INVESTMENT REPORT
City of Palo Alto | As of September 30, 2025
CHANDLER ASSET MANAGEMENT | chandlerasset.com
Chandler Team:
For questions about your account, please call (800) 317-4747, or contact [email protected]
Information contained herein is confidential. We urge you to compare this statement to the one you receive from your qualified custodian. Please see Important Disclosures at the end of the statement.
Attachment B
TABLE OF CONTENTS
ECONOMIC UPDATE
ACCOUNT PROFILE
CONSOLIDATED INFORMATION
PORTFOLIO HOLDINGS (Please refer to https://www.paloalto.gov/Departments/Administrative-Services/Financial-Reporting) 1 ECONOMIC UPDATE
2 ▪
▪
▪
Recent economic data suggest slower growth in 2025 and greater market uncertainty as the effects of fiscal policy unfold. Inflation pressures have eased, though core levels remain above the Federal Reserve’s target, while tariffs continue to cloud forecasts. Signs of a softer labor market are emerging, prompting expectations that the Fed will move cautiously toward policy normalization. Given the economic outlook, we expect gradual normalization of monetary policy and a steeper yield curve.
The Federal Reserve lowered the Federal Funds Rate a quarter percentage point to the range of 4.00 – 4.25% upon conclusion of the September Federal Open Market Committee meeting. The move was telegraphed by the Fed and in line with market expectations. Stephen Miran was the only opposing vote in the 11-1 decision as Governor Miran called for a larger 50 basis point rate cut. Chair Powell said concerns over signs of a softening labor market prompted the policy shift. Policymakers also updated their economic forecasts penciling in two additional quarter-point cuts through year-end.
The US Treasury yield curve flattened in September,as the 2-year Treasury yield declined 13 basis points to 3.57%, the 5-year Treasury also down 13 basis points to 3.66%, and the 10-year Treasury yield declined 14 basis points to 4.12%. The spread between the 2-year and 10- year Treasury yield points on the curve decreased to +54 basis points at September month-end versus +61 basis points at August month- end. The spread between the 2-year Treasury and 10-year Treasury yield one year ago was 14 basis points. The spread between the 3- month and 10-year Treasury yield points on the curve was +21 basis points in September versus +8 basis points in August.
ECONOMIC UPDATE
3 -400
-200
0 200
400
600
800
1,000MOM Change In Thousands (000's)
Nonfarm Payroll (000's)
Non-farm Payroll (000's)
3-month average (000's)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Unemployment Rate
Underemployment Rate (U6)
Unemployment Rate (U3)
Rate (%)
The U.S. economy added just 22,000 jobs in August, falling short of consensus expectations and punctuating the softening trend in the labor market. The three-month moving average and six-month moving average payrolls totaled 29,000 and 64,000 respectively. The unemployment rate rose to 4.3% in August from 4.2% in July. The labor participation rate inched up to 62.3%, remaining below the pre- pandemic level of 63.3%. The U-6 underemployment rate, which includes those who are marginally attached to the labor force and employed part time for economic reasons jumpedto 8.1% in August from 7.9% in July. Average hourly earnings fell to 3.7% year-over-year from 3.9% last month.
Source: US Department of Labor Source: US Department of Labor
EMPLOYMENT
4 0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Job Openings
Recession
Historical Average
In Thousands (000's)
The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed a modest increase to 7.227 million new job openings in August from 7.2 million in July. The quits rate and layoffs remained relatively stable. Job openings indicate a ratio of approximately 1 job for each unemployed individual, representing a relatively balanced labor market.
Source: US Department of Labor
JOB OPENINGS & LABOR TURNOVER SURVEY
5 0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Consumer Price Index (CPI)
CPI YOY % Change
Core CPI YOY % Change
YOY (%) Change
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Personal Consumption Expenditures (PCE)
PCE Price Deflator YOY % Change
PCE Core Deflator YOY % Change
Fed Target
YOY (%) Change
In August, the Consumer Price Index (CPI) increased more than expected at 0.4% month-over-month and 2.9% year-over-year, while the Core CPI rose 0.3% month-over-month and 3.1% year-over-year, in line with expectations. The Personal Consumption Expenditures (PCE) price index rose 0.3% month-over-month and 2.7% year-over-year in August. The Core PCE deflator, which excludes food and energy and is the Fed’s preferred gauge, was up 0.2% from July leaving it unchanged at 2.9% on an annual basis in August.
