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Home My WebLink AboutInvestment Report - April & May 2009CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARYNON� DATE: July 23, 2009 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports forwere presented and approved at the May and June meetings of the Audit, Investment and Finance Committee for the months of April and May 2009. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the minutes of the April and May 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) BYRDA Original ors iilcitri iity Cler k's Office CITY COUNCIL ACTION APPROVED DENIED RECEIVED/C muf.il MEETING DATE AYES: NOES: N017,- ABSENT: N U/C ABSTAIN- AJZ0(, VERIFIED 13Y:,�/C�r� Original on File with City Clerk's Office GARNANCE\NIAMH ORTEGA\INVESTMENT COMMITTEE\MEMOS\RKLASSENINVREPORT.WPD City of Palm Desert �.. City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT April 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) will meet next on June 24. No change in interest rates is expected. Over the last 12 months, consumer prices have fallen at the fastest rate since 1955. The U.S. Government is attempting to address this by "reflating" the economy with $1 trillion. There is a real risk that when the economy eventually rebounds, a high level of inflation may appear. The U.S. Treasury Yield Curve is showing an unusually steep slope between 2-Year and 10-Year Treasuries, suggesting a sharp increase in interest rates due to future inflation. In the meantime, the U.S. economy is struggling with falling home prices, weak consumer spending, soaring unemployment, and rising credit card delinquencies. When a recovery does occur, job growth may be feeble since small businesses, which are the principal engine of job creation, will be struggling with tight credit conditions and future taxes that the Obama Administration plans to impose, starting in 2011. The U.S. appears to be on the same economic path as Japan, which still has a depressed economy after 20 years. The Japanese did seven stimulus bills, and financially propped up companies that were not competitive. In the case of Chrysler, the U.S. Government ignored federal bankruptcy law, and proposed transferring majority ownership in Chrysler to unsecured debtors (UAW) who would be paid 43 cents on the dollar, while pressuring secured creditors (bondholders) to accept 28 cents on the dollar. In the "new" Chrysler, there will be no private U.S. capital in the ownership structure. 117aa.�s 67djoiv, c.c.s r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands Apr-09 Mar-09 FEB-09 JAN-09 DEC-08 NOV-08 CITY Month -End Book Value*** $ 217,963 $ 216,674 $ 219,469 $ 212,738 $ 199,053 $ 213,607 Month -End Market Value*** $ 218,619 $ 216,589 $ 218,243 $ 213,002 $ 199,922 $ 213,168 Paper Gain (Loss) $ 656 $ (85) $ (1,226) $ 264 $ 869 $ (439) Prior Year Book Variance $ (4,768) $ (15,800) $ (7,452) $ (18,677) $ (38,071) $ (27,138) Interest Earnings $ 360 $ 460 $ 443 $ 430 $ 471 $ 529 Yield -To -Maturity 2.09% 2.43% 2.34% 2.55% 2.87% 3.04% Weighted Maturity (Days) 329 324 419 454 490 463 Effective Duration 0.29 0.36 0.42 0.47 0.54 0.53 RDA Month -End Book Value *** $ 252,527 $ 268,377 $ 270,416 $ 281,273 $ 251,852 $ 244,674 Month -End Market Value *** $ 253,785 $ 269,503 $ 271,497 $ 282,566 $ 253,288 $ 245,564 Paper Gain (Loss) $ 1,258 $ 1,126 $ 1,081 $ 1,293 $ 1,436 $ 890 Prior Year Book Variance $ (9,242) $ (7,168) $ (9,283) $ (4,674) $ 877 $ (5,516) Interest Earnings $ 219 $ 259 $ 283 $ 268 $ 287 $ 304 Yield -To -Maturity 1.05% 1.07% 1.29% 1.25% 1.40% 1.51 % Weighted Maturity (Days) 217 205 235 226 256 272 Effective Duration 0.16 0.17 0.18 0.19 0.24 0.26 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics April 30, 2009 Dollars in Thousands Aqeinq Interval Market Value < 1 M $ 99,234 < 2M - < 3M 2,055 < 6M 8,143 < 1 YR 12,316 < 2YR 27,200 < 3YR 7,463 < 4YR - < 5YR - > 5YR - Total: $ 156,411 rr... ............................................................................ ............ . . General Fund Ageing 100 80 63 c 60 0 40 17 a 20 0 1 5 8 � 5 0 0 0 0 - rt 1-1 r---1 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Ratings * Market Value Credit Quality AAA AAA $ 93,818 45% AA 25,432 AA A 6,618 12% Unrated "* 83,039 Unrated ** 40% A Total: $ 208,907 3% Sector Market Value Asset Allocation MTNs CAMP MMF $ 32,448 15% 23% Agencies 25,851 MTNs 32,050 CAMP 35,519 Agencies RDA Loan 12% RDA Loan 22,655 GMRA 30,215 MMF GMRA LAIF 30,169 16% 14% CP - LAIF Total: $ 208,907 14% Month Citv Yield LAIF Yield Variance Performance May08 3.88 3.07 0.81 Jun 3.75 2.89 0.86 4.0 Jul 3.69 2.88 0.82 3.5 Aug 3.65 2.78 0.87 Sep 3.70 2.77 0.93 3.0 Oct 3.27 2.71 0.56 m 2.5 Nov 3.04 2.57 0.47 } Dec 2.87 2.35 0.52 2.0 Jan09 2.55 2.05 0.51 1.5 Feb 2.36 1.87 0.50 May08Jun Jul Aug Sep Oct Nov DecJan09 Feb Mar Apr Mar 2.17 1.82 0.35 Apr 2.09 1.61 0.49 ® ": ' - Standard and Poors ** LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings April 30, 2009 Market Ratings Par Value Issuer l Coupon j Maturity I Cost I YTM I Price I Value ' Moody's S&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,901,361 4.05 97.60 $ 3,704,053 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,042,467 3.20 97.14 $ 2,914,212 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,015,089 5.63 101.69 $ 2,069,353 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11 /15/10 $ 1,922,154 5.65 104.78 $ 1,981,471 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,014,400 5.67 103.79 $ 2,075,704 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,056,248 3.23 101.69 $ 4,031,933 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,066,197 5.02 102.27 $ 2,045,314 Al AA $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,009,716 4.93 101.50 $ 2,029,968 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,031,876 2.90 101.50 $ 3,044,952 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,098,952 5.13 102.23 $ 4,089,052 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,989,281 5.09 100.81 $ 2,016,276 Al AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,009,774 4.96 101.36 $ 2,047,537 Al AA $ 31,706,000 Subtotal $ 32,157,514 4.43 $ 32,049,825 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,004,697 4.61 103.88 $ 3,116,250 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,004,697 4.61 103.88 $ 3,116,250 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,995,117 5.59 101.50 $ 3,045,000 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,976,919 5.96 101.50 $ 2,030,000 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,030,641 4.87 100.84 $ 2,050,154 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,039,020 4.87 102.16 $ 2,093,183 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,992,517 4.88 101.95 $ 2,039,070 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,044,005 5.47 104.00 $ 2,144,480 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,031,147 5.50 102.16 $ 2,093,183 Aaa AAA $ 2,000,000 FEDERAL NAT MTG ASSOC 4.63 10/28/09 $ 1,997,712 4.88 102.00 $ 2,040,000 Aaa AAA $ 2,000,000 FEDERAL NAT MTG ASSOC 4.25 8/15/10 $ 1,970,810 5.47 104.16 $ 2,083,126 Aaa AAA $ 25,193,000 Subtotal $ 25,087,283 5.13 $ 25,850,696 Local Agency Investment Pool $ 30,168,974 