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Home My WebLink AboutSR - Investment Reports - Jun, Jul, & Aug 2009CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY DATE: OCTOBER 20, 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 June, July and August 2009. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the minutes of the June and July meetings for acceptance by the City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. nmo Attachment (as noted) CCe tVe- t Fr I P BY RDA ON II-0-C9 VERIFIED BY P,00 ,Original on file With City Clerk's Office CITY COUNCIL ACTION APPROVED DENIED RECEIVED F f �I�. O I HER MEETING DATE P- %.L�-C`) AYES: Aet)5cn.FeQ� 5c) Lll.2eC )q, `5,Qj9!=e — NOES: AI 0nP ABSENT: /IJt i7 a° ABSTAIN: I0 _ VERIFIED BY: RAK.l r,:1 Original on File with City Clerk 5 Office GAFINANCE\NIAMH ORTEGA\INVESTMENT COMM ITTEE\MEMOS\RKLASSENINVREPORT.WPD o City of Palm Desert .•-- ----. City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT June 2009 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC) met on June 24. Interest rates were left unchanged. Although the pace of economic contraction had slowed, consumer spending has been constrained by job losses, lower housing wealth, and tight credit. Inflation is expected to be subdued for "some time". A Federal Reserve Bank president commented that the Federal Funds Rate might have to be left at near zero for the next few years. The key question is whether the U.S. economy is heading into deflation or inflation. A strong case can be made that the immediate threat is a deflationary spiral (depression). While the Federal Reserve has flooded U.S. banks with enormous amounts of liquidity, most of it has never reached private borrowers since the banks have retained it to repair their balance sheets. It is also difficult to make a case for inflation when balancing the $14 trillion of credit destruction that has occurred in the U.S. with the Obama Administration's $2 trillion stimulus. As for rising commodity prices, they can be deflationary if the demand for the commodities (e.g., heating oil, gasoline, food, etc.) is relatively inelastic. Consumers will simply reallocate their spending away from discretionary items, thereby triggering more small business failures. Interest rates remain at historic lows, with the yield curve at the steepest that it has ever been. Five-year Treasuries were recently yielding 2.5%; two-year Treasuries 1 %; and cash near zero. The long end of the curve is higher due to inflation fears. Investors are concerned that U.S. Treasury debt issuance will fuel future inflation and the devaluation of the dollar. Pis tid4on, c.c.M r. City Treasurer PORTFOLIO STATISTICS Dollars in Thousands Jun-09 May-09 Apr-09 Mar-09 FEB-09 JAN-09 CITY Month -End Book Value` $ 228,948 $ 224,289 $ 217,963 $ 216,674 $ 219,469 $ 212,738 Month -End Market Value*** $ 230,005 $ 225,317 $ 218,619 $ 216,589 $ 218,243 $ 213,002 Paper Gain (Loss) $ 1,057 $ 1,028 $ 656 $ (85) $ (1,226) $ 264 Prior Year Book Variance $ (2,231) $ (457) $ (4,768) $ (15,800) $ (7,452) $ (18,677) Interest Earnings $ 366 $ 360 $ 360 $ 460 $ 443 $ 430 Yield -To -Maturity 2,03% 2.04% 2.09% 2.43% 2.34% 2.55% Weighted Maturity (Days) 306 319 329 324 419 454 Effective Duration 0.24 0.27 0.29 0.36 0.42 0.47 RDA Month -End Book Value ""* $ 287,291 $ 293,720 $ 252,527 $ 268,377 $ 270,416 $ 281,273 Month -End Market Value "' $ 288,384 $ 294,940 $ 253,785 $ 269,503 $ 271,497 $ 282,566 Paper Gain (Loss) $ 1,093 $ 1,220 $ 1,258 $ 1,126 $ 1,081 $ 1,293 Prior Year Book Variance $ 1,931 $ (5,751) $ (9,242) $ (7,168) $ (9,283) $ (4,674) Interest Earnings $ 307 $ 234 $ 219 $ 259 $ 283 $ 268 Yield -To -Maturity 1.30% 1.06% 1.05% 1.07% 1.29% 1.25% Weighted Maturity (Days) 243 187 217 205 235 226 Effective Duration 0.22 0.13 0.16 0.17 0.18 0.19 *** Omits SLGSs. Dollars in Thousands Ageina Interval < 1 M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: City of Palm Desert -- Portfolio Characteristics June 30, 2009 Market Value $ 117,475 5,058 3,034 10,267 8,273 21,533 8,048 $ 173,688 F General Fund Ageing I 100 80 68 - c 60 40 C 12 a 20 3 2 6 5 5 0 0 0 0 - , r-1 , ^ . n . '-' <1M <2M <3M <6M <1YR<2YR<3YR<4YR<5YR>5YR Ratin s * Market Value i Credit Quality AAA 42% AAA $ 95,238 AA AA 15,398 7% A 6,889 A Unrated ** 106,984 Unrated ** 3% Total: $ 224,509 48% it Asset Allocation Sector Market Value CAMP MMF $ 31,706 MTNs 23% RDA Loan Agencies 25,745 15% 10% MTNs 32,523 CAMP 27,551 Agencies 12% GMRA RDA Loan 22,655 21% GMRA 48,016 LAIF 36,313 MMF CP - 14% LAIF Total: $ 224,509 16% Month Citv Yield LAIF Yield Ju108 3.69 2.88 Aug 3.65 2.78 Sep 3.70 2.77 Oct 3.27 2.71 Nov 3.04 2.57 Dec 2.87 2.35 Jan09 2.55 2.05 Feb 2.36 1.87 Mar 2.17 1.82 Apr 2.09 1.61 May 2.04 1.53 Jun 2.03 1.38 Performance Variance 0.82 0.87 3.8 0.93 0.56 0.47 0.52 2.5 a� 0.51 } 0.50 0.35 1.2 - 0.49 Ju108 Aug Sep Oct Nov Dec Jan09 Feb Mar Apr May Jun 0.51 0.65 ■t All Y.:, ; s;.; * Standard and Poors ** LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings June 30, 2009 Market Ratings Par Value Issuer l Coupon j Maturity Cost YTM I Price Value Moody's S&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,893,616 