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Home My WebLink AboutSR - Invstmnt Rprt - Sept, Oct, & Nov '09CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARII��'� DATE: DECEMBER 28, 2009 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports forwere presented and approved at the recent meetings of the Audit, Investment and Finance Committee for the months of September, October and November 2009. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the minutes of the September, October and November 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) BY RDA (`� -C) ON I-IL4 IC= Vz.-P,IFHE: D BY P-1_VJ r6 J Original on file with City Clerk's Office CITY COUNCIL ACTION APPROVED DrNI1: D co RECEIVED Fi le O1'Hf;lt r MEETING DATE / -1q-;2C 10 y NOES: n 1011r' ABSENT: 40C_ ABSTAIN: Al rw1e _ VERIFIED BY: k'_ro, jra) Original on File with City Cleks Office GAFINANCE\NIAMH ORTEGA\INVESTMENT COMMITTEE\MEMOS\RKLASSENINVREPORT.WPD ---�--�. City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT September 2009 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer The Federal Open Market Committee (FOMC) met on September 23, and left short-term interest rates unchanged. The FOMC commented that it expected inflation to be subdued for some time. This is borne out by the long end of the yield curve which has flattened due to lower inflationary expectations. The next FOMC meeting will be on November 3-4. The fragility of the U.S. "economic recovery" was underscored by the September job loss report which was much worse than expected. Although the U.S. Government reported that national unemployment had jumped to 9.8%, thLos Times calculated that if unemployment and underemployment were added together, then the actual rate would be 17 Angeles. A prominent economist recently noted that a "recession" is typically characterized by inventory cycles where 80% of the decline in GDP is due to de -stocking in the manufacturing sector. A "depression", in contrast, is characterized by balance sheet compression and deleveraging in the form of debt elimination, asset liquidation, and rising savings rates. Federal regulators expect the cost of U.S. bank failures to be about $100 billion over the next four years. The Federal Deposit Insurance Corporation (FDIC) is currently in the red, and is expected to remain there through 2012. The next wave of bank losses will probably come from commercial real estate. 800 banks have more than half of their loan portfolio in commercial real estate. Many of these banks have insufficient reserves set aside for losses on these loans. Most of the "toxic" loans are interest -only loans. �s 67d)� C. C. R r. City Treasurer PORTFOLIO STATISTICS Dollars in Thousands CITY SEP-09 AUG-09 JUL-09 JUN-09 May-09 Apr-09 Month -End Book Value*** Month -End Market Value*** $ $ 232,393 233,526 $ 228,398 $ 226,460 $ 228,948 $ 224,289 $ 217,963 Paper Gain (Loss) $ $ 229,602 $ 227,587 $ 230,005 $ 225,317 $ 218,619 Prior Year Book Variance $ 1,133 21,716 $ $ 1,204 7,960 $ $ 1,127 $ 1,057 $ 1,028 $ 656 Interest Earnings $ 322 $ 332 $ 3,786 $ (2,231) $ (457) $ (4,768) Yield-To-Maturityo 1.74 /0 o 1.79 /0 356 1.90% $ 366 2.03% $ 360 $ 360 Weighted Maturity (Days) 253 282 297 2.04% 2.09% Effective Duration 0.18 0.20 0.22 306 0.24 319 329 0.27 0.29 RDA Month -End Book Value *** $ 265,942 $ 275,874 $ 284,220 $ 287,291 $ 293,720 $ 252,527 Month -End Market Value *** $ 266,805 $ 276,824 $ 285,231 $ 288,384 $ 294,940 Paper Gain (Loss) $ 863 $ 253,785 $ 950 $ 1,011 $ 1,093 $ 1,220 $ 1,258 Prior Year Book Variance $ 8,557 $ (8,260) $ (4,767) $ 9,242 1,931 $ (5,751) $ Interest Earnings $ 227 $ 277 ( ) $ 308 $ 307 $ 234 $ 219 Yield -To -Maturity 0.95% 1.19% 1.31 % 1.30% 1.06% 1.05% Weighted Maturity (Days) 192 226 236 243 187 Effective Duration 217 0.19 0.20 0.20 0.22 0.13 0.16 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics September 30, 2009 Dollars in Thousands Aaeinq Interval Market Value -- < 1 M $ 133,337 General Fund Ageing < 2M 4,027 < 3M 4,142 100 < 6M 2,040 74 < 1 YR 14,552 .� 80 0 < 2YR 21,578 0 60 < 3YR - 0 40 < 4YR _ o < 5YR _ a 20 2 2 1 8 12 > 5YR _ 0 - 0 0 0 0 M n Total: $ 179,676 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Ratings * Market Value Credit Quality AA AAA $ 76,717 3A3 % 9% AA 20,790 A A 6,993 3% Unrated ** 125,331 Unrated ** Total: $ 229,831 55% Sector Market Value Asset Allocation MMF $ 30,644 CAMP RDA Agencies 20 495 °Loan 23% 10 /° MTNs MTNs 27,783 12% CAMP 25,578 RDA Loan 22,655 Agencies GMRA GMRA 66,238 9 /° 29% LAIF 36,438 MMF CP _ 13% LAIF Total: $ 229,831 16% Month City Yield LAIF Yield Variance Performance Oct08 3.27 2.71 0.56 Nov 3.04 2.57 0.47 Dec 2.87 2.35 0.52 3.6 Jan09 2.55 2.05 0.51 2.7 Feb 2.36 1.87 0.50 a Mar 2.17 1.82 0.35 :2 1.8 Apr 2.09 1.61 0.49 >' May 2.04 1.53 0.51 0.9 Jun 2.03 1.38 0.65 0.0 Jul 1.90 Aug 1.79 1.04 0.86 Oct08 Nov DecJan09 Feb Mar Apr May Jun Jul Aug Sep 0.93 0.87 Sep 1.74 0.76 0.98 ■city Yield J Standard and Poors ** LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings September 30, 2009 Par Value Issuer Coupon I Maturity Cost YTM Market I Price Value Ratings Moody's I S&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,881,999 4.05 104.25 $ 3,956,451 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,029,977 3.20 101.21 $ 3,036,318 A2 $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,020,724 5.63 103.12 $ 2,098,461 Aa2 A $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,913,719 5.65 105.56 $ 1,996,221 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,011,082 5.67 105.52 $ 2,110,300 Aa2 AA+ AA+ $ $ 3,965,000 2,000,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,030,423 3.23 103.12 $ 4,088,649 Aa2 AA+ $ 4,000,000 WACHOVIA 7.80 8/18/10 $ 2,044,935 5.02 105.43 $ 2,108,672 Al AA $ 2,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,080,627 5.13 107.16 $ 4,286,560 Al AA $ 2,020,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,992,791 5.09 103.29 $ 2,065,768 Al AA WELLS FARGO BANK 4.20 1/15/10 $ 2,015,813 4.96 100.79 $ 2,035,938 Al AA $ 26,706,000 Subtotal $ 27,022,090 4.57 $ 27,783,337 j 1 Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,002,751 4.61 102.63 $ 3,078,750 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,002,751 4.61 102.63 $ 3,078,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,995,942 5.96 100.28 $ 2,005,626 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,045,703 4.87 100.75 $ 2,064,368 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,998,215 4.88 100.49 $ 2,009,786 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,054,759 5.47 102.91 $ 2,121,928 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,043,102 5.50 100.75 $ 2,064,368 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,999,651 4.88 100.31 $ 2,006,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,980,246 5.47 103.25 $ 2,065,000 Aaa AAA $ 20,160,000 Subtotal $ 20,123,120 5.09 $ 20,494,825 j J Local Agency Investment Pool $ 36,437,587 L.A.1.F. 0.00 10/1/09 $ 36,437,587 0.76 100.00 $ 36,437,587 U U $ 