HomeMy WebLinkAbout110519PREVISED
NOTICE OF THE
REGULAR SESSION OF
THE FOUNTAIN HILLS TOWN COUNCIL
TIME: 6:30 P.M.
WHEN: THURSDAY, MAY 19, 2011
WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS
16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ
Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call; a quorum of the Town’s
various Commissions or Boards may be in attendance at the Council meeting.
“Notice is hereby given that pursuant to A.R.S. §1 -602.A.9 , subject to certain specified statutory exceptions, parents have a right to
consent before the State or any of its political subdivisions make a video or audio recording of a minor child. Meetings of the Town
Council are audio and/or video recorded, and, as a result, proceedings in which children are present may be subject to such recording.
Parents in order to exercise their rights may either file written consent with the Town Clerk to such recording, or take personal action
to ensure that their child or children are not present when a recording may be made. If a child is present at the time a recording is
made, the Town will assume that the rights afforded parents pursuant to A.R.S. §1-602.A.9 have been waived.”
PROCEDURE FOR ADDRESSING THE COUNCIL
Anyone wishing to speak before the Council must fill out a speaker’s card and submit it to the
Town Clerk prior to Council discussion of that Agenda item. Speaker Cards are located in
the Council Chamber Lobby and near the Clerk’s position on the dais.
Speakers will be called in the order in which the speaker cards were received either by the Clerk
or the Mayor. At that time, speakers should stand and approach the podium. Speakers are
asked to state their name prior to commenting and to direct their comments to the Presiding
Officer and not to individual Councilmembers. Speakers’ statements should not be
repetitive. If a speaker chooses not to speak when called, the speaker will be deemed to have
waived his or her opportunity to speak on the matter. Speakers may not (i) reserve a portion
of their time for a later time or (ii) transfer any portion of their time to another speaker.
If there is a Public Hearing, please submit the speaker card to speak to that issue during
the Public Hearing.
Individual speakers will be allowed three contiguous minutes to address the Council. Time
limits may be waived by (i) discretion of the Town Manager upon request by the speaker not
less than 24 hours prior to a Meeting, (ii) consensus of the Council at Meeting or (iii) the
Mayor either prior to or during a Meeting. Please be respectful when making your
comments. If you do not comply with these rules, you will be asked to leave.
Mayor Jay T. Schlum
Councilmember Dennis Brown Councilmember Tait D. Elkie
Vice Mayor Dennis Contino Councilmember Cassie Hansen
Councilmember Ginny Dickey Councilmember Henry Leger
Z:\Council Packets\2011\R5-19-11\110519A.docx Last printed 5/16/2011 10:49 AM Page 2 of 3
CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Jay T. Schlum
INVOCATION – Pastor Steve Bergson, Shepherd of the Hills Lutheran Church
ROLL CALL – Mayor Jay T. Schlum
MAYOR’S REPORT
i) NONE
SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS
i) PRESENTATION by Enrique Melendez, Honorary Consul for the Republic of El
Salvador, relating to Team Ataco’s June 2, 2011 trip to El Salvador and the
community’s humanitarian efforts.
CALL TO THE PUBLIC
Pursuant to A.R.S. §38-431-01(G), public comment is permitted (not required) on matters not listed on the agenda. Any
such comment (i) must be within the jurisdiction of the Council and (ii) is subject to reasonable time, place, and manner
restrictions. The Council will not discuss or take legal action on matters raised during “Call to the Public” unless the
matters are properly noticed for discussion and legal action. At the conclusion of the call to the public, individual
Councilmembers may (i) respond to criticism, (ii) ask staff to review a matter or (iii) ask that the matter be placed on a
future Council agenda.
CONSENT AGENDA
1. CONSIDERATION of approving the TOWN COUNCIL MEETING MINUTES from May
5, 2011.
2. CONSIDERATION of approving RESOLUTION 2011-18, abandoning whatever right,
title, or interest the Town has in certain portions of the public utility and drainage easements
located at the side and rear property lines of Plat 605-C, Block 1, Lot 9 (11033 N. Pinto
Drive) as recorded in Book 164 of Maps, Page 14, Records of Maricopa County, Arizona.
EA11-03 (Soni)
REGULAR AGENDA
3. UPDATE by Chris Coyle, Allied Waste’s General Manager, relating to the
IMPLEMENTATION of Town-wide solid wastes services.
4. CONSIDERATION of RESOLUTION 2011-19, adopting the maximum amount for the
Town of Fountain Hills’ Fiscal Year 2011/12 tentative budget with appropriate direction to
publish said documents in accordance with state law. The Council may address any or all
items contained in the budget document and initiate any changes prior to the adoption.
5. DISCUSSION WITH POSSIBLE DIRECTION TO STAFF regarding the potential to have
the Fountain Hills Sanitary District assume the ongoing responsibility for the maintenance of
the effluent water quality in Fountain Park Lake and to potentially draft an agreement
between the Town and the District regarding the terms and conditions.
Z:\Council Packets\2011\R5-19-11\110519A.docx Last printed 5/16/2011 10:49 AM Page 3 of 3
6. CONSIDERATION of RESOLUTION 2011-16, declaring as a public record that certain
document filed with the Town Clerk and entitled the “Planned Area Development, Crestview
at Fountain Hills.”
7. PUBLIC HEARING of ORDINANCE 11-02, adopting the “Planned Area Development,
Crestview at Fountain Hills” by reference; providing for severability and proving for
penalties. Case #Z2010-05
8. CONSIDERATION of ORDINANCE 11-02, adopting the “Planned Area Development,
Crestview at Fountain Hills” by reference; providing for severability and proving for
penalties. Case #Z2010-05
9. PUBLIC HEARING of a SPECIAL USE PERMIT for AT&T Wireless Communications to
allow the installation of a 65’ tall cellular monopalm at 11807 N. Saguaro Boulevard, which
is located in the C-3 zoning district. Case # SU2010-04
10. CONSIDERATION of a SPECIAL USE PERMIT for AT&T Wireless Communications to
allow the installation of a 65’ tall cellular monopalm at 11807 N. Saguaro Boulevard, which
is located in the C-3 zoning district. Case # SU2010-04
11. CONSIDERATION of AUTHORIZING the Town Manager to approve Change Order
C2011-125.1 with Cactus Asphalt in an amount not to exceed $18,000.00.
12. CONSIDERATION of AUTHORIZING the Town Manager to approve Change Order
C2011-127.1 with Southwest Slurry Seal, Inc. in an amount not to exceed $68,000.00.
13. CONSIDERATION of AUTHORIZING the Town Manager to approve first amendment to
contract C2011-128 with Pavement Marking, Inc. in an amount not to exceed $12,500.00.
14. CONSIDERATION of APPROVING a Professional Services contract with PFM Asset
Management for investment management services of Town's funds.
15. COUNCIL DISCUSSION/DIRECTION to the Town Manager.
Items listed below are related only to the propriety of (i) placing such items on a future
agenda for action or (ii) directing staff to conduct further research and report back to the
Council:
A. None.
16. SUMMARY of Council requests and REPORT ON RECENT ACTIVITIES by the Town
Manager.
17. ADJOURNMENT.
DATED this 16th day of May 2011.
Bevelyn J. Bender, Town Clerk
The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call
480-816-5100 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to
participate in this meeting or to obtain agenda information in large print format. Supporting documentation and staff
reports furnished the Council with this agenda are available for review in the Clerk’s office.
NOTICE OF THE
REGULAR SESSION OF
THE FOUNTAIN HILLS TOWN COUNCIL
TIME: 6:30 P.M.
WHEN: THURSDAY, MAY 19, 2011
WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS
16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ
Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call; a quorum of the Town’s
various Commissions or Boards may be in attendance at the Council meeting.
“Notice is hereby given that pursuant to A.R.S. §1 -602.A.9 , subject to certain specified statutory exceptions, parents have a right to
consent before the State or any of its political subdivisions make a video or audio recording of a minor child. Meetings of the Town
Council are audio and/or video recorded, and, as a result, proceedings in which children are present may be subject to such recording.
Parents in order to exercise their rights may either file written consent with the Town Clerk to such recording, or take personal action
to ensure that their child or children are not present when a recording may be made. If a child is present at the time a recording is
made, the Town will assume that the rights afforded parents pursuant to A.R.S. §1-602.A.9 have been waived.”
PROCEDURE FOR ADDRESSING THE COUNCIL
Anyone wishing to speak before the Council must fill out a speaker’s card and submit it to the
Town Clerk prior to Council discussion of that Agenda item. Speaker Cards are located in
the Council Chamber Lobby and near the Clerk’s position on the dais.
Speakers will be called in the order in which the speaker cards were received either by the Clerk
or the Mayor. At that time, speakers should stand and approach the podium. Speakers are
asked to state their name prior to commenting and to direct their comments to the Presiding
Officer and not to individual Councilmembers. Speakers’ statements should not be
repetitive. If a speaker chooses not to speak when called, the speaker will be deemed to have
waived his or her opportunity to speak on the matter. Speakers may not (i) reserve a portion
of their time for a later time or (ii) transfer any portion of their time to another speaker.
If there is a Public Hearing, please submit the speaker card to speak to that issue during
the Public Hearing.
Individual speakers will be allowed three contiguous minutes to address the Council. Time
limits may be waived by (i) discretion of the Town Manager upon request by the speaker not
less than 24 hours prior to a Meeting, (ii) consensus of the Council at Meeting or (iii) the
Mayor either prior to or during a Meeting. Please be respectful when making your
comments. If you do not comply with these rules, you will be asked to leave.
Mayor Jay T. Schlum
Councilmember Dennis Brown Councilmember Tait D. Elkie
Vice Mayor Dennis Contino Councilmember Cassie Hansen
Councilmember Ginny Dickey Councilmember Henry Leger
Z:\Council Packets\2011\R5-19-11\110519A.docx Last printed 5/16/2011 9:04 AM Page 2 of 3
CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Jay T. Schlum
INVOCATION – Pastor Steve Bergson, Shepherd of the Hills Lutheran Church
ROLL CALL – Mayor Jay T. Schlum
MAYOR’S REPORT
i) NONE
SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS
i) PRESENTATION by Enrique Melendez, Honorary Consul for the Republic of El
Salvador, relating to Team Ataco’s June 2, 2011 trip to El Salvador and the
community’s humanitarian efforts.
CALL TO THE PUBLIC
Pursuant to A.R.S. §38-431-01(G), public comment is permitted (not required) on matters not listed on the agenda. Any
such comment (i) must be within the jurisdiction of the Council and (ii) is subject to reasonable time, place, and manner
restrictions. The Council will not discuss or take legal action on matters raised during “Call to the Public” unless the
matters are properly noticed for discussion and legal action. At the conclusion of the call to the public, individual
Councilmembers may (i) respond to criticism, (ii) ask staff to review a matter or (iii) ask that t he matter be placed on a
future Council agenda.
CONSENT AGENDA
1. CONSIDERATION of approving the TOWN COUNCIL MEETING MINUTES from May
5, 2011.
2. CONSIDERATION of approving RESOLUTION 2011-18, abandoning whatever right,
title, or interest the Town has in certain portions of the public utility and drainage easements
located at the side and rear property lines of Plat 605-C, Block 1, Lot 9 (11033 N. Pinto
Drive) as recorded in Book 164 of Maps, Page 14, Records of Maricopa County, Arizona.
EA11-03 (Soni)
REGULAR AGENDA
3. UPDATE by Chris Coyle, Allied Waste’s General Manager, relating to the
IMPLEMENTATION of Town-wide solid wastes services.
4. CONSIDERATION of RESOLUTION 2011-19, adopting the maximum amount for the
Town of Fountain Hills’ Fiscal Year 2011/12 tentative budget with appropriate direction to
publish said documents in accordance with state law. The Council may address any or all
items contained in the budget document and initiate any changes prior to the adoption.
5. DISCUSSION WITH POSSIBLE DIRECTION TO STAFF regarding the potential to have
the Fountain Hills Sanitary District assume the ongoing responsibility for the maintenance of
the effluent water quality in Fountain Park Lake and to potentially draft an agreement
between the Town and the District regarding the terms and conditions.
Z:\Council Packets\2011\R5-19-11\110519A.docx Last printed 5/16/2011 9:04 AM Page 3 of 3
6. CONSIDERATION of RESOLUTION 2011-16, declaring as a public record that certain
document filed with the Town Clerk and entitled the “Planned Area Development, Crestview
at Fountain Hills.”
7. PUBLIC HEARING of ORDINANCE 11-02, adopting the “Planned Area Development,
Crestview at Fountain Hills” by reference; providing for severability and proving for
penalties. Case #Z2010-05
8. CONSIDERATION of ORDINANCE 11-02, adopting the “Planned Area Development,
Crestview at Fountain Hills” by reference; providing for severability and proving for
penalties. Case #Z2010-05
9. PUBLIC HEARING of a SPECIAL USE PERMIT for AT&T Wireless Communications to
allow the installation of a 65’ tall cellular monopalm at 11807 N. Saguaro Boulevard, which
is located in the C-3 zoning district. Case # SU2010-04
10. CONSIDERATION of a SPECIAL USE PERMIT for AT&T Wireless Communications to
allow the installation of a 65’ tall cellular monopalm at 11807 N. Saguaro Boulevard, which
is located in the C-3 zoning district. Case # SU2010-04
11. CONSIDERATION of AUTHORIZING the Town Manager to approve Change Order
C2011-125.1 with Cactus Asphalt in an amount not to exceed $18,000.00.
12. CONSIDERATION of AUTHORIZING the Town Manager to approve Change Order
C2011-127.1 with Southwest Slurry Seal, Inc. in an amount not to exceed $68,000.00.
13. CONSIDERATION of AUTHORIZING the Town Manager to approve first amendment to
contract C2011-128 with Pavement Marking, Inc. in an amount not to exceed $12,500.00.
14. CONSIDERATION of APPROVING a Professional Services contract with PFM Asset
Management for investment management services of Town's funds.
15. COUNCIL DISCUSSION/DIRECTION to the Town Manager.
Items listed below are related only to the propriety of (i) placing such items on a future
agenda for action or (ii) directing staff to conduct further research and report back to the
Council:
A. None.
16. SUMMARY of Council requests and REPORT ON RECENT ACTIVITIES by the Town
Manager.
17. ADJOURNMENT.
DATED this 12th day of May 2011.
Bevelyn J. Bender, Town Clerk
The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call
480-816-5100 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to
participate in this meeting or to obtain agenda information in large print format. Supporting documentation and staff
reports furnished the Council with this agenda are available for review in the Clerk’s office.
2010-2011 Service Project
Hayley Rippy, Megan Engler, Kaylee Shields,
Kara Guy & Samantha VanZee
Students
Claire McWilliams
Hotel & Restaurant Mgt. Teacher/FCCLA Advisor
Fountain Hills High School
ORIGIN OF PROJECT:
•LOCAL and INTERNATIONAL cause in one project
•09’ Uganda backpack/school supply drive and trip
generated interest in international service
ORIGIN OF PROJECT:
We received two “tips” at the beginning of the school year:
•435 homes lost in a mudslide in our Sister City of
Ataco, El Salvador.
•Alumni lead: Children First Academy
“What does it feel like to be displaced from your home?”
“What does it feel like to be displaced from your home?”
PROJECT OBJECTIVES:
•Explore the impact of homelessness/displacement of
families both locally and globally.
•Develop our leadership skills through the design and
implementation of our service project.
•To foster a love of service, diverse cultures, and the ability
to make a difference.
PROJECT ACTIONS:
•Conducted a town-wide “Double Donation Drive” to benefit
a local partner (Children First Academy) and an international
cause (Sister City of Ataco, El Salvador) related to
homelessness/displacement.
•Planning and implementing a number of fundraisers to raise
money for home rebuilding in Ataco, El Salvador.
•Gained approval from the FH School Board to do an over-
seas service trip.
•Sending a delegation of FCCLA members to El Salvador to
assist with re-building efforts, and to bring cultural
information back to educate our fellow students and
community.
Formerly Thomas J.
Pappas School
Reopened 2008
Tempe, AZ
Charter School
Academic Instruction +
Special Services
Medical Care
Caring & Support
The “Double Drive” Concept:
“NEAR”
Children First Academy Used Children’s Clothing Drive:
Each student will receive a labeled bag with an invitation to fill it
with used clothing and hygiene items for the school’s “clothing
and supply room.”
November 9, 2009 435 Homes Lost
New Land Donated/Deeded “Fountain Hills of
Ataco”
The “Double
Drive” Concept:
“FAR”
Ataco House Milk Carton
Change Drive:
Elementary Age: Mini Carton
Change Bank (party for the
class who accumulates the
most points)
High School: Class vs. Class
Change War (giant change
banks, party for graduating
year with the most total
donations)
$975 in change was raised at
FHHS.
Dwight D. Eisenhower
1956
Increase diplomacy
2,000 cities
Fountain Hills Sister Cities (FHSC) President Sharon
Morgan and Honorary Consul Enrique Melendez have been
vital to connecting us with our international partner of Ataco,
El Salvador.
•Needs assessment
•Collaboration
•Guide, Bridge and Support for El Salvador Trip
ON-CAMPUS & LOCAL ACTIVITIES:
Enrique Melendez, Consulate to El Salvador,
Presentation/Meeting
“Double Drive”
Children First Academy Clothing Closet Set Up
Multiple Fundraisers on FHHS Campus for Ataco
rebuild
Multiple Fundraisers in Cooperation With FHSC
Side Local/Global Option: Feed My Starving Children
“Packing Party” in Tempe, AZ (October 29/30)
95 FCCLA members/parents learned about the impact
of starvation and pack nutritious meals for children all
over the world, including El Salvador.
Christina
In 2009, Feed
My Starving
Children
shipped more
than
3.8 million
meals
to El
Salvador.
About El Salvador
About El Salvador
FAST FACTS ON EL SALVADOR
Smallest & most densely-populated country in Central
America, but has 3rd largest economy
Industries/Exports: Textiles and apparel, ethyl alcohol,
coffee, sugar, medicines, iron and steel products, tuna,
light manufacturing, and paper products
Population of 7.1 million
Slightly smaller than the size of Massachusetts
37% of El Salvadorians live in rural areas
ANCIENT HISTORY
16th Century Spanish
Conquistadors took
over the area, calling it
the “Land of Our
Savior” hence El
Salvador.
Gains independence
from Spanish Crown
(September 15, 1821)
1820’s a “Federation of
Countries” was formed
in Central America
MORE RECENT HISTORY
Coffee plantation
profits/oligarchy of a small
number of affluent
families…various power
struggles between groups
throughout history finally
leading to…
Civil War (1980-1992)
Government
Mauricio Funes
Was a journalist and TV
host prior to winning
election in June 2009
Democratic Republic
government
84 member Legislative
Assembly
Indicator El Salvador United States
Average Annual Income (US Dollars)*2,850 46,040
Life Expectancy (years)72.06 78.14
Poverty Rate (%)30.7 12
Literacy Rate (%)80.2 99
Infant Mortality Rate (deaths per 1,000
births)22.19 6.3
Underweight children under age 5 (%)**10 2
THE ATACO
TRIP
Team Ataco
18 chaperones, community leaders, and alumni
44
Students
Tortugas Flores
Cascadas Volcanos
Del Sol
THE ATACO TRIP
FCCLA members will take a two-week
service trip to Ataco, El Salvador from
June 2-17th, 2011.
The group will be bussed to LAX and take a Taca Airlines
flight to the Comalapa Airport in the capital city of San
Salvador.
THE ATACO TRIP
Students will join sub-teams that would rotate through the
following activities:
1) Assist with the building of “Fountain Hills” of Ataco homes.
$1500
per house
to rebuild
Cement Floor
Wood Frame
Cement-board slats lock together to create walls
Corrugated Tin Roof
ACTIVITIES, Continued
Working with children in the local schools
Shadowing/observing in the local medical clinic
Miscellaneous community projects
Attending community and cultural events
Observing and learning from local artisans, sculptors,
craftspeople
Experiencing the natural wonders of El Salvador (zip lining,
Mayan ruins, water sports on a volcanic lake, etc.)
Hawksbill Sea Turtle Conservatory
Ataco, El Salvador
Elena
Challenges and
Thank You’s
Hiccups
We didn’t anticipate…
•Huge jumps in airline flight costs
•Passport requirement changes
•Concern about global travel, world events
•Exploding group size
•Organizational workload/tasks
•There’s no Home Depot in El Salvador! (supplies/worksite
challenges)
Gratitude
Enrique Melendez and his brother Carlos Araujo have been
INSTRUMENTAL in guiding us through red tape, procedures,
and protocol involved in a joint project in a foreign country.
“You don’t know what you don’t
know.”
They have been our guides through the “unknowns” that have
popped up along the way.
Sharon Morgan…instrumental in MAKING THINGS HAPPEN!
Mayor Oscar Gomez…essential to our success with the
rotations in Ataco.
Thankful to be in a district that allows educational opportunities
like these to happen!
¡Vayamos!
To join our travel blog email list, send an email to:
cmcwilliams@fhusd.org
Team Ataco will invite the community for an
evening of sharing about our experiences and
celebration upon our return.
We hope you will join us!
¿Preguntas?
Town of Fountain Hills
Allied Waste Services –A Partner
You Can Count On
Customer Service, Priority One
Excellent Customer Service,
Excellent Customer Quality
Customer Service, Priority One
All at a great low price
Price Fixed for 3 years until 2014
$11.44 for Standard Service/Month
Customer Service Team You Can
Count On
Customer Service
Customer Value
March 1
New Rates Available for Residents
New and Existing Customers
4000 Customers Received New Rates
Customer Quality
Quality Curbside Service
Customer Operations
Part Time Residents
Call for Vacation hold
with Start and End Dates
No Charge
Cart Set Out
Set out before 6 AM on
your service day
Place your cart where
you’ve always placed it –
keep carts 3’ apart
Customer Operations
Customer Operations
Did you know?
Residential Truck burns 4.78 gallons per hour
Diesel Price Increased $1.20/gallon since the
RFP
No Rate Adjustment until 2014
Customer Outreach
Arts and Crafts Festival
St. Patrick’s Day Celebration
Document Shredding Event
HOA Q & A’s with Board Members
and Community Residents
Community Events
Customer Outreach
Delivery Schedule
All carts ordered with delivery to AW by May 31 st
Existing AW Customers receive new carts 1 st half
of June
New Customers receive carts 2 nd half of June
Activities to Date
Customer Sign-Ups
Total New Customers (as of 5/4/11)2282 100%
Once a Week Trash with Once a Week
Recycle 1980 87%
Twice a Week Trash with or without Recycle 253 11%
Once a Week Trash with Two Carts 49 2%
Town of Fountain Hills
Questions?
APPROVAL of the Special Use Permit for a
65’ Tall Monopalm Communications Tower
Subject to:
The eight foot masonry wall surrounding the ground equipment finished to
match existing structures.
Three additional palm trees with a minimum height of 20’
Development per FM Group Inc. plans dated 3/31/11
Development per the photo-sims included in the application and attached
to the staff report.
Redacted
Redacted
Redacted
Redacted
Town of Fountain Hills
Pavement Management Program
May 19, 2011Paul Mood, P.E.
Zone 5 Pavement Management Area
Zone 5 Crack Seal, TRMSS and Slurry Seal
Zone 5 Pavement Markings
Project Costs
Crack Seal $115,000
TRMSS $110,000
Slurry Seal $155,000
Markings $16,000
$396,000
FHSD ASR Well #5 Project
Downtown Pavement Management –Project Limits
Downtown Project Cost Summary
Downtown Project Cost Town Funding FHSD Funding
Crack Seal $18,000 $11,850 $6,150
Slurry Seal $68,000 $42,850 $25,150
Markings $16,000 $13,400 $2,600
$102,000 $68,100 $33,900
Project Cost Summary
Zone 5 Project Cost Downtown Project Cost Town Funding FHSD Funding
Crack Seal $115,000 Crack Seal $18,000 $126,850 $6,150
TRMSS $110,000 TRMSS $0 $110,000 $0
Slurry Seal $155,000 Slurry Seal $68,000 $197,850 $25,150
Markings $16,000 Markings $16,000 $29,400 $2,600
$396,000 $102,000 $464,100 $33,900
Total Project Cost =$498,000
QUESTIONS?
Contact:
Paul Mood (480) 816-5129 pmood@fh.az.gov
1489861.1
PROFESSIONAL SERVICES AGREEMENT
BETWEEN
THE TOWN OF FOUNTAIN HILLS
AND
PFM ASSET MANAGEMENT LLC
THIS PROFESSIONAL SERVICES AGREEMENT (this “Agreement”) is entered into
as of May 5, 2011, between the Town of Fountain Hills, an Arizona municipal corporation (the
“Town”) and PFM ASSET MANAGEMENT LLC, a Delaware limited liability company (the
“Contractor”).
RECITALS
A. After a competitive bidding process, the Town of Goodyear entered into Contract
No. CON-11-1676 dated February 14, 2011, with the Contractor to provide investment
management services (the “Goodyear Contract”). A copy of the Goodyear Contract is attached
hereto as Exhibit A and incorporated herein by reference.
B. The Town is permitted to purchase investment management services under the
Goodyear Contract without further public bidding, and the Goodyear Contract permits its
cooperative use by other Arizona municipalities including the Town.
C. The Town desires to purchase investment management services (the “Services”)
under the Goodyear Contract for a lower cost than would otherwise be available.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated
herein by reference, the following mutual covenants and conditions, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Town and the
Contractor hereby agree as follows:
1. Term of Agreement. This Agreement shall be effective as of the date first set
forth above and shall remain in full force and effect until February 14, 2012 (the “Initial Term”),
unless terminated as otherwise provided pursuant to the terms and conditions of the Goodyear
Contract. After the expiration of the Initial Term, this Agreement may be renewed for up to four
successive one-year terms (each a “Renewal Term”) if (a) it is deemed in the best interests of the
Town, subject to availability and appropriation of funds for renewal in each subsequent year and
(b) the term of the Goodyear Contract has been extended pursuant to its renewal options. The
Initial Term and any Renewal Terms are collectively referred to as the “Term.” Upon renewal,
the terms and conditions of this Agreement shall remain in full force and effect. At least 30 days
prior to the expiration of either the Initial Term or any of the Renewal Terms, the Town shall
provide written notification to the Contractor of its intention to extend or terminate the
Agreement.
1489861.1
2
2. Scope of Work. Contractor shall provide the Services as more particularly set
forth in the Goodyear Contract, attached hereto as Exhibit A, and pursuant to instructions from
the Town.
3. Compensation. The Town shall pay Contractor for the Services at the rates as set
forth in the Fee Schedule included in the Goodyear Contract, attached hereto as Exhibit A.
4. Payments. The Town shall pay the Contractor monthly, based upon work
performed and completed to date, and upon submission and approval of invoices. All invoices
shall document and itemize all work completed to date. The invoice statement shall include a
record of time expended and work performed in sufficient detail to justify payment.
5. Records and Audit Rights. Contractor’s and its subcontractor’s books, records,
correspondence, accounting procedures and practices, and any other supporting evidence relating
to this Agreement, including the papers of any Contractor and its subcontractors’ employees who
perform any work or Services pursuant to this Agreement to ensure that the Contractor and its
subcontractors are complying with the warranty under Section 6 below (all the foregoing
hereinafter referred to as “Records”), shall be open to inspection and subject to audit and/or
reproduction during normal working hours by the Town, to the extent necessary to adequately
permit (a) evaluation and verification of any invoices, payments or claims based on Contractor’s
and its subcontractors’ actual costs (including direct and indirect costs and overhead allocations)
incurred, or units expended directly in the performance of work under this Agreement and (b)
evaluation of the Contractor’s and its subcontractors’ compliance with the Arizona employer
sanctions laws referenced in Section 6 below. To the extent necessary for the Town to audit
Records as set forth in this subsection, Contractor and its subcontractors hereby waive any rights
to keep such Records confidential. For the purpose of evaluating or verifying such actual or
claimed costs or units expended, the Town shall have access to said Records, even if located at
its subcontractors’ facilities, from the effective date of this Agreement for the duration of the
work and until three years after the date of final payment by the Town to Contractor pursuant to
this Agreement. Contractor and its subcontractors shall provide the Town with adequate and
appropriate workspace so that the Town can conduct audits in compliance with the provisions of
this subsection. The Town shall give Contractor or its subcontractors reasonable advance notice
of intended audits. Contractor shall require its subcontractors to comply with the provisions of
this subsection by insertion of the requirements hereof in any subcontract pursuant to this
Agreement.
6. E-verify Requirements. To the extent applicable under ARIZ. REV. STAT. § 41-
4401, the Contractor and its subcontractors warrant compliance with all federal immigration laws
and regulations that relate to their employees and compliance with the E-verify requirements
under ARIZ. REV. STAT. § 23-214(A). Contractor’s or its subcontractor’s failure to comply with
such warranty shall be deemed a material breach of this Agreement and may result in the
termination of this Agreement by the Town.
7. Scrutinized Business Operations. Pursuant to ARIZ. REV. STAT. §§ 35-391.06 and
35-393.06, the Contractor certifies that it does not have scrutinized business operations in Sudan
or Iran. For the purpose of this subsection the term “scrutinized business operations” shall have
the meanings set forth in ARIZ. REV. STAT. § 35-391 or 35-393, as applicable. If the Town
INWITNESSWHEREOF,thepartiesheretohaveexecutedthisAgreementasofthedate
andyearfirstsetforthabove.
"Town""Contractor"
TOWNOFFOUNTAINHlLLS,an
Arizonamunicipalcorporation
PFMASSETMANAGEMENTLLC,a
Delawarelimitedliabilitycompany
RichardL.Davis,TownManager
ATTEST:Name:Lav.~l.~('Cfl)-
Bevelyn J.Bender,TownClerk
Title:~()<::s b.M.c.W
1489861.2
4
1489861.1
4
(ACKNOWLEDGEMENTS)
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
This instrument was acknowledged before me on , 2011,
by Richard L. Davis, the Town Manager of the TOWN OF FOUNTAIN HILLS, an Arizona
municipal corporation, on behalf of the Town of Fountain Hills.
Notary Public in and for the State of Arizona
My Commission Expires:
STATE OF )
) ss.
COUNTY OF )
This instrument was acknowledged before me on , 2011,
by as of PFM ASSET MANAGEMENT
LLC, a Delaware limited liability company, on behalf of the company.
Notary Public in and for the State of
My Commission Expires:
1489861.1
EXHIBIT A
TO
PROFESSIONAL SERVICES AGREEMENT
BETWEEN
THE TOWN OF FOUNTAIN HILLS
AND
PFM ASSET MANAGEMENT LLC
[Goodyear Contract]
See following pages.
/
OFFER and ACEPTANCE FORM
OP 11-1676
OFFER
To the City of Goodyear:The undersigned,on behalf of the entity,firm,company,partnership,or other legal entity
listed below,offers to the City an Agreement that contains all terms,conditions,specifications,amendments,and
addenda in this Proposal!Agreement.The term Agreement shall mean and consist of the following documents,if
applicable:1)Standard Terms and Conditions;2)Special Terms and Conditions;3)Scope of Work or
Specifications and Fee Schedule (if separate from Special Terms and Conditions;4)any attachments referenced
herein;5)any amendments or addenda;and 6)the offer and acceptance.
City of Goodyear ••.'1/
Business Registration Number:._':..-L.•••...:.A->-_For clarification of this offer contact:
Federal Employer Identification
Number:'2.;33 010]0 i?>4
Name:CAA\6 CJRjfc::;lpJ>
Email:C.l..-L~O~\?C@YFt-A .l0M
Telephone:(4'0
Company Name
Address Printed Name
City State Zip Code Title Date
ACCEPTANCE OF OFFER AND CONTRACT AWARD (For City of Goodyear Use Only)
Your offer is accepted.The Contractor is now bound to sell the materials and/or services listed by the attached
award notice based upon the Request for Proposal,including all terms conditions,specifications,amendments,
addenda,etc.,and the Contractor's offer as accepted by the City.The Contractor is cautioned not to commence
any billable work or provide any material,service or construction under this contract until Contractor receives an
executed Purchase Order.
City Manager
FOR
N/A City of Goodyear,Arizona.Eft.Date:~-/'if -/JI
Attested by:
Contract Number
CON-11-1676
Official File
Page 2 of25
Page 1 of 25
Request For Proposals
No:
OP 11-1676 Due Date: December 1, 2010
Materials and/or Services: Provide Investment
Management Services for the
City
Time:
Contact:
3:30 P.M. AZ TIME
George Bravakos, CPPB
Mailing Location: City of Goodyear
City Hall Front Desk
190 North Litchfield Road,
Goodyear AZ, 85338
Phone:
Fax:
Email:
(623) 882-7845
(623)925-0829
george.bravakos
@goodyearaz.gov
In accordance with the City of Goodyear Procurement Code competitive Request for Proposals (RFPs) for the
above services will be received by the City of Goodyear Procurement Office, City Hall Front Desk, at the specified
location until the date and time cited above. RFPs received by the correct date and time shall be publicly opened
and read. RFPs shall be in the actual possession of the City of Goodyear; City Clerk’s Office, on or prior to the
exact date and time indicated above. Late RFPs will not be considered. RFPs shall be submitted in a sealed
envelope with the Request for Proposal number (OP 11-1676) and the offeror’s name and address clearly
indicated on the front of the packing material. All RFPs shall be completed in ink or typewritten. Offerors are
strongly encouraged to carefully read the entire RFP Package. RFP packages can be obtained by downloading
from the City of Goodyear’s web site: www.goodyearaz.gov and following these instructions: Enter City website,
click on BUSINESS, click on Vendor Services/Procurement, click on Solicitations for Bids/Proposals, click on OP-
10-1676. Should you experience problems downloading the solicitation, contact George Bravakos, CPPB at the
above email address.
