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AC 07-24-2023 Searchable PacketCITY OF CUPERTINO AUDIT COMMITTEE AGENDA 10300 Torre Avenue, City Hall Conference Room A Monday, July 24, 2023 4:00 PM Regular Meeting ROLL CALL ORDERS OF THE DAY APPROVAL OF MINUTES 1.Subject: Approve Minutes of Regular Meeting on April 24, 2023 Recommended Action: Approve Minutes of Regular Meeting on April 24, 2023 A - Draft Minutes 2.Subject: Approve Minutes of Special Meeting on May 31, 2023 Recommended Action: Approve Minutes of Special Meeting on May 31, 2023 A - Draft Minutes POSTPONEMENTS ORAL COMMUNICATIONS This portion of the meeting is reserved for persons wishing to address the Committee on any matter within the jurisdiction of the Committee and not on the agenda. Speakers are limited to three (3) minutes. In most cases, State law will prohibit the Commission from making any decisions with respect to a matter not on the agenda. OLD BUSINESS NEW BUSINESS 3.Subject: INFORMATIONAL ITEM Consider receiving OPEB & Pension Section 115 Trust Performance Report for Quarter Ending June 30, 2023 Recommended Action: Receive OPEB & Pension Section 115 Trust Performance Report for Quarter Ending June 30, 2023 Presenter: PARS and US Bank 4:15(15) Page 1 1 Audit Committee Agenda July 24, 2023 A - OPEB Pension Section 115 Trust Performance Report for Quarter Ending June 30 2023 4.Subject: ACTION ITEM Consider the Treasurer's Investment Report for the Quarter Ending June 30, 2023 Recommended Action: Receive the Treasurer's Investment Report for the Quarter Ending June 30, 2023 and recommend filing with City Council Presenter: Thomas Leung, Budget Manager, and Chandler Asset Management 4:30(10) Staff Report A – Chandler Investment Report June 2023 B – Chandler Custodial Statement June 2023 C – PARS Pension and OPEB Account Statement June 2023 D – LAIF Account Statement June 2023 5.Subject: INFORMATIONAL ITEM Consider the Quarterly Internal Audit Status Report Recommended Action: Receive the Quarterly Internal Audit Status Report Presenter: Moss Adams 4:40(20) A - Cupertino Quarterly Internal Audit Status Report 6.Subject: ACTION ITEM Consider the Enterprise Leadership Assessment Report Recommended Action: Receive the Enterprise Leadership Assessment Report and forward to City Council Presenter: Moss Adams 5:00(20) A - City of Cupertino Enterprise Leadership Assessment Final Report 7.Subject: ACTION ITEM Consider the FY 2023-24 Internal Audit Program Recommended Action: Receive the FY 2023-24 Internal Audit Program and forward to City Council Presenter: Moss Adams 5:20(15) A - City of Cupertino FY 23-24 Internal Audit Program 8.Subject: INFORMATIONAL ITEM Consider the Audit Committee 2023 Schedule and Work Plan Recommended Action: Receive Audit Committee 2023 Schedule and Work Plan and provide direction to staff Presenter: Jonathan Orozco, Finance Manager 5:35(10) A - Proposed Audit Committee 2023 Schedule and Work Plan B - Proposed Audit Committee 2023 Schedule and Work Plan - Redline Page 2 2 Audit Committee Agenda July 24, 2023 STAFF AND COMMITTEE REPORTS COMMITTEEMEMBER ATTENDANCE AT UPCOMING MEETINGS AND EVENTS FUTURE AGENDA SETTING ADJOURNMENT In compliance with the Americans with Disabilities Act (ADA), anyone who is planning to attend this meeting who is visually or hearing impaired or has any disability that needs special assistance should call the City Clerk's Office at 408-777-3223, at least 48 hours in advance of the meeting to arrange for assistance. In addition, upon request, in advance, by a person with a disability, meeting agendas and writings distributed for the meeting that are public records will be made available in the appropriate alternative format. Any writings or documents provided to a majority of the members after publication of the agenda will be made available for public inspection. Please contact the City Clerk’s Office in City Hall located at 10300 Torre Avenue, Cupertino, California 95014, during normal business hours. IMPORTANT NOTICE: Please be advised that pursuant to Cupertino Municipal Code section 2.08.100 written communications sent to the Cupertino City Council, Commissioners or City staff concerning a matter on the agenda are included as supplemental material to the agendized item. These written communications are accessible to the public through the City’s website and kept in packet archives. Do not include any personal or private information in written communications to the City that you do not wish to make public, as written communications are considered public records and will be made publicly available on the City website. Members of the public are entitled to address the members concerning any item that is described in the notice or agenda for this meeting, before or during consideration of that item. If you wish to address the members on any other item not on the agenda, you may do so during the public comment . Page 3 3 CITY OF CUPERTINO Agenda Item 23-12479 Agenda Date: 7/24/2023 Agenda #: 1. Subject:Approve Minutes of Regular Meeting on April 24, 2023 Approve Minutes of Regular Meeting on April 24, 2023 CITY OF CUPERTINO Printed on 7/21/2023Page 1 of 1 powered by Legistar™4 Page 1 City of Cupertino Audit Committee Regular Meeting Minutes April 24, 2023 CALL TO ORDER At 4:00 p.m., Vice Chair Mohan called the regular meeting to order in the City of Cupertino Conference Room A, 10300 Torre Avenue, and via teleconference. ROLL CALL Committee Members Present: Vice Chair Sheila Mohan, Committee member J.R. Fruen, Committee member Sophie Song City Staff Present: Kristina Alfaro, Thomas Leung, Janet Liang, Susan Michael, Matt Morley, Jonathan Orozco, Elizabeth Viajar Absent: Chair Angela Chen, Committee member Laura Hammer Guests: Jordan Wahl (Moss Adams), Adam Rondeau (Moss Adams), Colleen Rozillis (Moss Adams), Stephen Bachetti (Moss Adams), Rick Rosenthal (U.S. Bank), Jennifer Meza (U.S. Bank), Carlos Oblites (Chandler) ORDERS OF THE DAY 1. APPROVE MINUTES OF REGULAR MEETING ON MARCH 27, 2023 Committee member Fruen motioned to approve the minutes with edits, and Committee member Song seconded. Peggy Griffin made comments. The motion carried unanimously with Chair Chen and Committee member Hammer absent. POSTPONEMENTS ORAL COMMUNICATIONS Peggy Griffin and Rhoda Fry made comments. OLD BUSINESS NEW BUSINESS 2. Consider receiving the OPEB & Pension Section 115 Trust Performance Report for the Quarter Ending March 31, 2023 Meza and Rosenthal provided an overview of the report. Vice Chair Mohan asked how US bank handles situations in which the commodities market not holding up. Rosenthal noted they do not hold commodities exposure directly and that because the commodities market turned negative, it benefits the City. Vice Chair Mohan inquired about U.S. Banks’ strategies as the emerging markets are lagging behind. Rosenthal noted the fund was sold and placed into an index fund so that it could track the benchmark closer. 5 Page 2 Committee member Song asked if the investment balance is balanced and nontaxable, what does nontaxable mean. Rosenthal noted that it is part of their internal coding, and it determines whether or not they buy taxable securities in the bond space or municipal securities. Committee member Song inquired about the portfolio’s $1.6M in real estate assets. Rosenthal noted they are real estate investments in an index fund. Vice Chair Mohan asked what is the cause for the increase in OPEB and Pension. Rosenthal noted that there are many reasons and concerns about a recession, focusing on the federal government and people having optimism that the Fed is coming to an end of their rate increase cycle. 3. Consider the Library Construction Audit Final Report Bacchetti, Wahl, and Rondeau provided an overview of the report. Committee member Song asked how the contract was selected, whether it was reviewed, and whether it was part of the scope. Rozillis noted that it is not part of the scope for construction audits which they covered under the Procurement Operational Review last fiscal year. Rozillis noted that types of projects are bid according to best practice. Bacchetti noted that the construction contract audit is specifically related to reviewing the contract terms and the associated controls. Committee member Song asked when the project was done, what was the cost per square foot compared to others. Bacchetti noted that it was not part of this audit’s scope but that it should be calculated to establish the contract value and if it is within square footage. Committee member Song asked if engineers were hired to review the cost or if the financial auditors were because there are different types of auditors. Alfaro noted that this was the scope approved by the Audit Committee and City Council, and another audit could be brought up for the next internal audit program to be included. Rozillis noted that this proves the City’s processes are working and adds value as it notes that what the City is doing is correct. Bachetti noted that they have a team of qualified and experienced construction auditors and that small findings are an indication of good controls. Rhoda Fry and Peggy Griffin made comments. Vice Chair Mohan asked if there is an engineering audit or any other audits at the end of any construction projects. Staff noted that there is no other audit but that there are final procedures and that major construction of the library is complete. Vice Chair Mohan asked if the language amendments is something the City can do for future projects. Morley noted that they have reviewed with the City attorney and will continue to look to improve the contract language , but some of the recommendations may not be used as there are items not allowed under state law. Vice Chair Mohan asked why the contractor would have no further documents. Morley noted that the compliance document was not something that the contractor could go back and create. Committee member Song asked if they could elaborate on contract compliance. Rondeau noted that there was only one deviation, and waivers come in 2 types, conditional and non-conditional. Out of the 45 documents, there was one documentation missing, and the conditional waiver acts as a promise that when the waiver is received, the account will be settled. Once payment is received, they will issue a non-conditional waiver. 6 Page 3 Committee member Fruen motioned to receive the report and forward to City Council, Committee member Song seconded. The motion carried unanimously with Chair Chen and Committee member Hammer absent. 4. Consider the Internal Audit Status Report and Fraud, Waste, and Abuse Program Update Rozillis provided an overview of the report. Committee member Song asked what the allegation is. Rozillis noted that as it is being investigated, they cannot reveal information due to confidentially. Vice Chair Mohan asked at which point the information is disclosed. Rozillis noted that they will follow up with the City Attorney to determine. Committee member Song asked who has the knowledge. Rozillis noted Moss Adams and the City Attorney. Rhoda Fry and Peggy Griffin made comments. Committee member Song noted that the City Attorney reports to the Committee, and so why is the information kept confidential. Rozillis noted that it is best practice , and City Attorney will hold information confidential until they can release it. Alfaro noted that it is an ongoing investigation, and once the investigation concludes, they will note if it could be released. 5. Consider the Treasurer's Investment Report for the Quarter Ending March 31, 2023 Leung provided an overview of the report. Oblites provided an overview of the report. Vice Chair Mohan asked if the March investment report takes into account the new requirements for liquidity. Oblites confirmed that it does not. Committee member Song asked what it takes to get approval to change the strategy. Oblites noted that it is generally driven by staff and based on budgetary and financial needs to get a good asset-liability match. For most cities it is left to staff to determine and needs to comply with government code and investment policy, which is governed by City Council. Rhoda Fry and Peggy Griffin made comments. Vice Chair Mohan motioned to receive the report and recommend filing with City Council; Committee member Fruen seconded. The motion carried unanimously with Chair Chen and Committee member Hammer absent. 6. Consider the City's Investment Policy Leung provided an overview. Oblites provided an overview. Committee member Fruen asked given the date of the letter, does it incorporate the needs for increased liquidity. Oblites noted that the change to the policy does not affect the liquidity rate or the change in strategy. Both strategies continue to meet requirements and policy of the code. Vice Chair Mohan asked what is the benchmark index for the total rate of return. Oblites noted that it is an index of treasuries and agencies between 1-5 years with a duration of 2.5 years. Committee member Fruen motioned to receive the report and recommend filing with City Council; Vice Chair Mohan seconded. The motion carried unanimously with Chair Chen and Committee member Hammer absent. 7 Page 4 7. Consider the Audit Committee 2023 Schedule and Work Plan Leung presented the committee's work plan. STAFF AND COMMITTEE REPORTS COMMITTEE MEMBER ATTENDANCE AT UPCOMING MEETINGS AND EVENTS FUTURE AGENDA SETTING ADJOURNMENT The meeting adjourned at 6:03 p.m. Recording Secretary: Janet Liang, Administrative Assistant 8 CITY OF CUPERTINO Agenda Item 23-12480 Agenda Date: 7/24/2023 Agenda #: 2. Subject:Approve Minutes of Special Meeting on May 31, 2023 Approve Minutes of Special Meeting on May 31, 2023 CITY OF CUPERTINO Printed on 7/21/2023Page 1 of 1 powered by Legistar™9 Page 1 City of Cupertino Audit Committee Special Meeting Minutes May 31, 2023 CALL TO ORDER At 4:03 p.m., Vice Chair Mohan called the regular meeting to order in the City of Cupertino Conference Room A, 10300 Torre Avenue and via teleconference. ROLL CALL Committee Members Present: Vice Chair Sheila Mohan, Committee member J.R. Fruen, Committee member Laura Hammer City Staff Present: Kristina Alfaro, Thomas Leung, Janet Liang Matt Morley, Jonathan Orozco Absent: Chair Angela Chen, Committee member Sophie Song Guests: ORDERS OF THE DAY POSTPONEMENTS ORAL COMMUNICATIONS Rhoda Fry made comments. NEW BUSINESS 1. External Auditor Selection Subcommittee Report on City of Cupertino Auditor Selection Orozco provided an overview of the report. Committee member Hammer inquired about the grading. Orozco noted the top three were closely grouped together and the following four had a gap. Committee member Hammer inquired if the interviews helped to make a final decision. Orozco noted that Maze & Associates came in a close second but collectively the Pun Group was the best option. Committee member Hammer inquired if the Pun Group fees were similar across the groups. Orozco noted that their fees were in the middle of the top three. Rhoda Fry made comments. Committee member Fruen motioned, Committee member Hammer seconded. The motion passed with Chair Chen and Committee member Song absent. 2. Consider retaining the City’s Internal Auditor, Moss Adams, LLP for an additional three- year term and forward to City Council for approval. Orozco provided an overview of the report. Rhoda Fry made comments. Committee member Hammer motioned, Committee member Fruen seconded. The motion passed with Chair Chen and Committee member Song absent. STAFF AND COMMITTEE REPORTS 10 Page 2 COMMITTEEMEMBER ATTENDANCE AT UPCOMING MEETINGS AND EVENTS Staff noted that they will reach out to Chair Chen to see if she would attend the June 14, 2023 Mayor’s Commissioners meeting. Vice Chair Mohan noted her availability if Chair Chen is absent. FUTURE AGENDA SETTING ADJOURNMENT The meeting adjourned at 4:27 p.m. Recording Secretary: Janet Liang, Management Analyst 11 CITY OF CUPERTINO Agenda Item 23-12481 Agenda Date: 7/24/2023 Agenda #: 3. Subject:INFORMATIONAL ITEM Consider receiving OPEB & Pension Section 115 Trust Performance Report for Quarter Ending June 30, 2023 Receive OPEB & Pension Section 115 Trust Performance Report for Quarter Ending June 30, 2023 Presenter: PARS and US Bank 4:15(15) CITY OF CUPERTINO Printed on 7/21/2023Page 1 of 1 powered by Legistar™12 City of Cupertino PARS 115 Trust – OPEB Prefunding Program & Pension Rate Stabilization Program Plan Client Review July 24, 2023 13 City of Cupertino ▎ 2 Pars Trust Team Trust Administrator & Consultant •Serves as record-keeper, consultant, and central-point of contact •Record-keeping/account valuations •Monitors contributions •Processes disbursements •Handles all agency/participant inquiries •Ongoing plan compliance Corporate Experience Dollars under Administration 39 years (1984-2023) Over $6.7 billion Investment Manager & Trustee •Safeguard and Oversight of Plan Assets •Investment Fiduciary •Manage Program Portfolios •Investment Policy Assistance •Open Architecture with Active and Index Investments Corporate Experience Dollars under Trust Custody 160 years (1863–2023) Over $9.0 trillion 14 City of Cupertino ▎ 3 Subaccounts OPEB and pension assets are individually sub-accounted, and can be divided by dept., bargaining group, or cost center. Assets in the PARS Section 115 Combination Trust can be used to address unfunded liabilities. Financial Stability Allows separate investment strategies for OPEB and pension subaccounts. Flexible Investing OPEB and pension assets aggregate and reach lower fees on tiered schedule sooner – saving money! Economies-of-ScaleAnytime Access Trust funds are available anytime; OPEB for OPEB and pension for pension. No set-up costs, no minimum annual contribution amounts, and no fees until assets are added. No Set Up Cost or Minimums Retiree Medical Benefits Prefund OPEB GASB 75 OPEB $34.7M Reimburse agency; or Pay benefits provider Pension Rate Stabilization Program Prefund Pension (PRSP)GASB 68 Pension $19.1M Reimburse agency; or Pay retirement system Assets can be used to:Assets can be used to: prefund either or both General Fund PARS IRS -Approved Section 115 Trust 15 U.S. Bank ConfidentialU.S. Bank Confidential Investment and insurance products and services including annuities are: NOT A DEPOSIT ●NOT FDIC INSURED ●MAY LOSE VALUE ●NOT BANK GUARANTEED ●NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY PARS/CITY OF CUPERTINO 115P OPEB & PENSION ACCOUNTS U.S. Bank Institutional Asset Management June 30, 2023 16 U.S. Bank Confidential Your U.S. Bank Team Ryan Maxey Vice President & Relationship Manager Institutional Trust & Custody 971.865.1407 ryan.maxey@usbank.com Rick Rosenthal Vice President & Senior Portfolio Manager Institutional Asset Management 213.359.7954 richard.rosenthal@usbank.com Mitch Barker Executive Vice President PARS (Public Agency Retirement Services) 949.310.4876 (cell) www.pars.org Jennifer Meza, CEBS Manager, Consulting PARS (Public Agency Retirement Services) 800.540.6369 Ext. 141 (office) 949.375.8239 (cell) www.pars.org Page 2 of 4017 U.S. Bank Confidential Table of Contents Section 1 –PORTFOLIO REVIEW PARS/CITY OF CUPERTINO 115P -OPEB (X9600) •Portfolio Overview •Equity Analysis •Fixed Income Analysis •Performance (AGG460596) •Holdings PARS/CITY OF CUPERTINO 115P –PENSION (X9601) •Portfolio Overview •Equity Analysis •Fixed Income Analysis •Performance •Holdings Section 2 –ECONOMIC OUTLOOK Section 3 –DISCLOSURES, DEFINITIONS, DESCRIPTIONS Page 3 of 4018 U.S. Bank Confidential PORTFOLIO REVIEW 19 PARS/CITY OF CUPERTINO 115P -OPEB Portfolio Overview Account: XXXXXX9600 Holdings Method: Direct Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Portfolio Summary Inv. Objective Balanced/Nontaxable-1 Total Portfolio Value $34,683,396 Net Realized Cap Gains YTD $2,163,530 Annual Income Projected $763,863 Current Yield 2.20% Number of Securities 11 Portfolio Mgr.Rick Rosenthal Portfolio Asset Allocation Equity $22,654,096 65.32% Fixed Income $9,937,521 28.65% Real Assets $1,745,781 5.03% Cash $345,997 1.00% Invested Total $34,683,396 100.00% 65% 29% 5% 1% Equity Fixed Income Real Assets Cash Portfolio Model Allocation Cash Equivalents Investment Grade High Yield Large Cap U.S. Equity Mid Cap U.S. Equity Small Cap U.S. Equity Developed Markets Equity Emerging Markets Equity U.S. Listed Real Estate 0% 10% 20% 30% 40% 50% Portfolio Page 5 of 40 20 PARS/CITY OF CUPERTINO 115P -OPEB Equity Overview Account: XXXXXX9600 Holdings Method: Direct and Indirect Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Equity Summary Inv. Objective Balanced/Nontaxable-1 Total Equity Value $22,654,096 Current Yield 1.36% Annual Income Projected $306,966 Number of Securities 6 Portfolio Mgr.Rick Rosenthal Equity Asset Allocation Large Cap U.S.$10,470,344 46.22% Mid Cap U.S.$4,211,642 18.59% Developed Markets $4,172,852 18.42% Emerging Markets $2,053,271 9.06% Small Cap U.S.$1,745,986 7.71% 46% 19% 18% 9% 8% Large Cap U.S.Mid Cap U.S.Developed Markets Emerging Markets Small Cap U.S. Bottom 5/ Top 5 Contributors (Trailing 12 Months) HNACXFSPSXJVLIXFSMDXBOSOXFPADXFSSNXBEXIX -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Equity Global Distribution North America Europe Asia Middle East South America Africa 71.47% 14.52% 12.50% 0.69% 0.54% 0.28% Equity Country Distribution United States Japan France United Kingdom Hong Kong 70.17% 4.05% 3.44% 3.29% 2.12% Page 6 of 40 21 PARS/CITY OF CUPERTINO 115P - OPEB Common Stock Detail Account: XXXXXX9600 Holdings Method: Direct and Indirect Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Top 10 Common Stock Holdings Stock Wt. (%) Full Port Wt. (%)Yield (%) YTD Return* (%) 52 Wk Return* (%) NVIDIA Corporation 1.94 1.31 0.03 189.5 179.3 Microsoft Corporation 1.74 1.18 0.79 42.7 33.9 Apple Inc.1.63 1.10 0.49 49.7 42.7 Alphabet Inc. Class A 1.40 0.94 0.00 35.7 9.9 Amazon.com, Inc.1.32 0.89 0.00 55.2 22.7 Tesla, Inc.1.11 0.75 0.00 112.5 16.6 LVMH Moet Hennessy Louis V…0.89 0.60 1.40 27.9 50.6 JPMorgan Chase & Co.0.86 0.58 2.61 10.1 33.5 Berkshire Hathaway Inc. Class …0.84 0.57 0.00 10.4 24.9 Prologis, Inc.0.83 0.56 2.72 10.4 7.2 Common Stock Characteristics Portfolio S&P 500 Market Cap - Wtd Avg $255.6B $680.8B Market Cap - Median $4.7B $31.1B Dividend Yield (%)1.93 1.54 P/E NTM 16.2 19.3 P/E LTM 16.5 21.6 ROE (%)18.5 24.8 1 Yr Beta vs. S&P Composite .85 1.05 Est 3-5 Yr EPS Growth (%)13.8 12.3 Hist 3 Yr EPS Growth (%)22.5 22.7 Number of Securities 5051 503 Common Stock Sector Exposures 5% 10% 15% 20% 25% 30% Communication Services Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Real Estate Utilities Portfolio S&P 500 Portfolio S&P 500 6.02 8.39 12.64 10.66 5.22 6.67 5.07 4.11 13.68 12.42 12.81 13.42 11.13 8.49 17.08 28.26 4.03 2.50 9.96 2.49 2.38 2.58 Common Stock Market Cap Distribution > 50B 10B to 50B 2B to 10B 250MM to 2B < 250MM 0% 10% 20% 30% 40% 50% 60% 70% 80% Portfolio S&P 500 *Specific to the security - does not represent performance in the portfolio. Page 7 of 40 22 PARS/CITY OF CUPERTINO 115P -OPEB Fixed Income Overview Account: XXXXXX9600 Holdings Method: Direct Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Fixed Income Summary Inv. Objective Balanced/Nontaxable-1 Total Fixed Income Value $9,937,521 Current Yield 3.82% Annual Income Projected $379,440 Number of Securities 3 Portfolio Mgr.Rick Rosenthal Fixed Income Asset Allocation Investment Grade $8,208,395 82.60% High Yield $1,729,126 17.40% 83% 17% Investment Grade High Yield Fixed Income Sector Exposures Mutual Funds & ETFs $9,937,521 100.00%100% Mutual Funds & ETFs Fixed Income Market Value 12/3 1 / 2 0 1 9 12/3 1 / 2 0 2 0 12/3 1 / 2 0 2 1 12/3 0 / 2 0 2 2 Prev i o u s C l o s e 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 Page 8 of 40 23 U.S. Bank Confidential Custom Benchmark Asset Class Benchmark Range Target Actual Equities MSCI AC World Free Index 50%‐70% 63% 65.3% Fixed Income BBARC Global Aggregate Index 20%‐40% 29% 28.7% Real Estate S&P Global REIT TR USD 0%‐15% 5% 5.0% Commodities S&P GSCI Commodity Index 0%‐10% 2% 0% Cash FTSE 3‐Mo US T‐Bill Index 0%‐10% 1% 1.0% CITY OF CUPERTINO Page 9 of 4024 Selected Period Performance Period Ending: 06/30/2023PARS/CITY OF CUPERTINO OPEB AGG (****60596) Year Inception to Date to Date Market Value 3 Months (6 Months) 1 Year 3 Years 5 Years 110 Months 07/01/2010 Total Portfolio Gross of Fees 34,717,882 4.23 9.93 11.14 6.10 4.66 5.22 6.18 Total Portfolio Net of Fees 34,717,882 4.19 9.83 10.94 5.91 4.46 5.00 City of Cupertino 3.54 9.29 9.88 6.61 5.57 5.08 6.90 Total Equity 22,654,096 6.40 13.65 17.14 9.95 7.82 8.51 10.96 MSCI ACWI (Net)6.18 13.93 16.53 10.99 8.10 7.61 9.58 U.S. Equity 16,427,972 7.88 15.55 19.53 11.56 8.75 10.02 S&P 500 Index (Total Return)8.74 16.89 19.59 14.60 12.31 11.94 14.13 S&P MidCap 400 Index 4.85 8.84 17.61 15.44 7.79 9.18 12.28 S&P SmallCap 600 Index 3.38 6.03 9.75 15.19 5.22 8.61 12.14 Developed Markets Equity 4,172,852 3.20 12.07 18.94 9.37 8.88 6.67 MSCI EAFE Index (Net)2.95 11.67 18.77 8.93 4.39 3.79 6.46 Emerging Markets Equity 2,053,271 1.02 2.82 -.98 -.85 -1.38 .18 MSCI Emerging Markets Index (Net).90 4.89 1.75 2.32 .93 2.40 3.05 Total Fixed Income 9,970,095 -.36 2.62 .82 -2.31 -.61 .23 1.39 BBARC Global Aggregate Index -1.53 1.43 -1.32 -4.96 -1.09 -.42 .96 BBARC US Aggregate Bond Index -.84 2.09 -.94 -3.96 .77 1.31 1.97 Total Real Assets 1,745,781 2.57 4.98 -.51 6.83 3.25 Real Estate 1,745,781 2.57 4.98 -.51 6.83 3.76 5.48 S&P Global REIT Index (Gross)1.03 2.70 -1.92 6.38 2.41 4.23 7.73 S&P GSCI Index -2.73 -7.54 -14.22 25.11 2.75 -4.66 -1.67 Total Cash Equivalents 347,910 1.21 2.27 3.64 1.26 1.40 .96 .68 ICE BofAML US 3-Month Treasury Bill Index 1.17 2.25 3.59 1.27 1.55 1.07 .78 Pending Cash 0 .00 .00 .00 .00 .00 .00 .00 Page 10 of 4025 PARS/CITY OF CUPERTINO 115P -OPEB Portfolio Holdings Account: XXXXXX9600 Holdings Method: Direct Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Symbol % of Port.Price Shares/ Units Portfolio Value Cost Basis Unrealized Gain/Loss Current Yield Projected Annual Income Total 100.0 34,683,396 32,177,849 2,505,546 2.20 763,863 Cash 1.00 345,997 345,997 .00 5.01 17,351 Cash Equivalents 1.00 345,997 345,997 .00 5.01 17,351 FIRST AM GOVT OB FD CL X 31846V336 1.00 1.00 345,997 345,997 345,997 .00 5.01 17,351 Fixed Income 28.65 9,937,521 9,078,846 858,675 3.82 379,440 Investment Grade 23.67 8,208,395 7,137,668 1,070,727 3.12 255,846 Mutual Funds & ETFs 23.67 8,208,395 7,137,668 1,070,727 3.12 255,846 DoubleLine Total Return Bond Fund Class I DBLTX 7.87 8.81 309,745 2,728,851 2,721,670 7,181 4.05 110,579 Fidelity U.S. Bond Index Fund FXNAX 15.80 10.26 534,069 5,479,545 4,415,998 1,063,546 2.65 145,267 High Yield 4.99 1,729,126 1,941,178 -212,052 7.15 123,595 Mutual Funds & ETFs 4.99 1,729,126 1,941,178 -212,052 7.15 123,595 Artisan High Income Fund -Institutional Sh…APHFX 4.99 8.66 199,668 1,729,126 1,941,178 -212,052 7.15 123,595 Equity 65.32 22,654,096 20,685,714 1,968,382 1.36 306,966 Large Cap U.S. Equity 30.19 10,470,344 11,227,949 -757,605 0.67 69,871 Mutual Funds & ETFs 30.19 10,470,344 11,227,949 -757,605 0.67 69,871 Harbor Capital Appreciation Fund -Retire…HNACX 15.14 86.12 60,966 5,250,408 5,421,828 -171,420 0.00 0 John Hancock Fds III Disciplined Value Fu…JVLIX 15.05 21.74 240,107 5,219,936 5,806,121 -586,185 1.34 69,871 Mid Cap U.S. Equity 12.14 4,211,642 1,541,680 2,669,962 1.50 63,115 Mutual Funds & ETFs 12.14 4,211,642 1,541,680 2,669,962 1.50 63,115 Fidelity Mid Cap Index Fund FSMDX 12.14 28.16 149,561 4,211,642 1,541,680 2,669,962 1.50 63,115 Small Cap U.S. Equity 5.03 1,745,986 1,717,621 28,366 1.53 26,724 Mutual Funds & ETFs 5.03 1,745,986 1,717,621 28,366 1.53 26,724 Fidelity Small Cap Index Fund FSSNX 5.03 23.39 74,647 1,745,986 1,717,621 28,366 1.53 26,724 Developed Markets Equity 12.03 4,172,852 4,194,978 -22,126 2.37 99,078 Mutual Funds & ETFs 12.03 4,172,852 4,194,978 -22,126 2.37 99,078 Fidelity International Index Fund FSPSX 12.03 46.16 90,400 4,172,852 4,194,978 -22,126 2.37 99,078 Emerging Markets Equity 5.92 2,053,271 2,003,486 49,785 2.35 48,178 Mutual Funds & ETFs 5.92 2,053,271 2,003,486 49,785 2.35 48,178 Fidelity Emerging Markets Index Fund FPADX 5.92 9.93 206,775 2,053,271 2,003,486 49,785 2.35 48,178 Real Assets 5.03 1,745,781 2,067,292 -321,511 3.44 60,106 Page 11 of 40 26 PARS/CITY OF CUPERTINO 115P -OPEB Portfolio Holdings Account: XXXXXX9600 Holdings Method: Direct Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Symbol % of Port.Price Shares/ Units Portfolio Value Cost Basis Unrealized Gain/Loss Current Yield Projected Annual Income U.S. Listed Real Estate 5.03 1,745,781 2,067,292 -321,511 3.44 60,106 iShares Core U.S. REIT ETF USRT 5.03 51.41 33,958 1,745,781 2,067,292 -321,511 3.44 60,106 Page 12 of 40 27 PARS/CITY OF CUPERTINO 115P-PENSION Portfolio Overview Account: XXXXXX9601 Holdings Method: Direct Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Portfolio Summary Inv. Objective Balanced/Nontaxable-1 Total Portfolio Value $19,075,324 Net Realized Cap Gains YTD $790,236 Annual Income Projected $420,113 Current Yield 2.20% Number of Securities 11 Portfolio Mgr.Rick Rosenthal Portfolio Asset Allocation Equity $12,459,398 65.32% Fixed Income $5,465,481 28.65% Real Assets $960,133 5.03% Cash $190,312 1.00% Invested Total $19,075,324 100.00% 65% 29% 5% 1% Equity Fixed Income Real Assets Cash Portfolio Model Allocation Cash Equivalents Investment Grade High Yield Large Cap U.S. Equity Mid Cap U.S. Equity Small Cap U.S. Equity Developed Markets Equity Emerging Markets Equity U.S. Listed Real Estate 0% 10% 20% 30% 40% 50% Portfolio Page 13 of 40 28 PARS/CITY OF CUPERTINO 115P-PENSION Equity Overview Account: XXXXXX9601 Holdings Method: Direct and Indirect Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Equity Summary Inv. Objective Balanced/Nontaxable-1 Total Equity Value $12,459,398 Current Yield 1.36% Annual Income Projected $168,827 Number of Securities 6 Portfolio Mgr.Rick Rosenthal Equity Asset Allocation Large Cap U.S.$5,758,525 46.22% Mid Cap U.S.$2,316,337 18.59% Developed Markets $2,295,003 18.42% Emerging Markets $1,129,267 9.06% Small Cap U.S.$960,265 7.71% 46% 19% 18% 9% 8% Large Cap U.S.Mid Cap U.S.Developed Markets Emerging Markets Small Cap U.S. Bottom 5/ Top 5 Contributors (Trailing 12 Months) HNACXFSPSXJVLIXFSMDXBOSOXFPADXFSSNXBEXIX -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Equity Global Distribution North America Europe Asia Middle East South America Africa 71.47% 14.52% 12.50% 0.69% 0.54% 0.28% Equity Country Distribution United States Japan France United Kingdom Hong Kong 70.17% 4.05% 3.44% 3.29% 2.12% Page 14 of 40 29 PARS/CITY OF CUPERTINO 115P- PENSION Common Stock Detail Account: XXXXXX9601 Holdings Method: Direct and Indirect Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Top 10 Common Stock Holdings Stock Wt. (%) Full Port Wt. (%)Yield (%) YTD Return* (%) 52 Wk Return* (%) NVIDIA Corporation 1.94 1.31 0.03 189.5 179.3 Microsoft Corporation 1.74 1.18 0.79 42.7 33.9 Apple Inc.1.63 1.10 0.49 49.7 42.7 Alphabet Inc. Class A 1.40 0.94 0.00 35.7 9.9 Amazon.com, Inc.1.32 0.89 0.00 55.2 22.7 Tesla, Inc.1.11 0.75 0.00 112.5 16.6 LVMH Moet Hennessy Louis V…0.89 0.60 1.40 27.9 50.6 JPMorgan Chase & Co.0.86 0.58 2.61 10.1 33.5 Berkshire Hathaway Inc. Class …0.84 0.57 0.00 10.4 24.9 Prologis, Inc.0.83 0.56 2.72 10.4 7.2 Common Stock Characteristics Portfolio S&P 500 Market Cap - Wtd Avg $255.6B $680.8B Market Cap - Median $4.7B $31.1B Dividend Yield (%)1.93 1.54 P/E NTM 16.2 19.3 P/E LTM 16.5 21.6 ROE (%)18.5 24.8 1 Yr Beta vs. S&P Composite .85 1.05 Est 3-5 Yr EPS Growth (%)13.8 12.3 Hist 3 Yr EPS Growth (%)22.5 22.7 Number of Securities 5051 503 Common Stock Sector Exposures 5% 10% 15% 20% 25% 30% Communication Services Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Real Estate Utilities Portfolio S&P 500 Portfolio S&P 500 6.02 8.39 12.64 10.66 5.22 6.67 5.07 4.11 13.68 12.42 12.81 13.42 11.13 8.49 17.08 28.26 4.03 2.50 9.96 2.49 2.38 2.58 Common Stock Market Cap Distribution > 50B 10B to 50B 2B to 10B 250MM to 2B < 250MM 0% 10% 20% 30% 40% 50% 60% 70% 80% Portfolio S&P 500 *Specific to the security - does not represent performance in the portfolio. Page 15 of 40 30 PARS/CITY OF CUPERTINO 115P-PENSION Fixed Income Overview Account: XXXXXX9601 Holdings Method: Direct Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Fixed Income Summary Inv. Objective Balanced/Nontaxable-1 Total Fixed Income Value $5,465,481 Current Yield 3.82% Annual Income Projected $208,686 Number of Securities 3 Portfolio Mgr.Rick Rosenthal Fixed Income Asset Allocation Investment Grade $4,514,489 82.60% High Yield $950,992 17.40% 83% 17% Investment Grade High Yield Fixed Income Sector Exposures Mutual Funds & ETFs $5,465,481 100.00%100% Mutual Funds & ETFs Fixed Income Market Value 12/3 1 / 2 0 1 9 12/3 1 / 2 0 2 0 12/3 1 / 2 0 2 1 12/3 0 / 2 0 2 2 Prev i o u s C l o s e 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 Page 16 of 40 31 U.S. Bank Confidential Custom Benchmark Asset Class Benchmark Range Target Actual Equities MSCI AC World Free Index 50%‐70% 63% 65.3% Fixed Income BBARC Global Aggregate Index 20%‐40% 29% 28.7% Real Estate S&P Global REIT TR USD 0%‐15% 5% 5.0% Commodities S&P GSCI Commodity Index 0%‐10% 2% 0% Cash FTSE 3‐Mo US T‐Bill Index 0%‐10% 1% 1.0% CITY OF CUPERTINO Page 17 of 4032 Selected Period Performance Period Ending: 06/30/2023PARS/CITY OF CUPERTINO 115P- PENSION (****059601) Year Inception to Date to Date Market Value 3 Months (6 Months) 1 Year 3 Years 05/01/2019 Total Portfolio Gross of Fees 19,094,291 4.23 9.93 11.12 6.03 5.62 Total Portfolio Net of Fees 19,094,291 4.19 9.83 10.92 5.84 5.43 City of Cupertino 3.54 9.29 9.88 6.61 5.51 Total Equity 12,459,398 6.40 13.65 17.15 9.96 8.57 MSCI ACWI (Net)6.18 13.93 16.53 10.99 8.40 U.S. Equity 9,035,127 7.88 15.55 19.54 11.56 9.26 S&P 500 Index (Total Return)8.74 16.89 19.59 14.60 12.31 S&P MidCap 400 Index 4.85 8.84 17.61 15.44 8.82 S&P SmallCap 600 Index 3.38 6.03 9.75 15.19 7.08 Developed Markets Equity 2,295,003 3.20 12.07 18.94 9.37 10.64 MSCI EAFE Index (Net)2.95 11.67 18.77 8.93 5.23 Emerging Markets Equity 1,129,267 1.02 2.82 -.98 -.85 -1.11 MSCI Emerging Markets Index (Net).90 4.89 1.75 2.32 .47 Total Fixed Income 5,483,396 -.36 2.62 .81 -2.32 -1.52 BBARC Global Aggregate Index -1.53 1.43 -1.32 -4.96 -1.81 BBARC US Aggregate Bond Index -.84 2.09 -.94 -3.96 -.18 Total Real Assets 960,133 2.57 4.98 -.40 6.91 2.86 Real Estate 960,133 2.57 4.98 -.40 6.91 2.86 S&P Global REIT Index (Gross)1.03 2.70 -1.92 6.38 1.03 S&P GSCI Index -2.73 -7.54 -14.22 25.11 5.31 Total Cash Equivalents 191,364 1.21 2.27 3.56 1.22 1.26 ICE BofAML US 3-Month Treasury Bill Index 1.17 2.25 3.59 1.27 1.42 Pending Cash 0 .00 .00 .00 .00 .00 Page 18 of 4033 PARS/CITY OF CUPERTINO 115P-PENSION Portfolio Holdings Account: XXXXXX9601 Holdings Method: Direct Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Symbol % of Port.Price Shares/ Units Portfolio Value Cost Basis Unrealized Gain/Loss Current Yield Projected Annual Income Total 100.0 19,075,324 18,904,465 170,859 2.20 420,113 Cash 1.00 190,312 190,312 .00 5.01 9,544 Cash Equivalents 1.00 190,312 190,312 .00 5.01 9,544 FIRST AM GOVT OB FD CL X 31846V336 1.00 1.00 190,312 190,312 190,312 .00 5.01 9,544 Fixed Income 28.65 5,465,481 5,837,476 -371,995 3.82 208,686 Investment Grade 23.67 4,514,489 4,782,325 -267,836 3.12 140,711 Mutual Funds & ETFs 23.67 4,514,489 4,782,325 -267,836 3.12 140,711 DoubleLine Total Return Bond Fund Class I DBLTX 7.87 8.81 170,355 1,500,825 1,602,919 -102,094 4.05 60,817 Fidelity U.S. Bond Index Fund FXNAX 15.80 10.26 293,729 3,013,664 3,179,406 -165,742 2.65 79,894 High Yield 4.99 950,992 1,055,151 -104,159 7.15 67,975 Mutual Funds & ETFs 4.99 950,992 1,055,151 -104,159 7.15 67,975 Artisan High Income Fund -Institutional Sh…APHFX 4.99 8.66 109,814 950,992 1,055,151 -104,159 7.15 67,975 Equity 65.32 12,459,398 11,761,780 697,618 1.36 168,827 Large Cap U.S. Equity 30.19 5,758,525 6,110,546 -352,021 0.67 38,428 Mutual Funds & ETFs 30.19 5,758,525 6,110,546 -352,021 0.67 38,428 Harbor Capital Appreciation Fund -Retire…HNACX 15.14 86.12 33,530 2,887,642 2,968,528 -80,886 0.00 0 John Hancock Fds III Disciplined Value Fu…JVLIX 15.05 21.74 132,055 2,870,883 3,142,018 -271,135 1.34 38,428 Mid Cap U.S. Equity 12.14 2,316,337 1,346,982 969,356 1.50 34,712 Mutual Funds & ETFs 12.14 2,316,337 1,346,982 969,356 1.50 34,712 Fidelity Mid Cap Index Fund FSMDX 12.14 28.16 82,256 2,316,337 1,346,982 969,356 1.50 34,712 Small Cap U.S. Equity 5.03 960,265 944,664 15,601 1.53 14,698 Mutual Funds & ETFs 5.03 960,265 944,664 15,601 1.53 14,698 Fidelity Small Cap Index Fund FSSNX 5.03 23.39 41,055 960,265 944,664 15,601 1.53 14,698 Developed Markets Equity 12.03 2,295,003 2,257,702 37,301 2.37 54,491 Mutual Funds & ETFs 12.03 2,295,003 2,257,702 37,301 2.37 54,491 Fidelity International Index Fund FSPSX 12.03 46.16 49,718 2,295,003 2,257,702 37,301 2.37 54,491 Emerging Markets Equity 5.92 1,129,267 1,101,886 27,381 2.35 26,497 Mutual Funds & ETFs 5.92 1,129,267 1,101,886 27,381 2.35 26,497 Fidelity Emerging Markets Index Fund FPADX 5.92 9.93 113,723 1,129,267 1,101,886 27,381 2.35 26,497 Real Assets 5.03 960,133 1,114,897 -154,764 3.44 33,057 Page 19 of 40 34 PARS/CITY OF CUPERTINO 115P-PENSION Portfolio Holdings Account: XXXXXX9601 Holdings Method: Direct Report Date: 06/30/2023 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2023 Symbol % of Port.Price Shares/ Units Portfolio Value Cost Basis Unrealized Gain/Loss Current Yield Projected Annual Income U.S. Listed Real Estate 5.03 960,133 1,114,897 -154,764 3.44 33,057 iShares Core U.S. REIT ETF USRT 5.03 51.41 18,676 960,133 1,114,897 -154,764 3.44 33,057 Page 20 of 40 35 U.S. Bank Confidential ECONOMIC OUTLOOK 36 [ 1 ] Important disclosures provided on page 4. Market analysis At a glance Investors remain focused on the Federal Reserve and inflation as we near the end of the second quarter amid broader equity market performance. Term of the week Investment-grade bond – A bond with a rating that signifies a relatively low risk of default. While bond rating firms like Standard & Poor’s and Moody's use slightly different designations to identify a bond's credit quality rating, "AAA" and "AA" (high credit quality) and "A" and "BBB" (medium credit quality) are considered investment grade. June 26, 2023 Number of the week 28.9% The year-to-date return of the NASDAQ Composite through June 23. “Year- and month-to-date performance suggest differing outlooks. Year-to-date performance breadth is narrow, a reflection of macroeconomic uncertainty, a headwind to rising equity prices. Conversely, June performance is superb, and breadth is broad-based, often indicative of a market poised to trend higher. The S&P 500, NASDAQ Composite and Russell 2000 are up between 4.0% and 4.3%, with 10 of 11 S&P 500 sectors in positive territory.” -Terry Sandven, Portfolio Manager, Chief Equity Strategist, U.S. Bank usbank.com Investment products and services are: NOT A DEPOSIT • NOT FDIC INSURED • MAY LOSE VALUE • NOT BANK GUARANTEED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY Page 22 of 4037 [ 2 ] Important disclosures provided on page 4. Global economy Quick take: Global manufacturing activity remains weak, while service business activity points to slower growth. U.S. housing market activity is stabilizing as builders and buyers adjust to higher mortgage rates. Our view: Our U.S. Health Check is hovering above levels consistent with historical recessions as the Federal Reserve (Fed) continues tightening monetary policy to combat elevated inflation. Outside the U.S., our foreign scores are below median, reflecting choppy progress in China’s reopening. Japan is the exception, displaying economic expansion. The U.S. economy continued to expand in June, according to “flash” (preliminary) S&P Global Purchasing Manager’s Index data, with strength in services offsetting manufacturing contraction. The index fell slightly from May, indicating the pace of activity is slowing. The manufacturing index fell to 46.9 from 51.0 in May on falling new orders, though hiring remains a positive. The service index also slowed from May, but new orders and hiring remain positive. U.S. housing market activity appears to be stabilizing as buyers and builders adjust to the higher interest rate environment, with mortgage rates above 6%. Home builder sentiment improved into positive territory for the first time in 11 months on low inventories and solid demand. Annualized housing starts in May rebounded to 1.63 million, near the 2022 peak of 1.8 million and consistent with average building activity before the global financial crisis of 2008- 2009. Flash purchasing manager surveys for June show slowing activity in Europe, Japan and the United Kingdom (UK). Manufacturing output continues to lead the slowdown, with services businesses still modestly expanding. Price pressures are easing in Europe and Japan, while inflation remains a challenge in the UK. The Bank of England raised interest rates 0.5% last week to tame inflation; consumer prices, excluding food and energy, accelerated to a 7.1% year-over-year gain in May from 6.8% in April. Equity markets Quick take: U.S. equities are in pause mode. The tug-of-war between bull and bear market investors is balanced, which implies uncertainty and increased volatility for the foreseeable future. Our view: Persistent inflation, elevated interest rates and uncertainty over the pace of earnings growth in 2023 remain headwinds to advancing equity prices, but the pace of inflation is waning, the Fed is becoming less hawkish and earnings projections have stabilized. Year- and month-to-date performance suggest differing outlooks. Year-to-date performance breadth is narrow, a reflection of macroeconomic uncertainty, a headwind to rising equity prices. For the year as of Friday’s close, the S&P 500 and NASDAQ Composite are up 13.3% and 28.9%, respectively, versus the 3.4% gain of the small cap-oriented Russell 2000. In addition, sector performance leadership is narrow. Communication Services, Consumer Discretionary and Information Technology sectors are outpacing the remaining eight sectors by a large margin. Conversely, June performance is superb and breadth is broad-based, often indicative of a market poised to trend higher. The S&P 500, NASDAQ Composite and Russell 2000 are up between 4.0% and 4.3%, with 10 of 11 S&P 500 sectors in positive territory this month. Consensus earnings projections for 2023 and 2024 remain at $220 and $244 per share, respectively. Second quarter reporting is slated to ramp in mid-July. Expectations are for flat sales and earnings declining roughly 6.8% over year-ago levels, according FactSet. We are monitoring consumer and business spending trends, guidance and insights into company cost structures and profit margins. Factors supporting a durable U.S. equity rally include indicators suggesting that inflation’s pace is waning, increased likelihood the Fed will soon stop interest rate hikes, mounting prospects for only modest economic slowing toward year-end, better earnings growth, technology-induced growth drivers and resilient consumer spending. Factors supporting a less aggressive bias are also persuasive. Increased competition from bonds given higher interest rates, narrow year-to-date performance leadership, persistent inflation, potential “higher-for-longer” Fed rate hikes, possible economic and corporate earnings pressures later in the year and stretched valuations warrant a cautious bias. Page 23 of 4038 [ 3 ] Important disclosures provided on page 4. Bond markets Quick take: Short-term Treasury yields rose based on expectations that the Fed will increase interest rates another 0.25% this year. Long- term Treasury yields fell, aided by inflation expectations anchored near the Fed’s 2% target. Higher-quality bonds benefited from the decline in long-term Treasury yields. Our view: Persistent labor market strength that supports consumer spending offsets some of the risks presented by restrictive monetary policy and contracting liquidity, presenting balanced risks to portfolios for now. Normal fixed income allocations can help buffer against two-sided risks to stocks, and high-quality bonds offer favorable income opportunities with yields near 15-year highs. Fed Chairman Jerome Powell addressed the need for high rates to cool inflation in testimony to Congress. In his semiannual monetary policy report, Powell said the Fed is close to delivering enough rate hikes slow inflation, but a little more tightening may be needed. The Fed has raised rates by 5% since early 2021 and held rates steady on June 14 to observe the lagged impact of policy rate tightening on the economy. Still, recent Fed officials’ comments and market expectations indicate additional tightening may be necessary. Market interest rates reflect a roughly 70% chance of a 0.25% rate hike in July. The Fed also emphasized its flexibility to respond to evolving economic conditions. This heightens the importance of upcoming data releases for the labor market and inflation. High yield corporate bond prices fell last week, ending a three- week winning streak. Riskier bonds benefited from improving investor sentiment that corresponded with higher equity prices over the past month. However, the recent gains drove valuations on high yield corporate bonds, measured as their extra yield over Treasuries, slightly above long-term averages. Valuations on both investment-grade corporate and municipal bonds are cheaper relative to their riskier high yield counterparts. The extra yields on riskier bonds can aid in their outperformance if economic growth and investor sentiment prove resilient, but we prefer normal bond exposures comprised primarily of high-quality bonds to help balance equity risk in portfolios. Real assets Quick take: Real assets lagged the S&P 500 last week, with global central banks indicating that monetary tightening would continue. Dividend-paying sectors, such as Infrastructure and Real Estate, continue to struggle with growth sectors in favor. Commodity prices fell last week on signs of weakening global demand. Our view: We see some value in real assets’ defensive sectors. Decelerating economic growth and corporate earnings should support tangible assets with stable cash flows. Commodities remain vulnerable as expectations for falling inflation and decelerating growth come to fruition. Real Estate trailed the S&P 500 by 3.4% last week, with growth- oriented and defensive stocks outperforming interest rate- sensitive sectors. Data centers were the top-performing properties, outperforming the broader market by 0.4%. Offices lagged considerably for the second consecutive week, trailing the S&P 500 by 5.6%. Real Estate continues to offer compelling value at current levels, but we acknowledge that near-term risk is elevated, and sentiment can change abruptly. Infrastructure trailed the S&P 500 by 1.2% last week. Toll roads led performance but lagged the broader market by 0.1%. Midstream energy was the worst-performing sector, trailing the broader market by 1.5%. Crude oil prices fell 4.1% last week despite declines in the domestic supply. Signs of weakening global demand and continued monetary policy tightening by central banks were catalysts for the move lower. The crude oil market remains undersupplied over a longer time horizon, which provides support for oil prices. However, we acknowledge downside risks to oil prices exist as the global economy slows. Page 24 of 4039 [ 4 ] ©2023 U.S. Bank. This information represents the opinion of U.S. Bank Wealth Management. The views are subject to change at any time based on market or other conditions and are current as of the date indicated on the materials. This is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. U.S. Bank is not affiliated or associated with any organizations mentioned. Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio. Diversification and asset allocation do not guarantee returns or protect against losses. Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for direct investment. The S&P 500 Index consists of 500 widely traded stocks that are considered to represent the performance of the U.S. stock market in general. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index and is representative of the U.S. small capitalization securities market. The NASDAQ Composite Index is a market-capitalization weighted average of roughly 5,000 stocks that are electronically traded in the NASDAQ market. The S&P Global Purchasing Managers' Index data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies. Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investing in fixed income securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investment in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Investments in high yield bonds offer the potential for high current income and attractive total return but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer's ability to make principal and interest payments. The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issues of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes but may be subject to the federal alternative minimum tax (AMT), state and local taxes. There are special risks associated with investments in real assets such as commodities and real estate securities. For commodities, risks may include market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults). Page 25 of 4040 U.S. Bank | Public Important disclosures, definitions of terms and index descriptions If you have questions regarding this information or wish to receive definitions of any additional terms or indexes used in this report, please contact your Portfolio Manager. 41 U.S. Bank | Public Important disclosures (page 1 of 4) The information provided here is not intended to replace your account statement. Your account statement is the official record of your account. Equal Housing Lender. Credit products are offered by U.S. Bank National Association and subject to normal credit approval. Deposit products offered by U.S. Bank National Association. Member FDIC. For use in one-on-one meetings/presentations. This information represents the opinion of U.S. Bank. The views are subject to change at any time based on market or other conditions and are current as of the date indicated on the materials. This is not intended to be a forecast of future events or guarantee of future results. The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation. Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for direct investment, nor are they subject to fees and expenses. Performance reports included may show performance results gross of fees and expenses. If fees and expenses were included, the performance would be lower. If you have any questions, please speak with your relationship manager for additional information. Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio. Diversification and asset allocation do not guarantee returns or protect against losses. Page 27 of 4042 U.S. Bank | Public Important disclosures (page 2 of 4) Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. Stocks of small-capitalization companies involve substantial risk. These stocks historically have experienced greater price volatility than stocks of larger companies and may be expected to do so in the future. Stocks of mid-capitalization companies can be expected to be slightly less volatile than those of small-capitalization companies, but still involve substantial risk and may be subject tomore abrupt or erratic movements than large-capitalization companies. The value of large-capitalization stocks will rise and fall in response to the activities of the company that issued them, general market conditions and/or economic conditions. Growth investments focus on stocks of companies whose earnings/profitability are accelerating in the short term or have grown consistently over the long term. Such investments may provide minimal dividends, which could otherwise cushion stock prices in a market decline. Stock value may rise and fall significantly based, in part, on investors' perceptions of the company, rather than on fundamental analysis of the stocks. Investors should carefully consider the additional risks involved in growth investments. Value investments focus on stocks of income-producing companies whose price is low relative to one or more valuation factors, such as earnings or book value. Such investments are subject to risks that their intrinsic values may never be realized by the market, or such stocks may turn out not to have been undervalued. Investors should carefully consider the additional risks involved in value investments. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults). There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in fixed income securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investment in fixedincome securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Investments in high yield bonds offer the potential for high current income and attractive total return, but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer's ability to make principal and interest payments. Page 28 of 4043 U.S. Bank | Public Important disclosures (page 3 of 4) The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issues of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes, but may be subject to the federal alternative minimum tax (AMT), state and local taxes. Treasury Inflation-Protected Securities (TIPS)offer a lower return compared to other similar investments and the principal value may increase or decrease with the rate of inflation. Gains in principal are taxable in that year, even though not paid out untilmaturity. Non-financial specialty assets, such as real estate, farm, ranch and timber properties, oil, gas and mineral interests or closely-held business interests are complex and involve unique risks specific to each asset type, including the total loss of value. Special risk considerations may include natural events or disasters, complex tax considerations and lack of liquidity. Specialty assets may not be suitable for all investors. Alternative investments very often use speculative investment and trading strategies. There is no guarantee that the investment program will be successful. Alternative investments are designed only for investors who are able to tolerate the full loss of an investment. These products are not suitable for every investor even if the investor does meet the financial requirements. It is important to consult with your investment professional to determine how these investments might fit your asset allocation, risk profile and tax situation. Hedge funds are speculative and involve a high degree of risk. An investment in a hedge fund involves a substantially more complicated set of risk factors than traditional investments in stocks or bonds, including the risks of using derivatives, leverage and short sales, which can magnify potential losses or gains. Restrictions exist on the ability to redeem or transfer interests in a fund. Exchange-traded funds (ETFs)are baskets of securities that are traded on an exchange like individual stocks at negotiated prices and are not individually redeemable. ETFs are designed to generally track a market index and shares may trade at a premium or a discount to the net asset value of the underlying securities. Private equity investments provide investors and funds the potential to invest directly into private companies or participate in buyouts of public companies that result in a delisting of the public equity. Investors considering an investment in private equity must be fully aware that these investments are illiquidby nature, typically represent a long-term binding commitment and are not readily marketable. The valuation procedures for these holdings are often subjective in nature. Private debt investments may be either direct or indirect and are subject to significant risks, including the possibility of default, limited liquidity and the infrequent availability of independent credit ratings for private companies. Structured products are subject to market risk and/or principal loss if sold prior to maturity or if the issuer defaults on the security. Investors should request and review copies of Structured Products Pricing Supplements and Prospectuses prior to approving or directing an investment in these securities. Page 29 of 4044 U.S. Bank | Public Important disclosures (page 4 of 4) Mutual fund investing involves risk and principal loss is possible. Investing in certain funds involves special risks, such as those related to investments in small- and mid-capitalization stocks, foreign, debt and high-yield securities and funds that focus their investments in a particular industry. Please refer to the fund prospectus for additional details pertaining to these risks. An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although these funds seek to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in these funds. Holdings of First American Funds: U.S. Bancorp Asset Management, Inc. is a registered investment advisor and subsidiary of U.S. Bank National Association. U.S. Bank National Association is a separate entity and wholly owned subsidiary of U.S. Bancorp. U.S. Bank is not responsible for and does not guarantee the products, performance or services of U.S. Bancorp Asset Management. U.S. Bancorp Asset Management, Inc. serves as an investment advisor to First American Funds. Holdings of Nuveen mutual funds: Firstar Capital Corporation (Firstar Capital), an affiliate of U.S. Bancorp, holds a less-than-10 percent ownership interest in Windy City Investments Holdings, LLC which was formerly the parent of Windy City Investment Inc. and the indirect parent of Nuveen Fund Advisors, LLC which is the investment advisor to the Nuveen Mutual Funds. On October 1, 2014, Windy City Investments, Inc. was sold to Teachers Insurance and Annuity Association of America. As a result of the sale, U.S. Bancorp no longer has an indirect ownership interest in Nuveen Fund Advisors, LLC. Depending on the outcome of certain factors, Firstar Capital might in the future receive an earn-out payment in respect of its interest in Windy City Investment Holdings, LLC, under the terms of the sale. Non- proprietary mutual funds: U.S. Bank may enter into agreements with other non-proprietary mutual funds or their service providers whereby U.S. Bank provides shareholder services and/or sub-transfer agency, custodial and other administrative support services and receives compensation for these services. Compensation received by U.S. Bank directly or indirectly from mutual funds does not increase fund fees and expenses beyond what is disclosed in the fund prospectuses. For more information, review the fund prospectus. Page 30 of 4045 U.S. Bank | Public Definitions of report and statement terms (page 1 of 5) Accredited Investor: Private placement securities generally require that investors be accredited due to the additional risks and speculative nature of the securities. For natural persons, the criteria is met by a net worth of more than $1 million (excluding primary residence) or an income of more than $200,000 individually ($300,000 jointly) for the two most recent years and a reasonable expectation for the same in the current year. For other entities, such as corporations, partnerships, trusts and employee benefit plans, the criteria is met with at least $5 million in assets. See full definition in Rule 501 of Regulation D under the Securities Act of 1933. Alpha: A measure of risk-adjusted performance. A statistic measuring that portion of a stock, fund or composite's total return attributable to specific or non-market risk. Alpha measures non-market return and indicates how much value has been added or lost. A positive Alpha indicates the fund or composite has performed better than its Beta would predict (i.e., the manager has added value above the benchmark). A negative Alpha indicates a fund or composite has underperformed given the composite's Beta. Alternative Investments: As used by U.S. Bank, an investment considered to be outside of the traditional asset classes of long-only stocks, bonds and cash. Examples of alternative investments include hedge funds, private equity, options and financial derivatives. Annualized Excess Return: Shows the difference between the annualized linked returns of a portfolio and the model benchmark. Performance reports provided annualize only periods greater than one year. Annualized or Annual Rate of Return: Represents the average annual change in the value of an investment over the periods indicated. Batting Average: Shows how consistently the portfolio return met or beat the market. Beta: A measure of your portfolio's risk relative to a benchmark. A portfolio with a beta of 1.5, for example, would be expected to return roughly 1.5 times the benchmark's return. A high Beta indicates a riskier portfolio. Bond Credit Rating: A grade given to bonds by a private independent rating service that indicates their credit quality. Ratings are the opinion of Standard & Poor's or other agencies as noted and not the opinion of U.S. Bank. Consumer Price Index (CPI): A measure of the average change in prices over time in a market basket of goods and services and is one of the most frequently used statistics for identifying periods of inflation and deflation. Convexity to Stated Maturity: A measure of the curvature in the relationship between bond prices and bond yields that demonstrates how the duration of a bond changes as the interest rate changes. Convexity is used as a risk-management tool and helps to measure and manage the amount of market risk to which a portfolio of bonds is exposed. This version of convexity measures the rate change in duration of a bond as the yield to (stated) maturity changes. Page 31 of 4046 U.S. Bank | Public Definitions of report and statement terms (page 2 of 5) Cost basis/book value: The original value of an asset at the time it was acquired. This is normally the purchase price or appraised value at the time of acquisition. This data is for information purposes only. Cumulative Excess Return: Shows the difference between the annualized linked returns of a portfolio and the model benchmark. Performance reports provided use unannualized returns in periods up to one year, but annualized returns for periods exceeding one year. Downside Capture: The downside capture ratio reflects how a portfolio compares to a benchmark during periods when the benchmark is down. A downside capture ratio of 0.80 (or 80 percent) means the portfolio has historically declined only 80 percent as much as the benchmark during down markets. Downside Deviation: The deviation of returns that fall below a minimum acceptable return (MAR). Although the numerator includes only returns below the MAR, the denominator includes all returns in the performance period. This risk statistic is similar to the downside standard deviation except the sum is restricted to returns less than the MAR instead of the mean. Downside Standard Deviation: The deviation of returns that fall below the mean return. Although the numerator includes only returns below the mean, the denominator includes all returns in the performance period. This risk statistic is similar to the downside deviation except the sum is restricted to returns less than the mean instead of the minimum acceptable return (MAR). Effective Maturity: The date of a bond’s most likely redemption, given current market conditions, taking into consideration the optional and mandatory calls, the optional, mandatory and recurring puts, and the stated maturity. Estimated annual income: The amount of income a particular asset is anticipated to earn over the period indicted. The shares multiplied by the annual income rate. Gain/loss calculation: If an asset was sold, the difference between the proceeds received from the sale compared to the cost of acquiring the asset. If the value of the proceeds is the higher of the two numbers, then a gain was realized. If the value of the proceeds is the lower of the two numbers, a loss was incurred. This data is for information purposes only. Information Ratio: The information ratio compares the average excess return of the portfolio over its associated benchmark divided by the tracking error. M-Squared: The hypothetical return of the portfolio after its risk has been adjusted to match a benchmark. Page 32 of 4047 U.S. Bank | Public Definitions of report and statement terms (page 3 of 5) Market Value: Publicly traded assets are valued using market quotations or valuation methods from financial industry services believed by us to be reliable. Assets, that are not publicly traded, may be reflected at values from other external sources or special valuations prepared by us. Assets for which a current value is not available may be reflected as not valued, at par value, or at a nominal value. Values shown do not necessarily reflect prices at which assets could have been bought or sold. Values are updated based on internal policy and may be updated less frequently than statement generation. Market Value Over Time: Many factors can impact the portfolio value over time, such as contributions to the account, distributions from the account, the investment of dividends and interest, the deduction of fees and expenses, and market performance. Modified Duration to Effective Maturity: A formula that expresses the measurable change in the value of a security in response to a change in interest rates. This version of Modified Duration takes into consideration a “horizon date/price” that is, given current conditions, the most likely redemption date/price using the set of calls/puts, as well as stated maturity. Modified Duration to Stated Maturity: A formula that expresses the measurable change in the value of a security in response to a change in interest rates. This version of Modified Duration uses stated maturity as the “horizon date/price” and ignores any potential call/put/pre- refunding, even if they are mandatory. Price/Earnings Ratio (P/E): The P/E ratio of a company is calculated by dividing the price of the company’s stock by its trailing 12-month earnings per share. A high P/E usually indicates that the market is paying a premium for current earnings because it believes in the firm’s ability to grow its earnings. A low P/E indicates the market has less confidence that the company’s earnings will increase. Within a portfolio, P/E is the weighted average of the price/earnings ratios of the stocks in the portfolio. Qualified Purchaser: Some private placement securities require that investors be Qualified Purchasers in addition to being Accredited Investors. For natural persons, the criteria is generally met when the client (individually or jointly) owns at least $5 million in investments. For other entities, such as corporations, partnerships, trusts and employee benefit plans, the criteria is met with at least $25 million in investments though there are other eligibility tests that may apply. See full definition in Section 2(a)(51) of the Investment Company Act of 1940. R-Squared: Measures the portion of the risk in your portfolio that can be attributed to the risk in the benchmark. Realized and Unrealized Gains/Losses: Are calculated for individual tax lots based on the records we have available. Some data may be incomplete or differ from what you are required to report on your tax return. Some data used in these calculations may have beenobtained from outside sources and cannot be verified by U.S. Bank. The data is intended for informational purposes only and should not be used for tax reporting purposes. Please consult with your tax or legal advisor for questions concerning your personal tax or financial situation. Page 33 of 4048 U.S. Bank | Public Definitions of report and statement terms (page 4 of 5) Residual Risk: The amount of risk specific to the assets in a portfolio distinct from the market, represented by a benchmark. Return: An indication of the past performance of your portfolio. Sharpe Ratio: Measures of risk-adjusted return that calculates the return per unit of risk, where risk is the Standard Deviation of your portfolio. A high Sharpe ratio indicates that the portfolio is benefiting from taking risk. Sortino Ratio: Intended to differentiate between good and bad volatility. Similar to the Sharpe ratio, except it uses downside deviation for the denominator instead of standard deviation, the use of which doesn't discriminate between up and down volatility. Spread: The difference between the yields of two bonds with differing credit ratings (most often, a corporate bond with a certain amount of risk is compared to a standard traditionally lower risk Treasury bond). The bond spread will show the additional yield that could be earned from a bond which has a higher risk. Standard Deviation: A measure of the volatility and risk of your portfolio. A low standard deviation indicates a portfolio with less volatile returns and therefore less inherent risk. Time-weighted Return: The method used to calculate performance. Time-weighted return calculates period by period returns that negates the effect of external cash flows. Returns for periods of greater than one year are reported as an annualized (annual) rate of return. Returns of less than one year are reported on a cumulative return basis. Cumulative return is the aggregate amount an investment has gained or lost over time, independent of the period involved. Tracking Error: A divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the context of a hedge or mutual fund that did not work as effectively as intended, creating an unexpected profit or loss instead. Traditional Investments: As used by U.S. Bank, an investment made in equity, fixed income or cash securities, mutual funds or exchange- traded funds (ETFs) where the investor buys at a price with the goal that the investment will go up in value. Top 10 Holdings: The 10 assets with the highest market values in the account. Total Portfolio Gross of Fees: Represents all assets included in the calculation of the portfolio, before the deduction of trust and asset management fees, and is inclusive of all applicable third-party security fees and expenses. Details of those fees and expenses are provided in the security’s prospectus or offering documents. Page 34 of 4049 U.S. Bank | Public Definitions of report and statement terms (page 5 of 5) Total Return: The rate of return that includes the realized and unrealized gains and losses plus income for the measurement period. Treynor Ratio: Measures the performance of a sector relative to risk by dividing the return of the sector in excess of the risk-free return by the sector's Beta. The higher the Treynor ratio, the better the return relative to risk. Turnover Percent: Indicates how frequently asset are bought and sold within a portfolio. Turnover Ratio: The percentage of a mutual fund’s or other investment vehicle's holdings that have been "turned over" or replaced with other holdings in a given year. Unrealized gain (loss)— The difference between the current market value (at the end of the statement period) and the cost to acquire the asset. If the current market value is higher than the cost, a gain is reflected. If the current market value is lower than the cost paid, a loss is reflected. This data is for information purposes only. Upside Capture: The upside capture ratio reflects how a portfolio compares to the selected model benchmark during periods when the benchmark is up. An upside capture ratio of 1.15 (or 115 percent) means the portfolio has historically beat the benchmark by 15 percent during up markets. Yield: The annual rate of return on an investment, expressed as a percentage. For bonds, it is the coupon rate divided by the market price. For stocks, it is the annual dividend divided by the market price. Page 35 of 4050 U.S. Bank | Public Frequently used indexes (page 1 of 5) Bloomberg Barclays 1-3 year U.S. Treasury Index: Measures the performance of the U.S. government bond market and includes public obligations of the U.S. Treasury with a maturity between one year and up to (but not including) three years. Bloomberg Barclays 1-5 year U.S. Treasury Index: Includes all publicly issued, U.S. Treasury securities that have a remaining maturity of greater