INVESTMENT REPORT
City of Palo Alto| As of June 30, 2026
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
1 TABLE OF CONTENTS
ECONOMIC UPD ATE
ACCOUNT PROFILE
CONSOLIDATED INFORMATION
ATTACHMENT B
2 ECONOMIC UPDATE
ATTACHMENT B
3
Energy prices and inflation remained the primary drivers of the macro backdrop as the U.S.-Israel-Iran conflict entered its third month, disrupting global oil supply. Headline CPI accelerated at the fastest pace in more than three years, reflecting volat ility in the energy component. Crude oil, however, retraced roughly 20% from its May–early June peak as diplomatic progress between the United States and Iran pointed to a potential framework for de-escalation. The labor market remained resilient, with continued payroll growth and s ubdued jobless claims. Risk assets held firm, as equities hovered near record highs and credit spreads remained historically tight amid broadly better-than-expected corporate earnings. Taken together, the current market environment has further constrained the case for near-term monetary policy easing, leading the Chandler team to push out its expected timing for rate cuts beyond the six-month investment horizon.
The Federal Reserve’s June FOMC meeting ended with policymakers unanimously holding the target range at 3.50%–3.75%, a notable shift from the 8–4 split at April’s meeting, which marked Jerome Powell’s final session as Chair. Under new Chair Kevin Warsh, sworn in on May 22, the Committee released an unusually concise statement that referenced Middle East tensions and energy supply disruptions while removing prior forward guidance that had suggested a bias toward rate cuts. Updated projections leaned more hawkish, with 9 of 18 officials expecting at least one rate hike this year and 6 anticipating multiple increases. The shift signals that restoring price stability has reemerged as the central focus of monetary policy deliberations.
The Treasury yield curve flattened modestly in June as short-term yields responded to a more hawkish shift in Federal Reserve guidance.
The 2-year yield rose to 4.15% from 3.98% the prior month, while the 10-year yield edged down slightly to 4.44% from 4.45%. As a result, the 2s/10s spread narrowed to 29 basis points, down from roughly 47 basis points a month earlier and significantly below the 69 basis point spread at the start of the year. Meanwhile, the 3-month/10-year spread remained positive at 64 basis points. Front-end rates absorbed the bulk of the Fed’s updated rate outlook, while longer maturities were partly anchored by a late-month decline in oil prices.
ECONOMIC UPDATE
ATTACHMENT B
4 -400
-200
0 200
400
600
800
1,000 MOM Change In Thousands (000's)
Nonfarm Payroll (000's)
Non-farm Payroll (000's)
3-month average (000's)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Unemployment Rate
Underemployment Rate (U6)
Unemployment Rate (U3)
Rate (%)
Nonfarm payrolls increased by just 57,000 in June, well below the 113,000 consensus and marking a sharp slowdown from May’s pace. The unemployment rate edged down to 4.2%, though the decline was driven by a drop in labor force participation to 61.5%, its lowest level since March 2021. Revisions further weakened the report’s signal. April payrolls were revised down by 31,000 to 148,000, while May was lowered by 43,000 to 129,000, resulting in a combined two-month downward revision of 74,000.
Source: US Department of Labor Source: US Department of Labor
EMPLOYMENT
ATTACHMENT B
5 0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Job Openings
Recession
Historical Average
In Thousands (000's)
Job openings were essentially unchanged at 7.6 million in May, remaining elevated by historical standards even as hiring momentum moderates. Gains in wholesale trade and accommodation and food services were offset by declines in health care and social assistance, as well as finance and insurance. April openings were revised down by 33,000 to 7.6 million, while hires were revised up by 99,000, highlighting ongoing churn but a broadly stable labor market backdrop.
Source: US Department of Labor
JOB OPENINGS & LABOR TURNOVER SURVEY
ATTACHMENT B
6 Source: Bloomberg Indices Source: Bloomberg Indices
ENERGY MARKETS
Crude oil prices declined sharply in June as supply disruptions tied to the Middle East conflict began to ease. Tanker traffic through the Strait of Hormuz normalized, and signs of progress in U.S.–Iran negotiations helped unwind the geopolitical risk premium that had driven prices higher earlier in the year. West Texas Intermediate settled near $69.37 per barrel on June 30, while Brent crude closed around $72.96, both well below their recent peaks. Brent’s 21% monthly decline marked its steepest drop since March 2020, while WTI fell more than 20%, its largest monthly loss since late 2021. Beyond crude, broader energy markets also softened. Refined product cracks narrowed as gasoline and diesel demand showed signs of seasonal moderation, while U.S. natural gas prices remained range-bound amid ample storage and steady production. Taken together, the retracement in oil and broader energy prices reflects a rapid compression in geopolitical risk premia and improved near-term supply visibility, even as underlying structural risks in the region remain unresolved.
