YES Money Market Fund - Goldman Bank of America 100, % 25% YES Money Market Fund - Morgan Stanley 101, % 25% YES Money Market Fund - TD Bank 390, % 25% YES PFM Asset Management LLC 2

24 Palm Beach County School District Investment Report - Quarter Ended June 30, 2014 TAB III

25 Customer Service PO Box Harrisburg, PA PALM BEACH COUNTY SCHOOL DISTRICT, FL ACCOUNT STATEMENT For the Month Ending June 30, 2014 Client Management Team Steven Alexander, CTP, CGFO Managing Director 300 South Orange Avenue, Suite 1170 Orlando, FL Scott Stitcher, CFA Senior Managing Consultant 300 S. Orange Avenue, Ste Orlando, Fl Contents Cover/Disclosures Summary Statement Individual Accounts Accounts included in Statement PALM BEACH CNTY FL S/D PALM BEACH COUNTY SD SHORT TERM FUND Gregg Manjerovic, CFA Director One Keystone Plaza, Suite 300 Harrisburg, PA PALM BEACH COUNTY SCHOOL DISTRICT, FL MS. ANGELA ALETTO Rebecca Geyer, CTP Senior Analyst 300 South Orange Street, Suite 1170 Orlando, FL Online Access Customer Service

26 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 and that 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 or at the FINRA Regulation Internet website address 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 June 30, 2014 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

27 PALM BEACH COUNTY SCHOOL DISTRICT, FL Portfolio Summary Consolidated Summary Statement Investment Allocation Account Statement For the Month Ending June 30, 2014 Portfolio Holdings Cash Dividends and Income Closing Market Value PFM Managed Account 222, ,925, Total $222, $83,925, Investment Type Closing Market Value Percent Commercial Paper 6,195, Corporate Note 7,720, Federal Agency Bond / Note 11,618, Municipal Bond / Note 2,352, U.S. Treasury Bond / Note 56,039, Total $83,925, % Maturity Distribution (Fixed Income Holdings) Sector Allocation Portfolio Holdings Closing Market Value Percent Under 30 days 31 to 60 days 61 to 90 days 91 to 180 days 181 days to 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years 6,195, , ,153, ,060, Total $83,925, Weighted Average Days to Maturity % US TSY Bond / Note 66.78% Commercial Paper 7.38% Corporate Note 9.20% Fed Agy Bond / Note 13.84% Muni Bond / Note 2.80% Summary Page 1

28 PALM BEACH COUNTY SCHOOL DISTRICT, FL Consolidated Summary Statement Account Statement For the Month Ending June 30, 2014 Account Number Account Name Opening Market Value Purchases / Deposits Redemptions / Sales/ Maturities Unsettled Trades Change in Value Closing Market Value Cash Dividends and Income PALM BEACH CNTY FL S/D 83,995, ,114, (8,075,213.56) (108,565.68) 83,925, , PALM BEACH COUNTY SD SHORT 130,067, (40,000,00) 10, ,077, ,00 TERM FUND Total $214,062, $8,114, ($48,075,213.56) $ ($97,910.35) $174,003, $268, Summary Page 2

29 Managed Account Summary Statement For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D Transaction Summary - Managed Account Cash Transactions Summary - Managed Account Opening Market Value $83,995, Maturities/Calls Principal Dispositions Principal Acquisitions Unsettled Trades Change in Current Value (8,075,213.56) 8,114, (108,565.68) Reconciling Transactions Closing Market Value $83,925, Maturities/Calls Sale Proceeds Coupon/Interest/Dividend Income Principal Payments Security Purchases Net Cash Contribution 8,096, , (8,117,858.23) Earnings Reconciliation (Cash Basis) - Managed Account Cash Balance Interest/Dividends/Coupons Received Less Purchased Interest Related to Interest/Coupons Plus Net Realized Gains/Losses 178, (3,515.26) 47, Closing Cash Balance $390, Total Cash Basis Earnings $222, Earnings Reconciliation (Accrual Basis) Total Ending Amortized Value of Securities Ending Accrued Interest Plus Proceeds from Sales Plus Proceeds of Maturities/Calls/Principal Payments Plus Coupons/Dividends Received Less Cost of New Purchases Less Beginning Amortized Value of Securities Less Beginning Accrued Interest 83,842, , ,096, , (8,117,858.23) (83,799,642.31) (247,227.74) Total Accrual Basis Earnings $76, Account Page 1

