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HomeMy WebLinkAboutInvestment Reports - July & Aug 2008 .....---- , ���� CITY OF PALM DESERT � � FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: CHERIE THOMPSON, OFFICE ASSISTANT PER NIAMH ORTEGA� DATE: September 29, 2008 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports forwere presented and approved at the September meeting of the Audit, Investment and Finance Committee for the months of July and August, 2008, respectively. Please include on the upcoming agenda for review and acceptance by City Council. If you have any questions please let me know by e-mail or phone, ext. 582. Thank you. C�TY COU����,���; APPROVED DENIED RECBIVED OTHSR M�gTzr�G n.��'E a- _O AYES: �i ner-�- � � c, �� Cat NOBs: � ,��, ABSENT: (',f� 15�t� Attachment (1) ABSTA2N: � VERIFIED BY• �� Original on•File with ity Clerk' s Office ��''�� BY RDA �l� ���'+�� u5�n A����:,�f� � o►v ��� �-��-C�,�' VERIFIED BY���:;� �'_.__ C1ric�inal on file with City Clerk's Office ��� Gity of Pa►m Desert �� � � � City and Redevelopment Agency Portfolios � COMPLIANCE ANALYSIS AND INVESTMENT REPORT July 2008 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) met on August 5, and left the Federal Funds Rate unchanged at 2.0%. The FOMC continued to speak of balancing both inflation and growth risks. The next FOMC meeting will be on September 16. No change in interest rates is expected. July bond yields were slightly lower as market participants contended with financial market volatility, a housing-led economic decline, and an end to Federal Reserve interest-rate cuts. The advance reading for second-quarter GDP showed that the U.S. economy grew at 1.9%. The year-over-year Core Consumer Price Index(CPI less food and energy) rose to 2.4%, signaling continued inflationary pressure. Housing starts were at their lowest level since 1991. Payroll data confirmed the seventh consecutive month of negative job growth. Merrill Lynch believes that the U.S. is already in a recession that probably won't end until mid-2009. Loan officer surveys show that banks are reluctant to extend credit to either consumers or businesses. Consumers have curbed their spending in reaction to higher oil prices, falling home prices, and tighter credit. "The U.S. economy has been hit simultaneously with the worst home price declines since the Great Depression; the largest oil price shock since 1979; and the worst liquidity crisis since the early 1990s. ��s �'�� c.c.M r Treasurer PORTFOLIO STATISTICS Dollars in Thousands JUL-08 JUN-08 MAY-08 APR-08 MAR-08 FEB-08 CITY Month-End Book Value"" $ 222,674 $ 231,179 $ 224,746 $ 222,731 $ 232,474 $ 226,921 Month-End Market Value""" $ 223,460 $ 232,273 $ 226,069 $ 224,158 $ 234,850 $ 229,529 Paper Gain(Loss) $ 786 $ 1,094 $ 1,323 $ 1,427 $ 2,376 $ 2,608 Prior Year Book Variance $ (33,469) $ (11,919) $ (32,513) $ (26,260) $ 21,482 $ 8,430 Interest Earnings $ 688 $ 689 $ 703 $ 716 $ 756 $ 739 Yield-To-Maturity 3.69% 3.75% 3.88% 3.98% 4.03% 4.31% Weighted Maturity(Days) 500 503 519 512 496 462 Effective Duration 0.65 0.68 0.74 0.77 0.79 0.70 RDA Month-End Book Value"""' $ 288,987 $ 285,360 $ 299,471 $ 261,769 $ 275,545 $ 276,463 Month-End Market Value""` $ 289,777 $ 286,216 $ 300,441 $ 263,017 $ 277,364 $ 278,326 PaperGain(Loss) $ 790 $ 856 $ 970 $ 1,248 $ 1,819 $ 1,863 PriorYearBookVariance $ (4,039) $ (17,349) $ (11,724) $ (17,240) $ (27,987) $ (31,632) Interest Earnings $ 748 $ 744 $ 770 $ 721 $ 800 $ 749 Yield-To-Maturity 3.08% 3.09% 3.14% 3.35°/a 3.36% 3.79% Weighted Maturity(Days) 277 280 266 305 291 249 Effective Duration 0.30 0.32 0.33 0.40 0.59 0.31 "" Omits SLGSs. City of Palm Desert-- Portfolio Characteristics - July 31, 2008 Dollars in Thousands Aaeinq Interval Market Value < 1 M $ 60,560 General Fund Ageing <2M 3,012 <3M 