Source: US Department of Labor Source: US Department of Commerce
INFLATION
6 0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Retail Sales YOY % Change
YOY (%) Change
Advance Retail Sales showed continued strength jumping 0.6%in August as July data was also revised up to 0.6% month-over-month. The increase elevated retail sales to 5.0% on an annual basis after jumping 4.1% year-over-year in July. Back-to-school shopping was a likely catalyst as online shopping, clothing, and sporting goods saw some of the largest increases. Control group sales, which feed into GDP, also jumped 0.74% in August from the prior month. The Conference Board’s Consumer Confidence Index fell to 94.2 in September from a revised 97.8 in August, marking the lowest level since April 2025. Measures of current conditions and future expectations fell, signaling weaker sentiment toward employment and income. Consumers have remained resilient,but rising debt burdens, higher delinquency rates, lingering inflation worries, and emerging signs of labor market cooling could weigh on future spending. 0 20
40 60
80 100
120
140
160
Index Level
Consumer Confidence
Recession
Source: US Department of Commerce Source: The Conference Board All time high is 144.70 (1/31/00); All time low is 25.30 (2/28/09)
CONSUMER
7 -25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
Leading Economic Indicators (LEI)
Recession
YOY (%) Change
-1.00
-0.75
-0.50
-0.25
0.00 0.25
0.50 0.75
1.00 Chicago Fed National Activity Index (CFNAI)
Recession
3 Month Average
The Conference Board’s Leading Economic Index (LEI) fell by 0.5% in August, following a 0.1% increase in July. The LEI decreased by 3.6% year-over-year. The Conference Board is expecting economic growth to slow in the second half of 2025 due to consumer pessimism, soft manufacturing new orders, and negative impacts from tariffs. The Chicago Fed National Activity Index (CFNAI) came in at -0.12% in August after a downwardly revised -0.28 in July, indicating that economic momentum remained below its historical trend for the fifth consecutive month. The three-month moving average shows a similar trend at -0.18 in August from -0.20 in the prior month signaling ongoing below-trend growth in national economic activity.
Source: The Conference Board Source: Federal Reserve Bank of Chicago
LEADING INDICATORS OF ECONOMIC ACTIVITY
8 0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
In Thousands of Units
Annualized Housing Starts
Multi Family Housing Starts
Single Family Housing Starts
Housing starts dropped 8.5% in August to 1.307 million units, marking a pullback amid elevated inventory levels and a softening labor market. Single-family starts fell 7.0% in August to 890,000 units, hitting their lowest level since July 2024. The S&P Cotality Case Shiller 20- City Home Price Index recorded a 0.07% month-over-month decline in July, marking the fifth consecutive month of losses, while still posting a modest year-over-year gain of 1.8%. Persistently high asking prices and elevated mortgage rates have continued to challenge affordability, contributing to the recent cooling across the housing market. However, the Freddie Mac 30-year fixed mortgage rate continued recent declines to 6.3% as of September.
Source: US Department of Commerce Source: S&P
-20.0%
-16.0%
-12.0%
-8.0%
-4.0%
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
24.0%
S&P/Case-Shiller 20 City Composite Home Price Index
Recession
YOY (%) Change
HOUSING
9 40
45 50
55 60
65 70
Institute of Supply Management (ISM) Surveys
ISM Manufacturing ISM Services
EXPANDING
CONTRACTING
Manufacturing activity contractedat a slightly slower rate as the Institute for Supply Management (ISM) Manufacturing Index edgedup to
49.1 in September, from 48.7 in August yet remaining below the expansion threshold, signaling the seventh consecutive month of contraction in the manufacturing sector. Production growth factored into the gain, although dropsin new orders and inventories offset the increase. The ISM Services Index fell to 50.0 in September from 52.0 in August, which is the breakeven point between expansion and contraction. The 2.0-point decline generally indicated moderate to weak growth, with only isolated reports of supplier delivery delays.
Employment remained in contraction territory, reflecting delayed hiring plans and ongoing challenges in finding qualified workers.