than or equal to one year and less than five years, are rated investment grade and have $250 million or more of outstanding face value. The Bloomberg Barclays 1-5 year Municipal Index: Measures the performance of municipal bonds with time to maturity of more than one year and less than five years. Bloomberg Barclays 7-year Municipal Index: Includes municipal bonds with a minimum credit rating of Baa that have been issued as part of a transaction of at least $50 million, have a maturity value of at least $5 million and a maturity range of four to six years. Bloomberg Barclays Global Aggregate Index ex-U.S. Index: Measure of global investment grade debt from 24 local currency markets. This multi-currency benchmark includes Treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. Bloomberg Barclays Global Treasury ex-U.S. Index: Includes government bonds issued by investment-grade counties outside the United States, in local currencies, that have a remaining maturity of one year or more and are rated investment grade. Bloomberg Barclays High Yield Municipal Bond Index: An unmanaged index made up of bonds that are non-investment grade, unrated or below Ba1 bonds. Bloomberg Barclays Intermediate Aggregate Index: Consists of one- to 10-year governments, one- to 10-year corporate bonds, all mortgages and all asset-backed securities within the Aggregate Index. Bloomberg Barclays Mortgage-Backed Securities Index: Covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid adjustable-rate mortgages) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). Bloomberg Barclays U.S. Aggregate Bond Index: Measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. Bloomberg Barclays U.S. Corporate Bond Index: Measures the investment grade, fixed-rate, taxable corporate bond market and includes U.S. dollar-denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers. Page 36 of 4051 U.S. Bank | Public Frequently used indexes (page 2 of 5) Bloomberg Barclays U.S. Corporate High Yield Bond Index: Measures the U.S. dollar denominated, high yield, fixed-rate corporate bond market. Bloomberg Barclays U.S. Municipal Bond Index: Measures the investment grade, U.S. dollar-denominated, fixed tax-exempt bond market. The index includes state and local general obligation, revenue, insured and pre-refunded bonds. Bloomberg Barclays U.S. Treasury Index: Measures U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) Index: An unmanaged index includes all publicly issued, U.S. TIPS that have at least one year remaining to maturity, are rated investment grade, and have $250 million or more of outstanding facevalue. Cambridge U.S. Private Equity Index: This index is based on returns data compiled for U.S. private equity funds (including buyout, growth equity and mezzanine funds) that represent the majority of institutional capital raised by private equity partnerships formed since 1986. Returns may be delayed by up to six months. Quarterly performance is prorated based on the cube root for the months of the quarter. Citigroup 3-Month Treasury Bills: An unmanaged index and represents monthly return equivalents of yield averages of the last three-month Treasury Bill issues. Citigroup 6-Month Treasury Bills: An unmanaged index and represents monthly return equivalents of yield averages of the last six-month Treasury Bill issues. Credit Suisse Leverage Loan Index: Represents tradable, senior-secured, U.S. dollar-denominated non-investment grade loans. Dow Jones Industrial Average (DJIA): The price-weighted average of 30 significant U.S. stocks traded on the New York Stock Exchange and NASDAQ. The DJIA is the oldest and single most watched index in the world. Dow Jones Select REIT Index: Measures the performance of publicly traded REITs and REIT-like securities in the U.S. and is a proxy for direct real estate investment, in part by excluding companies whose performance may be driven by factors other than the value of real estate. HFRI Indices: The Hedge Fund Research, Inc. (HFRI) indexes are a series of benchmarks designed to reflect hedge fund industry performance by constructing composites of constituent funds, as reported by the hedge fund managers listed within the HFR Database. Page 37 of 4052 U.S. Bank | Public Frequently used indexes (page 3 of 5) HFRI Equity Hedge Total Index: Uses the HFR (Hedge Fund Research) database and consists only of equity hedge funds with a minimum of $50 million assets under management or a 12-month track record and that reported assets in U.S. dollars. HFRI Relative Value Fixed Income Corporate Index: Uses the HFR (Hedge Fund Research) database and consists of only relative value fixed income corporate funds with a minimum of $50 million assets under management or a 12-month track record and that reported assets in U.S. dollars. ICE BofAML 1-3 Year Corporate Index: Tracks U.S. dollar-denominated investment grade public debt issued in the U.S. bond market with maturities of one to three years. ICE BofAML 1-5 Year Corporate and Government Index: Tracks the performance of short-term U.S. investment grade government and corporate securities with maturities between one and five years. ICE BofAML U.S. 7-10 Year Index: Tracks the performance of U.S. dollar denominated investment grade rated corporate debt publicly issued in the U.S. domestic market and includes all securities with a remaining term to maturity of greater than or equal to seven years and less than 10 years. ICE BofAML Global Broad Market Index: Tracks the performance of investment grade public debt issued in the major domestic and Eurobond markets, including global bonds. ICE BofAML U.S. High Yield Master II Index: Commonly used benchmark index for high yield corporate bonds and measures the broad high yield market. J.P. Morgan Emerging Markets Bond Index Global (EMBI Global): Tracks total returns for traded external debt instruments in the emerging markets. London Interbank Offered Rate (LIBOR)3-months: The interest rate offered by a specific group of London banks for U.S. dollar deposits with a three-month maturity. London Interbank Offered Rate (LIBOR) 9-months:The interest rate offered by a specific group of London banks for U.S. dollar deposits with a nine-month maturity. MSCI All Country World Index (ACWI): Designed to measure the equity market performance of developed and emerging markets. Page 38 of 4053 U.S. Bank | Public Frequently used indexes (page 4 of 5) Russell 2000 Value Index: Measures companies in the Russell 2000 Index having lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index includes the 2,000 firms from the Russell 3000 Index with the smallest market capitalizations. Russell 3000 Index: Measures the performance of the 3,000 largest U.S. securities based on total market capitalization. Russell Midcap Index: Measures the 800 smallest companies in the Russell 3000 Index. Russell Midcap Growth Index: Measures companies in the Russell Midcap Index having higher price-to-book ratios and higher forecasted growth values. Russell Midcap Value Index: Measures companies in the Russell Midcap Index having lower price-to-book ratios and lower forecasted growth values. MSCI All County World ex-U.S. Index (ACWI, excluding United States): Tracks the performance of stocks representing developed and emerging markets around the world that collectively comprise most foreign stock markets. U.S. stocks are excluded from the index. MSCI EAFE Index: Includes approximately 1,000 companies representing the stock markets of 21 countries in Europe, Australasia and the Far East. MSCI Emerging Markets (EM) Index: Designed to measure equity market performance in global emerging markets. MSCI World Index: Tracks equity market performance of developed markets through individual country indices. NAREIT Index: Includes REITs (Real Estate Investment Trusts) listed on the New York Stock Exchange, NASDAQ and American Stock Exchange. NASDAQ Composite Index: A market capitalization-weighted average of roughly 5,000 stocks that are electronically traded in the NASDAQ market. NCREIF Property Index (NPI): Measures the investment performance of a very large pool of individual commercial real estate properties acquired in the private market for investment purposes only. Russell 1000 Index: Measures the performance of the 1,000 largest companies in the Russell 3000 Index and is representative of the U.S. large capitalization securities market. Page 39 of 4054 U.S. Bank | Public Frequently used indexes (page 5 of 5) Russell 1000 Growth Index: Measures companies in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values. It includes the largest 1,000 firms in the Russell 3000 Index. Russell 1000 Value Index: Measures companies in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values. It includes the largest 1,000 firms in the Russell 3000 Index. Russell 2000 Index: Measures the performance of the 2,000 smallest companies in the Russell 3000 Index and is representative of the U.S. small capitalization securities market. Russell 2000 Growth Index: Measures companies in the Russell 2000 Index having higher price-to-book ratios and higher forecasted growth values. and is representative of U.S. securities exhibiting growth characteristics. The Russell 2000 Index includes the 2,000 firms from the Russell 3000 Index with the smallest market capitalizations. S&P 500 Index: Consists of 500 widely traded stocks that are considered to represent the performance of the U.S. stock market. S&P Global ex-U.S. Property Index: Measures the investable universe of publicly traded property companies domiciled in developed and emerging markets excluding the United States. The companies included are engaged in real estate related activities such as property ownership, management, development, rental and investment. S&P GSCI: A composite index of commodity sector returns, representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities. S&P/Case-Shiller Home Price Indexes: A group of indexes that track changes in home prices throughout the United States. Case- Shiller produces indexes representing certain metropolitan statistical areas (MSA) as well as a national index. Swiss Re Global Cat Bond Total Return Index: Tracks the aggregate performance of all U.S. dollar-denominated euros and Japanese yen-denominated catastrophe bonds, capturing all ratings, perils and triggers. U.S. Dollar Index: Indicates the general international value of the U.S. dollar by averaging the exchange rates between the U.S. dollar and six major world currencies. Wilshire 5000 Index: Composed of more than 6,700 publicly-traded U.S. companies and is designed to track the overall performance of the American stock markets. Page 40 of 4055 CITY OF CUPERTINO Agenda Item 23-12484 Agenda Date: 7/24/2023 Agenda #: 4. Subject:ACTION ITEM Consider the Treasurer's Investment Report for the Quarter Ending June 30, 2023 Receive the Treasurer's Investment Report for the Quarter Ending June 30, 2023 and recommend filing with City Council Presenter: Thomas Leung, Budget Manager, and Chandler Asset Management 4:30(10) CITY OF CUPERTINO Printed on 7/21/2023Page 1 of 1 powered by Legistar™56 AUDIT COMMITTEE STAFF REPORT Meeting: July 24, 2023 Subject Receive the Treasurer's Investment Report for the Quarter Ending June 30, 2023 and forward to City Council Recommended Action Receive the Treasurer's Investment Report for the Quarter Ending June 30, 2023 and forward to City Council Reasons for Recommendation Background On May 19, 2022, the City Council approved the City Investment Policy. Per the City's Investment Policy, the Treasurer shall submit a quarterly investment report to the City Council approximately 45 days following the end of the quarter. In addition to the quarterly investment reports, monthly transaction reports are submitted to the City Council within 30 days of the end of the reporting period per California Government Code Section 53607. The quarterly investment report offers a more extensive discussion of the City's economy, cash flow, and investments. The City's Municipal Code Section 2.24.050 Investment Authority states that the Treasurer shall make a monthly report of all investment transactions to the City Council. Lastly, the City's Municipal Code Section 2.88.100 Duties–Powers–Responsibilities lists one of the powers and functions of the Audit Committee is "to review the quarterly Treasurer's Investment report." Per the referenced code provisions, a Treasurer's Investment Report shall be submitted to the City Council quarterly. Treasurer's Investment Report The report provides an update on the City's investment portfolio for the month ending June 30, 2023. The report is as of July 17, 2023. The attached statements include balances and transactions of the City's investments with the Local Agency Investment Fund (LAIF) and Chandler Asset Management. The 57 2 Chandler investment report provides information on the investment type, issuer, purchase date, maturity date, cost value, par value, and market value for each security, as well as the weighted average maturity and weighted average yield of all investments. While not governed by the City's Investment Policy, statements for the Public Agency Retirement Services (PARS) Section 115 Trusts are also attached per a request from the Treasurer's Report sub-committee. The City's General Ledger cash and investments balance was $236.4 million, a $8.1 million increase from the prior quarter. Cash and Investments – General Ledger Balance Fund Type Quarter Ending March 31, 2023 Quarter Ending June 30, 2023 General Fund 124,016,386 136,789,896 Special Revenue 43,657,350 42,474,048 Debt Service 2,322,250 6,850 Capital Projects 37,802,793 38,625,890 Enterprise 11,746,044 11,487,826 Internal Service 8,779,054 7,045,655 Total $228,323,878 $236,430,164 58 3 The $236.4 million in cash and investments includes $47.3 million in cash, $21.4 million in cash equivalents, $150.5 million in investments, and $17.2 million restricted for funding pension costs. The City pools cash for all funds except restricted funds. However, the City accounts for interest earnings, revenues, and expenditures separately for each fund to adequately meet the purpose and restrictions of each funding source. Pooling funds is a common and appropriate practice used in public agencies. By pooling funds, the City can benefit from economies of scale, diversification, liquidity, and ease of administration. 59 4 Cash and Investments – General Ledger Balance Quarter Ending March 31, 2023 Quarter Ending June 30, 2023 % of Portfolio Cash in banks and on hand Operating Checking (Wells Fargo) 39,300,196 47,251,612 20% Workers' Compensation Checking (Wells Fargo) 29,999 42,548 0% Payroll Checking (Wells Fargo) - - 0% Restricted for Bond Repayments1 (BNY Mellon) - - 0% Petty Cash and Change 4,700 3,586 0% Cash Equivalents Local Agency Investment Fund 21,242,141 21,385,575 9% Investments Investments (Chandler) 150,506,791 150,506,791 64% Restricted for Pension2 (PARS) 17,240,051 17,240,051 7% Total Cash and Investments3 $228,323,878 $236,430,164 100% 1 Cash held by fiscal agent for bond repayments 2 In accordance with GASB 67/68, the assets in the Section 115 Pension Trust are reported as restricted cash and investments in the General Fund. The assets can only be used to fund CalPERS costs. 3 Assets in the Section 115 OPEB Trust are excluded as the City cannot use these assets to fund its own operations. The assets are held in trust for retirees' post-employment health benefits. The table below shows the bank balances for the City's cash and i nvestments. Bank and General Ledger balances differ due to timing. Bank balances do not include outstanding checks and deposits in transit. The General Ledger is updated quarterly with interest earnings and annually with the year-end investment market values. Cash and Investments – Bank Balance Quarter Ending March 31, 2023 Quarter Ending June 30, 2023 % of Portfolio Cash in banks and on hand Operating Checking (Wells Fargo) 39,553,713 47,980,304 20% Workers' Compensation Checking (Wells Fargo) 31,312 38,002 0% Payroll Checking (Wells Fargo) - - 0% Restricted for Bond Repayments1 (BNY Mellon) - - 0% Cash Equivalents Local Agency Investment Fund 21,281,569 21,425,004 9% Investments Investments (Chandler) 149,670,106 149,161,767 63% Restricted for Pension2 (PARS) 18,329,961 19,088,859 8% Total Cash and Investments3 $228,866,661 $237,693,936 100% 1 Cash held by fiscal agent for bond repayments 60 5 2 In accordance with GASB 67/68, the assets in the Section 115 Pension Trust are reported as restricted cash and investments in the General Fund. The assets can only be used to fund CalPERS costs. 3 Assets in the Section 115 OPEB Trust are excluded as the City cannot use these assets to fund its own operations. The assets are held in trust for retirees' post-employment health benefits. Local Agency Investment Fund (LAIF) LAIF is an investment pool administered by the State of California Treasurer and governed by California Government Code. The City can withdraw funds from LAIF at any time. As a result, the City uses LAIF for short-term investment, liquidity, and yield. The City's LAIF account had a balance of $21.4 million. The quarterly interest rate was 3.36%. The City did not make any deposits or withdrawals in the quarter ending June 2023. Investment Portfolio In FY 2018-19, the City conducted a Request for Proposal (RFP) for investment management services and selected Chandler Asset Management. Under the City's Treasurer's direction, Chandler Asset Management manages the City's investment portfolio in accordance with the City's investment objectives. The City's investment objectives, in order of priority, are to provide:  Safety to ensure the preservation of capital in the overall portfolio  Sufficient liquidity for cash needs  A market rate of return consistent with the investment program The performance objective is to earn a total rate of return through a market cycle equal to or above the return on the benchmark index. Chandler Asset Management invests in high- quality fixed-income securities consistent with the City's Investment Policy and California Government Code to achieve the objective. The portfolio's market value was $149.2 million, compared to $149.7 million at the end of the previous quarter. The table below includes historical comparisons of the City's portfolio: 61 6 March 31, 2023 June 30, 2023 Market Value 149,670,106 149,161,767 Par Value 156,579,547 157,278,641 Book Value 156,313,174 156,959,650 Average Maturity 2.69 years 2.42 years Average Modified Duration 2.31 2.06 Average Purchase Yield 1.88% 1.95% Average Market Yield 4.41% 5.11% Average Quality1 AA/Aa1 AA/Aa1 1 S&P and Moody's respectively The portfolio's market value fluctuates depending on interest rates. When interest rates decrease after an investment is purchased, the market value of the investment increases. In contrast, when interest rates increase after an investment is purchased, the market value of the investment decreases. At the time of purchase, the City intends to hold all investments until maturity, meaning that changes in market value will not impact the City's investment principal. If the market value decreases, the City will incur an unrealized loss. However, the loss will only be realized if the City sells its investments before their maturity. The market values for the portfolio were provided by Chandler Asset Management. Section 115 Trust Investment Portfolio The City established Section 115 Trusts to reduce pension rate volatility and pre-fund Other Post-Employment Benefits (OPEB) costs. These trusts are a tax-exempt investment tool that local governments can use to set aside funds for pension and retiree health costs. Contributions made to the trust can only be used to fund retirement plans. Investments in the Section 115 Trusts are governed by separate investment policies, which are distinct from the City's Investment Policy. On December 6, 2022, City Council approved the Pension Trust Investment Policy and OPEB Trust Investment Policy. Public Agency Retirement Services (PARS) administers the trust, while US Bank manages the investments in accordance with the approved investment policies. Both Section 115 Trusts are invested in "balanced" portfolios. The investment objective is designed to provide a moderate amount of current income with moderate growth of capital. This type of investment strategy is generally recommended for investors with a long-term time horizon. The strategic asset allocation ranges for this investment objective are: 62 7 Asset Class Range Target Equities 50-70% 63% Fixed Income 20-40% 29% Real Estate 0-15% 5% Commodities 0-10% 2% Cash 0-10% 1% The Section 115 Pension Trust had a balance of $19.1 million, an increase of $0.8 million from the prior quarter due to investment gains. The Section 115 OPEB Trust had a balance of $34.7 million, an increase of $1.4 million from the prior quarter due to investment gains. The quarterly investment returns were 4.23% for both the Pension Trust and OPEB Trust. Analysis The City compares its portfolio to LAIF and one-year and two-year Treasury yields. Yield comparisons for the one-year Treasury, two-year Treasury, LAIF, and City average are presented below: In June, one-year and two-year Treasury yields increased. The yield curve remained inverted and the spread between the two-year and 10-year Treasury yield became more inverted. The one-year and two-year Treasury yields were 5.40% and 4.87%, respectively. The one-year Treasury yield increased by 76 basis points, and the two-year Treasury yield increased by 81 basis points from March 31, 2023. The yield of the City's investment 63 8 portfolio was 5.11%, lower than the one-year Treasury yield but higher than the two-year Treasury yield and LAIF. Cash Flow History Historical revenues, expenditures, and liquidity ratios are presented below: 64 9 As the City's portfolio becomes more or less liquid over time, the ratio of cash and cash equivalents to revenues and expenditures will increase or decrease, respectively. The portfolio's investment structure is complete, so the City anticipates the ratio of cash and cash equivalents to revenues and expenditures to continue to flatten out moving forward. While a formal liquidity level has not been established, significant and consistent fluctuations in the ratio may indicate that additional funds should be invested or, conversely, that investments should be liquidated. In recent years, sufficient liquidity levels for operating revenues and expenditures have approximated a ratio of 1.0. In March 2022, the City transferred $15.0 million from the operating account to the investment portfolio, which reduced the March 2022 liquidity ratios. As of June 30, 2023, the liquidity ratio was 2.5 and 2.9 for revenues and expenditures, respectively. The City will monitor inflows and outflows during FY 2023-24 and bring recommendations for the City's investment portfolio as necessary and applicable. As of June 30, 2023, the City had $68.7 million in cash and cash equivalents in the bank and on hand. Based on the cash flow forecast, the City maintains the ability to meet its expenditure requirements for the next six months. Cash Flow Forecast Applying three-year historical trend data for each of the City's revenue and expenditure line items to the FY 2023-24 Adopted Budget, the City estimated the following cash flow forecast for FY 2023-24: 65 10 The purpose of this cash flow and liquidity forecast is to illustrate the timing of the City's revenues and expenditures throughout a fiscal year using historical trend data. The first quarter of the fiscal year experiences expenditures exceeding revenues since the City begins receiving its property tax distributions in November and April of the respective fiscal year. In January and April, the City receives additional property tax revenues due to the Vehicle License Fee (VLF) swap. In June, the City tends to experience higher 66 11 activities, particularly expenditures, due to the year-end close and accrual process. From one fiscal year to the next, the City typically incurs one-time special project or capital expenditure costs. The timing of these costs is more difficult to pinpoint in a particular month. From a cash flow analysis perspective, the Adopted and Amended Budgets are efficient planning tools for determining cash flow needs for a single fiscal year. If a budget is adopted at a position in which revenues and expenditures are balanced, then it is reasonable to conclude cash flow is unlikely to be of concern. Beyond one fiscal year, a City prepares a long-term forward-looking forecast using historical and prospective assumptions. This forecast model is incorporated and presented to the City Council as part of the City's Adopted Budget. Compliance All of the City's investments comply with state law and the City's Investment Policy. In compliance with California Government Code 53646 (b)(3), the City maintains the ability to meet its expenditure requirements for the next six months. Sustainability Impact No sustainability impact. Fiscal Impact No fiscal impact. California Environmental Quality Act Not applicable. _____________________________________ Prepared by: __________________ Thomas Leung Budget Manager Reviewed by: __________________ Kristina Alfaro Director of Administrative Services and City Treasurer Approved for Submission by: __________________ Matt Morley Assistant City Manager Attachments: A – Chandler Investment Report June 2023 B – Chandler Custodial Statement June 2023 67 12 C – PARS Pension and OPEB Account Statement June 2023 D – LAIF Account Statement June 2023 68 CHANDLER ASSET MANAGEMENT, INC. | 800.317.4747 | www.chandlerasset.com INVESTMENT REPORT Period Ending June 30, 2023 City of Cupertino 69 SECTION 1 Economic Update SECTION 2 Account Profile SECTION 3 Portfolio Holdings SECTION 4 Transactions Table of Contents As of June 30, 2023 1 70 SECTION |Section 1 |Economic Update 2 71 Economic Update    Recent economic data continues to suggest positive but below trend growth this year.Although the pace of job growth is moderating,labor markets remain solid,and the U.S.consumer has demonstrated resiliency.Inflationary trends are subsiding, but core levels remain well above the Fed’s target.Given the cumulative effects of restrictive monetary policy and tighter financial conditions,we believe the economy will gradually soften and the Fed will remain data dependent as they tread cautiously going forward. At the June meeting,the Federal Open Market Committee paused in their rate hiking campaign after ten straight rate increases and left the target Federal Funds rate in the current range of 5.00 -5.25%.Market participants viewed the FOMC’s decision as a ‘hawkish’ pause, expecting further tightening in the future,primarily based on the updated release of the FOMC’s Summary of Economic Projections (SEP)forecast which reflected a stronger economic outlook and higher rates compared to the March forecast. We believe the resiliency of future economic data will determine if the Federal Reserve can stay on hold for a period of time or will be forced to tighten policy further to bring inflation back down towards their 2% policy objective. The yield curve remained inverted in June.The 2-year Treasury yield surged 50 basis points to 4.90%,the 5-year Treasury yield rose 40 basis points to 4.16%, and the 10-year Treasury yield increased 19 basis points to 3.84%. The inversion between the 2-year Treasury yield and 10-year Treasury yield widened to -106 basis points at June month-end versus -76 basis points at May month-end.The spread between the 2-year Treasury and 10-year Treasury yield one year ago was +6 basis points. The inversion between 3-month and 10-year Treasuries narrowed to -146 basis points in June from -176 basis points in May. The shape of the yield curve indicates that the probability of recession is increasing. 3 72 Source: US Department of Labor Source: US Department of Labor Employment The latest US jobs report showed mixed signals regarding the state of the labor market in May.The U.S.economy added 339,000 jobs in May, following an upward revision of 41,000 to 294,000 jobs for the month of April.The pace of job growth remains healthy with the three-month moving average payrolls at 283,000 and the six-month moving average at 302,000.The unemployment rate increased to 3.7%on a decline in household employment,while the labor force participation rate remained at 62.6%in May.The U-6 underemployment rate,which includes those who are marginally attached to the labor force and employed part time for economic reasons,increased to 6.7%from the prior month at 6.6%. Average hourly earnings decelerated to 4.3% year-over-year in May, down from a 4.4% increase in March. Job Openings in April edged up to 10.1 million and separations decreased to 5.7 million,indicating continuing demand for labor.While the longer-term trend of hiring is slowing, levels remain consistent with a solid labor market. 0 100 200 300 400 500 600 700 800 900 1,000 M O M C h a n g e I n ( 0 0 0 ' s ) Nonfarm Payroll (000's) Non-farm Payroll (000's) 3 month average (000's) 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Unemployment Rate Underemployment Rate (U6) Unemployment Rate (U3) Ra t e ( % ) 4 73 Source: US Department of Labor Source: US Department of Commerce Inflation The Consumer Price Index (CPI)increased in May by 0.1%month-over-month and 4.0%year-over-year,down from 4.9%in April.The Core CPI, which excludes volatile food and energy components,remained firm at 0.4%month-over-month and 5.3%year-over-year,decelerating modestly from 5.5%in April.The Personal Consumption Expenditures (PCE)index rose 3.8%year-over-year in May,down from a 4.3%gain in April.Core PCE,the Federal Reserve’s preferred inflation gauge,increased 4.6%year-over-year in May,down slightly from a 4.7%increase in April.Core inflation remains stubbornly elevated above the Fed's 2%target, with service-sector inflation and strong wage growth as headwinds. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% Personal Consumption Expenditures (PCE) PCE Price Deflator YOY % Change PCE Core Deflator YOY % Change YO Y ( % ) C h a n g e 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% Consumer Price Index (CPI) CPI YOY % Change Core CPI YOY % Change Y O Y ( % ) C h a n g e 5 74 Federal Reserve Source: Federal Reserve Source: Bloomberg At the June meeting,the Federal Open Market Committee paused in their rate hiking campaign after ten straight rate increases and left the target Federal Funds rate in the current range of 5.00 -5.25%.Market participants viewed the FOMC’s decision as a ‘hawkish’ pause, expecting further tightening in the future,primarily based on the updated release of the FOMC’s Summary of Economic Projections (SEP)forecast.The SEP is forecasting higher GDP,a lower unemployment rate,and higher PCE inflation compared to the March 2023 forecast.The median forecast for the Fed Funds rate was also increased to 5.6%in June,compared to the prior forecast of 5.1%in March,suggesting another 50 basis points of tightening in 2023.We believe the resiliency of future economic data will determine if the Federal Reserve can stay on hold for a period of time or will be forced to tighten policy further to bring inflation back down towards their 2% policy objective. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% Effective Federal Funds Rate Yi e l d ( % ) 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 Federal Reserve Balance Sheet Assets In $ m i l l i o n s 6 75 Source: Bloomberg Source: Bloomberg 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% US Treasury Note Yields 2-Year 5-Year 10-Year Y i e l d ( % ) 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% US Treasury Yield Curve Jun-23 Mar-23 Jun-22 Y i e l d ( % ) Bond Yields At the end of June,the 2-year Treasury yield was 194 basis points higher,and the 10-Year Treasury yield was about 82 basis points higher,year- over-year. The inversion between the 2-year Treasury yield and 10-year Treasury yield widened to -106 basis points at June month-end versus - 76 basis points at May month-end.The average historical spread (since 2003)is about +130 basis points.The inversion between 3-month and 10-year Treasuries narrowed to -146 basis points in June from -176 basis points in May.The shape of the yield curve indicates that the probability of recession is increasing. 7 76 Section 2|SECTION |Section 2 |Account Profile 8 77 Objectives 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. Investment Objectives The City of Cupertino’s investment objectives, in order of priority, are to provide safety to ensure the preservation of capital in the overall portfolio, provide sufficient liquidity for cash needs and a market rate of return consistent with the investment program. Strategy In order to achieve these objectives, the portfolio invests in high quality fixed incomes securities consistent with the investment policy and California Government Code. As of June 30, 2023 9 78 Compliance As of June 30, 2023 Category Standard Comment Treasury Issues No Limitation Complies Agency Issues 25% per Agency/GSE issuer; 20% max agency callable securities; Issued by Federal Agencies or U.S. Government Sponsored Enterprise obligations.Complies Supranational "AA" rating category or better by a NRSRO; 30% maximum; 10% max per issuer; USD denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by IBRD, IFC, or IADB.Complies Municipal Securities "A" rating category or better by a NRSRO; 30% maximum; 5% max per issuer; Obligations of the City, State of California, and any local agency within the State of California; Obligations of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states in addition to California. Complies Corporate Medium Term Notes "A" rating category or better by a NRSRO; 30% maximum; 5% max per issuer; Issued by corporations organized and operating within the U.S. or by depository institutions licensed by the U.S. or any state and operating within the U.S.Complies Asset Backed/ Mortgage Backed/ Collateralized Mortgage Obligation "AA" rating category or better by a NRSRO; 20% maximum; 5% max per issuer on Asset-Backed or Commercial Mortgage security; There is no issuer limitation on any Mortgage security where the issuer is the U.S. Treasury or a Federal Agency/GSE . Complies Negotiable Certificates of Deposit (NCDs) No rating required if amount of the NCD is insured up to the FDIC limit; If above FDIC insured limit, requires "A-1" short- term rated or "A" long-term rating category or better by a NRSRO; 30% maximum; 5% max per issuer; Issued by nationally or state chartered banks, state or federal savings associations, or state or federal credit unions, or by a federally licensed or state-licensed branch of a foreign bank. Complies Certificates of Deposit (CDs)/Time Deposit (TDs) 30% maximum; 5% max per issuer; Certificates of Deposit, Time Deposit, non-negotiable, and collateralized in accordance with California Government Code.Complies Banker’s Acceptances "A-1" short-term rated or better by a NRSRO; or "A" long-term rating category or better by a NRSRO; 40% maximum; 5% max per issuer; 180 days max maturity Complies Commercial Paper "A-1" short term rated or better a NRSRO; "A" long-term issuer rating category or better by a NRSRO; 25% maximum; 5% max per issuer; 270 days max maturity; Issued by corporations organized and operating in the U.S. with assets > $500 million; 10% max outstanding paper of the issuing corporation. Complies Money Market Funds 20% maximum; Daily money market funds administered for or by trustees, paying agents and custodian banks contracted by a City of Cupertino as allowed under California Government Code; Only funds holding U.S. Treasury obligations, Government agency obligations or repurchase agreements collateralized by U.S. Treasury or Government agency obligations can be utilized. Complies Local Agency Investment Fund (LAIF) Maximum amount permitted by LAIF; Not used by investment adviser Complies City of Cupertino Assets managed by Chandler Asset Management are in full compliance with state law and with the City's investment policy. 