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SR - Investment Reports - Nov & Dec 2001 & Jan & Feb 2008
CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY \�W . DATE: MARCH 25, 2008 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for November 2007, December 2007, January 2008 and February 2008 which were presented and approved at the recent meetings of the Audit, Investment and Finance Committee. Please include on the upcoming agenda for review and acceptance by City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. P us�� nmo BY RDA Attachment (as noted) ON (L C VERIFIED BY Original on file with City Clerk's Office CITY COUNCIL ACTION: APPROVED , DENIED ItECEIVED �-- I-i je, OTHER M32TING DATE AYES NOE S : ti 17�1 ABSENT: ABSTAIN: VERIFIED BY: (, b-664 Orig- nal on File withXity Clerk's Office G \Rnanceftamh Ortega\Investment Committee\Memos\rklasseninvreport.wpd �--� City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT November 2007 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC) met on December 11, and lowered the Federal Funds Rate for the third consecutive time, by 25 basis points to 4.25%. Problems in the housing, credit, and financial markets prompted this move. The FOMC was concerned about the risk of a vicious cycle of credit market conditions restraining economic growth, leading to additional tightening of credit. The FOMC also offered $40 billion in special loans to banks as part of a global effort to increase liquidity in the international banking system. The subprime crisis rivals the S&L crisis of 20 years ago. Citigroup had to bail out seven affiliated structured -investment vehicles (SIVs), adding $49 billion in assets to its balance sheet, while further depleting its capital base. Swiss bank UBS, which reported a $10 billion fourth-quarter write -down, received a capital infusion by selling 12.4% of its stock to the Singapore Government and to a Middle Eastern investor. MBIA shored up its capital structure by receiving $1 billion from Warburg Pincus, a private equity firm. Local government investment pools in Florida, Washington, Montana, Maine, and Connecticut were identified as possible candidates for subprime losses due to imprudent investments. The state -administered Florida Local Government Investment Pool had to suspend withdrawals from the fund due to a multi -billion -dollar run by local governments fearing subprime-related losses. The State of California has indicated that its subprime exposure is relatively small. Pis tid,-Jom C. C. /v r. Treasurer PORTFOLIO STATISTICS Dollars in Thousands NOV-07 OCT-07 SEP-07 AUG-07 JUL-07 JUN-07 CITY Month -End Book Value*** $ 240,745 $ 244,113 $ 233,947 $ 245,850 $ 256,143 $ 243,098 Month -End Market Value*** $ 242,224 $ 244,790 $ 234,328 $ 245,945 $ 256,176 $ 242,909 Paper Gain (Loss) $ 1,479 $ 677 $ 381 $ 95 $ 33 $ (189) Prior Year Book Variance $ 80,955 $ 86,710 $ 71,505 $ 76,483 $ 85,202 $ 69,826 Interest Earnings $ 965 $ 981 $ 957 $ 1,045 $ 1,066 $ 1,029 Yield -To -Maturity 4.93% 5.05% 5.01 % 5.09% 5.11 % 5.11 % Weighted Maturity (Days) 451 444 426 415 308 324 Effective Duration 0.77 0.79 0.76 0.75 0.45 0.50 RDA Month -End Book Value *** $ 250,190 $ 250,763 $ 279,542 $ 289,864 $ 293,026 $ 302,709 Month -End Market Value *** $ 251,232 $ 251,297 $ 280,070 $ 290,104 $ 293,073 $ 302,676 Paper Gain (Loss) $ 1,042 $ 534 $ 528 $ 240 $ 47 $ (33) Prior Year Book Variance $ 135,053 $ 134,543 $ 152,500 $ 148,263 $ 145,329 $ 158,249 Interest Earnings $ 952 $ 1,027 $ 1,167 $ 1,233 $ 1,270 $ 1,271 Yield -To -Maturity 4.70% 4.87% 5.02% 5.07% 5.10% 5.11 % Weighted Maturity (Days) 282 282 305 314 279 274 Effective Duration 0.40 0.41 0.40 0.47 0.39 0.40 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics November 30, 2007 Dollars in Thousands Ageing Interval Market Value < 1 M $ 31,250 < 2M _ < 3M 1,995 < 6M 1,994 < 1 YR 6,037 < 2YR 20,942 < 3YR 24,993 < 4YR 48,308 < 5YR 6,233 > 5YR _ Total: $ 141,752 General Fund Ageing 100 80 o o 60 o 40 34 0 22 IL 20 15 18 0 0 1 1 4--❑ < 1 M < 2M < 3M < 6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Ratings " Market Value Credit Quality AAA $ 186,769 AA 37,447 A 14,157 Unrated " 10 Total: $ 238,383 Sector Market Value (Asset Allocation MMF $ 60,557 Agencies 51,555 MTNs 59,806 CAMP 31,792 RDA Loan 32,785 UB Sweep 1,878 LAW 10 CP - Total: $ 238,383 Month City Yield LAW Yield Variance Dec06 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 Oct 5.05 5.14 -0.09 Nov 4.93 4.96 -0.03 Performance 5.4 4.4 DecOfilanO7 Feb Mar Apr May Jun Jul Aug Sep Oct Nov LM ! AIF Yield ® ; AAA A 78% 6% AA 16% J Agencies 2; MMF 25% ATNs 25% DAMP UB Sweep 13% 1 % RDA Loan 14% Standard and Poors " LAIF, and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings November 30, 2007 Par Value Issuer l Coupon j Maturity Cost YTM Market I Price Value Ratings ' Moody'sI S&P Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 2,988,568 5.08 99.83 $ 3,017,882 Al A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,975,422 5.01 101.82 $ 2,973,001 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 14,991,733 4.91 99.02 $ 15,121,026 Aal AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 1,997,916 4.91 99.02 $ 2,015,147 Aal AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 984,730 5.19 99.90 $ 998,964 Aal AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,938,920 5.19 99.90 $ 3,995,856 Aal AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,930,948 4.99 98.92 $ 1,978,432 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,977,145 5.63 102.24 $ 2,080,494 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,978,950 5.65 107.47 $ 2,032,190 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,036,740 5.67 105.54 $ 2,110,778 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 1,973,640 5.13 99.78 $ 1,995,504 Al A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,972,220 5.25 99.79 $ 1,995,706 Aaa A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 2,984,982 5.02 97.91 $ 3,015,659 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,951,820 5.18 98.58 $ 1,971,674 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,152,240 5.02 108.04 $ 2,160,700 Aa3 A+ $ 2,000,000 WALMART 6.88 8/10/09 $ 2,123,660 4.93 104.70 $ 2,094,068 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,196,560 5.13 105.90 $ 4,235,980 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,970,580 5.09 100.68 $ 2,013,542 Aal AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,974,423 4.92 97.98 $ 1,984,168 Aal AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,987,471 4.96 99.76 $ 2,015,168 Aal AA- 1 $ 59,299,000 Subtotal $ 59,088,669 5.09 $ 59,805,937 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,012,600 4.61 102.47 $ 3,074,063 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,012,600 4.61 102.47 $ 3,074,063 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 1,992,150 4.68 99.34 $ 2,001,777 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,936,563 6.90 99.50 $ 1,990,000 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,951,430 5.59 101.09 $ 3,032,813 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,972,951 4.87 100.69 $ 1,993,613 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,982,360 5.40 100.25 $ 3,007,500 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 2,987,883 5.02 99.91 $ 3,027,159 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,906,660 5.96 99.56 $ 1,991,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 1,993,560 4.87 100.78 $ 2,048,883 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,987,206 4.87 100.59 $ 2,061,166 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,948,340 4.88 100.80 $ 2,016,098 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,991,875 5.06 100.71 $ 2,014,200 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7112110 $ 1,958,405 5.47 101.00 $ 2,082,620 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,996,875 5.20 100.36 $ 2,007,122 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,986,993 5.50 100.59 $ 2,061,166 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,982,680 4.88 101.69 $ 2,033,750 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,907,020 5.47 101.38 $ 2,027,500 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,948,800 6.35 99.72 $ 