36,437,587 Subtotal $ 36,437,587 0.76 $ 36,437,587 j Local Agency Investment Pool $ $ 25,520,700 57,312 C.A.M.P. 0.00 10/1/09 $ 25,520,700 0.38 100.00 $ 25,520,700 U AAA C.A.M.P. (DESERT WILLOW) 0.00 10/1/09 $ 57,312 0.38 100.00 $ 57,312 U AAA $ 25,578,012 Subtotal $ 25,578,012 0.38 $ 25,578,012 j J Money Market Fund $ 30,643,781 WF ADVANTAGE GOVT 0.00 10/1/09 $ 30,643,781 0.00 100.00 $ 30,643,781 Aaa AAA $ 30,643,781 Subtotal $ 30,643,781 0.00 $ 30,643,781 Government Managed Rate Account $ 66,238,363 UNION BANK 0.00 10/1/09 $ 66,238,363 1.77 100.00 $ 66,238,363 U U $ 66,238,363 Subtotal $ 66,238,363 1.77 $ 66,238,363 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings September 30, 2009 I Par Value I Issuer I Coupon I Maturity City Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 $ 22,655,000 Subtotal Total Investments $ 228,418,743 Cash $ 3,222,090 CITY MAIN CHECKING 0.00 $ 389,196 DESERT WILLOW CHKG 0.00 $ 83,540 RECREATIONAL FAC CHKG 0.00 $ 3,694,826 Subtotal Total Investments and Cash $ 232,113, 569 Corporate Issuers BANK OF AMERICA GENERAL ELECTRIC WACHOVIA WELLS FARGO BANK Market Cost YTM I Price I Value 10/1/39 $ 22,655,000 0.76 100.00 $ 22,655,000 $ 22,655,000 0.76 $ 22,655,000 $ 228,697,953 1.74 $ 229,830,905 Ratings Moody's I S&P T 10/1/09 $ 3,222,090 0.00 100.00 $ 3,222,090 U 10/1 /09 $ 389,196 0.00 100.00 $ 389,196 U 10/1/09 $ 83,540 0.00 100.00 $ 83,540 U $ 3,694,826 $ 3,694,826 $ 232,392,779 % of Portfolio (Market Value) 2.99% 4.41 % 0.90% 3.59% $ 233,525,731 U U U j 1 "U" = Unrated Page 4 Par Value Issuer Agency Issuers City of Palm Desert Portfolio Holdings September 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) 2.64% 0.86% 3.54% 1.74% Market Ratings YTM Price I Value Moody's I S&P "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics September 30, 2009 Dollars in Thousands Apeina Interval Market Value. >' < 1 M j Portfolio Ageing $ 64 907 w/o SLGSs < 2M < 3M - 100 < 6M 13,760 < 1 YR 14,313 80 0 65 < 2YR 4,246 0 60 < 3YR - 40 < 4YR _ o a 20 14 14 < 5YR 0 0 � 4 0 0 2 n I I - I 2 0 > 5YR 2,015 0 `-, Total: $ 99,241 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Quality * Market Value Credit Quality AA AAA $ 117,768 6% AA 16,809 AAA A 44% 0 Unrated ** 131,580 Unrated " Total: $ 266,157 A 50% 0% Sector Market Value Asset Allocation Agencies MTNs MMF $ 74,120 6% 6% CAMP Agencies 17,427 9% MTNs 16,809 LAIF CAMP 24,207 MMF 15% LAIF 39,115 28% EIP 2,015 EIP 1% LAIF/Bond Proceeds 92,464 Treasuries - LAIF/Bond Total: $ 266,157 Proceeds 35% Month RDA Yield LAIF Yield Variance Performance Oct08 1.60 2.71 -1.11 Nov 1.51 2.57 -1.06 Dec 1.40 2.35 -0.95 3.2 Jan09 1.26 2.05 -0.79 2.4 Feb 1.29 1.87 -0.58 Mar 1.07 1.82 -0.75 2 1.6 Apr 1.05 1.61 -0.56 } 0.8 May 1.06 1.53 -0.47 Jun 1.30 1.38 -0.08 0.0 Jul 1.31 1.04 0.27 Oct08 Nov Dec Jan09 Feb Mar Apr May Jun Jul Aug Sep Aug 1.19 0.93 0.26 Sep 0.95 0.76 0.19 OLAIF Yield 13RDA Yield Standard and Poors ** LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings September 30, 2009 Par Value Market Ratings I Issuer Coupon I Maturity I Cost I YTM Price I Value Moody' s I S&P Medium -Term Notes $ 3,000,000 $ 13,625,000 WAL-MART WELLS FARGO BANK 4.13 7/1/10 $ 3,026,216 2.91 102.55 $ 3,076,461 Aa2 AA $ 16,625,000 Subtotal 4.20 1/15/10 $ 13,670,540 3.00 100.79 $ 13,732,501 Al AA $ 16,696,756 2.98 $ 16,808,962 Federal Agencies -- Coupon $ 2,000,000 $ 4,900,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,000,473 4.88 100.10 $ 2,002,046 Aaa FED FARM CREDIT BANK 4.90 9/22/10 $ 4,911,438 4.65 104.22 $ AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,983,325 5.49 105.97 $ 5,106,721 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,983,103 5.50 105.97 $ 2,119,376 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,022,460 5.54 106.03 $ 2,119,376 2,120,626 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,776,010 5.54 106.03 $ Aaa AAA $ 16,634,000 Subtotal $ 16,676,811 3,959,209 Aaa AAA 5.19 $ 17,427,354 Local Agency Investment Pool $ 39,093,210 $ 21,976 L.A.I.F. L.A.I.F. (HOUSING) 0.00 0.00 10/1/09 $ 39,093,210 0.76 100.00 $ 39,093,210 U U $ 39,115,186 Subtotal 10/1/09 $ 21,976 0.76 100.00 $ 21,976 U U $ 39,115,186 0.76 $ 39,115,186 j J Local Agency Investment Pool $ 20,123,091 $ L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 20,123,091 0.76 100.00 $ 20,123,091 U AA 4,779,722 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 4,779,722 0.76 100.00 $ 4,779,722 U AA $ 25,562,603 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 25,562,603 0.76 100.00 $ 25,562,603 U $ 10,510,000 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 10,510,000 0.76 100.00 $ 10,510,000 U AA $ 15,059,000 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 15,059,000 0.76 100.00 $ 15,059,000 U AA $ 16,430,000 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 16,430,000 0.76 100.00 $ 16,430,000 U AA $ 92,464,417 Subtotal $ 92,464,417 0.76 $ 92,464,417 AA j Local Agency Investment Pool $ 22,097,205 $ 2,109,295 C.A.M.P. C.A.M.P. (HOUSING) 0.00 0.00 10/1/09 $ 22,097,205 0.38 100.00 $ 22,097,205 U AAA $ 24,206,500 Subtotal 10/1/09 $ 2,109,295 0.38 100.00 $ 2,109,295 U AAA $ 24,206,500 0.38 $ 24,206,500 Money Market Fund $ 74,119,667 $ WF ADVANTAGE GOVT 0.00 10/1/09 $ 74,119,667 0.00 100.00 $ 74,119,667 Aaa AAA 74,119,667 Subtotal $ 74,119,667 0.00 $ 74,119,667 j J Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 3.00 9/2/29 $ 2,015,000 3.00 100.00 $ 2,015,000 U $ 2,015,000 Subtotal $ 2,015,000 3.00 $ 2,015,000 AA "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings September 30, 2009 Par Value I Issuer Total Investments $ 265,179,770 Cash $ 249,222 HOUSING AUTH CHKG $ 398,719 HOUSING AUTH TRUST $ 647,941 Subtotal Total Investments and Cash $ 265,827,711 Corporate Issuers WAL-MART WELLS FARGO BANK I Coupon I Maturity I Cost I YTM Market Price I Value Ratings MoodY' s I S&P $ 265,294,336 0.95 $ 266,157,086 0.00 10/1/09 $ 249,222 0.00 100.00 $ 249,222 U U 0.00 10/1/09 $ 398,719 0.00 100.00 $ 398,719 U U $ 647,941 0.00 $ 647,941 Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP $ 265,942,278 % of Portfolio (Market Value) 1.15% 5.15% % of Portfolio (Market Value) 2.66% 1.59% 2.28% $ 266,805,027 "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 Cit Council review the Statement of Investment Policy annually. y For the month ended September 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 October 27, 2009, City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code I City Investment Policy CA Govt Code Investment Category Maximum Maturity Maximum Quality Limit Maximum Maximum Quality % of City % of RDA 53601(a) Palm Desert Bonds 5 Years S&P/Mdys No Limit Maturity Limit S&P/Mdys Portfolio Portfolio 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 0.0% 0.8% 53601(b) 53601(c) U.S. Treasuries CA State Debt 5 Years No Limit 5 Years No Limit 29.0% 0.0% 0.0% 0.0% 53601(d) CA Local Agency Debt 5 Years 5 Years No Limit ++ No Limit ! Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years ° Not Authorized 30% 53601(f) Bankers' Acceptances 180 Days 40% 180 Days 6% 400o 8.