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Investment Reports - July & Aug 2008
CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK Ac FROM: CHERIE THOMPSON, OFFICE ASSISTANT PER NIAMH ORTEGAu_ DATE: September 29, 2008 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports forwere presented and approved at the September meeting of the Audit, Investment and Finance Committee for the months of July and August, 2008, respectively. Please include on the upcoming agenda for review and acceptance by City Council. If you have any questions please let me know by e-mail or phone, ext. 582. Thank you. CITY COUNCIL ACTION: APPROVED V/1, DENIED ]RECEIVED OTHER MEETING DATE AYES: Cat NOES: "SENT: Attachment (1) ABSTAIN: l\(el2e. VERIFIED BY: Original on File with -City Clerk's O:Efice aj)orb�ed BY RDA q-0 (rerja5tv-) Ak-,cnf) ON / D - 9 -C,,� VERIFIED BY iQT e__j rc Original on file with City Clerk's Office �,� i� �;�� �1��_ ��} ; �0 '"'i� � h� � �"?,� �a"r �0. .,� a E� � �f '•�.... Treasurer's Commentary .. "•�. ,: • ,,., i ��71►1'. _ � �"� � ', !c �r' � ^ h. � ,ti����-�' ��: The Federal Open Market Committee (FOMC) met on August 5, and left the Federal Funds Rate unchanged at 2.0%. The FOMC continued to speak of balancing both inflation and growth risks. The next FOMC meeting will be on September 16. No change in interest rates is expected. July bond yields were slightly lower as market participants contended with financial market volatility, a housing-led economic decline, and an end to Federal Reserve interest-rate cuts. The advance reading for second-quarter GDP showed that the U.S. economy grew at 1.9%. The year-over-year Core Consumer Price Index (CPI less food and energy) rose to 2.4%, signaling continued inflationary pressure. Housing starts were at their lowest level since 1991. Payroll data confirmed the seventh consecutive month of negative job growth. Merrill Lynch believes that the U.S. is already in a recession that probably won't end until mid-2009. Loan officer surveys show that banks are reluctant to extend credit to either consumers or businesses. Consumers have curbed their spending in reaction to higher oil prices, falling home prices, and tighter credit. 'The U.S. economy has been hit simultaneously with the worst home price declines since the Great Depression; the largest oil price shock since 1979; and the worst liquidity crisis since the early 1990s. ��s �'�� c. c.M r Treasurer Dollars in Thousands CITY Month-End Book Value"" $ Month-End Market Value""" $ Paper Gain (Loss) $ Prior Year Book Variance $ Interest Earnings $ Yield-To-Maturity Weighted Maturity (Days) Effective Duration RDA Month-End Book Value """' $ Month-End Market Value ""` $ Paper Gain (Loss) $ Prior Year Book Variance $ Interest Earnings $ Yield-To-Maturity Weighted Maturity (Days) Effective Duration City of Pa►m Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT July 2008 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer PORTFOLIO STATISTICS JUL-08 JUN-08 MAY-08 APR-08 MAR-08 FEB-08 222,674 $ 223,460 $ 786 $ (33,469) $ 688 $ 3.69% 500 0.65 288,987 $ 289,777 $ 790 $ (4,039) $ 748 $ 3.08% 277 0.30 231,179 $ 232,273 $ 1,094 $ (11,919) $ 689 $ 3.75% 503 0.68 285,360 $ 286,216 $ 856 $ (17,349) $ 744 $ 3.09% 280 0.32 224,746 $ 226,069 $ 1,323 $ (32,513) $ 703 $ 3.88% 519 0.74 299,471 $ 300,441 $ 970 $ (11,724) $ 770 $ 3.14% 266 0.33 222,731 $ 224,158 $ 1,427 $ (26,260) $ 716 $ 3.98% 512 0.77 261,769 $ 263,017 $ 1,248 $ (17,240) $ 721 $ 3.35°/a 305 0.40 232,474 $ 234,850 $ 2,376 $ 21,482 $ 756 $ 4.03% 496 0.79 275,545 $ 277,364 $ 1,819 $ (27,987) $ 800 $ 3.36% 291 0.59 226,921 229,529 2,608 8,430 739 4.31 % 462 0.70 276,463 278,326 1,863 (31,632) 749 3.79% 249 0.31 "" Omits SLGSs. City of Palm Desert -- Portfolio Characteristics July 31, 2008 Dollars in Thousands Aaeinq Interval < 1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratin s * AAA AA A Unrated "`" Total: Sector MMF Agencies MTNs CAMP RDA Loan LAI F CP Total: Month Aug07 Sep Oct Nov Dec Jan08 Feb Mar Apr May Jun Jul Citv Yield 5.09 5.01 5.05 4.93 4.87 4.72 4.31 4.05 3.98 3.88 3.75 3.69 Market Value $ 60,560 3,012 4,005 6,024 10,074 45,924 24,388 8,014 $ 162,001 Market Value $ 164,764 47,173 7,089 14 $ 219,040 Market Value $ 40,194 38,677 66,484 51,016 22,655 14 $ 219,040 LAIF Yield 5.25 5.23 5.14 4.96 4.80 4.62 4.16 3.78 3.40 3.07 2.89 2.88 Variance -0.17 -0.22 -0.09 -0.03 0.07 0.10 0.15 0.27 0.58 0.81 0.86 0.82 r' �� General Fund Ageing \ 100 80 � p 60 - '0 37 28 � 40 - ao 15 20 2 2 4 6 n � 5 0 0 o -�. � r� I I � < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR � .i �� � � Credit Quality � / � Asset Allocation � � I � Performance � A 3% �A 75% AA 22% Agencies MTNs 18% ;-`;;';";f 31 % �� -, „� ;�, �,:;, MMF CAMP 18% 23°/a RDA Loan 10% 5.2 - 0 4.4 - v d >' 3.6 - 2.8 - Aug07Sep Oct Nov DecJan08Feb Mar Apr May Jun Jul � v. , � . . ■ / � / \ / " Standard and Poors " LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings July 31, 2008 � Par Value � Issuer � Coupon� Maturity � Medium-Term Notes $ 2,920,000 BANK OF AMERICA $ 3,795,000 BANK OF AMERICA $ 3,000,000 BANK OF AMERICA $ 15,270,000 CITIGROUP $ 2,035,000 CITIGROUP $ 1,000,000 CITIGROUP $ 4,000,000 CITIGROUP $ 2,000,000 GENERAL ELECTRIC $ 2,035,000 GENERAL ELECTRIC $ 1,891,000 GENERAL ELECTRIC $ 2,000,000 GENERAL ELECTRIC $ 3,965,000 GENERAL ELECTRIC $ 3,080,000 WACHOVIA $ 2,000,000 WACHOVIA $ 2,000,000 WACHOVIA $ 2,000,000 WAL-MART $ 3,000,000 WAL-MART $ 4,000,000 WELLS FARGO BANK $ 2,000,000 WELLS FARGO BANK $ 2,025,000 WELLS FARGO BANK $ 2,020,000 WELLS FARGO BANK � $ 66,036,000 Subtotal 5.88 5.38 4.25 4.13 4.13 4.63 4.63 3.60 4.88 6.88 6.13 4.88 3.63 3.50 7.80 6.88 6.88 6.38 4.63 3.13 4.20 2/15/09 8/15/11 10/1/10 2/22/10 2/22/10 8/3/10 8/3/10 10/15/08 10/21/10 11/15/10 2/22/11 10/21/10 2/17/09 8/15/08 8/18/10 8/ 10/09 8/10/09 8/1/11 8/9/10 4/ 1 /09 1/15/10 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK $ 3,000,000 FED FARM CREDIT BANK $ 2,000,000 FED FARM CREDIT BANK $ 3,000,000 FED HOME LOAN BANK $ 1,980,000 FED HOME LOAN BANK $ 3,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,033,000 FED HOME LOAN MTG CORP $ 2,049,000 FED HOME LOAN MTG CORP $ 2,000,000 FED HOME LOAN MTG CORP $ 2,000,000 FED HOME LOAN MTG CORP $ 2,062,000 FED HOME LOAN MTG CORP $ 2,049,000 FED HOME LOAN MTG CORP $ 2,000,000 FED NATIONAL MTG ASSOC $ 2,000,000 FED NATIONAL MTG ASSOC $ 2,000,000 FED NATIONAL MTG ASSOC � $ 36,173,000 Subtotal 4.78 4.78 3.63 4.38 4.75 4.63 3.50 4.25 4.00 4.13 4.90 4.13 4.00 4.63 4.25 3.88 5/3/10 5/3/10 10/24/08 9/ 11 /09 12/12/08 9/12/08 11 /3/09 7/15/09 12/15/09 11 /18/09 11 /3/08 7/12/10 12/15/09 10/28/09 8/15/10 11 /17/08 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Cost 2,932,634 3,936,212 3,064,950 15,096,161 2,011,833 989,589 3,958,357 1,994,705 2,004,945 1,937,337 2,020,372 4,102, 732 3,058,167 1,998,758 2,104,470 2,036,215 3,118,809 4,131,936 1,982,961 2,001,835 1,998,905 66,481,884 Market � YTM Price � Value 5.01 4.05 3.20 4.91 4.91 5.19 5.19 4.99 5.63 5.65 5.67 3.23 5.02 5.18 5.02 4.93 2.90 5.13 5.09 4.92 4.96 4.72 101.08 100.02 99.43 98.72 98.72 99.16 99.16 99.95 102.17 106.05 104.38 102.17 99.19 99.95 101.73 103.96 103.96 103.69 100.89 99.55 100.05 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2,951,606 3,795,831 2,982,960 15,075,201 2,009,040 991,633 3,966,532 1,998,912 2,079,221 2,005,404 2,087,672 4,051,160 3,054,951 1,999,044 2,034,644 2,079,224 3,118,836 4,147,548 2,017,818 2,015,904 2,020,986 66,484,125 3,008,201 3,008,201 1,985,653 2,984,974 1,979,098 2,999,226 1,942,677 2,022,032 2,026,991 1,982,261 1,999,241 2,011,744 2,009,628 1,994,222 1,953,825 1,986,084 35,894,059 4.61 4.61 6.90 5.59 4.87 5.40 5.96 4.87 4.87 4.88 5.06 5.47 5.50 4.88 5.47 6.35 5.30 102.88 102.88 100.22 101.53 100.75 100.22 100.59 