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Investment Reports Mtg of 4/10/08
C CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY W) • DATE: MARCH 25, 2008 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for November 2007, December 2007, January 2008 and February 2008 which were presented and approved at the recent meetings of the Audit, Investment and Finance Committee. Please include on the upcoming agenda for review and acceptance by 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 OTHER METING DATE__ -(v--GS' AYES: Finer-- . j cG�, e/j beer"15(-)t'1 NOES: ti Y1E J j ABSEi°IT: FED t.Er1 ABSTAIN: 11(-\� VERIFIED BY: R.��C �q Orig-_nal on File with --City Clerk's Office BY RDA pre,6i)1-- ON VERIFIED BY i<-- Original on file with City Clerk's Office G'.\Finance\hiamh Ortega \Investment Committee\Memos\rklasseninvreport.wpd � �--��--� City of Palm Desert �� City and Redevelopment Agency Portfolios % � �� � '� COMPLIANCE ANALYSIS AND INVESTMENT REPORT � � November 2007 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 December 11, and lowered the Federal Funds Rate for the third consecutive time, by 25 basis points to 4.25%. Problems in the housing, credit, and financial markets prompted this move. The FOMC was concerned about the risk of a vicious cycle of credit market conditions restraining economic growth, leading to additional tightening of credit. The FOMC also offered $40 billion in special loans to banks as part of a global effort to increase liquidity in the international banking system. The subprime crisis rivals the S&L crisis of 20 years ago. Citigroup had to bai�out seven affiliated structured-investment vehicles (SIVs), adding $49 billion in assets to its balance sheet, while further depleting its capital base. Swiss bank UBS, which reported a$10 billion fourth-quarter write-down, received a capital infusion by selling 12.4% of its stock to the Singapore Government and to a Middle Eastern investor. MBIA shored up its capital structure by receiving $1 billion from Warburg Pincus, a private equity firm. Local government investment pools in Florida, Washington, Montana, Maine, and Connecticut were identified as possible candidates for subprime losses due to imprudent investments. The state-administered Florida Local Government Investment Pool had to suspend withdrawals from the fund due to a multi-billion-dollar run by local governments fearing subprime-related losses. The State of California has indicated that its subprime exposure is relatively small. i�"a.ccLS. Ci�lr�osv C.C.�1.T. Treasurer PORTFOLIO STATISTICS Dollars in Thousands NOV-07 OCT-07 SEP-07 AUG-07 JUL-07 JUN-07 CITY Month-End Book Value"'*" $ 240,745 $ 244,113 $ 233,947 $ 245,850 $ 256,143 $ 243,098 Month-End Market Value"" $ 242,224 $ 244,790 $ 234,328 $ 245,945 $ 256,176 $ 242,909 PaperGain(Loss) $ 1,479 $ 677 $ 381 $ 95 $ 33 $ (189) Prior Year Book Variance $ 80,955 $ 86,710 $ 71,505 $ 76,483 $ 85,202 $ 69,826 Interest Earnings $ 965 $ 981 $ 957 $ 1,045 $ 1,066 $ 1,029 Yield-To-Maturity 4.93% 5.05% 5.01% 5.09% 5.11% 5.11% Weighted Maturity(Days) 451 444 426 415 308 324 Effective Duration 0.77 0.79 0.76 0.75 0.45 0.50 RDA Month-End Book Value"*" $ 250,190 $ 250,763 $ 279,542 $ 289,864 $ 293,026 $ 302,709 Month-End Market Value"`*" $ 251,232 $ 251,297 $ 280,070 $ 290,104 $ 293,073 $ 302,676 Paper Gain(Loss) $ 1,042 $ 534 $ 528 $ 240 $ 47 $ (33) Prior Year Book Variance $ 135,053 $ 134,543 $ 152,500 $ 148,263 $ 145,329 $ 158,249 Interest Earnings $ 952 $ 1,027 $ 1,167 $ 1,233 $ 1,270 $ 1,271 Yield-To-Maturity 4.70% 4.87% 5.02% 5.07% 5.10% 5.11% Weighted Maturity(Days) 282 282 305 314 27g 274 Effective Duration 0.40 0.41 0.40 0.47 0.39 0.40 ""` Omits SLGSs. � y City of Palm Desert-- Portfolio Characteristics November 30, 2007 Dollars in Thousands � Ageinq Interval Market Value - _ -------- -- < 1 M $ 31,250 �General Fund Ageing <2M _ <3M 1,995 100 <6M 1,994 < 1 YR $� 6,037 � � <2YR 20,942 0 60 <3YR 24,993 � 40 34 <4YR 48,308 a 22 20 15 18 <5YR 6,233 0 1 1 4 4 >5YR _ 0 � Total: $ 141,752 < 1 M <2M <3M <6M < < < < < , 1YR 2YR 3YR 4YR 5YR 5YR Ratinqs" Market Value ' �,Credit Quality ' � $ 186,769 � � 37,447 A 78% A 14,157 6% Unrated ** 10 , � � Total: $ 238,383 , 16% Sector Market Value IAsset Allocation MMF $ 60,557 Agencies Agencies 51,555 I 22% MTNs MTNs 59,806 25% CAM P 31,792 �.:� RDA Loan 32,785 MMF @� ' UB SweeP 1,878 25% LAIF 10 ' CAMP CP - UB Sweep 13°/a Total: $ 238,383 � �o�o RDA Loan 14% Month Citv Yield LAIF Yield Variance Pertormance Dec06 5.03 5.13 -0.09 I Jan07 5.06 5.16 -0.10 5.4 Feb 5.08 5.18 -0.11 Mar 5.13 5.21 -0.08 i Apr 5.13 5.22 -0.10 � I May 5.11 5.25 -0.13 �° 4'9 d Jun 5.11 5.25 -0.14 } Jul 5.11 5.26 -0.15 Aug 5.09 5.25 -0.17 � 4.4 Sep 5.01 5.23 -0.22 DecOfilan07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Oct 5.05 5.14 -0.09 Nov 4.93 4.96 -0.03 � I��_����� v�i���;t<; ■Cityviei�� � --- - - - � * Standard and Poors "' LAIF, and City Loan to RDA Page 2 � City of Palm Desert Portfolio Holdings November 30, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 425 3/11/08 $ 2,988,568 5.08 99.83 $ 3,017,882 A1 A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,975,422 5.01 101.82 $ 2,973,001 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 14,991,733 4.91 99.02 $ 15,121,026 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 1,997,916 4.91 99.02 $ 2,015,147 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 984,730 5.19 99.90 $ 998,964 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,938,920 5.19 99.90 $ 3,995,856 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,930,948 4.99 98.92 $ 1,978,432 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,977,145 5.63 102.24 $ 2,080,494 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,978,950 5.65 107.47 $ 2,032,190 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,036,740 5.67 105.54 $ 2,110,778 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 1,973,640 5.13 99.78 $ 1,995,504 A1 A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,972,220 5.25 99.79 $ 1,995,706 Aa3 A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 2,984,982 5.02 97.91 $ 3,015,659 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,951,820 5.18 98.58 $ 1,971,674 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,152,240 5.02 108.04 $ 2,160,700 Aa3 A+ $ 2,000,000 WALMART 6.88 8/10/09 $ 2,123,660 4.93 104.70 $ 2,094,068 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,196,560 5.13 105.90 $ 4,235,980 Aa1 AA- - $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,970,580 5.09 100.68 $ 2,013,542 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,974,423 4.92 97.98 $ 1,984,168 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,987,471 4.96 99.76 $ 2,015,168 Aa1 AA- $ 59,299,000 Subtotal $ 59,088,669 5.09 $ 59,805,937 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,012,600 4.61 102.47 $ 3,074,063 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,012,600 4.61 102.47 $ 3,074,063 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 1,992,150 4.68 99.34 $ 2,001,777 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,936,563 6.90 99.50 $ 1,990,000 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,951,430 5.59 101.09 $ 3,032,813 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,972,951 4.87 100.69 $ 1,993,613 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,982,360 5.40 100.25 $ 3,007,500 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 2,987,8g3 5.02 99.91 $ 3,027,159 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,906,660 5.96 99.56 $ 1,991,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 1,993,560 4.87 100.78 $ 2,048,883 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,987,206 4.87 100.59 $ 2,061,166 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,948,340 4.88 100.80 $ 2,016,098 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,991,875 5.06 100.71 $ 2,014,200 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,958,405 5.47 101.00 $ 2,082,620 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,996,875 5.20 100.36 $ 2,007,122 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,986,993 5.50 100.59 $ 2,061,166 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,982,680 4.88 101.69 $ 2,033,750 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,907,020 5.47 101.38 $ 2,027,500 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,948,800 6.35 99.72 $ 1,994,375 Aaa AAA "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings November 30, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's SB�P Federal Agencies--Coupon(continued) $ 43,218,000 