$% 6.3% 53601(g� 53601(h) Commercial Paper Negotiable CDs 270 Days 25% A-1+ or p_1 270 Days A-1 & P-1 25po A-1+ or P-1 - - 0.0% 0.0% 53601(i) Re os P 5 Years 1 Year 30% No Limit 5 Years 30 30 /o AA- or Aaa J - _ 53601(i) Reverse Repos 92 Days 20% Days 20% J AAA & Aaa + - I - 53601(j) Medium -Term Notes 5 Years 30% A 5 Years ° Not Authorized 30 /o 53601 k O 53601(I) Mutual Funds Trust Indenture Debt 90 Days 20% 1 AAA & Aaa 90 Days y A 20% 2 O AAA &Aaa 11.8% 6.3% 0 — 13.4 /0 27.9% 53601(m)l Secured Bank Deposits 5 Years � No Limit +� ! Not Authorized 53601(k) Local Government AAA &Aaa Not Authorized 53601(n) Investment Pools Mortgage -Backed 90 Days 5 Years 20% or Advisor 90 Days AAA &Aaa 20% (2) or Advisor 11.2% 9.1 Securities 20% A (Issuer) & Not Authorized 16429.1(b)l LAW No Limit AA (Security (1) The City loan to RDA, which is not a bond, has No Limit � � been approved b the Palmesert lC 15 9% 49 6% (2) The City Energy Independence Program has been approved by he PalmDeDsert City unc lCty ll 9U•1% 100.0% (3) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 9 �-- = City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT Itl September 2009 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer The Federal Open Market Committee (FOMC) met on September 23, and left short-term interest rates unchanged. The FOMC commented that it expected inflation to be subdued for some time. This is borne out by the long end of the yield curve which has flattened due to lower inflationary expectations. The next FOMC meeting will be on November 3-4. The fragility of the U.S. "economic recovery" was underscored by the September job loss report which was much worse than expected. Although the U.S. Government reported that national unemployment had jumped to 9.8%, the Los Angeles Times calculated that if unemployment and underemployment were added together, then the actual rate would be 17%. A prominent economist recently noted that a "recession" is typically characterized by inventory cycles where 80% of the decline in GDP is due to de -stocking in the manufacturing sector. A "depression", in contrast, is characterized by balance sheet compression and deleveraging in the form of debt elimination, asset liquidation, and rising savings rates. Federal regulators expect the cost of U.S. bank failures to be about $100 billion over the next four years. The Federal Deposit Insurance Corporation (FDIC) is currently in the red, and is expected to remain there through 2012. The next wave of bank losses will probably come from commercial real estate. 800 banks have more than half of their loan portfolio in commercial real estate. Many of these banks have insufficient reserves set aside for losses on these loans. Most of the "toxic" loans are interest -only loans. Pis c. c. m r. City Treasurer PORTFOLIO STATISTICS Dollars in Thousands CITY SEP-09 AUG-09 JUL-09 JUN-09 May-09 Apr-09 Month -End Book Value*** $ 232,393 $ 228,398 $ 226,460 $ 228,948 $ 224,289 $ 217,963 Month -End Market Value*** $ 233,526 $ 229,602 $ 227,587 $ 230,005 $ 225,317 $ 218,619Paper Gain (Loss) $ 1,133 $ 1,204 $ 1,127 $ 1,057 $ 1,028 $ 656 Prior Year Book Variance $ 21,716 $ 7,960 $ 3,786 $ (2,231) $ (457) $ Interest Earnings $ 322 $ 332 $ 356 $ 366 $ (4,768) Yield -To -Maturity 1.74% 1.79% 1.90% 2.03% 360 2.04% $ 360 Weighted Maturity (Days) 253 282 297 2.09% Effective Duration 0.18 0.20 0.22 306 0.24 319 329 0.27 0.29 RDA Month -End Book Value *** $ 265,942 $ 275,874 $ 284,220 $ 287,291 $ 293,720 $ 252,527 Month -End Market Value *** $ 266,805 $ 276,824 $ 285,231 $ 288,384 $ 294,940 $ 785 25,258 Paper Gain (Loss) $ 863 $ 950 $ 1,011 $ 1,093 $ 1,220 $ 1 Prior Year Book Variance $ 8,557 $ (8,260) $ (4,767) $ 1,931 $ (5,751) $ ,258 Interest Earnings 9 $ 227 $ 277 $ 308 $ 307 $ (9,242) Yield -To -Maturity 0.95% 1.19% 1.31 % 1.30% 234 1.06% $ 219 Weighted Maturity (Days) 192 226 236 1.05% Effective Duration 0.19 0.20 0.20 243 0.22 187 21 0.13 0.16 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics September 30, 2009 Dollars in Thousands Aaeina Interval Market Value < 1 M $ 133,337 < 2M 4,027 < 3M 4,142 < 6M 2,040 < 1YR 14,552 < 2YR 21,578 < 3YR _ < 4YR _ < 5YR _ > 5YR _ Total: $ 179,676 Ratings " Market Value AAA $ 76,717 AA 20,790 A 6,993 Unrated " 125,331 Total: $ 229,831 General Fund Ageing I IN 100 80 74 o 0 60 rE 40 0 o_ 20 2 2 8 12 1 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR j Credit Quality AAA AA 33% 9% A 3% Unrated 55% Sector Market Value Asset Allocation MMF $ 30,644 CAMP 23% RDA Loan Agencies 20,495 MTNs 10% MTNs 27,783 12% CAMP 25,578 RDA Loan 22,655 Agencies GMRA GMRA 66,238 9% 29% LAIF 36,438 MMF CID _ 13% LAIF Total: $ 229,831 16% Month Oct08 Nov Dec Jan09 Feb Mar Apr May Jun Jul Aug Sep Citv Yield 3.27 3.04 2.87 2.55 2.36 2.17 2.09 2.04 2.03 1.90 1.79 1.74 LAIF Yield 2.71 2.57 2.35 2.05 1.87 1.82 1.61 1.53 1.38 1.04 0.93 0.76 Standard and Poors LAIF, and City Loan to RDA Variance Performance 0.56 0.47 3.6 0.52 0.51 2.7 0.50 0.35 :2 1.8 m 0.49 } 0.9 0.51 0.65 0.0 0.86 Oct08 Nov Dec Jan09 Feb Mar Apr May Jun Jul Aug Sep 0.87 0.98 ® a Page 2 City of Palm Desert Portfolio Holdings September 30, 2009 Par Value Issuer Coupon I Maturity Cost YTM I Price I MarketValue' Mo Ratings dy's I S&P Medium -Term Notes $ $ 3,795,000 3,000,000 BANK OF AMERICA 5.38 8/15/11 $ 3,881,999 4.05 104.25 $ 3,956,451 A2 A $ 2,035,000 BANK OF AMERICA 4.25 10/1/10 $ 3,029,977 3.20 101.21 $ 3,036,318 A2 A $ GENERAL ELECTRIC 4.88 10/21/10 $ 2,020,724 5.63 103.12 $ 2,098,461 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,913,719 5.65 105.56 $ 1,996,221 Aa2 AA+ 2,000,000 GENERAL ELECTRIC 6.13 2122111 $ 2,011,082 5.67 105.52 $ 2,110,300 Aa2 $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,030,423 3.23 103.12 $ 4,088,649 Aa2 AA+ $ $ 2,000,000 4,000,000 WACHOVIA 7.80 8/18/10 $ 2,044,935 5.02 105.43 $ 2,108,672 Al AA+ AA $ WELLS FARGO BANK 6.38 8/1/11 $ 4,080,627 5.13 107.16 $ 4,286,560 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,992,791 5.09 103.29 $ 2,065,768 Al AA 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,015,813 4.96 100.79 $ 2,035,938 Al $ 26,706,000 Subtotal $ 27,022,090 4.57 $ 27,783,337 AA Agencies -- Coupon $ $ 3,000,000 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,002,751 4.61 102.63 $ 3,078,750 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,002,751 4.61 102.63 $ 3,078,750 Aaa AAA $ 2,049,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,995,942 5.96 100.28 $ 2,005,626 Aaa AAA FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,045,703 4.87 100.75 $ 2,064,368 Aaa $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,998,215 4.88 100.49 $ 2,009,786 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,054,759 5.47 102.91 $ 2,121,928 AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,043,102 5.50 100.75 $ 2,064,368 Aaa Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,999,651 4.88 100.31 $ 2,006,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,980,246 5.47 103.25 $ 2,065,000 Aaa