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Home My WebLink AboutInvestment Reports - Nov & Dec 2005X-C CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARYM*Q:) DATE: JANUARY 25, 2006 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for November and December 2005 which were presented and approved at the meeting of January 25, 2006. Please include on the upcoming agenda for review and acceptance by City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. nmo Attachment (as noted) G:TinanceWtamh OrtegaMpdocsVnvestment CommtteetMemoslrklasseninvreport072605.wpd 0 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 December 13, and raised the Federal Funds Rate by 25 basis points to 4.25 percent. The FOMC observed that while the economic expansion appeared to be solid, higher natural resource prices had the potential to create inflationary pressures. Meeting minutes show that FOMC concerns about inflation are easing, however, as housing price gains slow, thereby restraining consumer spending. The financial futures markets expect the FOMC to authorize another 25 basis -point rate hike on January 31 to 4.50 percent, and a final 25 basis -point rate hike on March 28 to 4.75 percent. After that, it is thought that the FOMC will stay its hand for a while. The incoming FOMC chairman, Ben Bernanke, is even more focused on fighting inflation than Alan Greenspan. Consequently, Bernanke is more likely to favor raising interest rates in a weak economy, as opposed to holding them steady or even cutting them. Unlike Greenspan, Bernanke believes in setting an explicit inflation target. The real estate market will cool, but not crash. Gradually increasing mortgage interest rates are taking the steam out of speculative buying, without causing the markets to collapse. The 30-year fixed-rate mortage is expected to be at 6.75 percent by the end of 2006. U.S. banks are in the best condition in years, with plenty of cash. Pis �avom c.c.Al. r. Treasurer PORTFOLIO STATISTICS Dollars in Thousands NOV-05 OCT-05 SEP-05 AUG-05 JULY-05 JUNE-05 CITY Month -End Book Value*** $ 146,910 $ 148,655 $ 149,081 $ 153,545 $ 151,176 $ 150,073 Month -End Market Value*** $ 145,957 $ 148,157 $ 148,892 $ 153,380 $ 150,936 $ 149,868 Paper Gain (Loss) $ (953) $ (498) $ (189) $ (165) $ (240) $ (205) Prior Year Book Variance $ 18,308 $ 18,105 $ 16,961 $ 16,570 $ 9,725 $ 7,656 Interest Earnings $ 440 $ 444 $ 431 $ 444 $ 437 $ 377 Yield -To -Maturity 3.81 % 3.67% 3.56% 3.43% 3.34% 3.29% Weighted Maturity (Days) 215 214 211 208 216 220 Effective Duration 0.31 0.33 0.35 0.36 0.40 0.43 RDA Month -End Book Value *** $ 121,211 $ 123,243 $ 126,018 $ 139,481 $ 143,968 $ 146,433 Month -End Market Value *** $ 120,754 $ 122,833 $ 125,695 $ 139,291 $ 143,916 $ 146,296 Paper Gain (Loss) $ (457) $ (410) $ (323) $ (190) $ (52) $ (137) Prior Year Book Variance $ (27,519) $ (25,906) $ (33,342) $ (21,638) $ (31,342) $ (38,476) Interest Earnings $ 361 $ 350 $ 374 $ 374 $ 386 $ 366 Yield -To -Maturity 3.68% 3.54% 3.42% 3.32% 3.15% 3.09% Weighted Maturity (Days) 158 156 153 146 142 140 Effective Duration 0.23 0.25 0.27 