4,005 100 -- <6M 6,024 ^ $� < 1YR 10,074 0 <2YR 45,924 0 60 37 28 <3YR 24,388 � 40 <4YR 8,014 a 2p 2 2 q 6 15 5 0 0 <5YR - 0 >5YR - Total: $ 162,001 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Credit Quality Ratin s* Market Value qqq $ 164,764 A qq 47,173 3% � A 7,089 75% Unrated"`" 14 AA Total: $ 219,040 22% Sector Market Value Asset Allocation MMF $ 40,194 Agencies 38,677 Agencies �, MTNs MTNs 66,484 �go�o 31 /o CAMP 51,016 RDA Loan 22,655 MMF CAMP LAIF 14 18% 23°/a CP ' RDA Loan Total: $ 219,040 10% Month Citv Yield LAIF Yield Variance Performance Aug07 5.09 5.25 -0.17 Sep 5.01 5.23 -0.22 -.---------- Oct 5.05 5.14 -0.09 5.2 Nov 4.93 4.96 -0.03 Dec 4.87 4.80 0.07 0 4.4 Jan08 4.72 4.62 0.10 � Feb 4.31 4.16 0.15 } 3.6 Mar 4.05 3.78 0.27 Apr 3.98 3.40 0.58 2.8 May 3.88 3.07 0.81 Aug07Sep Oct Nov DecJan08Feb Mar Apr May Jun Jul Jun 3.75 2.89 0.86 Jul 3.69 2.88 0.82 vE ;���' �'. � ■'-� n , � r " Standard and Poors " LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings July 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,932,634 5.01 101.08 $ 2,951,606 Aa2 AA- $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,936,212 4.05 100.02 $ 3,795,831 Aa2 AA- $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,064,950 3.20 99.43 $ 2,982,960 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,096,161 4.91 98.72 $ 15,075,201 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,011,833 4.91 98.72 $ 2,009,040 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 989,589 5.19 99.16 $ 991,633 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,958,357 5.19 99.16 $ 3,966,532 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,994,705 4.99 99.95 $ 1,998,912 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,004,945 5.63 102.17 $ 2,079,221 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,937,337 5.65 106.05 $ 2,005,404 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,020,372 5.67 104.38 $ 2,087,672 Aaa AAA $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,102,732 3.23 102.17 $ 4,051,160 Aaa AAA $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,058,167 5.02 99.19 $ 3,054,951 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,998,758 5.18 99.95 $ 1,999,044 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,104,470 5.02 101.73 $ 2,034,644 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,036,215 4.93 103.96 $ 2,079,224 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,118,809 2.90 103.96 $ 3,118,836 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,131,936 5.13 103.69 $ 4,147,548 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,982,961 5.09 100.89 $ 2,017,818 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 2,001,835 4.92 99.55 $ 2,015,904 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,998,905 4.96 100.05 $ 2,020,986 Aa1 AA- $ 66,036,000 Subtotal $ 66,481,884 4.72 $ 66,484,125 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,008,201 4.61 102.88 $ 3,086,250 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,008,201 4.61 102.88 $ 3,086,250 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,985,653 6.90 100.22 $ 2,004,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,984,974 5.59 101.53 $ 3,045,938 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,979,098 4.87 100.75 $ 1,994,850 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,999,226 5.40 100.22 $ 3,006,563 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,942,677 5.96 100.59 $ 2,011,875 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,022,032 4.87 101.25 $ 2,058,413 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,026,991 4.87 101.34 $ 2,076,533 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,982,261 4.88 101.43 $ 2,028,648 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,999,241 5.06 100.57 $ 