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Home My WebLink AboutInvestment Reports - Jun, Jul, & Aug 2009CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY��VW DATE: OCTOBER 20, 2009 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for were presented and approved at the May and June meetings of the Audit, Investment and Finance Committee for the months of June, July and August 2009. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the minutes of the June and July meetings for acceptance by the City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. nmo Attachment (as noted) ive. t Fr l e BY RDA (5 `6i ON II -I -C9 VERIFIED BY \original on file with City Clerk's Office CITY COUNCIL ACTION APPROVED DENIED RECEIVED Ef (' Ie. O i HER MEETING DATE )/ - / - C `) AYES: PwnsonrFeyuscni rinerJy,J%l/y, S. ie j' L NOES: n!Dne ABSENT: /\)T'7 a' ABSTAIN: A1'on e; VERIFIED BY: )K. Original on File with City Clerk 5 Office G:\FINANCE\NIAMH ORTEGA\INVESTMENT COMMITTEE\MEMOS\RKLASSENINVREPORT.WPD - �,,7 �� Ci�y of Patrr� Desert� � .--, ,r-.. � ' City and Redevelopment Agency Portfo�'tcas � COMPLIANCE AI�taALYSI$A►N� tN�/ESTMEN"T R�PORT Ju�ne 200'� 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 June 24. Interest rates were left unchanged. Although the pace of economic contraction had slowed, consumer spending has been constrained by job �osses, lower housing wealth, and tight credit. Inflation is expected to be subdued for"some time". A Federal Reserve Bank president commented that the Federal Funds Rate might have to be left at near zero for the next few years. The key question is whether the U.S. economy is heading into deflation or inflation. A strong case can be made that the immediate threat is a deflationary spiral (depression). While the Federal Reserve has flooded U.S. banks with enormous amounts of liquidity, most of it has never reached private borrowers since the banks have retained it to repair their balance sheets. It is also difficult to make a case for inflation when balancing the $14 trillion of credit destruction that has occurred in the U.S. with the Obama Administration's $2 trillion stimulus. As for rising commodity prices, they can be deflationary if the demand for the commodities (e.g., heating oil, gasoline, food, etc.) is relatively inelastic. Consumers will simply reallocate their spending away from discretionary items, thereby triggering more small business failures. Interest rates remain at historic lows, with the yield curve at the steepest that it has ever been. Five-year Treasuries were recently yielding 2.5%; two-year Treasuries 1%; and cash near zero. The long end of the curve is higher due to inflation _fears. Investors are concerned that U.S. Treasury debt issuance will fuel future inflation and the devaluation of the dollar. ��s �'�r'�ao�, c.c.�r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands Jun-09 May-09 Apr-09 Mar-09 FEB-09 JAN-09 CITY Month-End Book Value""` $ 228,948 $ 224,289 $ 217,963 $ 216,674 $ 219,469 $ 212,738 Month-End Market Value"" $ 230,005 $ 225,317 $ 218,619 $ 216,589 $ 218,243 $ 213,002 PaperGain(Loss) $ 1,057 $ 1,028 $ 656 $ (85) $ (1,226) $ 264 Prior Year Book Variance $ (2,231) $ (457) $ (4,768) $ (15,800) $ (7,452) $ (18,677) Interest Earnings $ 366 $ 360 $ 360 $ 460 $ 443 $ 430 Yield-To-Maturity 2.03% 2.04% 2.09% 2.43% 2.34% 2.55% Weighted Maturity(Days) 306 319 329 324 419 454 Effective Duration 0.24 0.27 0.29 0.36 0.42 0.47 RDA Month-End Book Value""* $ 287,291 $ 293,720 $ 252,527 $ 268,377 $ 270,416 $ 281,273 Month-End Market Value"' $ 288,384 $ 294,940 $ 253,785 $ 269,503 $ 271,497 $ 282,566 Paper Gain (Loss) $ 1,093 $ 1,220 $ 1,258 $ 1,126 $ 1,081 $ 1,293 Prior Year Book Variance $ 1,931 $ (5,751) $ (9,242) $ (7,168) $ (9,283) $ (4,674) Interest Earnings $ 307 $ 234 $ 219 $ 259 $ 283 $ 268 Yield-To-Maturity 1.30% 1.06% 1.05% 1.07% 1.29% 1.25% Weighted Maturity(Days) 243 187 217 205 235 226 Effective Duration 0.22 0.13 0.16 0.17 0.18 0.19 "*` Omits SLGSs. City of Palm Desert-- Portfolio Characteristics June 30, 2009 Dollars in Thousands Aqeinq Interval Market Value < 1 M $ 117,475 General Fund Ageing <2M 5,058 <3M 3,034 100 <6M 10,267 � 80 68 < 1YR 8,273 0 <2YR 21,533 0 60 <3YR 8,048 � 40 12 <4YR ' a 20 3 2 6 5 5 0 0 0 <5YR - � > 5YR - Total: $ 173,688 <1M <2M <3M <6M <1YR<2YR<3YR<4YR<5YR>5YR Credit Quality qqq Ratin s* Market Value 42% qqq $ 95,238 AA qq 15,398 7% A 6,889 A Unrated"" 106,984 Unrated"* 3% Total: $ 224,509 48% Sector Market Value Asset Allocation CAMP MMF $ 31,706 MTNs 23% RDA Loan Agencies 25,745 �5% 10% MTNs 32,523 CAMP 27,551 Agencies RDA Loan 22,655 12% GMRA 21% GMRA 48,016 LAIF 36,313 MMF 14% LAIF CP - Total: $ 224,509 16% Month Citv Yield LAIF Yield Variance Performance Ju108 3.69 2.88 0.82 Aug 3.65 2.78 0.87 3.8 Sep 3.70 2.77 0.93 Oct 3.27 2.71 0.56 Nov 3.04 2.57 0.47 � Dec 2.87 2.35 0.52 � 2'S a� Jan09 2.55 2.05 0.51 } Feb 2.36 1.87 0.50 Mar 2.17 1.82 0.35 1.2 Apr 2.09 1.61 0.49 Ju108 Aug Sep Oct Nov Dec Jan09 Feb Mar Apr May Jun May 2.04 1.53 0.51 Jun 2.03 1.38 0.65 ■ia�N v,;,;i s�;:,v��z:�� * Standard and Poors ** LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings June 30, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,893,616 4.05 102.24 $ 3,879,871 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,037,471 3.20 100.32 $ 3,009,540 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,017,343 5.63 102.79 $ 2,091,856 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,918,780 5.65 104.28 $ 1,971,952 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,013,072 5.67 104.81 $ 2,096,228 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,045,918 3.23 102.79 $ 4,075,778 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,057,692 5.02 104.07 $ 2,081,440 A1 AA $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,003,828 4.93 100.61 $ 2,012,196 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,012,557 2.90 100.61 $ 3,018,294 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,091,622 5.13 104.79 $ 4,191,496 A1 AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,990,685 5.09 102.56 $ 2,051,106 A1 AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,012,190 4.96 101.15 $ 2,043,264 A1 AA $ 31,706,000 Subtotal $ 32,094,774 4.43 $ 32,523,022 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,919 4.61 103.59 $ 3,107,814 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,919 4.61 103.59 $ 3,107,814 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,997,371 5.59 100.81 $ 3,024,375 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,984,528 5.96 101.06 $ 2,021,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,032,554 4.87 100.16 $ 2,036,178 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,041,693 4.87 101.69 $ 2,083,577 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,994,796 4.88 101.45 $ 2,028,990 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,048,307 5.47 103.91 $ 2,142,548 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,035,929 5.50 101.69 $ 2,083,577 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,998,488 4.88 101.38 $ 2,027,500 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,974,585 5.47 104.06 $ 2,081,250 Aaa AAA $ 25,193,000 Subtotal $ 25,116,088 5.13 $ 25,744,872 Local Agency Investment Pool $ 36,312,974 L.A.I.F. 0.00 7/1/09 $ 36,312,974 1.38 100.00 $ 36,312,974 U U $ 36,312,974 Subtotal $ 36,312,974 1.38 $ 36,312,974 Local Agency Investment Pool $ 27,493,255 C.A.M.P. 0.00 7/1/09 $ 27,493,255 0.56 100.00 $ 27,493,255 U AAA $ 57,253 C.A.M.P. (DESERT WILLOW) 0.00 7/1/09 $ 57,253 0.56 100.00 $ 57,253 U AAA $ 27,550,508 Subtotal $ 27,550,508 0.56 $ 27,550,508 Money Market Fund $ 31,706,351 WF TREASURY PLUS 0.00 7/1/09 $ 31,706,351 0.01 100.00 $ 31,706,351 Aaa AAA $ 31,706,351 Subtotal $ 31,706,351 0.01 $ 31,706,351 "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings June 30, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Government Managed Rate Account $ 48,015,922 UNION BANK 0.00 7/1/09 $ 48,015,922 1.77 100.00 $ 48,015,922 U U $ 48,015,922 Subtotal $ 48,015,922 1.77 $ 48,015,922 Citry of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 7/1/39 $ 22,655,000 1.38 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 1.38 $ 22,655,000 Total Investments $ 223,139,754 $ 223,451,616 2.03 $ 224,508,648 Cash $ 3,688,743 CITY MAIN CHKG 0.00 7/1/09 $ 3,688,743 0.00 100.00 $ 3,688,743 U U $ 1,707,008 DESERT WILLOW CHKG 0.00 7/1/09 $ 1,707,008 0.00 100.00 $ 1,707,008 U U $ 100,584 RECREATIONAL FAC CHKG 0.00 7/1/09 $ 100,584 0.00 100.00 $ 100,584 U U $ 5,496,336 Subtotal $ 5,496,336 $ 5,496,336 Total Investments and Cash $ 228,636,090 $ 228,947,952 $ 230,004,984 %of Portfolio Corporate Issuer (Market Value) BANK OF AMERICA 3.00% GENERAL ELECTRIC 4.45% WACHOVIA 0.90% WAL-MART 2•�9% WELLS FARGO BANK 3.60% "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings June 30, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 2•70% FED HOME LOAN BANK 2•19% FED HOME LOAN MTG CORP 4.51% FED NATIONAL MTG ASSOC �•79% "U"=Unrated Page 5 Palm Desert Redevelopment Agency-- Portfolio Characteristics , June 30, 2009 Dollars in Thousands Aqeinq Interval Market Value partfolio Ageing w/o SLGSs < 1 M $ 83,550 <2M 5,050 <3M g,7g0 100 <6M 2,043 80 62 < 1YR 13,804 e 70 0 60 <2YR 18,675 '0 50 <3YR _ � 40 <4YR - a 20 4 � 2 10 14 <5YR _ �� 0 0 0 2 0 >5YR 2,015 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Total: $ 133,917 _ Quality* Market Value Credit Quality � qqq $ 175,302 61% AA 19,874 AA A - 7% A Unrated*" 92,440 po�o Total: $ 287,616 Unrated** 32% Asset Allocation Agencies Sector Market Value 11% MMF $ 101,299 M�Ns Agencies 30,337 MTNs 19,874 MMF 35% CAM P CAMP 43,666 15% LAIF 40,020 EIP 2,015 LAIF/Bond Proceeds 50,405 LAIF/Bond LAIF Treasuries - Proceeds EIP 14% 17% 1% Total: $ 287,616 � � Month RDA Yield LAIF Yield Variance Performance Ju108 3.08 2.79 0.29 Aug 3.05 2.78 0.27 3.4 Sep 3.18 2.77 0.41 Oct 1.60 2.71 -1.11 � 2 6 Nov 1.51 2.57 -1.06 � Dec 1.40 2.35 -0.95 } 1.8 Jan09 1.26 2.05 -0.79 Feb 1.29 1.87 -0.58 Mar 1.07 1.82 -0.75 1.0 Apr 1.05 1.61 -0.56 Ju108 Aug Sep Oct Nov Dec Jan09 Feb Mar Apr May Jun May 1.06 1.53 -0.47 ■LAIF Yield ■RDA Yield Jun 1.30 1.38 -0.08 - " Standard and Poors � " LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings June 30, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,006,483 4.76 100.61 $ 3,018,294 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,034,955 2.91 102.45 $ 3,073,620 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,709,950 3.00 101.15 $ 13,781,919 A1 AA $ 19,625,000 Subtotal $ 19,751,387 3.25 $ 19,873,833 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,007,569 4.88 101.65 $ 2,033,080 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,999,805 4.87 100.41 $ 2,008,126 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,914,371 4.65 105.09 $ 5,149,596 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,496,056 5.59 100.81 $ 4,536,563 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 2,003,818 4.89 100.22 $ 2,009,387 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,980,439 5.49 106.38 $ 2,127,500 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,980,179 5.50 106.38 $ 2,127,500 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,028,337 5.54 107.03 $ 2,140,626 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,787,001 5.54 107.03 $ 3,996,549 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,168,413 4.89 101.28 $ 4,208,238 Aaa AAA $ 29,294,000 Subtotal $ 29,365,988 5.16 $ 30,337,164 Local Government Investment Pool $ 39,997,687 L.A.I.F. 0.00 7/1/09 $ 39,997,687 1.38 100.00 $ 39,997,687 U U $ 21,894 L.A.I.F. (HOUSING) 0.00 7/1/09 $ 21,894 1.38 100.00 $ 21,894 U U $ 40,019,580 Subtotal $ 40,019,580 1.38 $ 40,019,580 Local Government Investment Pool $ 41,558,428 C.A.M.P. 0.00 7/1/09 $ 41,558,428 0.56 100.00 $ 41,558,428 U AAA $ 2,107,119 C.A.M.P.(HOUSING) 0.00 7/1/09 $ 2,107,119 0.56 100.00 $ 2,107,119 U AAA $ 43,665,548 Subtotal $ 43,665,548 0.56 $ 43,665,548 Local Government Investment Pool $ 50,405,000 WF/LAIF BOND PROCEEDS 0.00 7/1/09 $ 50,405,000 1.38 100.00 $ 50,405,000 U U $ 50,405,000 Subtotal $ 50,405,000 1.38 $ 50,405,000 Money Market Fund $ 101,299,562 WF TREASURY PLUS 0.00 7/1/09 $ 101,299,562 0.01 100.00 $ 101,299,562 Aaa AAA $ 101,299,562 Subtotal $ 101,299,562 0.01 $ 101,299,562 Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 0.00 3/2/29 $ 2,015,000 3.00 100.00 $ 2,015,000 U U $ 2,015,000 Subtotal $ 2,015,000 3.00 $ 2,015,000 . "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings June 30, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Total Investments $ 286,323,690 $ 286,522,066 1.28 $ 287,615,687 Cash $ 411,488 HOUSING AUTH TRUST 0.00 7/1/09 $ 411,488 0.00 100.00 $ 411,488 U U $ 357,084 HOUSING AUTH CHKG 0.00 7/1/09 $ 357,084 0.00 100.00 $ 357,084 U U $ 768,572 Subtotal $ 768,572 $ 768,572 Total Investments and Cash $ 287,092,262 $ 287,290,638 $ 288,384,260 %of Portfolio Corporate Issuers (Market Value) WAL-MART 2.11% WELLS FARGO BANK 5.84% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.19% FED HOME LOAN BANK 3.75% FED HOME LOAN MTG CORP 2.13% FED NATIONAL MTG ASSOC 1.46% . "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 June 30,2009,the City and the RDA investment portfolios were in compliance with alf 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. Interactive Data Corporation provided the data that was 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 July 28,2009, ��s �� c.c.�t.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 0.0% 0.7% 53632 c) Savings Accounts No Limit No Limit No Limit No Limit 21.5% 0.0% 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% 11.2% 10.3% 53601 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) 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% NotAuthorized 53601 ' Medium-Term Notes 5 Years 30% A 5 Years 30% A 14.4% 6.9% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 14.2% 35.4% 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Aufhorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 12.3% 15.2% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security 16429.1(b) LAIF No�imit No Limit 16.3% 31.6% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 89.9% 100.0% • (2) The City Energy Independence Program has been approved by the Palm Desert City Council. (3) Maximum limit for mutual funds and local government investment pools,excluding bond proceeds. � � Certified California Municipal Treasurer Page 9 City of Falm Desert �T� � City and Redevelopment Agency Portfc�lios � COMPLtAN�E ANALYSIS AND INYESTMEJ!+IT FtEP4RT Juiy 2009 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 12, and left short-term interest rates unchanged. The FOMC noted that while conditions in the financial markets had improved, ongoing job losses, slow income growth, lower housing wealth, and tight credit continued to constrain the economy. Ben Bernanke was nominated for a second term as the Federal Reserve Chairman. Job cuts continued to outpace the fall in U.S. Gross Domestic Product. U.S. unemployment is currently estimated at 9.5% (not counting those who have taken part-time work or have given up on job hunting). Rising joblessness will trigger additional foreclosures, and shrink the pool of potential home buyers. Retail sales remain relatively weak. All of these factors together may act as a drag on any economic recovery. The cash flow from the federal stimulus will also recede in the second half of 2009. Approximately 102 U.S. banks have failed in the last two years. On August 14, five banks failed on the same day. Three hundred more banks remain on an undisclosed FDIC list of problem institutions. Small and mid-size U.S. banks are at greatest risk because of potential commercial real estate loan losses that could total up to$100 billion by the end of 2010. The FDIC is stretched thin, and is considering a one-time fee on banks in order to replenish its deposit insurance fund. ��s �� c.c.