AAA $ 20,160,000 Subtotal $ 20,123,120 5.09 $ 20,494,825 AAA Local Agency Investment Pool $ 36,437,587 L.A.I.F. 0.00 10/1/09 $ 36,437,587 0.76 100.00 $ 36,437,587 U U $ 36,437,587 Subtotal $ 36,437,587 0.76 $ 36,437,587 Local Agency Investment Pool $ $ 25,520,700 C.A.M.P. 0.00 10/1/09 $ 25,520,700 0.38 100.00 $ 25,520,700 U AAA 57,312 C.A.M.P. (DESERT WILLOW) 0.00 10/1/09 $ 57,312 0.38 100.00 $ 57,312 U AAA $ 25,578,012 Subtotal $ 25,578,012 0.38 $ 25,578,012 Money Market Fund $ 30,643,781 WF ADVANTAGE GOUT 0.00 10/1/09 $ 30,643,781 0.00 100.00 $ 30,643,781 Aaa AAA $ 30,643,781 Subtotal $ 30,643,781 0.00 $ 30,643,781 Government Managed Rate Account $ 66,238,363 UNION BANK 0.00 10/1/09 $ 66,238,363 1.77 100.00 $ 66,238,363 U U $ 66,238,363 Subtotal $ 66,238,363 1.77 $ 66,238,363 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings September 30, 2009 Market Par Value Issuer Coupon Maturity Cost YTM I Price Value City Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 10/1/39 $ 22,655,000 0.76 100.00 $ 22,655,OOC $ 22,655,000 Subtotal $ 22,655,000 0.76 $ 22,655,000 Total Investments $ 228,418,743 $ 228,697,953 1.74 $ 229,830,905 Cash $ 3,222,090 CITY MAIN CHECKING 0.00 10/1/09 $ 3,222,090 0.00 100.00 $ 3,222,090 $ 389,196 DESERT WILLOW CHKG 0.00 10/1/09 $ 389,196 0.00 100.00 $ 389,196 $ 83,540 RECREATIONAL FAC CHKG 0.00 10/1/09 $ 83,540 0.00 100.00 $ 83,540 $ 3,694,826 Subtotal $ 3,694,826 $ 3,694,826 Total Investments and Cash $ 232,113,569 $ 232,392,779 $ 233,525,731 Corporate Issuers BANK OF AMERICA GENERAL ELECTRIC WACHOVIA WELLS FARGO BANK % of Portfolio (Market Value) 2.99% 4.41 % 0.90% 3.59% 'Ratings Moody's I S&P U U U U U I U U U "U" = Unrated Page 4 IPar Value Issuer Agency Issuers City of Palm Desert Portfolio Holdings September 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) 2.64% 0.86% 3.54% 1.74% Market Ratings YTM I Price I Value ' Moody's I S&P� "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics September 30, 2009 Dollars in Thousands Aaeina Interval Market Value < 1 M $ 64,907 i Portfolio Ageing w/o SLGSs < 2M < 3M - 100 < 6M 13,760 < 1YR 14,313 80 0 65 < 2YR 4,246 0 60 < 3YR - 40 < 4YR _ 0 a 20 14 14 < 5YR 0 0 I I I I 4 0 0 0 2 > 5YR 2,015 0 � ' - - Total: $ 99,241 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Quality " Market Value ! Credit Quality AA AAA $ 117,768 6% AA 16,809 AAA q 44% Unrated 131,580 Unrated " Total: l $ 266,157 q 50% 0% Sector Market Value Asset Allocation Agencies MTNs MMF $ 74,120 6%6% CAMP Agencies 17,427 9% MTNs 16,809 LAIF CAMP 24,207 MMF 15% LAIF 39,115 28% EIP 2,015 EIP 1% LAIF/Bond Proceeds 92,464 Treasuries - LAIF/Bond Total: $ 266,157 Proceeds 35% Month RDA Yield LAIF Yield Variance Performance Oct08 1.60 2.71 -1.11 Nov 1.51 2.57 -1.06 Dec 1.40 2.35 -0.95 3.2 Jan09 1.26 2.05 -0.79 2.4 - Feb 1.29 1.87 -0.58 Mar 1.07 1.82 -0.75 v 1.6 Apr 1.05 1.61 -0.56 } 0.8 May 1.06 1.53 -0.47 Jun 1.30 1.38 -0.08 0.0 Jul 1.31 1.04 0.27 Oct08Nov Dec Jan09Feb Mar Apr May Jun Jul Aug Sep Aug 1.19 0.93 0.26 Sep 0.95 0.76 0.19 OLAIF Yield ®RDA Yield 1 / Standard and Poors LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings September 30, 2009 Par Value Issuer Coupon I Maturity Cost YTM Market Price Value ' Ratings Moody's I S&P Medium -Term Notes $ 3,000,000 $ 13,625,000 WAL-MART WELLS FARGO BANK 4.13 7/1/10 $ 3,026,216 2.91 102.55 $ 3,076,461 Aa2 AA $ 16,625,000 Subtotal 4.20 1/15/10 $ 13,670,540 3.00 100.79 $ 13,732,501 Al AA $ 16,696,756 2.98 $ 16,808,962 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,000,473 4.88 100.10 $ 2,002,046 $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,911,438 4.65 104.22 $ 5,106,721 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,983,325 5.49 105.97 $ 2,119,376 Aaa Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,983,103 5.50 105.97 $ 2,119,376 AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,022,460 5.54 106.03 $ 2,120,626 Aaa Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,776,010 5.54 106.03 $ 3,959,209 AAA $ 16,634,000 Subtotal $ 16,676,811 5.19 $ 17,427,354 Aaa AAA j J Local Agency Investment Pool $ 39,093,210 $ 21,976 L.A.I.F. 0.00 10/1/09 $ 39,093,210 0.76 100.00 $ 39,093,210 U U L.A.I.F. (HOUSING) 0.00 10/1/09 $ 21,976 0.76 100.00 $ 21,976 U $ 39,115,186 Subtotal $ 39,115,186 0.76 $ 39,115,186 U Local Agency Investment Pool $ 20,123,091 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 20,123,091 0.76 100.00 $ 20,123,091 U $ 4,779,722 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 4,779,722 0.76 100.00 $ 4,779,722 U AA $ 25,562,603 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 25,562,603 0.76 100.00 $ 25,562,603 U AA $ 10,510,000 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 10,510,000 0.76 100.00 $ 10,510,000 U AA AA $ 15,059,000 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 15,059,000 0.76 100.00 $ 15,059,000 U AA $ 16,430,000 L.A.I.F. / WELLS FARGO 0.00 10/1/09 $ 16,430,000 0.76 100.00 $ 16,430,000 U AA $ 92,464,417 Subtotal $ 92,464,417 0.76 $ 92,464,417 Local Agency Investment Pool $ 22,097,205 $ 2,109,295 C.A.M.P. 0.00 10/1/09 $ 22,097,205 0.38 100.00 $ 22,097,205 U AAA C.A.M.P. (HOUSING) 0.00 10/1/09 $ 2,109,295 0.38 100.00 $ 2,109,295 U AAA $ 24,206,500 Subtotal $ 24,206,500 0.38 $ 24,206,500 Money Market Fund $ 74,119,667 WF ADVANTAGE GOVT 0.00 10/1/09 $ 74,119,667 0.00 100.00 $ 74,119,667 Aaa AAA $ 74,119,667 Subtotal $ 74,119,667 0.00 $ 74,119,667 Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 3.00 9/2/29 $ 2,015,000 3.00 100.00 $ 2,015,000 U AA $ 2,015,000 Subtotal $ 2,015,000 3.00 $ 2,015,000 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings September 30, 2009 Par Value I Issuer Total Investments $ 265,179,770 Cash $ 249,222 HOUSING AUTH CHKG $ 398,719 HOUSING AUTH TRUST $ 647,941 Subtotal Total Investments and Cash $ 265,827,711 Corporate Issuers WAL-MART WELLS FARGO BANK Coupon I Maturity Cost YTM Market I Price Value Ratings ' Moody's I S&P $ 265,294,336 0.95 $ 266,157,086 0.00 10/1/09 $ 249,222 0.00 100.00 $ 249,222 U U 0.00 10/1/09 $ 398,719 0.00 100.00 $ 398,719 U U $ 647,941 0.00 $ 647,941 j Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP $ 265,942,278 % of Portfolio (Market Value) 1.15% 5.15% % of Portfolio (Market Value) 2.66% 1.59% 2.28% $ 266,805,027 "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 September 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 October 27, 2009, Pa ,LS. tid)lom C. C. ".. T. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code I City Investment Policy CA Govt Code Investment Cate,gory Maximum Maturity Maximum Quality Limit Maximum Maximum Quality % of City % of RDA 53601(a) Palm Desert Bonds 5 Years S&P/Mdys No Limit Maturity Limit S&P/Mdys Portfolio Portfolio 53632(c) Savings Accounts No Limit No Limit I No Limit No Limit 0.0% 0.8% 53601(b) U.S. Treasuries 5 Years � No Limit I 5 Years' No Limit 29.0% 0.0% 53601(c) CA State Debt 5 Years No Limit 1 _ 0.0% 1 0.0% 53601(d) CA Local Agency Debt 5 Years ' No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years Not Authorized 30% 53601(f) Bankers's Acceptances 180 Days 40% J 6% 8.8% 6.3% 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 180 Days l 270 Days 40 /o A-1 & P-1 25% A-1+ P-1 53601(h) Negotiable CDs 5 Years 30% ) 5 Years or 30% 0.0% 1 0.0% 53601(i) I Repos 1 Year ) No Limit + 30 Days 20% 1AAA & Aaal I - 53601(i) Reverse Repos 92 Days 20% + - 53601(I) 1 Medium -Term Notes 5 Years � 30%30% I A 5 Years � Not Authorized 1 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 1 A 1 20% (2) 1 AAA & AaaJ 11.8% 6.3% 13.4% + 53601(I) Trust Indenture Debt 27.9% 53601(m) 1 Secured Bank Deposits 5 Years ' ' No Limit l Not Authorized 53601(k) Local Government AAA & Aaa Not Authorized 53601(n) Investment Pools Mortgage -Backed 90 Days I 5 20% or Advisor I 90 Days I AAA & Aaa 20% (2) or Advisor I l 11.2% 9.1 % I I Securities Years � Issuer 20% � A (issuer) & Not Authorized 16429.1(b)l LAW No Limit AA (Security)ll No Limit � � (1) The City loan to RDA, which is no a bond, has been I 15.9% ( 49.6% approved by the Palm Desert City Council. (2) The City Energy Independence Program has been 90.1 % 100.0% (3) Maximum approved by the Palm Desert City Council. limit for mutual funds and local investment government pools, excluding bond proceeds. Certified California Municipal Treasurer Page 9 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT RE PORT October 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 November 4, and left short-term interest rates unchanged. While the FOMC noted that economic activity had improved, it stated that conditions would probably warrant keeping the Federal Funds Rate at a low level for an extended period of time. The next FOMC meeting will be on December 16. After four quarters of contraction, U.S. Gross Domestic Product (GDP) grew by 3.5% in 3Q2009, driven largely by federal spending. It is questionable whether this growth will be sustainable, however, once the federal stimulus ends. About 1.6% of GDP growth, for example, came from auto sales that were accelerated by "cash for clunkers". Hiring plans and hours worked remained depressed as businesses weighed the risks of health care reform, cap and trade legislation, and less friendly business conditions. In the near term (next 2 years), there will be deflationary pressure on pricing. This is currently symbolized by high unemployment levels; an average work week that has fallen to 33 hours; and a manufacturing capacity utilization rate of 67%. If the U.S. continues to follow the Japanese path of large government deficits, increased taxes, increased personal savings, and limited bank credit, then economic stagnation may continue for a long time, especially in California. pas 4 C7 71C. C. R r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands CITY OCT-09 SEP-09 AUG-09 JUL-09 JUN-09 May-09 Month -End Book Value*** $ 239,207 $ 232,393 $ 228,398 $ 226,460 $ 228,948 $ 224,289 Month -End Market Value*** $ 240,435 $ 233,526 $ 229,602 $ 227,587 $ 230,005 $ 225,317 Paper Gain (Loss) $ 1,228 $ 1,133 $ 1,204 $ 1,127 $ 1,057 $ 1,028 Prior Year Book Variance $ 21,577 $ 21,716 $ 7,960 $ 3,786 $ (2,231) $ (457) Interest Earnings $ 326 $ 322 $ 332 $ 356 $ 366 $ 360 Yield -To -Maturity 1.69% 1.74% 1.79% 1.90% 2.03% 2.04% Weighted Maturity (Days) 246 253 282 297 306 Effective Duration 0.17 0.18 0.20 0.22 0.24 319 0.27 RDA Month -End Book Value *** $ 226,007 $ 265,942 $ 275,874 $ 284,220 $ 287,291 $ 293,720 Month -End Market Value *** $ 226,811 $ 266,805 $ 276,824 $ 285,231 $ 288,384 $ 294,940 Paper Gain (Loss) $ 804 $ 863 $ 950 $ 1,011 $ 1,093 $ 1,220 Prior Year Book Variance $ (19,093) $ 8,557 $ (8,260) $ (4,767) $ 1,931 $ (5,751) Interest Earnings $ 186 $ 227 $ 277 $ 308 $ 307 $ 234 Yield -To -Maturity 0.96% 0.95% 1.19% 1.31 % 1.30% 1.06% Weighted Maturity (Days) 214 192 226 236 243 Effective Duration 0.21 0.19 0.20 0.20 0.22 187 0.13 *** Omits SLGSs. Dollars in Thousands Aaeina Interval < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratinqs AAA AA A Unrated �* Total: Sector MMF Agencies MTNs CAMP RDA Loan GMRA LAIF CP Total: City of Palm Desert -- Portfolio Characteristics October 31, 2009 Market Value $ 145,180 4,116 2,033 23,791 12,423 $ 187,543 Market Value $ 71,597 20,838 7,098 125,506 $ 225,039 Market Value $ 29,633 18,430 27,936 23,534 22,655 66,331 36,520 $ 225,039 Month Citv Yield LAIF Yield Nov08 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 Jul 1.90 1.04 Aug 1.79 0.93 Sep 1.74 0.76 Oct 1.69 0.65 Standard and Poors ** LAIF, and City Loan to RDA General Fund Ageing 100 77 80 0 0 60 'IE 40 a0 20 13 7 2 1 0 0 0 0 0 0 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Credit Quality I Asset Allocation Variance Performance 0.47 052 AAA AA 0 32% 9 /o A 3% Unrated ** 56% CAMP RDA Loan 23% 10% MTNs 12% Agencies 8% MMF 13% LAI F 16% GMRA 30% 0.51 3.6 0.50 2.7 0.35 0.49 2 1.8 0.51 } 0.65 0.9 0.86 0.0 - 0.87 Nov08DecJano9 Feb Mar Apr May Jun Jul Aug Sep Oct 0.98 1.05 13 Page 2 I Par Value Medium -Term Notes $ 3,795,000 $ 3,000,000 $ 2,035,000 $ 1,891,000 $ 2,000,000 $ 3,965,000 $ 2,000,000 $ 4,000,000 $ 2,000,000 $ 2,020,000 1 $ 26,706,000 Agencies -- Coupon City of Palm Desert Portfolio Holdings October 31, 2009 Issuer l Coupon j Maturity Cost YTM I Price I Market Value Ratings Moody'sI SAP BANK OF AMERICA 5.38 8/15/11 $ 3,878,127 4.05 105.77 $ 4,014,116 A2 A BANK OF AMERICA 4.25 10/1/10 $ 3,027,479 3.20 102.80 $ 3,083,916 A2 A GENERAL ELECTRIC 4.88 10/21/10 $ 2,021,851 5.63 103.93 $ 2,115,035 Aa2 AA+ GENERAL ELECTRIC 6.88 11/15/10 $ 1,912,032 5.65 106.04 $ 2,005,256 Aa2 AA+ GENERAL ELECTRIC 6.13 2/22/11 $ 2,010,418 5.67 105.84 $ 2,116,786 Aa2 AA+ GENERAL ELECTRIC 4.88 10/21/10 $ 4,025,258 3.23 103.93 $ 4,120,939 Aa2 AA+ WACHOVIA 7.80 8/18/10 $ 2,040,682 5.02 104.99 $ 2,099,758 Al AA WELLS FARGO BANK 6.38 8/1/11 $ 4,076,963 5.13 107.18 $ 4,287,128 Al AA WELLS FARGO BANK 4.63 8/9/10 $ 1,993,493 5.09 103.03 $ 2,060,576 Al AA WELLS FARGO BANK 4.20 1/15/10 $ 2,017,021 4.96 100.63 $ 2,032,629 Al AA Subtotal $ 27,003,324 4.57 $ 27,936,139 $ 3,000,000 FED FARM CREDIT BANK $ 3,000,000 FED FARM CREDIT BANK $ 2,000,000 FED HOME LOAN BANK $ 2,049,000 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 $ 18,160,000 Subtotal Local Agency Investment Fund $ 36,519,992 L.A.I.F. $ 36,519,992 Subtotal 4.78 5/3/10 $ 3,002,362 4.61 102.25 $ 3,067,500 Aaa AAA 4.78 5/3/10 $ 3,002,362 4.61 102.25 $ 3,067,500 Aaa AAA 3.50 11/3/09 $ 1,999,746 5.96 100.00 $ 2,000,000 Aaa AAA 4.00 12/15/09 $ 2,047,040 4.87 100.44 $ 2,057,964 Aaa AAA 4.13 11/18/09 $ 1,999,354 4.88 100.17 $ 2,003,358 Aaa AAA 4.13 7/12/10 $ 2,056,910 5.47 102.63 $ 2,116,128 Aaa AAA 4.00 12/15/09 $ 2,045,493 5.50 100.44 $ 2,057,964 Aaa AAA 4.25 8/15/10 $ 1,982,134 5.47 103.00 $ 2,060,000 Aaa AAA $ 18,135,401 5.11 $ 18,430,414 0.00 11/1/09 $ 36,519,992 0.65 100.00 $ 36,519,992 U U $ 36,519,992 0.65 $ 36,519,992 Local Agency Investment Fund $ 23,526,812 C.A.M.P. 0.00 $ 7,323 11/1/09 $ 23,526,812 0.30 100.00 $ 23,526,812 U AAA C.A.M.P. (DESERT WILLOW) 0.00 11/1/09 $ 7,323 0.30 100.00 $ 7,323 U AAA $ 23,534,135 Subtotal $ 23,534,135 