10 79 Compliance As of June 30, 2023 Category Standard Comment Repurchase Agreements 1 year max maturity; 102% collateralized; A PSA Master Repurchase Agreement is required between City of Cupertino and the broke/dealer or financial institution for all repurchase agreements; Not used by investment adviser Complies Prohibited Securities Reverse Repurchase Agreement; Common stocks; Long-term (> 5 years maturity) notes and bonds; Special circumstances arise that necessitate purchase of securities beyond the 5-year limitation. On such occasions, request must be approved by City Council prior to purchase; Futures/Options; Inverse floaters; Ranges notes, Mortgage-derived, Interest-only strips; Zero interest accrual securities; Purchasing/selling securities on margin; Foreign currency denominated securities. Complies Minimum Budgeted Operating Expenditures in Short Term Investments Minimum 6 months of budgeted operating expenditures in short term investments to provide sufficient liquidity for expected disbursements Complies Max Per Issuer 5% per issuer, unless otherwise specified in the policy Complies Maximum maturity 5 years Complies City of Cupertino Assets managed by Chandler Asset Management are in full compliance with state law and with the City's investment policy. 11 80 Portfolio Summary – City of Cupertino #10659 As of June 30, 2023 12 81 Purchase Yield as of 06/30/23 = 1.95% 0.00 0.50 1.00 1.50 2.00 2.50 Pe r c e n t ( % ) Historical Average Purchase Yield City of Cupertino As of June 30, 2023 13 82 SECTION |Section 3 |Portfolio Holdings 14 83 Issue Name Investment Type % Portfolio Government of United States US Treasury 35.67% Federal National Mortgage Association Agency 8.82% Federal Home Loan Mortgage Corp Agency 4.36% Federal Home Loan Mortgage Corp CMO 3.80% Inter-American Dev Bank Supranational 3.33% Federal Home Loan Bank Agency 2.30% American Express ABS ABS 1.87% John Deere ABS ABS 1.76% Hyundai Auto Receivables ABS 1.71% Royal Bank of Canada Corporate 1.67% Toyota Motor Corp Corporate 1.60% Bank of America Corp Corporate 1.55% JP Morgan Chase & Co Corporate 1.54% Bank of New York Corporate 1.54% International Finance Corp Supranational 1.54% Intl Bank Recon and Development Supranational 1.46% Toronto Dominion Holdings Corporate 1.42% Northwestern Mutual Glbl Corporate 1.29% Paccar Financial Corporate 1.25% Bank of Montreal Chicago Corporate 1.16% Amazon.com Inc Corporate 1.13% Salesforce.com Inc Corporate 1.13% Metlife Inc Corporate 1.13% Air Products & Chemicals Corporate 1.11% Prudential Financial Inc Corporate 1.10% United Health Group Inc Corporate 1.07% New York Life Global Funding Corporate 1.07% GM Financial Automobile Leasing Trust ABS 1.02% Berkshire Hathaway Corporate 1.02% Honda ABS ABS 0.95% Guardian Life Global Funding Corporate 0.84% US Bancorp Corporate 0.82% Toyota Lease Owner Trust ABS 0.82% Caterpillar Inc Corporate 0.71% GM Financial Securitized Term Auto Trust ABS 0.67% MasterCard Inc Corporate 0.65% Toyota ABS ABS 0.63% Mass Mutual Insurance Corporate 0.60% Issuers City of Cupertino – Account #10659 As of June 30, 2023 15 84 Issue Name Investment Type % Portfolio Charles Schwab Corp/The Corporate 0.58% Hyundai Auto Lease Securitization ABS 0.52% State of California Municipal Bonds 0.49% Northern Trust Corp Corporate 0.44% Morgan Stanley Corporate 0.41% Verizon Master Trust ABS 0.38% BMW Vehicle Lease Trust ABS 0.37% BMW ABS ABS 0.35% Wal-Mart Stores Corporate 0.21% Wells Fargo 100% Treasury MMKT Fund Money Market Fund 0.13% Verizon Owner Trust ABS 0.07% TOTAL 100.00% Issuers City of Cupertino – Account #10659 As of June 30, 2023 16 85 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration ABS 89238EAC0 Toyota Lease Owner Trust 2021-A A3 0.390% Due 04/22/2024 91,167.99 03/23/2022 2.16% 89,344.63 90,896.50 99.69 6.22% 90,883.09 10.86 0.06% (13.41) Aaa / AAA NR 0.81 0.05 44891VAC5 Hyundai Auto Lease Trust 2021-B A3 0.330% Due 06/17/2024 239,581.62 06/08/2021 0.34% 239,545.68 239,578.29 99.45 6.07% 238,259.37 35.14 0.16% (1,318.92) Aaa / AAA NR 0.97 0.10 43813DAC2 Honda Auto Receivables 2020-2 A3 0.820% Due 07/15/2024 15,563.04 05/18/2020 0.83% 15,561.82 15,562.73 99.49 5.66% 15,484.40 5.67 0.01% (78.33) Aaa / AAA NR 1.04 0.10 47789KAC7 John Deere Owner Trust 2020-A A3 1.100% Due 08/15/2024 1,999.85 03/04/2020 1.11% 1,999.73 1,999.82 99.83 7.52% 1,996.36 0.98 0.00% (3.46) Aaa / NR AAA 1.13 0.03 43813KAC6 Honda Auto Receivables Trust 2020-3 A3 0.370% Due 10/18/2024 132,905.15 09/22/2020 0.38% 132,885.62 132,902.76 98.61 5.95% 131,063.75 17.76 0.09% (1,839.01) NR / AAA AAA 1.30 0.25 36262XAC8 GM Financial Auto Lease Trust 2021-3 A2 0.390% Due 10/21/2024 605,741.63 08/10/2021 0.39% 605,733.40 605,739.74 98.59 5.86% 597,221.27 72.18 0.40% (8,518.47) NR / AAA AAA 1.31 0.25 47787NAC3 John Deere Owner Trust 2020-B A3 0.510% Due 11/15/2024 24,012.85 07/14/2020 0.52% 24,009.19 24,012.28 99.28 5.17% 23,840.32 5.44 0.02% (171.96) Aaa / NR AAA 1.38 0.15 09690AAC7 BMW Vehicle Lease Trust 2021-2 A3 0.330% Due 12/26/2024 190,761.46 09/08/2021 0.34% 190,741.76 190,757.26 98.70 6.39% 188,290.72 10.49 0.13% (2,466.54) Aaa / NR AAA 1.49 0.21 89236XAC0 Toyota Auto Receivables 2020-D A3 0.350% Due 01/15/2025 91,064.31 10/06/2020 0.36% 91,047.34 91,058.15 98.94 6.01% 90,097.39 14.17 0.06% (960.76) NR / AAA AAA 1.55 0.19 44891WAC3 Hyundai Auto Lease Trust 2022-A A3 1.160% Due 01/15/2025 540,000.00 01/11/2022 1.16% 539,988.07 539,995.78 98.22 5.87% 530,395.56 278.40 0.36% (9,600.22) Aaa / AAA NR 1.55 0.38 92290BAA9 Verizon Owner Trust 2020-B A 0.470% Due 02/20/2025 110,213.94 08/04/2020 0.48% 110,190.79 110,205.54 99.30 5.63% 109,445.09 15.83 0.07% (760.45) Aaa / NR AAA 1.65 0.13 89238LAC4 Toyota Lease Owner Trust 2022-A A3 1.960% Due 02/20/2025 1,150,000.00 02/23/2022 1.98% 1,149,818.99 1,149,923.77 97.81 5.92% 1,124,764.40 688.72 0.75% (25,159.37) NR / AAA AAA 1.65 0.56 36265MAC9 GM Financial Auto Lease Trust 2022-1 A3 1.900% Due 03/20/2025 945,000.00 02/15/2022 1.91% 944,991.87 944,996.96 98.05 5.87% 926,603.69 548.63 0.62% (18,393.27) Aaa / NR AAA 1.72 0.49 05601XAC3 BMW Vehicle Lease Trust 2022-1 A3 1.100% Due 03/25/2025 367,689.92 01/11/2022 1.11% 367,634.96 367,671.42 98.29 5.84% 361,402.42 67.41 0.24% (6,269.00) NR / AAA AAA 1.74 0.36 43813GAC5 Honda Auto Receivables Trust 2021-1 A3 0.270% Due 04/21/2025 119,274.80 02/17/2021 0.27% 119,272.63 119,274.29 97.65 6.18% 116,475.07 8.95 0.08% (2,799.22) Aaa / NR AAA 1.81 0.39 89240BAC2 Toyota Auto Receivables Owners 2021-A A3 0.260% Due 05/15/2025 439,862.73 02/02/2021 0.27% 439,781.10 439,844.11 97.82 5.87% 430,262.29 50.83 0.29% (9,581.82) Aaa / NR AAA 1.88 0.39 44933LAC7 Hyundai Auto Receivables Trust 2021-A A3 0.380% Due 09/15/2025 304,823.89 04/20/2021 0.38% 304,791.82 304,814.70 97.38 6.00% 296,830.19 51.48 0.20% (7,984.51) NR / AAA AAA 2.21 0.46 As of June 30, 2023 17 86 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 43815GAC3 Honda Auto Receivables Trust 2021-4 A3 0.880% Due 01/21/2026 460,000.00 11/16/2021 0.89% 459,903.03 459,950.82 95.98 5.92% 441,499.26 112.44 0.30% (18,451.56) Aaa / NR AAA 2.56 0.80 47789QAC4 John Deere Owner Trust 2021-B A3 0.520% Due 03/16/2026 501,919.07 07/13/2021 0.52% 501,874.29 501,898.14 95.80 6.12% 480,831.94 116.00 0.32% (21,066.20) Aaa / NR AAA 2.71 0.75 89238JAC9 Toyota Auto Receivables Trust 2021-D A3 0.710% Due 04/15/2026 430,000.00 11/09/2021 0.71% 429,990.84 429,995.41 95.77 6.14% 411,795.09 135.69 0.28% (18,200.32) NR / AAA AAA 2.79 0.78 43815BAC4 Honda Auto Receivables Trust 2022-1 A3 1.880% Due 05/15/2026 740,000.00 02/15/2022 1.89% 739,888.70 739,935.32 95.55 5.87% 707,074.44 618.31 0.47% (32,860.88) Aaa / AAA NR 2.88 1.13 44935FAD6 Hyundai Auto Receivables Trust 2021-C A3 0.740% Due 05/15/2026 1,330,000.00 Various 2.03% 1,296,371.65 1,311,590.39 96.07 5.87% 1,277,697.76 437.42 0.86% (33,892.63) NR / AAA AAA 2.88 0.77 05602RAD3 BMW Vehicle Owner Trust 2022-A A3 3.210% Due 08/25/2026 530,000.00 05/10/2022 3.23% 529,972.44 529,982.38 97.22 5.76% 515,273.95 283.55 0.35% (14,708.43) Aaa / AAA NR 3.16 1.10 362554AC1 GM Financial Securitized Term 2021-4 A3 0.680% Due 09/16/2026 350,000.00 10/13/2021 0.68% 349,991.08 349,995.52 95.50 6.14% 334,267.15 99.17 0.22% (15,728.37) Aaa / AAA NR 3.22 0.82 47787JAC2 John Deere Owner Trust 2022-A A3 2.320% Due 09/16/2026 450,000.00 03/10/2022 2.34% 449,900.46 449,937.19 96.32 5.88% 433,454.85 464.00 0.29% (16,482.34) Aaa / NR AAA 3.22 1.04 448977AD0 Hyundai Auto Receivables Trust 2022-A A3 2.220% Due 10/15/2026 1,010,000.00 03/09/2022 2.23% 1,009,961.12 1,009,976.58 95.98 5.78% 969,371.74 996.53 0.65% (40,604.84) NR / AAA AAA 3.30 1.14 380146AC4 GM Financial Auto Receivables 2022-1 A3 1.260% Due 11/16/2026 295,000.00 01/11/2022 1.27% 294,974.36 294,985.52 95.52 5.90% 281,786.66 154.88 0.19% (13,198.86) NR / AAA AAA 3.38 0.97 362585AC5 GM Financial Securitized ART 2022-2 A3 3.100% Due 02/16/2027 390,000.00 04/05/2022 3.13% 389,918.49 389,947.40 96.77 5.72% 377,383.89 503.75 0.25% (12,563.51) Aaa / AAA NR 3.64 1.25 47800AAC4 John Deere Owner Trust 2022-B A3 3.740% Due 02/16/2027 655,000.00 07/12/2022 3.77% 654,937.45 654,954.02 97.15 5.73% 636,361.32 1,088.76 0.43% (18,592.70) Aaa / NR AAA 3.64 1.46 02589BAA8 American Express Credit Accoun 22-1 A 2.210% Due 03/15/2027 1,545,000.00 03/21/2022 2.69% 1,524,359.77 1,533,181.19 94.73 5.53% 1,463,637.21 1,517.53 0.98% (69,543.98) Aaa / NR AAA 3.71 1.62 02582JJT8 American Express Credit Trust 2022-2 A 3.390% Due 05/17/2027 1,375,000.00 05/17/2022 3.42% 1,374,695.85 1,374,808.61 96.51 5.43% 1,326,956.13 2,071.67 0.89% (47,852.48) NR / AAA AAA 3.88 1.75 47800BAC2 John Deere Owner Trust 2022-C A3 5.090% Due 06/15/2027 1,050,000.00 10/12/2022 5.15% 1,049,918.52 1,049,934.08 99.21 5.61% 1,041,673.50 2,375.33 0.70% (8,260.58) Aaa / NR AAA 3.96 1.69 92348KAV5 Verizon Master Trust 2022-5 A1A 3.720% Due 07/20/2027 570,000.00 08/02/2022 3.75% 569,974.92 569,982.94 98.78 5.25% 563,053.98 647.90 0.38% (6,928.96) NR / AAA AAA 4.06 1.09 TOTAL ABS 17,051,582.25 2.17% 16,993,972.37 17,020,289.61 5.79% 16,535,434.25 13,505.87 11.09% (484,855.36) Aaa / AAA AAA 2.82 0.97 As of June 30, 2023 18 87 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration Agency 3137EAFA2 FHLMC Note 0.250% Due 12/04/2023 855,000.00 12/02/2020 0.28% 854,153.55 854,879.41 97.84 5.41% 836,534.57 160.31 0.56% (18,344.84) Aaa / AA+ AAA 0.43 0.42 3130A1XJ2 FHLB Note 2.875% Due 06/14/2024 1,500,000.00 06/18/2019 1.96% 1,564,890.20 1,512,429.57 97.57 5.52% 1,463,544.00 2,036.46 0.98% (48,885.57) Aaa / AA+ NR 0.96 0.92 3135G0V75 FNMA Note 1.750% Due 07/02/2024 1,500,000.00 07/16/2019 1.96% 1,484,895.00 1,496,940.65 96.43 5.44% 1,446,480.00 13,052.08 0.98% (50,460.65) Aaa / AA+ AAA 1.01 0.97 3130A2UW4 FHLB Note 2.875% Due 09/13/2024 2,000,000.00 09/13/2019 1.79% 2,103,380.00 2,024,938.16 97.17 5.33% 1,943,320.00 17,250.00 1.31% (81,618.16) Aaa / AA+ AAA 1.21 1.15 3135G0W66 FNMA Note 1.625% Due 10/15/2024 1,975,000.00 Various 1.73% 1,965,802.75 1,972,555.49 95.41 5.35% 1,884,375.15 6,775.35 1.27% (88,180.34) Aaa / AA+ AAA 1.30 1.25 3135G0X24 FNMA Note 1.625% Due 01/07/2025 1,295,000.00 Various 1.38% 1,309,953.95 1,299,727.20 94.82 5.22% 1,227,873.68 10,171.14 0.83% (71,853.52) Aaa / AA+ AAA 1.53 1.46 3137EAEP0 FHLMC Note 1.500% Due 02/12/2025 2,365,000.00 02/13/2020 1.52% 2,363,178.95 2,364,409.28 94.40 5.16% 2,232,498.51 13,697.29 1.51% (131,910.77) Aaa / AA+ AAA 1.62 1.55 3135G03U5 FNMA Note 0.625% Due 04/22/2025 1,860,000.00 04/22/2020 0.67% 1,856,168.40 1,858,611.47 92.48 5.02% 1,720,157.76 2,228.13 1.15% (138,453.71) Aaa / AA+ AAA 1.81 1.76 3135G04Z3 FNMA Note 0.500% Due 06/17/2025 2,500,000.00 Various 0.50% 2,499,227.30 2,499,779.25 91.81 4.93% 2,295,207.50 486.11 1.54% (204,571.75) Aaa / AA+ AAA 1.97 1.91 3137EAEU9 FHLMC Note 0.375% Due 07/21/2025 1,250,000.00 07/21/2020 0.48% 1,243,775.00 1,247,436.97 91.24 4.90% 1,140,486.25 2,083.33 0.77% (106,950.72) Aaa / AA+ AAA 2.06 2.00 3135G05X7 FNMA Note 0.375% Due 08/25/2025 2,500,000.00 Various 0.48% 2,487,983.75 2,494,672.71 90.99 4.83% 2,274,872.51 3,281.25 1.53% (219,800.20) Aaa / AA+ AAA 2.16 2.09 3137EAEX3 FHLMC Note 0.375% Due 09/23/2025 2,500,000.00 Various 0.46% 2,489,362.80 2,495,147.64 90.74 4.80% 2,268,417.50 2,552.08 1.52% (226,730.14) Aaa / AA+ AAA 2.24 2.17 3135G06G3 FNMA Note 0.500% Due 11/07/2025 2,500,000.00 Various 0.56% 2,492,700.00 2,496,551.45 90.63 4.76% 2,265,792.50 1,875.00 1.52% (230,758.95) Aaa / AA+ AAA 2.36 2.29 TOTAL Agency 24,600,000.00 1.03% 24,715,471.65 24,618,079.25 5.09% 22,999,559.93 75,648.53 15.47% (1,618,519.32) Aaa / AA+ AAA 1.69 1.63 CMO 3137BFE98 FHLMC K041 A2 3.171% Due 10/25/2024 1,300,000.00 07/01/2021 0.72% 1,398,414.06 1,338,133.37 97.07 5.56% 1,261,926.90 3,435.25 0.85% (76,206.47) Aaa / AAA AAA 1.32 1.16 3137BLMZ8 FHLMC K049 A2 3.010% Due 07/25/2025 1,000,000.00 07/01/2021 0.87% 1,079,687.50 1,040,035.44 95.78 5.26% 957,834.00 2,508.33 0.64% (82,201.44) NR / NR AAA 2.07 1.83 As of June 30, 2023 19 88 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 3137BLW95 FHLMC K050 A2 3.334% Due 08/25/2025 950,000.00 11/16/2021 1.17% 1,018,132.81 988,428.72 96.28 5.24% 914,660.00 2,639.42 0.61% (73,768.72) NR / NR AAA 2.16 1.88 3137BM7C4 FHLMC K051 A2 3.308% Due 09/25/2025 440,000.00 03/15/2022 2.22% 453,079.69 448,212.35 96.15 5.21% 423,060.88 242.59 0.28% (25,151.47) NR / NR AAA 2.24 1.96 3137BN6G4 FHLMC KO53 2.995% Due 12/25/2025 570,000.00 03/15/2022 2.29% 582,001.17 577,907.88 95.27 5.13% 543,042.42 1,422.63 0.37% (34,865.46) NR / NR AAA 2.49 2.18 3137BSP72 FHLMC K058 A2 2.653% Due 08/25/2026 650,000.00 11/12/2021 1.35% 687,451.17 674,567.79 93.62 4.87% 608,522.20 1,437.04 0.41% (66,045.59) NR / NR AAA 3.16 2.90 3137FBBX3 FHLMC K068 A2 3.244% Due 08/25/2027 1,000,000.00 09/28/2022 4.41% 950,664.06 958,247.75 94.54 4.71% 945,408.00 2,703.33 0.64% (12,839.75) Aaa / NR NR 4.16 3.72 TOTAL CMO 5,910,000.00 1.74% 6,169,430.46 6,025,533.30 5.17% 5,654,454.40 14,388.59 3.80% (371,078.90) Aaa / AAA AAA 2.44 2.16 Corporate 89114QCA4 Toronto Dominion Bank Note 2.650% Due 06/12/2024 1,500,000.00 09/11/2019 2.24% 1,527,255.00 1,505,454.14 96.98 5.97% 1,454,667.00 2,097.92 0.98% (50,787.14) A1 / A AA- 0.95 0.92 06367TQW3 Bank of Montreal Note 0.625% Due 07/09/2024 600,000.00 02/09/2022 1.89% 582,216.00 592,433.20 94.98 5.74% 569,871.00 1,791.67 0.38% (22,562.20) A2 / A- AA- 1.03 0.99 79466LAG9 Salesforce.com Inc Callable Note Cont 7/15/2022 0.625% Due 07/15/2024 1,760,000.00 Various 0.87% 1,748,937.40 1,755,609.59 95.19 5.44% 1,675,340.48 5,072.23 1.13% (80,269.11) A2 / A+ NR 1.04 1.01 78013XZU5 Royal Bank of Canada Note 2.550% Due 07/16/2024 1,500,000.00 Various 1.99% 1,533,359.18 1,508,458.20 96.92 5.62% 1,453,839.00 17,531.26 0.99% (54,619.20) A1 / A AA- 1.05 1.00 91159HHX1 US Bancorp Callable Note Cont 6/28/2024 2.400% Due 07/30/2024 1,250,000.00 10/10/2019 2.07% 1,268,262.50 1,253,858.72 96.46 5.82% 1,205,688.75 12,583.33 0.82% (48,169.97) A3 / A A 1.08 1.03 009158AV8 Air Products & Chemicals Callable Note Cont 4/30/2024 3.350% Due 07/31/2024 1,675,000.00 08/07/2019 2.07% 1,771,212.00 1,691,945.80 97.42 5.84% 1,631,707.95 23,536.08 1.11% (60,237.85) A2 / A NR 1.09 1.03 69371RR40 Paccar Financial Corp Note 0.500% Due 08/09/2024 680,000.00 08/03/2021 0.52% 679,632.80 679,864.31 94.67 5.52% 643,745.80 1,341.11 0.43% (36,118.51) A1 / A+ NR 1.11 1.07 69371RQ25 Paccar Financial Corp Note 2.150% Due 08/15/2024 370,000.00 08/08/2019 2.20% 369,182.30 369,816.05 96.26 5.62% 356,163.48 3,005.22 0.24% (13,652.57) A1 / A+ NR 1.13 1.08 14913Q3B3 Caterpillar Finl Service Note 2.150% Due 11/08/2024 1,100,000.00 01/28/2020 1.92% 1,111,517.00 1,103,275.48 95.82 5.38% 1,054,061.80 3,481.81 0.71% (49,213.68) A2 / A A+ 1.36 1.30 74153WCQ0 Pricoa Global Funding Note 1.150% Due 12/06/2024 885,000.00 12/01/2021 1.19% 884,088.45 884,563.39 93.57 5.89% 828,122.82 706.77 0.56% (56,440.57) Aa3 / AA- AA- 1.44 1.38 As of June 30, 2023 20 89 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 89114TZL9 Toronto-Dominion Bank Note 1.450% Due 01/10/2025 700,000.00 03/15/2022 2.79% 674,737.00 686,289.30 94.13 5.51% 658,921.90 4,821.25 0.44% (27,367.40) A1 / A NR 1.53 1.46 89236TJT3 Toyota Motor Credit Corp Note 1.450% Due 01/13/2025 1,215,000.00 01/10/2022 1.50% 1,213,371.90 1,214,165.15 94.32 5.35% 1,146,014.73 8,221.50 0.77% (68,150.42) A1 / A+ A+ 1.54 1.47 64952WEK5 New York Life Global Note 1.450% Due 01/14/2025 1,680,000.00 01/11/2022 1.49% 1,678,185.60 1,679,067.97 93.96 5.60% 1,578,559.92 11,300.33 1.07% (100,508.05) Aaa / AA+ AAA 1.55 1.48 69371RR73 Paccar Financial Corp Note 2.850% Due 04/07/2025 885,000.00 03/31/2022 2.86% 884,769.90 884,864.38 95.71 5.42% 847,036.16 5,885.25 0.57% (37,828.22) A1 / A+ NR 1.77 1.68 78016EZ59 Royal Bank of Canada Note 3.375% Due 04/14/2025 1,050,000.00 04/07/2022 3.39% 1,049,611.50 1,049,768.53 96.27 5.59% 1,010,808.75 7,579.69 0.68% (38,959.78) A1 / A AA- 1.79 1.69 06406RBC0 Bank of NY Mellon Corp Callable Note Cont 3/25/2025 3.350% Due 04/25/2025 1,370,000.00 04/19/2022 3.35% 1,369,808.20 1,369,883.69 96.16 5.60% 1,317,345.42 8,414.08 0.89% (52,538.27) A1 / A AA- 1.82 1.72 06367WB85 Bank of Montreal Note 1.850% Due 05/01/2025 1,240,000.00 07/23/2021 0.85% 1,285,656.80 1,262,263.51 93.42 5.67% 1,158,357.16 3,823.33 0.78% (103,906.35) A2 / A- AA- 1.84 1.76 46647PCH7 JP Morgan Chase & Co Callable Note Cont 6/1/2024 0.824% Due 06/01/2025 1,370,000.00 05/24/2021 0.78% 1,371,773.90 1,370,543.83 95.06 6.07% 1,302,372.70 940.73 0.87% (68,171.13) A1 / A- AA- 1.92 1.83 46647PCK0 JP Morgan Chase & Co Callable Note Cont 6/23/2024 0.969% Due 06/23/2025 655,000.00 Various 0.95% 655,406.85 655,133.02 94.92 6.08% 621,735.83 141.05 0.42% (33,397.19) A1 / A- AA- 1.98 1.89 66815L2J7 Northwestern Mutual Glbl Note 4.000% Due 07/01/2025 1,170,000.00 06/27/2022 4.01% 1,169,602.20 1,169,734.68 96.85 5.69% 1,133,145.00 23,400.00 0.78% (36,589.68) Aaa / AA+ AAA 2.01 1.85 74153WCM9 Pricoa Global Funding Note 0.800% Due 09/01/2025 904,000.00 04/06/2022 3.26% 832,972.72 858,650.05 89.92 5.81% 812,833.41 2,410.67 0.55% (45,816.64) Aa3 / AA- AA- 2.18 2.09 06406HCQ0 Bank of New York Callable Note Cont 10/18/2025 3.950% Due 11/18/2025 1,000,000.00 04/05/2022 3.20% 1,024,910.00 1,016,220.47 96.39 5.59% 963,887.00 4,718.06 0.65% (52,333.47) A1 / A AA- 2.39 2.22 40139LBC6 Guardian Life Glob Fun Note 0.875% Due 12/10/2025 1,400,000.00 Various 1.12% 1,385,860.00 1,391,732.29 89.00 5.76% 1,246,018.20 714.58 0.84% (145,714.09) Aa1 / AA+ NR 2.45 2.35 66815L2A6 Northwestern Mutual Glbl Note 0.800% Due 01/14/2026 850,000.00 12/06/2021 1.47% 827,449.50 836,030.13 89.12 5.45% 757,516.60 3,154.44 0.51% (78,513.53) Aaa / AA+ AAA 2.55 2.44 06051GHY8 Bank of America Corp Callable Note Cont 2/13/2025 2.015% Due 02/13/2026 600,000.00 05/24/2021 1.05% 620,988.00 609,158.12 93.65 6.20% 561,882.00 4,634.50 0.38% (47,276.12) A1 / A- AA- 2.63 1.54 As of June 30, 2023 21 90 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 46647PBK1 JP Morgan Chase & Co Callable Note Cont 4/22/2025 2.083% Due 04/22/2026 401,000.00 05/20/2021 1.11% 415,969.33 407,924.23 93.65 5.83% 375,537.30 1,600.96 0.25% (32,386.93) A1 / A- AA- 2.81 1.73 6174468Q5 Morgan Stanley Callable Note Cont 4/28/2025 2.188% Due 04/28/2026 650,000.00 05/23/2022 4.87% 615,699.50 625,315.12 93.87 5.77% 610,160.20 2,488.85 0.41% (15,154.92) A1 / A- A+ 2.83 1.74 023135BX3 Amazon.com Inc Callable Note Cont 4/12/2026 1.000% Due 05/12/2026 1,875,000.00 05/10/2021 1.09% 1,866,900.00 1,870,360.02 89.90 4.81% 1,685,675.63 2,552.08 1.13% (184,684.39) A1 / AA AA- 2.87 2.76 91324PEC2 United Health Group Inc Callable Note Cont 4/15/2026 1.150% Due 05/15/2026 1,035,000.00 Various 1.37% 1,025,051.35 1,028,508.73 90.43 4.75% 935,955.68 1,520.88 0.63% (92,553.05) A3 / A+ A 2.88 2.76 89236TJK2 Toyota Motor Credit Corp Note 1.125% Due 06/18/2026 1,385,000.00 06/15/2021 1.13% 1,384,390.60 1,384,638.57 89.41 5.01% 1,238,357.59 562.66 0.83% (146,280.98) A1 / A+ A+ 2.97 2.85 06051GJD2 Bank of America Corp Callable Note Cont 6/19/2025 1.319% Due 06/19/2026 700,000.00 07/16/2021 1.27% 701,274.00 700,640.56 91.60 5.90% 641,213.30 307.77 0.43% (59,427.26) A1 / A- AA- 2.97 1.89 57629WDE7 Mass Mutual Global funding Note 1.200% Due 07/16/2026 1,000,000.00 08/19/2021 1.15% 1,002,230.00 1,001,385.64 88.39 5.38% 883,944.00 5,500.00 0.60% (117,441.64) Aa3 / AA+ AA+ 3.05 2.90 58989V2D5 Met Tower Global Funding Note 1.250% Due 09/14/2026 770,000.00 09/07/2021 1.27% 769,291.60 769,545.71 87.49 5.57% 673,647.59 2,860.76 0.45% (95,898.12) Aa3 / AA- AA- 3.21 3.05 931142ER0 Wal-Mart Stores Callable Note Cont 08/17/2026 1.050% Due 09/17/2026 350,000.00 09/08/2021 1.09% 349,338.50 349,574.70 89.28 4.68% 312,489.80 1,061.67 0.21% (37,084.90) Aa2 / AA AA 3.22 3.08 59217GER6 Metlife Note 1.875% Due 01/11/2027 1,115,000.00 01/03/2022 1.90% 1,113,728.90 1,114,102.02 89.09 5.30% 993,324.51 9,872.40 0.67% (120,777.51) Aa3 / AA- AA- 3.54 3.30 808513BY0 Charles Schwab Corp Callable Note Cont 2/3/2027 2.450% Due 03/03/2027 960,000.00 03/01/2022 2.46% 959,729.90 959,800.30 89.58 5.63% 859,940.16 7,709.34 0.58% (99,860.14) A2 / A- A 3.68 3.40 084664CZ2 Berkshire Hathaway Callable Note Cont 2/15/2027 2.300% Due 03/15/2027 1,615,000.00 03/07/2022 2.30% 1,614,693.15 1,614,772.64 93.51 4.21% 1,510,186.50 10,937.14 1.02% (104,586.14) Aa2 / AA A+ 3.71 3.47 06051GHT9 Bank of America Corp Callable Note 1X 4/23/2026 3.559% Due 04/23/2027 1,150,000.00 Various 4.92% 1,114,222.54 1,121,048.29 94.81 5.58% 1,090,282.80 7,730.94 0.74% (30,765.49) A1 / A- AA- 3.82 2.61 665859AW4 Northern Trust Company Callable Note Cont 4/10/2027 4.000% Due 05/10/2027 670,000.00 05/05/2022 4.04% 668,914.60 669,162.47 96.34 5.05% 645,459.91 3,796.67 0.44% (23,702.56) A2 / A+ A+ 3.86 3.50 As of June 30, 2023 22 91 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 91324PEG3 United Health Group Inc Callable Note Cont 4/15/2027 3.700% Due 05/15/2027 675,000.00 05/17/2022 3.69% 675,316.70 675,245.91 96.40 4.73% 650,689.88 3,191.25 0.44% (24,556.03) A3 / A+ A 3.88 3.54 57636QAW4 MasterCard Inc Callable Note Cont 2/9/28 4.875% Due 03/09/2028 945,000.00 03/06/2023 4.90% 944,083.35 944,140.55 101.13 4.60% 955,687.95 14,332.50 0.65% 11,547.40 Aa3 / A+ NR 4.70 4.03 TOTAL Corporate 42,705,000.00 2.08% 42,741,600.72 42,634,949.46 5.47% 40,052,195.66 237,332.73 27.01% (2,582,753.80) A1 / A+ AA- 2.23 2.03 Money Market Fund 94975H270 Wells Fargo 100% Treasury Money Mkt Fund 197,058.62 Various 4.69% 197,058.62 197,058.62 1.00 4.69% 197,058.62 0.00 0.13% 0.00 Aaa / AAA NR 0.00 0.00 TOTAL Money Market Fund 197,058.62 4.69% 197,058.62 197,058.62 4.69% 197,058.62 0.00 0.13% 0.00 Aaa / AAA NR 0.00 0.00 Municipal Bonds 13063DRK6 California State Taxable GO 2.400% Due 10/01/2024 755,000.00 10/16/2019 1.91% 772,342.35 759,402.88 96.17 5.60% 726,120.50 4,530.00 0.49% (33,282.38) Aa2 / AA- AA 1.26 1.20 TOTAL Municipal Bonds 755,000.00 1.91% 772,342.35 759,402.88 5.60% 726,120.50 4,530.00 0.49% (33,282.38) Aa2 / AA- AA 1.26 1.20 Supranational 4581X0DP0 Inter-American Dev Bank Note 0.250% Due 11/15/2023 2,800,000.00 07/01/2021 0.37% 2,792,300.00 2,798,776.22 98.13 5.32% 2,747,746.40 894.44 1.84% (51,029.82) Aaa / AAA NR 0.38 0.37 45950KCT5 International Finance Corp Note 0.375% Due 07/16/2025 2,500,000.00 05/27/2021 0.66% 2,471,150.00 2,485,709.10 91.44 4.82% 2,286,050.00 4,296.88 1.54% (199,659.10) Aaa / AAA NR 2.05 1.99 459058JL8 Intl. Bank Recon & Development Note 0.500% Due 10/28/2025 2,400,000.00 Various 0.60% 2,388,859.25 2,394,484.23 90.76 4.74% 2,178,333.61 2,100.01 1.46% (216,150.62) Aaa / AAA AAA 2.33 2.26 4581X0DV7 Inter-American Dev Bank Note 0.875% Due 04/20/2026 2,460,000.00 04/13/2021 0.97% 2,448,733.20 2,453,681.71 90.21 4.64% 2,219,195.52 4,245.21 1.49% (234,486.19) Aaa / AAA AAA 2.81 2.71 TOTAL Supranational 10,160,000.00 0.64% 10,101,042.45 10,132,651.26 4.90% 9,431,325.53 11,536.54 6.33% (701,325.73) Aaa / AAA AAA 1.81 1.75 US Treasury 912796YT0 US Treasury Bill 4.888% Due 11/02/2023 1,500,000.00 05/08/2023 5.08% 1,463,954.69 1,474,747.92 98.32 5.08% 1,474,747.92 0.00 0.99% 0.00 P-1 / A-1+ F-1+ 0.34 0.33 As of June 30, 2023 23 92 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 912796ZN2 US Treasury Bill 5.228% Due 12/28/2023 1,500,000.00 06/28/2023 5.44% 1,460,358.13 1,460,793.75 97.39 5.44% 1,460,793.75 0.00 0.98% 0.00 P-1 / A-1+ F-1+ 0.50 0.48 912828X70 US Treasury Note 2.000% Due 04/30/2024 1,700,000.00 06/10/2019 1.92% 1,705,976.56 1,701,017.86 97.22 5.45% 1,652,785.90 5,728.26 1.11% (48,231.96) Aaa / AA+ AAA 0.84 0.81 912828XX3 US Treasury Note 2.000% Due 06/30/2024 2,000,000.00 Various 1.80% 2,018,574.22 2,003,840.14 96.70 5.43% 1,934,062.00 108.69 1.30% (69,778.14) Aaa / AA+ AAA 1.00 0.97 912828D56 US Treasury Note 2.375% Due 08/15/2024 1,700,000.00 09/18/2019 1.71% 1,753,191.41 1,712,199.59 96.77 5.36% 1,645,081.50 15,168.51 1.11% (67,118.09) Aaa / AA+ AAA 1.13 1.08 912828YY0 US Treasury Note 1.750% Due 12/31/2024 2,100,000.00 03/15/2022 1.97% 2,087,203.13 2,093,119.02 95.07 5.21% 1,996,476.30 99.86 1.34% (96,642.72) Aaa / AA+ AAA 1.51 1.45 912828ZC7 US Treasury Note 1.125% Due 02/28/2025 1,500,000.00 03/18/2020 0.81% 1,523,144.53 1,507,787.42 93.73 5.09% 1,405,957.50 5,640.29 0.95% (101,829.92) Aaa / AA+ AAA 1.67 1.61 91282CED9 US Treasury Note 1.750% Due 03/15/2025 3,100,000.00 Various 2.23% 3,057,617.20 3,075,508.97 94.59 5.09% 2,932,407.80 15,921.20 1.98% (143,101.17) Aaa / AA+ AAA 1.71 1.64 912828ZL7 US Treasury Note 0.375% Due 04/30/2025 2,500,000.00 03/21/2022 2.24% 2,360,839.85 2,417,975.21 92.01 4.99% 2,300,195.00 1,579.48 1.54% (117,780.21) Aaa / AA+ AAA 1.84 1.78 91282CAB7 US Treasury Note 0.250% Due 07/31/2025 1,500,000.00 03/12/2021 0.72% 1,469,765.63 1,485,610.78 91.00 4.84% 1,364,941.50 1,564.23 0.92% (120,669.28) Aaa / AA+ AAA 2.09 2.03 91282CAM3 US Treasury Note 0.250% Due 09/30/2025 2,400,000.00 Various 0.56% 2,366,140.63 2,383,342.50 90.57 4.71% 2,173,780.80 1,508.20 1.46% (209,561.70) Aaa / AA+ AAA 2.25 2.19 91282CAT8 US Treasury Note 0.250% Due 10/31/2025 2,450,000.00 Various 0.49% 2,422,492.19 2,436,550.27 90.25 4.71% 2,211,125.00 1,031.93 1.48% (225,425.27) Aaa / AA+ AAA 2.34 2.27 91282CAZ4 US Treasury Note 0.375% Due 11/30/2025 2,250,000.00 03/26/2021 0.77% 2,209,658.20 2,229,131.92 90.27 4.68% 2,030,976.00 714.65 1.36% (198,155.92) Aaa / AA+ AAA 2.42 2.35 91282CBH3 US Treasury Note 0.375% Due 01/31/2026 2,500,000.00 05/27/2021 0.75% 2,456,445.31 2,475,916.22 89.78 4.61% 2,244,532.50 3,910.57 1.51% (231,383.72) Aaa / AA+ AAA 2.59 2.51 91282CBW0 US Treasury Note 0.750% Due 04/30/2026 2,500,000.00 05/27/2021 0.80% 2,493,652.34 2,496,349.57 90.05 4.53% 2,251,172.50 3,158.97 1.51% (245,177.07) Aaa / AA+ AAA 2.84 2.74 91282CCZ2 US Treasury Note 0.875% Due 09/30/2026 1,400,000.00 10/18/2021 1.19% 1,379,054.68 1,386,241.23 89.47 4.39% 1,252,563.20 3,079.23 0.84% (133,678.03) Aaa / AA+ AAA 3.25 3.13 91282CDG3 US Treasury Note 1.125% Due 10/31/2026 1,400,000.00 11/15/2021 1.25% 1,391,468.75 1,394,255.91 89.92 4.41% 1,258,906.60 2,653.53 0.85% (135,349.31) Aaa / AA+ AAA 3.34 3.20 91282CEW7 US Treasury Note 3.250% Due 06/30/2027 3,250,000.00 Various 3.18% 3,260,312.50 3,258,035.26 96.17 4.30% 3,125,586.75 287.02 2.10% (132,448.51) Aaa / AA+ AAA 4.00 3.70 91282CFB2 US Treasury Note 2.750% Due 07/31/2027 400,000.00 08/22/2022 3.12% 393,218.75 394,392.21 94.28 4.29% 377,109.20 4,588.40 0.26% (17,283.01) Aaa / AA+ AAA 4.09 3.76 As of June 30, 2023 24 93 Holdings Report City of Cupertino - Account #10659 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody/S&P Fitch Maturity Duration 91282CFH9 US Treasury Note 3.125% Due 08/31/2027 4,500,000.00 Various 3.28% 4,468,902.34 4,473,941.67 95.64 4.28% 4,303,651.50 47,002.38 2.92% (170,290.17) Aaa / AA+ AAA 4.17 3.81 91282CFM8 US Treasury Note 4.125% Due 09/30/2027 3,450,000.00 Various 4.31% 3,421,152.34 3,425,081.68 99.44 4.27% 3,430,728.30 35,772.54 2.32% 5,646.62 Aaa / AA+ AAA 4.25 3.82 91282CFZ9 US Treasury Note 3.875% Due 11/30/2027 850,000.00 12/05/2022 3.81% 852,656.25 852,354.14 98.58 4.23% 837,947.00 2,789.79 0.56% (14,407.14) Aaa / AA+ AAA 4.42 4.00 91282CGC9 US Treasury Note 3.875% Due 12/31/2027 2,750,000.00 Various 3.67% 2,775,107.42 2,772,957.03 98.60 4.22% 2,711,436.75 289.57 1.82% (61,520.28) Aaa / AA+ AAA 4.51 4.08 91282CGH8 US Treasury Note 3.500% Due 01/31/2028 3,000,000.00 02/07/2023 3.81% 2,957,929.69 2,961,238.85 97.11 4.20% 2,913,165.00 43,798.34 1.98% (48,073.85) Aaa / AA+ AAA 4.59 4.12 91282CGP0 US Treasury Note 4.000% Due 02/29/2028 3,700,000.00 Various 4.00% 3,699,113.28 3,699,296.71 99.26 4.17% 3,672,682.90 49,467.39 2.50% (26,613.81) Aaa / AA+ AAA 4.67 4.16 TOTAL US Treasury 55,900,000.00 2.45% 55,447,930.02 55,571,685.83 4.66% 52,962,813.17 245,863.03 35.67% (2,608,872.66) Aaa / AA+ AAA 2.88 2.68 TOTAL PORTFOLIO 157,278,640.87 1.95% 157,138,848.64 156,959,650.21 5.11% 148,558,962.06 602,805.29 100.00% (8,400,688.15) Aa1 / AA AAA 2.42 2.06 TOTAL MARKET VALUE PLUS ACCRUALS 149,161,767.35 As of June 30, 2023 25 94 SECTION |Section 4 |Transactions 26 95 Transaction Ledger City of Cupertino - Account #10659 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss ACQUISITIONS Purchase 05/09/2023 912796YT0 1,500,000.00 US Treasury Bill 4.888% Due: 11/02/2023 97.597 5.08%1,463,954.69 0.00 1,463,954.69 0.00 Purchase 06/29/2023 912796ZN2 1,500,000.00 US Treasury Bill 5.228% Due: 12/28/2023 97.357 5.44%1,460,358.13 0.00 1,460,358.13 0.00 Subtotal 3,000,000.00 2,924,312.82 0.00 2,924,312.82 0.00 TOTAL ACQUISITIONS 3,000,000.00 2,924,312.82 0.00 2,924,312.82 0.00 March 31, 2023 through June 30, 2023 As of June 30, 2023 27 96 Important Disclosures 2023 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 and carries a AA+/Aaa/AAA by S&P, Moody’s and Fitch respectively. Your qualified custodian bank maintains control of all assets reflected in this statement and we urge you to compare this statement to the one you receive from your qualified custodian. Chandler does not have any authority to withdraw or deposit funds from/to the custodian account. As of June 30, 2023 28 97 Benchmark Disclosures ICE BofA 1-3 Yr US Treasury & Agency Index The ICE BofA 1-3 Year US Treasury & Agency Index tracks the performance of US dollar denominated US Treasury and nonsubordinated US agency debt issued in the US domestic market. Qualifying securities must have an investment grade rating (based on an average of Moody’s, S&P and Fitch). Qualifying securities must have at least one year remaining term to final maturity and less than three 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. As of June 30, 2023 29 98 INVESTMENT AND INSURANCE PRODUCTS ARE: ·NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY FEDERAL GOVERNMENT AGENCY ·NOT A DEPOSIT, OBLIGATION OF, OR GUARANTEED BY ANY BANK OR BANKING AFFILIATE ·SUBJECT TO INVESTMENT RISKS AND MAY LOSE VALUE, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED PCS - SAN FRANCISCO CA 510 N VALLEY MILLS DRIVE, SUITE 400 WACO, TX 76710-6075 CITY OF CUPERTINO -CHANDLER ASSET MANAGEMENT ACCOUNT NUMBER MONTHLY STATEMENT JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT MANAGER: MICHAEL J WADE TELEPHONE NUMBER: 515-878-6110 PFGEDD INVESTMENT CONTACT: IMR/DOE SLANGER TELEPHONE NUMBER: ADMINISTRATOR: BELINDA CONWAY TELEPHONE NUMBER: 254-265-6137 18223 SE 99 Custody and trust services are provided by Principal Bank ®, Member FDIC, and/or Principal Trust Company ®. These services are provided under the trade name Principal ®Custody Solutions. Principal Trust Company is a trade name of Delaware Charter Guarantee & Trust Company. Principal Bank and Principal Trust Company are members of the Principal Financial Group ®, Des Moines, IA 50392. ASSET VALUATION PRACTICES VALUES REFLECTED FOR PUBLICLY TRADED ASSETS ARE OBTAINED FROM UNAFFILIATED SOURCES. IN SITUATIONS WHERE AN ASSET VALUE CANNOT BE PROVIDED BY OUR UNAFFILIATED PRICING SOURCES, SUCH AS BUT NOT LIMITED TO NON-PUBLICLY TRADED ASSETS, THE CUSTOMER OR THEIR DESIGNATED REPRESENTATIVE MUST PROVIDE THE UPDATED VALUE. IF PRINCIPAL CUSTODY SOLUTIONS DOES NOT RECEIVE AN UPDATED VALUE, OR IS UNABLE TO USE THE VALUE PROVIDED, THE LAST REPORTED VALUE WILL CONTINUE TO BE REPORTED. VALUES OBTAINED FROM THE CUSTOMER OR THEIR DESIGNATED REPRESENTATIVE SHOULD NOT BE CONSIDERED TO BE CERTIFIED BY PRINCIPAL BANK/PRINCIPAL TRUST COMPANY, AS APPLICABLE. SPECIAL INVESTMENTS "SPECIAL INVESTMENTS" ARE ASSETS NOT HELD IN CUSTODY BY PRINCIPAL BANK/PRINCIPAL TRUST COMPANY BUT WHOSE VALUE MAY BE SHOWN ON ACCOUNT STATEMENTS. EXAMPLES OF SPECIAL INVESTMENTS INCLUDE, BUT ARE NOT LIMITED TO, COMMON OR COLLECTIVE FUNDS NOT ADMINISTERED BY PRINCIPAL BANK/PRINCIPAL TRUST COMPANY (OR THEIR AFFILIATES), HEDGE FUNDS, LIMITED PARTNERSHIPS, AND OTHER UNREGISTERED SECURITIES. AT THE DIRECTION OF AND AS A MATTER OF CONVENIENCE TO ITS CLIENTS, PRINCIPAL BANK/PRINCIPAL TRUST COMPANY MAY BE REPORT SPECIAL INVESTMENTS AS A RECORDKEEPING ITEM ON ACCOUNT STATEMENTS, AT NOMINAL VALUE OR SUCH OTHER VALUE PROVIDED BY CLIENTS/EXTERNAL SOURCES. NEITHER PRINCIPAL BANK NOR PRINCIPAL TRUST COMPANY IS RESPONSIBLE FOR THE ACCURACY OF INFORMATION PROVIDED BY EXTERNAL SOURCES, AND DOES NOT CERTIFY THAT INFORMATION PROVIDED BY THESE EXTERNAL SOURCES IS TRUE OR CORRECT FOR THE SPECIAL INVESTMENTS REFLECTED IN YOUR ACCOUNT. TRADE CONFIRMS PURSUANT TO FEDERAL REGULATION, MONTHLY OR QUARTERLY ACCOUNT STATEMENTS THAT INCLUDE INVESTMENT TRANSACTION DETAILS MAY BE PROVIDED IN LIEU OF SEPARATE TRADE CONFIRMATIONS. SEPARATE TRADE CONFIRMS MAY BE OBTAINED AT NO ADDITIONAL COST UPON WRITTEN REQUEST TO THE ACCOUNT MANAGER. UNCLAIMED PROPERTY DESIGNATED REPRESENTATIVE NOTIFICATION YOUR PROPERTY MAY BE TRANSFERRED TO THE APPROPRIATE STATE IF NO ACTIVITY OCCURS IN THE ACCOUNT WITHIN THE TIME PERIOD SPECIFIED BY STATE LAW. IF YOUR STATE OF RESIDENCE ALLOWS, YOU MAY DESIGNATE A REPRESENTATIVE FOR THE PURPOSE OF RECEIVING NOTICE OF ACCOUNT INACTIVITY BY PROVIDING THE NAME AND MAILING OR EMAIL ADDRESS OF A REPRESENTATIVE. THE DESIGNATED REPRESENTATIVE DOES NOT HAVE ANY RIGHTS TO YOUR ACCOUNT. PLEASE REFER TO YOUR STATE'S UNCLAIMED PROPERTY WEBSITE FOR MORE INFORMATION AND INSTRUCTIONS ON HOW TO DESIGNATE A REPRESENTATIVE FOR NOTICE. 100 TABLE OF CONTENTS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ PAGE REPORT NAME NUMBER ASSET SUMMARY .................................................................................. 1 STATEMENT OF ASSETS AND LIABILITIES ............................................................ 2 CASH SUMMARY ................................................................................... 20 STATEMENT OF TRANSACTIONS ...................................................................... 