Subtotal $ 42,456,951 5.24 $ 43,539,116 Federal Agencies--Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,969,060 4.88 99.84 $ 1,996,875 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,375 5.06 100.49 $ 2,009,806 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.30 8/13/09 $ 2,000,000 5.30 100.26 $ 2,005,260 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 5.38 2/1/10 $ 2,000,000 5.37 10022 $ 2,004,375 Aaa AAA $ 8,000,000 Subtotal $ 7,968,435 5.16 $ 8,016,316 Local Government Investment Pool $ 9,735 L.A.I.F. 0.00 12/1/07 $ 9,735 4.96 100.00 $ 9,735 U U S 9,735 Subtotal $ 9,735 4.96 $ 9,735 Local Government Investment Pool $ 30,488,674 C.A.M.P. 0.00 12/1/07 $ 30,488,674 4.94 100.00 $ 30,488,674 U AAA $ 1,303,553 C.A.M.P. (HOUSING) 0.00 12/1/07 $ 1,303,553 4.94 100.00 $ 1,303,553 U AAA $ 31,792,228 Subtotal $ 31,792,228 4.94 $ 31,792,228 Money Market Fund $ 60,556,150 WF ADVANTAGE GOVT MMF 0.00 12/1/07 $ 60,556,150 4.52 100.00 $ 60,556,150 Aaa AAA $ 60,556,150 Subtotal $ 60,556,150 4.52 $ 60,556,150 Money Market Fund $ 1,878,214 CITY MAIN REPO SWEEP 0.00 12/1/07 $ 1,878,214 3.85 100.00 $ 1,878,214 P1 A1 $ 1,878,214 Subtotal $ 1,878,214 3.85 $ 1,878,214 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 12/1/37 $ 32,785,480 4.96 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 4.96 $ 32,785,480 Total Invesments $ 237,538,806 $ 236,535,861 4.93 $ 238,383,175 Cash $ 2,596,335 CITY MAIN CHKG 0.00 12/1/07 $ 2,596,335 0.00 100.00 $ 2,596,335 U U $ 553,606 MONTEREY 170 CHKG 0.00 12/1/07 $ 553,606 0.00 100.00 $ 553,606 U U $ 453,795 DESERT WILLOW CHKG 0.00 12/1/07 $ 453,795 0.00 100.00 $ 453,795 U U $ 163,647 RECREATIONAL FAC CHKG 0.00 12/1/07 $ 163,647 0.00 100.00 $ 163,647 U U $ 41,139 ART, FOOD&WINE CHKG 0.00 12/1/07 $ 41,139 0.00 100.00 $ 41,139 U U $ 31,877 CITY/FALCON CREST HOA 0.00 12/1/07 $ 31,877 0.00 100.00 $ 31,877 U U "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings November 30, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Cash(continued) $ 3,840,398 Subtotal $ 3,840,398 $ 3,840,398 Total Investments and Cash $ 241,379,205 $ 240,376,259 $ 242,223,574 %of Portfolio Corporate Issuers (Market Value) AMERICAN HONDA FINANCE 1.25% BANK OF AMERICA 1.23% CITIGROUP 9.14% GENERAL ELECTRIC 2.51% IBM 0.82% JP MORGAN CHASE 0.82��0 WACHOVIA 1.24% WALMART 2.57% WELLS FARGO BANK 4.23% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.19% FED HOME LOAN BANK 6.21% FED HOME LOAN MTG CORP 7.56% FED NATIONAL MTG ASSOC 3.33% _ : � y':- "U"= Unrated Page 5 Palm Desert Redevelopment Agency-- Portfolio Characteristics November 30, 2007 Dollars in Thousands Ageina Interval � �W �� - -- Market Value -..-....__....__. . ..... _..__. < 1M $ 8,830 � �Portfolio Ageing w/o SLGSsI �j <2M _ � � ! <3M 5,006 ' 100 � `6M 4,970 90 80 < 1YR 13,905 = 70 <2YR 31,079 � 0 60 � 50 <3YR 11,073 ' � 40 39 <4YR 4,052 � a 20 11 �$ 14 <5YR _ ` 10 0 6 6 5 j 0 0 0 >5YR _ € Total: � � �N1 <2M <3M <6M < < < < � � $ 78,915 j 1YR 2YR 3YR 4YR 5YR 5YR l Qua�itY` Market Value I �Credit Quatity � $ 223,524 �` 12,182 � 89% A 9,028 Unrated** 5,330 unrated" 2% AA Total: $ 250,064 5% 4 o 0 Sector Market Value � 'Asset Allocation MMF $ 165,957 Agencies 49,383 MMF LAI F 5,330 67% MTNs 21,210 CAMP g �gq i CP _ Treasuries CAMP Agencies 3% MTNs LAIF 20% Total: $ 250,064 ; 8��° 2% Month RDA Yield LAIF Yield Variance ;Performance Dec06 4.95 5.13 -0.18 Jan07 5.05 5.16 -0.11 I 5.4 Feb 5.06 5.18 -0.12 � i Mar 5.11 521 -0.11 Ap� 5.09 5.22 -0.13 � 0 5.0 I May 5.10 5.25 -0.15 � Jun 5.11 5.25 -0.14 } 4.6 Jul 5.10 5.26 -0.16 Aug 5.07 5.25 -0.19 4,2 , Sep 5.02 5.23 -0.21 � DecO6lan07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Oct 4.87 5.14 -027 I Nov 4.70 4.96 -0.26 I I■LAIF Yield ■RDA Yield �`� - - -- - " Standard and Poors '* LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings November 30, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's SB�P Medium-Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,051,514 5.13 101.91 $ 4,076,344 Aa1 AA- � $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,990,304 5.12 98.37 $ 4,003,651 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 2,995,179 5.12 98.37 $ 3,005,197 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/OS $ 2,014,696 5.00 100.97 $ 2,019,302 Aa3 A+ $ 3,000,000 WALMART 6.88 8/10/09 $ 3,101,235 4.76 104.70 $ 3,141,102 Aa2 Aq $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,987,398 4.96 99.01 $ 1,980,246 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,991,611 5.18 99.48 $ 2,984,268 Aa1 AA- $ 21,125,000 Subtotal $ 21,131,938 5.05 $ 21,210,110 Federal Agencies --Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,052,513 4.88 104.83 $ 2,096,684 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,996,335 4.87 101.72 $ 2,034,375 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,932,947 4.65 103.13 $ 5,053,125 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,952,331 4.79 99.97 $ 3,968,759 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,952,331 4.79 99.97 $ 3,968,759 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,463,939 5.59 101.09 $ 4,549,219 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,992,924 4.84 100.25 $ 4,010,000 Aaa AAA . $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,974,512 4.89 100.13 $ 2,007,506 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,962,162 5.49 103.44 $ 2,068,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,961,657 5.50 103.44 $ 2,068,750 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,983,884 5.16 99.91 $ 1,988,134 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,065,553 5.54 108.16 $ 2,163,125 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,856,611 5.54 108.16 $ 4,038,554 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,271,731 4.89 104.97 $ 4,361,452 Aaa AAA 43,224,000 Subtotal $ 43,419,430 5.07 $ 44,377,193 Federal Agencies--Callable $ 5,000,000 FED HOME LOAN BANK 5.25 2/1/08 $ 5,000,000 5.25 100.13 $ 5,006,250 Aaa AAA 5,000,000 Subtotal $ 5,000,000 5.25 $ 5,006,250 Local Government Investment Pool $ 4,969 L.A.I.F. 0.00 12/1/07 $ 4,969 4.96 100.00 $ 4,969 U U $ 5,000 L.A.I.F.(HOUSING) 0.00 12/1/07 $ 5,000 4.96 100.00 $ 5,000 U U $ 5,320,158 L.A.I.F. BOND PROCEEDS 0.00 12/1/07 $ 5,320,158 4.96 100.00 $ 5,320,158 U U 5,330,127 Subtotal $ 5,330,127 4.96 $ 5,330,127 Local Government Investment Pool $ 4,445,766 C.A.M.P. 0.00 12/1/07 $ 4,445,766 4.94 100.00 $ 4,445,766 U AAA $ 3,738,008 C.A.M.P.(HOUSING) 0.00 12l1/07 $ 3,738,008 4.94 100.00 $ 3,738,008 U AAA $ 8,183,774 Subtotal $ 8,183,774 4.94 $ 8,183,774 "U"= Unrated Page 7 � " Palm Desert Redevelopment Agency Portfolio Holdings November 30, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Local Government Investment Pool $165,956,659 WF ADVANTAGE GOVT MMF 0.00 12/1/07 $ 165,956,659 4.52 100.00 $ 165,956,659 Aaa AAq $165,956,659 Subtotal $ 165,956,659 4.52 $ 165,956,659 Total Investments $248,819,560 $ 249, 021,928 4.70 $ 250,064,113 Cash $ 817,465 HOUSING AUTH CHKG 0.00 12/1/07 $ 817,465 0.00 100.00 $ 817,465 U U $ 350,146 HOUSINGAUTHTRUST 0.00 12/1/07 $ 350,146 0.00 100.00 $ 350,146 U U $ 1,167,611 Subtotal $ 1,167,611 $ 1,167,611 Total Investments and Cash $249,987,171 $ 250,189,539 $ 251,231,724 %of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.62% JP MORGAN CHASE 1.59% FIRST UNION NAT BANK 2.00% WALMART 1.25% WELLS FARGO BANK �.ggo�o %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.66% FED HOME LOAN BANK g gpo/a FED HOME LOAN MTG CORP 2,47��0 FED NATIONAL MTG ASSOC 1.74% "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 loca�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 30,2007,the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity,and yield(in order of priority). Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portFolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. RespectFully submitted on December 18,2007, ,�'a�cLS. �'i�.�r�d� C.C.