101.25 101.34 101.43 100.57 101.81 101.34 102.00 102.06 100.31 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3,086,250 3,086,250 2,004,375 3,045,938 1,994,850 3,006,563 2,011,875 2,058,413 2,076,533 2,028,648 2,011,364 2,099,374 2,076,533 2,040,000 2,041,250 2,006,250 36,674,465 Ratings I Moody's � S&P Aa2 Aa2 Aa2 Aa1 Aa 1 Aa 1 Aa1 Aaa Aaa Aaa Aaa Aaa Aa3 Aa3 Aa3 Aa2 Aa2 Aa1 Aa 1 Aa1 Aa1 AA- AA- AA- AA AA AA AA AAA AAA AAA AAA AAA A+ A+ A+ AA AA AA- AA- AA- AA- Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings July 31, 2008 Market Ratings � Par Value � Issuer � Coupon� Maturity � Cost � YTM I Price � Value I Moody's� S8P Federal Agencies -- Callable $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,985 5.06 100.13 $ 2,002,692 Aaa AAA �$ 2,000,000 Subtotal $ 1,999,985 5.06 $ 2,002,692 � Local Government Investment Pool $ 14,057 L.A.I.F. 0.00 8/1/08 $ 14,057 2.79 100.00 $ 14,057 U U �$ 14,057 Subtotal $ 14,057 2.79 $ 14,057 � Local Government Investment Pool $ 49,864,614 C.A.M.P. 0.00 8/1/08 $ 49,864,614 2.51 100.00 $ 49,864,614 U AAA $ 1,150,621 C.A.M.P. (DESERT WILLOW) 0.00 8/1/08 $ 1,150,621 2.51 100.00 $ 1,150,621 U AAA �$ 51,015,235 Subtotal $ 51,015,235 2.51 $ 51,015,235 � Money Market Fund $ 40,194,354 WF HERITAGE SELECT 0.00 8/1/08 $ 40,194,354 2.52 100.00 $ 40,194,354 Aaa AAA �$ 40,194,354 Subtotal $ 40,194,354 2.52 $ 40,194,354 � �ity of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 8/1/38 $ 22,655,000 2.79 100.00 $ 22,655,000 U U �$ 22,655,000 Subtotal $ 22,655,000 2.79 $ 22,655,000 � Total Investments $ 218,087,646 $ 218,254,574 3.69 $ 219,039,928 Cash $ 3,239,281 CITY MAIN CHKG 0.00 8/1/08 $ 3,239,281 0.00 100.00 $ 3,239,281 U U $ 807,259 DESERT WILLOW CHKG 0.00 8/1/08 $ 807,259 0.00 100.00 $ 807,259 U U $ 373,096 RECREATIONAL FAC CHKG 0.00 8/1/08 $ 373,096 0.00 100.00 $ 373,096 U U $ 43 MONTEREY 170 CHKG 0.00 8/1/08 $ 43 0.00 100.00 $ 43 U U $ - ART, FOOD & WINE CHKG 0.00 8/1/08 $ - 0.00 100.00 $ - U U � $ 4,419,679 Subtotal $ 4,419,679 $ 4,419,679 � Total Investments and Cash $ 222,507,325 $ 222,674,253 $ 223,459,607 "U" = Unrated Page 4 � Par Value � City of Palm Desert Portfolio Holdings July 31, 2008 Issuer � Coupon� Maturity � Cost Corporate Issuers BANK OF AMERICA CITIGROUP GENERAL ELECTRIC WACHOVIA WAL-MART WELLS FARGO BANK Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC % of Portfolio (Market Value) 4.35% 9.86°/a 5.47% 3.17% 2.33% 4.57% % of Portfolio (Market Value) 3.66% 4.50°/a 5.53% 2.72% Market Ratings � YTM I Price � Value I Moody's� S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics July 31, 2008 Dollars in Thousands Aaeinp Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Quality " AAA AA A Unrated "* Total: Sector MMF Agencies MTNs CAMP LAIF CP Treasuries Total: Month Aug07 Sep Oct Nov Dec Jan08 Feb Mar Apr May Jun Jul Market Value $ 43,449 11,981 5,035 13,154 32,855 15,367 $ 121,841 Market Value $ 260,548 15,632 12,126 31 $ 288,337 Market Value $ 165,039 42,353 37,945 42,969 31 $ 288,337 RDA Yield LAIF Yield 5.07 5.25 5.02 5.23 4.87 5.14 4.70 4.96 4.70 4.80 4.45 4.62 3.78 4.16 3.36 3.78 3.35 3.40 3.14 3.07 3.09 2.89 3.08 2.79 l � � Portfolio Ageing w/o SLGSs � 100 90 - 80 - � 70 0 60 50 � 40 36 2� a 20 10 11 13 10 - n � 4 �--� n n 0 0 0 0 ^ < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR � � i � � Credit Quality � ♦ i � Asset Allocation, MMF 57°/a AAA 90% A 4% qq 6°/a CAMP MTNs 15% 13% Agencies 15% � � Variance � Performance � -0.19 -0.21 5.4 -0.27 -0.26 4.7 - -0.10 0 -0.1 7 a 4.0 d - -0.38 } = 3.3 - -0.42 -0.05 2.6 - 0.06 Aug07Sep Oct Nov DecJan08Feb Mar Apr May Jun Jul 0.20 0.29 I ■LAIF Yield ■RDA Yield I / 1 i � ♦ * Standard and Poors *" LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings July 31, 2008 � Par Value � Issuer � Coupon� Maturity � Medium-Term Notes $ 4,000,000 CITIGROUP $ 4,070,000 JP MORGAN CHASE $ 3,055,000 JP MORGAN CHASE $ 3,000,000 JP MORGAN CHASE $ 2,000,000 WACHOVIA $ 3,000,000 WAL-MART $ 3,000,000 WAL-MART $ 2,000,000 WELLS FARGO BANK $ 13,625,000 WELLS FARGO BANK � $ 37,750,000 Subtotal Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK $ 2,000,000 FED FARM CREDIT BANK $ 4,900,000 FED FARM CREDIT BANK $ 3,970,000 FED HOME LOAN BANK .