1,994,375 Aaa AAA "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings November 30, 2007 Market Ratings Par Value Issuer Coupon I Maturity Cost YTM I Price I Value ' Moody'sl S&P Federal Agencies -- Coupon (continued) $ 43,218,000 Subtotal 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 $ 9,735 L.A.I.F. 0.00 $ 9,735 Subtotal Local Government Investment Pool $ 30,488,674 C.A.M.P. 0.00 $ 1,303,553 C.A.M.P. (HOUSING) 0.00 $ 31,792,228 Subtotal Money Market Fund $ 60,556,150 WF ADVANTAGE GOVT MMF 0.00 $ 60,556,150 Subtotal Money Market Fund $ 1,878,214 CITY MAIN REPO SWEEP 0.00 $ 1,878,214 Subtotal City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 $ 32,785,480 Subtotal Total Invesments $ 237,538,806 Cash $ 2,596,335 CITY MAIN CHKG 0.00 $ 553,606 MONTEREY 170 CHKG 0.00 $ 453,795 DESERT WILLOW CHKG 0.00 $ 163,647 RECREATIONAL FAC CHKG 0.00 $ 41,139 ART, FOOD & WINE CHKG 0.00 $ 31,877 CITY/FALCON CREST HOA 0.00 $ 42,456,951 5.24 $ 43,539,116 7/18/08 $ 1,969,060 4.88 99.84 $ 1,996,875 Aaa AAA 8/22/08 $ 1,999,375 5.06 100.49 $ 2,009,806 Aaa AAA 8/13/09 $ 2,000,000 5.30 100.26 $ 2,005,260 Aaa AAA 2/1/10 $ 2,000,000 5.37 100.22 $ 2,004,375 Aaa AAA $ 7,968,435 5.16 $ 8,016,316 12/1/07 $ 9,735 4.96 100.00 $ 9,735 U U $ 9,735 4.96 $ 9,735 12/1/07 $ 30,488,674 4.94 100.00 $ 30,488,674 U AAA 12/1/07 $ 1,303,553 4.94 100.00 $ 1,303,553 U AAA $ 31,792,228 4.94 $ 31,792,228 12/1/07 $ 60,556,150 4.52 100.00 $ 60,556,150 $ 60,556,150 4.52 $ 60,556,150 12/1/07 $ 1,878,214 3.85 100.00 $ 1,878,214 $ 1,878,214 3.85 $ 1,878,214 12/1/37 $ 32,785,480 4.96 100.00 $ 32,785,480 $ 32,785,480 4.96 $ 32,785,480 $ 236,535,861 4.93 $ 238,383,175 Aaa AAA I P1 Al U U + i 12/1/07 $ 2,596,335 0.00 100.00 $ 2,596,335 U U 12/1/07 $ 553,606 0.00 100.00 $ 553,606 U U 12/1/07 $ 453,795 0.00 100.00 $ 453,795 U U 12/1/07 $ 163,647 0.00 100,00 $ 163,647 U U 12/1/07 $ 41,139 0.00 100.00 $ 41,139 U U 12/1/07 $ 31,877 0.00 100.00 $ 31,877 U U "U" = Unrated Page 4 Par Value I Issuer Cash (continued) $ 3,840,398 Subtotal Total Investments and Cash $ 241,379,205 City of Palm Desert Portfolio Holdings November 30, 2007 Coupon I Maturity I Cost $ 3,840,398 $ 240,376,259 % of Portfolio Corporate Issuers (Market Value) AMERICAN HONDA FINANCE 1.25% BANK OF AMERICA 1.23% CITIGROUP 9.14% GENERAL ELECTRIC 2.51% IBM 0.82% JP MORGAN CHASE 0.82% WACHOVIA 1.24% WALMART 2.57% WELLS FARGO BANK 4.23% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.19% FED HOME LOAN BANK 6.21% FED HOME LOAN MTG CORP 7.56% FED NATIONAL MTG ASSOC 3.33% Market YTM I Price I Value $ 3,840,398 $ 242,223,574 'Ratings Moody'sl S&P "U" = Unrated Page 5 Dollars in Thousands Ageing Interval < 1 M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Quality AAA AA A Unrated *` Total: Palm Desert Redevelopment Agency -- Portfolio Characteristics November 30, 2007 Market Value $ 8,830 5,006 4,970 13,905 31,079 11,073 4,052 $ 78,915 Market Value $ 223,524 12,182 9,028 5,330 $ 250,064 Sector Market Value MMF $ 165,957 Agencies 49,383 LAIF 5,330 MTNs 21,210 CAMP 8,184 CP Treasuries Total: $ 250,064 Month RDA Yield LAIF Yield Variance Dec06 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 Jun 5.11 5.25 -0.14 Jul 5.10 5.26 -0.16 Aug 5.07 5.25 -0.19 Sep 5.02 5.23 -0.21 Oct 4.87 5.14 -0.27 Nov 4.70 4.96 -0.26 Standard and Poors LAIF f Portfolio Ageing w/o SLGS� 100 90 80 70 0 60 40 39 0 30 (- 20 11 18 14 10 0 6 6 ❑ 5 0 0 0 M_ .__._r, J <1M <2M <3M <6M < < < < < 1YR 2YR 3YR 4YR 5YR 5YR credit Quality AAA 89% Unrated " 2% AA A ° ° 4% Asset Allocation CAMF 3% MTNs LAIF 8% 2% Performance 5.4 5.0 v m 4.6 4.2 DecOUan07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov ■ LAIF Yield ■ RDA Yield MMF 67% encies 20% Page 6 Palm Desert Redevelopment Agency Portfolio Holdings November 30, 2007 I Par Value I Issuer Medium -Term Notes $ 4,000,000 CITIGROUP $ 4,070,000 JP MORGAN CHASE $ 3,055,000 JP MORGAN CHASE $ 2,000,000 FIRST UNION NAT BANK $ 3,000,000 WALMART $ 2,000,000 WELLS FARGO BANK $ 3,000,000 WELLS FARGO BANK $ 21,125,000 Subtotal Federal Agencies -- Coupon $ 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 $ 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 $ 2,000,000 FED HOME LOAN MTG CORP $ 3,734,000 FED HOME LOAN MTG CORP $ 4,155,000 FED NATIONAL MTG ASSOC $ 43,224,000 Subtotal Federal Agencies -- Callable $ 5,000,000 FED HOME LOAN BANK $ 5,000,000 Subtotal Market Ratings Coupon I Maturity Cost YTM I Price I Value ' Moody'sI S&P 6.20 3/15/09 $ 4,051,514 5.13 101.91 $ 4,076,344 Aa1 AA- 3.50 3/15/09 $ 3,990,304 5.12 98.37 $ 4,003,651 Aa3 A+ 3.50 3/15/09 $ 2,995,179 5.12 98.37 $ 3,005,197 Aa3 A+ 5.80 12/1/08 $ 2,014,696 5.00 100.97 $ 2,019,302 Aa3 A+ 6.88 8/10/09 $ 3,101,235 4.76 104.70 $ 3,141,102 Aa2 AA 4.00 8/15/08 $ 1,987,398 4.96 99.01 $ 1,980,246 Aa1 AA- 4.13 3/10/08 $ 2,991,611 5.18 99.48 $ 2,984,268 Aa1 AA- $ 21,131,938 5.05 $ 21,210,110 6.45 10/7/09 $ 2,052,513 4.88 104.83 $ 2,096,684 Aaa AAA 4.75 8/3/09 $ 1,996,335 4.87 101.72 $ 2,034,375 Aaa AAA 4.90 9/22/10 $ 4,932,947 4.65 103.13 $ 5,053,125 Aaa AAA 4.25 9/12/08 $ 3,952,331 4.79 99.97 $ 3,968,759 Aaa AAA 4.25 9/12/08 $ 3,952,331 4.79 99.97 $ 3,968,759 Aaa AAA 4.38 9/11/09 $ 4,463,939 5.59 101.09 $ 4,549,219 Aaa AAA 4.63 9/12/08 $ 3,992,924 4.84 100.25 $ 4,010,000 Aaa AAA 3.88 7/24/09 $ 1,974,512 4.89 100.13 $ 2,007,506 Aaa AAA 4.88 3/11/11 $ 1,962,162 5.49 103.44 $ 2,068,750 Aaa AAA 4.88 3/11/11 $ 1,961,657 5.50 103.44 $ 2,068,750 Aaa AAA 4.00 3/10/08 $ 1,983,884 5.16 99.91 $ 1,988,134 Aaa AAA 6.88 9/15/10 $ 2,065,553 5.54 108.16 $ 2,163,125 Aaa AAA 6.88 9/15/10 $ 3,856,611 5.54 108.16 $ 4,038,554 Aaa AAA 6.63 9/15/09 $ 4,271,731 4.89 104.97 $ 4,361,452 Aaa AAA $ 43,419,430 5.07 $ 44,377,193 5.25 2/1/08 $ 5,000,000 5.25 100.13 $ 5,006,250 Aaa AAA $ 5,000,000 5.25 $ 5,006,250 Local Government Investment Pool $ 4,969 L.A.I.F. $ 5,000 0.00 12/1/07 $ 4,969 4.96 100.00 $ 4,969 U U L.A.I.F. (HOUSING) 0.00 12/1/07 $ 5,000 4.96 100.00 $ 5,000 U U $ 5,320,158 L.A.I.F. BOND PROCEEDS 0.00 1211107 $ 5,320,158 4.96 100.00 $ 5,320,158 U U $ 5,330,127 Subtotal $ 5,330,127 4.96 $ 5,330,127 Local Government Investment Pool $ 4,445,766 C.A.M.P. $ 3,738,008 C.A.M.P. (HOUSING) $ 8,183,774 Subtotal 0.00 12/1/07 $ 4,445,766 4.94 100.00 $ 4,445,766 U AAA 0.00 12/1/07 $ 3,738,008 4.94 100.00 $ 3,738,008 U AAA $ 8,183,774 4.94 $ 8,183,774 1 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings November 30, 2007 Par Value Issuer Coupon I Maturity Cost YTM I Price Market Value Ratings I Moody'sl S&P Local Government Investment Pool $165,956,659 WF ADVANTAGE GOVT MMF 0.00 12/1/07 $ 165,956,659 4.52 100.00 $ 165,956,659 Aaa AAA ' $165,956,659 Subtotal $ 165,956,659 4.52 $ 165,956,659 Total Investments $248,819,560 $ 249,021,928 4.70 $ 250,064,113 Cash $ 817,465 HOUSING AUTH CHKG 0.00 12/1/07 $ 817,465 0.00 100.00 $ 817,465 U U $ 350,146 HOUSING AUTH TRUST 0.00 12/1/07 $ 350,146 0.00 100.00 $ 350,146 U U $ 1,167,611 Subtotal $ 1,167,611 $ 1,167,611 Total Investments and Cash $249,987,171 $ 250,189,539 $ 251,231,724 Corporate Issuers CITIGROUP JP MORGAN CHASE FIRST UNION NAT BANK WALMART WELLS FARGO BANK Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC % of Portfolio (Market Value) 1.62% 1.59% 2.00% 1.25% 1.98% % of Portfolio (Market Value) 3.66% 9.80% 2.47% 1.74% "U" = Unrated Page 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and 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 November 30, 2007, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts, and are therefore not included in this report as assets. All balances are bank balances. Respectfully submitted on December 18, 2007, Pis tides c. c. /t/ r. 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 I No Limit I 53601(c) CA State Debt 5 Years No Limit Not Authorized 53601(d) 53601(e) CA Local Agency Debt Federal 5 Years No Limit Not Authorized Agencies 5 Years No Limit J 5 Years 30% 6% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 53601(q) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 53601(h) 53601(i) Negotiable CDs Repos 5 Years 30% 5 Years 30% AA- or Aa3 53601(i) Reverse Repos 1 Year No Limit 30 Days 20% 1AAA & Aaa 53601(j) Medium -Term Notes 92 Days 5 Years 20% 30% Not Authorized 53601(k) Mutual Funds )1 90 Days � A 20% AAA & Aaa 5 Years 90 Days' o 30 /o 20% (2) A 'AAA &Aaa' 53601(I) Trust Indenture Debt 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa Not Authorized Investment Pools 90 Days 20% + or Advisor 90 Days 120% (2) AAA & Aaa I or Advisor I 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) ) & Not Authorized Secunties AA (Security LAIF No Limit J I I No Limit (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. 