�>.r * City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized(1) 53601(b) U.S.Treasuries 5 Years No Limit 5 Years No Limit 53601(c) CA State Debt 5 Years No Limit 0.0% 0.0% Not Authorized 53601(d) CA Local Agency Debt 5 Years No Limit NotAuthorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 21.4% 19.5% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 &P-1 53601(g) Commercial Paper 270 Days 25% A-1+or P-1 270 Days 25% A-1+or P-1 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA-or Aa3 53601(i) Repos 1 Year No Limit 30 Days 20% AAA&Aaa 53601(i) Reverse Repos 92 Days 20% NotAuthorized 53601(j) Medium-Term Notes 5 Years 30% A 5 Years 30% A 25.0% 8.5% 53601(k) Mutual Funds 90 Days 20°Io AAA&Aaa 90 Days 20%(2) AAA&Aaa 26.4% 66.6% 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit NotAuthorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% ar Advisor 90 Days 20% (2) or Advisor 13.4% 3.3% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security LAIF No Limit No Limit 0.0% 2.1% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 86.2% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. ' Certified California Municipa/Treasurer Page 9 ��---�,, City of Palm Desert � City and Redevelopment Agency Portfolios ��� COMPLIANCE ANALYSIS AND INVESTMENT REPORT = December 2007 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The economy is slowing due to the housing market correction, higher energy prices, and turmoil in capital markets. Unfavorable employment growth and retail sales data for December bear this out. Housing prices are in a freefall. In December 2006, home prices were rising by 2-3% annually, and national unsold inventory was at seven months'supply. By December 2007, home prices had declined by 7%, and national unsold inventory had risen to over 10 months' supply. In the early 1990s, real estate deflation affected only 50% of the U.S. In 2007, it affects 85% of the U.S. Home prices are expected to fall another 25-30% over the next two years. This is projected to reduce consumer spending by$360 billion, which is equivalent to a 2% wage cut in 2008 and in 2009. In the financial sector, investors from Japan, Korea, Singapore, China, Saudi Arabia and Kuwait came to the rescue of Wall Street. These investors paid a combined total of$19.1 billion for preferred stock in Citigroup and in Merrill Lynch, both of which needed to shore up their capital bases. Citigroup, which announced a fourth-quarter loss of$9.8 billion, had asset write-downs of$18.1 billion. Merrill Lynch had fourth-quarter asset write-downs of$15 billion. Bank of America bought Countrywide Financial, the largest mortgage lender in the U.S., which was rumored to be near bankruptcy, for$4.1 billion in stock. Bank of America then sold $12 billion of preferred stock in order to shore up its capital base. ��s ��� c.c.,y r Treasurer PORTFOLIO STATISTICS Dollars in Thousands DEC-07 NOV-07 OCT-07 SEP-07 AUG-07 JUL-07 CITY Month-End Book Value"** $ 237,124 $ 240,745 $ 244,113 $ 233,947 $ 245,850 $ 256,143 Month-End Market Value'�" $ 238,366 $ 242,224 $ 244,790 $ 234,328 $ 245,945 $ 256,176 PaperGain(Loss) $ 1,242 $ 1,479 $ 677 $ 381 $ 95 $ 33 Prior Year Book Variance $ 78,074 $ 80,955 $ 86,710 $ 71,505 $ 76,483 $ 85,202 Interest Earnings $ 958 $ 965 $ 981 $ 957 $ 1,045 $ 1,066 Yield-To-Maturity 4.87% 4.93% 5.05% 5.01% 5.09% 5.11% Weighted Maturity(Days) 458 451 444 426 415 308 Effective Duration 0.74 0.77 0.79 0.76 0.75 0.45 RDA Month-End Book Value"'* $ 250,975 $ 250,190 $ 250,763 $ 279,542 $ 289,864 $ 293,026 Month-End Market Value*"* $ 252,033 $ 251,232 $ 251,297 $ 280,070 $ 290,104 $ 293,073 PaperGain(Loss) $ 1,058 $ 1,042 $ 534 $ 528 $ 240 $ 47 Prior Year Book Variance $ 139,907 $ 135,053 $ 134,543 $ 152,500 $ 148,263 $ 145,329 Interest Earnings $ 990 $ 952 $ 1,027 $ 1,167 $ 1,233 $ 1,270 Yield-To-Maturity 4.70% 4.70% 4.87% 5.02% 5.07% 5.10% Weighted Maturity(Days) 281 282 282 305 314 27g Effective Duration 0.37 0.40 0.41 0.40 0.47 0.39 "` Omits SLGSs. . City of Palm Desert -- Portfolio Characteristics December 31, 2007 Dollars in Thousands A�c einq Interval Market Value < 1 M $ 33,090 General Fund Ageing <2M 1,996 <3M 6,045 100 <6M < 1 YR $� 22,965 0 <2YR 27,317 0 60 <3YR 44,696 � 40 23 31 <4YR 6,347 a 20 16 19 <5YR _ 1 4 p 4 >5YR _ 0 0 0 Total: $ 142,456 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Credit Qualit Ratinqs* Market Value y � $ 148,369 � 37,252 ' A � A 16,194 8/° 74% Unrated `* 32,795 AA , Total: $ 234,610 �go�o Sector Market Value Asset Allocation MMF $ 58,697 Agencies Agencies 51,598 22% MTNs 59,575 MTNs CAMP 25% 29,919 RDA Loan 32,785 MMF UB Sweep 2,026 25% LAIF 10 CAMP 0 CP - UB Sweep RDA Loan � Total: $ 234,610 �% 14% Month Citv Yield LAIF Yield Variance Performance Jan07 5.06 5.16 -0.10 Feb 5.08 5.18 -0.11 5.4 Mar 5.13 5.21 -0.08 Apr 5.13 5.22 -0.10 May 5.11 525 -0.13 0 Jun 5.11 5.25 -0.14 '� 4•9 Jul 5.11 5.26 -0.15 � Aug 5.09 5.25 -0.17 Sep 5.01 5.23 -0.22 4.4 Oct 5.05 5.14 -0.09 Jan07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nov 4.93 4.96 -0.03 Dec 4.87 4.80 0.07 ■��,�� r�e�d ■�s�i� v��;a '' Standard and Poors "` LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings December 31, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's SB�P Medium-Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,018,338 5.08 99.96 $ 3,021,743 A1 A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,946,311 5.01 101.44 $ 2,961,975 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,031,087 4.91 98.54 $ 15,046,554 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,003,161 4.91 98.54 $ 2,005,222 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 986,561 5.19 99.45 $ 994,547 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,946,245 5.19 99.45 $ 3,978,188 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,979,678 4.99 99.15 $ 1,983,076 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,997,056 5.63 101.49 $ 2,065,250 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,949,146 5.65 106.61 $ 2,015,908 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,025,017 5.67 104.53 $ 2,090,670 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 1,997,734 5.13 99.93 $ 1,998,628 A1 A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,998,832 5.25 99.95 $ 1,998,906 Aa3 A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,034,775 5.02 97.93 $ 3,016,259 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,980,125 5.18 98.84 $ 1,976,792 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,134,238 5.02 107.77 $ 2,155,440 Aa3 A+ $ 2,000,000 WALMART 6.88 8/10/09 $ 2,056,825 4.93 104.51 $ 2,090,234 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1l11 $ 4,157,590 5.13 104.53 $ 4,181,124 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,978,046 5.09 100.08 $ 2,001,550 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,981,566 4.92 98.04 $ 1,985,387 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,990,451 4.96 99.37 $ 2,007,238 Aa1 AA- $ 59,299,000 Subtotal $ 59,192,780 5.09 $ 59,574,690 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,926 4.61 102.63 $ 3,078,750 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,926 4.61 102.63 $ 3,078,750 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,001,276 4.68 99.47 $ 2,004,295 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,949,354 6.90 99.56 $ 1,991,250 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,977,086 5.59 101.25 $ 3,037,500 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,977,653 4.87 100.63 $ 1,992,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,995,259 5.40 100.25 $ 3,007,500 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,024,368 5.02 99.88 $ 3,026,213 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,916,045 5.96 99.81 $ 1,996,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,015,336 4.87 100.94 $ 2,052,059 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,017,635 4.87 100.81 $ 2,065,648 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,974,284 4.88 100.99 $ 2,019,778 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,997,509 5.06 100.64 $ 2,012,884 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,996,689 5.47 101.22 $ 2,087,131 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,997,713 5.20 100.34 $ 2,006,756 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,992,891 5.50 100.81 $ 2,065,648 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,991,508 4.88 101.81 $ 2,036,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,940,614 5.47 101.56 $ 2,031,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,958,515 6.35 99.75 $ 1,995,000 Aaa AAA "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings December 31, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Federal Agencies--Coupon (continued) $ 43,218,000 Subtotal $ 42,745,586 5.24 $ 43,585,287 Federal Agencies--Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,993,074 4.88 99.91 $ 1,998,125 Aaa AAq $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,840 5.06 100.46 $ 2,009,126 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.30 8/13/09 $ 2,000,000 5.30 100.17 $ 2,003,350 Aaa AAq $ 2,000,000 FED NATIONAL MTG ASSOC 5.38 2/1/10 $ 2,000,000 5.37 100.13 $ 2,002,500 Aaa AAq $ 8,000,000 Subtotal $ 7,992,913 5.15 $ 8,013,101 Local Government Investment Pool $ 9,735 L.A.I.F. 0.00 1/1l08 $ 9,735 4.80 100.00 $ 9,735 U U $ 9,735 Subtotal $ 9,735 4.80 $ 9,735 Local Government Investment Pool $ 28,610,486 C.A.M.P. 0.00 1/1/08 $ 28,610,486 4.82 100.00 $ 28,610,486 U AAA $ 1,308,884 C.A.M.P. (HOUSING) 0.00 1/1/08 $ 1,308,884 4.82 100.00 $ 1,308,884 U AAq $ 29,919,370 Subtotal $ 29,919,370 4.82 $ 29,919,370 Money Market Fund $ 51,577,838 WF ADVANTAGE GOVT 0.00 1/1/08 $ 51,577,838 4.38 100.00 $ 51,577,838 Aaa AAA $ 51,577,838 Subtotal $ 51,577,838 4.38 $ 51,577,838 Money Market Fund $ 6,973,540 WF HERITAGE SELECT 0.00 1/1/08 $ 6,973,540 4.91 100.00 $ 6,973,540 Aaa AAA $ 6,973,540 Subtotal $ 6,973,540 4.91 $ 6,973,540 Money Market Fund $ 144,785 WF TREASURY PLUS 0.00 1/1/08 $ 144,785 3.71 100.00 $ 144,785 Aaa AAA $ 744,785 Subtotal $ 144,785 3.71 $ 144,785 Money Market Fund $ 2,026,214 CITY MAIN REPO SWEEP 0.00 1/1/08 $ 2,026,214 3.54 100.00 $ 2,026,214 P1 A1 2,026,213.50 Subtotal $ 2,026,214 3.54 2,026,213.50 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 1/1/38 $ 32,785,480 4.80 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 4.80 $ 32,785,480 Total Investments $ 233,953,962 $ 233,368,241 4.87 $ 234,610,039 "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings December 31, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Cash $ 2,702,297 CITY MAIN CHKG 0.00 1/1/08 $ 2,702,297 0.00 100.00 $ 2,702,297 U U $ 553,701 MONTEREY 170 CHKG 0.00 1/1/08 $ 553,701 0.00 100.00 $ 553,701 U U $ 250,619 DESERT WILLOW CHKG 0.00 1/1/08 $ 250,619 0.00 100.00 $ 250,619 U U $ 170,602 RECREATIONAL FAC CHKG 0.00 1/1/08 $ 170,602 0.00 100.00 $ 170,602 U U $ 41,239 ART, FOOD&WINE CHKG 0.00 1/1/08 $ 41,239 0.00 100.00 $ 41,239 U U $ 37,012 CITY/FALCON CREST HOA 0.00 1/1/08 $ 37,012 0.00 100.00 $ 37,012 U U $ 3,755,470 Subtotal $ 3,755,470 $ 3,755,470 Total Investments and Cash $ 237,709,432 $ 237,123,711 $ 238,365,509 %of Portfolio Corporate Issuers (Market Value) AMERICAN HONDA FINANCE 1,27��0 BANK OF AMERICA 1.24% CITIGROUP 9.240�0 GENERAL ELECTRIC 3.42% IBM 0.84% JP MORGAN CHASE 0.84% WACHOVIA 3.00% WALMART p.ggo�o WELLS FARGO BANK 4.27% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.26% FED HOME LOAN BANK 6.32% FED HOME LOAN MTG CORP 7.69% FED NATIONAL MTG ASSOC 3.38% "U"= Unrated _ Page 5 . Palm Desert Redevelopment Agency-- Portfolio Characteristics December 31, 2007 Dollars in Thousands _. .......�� _. _�.�. � .._. qeinq Interval Market Value � � _. _..,� < 1 M $ 5,095 IPortfolio Ageing w/o SLGSsI i `2 M 5,006 � <3M 4,972 100 <g►� _ � 90 < 1YR 80 15,947 � = 70 <2YR 29 276 � 0 60 50 <3YR 11,255 � � 40 39 <4YR 4,138 a 30 21 15 <5YR _ 10 � � � 0 5 0 0 >5YR � Total: � � �M <2M <3M <6M < < < < < , $ 75,689 � 1YR 2YR 3YR 4YR 5YR 5YR Qua�itY'` Market Value ICredit Quality � $ 224,369 AAA � 12,168 89% A 9,030 Unrated ** 5,330 unrated*' Total: $ 250,897 I 2% A ,qq 4% 5% Sector Market Value � �Asset Allocation � MMF $ 166,739 Agencies 49,414 MMF LAI F 5,330 67% MTNs 21,197 CAMP g 217 CP _ CAMP Treasuries _ 3% MTNs Agen�cies LAIF 20/o Total: $ 250,897 I 8% 2% Month RDA Yield LAIF Yield Variance � I Pertormance �, Jan07 5.05 5.16 -0.11 �� Feb 5.06 5.18 -0.12 5.4 Mar 5.11 5.21 -0.11 Apr 5.09 5.22 -0.13 �I May 5.10 5.25 -0.15 � = 5�0 � Jun 5.11 5.25 -0.14 �° � Jul 5.10 5.26 -0.16 � } 4.6 Aug 5.07 5.25 -0.19 ' I, Sep 5.02 5.23 -0.21 I 4,2 Oct 4.87 5.14 -0.27 Jan07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nov 4.70 4.96 -0.26 D2C 4.70 4.80 -0.10 I I ■LAIF Yield ■RDA Yield I , " Standard and Poors "` LAIF - Page 6 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2007 Par Value Market Ratings Issuer Coupon Maturity Cost YTM Price Value Moody's SB�P Medium-Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,048,184 5.13 101.37 $ 4,054,948 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,995,457 5.12 98.38 $ 4,003,883 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 2,999,047 5.12 98.38 $ 3,005,372 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,013,472 5.00 101.03 $ 2,020,532 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,096,249 4.76 104.51 $ 3,135,351 Aa2 Aq $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,988,887 4.96 99.29 $ 1,985,704 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,994,153 5.18 99.72 $ 2,991,543 Aa1 AA- $ 21,125,000 Subtotal $ 21,135,447 5.05 $ 21,197,333 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,050,147 4.88 104.84 $ 2,096,862 Aaa AAq $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,996,518 4.87 101.84 $ 2,036,875 Aaa AAq $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,931,969 4.65 103.31 $ 5,062,313 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,954,218 4.79 99.97 $ 3,968,759 Aaa AAq $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,954,218 4.79 99.97 $ 3,968,759 Aaa AAq $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,465,629 5.59 101.25 $ 4,556,250 Aaa AAq $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,993,679 4.84 100.25 $ 4,010,000 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,976,055 4.89 100.31 $ 2,011,266 Aaa AAq $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,963,124 5.49 103.66 $ 2,073,125 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,962,632 5.50 103.66 $ 2,073,125 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,985,738 5.16 99.88 $ 1,987,513 Aaa AAq $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,063,594 5.54 108.22 $ 2,164,375 Aaa AAq $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,852,947 5.54 108.22 $ 4,040,888 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15l09 $ 4,266,294 4.89 104.97 $ 4,361,452 Aaa AAA $ 43,224,000 Subtotal $ 43,416,760 5.07 $ 44,411,561 Federal Agencies--Callable $ 5,000,000 FED HOME LOAN BANK 5.25 2/1/08 $ 5,000,000 5.25 100.00 $ 5,001,563 Aaa AAA $ 5,000,000 Subtotal $ 5,000,000 5.25 $ 5,001,563 Local Government Investment Pool $ 4,969 L.A.I.F. 0.00 1/1/08 $ 4,969 4.80 100.00 $ 4,969 U U $ 5,000 L.A.I.F. 0.00 1/1/08 $ 5,000 4.80 100.00 $ 5,000 U U $ 5,320,158 L.A.I.F. BOND PROCEEDS 0.00 1/1/08 $ 5,320,158 4.80 100.00 $ 5,320,158 U U $ 5,330,127 Subtotal $ 5,330,127 4.80 $ 5,330,127 Local Government Investment Pool $ 4,463,947 C.A.M.P. 0.00 1/1/08 $ 4,463,947 4.82 100.00 $ 4,463,947 U AAA $ 3,753,298 C.A.M.P.(HOUSING) 0.00 1/1/08 $ 3,753,298 4.82 100.00 $ 3,753,298 U AAq S 8,217,245 Subtotal $ 8,217,245 4.82 $ 8,217,245 "U"=Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Money Market Fund $ 42,659,460 WF ADVANTAGE GOVT 0.00 1/1/08 $ 42,659,460 4.38 100.00 $ 42,659,460 Aaa AAA $ 42,659,460 Subtotal $ 42,659,460 4.38 $ 42,659,460 Money Market Fund $ 91,230,366 WF HERITAGE SELECT 0.00 1/1/08 $ 91,230,366 4.91 100.00 $ 91,230,366 Aaa AAA $ 91,230,366 Subtotal $ 91,230,366 4.91 $ 91,230,366 Money Market Fund $ 32,849,044 WF TREASURY PLUS 0.00 1/1/08 $ 32,849,044 3.71 100.00 $ 32,849,044 Aaa AAA $ 32,849,044 Subtotal $ 32,849,044 3.71 $ 32,849,044 Total Investments $ 249,635,242 $ 249,838,449 4.70 $ 250,896,698 � Cash $ 780,289 HOUSING AUTH CHKG 0.00 1/1/08 $ 780,289 0.00 100.00 $ 780,289 U U $ 356,423 HOUSING AUTH TRUST 0.00 1/1/08 $ 356,423 0.00 100.00 $ 356,423 U U $ 1,136,712 Subtotal $ 1,136,712 $ 1,136,712 Total Investments and Cash $ 250,771,954 $ 250,975,161 $ 252,033,410 %of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.61% JP MORGAN CHASE 2,78% FIRST UNION NAT BANK 0.80% WAL-MART 1.24% WELLS FARGO BANK 1,97% 1 "U"= Unrated Page 8 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.65% FED HOME LOAN BANK 9.78% FED HOME LOAN MTG CORP 2.46% FED NATIONAL MTG ASSOC 1.73% � �, , . � � � � � �': - � _ ' , ' . , �= -.. . 1 � _ , _ , � - � ��.;� - ,; - ` � �_��fi, : ��; � r � � ;� � , .� �� �!, -- � , � „, -„ ,�.., i,, . ,� :r. ,„ f - ,._ � � rti ���'�� `�� ,�,�., �,�,� r; r . � � r = . . . i- � f � . 1;�����k:f�7 . t "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 Councii review the Statement of Investment Policy annually. For the month ended December 31,2007, the City and the RDA investment portfolios were in compiiance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity,and yield(in order of priority). Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portFolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P.and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on January 22, 2008, �'auLS. G'r;�o�w, C.C.