0.30 $ 23,534,135 Money Market Fund $ 29,632,425 WF ADVANTAGE GOUT MMF 0.00 11/9/09 $ 29,632,425 0.01 100.00 $ 29,632,425 Aaa AAA $ 29,632,425 Subtotal $ 29,632,425 0.01 $ 29,632,425 j J Government Managed Rate Account $ 66,330,722 UNION BANK 0.00 11/1/09 $ 66,330,722 1.77 100.00 $ 66,330,722 U U $ 66,330,722 Subtotal $ 66,330,722 1.77 $ 66,330,722 "U" = Unrated Page 3 Par Value I Issuer City Loan to RDA $ 22,655,000 CITY OF PALM DESERT $ 22,655,000 Subtotal Total Investments $ 223,538,274 Cash $ 14,897,912 CITY MAIN CHKG $ 370,255 DESERT WILLOW CHKG $ 128,140 RECREATIONAL FAC CHKG $ 15,396,307 Subtotal $ 238,934,581 Agency Issuers BANK OF AMERICA GENERAL ELECTRIC WACHOVIA WELLS FARGO BANK City of Palm Desert Portfolio Holdings October 31, 2009 Market Coupon I Maturity Cost YTM I Price I Value 0.00 11/1/39 $ 22,655,000 0.65 100.00 $ 22,655,000 $ 22,655,000 0.65 $ 22,655,000 $ 223,810,998 1.69 $ 225,038,827 0.00 11 /1 /09 $ 14,897,912 0.00 100.00 $ 14,897,912 0.00 11/1/09 $ 370,255 0.00 100.00 $ 370,255 0.00 11 /1 /09 $ 128,140 0.00 100.00 $ 128,140 $ 15,396,307 $ 15,396,307 Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC $ 239,207,305 $ 240,435,134 % of Portfolio (Market Value) 2.95% 4.31 % 0.87% 3.49% % of Portfolio (Market Value) 2.55% 0.83% 3.43% 0.86% Ratings Moody's I S&P U U U U "U" = Unrated Page 4 U U U j J Palm Desert Redevelopment Agency -- Portfolio Characteristics October 31, 2009 Dollars in Thousands Aqeinq Interval Market Value < 1 M I Portfolio Ageing w/o SLGSs $ 39,279 < 2M < 3M 13,710 100 < 6M < 1 YR _ 14,219 ^. 80 < 2YR 4,228 _0 60 53 < 3YR - ° � 40 - < 4YR a 19 19 < 5YR - 20 0 I I 190 1j1 6 0 0 0 3 > 5YR 2,015 Total: $ 73,451 < 1 M < 2M < 3M < 6M < 1 YR< 2YR< 3YR< 4YR< 5YR> 5YR QualityCredit Market Value Quality Y AA AAA $ 80,456 7% AA 16,783 A AAA Unrated �* - 128,894 36% Unrated 57% Total: $ 226,133 A 0% Sector Market Value Asset Allocation MMF $ 60,860 Agencies MTNsCAMPAgencies 15,373 7% 7% 1 % MTNs 16,783 LAIF CAMP 2,208 MMF 17% LAIF 39,204 27% EIP EIP 2,015 1% LAIF/Bond Proceeds 89,690 Treasuries _ LAIF/Bond Total: $ 226133 Proceeds 40% Month RDA Yield LAIF Yield Variance Performance Nov08 1.51 2.57 -1.06 Dec 1.40 2.35 -0.95 Jan09 1.26 2.05 -0.79 3.2 Feb 1.29 1.87 -0.58 2.4 Mar 1.07 1.82 -0.75 Apr 1.05 1.61 -0.56 2 1.6 May 1.06 1.53 -0.47 } 0.8 - Jun 1.30 1.38 -0.08 Jul 1.31 1.04 0.27 0.0 Aug 1.19 0.93 0 26 Nov08DecJanO9 Feb Mar Apr May Jun Jul Aug Sep Oct Sep 0.95 0.76 0.19 Oct 0.96 0.65 0.32 MLAIF Yield GRDA Yield 1 1 Standard and Poors ** LAIF Page 5 Par Value I Issuer Medium -Term Notes Palm Desert Redevelopment Agency Portfolio Holdings October 31, 2009 Coupon I Maturity $ 3,000,000 WAL-MART 4.13 $ 13,625,000 WELLS FARGO BANK 4.20 $ 16,625,000 Subtotal Federal Agencies -- Coupon $ 4,900,000 FED FARM CREDIT BANK 4.90 $ 2,000,000 FED HOME LOAN BANK 4.88 $ 2,000,000 FED HOME LOAN BANK 4.88 $ 2,000,000 FED HOME LOAN MTG CORP 6.88 $ 3,734,000 FED HOME LOAN MTG CORP 6.88 $ 14,634,000 Subtotal Local Government Investment Pool $ 39,182,126 L.A.I.F. 0.00 $ 22,026 L.A.I.F. (HOUSING) 0.00 $ 39,204,151 Subtotal Local Government Investment Pool $ 17,638,468 L.A.I.F. / WELLS FARGO 0.00 $ 4,790,535 L.A.I.F. / WELLS FARGO 0.00 $ 25,175,995 L.A.I.F. / WELLS FARGO 0.00 $ 10,531,455 L.A.I.F. / WELLS FARGO 0.00 $ 15,089,741 L.A.I.F. / WELLS FARGO 0.00 $ 16,463,540 L.A.I.F. / WELLS FARGO 0.00 $ 89,689,734 Subtotal Local Government Investment Pool $ 98,200 C.A.M.P. 0.00 $ 2,109,824 C.A.M.P. (HOUSING) 0.00 $ 2,208,024 Subtotal Money Market Fund $ 60,859,876 WF ADVANTAGE GOVT MMF 0.00 $ 60,859,876 Subtotal Market Ratings Cost YTM I Price I Value Moody's I S&P 7/1/10 $ 3,023,303 2.91 102.42 $ 3,072,729 Aa2 AA 1/15/10 $ 13,657,403 3.00 100.63 $ 13,710,184 Al AA $ 16,680,707 2.98 $ 16,782,913 1 9/22/10 $ 4,910,461 4.65 103.94 $ 5,092,938 3/11 /11 $ 1,984,287 5.49 105.69 $ 2,113,750 3/11/11 $ 1,984,078 5.50 105.69 $ 2,113,750 9/15/10 $ 2,020,502 5.54 105.56 $ 2,111,250 9/15/10 $ 3,772,347 5.54 105.56 $ 3,941,704 $ 14,671,674 5.23 $ 15,373,391 11/1/09 $ 39,182,126 0.65 100.00 $ 39,182,126 11/1/09 $ 22,026 0.65 100.00 $ 22,026 $ 39,204,151 0.65 $ 39,204,151 11/1/09 $ 17,638,468 0.65 100.00 $ 17,638,468 11/1/09 $ 4,790,535 0.65 100.00 $ 4,790,535 11/1/09 $ 25,175,995 0.65 100.00 $ 25,175,995 11/1/09 $ 10,531,455 0.65 100.00 $ 10,531,455 11/1/09 $ 15,089,741 0.65 100.00 $ 15,089,741 11/1/09 $ 16,463,540 0.65 100.00 $ 16,463,540 $ 89,689,734 0.65 $ 89,689,734 11/1/09 $ 98,200 0.30 100.00 $ 98,200 11/1/09 $ 2,109,824 0.30 100.00 $ 2,109,824 $ 2,208,024 0.30 $ 2,208,024 11/1/09 $ 60,859,876 0.01 100.00 $ 60,859,876 $ 60,859,876 0.01 $ 60,859,876 Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 3.00 9/2/29 $ 2,015,000 3.00 100.00 $ 2,015,000 $ 2,015,000 Subtotal $ 2,015,000 3.00 $ 2,015,000 Aaa Aaa Aaa Aaa Aaa U U U U U U U U U U AAA AAA AAA AAA AAA j U U j AA AA AA AA AA AA AAA AAA I Aaa AAA I U AA "U" = Unrated Page 6 Palm Desert Redevelopment Agency Portfolio Holdings October 31, 2009 Par Value I Issuer Total Investments $ 225,235,786 Cash $ 407,729 HOUSING AUTH TRUST $ 270,419 HOUSING AUTH CHKG $ 678,148 Subtotal Total Investments and Cash $ 225,913,934 Corporate Issuers WAL-MART WELLS FARGO BANK Market Ratings Coupon I Maturity Cost YTM I Price I Value Moody's I S&P Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP $ 225,329,167 0.96 $ 226,133,089 0.00 11/1/09 $ 407,729 0.00 100.00 $ 407,729 0.00 11 /1 /09 $ 270,419 0.00 100.00 $ 270,419 $ 678,148 $ 678,148 $ 226,007,315 % of Portfolio (Market Value) 1.35% 6.04% % of Portfolio (Market Value) 2.25% 1.86% 2.67% $ 226,811,238 U U U U j "U" = Unrated Page 7 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive tha California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert n the i Council review the Statement of Investment Policy annually. Cty For the month ended October 31, 2009, the City and the RDA investment portfolios were in compliance with all a li federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent inpvp cable strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). p estment Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the Cit of Palm and the Palm Desert Redevelopment Agency over the next six months. In addition y Desert s of eithe portfolio could be liquidated in order to meet any significant, unexpected cash requirementsr the City or the RDA 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 therefor not included in this report as assets. All balances are bank balances. e Respectfully Submitted on November 24, 2009, �s �u CC r City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code I City Investment Policy CA Govt Code Investment Category Maximum Maturity Maximum Quality Limit Maximum Quality % of City % of RDA 53601(a) Palm Desert Bonds 5 Years S P/Mdys No Limit Maturitm y Limit S&P/Mdys Portfolio Portfolio 53632(c) 53601 b () � Savings Accounts U.S. Treasuries No Limit No Limit No Limit No Limit 0.0% 0•9% 29.6% 0.0% 53601(c) CA State Debt 5 Years 5 Years � No Limit No Limit 5 Years No Limit 0.0% 0.0% 