A mandatory pre-offer conference will be held on November 17, 2010 at 10:00 am Arizona time, at
the City of Goodyear City Hall, 190 N. Litchfield Road, Goodyear, AZ 85338. Proposals will NOT
be accepted from offerors who do not attend this conference.
Offerors must register in the City’s Vendor Registration System in order to have their offers
evaluated. Instructions to register are located on the last page of the solicitation. Additionally, if
you are awarded a contract you must obtain a City of Goodyear Business Registration Permit.
Contact Tina Daniels at tina.daniels@goodyearaz.gov or 623-882-7874, for further information.
All communications concerning this solicitation must be directed to George Bravakos, CPPB, via email
only. Communications with other City staff may disqualify you from submitting an offer.
______________________
Bob Carrier, CPPO, CPPB
Procurement Manager
City of Goodyear
Published in the Arizona Republic Southwest Section on: November 3, 2010 and November 5, 2010
OFFER and ACEPTANCE FORM
Page 2 of 25
To the City of Goodyear: The undersigned, on behalf of the entity, firm, company, partnership, or other legal entity
listed below, offers to the City an Agreement that contains all terms, conditions, specifications, amendments, and
addenda in this Proposal/Agreement. The term Agreement shall mean and consist of the following documents, if
applicable: 1) Standard Terms and Conditions; 2) Special Terms and Conditions; 3) Scope of Work or
Specifications and Fee Schedule ( if separate from Special Terms and Conditions; 4) any attachments referenced
herein; 5) any amendments or addenda; and 6) the offer and acceptance.
City of Goodyear
Business Registration Number: ___________
For clarification of this offer contact:
Name: ____________________________
Federal Employer Identification
Number: ____________________________
Email: _________________________________
Telephone: ________________________
Company Name
Authorized Signature for Offer
Address
Printed Name
City State Zip Code
Title Date
ACCEPTANCE OF OFFER AND CONTRACT AWARD (For City of Goodyear Use Only)
Your offer is accepted. The Contractor is now bound to sell the materials and/or services listed by the attached
award notice based upon the Request for Proposal, including all terms conditions, specifications, amendments,
addenda, etc., and the Contractor’s offer as accepted by the City. The Contractor is cautioned not to commence
any billable work or provide any material, service or construction under this contract until Contractor receives an
executed Purchase Order.
N/A
______________________________________________________
City Manager
Attested by:
Lynn Mulhall, City Clerk
City of Goodyear, Arizona. Eff. Date:
Approved as to form:
_________________________________________________FOR__
Roric Massey, City Attorney
CITY SEAL
CON-11-1676____________
Contract Number
Official File
Awarded on ______
Bob Carrier, CPPO, CPPB Procurement Manager
OP 11-1676
OFFER
Contract # 11-1676
Page 3 of 25
INSTRUCTIONS to OFFERORS
OP 11-1676
1. PREPARATION OF OFFER: a) All offers shall be on the forms provided in this Request for Proposal package. It is permissible to copy these forms if required. Telegraphic (facsimile) or email of offers will not be considered.
b) The Offer and Acceptance document shall be submitted with an original blue ink signature by a person authorized to sign the Offer. Pricing documents and other documents which require information to be filled in must be done in ink, typewritten or computer printed. No Offers will be accepted if pencil is used.
c) Offers shall include all costs as described and indicated by the specifications. Offers should be
submitted in a sealed envelope provided by the offeror, with the offeror’s name and address on
outside of the sealed envelope.
c) Erasures, interlineations, or other modifications in the offer shall be initialed in original, blue ink by
the authorized person signing the offer. d) If price is a consideration, and in case of error in the extension of prices in the offer, the unit price shall govern. No offer shall be altered, amended, or withdrawn after the specified RFP due date and time.
e) Periods of time, stated as a number of days, shall be calendar days. f) It is the responsibility of all Offerors to examine the entire Request for Proposal package and seek clarification of any item or requirement that may not be clear, and to check all responses for accuracy before submitting an offer.
g) It is the responsibility of the offeror to submit the offer at the place and time provided on the Request
for Proposal.
h) Negligence in preparing an offer confers no right of withdrawal after solicitation due date and time.
1. INQUIRIES: Any question related to the Request for Proposal shall be directed to the Procurement Specialist whose name appears on the front page via email only. The Offeror shall not contact or ask questions of the City department for which the requirement is being procured. Questions should be submi tted in writing when time permits. The Procurement Specialist may require any and all questions be submitted in writing at the Procurement Specialist’s sole discretion. Any correspondence related to a Request for Proposal should refer to the appropriate Request for Proposal number, page, and paragraph number. However, the Offeror shall not place the Request for
Proposal number on the outside of any packing material containing questions since such packing material may be identified as a sealed proposal and may not be opened until after the official Request for Proposal due date and time.
2. PROSPECTIVE OFFERORS CONFERENCE: A pre-offer conference may be held. If scheduled, the date
and time of this conference will be indicated on the cover page of this document. The purpose of this conference will be to clarify the contents of this Request for Proposal in order to prevent any misunderstanding of the City’s position. Any doubt as to the requirements of this Request for Proposal or any apparent omission or discrepancy should be presented to the City at this conference. The City will then determine if any action is necessary and may issue a written amendment to the Request for Proposal. Oral statements or instructions will not constitute an amendment to this Request for Proposal.
3. LATE OFFERS: Offers, modifications of offers, and withdrawals received at the office designated in the Request for Proposal after the exact hour and date specified for receipt will be rejected and not considered. An Offeror submitting a late offer shall be so notified. 4. WITHDRAWAL OF OFFER: At any time prior to the specified RFP due date and time, an offeror (or
designated representative) may withdraw their offer via letter addressed to Attn: Bob Carrier, Procurement Manager, City of Goodyear, PO Box 5100, Goodyear, AZ 85338. The envelope should be clearly marked
Contract # 11-1676
Page 4 of 25
“Withdrawal of Offer”. Telegraphic (facsimile) or email of offer withdrawal will not be considered as a withdrawal of offer. 5. AMENDMENT OF REQUEST FOR PROPOSAL: Receipt of a Request for Proposal Amendment shall be acknowledged by signing and returning the document with the RFP packet.
6. PAYMENT: The City will make every effort to process payment for the purchase of goods or services within thirty (30) calendar days after receipt of goods or services and a correct notice of amount due, unless a good faith dispute exists as to any obligation to pay all or a portion of the account. Any offer that requires payment in less than thirty (30) calendar days shall not be considered. 7. NEW: All items shall be new, unless otherwise stated in the specifications.
8. DISCOUNTS: Payment discount periods will be computed from the date of receipt of material/service or correct invoice, whichever is later, to the date City’s payment is mailed. Unless freight and other charges are itemized, any discount provided will be taken on full amount of invoice. Payment discount periods of thirty (30) calendar days or more will be deducted from the offer price. However, the City shall be entitled to take advantage of any payment discount offered by the Offeror provided payment is made within the discount period.
9. TAXES: The City of Goodyear is exempt from Federal Excise Tax, including the Federal Transportation Tax. Sales tax, if any, shall be indicated as a separate item. 10. VENDOR REGISTRATION: Register on line at www.goodyearaz.gov, Business, Vendor Services/Procurement, Vendor Registration Log-In. See instructions on last page of RFP.
11. AWARD OF CONTRACT: Pursuant to the City of Goodyear Procurement Code, the Contract will be awarded to the offer determined to be most advantageous to the City. a) Unless the offeror states otherwise, or unless provided within this Request for Proposal, the City reserves the right to award by individual line item, by group of line items, or as a total, whichever is deemed most
advantageous to the City. b) Notwithstanding any other provision of this Request for Proposal, The City expressly reserves the right to: i. Waive any immaterial defect or informality; or ii. Reject any or all offers, or portions thereof; or
iii. Reissue an Request for Proposal; or iv. Modify or cancel this Request for Proposal. c) A response to a Request for Proposal is an offer to contract with the City based upon the terms, conditions and specifications contained in the City’s Request for Proposal and the written amendments thereto, if any. If City Council approval is necessary, offers do not become contracts unless and until
they are accepted by the City Council. A contract is formed when written notice of award(s) is provided to the successful Offeror(s). The Contract has its inception in the award document, eliminating a formal signing of a separate contract. For that reason, all of the terms and conditions of the procurement contract are contained in the Request for Proposal; unless modified by a Request for Proposal Amendment or a Contract Amendment. d) The City Council has the right to reject any and all offers and parts of offers and or re-solicit Request for
Proposals. Unless the Council exercises their right of rejection; the Contract will be awarded to the Offeror whose offer is the most advantageous to the City. 12. PROTEST: Any interested party may protest a Request for Proposal issued by the City or the proposed award or the award of a City Contract.
a) Protests of a Request for Proposal must be filed within five (5) days of the first advertising of the
Request for Proposal.
b) Protests of a contract award must be filed within ten (10) days of the issue date of the Notice of Intent to
Award, or Notice of Award, or a Notice of Intent to Negotiate and Award.
c) Protests shall be filed with the Procurement Manager for the City of Goodyear, with a copy directed to
the City Attorney for the City of Goodyear. If the protest is hand-delivered, the physical location is 190
North Litchfield Road, Goodyear, Arizona, 85338, first floor.
Contract # 11-1676
Page 5 of 25
Procurement Manager for the City of Goodyear City Attorney for the City of Goodyear
Mr. Bob Carrier, CPPO, CPPB Mr. Roric Massey
Procurement Manager City Attorney
City of Goodyear City of Goodyear
P.O. Box 5100 P.O Box 5100
190 North Litchfield Road 190 North Litchfield Road
Goodyear, AZ 85338 Goodyear AZ 85338
Phone: 623-882-7893 Phone: 623-882-7227
Fax: 623-925-0829 Fax: 623-882-7230
Email:bcarrier@goodyearaz.gov
d) The protest must be in writing and shall include:
1. The name, address and telephone number of the protester;
2. The signature of the protester or its representative;
3. The identification of the purchasing department and the Request for Proposal or contract number;
4. A detailed statement of the legal or factual grounds of the protest including copies of relevant
documents; and
5. The form of relief requested. R3-4-16.01
The Procurement Manager is required to notify all interested parties that a protest has been filed.
END OF INSTRUCTIONS TO OFFERORS
Revised 09/10/09 Contract # 11-1676
Page 6 of 25
STANDARD TERMS and CONDITIONS
OP 11-1676
Section 1. Certification
1.1 By signature in the Offer section of the Offer and Acceptance page, the Contractor certifies that he or
she is authorized to sign on behalf of Contractor and certifies that the submission of the offer did not involve
collusion or other anti-competitive practices and that this Agreement is subject to the provisions of A.R.S. § 38-511
and may be canceled, without penalty or further obligation, by City if any person significantly involved in initiating,
negotiating, securing, drafting, or creating the Agreement on behalf of the City is, at any time while the Agreement or
any extension of the Agreement is in effect, an employee, consultant or agent of Contractor in any capacity with
respect to the subject matter of the Agreement
Section 2. Definitions
2.1 The “City” means the City of Goodyear.
2.2 “Contractor” means the individual, corporation, company, or other corporate entity that seeks to enter
into this contract with the City.
2.3 “Contract” or “Agreement” shall mean, and consist of, the following documents, if applicable:
1) Standard Terms and Conditions; 2) Special Terms and Conditions; 3) Scope of Work and Fee Schedule (if
separate from Special terms and Conditions); 4) any attachments referenced herein; 5) any amendments or addenda;
and 6) a fully executed Offer and Acceptance page.
2.4 The “Project” refers to the subject matter of this Contract as more fully set forth in the attached Scope of
Work.
2.5 “Subcontractor” means an individual, corporation, company, or other corporate entity who contracts to
Perform work or render services to a contractor or to another subcontractor as part of this contract with the City.
Section 3. Indemnification and Liability
3.1 Contractor shall defend, indemnify, save and hold harmless the City of Goodyear, its officials, directors,
officers, employees, attorneys, agents, and representatives (hereinafter referred to as "Indemnitee") from and against
any and all claims, actions, enforcement proceedings, liabilities, damages, losses, and/or expenses of any kind
(including, but not limited to, costs of claim processing, investigation, litigation, attorneys fees, court costs, and costs
of appellate proceedings) (hereinafter referred to as "Claims") relating to, arising out of, or alleged to have resulted
from, in whole or in part, any act, error, mistake, omission, work, or services of Contractor, its directors, office rs,
employees, attorneys, agents, representatives, or any tier of subcontractors in the performance of this Contract.
Contractor's indemnification obligations hereunder includes Claims arising out of, or recovered under, Arizona's
Workers' Compensation Law or the failure of Contractor to conform to any Federal, State, or local law, statute,
ordinance, rule, regulation or court decree. It is the specific intention of the Parties that the indemnification provided
hereunder shall apply to all Claims, except for Claims arising from the negligent or willful acts or omissions of the
Indemnitee. The City shall have the right, at its sole discretion, to approve any defense of the City pursuant to the
indemnification obligations hereunder or to assume responsibility for its own defense and have Contractor pay all
costs and expenses (including attorney fees) incurred in such defense. In consideration of the award of this contract,
Contractor agrees to waive all rights of subrogation against Indemnitee for Claims ar ising from the work performed
by Contractor, its directors, officers, employees, attorneys, agents, representatives, or any tier of subcontractors
pursuant to this Contract.
Section 4. Termination
4.1 The City, by written notice of default, may terminate the whole or any part of this Contract if the
Contractor fails to make delivery of the materials/supplies or to perform the services as specified, or if the Contractor
Revised 09/10/09 Contract # 11-1676
Page 7 of 25
fails to perform any of the provisions of this Contract and fails to remedy the situation within a period of ten (10)
days after receipt of notice.
4.2 Immediately after receiving such notice, the Contractor shall discontinue advancing services under this
Contract and proceed to close said services under this Contract. The Contractor shall summarize and report any
services completed prior to the termination date; deliver all drawings, special provisions, field survey notes, reports,
estimates, and all other documents generated under the contract with all unused materials supplie d by the City, and
submit an invoice to the City for payment. The City shall have the right to inspect the Contractor’s work to appraise
the services completed.
4.3 The City shall make full payment within thirty (30) days after the Contractor has delivered the last of
the partially completed items and the final fee has been agreed upon.
Section 5. Compliance with Laws
5.1 Contractor and all subcontractors shall comply with all applicable Federal, State, and local laws and
ordinances during the term of this Contract including the requirements of a background check if any services are
provided to minors.
5.2 Contractors and subcontractors shall not discriminate against any person on the basis of race, color,
or national origin in the performance of this Contract, and shall comply with the terms and intent of Title VI of the
Civil Rights Act of 1964, P.L. 88-354.
5.3 Contractor and all subcontractors warrant compliance with the e-verify program statute, A.R.S. § 23-
214(A). A breach of this warranty shall be deemed a material breach of this contract, and shall subject this contract
to penalties up to and including termination of the contract. The City retains the right to inspect the papers and
records of any of Contractor’s employees or subcontractor’s employees working on the contract to ensure compliance
with this requirement. For this section, Contractor shall have the meaning of contractor as found in A.R.S. § 41 -
4401, and subcontractor has the same meaning as found in A.R.S. § 41-4401.
5.4 Contractor further agrees to insert the Compliance with Laws provision in all subcontracts
hereunder, except subcontracts for standard commercial supplies and raw materials. Any failure to do so may
constitute a material breach of this Contract.
5.5 This Contract shall be in full force and effect only when it has been executed by duly authorized City
officials and the duly authorized agent of the Contractor.
Section 6. Prohibitions
6.1 Contractor, on behalf of itself and any subcontractor retained to perform work under this Contract certifies
to the extent applicable under ARS §§ 35-391 and 35-393 et seq that neither has “scrutinized” business operations, as
defined in the proceeding statutes, in the countries of Sudan or Iran.
Section 7. Governing Law; Choice Of Forum
7.1 This Contract shall be deemed to be made under, shall be construed in accordance with, and shall be
governed by the laws of the State of Arizona, without regard to conflicts or choice of law provisions. Any action
arising out of this Contract shall be commended and maintained in the Superior court of the State of Arizona in and
for the County of Maricopa.
Section 8. Insurance Terms and Conditions
8.1 Contractor and any subcontractor shall procure and maintain insurance against claims for injury to
persons or damage to property which may arise from or in connection with the performance of the work hereunder by
the Contractor, his agents, representatives, employees or subcontractors. Each insurer shall have a current A.M. Best
Company, Inc. rating of not less than A- and a category rating of not less than “8”. Use of alternate insurers requires
prior approval from the City. Insurance provided by Contractor shall be primary.
8.2 The insurance requirements herein are minimum requirements for this Contract and in no way limit
the indemnity covenants contained in this Contract. The City in no way warrants that the minimum limits contained
Revised 09/10/09 Contract # 11-1676
Page 8 of 25
herein are sufficient to protect Contractor or Subcontractor from liabilities that might arise out of the performance of
the work, and Contractor and Subcontractor are free to purchase additional insurance as may be deemed necessar y.
Any insurance coverage carried by the City or its employees is excess coverage and not contributory coverage to that
provided by the Contractor.
8.3 Insurance coverage, other than Workers’ Compensation and Professional Liability, shall name the
City, its agents, representatives, directors, officials, employees, and officers, as additional insured. Prior to
commencing services under this Contract, Contractor shall furnish City with Certificates of insurance or formal
endorsements as evidence that policies providing the required coverage, conditions, limits required by this Contract
are in full force and effect. Such certificates shall identify this Contract number and shall provide for not less than
thirty (30) days advance Notice of Cancellation, Terminati on or reduction in limit of liability or scope of coverage.
Such certificates shall be sent directly to Risk Management Section, City of Goodyear, P.O. Box 5100 , 190 North
Litchfield Road, Goodyear, Arizona 85338.
8.4 All insurance required herein shall be maintained in full force and effective until services required to
be performed under the terms of the Contract are satisfactorily completed and formally accepted.
8.5 The amount and type of insurance coverage requirements set forth herein shall in no way be
construed as limiting the scope of the indemnification obligations under this Contract.
Section 9. Workers’ Compensation
9.1 Contractor and subcontractor shall carry Workers’ Compensation insurance to cover obligations
imposed by federal and state statutes having jurisdiction over their employees engaged in the performance of the
Services.
Section 10. Automobile Liability
10.1 Contractor and subcontractor shall maintain Commercial/Business Automobile Liability insurance
with a combined single limit for bodily injury and property damages of not less than $1,000,000 each occurrence
regarding any owned, hired, and non-owned vehicles assigned to or used in performance of services herein.
Coverage will be at least as broad coverage Code 1 “any auto” under Insurance Service office policy form CA 00 01
10 01 or any replacement thereof.
Section 11. Commercial General Liability
11.1 Contractor and subcontractor shall maintain Commercial General Liability insurance with a limit of
not less than $1,000,000 for each occurrence and $2,000,000 in the aggregate. The policy shall include coverage for
bodily injury, property damage, personal injury, products and contractual covering, but shall not be limited to, the
liability assumed under the indemnification provisions of Section 3 of this Contract which coverage will be at least as
broad as Insurance Service Office policy form CG 00 01 07 98 or a replacement thereof. The Certificate of Insurance
for the Commercial General Liability insurance policy shall expressly cover the indemnification obligations of the
indemnification required by this agreement. A general liability insurance policy may not be written on a “claims
made” basis.
Section 12. Professional Liability
12.1 The Contractor retained by the City to provide the services required by the Contract will maintain
Professional Liability insurance covering negligent errors and omissions arising out of the services performed by the
Contractor or any person employed by him, with a limit of no less than $5,000,000 all claims. The certificate of
insurance for Professional Liability shall expressly cover Contractor's obligation of Indemnification and Liability
required in Section 3 of this contract.
Revised 09/10/09 Contract # 11-1676
Page 9 of 25
Section 13. Umbrella/Excess Liability
Section 14. Pollution Liability N/A
Section 15. Force Majeure
15.1 Neither party shall be in default by reason of any failure in performance of this Contract i f such
failure arises out of causes beyond their reasonable control and without the fault or negligence of said party
including, the following: (1) Acts of God; (2) terrorism or other acts of public enemy; (3) acts or omissions of
Governmental Authorities including, without limitation, Inspector s of Record; and (4) epidemics or quarantine
restrictions.
Section 16. Right to Assurance
16.1 Whenever the City in good faith has reason to question the Contractor’s intent or ability to perform,
the City may demand that the Contractor give a written assurance of his intent and ability to perform. In the event
that a demand is made and no written assurance is given within five (5) days, the City may treat this failure as an
anticipatory repudiation of the Contract.
Section 17. Conflict Audit
17.1 Within thirty (30) days of being requested to do so, Contractor agrees to provide the City an itemized
summary of any and all gifts a Contractor its directors, officers, managers, employees, agents and/or representatives
have made to any city employee during the year prior to the date of the Contract through the date of request. The
summary shall include the date the gift was made, a description of the gift, the city employee(s) who received the
gift, and the value of the gift. The summary shall be signed and its truthfulness certified by Contractor. For purposes
of this section the terms “gift” means anything of value that is provided to the employee and includes, by way of
example, but not limited to, meals, free use of vacation homes, low interest or no interest loans, tickets to sporting
events, tickets to charitable events, entertainment expenses, travel expenses, drinks, and the like. The failure to
comply with any request made pursuant to this section and/or the submission of a summary that contains material
misrepresentations constitutes grounds for debarment and the refusal to allow Contractor to participate in any future
contracts with the City.
Section 18. Audit of Records
18.1 Contractor shall retain, and shall contractually require each and every subcontractor that performs
any work under this Contract, all books, accounts, reports, files and any and all other records relating to the Contract
(herein referred to as “Contract Documents”) for six (6) years after completion of the Contract. City, upon written
request and at reasonable times, shall have the right to review, inspect, audit and copy all Contract Documents of the
Contractor and any subcontractors. Contractor shall produce the original Contract Documents at City Hall, currently
located at 190 N. Litchfield Road, Goodyear Arizona, 85338, or at such other City facility within the City as
designated by the City in writing. If approved by the City Attorney in writing, photographs, microphotogr aphs, or
other authentic reproductions may be maintained instead of original Contract Documents.
Section 19. Right to Inspect Plant
19.1 The City may, at reasonable times, inspect the part of the plant or place of business of a Contractor
or subcontractor which is related to the performance of any contract as awarded or to be awarded.
Section 20. Warranties
20.1 Contractor warrants that all material, services or construction delivered under the contract shall be to
the specifications of this Contract. Mere receipt of shipment of the material/services specified and any inspection
Revised 09/10/09 Contract # 11-1676
Page 10 of 25
incidental thereto by the City shall not alter or affect the obligations of the Contractor or the rights of the City under
the foregoing warranties. Additional warranty requirements may be set forth in the Request for Proposal.
Section 21. Inspection
21.1 All materials and/or services are subject to final inspection and acceptance by the City. Materials
and/or services failing to conform to the specifications of this Contract will be held at Contractor’s risk and may be
returned to the Contractor. If so returned, all costs are the responsibility of the Contractor. The City may elect to do
any or all of the following:
a. Waive the non-conformance;
b. Stop the work immediately;
c. Bring material into compliance; and/or
d. Terminate the Contract and seek all remedies available in law and in equity.
This shall be accomplished by a written determination by the City.
Section 22. No Replacement of Defective Tender
22.1 Every tender of materials shall fully comply with all provisions of the Contract. If a tender is made
which does not fully conform, this shall constitute a breach of the contract as a whole.
Section 23. Liens
23.1 All materials, services or construction shall be free of all liens, and if the City requests, a formal
release of all liens shall be delivered to the City.
Section 24. Licenses
24.1 Contractor and subcontractor shall maintain in current status all Federal, State and local licenses and
permits required for the operation of the business conducted by the Contractor as applicable to this Contract.
Section 25. Patents and Copyrights
25.1 All services, information, computer program elements, reports and other deliverables, which may be
patented or copyrighted and created under this Contract are the property of the City and shall not be used or released
by the Contractor, subcontractor or any other person unless the City provides prior written permission.
Section 26. Preparation of Specifications by Persons Other Than City Personnel
26.1 All specifications shall seek to promote overall economy for the purposes intended and encourage
competition and not be unduly restrictive in satisfying the City’s needs. No person preparing specifications shall
receive any direct or indirect benefit from the utilization of specifications, other than fees paid for the preparation of
specifications.
Section 27. Cost of Proposal Preparation
27.1 The City shall not reimburse the cost of developing, presenting, or providing any responses to this
IFB/RFP. Offers submitted for consideration should be prepared simply and economically, providing ad equate
information in a straightforward and concise manner.
Section 28. Public Record
28.1 All offers submitted in response to this Request for Proposal shall become the property of the City
and shall become a matter of public record available for review, subsequent to the award.
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Section 29. Advertising
29.1 Contractor shall not advertise or publish information concerning this Contract, without prior written
consent of the City.
Section 30. Purchase Orders
30.1 The City shall issue a Purchase Order for material and/or services covered by this Contract. All such
documents shall reference the contract number as indicated on the Offer and Acceptance page.
Section 31. Funding
31.1 Any contract entered into by the City of Goodyear is subject to funding availability. Fiscal years for
the City of Goodyear are July 1 to June 30. The City Council approves all budget requests. If a specific funding
request is not approved, the contract may be terminated.
Section 32. Payment
32.1 A separate invoice shall be issued for each shipment of material or services performed and no
payment will be issued prior to receipt of material and/or services, and correct invoice indicating the correct Purchase
Order number.
Section 33. City of Goodyear Procurement Code
33.1 The City of Goodyear procurement Code, §§ 3-4, 3-5 and 3-6, is incorporated by reference and can
be found on the City’s website (www.goodyearaz.gov).
Section 34. Miscellaneous Provisions
34.1 Successors and Assigns: This Contract is binding on the parties’ respective partners, successors,
assigns, and legal representatives. Contractor will not assign, subject, or transfer its interest in this Contract, without
the prior written consent of the City. In no event does this Contract create any contractual relationship between the
City and a third party.
34.2 Severability: If any part to this Contract is found by a court to be unenforceable, the remaining
provisions shall nonetheless be enforceable to the extent allowed by law.
34.3 Integration: This Contract contains the full Agreement of the parties hereto. Any prior or
contemporaneous written or oral agreement between the parties regarding the subject matter hereof is merged and
suspended hereby.
34.4 Ownership of Documents: All work products, electronic or paper, that are prepared in the performance
of this Contract are considered the property of the City and shall be delivered to the City upon final payment to the
Contractor. Work products include, but are not limited to, plans, specifications, cost estimates, tracings, studies,
design analyses, original Mylar drawings, computer aided drafting and design (CADD) file diskettes, computer disks,
and/or other electronic records. If applicable Contractor shall place the professional seal of Contractor on all plans
and documents prepared in the performance of this Contract.\
34.5 Independent Contractor: The services Contractor provides under the terms of this Contract are that
of an independent Contractor, not an employee, or agent of the City. No provision in this Contract gives or will be
construed to give the City the right to direct Contractor as to the details of accomplishing the work required under
this Contract.
34.6 Taxes: Contractor shall be solely responsible for any and all tax obligations that may result from the
Contractor’s performance of this Contract.
34.7 Survival: All warranties, representations and promises of indemnification by Contractor will survive
the completion and/or termination of this Contract.
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34.8 Cooperative Purchasing Statement: Any contract resulting from this Request for Proposal shall be
for the use of the City of Goodyear. In addition, specific eligible political subdivisions and nonprofit educational or
public health institutions may also participate at their discretion. In order to participate in any resultant Contract, a
political subdivision or nonprofit educational or public health institution must have been invited to participate in this
specific Request for Proposal and the Contractor must be in agreement with the cooperative transaction. In addition
to cooperative purchasing, any eligible agency may elect to participate (piggyback) on any resultant Contract. The
specific eligible political subdivision, nonprofit educational or public health inst itution and the Contractor must be in
agreement. Any orders placed to the successful Contractor will be placed by the specific agency participating in this
purchase. Payment for purchases made under this Agreement will be the sole responsibility of each participating
agency. The City of Goodyear shall not be responsible for any disputes arising out of transactions made by others.
Section 35. Contract Order of Precedence
35.1 Special Terms and Conditions
35.2 Standard Terms and Conditions
35.3 Scope of Work and Fee Schedule
35.4 Attachments, amendments or addenda
35.5 Offer and Acceptance
35.6 Any exhibits if applicable
35.7 Any documents referenced or included in the solicitation if applicable
Section 36. Encryption: Contractor shall ensure that all electronic transmissions of data are encrypted and meet the
following standards:
36.1 Symmetric crypto-key lengths must be at least 128 bits. Asymmetric crypto-system keys must be of a
length that yields equivalent strength and;
36.2 Utilize algorithm implementations that have been validated by the National Institute of Standards and
Technology (NIST).
36.3 The use of proprietary encryption algorithms will not be allowed for any purpose. The expor t of
encryption technologies is restricted by the U.S. Government.
END OF STANDARD TERMS AND CONDITIONS
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Page 13 of 25
SPECIAL TERMS and CONDITIONS
OP 11-1676
1. Purpose: Pursuant to provisions of the City Procurement Code, the City of Goodyear intends to establish a
contract to provide Investment Management Services for the City of Goodyear.
2. Authority: This Request for Proposal as well as any resultant contract is issued under the authority of the City
Council. No alteration of any resultant contract may be made without the express written approval in the form of an
official contract amendment. Any attempt to alter any contract without such approval is a violation of the contract
and the City Procurement Code. Any such action is subject to the legal and contractual remedies available to the City
inclusive of, but not limited to, contract cancellation, suspension and/or debarment of the contractor.
3. Offer Acceptance Period: In order to allow for an adequate evaluation, the City requires an offer in response to
this Request for Proposal to be valid for one hundred twenty (120) days after the opening time and date.
4. Contract Type: See Fee Schedule
5. Term of Contract: The term of any resultant contract shall commence on the date of award and shall continue
for a period of one (1) year with option to extend for four (4) additional one (1) year periods thereafter, unless
terminated, cancelled or extended as otherwise provided herein. An undetermined number of units may be purchased
during any extended term of this contract.
6. Affirmative Action: The City of Goodyear encourages suppliers of goods or services to the City to adhere to a
policy of equal employment opportunity and demonstrate an affirmative effort to recruit, hire, and promo te regardless
of race, color, religion, gender, national origin, age or disability.
7. Shipping Terms: Prices shall be F.O.B. Destination to the delivery location designated in the specifications.
Contractor shall retain title and control of all goods until they are delivered and accepted by the City. All risk of
transportation and related charges shall be the responsibility of the Contractor. All claims for visible or concealed
damage shall be filed by the Contractor. The City will notify the Contractor promptly of any damaged goods and
shall assist the Contractor in arranging for inspection.
8. Non-Exclusive Contract: Any contract resulting from this Request for Proposal shall be awarded with the
understanding and agreement that it is for the sole convenience of the City of Goodyear. The City reserves the
right to obtain like goods or services from another source when necessary. Off-Contract Purchase Authorization may
only be approved by the City Procurement Manager. Approval shall be at the discretion of the City Procurement
Manager and shall be conclusive, however, approval shall be granted only after a proper review and when deemed to
be appropriate. Off-Contract procurement shall be consistent with the City Procurement Code.
9. Taxes: Prices offered shall not include applicable State and local taxes. However, State and Local taxes should
be listed by line item on the Price Sheet. Taxes must be listed as a separate item on all invoices.
10. Warranty: All equipment supplied under this Request for Proposal shall be fully guaranteed by the Contractor
for a minimum period of one (1) year full machine warranty from the date of acceptance by the City. Any defects of
design, workmanship, or materials that would result in non-compliance with the contract specification shall be fully
corrected by the Contractor (including parts, labor, shipping or freight) without cost to the City. This includes any
necessary labor to remove, repair, install, or to ship or transport any item to a point of repair and return.
11. Price Adjustment: The City of Goodyear Office of Procurement will review fully documented requests for
price increase after any contract has been in effect for one (1) year. Any price increase adjustment will only be made
Revised 09/10/09 Contract # 11-1676
Page 14 of 25
at the time of contract extension and will be a factor in the extension review process. The City of Goodyear Office of
Procurement will determine whether the requested price increase or and alternate option is in the best interest of the
City. Any price adjustment will be effective upon the effective date of the contract extension.
12. Price Reduction: A price reduction may be offered at any time during the term of the contract and shall become
effective upon notice.
13. Discussions: After initial receipt of offers, discussions to clarify offers and to assure the unit offered meets the
minimum requirements of the offer, may be conducted with offerors who submitted offers determined to be
reasonably susceptible of being selected for award.