4.05 102.24 $ 3,879,871 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,037,471 3.20 100.32 $ 3,009,540 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,017,343 5.63 102.79 $ 2,091,856 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,918,780 5.65 104.28 $ 1,971,952 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,013,072 5.67 104.81 $ 2,096,228 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,045,918 3.23 102.79 $ 4,075,778 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,057,692 5.02 104.07 $ 2,081,440 Al AA $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,003,828 4.93 100.61 $ 2,012,196 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,012,557 2.90 100.61 $ 3,018,294 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,091,622 5.13 104.79 $ 4,191,496 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,990,685 5.09 102.56 $ 2,051,106 Al AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,012,190 4.96 101.15 $ 2,043,264 Al AA $ 31,706,000 Subtotal $ 32,094,774 4.43 $ 32,523,022 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,919 4.61 103.59 $ 3,107,814 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,919 4.61 103.59 $ 3,107,814 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,997,371 5.59 100.81 $ 3,024,375 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,984,528 5.96 101.06 $ 2,021,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,032,554 4.87 100.16 $ 2,036,178 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,041,693 4.87 101.69 $ 2,083,577 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,994,796 4.88 101.45 $ 2,028,990 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,048,307 5.47 103.91 $ 2,142,548 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,035,929 5.50 101.69 $ 2,083,577 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,998,488 4.88 101.38 $ 2,027,500 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,974,585 5.47 104.06 $ 2,081,250 Aaa AAA $ 25,193,000 Subtotal $ 25,116,088 5.13 $ 25,744,872 Local Agency Investment Pool $ 36,312,974 L.A.I.F. 0.00 7/1/09 $ 36,312,974 1.38 100.00 $ 36,312,974 U U $ 36,312,974 Subtotal $ 36,312,974 1.38 $ 36,312,974 j Local Agency Investment Pool $ 27,493,255 C.A.M.P. 0.00 7/1/09 $ 27,493,255 0.56 100.00 $ 27,493,255 U AAA $ 57,253 C.A.M.P. (DESERT WILLOW) 0.00 7/1/09 $ 57,253 0.56 100.00 $ 57,253 U AAA $ 27,550,508 Subtotal $ 27,550,508 0.56 $ 27,550,508 Money Market Fund $ 31,706,351 WF TREASURY PLUS 0.00 7/1/09 $ 31,706,351 0.01 100.00 $ 31,706,351 Aaa AAA $ 31,706,351 Subtotal $ 31,706,351 0.01 $ 31,706,351 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings June 30, 2009 Par Value I Issuer I Coup Corporate Issuer BANK OF AMERICA GENERAL ELECTRIC WACHOVIA WAL-MART WELLS FARGO BANK o Market YTM I Price I Value 7/1/09 $ 48,015,922 1.77 100.00 $ 48,015,922 $ 48,015,922 1.77 $ 48,015,922 7/1/39 $ 22,655,000 1.38 100.00 $ 22,655,000 $ 22,655,000 1.38 $ 22,655,000 $ 223,451,616 2.03 $ 224,508,648 7/1/09 $ 3,688,743 0.00 100.00 $ 3,688,743 7/1/09 $ 1,707,008 0.00 100.00 $ 1,707,008 7/1/09 $ 100,584 0.00 100.00 $ 100,584 $ 5,496,336 $ 5,496,336 $ 228,947,952 % of Portfolio (Market Value) 3.00% 4.45% 0.90% 2.19% 3.60% $ 230,004,984 IRatings Moody's I S&P U U U U J U U U U U U J "U" = Unrated Page 4 IPar Value Issuer Agency Issuers City of Palm Desert Portfolio Holdings June 30, 2009 Coupon I Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost % of Portfolio (Market Value) 2.70% 2.19% 4.51 % 1.79% Market Ratings YTM I Price I Value Moody'sI S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics June 30, 2009 Dollars in Thousands Aqeinq Interval Market Value < 1 M $ 83,550 < 2M 5,050 < 3M 8,780 < 6M 2,043 < 1YR 13,804 < 2YR 18,675 < 3YR - < 4YR - < 5YR - > 5YR 2,015 Total: $ 133,917 Quality * Market Value AAA $ 175,302 AA 19,874 A - Unrated ** 92,440 Total: $ 287,616 Sector Market Value MMF $ 101,299 Agencies 30,337 MTNs 19,874 CAMP 43,666 LAIF 40,020 EIP 2,015 LAIF/Bond Proceeds 50,405 Treasuries - Total: $ 287,616 Month RDA Yield LAIF Yield Ju108 3.08 2.79 Aug 3.05 2.78 Sep 3.18 2.77 Oct 1.60 2.71 Nov 1.51 2.57 Dec 1.40 2.35 Jan09 1.26 2.05 Feb 1.29 1.87 Mar 1.07 1.82 Apr 1.05 1.61 May 1.06 1.53 Jun 1.30 1.38 d � Portfolio Ageing w/o SLGSs 100 90 - 80 62 70 c 60 0 50 40 o 300 10 14 7 0 0 0 2 10 o r-' ? n F] . < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Credit Quality I i Asset Allocation Variance Performance 0.29 0.27 3.4 0.41 -1.11 - 2.6 -1.06 -0.95 } 1.8 -0.79 -0.58 -0.75 1.0 -0.56 Ju108 Aug Sep Oct Nov Dec Jan09 Feb Mar Apr May Jun -0.47 ■LAIF Yield ■RDA Yield -0.08 AAA 61% AA 7% A 0% Unrated " 32% Agencies 11 % MTNs 7% MMF 35% CAMP 15% LAI Proceeds 17% U EIP 14% 1% * Standard and Poors ** LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings June 30, 2009 Market Ratings Par Value Issuer Coupon I Maturity Cost YTM I Price Value I Moody'sI S&P Medium -Term Notes $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,006,483 4.76 100.61 $ 3,018,294 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,034,955 2.91 102.45 $ 3,073,620 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,709,950 3.00 101.15 $ 13,781,919 