�t.r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands JUL-09 JUN-09 May-09 Apr-09 Mar-09 FEB-09 CITY Month-End Book Value�"* $ 226,460 $ 228,948 $ 224,289 $ 217,963 $ 216,674 $ 219,469 Month-End Market Value"` $ 227,587 $ 230,005 $ 225,317 $ 218,619 $ 216,589 $ 218,243 PaperGain (Loss) $ 1,127 $ 1,057 $ 1,028 $ 656 $ (85) $ (1,226) Prior Year Book Variance $ 3,786 $ (2,231) $ (457) $ (4,768) $ (15,800) $ (7,452) Interest Earnings $ 356 $ 366 $ 360 $ 360 $ 460 $ 443 Yield-To-Maturity 1.90% 2.03°/a 2.04% 2.09% 2.43% 2.34% Weighted Maturity(Days) 297 306 319 329 324 419 Effective Duration 0.22 0.24 0.27 0.29 0.36 0.42 RDA Month-End Book Value""`' $ 284,220 $ 287,291 $ 293,720 $ 252,527 $ 268,377 $ 270,416 Month-End Market Value""" $ 285,231 $ 288,384 $ 294,940 $ 253,785 $ 269,503 $ 271,497 Paper Gain(Loss) $ 1,011 $ 1,093 $ 1,220 $ 1,258 $ 1,126 $ 1,081 PriorYearBookVariance $ (4,767) $ 1,931 $ (5,751) $ (9,242) $ (7,168) $ (9,283) Interest Earnings $ 308 $ 307 $ 234 $ 219 $ 259 $ 283 Yield-To-Maturity 1.31% 1.30% 1.06% 1.05% 1.07% 1.29% Weighted Maturity(Days) 236 243 187 217 205 235 Effective Duration 0.20 0.22 0.13 0.16 0.17 0.18 _ `*" Omits SLGSs. City of Palm Desert-- Portfolio Characteristics � July 31, 2009 Dollars in Thousands Aqeinq Interval Market Value < 1 M $ 120,592 General Fund Ageing �2M 3,024 <3M 2,028 100 <6M 10,261 gp 70 < 1YR 8,358 0 <2YR 19,459 0 60 < 3YR 8,071 � 40 <4YR a° 20 11 <5YR - 2 1 6 5 5 0 0 0 >5YR _ � Total: $ 171,793 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Ratinqs" Market Value Credit Quality � $ 82,886 3� � � 25,700 12% A 6,968 A Unrated*' 107,179 Unrated*'' 3% Total: $ 222,733 48% Sector Market Value Asset Allocation CAMP MMF $ 31,706 23% MTNs RDA Loan Agencies 23,619 15% MTNs 32,668 10% CAMP 27,561 Agencies RDA Loan 22,655 11% GMRA GMRA 48,086 22% LAIF 36,438 MMF CP _ 14% LAI F Total: $ 222,733 16% � Month Citv Yield LAIF Yield Variance Performance Aug08 3.65 2.78 0.87 Sep 3.70 2.77 0.93 3� Oct 3.27 2.71 0.56 Nov 3.04 2.57 0.47 Dec 2.87 2.35 0.52 0 2.8 Jan09 2.55 2.05 0.51 �-�, Feb 2.36 1.87 0.50 } 1.9 Mar 2.17 1.82 0.35 Apr 2.09 1.61 0.49 1.0 May 2.04 1.53 0.51 AugO8Sep Oct Nov DecJan09Feb Mar Apr May Jun Jul Jun 2.03 1.38 0.65 Jul 1.90 1.04 0.86 ��+�� 'ie�� ! ■c;t, °r��s � * Standard and Poors "' LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings July 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,889,744 4.05 103.30 $ 3,920,243 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,034,973 3.20 101.59 $ 3,047,631 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,018,470 5.63 103.12 $ 2,098,575 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,917,093 5.65 106.11 $ 2,006,582 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,012,409 5.67 105.22 $ 2,104,470 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,040,753 3.23 103.12 $ 4,088,871 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,053,440 5.02 105.37 $ 2,107,448 A1 AA $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,000,883 4.93 100.09 $ 2,001,812 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,002,898 2.90 100.09 $ 3,002,718 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,087,957 5.13 104.85 $ 4,193,860 A1 AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,991,387 5.09 102.68 $ 2,053,568 A1 AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,013,398 4.96 101.12 $ 2,042,537 A1 AA $ 31,706,000 Subtotal $ 32,063,404 4.43 $ 32,668,314 Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,530 4.61 103.19 $ 3,095,625 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,530 4.61 103.19 $ 3,095,625 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,998,497 5.59 100.44 $ 3,013,125 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,988,333 5.96 100.78 $ 2,015,626 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,043,030 4.87 101.34 $ 2,076,534 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,995,936 4.88 101.09 $ 2,021,802 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,050,458 5.47 103.34 $ 2,130,949 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,038,320 5.50 101.34 $ 2,076,534 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,998,875 4.88 100.97 $ 2,019,376 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,976,472 5.47 103.69 $ 2,073,750 Aaa AAA $ 23,160,000 Subtotal $ 23,096,980 5.15 $ 23,618,947 Local Agency Investment Pool $ 36,437,587 L.A.I.F. 0.00 8/1/09 $ 36,437,587 1.04 100.00 $ 36,437,587 U U $ 36,437,587 Subtotal $ 36,437,587 1.04 $ 36,437,587 Local Agency Investment Pool $ 27,503,632 