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Home My WebLink AboutSR - Invstmnt Rprts for DEC '09 & JAN '10CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY'"\\-(� DATE: FEBRUARY 24, 2010 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 December 2009 and January 2010. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the minutes of the December and January 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) CITY COUNCIL ACTION APPROVED DENIED RECEIVED $YRDA 5 MEETING DATF. 3-%/-o2G'(u ON 3��_ ,�c,/ Ci AYES: beiscon , &i s6n. K�llu, i e�� ,' �� v NOES: A70 e , VEMFIED BY ABSENT: A; i?r'1,1 ABSTAIN - Original on file with City Clerk's Office VERIFIED BY - Original on File with City Clerk's Office G:\FINANCE\NIAMH ORTEGA\INVESTMENT COMM ITTEE\MEMOS\RKLASSENINVREPORT.WPD ,.�. City of Palm Desert �---.� City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT December 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 January 26-27. No change in interest rates is expected. The FOMC plans to end its "quantitative easing program" by the end of March 2010. This program was designed to keep mortgage rates low, and to finance the U.S. Government fiscal deficit. The Fed bought mortgage securities from the banks, and the banks, in turn, either bought U.S. Government debt or placed the cash back at the Fed. This program was used to buy 80% of $1.5 trillion in new U.S. Government debt. Foreign investors bought the remaining 20%. In 2010, the U.S. Treasury will need to finance $2 trillion in short-term debt, plus an estimated $1.5 trillion in additional deficit spending. This amounts to nearly 30% of U.S. Gross Domestic Product. The Fed will again have to "print money" to purchase most of this debt. Foreign investors may become increasingly hesitant to buy Treasuries unless they are compensated for increased risk of sovereign default. The Russian and Indian central banks, for example, have reportedly stopped buying U.S. Treasury bills, and have started buying large amounts of gold. As the Federal stimulus recedes, asset values that have benefited from it may recede as well. A double -dip recession may be possible in early 2011 if large tax increases are introduced in the second half of 2010. Small businesses, which are the main engines of hiring, would be hit particularly hard by any tax increases. Pis 67dj�, c.C.At. r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands DEC-09 NOV-09 OCT-09 SEP-09 AUG-09 JUL-09 CITY Month -End Book Value*** $ 202,229 $ 201,381 $ 239,207 $ 232,393 $ 228,398 $ 226,460 Month -End Market Value*** $ 203,250 $ 202,521 $ 240,435 $ 233,526 $ 229,602 $ 227,587 Paper Gain (Loss) $ 1,021 $ 1,140 $ 1,228 $ 1,133 $ 1,204 $ 1,127 Prior Year Book Variance $ 3,176 $ (12,226) $ 21,577 $ 21,716 $ 7,960 $ 3,786 Interest Earnings $ 314 $ 315 $ 326 $ 322 $ 332 $ 356 Yield -To -Maturity 1.82% 1.93% 1.69% 1.74% 1.79% 1.90% Weighted Maturity (Days) 230 255 246 253 282 297 Effective Duration 0.15 0.17 0.17 0.18 0.20 0.22 RDA Month -End Book Value *** $ 256,271 $ 261,734 $ 226,007 $ 265,942 $ 275,874 $ 284,220 Month -End Market Value *** $ 256,897 $ 262,477 $ 226,811 $ 266,805 $ 276,824 $ 285,231 Paper Gain (Loss) $ 626 $ 743 $ 804 $ 863 $ 950 $ 1,011 Prior Year Book Variance $ 4,419 $ 17,060 $ (19,093) $ 8,557 $ (8,260) $ (4,767) Interest Earnings $ 262 $ 257 $ 186 $ 227 $ 277 $ 308 Yield -To -Maturity 1.21 % 1.21 % 0.96% 0.95% 1.19% 1.31 % Weighted Maturity (Days) 188 185 214 192 226 236 Effective Duration 0.16 0.17 0.21 