INVESTMENT REPORT
City of Palo Alto | As of December 31, 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
1 ATTACHMENT B
ECONOMIC UPDATE
2 ATTACHMENT B
▪
▪
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The near-term economic outlook continues to be distorted by the data delays from the government shutdown. Recently released government data—reflecting conditions from two to three months ago—indicate inflation remains moderately above the Federal Reserve’s target, while labor market conditions have continuedto soften. As the flow of economic data normalizes, the Chandler team expects further yield curve steepening as the Federal Reserve moves the policy rate toward a more neutral range. U.S. trade and fiscal policy also remain sources of elevated market uncertainty.
The Federal Reserve's December Federal Open Market Committee meeting concluded with the third consecutive 25-basis-point rate cut in 2025, lowering the target range to 3.50%–3.75%. However, policymakers remain divided on the path forward. Four Fed governors project one additional 25-basis-point cut in 2026, another four anticipateno further easing, eight expect multiple cuts, and three call for a potential rate hike. Chair Jerome Powell noted that the Fed is now “well placed to wait and see” how labor market conditions and inflation evolve in the near term.
The US Treasury yield curve steepened in December, as the 2-year Treasury yield dropped 2 basis points to 3.48%, the 5-year Treasury was up 13 basis points to 3.73%, and the 10-year Treasury yield was 15 basis points higher at 4.17%. The spread between the 2-year and 10- year Treasury yield points on the curve was 17 basis points wider from November at +69 basis points at December month-end. The spread between the 2-year Treasury and 10-year Treasury yield one year ago was +33 basis points. The spread between the 3-month and 10-year Treasury yield points on the curve was +54 basis points in December versus +21 basis points in November.
ECONOMIC UPDATE
3 ATTACHMENT B
-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)
-1.0%
3.0%
7.0%
11.0%
15.0%
Unemployment Rate
Underemployment Rate (U6)
Unemployment Rate (U3)
Rate (%)
The December Nonfarm Payrolls report showed weaker-than-expected job growth, with payrolls rising by 50,000 compared with the consensus estimate of 70,000. This follows a downwardly revised gain of 56,000 in November. Employment declines were most pronounced in retail trade and construction, while leisure and hospitality posted the strongest gains. Notably, the unemployment rate edged down to 4.4% after increasing to 4.6% in November.
Source: US Department of Labor Source: US Department of Labor
EMPLOYMENT
4 ATTACHMENT B
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) reported that job openings fell to 7.1 million in November from a downwardly revised 7.4 millionin October. The dropin vacancies, alongside slower hiring, suggests the labor market continues to soften, though employers remain cautious about laying off workers. The number of openings now roughly matches the number of unemployed individuals, pointing to a labor market that is approaching equilibrium.
Source: US Department of Labor
JOB OPENINGS & LABOR TURNOVER SURVEY
5 ATTACHMENT B
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%
Personal Consumption Expenditures (PCE)
PCE Price Deflator
YOY % Change
PCE Core Deflator
YOY % Change
Fed Target
YOY (%) Change
Inflation came in lower than expectedin November, with the Consumer Price Index (CPI) rising 2.7% year over year and core CPI easing to
2.6%. Notably, both Owners’ Equivalent Rent and Rent of Primary Residence contributed to the slowdown in services inflation. Shelter costs typically lag broader market trends by 12 to 18 months. Services, meanwhile, have remained the dominant driver of inflation throughout the post-pandemic period. The Personal Consumption Expenditures (PCE) Index for September, released on December 5, showed headline inflation up 0.3% from August and 2.8% year over year. Core PCE rose 0.2% on the month and 2.8% on an annual basis.
Source: US Department of Labor Source: US Department of Commerce
INFLATION
6 ATTACHMENT B
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Retail Sales YOY % Change
YOY (%) Change
October Retail Sales, released with a one-month delay, were flat from the prior month but up 3.5% year over year. Eight of thirteen major categories posted gains, while motor vehicle sales declined following the expiration of federal tax incentives for electric vehicles, and gas station sales weakened amid lower fuel prices. The government shutdown may have weighed on consumer confidence regarding jobs, incomes, and overall financial conditions, both current and in the future. The Conference Board’s Consumer Confidence Index declined to
89.1 in December from an upwardly revised 92.9 in November, marking its fifth consecutive monthly drop. Consumers were pessimistic about both business conditions and the labor market.
