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HomeMy WebLinkAboutCC Resolution 13334 - Approving the Annual Update to the Investment Policy for Fiscal Year 2025-26RESOLUTION NO. 13334 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CAMPBELL APPROVING THE ANNUAL UPDATE TO THE INVESTMENT POLICY FOR FISCAL YEAR (FY) 2025-26 WHEREAS, Government Code Section 53646(a)(2) recommends that a statement of Investment Policy be submitted to the City's legislative body annually for its consideration at a public meeting; and WHEREAS, there has been submitted to the City Council a statement of the City's Investment Policy; and WHEREAS, the Policy and any changes recommended by staff and the Finance Sub - Committee have been reviewed by the City Council and it has been determined that the Fiscal Year (FY) 2025-26 Investment Policy as recommended is acceptable. NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Campbell that the FY 2025-26 Investment Policy is hereby approved as submitted. PASSED AND ADOPTED this 16th day of September 2025, by the following roll call vote: AYES: Councilmembers: Bybee, Hines, Scozzola, Furtado, Lopez NOES: Councilmembers: None ABSENT: Councilmembers: None APPROVED: Sergio Lopez Mayor ATTEST: Andrea S ers, City Clerk [IIT,I:lILT, [01 kiIBill ►yi To: Finance Sub -Committee From: Will Fuentes, Finance Director Subject: Investment Strategy for FY 2025-26 BACKGROUND CITY OF CAMPBELL Finance Department Date: August 18, 2025 The Investment Policy establishes procedures and guidelines by which the City's surplus funds can be managed in a prudent and fiscally sound manner. The policy encompasses those funds over which the City exercises fiscal control and prioritizes the objectives of public funds management as safety, liquidity and yield, in that order and consistent with guidance provided by the Government Finance Officers Association (GFOA). It also stipulates allowable and unallowable investment alternatives as well as establishes parameters for selecting broker/dealers and institutions with which the City may do business. California Government Code Section 53646 (a) (2) recommends that on an annual basis, the City Investment Policy be submitted to its legislative body and any oversight committee for consideration at a public meeting. The Finance Sub -Committee is the oversight committee responsible for review of the Investment Policy. In addition to review of any proposed revisions to the Investment Policy, staff and the City's investment advisors (Chandler) have prepared a report summarizing the economic conditions for the quarter ending June 30, 2025, the City's portfolio performance over the same period, and the recommended Investment Strategy for managing the City's available invested funds in FY 2025-26. INVESTMENT OBJECTIVES AND OVERVIEW The City's policy is to invest public funds in a prudent manner, provide for maximum security while meeting daily cash flow needs and comply with applicable statutes. Chief among the objectives outlined in the Investment Policy are safety, liquidity and return, in that specific order and again consistent with GFOA guidance. Within this framework, a number of investment choices are provided to allow flexibility in meeting these objectives. The City and its investment advisors continue to take a conservative approach with its investments and that is reflected in the currently recommended investment policy. As a means to implement the policy, it is important to develop a strategy for achieving the stated objectives. Likewise, the strategy should be reviewed periodically to determine whether it needs to be modified in light of changing economic and financial conditions. This document will serve as the City's investment strategy for the current fiscal year (FY 2025- 26) and will be reviewed annually in conjunction with the review of the City's Investment Policy or sooner if conditions warrant. Investment Strategy FY 2025-26 Page 2 SUMMARY OF CURRENT STRATEGY AND RECOMMENDATIONS As the Finance Sub -Committee may recall, the City went through a competitive RFP process in FY 2023-24 and selected Chandler Asset Management to assist with the investment of City funds. As part of the agreement with Chandler which largely went into effect July 1, 2024, City staff continues to manage liquid funds to meet near -term expenditures and Chandler manages longer -term funds not needed for immediate use. Chandler though also provides expertise and support to City staff as needed regarding the optimal investment of near -term liquid funds. In regard to Investment Strategy for FY 2025-26, Chandler and City staff continue to recommend the use of the ICE Bank of America Merrill Lynch 1-5 Year US Treasury and Agency Index as the target benchmark to invest funds and to evaluate Chandler's performance against. Chandler will invest funds in accordance with the City's Investment Policy, and based on market conditions, seek to maximize return in comparison to the selected benchmark while also prioritizing safety and liquidity. Table 1 below provides of summary of City Investments by institution as of June 30, 2025 as shown in the Quarterly Investment Report provided to City Council on August 4, 2025: Table 1— City Investments by Institution as of June 30, 2025: Institution Market Value Rate of Return QTR Rate of Return ANNUAL Benchmark QTR LAIF Main Acct $29,653,140 4.274% 4.411% N/A LAIF Meas O 13,542,583 4.274% 4.430% N/A CAMP 7,606,427 4.423% 4.430% N/A BNY / Chandler 20,678,661 4.040% 4.235% 3.780% BNY / LRB TARB 2,229 N/A N/A N/A TOTAL $71,483,040 As shown above, the City maintains good liquidity in its Local Agency Investment Fund (LAIF) accounts and its California Asset Management Program (CAMP) accounts. Both are short-term investment tools and provide the City with $50.8 million of liquidity. And when soon to be spent down Measure O funds of $13.5 million are excluded, the City has remaining regular liquidity of $37.3 million for ongoing operational needs. As in the past, staff continues to recommend that the City maintain sufficient liquidity to cover daily operating cash flows for a minimum of 3 months to provide a reasonable cushion for fluctuations in the portfolio balance and for unforeseen emergencies. Average monthly disbursements over the last fiscal year (FY 2024-25), exclusive of Measure O expenditures were approximately $8.4 million. Therefore, staff recommends retaining a liquidity target of $25.2 million (3 months) in the Local Agency Investment Fund (LAIF), the California Asset Management Program (CAMP), or a similar secure, stable, and liquid pooled investment Investment Strategy FY 2025-26 Page 3 funds as allowed by the City's Investment Policy. At the current amount of $37.3 million as previously stated, the City is currently $12.1 million over its liquidity target. As such, staff will look to contribute additional funds into the City's Chandler managed portfolio as appropriate investment optionsbecome available. While Chandler is currently earning slightly less than both LAIF and CAMP as shown in Table 1, the investment returns it provides are locked in for a longer term of up to 5 years and are beating the performance benchmark agreed to. The Chandler account also provides the City with diversification, safety, consistent returns, and a hedge against LAIF and CAMP once short-term interest rates return to normal levels once again. While LAIF and CAMO interest rates have been elevated for several years, given historical trends, they will likely drop and fall below the rates earned by Chandler. LAIF and CAMP typically hover in the 1 % to 2% range long-term. ECONOMIC UPDATE AND OUTLOOOK Shown as Attachment A, Chandler has prepared a comprehensive Economic Update for the quarter ending June 30, 2025 which covers .the following topics on a national level: • Significant Economic Highlights • Employment • Job Openings & Labor Turnover • Inflation • Consumer Spending and Confidence • Leading Economic Indicators • Housing • Manufacturing • Gross Domestic Product (GDP) • Federal Reserve • Bond Yields Additionally, as it relates to employment in California, the state gained 6,100 nonfarm payroll jobs in June 2025. Statewide unemployment was 5.4% in June 2025; up slightly from 5.3% in both May 2025 and June 2024. In Santa Clara County, the unemployment rate was 4.6% in June 2025; up from 3.8% in May 2025 and 4.3% in June 2024. And in Campbell, the unemployment rate was 4.6% in June 2025; up from 3.8% in May 2025 and 4.4% in June 2024. At its pandemic high point in April 2020, the Campbell unemployment rate reached 11.2%. RECOMMENDATION It is recommended that the Finance sub -Committee approve the proposed strategy for FY 2025-26. Distribution: Sergio Lopez, Mayor Terry Hines, Council Member Brian Loventhal, City Manager U,.4.Oe.C44% City of Campbell, California 0 0 `�•�RCHAB� `� Investment Policy Date: September 16, 2025 I. PURPOSE It is the policy of the City of Campbell to invest public funds in a prudent manner which conforms to all statutes governing the investment of public funds while providing security and meeting the daily cash flow needs of the City. The purpose of this document is to identify the policies guiding prudent investment of the City's temporarily idle funds and to establish guidelines and objectives for suitable investments including delegation of authority, prudence, monitoring and reporting, policy review, diversification, eligible securities, safekeeping, co[lateral ization, selection of financial institutions and broker/dealers, glossary of terms, and forms utilized. II. SCOPE A. This investment policy shall apply to all financial assets, investment activities, and debt issues (excluding those debt issues subject to governing documents) of the City of Campbell including the following fund types: 1. General Fund 2. Special Revenue Funds 3. Debt Service Funds 4. Capital Projects Funds 5. Internal Service Funds 6. Trust and Agency Funds B. The policy does not cover funds held by the Public Employees Retirement System nor funds of the Deferred Compensation program. III. OBJECTIVES A. It is the objective of this policy to provide a system which will monitor and forecast revenues and expenditures so that the City can invest temporarily idle funds to the fullest extent possible. The temporarily idle funds shall be invested in accordance with provisions of California Government Code Section 53600 et. seq. B. The City adheres to conservative investment philosophies including investment