Al AA $ 19,625,000 Subtotal $ 19,751,387 3.25 $ 19,873,833 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,007,569 4.88 101.65 $ 2,033,080 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,999,805 4.87 100.41 $ 2,008,126 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,914,371 4.65 105.09 $ 5,149,596 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,496,056 5.59 100.81 $ 4,536,563 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 2,003,818 4.89 100.22 $ 2,009,387 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,980,439 5.49 106.38 $ 2,127,500 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,980,179 5.50 106.38 $ 2,127,500 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,028,337 5.54 107.03 $ 2,140,626 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,787,001 5.54 107.03 $ 3,996,549 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,168,413 4.89 101.28 $ 4,208,238 Aaa AAA $ 29,294,000 Subtotal $ 29,365,988 5.16 $ 30,337,164 Local Government Investment Pool $ 39,997,687 L.A.I.F. 0.00 7/1/09 $ 39,997,687 1.38 100.00 $ 39,997,687 U U $ 21,894 L.A.I.F. (HOUSING) 0.00 7/1/09 $ 21,894 1.38 100.00 $ 21,894 U U $ 40,019,580 Subtotal $ 40,019,580 1.38 $ 40,019,580 Local Government Investment Pool $ 41,558,428 C.A.M.P. 0.00 7/1/09 $ 41,558,428 0.56 100.00 $ 41,558,428 U AAA $ 2,107,119 C.A.M.P. (HOUSING) 0.00 7/1/09 $ 2,107,119 0.56 100.00 $ 2,107,119 U AAA $ 43,665,548 Subtotal $ 43,665,548 0.56 $ 43,665,548 Local Government Investment Pool $ 50,405,000 WF/LAIF BOND PROCEEDS 0.00 7/1/09 $ 50,405,000 1.38 100.00 $ 50,405,000 U U $ 50,405,000 Subtotal $ 50,405,000 1.38 $ 50,405,000 Money Market Fund $ 101,299,562 WF TREASURY PLUS 0.00 7/1/09 $ 101,299,562 0.01 100.00 $ 101,299,562 Aaa AAA $ 101,299,562 Subtotal $ 101,299,562 0.01 $ 101,299,562 Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 0.00 3/2/29 $ 2,015,000 3.00 100.00 $ 2,015,000 U U $ 2,015,000 Subtotal $ 2,015,000 3.00 $ 2,015,000 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings June 30, 2009 Par Value I Issuer Total Investments $ 286,323,690 Cash $ 411,488 HOUSING AUTH TRUST $ 357,084 HOUSING AUTH CHKG $ 768,572 Subtotal Total Investments and Cash $ 287,092,262 Corporate Issuers WAL-MART WELLS FARGO BANK Market Ratings Coupon I Maturity Cost YTM I Price I Value I Moody'sI S&P $ 286,522,066 1.28 $ 287,615,687 0.00 7/1 /09 $ 411,488 0.00 100.00 $ 411,488 U U 0.00 7/1/09 $ 357,084 0.00 100.00 $ 357,084 U U $ 768,572 $ 768,572 Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC $ 287,290,638 % of Portfolio (Market Value) 2.11% 5.84% % of Portfolio (Market Value) 3.19% 3.75% 2.13% 1.46% $ 288,384,260 "U" = Unrated Page 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended June 30, 2009, the City and the RDA investment portfolios were in compliance with 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 July 28, 2009, Pis 67ds�, c.c.R 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 0.0% 0.7% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 1 21.5% 0.0% 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit 0.0% 0.0% 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 11.2% 10.3% 53601(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 536010) Medium -Term Notes 5 Years 0 30% A 5 Years 30 0/o A 1 144 .0/0 69 .0/o 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 14.2% 35.4% 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 & Aaa) Investment Pools 90 Days 20% or Advisor 90 Day s 20% 2) ( or Advisor 12.3% 15.2% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security' 16429.1(b) LAIF No Limit I No Limit 16.3% 31.6% I (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 89.9% 100.0% (2) The City Energy Independence Program has been approved by the Palm Desert City Council. (3) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds Certified California Municipal Treasurer Page 9 City of Palm Desert �7 City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT July 2009 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC) met on August 12, and left short-term interest rates unchanged. The FOMC noted that while conditions in the financial markets had improved, ongoing job losses, slow income growth, lower housing wealth, and tight credit continued to constrain the economy. Ben Bernanke was nominated for a second term as the Federal Reserve Chairman. Job cuts continued to outpace the fall in U.S. Gross Domestic Product. U.S. unemployment is currently estimated at 9.5% (not counting those who have taken part-time work or have given up on job hunting). Rising joblessness will trigger additional foreclosures, and shrink the pool of potential home buyers. Retail sales remain relatively weak. All of these factors together may act as a drag on any economic recovery. The cash flow from the federal stimulus will also recede in the second half of 2009. Approximately 102 U.S. banks have failed in the last two years. On August 14, five banks failed on the same day. Three hundred more banks remain on an undisclosed FDIC list of problem institutions. Small and mid -size U.S. banks are at -greatest risk because of potential commercial real estate loan losses that