30 Portfolio Summary and Statistics For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D Account Summary Sector Allocation Description Par Value Market Value Percent U.S. Treasury Bond / Note 55,145,00 56,039, Municipal Bond / Note 2,350,00 2,352, Federal Agency Bond / Note 11,570,00 11,618, Corporate Note 7,710,00 7,720, Commercial Paper 6,200,00 6,195, Managed Account Sub-Total 82,975,00 83,925, % Accrued Interest 145, Total Portfolio 82,975,00 84,071, Commercial Paper 7.38% Corporate Note 9.20% Fed Agy Bond / Note 13.84% Unsettled Trades US TSY Bond / Note 66.78% Muni Bond / Note 2.80% Maturity Distribution Characteristics 53.80% Yield to Maturity at Cost Yield to Maturity at Market 0.51% 0.45% 38.20% Duration to Worst Weighted Average Days to Maturity % 0.62% % % % 0-6 Months 6-12 Months 1-2 Years 2-3 Years 3-4 Years 4-5 Years Over 5 Years Account Page 2

31 Managed Account Issuer Summary For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D Issuer Summary Credit Quality (S&P Ratings) Issuer APPLE INC BERKSHIRE HATHAWAY INC BNP PARIBAS CHEVRON CORP COCA-COLA COMPANY EXXON MOBIL CORP FANNIE MAE FEDERAL HOME LOAN BANKS FREDDIE MAC IBM CORP MISSISSIPPI STATE MITSUBISHI UFJ FINANCIAL GROUP INC REGIONAL TRANS AUTH, IL TOYOTA MOTOR CORP UNITED STATES TREASURY WAL-MART STORES INC Market Value of Holdings Percent 573, ,126, ,147, , , ,076, ,587, ,572, ,458, ,495, , ,048, ,071, , ,039, , AAA 1.28% AA- 4.04% AA % A % AA 6.00% Total $83,925, % Account Page 3

32 Managed Account Detail of Securities Held For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D 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 Par DTD 08/15/ % 08/15/ EE6 1,025,00 AA+ Aaa 01/07/14 01/09/14 1,089, , ,070, ,071, DTD 09/30/ % 09/30/ NZ9 1,860,00 AA+ Aaa 08/29/12 08/30/12 1,909, , ,880, ,884, DTD 11/30/ % 11/30/ PJ3 1,115,00 AA+ Aaa 11/01/12 11/05/12 1,148, , ,130, ,133, DTD 12/31/ % 12/31/ PM6 5,025,00 AA+ Aaa 12/18/12 12/20/12 5,288, ,155, ,165, DTD 01/15/ % 01/15/ UG3 425,00 AA+ Aaa 01/30/13 02/04/13 424, , , DTD 02/15/ % 02/15/ UM0 9,175,00 AA+ Aaa 02/04/14 02/06/14 9,183, , ,182, ,185, DTD 05/02/ % 04/30/ QF0 3,060,00 AA+ Aaa 03/27/13 04/01/13 3,211, , ,150, ,150, DTD 06/02/ % 05/31/ WM8 7,000,00 AA+ Aaa 06/02/14 06/03/14 6,998, , ,998, ,993, DTD 06/17/ % 06/15/ VG2 325,00 AA+ Aaa 04/08/14 04/11/14 324, , , DTD 06/30/ % 06/30/ KZ2 1,080,00 AA+ Aaa 05/10/13 05/15/13 1,175, ,141, ,139, DTD 06/30/ % 06/30/ KZ2 2,320,00 AA+ Aaa 05/29/13 05/31/13 2,513, ,445, ,448, DTD 06/30/ % 06/30/ KZ2 2,430,00 AA+ Aaa 05/22/13 05/28/13 2,639, ,565, ,564, DTD 08/15/ % 08/15/ FQ8 1,025,00 AA+ Aaa 01/06/14 01/09/14 1,138, , ,117, ,119, DTD 08/31/ % 08/31/ RF9 3,180,00 AA+ Aaa 08/29/13 08/30/13 3,197, , ,192, ,212, Account Page 4

