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Home My WebLink AboutInvstmnt Rprt - Feb 07City of Palm Desert4* t City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT February 2007 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 20-21 March, and left short-term interest rates unchanged. The Committee maintained its bias on inflation. In contrast, Fed Funds Futures have assigned a 76% probability that the FOMC will cut the Federal Funds Rate by 25 basis points to 5.00% at its next meeting in June. The FOMC remains focused on inflation targeting, while the market believes deflation to be the greater risk. Merrill Lynch's forecast is even more aggressive. It believes that the Federal Funds Rate will be at 3.75% by March 2008, after rate cuts of 150 basis points, mostly during the second half of 2007. The trigger will probably be the housing market, which accounts for a significant amount of consumer discretionary wealth. The easing of bank mortgage standards for subprime lenders has undermined the FOMC's efforts to raise short-term interest rates over the last two years. Subprime borrowers have accounted for nearly 20% of the annual increase in new home sales, and added 0.5% per year to Gross Domestic Product. The tightening of credit in subprime lending will now make it more difficult for subprime borrowers to avoid delinquency and default. The units that they vacate will add to a record glut of unsold homes on the market, and increase deflationary pressure on housing prices. Housing sales may fall by as much as 10% in 2007, and remain flat in 2008. The 10-year U.S. Treasury Note yield is expected to drift down to 4.00% from a current level of 4.55%. ;Pwdls (idvow, C. C.,y r. Treasurer PORTFOLIO STATISTICS Dollars in Thousands FEB-07 JAN-07 DEC-06 NOV-06 OCT-06 SEP-06 CITY Month -End Book Value*** $ 217,861 $ 237,367 $ 159,050 $ 159,790 $ 157,403 $ 162,442 Month -End Market Value- $ 218,014 $ 237,168 $ 158,939 $ 159,912 $ 157,328 $ 162,291 Paper Gain (Loss) $ 153 $ (199) $ (111) $ 122 $ (75) $ (151) Prior Year Book Variance $ 70,854 $ 89,718 $ 15,863 $ 12,880 $ 8,748 $ 13,361 Interest Earnings $ 859 $ 853 $ 650 $ 635 $ 657 $ 662 Yield -To -Maturity 5.08% 5.06% 5.03% 5.01% 4.99% 4.96% Weighted Maturity (Days) 444 402 495 514 517 449 0.69 0.57 0.75 0.80 0.83 0.70 RDA Month -End Book Value *'* $ 260,693 $ 235,609 $ 111,068 $ 115,137 $ 116,220 $ 127,042 Month -End Market Value *** $ 260,929 $ 235,493 $ 111,060 $ 115,388 $ 116,302 $ 127,023 Paper Gain (Loss) $ 236 $ (116) $ (8) $ 251 $ 82 $ (19) Prior Year Book Variance $ 107,041 $ 83,830 $ (14,327) $ (6,074) $ (7,023) $ 1,024 Interest Earnings $ 991 $ 1,018 $ 465 $ 466 $ 489 $ 530 Yield -To -Maturity 5.06% 5.05% 4.95% 4.95% 4.95% 4.94% Weighted Maturity (Days) 329 305 668 644 638 585 Effective Duration 0.56 0.49 1.10 1.11 1.14 1.09 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics 28 February 2007 Dollars in Thousands Ageing Interval Market Value < 1 M $ 88,979 General Fund Ageing) 1 < 2M - < 3M - 100 < 6M 11,438 80 < 1YR 6,926 53 < 2YR 26,706 .0 60 < 3YR 16,935 o f 40 < 4YR 11,980 a 20 7 16 10 7 < 5YR 4,195 0 0 r, I I n n 3 0 0 > 5YR < 1 M < 2M < 3M < 6M < < < < < > Total: $ 167,159 1 Y R 2YR 3YR 4YR 5YR 5YR Credit Quality Ratings " Market Value AAA $ 131,574 AAA AA 11,255 B 63% A 17,875 5% Unrated " 39,569 B 10,112 Unrated " Total: $ 210,385 19% A AA 8% 5% Sector Market Value Asset Allocation) MMF $ 47,605 1 Agencies MTNs Agencies 41,614 20% 22% MTNs 47,311 LGIP 34,286 RDA Loan 32,785 LGIP LAIF 6,784 MMF 16% CID23% Total: $ 210,385 LAIF RDA Loan 3% 16% Month Citv Yield LAIF Yield Variance Performance) 1 Mar06 4.38 4.14 0.23 Apr 4.47 4.30 0.17 5.2 May 4.62 4.56 0.05 Jun 4.72 4.70 0.02 4.8 e Jul 4.86 4.85 0.01 Aug 4.92 4.95 -0.02 m Sep 4.96 5.02 -0.07 } 4.4 I Oct 4.99 5.10 -0.11 M Nov 5.01 5.13 -0.12 4.0 Dec 5.03 5.13 -0.09 Mar06 Apr May Jun Jul Aug Sep Oct Nov Dec Jan07 Feb Jan07 5.06 5.16 -0.10 Feb 5.08 5.18 -0.11 ■ l Aif t i-ki ■ c!ty Yw i,.: ' Standard and Poors " LAIF, and City Loan to RDA Page 2 of 9 City of Palm Desert Portfolio Holdings 28 February 2007 Market Ratings Par Value { Issuer { Coupon { Maturity { Cost { YTM I Price { Value Moody's{ S&P Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 2,998,358 5.08 98.91 $ 2,990,101 Al A+ $ 3,000,000 BANK ONE 4.13 9/1/07 $ 3,006,861 3.64 99.40 $ 2,981,910 Aa3 A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,965,848 5.01 101.71 $ 2,969,964 Aa2 AA- $ 3,000,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 3,011,044 5.75 100.00 $ 2,999,883 B1 B $ 2,500,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 2,509,204 5.75 100.00 $ 2,499,902 61 B $ 4,612,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 4,637,987 5.10 100.00 $ 4,611,820 131 B GENERAL ELECTRIC 3.60 10/15/08 $ 1,958,211 4.99 97.81 $ 1,956,276 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,985,786 5.63 99.68 $ 2,028,460 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11 /15110 $ 1,966,017 5.65 106.18 $ 2,007,928 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,031,653 5.67 103.84 $ 2,076,806 Aaa AAA $ 3,000,000 GOLDMAN SACHS 7.20 3/1/07 $ 3,000,000 3.50 100.00 $ 3,000,000 Aa3 A+ $ 2,000,000 IBM CORPORATION 3.80 2/1/08 $ 1,975,075 5.13 98.79 $ 1,975,814 Al A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,973,805 5.25 98.81 $ 1,976,292 Aa3 A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,001,357 5.02 97.32 $ 2,997,441 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,953,506 5.18 97.68 $ 1,953,572 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,086,268 4.93 104.44 $ 2,088,868 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,194,239 5.13 105.52 $ 4,220,936 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,971,025 5.09 98.76 $ 1,975,124 Aal AA- $ 45,061,000 Subtotal $ 47,226,242 5.04 $ 47,311,097 Federal Agencies - Coupon $ 3,000,000 FED HOME LOAN BANK 3.70 8/15/07 $ 2,998,796 3.79 99.31 $ 2,979,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,965,817 5.59 98.97 $ 2,969,063 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,975,588 4.87 99.88 $ 1,977,525 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,989,594 5.40 99.75 $ 2,992,500 Aaa AAA $ 2,049,000 FED HOME LOAN BANK 4.00 12/15/09 $ 2,004,270 4.87 97.88 $ 2,005,459 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 2,999,881 5.02 99.00 $ 