2,011,364 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,011,744 5.47 101.81 $ 2,099,374 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,009,628 5.50 101.34 $ 2,076,533 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,994,222 4.88 102.00 $ 2,040,000 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,953,825 5.47 102.06 $ 2,041,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,986,084 6.35 100.31 $ 2,006,250 Aaa AAA $ 36,173,000 Subtotal $ 35,894,059 5.30 $ 36,674,465 "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings July 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S8P Federal Agencies--Callable $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,985 5.06 100.13 $ 2,002,692 Aaa AAA $ 2,000,000 Subtotal $ 1,999,985 5.06 $ 2,002,692 Local Government Investment Pool $ 14,057 L.A.I.F. 0.00 8/1/08 $ 14,057 2.79 100.00 $ 14,057 U U $ 14,057 Subtotal $ 14,057 2.79 $ 14,057 Local Government Investment Pool $ 49,864,614 C.A.M.P. 0.00 8/1/08 $ 49,864,614 2.51 100.00 $ 49,864,614 U AAA $ 1,150,621 C.A.M.P. (DESERT WILLOW) 0.00 8/1/08 $ 1,150,621 2.51 100.00 $ 1,150,621 U AAA $ 51,015,235 Subtotal $ 51,015,235 2.51 $ 51,015,235 Money Market Fund $ 40,194,354 WF HERITAGE SELECT 0.00 8/1/08 $ 40,194,354 2.52 100.00 $ 40,194,354 Aaa AAA $ 40,194,354 Subtotal $ 40,194,354 2.52 $ 40,194,354 �ity of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 8/1/38 $ 22,655,000 2.79 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 2.79 $ 22,655,000 Total Investments $ 218,087,646 $ 218,254,574 3.69 $ 219,039,928 Cash $ 3,239,281 CITY MAIN CHKG 0.00 8/1/08 $ 3,239,281 0.00 100.00 $ 3,239,281 U U $ 807,259 DESERT WILLOW CHKG 0.00 8/1/08 $ 807,259 0.00 100.00 $ 807,259 U U $ 373,096 RECREATIONAL FAC CHKG 0.00 8/1/08 $ 373,096 0.00 100.00 $ 373,096 U U $ 43 MONTEREY 170 CHKG 0.00 8/1/08 $ 43 0.00 100.00 $ 43 U U $ - ART, FOOD&WINE CHKG 0.00 8/1/08 $ - 0.00 100.00 $ - U U $ 4,419,679 Subtotal $ 4,419,679 $ 4,419,679 Total Investments and Cash $ 222,507,325 $ 222,674,253 $ 223,459,607 "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings July 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P %of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 4.35% CITIGROUP 9.86°/a GENERAL ELECTRIC 5.47% WACHOVIA 3.17% WAL-MART 2.33% . WELLS FARGO BANK 4.57% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.66% FED HOME LOAN BANK 4.50°/a FED HOME LOAN MTG CORP 5.53% FED NATIONAL MTG ASSOC 2.72% "U"= Unrated Page 5 Palm Desert Redevelopment Agency-- Portfolio Characteristics ' July 31, 2008 Dollars in Thousands Aqeinp Interval Market Value portfolio Ageing w/o SLGSs < 1 M $ 43,449 <2M 11,981 �3M _ 100 <6M 5,035 90 80 < 1YR 13,154 0 70 <2YR 32,855 0 60 ' 50 <3YR 15,367 � 40 36 27 <4YR - a 20 10 11 13 <5YR _ 10 0 4 0 0 0 0 >5YR - <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Total: $ 121,841 Quality" Market Value Credit Quality AAA $ 260,548 AA 15,632 � A 12,126 90��° Unrated"* 31 A Total: $ 288,337 4��° �` 6°/a Sector Market Value Asset Allocation _ MMF $ 165,039 Agencies 42,353 MMF MTNs 37,945 57% Agencies CAMP 42,969 �50�0 LAIF 31 CP - Treasuries _ CAMP MTNs 15/0 13/0 Total: $ 288,337 Month RDA Yield LAIF Yield Variance Performance Aug07 5.07 5.25 -0.19 Sep 5.02 5.23 -0.21 5.4 Oct 4.87 5.14 -0.27 Nov 4.70 4.96 -0.26 4.7 Dec 4.70 4.80 -0.10 0 Jan08 4.45 4.62 -0.17 a 4.0 d Feb 3.78 4.16 -0.38 } 3.3 Mar 3.36 3.78 -0.42 Apr 3.35 3.40 -0.05 2.6 May 3.14 3.07 0.06 Aug07Sep Oct Nov DecJan08Feb Mar Apr May Jun Jul Jun 3.09 2.89 0.20 .1u1 3.08 2.79 0.29 ■LAIF Yield ■RDA Yield * Standard and Poors *" LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings July 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,024,869 5.13 100.62 $ 4,024,960 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,031,526 5.12 99.62 $ 4,054,465 