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Home My WebLink AboutInvstmnt Rprt - May & June '07CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY DATE: AUGUST 14, 2007 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for may and June 2007 which were presented and approved at the regular meetings of the Audit, Investment and Finance Committee. Please include on the upcoming agenda for review and acceptance by City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. Iffilrel Attachment (as noted) CITY COUNCIL �,CTION: APPROVED DENIED ItECBIVED OTHER 1422TING BATEUlt AYES ABSENT: ABSTAIN: VERIFIED BY: Original on File withJCity Clerk's Office (I P,orov ej BY RDA TT ON VERIFIED BY Original on file with City Clerk's Office s 1 :01 NV I i 9nq L00a VD'1a3S30 WlVd 301330 S,)(8310 A110 03AIT) �1, GARnance\Niamh Ortega\Investment Committee\Memos\rklasseninvreport.wpd City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT May 2007 �Qw_,,F 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 28. The futures market is forecasting that the Federal Funds Rate will remain at 5.25% for the rest of 2007. Merrill Lynch is forecasting that rate reductions will occur in early 2008. Beyond 2008, Alan Greenspan is predicting that world interest rates will rise over the next few years as the downward pressure on prices and wages from China's and India's assimilation into the world economy lessens. This may explain why the Bernanke FOMC is so focused on containing inflation. The FOMC has maintained a "hawkish" stance despite five consecutive quarters of below -average economic growth, including a near -recession level of 0.6% economic growth in the first quarter of 2007. The FOMC is clearly more interested in core inflation that in economic growth. Consequently, there will probably not be a dramatic shift in FOMC thinking unless there is a dramatic shift in the economic data. The U.S. Treasury yield curve recently shifted from an inverted pattern to a normal one, with the yield of a 10-year Treasury Note slightly surpassing that of a 2-Year Treasury Note. This increase was triggered by global competition over interest rates; concern over rising prices; and a fear that China is shifting its investment from Treasuries to private equity. Rising Treasury rates will further weaken the housing market by increasing the cost of adjustable -rate mortgages. ;Paails G'6bsoir, C. C.,y r. Treasurer PORTFOLIO STATISTICS Dollars in Thousands MAY-07 APR-07 MAR-07 FEB-07 JAN-07 DEC-06 CITY Month -End Book Value*** $ 257,259 $ 248,864 $ 210,992 $ 217,861 $ 237,367 $ 159,050 Month -End Market Value*** $ 257,049 $ 248,991 $ 211,087 $ 218,014 $ 237,168 $ 158,939 Paper Gain (Loss) $ (210) $ 127 $ 95 $ 153 $ (199) $ (111) Prior Year Book Variance $ 77,552 $ 98,111 $ 61,048 $ 70,854 $ 89,718 $ 15,863 Interest Earnings $ 1,067 $ 952 $ 891 $ 859 $ 853 $ 650 Yield -To -Maturity 5.11% 5.13% 5.13% 5.08% 5.06% 5.03% Weighted Maturity (Days) 355 376 428 444 402 495 Effective Duration 0.50 0.56 0.66 0.69 0.57 0.75 RDA Month -End Book Value **" $ 311,195 $ 279,009 $ 303,532 $ 308,095 $ 237,367 $ 111,068 Month -End Market Value *** $ 311,011 $ 279,204 $ 303,707 $ 308,331 $ 237,252 $ 111,060 Paper Gain (Loss) $ (184) $ 195 $ 175 $ 236 $ (115) $ (8) Prior Year Book Variance $ 173,739 $ 136,331 $ 154,073 $ 154,443 $ 85,588 $ (14,327) Interest Earnings $ 1,191 $ 1,203 $ 1,333 $ 1,186 $ 1,013 $ 465 Yield -To -Maturity 5.10% 5.09% 5.11 % 5.07% 5.05% 4.95% Weighted Maturity (Days) 267 293 269 278 302 668 Effective Duration 0.42 0.49 0.47 0.56 0.49 1.10 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics May 31, 2007 Aaeina Interval Market Value < 1 M $ 62,750 General Fund Ageing < 2M 3,779 < 3M 5,968 100 < 6M 2,987 80 < 1 YR 9,954 ( < 2YR 20,818 0 60 45 �o < 3YR 17,021 40 < 4YR 12,069 a 20 7 < 5YR 4,191 3 4 2 n n n 3 r--� 0 n I I --, p .