0.19 0.20 0.20 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics December 31, 2009 Dollars in Thousands Ageing Interval Market Value N < 1 M $ 111,581 General Fund Ageing <2M _ < 3M - 100 < 6M 6,114 80 76 < 1YR 19,614 0 < 2YR 10,407 0 60 < 3YR - 0 40 < 4YR - 0 20 7 13 7 < 5YR - 0 04 n o 0 0 0 > 5YR _ o ^ Total: $ 147,716 < 1M < 2M < 3M < 6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR l Ratings * Market Value i Credit Quality AA AAA $ 66,777 AAA 33% 10% AA 20,732 A A 7,061 4% Unrated ** 107,928 Unrated ** Total: $ 202,498 53% Sector Market Value MMF $ 32,607 Agencies 10,244 MTNs 27,793 CAMP 3,536 RDA Loan 22,655 G M RA 100,143 LAIF 5,520 CP - Total: $ 202,498 Month Citv Yield LAIF Yield 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 Dec 1.82 0.57 Standard and Poors ** LAIF, and City Loan to RDA Asset Allocation MTNs RDA Loan 14% 140L MMF 16% Agencies 5% CAMF 23% ,o Variance Performance 0.51 0.50 2.7 0.35 0.49 1.8 0.51 0.65 d 0.86 } 0.9 0.87 0.98 0.0 1.05 Jan09Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1.32 1.26 ■:., . ■ . . GMRA 49% Page 2 IPar Value I Issuer Medium -Term Notes $ 3,795,000 BANK OF AMERICA $ 3,000,000 BANK OF AMERICA $ 2,035,000 GENERAL ELECTRIC $ 1,891,000 GENERAL ELECTRIC $ 2,000,000 GENERAL ELECTRIC $ 3,965,000 GENERAL ELECTRIC $ 2,000,000 WACHOVIA $ 4,000,000 WELLS FARGO BANK $ 2,000,000 WELLS FARGO BANK $ 2,020,000 WELLS FARGO BANK 1 $ 26,706,000 Subtotal Agencies -- Coupon City of Palm Desert Portfolio Holdings December 31, 2009 Market Ratings l Couponj Maturity I Cost I YTM I Price I Value I Moody's S&P 5.38 8/15/11 $ 3,870,382 4.05 104.98 $ 3,983,896 A2 A 4.25 10/1/10 $ 3,022,483 3.20 102.56 $ 3,076,677 A2 A 4.88 10/21/10 $ 2,024,105 5.63 103.41 $ 2,104,485 Aa2 AA+ 6.88 11/15/10 $ 1,908,658 5.65 105.41 $ 1,993,375 Aa2 AA+ 6.13 2/22/11 $ 2,009,091 5.67 105.67 $ 2,113,396 Aa2 AA+ 4.88 10/21/10 $ 4,014,928 3.23 103.41 $ 4,100,385 Aa2 AA+ 7.80 8/18/10 $ 2,032,177 5.02 104.35 $ 2,086,944 Al AA 6.38 8/1/11 $ 4,069,633 5.13 106.53 $ 4,261,316 Al AA 4.63 8/9/10 $ 1,994,898 5.09 102.56 $ 2,051,170 Al AA 4.20 1/15/10 $ 2,019,436 4.96 100.09 $ 2,021,759 Al AA $ 26,965,791 4.57 $ 27,793,404 J $ 3,000,000 FED FARM CREDIT BANK 4.78 $ 3,000,000 FED FARM CREDIT BANK 4.78 $ 2,062,000 FED HOME LOAN MTG CORP 4.13 $ 2,000,000 FED NAT MTG ASSOC 4.25 $ 10,062,000 Subtotal Local Agency Investment Fraud $ 5,519,992 L.A.I.F. 0.00 $ 5,519,992 Subtotal Local Agency Investment Fraud $ 3,528,502 C.A.M.P. 0.0C $ 7,326 C.A.M.P. (DESERT WILLOW) O.00 $ 3,535,828 Subtotal 5/3/10 $ 3,001,583 4.61 101.53 $ 3,045,938 Aaa AAA 5/3/10 $ 3,001,583 4.61 101.53 $ 3,045,938 Aaa AAA 7/12/10 $ 2,061,211 5.47 102.00 $ 2,103,240 Aaa AAA 8/15/10 $ 1,985,908 5.47 102.44 $ 2,048,750 Aaa AAA $ 10,050,286 4.96 $ 10,243,865 1/1/10 $ 5,519,992 0.57 100.00 $ 5,519,992 U U $ 5,519,992 0.57 $ 5,519,992 1/1/10 $ 3,528,502 0.25 100.00 $ 3,528,502 U AAA 1/1/10 $ 7,326 0.25 100.00 $ 7,326 U AAA $ 3,535,828 0.25 $ 3,535,828 Money Market Fund $ 32,606,825 WF ADVANTAGE GOVT MMF 0.00 1/1/10 $ 32,606,825 0.01 100.00 $ 32,606,825 Aaa AAA $ 32,606,825 Subtotal $ 32,606,825 0.01 $ 32,606,825 Government Managed Rate Account $ 100,143,009 UNION BANK 0.00 1/1/10 $ 100,143,009 1.77 100.00 $ 100,143,009 U U $ 100,143,009 Subtotal $ 100,143,009 1.77 $ 100,143,009 Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 1/1/39 $ 22,655,000 0.57 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 0.57 $ 22,655,000 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings December 31, 2009 Market Par Value Issuer Coupon Maturity Cost YTM I Price Value Total Investments 1 201 228 654 $ 201,476,730 1.82 $ 202,497,922 Cash $ 510,866 CITY MAIN CHKG 0.00 1/1/10 $ $ 139,266 DESERT WILLOW CHKG 0.00 1/1/10 $ $ 101,874 RECREATIONAL FAC CHKG 0.00 1/1/10 $ $ 752,006 Subtotal $ Total Investments and Cash IRatings Moody's I S&P 510,866 0.00 100.00 $ 510,866 U 139,266 0.00 100.00 $ 139,266 U 101,874 0.00 100.00 $ 101,874 U 752,006 $ 752,006 $ 201,980,660 $ 202,228,736 % of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 3.47% GENERAL ELECTRIC 5.07% WACHOVIA 1.03% WELLS FARGO BANK 4.10% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.00% FED HOME LOAN MTG CORP 1.03% FED NAT MTG ASSOC 1.01 % $ 203,249,928 U U U "U" = Unrated Page 4 Palm Desert Redevelopment Agency -- Portfolio Characteristics December 31, 2009 Dollars in Thousands Aqeinq Interval Market Value Portfolio Ageing w/o SLGSs < 1 M $ 88725 < 2M - < 3M _ 100 81 < 6M - 80 < 1YR 14,173 p 60 < 2YR 4,224 0 < 3YR _ 0 40 < 4YR - a. 20 13 < 5YR _ 0 0 0 n 4 0 0 0 2 0 > 5YR 2,015 < 1 M < 2M < 3M < 6M < < < < < > Total: $ 109,137 1YR 2YR 3YR 4YR 5YR 5YR Quality * Market Value Credit Quality AA AAA $ 74,643 AAA 29% 42% AA 105,759 A - A Unrated ** 75,074 0% Total: $ 255,476 Unrated " 29% Sector Market Value Asset Allocation MTNs LAIF MMF $ 57,871 CAMP Agencies 6% 2% Agencies 14,634 6 /° 1 /° 1% EIP MTNs 16,625 ° CAMP 2,209 MMF LAIF 5,204 LAIF/Bond 23% Proceeds EIP 2,015 34% LAIF/Bond Proceeds 87,048 0 GMRA 69,870 GMRA Total: $ 255,476 27% Month RDA Yield LAIF Yield Variance Performance Jan09 1.26 2.05 -0.79 Feb 1.29 1.87 -0.58 2.1 Mar 1.07 1.82 -0.75 Apr 1.05 1.61 -0.56 0 1.4 May 1.06 1.53 -0.47 Jun 1.30 1.38 -0.08 m Jul 1.31 1.04 0.27 5- 0.7 Aug 1.19 0.93 0.26 Sep 0.95 0.76 0.19 0.0 - Oct 0.96 0.65 0.32 Jan09Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nov 1.21 0.61 0.59 ®LAIF Yield ®RDAYield Dec 1.21 0.57 0.64 * Standard and Poors ** LAIF Page 5 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value I Moody's S&P Medium -Term Notes $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,017,477 2.91 101.97 $ 3,058,989 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,631,130 3.00 100.09 $ 13,636,867 Al AA $ 16,625,000 Subtotal $ 16,648,608 2.98 $ 16,695,856 Agencies -- Coupons $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,908,506 4.65 103.09 $ 5,051,594 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,986,211 5.49 104.91 $ 2,098,125 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,986,028 5.50 104.91 $ 2,098,125 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,016,584 5.54 104.53 $ 2,090,625 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,765,019 5.54 104.53 $ 3,903,197 Aaa AAA $ 14,634,000 Subtotal $ 14,662,348 5.23 $ 15,241,666 Local Government Investment Pool $ 5,182,126 L.A.I.F. 0.00 1/1/10 $ 5,182,126 0.57 100.00 $ 5,182,126 U U $ 22,026 L.A.I.F. (HOUSING) 0.00 1/1/10 $ 22,026 0.57 100.00 $ 22,026 U U $ 5,204,151 Subtotal $ 5,204,151 0.57 $ 5,204,151 Local Government Investment Pool $ 17,602,468 L.A.I.F. / WELLS FARGO 0.00 1/1/10 $ 17,602,468 0.57 100.00 $ 17,602,468 U AA $ 4,790,535 L.A.I.F. / WELLS FARGO 0.00 1/1/10 $ 4,790,535 0.57 100.00 $ 4,790,535 U AA $ 25,175,995 L.A.I.F. / WELLS FARGO 0.00 1/1/10 $ 25,175,995 0.57 100.00 $ 25,175,995 U AA $ 10,531,455 L.A.I.F. / WELLS FARGO 0.00 1/1/10 $ 10,531,455 0.57 100.00 $ 10,531,455 U AA $ 12,484,433 L.A.I.F. / WELLS FARGO 0.00 1/1/10 $ 12,484,433 0.57 100.00 $ 12,484,433 