�1.T. * City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Qualiry %of City %of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit NotAuthorized(1) 53601(b) U.S.Treasuries 5 Years No Limit 5 Years No Limit 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% 21.8% 19.4% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 &P-1 53601(g) Commercial Paper 270 Days 25% A-1+or P-1 270 Days 25% A-1+or P-1 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA-or Aa3 53601(i) Repos 1 Year No Limit 30 Days 20% AAA&Aaa 53601(i) Reverse Repos 92 Days 20% NofAuthorized 53601(j) Medium-Term Notes 5 Years 30% A 5 Years 30% A 25.4% 8.5% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAq&Aaa 26.0°!0 66.7% 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit NotAuthorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 12.8% 3.3% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security LAIF No Limit No Limit 0.0% 2.1% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 85.9% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. * Certified California Municipa/ Treasurer Page 10 � ��� City of Palm Desert � ,� City and Redevelopment Agency Portfolios � � � COMPLIANCE ANALYSIS AND INVESTMENT REPORT January 2008 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary On January 23, the Federal Open Market Committee ("FOMC") responded to a global stock panic by cutting the Federal Funds Rate by 75 basis points to 3.50%. This was the biggest rate cut in 20 years. On January 30, the FOMC cut the Federal Funds Rate by another 50 basis points to 3.00% in order to prevent a recession. The FOMC left the door open to further rate cuts. The FOMC's next meeting will be on March 18. The U.S. economy may be on the verge of"stagflation"--when low economic growth co-exists with high inflation. As a net � importer, the U.S. is vulnerable to higher energy and food prices, driven primarily by Chinese demand, and by a declining U.S. dollar. Over the last few weeks, the price of crude oil has risen to over$100 per barrel, and coal has risen to over$78 per U.S. ton. Gold has hit an all-time high of$927 per ounce as mainstream investors seek its protection. The U.S. real estate outlook is bleak, with home prices expected to drop another 25-30%over the next two years. The large municipal bond insurers are in trouble. MBIA, Ambac, and FGIC have either lost their"AAA"ratings or are in � danger of doing so since they also insured mortgage-backed securities. MBIA, for example, posted a $2.3 billion loss for the fourth quarter due to a decline in the value of those securities. Unless these firms can recapitalize, then it is likely that they � will be forced to separate their municipal bond business from their structured finance operations. ��s ��r� c.c.� r. Treasurer PORTFOLIO STATISTICS Dollars in Thousands JAN-08 DEC-07 NOV-07 OCT-07 SEP-07 AUG-07 CITY Month-End Book Value"*" $ 231,415 $ 237,124 $ 240,745 $ 244,113 $ 233,947 $ 245,850 Month-End Market Value**" $ 234,066 $ 238,366 $ 242,224 $ 244,790 $ 234,328 $ 245,945 Paper Gain (Loss) $ 2,651 $ 1,242 $ 1,479 $ 677 $ 381 $ 95 Prior Year Book Variance $ 5,952 $ 78,074 $ 80,955 $ 86,710 $ 71,505 $ 76,483 Interest Earnings $ 878 $ 958 $ 965 $ 981 $ 957 $ 1,045 Yield-To-Maturity 4.72% 4.87% 4.93% 5.05% 5.01°/a 5.09% Weighted Maturity(Days) 473 458 451 444 426 415 Effective Duration 0.72 0.74 0.77 0.79 0.76 0.75 RDA Month-End Book Value*"" $ 285,947 $ 250,975 $ 250,190 $ 250,763 $ 279,542 $ 289,864 Month-End Market Value*"* $ 287,781 $ 252,033 $ 251,232 $ 251,297 $ 280,070 $ 290,104 PaperGain(Loss) $ 1,834 $ 1,058 $ 1,042 $ 534 $ 528 $ 240 Prior Year Book Variance $ 50,338 $ 139,907 $ 135,053 $ 134,543 $ 152,500 $ 148,263 Interest Earnings $ 942 $ 990 $ 952 $ 1,027 $ 1,167 $ 1,233 Yield-To-MBtu�ity 4.45% 4.70% 4.70% 4.87% 5.02% 5.07% Weighted Maturity(Days) 247 281 282 282 305 314 Effective Duration 0.31 0.37 0.40 0.41 0.40 0.47 "' Omits SLGSs. City of Palm Desert-- Portfolio Characteristics January 31, 2008 Dollars in Thousands Ageinq Interval Market Value ,-- - � �� - - -------�.,� < 1 M $ 35,725 `General Fund Ageingl ; �2M 6,048 S <3M _ 100 � <6M 6,009 80 < 1 YR 16,968 � <2YR 29,338 0 60 <3YR 42,541 � 40 25 30 <4YR 6,272 a° 21 12 <5YR - 20 4 � 4 4 0 0 >5YR _ � Total: $ 142,901 < 1 M <2M <3M <6M < < < < < , 1YR 2YR 3YR 4YR 5YR 5YR �I Credit Quality � Ratinqs* Market Value � $ 177,133 � 37,905 A AAA A 12,266 5% 78% Unrated"" 14 Total: $ 227,318 � 17% ��'� -- - ` � - - _ - - - - - Sector Market Value ' IAsset Allocation MMF $ 51,462 Agencies 52,173 Agencies MTNs MTNs 58,457 23% 26% � CAMP 32,427 RDA Loan 32,785 I � ������� LAIF 14 MMF CAMP CP _ � 23% 14% Total: g 227�g�g RDA Loan 14% \ - - -- - - - - - � - - - -- - - - Month Citv Yield LAIF Yield Variance I IPerformance Feb07 5.08 5.18 -0.11 Mar 5.13 5.21 -0.08 5.4 ____..._____._�_.__.. Apr 5.13 5.22 -0.10 May 5.11 5.25 -0.13 I Jun 5.11 5.25 -0.14 I = Jul 5.11 5.26 -0.15 � ��-, 4�9 I Aug 5.09 5.25 -0.17 I } Sep 5.01 5.23 -0.22 Oct 5.05 5.14 -0.09 4.4 Nov 4.93 4.96 -0.03 Feb07 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan08 Dec 4.87 4.80 0.07 Jan08 4.72 4.62 0.10 I s���.�f�Y�e�� ■r;, ; r;�ac, , �� - - - � " Standard and Poors *` LAIF,and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings January 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,020,336 5.08 100.13 $ 3,026,981 A1 A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,944,357 5.01 102.58 $ 2,995,260 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,040,384 4.91 100.30 $ 15,315,841 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,004,400 4.91 100.30 $ 2,041,109 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 986,994 5.19 101.54 $ 1,015,367 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,947,975 5.19 101.54 $ 4,061,468 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,981,825 4.99 100.15 $ 2,003,054 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,998,183 5.63 103.37 $ 2,103,488 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,947,459 5.65 108.40 $ 2,049,823 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,024,353 5.67 106.44 $ 2,128,896 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 2,000,000 5.13 100.00 $ 2,000,000 A1 A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,038,116 5.02 99.03 $ 3,050,019 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,982,787 5.18 99.67 $ 1,993,306 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,129,985 5.02 109.80 $ 2,195,924 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,053,880 4.93 105.32 $ 2,106,428 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,153,925 5.13 107.06 $ 4,282,304 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,978,748 5.09 101.89 $ 2,037,760 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,984,461 4.92 99.27 $ 2,010,215 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,991,658 4.96 100.97 $ 2,039,628 Aa1 AA- $ 57,299,000 Subtotal $ 57,209,827 5.05 $ 58,456,871 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,537 4.61 104.31 $ 3,129,375 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,537 4.61 104.31 $ 3,129,375 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,003,398 4.68 100.25 $ 2,020,038 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,954,539 6.90 100.66 $ 2,013,125 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,978,213 5.59 102.69 $ 3,080,625 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,977,859 4.87 101.75 $ 2,014,650 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,995,826 5.40 101.13 $ 3,033,750 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,026,817 5.02 100.13 $ 3,033,788 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,919,849 5.96 101.34 $ 2,026,875 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,016,293 4.87 102.28 $ 2,079,378 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,018,972 4.87 102.34 $ 2,097,023 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,975,424 4.88 102.49 $ 2,049,894 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,997,756 5.06 101.66 $ 2,033,258 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,998,839 5.47 103.03 $ 2,124,504 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,998,053 5.20 101.03 $ 2,020,526 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,995,282 5.50 102.34 $ 2,097,023 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,991,896 4.88 103.25 $ 2,065,000 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,942,501 5.47 103.41 $ 2,068,125 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,962,453 6.35 100.88 $ 2,017,500 Aaa AAA $ 43,218,000 Subtotal $ 42,775,044 5.07 $ 44,133,832 "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings January 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Federal Agencies--Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,994,128 4.88 100.63 $ 2,012,500 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,860 5.06 101.25 $ 