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,026,121 5.12 99.62 $ 3,043,339 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 6.00 1/15/09 $ 3,040,104 3.00 100.55 $ 3,016,359 Aa3 A+ $ 2,000,000 WACHOVIA 5.80 12/1/08 $ 2,004,899 5.00 100.60 $ 2,011,998 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,061,340 4.76 103.96 $ 3,118,836 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,066,997 2.91 101.42 $ 3,042,501 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,999,305 4.96 100.04 $ 2,000,772 Aa1 AA- $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,854,451 3.00 100.05 $ 13,631,649 Aa1 AA- $ 37,750,000 Subtotal $ 38,109,612 3.96 $ 37,944,879 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,033,589 4.88 104.05 $ 2,080,948 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,997,796 4.87 101.84 $ 2,036,875 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,925,125 4.65 103.31 $ 5,062,313 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,967,422 4.79 100.19 $ 3,977,444 Aaa AAA .$ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,967,422 4.79 100.19 $ 3,977,444 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,477,462 5.59 101.53 $ 4,568,906 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,998,968 4.84 100.22 $ 4,008,750 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,986,851 4.89 100.84 $ 2,021,917 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,969,857 5.49 103.56 $ 2,071,250 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,969,456 5.50 103.56 $ 2,071,250 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,049,883 5.54 107.34 $ 2,146,875 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,827,302 5.54 107.34 $ 4,008,216 Aaa AAA $ 4,155,000 FED NAT MTG ASSOC 6.63 9/15/09 $ 4,228,229 4.89 104.00 $ 4,321,200 Aaa AAA $ 41,234,000 Subtotal $ 41,234,000 5.06 $ 41,234,000 Local Government Investment Pool $ 9,749 L.A.I.F. 0.00 8/1/08 $ 9,824 2.79 100.00 $ 9,824 U U $ 21,339 L.A.I.F. (HOUSING) 0.00 8/1/08 $ 21,503 2.79 100.00 $ 21,503 U U $ 31,087 Subtotal $ 31,327 2.79 $ 31,327 Local Government Investment Pool $ 40,890,819 C.A.M.P. 0.00 8/1/08 $ 40,890,819 2.51 100.00 $ 40,890,819 U AAA $ 2,078,053 C.A.M.P.(HOUSING) 0.00 8/1/08 $ 2,078,053 2.51 100.00 $ 2,078,053 U AAA $ 42,968,872 Subtotal $ 42,968,872 2.51 $ 42,968,872 Money Market Fund $ 165,038,448 WF HERITAGE SELECT 0.00 8/1/08 $ 165,038,448 2.52 100.00 $ 165,038,448 Aaa AAA $ 165,038,448 Subtotal $ 165,038,448 2.52 $ 165,038,448 "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings July 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Total Investments $ 287,022,408 $ 287,382,259 3.08 $ 287,217,526 Cash $ 1,061,198 HOUSING AUTH CHKG 0.00 8/1/08 $ 1,061,198 0.00 100.00 $ 1,061,198 U U $ 378,560 HOUSING AUTH TRUST 0.00 8/1/08 $ 378,560 0.00 100.00 $ 378,560 U U $ 1,439,758 $ 1,439,758 $ 1,439,758 Total Investments and Cash $ 288,462,166 $ 288,822,018 $ 288,657,284 - °/a of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.39% JP MORGAN CHASE 3.50% WACHOVIA 0.70% WAL-MART 2.13% WELLS FARGO BANK 5.42% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.18% FED HOME LOAN BANK 7.86% FED HOME LOAN MTG CORP 2.13% FED NAT MTG ASSOC 1.50% "U"= Unrated Page 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 Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended July 31,2008,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 September 23,2008, ��s ���ao� c.c.