The URL can be used to link to this page

Home My WebLink AboutInvstmnt Rpt - September & October 2007r--- ----. City of Palm Desert T- City and Redevelopment Agency Portfolios PAP PA COMPLIANCE ANALYSIS AND INVESTMENT REPORT September 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) will meet next on October 30 and 31. The Fed Fund Futures market has assigned a 32% probability to a 25 basis -point (0.25%) interest rate cut at that meeting. Since it takes about nine months for these rate cuts to take effect, the FOMC is focused more on the future than the present. The slump in the real estate sector continues to deepen. Sales of existing homes in August fell sharply, and home inventories are currently at an 18-year high. Lennar Corp., the second largest U.S. builder, reported a $514 million quarterly loss -- the largest in its history. Many builders are beginning to discount unsold housing inventory by as much as 30% - 50%. This puts downward pressure on the prices of existing houses. The financial sector continued to take major hits as Merrill Lynch reported a $5.5 billion writedown for the third quarter due to subprime mortgages and leveraged loans. Citigroup and UBS are expected to announce writedowns of $5.9 billion and $3.4 billion, respectively, for the same time period. Due to a shrinking U.S. dollar, exports are the bright spot in the U.S. economic picture. Imports, however, have become more expensive for the consumer, and this may increase inflation. Consumer confidence is presently at a two-year low. )9auLS. adVosv, C. C. At T. Treasurer PORTFOLIO STATISTICS Dollars in Thousands SEP-07 AUG-07 JUL-07 JUN-07 MAY-07 APR-07 CITY Month -End Book Value*** $ 234,244 $ 245,850 $ 256,143 $ 243,098 $ 257,259 $ 248,864 Month -End Market Value*** $ 234,625 $ 245,945 $ 256,176 $ 242,909 $ 257,049 $ 248,991 Paper Gain (Loss) $ 381 $ 95 $ 33 $ (189) $ (210) $ 127 Prior Year Book Variance $ 71,802 $ 76,483 $ 85,202 $ 69,826 $ 77,552 $ 98,111 Interest Earnings $ 988 $ 1,045 $ 1,066 $ 1,029 $ 1,067 $ 952 Yield -To -Maturity 5.01 % 5.09% 5.11 % 5.11 % 5.11 % 5.13% Weighted Maturity (Days) 426 415 308 324 355 376 Effective Duration 0.76 0.75 0.45 0.50 0.50 0.56 RDA Month -End Book Value *** $ 273,674 $ 289,864 $ 293,026 $ 302,709 $ 311,195 $ 279,009 Month -End Market Value *** $ 274,202 $ 290,104 $ 293,073 $ 302,676 $ 311,011 $ 279,204 Paper Gain (Loss) $ 528 $ 240 $ 47 $ (33) $ (184) $ 195 Prior Year Book Variance $ 146,632 $ 148,263 $ 145,329 $ 158,249 $ 173,739 $ 136,331 Interest Earnings $ 1,117 $ 1,233 $ 1,270 $ 1,271 $ 1,191 $ 1,203 Yield -To -Maturity 5.02% 5.07% 5.10% 5.11 % 5.10% 5.09% Weighted Maturity (Days) 312 314 279 274 267 293 Effective Duration 0.48 0.47 0.39 0.40 0.42 0.49 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics September 30, 2007 Aaeina Interval Market Value < 1 M $ 25,488 <2M - < 3M - < 6M 10,009 < 1 YR 10,967 < 2YR 21,035 < 3YR 44,200 < 4YR 10,228 < 5YR - > 5YR - Total: $ 121,927 Ratinas * Market Value AAA $ 154,579 AA 31,022 A 14,132 Unrated ** 33,640 Total: $ 233,373 Sector Market Value MMF $ 64,180 Agencies 41,158 MTNs 55,281 CAMP 27,863 RDA Loan 32,785 UB Sweep 11,251 LAIF 855 CID - Total: $ 233,373 Month Citv Yield LAIF Yield Variance Oct06 4.99 5.10 -0.11 Nov 5.01 5.13 -0.12 Dec 5.03 5.13 -0.09 Jan07 5.06 5.16 -0.10 Feb 5.08 5.18 -0.11 Mar 5.13 5.21 -0.08 Apr 5.13 5.22 -0.10 May 5.11 5.25 -0.13 Jun 5.11 5.25 -0.14 Jul 5.11 5.26 -0.15 Aug 5.09 5.25 -0.17 Sep 5.01 5.23 -0.22 General Fund Ageing i 100 80 0 60 40 36 21 17 a 20 n n 0 0 1 n 0 < 1 M < 2M < 3M < 6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Credit Qualityl A AAA 7% 77% AA 16% Asset Allocation Agencies 18% MMF 27% CAMP ;�k 12% z; UB Sweep RDA Loan 5% 14% K+TNs 4% Performance 5.4 v 4.9 m 4.4 Oct06 Nov Dec Jan07 Feb Mar Apr May Jun Jul Aug Sep ■t.n.!f v,, ! a r * Standard and Poors * LAIF, and City Loan to RDA Page 2 of 9 City of Palm Desert Portfolio Holdings September 30, 2007 Market Ratings 1 Par Value Issuer Coupon Maturity Cost YTM Price Value Moody'sI S&P Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,012,344 5.08 99.55 $ 3,009,391 Al