of all idle cash, preservation of principal at the risk of yield, maintenance of adequate liquidity to meet anticipated cash flow needs and diversification to avoid the risks inherent in over investing in any one asset class. C. This policy specifically prohibits trading securities for the sole purpose of speculating on the future direction of interest rates. It further prohibits reverse repurchase agreements, use of derivative products, and/or leveraging of the portfolio. D. The City shall ensure the safety of invested funds by limiting credit and interest rate risks. The three primary objectives of the City's Investment Policy in order of priority are: °""'sec City of Campbell, California O O �RcppR�4` Investment Policy Date: September 16, 2025 Safety: Safety of principal is the foremost objective of the City of Campbell. Safety and the minimizing of risk associated with investing refer to attempts to reduce the potential for loss of principal, interest or a combination of the two. The City ensures safety of its invested idle funds and limits credit and interest rate risks by following these guidelines (all of which are detailed within the body of the Investment Policy): a. Investing only in those instruments that are generally accepted as safe investment vehicles for local government as authorized by this Policy, b. Carefully reviewing the qualifications and financial strength of financial institutions and broker/dealers prior to conducting business with them, c. Diversifying the investment portfolio as prescribed within this Policy, d. Structuring the portfolio such that securities mature to meet the City's cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to their maturation, e. Limiting the final maturity of purchased securities to five years. The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City's investment objectives, constraints, and risk tolerances, and f. Ensuring the physical security or safekeeping of the City's investments. 2. Liquidity: Liquidity is the second most important objective of the City's Policy. Liquidity refers to the ability to convert an investment to cash promptly without loss of principal and minimal loss of interest. For example, this is accomplished by maintaining sufficient balances in liquid investment products, such as the Local Agency Investment Fund (LAIF) or other local government investment pools which offer same day availability, or by investing in securities with active secondary or resale markets. Return: Return on the City's portfolio is last in rank among investment objectives. Investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. IV. STRUCTURE AND RESPONSIBILITY A. DELEGATION OF AUTHORITY: The City Council assumes direction over the City's investments, and assigns management responsibility for the investment program to the Finance Director, who shall serve as Chief Fiscal Officer, and have legal custody of funds. The Finance Director may provide for delegation of his/her responsibilities to other 2 U�•°F�c City of Campbell, California 0 0 "A&o• Mvestment Policy Date: September 16, 2025 persons under his/her control responsible for investment transactions, including the delegation of certain portions of the investment portfolio to one or more external and qualified investment advisers or such other designee approved by the Finance Sub -Committee. External investment advisors who are engaged b by the City shall be registered under the Investment Advisers Act of 1940 and shall assist in the management of the City's investment portfolio in a manner consistent with the City's objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy. B. POLICY REVIEW: This Investment Policy shall be reviewed and approved annually as recommended by California Government Code Section 53600 et. seq. C. RESPONSIBILITIES: Responsibilities of the City Council: The City Council consists of a Mayor and four Council members and is the policy setting board for the City of Campbell. The City Council has considered and adopted a written Investment Policy for the City of Campbell. Pursuant to the City's Financial Policies, the City Council shall on an annual basis, approve necessary changes to the Investment Policy as recommended by the Finance Sub -Committee. On a quarterly basis, the City Council -shall receive, review and accept the Quarterly Investment Report submitted by the Finance Department. 2. Responsibilities of the Finance Sub -Committee: The Finance Sub - Committee consists of two Council members, the City Manager, the Finance Director, and the Assistant Finance Director. On an annual basis, this Sub - Committee shall review necessary revisions to the established Investment Policy of the City of Campbell and make a recommendation to the City Council accordingly. No less than once per fiscal year, the City's investment strategy will be reviewed by the Finance Sub -Committee. A summary of the investment strategy will be shared with the City Council at that time. Should market activity encourage revisions in the City's strategy, the Finance Sub -Committee shall be advised accordingly. 3. Responsibilities :of the City Manager: The City Manager is responsible for directing and supervising the Finance Director. He/she has the responsibility of keeping the City Council fully advised as to the financial condition of the City. a. Wire Transfer Authority: The- City Manager has unlimited wire transfer authority for a single transaction. Such a transaction requires joint review, approval and verification in advance by the City Manager and Finance Director. The transaction shall be highlighted in the Quarterly Investment Report to Council. 4. Responsibilities of the Finance Director: The Finance Director is appointed by the City Manager and serves as Chief Fiscal Officer. He/she is subject to the direction and supervision of the City Manager. The Finance Director is charged with the responsibility for the conduct of all Finance Department functions including the custody and investment of City funds, and investment of those funds in accordance with principles of sound treasury management and in accordance with applicable laws and policies. Refer to "Delegation of Authority" for additional information pertaining to delegation of investment responsibilities. 3 City of Campbell, California O O Investment Policy Date: September 16, 2025 • HRCHA$� a. Wire Transfer Authority: The Finance Director has wire transfer authority not to exceed $5,000,000 for a single transaction. Such a transaction shall be reviewed, approved and verified in advance by the City Manager. The transaction shall be highlighted in the Quarterly Investment Report to Council. 5. Responsibilities of the Assistant Finance Director: The Assistant Finance Director is appointed by the Finance Director and serves as the Investment Manager for the City pursuant to specific delegation authority provided by this Investment Policy. He/she is subject to the direction and supervision of the Finance Director and is charged with the responsibility and conduct of the day- to-day accounting and cash management functions of the City. This includes the custody and investment of City funds, and investment of those funds in accordance with principles of sound treasury management and in accordance with applicable laws and policies. Refer to "Delegation of Authority" for additional information pertaining to delegation of investment responsibilities. Implementation and maintenance of the Investment Policy are the responsibility of this individual. On an annual basis, the Assistant Finance Director shall present to the Finance Sub -Committee, recommended changes to the City's Investment Policy. On a quarterly basis, the Assistant Finance Director shall present to the City Council, via the City Manager, a Quarterly Investment Report. Refer to "Monitoring and Reporting" for additional information. a. Wire Transfer Authority: The Assistant Finance Director has wire transfer authority not to exceed $3,000,000 for a single investment transaction. Such a transaction shall be reviewed, approved and verified in advance by the Finance Director, and shall be reported in the Quarterly Investment Report to Council. 6. Responsibilities of the Accountant: The Accountant is appointed by the Finance Director and is subject to the direction and supervision of the Assistant Finance Director. The Accountant carries out the specific instructions provided by the Assistant Finance Director regarding the purchase and sale of securities in accordance with principles of sound treasury management and in accordance with applicable laws and policies. Accounting for the various investment transactions is the responsibility of the Accountant. a. Wire Transfer Authority: The Accountant has wire transfer authority not to exceed $2,100,000 for a single investment transaction. The standard operating procedure is that all cash and investment wire transfers made by the Accountant and Senior Accountant are reviewed, approved and verified in advance by the Assistant Finance Director, and are reported in the Quarterly Investment Report to Council. D. Prudence: Pursuant to California Government Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard. This means that all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to 4 �.4OV.CA4%,�C City of Campbell, California 0 0 use G,4, oRNao Investment Policy Date: September 16, 2025 this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the Agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the Agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law. 2. The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that no investment is totally riskless and that the investment activities of the City are a matter of public record. Accordingly, while the intent of the City is to hold purchased securities to maturity, the City recognizes that occasional measured losses may be advisable in a diversified portfolio and shall be considered within the context of the overall portfolio's return, provided that (a) adequate diversification has been implemented and (b) the sale of a security is in the best long-term interest of the City. E. Ethics and Conflicts of Interest: Elected officials and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the City's investment program or could impair or create the appearance of an impairment of their ability to make impartial investment decisions. Employees and investment officials shall disclose to the City Manager any business interests they