21 101 PAGE 1 ASSET SUMMARY CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ ASSET SUMMARY % TOTAL UNREALIZED ESTIMATED CURRENT ACCRUED INVESTMENT CATEGORY COST VALUE MARKET VALUE MARKET GAIN/LOSS ANNUAL INCOME YIELD INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ CASH 20,000.00 20,000.00 0.01 CASH EQUIVALENTS 3,101,371.44 3,111,778.62 2.09 10,407.18 161,175 5.18 3,785.19 BONDS AND NOTES 154,017,477.20 145,426,456.81 97.89 8,591,020.39- 2,845,924 1.96 603,833.31 TOTAL INVESTMENTS 157,138,848.64 148,558,235.43 100.00 8,580,613.21- 3,007,099 2.02 607,618.50 TOTAL ACCRUALS 607,618.50 607,618.50 ===================================================================================================================================== TOTAL ACCRUALS AND INVESTMENTS 157,746,467.14 149,165,853.93 8,580,613.21- 3,007,099 2.02 607,618.50 102 PAGE 2 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ INCOME CASH 20,000.00 20,000.00 0.01 CASH EQUIVALENTS 127,399.02 ALLSPRING 100% TREASURY 127,399.02 127,399.02 0.09 0.00 3,675.02 MONEY MARKET FUND - #008 1.0000 1.0000 49,659.6 PRINCIPAL PUBLIC DEPOSIT SWEEP 49,659.60 49,659.60 0.03 0.00 110.17 PROGRAM 1.0000 1.0000 1,500,000 UNITED STATES TREASURY BILLS 1,463,954.69 1,473,555.00 0.99 9,600.31 0.00 DTD 11/03/2022 DUE 11/02/2023 97.5970 98.2370 CUSIP 912796YT0 1,500,000 UNITED STATES TREASURY BILLS 1,460,358.13 1,461,165.00 0.98 806.87 0.00 DTD 12/29/2022 DUE 12/28/2023 97.3572 97.4110 CUSIP 912796ZN2 TOTAL CASH EQUIVALENTS 3,101,371.44 3,111,778.62 2.09 10,407.18 3,785.19 BOND & NOTES 1,675,000 AIR PRODUCTS & CHEMICALS 1,771,212.00 1,631,701.25 1.10 139,510.75- 23,536.08 DTD 07/31/14 3.350 07/31/2024 105.7440 97.4150 MOODY'S RATING A2 CUSIP 009158AV8 1,875,000 AMAZON.COM INC 1,866,900.00 1,685,681.25 1.13 181,218.75- 2,552.08 DTD 05/12/21 1.000 05/12/2026 99.5680 89.9030 MOODY'S RATING A1 CUSIP 023135BX3 1,375,000 AMERICAN EXPRESS CREDIT ACCOUNT 1,374,695.85 1,326,957.50 0.89 47,738.35- 2,071.67 ASSET BCKD SEC SER 2022-2 CL A 99.9779 96.5060 DTD 05/24/2022 3.390% 05/17/2027 NON CALLABLE CUSIP 02582JJT8 103 PAGE 3 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,545,000 AMERICAN EXPRESS CREDIT ACCOUNT 1,524,359.77 1,463,640.30 0.99 60,719.47- 1,517.53 ASSET BCKD SEC SER 2022-1 CL A 98.6641 94.7340 DTD 03/18/2022 2.210% 03/15/2027 NON CALLABLE MOODY'S RATING AAA CUSIP 02589BAA8 1,150,000 BANK OF AMERICA CORP 1,114,222.54 1,090,280.50 0.73 23,942.04- 7,730.94 MED TERM NOTE 96.8889 94.8070 DTD 04/23/19 04/23/2027 MOODY'S RATING A1 CUSIP 06051GHT9 600,000 BANK OF AMERICA CORP 620,988.00 561,882.00 0.38 59,106.00- 4,634.50 MED TERM NOTE 103.4980 93.6470 DTD 02/13/20 02/13/2026 MOODY'S RATING A1 CUSIP 06051GHY8 700,000 BANK OF AMERICA CORP 701,274.00 641,214.00 0.43 60,060.00-307.77 MED TERM NOTE 100.1820 91.6020 DTD 06/19/20 06/19/2026 MOODY'S RATING A1 CUSIP 06051GJD2 600,000 BANK OF MONTREAL 582,216.00 569,874.00 0.38 12,342.00- 1,791.67 MED TERM NOTE 97.0360 94.9790 DTD 07/09/21 0.625 07/09/2024 MOODY'S RATING A2 CUSIP 06367TQW3 1,240,000 BANK OF MONTREAL 1,285,656.80 1,158,358.40 0.78 127,298.40- 3,823.33 MED TERM NOTE 103.6820 93.4160 DTD 04/27/20 1.850 05/01/2025 MOODY'S RATING A2 CUSIP 06367WB85 104 PAGE 4 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,000,000 BANK OF NEW YORK MELLON 1,024,910.00 963,890.00 0.65 61,020.00- 4,718.06 MED TERM NOTE 102.4910 96.3890 DTD 11/18/13 3.950 11/18/2025 MOODY'S RATING A1 CUSIP 06406HCQ0 1,370,000 BANK OF NY MELLON CORP 1,369,808.20 1,317,350.90 0.89 52,457.30- 8,414.08 DTD 04/26/2022 3.350% 04/25/2025 99.9860 96.1570 CALLABLE MOODY'S RATING A1 CUSIP 06406RBC0 1,615,000 BERKSHIRE HATHAWAY FIN 1,614,693.15 1,510,186.50 1.02 104,506.65- 10,937.14 DTD 03/15/2022 2.300% 03/15/2027 99.9810 93.5100 CALLABLE MOODY'S RATING AA2 CUSIP 084664CZ2 367,689.92 BMW VEHICLE LEASE TRUST 367,634.96 361,402.42 0.24 6,232.54-67.41 SER 2022-1 CL A3 *0 DAY DELAY*99.9851 98.2900 DTD 01/19/22 1.100 03/25/2025 CUSIP 05601XAC3 190,761.46 BMW VEHICLE LEASE TRUST 190,741.76 188,291.10 0.13 2,450.66-8.74 SER 2021-2 CL A3 *0 DAY DELAY*99.9897 98.7050 DTD 09/15/21 0.330 12/26/2024 MOODY'S RATING AAA CUSIP 09690AAC7 530,000 BMW VEHICLE OWNER TRUST 529,972.44 515,276.60 0.35 14,695.84-283.55 ASSET BCKD SEC SER 2022-A CL A3 99.9948 97.2220 DTD 05/18/2022 3.210% 08/25/2026 CALLABLE MOODY'S RATING AAA CUSIP 05602RAD3 755,000 CALIFORNIA ST 772,342.35 726,121.25 0.49 46,221.10- 4,530.00 TXBL-REF 102.2970 96.1750 DTD 10/24/19 2.400 10/01/2024 MOODY'S RATING AA2 CUSIP 13063DRK6 105 PAGE 5 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,100,000 CATERPILLAR FINL SERVICE 1,111,517.00 1,054,064.00 0.71 57,453.00- 3,481.81 MED TERM NOTE 101.0470 95.8240 DTD 11/08/19 2.150 11/08/2024 MOODY'S RATING A2 CUSIP 14913Q3B3 960,000 CHARLES SCHWAB CORP 959,729.90 859,939.20 0.58 99,790.70- 7,709.33 DTD 03/03/2022 2.450% 03/03/2027 99.9719 89.5770 CALLABLE MOODY'S RATING A2 CUSIP 808513BY0 1,500,000 FED HOME LN BK 1,564,890.20 1,463,550.00 0.99 101,340.20- 2,036.46 DTD 05/08/14 2.875 06/14/2024 104.3260 97.5700 MOODY'S RATING AAA CUSIP 3130A1XJ2 2,000,000 FED HOME LN BK 2,103,380.00 1,943,320.00 1.31 160,060.00- 17,250.00 DTD 08/15/14 2.875 09/13/2024 105.1690 97.1660 MOODY'S RATING AAA CUSIP 3130A2UW4 1,300,000 FED HOME LN MTG CORP 1,398,414.06 1,261,923.00 0.85 136,491.06- 3,435.25 SER KO41 CL A2 *24 DAY DELAY*107.5703 97.0710 DTD 12/01/14 3.171 10/25/2024 CUSIP 3137BFE98 2,365,000 FED HOME LN MTG CORP 2,363,178.95 2,232,489.05 1.50 130,689.90- 13,697.29 DTD 02/14/20 1.500 02/12/2025 99.9230 94.3970 MOODY'S RATING AAA CUSIP 3137EAEP0 1,250,000 FED HOME LN MTG CORP 1,243,775.00 1,140,487.50 0.77 103,287.50- 2,083.33 SER USD 99.5020 91.2390 DTD 07/23/20 0.375 07/21/2025 MOODY'S RATING AAA CUSIP 3137EAEU9 106 PAGE 6 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 2,500,000 FED HOME LN MTG CORP 2,489,362.80 2,268,425.00 1.53 220,937.80- 2,552.08 DTD 09/25/20 0.375 09/23/2025 99.5745 90.7370 MOODY'S RATING AAA CUSIP 3137EAEX3 855,000 FED HOME LN MTG CORP 854,153.55 836,532.00 0.56 17,621.55-160.31 DTD 12/04/20 0.250 12/04/2023 99.9010 97.8400 MOODY'S RATING AAA CUSIP 3137EAFA2 1,500,000 FED NATL MTG ASSN 1,484,895.00 1,446,480.00 0.97 38,415.00- 13,052.08 DTD 07/08/19 1.750 07/02/2024 98.9930 96.4320 MOODY'S RATING AAA CUSIP 3135G0V75 1,975,000 FED NATL MTG ASSN 1,965,802.75 1,884,367.25 1.27 81,435.50- 6,775.35 DTD 10/18/19 1.625 10/15/2024 99.5343 95.4110 MOODY'S RATING AAA CUSIP 3135G0W66 1,295,000 FED NATL MTG ASSN 1,309,953.95 1,227,880.15 0.83 82,073.80- 10,171.15 DTD 01/10/20 1.625 01/07/2025 101.1548 94.8170 MOODY'S RATING AAA CUSIP 3135G0X24 1,860,000 FED NATL MTG ASSN 1,856,168.40 1,720,165.20 1.16 136,003.20- 2,228.13 DTD 04/24/20 0.625 04/22/2025 99.7940 92.4820 MOODY'S RATING AAA CUSIP 3135G03U5 2,500,000 FED NATL MTG ASSN 2,499,227.30 2,295,200.00 1.54 204,027.30-486.11 DTD 06/19/20 0.500 06/17/2025 99.9691 91.8080 MOODY'S RATING AAA CUSIP 3135G04Z3 2,500,000 FED NATL MTG ASSN 2,487,983.75 2,274,875.00 1.53 213,108.75- 3,281.25 DTD 08/27/20 0.375 08/25/2025 99.5194 90.9950 MOODY'S RATING AAA CUSIP 3135G05X7 107 PAGE 7 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 2,500,000 FED NATL MTG ASSN 2,492,700.00 2,265,800.00 1.53 226,900.00- 1,875.00 DTD 11/12/20 0.500 11/07/2025 99.7080 90.6320 MOODY'S RATING AAA CUSIP 3135G06G3 1,000,000 FHLMC MULTIFAMILY STRUCTURED P 1,079,687.50 957,830.00 0.64 121,857.50- 2,508.33 SER K049 CL A2 *24 DAY DELAY*107.9688 95.7830 DTD 10/01/15 3.010 08/25/2025 CUSIP 3137BLMZ8 950,000 FHLMC MULTIFAMILY STRUCTURED P 1,018,132.81 914,660.00 0.62 103,472.81- 2,639.42 SER K050 CL A2 *24 DAY DELAY*107.1719 96.2800 DTD 11/01/15 08/25/2025 CUSIP 3137BLW95 440,000 FHLMC MULTIFAMILY STRUCTURED P 453,079.69 423,060.00 0.28 30,019.69- 1,212.93 SER K051 CL A2 *24 DAY DELAY*102.9727 96.1500 DTD 12/01/15 3.308 09/25/2025 CUSIP 3137BM7C4 570,000 FHLMC MULTIFAMILY STRUCTURED P 582,001.17 543,044.70 0.37 38,956.47- 1,422.63 SER K053 CL A2 *24 DAY DELAY*102.1055 95.2710 DTD 03/01/16 2.995 12/25/2025 CUSIP 3137BN6G4 650,000 FHLMC MULTIFAMILY STRUCTURED P 687,451.17 608,523.50 0.41 78,927.67- 1,437.04 SER K058 CL A2 *24 DAY DELAY*105.7617 93.6190 DTD 11/01/16 2.653 08/25/2026 CUSIP 3137BSP72 1,000,000 FHLMC MULTIFAMILY STRUCTURED P 950,664.06 945,410.00 0.64 5,254.06- 2,703.33 SER K068 CL A2 *24 DAY DELAY*95.0664 94.5410 DTD 10/01/17 3.244 08/25/2027 MOODY'S RATING AAA CUSIP 3137FBBX3 605,741.63 GM FINANCIAL AUTOMOBILE LEASIN 605,733.40 597,218.85 0.40 8,514.55-65.62 SER 2021-3 CL A3 *0 DAY DELAY*99.9987 98.5930 DTD 08/18/21 0.390 10/21/2024 CUSIP 36262XAC8 108 PAGE 8 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 945,000 GM FINANCIAL AUTOMOBILE LEASIN 944,991.87 926,600.85 0.62 18,391.02-534.19 SER 2022-1 CL A3 *0 DAY DELAY*99.9992 98.0530 DTD 02/23/22 1.850 03/20/2025 MOODY'S RATING AAA CUSIP 36265MAC9 350,000 GM FINANCIAL SECURITIZED TERM 349,991.08 334,267.50 0.23 15,723.58-99.17 SER 2021-4 CL A3 *0 DAY DELAY*99.9975 95.5050 DTD 10/21/21 0.680 09/16/2026 MOODY'S RATING AAA CUSIP 362554AC1 390,000 GM FINANCIAL SECURITIZED TERM 389,918.49 377,383.50 0.25 12,534.99-503.75 ASSET BCKD SEC SER 2022-2 CL A3 99.9791 96.7650 DTD 04/13/2022 3.100% 02/16/2027 CALLABLE MOODY'S RATING AAA CUSIP 362585AC5 295,000 GM FINANCIAL SECURITIZED TERM 294,974.36 281,786.95 0.19 13,187.41-154.88 SER 2022-1 CL A3 *0 DAY DELAY*99.9913 95.5210 DTD 01/19/22 1.260 11/16/2026 CUSIP 380146AC4 1,400,000 GUARDIAN LIFE GLOB FUND 1,385,860.00 1,246,014.00 0.84 139,846.00-714.58 144A PRIV PLCMT 0.875 12/10/2025 98.9900 89.0010 MOODY'S RATING AA1 CUSIP 40139LBC6 15,563.04 HONDA AUTO RECEIVABLES OWNER T 15,561.82 15,484.45 0.01 77.37-5.67 SER 2020-2 CL A3 *0 DAY DELAY*99.9922 99.4950 DTD 05/27/20 0.820 07/15/2024 MOODY'S RATING AAA CUSIP 43813DAC2 119,274.8 HONDA AUTO RECEIVABLES OWNER T 119,272.63 116,475.42 0.08 2,797.21-8.95 SER 2021-1 CL A3 *0 DAY DELAY*99.9982 97.6530 DTD 02/24/21 0.270 04/21/2025 MOODY'S RATING AAA CUSIP 43813GAC5 109 PAGE 9 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 132,905.15 HONDA AUTO RECEIVABLES OWNER T 132,885.62 131,063.08 0.09 1,822.54-17.76 SER 2020-3 CL A3 *0 DAY DELAY*99.9853 98.6140 DTD 09/29/20 0.370 10/18/2024 CUSIP 43813KAC6 740,000 HONDA AUTO RECEIVABLES OWNER T 739,888.70 707,077.40 0.48 32,811.30-618.31 SER 2022-1 CL A3 *0 DAY DELAY*99.9850 95.5510 DTD 02/23/22 1.000 05/15/2026 MOODY'S RATING AAA CUSIP 43815BAC4 460,000 HONDA AUTO RECEIVABLES OWNER T 459,903.03 441,498.80 0.30 18,404.23-112.44 SER 2021-4 CL A3 *0 DAY DELAY*99.9789 95.9780 DTD 11/24/21 0.880 01/21/2026 MOODY'S RATING AAA CUSIP 43815GAC3 239,581.62 HYUNDAI AUTO LEASE SECURITIZAT 239,545.68 238,259.13 0.16 1,286.55-30.75 SER 2021-B CL A3 *0 DAY DELAY*99.9850 99.4480 144A PRIV PLCMT 0.330 06/17/2024 MOODY'S RATING AAA CUSIP 44891VAC5 540,000 HYUNDAI AUTO LEASE SECURITIZAT 539,988.07 530,393.40 0.36 9,594.67-278.40 SER 2022-A CL A3 *0 DAY DELAY*99.9978 98.2210 144A PRIV PLCMT 1.160 01/15/2025 MOODY'S RATING AAA CUSIP 44891WAC3 1,010,000 HYUNDAI AUTO RECEIVABLES TRUST 1,009,961.12 969,367.70 0.65 40,593.42-996.53 ASSET BCKD SEC SER 2022-A CL A3 99.9962 95.9770 DTD 03/16/2022 2.220% 10/15/2026 CALLABLE CUSIP 448977AD0 304,823.89 HYUNDAI AUTO RECEIVABLES TRUST 304,791.82 296,831.41 0.20 7,960.41-51.48 SER 2021-A CL A3 *0 DAY DELAY*99.9895 97.3780 DTD 04/28/21 0.380 09/15/2025 CUSIP 44933LAC7 110 PAGE 10 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,330,000 HYUNDAI AUTO RECEIVABLES TRUST 1,296,371.65 1,277,691.10 0.86 18,680.55-437.42 SER 2021-C CL A3 *0 DAY DELAY*97.4716 96.0670 DTD 11/17/21 0.740 05/15/2026 CUSIP 44935FAD6 2,800,000 INTER-AMERICAN DEVEL BK 2,792,300.00 2,747,752.00 1.85 44,548.00-894.44 DTD 09/02/20 0.250 11/15/2023 99.7250 98.1340 MOODY'S RATING AAA CUSIP 4581X0DP0 2,460,000 INTER-AMERICAN DEVEL BK 2,448,733.20 2,219,190.60 1.49 229,542.60- 4,245.21 DTD 04/20/21 0.875 04/20/2026 99.5420 90.2110 MOODY'S RATING AAA CUSIP 4581X0DV7 2,400,000 INTL BK RECON & DEVELOP 2,388,859.25 2,178,336.00 1.47 210,523.25- 2,100.00 DTD 10/28/20 0.500 10/28/2025 99.5358 90.7640 MOODY'S RATING AAA CUSIP 459058JL8 2,500,000 INTL FINANCE CORP 2,471,150.00 2,286,050.00 1.54 185,100.00- 4,296.88 DTD 07/16/20 0.375 07/16/2025 98.8460 91.4420 MOODY'S RATING AAA CUSIP 45950KCT5 450,000 JOHN DEERE OWNER TRUST 449,900.46 433,453.50 0.29 16,446.96-464.00 ASSET BCKD SEC SER 2022-A CL A3 99.9779 96.3230 DTD 03/16/2022 2.320% 09/16/2026 NON CALLABLE MOODY'S RATING AAA CUSIP 47787JAC2 24,012.85 JOHN DEERE OWNER TRUST 24,009.19 23,840.44 0.02 168.75-5.44 SER 2020-B CL A3 *0 DAY DELAY*99.9848 99.2820 DTD 07/22/20 0.510 11/15/2024 MOODY'S RATING AAA CUSIP 47787NAC3 111 PAGE 11 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,999.85 JOHN DEERE OWNER TRUST 1,999.73 1,996.37 0.00 3.36-0.98 SER 2020-A CL A3 *0 DAY DELAY*99.9940 99.8260 DTD 03/11/20 1.100 08/15/2024 MOODY'S RATING AAA CUSIP 47789KAC7 501,919.07 JOHN DEERE OWNER TRUST 501,874.29 480,833.45 0.32 21,040.84-108.75 SER 2021-B CL A3 *0 DAY DELAY*99.9911 95.7990 DTD 07/21/21 0.520 03/16/2026 MOODY'S RATING AAA CUSIP 47789QAC4 655,000 JOHN DEERE OWNER TRUST 654,937.45 636,358.70 0.43 18,578.75- 1,088.76 ASSET BCKD SEC SER 2022-B CL A3 99.9905 97.1540 DTD 07/20/2022 3.740% 02/16/2027 NON CALLABLE MOODY'S RATING AAA CUSIP 47800AAC4 1,050,000 JOHN DEERE OWNER TRUST 1,049,918.52 1,041,673.50 0.70 8,245.02- 2,375.33 ASSET BCKD SEC SER 2022-C CL A3 99.9923 99.2070 DTD 10/19/2022 5.090% 06/15/2027 CALLABLE MOODY'S RATING AAA CUSIP 47800BAC2 655,000 JPMORGAN CHASE &655,406.85 621,739.10 0.42 33,667.75-141.04 SER F2F 100.0621 94.9220 DTD 06/23/21 06/23/2025 MOODY'S RATING A1 CUSIP 46647PCK0 401,000 JPMORGAN CHASE & CO 415,969.33 375,536.50 0.25 40,432.83- 1,600.96 DTD 04/22/20 04/22/2026 103.7330 93.6500 MOODY'S RATING A1 CUSIP 46647PBK1 112 PAGE 12 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,370,000 JPMORGAN CHASE & CO 1,371,773.90 1,302,376.80 0.88 69,397.10-940.73 DTD 06/01/21 06/01/2025 100.1295 95.0640 MOODY'S RATING A1 CUSIP 46647PCH7 1,000,000 MASSMUTUAL GLOBAL FUNDIN 1,002,230.00 883,940.00 0.60 118,290.00- 5,500.00 144A PRIV PLCMT 1.200 07/16/2026 100.2230 88.3940 MOODY'S RATING AA3 CUSIP 57629WDE7 945,000 MASTERCARD INC 944,083.35 955,687.95 0.64 11,604.60 14,332.50 DTD 03/09/2023 4.875% 03/09/2028 99.9030 101.1310 CALLABLE MOODY'S RATING AA3 CUSIP 57636QAW4 1,115,000 MET LIFE GLOB FUNDING I 1,113,728.90 993,320.05 0.67 120,408.85- 9,872.40 144A PRIV PLCMT 1.875 01/11/2027 99.8860 89.0870 MOODY'S RATING AA3 CUSIP 59217GER6 770,000 MET TOWER GLOBAL FUNDING 769,291.60 673,649.90 0.45 95,641.70- 2,860.76 144A PRIV PLCMT 1.250 09/14/2026 99.9080 87.4870 MOODY'S RATING AA3 CUSIP 58989V2D5 650,000 MORGAN STANLEY 615,699.50 610,161.50 0.41 5,538.00- 2,488.85 DTD 04/28/20 04/28/2026 94.7230 93.8710 MOODY'S RATING A1 CUSIP 6174468Q5 1,680,000 NEW YORK LIFE GLOBAL FDG 1,678,185.60 1,578,561.60 1.06 99,624.00- 11,300.33 144A PRIV PLCMT 1.450 01/14/2025 99.8920 93.9620 MOODY'S RATING AAA CUSIP 64952WEK5 670,000 NORTHERN TRUST CORP 668,914.60 645,457.90 0.43 23,456.70- 3,796.67 DTD 05/10/2022 4.000% 05/10/2027 99.8380 96.3370 CALLABLE MOODY'S RATING A2 CUSIP 665859AW4 113 PAGE 13 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 850,000 NORTHWESTERN MUTUAL GLBL 827,449.50 757,520.00 0.51 69,929.50- 3,154.44 144A PRIV PLCMT 0.800 01/14/2026 97.3470 89.1200 MOODY'S RATING AAA CUSIP 66815L2A6 1,170,000 NORTHWESTERN MUTUAL GLBL 1,169,602.20 1,133,145.00 0.76 36,457.20- 23,400.00 DTD 07/01/2022 4.000% 07/01/2025 99.9660 96.8500 NON CALLABLE 144A PRIVATE PLACEMENT MOODY'S RATING AAA CUSIP 66815L2J7 370,000 PACCAR FINANCIAL CORP 369,182.30 356,162.00 0.24 13,020.30- 3,005.22 MED TERM NOTE 99.7790 96.2600 DTD 08/15/19 2.150 08/15/2024 MOODY'S RATING A1 CUSIP 69371RQ25 680,000 PACCAR FINANCIAL CORP 679,632.80 643,749.20 0.43 35,883.60- 1,341.11 MED TERM NOTE 99.9460 94.6690 DTD 08/09/21 0.500 08/09/2024 MOODY'S RATING A1 CUSIP 69371RR40 885,000 PACCAR FINANCIAL CORP 884,769.90 847,033.50 0.57 37,736.40- 5,885.25 DTD 04/07/2022 2.850% 04/07/2025 99.9740 95.7100 NON CALLABLE MOODY'S RATING A1 CUSIP 69371RR73 904,000 PRICOA GLOBAL FUNDING 1 832,972.72 812,831.60 0.55 20,141.12- 2,410.67 144A PRIV PLCMT 0.800 09/01/2025 92.1430 89.9150 MOODY'S RATING AA3 CUSIP 74153WCM9 885,000 PRICOA GLOBAL FUNDING 1 884,088.45 828,121.05 0.56 55,967.40-706.77 144A PRIV PLCMT 1.150 12/06/2024 99.8970 93.5730 MOODY'S RATING AA3 CUSIP 74153WCQ0 114 PAGE 14 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,500,000 ROYAL BANK OF CANADA 1,533,359.18 1,453,845.00 0.98 79,514.18- 17,531.25 DTD 07/16/19 2.550 07/16/2024 102.2240 96.9230 MOODY'S RATING A1 CUSIP 78013XZU5 1,050,000 ROYAL BANK OF CANADA 1,049,611.50 1,010,814.00 0.68 38,797.50- 7,579.69 MEDIUM TERM NOTE 99.9630 96.2680 CONVERTIBLE DTD 04/14/2022 3.375% 04/14/2025 NON CALLABLE MOODY'S RATING A1 CUSIP 78016EZ59 1,760,000 SALESFORCE.COM INC 1,748,937.40 1,675,344.00 1.13 73,593.40- 5,072.22 DTD 07/12/21 0.625 07/15/2024 99.3715 95.1900 MOODY'S RATING A2 CUSIP 79466LAG9 1,500,000 TORONTO-DOMINION BANK 1,527,255.00 1,454,670.00 0.98 72,585.00- 2,097.92 MED TERM NOTE 101.8170 96.9780 DTD 06/12/19 2.650 06/12/2024 MOODY'S RATING A1 CUSIP 89114QCA4 700,000 TORONTO-DOMINION BANK 674,737.00 658,924.00 0.44 15,813.00- 4,821.25 MED TERM NOTE SER FXD 96.3910 94.1320 DTD 01/12/22 1.450 01/10/2025 MOODY'S RATING A1 CUSIP 89114TZL9 91,064.31 TOYOTA AUTO RECEIVABLES OWNER 91,047.34 90,097.21 0.06 950.13-14.17 SER 2020-D CL A3 *0 DAY DELAY*99.9814 98.9380 DTD 10/13/20 0.350 01/15/2025 CUSIP 89236XAC0 430,000 TOYOTA AUTO RECEIVABLES OWNER 429,990.84 411,793.80 0.28 18,197.04-135.69 SER 2021-D CL A3 *0 DAY DELAY*99.9979 95.7660 DTD 11/15/21 0.710 04/15/2026 CUSIP 89238JAC9 115 PAGE 15 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 439,862.73 TOYOTA AUTO RECEIVABLES OWNER 439,781.10 430,260.53 0.29 9,520.57-50.83 SER 2021-A CL A3 *0 DAY DELAY*99.9815 97.8170 DTD 02/08/21 0.260 05/15/2025 MOODY'S RATING AAA CUSIP 89240BAC2 91,167.99 TOYOTA LEASE OWNER TRUST 89,344.63 90,883.55 0.06 1,538.92 8.89 SER 2021-A CL A3 *0 DAY DELAY*98.0000 99.6880 144A PRIV PLCMT 0.390 04/22/2024 MOODY'S RATING AAA CUSIP 89238EAC0 1,150,000 TOYOTA LEASE OWNER TRUST 1,149,818.99 1,124,769.00 0.76 25,049.99-688.72 ASSET BCKD SEC SER 2022-A CL A3 99.9843 97.8060 DTD 02/28/2022 1.960% 02/20/2025 CALLABLE 144A PRIVATE PLACEMENT CUSIP 89238LAC4 1,385,000 TOYOTA MOTOR CREDIT CORP 1,384,390.60 1,238,356.20 0.83 146,034.40-562.66 MED TERM NOTE 99.9560 89.4120 DTD 06/18/21 1.125 06/18/2026 MOODY'S RATING A1 CUSIP 89236TJK2 1,215,000 TOYOTA MOTOR CREDIT CORP 1,213,371.90 1,146,012.30 0.77 67,359.60- 8,221.50 DTD 01/13/22 1.450 01/13/2025 99.8660 94.3220 MOODY'S RATING A1 CUSIP 89236TJT3 3,100,000 UNITED STATES TREASURY NOTES 3,057,617.20 2,932,414.00 1.97 125,203.20- 15,921.20 DTD 03/15/2022 1.750% 03/15/2025 98.6328 94.5940 MOODY'S RATING AAA CUSIP 91282CED9 3,250,000 UNITED STATES TREASURY NOTES 3,260,312.50 3,125,590.00 2.10 134,722.50-287.02 DTD 06/30/2022 3.250% 06/30/2027 100.3173 96.1720 MOODY'S RATING AAA CUSIP 91282CEW7 116 PAGE 16 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 400,000 UNITED STATES TREASURY NOTES 393,218.75 377,108.00 0.25 16,110.75- 4,588.40 DTD 07/31/2022 2.750% 07/31/2027 98.3047 94.2770 MOODY'S RATING AAA CUSIP 91282CFB2 4,500,000 UNITED STATES TREASURY NOTES 4,468,902.34 4,303,665.00 2.90 165,237.34- 47,002.38 DTD 08/31/2022 3.125% 08/31/2027 99.3090 95.6370 MOODY'S RATING AAA CUSIP 91282CFH9 3,450,000 UNITED STATES TREASURY NOTES 3,421,152.34 3,430,714.50 2.31 9,562.16 35,772.54 DTD 09/30/2022 4.125% 09/30/2027 99.1639 99.4410 MOODY'S RATING AAA CUSIP 91282CFM8 850,000 UNITED STATES TREASURY NOTES 852,656.25 837,947.00 0.56 14,709.25- 2,789.79 DTD 11/30/2022 3.875% 11/30/2027 100.3125 98.5820 MOODY'S RATING AAA CUSIP 91282CFZ9 2,750,000 UNITED STATES TREASURY NOTES 2,775,107.42 2,711,445.00 1.83 63,662.42-289.57 DTD 12/31/2022 3.875% 12/31/2027 100.9130 98.5980 MOODY'S RATING AAA CUSIP 91282CGC9 3,000,000 UNITED STATES TREASURY NOTES 2,957,929.69 2,913,180.00 1.96 44,749.69- 43,798.34 DTD 01/31/2023 3.500% 01/31/2028 98.5977 97.1060 MOODY'S RATING AAA CUSIP 91282CGH8 3,700,000 UNITED STATES TREASURY NOTES 3,699,113.28 3,672,694.00 2.47 26,419.28- 49,467.39 DTD 02/28/2023 4.000% 02/29/2028 99.9760 99.2620 MOODY'S RATING AAA CUSIP 91282CGP0 1,035,000 UNITEDHEALTH GROUP INC 1,025,051.35 935,960.85 0.63 89,090.50- 1,520.87 DTD 05/19/21 1.150 05/15/2026 99.0388 90.4310 MOODY'S RATING A3 CUSIP 91324PEC2 117 PAGE 17 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 675,000 UNITEDHEALTH GROUP INC 675,316.70 650,693.25 0.44 24,623.45- 3,191.25 DTD 05/20/2022 3.700% 05/15/2027 100.0469 96.3990 CALLABLE MOODY'S RATING A3 CUSIP 91324PEG3 1,250,000 US BANCORP 1,268,262.50 1,205,687.50 0.81 62,575.00- 12,583.33 DTD 07/29/19 2.400 07/30/2024 101.4610 96.4550 MOODY'S RATING A3 CUSIP 91159HHX1 1,500,000 US TREASURY NOTE 1,469,765.63 1,364,940.00 0.92 104,825.63- 1,564.23 DTD 07/31/20 0.250 07/31/2025 97.9844 90.9960 MOODY'S RATING AAA CUSIP 91282CAB7 2,400,000 US TREASURY NOTE 2,366,140.63 2,173,776.00 1.46 192,364.63- 1,508.20 DTD 09/30/20 0.250 09/30/2025 98.5892 90.5740 MOODY'S RATING AAA CUSIP 91282CAM3 2,450,000 US TREASURY NOTE 2,422,492.19 2,211,125.00 1.49 211,367.19- 1,031.93 DTD 10/31/20 0.250 10/31/2025 98.8772 90.2500 MOODY'S RATING AAA CUSIP 91282CAT8 2,250,000 US TREASURY NOTE 2,209,658.20 2,030,985.00 1.37 178,673.20-714.65 DTD 11/30/20 0.375 11/30/2025 98.2070 90.2660 MOODY'S RATING AAA CUSIP 91282CAZ4 2,500,000 US TREASURY NOTE 2,456,445.31 2,244,525.00 1.51 211,920.31- 3,910.57 DTD 02/01/21 0.375 01/31/2026 98.2578 89.7810 MOODY'S RATING AAA CUSIP 91282CBH3 2,500,000 US TREASURY NOTE 2,493,652.34 2,251,175.00 1.52 242,477.34- 3,158.97 DTD 04/30/21 0.750 04/30/2026 99.7461 90.0470 MOODY'S RATING AAA CUSIP 91282CBW0 118 PAGE 18 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,400,000 US TREASURY NOTE 1,379,054.68 1,252,566.00 0.84 126,488.68- 3,079.24 DTD 09/30/21 0.875 09/30/2026 98.5039 89.4690 MOODY'S RATING AAA CUSIP 91282CCZ2 1,400,000 US TREASURY NOTE 1,391,468.75 1,258,908.00 0.85 132,560.75- 2,653.53 DTD 11/01/21 1.125 10/31/2026 99.3906 89.9220 CUSIP 91282CDG3 1,700,000 US TREASURY NOTE 1,753,191.41 1,645,090.00 1.11 108,101.41- 15,168.51 DTD 08/15/14 2.375 08/15/2024 103.1289 96.7700 MOODY'S RATING AAA CUSIP 912828D56 2,000,000 US TREASURY NOTE 2,018,574.22 1,934,060.00 1.30 84,514.22-109.29 DTD 06/30/17 2.000 06/30/2024 100.9287 96.7030 MOODY'S RATING AAA CUSIP 912828XX3 1,700,000 US TREASURY NOTE 1,705,976.56 1,652,791.00 1.11 53,185.56- 5,728.26 DTD 05/01/17 2.000 04/30/2024 100.3516 97.2230 MOODY'S RATING AAA CUSIP 912828X70 2,100,000 US TREASURY NOTE 2,087,203.13 1,996,470.00 1.34 90,733.13-99.86 DTD 12/31/19 1.750 12/31/2024 99.3906 95.0700 CUSIP 912828YY0 1,500,000 US TREASURY NOTE 1,523,144.53 1,405,965.00 0.95 117,179.53- 5,733.77 DTD 03/02/20 1.125 02/28/2025 101.5430 93.7310 MOODY'S RATING AAA CUSIP 912828ZC7 2,500,000 US TREASURY NOTE 2,360,839.85 2,300,200.00 1.55 60,639.85- 1,579.48 DTD 04/30/20 0.375 04/30/2025 94.4336 92.0080 MOODY'S RATING AAA CUSIP 912828ZL7 119 PAGE 19 STATEMENT OF ASSETS AND LIABILITIES CITY OF CUPERTINO AS OF JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF ASSETS AND LIABILITIES COST VALUE MARKET VALUE % TOTAL UNREALIZED PAR VALUE/SHARES DESCRIPTION / UNIT COST / UNIT PRICE MARKET GAIN/LOSS ACCRUED INCOME ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 570,000 VERIZON MASTER TRUST 569,974.92 563,051.70 0.38 6,923.22-647.90 ASSET BCKD SEC SER 2022-5 CL A1A 99.9956 98.7810 DTD 08/11/2022 VAR CPN 07/20/2027 CALLABLE CUSIP 92348KAV5 110,213.94 VERIZON OWNER TRUST 110,190.79 109,444.65 0.07 746.14-15.83 SER 2020-B CL A *0 DAY DELAY*99.9790 99.3020 DTD 08/12/20 0.470 02/20/2025 MOODY'S RATING AAA CUSIP 92290BAA9 350,000 WALMART INC 349,338.50 312,490.50 0.21 36,848.00- 1,061.67 DTD 09/17/21 1.050 09/17/2026 99.8110 89.2830 MOODY'S RATING AA2 CUSIP 931142ER0 TOTAL BOND & NOTES 154,017,477.20 145,426,456.81 97.89 8,591,020.39- 603,833.31 ====================================================================================================================================== TOTAL INVESTMENTS 157,138,848.64 148,558,235.43 100.00 8,580,613.21- 607,618.50 TOTAL ACCRUALS 607,618.50 607,618.50 ====================================================================================================================================== TOTAL ACCRUALS AND INVESTMENTS 157,746,467.14 149,165,853.93 120 PAGE 20 CASH SUMMARY CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ CASH SUMMARY DESCRIPTION PRINCIPAL CASH INCOME CASH ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ BEGINNING BALANCE 0.00 0.00 RECEIPTS NET INTEREST COLLECTED 0.00 272,391.20 TRANSFER RECEIPTS 252,391.20 0.00 SALES 591,254.89 0.00 CASH MANAGEMENT SALES 1,469,637.67 0.00 TOTAL CASH RECEIPTS 2,313,283.76 272,391.20 DISBURSEMENTS INVESTMENT MANAGEMENT EXPENSES 9,168.78-0.00 TRANSFER DISBURSEMENTS 0.00 252,391.20- PURCHASES 1,460,358.13-0.00 CASH MANAGEMENT PURCHASES 843,756.85-0.00 TOTAL CASH DISBURSEMENTS 2,313,283.76-252,391.20- ENDING BALANCE 0.00 20,000.00 ________________________________________________________________________________________________________________________________________ 121 PAGE 21 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ BEGINNING BALANCE 0.00 156,873,924.60 ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ CASH EQUIVALENTS 06/01/23 INTEREST RECEIVED 2,657.33 AS 100% TREAS MM FD-SVC CL #008 INTEREST FROM 5/1/23 TO 5/31/23 06/01/23 INTEREST RECEIVED 110.76 PRINCIPAL PUBLIC DEPOSIT SWEEP PRGRM INTEREST FROM 5/1/23 TO 5/31/23 06/29/23 1,500,000 PURCHASED 1,460,358.13- 1,460,358.13 U.S. TREASURY BILLS 12/28/23 CUSIP 912796ZN2 AT $97.3572 ON TRADE DATE 06/28/2023 TO SETTLE ON 06/29/2023 MERRILL LYNCH,PIERCE,FENNER 06/30/23 843,646.09 CASH SWEEP PURCHASES FOR STMT PERIOD 843,646.09-843,646.09 AS 100% TREAS MM FD-SVC CL #008 13 TRANSACTIONS 06/30/23 110.76 CASH SWEEP PURCHASES FOR STMT PERIOD 110.76-110.76 PRINCIPAL PUBLIC DEPOSIT SWEEP PRGRM 1 TRANSACTIONS 06/30/23 1,469,637.67- CASH SWEEP SALES FOR STMT PERIOD 1,469,637.67 1,469,637.67- AS 100% TREAS MM FD-SVC CL #008 3 TRANSACTIONS BONDS & NOTES 06/15/23 INTEREST RECEIVED 2,845.38 AMERICAN EXPRES ABS 2.210% 3/15/27 CUSIP 02589BAA8 $0.00184/PV ON 1,545,000.00 PV DUE 6/15/23 122 PAGE 22 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/15/23 INTEREST RECEIVED 3,884.38 AMERICAN EXPRESS ABS 3.390% 5/17/27 CUSIP 02582JJT8 $0.00283/PV ON 1,375,000.00 PV DUE 6/15/23 06/26/23 INTEREST RECEIVED 63.10 BMW VEHICLE LEASE TR 0.330% 12/26/24 CUSIP 09690AAC7 $0.00015/PV ON 229,453.89 PV DUE 6/25/23 06/26/23 38,692.43- PAID DOWN 38,692.43 38,688.44-3.99 BMW VEHICLE LEASE TR 0.330% 12/26/24 CUSIP 09690AAC7 TO SETTLE ON 06/26/2023 06/26/23 INTEREST RECEIVED 378.07 BMW VEHICLE LEASE TR 1.100% 3/25/25 CUSIP 05601XAC3 $0.00084/PV ON 412,445.09 PV DUE 6/25/23 06/26/23 44,755.17- PAID DOWN 44,755.17 44,748.48-6.69 BMW VEHICLE LEASE TR 1.100% 3/25/25 CUSIP 05601XAC3 TO SETTLE ON 06/26/2023 06/26/23 INTEREST RECEIVED 1,417.75 BMW VEHICLE OWN ABS 3.210% 8/25/26 CUSIP 05602RAD3 $0.00268/PV ON 530,000.00 PV DUE 6/25/23 06/14/23 INTEREST RECEIVED 21,562.50 FED HOME LN BK 2.875% 6/14/24 CUSIP 3130A1XJ2 INTEREST ON 1,500,000.000 UNITS 123 PAGE 23 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/05/23 INTEREST RECEIVED 1,068.75 FED HOME LN MTG CORP 0.250% 12/04/23 CUSIP 3137EAFA2 INTEREST ON 855,000.000 UNITS 06/26/23 INTEREST RECEIVED 3,435.25 FED HOME LN MTG CORP 3.171% 10/25/24 CUSIP 3137BFE98 $0.00264/PV ON 1,300,000.00 PV DUE 6/25/23 06/20/23 INTEREST RECEIVED 6,250.00 FED NATL MTG ASSN 0.500% 6/17/25 CUSIP 3135G04Z3 INTEREST ON 2,500,000.000 UNITS 06/26/23 INTEREST RECEIVED 1,437.04 FHLMC MULTIFAMILY ST 2.653% 8/25/26 CUSIP 3137BSP72 $0.00221/PV ON 650,000.00 PV DUE 6/25/23 06/26/23 INTEREST RECEIVED 1,422.62 FHLMC MULTIFAMILY ST 2.995% 12/25/25 CUSIP 3137BN6G4 $0.00250/PV ON 570,000.00 PV DUE 6/25/23 06/26/23 INTEREST RECEIVED 2,508.33 FHLMC MULTIFAMILY ST 3.010% 8/25/25 CUSIP 3137BLMZ8 $0.00251/PV ON 1,000,000.00 PV DUE 6/25/23 06/26/23 INTEREST RECEIVED 2,703.33 FHLMC MULTIFAMILY ST 3.244% 8/25/27 CUSIP 3137FBBX3 $0.00270/PV ON 1,000,000.00 PV DUE 6/25/23 124 PAGE 24 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/26/23 INTEREST RECEIVED 1,212.93 FHLMC MULTIFAMILY ST 3.308% 9/25/25 CUSIP 3137BM7C4 $0.00276/PV ON 440,000.00 PV DUE 6/25/23 06/16/23 INTEREST RECEIVED 1,007.50 GM FINANCIAL ABS 3.100% 2/16/27 CUSIP 362585AC5 $0.00258/PV ON 390,000.00 PV DUE 6/16/23 06/20/23 INTEREST RECEIVED 227.08 GM FINANCIAL AUTOMOB 0.390% 10/21/24 CUSIP 36262XAC8 $0.00024/PV ON 698,702.49 PV DUE 6/20/23 06/20/23 92,960.86- PAID DOWN 92,960.86 92,959.60-1.26 GM FINANCIAL AUTOMOB 0.390% 10/21/24 CUSIP 36262XAC8 06/20/23 INTEREST RECEIVED 1,496.25 GM FINANCIAL AUTOMOB 1.850% 3/20/25 CUSIP 36265MAC9 $0.00158/PV ON 945,000.00 PV DUE 6/20/23 06/16/23 INTEREST RECEIVED 198.33 GM FINANCIAL SECURIT 0.680% 9/16/26 CUSIP 362554AC1 $0.00057/PV ON 350,000.00 PV DUE 6/16/23 06/16/23 INTEREST RECEIVED 309.75 GM FINANCIAL SECURIT 1.260% 11/16/26 CUSIP 380146AC4 $0.00105/PV ON 295,000.00 PV DUE 6/16/23 125 PAGE 25 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/21/23 INTEREST RECEIVED 30.01 HONDA AUTO RECEIVABL 0.270% 4/21/25 CUSIP 43813GAC5 $0.00010/PV ON 133,366.83 PV DUE 6/21/23 06/21/23 14,092.03- PAID DOWN 14,092.03 14,091.77-0.26 HONDA AUTO RECEIVABL 0.270% 4/21/25 CUSIP 43813GAC5 06/20/23 INTEREST RECEIVED 48.12 HONDA AUTO RECEIVABL 0.370% 10/18/24 CUSIP 43813KAC6 $0.00008/PV ON 156,079.61 PV DUE 6/18/23 06/20/23 23,174.46- PAID DOWN 23,174.46 23,171.06-3.40 HONDA AUTO RECEIVABL 0.370% 10/18/24 CUSIP 43813KAC6 TO SETTLE ON 06/20/2023 06/15/23 INTEREST RECEIVED 14.77 HONDA AUTO RECEIVABL 0.820% 7/15/24 CUSIP 43813DAC2 $0.00008/PV ON 21,609.87 PV DUE 6/15/23 06/15/23 6,046.83- PAID DOWN 6,046.83 6,046.35-0.48 HONDA AUTO RECEIVABL 0.820% 7/15/24 CUSIP 43813DAC2 06/21/23 INTEREST RECEIVED 337.33 HONDA AUTO RECEIVABL 0.880% 1/21/26 CUSIP 43815GAC3 $0.00073/PV ON 460,000.00 PV DUE 6/21/23 126 PAGE 26 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/15/23 INTEREST RECEIVED 1,159.33 HONDA AUTO RECEIVABL 1.000% 5/15/26 CUSIP 43815BAC4 $0.00157/PV ON 740,000.00 PV DUE 6/15/23 06/15/23 INTEREST RECEIVED 93.16 HYUNDAI AUTO LEASE 0.330% 6/17/24 CUSIP 44891VAC5 $0.00012/PV ON 338,772.61 PV DUE 6/15/23 06/15/23 99,190.99- PAID DOWN 99,190.99 99,176.11-14.88 HYUNDAI AUTO LEASE 0.330% 6/17/24 CUSIP 44891VAC5 06/15/23 INTEREST RECEIVED 522.00 HYUNDAI AUTO LEASE 1.160% 1/15/25 CUSIP 44891WAC3 $0.00097/PV ON 540,000.00 PV DUE 6/15/23 06/15/23 INTEREST RECEIVED 1,868.50 HYUNDAI AUTO REC ABS 2.220% 10/15/26 CUSIP 448977AD0 $0.00185/PV ON 1,010,000.00 PV DUE 6/15/23 06/15/23 INTEREST RECEIVED 105.56 HYUNDAI AUTO RECEIVA 0.380% 9/15/25 CUSIP 44933LAC7 $0.00020/PV ON 333,348.94 PV DUE 6/15/23 06/15/23 28,525.05- PAID DOWN 28,525.05 28,522.05-3.00 HYUNDAI AUTO RECEIVA 0.380% 9/15/25 CUSIP 44933LAC7 127 PAGE 27 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/15/23 INTEREST RECEIVED 820.17 HYUNDAI AUTO RECEIVA 0.740% 5/15/26 CUSIP 44935FAD6 $0.00062/PV ON 1,330,000.00 PV DUE 6/15/23 06/15/23 INTEREST RECEIVED 4,453.75 JOHN DEERE OWNE ABS 5.090% 6/15/27 CUSIP 47800BAC2 $0.00424/PV ON 1,050,000.00 PV DUE 6/15/23 06/15/23 INTEREST RECEIVED 870.00 JOHN DEERE OWNER ABS 2.320% 9/16/26 CUSIP 47787JAC2 $0.00193/PV ON 450,000.00 PV DUE 6/15/23 06/15/23 INTEREST RECEIVED 2,041.42 JOHN DEERE OWNER ABS 3.740% 2/16/27 CUSIP 47800AAC4 $0.00312/PV ON 655,000.00 PV DUE 6/15/23 06/15/23 INTEREST RECEIVED 13.39 JOHN DEERE OWNER TRU 0.510% 11/15/24 CUSIP 47787NAC3 $0.00005/PV ON 31,500.09 PV DUE 6/15/23 06/15/23 7,487.24- PAID DOWN 7,487.24 7,486.10-1.14 JOHN DEERE OWNER TRU 0.510% 11/15/24 CUSIP 47787NAC3 06/15/23 INTEREST RECEIVED 230.58 JOHN DEERE OWNER TRU 0.520% 3/16/26 CUSIP 47789QAC4 $0.00040/PV ON 532,107.31 PV DUE 6/15/23 128 PAGE 28 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/15/23 30,188.24- PAID DOWN 30,188.24 30,185.55-2.69 JOHN DEERE OWNER TRU 0.520% 3/16/26 CUSIP 47789QAC4 06/15/23 INTEREST RECEIVED 8.76 JOHN DEERE OWNER TRU 1.100% 8/15/24 CUSIP 47789KAC7 $0.00003/PV ON 9,551.14 PV DUE 6/15/23 06/15/23 7,551.29- PAID DOWN 7,551.29 7,550.83-0.46 JOHN DEERE OWNER TRU 1.100% 8/15/24 CUSIP 47789KAC7 06/12/23 INTEREST RECEIVED 6,125.00 P/P GUARDIAN LIFE GL 0.875% 12/10/25 CUSIP 40139LBC6 INTEREST ON 1,400,000.000 UNITS 06/06/23 INTEREST RECEIVED 5,088.75 P/P PRICOA GLOBAL FU 1.150% 12/06/24 CUSIP 74153WCQ0 INTEREST ON 885,000.000 UNITS 06/12/23 INTEREST RECEIVED 19,875.00 TORONTO-DOMINION BAN 2.650% 6/12/24 CUSIP 89114QCA4 INTEREST ON 1,500,000.000 UNITS 06/15/23 INTEREST RECEIVED 106.12 TOYOTA AUTO RECEIVAB 0.260% 5/15/25 CUSIP 89240BAC2 $0.00010/PV ON 489,800.99 PV DUE 6/15/23 129 PAGE 29 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/15/23 49,938.26- PAID DOWN 49,938.26 49,928.99-9.27 TOYOTA AUTO RECEIVAB 0.260% 5/15/25 CUSIP 89240BAC2 06/15/23 INTEREST RECEIVED 32.36 TOYOTA AUTO RECEIVAB 0.350% 1/15/25 CUSIP 89236XAC0 $0.00007/PV ON 110,948.03 PV DUE 6/15/23 06/15/23 19,883.72- PAID DOWN 19,883.72 19,880.02-3.70 TOYOTA AUTO RECEIVAB 0.350% 1/15/25 CUSIP 89236XAC0 06/15/23 INTEREST RECEIVED 254.42 TOYOTA AUTO RECEIVAB 0.710% 4/15/26 CUSIP 89238JAC9 $0.00059/PV ON 430,000.00 PV DUE 6/15/23 06/20/23 INTEREST RECEIVED 1,878.33 TOYOTA LEASE OWN ABS 1.960% 2/20/25 CUSIP 89238LAC4 $0.00163/PV ON 1,150,000.00 PV DUE 6/20/23 06/20/23 INTEREST RECEIVED 56.29 TOYOTA LEASE OWNER 0.390% 4/22/24 CUSIP 89238EAC0 $0.00008/PV ON 173,196.70 PV DUE 6/20/23 06/20/23 82,028.71- PAID DOWN 82,028.71 80,388.13-1,640.58 TOYOTA LEASE OWNER 0.390% 4/22/24 CUSIP 89238EAC0 130 PAGE 30 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/20/23 INTEREST RECEIVED 7,790.63 TOYOTA MOTOR CREDIT 1.125% 6/18/26 CUSIP 89236TJK2 INTEREST ON 1,385,000.000 UNITS 06/30/23 INTEREST RECEIVED 52,812.50 U.S. TREASURY NOTES 3.250% 6/30/27 CUSIP 91282CEW7 INTEREST ON 3,250,000.000 UNITS 06/30/23 INTEREST RECEIVED 53,281.25 U.S. TREASURY NOTES 3.875% 12/31/27 CUSIP 91282CGC9 INTEREST ON 2,750,000.000 UNITS 06/30/23 INTEREST RECEIVED 18,375.00 US TREASURY NOTE 1.750% 12/31/24 CUSIP 912828YY0 INTEREST ON 2,100,000.000 UNITS 06/30/23 INTEREST RECEIVED 20,000.00 US TREASURY NOTE 2.000% 6/30/24 CUSIP 912828XX3 INTEREST ON 2,000,000.000 UNITS 06/20/23 INTEREST RECEIVED 1,767.00 VERIZON MAST ABS V-M 3.720% 7/20/27 CUSIP 92348KAV5 $0.00310/PV ON 570,000.00 PV DUE 6/20/23 06/20/23 INTEREST RECEIVED 61.47 VERIZON OWNER TRUST 0.470% 2/20/25 CUSIP 92290BAA9 $0.00008/PV ON 156,953.55 PV DUE 6/20/23 131 PAGE 31 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/20/23 46,739.61- PAID DOWN 46,739.61 46,729.79-9.82 VERIZON OWNER TRUST 0.470% 2/20/25 CUSIP 92290BAA9 06/20/23 INTEREST RECEIVED 4,616.50 VR BANK OF AMERICA 1.319% 6/19/26 CUSIP 06051GJD2 INTEREST ON 700,000.000 UNITS 06/26/23 INTEREST RECEIVED 2,639.42 VR FHLMC MULTIFAMI 3.334% 8/25/25 CUSIP 3137BLW95 $0.00278/PV ON 950,000.00 PV DUE 6/25/23 06/01/23 INTEREST RECEIVED 5,644.40 VR JPMORGAN CHASE & 0.824% 6/01/25 CUSIP 46647PCH7 INTEREST ON 1,370,000.000 UNITS 06/23/23 INTEREST RECEIVED 3,173.48 VR JPMORGAN CHASE & 0.969% 6/23/25 CUSIP 46647PCK0 INTEREST ON 655,000.000 UNITS TRANSFER RECEIPTS 06/01/23 ADDITION TO ACCOUNT 8,412.49 TRANSFER FROM INCOME 06/05/23 ADDITION TO ACCOUNT 1,068.75 TRANSFER FROM INCOME 06/06/23 ADDITION TO ACCOUNT 5,088.75 TRANSFER FROM INCOME 132 PAGE 32 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 06/12/23 ADDITION TO ACCOUNT 26,000.00 TRANSFER FROM INCOME 06/14/23 ADDITION TO ACCOUNT 21,562.50 TRANSFER FROM INCOME 06/15/23 ADDITION TO ACCOUNT 19,324.05 TRANSFER FROM INCOME 06/16/23 ADDITION TO ACCOUNT 1,515.58 TRANSFER FROM INCOME 06/20/23 ADDITION TO ACCOUNT 19,575.17 TRANSFER FROM INCOME 06/21/23 ADDITION TO ACCOUNT 4,983.84 TRANSFER FROM INCOME 06/23/23 ADDITION TO ACCOUNT 3,173.48 TRANSFER FROM INCOME 06/26/23 ADDITION TO ACCOUNT 17,217.84 TRANSFER FROM INCOME 06/30/23 ADDITION TO ACCOUNT 124,468.75 TRANSFER FROM INCOME INVESTMENT MANAGEMENT EXPENSES 06/06/23 INVESTMENT MGMT FEE 9,168.78- PAID TO CHANDLER ASSET MANAGEMENT INC CHANDLER ASSET MGMT FEE INV 2305CUPERTIN 133 INVESTMENT AND INSURANCE PRODUCTS ARE: ·NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY FEDERAL GOVERNMENT AGENCY ·NOT A DEPOSIT, OBLIGATION OF, OR GUARANTEED BY ANY BANK OR BANKING AFFILIATE ·SUBJECT TO INVESTMENT RISKS AND MAY LOSE VALUE, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED PAGE 33 STATEMENT OF TRANSACTIONS CITY OF CUPERTINO FOR THE PERIOD JUNE 1, 2023 THROUGH JUNE 30, 2023 ACCOUNT NUMBER ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯ STATEMENT OF TRANSACTIONS REALIZED DATE PAR VALUE/SHARES DESCRIPTION CASH COST VALUE GAIN/LOSS ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ TRANSFER DISBURSEMENTS 06/01/23 TRANSFER TO PRINCIPAL 8,412.49- 06/05/23 TRANSFER TO PRINCIPAL 1,068.75- 06/06/23 TRANSFER TO PRINCIPAL 5,088.75- 06/12/23 TRANSFER TO PRINCIPAL 26,000.00- 06/14/23 TRANSFER TO PRINCIPAL 21,562.50- 06/15/23 TRANSFER TO PRINCIPAL 19,324.05- 06/16/23 TRANSFER TO PRINCIPAL 1,515.58- 06/20/23 TRANSFER TO PRINCIPAL 19,575.17- 06/21/23 TRANSFER TO PRINCIPAL 4,983.84- 06/23/23 TRANSFER TO PRINCIPAL 3,173.48- 06/26/23 TRANSFER TO PRINCIPAL 17,217.84- 06/30/23 TRANSFER TO PRINCIPAL 124,468.75- ================================================================================================================= ENDING BALANCE 20,000.00 157,118,848.64 ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 134 CITY OF CUPERTINO PARS Post-Employment Benefits Trust 6/1/2023 to 6/30/2023 Kristina Alfaro Director of Administrative Services City of Cupertino 10300 Torre Ave. Cupertino, CA 95014 Account Summary Source 6/1/2023 Contributions Earnings Expenses Distributions Transfers 6/30/2023 OPEB 1001 $33,223,791.44 $0.00 $1,494,014.92 $9,799.99 $0.00 $0.00 $34,708,006.37 