A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,952,172 5.01 100.97 $ 2,948,458 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,003,199 4.91 98.22 $ 14,997,721 Aal AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 1,999,444 4.91 98.22 $ 1,998,714 Aal AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 985,264 5.19 99.20 $ 991,977 Aal AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,941,054 5.19 99.20 $ 3,967,908 Aal AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,973,238 4.99 98.49 $ 1,969,832 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,993,675 5.63 99.91 $ 2,033,085 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,954,207 5.65 105.56 $ 1,996,155 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,027,008 5.67 103.06 $ 2,061,106 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 1,990,936 5.13 99.53 $ 1,990,590 Al A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,991,324 5.25 99.59 $ 1,991,834 Aa3 A+ $ 3,080,000 WACHOVIA 3.63 2/17109 $ 3,024,749 5.02 98.18 $ 3,023,852 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8115/08 $ 1,972,139 5.18 98.68 $ 1,973,668 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,146,995 5.02 107.13 $ 2,142,666 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,065,658 4.93 103.37 $ 2,067,382 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 811/11 $ 4,168,585 5.13 103.44 $ 4,137,744 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,975,940 5.09 98.95 $ 1,979,046 Aal AA- $ 55,254,000 Subtotal $ 55,177,930 5.10 $ 55,281,128 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,012,094 4.61 100.84 $ 3,025,313 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,012,094 4.61 100.84 $ 3,025,313 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 1,994,909 4.68 98.97 $ 1,994,220 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,973,705 5.59 99.97 $ 2,999,063 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,977,033 4.87 100.25 $ 1,984,950 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,993,560 5.40 100.00 $ 3,000,000 Aaa AAA $ 2,049,000 FED HOME LOAN BANK 4.00 12/15/09 $ 2,013,626 4.87 99.16 $ 2,031,712 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,017,022 5.02 99.59 $ 3,017,691 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,012,467 4.87 99.72 $ 2,027,282 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,970,865 4.88 99.45 $ 1,988,906 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 1113108 $ 1,996,767 5.06 100.41 $ 2,008,248 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,990,236 5.47 99.22 $ 2,045,891 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,990,345 4.88 100.44 $ 2,008,750 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,934,952 5.47 99.50 $ 1,990,000 Aaa AAA $ 33,169,000 Subtotal $ 32,889,674 5.02 $ 33,147,337 "U" = Unrated Page 3 of 10 City of Palm Desert Portfolio Holdings September 30, 2007 Par Value I Issuer Coupon I Maturity Cost Federal Agencies -- Callable $ 2,000,000 FED HOME LOAN BANK 4.20 $ 2,000,000 FED HOME LOAN MTG CORP 5.05 $ 2,000,000 FED HOME LOAN MTG CORP 5.30 $ 2,000,000 FED NATIONAL MTG ASSOC 5.38 $ 8,000,000 Subtotal Local Government Investment Pool $ 854,503 L.A.I.F. 0.00 $ 854,503 Subtotal Local Government Investment Pool $ 26,370,725 C.A.M.P. 0.00 $ 1,492,355 C.A.M.P. (HOUSING) 0.00 $ 27,863,079 Subtotal Money Market Fund $ 64,180,343 WF ADVANTAGE GOVT MMF 0.00 $ 64,180,343 Subtotal Money Market Fund $ 11,251,128 HIGHMARK SWEEP 0.00 $ 11,251,128 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 $ 32,785,480 Subtotal Total Investments $ 233,357,533 Cash $ (539,483) CITY MAIN CHKG'** 0.00 $ 642,785 DESERT WILLOW CHKG 0.00 $ 1,027,280 MONTEREY 170 CHKG 0.00 $ 84,244 RECREATIONAL FAC CHKG 0.00 $ 22,250 ART, FOOD & WINE CHKG 0.00 $ 15,132 FALCON CREST HOA CHKG 0.00 $ 1,252,210 Subtotal Market YTM I Price I Value Ratings Moody's I S&P 7/18/08 $ 1,989,909 4.88 99.59 $ 1,991,875 Aaa AAA 8/22/08 $ 1,999,777 5.06 100.34 $ 2,006,818 Aaa AAA 8/13/09 $ 2,000,000 5.30 100.29 $ 2,005,728 Aaa AAA 2/1/10 $ 2,000,000 5.37 100.28 $ 2,005,625 Aaa AAA $ 7,989,686 5.15 $ 8,010,046 