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 ATTACHMENT B
-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) declined 0.3% in September, marking its second consecutive monthly decrease after a revised 0.3% drop in August. On a year-over-year basis, the index fell 3.3%. According to the Conference Board, weakening expectations among consumers and businesses contributed most to the LEI’s overall decline. The index continues to signal slower economic growth through the end of 2025 and into 2026. The Chicago Fed National Activity Index (CFNAI) came in at -0.21 in September, following a downwardly revised -0.31 in August, signaling that U.S. economic activity remained below its historical trend for the sixth consecutive month. The three-month moving average ticked down to -0.21 in September from -0.18 in August, reinforcing signs of ongoing below-trend national growth. Employment-related indicators turned slightly positive, contributing +0.01 in September after a -0.11 result in August.
Source: The Conference Board Source: Federal Reserve Bank of Chicago
LEADING INDICATORS OF ECONOMIC ACTIVITY
8 ATTACHMENT B
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
The S&P Cotality Case-Shiller 20-City Composite Home Price Index rose 1.3% year over year in October, slightly down from a 1.4% gain in September and marking the slowest annual increase since mid ‑2023. Short-term momentum also weakened, with 80 percent of the 20 tracked markets recording month-over-month price declineson a non-seasonally adjusted basis. Housing starts declined in October to an annualized rate of 1.25 million units, down from 1.29 million in September. Existing home sales inched higher in November to a 4.13 million-unit pace, indicating only modest improvement despite some relief in mortgage rates. The Freddie Mac 30‑year fixed mortgage rate fell throughout 2025 and averaged 6.18% at the end of December.
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 ATTACHMENT B
40 45
50 55
60 65
70 Institute of Supply Management (ISM) Surveys
ISM Manufacturing ISM Services
EXPANDING
CONTRACTING
The Institute for Supply Management’s (ISM) manufacturing index slipped to 47.9 in December, down from 48.2 in November, marking continued weakness across the sector. Manufacturing activity has now been in contraction for 36 of the past 38 months, as readings below 50 indicate contraction and those above50 signal expansion. The latest decline was driven primarily by pullbacks in the Production and Inventories components. In contrast, the ISM services index remained in expansion territory, rising to 54.4 in December from 52.6 in November. Respondents attributed the improvementto seasonal strength, though many remained cautious about the potential impact of tariffs.
Source: Institute for Supply Management
SURVEY BASED MEASURES
10 ATTACHMENT B
Components of GDP 12/24 3/25 6/25 9/25
2.6% 0.4% 1.7% 2.4%
-1.3% 3.8% -2.7% 0.0%
-0.1% -4.7% 4.8% 1.6%
0.3% -0.4% -0.4% 0.2%
0.3% 0.2% 0.3% 0.2%
1.9% -0.6% 3.8% 4.3%
State and Local (Consumption and Gross
Investment)
Personal Consumption Expenditures
Gross Private Domestic Investment
Net Exports and Imports
Federal Government Expenditures
Total
-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 The U.S. inflation adjusted gross domestic product (GDP) report demonstrated continued strength in the third quarter, with the first estimate showing a 4.3% annualized quarter-over-quarter increase, up from 3.8% in the second quarter. Consumer spending accelerated, while exports contributed 1.6 percentage points to growth—both key drivers of the quarter’s performance. The stronger-than-expected result represented the fastest pace of U.S. economic expansion in two years. The consensus projection calls for 1.1% growth in the fourth quarter and 2.0% growth for the full year 2025.