0.27 0.28 0.30 *** Omits SLGSs. Dollars in Thousands Ageinq Interval <1M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratings AAA Unrated " AA A-1 BB+ Total: Sector MMFs LAIF RDA Loan MTNs Agencies CP Total: Month Dec04 Jan05 Feb Mar Apr May Jun Jul Aug Sep Oct Nov City of Palm Desert -- Portfolio Characteristics 30 November 2005 Market Value $ 65,665 1,014 2,027 4,926 20,299 $ 93,931 Market Value $ 51,294 72,785 6,049 9,632 $ 139,760 Market Value $ 27,119 40,000 32,785 17,648 22,208 $ 139,760 Citv Yield LAIF Yield 2.26 2.20 2.54 2.26 2.66 2.37 2.79 2.54 2.94 2.72 3.06 2.86 3.29 2.97 3.37 3.08 3.43 3.18 3.56 3.32 3.67 3.46 3.81 3.64 General Fund Ageing 100 80 70 I � _ 0 60 40 M 22 20 5 1 0 2 F1 � I 0 0 r� < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR Credit Quality AAA A-1 i 37% 0 0 /o BB+ 7% - AA Unrated " 4% 52% Asset Allocation) RDA Loan 23% MTNs 13% 0% 16% Variance Performance 0.06 1 0.28 3.9 0.29 0.25 3.4 0.21 0.21 0 2.9 0.32 Y 2.4 0.29 0.25 1.9 0.24 Dec041an05 Feb Mar Apr May Jun Jul Aug Sep Oct Nov 0.21 0 17 ■ LAIF Yield ■ City Yield LAIF 29% MMFs 19% ' Standard and Poors " LAIF, and City Loan to RDA Page 2 of 8 City of Palm Desert Portfolio Holdings 30 November 2005 Par Value I Issuer I Coup Medium -Term Notes $ 3,000,000 BANK ONE 4.13 $ 3,000,000 FORD MOTOR CREDIT CORP 7.20 $ 2,500,000 FORD MOTOR CREDIT CORP 7.20 $ 4,612,000 FORD MOTOR CREDIT CORP 7.20 $ 2,000,000 GENERAL ELECTRIC 3.13 $ 3,000,000 GOLDMAN SACHS 7.20 1 $ 18,112,000 Subtotal Federal Agencies -- Discount $ 2,060,000 FED HOME LOAN BANK 0.00 $ 2,000,000 FED HOME LOAN MTG CORP 0.00 $ 1,023,000 FED NATIONAL MTG ASSOC 0.00 J $ 5,083,000 Subtotal Federal Agencies - Coupon $ 3,000,000 FED HOME LOAN BANK 3.70 -$ 1,500,000 FED HOME LOAN BANK 2.10 $ 2,035,000 FED HOME LOAN MTG CORP 2.50 $ 2,009,000 FED HOME LOAN MTG CORP 1.88 $ 2,786,000 FED NATIONAL MTG ASSOC 7.13 $ 3,000,000 FED NATIONAL MTG ASSOC 3.00 $ 3,000,000 FED NATIONAL MTG ASSOC 2.75 $ 17,330,000 Subtotal Local Government Investment Pool $ 40,000,000 L.A.I.F. 0.00 $ 40,000,000 Subtotal Local Government Investment Pool $ 18,328,203 C.A.M.P. 0.00 $ 18,328,203 Subtotal Money Market Fund $ 8,790,496 AIM 0.00 1 $ 8,790,496 Subtotal City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 $ 32,785,480 Subtotal o Market nj Maturity I Cost I YTM I Price I Value Ratings Moody'sl S&P 911/07 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 $ 32,785,480 Subtotal o Market nj Maturity I Cost I YTM I Price I Value Ratings Moody'sl S&P 911/07 $ 3,024,014 3.64 98.77 $ 2,963,229 Aa3 A+ 6115107 $ 3,058,832 5.75 95.25 $ 2,857,599 Baa3 BB+ 6/15/07 $ 2,549,027 5.75 95.25 $ 2,381,332 Baa3 BB+ 6/15/07 $ 4,750,431 5.10 95.25 $ 4,393,082 Baa3 BB+ 11/9/06 $ 1,985,553 3.92 98.39 $ 1,967,884 Aaa AAA 3/1/07 $ 3,132,568 3.50 102.84 $ 3,085,323 Aa3 A+ $ 18,500,425 4.66 $ 17,648,449 3/20/06 $ 2,000,681 3.59 98.72 $ 2,033,632 Aaa AAA 12/13/05 $ 1,967,042 3.49 99.87 $ 1,997,400 Aaa AAA 1/18/06 $ 999,798 3.54 99.45 $ 1,017,373 Aaa AAA $ 4,967,521 3.54 $ 5,048,405 8/15107 $ 2,995,494 3.79 98.38 $ 2,951,250 10/13/06 $ 1,478,732 3.79 97.84 $ 1,467,656 12/4/06 $ 