10/1/07 $ 854,503 5.23 100.00 $ 854,503 U U $ 854,503 5.23 $ 854,503 10/1/07 $ 26,370,725 5.19 100.00 $ 26,370,725 U AAA 10/1/07 $ 1,492,355 5.19 100.00 $ 1,492,355 U AAA $ 27,863,079 5.19 $ 27,863,079 10/1/07 $ 64,180,343 4.99 100.00 $ 64,180,343 Aaa AAA $ 64,180,343 4.99 $ 64,180,343 10/1/07 $ 11,251,128 3.40 100.00 $ 11,251,128 Aaa AAA $ 11,251,128 3.40 $ 11,251,128 10/1/37 $ 32,785,480 5.23 100.00 $ 32,785,480 U U $ 32,785,480 5.23 $ 32,785,480 $ 232,991,823 5.01 $ 233,373,044 10/1/07 $ (539,483) 0.00 100.00 $ (539,483) U U 10/1/07 $ 642,785 0.00 100.00 $ 642,785 U U 10/1/07 $ 1,027,280 0.00 100.00 $ 1,027,280 U U 10/1/07 $ 84,244 0.00 100.00 $ 84,244 U U 10/1/07 $ 22,250 0.00 100.00 $ 22,250 U U 10/1/07 $ 15,132 0.00 100.00 $ 15,132 U U $ 1,252,210 $ 1,252,210 "U" = Unrated Page 4 of 10 City of Palm Desert Portfolio Holdings September 30, 2007 Market Par Value Issuer Coupon I Maturity Cost YTM I Price Value Total Investments and Cash $ 234,609,743 $ 234,244,033 $ 234,625,253 Ratings Moody'sI S&P *** BOOK OVERDRAFT -- NOT A BANK OVERDRAFT. BALANCE SHOWN PRIOR TO INCOMING TRANSFER OF FUNDS FROM THE CITY'S SWEEP ACCOUNT. % of Portfolio Corporate Issuers (Market Value) AMERICAN HONDA FINANCE 1.28% BANK OF AMERICA 1.26% CITIGROUP 9.36% GENERAL ELECTRIC 3.44% IBM 0.85% JP MORGAN CHASE 0.85% WACHOVIA 3.04% WAL-MART 0.88% WELLS FARGO BANK 2.61 % % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.43% FED HOME LOAN BANK 6.40% FED HOME LOAN MTG CORP 5.15% FED NATIONAL MTG ASSOC 2.56% "U" = Unrated Page 5 of 10 Palm Desert Redevelopment Agency -- Portfolio Characteristics September 30, 2007 Aqeinq Interval Market Value r Portfolio Ageing w/o SLGSs� \l < 1 M $ 6,005 < 2M - < 3M - 100 90 < 6M 9,977 80 < 1YR 17,854 70 < 2YR 34,918 c 50 38 < 3YR 19,133 le 0 30 19 21 < 4YR 4,051 a 20 7 11 10 0 0 (� n 4 0 0 < 5YR - n n 1 I I I > 5YR - < 1M < 2M < 3M < 6M < < < < < > Total: $ 91,938 ` 1YR 2YR 3YR 4YR 5YR 5YR ) ualit Market Value Credit Quality AAA $ 235,865 AAA AA 18,043 86% A 8,990 Unrated " Unrated " 10,802 4% AA A Total: $ 273,700 7%3% Sector Market Value Asset Allocation MMF $ 173,627 Agencies 58,890 MMF LAIF 10,802 64% MTNs 27,033 CAMP 3,348 CID - MTNs Agencies Treasuries - 10% LAIF 22% Total: $ 273,700 4% Month RDA Yield LAW Yield Variance Performance Oct06 4.95 5.10 -0.15 Nov 4.95 5.13 -0.18 5.4 Dec 4.95 5.13 -0.18 Jan07 5.05 5.16 -0.11 Feb 5.06 5.18 -0.12 a 5.0 Mar 5.11 5.21 -0.11 v } 0111 Apr 5.09 5.22 -0.13 4.6 May 5.10 5.25 -0.15 Jun 5.11 5.25 -0.14 4.2 Jul 5.10 5.26 -0.16 Oct06 Nov Dec Jan07 Feb Mar Apr May Jun Jul Aug Sep Aug 5.07 5.25 -0.19 Sep 5.02 5.23 -0.21 • LAIF Yield ■RDA Yield ` Standard and Poors " LAIF Page 6 of 9 Palm Desert Redevelopment Agency Portfolio Holdings September 30, 2007 IPar Value l Issuer Medium -Term Notes $ 4,000,000 CITIGROUP $ 4,070,000 JP MORGAN CHASE $ 3,055,000 JP MORGAN CHASE $ 2,000,000 MERRILL LYNCH $ 2,000,000 FIRST UNION NAT BANK $ 3,000,000 WAL-MART $ 2,000,000 WELLS FARGO BANK $ 3,000,000 WELLS FARGO BANK $ 2,020,000 WELLS FARGO BANK $ 2,025,000 WELLS FARGO BANK $ 27,170,000 Subtotal Federal Agencies - Coupon $ 2,000,000 FED FARM CREDIT BANK $ 2,000,000 FED FARM CREDIT BANK $ 2,000,000 FED FARM CREDIT BANK $ 4,900,000 FED FARM CREDIT BANK $ 3,970,000 FED HOME LOAN BANK $ 3,970,000 FED HOME LOAN BANK $ 4,500,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 4,000,000 FED HOME LOAN BANK $ 2,005,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN BANK $ 1,990,000 FED HOME LOAN BANK $ 2,049,000 FED HOME LOAN MTG CORP $ 2,000,000 FED HOME LOAN MTG CORP $ 2,000,000 FED HOME LOAN MTG CORP $ 3,734,000 FED HOME LOAN MTG CORP $ 4,155,000 FED NATIONAL MTG ASSOC $ 2,000,000 FED NATIONAL MTG ASSOC $ 53,273,000 Subtotal Federal Agencies -- Callable $ 5,000,000 FED HOME LOAN BANK $ 5,000,000 Subtotal Market Ratings Coupon l Maturity Cost YTM I Price l Value `Moody'sl S&P 6.20 3115109 $ 4,058,176 5.13 101.70 $ 4,067,832 Aal AA- 3.50 3/15/09 $ 3,979,998 5.12 97.84 $ 3,982,182 Aa3 A+ 3.50 3/15/09 $ 2,987,444 5.12 97.84 $ 2,989,082 Aa3 A+ 3.13 7/15/08 $ 1,963,991 5.49 97.88 $ 1,957,594 Aa3 AA- 5.80 12/1/08 $ 2,017,146 