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit Not Authorized 53601(f) + Bankers's Acceptances 180 Days) 40% 5 Years 30% 6% 8.1 % 6.5% 53601(g) Commercial Paper 270 Days) 25% A-1+ or P-1 180 Days 270 Days 40% A-1 & P-1 25% IA-1+ _ 53601(h) Negotiable CDs 5 Years + 30% or P-1 0.0% 0.0% 53601(i) Re os P f 1 Year + No Limit 5 Years 30% I AA- or Aa3 - - 53601(i) Reverse Repos 92 Days 20% 30 Days 20% ) AAA &Aaa - - 53601(j) Medium -Term Notes 5 Years 30% A 5 Years ° Not Authorized 53601(k) I t 53601(I) � Mutual Funds Trust Indenture Debt 90 Da Days � ° 20 /° AAA & Aaa 90 Days 30 /° A 20% (2) AAA & Aaa 12.1 % 13.2% 7.4% 27.0% 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA &Aaa Not Authorized 53601(n) Investment Pools Mortgage -Backed 90 Days 5 Years 20% or Advisor 90 Days AAA &Aaa 20% (2) or Advisor 10.5% 1.0% Securities 20% A (Issuer) & Not Authorized 16429.1(b) LAW No Limit � � (Security I 1 () The City loan to RDA, which is not a bond, has No Limit � been approved by the Palm Desert City Council. ° 16.3% 57.2% (2) The City Energy Independence Program has been approved by the Palm Desert City Council. (3) Maximum limit for mutual funds local 89'9 /0 100.0 /° and government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 8 --�---� City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT November 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 on December 16 to review monetary policy. The FOMC is expected to reaffirm that "... rates will remain at exceptionally low levels for an extended period". The FOMC, however, is beginning to implement its "exit strategy" by removing some of the temporary liquidity measures that it put in place at the height of the financial crisis. This anti-inflation strategy is designed to reduce the money supply gradually. Deflation remains the key issue for now. The October 2009 Consumer Price Index decreased by 0.2% on a year -over -year basis. Inflation is not expected to pose a problem in 2010. The current U.S. economic situation might best be described as a "statistical recovery". Wall Street is recovering, but Main Street is not. While the banks are reporting profits, and paying off their TARP loans from the U.S. Government, they are making only a small volume of loans to consumers and businesses. Businesses are not hiring; high levels of unemployment continue; and consumers are increasing their savings rate. Consumers are also paying off an unprecedented amount of credit card debt. Ageing baby boomers, who drove the last two asset bubbles, are deleveraging as they recognize that they cannot recoup their losses from last year's market crash. The 55+ age group is also the fastest -growing employment segment. Accordingly, consumer spending, which typically drives an economic recovery, is relatively frail. Pa"zs 0�7d� C. c.,y r. City Treasurer PORTFOLIO STATISTICS Dollars in Thousands NOV-09 OCT-09 SEP-09 AUG-09 JUL-09 JUN-09 CITY Month -End Book Value*** $ 201,381 $ 239,207 $ 232,393 $ 228,398 $ 226,460 $ 228,948 Month -End Market Value*** $ 202,521 $ 240,435 $ 233,526 $ 229,602 $ 227,587 $ 230,005 Paper Gain (Loss) $ 1,140 $ 1,228 $ 1,133 $ 1,204 $ 1,127 $ 1,057 Prior Year Book Variance $ (12,226) $ 21,577 $ 21,716 $ 7,960 $ 3,786 $ (2,231) Interest Earnings $ 315 $ 326 $ 322 $ 332 $ 356 $ 366 Yield -To -Maturity 1.93% 1.69% 1.74% 1.79% 1.90% 2.03% Weighted Maturity (Days) 255 246 253 282 297 306 Effective Duration 0.17 0.17 0.18 0.20 0.22 0.24 RDA Month -End Book Value *** $ 261,734 $ 226,007 $ 265,942 $ 275,874 $ 284,220 $ 287,291 Month -End Market Value *** $ 262,477 $ 226,811 $ 266,805 $ 276,824 $ 285,231 $ 288,384 Paper Gain (Loss) $ 743 $ 804 $ 863 $ 950 $ 1,011 $ 1,093 Prior Year Book Variance $ 17,060 $ (19,093) $ 8,557 $ (8,260) $ (4,767) $ 1,931 Interest Earnings $ 257 $ 186 $ 227 $ 277 $ 308 $ 307 Yield -To -Maturity 1.21 % 0.96% 0.95% 1.19% 1.31 % 1.30% Weighted Maturity (Days) 185 214 192 226 236 243 Effective Duration 0.17 0.21 0.19 0.20 0.20 0.22 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics November 30, 2009 Dollars in Thousands Aaeina Interval Market Value < 1M $ 111,089 < 2M 2,033 < 3M _ < 6M 6,135 < 1 YR 19,662 < 2YR 10,418 < 3YR _ < 4YR _ < 5YR _ > 5YR _ Total: $ 149,337 Ratings * Market Value AAA $ 47,639 AA 20,796 A 7,087 Unrated ** 124,969 Total: $ 200,491 Sector Market Value MMF $ 29,720 Agencies 14,384 MTNs 27,883 CAMP 3,535 RDA Loan 22,655 G M RA 96,794 LAIF 5,520 CID Total: $ 200,491 Month Citv Yield LAIF Yield Dec08 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 Jul 1.90 1.04 Aug 1.79 0.93 Sep 1.74 0.76 Oct 1.69 0.65 Nov 1.93 0.61 f General Fund Ageing 100 80 74 o a 60 � 40 a 20 4 13 7 ° n n 0 0 0 0 <1M <2M <3M <6M < < < < < > 1 YR 2YR 3YR 4YR 5YR 5YR Credit Quality AA AAA 10% 24% A 4% Unrated ** 62 % Asset Allocation MTNs RDA Loan 14% 11% MMF 15% Agencies 7% CAMP 23% LAIF 3% GMRA 48% Variance Performance 0.52 0.51 3.0 0.50 0.35 0.49 2.0 : 0.51 m 1111Hil.1.1m 0.65 } 1.0 0.86 0.87 0.0 0.98 Dec08an09Feb Mar Apr May Jun Jul Aug Sep Oct Nov 1.05 1.32 ® a * Standard and Poors ** LAIF, and City Loan to RDA Page 2 CITY OF PALM DESERT Portfolio Holdings November 30, 2009 Par Value Issuer Coupon I Maturity Cost YTM I Price I MarketValue ' Mo Ratings dy's I S&P Medium -Term Notes $ 3,795,000 $ BANK OF AMERICA 5.38 8/15/11 $ 3,874,254 4.05 105.58 $ 4,006,571 A2 A 3,000,000 $ BANK OF AMERICA 4.25 10/1/10 $ 3,024,981 3.20 102.69 $ 3,080,592 A2 A 2,035,000 $ 1,891,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,022,978 5,63 103.64 $ 2,109,100 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,910,345 5.65 105.79 $ 2,000,428 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC GENERAL ELECTRIC 6.13 2/22/11 $ 2,009,755 5.67 105.82 $ 2,116,474 Aa2 AA+ $ 2,000,000 WACHOVIA 4.88 10/21/10 $ 4,020,093 3.23 103.64 $ 4,109,378 Aa2 AA+ $ 4,000,000 WELLS FARGO BANK 7.80 6.38 8/18/10 8/1/11 $ $ 2,036,430 4,073,298 5.02 104.61 $ 2,092,158 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,994,196 5.13 107.10 $ 4,284,132 Al AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,018,229 5.09 4.96 102.83 $ 2,056,544 Al AA $ 26,706,000 Subtotal 100.39 $ 2,027,878 Al AA $ 26,984,557 4.57 $ 27,883,256 Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,001,972 4.61 101.91 $ 3,057,188 Aaa $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,001,972 4.61 101.91 $ 3,057,188 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,048,376 4.87 100.16 $ 2,052,202 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,059,061 5.47 102.34 $ 2,110,328 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,047,884 5.50 100.16 $ 2,052,202 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,984,021 5.47 102.75 $ 2,055,000 Aaa AAA $ 14,160,000 Subtotal $ 14,143,287 5.02 $ 14,384,106 AAA Local Agency Investment Fund $ 5,519,992 L.A.I.F. 0.00 12/1/09 $ 5,519,992 0.61 100.00 $ 5,519,992 U U $ 5,519,992 Subtotal $ 5,519,992 0.61 $ 5,519,992 Local Agency Investment Fund $ 3,527,742 $ 7,324 C.A.M.P. 0.00 12/1/09 $ 3,527,742 0.27 100.00 $ 3,527,742 U AAA C.A.M.P. (DESERT WILLOW) 