__. > 5YR - <1M <2M <3M <6M < < < < < > Total: $ 139,537 1YR 2YR 3YR 4YR 5YR 5YR Credit Quality Ratinas * Market Value AAA $ 179,020 AAA AA 11,103 B 83% A 14,897 5% B 10,113 A 7%AA Unrated ** 33,629 Total: $ 248,762 5% Sector Market Value Asset Allocation Agencies MMF $ 79,566 17% MTNs Agencies 42,472 18% MTNs 44,099 LG I P 48,996 M M F RDA Loan 32,785 32% LAIF 844 0IP 2 % CID- Total: $ 248,762 RDA Loan 13% Month Citv Yield LAIF Yield Variance Performance Jun06 4.72 4.70 0.02 Jul 4.86 4.85 0.01 5.4 Aug 4.92 4.95 -0.02 Sep 4.96 5.02 -0.07 Oct 4.99 5.10 -0.11 Nov 5.01 5.13 -0.12 :2 4.9 m Dec 5.03 5.13 -0.09 } Jan07 5.06 5.16 -0.10 Feb 5.08 5.18 -0.11 4.4 Mar 5.13 5.21 -0.08 Jun06 Jul Aug Sep Oct Nov Dec Jan07 Feb Mar Apr May Apr 5.13 5.22 -0.10 May 5.11 5.25 -0.13 Standard and Poors ** LAIF, and City Loan to RDA Page 2 of 9 City of Palm Desert Portfolio Holdings May 31, 2007 Market Ratings Par Value Issuer l Coupon j Maturity I Cost I YTM I Price I Value ' Moody's I S&P Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,004,352 5.08 99.12 $ 2,996,491 Al A+ $ 3,000,000 BANK ONE 4.13 9/1/07 $ 3,003,431 3.64 99.67 $ 2,990,064 Aa3 A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,959,987 5.01 100.92 $ 2,946,809 Aa2 AA- $ 3,000,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 3,001,487 5.75 100.01 $ 3,000,219 B1 B $ 2,500,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 2,501,239 5.75 100.01 $ 2,500,182 B1 B $ 4,612,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 4,615,498 5.10 100.01 $ 4,612,336 B1 B $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,964,651 4.99 97.71 $ 1,954,106 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,989,167 5.63 98.64 $ 2,007,302 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,960,955 5.65 104.66 $ 1,979,145 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,029,662 5.67 102.31 $ 2,046,102 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 1,981,873 5.13 99.03 $ 1,980,686 Al A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,981,313 5.25 99.05 $ 1,980,920 Aa3 A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,011,382 5.02 97.13 $ 2,991,543 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,961,491 5.18 97.85 $ 1,956,940 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,077,435 4.93 103.13 $ 2,062,688 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,183,244 5.13 103.43 $ 4,137,192 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,973,131 5.09 97.80 $ 1,956,068 Aal AA- $ 44,061,000 Subtotal $ 44,200,298 5.15 $ 44,098,793 Federal Agencies -- Coupon $ 3,000,000 FED HOME LOAN BANK 3.70 8/15/07 $ 2,999,457 3.79 99.69 $ 2,990,625 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,969,198 5.59 98.41 $ 2,952,188 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,976,207 4.87 99.22 $ 1,964,531 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,991,293 5.40 99.16 $ 2,974,688 Aaa AAA $ 2,049,000 FED HOME LOAN BANK 4.00 12/15/09 $ 2,008,279 4.87 97.31 $ 1,993,933 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,007,227 5.02 99.00 $ 2,999,700 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,008,641 4.87 98.16 $ 1,995,517 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,966,307 4.88 97.67 $ 1,953,434 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,995,777 5.06 99.51 $ 1,990,174 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,981,633 5.47 97.13 $ 2,002,718 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 3.00 8/15/07 $ 2,996,377 3.63 99.56 $ 2,986,875 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,988,794 4.88 98.81 $ 1,976,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,927,403 5.47 97.34 $ 1,946,875 Aaa AAA $ 31,154,000 Subtotal $ 30,816,593 4.87 $ 30,727,507 Federal Agencies - Discount $ 3,801,000 FED HOME LOAN MTG CORP 5.11 7/9/07 $ 3,778,879 5.21 99.46 $ 3,780,475 Aaa AAA $ 3,801,000 Subtotal $ 3,778,879 5.21 $ 3,780,475 Federal Agencies -- Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,985,690 4.88 98.81 $ 1,976,250 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,694 5.06 99.69 $ 1,993,746 Aaa AAA Unrated = "U" Page 3 of 9 City of Palm Desert Portfolio Holdings May 31, 