2.00 2.50
3.00 3.50
4.00 4.50
5.00 5.50
6.00 6.50
US Fuel Prices
Average Retail Price US Diesel
Average Retail Price US Gas
($) Per Gallon
40 60
80 100
120
140
160
Oil Prices
West Texas Intermediate (WTI Spot Cushing)
Dated Brent (Global Spot)
Price Per Barrel (WTI Spot)
ATTACHMENT B
7 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
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
Inflation firmed in May, with the Personal Consumption Expenditures (PCE) price index rising 0.4% on the month and 4.1% year over year, up from 3.8% in April and marking the highest annual rate of the current cycle. Core PCE, which excludes food and energy, increased 0.3% in May and 3.4% over the year. Energy prices remained the primary driver of the headline acceleration, reflecting supply disruptions tied to the Iranian conflict. A similar pattern was evident in the headline Consumer Price Index (CPI), which rose 0.5% on the month and 4.2% year over year, the fastest annual pace since 2023. Energy prices climbed 3.9% in May and 23.5% from a year earlier, largely due to crude oil reaching a four-year high. In contrast, core CPI rose a more modest 0.2% on the month and 2.9% year over year, indicating that inflation pressures remain concentrated in energy rather than broad-based.
Source: US Department of Labor Source: US Department of Commerce
INFLATION
ATTACHMENT B
8 0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Retail Sales YOY % Change
YOY (%) Change
Retail sales rose a robust 0.9% in May to $763.7 billion, nearly double the pace economists had penciled in and an acceleration from April's downwardly revised 0.4% gain. The closely watched control group, which feeds directly into gross domestic product calculations, advanced
0.7%, pointing to durable underlying demand. Gasoline station receipts rose as energy prices stayed high, while auto sales rebounded after an April pullback. The Conference Board's Consumer Confidence Index ticked up 0.6 points to 91.2 in June, though the improvement masked a further deterioration in how households view the job market, with the share calling jobs ‘hard-to-get’ climbing to a five year high.
Spending has proven more resilient than sentiment across recent months. 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
ATTACHMENT B
9 -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) edged up 0.1% in May to 99.3, following a revised 0.2% increase in April. Despite the monthly gains, the LEI’s six- and twelve-month growth rates remained negative at -0.6% and -1.5%, respectively. The advance was driven primarily by financial components, including equity prices and the interest rate spread, while consumer expectations continued to weigh on the index. The Chicago Fed National Activity Index fell to -0.10 in May from an upwardly revised 0.19 in April. Production-related and employment-related indicators each subtracted from the index, while the sales, orders, and inventories category made a small positive contribution.
Source: The Conference Board Source: Federal Reserve Bank of Chicago
LEADING INDICATORS OF ECONOMIC ACTIVITY
ATTACHMENT B
10 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 declined sharply in May to a seasonally adjusted annual rate of 1,177,000, a 15.4% drop from a downwardly revised 1,392,000 in April. The pullback was driven primarily by multifamily construction, while single-family starts edged down a more modest
1.9% to 882,000; total multifamily starts came in at 295,000 units. The S&P CoreLogic Case-Sh iller 20-City Composite rose 1.1% year over year in April, marking its first pickup since November 2025, following an upwardly revised 0.9% gain in March. Freddie Mac’s average 30- year fixed mortgage rate increased to 6.44% in May from 6.33% in April, reinforcing ongoing affordability constraints for prospective buyers.
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
ATTACHMENT B
11 40
45 50
55 60
65 70
Institute of Supply Management (ISM) Surveys
ISM Manufacturing ISM Services
EXPANDING
CONTRACTING
Manufacturing activity cooled slightly in June, with the Institute for Supply Management's Manufacturing Index easing to 53.3%, down 0.7 percentage point from May but still marking a sixth consecutive month of expansion. Services activity also moderated, as the ISM Services Index eased to 54.0% from 54.5%, a twenty-fourth consecutive month in expansion territory. Business activity and new orders both slowed, though the employment component jumped to 51.2% from 47.9%, its strongest reading since late 2021 and the first expansion in services hiring in four months.