L.A.I.F. 0.00 5/1/09 $ 30,168,974 1.61 100.00 $ 30,168,974 U U $ 30,168,974 Subtotal $ 30,168,974 1.61 $ 30,168,974 Local Agency Investment Pool $ 35,461,508 C.A.M.P. 0.00 5/1/09 $ 35,461,508 0.75 100.00 $ 35,461,508 U AAA $ 57,197 C.A.M.P. (DESERT WILLOW) 0.00 5/1/09 $ 57,197 0.75 100.00 $ 57,197 U AAA $ 35,518,705 Subtotal $ 35,518,705 0.75 $ 35,518,705 Money Market Fund $ 32,449,172 WF TREASURY PLUS 0.00 5/1/09 $ 32,449,172 0.00 100.00 $ 32,449,172 Aaa AAA $ 32,449,172 Subtotal $ 32,449,172 0.00 $ 32,449,172 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings April 30, 2009 Par Value I Issuer Coup Corporate Issuer BANK OF AMERICA GENERAL ELECTRIC WACHOVtA WAL-MART WELLS FARGO BANK o Market n I Maturity Cost YTM I Price I Value 5/1/09 $ 30,214,684 1.77 100.00 $ 30,214,684 $ 30,214,684 1.77 $ 30,214,684 5/1/39 $ 22,655,000 1.61 100.00 $ 22,655,000 $ 22,655,000 1.61 $ 22,655,000 $ 208,251,331 2.09 $ 208,907,055 5/1/09 $ 7,390,520 0.00 100.00 $ 7,390,520 5/1/09 $ 1,963,741 0.00 100.00 $ 1,963,741 5/1/09 $ 357,907 0.00 100.00 $ 357,907 $ 9,712,169 $ 9,712,169 $ 217,963,500 % of Portfolio (Market Value) 3.03% 4.65% 0.94% 2.32% 3.73% $ 218,619,223 IRatings Moody's I S&P U U U U U U U U U U "U" = Unrated Page 4 IPar Value City of Palm Desert Portfolio Holdings April 30, 2009 Market Issuer Coupon I Maturity Cost YTM I Price I Value % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FEDERAL NAT MTG ASSOC 2.85% 2.32% 4.77% 1.89% IRatings Moody's I S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics April 30, 2009 Dollars in Thousands Ageing Interval Market Value Portfolio Ageing w/o SLGSs N < 1 M $ 49,672 < 2M - < 3M 2,026 100 90 < 6M 15,980 80 < 1YR 13,629 0 70 60 50 < 2YR 18,698 c 50 _ < 3YR -o 40 o 30 16 14 19 a20 100 0 2 I I I I 0 0 0 0 < 5YR - I I > 5YR - < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: $ 100,005 t i Quality * Market Value i Credit Quality AAA $ 221,116 A AA 19,937 0% AAA 87% A - Unrated'* Unrated *" 11,755 5% AA Total: $ 252,808 8% Sector MMF Agencies MTNs CAMP LAIF CP Treasuries Total: Month May08 Jun Jul Aug Sep Oct Nov Dec Jan09 Feb Mar Apr Market Value I Asset Allocation $ 150,550 30,498 19,937 40,068 11,755 $ 252,808 MMF 59% LAIF 5% CAMP MTNs 16% 8% Agencies 12% RDA Yield LAIF Yield Variance Performance 3.14 3.07 0.06 3.09 2.89 0.20 3.5 3.08 2.79 0.29 3.05 2.78 0.27 2.6 3.18 2.77 0.41 == 1.60 2.71 -1.11 1.51 2.57 -1.06 r 1.7 1.40 2.35 -0.95 1.26 2.05 -0.79 0.8 1.29 1.87 -0.58 May08Jun Jul Aug Sep Oct Nov DecJan09Feb Mar Apr 1.07 1.82 -0.75 1.05 1.61 -0.56 ®LAIF Yield ®RDA Yield * Standard and Poors ** LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings April 30, 2009 Par Value I Issuer Coup $ 150,549,963 Subtotal Total Investments o 8/10/09 $ 3,016,457 4.76 101.50 $ 3,044,952 7/1/10 $ 3,040,781 2.91 102.73 $ 3,081,765 1/15/10 $ 13,736,223 3.00 101.36 $ 13,810,736 $ 19,793,460 3.25 $ 19,937,453 10/7/09 $ 2,012,300 4.88 102.66 $ 2,053,226 8/3/09 $ 1,999,440 4.87 101.16 $ 2,023,126 9/22/10 $ 4,916,327 4.65 105.19 $ 5,154,188 9/11/09 $ 4,492,675 5.59 101.50 $ 4,567,500 7/24/09 $ 2,000,733 4.89 100.84 $ 2,021,918 3/11/11 $ 1,978,515 5.49 106.63 $ 2,132,500 3/11/11 $ 1,978,229 5.50 106.63 $ 2,132,500 9/15/10 $ 2,032,254 5.54 107.44 $ 2,148,750 9/15/10 $ 3,794,329 5.54 107.44 $ 4,011,716 9/15/09 $ 4,179,289 4.89 102.34 $ 4,252,385 $ 29,384,091 5.16 $ 30,497,809 5/1/09 $ 11,732,687 1.61 100.00 $ 11,732,687 5/1/09 $ 21,894 1.61 100.00 $ 21,894 $ 11,754,580 1.61 $ 11,754,580 5/1/09 $ 37,962,908 0.75 100.00 $ 37,962,908 5/1/09 $ 2,105,079 0.75 100.00 $ 2,105,079 $ 40,067,988 0.75 $ 40,067,988 5/1/09 $ 150,549,963 0.00 100.00 $ 150,549,963 $ 150,549,963 0.00 $ 150,549,963 Ratings Moody's I S&P Aa2 Aa2 Al Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa U U U U Aaa AAA I $ 251,291,531 $ 251,550,082 1.05 $ 252,807,793 Cash $ 573,262 HOUSING AUTH CHKG 0.00 5/1/09 $ 573,262 0.00 100.00 $ 573,262 U U $ 403,758 HOUSING AUTH TRUST 0.00 5/1/09 $ 403,758 0.00 100.00 $ 403,758 U U $ 977,020 Subtotal $ 977,020 0.00 $ 977,020 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings April 30, 2009 Par Value I Issuer Total Investments and Cash $ 252,268,551 Corporate Issuers WAL-MART WELLS FARGO BANK Coupon I Maturity Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost $ 252,527,102 % of Portfolio (Market Value) 2.41 % 7.86% % of Portfolio (Market Value) 3.64% 4.28% 2.43% 1.68% Market YTM I Price I Value $ 253,784,813 IRatings Moody's I S&P "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 April 30, 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. 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 May 26, 2009, pis Gd_ao�, C. C..,y r * City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS ICalifornia 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) 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 14.5% 0.0% 53601(b) U.S. Treasuries 5 Years No Limit 5 Years I No Limit I 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% 12.1 % 11.7% 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 Q) Medium -Term Notes 5 Years 0 30% A 5 Years 30 0/o A 1 15.. 4 0/0 79 0/o . 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 15.6% 59.9% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa I I AAA & AaaI I Investment Pools 90 Days 20% or Advisor 90 Days 20% (2 ) or Advisor 1 17.1 % 15.9% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security,' 16429.1(b) LAIF No Limit No Limit I 14.5% I 4.7% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 89.1 % 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. x Certified California Municipal Treasurer Page 9 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT May 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 will meet next on June 23-24. No change in interest rates is expected. Federal Funds Futures, however, are projecting a December 2009 Federal Funds rate of 0.50% and a March 2010 rate of 1.00%. These projections are being driven by signs that the pace of economic decline is moderating, and by inflation fears due to U.S. economic policy. Treasury yield curves have also experienced a recent, rapid steepening. Obama's $1.2 trillion stimulus program is RAISING, not lowering mortgage interest rates. This is threatening a housing recovery, which is essential for an economic recovery. The U.S. Government is monetizing its debt by issuing debt, and then "printing" the money to buy it. This dilutes the dollar, and inevitably leads to inflation. It also implicitedly recognizes the absence of foreign demand for U.S. Treasuries. Russia has already announced that it will not buy any more U.S. Treasuries. This puts pressure on the U.S. Treasury to raise interest rates to attract buyers, and this raises mortgage rates. If unfunded Social Security and Medicare obligations are included, then the Federal deficit is over $100 TRILLION DOLLARS. This figure does not include the cost of a new national health plan. Congress is currently discussing various ways to finance a national health plan, which include taxing employee health benefits and adopting a national sales tax Value Added Tax or "VAT"), which would be in addition to state sales tax. In Europe, VATs range from 10% -- 25% of product value. ;Pa,"bs 676baow, C. c./V