2007 Market Par Value Issuer Coupon I Maturity Cost YTM I Price I Value Federal Agencies -- Callable (continued) $ 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 $ 843,608 L.A.I.F. 0.00 $ 843,608 Subtotal Local Government Investment Pool $ 47,331,336 C.A.M.P. 0.00 $ 1,664,761 C.A.M.P. (HOUSING) 0.00 $ 48,996,097 Subtotal Money Market Fund $ 79,566,446 WF ADVANTAGE GOVT MMF 0.00 $ 79,566,446 Subtotal Money Market Fund Ratings Moody's I S&P 8/13/09 $ 2,000,000 5.30 99.84 $ 1,996,862 Aaa AAA 2/1/10 $ 2,000,000 5.37 99.88 $ 1,997,500 Aaa AAA $ 7,985,384 5.15 $ 7,964,358 6/1/07 $ 843,608 5.25 100.00 $ 843,608 $ 843,608 5.25 $ 843,608 6/1/07 $ 47,331,336 5.19 100.00 $ 47,331,336 6/1/07 $ 1,664,761 5.19 100.00 $ 1,664,761 $ 48,996,097 5.19 $ 48,996,097 6/1/07 $ 79,566,446 5.12 100.00 $ 79,566,446 $ 79,566,446 5.12 $ 79,566,446 $ 3,183,594 HIGHMARK SWEEP 0.00 6/1/2007 $ 3,183,594 4.36 100.00 $ 3,183,594 $ 3,183,594 Subtotal $ 3,183,594 4.36 $ 3,183,593.96 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 $ 32,785,480 Subtotal Total Investments $ 252,391,225 Cash $ 2,977,627 CITY MAIN CHKG 0.00 $ 1,184,156 DESERT WILLOW CHKG 0.00 $ 627,855 MONTEREY 170 CHKG 0.00 $ 312,795 RECREATIONAL FAC CHKG 0.00 $ 5,102,434 Subtotal Total Investments and Cash $ 257,493,659 6/1/37 $ 32,785,480 5.25 100.00 $ 32,785,480 $ 32,785,480 5.25 $ 32,785,480 $ 252,156,380 5.11 $ 251,946,357 U U U AAA U AAA Aaa AAA I Aaa AAA I U U I 6/1/07 $ 2,977,627 0.00 100.00 $ 2,977,627 U U 6/1/07 $ 1,184,156 0.00 100.00 $ 1,184,156 U U 6/1/07 $ 627,855 0.00 100.00 $ 627,855 U U 6/1/07 $ 312,795 0.00 100.00 $ 312,795 U U $ 5,102,434 $ 5,102,434 $ 257,258,814 $ 257,048,791 Unrated = "U" Page 4 of 9 IPar Value I Issuer Corporate Issuers AMERICAN HONDA FINANCE BANK ONE BANK OF AMERICA FORD MOTOR CREDIT CORP GENERAL ELECTRIC IBM JP MORGAN CHASE WACHOVIA WAL-MART WELLS FARGO BANK City of Palm Desert Portfolio Holdings May 31, 2007 Coupon I Maturity I Cost % of Portfolio (Market Value) 1.17% 1.16% 1.15% 3.93% 3.11% 0.77% 0.77% 1.93% 0.80% 2.37% Market YTM I Price I Value Ratings Moody's I S&P Unrated = "U" Page 5 of 9 Palm Desert Redevelopment Agency -- Portfolio Characteristics May 31, 2007 Aqeinq Interval Market Value < 1 M $ 2,354 < 2M 35,735 < 3M - < 6M 5,952 < 1 YR 14,938 < 2YR 32,773 < 3YR 18,757 < 4YR 10,114 < 5YR - > 5YR - Total: $ 120,623 Portfolio Ageing w/o SLGSs� 100 - -- -- -- --- -- -- 90 .. 80 70 0 60 0 50 1` 40 30 27 a 20 n 10 2 0 5 12 16 8 0 0 I I 0 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Quality' Market Value Credit Quality AAA $ 278,656 AAA AA 8,987 90% A 8,912 Unrated "" Unrated " 13,482 4% AA A Total: $ 310,037 3% 3% Sector Market Value MMF $ 177,979 Agencies 100,007 LAIF 13,482 MTNs 17,899 LGIP 670 CP - Treasuries - Total: $ 310,037 Month RDA Yield LAIF Yield Variance Jun06 4.69 4.70 -0.01 Jul 4.82 4.85 -0.03 Aug 4.85 4.95 -0.10 Sep 4.94 5.02 -0.09 Oct 4.95 5.10 -0.15 Nov 4.95 5.13 -0.18 Dec 4.95 5.13 -0.18 Jan07 5.05 5.16 -0.11 Feb 5.06 5.18 -0.12 Mar 5.11 5.21 -0.11 Apr 5.09 5.22 -0.13 May 5.10 5.25 -0.15 Asset Allocation MTI 6% LAIF 4% Performance 5.4 5.0 0 a 4.6 4.2 Jun06 Jul Aug Sep Oct Nov Dec Jan07 Feb Mar Apr May ■ LAIF Yield ■ RDA Yield MMF 58% encies 32% Standard and Poors " LAIF Page 6 of 9 I Par Value I Issuer Medium -Term Notes Palm Desert Redevelopment Agency Portfolio Holdings May 31, 2007 Market I Ratings Coupon I Maturity Cost YTM I Price Value Moody's S&P $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,071,499 5.13 101.39 $ 4,055,636 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,959,387 5.12 96.80 $ 3,939,891 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 2,971,973 5.12 96.80 $ 2,957,338 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,022,044 5.00 100.73 $ 2,014,670 Aa3 A+ $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,978,468 4.96 98.16 $ 1,963,192 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,976,357 5.18 98.95 $ 2,968,461 Aa1 AA- $ 18,125,000 Subtotal $ 17,979,728 5.10 $ 17,899,188 