C.A.M.P. 0.00 8/1/09 $ 27,503,632 0.44 100.00 $ 27,503,632 U AAA $ 57,274 C.A.M.P. (DESERT WILLOW) 0.00 8/1/09 $ 57,274 0.44 100.00 $ 57,274 U AAA $ 27,560,906 Subtotal $ 27,560,906 0.44 $ 27,560,906 Money Market Fund $ 31,706,399 WF ADVANTAGE GOVT 0.00 8/1/09 $ 31,706,399 0.07 100.00 $ 31,706,399 Aaa AAA $ 31,706,399 Subtotal $ 31,706,399 0.07 $ 31,706,399 Page 3 . NR= Not Rated City of Palm Desert Portfolio Holdings July 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S8�P Government Managed Rate Account $ 48,086,436 UNION BANK 0.00 8/1/09 $ 48,086,436 1.77 100.00 $ 48,086,436 U U $ 48,086,436 Subtotal $ 48,086,436 1.77 $ 48,086,436 City of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 8/1/39 $ 22,655,000 1.04 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 1.04 $ 22,655,000 Total Investments $ 221,312,328 $ 221,606,712 1.90 $ 222,733,589 Cash $ 3,615,197 CITY MAIN CHKG 0.00 8/1/09 $ 3,615,197 0.00 100.00 $ 3,615,197 U U $ 1,154,643 DESERT WILLOW CHKG 0.00 8/1/09 $ 1,154,643 0.00 100.00 $ 1,154,643 U U $ 83,392 RECREATIONAL FAC CHKG 0.00 8/1/09 $ 83,392 0.00 100.00 $ 83,392 U U $ 4,853,232 Subtotal $ 4,853,232 $ 4,853,232 Total Investments and Cash $ 226,165,559 $ 226,459,943 $ 227,586,821 %of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 3.06% GENERAL ELECTRIC 4.53°/a WACHOVIA 0.93% WAL-MART 2.20% WELLS FARGO BANK 1.84% Page 4 NR= Not Rated City of Palm Desert Portfolio Holdings July 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 2.72% FED HOME LOAN BANK 2.21% FED HOME LOAN MTG CORP 3.65% FED NATIONAL MTG ASSOC 1.80% Page 5 NR= Not Rated Palm Desert Redevelopment Agency-- Portfolio Characteristics July 31, 2009 Dollars in Thousands Ageinq Interval Market Value < 1 M $ 82 977 Portfolio Ageing w/o SLGSs <2M 8,745 <3M 2,033 100 <6M 13,782 90 $� 65 < 1YR 3,074 = 70 <2YR 15,542 0 60 '0 50 < 3YR _ � 40 <4YR - a 20 � 11 12 <5YR _ 10 2 2 0 0 0 2 0 >5YR 2,015 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Total: $ 128,168 Qualitv` Market Value Credit Quality qq qqq 8% AAA $ 131,114 46% AA 21,876 A - Unrated""` 131,580 A Unrated" Total: $ 284,570 0% 46% . \ MTNs � Sector Market Value Asset Allocation Agencies 70�o CAMP MMF $ 61,902 10% 14% Agencies 28,231 MTNs 19,861 LAIF CAMP 40,982 MMF 14o�a 22/o LAIF 39,115 EIP EIP 2,015 �o�o LAIF/Bond Proceeds 92,464 Treasuries - Total: $ 284,570 LAIF/Bond Proceeds 32% Month RDA Yield LAIF Yield Variance Performance Aug08 3.05 2.78 0.27 Sep 3.18 2.77 0.41 3.4 Oct 1.60 2.71 -1.11 Nov 1.51 2.57 -1.06 0 2.6 Dec 1.40 2.35 -0.95 Jan09 1.26 2.05 -0.79 d } 1.8 Feb 1.29 1.87 -0.58 Mar 1.07 1.82 -0.75 Apr 1.05 1.61 -0.56 1.0 May 1.06 1.53 -0.47 Aug08Sep Oct Nov DecJan09 Feb Mar Apr May Jun Jul .lUfl 1.30 1.38 -0.08 ��LAIF Yield ■RDA Yield Jul 1.31 1.04 0.27 � " Standard and Poors "" LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings July 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,001,496 4.76 100.09 $ 3,002,718 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,032,042 2.91 102.71 $ 3,081,219 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,696,813 3.00 101.12 $ 13,777,014 A1 AA $ 19,625,000 Subtotal $ 19,730,351 3.25 $ 19,860,951 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,005,204 4.88 101.09 $ 2,021,796 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,999,988 4.87 100.00 $ 2,000,000 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,913,394 4.65 104.72 $ 5,131,221 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,497,746 5.59 100.44 $ 4,519,688 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,981,401 5.49 106.19 $ 2,123,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,981,153 5.50 106.19 $ 2,123,750 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,026,378 5.54 106.84 $ 2,136,876 Aaa AAA - $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,783,338 5.54 106.84 $ 3,989,547 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,162,975 4.89 100.72 $ 4,184,866 Aaa AAA $ 27,289,000 Subtotal $ 27,351,577 5.19 $ 28,231,494 Local Government Investment Pool $ 39,093,210 L.A.I.F. 0.00 8/1/09 $ 39,093,210 1.04 100.00 $ 39,093,210 U U $ 21,976 L.A.I.F.(HOUSING) 0.00 8/1/09 $ 21,976 1.04 100.00 $ 21,976 U U $ 39,115,186 Subtotal $ 39,115,186 1.04 $ 39,115,186 Local Government Investment Pool $ 38,873,840 C.A.M.P. 0.00 8/1/09 $ 38,873,840 0.44 100.00 $ 38,873,840 U AAA $ 2,107,915 C.A.M.P.(HOUSING) 0.00 8/1/09 $ 2,107,915 0.44 100.00 $ 2,107,915 U AAA $ 40,981,754 Subtotal $ 40,981,754 0.44 $ 40,981,754 Local Government Investment Pool $ 25,562,603 WF/LAIF BOND PROCEEDS 0.00 8/1/09 $ 25,562,603 1.04 100.00 $ 25,562,603 U U $ 20,123,091 WF/LAIF BOND PROCEEDS 0.00 8/1/09 $ 20,123,091 1.04 100.00 $ 20,123,091 U U $ 4,779,722 WF/LAIF BOND PROCEEDS 0.00 8/1/09 $ 4,779,722 1.04 100.00 $ 4,779,722 U U $ 10,510,000 WF/LAIF BOND PROCEEDS 0.00 8/1/09 $ 10,510,000 1.04 100.00 $ 10,510,000 U U $ 15,059,000 WF/LAIF BOND PROCEEDS 0.00 8/1/09 $ 15,059,000 1.04 100.00 $ 15,059,000 U U $ 16,430,000 WF/LAIF BOND PROCEEDS 0.00 8/1/09 $ 16,430,000 1.04 100.00 $ 16,430,000 U U $ 92,464,417 Subtotal $ 92,464,417 1.04 $ 92,464,417 Money Market Fund $ 61,901,605 WF ADVANTAGE