33 Managed Account Detail of Securities Held For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D 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 Par DTD 08/31/ % 08/31/ RF9 4,905,00 AA+ Aaa 02/27/14 02/28/14 4,966, , ,958, ,955, DTD 11/30/ % 11/30/ RU6 3,500,00 AA+ Aaa 10/31/13 11/01/13 3,526, , ,521, ,521, DTD 11/30/ % 11/30/ RU6 4,380,00 AA+ Aaa 11/27/13 12/03/13 4,419, , ,411, ,407, DTD 01/31/ % 01/31/ SC5 1,110,00 AA+ Aaa 06/02/14 06/03/14 1,115, , ,115, ,114, DTD 03/31/ % 03/31/ SM3 2,205,00 AA+ Aaa 03/19/14 03/21/14 2,209, , ,209, ,218, Security Type Sub-Total 55,145,00 56,482, , ,996, ,039, Municipal Bond / Note Par MS ST TXBL GO BONDS DTD 12/03/ % 12/01/ DQ7 275,00 AA Aa2 11/13/13 12/03/13 282, , , REGIONAL TRANS AUTH, IL TXBL REV BONDS DTD 05/07/ % 05/06/ X88 2,075,00 AA Aa3 04/24/14 05/07/14 2,073, , ,073, ,071, Security Type Sub-Total 2,350,00 2,356, , ,354, ,352, Federal Agency Bond / Note Par FANNIE MAE GLOBAL NOTES DTD 04/19/ % 05/27/ G0KM4 515,00 AA+ Aaa 04/17/12 04/19/12 513, , , FEDERAL HOME LOAN BANK GLOBAL NOTES DTD 08/09/ % 08/28/ V81 2,420,00 AA+ Aaa 08/08/13 08/09/13 2,419, , ,419, ,425, FREDDIE MAC GLOBAL NOTES DTD 07/11/ % 08/28/ G3ZA1 2,450,00 AA+ Aaa 07/30/12 07/31/12 2,452, , ,451, ,458, FHLB (CALLABLE) GLOBAL NOTES DTD 12/30/ % 12/30/ A0GK0 2,050,00 AA+ Aaa 12/12/13 12/30/13 2,049, ,049, ,050, Account Page 5

34 Managed Account Detail of Securities Held For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D 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 Federal Agency Bond / Note Par FANNIE MAE GLOBAL NOTES DTD 02/15/ % 03/30/ G0VA8 1,460,00 AA+ Aaa 02/14/13 02/15/13 1,458, , ,459, ,462, FNMA NOTES DTD 08/19/ % 09/28/ G0CM3 600,00 AA+ Aaa 10/01/13 10/03/13 608, , , , FEDERAL HOME LOAN BANKS (CALLABLE) DTD 03/27/ % 03/27/ A1CR7 2,075,00 AA+ Aaa 04/02/14 04/04/14 2,097, , ,092, ,096, Security Type Sub-Total 11,570,00 11,600, , ,593, ,618, Corporate Note Par WAL-MART STORES INC GLOBAL NOTES DTD 04/11/ % 04/11/ DE0 570,00 AA Aa2 04/04/13 04/11/13 569, , , APPLE INC GLOBAL NOTES DTD 05/03/ % 05/03/ AH3 575,00 AA+ Aa1 04/30/13 05/03/13 573, , , IBM CORP GLOBAL NOTES (EX-CALLABLE) DTD 05/07/ % 05/06/ HL8 2,500,00 AA- Aa3 05/02/13 05/07/13 2,492, , ,495, ,495, TOYOTA MOTOR CREDIT CORP DTD 05/17/ % 05/17/ TAL9 890,00 AA- Aa3 05/14/13 05/17/13 889, , , CHEVRON CORP GLOBAL NOTES DTD 06/24/ % 06/24/ AC4 530,00 AA Aa1 06/17/13 06/24/13 530, ,00 533, BERKSHIRE HATHAWAY FIN GLOBAL NOTES DTD 08/15/ % 08/15/ BX8 1,120,00 AA Aa2 08/06/13 08/15/13 1,119, , ,119, ,126, COCA-COLA CO/THE GLOBAL NOTES DTD 11/01/ % 11/01/ BD1 450,00 AA Aa3 10/29/13 11/01/13 449, , , EXXON MOBIL CORP NOTE DTD 03/20/ % 03/15/ GAA0 1,075,00 AAA Aaa 03/17/14 03/20/14 1,075, , ,075,00 1,076, Security Type Sub-Total 7,710,00 7,700, , ,703, ,720, Commercial Paper Par Account Page 6

35 Managed Account Detail of Securities Held For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D 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 Commercial Paper Par BNP PARIBAS FINANCE INC COMM PAPER -- 0% 10/20/ N1KL6 4,150,00 A-1 P-1 04/23/14 04/23/14 4,143, ,146, ,147, BANK OF TOKYO MITSUBISHI COMM PAPER -- 0% 11/07/ CL74 2,050,00 A-1 P-1 05/12/14 05/12/14 2,047, ,048, ,048, Security Type Sub-Total 6,200,00 6,191, ,194, ,195, Managed Account Sub-Total 82,975,00 84,331, , ,842, ,925, Securities Sub-Total Accrued Interest Total Investments $82,975,00 $84,331, % $145, $83,842, $83,925, $145, $84,071, Account Page 7