�r. � City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS � California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA Code Investment Category 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 No Limit 0.0% 0.0% 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% 6% 17.4% 14.4% 53601(� 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 0.0% 0.0% 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 30.5% 13.3% 53601(k) Mutual Funds 90 Days 20% AAA 8�Aaa 90 Days 20% (2) AAA&Aaa 18.4% 57.4% 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit NotAuthorized 53601(k) Local Govemment AAA&Aaa AAA&Aaa Investment Pools 90 Days 20°/a or Advisor 90 Days 20% (2) or Advisor 23.4% 14.9% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security LAIF No Limit No Limit 0.0% 0.0% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 89.6% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. "` Certified California Municipa/Treasurer Page 9 � City of Palm Desert ♦ � � City and Redevelopment Agency Portfolios � � COMPLIANCE ANALYSIS AND INVESTMENT REPORT August 2008 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 September 16. There may be a rate cut due to the current chaotic market conditions. Eighty-two-year-old Alan Greenspan has commented that the U.S. is mired in a "once-in-a-century"financial crisis, and that this is the worst economy that he has ever seen. Recent events appear to bear this out. On September 7, the U.S. Treasury seized Fannie Mae and Freddie Mac, and put them under a "conservatorship". The Treasury pledged to inject$100 billion into each company in order to stabilize them since neither company could survive as currently structured. Both companies had issued more than $5 trillion of debt and mortgage-backed securities. Their stock was trading at less than $1 a share at time of seizure. On September 14, the U.S. Treasury called for an emergency session at the New York Fed with top Wall Street executives. The outcome was that Lehman Brothers filed a Chapter 11 bankruptcy as its stock price slid to$4 a share, and Merrill . Lynch was sold to Bank of America as part of a government-brokered takeover. The last two largest investment banks, Goldman Sachs and Morgan Stanley, are unlikely to remain independent since they made the same mistakes as Merrill and Lehman. Major investment banks that survived the Great Depression are now disappearing. ��s ��� c.c.�r. City Treasurer PORTFOLIO STATISTICS Dollars in Thousands AUG-08 JUL-08 JUN-08 MAY-08 APR-08 MAR-08 CITY Month-End Book Value*"" $ 220,438 $ 222,674 $ 231,179 $ 224,746 $ 222,731 $ 232,474 Month-End Market Value*"' $ 221,338 $ 223,460 $ 232,273 $ 226,069 $ 224,158 $ 234,850 Paper Gain(Loss) $ 900 $ 786 $ 1,094 $ 1,323 $ 1,427 $ 2,376 PriorYearBookVariance $ (25,412) $ (33,469) $ (11,919) $ (32,513) $ (26,260) $ 21,482 Interest Earnings $ 665 $ 688 $ 689 $ 703 $ 716 $ 756 Yield-To-Maturity 3.65% 3.69% 3.75% 3.88% 3.98% 4.03% Weighted Maturity(Days) 490 500 503 519 512 496 Effective Duration 0.63 0.65 0.68 0.74 0.77 0.79 RDA Month-End Book Value"""' $ 284,134 $ 288,987 $ 285,360 $ 299,471 $ 261,769 $ 275,545 Month-End Market Value"" $ 284,962 $ 289,777 $ 286,216 $ 300,441 $ 263,017 $ 277,364 Paper Gain(Loss) $ 828 $ 790 $ 856 $ 970 $ 1,248 $ 1,819 Prior Year Book Variance $ (5,730) $ (4,039) $ (17,349) $ (11,724) $ (17,240) $ (27,987) Interest Earnings $ 727 $ 748 $ 744 $ 770 $ 721 $ 800 Yield-To-Maturity 3.05% 3.08% 3.09% 3.14% 3.35% 3.36% Weighted Maturity(Days) 275 277 280 266 305 291 Effective Duration 0.28 0.30 0.32 0.33 0.40 0.59 "** Omits SLGSs. - City of Palm Desert-- Portfolio Characteristics August 31, 2008 Dollars in Thousands Aqeina Interval Market Value < 1M $ 56,120 General Fund Ageing <2M 4,002 < 3M 4,010 100 ---- --..-----�..��_____...v. <6M 7,992 ,_ 80 < 1YR 9,254 0 <2YR 51,795 0 60 < 3YR 21,235 � 40 36 34 <4YR a 20 3 3 5 6 14 <5YR - 0 0 0 > 5YR - � Total: $ 154,408 ��M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Ratinas" Market Value Credit Quality AAA $ 142,215 A AA 47,316 30�0 � A 5,099 73% Unrated""` 22,669 � Total: $ 217,299 24o�o Sector Market Value Asset Allocation MMF $ 42,720 Agencies 36,617 Agencies MTNs MTNs 64,673 17% ;y� 30% CAM P 50,620 RDA Loan 22,655 MMF CAMP LAIF 14 2�% 23% CP - Total: $ 217 299 RDA Loan ' 10°/a Month Citv Yield LAIF Yield Variance Performance Sep07 5.01 5.23 -0.22 Oct 5.05 5.14 -0.09 Nov 4.93 4.96 -0.03 5� �'����`��`�"�il�_.