2,024,956 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.30 8/13/09 $ 2,000,000 5.30 100.09 $ 2,001,800 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 5.38 2/1/10 $ 2,000,000 5.37 100.00 $ 2,000,000 Aaa AAA $ 8,000,000 Subtotal $ 7,993,989 5.25 $ 8,039,256 Local Government Investment Pool � $ 13,547 L.A.I.F. 0.00 2/1/OS $ 13,547 4.62 100.00 $ 13,547 U U $ 13,547 Subtotal $ 13,547 4.62 $ 13,547 Local Government Investment Pool $ 31,113,431 C.A.M.P. 0.00 2/1/08 $ 31,113,431 4.50 100.00 $ 31,113,431 U AAA $ 1,313,874 C.A.M.P. (HOUSING) 0.00 2/1/08 $ 1,313,874 4.50 100.00 $ 1,313,874 U AAA $ 32,427,305 Subtotal $ 32,427,305 4.50 $ 32,427,305 Money Market Fund $ 50,752,221 WF ADVANTAGE GOVT 0.00 2/1/08 $ 50,752,221 4.04 100.00 $ 50,752,221 Aaa AAA $ 50,752,221 Subtotal $ 50,752,221 4.04 $ 50,752,221 Money Market Fund $ 46,149 WF HERITAGE SELECT 0.00 2/1/08 $ 46,149 4.56 100.00 $ 46,149 Aaa AAA $ 46,149 Subtotal $ 46,149 4.56 $ 46,149 Money Market Fund $ 663,312 WF TREASURY PLUS 0.00 2/1/08 $ 663,312 3.20 100.00 $ 663,312 Aaa AAA $ 663,312 Subtotal $ 663,312 3.20 $ 663,312 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 2/1/38 $ 32,785,480 4.62 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 4.62 $ 32,785,480 Total Investments $ 225,205,014 $ 224,666,874 4.72 $ 227,317,974 Cash $ 5,697,897 CITY MAIN CHKG 0.00 2/1/08 $ 5,697,897 0.00 100.00 $ 5,697,897 U U $ 315,681 DESERT WILLOW CHKG 0.00 2/1/08 $ 315,681 0.00 100.00 $ 315,681 U U $ 553,796 MONTEREY 170 CHKG 0.00 2/1/08 $ 553,796 0.00 100.00 $ 553,796 U U "U" = Unrated Page 4 City of Palm Desert Portfolio Holdings January 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S8P Cash(continued) $ 92,066 RECREATIONAL FAC CHKG 0.00 2/1/08 $ 92,066 0.00 100.00 $ 92,066 U U $ 47,558 CITY/FALCON CREST HOA 0.00 2/1/08 $ 47,558 0.00 100.00 $ 47,558 U U $ 41,239 ART, FOOD&WINE CHKG 0.00 2/1/08 $ 41,239 0.00 100.00 $ 41,239 U U $ 6,748,237 Subtotal $ 6,748,237 0.00 $ 6,748,237 Total Investments and Cash $ 231,953,251 $ 231,415,110 $ 234,066,210 %of Portfolio Corporate Issuers (Market Value) AMERICAN HONDA FINANCE 1.29% BANK OF AMERICA 1,28a�o CITIGROUP 9.58% GENERAL ELECTRIC 3.54% IBM 0.85% WACHOVIA 3.09��a WAL-MART 0.90% WELLS FARGO BANK 4.43% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.40% FED HOME LOAN BANK 6.49% FED HOME LOAN MTG CORP 7,g2�/a FED NATIONAL MTG ASSOC 3.48% "U"=Unrated Page 5 Palm Desert Redevelopment Agency--Portfolio Characteristics January 31, 2008 Dollars in Thousands _ ...._...._._._ ..._ _.._ _.._.� .._ � ueint� nterval Market Value � - < 1 M $ 48 �22 ` I Portfolio Ageing w/o SLGSs� �2M 4,979 � �3M - ! 100 __..__._____� <g►� 9� < 1 YR 80 15,954 = 70 <2YR 29,262 f ° 50 42 <3YR 11,268 [ � 40 <4YR 26 4,146 a 20 14 <5YR _ 10 4 0 0 10 4 0 0 >5YR _ � Total: $ 173,731 ; < 1M <2M <3M <6M < < < < < , � 1YR 2YR 3YR 4YR 5YR 5YR __ _ - Qua�itY" Market Value I ICredit Quality � $ 259,939 AAA � 12,263 91% A 9,153 Unrated *` Unrated'" 5,414 2% A Total: $ 286,769 3% � �� 4% Sector Market Value Asset Allocation MMF $ 163,701 Agencies 49,971 I LAIF 5,414 MMF Agencies MTNs 21,417 I 58% 17% CAMP 46,266 CP _ LAIF Treasuries _ CAMP MTNs 2% Total: $ 286,769 I 16% 7% �� �- - - - - - - - - Month RDA Yield LAIF Yield Variance ' IPerformance Feb07 5.06 5.18 -0.12 I Mar 5.11 5.21 -0.11 5.4 Apr 5.09 5.22 -0.13 I May 5.10 5.25 -0.15 I Jun 5.11 5.25 -0.14 I o 5.0 Jul 5.10 5.26 -0.16 � �° Aug 5.07 5.25 -0.19 I � 4.6 �� Sep 5.02 5.23 -0.21 � Oct 4.87 5.14 -0.27 q 2 Nov 4.70 4.96 -0.26 i Feb07 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan08 Dec 4.70 4.80 -0.10 Jan08 4.45 4.62 -0.17 I I ■LAIFYield ■RDAYield ' I �_ - - - - - -- � '' Standard and Poors "" LAIF _ Page 6 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,044,853 5.13 102.54 $ 4,101,640 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,000,609 5.12 99.82 $ 4,062,638 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,002,914 5.12 99.82 $ 3,049,474 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,012,247 5.00 102.05 $ 2,040,952 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,091,262 4.76 105.32 $ 3,159,642 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,990,375 4.96 100.12 $ 2,002,406 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,996,695 5.18 99.99 $ 2,999,793 Aa1 AA- $ 21,125,000 Subtotal $ 21,138,956 5.05 $ 21,416,545 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,047,782 4.88 106.19 $ 2,123,774 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,996,700 4.87 103.19 $ 2,063,750 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,930,991 4.65 105.03 $ 5,146,531 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,956,104 4.79 100.91 $ 4,005,978 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,956,104 4.79 100.91 $ 4,005,978 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,467,319 5.59 102.69 $ 4,620,938 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,994,435 4.84 101.13 $ 4,045,000 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,977,597 4.89 101.69 $ 2,038,834 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,964,086 5.49 105.44 $ 2,108,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,963,607 5.50 105.44 $ 2,108,750 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,987,591 5.16 100.13 $ 1,992,488 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,061,635 5.54 109.84 $ 2,196,875 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15l10 $ 3,849,284 5.54 109.84 $ 4,101,566 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,260,856 4.89 106.19 $ 4,412,091 Aaa AAA $ 43,224,000 Subtotal $ 43,414,091 5.07 $ 44,971,302 Federal Agencies--Callable $ 5,000,000 FED HOME LOAN BANK 5.25 2/1/08 $ 5,000,000 5.25 100.00 $ 5,000,000 Aaa AAA $ 5,000,000 Subtotal $ 5,000,000 5.25 $ 5,000,000 Local Government Investment Pool $ 9,656 L.A.I.F. 0.00 2/1/08 $ 9,656 4.62 100.00 $ 9,656 U U $ 21,145 L.A.I.F. (HOUSING) 0.00 2/1/08 $ 21,145 4.62 100.00 $ 21,145 U U $ 5,383,080 L.A.I.F. BOND PROCEEDS 0.00 2/1/08 $ 5,383,080 4.62 100.00 $ 5,383,080 U U $ 5,413,880 Subtotal $ 5,413,880 4.62 $ 5,413,880 Local Government Investment Pool $ 42,497,929 C.A.M.P. 0.00 2/1/08 $ 42,497,929 4.50 100.00 $ 42,497,929 U AAA $ 3,767,607 C.A.M.P. (HOUSING) 0.00 2/1/08 $ 3,767,607 4.50 100.00 $ 3,767,607 U AAA $ 46,265,536 Subtotal $ 46,265,536 4.50 $ 46,265,536 "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Money Market Fund $ 38,569,451 WF ADVANTAGE GOVT 0.00 2/1/08 $ 38,569,451 4.04 100.00 $ 38,569,451 Aaa AAA $ 38,569,451 Subtotal $ 38,569,451 4.04 $ 38,569,451 Money Market Fund $ 92,242,584 WF HERITAGE SELECT 0.00 2/1/08 $ 92,242,584 4.56 100.00 $ 92,242,584 Aaa AAA $ 92,242,584 Subtotal $ 92,242,584 4.56 $ 92,242,584 Money Market Fund $ 32,888,487 WF TREASURY PLUS 0.00 2/1/08 $ 32,888,487 3.20 100.00 $ 32,888,487 Aaa AAA $ 32,888,487 Subtotal $ 32,888,487 3.20 Total Investments $ 192,486,355 $ 192,690,401 4.45 $ 161,636,714 Cash $ 648,521 HOUSING AUTH CHKG 0.00 2/1/08 $ 648,521 0.00 100.00 $ 648,521 U U $ 365,139 HOUSING AUTH TRUST 0.00 2/1/08 $ 365,139 0.00 100.00 $ 365,139 U U $ 1,013,660 Subtotal $ 1,013,660 0.00 $ 1,013,660 Total Investments and Cash $ 193,500,015 $ 193,704,061 $ 162,650,375 %of Portfolio Corporate issuers (Market Value) CITIGROUP 2,52% JP MORGAN CHASE 4.37% FIRST UNION NAT BANK 1.25% WAL-MART �.94% WELLS FARGO BANK 3.08% "U"= Unrated Page 8 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P %of Portfolio Agency Issuers (Market Value) • FED FARM CREDIT BANK 5.74% FED HOME LOAN BANK 18.40% FED HOME LOAN MTG CORP 3,870�0 FED NATIONAL MTG ASSOC 2.7�% "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 31,2008,the City and the RDA investment portfolios were in compliance with all applicable federal, state,and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield(in order of priority). Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio cou�d be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Govemment 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 26,2008, ��s ���o�, c.c.�r � City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Qualiry %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 NotAufhorized(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 NotAuthorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 22.6% 17.0% 53601(fl Bankers's Acceptances 180 Days 40% 180 Days 40°/a 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-orAa3 - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA&Aaa - - 53601(i) Reverse Repos 92 Days 20% NotAuthorized 53601(j) Medium-Term Notes 5 Years 30% A 5 Years 30°/a A 25.5% 7.4% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 22.9% 57.5% 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 14.4% 16.2% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security LAIF No Limit No Limit 0.1% 1.8% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 85.5% 100.0% (2) Maximum limit for mutual funds and local overnment investment pools, excluding bond proceeds. * Certified California Municipal Treasurer Page 10 ��_..