$ 3,970,000 FED HOME LOAN BANK $ 4,500,000 FED HOME LOAN BANK $ 4,000,000 FED HOME LOAN BANK $ 2,005,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN MTG CORP $ 3,734,000 FED HOME LOAN MTG CORP $ 4,155,000 FED NAT MTG ASSOC � $ 41,234,000 Subtotal Local Government Investment Pool $ 9,749 L.A.I.F. $ 21,339 L.A.I.F. (HOUSING) � $ 31,087 Subtotal Local Government Investment Pool $ 40,890,819 C.A.M.P. $ 2,078,053 C.A.M.P. (HOUSING) � $ 42,968,872 Subtotal Money Market Fund $ 165,038,448 WF HERITAGE SELECT � $ 165,038,448 Subtotal "U" = Unrated 6.20 3.50 3.50 6.00 5.80 6.88 4.13 4.00 4.20 6.45 4.75 4.90 4.25 4.25 4.38 4.63 3.88 4.88 4.88 6.88 6.88 6.63 3/15/09 3/15/09 3/15/09 1 /15/09 12/1 /08 8/10/09 7/1/10 8/15/08 1/15/10 10/7/09 8/3/09 9/22/10 9/12/08 9/ 12/08 9/11 /09 9/12/08 7/24/09 3/11/11 3/11/11 9/15/10 9/15/10 9/15/09 Market Ratings Cost � YTM I Price � Value , Moody's� S&P $ 4,024,869 5.13 100.62 $ $ 4,031,526 5.12 99.62 $ $ 3,026,121 5.12 99.62 $ $ 3,040,104 3.00 100.55 $ $ 2,004,899 5.00 100.60 $ $ 3,061,340 4.76 103.96 $ $ 3,066,997 2.91 101.42 $ $ 1,999,305 4.96 100.04 $ $ 13,854,451 3.00 100.05 $ $ 38,109,612 3.96 $ $ 2,033,589 4.88 104.05 $ $ 1,997,796 4.87 101.84 $ $ 4,925,125 4.65 103.31 $ $ 3,967,422 4.79 100.19 $ $ 3,967,422 4.79 100.19 $ $ 4,477,462 5.59 101.53 $ $ 3,998,968 4.84 100.22 $ $ 1,986,851 4.89 100.84 $ $ 1,969,857 5.49 103.56 $ $ 1,969,456 5.50 103.56 $ $ 2,049,883 5.54 107.34 $ $ 3,827,302 5.54 107.34 $ $ 4,228,229 4.89 104.00 $ $ 41,234,000 5.06 $ 0.00 8/1/08 $ 0.00 8/1/08 $ $ 0.00 8/1/08 $ 0.00 8/1/08 $ $ 9,824 2.79 100.00 $ 21,503 2.79 100.00 $ 31,327 2.79 $ 40,890,819 2.51 100.00 $ 2,078,053 2.51 100.00 $ 42,968,872 2.51 $ 4,024,960 4,054,465 3,043,339 3,016,359 2,011,998 3,118,836 3,042,501 2,000,772 13,631,649 37,944,879 2,080,948 2,036,875 5,062,313 3,977,444 3,977,444 4,568,906 4,008,750 2,021,917 2,071,250 2,071,250 2,146,875 4,008,216 4,321,200 41,234,000 Aa1 Aa3 Aa3 Aa3 Aa3 Aa2 Aa2 Aa 1 Aa1 Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa AA- A+ A+ A+ A+ AA AA AA- AA- AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA 7 9,824 U U 21,503 U U 31,327 40,890,819 2,078,053 42,968,872 U AAA U AAA � Aaa AAA ! Page 7 0.00 8/1/08 $ 165,038,448 2.52 100.00 $ 165,038,448 $ 165,038,448 2.52 $ 165,038,448 Palm Desert Redevelopment Agency Portfolio Holdings July 31, 2008 � Par Value � Issuer Total Investments $ 287,022,408 Cash $ 1,061,198 HOUSING AUTH CHKG $ 378,560 HOUSING AUTH TRUST � $ 1,439,758 Total Investments and Cash $ 288,462,166 Market � Coupon� Maturity � Cost � YTM Price � Value $ 287,382,259 3.08 $ 287,217,526 0.00 8/1 /08 $ 1,061,198 0.00 100.00 $ 1,061,198 0.00 8/1/08 $ 378,560 0.00 100.00 $ 378,560 $ 1,439,758 $ 1,439,758 $ 288,822,018 Corporate Issuers CITIGROUP JP MORGAN CHASE WACHOVIA WAL-MART WELLS FARGO BANK °/a of Portfolio (Market Value) 1.39% 3.50% 0.70% 2.13% 5.42 % , Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NAT MTG ASSOC % of Portfolio (Market Value) 3.18% 7.86% 2.13% 1.50% $ 288,657,284 Ratings I Moody's � S&P U U U U 7 "U" = Unrated Page 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended July 31, 2008, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on September 23, 2008, ��s ���ao� c. c.M 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&PlMdys 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 � � 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% 53601(� Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 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(j) Medium-Term Notes 5 Years 3� /o A 5 Years 30 /o A 53601(k) Mutual Funds 90 Days 20% AAA 8� Aaa 90 Days I 20% (2) � AAA & Aaa 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit NotAuthorized 53601(k) Local Govemment AAA & Aaa I I AAA & Aaal Investment Pools 90 Days 20°/a or Advisor 90 Days 20% (2) or Advisor 53601(n) Mortgage-Backed 5 Years 20% A(Issuer) & NotAuthorized Securities AA (Security LAIF No Limit � No Limit � � (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. 