GOVT 0.00 8/1/09 $ 61,901,605 0.07 100.00 $ 61,901,605 Aaa AAA $ 61,901,605 Subtotal $ 61,901,605 0.07 $ 61,901,605 U = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings July 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S8�P Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 0.00 9/2/29 $ 2,015,000 3.00 100.00 $ 2,015,000 U AA $ 2,015,000 Subtotal $ 2,015,000 3.00 $ 2,015,000 \ Total Investments $ 283,391,962 $ 283,559,890 1.16 $ 284,570,407 Cash $ 259,226 HOUSING AUTH CHKG 0.00 8/1/09 $ 259,226 0.00 100.00 $ 259,226 U U $ 401,355 HOUSING AUTH TRUST 0.00 8/1/09 $ 401,355 0.00 100.00 $ 401,355 U U $ 660,581 Subtotal $ 660,581 $ 660,581 Total Investments and Cash $ 284,052,543 $ 284,220,471 $ 285,230,988 %of Portfolio Corporate Issuers (Market Value) WAL-MART 2.13% WELLS FARGO BANK 4.83% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.21% FED HOME LOAN BANK 3.07% FED HOME LOAN MTG CORP 2.15% FED NATIONAL MTG ASSOC 1.47°/a , 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 31,2009, 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. Interactive Data Corporation provided the data that was 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 August 25,2009, ��s G�� 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 0.0% 0.7% 53632(c) Savin s Accounts No Limit No Limit No Limit No Limit 21.7% 0.0% 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 NotAuthorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 10.4% 9.7% 53601(fl 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) 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 14.5% 7.0% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 14.3% 54.4% 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit NotAuthorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 12.4% 14.5% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security 16429.1(b) LAIF No Limit No Limit 16.4% 13.8% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 89.8% 100.0% (2) The City Energy Independence Program has been approved by the Palm Desert City Council. ' (3) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. * Certified California Municipal Treasurer Page 9 ,,,,.,.,.,,. Gity of Palm aeser# � City antl Rede�vefopme�at A��ncy Pc�rkts�lios C�MPLtAh�C�ANA�Y�IS AIVG►'1�1VESTM��1"f�tEP(1RT At�+�u�st�4fl� 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 next on September 23. The FOMC is not expected to raise short-term interest rates until 2011. Bank of America is then predicting four rate hikes within a 12-month period. The FOMC wants to avoid the possibility of prematurely killing any economic recovery, and causing a double-dip ("W") recession. The most immediate threat, however, is deflation due to slack demand and global surplus capacity. In August, U.S. unemployment rose from 9.5% to 9.7%. It may exceed 10% by year-end. The FDIC's list of troubled banks also rose from 300 to 417 during August. This recession has been called the "Great Recession" because it has been the longest one since World War II, and the slowest to reverse. The real story in 2010 may be commercial real estate. Retail vacancy rates have increased, rents have declined, and delinquency rates have risen. Consumer spending remains hobbled by a combination of sluggish income growth, rising unemployment, and higher state and local taxes. If the 2009 holiday season is disappointing, then more retail bankruptcies and store closings can be expected. Meanwhile, the U.S. banking system is weighed down with hundreds of billions of dollars of unrecognized bad debt because it is still carrying"toxic" reai estate loans on the books at full value. Changes in accounting rules have helped the banks avoid write-downs on commercial real estate loans. All of this supports a climate of economic stagnation similar to what Japan has experienced over the last two decades. - ��,izs G�� c.c.�r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands AUG-09 JUL-09 JUN-09 May-09 Apr-09 Mar-09 CITY Month-End Book Value**" $ 228,398 $ 226,460 $ 228,948 $ 224,289 $ 217,963 $ 216,674 Month-End Market Value"*" $ 229,602 $ 227,587 $ 230,005 $ 225,317 $ 218,619 $ 216,589 Paper Gain(Loss) $ 1,204 $ 1,127 $ 1,057 $ 1,028 $ 656 $ (85) Prior Year Book Variance $ 7,960 $ 3,786 $ (2,231) $ (457) $ (4,768) $ (15,800) Interest Earnings $ 332 $ 356 $ 366 $ 360 $ 360 $ 460 Yield-To-MatUrity 1.79% 1.90% 2.03% 2.04% 2.09% 2.43% Weighted Maturity(Days) 282 297 306 319 329 324 Effective Duration 0.20 0.22 0.24 0.27 0.29 0.36 RDA Month-End Book Value""' $ 275,874 $ 284,220 $ 287,291 $ 293,720 $ 252,527 $ 268,377 Month-End Market Value"''" $ 276,824 $ 285,231 $ 288,384 $ 294,940 $ 253,785 $ 269,503 Paper Gain(Loss) $ 950 $ 1,011 $ 1,093 $ 1,220 $ 1,258 $ 1,126 Prior Year Book Variance $ (8,260) $ (4,767) $ 1,931 $ (5,751) $ (9,242) $ (7,168) Interest Earnings $ 277 $ 308 $ 307 $ 234 $ 219 $ 259 Yield-To-Maturity 1.19% 1.31% 1.30% 1.06% 1.05% 1.07% Weighted Maturity(Days) 226 236 243 187 217 205 Effective Duration 0.20 0.20 0.22 0.13 0.16 0.17 ""'""` Omits SLGSs. City of Palm Desert-- Portfolio Characteristics August 31, 2009 Dollars in Thousands Aqeinq Interval Market