r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands May-09 Apr-09 Mar-09 FEB-09 JAN-09 DEC-08 CITY Month -End Book Value*** $ 224,289 $ 217,963 $ 216,674 $ 219,469 $ 212,738 $ 199,053 Month -End Market Value*** $ 225,317 $ 218,619 $ 216,589 $ 218,243 $ 213,002 $ 199,922 Paper Gain (Loss) $ 1,028 $ 656 $ (85) $ (1,226) $ 264 $ 869 Prior Year Book Variance $ (457) $ (4,768) $ (15,800) $ (7,452) $ (18,677) $ (38,071) Interest Earnings $ 360 $ 360 $ 460 $ 443 $ 430 $ 471 Yield -To -Maturity 2.04% 2.09% 2.43% 2.34% 2.55% 2.87% Weighted Maturity (Days) 319 329 324 419 454 490 Effective Duration 0.27 0.29 0.36 0.42 0.47 0.54 RDA Month -End Book Value *** $ 293,720 $ 252,527 $ 268,377 $ 270,416 $ 281,273 $ 251,852 Month -End Market Value *** $ 294,940 $ 253,785 $ 269,503 $ 271,497 $ 282,566 $ 253,288 Paper Gain (Loss) $ 1,220 $ 1,258 $ 1,126 $ 1,081 $ 1,293 $ 1,436 Prior Year Book Variance $ (5,751) $ (9,242) $ (7,168) $ (9,283) $ (4,674) $ 877 Interest Earnings $ 234 $ 219 $ 259 $ 283 $ 268 $ 287 Yield -To -Maturity 1.06% 1.05% 1.07% 1.29% 1.25% 1.40% Weighted Maturity (Days) 187 217 205 235 226 256 Effective Duration 0.13 0.16 0.17 0.18 0.19 0.24 ,.. *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics May 31, 2009 Dollars in Thousands Ageing Interval Market Value < 1 M $ 109,742 < 2M 2,043 < 3M 5,058 < 6M 9,127 < 1 YR 12,447 < 2YR 21,533 < 3YR 8,047 < 4YR < 5YR > 5YR _ Total: $ 167,997 General Fund Ageing 100 t 80 B5 0 c 60 t 40 a- 20 13 1 3 5 7 5 0 0 0 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Ratings Market Value Credit Quality AAA AAA $ 93,669 44% AA 25,598 AA A 6,858 12% Unrated *` 89,223 Unrated ** Total: $ 215,348 41 % 3% Sector Market Value I Asset Allocation MTNs CAMP MMF $ 32,333 15% 23% Agencies 25,799 MTNs 32,457 RDA Loan CAMP 35,537 Agencies 11 RDA Loan 22,655 GMRA 30,255 GMRA LAIF 36,312 MMF 14% CID - 15% LAIF Total: $ 215,348 17% Month Citv Yield LAIF Yield Variance Jun08 3.75 2.89 0.86 Jul 3.69 2.88 0.82 Aug 3.65 2.78 0.87 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 Jan09 2.55 2.05 0.51 Feb 2.36 1.87 0.50 Mar 2.17 1.82 0.35 Apr 2.09 1.61 0.49 May 2.04 1.53 0.51 Performance 3.8 3.2 a 2.6 m 2.0 1.4 - - Jun08 Jul Aug Sep Oct Nov Dec Jan09 Feb Mar Apr May Standard and Poors " LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings May 31, 2009 Market Ratings Par Value Issuer l Coupon j Maturity I Cost I YTM I Price I Value Moody'sI S&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,897,489 4.05 102.24 $ 3,880,164 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,039,969 3.20 99.28 $ 2,978,316 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,016,216 5.63 102.07 $ 2,077,063 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,920,467 5.65 105.07 $ 1,986,787 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,013,736 5.67 104.66 $ 2,093,178 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,051,083 3.23 102.07 $ 4,046,957 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,061,945 5.02 104.77 $ 2,095,406 Al AA $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,006,772 4.93 101.16 $ 2,023,168 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,022,216 2.90 101.16 $ 3,034,752 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,095,287 5.13 104.19 $ 4,167,768 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,989,983 5.09 101.34 $ 2,026,822 Al AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,010,982 4.96 101.31 $ 2,046,498 Al AA $ 31,706,000 Subtotal $ 32,126,144 4.43 $ 32,456,879 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,004,308 4.61 103.78 $ 3,113,439 