0.00 12/1/09 $ 7,324 0.27 100.00 $ 7,324 U $ 3,535,067 Subtotal $ 3,535,067 0.27 $ 3,535,067 AAA Money Market Fund $ 29,719,572 WF ADVANTAGE GOVT MMF 0.00 12/1/09 $ 29,719,572 0.00 100.00 $ 29,719,572 Aaa $ 29,719,572 Subtotal $ 29,719,572 0.00 $ 29,719,572 AAA Government Managed Rate Account $ 96,794,022 UNION BANK 0.00 12/1/09 $ 96,794,022 1.77 100.00 $ 96,794,022 U U $ 96,794,022 Subtotal $ 96,794,022 1.77 $ 96,794,022 City Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 12/1/39 $ 22,655,000 0.61 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 0.61 $ 22,655,000 "U" = Unrated Page 3 CITY OF PALM DESERT Portfolio Holdings November 30, 2009 Market Ratings Par Value Issuer Coupon I Maturity Cost YTM I Price Value ' Moody's I S&P Total Investments $ 199 089 65 3 $ 199,351,497 1.93 $ 200,491,015 Cash $ 1,265,996 CITY MAIN CHKG 0.00 1211109 $ 1,265,996 0.00 100.00 $ 1,265,996 U U $ 658,470 DESERT WILLOW CHKG 0.00 12/1/09 $ 658,470 0.00 100.00 $ 658,470 U $ 105,292 RECREATIONAL FAC CHKG 0.00 12/1/09 $ 105,292 0.00 100.00 $ U 105,292 U $ 2,029,758 Subtotal $ 2,029,758 $ U 2,029,758 Total Investments and Cash $ 201 119 411 ' 1 $ 201,381,255 % of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 3.50% GENERAL ELECTRIC 5.10% WACHOVIA 1.03% WELLS FARGO BANK 4.13% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.02% FED HOME LOAN MTG CORP 3.07% FED NATIONAL MTG ASSOC 1.01% $ 202,520,773 "U" = Unrated Page 4 Palm Desert Redevelopment Agency -- Portfolio Characteristics November 30, 2009 Dollars in Thousands Aaeina Interval < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: ualit AAA AA A Unrated Total: Sector MMF Agencies MTNs CAMP LAIF EIP LAIF/Bond Proceeds GMRA Total: Market Value $ 74,950 13,710 14,219 4,228 2,015 $ 109,122 Market Value $ 79,403 16,746 165,624 $ 261,773 Market Value $ 60,850 15,329 16,746 2,209 5,204 2,015 89,654 69,766 $ 261,773 Month RDA Yield LAIF Yield Variance Dec08 .40 2.35 -0.95 Jan09 .26 2.05 -0.79 Feb 29 1.87 -0.58 Mar .07 1.82 -0.75 Apr .05 1.61 -0.56 May '. .06 1.53 -0.47 Jun 1.30 1.38 -0.08 Jul 1.31 1.04 0.27 Aug 1.19 0.93 0.26 Sep 0.95 0.76 0.19 Oct 0.96 0.65 0.32 Nov 1.21 0.61 0.59 Portfolio Ageing w/o SLGSs 100 80 69 0 60 t 40 a° 20 13 13 n 0 0 n 0 0 0 2 0 '4' <1M <2M <3M <6M < < < < < > 1 YR 2YR 3YR 4YR 5YR 5YR � Credit Quality AA 7% AAA Q) Unrated " 30% 63% A 0% Asset Allocation MTNs LAIF 6% 2% CAMP Agencies 1 /o EIP 6% 1% MMF LAIF/Bond 3% 2 Proceeds 34% GMRA 27% Performance 1 2.7 1.8 0 e. M } 0.9 0.0 Dec08an09Feb Mar Apr May Jun Jul Aug Sep Oct Nov OLAIF Yield ■RDA Yield Standard and Poors ** LAIF Page 5 Palm Desert Redevelopment Agency Portfolio Holdings November 30, 2009 jPar Value Issuer Coupon Maturity Cost YTM I Price Market Value Ratings I Moody'sI S&P� Medium -Term Notes $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,020,390 2.91 102.25 $ 3,067,428 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,644,267 3.00 100.39 $ 13,678,138 Al AA $ 16,625,000 Subtotal $ 16,664,657 2.98 $ 16,745,566 Federal Agencies -- Coupon $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,909,483 4.65 103.63 $ 5,077,625 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,985,249 5.49 105.59 $ 2,111,875 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,985,053 5.50 105.59 $ 2,111,875 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,018,543 5.54 105.13 $ 2,102,500 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,768,683 5.54 105.13 $ 3,925,368 Aaa AAA $ 14,634,000 Subtotal $ 14,667,011 5.23 $ 15,329,243 Local Government Investment Pool $ 5,182,126 L.A.I.F. 0.00 12/1/09 $ 5,182,126 0.61 100.00 $ 5,182,126 U U $ 22,026 L.A.I.F. (HOUSING) 0.00 12/1/09 $ 22,026 0.61 100.00 $ 22,026 U U $ 5,204,151 Subtotal $ 5,204,151 0.61 $ 5,204,151 Local Government Investment Pool $ 17,602,238 L.A.I.F. / WELLS FARGO 0.00 12/1/09 $ 17,602,238 0.61 100.00 $ 17,602,238 U AA $ 4,790,552 L.A.I.F. / WELLS FARGO 0.00 12/1/09 $ 4,790,552 0.61 100.00 $ 4,790,552 U AA $ 25,175,995 L.A.I.F. / WELLS FARGO 0.00 12/1/09 $ 25,175,995 0.61 100.00 $ 25,175,995 U AA $ 10,531,455 L.A.I.F. / WELLS FARGO 0.00 12/1/09 $ 10,531,455 0.61 100.00 $ 10,531,455 U AA $ 15,089,743 L.A.I.F. / WELLS FARGO 0.00 12/1/09 $ 15,089,743 0.61 100.00 $ 15,089,743 U AA $ 16,463,541 L.A.I.F. / WELLS FARGO 0.00 12/1/09 $ 16,463,541 0.61 100.00 $ 16,463,541 U AA $ 89,653,524 Subtotal $ 89,653,524 0.61 $ 89,653,524 Local Government Investment Pool $ 98,222 C.A.M.P. 0.00 12/1/09 $ 98,222 0.27 100.00 $ 98,222 U AAA $ 2,110,295 C.A.M.P. (HOUSING) 0.00 12/1/09 $ 2,110,295 0.27 100.00 $ 2,110,295 U AAA $ 2,208,516 Subtotal $ 2,208,516 0.27 $ 2,208,516 Money Market Fund $ 60,849,555 WF ADVANTAGE GOVT MMF 0.00 12/1/09 $ 60,849,555 0.00 100.00 $ 60,849,555 Aaa AAA $ 60,849,555 Subtotal $ 60,849,555 0.00 $ 60,849,555 Government Managed Rate Account $ 69,766,485 UNION BANK 0.00 1211/09 $ 69,766,485 1.77 100.00 $ 69,766,485 U U $ 69,766,485 Subtotal $ 69,766,485 1.77 $ 69,766,485 "U" = Unrated Page 6 Palm Desert Redevelopment Agency Portfolio Holdings November 30, 2009 jPar Value I Issuer I Coupon I Maturity I Cost Municipal Bonds $ 2,015,000 ENERGY INDEP PROGRAM 3.00 $ 2,015,000 Subtotal Investments $ 260,956,231 Cash Market YTM I Price I Value 9/2/29 $ 2,015,000 3.00 100.00 $ 2,015,000 $ 2,015,000 3.00 $ 2,015,000 $ 261,028,900 1.93 $ 261,772,039 $ 287,097 HOUSING AUTH CHKG 0.00 12/1/09 $ 287,097 0.00 100.00 $ 287,097 $ 418,146 HOUSING AUTH TRUST 0.00 12/1/09 $ 418,146 0.00 100.00 $ 418,146 $ 705,243 Subtotal $ 705,243 $ 705,243 Total Investments and Cash $ 261,661,475 $ 261,734,143 $ 262,477,283 % of Portfolio Corporate Issuers (Market Value) WAL-MART 1.17% WELLS FARGO BANK 5.21 % % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 1.93% FED HOME LOAN BANK 1.61 % FED HOME LOAN MTG CORP 2.30% 'Ratings Moody's I S&P U U U AA I U U 1 "U" = Unrated Page 7 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 November 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 December 22, 2009, Pis 67d)10� C. C /V 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 I 0.0% 0.8% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 48.6% 1 26.7% 53601(b) U.S. Treasuries 5 Years No Limit 5 Years I 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 I No Limit 5 Years 30% 6% 53601(f) Bankers's Acceptances J 180 Days J 40% 180 Days 40% A-1 & P-1 53601(g) Commercial Paper 270 Days J 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 30% A 5 Years 30% A 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days' 20% (2) I AAA & Aaal 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) I Local Government I AAA & Aaa AAA & Aaa Investment Pools 190 Days 20% I or Advisor 90 Days 120% (2) I or Advisor l 53601(n) I Mortgage -Backed 5 Years I 20% I A ) & (Issuer) Not Authorized Securities AA (Security 16429.1(b)l 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) 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. 7.1 % 5.6% 0.0% 0.0% 13.5% 6.4% 14.9% 23.3% 1.8% I 0.9% 2.8% 36.3% 88.6% 100.0% Certified California Municipal Treasurer Page 8