14. Evaluation: In accordance with the City of Goodyear Procurement Code, awards shall be made to the lowest
responsive and responsible offeror whose offer conforms in all material respects to the Request for Proposal.
15. Independent Contractor:
a. General
i. The Contractor acknowledges that all services provided under this Agreement are being provided as
a contractor, not as an employee, agent, partner, joint venturer, associate or any other representative of the
City Manager or the City of Goodyear.
ii. Both parties agree that this Agreement is nonexclusive and that Contractor is not prohibited from
entering into other contracts nor prohibited from practicing his profession elsewhere.
16. Ordering Process: Upon award of a contract, the City of Goodyear Office of Procurement may procure the
specific material and/or service awarded by the issuance of a Purchase Order to the appropriate Contractor. The
award of a contract shall be in accordance with the City of Goodyear Procurement Code and all transactions and
procedures required by the Code for public bidding will be complied with. A Purchase Order for the awarded
material and/or service that cites the correct contract number is the only document required for the department to
order and the Contractor to deliver the material or service.
Any attempt to represent any material and/or service not specifically awarded as being under contract with the City
of Goodyear is a violation of the contract and the City of Goodyear Procurement Code. Any suc h action is subject to
the legal and contractual remedies available to the City inclusive of, but not limited to, contract cancellation,
suspension and/or debarment of the Contractor.
17. Billing: All billing notices to the City shall identify the specific item(s) being billed and the Purchase Order
number. Items are to be identified by the name, model number, and/or serial number most applicable. Any Purchase
Order issued by the requesting agency shall refer to the contract number resulting from this Request for Proposal.
18. Current Products: All products offered in response to this solicitation shall be new and capable of meeting or
exceeding all specifications and requirements set forth in this Request for Proposal.
19. Product Discontinuance: The city may award contracts for particular products and/or models of equipment as a
result of this Request for Proposal. In the event that a product or model is discontinued by the manufacturer, the City
at its sole discretion may allow the Contractor to provide a substitute for the discontinued item. The Contractor shall
request permission to substitute a new product or model and provide the following:
a. A formal announcement from the manufacturer that the product or model has been discontinued.
b. Documentation from the manufacturer that names the replacement product or model.
c. Documentation that provides clear and convincing evidence that the replacement meets or exceeds all
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specifications required by the original Request for Proposal.
d. Documentation that provides clear and convincing evidence that the replacement will be compatible with
all the functions or uses of the discontinued product or model
e. Documentation confirming that the price for the replacement is the same as or less than the discontinued
product or model.
20. Licenses: Contractor shall maintain in current status all federal, State and Local licenses and permits required
for the operation of the business conducted by the Contractor. Additionally, all required building permits and right
of-way permits required must be obtained. Any cost associated with any permit, or license will be the responsibility
of the Contractor.
21. Substitutions or Exceptions: If you take any exceptions to the specifications and the City does not agree or
accept your changes or exceptions, your offer may not be considered for award. If you propose a unit which does not
meet the City’s specifications exactly and you do not additionally propose the specified unit prior to o ffer opening,
your offer will not be considered for award if the City rejects your alternative.
22. Safety Standards: All items supplied on this Contract shall comply with the current applicable Occupational
Safety and Health Standards of the State of Arizona Industrial Commission, the National Electric Code, and the
National Fire Protection Association Standards.
23. Descriptive Literature: All offerors shall include complete manufacturer’s descriptive literature regarding the
equipment they propose to furnish. Literature shall be sufficient in detail in order to allow full and fair evaluation of
the offer submitted. Failure to include this information may result in the offer being rejected.
24. Usage Report: It is an express condition of any award that the Contractor shall provide the City of Goodyear
Office of Procurement with an annual report as requested.
25. Confidential Information:
a. If a person believes that a bid, proposal, offer, specification, or protest contains information t hat should
be withheld, a statement advising the City of Goodyear Office of Procurement of this fact shall
accompany the submission and the information shall be identified.
b. The information identified by the person as confidential shall not be disclosed until the City of Goodyear
Office of Procurement makes a written determination.
c. The City of Goodyear Office of Procurement shall review the statement and information and shall
determine in writing whether the information shall be withheld.
d. If the City of Goodyear Office of Procurement determines to disclose the information, the City shall
inform the offeror in writing of such determination.
26. Confidentiality of Records: The Contractor shall establish and maintain procedures and controls that are
acceptable to the City for the purpose of assuring that information contained in its records or obtained from the City
or from others in carrying out its functions under the contract shall not be used or disclosed by it, its agents, officers,
or employees, except as required to efficiently perform duties under the contract. Persons requesting such
information should be referred to the City. Contractor also agrees that any information pertaining to individual
persons shall not be divulged other than to employees or officers of Contractor as needed for the performance of
duties under the contract.
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27. Contract Termination: Any contract entered into as a result of this Request for Proposal is for the convenience
of the City and as such, may be terminated without default by the City by providing a written thirty (30) day notice of
termination.
28. Cancellation: The City reserves the right to cancel the whole or any part of this Contract due to failure by the
Contractor to carry out any obligation, term or condition of the contract.
a. The Contractor provides material that does not meet the specifications of the contract.
b. The Contractor fails to adequately perform the services set forth in the specifications of the contract.
c. The Contractor fails to complete the work required or to furnish the materials required within the time
stipulated in the contract.
d. The Contractor fails to make progress in the performance of the contract and/or gives the City reason to
believe that the Contractor will not or cannot perform to the requirements of the contract.
Upon receipt of the written notice of concern, the Contractor shall have ten (10) days to provide a satisfactory
response to the City. Failure on the part of the Contractor to adequately address all issues of concern may result in
the City resorting to any single combination of the following remedies:
a. Cancel any contract;
b. Reserve all rights or claims to damage for breach of any covenants of the contract.
c. Perform any test or analysis on materials for compliance with the specifications of the contract. If the
result of any test or analysis finds a material non-compliance with the specifications, the actual expense of
testing shall be borne by the Contractor.
d. In case of default, the City reserves the right to purchase materials, or to complete the required work in
accordance with the City procurement Code. The City may recover any actual excess costs from the
Contractor by:
i. Deduction from an unpaid balance;
ii. Collection against the offer and/or performance bond, or;
iii Any combination of the above or any other remedies as provided by law.
29. Contract Default: The City, by written notice of default to the Contractor, may terminate the whole or any part
of this Contract in any one of the following circumstances:
a. If the Contractor fails to make delivery of the supplies or to perform the services within the time specified;
or
b. If the Contractor fails to perform any of the other provisions of the contract and fails to remedy the
situation within a period of ten (10) days after receipt of notice.
In the event the City terminates this Contract in whole or part, the City may procure supplies or services similar to
those terminated and the Contractor shall be liable to the City for any excess costs for such similar supplies or
services.
30. Dispute Resolution: If a dispute arises out of or related to this Agreement, or breach thereof, the Parties agree
first to try to settle the dispute through mediation before resorting to litigation, or some other dispute resolution. In
Revised 09/10/09 Contract # 11-1676
Page 17 of 25
the event that the Parties cannot agree upon the selection of a mediator within seven (7) days, either Party may
request a presiding judge of the Superior Court to assign a mediator from a list of mediators maintained by the
Arizona Municipal Risk Retention Pool.
31. Estimated Quantities: Quantities listed are the City’s best estimate and do not obligate the City to order or
accept more than the City’s actual requirements during the period of this agreement as determined by actual needs
and availability of appropriate funds. It is expressly understood and agreed that the resulting contract is to supply the
City with its complete and actual requirements for the contract period.
32. Identity Theft Prevention Program: The Contractor(s) awarded this contract shall be required to comply with
all terms and conditions contained in the City of Goodyear Identity Theft Prevention Program policy as amended
March 30, 2010, as well as any and all subsequent amendments thereto. The City will provide a copy of the Identity
Theft Prevention Program policy to the Contractor(s) awarded this contract.
END OF SPECIAL TERMS and CONDITIONS
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Page 18 of 25
SCOPE of WORK
OP 11-1676
I. OVERVIEW
The City of Goodyear is soliciting Request for Proposals from qualified firms to provide Investment Management
Services for the City's investment portfolio.
The current size of the City's Investment portfolio is approximately $60 million. A portion of these funds will be
invested in the Local Government Investment Pool (LGIP) and not included in the managed portfolio. A copy of
the current investment policy is available to offerors upon request.
The City expects its investment advisor to be highly experienced, a leader and innovator in the management of
investments, and is able to provide comprehensive investment and portfolio accounting services.
The firm selected as the investment advisor and its affiliates will be restricted from selling to the City, or buying
from the City, any securities to or from that firm's own inventory or account. The investment advisor shall act
solely in a fiduciary capacity and shall not receive any fee or compensation based upon the purchase or sale of
securities, but rather, the investment advisor will be compensated pursuant to the provision of its contract with the
City.
II. MINIMUM REQUIREMENTS
The investment advisor must:
1. Provide the dollar amount for currently managed domestic fixed income assets for public entities.
2. Manage portfolios for a minimum of five (5) local (Arizona) government public entities.
3. Be familiar with all applicable Arizona statutes with regards to qualified investments for public entities.
4. Be registered with the Securities and Exchange Commission under the Investment Advisor's Act of 1940.
5. Be financially solvent and appropriately capitalized to be able to provide service for the duration of the
contract.
6. Adhere to the Code of Professional and Ethical Standards as described by the CFA Institute.
III. CONTRACTOR (INVESTMENT MANAGER) REQUIREMENTS
Specific responsibilities of the selected investment manager shall include, but not be limited to the following:
1. Manage on a daily basis the City's separate investment portfolios pursuant to the specific , stated investment
objectives. Place all orders for the purchase and sale of securities, communicate settlement information to the
City's staff and coordinate security settlement.
2. Serve as a general resource to the City's staff for information and advice and training regarding fixed income
securities and investments.
3. Work with City staff to understand cash flow projections to ensure that the investment strategy is consistent with
the City's liquidity requirements.
Revised 09/10/09 Page 19 of 25 Contract 11-1676
4. Provide monthly statements with all the information required by the Arizona Revised Statutes and GASB .
These reports must include a mark-to-market valuation. The selected investment advisor must maintain accurate
reports of investments including the diversity of investments and compliance with applicable investment policies
of the City and State of Arizona statutes.
5. Provide quarterly investment reports including a description of market conditi ons, investment strategies
employed performance and suggested changes to investment strategy. The performance numbers shall be
presented as required by the CFA Institute's "GIPS".
6. The investment manager WILL NOT provide custodial services or security safekeeping. However, the
investment advisor may be asked to facilitate the procurement of these services.
IV. SUBMITTAL REQUIREMENTS
Interested parties MUST submit one (1) original marked "original", five (5) copies marked "copy" and one (1)
electronic copy in the form of a CD/DVD (MS Office or Adobe Acrobat Format) of their proposal in a sealed
package, including any supplemental documents to be considered. Emails will not be accepted as electronic
copies.
A. Firm's Background
1. Describe the organization, date founded, and ownership of the firm. Specify the number of years the
organization has been providing investment management services.
2. Provide an organization chart depicting the overall structure of the firm and the position of asset management
group within the firm.
3. Provide resumes of those individuals who will be assigned to the City account.
4. Describe any business affiliations (e.g., subsidiaries, joint ventures, "soft dollar" arrangements with brokers)
your firm may be involved in.
5. Describe your firm's revenue sources (e.g., investment management, institutional research, etc.) and describe
your firm's financial condition.
6. Is your firm a registered investment advisor under the Investment Advisor's Act of 1940? Please attach Part II
of your most recent Form ADV.
7. Indicate whether your firm has obtained all required licenses to operate as a broker/dealer in the State of
Arizona. Provide copies of the licenses.
8. Describe any SEC, FINRA, or any other regulatory censure or litigation involving your firm during the past ten
(10) years.
9. Indicate whether your firm adheres to the Code of Professional and Ethical Standards as described by the CFA
Institute.
10. Provide a copy of your most recent audited annual report and/or 10K.
11. Describe any plans to change the structure, organization, staffing levels, or technology systems of your firm
that may affect the services of this RFP.
Revised 09/10/09 Page 20 of 25 Contract 11-1676
12. Describe any related services your firm provides and any affiliates and/or subsidiaries that would be involved in
providing services under your proposal.
13. Provide a copy of your most recent statement on Auditing Standards (SAS) No. 70 report
B. Personnel
1. Identify the number of professionals employed by your firm by classification. Indicate how many of these
professionals are dedicated solely to providing investment management services to the public sector.
2. Describe your proposed project team and provide biographical information, including the role they will play,
title and years at the firm. Identify the primary portfolio manager and client contacts who will be assigned to
the City's portfolio.
3. Will a primary contact be assigned to the City's account? If so, describe:
a. From which area of the organization will the primary contact come?
b. The primary responsibilities and authority of the primary contact
c. For how many customers is the person the primary contact?
d. How often will the primary contact be available for client meetings?
e. How will the City's account be handled when the primary contact is not available?
4. Describe your firm's compensation policies for investment professionals.
5. Describe any personnel changes of senior leadership or portfolio managers within the past six (6) months.
C. Assets Under Management
1. Identify the types of accounts managed by your firm and provide th e total dollar amount and percentage
managed (exclude accounts for which your services provides periodic oversight or advice) for each of the
following categories: public agency (excluding retirement funds), corporations, individuals and others.
2. Indicate the amount of public sector operating fund assets your firm manages as well as the amount of bond
proceeds assets.
3. For public agency portfolios whose duration exceeds one (1) year, provide the percentage of assets under
management for your latest reporting period using the table below.
U.S. Treasury securities _____________________%
Federal Agency obligations _____________________%
Corporate securities rated AAA-AA _____________________%
Corporate securities rated A _____________________%
Corporate securities rated BBB or lower _____________________%
Revised 09/10/09 Page 21 of 25 Contract 11-1676
Other _____________________%
D. Investment Philosophy/Approach
1. Describe your firm's investment philosophy for public sector clients.
2. Describe the maturity concentration, quality and sectors of current accounts similar to the City's
3. Describe the primary strategies for adding value to portfolios (e.g., market timing, credit research, trading)
4. Describe the process you would recommend for establishing the investment obje ctives and constraints for this
account.
5. Describe you firm's in-house technical and research capabilities. Are outside sources used by the firm on a
regular basis?
6. Describe your in-house credit review and risk control process. Does your firm assign cre dit research to
specialists?
7. What process do you use for determining a permanent impairment of security? How is an impairment
communicated to the City?
8. How will your firm handle fluctuating cash flows and the cash forecasting process?
9. Do you have or would you recommend there be policy restrictions with respect to maturity, sector, quality and
coupon.
10. Provide your list of approved brokers/dealers. How are brokers/dealers selected? What process do you have in
place to monitor brokers/dealers after they have been approved?
11. Describe your firm's experience in investing municipal bond proceeds and familiarity with U.S. Treasury
arbitrage restrictions as they relate to the investment of proceeds of municipal bonds.
E. Portfolio Management
1. Are portfolios managed by teams or one individual?
2. Primary client contact is delegated to which of your firm's professionals?
3. Describe procedures used to ensure that portfolios comply with client investment objectives, policies and bond
resolutions.
4. Which of your firm's offices would service this account? What specific services would each office provide,
i.e., portfolio management, customer service, research compliance, etc.?
5. What are the hours of operation of the customer service unit (specify time zone)? What back -office support do
you provide?
6. How does your firm handle inquiries requiring research and adjustments? Are there established turn -around
times for research and adjusted items? If yes, specify.
7. During what hours are portfolio managers and customer service representatives accessible to the City? By what
means (e.g., e-mail, phone, Bloomberg) may the City access them?
Revised 09/10/09 Page 22 of 25 Contract 11-1676
8. Does your institution have a formal quality assurance program for this service? If yes, describe.
9. How often would you hold performance review meetings at the City's office? Who would represent the firm at
these meetings?
10. Describe your back-office interface and coordination with custodian.
F. References
Please provide five (5) local agency client references, including at least three (3) from Arizona, including
length of time managing their assets, client name, address and phone number.
G. Reporting
1. Describe how your firm typically reports performance.
2. Provide a performance composite showing the past five (5) years. The composite should consist of a minimum
of five (5) current accounts comprising securities that are permitted under the Arizona Revised Statutes. NO
SAMPLE PORTFOLIOS. The duration of the composite should be comparable to the Merrill Lynch 1-3 Year
U.S. Treasury Index. Provide information regarding the composition and duration of the data used, including
the number of portfolios making up the composite, for your presentation of performance history. The
composite should be prepared and presented in compliance with the CFA Instit ute's Global Investment
Performance Standards "GIPS"
3. Will your firm develop reporting procedures in line with the City's needs and objectives, i.e., accessible,
downloadable?
4. Are confirmations of investment transactions sent directly by the broker/dealer to the client?
5. How does your firm reconcile your reported returns with the custodian and/or client? How often? What items
do you reconcile?
H. Implementation
1. Discuss all the steps involved with the implementation process and your estimated timeline if the City transfers
a portion of its cash portfolio to your organization for management.
2. What is the average lead-time for opening an account? What are the critical factors that might impact lead
time?
I. Disaster Recovery
1. Briefly describe your firm's disaster recovery plans. Include current estimates of time frames required to
resume service in all functional areas, including systems, operations and client administration.
2. How often are contingency plans reviewed and tested? Briefly describe the testin g methodology (e.g.,
simulated disaster with actual offsite system regeneration and recovery). When was the plan last tested?
3. How frequently are customer records backed up? Are backup transaction files stored in the same location as
the primary copy? If not, where are those files stored?
Revised 09/10/09 Page 23 of 25 Contract 11-1676
4. Is there a "hot" alternate backup processing site? Describe its location and capabilities. What is the
contingency plan if a "hot" backup site is not available and a disaster occurs that prevents all work from being
processed on a same-day basis?
The City of Goodyear reserves the right to add additional services to this Scope of Work.
V. EVALUATION CRITERIA
Proposals will be reviewed by an Evaluation Committee composed of City staff. Evaluation Criteria are listed
in descending order of importance.
1. Firm's experience, resources and qualifications of the investment advisor and individuals assigned to the City's
account.
2. Firm's relevant experience managing public sector funds and demonstrated performance
3. Investment philosophy and strategy of managing City's account.
4. Proposed Fee and Compensation
5. Conformance to the RFP.
Revised 09/10/09 Page 24 of 25 Contract 11-1676
FEE SCHEDULE
OP 11-1676
1. Include a copy of your firm's fee schedule. State your fee in basic points for assets under
management.
a. Indicate whether they include custodial fees and if there is a minimum annual fee.
b. Indicate if fees charged when there is no activity in the account.
c. Indicate any fees for such additional services as arbitrage rebate related services.
Revised 09/10/09 Page 25 of 25 Contract 11-1676
OP 11-1676
INSTRUCTIONS FOR REGISTERING IN THE CITY’S VENDOR
REGISTRATION SYSTEM
Enter the City website at www.goodyearaz.gov. Click on Business, then
Vendor Services/Procurement, then Registration/Log-In and follow the
links. Should you experience any problems registering, please contact
Fernando Camacho at 623-882-7844.
ORIGINAL
City of Goodyear
Proposal for Investment Management Services
#OP 11-1676
December 1, 2010
PFM Asset Management LLC
2375 E. Camelback Road, Suite 5118
Phoenix, AZ 85016
(602) 387-5187
Table of Contents
Cover Letter I
Proposal Response II
Executive Summary
Firms Background
Personnel
Assets Under Management
Investment Philosophy/Approach
Portfolio Management
References
Reporting
Implementation
Disaster Recovery
Appendix III
Offer and Acceptance Form
Engagement Team Resumes
Form ADV Part II
License to Operate as a Broker/Dealer in Arizona
Audited Financial Statement
Educational Seminar Materials
PFM 1-3 Year Fixed Income Composite
List of Approved Brokers/Dealers
Sample Reports
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 1
Executive Summary
PFM Asset Management LLC (―PFM‖) is pleased to present this Investment Management Services
proposal to the City of Goodyear. PFM is one of the premier, independent, investment advisory firms
in the United States, specializing in serving the public sector. PFM meets or exceeds all of the City‘s
minimum requirements and is fully prepared to provide all the required services described in the City‘s
RFP as summarized below:
Minimum Requirements:
PFM currently provides management for $36.4 billion of domestic fixed income assets for
public entities.
We manage 24 separate portfolios for 10 public entities located in Arizona, totaling over $1.4
billion.
All PFM individuals who work with Arizona clients including traders, accounting staff,
managers, and consultants are very familiar with all applicable Arizona statutes.
PFM Asset Management LLC is a registered advisor under the Investment Advisers Act of
1940.
The financial condition of PFM remains strong. Due to the variety of clients and expertise,
PFM has a strong client base to ensure continued success. Furthermore, there are no foreseen
factors to impede our continuance as a financially secure, ongoing business.
PFM adheres to the CFA Institute’s Code of Ethics as well as an internally developed Code
of Ethics.
Investment Manager Requirements:
Manage City’s investment portfolios pursuant to investment objectives. Place all orders
for the purchase and sale of securities, communicate settlement information to the
City’s staff and coordinate security settlement. PFM has developed strict operating
procedures designed to assure clients that portfolio managers consistently comply with state
laws and client investment policies, meet client investment objectives, and follow prudent
practices when making investment decisions. As a discretionary client, PFM will handle all
aspects of purchasing and selling securities for the City‘s portfolio including communicating
settling information and coordinating security settlement.
Serve as a general resource to City staff. We will seek to become an extension of the City‘s
staff, providing advice and information on topics ranging from the City‘s investment program
to accounting to the current market environment. We will also offer training and education, as
requested.
Work with City staff to understand cash flow projections and ensure strategy is
consistent with City’s liquidity requirements. PFM has developed a sophisticated cashflow
model to assist in determining an appropriate allocation of assets between short- and longer-
term funds. Using this analysis, along with direct input from the City, we can develop strategies
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 2
that maximize return and ensure that the City has sufficient funds available for operational
purposes.
Provide monthly statements with all the information required by the Arizona Revised
Statutes and GASB. The City will have access to timely daily transaction information and
monthly holdings statements that provide all required GASB 40 elements and information
necessary to track the City‘s investments. PFM‘s reports demonstrate compliance with
investment policies and state statutes as well. Customized reports can be prepared.
Provide quarterly investment reports. The City will receive quarterly investment reports that
include: economic overview, strategy summary, summary of portfolio information,
performance comparison to the selected benchmark, and a detailed listing of sec urities. All
performance calculations are reported on a total return basis and presented in accordance with
CFA Institute‘s Global Investment Performance Standards (GIPS).
Facilitate the procurement of custodial services or security safekeeping. Consistent with
the City‘s policy, PFM does not provide safekeeping services because it is our firm belief that to
protect an entity‘s investments, each public entity should have a separate custodian arrangement
with a bank. However, we have assisted numerous entities in procuring custodial banking
services by conducting a RFP/RFQ process on the entity‘s behalf. We would be happy to do
this for the City, if requested, as part of our services.
We welcome the opportunity to meet with the City of Goodyear to discuss our proposal and our ideas
for improving the overall efficiency of the City‘s investment program.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 3
A. Firm’s Background
1. Describe the organization, date founded, and ownership of the firm. Specify the number of
years the organization has been providing investment management services.
Public Financial Management, Inc. was founded in 1975 and began providing investment adviso ry
services in 1980. In 2001, PFM Asset Management LLC was created as the entity under which
investment advisory services are provided. PFM Asset Management LLC has been registered with the
SEC since 2001 and is independent of any financial institution or securities brokerage firm.
In May 2009, Public Financial Management, Inc. and PFM Asset Management LLC and related
businesses, all of which were owned by their senior employees (―Managing Directors‖), reorganized
into a holding company structure. The new holding company is named PFM I, LLC and all of the
above-named business entities have become indirect wholly owned subsidiaries of PFM I, LLC.
Contemporaneously, a group of well-known private equity investors made a substantial equity and
credit investment in the PFM I, LLC holding-company structure.
2. Provide an organization chart depicting the overall structure of the firm and the position of
asset management group within the firm.
3. Provide resumes of those individuals who will be assigned to the City account.
Resumes for the entire engagement team are included in the Appendix.
4. Describe any business affiliations (e.g., subsidiaries, joint ventures, "soft dollar"
arrangements with brokers) your firm may be involved in.
We do not participate in any ―soft-dollar‖ arrangements, nor do we receive brokerage fees, referral
fees, origination fees, inventory mark-up, trading spreads, commissions, or any other source of
income that could be perceived as affecting the objectivity of our advice.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 4
5. Describe your firm’s revenue sources (e.g., investment management, institutional research,
etc.) and describe your firm’s financial condition.
PFM‘s primary business focus is serving the needs of our public sector clients, and nearly 100% of
our revenue is generated from investment advice and portfolio management services.
The financial condition of PFM remains strong. PFM‘s financial performance has been driven by
strong investment results. This performance has fueled our continued growth in assets under
management, which even during the height of the financial crisis has grown from $32 billion at the
end of 2007 to approximately $36 billion today.
6. Is your firm a registered investment advisor under the Investment Advisor’s Act of 1940?
Please attach Part II of your most recent Form ADV.
Yes. Please find our Form ADV Part II in the appendix.
7. Indicate whether your firm has obtained all required licenses to operate as a broker/dealer
in the State of Arizona. Provide copies of the licenses.
PFM Asset Management LLC (―PFMAM‖) has a wholly -owned broker dealer subsidiary, PFM
Fund Distributors, Inc. (―PFMFD‖). PFMFD is an SEC-registered broker dealer, member of the
Financial Industry Regulatory Authority (―FINRA‖) and also subject to the rules of the Municipal
Securities Rulemaking Board (―MSRB‖). PFMFD distributes shares of local government pooled
investment programs and a money market mutual fund, PFM Funds.
PFMFD is registered as a broker dealer in the State of Arizona. Evidence of this registration is
contained in the current Form BD for PFMFD which is included in the Appendix.
8. Describe any SEC, FINRA, or any other regulatory censure or litigation involving your firm
during the past ten (10) years.
None.
9. Indicate whether your firm adheres to the Code of Professional and Ethical Standards as
described by the CFA Institute.
Yes, PFM adheres to the CFA Institute‘s Code of Ethics. Our firm employs 11 CFA charter
holders, in addition to 27 employees who are currently enrolled in the CFA program. Furthermore,
every member of PFM follows an internally developed Code of Ethics. PFM also requires
compliance with both the letter and spirit of the laws and regulations of the United States and
jurisdictions in which we operate. PFM requires that all officers, employees, consultants, and
representatives avoid unauthorized activities that involve or might appear to involve conflict of
interest between personal and professional relationships. To ensure compliance, PFM‘s Compliance
Manual provides detailed procedures designed to prevent conflicts of interest which could arise,
and such procedures are tested annually for effectiveness.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 5
10. Provide a copy of your most recent audited annual report and/or 10K.
We have included a copy of our 2009 audited financial statements in the Appendix.
11. Describe any plans to change the structure, organization, staffing levels, or technology
systems of your firm that may affect the services of this RFP.
PFM‘s core business is and will continue to be providing investment services to the public sector.
Accordingly, we expect to continue to develop our resources and add staff that will enable us to
continue providing the highest level of service to our public sector clients. For example in August
2009, we acquired Bond Resource Partners, LP in order to develop and expand our arbitrage rebate
related services. Also, PFM has continued to dedicate a significant amount of resources to its
technological systems. At the start of 2010, we began using the state-of-the-art Charles River
Investment Management System suite. The Charles River IMS platform provides one of the most
comprehensive structures for portfolio management, trading, compliance, and centralized post -
trade processing. In addition, as our business has grown, we have proactively added members to
our portfolio management, analytical, and client service staff to ensure the highest quality of
customer service for our clients.
12. Describe any related services your firm provides and any affiliates and/or subsidiaries that
would be involved in providing services under your proposal.
All of the services specified in the City‘s RFP will be performed by PFM. However, the City may
find down the road that it wants to take advantage of other financial and investment services that
the PFM Group offers its public sector clients, including:
Financial Advising: As a financial advisor, Public Financial Management, Inc. engages in
capital planning, revenue forecasting and evaluation, resource allocation, debt management
policy development, and debt transaction management (including structuring,
documentation, and execution).
PFM, Inc. has been working with public entities in Arizona for approximately 10 years,
serving as the current advisor for the Salt River Water Project and in the pool of advisors
for the City of Phoenix, the Arizona State University, and the Arizona School Facilities
Board.
Arbitrage Rebate: PFM has provided arbitrage rebate services since 1989, using the right
resources and the right experience to secure the best after-tax arbitrage rebate result.
PFM Funds: PFM Funds (the ‗Fund‖) offers two money market mutual funds to meet the
short-term investment needs of institutional investors. The portfolios provide: daily
liquidity, competitive money market returns, unlimited number of deposits and withdrawals,
transactions by wire, ACH and check, sub-accounting to track multiple funds/accounts,
and arbitrage rebate compliance services (for proceeds of tax-exempt or other issues subject
to rebate). Both funds are rated ―AAAm‖ by Standard & Poor‘s, maintain a dollar-weighted
average portfolio maturity of 90 days or less, and are managed to maintain a constant $1.00
price per share or net asset value (NAV).
Procurement Card: PFM offers the Power Card Program to deliver procurement cards
(―P-Cards‖) via the MasterCard platform to public entities in the United States.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 6
Strategic Consulting: As a strategic consultant, Public Financial Management, Inc. offers
highly effective capital and operating budget advice.
Educational Seminars: PFM offers educational presentations, workshops, and
investment training to all of our clients. The nature and type of training varies depending on
the client‘s specific needs and preferences. For several of our clients, we have included
investment training as part of, or in conjunction with, our quarterly meetings. For example,
on December 2, 2010 we will conduct an education seminar in Phoenix intended for
municipal finance professionals. The seminar will address the following topics: Developing
an Investment Policy, Basics of Investment Accounting, Current Economic Update and
Strategies for Investing In an Era of Low Rates, Fed Intervention, and Political Uncertainty.
We have included these educational seminar materials in the appendix. Other educational
seminars we have conducted in the past include the following topics:
• Basic information about the types of securities permitted by Arizona Revised Statutes
• Types of investment risks, e.g., credit risk, market risk, and interest rate risk
• Criteria to consider when making asset allocation decisions
• Yield curve analysis—finding value on the yield curve. Deciding which maturity offers
the best relative value
• Sector analysis. Presentation of the historical spreads between Treasuries and other
types of securities
• Impact of releases of economic data and news on the market
• Evaluating investment performance
• Cash flow analysis and forecasting
• Limiting portfolio risk without sacrificing return
• Investment strategies for bond proceeds, arbitrage rebate regulations, and refunding
escrows: structuring and restructuring
13. Provide a copy of your most recent statement on Auditing Standards (SAS) No. 70 report
A SAS 70 report is required for entities that serve as service organizations, which generally
encompass entities that either execute transactions and maintain the related accountability, record
transactions and process related data, or both. PFM does not take custody of our clients‘ cash or
securities in our role as an independent investment advisor; therefore, we do not have a SAS 70
report.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 7
B. Personnel
1. Identify the number of professionals employed by your firm by classification. Indicate how
many of these professionals are dedicated solely to providing investment management
services to the public sector.
PFM has 182 professionals dedicated to actively managing and supporting the management of $36
billion in fixed-income operating funds, capital funds and reserves, and bond proceeds solely for
public sector entities. The following table provides a breakdown of PFM‘s asset management
professionals by classification:
Professional Capacity Employees*
Portfolio Managers/Traders 12
Technical/Research Analysts 36
Consulting/Client Services 70
Accounting/Operations 37
Administrative Staff 27
Total 182
*As of September 30, 2010
2. Describe your proposed project team and provide biographical information, including the
role they will play, title and years at the firm. Identify the primary portfolio manager and
client contacts who will be assigned to the City's portfolio.
We are proposing an experienced team of senior professionals to work with the City, each of whom
has ten or more years of experience working with public agencies. The following three individuals
would lead the engagement team assigned to the City:
Craig Clifford, CPA, Senior Managing Consultant, has 38 years of experience working
in the public sector and in the banking industry and will serve as the City‘s co-engagement
manager and primary contact. He is most recently retired as the Chief Financial Officer for
the City of Scottsdale, Arizona and has also served for other Arizona municipalities and the
Government Finance Officers Association. He sat on your side of the table and understands
the municipal finance issues you face and how to meet some of these challenges with an
effective investment program. NASD Exams: Series 6 & 63
Lauren Brant, Managing Director, has over 14 years of investment advisory experience
and will be co-engagement manager and secondary contact for the City. Lauren has
extensive experience assisting clients in identifying short and long term investment options,
while working with client portfolios ranging from $10 million to over $1 billion. NASD
Exams: Series 52, 6 and 63
Bob Cheddar, CFA, Senior Portfolio Manager, has 11 years of portfolio management
experience and will serve as the primary portfolio manager to the City. Bob serves as chair
of PFM‘s Credit Committee and serves as a portfolio manager for approximately $5.6
billion of PFM‘s short- to intermediate-term fixed income portfolios. FINRA Exams: 7 &
63
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 8
The following table lists the key professionals who will support this engagement. They include
professionals with a wide range of specialized skills to address each element of the Cit y‘s requested
scope of services. As required, the engagement team can also draw upon the resources of the entire
firm. Resumes for the entire engagement team are included in the appendix.