�.��W� Dec 4.87 4.80 0.07 Jan08 4.72 4.62 0.10 o q 2 Feb 4.31 4.16 0.15 � Mar 4.05 3.78 0.27 �' 3.4 Apr 3.98 3.40 0.58 May 3.88 3.07 0.81 2 6 Jun 3.75 2.89 0.86 Sep070ct Nov DecJanOBFeb Mar Apr May Jun Jul Aug Jul 3.69 2.88 0.82 Aug 3.65 2.78 0.87 ■�.��F ,; , ■ ;, , . �,�,� '` Standard and Poors *' LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings August 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,930,681 5.01 100.87 $ 2,945,527 Aa2 AA- $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,932,340 4.05 100.46 $ 3,812,578 Aa2 AA- $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,062,451 3.20 99.72 $ 2,991,522 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,105,457 4.91 99.06 $ 15,126,646 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,013,072 4.91 99.06 $ 2,015,895 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 990,022 5.19 99.85 $ 998,484 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,960,087 5.19 99.85 $ 3,993,936 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,996,852 4.99 99.98 $ 1,999,522• Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,006,072 5.63 102.53 $ 2,086,410 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,935,650 5.65 106.26 $ 2,009,450 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,019,708 5.67 104.85 $ 2,096,934 Aaa AAA $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,097,567 3.23 102.53 $ 4,065,168 Aaa AAA $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,061,509 5.02 99.24 $ 3,056,454 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,100,218 5.02 102.14 $ 2,042,740 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,033,270 4.93 103.72 $ 2,074,336 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,109,150 2.90 103.72 $ 3,111,504 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,128,271 5.13 104.31 $ 4,172,424 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,983,663 5.09 101.24 $ 2,024,892 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 2,004,731 4.92 99.57 $ 2,016,335 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,000,112 4.96 100.60 $ 2,032,161 Aa1 AA- $ 64,036,000 Subtotal $ 64,470,884 4.70 $ 64,672,918 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,007,812 4.61 102.84 $ 3,085,313 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,007,812 4.61 102.84 $ 3,085,313 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,990,839 6.90 100.13 $ 2,002,500 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,986,101 5.59 101.31 $ 3,039,375 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,979,305 4.87 100.53 $ 1,990,519 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,999,792 5.40 100.06 $ 3,001,875 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,946,482 5.96 100.41 $ 2,008,125 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,022,989 4.87 100.91 $ 2,051,424 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,028,328 4.87 101.19 $ 2,073,332 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,983,400 4.88 101.18 $ 2,023,524 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,999,489 5.06 100.33 $ 2,006,620 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,013,895 5.47 101.78 $ 2,098,729 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,012,019 5.50 101.19 $ 2,073,332 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,994,610 4.88 101.59 $ 2,031,875 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,955,712 5.47 102.06 $ 2,041,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,990,023 6.35 100.19 $ 2,003,750 Aaa AAA $ 36,173,000 Subtotal $ 35,918,606 