36 Managed Account Fair Market Value & Analytics For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D 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 U.S. Treasury Bond / Note DTD 08/15/ % 08/15/ EE6 1,025,00 MERRILL ,071, (18,017.90) 1, DTD 09/30/ % 09/30/ NZ9 1,860,00 JPMCHASE ,884, (24,484.22) 4, DTD 11/30/ % 11/30/ PJ3 1,115,00 BNP PARI ,133, (15,026.37) 2, DTD 12/31/ % 12/31/ PM6 5,025,00 CITIGRP ,165, (123,071.35) 9, DTD 01/15/ % 01/15/ UG3 425,00 CITIGRP , , DTD 02/15/ % 02/15/ UM0 9,175,00 CITIGRP ,185, , , DTD 05/02/ % 04/30/ QF0 3,060,00 CITIGRP ,150, (61,678.51) (351.32) DTD 06/02/ % 05/31/ WM8 7,000,00 BNP PARI ,993, (4,645.38) (4,708.27) DTD 06/17/ % 06/15/ VG2 325,00 MERRILL , DTD 06/30/ % 06/30/ KZ2 1,080,00 CITIGRP ,139, (35,395.31) (1,074.18) DTD 06/30/ % 06/30/ KZ2 2,320,00 HSBC ,448, (64,706.25) 3, DTD 06/30/ % 06/30/ KZ2 2,430,00 GOLDMAN ,564, (74,418.75) (647.72) DTD 08/15/ % 08/15/ FQ8 1,025,00 CITIGRP ,119, (18,777.94) 1, DTD 08/31/ % 08/31/ RF9 3,180,00 JPMCHASE ,212, , , DTD 08/31/ % 08/31/ RF9 4,905,00 BARCLAYS ,955, (11,115.34) (2,907.49) DTD 11/30/ % 11/30/ RU6 3,500,00 BARCLAYS ,521, (5,332.03) DTD 11/30/ % 11/30/ RU6 4,380,00 GOLDMAN ,407, (12,147.66) (4,649.44) Account Page 8

37 Managed Account Fair Market Value & Analytics For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D 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 U.S. Treasury Bond / Note DTD 01/31/ % 01/31/ SC5 1,110,00 CITIGRP ,114, (1,040.76) (869.04) DTD 03/31/ % 03/31/ SM3 2,205,00 BARCLAYS ,218, , , Security Type Sub-Total 55,145,00 56,039, (443,004.36) 42, Municipal Bond / Note MS ST TXBL GO BONDS DTD 12/03/ % 12/01/ DQ7 275,00 MORGANST , (2,285.25) (21.77) REGIONAL TRANS AUTH, IL TXBL REV BONDS DTD 05/07/ % 05/06/ X88 2,075,00 JPMCHASE ,071, (1,701.50) (1,806.68) Security Type Sub-Total 2,350,00 2,352, (3,986.75) (1,828.45) Federal Agency Bond / Note FANNIE MAE GLOBAL NOTES DTD 04/19/ % 05/27/ G0KM4 515,00 CITIGRP , , , FEDERAL HOME LOAN BANK GLOBAL NOTES DTD 08/09/ % 08/28/ V81 2,420,00 DEUTSCHE ,425, , , FREDDIE MAC GLOBAL NOTES DTD 07/11/ % 08/28/ G3ZA1 2,450,00 BNP PARI ,458, , , FHLB (CALLABLE) GLOBAL NOTES DTD 12/30/ % 12/30/ A0GK0 2,050,00 JPMCHASE 09/30/ ,050, FANNIE MAE GLOBAL NOTES DTD 02/15/ % 03/30/ G0VA8 1,460,00 CITIGRP ,462, , , FNMA NOTES DTD 08/19/ % 09/28/ G0CM3 600,00 RBS_SEC , (66.00) 2, FEDERAL HOME LOAN BANKS (CALLABLE) DTD 03/27/ % 03/27/ A1CR7 2,075,00 GOLDMAN 03/27/ ,096, (1,049.95) 4, Security Type Sub-Total 11,570,00 11,618, , , Account Page 9