Source: Institute for Supply Management
PURCHASING MANAGERS INDEX (PMI)
ATTACHMENT B
12 Components of GDP 6/25 9/25 12/25 3/26
1.7% 2.3% 1.3% 0.4%
-2.7% 0.0% 0.4% 1.4%
4.8% 1.6% -0.2% -0.4%
-0.4% 0.2% -1.2% 0.6%
0.3% 0.2% 0.2% 0.2%
3.8% 4.4% 0.5% 2.1%
Personal Consumption Expenditures
Gross Private Domestic Investment
Net Exports and Imports
Federal Government Expenditures
Total
State and Local (Consumption and Gross
Investment) -2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Gross Domestic Product (GDP)
GDP QOQ % Change
GDP YOY % Change
Source: US Department of Commerce Source: US Department of Commerce Real gross domestic product increased at an annualized rate of 2.1% in the first quarter of 2026, according to the Bureau of Economic Analysis’ third estimate, up from 1.6% in the prior estimate and an acceleration from 0.5% in the fourth quarter of 2025. The 0.5 percentage point upward revision was driven primarily by a downward revision to imports—which subtract from GDP—partly offset by a downward revision to consumer spending.
GROSS DOMESTIC PRODUCT (GDP)
ATTACHMENT B
13 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 Open Market Committee (FOMC) held the target range for the federal funds rate at 3.50% to 3.75% at its June 16–17 meeting, with a unanimous 12–0 vote. This marked a notable shift from the April meeting—Jerome Powell’s last as chair—which saw four dissents in an 8–4 decision. The return to consensus under Chair Kevin Warsh signals a clear change in tone. Minutes from the June meeting are scheduled for release in early July. The June Summary of Economic Projections reflected a more hawkish outlook. The median projection for the federal funds rate at year-end 2026 rose to 3.8%, up from 3.4% in March, before easing to 3.6% in 2027 and 3.4% in 2028. Officials also revised their inflation forecasts, with headline PCE projected at 3.6% in 2026 (from 2.7%) and core PCE at 3.3%. By contrast, median projections for real GDP growth and the unemployment rate—2.2% and 4.3%, respectively—were little changed.
FEDERAL RESERVE
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Effective Federal Funds Rate
Recession
Yield (%)
ATTACHMENT B
14 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 (%)
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
US T reasury Yield Curve
Jun-26
Mar-26
Jun-25
Yield (%)
Treasury yields ended June mixed, with a modest flattening across the curve as markets digested a more hawkish Federal Reserve signal.
The 2-year yield rose to 4.15% from 3.98% at the end of May, while the 10-year yield edged down to 4.44% from 4.45%. The 2s/10s spread narrowed to 29 basis points, down from 47 basis points a month earlier. The 3-month/10-year spread remained positive at roughly 64 basis points at month-end. Relative to the 69 basis point spread at the start of 2026, the curve has flattened materially year to date, reflecting a repricing higher in front-end rates as expectations shift toward the possibility of further Fed tightening rather than easing.
BOND YIELDS
ATTACHMENT B
15 ACCOUNT PROFILE
ATTACHMENT B
16 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.
ATTACHMENT B
17 STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Rules Name Limit Actual Compliance
Status Notes
AGENCY MORTGAGE SECURITIES
Max % Issuer (MV) 30.0 0.7 Compliant
Max Maturity (Years) 10.0 2.6 Compliant
ASSET-BACKED SECURITIES (ABS)