5.00 100.92 $ 2,018,418 Aa3 A+ 6.88 8/10/09 $ 3,111,209 4.76 103.37 $ 3,101,073 Aa2 AA 4.00 8/15/08 $ 1,984,421 4.96 98.96 $ 1,979,204 Aal AA- 4.13 3/10/08 $ 2,986,526 5.18 99.34 $ 2,980,056 Aal AA- 4.20 1/15/10 $ 1,988,869 4.92 98.33 $ 1,986,177 Aal AA- 3.13 4/1/09 $ 1,977,666 4.76 97.35 $ 1,971,263 Aal AA- $ 27,055,447 5.05 $ 27,032,881 6.45 10/7/09 $ 2,057,243 4.88 103.93 $ 2,078,588 Aaa AAA 3.63 10/24/08 $ 1,975,106 4.89 99.03 $ 1,980,625 Aaa AAA 4.75 8/3/09 $ 1,995,970 4.87 100.69 $ 2,013,750 Aaa AAA 4.90 9/22/10 $ 4,934,902 4.65 101.25 $ 4,961,250 Aaa AAA 4.25 9/12/08 $ 3,948,559 4.79 99.66 $ 3,956,353 Aaa AAA 4.25 9/12/08 $ 3,948,559 4.79 99.66 $ 3,956,353 Aaa AAA 4.38 9111109 $ 4,460,558 5.59 99.97 $ 4,498,594 Aaa AAA 3.50 11/3/09 $ 1,947,813 4.88 98.16 $ 1,963,125 Aaa AAA 4.63 9/12/08 $ 3,991,413 4.84 100.00 $ 4,000,000 Aaa AAA 3.88 7/24/09 $ 1,971,428 4.89 98.97 $ 1,984,323 Aaa AAA 4.88 3/11/11 $ 1,960,238 5.49 101.28 $ 2,025,625 Aaa AAA 4.88 3/11/11 $ 1,959,707 5.50 101.28 $ 2,025,625 Aaa AAA 4.00 3/10/08 $ 1,980,178 5.16 99.59 $ 1,981,916 Aaa AAA 4.00 12/15/09 $ 2,013,504 4.87 99.16 $ 2,031,712 Aaa AAA 5.00 7/23/08 $ 1,998,969 5.07 100.23 $ 2,004,602 Aaa AAA 6.88 9/15/10 $ 2,069,470 5.54 106.59 $ 2,131,875 Aaa AAA 6.88 9/15/10 $ 3,863,938 5.54 106.59 $ 3,980,211 Aaa AAA 6.63 9/15/09 $ 4,282,607 4.89 104.13 $ 4,326,394 Aaa AAA 3.88 11/17/08 $ 1,979,192 4.87 99.22 $ 1,984,375 Aaa AAA $ 53,339,353 5.02 $ 53,885,295 5.25 2/1/08 $ 5,000,000 5.25 100.09 $ 5,004,688 Aaa AAA $ 5,000,000 5.25 $ 5,004,688 "U" = Unrated Page 7 of 10 Palm Desert Redevelopment Agency Portfolio Holdings September 30, 2007 Market Par Value Issuer I Coupon I Maturity Cost YTM I Price Value Local Government Investment Pool Ratings Moody'sl S&P $ 1,057,074 L.A.I.F. 0.00 10/1/07 $ 1,057,074 5.25 100.00 $ 1,057,074 U $ 3,681,202 L.A.I.F. (HOUSING) 0.00 10/1/07 $ 3,681,202 5.25 100.00 $ 3,681,202 U $ 6,063,528 L.A.I.F. BOND PROCEEDS 0.00 1011/07 $ 6,063,528 5.25 100.00 $ 6,063,528 U $ 10,801,803 Subtotal $ 10,801,803 5.25 $ 10,801,803 Local Government Investment Pool $ 3,347,955 C.A.M.P. 0.00 $ 3,347,955 Subtotal Money Market Fund $ 173,627,003 WF ADVANTAGE GOVT MMF 0.00 $ 173,627,003 Subtotal Total Investments $ 273,219,761 Cash U U U 1 1011107 $ 3,347,955 5.19 100.00 $ 3,347,955 U AAA $ 3,347,955 5.19 $ 3,347,955 10/1/07 $ 173,627,003 4.99 100.00 $ 173,627,003 Aaa AAA $ 173,627,003 4.99 $ 173,627,003 1 $ 273,171,561 5.01 $ 273,699,625 $ 150,566 HOUSING AUTH CHKG 0.00 10/1/07 $ 150,566 0.00 100.00 $ 150,566 U U $ 352,068 HOUSING AUTH TRUST 0.00 10/1/07 $ 352,068 0.00 100.00 $ 352,068 U U $ 502,634 Subtotal $ 502,634 $ 502,634 Total Investments and Cash $ 273,722,396 $ 273,674,196 $ 274,202,259 % of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.48% JP MORGAN CHASE 2.54% MERRILL LYNCH 0.71 % FIRST UNION NAT BANK 0.74% WAL-MART 1.13% WELLS FARGO BANK 0.72% "U" = Unrated Page 8 of 10 I Par Value I Palm Desert Redevelopment Agency Portfolio Holdings September 30, 2007 Issuer Agency Issuers Coupon I Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost % of Portfolio (Market Value) 4.02% 11.45% 3.70% 2.30% Market Ratings YTM I Price I Value Moody'sl S&P "U" = Unrated Page 9 of 10 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended September 30, 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 October 23, 2007, Pa"S. i7d4o�, C. c. M. r City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS I California Government Code I City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit 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% 17.6% 21.4% 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% Not Authorized 53601(i) Medium -Term Notes 5 Years 30% A 5 Years 30% A 23.7% 9.9% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) IAAA&Aaal 32.4% 63.6% 53601(l) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa I AAA & AaaI Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 1 12.0% 1.2% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security LAW No Limit No Limit j 0.4% 4.0% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. I 