� City of Palm Desert � '�; City and Redevelopment Agency Portfolios � � �_ COMPLIANCE ANALYSIS AND INVESTMENT REPORT - February 2008 . �J •�,�� 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 March 18, and cut the Federal Funds Rate by 75 basis points from 3.00% to 2.25%. The FOMC was reacting to falling economic indicators, financial market turmoil, and the spectacular collapse of investment bank Bear Stearns after a "run"that was prompted by rumors. Much of the low-cost money that the banks borrowed from the Federal Reserve did not make it to borrowers however. The banks, instead, invested it in Treasury bonds, and took arbitrage profits in order to strengthen their balance sheets. Ironically, the expanded money supply further weakened the U.S. dollar, thereby aggravating a spiral in crude oil prices which hit$112lbarrel in March. Investors continued to buy oil and other commodities as a hedge against the falling U.S. dollar and inflation. Some economists believe that by the end of 2008, U.S. unemployment will rise from 4.8% to 5.5%. Bear Stearns, an 85-year-old institution, was the smallest of the big five investment banks; the least diversified; and the biggest issuer of mortgage-backed securities. The U.S. Government engineered a takeover of Bear by J.P. Morgan Chase for the firesale price of$2/share as Bear neared bankruptcy after losing billions of dollars on mortgage-backed securities. �One year earlier, Bear's stock had traded at$150/share. Lehman Brothers and Goldman Sachs are now being closely watched since they also were big players in mortgage-backed securities. Much of this mortgage-backed debt is not shown on bank balance sheets, but is carried "off the books" by hedge funds, which are unregulated investment pools. ,�'auLS. .�'i�lr�o� C.C.�1.T. Treasurer PORTFOLIO STATISTICS Dollars in Thousands FEB-08 JAN-08 DEC-07 NOV-07 OCT-07 SEP-07 CITY Month-End Book Value"** $ 237,245 $ 231,415 $ 237,124 $ 240,745 $ 244,113 $ 233,947 Month-End Market Value"** $ 240,311 $ 234,066 $ 238,366 $ 242,224 $ 244,790 $ 234,328 PaperGain(Loss) $ 3,066 $ 2,651 $ 1,242 $ 1,479 $ 677 $ 381 Prior Year Book Variance $ 19,384 $ 5,952 $ 78,074 $ 80,955 $ 86,710 $ 71,505 Interest Earnings $ 797 $ 878 $ 958 $ 965 $ 981 $ 957 Yield-To-Maturity 4.31% 4.72% 4.87% 4.93% 5.05% 5.01% Weighted Maturity(Days) 461 473 458 451 444 426 Effective Duration 0.70 0.72 0.74 0.77 0.79 0.76 RDA Month-End Book Value*'* $ 279,699 $ 285,947 $ 250,975 $ 250,190 $ 250,763 $ 279,542 Month-End Market Value*'"` $ 281,642 $ 287,781 $ 252,033 $ 251,232 $ 251,297 $ 280,070 PaperGain(Loss) $ 1,943 $ 1,834 $ 1,058 $ 1,042 $ 534 $ 528 Prior Year Book Variance $ 19,006 $ 50,338 $ 139,907 $ 135,053 $ 134,543 $ 152,500 Interest Earnings $ 845 $ 942 $ 990 $ 952 $ 1,027 $ 1,167 Yield-To-Maturity 3.78% 4.45% 4.70% 4.70% 4.87% 5.02% Weighted Maturity(Days) 249 247 281 282 282 305 Effective Duration 0.31 0.31 0.37 0.40 0.41 0.40 ' "*" Omits SLGSs. - City of Palm Desert-- Portfolio Characteristics February 29, 2008 Dol/ars in Thousands Aqeins�Interval Market Value ---- < 1 M $ 42,886 �General Fund Ageing� �� <2M <3M _ 100 �6M 10,071 80 � � < 1 YR 19,161 � <2YR 39,009 0 60 <3YR 26,044 � 40 30 28 <4YR 4,282 a° 20 �4 18 <5YR _ 0 0 � 3 p 0 >5YR _ 0 Total: $ 141,453 < 1 M <2M <3M <6M < < < < < , 1YR 2YR 3YR 4YR 5YR 5YR - - -- � - - - � Credit Qualit Ratinas' Market Value I I y � $ 142,096 I ' � 38,137 A � A 10,304 5% 75% Unrated '" 32,799 Total: $ 223,336 I � 20% - - - _ _ _ - - _ / _ _ - - - - - - - - Sector Market Value iAsset Allocation MMF $ 52 g2g ' Agencies 48,302 Agencies MTNs MTNs 56,786 22% 24% � CAMP 32,523 I RDA Loan 32 785 I ,I LAIF �4 MMF CAMP CP _ 24% 15% Total: $ 223,336 RDA Loan � � 15% ' Month Citv Yield LAIF Yield Variance I PerFormance Mar07 5.13 5.21 -0.08 Apr 5.13 5.22 -0.10 5.5 � May 5.11 5.25 -0.13 � Jun 5.11 5.25 -0.14 I Jul 5.11 5.26 -0.15 I p 5.0 Aug 5.09 5.25 -0.17 �° Sep 5.01 5.23 _p,22 I � 4.5 � Oct 5.05 5.14 -0.09 I Nov 4.93 4.96 -0.03 4.0 I DeC 4.87 4.80 0.07 Mar07 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb08 Jan 4.72 4.62 0.10 Feb08 4.31 4.16 0.15 I ■t.�a�t= r;�:�d ■c;,ty v�eid I \ ` Standard and Poors "'"' LAIF,and City Loan to RDA Page 2 I City of Palm Desert Portfolio Holdings February 29, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,022,334 5.08 100.02 $ 3,023,674 A1 A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,942,403 5.01 102.36 $ 2,988,g2g Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,049,680 4.91 101.04 $ 15,428,350 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,005,638 4.91 101.04 $ 2,056,103 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 987,426 5.19 102.33 $ 1,023,311 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,949,706 5.19 102.33 $ 4,093,244 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,983,971 4.99 100.31 $ 2,006,270 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,999,310 5.63 104.61 $ 2,128,879 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,945,772 5.65 109.41 $ 2,068,949 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,023,690 5.67 107.09 $ 2,141,874 Aaa AAA $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,041,458 5.02 99.97 $ 3,079,107 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,985,448 5.18 99.96 $ 1,999,246 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,125,733 5.02 110.08 $ 2,201,594 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,050,936 4.93 105.72 $ 2,114,492 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,150,260 5.13 107.84 $ 4,313,492 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,979,450 5.09 102.70 $ 2,053,944 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,987,357 4.92 99.27 $ 2,010,276 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,992,866 4.96 101.72 $ 2,054,665 Aa1 AA- $ 55,299,000 Subtotal $ 55,223,440 5.08 $ 56,786,399 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,147 4.61 104.94 $ 3,148,125 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,147 4.61 104.94 $ 3,148,125 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,005,520 4.68 100.22 $ 2,019,408 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,959,725 6.90 100.72 $ 2,014,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,979,340 5.59 103.16 $ 3,094,688 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,978,066 4.87 101.75 $ 2,014,650 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,996,393 5.40 101.06 $ 3,031,875 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,029,265 5.02 100.03 $ 3,030,947 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,923,654 5.96 101.91 $ 2,038,125 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,017,249 4.87 102.66 $ 2,087,002 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,020,308 4.87 102.94 $ 2,109,189 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,976,563 4.88 103.04 $ 2,060,804 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,998,004 5.06 101.62 $ 2,032,352 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,000,990 5.47 103.66 $ 2,137,392 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,998,392 5.20 100.85 $ 2,017,042 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,997,673 5.50 102.94 $ 2,109,189 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,992,284 4.88 103.78 $ 2,075,625 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,944,388 5.47 104.06 $ 2,081,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,966,392 6.35 100.94 $ 2,018,750 Aaa AAA $ 43,218,000 Subtotal $ 42,804,502 5.24 $ 44,268,912 "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings February 29, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Federal Agencies--Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,995,183 4.88 100.53 $ 2,010,625 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,881 5.06 101.13 $ 2,022,570 Aaa AAA $ 4,000,000 Subtotal $ 3,995,064 4.97 $ 4,033,195 Local Government Investment Pool $ 13,547 L.A.I.F. 0.00 3/1/08 $ 13,547 4.16 100.00 $ 13,547 U U $ 13,547 Subtotal $ 13,547 4.16 $ 13,547 Local Government Investment Pool $ 31,205,443 C.A.M.P. 0.00 3/1/08 $ 31,205,443 3.74 100.00 $ 31,205,443 U AAA $ 1,317,760 C.A.M.P.