Max % (MV; ABS & MBS) 20.0 3.8 Compliant
Max % Issuer (MV) 5.0 0.7 Compliant
Max Maturity (Years) 5.0 4.6 Compliant
Min Rating (AA- by 1) 0.0 0.0 Compliant
BANKERS' ACCEPTANCES
Max % (MV) 40.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Days) 180.0 0.0 Compliant
COLLATERALIZED BANK DEPOSITS
Max % (MV) 100.0 0.0 Compliant
COLLATERALIZED TIME DEPOSITS (NON-
NEGOTIABLE CD/TD)
Max % (MV; FDIC & Collateralized CD/TD) 20.0 0.0 Compliant Max % Issuer (MV) 10.0 0.0 Compliant
Min Rating (A-1 by 1; A- by 1 if > FDIC Limit) 0.0 0.0 Compliant
COMMERCIAL PAPER
Max % (MV) 40.0 0.0 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Days) 397.0 0.0 Compliant
Min Rating (A-1 by 1 or A- by 1) 0.0 0.0 Compliant
CORPORATE MEDIUM TERM NOTES
Max % (MV) 30.0 9.0 Compliant
Max % Issuer (MV) 5.0 0.7 Compliant
Max Maturity (Years) 5.0 4.9 Compliant
Min Rating (A- by 1) 0.0 0.0 Compliant
ATTACHMENT B
18 STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Rules Name Limit Actual Compliance
Status Notes
FDIC INSURED TIME DEPOSITS (NON-NEGOTIABLE
CD/TD)
Max % (MV; FDIC & Collateralized CD/TD) 20.0 0.0 Compliant Max % Issuer (MV) 10.0 0.0 Compliant
Min Rating (A-1 by 1; A- by 1) 0.0 0.0 Compliant
FEDERAL AGENCIES
Max % (MV) 100.0 16.4 Compliant
Max % Issuer (MV) 30.0 5.5 Compliant
Max Callables (MV) 20.0 12.1 Compliant
Max Maturity (Years) 10.0 8.7 Compliant
GENERAL INVESTMENT GUIDELINES
Max % 5-10 Years Maturities (MV) 30.0 9.0 Compliant
Max Maturity (Years) 10.0 8.7 Compliant
LOCAL AGENCY INVESTMENT FUND (LAIF)
Max Concentration (MV) 75.0 43.0 Compliant
LOCAL GOVERNMENT INVESTMENT POOL (LGIP)
Max % (MV) 20.0 0.0 Compliant
MONEY MARKET MUTUAL FUNDS
Max % (MV) 20.0 0.3 Compliant
Max % Issuer (MV) 20.0 0.3 Compliant
Min Rating (AAA by 2) 0.0 0.0 Compliant
MORTGAGE -BACKED SECURITIES (NON-AGENCY)
Max % (MV; ABS & MBS) 20.0 3.8 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5.0 0.0 Compliant
Min Rating (AA- by 1) 0.0 0.0 Compliant
MUNICIPAL SECURITIES
Max % (MV) 30.0 0.0 Compliant
Max % Issuer (MV) 5.0 1.1 Compliant
Max Maturity (Years) 10.0 8.5 Compliant
ATTACHMENT B
19 STATEMENT OF COMPLIANCE
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Rules Name Limit Actual Compliance
Status Notes
Min Rating (A- by 1) 0.0 0.0 Compliant
NEGOTIABLE CERTIFICATES OF DEPOSIT (NCD)
Max % (MV) 30.0 0.3 Compliant
Max % Issuer (MV) 5.0 0.0 Compliant
Max Maturity (Years) 5.0 3.8 Compliant
Min Rating (A-1 by 1 or A- by 1 if > FDIC Limit) 0.0 0.0 Compliant
REPURCHASE AGREEMENTS
Max Maturity (Years) 1.0 0.0 Compliant
SRI PROHIBITED INVESTMENTS
Prohibited Investment - Fossil Fuels 0.0 0.0 Compliant
Prohibited Investments - Firearms 0.0 0.0 Compliant
Prohibited Investments - Tobacco 0.0 0.0 Compliant
SUPRANATIONAL OBLIGATIONS
Max % (MV) 30.0 5.9 Compliant
Max % Issuer (MV) 10.0 3.7 Compliant
Max Maturity (Years) 5.0 3.7 Compliant
Min Rating (AA- by 1) 0.0 0.0 Compliant
U.S. TREASURIES
Max % (MV) 100.0 11.7 Compliant
Max Maturity (Years) 10.0 4.4 Compliant
ATTACHMENT B
20 PORTFOLIO CHARACTERISTICS
Palo Alto Managed Acct | Account #11463 | As of June 30, 2026 Benchmark* 6/30/2026
Portfolio
3/31/2026
Portfolio
Average Maturity (yrs) 2.64 2.95 2.99
Average Modified Duration 2.46 2.54 2.63
Average Purchase Yield 3.17% 3.04%
Average Market Yield 4.16% 4.32% 4.06%
Average Quality** AA+ AA+ AA+
Total Market Value 528,545,305 526,367,008
*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.