Source: Institute for Supply Management
SURVEY BASED MEASURES
10 Components of GDP 9/24 12/24 3/25 6/25
2.7% 2.6% 0.4% 1.7%
0.2% -1.3% 3.8% -2.7%
-0.4% -0.1% -4.7% 4.8%
0.5% 0.3% -0.4% -0.4%
0.4% 0.3% 0.2% 0.3%
3.4% 1.9% -0.6% 3.8%
Personal Consumption Expenditures
Gross Private Domestic Investment
Net Exports and Imports
Federal Government Expenditures
Total
State and Local (Consumption and Gross
Investment)
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
Gross Domestic Product (GDP)
GDP QOQ % Change
GDP YOY % Change
Source: US Department of Commerce Source: US Department of Commerce In a sharp rebound from the first quarter, real GDP increasedat an annualized rate of 3.8% in the second quarter of 2025 according to the final data revision from the Bureau of Economic Analysis. The increase in real GDP in the second quarter was driven by the drop in imports following the significant rise in the first quarter in anticipation of higher tariffs and an increase in consumer spending. The consensus projection calls for 1.7% growth for the third quarter and 1.8% for the full year 2025.
GROSS DOMESTIC PRODUCT (GDP)
11 Source: Federal Reserve Source: Bloomberg
0 1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
Federal Reserve Balance Sheet Assets
Recession
In $ millions
The Federal Reserve lowered its benchmark interest rate by a quarter point to a range of 4.00% to 4.25% at its September meeting, as officials responded to mounting signs of labor market weakness. Chair Jerome Powell said the move was aimed at cushioning the slowdown while keeping policy restrictive enough to fight lingering inflation. The Fed kept its balance-sheet runoff unchanged, maintaining a $5 billion monthly cap on Treasuries and $35 billion on agency and mortgage-backed securities. Since launching its Quantitative Tightening campaign in June 2022, the Fed has reduced its securities holdings by about $2.35 trillion, bringing the total down to roughly $6.6 trillion.
FEDERAL RESERVE
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Effective Federal Funds Rate
Recession
Yield (%)
12 Source: Bloomberg Source: Bloomberg
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
US Treasury Note Yields
2-Year
5-Year
10-Year
Yield (%)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
US Treasury Yield Curve
Sep-25
Jun-25
Sep-24
Yield (%)
At the end of September, the 2-year Treasury yield was 5 basis points lower, and the 10-Year Treasury yield was 40 basis points higher, year-over-year. The spread between the 2-year and 10-year Treasury yield points on the curve decreased to +54 basis points at September month-end versus +61 basis points at August month-end. The prior 2-year/10-year yield curve inversion, which spanned from July 2022 to August 2024, was historically long. The average historical spread (since 2005) is about +99 basis points. The spread between the 3-month and 10-year Treasury yield points on the curve was +21 basis points in September versus +8 basis points in August.
BOND YIELDS
13 ACCOUNT PROFILE
14 OBJECTIVES
Investment Objectives
Safety of principal is the foremost objective of the investment program. The investment portfolio shall remain sufficiently liquid to meet all requirements that may be reasonably anticipated. The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs.
Chandler Asset Management Performance Objective
The performance objective for the portfolio is to earn a total rate of return through a market cycle that is equal to or above the return on the benchmark index.
Strategy
In order to achieve these objectives, the portfolio invests in high quality fixed income securities that comply with the investment policy and all regulation governing the funds. 15 STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of September 30, 2025 Rules Name Limit Actual Compliance