Team Member/Title Years in Field/
with PFM Group Role with the City
ENGAGEMENT TEAM LEADERS
Craig Clifford, CPA, CGFM
Senior Managing Consultant 38/2
Co-engagement
Manager/ Primary
Contact
Lauren Brant
Managing Director 14/14
Co-engagement
Manager/Secondary
Contact
Robert Cheddar, CFA
Senior Portfolio Manager 11/5
Senior Portfolio
Manager/Chief Credit
Officer
ENGAGEMENT TEAM MEMBERS
Portfolio Management
Marty Margolis
Managing Director/Chief Investment Officer 32/28 Investment Strategy and
Portfolio Oversight
Kenneth Schiebel, CFA
Managing Director 29/16 Senior Portfolio Manager
Brian Raubenstine
Trader 3/3 Portfolio Trader
Client Service
Allison Kaune
Consultant 4/4 Client and Analytical
Support
Paulina Woo
Consultant 4/4 Client and Analytical
Support
Stephen Wilson
Consultant 3/3 Client and Analytical
Support
Accounting and Reporting
Debra Goodnight, CPA
Managing Director 27/20 Portfolio Accounting/
Reporting
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 9
3. Will a primary contact be assigned to the City’s account? If so, describe:
The City‘s relationship will primarily be the responsibility of Craig Clifford, CPA.
a. From which area of the organization will the primary contact come?
Craig Clifford works within PFM‘s asset management practice.
b. The primary responsibilities and authority of the primary contact
Craig will serve as the City‘s day-to-day contact. His main responsibilities will include all policy
work, strategy discussions, meeting preparations, performance reports, and coordinating
communications between the City and the portfolio management team. He will also bri ng to
bear all resources of the firm to ensure that the City receives timely, accurate information.
c. For how many customers is the person the primary contact?
Craig is the primary contact for six Arizona-based clients.
d. How often will the primary contact be available for client meetings?
Craig will meet with the City as often as necessary to review portfolio strategies and to ensure
that its investment objectives are met. In the beginning, we envision greater contact as we get
to know the City and its policies and procedures. Once the City is comfortable with the
relationship, we recommend review meetings at least once a quarter.
e. How will the City’s account be handled when the primary contact is not available?
Craig will ultimately be responsible for managing PFM‘s relationship with the City. However,
because we operate in teams at PFM, there will be several other individuals who will be
intimately familiar with the City‘s portfolio and objectives. Lauren Brant will act as the City‘s
secondary contact. Both Craig and Lauren are available by telephone, e-mail, and fax whenever
City staff have questions or need to initiate an ad hoc report request regarding PFM-managed
investment portfolios.
4. Describe your firm’s compensation policies for investment professionals.
PFM‘s compensation plan is designed to reward excellent performance and ensure that we offer
unbiased advice without any potential conflicts of interest. PFM employees are paid a base salary
plus an annual bonus. The bonus is dependent upon the profitability of the firm, each group‘s
contribution to the firm‘s overall profitability, and each individual‘s contribution to the group‘s
success. No employee is compensated on a commission or transaction-oriented basis. Furthermore,
we earn no fees or profits from the trading activity performed on behalf of clients.
5. Describe any personnel changes of senior leadership or portfolio managers within the past
six (6) months.
We have very low turnover among senior professionals. In the past six months, we added one
senior professional, Chris Blackwood, to PFM‘s Western Region Investment Advisory Practice
staff to support continued growth in the West.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 10
C. Assets Under Management
1. Identify the types of accounts managed by your firm and provide the total dollar amount
and percentage managed (exclude accounts for which your services provides periodic
oversight or advice) for each of the following categories: public agency (excluding
retirement funds), corporations, individuals and others.
PFM‘s primary focus is the management of public sector funds. Our core client base includes
public entities similar in size and scope to the City. The types of accounts primarily managed for
these clients range from short-term liquidity funds, to operating funds, bond proceeds accounts,
and working capital funds. As of September 30, 2010, we managed approximately $36 billion of
public and not-for-profit assets.
Category Assets Percentage
Public Agency $33.3 billion 94%
Corporations $0
Individuals $0
Others $2.2 billion 6%
Total $35.5 billion 100%
*Others consist of university, college, and hospital clients.
**Pension funds, OPEB funds, and defined benefit and contribution funds for public agency and not-for-
profit clients make up the remaining $0.9 million of funds.
2. Indicate the amount of public sector operating fund assets your firm manages as well as
the amount of bond proceeds assets.
PFM provides management on approximately $26.9 billion of operating funds and $8.6 billion of
bond proceeds assets. In addition, we manage approximately $0.9 billion of pension funds, OPEB
funds, and defined benefit and contribution funds.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 11
3. For public agency portfolios whose duration exceeds one (1) year, provide the percentage
of assets under management for your latest reporting period using the table below.
U.S. Treasury securities 14.1%
Federal Agency
GSEs1
TLGP2
62.6%
57.5%
5.1%
Corporate securities rated AAA-AA 4.1%
Corporate securities rated A 2.3%
Corporate securities rated BBB or lower 0.0%
Other
Money Market Funds/Mutual Funds
Commercial Paper
Agency MBS
Certificates of Deposit
Municipal Obligations
16.9%
10.3%
4.2%
1.0%
0.8%
0.6%
As of September 30, 2010
1 Government sponsored enterprises including, but not limited to, Fannie Mae, Freddie Mac,
Federal Home Loan Bank system and Federal Farm Credit Banks.
2 Debt guaranteed under the Federal Deposit Insurance Corporation‘s Temporary Liquidity
Guarantee Program and backed by the full faith and credit of the United States.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 12
D. Investment Philosophy/Approach
1. Describe your firm's investment philosophy for public sector clients.
The requirements for integrity, diligence, transparency, and a focus on risk management that public
entities expect are fundamental to PFM‘s investment philosophy and style of management. Our
core investment philosophy—which has been in place since we began managing public funds 30
years ago—emphasizes the use of low-risk, active management strategies to add value by managing
credit and market risks and by carefully analyzing market conditions. Because while we always strive
to achieve returns that are equal to or above those of very high -quality benchmarks, we understand
the importance of protecting our clients not only from an actual loss on investments, but also from
a loss of the public trust.
Our investment approach differs fundamentally from that of most managers whose client lists
include private corporations. These managers often take significantly higher levels of credit risk by
purchasing lower quality investments in an attempt to achieve higher returns. PFM systematically
avoided the high-risk credits that other public fund investors and advisors were holding through
the 2007 to 2009 credit crisis. PFM‘s investment style helped our clients avoid the numerous
problems involving collateralized debt obligations (CDOs), structured investment vehicles (SIVs),
asset-backed commercial paper (ABCP), and defaulted corporate securities. This is not a matter of
luck, but rather reflects our systematic approach to managing risk, a deeper understanding of the
true risks of investing public funds, and a willingness to make timely sacrifices of up-front yield to
achieve safety first.
2. Describe the maturity concentration, quality and sectors of current accounts similar to the
City’s.
PFM manages client portfolios on a customized basis according to each client‘s specific criteria. As
a result, the portfolio characteristics of each will vary depending on the specific objectives and
constraints. PFM‘s portfolios are well-diversified and of high credit quality. We seek to structure
portfolios to safely capture value within each client‘s allowable investments such as U.S. Treasuries,
Federal Agencies, Temporary Liquidity Guarantee Program Corporate securities, and high-quality
corporate securities. The average credit quality of our portfolios is AAA.
In a more normalized interest rate environment, cities similar to the City of Goodyear, target
average portfolio durations close to 1 ½ to 2 years and measure portfolio performance in
comparison to U.S. Treasury benchmarks in the 1-3 year or 1-5 year range. Since the beginning of
the financial crisis and the ensuing collapse of interest rate levels, we have managed the durations of
our clients‘ portfolios more conservatively to minimize their exposure to interest rate risk and
market value deterioration.
3. Describe the primary strategies for adding value to portfolios (e.g., market timing, credit
research, trading)
PFM seeks to add value while minimizing our clients‘ exposure to credit risk and market risk. We
do not seek to boost yields by making speculative investments, taking higher levels of risk by
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 13
investing in securities with maturities longer than appropriate, or by investing in lower-rated
securities. The strategies we will use to add value to the City‘s investment program include:
Issue Selection and Credit Analysis. The average quality of our portfolios is ―AAA,‖ and we
generally seek to reduce risk by emphasizing U.S. Treasury, Federal Agency, and FDIC-
Guaranteed obligations that have lower risk than comparable-maturity corporate securities. We
will evaluate the investment types that the City is comfortable holding and recommend
securities based on PFM‘s assessment of issuer quality and rating, credit trends, issue structure,
and liquidity. Similar to the authorized investments outlined in the City of Goodyear‘s
Investment Policy, many of our clients‘ portfolios comprise only U.S. Treasury and Federal
Agency securities. For any non-governmental issuers, PFM has a formal internal credit process
that requires an analysis, write-up and approval by the Credit Committee of all new credits.
Once approved, a company is subject to regular review and updates, although market
developments could trigger an immediate review.
Duration Management. We will seek to add value by re-balancing the portfolio duration to
take advantage of interest rate trends. Consistent with the portfolio‘s target duration, we will
position the portfolio‘s duration with a shorter bias when rates are rising and longer when rates
are falling. Disciplined duration management helps to enhance a portfolio‘s long-term
performance and reduce the portfolio‘s volatility. For example, in the current environment we
are cautiously managing the duration of our clients‘ portfolios to balance the steepness of the
current yield curve against the likelihood of future interest rate increases as we anticipate the
beginning of a new interest rate cycle.
Yield Curve Placement and Sector Weighting. When we design a portfolio and select
securities, we do not use a strict cash match or portfolio optimization approach; rather, we
monitor the relationship between various security sectors (e.g., U.S. Treasury vs. Federal
Agency) and positions on the yield curve (different terms to maturity) and select instruments in
those sectors or maturity ranges that currently offer the most value. This is a low-risk approach
to enhance earnings and structure a portfolio to perform well over time.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 14
For example, as shown in the table and chart above, in the fourth quarter of 2008, as spreads
between Treasuries and Federal Agencies reached record highs, we overweighed our portfolios
in the Agency sector. Our strategy added value to our clients‘ portfolios as spreads tightened
throughout 2009 and resulted in vast outperformance and provided opportunities to book
significant gains. As a representative illustration of the result of this strategy, for 2009 the PFM
1-3 Year Composite outperformed the Merrill Lynch 1-3 Year Treasury Index by 127 basis
points (1.27%). A full copy of PFM‘s composite data is included in the appendix.
Market Analysis. Although we buy every security with the intent to hold it to maturity, we
monitor the markets on an ongoing basis, looking for opportunities to re-balance the portfolio
among security market sectors and/or maturities that could safely add value and enhance
investment performance. PFM‘s portfolio managers and traders are assigned to specific market
sectors in order to monitor products and opportunities; these responsibilities run across all
portfolios. PFM has developed analytic resources and software to structure portfolios, identify
trading opportunities, and respond to changes in the sentiment of the fixed-income market.
This enables us to trade among sectors or maturity ranges to capture incremental value in the
market without exposing the portfolio to unnecessary risks.
Competitive Shopping. PFM is an independent advisor; therefore, we do not have an
inventory of securities that we ―re-sell‖ to clients. We solicit competitive bids/offers from at
least three qualified financial institutions on every transaction, and may get as many as five or
six bids/offers, depending on the security and the market environment. To further protect our
clients, PFM only transacts business with firms whose financial conditions we have assessed,
and are on our approved broker/dealer list. PFM currently works with 33 broker and dealers,
including 17 primary dealers.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 15
Please see the following actual example, which illustrates different security pricing from twelve
different brokers for the same FHLB security and the client benefit (higher yield) achieved
from PFM‘s competitive selection:
Example of Value Added by PFM’s Competitive Shopping Process
Action: Sell
Trade Date: July 22, 2010
Security: FHLB Note
Coupon: 3.50%
Maturity: December 9, 2016
Par: $26,710,000
Actual Bid Results
Dealer Yield Price Principal
Broker 1 2.561% 105.491 $28,176,646
Broker 2 2.580% 105.376 28,146,014
Broker 3 2.587% 105.334 28,134,752
Broker 4 2.591% 105.310 28,128,319
Broker 5 2.616% 105.160 28,088,150
Broker 6 2.617% 105.154 28,086,545
Broker 7 2.627% 105.095 28,070,817
Broker 8 2.627% 105.094 28,070,496
Broker 9 2.647% 104.974 28,038,432
Broker 10 2.667% 104.854 28,006,409
Broker 11 2.677% 104.794 27,990,413
Broker 12 2.682% 104.764 27,982,419
Qualitative Benefits. The most important qualitative benefit we offer our clients is our credit
research process. Because we understand the need to safeguard the public trust, PFM conducts
independent credit research and analysis to select investments that are appropriate for public
funds. We avoided the many issuers that entangled several public agency investors during the
credit and financial crisis late in 2008 and 2009 (e.g., Lehman losses sustained by the AzLGIP).
Because of our credit analysis, none of our clients were placed in the position of having to
report losses due to default, as many treasurers and finance directors were forced to do.
Treasury Workload Relief. Additionally, there are a number of other treasury responsibilities
where PFM‘s services provide workload relief to our clients. In a discretionary management
role, PFM takes responsibility for many of the time-consuming, day-to-day activities related to
managing a portfolio, including competitively shopping transactions, coordinating trade
settlement with the broker and custodian, reconciling investment activity, monitoring credit
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 16
quality, and preparing investment reports and GASB Statement disclosures. With PFM
managing these tasks, City staff has more time to spend on their many other financial
responsibilities.
4. Describe the process you would recommend for establishing the investment objectives and
constraints for this account.
PFM‘s ultimate goal is to function as an extension of the City‘s staff, assuming day-to-day
responsibilities and formulating specific strategy recommendations. We want to work with the City
to improve portfolio returns and the overall efficiency of the City‘s investment program. However,
we view the task of investing the funds in the portfolio as only one part of the engagement. There
are several important tasks that are involved in the transition and initial stages of the engagement.
Meet With Staff To Better Understand Investment Objectives and Tolerance for
Risk. Prior to making any investment recommendations, PFM will work with City staff to
gain a better understanding of the City‘s investment program. As part of this initial phase,
we will review the City of Goodyear‘s newly adopted Investment Policy and investment
reports, and suggest further enhancements, if needed. The formal Policy review would
ensure that the Policy fully complies with current Arizona Revised Statutes and
incorporates current industry standards and safeguards. We will also meet with staff to
discuss the City‘s current investment approach and any important practices or policies. In
particular, PFM will want to focus on the following areas:
Level of risk tolerance
Cash flow and liquidity requirements
Investment decision making process
Reporting requirements and procedures
Broker/dealer relationships
Perform cash flow analysis to determine current and future liquidity needs. PFM has
dedicated significant resources to modeling cash flows, since accurate cash flow projections
play a critical role in determining the proper allocation between short-term liquidity needs
and longer-term funds, and in developing an effective investment strategy for the City‘s
funds. From our experience with other cities, we have come to recognize that each has
unique requirements, and our understanding of your specific cash flow patterns will enable
us to develop an investment strategy that more accurately reflects the City‘s needs.
Develop a long-term investment strategy and select an appropriate benchmark.
Craig Clifford and Lauren Brant, the engagement team leaders, and the portfolio manager,
Bob Cheddar, will work with the City of Goodyear to develop a long-term investment
strategy that will set the framework for all subsequent investment decisions. The strategy
will be predicated on the City‘s expected cash flow requirements, Investment Policy, and
risk tolerance. The strategy will comply with the Arizona Revised Statutes, the City‘s
Investment Policy, and the dictates of prudent public-funds investing. We will also design
an investment strategy with adequate safeguards to ensure the safety and liquidity of funds
while simultaneously providing enough flexibility to allow the City to meet realistic
performance objectives.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 17
We will work with the City of Goodyear to select a performance benchmark that addresses
the City‘s specific investment objectives, tolerance for risk, types of investments, maximum
maturity limits, and cash-flow requirements. We believe an in-depth discussion about the
benefits and disadvantages of using various benchmarks would be helpful when trying to
determine what would be appropriate. Through extensive communication with the City of
Goodyear, we will ensure that the benchmark ultimately selected will address the City‘s
return expectation, as well as the volatility of returns.
5. Describe you firm’s in-house technical and research capabilities. Are outside sources used
by the firm on a regular basis?
PFM‘s investment management activities are supported by our extensive in-house research
capabilities and technical expertise, which have been tailored to meet the needs of our public sector
clientele. Unlike most investment advisors, we only focus on those investments suitable for the
public sector—fixed-income securities that have credit ratings of ―A‖ or better and maturities that
are generally under five years. Our portfolio managers and analytical team utilize our in-house
accounting system and proprietary computer models to quickly analyze market conditions, identify
value, and minimize risk with respect to the specific fixed-income securities that public agencies are
permitted to purchase. These proprietary models include:
• PFM’s Duration Model analyzes the optimal portfolio duration for a given target duration
and duration band based on current interest rates, yield curve, and interest rate trends.
• PFM’s Horizon Analysis Model calculates the expected total return of a set of sample or
actual portfolios under a variety of interest rate assumptions. This model also allows us to
perform scenario analyses and ―what-if‖ testing on portfolios; enabling us to anticipate the
performance of the portfolio or to test trade ideas and alternative portfolio structures.
• PFM’s Duration Value Analysis Model analyzes the value of securities within a sector to
determine the bond that has the highest value relative to its duration.
• PFM’s Cross Spread Analyzer assimilates and compares the yields on every available
Treasury note, Treasury bill, and Federal Agency issue available in the market. It quickly
displays current relationships as well as recent trading ranges, making identification of
investment or swap (i.e., investment exchanges among sectors) opportunities from vast
amounts of raw data.
• PFM’s Sector Spread Model analyzes the market to identify which sectors offer the best
relative value. This information is useful in selecting security sectors and maturities for
purchase and for identifying potential restructuring opportunities.
Additionally, our portfolio managers and analytical team have access to four major on-line market
trading systems, Bloomberg, MarketAxess, Reuters, and TradeWeb. We also have access to
financial market news from Dow Jones, the Associated Press, Bloomberg News, and several
specialized wire services. In addition, we speak daily to approximately 20 major government
securities dealers and receive market information from them that assists us in identifying specific
market opportunities.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 18
6. Describe your in-house credit review and risk control process. Does your firm assign credit
research to specialists?
PFM values safety of our clients‘ funds above all else. As such, there are no shortcuts in PFM‘s
credit review process. Unlike other investment advisors, we do not subcontract for credit research,
and we do not run our research out of a unit that is completely separate from our asset
management operations. PFM‘s credit research is performed by our in-house Credit Committee
who employs a rigorous, market-driven approach that evaluates both the quantitative and
qualitative aspects of corporate issues from the perspective of a public agency investor. PFM‘s
Credit Committee researches every issuer that we would consider purchasing for our clients,
whether the issuer is a Federal Agency, a large bank, or a medium sized manufacturer. The factors
the Credit Committee analyzes include:
1. Current and expected market conditions
2. Industry trends
3. Corporate earnings reports and quarterly financial statements
4. Price movement of issuer fixed-income and equity securities
5. News releases
6. Rating agency outlooks and actions
The Credit Committee is lead by Bob Cheddar, Senior Portfolio Manager, who is also part of our
proposed investment advisory team for the City of Goodyear. The Committee has access to a wide
range of resources to assist with this process. PFM subscribes to several economic services and we
receive regular economic and company data from major banks, securities dealers, and issuers. We
also subscribe to Moody‘s Investors Service and Standard & Poor‘s Rating Agency, which provide
an additional credit assessment of the securities we purchase. These resources supplement and
enhance PFM‘s in-house resources and provide broad credit perspectives used to evaluate the
credit quality of a particular issuer.
Our credit review process has been time tested. The recent credit crisis was unlike anything the
market has ever witnessed. Our proactive and conservative approach helped our clients to avoid
losses and liquidity issues related to the effects of the crisis. As the credit markets seized up in
2007, some investment managers and their clients lost millions of dollars in principal. PFM‘s
stringent credit review process allowed us to avoid these types of losses. An example of this is
evident by looking at events that transpired in the investment market over the past few years.
During this time, many investment managers did not perform enough due diligence in analyzing the
credit of corporate securities for their public clients. This was not the case for PFM as we sold all
our clients‘ asset-backed obligations in June and July 2007, nearly two months before the market
witnessed the most severe disruptions in the credit markets in several decades.
7. What process do you use for determining a permanent impairment of security? How is an
impairment communicated to the City?
PFM has never purchased or held a corporate security for a client portfolio that was permanently
impaired. Should a security in the portfolio exhibit any signs of credit distress, PFM will proactively
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 19
conduct a market analysis of the security and perform an impact analysis of holding or selling the
security. Any deterioration in the quality of an investment holding that could result in the
impairment of a security would be promptly communicated to the City along with our
recommended approach for resolving the situation.
8. How will your firm handle fluctuating cash flows and the cash forecasting process?
Having an accurate cash flow projection is a vital element in developing an investment strategy.
PFM has worked with many entities to track and forecast cash flows. PFM has developed a
sophisticated cash flow model that will help us identify what portion of the City of Goodyear‘s
portfolio is needed for liquidity and what portion represents ―core‖ funds that could be invested
with longer duration at higher rates. In addition, the model builds in a liquidity cushion to account
for unforeseen changes in cash flow patterns or to be prepared if emergency cash flow needs arise.
The following example is a graphic representation of the results of an analysis prepared for a PFM
client.
Having worked with municipalities for over 30 years, PFM understands the cash flow patterns of
cities, with revenue coming primarily from sales and property taxes and outflows largely dependent
on the amount and timing of services provided to its citizens. In addition to liquidity requirements,
portfolios must be responsive to a broad range of financial parameters, including those outside of
the investment arena. We will work with the City to develop portfolio liquidity and return
characteristics appropriate for the portfolio‘s overall investment objectives by emphasizing high
quality, liquid securities and by carefully managing portfolio duration to manage ma rket value risk
and exposure to market value losses.
9. Do you have or would you recommend there be policy restrictions with respect to maturity,
sector, quality and coupon.
PFM has developed and reviewed investment policies for numerous public agencies for more than
three decades. From our perspective, policy restrictions, in excess of what is required by the
Arizona Revised Statutes, should be used to the degree they will help safeguard the portfolio
consistent with the client‘s specific requirements or risk preferences. The City of Goodyear has
already initiated this process by updating and adopting a new Investment Policy this past summer.
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Example City Cash Flow Analysis
Historical Short-term Portfolio Historical Core Projected Short-term Portfolio Projected Core
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 20
Within appropriate safeguards, we encourage flexibility in an investment policy to make it easier to
adapt to changing market conditions and the client‘s investment requirements. At the beginning of
our engagement, we will meet with the City to discuss your newly adopted Investment Policy and,
based on the City‘s objectives and constraints, develop specific maturity, sector, and credit quality
recommendations suitable for the City of Goodyear.
10. Provide your list of approved brokers/dealers. How are brokers/dealers selected? What
process do you have in place to monitor brokers/dealers after they have been approved?
To protect our clients, PFM only transacts business with brokers/dealers that we h ave reviewed
and added to our approved list. The list is updated as situations warrant and is reviewed at least
quarterly. PFM has established policies and procedures to evaluate and monitor firms‘ credit
worthiness and their ability to effectively and adequately perform the duties necessary for trade
execution. This review includes an assessment by our internal Credit Committee of many
important factors including market presence, capitalization, company history, profitability and
management, product availability, trade execution, timeliness of information, quality of service, and
special circumstances.
A copy of PFM‘s most recent list of approved brokers/dealers is included in the appendix.
11. Describe your firm’s experience in investing municipal bond proceeds and familiarity with
U.S. Treasury arbitrage restrictions as they relate to the investment of proceeds of
municipal bonds.
PFM has been managing the proceeds of tax-exempt bond issues since 1980. In just the last five
years, we have invested well over $100 billion of bond proceeds for our clients. Additionally, as
part of PFM‘s holistic approach to the public sector, we have an in-house Arbitrage Rebate Services
group that is nationally recognized for their ability to incorporate arbitrage considerations into
optimizing both debt and investment strategies.
When managing bond proceeds, our key objective is to maximize the earnings that the issuer may
retain while complying with all aspects of the Tax Code and rebate regulations, thereby increasing
the funds available to finance issuers‘ capital projects. As an example, for a bond proceeds
construction account, we will carefully evaluate the client‘s projected cash flow needs as a basis for
the development of a target duration and overall investment strategy. After purchasing the initial
portfolio, we monitor the drawdown schedule through direct contact with client project managers
or engineers and continually update cash flow projections and the accrued rebate liability of the
issue. This active approach allows us to make appropriate adjustments to the portfolio so that
assets and liabilities are properly matched and earnings are maximized to the extent permitted by
the arbitrage regulations.
Attention to arbitrage and rebate compliance is an integral part of our focused public sector
management of bond proceeds—even in the current negative arbitrage environment. The
integration of the investment function and arbitrage and rebate compliance ensures that attention is
given to the requirements of federal law throughout the investment period and not ―after the fact.‖
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 21
Before we begin investing a client‘s bond proceeds (and if an existing client, before the new bond
issue has settled), we consider all relevant arbitrage considerations, including:
Is the issuer likely to meet, based on the estimated draw schedule, any of the expenditure
exceptions?
Would there be a significant expected benefit from electing penalty in lieu of arbitrage
rebate, or, if the issuer has already elected penalty, how can PFM assist the issuer in
minimizing the penalty and maximizing retainable earnings?
Has the issue been refunded? Is the 3-year temporary period still in effect? Have any funds
become yield restricted?
Must the bond yield be recalculated by virtue of a refunding?
Does the bond yield reflect payments made for a ―qualified hedge‖?
Are there any opportunities to blend yields, e.g., between a construction fund with positive
arbitrage and an escrow with negative arbitrage?
Would an investment in tax-exempt securities allow the issuer to increase retainable
earnings?
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 22
E. Portfolio Management
1. Are portfolios managed by teams or one individual?
PFM takes a team approach to managing portfolios. For the City‘s portfolio, Bob Cheddar, CFA,
will serve as the primary portfolio manager, assisted by one or more traders. Ken Schiebel, CFA
will serve as a secondary portfolio contact. In addition, Lauren Brant and Craig Clifford, the
proposed engagement managers, will have access to portfolio positions at all times and will
participate in discussions about investment strategies. Consequently, at all times, there are at least
four PFM individuals who will be very familiar with the City‘s portfolio and its unique requirements
and can provide back up if Bob is away. This team approach will provide the City with the
personal attention it deserves while utilizing PFM‘s extensive resources and experience.
2. Primary client contact is delegated to which of your firm’s professionals?
Craig Clifford will serve as the primary contact to the City.
3. Describe procedures used to ensure that portfolios comply with client investment
objectives, policies and bond resolutions.
PFM takes very seriously the issue of compliance with our clients‘ financial policies, guidelines, and
preferences, as well as with all applicable state and federal statutes. Inherent in our internal control
structure and operations are a number of procedures that ensure strict compliance, including:
Our trade input system including fully automated, real-time compliance assurance functions.
– The system includes client specific requirements, such as permitted sectors, holding limits,
minimum credit criteria, and other policy limitations.
Daily review of all transactions by PFM‘s Chief Investment Officer.
– In addition, analytical and research personnel, along with portfolio management staff,
examine our clients‘ portfolios regularly.
Client investment policies available at all times to portfolio managers and traders.
Quarterly comprehensive performance report.
– Report includes a description of the portfolio‘s credit quality distribution and a
comparison of the portfolio‘s sector distribution to the City‘s Investment Policy.
Our knowledge of Arizona Revised Statutes requirements.
Checks against client guidelines and specific strategy requirements.
4. Which of your firm’s offices would service this account? What specific services would each
office provide, i.e., portfolio management, customer service, research compliance, etc.?
PFM‘s Phoenix and San Francisco offices would primarily service the City‘s account. Craig
Clifford, CPA, in PFM‘s Phoenix office will be the City‘s day-to-day contact, and Lauren Brant, the
City‘s co-engagement manager, works from both PFM‘s Phoenix and San Francisco offices. A
majority of the customer service tasks, report generation, and persons of contact are located in San
Francisco.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 23
5. What are the hours of operation of the customer service unit (specify time zone)? What
back-office support do you provide?
As the City‘s primary contact, Craig Clifford, will bring to bear the resources necessary to provide
the highest level of service to the City of Goodyear. He will be available from 7:30 am MST to 6:30
pm MST. Lauren Brant will also be available during those times. If Craig or Lauren are not able
to assist the City with a specific inquiry, they and the City will have direct access via phone and
email to PFM‘s portfolio accounting staff, trading room staff, and operations staff to ask questions
regarding statements, accounting methods, portfolio trade details, or custodial reconciliation.
6. How does your firm handle inquiries requiring research and adjustments? Are there
established turn-around times for research and adjusted items? If yes, specify.
Any inquiries would be directed to Craig Clifford who would follow up with our trading room,
other members of the engagement team, or accounting group, as necessary. While we do not have
established time-tables for research and adjustment items, our systems and procedures are
structured to help us proactively identify any discrepancies and quickly correct any errors. When we
are notified of a problem, we work to resolve the problem as quickly as possible, while judiciously
providing the City with status updates regarding our progress.
7. During what hours are portfolio managers and customer service representatives accessible
to the City? By what means (e.g., e-mail, phone, Bloomberg) may the City access them?
As discussed in question 5 above, Craig and Lauren will be available via email and via phone from
7:30 AM MST to 6:30 PM MST each day. Bob Cheddar, the City‘s proposed portfolio manager
and Brian Raubenstine, his assistant trader, are located in the Harrisburg, PA office and will be
available 8:00 AM to 7:00 PM EST Monday through Friday. They can be contacted via e-mail or
phone, and will also be available to attend meetings with the City either in person or via webinar
when requested.
8. Does your institution have a formal quality assurance program for this service? If yes,
describe.
We do not have a formal quality assurance program in place. That said, Lauren Brant, Managing
Director and proposed co-engagement manager, is committed to the City and will stay in close
contact to ensure that it receives the highest quality service possible.
We also encourage the City to contact our references who will attest to our dedicated client service
performance.
9. How often would you hold performance review meetings at the City’s office? Who would
represent the firm at these meetings?
PFM is committed to frequent communication as the key to a successful relationship, and we will
encourage a close dialogue between PFM‘s engagement team and City staff. We will meet with the
City as often as necessary to review portfolio strategies and to ensure that its investment objectives
are met. We recommend performance review meetings at least once a quarter. Either Lauren
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 24
Brant or Craig Clifford, and frequently both, will represent PFM at all meetings with the City of
Goodyear. A portfolio manager will also be available to attend meetings at the City‘s request.
In addition to any formal meetings, City of Goodyear staff will have daily access to our portfolio
managers, as well as our client service, analytical, and accounting staff by telephone to answer any
questions. The City will also have visibility to month-to-date transactions and a daily listing of
portfolio holdings via the Internet to keep the City informed about current investment activities.
10. Describe your back-office interface and coordination with custodian.
PFM will work with the City‘s custodian to facilitate monthly and inter-monthly reconcilements
when necessary. Because PFM is not a custodian bank and does not advise on our client‘s general
ledger accounting or internal control issues, we provide a level of independence that is essential in
today‘s regulatory environment.
We are in regular contact with each of our clients‘ custodians. Our trading desk performs all
activities related to trade execution and coordinates settlement with the client‘s custodia n. Debbie
Goodnight, a CPA with 27 years of accounting experience, and her staff of fifteen professionals
will be responsible for reconciling the City‘s investment positions with the custodial bank. PFM
currently provides reconcilement services for over 400 clients with more than 1,200 portfolios that
consist of nearly 10,000 positions held in more than 3,000 different securities. Additionally, we
compare the client‘s statement to PFM‘s portfolio records to ensure that all trades have been
confirmed and that balances are accurate.
As part of our service, we can assist the City of Goodyear in the process of evaluating an existing
custodian and/or help the City through the process of selecting a new custody bank for your
investment portfolio securities.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 25
F. References
1. Please provide five (5) local agency client references, including at least three (3) from
Arizona, including length of time managing their assets, client name, address and phone
number.