Value < 1M $ 121,627 General Fund Ageing <2M 2,019 <3M 4,037 100 <6M 6,196 ^ $� 72 < 1YR 14,557 0 <2YR 21,460 0 60 <3YR - � 40 <4YR - a 2o g 13 <5YR - � 2 4 0 0 0 0 >5YR - � Total: $ 169,896 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Credit Quality qqq Ratinqs" Market Value 39% AAA $ 84,993 '�` AA 20,796 9% A 7,000 A Unrated** 3% Unrated"' 107,249 490�0 Total: $ 220,038 Sector Market Value Asset Allocation CAMP MMF $ 35,863 MTNs 23% Agencies 23,560 �30�o RDA�Loan 10/o MTNs 27,796 CAMP 25,570 Agencies 11% GMRA RDA Loan 22,655 22% GMRA 48,156 MMF LAI F 36,438 16% CP - LAIF Total: $ 220,038 16% Month Citv Yield LAIF Yield Variance Performance Sep08 3.70 2.77 0.93 Oct 3.27 2.71 0.56 3.6 Nov 3.04 2.57 0.47 Dec 2.87 2.35 0.52 2.7 Jan09 2.55 2.05 0.51 = Feb 2.36 1.87 0.50 �° �•$ d Mar 2.17 1.82 0.35 � 0.9 Apr 2.09 1.61 0.49 May 2.04 1.53 0.51 0.0 Jun 2.03 1.38 0.65 Sep080ct Nov DecJan09Feb Mar Apr May Jun Jul Aug Jul 1.90 1.04 0.86 Aug 1.79 0.93 0.87 ■t,A�� v,��d ■�l�iyY�E.{� � * Standard and Poors "'* LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings August 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,885,872 4.05 104.28 $ 3,957,263 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,032,475 3.20 101.44 $ 3,043,119 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,019,597 5.63 103.43 $ 2,104,770 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,915,406 5.65 106.06 $ 2,005,619 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,011,745 5.67 105.69 $ 2,113,830 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,035,588 3.23 103.43 $ 4,100,940 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,049,187 5.02 105.48 $ 2,109,692 A1 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,084,292 5.13 106.33 $ 4,253,028 A1 AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,992,089 5.09 103.36 $ 2,067,206 A1 AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,014,605 4.96 100.99 $ 2,040,087 A1 AA $ 26,706,000 Subtotal $ 27,040,857 4.57 $ 27,795,554 Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,140 4.61 102.94 $ 3,088,125 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,140 4.61 102.94 $ 3,088,125 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,999,624 5.59 100.13 $ 3,003,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,992,137 5.96 100.53 $ 2,010,626 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,044,367 4.87 101.06 $ 2,070,771 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,997,075 4.88 100.80 $ 2,015,944 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,052,608 5.47 103.19 $ 2,127,726 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,040,711 5.50 101.06 $ 2,070,771 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,999,263 4.88 100.66 $ 2,013,126 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,978,359 5.47 103.56 $ 2,071,250 Aaa AAA $ 23,160,000 Subtotal $ 23,110,426 5.15 $ 23,560,214 Local Agency Investment Pool $ 36,437,587 L.A.I.F. 0.00 9/1/09 $ 36,437,587 0.93 100.00 $ 36,437,587 U U $ 36,437,587 Subtotal $ 36,437,587 0.93 $ 36,437,587 Local Agency Investment Pool $ 25,512,683 C.A.M.P. 0.00 9/1/09 $ 25,512,683 0.40 100.00 $ 25,512,683 U AAA $ 57,294 C.A.M.P. (DESERT WILLOW) 0.00 9/1/09 $ 57,294 0.40 100.00 $ 57,294 U AAA $ 25,569,976 Subtotal $ 25,569,976 0.40 $ 25,569,976 Money Market Fund $ 35,863,655 WF ADVANTAGE GOVT 0.00 9/1/09 $ 35,863,655 0.00 100.00 $ 35,863,655 Aaa AAA $ 35,863,655 Subtotal $ 35,863,655 0.00 $ 35,863,655 Government Managed Rate Account $ 48,156,364 UNION BANK 0.00 9/1/09 $ 48,156,364 1.77 100.00 $ 48,156,364 U U $ 48,156,364 Subtotal $ 48,156,364 1.77 $ 48,156,364 "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings August 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P City Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 9/1/39 $ 22,655,000 0.93 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 0.93 $ 22,655,000 Total Investments $ 218,548,582 $ 218,833,864 1.90 $ 220,038,349 Cash $ 8,589,600 CITY MAIN CHKG 0.00 9/1/09 $ 8,589,600 0.00 100.00 $ 8,589,600 U U $ 857,998 DESERT WILLOW CHKG 0.00 9/1/09 $ 857,998 0.00 100.00 $ 857,998 U U $ 116,373 RECREATIONAL FAC CHKG 0.00 9/1/09 $ 116,373 0.00 100.00 $ 116,373 U U $ 9,563,971 Subtotals $ 9,563,971 $ 9,563,971 Total Investments and Cash $ 228,112,553 $ 228,397,835 $ 229,602,320 %of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 3.05°/a GENERAL ELECTRIC 4.50% WACHOVIA 0.92% WELLS FARGO BANK 3.64°/a "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings August 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 2.69% FED HOME LOAN BANK 2.18°/a FED HOME LOAN MTG CORP 3.61% FED NATIONAL MTG ASSOC 1.78% "U"= Unrated Page 5 . Palm Desert Redevelopment Agency-- Portfolio Characteristics August 31, 2009 Dollars in Thousands Aqeina Interval Market Value < 1 M $ 86,672 Portfolio Ageing w/o SLGSs <2M 2,022 <3M _ 100 <6M 13,777 ^ gp 70 < 1YR 3,081 = <2YR 15,505 0 60 <3YR _ � 40 0 <4YR - a 20 �� 3 13 < 5YR _ 2 � 0 0 0 2 0 >5YR 2,015 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Total: $ 123,072 _� Qualitv* Market Value Credit Quality 6 AAA $ 127,768 '� 46% AA 16,840 A - Unrated"" 131,579 A Unrated'* . Total: $ 276,187 �% 4s% � MTNs � Sector Market Value Asset Allocation A encies 6% CAMP MMF $ 58,594 9 15/0 9% Agencies 26,163 MTNs 16,840 LAIF CAM P 40,996 �4% LAIF 39,115 21°o EIP EIP 2,015 1% LAIF/Bond Proceeds 92,464 Treasuries - LAIF/Bond Total: $ 276,187 Proceeds 34°/a � Month RDA Yield LAIF Yield Variance Performance Sep08 3.18 2.77 0.41 Oct 1.60 2.71 -1.11 Nov 1.51 2.57 -1.06 3'2 Dec 1.40 2.35 -0.95 ^, 2.4 Jan09 1.26 2.05 -0.79 ' Feb 1.29 1.87 -0.58 � 1.6 Mar 1.07 1.82 -0.75 } 0.8 Apr 1.05 1.61 -0.56 May 1.06 1.53 -0.47 0.0 Jun 1.30 1.38 -0.08 Sep080ct Nov DecJan09Feb Mar Apr May Jun Jul Aug Jul 1.31 1.04 027 ■LAIF Yield ■RDA Yield Aug 1.19 0.93 0.26 � � * Standard and Poors "* LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings August 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,029,129 2.91 102.65 $ 3,079,377 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,683,677 3.00 100.99 $ 13,760,487 A1 AA $ 16,625,000 Subtotal $ 16,712,806 2.98 $ 16,839,864 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,002,839 4.88 100.61 $ 2,012,240 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,912,416 4.65 104.56 $ 5,123,563 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,499,437 5.59 100.13 $ 4,505,625 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,982,363 5.49 106.16 $ 2,123,126 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,982,128 5.50 106.16 $ 2,123,126 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,024,419 5.54 106.56 $ 2,131,250 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,779,674 5.54 106.56 $ 3,979,044 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,157,538 4.89 100.25 $ 4,165,388 Aaa AAA $ 25,289,000 Subtotal $ 25,340,813 5.21 $ 26,163,361 �Local Agency Investment Pool $ 39,093,210 L.A.I.F. 0.00 9/1/09 $ 39,093,210 0.93 100.00 $ 39,093,210 U U $ 21,976 L.A.I.F.(HOUSING) 0.00 9/1/09 $ 21,976 0.93 100.00 $ 21,976 U U $ 39,115,186 Subtotal $ 39,115,186 0.93 $ 39,115,186 Local Agency Investment Pool $ 38,887,075 C.A.M.P. 0.00 9/1/09 $ 38,887,075 0.40 100.00 $ 38,887,075 U AAA $ 2,108,632 C.A.M.P.(HOUSING) 0.00 9/1/09 $ 2,108,632 0.40 100.00 $ 2,108,632 U AAA $ 40,995,708 Subtotal $ 40,995,708 0.40 $ 40,995,708 Local Agency Investment Pool $ 20,123,091 CITY OF PALM DESERT 0.00 9/1/09 $ 20,123,091 0.93 100.00 $ 20,123,091 U AA $ 4,779,722 CITY OF PALM DESERT 0.00 9/1/09 $ 4,779,722 0.93 100.00 $ 4,779,722 U AA $ 25,562,603 CITY OF PALM DESERT 0.00 9/1/09 $ 25,562,603 0.93 100.00 $ 25,562,603 U AA $ 10,510,000 CITY OF PALM DESERT 0.00 9/1/09 , $ 10,510,000 0.93 100.00 $ 10,510,000 U AA $ 15,059,000 CITY OF PALM DESERT 0.00 9/1/09 $ 15,059,000 0.93 100.00 $ 15,059,000 U AA $ 16,430,000 CITY OF PALM DESERT 0.00 9/1/09 $ 16,430,000 0.93 100.00 $ 16,430,000 U AA $ 92,464,417 Subtotal $ 92,464,417 0.93 $ 92,464,417 Money Market Fund $ 58,593,594 WF ADVANTAGE GOVT 0.00 9/1/09 $ 58,593,594 0.00 100.00 $ 58,593,594 Aaa AAA $ 58,593,594 Subtotal $ 58,593,594 0.00 $ 58,593,594 Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 0.00 9/2/29 $ 2,015,000 3.00 100.00 $ 2,015,000 U AA $ 2,015,000 Subtotal $ 2,015,000 3.00 $ 2,015,000 "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings August 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Total Investments $ 275,097,904 $ 275,237,523 1.19 $ 276,187,129 Cash $ 399,736 HOUSING AUTH TRUST 0.00 9/1/09 $ 399,736 0.00 100.00 $ 399,736 U U $ 237,177 HOUS�NG AUTH CHKG 0.00 9/1/09 $ 237,177 0.00 100.00 $ 237,177 U U $ 636,913 Subtotal $ 636,913 0.00 $ 636,913 Total Investments and Cash $ 275,734,817 $ 275,874,436 $ 276,824,042 %of Portfolio Corporate Issuers (Market Value) WAL-MART 1.11°/a WELLS FARGO BANK 4.97% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 2.58% FED HOME LOAN BANK 3.16% FED HOME LOAN MTG CORP 2.21% FED NATIONAL 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 August 31,2009,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 suffcient 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. Interactive Data Corporation provided the data that was 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 22, 2009, ,aa.ccLS. C�'��o� C.C.�1.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 0.0% 0.7% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 22.0% 0.0% 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 NotAuthorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 10.6% 9.2% 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 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 12.4% 6.1% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 16.4% 54.9% 53601(I) Trust Indenture Debt Not Authorized 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°/a (2) or Advisor 11.7% 14.9% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security 16429.1(b) LAIF No Limit No Limit 16.7% 14.2% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 89.7% 100.0°/a (2) The City Energy Independence Program has been approved by the Palm Desert City Council. (3) Maximum timit for mutual funds and local government investment pools, excluding bond proceeds. * Certified California Municipa/Treasurer Page 9