85.9% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. ' Certified California Municipal Treasurer Page 10 of 10 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT October 2007 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary On October 31, the Federal Open Market Committee cut the Federal Funds Rate by 25 basis points to 4.50%. The FOMC is caught between a collapsing housing market (recession risk), and rising commodity prices and a falling dollar (inflation risk). Merrill Lynch forecasts a 2.00% Federal Funds Rate by June 2009, based upon projected U.S. economic growth of 1.4% in 2008, and 2.0% in 2009. This assumes that housing will contract in 2008, and consumer spending will be crippled by tight credit, high oil prices, real estate deflation, and weakening employment. The FOMC will next meet on December 11. Banking remains in turmoil. Freddie Mac reported a $2.2 billion loss for 3Q2007, and may have to cut its dividend, and raise capital. Citigroup, which has a $55 billion exposure to subprime securities, is expected to report an $8-11 billion writedown for 4Q2007. UBS is expected to report a $7 billion writedown for the same period. Deutsche Bank estimates global subprime losses at $50 billion, and believes that they may rise to $400 billion. The CEOs of Citigroup and Merrill Lynch have resigned. Bond insurers may face lower credit ratings since they have insured $100 billion of securities backed by risky mortgages. The plummeting U.S. dollar is adding to the liquidity squeeze by prompting foreign investors to go elsewhere. Gold is currently selling for around $800 an ounce. The OPEC countries and China are discussing dropping the U.S. dollar as a currency peg. Staff deemed it prudent to sell a Merrill Lynch bond prior to maturity, at a profit, due to the firm's declining credit ratings. )9aa4s 4jdv >", C. C. Al. 7- Treasurer PORTFOLIO STATISTICS Dollars in Thousands OCT-07 SEP-07 AUG-07 JUL-07 JUN-07 MAY-07 CITY Month -End Book Value*** $ 244,113 $ 233,947 $ 245,850 $ 256,143 $ 243,098 $ 257,259 Month -End Market Value*** $ 244,790 $ 234,328 $ 245,945 $ 256,176 $ 242,909 $ 257,049 Paper Gain (Loss) $ 677 $ 381 $ 95 $ 33 $ (189) $ (210) Prior Year Book Variance $ 86,710 $ 71,505 $ 76,483 $ 85,202 $ 69,826 $ 77,552 Interest Earnings $ 981 $ 957 $ 1,045 $ 1,066 $ 1,029 $ 1,067 Yield -To -Maturity 5.05% 5.01 % 5.09% 5.11 % 5.11 % 5.11 % Weighted Maturity (Days) 444 426 415 308 324 355 Effective Duration 0.79 0.76 0.75 0.45 0.50 0.50 RDA Month -End Book Value *** $ 250,763 $ 279,542 $ 289,864 $ 293,026 $ 302,709 $ 311,195 Month -End Market Value *** $ 251,297 $ 280,070 $ 290,104 $ 293,073 $ 302,676 $ 311,011 Paper Gain (Loss) $ 534 $ 528 $ 240 $ 47 $ (33) $ (184) Prior Year Book Variance $ 134,543 $ 152,500 $ 148,263 $ 145,329 $ 158,249 $ 173,739 Interest Earnings $ 1,027 $ 1,167 $ 1,233 $ 1,270 $ 1,271 $ 1,191 Yield -To -Maturity 4.87% 5.02% 5.07% 5.10% 5.11 % 5.10% Weighted Maturity (Days) 282 305 314 279 274 267 Effective Duration 0.41 0.40 0.47 0.39 0.40 0.42 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics October 31, 2007 (in thousands) Aqeinq Interval Market Value < 1 M $ 34,697 < 2M - < 3M 1,992 < 6M 8,018 < 1 YR 18,883 < 2YR 21,447 < 3YR 50,205 < 4YR 8,195 < 5YR - > 5YR - Total: $ 143,437 Ratings Market Value AAA $ 188,445 AA 37,102 A 16,111 Unrated "' 867 Total: $ 242,525 Sector Market Value MMF $ 60,309 Agencies 51,175 MTNs 61,296 CAMP 35,806 RDA Loan 32,785 UB Sweep 287 LAIF 867 CID - Total: $ 242,525 Month Cltv Yield LAIF Yield Nov06 5.01 5.13 Dec 5.03 5.13 Jan07 5.06 5.16 Feb 5.08 5.18 Mar 5.13 5.21 Apr 5.13 5.22 May 5.11 5.25 Jun 5.11 5.25 Jul 5.11 5.26 Aug 5.09 5.25 Sep 5.01 5.23 Oct 5.05 5.14 General Fund Ageing i 100 80 0 60 40 35 0 24 n a. 20 13 15 n n 0 0 0 = <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR J Credit Quality AAA 78% A 7% AA Unrated 15% 0% Asset Allocation Agencies 21 MMF 25% Variance Performance -0.12 -0.09 5.4 -0.10 -0.11 -0.08 -0.10 2 4.9 -0.13 >- -0.14 -0.15 4.4 -0.17 Nov06 Dec Jan07 Feb Mar Apr May Jun Jul Aug Sep Oct -0.22 RDA Loan 14% ITNs ?5% -AMP 15% Standard and Poors " LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings October 31, 2007 Market Ratings Par Value I Issuer I Coupon I Maturity Cost YTM I Price I Value ' Moody'sI S&P Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,014,342 5.08 99.73 $ 3,014,871 Al A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,950,218 5.01 100.68 $ 2,939,751 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,012,495 4.91 98.33 $ 15,014,900 Aal AA $ 2,035,000 CITIGROUP 4A3 2/22110 $ 2,000,683 4.91 98.33 $ 2,001,003 Aal AA $ 11000,000 CITIGROUP 4.63 8/3/10 $ 985,696 5.19 99.41 $ 994,055 Aal AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,942,784 5.19 99.41 $ 3,976,220 Aal AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,975,385 4.99 98.82 $ 1,976,424 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,994,802 5.63 100.08 $ 2,036,642 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,952,520 5.65 105.73 $ 1,999,411 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2122/11 $ 2,026,344 5.67 103.56 $ 2,071,122 Aaa AAA $ 2,000,000 IBM 3.80 211108 $ 1,993,202 5.13 99.72 $ 1,994,436 Al A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,993,827 5.25 99.74 $ 1,994,834 Aa3 A+ $ 2,000,000 MERRILL LYNCH 3.13 7/15/08 $ 1,961,426 5.49 98.47 $ 1,969,350 Al A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,028,091 5.02 97.96 $ 3,017,017 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,974,801 5.18 98.83 $ 1,976,608 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,142,743 5.02 107.18 $ 2,143,540 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,062,713 4.93 103.58 $ 2,071,662 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 811111 $ 4,164,920 5.13 104.02 $ 4,160,856 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,976,642 5.09 99.03 $ 1,980,682 Aal AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,975,774 4.76 97.47 $ 1,973,668 Aal AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15110 $ 1,988,035 4.92 98.48 $ 1,989,241 Aal AA- $ 61,299,000 Subtotal $ 61,117,443 5.11 $ 61,296,295 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,011,705 4.61 100.94 $ 3,028,125 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,011,705 4.61 100.94 $ 3,028,125 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 1,997,031 4.68 99.19 $ 1,998,628 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,938,982 4.89 99.19 $ 1,983,750 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9111109 $ 2,974,832 5.59 100.03 $ 3,000,938 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,977,240 4.87 100.31 $ 1,986,188 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,994,126 5.40 100.06 $ 3,001,875 Aaa AAA $ 2,049,000 FED HOME LOAN BANK 4.00 12/15/09 $ 1,988,109 4.87 99.34 $ 2,035,553 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,019,471 5.02 99.75 $ 3,022,425 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,908,435 4.88 98.34 $ 1,966,875 Aaa AAA $ 2,049,000 FED HOME LOAN BANK 4.00 12/15/09 $ 2,014,962 4.87 99.34 $ 2,035,553 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7115109 $ 2,013,423 4.87 99.81 $ 2,029,188 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4,13 11/18/09 $ 1,972,005 4.88 99.61 $ 1,992,202 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,997,014 5.06 100.46 $ 2,009,176 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,992,387 5.47 99.34 $ 2,048,468 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,997,034 5.07 100.30 $ 2,005,978 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,990,733 4.88 100.56 $ 2,011,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,936,839 5.47 99.63 $ 1,992,500 Aaa AAA "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings October 31, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value Moody's S&P Federal Agencies -- Coupon (continued) $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,950,638 4.87 99.34 $ 1,986,875 Aaa AAA } $ 43,218,000 Subtotal $ 42,686,671 5.24 $ 43,163,673 Federal Agencies -- Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,990,964 4.88 99.75 $ 1,995,000 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,798 5.06 100.39 $ 