U AA $ 16,463,540 L.A.I.F. / WELLS FARGO 0.00 1/1/10 $ 16,463,540 0.57 100.00 $ 16,463,540 U AA $ 87,048,426 Subtotal $ 87,048,426 0.57 $ 87,048,426 Local Government Investment Pool $ 98,243 C.A.M.P. 0.00 1/1/10 $ 98,243 0.25 100.00 $ 98,243 U AAA $ 2,110,749 C.A.M.P. (HOUSING) 0.00 1/1/10 $ 2,110,749 0.25 100.00 $ 2,110,749 U AAA $ 2,208,992 Subtotal $ 2,208,992 0.25 $ 2,208,992 Money Market Fund $ 57,870,815 WF ADVANTAGE GOVT MMF 0.00 $ 57,870,815 Subtotal Government Managed Rate Account $ 69,870,018 UNION BANK 0.00 $ 69,870,018 Subtotal 1/1/10 $ 57,870,815 0.01 100.00 $ 57,870,815 $ 57,870,815 0.01 $ 57,870,815 1/1/10 $ 69,870,018 1.77 100.00 $ 69,870,018 $ 69,870,018 1.77 $ 69,870,018 Aaa AAA I U U "U" = Unrated Page 6 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2009 Market Ratings Par Value Issuer Coupon I Maturity Cost YTM I Price I Value I Moody'sI S&P 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 Total Investments $ 255,476,402 $ 255,528,357 1.21 $ 256,154,924 Cash $ 322,218 HOUSING AUTH CHKG 0.00 1/1/10 $ 322,218 0.00 100.00 $ 322,218 $ 419,962 HOUSING AUTH TRUST 0.00 1/1/10 $ 419,962 0.00 100.00 $ 419,962 $ 742,180 Subtotal $ 742,180 $ 742,180 Total Investments and Cash $ 256,218,582 $ 256,270,537 $ 256,897,104 % of Portfolio Corporate Issuers (Market Value) WAL-MART 1.19% WELLS FARGO BANK 5.31 % % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 1.97% FED HOME LOAN BANK 1.63% FED HOME LOAN MTG CORP 2.33% U U U AA I U U "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 December 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 January 26, 2010, Pis c.C..At. 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% 0.8% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit I I 49.7% 1 1 27.3% 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% 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 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 536016) Medium -Term Notes 5 Years 30% A 5 Years 1 30% A 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) IAAA&Aaal 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa AAA & Aaal Investment Pools 90 Days 20% or Advisor 90 Days I 20% (2) 1 or Advisor 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security' 16429.1(b) 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. 5.0% 5.7% 0.0% 0.0% 13.4% 6.5% 16.2% 22.7% 1.80/6 I 0.9% 2.7% 36.1% 88.7% 100.0% Certified California Municipal Treasurer Page 8 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT 4ip January 2010 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The U.S. Government has launched a series of initiatives designed to tighten monetary policy gradually, and to increase investment in securities markets. While the FOMC left the Federal Funds Rate unchanged at its January 27 meeting, it subsequently raised the Discount Rate (lending rate to member banks) in an effort to wean banks off government credit. Separately, the SEC voted to restructure money market funds by shortening portfolio maturities; increasing the amount of daily cash equivalents held; and empowering governing boards to suspend redemptions during emergencies. U.S. Gross Domestic Product (GDP) grew by 5.7% in 4Q09. Approximately 3.4% (60%) of this was due to inventory rebuilding, and another 2.0% (35%) was due to consumer spending. Consumer spending fell by 0.8% from 3Q09 due largely to the end of "cash for clunkers." Some economists believe that a 5.7% growth rate may not be sustainable once inventory rebuilding