Status Notes
BANKERS' ACCEPTANCES
Max % 30.0 0.0 Compliant
Max Amount Issuer 5,000,000.0 0.0 Compliant
Max Maturity (Days) 180.0 0.0 Compliant
COLLATERALIZED TIME DEPOSITS (NON-
NEGOTIABLE CD/TD)
Max % 20.0 0.0 Compliant
Max % Issuer 10.0 0.0 Compliant
COMMERCIAL PAPER
Max % 15.0 0.0 Compliant
Max Amount Issuer 3,000,000.0 0.0 Compliant
Max Maturity (Days) 270.0 0.0 Compliant
Min Rating (A-1+ or AAA by 1) 0.0 0.0 Compliant
CORPORATE MEDIUM TERM NOTES
Max % 10.0 5.4 Compliant
Max Amount Issuer 5,000,000.0 4,985,491.7 Compliant
Max Maturity (Years) 5.0 4.7 Compliant
Min Rating (AA by 1) 0.0 0.0 Compliant
FDIC INSURED TIME DEPOSITS (NON-NEGOTIABLE
CD/TD)
Max % 20.0 0.0 Compliant
Max % Issuer 10.0 0.0 Compliant
FEDERAL AGENCIES
Max % 100.0 24.7 Compliant
Max Callables 25.0 15.5 Compliant
Max Maturity (Years) 10.0 9.5 Compliant
GENERAL INVESTMENT GUIDELINES
Max % 5-10 Years Maturities 30.0 19.5 Compliant
Max Maturity (Years) 10.0 9.5 Compliant
Minimum Maturing Less Than 2 Years 50.0 213.4 Compliant 16 STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of September 30, 2025 Rules Name Limit Actual Compliance
Status Notes
LOCAL AGENCY INVESTMENT FUND (LAIF)
Max Concentration 75.0 31.7 Compliant
MONEY MARKET MUTUAL FUNDS
Max % 20.0 2.7 Compliant
Min Rating (AAA by 2) 0.0 0.0 Compliant
MUNICIPAL SECURITIES
Max % 40.0 36.4 Compliant
Max Maturity (Years) 10.0 9.3 Compliant
Min Rating (AA by 1) 0.0 0.0 Compliant
NEGOTIABLE CERTIFICATES OF DEPOSIT (NCD)
Max % 20.0 4.1 Compliant
Max Issuer Amount 5,000,000.0 499,111.8 Compliant
REPURCHASE AGREEMENTS
Max Maturity (Years) 1.0 0.0 Compliant
SUPRANATIONAL OBLIGATIONS
Max % 20.0 12.0 Compliant
Max % Issuer 10.0 6.9 Compliant
Max Maturity (Years) 5.0 4.5 Compliant
Min Rating (AA by 1) 0.0 0.0 Compliant
U.S. TREASURIES
Max % 100.0 2.5 Compliant
Max Maturity (Years) 10.0 2.6 Compliant
17 PORTFOLIO CHARACTERISTICS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Benchmark* 9/30/2025
Portfolio
6/30/2025
Portfolio
Average Maturity (yrs) 2.65 3.07
Average Modified Duration 2.48 2.64
Average Purchase Yield 2.61%
Average Market Yield 3.66% 4.01%
Average Quality** AA+ AA+
Total Market Value 517,930,715
*Benchmark: ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index **The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 18 SECTOR DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Sector as a Percentage of Market Value
Sector 09/30/2025 06/30/2025
Muni Bonds 41.49% --
Agency 28.18% --
Supras 13.70% --
Corporate 6.10% --
Neg CD 4.62% --
Money Mkt Fd 3.05% --
US Treasury 2.82% --
CD 0.05% --
Cash 0.00% --
19 ISSUERS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Issuer Investment Type % Portfolio
Federal Home Loan Banks Agency 8.52%
Federal Agricultural Mortgage Corp Agency 7.95%
International Bank for Recon and Dev Supras 7.82%
Federal Home Loan Mortgage Corp Agency 5.56%
Farm Credit System Agency 4.67%
International Finance Corporation Supras 3.28%
U.S. Bancorp Money Mkt Fd 3.05%
United States US Treasury 2.82%
Inter-American Development Bank Supras 2.21%
State of Hawaii Muni Bonds 1.59%
San Francisco City & County of Muni Bonds 1.33%
City of Oakland, California Muni Bonds 1.32%
State of Oregon Muni Bonds 1.22%
State Of Georgia Muni Bonds 1.18%
San Francisco California City & Coun Muni Bonds 1.12%
Commonwealth of Massachusetts Muni Bonds 1.10%
Santa Monica Community College Distr Muni Bonds 0.99%
City of Los Angeles Muni Bonds 0.99%
Microsoft Corporation Corporate 0.97%
Apple Inc. Corporate 0.93%
Stanford University Corporate 0.93%
Los Angeles Community College Distri Muni Bonds 0.91%
State of Wisconsin Muni Bonds 0.90%
Alphabet Inc. Corporate 0.89%
FNMA Agency 0.89%
Texas Public Finance Authority Muni Bonds 0.86%