have in financial institutions that conduct business with the City, and they shall subordinate their personal investment transactions to those of the City. In addition, the City Manager, the Finance Director and others with delegated investment authority shall file a Statement of Economic Interests each year pursuant to California Government Code Section 87203 and regulations of the Fair Political Practices Commission. All participants in the investment process are required to comply with terms of the Political Reform Act, Fair Political Practices Commission Regulations promulgated thereunder (2 C.C.R. §§ 18110 through 18998), the City's Conflict of Interest Policy, including, without limitation, filing of Form 700, notification and recusal obligations, and Government Code section 1090 prohibitions. Conflict with State Statutes or Regulations 1. In the instance of any conflict between the City of Campbell Investment Policy and Government Code Section 53600 et seq, the more stringent requirement shall apply. V. AUTHORIZED SECURITIES AND TRANSACTIONS All investments and deposits of the City shall be made in accordance with California Government Code Sections 16429.1, 53600-53609 and 53630-53686, except that pursuant to California Government Code Section 5903(e), proceeds of bonds and any moneys set aside or pledged to secure payment of the bonds may be invested in securities or obligations described in the ordinance, resolution, indenture, agreement, or other instrument providing for the issuance of the bonds. Any revisions or extensions of these code sections will be assumed 5 Uy°V'C'"'pec City of Campbell, California O O Investment Policy Date: September 16, 2025 •�RCOAaO to be part of this Policy immediately upon being enacted. However, in the event that amendments to these sections conflict with this Policy and past City investment practices, the City may delay adherence to the new requirements when it is deemed in the best interest of the City to do so. Percentage holdings limits listed in this section apply at the time the security is purchased. The City has further restricted the eligible types of securities and transactions to the following: 1. United States Treasury bills, notes, bonds, or strips with a final maturity not exceeding five years from the date of purchase. Federal Agency debentures and mortgage -backed securities with a final maturity not exceeding five years from the date of purchase issued by the Government National Mortgage Association (GNMA). The aggregate investment in Federal Agency obligations shall not exceed 75% of the City's total portfolio. No more than 30% of the total portfolio may be invested in any single Agency issuer. No more than 20% of the total portfolio may be invested in callable agency securities. Federal Instrumentality (government sponsored enterprise (GSE)) debentures, discount notes, callable and step-up securities, with a final maturity not exceeding five years from the date of purchase, issued by the following only: Federal Home Loan Banks (FHLB), Federal National Mortgage Association (FNMA), Federal Farm Credit Banks (FFCB) and Federal Home Loan Mortgage Corporation (FHLMC). The aggregate investment in Federal Instrumentality obligations shall not exceed 75% of the City's total portfolio. No more than 30% of the total portfolio may be invested in any single Agency/GSE issuer. No more than 20% of the total portfolio may be invested in callable agency securities. 4. Repurchase Agreements with a final termination date not exceeding one year collateralized by U.S. Treasury obligations, Federal Agency securities, or Federal Instrumentality securities listed in items 1, 2 and 3 above with the maturity of the collateral not exceeding five years. For the purpose of this section, the term collateral shall mean purchased securities under the terms of the City's approved Master Repurchase Agreement. The purchased securities shall have a minimum market value including accrued interest of 102% of the dollar value of the transaction. Collateral shall be held in the City's custodian bank, as safekeeping agent, and the market value of the collateral securities shall be marked -to -the -market daily. The aggregate investment in repurchase agreements shall not exceed 10% of the City's total portfolio. Repurchase Agreements shall be entered into only with broker/dealers that have executed a City approved Master Repurchase Agreement with the City. Repurchase counterparties shall be recognized as Primary Dealers with the Federal Reserve Bank of New York, or shall have a primary dealer within their holding company structure. Broker/dealers approved as Repurchase Agreement counterparties shall have a short-term credit rating of at least A-1 or the equivalent and a long-term credit rating of at least A or the equivalent. The Finance Director shall maintain a copy of the City's approved Master Repurchase Agreement along with a list of the broker/dealers that have executed a Master Repurchase Agreement with the City. 5. Prime Commercial Paper with a maturity not exceeding 270 days from the date of purchase with the highest ranking or of the highest letter and number rating as provided for by a Nationally Recognized Statistical Ratings Organization (NRSRO). The entity that issues the commercial paper shall meet all of the following conditions in either sub -paragraph a. A City of Campbell, California O O �6� ARCH ARO o-4 Investment Policy Date: September 16, 2025 or sub -paragraph b. below: a. The entity shall (1) be organized and operating in the United States as a general corporation, (2) have total assets in excess of five hundred million dollars ($500,000,000) 'and (3) have debt other than commercial paper, if any, that is rated "A" or higher by a NRSRO. b. The entity shall (1) be organized within the United States as a special purpose corporation, trust, or limited liability company, (2) have program wide credit enhancements, including, but not limited to, over collateral ization, letters of credit or surety bond and (3) have commercial paper that is rated "A-V or higher, or the equivalent, by a NRSRO. No more than 5% of the City's total portfolio may be invested in the.commercial paper and medium -term notes of any single issuer, and the aggregate -investment in commercial paper shall not exceed 25% of the City's total portfolio. 6. Eligible Bankers Acceptances provided that no more than 5% of the City's total portfolio may be invested in banker's acceptances of any one issuer, and the aggregate investment in banker's acceptances shall not exceed 30% of the City's total portfolio. The maximum maturity does not exceed 180 days. 7. Medium Term Notes issued by corporations organized and operating. within the United States or by depository institutions licensed by the United States or any state and operating within the United States, with a final maturity not exceeding five years from the date of purchase, and are rated in a rating category of "A" or its equivalent or better by at least one NRSRO. No more than 5% of the City's total portfolio may be invested in medium term notes of any one issuer and the aggregate investment in medium term notes shall not exceed 30% of the City's total portfolio. 8. Non-negotiable Time Certificates of Deposit and savings deposits with a maturity not exceeding five years, in state or nationally chartered banks or savings and loans with a California branch office that are. insured by the FDIC. Time Certificates of Deposit exceeding the FDIC insured amount must be secured pursuant to California Government Code Section 53652. No more than $1 million may be invested in non-negotiable time certificates of deposit of any one issuer and the aggregate amount invested in non- negotiable time. certificates of deposit shall not exceed 20% of the City's total portfolio. Certificates of Deposit at commercial bank, savings bank, or savings and loan association that uses 'a private sector entity (Certificate of Deposit Account Registry Service) that assists in the placement of certificates of deposit, provided that the purchase of certificates of deposit do not, in total, exceed 30% of the City's funds that may be invested for this purpose. The City shall choose a nationally or state chartered commercial bank in California as the "selected" depository 'institution ' to invest the funds. The selected depository institution may submit the funds to a MARS for the benefit of the City's account. The full amount of the principal and interest that may be accrued during the maximum term of each certificate shall be insured by the FDIC. The maximum maturity does not exceed 5 years 10. Negotiable Certificates of Deposit (NCDs) issued by a nationally or state -chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally licensed or state -licensed branch of a foreign bank, provided that the purchase of rl 144.0v.G�City of Campbell, California 0 0 Investment Policy Date: September 16, 2025 • CkCf1A89 certificates of deposit do not, in total, exceed 30% of the City's funds that may be invested for this purpose. The amount of the NCD insured up to the FDIC limit does not require any credit ratings. Any amount above the FDIC insured limit must be issued by institutions which have short-term debt obligations rated "A-1" or its equivalent or better by at least one NRSRO; or long-term obligations rated in a rating category of "A" or its equivalent or better by at least one NRSRO. The maximum maturity does not exceed 5 years and no more than 5% of the total portfolio may be invested in any single issuer. 11. State of California's Local Agency Investment Fund (LAIF), pursuant to California Government Code Section 16429.1. 12. Mutual Funds registered under the Investment Company Act of 1940 that (1) are "no-load" (meaning no commission or fee shall be charged on purchases or sales of shares); (2) invest only in the securities and obligations authorized in this policy and (3) have a rating of AAA by Standard and Poor's, Aaa by Moody's or AAA/V1+ by Fitch. No more than 10% of the City's total portfolio may be invested in mutual funds of any one issuer, and the aggregate investment in mutual funds shall not exceed 10% of the City's total portfolio. The combined aggregate investment in mutual funds and money market funds shall not exceed 20% of the total portfolio. 