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 2.63 9/17/07 $ 2,993,168 3.43 99.25 $ 2,977,500 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,066,705 4.88 102.82 $ 2,056,302 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,967,306 4.89 97.75 $ 1,955,000 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,995,239 4.87 99.25 $ 1,985,000 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 3.38 9/14/07 $ 2,999,211 3.82 99.47 $ 2,984,063 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,941,013 4.79 98.72 $ 3,919,134 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,941,013 4.79 98.72 $ 3,919,134 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,453,797 5.59 98.41 $ 4,428,281 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,939,485 4.88 96.28 $ 1,925,625 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,988,391 4.84 99.16 $ 3,966,250 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,965,258 4.89 97.38 $ 1,952,369 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,956,390 5.49 99.09 $ 1,981,875 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,955,808 5.50 99.09 $ 1,981,875 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,972,765 5.16 99.00 $ 1,970,100 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,008,139 4.87 97.31 $ 1,993,933 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,998,545 5.07 99.65 $ 1,993,068 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,077,305 5.54 105.19 $ 2,103,750 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,878,593 5.54 105.19 $ 3,927,701 Aaa AAA $ 4,155,000 FED NAT MTG ASSOC 6.63 9/15/09 $ 4,304,358 4.89 103.13 $ 4,284,844 Aaa AAA $ 2,000,000 FED NAT MTG ASSOC 3.88 11/17/08 $ 1,973,042 4.87 97.94 $ 1,958,750 Aaa AAA $ 54,373,000 Subtotal $ 54,375,532 4.92 $ 54,264,554 Federal Agencies - Discount $ 35,944,000 FED HOME LOAN MTG CORP 5.11 7/9/07 $ 35,734,816 5.21 99.46 $ 35,749,905 Aaa AAA $ 35,944,000 Subtotal $ 35,734,816 5.21 $ 35,749,905 Federal Agencies -- Callable $ 5,000,000 FED HOME LOAN BANK 5.25 2/15/08 $ 5,000,000 5.25 99.91 $ 4,995,313 Aaa AAA $ 5,000,000 FED HOME LOAN BANK 5.25 2/1/08 $ 5,000,000 5.25 99.94 $ 4,996,875 Aaa AAA $ 10,000,000 Subtotal $ 10,000,000 5.25 $ 9,992,188 "U" = Unrated Page 7 of 9 Palm Desert Redevelopment Agency Portfolio Holdings May 31, 2007 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value Moody's S&P Local Government Investment Pool $ 1,043,493 L.A.I.F. 0.00 6/1/07 $ 1,043,493 5.25 100.00 $ 1,043,493 U U $ 4,621,074 L.A.I.F. (HOUSING) 0.00 6/1/07 $ 4,621,074 5.25 100.00 $ 4,621,074 U U $ 7,817,768 L.A.I.F. BOND PROCEEDS 0.00 6/1/07 $ 7,817,768 5.25 100.00 $ 7,817,768 U U $ 13,482,335 Subtotal $ 13,482,335 5.25 $ 13,482,335 Local Government Investment Pool $ 669,768 C.A.M.P. 0.00 6/1/07 $ 669,768 5.21 100.00 $ 669,768 U AAA $ 669,768 Subtotal $ 669,768 5.21 $ 669,768 Money Market Fund $ 177,978,912 WF ADVANTAGE GOVT MMF 0.00 6/1/07 $ 177,978,912 5.11 100.00 $ 177,978,912 Aaa AAA $ 177,978,912 Subtotal $ 177,978,912 5.11 $ 177,978,912 Total Investments $ 310,573,015 $ 310,221,091 5.10 $ 310,036,850 Cash $ 646,533 HOUSING AUTH CHKG 0.00 6/1/07 $ 646,533 0.00 100.00 $ 646,533 U U $ 327,346 HOUSING AUTH TRUST 0.00 6/1/07 $ 327,346 0.00 100.00 $ 327,346 U U $ 973,879 Subtotal $ 973,879 $ 973,879 Total Investments and Cash $ 311,546,895 $ 311,194,971 $ 311,010,729 Corporate Issuers CITIGROUP JP MORGAN CHASE FIRST UNION NAT BANK WELLS FARGO BANK % of Portfolio (Market Value) 1.30% 2.22% 0.65% 1.59% "U" = Unrated Page 8 of 9 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended May 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 June 26, 2007, PwdlS. Cidvon C. C. Al T. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS ICalifornia Government Code I City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized 1) 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit f 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% 16.9% 32.3% 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(j) Medium -Term Notes 5 Years 0 30% A 5 Years 30 0/o A 17.. 