ATTACHMENT B
21 SECTOR DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of June 30, 2026 Sector as a Percentage of Market Value
Sector 06/30/2026 03/31/2026
Muni Bonds 36.07% 39.41%
Agency 20.93% 21.36%
US Treasury 14.91% 14.55%
Corporate 11.38% 9.78%
Supras 7.45% 9.42%
ABS 4.88% 0.69%
CD 2.65% 2.71%
Agency CMBS 0.91% 0.92%
Money Mkt Fd 0.43% 0.69%
Neg CD 0.38% 0.47%
ATTACHMENT B
22 QUALITY DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of June 30, 2026 S&P Rating Moody’s Rating Fitch Rating
Rating 06/30/2026 03/31/2026
AAA 20.04% 19.12%
AA 54.54% 63.49%
A 4.93% 3.77%
BBB 0.19% 0.19%
A-1+ 2.35% 1.89%
NA 17.90% 11.48%
B 0.05% 0.05%
Rating 06/30/2026 03/31/2026
Aaa 20.77% 20.84%
Aa 53.46% 61.99%
A 4.97% 3.82%
P-1 2.35% 1.89%
NA 18.45% 11.45%
Rating 06/30/2026 03/31/2026
AAA 12.04% 10.04%
AA 37.71% 45.55%
A 2.28% 1.55%
BBB -- 0.05%
F1+ 2.35% 1.89%
NA 45.62% 40.91%
ATTACHMENT B
23 DURATION DISTRIBUTION
Palo Alto Managed Acct | Account #11463 | As of June 30, 2026 Portfolio Compared to the Benchmark
0-.25 .25-.5 .5-1 1-2 2-3 3-4 4-5 5-7 7+
Portfolio 11.8% 3.0% 8.6% 20.4% 15.6% 17.5% 14.9% 7.6% 0.5% ICE BofA 1-5 Year Unsubordinated US Treasury &
Agency Index 0.0% 0.0% 2.5% 36.2% 28.4% 20.6% 12.3% 0.0% 0.0%
ATTACHMENT B
24 INVESTMENT PERFORMANCE
Palo Alto Managed Acct | Account #11463 | As of June 30, 2026 Total Rate of Return: Inception | 09/01/2025
TOTAL RATE OF RETURN* 3 Months 12 Months 2 Years 3 Years 5 Years 10 Years Since Inception Palo Alto Managed Acct 0.41%
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.
Benchmark: ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index
ATTACHMENT B
25 PORTFOLIO CHARACTERISTICS
City of Palo Alto Reporting | Account #11464 | As of June 30, 2026 6/30/2026
Portfolio
3/31/2026
Portfolio
Average Maturity (yrs) 0.00 0.00
Average Modified Duration 0.00 0.00
Average Purchase Yield 2.33% 1.95%
Average Market Yield 2.33% 1.95%
Average Quality** AAA AAA
Total Market Value 142,610,088 145,024,434
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch.
ATTACHMENT B
26 SECTOR DISTRIBUTION
City of Palo Alto Reporting | Account #11464 | As of June 30, 2026 Sector as a Percentage of Market Value