could total up to $100 billion by the end of 2010. The FDIC is stretched thin, and is considering a one-time fee on banks in order to replenish its deposit insurance fund. ;Pat,dIs tjdj�, c.C.Al. r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands JUL-09 JUN-09 May-09 Apr-09 Mar-09 FEB-09 CITY Month -End Book Value"* $ 226,460 $ 228,948 $ 224,289 $ 217,963 $ 216,674 $ 219,469 Month -End Market Value"` $ 227,587 $ 230,005 $ 225,317 $ 218,619 $ 216,589 $ 218,243 Paper Gain (Loss) $ 1,127 $ 1,057 $ 1,028 $ 656 $ (85) $ (1,226) Prior Year Book Variance $ 3,786 $ (2,231) $ (457) $ (4,768) $ (15,800) $ (7,452) Interest Earnings $ 356 $ 366 $ 360 $ 360 $ 460 $ 443 Yield -To -Maturity 1.90% 2.03% 2.04% 2.09% 2.43% 2.34% Weighted Maturity (Days) 297 306 319 329 324 419 Effective Duration 0.22 0.24 0.27 0.29 0.36 0.42 RDA Month -End Book Value'"`' $ 284,220 $ 287,291 $ 293,720 $ 252,527 $ 268,377 $ 270,416 Month -End Market Value """ $ 285,231 $ 288,384 $ 294,940 $ 253,785 $ 269,503 $ 271,497 Paper Gain (Loss) $ 1,011 $ 1,093 $ 1,220 $ 1,258 $ 1,126 $ 1,081 Prior Year Book Variance $ (4,767) $ 1,931 $ (5,751) $ (9,242) $ (7,168) $ (9,283) Interest Earnings $ 308 $ 307 $ 234 $ 219 $ 259 $ 283 Yield -To -Maturity 1.31 % 1.30% 1.06% 1.05% 1.07% 1.29% Weighted Maturity (Days) 236 243 187 217 205 235 Effective Duration 0.20 0.22 0.13 0.16 0.17 0.18 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics July 31, 2009 Dollars in Thousands Ageing Interval Market Value < 1 M $ 120,592 < 2M 3,024 < 3M 2,028 < 6M 10,261 < 1YR 8,358 < 2YR 19,459 < 3YR 8,071 < 4YR < 5YR > 5YR Total: $ 171,793 f General Fund Ageing t 100 80 70 o c 60 rR 40 a° 20 11 2 1 6 5 5 0 0 0 0 - , - . r-1 , r-i . n I , < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR . Ratings " Market Value Credit Quality AAA $ 82,886 AAA 337 /o AA AA 25,700 12% A 6,968 A Unrated *' 107,179 Unrated *' 3% Total: $ 222,733 48% Sector Market Value MMF $ 31,706 Agencies 23,619 MTNs 32,668 CAMP 27,561 RDA Loan 22,655 GMRA 48,086 LAIF 36,438 CP _ Total: $ 222,733 Month Citv Yield LAIF Yield Variance Aug08 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 Jun 2.03 1.38 0.65 Jul 1.90 1.04 0.86 ,j Asset Allocation CAMP MTNs 23% 15% RDA Loan 10% Agencies 11% GMRA 22% MMF 14% LAIF 16% Performance 3.7 2.8 a m 1.9 - 1.0 Aug08Sep Oct Nov DecJan09Feb Mar Apr May Jun Jul i Standard and Poors "' LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings July 31, 2009 Market Ratings Par Value Issuer 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 $ 3,889,744 4.05 103.30 $ 3,920,243 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,034,973 3.20 101.59 $ 3,047,631 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,018,470 5.63 103.12 $ 2,098,575 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,917,093 5.65 106.11 $ 2,006,582 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,012,409 5.67 105.22 $ 2,104,470 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,040,753 3.23 103.12 $ 4,088,871 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,053,440 5.02 105.37 $ 2,107,448 Al AA $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,000,883 4.93 100.09 $ 2,001,812 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,002,898 2.90 100.09 $ 3,002,718 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,087,957 5.13 104.85 $ 4,193,860 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,991,387 5.09 102.68 $ 2,053,568 Al AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,013,398 4.96 101.12 $ 2,042,537 Al AA $ 31,706,000 Subtotal $ 32,063,404 4.43 $ 32,668,314 Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,530 4.61 103.19 $ 3,095,625 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,530 4.61 103.19 $ 3,095,625 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,998,497 5.59 100.44 $ 3,013,125 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,988,333 5.96 100.78 $ 2,015,626 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,043,030 4.87 101.34 $ 2,076,534 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,995,936 4.88 101.09 $ 2,021,802 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,050,458 5.47 103.34 $ 2,130,949 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,038,320 5.50 101.34 $ 2,076,534 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,998,875 4.88 100.97 $ 2,019,376 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,976,472 5.47 103.69 $ 2,073,750 Aaa AAA $ 23,160,000 Subtotal $ 23,096,980 5.15 $ 23,618,947 Local Agency Investment Pool $ 36,437,587 L.A.I.F. 0.00 8/1/09 $ 36,437,587 1.04 100.00 $ 36,437,587 U U $ 36,437,587 Subtotal $ 36,437,587 1.04 $ 36,437,587 Local Agency Investment Pool $ 27,503,632 C.A.M.P. 0.00 8/1/09 $ 27,503,632 0.44 100.00 $ 27,503,632 U AAA $ 57,274 C.A.M.P. (DESERT WILLOW) 0.00 8/1/09 $ 57,274 0.44 100.00 $ 57,274 U AAA $ 27,560,906 Subtotal $ 27,560,906 0.44 $ 27,560,906 Money Market Fund $ 31,706,399 WF ADVANTAGE GOVT 0.00 8/1/09 $ 31,706,399 0.07 100.00 $ 31,706,399 Aaa AAA $ 31,706,399 Subtotal $ 31,706,399 0.07 $ 31,706,399 Page 3 NR = Not Rated Par Value I Issuer Coup Government Managed Rate Account $ 48,086,436 UNION BANK 0.00 $ 48,086,436 Subtotal