13. Money Market Mutual Funds registered under the Investment Company Act of 1940 that (1) are "no-load" (meaning no commission or fee shall be charged on purchases or sales of shares); (2) have a constant daily net asset value per share of $1.00; (3) invest only in the securities and obligations authorized in this policy and (4) have a rating of at least two of the following' AAA by Standard and Poor's, Aaa by Moody's or AAA/V1+ by Fitch. No more than 20% of the City's total portfolio may be invested in the shares of any on money market fund, and the combined aggregate investment in mutual funds and money market funds shall not exceed 20% of the total portfolio. 14. Municipal and State Obligations with a minimum long-term rating of A/A-1 or higher by Standard and Poor's and not exceeding 30% of the portfolio and the maximum maturity does not exceed 5 years: . (a) Bonds Issued by the Local Agency (City of Campbell) including bonds payable solely out of the revenue from a revenue -producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency.) (b) State Obligations including registered treasury notes or bonds of this State and any of the other 49 states in addition to California, including bonds payable solely out of the revenue from a revenue -producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of the any of the other 49 United States, in addition to California. (c) California Local Agency obligations including bonds, notes, warrants, or other evidence of indebtedness of any local agency within this state, including bonds payable solely out of the revenue from a revenue -producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the any of the local agency. (d) No more than 5% of the portfolio may be invested in any single issuer. 15. Asset -Backed, Mortgage -Backed, Mortgage Pass -Through Securities, and Collateralized Mortgage Obligations from Issuers Not Defined in sections 1, 2 and 3 of the Authorized Securities and Transactions Section of This Policy, provided that: E; U.4•°�'�"�4 City of Campbell, California O O oRHAao• Investment Policy Date: September 16, 2025 (a) The securities are rated in a rating category of "AA" or its equivalent or better by a NRSRO. (b) No more than 20% of the total portfolio may be invested in these securities. (c) No more than 5% of the portfolio may be invested in any single Asset -Backed security issuer. '(d) The maximum legal final maturity does not exceed five (5) years. 16. Supranationals, provided that: (a) Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter -American Development Bank. (b) The securities are rated in a rating category of "AA" or its equivalent or better by a NRSRO. (c) No more than 30% of the total portfolio may be invested in these securities. (d) No more than 10% of the portfolio may be invested in any single issuer. (e) The maximum maturity does not exceed five (5) years. It is the intent of the City that the foregoing list of authorized securities and transactions is strictly interpreted. Any deviation from this list must be preapproved by the City Council writing. 17. Shares of Beneficial Interest Issued by a Joint Powers Authority (JPA) organized pursuant to Section 6509.7 that. invests in the securities and obligations authorized in subdivisions (a) to (q), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority and be rated AAA or equivalent. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria: (a) The adviser is registered or exempt from registration with the Securities and Exchange Commission. (b) The adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (q), inclusive. (c) The adviser has assets under management in excess of five hundred million dollars ($500,000,000). 18. Prohibited Investment Vehicles and Practices . a. State law notwithstanding, any investments not specifically described herein are . prohibited, including, but not limited to futures and options. b. In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest -only strips is prohibited. c. Investment in any security that could result in a.zero interest accrual if held to maturity is prohibited. Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero- or negative -interest accrual if held to maturity are permitted. d. Purchasing or selling securities on margin is prohibited. e. The purchase of foreign currency denominated securities is prohibited. f. Agencies that are not Qualified Institutional Buyers (QIB) as defined by the Securities and Exchange Commission , are prohibited from purchasing Private Placement Securities. The SEC defines a QIB as having at least $100,000,,000 in securities owned and invested. g. The purchase of a security with a forward settlement date exceeding 45 days from the time of investment is prohibited. i'] y°V��r City of Campbell, California % 0 �_� • °'� Investment Policy Date: September 16, 2025 CRCIIARD VI. PORTFOLIO MATURITIES AND LIQUIDITY To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities. The City will not invest in securities maturing more than five years from the date of settlement, unless the City Council has granted authority to make such an investment at least three months prior to the date of investment. The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City's investment objectives, constraints and risk tolerances. VII. MONITORING AND REPORTING A. The Finance Director shall routinely monitor the contents of the portfolio and shall file ,with the City Council the Assistant Finance Director's Investment Report at the first regularly scheduled City Council meeting after 45 days from the end of the quarter. The reports shall be prepared and submitted in accordance with California Government Code Section 53646 and shall include the following on all invested monies: ➢ Type of Investment and Issuer ➢ Beginning Balances ➢ Purchases During Quarter ➢ Monthly transactions including all Maturities and Sales During the Quarter ➢ Ending Balances ➢ Maturity Date ➢ Weighted Average Final Maturity ➢ Call Provisions (if any) ➢ Interest Rate ➢ Weighted Average Yield ➢ Face Value or Purchase Cost ➢ Market Value including source ➢ Interest Earned During Quarter ➢ Interest Earned to Maturity ➢ Cash Flow Projection for the Following Quarter ➢ Summary of Cash Invested to Total Cash Balances ➢ Comparative Statistics by Fiscal Year ➢ Reconciliation of Cash & Investments to General Ledger Balances ➢ Investments under the Management of Contracted Parties ➢ Statement of Compliance with the Investment Policy ➢ Statement of Ability to Meet Obligations of Next Six Months Vill. SELECTION OF BROKER/DEALERS The City shall transact business with securities broker/dealers after careful review of their qualifications and creditworthiness. In selecting broker /dealers, the Finance Director or designated staff member shall select broker/dealers representing primary dealers in government securities that have established offices and order desks within the State of California, or with such firms that have a primary dealer within their holding company structure. Exceptions to this rule will be made only upon the joint written authorization of the Finance Director and City Manager. Staff shall investigate broker/dealers wishing to do business with the City to determine if they are adequately capitalized, are reputable, have pending legal action against the firm or the individual broker, have established offices and order desks within the State of California, and make markets in the. securities appropriate to the City's needs. 10 City of Campbell, California 0 0 04CHA ' Investment Policy Date: September 16, 2025 Before accepting funds or engaging in investment transactions with the City, the supervising officer at each authorized broker/dealer shall submit and annually update a City approved Broker/Dealer Information Request form that includes the firm's most recent audited financial statement. The Finance Director, or his or her designee, shall maintain a list of approved broker/dealers. Broker/dealers shall attest in writing that they have received and reviewed a copy of this Investment Policy, and that they will comply with it and disclose potential conflicts or risks to public funds that might arise out of business transactions between the firm and the City of Campbell. If the City has engaged the services of an outside professional investment advisor, the investment advisor may use its own list of authorized broker -dealers to conduct transactions on behalf of the City. IX. DELIVERY, SAFEKEEPING AND COLLATERALIZATION A. Delivery: All investment transactions shall be conducted on a delivery -versus -payment (DVP) basis. B. Safekeeping: The City shall contract with a bank or banks for the safekeeping of securities which are owned by the City as a part of the investment portfolio. Staff shall periodically review the performance and pricing of the third -party, safekeeping agent services. 2. All investment securities (except the collateral for certificates of deposit in banks, and/or savings and loans) purchased by the -City shall be held in third -party safekeeping by an institution designated as primary agent. The primary agent shall issue a safekeeping receipt to the City listing the specific instrument, rate, maturity and other pertinent information, and shall provide monthly reports of activity and ending balances for all securities held on behalf of the City. C. Collateralization: Certificates of Deposit (CDs). The Agency shall require any commercial bank or savings and loan association to deposit eligible securities with an agency of a depository approved by the State Banking Department to secure any uninsured portion of a Non -Negotiable Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security. 2. Collateral izatio n of Bank Deposits. This is the process by which a bank or financial institution pledges securities, or other deposits for the purpose of securing repayment of deposited funds. The Agency shall require any bank or financial institution to comply with the collateral ization criteria defined in California Government Code, Section 53651. 3. Repurchase Agreements. The Agency requires that Repurchase Agreements be collateralized only by securities authorized in accordance with California Government Code: a. The securities which collateralize the repurchase agreement shall be priced at Market Value, including any Accrued Interest plus a margin. The Market 11 ,°V'C""�8City of Campbell, California U O C O 16�•�RCHABm, Investment Policy Date: September 16, 2025 Value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities. b. Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above C. The Agency shall receive monthly statements, of collateral. X. DIVERSIFICATION AND ELIGIBLE SECURITIES The City will diversify investment instruments to avoid incurring unreasonable risks in overinvesting in specific instruments, individual financial institutions or maturities. The following portfolio maximums shall apply: If the credit ratings of any security owned by the City are downgraded to a level below the quality required by this investment policy, it will be the City's policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. If a security is downgraded, the Finance Director will use discretion in determining whether to sell or hold the security based on its current maturity, the economic outlook for the issuer, and other relevant factors. If a decision is made to retain a downgraded security in the portfolio, its presence in the portfolio will be monitored and reported quarterly to the City Council. 12 �0.OVC44%sCr City of Campbell, California 0 0 •ORCHABO• Investment Policy Date: September 16, 2025 EXHIBIT A GLOSSARY Asset Backed Securities..- Securities that are supported by pools of assets, such as installment loans or leases, or by pools of revolving lines of credits. Asset -backed securities are structured as trusts in order to perfect a security interest in the underlying assets. Banker's Acceptance. This is a negotiable time draft (bill of exchange) with a maturity of six months or less drawn on and accepted by a commercial bank. Banker's Acceptances are usually created to finance the import and export of goods, the shipment of goods within the United States and storage of readily marketable commodities. Per State Law, cities may not invest more than 30% of idle cash in Banker's Acceptances. Certificate of Deposit (Ws). - is a receipt for funds deposited in a bank or savings and loan association for a specified period of time at a specified rate of interest. The first $250,000 of a certificate of deposit is guaranteed by the Federal Deposit Insurance Corporation (FDIC). CD's with a face value in excess of $250,000 can be collateralized by Treasury Department Securities, which must be at least 110% of the face value of the CD's, in excess of the first $250,000, or by first mortgage loans which must be at least 150% of the face value of the CD balance in excess of the first $250,000. Commercial Paper. - Notes are unsecured promissory notes of industrial corporations, utilities and bank holding companies. State law limits a city to investments in United States corporations having assets in excess of five hundred million dollars with an "A" or higher rating. Per State law, cities with less than $100 million in assets under management may not invest more than 25% of idle cash in commercial paper. Delivery Versus Payment (DVP). - Delivery versus payment (DVP) is a securities industry settlement method that guarantees the transfer of securities only happens after payment has been made. DVP stipulates that the buyer's cash payment for securities must be made prior to or at the same time as the delivery of the security. Local Agency Investment Fund (L.A.I.F.). - The L.A.I.F. was established by the state of California to enable treasurers to place funds in a pool for investments. There currently is a limitation of $75 million per agency subject to a maximum of 15 total transactions per month. The City of Campbell uses this fund when interest rates are declining as well as for short-term investments and liquidity. Medium Term Notes. - are corporate or depository institution debt securities meeting certain minimum quality standards (as specified in the California Government Code) with a remaining maturity of five years or less. Money Market Mutual Fund. - Mutual funds that invest solely in money market instruments (short- term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, repos and federal funds). Mortgage Backed Securities. - Mortgage -backed securities (MBS) are created when a mortgagee or a purchaser of residential real estate mortgages creates a pool of mortgages and markets undivided interests or participations in the pool. MBS owners receive a prorata share of the interest and principal cash flows (net of fees), that are "passed through" from the pool of mortgages. MBS are complex securities whose cash flow is determined by the characteristics of the mortgages that are pooled together. Investors in MBS face prepayment risk associated with the option of the underlying mortgagors to pre -pay or payoff their mortgage. Most MBS are issued and/or guaranteed by federal 13 �y°4'CAV°��c City of Campbell, California O O oft,,,&o. Investment Policy Date: September 16, 2025 agencies and instrumentalities (e.g., Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA), and Federal Home Loan Mortgage Corporation (FHLMC)). Mortgage Pass -Through Obligations. - Securities that are created when residential mortgages (or other mortgages) are pooled together and undivided interests or participations in the stream of revenues associated with the mortgages are sold. Mutual Fund. - An investment company that pools money and can invest in a variety of securities, including fixed -income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by strict Securities and Exchange Commission (SEC) disclosure guidelines. Nationally Recognized Statistical Ratings Organization. - A nationally recognized statistical ratings organization (NRSRO) is a credit rating agency that provides an assessment of the creditworthiness of a firm or financial instrument(s) that is registered and approved by the Securities and Exchange Commission (SEC). Not all credit rating organizations are NRSROs Repurchase Agreements (REPOS). - is a contractual arrangement between a financial institution, or dealer, and an investor. This agreement normally can run for one or more days. The investor puts up his funds for a certain number of days at a stated yield. In return, he takes a given block of securities as collateral. At maturity, the securities are repurchased and the funds repaid plus interest. Supranationals. - International institutions formed by two or more governments that transcend boundaries to pursue mutually beneficial economic or social goals. There are three supranational institutions that issue obligations that are eligible investments for California local agencies: the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and InterAmerican Development Bank (IADB). U.S. Treasury Bills. Commonly referred to as T-Bills, these are short-term marketable securities sold as obligations of the U.S. Government. T-Bills do not accrue interest but are sold at a discount to pay face value at maturity. . U.S. Treasury Notes. These are marketable, interest -bearing securities sold as obligations of the U.S. Government with original maturities of one to ten years. Interest is paid semi-annually. U.S. Treasury Bonds. These are the same as U.S. Treasury Notes except they have original maturities of ten years or longer. U.S. Government Agency Issues. Are securities that are unconditionally backed by the full faith and credit of the United States, including: Government National Mortgage Association (GNMA), Farmers Home Administration (FmHA), Small Business Administration (SBA), General Services Administration (GSA), Federal Housing Administration (FHA) and Housing and Urban Development (HUD). U.S. Government Instrumentality Issues. Are government sponsored enterprises that are backed by the creditworthiness of the issuing agency, not the full faith and credit of the U.S. government. They do carry an implied guarantee of government assistance to the organization should it encounter financial difficulties. Issuers include: Federal National Mortgage Association (FNMA), Federal Home Loan Bank (FHLB), Federal Farm Credit Banks (FFCB) and Federal Home Loan Mortgage Corporation (FHLMC). 14 C,iCHANDLER ASSET MANAGEMENT CHANDLER ASSET MANAGEMENT I chandlerasset.com ChandlerTeam: For questions about your account, please call (800) 317-4747, or contact clientserviceC@chandierasset.co_m 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. TABLE OF CONTENTS cil CHANDLER ASSET MANAGEMENT ECONOMIC UPDATE ACCOUNT PROFILE PORTFOLIO HOLDINGS TRANSACTIONS CiCHANDLER t% ASSET MANAGEMENT ECONOMIC UPDATE CHANDLER ASSET MANAGEMENT Recent economic data suggest slower growth in 2025 and greater market uncertainty as the effects of fiscal policy unfold. Inflationary trends have subsided, but some components remain sticky, and core levels remain above the Fed's target. The labor market reflects improved balance between supply and demand for workers. While job creation has been robust, continuing jobless claims remain elevated. Given the economic outlook, we expect gradual normalization of monetary policy and a steepening yield curve. ® As broadly anticipated, the Federal Open Market Committee (FOMC) left the Federal Funds Rate unchanged at the range of 4.25 - 4.50% at the June meeting. Fed Chair Powell continued to emphasize the Committee's "wait and see" approach amidst economic uncertainty that remains elevated but diminished. Federal Reserve officials continued to pencil in two rate cuts in 2025. N US Treasury yields declined in June. The 2-year Treasury yield fell 18 basis points to 3.72%, the 5-year Treasury dropped 17 basis points to 3.809/o, and the 10-year Treasury yield also declined 17 basis points to 4.23%. The spread between the 2-year and 10-year Treasury yield points on the curve edged up to +51 basis points at June month -end versus +50 basis points at May month -end. The spread between the 2- year Treasury and 10-year Treasury yield one year ago was -36 basis points. The spread between the 3-month and 10-year Treasury yield points on the curve was -7 basis points in June, versus -6 basis points in May. 3 EMPLOYMENT 1,000 - -- -- '9 0 8 0 9 600 C W 400 Nonfarm Payroll (000's) iI%Ik° 10 r r% 200 C c u Non -farm Payroll (000's) o -200 E m -3-month average (000's) -400 CICI On ­)D 1)0 ';�1 '�? Source: US Department of Labor CCHANDLER ASSET MANAGEMENT Unemployment Rate 25.0% — ---- ---- ®®® Underemployment Rate(U6) Unemployment Rate (U3) 20.0% 0.0% On -1p �� r'Z 11 2Q Source: US Department of Labor The U.S. economy added 147,000 jobs in June, exceeding consensus expectations, and the last two months were revised up by 16,000. Gains were primarily driven by state and local government education, while job growth in service sectors languished. The three-month moving average and six-month moving average payrolls totaled 150,000 and 130,000 respectively. The unemployment rate declined to 4.1% in June from 4.2% in May, due to a shrinking labor force. The labor participation rate dipped 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 dropped to 7.7% in June. Average hourly earnings fell slightly, marking a 3.7% year -over -year increase. 