0.0% 0.0% 21.4% 19.5% 0.0% 0.0% 25.0% 8.5% 26.4% 66.6% 13.4% J 3.3% 0.0% 1 2.1 % 86.2% 100.0% Certified California Municipal Treasurer Page 9 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT December 2007 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The economy is slowing due to the housing market correction, higher energy prices, and turmoil in capital markets. Unfavorable employment growth and retail sales data for December bear this out. Housing prices are in a freefall. In December 2006, home prices were rising by 2-3% annually, and national unsold inventory was at seven months' supply. By December 2007, home prices had declined by 7%, and national unsold inventory had risen to over 10 months' supply. In the early 1990s, real estate deflation affected only 50% of the U.S. In 2007, it affects 85% of the U.S. Home prices are expected to fall another 25-30% over the next two years. This is projected to reduce consumer spending by $360 billion, which is equivalent to a 2% wage cut in 2008 and in 2009. In the financial sector, investors from Japan, Korea, Singapore, China, Saudi Arabia and Kuwait came to the rescue of Wall Street. These investors paid a combined total of $19.1 billion for preferred stock in Citigroup and in Merrill Lynch, both of which needed to shore up their capital bases. Citigroup, which announced a fourth-quarter loss of $9.8 billion, had asset write -downs of $18.1 billion. Merrill Lynch had fourth-quarter asset write -downs of $15 billion. Bank of America bought Countrywide Financial, the largest mortgage lender in the U.S., which was rumored to be near bankruptcy, for $4.1 billion in stock. Bank of America then sold $12 billion of preferred stock in order to shore up its capital base. Pacd,S. Ciibjoi; C. C. M. T. Treasurer PORTFOLIO STATISTICS Dollars in Thousands DEC-07 NOV-07 OCT-07 SEP-07 AUG-07 JUL-07 CITY Month -End Book Value*** $ 237,124 $ 240,745 $ 244,113 $ 233,947 $ 245,850 $ 256,143 Month -End Market Value*** $ 238,366 $ 242,224 $ 244,790 $ 234,328 $ 245,945 $ 256,176 Paper Gain (Loss) $ 1,242 $ 1,479 $ 677 $ 381 $ 95 $ 33 Prior Year Book Variance $ 78,074 $ 80,955 $ 86,710 $ 71,505 $ 76,483 $ 85,202 Interest Earnings $ 958 $ 965 $ 981 $ 957 $ 1,045 $ 1,066 Yield -To -Maturity 4.87% 4.93% 5.05% 5.01 % 5.09% 5.11 % Weighted Maturity (Days) 458 451 444 426 415 308 Effective Duration 0.74 0.77 0.79 0.76 0.75 0.45 RDA Month -End Book Value *** $ 250,975 $ 250,190 $ 250,763 $ 279,542 $ 289,864 $ 293,026 Month -End Market Value *** $ 252,033 $ 251,232 $ 251,297 $ 280,070 $ 290,104 $ 293,073 Paper Gain (Loss) $ 1,058 $ 1,042 $ 534 $ 528 $ 240 $ 47 Prior Year Book Variance $ 139,907 $ 135,053 $ 134,543 $ 152,500 $ 148,263 $ 145,329 Interest Earnings $ 990 $ 952 $ 1,027 $ 1,167 $ 1,233 $ 1,270 Yield -To -Maturity 4.70% 4.70% 4.87% 5.02% 5.07% 5.10% Weighted Maturity (Days) 281 282 282 305 314 279 Effective Duration 0.37 0.40 0.41 0.40 0.47 0.39 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics December 31, 2007 Dollars in Thousands Ageing Interval Market Value < 1 M $ 33,090 < 2M 1,996 < 3M 6,045 < 6M < 1 YR 22,965 < 2YR 27,317 < 3YR 44,696 < 4YR 6,347 < 5YR _ > 5YR _ Total: $ 142,456 Ratings ` Market Value AAA $ 148,369 AA 37,252 A 16,194 Unrated ` 32,795 Total: $ 234,610 Sector MMF Agencies MTNs CAMP RDA Loan UB Sweep LAIF CID Total: Month Jan07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Market Value $ 58,697 51,598 59,575 29,919 32,785 2,026 10 $ 234,610 City Yield LAIF Yield 5.06 5.16 5.08 5.18 5.13 5.21 5.13 5.22 5.11 5.25 5.11 5.25 5.11 5.26 5.09 5.25 5.01 5.23 5.05 5.14 4.93 4.96 4.87 4.80 Standard and Poors " LAIF, and City Loan to RDA Variance -0.10 -0.11 -0.08 -0.10 -0.13 -0.14 -0.15 -0.17 -0.22 -0.09 -0.03 0.07 General Fund Ageing 100 80 o 0 60 i 40 23 31 a. 20 16 19 01 ^ ° n n r, o - < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Credit Quality A AAA 8% 74% AA 18% Asset Allocation Agencies 22% MTNs 25% MMF 25% CAMP 11 UB Sweep13% RDA Loan 1% 14% ! Performance 5.4 0 4.9 m r 4.4 Jan07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec L © ■City Yield Page 2 City of Palm Desert Portfolio Holdings December 31, 2007 Par Value Issuer lCoupon I Maturity Cost YTM Market I Price Value Ratings ' Moody'sI S&P� Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,018,338 5.08 99.96 $ 3,021,743 Al $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,946,311 5.01 101.44 $ 2,961,975 Aa2 A+ AA- $ 15,270,000 CITIGROUP 4.13 2122110 $ 15,031,087 4.91 98.54 $ 15,046,554 Aal AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,003,161 4.91 98.54 $ 2,005,222 Aal AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 986,561 5.19 99.45 $ 994,547 Aal AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,946,245 5.19 99.45 $ 3,978,188 Aal AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,979,678 4.99 99.15 $ 1,983,076 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,997,056 5.63 101.49 $ 2,065,250 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,949,146 5.65 106.61 $ 2,015,908 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,025,017 5.67 104.53 $ 2,090,670 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 1,997,734 5.13 99.93 $ 1,998,628 Al A+ $ 2,000,000 JP MORGAN CHASE 3.70 1/15/08 $ 1,998,832 5.25 99.95 $ 1,998,906 Aa3 A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,034,775 5.02 97.93 $ 3,016,259 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,980,125 5.18 98,84 $ 1,976,792 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,134,238 5.02 107.77 $ 2,155,440 Aa3 A+ $ 2,000,000 WALMART 6.88 8/10/09 $ 2,056,825 4.93 104.51 $ 2,090,234 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,157,590 5.13 104.53 $ 4,181,124 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,978,046 5.09 100.08 $ 2,001,550 Aal AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,981,566 4.92 98.04 $ 1,985,387 Aal AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,990,451 4.96 99.37 $ 2,007,238 Aal AA- $ 59,299,000 Subtotal $ 59,192,780 5.09 $ 59,574,690 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,926 4.61 102.63 $ 3,078,750 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,926 4.61 102.63 $ 3,078,750 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,001,276 4.68 99.47 $ 2,004,295 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,949,354 6.90 99.56 $ 1,991,250 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,977,086 5.59 101.25 $ 3,037,500 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,977,653 4.87 100.63 $ 1,992,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,995,259 5.40 100.25 $ 3,007,500 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,024,368 5.02 99.88 $ 3,026,213 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,916,045 5.96 99.81 $ 1,996,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,015,336 4.87 100.94 $ 2,052,059 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,017,635 4.87 100.81 $ 2,065,648 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,974,284 4.88 100.99 $ 2,019,778 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,997,509 5.06 100.64 $ 2,012,884 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,996,689 5.47 101.22 $ 2,087,131 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,997,713 5.20 100.34 $ 2,006,756 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,992,891 5.50 100.81 $ 2,065,648 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,991,508 4.88 101.81 $ 2,036,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,940,614 5,47 101.56 $ 2,031,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,958,515 6.35 99.75 $ 1,995,000 Aaa AAA "U" = Unrated Page 3 Par Value I Issuer lCoup City of Palm Desert Portfolio Holdings December 31, 2007 o Market n I Maturity Cost YTM I Price I Value $ 42,745,586 5.24 $ 43,585,287 7/18/08 $ 1,993,074 4.88 99.91 $ 1,998,125 8/22/08 $ 1,999,840 5.06 100.46 $ 2,009,126 8/13/09 $ 2,000,000 5.30 100.17 $ 2,003,350 211110 $ 2,000,000 5.37 100.13 $ 2,002,500 $ 7,992,913 5.15 $ 8,013,101 1/1/08 $ 9,735 4.80 100.00 $ 9,735 $ 9,735 4.80 $ 9,735 1/1/08 $ 28,610,486 4.82 100.00 $ 28,610,486 1/1/08 $ 1,308,884 4.82 100.00 $ 1,308,884 $ 29,919,370 4.82 $ 29,919,370 1/1/08 $ 51,577,838 4.38 100.00 $ 51,577,838 $ 51,577,838 4.38 $ 51,577,838 1/1/08 $ 6,973,540 4.91 100.00 $ 6,973,540 $ 6,973,540 4.91 $ 6,973,540 1/1/08 $ 144,785 3.71 100.00 $ 144,785 $ 144,785 3.71 $ 144,785 1/1/08 $ 2,026,214 3.54 100.00 $ 2,026,214 $ 2,026,214 3.54 2,026,213.50 1/1/38 $ 32,785,480 4.80 100.00 $ 32,785,480 $ 32,785,480 4.80 $ 32,785,480 $ 233,368,241 4.87 $ 234,610,039 'Ratings Moody's I S&P Aaa AAA Aaa AAA Aaa AAA Aaa AAA U U I U AAA U AAA I Aaa AAA I Aaa AAA I Aaa AAA I P1 Al I U U I "U" = Unrated Page 4 Par Value I Issuer Cash $ 2,702,297 CITY MAIN CHKG $ 553,701 MONTEREY 170 CHKG $ 250,619 DESERT WILLOW CHKG $ 170,602 RECREATIONAL FAC CHKG $ 41,239 ART, FOOD & WINE CHKG $ 37,012 CITY/FALCON CREST HOA $ 3,755,470 Subtotal Total Investments and Cash $ 237,709,432 City of Palm Desert Portfolio Holdings December 31, 2007 Market Ratings lCoupon I Maturity Cost YTM I Price I Value ' Moody'sI S&P 0.00 1/1/08 $ 2,702,297 0.00 100.00 $ 2,702,297 U U 0.00 1/1/08 $ 553,701 0.00 100.00 $ 553,701 U U 0.00 1/1/08 $ 250,619 0.00 100.00 $ 250,619 U U 0.00 1/1/08 $ 170,602 0.00 100.00 $ 170,602 U U 0.00 1/1/08 $ 41,239 0.00 100.00 $ 41,239 U U 0.00 1/1/08 $ 37,012 0.00 100.00 $ 37,012 U U $ 3,755,470 $ 3,755,470 Corporate Issuers AMERICAN HONDA FINANCE BANK OF AMERICA CITIGROUP GENERAL ELECTRIC IBM JP MORGAN CHASE WACHOVIA WALMART WELLS FARGO BANK Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC $ 237,123,711 % of Portfolio (Market Value) 1.27% 1.24% 9.24% 3.42 % 0.84% 0.84% 3.00% 0.88% 4.27% % of Portfolio (Market Value) 4.26% 6.32% 7.69% 3.38% $ 238,365,509 "U" = Unrated Page 5 Dollars in Thousands Ageing Interval < 1 M <2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Palm Desert Redevelopment Agency -- Portfolio Characteristics December 31, 2007 Market Value $ 5,095 5,006 4,972 15,947 29,276 11,255 4,138 Quality * Market Value AAA $ 224,369 AA 12,168 A 9,030 Unrated 5,330 Total: $ 250,897 Sector Market Value MMF $ 166,739 Agencies 49,414 LAIF 5,330 MTNs 21,197 CAMP 8,217 CP _ Treasuries _ Total: it isn aa7 Portfolio Ageing w/o SLGSs 100 90 80 70 0 60 O 50 40 0 30 20 10 0 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Credit Quality `Asset Allocation Month RDA Yield LAIF Yield Variance Performance Jan07 5.05 5.16 -0.11 Feb 5.06 5.18 -0.12 5.4 Mar 5.11 5.21 -0.11 Apr 5.09 5.22 -0.13 May 5.10 5.25 -0.15 5.0 Jun 5.11 5.25 -0.14 ° Jul 5.10 5.26 -0.16 } 4.6 Aug 5.07 5.25 -0.19 Sep 5 02 5 2 3 -0.21 4.2 Oct 4.87 5.14 -0.27 Jan07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nov 4.70 4.96 -0.26 Dec 4.70 4.80 -0.10 LN LAIF Yield ■ RDA Yield Standard and Poors LAIF Page 6 AAA 89% Unrated " 2% A AA 4% 5% CAM[ 3% MTNs LAIF 8% 2% MMF 67% Fancies 20% Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2007 IPar Value I Issuer Medium -Term Notes $ 4,000,000 CITIGROUP $ 4,070,000 JP MORGAN CHASE $ 3,055,000 JP MORGAN CHASE $ 2,000,000 FIRST UNION NAT BANK $ 3,000,000 WAL-MART $ 2,000,000 WELLS FARGO BANK $ 3,000,000 WELLS FARGO BANK $ 21,125,000 Subtotal Federal Agencies -- Coupon $ 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 $ 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 $ 2,000,000 FED HOME LOAN MTG CORP $ 3,734,000 FED HOME LOAN MTG CORP $ 4,155,000 FED NATIONAL MTG ASSOC $ 43,224,000 Subtotal Federal Agencies -- Callable $ 5,000,000 FED HOME LOAN BANK $ 5,000,000 Subtotal Market Ratings jCouponj Maturity Cost YTM Price I Value I Moody'sI S&P 6.20 3/15/09 $ 4,048,184 5.13 101.37 $ 4,054,948 Aa1 AA- 3.50 3/15/09 $ 3,995,457 5.12 98.38 $ 4,003,883 Aa3 A+ 3.50 3/15/09 $ 2,999,047 5.12 98.38 $ 3,005,372 Aa3 A+ 5.80 12/1/08 $ 2,013,472 5.00 101.03 $ 2,020,532 Aa3 A+ 6.88 8/10/09 $ 3,096,249 4.76 104.51 $ 3,135,351 Aa2 AA 4.00 8/15/08 $ 1,988,887 4.96 99.29 $ 1,985,704 Aa1 AA- 4.13 3/10/08 $ 2,994,153 5.18 99.72 $ 2,991,543 Aa1 AA- $ 21,135,447 5.05 $ 21,197,333 j 6.45 10/7/09 $ 2,050,147 4.88 104.84 $ 2,096,862 Aaa AAA 4.75 8/3/09 $ 1,996,518 4.87 101.84 $ 2,036,875 Aaa AAA 4.90 9/22/10 $ 4,931,969 4.65 103.31 $ 5,062,313 Aaa AAA 4.25 9/12/08 $ 3,954,218 4.79 99.97 $ 3,968,759 Aaa AAA 4.25 9/12/08 $ 3,954,218 4.79 99.97 $ 3,968,759 Aaa AAA 4.38 9/11/09 $ 4,465,629 5.59 101.25 $ 4,556,250 Aaa AAA 4.63 9/12/08 $ 3,993,679 4.84 100.25 $ 4,010,000 Aaa AAA 3.88 7/24/09 $ 1,976,055 4.89 100.31 $ 2,011,266 Aaa AAA 4.88 3/11/11 $ 1,963,124 5.49 103.66 $ 2,073,125 Aaa AAA 4.88 3/11/11 $ 1,962,632 5.50 103.66 $ 2,073,125 Aaa AAA 4.00 3/10/08 $ 1,985,738 5.16 99.88 $ 1,987,513 Aaa AAA 6.88 9/15/10 $ 2,063,594 5.54 108.22 $ 2,164,375 Aaa AAA 6.88 9/15/10 $ 3,852,947 5.54 108.22 $ 4,040,888 Aaa AAA 6.63 9/15/09 $ 4,266,294 4.89 104.97 $ 4,361,452 Aaa AAA $ 43,416,760 5.07 $ 44,411,561 5.25 2/1/08 $ 5,000,000 5.25 100.00 $ 5,001,563 Aaa AAA $ 5,000,000 5.25 $ 5,001,563 Local Government Investment Pool $ 4,969 L.A.I.F. $ 0.00 1/1/08 $ 4,969 4.80 100.00 $ 4,969 U U 5,000 L.A.I.F. $ 5,320,158 0.00 1/1/08 $ 5,000 4.80 100.00 $ 5,000 U U L.A.I.F. BOND PROCEEDS 0.00 1/1/08 $ 5,320,158 4.80 100.00 $ 5,320,158 U $ 5,330,127 Subtotal $ 5,330,127 4.80 $ 5,330,127 U Local Government Investment Pool $ 4,463,947 C.A.M.P. $ 3,753,298 0.00 1/1/08 $ 4,463,947 4.82 100.00 $ 4,463,947 U AAA C.A.M.P. (HOUSING) 0.00 1/1/08 $ 3,753,298 4.82 100.00 $ 3,753,298 U AAA $ 8,217,245 Subtotal $ 8,217,245 4.82 $ 8,217,245 j "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2007 Par Value I Issuer Money Market Fund $ 42,659,460 WF ADVANTAGE GOVT $ 42,659,460 Subtotal Money Market Fund $ 91,230,366 WF HERITAGE SELECT $ 91,230,366 Subtotal Money Market Fund $ 32,849,044 WF TREASURY PLUS $ 32,849,044 Subtotal Total Investments $ 249,635,242 Cash $ 780,289 HOUSING AUTH CHKG $ 356,423 HOUSING AUTH TRUST $ 1,136,712 Subtotal Total Investments and Cash $ 250,771,954 Corporate Issuers CITIGROUP JP MORGAN CHASE FIRST UNION NAT BANK WAL-MART WELLS FARGO BANK Market Ratings lCouponj Maturity Cost JYTM Price I Value I Moody'sI S&P� 0.00 1/1/08 $ 42,659,460 4.38 100.00 $ 42,659,460 Aaa AAA $ 42,659,460 4.38 $ 42,659,460 0.00 1/1/08 $ 91,230,366 4.91 100.00 $ 91,230,366 Aaa AAA $ 91,230,366 4.91 $ 91,230,366 0.00 1/1/08 $ 32,849,044 3.71 100.00 $ 32,849,044 Aaa AAA $ 32,849,044 3.71 $ 32,849,044 $ 249,838,449 4.70 $ 250,896,698 0.00 1/1/08 $ 780,289 0.00 100.00 $ 780,289 U U 0.00 1/1/08 $ 356,423 0.00 100.00 $ 356,423 U U $ 1,136,712 $ 1,136,712 $ 250,975,161 % of Portfolio (Market Value) 1.61 % 2.78% 0.80% 1.24% 1.97% $ 252,033,410 "U" = Unrated Page 8 IPar Value Palm Desert Redevelopment Agency Portfolio Holdings December 31, 2007 Issuer Agency Issuers lCouponj Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Cost % of Portfolio (Market Value) 3.65% 9.78% 2.46% 1.73% Market Ratings JYTM Price I Value I Moody'sI S&P "U" = Unrated Page 9 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended December 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 January 22, 2008, Pis (Ji;l"v, cc /q, 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 I No Limit i 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 Aqencies 5 Years No Limit .1 5 Years 30% 6% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 53601(h) Negotiable CDs 5 Years 30% J 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 30% A 5 Years 30% A 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) IAAA&Aaal 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa AAA & Aaal Investment Pools 90 Days 20% or Advisor 90 Days I 20% (2) I or Advisor 53601(n) I Mortgage -Backed 5 Years 20% I A ) & (Issuer) Not Authorized Securities AA (Security LAW j I No Limit I I No Limit 1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. ?) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. 