5 0/0 58 0/o 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) 1 AAA & Aaa 31.6% 57.4% 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 I AAA & Aaa l Investment Pools 90 Days 20% or Advisor 90 Day s 20% 2) ( or Advisor 19.49/6 0.2% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security LAIF No Limit I No Limit 0.3% 4.4% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. I 85.7% I 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds Certified California Municipal Treasurer Page 9 of 9 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT June 2007 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC) met on June 28, and left the Federal Funds Rate unchanged at 5.25%. The FOMC noted that while economic growth had moderated during the first half of the year, a sustained moderation in inflation pressures had not yet happened. Analysts expect that the FOMC will keep short-term interest rates on hold well into 2008, barring an unusually severe downturn in the housing market. The FOMC's currently believes that housing and credit problems in the subprime market will probably not affect the economy's underpinnings in a signficant way. The FOMC is focused on two resource utilization measures that are still at high levels: 1) The Unemployment Rate at 4.5%; and 2) the Capacity Utilization Rate which will probably reach 81.6 percent. The FOMC is concerned that oil prices, which are above $70/barrel, may pass through to other goods and services, thereby raising core inflation. Economists, however, believe that price shocks to food and energy are now more short-lived that in the past. Wage -price spiral inflation is now less likely, due to weakened worker bargaining power. Globalization is restraining unit labor costs, as evidenced by sharply declining union membership rates and minimal strike action. Due to declining expectations about a rate cut, the yield curve has moved to a more normal shape, with the highest rates being found in the 30-year sector. Pa"Is. <idvon, c. c.Itt r Treasurer PORTFOLIO STATISTICS Dollars in Thousands JUN-07 MAY-07 APR-07 MAR-07 FEB-07 JAN-07 CITY Month -End Book Value*** $ 243,098 $ 257,259 $ 248,864 $ 210,992 $ 217,861 $ 237,367 Month -End Market Value*** $ 242,909 $ 257,049 $ 248,991 $ 211,087 $ 218,014 $ 237,168 Paper Gain (Loss) $ (189) $ (210) $ 127 $ 95 $ 153 $ (199) Prior Year Book Variance $ 69,826 $ 77,552 $ 98,111 $ 61,048 $ 70,854 $ 89,718 Interest Earnings $ 1,029 $ 1,067 $ 952 $ 891 $ 859 $ 853 Yield -To -Maturity 5.11 % 5.11 % 5.13% 5.13% 5.08% 5.06% Weighted Maturity (Days) 324 355 376 428 444 402 Effective Duration 0.50 0.50 0.56 0.66 0.69 0.57 RDA Month -End Book Value *** $ 302,709 $ 311,195 $ 279,009 $ 303,532 $ 308,095 $ 237,367 Month -End Market Value *** $ 302,676 $ 311,011 $ 279,204 $ 303,707 $ 308,331 $ 237,252 Paper Gain (Loss) $ (33) $ (184) $ 195 $ 175 $ 236 $ (115) Prior Year Book Variance $ 158,249 $ 173,739 $ 136,331 $ 154,073 $ 154,443 $ 85,588 Interest Earnings $ 1,271 $ 1,191 $ 1,203 $ 1,333 $ 1,186 $ 1,013 Yield -To -Maturity 5.11 % 5.10% 5.09% 5.11 % 5.07% 5.05% Weighted Maturity (Days) 274 267 293 269 278 302 Effective Duration 0.40 0.42 0.49 0.47 0.56 0.49 *** Omits SLGSs. Aqeinq Interval < 1 M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratings AAA AA A Unrated ** Total: Sector MMF Agencies MTNs LGIP RDA Loan UB Sweep LAIF CID Total: Month Ju106 Aug Sep Oct Nov Dec Jan07 Feb Mar Apr May Jun City of Palm Desert -- Portfolio Characteristics June 30, 2007 Market Value $ 47,860 16,520 2,993 9,968 20,766 16,923 11,919 4,125 $ 131,074 Market Value $ 180,674 11,087 14,917 33,629 $ 240,307 Market Value $ 75,216 53,036 33,975 42,108 32,785 2,343 844 $ 240,307 General Fund Ageing) 1 i 100 --------- -- -- -- - - - - - I ( 80 0 o 60 40 37 n 16 II a 20 13 8 13 9 n 2 ° m n I f-1 f-1 3, ° 0 _1 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR j Credit Quality AAA A 88% 7% AA 5% Asset Allocation) Agencies 1 22% Citv Yield LAIF Yield Variance Performance 4.86 4.85 