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Home My WebLink AboutCompliance Analysis Portfolio Management Summaries - May and June 2004City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT May 2004 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC) will meet on 29-30 June to review short-term interest rates. The market has already priced in a 25 basis -point rate hike. Chairman Greenspan recently made a statement that he continues to anticipate raising short-term interest rates at a "measured pace," although this could change if inflation were to surge. Greenspan's intention was to reassure the financial markets that the FOMC would not be complacent in the face of inflation, although it is currently not viewed as a serious threat. Chairman Greenspan did cite some areas of inflationary concern, however: a rise in energy prices; indications that wages are rising faster than productivity; a significant increase in core consumer prices; and a recovery of corporate pricing power. Greenspan was responding to a recent Labor Department report that showed that the Consumer Price Index had risen 0.6% in May -- the biggest increase in three years. This was offset, however, by a meager increase of 0.2% in core inflation, excluding volatile energy and food prices. President Bush recently nominated Chairman Greenspan, age 78, to a fifth four-year term as FOMC Chairman, a position that he has held since 1987. Chairman Greenspan is expected to win Senate approval with little opposition. Pas 6.C. C. r. Treasurer PORTFOLIO STATISTICS Dollars in Thousands MAY-04 APR-04 MAR-04 FEB-04 JAN-04 DEC-03 CITY Month -End Book Value*** $ 125,903 $ 130,340 $ 126,691 $ 124,938 $ 127,837 $ 132,836 Month -End Market Value*** $ 126,048 $ 130,530 $ 127,019 $ 125,243 $ 128,091 $ 133,087 Paper Gain (Loss) $ 145 $ 190 $ 328 $ 305 $ 254 $ 251 Prior Year Book Variance $ (55,318) $ (26,045) $ (28,114) $ (39,878) $ (46,315) $ (3,851) Interest Earnings $ 159 $ 156 $ 161 $ 143 $ 168 $ 172 Yield -To -Maturity 1.53% 1.54% 1.56% 1.58% 1.58% 1.58% Weighted Maturity (Days) 120 119 119 111 100 92 Effective Duration 0.18 0.20 0.22 0.21 0.18 0.16 RDA Month -End Book Value*** $ 179,643 $ 152,696 $ 163,515 $ 164,571 $ 163,130 $ 141,723 Month -End Market Value *** $ 181,819 $ 154,863 $ 165,671 $ 166,715 $ 165,294 $ 143,881 Paper Gain (Loss) $ 2,176 $ 2,167 $ 2,156 $ 2,144 $ 2,164 $ 2,158 Prior Year Book Variance $ 77,086 $ 49,309 $ 58,734 $ 60,901 $ 58,107 $ 48,936 Interest Earnings $ 161 $ 156 $ 174 $ 154 $ 151 $ 159 Yield -To -Maturity 1.17% 1.22% 1.20% 1.20% 1.24% 1.29% Weighted Maturity (Days) 81 96 91 93 91 89 Effective Duration 0.02 0.03 0.04 0.06 0.06 0.03 Omits SLGSs. Dollars in Thousands Ageing Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: City of Palm Desert -- Portfolio Characteristics 31 May 2004 Market Value $ 61,829 4,522 2,502 7,311 