slows, and the government stimulus fades. The global economic recovery may be hampered by events unfolding in China and in Europe. Some economists believe that a credit bubble may be building in China due to a long period of easy credit. In Europe, a number of EU members have high levels of sovereign debt relative to GDP, with Greece thought to be at the greatest risk of sovereign default. Germany and France however, cannot avoid a Greek default since their banks hold large amounts of Greek debt. Although a EU/IMF bailout is likely, the national austerity measures that follow may slow the European economic recovery. Pis 67dV&P, c.C./V r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands JAN-10 DEC-09 NOV-09 OCT-09 SEP-09 AUG-09 CITY Month -End Book Value*** $ 218,094 $ 202,229 $ 201,381 $ 239,207 $ 232,393 $ 228,398 Month -End Market Value*** $ 219,068 $ 203,250 $ 202,521 $ 240,435 $ 233,526 $ 229,602 Paper Gain (Loss) $ 974 $ 1,021 $ 1,140 $ 1,228 $ 1,133 $ 1,204 Prior Year Book Variance $ 5,356 $ 3,176 $ (12,226) $ 21,577 $ 21,716 $ 7,960 Interest Earnings $ 221 $ 314 $ 315 $ 326 $ 322 $ 332 Yield -To -Maturity 1.31 % 1.82% 1.93% 1.69% 1.74% 1.79% Weighted Maturity (Days) 419 230 255 246 253 282 Effective Duration 0.35 0.15 0.17 0.17 0.18 0.20 RDA Month -End Book Value *** $ 287,243 $ 256,271 $ 261,734 $ 226,007 $ 265,942 $ 275,874 Month -End Market Value *** $ 287,788 $ 256,897 $ 262,477 $ 226,811 $ 266,805 $ 276,824 Paper Gain (Loss) $ 545 $ 626 $ 743 $ 804 $ 863 $ 950 Prior Year Book Variance $ 5,970 $ 4,419 $ 17,060 $ (19,093) $ 8,557 $ (8,260) Interest Earnings $ 183 $ 262 $ 257 $ 186 $ 227 $ 277 Yield -To -Maturity 0.72% 1.21 % 1.21 % 0.96% 0.95% 1.19% Weighted Maturity (Days) 236 188 185 214 192 226 Effective Duration 0.38 0.16 0.17 0.21 0.19 0.20 *** Omits SLGSs. Dollars in Thousands Ageing Interval < 1 M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratings AAA AA A Unrated Total: Sector MMF Agencies MTNs CAMP RDA Loan LAIF Total: Month Feb09 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan10 City of Palm Desert -- Portfolio Characteristics January 31, 2010 Market Value $ 63,846 3,000 8,170 23,509 31,738 32,929 $ 163,192 Market Value $ 125,985 21,769 7,073 62,200 $ 217,027 Market Value $ 32,593 70,503 28,844 22,887 22,655 39,545 $ 217,027 Citv Yield LAIF Yield 2.36 1.87 2.17 1.82 2.09 1.61 2.04 1.53 2.03 1.38 1.90 1.04 1.79 0.93 1.74 0.76 1.69 0.65 1.93 0.61 1.82 0.57 1.31 0.56 General Fund Ageing 100 - - - - --- ._._... ...... 80 c 60 0 39 w 40 a 14 19 20 20 0 2 S n I I n I n I 0 0 0 0 - ^, <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Credit Quality AAA 58% Unrated "* j 29% AA A 10% 3% i Asset Allocation CAMP 23% Agencies 33% MTNs q 13% RDA Loan MMF 1 15% 0% LAIF 18°/ Variance I Performancel 0.50 0.35 2.4__-.-- 0.49 0.51 ` 1.6 0.65 0.86 m 0.87 } 0.8 - 0.98 _ 1.05 0.0 - 1.32 FebOgMar Apr May Jun Jul Aug Sep Oct Nov DeWan10 1.26 0.76 ® a Standard and Poors "* LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings January 31, 2010 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium -Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,866,510 4.05 105.57 $ 4,006,526 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,019,984 3.20 102.26 $ 3,067,791 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,025,232 5.63 103.08 $ 2,097,647 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,906,971 5.65 105.05 $ 1,986,528 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,008,427 5.67 105.64 $ 2,112,820 