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,004,308 4.61 103.78 $ 3,113,439 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,996,244 5.59 101.13 $ 3,033,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,980,723 5.96 101.31 $ 2,026,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,031,597 4.87 100.47 $ 2,042,531 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,040,357 4.87 101.84 $ 2,086,779 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,993,656 4.88 101.66 $ 2,033,126 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,046,156 5.47 104.03 $ 2,145,125 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,033,538 5.50 101.84 $ 2,086,779 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,998,100 4.88 101.69 $ 2,033,750 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,972,697 5.47 104.19 $ 2,083,750 Aaa AAA $ 25,193,000 Subtotal $ 25,101,685 5.13 $ 25,798,719 Local Agency Investment Pool $ 36,312,974 L.A.I.F. 0.00 6/1/09 $ 36,312,974 1.53 100.00 $ 36,312,974 U U $ 36,312,974 Subtotal $ 36,312,974 1.53 $ 36,312,974 Local Agency Investment Pool $ 35,479,583 C.A.M.P. 0.00 6/1/09 $ 35,479,583 0.60 100.00 $ 35,479,583 U AAA $ 57,226 C.A.M.P. (DESERT WILLOW) 0.00 6/1/09 $ 57,226 0.60 100.00 $ 57,226 U AAA $ 35,536,810 Subtotal $ 35,536,810 0.60 $ 35,536,810 Money Market Fund $ 32,332,761 WF TREASURY PLUS 0.00 6/1/09 $ 32,332,761 0.00 100.00 $ 32,332,761 Aaa AAA $ 32,332,761 Subtotal $ 32,332,761 0.00 $ 32,332,761 "U" = Unrated Page 3 Par Value I Issuer Coup Corporate Issuer BANK OF AMERICA GENERAL ELECTRIC WACHOVIA WAL-MART WELLS FARGO BANK City of Palm Desert Portfolio Holdings May 31, 2009 o Market n I Maturity Cost YTM I Price I Value 6/1/09 $ 30,254,845 1.77 100.00 $ 30,254,845 $ 30,254,845 1.77 $ 30,254,845 6/1/39 $ 22,655,000 1.61 100.00 $ 22,655,000 $ 22,655,000 1.61 $ 22,655,000 $ 214,320,218 2.04 $ 215,347,987 6/1/09 $ 7,694,472 0.00 100.00 $ 7,694,472 6/1/09 $ 1,859,901 0.00 100.00 $ 1,859,901 6/1/09 $ 414,316 0.00 100.00 $ 414,316 $ 9,968,689 $ 9,968,689 $ 224,288,907 % of Portfolio (Market Value) 3.04% 4.53% 0.93% 2.24% 3.66% $ 225,316,675 Ratings Moody's I S&P U U U U U U U U U U "U" = Unrated Page 4 IPar Value City of Palm Desert Portfolio Holdings May 31, 2009 Market Issuer Coupon I Maturity Cost YTM I Price I Value % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC 2.76% 2.25% 4.61 % 1.83% Ratings Moody's I S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics May 31, 2009 Dollars in Thousands Aaeina Interval Market Value Portfolio Ageing w/o SLGSs < 1 M $ 91,535 < 2M 2,016 < 3M 5,050 100 90 - < 6M 10,823 80 65 < 1 YR 13,804 70 60 < 2YR 18,675 0 0 50 < 3YR - 40 < 4YR - a- 20 8 10 13 10 1 4 0 0 0 0 < 5YR - m n F1 > 5YR - < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: $ 141,903 Credit Quality Quality * Market Value AAA $ 234,162 AAA 80% AA 19,925 A - Unrated ** 40,020 Unrated *' AA Total: $ 294,107 13% o% 7% Sector MMF Agencies MTNs CAMP LAIF CID Treasuries Total: Month Jun08 Jul Aug Sep Oct Nov Dec Jan09 Feb Mar Apr May Market Value $ 150,076 30,443 19,925 53,643 40,020 $ 294,107 Asset Allocation MMF 51% LAIF 14% Agencies 10% MTNs 7% CAMP 18% Performance RDA Yield LAIF Yield Variance 3.09 2.89 0.20 3.08 2.79 0.29 3.5 3.05 2.78 0.27 3.18 2.77 0.41 2.6 - 1.60 2.71 -1.11 1.51 2.57 -1.06 1.40 2.35 -0.95 r 1.7 1.26 2.05 -0.79 1.29 1.87 -0.58 0.8 1.07 1.82 -0.75 Jun08 Jul Aug Sep Oct Nov DecJan09Feb Mar Apr May 1.05 1.61 -0.56 1.06 1.53 -0.47 ®LAIF Yield ■RDA Yield * Standard and Poors * LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings May 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value Moody's I S&P Medium -Term