4 JOB OPENINGS & LABOR TURNOVER SURVEY Q11 CHANDLER ASSET MANAGEMENT Job Openings 14,000 _ I L=Recession 12,000 - Historical Average 10,000 o � 8,000 Mc c 6,000 -- 4,000 - --- - - --- _ . _ _ .- - -- ----- -- --- -- ----- - 8 2,000 _ .. _._ — -- --- -- -- - - - i ! - - - ---- ---- - - - -- i �dy mod` �d` dy ��te�d y a` 41- 'lia` y 41- 47- 1 d1 1dy y �dy �dy �dy �dy mod` �dy �dy OS 06 Oj 0,9 0,9 170 17 d2 7J, 7� 7S .76 7j d& 9 �0 Source: US Deportment of Labor The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) unexpectedly rose to 7.77 million new job openings in May from 7.40 million in April. Layoffs declined and the quits rate increased. Job openings indicate a ratio of approximately 1.1 jobs for each unemployed individual, representing a relatively balanced labor market. 5 INFLATION CK CHANDLER ASSET" MANAGEMENT Consumer Price Index (CPI) ®CPI YOY % Change ® Core CPI YOY % Change 8.0% 7.0% 5.0% - 0 4.0% 3.0% 2.0% - 1.0%_ .. 0.0% Source: US Department of Labor Personal Consumption Expenditures (PCE) 10.0% -- -- - - -- -- PCE Price Deflator YOY % Change 9'0% ©®m PCE Core Deflator YOY % Change 8.0% Fed Target 7.0% t 6.0 /o 5.0 % r`e- 3.0%4.0%2.0% 1.0 % - -- - -- -- - ---- _.. - - 0.0 "/d`�//0`-O'�'/dL�1/jjp`2Z�Jd`4j01- "/dL�jpL/�jdL�Q/�01- �'/dyes Source: US Department of Commerce In May, the Consumer Price Index (CPI) cooled slightly more than consensus expectations. The headline CPI increased 0.1% month -over - month and rose 2.4% year -over -year, while the Core CPI rose 0.1% month -over -month and 2.8% year -over -year. The Personal Consumption Expenditures (PCE) price index increased 0.1% month -over -month and rose 2.3% year -over -year in May. The Core PCE deflator, which excludes food and energy and is the Fed's preferred gauge, increased 0.2% month -over -month and 2.7% year -over -year, up from April's 2.6%year-over-year increase. Inflation is hovering above the Fed's 2%target. 11 CONSUMER Retail Sales YOY % Change 60.0% -- -- - - 50.0% 40.0% a C r 30.0% u 20.0% 0 10.0% 0.0% -10.0% It,dy ����°d�°�d` L �°� d` 1 ay 1 d� � 10 0 1j dy �p �s Source: US Department of Commerce 160- 140 Recession 120 100 v 80 ¢ x c 60 -- = 40 20 -- - -- -- � 0 �47,OS ✓411✓411 `0, 0.9 CCHANDLER ASSET MANAGEMENT Consumer Confidence T1 1� 1S T� z,9 Source: The Conference Board All time high is 144.70 (1131100); All time low is 25.30 (2128109) Advance Retail Sales were down 0.9% month -over -month in May, further slowing from a downwardly revised -0.1% in April. Declines were led by auto sales, building materials, garden equipment and supplies, and spending at restaurants and bars fell by the most since early 2023. Control group sales, which feed into GDP, were the only bright spot in the report, with a 0.4% increase. On a year -over -year basis, Retail Sales grew 3.3% in May following a 5.0% increase in April. The Conference Board's Consumer Confidence Index dropped to 93.0 in June from 98.4 in May, as consumers' assessment of both the current situation and future expectations for income and labor markets soured. While the consumer has been resilient, elevated inflation expectations, concerns about trade policies and tariffs, and general economic and policy uncertainty could pose potential risks to future spending. 7 LEADING INDICATORS OF ECONOMIC ACTIVITY CKCHANDLER ASSET MANAGEMENT 15.0% - -- 10.0% 5.0% -15.0% -20.0% Leading Economic Indicators (LEI) �dy� 2'a/,�9 �01- 2ldk`9, �0% Oil, �0A�9 Oil, �t 1, Source: The Conference Board Chicago Fed National Activity Index (CFNAI) 1.00 0.75 d 0.25 v a 0.00 s c 0 -0.25 M -0.50 -0.75 -1.00 47dy It, All �10 �dL may /Oil �!°'` wok �db �1 �s 8s 8�g 0-9 '9j O. j OS 09 Source: Federal Reserve Bank of Chicago '�d'j,-y1,�d`�1 �ok�? The Conference Board's Leading Economic Index (LEI) fell by 0.1% in May, following a downwardly revised 1.4% decline in April. The LEI decreased by 4.0% year -over -year. The rebound in the stock market was the primary positive contributor, offset by consumer pessimism, weak new orders in manufacturing, the second consecutive month of rising initial unemployment claims, and a drop in housing permits. The Chicago Fed National Activity Index (CFNAI) improved to -0.28 in May from a downwardly revised -0.36 in April. The three-month moving average dropped to -0.16 in May from 0.06 in April, indicating slightly below trend growth. 0 HOUSING Q1%CHANDLER ASSET MANAGEMENT 2,400 2,200 2,000 1,800 1,600 46 °� 1,400 1,200 0 1,000 800 c 600 t' oIl] 0 Annualized Housing Starts 24.0% 20.0% 16.0% 12.0% i� 8.0 c 4.0% v g 0.0% o -4.0% r -8.0% -12.0•% -16.0% -20.0% 4°'` Os �04,, O) �OP,, 0,9 �dG �°'L, 17 1�, �0%, 1s �dG 1j /17 Oil, 1g �°'L, �1 �°'` � �0% ,.IS Source: US Department of Commerce S&P/Case-Shiller 20 City Composite Home Price Index .0S, O) 09 .7,7 7S .7S '7) ,79 ,. j 2a' 2S Source: S&P Housing starts declined 9.8% month -over -month in May to a seasonally adjusted annual rate of 1.256 million units. Single family starts increased 0.4% above the revised April figures, whereas multi -family starts fell-30.4%. Total starts dropped 4.6% compared to May 2024. Homebuilder confidence is shaky due to elevated mortgage rates, affordability constraints, and a weakening economic outlook. The Freddie Mac 30-year fixed rate mortgage averaged approximately 6.8% in June. According to the Case-Shiller 20-City Home Price Index, housing prices rose 3.4% year -over -year in April, compared to 4.1% in March. Limited inventory, elevated mortgage rates, and lack of affordability continue to weigh on the housing market. 0 SURVEY BASED MEASURES 70 65 60 55 50 45 40 CHANDLER ASSET ASSET MANAGEMENT Institute of Supply Management (ISM) Surveys ISM Manufacturing -----ISM Services ✓4 sP O� ✓4 s� O� ✓4 010 O2, ✓�, s� O✓� se O� 2, ✓�, �O�20 dr�� �'�d dr2� � c�2 d~�s his p�`'s � cad a�'�Q ��Q p�Q c�Q Source: Institute for Supply Management The Institute for Supply Management (ISM) Manufacturing index edged up to 49.0 in June from 48.5 in May, indicating a continuation of modest contraction in the sector. Inventories and production improved as companies worked through backlogs, while employment and new orders contracted. The ISM Services index increased to 50.8 in June from 49.9 in May, as new orders improved. However, ongoing concerns about the impact of tariffs remain. A reading over 50 indicates expansion, while a reading under 50 indicates contraction. 10 GROSS DOMESTIC PRODUCT (GDP) Q® CHANDLER ASSET MANAGEMENT Gross Private Domestic Investment Net Exports and Imports r Federal Government Expenditures State and Local (Consumption and Gross Investment) Total Source: US Department of Commerce 1.5% -0.9% 40.0% 30.0% - - - - - -- -.1 20.0% - 0.2% -1.0% 3.9% 10.0% - 0.0 --l- --] -10.0% - 0.3% 0.6% 0.3% -0.3% -20.0% - 0.3% - _ 0.3% 0.35 0.2% -30.0% -- 3.0% 3.1% 2.5% -0.59110 -40.0% Gross Domestic Product (GDP) s s dr, Pb, dr, ob. 20 1-1p Source: US Department of Commerce sPb �d,; sob• �0, s96 �0- Real GDP decreased at an annualized rate of 0.5% in the first quarter of 2025, according to the third and final estimate from the Bureau of Economic Analysis, a downward revision from the previously estimated 0.2% decline. This marks the first negative quarter since 2022. The primary driver of the downward revision was weaker personal consumption expenditures. Net exports remained the primary drag on growth, as imports rose sharply in anticipation of higher tariffs. Gross investment contributed positively, powered by business decisions to get ahead of possible cost increases. The consensus projection calls for 2.1%growth for the second quarter and 1.5% for the full year 2025. 11 FEDERAL RESERVE C11 CHANDLER ASSE MANAGL-.MEN`C" Federal Reserve Balance Sheet Assets 10,000,000 _ ._y 9,000,000 Recession 8,000,000-- 7,000,000 i a 6,000,000 E 5,000,000 4,000,000 I " 3,000,000 2,000,000 li 1,000,000 0 i �4 �4 �4 �4 �4 /0 ✓0 V4 V4 Y)'O O'O �'O �'1 7),1 �1 1j 7% fie' h', 7 S 9 I v' S ,9 Z S Source: Federal Reserve 6.00% 5.00% 4.00% 'a 3.00% 2 2.00% 1.00 / 0.00% O.S ��7.0' ✓4�,09 Effective Federal Funds Rate I i r� Recession Source: Bloomberg 1I 1S ZS 1) 1g �Z 2S ?S As broadly anticipated, the Federal Open Market Committee (FOMC) left the Federal Funds Rate unchanged at the range of 4.25 - 4.50% at the June meeting. In the Summary of Economic Projections (SEP), Federal Reserve officials continued to pencil in two rate cuts in 2025, while downgrading estimates for economic growth and raising forecasts for both unemployment and inflation this year. The statement indicated that uncertainty about the economic outlook remained elevated but had diminished. The monthly redemption cap on Treasuries will remain at $5 billion, while the cap on agencies and mortgage -backed securities will be maintained at $35 billion. Since the Fed began its Quantitative Tightening campaign in June 2022, securities holdings have declined by about $2.2 trillion to approximately $6.7 trillion. 12 BOND YIELDS QVI CH ANDLER ASSET MANAGEMENT US Treasury Note Yields 6.0% 5.0% 4.0% ONO :2 3.0% d 2.0% 1.0% •.............••.•• 0.0% - _._. ._.. �p �p Source: Bloomberg 6.0% 5.0% 2.0% 1.0% 0.0 US Treasury Yield Curve ,' 6' � S 7 moo Syr Source: Bloomberg i Jun-25 _ — — — Mar-25 •••••• Jun-24 At the end of June, the 2-year Treasury yield was 103 basis points lower, and the 10-Year Treasury yield was 17 basis points lower, year - over -year. The spread between the 2-year and 10-year Treasury yield points on the curve edged up to +51 basis points at June month -end versus +50 basis points at May month -end. The recent yield curve inversion which began in July 2022 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 -7 basis points in June, versus -6 basis points in May. 13 14 OBJECTIVES CKCHANDLER 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 this objective, the portfolio invests in high -quality fixed income securities that comply with the investment policy.and all regulations governing the funds. 15 PORTFOLIO CHARACTERISTICS CA CHANDLER ASSET MANAGEMEN1- City of Campbell I Account #11214 1 As of June 30, 2025 Average Maturity (yrs) 2.65 3.09 3.02 Average Modified Duration 2.48 2.58 2.55 Average Purchase Yield 4.06% 3.93% Average Market Yield 3.78% 4.04% 4.20% Average Quality" AA+ AA+ AA+ Total Market Value 20,854,973 20,536,778 *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. 