0.01 4.92 4.95 -0.02 5.4 4.96 5.02 -0.07 4.99 5.10 -0.11 5.01 5.13 -0.12 5.03 5.13 -0.09 12 4.9 5.06 5.16 -0.10 } 5.08 5.18 -0.11 5.13 5.21 -0.08 4.4 5.13 5.22 -0.10 Ju106 Aug Sep Oct Nov DecJan07 Feb Mar Apr May Jun 5.11 5.25 -0.13 5.11 5.25 -0.14 LAW 0% MMF 31% UB Sweep RDA Loan 1% 14% ATNs 14% LGIP 18% * Standard and Poors ** LAIF, and City Loan to RDA Page 2 of 9 City of Palm Desert Portfolio Holdings June 30, 2007 Market Ratings Par Value Issuer lCouponj Maturity I Cost I YTM Price I Value Moody'sI S&P Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,006,350 5.08 99.21 $ 2,999,103 Al A+ $ 3,000,000 BANK ONE 4.13 9/1/07 $ 3,002,287 3.64 99.78 $ 2,993,406 Aa3 A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,958,033 5.01 100.80 $ 2,943,308 Aa2 AA- $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,966,798 4.99 97.80 $ 1,956,072 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,990,294 5.63 98.45 $ 2,003,364 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,959,268 5.65 104.40 $ 1,974,202 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,028,998 5.67 101.93 $ 2,038,588 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 1,984,139 5.13 99.16 $ 1,983,218 Al A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,983,816 5.25 99.17 $ 1,983,330 Aa3 A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,014,724 5.02 97.37 $ 2,999,082 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,964,153 5.18 97.92 $ 1,958,488 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,074,490 4.93 103.13 $ 2,062,534 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,179,579 5.13 103.13 $ 4,125,028 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,973,833 5.09 97.79 $ 1,955,736 Aal AA- $ 33,949,000 Subtotal $ 34,086,763 5.05 $ 33,975,459 Federal Agencies - Coupon $ 3,000,000 FEDERAL HOME LOAN BANK 3.70 8/15/07 $ 2,999,677 3.79 99.78 $ 2,993,438 Aaa AAA $ 3,000,000 FEDERAL HOME LOAN BANK 4.38 9/11/09 $ 2,970,325 5.59 98.34 $ 2,950,313 Aaa AAA $ 1,980,000 FEDERAL HOME LOAN BANK 4.75 12/12/08 $ 1,976,414 4.87 99.31 $ 1,966,388 Aaa AAA $ 3,000,000 FEDERAL HOME LOAN BANK 4.63 9/12/08 $ 2,991,860 5.40 99.25 $ 2,977,500 Aaa AAA $ 2,049,000 FED HOME LOAN BANK 4.00 12/15/09 $ 2,009,616 4.87 97.28 $ 1,993,293 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,009,676 5.02 99.09 $ 3,002,541 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,009,597 4.87 98.19 $ 1,996,152 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,967,447 4.88 97.62 $ 1,952,488 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,996,024 5.06 99.60 $ 1,991,906 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,983,784 5.47 97.03 $ 2,000,784 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 3.00 8/15/07 $ 2,997,846 3.63 99.72 $ 2,991,563 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,989,181 4.88 98.75 $ 1,975,000 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,929,290 5.47 97.28 $ 1,945,625 Aaa AAA $ 31,154,000 Subtotal $ 30,830,737 4.87 $ 30,736,989 Federal Agencies -- Discount $ 3,801,000 FED HOME LOAN MTG CORP 0.00 7/9/07 $ 3,778,879 5.21 99.90 $ 3,797,199 Aaa AAA $ 10,603,000 FED HOME LOAN MTG CORP 0.00 8/16/07 $ 10,517,045 5.23 99.36 $ 10,535,141 Aaa AAA $ 14,404,000 Subtotal $ 14,295,924 5.23 $ 14,332,340 "U" = Unrated Page 3 of 9 City of Palm Desert Portfolio Holdings June 30, 2007 Market Ratings Par Value Issuer jCouponj Maturity I Cost I YTM I Price I Value Moody's S&P Federal Agencies -- Callable $ 2,000,000 FEDERAL HOME LOAN BANK 4.20 7/18/08 $ 1,986,745 4.88 98.91 $ 1,978,125 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,715 5.06 99.74 $ 1,994,890 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.30 8/13/09 $ 2,000,000 5.30 99.80 $ 1,996,092 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 5.38 211110 $ 2,000,000 5.37 99.88 $ 1,997,500 Aaa AAA $ 8,000,000 Subtotal $ 7,986,460 5.15 $ 7,966,607 Local Government Investment Pool $ 843,608 L.A.I.F. 0.00 7/1/07 $ 843,608 5.25 100.00 $ 843,608 U U $ 843,608 Subtotal $ 843,608 