4,805 5,855 $ 86,824 Ratings* Aaa Unrated ** Aa A Al/P1 Total: Market Value $ 27,671 72,785 7,147 10,373 5,014 $ 122,990 Sector Market Value Money Market Funds $ 22,697 LAIF 40,000 RDA Loan 32,785 MTNs 19,985 U.S. Treasury Federal Agency 2,509 Commercial Paper 5,014 Total: $ 122,990 Month City Yield LAIF Yield Variance Jun03 1.58 1.70 -0.12 Jul 1.46 1.65 -0.20 Aug 1.43 1.63 -0.20 Sep 1.62 1.64 -0.01 Oct 1.61 1.60 0.01 Nov 1.61 1.57 0.03 Dec 1.58 1.55 0.03 Jan04 1.58 1.53 0.05 Feb 1.58 1.44 0.14 Mar 1.56 1.47 0.09 Apr 1.54 1.45 0.09 May 1.53 1.43 0.11 * Moody's Credit Ratings ** LAIF, and City Loan to RDA General Fund Ageing' 0 0 0 a 100 80 - 60 - 40 - 20 - 0 71 <1M 5 3 8 6 < 2M < 3M < 6M < 1 YR 0 < 2YR rCredit Quality Aaa Aa 0% Unrated ** 66% Asset Allocation Money Market Funds 20% RDA Loan 28% MTNs 17% Performance 1.8 1.4 1 Jun03 Jul Aug Sep Oct Nov DecJan04Feb Mar Apr May ■LAIF Yield ®City Yield Page 2 of 8 City of Palm Desert Portfolio Holdings 31 May 2004 Market Ratings lPar Value Medium -Term Notes $ 2,355,000 $ 3,000,000 $ 2,500,000 $ 2,500,000 $ 2,000,000 $ 2,425,000 $ 2,360,000 $ 1,270,000 $ 1,000,000 Issuer CHEVRON -TEXACO FORD FORD FORD FORD GENERAL ELECTRIC NORTHERN TRUST PITNEY BOWES WACHOVIA 1 Coupon I Maturity I Cost I YTM 6.63 7.20 7.20 7.50 6.70 4.25 6.65 5.95 7.70 10/ 1 /04 6/15/07 6/15/07 6/15/04 7/16/04 1/28/05 11/9/04 2/1/05 2/15/05 $ 2,397,841 1.13 $ 3,116,177 5.75 $ 2,596,814 5.75 $ 2,504,428 2.84 $ 2,008,584 3.17 $ 2,471,575 1.30 $ 2,416,343 1.17 $ 1,308,784 1.32 $ 1,044,115 1.38 Price I Value 101.70 $ 106.45 $ 106.45 $ 100.21 $ 100.63 $ 101.64 $ 102.19 $ 102.31 $ 104.09 $ Moody's 2,395,073 Aa2 3,193,572 A3 2,661,310 A3 2,505,240 A3 2,012,590 A3 2,464,857 Aaa 2,411,689 Aa3 1,299,309 Aa3 1,040,880 Aa3 $ 19,410,000 Subtotal $ 19,864,661 2.93 $ 19,984,519 Commercial Paper -- $ 2,510,000 $ 2,517,000 Discount CITIGROUP GENERAL ELECTRIC 1.05 8/12/04 $ 2,498,140 1.07 99.79 $ 2,504,656 P-1 1.06 9/15/04 $ 2,499,880 1.10 99.68 $ 2,509,070 P-1 $ 5,027,000 Subtotal $ 4,998,020 1.08 $ 5,013,726 Federal Agencies -- Discount $ 2,513,000 FED NATIONAL MTG ASSOC 1.06 7/28/04 $ 2,499,670 1.08 99.84 $ 2,508,979 Aaa $ 2,513,000 Subtotal $ 2,499,670 1.08 $ 2,508,979 LGIP $ 40,000,000 L.A.I.F. 0.00 6/1/04 $ 40,000,000 1.43 100.00 $ 40,000,000 NR $ 40,000,000 Subtotal $ 40,000,000 1.43 $ 40,000,000 LGIP $ 13,288,818 C.A.M.P. 0.00 6/1/04 $ 13,288,818 0.89 100.00 $ 13,288,818 NR $ 13,288,818 Subtotal $ 13,288,818 0.89 $ 13,288,818 Pooled Funds - AIM $ 9,408,141 PRIME PORTFOLIO 0.00 6/1/04 $ 9,408,141 0.63 100.00 $ 9,408,141 Aaa $ 9,408,141 Subtotal $ 9,408,141 0.63 $ 9,408,141 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 5.18 $ 32,785,480 1.43 0.00 $ 32,785,480 NR $ 32,785,480 Subtotal $ 32,785,480 1.43 32,785,480 Total Investments $ 122,432,439 $ 122,844,790 1.53 $ 122,989,663 NR = Not Rated Page 3 of 8 IPar Value