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HomeMy WebLinkAboutC2022-033 - PFM Asset Management LLC1 Contract No. 2022-033 COOPERATIVE PURCHASING AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND PFM ASSET MANAGEMENT LLC THIS COOPERATIVE PURCHASING AGREEMENT (this “Agreement”) is entered into as of November 22, 2021, 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 procurement process, the Town of Marana (“Marana”) entered into a contract dated September 1, 2020 (collectively, “Marana Contract”) for the Contractor to provide investment management services. A copy of the Marana Contract is incorporated herein by reference, to the extent not inconsistent with this Agreement. B. The Town is permitted, pursuant to Section 3-3-27 of the Town Code, to make purchases under the Marana Contract, as amended, at its discretion and with the agreement of the awarded Contractor, and the Marana Contract permits its cooperative use by other public entities (Marana Contract Article 10.09 referencing Az. Rev. Statute 41-2632), including the Town. C. The Town and the Contractor desire to enter into this Agreement for the purpose of (i) acknowledging their cooperative contractual relationship under the Marana Contract and this Agreement, (ii) establishing the terms and conditions by which the Contractor may provide the Town with investment management services (the “Services”), and (iii) setting the maximum aggregate amount to be expended pursuant to this Agreement related to the Materials and Services. AGREEMENT NOW, THEREFORE, in consideration of the foregoing introduction and 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 are 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 October 21, 2022 (the “Initial Term”), if the Marana Contract is extended and unless terminated as otherwise provided in this Agreement or the Marana Contract. After the expiration of the Initial Term, this Agreement may be renewed for up to four (4) successive one-year terms (the “Renewal Term”) if: (i) it is deemed in the best interests of the Town, subject to availability and appropriation of funds for renewal in each subsequent year, (ii) the term of the Marana Contract has not expired or has been extended, (iii) at least 30 days prior to the end of the then-current term of this Agreement, the Contractor requests, in writing, to extend this Agreement for an additional one-year term and (iv) the Town approves the additional one-year term in writing (including any price adjustments approved as part of the Marana Contract, 2 as evidenced by the Town Manager’s signature thereon, which approval may be withheld by the Town for any reason. The Contractor’s failure to seek a renewal of this Agreement shall cause this Agreement to terminate at the end of the then-current term of this Agreement; provided, however, that the Town may, at its discretion and with the agreement of the Contractor, elect to waive this requirement and renew this Agreement. The Initial Term and any Renewal Term(s) are collectively referred to herein as the “Term.” Upon renewal, the terms and conditions of this Agreement shall remain in full force and effect. 2. Scope of Work. This is an Agreement for Services under the terms and conditions of the Marana Contract with the investment policies provided by the Town. Each invoice to this Agreement shall contain a reference to this Agreement and the Marana Contract. 3. Compensation. The Town shall pay Contractor for the Term an amount not to exceed $50,000.00 for the Materials and Services at the rates under the terms and conditions of the Marana contract, with the exception of the minimum annual fee. The minimum annual fee under this Agreement shall be $15,000. The aggregate amount per Renewal Term shall not exceed $50,000 in any case unless the Agreement is affirmed and ratified via an executed amendment. All remaining terms and conditions of the Agreement shall remain in full force and effect. 4. Payments. The Town shall pay the Contractor monthly (and the Contractor shall invoice the Town monthly), based upon the Services performed and completed to date, and upon submission and approval of invoices. Each invoice shall (i) contain a reference to this Agreement and the Marana Contract and (ii) document and itemize all work completed to date. The invoice statement shall include a record of services delivered in sufficient detail to justify payment. Additionally, invoices submitted without referencing this Agreement and the Marana Contract will be subject to rejection and may be returned. 5. Records and Audit Rights. To ensure that the Contractor and its subcontractors are complying with the warranty under Section 6 below, Contractor’s and its subcontractors’ 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 (all of 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 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 Section, 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 Section. 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 3 Section 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 their compliance with the E-verify requirements under ARIZ. REV. STAT. § 23-214(A). Contractor’s or its subcontractors’ 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. Israel. Contractor certifies that it is not currently engaged in and agrees for the duration of this Agreement that it will not engage in a “boycott,” as that term is defined in ARIZ. REV. STAT. § 35-393, of Israel; provided, however, that nothing herein to the contrary shall cause Contractor to violate any applicable laws.. 8. Conflict of Interest. This Agreement may be canceled by the Town pursuant to ARIZ. REV. STAT. § 38-511. 9. Applicable Law; Venue. This Agreement shall be governed by the laws of the State of Arizona and a suit pertaining to this Agreement may be brought only in courts in Maricopa County, Arizona. 10. Agreement Subject to Appropriation. The Town is obligated only to pay its obligations set forth in this Agreement as may lawfully be made from funds appropriated and budgeted for that purpose during the Town’s then current fiscal year. The Town’s obligations under this Agreement are current expenses subject to the “budget law” and the unfettered legislative discretion of the Town concerning budgeted purposes and appropriation of funds. Should the Town elect not to appropriate and budget funds to pay its Agreement obligations, this Agreement shall be deemed terminated at the end of the then-current fiscal year term for which such funds were appropriated and budgeted for such purpose and the Town shall be relieved of any subsequent obligation under this Agreement. The parties agree that the Town has no obligation or duty of good faith to budget or appropriate the payment of the Town’s obligations set forth in this Agreement in any budget in any fiscal year other than the fiscal year in which this Agreement is executed and delivered. The Town shall be the sole judge and authority in determining the availability of funds for its obligations under this Agreement. The Town shall keep Contractor informed as to the availability of funds for this Agreement, including providing prompt written notice of any event of non-appropriation. The obligation of the Town to make any payment pursuant to this Agreement is not a general obligation or indebtedness of the Town. Contractor hereby waives any and all rights to bring any claim against the Town from or relating in any way to the Town’s termination of this Agreement pursuant to this section. 11. Conflicting Terms. In the event of any inconsistency, conflict or ambiguity among the terms of this Agreement, the Marana Contract and invoices, the documents shall govern in the order listed herein. Notwithstanding the foregoing, and in conformity with Section 2 above, unauthorized exceptions, conditions, limitations or provisions in conflict with the terms of this Agreement or the Marana Contract (collectively, the “Unauthorized Conditions”), other than the Town’s project-specific requirements, are expressly declared void and shall be of no force and effect. Acceptance by the Town of any work order or invoice containing any such Unauthorized Conditions or failure to demand full compliance with the terms and conditions set forth in this Agreement or under the Marana Contract shall not alter such terms and conditions or relieve 4 Contractor from, nor be construed or deemed a waiver of, its requirements and obligations in the performance of this Agreement. 12. Rights and Privileges. To the extent provided under the Marana Contract, the Town shall be afforded all of the rights and privileges afforded to Marana and shall be “the Town” (“The Town of Fountain Hills” replacing the “Town of Marana” in the Marana Contract) for the purposes of the portions of the Marana Contract that are incorporated herein by reference. 13. Indemnification; Insurance. In addition to and in no way limiting the provisions set forth in Section 12 above, the Town shall be afforded all of the insurance coverage and indemnifications afforded to Marana to the extent provided under the Marana Contract, and such insurance coverage and indemnifications shall inure and apply with equal effect to the Town under this Agreement including, but not limited to, the Contractor’s obligation to provide the indemnification and insurance. In any event, the Contractor shall indemnify, defend and hold harmless the Town and each council member, officer, employee or agent thereof (the Town and any such person being herein called an “Indemnified Party”), for, from and against any and all losses, claims, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees, court costs and the costs of appellate proceedings) to which any such Indemnified Party may become subject, under any theory of liability whatsoever (“Claims”), insofar as such Claims (or actions in respect thereof) relate to, arise out of, or are caused by or based upon the negligent acts, intentional misconduct, errors, mistakes or omissions, in connection with the work or services of the Contractor, its officers, employees, agents, or any tier of subcontractor in the performance of this Agreement. 14. Notices and Requests. Any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered to the party at the address set forth below, (ii) deposited in the U.S. Mail, registered or certified, return receipt requested, to the address set forth below or (iii) given to a recognized and reputable overnight delivery service, to the address set forth below: If to the Town: Town of Fountain Hills 16705 East Avenue of the Fountains Fountain Hills, Arizona 85268 Attn: Grady E. Miller, Town Manager With copy to: Town of Fountain Hills 16705 East Avenue of the Fountains Fountain Hills, Arizona 85268 Attn: Aaron Arnson, Town Attorney If to Contractor: PFM Asset Management LLC 1820 East Ray Road Chandler, AZ 85225 Attn: Paulina Woo or at such other address, and to the attention of such other person or officer, as any party may designate in writing by notice duly given pursuant to this subsection. Notices shall be deemed received: (i) when delivered to the party, (ii) three business days after being placed in the U.S. 5 Mail, properly addressed, with sufficient postage or (iii) the following business day after being given to a recognized overnight delivery service, with the person giving the notice paying all required charges and instructing the delivery service to deliver on the following business day. If a copy of a notice is also given to a party’s counsel or other recipient, the provisions above governing the date on which a notice is deemed to have been received by a party shall mean and refer to the date on which the party, and not its counsel or other recipient to which a copy of the notice may be sent, is deemed to have received the notice. [SIGNATURES APPEAR ON FOLLOWING PAGES] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first set forth above. “Town” TOWN OF FOUNTAIN HILLS, an Arizona municipal corporation Grady E. Miller, Town Manager ATTEST: Elizabeth A. Klein, Town Clerk APPROVED AS TO FORM: Aaron D. Arnson, Town Attorney [SIGNATURES CONTINUE ON FOLLOWING PAGES] Elizabeth Klein (Jan 5, 2022 07:25 MST) “Contractor” ____________________________________, By: Name: Title: PFM Asset Management LLC, a Delaware limited liability company Paulina Woo (Jan 3, 2022 12:31 MST) Paulina Woo Managing Director Paulina Woo EXHIBIT A TO COOPERATIVE SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND PFM ASSET MANAGEMENT, LLC [Marana Contract] See following pages. -1 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 TOWN OF MARANA, ARIZONA FINANCE DEPARTMENT 11555 WEST CIVIC CENTER DRIVE MARANA, AZ 85653 PROFESSIONAL SERVICES AGREEMENT Agreement Number: THIS AGREEMENT IS MADE AND ENTERED INTO by and between the TOWN OF MARANA, an Arizona municipal corporation (the “Town”), and PFM ASSET MANAGEMENT LLC, a Delaware limited liability company (the “Consultant”), for the purpose of providing investment management services to the Town. The Town and the Consultant are sometimes collectively referred to as the “Parties,” each of which is sometimes individually referred to as a “Party.” ARTICLE 1. SCOPE OF WORK 1.01. In February 2020, the Town issued a “Request for Qualifications for Investment Management Services” (the “Investment Management RFQ”). The professional services to be performed by the Consultant under this Agreement shall be as described in this Agreement and as set forth in the following: 1.01.01. The Investment Management RFQ (and in particular, but not by limitation, the section entitled “Appendix A – Scope of Work), and Addendum No. 1 to the Investment Management RFQ, which are together attached as Exhibit A to this Agreement. 1.01.02. The Consultant’s March 5, 2020 proposal in response to the Investment Management RFQ, attached as Exhibit B to this Agreement (the “Consultant’s Proposal”). ARTICLE 2. TERM 2.01. This Agreement shall be effective for an initial one-year term beginning on May 11, 2020 and ending on May 10, 2021. 2.02. The Town, at its sole discretion, acting through its Finance Director, may renew this Agreement for up to four consecutive one-year periods on the same terms as set forth in this Agreement, by executing a written amendment setting forth the renewal term and signed by the Finance Director and the Consultant. EXHIBIT A -2 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 2.03. Before each of the four one-year extension periods, the Consultant may request revisions to the fee schedule included in section 6.01 below for the extension period to address increased costs, market conditions, demand, and the like. If the Town refuses to agree to modify the fee schedule, the Consultant’s sole remedy is to terminate this Agreement at the end of the then-current one-year term (see section 7.02 below). 2.04. The term of this Agreement, including all renewals, shall not exceed five years. ARTICLE 3. RELATIONSHIPS 3.01. In the performance of the services described in this Agreement, the Consultant shall act solely as an independent contractor, and nothing expressed or implied in this Agreement shall be construed to create the relationship of employer and employee, partnership, principal and agent, except for the purchase and sale of portfolio securities, or to create a joint venture between the Town and the Consultant. 3.02. In relation to services performed by the Consultant for or in connection with the Town, the Consultant states and declares the following: 3.02.01. The Consultant acknowledges that the Consultant operates the Consultant's own independent business and is providing services for or in connection with the Town as an independent contractor. 3.02.02. The Consultant acknowledges that the Consultant is not an employee of the Town and the services rendered for or in connection with the Town do not establish any right to unemployment benefits or any other right arising from an employment relationship. 3.02.03. The Consultant is responsible for all tax liability associated with payments received from or through the Town and the Town will not withhold any taxes from payments to the Consultant. 3.02.04. The Consultant is responsible for obtaining and maintaining any required registration, licenses or other authorization necessary for the services rendered by the Consultant. 3.02.05. The Consultant acknowledges at least six of the following: (1)That the Consultant is not insured under the Town’s health insurance coverage or workers' compensation insurance coverage. (2) That the Town does not restrict the Consultant's ability to perform services for or through other parties and the Consultant is authorized to accept work from and perform work for other businesses and individuals besides the Town. (3) That the Consultant has the right to accept or decline requests for services by or through the Town. (4) That the Town expects that the Consultant provides services for other parties. -3 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 (5) That the Consultant is not economically dependent on the services performed for or in connection with the Town. (6) That the Town does not dictate the performance, methods or process the Consultant uses to perform services. (7) That the Town has the right to impose quality standards or a deadline for completion of services performed, or both, but the Consultant is authorized to determine the days worked and the time periods of work. (8) That the Consultant will be paid by or through the Town based on the work the Consultant is contracted to perform and that the Town is not providing the Consultant with a regular salary or any minimum, regular payment. (9) That the Consultant is responsible for providing and maintaining all tools and equipment required to perform the services performed. (10) That the Consultant is responsible for all expenses incurred by the Consultant in performing the services. 3.02.06. The Consultant acknowledges that the terms set forth in this declaration apply to the Consultant, the Consultant's employees and the Consultant's independent contractors. 3.03. The Consultant shall report to and coordinate duties with the Town’s Finance Director, Yiannis Kalaitzidis (the “Town Representative”). 3.04. Under the direction of and in coordination with the Town Representative, the Consultant shall work cooperatively with Town staff, officials, boards, commissions, and committees, and with any other agency, organization or individual the Town Representative deems necessary to complete the services described in Article 1 (Scope of Work) of this Agreement. 3.05. All notice requests and authorizations provided for in this Agreement shall be in writing and shall be delivered or mailed, addressed as follows: Town: TOWN OF MARANA Attention: Yiannis Kalaitzidis, Finance Director Address: 11555 W. Civic Center Drive Marana, Arizona 85653 Consultant: PFM ASSET MANAGEMENT, LLC Attention: Luke Schneider, CFA Director Address: 1820 E. Ray Rd. Chandler, Arizona 85225 ARTICLE 4. LIMITATION OF ASSIGNMENT 4.01. For purposes of the work and services performed under this Agreement and the obligations and requirements imposed on the Consultant pursuant to this Agreement, the term “Consultant” shall include the Consultant, Consultant’s staff, all sub- -4 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 consultants identified in the Consultant’s Proposal, and all other persons working at Consultant’s request or direction as permitted by this Agreement. 4.02. The work and services provided for in this Agreement shall be performed by the Consultant, except as otherwise provided in this Article or approved in writing by the Town Representative and the Finance Director. 4.03. Secretarial, clerical, and similar incidental services needed to assist the Consultant in performance of this Agreement are not subject to the limitations of section 4.01 above. 4.04. Neither this Agreement nor any interest or rights under this Agreement may be assigned or transferred by the Consultant without the express written consent of the Finance Director. ARTICLE 5. WORK PRODUCT 5.01. All of Consultant’s “Work Product” (including without limitation all reports, drawings, designs, specifications, notebooks, tracings, photographs, negatives, findings, recommendations, data and memoranda of every description) prepared in connection with or relating to the services described in this Agreement and in completion of it, shall be the property of the Town, and shall not be disclosed to third parties without the express written consent of the Town Representative, unless such disclosure is required by law or by regulatory or judicial process. 5.02. Except with the express written consent of the Town Representative, the Consultant shall not publish any results of scientific, technical or general interest originating from or existing by virtue of this Agreement in, or by means of, journals, magazines, newspapers, radio broadcasts, or other media of communication. ARTICLE 6. INVOICES AND PAYMENT 6.01. Except as otherwise set forth in or modified by this Article, the Consultant shall charge the following fees for all services and work performed by the Consultant under this Agreement. 6.01.01. First $100 million in Assets Under Management (AUM) – 9 basis points 6.01.02. Next $100 million in AUM – 6 basis points 6.01.03. Next $100 million in AUM – 4 basis points 6.01.04. Over $300 million in AUM - 3 basis points Regardless of the amount of AUM, the Consultant shall charge a minimum annual fee of $25,000.00. 6.02. The Consultant shall not submit an invoice covering the cost of services, and the Town shall not be financially obligated to pay the Consultant for services, unless and until the Town’s Finance Department has issued a Purchase Order for the services. 6.03. The Town’s financial obligation for the Consultant’s performance of services shall not exceed the amount of the Purchase Order, as it may be amended from time to. 6.04. The Town shall pay Consultant’s actual direct costs (without markup) incurred in the performance of services and work performed under and in accordance with this __________________________________________________________ -5 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 Agreement, including the direct costs of the following (all of which are collectively referred to in this Agreement as the “Direct Costs”): 6.04.01. Reproduction costs associated with the printing of reports required to be produced and printed. 6.04.02. Costs associated with the delivery of reports to the Town. 6.04.03. Reproduction costs associated with project development and data gathering. 6.04.04. Travel expenses outside of Pima County, when approved in writing by the Town Representative prior to the date of travel. 6.04.05. Actual out-of-pocket costs incurred by the Consultant in the performance of services. 6.05. The Consultant shall submit to the Town Representative for processing and payment a monthly invoice for services performed under this Agreement, and each invoice shall include: 6.05.01. Reference to Town tracking numbers, including Purchase Order numbers, authorizing payment for the work and services addressed by the invoice. 6.05.02. The amount of Direct Costs incurred by the Consultant and payable by the Town in accordance with section 6.04 above, which shall be disaggregated into appropriate categories on the invoice and shall be accompanied by backup documentation substantiating the amount of each direct cost. 6.05.03. Credits and adjustments required in accordance with sections 6.06 or 6.07 below. 6.06. Upon the Town’s reasonable request, the Consultant shall participate in meetings by video conference or other electronic means. If the Consultant does not honor such a request, the Town shall be credited the reasonable cost savings that would have resulted if the Consultant had participated by video conference or other electronic means. 6.07. Upon the Town’s reasonable request, the Consultant shall provide Work Product in electronic format. The Town shall be credited any Direct Costs associated with the printing of Work Product requested by the Town to be provided in electronic format. 6.08. The Consultant shall be liable for all taxes applicable to the proceeds received by the Consultant under this Agreement. The Town shall not withhold or pay federal, social security, or state income taxes or worker’s compensation out of the proceeds payable by the Town under this Agreement, unless duly ordered to do so by a court or other government authority with jurisdiction. 6.09. Except as otherwise set forth in this Article, the Town shall pay the Consultant within 30 days after the Town Representative approves the Consultant’s invoice or any portion of it. 6.10. The Town may withhold final payment for services until the Town is satisfied that the Consultant has complied with all the obligations specified in this Agreement related to the services. - 6 - 00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 6.11. Any rework required by the Town to satisfy the requirements or performance of this Agreement shall be at the sole expense of the Consultant. ARTICLE 7. TERMINATION AND BREACH 7.01. The Consultant may terminate this Agreement upon not less than 15 days’ written notice to the Town Representative and the Finance Director if the Town fails to perform its obligations under this Agreement through no fault of the Consultant. 7.02. The Consultant may at its option terminate this Agreement at the end of the initial one-year term, or at the end of any of the one-year extension periods, if the Town does not agree to modify the fee schedule, Exhibit B page 24 of the PDF/ numbered page 10, for the renewal period (see section 2.03 above). 7.03. The Town may terminate this Agreement with or without cause upon 15 days’ written notice to the Consultant. 7.04. This Agreement may be terminated if for any reason the Town Council does not appropriate sufficient funds for the purpose of maintaining this Agreement. The Town agrees to promptly notify the Consultant in writing of any event of non-appropriation. 7.05. Upon termination, the Town shall have no further obligation to Consultant, other than for payment of acceptable services rendered prior to termination. 7.06. Either Party may pursue any remedies available to it for the breach of this Agreement, and no right or remedy is intended to be exclusive of any other right or remedy existing at law or at equity or by virtue of this Agreement. ARTICLE 8. INDEMNIFICATION 8.01. The Consultant agrees to defend, save, hold harmless, and indemnify the Town, its officials, employees, agents, successors, and assigns from and against any and all manner of claims, suits, lawsuits, action or actions, causes or causes of action, liabilities, damages, and other claims and demands of whatsoever nature or kind, in law or in equity, in tort or in contract, or otherwise caused by or resulting from the Consultant’s negligent errors, omissions, or acts in the performance of services pursuant to this Agreement. 8.02. The indemnification provisions set forth in this Article shall survive termination of this Agreement. ARTICLE 9. INSURANCE 9.01. Except as otherwise provided in this Article, the Consultant and any subconsultant who performs any work for the Consultant under this Agreement shall maintain insurance with carriers acceptable to the Town throughout the term of this Agreement with the following required minimum coverages and limits: -7 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 Workers’ Compensation Statutory Employer’s Liability U.S. $100,000 Commercial General Liability U.S. $1,000,000 per occurrence U.S. $2,000,000 aggregate Business Auto Liability U.S. $1,000,000 combined single limit Professional Liability U.S. $2,000,000 per claim and in the aggregate 9.02. The Consultant shall deliver one or more certificates of insurance evidencing coverage as described in this Article, including coverage required of any subconsultant, to the Town upon execution of this Agreement, prior to commencing any work pursuant to this Agreement. The Consultant shall also deliver new certificates of insurance each time the policy(s) is updated. All certificates shall be delivered to: Rudy Torres, Purchasing Officer, 11555 W. Civic Center Drive, Marana, AZ 85653. 9.03. The Town shall be named as an additional insured on the commercial general liability insurance policies required by section 9.01 above. As an additional insured, the Town shall be provided coverage for any liability arising out of operations performed in whole or in part by or on behalf of the Consultant or any subconsultant. The Consultant shall deliver additional insured endorsement(s) along with the certificate(s) of insurance required by section 9.02 above. The additional insured endorsement form identification number shall also be included within the description box on the certificate of insurance and the applicable policy number shall be included on the endorsement. 9.04. All policies required pursuant to this Article except professional liability shall be endorsed to contain a waiver of transfer of rights of recovery (subrogation) against the Town, its agents, officers, officials, and employees for any claims arising out of the Consultant’s or any subconsultant’s work or service. Endorsements evidencing this waiver of subrogation shall be provided to the Town along with all other insurance documentation required by this Article. 9.05. The certificate(s) shall also stipulate that the insurance afforded the Consultant and any subconsultant shall be primary insurance and that any insurance carried by the Town, its agents, officials or employees shall be excess and not contributory insurance to that provided by the Consultant or subconsultant. Coverage provided by the Consultant or subconsultant shall be primary insurance with respect to all other available sources. 9.06. Notwithstanding the requirements set forth in section 9.01 above, subconsultants shall be permitted to maintain professional liability insurance in the amount of $1,000,000 per claim and $1,000,000 in the aggregate. Subconsultants shall maintain all other insurance required by section 9.01, with the required coverages and limits set forth in section 9.01 and this Article, except as otherwise provided for in this Article. 9.07. Notwithstanding the requirements set forth in section 9.01 above, if any subconsultant is a sole proprietor without employees, the subconsultant is not required to maintain or provide proof of workers’ compensation or employer’s liability coverage, provided that the subconsultant executes a waiver in accordance with A.R.S. § 23-961(M). Any such executed waiver shall be attached to this Agreement and incorporated in and fully made a part of this Agreement by this reference. -8 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 9.08. The coverage requirements specified in this Article may not be changed or modified except by written agreement signed by all Parties. 9.09. The Consultant shall give the Town at least 30 calendar days’ written notice prior to a planned cancellation or reduction of any coverage required by this Article. The Consultant shall give the Town immediate notice of any other cancellation or reduction of any coverage required by this Article. Cancellation or reduction of any coverage required by this Article is grounds for termination of this Agreement by the Town. ARTICLE 10. MISCELLANEOUS PROVISIONS 10.01. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Arizona. 10.02. This Agreement represents the entire and integrated agreement between the Parties and supersedes all prior negotiations, representations or agreements, either written or oral. 10.03. If any provision of this Agreement is declared invalid or unenforceable, the remainder shall continue in full force and effect. 10.04. This Agreement may not be changed or modified except by written agreement signed by all Parties. 10.05. All exhibits referenced in and attached to this Agreement are incorporated in and fully made a part of this Agreement by reference. 10.06. The Consultant shall comply with all federal and state equal opportunity laws, orders and regulations and shall not discriminate against any employee or applicant for employment on the basis of age, race, color, religion, sex, disability, national origin, marital status, veteran status, or sexual orientation. 10.07. The Consultant warrants that it, and any subconsultant who performs any work for the Consultant under this Agreement, will at all times comply with all federal immigration laws and regulations that relate to its employees and with Arizona Revised Statutes section (A.R.S. §) 23-214 (A). The Consultant acknowledges that pursuant to A.R.S. § 41-4401 and effective September 30, 2008, a breach of this warranty is a material breach of this Agreement subject to penalties up to and including termination of this Agreement, and that the Town retains the legal right to inspect the papers of any employee who works on the Agreement to ensure compliance with this warranty. 