0.0°10 � 0.0% 17.4% 14.4% 0.0% 0.0% 30.5% I 13.3% 18.4% � 57.4% 23.4% � 14.9% 0.0% 0.0% 89.6% � 100.0% * Certified California Municipa/ Treasurer Page 9 f;' t' ��� i�� - •. � p� � h � '•,� :�� f�+, f ,�a E� :.�` Treasurer's Commentary ,r" j� !�� +�l _ !� i ; �, �, � h f i,tiyi�� y��. , ��� A The Federal Open Market Committee (FOMC) will meet on September 16. There may be a rate cut due to the current chaotic market conditions. Eighty-two-year-old Alan Greenspan has commented that the U.S. is mired in a"once-in-a-century" financial crisis, and that this is the worst economy that he has ever seen. Recent events appear to bear this out. On September 7, the U.S. Treasury seized Fannie Mae and Freddie Mac, and put them under a"conservatorship". The Treasury pledged to inject $100 billion into each company in order to stabilize them since neither company could survive as currently structured. Both companies had issued more than $5 trillion of debt and mortgage-backed securities. Their stock was trading at less than $1 a share at time of seizure. On September 14, the U.S. Treasury called for an emergency session at the New York Fed with top Wall Street executives. The outcome was that Lehman Brothers filed a Chapter 11 bankruptcy as its stock price slid to $4 a share, and Merrill Lynch was sold to Bank of America as part of a government-brokered takeover. The last two largest investment banks, Goldman Sachs and Morgan Stanley, are unlikely to remain independent since they made the same mistakes as Merrill and Lehman. Major investment banks that survived the Great Depression are now disappearing. ��s ��� c. c.� r. City Treasurer Dollars in Thousands CITY Month-End Book Value*"" $ Month-End Market Value*"' $ Paper Gain (Loss) $ Prior Year Book Variance $ Interest Earnings $ Yield-To-Maturity Weighted Maturity (Days) Effective Duration RDA Month-End Book Value """' $ Month-End Market Value "" $ Paper Gain (Loss) $ Prior Year Book Variance $ Interest Earnings $ Yield-To-Maturity Weighted Maturity (Days) Effective Duration City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT August 2008 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer PORTFOLIO STATISTICS AUG-08 JUL-08 JUN-08 MAY-08 APR-08 MAR-08 220,438 $ 221,338 $ 900 $ (25,412) $ 665 $ 3.65% 490 0.63 284,134 $ 284,962 $ 828 $ (5,730) $ 727 $ 3.05% 275 0.28 222,674 $ 223,460 $ 786 $ (33,469) $ 688 $ 3.69% 500 0.65 288,987 $ 289,777 $ 790 $ (4,039) $ 748 $ 3.08% 277 0.30 231,179 $ 232,273 $ 1,094 $ (11,919) $ 689 $ 3.75% 503 0.68 285,360 $ 286,216 $ 856 $ (17,349) $ 744 $ 3.09% 280 0.32 224,746 $ 226,069 $ 1,323 $ (32,513) $ 703 $ 3.88% 519 0.74 299,471 $ 300,441 $ 970 $ (11,724) $ 770 $ 3.14% 266 0.33 222,731 $ 224,158 $ 1,427 $ (26,260) $ 716 $ 3.98% 512 0.77 261,769 $ 263,017 $ 1,248 $ (17,240) $ 721 $ 3.35% 305 0.40 232,474 234,850 2,376 21,482 756 4.03% 496 0.79 275,545 277,364 1,819 (27,987) 800 3.36% 291 0.59 "** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics August 31, 2008 Dollars in Thousands Aqeina Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratinas « AAA AA A Unrated ""` Total: Sector MMF Agencies MTNs CAMP RDA Loan LAI F CP Total: Month Sep07 Oct Nov Dec Jan08 Feb Mar Apr May Jun Jul Aug Market Value $ 56,120 4,002 4,010 7,992 9,254 51, 795 21,235 $ 154,408 Market Value $ 142,215 47,316 5,099 22,669 $ 217,299 Market Value $ 42,720 36,617 64,673 50,620 22,655 14 $ 217,299 Citv Yield LAIF Yield 5.01 5.23 5.05 5.14 4.93 4.96 4.87 4.80 4.72 4.62 4.31 4.16 4.05 3.78 3.98 3.40 3.88 3.07 3.75 2.89 3.69 2.88 3.65 2.78 �� General Fund Ageing � � 100 80 � 0 0 60 � 40 I�36I 34 a 20 I I 3 3 5 6 I I 14 II n � � � o �,� � < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR � / i � ' Credit Quality � i � Asset Allocation � .