San Bernardino Community College Dis Muni Bonds 0.83%
Solano California Community College Muni Bonds 0.80%
State of New York Muni Bonds 0.78%
Contra Costa Community College Distr Muni Bonds 0.72%
20 ISSUERS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Issuer Investment Type % Portfolio
San Mateo Union High School District Muni Bonds 0.72%
San Diego County Water Authority Muni Bonds 0.72%
Andrew W. Mellon Foundation, The Corporate 0.71%
Marin California Community College D Muni Bonds 0.71%
Palo Alto Unified School District Muni Bonds 0.65%
State Of Mississippi Muni Bonds 0.64%
San Diego Unified School District Muni Bonds 0.61%
County of Alameda, California Muni Bonds 0.61%
The University of Chicago Corporate 0.60%
Tennessee Valley Authority Agency 0.59%
City of Glendora, California Muni Bonds 0.58%
Johnson & Johnson Corporate 0.58%
Ohlone Community College District Muni Bonds 0.57%
City of Manhattan Beach, California Muni Bonds 0.54%
City of Corona, California Muni Bonds 0.51%
San Diego Community College District Muni Bonds 0.51%
Northwestern Mutual Global Funding Corporate 0.49%
Santa Clara VY California Water Dist Muni Bonds 0.47%
City of Chula Vista, California Muni Bonds 0.45%
San Ramon Valley Unified School Dist Muni Bonds 0.44%
Santa Monica-Malibu Unified School D Muni Bonds 0.42%
City of Huntington Beach, California Muni Bonds 0.42%
Redwood City School District Muni Bonds 0.40%
State Of Rhode Island Muni Bonds 0.39%
International Bank for Reconstructio Supras 0.39%
City of Fairfield, California Muni Bonds 0.39%
Riverside Community College District Muni Bonds 0.38%
Los Angeles Department of Water and Muni Bonds 0.38%
Cabrillo California Community Colleg Muni Bonds 0.38%
San Jose Unified School District Muni Bonds 0.37%
21 ISSUERS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Issuer Investment Type % Portfolio
City of Santa Ana, California Muni Bonds 0.35%
Metropolitan Transportation Commissi Muni Bonds 0.34%
The New York State Urban Development Muni Bonds 0.32%
Antelope Valley Community College Di Muni Bonds 0.31%
State Of Colorado Muni Bonds 0.29%
Yosemite Community California Colleg Muni Bonds 0.28%
Glendale California Unified School D Muni Bonds 0.28%
South Pasadena Unified School Distri Muni Bonds 0.26%
Fullerton School District, Californi Muni Bonds 0.26%
The Regents Of The University Of Cal Muni Bonds 0.26%
Redondo Beach California Unified Sch Muni Bonds 0.25%
Palomar California Community College Muni Bonds 0.25%
City of Covina, California Muni Bonds 0.25%
Tustin Unified School District Schoo Muni Bonds 0.25%
San Dieguito Union High School Distr Muni Bonds 0.25%
Calleguas California Municipal Water Muni Bonds 0.25%
Minnesota Housing Finance Agency Muni Bonds 0.24%
State of Texas Muni Bonds 0.24%
Santa Clarita California Community C Muni Bonds 0.24%
Sequoia Union High School District Muni Bonds 0.24%
Mountain View Whisman School Distric Muni Bonds 0.22%
Desert Community College District Muni Bonds 0.21%
San Jose Evergreen California Commun Muni Bonds 0.21%
Maryland Department of Housing and C Muni Bonds 0.21%
State of Alabama Muni Bonds 0.19%
Sierra Joint Community College Distr Muni Bonds 0.19%
State Of Tennessee Muni Bonds 0.19%
Burbank California City Unified Scho Muni Bonds 0.19%
Menlo Park California City School Di Muni Bonds 0.19%
Santa Cruz Metropolitan Transit Dist Muni Bonds 0.19%
22 ISSUERS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Issuer Investment Type % Portfolio
Mount San Antonio California Communi Muni Bonds 0.19%
Los Angeles County California Public Muni Bonds 0.18%
City of La Habra, California Muni Bonds 0.18%
State of California Muni Bonds 0.18%
Beverly Hills Unified School Distric Muni Bonds 0.18%
Placentia-Yorba Linda California Uni Muni Bonds 0.17%