2,999,700 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,005,771 4.87 98.69 $ 2,006,317 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,962,888 4.88 98.23 $ 1,964,578 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,995,034 5.06 100.03 $ 2,000,590 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12110 $ 1,975,181 5.47 97.97 $ 2,020,116 Aaa AAA $ 2,786,000 FED NATIONAL MTG ASSOC 7.13 3/15/07 $ 2,789,715 3.55 100.06 $ 2,787,741 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 3.00 8/15/07 $ 2,991,972 3.63 99.00 $ 2,970,000 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,987,630 4.88 99.50 $ 1,990,000 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,921,741 5.47 98.34 $ 1,966,875 Aaa AAA $ 33,940,000 Subtotal $ 33,563,879 4.76 $ 33,629,838 Federal Agencies - Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,982,526 4.88 99.13 $ 1,982,500 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,631 5.06 100.30 $ 2,005,940 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.30 8/13/09 $ 2,000,000 5.30 99.86 $ 1,997,284 Aaa AAA "U" = Unrated Page 3 of 9 City of Palm Desert Portfolio Holdings 28 February 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value Moody'sS&P Federal Agencies -- Callable (continued) $ 2,000,000 FED NATIONAL MTG ASSOC 5.38 2/1/10 $ 2,000,000 5.37 99.94 $ 1,998,750 Aaa AAA $ 8,000,000 Subtotal $ 7,982,157 5.15 $ 7,984,474 Local Government Investment Pool $ 6,783,585 L.A.I.F. 0.00 3/1/07 $ 6,783,585 5.18 100.00 $ 6,783,585 U U $ 6,783,585 Subtotal $ 6,783,585 5.18 $ 6,783,585 Local Government Investment Pool $ 33,538,742 C.A.M.P. 0.00 3/1/07 $ 33,538,742 5.22 100.00 $ 33,538,742 U AAA $ 747,197 C.A.M.P. (HOUSING) 0.00 3/1/07 $ 747,197 5.22 100.00 $ 747,197 U AAA $ 34,285,939 Subtotal $ 34,285,939 5.22 $ 34,285,939 Money Market Fund $ 47,604,830 WF ADVANTAGE GOVT MMF 0.00 3/1/07 $ 47,604,830 5.13 100.00 $ 47,604,830 Aaa AAA $ 47,604,830 Subtotal $ 47,604,830 5.13 $ 47,604,830 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 3/1/37 $ 32,785,480 5.18 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 5.18 $ 32,785,480 Total Investments $ 208,460,833 $ 210,232,111 5.08 $ 210,385,242 Cash $ 5,816,380 CITY MAIN CHKG 0.00 3/1/07 $ 5,816,380 0.00 100.00 $ 5,816,380 U U $ 1,014,234 DESERT WILLOW CHKG 0.00 3/1/07 $ 1,014,234 0.00 100.00 $ 1,014,234 U U $ 627,534 MONTEREY 170 CHKG 0.00 3/1/07 $ 627,534 0.00 100.00 $ 627,534 U U $ 170,756 RECREATIONAL FAC CHKG 0.00 3/1/07 $ 170,756 0.00 100.00 $ 170,756 U U $ 7,628,905 Subtotal $ 7,628,905 $ 7,628,905 Total Investments and Cash $ 216,089,738 $ 217,861,016 $ 218,014,147 "U" = Unrated Page 4 of 9 I Par Value City of Palm Desert Portfolio Holdings 28 February 2007 Market Issuer Coupon I Maturity Cost YTM I Price I Value % of Portfolio Corporate Issuers (Market Value) AMERICAN HONDA FINANCE 1.37% BANK ONE 1.37% BANK OF AMERICA 1.36% FORD MOTOR CREDIT CORP 4.64% GENERAL ELECTRIC 3.70% GOLDMAN SACHS 1.38% IBM CORPORATION 0.91% JP MORGAN CHASE 0.91 % WACHOVIA 1.37% WAL-MART 0.96% WELLS FARGO BANK 2.84% Ratings Moody 'si S&P� "U" = Unrated Page 5 of 9 Palm Desert Redevelopment Agency -- Portfolio Characteristics 28 February 2007 