� � Variance � Performance � -0.22 -0.09 A 3% ,aqq 73% AA 24% Agencies MTNs 17% 30% ;:r� r, <, t,;;> �; �'�.- . ;�. MMF CAMP 20% 23% RDA Loan 10°/a -0.03 5.0 - 0.07 - 0.10 o q 2 = - 0.15 � 0.27 �' 3.4 0.58 0.81 2.6 = 0.86 Sep07 Oct Nov Dec Jan08 Feb Mar Apr May Jun Jul Aug 0.82 0.87 I ■. . ■ � I . / 1 i \ J '` Standard and Poors *' LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings August 31, 2008 � Par Value � Medium-Term Notes $ 2,920,000 $ 3,795,000 $ 3,000,000 $ 15,270,000 $ 2,035,000 $ 1,000,000 $ 4,000,000 $ 2,000,000 $ 2,035,000 $ 1,891,000 $ 2,000,000 $ 3,965,000 $ 3,080,000 $ 2,000,000 $ 2,000,000 $ 3,000,000 $ 4,000,000 $ 2,000,000 $ 2,025,000 $ 2,020,000 � $ 64,036,000 Issuer BANK OF AMERICA BANK OF AMERICA BANK OF AMERICA CITIGROUP CITIGROUP CITIGROUP CITIGROUP GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC GENERAL ELECTRIC WACHOVIA WACHOVIA WAL-MART WAL-MART WELLS FARGO BANK WELLS FARGO BANK WELLS FARGO BANK WELLS FARGO BANK Subtotal Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK $ 3,000,000 FED FARM CREDIT BANK $ 2,000,000 FED FARM CREDIT BANK $ 3,000,000 FED HOME LOAN BANK $ 1,980,000 FED HOME LOAN BANK $ 3,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,033,000 FED HOME LOAN MTG CORP $ 2,049,000 FED HOME LOAN MTG CORP $ 2,000,000 FED HOME LOAN MTG CORP $ 2,000,000 FED HOME LOAN MTG CORP $ 2,062,000 FED HOME LOAN MTG CORP $ 2,049,000 FED HOME LOAN MTG CORP $ 2,000,000 FED NATIONAL MTG ASSOC $ 2,000,000 FED NATIONAL MTG ASSOC $ 2,000,000 FED NATIONAL MTG ASSOC ' $ 36,173,000 Subtotal � Coupon� Maturity � 5.88 2/15/09 5.38 8/15/11 4.25 10/1/10 4.13 2/22/10 4.13 2/22/10 4.63 8/3/10 4.63 8/3/10 3.60 10/15/08 4.88 10/21/10 6.88 11/15/10 6.13 2/22/11 4.88 10/21/10 3.63 2/17/09 7.80 8/18/10 6.88 8/10/09 6.88 8/10/09 6.38 8/1/11 4.63 8/9/10 3.13 4/1/09 4.20 1/15/10 4.78 5/3/10 4.78 5/3/10 3.63 10/24/08 4.38 9/11/09 4.75 12/12/08 4.63 9/12/08 3.50 11 /3/09 4.25 7/15/09 4.00 12/15/09 4.13 11/18/09 4.90 11 /3/08 4.13 7/12/10 4.00 12/15/09 4.63 10/28/09 4.25 8/15/10 3.88 11 /17/08 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Cost 2,930,681 3,932,340 3,062,451 15,105,457 2,013,072 990,022 3,960,087 1,996,852 2,006,072 1,935,650 2,019,708 4,097,567 3,061,509 2,100,218 2,033,270 3,109,150 4,128,271 1,983,663 2,004,731 2,000,112 64,470,884 3,007,812 3,007,812 1,990,839 2,986,101 1,979,305 2,999,792 1,946,482 2,022,989 2,028,328 1,983,400 1,999,489 2,013,895 2,012,019 1,994,610 1,955,712 1,990,023 35,918,606 Market � YTM Price � Value 5.01 4.05 3.20 4.91 4.91 5.19 5.19 4.99 5.63 5.65 5.67 3.23 5.02 5.02 4.93 2.90 5.13 5.09 4.92 4.96 4.70 4.61 4.61 6.90 5.59 4.87 5.40 5.96 4.87 4.87 4.88 5.06 5.47 5.50 4.88 5.47 6.35 5.30 100.87 100.46 99.72 99.06 99.06 99.85 99.85 99.98 102.53 106.26 104.85 102.53 99.24 102.14 103.72 103.72 104.31 101.24 99.57 100.60 102.84 102.84 100.13 101.31 100.53 100.06 100.41 100.91 101.19 101.18 100.33 101.78 101.19 101.59 102.06 100.19 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2,945,527 3,812,578 2,991,522 15,126,646 2,015,895 998,484 3,993,936 1,999,522 2,086,410 2,009,450 2,096,934 4,065,168 3,056,454 2,042,740 2,074,336 3,111, 504 4,172,424 2,024,892 2,016,335 2,032,161 64,672,918 3,085,313 3,085,313 2,002,500 3,039,375 1,990,519 3,001,875 2,008,125 2,051,424 2,073,332 2,023,524 2,006,620 2,098,729 2,073,332 2,031,875 2,041,250 2,003,750 36,616,855 Ratings Moody's � S&P Aa2 Aa2 Aa2 Aa1 Aa 1 Aa1 Aa1 Aaa Aaa Aaa Aaa Aaa Aa3 Aa3 Aa2 Aa2 Aa1 Aa1 Aa1 Aa1 AA- AA- AA- AA AA AA AA AAA AAA AAA AAA AAA A+ A+ AA AA AA- AA- AA- AA- Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA "U" = Unrated Page 3 � Par