Client/Contact Client Since
City of Surprise
Scott McCarty, CPA, CFO
(623) 222-1820
16000 N. Civic Center Plaza
Surprise, AZ 85374
Since 2010
City of Chandler
Dennis Strachota, Management Services Director
(480) 782-2257
Dawn Lang, Assistant Director of Finance
(480) 782-2255
55 North Arizona Place, Suite 201
Chandler, AZ 85225
Since 2005
City of Tempe
Karen Huffman, Controller
(480) 350-8256
31 E. 5th Street
Tempe, AZ 85281
Since 2008
City of Mesa
Doug Yeskey, Controller
(480) 644-2275
20 East Main Street, Suite 350
Mesa, AZ 85201
Since 2010
Arizona State University
Joanne Wamsley, Deputy Treasurer
(480) 965-6940
1551 S. Rural Road
Tempe, AZ 85281
Since 2002
University of Arizona
Duc Ma, Director Capital Finance Funding, Property,
Internal Loan Services
(520) 621-3220
888 N. Euclid Avenue
Tucson, AZ 85722
Since 2008
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 26
G. Reporting
1. Describe how your firm typically reports performance.
We report performance to our clients on a quarterly basis and provide detailed portfolio holdings
reports on a monthly basis. The structure of our quarterly performance reports is intended to
clearly and concisely convey information regarding the entity‘s long-term objectives, current
performance, portfolio characteristics, investment strategy, and the market environment. The key
elements we include in the report are as follows (a sample quarterly report and monthly statement is
included in the Appendix):
Economic overview. This provides the necessary context to help understand the status of
the portfolio relative to current and expected market and economic conditions.
Strategy summary. Although the long-term strategy for a portfolio should remain
consistent, it is important to describe changes in tactical decisions and how they will impact
the portfolio.
Summary portfolio information. Sector distributions, credit quality distributions, market
value, and duration information in summary form to describe the overall composition of
the portfolio and to ensure compliance with the City‘s Investment Policy and the Arizona
Revised Statutes.
Performance comparison. The portfolio‘s performance is compared on a total return
basis to an objective market index selected by the City based on its investment objectives
and risk-return preferences. Rather than an absolute return, it is the portfolio‘s performance
relative to the benchmark that will indicate if the portfolio is being managed effectively
without undue risk.
Detailed listing of securities. The report also provides detailed information on each
security in the portfolio, including, security description, issuer name, credit rating, duration,
and each security‘s value on a par, market, and amortized cost basis. City of Goodyear staff
will also have visibility to month-to-date transactions and a daily listing of portfolio
holdings via the Internet to keep the City informed about current investment activities.
All performance calculations are reported on a total return basis and presented in accordance with
CFA Institute‘s Global Investment Performance Standards (GIPS).
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City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 27
2. Provide a performance composite showing the past five (5) years. The composite should
consist of a minimum of five (5) current accounts comprising securities that are permitted
under the Arizona Revised Statutes. NO SAMPLE PORTFOLIOS. The duration of the
composite should be comparable to the Merrill Lynch 1-3 Year U.S. Treasury Index.
Provide information regarding the composition and duration of the data used, including
the number of portfolios making up the composite, for your presentation of performance
history. The composite should be prepared and presented in compliance with the CFA
Institute's Global Investment Performance Standards “GIPS”.
The following table is a summary of performance history for the past five years for PFMAM‘s 1-3
Year Fixed Income Composite. This composite consists only of actual client portfolios—no model
portfolios. PFMAM‘s returns are calculated and compiled in compliance with the CFA Institute‘s
Global Investment Performance Standards (GIPS®), formerly AIMR.
The portfolios comprising the composite are invested in government and high-quality corporate
fixed-income securities. Complete composite performance and disclosure for our 1-3 Year Fixed
Income Composite is included in the Appendix. Additional composites are available upon request.
Annualized
Std Dev
Annualized Merrill Lynch
Merrill Lynch Std Dev Merrill Lynch
Composite 1-3 Year Composite 1-3 Year Historical 1-3 Year
Year Return Treasury Index Duration Treasury Index Returns Treasury Index
Gross-of-Fees Annualized Returns (ending 9/30/2010)
1 Year 2.56% 2.53% 1.71 1.83 1.06% 1.40%
2 Year 4.13% 3.00% 1.61 1.79 1.57% 1.46%
3 Year 4.56% 4.07% 1.59 1.73 1.73% 1.91%
4 Year 4.85% 4.50% 1.58 1.71 1.57% 1.75%
5 Year 4.70% 4.35% 1.57 1.71 1.44% 1.61%
Number of accounts in Composite: 87
3. Will your firm develop reporting procedures in line with the City’s needs and objectives,
i.e., accessible, downloadable?
Yes, PFM is willing to work with the City to provide reports that will meet its needs and objectives.
4. Are confirmations of investment transactions sent directly by the broker/dealer to the
client?
Yes, confirmations of investment transactions will be sent directly by the broker/dealer to the City.
Additionally, PFM will archive the City‘s trade tickets for seven years following the trade date.
5. How does your firm reconcile your reported returns with the custodian and/or client? How
often? What items do you reconcile?
PFM‘s Accounting Department reconciles portfolio holdings and transactions to various custodians
on either a weekly or monthly basis. PFM has built an automated interface with six different
custodians that encompasses 85% of PFM‘s portfolios. The automated process is completed both
weekly, for PFM‘s short-term investment pools, and at the beginning of each month for individual
security holdings.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 28
For individual portfolio positions specifically, the reconciliation process compares CUSIP, issuer,
par values, original cost, coupon rate, and maturity date. This report also compares the cash/money
fund balances. The transaction comparison is used to ensure that all trades, withdrawals,
contributions, interest payments, and all other security transactions are accurate. Differences
between PFM and the custodian are investigated. For custodial banks where there is no automated
interface, the same steps are completed manually.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 29
H. Implementation
1. Discuss all the steps involved with the implementation process and your estimated timeline
if the City transfers a portion of its cash portfolio to your organization for management.
The implementation process consists of two components, documentation and investment plan
development, either of which can be accelerated depending on how quickly the City wants to get
started:
Documentation
The first step of our implementation process involves completion of all required documentation,
including the City contract/investment advisory agreement, custodial agreement, and authorization
forms. The typical time for this usually runs between two to three weeks depending on the City‘s
own internal review and approval process. Once City Council approval has been received and all
documentation completed, the City can transfer cash or securities to the City‘s custodial account
for investment and PFM can begin managing the portfolio. This part of the process typically takes
only a few days.
Investment Plan Development
As we manage each client‘s portfolio on a customized basis, an important part of the
implementation process is working with our client to outline their specific objectives for the
portfolio. This process is described in detail in our response to Question D.4. This process typically
takes a couple of weeks and can begin while the documentation is being completed.
The following represents a typical implementation process
Documentation (2-3 Weeks)
-Review and approve contract documents
-Receive City Council approval
-Complete custody account trade authorization
PFM selected
Investment Plan Development (2-3 Weeks)
-Meet with City Staff
-Document review
-Cash flow/benchmark discussion
-PFM to provide strategy recommendations
Investment Management (On-Going)
-City transfers cash or assets to its third-party custodian
Documentation (2-3 Weeks)
-Review and approve contract documents
-Receive City Council approval
-Complete custody account trade authorization
Documentation (2-3 Weeks)
-Review and approve contract documents
-Receive City Council approval
-Complete custody account trade authorization
PFM selected
Investment Plan Development (2-3 Weeks)
-Meet with City Staff
-Document review
-Cash flow/benchmark discussion
-PFM to provide strategy recommendations
Investment Plan Development (2-3 Weeks)
-Meet with City Staff
-Document review
-Cash flow/benchmark discussion
-PFM to provide strategy recommendations
Investment Management (On-Going)
-City transfers cash or assets to its third-party custodian
Investment Management (On-Going)
-City transfers cash or assets to its third-party custodian
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 30
2. What is the average lead-time for opening an account? What are the critical factors that
might impact lead time?
The average lead-time for completing the required documentation and opening an account, once
City Council approval has been received, is around a week. As needed, we will be available to assist
City staff through the City‘s own approval process.
As part of the implementation process, we will also need to meet with City staff to determine an
appropriate investment strategy and performance benchmark(s) for the City‘s investment. As part
of this process, which is described in more detail in our responses to Questions D.3 and D.4, we
will review the City‘s investment objectives, policies, liquidity requirements, and risk -return
preferences. This process typically takes a couple of weeks. However, we will often start this
process right after we are selected, but before City Council approval, so we are ready to begin
managing the City‘s portfolio as soon as we receive City Council approval.
If requested, and as a part of our services, we can help the City of Goodyear evaluate the quality
and cost of obtaining a custodian through a RFP/RFQ process.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 31
I. Disaster Recovery
1. Briefly describe your firm’s disaster recovery plans. Include current estimates of time
frames required to resume service in all functional areas, including systems, operations and
client administration.
We have a business continuity plan in place that provides for occurrence s as minor as hardware
failure to loss of the physical office space. In the area of communications, we have a plan in place
with our carrier whereby all phone service can be rerouted to our Philadelphia office within one
hour of a declared disaster. If we lose a single piece of mission critical hardware, we maintain
nightly back-ups that provide us with the ability to restore any system on a new piece of hardware
as of the close of business from the previous day. Our contract with our maintenance vendor
provides us with either a fix of hardware or replacement within four hours of a service call being
placed. Our formalized Disaster Recovery Plan and procedures are reviewed and updated annually.
2. How often are contingency plans reviewed and tested? Briefly describe the testing
methodology (e.g., simulated disaster with actual offsite system regeneration and
recovery). When was the plan last tested?
As a standard policy, PFM conducts an annual test of its Disaster Recovery Plan. The plan assumes
that the Harrisburg, PA facility and all critical business systems are unavailable. The objective of the
test is to ensure that PFM can resume execution of critical business functions within a
predetermined recovery time in the event of a major disaster. The scope of the annual test includes
the recovery of all essential business applications, network connectivity, telecommunications, and
access to market data sources, all of which are needed to support the critical business functions (i.e.,
Accounting, Trading, etc.) of PFM. The test validates all written system and business recovery
procedures and communication protocols, and ensures that all essentials necessary to resume
business are intact and understood by all test participants.
The test begins with the reporting of a disaster to the head of PFM (―Crisis Manager‖ or ―CM‖).
The CM will immediately convene a conference call with the Crisis Management Team (―CMT‖) to
evaluate the extent of the disaster. The CM declares a disaster and the CMT executes the Disaster
Recovery Call Tree, which contains the contact information for all critical PFM management and
staff. The Information Technology (―IT‖) team will immediately execute its procedures to bring all
corresponding disaster recovery systems and application online at the Business Recovery Facility
(―BRF‖) located in the Philadelphia, Pennsylvania office. Customer service toll-free lines and client
websites are also redirected to Philadelphia.
As part of the test, designated Harrisburg staff will travel to the Philadelphia BRF. When they
arrive, individual workstations, critical business systems, telephones, and other essentials will be
made available for them to begin their testing steps.
Any issues that arise during the test are immediately addressed and documented by onsite IT staff.
Once the test is completed, a post mortem review of the test is conducted with all participants.
During this exercise, all issues are prioritized and a plan for their remediation is established. Once
critical issues are worked on and resolved, they will be validated as part of the next annual test.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 32
The date of our last disaster recovery test was November 11, 2010.
3. How frequently are customer records backed up? Are backup transaction files stored in the
same location as the primary copy? If not, where are those files stored?
Records are backed up daily. These tapes are maintained for one month, weekend back-up tapes for
three months, and month end back-up tapes for three years and yearly back-up tapes for seven
years.
Monthly and year-end back-up tapes are stored offsite by an archive company and are retrieved
within four hours of a call being placed.
4. Is there a “hot” alternate backup processing site? Describe its location and capabilities.
What is the contingency plan if a “hot” backup site is not available and a disaster occurs
that prevents all work from being processed on a same-day basis?
All application and database servers for PFM have a hot spare server in our Philadelphia office that
is updated on a nightly basis or via ―real-time‖ replication, and in the advent of the total loss of our
building, is available for immediate use. Additionally, hot-site disaster recovery services are
provided under a contract with Maintech Systems. We have a process in place whereby staff
members would travel to our Philadelphia office and be able to resume business within four hours.
We can operate out of the Philadelphia office indefinitely.
The likelihood of both the primary and backup facilities being unavailable is remote give n the
distance between the two. However, if both were unavailable at the same time, we would execute
alternate plans, which would include relocating PFM staff to other nearby PFM offices and
implementing a combination of manual and system based procedures.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 33
Fee Schedule
1. Include a copy of your firm’s fee schedule. State your fee in basis points for assets under
management.
For the City‘s scope of services, PFM‘s proposed fee schedule is as follows:
9 basis points (0.09%) per year on the first $100 million of assets under management
6 basis points (0.06%) per year on assets greater than $100 million
The fee is based on the average daily net assets under management. PFM would bill the City
monthly, in arrears, based on the average assets under management for the month.
a. Indicate whether they include custodial fees and if there is a minimum annual fee.
Our proposed fee schedule does not include custody services. PFM does not provide
safekeeping services because it is our firm belief that in order to protect an agency‘s
investments, each public agency should have a separate custodian arrangement with a third-
party bank. At the City‘s request, we can assist the City of Goodyear in the RFP process for a
custodian for no additional fee.
There is no minimum annual fee.
b. Indicate if fees are charged when there is no activity in the account.
PFM‘s fees are based on assets under management (invested), rather than trading activity. Thus,
there is no incentive to ―churn‖ the account.
c. Indicate any fees for such additional services as arbitrage rebate related services.
The PFM Group brings a holistic approach to meeting the financial and investment needs of
the public sector. Additional services offered by The PFM Group include:
Financial Advising. As a financial advisor, Public Financial Management, Inc. engages in
capital planning, revenue forecasting and evaluation, resource allocation, debt management
policy development, and debt transaction management (including structuring,
documentation, and execution).
Arbitrage Rebate. PFM has provided arbitrage rebate services since 1989, using the right
resources and the right experience to secure the best after-tax arbitrage rebate result. The
cost of such calculations ranges from $1,500 to $5,000 depending on the complexity of the
calculation and time period being covered. If such a service is desired, PFM would work
with the City to identify which bond issues would need calculations and develop a fee
schedule based on City‘s specific needs.
Procurement Card. PFM offers the Power Card Program to deliver procurement cards
(―P-Cards‖) via the MasterCard platform to public entities in the United States.
Investment Advisors to the Public Sector
City of Goodyear, Arizona ~ Proposal for Investment Advisory Services| 34
Strategic Consulting. As a strategic consultant, Public Financial Management, Inc. offers
highly effective capital and operating budget advice.
For financial advisory and strategic consulting services, fees will be determined based on the
complexity of the engagement. The Procurement P-Card program is offered at no cost and
provides cash rebates based on purchasing volume, giving our clients an additional source of
revenue.
The most current fee schedule for PFM‘s arbitrage rebate services is provided below.
P-Card Program Rebate Schedule:
Annual Net
Purchasing Volume*
Sept 1, 2010 – Aug31, 2011
Settlement Period
“Net” 7 days
Rebate %
Settlement Period
“Net” 7 days
Rebate Dollars
$50,000 - $99,999 0.25% $125 - $250
$100,000 - $299,999 0.40% $400 - $1,200
$300,000 - $799,999 0.45% $1,350 - $3,600
$800,000 - $1,499,999 0.50% $4,000 - $7,500
$1,500,000 - $3,499,999 0.60% $9,000 - $21,000
$3,500,000 - $5,499,999 0.65% $22,750 - $35,750
$5,500,000 - $7,499,999 0.70% $38,750 - $52,500
$7,500,000 – $9,999,999 0.75% $56,250 - $75,000
Over $10,000,000 0.80% $80,000+
*Annual Net Purchasing Volume is defined as the total of purchases less purchase credits, cash advances and fraud charges.
Investment Advisors to the Public Sector
Appendix
Investment Advisors to the Public Sector
Offer and Acceptance Form
Investment Advisors to the Public Sector
Engagement Team Resumes
ENGAGEMENT TEAM LEADERS
Craig Clifford, CPA, CGFM, Senior Managing Consultant
Craig Clifford is a Senior Managing Consultant with PFM Asset Management LLC. He is a Certified
Public Accountant, Certified Government Financial Manager, and recently retired as the Chief Financial
Officer for the City of Scottsdale, Arizona. He has also served for other Arizona municipalities and
worked in the banking industry. He is past Executive Board member of the Government Finance
Officers Association of US and Canada, Past President of the Arizona Finance Officers Association,
and recently served on the Municipal Securities Rule Making Board Local (Bond) Issuer Advisory
Committee. He is a member of the Arizona Society of CPAs, American Institute of CPAs, Association
of Government Accountants, Municipal Treasurer’s Association, and Fellow of the American Board of
Forensic Accounting. Other previous civic experience includes: Past President of Sierra Tempe
Homeowners Association, Past Treasurer and Executive Board member of the Tempe Community
Council, Valley of the Sun United Way Committee, and Boy Scouts of America volunteer.
Craig earned undergraduate degrees in Business Management and Accounting from Arizona State
University and a Masters in Business Administration with honors from the University of Phoenix.
Craig is a native Arizonan and currently serves on the Arizona Botanical Garden’s Finance Committee.
Lauren Brant, Managing Director
Lauren Brant joined the PFM Group in 1995. A Managing Director in our Phoenix and San
Francisco offices, Lauren manages PFM’s Western Region investment advisory practice in
coordination with Nancy Jones.
Lauren serves as an engagement manager for PFM’s Western Region clients. She is responsible for
coordinating client services, providing technical and analytical support, keeping entities apprised of
pending legislation that may impact their investment portfolio, and presenting investment reports to
governing boards. Lauren works closely with her clients to formulate and implement a customized
investment strategy designed to meet their specific investment objectives. To create the optimal
portfolio structure, she gains a thorough understanding of the entity’s risk tolerances, cash flows,
and investment objectives. Lauren is also very familiar with arbitrage rebate regulations.
Lauren has conducted numerous training workshops for clients and has given speeches to national
and local municipal organizations.
Lauren is a graduate of Pennsylvania State University, where she earned a Bachelor of Science
degree in Economics.
NASD Exams: Series 52, 6 and 63.
Robert Cheddar, CFA, Chief Credit Officer & Senior Portfolio Manager
Robert Cheddar joined PFM in 2004 as a Senior Portfolio Manager. Bob manages PFM client
accounts across the country. He is also responsible for corporate bond and commercial paper
research. With the combined effort of the portfolio management group, Bob develops customized
investment strategies to improve clients’ interest earnings while limiting portfolio risk.
Prior to joining PFM, Bob was a Fixed-Income Portfolio Manager for the Wilmington Trust Corp.
In this capacity, Bob was responsible for managing short- and intermediate-term individual
portfolios. His clients included corporations, municipalities, and high net-worth individuals.
Bob received his MBA from Pennsylvania State University and a B.S. in Business Administration
from Susquehanna University. He is a member of the CFA Institute and the Philadelphia Financial
Analysts. Bob also holds the Chartered Financial Analyst designation.
PORTFOLIO MANAGEMENT
Kenneth Schiebel, CFA, Managing Director
Ken Schiebel joined PFM in 1994 and is a Managing Director and Senior Portfolio Manager for
PFM’s Western Region accounts. He is responsible for approximately 50 accounts that include
general funds, reserves, and bond proceeds with an approximate value of $6 billion for cities,
counties, state and local government agencies, universities, and other public entities. Ken has over
25 years of experience in portfolio management, investment analysis, asset/liability matching and
developing innovative investment strategies for clients. He is an expert in risk management
techniques, IRS arbitrage regulations and all facets of managing portfolios comprised of high-quality
fixed-income assets.
Prior to joining PFM, Ken spent 13 years at Aetna Life & Casualty, the large multi-line insurance
and financial services company. As Senior Portfolio Manager, he managed $5 billion of corporate
operating funds, insurance reserves and pension fund assets for Aetna and its investment advisory
clients. He was also responsible for managing Aetna’s short-term debt issuance. Prior positions
included Manager of Fixed-Income Investment Research, Senior Investment Analyst and
Administrator of Aetna’s Cash Planning Unit.
Ken has a bachelor’s degree in mathematics and computer science from the University of Michigan.
He holds the Chartered Financial Analyst designation, and is a member of the CFA Institute
(formerly known as the Association for Investment Management and Research). He is also a guest
lecturer in the University of Connecticut’s MBA program, provided expert testimony to the GASB
Deposit and Investment Risk Disclosure Task Force, and has spoken at industry conferences,
workshops and seminars.
FINRA Exams: Series 7 and 63
Marty Margolis, Chief Investment Officer, Managing Director
Marty Margolis founded what is now PFM Asset Management in 1980 and has been the Managing
Director responsible for its entire operation since then. In addition to managing the Investment
Advisory Group, Marty oversees the development and implementation of all investment strategies;
he reviews all portfolios and all the credit research. He sits on the PFM Board of Directors and is
part of the firm’s senior management team.
Marty has been a leader in developing pooled investment programs for public agencies for more
than a decade. He has been involved in the development of statewide programs in California,
Pennsylvania, Virginia, New Jersey, and Florida, and specialized pooled programs for the
government of the Virgin Islands and the Massachusetts Health and Educational Facilities
Authority.
Before his work in the investment advisory field, Marty was Special Assistant to the Governor and
Director of Program Development in the Pennsylvania Governor’s Office, where he had broad
responsibility for budgetary, fiscal and debt management activities.
Marty has a Bachelor’s Degree in History from the University of Pennsylvania, where he also
completed course work for a Ph.D. He has given workshops and seminars on debt management and
investment practice for local government officials and others.
FINRA Exams: Series 6, 26, 52, 53 and 63
Brian Raubenstine, Portfolio Trader
Brian Raubenstine joined PFM in 2008 as a portfolio trader. His present role consists of assisting
Bob Cheddar, CFA in the daily management of client portfolios primarily through the purchase and
sale of fixed income securities. His responsibilities include trading securities, portfolio structuring
and restructuring, review of investment policies and their compliance with current codes, continual
update of credit files, and settling transactions.
Brian graduated from Penn State University, earning a Bachelor of Science Deg ree in Finance with a
minor in History. He is currently enrolled in the CFA program and studying to become a Chartered
Financial Analyst.
CLIENT SERVICE
Allison Kaune, Consultant
Allison Kaune joined PFM in 2006. Her present role primarily consists of providing technical,
analytical and marketing support for clients based in Arizona and other Western states. Allison’s
responsibilities include cash flow modeling, portfolio structuring and restructuring, writing
investment performance summaries and reviewing investment policies and practices for compliance
with state statutes.
Allison is a graduate of the University of Iowa, where she earned a Bachelor of Arts degree in
History.
Paulina Woo, Consultant
Paulina Woo joined PFM as a Consultant in 2007. She works with PFM’s West Coast practice and
provides technical, analytical, and marketing support for clients primarily based in the western states.
Paulina’s responsibilities include investment performance analysis, cash flow modeling, optimized
portfolio structuring, economic research, and investment policy evaluation.
Paulina has a Bachelor of Arts degree from University of Texas at Austin in Ancient History and
History. She earned her Master’s degree at the University of California, Berkeley in Medieval
European History.
NASD Exams: Series 6 and 63
Stephen Wilson, Consultant
Stephen Wilson joined PFM in 2008 as a consultant. His present role primarily consists of providing
technical, analytical and marketing support for clients based in Arizona and other Western states.
Stephen’s responsibilities include cash flow modeling, portfolio structuring and restructuring, swap
analysis, writing investment performance summaries and reviewing investment policies and practices
for compliance with state statutes.
Stephen is a graduate of Harvard College, where he earned a Bachelor of Arts degree in History with
a minor in Economics and a citation in Spanish.
NASD Exams: Series 6
ACCOUNTING AND REPORTING
Debra J. Goodnight, CPA, Managing Director
Debra Goodnight, CPA, has overall responsibility for accounting and administration for PFM,
including portfolio accounting, pool accounting, and client billing. She monitors the integrity of the
portfolio accounting systems, verifying the mathematical accuracy of interest accruals and analytic
information. She is responsible for verification of accounting compliance with the Government
Accounting Standards Board’s regulations and guidelines. She monitors the pool reporting
requirements to ensure that they adhere to SEC guidelines. She regularly confers with independent
accounting firms on behalf of clients.
Prior to joining the PFM Group in 1990, Debra spent 9 years with American General Corporation.
As Second Vice President and Assistant Controller, she was responsible for investment accounting
operations for portfolios totaling approximately $19 billion. During her tenure, American General’s
investment accounting operations were able to reduce the failed trade rate to one-fourth the industry
standard, dramatically reduce income variances, thereby eliminating lost income opportunities, and
develop and install a mortgage-backed processing system on a local area network. Prior to joining
American General, Debra was also employed with the Controller’s Department of H.J. Heinz and
the accounting firm of Coopers and Lybrand.
Debra holds a B.S. Degree in accounting from Robert Morris College, and a M.B.A. with an
emphasis on finance from St. Thomas University. She is a Certified Public Accountant licensed in
both Pennsylvania and Texas and has taught management courses at the collegiate level. Debra has
served on the Advisory Board for Information Systems of America, Inc., providing investment
industry direction of their software development. Debra was on the Technical Advisory Committee
for GASB 40.
Investment Advisors to the Public Sector
Form ADV Part II
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 2, Item 1 A, B, C
and D
ADVISORY SERVICES AND FEES:
PFM Asset Management LLC (“PFMAM”) generally provides its clients with advice on the purchase
and sale of fixed-income securities, which are generally U.S. Treasury securities, Federal Agency
securities, high grade corporate obligations and money market instruments, to meet the investment
objectives and cash flow requirements of each individual client. PFMAM may also provide advice on
the purchase and sale of both fixed income and equity securities to clients which are pension plans,
endowments, trusts, or other post employment benefit (“OPEB”) plans. When a client grants PFMAM
investment discretion, PFMAM will have the authority to determine, without obtaining specific
consent, (1) the specific securities to be bought and sold and (2) the amount of securities to be
bought and sold, subject to limitations of state law and the applicable contract with and policies of
each client. PFMAM may provide advice on a non-discretionary basis where a client executes trades
directly or specifically approves the purchase or sale of specific securities. PFMAM generally but
does not always have brokerage discretion. If a client does not grant PFMAM brokerage discretion,
the client will direct PFMAM to use a particular broker or dealer. PFMAM also provides investment
advisory, administrative and transfer agency services to a registered investment company and a
number of local government investment pools.
Compensation for fixed income portfolio management is generally based on a percentage of assets
under management, is payable after a service is provided, and is normally billed on a monthly basis.
As a general guideline, the fees for investment advisory services for fixed income accounts are
shown below:
Annual Rate
First $25,000,000 0.25%
Assets in excess of $25,000,000 0.15%
For certain clients, PFMAM, through its PFM Advisors division, may serve as a "manager of
managers." As a manager of managers, PFMAM will assist its clients in selecting and monitoring
minority, women-owned and emerging managers as sub-advisers to manage a client's portfolio.
Generally, each investment sub-adviser is provided a particular investment mandate for managing a
portion of a client's investment portfolio. PFMAM, as the manager of managers, has discretion in the
initial selection of the investment sub-advisers and provides ongoing periodic reporting and
monitoring services by evaluating and re-evaluating the investment sub-adviser's portfolio
management philosophy, policies, processes, controls, personnel, and investment performance. For
these clients, PFMAM is generally granted authority to change, eliminate or add investment sub-
advisers and allocate and re-allocate portions of the client's investment portfolios to different
investment sub-advisers. Investment sub-advisers are generally granted both investment and
brokerage discretion in managing a portion of the client's portfolio. PFMAM provides to these clients
periodic reports regarding the investment performance of the various investment sub-advisers and
the portfolio as a whole.
For manager of manager agreements, PFMAM may utilize a fee structure based on a percentage of
assets under management, or a fee structure based on a fixed fee. The fee structure, based on a
percentage of assets under management, utilized by PFMAM as a general guideline for providing
manager of managers advisory services is as follows:
Assets Under Management Annual Rate
First $50,000,000 0.70%
Next $50,000,000 0.65%
Assets in excess of $100,000,000 0.60%
A portion of fees received for these services may be remitted to the sub-advisers, depending upon
the fee structure in question.
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 2, Item 1 A, B, C
and D (continued)
PFMAM provides consulting services on investment policy development, investment portfolio risk,
investment sector allocation and investment performance and also provides portfolio oversight
services where PFMAM does not have investment discretion. PFMAM generally charges fixed fees
for these services with the level of fee based on the scope and complexity of the services offered.
PFMAM, through its PFM Advisors division, provides investment consulting services to public, Taft-
Hartley and corporate pension funds, hospital endowments and foundations, trusts, OPEB plans, and
other similar institutional investors, on the management of their investment programs. These services
typically begin with assessing a client's investment objectives, time horizon and risk tolerance. Using
this data PFMAM will propose asset allocation models within the investment parameters of the client.
PFMAM may also assist in writing an investment policy detailing the objectives, diversification, quality
and performance measurement of the portfolio and assist in the selection of money managers,
pooled trusts or mutual funds. Once the investment policy is implemented PFMAM reports quarterly
to its clients on the investment performance, manager adherence to its particular style and portfolio
compliance with the investment policy. Such services are provided on a non-discretionary basis and
PFMAM generally has no investment or brokerage discretion when providing such services.
For investment consulting services, PFMAM generally will charge clients either a fixed fee or a fee
that is based on a percentage of assets. Fixed fees are negotiated based on portfolio size,
complexity, and scope of services. As a general guideline, asset based fees generally range from
0.05% to 0.30% annually based on the three characteristics listed above. From time to time, PFMAM
undertakes investment consulting engagements for which hourly fees are negotiated.
PFMAM also provides consulting services to OPEB plans with respect to financial reporting, cash
flow implications of funding strategies, account structures, and other issues relating to the OPEB
benefits and funding arrangements. These efforts are generally undertaken in cooperation with the
client’s other professional advisors (e.g., accountant, actuary). In conjunction with these services,
PFMAM provides advice on these topics and in many cases provides a written report. For these
services and documentation, a fixed fee is negotiated that generally ranges from $10,000 to $20,000
depending on the parameters of the engagement.
For certain clients, PFMAM may serve as a discretionary manager for various trusts, pension plans,
endowments, foundations, OPEB plans or other similar asset pools to invest assets in multiple
sectors. Generally these accounts include a variety of asset classes including domestic equity,
international equity, fixed income, and other asset classes. PFMAM provides these services in two
broad forms including a wrap fee program known as a Managed Accounts Program (the “Managed
Accounts Program” or “MAP”) and a general discretionary form where some of the fees required for
services may be unbundled and may be separately negotiable. In each form, PFMAM will work with
the client to determine a target asset allocation based on a variety of risk and return characteristics.
PFMAM will then execute the asset allocation either by buying shares of mutual funds and/or pooled
funds or other investment vehicles or by selecting separate account managers who will manage
specific asset classes and/or strategies. PFMAM will communicate the method of asset allocation
execution to the client through a written investment strategy. For these clients, PFMAM is generally
granted authority to re-allocate assets and to change, eliminate or add managers or investments
within the scope of the investment strategy. PFMAM will not take custody of such client’s assets, but
is generally authorized to give instructions to the client’s custodian in connection with transactions
executed in the client’s portfolio.
The fee structure utilized by PFMAM as a general guideline for the MAP is as follows:
Annual Rate
First $5,000,000 of assets 1.00%
Next $5,000,000 0.85%
Next $10,000,000 0.75%
Assets in excess of $20,000,000 0.60%
As compensation for accepting a MAP account with less than $1,000,000 in assets, a minimum
advisory fee may be imposed. However, at such time as a fee for such an account, calculated
according to the schedule above, would exceed the minimum fee, the fee calculated in
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 2, Item 1 A, B, C
and D (continued)
Page 2, Item 2 G
Page 3, Item 3 L
in accordance with the above schedule would apply, rather than the minimum fee. These fees
are inclusive of asset management, investment advisory and custodial services, but do not include
front or back-end fees for the funds, any taxes or fees of attorneys, accountants, auditors or other
professional advisors.
For the general discretionary form, fee structure differs for each client based on portfolio size,
complexity, and scope of services. PFMAM’s fees generally range from 0.10% to 0.50% based on
the mix of these factors and specific client mandate. The fees for PFMAM’s services may be
charged in an unbundled manner or may be bundled with other fees. In these cases, the client will
bear the fees and expenses associated with mutual funds or other externally managed investments.
From time to time, PFMAM may create marketing names for its general discretionary program. One
such program is the Commonwealth of Virginia OPEB Management Program (“COMP”). In
conjunction with these marketing programs, PFMAM may provide for discounts associated with the
total assets under management.
PFMAM also provides analytical services in designing portfolios in connection with advance
refundings of municipal bonds and the investment of bond proceeds, and purchases specific
securities that are generally government obligations or guaranteed investment contracts, on a
competitive or negotiated basis on behalf of clients. PFMAM furnishes advice on the structuring of
interest rate swaps entered into in connection with or related to municipal debt transactions. In these
transactions, compensation is normally an agreed-upon fixed fee, and payable by the client or on
behalf of the client by the investment contract counterparty upon specific written authorization of the
client. The fee for this service is agreed upon for each engagement and is a function of the size and
complexity of the engagement. As a general guideline, the typical fee for investment of municipal
bond proceeds in a structured investment, or for swaps and escrow restructuring supervisory
services, is less than .05% of the notional amount of a swap or the yield of escrow securities or
guaranteed investment contract procured on behalf of the client. PFMAM provides periodic
valuations of interest rate swaps for clients. The fee for this service is a fixed annual fee that depends
on the complexity of the swap to be valued and the frequency of valuation.