10.07.01. The Consultant shall advise each subconsultant of the Town’s rights, and the subconsultant’s obligations, under this section by including a provision in each subcontract substantially in the following form: “The subconsultant hereby warrants that it will at all times during the term of this agreement comply with all federal immigration laws applicable to the subconsultant’s employees, and with the requirements of A.R.S. § 23-214 (A). The subconsultant further agrees that the Town may inspect the subconsultant’s books and records to insure that the subconsultant is in compliance with these requirements. Any breach of this paragraph by the -9 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 subconsultant will be deemed to be a material breach of this agreement subjecting subconsultant to penalties up to and including suspension or termination of this agreement.” 10.07.02. If a subconsultant’s subcontract is suspended or terminated, the Consultant shall either self-perform the service under the subcontract or retain a replacement subconsultant. 10.07.03. Any additional costs attributable directly or indirectly to remedial action under this section shall be the responsibility of the Consultant. 10.08. Neither Party’s waiver of the other’s breach of any term or condition contained in this Agreement shall be deemed a waiver of any subsequent breach of the same or any other term or condition of this Agreement. 10.09. This Agreement is available to public procurement units as a cooperative purchasing agreement pursuant to A.R.S. § 41-2632. The Town shall not be responsible for any disputes arising out of transactions made by others and shall not be liable for any violation of this Agreement by, or the actions or inaction of, an eligible procurement unit related to this Agreement. Receipt, inspection and payment for materials and services cooperatively procured under this Agreement shall be the exclusive obligation of the procuring agency. The procuring agency shall not use this Agreement to obtain additional concessions or reduced prices for similar materials and services. The failure of the eligible procurement unit to secure performance from the Consultant in accordance with the terms and conditions of its purchase order does not necessarily obligate the Town to exercise its own right or remedies. 10.10. The Consultant shall keep fully informed of and at all times observe and comply with all federal and state laws, all local laws, ordinances and regulations and all orders and decrees of bodies or tribunals having any jurisdiction or authority, which in any manner affect those engaged or employed on the work or which in any way affect the conduct of the work, including without limitation the Drug-Free Workplace Act, Americans with Disabilities Act, Occupational Safety and Health Act, and all other applicable laws. The Consultant shall defend, hold harmless and indemnify the Town, its representatives and agents against any claim or liability arising from or based on the violation of any such law, ordinance, regulation, order or decree, whether by the Consultant or by any of the Consultant’s subcontractors or suppliers, or by any of their employees. 10.11. This Agreement is subject to the provisions of A.R.S. § 38-511, which provides for termination in certain instances involving conflicts of interest. 10.12. To the extent required or applicable, the Consultant certifies that it is not currently engaged in, and agrees for the duration of the Agreement to not engage in, a boycott of Israel as defined by A.R.S. §35-393, provided, however, that nothing herein to the contrary shall cause the Consultant to violate any applicable laws. - 10 - 00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 ARTICLE 11. INVESTMENT ADVISOR PROVISIONS 11.01. The Town hereby engages the Consultant to serve as investment advisor under the terms of this Agreement with respect to the funds described in this Agreement and such other funds as the Town may from time to time assign by written notice to the Consultant (collectively the "Managed Funds"), and the Consultant accepts such appointment. In connection therewith, the Consultant will provide investment research and supervision of the Managed Funds investments and conduct a continuous program of investment and evaluation of the Managed Funds assets. The Consultant shall continuously monitor investment opportunities and evaluate investments of the Managed Funds. The Consultant shall furnish the Town with statistical information and reports with respect to investments of the Managed Funds. The Consultant shall place all orders for the purchase, sale, loan or exchange of portfolio securities for the Town's account with brokers or dealers recommended by the Consultant and/or the Town, and to that end the Consultant is authorized as agent of the Town to give instructions to the custodian designated by the Town (the “Custodian”) as to deliveries of securities and payments of cash for the account of the Town. In connection with the selection of such brokers and dealers and the placing of such orders, the Consultant is directed to seek for the Town the most favorable execution and price, the determination of which may take into account, subject to any applicable laws, rules and regulations, whether statistical, research and other information or services have been or will be furnished to the Consultant by such brokers and dealers. Both the Town and the Consultant agree on the following explicit roles in the conduct of investment decisions, and the Consultant’s authority to implement those decisions. The Consultant shall have no discretionary authority under this Agreement. The Consultant shall make investment recommendations to the Town, in accordance with the Town’s written Investment Policy Statement. The Town agrees to evaluate the Consultant’s recommendations, and to either accept, reject, or modify the investment recommendations. The Town is not limited to the Consultant’s recommendations in the choice of investment decisions regarding the investments for the Managed Funds or the allocation of the Managed Funds among those recommended investments, and the Consultant may assist in the implementation of some or all investment decisions, without responsibility, however, for assuring compliance with the Investment Policy Statement as to investments directed by the Town that have not been recommended by the Consultant. The Twon authorizes the Consultant to follow any written instructions provided by the agent designated by the Town for communicating those instructions with regard to investments and allocation of investments within the Managed Funds. Such written instructions may be sent by first class mail, fax, electronic mail or otherwise. -11 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 The Custodian shall have custody of cash, assets and securities of the Town. The Consultant shall not take possession of or act as custodian for the cash, securities or other assets of the Town and shall have no responsibility in connection therewith. Authorized investments shall include only those investments which are currently authorized by the Investment Policy Statement, the state investment statutes and the applicable covenants and as supplemented by such other written instructions as may from time to time be provided by the Town to the Consultant. The Consultant shall be entitled to rely upon the Town's written advice with respect to anticipated drawdowns of Managed Funds. The Consultant will observe the instructions of the Town with respect to broker/dealers who are approved to execute transactions involving the Managed Funds and in the absence of such instructions will engage broker/dealers which the Consultant reasonably believes to be reputable, qualified and financially sound. 11.02. Assets invested by the Consultant under the terms of this Agreement may from time to time be invested in (i) a money market mutual fund managed by the Consultant or (ii) a local government investment pool managed by the Consultant (either, a “Pool”) or in individual securities. Average daily net assets subject to the fees described in this Agreement shall not take into account any funds invested in the Pool. Expenses of the Pool, including compensation for the Consultant and the Pool custodian, are described in the relevant prospectus or information statement and are paid from the Pool. 11.03. If and to the extent that the Town shall request the Consultant to render services other than those to be rendered by the Consultant under this Agreement, such additional services shall be compensated separately on terms to be agreed upon between the Consultant and the Town. 11.04. The Consultant shall furnish at its own expense all necessary administrative services, office space, equipment, clerical personnel, telephone and other communication facilities, investment advisory facilities, and executive and supervisory personnel for managing the Managed Funds. Except as expressly provided otherwise herein, the Town shall pay all of its own expenses including, without limitation, taxes, commissions, fees and expenses of the Town's independent auditors and legal counsel, if any, brokerage and other expenses connected with the execution of portfolio security transactions, insurance premiums, and fees and expenses of the Custodian. 11.05. The Consultant hereby represents it is a registered investment advisor under the Investment Advisers Act of 1940. The Consultant shall immediately notify the Town if at any time during the term of this Agreement it is not so registered or if its registration is - 12 - 00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 suspended. The Consultant agrees to perform its duties and responsibilities under this Agreement with reasonable care. The federal securities laws impose liabilities under certain circumstances on persons who act in good faith. Nothing herein shall in any way constitute a waiver or limitation of any rights which the Town may have under any federal securities laws. The Town hereby authorizes the Consultant to sign I.R.S. Form W-9 on behalf of the Town and to deliver such form to broker-dealers or others from time to time as required in connection with securities transactions pursuant to this Agreement. 11.06. The Town understands that the Consultant performs investment advisory services for various other clients which may include investment companies, commingled trust funds and/or individual portfolios. The Town agrees that the Consultant, in the exercise of its professional judgment, may give advice or take action with respect to any of its other clients which may differ from advice given or the timing or nature of action taken with respect to the Managed Funds. The Consultant shall not have any obligation to purchase, sell or exchange any security for the Managed Funds solely by reason of the fact that the Consultant, its principals, affiliates, or employees may purchase, sell or exchange such security for the account of any other client or for itself or its own account s. 11.07. The Consultant shall have no liability for any losses arising out of the delays in performing or inability to perform the services which it renders under this Agreement which result from events beyond its control, including interruption of the business activities of the Consultant or other financial institutions due to acts of God, acts of governmental authority, acts of war, terrorism, civil insurrection, riots, labor difficulties, or any action or inaction of any carrier or utility, or mechanical or other malfunction. 11.08. The Consultant shall promptly give notice to the Town if the Consultant shall have been found to have violated any state or federal securities law or regulation in any final and unappealable judgment in any criminal action or civil suit in any state or federal court or in any disciplinary proceeding before the Securities and Exchange Commission (“SEC”) or any other agency or department of the United States, any registered securities exchange, FINRA, or any regulatory authority of any State based upon the performance of services as an investment advisor. 11.09. The Consultant shall maintain records of all transactions in the Managed Funds. The Consultant shall provide the Town with a monthly statement showing deposits, withdrawals, purchases and sales (or maturities) of investments, earnings received, and the value of assets held on the last business day of the month. The statement shall be in the format and manner that is mutually agreed upon by the Consultant and the Town. -13 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 11.10. The Consultant warrants that it has delivered to the Town prior to the execution of this Agreement the Consultant's current SEC Form ADV, Part 2A (brochure) and Part 2B (brochure supplement). The Town acknowledges receipt of such brochure and brochure supplement prior to the execution of this Agreement. 11.11. Each party to this Agreement represents and warrants that the person or persons signing this Agreement on behalf of such party is authorized and empowered to sign and deliver this Agreement for such party. [SIGNATURE PAGE FOLLOWING] -15 -00069852.DOC /2 5/6/2020 JF 00069852.DOC /2 LIST OF EXHIBITS Exhibit A: The Investment Management RFQ, and Addendum No. 1 to the Investment Management RFQ Exhibit B: The Consultant’s March 5, 2020 proposal in response to the Investment Management RFQ ARTICLE 6. INVOICES AND PAYMENT 6.01. Except as otherwise set forth in or modified by this Article, the Consultant shall charge the following fees for all services and work performed by the Consultant under this Agreement. 6.01.01. First $100 million in Assets Under Management (AUM) – 9 basis points 6.01.02. Next $100 million in AUM – 6 basis points 6.01.03. Next $100 million in AUM – 4 basis points 6.01.04. Over $300 million in AUM - 3 basis points Regardless of the amount of AUM, the Consultant shall charge a minimum annual fee of $25,000.00. 6.02. The Consultant shall not submit an invoice covering the cost of services, and the Town shall not be financially obligated to pay the Consultant for services, unless and until the Town’s Finance Department has issued a Purchase Order for the services. 6.03. The Town’s financial obligation for the Consultant’s performance of services shall not exceed the amount of the Purchase Order, as it may be amended from time to. 6.04. The Town shall pay Consultant’s actual direct costs (without markup) incurred in the performance of services and work performed under and in accordance with this ____________________________________________________________________ Agreement, including the direct costs of the following (all of which are collectively referred to in this Agreement as the “Direct Costs”): 6.04.01. Reproduction costs associated with the printing of reports required to be produced and printed. 6.04.02. Costs associated with the delivery of reports to the Town. 6.04.03. Reproduction costs associated with project development and data gathering. 6.04.04. Travel expenses outside of Pima County, when approved in writing by the Town Representative prior to the date of travel. 6.04.05. Actual out-of-pocket costs incurred by the Consultant in the performance of services. 6.05. The Consultant shall submit to the Town Representative for processing and payment a monthly invoice for services performed under this Agreement, and each invoice shall include: 6.05.01. Reference to Town tracking numbers, including Purchase Order numbers, authorizing payment for the work and services addressed by the invoice. 6.05.02. The amount of Direct Costs incurred by the Consultant and payable by the Town in accordance with section 6.04 above, which shall be disaggregated into appropriate categories on the invoice and shall be accompanied by backup documentation substantiating the amount of each direct cost. 6.05.03. Credits and adjustments required in accordance with sections 6.06 or 6.07 below. 6.06. Upon the Town’s reasonable request, the Consultant shall participate in meetings by video conference or other electronic means. If the Consultant does not honor such a request, the Town shall be credited the reasonable cost savings that would have resulted if the Consultant had participated by video conference or other electronic means. 6.07. Upon the Town’s reasonable request, the Consultant shall provide Work Product in electronic format. The Town shall be credited any Direct Costs associated with the printing of Work Product requested by the Town to be provided in electronic format. 6.08. The Consultant shall be liable for all taxes applicable to the proceeds received by the Consultant under this Agreement. The Town shall not withhold or pay federal, social security, or state income taxes or worker’s compensation out of the proceeds payable by the Town under this Agreement, unless duly ordered to do so by a court or other government authority with jurisdiction. 6.09. Except as otherwise set forth in this Article, the Town shall pay the Consultant within 30 days after the Town Representative approves the Consultant’s invoice or any portion of it. 6.10. The Town may withhold final payment for services until the Town is satisfied that the Consultant has complied with all the obligations specified in this Agreement related to the services. 6.11. Any rework required by the Town to satisfy the requirements or performance of this Agreement shall be at the sole expense of the Consultant. March 5, 2020 Table of Contents Cover Letter I.Technical Proposal 1.Firm’s Qualifications 2.Staff Qualifications 3.Investment Management Approach 4. Record Keeping and Reporting Capabilities II.Appendices Arizona Public Sector Clients ADV Parts I & II Resumes Fixed Income Monthly Market Review Sample Monthly Report Sample Quarterly Report Exceptions to Professional Services Agreement Required Forms Non-Collusion Affidavit Form W-9 Addendum No. 1 Acknowledgement PFM Asset Management LLC 855.885.9621 pfm.com 1820 East Ray Road Chandler, AZ 85225 Town of Marana Request for Qualifications for Investment Management Services RFQ #2020-009 ABOUT PFM PFM is the marketing name for a group of affiliated companies providing a range of services. All services are provided through separate agreements with each company. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. Investment advisory services are provided by PFM Asset Management LLC which is registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940. Financial advisory services are provided by PFM Financial Advisors LLC and Public Financial Management, Inc. Both are registered municipal advisors with the SEC and the Municipal Securities Rulemaking Board (“MSRB”) under the Dodd-Frank Act of 2010. Swap advisory services are provided by PFM Swap Advisors LLC which is registered as a municipal advisor with both the MSRB and SEC under the Dodd-Frank Act of 2010, and as a commodity trading advisor with the Commodity Futures Trading Commission. Additional applicable regulatory information is available upon request. Consulting services are provided through PFM Group Consulting LLC. Institutional purchasing card services are provided through PFM Financial Services LLC. PFM’s financial modeling platform for strategic forecasting is provided through PFM Solutions LLC. A web-based platform for municipal bond information is provided through Munite LLC. For more information regarding PFM’s services or entities, please visit www.pfm.com. March 5, 2020 1820 East Ray Road Chandler, AZ 85225 855.885.9621 pfm.com Yiannis Kalaitzidis Town of Marana 11555 W. Civic Center Drive Marana, AZ 85653 Cover Letter Dear Mr. Kalaitzidis : On behalf of PFM, we are pleased to submit this proposal to continue providing investment advisory services to the Town of Marana (the “Town”). We have had the privilege of working with the Town since 2015 and hope that we have exceeded your expectations in helping the Town develop and implement an investment strategy focused on achieving its long-term investment objectives. We are confident that we can continue to successfully partner with the Town as its operational needs continue to evolve, all the while meeting the Town’s ultimate financial goals. We will do this by employing value-added investment strategies developed over the last 40 years and offering insight as market conditions change, working closely with the Town’s staff to understand cash flow needs, providing customized reporting, and acting as a resource for all investment- related needs. We understand and are able to perform the Scope of Work outlined in the Town’s solicitation within the specified time period. PFM has been managing fixed income portfolios for Arizona public agencies since 2001. We have built a strong reputation among public sector investors based on our independent advice, in-depth knowledge and continual research of the fixed income market, and dedicated resources that enable us to implement customized investment programs. Today, we manage or advise on $153.1 billion in total assets, including $113.1 billion in discretionary assets under management and $40 billion in non-discretionary assets under advisement (as of December 31, 2019). In Arizona, we manage or advise on approximately $4.3 billion for 31 local government agencies. We have reviewed and understand all elements of the Town’s Request for Qualifications (“RFQ”). Our team is prepared and qualified to provide all requested services, and we believe that our public-sector-focused resources far surpass other investment advisors. We have also reviewed the Town’s Professional Services Agreement and respectfully request the opportunity to discuss our comments provided in Exceptions before entering into a contract. As a managing director, Paulina Woo is authorized to bind the company. Sincerely, Paulina Woo Managing Director PFM Asset Management LLC woop@pfm.com Luke Schneider, CFA Director PFM Asset Management LLC schneiderl@pfm.com 1 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 I.TECHNICAL PROPOSAL 1.Firm’s Qualifications 1.Describe your firm’s ownership, structure, locations, subsidiaries and any financial institutions affiliated with your firm. Describe your firm’s various lines of business and the size of your investment management and advisory business. PFM is a leading provider of independent investment management services to public entities and other institutional investors.1 We currently manage or advise on $132.4 billion in total fixed income assets, including $99.4 billion in discretionary assets under management and $33 billion in non-discretionary assets under advisement (as of December 31, 2019). We specialize in managing and advising on fixed-income portfolios comprising pooled funds, operating funds, general reserve funds, self- insurance reserves and bond proceeds. In the State of Arizona, we work with 31 clients, and have $4.3 billion in assets under management. PFM’s original practice was founded in 1975 to provide independent financial advisory services to the public sector. The firm began providing investment advisory services in 1980 and created PFM Asset Management LLC in 2001 as the entity through which we provide investment advisory services. We have been providing investment advisory services to local governments for 40 years. PFM is made up of affiliates that are indirect, wholly owned subsidiaries of our holding company, PFM I, LLC. PFM’s 89 managing directors (as of December 31, 2019) own 100% of the firm. PFM and its affiliates employ more than 600 people across 37 offices nationwide, including an office in Chandler. Our subsidiaries are PFM Fund Distributors, Inc., a limited-purpose broker-dealer whose primary activity is to serve as the distributor for shares of the local government investment pools (“LGIPs”) and registered investment companies that PFM sponsors and advises, and BondResource Partners, LLC and BondResource Partners, LP which conduct arbitrage rebate monitoring and tax compliance services. Our comprehensive services include investment policy review, strategy development and implementation, ongoing portfolio management, full-service reporting, as well as client service and education. The Town has worked closely with PFM and has developed a partnership with our asset management business, but we have also been able to assist our clients in multiple capacities through financial advisory, management and budget consulting, and specialized services such as treasury consulting, structured products and arbitrage and tax compliance. 2.Describe your firm’s experience in serving as an investment management advisor in a fiduciary capacity for municipalities and other public entities. Include the total non-pension assets your firm has under management for public sector clients and the number of non-pension public sector clients served. Our professionals have extensive experience managing non-pension assets such as operating funds, capital funds, reserve funds, and bond proceeds for governmental and other public entities across the country. Approximately 89% of our assets under management are non-pension public sector funds. We believe that our professionals’ successful management of high-quality assets is evidenced by a number of major accomplishments, including: (1) Pioneering the nation’s first grassroots LGIP in 1981; (2) Successfully protecting our client assets during the 2007–2008 financial crisis without a loss of principal due to default or bankruptcy; (3) Adopting the CFA Institute’s GIPS® in 2003; (4) Surpassing $100 billion of public funds under management and advisement in 2014; (5) Through membership on the GFOA’s Committee on Treasury and Investment Management, helping develop GFOA’s Best Practices related to investing public funds; and (6) Maintaining an unblemished record of ethics and integrity. We also have a long-time Commitment to Arizona, and our Southern Arizona clients which include, but are not limited to: Town of Oro Valley, City of Tucson, University of Arizona, and RTA of Pima County just to name a few. We currently manage more than $4.3 billion for 31 cities and other public entities across the State of Arizona (as of December 31, 2019) in addition to providing treasury consulting and post-issuance compliance services. We have been serving public entities in the state since 2001 and have extensive knowledge not only of relevant provisions of the Arizona Revised 1 Source: “Largest Money Managers: 2018.” Pensions & Investments, May 28, 2018. Accessed April 30, 2019. https://www.pionline.com/specialreports/money-managers/20180528 2 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 Statutes, but also of the fiscal and political environment in which Arizona public entities operate every day. As our Arizona client base has grown, we continue to make additional investments in resources. 3. List any Arizona public sector clients your firm serves. Please reference Appendices for a complete list of Arizona Public Sector clients that PFM serves. 4. Describe your firm’s business focus and philosophy in providing investment management and advisory services to public sector clients. Our business focus is managing or advising public sector portfolios and, in doing so, we believe that the advice offered to municipalities should be independent and transparent. In our role as the Town’s advisor, we view it as our responsibility to: educate the Town on investment and regulatory-related matters; advise the Town from a broad view of the markets; make firm recommendations; present appropriate data in a clear, concise manner; be proactive and forward-thinking in our advice; and attentively serve the Town with consistent follow-up and follow-through. Our investment management philosophy on behalf of the Town and our public sector clients is to be proactive in capturing the highest value for the lowest risk. We believe it’s important to have a plan for all funds and that an active approach best achieves the public sector objectives of safeguarding principal, providing liquidity, and attaining a market rate of return. We remain in close communication with our clients to implement active management. 5. Describe your firm’s resources, approach and experience in market monitoring and investment and credit analysis and research. We employ more than 250 professionals dedicated to supporting our public sector and other institutional clients. Our investment management resources include Arizona Revised Statutes sector specialists on our trading desk, fixed income research from our Portfolio Strategies Group, in-house credit analysis from our Fixed Income Credit Committee (“Credit Committee”), Governmental Accounting Standards Board (“GASB”)-compliant reporting from our Accounting Group, and coordinated trade execution, settlement, and compliance systems maintained by separate and dedicated teams. Our approach is to add value and manage portfolio risk through a disciplined analytical approach, made possible by these various resources. While our primary investment research and analysis is done internally, we also have access to a wide range of external sources of economic and market information, including: Bloomberg, credit research from Moody’s, Standard & Poor’s and CreditSights, broker/dealer research, research and views of financial industry economists, electronic real-time trading platforms including Bloomberg FIT, TradeWeb, and MarketAxess. These tools are an extension of our research team, but we have found it most valuable to perform additional due diligence over and above the rating agencies. Our Credit committee comprises our Chief Investment Officer, Chief Credit Officer, Head of Structured Investments, and multiple portfolio managers and strategists. We conduct formal meetings each month that begin with an economic update, strategy reviews and recommendations, as well as input from each of our sector specialists. Our sector specialists have in-depth knowledge specific to their area of expertise and share their thoughts and research findings which assist in making portfolio strategy decisions. Our resources both internally and externally supplement and enhance our quantitative analysis capabilities. Due to our credit oversight and risk management policies, we successfully navigated the markets during the 2008 credit crisis, avoiding the credit scares and defaults that affected many other investment managers. Not a single one of our clients’ staff members was forced to go before their governing body to explain that PFM held troubled assets in its portfolio. We continue to help our clients manage credit risk during periods of volatility and are proud of the fact that, since inception, none of our advised accounts have lost any principal from a default or bankruptcy. 6. Describe the training and/or educational resources and any other value added products and services that your firm has available to clients. PFM strives to be an industry leader in public finance and a resource to the finance community. We continually look for ways to communicate our views of the capital markets, investment management considerations, cybersecurity and more nuanced topics, including, but not limited to, arbitrage rebate, bond proceeds strategies and structured products, asset-backed securities, and treasury management. As a PFM client, the Town receives more than investment portfolio information. The Town also receives education via PFM-sponsored seminars, investment education webinars, and a suite of communications we publish on a regular basis. For example, since 2011 we have hosted free annual investment and financial management seminars in Phoenix covering a variety of topics that are important to public agencies in Arizona. Finally, all of our meetings with Town staff can include an educational component, whether we are reviewing the Town’s Investment Policy for any 3 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 updates or discussing portfolio performance in the context of current market conditions. We are long-standing and active participants in the Arizona government finance community, maintaining close involvement with public sector organizations like the Government Finance Officers Association of Arizona (“GFOAz’”) and Tucson CFA society. 7.Describe your firm’s policy and approach to managing relationships with the broker/dealer. Describe your firm’s policy regarding the use of financial institutions affiliated with your firm. We are not affiliated with a financial institution. PFM maintains an approved broker/dealer list. We only add broker/dealers to this list that we have reviewed, approved, and regularly monitor. We have established policies and procedures to evaluate and monitor firms’ creditworthiness and their ability to perform the duties necessary for efficient trade execution. Our Credit Committee assesses many important factors, including market presence, capitalization, company history, profitability and management, product availability, trade execution, timeliness of information, quality of service and personnel, and special circumstances such as qualified minority/women-owned business enterprise (“M/WBE”) firms. Clients frequently delegate the broker/dealer review and monitor function to PFM as their investment advisor so they can benefit from our firm’s extensive due diligence, long-term relationships in the brokerage community, economies of scale, and access to investment offerings at the most competitive prices. We conduct formal semi-annual reviews of all approved broker/dealers to help ensure counterparties continue to meet our safety, service, and competitive pricing standards. Our trading volume, broad market access of approximately 60 national and regional broker/dealers, and evaluation tools give our firm an exceptionally strong sense of appropriate pricing. We use our knowledge of broker strengths and weaknesses to select what we believe to be the optimal list of brokers for each security type and situation. Through our well-informed competitive bidding process, we work diligently seeking to obtain best prices for our clients on each and every trade. We periodically conduct a formal review of our Approved Broker/Dealer List to ensure counterparties continue to meet our standards. Broker/dealers that experience financial difficulty, or otherwise fail to meet any of our standards for safety, liquidity, operating characteristics, service, or other risk factors we deem material to protecting our clients’ interests, may be removed. 