Desert Sands Unified School District Muni Bonds 0.17%
City of El Segundo, California Muni Bonds 0.16%
San Francisco Bay Area Rapid Transit Muni Bonds 0.16%
Beverly Hills California Public Fina Muni Bonds 0.16%
Huntington Beach California Public F Muni Bonds 0.14%
Santa Cruz County Capital Financing Muni Bonds 0.14%
California Infrastructure and Econom Muni Bonds 0.13%
City of Auburn, California Muni Bonds 0.13%
Rancho Water District Financing Auth Muni Bonds 0.12%
Rancho Santiago Community College Di Muni Bonds 0.12%
City of Buena Park, California Muni Bonds 0.12%
San Mateo-Foster City School Distric Muni Bonds 0.12%
Milpitas Unified School District Muni Bonds 0.11%
City of Ontario, California Muni Bonds 0.11%
Temecula Valley Unified School Distr Muni Bonds 0.11%
City of Pacifica, California Muni Bonds 0.11%
Pasadena Public Financing Authority, Muni Bonds 0.11%
San Juan Unified School District Muni Bonds 0.10%
Santa Clara County Muni Bonds 0.10%
State of Ohio Muni Bonds 0.10%
Morgan Stanley Neg CD 0.10%
Liberty Union High School District Muni Bonds 0.10%
Oxnard Union High School District Muni Bonds 0.09%
Chabot-Las Positas Community College Muni Bonds 0.09%
23 ISSUERS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Issuer Investment Type % Portfolio
City of Monterey Park, California Muni Bonds 0.09%
Tracy Joint Unified School District Muni Bonds 0.09%
Campbell California Union High Schoo Muni Bonds 0.09%
Santa Barbara Unified School Distric Muni Bonds 0.09%
Santa Maria Joint Union High School Muni Bonds 0.09%
Roseville California Finance Authori Muni Bonds 0.08%
Torrance California Joint Powers Fin Muni Bonds 0.08%
San Jose, California Muni Bonds 0.07%
San Jose Financing Authority Muni Bonds 0.07%
City of San Ramon, California Muni Bonds 0.06%
Carlsbad Unified School District Muni Bonds 0.06%
Chaffey Community College District C Muni Bonds 0.05%
Sunnyvale School District, Californi Muni Bonds 0.05%
LEDYARD NATIONAL BANK Neg CD 0.05%
Global Federal Credit Union Neg CD 0.05%
The Bippus State Bank Neg CD 0.05%
Alliant Credit Union Neg CD 0.05%
American Express Company Neg CD 0.05%
The Pitney Bowes Bank Inc. Neg CD 0.05%
Signature Federal Credit Union Neg CD 0.05%
SPCO Credit Union Neg CD 0.05%
The Peoples Bank Co. Neg CD 0.05%
Enterprise Bank Neg CD 0.05%
Workers Federal Credit Union Neg CD 0.05%
Austin Telco Federal Credit Union Neg CD 0.05%
County Schools Federal Credit Union Neg CD 0.05%
Baxter Credit Union Neg CD 0.05%
UBS Bank USA Neg CD 0.05%
General Electric Credit Union Neg CD 0.05%
First Technology Federal Credit Unio Neg CD 0.05%
24 ISSUERS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Issuer Investment Type % Portfolio
Southern Bank Neg CD 0.05%
Healthcare Systems Federal Credit Un Neg CD 0.05%
Amerant Bank N.A. Neg CD 0.05%
Ally Bank Neg CD 0.05%
Truist Bank Neg CD 0.05%
First Southwest Bank Neg CD 0.05%
CNB Bank, Inc. Neg CD 0.05%
CFG Bank Neg CD 0.05%
GreenWay Bank Neg CD 0.05%
Diversified Members Credit Union Neg CD 0.05%
Wings Financial Credit Union Neg CD 0.05%
Noble Federal Credit Union Neg CD 0.05%
JPMorgan Chase Bank, N.A. Neg CD 0.05%
Sherwin Williams Employees Credit Un Neg CD 0.05%
Skyla Federal Credit Union Neg CD 0.05%
First Guaranty Bank Neg CD 0.05%
Cornerstone Community Federal Credit Neg CD 0.05%
Transportation Alliance Bank, Inc. Neg CD 0.05%
Achieve Financial Credit Union Neg CD 0.05%
Metropolitan Capital Bank & Trust Neg CD 0.05%
Liberty First Credit Union Neg CD 0.05%
Chambers State Bank Neg CD 0.05%
CIBM Bank Neg CD 0.05%
Rogue Credit Union Neg CD 0.05%
Select Bank Neg CD 0.05%
Mutual Savings Association Neg CD 0.05%
Evolve Bank & Trust Neg CD 0.05%
Finwise Bank Neg CD 0.05%
Sharonview Federal Credit Union Neg CD 0.05%
Community Choice Credit Union Neg CD 0.05%