GROSS DOMESTIC PRODUCT (GDP)
11 ATTACHMENT B
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 target range of 3.50% to 3.75% at its December meeting, citing concerns about emerging weakness in the labor market. A few policymakers dissented, arguing that tighter monetary policy may still be warranted to ensure progress on price stability. Beginning December 1, the Fed also halted its balance sheet runoff, announcing that principal and interest payments from its holdings will be reinvested in Treasury securities to maintain ample reserves and support market stability.
FEDERAL RESERVE
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Effective Federal Funds Rate
Recession
Yield (%)
12 ATTACHMENT B
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
Dec-25
Sep-25
Dec-24
Yield (%)
At the end of December, the 2-year yield was 77 basis points lower, and the 10-year yield was 40 basis points lower, year-over-year. The spread between the 2-year and 10-year Treasury yield points on the curve increased to +69 basis points at December month-end versus +52 basis points at November 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 +95 basis points. The spread between the 3-month and 10-year Treasury yield points on the curve was +54 basis points in December versus +21 basis points in November.
BOND YIELDS
13 ATTACHMENT B
ACCOUNT PROFILE
14 ATTACHMENT B
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 ATTACHMENT B
STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of December 31, 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 % (Par Value) 10.0 4.8 Compliant
Max Amount Issuer (Par Value) 5,000,000.0 5,000,000.0 Compliant Max Maturity (Years) 5.0 4.8 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 19.5 Compliant
Max Callables 25.0 11.5 Compliant
Max Maturity (Years) 10.0 9.2 Compliant
GENERAL INVESTMENT GUIDELINES
Max % 5-10 Years Maturities 30.0 13.8 Compliant
Max Maturity (Years) 10.0 9.2 Compliant
Minimum Maturing Less Than 2 Years 50.0 215.3 Compliant 16 ATTACHMENT B
STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of December 31, 2025 Rules Name Limit Actual Compliance
Status Notes
LOCAL AGENCY INVESTMENT FUND (LAIF)
Max Concentration 75.0 42.0 Compliant
MONEY MARKET MUTUAL FUNDS
Max % 20.0 0.9 Compliant
Min Rating (AAA by 2) 0.0 0.0 Compliant
MUNICIPAL SECURITIES
Max % 40.0 32.9 Compliant
Max Maturity (Years) 10.0 9.0 Compliant
Min Rating (AA by 1) 0.0 0.0 Compliant
NEGOTIABLE CERTIFICATES OF DEPOSIT (NCD)
Max % 20.0 3.1 Compliant
Max Issuer Amount 5,000,000.0 499,274.3 Compliant
REPURCHASE AGREEMENTS
Max Maturity (Years) 1.0 0.0 Compliant
SUPRANATIONAL OBLIGATIONS
Max % 20.0 10.7 Compliant
Max % Issuer 10.0 5.6 Compliant
Max Maturity (Years) 5.0 4.2 Compliant
Min Rating (AA by 1) 0.0 0.0 Compliant
U.S. TREASURIES
Max % 100.0 9.0 Compliant
Max Maturity (Years) 10.0 4.9 Compliant
17 ATTACHMENT B
PORTFOLIO CHARACTERISTICS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Benchmark* 12/31/2025
Portfolio
9/30/2025
Portfolio
Average Maturity (yrs) 2.64 2.97 3.07
Average Modified Duration 2.47 2.56 2.64
Average Purchase Yield 2.76% 2.61%
Average Market Yield 3.55% 3.87% 4.01%
Average Quality** AA+ AA+ AA+
Total Market Value 523,863,105 517,930,715
*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 ATTACHMENT B
SECTOR DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Sector as a Percentage of Market Value
Sector 12/31/2025 09/30/2025
Muni Bonds 40.62% 41.49%
Agency 24.07% 28.18%
