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Investment Reports April - June
c_ TO: FROM: DATE: CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM RACHELLE KLASSEN, CITY CLERK NIAMH ORTEGA, RECORDING SECRETARY JULY 10, 2008 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for were presented and approved at the May and June meetings of the Audit, Investment and Finance Committee for the months of April and May, 2008, respectively. 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) 44n (r°2-- BY RDA ON • g/i 0 VERIFIED BY Original on file with City C erk't (Mica CITY COUNCILTION: APPROVED DENIED RECEIVED OTHER iTi:,LT LNG ; .\:3;SS: XBSTAIN: 4ERIFIED Originr41 o & BY : Uh vn on File witH ity Clerk's Office G \Finance\ Niamh Ortega\ Investment CommateMemos\rklasseninvreport wpd CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: CHERIE THOMPSON, OFFICE ASSSITANT PER NIAMH ORTEGA DATE: AUGUST 28, 2008 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for were presented and approved at the July meeting of the Audit, Investment and Finance Committee for the months of June, 2008, respectively. 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. cat Attachment (as noted) CITY COUNCIL ACTION: APPROVED v' DENIED RECEIVED OTHER MEETING AYES: NOES: ABSENT: flQ ABSTAIN: VERIFIED Original �'1riyLSZ. BY: k nv, IC-0(Y) on File wi�l-i C ty Clerk's Office -A(PYalea BY RDA VERIFIED BY Original on filo with City Clorki§ Off* G:\FINANCE\NIAMH ORTEGA\INVESTMENT COMMITTEE \MEMOS\RKLASSENINVREPORT.WPD . t � City of Palm Desert ��� �� ���� City and Redevelopment Agency Portfolios ���:� COMPLIANCE ANALYSIS AND INVESTMENT REPORT , April 2008 '� � i Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary On April 30, the Federal Open Market Committee (FOMC)cut the Fed Funds Rate by 25 basis points to 2.00 percent. The FOMC stated that the economy remained weak, and that markets were under"considerable stress". The FOMC removed its "downside risks to growth" bias, however, signaling a slowdown in rate cutting. Merrill Lynch believes that there will be more easing, and that the Federal Funds Rate will fall to 1.00 percent. The next FOMC meeting will be on June 25. The U.S. economy is still in a slump with weakened consumer spending due to recessionary psychology, higher fuel and food prices, and fewer work hours. Conditions in the subprime market continue to deteriorate. GMAC and Countrywide recently had their credit ratings cut. The Federal Reserve has added asset-backed commercial paper to the list of collateral that it will take. Consumer auto loans and credit cards are probably the next area where problems will arise. Residential construction is in its worst contraction in 27 years. The major threat to the U.S. economy is the linkage between crude oil prices and food prices. The Federal Reserve has no control over these commodities as inflationary drivers. Crude oil, which is in a bubble, recently hit$129/barrel. This increases the production, transportation, and packaging costs of food. Grains are also being diverted into ethanol, thereby � reducing the supply of food. All of this puts tremendous pressure on consumers. ��s ��� c.c.,y r Treasurer PORTFOLIO STATISTICS Dollars in Thousands APR-08 MAR-08 FEB-08 JAN-08 DEC-07 NOV-07 CITY Month-End Book Value""` $ 222,731 $ 232,474 $ 226,921 $ 231,415 $ 235,098 $ 238,867 Month-End Market Value"'""` $ 224,158 $ 234,850 $ 229,529 $ 234,066 $ 236,340 $ 240,346 Paper Gain(Loss) $ 1,427 $ 2,376 $ 2,608 $ 2,651 $ 1,242 $ 1,479 Prior Year Book Variance $ (26,260) $ 21,482 $ 8,430 $ (5,952) $ 76,048 $ 79,077 Interest Earnings $ 716 $ 756 $ 739 $ 865 $ 932 $ 961 Yield-To-Maturity 3.98% 4.03% 4.31% 4.72% 4.88% 4.93% Weighted Maturity(Days) 512 496 462 473 462 455 Effective Duration 0.77 0.79 0.70 0.72 0.74 0.77 RDA Month-End Book Value""` $ 261,769 $ 275,545 $ 276,463 $ 285,919 $ 248,963 $ 250,163 Month-End Market Value""* $ 263,017 $ 277,364 $ 278,326 $ 287,781 $ 252,033 $ 251,232 Paper Gain(Loss) $ 1,248 $ 1,819 $ 1,863 $ 1,862 $ 3,070 $ 1,069 Prior Year Book Variance $ (17,240) $ (27,987) $ (31,632) $ 48,552 $ 137,895 $ 135,026 Interest Earnings $ 721 $ 800 $ 749 $ 1,027 $ 992 $ 966 Yield-To-Maturity 3.35% 3.36% 3.79% 4.45% 4.71% 4.70% Weighted Maturity(Days) 305 291 249 247 285 283 Effective Duration 0.40 0.59 0.31 0.31 0.37 0.40 ""* Omits SLGSs. City of Palm Desert-- Portfolio Characteristics April 30, 2008 Dollars in Thousands Aaeinq Interval Market Value < 1 M $ 30,811 General Fund Ageing <2M - <3M 6,047 100 _�...__...�.. _._.._. �_..______..___�w_ _.._. ......___�� _._._..__._ <6M 11,063 ^ $� < 1YR 14,119 0 <2YR 40,030 0 60 < 3YR 33,217 � 40 21 28 23 <4YR 8,216 n°. 20 4 g 10 6 <5YR - � 0 0 0 > 5YR - Total: $ 143,503 <1 M <2M <3M <6M <1YR<2YR<3YR<4YR<5YR>5YR � ----- Credit Quality Ratinas* Market Value qqq $ 169,522 A qq 43,414 3% AAA A 7,177 77% Unrated"" 14 � Total: $ 22p,�27 20% Sector Market Value Asset Allocation MMF $ 47,839 Agencies Agencies 44,945 2p% MTNs 30% MTNs 66,820 CAMP 27,724 Y ..�F,, RDA Loan 32,785 LAIF �4 MMF CAMP 22% 13% CP - � Total: $ 220,127 RDA Loan 15% Month City Yield LAIF Yield Variance Performance May07 5.11 5.25 -0.13 Jun5.11 5.25 -0.14 5.5 ____.._.__._n�....___.____��._._.___..__�._........._..�....___.._.,._.___.