PENSION 1002 $18,272,565.03 $0.00 $821,684.19 $5,389.83 $0.00 $0.00 $19,088,859.39 Totals $51,496,356.47 $0.00 $2,315,699.11 $15,189.82 $0.00 $0.00 $53,796,865.76 Investment Selection Source OPEB PENSION Investment Objective Source OPEB PENSION Investment Return Source 1-Month 3-Months 1-Year 3-Years 5-Years 10-Years OPEB 4.50%4.23%11.14%6.09%4.72%5.77%6/21/2010 PENSION 4.50%4.23%11.12%6.05%--3/26/2019 Information as provided by US Bank, Trustee for PARS; Not FDIC Insured; No Bank Guarantee; May Lose Value Headquarters - 4350 Von Karman Ave., Suite 100, Newport Beach, CA 92660 800.540.6369 Fax 949.250.1250 www.pars.org Account balances are inclusive of Trust Administration, Trustee and Investment Management fees Annualized Return Investment Return: Annualized rate of return is the return on an investment over a period other than one year multiplied or divided to give a comparable one-year return. Past performance does not guarantee future results. Performance returns may not reflect the deduction of applicable fees, which could reduce returns. Information is deemed reliable but may be subject to change. Individual account based on US Bank Balanced MM. Dual goals are to provide a moderate amount of current income with moderate capital growth. Income production and longer term growth of capital. Account Report for the Period Balance as of City of Cupertino - OPEB Balance as of Individual account based on US Bank Balanced MM. Dual goals are to provide a moderate amount of current income with moderate capital growth. Income production and longer term growth of capital. City of Cupertino - PEN Plan's Inception Date 135 7/3/23, 10:56 AM LAIF Regular Monthly Statement https://laifms.treasurer.ca.gov/RegularStatement.aspx 1/1 Local Agency Investment Fund P.O. Box 942809 Sacramento, CA 94209-0001 (916) 653-3001 July 03, 2023 LAIF Home PMIA Average Monthly Yields CITY OF CUPERTINO FINANCE MANAGER 10300 TORRE AVENUE CUPERTINO, CA 95014 Account Number: June 2023 Statement Tran Type Definitions Account Summary Total Deposit:0.00 Beginning Balance:21,425,003.72 Total Withdrawal 0 00 Ending Balance 21,425,003.72 136 CITY OF CUPERTINO Agenda Item 23-12482 Agenda Date: 7/24/2023 Agenda #: 5. Subject:INFORMATIONAL ITEM Consider the Quarterly Internal Audit Status Report Receive the Quarterly Internal Audit Status Report Presenter: Moss Adams 4:40(20) CITY OF CUPERTINO Printed on 7/21/2023Page 1 of 1 powered by Legistar™137 July 17, 2023 To: City of Cupertino Audit Subcommittee From: Moss Adams LLP Subject: Internal Audit Status Report April 17 through July 17, 2023 _____ FY22-23 INTERNAL AUDIT PROGRAM ENTERPRISE LEADERSHIP EFFECTIVENESS STUDY POLICY REVIEW ONGOING SUPPORT ONGOING INTERNAL AUDIT SERVICES Objective Assess the effectiveness of the City’s management and governance collaboration framework and provide recommendations to strengthen and streamline procedures to align with best practices for municipal leadership. As the City updates and develops draft financial policies based on the prioritized inventory, review drafts and provide recommendations to align policies with best practice. Link to May 2022 Audit Committee agenda and report containing prioritized fiscal policy inventory. Attend Audit Committee and Council meetings; prepare status reports, manage internal audit program, and prepare FY 23-24 internal audit plan. Schedule April through July 2023 July 2022 through June 2023 July 2022 through June 2023 Activities for This Period Conducted interviews and fieldwork, developed preliminary and draft reports, and developed final report. All policy drafts have been updated by the City and reviewed by Moss Adams. Developed proposed FY23-24 internal audit program. Activities for Next Period None Continue to review draft policies and procedures at the request of the City. Continue to monitor FWA hotline and provide ongoing support to City. Issues None None None FRAUD, WASTE, AND ABUSE HOTLINE STATISTICS Complaint Type Complaints Received This Quarter Under Review Referred to Appropriate City Official(s) Closed Compliance & Ethics 0 0 0 0 Fraud 0 0 0 0 Employment Matters 0 0 0 0 Other/Not Relevant to City Operations 1 0 0 1 138 CITY OF CUPERTINO Agenda Item 23-12483 Agenda Date: 7/24/2023 Agenda #: 6. Subject:ACTION ITEM Consider the Enterprise Leadership Assessment Report Receive the Enterprise Leadership Assessment Report and forward to City Council Presenter: Moss Adams 5:00(20) CITY OF CUPERTINO Printed on 7/21/2023Page 1 of 1 powered by Legistar™139 This report is intended for the internal use of the City of Cupertino, and may not be provided to, used, or relied upon by any third parties. FINAL REPORT City of Cupertino ENTERPRISE LEADERSHIP ASSESSMENT July 14, 2023 Moss Adams LLP 999 3rd Ave, Suite 2800 Seattle, WA 98104 (206) 302-6500 140 Enterprise Leadership Assessment FOR INTERNAL USE OF THE CITY OF CUPERTINO ONLY Table of Contents Executive Summary 1 A. Background, Scope, and Methodology 1 B. Summary of Observations and Recommendations 1 Background, Scope, and Methodology 5 A. Background 5 B. Scope and Methodology 5 Observations and Recommendations 7 A. City Council 7 B. Commissions and Committees 22 C. City Staff 29 Appendix A: Commission and Committee Selection Criteria 34 141 Enterprise Leadership Assessment | 1 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY EXECUTIVE SUMMARY The City of Cupertino (the City) is governed by a five-member City Council and managed by the City’s executive leadership team. As part of Moss Adams LLP’s (Moss Adams, we) role as the City’s outsourced internal auditor, we developed this assessment to evaluate the effectiveness of the City’s management and governance collaboration framework and provide recommendations to strengthen and streamline procedures to align with best practices for municipal leadership. As part of this work, we evaluated governance topics including: • The Council’s capacity to set the City’s strategic direction and monitor financial sustainability • Council meeting procedures and resources • Working relationship and collaboration between Council members, City management, and staff • Training and onboarding • Committee and commission roles, core function, and support This assessment was conducted between March 2023 and June 2023. Analysis was informed by interviews with the City’s leadership and staff, and a review of data and documents provided by the City. The goal of this report is to detail current conditions and provide constructive and forward-looking recommendations for how the City’s leadership team can adjust operations to align with public sector best practices. Observations and recommendations were grouped into three areas: City Council, Commissions and Committees, and City Staff. Observations and recommendations for both areas are summarized below and provided in Section III. OBSERVATIONS AND RECOMMENDATIONS City Council 1. Observation While the City has established many policies that are aligned with best practices, there are opportunities to increase the effectiveness of current policies. Recommendations A. Continue current efforts to review, update, and expand the City’s governance policies, including the Ethics Policy and Commission Handbook. B. Establish a process to ensure all governance policies are reviewed at least once every five years. 142 Enterprise Leadership Assessment | 2 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY OBSERVATIONS AND RECOMMENDATIONS 2. Observation With the adoption of the City Council Procedures Manual and other recent changes, the City has made positive progress toward increasing the effectiveness of City Council meetings. However, ongoing challenges remain to ensure that meetings are productive and timely. Recommendation Continue current efforts to implement the City Council Procedures Manual and hold meeting participants accountable. 3. Observation There is a well-documented history of mistrust and poor communication between the Council and management. Recommendations A. Continue current efforts to implement recommendations from the 2023 Internal Review, with a focus on expanding the use of 1:1 pre-meetings with Council members B. In alignment with Municipal Code guidelines, consider developing and implementing a set of practical criteria to determine when requests for information will require a significant allocation of staff time or otherwise exceed the code guidelines. C. Continue current efforts to clarify roles and responsibilities and build productive working relationships by providing regular governance trainings and retreats. 4. Observation The City Council onboarding and orientation process has recently been updated to increase its effectiveness. This process could be further strengthened by focusing additional attention on roles, responsibilities, and practical application of guidelines. Recommendation Take steps to expand and strengthen the orientation process for new Council members. 5. Observation The City has established many best practice elements of a comprehensive ethics program. However, there are gaps in the City’s compliance enforcement. Recommendation Strengthen internal processes for tracking and holding elected and appointed individuals accountable to timely completion of Form 700 Disclosures. 6. Observation A core function of any governing body is to set and monitor the strategic direction of the organization. While the City Council has adopted a two-year Work Program to prioritize annual initiatives, it has not yet developed a long- range strategic plan. Recommendations A. Consider developing a long-range strategic plan to increase the City’s ability to strategically plan and advance initiatives. B. Continue current efforts to utilize and refine the annual Work Program prioritization practice. C. Consider expanding the City’s reporting processes to more effectively track progress toward strategic goals over time. 143 Enterprise Leadership Assessment | 3 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY OBSERVATIONS AND RECOMMENDATIONS 7. Observation While the City has established some strong community engagement practices, interviewees noted that Council members may have an overreliance on anecdotal evidence and/or public comment that may not be representative of the wider community perspective. Recommendations A. Consider setting clearer expectations for the intended scope of community engagement at the start of City initiatives. B. Continue current efforts to implement a statistically significant, representative community survey. C. Consider providing media and crisis communication training to all Council members. Commissions and Committees 8. Observation The City utilizes multiple commissions and committees to support Council decision-making. There are opportunities to increase the effectiveness of some of these groups. Recommendations A. Establish charters, including clear roles and responsibilities, for each commission and committee that outline the group’s purpose and member roles and responsibilities. B. Review additional opportunities to streamline governance groups. C. Consider reviewing the names of governance groups to introduce a consistent naming convention for commission versus committee. 9. Observation The City has documented processes to select and appoint community members to governance groups. This process could be strengthened by adding relevant qualification criteria. Recommendation Review and establish the qualification criteria for each commission and committee member to determine if the City would benefit from adjustments. 10. Observation Commission and committee operations—including onboarding, meeting procedures, work plans, and reporting—are not always consistent or effective. Recommendations A. Continue efforts to expand and formalize onboarding and training expectations for both commissions and committees. B. Clarify the process and expectation for cancelling unnecessary meetings. C. Consider adopting the practice of requiring annual work plans for each commission and committee. City Staff 11. Observation The staff time used to support governance groups represents a significant investment of City resources. Recommendations A. Review the practice of requesting department directors attend commission and committee meetings. B. Provide training for staff liaisons annually and when a new individual takes on the liaison role. 144 Enterprise Leadership Assessment | 4 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY OBSERVATIONS AND RECOMMENDATIONS 12. Observation City staff continue to experience a high degree of organizational change and uncertainty. Within this context, it is critical for the City’s management team to provide active communication and change management to increase support of staff. Recommendation Identify and implement expanded communication and change management practices to improve workplace culture. 145 Enterprise Leadership Assessment | 5 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY BACKGROUND, SCOPE, AND METHODOLOGY In recent years, the City has experienced significant organizational change and uncertainty. In particular, there has been both a high turnover rate in key leadership positions within the City and ongoing turmoil in relation to the Council/staff relationship. Two highly publicized reports have documented related issues: • The 2022 Santa Clara County Civil Grand Jury report A House Divided: Cupertino City Council and City Staff (referred to throughout this document as the 2022 Grand Jury report) • The 2023 Review of Outstanding Issues and Concerns Raised by the Findings and Recommendations of the 2022 Santa Clara Civil Grand Jury Report (referred to in this document as the 2023 Internal Review) Within this context, City leadership expressed interest in an assessment that could both detail current conditions and provide constructive and forward-looking recommendations for how the City’s leadership team can adjust operations to align with public sector best practices. Moss Adams serves as the outsourced internal auditor for the City, and reports to the City Council’s Audit Committee. As part of the 2022–23 internal audit work plan, the Audit Committee approved this Enterprise Leadership Assessment. The purpose of this assessment is to evaluate the effectiveness of the City’s management and governance collaboration framework and provide recommendations to strengthen and streamline procedures to align with best practices for municipal leadership. As part of this work, we evaluated governance topics, including: • Council’s capacity to set the City’s strategic direction and monitor financial sustainability • Council meeting procedures and resources • Working relationship and collaboration between Council members, City management, and staff • Training and onboarding • Committee and commission roles, core function, and support Moss Adams conducted this engagement between March 2023 and June 2023. The project consisted of four major phases. PHASE DESCRIPTION 1 Start-Up and Management  Project initiation consisted of collaborative project planning with the City and project management, including developing our scope of work and final work plan. 146 Enterprise Leadership Assessment | 6 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY PHASE DESCRIPTION 2 Fact-Finding and Data Collection  The second phase included interviews, document review, and best practice research. We worked with City staff to obtain the most current information and insights. • Interviews: We conducted interviews with 23 members of City staff and City Council members. • Document review: We received documents including policies, procedures, planning documents, reports, and others. • Best practice research: Based on the opportunities for improvement identified, we conducted research to ascertain best practices within the public sector. 3 Analysis  Based on the information gained during our fieldwork phase, we assessed the current conditions and identified opportunities for improvement. Leveraging best practice information and our own experience from working with similar entities, we developed practical recommendations. 4 Reporting Results  We communicated the results of our analysis with observations and recommendations presented first in a draft report that was reviewed with management to confirm the practicality and relevance of recommendations before finalizing the report. We would like to thank City leadership and staff for their willingness to assist in this assessment. 147 Enterprise Leadership Assessment | 7 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY OBSERVATIONS AND RECOMMENDATIONS Based on the input gathered from interviews, document review, focus groups, and comparisons to best practices, we prepared a comprehensive set of observations and recommendations. 1. Observation While the City has established many policies that are aligned with best practices, there are opportunities to increase the effectiveness of current policies. Recommendation A. Continue current efforts to review, update, and expand the City’s governance policies, including the Ethics Policy and Commission Handbook. B. Establish a process to ensure all governance policies are reviewed at least once every five years. Best Practice In addition to regulations and codes, many city councils have adopted formal rules of procedure to govern the conduct of their meetings and/or provide guidelines for collaboration. The motivation in adopting rules is usually to increase the efficiency and effectiveness of meetings, improve communication, and manage conflict. The basic premise in adopting rules is to ensure that governance group interactions will run smoothly and follow a generally accepted format. These types of city council policies often cover the following categories: • Code of conduct, ethics, or group norms • Council meeting processes and agenda development • Council communications with staff • Council communication with members of the public • Use of technology • Conflict of interest • Committees and commissions-specific topics ○ Purpose and relationship to City Council ○ Selection and appointment ○ Meeting processes and agenda development ○ Planning and reporting Current Conditions The City has adopted several governance-related policies, including the primary documents detailed below. 148 Enterprise Leadership Assessment | 8 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY City Council Procedures Manual In February 2023, the City Council adopted Resolution 23-021 to establish the Cupertino City Council Procedures Manual. In alignment with best practice, the manual include guidelines for many processes, including communication, meeting management, decorum, and decision-making. The manual also incorporates references to the applicable sections of the Municipal Code to provide administrative guidelines to comply with relevant provisions. Interviewed staff generally noted that the Procedure Manual is a welcome improvement. However, the usefulness of this document is highly dependent on whether City Council adheres to the practices described within. Ethics Policy The City’s current Ethics Policy applies to City Council, appointed officials, and City staff with the purpose of promoting public confidence in the integrity, effectiveness, and fairness of City operations. However, as noted in the 2022 Grand Jury report “the current Ethics Policy is less comprehensive [than previous versions] and ignores the subject of councilmanic interference found in the rescinded version. Thus, there are significantly fewer ethical requirements and standards for councilmembers.” The new City Council Procedures Manual strives to address this issue by stating that “City Council may enforce repeated or serious violations of the rules set forth in the Manual through a censure action placed on a Council agenda." At this time, the City Council is planning to consider revising the Ethics Policy in the first quarter of fiscal year 2024. While the Ethics Policy references conflicts of interest, the City has not established a separate conflicts of interest policy. Technology Use The City adopted a Technology Use Policy in November 2018. The policy applies to City employees, elected officials, commissioners, contractors, consultants, temporary workers, interns, volunteers, and vendors using City technology resources. In alignment with best practice, the policy covers a range of topics, including cybersecurity, the California Public Records Act, confidentiality, prohibited use of technology, and violations. However, the policy has not been updated since 2018 and contains some outdated information (like a reference to pending litigation). Commission Handbook The City established a Commission Handbook in 2021 to provide guidance to the City’s various commissions and committees. In alignment with best practice, the handbook builds off of the tenets laid out in the municipal code and covers a range of topics, including commissions’ purpose and relationship to City Council, management, and staff, as well as commission membership, meeting processes and agenda development, and communications. However, this handbook has not been reviewed for alignment with the new City Council Procedures Manual and it is unclear whether it applies to committees. At this time, the City Council is planning to consider revising the Commission Handbook in the first quarter of fiscal year 2024. 149 Enterprise Leadership Assessment | 9 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Policies and Guidelines on Sister Cities, Friendship Cities, and International Cupertino Delegations for the City Of Cupertino The City has established a policy to help guide activities around Sister Cities, Friendship Cities, and international delegations. The document outlines travel and expense guidelines for Council members who are supporting these programs. However, the City has not yet developed a general travel and expense policy for Council members. Recommendations • Continue current efforts to update governance policies, including: ○ Reviewing the Ethics Policy to ensure it aligns with best practice. ○ Reviewing the Commission Handbook to ensure it is aligned with other City policies, including the City Council Procedures Manual and the Ethics Policy. As part of this work, it will be important to clarify whether this handbook is relevant to City committees. ○ Considering developing a standalone conflict of interest policy that applies to Council members. ○ Considering developing a general travel and expense policy that applies to Council members. • Adopt a process to review and update governance-related policies at least once every five years. • Continue efforts to implement the City Council Procedures Manual and hold participants accountable to the policies and procedures. See the Meeting Cadence and Processes section for more details. 2. Observation With the adoption of the City Council Procedures Manual and other recent changes, the City has made positive progress toward increasing the effectiveness of City Council meetings. However, ongoing challenges remain to ensure that meetings are productive and timely. Recommendation Continue current efforts to implement the City Council Procedures Manual and hold meeting participants accountable. Best Practice City council meetings play a crucial role in local governance, where elected officials convene to make decisions, address community concerns, and shape the future of their cities. Establishing best practices for meeting cadence and processes is essential to ensure efficiency, transparency, and effective decision-making. By following best practices, city councils can foster an environment that allows for informed discussions and ultimately leads to better outcomes for their communities:1,2 In general, best practices for effective public meetings include: 1 Planning and Leading Effective Meetings, NLM 2 Guide to Good Meetings, ICMA 150 Enterprise Leadership Assessment | 10 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY • Established Procedures: The city should set clear procedures for meeting structure, agenda, decision-making, conflict resolution, and use of a consent agenda. • Reasonable Cadence and Length: Meetings should be held as frequently as needed to accomplish critical work. Research indicates that shorter meetings are generally better meetings, as it becomes more difficult to maintain focus over time. • Effective Meeting Facilitation: Meetings should be led by skilled facilitator, such as the mayor or chair, to manage discussions, maintain decorum, and ensure efficient use of time. Encourage respectful and constructive dialogue among council members and establish clear rules and protocols for productive meetings. • Preparation and Pre-Meeting Communication: Meeting participants (e.g. council, commission, or committee members) should be provided with sufficient time to review meeting materials in advance. Distribute agendas, reports, and supporting documents to allow for thorough preparation, informed discussions, and informed decision-making. Within the public sector space, 1:1 preparation meetings with management are frequently used to provide elected officials with time to ask questions and understand issues before a public meeting is held. • Engaged Participants: Meeting participants should be able to actively engage with the meeting content and respond to feedback. They should employ professionalism and follow any codes of conduct or group norms. • Technology and Accessibility: Technology should be leveraged to enhance meeting accessibility and public engagement. Explore options for live streaming, video conferencing, or online comment submission to enable broader community engagement, especially for those unable to attend in person. Current Conditions In alignment with best practice for establishing procedures, the City recently adopted the City Council Procedures Manual. The manual documents processes for key items like decision-making, agenda development, decorum, communication with staff, and use of a consent calendar. Despite the implementation of the manual, interviewed staff reported that meeting efficiency and effectiveness remains a high area of concern. Staff note that time limits are not always enforced, there is little group consensus about discussion priorities (so items with relatively minimal impact may take up significant discussion time), and items are routinely removed from the consent agenda for additional discussion. Within this context, staff noted that agenda items were frequently bumped to the next meeting. As a result, staff reported the common experience of sitting through hours of a meeting and not being able to present their agenda item—which is both a waste of staff resources and a challenge to employee morale. To help combat this issue, the new City Council Procedures Manual has established time limits for discussion items and questions. Interviewed staff noted that this was a step in the right direction, but ongoing challenges remain. In terms of the frequency and length of meetings, the number of City Council meetings has been high in recent years, with 63 meetings held in 2021 and 64 in 2022. Council meetings have also historically extended into late hours. Between 2020 and 2022, the average length of Council meetings was over five hours (5.1 hours in 2020, 5.7 hours in 2021, and 5.2 hours in 2022). Given that meetings start at 6:45 pm, this means that participants were routinely in meetings that ran past midnight. Long meeting lengths impact the productivity, wellness, and safety of the Council members, staff, and community participants. 151 Enterprise Leadership Assessment | 11 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY The City Attorney and the Mayor play significant roles in ensuring that the meeting agenda is adhered to and that Council conversation does not stray off topic or relitigate decisions that have already been made. Interviewees noted appreciation for the City Attorney’s and Mayor’s efforts in this area. In alignment with best practice and regulations, the City provides agenda materials at least six days before standard Council meetings. Council members have the opportunity to ask questions through email between the time the agenda is posted and when the meeting is held. Staff responds to these questions by way of an addendum or desk item to the staff report. In addition, the City management team has expanded the practice of offering 1:1 preparation meetings to City Council members. While individual City Council members must voluntarily opt into these meetings (and Council members do not always choose to do so), staff and some members of Council report that these meetings are effective in terms of increasing communication and collaboration. In alignment with best practice, the City provides live broadcast and on demand coverage of city meetings. In addition, members of the public may provide comments in-person, online, or via telephone. Recommendations • Continue current efforts to implement the City Council Procedures Manual and hold participants accountable to the policies and procedures. This will require ongoing and concerted effort on the part of the Mayor, members of City Council, City Attorney’s Office, City Clerk, and City Manager’s Office. In particular, City staff should continue to provide the Mayor with active support to ensure the Mayor is well positioned to keep meetings on track. • Continue current efforts to provide 1:1 pre-meetings between individual Council members and management for upcoming council agenda items. See the Collaboration and Relationships section for more details. 3. Observation There is a well-documented history of mistrust and poor communication between the Council and management. Recommendation A. Continue current efforts to implement recommendations from the 2023 Internal Review, with a focus on expanding the use of 1:1 pre- meetings with Council members B. In alignment with Municipal Code guidelines, consider developing and implementing a set of practical criteria to determine when requests for information will require a significant allocation of staff time or otherwise exceed the code guidelines. C. Continue current efforts to clarify roles and responsibilities and build productive working relationships by providing regular governance trainings and retreats. 152 Enterprise Leadership Assessment | 12 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Best Practice City council collaboration, productive group dynamics, and trust in management are vital aspects of effective local governance. The following are characteristics that are commonly found in high-function governance teams: 3,4 • Defined Roles and Responsibilities: Clearly defined roles help council members and staff avoid confusion, ensure accountability, and enables efficient collaboration. For cities like Cupertino that have chosen to operate under the Council-Manager form of government, operational responsibilities are delegated to the City Manager from City Council, while City Council is responsible to guide the strategic direction of the organization by setting policy, providing oversight, and supporting City staff.5 • Mutual Respect: Mutual respect and professionalism are baseline requirements for healthy working relationships. This behavior is characterized by open communication, active listening, adherence to codes of conduct or group norms, respect for roles, appreciation for diverse viewpoints, active preparation, and commitment to working in collaboration to move the organization toward its goals. • Clear Communication: Focused, concise, and direct communication can provide a strong foundation for building trusting and productive relationships. • Collaboration with Staff: Productive relationships between council and staff often begin with respecting roles, recognizing individual expertise, and showing support for city employees. Current Conditions As reported by staff and Council members, and documented in both the 2022 Grand Jury report and the City’s subsequent 2023 Internal Review, there are varying opinions within City Council about the ultimate role that Council members are meant to play. For example, it is apparent that some Council members perceive the oversight role to encompass highly operational work, like conducting independent research or analysis. This type of behavior both causes tension with staff as it is a clear signal that their expertise and work is not trusted; it is also a poor use of time and ultimately a distraction from the more critical work of the Council. While oversight is a critical component of good governance, it must be predicated on a baseline trust that the City Manager has hired competent and qualified staff to perform operational functions. In alignment with best practice, City management does provide training related to roles and responsibilities to help onboard new members of City Council. See the City Council Onboarding and Training section for more details. In regard to mutual respect, there is a well-documented history of mistrust and conflict between Council and management. While interviewed staff report some positive progress in recent months, there are still regular challenges in terms of professionalism, respect, and positive intent. There is a strong need to rebuild trust within the Council and between the Council and management. In terms of communication, one of the most frequently cited ongoing challenges is related to email requests from Council members. As documented in the 2023 Internal Review and reported by interviewed staff, several Council members have continued the practice of sending a high volume of 3 Building the Best Relationship with Your Council, ICMA 4 Strategies for creating a more collaborative, effective council, Western City. 5 Making it Work: The Essentials of Council-Manager Relations, ICMA 153 Enterprise Leadership Assessment | 13 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY emails, averaging 50-70 initial emails per week, not counting any follow-up emails. This practice is ineffective for communication purposes, creates significant workload for staff, and is widely perceived to be an obstruction tactic. Council members at times request responses to questions posed by the public as if they were the Council members’ own. This pass-through of information requests without vetting creates work efforts where it may not be effective or even considered in the decision-making process. The City’s Municipal Code provision § 2.17.043 clarifies that the City Manager may determine when individual council member requests are overly onerous (and thus should be directed to staff through a collective instruction from the entire City Council). The code states that the following guidelines should be considered when making this judgement: A. Is the request specific and limited in scope so that staff can respond without altering other priorities and with only minimal delay to other assignments? B. Is the request a "one time" work requirement, as opposed to an on-going work requirement? C. Does the response to a request require a significant allocation of staff resources (generally defined as consisting of more than one staff person, or a single staff person working on the request in excess of two hours)? However, staff report that it has been challenging to exercise these guidelines in a practical, consistent, and productive way. Several interviewed staff noted that it has been extremely challenging to accomplish operational work given the number of staff hours required to respond to these requests, in addition to preparing staff reports and materials for regular Council meetings. As noted in the Meeting Cadence and Processes section, the City management team has expanded the practice of offering 1:1 preparation meetings to City Council members as an option for more efficient and direct communication. In alignment with best practice, the City has implemented City Council retreats as an opportunity for ongoing relationship building and professional development. Recommendations • Moss Adams concurs with the recommendations to improve collaboration made within the 2023 Internal Review. In particular, the City and individual councilmembers should continue efforts to utilize the 1:1 meetings as a more efficient means of sharing information. • In alignment with the City’s Municipal Code provision § 2.17.043, the City Manager should consider developing a set of practical criteria to determine when individual Council member requests for information exceeds standard guidelines as outlined in the code. Ideally, this type of criteria could provide a consistent, objective, and efficient means to evaluate incoming requests. • Continue current efforts to clarify roles and responsibilities and build productive working relationships by providing regular governance trainings, retreats, and strategic planning work sessions. 