8.Describe any compensation arrangements your firm has with brokers/dealers or financial institutions on investment transactions. We do not have “soft dollar” or any other compensation arrangements with brokers. The only compensation we receive is fees paid by clients. 9.Describe any charges, complaints, disciplinary actions, investigations, or legal proceedings by the SEC or other regulatory agencies against your firm or members of the firm over the last 3 years. Describe any on-going or pending investigations, charges, complaints or litigation by the SEC or any other regulatory agency. Neither PFM Asset Management LLC, nor to the best of its knowledge, have any of its members had any charges, complaints, disciplinary actions, investigations, or legal proceedings by the SEC or other regulatory agencies against our firm or members of the firm over the last three (3) years. 10.Provide a copy of your firm’s Uniform Application for Investment Advisor Registration (ADV) Parts I and II, as on file with the SEC. Please find our ADV Parts I and II in the Appendices. 2.Staff Qualifications 1.Identify the number of professionals (portfolio managers, consultants, analysts and researchers) your firm has who are dedicated to public sector asset management. Specify the number of accounts handled by each portfolio manager or investment advisor. We employ 252 professionals (as of December 31, 2019) dedicated to supporting our public sector and other institutional clients, including a trading desk of fixed income sector specialists, a dedicated Portfolio Strategies Group, and a governmental Accounting Group. Our portfolio managers usually average approximately 40 actively managed accounts. Since our portfolios are managed by teams, we have no set limit on the number of accounts managed. Our team approach helps ensure that multiple investment professionals are knowledgeable about each client’s portfolio, actively participate in discussions about investment strategies, and have access to portfolio recommendations at all times. The portfolio strategy and management teams also use the team approach to provide for backup in case the primary portfolio manager/strategist is out of the office. 4 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 2. Identify the individual(s) who will be assigned to the Town of Marana’s account. Provide brief biographies on these individuals, including education, experience, length of time with the firm, certification, and licensing information. PFM will continue to pledge senior-level resources to our engagement with the Town through a combination of Southwest investment professionals and additional PFM specialists throughout the firm. In this way, the Town gets the best allocation of resources internally and externally: local expertise and the expertise of a national leader in public funds management. Paulina, Luke and Annette are all based in our Chandler office and are readily available to the Town. Our team’s local perspective runs deep, as Luke is originally from the Town of Marana and graduated from Marana High School. We provide detailed resumes in the Appendices. Management Team: Paulina Woo, Managing Director Co-Engagement Manager 13 Years of Experience in the Field | 13 Years with PFM Luke Schneider, CFA, Director Co-Engagement Manager 13 Years of Experience in the Field | 5 Years with PFM Annette Gaston, Senior Managing Consultant Client Service and Support 15 Years of Experience in the Field | 2 Years with PFM Kyle Jones, Managing Director Co-Head of Portfolio Strategies Group 18 Years of Experience in the Field | 8 Years with PFM Robert Cheddar, CFA, Managing Director Head of Portfolio Management 22 Years of Experience in the Field | 16 Years with PFM Karen Jones, CPA Australia, Managing Director Head of Reporting and Accounting 30 Years of Experience in the Field | 2 Years with PFM 3. List the five largest public sector clients served by the individuals to be assigned to the Town’s account and the length of time they have been clients with these individuals. Include the total assets under management for each client listed. The five largest clients served by Luke Schneider and Paulina Woo are listed below. City of Santa Rosa is also listed as Paulina works with the City of Santa Rosa and the City can be described as a top five client categorized by AUM. Top 5 Public Sector Clients in Arizona AUM (mm) Engagement Description City of Scottsdale (480) 312-2437 Jeffrey Nichols, Finance Director $523.1 Client since 2005. We provide discretionary management of operating funds and Treasury Consulting services. Town of Gilbert (480) 503-6000 Hakon Johanson, Finance Director $477.5 Client since 2011. We provide discretionary management of operating funds, and bond proceeds. 5 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 City of Mesa (480) 644-3333 Michael Kennington, Finance Director $465.3 Client since 2010. We provide discretionary management of operating funds and Treasury Consulting services. City of Peoria (623) 773-7126 Brian Richie, Accounting Manager $360.9 Client since 2005. We provide discretionary management of operating funds and bond proceeds. City of Tucson (520) 791-4893 Art Cuaron, Pension Administrator $333.7 Client since 2012. We provide discretionary management of operating funds. Other Client Served by Relationship Manager City of Santa Rosa (707) 543-3140 Chuck Mcbride, Chief Financial Officer $432.4 Client since 2007. We provide discretionary management of operating funds and Treasury Consulting services. 4. Identify the individual(s) who perform credit research and market analysis. Provide brief biographies on these individuals, including education, experience, length of time with the firm, certifications and licensing information. Robert Cheddar, PFM’s Chief Credit Officer and chair of the Credit Committee, and Kyle Jones, the head of PFM’s Portfolio Strategies Group, are responsible for firm wide credit research and market analysis. Please refer to the Appendices for complete biographies. 5. Describe the training that the individuals listed in items 2 and 4 above will receive each year. Please refer to Question 6 below. 6. Describe your firm’s efforts to keep portfolio managers informed of developments relevant to public sector investment managers. As an industry leader in government investing, we devote significant time and resources to keep our professionals well informed of market and industry developments, including the following: Leadership in national and statewide organizations such as the Government Finance Officers Association (“GFOA”) and the Association of Public Treasurers of the United States and Canada (“APT US&C”). Paulina Woo serves on GFOA’s Committee on Treasury and Investment Management (“TIM”). Internal training programs designed to continually develop staff skills and foster professional growth. PFM University provides formal training dedicated to educating our professionals on a wide range of topics in municipal financ e, including public-sector investment topics, investment management principles, and governmental accounting standards. While all employees have access to this training, senior professionals must complete two classes per year, enabling them to tailor a curriculum to their particular career development needs. Weekly internal conference calls on the economy, investment markets and credit market trends, as well as monthly webinars that focus on separately managed accounts and monthly investment committee meetings. In addition, subject- area experts host one-hour training sessions on their area of expertise on a bi-weekly basis. Members of the Town’s portfolio management team participate in these meetings. Meetings with key issuers and industry analysts in the fixed-income markets, including government agencies (e.g., FHLB, FFCB), corporate issuers, rating agencies (e.g., Standard & Poor’s and Moody’s), underwriters and Wall Street research departments. Support for attaining the CFA designation, an achievement we encourage for all our investment professionals. PFM provides financial assistance, including covering the initial CFA fee to begin the program and the cost of educational resour ces and testing. As of December 31, 2019, PFM and its affiliates have 38 employees who have attained their CFA designation and an additional 31 employees who have passed at least one of the three required exams. 7. Explain whether there has been any turnover or additions of key personnel within your firm in the past 3 years. PFM’s asset management business has historically had very low turnover among our portfolio management, research, and client service professionals, which provides our clients with long-term stability. As we continue to grow, we have proactively 6 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 added members to our portfolio management, portfolio strategy, analytical, and client service staff. In the last three years, 22 senior-level staff members have left the firm.2 During that same time, we added 25 new senior-level staff to our firm. 8. Describe your firm’s compensation policies for investment professionals. PFM’s employees, including our investment professionals, are paid a base salary plus a year-end bonus. The annual bonus is dependent upon the profitability of the firm, each business unit’s contribution to the overall profitability of the firm, and each individual’s contribution to the business unit’s success. The firm’s compensation plan is intended to recognize and reward excellent performance on the part of individuals; however, no asset management employee is compensated on a commission or transaction-related basis. Portfolio performance is one element of assessing portfolio managers’ individual performance and contribution. Client satisfaction, retention, and business development are important elements of measuring the contribution of client service and marketing personnel. 3. Investment Management Approach 1. Describe your approach to providing investment management and advisory services to the Town. Describe the daily procedures for portfolio review, investment management, and client contact. Our portfolio management team will continue to review the Town’s portfolio on a daily basis. As part of our daily practices, portfolio managers and traders will discuss how market developments, product offerings, new issues, and the potential impact of pending economic announcements may affect each portfolio. The team will also review portfolio holdings, upcoming maturities, cash flows, and other Town-specific needs. If an opportunity for a trade is identified, our trade process starts with a review of market conditions and relative value relationships. In strict compliance with the Town’s Investment Policy, we will then decide what sector and maturity to purchase—the one with the best combination of return and risk characteristics—and one that fulfills a need within the portfolio. Security selection is heavily dependent on the current make-up of the portfolio, the Town’s investment policy, and the long-term investment strategy. Once executed, full details of all trades, including competitive bids and offers, will be provided to the Town on the same day as execution. The Town will continue to have access to all trading activity through our internet reporting site, Easy Online Network (“EON”), the day after the trade and will receive a complete reconciled report of transactions and holdings on a monthly basis. In addition, Paulina, Luke, and Annette will be available to answer the Town’s questions as needed. 2. Describe how you would assist the Town with developing portfolio strategies, managing portfolio risks and cash flow needs. Describe how often your staff will meet with Town staff to discuss portfolio strategies. We will continue to work closely with Town staff to develop a comprehensive understanding of the Town’s overall investment program, objectives, and cash flow needs. This includes regularly reviewing changes in the Town’s financial position, incorporating industry best practices for investing and reporting, and having frequent discussions to help ensure the investment strategy safely meets the Town’s objectives and investment policy qualifications. Our relationship management team members will continue to meet with Town staff on a quarterly basis to provide the portfolio performance report. 3. Describe your review process for assuring compliance with Arizona Revised Statutes and the Town’s investment policies and guidelines. We stay abreast of proposed legislation and actual changes in Arizona law as they are enacted, and will advise the Town of any necessary or recommended changes to its investment policy to align with State Code, enhance market opportunities, or incorporate industry best practices. PFM also uses Bloomberg AIM to house, monitor, and automate compliance. All trades are staged and processed through Bloomberg AIM, which applies all aspects of each client’s investment policy guidelines and policy limits to pending trades and verifies compliance of trades placed within the Town’s portfolio. 2 Senior-level staff include senior managing consultants, directors and managing directors. 7 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 4. Describe your process of identifying and proposing recommendations for the purchase or sale of individual investment securities. Describe the trade process you anticipate for the Town once a buy or sell transaction is approved. Our trading methodology is highlighted by the following characteristics—many of which we believe are distinctive to our approach. For every transaction, our portfolio management team will:  Identify opportunities: (1) Perform investment research and analysis of the macroeconomic environment, including interest rate and credit trends; (2) Evaluate sectors and issues for yield/return potential and risk; careful risk management is a primary consideration for all investment decisions; (3) Identify specific issues that fit the strategy; (4) Continually analyze investment alternatives and decide which sectors/maturities have value and shop for them.  Communicate trade recommendation to the Town: (1) Draw up a recommendation and present it to the Town for approval; (2) the Town approves transaction.  Execute trades: (1) Process proposed trades through Bloomberg AIM to ensure compliance; (2) Competitively bid each trade to a minimum of three to five (when available) carefully-selected brokers to seek optimal execution; (3) Execute trade and check post-execution compliance.  Coordinate trade settlement: (1) Transmit trade information to both the Town and its custodian and confirm receipt; (2) The Town receives a same day copy of the trade ticket from us, and a duplicate confirmation from the broker; (3) On settlement date, confirm settlement with the City’s custodian; (4) Enter trade into our firm’s accounting and reporting system. 5. Describe your firm’s view of the current interest rate environment and market trends or provide a published commentary of your firm’s view of interest rates and market trends. The U.S. Treasury yield curve flattened over the month and has inverted once again (between three months and 10 years). The significant rally in Treasury prices was largely due to the coronavirus outbreak in China. Given the uncertainty regarding the potential impact of the coronavirus outbreak on global growth and interest rates, we expect the yield curve will continue to reprice lower and slightly steeper relative to prior months. We also expect the Fed to price in at least one rate cut by year end. As a result, we plan to continue a duration-neutral strategy relative to benchmarks. For a full market review, please refer to the Appendices for PFM’s Fixed Income Monthly Market Review. 6. Describe your process of ensuring idle funds are invested and maturities are reinvested based on cash flow needs and also ensuring the Town is informed of investment opportunities. We seek to ensure the Town’s idle funds are invested by: (1) Understanding the Town’s expected cash flows, seasonality of those cash flows, and any capital project expenditure schedules; (2) Using our firm’s cash flow model to analyze historical balances and trends; (3) evaluate the addition of sectors like corporate notes, negotiable certificates of deposit (“NCDs”), mortgage backed securities (MBS), supranational, commercial paper (“CP”), and asset-backed securities (ABS) (4) Providing a “liquidity cushion” for unexpected cash needs; and (5) Utilizing investments that can easily be sold in well-established secondary markets to provide “contingent liquidity.” Over several meetings in the last year, PFM has reviewed idle cash balances and have provided recommendations to the Town to invest these funds. 7. In reviewing the attached listing of the Town’s security holdings and the Town’s Investment and Portfolio Policies, describe the advice you would provide to the Town in managing its portfolio and its investment program. The Town has utilized a 1-3 Year Agency Index since inception of the portfolio. Our recommendation to the Town for an optimal portfolio is to extend the duration to a 1-5 Year benchmark, and broaden the sector selection to include additional recommended sectors; corporate notes, negotiable certificates of deposit (“NCDs”), mortgage backed securities (MBS), supranationals, commercial paper (“CP”), and asset-backed securities (ABS). As part of our ongoing active management within the portfolio, we recommend selling securities prior to maturity to re-align benchmark duration and take advantage of additional opportunities within the market which we feel the Town could benefit from. We add value to the Town’s portfolio by collaborating with clients and using our expertise to develop investment strategies tailored to meet each client’s needs. We further seek to add value through a disciplined approach that focuses on the core principles of diversification, rigorous analysis, and careful risk management. As part of our ongoing investment management 8 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 relationship with the Town, we will continue to incorporate the following strategies which add values to the investment program:  Diversification. We regularly monitor the yield relationships between all permitted investment sectors (e.g., U.S. Treasuries, federal agency securities, government securities, commercial paper, negotiable CDs) and select investments we believe offer the best relative value—that is, the best combination of both return and risk—combined into safe and high performing portfolios aligned with the Town’s objectives. We seek broad diversification, but since every market and time period has unique characteristics, our portfolios will reflect different investment choices at different times, capitalizing on the current opportunities. The chart to the right shows the changes we made to the portfolio’s sector allocation over time. The Town’s portfolio, which we manage, has $1.1 million total accrued earnings over the last 5 years. The portfolio would benefit from diversification beyond current sectors—U.S. Treasury and Federal Agency. Sectors such as: corporate notes, negotiable certificates of deposit (“NCDs”), mortgage backed securities (“MBS”), supranationals, commercial paper (“CP”), and asset-backed securities (“ABS”) have offered Arizona public sector portfolios significant return relative to comparable maturity government securities in recent years. We have presented several policy changes to the Town, and have advocated for broader diversification in the past. The Town recognizes the value of expanding diversification within the portfolio and has begun moving in that direction.  Duration Management. We seek to add value by managing portfolio duration to take advantage of interest rate trends, but we do this within a narrow range around the specified benchmark to help ensure the actual portfolio performance is aligned with the goals of the mandate. We do not believe in making big duration bets; we typically manage duration close to the benchmark unless we have a strong conviction about the near-term direction of interest rates. An example of our value is when we believed that market rates were not adequately pricing in the potential for a Federal Reserve (“Fed”) rate hike in March 2017, we shortened duration accordingly. When the Fed did raise rates, we took advantage of the sharp surge in yields by extending the portfolio’s duration back out to a near-neutral position to capture value for the Town. Disciplined duration management has helped to enhance the Town’s long-term performance and reduce the volatility of the portfolio’s returns. We recommend the Town consider moving to a longer duration strategy such as a 1-5 year benchmark. Historically longer duration strategies have outperformed shorter duration strategies, and we feel the Town would benefit from a longer duration portfolio.  Yield Curve Placement. By using a series of analytical models, we identify those maturities that in our opinion offer the greatest value—that is, the largest amount of yield or return potential for a given amount of risk. Our analysis includes assessing the impact of extending maturity by evaluating the benefit from both higher initial yields and “roll down”—the tendency of longer maturities to appreciate as they age and shorten in maturity, and are re-priced along the yield curve —a powerful force underestimated by most managers.  Issuer Selection. Yields can vary significantly among issuers or, within the same issuer, among securities with similar maturities. Sometimes this is due to perceived quality differences that need to be carefully analyzed. At other times, it is due to supply differences, pricing inefficiencies, or other market anomalies. We seek to emphasize securities that are both safe and offer high return potential. Our trading tools help us quickly identify and capitalize on pricing inefficiencies, which may result in higher portfolio yields for the Town.  Credit Analysis. PFM’s Credit Committee employs a rigorous, market-driven approach to credit analysis that evaluates both the quantitative and qualitative aspects of issuers. Our credit research seeks to identify issuers that meet our credit quality standards and that offer incremental value with minimal credit risk, allowing us to safely increase yield. Our robust internal credit review and monitoring procedures are a critical element of the security selection process and allocations to 9 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 individual issuers are limited to ensure broad diversification. As discussed above, we have already leveraged these resources on behalf of the Town and will continue to do so. 8. Describe how you would measure and benchmark the Town’s investment portfolio performance. PFM has served as the discretionary investment manager to the Town of Marana since 2015. Over that time, we have remained in close contact with the Town regarding its cash flow patterns, anticipated cash needs, as well as the investment goals and objectives. As the Town’s investment needs and cash flow patterns evolved, we’ve worked with the Town to ensure that the benchmark accurately reflects the changing strategy and structure of its portfolio. Since the outset of the engagement, the Town has utilized the 1-3 Year Agency Index. Over time as the market and cash needs of the Town have changed, we’ve transitioned additional liquid funds into the portfolio and expanded the diversification to include not only Agency securities, but also higher yielding Treasury securities. Additionally, we completed an in-depth cash flow analysis to help determine the optimal mix of core and liquid funds. As part of this effort, we recognized the Town’s need to incorporate a liquidity component within the portfolio. We then analyzed numerous benchmarks, discussed the pros and cons of each with Town staff and assisted in selecting a standard BofAML benchmark, ICE BofAML 1-3 Yr. U.S. Agency Index, reflecting the conservative strategy being used for the investment portfolio. Based on the stability of the Town’s cash flow and long term investment goals, we believe it would be prudent to eventually adjust the Town’s benchmark from a 1-3 year strategy to a 1-5 year strategy. 4. Record Keeping and Reporting Capabilities 1. Describe the investment record keeping system used by your firm and describe how the system is used by portfolio managers to manage the investment portfolio. Our governmental accounting team of 28 professionals, including three CPAs, is independent from our trading desk and uses a sophisticated investment accounting system to provide accurate and timely reports on security transactions and portfolio positions that also considers credit quality of issuers and securities. The system also provides data used for decision-making on investments. It interfaces with Bloomberg AIM, which is the compliance software used by the firm, ensuring adherence with investment policies and portfolio performance measurement. 2. Describe how the data in your system is verified for accuracy and completeness and also how the system is maintained to ensure proper security and protection from accidental loss, corruption or system failures. It is paramount that our clients receive accurate and timely reports. PFM uses SS&C CAMRA, an industry-leading investment accounting system, providing reports for security transactions, portfolio positions, and to track the credit quality of issuers and securities. PFM’s systems are proactively monitored 24/7. We maintain highly protected systems in multiple data centers located across several regions, each designed to back up the other system in the event of an unplanned disruption. 3. Describe whether the firm has the capability to allow access to portfolio data or statements via the internet either currently or in the future. The Town will have access to our Easy Online Network (“EON”), in which PFM will provide a monthly statement that will be published on EON (https://eon.pfm.com). The statement will show the Town’s security positions and transactions, as well as portfolio composition. EON also offers the Town daily access to portfolio holdings and the ability to review and print complete portfolio details. 4. Describe the frequency, timeliness, and format of reports that would be provided to the Town to meet its accounting and reporting needs. Provide sample reports and include methods and formulas used to calculate yield, return and other pertinent information for the Town’s accounting and reporting needs. Report Frequency/ Delivery Content/Features Daily Holdings Daily  Holdings report showing securities, par, cost, duration, purchase yields, and discounts as of the prior business day. Month-to-Date Transactions Daily  Description of any security transactions month-to-date as of the prior business day. 10 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 Report Frequency/ Delivery Content/Features Portfolio Holdings and Activity Report Monthly  This report includes a detailed description of all securities in the portfolio; summary of realized and unrealized earnings for the month; report of all purchases, sales, maturities, interest deposits, and withdrawals for each separate account; and all the information required by GASB 31, and provides the month-end credit quality ratings to comply with the Credit Risk Disclosure requirement and duration by investment type to facilitate compliance with the Interest Rate Disclosure requirement of GASB 40. Market Update Monthly  Summary of recent market events and the outlook for investment opportunities moving forward. Performance Reports Quarterly  Quarterly reports typically include an aggregate portfolio sector, maturity, and credit-quality distribution; an aggregate view of performance portfolios by investment strategy; a portfolio strategy recap and market outlook, including recommended changes to strategy; individual portfolio sector, maturity, and credit quality distribution; performance statistics compared to a market benchmark; and a high level economic and investment-sector performance synopsis. 5. A summarized investment report is currently provided to Town Council every quarter. Provide a sample summary report prepared by your firm that can be provided to Town Council every quarter. Please refer to the Appendices for a sample quarterly report. B. Fees 1. For informational purposes, and without providing any actual fee amounts, describe how fees will be structured considering the Town’s total portfolio value and activity, the minimum charge assessed and how the fee will be billed. The Town’s portfolio may range from $20 million to $50 million with activity ranging from 2 to 5 trades a month. PFM strives to charge fees that are commensurate with our scope of services and the complexity of work performed. We believe that the proposed fee schedule recognizes our current partnership with the Town as well as the unique quantitative and qualitative resources that we bring to the relationship. 2. Identify all other services that are not included in the investment management fee structure in item 1 above, without providing any actual fee amounts for those services. Our fee does not include custodial and safekeeping services. Other services not included in the fee above, but offered by PFM as specialized offering under a separate agreement and fee arrangement include: structured products, treasury consulting/banking services RFP, and arbitrage rebate services. C. References (Maximum 1 page) 1. Provide three municipal or other public sector references served by the individual(s) who will be assigned to the Town of Marana’s account, including the length of time the individual(s) has managed their assets, client name, contact personnel, address and phone number. Refer to Section 2, Question 3. Fee Schedule* First $100 million in AUM 9 basis points Next $100 million in AUM 6 basis points * Minimum annual fee of $25,000 applies. 11 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 II.Appendices Arizona Public Sector Clients Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 PFM ’s Arizona Public Sector Clients ARIZONA MUNICIPAL RISK RETENTION POOL CHANDLER CULTURAL FOUNDATION CHANDLER INDUSTRIAL DEVELOPMENT AUTH CITY OF AVONDALE CITY OF BUCKEYE CITY OF CASA GRANDE CITY OF CHANDLER CITY OF COTTONWOOD CITY OF FLAGSTAFF, ARIZONA CITY OF GOODYEAR, ARIZONA CITY OF MARICOPA, ARIZONA CITY OF MESA CITY OF PEORIA CITY OF SCOTTSDALE CITY OF SURPRISE CITY OF TEMPE CITY OF TUCSON, ARIZONA COCONINO COUNTY LA PAZ COUNTY MOHAVE COUNTY PFMG-CITY OF TOLLESON PFMP-CITY OF ELOY REGIONAL TRANSPORTATION AUTH - PIMA CNTY TOWN OF FLORENCE TOWN OF FOUNTAIN HILLS, ARIZONA TOWN OF GILBERT TOWN OF MARANA TOWN OF ORO VALLEY TOWN OF PARADISE VALLEY UNIVERSITY OF ARIZONA VALLEY METRO RPTA ADV Parts I & II Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 PFM Asset Management LLC 213 Market Street Harrisburg, PA 17101-2141 717-231-6200 phone 717-233-6073 fax www.pfm.com 3/29/2019 FORM ADV PART 2 BROCHURE This brochure provides information about the qualifications and business practices of PFM Asset Management LLC. If you have any questions about the contents of this brochure, please contact us at pfmamrequest@pfm.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Additional information about PFM Asset Management LLC is also available on the SEC’s website at www.adviserinfo.sec.gov. The searchable IARD/CRD number for PFM Asset Management LLC is 122141. PFM Asset Management LLC is a Registered Investment Adviser. Registration with the United States Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 Notice of Material Changes We may, at any time, update this Brochure and if we do, we will either send you a copy or offer to send you a copy (either by electronic means (email) or in hard copy form). If you would like another copy of this Brochure, please download it from the SEC website as indicated on the cover page or you may contact our Chief Compliance Officer, Leo Karwejna, at 717-231-6200 or at pfmamrequest@pfm.com. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 Table of Contents Advisory Business ................................................................................................................................................1 Fees and Compensation ........................................................................................................................................5 Performance-Based Fees and Side-By-Side Management ...................................................................................8 Types of Clients ....................................................................................................................................................8 Methods of Analysis, Investment Strategies and Risk of Loss .......................................................................