City of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 $ 22,655,000 Subtotal Total Investments $ 221,312,328 Cash $ 3,615,197 CITY MAIN CHKG 0.00 $ 1,154,643 DESERT WILLOW CHKG 0.00 $ 83,392 RECREATIONAL FAC CHKG 0.00 $ 4,853,232 Subtotal Total Investments and Cash $ 226,165,559 Corporate Issuers BANK OF AMERICA GENERAL ELECTRIC WACHOVIA WAL-MART WELLS FARGO BANK City of Palm Desert Portfolio Holdings July 31, 2009 Market on I Maturity Cost YTM I Price I Value 8/1/09 $ 48,086,436 1.77 100.00 $ 48,086,436 $ 48,086,436 1.77 $ 48,086,436 8/1/39 $ 22,655,000 1.04 100.00 $ 22,655,000 $ 22,655,000 1.04 $ 22,655,000 $ 221,606,712 1.90 $ 222,733,589 8/1/09 $ 3,615,197 0.00 100.00 $ 3,615,197 8/1/09 $ 1,154,643 0.00 100.00 $ 1,154,643 8/1/09 $ 83,392 0.00 100.00 $ 83,392 $ 4,853,232 $ 4,853,232 $ 226,459,943 % of Portfolio (Market Value) 3.06% 4.53% 0.93% 2.20% 1.84% $ 227,586,821 Ratings Moody's I S&P U U U U 1 U U U U U U ` J Page 4 NR = Not Rated IPar Value I Issuer Agency Issuers City of Palm Desert Portfolio Holdings July 31, 2009 Coupon I Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost % of Portfolio (Market Value) 2.72% 2.21 % 3.65% 1.80% Market Ratings YTM I Price I Value Moody'sI S&P NR = Not Rated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics July 31, 2009 Dollars in Thousands Aqeinq Interval Market Value < 1 M $ 82,977 < 2M 8,745 < 3M 2,033 < 6M 13,782 < 1YR 3,074 < 2YR 15,542 < 3YR - < 4YR - < 5YR - > 5YR 2,015 Total: $ 128,168 Quality ` Market Value AAA $ 131,114 AA 21,876 A - Unrated "" 131,580 Total: $ 284,570 Sector Market Value MMF $ 61,902 Agencies 28,231 MTNs 19,861 CAMP 40,982 LAIF 39,115 EIP 2,015 LAIF/Bond Proceeds 92,464 Treasuries - Total: $ 284,570 Month Aug08 Sep Oct Nov Dec Jan09 Feb Mar Apr May Jun Jul Portfolio Ageing w/o SLGSs 100 90 800 65 p 60 0 50 ` 40 o 30 a- 20 7 11 12 10 17'1 2 n 2 n 0 0 0 2 0 <1M <2M <3M <6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Credit Quality N Asset Allocation AA AAA 8% 46% A Unrated " 0% 0 46% MTNs Agencies 7% CAMP 0 ° �-� 14% MMF 22% LAIF/Bond Proceeds 0 LAIF 14% EIP 1% 32 /° RDA Yield LAIF Yield Variance Performance 3.05 2.78 0.27 3.18 2.77 0.41 3.4 1.60 2.71 -1.11 1.51 2.57 -1.06 2.6 1.40 2.35 -0.95 0 1.26 2.05 -0.79 m R 1.29 1.87 -0.58 1.8 1.07 1.82 -0.75 1.05 1.61 -0.56 1.0 IL 1.06 1.53 -0.47 Aug08Sep Oct Nov DecJan09 Feb Mar Apr May Jun Jul 1.30 1.38 -0.08 1.31 1.04 0.27 ®LAIF Yield ®RDA Yield � Standard and Poors "" LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings July 31, 2009 Market Ratings Par Value Issuer I Coupon] Maturity I Cost YTM Price Value Moody's I S&P Medium -Term Notes $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,001,496 4.76 100.09 $ 3,002,718 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,032,042 2.91 102.71 $ 3,081,219 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,696,813 3.00 101.12 $ 13,777,014 Al AA $ 19,625,000 Subtotal $ 19,730,351 3.25 $ 19,860,951 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,005,204 4.88 101.09 $ 2,021,796 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,999,988 4.87 100.00 $ 2,000,000 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,913,394 4.65 104.72 $ 5,131,221 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,497,746 5.59 100.44 $ 4,519,688 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,981,401 5.49 106.19 $ 2,123,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,981,153 5.50 106.19 $ 2,123,750 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,026,378 5.54 106.84 $ 2,136,876 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,783,338 5.54 106.84 $ 3,989,547 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,162,975 4.89 100.72 $ 4,184,866 Aaa AAA $ 27,289,000 Subtotal $ 27,351,577 5.19 $ 28,231,494 Local Government Investment Pool $ 39,093,210 L.A.I.F. 0.00 8/1/09 $ 39,093,210 1.04 100.00 $ 39,093,210 U U $ 21,976 L.A.I.F. (HOUSING) 0.00 8/1/09 $ 21,976 1.04 100.00 $ 21,976 U U $ 39,115,186 Subtotal $ 39,115,186 1.04 $ 39,115,186 Local Government Investment Pool $ 38,873,840 C.A.M.P. 0.00 8/1/09 $ 38,873,840 0.44 100.00 $ 38,873,840 U AAA $ 2,107,915 C.A.M.P. (HOUSING) 0.00 8/1/09 $ 2,107,915 0.44 100.00 $ 2,107,915 U AAA $ 40,981,754 Subtotal $ 40,981,754 0.44 $ 40,981,754 Local Government Investment Pool $ 25,562,603 WF / LAIF BOND PROCEEDS 0.00 8/1/09 $ 25,562,603 1.04 100.00 $ 25,562,603 U U $ 20,123,091 WF / LAIF BOND PROCEEDS 0.00 8/1/09 $ 20,123,091 1.04 100.00 $ 20,123,091 U U $ 4,779,722 WF / LAIF BOND PROCEEDS 0.00 8/1/09 $ 4,779,722 1.04 100.00 $ 4,779,722 U U $ 10,510,000 WF / LAIF BOND PROCEEDS 0.00 8/1/09 $ 10,510,000 1.04 100.00 $ 10,510,000 U U $ 15,059,000 WF / LAIF BOND PROCEEDS 0.00 8/1/09 $ 15,059,000 1.04 100.00 $ 15,059,000 U U $ 16,430,000 WF / LAIF BOND PROCEEDS 0.00 8/1/09 $ 16,430,000 1.04 100.00 $ 16,430,000 U U $ 92,464,417 Subtotal $ 92,464,417 1.04 $ 92,464,417 Money Market Fund $ 61,901,605 WF ADVANTAGE GOVT 0.00 8/1/09 $ 61,901,605 0.07 100.00 $ 61,901,605 Aaa AAA $ 61,901,605 Subtotal $ 61,901,605 0.07 $ 61,901,605 U = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings July 31, 2009 Par Value I Issuer Coupon Maturity Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 