2,008,480 3.84 97.88 $ 1,991,756 2/15/06 $ 2,001,734 3.67 99.50 $ 1,998,955 3/15107 $ 2,909,139 3.55 103.00 $ 2,869,580 8/15/07 $ 2,969,943 3.63 97.25 $ 2,917,500 8/11/06 $ 2,978,451 3.81 98.75 $ 2,962,500 $ 17,341,972 3.72 $ 17,159,198 12/1/05 $ 40,000,000 3.64 100.00 $ 40,000,000 $ 40,000,000 3.64 $ 40,000,000 12/1/05 $ 18,328,203 3.87 100.00 $ 18,328,203 $ 18,328,203 3.87 $ 18,328,203 12/1/05 $ 8,790,496 3.65 100.00 $ 8,790,496 $ 8,790,496 3.65 $ 8,790,496 12/1/35 $ 32,785,480 3.64 100.00 $ 32,785,480 $ 32,785,480 3.64 $ 32,785,480 Aaa Aaa Aaa Aaa Aaa Aaa Aaa AAA AAA AAA AAA AAA AAA AAA U U 1 1 U AAA Aaa AAA U U I "U" = Unrated Page 3 of 8 City of Palm Desert Portfolio Holdings 30 November 2005 Market Par Value Issuer l Couponj Maturity I Cost I YTM I Price I Value Total Investments $ 140,429,179 Cash $ 5,524,662 CITY MAIN CHKG 0.00 $ 461,497 DESERT WILLOW CHKG 0.00 $ 210,135 RECREATIONAL FAC CHKG 0.00 $ 6,196,294 Subtotal Total Investments and Cash $ 146,625,473 Corporate Issuers FORD MOTOR CREDIT CORP GOLDMAN SACHS BANK ONE GENERAL ELECTRIC $ 140,714,097 3.81 $ 139,760,232 Ratings Moody'si S&P 12/1/05 $ 5,524,662 0.00 100.00 $ 5,524,662 N/A N/A 12/1 /05 $ 461,497 0.00 100.00 $ 461,497 N/A N/A 12/1 /05 $ 210,135 0.00 100.00 $ 210,135 N/A N/A $ 6,196,294 $ 6,196,294 $ 146,910,391 $ 145,956,525 % of Portfolio (Market Value) 6.59% 2.11% 2.03% 1.34% "U" = Unrated Page 4 of 8 Dollars in Thousands Aaeina Interval < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Quail ` AAA Unrated A-1 BB+ Total: Sector LAIF MMFs Agencies CID MTNs Treasuries Total: Month Dec04 Jan05 Feb Mar Apr May Jun Jul Aug Sep Oct Nov RDA Yield 2.00 2.23 2.37 2.58 2.80 2.93 3.09 3.21 3.32 3.42 3.54 3.68 Palm Desert Redevelopment Agency - Portfolio Characteristics 30 November 2005 Market Value $ 47,070 3,523 8,818 5,902 14,738 $ 80,051 Market Value $ 51,853 60,837 6,424 $ 119,114 Market Value $ 60,837 25,370 20,662 12,245 $ 119,114 LAW Yield 2.20 2.26 2.37 2.54 2.72 2.86 2.97 3.08 3.18 3.32 3.46 3.64 Portfolio Ageing w/o SLGSs� 100 90 80 a 70 59 e 60 - i o 50 40 a° 30 18 20 11 7 4 10 0 F -n 1--1 i 0 0 0 .1 < 1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR i Credit Quality Unrated " AAA 51 % 44% BBC'A, -1 5% 0% Asset Allocation CID 0% LAW 52% - MMFs 21% MTNs Agencies 10% 17% Variance i Performances -0.20 -0.03 3.9 0.00 0.04 3.4 0.08 0.07 ; 2.9 0.13 } 2.4 0.13 maw 0.14 1.9 0.10 Dec041an05 Feb Mar Apr May Jun Jul Aug Sep Oct Nov 0.08 0.04 ■ LAIF Yield ■ RDA Yield ` Standard and Poors "` LAW Page 5 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 30 November 2005 Par Value I Issuer I Coup Medium -Term Notes $ 3,000,000 FORD MOTOR CREDIT CORP 6.50 $ 3,525,000 FORD MOTOR CREDIT CORP 6.88 $ 2,896,000 GENERAL ELECTRIC 6.38 $ 2,896,000 GENERAL ELECTRIC 6.38 $ 12,317,000 Subtotal Federal Agency - Coupon $ 3,000,000 FED FARM CREDIT BANK 2.63 $ 3,000,000 FED HOME LOAN BANK 3.38 $ 3,005,000 FED HOME LOAN BANK 2.50 $ 3,000,000 FED HOME LOAN MTG CORP 4.88 $ 2,974,000 FED HOME LOAN MTG CORP 3.63 $ 2,974,000 FED HOME LOAN MTG CORP 3.63 $ 2,973,000 FED NATIONAL MTG ASSOC 3.63 $ 20,926,000 Subtotal -Local