Supras 13.24% 13.70%
US Treasury 11.15% 2.82%
Corporate 5.96% 6.10%
Neg CD 3.77% 4.62%
Money Mkt Fd 1.14% 3.05%
19 ATTACHMENT B
ISSUERS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Issuer Investment Type % Portfolio
United States US Treasury 11.15%
Federal Home Loan Banks Agency 7.62%
Federal Agricultural Mortgage Corp Agency 7.35%
International Bank for Recon and Dev Supras 6.90%
Farm Credit System Agency 4.45%
Federal Home Loan Mortgage Corp Agency 3.38%
Inter-American Development Bank Supras 3.17%
International Finance Corporation Supras 2.78%
State of Hawaii Muni Bonds 1.58%
San Francisco City & County of Muni Bonds 1.32%
City of Oakland, California Muni Bonds 1.28%
State of Oregon Muni Bonds 1.21%
First American Govt Oblig Fund Money Mkt Fd 1.14%
State of Georgia Muni Bonds 1.12%
San Francisco California City & Coun Muni Bonds 1.11%
Commonwealth of Massachusetts Muni Bonds 1.08%
Santa Monica Community College Distr Muni Bonds 0.98%
City of Los Angeles Muni Bonds 0.98%
Apple Inc. Corporate 0.93%
Stanford University Corporate 0.93%
Los Angeles Community College Distri Muni Bonds 0.90%
State of Wisconsin Muni Bonds 0.90%
Alphabet Inc. Corporate 0.89%
San Bernardino Community College Dis Muni Bonds 0.82%
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%
San Mateo Union High School District Muni Bonds 0.72%
San Diego County Water Authority Muni Bonds 0.71%
Andrew W. Mellon Foundation, The Corporate 0.71%
20 ATTACHMENT B
ISSUERS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Issuer Investment Type % Portfolio
Marin California Community College D Muni Bonds 0.71%
FNMA Agency 0.69%
Palo Alto Unified School District Muni Bonds 0.64%
San Diego Unified School District Muni Bonds 0.61%
County of Alameda, California Muni Bonds 0.60%
The University of Chicago Corporate 0.59%
Federal Agricultural Mortgage Corp. Agency 0.59%
City of Glendora, California Muni Bonds 0.58%
Johnson & Johnson Corporate 0.58%
Ohlone Community College District Muni Bonds 0.56%
State of Mississippi Muni Bonds 0.56%
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%
Guardian Life Global Funding Corporate 0.48%
Santa Clara VY California Water Dist Muni Bonds 0.46%
City of Chula Vista, California Muni Bonds 0.44%
San Ramon Valley Unified School Dist Muni Bonds 0.44%
Santa Monica-Malibu Unified School D Muni Bonds 0.42%
Texas Public Finance Authority Muni Bonds 0.42%
City of Huntington Beach, California Muni Bonds 0.41%
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 0.38%
Riverside Community College District Muni Bonds 0.38%
Cabrillo California Community Colleg Muni Bonds 0.38%
Los Angeles Department of Water and Muni Bonds 0.38%
San Jose Unified School District Muni Bonds 0.37%
21 ATTACHMENT B
ISSUERS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Issuer Investment Type % Portfolio
Microsoft Corporation Corporate 0.36%
City of Santa Ana, California Muni Bonds 0.35%
Bay Area Toll Auth Calif Toll Brdg R Muni Bonds 0.33%
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 0.25%
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%
Calleguas California Municipal Water Muni Bonds 0.25%
San Dieguito Union High School Distr Muni Bonds 0.25%
Minnesota Housing Finance Agency Muni Bonds 0.24%
State of Texas Muni Bonds 0.24%
Sequoia Union High School District Muni Bonds 0.24%
Santa Clarita California Community C 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%
Sierra Joint Community College Distr Muni Bonds 0.19%