I Cash $ 2,031,835 $ 612,926 $ 22,960 $ 377,136 City of Palm Desert Portfolio Holdings 31 May 2004 Market Ratings Issuer I Coupon I Maturity I Cost I YTM CITY MAIN CHKG DESERT WILLOW CHKG OFFICE COMPLEX TRUST RECREATIONAL FAC CHKG 0.00 0.00 0.00 0.00 6/1/04 $ 6/1/04 $ 6/1/04 $ 6/1/04 $ 2,031,835 N/A 612,926 N/A 22,960 N/A 377,136 N/A Price I Value 100.00 $ 100.00 $ 100.00 $ 100.00 $ 2,031,835 612,926 22,960 377,136 Moody's NR NR NR NR $ 3,044,856 Subtotal $ 3,044,856 $ 3,044,856 Total Investments and Cash $ 125,477,295 $ 125,889,646 $ 126,034,519 NR = Not Rated Page 4 of 8 Palm Desert Redevelopment Agency -- Portfolio Characteristics 31 May 2004 Dollars in Thousands Ageing Interval Market Value < 1 M $ 119,004 < 2M - < 3M 7,128 < 6M 6,518 < 1YR - < 2YR < 3YR < 4YR < 5YR > 5YR Total: $ 132,650 Quality* Market Value Aaa $ 113,358 Unrated ** 61,036 Aa A Al/P1 5,017 Total: $ 179,411 Portfolio Ageing w/o SLGSsI Sector Market Value U.S. Treasury $ 7,128 Money Market Funds 70,720 LAIF 61,036 Federal Agency 5,510 Commercial Paper 5,017 Repurchase Agreements 30,000 Corporate Bonds Total: $ 179,411 Month RDA Yield LAIF Yield Variance Jun03 1.71 1.70 0.01 Jul 1.56 1.65 -0.09 Aug 1.36 1.63 -0.27 Sep 1.28 1.64 -0.36 Oct 1.30 1.60 -0.30 Nov 1.29 1.57 -0.28 Dec 1.29 1.55 -0.25 Jan04 1.24 1.53 -0.29 Feb 1.20 1.44 -0.24 Mar 1.20 1.47 -0.28 Apr 1.22 1.45 -0.23 May 1.17 1.43 -0.26 100 90 80 • 70 • 60 0 50 40 • 30 20 10 0 0 5 5 0 0 0 0 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR Credit Quality' Aaa 65% i Unrated ** _:17 35% \ J Asset Allocation U.S. Treasury 5% Money Market Funds 51% LAIF 44% [performance' 1.1 Jun03 Jul Aug Sep Oct Nov Dec Jan04 Feb Mar Apr May ■ LAI F Yield IS RDA Yield * Moody's Credit Ratings ** LAIF Page 5 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 31 May 2004 Market Ratings Par Value Issuer Coupon I Maturity I Cost I YTM Price I Value Moody's Repurchase Agreements $ 30,000,000 WELLS FARGO BANK 0.92 6/1/04 $ 30,000,000 0.92 100.00 $ 30,000,000 Aaa $ 30,000,000 Subtotal $ 30,000,000 0.92 $ 30,000,000 Commercial Paper $ 3,021,000 $ 2,008,000 - Discount GENERAL ELECTRIC TOYOTA 1.10 9/22/04 $ 2,999,215 1.122 99.65 $ 3,010,477 P-1 1.01 6/23/04 $ 1,999,831 1.014 99.94 $ 2,006,704 P-1 $ 5,029,000 Subtotal $ 4,999,047 1.09 $ 5,017,181 U.S. Treasury - Discount $ 7,143,000 UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 99.79 $ 7,128, 057 Aaa $ 7,143,000 Subtotal $ 4,989,671 5.54 $ 7,128,057 Federal Agency - $ 2,000,000 $ 3,523,000 - Discount FED NATIONAL MTG ASSOC 1.02 6/23/04 $ 1,991,783 1.024 99.94 $ 1,998,800 Aaa FED NATIONAL MTG ASSOC 1.10 9/3/04 $ 3,499,963 1.121 99.69 $ 3,512,079 Aaa $ 5,523,000 Subtotal $ 5,491,747 1.10 $ 5,510,879 LGIPs $ 40,000,000 $ 6,249,493 $ 5,027,390 $ 9,758,158 L.A.I.F. L.A.I.F. (HOUSING) L.A.I.F. BOND PROCEEDS L.A.I.F. BOND PROCEEDS 0.00 6/1/04 $ 40,000,000 1.426 100.00 $ 40,000,000 0.00 6/1/04 $ 6,249,493 1.426 100.00 $ 6,249,493 0.00 6/1/04 $ 5,027,390 1.426 100.00 $ 5,027,390 0.00 6/1/04 $ 9,758,158 1.426 100.00 $ 9,758,158 NR NR NR NR $ 61,035,041 Subtotal $ 61,035,041 1.43 $ 61,035,041 LGIP $ 29,529,261 C.A.M.P. 0.90 6/1/04 $ 29,529,261 0.89 100.00 $ 29,529,261 NR $ 29,529,261 Subtotal $ 29,529,261 0.89 $ 29,529,261 Pooled Funds -- AIM $ 41,190,292 PRIME PORTFOLIO 0.00 6/1/04 $ 41,190,292 0.64 100.00 $ 41,190,292 Aaa $ 41,190,292 Subtotal $ 41,190,292 0.64 $ 41,190,292 Total Investments $ 179,449,593 Cash $ 2,088,253 $ 320,027 HOUSING AUTH CHKG HOUSING AUTH TRUST $ 177,235,058 1.17 $ 179,410,710 0.00 6/1/04 $ 2,088,253 N/A 100.00 $ 2,088,253 NR 0.00 6/1/04 $ 320,027 N/A 100.00 $ 320,027 NR $ 2,408,280 ' Subtotal $ 2,408,280 $ 2,408,280 NR = Not Rated Page 6 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 31 May 2004 Market Ratings IPar Value Total Investments and Cash $ 181,857,873 Issuer I Coupon I Maturity I Cost I YTM $ 179,643,338 Price I Value $ 181,818,990 Moody's NR = Not Rated Page 7 of 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Investment Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended 31 May 2004, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on 24 June 2004, PauLS. 6b on City Treasurer CA Govt Code Investment Category SUMMARY OF AUTHORIZED INVESTMENTS California Govemment Code I City Investment Policy Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized (1) 53601(b) U.S. Treasuries 5 Years No Limit 5 Years I No Limit 0.0% 2.8% 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 2.0% 3.1% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 4.1% 2.8% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA- or Aa3 - - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA & Aaa - 16.9% 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 16.2% 0.0% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 7.7% 23.2% 53601(1) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government Investment Pools 90 Days 20% AAA & Aaa or Advisor 90 Days 20% (2) AAA & Aaa or Advisor 10.8% 16.7% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Security) Not Authorized 16429 LAIF No Limit No Limit 32.6% 34.4% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. 73.3% 100.0% Certified California Municipal Treasurer Page 8 of 8 City of Patin Desert City and RedevelopmentAgency Portfolios COMPLIANCE -ANALYSTS ANOWirtnitfirREMM June 2004 Atn:hf.> Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC) raised the Federal Funds Rate by 25 basis points (b.p.) to 1.25 percent at the June 30th meeting. The FOMC indicated that it would continue to raise rates at a "measured pace" (25 b.p.), although it would retain the option of making more dramatic rate hikes if inflation accelerated. Merrill Lynch is forecasting a 25 b.p. hike at the August 10th FOMC meeting, and then another 25 b.p. hike by year-end. Wells Fargo is advising its institutional clients to keep portfolio maturities short, and to wait for the Federal Reserve to complete its tightening cycle. Wells Fargo is also recommending that its clients buy Corporates since many companies currently have robust earnings and a strong cash position. These factors diminish default risk. Although consumer spending is slowing, it is expected to accelerate again, due to increasing employment, income, and rising consumer confidence. Business spending has been robust, rising at a double-digit rate. Inventory -sales ratios are at a historic low. The economy appears to be settling into a sustainable growth pattern, which should help to control inflation. While the pace of job creation has not been bad, nearly 90% of the new jobs have been low -wage jobs in the service sector. This is not good news in the long run, since the the sustainability of the business cycle is affected by the rate at which incomes rise. Pas G c.c.s r Treasurer Dollars in Thousands PORTFOLIO STATISTICS JUN-04 MAY-04 APR-04 MAR-04 FEB-04 JAN-04 CITY Month -End Book Value*** $ 142,417 $ 125,903 $ 130,340 $ 126,691 $ 124,938 $ 127,837 Month -End Market Value*** $ 142,542 $ 126,048 $ 130,530 $ 127,019 $ 125,243 $ 128,091 Paper Gain (Loss) $ 125 $ 145 $ 190 $ 328 $ 305 $ 254 Prior Year Book Variance $ (35,770) $ (55,318) $ (26,045) $ (28,114) $ (39,878) $ (46,315) Interest Earnings $ 174 $ 159 $ 156 $ 161 $ 143 $ 168 Yield -To -Maturity 1.58% 1.53% 1.54% 1.56% 1.58% 1.58% Weighted Maturity (Days) 133 120 119 119 111 100 Effective Duration 0.23 0.18 0.20 0.22 0.21 0.18 RDA Month -End Book Value*** $ 184,909 $ 179,643 $ 152,696 $ 163,515 $ 164,571 $ 163,130 Month -End Market Value *** $ 187,083 $ 181,819 $ 154,863 $ 165,671 $ 166,715 $ 165,294 Paper Gain (Loss) $ 2,174 $ 2,176 $ 2,167 $ 2,156 $ 2,144 $ 2,164 Prior Year Book Variance $ 85,643 $ 77,086 $ 49,309 $ 58,734 $ 60,901 $ 58,107 Interest Earnings $ 183 $ 161 $ 156 $ 174 $ 154 $ 151 Yield -To -Maturity 1.37% 1.17% 1.22% 1.20% 1.20% 1.24% Weighted Maturity (Days) 128 81 96 91 93 91 Effective Duration 0.15 0.02 0.03 0.04 0.06 0.06 Omits SLGSs. Dollars in Thousands Ageing Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: City of Palm Desert -- Portfolio Characteristics 30 June 2004 Market Value $ 57,842 2,505 2,509 7,806 17,301 5,855 $ 93,818 Ratings * Market Value Aaa $ 21,294 Unrated ** 84,084 Aa 7,109 A 10,340 P1 11,025 Total: $ 133,852 Sector Money Market Funds LAIF RDA Loan MTNs U.S. Treasury Federal Agency Commercial Paper Total: Market Value $ 20,639 40,000 32,785 19,904 9,499 11,025 $ 133,852 Month City Yield LAIF Yield Variance JuI03 1.46 1.65 -0.20 Aug 1.43 1.63 -0.20 Sep 1.62 1.64 -0.01 Oct 1.61 1.60 0.01 Nov 1.61 1.57 0.03 Dec 1.58 1.55 0.03 Jan04 1.58 1.53 0.05 Feb 1.58 1.44 0.14 Mar 1.56 1.47 0.09 