5.25 $ 843,608 Local Government Investment Pool $ 40,436,588 C.A.M.P. 0.00 7/1/07 $ 40,436,588 5.21 100.00 $ 40,436,588 U AAA $ 1,671,885 C.A.M.P. (HOUSING) 0.00 7/1/07 $ 1,671,885 5.21 100.00 $ 1,671,885 U AAA $ 42,108,473 Subtotal $ 42,108,473 5.21 $ 42,108,473 Money Market Fund $ 75,215,073 WF ADVANTAGE GOVT MMF 0.00 7/1/07 $ 75,215,073 5.13 100.00 $ 75,215,073 Aaa AAA $ 75,215,073 Subtotal $ 75,215,073 5.13 $ 75,215,073 Money Market Fund $ 2,342,910 HIGHMARK SWEEP 0.00 7/1/07 $ 2,342,910 3.75 100.00 $ 2,342,910 Aaa AAA $ 2,342,910 Subtotal $ 2,342,910 3.75 $ 2,342,910 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 7/1/37 $ 32,785,480 5.25 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 5.25 $ 32,785,480 Total Investments $ 240,802,544 $ 240,495,428 5.11 $ 240,306,939 Cash $ 705,596 CITY MAIN CHKG 0.00 7/1/07 $ 705,596 0.00 100.00 $ 705,596 U U $ 1,055,816 DESERT WILLOW CHKG 0.00 7/1/07 $ 1,055,816 0.00 100.00 $ 1,055,816 U U $ 627,956 MONTEREY 170 CHKG 0.00 7/1/07 $ 627,956 0.00 100.00 $ 627,956 U U $ 207,091 RECREATIONAL FAC CHKG 0.00 7/1/07 $ 207,091 0.00 100.00 $ 207,091 U U $ 5,742 CITY/FALCON CREST HOA 0.00 7/1/07 $ 5,742 0.00 100.00 $ 5,742 U U $ - ART, FOOD & WINE CHKG 0.00 7/1/07 $ - 0.00 100.00 $ - U U $ 2,602,200 Subtotal $ 2,602,200 $ 2,602,200 "U" = Unrated Page 4 of 9 IPar Value Total Investments and Cash $ 243,404,745 City of Palm Desert Portfolio Holdings June 30, 2007 Issuer lCouponj Maturity Corporate Issuers AMERICAN HONDA FINANCE BANK ONE BANK OF AMERICA GENERAL ELECTRIC IBM JP MORGAN CHASE WACHOVIA WAL-MART WELLS FARGO BANK Cost $ 243,097,629 % of Portfolio (Market Value) 1.23% 1.23% 1.21 % 3.28% 0.82% 0.82% 2.04% 0.85% 2.50% Market YTM I Price I Value $ 242,909,139 Ratings Moody'sI S&P "U" = Unrated Page 5 of 9 Acleinq Interval < 1 M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: ualit AAA AA A Unrated " Total: Sector MMF Agencies LAIF MTNs LGIP CID Treasuries Total: Month Ju106 Aug Sep Oct Nov Dec Jan07 Feb Mar Apr May Jun Palm Desert Redevelopment Agency -- Portfolio Characteristics June 30, 2007 Market Value Portfolio Ageing w/o SLGSsI $ 38,268 1 5,971 100 90 - 80 14,934 70 32,681 o 60 '0 50 18,612 27 9,967 0 30 a 20 5 0 12 0 n 15 8 0 0 - 10 ^ �-� I l n n 0 <1M <2M <3M <6M < < < < < > $ 120,433 1YR 2YR 3YR 4YR 5YR 5YR Market Value Credit Qualityl $ 270,974 AAA 8,992 90% 8,926 Unrated " 12,955 4°�° AA A $ 301,847 3% 3% Market Value Asset Allocation $ 170,146 100,154 12,955 17,919 673 $ 301,847 MMF 57% MTI 6% LAIF 4% agencies 33% RDA Yield LAIF Yield Variance Performance 4.82 4.85 -0.03 4.85 4.95 -0.10 5.4 4.94 5.02 -0.09 4.95 5.10 -0.15 4.95 5.13 -0.18 a 5.0 4.95 5.13 -0.18 2 5.05 5.16 -0.11 } 4.6 5.06 5.18 -0.12 5.11 5.21 -0.11 4.2 5.09 5.22 -0.13 Ju106 Aug Sep Oct Nov DecJan07 Feb Mar Apr May Jun 5.10 5.25 -0.15 5.11 5.25 -0.14 ■ LAIF Yield ■ RDA Yield Standard and Poors *' LAIF Page 6 of 9 Palm Desert Redevelopment Agency Portfolio Holdings June 30, 2007 Market Ratings Par Value Issuer lCouponj Maturity I Cost I YTM I Price I Value Moody'sI S&P Medium -Term Notes $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,068,168 5.13 101.34 $ 4,053,752 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,964,540 5.12 97.00 $ 3,948,059 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 2,975,840 5.12 97.00 $ 2,963,469 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,020,820 5.00 100.74 $ 2,014,832 Aa3 A+ $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,979,956 4.96 98.38 $ 1,967,534 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,978,899 5.18 99.04 $ 2,971,167 Aa1 AA- $ 18,125,000 Subtotal $ 17,988,223 5.10 $ 17,918,813 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 2.63 9/17/07 $ 2,995,101 3.43 99.44 $ 2,983,125 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,064,340 4.88 102.65 $ 2,052,930 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,969,256 4.89 97.94 $ 1,958,750 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,995,422 4.87 99.25 $ 1,985,000 