____�-----------__ Jul 5.11 5.26 -0.15 Aug 5.09 5.25 -0.17 5.0 Sep 5.01 5.23 -022 0 4.5 Oct 5.05 5.14 -0.09 � 4� Nov 4.93 4.96 -0.03 } Dec 4.87 4.80 0.07 3.5 Jan 4.72 4.62 0.10 3.0 Feb 4.31 4.16 0.15 May07 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr08 Mar 4.05 3.78 0.27 Apr08 3.98 3.40 0.58 � ' �' ' " Standard and Poors ** LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings April 30, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,938,496 5.01 101.66 $ 2,968,358 Aa2 AA- $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,947,829 4.05 103.09 $ 3,912,414 Aa2 AA- $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,072,444 3.20 0.00 $ 3,077,190 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,068,272 4.91 98.17 $ 14,990,482 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,008,116 4.91 98.17 $ 1,997,749 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 988,292 5.19 98.98 $ 989,765 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,953,166 5.19 98.98 $ 3,959,060 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,988,265 4.99 99.92 $ 1,998,354 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,001,564 5.63 102.50 $ 2,085,786 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,942,398 5.65 107.18 $ 2,026,785 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,022,363 5.67 104.94 $ 2,098,716 Aaa AAA $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,118,227 3.23 102.50 $ 4,063,951 Aaa AAA $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,048,142 5.02 99.38 $ 3,060,907 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,990,772 5.18 99.86 $ 1,997,244 Aa3 A+ • $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,117,228 5.02 105.95 $ 2,118,982 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,045,048 4.93 104.37 $ 2,087,474 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,147,787 2.90 104.37 $ 3,131,211 Aa2 AA ' $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,142,931 5.13 104.85 $ 4,193,832 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,980,855 5.09 101.55 $ 2,031,002 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,993,148 4.92 98.67 $ 1,998,029 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,995,281 4.96 100.84 $ 2,036,988 Aa1 AA- $ 66,036,000 Subtotal $ 66,510,623 4.71 $ 66,824,278 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,009,369 4.61 103.88 $ 3,116,250 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,009,369 4.61 103.88 $ 3,116,250 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,009,765 4.68 100.19 $ 2,018,778 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,970,096 6.90 100.53 $ 2,010,625 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,981,594 5.59 102.00 $ 3,060,000 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,978,479 4.87 101.31 $ 2,005,988 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,997,526 5.40 100.81 $ 3,024,375 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,931,263 5.96 100.81 $ 2,016,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,019,162 4.87 101.72 $ 2,067,942 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,022,982 4.87 101.75 $ 2,084,858 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,978,842 4.88 101.83 $ 2,036,620 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,998,499 5.06 101.20 $ 2,023,934 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,005,292 5.47 102.72 $ 2,118,061 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,999,072 5.20 100.59 $ 2,011,770 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,002,455 5.50 101.75 $ 2,084,858 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,993,059 4.88 102.47 $ 2,049,375 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,948,163 5.47 103.06 $ 2,061,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,974,269 6.35 100.69 $ 2,013,750 Aaa AAA "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings April 30, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Federal Agencies--Coupon(continued) $ 40,188,000 Subtotal $ 39,829,254 5.26 $ 40,920,932 Federal Agencies--Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,997,293 4.88 100.38 $ 2,007,500 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,923 5.06 100.81 $ 2,016,266 Aaa AAA $ 4,000,000 Subtotal $ 3,997,216 4.97 $ 4,023,766 Local Government Investment Pool $ 13,950 L.A.I.F. 0.00 5/1/08 $ 13,950 3.40 100.00 $ 13,950 U U $ 13,950 Subtotal $ 13,950 3.40 $ 13,950 Local Government Investment Pool $ 25,897,891 C.A.M.P. 0.00 5/1/08 $ 25,897,891 2.96 100.00 $ 25,897,891 U AAA $ 1,826,491 C.A.M.P. (DESERT WILLOW) 0.00 5/1/08 $ 1,826,491 2.96 100.00 $ 1,826,491 U AAA $ 27,724,382 Subtotal $ 27,724,382 2.96 $ 27,724,382 Money Market Fund $ 47,839,066 WELLS FARGO HERITAGE 0.00 5/1/08 $ 47,839,066 2.82 100.00 $ 47,839,066 Aaa AAA $ 47,839,066 Subtotal $ 47,839,066 2.82 $ 47,839,066 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 5/1/38 $ 32,785,480 3.40 0.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 3.40 $ 32,785,480 Total Investments $ 218,586,878 $ 218,699,971 3.98 $ 220,131,854 Cash $ 1,590,813 CITY MAIN CHKG 0.00 5/1/08 $ 1,590,813 0.00 100.00 $ 1,590,813 U U $ 1,601,934 DESERT WILLOW CHKG 0.00 5/1/08 $ 1,601,934 0.00 100.00 $ 1,601,934 U U $ 554,073 MONTEREY 170 CHKG 0.00 5/1/08 $ 554,073 0.00 100.00 $ 554,073 U U $ 283,925 RECREATIONAL FAC CHKG 0.00 5/1/08 $ 283,925 0.00 100.00 $ 283,925 U U $ - FALCON CREST HOA 0.00 5/1/08 $ - 0.00 100.00 $ - U U $ - ART, FOOD&WINE CHKG 0.00 5/1/08 $ - 0.00 100.00 $ - U U $ 4,030,746 Subtotal $ 4,030,746 $ 4,030,746 Total Investments and Cash $ 222,617,624 $ 222,730,717 $ 224,162,600 "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings April 30, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P °/a of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 4.44°/a CITIGROUP 9.79% GENERAL ELECTRIC 5.48% WACHOVIA 3.20°/a WAL-MART 2.33% WELLS FARGO BANK 4.58% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.58% FED HOME LOAN BANK 5.40% FED HOME LOAN MTG CORP 7.34% FED NATIONAL MTG ASSOC 2.73% "U"= Unrated Page 5 Palm Desert Redevelopment Agency-- Portfolio Characteristics April 30, 2008 Dollars in Thousands �.-_- --..