…..8 Disciplinary Information .....................................................................................................................................14 Other Financial Industry Activities and Affiliations ......................................................................................….14 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading…………………………..…......................................................….15 Brokerage Practices .............................................................................................................................................16 Review of Accounts .............................................................................................................................................18 Client Referrals and Other Compensation .......................................................................................................…19 Custody.................................................................................................................................................................19 Investment Discretion ..........................................................................................................................................19 Voting Client Securities........................................................................................................................................19 Financial Information .......................................................................................................................................... 21 PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 1 Item 4 -Advisory Business Public Financial Management, Inc. (PFM, Inc.) was founded in 1975 to provide independent financial advisory services to the public sector. PFM, Inc. began providing investment advisory services to public entities in 1980. In 2001, PFM Asset Management LLC (PFMAM) was created as the entity through which investment advisory services are provided. Effective June 1, 2016, financial advisory services historically offered through PFM, Inc. are being offered through a new operating company, PFM Financial Advisors LLC (PFMFA). PFM, Inc., PFMFA, PFMAM and certain other affiliated companies are collectively referred to as “PFM”. PFMAM and the other related businesses within PFM are organized in a holding company structure, and are indirect, wholly owned subsidiaries of the holding company, named PFM I, LLC. PFMAM is a Delaware limited liability company. As of December 31, 2018, the amount of client assets we managed on a discretionary basis was $94,103,777,992.80 and the amount we managed on a nondiscretionary basis was $1,207,414,365.91. In addition, as of December 31, 2018, we provided investment consulting services with respect to assets in the amount of $40,837,028,192.22. We offer the following types of investment advice: 1. Discretionary Advice. We offer discretionary advisory services for government, nonprofit and other institutional investors who invest in fixed-income and multi-asset class strategies. When a client gives us investment discretion, we have the authority to determine, without obtaining specific approval, (1) overall asset allocation, (2) the manager or sub- adviser to be utilized for the portfolio, (3) the specific securities to be bought and sold, (4) the amount of securities to be bought and sold and (5) the broker or dealer through which the securities are bought or sold. These decisions are subject to limitations of law and any other restrictions in the contract with our client and limitations in our client’s written investment policies. Under these types of engagements, we assume day-to-day management responsibility for the assets covered by the investment advisory agreement. Examples of the securities we may recommend include U.S. Treasury securities, Federal Agency securities, high-grade corporate obligations, mortgage and asset backed securities, municipal securities, institutional mutual funds, and money market instruments. We arrange for the purchase and sale of these securities to meet the investment objectives and cash flow requirements of each client. We manage fixed-income portfolios, often on a total return basis. We also implement liability-driven strategies that seek to generate cash flows from a portfolio of fixed-income securities to match specific liabilities such as bond-funded defeasance accounts, construction accounts or insurance liabilities. We also provide services to the PFM Multi-Manager Series Trust (MMST or the Trust), a registered open- end investment company, utilizing a manager-of-managers structure. The Trust offers different funds (MMST Funds), with each MMST Fund having specific investment objectives, policies, and restrictions. We are responsible for, among other overall management services, determining investment strategies, selecting and monitoring unaffiliated investment sub-advisers for each MMST Fund and for allocating and reallocating assets among the sub- advisers consistent with each MMST Fund’s investment objective and strategies. For some of our clients, including trusts, pension plans, endowments, foundations, other post-employment benefits (OPEB) plans or other similar asset pools, we serve as a discretionary manager to invest a client’s assets in PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 2 multiple types of investments. Generally these accounts include a variety of asset classes, which may include domestic equity, international equity, fixed-income, and alternative asset classes, including shares of MMST Funds. We provide multi-asset class investment services in two forms. One form is a wrap fee program known as the Managed Accounts Program (MAP), where we charge a single fee to include investment advisory, third-party custody and administrative services. We are no longer marketing MAP to new clients. The other is a general discretionary form where we unbundle some of the service fees, which allows the client to separately negotiate these fees (for example, custody fees). This form of multi-asset class management is referred to as a fund of funds approach. It may also be described as outsourced CIO, implemented consulting and a variety of other generic terms. In each of these two general forms of management, we work with the client to determine a target asset allocation based on a variety of risk and return characteristics. We then implement the asset allocation, either by buying shares of mutual funds (including ETF’s) and/or pooled funds or other investment vehicles (collectively, Funds), or by selecting separate account managers who will manage separate accounts of specific asset classes and/or strategies, including the MMST sub-advisers (Investment Sub-Advisers). Shares may include those of the MMST Funds. Under this approach, we have discretion to make the initial selection of the Funds or Investment Sub- Advisers. We also provide ongoing periodic monitoring services by evaluating the Fund’s or the Investment Sub- Adviser's portfolio management philosophy, policies, processes, controls, personnel and investment performance. Clients who hire us give us authority to change, drop or add Funds or Investment Sub-Advisers. The client generally gives the Investment Sub-Advisers both investment and brokerage discretion in managing its portion of the portfolio. We give these clients periodic reports on the investment performance of the various Funds, Investment Sub-Advisers and the portfolio as a whole. We assist clients in establishing the basis for asset allocation by preparing a written investment strategy. These clients give us authority to re-allocate assets and to change, eliminate or add managers or investments within the scope of the investment strategy. 2. Services to Registered Investment Companies and Local Government Investment Pools PFMAM currently provides investment advisory and/or administrative services to 17 pooled investment programs (generally known as local government investment pools) across 15 states, as well as to two registered investment companies whose series or classes are registered in multiple states. We generally, but not always, provide administration services and an affiliate generally provides distribution services as described in this document. Where PFMAM is the investment adviser to a pooled investment vehicle, investment objectives, guidelines and any investment restrictions are not tailored to the needs of individual investors in those vehicles, but rather are described in the relevant offering documents for the vehicle. 3. Nondiscretionary Advice We also may provide advice on a nondiscretionary basis where we offer clients investment recommendations, subject to their specific approval and further execution instructions. In this case our client makes trades directly or specifically approves our purchase or sale of specific securities, including certificates of deposit. 4. Consulting Services We also provide nondiscretionary investment consulting services to:  governmental entities;  public, Taft-Hartley and corporate pension funds;  hospital endowments and foundations; PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 3  trusts;  OPEB plans; and  other similar institutional investors. For certain of our clients, these consulting services may consist of providing general portfolio and management assistance, in which we assist the client in reviewing its investment policy and providing advice on management of broker and banking relationships. We may also assist in areas such as cash flow reviews, analysis of the characteristics of client’s portfolio, market commentary, portfolio analytics, portfolio reporting, and credit analysis support. These consulting services consist of overseeing a client’s portfolio where we have not been given authority to buy or sell securities in the portfolio. We typically begin these services by assessing the client's investment objectives, time horizon and risk tolerance. Using this information, we then propose asset allocation models within the investment guidelines which the client gives us. We may also assist in writing an investment policy which provides details about the objectives, diversification, quality and performance measurement of the portfolio. We also make recommendations on the selection of money managers, pooled trusts or mutual funds to carry out the client’s investment strategy. Once our client puts the investment policy into place, we report quarterly to the client on the investment performance. We also report on whether an investment manager chosen follows its particular style, and whether our client’s portfolio complies with its investment policy. We also provide consulting services to OPEB plans and pension plans. These services involve financial reporting, analyzing cash flow implications of different funding strategies, and other matters relating to the OPEB benefits or pension benefits and funding arrangements. Often we perform these services by cooperating with our client’s other professional advisors, such as the client’s accountant or actuary. 5. Structured Products We also provide analytical services for designing and procuring portfolios in connection with the current or advance refunding of municipal bonds and the investment of bond proceeds. For these engagements we arrange for purchases of specific securities that are generally government obligations or structured investments such as forward delivery agreements. On our client’s behalf we arrange these purchases by obtaining bids on a competitive basis or in rare instances by negotiating on behalf of our client. 6. Treasury Consulting Services We also provide clients with services to assist with the design and procurement of banking and custody services. For each client, we conduct a detailed assessment of current banking arrangements. We evaluate the client’s needs, analyze existing banking relationships, review how bank services fit into cash management and investment systems, and make specific recommendations to improve certain systems. 7. Services for Banking and Other Similarly Chartered Financial Institutions We also offer discretionary and nondiscretionary advice tailored for banks and other similarly chartered financial institutions which invest in fixed-income securities. These services are tailored to the particular investment needs, restrictions and requirements which apply to these types of clients. These decisions are subject to limitations of banking regulatory requirements, and any other restrictions in the contract with our client and limitations in our client’s written investment policies. Examples of the securities we may recommend include U.S. Treasury securities, Federal Agency securities, high-grade corporate obligations, mortgage and asset backed securities, institutional mutual funds, and money market instruments. We arrange for or recommend the purchase PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 4 and sale of these securities to meet the investment objective, strategies, and risk position of each of these types of client. 8. Stable Value Management We also offer stable value strategies that typically include fixed-income investments and benefit-responsive wrap contracts or "wrappers" offered by banks and insurance companies with an overall objective of seeking capital preservation and current income. Stable value strategies are generally offered to defined contribution retirement plans either as a separately managed account (which we presently offer) or as a commingled fund. These structures may utilize any of the following types of investments, which we refer to as “Stable Value Contracts”:  Guaranteed Investment Contracts (GIC): This is a stable value investment contract issued by an insurance company that pays a specified rate of return for a specified period of time and is backed by the financial strength of the issuing entity. The underlying securities are typically held on the issuing insurer’s balance sheet in either a general or separate account.  Synthetic GIC: A synthetic GIC is a contract that simulates the performance of a traditional GIC through the use of financial instruments. The underlying assets associated with a synthetic GIC are held in trust for the benefit of the investing plan’s participants. Those assets typically include high- quality fixed-income securities which we manage. To enable the policyholder to realize a specific known value for the assets if it needs to liquidate them, synthetic GICs utilize a benefit-responsive "wrapper" contract that is designed to provide market and cash flow risk protection to the policyholder.  Separate Account GIC: A stable value investment contract issued by an insurance company. The underlying assets which we manage are owned by the issuing insurance company but held in a separate account for the benefit of participating plan or plans. For client stable value accounts, Synthetic and Separate Account GICs typically require that we manage the account(s) within specified investment guidelines as a part of the underwriting and contract process of the issuer of the GIC. These additional guidelines may serve to limit the scope or types of investments otherwise included within a client portfolio, which could result in a lower return to investors. As part of a stable value strategy for the assets we manage, we will make allocations to various underlying strategies, monitor and maintain portfolio duration, and coordinate the resources of various investment, legal and compliance professionals as well as potentially third-party managers. An ongoing review of portfolio structure, cash flow history, guidelines and objectives for each client will occur. We may provide a full range of services for particular stable value clients, or services may be focused on a subset of stable value management such as advising on overall structure or third-party manager asset allocation. Entering into Stable Value Contracts is an important aspect of stable value management. We will identify and select, or assist in the selection of, the financial organizations issuing Stable Value Contracts and negotiate contracts on behalf of clients. 9. General Approach to Advisory Services We tailor our advisory services taking into account following factors:  the services that the client has requested; PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 5  the client’s investment objective;  the client’s investment policy;  the client’s time horizon; and  the client’s risk tolerance. A client may impose additional restrictions on the types of securities in which we can invest, or on the maturity of securities. We adhere to any investment restrictions provided by the client. Item 5 - Fees and Compensation The fees we charge to our advisory clients vary depending upon a number of factors including the types of investments permitted, the personnel providing the advisory services, the particular strategy, the size of portfolio being managed, the relationship with the client, and service requirements associated with the account. Fees may also differ based on account type (e.g., a commingled, pooled account or a separate individual portfolio account). Fees are negotiable so one client may pay a higher fee than another client with similar investment objectives or goals. 1. Discretionary Advice – Separate Accounts We generally receive compensation calculated as a percentage of assets we manage. We receive this compensation after a service is provided, and we bill in arrears on a monthly or quarterly basis. As a general guideline, we charge the following fees for investment advisory services for fixed-income separate account management and stable value strategy management: Fixed-Income Assets Under Management Annual Rate First $25,000,000 0.25% Assets in Excess of $25,000,000 0.15% Stable Value Assets Under Management Annual Rate First $50,000,000 0.30% Next $50,000,000 0.25% Next $150,000,000 0.15% Next $250,000,000 0.10% In excess of $500,000,000 0.075% Generally, the fees we charge for these types of engagements are calculated based on the value of the assets as determined by us using the agreed-upon measure in the contract with our client. Some clients may receive lower fees than this, based on the nature of the mandate or the size of the accounts. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 6 As a general guideline for the multi-asset class management discretionary form, we charge the following fees for investment advisory services: Assets Under Management Annual Rate First $10,000,000 0.45% Next $10,000,000 0.35% Next $30,000,000 0.25% Next $50,000,000 0.20% Assets in Excess of $100,000,000 0.15% Generally, the fees we charge for these types of engagements are calculated based on the agreed-upon measure in the contract with our client, typically market value of assets, as determined by the custodian. For certain accounts, we may charge a minimum fee. However, when a fee for an account, as calculated above, exceeds the minimum fee, the calculated fee applies, rather than the minimum fee. We use the following fee structure as a general guideline for MAP, which is no longer open to new clients: Assets Under Management Annual Rate First $5,000,000 1.00% Next $5,000,000 0.85% Next $10,000,000 0.75% Assets in Excess of $20,000,000 0.60% These MAP fees include the following services: asset management, investment advisory (including mutual fund fees) and custody. However, the MAP fee does not include front or back-end fees for the mutual or pooled funds we select, any taxes or fees of attorneys, accountants, auditors or other professionals advising the client. A portion of the fee for MAP is used to compensate the Investment Sub-Advisors. 2. Registered Investment Companies and Pools The fees we charge for the investment services we provide to the registered investment companies and local government investment pools vary by program. Typically the fee schedule includes various breakpoints depending on asset levels, and may include fee caps or waivers which can be triggered by the overall expense ratio of the pool. We may also receive compensation for providing marketing and administrative services to the shareholders of each registered investment company and to investors in the local government investment pools. We generally provide these administrative and marketing services as an integral part of our investment advisory services, and the fees we receive for these services may be included as a component of the investment advisory fees we charge. 3. Nondiscretionary Advice We generally charge fixed fees for these services, depending upon the services that the client requests, and the complexity of the services. We also offer nondiscretionary advice on certificate of deposit investment programs, which are designed to provide clients with a fixed rate to a fixed maturity date. Fees typically range up to 0.25% per annum of the cost of the investment purchased by our clients. Under the certificate of deposit programs, we provide clients with the option to set aside moneys in client accounts to pay our fee after we have performed the service. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 7 4. Consulting Services For investment consulting services where we have not been given authority to buy or sell securities in the portfolio, we generally charge clients either a fixed fee or a fee that is based on a percentage of assets. The fixed fee is based on the size of the portfolio, complexity, and scope of services which our client wants us to perform. As a general guideline, we charge asset-based fees in a range from 0.05% to 0.30% annually, based on the characteristics listed above. From time to time, we charge hourly fees for these types of services. For consulting services and reports we provide to OPEB plans, we charge a fixed fee generally in the range of $10,000 to $150,000, depending on the specifics of the services we agree to provide. 5. Structured Products In these types of engagements, we usually charge a fixed fee. The client may pay the fee, or may instruct the investment contract counterparty or underwriter in writing to pay our fee on the client’s behalf. We and our clients agree upon a fee for each of these engagements and the fee 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 in a refunding bond escrow structuring and procurement engagement, is less than or equal to 0.2% of the cost of the portfolio or the sum of the total deposits under the agreement. In limited circumstances, the fee will be higher, often because the portfolio is small. 6. Other Important Information about Our Compensation Because we tailor our services to the individual needs of a client, we may offer clients more than one of the services mentioned above. In addition, we may also provide services not mentioned above, such as assisting our clients with a one-time purchase or sale of securities. The fees we charge are negotiable and vary depending upon the particular services we perform and the complexity and extent of the work we provide. We may charge a minimum fee for small accounts, as explained in Item 5, subsection 1 above. Other than these minimum fee requirements, there are no other requirements for maintaining the account. All fees are payable to us only after we perform the services; we do not require our clients to pay our fees in advance. Under the majority of our investment advisory engagements, clients authorize us to deduct fees from their investment accounts after they are notified. Under some engagements, the client pays our fees from other sources. The method of payment of our fees is subject to negotiation, and clients have the ability to choose the method of payment, depending on the type of service. For most of our accounts, we bill monthly in arrears. Under some client contracts, we bill the client quarterly. For some services, we bill the client on a one-time basis only when we complete the service. For services we provide, other than those under MAP, clients are responsible for their own brokerage, sub- advisory, custody and legal fees and taxes, if any. For the services we provide under our MAP, we charge clients a wrap fee. The wrap fee covers fees payable to the portfolio managers of the funds we choose for our MAP and the fee we pay to the custodian for MAP for custodial and administrative services. The portion of the wrap fee paid to portfolio managers of mutual funds generally is in the form of the expense ratios and is deducted automatically by the mutual fund company from the assets invested in the funds. We receive the remainder of the wrap fee, and apply a portion of the fee to pay the custodian pursuant to agreements between the custodian and us. We no longer offer MAP to new clients; a copy of the MAP wrap fee program brochure is available upon request. We have a wholly-owned subsidiary, PFM Fund Distributors, Inc., which is a broker-dealer under the Securities Exchange Act of 1934. PFM Fund Distributors, Inc. typically serves as exclusive distributor of shares of PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 8 registered investment companies and local government investment pools (Pooled Funds) for which we serve as investment adviser and/or administrator and we receive fees from this arrangement, as more fully described in Item 10, below. No supervised person of our affiliated broker-dealer is compensated for the sale of securities. PFMAM employees are paid a base salary plus a year-end bonus. The annual bonus is dependent upon the profitability of the firm, each group’s contribution to the overall profitability of the firm, and each individual’s contribution to the group’s success. Thus, PFMAM personnel may receive a portion of their bonus based on marketing success which could include revenue derived from investment transactions. The firm’s compensation plan is intended to recognize and reward excellent performance on the part of individuals; however, no PFMAM employee is compensated on a commission-related basis. Managing Directors also may have the obligation to buy equity in PFM as part of the bonus process. Item 6 - Performance-Based Fees and Side-By-Side Management In rare instances, we enter into advisory agreements under which the client pays us a fee, part of which is performance based. For example, we have entered into agreements where the client pays us all or part of our fee to the extent that the performance of the portfolio we manage exceeds a predetermined benchmark, measured over a designated period of time. We manage both accounts that are charged a performance-based fee and accounts which are charged other fees, typically a percentage of the value of assets managed. To address any concern that we may have an incentive to favor certain investment opportunities for a performance-based account, we follow written procedures designed to allocate trades on an equitable basis considering the investment objectives of the account and without regard to whether an account has a performance-based fee. Accounts with the same objectives and permitted investments should receive a fair allocation of trades over time. Item 7 - Types of Clients PFMAM provides investment advisory services to institutional investors, including state and local governments and their agencies, local government investment pools, non-profit organizations, pension and OPEB funds and corporations. For information concerning minimum fee requirements, please see Item 5 above. Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss Fixed-Income Portfolios – Analysis and Strategy Overall strategies are developed by the Fixed-Income Investment Committee which considers the macroeconomic and interest rate conditions described below. The strategies provide guidance for portfolio managers with regard to appropriate duration and sector allocation targets for individual portfolios. We use a variety of analyses as well as internal and external data sources and market research. External sources include various news and information sources, books, governmental bulletins, data bases, research prepared by others and publications from rating agencies, unaffiliated broker-dealers and third-party information providers. We also collect information from clients to determine their liquidity requirements, risk tolerances and any other policies or procedures that guide the investment of the client’s assets. Within the investment objectives and other requirements of the particular client, for clients whose objectives are measured by total return or income our investment approach emphasizes the use of active management strategies that seek to add value while limiting market and credit risk. For liability-driven investment portfolios, such as those funded with bond proceeds and used to pay project costs, we identify securities whose cash flows are expected to PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 9 meet a draw schedule and we modify the portfolio as the draw schedule changes or as investment opportunities present themselves, although in the latter case the draw schedule is considered when making modifications. Our Fixed-Income Active Management Process The following describes our fixed-income investment strategy:  Disciplined decision making process;  Duration positioning to manage risk: generally manage durations so they are close to relevant benchmarks, policy of no more than +/- 25% of a related benchmark, which is designed to protect the market value of the portfolio; and  Seeks out relative value through spread analysis, yield curve positioning, sector weightings and duration management. We use top-down analysis to assess macroeconomic conditions including interest rates, the shape of the yield curve, Federal Reserve monetary policy, and current and historical yield spreads between sectors. Top-down analysis is a key element of our duration and sector allocation decision-making process. We believe identifying macro-level trends in these areas is important for adding value, controlling risk, and lowering volatility. We use a careful bottom-up approach to security selection that seeks to identify those industries and issuers with fundamental characteristics and financial strength that enhances their potential to perform well. We seek to combine fundamentally sound investments into a portfolio that optimizes return potential in consideration of investment guidelines or restrictions. Lastly, we incorporate low-risk active management techniques designed to enhance our relative value approach. We believe active management can capture market inefficiencies that create opportunities for return enhancement. While we expect that every security we buy will be suitable to hold to maturity, we frequently identify opportunities to swap one investment for another to increase earnings, adjust portfolio duration, improve liquidity, or restructure a portfolio to better meet future needs. Many of the accounts we manage are short and intermediate-term fixed-income assets of governmental entities, so we have tailored our research capabilities and resources to this area of the market. Our portfolio managers and analytical team have access to three major on-line market trading systems: Bloomberg, MarketAxess, and TradeWeb. These systems provide active market quotes, including real-time securities pricing services. We also have access to news from Dow Jones, the Associated Press, Bloomberg News, and several specialized news services. In addition, we communicate daily with approximately 30 major government securities dealers and receive market information from them that assists us in identifying specific market opportunities. We supplement these external systems and data sources with proprietary trading tools which we have developed. After factoring in a conservative posture of selecting investment maturities to meet cash flow requirements, we will position a portfolio’s duration to take advantage of expected interest rate movements: positioning with a shorter bias when we expect rates to rise and longer when we expect rates to fall. We establish a duration (or average maturity) target for the portfolio based on our macro view of the economy and the financial markets, the type of funds, cash-flow analysis and benchmark chosen by a client. We seek to add value by re-balancing the portfolio to take advantage of market opportunities and in anticipation of interest rate movements. Duration limits are established by our Fixed-Income Investment Committee and may be provided to and evaluated with our clients’ staff on a regular basis as a management and oversight tool. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 10 While maintaining the target duration range for a portfolio, we add value through asset allocation strategies which involve sector selection (security type), curve placement (maturity), spread analysis and issue selection (individual issuer). Our overall view of the financial markets provides the context for selecting maturities which represent the best relative value along the yield curve and the highest potential for enhanced return by “rolling down the curve” and for selecting specific securities within a sector. We perform extensive proprietary analysis on the yield curve to identify “cheap” areas of the curve, and to evaluate a variety of portfolio structures. Using the results of this analysis, our portfolios are frequently over-weighted in certain maturities, and are structured in either a “bullet”, “barbell” or “laddered” construct to provide optimal performance. We think there is a significant opportunity to enhance earnings with a strategy that focuses on the selection of securities based on relative value. Sectors are selected which represent the best relative value based on our sector outlook and historical sector spreads. Investments other than Treasuries are purchased when spreads are wide and avoided or swapped out when spreads are narrow. Our portfolio managers and traders are assigned to specific market sectors in order to monitor products and opportunities and these responsibilities run across all portfolios. Individual issues are selected based on our assessment of issuer financial quality and rating trends, interest rate spread, credit trends, issue structure and liquidity. Portfolios are generally diversified by security type and maturity to avoid a significant investment in a single issuer and to accommodate varying cash flow needs to provide periodic liquidity. Fixed-Income Portfolios – Risk Our fixed-income strategies, like all investment strategies, involve certain risks. For portfolios whose investments are limited to obligations of the U.S government we believe the risk of default is minimal; for those invested in obligations of Federal agencies, we believe the risk is nearly as low as it is for direct obligations of the U.S. government. Portfolios whose investments include corporate and municipal obligations are subject to the risk that an issuer will fail to pay principal or interest on a timely basis, while those containing mortgage-backed securities are subject to the risk of uncertain timing of principal payments. In order to manage risks, we seek to diversify portfolio holdings and we limit our investments in corporate and municipal obligations and in mortgage- backed securities to those that are high grade. Portfolios are also subject to interest rate risk. This is because the market value of securities changes as interest rates change, with a rise in rates reducing market values and a decline in rates increasing market values. Changes in interest rates affect longer maturity securities more than they affect shorter maturity securities. We manage this risk by varying the duration of portfolios other than those that are liability-driven in accordance with our outlook for interest rates, and by managing these portfolios within duration ranges. Nonetheless, investors should expect to experience interest rate volatility in short-term fixed income portfolios and total return volatility which can include unrealized losses in excess of periodic income in intermediate and longer-term portfolios. Although the investment strategies we employ do not involve significant or unusual risk beyond that of the general domestic fixed-income markets, investors need to recognize that investing in securities involves a risk of loss that the investor should be prepared to bear. Past performance is not a guarantee of future returns. The risk of our top-down strategy is that our macro view of the economy and financial markets is wrong and we position a portfolio’s duration or sector allocation in a manner that is not optimal. We seek to manage this risk by limiting variations from duration or maturity targets and by diversifying holdings among security types. For liability-driven investment portfolios, we seek to minimize market risk by approximately matching portfolio cash flows with expected liabilities. The risk of our bottom-up strategy is that securities that we include in a portfolio because they are perceived to have relative value may later lose value when compared with other securities. We seek to manage this risk by PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 11 careful and systematic analysis of relative values by performing credit analysis on issuers of securities we recommend and by diversifying holdings. Frequent trading of securities can create higher overall transaction costs and these will reduce portfolio income. We do manage portfolios actively and we seek to minimize trading costs by recommending liquid issues that are actively traded in the markets and by utilizing competitive bidding wherever feasible. Stable value strategies are subject to many of the risks described above as well as those risks related to stable value contracts, which are designed to permit plan participant withdrawals relating to activities such as investment option transfers, withdrawals on account of a participant’s death, disability, retirement or other termination of employment, and in-service withdrawals in accordance with the plan, to occur at book value on the terms set forth in each contract. Stable value contracts typically include provisions that could serve to limit plan sponsor flexibility to implement desired plan changes. In addition, plan sponsors are obligated to notify the stable value manager of plan changes, in certain cases before changes are implemented. The obligations of providers of stable value contracts are those of the providers, not us. There is no guarantee that stable value contracts will continue to be valued at their contract value rather than market or fair value or that providers under stable value contracts will fulfill their obligations. If the assets under a stable value contract were revalued at their market values, for purposes of redeeming investments by participants in a retirement plan, this could cause a significant loss in value to the investor. Stable value contracts generally have terms that provide that certain contract withdrawals will not be paid by the provider at contract value, but would be subject to a market value adjustment to the contract value for withdrawals associated with specified events or circumstances, or when the provider determines that it could create a material adverse effect on its financial interests. While each contract’s terms may differ, events or circumstances which may trigger a market value adjustment can typically include all or some of the following: (1) amendments to the plan documents or plan’s administration; (2) additions of or changes to a plan’s competing investment options; (3) manager change; (4) complete or partial termination of the plan or merger of the plan with another plan; (5) a withdrawal resulting from an event initiated or directed by the plan sponsor (“employer initiated event”), e.g., withdrawals due to the removal of a group of employees from the plan’s coverage (such as a group layoff or early retirement incentive program), or the closing or sale of a subsidiary, employing unit or affiliate; (6) changes in law or regulation applicable to the plan; (7) the delivery of any communication to plan participants designed to influence a participant not to invest in the stable value account. In addition, certain stable value contracts typically provide for an adjustment to contract value if a security that is part of the covered assets defaults or otherwise has its credit risk deteriorate or becomes “impaired” as defined in the contract. Stable Value Contracts also define certain termination events, such as plan merger, bankruptcy of the plan or its sponsor, excessive impaired securities, changes in law or default by the plan under the contract, that permit the provider to terminate the contract at market value and the account will receive the market value of the covered assets as of the date of termination. The market for stable value contracts is not unlimited. There can be no assurance that sufficient Stable Value Contracts will be available in the future to replace or supplement existing contracts or, even if available, will be available on favorable financial terms. Certain Stable Value providers offer bundled arrangements, under which the provider has both the contract value obligation and the provider (or an affiliate) manages the underlying portfolio. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 12 Multi-Asset Class Asset Management – Analysis and Strategy The Multi-Asset Class Investment Committee plays a key role in the investment services delivered to clients by establishing asset allocation targets and approving managers/funds for all discretionary multi-asset class accounts. The Multi-Asset Class Investment Committee provides investment and portfolio risk oversight for investment decisions, and convenes regularly to discuss any changes necessary. We use a consistent approach to multi-asset class accounts that involves portfolio planning, risk assessment, asset allocation determination, manager selection, and performance reporting. The primary difference between discretionary and nondiscretionary types of accounts relates to who provides direction relating to the allocation of assets to separate account managers and the execution of mutual fund buy and sell transactions. For discretionary accounts, we are authorized to instruct the custodian to rebalance the portfolio, move assets among separate account managers and/or to arrange for the purchase or sale of mutual fund holdings. We believe that the asset allocation decision is the most important factor in determining the expected investment return of a portfolio. The strategies are implemented in multi-asset class accounts, largely by investing in mutual funds advised by advisers that are not affiliated with us. In MMST the strategies are implemented by allocating assets to Investment Sub-Advisers. Shares of MMST Funds may also make up a portion or all of the assets of a multi-asset class account. Compiling Capital Market Assumptions Portfolio strategies are based on Capital Market Assumptions that are determined by the Multi-Asset Class Investment Committee. Our assumptions are for intermediate- and long-term returns in a wide range of asset classes.  For the intermediate term (five years), our Capital Market Assumptions are derived from our assessment of current economic conditions, including corporate profits, balance sheets, and current valuations for various asset classes.  Our long-term assumptions (thirty years) are derived using an economic building block approach that projects economic and corporate profit growth, and that takes into consideration the fundamental factors driving long-term real economic growth, and our expectation for inflation, productivity and labor force growth. Engaging in a Portfolio Planning Survey We begin the asset allocation process by reviewing a detailed portfolio planning survey with a new client. The survey is designed to facilitate a discussion of all of the asset classes to determine which should be permitted in the final overall allocation. In addition, through a series of questions, the survey would bring to light information about goals, objectives, cash flow projections, risk tolerance, ability to withstand losses, as well as the view of the economy and the markets. In summary, the portfolio planning survey documents the level of expectations so that everyone understands the goals that have been set for the investment of the assets. The survey results are updated periodically during an ongoing engagement as client circumstances change. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 13 Determining Asset Allocation Structure The information from the portfolio planning survey and the Capital Market Assumptions is used to design and keep current an asset allocation plan for the client. We use a modeling program from Ibbotson Associates, along with an internally-built modeling program, which allows us to conduct a more detailed asset/liability modeling study. Each model uses the latest historical data on asset class investment returns, volatility, and correlation with other asset classes along with our Capital Market Assumptions to determine an "optimal" portfolio. Selecting an Appropriate Asset Mix A series of tests is run on each model to determine the probability of achieving the desired investment objective under different market scenarios. Existing funding requirements may override the more subjective “tolerance for loss.” We use this process, to help inform our clients of the range of possibilities associated with each asset allocation plan, and to identify a plan that best meets the expectations set forth in the portfolio planning survey. Investment Manager Selection Our research team is focused on monitoring the investment products included in our client portfolios. The research analysts are assigned to a specific asset class for which they are responsible. Both the research analysts and our Director of Research correspond with investment managers on a regular basis and meet with investment managers routinely to maintain an understanding of each manager’s investment process and strategy. As part of the ongoing manager due diligence, the research analysts run a series of risk/return statistics, peer universe analysis, portfolio attribution and style analysis on all of the investment strategies employed in our clients’ portfolios to ensure they continue to be an appropriate component of the overall portfolio. As a result, our research team is able to provide the clients with valuable information about potential investment managers. Rebalancing We evaluate a client’s portfolio regularly to determine the need for rebalancing the portfolio based on factors including current allocation targets, perceived assessment of relative value, and changes in Capital Market Assumptions. For multi-asset class portfolios where we have discretion we establish target levels for each asset class in the planning stages along with a minimum /maximum range and may update these as our Capital Markets Assumptions and market conditions change. These parameters are input into the client’s investment policy statement and are illustrated in the quarterly reports. We have invested in software that allows our staff to monitor compliance of a client’s portfolios. Ongoing Monitoring We monitor a client’s asset allocation, as well as the portfolio’s money managers/mutual funds on an ongoing basis through detailed analysis and our proprietary manager ranking system. For our discretionary accounts, we place a manager or fund on the watch list as a result of lagging performance, poor risk metrics and/or qualitative issues, among other things. Removal from the watch list is typically based on several quarters of improved performance against peers and an appropriate benchmark or remediation of other issues. If problems endure, probation is a subsequent step in the process of reviewing managers. Ultimately, if the problem persists, our Multi-Asset Class Investment Committee approves a termination recommendation. We continually evaluate the economy, financial markets, and correlation of asset classes to assess whether a client’s asset allocations are appropriate, and rebalance the portfolio if necessary. We regularly interview managers and visit their operations to ensure that they remain the most appropriate vehicle for our client’s investments. Strategic allocation decisions, rebalancing, and re-evaluating managers are all part of the ongoing monitoring process. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 14 Performance Reporting We provide performance reporting on a quarterly basis. Each client will receive a report containing its own performance measures allowing the client to review its plan and its investment managers’ performance versus the established benchmark, while monitoring cash flows and other financial indicators. The report includes a review of the economy, financial markets, and our investment strategy. We also organize quarterly conference calls/meetings to give a client a better understanding by hearing from the people who are making the asset allocation and investment manager decisions. Multi-Asset Class Asset Management – Risk Although the investment strategies we employ do not involve significant or unusual risk beyond that of the general markets for international and domestic equities, fixed income, publicly traded real estate, and other investments we recommend, investors need to recognize that investing in securities involves a risk of loss that an investor should be prepared to bear. In order to manage the risks inherent in these markets, we seek to diversify portfolios by blending equity, fixed income, and cash based securities, in a manner that is designed to meet the client’s risk tolerance, with the objective of reducing the risk of long term losses. Past performance is not a guarantee of future returns. Investing in cash, fixed income, and equity funds through separate account managers, mutual funds or ETFs involves risk. Each asset class has its own idiosyncratic risk and return characteristics. In modeling portfolios for our clients, we assess the individual characteristics of asset classes, from a historic and forward looking point of view, to optimize the best blend given the client’s investment objectives and tolerance for risk. Consulting Engagements – Analysis Strategy and Risk For multi-asset class consulting engagements where we do not have discretion, the methods and analysis generally are similar to those for discretionary accounts as described above. However, determining asset allocation, setting an appropriate asset mix and manager selection are the responsibilities of the client, and not us. We generally make recommendations and report the results of reviews at quarterly client meetings and follow client direction with regard to the selection of managers and re-balancing accounts. As directed by the client, managers may include those that are not approved for our discretionary accounts. In cases where a client directs assets to a manager that is not approved, the level of ongoing diligence we perform may be limited and clients acknowledge this in writing. Risk for these accounts is similar to risk for discretionary multi-asset class accounts. Item 9 - Disciplinary Information An investment advisor must disclose material facts about any legal or disciplinary event that is material to a client’s evaluation of our advisory business or the integrity of our management. We do not have any disclosure items of this nature. Item 10 - Other Financial Industry Activities and Affiliations Our wholly-owned subsidiary, PFM Fund Distributors, Inc. (PFMFD), is registered as a broker-dealer under the Securities Exchange Act of 1934. Its sole activities are to serve as exclusive distributor to the registered investment companies and local government investment pools (Pooled Funds) for which we serve as investment adviser and/or administrator. Marty Margolis, Debra Goodnight and Daniel Hess, management of our company, are registered principals of PFMFD. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 15 If our client invests in a Pooled Fund, we disclose this relationship to the client, through the Form ADV Part 2A and the offering statement for the Pooled Fund. In addition, where Pooled Funds are employed as part of our investment strategy, our investment advisory agreement with the client provides that if we invest client assets in a Pooled Fund, either we will not take these assets into account for purposes of calculating our fees under the client’s investment advisory agreement, or we will credit investment advisory fee we earn on the client’s Pooled Fund investment against investment advisory fees due us related to the client’s separately managed account that holds assets in the Pooled Fund. We serve 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. Additionally, we also serve as investment adviser to the MMST and the MMST Funds. We may enter into arrangements with a third party to compensate it for service it provides to us in our role as administrator to PFM Funds, or PFMFD’s role as distributor to PFM Funds and the MMST. Such compensation payable to the third party is paid out of the fee we receive from the Pooled Fund. We also serve as administrator and/or investment adviser to the following local government investment pools:  California Asset Management Trust (CAMP);  Colorado Statewide Investment Pool (CSIP);  Florida Education Investment Trust Fund (FEITF);  Illinois Trust;  Massachusetts Development Finance Agency Short-Term Asset Reserve Fund (Mass STAR);  Michigan Liquid Asset Fund Plus (MILAF+);  Minnesota Association of Governments Investing for Counties (MAGIC);  Minnesota School District Liquid Asset Fund Plus (MSDLAF+);  Missouri Securities Investment Program (MOSIP);  Nebraska Liquid Asset Fund (NLAF);  New Hampshire Public Deposit Investment Pool (NH PDIP)  New Jersey Asset & Rebate Management Program (NJ/ARM);  Pennsylvania Local Government Investment Trust (PLGIT);  Pennsylvania OPEB Trust (adviser and distributor only);  TexasTERM Local Government Investment Pool (TexasTERM);  Virginia State Non-Arbitrage Program (SNAP); and  Wyoming Government Investment Fund (WGIF). PFMFD serves as distributor to all of these pools except for WGIF. We have no arrangements with other investment advisers for direct or indirect compensation for recommending those advisors to our clients. As a matter of policy and practice, we do not accept any fees, commissions or other forms of compensation from any underlying money managers or other professionals affiliated with our client’s account. Item 11 - Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Under Rule 204A-1 of the Investment Advisers Act of 1940, our employees are subject to our Code of Ethics (Code). Compliance with the Code is a condition of employment for all of our employees. This Code sets out general ethical standards applicable to our employees. Employees are expected to maintain the highest ethical standards, embody a business culture that supports actions based on what is right rather PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 16 than expediency, deal fairly with clients and one another, protect confidential information and seek guidance about ethical questions. More specifically with respect to advisory activities, the Code requires that whenever our personnel act in a fiduciary capacity, we will endeavor to put the client’s interest ahead of the firm’s. We will disclose actual and potential meaningful conflicts of interest. We will manage actual conflicts in accordance with applicable regulatory and legal standards. If applicable regulatory and legal standards do not permit management of a conflict, we will seek to avoid the conflict. We will not engage in fraudulent, deceptive or manipulative conduct with respect to clients. We will act with appropriate care, skill and diligence. Our employees are required to know when we are acting as a fiduciary with respect to the work they are doing. If we are acting as a fiduciary, they are expected to comply with all fiduciary standards which apply to us in performing their duties. In addition, they must also put the client’s interest ahead of their own personal interest. An employee’s fiduciary duty is a personal obligation. While advisory personnel may rely upon subordinates to perform many tasks that are part of their responsibilities, they are personally responsible for fiduciary obligations even if carried out through subordinates. In general, the Code expresses our recognition of our responsibilities to the public, clients and professional associates. Our Code also contains various reporting, disclosure and approval requirements regarding employees' personal securities transactions. The Code requires that our employees whom we deem to be "Access Persons" must report all personal securities transactions, including transactions in mutual funds advised by us, to our Chief Compliance Officer, or to the person he designates. Additionally, certain designated Access Persons are required to pre-clear personal securities transactions. We prohibit our Access Persons from participating in initial public offerings unless our Chief Compliance Officer gives his approval. We also prohibit our employees from purchasing any municipal securities within 60 days of their issue date, if our affiliates PFM, Inc. or PFMFA served as municipal advisor for the bond issue. You can receive a copy of our Code by contacting us at 213 Market Street, Harrisburg, PA 17101, by calling 717-231-6200 or by emailing pfmamrequest@pfm.com. On infrequent occasions, our employees may invest in securities that coincidentally we also recommend for purchase or sale in our client accounts. The securities we recommend for purchase and sale within our fixed- income and multi-asset class portfolios are of the type which the Securities and Exchange Commission has expressly recognized as presenting little opportunity for the type of improper trading which compliance with the Code of Ethics reporting requirements is designed to uncover. Further, our employees are subject to our Code of Ethics described above, and because our personnel are acting in a fiduciary capacity, we require our employees to put the client’s interests ahead of their individual interests or that of the firm with respect to the purchase and sale of securities. Item 12 - Brokerage Practices We generally exercise brokerage discretion as follows: typically, our clients allow us to choose the broker or dealer to execute the trades. In these situations, we deal with brokers and dealers whom we determine to be major market makers for the types of securities purchased or sold. As a matter of policy, we do not recommend, request or require a client to direct us to execute transactions through a specified broker-dealer. If a client provides us with an approved list of brokers and dealers, we place all orders for the purchase or sale of securities for the client's account with those brokers or dealers and this may limit our ability to achieve the most favorable price or execution. Under these circumstances, the client and the broker or dealer determine the commission rates. The factors that we may consider in selecting or recommending a particular broker or dealer include: the execution, clearance and settlement capabilities of the firm; our knowledge of negotiated commission rates currently PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 17 available and other current transaction costs; the nature of the portfolio transaction; the size of the transaction; the desired timing of the trade; the activity existing and expected in the market for the particular transaction; confidentiality; the availability of research and research related services provided through such firms (as discussed below); our knowledge of the financial stability of the firm; and our knowledge of actual or apparent operational problems of the firm. Given these factors, our clients may pay transaction costs in excess of that which another firm might have charged for effecting the same transaction. When we select or recommend a firm that executes orders or is a party to portfolio transactions, relevant factors taken into consideration may also include whether that firm has furnished research and research related products and/or services. We receive a broad range of research services, including information on the economy, industries, groups of securities and individual companies, statistical information, market data, accounting and tax law interpretations, political developments, pricing and appraisal services, credit analysis, risk measurement analysis, performance analysis and other information which may affect the economy and/or security prices. They also may consist of computer databases. Currently, as a matter of policy, we do not enter into any third party or proprietary soft dollar arrangements where a broker-dealer provides research services in exchange for an expectation of receiving a certain dollar amount of commissions. From time to time some of these brokers offer us market commentary and data and statistical research reports as to factors which may influence market price movements. We believe that this information improves the quality of our investment and trading decisions for the benefit of all of our clients. We obtain express authorization from our clients 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 these particular brokerage firms may result from time to time in a less favorable price for a particular transaction than if we canvassed a broader range of brokers. However, we believe that the practice of taking into account the furnishing of market information is reasonable. For fixed-income securities, we seek to minimize the effect, if any, of research on the transaction costs by seeking multiple competitive bids and offers and involving major market makers wherever feasible, and use electronic trading platforms for a majority of trades to facilitate market access and in an effort to minimize transaction costs. We have 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, and we do not utilize soft dollar arrangements other than those activities explicitly authorized under Section 28(e) of the Securities Exchange Act of 1934. In the fixed-income and ETF markets, we may cause securities transactions to be executed for a client’s account concurrently with authorizations to purchase or sell the same securities or shares for other accounts we manage. It is our policy to aggregate the purchase or sale of securities or shares for various client accounts in order to achieve efficiency of execution and better pricing. Each client participating in an aggregate transaction will participate at the same price. Where we receive an allocation that is less than our order we normally allocate the securities or shares to the participating client accounts on a pro rata basis in proportion to the size of the orders placed for each account, to the extent that we can. We may increase or decrease the amount of securities or shares allocated to a client if necessary due to factors including avoiding odd lots in a particular security. With respect to ETFs, due to low trading volume or the established limit price for the trade order being reached, there may be times when a trade order goes unfilled or only partially filled. At the close of business on the trade date, any remaining trades that have not been filled by the broker will be terminated. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 18 Item 13 - Review of Accounts For our fixed-income accounts, our Fixed-Income Investment Committee meets generally on a monthly basis, or more frequently as necessary to review the overall strategic direction. This investment committee consists of portfolio managers, senior research staff and our chief investment officer. Shorter-term tactical approaches are presented routinely through a report and analysis prepared and distributed by a sector specialist and may be discussed at a meeting. These reports highlight interest rate trends and the relative value of different sectors and maturity structures in the market. Ad-hoc strategy discussions take place regularly, or after any significant market moving event, such as sudden changes in financial market conditions, general economic conditions, credit ratings downgrades, and/or the movement of a particular portfolio security through a price support or resistance level. Our fixed-income portfolio managers and traders are assigned specific accounts and review client portfolios on a daily basis. As part of daily practices, portfolio managers and traders discuss market developments, overall strategies, and the potential impact of pending economic announcements. During these sessions, portfolio managers review portfolios, upcoming maturities, and any expected large transactions. The Stable Value Investment Committee also meets monthly, or more frequently as necessary. The stable value portfolio managers and research analysts monitor client positions on a daily basis. They discuss daily cash positions, changes in issuers’ credit conditions, anticipated cash flow, economic conditions, potential liquidity needs and anticipated upcoming placements. For our multi-asset class accounts, our Multi-Asset Class Investment Committee meets generally on a monthly basis, or more frequently as necessary to review the overall strategic direction. This investment committee consists of portfolio managers, senior research staff and our chief investment officer. We monitor the performance of multi-asset class accounts, including our Managed Accounts Program (MAP), 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. We provide our 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, we will consult with the client to determine whether there are reasons to revise the client's target investment strategy. Changes in our Capital Market Assumptions, our outlook for asset class valuation, sudden changes in financial market conditions, and general economic conditions may trigger a review of our multi-asset class accounts. Accounts are reviewed by a principal or a portfolio manager in consultation with one of our principals. Normally, we sequence account reviews 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. We furnish monthly account summaries to each fixed-income portfolio client with assets under continuous management. The summaries include details of all transactions and holdings at the end of the period. We also provide account summaries on a daily basis on the Internet. We may also provide an investment advice memorandum upon advising and/or completing an order for a buy or sell of securities. Pursuant to our investment advisory agreements, we may also provide quarterly performance and economic reviews for some clients. The custodian of our multi-asset class portfolio clients, including our MAP 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. We review such statements monthly to determine whether transactions executed by the custodian PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 19 are in agreement with any instructions which we or the client provided. In addition, we provide monthly written statements and quarterly performance reports. Item 14 - Client Referrals and Other Compensation From time to time, we may enter into arrangements under which we agree to engage a third party to solicit or refer to us potential new investment advisory clients. Under these arrangements, we enter into a written agreement with the third party that describes the third party’s activities on our behalf and the amount we agree to pay the third party. The agreement also contains the third party’s undertaking to act in manner consistent with our instructions and with the provisions of the Investment Advisers Act of 1940, and to provide the referral with a copy of our Form ADV, Part 2A and Part 2B. If the referral subsequently enters into an investment advisory agreement with us, we pay the solicitor a percentage of our investment advisory fee, which fee arrangement is disclosed to the prospect by the solicitor prior to any contact or meeting with the prospect. Item 15 - Custody We do not have custody of client funds or securities. Item 16 - Investment Discretion We offer discretionary advisory services with respect to a client’s investable assets. When a client gives us investment discretion, we then have the authority to determine, without obtaining their specific approval, (1) overall asset allocation, (2) the manager or sub-adviser to be utilized for the portfolio, (3) the specific securities to be bought and sold, (4) the amount of securities to be bought and sold including overall asset allocation and (5) the broker or dealer through which the securities are bought or sold. These decisions are subject to limitations of law and any other restrictions in the contract with our client, or in our client’s investment policies. Many of our clients have their own investment policies, which usually contain restrictions on the types and credit quality of investments. We agree contractually to follow those guidelines. In addition, many of our clients are subject to state investment statutes, which we comply with as well. Our clients typically grant us discretionary authority in the investment advisory agreement which we enter into with them. Item 17 - Voting Client Securities We provide to certain of our clients discretionary investment advice on securities which are mutual funds. These mutual funds send us proxies, which we vote on behalf of these discretionary clients if they have given us the authorization to vote them. We also occasionally receive consent requests. Generally, we arrange for the portfolio manager overseeing the client’s investments to be responsible for making all proxy-voting decisions. We seek to vote proxy proposals, consents or resolutions in a manner that serves the best interests of our clients. When reviewing whether a proposed action would be in our client’s best interests, we take into account the following factors:  The impact on the valuation of securities;  The anticipated costs and benefits associated with the proposal;  An increase or decrease in costs, particularly management fees, of investment in the securities;  The effect on liquidity; and  Customary industry and business practices. PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 20 In reviewing proxy issues of the type described below, we will apply the following general principles:  With respect to an election of directors, we will typically vote in favor of the management-proposed slate of directors, unless there is a proxy contest for seats on the board of a portfolio fund or other important reasons for withholding votes for directors. We may abstain if there is insufficient information about the nominees disclosed in the proxy statement.  Similarly, we will also generally support management’s recommendation for the appointment of auditors, unless there are reasons for us to question the independence or performance of the nominees.  We will vote in accordance with management’s recommendations on issues that are technical and administrative in nature, such as changes to increase the number of directors or to adopt term limits. However, we review and vote on a case-by-case basis any non-routine proposals which are likely to affect the structure and operation of the portfolio company. Examples of these types of proposals include any limitations on shareholder rights, or those which have a material economic effect on the company.  We will generally vote in favor of proposals that give shareholders a greater vote in the affairs of the company and oppose any measure that seeks to limit those rights.  We also support proposals promoting transparency and accountability within a company to ensure that the directors fulfill their obligations to shareholders.  We review proposals that result in an increase of compensation to investment advisors and other service providers of portfolio mutual funds on a case-by-case basis, with particular emphasis on the relative performance of the fund.  We also review proposals relating to executive compensation plans to ensure that the long-term interests of management and shareholders are properly aligned.  We generally oppose proposals to give shareholders the right to vote on executive compensation. These policies are not exhaustive due to the variety of proxy voting issues that we may be required to consider. With the exception of a client’s shareholdings in the Pooled Funds, a conflict of interest between us, and a client whose investments are managed by us, is unlikely. We are the investment advisor to the Pooled Funds. We either receive no investment advisory fee from a client for managing client assets which we invest in the Pooled Funds, or we credit to the client any investment advisory fee we receive from the Pooled Funds investment. In regard to the voting of securities in the Pooled Funds for which we are the investment advisor (or where it would appear that we have an interest), we apply the following principles:  If the proposal relates to the matters in which the outcome does not directly affect us, we will follow our general voting policies.  If the proxy proposal relates to a transaction which directly affects us, or otherwise requires a case- by-case determination by us under our voting policies, we will seek the advice either of the managers of the client or of a qualified, independent third party, and we will submit the proxy PFM Asset Management LLC IARD/CRD No: 122141 Form ADV Part 2A SEC File No.: 801- 60449 Brochure 3/29/2019 21 statement to them. We will then follow the decision of our client’s management or the recommendation of the third party in voting the proxy. We maintain records relating to all proxy voting for five years. We will provide information to any client about how we voted proxies for securities in the client’s account. Our Proxy Voting Policy is available upon request by contacting us at 213 Market Street, Harrisburg, PA 17101, by calling 717-231-6200 or by emailing pfmamrequest@pfm.com. Under certain of our engagements, we do not assume the responsibility for voting proxies on client securities. The clients make arrangements to receive proxies from their custodian. In the event that we receive a proxy and we do not have authority to vote on it, we forward it to our client. Clients may contact the portfolio manager for their account if they have questions about a particular solicitation. Item 18 - Financial Information We are not aware of any financial condition that is reasonably likely to impair our ability to carry out our commitments and responsibilities under our client contracts. FORM ADV PART 2B BROCHURE SUPPLEMENT PFM ASSET MANAGEMENT LLC 213 Market Street Harrisburg, PA 17101-2141 717-231-6200 (phone) www.pfm.com SEC File No. 801-60449 March 29, 2019 Marc D. Ammaturo* Robert H. Cheddar, CFA Sandra A .Costa** Joseph W. Creason Michael P. Downs, CFA Matthew R. Eisel, CFA Wayne Gates, CFA, CRPC, QPFC** Christopher Harris, CFA, CAIA Biagio Manieri, CFA* Martin P. Margolis David J. Molin, CFA** Kristine R. Pavelchak** Jeffrey H. Rowe, CFA Kenneth R. Schiebel, CFA James P. Sims, CFA John S. Spagnola* David W. Starr* Kerri L. Staub Muskin Michael R. Varano This Brochure Supplement provides information about our personnel listed above and supplements the PFM Asset Management LLC brochure. You should have received a copy of that brochure. Please contact our Compliance Department at 717.231.6200, or contact us by emailing pfmamrequest@pfm.com if you did not receive our Firm’s brochure or if you have any questions about the contents of this supplement. *Messrs. Ammaturo, Manieri, Spagnola and Starr are based in the Firm’s Philadelphia, Pennsylvania Office, which is located at: 1735 Market Street, 43rd Floor, Philadelphia, PA 19103; 215.567.6100 (telephone). Mr. Gates, Ms. Costa and Ms. Pavelchak are based in the Firm’s Wallingford, Connecticut Office, which is located at 1062 Barnes Road, Suite 202, Wallingford, CT 06492; 203-269-0440 (telephone). Updated as of 3/29/19 Table of Contents Educational Background and Business Experience 1 Disciplinary Information 8 Other Business Activities 9 Additional Compensation 10 Supervision 11 Updated as of 3/29/19 1 Educational Background and Business Experience Item 2 Item 2 of Form ADV, Part 2B asks us to disclose background in education and business for our supervised persons who formulate the various types of investment advice we offer. Most types of our investment advice are provided to you by a team of more than five individuals. We have prepared background information for the team members who have the most responsibility for the advice the team prepares. We have provided the person’s name, year of birth, formal education after high school, and business background (including an identification of the specific positions held) for the preceding five years of our supervised persons. Also listed are certain professional designations held by the supervised person. An explanation of the minimum qualifications required for each designation is included so you may better understand the value of the designation. FIXED INCOME PORTFOLIOS Robert H. Cheddar, CFA Year of Birth: 1966  Formal Education after High School • Susquehanna University, Selinsgrove, PA, Bachelor of Science, Business, Graduated 1988 • Pennsylvania State University, Malvern, PA, MBA, Graduated 2003  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Senior Portfolio Manager, 1/2004 – 1/2011; Managing Director, 1/2011 – Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Joseph W. Creason Year of Birth: 1976  Formal Education after High School • Shippensburg University, Shippensburg, PA, Bachelor of Science, Finance, and Bachelor of Science, Economics, Graduated 2000  Business Background for the Previous Five Years • PFM Asset Management LLC / Public Financial Management Inc., Harrisburg, PA, Portfolio Trader, 7/2000 –7/2009; Portfolio Manager, 07/2009 – 1/2017; Director, 2/2017—Present Michael P. Downs, CFA Year of Birth: 1964  Formal Education after High School • The Ohio State University, Columbus, OH, Bachelor of Science, Finance and Accounting, Graduated 1987 • The Ohio State University, Columbus, OH, Master of Business Administration, Finance, Graduated 1991  Business Background for the Previous Five Years • Hughes Capital Management, Inc., Alexandria, VA, Portfolio Manager, 06/2005 – 02/2014, PFM Asset Management LLC, Harrisburg, PA, Portfolio Manager, 04/2014 – Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Martin P. Margolis Year of Birth: 1944  Formal Education after High School • University of Pennsylvania, Philadelphia, PA, Bachelor of Arts, History, Graduated 1966 • University of Pennsylvania, Philadelphia, PA, Graduate School, History 1967-1972  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Managing Director, President, 1/2003 – Present; Public Financial Management, Inc., Harrisburg, PA, Managing Director, 1/1987 – 1/2003 Updated as of 3/29/19 2 Jeffrey H. Rowe, CFA Year of Birth: 1982  Formal Education after High School • Pennsylvania State University, University Park, PA, Bachelor of Science, Finance, and a Minor in Supply Chain and Information Systems Technology, Graduated 2005  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Portfolio Trader, 5/2005 – 5/2010; Portfolio Manager, 5/2010 – 1/2017; Managing Director, 2/2017—Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Kenneth R. Schiebel, CFA Year of Birth: 1959  Formal Education after High School • University of Michigan, Ann Arbor, MI, Bachelor of Arts, Mathematics & Computer Science, Graduated 1981  Business Background for the Previous Five Years • PFM Asset Management LLC / Public Financial Management, Inc., Harrisburg, PA, Managing Director, 1/1994 – Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. James P. Sims, CFA Year of Birth: 1970 Formal Education after High School • Georgia State University, Atlanta, GA, Bachelor of Business Administration, Finance, Graduated 1993 • Georgia State University, Atlanta, GA, Masters of Science, Finance, Graduated 1997 Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Senior Portfolio Manager, 02/2016 – Present; Columbia Management Investment Advisers, LLC, Portland, OR, Portfolio Manager, 09/2010 – 01/2017; Director, 2/1/2017—Present Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item.  Kerri L. Staub Muskin Year of Birth: 1983  Formal Education after High School • Pennsylvania State University, Harrisburg, PA, Bachelor of Science, Business Management, Graduated 2006  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Portfolio Trader, 6/2007 – 7/2012; Portfolio Manager, 7/2012 – 1/2017; Director, 2/2017—Present Michael R. Varano Year of Birth: 1952  Formal Education after High School • Bloomsburg University, Bloomsburg, PA, Bachelor of Science, Business Management & Accounting, Graduated 1974  Business Background for the Previous Five Years • PFM Asset Management LLC / Public Financial Management, Inc., Harrisburg, PA, Managing Director, 1/1987– Present Updated as of 3/29/19 3 MULTI-ASSET CLASS MANAGEMENT Marc D. Ammaturo Year of Birth: 1974  Formal Education after High School • The Pennsylvania State University, State College, PA, Bachelor of Science, Accounting, Graduated 1996 • Maryland University, College Park, MD, Masters of Business Administration, Finance, Graduated 2004  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Research Analyst, 1/2005 - 1/2007; Senior Managing Consultant, 1/2007 - 1/2012; Managing Director, 1/2012 – Present Biagio Manieri, Ph.D., CFA Year of Birth: 1960  Formal Education after High School • City College of the City University of New York, New York, NY, Bachelor of Science, Electrical Engineering, Graduated 1983 • Columbia University, New York, NY, Doctor of Philosophy, International Relations, Graduated 1995  Business Background for the Previous Five Years • PFM Asset Management LLC, Philadelphia, PA, Director of Research, 1/2012 – Present; Federal Reserve System, Investment Officer, 3/2005-01/2017; Managing Director, 2/2017—Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Martin P. Margolis Year of Birth: 1944  Formal Education after High School • University of Pennsylvania, Philadelphia, PA, Bachelor of Arts, History, Graduated 1966 • University of Pennsylvania, Philadelphia, PA, Graduate School, History 1967-1972  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Managing Director, President, 1/2003 – Present; Public Financial Management, Inc., Harrisburg, PA, Managing Director, 1/1987 – 1/2003 Kenneth R. Schiebel, CFA Year of Birth: 1959  Formal Education after High School • University of Michigan, Ann Arbor, MI, Bachelor of Arts, Mathematics & Computer Science, Graduated 1981  Business Background for the Previous Five Years • PFM Asset Management LLC / Public Financial Management, Inc., Harrisburg, PA, Managing Director, 1/1994– Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Updated as of 3/29/19 4 John S. Spagnola Year of Birth: 1957  Formal Education after High School • Yale University, New Haven, CT, Bachelor of Arts, Political Science, Graduated 1980  Business Background for the Previous Five Years • PFM Asset Management LLC, Philadelphia, PA, Managing Director, 1/2003 – Present STRUCTURED PRODUCTS Matthew R. Eisel, CFA Year of Birth: 1983  Formal Education after High School • University of South Carolina, Bachelor of Science, Entrepreneurial Management, Finance, and Risk Management & Insurance, Graduated 2005  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Consultant, 7/2005-7/2009; Senior Managing Consultant, 7/2009-10/2012; Director, 10/2012-1/2015; Managing Director, 2/2015 – Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Christopher M. Harris, CFA, CAIA Year of Birth: 1986  Formal Education after High School • Dickinson College, Carlisle, PA, Bachelor of Arts, Economics, Graduated 2008  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Analyst, 6/2008—12/2012; Senior Managing Consultant, 1/2013 – 1/2017; Director; 2/2017—Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. • Chartered Alternative Investment Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Martin P. Margolis Year of Birth: 1944  Formal Education after High School • University of Pennsylvania, Philadelphia, PA, Bachelor of Arts, History, Graduated 1966 • University of Pennsylvania, Philadelphia, PA, Graduate School, History 1967-1972  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Managing Director, President, 1/2003 – Present; Public Financial Management, Inc., Harrisburg, PA, Managing Director, 1/1987 – 1/2003 Updated as of 3/29/19 5 Kenneth R. Schiebel, CFA Year of Birth: 1959  Formal Education after High School • University of Michigan, Ann Arbor, MI, Bachelor of Arts, Mathematics & Computer Science, Graduated 1981  Business Background for the Previous Five Years • PFM Asset Management LLC / Public Financial Management, Inc., Harrisburg, PA, Managing Director, 1/1994 – Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. CERTIFICATES OF DEPOSIT/FIXED TERM INVESTMENTS Robert H. Cheddar, CFA Year of Birth: 1966  Formal Education after High School • Susquehanna University, Selinsgrove, PA, Bachelor of Science, Business, Graduated 1988 • Pennsylvania State University, Malvern, PA, MBA, Graduated 2003  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Senior Portfolio Manager, 1/2004 – 1/2011; Managing Director, 1/2011 – Present  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Kerri L. Staub Muskin Year of Birth: 1983  Formal Education after High School • Pennsylvania State University, Harrisburg, PA, Bachelor of Science, Business Management, Graduated 2006  Business Background for the Previous Five Years • PFM Asset Management LLC, Harrisburg, PA, Portfolio Trader, 6/2007 – 7/2012; Portfolio Manager, 7/2012 – 1/2017; Director, 2/2017—Present Michael R. Varano Year of Birth: 1952  Formal Education after High School • Bloomsburg University, Bloomsburg, PA, Bachelor of Science, Business Management & Accounting, Graduated 1974  Business Background for the Previous Five Years • PFM Asset Management LLC / Public Financial Management, Inc., Harrisburg, PA, Managing Director, 1/1987– Present STABLE VALUE PRODUCTS David W. Starr Year of Birth: 1957  Formal Education after High School • Duke University, Durham, NC, Bachelor of Arts, Economics, Graduated 1979  Business Background for the Previous Five Years • PFM Asset Management LLC, Philadelphia, PA, Managing Director, 8/2015 – Present; Goldman Sachs, Inc., Managing Director, 5/2012—10/2013; Dwight Asset Management, 12/1989—5/2012 Updated as of 3/29/19 6 Wayne Gates Year of Birth: 1954  Formal Education after High School • Salem State University, Bachelor of Arts, Economics, Graduated 1976 • Boston College, Master of Arts, Economics, Graduated 1978  Business Background for the Previous Five Years • PFM Asset Management LLC, Wallingford, CT, Chief Investment Officer, Stable Value, 12/2017 - Present; Fiduciary Capital Management, Inc., President 1/2014-12/2017; Executive Vice President and Chief Investment Officer 11/2012-12/2013  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. • Chartered Retirement Planning Counselor. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. • Qualified Plan Financial Consultant. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Sandra A. Costa Year of Birth: 1976  Formal Education after High School • Post University, Bachelor of Science in Finance, Graduated 1998  Business Background for the Previous Five Years • PFM Asset Management LLC, Wallingford, CT, Portfolio Manager, Stable Value, 12/2017 – Present; Fiduciary Capital Management, Inc., Portfolio Manager 5/1998 – 12/2017 Robert J. McEvitt Year of Birth: 1952  Formal Education after High School • Union College, New York, B. A. in English, Graduate 1974  Business Background for the Previous Five Years • PFM Asset Management LLC, Wallingford, CT, Portfolio Manager, 12/2017 – Present; Fiduciary Capital Management, Inc., Executive Vice President and Portfolio Manager, 2/1975 - 12/2017 David J. Molin Year of Birth: 1970  Formal Education after High School • Bentley University, Bachelor of Science in Finance, Graduated 1992  Business Background for the Previous Five Years • PFM Asset Management LLC, Wallingford, CT, Director of Research, Stable Value, 12/2017 – Present; Fiduciary Capital Management, Inc., Senior Vice President and Director of Research and Enterprise Risk Management, 6/2000 – 12/2017  Certifications • Chartered Financial Analyst. An explanation of the minimum qualifications required for this designation is provided at the conclusion of this Item. Kristine R. Pavelchak Year of Birth: 1980  Formal Education after High School • School of Business University of Connecticut, Risk Management and Insurance, Graduated 2002  Business Background for the Previous Five Years • PFM Asset Management LLC, Wallingford, CT, Trader, 12/2017 – Present; Fiduciary Capital Management, Inc., Senior Assistant Portfolio Manager and Research Assistant, 8/2006 – 12/2017 Updated as of 3/29/19 7 SUMMARY OF PROFESSIONAL DESIGNATIONS This Summary should assist you with evaluating the professional designations and the minimum requirements that an individual must meet in order to hold this designation. CFA – Chartered Financial Analyst This designation is issued by the CFA Institute (www.cfainstitute.org). A candidate must meet one of the following prerequisites in order to participate in the CFA program: 1) Have obtained an undergraduate degree and have 4 years of professional experience involving investment decision-making; or 2) Have 4 years of full-time qualified work experience. The educational requirements that must be completed involve 250 hours of study for each of the 3 levels, and there are 3 course exams. There are no continuing education requirements. CAIA – Chartered Alternative Investment Analyst This designation is issued by the Chartered Alternative Investment Analyst Association (www.caia.org). In order to participate in the CAIA program, a candidate must: 1) Hold a bachelor’s degree or the equivalent, and have more than one year of professional experience (defined as full-time employment in a professional capacity within the regulatory, banking, financial, or related field); or 2) Have at least four years of professional experience. The educational requirements that must be completed involve 200 hours of study for each of the 2 levels, and there are 2 course exams. There is a continuing education requirement every three years. CRPC – Chartered Retirement Planning Counselor This designation is awarded by The College for Financial Planning. In order to participate in the CRPC individuals must have completed a course of study of investments, insurance, tax, retirement and estate planning issues. The program is designed for 120-150 hours of self-study. The program is self-paced and must be completed in one year from enrollment. Individuals are required to pass an online, timed and proctored end-of-course examination with a score of 70% of higher. Credentials must be renewed every two years by completing 16 hours of continuing education. QPFC – Qualified Plan Financial Consultant This designation is the professional credential for financial professionals who sell, advise, market or support qualified retirement plans. QPFC is not an entry-level credential. A minimum of two years’ experience in retirement plan related matters is required along with completion of ASPPA’s QPA examination series which includes completion of the Plan Financial Consulting Part 1 and Part 2. A candidate must meet one of the following additional requirements: Series 6, 7 or 65 license issued by FINRA and two letters of reference demonstrating at least two years of retirement plan related experience; or state-life or annuity insurance license and two letters of reference demonstrating at least two years of retirement plan related experience; or Investment Advisor Representative or Registered Investment Advisor credential and two letters of reference demonstrating at least two years of retirement plan related experience; or two letter of reference demonstrating at least three years of retirement plan experience. Credentialed members must acquire 40 hours of Continuing Education credits (2 of these must be Ethics) in a two-year cycle as well as renew ASPPA membership annually to retain credentials. Updated as of 3/29/19 8 Disciplinary Information Item 3 If there are legal or disciplinary events material to your evaluation of the supervised person, Item 3 requires us to disclose all material facts regarding those events. A. A criminal or civil action in a domestic, foreign or military court of competent jurisdiction in which the supervised person 1. was convicted of, or pled guilty or nolo contendere (“no contest”) to (a) any felony; (b) a misdemeanor that involved investments or an investment-related business, fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, or extortion; or (c) a conspiracy to commit any of these offenses; 2. is the named subject of a pending criminal proceeding that involves an investment-related business, fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses; 3. was found to have been involved in a violation of an investment-related statute or regulation; or 4. was the subject of any order, judgment, or decree permanently or temporarily enjoining, or otherwise limiting, the supervised person from engaging in any investment-related activity, or from violating any investment-related statute, rule, or order. Not applicable. None of the personnel listed in Item 2 above has ever been subject to any such criminal or civil action. B. An administrative proceeding before the SEC, any other federal regulatory agency, any state regulatory agency, or any foreign financial regulatory authority in which the supervised person 1. was found to have caused an investment-related business to lose its authorization to do business; or 2. was found to have been involved in a violation of an investment-related statute or regulation and was the subject of an order by the agency or authority (a) denying, suspending, or revoking the authorization of the supervised person to act in an investment- related business; (b) barring or suspending the supervised person's association with an investment-related business; (c) otherwise significantly limiting the supervised person's investment-related activities; or (d) imposing a civil money penalty of more than $2,500 on the supervised person. Not applicable. None of the personnel listed in Item 2 above has ever been subject to any such administrative proceeding. C. A self-regulatory organization (SRO) proceeding in which the supervised person 1. was found to have caused an investment-related business to lose its authorization to do business; or 2. was found to have been involved in a violation of the SRO’s rules and was: (i) barred or suspended from membership or from association with other members, or was expelled from membership; (ii) otherwise significantly limited from investment-related activities; or (iii) fined more than $2,500. Not applicable. None of the personnel listed in Item 2 above has ever been subject to any such proceeding by an SRO. D. Any other proceeding in which a professional attainment, designation, or license of the supervised person was revoked or suspended because of a violation of rules relating to professional conduct. If the supervised person resigned (or otherwise relinquished his attainment, designation, or license) in anticipation of such a proceeding (and the adviser knows, or should have known, of such resignation or relinquishment), disclose the event. Not applicable. None of the personnel listed in Item 2 above has ever been subject to any such suspension or revocation. Updated as of 3/29/19 9 Other Business Activities Item 4 A. If the supervised person is actively engaged in any investment-related business or occupation, including if the supervised person is registered, or has an application pending to register, as a broker-dealer, registered representative of a broker-dealer, futures commission merchant (“FCM”), commodity pool operator (“CPO”), commodity trading advisor (“CTA”), or an associated person of an FCM, CPO, or CTA, we are required to disclose this fact and describe the business relationship, if any, between the advisory business and the other business. We have a wholly owned subsidiary, PFM Fund Distributors, Inc. (“PFMFD”), which is a broker-dealer under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority (“FINRA”). PFMFD serves as exclusive distributor of shares of registered investment companies and local government investment pools (Pooled Funds) for which we serve as investment adviser and/or administrator and we receive fees from this arrangement. Messrs. Ammaturo, Eisel, Harris, Margolis, Schiebel, Spagnola, Starr and Varano are registered representatives of PFMFD. • If a relationship between the advisory business and the supervised person’s other financial industry activities creates a material conflict of interest with clients, describe the nature of the conflict and generally how you address it. If our client invests in a Pooled Fund, we disclose this relationship to the client, through our firm brochure (the Form ADV, Part 2A) and the offering statement for the Pooled Fund. In addition, if we have an investment advisory arrangement with a client to manage a separate account, our investment advisory agreement with the client provides that if we invest client assets in a Pooled Fund, we will not take these assets into account for purposes of calculating our fees for managing the separate account or we will credit investment advisory fees we earn on the client’s Pooled Fund investment against investment advisory fees due us related to the client’s separately managed account that holds assets in the Pooled Fund. • If the supervised person receives commissions, bonuses or other compensation based on the sale of securities or other investment products, including as a broker-dealer or registered representative, and including distribution or service (“trail”) fees from the sale of mutual funds, disclose this fact. If this compensation is not cash, explain what type of compensation the supervised person receives. Explain that this practice gives the supervised person an incentive to recommend investment products based on the compensation received, rather than on the client’s needs. Our PFMFD registered representatives listed in this Brochure Supplement do not receive commissions, bonuses or other compensation directly based on the sale of shares in the Pooled Funds. B. If the supervised person is actively engaged in any business or occupation for compensation not discussed in response to Item 4.A, above, and the other business activity or activities provide a substantial source of the supervised person’s income or involve a substantial amount of the supervised person’s time, disclose this fact and describe the nature of that business. If the other business activities represent less than 10 percent of the supervised person’s time and income, you may presume that they are not substantial. None of our supervised persons described in this Brochure Supplement engages in any other business or occupation which provides a substantial source of income or involves a substantial amount of time. Updated as of 3/29/19 10 Additional Compensation Item 5 If someone who is not a client provides an economic benefit to the supervised person for providing advisory services, generally describe the arrangement. For purposes of this Item, economic benefits include sales awards and other prizes, but do not include the supervised person’s regular salary. Any bonus that is based, at least in part, on the number or amount of sales, client referrals, or new accounts should be considered