5.30 $ 36,616,855 "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings August 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Local Government Investment Pool $ 14,057 L.A.I.F. 0.00 9/1/08 $ 14,057 2.78 100.00 $ 14,057 U U $ 14,057 Subtotal $ 14,057 2.78 $ 14,057 Local Government Investment Pool $ 49,967,648 C.A.M.P. 0.00 9/1/08 $ 49,967,648 2.53 100.00 $ 49,967,648 U AAA $ 652,258 C.A.M.P. (DESERT WILLOW) 0.00 9/1/08 $ 652,258 2.53 100.00 $ 652,258 U AAA $ 50,619,907 Subtotal $ 50,619,907 2.53 $ 50,619,907 Money Market Fund $ 42,719,933 WF HERITAGE SELECT 0.00 9/1/08 $ 42,719,933 2.48 100.00 $ 42,719,933 Aaa AAA $ 42,719,933 Subtotal $ 42,719,933 2.48 $ 42,719,933 City of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 9/1/08 $ 22,655,000 2.78 0.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 2.78 $ 22,655,000 Total Investments $ 216,217,897 $ 216,398,387 3.65 $ 217,298,670 Cash $ 2,896,109 CITY MAIN CHKG 0.00 9/1/08 $ 2,896,109 0.00 100.00 $ 2,896,109 U U $ 859,532 DESERT WILLOW CHKG 0.00 9/1/08 $ 859,532 0.00 100.00 $ 859,532 U U $ 283,811 RECREATIONAL FAC CHKG 0.00 9/1/08 $ 283,811 0.00 100.00 $ 283,811 U U $ 43 MONTEREY 170 CHKG 0.00 9/1/08 $ 43 0.00 100.00 $ 43 U U $ - ART, FOOD&WINE CHKG 0.00 9/1/08 $ - 0.00 100.00 $ - U U $ 4,039,495 Subtotal $ 4,039,495 $ 4,039,495 Total Investments and Cash $ 220,257,392 $ 220,437,882 $ 221,338,164 "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings August 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P %of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 4.40% CITIGROUP 10.00% GENERAL ELECTRIC 5.54% WACHOVIA 2.30% WAL-MART 2.34% WELLS FARGO BANK 4.63% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.69% FED HOME LOAN BANK 4.54% FED HOME LOAN MTG CORP 5.57% FED NATIONAL MTG ASSOC 2.75% "U"= Unrated Page 5 - Palm Desert Redevelopment Agency-- Portfolio Characteristics August 31, 2008 Dollars in Thousands Acreinq Interval Market Value < 1 M $ 55,499 Portfolio Ageing w/o SLGSs <2M _ <3M - 100 ---e--..._. ___._. �______._.___�_._.....___________.._ <6M 5,022 90 80 < 1YR 18,300 0 70 <2YR 27,694 0 60 46 '0 50 < 3YR 15,349 40 23 <4YR - a° 20 �5 13 <5YR _ 10 0 0 4 0 0 0 >5YR - � Total: $ 121,864 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR (luality" Market Value Credit Quality AAA $ 247,565 AA 23,914 qqq A 12,120 87% Unrated`* 31 A Total: $ 283,630 4% AA 9% Sector Market Value Asset Allocation MMF $ 160,227 Agencies 42,275 MMF MTNs 36,034 56% Agencies CAMP 45,063 15% LAIF 31 CP - Treasuries - CAMP MTNs Total: $ 283,630 16% �3% Month RDA Yield LAIF Yield Variance Performance Sep07 5.02 5.23 -0.21 Oct4.87 5.14 -0.27 5.4 �..._._.. - -- - __.�.�_ _ _Y._._____..___..�._�.__._ Nov 4.70 4.96 -0.26 Dec 4.70 4.80 -0.10 4.7 Jan08 4.45 4.62 -0.17 0 Feb 3.78 4.16 -0.38 v 4.0 m Mar 3.36 3.78 -0.42 �' 3.3 Apr 3.35 3.40 -0.05 May 3.14 3.07 0.06 2 6 Jun 3.09 2.89 0.20 Sep07 Oct Nov Dec Jan08 Feb Mar Apr May Jun Jul Aug Jul 3.08 2.79 0.29 AU9 3.05 2.78 0.27 sLAIF Yield ■RDA Yield * Standard and Poors _ "" LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings August 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S8�P Medium-Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,021,538 5.13 100.97 $ 4,038,740 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,036,679 5.12 99.62 $ 4,054,424 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,029,989 5.12 99.62 $ 3,043,308 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 6.00 1/15/09 $ 3,032,768 3.00 100.42 $ 3,012,723 Aa3 A+ $ 2,000,000 WACHOVIA 5.80 12/1/08 $ 2,003,674 5.00 100.46 $ 2,009,294 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,056,353 4.76 103.72 $ 3,111,504 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,064,084 2.91 101.89 $ 3,056,661 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,841,315 