Apr 1.54 1.45 0.09 May 1.53 1.43 0.11 Jun 1.58 1.47 0.11 * Moody's Credit Ratings ** LAIF, and City Loan to RDA General Fund Ageing 100 1 80 - F 0 60 - 0 40 - 0 a 20 - 0 62 3 3 <1M <2M <3M 18 8 n f-1 <6M <1YR 0 < 2YR Credit Quality I Unrated ** 73% Asset Allocation I Money Market Funds 18% RDA Loan 29% MTNs 18% Performance -o 1.8 1.4 JuI03 Aug Sep Oct Nov DecJan04Feb Mar Apr May Jun •LAIF Yield al City Yield \ j Page 2 of 8 City of Palm Desert Portfolio Holdings 30 June 2004 Market Ratings Par Value Issuer Coupon I Maturity I Cost I YTM Price I Value Moodys Medium -Term Notes $ 2,406,000 $ 2,355,000 $ 3,000,000 $ 2,500,000 $ 2,000,000 $ 2,425,000 $ 2,360,000 $ 1,270,000 $ 1,000,000 ABBOTT LABS CHEVRON -TEXACO FORD FORD FORD GENERAL ELECTRIC NORTHERN TRUST PITNEY BOWES WACHOVIA 6.80 6.63 7.20 7.20 6.70 4.25 6.65 5.95 7.70 5/15/05 10/1/04 6/15/07 6/15/07 7/16/04 1/28/05 11/9/04 2/1/05 2/15/05 $ 2,503,549 $ 2,387,130 $ 3,112,991 $ 2,594,159 $ 2,002,861 $ 2,465,680 $ 2,405,645 $ 1,303,936 $ 1,038,904 2.08 1.13 5.75 5.75 3.17 1.30 1.17 1.32 1.38 103.45 101.18 106.33 106.33 100.14 101.26 101.66 101.83 103.38 $ 2,489,065 $ 2,382,707 $ 3,190,017 $ 2,658,347 $ 2,002,856 $ 2,455,451 $ 2,399,152 $ 1,293,228 $ 1,033,826 Al Aa2 A3 A3 A3 Aaa Aa3 Aa3 Aa3 $ 19,316,000 Subtotal $ 19,814,856 2.84 $ 19,904,649 Commercial Paper -- $ 2,510,000 3,025,000 3,031,000 2,517,000 Discount CITIGROUP GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC 1.05 1.55 1.64 1.06 8/12/04 $ 12/15/04 $ 1/14/05 $ 9/15/04 $ 2,498,140 1.07 99.87 $ 2,999,603 1.61 99.28 $ 2,999,932 1.70 99.10 $ 2,499,880 1.10 99.77 $ 2,506,852 3,003,119 3,003,660 2,511,293 P-1 P-1 P-1 P-1 $ 11,083,000 Subtotal $ 10,997,555 1.40 $ 11,024,925 Federal Agencies -- Discount 2,513,000 1,015,000 3,035,000 3,045,000 FED NATIONAL MTG ASSOC FED NATIONAL MTG ASSOC FED NATIONAL MTG ASSOC FED NATIONAL MTG ASSOC 1.06 1.92 1.71 1.79 7/28/04 $ 5/2/05 $ 3/3/05 $ 4/1/05 $ 2,499,670 1.08 99.91 $ 997,021 2.00 98.25 $ 2,995,644 1.78 98.65 $ 2,999,427 1.86 98.43 $ 2,510,738 997,238 2,994,027 2,997,193 Aaa Aaa Aaa Aaa $ 9,608,000 Subtotal $ 9,491,762 1.64 $ 9,499,196 LGIP $ 40,000,000 $ 40,000,000 LGIP $ 11,297,994 L.A.I.F. Subtotal C.A.M.P. 0.00 7/1/04 $ 40,000,000 1.47 100.00 $ 40,000,000 NR $ 40,000,000 1.47 $ 40,000,000 0.00 7/1/04 $ 11,297,994 0.98 100.00 $ 11,297,994 NR $ 11,297,994 Subtotal $ 11,297,994 0.98 $ 11,297,994 Pooled Funds -- AIM $ 9,339,716 PRIME PORTFOLIO 0.00 7/1/04 $ 9,339,716 0.69 100.00 $ 9,339,716 Aaa $ 9,339,716 Subtotal $ 9,339,716 0.69 $ 9,339,716 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 7/1/04 $ 32,785,480 1.47 100.00 $ 32,785,480 NR $ 32,785,480 Subtotal $ 32,785,480 1.47 $ 32,785,480 NR = Not Rated Page 3 of 8 City of Palm Desert Portfolio Holdings 30 June 2004 Market Ratings Par Value Issuer I Coupon I Maturity I Cost I YTM Price I Value Moody's Total Investments $ 133,430,189 Cash $ 7,724,984 $ 512,907 $ 22,960 $ 404,448 CITY MAIN CHKG DESERT WILLOW CHKG OFFICE COMPLEX TRUST RECREATIONAL FAC CHKG 0.00 0.00 0.00 0.00 $ 133,727,363 1.58 7/1/04 $ 7/1/04 $ 7/1/04 $ 7/1/04 $ $ 133,851,960 7,724,984 N/A 100.00 $ 512,907 N/A 100.00 $ 22,960 N/A 100.00 $ 404,448 N/A 100.00 $ 7,724,984 512,907 22,960 404,448 NR NR NR NR $ 8,665,299 Subtotal $ 8,665,299 $ 8,665,299 Total Investments and Cash $ 142,095,488 $ 142,392,661 $ 142,517,258 NR = Not Rated Page 4 of 8 Dollars in Thousands Ageing Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Palm Desert Redevelopment Agency -- Portfolio Characteristics 30 June 2004 Market Value $ 90,781 7,128 6,523 2,000 10,985 $ 117,417 Quality* Market Value Aaa $ 83,921 Unrated ** 90,588 Aa A P1 10,019 Total: $ 184,528 Sector Market Value U.S. Treasury $ 30,664 Money Market Funds 71,313 LAIF 61,035 Federal Agency 11,497 Commercial Paper 10,019 Corporate Bonds Total: $ 184,528 Month RDA Yield LAIF Yield Variance JuI03 1.56 1.65 -0.09 Aug 1.36 1.63 -0.27 Sep 1.28 1.64 -0.36 Oct 1.30 1.60 -0.30 Nov 1.29 1.57 -0.28 Dec 1.29 1.55 -0.25 Jan04 1.24 1.53 -0.29 Feb 1.20 1.44 -0.24 Mar 1.20 1.47 -0.28 Apr 1.22 1.45 -0.23 May 1.17 1.43 -0.26 Jun 1.37 1.47 -0.10 Portfolio Ageing w/o SLGSs 100 90 80 70 60 50 40 o. 30 20 10 0 77 6 6 r, r, 2 9 n 0 0 0 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR J Credit Quality) Aaa 48% Unrated ** 52% M :Asset Allocation U.S. Treasury 19% Performance 1.1 1 Money Market Funds 44% LAIF 37% Ju103 Aug Sep Oct Nov DecJan04Feb Mar Apr May Jun ■LAIF Yield RDA Yield * Moody's Credit Ratings ** LAIF Page 5 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 30 June 2004 Market Ratings Par Value Issuer I Coupon I Maturity I Cost I YTM _ Price I Value Moody's Commercial Paper - $ 2,002,000 $ 3,021,000 $ 2,009,000 $ 3,039,000 - Discount CITIGROUP GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC 1.10 1.10 1.35 1.73 7/15/04 $ 9/22/04 $ 10/4/04 $ 3/1/05 $ 1,999,431 1.12 2,999,215 1.14 1,999,733 1.38 2,999,569 1.80 99.95 $ 99.74 $ 99.64 $ 98.83 $ 2,001,082 3,013,246 2,001,768 3,003,366 P-1 P-1 P-1 P-1 $ 10,071,000 Subtotal $ 9,997,948 1.38 $ 10,019,462 U.S. Treasury -- $ 23,107,000 Coupon UNITED STATES TREASURY 1.63 3/31/05 $ 23,066,518 1.86 99.81 $ 23,063,674 Aaa $ 23,107,000 $ 23,066,518 1.86 $ 23,063,674 U.S. Treasury -- $ 7,143,000 $ 469,000 Discount UNITED STATES TREASURY UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 99.87 $ 7,133,407 Aaa 1.26 9/30/04 $ 467,391 1.28 99.66 $ 467,388 Aaa $ 7,612,000 Subtotal Federal Agency -- Coupon • $ 1,983,000 FED HOME LOAN MORTGAGE $ 5,457,063 5.18 $ 7,600,795 1.88 1/15/05 $ 1,984,837 1.70 100.06 $ 1,984,239 Aaa I $ 1,983,000 Subtotal $ 1,984,837 1.70 $ 1,984,239 Federal Agency -- Discount $ 3,523,000 $ 3,040,000 $ 3,040,000 FED NATIONAL MTG ASSOC FED NATIONAL MTG ASSOC FED NATIONAL