__ _ _ Aqeinp Interval Market Value � � < 1 M $ 16,770 � Portfolio Ageing w/o SLGSs� � <2M - 1 < 3M - 100 _ _ _ _ _ _ ; <6M 14,045 90 80 < 1YR 16,244 = 70 <2YR 32,306 0 60 50 33 <3YR 18,840 � 0 30 17 17 19 <4YR - a 2� 14 <5YR _ 10 0 0 n n 0 0 0 0 -u -u- --- > 5YR ' < 1 M <2M <3M <6M < < < < < > Total: $ 98,205 � 1YR 2YR 3YR 4YR 5YR 5YR Quality* Market Value Credit Quality AAA $ 224,081 � AA 25,968 Unrated" 85o/a A 12,151 �% Unrated"` 31 A Total: $ 262,231 50�0 � 10% Sector Market Value Asset Allocation , MMF $ 162,139 MMF LAIF Agencies 42,719 620�0 0% LAI F 31 MTNs 38,118 CAMP 19,224 Agencies CP - CAMP ;; 16% Treasuries - 7°/o MTNs Total: $ 262,231 15% Month RDA Yield LAIF Yield Variance Performance Apr07 5.09 5.22 -0.13 May 5.10 5.25 -0.15 5.5 _ _ _ Jun 5.11 5.25 -0.14 i Jul 5.10 5.26 -0.16 5.0 Aug 5.07 5.25 -0.19 = 4.5 Sep 5.02 5.23 -0.21 d 4.0 Oct 4.87 5.14 -0.27 } Nov 4.70 4.96 -0.26 3•5 Dec 4.70 4.80 -0.10 3A Jan 4.45 4.62 -0.17 Apr07 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Feb 3.78 4.16 -0.38 Mar 3.36 3.78 -0.42 �LAIF Yield �RDA Yield Apr08 3.35 3.40 -0.05 -- - - --- " Standard and Poors '" LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings April 30, 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 $ 4,034,861 5.13 101.51 $ 4,060,452 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,016,068 5.12 99.64 $ 4,055,198 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,014,518 5.12 99.64 $ 3,043,889 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 6.00 1/15/09 $ 3,062,113 3.00 101.16 $ 3,034,902 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,008,573 5.00 100.83 $ 2,016,682 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,076,301 4.76 104.37 $ 3,131,211 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,075,735 2.91 101.23 $ 3,036,825 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,994,840 4.96 99.98 $ 1,999,634 Aa1 AA- $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,893,861 3.00 100.84 $ 13,739,587 Aa1 AA- $ 37,750,000 Subtotal $ 38,176,869 3.96 $ 38,118,380 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,040,685 4.88 104.98 $ 2,099,648 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,997,248 4.87 102.47 $ 2,049,375 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,928,058 4.65 104.59 $ 5,125,094 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,961,763 4.79 100.69 $ 3,997,294 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,961,763 4.79 100.69 $ 3,997,294 Aaa AAA ' $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,472,391 5.59 102.00 $ 4,590,000 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,996,701 4.84 100.81 $ 4,032,500 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,982,224 4.89 101.22 $ 2,029,436 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,966,972 5.49 104.66 $ 2,093,125 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,966,531 5.50 104.66 $ 2,093,125 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,055,759 5.54 108.97 $ 2,179,375 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,838,293 5.54 108.97 $ 4,068,893 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,244,542 4.89 105.03 $ 4,364,048 Aaa AAA $ 41,234,000 Subtotal $ 41,412,931 5.06 $ 42,719,207 Local Government Investment Pool $ 9,749 L.A.I.F. 0.00 5/1/08 $ 9,749 3.40 100.00 $ 9,749 U U $ 21,339 L.A.I.F. (HOUSING) 0.00 5/1/08 $ 21,339 3.40 100.00 $ 21,339 U U $ 31,087 Subtotal $ 31,087 3.40 $ 31,087 Local Government Investment Pool $ 16,163,384 C.A.M.P. 0.00 5/1/08 $ 16,163,384 2.96 100.00 $ 16,163,384 U AAA $ 3,060,680 C.A.M.P.(HOUSING) 0.00 5/1/08 $ 3,060,680 2.96 100.00 $ 3,060,680 U AAA $ 19,224,064 Subtotal $ 19,224,064 2.96 $ 19,224,064 Money Market Fund $ 162,137,832 WELLS FARGO HERITAGE 0.00 5/1/08 $ 162,137,832 2.82 100.00 $ 162,137,832 Aaa AAA $ 162,137,832 Subtotal $ 162,137,832 2.82 $ 162,137,832 "U"= Unrated Page 7 � Palm Desert Redevelopment Agency Portfolio Holdings April 30, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Total Investments $ 260,376,983 $ 260,982,783 3.35 $ 262,230,570 Cash $ 397,361 HOUSING AUTH CHKG 0.00 5/1/08 $ 397,361 0.00 100.00 $ 397,361 U U $ 389,132 HOUSING AUTH TRUST 0.00 5/1/08 $ 389,132 0.00 100.00 $ 389,132 U U $ 786,493 Subtotal $ 786,493 $ 786,493 Total Cash and Investments $ 261,163,476 $ 261,769,276 $ 263,017,063 °/a of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.54% JP MORGAN CHASE 3.85% FIRST UNION NAT BANK 0.77% WAL-MART 2.35% WELLS FARGO BANK 5.98% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.53% FED HOME LOAN BANK 8.68% FED HOME LOAN MTG CORP 2.38% FED NATIONAL MTG ASSOC 1.66% "U"= Unrated Page 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert("City")and the Palm Desert Redevelopment Agency("RDA")are governed by federal, state, and local law. The City Treasurer's"Statement of Investment Policy"is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended April 30, 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 could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on May 27, 2008, ,aaccLS. C'i�lr�o�rz C.C.�1.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 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 NotAuthorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 20.0% 15.9% 53601(f) 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-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 A 30.4% 14.6% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 21.9% 62.1% 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&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 12.7% 7.4% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& Not Authorized Securities AA(Security LAIF No Limit No Limit 0.0% 0.0% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 85.0% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. "` Certified California Municipal Treasurer Page 9 ♦ City of Palm Desert � i--; ---. .--- --� �, City and Redevelopment Agency Portfolios ��„ COMPLIANCE ANALYSIS AND INVESTMENT REPORT �� �� � May 2008 •� , � Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee(FOMC)will meet next on June 24-25. No changes to the Federal Funds Rate are expected, as the FOMC pauses to evaluate the effects of its prior rate actions. Federal Funds Futures have assigned a 45% probability in October 2008, and a 75% probability in November 2008, to a 25 basis-point rate increase. It is thought that rapidly escalating oil prices will compel the FOMC to shift from stimulating the economy to restraining commodities-driven inflation, by raising short-term interest rates. Real Gross Domestic Product(GDP) is estimated to have grown by only 0.6% during 4Q2007 and 1 Q2008. The depth of the economic slowdown is underscored by the Unemployment Rate which rose from 5.0% to 5.5% in May. The financial sector continues to struggle. Lehman Brothers is attempting to raise $6 billion, in anticipation of a$2.8 billion loss in 2Q2008. Banks are expected to charge-off$65-$165 billion in bad debt over the next five years due to bad real estate loans. Transportation industries (autos, airlines, trucking) are under severe pressure, with the cost of crude oil rising to $138/barrel. Morgan Stanley believes that oil will rise to $150/barrel by July 4 due to increased Asian demand. Bond yields improved from April to May as the "Flight to Quality" reversed. Rising U.S. Treasury yields narrowed the yield � spreads between corporates, and Treasuries and Federal Agencies. ��s ��ao� c.c.