Dollars in Thousands Aaeina Interval Market Value < 1 M $ 28,812 (Portfolio Ageing w/o SLGSsI I 1 < 2M - I < 3M - 100 < 6M - 90 80 < 1YR 15,918 70 < 2YR 26,612 60 050 < 3YR 29,624 40 0 26 24 27 < 4YR 6,071 30 a 20 n 100 14 0 0 0 0 n < 5YR 3,974 I I n I I r-i > 5YR - < 1 M < 2M < 3M < 6M < < < < < > Total: $ 111,011 l 1YR 2YR 3YR_4YR 5YR 5YR ) ualit Market Value Credit Qualityl AAA AAA $ 227,257 88% AA 9,025 A 8,931 " Unrated ** 15,334 Unr6% AA A Total: $ 260,547 3%3% Sector MMF Agencies LAIF LGIP MTNs CID Treasuries Total: Market Value $ 135,476 70,562 15,334 21,218 17,957 $ 260,547 Month RDA Yield LAIF Yield Variance Mar06 4.38 4.14 0.24 Apr 4.50 4.30 0.20 May 4.60 4.56 0.04 Jun 4.69 4.70 -0.01 Jul 4.82 4.85 -0.03 Aug 4.85 4.95 -0.10 Sep 4.94 5.02 -0.09 Oct 4.95 5.10 -0.15 Nov 4.95 5.13 -0.18 Dec 4.95 5.13 -0.18 Jan07 5.05 5.16 -0.11 Feb 5.06 5.18 -0.12 Asset Allocation( MMF 52% MT 7% LAIF LGIP 6% 8% Performance( 5.2 4.8 v 4.4 4.0 Mar06 Apr May Jun Jul Aug Sep Oct Nov Dec Jan07 Feb ■ LAIF Yield ■ RDA Yield Agencies 27% * Standard and Poors ** LAIF Page 6 of 9 Palm Desert Redevelopment Agency Portfolio Holdings 28 February 2007 Market Ratings Par Value Issuer I Coupon] Maturity I Cost I YTM I Price I Value I Moody'sI S&P Medium -Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,081,491 5.13 102.27 $ 4,090,824 Aa1 AA- $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,025,718 5.00 101.27 $ 2,025,318 Aa3 A+ $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,943,929 5.12 96.93 $ 3,944,929 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 2,960,369 5.12 96.93 $ 2,961,120 Aa3 A+ $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,974,003 4.96 98.44 $ 1,968,712 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,968,730 5.18 98.83 $ 2,964,975 Aa1 AA- $ 18,125,000 Subtotal $ 17,954,240 5.10 $ 17,955,878 Federal Agency - Coupon $ 3,000,000 FED FARM CREDIT BANK 2.63 9/17/07 $ 2,987,367 3.43 98.63 $ 2,958,750 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,073,801 4.88 103.87 $ 2,077,378 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,961,457 4.89 98.09 $ 1,961,875 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,994,692 4.87 99.91 $ 1,998,125 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 3.38 9/14/07 $ 2,998,522 3.82 99.03 $ 2,970,938 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,935,354 4.79 99.19 $ 3,937,744 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,935,354 4.79 99.19 $ 3,937,744 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,448,725 5.59 98.97 $ 4,453,594 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,933,239 4.88 96.69 $ 1,933,750 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,986,125 4.84 99.75 $ 3,990,000 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,960,631 4.89 97.78 $ 1,960,514 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,953,504 5.49 100.22 $ 2,004,375 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,952,884 5.50 100.22 $ 2,004,375 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,967,205 5.16 99.00 $ 1,970,100 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 4.88 3/15/07 $ 3,001,666 3.38 99.97 $ 2,999,063 