0.0% 0.0% 21.8% 19.4% 0.0% 0.0% 25.4% 8.5% 26.0% 66.7% 12.8% 1 3.3% 0.0% I 2.1% 85.9% 100.0% Certified California Municipal Treasurer Page 10 City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT January 2008 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary On January 23, the Federal Open Market Committee ("FOMC") responded to a global stock panic by cutting the Federal Funds Rate by 75 basis points to 3.50%. This was the biggest rate cut in 20 years. On January 30, the FOMC cut the Federal Funds Rate by another 50 basis points to 3.00% in order to prevent a recession. The FOMC left the door open to further rate cuts. The FOMC's next meeting will be on March 18. The U.S. economy may be on the verge of "stagflation" -- when low economic growth co -exists with high inflation. As a net importer, the U.S. is vulnerable to higher energy and food prices, driven primarily by Chinese demand, and by a declining U.S. dollar. Over the last few weeks, the price of crude oil has risen to over $100 per barrel, and coal has risen to over $78 per U.S. ton. Gold has hit an all-time high of $927 per ounce as mainstream investors seek its protection. The U.S. real estate outlook is bleak, with home prices expected to drop another 25-30% over the next two years. The large municipal bond insurers are in trouble. MBIA, Ambac, and FGIC have either lost their "AAA" ratings or are in danger of doing so since they also insured mortgage -backed securities. MBIA, for example, posted a $2.3 billion loss for the fourth quarter due to a decline in the value of those securities. Unless these firms can recapitalize, then it is likely that they will be forced to separate their municipal bond business from their structured finance operations. Pis tid,-jo�, c. c.R r Treasurer PORTFOLIO STATISTICS Dollars in Thousands JAN-08 DEC-07 NOV-07 OCT-07 SEP-07 AUG-07 CITY Month -End Book Value- $ 231,415 $ 237,124 $ 240,745 $ 244,113 $ 233,947 $ 245,850 Month -End Market Value*** $ 234,066 $ 238,366 $ 242,224 $ 244,790 $ 234,328 $ 245,945 Paper Gain (Loss) $ 2,651 $ 1,242 $ 1,479 $ 677 $ 381 $ 95 Prior Year Book Variance $ 5,952 $ 78,074 $ 80,955 $ 86,710 $ 71,505 $ 76,483 Interest Earnings $ 878 $ 958 $ 965 $ 981 $ 957 $ 1,045 Yield -To -Maturity 4.72% 4.87% 4.93% 5.05% 5.01 % 5.09% Weighted Maturity (Days) 473 458 451 444 426 415 Effective Duration 0.72 0.74 0.77 0.79 0.76 0.75 RDA Month -End Book Value - $ 285,947 $ 250,975 $ 250,190 $ 250,763 $ 279,542 $ 289,864 Month -End Market Value *** $ 287,781 $ 252,033 $ 251,232 $ 251,297 $ 280,070 $ 290,104 Paper Gain (Loss) $ 1,834 $ 1,058 $ 1,042 $ 534 $ 528 $ 240 Prior Year Book Variance $ 50,338 $ 139,907 $ 135,053 $ 134,543 $ 152,500 $ 148,263 Interest Earnings $ 942 $ 990 $ 952 $ 1,027 $ 1,167 $ 1,233 Yield -To -Maturity 4.45% 4.70% 4.70% 4.87% 5.02% 5.07% Weighted Maturity (Days) 247 281 282 282 305 314 Effective Duration 0.31 0.37 0.40 0.41 0.40 0.47 """ Omits SLGSs. City of Palm Desert -- Portfolio Characteristics January 31, 2008 Dollars in Thousands Aaeina Interval Market Value a < 1 M $ 35,725 General Fund Ageing < 2M 6,048 < 3M _ 100 < 6M 6,009 80 < 1 YR 16,968 < 2YR 29,338 2 60 < 3YR 42,541 � 40 25 30 < 4YR < 5YR 6,272 (L 0 24 n 0 4 21 - r-, nnnr, 0 0 > 5YR _ Total: $ 142,901 < 1 M < 2M < 3M < 6M < < < < < > tt 1YR 2YR 3YR 4YR 5YR 5YR Ratings ` Market Value Credit Qualityl 1 AAA $ 177,133 AA 37,905 A AAA A 12,266 5% 78% Unrated ** 14 Total: $ 227,318 AA 177 % Sector Market Value Asset Allocation MMF $ 51,462 Agencies 52,173 Agencies MTNs MTNs 58,457 23% 26% CAMP 32,427 RDA Loan 32,785 LAIF 14 MMF CAMP CP - 23% 14% Total: $ 227,318 RDA Loan 14% Month Citv Yield LAIF Yield Variance Feb07 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 Oct 5.05 5.14 -0.09 Nov 4.93 4.96 -0.03 Dec 4.87 4.80 0.07 Jan08 4.72 4.62 0.10 * Standard and Poors ** LAIF, and City Loan to RDA �Performance� 5.4 0 4.9 m 4.4 Feb07 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan08 ■LAIF Yield ■ Gty Yield Page 2 City of Palm Desert Portfolio Holdings January 31, 2008 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value I Moody'sI S&P Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,020,336 5.08 100.13 $ 3,026,981 Al A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,944,357 5.01 102.58 $ 2,995,260 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,040,384 4.91 100.30 $ 15,315,841 Aal AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,004,400 4.91 100.30 $ 2,041,109 Aal AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 986,994 5.19 101.54 $ 1,015,367 Aal AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,947,975 5.19 101.54 $ 4,061,468 Aal AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,981,825 4.99 100.15 $ 2,003,054 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,998,183 5.63 103.37 $ 2,103,488 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,947,459 5.65 108.40 $ 2,049,823 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,024,353 5.67 106.44 $ 2,128,896 Aaa AAA $ 2,000,000 IBM 3.80 2/1/08 $ 2,000,000 5.13 100.00 $ 2,000,000 Al A+ $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,038,116 5.02 99.03 $ 3,050,019 Aaa A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,982,787 5.18 99.67 $ 1,993,306 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,129,985 5.02 109.80 $ 2,195,924 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,053,880 4.93 105.32 $ 2,106,428 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,153,925 5.13 107.06 $ 4,282,304 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,978,748 5.09 101.89 $ 2,037,760 Aal AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,984,461 4.92 99.27 $ 2,010,215 Aal AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,991,658 4.96 100.97 $ 2,039,628 Aal AA- $ 57,299,000 Subtotal $ 57,209,827 5.05 $ 58,456,871 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,537 4.61 104.31 $ 3,129,375 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,537 4.61 104.31 $ 3,129,375 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,003,398 4.68 100.25 $ 2,020,038 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,954,539 6.90 100.66 $ 2,013,125 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,978,213 5.59 102.69 $ 3,080,625 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,977,859 4.87 101.75 $ 2,014,650 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,995,826 5.40 101.13 $ 3,033,750 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,026,817 5.02 100.13 $ 3,033,788 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,919,849 5.96 101.34 $ 2,026,875 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,016,293 4.87 102.28 $ 2,079,378 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,018,972 4.87 102.34 $ 2,097,023 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,975,424 4.88 102.49 $ 2,049,894 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,997,756 5.06 101.66 $ 2,033,258 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 1,998,839 5.47 103.03 $ 2,124,504 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,998,053 5.20 101.03 $ 2,020,526 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,995,282 5.50 102.34 $ 2,097,023 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,991,896 4.88 103.25 $ 2,065,000 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,942,501 5.47 103.41 $ 2,068,125 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,962,453 6.35 100.88 $ 2,017,500 Aaa AAA $ 43,218,000 Subtotal $ 42,775,044 5.07 $ 44,133,832 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings January 31, 2008 Market Par Value Issuer I Coupon] Maturity) Cost YTM I Price I Value Federal Agencies -- Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,994,128 4.88 100.63 $ $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,860 5.06 101.25 $ $ 2,000,000 FED HOME LOAN MTG CORP 5.30 8/13/09 $ 2,000,000 5.30 100.09 $ $ 2,000,000 FED NATIONAL MTG ASSOC 5.38 2/1/10 $ 2,000,000 5.37 100.00 $ $ 8,000,000 Subtotal $ 7,993,989 5.25 $ Local Government Investment Pool $ 13,547 L.A.I.F. 0.00 2/1/08 $ 13,547 4.62 100.00 $ $ 13,547 Subtotal $ 13,547 4.62 $ Local Government Investment Pool Ratings I Moody's I S&P 2,012,500 Aaa 2,024,956 Aaa 2,001,800 Aaa 2,000,000 Aaa 8,039,256 13,547 13,547 $ 31,113,431 C.A.M.P. 0.00 2/1/08 $ 31,113,431 4.50 100.00 $ 31,113,431 $ 1,313,874 C.A.M.P. (HOUSING) 0.00 2/1/08 $ 1,313,874 4.50 100.00 $ 1,313,874 $ 32,427,305 Subtotal $ 32,427,305 4.50 $ 32,427,305 Money Market Fund $ 50,752,221 WF ADVANTAGE GOVT 0.00 2/1/08 $ 50,752,221 4.04 100.00 $ 50,752,221 $ 50,752,221 Subtotal $ 50,752,221 4.04 $ 50,752,221 Money Market Fund $ 46,149 WF HERITAGE SELECT 0.00 2/1/08 $ 46,149 4.56 