Sector 06/30/2026 03/31/2026
Cash 69.85% 63.78%
LAIF 30.15% 36.22%
ATTACHMENT B
27 CONSOLIDATED INFORMATION
ATTACHMENT B
28 PORTFOLIO CHARACTERISTICS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 6/30/2026
Portfolio
3/31/2026
Portfolio
Average Maturity (yrs) 2.32 2.34
Average Modified Duration 2.00 2.06
Average Purchase Yield 2.99% 2.81%
Average Market Yield 3.90% 3.60%
Average Quality** AA+ AA+
Total Market Value 671,155,393 671,391,442
*Benchmark: NO BENCHMARK REQUIRED
**The credit quality is a weighted average calculation of the highest of S&P, Moody’s and Fitch.
ATTACHMENT B
29 SECTOR DISTRIBUTION
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Sector as a Percentage of Market Value
Sector 06/30/2026 03/31/2026
Muni Bonds 28.36% 30.85%
Agency 16.46% 16.72%
Cash 14.94% 13.86%
US Treasury 11.72% 11.39%
Corporate 8.95% 7.66%
LAIF 6.45% 7.86%
Supras 5.86% 7.37%
ABS 3.84% 0.54%
CD 2.08% 2.12%
Agency CMBS 0.71% 0.72%
Money Mkt Fd 0.34% 0.54%
Neg CD 0.30% 0.37%
ATTACHMENT B
30 ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Issuer Investment Type % Portfolio
United States US Treasury 11.72%
US Bank Cash 8.55%
LAIF LAIF 6.45%
Fidelity Cash 5.88%
Federal Home Loan Banks Agency 5.47%
Federal Agricultural Mortgage Corp Agency 5.00%
International Bank for Recon and Dev Supras 3.71%
Farm Credit System Agency 2.92%
Federal Home Loan Mortgage Corp Agency 2.61%
Inter-American Development Bank Supras 1.70%
State of Hawaii Muni Bonds 1.09%
City of Oakland, California Muni Bonds 0.99%
San Francisco California City & Coun Muni Bonds 0.87%
State of Georgia Muni Bonds 0.86%
Commonwealth of Massachusetts Muni Bonds 0.83%
San Francisco City & County of Muni Bonds 0.77%
City of Los Angeles, California Muni Bonds 0.76%
Santa Monica Community College Distr Muni Bonds 0.76%
State of Oregon Muni Bonds 0.76%
Stanford University Corporate 0.73%
Federal Home Loan Mortgage Corp Agency CMBS 0.71%
Los Angeles Community College Distri Muni Bonds 0.70%
Alphabet Inc. Corporate 0.70%
Hyundai Auto Lease Sec Trust ABS 0.66%
San Bernardino Community College Dis Muni Bonds 0.64%
Solano California Community College Muni Bonds 0.62%
Apple Inc. Corporate 0.62%
Honda Auto Receivables Owner Trust ABS 0.58%
Toyota Motor Corporation Corporate 0.58%
Mercedes-Benz Auto Receivables Trust ABS 0.56%
ATTACHMENT B
31 ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Issuer Investment Type % Portfolio
Andrew W. Mellon Foundation, The Corporate 0.56%
Contra Costa Community College Dist Muni Bonds 0.56%
San Mateo Union High School District Muni Bonds 0.56%
Marin California Community College D Muni Bonds 0.55%
BMW Vehicle Lease Trust ABS 0.50%
Palo Alto Unified School District Muni Bonds 0.50%
San Diego Unified School District Muni Bonds 0.47%
Federal National Mortgage Assoc Agency 0.46%
The University of Chicago Corporate 0.46%
International Finance Corporation Supras 0.45%
County of Alameda, California Muni Bonds 0.44%
Hyundai Motor Company ABS 0.44%
Ohlone Community College District Muni Bonds 0.44%
State of Mississippi Muni Bonds 0.43%
Wells Fargo & Company Cash 0.43%
City of Manhattan Beach, California Muni Bonds 0.42%
Amazon.com, Inc. Corporate 0.41%
San Diego Community College District Muni Bonds 0.40%
City of Corona Muni Bonds 0.40%
State of New York Muni Bonds 0.38%
U.S. Bancorp Corporate 0.38%
Morgan Stanley Corporate 0.38%
Deere & Company Corporate 0.38%
Qualcomm Incorporated Corporate 0.37%
Northwestern Mutual Global Funding Corporate 0.37%
JPMorgan Chase & Co. Corporate 0.37%
Eli Lilly and Company Corporate 0.37%
Meta Platforms, Inc. Corporate 0.37%
New York Life Insurance Company Corporate 0.37%
Guardian Life Global Funding Corporate 0.37%
ATTACHMENT B
32 ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Issuer Investment Type % Portfolio
Simon Property Group, Inc. Corporate 0.37%
Santa Clara VY California Water Dist Muni Bonds 0.36%
Bank of America Corporation Corporate 0.35%
San Ramon Valley Unified School Dist Muni Bonds 0.34%
First American Govt Oblig Fund Money Mkt Fd 0.34%
Santa Monica-Malibu Unified School D Muni Bonds 0.33%
Texas Public Finance Authority Muni Bonds 0.32%