38 Managed Account Fair Market Value & Analytics For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D 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 Corporate Note WAL-MART STORES INC GLOBAL NOTES DTD 04/11/ % 04/11/ DE0 570,00 MORGANST , , , APPLE INC GLOBAL NOTES DTD 05/03/ % 05/03/ AH3 575,00 GOLDMAN , (182.27) (583.24) IBM CORP GLOBAL NOTES (EX-CALLABLE) DTD 05/07/ % 05/06/ HL8 2,500,00 MERRILL ,495, , (426.89) TOYOTA MOTOR CREDIT CORP DTD 05/17/ % 05/17/ TAL9 890,00 CITIGRP , , , CHEVRON CORP GLOBAL NOTES DTD 06/24/ % 06/24/ AC4 530,00 BARCLAYS , , , BERKSHIRE HATHAWAY FIN GLOBAL NOTES DTD 08/15/ % 08/15/ BX8 1,120,00 WELLSFAR ,126, , , COCA-COLA CO/THE GLOBAL NOTES DTD 11/01/ % 11/01/ BD1 450,00 HSBC , (5.99) EXXON MOBIL CORP NOTE DTD 03/20/ % 03/15/ GAA0 1,075,00 HSBC ,076, , , Security Type Sub-Total 7,710,00 7,720, , , Commercial Paper BNP PARIBAS FINANCE INC COMM PAPER -- 0% 10/20/ N1KL6 4,150,00 BNP PARI ,147, , BANK OF TOKYO MITSUBISHI COMM PAPER -- 0% 11/07/ CL74 2,050,00 BTM_DIR ,048, Security Type Sub-Total 6,200,00 6,195, , , Managed Account Sub-Total 82,975,00 83,925, (405,268.90) 83, Account Page 10

39 Managed Account Fair Market Value & Analytics For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D Securities Sub-Total $82,975,00 $83,925, ($405,268.90) $83, % Accrued Interest $145, Total Investments $84,071, Account Page 11

40 Managed Account Security Transactions & Interest For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D Transaction Type Principal Trade Settle Security Description CUSIP Par Proceeds BUY Accrued Realized G/L Realized G/L Sale Interest Total Cost Amort Cost Method 06/02/14 06/02/14 06/03/14 DTD 06/02/ % 05/31/ /03/14 DTD 01/31/ % 01/31/ WM8 7,000,00 (6,998,359.38) (215.16) (6,998,574.54) SC5 1,110,00 (1,115,983.59) (3,300.10) (1,119,283.69) Transaction Type Sub-Total 8,110,00 (8,114,342.97) (3,515.26) (8,117,858.23) INTEREST 06/01/14 06/02/14 06/15/14 06/24/14 06/30/14 06/30/14 06/30/14 06/30/14 06/30/14 06/01/14 MS ST TXBL GO BONDS DTD 12/03/ % 12/01/ DQ7 275,00 2, , /02/14 MONEY MARKET FUND MONEY /15/14 DTD 06/17/ % 06/15/ /24/14 CHEVRON CORP GLOBAL NOTES DTD 06/24/ % 06/24/ /30/14 FHLB (CALLABLE) GLOBAL NOTES DTD 12/30/ % 12/30/ /30/14 DTD 06/30/ % 06/30/ /30/14 DTD 12/31/ % 12/31/ /30/14 DTD 06/30/ % 06/30/ /30/14 DTD 06/30/ % 06/30/ VG2 325, AC4 530,00 2, , A0GK0 2,050,00 3, , KZ2 2,320,00 37,70 37, PM6 5,025,00 53, , KZ2 2,430,00 39, , KZ2 1,080,00 17,55 17,55 Transaction Type Sub-Total 14,035,00 157, , SELL 06/02/14 06/02/14 06/02/14 06/03/14 FANNIE MAE GLOBAL NOTES DTD 02/06/ % 03/16/ /03/14 FANNIE MAE GLOBAL NOTES DTD 04/19/ % 05/27/ /03/14 DTD 11/30/ % 11/30/ G0HG1 3,360,00 3,366, , ,369, , , SPEC LOT 3135G0KM4 1,485,00 1,490, ,490, , , SPEC LOT UA6 1,110,00 1,094, ,094, , , SPEC LOT Account Page 12

41 Managed Account Security Transactions & Interest For the Month Ending June 30, 2014 PALM BEACH CNTY FL S/D Transaction Type Principal Trade Settle Security Description CUSIP Par Proceeds SELL Accrued Realized G/L Realized G/L Sale Interest Total Cost Amort Cost Method 06/02/14 06/03/14 GENERAL ELEC CAP CORP GLOBAL NOTES DTD 01/09/ % 01/09/ G5M2 2,100,00 2,123, ,06 2,141, , , SPEC LOT Transaction Type Sub-Total 8,055,00 8,075, , ,096, , , Managed Account Sub-Total (39,129.41) 175, , , , Total Security Transactions ($39,129.41) $175, $136, $47, $42, Account Page 13