�r. Treasurer PORTFOLIO STATISTICS Dollars in Thousands MAY-08 APR-08 MAR-08 FEB-08 JAN-08 DEC-07 CITY Month-End Book Value*"' $ 224,746 $ 222,731 $ 232,474 $ 226,921 $ 231,415 $ 235,098 Month-End Market Value""' $ 226,069 $ 224,158 $ 234,850 $ 229,529 $ 234,066 $ 236,340 Paper Gain(Loss) $ 1,323 $ 1,427 $ 2,376 $ 2,608 $ 2,651 $ 1,242 Prior Year Book Variance $ (32,513) $ (26,260) $ 21,482 $ 8,430 $ (5,952) $ 76,048 Interest Earnings $ 689 $ 716 $ 756 $ 739 $ 865 $ 932 Yield-To-Maturity 3.88% 3.98% 4.03% 4.31% 4.72% 4.88% Weighted Maturity(Days) 519 512 496 462 473 462 Effective Duration 0.74 0.77 0.79 0.70 0.72 0.74 RDA Month-End Book Value"�" $ 299,471 $ 261,769 $ 275,545 $ 276,463 $ 285,919 $ 248,963 Month-End Market Value""" $ 300,441 $ 263,017 $ 277,364 $ 278,326 $ 287,781 $ 252,033 Paper Gain(Loss) $ 970 $ 1,248 $ 1,819 $ 1,863 $ 1,862 $ 3,070 Prior Year Book Variance $ (11,724) $ (17,240) $ (27,987) $ (31,632) $ 48,552 $ 137,895 Interest Earnings $ 722 $ 721 $ 800 $ 749 $ 1,027 $ 992 Yield-To-Maturity 3.14% 3.35% 3.36% 3.79% 4.45% 4.71% Weighted Maturity(Days) 266 305 291 249 247 285 Effective Duration 0.33 0.40 0.59 0.31 0.31 0.37 ""' Omits SLGSs. City of Palm Desert -- Portfolio Characteristics May 31, 2008 Dollars in Thousands Aqeinq Interval Market Value < 1 M $ 30,046 General Fund Ageing <2M 6,029 <3M 4,010 100 �_____.�._.__�__.�___ <6M 11,060 ^ 80 < 1 YR 10,052 0 <2YR 46,013 0 60 <3YR 26,522 � 40 32 <4YR 7,992 a 21 19 20 4 3 8 7 6 <5YR - 0 0 > 5YR _ � Total: $ 141,724 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Ratinqs" Market Value Credit Quality � $ 147,002 � 47,551 A AAA A 22,467 10% 68% Unrated"' 14 Total: $ 217,034 AA • 22% Sector Market Value Asset Allocation ' MMF $ 42,227 Agencies 44,788 Agencies MTNs MTNs 66,891 21% 31°/a CAMP 30,329 ?� RDA Loan 32,785 (t&d.��::._d'°.s:,, LAIF �q MMF CAMP CP _ 19% 14% Total: $ 217,034 RDA Loan 15% Month Citv Yield LAIF Yield Variance Performance Jun07 5.11 5.25 -0.14 Jul 5.11 5.26 -0.15 ____.._.__.._________..__.._�..._..__.._..._....__..._..........._._.___.__._.._..__--- -- Aug 5.09 5.25 -0.17 5•2 Sep 5.01 5.23 -0.22 Oct 5.05 5.14 -0.09 e 4.4 Nov 4.93 4.96 -0.03 � Dec 4.87 4.80 0.07 } 3.6 Jan 4.72 4.62 0.10 Feb 4.31 4.16 0.15 2$ Mar 4.05 3.78 �•27 Jun07 Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay08 Apr 3.98 3.40 0.58 May08 3.88 3.07 0.81 � . . ; a, , , ,- " Standard and Poors *"` LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings May 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S 8�P Medium-Term Notes $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,936,542 5.01 101.67 $ 2,968,627 Aa2 AA- $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,943,957 4.05 101.95 $ 3,869,067 Aa2 AA- $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,069,946 3.20 0.00 $ 3,069,946 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,077,568 4.91 99.58 $ 15,205,484 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,009,355 4.91 99.58 $ 2,026,402 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 988,724 5.19 100.38 $ 1,003,757 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,954,897 5.19 100.38 $ 4,015,028 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,990,411 4.99 99.95 $ 1,998,988 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,002,691 5.63 101.50 $ 2,065,554 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,940,711 5.65 105.80 $ 2,000,757 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,021,699 5.67 104.11 $ 2,082,104 Aaa AAA $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,113,062 3.23 101.50 $ 4,024,531 Aaa AAA $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,051,483 5.02 99.36 $ 3,060,242 Aa3 A+ - $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,993,434 5.18 99.92 $ 1,998,418 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,112,975 5.02 105.43 $ 2,108,602 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,042,103 4.93 104.27 $ 2,085,342 Aa2 AA � $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,138,128 2.90 104.27 $ 3,128,013 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,139,266 5.13 103.08 $ 4,123,060 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,981,557 5.09 100.53 $ 2,010,564 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,996,044 4.92 99.74 $ 2,019,759 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,996,489 4.96 100.31 $ 2,026,290 Aa1 AA- $ 66,036,000 Subtotal $ 66,501,043 4.71 $ 66,890,535 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,008,980 4.61 103.03 $ 3,090,938 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,008,980 4.61 103.03 $ 3,090,938 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,011,887 4.68 100.13 $ 2,017,519 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,975,282 6.90 100.47 $ 2,009,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,982,721 5.59 101.78 $ 3,053,438 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,978,685 4.87 101.16 $ 2,002,894 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,998,092 5.40 100.63 $ 3,018,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,935,068 5.96 100.63 $ 2,012,500 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,020,119 4.87 101.56 $ 2,064,766 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,024,318 4.87 101.38 $ 2,077,174 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,979,982 4.88 101.52 $ 2,030,466 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,998,746 5.06 101.05 $ 2,021,016 