Government Investment Pools $ 40,000,000 L.A.I.F. 0.00 $ 5,848,824 L.A.I.F. 0.00 $ 14,827,783 L.A.I.F. BOND PROCEEDS 0.00 $ 160,090 L.A.I.F. BOND PROCEEDS 0.00 $ 60,836,697 Subtotal Money Market Fund $ 19,559,693 AIM 0.00 1 $ 19,559,693 Subtotal o Market nI Maturity I Cost I YTM I Price I Value 1/25/07 1 $ 19,559,693 Subtotal o Market nI Maturity I Cost I YTM I Price I Value 1/25/07 $ 3,053,487 4.85 97.10 $ 2,913,048 2/1/06 $ 3,541,718 3.94 99.60 $ 3,511,044 3/15/06 $ 2,919,274 3.52 100.50 $ 2,910,575 3/15/06 $ 2,919,274 3.52 100.50 $ 2,910,575 $ 12,433,754 3.97 $ 12,245,243 9117107 $ 2,958,362 3.43 96.53 $ 2,895,938 9/14/07 $ 2,995,075 3.82 97.78 $ 2,933,438 3/15/06 $ 2,997,159 3.42 99.50 $ 2,989,975 3/15/07 $ 3,055,218 3.38 100.22 $ 3,006,563 9/15/06 $ 2,974,693 3.60 99.22 $ 2,950,766 9/15106 $ 2,974,821 3.60 99.22 $ 2,950,766 3/15/07 $ 2,975,682 3.95 98.72 $ 2,934,908 $ 20,931,010 3.60 $ 20,662,352 12/1/05 $ 40,000,000 3.64 100.00 $ 40,000,000 12/1/05 $ 5,848,824 3.64 100.00 $ 5,848,824 12/1/05 $ 14,827,783 3.64 100.00 $ 14,827,783 12/1/05 $ 160,090 3.64 100.00 $ 160,090 $ 60,836,697 3.64 $ 60,836,697 12/1/05 $ 19,559,693 3.65 100.00 $ 19,559,693 $ 19,559,693 3.65 $ 19,559,693 Ratings Moody'sl S&P Baa3 Baa3 Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa BB+ BB+ AAA AAA AAA AAA AAA AAA AAA AAA AAA U U U U U U U U Aaa AAA $ 5,810,463 C.A.M.P. 0.00 12/1/05 $ 5,810,463 3.87 100.00 $ 5,810,463 U AAA $ 5,810,463 Subtotal $ 5,810,463 3.87 $ 5,810,463 Total Investments $ 119,449,853 $ 119,571,617 3.68 $ 119,114,448 Cash $ 1,294,821 HOUSING AUTH CHKG 0.00 12/1/05 $ 1,294,821 0.00 100.00 $ 1,294,821 N/A N/A $ 344,709 HOUSING AUTH TRUST 0.00 12/1/05 $ 344,709 0.00 100.00 $ 344,709 N/A N/A $ 1,639,530 Subtotal $ 1,639,530 $ 1,639,530 "U" = Unrated Page 6 of 8 Par Value I Issuer Total Investments and Cash $ 121,089,383 Palm Desert Redevelopment Agency Portfolio Holdings 30 November 2005 I Coupon) Maturity I Corporate Issuers FORD MOTOR CREDIT CORPORATION GENERAL ELECTRIC CAPITAL CORPORATION Cost $ 121,211,147 % of Portfolio (Market Value) 5.39% 4.82% Market YTM I Price I Value $ 120,753,978 Ratings Moody's I S&P "U" = Unrated 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 November 2005, 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 December 2005, City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS I California Government Code I 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) east ,E S .' -.0 'ea Na U141t = .. 5 Years 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized <51f8- FecJei`1Qrcjes :- s51!sairs = [` o.L`'t►ti1it,. :. - .. .. 5 YQ�rs.` .'.. 31Q%o`: .. - _6f«-. �,��: .:17:°1c '.:r80, bays `x '' 46W ...- " I 4 = y }�- ; .tor ?= ` • 27�. Da�Cs: - 55Ys;.- ,:3t}�/o`'.,ears - Irrriit: 53601(i) Reverse Repos 92 Days 20% Not Authorized 5.360(7():' . -- M1WttittrZliNGtes'-:;-_ r'5st'8als< ::. 30'/0 •' .. . A .: .. :.5 i°serS: ,3t3�io _ ` Ai: ;- _ _:3 2p%a .AAA—&-ka(a" 90'0814- 1 20.°1S(2):: 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 536t31 icj.. ; : ; Eoca1 Gsiveaani it::'' y ., & Aaa`. A= Aar Inved%MdntPooi§, _: -= Q.0ays:. ; 24f ;; ", `:orAtivisor--..90.Days 20%{2) or:Advi$6 13:0°/6 :4;8"%. 