Compensation for services provided to the registered investment company and local government
investment pools varies by program, but typically includes various breakpoints depending on asset
levels, as well as fee caps triggered by the overall expense ratio of the pool.
Because services are tailored to the individual needs of a client, some or all of the services
mentioned above may be offered to a client. In addition, PFMAM may also provide investment
advice through services not mentioned above. Fees charged by PFMAM are negotiable and vary
depending upon the particular services to be performed and the complexity and extent of the work to
be provided. All fees are payable to PFMAM after services have been performed; however, for
certificate of deposit and fixed rate investment programs, which are designed to provide a fixed rate
to a targeted maturity, PFMAM provides clients with the option to set aside moneys in client accounts
to be paid to PFMAM upon the performance of such services.
TYPES OF CLIENTS:
PFMAM also provides investment advisory services to state and local governments and agencies
thereof, local government investment pools, non-profit organizations, pension and OPEB funds and
other institutional clients.
TYPES OF INVESTMENTS:
PFMAM designs, develops bid specifications, reviews bids and negotiates terms of guaranteed
investment contracts, forward rate income agreements, similar investment agreements and interest
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 3, Item 3 L
(continued)
Page 3, Item 4 B
Page 4, Item 6
TYPES OF INVESTMENTS (continued):
rate swaps on behalf of its clients. PFMAM may also recommend exchange traded funds ("ETFs")
and hedge funds for clients who invest assets in multiple sectors. PFMAM may offer securities
advice, generic or specific, on any other investments which may be owned by the client or deemed
appropriate for the specific needs of the client.
METHODS OF ANALYSIS, SOURCES OF INFORMATION, AND INVESTMENT STRATEGIES:
To support its manager of managers and investment consulting services, PFMAM utilizes manager
performance and style analysis data provided by third parties.
EDUCATION AND BUSINESS STANDARDS:
PFMAM requires those associated with it to have extensive education and/or experience in
administering public funds, rendering investment advice, supervising sub-advisers, and/or consulting
with public entities and other institutional investors on financial management, cash management and
investment management, as applicable to that person's job responsibilities.
EDUCATION AND BUSINESS BACKGROUND:
The following information relates to those individuals who determine general investment advice.
Marc Ammaturo, CPA
Birthyear: 1974
Education: University of Maryland, Robert H. Smith School of
Business, College Park, MD
Graduated 2004, MBA
Pennsylvania State University, State College, PA
Graduated 1996, BS Accounting
Employment: PFM Asset Management LLC
Philadelphia, Pennsylvania
Senior Managing Consultant
1/05 to Present
Robert H. Cheddar, CFA
Birthyear: 1966
Education: Pennsylvania State University, Malvern, PA
Graduated 2003, MBA
Susquehanna University, Selinsgrove, PA
Graduated 1988, BS Business
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC FileNumber:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 4, Item 6
(continued)
EDUCATION AND BUSINESS BACKGROUND (continued)
Robert H. Cheddar, CFA (continued)
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Senior Portfolio Manager
11/04 to Present
Thomas J. Conroy
Birthyear: 1952
Education: Temple University, Philadelphia, PA
Graduated 1981, MBA
LaSalle University, Philadelphia, PA
Graduated 1974, BS Accounting
Employment: PFM Asset Management LLC
Philadelphia, Pennsylvania
Senior Managing Consultant
3/06 to present
The Children’s Hospital of Philadelphia
Philadelphia, Pennsylvania
Chief Investment Officer
9/98 to 3/06
Joseph W. Creason
Birthyear: 1976
Education: Shippensburg University, Shippensburg, PA
Graduated 2000, BS Finance & BS Economics
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Portfolio Manager
7/09 to Present
Portfolio Trader
1/05 to 7/09
Public Financial Management, Inc.
Harrisburg, Pennsylvania
Portfolio Trader
7/00 to 1/05
Debra J. Goodnight, CPA
Birthyear: 1955
Education: St. Thomas University, Houston, TX
Graduated 1985, MBA
Robert Morris College, Pittsburgh, PA
Graduated 1977, BS Accounting
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Managing Director
1/03 to present
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 4, Item 6
(continued)
EDUCATION AND BUSINESS STANDARDS (continued):
Debra J. Goodnight, CPA (continued)
Employment: Public Financial Management, Inc.
Harrisburg, Pennsylvania
Managing Director
10/90 to 1/03
Michael W. Harris
Birthyear: 1965
Education: University of Pennsylvania, Philadelphia, PA
Graduated 1988, BA Economics & Political
Science
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Managing Director
1/05 to Present
Public Financial Management, Inc.
Harrisburg, Pennsylvania
Managing Director
10/89 to 1/05
Valentine James Link, Jr.
Birthyear: 1962
Education: Texas A&M University, College Station, TX
Graduated 1988, BS Economics
Employment: PFM Asset Management LLC
Philadelphia, Pennsylvania
Managing Director
5/06 to Present
Wachovia Bank, N.A.
Charlotte, North Carolina and Atlanta, Georgia
Vice President, Institutional Trust Division-
National Sales Manager
11/04 to 5/06
Gregg Manjerovic, CFA
Birthyear: 1971
Education: University of Illinois at Chicago, Chicago, IL
Graduated 1993, BS Finance/Management
: Illinois Institute of Technology, Chicago, IL
Graduated 1999, MS Financial Markets &
Technology
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Fixed Income Portfolio Manager
1/05 to Present
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 4, Item 6
(continued)
EDUCATION AND BUSINESS STANDARDS (continued):
Gregg Manjerovic, CFA (continued
Employment Public Financial Management, Inc.
Harrisburg, Pennsylvania
Fixed Income Portfolio Manager
7/01 to 1/05
Martin P. Margolis
Birthyear: 1944
Education: University of Pennsylvania, Philadelphia, PA
Graduated 1966, BA History
University of Pennsylvania, Philadelphia, PA
Graduate School, History, 1967-1972
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Managing Director, President
1/03 to Present
Public Financial Management, Inc.
Harrisburg, Pennsylvania
Managing Director
1/87 to 1/03
Andrew G. McKendrick
Birthyear: 1967
Education: Kalamazoo College, Kalamazoo, MI
Graduated 1988, BA Economics
Employment: PFM Asset Management LLC
Philadelphia, Pennsylvania
Managing Director
1/08 to Present
Senior Managing Consultant
1/05 to 1/08
Public Financial Management, Inc.
Philadelphia, Pennsylvania
Senior Managing Consultant
3/03 to 1/05
Girard C. Miller, CFA
Birthyear: 1951
Education: University of Washington, Seattle, WA
Graduated 1972, BA Political Economics
Syracuse University, Syracuse, NY
Graduated 1973, MPA
Wayne State University, Detroit, MI
Graduated 1979, MA Economics
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 4, Item 6
(continued)
EDUCATION AND BUSINESS STANDARDS (continued):
Girard C. Miller, CFA (continued)
Employment: PFM Asset Management LLC
Los Angeles, California
Senior Strategist
7/08 to Present
Governmental Accounting Standards Board
Norwalk, Connecticut
Board Member
7/07 to 7/08
Janus Capital Group
Denver, Colorado
Chief Operating Officer & President of Janus Mutual Funds
7/03 to 1/06
John W. Molloy, CFA
Birthyear: 1966
Education: Lafayette College, Easton, PA
Graduated 1988, AB Government, Law,
Economics & Business
Cornell University, S.C. Johnson Graduate School
of Management, Ithaca, NY
Graduated 2002, MBA
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Senior Managing Consultant
7/02 to Present
Jeffrey M. Pearsall
Birthyear: 1961
Education: Northwestern University, Evanston, IL
Graduated 1983, BA Economics
University of Chicago, Chicago, IL
Graduated 1987, MBA Finance
Employment: PFM Asset Management LLC
Philadelphia, Pennsylvania
Managing Director
1/05 to Present
: Public Financial Management, Inc.
Philadelphia, Pennsylvania
Managing Director
8/99 to 1/05
Kenneth R. Schiebel, CFA
Birthyear: 1959
Education: University of Michigan, Ann Arbor, MI
Graduated 1981, BA Mathematics & Computer
Science
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 4, Item 6
(continued)
EDUCATION AND BUSINESS STANDARDS (continued):
Kenneth R. Schiebel, CFA
Birthyear: 1959
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Managing Director
1/05 to Present
Public Financial Management, Inc.
Harrisburg, Pennsylvania
Managing Director
10/94 to 1/05
John S. Spagnola
Birthyear: 1957
Education: Yale University, New Haven, CT
Graduated 1980, BA Political Science
Employment: PFM Asset Management LLC
Philadelphia, Pennsylvania
Managing Director
1/03 to Present
Bradford J. Stephan, CFA
Birthyear: 1978
Education: University of Delaware, Newark, DE
Graduated 2000, BSBA Finance
Villanova University, Villanova, PA
Graduated 2002, MBA Finance
Employment: PFM Asset Management LLC
Philadelphia, Pennsylvania
Senior Managing Consultant
12/08 to Present
SEI Investments
Oaks, Pennsylvania
Investment Director – Global Institutional Group
3/04 to 12/08
Michael R. Varano
Birthyear: 1952
Education: Bloomsburg University, Bloomsburg, PA
Graduated 1974, BS Business Management &
Accounting
Employment: PFM Asset Management LLC
Harrisburg, Pennsylvania
Managing Director
1/03 to Present
Public Financial Management, Inc.
Harrisburg, Pennsylvania
Managing Director
1/87 to 1/03
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 4, Item 7 A & B
Page 4, Item 8 C 1 & 2
Page 5, Item 9 B & E
OTHER BUSINESS ACTIVITIES:
PFMAM’s primary business is to provide investment advisory services. PFMAM also provides on a
full time basis administrative and transfer agent services to its registered investment company
shareholders and local government investment pool participants. It also provides cash management
related advisory and administrative services to investors in those funds. Although these services are
generally provided to local government investment pools for which PFMAM serves as investment
adviser, in some cases PFMAM provides administrative services to local government investment
pools which are advised by other organizations. Administrative, transfer agent and cash
management consulting services are generally provided as an integral part of investment advisory
services. PFMAM also furnishes advice on the structuring of interest rate swaps and commodity
swaps entered into in connection with or related to municipal debt transactions or in connection with
the ongoing management of its clients’ operations. PFMAM also provides arbitrage rebate consulting
services to state and local government entities to assist them in complying with the arbitrage rebate
provisions of the Internal Revenue Code of 1986, as amended. PFMAM also provides a web-based
platform to assist institutions that enter into interest rate swap transactions with the tracking,
monitoring and reporting requirements for swap portfolios. Such services do not generally involve
investment advice. These activities may possibly be deemed to constitute a material business
activity in view of the revenues from such activities. On a stand-alone basis, when not part of
PFMAM’s overall arrangement that includes investment advisory services, it is estimated that
approximately eighteen percent of total personnel time is currently devoted to providing
administrative services on a firm-wide basis.
OTHER FINANCIAL INDUSTRY ACTIVITIES OR AFFILIATIONS:
PFM Fund Distributors, Inc., a wholly owned subsidiary of PFMAM, is registered as a broker-dealer
under the Securities Exchange Act of 1934, and its sole activities are to serve as distributor to the
registered investment company and local government investment pools for which PFMAM serves as
investment adviser and/or administrator. PFMAM is under common ownership with Public Financial
Management, Inc., a financial advisory firm.
PFMAM serves as administrator and investment adviser to PFM Funds, a diversified, open-end
management registered investment company offering money market funds to governmental entities
and other institutional investors. PFM Fund Distributors, Inc., a wholly owned subsidiary of PFMAM,
serves as distributor for PFM Funds. PFMAM also serves as administrator and/or investment adviser
to the following local government investment pools: (a) California Asset Management Trust (CAMP),
(b) Illinois Institutional Investors Trust (IIIT), (c) Illinois Park District Liquid Asset Fund Plus
(IPDLAF+), (d) Massachusetts Health and Educational Facilities Authority Short-Term Asset Reserve
Fund (MassSTAR), (e) Michigan Liquid Asset Fund Plus (MILAF+), (f) Minnesota Association of
Governments Investing for Counties (MAGIC), (g) Minnesota School District Liquid Asset Fund Plus
(MSDLAF+), (h) Missouri Securities Investment Program (MOSIP), (i) Nebraska Liquid Asset Fund
(NLAF), (j) New Jersey Asset & Rebate Management Program (NJ/ARM), (k) Pennsylvania Local
Government Investment Trust (PLGIT), (l) TexasTERM Local Government Investment Pool
(TexasTERM) and (m) Wyoming Government Investment Fund (WGIF). PFM Fund Distributors, Inc.
serves as distributor to all of such pools except for WGIF.
PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS:
As defined above in the description for Page 4, Item 8C 1 & 2, PFM Fund Distributors, Inc., a wholly
owned subsidiary of PFMAM, serves as distributor to a registered investment company and local
government investment pools for which PFMAM serves as investment adviser and/or administrator.
If a client of PFMAM invests in such a fund, PFMAM discloses to the client, through this ADV Part II
and the relevant prospectus or information statement, such relationship. In addition, the investment
advisory agreement with the client provides that if assets of the client are invested in such fund by
PFMAM, PFMAM will not take these assets into account for purposes of calculating PFMAM’s fees
under the client’s investment advisory agreement.
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 5, Item 9 B & E
(continued)
Page 5, Item 10
Page 5, Item 11 A & B
PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS (continued):
On infrequent occasions, PFMAM's employees may purchase or sell securities that are also
recommended for purchase or sale by PFMAM in client accounts. Pursuant to Rule 204A-1 of the
Investment Advisers Act of 1940, employees of PFMAM are subject to PFMAM's Code of Ethics (the
"Code"). Compliance with the Code is a condition of employment for all employees of PFMAM.
In general, the Code is an expression of PFMAM's recognition of its responsibilities to the public,
clients and professional associates. The Code also contains various reporting, disclosure and
approval requirements regarding employees' personal securities transactions. The Code requires
that the employees who are deemed to be "Access Persons" must report all personal securities
transactions, including transactions in mutual funds advised by PFMAM, to PFMAM’s Chief
Compliance Officer, or his/her designee. Access Persons are also prohibited from participation in
initial public offerings unless approved by PFMAM's Chief Compliance Officer and are prohibited
from purchasing any municipal securities within 60 days of the date of issuance if any affiliate of
PFMAM served as financial advisor.
PFMAM's Code is available, in its entirety, by contacting PFMAM at One Keystone Plaza, Suite 300,
North Front & Market Streets, Harrisburg, PA 17101, by calling 717-231-6200 or by emailing
pfmamrequest@pfm.com.
The securities on which PFMAM currently provides discretionary investment advice are generally
fixed income securities and mutual funds. PFMAM infrequently receives proxies to vote on behalf of
such discretionary clients and also occasionally receives consent requests. In the event a consent
request or proxy is received, a portfolio manager will either contact the client and then proceed
according to the client’s instructions or will forward the consent request or proxy to the client so the
client may respond directly. PFMAM's Proxy Voting Policy is available upon request by contacting
PFMAM at One Keystone Plaza, Suite 300, North Front & Market Streets, Harrisburg, PA 17101, by
calling 717-231-6200 or by emailing pfmamrequest@pfm.com.
CONDITIONS FOR MANAGING ACCOUNTS:
PFMAM provides a Managed Accounts Program (described above), and participants must make an
initial investment of at least $100,000. Certain of the portfolios of the local government investment
pools and short term certificate of deposit purchase programs for which PFMAM serves as
administrator and/or investment advisor have minimum investment requirements of between
approximately $50,000 and $1,000,000.
REVIEW OF ACCOUNTS:
Short term fixed income accounts are reviewed daily, and securities portfolios with a longer time
horizon are generally reviewed weekly. Investment committees consisting of senior portfolio
managers, senior research staff and the chief investment officer meet approximately monthly to
assess economic and market conditions and set overall direction for portfolio managers.
Reviews may also be triggered by sudden changes in financial market conditions, general economic
conditions, and/or the movement of a particular portfolio security through a price support or
resistance level. Accounts are reviewed by a principal or a portfolio manager in consultation with a
principal of PFMAM. Normally, account reviews are sequenced in a manner that provides for first
review of the accounts that have the greatest potential exposure to the effects of the event which
triggers the review.
The performance of investment consulting accounts for pension and similar plans and investment
sub-advisers in a manager of managers account is monitored on at least a monthly basis to
determine whether the assets or investment sub-advisers are performing in line with expectations
and are meeting the individual needs of the clients. On a quarterly basis, the assets in these
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 5, Item 11 A & B
(continued)
Page 6, Item 12 B
REVIEW OF ACCOUNTS (continued):
accounts are valued and the asset allocation of the portfolio is compared to the target allocation. Any
material asset allocation adjustments or moves or changes in investment sub-advisers will be
recommended to the client at that time. For these accounts, at least annually PFMAM consults with
the client and conducts a review of the client's objectives and risk tolerance, and makes any
necessary changes to the asset allocation mix within the portfolio.
The performance of multi-asset class accounts, including PFMAM's Managed Accounts Program, is
monitored on at least a quarterly basis to determine whether the underlying investments selected are
performing in line with expectations and are meeting the needs of the individual client. PFMAM
provides its multi-asset class clients a quarterly analysis of the performance of the underlying funds
in which the client's assets are invested and of any reallocation of assets among these underlying
funds. At least annually, PFMAM will consult with the client to determine whether there are reasons
to revise the client's target investment strategy. The custodian of PFMAM's multi-asset class
portfolio clients, including its Managed Accounts Program clients, provides each client with a monthly
statement of account detailing the client's month-end balances and any transactions which occurred
during the month. Such statements are reviewed monthly by PFMAM to determine whether
transactions executed by the custodian are in agreement with any instructions provided by PFMAM
or the client.
PFMAM furnishes monthly account summaries to each fixed income portfolio client with assets under
continuous management which include details of all transactions and holdings at the end of the
period. Account summaries are also available on a daily basis on the Internet. PFMAM may also
provide an investment advice memorandum upon advising and/or executing any transaction.
Pursuant to its investment advisory agreements, PFMAM may also provide quarterly performance
and economic reviews for some clients. For multi-asset class portfolio clients, including clients in
PFMAM's Managed Accounts Program, monthly statements of accounts are provided by the
program's custodian and quarterly performance reports are provided by PFMAM.
INVESTMENT OR BROKERAGE DISCRETION:
PFMAM generally exercises brokerage discretion as follows: if a client furnishes PFMAM with an
approved list of brokers and dealers, PFMAM places all orders for the purchase or sale of securities
for the client's account with brokers or dealers selected by it from such list. Under these
circumstances, commission rates are determined by the client and the broker or dealer. Otherwise,
PFMAM deals with brokers and dealers who are determined to be major market makers for the types
of securities purchased or sold as such determination is made by PFMAM. From time to time certain
such brokers offer to PFMAM market commentary and data and statistical research reports as to
factors which may influence market price movements. PFMAM believes that such information
improves the quality of its investment and trading decisions for the benefit of all of its clients.
PFMAM obtains express authorization from the client to consider direct brokerage factors (efficiency
of execution and commission) in selecting a broker or dealer, and to consider the furnishing of
statistical research and other information services by the broker or dealer. It is possible that the use
of any particular such brokerage firm may result from time to time in a less favorable price for a
particular transaction than if PFMAM had canvassed a broader range of brokers, but PFMAM
believes that the practice of taking into account the furnishing of market information is reasonable in
light of PFMAM’s position as a regular, and generally exclusive, investment adviser for its institutional
clients. PFMAM has no agreement, understanding or other arrangement, either internal or with
brokers and/or dealers, which would influence the allocation of securities transactions among brokers
and/or dealers.
When placing orders on behalf of clients to purchase or sell securities, PFMAM generally obtains
multiple bids or offers and will select from brokers and/or dealers in order to obtain the best net price
available. In some instances PFMAM purchases securities directly from the issuer. When a client
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
(Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Item of Form
(Identify) Answer
Page 6, Item 12 B
(continued)
Page 6, Item 13 B
INVESTMENT OR BROKERAGE DISCRETION: (continued):
directs PFMAM to use a particular broker or dealer, PFMAM may be unable to negotiate
commissions, obtain volume discounts or select broker/dealers based on the best price and
execution for the transaction. A client who directs PFMAM to use a particular broker or dealer may
pay higher commission charges or receive less favorable prices than would otherwise be the case if it
had not designated a particular broker or dealer. In those circumstances where PFMAM does not
have investment or brokerage discretion, prior to the entry of any transaction order, the client must
authorize the type of investment, the amount and the timing of the transaction. In those cases, the
client is under no obligation to act on the recommendations of PFMAM. If PFMAM assists in the
implementation of any recommendations, PFMAM is responsible to ensure that the client receives
the best execution possible. Neither PFMAM nor its principals are compensated directly or indirectly
for the recommendation to utilize any broker, dealer or independent custodian.
ADDITIONAL COMPENSATION:
PFMAM has arrangements with third parties as solicitors for PFMAM's investment advisory services.
These solicitors may assist PFMAM by identifying clients that might benefit from PFMAM’s services,
introducing PFMAM personnel to these potential clients and attending meetings to explain PFMAM
services. These solicitors are paid a fee for these services under terms of their respective contracts
and are not employees of PFMAM. PFMAM assumes this fee as an overall cost of its business and
does not charge any differential or adjust its fees charged to specific clients where a solicitor is
involved.
Complete amended pages in full, circle amended items and file with execution page (page 1).
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
MANAGED ACCOUNTS PROGRAM BROCHURE
Sponsor: PFM Asset Management LLC
Address and
Telephone No.: One Keystone Plaza, Suite 300
North Front & Market Streets
Harrisburg, PA 17101
(717) 231-6200
This Brochure provides clients with information about PFM Asset Management LLC and
the Managed Accounts Program that should be considered before becoming a client of the
Managed Accounts Program. This information has not been approved or verified by any
governmental authority.
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
TABLE OF CONTENTS
INTRODUCTION .................................................................................................................... 1
CLIENT ELIGIBILITY ............................................................................................................ 2
PROGRAM SERVICES ........................................................................................................... 2
1. For OPEB: Pre-Funding Consulting .................................................................................... 2
2. Selecting a Portfolio Manager. ............................................................................................ 2
3. Your Portfolio Manager and the Management of Your Account ......................................... 3
4. Account Information and Reporting .................................................................................... 4
PROGRAM FEE ....................................................................................................................... 5
TERMINATION ....................................................................................................................... 5
ADDITIONAL INFORMATION AND CONFLICTS OF INTEREST .................................. 6
ADDITIONAL DISCLOSURES .............................................................................................. 7
PFMAM DOES NOT SPONSOR OTHER WRAP FEE PROGRAMS .................................. 8
EXHIBIT A ............................................................................................................................... 9
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 1
MANAGED ACCOUNTS PROGRAM BROCHURE
INTRODUCTION
PFM Asset Management LLC (“PFMAM”), a Delaware limited liability company, sponsors a
wrap fee program called the Managed Accounts Program (the “Program”) pursuant to which
investment advice, custody services, and other administrative services are provided to you for an
all-inclusive wrap fee (“Wrap Fee”). The Program will offer you access to a variety of
investment managers through mutual funds or other investment vehicles (“Portfolio Managers”)
suitable for implementing an investment strategy. PFMAM will assist you in developing or
updating an investment policy, developing an asset allocation, and implementing the investment
strategy. PFMAM will manage your account (“Account”) on a discretionary basis and select the
Portfolio Managers with which your Account will be invested and in what amounts. A
questionnaire to be completed by you (the “Portfolio Planning Survey”) will be used by PFMAM
to determine your eligibility for the Program and for the specified investment strategy in which
your Account should be invested. If your Account relates to an other post employment benefit
(“OPEB”) plan or trust, we will also assist you with pre-funding structuring advice for a
consulting fee as described in Exhibit A.
U.S. Bank National Association (the “Custodian“) will provide custody of securities and cash
balances, and certain record keeping, reporting and administrative services to and/or on behalf of
Program clients, which may include execution, clearance and settlement of securities
transactions, and benefit payment services for retirement plans.
The following sections describe the Program in further detail. You should read this
Brochure, the Investment Advisory Agreement and all other Program materials carefully,
including Part II of your Portfolio Manager’s Form ADV, carefully before you decide to
join the Program.
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 2
CLIENT ELIGIBILITY
Your Portfolio Planning Survey will be evaluated to determine whether you are eligible for the
Program and which Program asset allocation would be suitable for your Account. The Program
is open to all PFMAM customers (assuming they satisfy the eligibility criteria) and is intended
for pension, endowment, foundation, trust, OPEB and other long-term accounts. To participate in
the Program, you must complete a Portfolio Planning Survey and sign an Investment Advisory
Agreement and a Custody Agreement. The terms of your Investment Advisory Agreement and
Custody Agreement will govern your participation in the Program. You should read carefully all
of the Program materials and information before deciding to join the Program.
You must fund your Program Account with at least $100,000. You may add assets to or
withdraw assets from your Account. However, if a withdrawal at any time causes your Account
to have a value of less than $100,000, your Account may be closed at PFMAM’s discretion.
Withdrawals of assets from your Account, including withdrawals of specific securities, may be
made by contacting the Custodian.
PROGRAM SERVICES
The following describes the Program and the services offered to Program participants. Each
participant in the Program is responsible only for the performance of its Program-related duties
and not for those of any other participant.
1. For OPEB: Pre-Funding Consulting
For participants planning to use the Program for OPEB assets, PFMAM will work with you to
develop a comprehensive report detailing a variety of funding scenarios (“Scenarios”) that
include potential budget and cash flow implications of the Scenarios and compare them to one
another. The Scenarios may include sample debt funding, cash flow funding and lump sum
funding alternatives and Scenarios that include combinations of these funding alternatives.
PFMAM will also help you identify the appropriate means to hold and invest the assets. These
alternatives may include pay as you go funding, dedicated fund balances, and a variety of trust
alternatives. Finally, the report will provide examples of asset allocations for the account. The
investment alternatives will include probabilities for meeting different investment rates of return
based on historical performance.
In addition to the comprehensive report, PFMAM may upon request provide you with
introductions to other professional service providers (e.g., actuaries, attorneys). PFMAM will
not be compensated for these introductions, nor will you be required to utilize services of these
providers.
2. Selecting a Portfolio Manager
PFMAM has selected certain Portfolio Managers for inclusion in the Program. Before inclusion
in the Program, the Portfolio Managers are screened by PFMAM based on a variety of criteria,
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 3
utilizing third-party resources, information provided by the Portfolio Managers and PFMAM’s
own information and analysis. Once selected for the Program, Portfolio Managers are monitored
by PFMAM using the same criteria. A Portfolio Manager may be terminated from the Program
in PFMAM’s discretion if the Portfolio Manager’s investment performance fails to meet
PFMAM’s expectations or if PFMAM identifies a material change in the Portfolio Manager’s
investment style or capabilities.
PFMAM may add additional Portfolio Managers, which may include Portfolio Managers with
different fees and/or different strategies (including multi-discipline strategies), to the Program at
any time.
PFMAM will work with you to prepare an investment policy statement (the “Investment Policy
Statement”) and an asset allocation study which PFMAM will use in managing your Account.
Your completed Portfolio Planning Survey gives PFMAM important information about your
Account’s circumstances, investment objectives and risk/return characteristics (collectively,
“Fund Information”). PFMAM will evaluate your Portfolio Planning Survey, Investment Policy
Statement and asset allocation study results for suitability with the Program. PFMAM then will
determine whether to accept your Account based on your Fund Information and any other factors
it deems appropriate. Once PFMAM has approved your Portfolio Planning Survey, PFMAM will
manage the assets in your Account on a discretionary basis.
You will have a separate Account and Account number for each plan or fund.
PFMAM will assist you in completing the Portfolio Planning Survey. PFMAM also will furnish
you with the other materials relating to the Program, including Part II of PFMAM’s Form ADV.
The Form ADV describes the investment advisory services offered by PFMAM and other related
information.
You will be notified if it is determined that you are not eligible to participate in the Program or
that your Fund Information is inconsistent with the Program and its corresponding investment
strategies.
3. Your Portfolio Manager and the Management of Your Account
PFMAM will assist you in opening your Account, will review your Investment Policy Statement
and the results of your Portfolio Planning Survey, and will buy and sell and trade for your risk
the assets in your Account in accordance with the terms stated in your Investment Advisory
Agreement. PFMAM will have the discretion to manage your Account (i.e., to act on your behalf
without prior consultation with you). You may, however, impose reasonable restrictions on
PFMAM’s management of your Account. For example, you may specify certain asset classes or
sub-asset classes that you do not want PFMAM to acquire for your Account. PFMAM will
determine whether any restriction you request is reasonable. You will not be permitted to engage
directly in transactions for your Account under the Program.
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 4
The Custodian will execute and clear trades and act as the custodian for your Account. You will
have access to your Account and receive information about your Account as set forth below.
If you wish to transfer any of your assets out of the Program, you should contact PFMAM or the
Custodian and PFMAM or the Custodian will advise you about how to transfer assets.
Under the Program, except as otherwise specifically waived or agreed to by you, you retain the
following rights to the same extent as if you held the assets in an account outside of the Program:
(a) the right to withdraw securities or cash from your Account; (b) the right to vote, or delegate
the authority to vote, the securities in your Account; (c) the right to be provided in a timely
manner with written trade confirmations for all securities transactions in your Account, and all
other documents required by law to be given to security holders; and (d) the right to proceed
directly against an issuer of any security in your Account and not be obligated to join any other
person or client of the Program as a condition of bringing a proceeding.
You should promptly notify PFMAM in writing if you want to revise your answers in the
Portfolio Planning Survey, if you want to impose any reasonable restrictions, or modify any
existing restrictions, on the management of your Account, or if there have otherwise been any
material changes in your Fund Information. At least annually, PFMAM will contact you to
change or confirm existing investment objectives. PFMAM will have personnel who are
knowledgeable about your Account reasonably available to you on an ongoing basis for
consultation.
4. Account Information and Reporting
You (or someone you designate) will be furnished with a monthly Account statement by the
Custodian showing holdings and all securities transactions in your Account and a quarterly
Account review. In the Custody Agreement, you will authorize the Custodian to send PFMAM
duplicate copies of trade confirmations, Account statements and reviews and any other
applicable Account information. At a web site operated by the Custodian, you will be able to see
trading history, positions and executions of trades online as of the prior business day.
The rate of return performance for your Account is calculated by PFMAM using data provided
by the Custodian, and such performance is reported to you quarterly. Your Account’s rate of
return performance is calculated by PFMAM in a manner consistent with the Global Investment
Performance Standards (“GIPS”) of the CFA Institute, unless otherwise indicated. In reviewing,
compiling and analyzing Portfolio Manager performance as it relates to the Program, PFMAM,
among other things, compares the data collected on the Portfolio Manager to indices and
benchmarks. PFMAM will periodically review the performance of the mutual funds or other
investment vehicles in which your assets are invested. PFMAM will prepare and distribute
Program level performance reports which address the performance of these funds.
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 5
PROGRAM FEE
For the services provided by PFMAM, the Portfolio Managers and the Custodian, you will be
charged a Wrap Fee in accordance with Exhibit A hereto. The fees set forth in Exhibit A are
negotiable.
The Wrap Fee will be charged on a calendar month basis, in arrears. The portion of the Wrap Fee
paid to Portfolio Managers of mutual funds will be in the form of the expense ratios and is
deducted automatically from the assets invested in the funds. A portion of the Wrap Fee paid to
the Portfolio Managers of other types of accounts may vary and will be based on the Account’s
value. PFMAM receives the remainder of the Wrap Fee from which it pays the Custodian
pursuant to agreements between PFMAM and the Custodian.
In the Investment Advisory Agreement, you will authorize PFMAM to deduct, unless otherwise
instructed by you, the monthly Wrap Fee (and all other charges payable under the Program) from
the assets in your Account, retain a portion as its fee and distribute the fees that are due to the
Portfolio Managers (for vehicles other than mutual funds) and the Custodian. PFMAM is
authorized, if necessary, to liquidate assets in your Account in order to make cash available for
such payments. The assets to be liquidated will be selected by PFMAM.
The monthly Wrap Fee payments will be charged on the Account value as determined by the
Custodian on the last business day of the month. For each addition to, or withdrawal from, your
Account, the Wrap Fee payment will be adjusted in the next month. The Wrap Fee Schedule may
be modified by PFMAM upon 30 days’ prior written notice to you.
The Wrap Fee includes all fees and charges by PFMAM, the Portfolio Managers and the
Custodian for services in connection with the Program (including investment management fees
payable to Portfolio Managers, brokerage commissions, quarterly and annual report charges, and
custodial charges, if applicable) except for charges, if any, related to redemption of mutual fund
shares that are paid to the fund and not incorporated into its expense ratio, certain fees, such as
front-end or back-end sales charges, or certain charges associated with securities transactions
imposed by regulatory authorities. The Wrap Fee does not include fees related to actuarial,
accounting, trustee, auditing or legal services required by your Account or any other charges
imposed by law.