0.00 9/2/29 $ $ 2,015,000 Subtotal $ Total Investments $ 283,391,962 $ 283,559,890 1.16 Cash $ 259,226 HOUSING AUTH CHKG 0.00 8/1/09 $ $ 401,355 HOUSING AUTH TRUST 0.00 8/1/09 $ $ 660,581 Subtotal $ Market Ratings Cost YTM I Price I Value I Moody's I S&P� 2,015,000 3.00 100.00 $ 2,015,000 U AA 2,015,000 3.00 $ 2,015,000 $ 284,570,407 259,226 0.00 100.00 $ 401,355 0.00 100.00 $ 660,581 $ Total Investments and Cash $ 284,052,543 $ 284,220,471 % of Portfolio Corporate Issuers (Market Value) WAL-MART 2.13% WELLS FARGO BANK 4.83% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.21 % FED HOME LOAN BANK 3.07% FED HOME LOAN MTG CORP 2.15% FED NATIONAL MTG ASSOC 1.47% 259,226 U U 401,355 U U 660,581 i $ 285,230,988 U = Unrated Page 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended July 31, 2009, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Interactive Data Corporation provided the data that was used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. Respectfully Submitted on August 25, 2009, Pis Gdjo�, c,C..Af. 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 0.0% 0.7% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit I 1 21.7% 0.0% 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit 0.0% 0.0% 53601(c) CA State Debt 5 Years No Limit 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% 10.4% 9.7% 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 Aa3I - - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA &Aaa - - 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years I 30% I A I 14.5% I 7.0% 53601(k) Mutual Funds 90 Days 20 /o AAA & Aaa 90 Days 20% (2) AAA & Aaa 14.3 /0 54.4 /o 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa 120% AAA & Aaa I Investment Pools 90 Days 20% or Advisor 90 Days (2) or Advisor I 12.40/co 14.5% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security 16429.1(b) LAW No Limit I No Limit 16.4% 13.8% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 89.8% 100.0% (2) The City Energy Independence Program has been approved by the Palm Desert City Council. (3) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 9 ,,,,... City of Palm Desert _. 7 City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT August 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 September 23. The FOMC is not expected to raise short-term interest rates until 2011. Bank of America is then predicting four rate hikes within a 12-month period. The FOMC wants to avoid the possibility of prematurely killing any economic recovery, and causing a double -dip ("W") recession. The most immediate threat, however, is deflation due to slack demand and global surplus capacity. In August, U.S. unemployment rose from 9.5% to 9.7%. It may exceed 10% by year-end. The FDIC's list of troubled banks also rose from 300 to 417 during August. This recession has been called the "Great Recession" because it has been the longest one since World War II, and the slowest to reverse. The real story in 2010 may be commercial real estate. Retail vacancy rates have increased, rents have declined, and delinquency rates have risen. Consumer spending remains hobbled by a combination of sluggish income growth, rising unemployment, and higher state and local taxes. If the 2009 holiday season is disappointing, then more retail bankruptcies and store closings can be expected. Meanwhile, the U.S. banking system is weighed down with hundreds of billions of dollars of unrecognized bad debt because it is still carrying "toxic" real estate loans on the books at full value. Changes in accounting rules have helped the banks avoid write -downs on commercial real estate loans. All of this supports a climate of economic stagnation similar to what Japan has experienced over the last two decades. Pis Gd� C. c.R r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands AUG-09 JUL-09 JUN-09 May-09 Apr-09 Mar-09 CITY Month -End Book Value*** $ 228,398 $ 226,460 $ 228,948 $ 224,289 $ 217,963 $ 216,674 Month -End Market Value*** $ 229,602 $ 227,587 $ 230,005 $ 225,317 $ 218,619 $ 216,589 Paper Gain (Loss) $ 1,204 $ 1,127 $ 1,057 $ 1,028 $ 656 $ (85) Prior Year Book Variance $ 7,960 $ 3,786 $ (2,231) $ (457) $ (4,768) $ (15,800) Interest Earnings $ 332 $ 356 $ 366 $ 360 $ 360 $ 460 Yield -To -Maturity 1.79% 1.90% 2.03% 2.04% 2.09% 2.43% Weighted Maturity (Days) 282 297 306 319 329 324 Effective Duration 0.20 0.22 0.24 0.27 0.29 0.36 RDA Month -End Book Value *** $ 275,874 $ 284,220 $ 287,291 $ 293,720 $ 252,527 $ 268,377 Month -End Market Value *** $ 276,824 $ 285,231 $ 288,384 $ 294,940 $ 253,785 $ 269,503 Paper Gain (Loss) $ 950 $ 1,011 $ 1,093 $ 1,220 $ 1,258 $ 1,126 Prior Year Book Variance $ (8,260) $ (4,767) $ 1,931 $ (5,751) $ (9,242) $ (7,168) Interest Earnings $ 277 $ 308 $ 307 $ 234 $ 219 $ 259 Yield -To -Maturity 1.19% 1.31 % 1.30% 1.06% 1.05% 1.07% Weighted Maturity (Days) 226 236 243 187 217 205 Effective Duration 0.20 0.20 0.22 0.13 0.16 0.17 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics August 31, 2009 Dollars in Thousands Ageing Interval Market Value < 1 M $ 121,627 < 2M 2,019 < 3M 4,037 < 6M 6,196 < 1YR 14,557 < 2YR 21,460 < 3YR - < 4YR - < 5YR - > 5YR - Total: $ 169,896 F General Fund Ageing 100 80 72 c 60 t 40 ° 13 a 20 1 2 4 9 n n o 0 0 0 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR " Credit Quality AAA Ratings Market Value 39% AAA $ 84,993 AA 9% AA 20,796 A 7,000 A Unrated "' 107,249 ** Unrated 3%49% Total: $ 220,038 Sector Market Value MMF $ 35,863 Agencies 23,560 MTNs 27,796 CAMP 25,570 RDA Loan 22,655 G M RA 48,156 LAIF 36,438 CID - Total: $ 220,038 Month Citv Yield LAIF Yield Variance Sep08 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 Jun 2.03 1.38 0.65 Jul 1.90 1.04 0.86 Aug 1.79 0.93 0.87 Asset Allocation CAMP MTNs 23% 13% RDA Loan 10% Agencies 11 % GMRA 22% MMF 16% LAIF 16% Performance 3.6 2.7 0 '2 1.8 d 0.9 0.0 Sep08 Oct Nov Dec Jan09 Feb Mar Apr May Jun Jul Aug Standard and Poors * LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings August 31, 2009 Market Ratings Par Value Issuer l Couponj Maturity Cost , YTM I Price Value I Moody'sS&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,885,872 4.05 104.28 $ 3,957,263 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,032,475 3.20 101.44 $ 3,043,119 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,019,597 5.63 103.43 $ 2,104,770 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,915,406 5.65 106.06 $ 2,005,619 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,011,745 5.67 105.69 $ 2,113,830 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,035,588 3.23 103.43 $ 4,100,940 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,049,187 5.02 105.48 $ 2,109,692 Al AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1111 $ 4,084,292 5.13 106.33 $ 4,253,028 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,992,089 5.09 103.36 $ 2,067,206 Al AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,014,605 4.96 100.99 $ 2,040,087 Al AA $ 26,706,000 Subtotal $ 27,040,857 4.57 $ 27,795,554 Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,140 4.61 102.94 $ 3,088,125 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,003,140 4.61 102.94 $ 3,088,125 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,999,624 5.59 100.13 $ 3,003,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3109 $ 1,992,137 5.96 100.53 $ 2,010,626 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,044,367 4.87 101.06 $ 2,070,771 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,997,075 4.88 100.80 $ 2,015,944 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,052,608 5.47 103.19 $ 2,127,726 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,040,711 5.50 101.06 $ 2,070,771 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,999,263 4.88 100.66 $ 2,013,126 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,978,359 5.47 103.56 $ 2,071,250 Aaa AAA $ 23,160,000 Subtotal $ 23,110,426 5.15 $ 23,560,214 Local Agency Investment Pool $ 36,437,587 L.A.I.F. 0.00 9/1109 $ 36,437,587 0.93 100.00 $ 36,437,587 U U $ 36,437,587 Subtotal $ 36,437,587 0.93 $ 36,437,587 Local Agency Investment Pool $ 25,512,683 C.A.M.P. 0.00 9/1/09 $ 25,512,683 0.40 100.00 $ 25,512,683 U AAA $ 57,294 C.A.M.P. (DESERT WILLOW) 0.00 9/1/09 $ 57,294 0.40 100.00 $ 57,294 U AAA $ 25,569,976 Subtotal $ 25,569,976 0.40 $ 25,569,976 Money Market Fund $ 35,863,655 WF ADVANTAGE GOVT 0.00 9/1/09 $ 35,863,655 0.00 100.00 $ 35,863,655 Aaa AAA $ 35,863,655 Subtotal $ 35,863,655 0.00 $ 35,863,655 Government Managed Rate Account $ 48,156,364 UNION BANK 0.00 911/09 $ 48,156,364 1.77 100.00 $ 48,156,364 U U $ 48,156,364 Subtotal $ 48,156,364 1.77 $ 48,156,364 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings August 31, 2009 Market Par Value Issuer Coupon Maturity Cost YTM I Price I Value City Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 $ 22,655,000 Subtotal Total Investments $ 218,548,582 Cash $ 8,589,600 CITY MAIN CHKG 0.00 $ 857,998 DESERT WILLOW CHKG 0.00 $ 116,373 RECREATIONAL FAC CHKG 0.00 $ 9,563,971 Subtotals Total Investments and Cash $ 228,112,553 Corporate Issuers BANK OF AMERICA GENERAL ELECTRIC WACHOVIA WELLS FARGO BANK 9/1/39 $ 22,655,000 0.93 100.00 $ 22,655,000 $ 22,655,000 0.93 $ 22,655,000 $ 218,833,864 1.90 $ 220,038,349 IRatings Moody's I S&P U 9/1/09 $ 8,589,600 0.00 100.00 $ 8,589,600 U 911/09 $ 857,998 0.00 100.00 $ 857,998 U 9/1/09 $ 116,373 0.00 100.00 $ 116,373 U $ 9,563,971 $ 9,563,971 $ 228,397,835 % of Portfolio (Market Value) 3.05% 4.50% 0.92% 3.64% j $ 229,602,320 U i U U U J "U" = Unrated Page 4 I Par Value Issuer Agency Issuers City of Palm Desert Portfolio Holdings August 31, 2009 Coupon Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost % of Portfolio (Market Value) 2.69% 2.18% 3.61 % 1.78% Market Ratings YTM I Price I Value I Moody'sI S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics August 31, 2009 Dollars in Thousands Acieina Interval Market Value Portfolio Ageing w/o SLGSs < 1 M $ 86,672 < 2M 2,022 < 3M - 100 < 6M 13,777 80 70 < 1YR 3,081 < 2YR 15,505 0 60 < 3YR - 0 40 < 4YR - 0 a 20 11 13 < 5YR - 2 0 n 3 n 0 0 0 2 0 - - > 5YR 2,015 Total: $ 123,072 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Quality * Market Value Credit Quality AA AAA $ 127,768 AAA 46% AA 16,840 A - Unrated 131,579 A Unrated " Total: $ 