25 ISSUERS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Issuer Investment Type % Portfolio
Oak Bank Neg CD 0.05%
Public Service Credit Union Neg CD 0.05%
County of Riverside, California Muni Bonds 0.05%
Pathfinder Bank Neg CD 0.05%
Ponce Bank Neg CD 0.05%
BMW Bank of North America Neg CD 0.05%
BankFirst Neg CD 0.05%
First Wyoming Bank & Trust Neg CD 0.05%
Banner Capital Bank Neg CD 0.05%
Bank Hapoalim B.M. - New York Branch Neg CD 0.05%
Western State Bank Neg CD 0.05%
Texas Bank Neg CD 0.05%
Decorah Bank and Trust Company Neg CD 0.05%
BankUnited NA CD 0.05%
Farmers Insurance Federal Credit Uni Neg CD 0.05%
Meritrust Federal Credit Union Neg CD 0.05%
Kennett Trust Bank Neg CD 0.05%
Merrick Bank Neg CD 0.05%
Toyota Financial Savings Bank Neg CD 0.05%
Eaglemark Savings Bank Neg CD 0.05%
GreenState Credit Union Neg CD 0.05%
Monet Bank Neg CD 0.05%
Beal Bank USA Neg CD 0.05%
Delta National Bank and Trust Compan Neg CD 0.05%
Institution for Savings in Newburypo Neg CD 0.05%
Synchrony Bank Neg CD 0.05%
Pentagon Federal Credit Union Neg CD 0.05%
Capital One Financial Corporation Neg CD 0.05%
Connexus Credit Union Neg CD 0.05%
Rockland Federal Credit Union Neg CD 0.05%
26 ISSUERS
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Issuer Investment Type % Portfolio
First Oklahoma Bank Neg CD 0.05%
First National Bank of America Neg CD 0.05%
First Community Credit Union of Belo Neg CD 0.05%
Encore Bank Neg CD 0.05%
Cinfed Federal Credit Union Neg CD 0.05%
Live Oak Banking Company Neg CD 0.05%
Fremont Union High School District Muni Bonds 0.05%
Silicon Valley Clean Water Muni Bonds 0.05%
Gesa Credit Union Neg CD 0.05%
Jonesboro State Bank Neg CD 0.05%
Sunwest Bank Neg CD 0.05%
Bank of Montreal Neg CD 0.04%
Minnwest Bank Neg CD 0.04%
Farmers and Merchants State Bank Neg CD 0.04%
The Farmers & Merchants Bank Neg CD 0.04%
Legacy Bank & Trust Company Neg CD 0.04%
Central Bank Neg CD 0.04%
Country Club Bank Neg CD 0.04%
USF Federal Credit Union Neg CD 0.04%
Pony Express Bank Neg CD 0.04%
Peoples Bank Neg CD 0.04%
Berkeley California Unified School D Muni Bonds 0.04%
Haddon Savings Bank Neg CD 0.04%
San Diego Association Of Governments Muni Bonds 0.04%
City of Downey, California Muni Bonds 0.03%
Sonoma County California Junior Coll Muni Bonds 0.03%
Southern California Public Power Aut Muni Bonds 0.02%
Orchard California School District Muni Bonds 0.02%
Cash Cash 0.00%
TOTAL 100.00%
27 QUALITY DISTRIBUTION
Rating 09/30/2025 06/30/2025
AAA 27.55% --
AA 59.11% --
A 0.77% --
BBB 0.24% --
B 0.05% --
NA 12.29% --
Rating 09/30/2025 06/30/2025
Aaa 27.77% --
Aa 59.16% --
A 0.24% --
Baa 0.05% --
NA 12.78% --
Rating 09/30/2025 06/30/2025
AAA 11.49% --
AA 41.51% --
A 0.15% --
BBB 0.09% --
NA 46.76% --
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 S&P Rating Moody’s Rating Fitch Rating
28 0-.25 .25-.5 .5-1 1-2 2-3 3-4 4-5 5-7 7+
Portfolio 10.8% 8.7% 14.2% 15.5% 8.7% 11.1% 15.4% 12.8% 2.8% ICE BofA 1-5 Year Unsubordinated US Treasury &
Agency Index 0.0% 0.1% 2.6% 35.0% 27.7% 22.6% 12.0% 0.0% 0.0%
DURATION DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Portfolio Compared to the Benchmark
29 3 Months 12 Months 2 Years 3 Years 5 Years 10 Years Since Inception TOTAL RATE OF RETURN*
Palo Alto Managed Acct 0.40%
Benchmark 0.24%
*Periods over 1 year are annualized.
Total rate of return: A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending market value; it includes interest earnings, realized and unrealized gains and losses in the portfolio. Realized rate of return: A measure of a portfolio’s return over time. It is the internal rate which equates the beginning book value of the portfolio with the ending book value; it includes interest earnings, realized gains and losses in the portfolio.