16 SECTOR DISTRIBUTION OR CHANDLER ASSET MANAGEMENT City of Campbell Account #11214 As of June 30, 2025 50% 25% w US Treasury Corporate Agency Agency CMBS ABS Supras Muni Bonds Money Mkt Fd 06/30/2025 ] 03/31/2025 Sector as a Percentage of Market Value a US Treasury 35.91% 36.63% Corporate 24.98% 23.15% Agency 15.66% 19.46% Agency CMBS 10.16% 9.00% ABS 9.50% 7.72% Supras 2.31% 2.32% Muni Bonds 1.01% 1.02% Money Mkt Fd 0.48% 0.68% 17 ISSUERS City of Campbell ( Account #11214 As of June 30, 2025 Government of The United States C11%CHANDLER US Treasury ASSET MANAGEMENT P. 35.91% FHLMC Agency CMBS� 10.16% Farm Credit System Agency 9.65% Federal Home Loan Banks Agency 6.00% —_ TInternational Bank for Recon and Dev Supras 2.31% BMW Vehicle Owner Trust ABS 1.96% Toyota Motor Corporation Corporate 1.94% American Express Credit Master Trust ABS 1.81% Bank of America Corporation Corporate 1.48% John Deere Owner Trust ABS 1.46% JPMorgan Chase & Co. Corporate 1.30% National Rural Utilities Cooperative Corporate 1.24% Caterpillar Inc. Corporate � 1.23% Cisco Systems, Inc. Corporate.-.-.-------. 1.22% Marsh & McLennan Companies, Inc. _ Corporate 1.22% State Street Corporation Corporate 1.21% Royal Bank of Canada Corporate 1.21% UnitedHealth Group Incorporated Corporate 1.17% GM Financial Securitized Term ABS 1.14% Eli Lilly and Company Duke Energy Corporation PACCAR Inc Deere & Company The Home Depot, Inc. The Toronto -Dominion Bank Corporate Corporate Corporate Corporate Corporate Corporate 1.14% 1.13% 1.13% 1.11% 1.11% 1.10% BNY Mellon Corp Corporate 1.08% Toyota Auto Receivables Owner Trust ABS 1.06% State of California Muni Bonds 1.01% Honda Motor Co., Ltd. Corporate 0.98% U.S. Bancorp Corporate 0.97% --� 18 CHANDLER ASSET MANAGEMENT City of Campbell I Account #11214 1 As of June 30, 2025 VVu|mart|nu Corporate 0.90% AbbWe|nu Ford CreditAuto Owner Trust Corporate ABS 0\62& 0.59% Mercedes-Benz Auto Receixob|esTiust �­­ .`� VVFCard Issuance Trust ABS ABS D.56Y6 0.53Y6 Bank ufW1untreal Corporate � U.49Y� Money Market Fund Money Mkt: Fd 0.48% Hyundai Auto Reoeivab|esTrust ABS 0.3996 '-------'-- Cosh [ash 0.00Q TOTAL 100.00% 19 QUALITY DISTRIBUTION CI CHANDLER ASSET MANAGEMENT City of Campbell I Account #11214 1 As of June 30, 2025 S&P Rating Moody's Rating Fitch Rating 75%1 100%I 50% 25% 010 AAA AA A NA ® 06/30/202S I_J03/31/2025 75% 50% 25% 070 AAA AA A NA ®06/30/2025 €,j03/31/2025 U70 AAA AA A NA E 06/30/2025 i_103/31/2025 AAA 11.8% 10.3% AAA 9.54% 74.20% AAA 14.36% 11.41% AA 62.2% 64.7% AA 67.44% 5.62% AA 63.53% 67.27% A 21.7% 20.8% A 19.62% 18.62% A 10.02% 10.11% NA 4.2% 4.3% NA 3.41% 1.56% NA 12.08% 11.22% DURATION DISTRIBUTION C`®1CHANDLER ASSET MANAGEMENT City of Campbell I Account #11214 1 As of June 30, 2025 40M 30% 20% 10% 0% 0,25 25-.5 .5-1 1-2 2-3 3-4 4-5 5-7 7+ N 06/30/202.5 El 03/31/2025 06/30/2025 6.4% 0.0% 7.0% 24.2% 17.9% 03/31/2025 0.7% 9.6% 4.0% 18.7% 26.2% 34.3% 10.2% 0.0% 0.09/0 20.4% 20.4% 0.0% 0.0% 21 INVESTMENT PERFORMANCE City of Campbell I Account #11214 1 As of June 30, 2025 Total Rate of Return : Inception 1 03/01/2025 3% 2% 1% 0% 3 Months 12 Months 2 Years 3 Years ®Total Return F1 Benchmark TOTAL RATE OF RETURN City of Campbell 1.54% Benchmark 1.36% CCHANDLER ASSET MANAGEMENT - 5 Years 10 Years Since Inception* 2.05% 1.89% *Periods over 1 year are annualized. Benchmark: ICE BofA 1-5 Year Unsubordinated US Treasury & Agency Index Total rate of return: A measure of a portfolio's performance overtime. 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. 22 PORTFOLIO HOLDINGS HOLDINGS REPORT OH CANDLER ASSET MANAGEMENT City of Campbell I Account #11214 1 As of June 30, 2025 ABS 891940AC2 TACIT 2023-A A3 4.63 09/15/2027 94,107.40 11/14/2024 94,144.15 100.04 94,149.22 0.46% NA/AAA 2.21 4.63% 94,132.16 4.59% 193.65 17.05 AAA 0.51 36 --- 362962AD4 GMALT 2025-2 A3 4.58 95,000.00 05/20/2025 94,998.42 100.64 95,606.70 0.46% _ NA/AAA 2.90 05/22/2028 4 84% 94,998.47 4.23/0 132.95 608.23 AAA 1.62 47800RAD5 JDOT 2024 A3 4.9611/15/2028 200,000.00 02/20/2025 201,203.13 100.92 201,847.52 0.98% Aaa/NA 3.38 4.63% 201,046.25 4.29% 440.89 801.27 AAA 1.27 BMWOT 2024-A A3 5.18 -- 404,156.25 101.26 405,043.20 1.96% Aaa/AAA 3.66 096919AD7 02/26/2029 400,000.00 4.69% 403,531.82 4.11% 345.33 1,511.38 NA 1.12 89239TAD4 TAOT 2024-D A3 4.4 06/15/2029 60,000.00 10/10/2024 59,996.65 100.42 60,253.07 0.29% Aaa/AAA 3.96 4.51% 59,997.16 4.15% 117.33 255.92 NA 1.44 02589BAEO AMXCA 2024-3 A 4.65 07/15/2027 200,000.00 02/20/2025 200,546.88 101.17 202,349.26 0.98% NA/AAA 2.04 4.57% 200,465.54 4.08% 413.33 1,883.72 AAA 1.91 34535VAD6 FORDO 2024-D A3 4.61 120,000.00 11/19/2024 119,996.15 101.00 121,200.89 0.59% Aaa/NA 4.13 08/15/2029 4.66% 119,996.64 4.08% 245.87 1,204.25 AAA 1.73 38014AAD3 GMCAR 2024-4 A3 4.4 60,000.00 10/08/2024 59,988.44 100.29 60,172.75 0.29% Aaa/AAA 4.13 08/16/2029 4.32% 59,990.13 4.24% 110.00 182.62 NA 1.41 47800DAD6 JDOT 2025 A3 4.23 09/17/2029 100,000.00 03/04/2025 99,993.71 100.25 100,246.96 0.48% Aaa/NA 4.22 5.09% 99,994.14 4.16% 188.00 252.82 AAA 2.18 92970QAE5 W FCIT 2024-2 A 4.2910/15/2029 110,000.00 10/17/2024 109,983.65 100.47 110,517.11 0.53% Aaa/AAA 4.29 4.29% 109,985.90 4.11% 209.73 531.21 NA 2.14 89231HADB TACIT 2025-B A3 4.3411/15/2029 65,000.00 04/24/2025 64,996.28 100.62 65,399.93 0.32% NA/AAA 4.38 4.82% 64,996.42 4.08% 125.38 403.51 AAA 2.02 44935XAD7 HART 2025-B A3 4.3612/17/2029 80,000.00 06/03/2025 79,992.78 100.64 80,512.16 0.39% �NA/AAA _ 4.47 4.36% 79,992.87 4.09% 193.78 519.29 AAA 2.07 58773DAD6 MBART 2025-1 A3 4.78 115,000.00 01/14/2025 114,975:54 101.32 116,519.02 0.56% Aaa/NA 4.47 12/17/2029 4.84% 114,977.71 4.06% 244.31 1,541.31 AAA 1.71 362955AD8 GMCAR 2025-1 A3 4.62 80,000.00 01/09/2025 79,994.06 100.90 _ 80,716.64� 0.39% Aaa/NA� 4.47 12/17/2029 5.03% 79,994.61 4.09% 154.00 722.03 AAA 1.55 02582J1<P4 AMXCA 2025-2 A 4.28 04/15/2030 170,000.00 05/06/2025 169,996.92 100.61 171,039.94 0.83% NA/AAA^^ 4.79 4.28% 169,997.00 4.08% 323.38 1,042.84 AAA 2.58 1,954,963.01 100.85 1,965,574.27 9.50% 3.71 Total ABS 1,949,107.40 4.63% 1,954,096.83 4.15% 3,437.93 11,477.45 1.63 24 HOLDINGS REPORT Q® CHANDLER ASSET MANAGEMENT City of Campbell 1 Account #11214 1 As of June 30, 2025 AGENCY FEDERAL HOME LOAN BANKS0.81 10/29/2021 250,000.00 99.72 249,308.92 1.21% Aa1/AA+ 0.08 3130APFH3 07/29/2025 250,000.00 0.81% 250,000.00 4,36% . 855.00 (691.08) AA+ 0.08 3130ANV63 FEDERAL HOME LOAN BANKS0.8 1,000,000.00 09/17/2021 1,000,000.00 99.23 992,303.44 4.80% Aa1/AA+ 0.22 09/17/2025 0.80% 1,000,000.00 4.47% 2,311.11 (7,696.56) AA+ 0.21 3133ENZC7 FEDERAL FARM CREDIT BANKS 1,000,000.00 06/22/2022 1,000,000.00 99.95 r ,999,479.58 _ 4.83% Aa1/AA+ 0.98 FUNDING CORP 4.12 06/22/2026 4.12% 1,000,000.00 4.17% 1,030.00 (520.42) AA+ 0.95 FEDERAL FARM CREDIT BANKS 07/12/2022 1,000,000.00 99.69 996,874.94 4,82% Aa1/AA+ 2.03 3133ENZY9 FUNDING CORP 3.96 07/12/2027 1,000,000.00 3,96% 1,000,000.00 4.12% 18,590.00 (3,125.06) AA+ 1.90 3,250,000.00 99.63 3,237,966.88 15.66% 1.00 Total Agency 3,250,000.00 2.80% 3,250,000.00 4.26% 22,786.11 (12,033.12) 0.95 AGENCY CMBS 3137BSRE5 FHMS K-059 A2 3.12 09/25/2026 250,000.00 11/21/2024 243,691.41 98.61 246,520.70 1.19% Aa1/AAA 1.24 4.55% 245,817.13 4.22% 650.00 703.57 AAA 1.10 3137FJEH8 FHMS K-081 A2 3.9 08/25/2028 250,000.00 11/21/2024 244,335.94 99.55 248,864.08 1,20% Aa1/AA+ 3.15 4.53% 245,250.45 4,00% 812.50 3,613.63 AAA 2.89 3137FJKE8 FHMS K-082 A2 3.92 09/25/2028 250,000.00 06/10/2025 246,992.19 99.65 249,132.28 1.20% Aa1/AA+ 3.24 4.27% 247,038.23 3.98% 816.67 2,094,05 AAA 2.92 3137FKSHO FHMS K-086 A2 3,85911/25/2028 150,000.00 09/18/2024 150,005.86 99.34 149,004.90 0.72%� Aaa/AA+ 3.41 3.82% 150,004.76 4.02% 482.38 (999.86) AA+ 3.09 3137FLN91 FHMS K-091 A2 3.505 03/25/2029 300,000.00 11/14/2024 287,074.22 98.06 294,181.08 1.42% Aa1/AAA 3.73 4,62% 288,926.67 4.05% 876.25 5,254.41 AA+ 3.34 3137FMCR1 FHMS K-093 A2 2.982 05/25/2029 148,909.71 10/16/2024 141,883.04 96.30 143,405.00 0.69% Aa1/AA+ 3.90 4.15% 142,958.51 4.05% 370.04 446.49 AAA 3.40 3137FNAEO FHMS K-095 A2 2.785 06/25/2029 250,000.00 03/13/2025 234,707.03 95.37 238,423.20 1.15% Aa1/AA+ 3.99 4.39% 235,752.45 4.06% 580.21 2,670.75 �1.36% AAA 3.60 3137FPHK4 FHMS K-098 A2 2.425 OS/25/2029 300,000.00 10/17/2024 276,445.31 ~ 93.83 281,486.73 Aa1/AA+ 4.15 4.26% 279,848.85 4.07% 606.25 1,637.88 _.� AAA .-�......._ 3.78 _ 3137FRUJ8 FHMS K-105 A2 1.872 01/25/2030 275 000.00 03/17/2025 � _ 8.16 244,86 90.81 249,727.50 1.21% Aa1/AA+ 4.57 4,43% 246,643.66 4.12% 429.00 3,083.84 AAA 4.23 25 HOLDINGS REPORT CA% CHANDLER ASSET MANAGEMENT City of Campbell I Account #11214 1 As of June 30, 2025 2,070,003.16 96.73 2,100,745.46 10.16% 3.49 Total Agency CMBS 2,173,909.71 4.37% 2,082,240.71 4.07% 5,623.29 18,504.75 3.15 CASH -- 1.00 377.79 0.00% Aaa/AAA 0.00 .377.79 CCYUSD Receivable 377.79 377.79 0.00% 0.00 0.00 AAA 0.00 377.79 1.00 377.79 0.00% 0.00 Total Cash 377.79 377.79' 0.00% 0.00 0.00 0.00 CORPORATE 91324PEY4 UNITEDHEALTH GROUP INC 4.6 240,000.00 09/18/2024 244,346:40 100.60 241,436.43 1.17% A2/A+ 1.79 04/15/2027 3.83% 242,980.66 4.25% 2,330.67 (1,544.24) A 1.61 437076D85 HOME DEPOTINC4.875 225,000.00 08/12/2024 228,663.00 101.58 228,545.17 1.11% A2/A 1.99 06/25/2027 4 25% 227,500.94 4.04% 182.81 1,044.23 A 1.80 02665WFK2 AMERICAN HONDA FINANCE 200,000.00 09/18/2024 204,578.00 101.23 202,455.80 0.98% A3/A- 2.02 CORP 4.9 07/09/2027 4,03% 203,302.60 4,26% 4,682.22 (846.80) NA 1.87 78017FZC19 ROYAL BANK OF CANADA 4, 51 _10/18/2027 _._._w.. ,._..,.. �. _ ..._ _._.,.W.,.. ____.__.-,_.... _...._.. _.-.... ._-....._.___ 250,000.00 4--..____-�-. 