Redwood City School District Muni Bonds 0.31%
State of Rhode Island Muni Bonds 0.30%
Riverside Community College District Muni Bonds 0.30%
City of Fairfield, California Muni Bonds 0.30%
Cabrillo California Cmmnty College Muni Bonds 0.29%
San Jose Unified School District Muni Bonds 0.29%
Los Angeles Department of Water and Muni Bonds 0.29%
Toyota Auto Receivables Owner Trust ABS 0.29%
Microsoft Corporation Corporate 0.28%
T-Mobile Us Trust 2026-1 ABS 0.28%
City of Santa Ana, California Muni Bonds 0.27%
John Deere Owner Trust ABS 0.26%
GM Financial Auto Leasing Trust ABS 0.26%
City of Glendora, California Muni Bonds 0.25%
Antelope Valley Cmnty College Dist Muni Bonds 0.24%
Yosemite Community California Colleg Muni Bonds 0.22%
Glendale California Unified School D Muni Bonds 0.22%
San Diego County Water Authority Muni Bonds 0.21%
State of Colorado Muni Bonds 0.21%
Fullerton School District, Californi Muni Bonds 0.20%
South Pasadena Unified School Distri Muni Bonds 0.20%
Palomar California Community College Muni Bonds 0.20%
The Regents of the University of Cal Muni Bonds 0.20%
ATTACHMENT B
33 ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Issuer Investment Type % Portfolio
City of Chula Vista, California Muni Bonds 0.20%
Redondo Beach California Unified Sch Muni Bonds 0.20%
City of Covina Muni Bonds 0.20%
Tustin Unified School District Schoo Muni Bonds 0.19%
San Dieguito Union High School Distr Muni Bonds 0.19%
Calleguas California Municipal Water Muni Bonds 0.19%
Minnesota Housing Finance Agency Muni Bonds 0.19%
Santa Clarita California Community C Muni Bonds 0.19%
State of Texas Muni Bonds 0.18%
Sequoia Union High School District Muni Bonds 0.18%
Salesforce, Inc. Corporate 0.17%
Mountain View Whisman School Distric Muni Bonds 0.17%
Desert Community College District Muni Bonds 0.16%
Maryland Dep of Housing & Com Muni Bonds 0.16%
San Jose Evergreen California Commun Muni Bonds 0.16%
State of Tennessee Muni Bonds 0.15%
Burbank California City Unified SD Muni Bonds 0.15%
State of Alabama Muni Bonds 0.15%
Sierra Joint Community College Distr Muni Bonds 0.15%
Menlo Park California City School Di Muni Bonds 0.15%
The New York State Urban Development Muni Bonds 0.15%
Santa Cruz Metropolitan Transit Dist Muni Bonds 0.15%
Mount San Antonio California Communi Muni Bonds 0.14%
Los Angeles County California Public Muni Bonds 0.14%
City of La Habra, California Muni Bonds 0.14%
Beverly Hills Unified School Dist Muni Bonds 0.14%
Placentia-Yorba Linda California Uni Muni Bonds 0.13%
Desert Sands Unified School District Muni Bonds 0.13%
City of El Segundo Muni Bonds 0.13%
San Francisco Bay Area Rapid Transit Muni Bonds 0.12%
ATTACHMENT B
34 ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Issuer Investment Type % Portfolio
California Dep of Water Resources Muni Bonds 0.11%
Huntington Beach CA Pub Fin Auth Muni Bonds 0.11%
California Infrastructure & Economic Muni Bonds 0.10%
Auburn California Muni Bonds 0.10%
Rancho Santiago Community College Di Muni Bonds 0.09%
City of Buena Park, California Muni Bonds 0.09%
Rancho Water District Financing Auth Muni Bonds 0.09%
City of Ontario, California Muni Bonds 0.09%
Milpitas Unified School District Muni Bonds 0.09%
San Mateo-Foster City School Distric Muni Bonds 0.09%
Temecula Valley Unified School Distr Muni Bonds 0.09%
Pasadena Public Financing Authority, Muni Bonds 0.08%
Cash Cash 0.08%
San Juan Unified School District Muni Bonds 0.08%
Santa Clara County Muni Bonds 0.08%
State of Ohio Muni Bonds 0.08%
Liberty Union High School District Muni Bonds 0.07%
Oxnard Union High School District Muni Bonds 0.07%
Chabot-Las Positas Community College Muni Bonds 0.07%
City of Monterey Park, California Muni Bonds 0.07%
Beverly Hills Cali Public Finance Muni Bonds 0.07%
Tracy Joint Unified School District Muni Bonds 0.07%
Campbell California Union HS Muni Bonds 0.07%
Santa Maria Joint Union High School Muni Bonds 0.07%
Santa Barbara Unified School Distric Muni Bonds 0.07%
Roseville California Finance Authori Muni Bonds 0.06%
Torrance California Joint Powers Fin Muni Bonds 0.06%
San Jose, California Muni Bonds 0.05%