276,187 0% 48% Sector Market Value MMF $ 58,594 Agencies 26,163 MTNs 16,840 CAMP 40,996 LAIF 39,115 EIP 2,015 LAIF/Bond Proceeds 92,464 Treasuries - Total: $ 276,187 Month Sep08 Oct Nov Dec Jan09 Feb Mar Apr May Jun Jul Aug ' Ns Asset Allocation MTCAMP Agencies15% 9% RDA Yield LAIF Yield Variance Performance 3.18 2.77 0.41 1.60 2.71 -1.11 LAIF 14% MMF 21% EIP 1% LAIF/Bond Proceeds 34% 1.51 2.57 -1.06 3.2 1.40 2.35 -0.95 2.4 1.26 2.05 -0.79 1.29 1.87 -0.58 1.6 1.07 1.82 -0.75 } 0.8 1.05 1.61 -0.56 1.06 1.53 -0.47 0.0 1.30 1.38 -0.08 Sep08 Oct Nov Dec Jan09 Feb Mar Apr May Jun Jul Aug 1.31 1.04 0.27 1.19 0.93 0.26 ■LAIF Yield ■RDA Yield Standard and Poors "* LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings August 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value I Moody's I S&P Medium -Term Notes $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,029,129 2.91 102.65 $ 3,079,377 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,683,677 3.00 100.99 $ 13,760,487 Al AA $ 16,625,000 Subtotal $ 16,712,806 2.98 $ 16,839,864 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,002,839 4.88 100.61 $ 2,012,240 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,912,416 4.65 104.56 $ 5,123,563 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,499,437 5.59 100.13 $ 4,505,625 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,982,363 5.49 106.16 $ 2,123,126 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,982,128 5.50 106.16 $ 2,123,126 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,024,419 5.54 106.56 $ 2,131,250 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,779,674 5.54 106.56 $ 3,979,044 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,157,538 4.89 100.25 $ 4,165,388 Aaa AAA $ 25,289,000 Subtotal $ 25,340,813 5.21 $ 26,163,361 Local Agency Investment Pool $ 39,093,210 L.A.1.F. 0.00 9/1/09 $ 39,093,210 0.93 100.00 $ 39,093,210 U U $ 21,976 L.A.I.F. (HOUSING) 0.00 9/1/09 $ 21,976 0.93 100.00 $ 21,976 U U $ 39,115,186 Subtotal $ 39,115,186 0.93 $ 39,115,186 Local Agency Investment Pool $ 38,887,075 C.A.M.P. 0.00 9/1/09 $ 38,887,075 0.40 100.00 $ 38,887,075 U AAA $ 2,108,632 C.A.M.P. (HOUSING) 0.00 9/1/09 $ 2,108,632 0.40 100.00 $ 2,108,632 U AAA $ 40,995,708 Subtotal $ 40,995,708 0.40 $ 40,995,708 Local Agency Investment Pool $ 20,123,091 CITY OF PALM DESERT 0.00 9/1/09 $ 20,123,091 0.93 100.00 $ 20,123,091 U AA $ 4,779,722 CITY OF PALM DESERT 0.00 9/1/09 $ 4,779,722 0.93 100.00 $ 4,779,722 U AA $ 25,562,603 CITY OF PALM DESERT 0.00 9/1/09 $ 25,562,603 0.93 100.00 $ 25,562,603 U AA $ 10,510,000 CITY OF PALM DESERT 0.00 9/1/09 , $ 10,510,000 0.93 100.00 $ 10,510,000 U AA $ 15,059,000 CITY OF PALM DESERT 0.00 9/1/09 $ 15,059,000 0.93 100.00 $ 15,059,000 U AA $ 16,430,000 CITY OF PALM DESERT 0.00 9/1/09 $ 16,430,000 0.93 100.00 $ 16,430,000 U AA $ 92,464,417 Subtotal $ 92,464,417 0.93 $ 92,464,417 Money Market Fund $ 58,593,594 WF ADVANTAGE GOVT $ 58,593,594 Subtotal Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM $ 2,015,000 Subtotal 0.00 9/1/09 $ 0.00 9/2/29 $ 58,593,594 0.00 100.00 $ 58,593,594 Aaa AAA 58,593,594 0.00 $ 58,593,594 1 2,015,000 3.00 100.00 $ 2,015,000 3.00 $ 2,015,000 U AA 2,015,000 1 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings August 31, 2009 Par Value I Issuer Total Investments $ 275,097,904 Cash $ 399,736 HOUSING AUTH TRUST $ 237,177 HOUSING AUTH CHKG $ 636,913 Subtotal Total Investments and Cash $ 275,734,817 Corporate Issuers WAL-MART WELLS FARGO BANK Market Ratings Coupon Maturity Cost YTM I Price I Value I Moody'sI S&P $ 275,237,523 1.19 $ 276,187,129 0.00 9/1/09 $ 399,736 0.00 100.00 $ 399,736 0.00 9/1/09 $ 237,177 0.00 100.00 $ 237,177 $ 636,913 0.00 $ 636,913 Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC $ 275,874,436 % of Portfolio (Market Value) 1.11% 4.97% % of Portfolio (Market Value) 2.58% 3.16% 2.21 % 1.50% $ 276,824,042 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, 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 September 22, 2009, Pa ,jLS Gd� C. C. A1. T. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) ' Palm Desert Bonds 5 Years No Limit * 0.0% 0.7% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit I 1 22.0% 0.0% 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit 0.0% 0.0% 53601(c) CA State Debt 5 Years No Limit 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% I 10.6% 9.2% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-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 536010) Medium -Term Notes 5 Years 30% A 5 Years 30% A I 12.4% 6.1% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days' 20% (2) AAA & Aaal 16.4% 54.9% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa 120% AAA & Aaa I I Investment Pools 90 Days 20% or Advisor 90 Days (2) or Advisor 11.70/6 14.9% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security 16429.1(b) LAW No Limit I No Limit 16.7% I 14.2% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 89.7% 100.0% (2) The City Energy Independence Program has been approved by the Palm Desert City Council. (3) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. * Certified California Municipal Treasurer Page 9