Benchmark: ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index
INVESTMENT PERFORMANCE
Palo Alto Managed Acct | Account #11463 | As of September 30, 2025 Total Rate of Return : Inception | 09/01/2025
30 PORTFOLIO CHARACTERISTICS
City of Palo Alto Reporting | Account #11464 | As of September 30, 2025 9/30/2025
Portfolio
6/30/2025
Portfolio
Average Maturity (yrs) 0.00
Average Modified Duration 0.00
Average Purchase Yield 1.86%
Average Market Yield 1.86%
Average Quality** AAA
Total Market Value 71,567,424
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 31 SECTOR DISTRIBUTION
City of Palo Alto Reporting | Account #11464 | As of September 30, 2025 Sector as a Percentage of Market Value
Sector 09/30/2025 06/30/2025
Cash 55.68% --
LAIF 44.32% --
32 CONSOLIDATED INFORMATION
33 PORTFOLIO CHARACTERISTICS
City of Palo Alto Consolidated | Account #11465 | As of September 30, 2025 9/30/2025
Portfolio
6/30/2025
Portfolio
Average Maturity (yrs) 2.70
Average Modified Duration 2.31
Average Purchase Yield 2.52%
Average Market Yield 3.75%
Average Quality** AA+
Total Market Value 589,498,139
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 34 SECTOR DISTRIBUTION
City of Palo Alto Consolidated | Account #11465 | As of September 30, 2025 Sector as a Percentage of Market Value
Sector 09/30/2025 06/30/2025
Muni Bonds 36.42% --
Agency 24.74% --
Supras 12.03% --
Cash 6.80% --
LAIF 5.41% --
Corporate 5.35% --
Neg CD 4.05% --
Money Mkt Fd 2.68% --
US Treasury 2.47% --
CD 0.04% --
35 IMPORTANT DISCLOSURES
2025 Chandler Asset Management, Inc, An Independent Registered Investment Adviser.
Information contained herein is confidential. Prices are provided by ICE Data Services Inc (“IDS”), an independent pricing source. In the event IDS does not provide a price or if the price provided is not reflective of fair market value, Chandler will obtain pricing from an alternative approved third party pricing source in accordance with our written valuation policy and procedures. Our valuation procedures are also disclosed in Item 5 of our Form ADV Part 2A.
Performance results are presented gross-of-advisory fees and represent the client’s Total Return. The deduction of advisory fees lowers performance results. These results include the reinvestment of dividends and other earnings. Past performance may not be indicative of future results. Therefore, clients should not assume that future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Economic factors, market conditions or changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio.
Index returns assume reinvestment of all distributions. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results. It is not possible to invest directly in an index.
Source ICE Data Indices, LLC (“ICE”), used with permission. ICE permits use of the ICE indices and related data on an “as is” basis; ICE, its affiliates and their respective third party suppliers disclaim any and all warranties and representations, express and/or implied, including any warranties of merchantability or fitness for a particular purpose or use, including the indices, index data and any data included in, related to, or derived therefrom. Neither ICE data, its affiliates or their respective third party providers guarantee the quality, adequacy, accuracy, timeliness or completeness of the indices or the index data or any component thereof, and the indices and index data and all components thereof are provided on an “as is” basis and licensee’s use it at licensee’s own risk. ICE data, its affiliates and their respective third party do not sponsor, endorse, or recommend chandler asset management, or any of its products or services.
This report is provided for informational purposes only and should not be construed as a specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment.
Fixed income investments are subject to interest, credit and market risk. Interest rate risk: the value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market in general could decline due to economic conditions, especially during periods of rising interest rates.
Ratings information have been provided by Moody’s, S&P and Fitch through data feeds we believe to be reliable as of the date of this statement, however we cannot guarantee its accuracy.
Security level ratings for U.S. Agency issued mortgage-backed securities (“MBS”) reflect the issuer rating because the securities themselves are not rated. The issuing U.S. Agency guarantees the full and timely payment of both principal and interest. 36 BENCHMARK DISCLOSURES
Benchmark Disclosure
ICE BofA 1-5 Yr US Treasury & Agency Index
The ICE BofA 1-5 Year US Treasury & Agency Index tracks the performance of US dollar denominated US Treasury and nonsubordinated US agency debt issued in the US domestic market. Qualifying securities must have an investment grade rating (based on an average of Moody’s, S&P and Fitch). Qualifying securities must have at least one year remaining term to final maturity and less than five years remaining term to final maturity, at least 18 months to maturity at time of issuance, a fixed coupon schedule, and a minimum amount outstanding of $1 billion for sovereigns and $250 million for agencies. 37