City of San Ramon, California Muni Bonds 0.05%
Carlsbad Unified School District Muni Bonds 0.05%
ATTACHMENT B
35 ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Issuer Investment Type % Portfolio
Chaffey Community College District Muni Bonds 0.04%
Santa Cruz County Capital Financing Muni Bonds 0.04%
Sunnyvale School District, Californi Muni Bonds 0.04%
Ledyard National Bank CD 0.04%
Alliant Credit Union CD 0.04%
Global Federal Credit Union CD 0.04%
American Express Company Neg CD 0.04%
The Peoples Bank Co. CD 0.04%
Austin Telco Federal Credit Union CD 0.04%
First Southwest Bank CD 0.04%
The Bippus State Bank CD 0.04%
CNB Bank, Inc. CD 0.04%
Baxter Credit Union CD 0.04%
UBS Bank USA, National Association Neg CD 0.04%
Capital Funding Bancorp, Inc. CD 0.04%
General Electric Credit Union CD 0.04%
Morgan Stanley Neg CD 0.04%
Signature Federal Credit Union CD 0.04%
First Guaranty Bancshares, Inc. CD 0.04%
County Schools Federal Credit Union CD 0.04%
SPCO Credit Union CD 0.04%
The Pitney Bowes Bank Inc. CD 0.04%
Workers Federal Credit Union CD 0.04%
First Technology Federal Credit Unio CD 0.04%
Truist Bank Neg CD 0.04%
Healthcare Systems Fed Credit Union CD 0.04%
Diversified Members Credit Union CD 0.04%
Enterprise Bank CD 0.04%
Mutual Savings Association CD 0.04%
Public Service Credit Union CD 0.04%
ATTACHMENT B
36 ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Issuer Investment Type % Portfolio
Amazon.com, Inc. CD 0.04%
Eaglemark Savings Bank CD 0.04%
Ally Bank Neg CD 0.04%
Toyota Financial Savings Bank Neg CD 0.04%
GreenState Credit Union CD 0.04%
Instit for Savings in Newburyport CD 0.04%
Southern Bank CD 0.04%
Synchrony Bank CD 0.04%
Pentagon Federal Credit Union CD 0.04%
Coöperatieve Rabobank U.A. NY CD 0.04%
Ponce Bank, National Association CD 0.04%
County of Riverside, California Muni Bonds 0.04%
Capital One Financial Corporation Neg CD 0.04%
Beal Financial Corporation CD 0.04%
Monet Bank CD 0.04%
Connexus Credit Union CD 0.04%
Decorah Bank and Trust Company CD 0.04%
Delta National Bank and Trust Comp CD 0.04%
First Oklahoma Bank CD 0.04%
First National Bank of America CD 0.04%
First Community Credit Union of Belo CD 0.04%
BankFirst CD 0.04%
Cinfed Federal Credit Union CD 0.04%
Encore Bank CD 0.04%
Kennett Trust Bank CD 0.04%
Live Oak Banking Company CD 0.04%
Silicon Valley Clean Water Muni Bonds 0.04%
Gesa Credit Union CD 0.04%
Jonesboro State Bank CD 0.04%
Sunwest Bank CD 0.04%
ATTACHMENT B
37 ISSUERS
City of Palo Alto Consolidated | Account #11465 | As of June 30, 2026 Issuer Investment Type % Portfolio
Bank of Montreal Neg CD 0.03%
Minnwest Bank CD 0.03%
Legacy Bank & Trust Company CD 0.03%
Farmers and Merchants State Bank CD 0.03%
The Farmers & Merchants Bank CD 0.03%
Central Bank CD 0.03%
Country Club Bank CD 0.03%
Berkeley California Unified SD Muni Bonds 0.03%
Peoples Bank CD 0.03%
Pony Express Bank CD 0.03%
USF Federal Credit Union CD 0.03%
Fremont Union High School District Muni Bonds 0.03%
City of Downey Muni Bonds 0.02%
Sonoma County California Junior Coll Muni Bonds 0.02%
Orchard California School District Muni Bonds 0.01%
TOTAL 100.00%
ATTACHMENT B
38 IMPORTANT DISCLOSURES
2026 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.
LGIP Yields: Reported yields for local government investment pools may be presented as either the 30-day yield or the monthly distribution yield, as applicable. For certain funds, the 30-day yield is calculated using reported daily yield data. Yield calculations are subject to change and may not be directly comparable across funds.
LAIF Yields: Additional Disclosure for CA Clients - As a result of a reporting lag from the Local Agency Investment Fund (LAIF), reported LAIF yields represent the most recently available Daily Effective Yield and may reflect data from approximately 7–10 days prior to month-end.
ATTACHMENT B
39 BENCHMARK DISCLOSURES
Benchmark Disclosure
ICE BofA 1-5 Yr Unsubordinated US
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. Qualifyi ng 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 l ess 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.
ATTACHMENT B
40