100.00 $ $ 46,149 Subtotal $ 46,149 4.56 $ Money Market Fund $ 663,312 WF TREASURY PLUS 0.00 2/1/08 $ 663,312 3.20 100.00 $ $ 663,312 Subtotal $ 663,312 3.20 $ City Loan to RDA U U U AAA AAA AAA AAA U AAA AAA r J Aaa AAA I 46,149 Aaa AAA 46,149 663,312 Aaa AAA 663,312 $ 32,785,480 CITY OF PALM DESERT 0.00 2/1/38 $ 32,785,480 4.62 100.00 $ 32,785,480 $ 32,785,480 Subtotal $ 32,785,480 4.62 $ 32,785,480 Total Investments $ 225,205,014 $ 224,666,874 4.72 $ 227,317,974 Cash $ 5,697,897 CITY MAIN CHKG $ 315,681 DESERT WILLOW CHKG $ 553,796 MONTEREY 170 CHKG "U" = Unrated 0.00 2/1/08 $ 5,697,897 0.00 100.00 $ 0.00 2/1/08 $ 315,681 0.00 100.00 $ 0.00 2/1/08 $ 553,796 0.00 100.00 $ U U I 5,697,897 U U 315,681 U U 553,796 U U Page 4 Par Value I Issuer Cash (continued) $ 92,066 RECREATIONAL FAC CHKG $ 47,558 CITY/FALCON CREST HOA $ 41,239 ART, FOOD & WINE CHKG $ 6,748,237 Subtotal Total Investments and Cash $ 231,953,251 City of Palm Desert Portfolio Holdings January 31, 2008 Market Ratings Coupon Maturity Cost YTM I Price Value ' Moody'sl S&P 0.00 2/1/08 $ 92,066 0.00 100.00 $ 92,066 U U 0.00 2/1/08 $ 47,558 0.00 100.00 $ 47,558 U U 0.00 2/1 /08 $ 41,239 0.00 100.00 $ 41,239 U U $ 6,748,237 0.00 $ 6,748,237 Corporate Issuers AMERICAN HONDA FINANCE BANK OF AMERICA CITIGROUP GENERAL ELECTRIC IBM WACHOVIA WAL-MART WELLS FARGO BANK Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC $ 231,415,110 % of Portfolio (Market Value) 1.29% 1.28% 9.58% 3.54% 0.85% 3.09% 0.90% 4.43% % of Portfolio (Market Value) 4.40% 6.49% 7.92% 3.48% $ 234,066,210 "U" = Unrated Page 5 Palm Desert Redevelopment Agency -- Portfolio Characteristics January 31, 2008 Dollars in Thousands Acieina Interval Market Value < 1 M $ 48,122 < 2M 4,979 < 3M _ < 6M _ < 1 YR 15,954 < 2YR 29,262 < 3YR 11,268 < 4YR 4,146 < 5YR _ > 5YR Total: $ 113,731 Quality * Market Value AAA $ 259,939 AA 12,263 A 9,153 Unrated ** 5,414 Total: $ 286,769 Sector Market Value MMF $ 163,701 Agencies 49,971 LAIF 5,414 MTNs 21,417 CAMP 46,266 CP _ Treasuries _ Total: $ 286,769 Month RDA Yield LAIF Yield Feb07 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 Nov 4.70 4.96 Dec 4.70 4.80 Jan08 4.45 4.62 * Standard and Poors *' LAIF r-------___....... ......_.._... ............. _.... _................ _._........ _........ Portfolio Ageing w/o SLGSs 100 90 80 70 0 60 .0 50 42 72 40 ao 30 26 20 14 100 4 0 0 n I I 10 4 0 0 n <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR 0 Credit Quality AAA 91% Unrated '* 2% A 3% AA 4% Asset Allocation ) Variance Performance -0.12 -0.11 5.4 -0.13 -0.15 -0.14 5.0 -0.16 11 -0.19 r 4.6 -0.21 MMF Agencies 58% 17% LAIF CAMP MTNs 2% 16% 7% -0.27 4.2 -0.26 Feb07 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan08 -0.10 -0.17 ■ LAIF Wield • RDA Yield Page 6 I Par Value I Issuer Medium -Term Notes Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2008 Market Ratings Coupon I Maturity Cost YTM I Price I Value ' Moody'sI S&P $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,044,853 5.13 102.54 $ 4,101,640 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,000,609 5.12 99.82 $ 4,062,638 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,002,914 5.12 99.82 $ 3,049,474 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,012,247 5.00 102.05 $ 2,040,952 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,091,262 4.76 105.32 $ 3,159,642 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,990,375 4.96 100.12 $ 2,002,406 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,996,695 5.18 99.99 $ 2,999,793 Aa1 AA- $ 21,125,000 Subtotal $ 21,138,956 5.05 $ 21,416,545 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,047,782 4.88 106.19 $ 2,123,774 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,996,700 4.87 103.19 $ 2,063,750 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,930,991 4.65 105.03 $ 5,146,531 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,956,104 4.79 100.91 $ 4,005,978 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,956,104 4.79 100.91 $ 4,005,978 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,467,319 5.59 102.69 $ 4,620,938 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,994,435 4.84 101.13 $ 4,045,000 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,977,597 4.89 101.69 $ 2,038,834 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,964,086 5.49 105.44 $ 2,108,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3111/11 $ 1,963,607 5.50 105.44 $ 2,108,750 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,987,591 5.16 100.13 $ 1,992,488 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,061,635 5.54 109.84 $ 2,196,875 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,849,284 5.54 109.84 $ 4,101,566 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,260,856 4.89 106.19 $ 4,412,091 Aaa AAA $ 43,224,000 Subtotal $ 43,414,091 5.07 $ 44,971,302 Federal Agencies -- Callable $ 5,000,000 FED HOME LOAN BANK 5.25 2/1/08 $ 5,000,000 5.25 100.00 $ 5,000,000 Aaa AAA $ 5,000,000 Subtotal $ 5,000,000 5.25 $ 5,000,000 Local Government Investment Pool $ 9,656 L.A.I.F. 0.00 2/1/08 $ 9,656 4.62 100.00 $ 9,656 U U $ 21,145 L.A.I.F. (HOUSING) 0.00 2/1/08 $ 21,145 4.62 100.00 $ 21,145 U U $ 5,383,080 L.A.I.F. BOND PROCEEDS 0.00 2/1/08 $ 5,383,080 4.62 100.00 $ 5,383,080 U U $ 5,413,880 Subtotal $ 5,413,880 4.62 $ 5,413,880 Local Government Investment Pool $ 42,497,929 C.A.M.P. $ 3,767,607 C.A.M.P. (HOUSING) $ 46,265,536 Subtotal 0.00 2/1/08 $ 42,497,929 4.50 100.00 $ 42,497,929 U AAA 0.00 2/1/08 $ 3,767,607 4.50 100.00 $ 3,767,607 U AAA $ 46,265,536 4.50 $ 46,265,536 1 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2008 Par Value I Issuer Money Market Fund $ 38,569,451 WF ADVANTAGE GOVT $ 38,569,451 Subtotal Money Market Fund $ 92,242,584 WF HERITAGE SELECT $ 92,242,584 Subtotal Money Market Fund $ 32,888,487 WF TREASURY PLUS $ 32,888,487 Subtotal Total Investments $ 192,486,355 Cash $ 648,521 HOUSING AUTH CHKG $ 365,139 HOUSING AUTH TRUST $ 1,013,660 Subtotal Total Investments and Cash $ 193,500,015 Corporate Issuers CITIGROUP JP MORGAN CHASE FIRST UNION NAT BANK WAL-MART WELLS FARGO BANK Market Ratings Coupon I Maturity Cost YTM I Price I Value I Moody'sI S&P 0.00 2/1/08 $ 38,569,451 4.04 100.00 $ 38,569,451 Aaa AAA $ 38,569,451 4.04 $ 38,569,451 0.00 2/1/08 $ 92,242,584 4.56 100.00 $ 92,242,584 Aaa AAA $ 92, 242, 584 4.56 $ 92, 242, 584 1 0.00 2/1/08 $ 32,888,487 3.20 100.00 $ 32,888,487 Aaa AAA $ 32,888,487 3.20 1 $ 192,690,401 4.45 $ 161,636,714 0.00 2/1/08 $ 648,521 0.00 100.00 $ 648,521 0.00 2/1/08 $ 365,139 0.00 100.00 $ 365,139 $ 1,013,660 0.00 $ 1,013,660 $ 193,704,061 % of Portfolio (Market Value) 2.52% 4.37% 1.25% 1.94% 3.08% $ 162,650,375 U U U U I "U" = Unrated Page 8 Palm Desert Redevelopment Agency Portfolio Holdings January 31, 2008 I Par Value I Issuer Agency Issuers Coupon I Maturity FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC Market Ratings Cost YTM I Price I Value I Moody'si S&P % of Portfolio (Market Value) 5.74% 18.40% 3.87% 2.71 % "U" = Unrated Page 9 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended January 31, 2008, the City and the RDA investment portfolios were in compliance with all applicable federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority). Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio 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 February 26, 2008, Pis (id1611�, c.CR r. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City % of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized (1) 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit 53601(c) CA State Debt 5 Years No Limit 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% 22.6% 17.0% 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- orAa3 - - 53601(i) Repos 1 Year No Limit 30 Days 20% AAA & Aaa 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 25.5% 7.4% 53601(k) Mutual Funds 90 Days 1 20% AAA & Aaa 90 Days 20%(2) IAAA&Aaal 22.9% I 57.5% 53601(I) Trust Indenture Debt j Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) I Local Government I AAA & Aaa & AaaI Investment Pools 90 Days 20% or Advisor 90 Days I 20% (2) IAAA or Advisor 1 14.4% 16.2% 53601(n) I Mortgage -Backed 5 Years 20% I A (Issuer) & Not Authorized Securities AA (Security LAIF No Limit No Limit 0.1% 1.8% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. I 85.5% I 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 10 -.