Value � Issuer � Coup Local Government Investment Pool $ 14,057 L.A.I.F. 0.00 � $ 14,057 Subtotal Local Government Investment Pool $ 49,967,648 C.A.M.P. 0.00 $ 652,258 C.A.M.P. (DESERT WILLOW) 0.00 � $ 50,619,907 Subtotal Money Market Fund $ 42,719,933 WF HERITAGE SELECT 0.00 � $ 42,719,933 Subtotal City of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 � $ 22,655,000 Subtotal Total Investments $ 216,217,897 Cash $ 2,896,109 CITY MAIN CHKG 0.00 $ 859,532 DESERT WILLOW CHKG 0.00 $ 283,811 RECREATIONAL FAC CHKG 0.00 $ 43 MONTEREY 170 CHKG 0.00 $ - ART, FOOD & WINE CHKG 0.00 � $ 4,039,495 Subtotal Total Investments and Cash $ 220,257,392 City of Palm Desert Portfolio Holdings August 31, 2008 Market on� Maturity � Cost � YTM Price � Value 9/1/08 $ 14,057 2.78 100.00 $ 14,057 $ 14,057 2.78 $ 14,057 9/1/08 $ 49,967,648 2.53 100.00 $ 49,967,648 9/1/08 $ 652,258 2.53 100.00 $ 652,258 $ 50,619,907 2.53 $ 50,619,907 Ratings Moody's � S&P U U U 9/1/08 $ 42,719,933 2.48 100.00 $ 42,719,933 Aaa $ 42,719,933 2.48 $ 42,719,933 9/1/08 $ 22,655,000 2.78 0.00 $ 22,655,000 $ 22,655,000 2.78 $ 22,655,000 $ 216,398,387 3.65 $ 217,298,670 9/1/08 $ 2,896,109 0.00 100.00 $ 2,896,109 9/1/08 $ 859,532 0.00 100.00 $ 859,532 9/1/08 $ 283,811 0.00 100.00 $ 283,811 9/1/08 $ 43 0.00 100.00 $ 43 9/1/08 $ - 0.00 100.00 $ - $ 4,039,495 $ 4,039,495 $ 220,437,882 $ 221,338,164 U U U U U U "U" = Unrated Page 4 � Par Value � City of Palm Desert Portfolio Holdings August 31, 2008 Issuer Corporate Issuers � Coupon� Maturity � BANK OF AMERICA CITIGROUP GENERAL ELECTRIC WACHOVIA WAL-MART WELLS FARGO BANK Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost % of Portfolio (Market Value) 4.40% 10.00% 5.54% 2.30% 2.34% 4.63% % of Portfolio (Market Value) 3.69% 4.54% 5.57% 2.75% Market Ratings � YTM Price � Value I Moody's� S&P � "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics August 31, 2008 Dollars in Thousands Aaeina Interval < 1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Quality" AAA AA A Unrated `* Total: Sector MMF Agencies MTNs CAMP LAIF CP Treasuries Total: Month Sep07 Oct Nov Dec Jan08 Feb Mar Apr May Jun Jul Aug Market Value $ 55,499 5,022 18,300 27,694 15,349 $ 121,864 Market Value $ 247,565 23,914 12,120 31 $ 283,630 Market Value $ 160,227 42,275 36,034 45,063 31 $ 283,630 � � � Portfolio Ageing w/o SLGSs � 100 .��_....._---____..__ 90 80 0 70 0 60 - 46 '0 50 40 23 a 30 15 13 20 10 0 0 4 n n n 0 0 0 0 , , ^ , � < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR � � i � � Credit Quality � AAA 87% A 4% � � 9% �� Asset Allocation � MMF 56% CAMP 16% � i RDA Yield LAIF Yield Variance � Performance � 5.02 5.23 -0.21 4 87 1 MTNs 13% Agencies 15% . 5. 4 -0.27 5.4 ._ __... 4.70 4.96 -0.26 4.70 4.80 -0.10 4.7 4.45 4.62 -0.17 0 3.78 4.16 -0.38 v 4.0 d 3.36 3.78 -0.42 r 3.3 3.35 3.40 -0.05 3.14 3.07 0.06 2 6 3.09 2.89 0.20 Sep07 Oct Nov Dec Jan08 Feb Mar Apr May Jun Jul Aug 3.08 2.79 0.29 3.05 2.78 0.27 I sLAIF Yield ■RDA Yield � � / \ 1 / * Standard and Poors "" LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings August 31, 2008 � Par Value � Issuer Medium-Term Notes $ 4,000,000 CITIGROUP $ 4,070,000 JP MORGAN CHASE $ 3,055,000 JP MORGAN CHASE $ 3,000,000 JP MORGAN CHASE $ 2,000,000 WACHOVIA $ 3,000,000 WAL-MART $ 3,000,000 WAL-MART $ 13,625,000 WELLS FARGO BANK � $ 35,750,000 Subtotal Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK $ 2,000,000 FED FARM CREDIT BANK -$ 4,900,000 FED FARM CREDIT BANK $ 3,970,000 FED HOME LOAN BANK $ 3,970,000 FED HOME LOAN BANK �$ 4,500,000 FED HOME LOAN BANK $ 4,000,000 FED HOME LOAN BANK $ 2,005,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN MTG CORP $ 3,734,000 FED HOME LOAN MTG CORP $ 4,155,000 FED NAT�ONAL MTG ASSOC � $ 41,234,000 Subtotal Local Government Investment Pool $ 9,824 L.A.I.F. $ 21,503 L.A.I.F. (HOUSING) � $ 31,327 Subtotal Local Government Investment Pool $ 42,980,546 C.A.M.P. $ 