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,009,763 3.23 103.08 $ 4,087,063 Aa2 AA+ $ 3,000,000 TOYOTA 4.35 12/15/10 $ 3,101,979 0.44 103.43 $ 3,102,912 Aal AA $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,027,925 5.02 103.81 $ 2,076,198 Al AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,065,968 5.13 106.54 $ 4,261,780 Al AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,995,600 5.09 102.22 $ 2,044,468 Al AA $ 27,686,000 Subtotal $ 28,028,359 4.08 $ 28,843,732 Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,001,194 4.61 101.19 $ 3,035,625 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,001,194 4.61 101.19 $ 3,035,625 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 3.50 10/3/11 $ 3,125,524 0.97 104.28 $ 3,128,438 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.63 7/27/11 $ 3,035,204 1.18 101.25 $ 3,037,500 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 0.44 10/7/10 $ 3,002,442 0.32 100.03 $ 3,000,938 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.63 3/16/11 $ 3,038,125 0.41 101.22 $ 3,036,563 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,063,362 5.47 101.78 $ 2,098,729 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 1.63 4/26/11 $ 3,036,309 0.60 101.31 $ 3,039,375 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 4.13 2/24/11 $ 3,114,618 0.52 103.72 $ 3,111,563 Aaa AAA $ 2,000,000 FED NAT MTG ASSOC 4.25 8/15/10 $ 1,987,796 5.47 102.28 $ 2,045,625 Aaa AAA $ 3,000,000 FED NAT MTG ASSOC 1.75 12/28/12 $ 2,995,572 1.91 99.97 $ 2,999,063 Aaa AAA $ 31,062,000 Subtotal $ 31,401,339 2.16 $ 31,569,042 Agencies -- Callable $ 3,000,000 FED HOME LOAN BANK 1.00 10/28/11 $ 3,000,000 1.00 100.03 $ 3,000,938 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.38 6/11/12 $ 2,994,118 2.01 99.84 $ 2,995,313 Aaa AAA $ 15,000,000 FED HOME LOAN BANK 1.38 6/28/12 $ 14,970,577 1.82 99.81 $ 14,971,875 Aaa AAA $ 2,980,000 FED HOME LOAN BANK 1.88 11/19/12 $ 2,986,411 1.61 99.72 $ 2,971,619 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 1.85 12/21/12 $ 3,000,922 1.82 99.78 $ 2,993,438 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 1.25 1/26/12 $ 3,000,000 1.25 100.10 $ 3,002,958 Aaa AAA $ 6,000,000 FED NAT MTG ASSOC 1.75 12/28/12 $ 5,991,506 1.90 99.97 $ 5,998,125 Aaa AAA $ 35,980,000 Subtotal $ 35,943,533 1.71 $ 35,934,264 Agencies -- Discount $ 3,000,000 FED HOME LOAN BANK 0.00 4/13/10 $ 2,999,440 0.07 99.99 $ 2,999,700 Aaa AAA $ 3,000,000 Subtotal $ 2,999,440 0.07 $ 2,999,700 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings January 31, 2010 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Local Agency Investment Fund $ 39,545,341 L.A.I.F. 0.00 2/1/10 $ 39,545,341 0.56 100.00 $ 39,545,341 U U $ 39,545,341 Subtotal $ 39,545,341 0.56 $ 39,545,341 Local Agency Investment Fund $ 22,879,202 C.A.M.P. 0.00 2/1/10 $ 22,879,202 0.22 100.00 $ 22,879,202 U AAA $ 7,327 C.A.M.P. (DESERT WILLOW) 0.00 2/1/10 $ 7,327 0.22 100.00 $ 7,327 U AAA 1 $ 22,886,530 Subtotal $ 22,886,530 0.22 $ 22,886,530 Money Market Fund $ 32,593,087 WF ADVANTAGE GOVT MMF 0.00 2/1/10 $ 32,593,087 0.00 100.00 $ 32,593,087 Aaa AAA $ 32,593,087 Subtotal $ 32,593,087 0.00 $ 32,593,087 Loan to RDA $ 22,655,000 CITY OF PALM DESERT 0.00 2/1/40 $ 22,655,000 0.56 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 0.56 100.00 $ 22,655,000 Total Investments $ 215,407,957 $ 216,052,628 1.31 $ 217,026,696 Cash $ 1,421,222 CITY MAIN CHKG 0.00 2/1/10 $ 1,421,222 0.00 100.00 $ 1,421,222 U U $ 499,751 DESERT WILLOW