TERMINATION
In addition to your right to withdraw assets in your Account at any time, you will be able to
terminate, by written notice to PFMAM, your participation in the Program immediately in the
event of material breach of the Investment Advisory Agreement by PFMAM. You will be able
to terminate your participation in the Program at any time on not less than 30 days’ written
notice to PFMAM. PFMAM may terminate your participation in the Program and the
Investment Advisory Agreement immediately upon any material breach of its terms by you, or at
any time after one year upon 30 days’ written notice. If you close your Account prior to the end
of a calendar month, the Wrap Fee will be prorated.
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 6
The Program will not end because any Portfolio Manager stops participating in the Program.
PFMAM may terminate a Portfolio Manager from the Program at any time for any reason.
Generally, PFMAM may elect to terminate a Portfolio Manager if the Portfolio Manager fails to
perform as desired or ceases to meet one or more of the criteria used by PFMAM to select the
Portfolio Manager for the Program.
If the Program ends, PFMAM will assist you in determining the appropriate action to take with
respect to your Account. Termination of the Program will not affect any of your obligations
under the Program, including your obligation to pay any portion of the Wrap Fee accruing prior
to the termination date.
ADDITIONAL INFORMATION AND CONFLICTS OF INTEREST
PFM Asset Management LLC (“PFMAM”), whose principal office is at One Keystone Plaza,
Suite 300, North Front & Market Streets, Harrisburg, PA 17101-2044, is an investment adviser
registered under the Investment Advisers Act of 1940, as amended, and is under common
ownership with Public Financial Management, Inc. (“PFM”), a financial advisory firm. In the
aggregate, PFMAM and PFM have acted as financial advisers and/or investment advisers to
more than 9,000 cities, townships, boroughs, counties, school districts, authorities, colleges,
hospitals, and other governments and nonprofits in 35 states. PFMAM had more than $36.9
billion in discretionary funds under management as of December 31, 2009. Together, these
companies provide their clients with financial, investment advisory, and cash management
services. PFMAM is the Program sponsor.
PFMAM has a wholly owned broker-dealer subsidiary, PFM Fund Distributors, Inc., whose sole
business is to distribute shares of local government pooled investment programs and a registered
investment company that offers money market funds. These pooled programs and funds will not
be part of the Program. PFM Fund Distributors, Inc. is a member of the Financial Industry
Regulatory Authority (“FINRA”) and of the Municipal Securities Rulemaking Board (“MSRB”).
Written agreements may be entered into between PFMAM and solicitors as permitted by Rule
206(4)-3 under the Investment Advisers Act of 1940. Pursuant to such agreements, PFMAM will
provide the solicitor with an ADV disclosure document and an additional disclosure statement
which are to be furnished to prospective clients at the time of solicitation by the solicitor.
PFMAM will not have the discretionary authority to determine the underlying securities (or
amount of securities) to be bought or sold by Portfolio Managers, the broker to be used or the
commission rates paid with respect to assets assigned to the Portfolio Managers in the Program.
PFMAM does not act as investment adviser or portfolio manager for any of the mutual funds or
other investment vehicles utilized as investment options in the Program.
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 7
ADDITIONAL DISCLOSURES
As discussed above, your Portfolio Managers will receive compensation as a result of your
participation in the Program. This compensation comes in the form of the mutual fund’s expense
ratio and is not billed separately by the Program. The amount of your Portfolio Managers’
compensation may be more or less than the amount your Portfolio Managers would receive if
you paid separately for investment advice, brokerage and other services similar to the services
provided to you under the Program.
PFMAM does not communicate information about you to the managers of the mutual funds
utilized by the Program. Unless you request otherwise, the Custodian will provide the mutual
fund managers with your name and address.
For investments in the Program made in mutual funds, the investment policies of the respective
fund are as described in its prospectus and other documents that govern the fund’s activities.
There is no restriction on your ability to contact Portfolio Managers; however, the Portfolio
Managers of mutual funds are not able to change their fundamental investment strategies and
must manage the mutual fund portfolio according to its own policies.
The Wrap Fee charged to you in the Program may be more or less than the cost of separately
purchasing services similar to the Program’s services, as in an arrangement involving a separate
fee for investment advice and a separate fee for custody services. Generally, the factors that bear
upon the relative costs of an investment program include the asset size, the costs of the specific
services provided and the amount of trading activity in the client’s accounts.
There is no guarantee that your Account will be profitable or will not sustain a loss. The past
performance of any Portfolio Manager is not necessarily indicative of the results that may be
achieved for your Account.
Each Program service provider and its affiliates and their employees may perform similar or
different brokerage, research and investment advisory, custody and administrative services for
other persons not participating in the Program and for their own respective accounts, including
rendering services in connection with wrap fee programs other than the Program. Your Portfolio
Managers also may give advice or take actions for other clients that differ from the timing or the
nature of any action taken for your Account. Each Program participant and its affiliates and their
employees may acquire confidential and material non-public information in the course of its
investment banking or other securities activities and will not divulge such information to you or,
if possessed by a participant other than your Portfolio Manager, to your Portfolio Manager, or
take any action with respect to your Accounts on the basis of such information.
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 8
PFMAM DOES NOT SPONSOR OTHER WRAP FEE PROGRAMS
PFMAM does not offer or sponsor other wrap fee programs.
Schedule H of Form ADV
MANAGED ACCOUNTS PROGRAM
Applicant:
PFM Asset Management LLC
SEC File Number:
801-60449
Date:
3/31/10
1. Full name of applicant exactly as stated in Item 1A of Form ADV:
PFM Asset Management LLC
IRS Empl. Ident. No:
23-3087064
Page 9
EXHIBIT A
Wrap Fee Schedule
For clients with assets invested in the Managed Accounts Program (the “Program”) the following
fees apply:
Annual Rate
First $5,000,000 of assets 1.00%
Next $5,000,000 0.85%
Next $10,000,000 0.75%
Assets in excess of $20,000,000 0.60%
The wrap fee schedule set forth above applies only to Accounts having assets of $1,000,000 or
more; if and for so long as such assets are less than $1,000,000, the Wrap Fees will be at an
annual rate of 1.25%, unless a minimum flat advisory fee is negotiated, instead of a wrap fee at
this increased annual rate.
The Wrap Fee will be charged on the net market value of assets in your Account as determined
by the Custodian on the last day of the month. The Wrap Fee will compensate PFMAM and
cover the costs of Portfolio Managers, custody and certain other Program costs.
The underlying investment options of the Program will generally be mutual funds. The mutual
fund Portfolio Managers will be compensated according to their specific expense ratios. Where
offered and available to the Program, PFMAM will select institutionally priced share classes of
funds. Clients will not be separately billed for these services. It is anticipated that the weighted
average expense ratio for all mutual funds in the Program will be in the range of 0.35% to
0.50%.
The portion of the total fees retained by PFMAM will generally range from 0.65% to 0.15%.
PFMAM is compensated for investment consulting, selection and monitoring of investment
options, Program administration and marketing, client services, and other related duties.
From its portion of the Wrap Fee PFMAM will pay the fee of the Custodian for custody and
benefit payment services. These are provided by U.S. Bank National Association. Fees for these
services will range between 0.05% and 0.25%.
Fee Adjustments for OPEB Accounts
With respect to OPEB funds, PFMAM may provide Pre-Funding Consulting for a flat fee
ranging from $10,000 to $20,000. If PFMAM is selected to provide the ongoing Account
management services and the Account is funded with at least $5,000,000 in initial funding,
PFMAM may reimburse the Account for the initial flat fee in equal installments over the first
year of the Account’s existence. However, if the Account falls below $5,000,000 in funding
during the first year, the reimbursement will be discontinued.
Investment Advisors to the Public Sector
License to Operate as a Broker/Dealer in Arizona
Investment Advisors to the Public Sector
Audited Financial Statement
Investment Advisors to the Public Sector
Educational Seminar Materials
9:30 AM – 10:00 AM Registration
10:00 AM – 10:10 AM Welcome and Seminar Introduction
Lauren Brant, Managing Director
10:10 AM – 11:00 AM Establishing a Firm Foundation: Developing Your
Investment Policy
Craig Clifford, CPA, CGFM, Senior Managing Consultant
11:00 AM – 11:10 AM Break
11:10 AM – 12:00 PM Basics of Investment Accounting
Debra Goodnight, CPA, Managing Director
12:00 PM – 12:30 PM Lunch Service on Webster Patio
12:30 PM – 1:20 PM U.S. Economic Update
Chris Blackwood, Senior Managing Consultant
1:20 PM – 1:30 PM Break
1:30 PM – 2:30 PM Investment Strategies for 2011 –
Navigating Uncharted Waters In the Wake of QE2
How to Invest In an Era of Low Rates, Fed Intervention,
and Political Uncertainty
Ken Schiebel, Managing Director/Senior Portfolio Manager
PFM Asset Management LLC
Investment and Financial Management Forum
December 2, 2010
Webster Auditorium
Desert Botanical Garden
1201 N. Galvin Parkway
Phoenix, AZ 85008
480.941.1225
2010
Investment and Financial
Management Forum
PPrroovviiddiinngg tthhee ttoooollss
ffoorr ssuucccceessss!!
December 2
10:00 a.m. – 2:30 p.m.
Webster Auditorium
Desert Botanical Garden
1201 N. Galvin Parkway
Phoenix, AZ 85008
2375 E. Camelback Rd Suite 5118
Phoenix, AZ 85016
(602) 387-5187
Agenda
9:30 a.m. – 10:00 a.m.
Registration
10:00 a.m. – 10:10 a.m.
Welcome and Seminar Introduction
Lauren Brant, Managing Director
10:10 a.m. – 11:00 a.m.
Establishing a Firm Foundation: Developing Your
Investment Policy
Craig Clifford, CPA, CGFM, Senior Managing Consultant
This session will focus on recommended components of an investment
policy document for the public sector. Attendees will learn that an
investment policy is the foundation for sound investment practice and
processes. We will discuss why each component is important and how
they help public officials effectively manage their investments, with a
focus on safety of principal. The session will address the various
investment policy inclusions and best practices recommended by the
Government Finance Officers Association and the Association of
Public Treasurers, U.S. & Canada.
11:00 a.m. – 11:10 a.m.
Break
11:10 a.m. – 12:00 p.m.
Basics of Investment Accounting
Debra Goodnight, CPA, Managing Director
This session focuses on the fundamentals of investment accounting—
without overwhelming you with the intricacies. We will explain
fundamental terminology, compare and contrast different methods of
accounting, and provide a refresher on the key aspects of GASB
Statement 31 and GASB Statement 40.
Biographies
Ken Schiebel
Managing Director/Senior Portfolio Manager
Kenneth Schiebel is a Managing Director and Sr. Portfolio Manager for
PFM’s Western Region accounts. He has extensive experience
managing portfolios comprised of high-quality, fixed-income assets
and is currently responsible for $6 billion of general funds and bond
proceeds for cities, counties, universities, and other public entities.
Ken has 29 years of experience in portfolio management, investment
analysis, risk management, and asset/liability management. At PFM,
Ken has been developing innovative and succesful investment
strategies for clients for over 16 years. He is a member of PFM’s
Investment and Credit Committees.
Prior to joining PFM, Ken spent 13 years at Aetna Life & Casualty, the
large multi-line insurance and financial services company. As Sr.
Portfolio Manager, he managed $5 billion of corporate operating funds,
insurance reserves, and pension fund assets for Aetna and its
investment advisory clients. He was also responsible for managing
Aetna’s short-term debt issuance. Prior positions included Manager of
Fixed-Income Investment Research, Senior Investment Analyst and
Head of Aetna’s Cash Planning Unit.
Ken has a degree in mathematics and computer science from the
University of Michigan. He has also done post-graduate work in
behavioral finance at the Harvard University Kennedy School of
Government. He holds the Chartered Financial Analyst designation, is
a member of the CFA Institute and is a General Securities Registered
Representative, holding NASD Series 7 and 63 registrations. Ken has
been a guest lecturer in the University of Connecticut’s MBA program,
provided expert testimony to the GASB Deposit and Investment Risk
Disclosure Task Force and has spoken at numerous industry
conferences, workshops and seminars. Ken is a General Securities
Registered Representative holding FINRA Series 7 and 63.
12:00 p.m. – 12:30 p.m.
Lunch Break
12:30 p.m. – 1:20 p.m.
U.S. Economic Update
Chris Blackwood, Senior Managing Consultant
This session will provide an overview of economic and business
conditions in the United States, including a discussion of the impacts
of monetary and fiscal policy. Attendees will also be provided
perspectives on employment, personal income, consumer spending,
housing, interest rates, and consumer and business credit conditions.
1:20 p.m. – 1:30 p.m.
Break
1:30 p.m. – 2:30 p.m.
Investment Strategies for 2011 –
Navigating Uncharted Waters in the Wake of QE2
How to Invest In an Era of Low Rates, Fed Intervention,
and Political Uncertainty
Ken Schiebel, Managing Director/ Senior Portfolio Manager
This session will discuss factors impacting today’s investment markets.
The presentation will review what strategies worked best in prior
economic recoveries, and what opportunities—and risks—exist in
today’s low rate environment. Also covered will be how the investment
landscape has been changed by the recent credit crisis, Federal
Reserve policy, and regulatory reform.
Agenda Biographies
Debra holds a B.S. Degree in accounting from Robert Morris College,
and an M.B.A. with an emphasis on finance from St. Thomas
University. She is a Certified Public Accountant licensed in both
Pennsylvania and Texas and has taught management courses at the
collegiate level. Debra has served on the Advisory Board for
Information Systems of America, Inc., providing investment industry
direction of their software development. Debra was on the Technical
Advisory Committee for GASB 40.
Chris Blackwood
Senior Managing Consultant
Chris Blackwood serves as a Senior Managing Consultant for PFM
Asset Management, LLC in Denver, Colorado. His practice focuses on
providing investment advisory services to governments and nonprofit
organizations throughout the Rocky Mountain region and Western
United States. He has expertise in developing investment policies,
structuring investment portfolios, and providing presentations to
governing boards.
From 2000 to 2010, Chris served as a portfolio manager and
administrator for two local government investment pools and provided
oversight on over 70 separately managed accounts totaling in excess
of $5 billion. Previously, he served as Chief Financial Economist for
Boettcher & Company and Senior Economist to the Governor of
Colorado. Chris is a past board member of the Denver Association of
Business Economists and is Chairman of the Board for the Rangeview
Library District Foundation. He is a frequent speaker at industry
organizations including the GFOA, iMoneyNet, and governmental
organizations representing schools districts, counties, special districts,
and municipalities. In addition, he has authored a number of
newsletters and books related to public finance and investment
advisory services for government entities.
Chris holds a B.A. and M.A. in Economics from the University of
Colorado and has received Executive Education certificates from the
University of Denver and the Massachusetts Institute of Technology.
Chris is a General Securities Registered Representative holding
FINRA Series 7, 52 and 66.
Biographies
Lauren Brant
Managing Director
Lauren Brant joined the PFM Group in 1995. A Managing Director in
our Phoenix and San Francisco offices, Lauren manages PFM’s
Western Region investment advisory practice in coordination with
Nancy Jones.
Lauren serves as an engagement manager for PFM’s Western Region
clients. She is responsible for coordinating client services, providing
technical and analytical support, keeping entities apprised of pending
legislation that may impact their investment portfolios, and presenting
investment reports to governing boards. Lauren works closely with her
clients to formulate and implement a customized investment strategy
designed to meet their specific investment objectives. To create the
optimal portfolio structure, she gains a thorough understanding of the
entity’s risk tolerances, cash flows, and investment objectives. Lauren
is also very familiar with arbitrage rebate regulations.
Lauren has conducted numerous training workshops for clients and
has given speeches to national and local municipal organizations.
Lauren is a graduate of Pennsylvania State University, where she
earned a Bachelor of Science degree in Economics. Lauren is a
General Securities Registered Representative holding FINRA Series
6, 52 and 63.
Craig Clifford, CPA, CGFM
Senior Managing Consultant
Craig Clifford is a Senior Managing Consultant with PFM Asset
Management LLC. He is a Certified Public Accountant and Certified
Government Financial Manager. He recently retired as the Chief
Financial Officer for the City of Scottsdale, Arizona. He has also served
for other Arizona municipalities and worked in the banking industry. He is
past Executive Board member of the Government Finance Officers
Association of US and Canada; Past President of the Arizona Finance
Officers Association; and recently served on the Municipal Securities
Rule Making Board Local (Bond) Issuer Advisory Committee. He is a
member of the Arizona Society of CPAs, American Institute of CPAs,
Association of Government Accountants, Municipal Treasurer’s
Association, and Fellow of the American Board of Forensic Accounting.
(continued on next page)
Biographies
Other previous civic experience includes, Past President of Sierra
Tempe Homeowners Association, Past Treasurer and Executive Board
member of the Tempe Community Council, Valley of the Sun United
Way Committee, and Boy Scouts of America volunteer.
Craig earned undergraduate degrees in Business Management and
Accounting from Arizona State University and a Masters in Business
Administration with honors from the University of Phoenix. Craig is a
native Arizonan and currently serves on the Arizona Botanical Garden’s
Board of Trustees and Finance Committee. Craig is a General
Securities Registered Representative holding FINRA Series 6 and 63.
Debra Goodnight, CPA
Managing Director
Debra Goodnight, CPA, has overall responsibility for accounting and
administration for PFM, including portfolio accounting, pool
accounting, and client billing. She monitors the integrity of the portfolio
accounting systems, verifying the mathematical accuracy of interest
accruals and analytic information. She is responsible for verification of
accounting compliance with the Government Accounting Standards
Board’s regulations and guidelines. She monitors the pool reporting
requirements to ensure that they adhere to SEC guidelines. She
regularly confers with independent accounting firms on behalf of
clients.
Prior to joining the PFM Group in 1990, Debra spent nine years with
American General Corporation. As Second Vice President and
Assistant Controller, she was responsible for investment accounting
operations for portfolios totaling approximately $19 billion. During her
tenure, American General’s investment accounting operations were
able to reduce the failed trade rate to one-fourth the industry standard,
dramatically reduce income variances, thereby eliminating lost income
opportunities, and develop and install a mortgage-backed processing
system on a local area network.
Prior to joining American General, Debra was employed with the
Controller’s Department of H.J. Heinz and the accounting firm of
Coopers and Lybrand.
(continued on next page)
Investment Advisors to the Public Sector
PFM’s 1-3 Year Fixed Income Composite
Std Dev
Merrill LynchMerrill LynchCompositePercent of
PeriodComposite1-3 YearComposite1-3 YearCompositeAccountCompositeTotal PFM
EndedReturnTreasury IndexDurationTreasury IndexAccountsReturnsAssetsAssets
Gross-of-Fees Quarterly Returns (unannualized)
MV ReturnG1O2DTWG1O2ASSETS
12/31/19981.18%0.76%1.461.62180.07%927,850,7227.31%
3/31/19990.82%0.60%1.761.59210.05%1,013,620,0608.07%
6/30/19990.58%0.57%2.001.59200.03%1,088,980,4698.99%
9/30/19991.14%1.26%1.921.59230.07%1,139,066,4448.58%
12/31/19990.90%0.60%1.861.55240.07%1,301,626,1549.68%
3/31/20001.21%1.25%1.731.61270.08%1,374,588,04710.19%
6/30/20001.73%1.72%1.601.55290.11%1,477,707,35010.75%
9/30/20002.28%2.10%1.541.60300.15%1,463,883,65110.10%
12/31/20002.69%2.70%1.471.59300.18%1,571,897,82210.75%
3/31/20012.50%2.76%1.231.58310.17%1,552,241,40910.50%
6/30/20011.28%1.18%1.481.57300.09%1,613,740,73010.60%
9/30/20013.18%3.38%1.351.60310.21%1,663,172,47011.03%
12/31/20010.74%0.76%1.491.63320.05%1,764,305,58311.60%
3/31/20020.23%0.01%1.551.60290.02%1,755,546,82711.58%
6/30/20022.30%2.38%1.441.61280.15%1,903,531,75811.76%
9/30/20022.12%2.41%1.371.60350.15%2,231,243,86213.66%
12/31/20021.04%0.87%1.491.59410.08%2,405,349,34514.19%
3/31/20030.77%0.59%1.451.55420.06%2,870,846,60816.65%
6/30/20030.84%0.72%1.381.61440.07%2,910,108,08415.66%
9/30/20030.33%0.43%1.451.61490.03%3,095,011,35616.29%
12/31/20030.30%0.15%1.411.70490.03%3,126,500,95015.65%
3/31/20040.99%1.00%1.401.70500.08%3,621,960,69616.18%
6/30/2004-0.99%-1.06%1.681.69520.09%3,814,310,43917.24%
9/30/20041.10%0.97%1.571.69500.09%3,618,300,85413.76%
12/31/20040.13%0.02%1.561.66480.01%3,216,936,61111.22%
3/31/2005-0.11%-0.26%1.481.63520.01%3,356,738,91311.54%
6/30/20051.16%1.14%1.511.67530.10%3,501,275,78612.21%
9/30/20050.23%0.09%1.501.63570.02%3,653,547,00212.27%
12/31/20050.68%0.69%1.481.68580.06%3,661,571,71115.18%
3/31/20060.60%0.38%1.561.66560.06%3,787,571,08715.57%
6/30/20060.73%0.65%1.541.68560.07%3,778,609,53615.15%
9/30/20062.00%1.97%1.621.71530.18%3,485,620,89913.55%
12/31/20061.11%0.91%1.641.68550.10%3,669,465,19313.34%
3/31/20071.43%1.40%1.481.68570.13%3,610,712,00813.08%
6/30/20070.79%0.70%1.601.67630.08%3,888,863,45614.54%
9/30/20072.28%2.67%1.531.64680.23%4,139,405,78114.55%
12/31/20072.18%2.36%1.551.61700.22%4,382,484,24113.06%
3/31/20082.76%2.98%1.531.65680.28%4,653,778,32413.27%
6/30/2008-0.46%-0.86%1.601.59730.05%4,765,722,43813.65%
9/30/20080.88%1.68%1.521.63730.09%4,805,364,05514.07%
12/31/20083.75%2.69%1.591.64770.40%5,229,617,01614.11%
3/31/20090.33%0.09%1.461.76770.04%5,157,762,59713.35%
6/30/20090.71%-0.11%1.621.81750.08%5,076,338,42613.39%
9/30/20090.86%0.78%1.461.85810.10%5,300,760,19214.16%
12/31/20090.14%0.03%1.641.84790.02%5,074,523,38512.92%
3/31/20100.67%0.70%1.851.84810.07%5,312,758,31813.38%
6/30/20101.11%1.16%1.641.82840.13%5,518,575,58114.56%
9/30/20100.62%0.62%1.521.81870.07%5,492,345,35114.20%
PFM 1-3 Year Fixed Income Composite
AnnualizedStd Dev
AnnualizedMerrill LynchMerrill LynchStd DevMerrill Lynch
Composite1-3 YearComposite1-3 YearHistorical 1-3 Year
YearReturnTreasury IndexDurationTreasury IndexReturnsTreasury Index
Gross-of-Fees Annualized Returns (ending 9/30/2010)
1 Year2.56%2.53%1.711.831.06%1.40%
2 Year4.13%3.00%1.611.791.57%1.46%
3 Year4.56%4.07%1.591.731.73%1.91%
4 Year4.85%4.50%1.581.711.57%1.75%
5 Year4.70%4.35%1.571.711.44%1.61%
6 Year4.14%3.78%1.561.701.42%1.58%
7 Year3.74%3.38%1.561.701.45%1.60%
8 Year3.65%3.29%1.541.681.45%1.58%
9 Year3.85%3.55%1.531.68n/an/a
10 Year4.45%4.21%1.521.67n/an/a
PFM 1-3 Year Fixed Income Composite
PFM 1-3 Year Fixed Income Composite
Average
Merrill LynchQuarterMerrill Lynch
PeriodComposite1-3 YearComposite1-3 Year
EndedReturnTreasury IndexDurationTreasury Index
Gross-of-Fees Yearly Returns
20008.14%7.99%1.591.59
20017.90%8.30%1.391.60
20025.80%5.76%1.471.60
20032.25%1.90%1.421.62
20041.21%0.91%1.551.69
20051.96%1.67%1.491.65
20064.52%3.96%1.591.68
20076.85%7.32%1.541.65
20087.06%6.61%1.561.63
20092.05%0.78%1.541.81
Disclosures
PFM Asset Management LLC has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®).
Public Financial Management, Inc. was founded in 1975 and has been providing investment management services since 1980. In 2001, PFM Asset Management LLC was created as the entity under which
investment advisory services are provided, and is devoted exclusively to providing investment advice and portfolio management for funds of institutional investors. Both Public Financial Management, Inc. and PFM
Asset Management LLC are owned and managed by the same managing directors who, as a group, set overall strategic direction. This group of managing directors, and the two companies they own, are referred
collectively as The PFM Group, or simply “PFM.” PFM maintains a complete list of and description of composites, which is available upon request.
The PFM 1-3 Year Fixed Income Composite was created on 9/30/03 and includes all fee paying, discretionary accounts over $10 million that are managed according to a(n) 1-3 Year Fixed Income strategy.
Portfolios in the composite have duration generally between plus or minus 25% of a short-term fixed income index such as the
Merrill Lynch 1-3 Year Treasury Index and invest in high quality government securities and corporate debt instruments, generally limited to AA or better. Only actual portfolios are included in the composites – no
model portfolios.
Returns include accounts under management from their respective inception dates, including those no longer with the firm. No selective periods for presentation have been utilized – data from all accounts have
been continuous from the inception to present or the last full quarter of management. No alterations of composites have occurred because of changes in personnel or other reasons at any time. Internal dispersion is
calculated using the asset-weighted standard deviation of all portfolios included in the composite for an entire year.
Performance results represent firm-wide performance for a particular investment strategy, rather than a specific manager’s record. Stated performance results are that of a particular composite. There is no
guarantee that the performance of any one specific portfolio will be identical to the composite. Performance data should not be considered a prediction of future performance results. The actual future performance
of any product may be greater or less than past performance. Investment returns and principal will vary.
All returns are based in U.S. Dollars and portfolio returns are time-weighted using Modified Dietz method to calculate individual performance. Geometric linking and asset weighting is used for the composites. Total
returns are presented using the accrual basis of accounting for fixed income securities. Cash basis accounting is used for dividends. For periods ended 9/30/03, investments were recorded on a Settlement Date basis.
Subsequent investments were recorded on a Trade Date basis. Additional information regarding policies for calculating and reporting returns is available upon request.
All securities within portfolios are valued on a monthly basis using closing bid prices as of the last business day of the month as supplied by external pricing services. Prices for securities not priced by one of our
pricing services are derived using matrix pricing and interpolating based upon pricing service data. All cash reserves and/or equivalents under management are included in composite totals.
Gross-of-fees returns are presented, i.e., before management fees, custodial fees and taxes, but after brokerage and other transaction fees. A client return will be reduced by the advisory fees and other expenses the
portfolio may incur. Non-fee paying portfolios are excluded from composites, except where noted. PFM's investment advisory fees are described in Part II of PFM's Form ADV. The standard fee schedule is as
follows: 0.25% per annum on first $25 million; 0.15% per annum on assets over $25 million. For example, a $10 million portfolio earning a 5% annual return over 5 years would grow to $12.8 million while the
same portfolio with an annual fee of .25% would grow to $12.6 million net of fees. Similarly, a $10 million portfolio earning a 5% annual return over 10 years would grow to $16.3 million while the same portfolio
with an annual fee of .25% would grow to $15.9 million net of fees.
Grace Period is defined as follows: For portfolios where PFM inherits more than the greater of 50% of Beginning Market Value or $2 million in securities, they will be included in the composite the second full
calendar quarter. All other portfolios will be included in the composite the first full calendar quarter.
Investment Advisors to the Public Sector
List of Approved Brokers/Dealers
*Banc of America Securities LLC *Mizuho Securities USA Inc.
*Barclays Capital Inc.Morgan Keegan & Co.
BGC Financial Inc.*Morgan Stanley & Co. Incorporated
†Blaylock Robert Van, LLC *Nomura Securities International, Inc.
*BNP Paribas Securities Corp.†Siebert Branford Shank & Co., LLC
*Cantor Fitzgerald & Co.†StormHarbor Securities LP
*Citigroup Global Markets Inc.Raymond James & Associates, Inc.
*Credit Suisse Securities (USA) LLC *RBC Capital Markets Corporation
*Deutsche Bank Securities Inc.*RBS Securities Inc.
FTN FinancialSandler O'Neill & Partners, LP
G.X. Clarke & Co.Stephens, Inc.
*Goldman, Sachs & Co. Stone & Youngberg LLC
*HSBC Securities (USA) Inc.Susquehanna Financial Group, LP
*Jefferies & Company, Inc.*UBS Securities LLC.
*J. P. Morgan Securities Inc. Wachovia Capital Markets LLC
Keybanc Capital Markets Wells Fargo Institutional Sales
Mesirow Financial, Inc.
*Primary Government Securities Dealer
†Minority or woman owned business enterprise
Note: Direct issuers of CP and CDs are automatically included if approved as an approved issuer.
Important Disclosures
PFM Asset Management LLC
Approved Broker/Dealer List
August 23, 2010
This list is current as of the effective date only and is subject to change. This list is for information purposes only,
and may not be relied upon for any other purpose. This information is confidential and may not be distributed with
prior written consent of PFM Asset Management LLC.
PFM Asset Management LLC
Investment Advisors to the Public Sector
Sample Reports
PFM Asset Management LLC
2375 E. Camelback Rd. Suite 5118
Phoenix, AZ 85016
602-387-5187
brantl@pfm.com
Client's Name
Investment Performance Review
Third Quarter 2010
CLIENT'S NAME Investment Report – Quarter Ended September 30, 2010
PFM Asset Management LLC Section A - 1
Fixed-income portfolios generated strong total returns in the third
quarter, as interest rates across the yield curve declined to new record
lows. All but the shortest duration benchmarks significantly
outperformed money market instruments, which continued to offer
near-zero yields. Longer duration benchmarks generally performed the
best due to larger interest rate declines for longer maturities.
For the quarter our approach to duration was cautious, conservatively
positioning portfolio durations short of benchmark durations to guard
against the negative effect rising interest rates would have on portfolio
market values.
Although the short bias of this strategy sacrificed some return in the
quarter, value-added management techniques including strategic yield
curve placement and active sector management, worked to produce
returns roughly even with benchmarks.
The Federal Reserve has acknowledged a slowing recovery in recent
statements, pledging to ―provide additional accommodation if needed
to support economic recovery and to return inflation, over time, to
levels consistent with its mandate.‖ This ―additional accommodation‖
would almost certainly come in the form of further quantitative easing
– a process by which the central bank purchases large amounts of
government securities in the open market over a period of months in
an effort to push interest rates down and support economic expansion.
With a slower pace of economic growth and the Fed’s renewed focus
on easing, it is likely that rates will remain at recent levels for months,
opening a window for us to extend durations closer to those of
benchmarks.
Thus our strategy for the fourth quarter is built around somewhat
longer durations to take advantage of the steep yield curve. Despite
the sharp decline in long term rates during the third quarter, by historic
standards, the spread between 2-year and 10-year Treasuries remains
wide. With the prospect of low growth and low inflation over the next
several quarters, extensions to the range of 90% to 95% of benchmark
durations are designed to earn somewhat higher income and benefit
from (somewhat diminished) yield curve roll-down, as the Fed signals
readiness to push down rates across the yield curve.
Interest Rates and Returns
Interest rates continued to decline steadily throughout the third quarter,
as shown in the chart below, in response to weaker-than-expected
economic data. On July 1, a 2-year U.S. Treasury note offered a yield
of 0.63%, but by September 30 it was yielding only 0.42% – an all-
time low.
2-Year U.S. Treasury Note Yield
October 1, 2009 through September 30, 2010
While short-term rates declined considerably in the quarter, the decline
in rates was most dramatic in longer-term securities, where
diminishing inflation expectations and the prospect of Fed intervention
had a stronger effect. 5- and 10-year Treasury yields fell 40 to 50 basis
points between June and September.
The table on the next page shows quarter-end yields for various U.S.
Treasury securities, changes in the quarter, and changes for the past 12
months.
0.40%
0.60%
0.80%
1.00%
1.20%
Oct 09 Jan 10 Apr 10 Jul 10
Source data: Bloomberg Markets
CLIENT'S NAME Investment Report – Quarter Ended September 30, 2010
PFM Asset Management LLC Section A - 2
Summary of U.S. Treasury Security Yields
Date 3M 6M 1Y 2Y 3Y 5Y 10Y
September 30, 2010 0.15% 0.19% 0.25% 0.42% 0.63% 1.26% 2.51%
June 30, 2010 0.17% 0.22% 0.31% 0.60% 0.97% 1.77% 2.93%
Change over Quarter -0.02% -0.03% -0.06% -0.18% -0.34% -0.51% -0.42%
September 30, 2009 0.11% 0.17% 0.38% 0.95% 1.42% 2.31% 3.31%
Change over Year 0.04% 0.02% -0.13% -0.53% -0.79% -1.05% -0.80%
With the decline in interest rates, the market values of fixed-income
portfolios increased considerably, both quarter-over-quarter and year-
over-year. As the chart below illustrates, portfolios with longer durations
outperformed those with shorter durations.