53601(n) Mortgage -Backed 5 Years 20% A (issuer) & Not Authorized Securities AA (Security ' a.At!< .. - :No.L#Wtt". i (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. ' 76.7% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 8 of 8 f 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 January 30-31 to review short-term interest rates. The Committee is expected to raise the Federal Funds Rate by 25 basis points to 4.50 percent. This might be the last rate hike in 2006. Although new FOMC chairmen have traditionally done a rate hike at their first FOMC meeting (Bernanke's will be on March 28), there was a hint of softening demand in the December 2005 economic data. Gross Domestic Product (GDP) growth is currently projected at 2.7 percent for 2006 (down from 3.6 percent in 2005). Much of the growth will come from nonresidential construction, and from exports, both of which account for 25 percent of GDP. U.S. exporters will be responding to greater demand in Asia and in Europe, based upon accelerated economic growth in those regions. Consumer spending, and housing account for the remaining 75 percent of GDP. Growth in these sectors is expected to slow in 2006 due to the lagging effect of FOMC rate hikes, credit -restraining measures undertaken by regulators, and a softening in home prices. In late December, the two-to-1 0-year portion of the yield curve "inverted" (short-term interest rates were higher than longer term interest rates). Over the last 30 years, the yield curve has inverted five out of eight times after the FOMC has tightened monetary policy. In each of those five times, an economic recession has followed within a year. Aa d,S. riaions c, C. At. 7- Treasurer PORTFOLIO STATISTICS Dollars in Thousands DEC-05 NOV-05 OCT-05 SEP-05 AUG-05 CITY Month -End Book Value"" $ 143,187 $ 146,910 $ 148,655 $ 149,081 $ 153,545 $ Month -End Market Value*" $ 142,231 $ 145,957 $ 148,157 $ 148,892 $ 153,380 $ Paper Gain (Loss) $ (956) $ (953) $ (498) $ (189) $ (165) $ Prior Year Book Variance $ 18,463 $ 18,308 $ 18105 $ 16,961 $ 16,570 $ Interest Earnings $ 460 $ 440 $ 444 $ 431 $ 444 $ Yield -To -Maturity 3.95% 3.81 % 3.67% 3.56% 3.43% Weighted Maturity (Days) 215 215 214 211 208 Effective Duration 0.29 0.31 0.33 0.35 0.36 Month -End Book Value'*' $ 125,395 $ 121,211 $ 123,243 $ 126,018 $ 139,481 $ Month -End Market Value "" $ 124,957 $ 120,754 $ 122,833 $ 125,695 $ 139,291 $ Paper Gain (Loss) $ (438) $ (457) $ (410) $ (323) $ (190) $ Prior Year Book Variance $ (22,407) $ (27,519) $ (25,906) $ (33,342) $ (21,638) $ Interest Earnings $ 385 $ 361 $ 350 $ 374 $ 374 $ Yield -To -Maturity 3.82% 3.68% 3.54% 3.42% 3.32% Weighted Maturity (Days) 153 158 156 153 146 Effective Duration 0.20 0.23 0.25 0.27 0.27 JU LY-05 151,176 150,936 (240) 9,725 437 3.34% 216 0.40 143,968 143,916 (52) (31,342) 386 3.15% 142 0.28 "' Omits SLGSs. Dollars in Thousands Aaeina Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Rati nas AAA Unrated ** AA A-1 BB+ Total: Sector MMFs LAIF RDA Loan MTNs Agencies CID Total: Month Jan05 