154 Enterprise Leadership Assessment | 14 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY 4. Observation The City Council onboarding and orientation process has recently been updated to increase its effectiveness. This process could be further strengthened by focusing additional attention on roles, responsibilities, and practical application of guidelines. Recommendation Take steps to expand and strengthen the orientation process for new Council members. Best Practice Onboarding, orientation, and training for new city council members are critical to their successful integration into their roles and the effective functioning of the council as a whole. By implementing a robust onboarding and training program, cities can equip new council members with the knowledge, skills, and resources needed to navigate their roles effectively. This contributes to a cohesive council, enhances decision-making, and strengthens the council's ability to serve the community.6 Comprehensive onboarding support typically involved the following components: • Orientation Program: The organizations should develop a comprehensive orientation program to familiarize new council members with their roles, responsibilities, and the governance structure. The program should address: ○ Overview of the council's purpose, functions, codes, and legal obligations ○ Insights into the local community's history, demographics, priorities, and challenges ○ Definition of roles and responsibilities of council members, including their specific duties, expectations, areas of focus, and understanding of how their role contributes to the overall work of the group • Ethics, Policies, and Procedures Training: The organization should offer training on key policies and procedures that govern council operations. Guidance should be provided on meeting protocols, code of conduct, ethical standards, and conflict of interest guidelines. The organization should ensure that new council members understand their legal obligations, including compliance with relevant legislation and regulations. • Financial and Budgetary Training: The organization should provide training on municipal budget processes, financial management, and fiscal responsibilities, and help council members understand the budgetary constraints, revenue sources, and expenditure allocation. The training should also familiarize them with financial reports, audits, and accountability mechanisms to ensure effective stewardship of public funds. • Support from Staff or Liaisons: The onboarding process should be provided in collaboration with staff members or designated liaisons who can provide guidance and support to new council members. Ensure that staff are available to address questions, provide administrative assistance, and facilitate access to necessary resources or expertise. • Continuous Learning and Professional Development: Ongoing learning opportunities for council members should be provided to enhance their skills and knowledge in governance, leadership, 6 Making it Work: The Essentials of Council-Manager Relations, ICMA 155 Enterprise Leadership Assessment | 15 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY and effective decision-making. Encourage participation in workshops, conferences, and training programs that promote professional growth. Current Conditions In alignment with best practice, the City has established a two-day orientation program coordinated by the City Clerk’s Office. The program consists of several intensive sessions that cover topics including the Council’s core functions, roles and responsibilities, regulatory requirements (like Brown Act rules), meeting procedures, and a deep dive with department heads presenting on the purpose and mission of their respective departments. This work is collaboratively supported by the City Manager’s Office, City Attorney’s Office, City Clerk’s Office, and the department directors. Interviewees noted several opportunities to continue to improve the onboarding process, including: • Spacing out information so that new members are not fatigued by information overload over the course of a few days • Providing refresher trainings throughout the year • Providing peer-to-peer learning opportunities where new members can receive input and guidance from more veteran members • Increasing practical examples and scenarios to help increase the practical applicability of the trainings • Requesting full participation of all Council members (this year one member of council chose not to participate in the orientation) In alignment with best practice, the City does offer opportunities for Council members to engage in ongoing professional development opportunities on an ad hoc basis. Recommendations • Continue to expand and strengthen the orientation process for new Council members. In particular, the City may benefit from extending the onboarding timeline, providing refresher trainings throughout the year, and adding scenario exercises to increase the practical applicability of trainings. 5. Observation The City has established many best practice elements of a comprehensive ethics program. However, there are gaps in the City’s compliance enforcement. Recommendation Strengthen internal processes for tracking and holding elected and appointed individuals accountable to timely completion of Form 700 Disclosures. Best Practice The role of elected officials—and government as a whole—is to serve the public interest. When government representatives act ethically and avoid engaging in behavior that promotes any private 156 Enterprise Leadership Assessment | 16 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY interests, they are acting for the common good. To foster an ethical operating environment, it is common for cities to establish the following components: • A Fraud, Waste, and Abuse Program, including an ethics hotline where members of the public and the city government can report issues for investigation • Disclosure of potential conflicts of interest (primarily accomplished via Form 700 within the state of California) • Trainings and expert advice on government ethics (including topics like the Brown Act) • Processes to track and report on compliance with standard disclosures and regulations • Commitment from leadership to hold all parties accountable, including Council, Committee, and Commission members • An ethics policy that applies to all elected and appointed officials, as well as staff Current Conditions In alignment with best practice, the City has implemented the following: • A formal Fraud, Waste, and Abuse Program and related ethics hotline was implemented in 2022. • The City provides required ethics and anti-harassment training for Council, Committee, and Commission members as required by state law, and the City Attorney provides expert counsel as needed. In addition, Council members are given the opportunity to participate in ethics education at League of Cities conferences. • The City Clerk’s Office and City Attorney’s Office provide guidance to elected and appointed officials in filling out the Form 700 Disclosures and complying with other regulations. Several interviewed staff reported that at least one Commission member had not filed their Form 700 Disclosure. While the City Clerk’s office has been aware of this issue for over a year and made efforts to correct the issue, it has not yet been resolved. This indicates that there are gaps in the current process to hold participants accountable for compliance in this area. Recommendations • Strengthen internal processes for tracking and holding elected and appointed individuals accountable to timely completion of Form 700 Disclosures and any other required documentation. If governance group members have not completed this form in a timely manner, they should face disciplinary action up to and including removal from their position. • See the Policies and Procedures section for more details on the City’s Ethics Policy. 157 Enterprise Leadership Assessment | 17 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY 6. Observation A core function of any governing body is to set and monitor the strategic direction of the organization. While the City Council has adopted a two- year Work Program to prioritize annual initiatives, it has not yet developed a long-range strategic plan. Recommendation A. Consider developing a long-range strategic plan to increase the City’s ability to strategically plan and advance initiatives. B. Continue current efforts to utilize and refine the annual Work Program prioritization practice. C. Consider expanding the City’s reporting processes to more effectively track progress toward strategic goals over time. Best Practice A core function of any governing body is to set and monitor the strategic direction of the organization. Within this context, it is best practice for City leadership to develop a multi-year strategic plan and then select key priorities via a collaborative process between Council and management on an annual basis.7,8 By grounding work in the long-term vision for the community and core mission of City government, the City Council can ensure that resources are strategically allocated to support long- term success. In addition, strategic plans can help provide consistency of vision and direction—even as members of the Council or the management team exit the organization. Typically, strong strategic plans are characterized by: • Long-Term Vision: The organization should have a clear vision statement that captures the long- term aspirations for the community. Strategic plans also typically incorporate mission and value statements. • Policy-Level Guidance from Council: The governing body should be actively involved in shaping the plan by setting high-level policy guidance and broad goals. Within this setting, the management team should be responsible for determining and implementing the best means to achieve these objectives. • Public Input: The City serves the community, so planning activities should take the community’s needs into consideration. Seeking community input during the planning process is critical. • Annual Prioritization: All organizations have resource constraints. As such, realistic plans should prioritize activities in a clear order to help guide resource allocation. An annual review of goals and a process to prioritize work for the upcoming fiscal year ensures that work is guided by long- term strategies and responsive to emergent needs. • Link to Financial Data: Planning should be linked a long-range financial plan that forecasts revenue, identifies unfunded liabilities, determines long-term debt capacity, analyzes external economic environment, and determines the long-term impacts of priorities and goals.9 7 GFAO Strategic Planning 8 Strategic Planning Revisited, ICMA. 9 GFAO Planning Resource Center 158 Enterprise Leadership Assessment | 18 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY • Equity Considerations: Equity should be incorporated into every step of the strategic planning process to ensure that all members of the community are represented and have a voice in the process. • Outcome-Based Key Performance Indicators: Strong plans include key performance indicators (KPIs) and metrics to measure progress and success. Ideally, KPIs are primarily focused on the ultimate outcomes the organization is hoping to achieve, rather than output measures of activities. With this type of tool, leadership can regularly monitor and evaluate the city's performance to track the achievement of strategic goals. Current Conditions The City does not currently utilize an organization-wide, long-range strategic plan that lays out a vision for the City and guides priorities, projects, and resource allocation. This is in part due to high turnover in the City Manager’s Office, which has limited organizational capacity to perform long-term strategic work. However, the City has adopted many related planning elements: • Strategic Goals: In February 2020, the City Council established a number of strategic goals to provide a framework for City priorities and guide annual development of the Work Program— including Public Engagement and Transparency, Transportation, Housing, Sustainability, and Quality of Life. • Annual Work Program: The City has established an annual Work Program process that identifies and selects priority projects and initiatives that fall outside the City’s regular operations for execution within the following year. ○ The Work Program document includes information about the project title, objective, estimated budget, allocated budget, and related department, commission, goal category, and General Plan Guiding Principles. ○ In the past, the Work Program has expanded to include a high number of unprioritized items. To combat this issue, City management established a new facilitated prioritization process in 2023. This step is a significant improvement in terms of alignment with best practice. • Other Guiding Plans: In addition to the Work Program, the City has many individual plans for work that line up with many of the best practice criteria above. Examples include the General Plan, Capital Improvement Program, and Climate Action Plan. • Financial Forecast: In alignment with best practice, the City has developed a 10-year financial forecast to address various expenditure and revenue components and assumptions. • Progress Reporting: In alignment with best practice, the City has developed a dashboard to transparently communicate progress toward completing the City’s Work Program projects. This is commendable. In addition, the City reports on department-specific KPIs as part of the budget process. Based on staff interviews, staff reports, and a review of documentation there are several interconnected challenges or areas of misalignment with best practice in relation to the City’s planning environment: • Given the lack of a long-range strategic planning framework, some staff noted that Work Program items and Council priorities are not always clearly linked with the City’s big-picture goals. In addition, many interviewees were not aware of the City’s 2020 strategic goals. This may indicate that this framework is not providing sufficient specificity and/or is not being widely utilized to guide decision-making. 159 Enterprise Leadership Assessment | 19 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY • City Council has a tendency toward more tactical and operational initiatives, rather than staying at the policy level to align the City with its vision. Ideally, the Council should be setting high-level goals and objectives and the management team should be responsible for determining the best means to accomplish the end. • The City’s Work Program has sometimes created new ongoing programs without sufficient or identified resources to support them. This results in staff taking on additional workload without appropriate support. This indicates that planning activities are not sufficiently tied to resource allocation decisions. • The Work Program does not explicitly incorporate equity considerations. This indicates that there may be blind spots in relation to the City’s understanding and approach to solving issues. • While public input has historically been actively solicited as part of the Work Program process, this step was forgone this year in order to tackle the backlog of critical work and make progress. This is reasonable given the circumstances, but the City should reintroduce public input in the future. • While the City reports on progress toward Work Program activities and includes KPIs in its budget, the organization has not yet established outcome-based performance measures to track progress toward high-level goals. As a result, progress reporting is often reliant on measures of activities or outputs—rather than focusing on the long-term outcomes that the City is hoping to create. Recommendations • Consider developing a long-range strategic plan—that builds upon the City’s current goals and vision—to increase the City’s ability to plan and advance initiatives. • Continue to utilize and refine the annual prioritization practice, with a focus on determining what is achievable considering the City’s staffing and funding resources within a given fiscal year. • Implement the practice of reviewing progress toward strategic goals on a quarterly or semi-annual basis. As part of this work, the City should identify outcome-based performance measure to track and report on progress. In addition, the expanded use of performance dashboards, indicators, and other standardized reporting tools would strengthen the City Council’s ability to provide appropriate oversight and track progress over time. 160 Enterprise Leadership Assessment | 20 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY 7. Observation While the City has established some strong community engagement practices, interviewees noted that Council members may have an overreliance on anecdotal evidence and/or public comment that may not be representative of the wider community perspective. Recommendation A. Consider setting clearer expectations for the intended scope of community engagement at the start of City initiatives. B. Continue current efforts to implement a statistically significant, representative community survey. C. Consider providing media and crisis communication training to all Council members. Best Practice Community engagement is an essential component of a well-run local government. By utilizing community input, local governments can improve decision-making, ensure transparency, foster community participation, and build trust with community members.10,11 Successful community engagement programs are multi-pronged, and often include a combination of the following practices: • Public meeting and hearings (often required by regulation) • Focus groups or work sessions • Social media, web pages, or mobile applications • Email, newsletters, text, or other digital communication • Advisory boards, committees, or commissions • Volunteer programs • Representative community surveys 12,13 • Collaboration with representative community partners For crisis situations, it is best practice to have a dedicated point of contact for communication with the public. In addition, many cities provide media training to council members to ensure they are well- prepared to engage as needed. Current Conditions In alignment with best practice, the City has invested in a centralized communication team that is responsible for managing various communication channels, including social media and media outlets. The City has also established some creative programs to engage with residents, such as the Cupertino Block Leader Program which was developed as a collaborative way to work with residents 10 Community Engagement and Public Strategy, ICMA 11 Building an Effective Community Engagement Strategy, ICMA 12 ICMA, The Voice of the Public 13 Bloomberg Cities, Five Secrets of Successful Community Surveys 161 Enterprise Leadership Assessment | 21 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY to enhance community preparedness, communication, and resilience at the neighborhood level. The City also regularly solicits input from the community regarding specific projects. For example, for significant policy initiatives such as updating the building code, the City actively seeks public feedback through surveys, focus groups, and other methods. However, the City has not established a standardized approach to what constitutes comprehensive or sufficient community input for a given initiative. As a result, staff report that at times City Council has repeatedly requested additional avenues for community feedback, which has heightened workloads. In alignment with regulations, the City provides space for public comment at regular City Council meetings and other venues. Interviewed staff and some Council members report that comments made by community members at public meetings are sometimes interpreted to be representative of the views of all stakeholders and to be factual without substantive validation. Within this context, community members with the means, ability, access, and interest in participating in public comment may receive oversized responses to their issues. In recent years, the City has not utilized a representative community survey to gather wholistic information about community perception of City services. However, a survey of this type is budgeted and planned for the 2024 fiscal year. By returning to this practice, the City can help provide context for individual public input and help ground decision-making in majority interests, rather than relying on individual feedback provided via the public comment process. Ideally, the City will continue to administer community surveys on an annual basis and ask similar questions each year. In this way, City leadership will both establish a baseline and receive comprehensive insight into trends. In terms of crisis communication, City policy dictates that the Mayor is the designated spokesperson for the Council. However, Council members have not been provided with media training and some staff report that there have been instances of Council members sharing comments with the media without notifying City staff. Recommendations • Consider implementing processes to set clearer expectations for the scope of community engagement at the start of major City initiatives. This may take the form of staff establishing baseline definitions for appropriate levels of community engagement for different types of projects or proactively documenting the intended outreach plan associated with major projects. • Continue current efforts to implement a statistically significant, representative community survey to gather baseline information about resident’s needs, interests, and perception of City services. • Consider providing media and crisis communication training to all Council members. As part of this training, it would be beneficial to clarify individual roles and responsibilities, including those of the Mayor and Vice Mayor. 162 Enterprise Leadership Assessment | 22 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY 8. Observation The City utilizes multiple commissions and committees to support Council decision-making. There are opportunities to increase the effectiveness of some of these groups. Recommendation A. Establish charters, including clear roles and responsibilities, for each commission and committee that outline the group’s purpose and member roles and responsibilities. B. Review additional opportunities to streamline governance groups. C. Consider reviewing the names of governance groups to introduce a consistent naming convention for commission versus committee. Best Practice Commissions and committees play an important role in local government by acting in an advisory capacity, providing in-depth analyses, and making recommendations to inform city council decision- making.14 These types of governance groups are an effective way of involving citizens in the engagement process of local government. In terms of committee and commission structure, the following are best practices for effective use of these types of groups: • Each group should have a clearly defined purpose, scope of authority (including whether groups are meant to be advisory, regulatory, or operational), responsibilities, and legal obligations. This information is typically defined within municipal code and/or via charters or other formal documents. • Leadership should regularly evaluate the existing governance group structure and ability to adjust it based on the organization or community’s changing governance needs. • While there is no established standard for the ideal number of governance groups, leadership groups should consider the following factors when deciding to add, eliminate, or combine groups: ○ Is this group fulfilling a high-priority need for our community? ○ Is this group fulfilling a distinct purpose for our community or could additional scope and/or responsibilities be added to a current group? ○ Do we have sufficient staff to effectively support this group? Governance groups are sometimes called boards, commissions, committees, or councils depending on their function. Frequently, the term “commission” is used to indicate a group that has powers and duties established by ordinance and have either regulatory or functional responsibilities. The term “committee” is frequently used to denote a group that is advisory in nature. However, the terminology used is often a matter of local preference.15 14 Local Government Citizen Advisory Boards, MRSC 15 Maryland Municipal League: Citizen Boards, Commissions and Committees 163 Enterprise Leadership Assessment | 23 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Current Conditions The City has established various committees and commissions to address specific areas of focus. There are ten commissions tasked with advising the City Council in the formation of policy. With the exception of the Planning Commission, all other commissions function in a strictly advisory role to the City Council, as is appropriate and consistent with best practices. Commissions include: • Arts and Culture Commission • Bicycle Pedestrian Commission • Housing Commission • Library Commission • Parks and Recreation Commission • Planning Commission • Public Safety Commission • Sustainability Commission • Technology, Information, and Communications Commission • Teen Commission The City also has three committees and a council. Generally, one or two Council members are assigned as members, and the committees may include members from the public or staff. With the exception of the Administrative Hearing Committee (which conducts administrative hearings), the purpose of the committees is to review specific topics affecting the City and make recommendations to the City Council. • Administrative Hearing Committee • Audit Committee • Disaster Council • Sister City Committee The City Council also occasionally creates topic-specific, time-delimited subcommittees (which are usually led by two Council members) to address a particular concern. In alignment with best practice, the City reviewed the purpose and number of governance groups in early 2023. Based on staff recommendations, the City Council consolidated or eliminated several groups to reduce the overall number of governance groups from 17 to 13 (per City Council Ordinance No. 23-2247). A recent staff report determined that cities in Santa Clara County on average support 12 commissions and committees, not including any active council subcommittees. As such, the City is now significantly closer to the local average. In terms of the core function of the City’s governance groups, almost all groups (regardless of whether they are named “commission” or “committee”) are advisory bodies. With the exception of the Administrative Hearing Committee, the foundational duties of all other governance groups are codified in the City’s Municipal Code. However, the City has not yet established the process of developing individual charters to outline the group’s purpose and member roles and responsibilities. 164 Enterprise Leadership Assessment | 24 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Staff report that there have been ongoing challenges ensuring that all governance group members understand the scope of their authority. It was frequently reported that certain group members believe they have the authority to direct staff on administrative matters or assign work tasks. This is a breach of the group’s actual authority, and can create tension when staff members are put in a position to deny or redirect the work requests. In addition, interviewees noted that several groups often do not have significant volumes of work, which can create challenges to keeping members productively engaged. The following groups were noted: • Public Safety Commission • Sustainability Commission • Teen Commission Recommendations • Establish charters for each commission and committee that outline the group’s purpose and member roles and responsibilities in more detail than is currently provided in the Municipal Code. In particular, it will be critical to outline what the advisory function fully entails and clarify that commissions and committees cannot direct staff work or assign tasks. • Review additional opportunities to streamline governance groups. In particular, the City should evaluate the following: ○ Housing Commission: It is common for Housing Commissions to be combined with Planning Commissions, given the highly interrelated areas of work.16 ○ Library Commission: The local library system is administered by the Santa Clara Library District, rather than the City. Within this structure, it is questionable whether a Library Commission supports a core function of the City. To provide input on time-specific topics like the location of a new library within the City, it may be more effective to utilize an ad hoc committee or work group. ○ Public Safety Commission: Consider reviewing the core function of the Public Safety Commission. While fire and police services are provided by the County (and therefore not directly managed by the City), this commission also advises on issues related to traffic and general public safety. ○ Teen and Sustainability Commissions: Consider reviewing the Teen Commission and Sustainability Commission to determine if this work may be better carried out through alternative structures and/or whether fewer annual meetings may be appropriate. • Consider reviewing the names of governance groups to introduce a consistent naming convention for commission versus committee. Given that the majority of the groups are advisory in nature, it may be beneficial to rename the commissions to “committees.” The Planning Commission would be the primary exception to this, as the group’s core function is not solely advisory. 16 Housing Data: Housing Committees 165 Enterprise Leadership Assessment | 25 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY 9. Observation The City has documented processes to select and appoint community members to governance groups. This process could be strengthened by adding relevant qualification criteria. Recommendation Review and establish the qualification criteria for each commission and committee member to determine if the City would benefit from adjustments. Best Practice When appointing community members to governance groups, it is best practice to document guidelines for position recruitment, evaluation, and selection.17,18 Documents typically address the following: • Appointment Process: The organization should establish a transparent and fair appointment process for committee or commission members. Define the roles of the governing body (such as the mayor, city council, or relevant authority) in appointing or approving members. Most processes utilize both a written submission and some type of interview process to assess qualifications and fit. • Terms and Staggering: The organization should document the terms of committee or commission members. There are advantages to limiting the length and number of terms for which members can serve. Limiting terms can help avoid overrepresentation of interest groups. However, term limits may also result in the exit of members who have the most experience. By staggering terms, the organization can maintain institutional memory while allowing for new members to join regularly. In addition, another common best practice is to require governance group members to wait a period of time (usually one or two term lengths) before applying for new governance roles. This helps to ensure broad representation on governance groups. • Composition and Diversity: The organization should document the size and composition of the committee or commission based on the requirements of the work to be done. It is best practice to strive for diversity in membership. Equity principles suggests that membership be representative of the community at large (in terms of sex, race, ethnicity, and geography) in order to promote inclusivity, robust decision-making, and community representation. • Expertise and Qualifications: Some municipalities require only that its governance group members reside in or own a business in the city and demonstrate an interest in the committee subject matter. However, some governance groups—like the Planning Commission—may benefit from specialized expertise or a minimum baseline knowledge within their membership. In particular, groups charged with oversight responsibilities or that deal in highly technical topics often require some degree of subject-matter familiarity from some or all members. This ensures that members can contribute effectively and make informed recommendations, in collaboration with the subject matter expertise that staff provide. 17 Maryland Municipal League: Citizen Boards, Commissions and Committees 18 Local Government Citizen Advisory Boards, MRSC 166 Enterprise Leadership Assessment | 26 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Current Conditions The processes to select and appoint members of commissions and committees is outlined via various City Council resolutions. For example, Resolution 16-137 establishes processes related to recruitment and appointments. In alignment with best practice, the City has also taken steps to expand diversity within the governance groups by adopting Resolution 03-203, which affirms the intention to embrace the City’s demographic diversity when making appointments. The Municipal Code outlines some considerations for selection criteria for some, but not all, groups. For example, the Housing Commission chapter notes criteria that the Council should prioritize when appointing members (like applicants who are familiar with the operation of affordable housing or who are renters). However, several groups do not have clear standards or criteria for minimum qualifications for positions within groups that would benefit from technical expertise. Notably, the Planning Commission does not have any documented criteria. Without minimum (or even desired) qualification requirements, it is difficult to ensure that applicants have subject matter familiarity related to the governing group on which they serve. The City does not currently require governance group members to wait a period of time before applying for new governance roles. As such, governance group members can serve in multiple consecutive positions across various groups. Recommendations • Review the qualification criteria for each commission and committee to determine if the City would benefit from adjustments: ○ Consider establishing qualification criteria for select groups to help ensure that the City’s advisory groups contain members with baseline subject matter familiarity to productively engage in their advisory capacity. ○ Consider establishing a waiting period for current governance group members looking to apply for new positions. The goal of this shift would be to encourage broader participation and representation within governance groups. ○ Consider adopting standard commission and committee member interview questions that are germane to their roles and responsibilities. • Appendix A contains a summary of the current selection criteria for each group as documented in the City’s Municipal Code. 167 Enterprise Leadership Assessment | 27 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY 10. Observation Commission and committee operations—including onboarding, meeting procedures, work plans, and reporting—are not always consistent or effective. Recommendation A. Continue efforts to expand and formalize onboarding and training expectations for both commissions and committees. B. Clarify the process and expectation for cancelling unnecessary meetings. C. Consider adopting the practice of requiring annual work plans for each commission and committee. Best Practice Onboarding and Training Onboarding and training for new commission or committee members are crucial for smooth integration into their roles and the effective functioning of the commission or committee. By implementing a robust onboarding and training program, commissions or committees can facilitate effective participation and engagement of new members. This leads to informed decision-making, collaboration, and overall success of the group’s work in serving the community. In most aspects, governance group orientations often follow a similar (if abbreviated) format to that of Council orientations (see the City Council Onboarding and Training section). However, committee and commission orientations often focus on additional areas: • Subject Matter Training: Governance group orientation typically includes some degree of subject matter training or resources to help new members familiarize themselves with the area of focus of the commission or committee. By providing background information, relevant research, and resources, new members can build their knowledge and expertise in their respective areas. • Roles and Responsibilities: Clarifying the roles and responsibilities of the governance group chair, members, and staff can be helpful to support smooth operations. In particular, the chair will play a large role in ensuring productive meetings by facilitating discussions and keeping the group focused. • Staff Support: Governance group orientations should clearly outline what type of support the group will receive from their staff liaison, as well as introduce other important staff contacts (like the City Clerk’s Office). Meeting Procedures Commission and committee meeting procedures should be established in code and/or other formal documents. In terms of meeting cadence, there are no established standards for meeting frequency. Rather the cadence should be based on the needs of the committee or commission’s function. If there is not active work to accomplish, the group should have a provision to cancel unnecessary meetings. 