MTG ASSOC 0.00 9/3/04 $ 3,499,963 1.14 99.76 $ 3,514,545 0.00 3/4/05 $ 2,999,509 1.82 98.65 $ 2,998,960 0.00 3/1/05 $ 3,001,012 1.78 98.66 $ 2,999,264 Aaa Aaa Aaa $ 9,603,000 Subtotal $ 9,500,484 1.56 $ 9,512,769 LGIPs $ 40,000,000 $ 6,249,493 $ 5,027,390 $ 9,758,158 L.A.I.F. L.A.I.F. (HOUSING) L.A.I.F. BOND PROCEEDS L.A.I.F. BOND PROCEEDS 0.00 7/1/04 $ 40,000,000 1.47 100.00 $ 40,000,000 0.00 7/1/04 $ 6,249,493 1.47 100.00 $ 6,249,493 0.00 7/1/04 $ 5,027,390 1.47 100.00 $ 5,027,390 0.00 7/1/04 $ 9,758,158 1.47 100.00 $ 9,758,158 NR NR NR NR $ 61,035,041 Subtotal $ 61,035,041 1.47 $ 61,035,041 LGIP $ 29,552,996 C.A.M.P. 0.00 7/1/04 $ 29,552,996 0.98 100.00 $ 29,552,996 NR $ 29,552,996 Subtotal $ 29,552,996 0.98 $ 29,552,996 Pooled Funds -- AIM $ 41,759,251 PRIME PORTFOLIO 0.00 7/1/04 $ 41,759,251 0.69 100.00 $ 41,759,251 Aaa $ 41,759,251 Subtotal $ 41,759,251 0.69 $ 41,759,251 NR = Not Rated Page 6 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 30 June 2004 Market Ratings Par Value Issuer _I Coupon I Maturity I Cost I YTM Price I Value Moody's Total Investments $ 184,723,289 Cash $ 2,133,681 $ 319,567 HOUSING AUTH CHKG HOUSING AUTH TRUST $ 182,354,139 1.37 $ 184,528,229 0.00 7/1/04 $ 2,133,681 0.00 100.00 $ 2,133,681 0.00 7/1/04 $ 319,567 0.00 100.00 $ 319,567 NR NR $ 2,453,248 Subtotal $ 2,453,248 $ 2,453,248 Total Investments and Cash $ 187,176,537 $ 184,807,387 $ 186,981,477 NR = Not Rated Page 7 of 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Investment Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended 30 June 2004, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on 28 July 2004, PateZS.bon c. c.M i City Treasurer CA Govt Code Investment Category SUMMARY OF AUTHORIZED INVESTMENTS ICalifornia Government Code I City Investment Policy Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized (1) 53601(b) U.S. Treasuries 5 Years No Limit 5 Years I No Limit I 0.0% 15.6% 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) FederalAgencies 5 Years No Limit 5 Years 30% 7.1% 6.3% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% , A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 8.2% 5.5% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA- or Aa3 - - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA &Aaa - - 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601 (j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 14.8% 0.0%. 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 7.0% 22.9% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government Investment Pools 90 Days 20% AAA & Aaa or Advisor 90 Days 20% (2) AAA & Aaa or Advisor 8.5% 16.2% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Security) Not Authorized LAIF No Limit No Limit I 29.9% 33.5% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. 75.5% 100.0% Certified California Municipal Treasurer Page 8of8