CHKG 0.00 2/1/10 $ 499,751 0.00 100.00 $ 499,751 U U $ 120,022 RECREATIONAL FAC CHKG 0.00 2/1/10 $ 120,022 0.00 100.00 $ 120,022 U U $ 2,040,995 Subtotal $ 2,040,995 $ 2,040,995 Total Investments and Cash $ 217,448,952 $ 218,093,623 $ 219,067,691 "U" = Unrated Page 4 City of Palm Desert Portfolio Holdings January 31, 2010 Market Ratings Par Value Issuer Coupon I Maturity Cost YTM I Price I Value I Moody's I S&P % of Portfolio Corporate Issuers (Markert Value) BANK OF AMERICA 3.23% GENERAL ELECTRIC 4.69% TOYOTA 1.42% WACHOVIA 0.95% WELLS FARGO BANK 2.88% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.20% FED HOME LOAN BANK 17.81% FED HOME LOAN MTG CORP 5.14% FED NAT MTG ASSOC 5.04% "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics January 31, 2010 Dollars in Thousands Aaeina Interval Market Value Portfolio Ageing w/o SLGSs < 1 M $ 79990 < 2M - < 6M 3,051 80 - < 1 YR 14,017 0 59 <2YR 31,573 _0 60 0 < 3YR 3,850 V 40 23 < 4YR - a° 20 - 10 n ; < 5YR - 0 0 ? n I I 3 0 0 2 0 > 5YR 3,151 < 1 M < 2M < 3M < 6M < < < < < > Total: $ 135,632 1YR 2YR 3YR 4YR 5YR 5YR ualit Market Value [Credit Quality AAA $ 138,310 48°/Ao AA 98,901 AA 34% A 10,155 Unrated "" 39,731 Unrated " A Total: $ 287,097 14% 4% Sector Market Value Asset Allocation MTNs MMF $ 59,731 Agencies 6% CAMP Agencies 36,187 12% 15% MTNs 16,303 LAIF CAMP 42,392 2 M j 14% LAIF 39,731 EIP EIP 3,151 it 1 % LAIF/Bond Proceeds 89,602 LAIF/Bond Total: $ 287,097 Proceeds 31% Month RDA Yield LAIF Yield Variance Performance Feb09 1.29 1.87 -0.58 Mar 1.07 1.82 -0.75 2.1 - --------- Apr 1.05 1.61 -0.56 May 1.06 1.53 -0.47 1.4 Jun 1.30 1.38 -0.08 Jul 1.31 1.04 0.27 d Aug 1.19 0.93 0.26 } 0'7 Sep 0.95 0.76 0.19 Oct 0.96 0.65 0.32 � 0.0 - if Nov 1.21 0.61 0.59 FebOgMar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Dec 1.21 0.57 0.64 Jan 0.72 0.56 0.16 d ®LAIF Yield ORDAYield �- -- Standard and Poors '* LAIF Page 6 IPar Value Medium -Term Notes $ 3,000,000 $ 3,450,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 15,450,000 Agencies -- Coupon Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2010 Market Ratings Issuer Coupon Maturity Cost YTM I Price I Value Moody's I S&P ABBOTT LABS 3.75 3/15/11 $ 3,105,502 0.60 103.25 $ 3,097,593 Al AA BEAR STEARNS (JPM) 6.95 8/10/12 $ 3,883,735 1.83 111.60 $ 3,850,307 Aa3 A+ JP MORGAN CHASE 3.13 12/1/11 $ 3,121,612 0.69 104.15 $ 3,121,612 Aa3 A+ JP MORGAN CHASE 5.60 6/1/11 $ 3,188,448 0.85 106.10 $ 3,182,982 Aa3 A+ WAL-MART 4.13 7/1/10 $ 3,014,565 2.91 101.70 $ 3,050,982 Aa2 AA Subtotal $ 16,313,862 1.39 $ 16,303,476 $ 4,900,000 FED FARM CREDIT BANK $ 2,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,890,000 FED HOME LOAN BANK $ 3,000,000 FED HOME LOAN BANK $ 3,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN MTG CORP $ 3,734,000 FED HOME LOAN MTG CORP $ 2,940,000 FED NATIONAL MTG ASSOC $ 9,000,000 FED NATIONAL MTG ASSOC 1 $ 35,464,000 Subtotal Local Government Investment Pool $ 39,708,598 L.A.I.F. $ 22,059 L.A.I.F. (HOUSING) $ 39,730,658 Subtotal Local Government Investment Pool $ 17,629,313 L.A.I.F. / WELLS FARGO $ 4,797,836 L.A.I.F. / WELLS FARGO $ 25,214,364 L.A.I.F. / WELLS FARGO $ 10,358,920 L.A.I.F. / WELLS FARGO $ 15,112,739 L.A.I.F. / WELLS FARGO $ 16,488,631 L.A.I.F. / WELLS FARGO 1 $ 89,601,804 Subtotal Local Government Investment Pool $ 40,281,191 C.A.M.P. $ 2,111,137 C.A.M.P. (HOUSING) $ 42,392,328 Subtotal 4.90 9/22/10 $ 4,907,528 4.65 102.91 $ 5,042,406 Aaa AAA 4.88 3/11/11 $ 1,987,173 5.49 104.81 $ 2,096,250 Aaa AAA 4.88 3/11/11 $ 1,987,002 5.50 104.81 $ 2,096,250 Aaa AAA 2.88 3/11/11 $ 2,966,136 0.49 102.56 $ 2,964,056 Aaa AAA 0.50 11/29/10 $ 3,005,177 0.36 100.06 $ 3,001,875 Aaa AAA 1.13 12/9/11 $ 3,010,721 0.96 100.25 $ 3,007,500 Aaa AAA 6.88 9/15/10 $ 2,014,625 5.54 104.16 $ 2,083,125 Aaa AAA 6.88 9/15/10 $ 3,761,355 5.54 104.16 $ 3,889,194 Aaa AAA 1.75 3/23/11 $ 2,982,085 0.43 101.41 $ 2,981,344 Aaa AAA 1.00 11/23/11 $ 9,009,652 1.00 100.28 $ 9,025,313 Aaa AAA $ 35,631,455 2.59 $ 36,187,313 0.00 2/1110 $ 39,708,598 0.56 100.00 $ 39,708,598 U U 0.00 2/1/10 $ 22,059 0.56 100.00 $ 22,059 U U $ 39,730,658 0.56 $ 39,730,658 0.00 2/1/10 $ 17,629,313 0.56 100.00 $ 17,629,313 U AA 0.00 2/1/10 $ 4,797,836 0.56 100.00 $ 4,797,836 U AA 0.00 2/1/10 $ 25,214,364 0.56 100.00 $ 25,214,364 U AA 0.00 2/1/10 $ 10,358,920 0.56 100.00 $ 10,358,920 U AA 0.00 2/1/10 $ 15,112,739 0.56 100.00 $ 15,112,739 U AA 0.00 2/1/10 $ 16,488,631 0.56 100.00 $ 16,488,631 U AA $ 89,601,804 0.56 $ 89,601,804 0.00 2/1/10 $ 40,281,191 0.22 100.00 $ 40,281,191 U AAA 0.00 2/1/10 $ 2,111,137 0.22 100.00 $ 2,111,137 U AAA $ 42,392,328 0.22 $ 42,392,328 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2010 I Par Value I Issuer I Coupon Maturity I Cost Money Market Fund $ 59,730,952 WF ADVANTAGE GOVT MMF 0.00 $ 59,730,952 Subtotal Municipal Bonds $ 3,151,000 CITY OF PALM DESERT 3.00 $ 3,151,000 Subtotal Total Investments $ 285,520,741 Cash $ 286,110 HOUSING AUTH CHKG 0.00 $ 404,387 HOUSING AUTH TRUST 0.00 $ 690,497 Subtotal Total Investments and Cash $ 286,211,239 Corporate Issuers ABBOTT LABS BEAR STEARNS (JPM) JP MORGAN CHASE WAL-MART Market Ratings YTM I Price I Value Moody's I S&P 2/1/10 $ 59,730,952 0.00 100.00 $ 59,730,952 Aaa AAA $ 59,730,952 0.00 $ 59,730,952 9/2/29 $ 3,151, 000 3.00 100.00 $ 3,151,000 U AA $ 3,151,000 3.00 $ 3,151,000 $ 286,552,058 0.72 $ 287,097,530 2/1/10 $ 286,110 0.00 100.00 $ 286,110 U U 2/1/10 $ 404,387 0.00 100.00 $ 404,387 U U $ 690,497 $ 690,497 1 $ 287,242,556 % of Portfolio (Market Value) 1.08% 1.34% 2.19% 1.06% $ 287,788,028 "U" = Unrated Page 8 I Par Value Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2010 Issuer Agency Issuers Coupon] Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost % of Portfolio (Market Value) 1.75% 4.57% 2.08% 4.17% Market Ratings YTM I Price I Value ' Moody's I S&P "U" = Unrated Page 9 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended January 31, 2010, 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 February 23, 2010, Pis .ads c.CA 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% 1.1% 53632(c) Savings Accounts No Limit No Limit No Limit No Limit 1 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% 32.6% 12.4% 53601(f) Bankers'sAcceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA- or Aa3 - - 53601(i) Repos 1 Year No Limit 30 Days' 20% AAA & Aaa - - 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% ( A 5 Years 30% A 13.0% 5.7% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 120% (2) I AAA & Aaa 1 15.1 % 20.8% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits ( 5 Years No Limit Not Authorized 53601(k) ( Local Government I I ( AAA & Aaa AAA & Aaa Investment Pools 90 Days 20% or Advisor 90 Days I 20% (2) ( or Advisor 1 10.6% 14.8% 53601(n) I Mortgage -Backed ( 5 Years I 20% A (Issuer) & Not Authorized Securities I AA (Security) 16429.1(b)l LAIF No Limit No Limit 18.3% ! 45.1% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. I 89.5% I 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 10