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,007,442 5.47 101.81 $ 2,099,374 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,999,411 5.20 100.36 $ 2,007,250 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,004,846 5.50 101.38 $ 2,077,174 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,993,447 4.88 102.22 $ 2,044,375 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,950,050 5.47 102.09 $ 2,041,875 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,978,207 6.35 100.59 $ 2,011,875 Aaa AAA Page 3 "U"= Unrated City of Palm Desert Portfolio Holdings May 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S& P Federal Agencies--Coupon (continued) $ 40,188,000 Subtotal $ 39,856,263 5.26 $ 40,771,694 Federal Agencies--Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,998,348 4.88 100.22 $ 2,004,375 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,944 5.06 100.58 $ 2,011,612 Aaa AAA $ 4,000,000 Subtotal $ 3,998,291 4.97 $ 4,015,987 Local Government Investment Pool $ 13,950 L.A.I.F. 0.00 6/1/08 $ 13,950 3.07 100.00 $ 13,950 U U $ 13,950 Subtotal $ 13,950 3.07 $ 13,950 Local Government Investment Pool $ 28,498,638 C.A.M.P. 0.00 6/1/08 $ 28,498,638 2.78 100.00 $ 28,498,638 U AAA $ 1,830,784 C.A.M.P. (DESERT WILLOW) 0.00 6/1/08 $ 1,830,784 2.78 100.00 $ 1,830,784 U AAA $ 30,329,422 Subtotal $ 30,329,422 2.78 $ 30,329,422 Money Market Fund $ 42,227,154 WELLS FARGO HERITAGE 0.00 6/1/08 $ 42,227,154 2.58 100.00 $ 42,227,154 Aaa AAA $ 42,227,154 Subtotal $ 42,227,154 2.58 $ 42,227,154 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 6/1/38 $ 32,785,480 3.07 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 3.07 $ 32,785,480 ITotallnvestments $ 215,580,006 $ 215,711,604 3.88 $ 217,034,222 Cash $ 7,004,853 CITY MAIN CHKG 0.00 6/1/08 $ 7,004,853 0.00 100.00 $ 7,004,853 U U $ 1,646,409 DESERT WILLOW CHKG 0.00 6/1/08 $ 1,646,409 0.00 100.00 $ 1,646,409 U U $ 383,001 RECREATIONAL FAC CHKG 0.00 6/1/08 $ 383,001 0.00 100.00 $ 383,001 U U $ 43 MONTEREY 170 CHKG 0.00 6/1/08 $ 43 0.00 100.00 $ 43 U U $ - ART, FOOD&WINE CHKG 0.00 6/1/08 $ - 0.00 100.00 $ - U U $ 9,034,306 Subtotal $ 9,034,306 $ 9,034,306 Total Investments and Cash $ 224,614,312 $ 224,745,910 $ 226,068,528 Page 4 "U"= Unrated City of Palm Desert Portfolio Holdings May 31, 2008 Market Rati ngs Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S 8�P %of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 4.38% CITIGROUP 9.84% GENERAL ELECTRIC 5.38% WACHOVIA 3.17% WAL-MART 2.31% WELLS FARGO BANK 4.50% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.52% FED HOME LOAN BANK 4.46% FED HOME LOAN MTG CORP 6.36% FED NATIONAL MTG ASSOC 2.70% Page 5 "U"= Unrated . Palm Desert Redevelopment Agency-- Portfolio Characteristics May 31, 2008 Dollars in Thousands Aqeinq Interval Market Value < 1 M $ 56,267 Portfolio Ageing w/o SLGSs <2M _ < 3M 2,000 100 .___ _..__.. .___..__ __�. _.__ . ._.__......_._____._�------ <6M 12,005 90 � 80 < 1YR 16,218 0 70 <2YR 31,887 0 50 41 <3YR 18,422 � 40 23 <4YR - a 20 9 12 13 < 5YR _ 10 0 � 0 0 0 0 >5YR - Total: $ 136,799 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Qualitv" Market Value Credit Quality AAA $ 261,733 AA 25,892 '� 87% A 12,167 Unrated"` 31 A Total: $ 299,823 4% qq 9% Sector Market Value Asset Allocation MMF $ 160,505 Agencies 42,475 MTNs MTNs 38,059 MMF 53% 13% CAMP 58,753 LAIF 31 CP - Agencies Treasuries - CAMP 14% Total: $ 299,823 20% Month RDA Yield LAIF Yield Variance Performance Jun07 5.11 5.25 -0.14 Jul5.10 5.26 -0.16 _.._...__ __.,_�_._�._______..._._.. ---.._.___��_�,___ _..._.._.___.___._____.. Aug 5.07 525 -0.19 5•2 Sep 5.02 5.23 -0.21 Oct 4.87 5.14 -0.27 0 4.4 Nov 4.70 4.96 -0.26 �° a� Dec 4.70 4.80 -0.10 } 3.6 Jan 4.45 4.62 -0.17 Feb 3.78 4.16 -0.38 2 g Mar 3.36 3.78 -0.42 Jun07 Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay08 Apr 3.35 3.40 -0.05 May08 3.14 3.07 0.06 �LAIF Yield �RDA Yield " Standard and Poors "' LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings May 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 $ 4,031,530 5.13 101.29 $ 4,051,412 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,021,221 5.12 99.89 $ 4,065,502 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,018,385 5.12 99.89 $ 3,051,624 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 6.00 1/15/09 $ 3,054,776 3.00 101.05 $ 3,031,539 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/OS $ 2,007,348 5.00 100.91 $ 2,018,186 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,071,314 4.76 104.27 $ 3,128,013 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,072,823 2.91 101.48 $ 3,044,526 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,996,329 4.96 100.02 $ 2,000,314 Aa1 AA- $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,880,724 3.00 100.31 $ 13,667,428 Aa1 AA- $ 37,750,000 Subtotal $ 38,154,450 3.96 $ 38,058,545 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,038,320 4.88 104.64 $ 2,092,764 Aaa AAA " $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,997,431 4.87 102.25 $ 2,045,000 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,927,081 4.65 103.53 $ 5,073,031 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,963,649 4.79 100.50 $ 3,989,850 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,963,649 4.79 100.50 $ 3,989,850 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,474,081 5.59 101.78 $ 4,580,156 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,997,457 4.84 100.63 $ 4,025,000 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,983,767 4.89 101.09 $ 2,026,930 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,967,933 5.49 103.25 $ 2,065,000 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,967,506 5.50 103.25 $ 2,065,000 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,053,800 5.54 107.69 $ 2,153,750 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,834,629 5.54 107.69 $ 4,021,051 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,239,105 4.89 104.63 $ 4,347,169 Aaa AAA $ 41,234,000 Subtotal $ 41,408,408 5.06 $ 42,474,551 Local Government Investment Pool $ 9,749 L.A.I.F. 0.00 6/1/08 $ 9,749 3.07 