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cltv Yield 2.54 2.66 2.79 2.94 3.06 3.29 3.37 3.43 3.56 3.67 3.81 3.95 City of Palm Desert - Portfolio Characteristics 31 December 2005 Market Value $ 64,874 2,041 4,937 20,012 $ 91,864 Market Value $ 49,409 72,785 6,044 9,626 $ 137,864 Market Value $ 27,210 40,000 32,785 17,641 20,228 $ 137,864 LAIF Yield 2.26 2.37 2.54 2.72 2.86 2.97 3.08 3.18 3.32 3.46 3.64 3.81 Variance 0.28 0.29 0.25 0.21 0.21 0.32 0.29 0.25 0.24 0.21 0.17 0.14 General Fund Ageing 100 80 71 0 0 60 13 40 ao 22 20 0 2 0 r 5-i 0 F 0 "_ I < 1M < 2M < 3M < 6M < 1YR < 2YR < 3YR Credit Quality AAA A-1 36% 0% BB+ i 7% AA Unrated " 4%4!! 53% Asset Allocation) 1 LAW 28% RDA Loan 24% MMFs 20% MTNs CP Agencies 13% 0 0% 15% -, Performance) An 3.5 e. 0 3.0 ar r 2.5 2.0 Jan05 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec I ■ LAIF Yield ■ City Yield * Standard and Poors *' LAIF, and City Loan to RDA Page 2 of 8 City of Palm Desert Portfolio Holdings 31 December 2005 Market Ratings Par Value Issuer Coupons Maturity Cost YTM I Price Value I Moody'sI S&P Medium -Term Notes $ 3,000,000 BANK ONE 4.13 9/1/07 $ 3,022,871 3.64 98.81 $ 2,964,240 Aa3 A+ $ 3,000,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 3,055,646 5.75 95.20 $ 2,855,853 Baa3 BB+ $ 2,500,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 2,546,372 5.75 95.20 $ 2,379,877 Baa3 BB+ $ 4,612,000 FORD MOTOR CREDIT CORP 7.20 6/15107 $ 4,742,934 5.10 95.20 $ 4,390,398 Baa3 BB+ $ 2,000,000 GENERAL ELECTRIC 3.13 11/9/06 $ 1,986,835 3.92 98.52 $ 1,970,422 Aaa AAA $ 3,000,000 GOLDMAN SACHS 7.20 3/1107 $ 3,123,730 3.50 102.67 $ 3,080,070 Aa3 A+ $ 18,112,000 Subtotal $ 18,478,389 4.66 $ 17,640,861 Federal Agencies - Discount $ 2,060,000 FED HOME LOAN BANK 0.00 3/20/06 $ 2,000,681 3.59 99.10 $ 2,041,460 Aaa AAA $ 1,023,000 FED NATIONAL MTG ASSOC 0.00 1/18/06 $ 999,798 3.54 99.83 $ 1,021,261 Aaa AAA $ 3,083,000 Subtotal $ 3,000,480 3.58 $ 3,062,721 Federal Agencies -- Coupon $ 3,000,000 FED HOME LOAN BANK 3.70 8/15/07 $ $ 1,500,000 FED HOME LOAN BANK 2.10 10/13/06 $ $ 2,035,000 FED HOME LOAN MTG CORP 2.50 12/4/06 $ $ 2,009,000 FED HOME LOAN MTG CORP 1.88 2/15/06 $ $ 2,786,000 FED NATIONAL MTG ASSOC 7.13 3115107 $ $ 3,000,000 FED NATIONAL MTG ASSOC 3.00 8/15/07 $ $ 3,000,000 FED NATIONAL MTG ASSOC 2.75 8/11/06 $ $ 17,330,000 Subtotal $ Local Government Investment Pool $ 40,000,000 L.A.I.F. $ 40,000,000 Subtotal Local Government Investment Pool $ 18,391,929 C.A.M.P. $ 18,391,929 Subtotal Money Market Fund $ 8,817,572 AIM $ 8,817,572 Subtotal City Loan to RDA $ 32,785,480 CITY OF PALM DESERT $ 32,785,480 Subtotal 2,995,714 3.79 98.41 $ 2,952,188 1,480,777 3.79 98.03 $ 1,470,469 2,010,672 3.84 98.00 $ 1,994,300 2,004,680 3.67 99.69 $ 2,002,722 2,901,177 3.55 102.69 $ 2,860,874 2,971,411 3.63 97.28 $ 2,918,438 2,981,037 3.81 98.88 $ 2,966,250 17,345,468 3.72 $ 17,165,239 0.00 12/1/05 $ 40,000,000 3.81 100.00 $ 40,000,000 $ 40,000,000 3.81 $ 40,000,000 0.00 1211/05 $ i 0.00 12/1/05 $ S 0.00 12/1/05 $ a 18,391,929 4.09 100.00 $ 18,391,929 18,391,929 4.09 $ 18,391,929 8,817,572 3.85 100.00 $ 8,817,572 8,817,572 