2,082,514 C.A.M.P. (HOUSING) � $ 45,063,060 Subtotal Money Market Fund $ 160,226,036 WF HERITAGE SELECT � $ 160,226,036 Subtotal � Coupon� Maturity � 6.20 3.50 3.50 6.00 5.80 6.88 4.13 4.20 6.45 4.75 4.90 4.25 4.25 4.38 4.63 3.88 4.88 4.88 6.88 6.88 6.63 3/15/09 3/15/09 3/15/09 1 /15/09 12/1 /08 8/10/09 7/1 /10 1/15/10 10/7/09 8/3/09 9/22/10 9/12/08 9/12/08 9/11 /09 9/12/08 7/24/09 3/11/11 3/11/11 9/15/10 9/15/10 9/15/09 Market Cost � YTM Price � Value $ 4,021,538 5.13 100.97 $ $ 4,036,679 5.12 99.62 $ $ 3,029,989 5.12 99.62 $ $ 3,032,768 3.00 100.42 $ $ 2,003,674 5.00 100.46 $ $ 3,056,353 4.76 103.72 $ $ 3,064,084 2.91 101.89 $ $ 13,841,315 3.00 100.60 $ $ 36,086,399 3.91 $ $ 2,031,224 4.88 103.66 $ $ 1,997,979 4.87 101.63 $ $ 4,924,148 4.65 103.41 $ $ 3,969,308 4.79 100.03 $ $ 3,969,308 4.79 100.03 $ $ 4,479,152 5.59 101.31 $ $ 3,999,723 4.84 100.06 $ $ 1,988,394 4.89 100.72 $ $ 1,970,819 5.49 103.66 $ $ 1,970,430 5.50 103.66 $ $ 2,047,924 5.54 107.00 $ $ 3,823,638 5.54 107.00 $ $ 4,222,791 4.89 103.44 $ $ 41,394,839 5.06 $ 0.00 9/1/08 $ 0.00 9/1/08 $ $ 0.00 9/1/08 $ 0.00 9/1/08 $ $ 9,824 2.78 100.00 $ 21,503 2.78 100.00 $ 31,327 2.78 $ 42,980,546 2.53 100.00 $ 2,082,514 2.53 100.00 $ 45,063,060 2.53 $ 4,038,740 4,054,424 3,043,308 3,012,723 2,009,294 3,111,504 3,056,661 13,707,023 36,033,678 2,073,176 2,032,500 5,066,906 3,971,241 3,971,241 4,559,063 4,002,500 2,019,411 2,073,125 2,073,125 2,140,000 3,995,380 4,297,828 42,275,495 Ratings Moody's � S8�P � Aa1 Aa3 Aa3 Aa3 Aa3 Aa2 Aa2 Aa1 AA- A+ A+ A+ A+ AA AA AA- Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA � 9,824 U U 21,503 U U 31,327 � 42,980,546 U AAA 2,082,514 U AAA 45,063,060 � 0.00 9/1/08 $ 160,226,036 2.48 100.00 $ 160,226,036 Aaa $ 160,226,036 2.48 $ 160,226,036 q•� "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings August 31, 2008 � Par Value � Issuer Total Investments $ 282,304,423 Cash $ 942,197 HOUSING AUTH CHKG $ 390,232 HOUSING AUTH TRUST � $ 1,332,429 Subtotal Total Investments and Cash $ 283,636,852 Corporate Issuers CITIGROUP JP MORGAN CHASE WACHOVIA WAL-MART WELLS FARGO BANK Market � Coupon � Maturity � Cost � YTM Price � Value $ 282,801,662 3.05 $ 283,629,596 0.00 9/1 /08 $ 942,197 0.00 100.00 $ 942,197 0.00 9/1/08 $ 390,232 0.00 100.00 $ 390,232 $ 1,332,429 $ 1,332,429 $ 284,134,091 Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC % of Portfolio (Market Value) 1.42% 3.55% 0.71 % 2.16% 4.81 % % of Portfolio (Market Value) 3.22% 7.96% 2.15% 1.51 % $ 284,962,025 Ratings Moody's � S&P � U U U U � "U" = Unrated Page 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended August 31, 2008, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on September 23, 2008, ��s ��� c. c.,� r � City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS � California Government Code � City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit NotAuthorized (1, 53601(b) U.S. Treasuries 5 Years No Limit 5 Years � No Limit � � 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit NotAuthorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 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 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 ' 300% � A 5 Yeay I 3�0°� ) I A I 53601(k) � Mutual Funds � 90 Days � 20 /o � AAA & Aaa 90 Da s 20 /0 2 AAA & Aaa+ 53601(I) � Trust Indenture Debt � � � NotAuthorized 53601(m) � Secured Bank Deposits � 5 Years � No Limit � Not Authorized 53601(k) I Local Government � I I AAA & Aaa I I AAA & Aaal Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 53601(n) I Mortgage-Backed 5 Years 20% A(Issuer) & NotAuthorized 0.0% � 0.0% 16.6% 14.6% 0.0% 0.0% 29.8% � 12.8% 19.7% � 56.7% 23.4% I 15.9% Securities � I AA (Security� � LAIF � � No Limit � � No Limit � 0.0% 0.0% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. � 89.5% �� 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. * Certified California Municipa/ Treasurer Page 9