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 3.38 9/14/07 $ 2,999,441 3.82 99.59 $ 2,987,813 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,942,900 4.79 98.84 $ 3,924,097 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,942,900 4.79 98.84 $ 3,924,097 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,455,487 5.59 98.34 $ 4,425,469 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11 /3/09 $ 1,941,567 4.88 96.28 $ 1,925,625 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,989,147 4.84 99.25 $ 3,970,000 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,966,801 4.89 97.41 $ 1,952,995 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,957,352 5.49 98.84 $ 1,976,875 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,956,783 5.50 98.84 $ 1,976,875 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,974,618 5.16 99.09 $ 1,971,966 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,009,480 4.87 97.28 $ 1,993,293 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,998,651 5.07 99.71 $ 1,994,148 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,075,347 5.54 104.88 $ 2,097,500 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,874,929 5.54 104.88 $ 3,916,033 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,298,920 4.89 102.94 $ 4,277,053 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,974,579 4.87 98.09 $ 1,961,875 Aaa AAA $ 54,373,000 Subtotal $ 54,383,020 4.92 $ 54,255,517 Federal Agencies -- Discount $ 35,944,000 FED HOME LOAN MTG CORP 5.11 7/9/07 $ 35,734,816 5.21 99.90 $ 35,908,054 Aaa AAA $ 35,944,000 Subtotal $ 35,734,816 5.21 $ 35,908,054 Federal Agencies -- Callable $ 5,000,000 FED HOME LOAN BANK 5.25 2/15/08 $ 5,000,000 5.25 99.91 $ 4,995,313 Aaa AAA $ 5,000,000 FED HOME LOAN BANK 5.25 2/1/08 $ 5,000,000 5.25 99.91 $ 4,995,313 Aaa AAA $ 10,000,000 Subtotal $ 10,000,000 5.25 $ 9,990,625 "U" = Unrated Page 7 of 9 Palm Desert Redevelopment Agency Portfolio Holdings June 30, 2007 Market Ratings Par Value Issuer I Coupon] Maturity I Cost I YTM I Price I Value I Moody'sI S&P Local Government Investment Pool $ 4,621,074 L.A.I.F. 0.00 7/1 /07 $ 4,621,074 5.25 100.00 $ 4,621,074 U U $ 1,043,493 L.A.I.F. (HOUSING) 0.00 7/1/07 $ 1,043,493 5.25 100.00 $ 1,043,493 U U $ 7,290,848 L.A.I.F. BOND PROCEEDS 0.00 7/1/07 $ 7,290,848 5.25 100.00 $ 7,290,848 U U $ 12,955,415 Subtotal $ 12,955,415 5.25 $ 12,955,415 Local Government Investment Pool $ 672,634 C.A.M.P. 0.00 7/1/07 $ 672,634 5.21 100.00 $ 672,634 U AAA $ 672,634 Subtotal $ 672,634 5.21 $ 672,634 Money Market Fund $ 170,146,128 WF ADVANTAGE GOVT MMF 0.00 7/1/07 $ 170,146,128 5.13 100.00 $ 170,146,128 Aaa AAA $ 170,146,128 Subtotal $ 170,146,128 5.13 $ 170,146,128 'Total Investments $ 302,216,177 $ 301,880,237 5.11 $ 301,847,186 Cash $ 501,493 HOUSING AUTH CHKG 0.00 7/1/07 $ 501,493 0.00 100.00 $ 501,493 U U $ 327,109 HOUSING AUTH TRUST 0.00 7/1/07 $ 327,109 0.00 100.00 $ 327,109 U U $ 828,602 Subtotal $ 828,602 $ 828,602 Total Investments and Cash $ 303,044,779 $ 302,708,839 $ 302,675,788 % of Portfolio Corporate Issuers (Market Value) CITIGROUP 1.34% JP MORGAN CHASE 2.28% FIRST UNION NAT BANK 0.67% WELLS FARGO BANK 1.63% "U" = Unrated Page 8 of 9 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended June 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 July 24, 2007, Par bS. C. C. At. 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 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% 22.1 % 33.2% 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 536010) Medium -Term Notes 5 Years 0 30% A 5 Years 30 0/o A 1 14.. 2 0/0 60 0/o 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) AAA & Aaa 32.3% 56.4% 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 I 20% (2 ) I or Advisor l 17.59/6 I 0.2% 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security LAIF No Limit I No Limit 0.4% 4.3% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. I 86.4% I 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. ` Certified California Municipal Treasurer Page 9 of 9