2,007,786 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.30 8/13/09 $ 2,000,000 5.30 100.23 $ 2,004,568 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 5.38 2/1/10 $ 2,000,000 5.37 100.22 $ 2,004,375 Aaa AAA $ 8,000,000 Subtotal $ 7,990,762 5.15 $ 8,011,729 Local Government Investment Pool $ 865,735 L.A.I.F. 0.00 11/1/07 $ 865,735 5.14 100.00 $ 865,735 U U $ 865,735 Subtotal $ 865,735 5.14 $ 865,735 Local Government Investment Pool $ 34,507,962 C.A.M.P. 0.00 11/1/07 $ 34,507,962 5.11 100.00 $ 34,507,962 U AAA $ 1,298,278 CA.M.P. (HOUSING) 0.00 11/1/07 $ 1,298,278 5.11 100.00 $ 1,298,278 U AAA $ 35,806,240 Subtotal $ 35,806,240 5.11 $ 35,806,240 Money Market Fund $ 60,309,467 WF ADVANTAGE GOVT MMF 0.00 1111107 $ 60,309,467 4.76 100.00 $ 60,309,467 Aaa AAA $ 60,309,467 Subtotal $ 60,309,467 4.76 $ 60,309,467 Money Market Fund $ 286,640 REPO SWEEP 0.00 11/1/07 $ 286,640 4.10 100.00 $ 286,640 P1 Al $ 286,640 Subtotal $ 286,640 4.10 $ 286,640 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 11/1/37 $ 32,785,480 5.14 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 5.14 $ 32,785,480 Total Investments $ 242,570,562 $ 241,848,438 5.05 $ 242,525,258 Cash $ 875,855 CITY MAIN CHKG 0.00 11/1/07 $ 875,855 0.00 100.00 $ 875,855 U U $ 634,786 DESERT WILLOW CHKG 0.00 11/1/07 $ 634,786 0.00 100.00 $ 634,786 U U $ 591,843 MONTEREY 170 CHKG 0.00 11/1/07 $ 591,843 0.00 100.00 $ 591,843 U U $ 117,875 RECREATIONAL FAC CHKG 0.00 11/1/07 $ 117,875 0.00 100.00 $ 117,875 U U $ 22,288 CITY/FALCON CREST HOA 0.00 11/1/07 $ 22,288 0.00 100.00 $ 22,288 U U "U" = Unrated Page 4 Par Value I Issuer Cash (continued) $ 22,250 ART, FOOD & WINE CHKG $ 2,264,898 Subtotal Total Investments and Cash $ 244,835,460 City of Palm Desert Portfolio Holdings October 31, 2007 Market Coupon I Maturity Cost YTM I Price I Value 0.00 11/1/07 $ 22,250 0.00 100.00 $ 22,250 $ 2,264,898 $ 2,264,898 $ 244,113,336 $ 244,790,156 Corporate Issuers AMERICAN HONDA FINANCE BANK OF AMERICA CITIGROUP GENERAL ELECTRIC IBM JP MORGAN CHASE MERRILL LYNCH WACHOVIA WAL-MART WELLS FARGO BANK Recent Credit Downgrades: MERRILL LYNCH 9/30/07 10/24/07 S&P Moody's AA Aa3 A+ Al Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC % of Portfolio (Market Value) 1.23% 1.20% 8.98% 3.30% 0.81 % 0.81 % 0.80% 2.92% 0.85% 4.13% Outlook NEGATIVE % of Portfolio (Market Value) 4.10% 7.78% 5.76% 3.27% Ratings Moody's I S&P U U "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics October 31, 2007 (in thousands) Aaeina Interval Market Value < 1 M $ 5,059 < 2M - < 3M - < 6M 9,967 < 1 YR 13,892 < 2YR 31,060 < 3YR 11,073 < 4YR 4,051 < 5YR - > 5YR - Total: $ 75,102 ualit Market Value AAA $ 218,757 AA 12,142 A 9,001 Unrated *` 10,133 Total: $ 250,033 Sector Market Value MMF $ 166,452 Agencies 48,943 LAIF 10,133 MTNs 21,143 CAMP 3,362 CID - Treasuries - Total: $ 250,033 Month RDA Yield LAW Yield Nov06 4.95 5.13 Dec 4.95 5.13 Jan07 5.05 5.16 Feb 5.06 5.18 Mar 5.11 5.21 Apr 5.09 5.22 May 5.10 5.25 Jun 5.11 5.25 Jul 5.10 5.26 Aug 5.07 5.25 Sep 5.02 5.23 Oct 4.87 5.14 Portfolio Ageing w/o SLGSs� 100 -- -------- --- 90 80 70 o 60 0 50 41 1` 40 a- 20 13 18 15 j 10 0 0 n n r-1 0 0 n i o r, <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Credit Quality AAA ;) 87% Unrated " 4% AA A 5% 4% Asset Allocation) MMF 67% MT,. 9% LAW 4% Variance Performance -0.18 -0.18 5.4 -0.11 -0.12 -0.11 0 5.0 -0.13 d -0.15 4.6 -0.14 -0.16 4.2 -0.19 Nov06Dec JanO7 Feb Mar Apr May Jun Jul Aug Sep Oct -0.21 -0 27 ■ LAIF Yield ■ RDA Yield ,ancies 20% ' Standard and Poors *' LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings October 31, 2007 Market Ratings Par Value Issuer j Coupon I Maturity Cost YTM I Price I Value , Moody'sI S&P Medium -Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,054,845 5.13 101.68 $ 4,067,364 Aal AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,985,151 5.12 98.00 $ 3,988,522 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 2,991,311 5.12 98.00 $ 2,993,842 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,015,921 5.00 100.93 $ 2,018,602 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,106,222 