100.00 $ 9,749 U U $ 21,339 L.A.I.F. (HOUSING) 0.00 6/1/08 $ 21,339 3.07 100.00 $ 21,339 U U $ 31,087 Subtotal $ 31,087 3.07 $ 31,087 Local Government Investment Pool $ 55,684,637 C.A.M.P. 0.00 6/1/08 $ 55,684,637 2.78 100.00 $ 55,684,637 U AAA $ 3,067,874 C.A.M.P. (HOUSING) 0.00 6/1/08 $ 3,067,874 2.78 100.00 $ 3,067,874 U AAA $ 58,752,511 Subtotal $ 58,752,511 2.78 $ 58,752,511 Money Market Fund $ 160,505,883 WELLS FARGO HERITAGE 0.00 6/1/08 $ 160,505,883 2.58 100.00 $ 160,505,883 Aaa AAA $ 160,505,883 Subtotal $ 160,505,883 2.58 $ 160,505,883 "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings May 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Total Investments $ 298,273,482 $ 298,852,340 3.32 $ 299,822,578 Cash $ 228,228 HOUSING AUTH CHKG 0.00 6/1/08 $ 228,228 0.00 100.00 $ 228,228 U U $ 389,999 HOUSING AUTH TRUST 0.00 6/1/08 $ 389,999 0.00 100.00 $ 389,999 U U $ 618,227 Subtotal $ 618,227 $ 618,227 Total Investments and Cash $ 298,891,709 $ 299,470,567 $ 300,440,805 %of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.35% JP MORGAN CHASE 3.38% FIRST UNION NAT BANK 0.67% WAL-MART 2.05% WELLS FARGO BANK 5.21% %of Portfolio Agency Users (Market Value) FED FARM CREDIT BANK 3.07% FED HOME LOAN BANK 6.19% FED HOME LOAN MTG CORP 2.06% FED NATIONAL MTG ASSOC 1.45% "U"= Unrated Page 8 — — - --- ..�.�,- STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert("City")and the Palm Desert Redevelopment Agency("RDA")are governed by federal, state, and local law. The City Treasurer's"Statement of Investment Policy"is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended May 31, 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 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 June 24, 2008, �actiLS. G'�tr�o�, C.C.�1.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% 20.3% 13.9% 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°/o AAA&Aaa - - 53601(i) Reverse Repos 92 Days 20% NotAuthorized 53601(j) Medium-Term Notes 5 Years 30% A 5 Years 30°/a A 30.8% 12.8% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 19.6% 53.7% 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 14.1% 19.7% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& Not Authorized Securities AA(Security LAIF No Limit No Limit 0.0% 0.0% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 84.8% 100.0% (2) Maximum limit for mutual funds and local government investment pools,excluding bond proceeds. ' Certified California Municipal Treasurer Page 9 City of Palm Desert ��� ����--� �' /-���,� City and Redevelopment Agency Portfolios � � � � COMPLIANCE ANALYSIS AND INVESTMENT REPORT ��� � June 2008 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 August 5. No change in interest rates is expected. The FOMC is fighting both rising inflation and anemic growth at the same time. There is little room for the FOMC to raise interest rates over the next six months, with the economy being undermined by high food and energy prices, a damaged housing sector, weak employment, and depressed consumer expectations. The FOMC is hoping that the slowing economy will restrain price increases. There is, however, the question of how effectively domestic policy can contain inflation fueled by essential commodities imports. Inflation in June 2008 was at the highest level in 16 years. Commercial banks, investment banks, and mortgage banks continued to pile up huge real estate-related losses. The U.S. Treasury put together a rescue package for Fannie Mae and Freddie Mack after rumors spread that they might be put into federal receivership due to a shrinking capital base, and huge amounts of subprime loans on their books. Separately, IndyMac, a California mortgage lender and savings bank, was seized by federal regulators, in the third-largest bank failure in U.S. history. The failure was caused by a classic 1930s-type bank run which continued after federal regulators reopened the bank. Federal regulators reportedly have a list of 90-100 other financial institutions that may fail over the next year. The IndyMac collapse alone may wipe out more than 10% of the FDIC's $53 billion deposit-insurance fund. In an effort to stabilize 19 other financial institutions that are under pressure, the SEC issued an emergency order to limit short sales of � those institutions' stock. ,��5 G� c.c.M r � Treasurer PORTFOLIO STATISTICS Dollars in Thousands JUN-08 MAY-08 APR-08 MAR-08 FEB-08 JAN-08 CITY Month-End Book Value"" $ 231,179 $ 224,746 $ 222,731 $ 232,474 $ 226,921 $ 231,415 Month-End Market Value""" $ 232,273 $ 226,069 $ 224,158 $ 234,850 $ 229,529 $ 234,066 Paper Gain(Loss) $ 1,094 $ 1,323 $ 1,427 $ 2,376 $ 2,608 $ 2,651 Prior Year Book Variance $ (11,919) $ (32,513) $ (26,260) $ 21,482 $ 8,430 $ (5,952) Interest Earnings $ 689 $ 703 $ 716 $ 756 $ 739 $ 865 Yield-To-Maturity 3.75% 3.88% 3.98% 4.03% 4.31% 4•72°�a Weighted Maturity(Days) 503 519 512 496 462 473 Effective Duration 0.68 0.74 0.77 0.79 0.70 0.72 RDA Month-End Book Value"""' $ 285,360 $ 299,471 $ 261,769 $ 275,545 $ 276,463 $ 285,919 Month-End Market Value"" $ 286,216 $ 300,441 $ 263,017 $ 277,364 $ 278,326 $ 287,781 Paper Gain (Loss) $ 856 $ 970 $ 1,248 $ 1,819 $ 1,863 $ 1,862 Prior Year Book Variance $ (17,349) $ (11,724) $ (17,240) $ (27,987) $ (31,632) $ 48,552 Interest Earnings $ 744 $ 770 $ 721 $ 800 $ 749 $ 1,027 Yield-To-Maturity 3.09% 3.14% 3.35% 3.36% 3.79% 4.45% Weighted Maturity(Days) 280 266 305 29� 249 24� Effective Duration 0.32 0.33 0.40 0.59 0.31 0.31 *"'"' Omits SLGSs. � City of Palm Desert-- Portfolio Characteristics June 30, 2008 Dollars in Thousands Aaeinq Interval Market Value �w. __ _�4 < 1M $ 50,532 ' General Fund Ageingl <ZM 4,010 j <3M 3,019 I 100 ` ___ _.____. . ._---- --- . __,.m _.,__�_ _._.._.. _ __,_ <6M 10,044 � $� < 1 YR 8,049 ' _ <2YR 46,013 0 60 <3YR 26,520 � 40 32 29 <4YR 7,991 a° �� <5YR _ i 20 3 2 6 5 5 0 0 > 5YR - � � i ? < 1M <2M <3M <6M < < < < < > Total: $ 156,178 € 1YR 2YR 3YR 4YR 5YR 5YR ' �W e. r___ ✓t Ratinqs` Market Value Credit Quality AAA $ 146,747 A AA 47,405 qo�a qqq A 7,150 72% Unrated*" 22,669 � Total: $ 223,971 24% Sector Market Value Asset Allocation MMF $ 41,128 Agencies 44,739 Agencies MTNs MTNs 66,729 20% 30% CAM P 48,706 ,�;' ^ RDA Loan 22,655 MMF � CAMP LAIF 14 18% 22% CP - RDA Loan Total: $ 223,971 10% Month Citv Yield LAIF Yield Variance Performance Ju107 5.11 5.26 -0.15 Aug5.09 5.25 -0.17 __---__�______--------________._____..