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,004,115 4.87 97.88 $ 2,005,459 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,998,227 5.07 100.16 $ 2,003,300 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,083,182 5.54 106.75 $ 2,135,000 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,889,584 5.54 106.75 $ 3,986,045 Aaa AAA $ 2,973,000 FED NAT MTG ASSOC 3.63 3/15/07 $ 2,973,081 3.95 99.94 $ 2,971,142 Aaa AAA $ 4,155,000 FED NAT MTG ASSOC 6.63 9/15/09 $ 4,320,672 4.89 104.25 $ 4,331,588 Aaa AAA $ 2,000,000 FED NAT MTG ASSOC 3.88 11/17/08 $ 1,968,429 4.87 98.34 $ 1,966,875 Aaa AAA $ 60,346,000 Subtotal $ 60,327,816 4.79 $ 60,557,731 Federal Agency - Callable $ 5,000,000 FED HOME LOAN BANK 5.25 2/15/08 $ 5,000,000 5.25 100.06 $ 5,003,125 Aaa AAA $ 5,000,000 FED HOME LOAN BANK 5.25 2/1/08 $ 5,000,000 5.25 100.03 $ 5,001,563 Aaa AAA $ 10,000,000 Subtotal $ 10,000,000 5.25 $ 10,004,688 "U" = Unrated Page 7 of 9 Palm Desert Redevelopment Agency Portfolio Holdings 28 February 2007 Par Value I Issuer 1coup Local Government Investment Pool $ 1,030,425 L.A.I.F. 0.00 $ 5,554,701 L.A.I.F. 0.00 $ 8,749,249 L.A.I.F. BOND PROCEEDS 0.00 $ 15,334,375 Subtotal Local Government Investment Pool $ 21,218,262 C.A.M.P. 0.00 $ 21,218,262 Subtotal Money Market Fund $ 135,476,173 WF ADVANTAGE GOVT MMF 0.00 $ 135,476,173 Subtotal Total Investments $ 260,499,810 Cash $ 58,555 HOUSING AUTH CHKG 0.00 $ 323,407 HOUSING AUTH TRUST 0.00 $ 381,962 Subtotal Total Investments and Cash $ 260,881,772 Corporate Issuers CITIGROUP FIRST UNION NAT BANK JP MORGAN CHASE WELLS FARGO BANK Market onl Maturity I Cost I YTM I Price I Value 3/1/07 $ 1,030,425 5.18 100.00 $ 1,030,425 3/1/07 $ 5,554,701 5.18 100.00 $ 5,554,701 3/1/07 $ 8,749,249 5.18 100.00 $ 8,749,249 $ 15,334,375 5.18 $ 15,334,375 3/1/07 $ 21,218,262 5.22 100.00 $ 21,218,262 $ 21,218,262 5.22 $ 21,218,262 Ratings Moody's I S&P U U U U U U U AAA N 3/1/07 $ 135,476,173 5.13 100.00 $ 135,476,173 Aaa AAA $ 135,476,173 5.13 $ 135,476,173 1 $ 260,310,866 5.06 $ 260,547,107 3/1/07 $ 58,555 0.00 100.00 $ 58,555 U U 3/1/07 $ 323,407 0.00 100.00 $ 323,407 U U $ 381,962 $ 381,962 $ 260,692,828 $ 260,929,069 % of Portfolio (Market Value) 1.57% 0.78% 2.65% 1.89% "U" = Unrated Page 8 of 9 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 28 February 2007, 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 27 March 2007, Pis �iauom c. c At r * 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) 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit I ( 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% 19.8% 27.0% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(q) 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 0 30% A 5 Years 30 0/o A 1 22.. 5 0/0 69 0/o 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 22.6% 52.0% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa I I AAA & AaaI I Investment Pools 90 Days 20% or Advisor 90 Day s 20% 2) ( or Advisor 1 16.3% 8.2% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security LAIF No Limit I No Limit 3.2% 5.9% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 84.4% I 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 9 of 9