4.76 103.58 $ 3,107,493 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,985,910 4.96 99.10 $ 1,982,030 Aal AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,989,068 5.18 99.49 $ 2,984,661 Aal AA- $ 21,125,000 Subtotal $ 21,128,429 5.05 $ 21,142,514 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,054,878 4.88 103.85 $ 2,077,084 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 813/09 $ 1,996,153 4.87 100.72 $ 2,014,375 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,933,924 4.65 101.34 $ 4,965,844 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,950,445 4.79 99.75 $ 3,960,075 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9112/08 $ 3,950,445 4.79 99.75 $ 3,960,075 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,462,248 5.59 100.03 $ 4,501,406 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,992,168 4.84 100.06 $ 4,002,500 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,972,970 4.89 99.09 $ 1,986,830 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,961,200 5.49 101.31 $ 2,026,250 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3111111 $ 1,960,682 5.50 101.31 $ 2,026,250 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,982,031 5.16 99.75 $ 1,985,025 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,067,512 5.54 106.50 $ 2,130,000 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,860,275 5.54 106.50 $ 3,976,710 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,277,169 4.89 104.06 $ 4,323,797 Aaa AAA $ 43,224,000 Subtotal $ 43,422,100 5.07 $ 43,936,221 Federal Agencies -- Callable $ 5,000,000 FEDERAL HOME LOAN BANK 5.25 2/1/2008 $ 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 $ 3,742,305 L.A.I.F. 0.00 11/1/07 $ 3,742,305 5.14 100.00 $ 3,742,305 U U $ 1,070,969 L.A.I.F. (HOUSING AUTH) 0.00 11/1/07 $ 1,070,969 5.14 100.00 $ 1,070,969 U U $ 5,320,156 L.A.I.F. BOND PROCEEDS 0.00 1111/07 $ 5,320,156 5.14 100.00 $ 5,320,156 U U $ 10,133,430 Subtotal $ 10,133,430 5.14 $ 10,133,430 Local Government Investment Pool $ 3,362,497 C.A.M.P. 0.00 11/1/07 $ 3,362,497 5.11 100.00 $ 3,362,497 U AAA $ 3,362,497 Subtotal $ 3,362,497 5.11 $ 3,362,497 "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings October 31, 2007 Par Value Issuer Coupon I Maturity Cost Local Government Investment Pool $ 166,452,451 WF ADVANTAGE GOVT MMF 0.00 $ 166,452,451 Subtotal Total Investments $ 249,297,379 Cash $ 914,570 HOUSING AUTH CHKG 0.00 $ 349,290 HOUSING AUTH TRUST 0.00 $ 1,263,860 Subtotal Total Investments and Cash $ 250,561,239 Corporate Issuers CITIGROUP JP MORGAN CHASE FIRST UNION NAT BANK WAL-MART WELLS FARGO BANK Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Market Ratings YTM I Price J Value Moody'sI S&P 11/1/07 $ 166,452,451 4.76 100.00 $ 166,452,451 Aaa AAA $ 166,452,451 4.76 $ 166,452,451 1 $ 249,498,908 4.87 $ 250,033,363 11/1/07 $ 914,570 0.00 100.00 $ 914,570 11/1/07 $ 349,290 0.00 100.00 $ 349,290 $ 1,263,860 $ 1,263,860 $ 250,762,768 % of Portfolio (Market Value) 1.62% 2.78% 0.80 % 1.24% 1.98% % of Portfolio (Market Value) 3.60% 11.72% 2.43% 1.72% $ 251,297,223 U U U U "U"= Unrated Page 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended October 31, 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 November 27, 2007, Jpa bs. 67d4olv, C. C. At T. * City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code I City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized (1) 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit I 1 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% 21.0% 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% Not Authorized 536016) Medium -Term Notes 5 Years 30% A 5 Years 30% A 25.3% 8.5% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) IAAA&Aaal 25.1 % 66.7% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa I AAA & AaaI Investment Pools 90 Days 20% or Advisor 90 Day s 20% 2) ( or Advisor 1 14.8% 1.4% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security LAW No Limit I No Limit 0.4% 4.1% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. ' 86.5% I 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 9