168 Enterprise Leadership Assessment | 28 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Annual Work Plans It is best practice for advisory groups to develop an annual work plan that outlines the group’s priorities, timelines, and any relevant deliverables.19 Regular review of progress and adjustment to the work plan may be required over the course of the year. This type of planning document can help ensure groups are focused on the highest priority work and reduce scope expansion. Given that advisory groups do not have assigned staff to complete operational work, it is important to note that the annual work plans can only refer to work that group members will produce themselves. In addition, work plans should be aligned with and support major City goals, priorities, and/or Work Program items. Reporting The reporting structure and expectations for how commissions or committees share information with City Council should be documented. Establishing clear lines of communication and reporting to the governing body ensures that recommendations are documented and considered in decision-making processes. Committees and commissions usually communicate with the governing body and the public by means of written reports, public hearings, and/or verbal communication. In addition, the new Council Procedures Manual requires that at least one commission member be present at Council meetings when the commission’s recommendations are being considered to help facilitate direct communication. Current Conditions Onboarding and Training The City has developed a general onboarding presentation for commissions. The focus of the onboarding presentation is the material covered in the Commission Handbook, including structure of government; commission purpose; attendance; public meetings (Brown Act); conflicts of interest; parliamentary procedures; ethics; City Work Program; and communications. However, there are opportunities to enhance the effectiveness of the onboarding process. • It is unclear whether this training is presented to committees. • As noted in the Commission and Committee Structure section, there have been ongoing challenges ensuring that all governance group members understand that their core function is advisory in nature and that they cannot direct staff on administrative matters or assign work tasks. • Interviewed staff noted that the current orientation is fairly short and does not go into depth on any issues. The training does not touch on specific responsibilities. For example, some staff noted that the role of the chair is often not specifically addressed, and note-taking processes vary by group. Meeting Procedures Meeting cadence varies widely by group, which is to be expected given their differing scopes. Staff report that groups which meet frequently (once or twice per month) have frequently resisted the idea of cancelling meetings when there are no active agenda items. This suggests that additional training 19 Local Government Citizen Advisory Boards, MRSC 169 Enterprise Leadership Assessment | 29 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY and guidance from staff on this issue may be beneficial to make better use of staff and governing group members’ time, and that meeting frequency could be evaluated. Work Plans The City does not require annual work plans for any of their governance groups. In the absence of defined priorities or clear direction from Council, some interviewees noted that governing groups will occasionally find new projects to take on that are outside the scope of the group’s intended role. Reporting The City hosts a monthly meeting where all commissions can report on progress and upcoming activities to the Mayor. Recommendations • Continue efforts to expand and formalize onboarding and training expectations for both commissions and committees. In particular, it may be helpful to expand the current orientation process and establish consistent processes to provide subject matter training for relevant groups. Providing opportunities for peer-to-peer learning across governance groups may also be helpful. • Provide additional support for groups that meet frequently (at least once per month) to clarify the process and expectation for cancelling unnecessary meetings. It may be beneficial to introduce a regular check-in between the chair and staff liaison when finalizing agendas to determine if there is a need for the subsequent meeting. • Consider adopting the practice of requiring annual work plans for each commission and committee, that aligns with City’s goals, priorities, and/or Work Program. The development of annual work plans would need to be supported by staff to ensure they are targeted, meaningful, and reasonable in scope. In many cities, staff liaisons develop draft work plans that are then reviewed, edited, and approved by the group they support. 11. Observation The staff time used to support governance groups represents a significant investment of City resources. Recommendation A. Review the practice of requesting department directors attend commission and committee meetings. B. Provide training for staff liaisons annually and when a new individual takes on the liaison role. Best Practice Staff support is a crucial element to ensure governance groups can operate smoothly, leverage expertise, and make informed decisions. Staff from across the organization may support different elements of the governance groups, including: 170 Enterprise Leadership Assessment | 30 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY • Administrative support for meetings (including agenda development, meeting logistics, and taking meeting minutes) • Compliance support • Legal advice • Subject matter expertise • Training and onboarding It is common practice to assign a specific staff liaison to provide the primary administrative support and subject matter expertise. Within this setting, it is critical to support liaisons with documentation and training on processes, responsibilities, and expectations. The most critical best practice is to ensure that roles and responsibilities are clearly defined for all parties. Both staff and governance group members should understand their specific duties, expectations, areas of expertise, and limitations. Current Conditions In alignment with best practice, the City has established staff liaison roles to support each commission and committee. In the instances where staff liaison roles are not already filled by a department director, some department directors have recently been asked to participate in these meetings in addition to the staff liaison. While the intention behind this shift was to provide additional support to staff, some interviewees noted that this has created challenges to the staff liaison’s authority and sense of responsibility. When department directors are present, it can undermine the staff liaison’s position and can create confusion about roles. Supporting governance groups requires significant investment of staff time and City resources. A 2023 review performed by the City estimated that required annual staff liaison time to provide this support totaled more than 4,600 hours.20 In addition to staff liaison hours, the report notes that the “City Clerk’s Office spends significant time (over 1,000 hours) per year on administrative duties for commissions such as orientation, training, and assisting with agendas. The City Attorney’s Office also supports certain commission and committee items and staffs the Planning Commission.” Some interviewed staff reported significant challenges to accomplishing the workload associated with supporting these groups. In particular, the City Clerk’s Office has been struggling with understaffing, which has had a negative impact of their ability to both support governance groups and accomplish other work priorities. January 17 Staff Report – Staff Liaison Hour Summary 21 Commission Annual Staff Liaison Hours Committee Annual Staff Liaison Hours Bicycle Pedestrian 240 Administrative Hearing Committee 30 Arts and Culture 200 Audit Committee 230 20 City Council Staff Report January 17: Study Session to consider modifying Municipal Code Title 2 regarding compositions and responsibilities of existing Commissions and Committees 21 City Council Staff Report January 17: Study Session to consider modifying Municipal Code Title 2 regarding compositions and responsibilities of existing Commissions and Committees 171 Enterprise Leadership Assessment | 31 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Commission Annual Staff Liaison Hours Committee Annual Staff Liaison Hours Housing 220 Disaster Council 30 Library 350 Economic Development 60 Parks and Recreation 750 Environmental Review 80 Planning 1100 Design Review 40 Public Safety 200 Legislative Review 400 Sustainability 220 Total 870 TICC 120 Teen 300 Total 3,740 In alignment with best practice, the City has documented the liaison duties and expectations. However, the City does not provide annual trainings for new and returning staff liaisons. Recommendations • Review the practice of requesting department directors attend commission and committee meetings. If it is determined that this practice does make sense within the City’s operating environment, it will be critical to distinguish between the role of the staff liaison and the department director. If both department directors and staff liaisons are to attend the meeting, clear expectations for roles and responsibilities should be delineated and communicated. Department directors should reinforce the expertise and role of the staff liaison, while supporting staff in managing the effective function of the commission. • Provide training for staff liaisons at least annually, and when a new individual takes on the liaison role. Ideally, this training would include key meeting protocols, roles and responsibilities, City policies, and tactics to help the groups stay focused on priorities, reinforce appropriate roles and responsibilities, and address conflicts. • Continue efforts to right-size the number of committees and commissions to more effectively utilize staff time. See Commission and Committee Structure section for more details. 172 Enterprise Leadership Assessment | 32 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY 12. Observation City staff continue to experience a high degree of organizational change and uncertainty. Within this context, it is critical for the City’s management team to provide active communication and change management to increase support of staff. Recommendation Identify and implement expanded communication and change management practices to improve workplace culture. Best Practice Effective communication and change management with city staff are crucial for successful organizational operations and implementation of new initiatives:22, 23, 24 The following are common best practices to help staff navigate significant organizational change or upheaval: • Transparent Communication: Foster a culture of transparent communication by providing regular updates, sharing information, and actively engaging with staff members. Be open about organizational goals, changes, and challenges, and encourage two-way communication where staff can ask questions, share feedback, and express concerns. • Clear and Timely Messaging: Ensure that messages about organizational changes, new initiatives, or important updates are clear, concise, and timely. Use multiple communication channels, such as staff meetings, emails, intranet, or newsletters, to reach staff members effectively. Tailor messages to different departments or levels of the organization, as needed. • Change Management Strategy: For any major organizational change, develop a change management strategy to guide the related communications. This strategy should include: ○ A clear vision/message that communicates why the change is taking place. Without a clear understanding of the need for change, it is difficult to gain buy-in. ○ A communication plan that outlines the specific communication milestones, methods, and responsible parties. The communication plan should clearly identify what is changing, how it is changing, who will be affected, how City customers will be affected, and when the change will occur. ○ Mechanisms for staff involvement and feedback. Wherever possible, employees should be engaged prior to announcing new changes to define the problem, provide input on potential concerns, and provide suggestions to improve implementation. ○ Training programs, if relevant, to build new staff knowledge and skills. • Staff Involvement and Empowerment: Involve staff members in the change process by soliciting their input, ideas, and concerns. Encourage their active participation in decision-making, problem- solving, and identifying areas for improvement. Empower staff by providing opportunities for training, skill development, and growth aligned with the changes being implemented. • Feedback and Recognition: Create mechanisms for staff to provide feedback on the change process and the impact it has on their work. Actively listen to their concerns, address issues 22 Council-Staff Communication Guidelines, ICMA 23 Preparing for a Culture of Change and Innovation, ICMA 24 Mistakes to Avoid When Communicating Change, ICMA 173 Enterprise Leadership Assessment | 33 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY promptly, and acknowledge their contributions and efforts. Recognize and reward staff members who adapt well to change and contribute positively to organizational goals. Current Conditions The City has undergone and continues to experience a high degree of organizational change and uncertainty. In particular, the high turnover in key leadership positions within the City and the ongoing turmoil in relation to Council/staff relationships has reportedly resulted in low employee morale and a strong (and understandable) resistance to additional change. Some interviewed staff reported the need for strong levels of communication for leadership and a desire for more engagement and inclusion in decision-making processes—especially on topics that greatly impact staff such as flexible work arrangements. Within this environment, it becomes highly important that the City’s management team is engaged in active communication, change management, and support of staff to help the organization weather change and improve the workplace culture. Recommendations • The City’s management team should collaborate to identify and implement expanded communication and change management practices as a means of supporting staff and helping to improve workplace culture. Options may include: ○ Communication Alignment: The City’s leadership team may benefit from establishing specific processes to explicitly identify what information needs to be shared with staff and who is responsible for sharing it. This can be as simple as a checklist that is used at the end of each management team meeting to discuss: − What information (if any) needs to be communicated out to staff? − Who is responsible for communicating it (individual vs. all department directors)? − How will the message be shared (email, verbal, etc.)? − When will the information go out? ○ Engagement Surveys: Regular (quarterly or semi-annual) employee engagement surveys can provide a means to track baseline and trends. By reviewing and acting upon feedback, the leadership team can continue to build trust with staff. ○ Change Management Training: The City’s management team may benefit from training on communication and change management best practices. By participating in such trainings as a team, City management can then develop a shared vocabulary and begin to identify opportunities to make positive changes to current communication practices. 174 Enterprise Leadership Assessment | 34 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY APPENDIX A: COMMISSION AND COMMITTEE SELECTION CRITERIA The following table contains a summary of the current selection criteria for each governance group as documented in the City’s Municipal Code. Governance Group Title Selection Criteria Administrative Hearing Committee • N/A Arts and Culture Commission • Members cannot be an official or employee of the City • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission • Three members must be City residents • Membership will be drawn to represent the arts, citizens and business community on an approximately equal basis Audit Committee • A minimum of two and a maximum of three at large members cannot be officials or employees of the City • A minimum of two and a maximum of three at large members cannot cohabitate or be related to a member of the Committee, the City Manager, or the staff persons assigned to the Committee • Members must be a City resident, apart from the at-large member • In selecting an at-large member, the City Council shall give priority to individuals who have substantial accounting, audit, or investment experience, preferably in connection with a governmental agency Bicycle Pedestrian Commission • Members cannot be an official or employee of the City • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission • Members must be City residents Disaster Council • N/A Housing Commission • The commission will include four community members and one representative from a Cupertino business • Members cannot be an official or employee of the City 175 Enterprise Leadership Assessment | 35 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Governance Group Title Selection Criteria • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission • Members must be City residents, apart from the representative of a business • The business representative must represent a business that is located in the City • In selection of community members, the City Council may give priority to: ○ Applicants who represent the Community Development Block Grant (CDBG) target areas as described in the City's Consolidated Plan; ○ Applicants who are familiar with the operation of affordable housing; ○ Applicants who represent non-profit community organizations; and ○ Applicants who are knowledgeable about the housing needs of groups targeted for affordable housing development which include, but are not limited to, the following: − Seniors − Single parent families − Homeless persons − Families of low income − Disabled persons − Renters − First time homebuyers Library Commission • Members cannot be an official or employee of the City • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission Parks and Recreation Commission • Members cannot be an official or employee of the City • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission • Members must be City residents Planning Commission • Members cannot be an official or employee of the City • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission 176 Enterprise Leadership Assessment | 36 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Governance Group Title Selection Criteria • Members must be City residents • Members must be qualified electors in the City Public Safety Commission • Members cannot be an official or employee of the City • Members cannot be part of the Sheriff’s Department of the County, either regular or reserve, or members of the Central Fire Protection District • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission • Members must be City residents Sister City Committee • N/A Sustainability Commission • Members cannot be an official or employee of the City • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission • The Commission must include: ○ One representative from a Cupertino-based business, ○ One representative from a Cupertino-based primary, secondary, or higher educational institution, and ○ Three community members. • Members must be City residents, apart from the business and educational institution representatives • Business and educational institution representatives must represent organizations that are located in the City • In selection of community members, the City Council may give priority to: ○ Applicants who represent the target sectors and partners as described in the Cupertino Climate Action Plan (hereinafter referred to in this Chapter as "CAP") ○ Applicants who are familiar with climate change mitigation and adaptation strategies, greenhouse gas emissions inventories, resource and utility conservation, sustainability, and behavior change ○ Applicants who represent non-profit community organizations and environmental interest groups Technology, Information, and Communications Commission • Members cannot be an official or employee of the City • Members cannot cohabitate or be related to a member of the Commission, the City Manager, or the staff persons assigned to the Commission 177 Enterprise Leadership Assessment | 37 FOR INTERNAL USE OF CITY OF CUPERTINO ONLY Governance Group Title Selection Criteria • Members must be qualified electors in the City Teen Commission • Members cannot be an official or employee of the City • Members cannot be related to any official or employee of the City • Members must be City residents • Members must include at least one person from each public middle school and public high school in Cupertino, if possible • Members may attend schools outside of the City limits, or be schooled at home • Members must be in the 8th through 11th grade at time of appointment • Members should reflect the broadest possible representation of Cupertino youth 178 179 CITY OF CUPERTINO Agenda Item 23-12486 Agenda Date: 7/24/2023 Agenda #: 7. Subject: ACTION ITEM Consider the FY 2023-24 Internal Audit Program Receive the FY 2023-24 Internal Audit Program and forward to City Council Presenter: Moss Adams 5:20(15) CITY OF CUPERTINO Printed on 7/21/2023Page 1 of 1 powered by Legistar™180 City of Cupertino FY 23-24 Internal Audit Program Audit Committee Meeting July 2023 181 Overview 1.Internal Audit Overview 2.Program Components 3.Program Review 4.Potential Internal Audit Projects 5.Recommended Internal Audit Plan 2182 Cupertino Municipal Code GFOA Best Practices •To review the annual audit report and management letter •To recommend appointment of internal/external auditors •To review the treasurer’s report •To recommend a budget format •To review City investment policies and internal controls of such policies •To review internal audit reports •To review quarterly Fraud, Waste, and Abuse program reports •Independent review and oversight of the City’s financial reporting process, internal controls, and audit functions •Ensure management properly develops and adheres to a system of internal controls, procedures are in place to assess management practices, and independent auditors objectively assess financial reporting practices •Understand and monitor City risks, mitigation strategies, and corrective actions •Understand and oversee the FWA program •Shape the internal audit program by directing areas of focus and approving work plans Audit Committee Powers & Functions Source: City of Cupertino Municipal Code 2.88.100 183 •Align audit committee meeting agendas and meetings with priority areas •Distribute materials in advance to enable review •Highlight issues and critical discussion points •Encourage open dialogue and candid discussion to promote improvements Effective Audit Committee Practices Source: GFOA 184 •The City retained Moss Adams to serve as the designated Internal Auditor and conduct projects focusing on: •Risks •Internal controls •Efficiency and effectiveness •Best practices •Compliance •Work is being completed under appropriate industry standards (IIA, GAGAS, AICPA) Internal Audit Overview 5 185 •Different perspective than financial audit •Objective and independent are not mutually exclusive of collaborative and constructive •Prioritize opportunities for reducing risks, strengthening controls, and enhancing performance •Goes beyond the finance department •Government code requirement to evaluate the need •Best practices •Alignment with strategic goals Why Internal Audit? 186 Role of Internal Audit 7 Source: IIA 187 Internal Audit Program Components Tracking & ReportingCOpportunitiesBProgram InputsA •Enterprise Assessments •Employees and Residents •Performance Metrics •FWA Hotline •Risks •Controls •Compliance •Performance •Findings & Recommendations •Corrective Actions •Implementation •Validation 188 Enterprise Assessments Ci t y F u n c t i o n s Enterprise Risk Assessment Enterprise Internal Controls Review Asset Management and Capital Program Payroll Operations/Service Delivery Monthly Account Reconciliation and Closing Risk Management and Internal Controls Budgeting Governance, Management, and Organization Cash Receipts and Cash Handling Funding and Economics Revenues and Billings Human Resources Accounts Receivables and Write-offs Technology Grants Management and Compliance Safety and Security Information Technology Access Accounting, Financial Reporting, and Procurement Accounts Payable Fraud, Waste, and Abuse Overall Control Environment 189 •Confidentiality protection per CA state law and City policy •Program implementation support •Training at all levels •Follow up and follow through •Protection from retaliation •Quarterly reporting FWA Program & Ethics Hotline 10 190 •Objective •Independent •Collaborative •Constructive •Comprehensive Sustaining Philosophy & Approach 191 12 Internal Audit Program Review Focus Accomplishments •Enterprise Risk Assessments 2021 •Internal Controls Projects Completed 2 •Performance/Efficiency Projects Completed 5 •Policies Reviewed 17 •Recommendations Delivered 52 •Ethics Hotline 6 reports •Recommendations Validated To Come 192 13 Internal Audit Departments Covered Department Projects Administrative Services Procurement (22) Finance P&Ps (22) Budget Process Review (23) City Clerk City Manager’s Office FWA Program (22) Community Development Communications Innovation & Technology Parks & Recreation Public Works Capital Program (22) Library Construction Audit (23) Enterprise Projects: Risk Assessment (21), Enterprise Leadership (23) 193 1.Enterprise Risk Assessment ($50,000) 2.Citywide Policy Review & Gap Analysis ($40,000) 3.Ongoing Internal Audit Services ($10,000) 4.Grants Management Performance Audit ($35,000) 5.IT General Controls Review ($30,000) 6.Succession Planning Study ($35,000) 7.Contract/Vendor Management Performance Audit ($30,000) 4. Potential Internal Audit Projects Highlighted items are recommended 7 194 Recommended Plan & Timing 1.Enterprise Risk Assessment: Identify, analyze, and measure risks by the level of inherent vulnerability, the level of preparedness to mitigate them, and the impact such negative events could have on the City should they occur. This assessment serves as management’s and the internal auditor’s basis for determining possible actions for managing and mitigating uncertainty, both on an inherent and a residual basis, and informs the three-year internal audit work program. (20 weeks) 2.Citywide Policy Review & Gap Analysis: Inventory City policies in each department, identify gaps, and review policies for opportunities for update and alignment with best practice. Provide a prioritized implementation plan for policy update. (35 weeks) 3.Ongoing Internal Audit Services: Attend Audit Committee and Council meetings; prepare status reports, manage internal audit program, manage FWA hotline, and prepare annual internal audit plan. (52 weeks) Project 7-9/23 10-12/23 1-3/24 4-6/24 Enterprise Risk Assessment Citywide Policy Inventory and Gap Analysis Ongoing Internal Audit Services 195 •Government Finance Officer’s Association (GFOA) •GFOA Best Practices Guide on Audit Committees •GFOA Best Practices on Whistleblower Hotlines •Institute of Internal Auditors •IIA Publication “The Audit Committee: Internal Audit Oversight” •U.S. Government Accountability Office (GAO) •American Institute of Certified Public Accountants •Association of Certified Fraud Examiners 16 Resources 196 The material appearing in this presentation is for informational purposes only and is not legal or accounting advice. Communication of this information is not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accountant-client relationship. Although these materials may have been prepared by professionals, they should not be used as a substitute for professional services. If legal, accounting, or other professional advice is required, the services of a professional should be sought. 17 10 197 CITY OF CUPERTINO Agenda Item 23-12485 Agenda Date: 7/24/2023 Agenda #: 8. Subject:INFORMATIONAL ITEM Consider the Audit Committee 2023 Schedule and Work Plan Receive Audit Committee 2023 Schedule and Work Plan and provide direction to staff Presenter: Jonathan Orozco, Finance Manager 5:35(10) CITY OF CUPERTINO Printed on 7/21/2023Page 1 of 1 powered by Legistar™198 January 23, 2023 February 27, 2023 March 27, 2023 April 24, 2023 May 31, 2023 (Special) July 24, 2023 October 23, 2023 Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes External Auditor Selection Approve Prior Meeting Minutes Approve Prior Meeting Minutes Monthly Treasurerʹs Report for December 2022 Monthly Treasurerʹs Report for January 2022 Monthly Treasurerʹs Report for February 2023 Quarterly Treasurerʹs Investment Report Internal Auditor Contract Extension OPEB & Pension Trust Performance Report for Quarter Ending June 30, 2023 OPEB & Pension Trust Performance Report for Quarter Ending September 30, 2023 Monthly Treasurerʹs Investment Report for December 2022 Monthly Treasurerʹs Investment Report for January 2022 Monthly Treasurerʹs Investment Report for February 2023 OPEB & Pension Trust Performance Report for Quarter Ending March 31, 2023 Quarterly Treasurerʹs Investment Report Quarterly Treasurerʹs Investment Report OPEB & Pension Trust Performance Report for Quarter Ending December 31, 2022 Internal Audit and Fraud, Waste, and Abuse Program Update Budget Format Review Internal Audit and Fraud, Waste, and Abuse Program Update Internal Audit and Fraud, Waste, and Abuse Program Update Internal Audit and Fraud, Waste, and Abuse Program Update Update on Status of Draft ACFR and AUP Reports Review of FY 2021‐22 ACFR and Supplemental Reports Annual Review of City Investment Policy Enterprise Leadership Assessment Report Annual Review of OPEB and Pension Trust Investment Policies Internal Audit Program Budget Format Review Annual Comprehensive Financial Report and AUP Update Source: Cupertino, CA Municipal Code, Chapter 2.88.100: Audit Committee The powers and functions of the Audit Committee shall be as follows: A: To review the annual audit report and management letter; B: To recommend appointment of auditors; C. To review the quarterly Treasurer’s Investment report; D. To recommend a budget format; E. To review City investment policies and internal controls of such policies. F. To recommend appointment of internal auditors; G. To review internal audit reports. H. To review quarterly Fraud, Waste, and Abuse Program reports. (Ord. 22-2243 § 1, 2023; Ord. 20-2208, § 1, 2020; Ord. 1679, § 1 (part), 1995) CITY OF CUPERTINO ‐ AUDIT COMMITTEE 2023 SCHEDULE AND WORK PLAN Summary of Duties – Powers – Responsibilities of Cupertino Audit Committee 19 9 January 23, 2023 February 27, 2023 March 27, 2023 April 24, 2023 May 31, 2023 (Special)July 24, 2023 October 23, 2023 Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes Approve Prior Meeting Minutes External Auditor Selection Approve Prior Meeting Minutes Approve Prior Meeting Minutes Monthly Treasurerʹs Report for December 2022 Monthly Treasurerʹs Report for January 2022 Monthly Treasurerʹs Report for February 2023 Quarterly Treasurerʹs Investment Report Internal Auditor Contract Extension OPEB & Pension Trust Performance Report for Quarter Ending June 30, 2023 OPEB & Pension Trust Performance Report for Quarter Ending September 30, 2023 Monthly Treasurerʹs Investment Report for December 2022 Monthly Treasurerʹs Investment Report for January 2022 Monthly Treasurerʹs Investment Report for February 2023 OPEB & Pension Trust Performance Report for Quarter Ending March 31, 2023 Quarterly Treasurerʹs Investment Report Quarterly Treasurerʹs Investment Report OPEB & Pension Trust Performance Report for Quarter Ending December 31, 2022 Internal Audit and Fraud, Waste, and Abuse Program Update Budget Format Review Internal Audit and Fraud, Waste, and Abuse Program Update Internal Audit and Fraud, Waste, and Abuse Program Update Internal Audit and Fraud, Waste, and Abuse Program Update Update on Status of Draft ACFR and AUP Reports Review of FY 2021‐22 ACFR and Supplemental Reports Annual Review of City Investment Policy Enterprise Leadership Assessment Report Annual Review of OPEB and Pension Trust Investment Policies Internal Audit Program Budget Format Review Interim Audit and AUP Engagements Annual Comprehensive Financial Report and AUP Update Follow‐up on Previous Fiscal Year Management Letter Items and Management Responses Source: Cupertino, CA Municipal Code, Chapter 2.88.100: Audit Committee The powers and functions of the Audit Committee shall be as follows: A: To review the annual audit report and management letter; B: To recommend appointment of auditors; C. To review the quarterly Treasurer’s Investment report; D. To recommend a budget format; E. To review City investment policies and internal controls of such policies. F. To recommend appointment of internal auditors; G. To review internal audit reports. H. To review quarterly Fraud, Waste, and Abuse Program reports. (Ord. 22-2243 § 1, 2023; Ord. 20-2208, § 1, 2020; Ord. 1679, § 1 (part), 1995) CITY OF CUPERTINO ‐ AUDIT COMMITTEE 2023 SCHEDULE AND WORK PLAN Summary of Duties – Powers – Responsibilities of Cupertino Audit Committee 20 0