3.00 100.60 $ 13,707,023 Aa1 AA- $ 35,750,000 Subtotal $ 36,086,399 3.91 $ 36,033,678 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,031,224 4.88 103.66 $ 2,073,176 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,997,979 4.87 101.63 $ 2,032,500 Aaa AAA - $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,924,148 4.65 103.41 $ 5,066,906 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,969,308 4.79 100.03 $ 3,971,241 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,969,308 4.79 100.03 $ 3,971,241 Aaa AAA � $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,479,152 5.59 101.31 $ 4,559,063 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,999,723 4.84 100.06 $ 4,002,500 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,988,394 4.89 100.72 $ 2,019,411 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,970,819 5.49 103.66 $ 2,073,125 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,970,430 5.50 103.66 $ 2,073,125 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,047,924 5.54 107.00 $ 2,140,000 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,823,638 5.54 107.00 $ 3,995,380 Aaa AAA $ 4,155,000 FED NATtONAL MTG ASSOC 6.63 9/15/09 $ 4,222,791 4.89 103.44 $ 4,297,828 Aaa AAA $ 41,234,000 Subtotal $ 41,394,839 5.06 $ 42,275,495 Local Government Investment Pool $ 9,824 L.A.I.F. 0.00 9/1/08 $ 9,824 2.78 100.00 $ 9,824 U U $ 21,503 L.A.I.F. (HOUSING) 0.00 9/1/08 $ 21,503 2.78 100.00 $ 21,503 U U $ 31,327 Subtotal $ 31,327 2.78 $ 31,327 Local Government Investment Pool $ 42,980,546 C.A.M.P. 0.00 9/1/08 $ 42,980,546 2.53 100.00 $ 42,980,546 U AAA $ 2,082,514 C.A.M.P.(HOUSING) 0.00 9/1/08 $ 2,082,514 2.53 100.00 $ 2,082,514 U AAA $ 45,063,060 Subtotal $ 45,063,060 2.53 $ 45,063,060 Money Market Fund $ 160,226,036 WF HERITAGE SELECT 0.00 9/1/08 $ 160,226,036 2.48 100.00 $ 160,226,036 Aaa AAA $ 160,226,036 Subtotal $ 160,226,036 2.48 $ 160,226,036 . "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings August 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Total Investments $ 282,304,423 $ 282,801,662 3.05 $ 283,629,596 Cash $ 942,197 HOUSING AUTH CHKG 0.00 9/1/08 $ 942,197 0.00 100.00 $ 942,197 U U $ 390,232 HOUSING AUTH TRUST 0.00 9/1/08 $ 390,232 0.00 100.00 $ 390,232 U U $ 1,332,429 Subtotal $ 1,332,429 $ 1,332,429 Total Investments and Cash $ 283,636,852 $ 284,134,091 $ 284,962,025 %of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.42% JP MORGAN CHASE 3.55% WACHOVIA 0.71% WAL-MART 2.16% WELLS FARGO BANK 4.81% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.22% FED HOME LOAN BANK 7.96% FED HOME LOAN MTG CORP 2.15% FED NATIONAL MTG ASSOC 1.51% . "U"= Unrated Page 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 Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended August 31,2008,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 September 23,2008, ��s ��� c.c.,�r � City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit NotAuthorized(1) 53601(b) U.S.Treasuries 5 Years No Limit 5 Years No Limit 0.0% 0.0% 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit NotAuthorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 16.6% 14.6% 53601 fl Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 &P-1 - - 53601( Commercial Paper 270 Days 25% A-1+or P-1 270 Days 25% A-1+or P-1 0.0% 0.0% 53601 h) Ne otiable 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 29.8% 12.8% 53601 k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 19.7% 56.7% 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20%(2) or Advisor 23.4% 15.9% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security LAIF No Limit No Limit 0.0% 0.0% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 89.5% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. . * Certified California Municipa/Treasurer Page 9