11/05/2024 249,005.00 100.18 250,455.32 1.21% Al/A 2.30 .66% 249,224.16 3.33% 2,286.32 1,231.16 AA- 1.24 857477CP6 STATE STREET CORP 4.33 250,000.00 11/07/2024 248,537.50 100,51 251,272.77 1.21% Aa3/A 2.31 10/22/2027 4.54% 248,856.32 4.09% 2,074.79 2,416.45 AA- 2.09 89115A3E0 TORONTO-DOMINION BANK 4.861 225,000.00 01/28/2025 225,000.00 101.37 228,079.71 1.10% A2/A- 2.59 01/31/2028 4.86% 225,000.00 4.29% 4,587.57 3,079.71 AA- 2.36 17275RBW1 CISCO SYSTEMS INC 4.55 250,000.00 03/11/2025 251,557.50 101.32 253,304.98 1.22% Al/AA- 2.65 02/24/2028 4.32% 251,392.54 4.02% 4,012.85 1,912.44 NA 2.36 00287YDY2 ABBVIE INC 4.65 03/15/2028 125,000.00 02/18/2025 124,833.75 101.51 ' 126,889.76 0.61% AB/A- 2.71 4.70% 124,852.42 4.05% 2,018.23 2,037.33 NA 2.41 06406RBG1 BANK OF NEW YORK MELLON 225,000.00 09/05/2024 223,128.00 99.65 224,202.92 1.08% Aa3/A 2.96 CORP 3.992 06/13/2028 4.31% 223,680.33 4.63% 449.10 522.59 AA- 1.85 46647PDG8 JPMORGAN CHASE & CO 4,851 150,000.00 08/12/2024 150,933.00 101.04 151,563.74 0.73% Al/A 3.07 07/25/2028 4,62% 150,653.79 4.96% _ 3,153.15 909.94 AA- 1.91 46647PEU6 JPMORGAN CHASE & CO 4,915 115,000.00 01/16/2025 115,000.00 101.34 116,544.28 0.56% Al/A 3.57 01/24/2029 4.92% 115,000.00 4.58% 2,465.01 1,544.28 AA- 2.34 26 HOLDINGS REPORT QR CHANDLER ASSET MANAGEMENT City of Campbell ( Account #11214 1 As of June 30, 2025 BANK OF AMERICA CORP 4.979 01/17/2025 150,000.00 101.43 152,139.58 0.74% Al/A- 3.57 06051GMK2 01/24/2029 150,000.00 4.98% 150,000.00 4.61% 3,257.10 2,139.58 AA- 2.34 06368MJGO BANK OF MONTREAL 5.004 100,000.00 01/22/2025 100,000.00 101.62 101,619.27 0.49% A2/A- 3.58 01/27/2029 5.01% 100,000.00 4.53% 2,140.60 1,619.27 AA- 2.35 91159HJK7 US BANCORP 4.653 02/01/2029 200,000.00 09/05/2024 201,116.00 100.65 201,297.45 0.97% A3/A 3.59 4.47% 200,848.45 4.72% 3,877.50 449.00 A 2.37 BANK OF AMERICA CORP 5,202 08/12/2024 152,550.00 102.20 153,294.30 0.74% Al/A- 3.82 06051GLG2 04/25/2029 150,000.00 4 69% 151,942.23 4.77% 1,430.55 1,352.07 AA- 2.58 JOHN DEERE CAPITAL CORP 4.85 08/12/2024 229,338.00 102.46 230,531.60 1.11% Al/A 3.95 24422EXT1 06/11/2029 225,000.00 4.40% 228,545.69 4.17% 606.25 1,985.90 A+ 3.56 -- _� 89236TMK8 TOYOTA MOTOR CREDIT CORP 225,000.00 08/12/2024 -� 225,567.00 100.80 226,803.74 1.10% Al/A+ 4.11 4.55 08/09/2029 4.49% 225,466.79 4.33% 4,038.13 1,336.94 A+ 3.65 532457CQ9 - ELI LILLY AND CO 4.2 08/14/2029 235,000.00 08/12/2024 234,769.70 100.35 235,834.11 1.14% Aa3/A+ 4.12 4.22% 234,810.19 4.10% 3,756.08 1,023.92 NA 3.62 26442CAY0 DUKE ENERGY CAROLINAS LLC 250,000.00 12/18/2024 226,517.50 93.27 233,182.12 1.13% v Aa3/A 4.13 2.45 08/15/2029 4 72% 229,197.27 4.25% 2,313.89 3,984.85 NA 3.82 - 14913UAU4 CATERPILLAR FINANCIAL SERVICES - 250,000.00 11/12/2024 249,592.50 101.85 254,613.14 1.23% - A2/A 4.38 CORP 4.7 11/15/2029 4.74% 249,643.38 4.23% 1,501.39 4,969.76 A+ 3.90 89236TNA9 TOYOTA MOTOR CREDITCORP 170,000.00 01/06/2025 169,636.20 102.26 173,846.26 0.84% Al/A+ 4.53 4.95 01/09/2030 5.00% 169,670,67 4.39% 4,020.50 4,175.59 A+ 3.93 NATIONAL RURAL UTILITIES 02/20/2025 250,550.00 102.28 255,709.62 1.24% A2/NA 4.61 63743HFX5 COOPERATIVE FINANCE CORP 4.95 250,000.00 4.90% 250,509.85 4.40% 4,950.00 5,199.76 A 3.94 02/07/2030 MARSH & MCLENNAN 03/24/2025 249,755.00 101.13 252,819.51 1.22% A3/A- 4.71 571748CA8 COMPANIES INC 4.65 03/15/2030 250,000.00 4.67% 249,768.22 ° 4.38/° 3,422.92 3,051.29 A- 4.07 - `931142FNB WALMART INC 4.35 04/28/2030 185,000.00 04/23/2025 184,679.95 101.15 187,118.26 0.90% Aa2/AA 4.83 4.39% 184,691.17 4.09% 1,408.31 2,427.10 AA 4.22 PACCAR FINANCIAL CORP 4,55 05/05/2025 229,643.50 101.26 232,902.25 1.13% Al/A+ 4.85 69371RT71 05/08/2030 230,000.00 4,59% 229,654.04 4.26% 1,540.68 3,248.21 NA 4.29 5,119,297.50 100.84 5,166,462.06 24.98% 3.46 Total Corporate 5,125,000.00 4.54% 5,117,191.72 4.27% 66,506.61 49,270.34 2.86 MONEY MARKET FUND 27 HOLDINGS REPORT C/1CHANDLER ASSET MANAGEMENT City of Campbell I Account #11214 1 As of June 30, 2025 X9USDDGCM DREYFUS GVT CM INST 98,732,84 -- 98,732.84 1.00 98,732.84 0.48% Aaa/AAAm 0.00 4.21% 98,732.84 4.21% 0.00 0.00 NA 0.00 Total Money Market 98,732.84 1.00 98,732.84 0.48% 0.00 Fund 98,732.84 4.21% 98,732.84 4.21% 0.00 0.00 0.00 MUNICIPAL BONDS 13063EGT7 CALIFORNIA STATE 4.5 08/01/2029 . 205,000.00 10/30/2024 206,080.35 101.77 208,637.73 1.01% Aa2/AA- 4.09 4.38% 205,931.72 4.02% 3,843.75 2,706.00 AA 3.64 Total Municipal 206,080.35 101.77 208,637.73 1.01% 4.09 Bonds 20S,000.00 4.38% 205,931.72 4.02% 3,843.75 2,706.00 3.64 SUPRANATIONAL INTERNATIONAL BANK FOR 12/13/2024 343,689.50 100.24 350,822.70 1.70% Aaa/AAA 4.30 459058LN1 RECONSTRUCTION AND 350,000.00 4 29% 344,393.84 3.81% 2,825.52 6,428.86 NA 3.89 DEVELOPM 3.87510/16/2029 INTERNATIONAL BANK FOR 03/14/2025 124,553.75 101.23 126,531.37 0.61% Aaa/AAA 4.72 459058LR2 RECONSTRUCTION AND 125,000.00 4.20% 124,578.92 3.84% 1,446.61 1,952.45 NA 4.21 DEVELOPM 4.125 03/20/2030 468,243.25 100.50 477,354.07 2.31% 4.41 Total Supranational 415,000.00 4.27% 468,972.77 3.82% 4,272.14 8,381.30 3.98 US TREASURY 91282CGR6 UNITED STATES TREASURY4.625 350,000.00 08/20/2024 352,542.97 100.35 351,233.89 1.70% Aa1/AA+ 0.71 03/15/2026 4.14% 351,144.56 4.11% 4,750.68 89.33 AA+ 0.68 91282CJC6 UNITED STATES TREASURY4.625 375,000.00 08/30/2024 380,507.81 100.89 378,339.84 1.83% Aa1/AA+ 1.29 10/15/2026 3.90% 378,343.01 3.91% 3,648.82 (3.17) AA+ 1.23 91282CKE0 UNITED STATES TREASURY4.25 350,000.00 08/20/2024 353,322.27 100.76 352,652.34 1.71% Aa1/AA+ 1.71 03/15/2027 3.86% 352,207.75 3.78% 4,365.49 444.59 AA+ 1.61 91282CKZ3 U N ITED STATES TREASURY 4.375 375,000.00 08/08/2024 379,804.69 101.25 379,672.85 1.84% Aa1/AA+ 2.04 07/15/2027 3.91% 378,340.83 3.73% 7,568.63 1,332.02 AA+ 1.90 91282CFM8 UNITED STATES TREASURY4.125 350,000.00 10/31/2024 349,521.48 100.91 353,185.55 1.71%^^Aa1/AA+_ _ 2.25 09/30/2027 4.17% 349,630.42 3.70% 3,629.10 3,555.13 AA+ 2.11 28 CHANDLER ASSET MANAGEMEN' City of Campbell I Account #11214 1 As of June 30, 2025 UNITED STATES TREASURY4.0 08/08/2024 376,552.73 100.76 377,841.80 1.83% Aa1/AA+ 2.67 91282CGP0 02/29/2028 375,000.00 3.87% 376,163.05 3,70% 5,013.59 1,678.74 AA+ 2.48 91282CHKO UNITED STATES TREASURY4.0 350,000.00 08/20/2024 353,007.81 100.86 353,007.81 1.71% Aa1/AA+ 3.00 06/30/2028 3.76% 352,337.51 3.69% 38.04 670.30 AA+ 2.80 91282CJF9 UNITED STATES TREASURY4,875 00000 375,. 08/08/2024 389,765.63 103.59 388,476.75 1.88% Aa1/AA+ 3.34 10/31/2028 3.85% 386,648.02 3.72% 3,079.99 1,828.73 AA+ 3.04 91282CKD2 UNITED STATES TREASURY 4.25 375,000.00 11/26/2024 375,585.94 101.76 381,606.45 1.85% Aa1/AA+ 3.67 02/28/2029 4.21% 375,504.50 3.73% 5,326.94 6,101.95 AA+ 3.33 91282CKG5 UNITED STATES TREASURY4.125 350,000.00 11/18/2024 347,498.05 101.35 354,730.47 1.72% Aa1/AA+ 3.75 03/31/2029 4.31% 347,849.86 3.73% 3,629.10 6,880.60 AA+ 3.42 91282CKP5 UNITED STATES TREASURY4,625 375,000.00 08/08/2024 387,583.01 103.13 386,718.75 1.87% Aa1/AA+ 3.83 04/30/2029 3 84% 385,205.00 3.74% 2,922.04 1,513.75 AA+ 3.47 91282CEV9 UNITED STATES TREASURY3.25 350,000.00 11/18/2024 334,591.80 98.17 343,601.56 1.66% Aa1/AA+ 4.00 06/30/2029 4.31% 336,641.35 3.75% 30.91 6,960.22 AA+ 3.71 91282CLC3 UNITED STATES TREASURY4.0 350,000.00 08/20/2024 354,634.77 100.93 353,267.58 1.71% Aa1/AA+ 4.08 07/31/2029 3.70% 353,828.50 3.75% 5,839.78 (560.92) AA+ 3.68 91282CLK5 U N ITE D STATES TR EASU RY 3. 62 5 400,000.00 -- 400,687.50 99.50 398,015.62 1.92% Aa1/AA+ 4.17 08/31/2029 3.60% 400,460.85 3.75% 4,946.47 (2,445.22) AA+ 3.79 91282CLN9 UNITED STATES TREASURY3.5 400,000.00 -- 389,617.18 98.99 395,968.75 1.91% Aa1/AA+ 4.25 09/30/2029 4.09% 390,947.07 3.76% 3,519.13 5,021.68 AA+ 3.88 91282CLR0 UNITED STATES TREASURY4.125 400,000.00 -- 396,388.68 101.43 405,718.75 1.96% Aa1/AA+ 4.34 10/31/2029 4.33% 396,807.56 3.76% 2,779.89 8,911.19 AA+ 3.91 91282CMA6 UNITED STATES TREASURY 4.125 400,000.00 � - 12112024 400,546.88 101.47 -3 405,875.20 1.96% Aa1/AA+ 4.42 11302029 / / 4.09% 400486.28 .76% 1,397.54 5,388.92 AA+ 4.00 91282CMD0 UNITED STATES TREASURY4,375 400,000.00 -- 398,679.69 102.48 409,921.88 1,98% Aa1/AA+ 4.50 12/31/2029 4.45% 398,800.81 3,77% 47.55 11,121.06 AA+ 4.06 91282CMU2 UNITED STATES TREASURY4.0 300,000.00 04/07/2025 303,375.00 100.93 -- 302,789.06 1.46% Aa1/AA+-� 4.75 03/31/2030 3.75% 303,219.06 3.78% 3,016.39 (430.00) AA+ 4.25 91282CNG2 UNITED STATES TREASURY4.0 350,000.00 06/09/2025 348,742.19 100.97 353,390.80 1.71% Aa1/AA+ 4.92 05/31/2030 4,08% 348,756.74 3.78% 1,185.79 4,634.06 AA+ 4.42 7,372,956.08 101.05 7,426,015.70 35.91% 3.40 Total US Treasury 7,350,000.00 4.01% 7,363,322.73 3.77% 66,635.88 62,692.97 3.10 29 HOLDINGS REPORT GivCHANDLER ASSET MANAGEMENT City of Campbell I Account #11214 1 As of June 30, 2025 20,540,653.98 99.83 20,682,866.80 100.00% Total Portfolio 20,627,127.74 4.06% 20,540,867.11 4.04% 173,105.70 140,999.69 Total Market Value + Accrued 20,854,972.50 W] 3.09 2.58 TRANSACTIONS TRANSACTION LEDGER CI. CHANDLER ASSET MANAGEWNT City of Campbell I Account 1111214104/01/2025 Through 06/30/20251 ACQUISITIONS Purchase 04/08/2025 91282CMU2 300,000,00 UNITED STATES TREASURY 101.125 3.75% (303,375.00) (262,30) (303,637.30) 0.00 4.0 03/31/2030 Purchase 04/28/2025 931142FN8 185,000,00 WALMARTINC4.35 04/28/2030 99.827 4.39% (184,679.95) 0.00 (184,679.95) 0.00 Purchase 04/30/2025 89231HAD8 65,000.00 TAOT 2025-B A3 4.34 11/15/2029 99.994 4.82% (64,996.28) 0.00 (64,996.28) 0.00 Purchase 05/08/2025 69371RT71 230,000.00 PACCAR FINANCIAL CORP 4.55 05/08/2030 99.845 4.59% (229,643.50) 0.00 (229,643.50) 0.00 Purchase 05/13/2025 02582JKP4 170,000.00 AMXCA 2025-2 A 4.28 99.998 4.28% (169,996.92) 0.00 (169,996.92) 0.00 04/15/2030 Purchase 05/29/2025 362962AD4 9S,000.00 GMALT 2025-2 A3 4.58 OS/20/2028 99.998 4.84% (94,998,42) 0.00 (94,998.42) 0.00 Purchase 06/10/2025 91282CNG2 350,000.00 UNITED STATES TREASURY 4.0 05/31/2030 99.641 4.08% (348,742.19) (382.51) (349,124.70) 0.00 Purchase 06/11/2025 44935XAD7 80,000.00 HART 2025-B A3 4.36 12/17/2029 99.991 4.36% (79,992.78) 0.00 (79,992.78) 0.00 Purchase 06/13/2025 3137FJKE8 250,000.00 FHMS K-082 A2 3.92 09/25/2028 98.797 4.27% (246,992.19) (326.67) (247,318.86) 0.00 Total Purchase 1,725,000.00 (1,723,417.23) (971.48) (1,724,388.71) 0.00 TOTAL ACQUISITIONS 1,725,000.00 (1,723,417.23) (971.48) (1,724,388.71) 0.00 DISPOSITIONS Sale 04/08/2025 9128201-6 (350,000.00) UNITED STATES TREASURY 100.500 4.30% 351,750.00 6,046.88 357,796.88 510.61 4.875 11/30/2025 Sale 05/08/2025 3130APFH3 (500,000.00) FEDERAL HOME LOAN BANKS 0.8107/29/2025 99.190 0.81% 495,950.00 1,113.75 497,063.75 (4,050.00) Sale 06/06/2025 91282CHH7 (375,000.00) U NITED STATES TREASURY 4.125 06/15/2026 100.035 4,10% 375,131.84 7,351.91 382,483.75 34.44 Sale 06/13/2025 3130APFH3 (250,000.00) FEDERAL HOME LOAN BANKS 0.8107/29/2025 99.503 0.81% 248,757.50 753.75 249,511.25 (1,242.50) Total Sale (1,475,000.00) 1,471,589.34 15,266.29 1,486,855.63 (4,747.45) 32 TRANSACTION LEDGER City of Campbell I Account #11214104/01/2025 Through 06/30/20251 TOTAL DISPOSITIONS (1,475,000.00) 2,471,589.34 15,266.29 c) CHANDLER, ASSET MANAGEMENT 1,486,855.63 (4,747.45) 33 IMPORTANT DISCLOSURES OCHANDLER ASSE I- MANAGEMENT 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. 34 BENCHMARK DISCLOSURES City of Campbell I Account #t11214 1 As of June 30, 2025 CHANDLER ASSET MANAGEMENT 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 ICE BofA 1-5 Yr US Treasury & Agency Index (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. 35