__._---------------- Sep 5.01 5.23 -0.22 5.2 , Oct 5.05 5.14 -0.09 Nov 4.93 4.96 -0.03 0 4.4 Dec 4.87 4.80 0.07 �-�, Jan08 4.72 4.62 0.10 } 3.6 Feb 4.31 4.16 0.15 ; Mar 4.05 3.78 0.27 2,8 Apr 3.98 3.40 0.58 Ju107 Aug Sep Oct Nov Dec Jan08 Feb Mar Apr May Jun May 3.88 3.07 0.81 Jun 3.75 2.89 0.86 � � ' � * Standard and Poors "' LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings 30 June 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,934,588 5.01 101.10 $ 2,952,199 Aa2 AA- $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,940,085 4.05 101.45 $ 3,849,921 Aa2 AA- $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,067,448 3.20 0.00 $ 3,067,448 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,086,865 4.91 99.07 $ 15,128,601 Aa1 AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,010,594 4.91 99.07 $ 2,016,156 Aa1 AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 989,157 5.19 99.59 $ 995,853 Aa1 AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,956,627 5.19 99.59 $ 3,983,412 Aa1 AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,992,558 4.99 99.92 $ 1,998,364 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,003,818 5.63 101.57 $ 2,066,994 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,939,024 5.65 105.35 $ 1,992,250 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,021,035 5.67 104.48 $ 2,089,644 Aaa AAA $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,107,897 3.23 101.57 $ 4,027,338 Aaa AAA $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,054,825 5.02 98.87 $ 3,045,098 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,996,096 5.18 99.87 $ 1,997,334 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,108,723 5.02 105.39 $ 2,107,718 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,039,159 4.93 103.68 $ 2,073,522 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,128,469 2.90 103.68 $ 3,110,283 Aa2 AA I $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,135,601 5.13 104.12 $ 4,164,688 Aa1 AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,982,259 5.09 101.01 $ 2,020,174 Aa1 AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,998,939 4.92 99.55 $ 2,015,851 Aa1 AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,997,697 4.96 100.29 $ 2,025,888 Aa1 AA- $ 66,036,000 Subtotal $ 66,491,464 3.76 $ 66,728,735 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,008,590 4.61 102.91 $ 3,087,188 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,008,590 4.61 102.91 $ 3,087,188 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,014,010 4.68 100.03 $ 2,015,630 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,980,467 6.90 100.31 $ 2,006,250 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,983,848 5.59 101.69 $ 3,050,625 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,978,892 4.87 100.94 $ 1,998,563 Aaa AAA ' $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,998,659 5.40 100.41 $ 3,012,188 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,938,872 5.96 100.66 $ 2,013,125 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,021,075 4.87 101.38 $ 2,060,954 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,025,655 4.87 101.47 $ 2,079,095 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,981,121 4.88 101.58 $ 2,031,612 Aaa AAA I $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,998,994 5.06 100.79 $ 2,015,860 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,009,593 5.47 101.75 $ 2,098,085 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,999,751 5.20 100.14 $ 2,002,896 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,007,237 5.50 101.47 $ 2,079,095 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,993,835 4.88 102.16 $ 2,043,125 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,951,937 5.47 102.00 $ 2,040,000 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,982,146 6.35 100.47 $ 2,009,375 Aaa AAA "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings 30 June 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Federal Agencies--Coupon (continued) $ 40,188,000 Subtotal $ 39,883,272 5.26 $ 40,730,851 Federal Agencies--Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,999,402 4.88 100.06 $ 2,001,250 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,965 5.06 100.34 $ 2,006,870 Aaa AAA $ 4,000,000 Subtotal $ 3,999,367 4.97 $ 4,008,120 Local Government Investment Pool $ 13,950 L.A.I.F. 0.00 7/1/08 $ 13,950 2.89 100.00 $ 13,950 U U $ 13,950 Subtotal $ 13,950 2.89 $ 13,950 Local Government Investment Pool $ 47,557,750 C.A.M.P. 0.00 7/1/08 $ 47,557,750 2.51 100.00 $ 47,557,750 U AAA $ 1,148,180 C.A.M.P. (DESERT WILLOW) 0.00 7/1/08 $ 1,148,180 2.51 100.00 $ 1,148,180 U AAA , $ 48,705,930 Subtotal $ 48,705,930 2.51 $ 48,705,930 Money Market Fund • $ 41,128,565 WF HERITAGE SELECT 0.00 7/1/08 $ 41,128,565 2.58 100.00 $ 41,128,565 Aaa AAA $ 41,128,565 Subtotal $ 41,128,565 2.58 $ 41,128,565 City of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 7/1/38 $ 22,655,000 2.89 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 2.89 $ 22,655,000 Total Investments $ 222,727,444 $ 222,877,547 3.75 $ 223,971,151 Cash $ 6,783,821 CITY MAIN CHKG 0.00 7/1/08 $ 6,783,821 0.00 100.00 $ 6,783,821 U U $ 1,103,364 DESERT WILLOW CHKG 0.00 7/1/08 $ 1,103,364 0.00 100.00 $ 1,103,364 U U $ 414,466 RECREATIONAL FAC CHKG 0.00 7/1/08 $ 414,466 0.00 100.00 $ 414,466 U U $ 43 MONTEREY 170 CHKG 0.00 7/1/08 $ 43 0.00 100.00 $ 43 U U $ - ART, FOOD&WINE CHKG 0.00 7/1/08 $ - 0.00 100.00 $ - U U $ 8,301,694 Subtotal $ 8,301,694 $ 8,301,694 Total Investments and Cash $ 231,029,138 $ 231,179,241 $ 232,272,844 "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings 30 June 2008 Market Rati ngs Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S8�P %of Portfolio Corporate Issuers (Market Value) BANK OF AMERICA 4.25% CITIGROUP 9.53% GENERAL ELECTRIC 5•24% WACHOVIA 3.08% WAL-MART 2•23% WELLS FARGO BANK 4.40% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.39% FED HOME LOAN BANK 5.19% FED HOME LOAN MTG CORP 7.05% FED NATIONAL MTG ASSOC 2.62% � "U"= Unrated Page 5 Palm Desert Redevelopment Agency-- Portfolio Characteristics June 30, 2008 Dollars in Thousands --- __. -_.._ _- - _ k, Aaeing Interval Market Value � ° < 1M $ 56,333 Portfolio Ageing wlo SLGSs� ? <2M 2,000 � � <3M 12,005 ' 100 _ ._.. _ . ; 90 <6M 2,018 ,... 