3.85 $ 8,817,572 Aaa Aaa Aaa Aaa Aaa Aaa Aaa AAA AAA AAA AAA AAA AAA AAA U U U AAA Aaa AAA 32,785,480 3.81 100.00 $ 32,785,480 U U 32,785,480 3.81 $ 32,785,480 1 "U" = Unrated Page 3 of 8 City of Palm Desert Portfolio Holdings 31 December 2005 Market Par Value Issuer I Coupon) Maturitrl Cost I YTM I Price I Value Total Investments $ 138,519,981 $ 138,819,317 3.95 $ 137,863,802 Cash $ 3,739,807 CITY MAIN CHKG 0.00 12/1/05 $ $ 417,054 DESERT WILLOW CHKG 0.00 12/1/05 $ $ 210,564 RECREATIONAL FAC CHKG 0.00 12/1/05 $ $ 4,367,425 Subtotal $ Total Investments and Cash Ratings Moody's I S&P 3,739,807 0.00 100.00 $ 3,739,807 N/A N/A 417,054 0.00 100.00 $ 417,054 N/A N/A 210,564 0.00 100.00 $ 210,564 N/A NIA 4,367,425 $ 4,367,425 $ 142,887,406 $ 143,186,742 Corporate Issuers FORD MOTOR CREDIT CORPORATION GOLDMAN SACHS BANK ONE GENERAL ELECTRIC CAPITAL CORPORATION % of Portfolio (Market Value) 6.76% 2.16% 2.08% 1.38% $ 142,231,227 "U" = Unrated Page 4 of 8 Palm Desert Redevelopment Agency - Portfolio Characteristics 31 December 2005 Dollars in Thousands Aqeinq Interval Market Value < 1 M $ 51,094 < 2M 3,517 < 3M 8,803 < 6M - < 1YR 5,905 < 2YR 14,675 < 3YR - < 4YR - < 5YR - > 5YR - Total: $ 83,994 uali Market Value AAA $ 56,093 Unrated '" 60,837 A-1 - BB+ 6,420 Total: $ 123,350 Sector Market Value LAIF $ 60,837 MMFs 29,612 Agencies 20,670 CID - MTNs 12,231 Treasuries - Total: $ 123,350 Month RDA Yield LAW Yield Variance Jan05 2.23 2.26 -0.03 Feb 2.37 2.37 0.00 Mar 2.58 2.54 0.04 Apr 2.80 2.72 0.08 May 2.93 2.86 0.07 Jun 3.09 2.97 0.13 Jul 3.21 3.08 0.13 Aug 3.32 3.18 0.14 Sep 3.42 3.32 0.10 Oct 3.54 3.46 0.08 Nov 3.68 3.64 0.04 Dec 3.82 3.81 0.01 ` Standard and Poors *` LAIF FPortfollo Ageing w/o SLGSs� I 100 I 90 80 e 70 61 0 60 c 50 40 a 30 17 20 4 10 10 '� M 0 (- � 0 0 0 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR i Credit Quality Unrated " AAA - 50% 45% BB+ A-1 5% 0% Asset Allocation CID 0% LAIF 49% = MMFs 24% MTNs Agencies 10% 17% Performance 3.9 3.4 0 '0 2.9 m r 2.4 1.9 Jan05 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ■ LAI F Yield ■ RDA Yield Page 5 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 31 December 2005 lPar Value I Issuer I Coup Medium -Term Notes $ 3,000,000 FORD MOTOR CREDIT CORP 6.50 $ 3,525,000 FORD MOTOR CREDIT CORP 6.88 $ 2,896,000 GENERAL ELECTRIC 6.38 $ 2,896,000 GENERAL ELECTRIC 6.38 $ 12,317,000 Subtotal Federal Agency - Coupon $ 3,000,000 FED FARM CREDIT BANK 2.63 $ 3,000,000 FED HOME LOAN BANK 3.38 $ 3,005,000 FED HOME LOAN BANK 2.50 $ 3,000,000 FED HOME LOAN MTG CORP 4.88 $ 2,974,000 FED HOME LOAN MTG CORP 3.63 $ 2,974,000 FED HOME LOAN MTG CORP 3.63 $ 2,973,000 FED NATIONAL MTG ASSOC 3.63 $ 20,926,000 Subtotal Local Government Investment Pools $ 40,000,000 L.A.I.F. 0.00 $ 5,848,824 L.A.I.F. (HOUSING) 0.00 $ 14,827,783 L.A.I.F. BOND PROCEEDS 0.00 $ 160,090 L.A.I.F. BOND PROCEEDS 0.00 ' $ 60,836,697 Subtotal Local Government Investment Pool $ 9,831,579 C.A.M.P. 0.00 r $ 9,831,579 Subtotal Money Market Fund $ 19,780,066 AIM 0.00 r $ 19,780,066 Subtotal Total Investments $ 123,691,342 Market on (Maturity I Cost I YTM I Price