an economic benefit, but other regular bonuses should not. We do not have any arrangements in which someone other than a client provides any economic benefit to our supervised persons for providing advisory services. Updated as of 3/29/19 11 Supervision Item 6 Explain how you supervise the supervised person, including how you monitor the advice the supervised person provides to clients. Provide the name, title and telephone number of the person responsible for supervising the supervised person’s advisory activities on behalf of your firm. Marty Margolis as Chief Investment Officer and President of PFM Asset Management LLC oversees or participates in meetings of the committees which develop investment strategies for the various types of investment advice we offer to our clients. The strategies and advice developed by these committees are then marketed to our clients and prospects by the managing directors of our firm and our additional personnel. As the Chief Investment Officer of the firm, Mr. Margolis does not fall under the supervision of any individual, although he meets regularly with the other managing directors, the Firm’s Chief Compliance Officer, and the Board of Directors and officers of the Firm’s parent holding company. Mr. Margolis may be reached at 717.231.6200. Resumes Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 P aulina Woo M ana ging D i r ec t o r P F M As set M a na gement L L C P a uli na j oi ne d P F M ’s ass e t ma nag ement b us i n es s i n 200 7. S he ma nag es c l i e nt r e l at i o ns hi ps f or pu bli c ag enci es l ocat ed t hr o ugh ou t t h e we st er n U nit e d S tat es . H e r r es po n s i b i l i t i e s i nc l u de: i n ve st me nt ad vis o r y a nd c ons ul t i n g se rv i ces , c as h fl ow mode l i n g, p or t f o l i o s tr u ct ur i n g, econ omi c r es ear ch , t r easur y ma nag eme nt c on sul t i ng an d i n ve st men t po l i c y eval ua t i o n s . S h e wor ks wit h a d i ver se nu mbe r o f mu ni c i p al i t ies , i ns t i t ut i o ns o f hi gh er ed u c a t i o n a nd no n- pr o f i t o rga ni zat i o ns . P a uli na i s a f r equ en t sp eaker a t mun i cipa l c onf er e nc es a nd s e mina rs f or c l i en t s a nd b o ar d member s; cov er i n g su ch s ubj e ct s as bo n d pr o c e eds i n v e st me nt , bui l di ng a n i n v e stme nt p r og r am, pe r mi t t e d i n ve st men t s, de ve l o pment o f i nv es t ment p ol i ci es and i nt e r n al c on t r o l s, a nd ma nag i ng r is k i n p ubl i c i nvest men t . S h e i s a member o f t h e G ov er n men t F i nan ce O ff i c er s As soci at i o n (G F O A) an d i s an Advi so r member o f t h e G F O A C ommi t tee O n T rea su ry an d In ve st me n t M an age men t (T I M ). S h e i s al so a n ac ti v e pa r t i c i pan t i n sever al a ddi t i ona l pu bli c f i n anc e or g an i za t i on s, i nc l u di ng t he N a t i on al Ass oc i at i o n o f C o unti es (N AC o ), G over nme nt F i na nc e O f f i cer s As so ciat i on of Ar i zo na (G F O Az), N e w M exi co G o ve rnment F i n anc e O f fi c e r s Ass oc i a t i on (N M G F O A), t h e Ar i zon a C ou nt y T r ea sur er ’s As s o c i a t ion (A C TA), an d C ol or ado R i ver F i na nc e O f f i ce r s As so ci ati on (C R F O A). S h e al s o p ar ti c i p at e s i n Wo me n i n P ubl i c F ina nc e, N a t i o n al Ass oc i at i o n of H i spa nic C o un t y O ff i ci al s , and Asi an Ame r ic ans i n P ubl i c F i n an ce . C o ntact 1 8 2 0 E a s t R a y R o a d C ha nd le r, A Z 8 5 2 2 5 wo o p @ p fm .c o m 4 1 5 .4 7 0 .7 8 1 5 o ffi c e S pe cia lties A s s e t M a na g e m e nt S ta te & L o c a l G o ve rnme nts E du ca tion B .A . i n A nc i e nt H i s to r y a nd H i s to ry U ni ve r s i ty o f Te xa s a t A us ti n M .A . i n H i s to r y U ni ve r s i ty o f C a li fo rni a , B e r k e le y P ro fe ss io na l D e sig n ation s or L ic en ses F IN R A S e r i e s 6 a nd 6 3 l i c e ns e s S ta rted w ith P F M: 2 0 0 7 S ta rted in the F ield : 2 0 0 7 RESUMES OF KEY PROFESSIONA LS Retr i e ve d Fe b ruar y 1 8 , 2 0 2 0 L uke S chneid e r, C FA D i r e ct or P F M As set M a na gement L L C L uk e S chn ei de r j o i n ed P F M ’s a sset man a ge men t bu sine ss a s a di r e ct or i n 201 5 and mana ge s eng age me n t s i n t he S outhwest er n an d N or thwest er n U .S . L uke ha s ext e ns i ve exp er i en ce mana ging an d a dv i sing o n fi xed-i n c o me po r t f o l i o s f o r p ub l i c e nt i ti es , high er ed u c a t i o n i n st i t uti on s, a nd s p ec i al d i st ri ct s . P r i or t o j oi n i n g P F M , L u ke w as a mana gi ng di r ec tor a nd s e ni or po r t fol io ma nag er at G o v e r nmen t P o rt f ol i o Advi s o r s (G PA) wh er e he s pen t t wo y ear s man ag i n g i n sti t u t i on al i n ve st men t po rt fol i os. B e f o re j oi ni ng G PA, L uk e sp e nt f ou r yea r s w i t h D av i d so n F i xed In co me M an age men t as a p or tf o l i o a nal y st a nd s al es a nd t r ad i n g r ep r e sen t a t i v e, a n d befor e t h at t wo y ear s as a r es ear ch an al y st f or R M H Inv es t me nt M a nag eme nt , L L C . L uk e i s a membe r o f t h e C FA In sti t u t e an d a boa rd me mbe r of t he C F A S oc i e t y o f T uc so n. C o ntact 1 8 2 0 E a s t R a y R o a d C ha nd le r, A Z 8 5 2 2 5 s c hne i d e rl@ p f m.c o m 5 2 0 .2 6 0 .1 5 7 4 c e ll S pe cia lties A s s e t M a na g e m e nt, S p e c i a li ze d S e rvi c e s S ta te & L o c a l G o ve rnme nts , E nd o w m e nt s & F o und a ti o ns E du ca tion B .S . i n F i na nc e U ni ve r s i ty o f A r i zo na M .A c c . U ni ve r s i ty o f S o uthe rn C a li f o r ni a P ro fe ss io na l D e sig n ation s or L ic en ses F IN R A S e r i e s 7 , 2 4 a nd 6 6 L i c e ns e s C ha r te r e d F i na nc i a l A na lys t (C F A ) S ta rted w ith P F M: 2 0 1 5 S ta rted in the F ield : 2 0 0 7 RESUMES OF KEY PROFESSIONA LS Retr i e ve d Fe b ruar y 1 8 , 2 0 2 0 Annette Gaston S e nior M an ag i n g C on su l tan t P F M As set M a na gement L L C Anne t t e G as t o n j o i ned P F M i n 20 18 as a sen i o r man ag i n g c o ns ul t a nt i n t h e C h a nd l e r, A Z of f i c e. An nett e man age s c l i en t r el a t i on sh i p s f o r pub l i c age nc y cl ien t s thr oug hou t t h e We st er n U n i ted S t a t e s. H er r e sp onsi bi l i ti es i ncl ud e i n ve st me n t ad vi s or y s e rv i ces, inv es t men t pol ic y ev al uati on , ec ono mi c r e se ar ch, po r t fol io an a l ys i s, a nd c as h fl ow mode l i n g. P r i or t o j oi n i n g P F M , An nett e was a sal e s rep resen t a t i v e for J o h ns on & J oh ns on wh er e she w or ke d wi t h key a c cou nt c l i e nt s i n t h e S o ut h er n C al i f o rni a ma r k et . B e f o re j oi ni ng J ohn so n & J o hnson , Anne t t e sp ent f iv e yea rs a s a C on su l ti ng G r oup a nal y st mana gi ng pr i v at e we al t h a nd i ns t i t ut i o nal cl ien t por t f ol i os , i n Ari zona a nd S o ut her n C al i f or n i a . S h e br i n gs a de mon s tr a t e d h i st or y of w or ki ng i n t he fi nan ci a l s e r v i ces i n du st ry, an d mul t i p l e yea r s o f expe ri en ce. S h e i s an Ar i zon a nat i ve a nd a gr a dua t e o f G r a nd C a ny on U n i ver si t y wh er e she p u r s ue d a d egr ee i n F i n ance an d E c on o mi c s. C o ntact 1 8 2 0 E a s t R a y R o a d C ha nd le r, A Z 8 5 2 2 5 g a s t o na @ p fm .c o m 4 8 0 .2 7 1 .0 4 3 2 o ffi c e S pe cia lties S p e c i a li ze d S e rvi c e s , A s s e t M a na g e me nt E nd o w m e nt s & F o und a ti o ns , S ta te & L o c a l G o ve rnme nts E du ca tion B .A . i n F i na nc e a nd E c o no mi c s G ra nd C a nyo n U ni ve rs i ty P ro fe ss io na l D e sig n ation s or L ic en ses F IN R A S e r i e s 6 , 7 , 6 3 a nd 6 6 L i c e ns e s S ta rted w ith P F M: 2 0 1 8 S ta rted in the F ield : 2 0 0 5 RESUMES OF KEY PROFESSIONA LS Retr i e ve d Fe b ruar y 2 2 , 2 0 2 0 K yle J ones M ana ging D i r ec t o r P F M As set M a na gement L L C K yl e j oi ned P F M ’s as se t man ag e me nt bu s i n es s i n 2 012 a nd i s t h e c o -he ad of t he P or t f oli o S t r a teg i es G r oup (P S G ). H e l e ad s P S G ’s ef f o rt s i n the i nvest men t st r a teg y de ve l o pme nt p roces s f or ma ny l ar g e and s t r at egi c al l y i mpo rt ant P F M cl i e nt r el at i ons hi ps. K yl e wo r k s pr i mar i l y w i t h c l i e nt s of t he s epa rat e ac co unt b us i ness by he l p i n g t o d ev i se c u stomi ze d por t f ol i o st rateg i e s de si gn ed t o mee t t h ei r sp ec i fi c i nv es t ment n ee d s . In ad dit i o n, he a ssi st s i n t h e c r eati on an d del i v er y o f ou r vi ew s an d st r ateg i e s t o cl i ents , pr o s p ec t s a nd t hi r d-par t y con s u l t an t s. K yl e i s a F i xe d In co me In ve st me nt C o mmi tt e e M emb er as we l l as a C r ed i t C ommi t t ee M emb er. P r i or t o j oi n i n g P F M , K y l e s pen t 10 y ear s at J P M o rga n C ha se i n a v a ri et y of cap ac i ti es , mo st r ec ent l y as a n i n ve st me nt s peci ali st for t h ei r In st i t u t i on al S al es busi ness . K yl e se rv es on sever al commun i t y r el at ed bo ar d s an d i s a cti ve i n hi s r e s p ec t i v e al umn i a ss oc i a t i o n s . H e i s a f r equ ent spe ak er at i ndu st r y c on f e r en ce s and e ducat i ona l s emi n ar s . C o ntact 2 1 3 M a rk e t S t re e t H a r r i s b urg , PA 1 7 1 0 1 j o ne s k @ p f m .c o m 7 1 7 .2 3 1 .6 2 2 2 o ffi c e S pe cia lties A s s e t M a na g e m e nt S ta te & L o c a l G o ve rnme nts , H i g he r E d uc a ti o n E du ca tion B .A . i n B us i ne s s M a na g e me nt D i lla r d U ni ve r s i ty M B A i n F i na nc e a nd A c c o unti ng U ni ve r s i ty o f C hi c a g o B o o t h S c ho o l o f B us i ne s s P ro fe ss io na l D e sig n ation s or L ic en ses F IN R A S e r i e s 7 a nd 6 3 L i c e ns e s S ta rted w ith P F M: 2 0 1 2 S ta rted in the F ield : 2 0 0 2 RESUMES OF KEY PROFESSIONA LS Retr i e ve d Fe b ruar y 1 8 , 2 0 2 0 R obert C heddar, C FA M ana ging D i r ec t o r P F M As set M a na gement L L C B o b j o i ned P F M ’s as se t man ag e me nt bu si n e s s i n 2 004 a s a se ni or po r t fol io ma nag er an d was pr o moted t o man ag i n g di rect or i n 2 011. H e ma na ges cl i ent a c cou nt s ac ross t he c oun t r y, spe ci a l i zi ng i n hi gh -qu al i t y fi xed-i n co me ass et s. H e i s r es pon si b l e f or t he ma nag eme nt o f cl i en t as se t s i n s epa rate po r t fol ios for c i t ies, c o unti es , i ns ur a nc e a nd s elf -i ns u r a nc e o r ga nizat i o ns , s cho ol di s t r i c t s, s t a t e an d l o c a l g o v e r n men t age nc i e s , pub l i c fi nan c e au t ho r it i e s, a nd un i ver si t i e s . Ass et s un der mana gement i n cl u d e op e r a t ing f und s , cap i t a l r e se r v e s, b on d p r ocee ds , an d o t h er po st - empl oy men t be nef i t s (O P E B ) obl iga t i on f un d s . In a ddi t i o n t o b ei ng a ma nag i ng di r e ct or, B o b se rv es as ch i e f c r edi t of f i c er an d cha i r o f t h e F i xe d-Inc ome C r e di t C o mmi t t e e, lea di ng a t e am r e sp onsi ble f o r i n dep en den t cr edi t r es e ar ch an d st r a teg y. T h i s t e am c ond uc t s a l l i nt e r n al c r e d i t r esea rc h f o r b ot h l o ca l go ver nme nt i n vest men t po ol s an d sep ar a t e l y man ag e d ac co unts an d i s r es pon si bl e f or t h e an a l ys i s an d o ve rs i g ht o f al l o f t h e P F M ’s a ss et mana gement cl i en ts ’ c r e d i t expo su re. C o ntact 2 1 3 M a rk e t S t re e t H a r r i s b urg , PA 1 7 1 0 1 c he d d a r r@p fm.c o m 7 1 7 .2 3 1 .6 2 0 2 o ffi c e S pe cia lties A s s e t M a na g e m e nt E du ca tion B .S . i n B us i ne s s A d mi ni s tr a ti o n S us q ue ha nna U ni ve r s i ty M B A P e nns ylva ni a S ta t e U ni ve r s i ty P ro fe ss io na l D e sig n ation s or L ic en ses C ha r te r e d F i na nc i a l A na lys t (C F A ) S ta rted w ith P F M: 2 0 0 4 S ta rted in the F ield : 1 9 9 8 RESUMES OF KEY PROFESSIONA LS Retr i e ve d Fe b ruar y 1 8 , 2 0 2 0 K aren J ones, C PA Australia M ana ging D i r ec t o r P F M As set M a na gement L L C K a r en h as mana gemen t respo ns i b i l i t i e s f o r ac co unti ng an d ad mi ni s tr a t i on f or P F M ’s a s set man age men t bu si ne ss , i nc l udi ng po r t fol io ac co unti ng , and c l i e nt b i l l i ng . S h e sup er vis e s a s taff t hat an n ua l l y p rocess e s over 1 00,00 0 secur i ty t ran sa ct i ons wit h a n av er a ge da i l y t r a de v ol ume o f ne ar l y $2 b i l l i on . K a r en h as e xten si v e expe r i ence as a s en i o r ac co u nt i ng an d f i n a nc e exec ut i ve , most r e c e nt l y wi t h B a n k of Amer i ca i n C ha r lot t e , N C , wh er e s he w as a D i r ec t o r for C entr a l i zed R egu l a t o r y R e por t ing . P r i o r t o t hat sh e was G l oba l C o nt rol ler f or G en er a l E l e ct ri c C a pit a l i n N o rwal k, C T, an d se rv ed t o ur s wi t h AB N AM R O , t h e Wo rl d B a nk G r oup i n Was hi ngton D C , a nd wi t h se ve ral gl ob a l ba n k s i n L o nd o n an d Au s tr a l i a . C o ntact 2 1 3 M a rk e t S t re e t H a r r i s b urg , PA 1 7 1 0 1 j o ne s k a @p fm.c o m S pe cia lties A s s e t M a na g e m e nt E du ca tion B .B us S wi nb ur ne U ni ve r s i t y o f Te c hno lo g y, V i c to ri a , A us t r a li a M B A M o na s h U ni ve r s i ty, V i c to r i a , A us tr a li a P ro fe ss io na l D e sig n ation s or L ic en ses C PA A us tr a li a S ta rted w ith P F M: 2 0 1 8 S ta rted in the F ield : 1 9 9 0 K J RESUMES OF KEY PROFESSIONA LS Retr i e ve d Fe b ruar y 1 8 , 2 0 2 0 L eo K arw ejna M ana ging D i r ec t o r P F M As set M a na gement L L C L eo K ar wej n a j o i n ed P F M t o hea d t he C omp l i a nc e G r o u p i n 2 011 as chi ef compl i an ce off i cer a n d ma n ag i n g di r ect or. H e ha s ov er 15 y e ar s of exp er i en c e p rovi di ng c omp l i a nc e su ppo rt t o f ir ms i n the i nv es tme nt a dv i sor y an d secur i ti es -t rad i n g busi ne ss es i ncl ud i n g eq u i t y, f i xe d i n c o me , rea l est a t e (di r ect p r op er t y an d R E I T s e cu ri t i e s) an d add i ti on al a l ter nati ve i nvest men t st r a t eg i es . L eo i s r e s p onsi bl e f o r al l r egu l a t o ry c omp l i a nc e pr o gr a m ef f o r t s r el a t e d to P F M ’s b us i n es s ac t i v i t ies a nd pe rs onn el. H e a ss i st s P F M pr o f e ssi ona l s wi t h sp ec i fi c c o mp l i a n c e a dv i sor y gu i d ance an d l ead s t h e P F M C ompli ance t e am’s ef for t s to de ve l o p, mai nt ai n and mo ni t o r fi r m-wi d e co mpl i an ce w i t h ap pr o pr i a t e po l i ci es , pr o c e du r es an d r egu l at o r y r equ i r ement s . L eo ’s pr i or e xp er i e nc e i n cl ud es c ompl i anc e ma nag eme nt p os i t i ons at P r u den t i al F i n anci al Inc., D e u t sc he As se t M ana gement, an d R R E E F Al t er n at i ve Inv e s tme nt s. H e i s a member o f t h e N ati ona l S o c i e t y o f C ompl i an ce P rofes s i o nal s a nd t h e S e cu ri t i es In dus t r y an d F i na nc i al M a r k e t s Ass oc i at i o n – C ompl i anc e an d L e ga l S o c i e t y a nd al s o r eg ul ar l y ser ve s as a n Arbi t rat or f or s e c u r it i e s- r el a t e d i s s u es a mon g t h e i n ve st i ng pu bl i c and /o r i n dust r y pa r t i c i pan t s . C o ntact 2 1 3 M a rk e t S t re e t H a r r i s b urg , PA 1 7 1 0 1 k a r we jna l@p fm.c o m 7 1 7 .2 1 3 .3 8 4 7 o ffi c e E du ca tion B .S . i n F i na nc e S t. J o s e p h's U ni ve r s i ty J .D . Te mp le U ni ve r s i ty S c ho o l o f L a w P ro fe ss io na l D e sig n ation s or L ic en ses F IN R A S e r i e s 7 a nd 6 6 L i c e ns e s N a ti o na l A s s o c i a ti o n o f M uni c i p a l A d vi s o rs N a ti o na l S o c i e ty o f C o m p li a nc e P ro fe s s i o na ls S ta rted w ith P F M: 2 0 11 S ta rted in the F ield : 1 9 9 9 RESUMES OF KEY PROFESSIONA LS Retr i e ve d Fe b ruar y 1 8 , 2 0 2 0 Fixed Income Monthly Market Review Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 Monthly Market Review It’s all about China, my friends. Economic Highlights • When the world’s second-largest economy comes down with the flu, we all suffer. The year began with general optimism that the long-running economic expansion in the U.S. would continue, supported by a healthy job market, upbeat consumer confidence and household spending, a rebound in manufacturing activity, a surging stock market, and a pickup in global growth. And then came the coronavirus… • As of early February, the coronavirus, concentrated largely in China, had infected more than 40,000 people and caused over 1,000 deaths, making it more prevalent and deadly than the SARS outbreak of 2002-2003. However, since the SARS outbreak 17 years ago, China has grown from 4% of the global economy to more than 16%, making the economic toll from the current health crisis exponentially greater. Due to China’s role in global trade, its economy accounted for nearly 40% of global economic growth in 2019. Deutsche Bank estimates that the current outbreak will reduce China’s first quarter Gross Domestic Product (GDP) by 1.5% and lower global GDP by 0.2%, but that assumes the rate of infection slows sharply in the weeks ahead. • In better news, the U.S. signed a “Phase One” trade deal with China that suspended some tariffs in exchange for China agreeing to purchase more American products, eliminate forced technology transfers, and strengthen intellectual property protections. Yet the coronavirus outbreak raises questions about whether China will step up its imports of U.S. goods and services, at least in the short run. • The markets responded to these events by pushing Treasury yields lower by 25 to 40 basis points (bps), sending oil markets into a bear market sell-off, and temporarily reversing early-year stock market gains. Meanwhile, the yield curve inverted and the probability of a Federal Reserve (Fed) rate cut in 2020 increased from 60% at the beginning of the year to pricing in two full rate cuts as of January 31. • In a footnote to the action, three-and-a-half years after the Brexit referendum, the U.K. officially left the European Union as of January 31. Investors, otherwise pre-occupied with China, barely reacted. • At its January meeting, the Fed left interest rates unchanged, as expected, maintaining the target range for overnight rates at 1.5% to 1.75%. Chairman Powell noted that “monetary policy is well- positioned” to support “continued economic growth, a strong job market, and a return of inflation to our symmetric 2% goal.” • The U.S. economy grew at a slightly better-then-expected 2.1% pace in the fourth quarter of 2019 and at 2.3% for the entire year. A sharp decline in imports was notable, causing net exports (usually a detractor) to contribute 1.5% to the overall reading. Growth in consumer spending was tepid and private inventories fell sharply, but residential housing and government spending were positive contributors. • The U.S. economy added 225,000 jobs in January, besting expectations. Meanwhile, the unemployment rate ticked up to 3.6% as labor force participation rose to the highest level in four years. The Labor Department also revised historic employment for the period ending March 2019 downward by 514,000 jobs. • Manufacturing reversed its contraction, as new orders rose. The ISM manufacturing index rebounded to 50.9 in January, above the demarcation line (50) that signals expansion. Bond Markets • The U.S. Treasury yield curve flattened over the month and has inverted once again (between three months and 10 years). The significant rally in Treasury prices was largely due to a “flight to quality” over emerging economic concerns (e.g. China). The yield on two-, five-, and 10-year Treasury notes fell 26, 38, and 41 bps, respectively. The 30-year Treasury yield settled at 2%, near a five- month low. • As a result, performance of longer-term Treasuries dominated shorter tenors. For example, three-month and two-year Treasury indices returned 0.13% and 0.54%, while five-year and 10-year indices generated returns of 1.83% and 3.71%. Equity Markets • U.S equities soared to record highs amid an improved trade outlook in early January, but the coronavirus outbreak left stocks struggling for direction by month-end. Over the month, the S&P 500 lost 0.04% and the Dow retreated 0.9%, while the NASDAQ advanced 2% on solid tech earnings. • The U.S. Dollar Index (DXY) resumed its uptrend, climbing 1% in January. PFM Outlook • Given the uncertainty regarding the potential impact of the coronavirus outbreak on global growth and interest rates, we will maintain durations in line with benchmarks. • Yield spreads remain narrow across all sectors. Investment-grade corporates offer some incremental yield, but narrow spreads warrant greater selectivity, with the most value residing in the new-issue market. We also view the uptick in taxable municipal issuance as an opportunity, but short-maturity supply is limited. • We currently favor asset-backed securities, which performed well in January and appear to offer better spreads than some corporates and better risk-adjusted return opportunities. • After a very strong fourth quarter, mortgage-backed securities took a beating in January as rates fell. With no imminent catalyst to support near-term outperformance expectations, we plan to exercise caution in the sector. Fixed Income | February 2020 © PFM Asset Management LLC Spot Prices and Benchmark Rates Index Jan 31, 2019 Dec 31, 2019 Jan 31, 2020 Monthly Change 1 Month LIBOR 2.51%1.76%1.66%-0.10% 3 Month LIBOR 2.74%1.91%1.75%-0.16% Effective Fed Funds Rate 2.40%1.55%1.59%0.04% Fed Funds Target Rate 2.50%1.75%1.75%0.00% Gold ($/oz)$1,320 $1,523 $1,583 $60 Crude Oil ($/Barrel)$53.79 $61.06 $51.56 -$9.50 US Dollars per Euro $1.14 $1.12 $1.11 -$0.01 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% U.S. Treasury Yield Curve 1/31/2019 12/31/2019 1/31/2020 3mo 2yr 5yr 10yr 30yr Source: Bloomberg. Data as of January 31, 2020, unless otherwise noted. The views expressed constitute the perspective of PFM Asset Management LLC at the time of distribution and are subject to change. The content is based on sources generally believed to be reliable and available to the public; however, PFM cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. PFM is the marketing name for a group of affiliated companies providing a range of services. All services are provided through separate agreements with each company. Investment advisory services are provided by PFM Asset Management LLC, which is registered with the SEC under the Investment Advisers Act of 1940. For more information regarding PFM’s services or entities, please visit www.pfm.com. U.S. Treasury Yields Duration Jan 31, 2019 Dec 31, 2019 Jan 31, 2020 Monthly Change 3-Month 2.39%1.55%1.55%0.00% 6-Month 2.46%1.59%1.53%-0.06% 2-Year 2.46%1.57%1.32%-0.25% 5-Year 2.44%1.69%1.31%-0.38% 10-Year 2.63%1.92%1.51%-0.41% 30-Year 3.00%2.39%2.00%-0.39% Yields by Sector and Maturity as of November 30, 2019 Maturity U.S. Treasury Federal Agency Corporates- A Industrials AAA Municipals 3 Month 1.55%1.55%1.64%- 6 Month 1.53%1.51%1.63%- 2 Year 1.32%1.36%1.61%0.91% 5 Year 1.31%1.40%1.76%0.93% 10 Year 1.51%1.74%2.24%1.27% 30 Year 2.00%2.24%3.07%1.88% Economic Indicators Indicator Release Date Period Actual Survey (Median) Consumer Confidence 28-Jan Jan 131.6 128.0 GDP Annualized QoQ 30-Jan 4Q A 2.1%2.0% PCE Core Deflator YoY 31-Jan Dec 1.6%1.6% ISM Manufacturing 3-Feb Jan 50.9 48.5 Nonfarm Payrolls 7-Feb Jan 225k 165k Unemployment Rate 7-Feb Jan 3.6%3.5% Retail Sales MoM 14-Feb Jan 0.3%0.3% 0.87%0.62%0.86%0.67%0.68% 4.77%4.11% 6.21% 3.76% 5.78% 1-5 Year Treasury 1-5 Year Agency 1-5 Year AAA-A Corp 1-5 Year Municipals 0-5 Year MBS ICE BofAML Fixed Income Index Returns January Prior 12 Months 2.6% 0.0% -3.2%-2.1% 9.2% 21.7% 9.2% 12.1% ICE BofAML U.S. Treasury Master Index S&P 500 Russell 2000 (Small Cap) MSCI EAFE (Developed Europe/Asia) Total Return of Major Indices January Prior 12 Months For the period ended January 31, 2020 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Jan '19 Apr '19 Jul '19 Oct '19 Jan '20 30-Day Money Market Yields Commercial Paper (A1/P1)Federal Agency U.S. T-Bill Sample Monthly Report Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 For the Month Ending January 31, 2020Managed Account Summary Statement SAMPLE CLIENT Total Cash Basis Earnings Plus Net Realized Gains/Losses Less Purchased Interest Related to Interest/Coupons Interest/Dividends/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/Dividends Received Plus Proceeds of Maturities/Calls/Principal Payments Plus Proceeds from Sales Ending Accrued Interest Ending Amortized Value of Securities Earnings Reconciliation (Accrual Basis) $23,214,603.49 0.00 0.00 0.00 0.00 56,325.45 $23,270,928.94 22,837.50 0.00 0.00 $22,837.50 Total 23,034,235.40 117,734.86 0.00 0.00 22,837.50 0.00 (23,029,708.48) (100,388.69) Total Accrual Basis Earnings $44,710.59 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/Dividend Income Sale Proceeds Maturities/Calls Cash Transactions Summary - Managed Account 0.00 0.00 22,837.50 0.00 0.00 (22,837.50) 0.00 Cash Balance $0.00 Closing Cash Balance For the Month Ending January 31, 2020Portfolio Summary and Statistics SAMPLE CLIENT Account Summary Percent Par Value Market ValueDescription U.S. Treasury Bond / Note 4,640,000.00 4,688,248.39 20.15 Federal Agency Bond / Note 18,425,000.00 18,582,680.55 79.85 Managed Account Sub-Total 23,065,000.00 23,270,928.94 100.00% Accrued Interest 117,734.86 Total Portfolio 23,065,000.00 23,388,663.80 Unsettled Trades 0.00 0.00 Sector Allocation 79.85% Fed Agy Bond / Note 20.15% US TSY Bond / Note 0 - 6 Months 6 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years Over 5 Years 18.93% 15.18% 34.81% 31.08% 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 1.37 511 2.33% 1.45% For the Month Ending January 31, 2020Managed Account Issuer Summary SAMPLE CLIENT Credit Quality (S&P Ratings) 100.00% AA+ Issuer Summary Percentof HoldingsIssuer Market Value 8,303,006.31 35.67 FANNIE MAE 5,835,958.41 25.08 FEDERAL HOME LOAN BANKS 4,443,715.83 19.10 FREDDIE MAC 4,688,248.39 20.15 UNITED STATES TREASURY $23,270,928.94 Total 100.00% For the Month Ending January 31, 2020Managed Account Detail of Securities Held SAMPLE CLIENT Dated Date/Coupon/Maturity CUSIP Rating Rating Date Date Cost at Cost Interest Cost Value Security Type/Description S&P Moody's Original YTM Accrued Amortized MarketTrade Settle Par U.S. Treasury Bond / Note US TREASURY NOTES DTD 12/31/2014 2.125% 12/31/2021 1,004,385.89 999,431.79 1,849.45 1,001,678.91 08/14/1908/13/19AaaAA+ 990,000.00 912828G87 1.62 US TREASURY NOTES DTD 03/02/2015 1.750% 02/28/2022 1,275,673.44 1,250,743.98 9,365.87 1,245,234.38 04/04/1904/03/19AaaAA+ 1,265,000.00 912828J43 2.31 UNITED STATES TREASURY NOTES DTD 07/15/2019 1.750% 07/15/2022 1,272,993.75 1,259,100.18 1,029.81 1,258,917.19 08/01/1907/31/19AaaAA+ 1,260,000.00 9128287C8 1.78 UNITED STATES TREASURY NOTES DTD 12/16/2019 1.625% 12/15/2022 1,135,195.31 1,125,555.20 2,397.54 1,125,571.29 12/31/1912/30/19AaaAA+ 1,125,000.00 912828YW4 1.61 14,642.67 4,688,248.39 4,634,831.15 1.85 4,631,401.77 4,640,000.00 Security Type Sub-Total Federal Agency Bond / Note FHLB NOTES DTD 02/09/2018 2.125% 02/11/2020 1,000,119.00 999,890.39 10,034.72 993,090.00 05/02/1805/01/18AaaAA+ 1,000,000.00 3130ADN32 2.52 FEDERAL HOME LOAN BANKS NOTES DTD 03/16/2018 2.375% 03/30/2020 2,493,147.36 2,489,078.28 19,876.77 2,481,160.50 08/28/1808/27/18AaaAA+ 2,490,000.00 3130ADUJ9 2.60 FHLMC NOTES DTD 04/19/2018 2.500% 04/23/2020 911,870.05 909,448.48 6,193.06 906,178.00 09/18/1809/17/18AaaAA+ 910,000.00 3137EAEM7 2.77 FHLMC NOTES DTD 09/29/2017 1.625% 09/29/2020 995,379.10 993,960.18 5,479.41 990,482.70 10/26/1710/25/17AaaAA+ 995,000.00 3137EAEJ4 1.78 FHLMC NOTES DTD 11/15/2017 1.875% 11/17/2020 2,536,466.68 2,513,740.63 9,751.04 2,485,345.50 08/28/1808/27/18AaaAA+ 2,530,000.00 3137EAEK1 2.70 FNMA NOTES DTD 02/05/2016 1.375% 02/26/2021 2,555,642.88 2,524,657.59 15,155.56 2,479,078.40 08/28/1808/27/18AaaAA+ 2,560,000.00 3135G0J20 2.69 FANNIE MAE NOTES DTD 06/25/2018 2.750% 06/22/2021 2,536,408.62 2,490,538.66 7,418.13 2,491,020.90 08/28/1808/27/18AaaAA+ 2,490,000.00 3135G0U35 2.73 FEDERAL HOME LOAN BANKS NOTES DTD 10/12/2018 3.000% 10/12/2021 1,083,740.31 1,063,348.94 9,582.92 1,067,828.80 02/21/1902/20/19AaaAA+ 1,055,000.00 3130AF5B9 2.52 FANNIE MAE NOTES DTD 01/11/2019 2.625% 01/11/2022 921,450.60 899,656.12 1,312.50 899,478.00 01/29/1901/28/19AaaAA+ 900,000.00 3135G0U92 2.65 For the Month Ending January 31, 2020Managed Account Detail of Securities Held SAMPLE CLIENT Dated Date/Coupon/Maturity CUSIP Rating Rating Date Date Cost at Cost Interest Cost Value Security Type/Description S&P Moody's Original YTM Accrued Amortized MarketTrade Settle Par Federal Agency Bond / Note FANNIE MAE NOTES DTD 04/12/2019 2.250% 04/12/2022 1,283,991.66 1,271,825.29 8,583.75 1,274,439.60 08/01/1907/31/19AaaAA+ 1,260,000.00 3135G0V59 1.81 FEDERAL HOME LOAN BANKS NOTES DTD 06/12/2015 2.375% 06/10/2022 1,258,951.74 1,245,154.34 4,138.44 1,248,782.10 07/02/1907/01/19AaaAA+ 1,230,000.00 3130A5P45 1.84 FANNIE MAE NOTES DTD 09/06/2019 1.375% 09/06/2022 1,005,512.55 998,105.35 5,565.89 997,402.20 10/24/1910/22/19AaaAA+ 1,005,000.00 3135G0W33 1.65 103,092.19 18,582,680.55 18,399,404.25 2.45 18,314,286.70 18,425,000.00 Security Type Sub-Total 23,065,000.00 22,945,688.47 2.33 117,734.86 23,034,235.40 23,270,928.94 Managed Account Sub-Total $23,065,000.00 $22,945,688.47 $117,734.86 $23,034,235.40 $23,270,928.94 2.33% $23,388,663.80 $117,734.86 Total Investments Accrued Interest Securities Sub-Total For the Month Ending January 31, 2020Managed Account Fair Market Value & Analytics SAMPLE CLIENT Value On Cost Amort Cost to WorstCUSIPBrokerDate PriceDated Date/Coupon/Maturity Par at Mkt Market Unreal G/L Unreal G/L DurationNext Call MarketSecurity Type/Description YTMEffective Duration U.S. Treasury Bond / Note 1.87 4,954.10 2,706.98 1,004,385.89 101.45 RBC 990,000.00 912828G87US TREASURY NOTES DTD 12/31/2014 2.125% 12/31/2021 1.35 1.87 2.02 24,929.46 30,439.06 1,275,673.44 100.84 BNP_PARI 1,265,000.00 912828J43US TREASURY NOTES DTD 03/02/2015 1.750% 02/28/2022 1.34 2.02 2.40 13,893.57 14,076.56 1,272,993.75 101.03 NOMURA 1,260,000.00 9128287C8UNITED STATES TREASURY NOTES DTD 07/15/2019 1.750% 07/15/2022 1.32 2.40 2.79 9,640.11 9,624.02 1,135,195.31 100.91 RBC 1,125,000.00 912828YW4UNITED STATES TREASURY NOTES DTD 12/16/2019 1.625% 12/15/2022 1.30 2.79 56,846.62 1.33 2.28 53,417.24 4,688,248.39 4,640,000.00 Security Type Sub-Total 2.28 Federal Agency Bond / Note 0.03 228.61 7,029.00 1,000,119.00 100.01 MORGAN_S 1,000,000.00 3130ADN32FHLB NOTES DTD 02/09/2018 2.125% 02/11/2020 1.53 0.03 0.17 4,069.08 11,986.86 2,493,147.36 100.13 MORGAN_S 2,490,000.00 3130ADUJ9FEDERAL HOME LOAN BANKS NOTES DTD 03/16/2018 2.375% 03/30/2020 1.60 0.17 0.23 2,421.57 5,692.05 911,870.05 100.21 MIZUHO 910,000.00 3137EAEM7FHLMC NOTES DTD 04/19/2018 2.500% 04/23/2020 1.56 0.23 0.65 1,418.92 4,896.40 995,379.10 100.04 JPM_CHAS 995,000.00 3137EAEJ4FHLMC NOTES DTD 09/29/2017 1.625% 09/29/2020 1.57 0.65 0.78 22,726.05 51,121.18 2,536,466.68 100.26 MORGAN_S 2,530,000.00 3137EAEK1FHLMC NOTES DTD 11/15/2017 1.875% 11/17/2020 1.55 0.78 1.05 30,985.29 76,564.48 2,555,642.88 99.83 MORGAN_S 2,560,000.00 3135G0J20FNMA NOTES DTD 02/05/2016 1.375% 02/26/2021 1.54 1.05 1.36 45,869.96 45,387.72 2,536,408.62 101.86 DEUTSCHE 2,490,000.00 3135G0U35FANNIE MAE NOTES DTD 06/25/2018 2.750% 06/22/2021 1.39 1.36 1.64 20,391.37 15,911.51 1,083,740.31 102.72 BONY 1,055,000.00 3130AF5B9FEDERAL HOME LOAN BANKS NOTES DTD 10/12/2018 3.000% 10/12/2021 1.37 1.64 1.89 21,794.48 21,972.60 921,450.60 102.38 WELLS_FA 900,000.00 3135G0U92FANNIE MAE NOTES DTD 01/11/2019 2.625% 01/11/2022 1.38 1.89 2.13 12,166.37 9,552.06 1,283,991.66 101.90 TD 1,260,000.00 3135G0V59FANNIE MAE NOTES DTD 04/12/2019 2.250% 04/12/2022 1.37 2.13 2.29 13,797.40 10,169.64 1,258,951.74 102.35 DEUTSCHE 1,230,000.00 3130A5P45FEDERAL HOME LOAN BANKS NOTES DTD 06/12/2015 2.375% 06/10/2022 1.36 2.29 For the Month Ending January 31, 2020Managed Account Fair Market Value & Analytics SAMPLE CLIENT Value On Cost Amort Cost to WorstCUSIPBrokerDate PriceDated Date/Coupon/Maturity Par at Mkt Market Unreal G/L Unreal G/L DurationNext Call MarketSecurity Type/Description YTMEffective Duration Federal Agency Bond / Note 2.53 7,407.20 8,110.35 1,005,512.55 100.05 MORGAN_S 1,005,000.00 3135G0W33FANNIE MAE NOTES DTD 09/06/2019 1.375% 09/06/2022 1.35 2.53 268,393.85 1.48 1.14 183,276.30 18,582,680.55 18,425,000.00 Security Type Sub-Total 1.14 23,065,000.00 23,270,928.94 325,240.47 236,693.54 1.37 1.45 Managed Account Sub-Total 1.37 Total Investments $23,388,663.80 $117,734.86 $23,270,928.94 Accrued Interest Securities Sub-Total $23,065,000.00 $325,240.47 $236,693.54 1.37 1.45% 1.37 For the Month Ending January 31, 2020Managed Account Security Transactions & Interest SAMPLE CLIENT Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method INTEREST 01/11/20 FANNIE MAE NOTES DTD 01/11/2019 2.625% 01/11/2022 3135G0U92 0.00 11,812.50 11,812.50 900,000.00 01/11/20 01/15/20 UNITED STATES TREASURY NOTES DTD 07/15/2019 1.750% 07/15/2022 9128287C8 0.00 11,025.00 11,025.00 1,260,000.00 01/15/20 22,837.50 22,837.50 