The 1- to 3-year U.S. Treasury benchmark returned 0.62% (2.50%
annualized), while the 3- to 5-year U.S. Treasury benchmark returned
2.46% (10.21% annualized). The duration of the 3- to 5-year U.S.
Treasury benchmark was 3.85 years, versus 1.89 years for the 1- to 3-
year U.S. Treasury benchmark.
Total Returns of Merrill Lynch U.S. Treasury Indices
Quarterly and 12-Month Total Return as of September 30, 2010
The yield curve flattened sharply, reducing the benefit of roll-down.
Short-term rates remain near zero, intermediate rates have fallen to
record lows, and longer rates have fallen 100 to 150 basis points from
their April highs. During the quarter, the difference between 2- and 10-
year U.S. Treasury yields was as high as 2.45%, but by quarter end,
the difference had fallen to 2.09%.
The spread between U.S. Treasury and Federal Agency rates
fluctuated within a narrow range during the quarter, though it
remained tight by historic standards, reflecting a perception of reduced
risk and increased liquidity for agency debt. For example, the spread
on 2-year maturities ranged between 16 and 23 basis points, and the
spread on 5-year maturities ranged between 20 and 28 basis points, all
well below historical averages.
Duration Adjusted Returns of Merrill Lynch 1-3 Year Indices
Quarterly and 12-Month Total Return as of September 30, 2010
Spreads between Treasuries and corporate securities narrowed in
response to improving corporate balance sheets and greater investor
appetite for risk, contributing to the strong performance of the
corporate sector. As the chart above illustrates, on a duration-adjusted
0.04%
0.62%
1.32%
2.46%
0.13%
2.53%
4.23%
7.06%
0%
1%
2%
3%
4%
5%
6%
7%
8%
3mo 1-3yr 1-5yr 3-5yr
Quarter 1 Year
0.62%0.60%
1.72%
2.53%2.58%
5.11%
0%
1%
2%
3%
4%
5%
6%
U.S. Treasury Federal Agency AA/AAA Corporate
Current Quarter Past 12 Months
Source data: Bank of America Merrill Lynch; Bloomberg Markets
Duration-adjusted return incorporates an adjustment to the market value return
(but not the income return) of each benchmark to account for their varied
durations, making it easier for investors to assess the relative risk and return of
benchmarks of different lengths.
Source data: Bloomberg
Source data: Bank of America Merrill Lynch; Bloomberg Markets
CLIENT'S NAME Investment Report – Quarter Ended September 30, 2010
PFM Asset Management LLC Section A - 3
basis, Treasury and Agency benchmarks performed roughly in line
with one another, while corporate benchmarks significantly
outperformed.
As corporate spreads continued to narrow in the quarter, we generally
increased corporate holdings, selectively purchasing the securities of
highly-rated issuers on our approved list. In many portfolios we
incorporated commercial paper, which offered some additional value
over short-dated Treasury bills, Agency discount notes, and money
market instruments.
Economic Outlook
Economic data was generally weak in the third quarter, pointing
toward a slowing recovery and uncertain prospects for future growth.
The final measurement of second quarter GDP was an anemic 1.7%
and economist estimates call for third quarter growth of under 2.0%.
Economic conditions remain subject to considerable uncertainty, with
the most likely scenario being modest growth and little-to-no inflation
for the foreseeable future. The current pace of expansion is insufficient
to make a real dent in unemployment, with nearly 8 million jobs lost
since 2008. Unemployment remains persistently high, near 10%, with
most businesses still hesitant to add new employees.
The housing sector remains weak, with housing starts, building
permits, and sales relatively unchanged in recent months, and housing
prices showing no signs of recovery. The pace of manufacturing
activity has accelerated, but is hardly booming, as evidenced by only
small upticks in factory orders, stable manufacturing employment, and
continued low rates of capacity utilization. Retail sales, though
positive year-over-year, are not strong enough to provide significant
fuel to recovery.
Global economies, particularly in Asia and emerging markets, are out-
pacing the U.S. The dollar weakened significantly in the quarter (from
$1.19 to $1.35 versus the Euro at quarter-end), as fears of a European
meltdown diminished and growth picked up in Western Europe. Oil
and commodity prices have risen based on the prospect for stronger
global demand. These developments should ultimately aid U.S. export
sectors and large, global businesses based in the U.S., but do little to
aid small, domestic firms.
The Federal Reserve has become increasingly focused on inflation—
or, more properly, the lack thereof. As the following chart shows,
though underlying price data show modest inflation, the majority of
Fed governors have signaled support for a new round of quantitative
easing that would involve the central bank purchasing $1 trillion of
government securities in an effort to push long-term interest rates even
lower, ultimately encouraging modest price increases that would help
debtors and, perhaps, stimulate spending.
Core and Non-Core Consumer Price Index
August 2005 through August 2010
Investment Strategy
Given the increased likelihood that low interest rates will persist over
the next several quarters, we plan to manage portfolios slightly closer
to those of their respective benchmarks. This cautious duration
extension should offer an opportunity to add value, while providing
enough flexibility to respond to changing interest rate scenarios. We
remain concerned that when interest rates rise from their record lows,
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Aug 05 Aug 06 Aug 07 Aug 08 Aug 09 Aug 10
Consumer Price Index
Core CPI
Source data: U.S. Department of Labor, Bureau of Labor Statistics
CLIENT'S NAME Investment Report – Quarter Ended September 30, 2010
PFM Asset Management LLC Section A - 4
as they surely will, longer duration investments will experience market
value declines that will lead to strongly negative returns for an
extended period. We believe the best defense is to keep portfolios
somewhat shorter; even though such a strategy may give up some
return in the short run, it will mitigate the effects of a rise in rates.
With rates at record lows, even a slight increase has the potential to
more than offset interest income, resulting in a negative total return.
We also plan to maintain or increase holdings of assets other than
Treasuries because, although credit spreads are generally narrow,
strong government and central bank action to promote economic
growth and keep interest rates low should aid these types of
investments.
CLIENT'S NAME Investment Report - Quarter Ended September 30, 2010
Portfolio Summary
Total Portfolio Value September 30, 2010 June 30, 2010
Market Value $26,354,047.04 $34,375,859.58
Amortized Cost $26,197,675.57 $34,236,253.93
PORTFOLIO RECAP
The portfolio is in compliance with California Government Code and the Client's investment policy. The portfolio is
conservatively managed, consistent with our mandate, and has very high credit quality.
During the third quarter, the pace of the economic recovery slowed drastically. The positive growth exhibited in the previous two quarters was
largely as a result of temporary stimulus measures and inventory rebuilding. As capacity utilization remains low, the true r ate of growth that
the economy is projected to support is from 1.7%-2.5%.
Rates continued to plunge to historic lows during the quarter on concerns about a prolonged recovery, a second round of quantitative easing
by the Fed, and a target rate set at 0.00%-0.25% for at least the next 2-4 quarters. The yield on the 2-year Treasury ended the quarter at a
record low 0.42%.
We continued to restructure the portfolio to target specific cash flow dates based on the Client’s cash flow and revenue projections.
– We recommended that the Client begin moving funds from LAIF into individual securities that offer value and “roll down” appreciation as
the yield curve remains steep.
At the end of the quarter, we purchased an attractive callable Agency note using the proceeds from maturities in the portfolio and the sale of a
security. Callable securities often offer higher yields and favorable return characteristics in a stable interest rate environment. The callable
note will settle on October 25.
The portfolio continues to produce favorable returns and to maintain a favorable yield to maturity of 0.91%. In the third quarter, the
portfolio returned 0.29% unannualized or 1.18% annualized. Since inception the portfolio has generated a return of 1.16%.
PFM Asset Management LLC Section B - 1
CLIENT'S NAME Investment Report - Quarter Ended September 30, 2010
Portfolio Summary - continued
PORTFOLIO STRATEGY
The slowdown in economic growth that occurred in the third quarter is expected to persist through the fourth quarter, and likely beyond.
Recent economic data and statements issued by the Federal Reserve suggest that interest rates may remain low for longer than
previously expected.
We will look for strategic opportunities to invest a portion of the Client’s liquid funds in securities based on the Client’s projected cash
flow needs.
Although commercial paper rates have come down as the disruptions in international funding markets have subsided, we will con tinue
to evaluate 6- to 12-month commercial paper. These securities can offer attractive yields relative to short-term Treasuries and Federal
Agencies and offer good investment opportunities relative to risk.
While employing an overall long-term disciplined investment approach to managing the portfolio, the specific investment strategies we
utilize will remain flexible and may change in response to changes in interest rates, economic data, market outlook, or specific
opportunities that arise.
We will maintain a well-diversified, high-quality portfolio. We will emphasize U.S. Treasury and Federal Agency securities while
evaluating all investment options available to the Client.
PFM Asset Management LLC Section B - 2
CLIENT'S NAME Investment Report - Quarter Ended September 30, 2010
Portfolio Performance
Quarter Ended Annualized Past 6 Annualized Past 6 Since
Total Return1,2,3,4 September 30, 2010 Quarter Months Months Inception
Client's Name 0.29%1.18%0.79%1.58%1.16%
Merrill Lynch 1 Year Treasury Index 0.24%0.96%0.51%1.02%0.99%
Effective Duration September 30, 2010 June 30, 2010 Yields September 30, 2010 June 30, 2010
Client's Name 0.84 0.80 Yield at Market 0.37%0.71%
Merrill Lynch 1 Year Treasury Index 0.91 0.91 Yield on Cost 0.91%1.03%
Notes:
1. Performance on trade date basis, gross (i.e., before fees), in accordance with the CFA Institute’s Global Investment Performance Standards (GIPS).
2. Merrill Lynch Indices provided by Bloomberg Financial Markets.
3. Periodic returns are presented on both an unannualized and annualized basis. The annualized return assumes the periodic return is compounded at the same rate for a full year and is presented for reference only.
The actual annual return will be the result of chaining the most recent four quarterly returns.
4. Includes money market fund/cash in performance and duration computations. Excludes money market fund/cash in yield calculations.
0.29%
0.24%
-0.25%
0.00%
0.25%
0.50%
0.75%
0.00 0.50 1.00 1.50 2.00
Re
t
u
r
n
Effective Duration (Years)
Quarter Total Return Comparison
Merrill Lynch 1 Year
Treasury Index
Client's Name 1.16%
0.99%
0.50%
0.75%
1.00%
1.25%
1.50%
0.00 0.50 1.00 1.50 2.00
Re
t
u
r
n
Effective Duration (Years)
Since Inception Total Return Comparison
Merrill Lynch 1 Year
Treasury Index
Client's Name
PFM Asset Management LLC Section B - 3
CLIENT'S NAME Investment Report - Quarter Ended September 30, 2010
Portfolio Composition and Credit Quality Characteristics
Security Type1 September 30, 2010 % of Portfolio June 30, 2010 % of Portfolio Permitted by Policy
U.S. Treasuries $4,961,755.73 18.8%$4,956,564.67 14.4%100%
Federal Agencies $19,260,287.15 73.1%$23,261,304.59 67.7%100%
GSEs 2 $13,202,961.18 50.1%$17,189,506.37 50.0%100%
FDIC Guaranteed Obligations 3 $6,057,325.97 23.0%$6,071,798.22 17.7%100%
Certificates of Deposit $0.00 0.0%$0.00 0.0%30%
Commerical Paper $0.00 0.0%$0.00 0.0%25%
Bankers Acceptances $0.00 0.0%$0.00 0.0%15%
California Municipal Obligations $0.00 0.0%$0.00 0.0%100%
Money Market Fund $2,132,004.16 8.1%$6,157,990.32 17.9%20%
Totals $26,354,047.04 100.0%$34,375,859.58 100.0%
Notes:
1. End of quarter trade-date market values of portfolio holdings, including accrued interest.
2. Government sponsored enterprises including, but not limited to Fannie Mae, Freddie Mac, Federal Home Loan Bank system and Federal Farm Credit Banks.
3. Debt guaranteed under the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program and backed by the full faith and credit of the United States.
U.S. Treasuries
18.8%
GSEs
50.1%
FDIC Guaranteed
Obligations
23.0%
Money Market
Fund
8.1%
Portfolio Composition
U.S. Treasury
18.8%
AAA
73.1%
Money Market
Fund
8.1%
Credit Quality Distribution
Ratings by Standard & Poors
PFM Asset Management LLC Section B - 4
CLIENT'S NAME Investment Report - Quarter Ended September 30, 2010
Portfolio Maturity Distribution
Maturity Distribution1 September 30, 2010 June 30, 2010
Under 6 Months $8,082,810.71 $10,193,127.54
6 - 12 Months $4,014,683.50 $3,942,566.57
1 - 2 Years $14,256,552.83 $18,227,165.47
2 - 3 Years $0.00 $2,013,000.00
3 - 4 Years $0.00 $0.00
4 - 5 Years $0.00 $0.00
5 Years and Over $0.00 $0.00
Totals $26,354,047.04 $34,375,859.58
Notes:
1. Callable securities, if any, in portfolio are included in the maturity distribution analysis to their stated maturity date, although they may be called prior to maturity.
30%
11%
53%
6%
0%0%0%
31%
15%
54%
0%0%0%0%
0%
25%
50%
75%
100%
Under 6 Months 6 -12 Months 1 -2 Years 2 -3 Years 3 -4 Years 4 -5 Years 5 Years and Over
Pe
r
c
e
n
t
a
g
e
o
f
T
o
t
a
l
P
o
r
t
f
o
l
i
o
Portfolio Maturity Distribution1
June 30, 2010
September 30, 2010
PFM Asset Management LLC
Section B - 5
For the Month Ending September 30, 2010
CLIENT'S NAME
Managed Account Detail of Securities Held
Dated Date/Coupon/Maturity CUSIP ParRatingRatingDateDate Costat CostInterest Cost Value
Security Type/Description S&PMoody's OriginalYTMAccruedAmortized MarketTradeSettle
U.S. Treasury Bond / Note
US TREASURY NOTES
DTD 12/31/2008 0.875% 12/31/2010
901,476.90 901,166.86 1,990.15 905,238.28 11/20/0911/20/09TSYTSY 900,000.00 912828JV3 0.35
US TREASURY NOTES
DTD 07/31/2009 1.000% 07/31/2011
2,012,110.00 2,005,484.00 3,369.57 2,010,156.25 01/15/1001/14/10TSYTSY 2,000,000.00 912828LG3 0.67
US TREASURY NOTES
DTD 05/15/2009 1.375% 05/15/2012
2,032,421.88 1,997,831.32 10,387.23 1,996,093.75 06/04/0906/03/09TSYTSY 2,000,000.00 912828KP4 1.44
15,746.95 4,946,008.78 4,904,482.18 0.93 4,911,488.28 4,900,000.00 Security Type Sub-Total
U.S. Government Supported Corporate Debt
REGIONS BANK (FDIC) MTN
DTD 12/11/2008 2.750% 12/10/2010
2,008,334.00 2,007,154.32 16,958.33 2,056,360.00 06/04/0906/03/09AaaAAA 2,000,000.00 7591EAAA1 0.88
CITIBANK NA (FDIC) NOTE
DTD 03/30/2009 1.625% 03/30/2011
2,014,356.00 2,005,739.42 90.28 2,020,880.00 06/04/0906/03/09AaaAAA 2,000,000.00 17314JAA1 1.04
GOLDMAN SACHS GROUP INC (FDIC) FRN
DTD 12/05/2008 1.058% 12/05/2011
1,009,318.00 1,009,110.82 766.32 1,016,463.00 11/04/0910/30/09AaaAAA 1,000,000.00 38146FAB7 0.25
KEYCORP (FDIC) FRN
DTD 12/19/2008 0.857% 12/19/2011
1,007,217.00 1,006,905.44 286.04 1,012,253.00 11/04/0910/30/09AaaAAA 1,000,000.00 49327GAB3 0.27
18,100.97 6,039,225.00 6,028,910.00 0.73 6,105,956.00 6,000,000.00 Security Type Sub-Total
Federal Agency Bond / Note
FNMA GLOBAL NOTES
DTD 02/27/2009 1.750% 03/23/2011
1,007,212.00 1,004,229.82 388.89 1,014,920.00 07/13/0907/13/09AaaAAA 1,000,000.00 31398AVQ2 0.86
FANNIE MAE GLOBAL NOTES (FLOATING)
DTD 02/11/2010 0.167% 08/11/2011
1,999,018.00 1,997,732.60 185.93 1,997,160.00 05/04/1005/03/10AaaAAA 2,000,000.00 31398AG22 0.27
FNMA NOTES
DTD 12/04/2009 0.875% 01/12/2012
2,011,032.00 1,995,561.36 3,840.28 1,993,120.00 01/15/1001/14/10AaaAAA 2,000,000.00 31398AB43 1.05
FNMA GLOBAL NOTES
DTD 03/02/2010 1.000% 04/04/2012
2,016,442.00 1,995,198.60 9,833.33 1,993,660.00 04/05/1004/01/10AaaAAA 2,000,000.00 31398AH54 1.16
For the Month Ending September 30, 2010
CLIENT'S NAME
Managed Account Detail of Securities Held
Dated Date/Coupon/MaturityCUSIP ParRatingRatingDateDate Costat CostInterest Cost Value
Security Type/Description S&PMoody's OriginalYTMAccruedAmortized MarketTradeSettle
Federal Agency Bond / Note
FNMA GLOBAL NOTES
DTD 03/02/2010 1.000% 04/04/2012
5,041,105.00 4,993,569.60 24,583.33 4,991,200.00 03/08/1003/05/10AaaAAA 5,000,000.00 31398AH54 1.09
FNMA GLOBAL BENCHMARK NOTES
DTD 05/18/2007 4.875% 05/18/2012
1,071,310.00 1,055,297.15 18,010.42 1,085,560.00 11/04/0910/30/09AaaAAA 1,000,000.00 31398ABX9 1.43
56,842.18 13,146,119.00 13,041,589.13 0.98 13,075,620.00 13,000,000.00 Security Type Sub-Total
23,900,000.00 24,093,064.28 0.91 90,690.10 23,974,981.31 24,131,352.78 Managed Account Sub-Total
$23,900,000.00 $24,093,064.28 $90,690.10 $23,974,981.31 $24,131,352.78 0.91%
$24,222,042.88
$90,690.10
Total Investments
Accrued Interest
Securities Sub-Total
For the Month Ending October 31, 2010
CLIENT'S NAME
Managed Account Summary Statement
Total Cash Basis Earnings
Plus Net Realized Gains/Losses
Less Purchased Interest Related to Interest/Coupons
Interest/Coupons Received
Earnings Reconciliation (Cash Basis) - Managed Account
Less Beginning Accrued Interest
Less Beginning Amortized Value of Securities
Less Cost of New Purchases
Plus Coupons Received
Plus Proceeds of Maturities/Calls/Principal Payments
Plus Proceeds from Sales
Ending Accrued Interest
Ending Amortized Value of Securities
Earnings Reconciliation (Accrual Basis)
$24,131,352.78
0.00
(2,907,766.25)
5,005,500.00
0.00
(2,348.65)
$26,226,737.88
59,935.93
0.00
(53,832.03)
$6,103.90
Total
26,067,060.05
56,895.42
2,930,894.99
0.00
36,807.19
(5,005,500.00)
(23,974,981.31)
(90,690.10)
Total Accrual Basis Earnings $20,486.24
Closing Market Value
Change in Current Value
Unsettled Trades
Principal Acquisitions
Principal Dispositions
Maturities/Calls
Opening Market Value
Transaction Summary - Managed Account
_________________
_________________
______________________________________________________________________________________________Reconciling Transactions
Net Cash Contribution
Security Purchases
Principal Payments
Coupon/Interest Income
Sale Proceeds
Maturities/Calls
Cash Transactions Summary - Managed Account
0.00
2,930,894.99
36,807.19
0.00
(5,005,500.00)
0.00
0.00
Cash Balance
$94,206.34 Closing Cash Balance
Account # Page 1
For the Month Ending October 31, 2010
CLIENT'S NAME
Portfolio Summary and Statistics
Sector Allocation
69.22%
Fed Agy Bond /
Note
15.36%
US Govt Supported
Corp Debt
15.42%
US TSY Bond / Note
Account Summary
Percent Par ValueMarket ValueDescription
U.S. Treasury Bond / Note 4,000,000.00 4,044,608.00 15.42
U.S. Government Supported Corporate
Debt
4,000,000.00 4,027,624.00 15.36
Federal Agency Bond / Note 18,000,000.00 18,154,505.88 69.22
Managed Account Sub-Total 26,000,000.0026,226,737.88 100.00%
Accrued Interest 56,895.42
Total Portfolio 26,000,000.0026,283,633.30
Unsettled Trades 0.00 0.00
0 - 6 Months 6 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years Over 5 Years
11.51%15.29%
73.20%
0.00%0.00%0.00%0.00%
Maturity Distribution Characteristics
Yield to Maturity at Cost
Yield to Maturity at Market
Duration to Worst
Weighted Average Days to Maturity
0.99
470
0.88%
0.36%
Account # Page 2
For the Month Ending October 31, 2010
CLIENT'S NAME
Managed Account Issuer Summary
Credit Quality (S&P Ratings)
84.58%
AAA
15.42%
TSY
Issuer Summary
Percentof HoldingsIssuer
Market Value
2,011,628.00 7.67 CITIGROUP INC
13,152,615.88 50.15 FANNIE MAE
5,001,890.00 19.07 FREDDIE MAC
1,009,244.00 3.85 GOLDMAN SACHS GROUP INC
1,006,752.00 3.84 KEYCORP
4,044,608.00 15.42 UNITED STATES TREASURY
$26,226,737.88 Total 100.00%
Account # Page 3
For the Month Ending October 31, 2010
CLIENT'S NAME
Managed Account Detail of Securities Held
Dated Date/Coupon/MaturityCUSIP ParRatingRatingDateDate Costat CostInterest Cost Value
Security Type/Description S&PMoody's OriginalYTMAccruedAmortized MarketTradeSettle
U.S. Treasury Bond / Note
US TREASURY NOTES
DTD 07/31/2009 1.000% 07/31/2011
2,011,562.00 2,004,929.54 5,054.35 2,010,156.25 01/15/1001/14/10TSYTSY 2,000,000.00 912828LG3 0.67
US TREASURY NOTES
DTD 05/15/2009 1.375% 05/15/2012
2,033,046.00 1,997,942.44 12,703.80 1,996,093.75 06/04/0906/03/09TSYTSY 2,000,000.00 912828KP4 1.44
17,758.15 4,044,608.00 4,002,871.98 1.06 4,006,250.00 4,000,000.00 Security Type Sub-Total
U.S. Government Supported Corporate Debt
CITIBANK NA (FDIC) NOTE
DTD 03/30/2009 1.625% 03/30/2011
2,011,628.00 2,004,777.50 2,798.61 2,020,880.00 06/04/0906/03/09AaaAAA 2,000,000.00 17314JAA1 1.04
GOLDMAN SACHS GROUP INC (FDIC) FRN
DTD 12/05/2008 1.057% 12/05/2011
1,009,244.00 1,008,437.91 792.66 1,016,463.00 11/04/0910/30/09AaaAAA 1,000,000.00 38146FAB7 0.25
KEYCORP (FDIC) FRN
DTD 12/19/2008 0.856% 12/19/2011
1,006,752.00 1,006,338.90 309.20 1,012,253.00 11/04/0910/30/09AaaAAA 1,000,000.00 49327GAB3 0.27
3,900.47 4,027,624.00 4,019,554.31 0.65 4,049,596.00 4,000,000.00 Security Type Sub-Total
Federal Agency Bond / Note
FNMA GLOBAL NOTES
DTD 02/27/2009 1.750% 03/23/2011
1,006,465.00 1,003,492.06 1,847.22 1,014,920.00 07/13/0907/13/09AaaAAA 1,000,000.00 31398AVQ2 0.86
FANNIE MAE GLOBAL NOTES (FLOATING)
DTD 02/11/2010 0.166% 08/11/2011
1,998,668.00 1,997,945.96 184.72 1,997,160.00 05/04/1005/03/10AaaAAA 2,000,000.00 31398AG22 0.27
FNMA NOTES
DTD 12/04/2009 0.875% 01/12/2012
2,012,421.88 1,995,848.44 5,298.61 1,993,120.00 01/15/1001/14/10AaaAAA 2,000,000.00 31398AB43 1.05
FNMA GLOBAL NOTES
DTD 03/02/2010 1.000% 04/04/2012
2,018,696.00 1,995,462.20 1,500.00 1,993,660.00 04/05/1004/01/10AaaAAA 2,000,000.00 31398AH54 1.16
FNMA GLOBAL NOTES
DTD 03/02/2010 1.000% 04/04/2012
5,046,740.00 4,993,922.75 3,750.00 4,991,200.00 03/08/1003/05/10AaaAAA 5,000,000.00 31398AH54 1.09
FNMA GLOBAL BENCHMARK NOTES
DTD 05/18/2007 4.875% 05/18/2012
1,069,625.00 1,052,507.95 22,072.92 1,085,560.00 11/04/0910/30/09AaaAAA 1,000,000.00 31398ABX9 1.43
Account # Page 4
For the Month Ending October 31, 2010
CLIENT'S NAME
Managed Account Detail of Securities Held
Dated Date/Coupon/Maturity CUSIP ParRatingRatingDateDate Costat CostInterest Cost Value
Security Type/Description S&PMoody's OriginalYTMAccruedAmortized MarketTradeSettle
Federal Agency Bond / Note
FHLMC NOTES (CALLABLE)
DTD 10/25/2010 0.700% 10/25/2012
5,001,890.00 5,005,454.40 583.33 5,005,500.00 10/25/1010/07/10AaaAAA 5,000,000.00 3134G1WD2 0.64
35,236.80 18,154,505.88 18,044,633.76 0.89 18,081,120.00 18,000,000.00 Security Type Sub-Total
26,000,000.00 26,136,966.00 0.88 56,895.42 26,067,060.05 26,226,737.88 Managed Account Sub-Total
$26,000,000.00 $26,136,966.00 $56,895.42 $26,067,060.05 $26,226,737.88 0.88%
$26,283,633.30
$56,895.42
Total Investments
Accrued Interest
Securities Sub-Total
Account # Page 5
For the Month Ending October 31, 2010
CLIENT'S NAME
Managed Account Fair Market Value & Analytics
ValueOn Cost Amort Costto WorstCUSIPBrokerDatePriceDated Date/Coupon/Maturity Par at Mkt
MarketUnreal G/LUnreal G/LDurationNext CallMarketSecurity Type/Description YTM
U.S. Treasury Bond / Note
0.75 6,632.46 1,405.75 2,011,562.00 100.58 CITIGRP 2,000,000.00 912828LG3US TREASURY NOTES
DTD 07/31/2009 1.000% 07/31/2011
0.23
1.52 35,103.56 36,952.25 2,033,046.00 101.65 MORGANST 2,000,000.00 912828KP4US TREASURY NOTES
DTD 05/15/2009 1.375% 05/15/2012
0.30
38,358.00 0.26 1.13 41,736.02 4,044,608.00 4,000,000.00 Security Type Sub-Total
U.S. Government Supported Corporate Debt
0.42 6,850.50 (9,252.00) 2,011,628.00 100.58 LOOP CAP 2,000,000.00 17314JAA1CITIBANK NA (FDIC) NOTE
DTD 03/30/2009 1.625% 03/30/2011
0.23
1.09 806.09 (7,219.00) 1,009,244.00 100.92 GOLDMAN 1,000,000.00 38146FAB7GOLDMAN SACHS GROUP INC (FDIC) FRN
DTD 12/05/2008 1.057% 12/05/2011
0.21
1.13 413.10 (5,501.00) 1,006,752.00 100.68 BARCLAYS 1,000,000.00 49327GAB3KEYCORP (FDIC) FRN
DTD 12/19/2008 0.856% 12/19/2011
0.26
(21,972.00) 0.23 0.76 8,069.69 4,027,624.00 4,000,000.00 Security Type Sub-Total
Federal Agency Bond / Note
0.40 2,972.94 (8,455.00) 1,006,465.00 100.65 MORGANST 1,000,000.00 31398AVQ2FNMA GLOBAL NOTES
DTD 02/27/2009 1.750% 03/23/2011
0.11
0.78 722.04 1,508.00 1,998,668.00 99.93 MORGANST 2,000,000.00 31398AG22FANNIE MAE GLOBAL NOTES (FLOATING)
DTD 02/11/2010 0.166% 08/11/2011
0.25
1.19 16,573.44 19,301.88 2,012,421.88 100.62 JPMCHASE 2,000,000.00 31398AB43FNMA NOTES
DTD 12/04/2009 0.875% 01/12/2012
0.35
1.42 23,233.80 25,036.00 2,018,696.00 100.93 BNP PARI 2,000,000.00 31398AH54FNMA GLOBAL NOTES
DTD 03/02/2010 1.000% 04/04/2012
0.34
1.42 52,817.25 55,540.00 5,046,740.00 100.93 WELLSFAR 5,000,000.00 31398AH54FNMA GLOBAL NOTES
DTD 03/02/2010 1.000% 04/04/2012
0.34
1.48 17,117.05 (15,935.00) 1,069,625.00 106.96 JEFFERIE 1,000,000.00 31398ABX9FNMA GLOBAL BENCHMARK NOTES
DTD 05/18/2007 4.875% 05/18/2012
0.36
Account # Page 6
For the Month Ending October 31, 2010
CLIENT'S NAME
Managed Account Fair Market Value & Analytics
Value On Cost Amort Costto WorstCUSIPBrokerDatePriceDated Date/Coupon/Maturity Par at Mkt
MarketUnreal G/LUnreal G/LDurationNext CallMarketSecurity Type/Description YTM
Federal Agency Bond / Note
0.48 (3,564.40)(3,610.00) 5,001,890.00 100.04 04/25/11JPMCHASE 5,000,000.00 3134G1WD2FHLMC NOTES (CALLABLE)
DTD 10/25/2010 0.700% 10/25/2012
0.68
73,385.88 0.41 1.01 109,872.12 18,154,505.88 18,000,000.00 Security Type Sub-Total
26,000,000.00 26,226,737.88 89,771.88 159,677.83 0.99 0.36 Managed Account Sub-Total
Total Investments $26,283,633.30
$56,895.42
$26,226,737.88
Accrued Interest
Securities Sub-Total $26,000,000.00 $89,771.88 $159,677.83 0.99 0.36%
Account # Page 7
For the Month Ending October 31, 2010
CLIENT'S NAME
Managed Account Security Transactions & Interest
Transaction Type
Trade CUSIPSecurity DescriptionSettle Par Proceeds
Principal Accrued
Interest Total Cost
Realized G/L Realized G/L Sale
Amort Cost Method
BUY
10/25/10 FHLMC NOTES (CALLABLE)
DTD 10/25/2010 0.700% 10/25/2012
3134G1WD2 (5,005,500.00) 0.00 (5,005,500.00) 5,000,000.00 10/07/10
0.00 (5,005,500.00)(5,005,500.00) 5,000,000.00 Transaction Type Sub-Total
INTEREST
10/01/10 MONEY MARKET FUND MONEY0002 0.00 14.91 14.91 0.00 10/01/10
10/04/10 FNMA GLOBAL NOTES
DTD 03/02/2010 1.000% 04/04/2012
31398AH54 0.00 25,000.00 25,000.00 5,000,000.00 10/04/10
10/04/10 FNMA GLOBAL NOTES
DTD 03/02/2010 1.000% 04/04/2012
31398AH54 0.00 10,000.00 10,000.00 2,000,000.00 10/04/10
10/05/10 GOLDMAN SACHS GROUP INC (FDIC)
FRN
DTD 12/05/2008 1.057% 12/05/2011
38146FAB7 0.00 822.74 822.74 1,000,000.00 10/05/10
10/11/10 FANNIE MAE GLOBAL NOTES
(FLOATING)
DTD 02/11/2010 0.166% 08/11/2011
31398AG22 0.00 278.90 278.90 2,000,000.00 10/11/10
10/19/10 KEYCORP (FDIC) FRN
DTD 12/19/2008 0.856% 12/19/2011
49327GAB3 0.00 690.64 690.64 1,000,000.00 10/19/10
36,807.19 36,807.19 0.00 11,000,000.00 Transaction Type Sub-Total
SELL
10/25/10 US TREASURY NOTES
DTD 12/31/2008 0.875% 12/31/2010
912828JV3 901,406.25 2,503.74 903,909.99 (3,832.03) 547.13 FIFO 900,000.00 10/07/10
10/25/10 REGIONS BANK (FDIC) MTN
DTD 12/11/2008 2.750% 12/10/2010
7591EAAA1 2,006,360.00 20,625.00 2,026,985.00 (50,000.00) 1,694.14 FIFO 2,000,000.00 10/07/10
23,128.74 2,241.27 (53,832.03) 2,930,894.99 2,907,766.25 2,900,000.00 Transaction Type Sub-Total
18,900,000.00 (2,097,733.75) 59,935.93 (2,037,797.82)(53,832.03) 2,241.27 Managed Account Sub-Total
Total Security Transactions ($53,832.03)($2,037,797.82)$59,935.93 ($2,097,733.75)$2,241.27 $18,900,000.00
Account # Page 8