I Value 1/25/07 $ 3,049,611 4.85 96.75 $ 2,902,410 2/1/06 $ 3,533,359 3.94 99.79 $ 3,517,421 3/15/06 $ 2,912,561 3.52 100.34 $ 2,905,792 3/15/06 $ 2,912,561 3.52 100.34 $ 2,905,792 $ 12,408,091 3.97 $ 12,231,414 9/17/07 $ 2,960,296 3.43 96.66 $ 2,899,688 9/14/07 $ 2,995,305 3.82 97.84 $ 2,935,313 3/15/06 $ 2,999,421 3.42 99.56 $ 2,991,853 3/15/07 $ 3,051,648 3.38 100.13 $ 3,003,750 9/15/06 $ 2,974,620 3.60 99.28 $ 2,952,624 9/15/06 $ 2,974,734 3.60 99.28 $ 2,952,624 3/15/07 $ 2,975,508 3.95 98.69 $ 2,933,979 $ 20,931,532 3.60 $ 20,669,831 Ratings Moody'sl S&P Baa3 Baa3 Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa BB+ BB+ AAA AAA AAA AAA AAA AAA AAA AAA AAA 1/1/06 $ 40,000,000 3.81 100.00 $ 40,000,000 U U 1/1/06 $ 5,848,824 3.81 100.00 $ 5,848,824 U U 1/1/06 $ 14,827,783 3.81 100.00 $ 14,827,783 U U 1/1/06 $ 160,090 3.81 100.00 $ 160,090 U U $ 60,836,697 3.81 $ 60,836,697 1/1/06 $ 9,831,579 4.09 100.00 $ 9,831,579 $ 9,831,579 4.09 $ 9,831,579 1/1/06 $ 19,780,066 3.85 100.00 $ 19,780,066 $ 19,780,066 3.85 $ 19,780,066 $ 123,787,966 3.82 $ 123,349,588 U AAA i Aaa AAA i Cash $ 1,268,831 HOUSING AUTH CHKG 0.00 1/1/06 $ 1,268,831 0.00 100.00 $ 1,268,831 NIA NIA $ 338,349 HOUSING AUTH TRUST 0.00 1/1/06 $ 338,349 0.00 100.00 $ 338,349 N/A NIA $ 1,607,180 Subtotal $ 1,607,180 $ 1,607,180 "U" = Unrated Page 6 of 8 lPar Value I Issuer Total Investments and Cash $ 125,298,522 Corporate Issuers Palm Desert Redevelopment Agency Portfolio Holdings 31 December 2005 I Coupon (Maturity I FORD MOTOR CREDIT CORPORATION GENERAL ELECTRIC CAPITAL CORPORATION Market Cost I YTM I Price I Value $ 125,395,146 $ 124,956,768 % of Portfolio I (Market Value) 5.13% 4.65% Ratings Moody'sl S&P "U" = Unrated 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 December 2005, 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 January 2006, Pis (idVoru C. c.". r. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code I 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) 52601N., r, -: f :-�'re�)stbiaes .... `s-YBares . =t�tE► kf iitF-. ; . r: - ; s: Years, `. 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized :53fif1tL(e.3010 ".. - - .. Ala.'' . 44.?• ,10=� t..}; ai!~i�-.:s.�ti�o-'�'�`8�`bts - '' .. a vW Rl3pe ;< fi = is .. 5°Jo::` . `•1Y t . or.P= i s 2� sr ; : `'=.2510: 7 -i oF1 .1 Y0. /° . ,� .. ;.ai6Q�(i): _ , .. repo,;: f`_Y ' :No`Li►it.: ' 30 bays` . :-2Q°:_''Y. Ai;A i4aa t.. 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601'(�1 IVt9dii�TE[rf30H . - :5:?FBA►�s' ' _-309k_;. fi 536F11i)- ; _ ^ ;Mc�tial Funds:.: =`3Q DaYs': 2fJ"% ° . ; }1A,q&aa;:DaYs:;�=,(Xolo_.F?)•,.`AA+4 &:a�: frt% ; 1�6.(3'/0• 53601(1) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized y Ave;:&;Aaa' AA: aa A } . - _ . InvestFuritfsiiots_ 9(1Oays.-, 20°to . iivisor'. <9(Tbays'� -20"!o:(2j 'orAdtiasori< 'tS% -�. 7:9°l0- 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA Security No;imit .. _- i -Na Limit `{• .. :. 28 ti%.:g'to (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 76.4% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds ` Certified California Municipal Treasurer Page 8 of 8