Notes $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,011,470 4.76 101.16 $ 3,034,752 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,037,868 2.91 102.87 $ 3,086,031 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,723,086 3.00 101.31 $ 13,803,733 Al AA $ 19,625,000 Subtotal $ 19,772,424 3.25 $ 19,924,516 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,009,935 4.88 102.15 $ 2,043,056 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,999,623 4.87 100.78 $ 2,015,626 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,915,349 4.65 105.34 $ 5,161,846 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,494,365 5.59 101.13 $ 4,550,625 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 2,002,275 4.89 100.53 $ 2,015,653 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,979,477 5.49 106.75 $ 2,135,000 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,979,204 5.50 106.75 $ 2,135,000 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,030,295 5.54 107.38 $ 2,147,500 Aaa AAA '$ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,790,665 5.54 107.38 $ 4,009,383 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,173,851 4.89 101.78 $ 4,229,013 Aaa AAA 1, $ 29,294,000 Subtotal $ 29,375,039 5.16 $ 30,442,701 Local Government Investment Pool $ 39,997,687 L.A.I.F. 0.00 6/1/09 $ 39,997,687 1.61 100.00 $ 39,997,687 U U $ 21,894 L.A.I.F. (HOUSING) 0.00 6/1/09 $ 21,894 1.61 100.00 $ 21,894 U U $ 40,019,580 Subtotal $ 40,019,580 1.61 $ 40,019,580 Local Government Investment Pool $ 51,537,259 C.A.M.P. 0.00 6/1/09 $ 51,537,259 0.60 100.00 $ 51,537,259 U AAA $ 2,106,152 C.A.M.P. (HOUSING) 0.00 6/1/09 $ 2,106,152 0.60 100.00 $ 2,106,152 U AAA $ 53,643,412 Subtotal $ 53,643,412 0.60 $ 53,643,412 Money Market Fund $ 150,076,634 WF TREASURY PLUS 0.00 6/1/09 $ 150,076,634 0.00 100.00 $ 150,076,634 Aaa AAA $ 150,076,634 Subtotal $ 150,076,634 0.00 $ 150,076,634 Total Investments $ 292,658,626 $ 292,887,089 1.06 $ 294,106,843 Cash $ 435,183 HOUSING AUTH CHKG 0.00 6/1/09 $ 435,183 0.00 100.00 $ 435,183 U U $ 397,866 HOUSING AUTH TRUST 0.00 6/1/09 $ 397,866 0.00 100.00 $ 397,866 U U $ 833,049 Subtotal $ 833,049 $ 833,049 "U" = Unrated Page 7 Par Value I Issuer Total Investments and Cash $ 293,491,675 Palm Desert Redevelopment Agency Portfolio Holdings May 31, 2009 Corporate Issuers WAL-MART WELLS FARGO BANK Agency Issuers Coupon I Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Market Ratings Cost YTM I Price I Value Moody's I S&P $ 293,720,138 $ 294,939,892 % of Portfolio (Market Value) 2.08% 4.68% % of Portfolio (Market Value) 3.13% 3.67% 2.09% 1.43% "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 May 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 June 23, 2009, Pis 67duo�, c.C/I r. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS ICalifornia 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) 53632(c) Savings Accounts No Limit No Limit No Limit I No Limit I I 14.1% I 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% 11.7% 10.0% 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 Q) Medium -Term Notes 5 Years 0 30% A 5 Years 30 0/o A 1 0 0/0 15.. 68 0/o 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 15.1 % 51.2% 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 Investment Pools 90 Days 20% or Advisor 90 Day s 20% 2) ( or Advisor 1 16.6% 18.3% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security 16429.1(b) LAIF No Limit No Limit 16.9% 13.7% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 89.4% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. * Certified California Municipal Treasurer Page 9