(DESERT WILLOW) 0.00 3/1/08 $ 1,317,760 3.74 100.00 $ 1,317,760 U AAA $ 32,523,203 Subtotal $ 32,523,203 3.74 $ 32,523,203 Money Market Fund $ 52,107,969 WF ADVANTAGE GOVT 0.00 3/1/08 $ 52,107,969 4.04 100.00 $ 52,107,969 Aaa AAA $ 52,107,969 Subtotal $ 52,107,969 4.04 $ 52,107,969 Money Market Fund $ 59,643 WF HERITAGE SELECT 0.00 3/1/08 $ 59,643 4.56 100.00 $ 59,643 Aaa AAA $ 59,643 Subtotal $ 59,643 4.56 $ 59,643 Money Market Fund $ 757,808 WF TREASURY PLUS 0.00 3/1/08 $ 757,808 3.20 100.00 $ 757,808 Aaa AAA $ 757,808 Subtotal $ 757,808 3.20 $ 757,808 City Loan to RDA $ 32,785,480 C�TY OF PALM DESERT 0.00 3/1/38 $ 32,785,480 4.16 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 4.16 $ 32,785,480 Total Investments $ 220,764,650 $ 220,270,656 4.31 $ 223,336,156 Cash $ 15,228,961 CITY MAIN CHKG 0.00 3/1/08 $ 15,228,961 0.00 100.00 $ 15,228,961 U U $ 866,993 DESERT WILLOW CHKG 0.00 3/1/08 $ 866,993 0.00 100.00 $ 866,993 U U $ 553,886 MONTEREY 170 CHKG 0.00 3/1/08 $ 553,886 0.00 100.00 $ 553,886 U U $ 236,652 RECREATIONAL FAC CHKG 0.00 3/1/08 $ 236,652 0.00 100.00 $ 236,652 U U $ 46,733 CITY/FALCON CREST HOA 0.00 3/1/08 $ 46,733 0.00 100.00 $ 46,733 U U $ 41,239 ART, FOOD&WINE CHKG 0.00 3/1/08 $ 41,239 0.00 100.00 $ 41,239 U U $ 16,974,464 Subtotal $ 16,974,464 $ 16,974,464 "U"= Unrated Page 4 � City of Palm Desert Portfolio Holdings February 29, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S 8 P Total Investments and Cash $ 237,739,114 $ 237,245,119 $ 240,310,620 %of Portfolio Corporate Issuers (Market Value) AMERICAN HONDA FINANCE 1.26% BANK OF AMERICA 1.24% CITIGROUP 9.40% GENERAL ELECTRIC 3.47% WACHOVIA 3.03% WAL-MART p.ggo�o WELLS FARGO BANK 4.34% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.30% FED HOME LOAN BANK 6.33% FED HOME LOAN MTG CORP 6.90% FED NATIONAL MTG ASSOC 2.57o/a � +�-�t , , ,�,��' . . 1 T.- � 3 � �1 9..� . 4 « ,i� . �3� I � ,.: ��- � �r� ,. , - r" i� . t�-'� . �� '���" . . ` 3s�.�ii`1'� r r .. ' . . . _ � . - ���. � . � ' ' �t'�'�.�� ,l'_ ��s � - ��� ; {� �.�f t� y4�,��� ���3�:.h��,� ,r -' t � :c7 ' � . � . ' r 'S� r . .V � ���2 - • ir._.I _ ... - �4 k�i��rSi'r.a�i71? '_ - ��� . "U"= Unrated Page 5 . Palm Desert Redevelopment Agency--Portfolio Characteristics February 29, 2008 Dol/ars in Thousands __W_...__.. __ ..._ .___..._._.....__ ___......_.._..... _........ _ qeinq Interval Market Value -- - < 1 M $ 46,151 � IPortfolio Ageing w/o SLGSs� �2M - i <3M _ � 100 <6M 2 002 i 90 < 1 YR 80 14,098 = 70 <2YR 29,633 •0 50 43 <3YR 11,445 ; � 40 28 <4YR 4,218 � a 20 13 11 <5YR _ ' 10 0 0 2 4 0 0 >5YR _ � Total: $ 107,547 ` �M `2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR %: --- - - _ - - - -- -�, ualit " Market Value i ICredtt cluality � $ 251,014 I � 12,068 �` A 12,203 I 90% Unrated"' 5,428 I Unrated" Total: $ 280,713 2% ,q � 0 4/a 4% - - - - i _ _ - - - - Sector Market Value IAsset Allocation MMF $ 161,310 A en ' I g cies 45,102 LAIF 5,428 MMF Agencies MTNs 24,471 57% 16% CAMP 44,402 CP LAIF Treasuries _ CAMP MTNs 2% Total: $ 280,713 16°/a 9% I _ I � ,- - -- - - - Month RDA Yield LAIF Yield Variance / !PerFormance Mar07 5.11 5.21 -0.11 Apr 5.09 5.22 -0.13 I 5.4 May 5.10 5.25 -0.15 i Jun 5.11 5.25 -0.14 Jul 5.10 5.26 -0.16 5.0 � Aug 5.07 5.25 -0.19 I -��, Sep 5.02 5.23 _0.21 I � 4.6 � Oct 4.87 5.14 -0.27 Nov 4.70 4.96 -0.26 4,2 Dec 4.70 4.80 -0.10 Mar07 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb08 Jan 4.45 4.62 -0.17 I, Feb08 3.78 4.16 -0.38 I ■LAIFYield lRDAYield 1 I � - J * Standard and Poors ** LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings February 29, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,041,522 5.13 102.38 $ 4,095,108 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,005,762 5.12 99.77 $ 4,060,761 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,006,782 5.12 99.77 $ 3,048,065 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 6.00 1/15/09 $ 3,076,785 3.00 101.86 $ 3,055,902 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,011,022 5.00 101.92 $ 2,038,328 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,086,275 4.76 105.72 $ 3,171,738 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,991,863 4.96 100.07 $ 2,001,330 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,999,237 5.18 100.00 $ 2,999,913 Aa1 AA- $ 24,125,000 $ 24,219,249 4.79 $ 24,471,145 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,045,416 4.88 106.53 $ 2,130,550 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,996,883 4.87 103.56 $ 2,071,250 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,930,014 4.65 105.72 $ 5,180,219 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,957,990 4.79 100.88 $ 4,004,738 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,957,990 4.79 100.88 $ 4,004,738 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,469,010 5.59 103.16 $ 4,642,031 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,995,190 4.84 101.06 $ 4,042,500 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,979,140 4.89 102.13 $ 2,047,606 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,965,048 5.49 105.91 $ 2,118,125 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,964,581 5.50 105.91 $ 2,118,125 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,989,444 5.16 100.03 $ 1,990,622 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,059,677 5.54 110.31 $ 2,206,250 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,845,620 5.54 110.31 $ 4,119,069 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,255,418 4.89 106.53 $ 4,426,373 Aaa AAA $ 43,224,000 Subtotal $ 43,224,000 5.07 $ 43,224,000 Local Government Investment Pool $ 9,656 L.A.I.F. 0.00 3/1/08 $ 9,656 4.16 100.00 $ 9,656 U U $ 21,145 L.A.I.F.(HOUSING) 0.00 3/1/08 $ 21,145 4.16 100.00 $ 21,145 U U $ 5,397,598 L.A.I.F. BOND PROCEEDS 0.00 3/1/08 $ 5,397,598 4.16 100.00 $ 5,397,598 U U $ 5,428,399 Subtotal $ 5,428,399 4.16 $ 5,428,399 Local Government Investment Pool $ 40,623,025 C.A.M.P. 0.00 3/1/08 $ 40,623,025 3.74 100.00 $ 40,623,025 U AAA $ 3,778,749 C.A.M.P.(HOUSING) 0.00 3/1/08 $ 3,778,749 3.74 100.00 $ 3,778,749 U AAA $ 44,401,774 Subtotal $ 44,401,774 3.74 $ 44,401,774 Money Market Fund $ 38,698,707 WF ADVANTAGE GOVT 0.00 3/1/08 $ 38,698,707 3.15 100.00 $ 38,698,707 Aaa AAA $ 38,698,707 Subtotal $ 38,698,707 3.15 $ 38,698,707 "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings February 29, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Money Market Fund $ 91,412,185 WF HERITAGE SELECT 0.00 3/1/08 $ 91,412,185 3.61 100.00 $ 91,412,185 Aaa AAA $ 91,412,185 Subtotal $ 91,412,185 3.61 $ 91,412,185 Money Market Fund $ 31,198,420 WF TREASURY PLUS 0.00 3/1/08 $ 31,198,420 2.47 100.00 $ 31,198,420 Aaa AAA $ 31,198,420 Subtotal $ 31,198,420 2.47 $ 31,198,420 Total Investments $ 278,488,485 $ 278,582,734 3.78 $ 278,834,630 Cash $ 569,095 HOUSING AUTH CHKG 0.00 3/1/08 $ 569,095 0.00 100.00 $ 569,095 U U $ 360,008 HOUSING AUTH TRUST 0.00 3/1/08 $ 360,008 0.00 100.00 $ 360,008 U U $ 929,103 Subtotal $ 929,103 $ 929,103 Total investments and Cash $ 279,417,588 $ 279,511,837 $ 279,763,732 %of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.46% JP MORGAN CHASE 3.63% FIRST UNION NAT BANK 0.73% WAL-MART 1.13% WELLS FARGO BANK 1.79% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.35% FED HOME LOAN BANK 8.92% FED HOME LOAN MTG CORP 2.26% FED NATIONAL MTG ASSOC 1.58% "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 February 29,2008,the Ciry and the RDA investment portfofios 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 cou�d be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts,and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on March 25,2008, ,aac�LS. Gr;lr�� C.C.�>.T: * City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized(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% 21.2% 15.6% 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 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30°/a AA-or Aa3 - - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA&Aaa - - 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601Q) Medium-Term Notes 5 Years 30% A 5 Years 30% A 25.1% 8.7% 53601(k) Mutual Funds 90 Days 20% AAA 8�Aaa 90 Days 20% (2) AAA 8�Aaa 24.0% 57.9% 53601(I) Trust Indenture Debt NotAuthorized 53601(m) Secured Bank Deposits 5 Years No Limit NotAuthorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 14.8% 15.9% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security LAIF No Limit No Limit 0.1% 2.0% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 85.2% 100.0% (2) Maximum limit for mutual funds and local government investment pools,excludin bond proceeds. " Certified California Municipal Treasurer Page 9