State of Alabama 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%
22 ATTACHMENT B
ISSUERS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Issuer Investment Type % Portfolio
Santa Cruz Metropolitan Transit Dist Muni Bonds 0.19%
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%
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%
State of California Muni Bonds 0.14%
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%
Auburn California Muni Bonds 0.13%
Rancho Santiago Community College Di Muni Bonds 0.12%
City of Buena Park, California Muni Bonds 0.12%
Rancho Water District Financing Auth Muni Bonds 0.12%
Milpitas Unified School District Muni Bonds 0.11%
San Mateo-Foster City School Distric 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%
Liberty Union High School District Muni Bonds 0.10%
Morgan Stanley Neg CD 0.10%
Oxnard Union High School District Muni Bonds 0.09%
23 ATTACHMENT B
ISSUERS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Issuer Investment Type % Portfolio
Chabot-Las Positas Community College Muni Bonds 0.09%
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%
The Bippus State Bank Neg CD 0.05%
Global Federal Credit Union Neg CD 0.05%
Alliant Credit Union Neg CD 0.05%
American Express Company Neg CD 0.05%
The Peoples Bank Co. Neg CD 0.05%
Signature Federal Credit Union Neg CD 0.05%
The Pitney Bowes Bank Inc. Neg CD 0.05%
SPCO Credit Union Neg CD 0.05%
Austin Telco Federal Credit Union Neg CD 0.05%
Baxter Credit Union Neg CD 0.05%
County Schools Federal Credit Union Neg CD 0.05%
Workers Federal Credit Union Neg CD 0.05%
Enterprise Bank Neg CD 0.05%
UBS Bank USA Neg CD 0.05%
General Electric Credit Union Neg CD 0.05%
24 ATTACHMENT B
ISSUERS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Issuer Investment Type % Portfolio
First Technology Federal Credit Unio Neg CD 0.05%
Healthcare Systems Federal Credit Un Neg CD 0.05%
Amerant Bank N.A. Neg CD 0.05%
Southern Bank Neg CD 0.05%
Ally Bank Neg CD 0.05%
First Southwest Bank Neg CD 0.05%
CFG Bank Neg CD 0.05%
CNB Bank, Inc. Neg CD 0.05%
Truist Bank Neg CD 0.05%
GreenWay Bank Neg CD 0.05%
Wings Credit Union Neg CD 0.05%
First Guaranty Bancshares, Inc. Neg CD 0.05%
Diversified Members Credit Union Neg CD 0.05%
Transportation Alliance Bank, Inc. Neg CD 0.05%
Cornerstone Community Federal Credit Neg CD 0.05%
Metropolitan Capital Bank & Trust Neg CD 0.05%
Chambers State Bank Neg CD 0.05%
Achieve Financial Credit Union Neg CD 0.05%
Mutual Savings Association Neg CD 0.05%
Finwise Bank Neg CD 0.05%
Oak Bank Neg CD 0.05%
Liberty First Credit Union Neg CD 0.05%
Community Choice Credit Union Neg CD 0.05%
Public Service Credit Union Neg CD 0.05%
Evolve Bank & Trust Neg CD 0.05%
BankUnited NA CD 0.05%
Farmers Insurance Federal Credit Uni Neg CD 0.05%
Ponce Bank, National Association Neg CD 0.05%
County of Riverside, California Muni Bonds 0.05%
Meritrust Federal Credit Union Neg CD 0.05%
25 ATTACHMENT B
ISSUERS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Issuer Investment Type % Portfolio
BankFirst Neg CD 0.05%
Decorah Bank and Trust Company Neg CD 0.05%
Merrick Bank Neg CD 0.05%
Eaglemark Savings Bank Neg CD 0.05%
Toyota Financial Savings Bank Neg CD 0.05%
GreenState Credit Union Neg CD 0.05%
Institution for Savings in Newburypo Neg CD 0.05%
Kennett Trust Bank Neg CD 0.05%
Synchrony Bank 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%
Pentagon Federal Credit Union Neg CD 0.05%
Capital One Financial Corporation Neg CD 0.05%
Connexus Credit Union Neg CD 0.05%