80 < 1 YR 14,200 � ' �� <2YR 31,887 0 50 41 < 3YR 18�422 � 0 30 23 <4YR - ; a 20 . g 10 13 10 1 1 0 0 0 < 5YR ' 0 > 5YR - < 1 M <2M <3M <6M < < < < < > Total: $ 136,865 � 1YR 2YR 3YR 4YR 5YR 5YR �.._.. _.��_ _...._ _ _. - Qualit * Market Value Credit Quality qqq $ 246,703 p� qq 25,848 87% q 12,132 Unrated"` 3� A Total: $ 284,714 4% AA 9% Sector Market Value Asset Allocation MMF $ 156,419 I � Agencies 42,412 MTNs 37,980 MMF Agencies CAMP 47,872 55% 15% LAIF 31 CP - CAMP MTNs Treasuries - 17% 13% Total: $ 284,714 Month RDA Yield LAIF Yield Variance Performance Ju107 5.10 5.26 -0.16 Aug5.07 5.25 -0.19 ___.�_� ---__--_....___----------..__._._.___.___--� Sep 5.02 5.23 -0.21 5'2 ` ' Oct 4.87 5.14 -0.27 I Nov 4.70 4.96 -0.26 = 4.4 Dec 4.70 4.80 -0.10 �-�, Jan08 4.45 4.62 -0.17 } 3.6 Feb 3.78 4.16 -0.38 Mar 3.36 3.78 -0.42 2.8 Apr 3.35 3.40 -0.05 Ju107 Aug Sep Oct Nov DecJan08 Feb Mar Apr May Jun I May 3.14 3.07 0.06 Juf1 3.09 2.89 0.20 ■LAIF Yield ■RDA Yield * Standard and Poors "* LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings 30 June 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 $ 4,028,200 5.13 100.83 $ 4,033,376 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,026,373 5.12 99.60 $ 4,053,858 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,022,253 5.12 99.60 $ 3,042,884 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 6.00 1/15/09 $ 3,047,440 3.00 100.68 $ 3,020,460 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,006,123 5.00 100.72 $ 2,014,494 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,066,327 4.76 103.68 $ 3,110,283 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,069,910 2.91 101.33 $ 3,039,843 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,997,817 4.96 100.00 $ 1,999,936 Aa1 AA- $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,867,588 3.00 100.29 $ 13,664,717 Aa1 AA- $ 37,750,000 Subtotal $ 38,132,031 3.96 $ 37,979,851 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,035,955 4.88 104.39 $ 2,087,702 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,997,614 4.87 102.03 $ 2,040,625 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,926,103 4.65 103.34 $ 5,063,844 Aaa AAA � $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,965,536 4.79 100.31 $ 3,982,406 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,965,536 4.79 100.31 $ 3,982,406 Aaa AAA , $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,475,771 5.59 101.69 $ 4,575,938 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,998,212 4.84 100.41 $ 4,016,250 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,985,309 4.89 100.94 $ 2,023,797 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,968,895 5.49 103.53 $ 2,070,625 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,968,481 5.50 103.53 $ 2,070,625 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,051,842 5.54 107.47 $ 2,149,375 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,830,965 5.54 107.47 $ 4,012,883 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,233,667 4.89 104.34 $ 4,335,483 Aaa AAA $ 41,234,000 Subtotal $ 41,403,885 5.06 $ 42,411,959 Local Government Investment Pool $ 9,749 L.A.I.F. 0.00 7/1/08 $ 9,749 2.89 100.00 $ 9,749 U U $ 21,339 L.A.I.F. (HOUSING) 0.00 7/1/08 $ 21,339 2.89 100.00 $ 21,339 U U $ 31,087 Subtotal $ 31,087 2.89 $ 31,087 Local Government Investment Pool $ 45,799,269 C.A.M.P. 0.00 7/1/08 $ 45,799,269 2.51 100.00 $ 45,799,269 U AAA $ 2,073,645 C.A.M.P. (HOUSING) 0.00 7/1/08 $ 2,073,645 2.51 100.00 $ 2,073,645 U AAA $ 47,872,914 Subtotal $ 47,872,914 2.51 $ 47,872,914 Money Market Fund $ 156,418,681 WF HERITAGE SELECT 0.00 7/1/08 $ 156,418,681 2.58 100.00 $ 156,418,681 Aaa AAA $ 156,418,681 Subtotal $ 156,418,681 2.58 $ 156,418,681 "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings 30 June 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Total Investments $ 283,306,682 $ 283,858,599 3.07 $ 284,714,492 Cash $ 1,123,878 HOUSING AUTH CHECKING 0.00 7/1/08 $ 1,123,878 0.00 100.00 $ 1,123,878 U U $ 377,517 HOUSING AUTH TRUST 0.00 7/1/08 $ 377,517 0.00 100.00 $ 377,517 U U $ 1,501,395 Subtotal $ 1,501,395 $ 1,501,395 Total Investments and Cash $ 284,808,077 $ 285,359,993 $ 286,215,887 °/a of Portfolio • Corporate Issuers (Market Value) CITIGROUP 1.41% JP MORGAN CHASE 3.53% FIRST UNION NAT BANK 0.70% WAL-MART 2.15% WELLS FARGO BANK 5.47% %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.21% FED HOME LOAN BANK 7•94% FED HOME LOAN MTG CORP 2.15% FED NATIONAL MTG ASSOC 1.51% "U"= Unrated Page 8 � STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert("City")and the Palm Desert Redevelopment Agency("RDA")are governed by federal, state, and local law. The City Treasurer's"Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended June 30, 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 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 June 22,2008, ��s ��� 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 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% 19.6% 14.6% 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 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 29.8% 13.4% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 18.5% 55.1% 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 21.9% 16.9% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& Not Authorized Securities AA(Security LAIF No Limit No Limit 0.0% 0.0% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 89.7% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. * Certified California Municipal Treasurer Page 9