•.� City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT February 2008 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC) met on March 18, and cut the Federal Funds Rate by 75 basis points from 3.00% to 2.25%. The FOMC was reacting to falling economic indicators, financial market turmoil, and the spectacular collapse of investment bank Bear Stearns after a "run" that was prompted by rumors. Much of the low-cost money that the banks borrowed from the Federal Reserve did not make it to borrowers however. The banks, instead, invested it in Treasury bonds, and took arbitrage profits in order to strengthen their balance sheets. Ironically, the expanded money supply further weakened the U.S. dollar, thereby aggravating a spiral in crude oil prices which hit $112/barrel in March. Investors continued to buy oil and other commodities as a hedge against the falling U.S. dollar and inflation. Some economists believe that by the end of 2008, U.S. unemployment will rise from 4.8% to 5.5%. Bear Stearns, an 85-year-old institution, was the smallest of the big five investment banks; the least diversified; and the biggest issuer of mortgage -backed securities. The U.S. Government engineered a takeover of Bear by J.P. Morgan Chase for the firesale price of $2/share as Bear neared bankruptcy after losing billions of dollars on mortgage -backed securities. One year earlier, Bear's stock had traded at $150/share. Lehman Brothers and Goldman Sachs are now being closely watched since they also were big players in mortgage -backed securities. Much of this mortgage -backed debt is not shown on bank balance sheets, but is carried "off the books" by hedge funds, which are unregulated investment pools. Pis 67d-jo�, c. c /q r Treasurer PORTFOLIO STATISTICS Dollars in Thousands FEB-08 JAN-08 DEC-07 NOV-07 OCT-07 SEP-07 CITY Month -End Book Value*** $ 237,245 $ 231,415 $ 237,124 $ 240,745 $ 244,113 $ 233,947 Month -End Market Value*** $ 240,311 $ 234,066 $ 238,366 $ 242,224 $ 244,790 $ 234,328 Paper Gain (Loss) $ 3,066 $ 2,651 $ 1,242 $ 1,479 $ 677 $ 381 Prior Year Book Variance $ 19,384 $ 5,952 $ 78,074 $ 80,955 $ 86,710 $ 71,505 Interest Earnings $ 797 $ 878 $ 958 $ 965 $ 981 $ 957 Yield -To -Maturity 4.31% 4.72% 4.87% 4.93% 5.05% 5.01% Weighted Maturity (Days) 461 473 458 451 444 426 Effective Duration 0.70 0.72 0.74 0.77 0.79 0.76 RDA Month -End Book Value *** $ 279,699 $ 285,947 $ 250,975 $ 250,190 $ 250,763 $ 279,542 Month -End Market Value *** $ 281,642 $ 287,781 $ 252,033 $ 251,232 $ 251,297 $ 280,070 Paper Gain (Loss) $ 1,943 $ 1,834 $ 1,058 $ 1,042 $ 534 $ 528 Prior Year Book Variance $ 19,006 $ 50,338 $ 139,907 $ 135,053 $ 134,543 $ 152,500 Interest Earnings $ 845 $ 942 $ 990 $ 952 $ 1,027 $ 1,167 Yield -To -Maturity 3.78% 4.45% 4.70% 4.70% 4.87% 5.02% Weighted Maturity (Days) 249 247 281 282 282 305 Effective Duration 0.31 0.31 0.37 0.40 0.41 0.40 *** Omits SLGSs. City of Palm Desert -- Portfolio Characteristics February 29, 2008 Dollars in Thousands Ageing Interval Market Value < 1 M $ 42,886 < 2M < 3M < 6M 10,071 < 1YR 19,161 < 2YR 39,009 < 3YR 26,044 < 4YR 4,282 < 5YR _ > 5YR _ Total: $ 141,453 Ratings * Market Value AAA $ 142,096 AA 38,137 A 10,304 Unrated ** 32,799 Total: $ 223,336 Sector Market Value MMF $ 52,926 Agencies 48,302 MTNs 56,786 CAMP 32,523 RDA Loan 32,785 LAIF 14 CP _ Total: $ 223,336 Month City Yield LAIF Yield Mar07 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 Nov 4.93 4.96 Dec 4.87 4.80 Jan 4.72 4.62 Feb08 4.31 4.16 * Standard and Poors ** LAIF, and City Loan to RDA General Fund Ageing 100 80 e 0 60 t 40 30 28 a 20 ( n 14 18 0 0 7 3 0 0 <1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR Credit Quality A AAA 5% 75% AA 20% Asset Allocation Variance Performance -0.08 -0.10 5.5 -0.13 -0.14 -0.15 5.0 -0.17 d -0.22 } 4.5 -0.09 Agencies MTNs 22% 24% MMF CAMP 24% 15% RDA Loan 15% 1 -0.03 4.0 0.07 Mar07 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb08 0.10 0.15 ■LAIFYield ■City Yield Page 2 City of Palm Desert Portfolio Holdings February 29, 2008 Par Value Issuer Coupon Maturity Cost J YTM Price Market Value Ratings Moody'si S & P Medium -Term Notes $ 3,023,000 AMERICAN HONDA FINANCE 4.25 3/11/08 $ 3,022,334 5.08 100.02 $ 3,023,674 Al A+ $ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,942,403 5.01 102.36 $ 2,988,929 Aa2 AA- $ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,049,680 4.91 101.04 $ 15,428,350 Aal AA $ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,005,638 4.91 101.04 $ 2,056,103 Aal AA $ 1,000,000 CITIGROUP 4.63 8/3/10 $ 987,426 5.19 102.33 $ 1,023,311 Aal AA $ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,949,706 5.19 102.33 $ 4,093,244 Aal AA $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,983,971 4.99 100.31 $ 2,006,270 Aaa AAA $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 1,999,310 5.63 104.61 $ 2,128,879 Aaa AAA $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,945,772 5.65 109.41 $ 2,068,949 Aaa AAA $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,023,690 5.67 107.09 $ 2,141,874 Aaa AAA $ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,041,458 5.02 99.97 $ 3,079,107 Aa3 A+ $ 2,000,000 WACHOVIA 3.50 8/15/08 $ 1,985,448 5.18 99.96 $ 1,999,246 Aa3 A+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,125,733 5.02 110.08 $ 2,201,594 Aa3 A+ $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,050,936 4.93 105.72 $ 2,114,492 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,150,260 5.13 107.84 $ 4,313,492 Aal AA- $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,979,450 5.09 102.70 $ 2,053,944 Aal AA- $ 2,025,000 WELLS FARGO BANK 3.13 4/1/09 $ 1,987,357 4.92 99.27 $ 2,010,276 Aal AA- $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 1,992,866 4.96 101.72 $ 2,054,665 Aal AA- $ 55,299,000 Subtotal $ 55,223,440 5.08 $ 56,786,399 Federal Agencies -- Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,147 4.61 104.94 $ 3,148,125 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,010,147 4.61 104.94 $ 3,148,125 Aaa AAA $ 2,015,000 FED FARM CREDIT BANK 3.38 7/15/08 $ 2,005,520 4.68 100.22 $ 2,019,408 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,959,725 6.90 100.72 $ 2,014,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,979,340 5.59 103.16 $ 3,094,688 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,978,066 4.87 101.75 $ 2,014,650 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,996,393 5.40 101.06 $ 3,031,875 Aaa AAA $ 3,030,000 FED HOME LOAN BANK 4.00 3/10/08 $ 3,029,265 5.02 100.03 $ 3,030,947 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,923,654 5.96 101.91 $ 2,038,125 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,017,249 4.87 102.66 $ 2,087,002 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,020,308 4.87 102.94 $ 2,109,189 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,976,563 4.88 103.04 $ 2,060,804 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,998,004 5.06 101.62 $ 2,032,352 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,000,990 5.47 103.66 $ 2,137,392 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,998,392 5.20 100.85 $ 2,017,042 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,997,673 5.50 102.94 $ 2,109,189 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,992,284 4.88 103.78 $ 2,075,625 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,944,388 5.47 104.06 $ 2,081,250 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,966,392 6.35 100.94 $ 2,018,750 Aaa AAA ' $ 43,218,000 Subtotal $ 42,804,502 5.24 $ 44,268,912 "U" = Unrated Page 3 City of Palm Desert Portfolio Holdings February 29, 2008 Par Value I Issuer Coupon Maturity Federal Agencies -- Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ $ 4,000,000 Subtotal $ Local Government Investment Pool $ 13,547 L.A.I.F. 0.00 3/1/08 $ $ 13,547 Subtotal $ Local Government Investment Pool $ 31,205,443 C.A.M.P. 0.00 $ 1,317,760 C.A.M.P. (DESERT WILLOW) 0.00 $ 32,523,203 Subtotal Money Market Fund $ 52,107,969 WF ADVANTAGE GOVT 0.00 $ 52,107,969 Subtotal Money Market Fund $ 59,643 WF HERITAGE SELECT 0.00 $ 59,643 Subtotal Money Market Fund $ 757,808 WF TREASURY PLUS 0.00 $ 757,808 Subtotal