0.00 2,160,000.00 Transaction Type Sub-Total 0.00 22,837.50 22,837.50 Managed Account Sub-Total Total Security Transactions $22,837.50 $22,837.50 $0.00 Sample Quarterly Report Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 Client Management Team Paulina Woo, Managing Director Luke Schneider, CFA, Director Annette Gaston, Senior Managing Consultant PFM Asset Management LLC 213 Market Street Harrisburg, PA 17101-2141 717-232-2723 Investment Performance Review For the Quarter Ended December 31, 2019 SAMPLE CLIENT 1820 East Ray Road Chandler, AZ 85225 855-885-9621 QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2019 Fixed Income Management SUMMARY •In Q4, U.S. economic conditions were characterized by: (1) moderate economic growth; (2)robust job growth and elevated consumer confidence; (3) strong housing market but mixed manufacturing activity; (4) growing risks to the economic outlook, including re- escalation of trade conflicts, fallout from impeachment proceedings and the 2020 U.S. presidential election, and deteriorating business confidence and investment, and; (5) geopolitical risks taking center stage. •After delivering two rate cuts in Q3, the Fed cut the overnight fed funds target rate again in October to the new range of 1.50% to 1.75%. The dynamics supporting the rate cuts were similar to those cited for the first two, including weakness in global growth, ongoing trade uncertainty and muted inflation. The Fed is expected to hold their target range steady over the near term absent a “material reassessment of their outlook.” •Bond yields ended the year down markedly across the curve, boosting fixed income returns. In Q4 the yield curve steepened modestly, which was generally attributed to an improved economic outlook and a decline in uncertainties plaguing investors. U.S. equity markets continued to rally to new record highs. The S&P 500 Index returned 9.1% for Q4 and 31.5% for the year. ECONOMIC SNAPSHOT •The U.S. economy grew a moderate 2.1% in Q3. The reading highlighted continued reliance on the American consumer as consumer spending, which was 2%, accounted for nearly all of the growth. Government spending and residential housing were also positive contributors, while business investment was a detractor, marking the first back- to-back contraction in business investment of more than 1% since 2009. •The U.S. labor market continued to grow at a solid pace in the final quarter of the year. The U.S. economy added an average of 180,000 jobs in Q4, bringing the 2019 monthly average to 177,000 which fell short of the 223,000 average of monthly gains in 2018. The unemployment rate held steady at a 50-year low of 3.5% to round out the year. •Inflation remains muted, showing no indication of substantial upward price pressure heading into Q1. Year-over-year growth in the core Consumer Price Index reached 2.3% in December, while the Fed’s preferred inflation gauge, the core Personal Consumption Expenditure price index, dropped to 1.5% on a yearly basis in November, which is well below the Fed’s 2% target. Price pressures on services were stable in Q4, while price pressures on goods drifted lower amid a de-escalation of trade tensions. •U.S. manufacturing activity was mixed in the fourth quarter. The ISM manufacturing PMI survey remained in contractionary territory during the quarter and fell to its lowest level since 2009 in December. A similar measure of manufacturing activity by Markit diverged, recovering from the slowdown in Q3 and remaining in expansionary territory in Q4. Each index tells a slightly different story as the result of a difference in methodology, as ISM data surveys large multinational companies, leaving it more exposed to U.S. and China trade tensions that have weighed on confidence and business decisions. •Housing fundamentals remained strong in Q4. New home sales made solid gains in November, marking the best three months of growth since 2007, a sign of housing market momentum amid low interest rates and steady economic growth. INTEREST RATES •After falling for four consecutive quarters, the U.S. Treasury yield curve twisted around the 3-year inflection point in Q4. Shorter-term rates declined up to 0.40% and longer- term rates rose as much as 0.30%. This steepening effect is evidenced by the spread between the 3-month and 10-year Treasuries, which began the quarter at -14 bps and finished the quarter at +11 bps. •At quarter-end, the yield on a 3-month Treasury bill stood at 1.55%, the 2-year note was 1.57%, the 5-year note was 1.69%, the 10-year note was 1.92%, and the 30-year Treasury ended the year at 2.39%. •Shorter-duration portfolios benefited from the decline in yields in the short end of the curve, while longer-duration portfolios were negatively impacted by the rise in long-term rates. The 3-month Treasury bill index generated 0.46% of total return for the quarter, while 10-year and 30-year Treasuries returned -1.77% and -4.93%, respectively. •With the expectations for the Fed now on hold, ultra-short rates stabilized and settled into an equilibrium by year end. Investors found incremental value in short-term credit opportunities in Q4 as yield spreads on commercial paper and bank CDs widened to attractive levels, helping to offset a portion of recent declines in money market yields. SECTOR PERFORMANCE •Broad portfolio diversification was additive to portfolio performance in Q4. Lower quality corporates and mortgage-backed securities (MBS) led the pack and drove positive performance as spreads generally tightened across the board. •Federal agency and supranational returns were muted as spread levels remained near historic tights and scarce supply largely limited value, capping both sectors’ excess returns. The slight incremental income relative to Treasuries helped buoy relative performance as each sector generally traded in a tight range. •Corporate bonds performed top-of-class again as yield spreads broke prior 2019 lows and challenged post-recession tights. As a result, investment-grade corporates generated attractive excess returns for Q4 with longer duration and lower quality issuers once again outperforming their shorter- and higher-quality counterparts. •Asset-backed securities were one of the few investment grade fixed income sectors that detracted from portfolio performance as excess returns in the sector were generally negative in Q4. The adverse impact of spreads rebounding off of prior multi-year lows weighed on the sector. Despite slightly negative excess returns, incremental income in the sector offset a majority of the negative impact of spreads drifting wider. •Following a volatile Q3, MBS saw a retracement of volatility and spreads. As a result, most coupon and collateral structures generated strong absolute and relative performance. After leading the pack for most of 2019, performance of agency-backed commercial MBS lagged its peers in Q4. •In the municipal sector, taxable issuance volume remained elevated but so too did investor appetite. As a result, the sector generated positive excess returns which helped buoy portfolio performance, especially for government-focused strategies. PFM Asset Management LLC QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2019 Fixed Income Management Economic Snapshot Labor Market Sep '19 Dec '18 Unemployment Rate Dec '19 3.5%3.5%3.9% Change In Non-Farm Payrolls Dec '19 145,000 193,000 227,000 Average Hourly Earnings (YoY)Dec '19 2.9%3.0%3.3% Personal Income (YoY)Nov '19 4.9%4.6%5.0% Initial Jobless Claims (week)1/11/20 204,000 220,000 231,000 Growth Real GDP (QoQ SAAR)2019Q3 2.1%2.0%2.9% GDP Personal Consumption (QoQ SAAR) 2019Q3 3.2%4.6%3.5% Retail Sales (YoY)Dec '19 5.8%4.0%1.5% ISM Manufacturing Survey (month)Dec '19 47.2 47.8 54.3 Existing Home Sales SAAR (month) Dec '19 5.54 mil. 5.36 mil. 5.00 mil. Inflation / Prices Personal Consumption Expenditures (YoY) Nov '19 1.5%1.3%1.8% Consumer Price Index (YoY)Dec '19 2.3%1.7%1.9% Consumer Price Index Core (YoY)Dec '19 2.3%2.4%2.2% Crude Oil Futures (WTI, per barrel)Dec 31 $61.06 $54.07 $45.41 Gold Futures (oz.)Dec 31 $1,523 $1,466 $1,281 Latest 0 150K 300K 450K 3% 4% 5% Dec '16 Jun '17 Dec '17 Jun '18 Dec '18 Jun '19 Dec '19 Unemployment Rate (left) vs. Change in Non-farm Payrolls (right) Change In Non-Farm Payrolls Unemployment Rate 0% 2% 4% Sep '16 Mar '17 Sep '17 Mar '18 Sep '18 Mar '19 Sep '19 Real GDP (QoQ) 0% 1% 2% 3% 4% Dec '16 Jun '17 Dec '17 Jun '18 Dec '18 Jun '19 Dec '19 Consumer Price Index CPI (YoY)Core CPI (YoY) 2 2 1 1 1. Data as of Second Quarter 2019. 2. Data as of Third Quarter 2018. Note: YoY = year-over-year, QoQ = quarter-over-quarter, SAAR = seasonally adjusted annual rate, WTI = West Texas Intermediate crude oil. Source: Bloomberg. PFM Asset Management LLC QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2019 Fixed Income Management Source: Bloomberg. Interest Rate Overview U.S. Treasury Note Yields U.S. Treasury Yield Curve U.S. Treasury Yields Yield Curves as of 12/31/19 0% 1% 2% 3% 4%3-mo1-yr2-yr3-yr5-yr7-yr10-yr30-yrYieldMaturity December 31, 2019 September 30, 2019 December 31, 2018 0% 1% 2% 3% 4%3-mo1-yr2-yr3-yr5-yr07-yr10-yr25-yr30-yrYieldMaturity U.S. Treasury Federal Agency Corporates, A Rated 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 12/31/18 3/31/19 6/30/19 9/30/19 12/31/19Yield 2-Year 5-Year 10-Year Maturity Dec '19 Sep '19 Change over Quarter Dec '18 Change over Year 3-Month 1.55% 1.82% (0.27%)2.36% (0.81%) 1-Year 1.58% 1.76% (0.18%)2.60% (1.02%) 2-Year 1.57% 1.62% (0.05%)2.49% (0.92%) 5-Year 1.69% 1.55% 0.14% 2.51% (0.82%) 10-Year 1.92% 1.67% 0.25% 2.69% (0.77%) 30-Year 2.39% 2.11% 0.28% 3.02% (0.63%) PFM Asset Management LLC QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2019 Fixed Income Management Source: ICE BofAML Indices. December 31, 2019 Duration Yield 3 Month 1 Year 3 Years 1-3 Year Indices U.S. Treasury 1.86 1.60% 0.51% 3.55% 1.84% Federal Agency 1.57 1.62% 0.55% 3.48% 1.96% U.S. Corporates, A-AAA rated 1.81 1.96% 0.79% 4.99% 2.75% Agency MBS (0 to 3 years)3.44 2.43% 0.77% 6.10% 3.05% Taxable Municipals 1.60 1.89% 0.61% 4.66% 3.04% 1-5 Year Indices U.S. Treasury 2.60 1.62% 0.35% 4.20% 2.11% Federal Agency 2.06 1.63% 0.47% 3.78% 2.11% U.S. Corporates, A-AAA rated 2.59 2.06% 0.81% 6.33% 3.22% Agency MBS (0 to 5 years)2.15 2.40% 0.59% 5.83% 2.77% Taxable Municipals 2.08 2.20% 0.59% 5.10% 3.13% Master Indices (Maturities 1 Year or Greater) U.S. Treasury 6.70 1.82%(0.89%)6.99% 3.37% Federal Agency 4.26 1.84%(0.13%)5.87% 3.11% U.S. Corporates, A-AAA rated 7.75 2.60% 0.62% 12.58% 5.36% Agency MBS (0 to 30 years)3.53 2.55% 0.66% 6.51% 3.29% Taxable Municipals 11.02 3.21%(1.58%)13.69% 7.38% As of 12/31/19 Returns for Periods ended 12/31/19 Returns for periods greater than one year are annualized. PFM Asset Management LLC ICE BofAML Index Returns QUARTERLY MARKET SUMMARY For the Quarter Ended December 31, 2019 Fixed Income Management DISCLOSURES PFM is the marketing name for a group of affiliated companies providing a range of services. All services are provided through separate agreements with each company. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. Investment advisory services are provided by PFM Asset Management LLC, which is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The information contained is not an offer to purchase or sell any securities. Additional applicable regulatory information is available upon request. For more information regarding PFM’s services or entities, please visit www.pfm.com. The views expressed within this material constitute the perspective and judgment of PFM Asset Management LLC at the time of distribution and are subject to change. Information is obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management LLC cannot guarantee its accuracy, completeness, or suitability. This material is for general information purposes only and is not intended to provide specific advice or recommendation. The information contained in this report is not an offer to purchase or sell any securities. © 2019 PFM Asset Management LLC. Further distribution is not permitted without prior written consent. PFM Asset Management LLC PFM Asset Management LLC For the Quarter Ended December 31, 2019 Portfolio Recap Portfolio Review Our strategy throughout the fourth quarter included the following elements: •Following three consecutive Fed rate cuts, we continued to maintain portfolio durations in line with benchmarks for the quarter as market expectations called for stable rates well into 2020. •We maintained broad diversification across all permitted fixed income sectors. Although most sector spread levels were on the tighter end of their recent trading history, the incremental income was generally additive to performance in a range- bound interest rate environment in the fourth quarter. •We continued to de-emphasize agencies, generally reducing allocations in favor of other sectors. Value in federal agency issuers remained extremely limited, largely on scarce supply. Spreads remained near historically tight levels, capping the sector's excess returns in the fourth quarter. In some instances, agencies were trading at yields less than similar-maturity Treasuries. We also largely avoided callable agencies during the quarter as early redemption risk remained elevated. •Short-term investors found opportunities from wider spreads on money market credit investments. Increased allocations to these sectors at attractive levels helped cushion the impact of the Fed’s lower overnight target rate. SAMPLE CLIENT PFM Asset Management LLC For the Quarter Ended December 31, 2019 Investment Strategy Outlook We expect the Fed to remain on hold for an extended period and rates to remain mostly range-bound in the near term. As a result, we plan to continue a duration-neutral strategy relative to benchmarks. Our outlook for the major investment-grade fixed income sectors is as follows: OutlookSAMPLE CLIENT •Federal agency yield spreads remain very tight after trading in a close range for most of 2019. We do not expect this to change. We continue to favor further reductions in agency holdings as their benefit and upside are limited. •In the money market space, a positively sloped yield curve and wide spreads have created opportunities for incremental earnings potential. PFM Asset Management LLC SAMPLE CLIENT Sector Allocation and Compliance  The portfolio is in compliance with the Client’s Investment Policy and the Arizona Revised Statutes. Security Type Market Value %of Portfolio %Change vs.9/30/19 Permitted by Policy In Compliance U.S. Treasury $4,661,118 11.2%+0.1%100% Federal Agency $18,553,485 44.4%-0.1%100% Securities Sub-Total $23,214,603 55.6% Accrued Interest $100,389 Securities Total $23,314,992 AZ LGIP $18,525,780 44.4%-0.1% Investments Total $41,740,383 100.0% Market values, excluding accrued interest. Detail may not add to total due to rounding. Current investment policy as of February 2000. For the Quarter Ended December 31, 2019 Portfolio Compliance 100% For the Quarter Ended December 31, 2019 Portfolio Snapshot Portfolio Statistics As of December 31, 2019 $23,065,000 $23,314,992 $23,214,603 $100,389 - Accrued Interest: Cash: Par Value: Total Market Value: Security Market Value: $23,029,708 1.60% 2.33% AAAverage Credit: * Yield at Cost: Amortized Cost: Yield at Market: Effective Duration:1.44 Years Duration to Worst:1.44 Years Average Maturity:1.48 Years Credit Quality (S&P Ratings) 100.0% AA+ 0% 5% 10% 15% 20% 25% 30% 35% 40% 0 - 1 Year 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years > 5 Years 34.2% 26.6% 39.2% 0.0%0.0%0.0% Maturity Distribution Sector Allocation 79.9% Federal Agency/GSE 20.1% U.S. Treasury PFM Asset Management LLC * An average of each security’s credit rating assigned a numeric value and adjusted for its relative weighting in the portfolio. SAMPLE CLIENT For the Quarter Ended December 31, 2019 Portfolio Composition Sector Allocation December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 % of TotalMV ($MM)Sector % of Total% of Total% of Total MV ($MM)MV ($MM)MV ($MM) Federal Agency/GSE 18.6 79.9% 18.6 80.0% 18.3 78.8% 16.9 82.3% U.S. Treasury 4.7 20.1% 4.6 20.0% 4.9 21.2% 3.6 17.7% $23.2 100.0%$23.2 100.0%$23.2 100.0%$20.5 100.0%Total 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% December 2019 September 2019 June 2019 March 2019 U.S. Treasury Federal Agency/GSE PFM Asset Management LLC Detail may not add to total due to rounding. SAMPLE CLIENT For the Quarter Ended December 31, 2019 Portfolio Composition Maturity Distribution As of December 31, 2019 >5 Years 4-5 Years 3-4 Years 2-3 Years 1-2 Years 0-1 Years Yield at MarketPortfolio/Benchmark Average Maturity 1.60% 34.2% 26.6% 39.2% 0.0% 0.0% 0.0%1.48 yrsSAMPLE CLIENT ICE BofAML 1-3 Year U.S. Agency Index 1.62% 0.0% 60.3% 39.7% 0.0% 0.0% 0.0%1.88 yrs 0% 10% 20% 30% 40% 50% 60% 70% 0-1 Years 1-2 Years 2-3 Years 3-4 Years 4-5 Years > 5 Years 34.2% 26.6% 39.2% 0.0%0.0%0.0%0.0% 60.3% 39.7% 0.0%0.0%0.0% SAMPLE CLIENT ICE BofAML 1-3 Year U.S. Agency Index PFM Asset Management LLC SAMPLE CLIENT For the Quarter Ended December 31, 2019 Portfolio Performance Portfolio Earnings Quarter-Ended December 31, 2019 Market Value Basis Accrual (Amortized Cost) Basis Net Purchases/Sales Change in Value Interest Earned $23,195,278.90 $12,973.49 $6,351.10 $120,588.99 $126,940.09 $23,214,603.49 $23,000,774.59 $12,973.49 $15,960.40 $120,588.99 $136,549.39 $23,029,708.48 Portfolio Earnings Beginning Value (09/30/2019) Ending Value (12/31/2019) PFM Asset Management LLC SAMPLE CLIENT For the Quarter Ended December 31, 2019 Portfolio Composition Sector/Issuer Distribution As of December 31, 2019 % of SectorSector / Issuer Market Value ($)% of Total Portfolio Federal Agency/GSE FANNIE MAE 35.7% 44.6% 8,281,120 FEDERAL HOME LOAN BANKS 25.1% 31.4% 5,830,035 FREDDIE MAC 19.1% 23.9% 4,442,331 100.0% 79.9% 18,553,485 Sector Total U.S. Treasury UNITED STATES TREASURY 20.1% 100.0% 4,661,118 100.0% 20.1% 4,661,118 Sector Total 100.0% 23,214,603 Portfolio Total 100.0% PFM Asset Management LLC SAMPLE CLIENT For the Quarter Ended December 31, 2019 Portfolio Activity Quarterly Portfolio Transactions Trade Date Settle Date Maturity DatePar ($)CUSIP Security Description Transact Amt ($) Yield at Market Realized G/L (BV)Coupon BUY 10/22/19 10/24/19 1,005,000 3135G0W33 FANNIE MAE NOTES 9/6/22 999,244.70 1.65%1.37% 12/30/19 12/31/19 1,125,000 912828YW4 UNITED STATES TREASURY NOTES 12/15/22 1,126,370.47 1.61%1.62% 2,130,000 2,125,615.17Total BUY INTEREST 10/12/19 10/12/19 1,055,000 3130AF5B9 FEDERAL HOME LOAN BANKS NOTES 10/12/21 15,825.00 3.00% 10/12/19 10/12/19 1,260,000 3135G0V59 FANNIE MAE NOTES 4/12/22 14,175.00 2.25% 10/23/19 10/23/19 910,000 3137EAEM7 FHLMC NOTES 4/23/20 11,375.00 2.50% 10/24/19 10/24/19 1,000,000 3135G0R39 FANNIE MAE GLOBAL NOTES 10/24/19 5,000.00 1.00% 11/17/19 11/17/19 2,530,000 3137EAEK1 FHLMC NOTES 11/17/20 23,718.75 1.87% 12/10/19 12/10/19 1,230,000 3130A5P45 FEDERAL HOME LOAN BANKS NOTES 6/10/22 14,606.25 2.37% 12/22/19 12/22/19 2,490,000 3135G0U35 FANNIE MAE NOTES 6/22/21 34,237.50 2.75% 12/31/19 12/31/19 1,110,000 9128283N8 US TREASURY NOTES 12/31/19 10,406.25 1.87% 12/31/19 12/31/19 990,000 912828G87 US TREASURY NOTES 12/31/21 10,518.75 2.12% 12,575,000 139,862.50Total INTEREST MATURITY 10/24/19 10/24/19 1,000,000 3135G0R39 FANNIE MAE GLOBAL NOTES 10/24/19 1,000,000.00 0.00 1.00% 12/31/19 12/31/19 1,110,000 9128283N8 US TREASURY NOTES 12/31/19 1,110,000.00 0.00 1.87% 2,110,000 2,110,000.00 0.00Total MATURITY PFM Asset Management LLC SAMPLE CLIENT For the Quarter Ended December 31, 2019 Portfolio Holdings Managed Account Detail of Securities Held Original Cost Settle Date Trade Date Moody's Rating S&P Rating Accrued Interest Amortized Cost Market Value YTM at Cost Security Type/Description CUSIP ParDated Date/Coupon/Maturity U.S. Treasury Bond / Note AA+Aaa 8/13/2019 8/14/2019 1,001,678.91 57.80 999,846.60 1,000,402.921.62US TREASURY NOTES DTD 12/31/2014 2.125% 12/31/2021 912828G87 990,000.00 AA+ Aaa 4/3/2019 4/4/2019 1,245,234.38 7,480.53 1,250,175.39 1,269,743.752.31US TREASURY NOTES DTD 03/02/2015 1.750% 02/28/2022 912828J43 1,265,000.00 AA+ Aaa 7/31/2019 8/1/2019 1,258,917.19 10,186.14 1,259,069.43 1,264,872.421.78UNITED STATES TREASURY NOTES DTD 07/15/2019 1.750% 07/15/2022 9128287C8 1,260,000.00 AA+ Aaa 12/30/2019 12/31/2019 1,125,571.29 849.13 1,125,570.77 1,126,099.131.61UNITED STATES TREASURY NOTES DTD 12/16/2019 1.625% 12/15/2022 912828YW4 1,125,000.00 1.85 4,661,118.22 4,634,662.19 18,573.60 4,640,000.00 4,631,401.77Security Type Sub-Total Federal Agency Bond / Note AA+ Aaa 5/1/2018 5/2/2018 993,090.00 8,263.89 999,561.56 1,000,527.002.52FHLB NOTES DTD 02/09/2018 2.125% 02/11/2020 3130ADN32 1,000,000.00 AA+ Aaa 8/27/2018 8/28/2018 2,481,160.50 14,948.65 2,488,609.61 2,494,748.432.60FEDERAL HOME LOAN BANKS NOTES DTD 03/16/2018 2.375% 03/30/2020 3130ADUJ9 2,490,000.00 AA+ Aaa 9/17/2018 9/18/2018 906,178.00 4,297.22 909,246.70 912,426.062.77FHLMC NOTES DTD 04/19/2018 2.500% 04/23/2020 3137EAEM7 910,000.00 AA+ Aaa 10/25/2017 10/26/2017 990,482.70 4,132.01 993,829.99 994,938.311.78FHLMC NOTES DTD 09/29/2017 1.625% 09/29/2020 3137EAEJ4 995,000.00 AA+ Aaa 8/27/2018 8/28/2018 2,485,345.50 5,797.92 2,512,049.47 2,534,966.392.70FHLMC NOTES DTD 11/15/2017 1.875% 11/17/2020 3137EAEK1 2,530,000.00 AA+ Aaa 8/27/2018 8/28/2018 2,479,078.40 12,222.22 2,521,954.92 2,553,561.602.69FNMA NOTES DTD 02/05/2016 1.375% 02/26/2021 3135G0J20 2,560,000.00 AA+ Aaa 8/27/2018 8/28/2018 2,491,020.90 1,711.88 2,490,570.43 2,532,110.882.73FANNIE MAE NOTES DTD 06/25/2018 2.750% 06/22/2021 3135G0U35 2,490,000.00 AA+ Aaa 2/20/2019 2/21/2019 1,067,828.80 6,945.42 1,063,749.86 1,080,805.302.52FEDERAL HOME LOAN BANKS NOTES DTD 10/12/2018 3.000% 10/12/2021 3130AF5B9 1,055,000.00 AA+ Aaa 1/28/2019 1/29/2019 899,478.00 11,156.25 899,641.74 918,210.602.65FANNIE MAE NOTES DTD 01/11/2019 2.625% 01/11/2022 3135G0U92 900,000.00 PFM Asset Management LLC SAMPLE CLIENT For the Quarter Ended December 31, 2019 Portfolio Holdings Managed Account Detail of Securities Held Original Cost Settle Date Trade Date Moody's Rating S&P Rating Accrued Interest Amortized Cost Market Value YTM at Cost Security Type/Description CUSIP ParDated Date/Coupon/Maturity Federal Agency Bond / Note AA+Aaa 7/31/2019 8/1/2019 1,274,439.60 6,221.25 1,272,264.64 1,278,848.341.81FANNIE MAE NOTES DTD 04/12/2019 2.250% 04/12/2022 3135G0V59 1,260,000.00 AA+ Aaa 7/1/2019 7/2/2019 1,248,782.10 1,704.06 1,245,679.49 1,253,954.251.84FEDERAL HOME LOAN BANKS NOTES DTD 06/12/2015 2.375% 06/10/2022 3130A5P45 1,230,000.00 AA+ Aaa 10/22/2019 10/24/2019 997,402.20 4,414.32 997,887.88 998,388.111.65FANNIE MAE NOTES DTD 09/06/2019 1.375% 09/06/2022 3135G0W33 1,005,000.00 2.45 18,553,485.27 18,395,046.29 81,815.09 18,425,000.00 18,314,286.70Security Type Sub-Total 22,945,688.47 23,065,000.00 100,388.69 23,029,708.48 23,214,603.49 2.33 Managed Account Sub Total $100,388.69 $23,029,708.48 $23,214,603.49 Securities Sub-Total Accrued Interest $100,388.69 Total Investments $23,314,992.18 2.33%$23,065,000.00 $22,945,688.47 Bolded items are forward settling trades. PFM Asset Management LLC SAMPLE CLIENT For the Quarter Ended December 31, 2019 Appendix IMPORTANT DISCLOSURES This material is based on information obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management LLC cannot guarantee its accuracy, completeness or suitability. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. All statements as to what will or may happen under certain circumstances are based on assumptions, some, but not all of which, are noted in the presentation. Assumptions may or may not be proven correct as actual events occur, and results may depend on events outside of your or our control. Changes in assumptions may have a material effect on results. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in this presentation is not an offer to purchase or sell any securities. Dime à Market values that include accrued interest are derived from closing bid prices as of the last business day of the month as supplied by Interactive Data, Bloomberg, or Telerate. Where prices are not available from generally recognized sources, the securities are priced using a yield based matrix system to arrive at an estimated market value. à In accordance with generally accepted accounting principles, information is presented on a trade date basis; forward settling purchases are included in the monthly balances, and forward settling sales are excluded. à Performance is presented in accordance with the CFA Institute ’s Global Investment Performance Standards (GIPS). Unless otherwise noted, performance is shown gross of fees. Quarterly returns are presented on an unannualized basis. Returns for periods greater than one year are presented on an annualized basis. Past performance is not indicative of future returns. à Bank of America/Merrill Lynch Indices provided by Bloomberg Financial Markets. à Money market fund/cash balances are included in performance and duration computations. à Standard & Poorʼs is the source of the credit ratings. Distribution of credit rating is exclusive of money market fund/LGIP holdings. à Callable securities in the portfolio are included in the maturity distribution analysis to their stated maturity date, although, they may be called prior to maturity. à MBS maturities are represented by expected average life. PFM Asset Management LLC SAMPLE CLIENT For the Quarter Ended December 31, 2019 Appendix GLOSSARY à ACCRUED INTEREST: Interest that is due on a bond or other fixed income security since the last interest payment was made. à AGENCIES: Federal agency securities and/or Government-sponsored enterprises. à AMORTIZED COST: The original cost of the principal of the security is adjusted for the amount of the periodic reduction of any discount or premium from the purchase date until the date of the report. Discount or premium with respect to short-term securities (those with less than one year to maturity at time of issuance) is amortized on a straight line basis. Such discount or premium with respect to longer-term securities is amortized using the constant yield basis. à BANKERS’ ACCEPTANCE: A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill as well as the insurer. à COMMERCIAL PAPER: An unsecured obligation issued by a corporation or bank to finance its short-term credit needs, such as accounts receivable and inventory. à CONTRIBUTION TO DURATION: Represents each sector or maturity range ’s relative contribution to the overall duration of the portfolio measured as a percentage weighting. Since duration is a key measure of interest rate sensitivity, the contribution to duration measures the relative amount or contribution of that sector or maturity range to the total rate sensitivity of the portfolio. à DURATION TO WORST: A measure of the sensitivity of a security ’s price to a change in interest rates, stated in years, computed from cash flows to the maturity date or to the put date, whichever results in the highest yield to the investor. à EFFECTIVE DURATION: A measure of the sensitivity of a security’s price to a change in interest rates, stated in years. à EFFECTIVE YIELD: The total yield an investor receives in relation to the nominal yield or coupon of a bond. Effective yield takes into account the power of compounding on investment returns, while nominal yield does not. à FDIC: Federal Deposit Insurance Corporation. A federal agency that insures bank deposits to a specified amount. à INTEREST RATE: Interest per year divided by principal amount and expressed as a percentage. à MARKET VALUE: The value that would be received or paid for an investment in an orderly transaction between market participants at the measurement date. à MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. à NEGOTIABLE CERTIFICATES OF DEPOSIT: A CD with a very large denomination, usually $1 million or more, that can be traded in secondary markets. à PAR VALUE: The nominal dollar face amount of a security. PFM Asset Management LLC SAMPLE CLIENT For the Quarter Ended December 31, 2019 Appendix GLOSSARY à PASS THROUGH SECURITY: A security representing pooled debt obligations that passes income from debtors to its shareholders. The most common type is the mortgage-backed security. à REPURCHASE AGREEMENTS: A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. à SETTLE DATE: The date on which the transaction is settled and monies/securities are exchanged. If the settle date of the transaction (i.e., coupon payments and maturity proceeds) occurs on a non-business day, the funds are exchanged on the next business day. à TRADE DATE: The date on which the transaction occurred; however, the final consummation of the security transaction and payment has not yet taken place. à UNSETTLED TRADE: A trade which has been executed; however, the final consummation of the security transaction and payment has not yet taken place. à U.S. TREASURY: The department of the U.S. government that issues Treasury securities. à YIELD: The rate of return based on the current market value, the annual interest receipts, maturity value, and the time period remaining until maturity, stated as a percentage on an annualized basis. à YTM AT COST: The yield to maturity at cost is the expected rate of return based on the original cost, the annual interest receipts, maturity value, and the time period from purchase date to maturity, stated as a percentage on an annualized basis. à YTM AT MARKET: The yield to maturity at market is the rate of return based on the current market value, the annual interest receipts, maturity value, and the time period remaining until maturity, stated as a percentage on an annualized basis. PFM Asset Management LLC SAMPLE CLIENT © PFM 0 Economic Update © PFM 1 Yield Curve Flattens Modestly as Long-Term Yields Fall Source: Bloomberg, as of 1/03/2020. U.S. Treasury Yield Curve 1.54% 1.69% 1.92% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 3 M 1 Y 2 Y 3 Y 4 Y 5 Y 10 Y 30 YYield Maturity December 31, 2019 January 6, 2020 © PFM 2 Market Reaction to Geopolitical Events Source: LPL Financial and CFRA 1/09/2020 © PFM 3 Short-Term Sector Reactions to Middle East Crises https://finance.yahoo.com/news/phoenix-the-hottest-housing-market-of-2019-133346968.html?guccounter=1 © PFM 4 Next market-implied rate cut in September 2020 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Dec '16 Dec '17 Dec '18 Dec '19 Dec '20 Dec '21 Rates Expected to Remain Steady in Coming Months Source: Federal Reserve and Bloomberg. Fed funds futures as of Fed meeting dates of 12/19/2018 and 3/20/2019, as well as 1/06/2020. Fed Funds Target Rate (mid-point) 1/06/20 Fed Funds Futures 12/31/19 Fed Funds Futures © PFM 5 Arizona Top Destination for Jobs Study compared 182 cities by analyzing metrics including: job opportunities, employment growth, starting salaries, in addition to other metrics. Reasons Americans are moving: •To seek a new job •Relocate for current job Arizona is home to three cities in the top 10 for employment: •#1 Scottsdale •#6 Chandler •#8 Tempe https://money.yahoo.com/best-cities-jobs-171827960.html © PFM 6 Phoenix Housing Value Growth Exceeds National Average https://finance.yahoo.com/news/phoenix-the-hottest-housing-market-of-2019-133346968.html?guccounter=1 Sept 2019 AZ 6% National 3.2% Exceptions to Professional Services Agreement Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 Exceptions to Sample Professional Service Agreement: Town of Marana RFP pg. 19 of PDF – SAMPLE AGREEMENT – ARTICLE 7. TERMINATION AND BREACH 7.04. This Agreement may be terminated if for any reason the Town Council does not appropriate sufficient funds for purpose of maintaining this Agreement, provided that prompt written notice is given to Consultant of any non-appropriation of funds. Explanation: PFM Asset Management LLC respectfully requests that the Town Council provide PFM Asset Management LLC with prompt notification of any event of non-appropriation. RFP pg. 19 of PDF – SAMPLE AGREEMENT – ARTICLE 8. INDEMNIFICATION 8.01. The Consultant agrees to defend, save, hold harmless, and indemnify the Town, its officials….from and against any and all manner of claims, suits, lawsuits, action……caused by or resulting from the Consultant’s negligent acts, errors, omissions, or negligent acts in the performance of services pursuant to this Agreement. Explanation: PFM Asset Management LLC respectfully requests the opportunity to negotiate the indemnification language in any resulting agreement so that PFM Asset Management LLC’s obligation to indemnify is limited to circumstances in which its performance has been wrongful, which would include negligent or intentionally wrongful acts. If PFM Asset Management LLC is awarded the engagement, we respectfully request the inclusion of certain provisions in the resulting contract that are driven by our status as an investment advisor registered under the Investment Advisers Act of 1940 (e.g., registered advisor description; conflict of interest provision; our maintenance of books and records; and our disclosu re statement [Form ADV, Parts 2A and 2B]). Required Forms Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 Non-Collusion Affidavit Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 Form W-9 Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 Addendum No. 1 Acknowledgement Town of Marana Request for Qualifications for Investment Management Services | RFQ #2020-009 23-3087064