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%
Legacy Bank & Trust Company Neg CD 0.04%
26 ATTACHMENT B
ISSUERS
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Issuer Investment Type % Portfolio
The Farmers & Merchants Bank Neg CD 0.04%
Central Bank Neg CD 0.04%
Country Club Bank Neg CD 0.04%
Berkeley California Unified School D Muni Bonds 0.04%
Pony Express Bank Neg CD 0.04%
Peoples Bank Neg CD 0.04%
USF Federal Credit Union 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 ATTACHMENT B
QUALITY DISTRIBUTION
Rating 12/31/2025 09/30/2025
AAA 24.04% 27.55%
AA 61.51% 59.11%
A 0.72% 0.77%
BBB 0.19% 0.24%
A-1+ 1.90% --
NA 11.59% 12.29%
B 0.05% 0.05%
Rating 12/31/2025 09/30/2025
Aaa 24.32% 27.77%
Aa 61.51% 59.16%
A 0.24% 0.24%
Baa -- 0.05%
P-1 1.90% --
NA 12.04% 12.78%
Rating 12/31/2025 09/30/2025
AAA 9.39% 11.49%
AA 43.53% 41.51%
A 0.14% 0.15%
BBB 0.09% 0.09%
F1+ 1.90% --
NA 44.94% 46.76%
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 S&P Rating Moody’s Rating Fitch Rating
28 ATTACHMENT B
0-.25 .25-.5 .5-1 1-2 2-3 3-4 4-5 5-7 7+
Portfolio 12.7% 5.3% 12.0% 16.8% 12.2% 11.3% 18.8% 9.0% 1.8% ICE BofA 1-5 Year Unsubordinated US Treasury &
Agency Index 0.0% 0.0% 2.5% 35.4% 28.7% 21.2% 12.3% 0.0% 0.0%
DURATION DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Portfolio Compared to the Benchmark
29 ATTACHMENT B
TOTAL RATE OF RETURN* 3 Months 12 Months 2 Years 3 Years 5 Years 10 Years Since Inception Palo Alto Managed Acct 1.16% 1.56%
Benchmark 1.11% 1.35%
*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.
Benchmark: ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index
INVESTMENT PERFORMANCE
Palo Alto Managed Acct | Account #11463 | As of December 31, 2025 Total Rate of Return : Inception | 09/01/2025
30 ATTACHMENT B
PORTFOLIO CHARACTERISTICS
City of Palo Alto Reporting | Account #11464 | As of December 31, 2025 12/31/2025
Portfolio
9/30/2025
Portfolio
Average Maturity (yrs) 0.00 0.00
Average Modified Duration 0.00 0.00
Average Purchase Yield 2.50% 1.86%
Average Market Yield 2.50% 1.86%
Average Quality** AAA AAA
Total Market Value 121,364,206 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 ATTACHMENT B
SECTOR DISTRIBUTION
City of Palo Alto Reporting | Account #11464 | As of December 31, 2025 Sector as a Percentage of Market Value
Sector 12/31/2025 09/30/2025
Cash 65.29% 55.60%
LAIF 34.71% 44.40%
32 ATTACHMENT B
CONSOLIDATED INFORMATION
33 ATTACHMENT B
PORTFOLIO CHARACTERISTICS
City of Palo Alto Consolidated | Account #11465 | As of December 31, 2025 12/31/2025
Portfolio
9/30/2025
Portfolio
Average Maturity (yrs) 2.41 2.70
Average Modified Duration 2.08 2.31
Average Purchase Yield 2.71% 2.52%
Average Market Yield 3.61% 3.75%
Average Quality** AA+ AA+
Total Market Value 645,227,312 589,498,139
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch. 34 ATTACHMENT B
SECTOR DISTRIBUTION
City of Palo Alto Consolidated | Account #11465 | As of December 31, 2025 Sector as a Percentage of Market Value
Sector 12/31/2025 09/30/2025
Muni Bonds 32.96% 36.43%
Agency 19.53% 24.75%
Cash 12.32% 6.78%
Supras 10.74% 12.03%
US Treasury 9.05% 2.47%
LAIF 6.55% 5.41%
Corporate 4.83% 5.36%
Neg CD 3.06% 4.05%
Money Mkt Fd 0.93% 2.68%
35 ATTACHMENT B
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 ATTACHMENT B
BENCHMARK DISCLOSURES
Benchmark Disclosure
ICE BofA 1-5 Year UnsubordinatedUS
Treasury & Agency Index
The ICE BofA 1-5 Year Unsubordinated 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 ATTACHMENT B