City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 $ 32,785,480 Subtotal Total Investments $ 220,764,650 Cash $ 15,228,961 CITY MAIN CHKG 0.00 $ 866,993 DESERT WILLOW CHKG 0.00 $ 553,886 MONTEREY 170 CHKG 0.00 $ 236,652 RECREATIONAL FAC CHKG 0.00 $ 46,733 CITY/FALCON CREST HOA 0.00 $ 41,239 ART, FOOD & WINE CHKG 0.00 $ 16,974,464 Subtotal I Market Ratings Cost YTM Price I Value ' Moody'sl S & P 1,995,183 4.88 100.53 $ 2,010,625 Aaa AAA 1,999,881 5.06 101.13 $ 2,022,570 Aaa AAA 3,995,064 4.97 $ 4,033,195 13,547 4.16 100.00 $ 13,547 13,547 4.16 $ 13,547 3/1/08 $ 31,205,443 3.74 100.00 $ 31,205,443 3/1/08 $ 1,317,760 3.74 100.00 $ 1,317,760 $ 32,523,203 3.74 $ 32,523,203 U U i U AAA U AAA j i 3/1/08 $ 52,107,969 4.04 100.00 $ 52,107,969 Aaa AAA $ 52,107,969 4.04 $ 52,107,969 3/1/08 $ 59,643 4.56 100.00 $ 59,643 Aaa AAA $ 59,643 4.56 $ 59,643 3/1/08 $ 757,808 3.20 100.00 $ 757,808 Aaa AAA $ 757,808 3.20 $ 757,808 1 3/1/38 $ 32,785,480 4.16 100.00 $ 32,785,480 U U $ 32,785,480 4.16 $ 32,785,480 $ 220,270,656 4.31 $ 223,336,156 3/1/08 $ 15,228,961 0.00 100.00 $ 15,228,961 U U 3/1 /08 $ 866,993 0.00 100.00 $ 866,993 U U 3/1/08 $ 553,886 0.00 100.00 $ 553,886 U U 3/1/08 $ 236,652 0.00 100.00 $ 236,652 U U 3/1/08 $ 46,733 0.00 100.00 $ 46,733 U U 3/1/08 $ 41,239 0.00 100.00 $ 41,239 U U $ 16,974,464 $ 16,974,464 "U" = Unrated Page 4 City of Palm Desert Portfolio Holdings February 29, 2008 Market Par Value Issuer Coupon Maturity Cost YTM I Price I Value Total Investments and Cash $ 237,739,114 $ 237,245,119 $ 240,310,620 % of Portfolio Corporate Issuers (Market Value) AMERICAN HONDA FINANCE 1.26% BANK OF AMERICA 1.24% CITIGROUP 9.40% GENERAL ELECTRIC 3.47% WACHOVIA 3.03% WAL-MART 0.88% WELLS FARGO BANK 4.34% % of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 4.30% FED HOME LOAN BANK 6.33% FED HOME LOAN MTG CORP 6.90% FED NATIONAL MTG ASSOC 2.57% Ratings ' Moody'sl S & P "U" = Unrated Page 5 Dollars in Thousands Aaeina Interval < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Quality " AAA AA A Unrated Total: Sector MMF Agencies LAIF MTNs CAMP CP Treasuries Total: Month Mar07 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb08 RDA Yield 5.11 5.09 5.10 5.11 5.10 5.07 5.02 4.87 4.70 4.70 4.45 3.78 Palm Desert Redevelopment Agency -- Portfolio Characteristics February 29, 2008 Market Value $ 46,151 2,002 14,098 29,633 11,445 4,218 $ 107,547 Market Value $ 251,014 12,068 12,203 5,428 $ 280,713 Market Value $ 161,310 45,102 5,428 24,471 44,402 $ 280,713 LAIF Yield 5.21 5.22 5.25 5.25 5.26 5.25 5.23 5.14 4.96 4.80 4.62 4.16 Portfolio Ageing w/o SLGSs 100 90 80 0 70 0 60 4 3 0 50 40 0 28- 30 a 10 0 0 2 n n n 0 0 < 1M <2M <3M <6M < < < < < > 1YR 2YR 3YR 4YR 5YR 5YR r (Credit Quality AAA 90% Unrated ** 2% A ° ° 4% Asset Allocation MMF 57% Variance Performance -0.11 -0.13 5.4 -0.15 -0.14 -0.16 a 5.0 -0.19 -0.21 } 4.6 -0.27 -0.26 4.2 -0.10 Mar07 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb08 -0.17 -0.38 ■LAIF Yield ■RDA Yield Agencies 16% AIF CAMP MTNs 2% 16% 9% Standard and Poors ** LAIF Page 6 jPar Value I Issuer Medium -Term Notes Palm Desert Redevelopment Agency Portfolio Holdings February 29, 2008 Market Ratings Coupon I Maturity Cost YTM I Price I Value ' Moody'sI S & P� $ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,041,522 5.13 102.38 $ 4,095,108 Aa1 AA- $ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,005,762 5.12 99.77 $ 4,060,761 Aa3 A+ $ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,006,782 5.12 99.77 $ 3,048,065 Aa3 A+ $ 3,000,000 JP MORGAN CHASE 6.00 1/15/09 $ 3,076,785 3.00 101.86 $ 3,055,902 Aa3 A+ $ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,011,022 5.00 101.92 $ 2,038,328 Aa3 A+ $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,086,275 4.76 105.72 $ 3,171,738 Aa2 AA $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,991,863 4.96 100.07 $ 2,001,330 Aa1 AA- $ 3,000,000 WELLS FARGO BANK 4.13 3/10/08 $ 2,999,237 5.18 100.00 $ 2,999,913 Aa1 AA- $ 24,125,000 $ 24,219,249 4.79 $ 24,471,145 1 Federal Agencies -- Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,045,416 4.88 106.53 $ 2,130,550 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,996,883 4.87 103.56 $ 2,071,250 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,930,014 4.65 105.72 $ 5,180,219 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,957,990 4.79 100.88 $ 4,004,738 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,957,990 4.79 100.88 $ 4,004,738 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,469,010 5.59 103.16 $ 4,642,031 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,995,190 4.84 101.06 $ 4,042,500 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,979,140 4.89 102.13 $ 2,047,606 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,965,048 5.49 105.91 $ 2,118,125 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,964,581 5.50 105.91 $ 2,118,125 Aaa AAA $ 1,990,000 FED HOME LOAN BANK 4.00 3/10/08 $ 1,989,444 5.16 100.03 $ 1,990,622 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,059,677 5.54 110.31 $ 2,206,250 Aaa AAA $ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,845,620 5.54 110.31 $ 4,119,069 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,255,418 4.89 106.53 $ 4,426,373 Aaa AAA $ 43,224,000 Subtotal $ 43,224,000 5.07 $ 43,224,000 Local Government Investment Pool $ 9,656 L.A.I.F. 0.00 3/1/08 $ 9,656 4.16 100.00 $ 9,656 U U $ 21,145 L.A.I.F. (HOUSING) 0.00 3/1/08 $ 21,145 4.16 100.00 $ 21,145 U U $ 5,397,598 L.A.I.F. BOND PROCEEDS 0.00 3/1/08 $ 5,397,598 4.16 100.00 $ 5,397,598 U U $ 5,428,399 Subtotal $ 5,428,399 4.16 $ 5,428,399 Local Government Investment Pool $ 40,623,025 C.A.M.P. $ 3,778,749 C.A.M.P. (HOUSING) $ 44,401,774 Subtotal Money Market Fund $ 38,698,707 WF ADVANTAGE GOVT $ 38,698,707 Subtotal 0.00 3/1/08 $ 40,623,025 3.74 100.00 $ 40,623,025 U AAA 0.00 3/1/08 $ 3,778,749 3.74 100.00 $ 3,778,749 U AAA $ 44,401,774 3.74 $ 44,401,774 0.00 3/1/08 $ 38,698,707 3.15 100.00 $ 38,698,707 Aaa AAA $ 38,698,707 3.15 $ 38,698,707 "U" = Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings February 29, 2008 IPar Value I Issuer Money Market Fund $ 91,412,185 WF HERITAGE SELECT $ 91,412,185 Subtotal Money Market Fund $ 31,198,420 WF TREASURY PLUS $ 31,198,420 Subtotal Total Investments $ 278,488,485 Cash $ 569,095 HOUSING AUTH CHKG $ 360,008 HOUSING AUTH TRUST $ 929,103 Subtotal Total Investments and Cash $ 279,417,588 Market Ratings Coupon I Maturity Cost YTM I Price I Value I Moody'sI S & P� Corporate Issuers CITIGROUP JP MORGAN CHASE FIRST UNION NAT BANK WAL-MART WELLS FARGO BANK 0.00 3/1/08 $ 91,412,185 3.61 100.00 $ 91,412,185 Aaa AAA $ 91,412,185 3.61 $ 91,412,185 0.00 3/1/08 $ 31,198,420 2.47 100.00 $ 31,198,420 Aaa AAA $ 31,198,420 2.47 $ 31,198,420 $ 278,582,734 3.78 $ 278,834,630 0.00 3/1/08 $ 569,095 0.00 100.00 $ 569,095 U U 0.00 3/1/08 $ 360,008 0.00 100.00 $ 360,008 U U $ 929,103 $ 929,103 Agency Issuers FED FARM CREDIT BANK FED HOME LOAN BANK FED HOME LOAN MTG CORP FED NATIONAL MTG ASSOC $ 279,511,837 % of Portfolio (Market Value) 1.46% 3.63% 0.73% 1.13% 1.79% % of Portfolio (Market Value) 3.35% 8.92% 2.26% 1.58% $ 279,763,732 "U" = Unrated Page 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the California Government Code.. The Palm Desert Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended February 29, 2008, the 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 March 25, 2008, Pis cider C. c.Af. 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% 21.2% 15.6% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA- or Aaa 53601(i) Repos 1 Year No Limit j 30 Days 20% AAA & Aaa - - 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 25.1% 8.7% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20%(2) IAAA & Aaal 24.0% I 57.9% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government + I AAA & Aaa & Aaa Investment Pools 11 90 Days 20% or Advisor 90 Days I 20% (2) IAAA or Advisor l 14.8% I 15.9% 53601(n) Mortgage -Backed 5 Years I 20% I A (Issuer) & Not Authorized Securities AA (Security LAIF No Limit I I No Limit 0.1% 2.0% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 85.2% I 100.0% (2) Maximum limit for mutual funds and local government investment excluding bond pools, proceeds. Certified California Municipal Treasurer Page 9