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HomeMy WebLinkAboutBUDGET AND FINANCE ACTION SUMMARY 03-18-13Central Contra Costa Sanitary District �7I1411i mii � i #�%FTi I_'�:ll.�.Z�'x�'Y•i SPECIAL MEETING OF THE Bo4RDOFDIRECTORS: CENTRAL CONTRA COSTA s � ��E�Lnt President SANITARY DISTRICT DAb7DR.TfILLIAMS BUDGET AND FINANCE COMMITTEE P,esdentP,oTem P.- 1iiLH. C1iSEF 111CHAEL R.11CGILL ACTION SUMMARY T.4D J. PILECKI MOAT: (925) 228 -9500 Chair McGill EI : (925) 676 -7211 17 wxentralsan. org Member Nejedly Monday, March 18, 2013 3:00 p.m. Middle Conference Room 1470 Enea Circle, Second Floor Concord, California PRESENT: Chair Mike McGill, Member Jim Nejedly, Provisional General Manager Curt Swanson, Finance Manager Thea Vassallo, Environmental Services Division Manager Danea Gemmell, Senior Engineer Thomas Brightbill 1. Call Meeting to Order Chair McGill called the meeting to order at 3:00 p.m. 2. Public Comments None. 3. Old Business a. Review staff's response to the Committee's request for information regarding the following expenditure at a previous meeting: Check# Date Vendor Amount 35136 2/21/13 DD Management $28,675.46 COMMITTEE ACTION: Received staff's response. 4. Risk Management a. Review Loss Control Report and discuss outstanding claims COMMITTEE ACTION: Reviewed the report. Budget and Finance Committee March 18, 2013 Page 2 5. Review the 2012 Annual Report of the Deferred Compensation Plan Advisory Committee (Item 3.c. in Board Binder) Finance Manager Thea Vassallo summarized the investment changes during the calendar year 2012 in comparison to the prior year balances and reviewed the high and low returns of each fund. COMMITTEE ACTION: Reviewed and recommended Board acceptance. 6. Review Position Paper approving use of revised administrative overhead percentage of 196 percent (three -year average rate) for billing outside agencies and for calculating the annual Environmental and Development - Related Rates and Charges (Item 3.d. in Board Binder) COMMITTEE ACTION: Reviewed and recommended Board approval. 7. Review Position Paper setting public hearing on April 18, 2013 at 2:00 p.m. to consider adoption of an uncodified ordinance to amend the Schedule of Environmental and Development - Related Rates and Charges (Item 3.e. in Board Binder) COMMITTEE ACTION: Reviewed and recommended the Board set the hearing. 8. Review Position Paper setting public hearing on April 18, 2013 at 2:00 p.m. to consider adoption of an uncodified ordinance to amend the Schedule of Capacity Fees (Item 3.f. in Board Binder) COMMITTEE ACTION: Reviewed and recommended the Board set the hearing. 9. Expenditures a. Review Expenditures (Item 3.b. in Board Binder) COMMITTEE ACTION: Reviewed and recommended Board approval. b. Review Legal Expenditure Summary COMMITTEE ACTION: Reviewed Legal Expenditure Summary. *10. Reports and Announcements Ms. Vassallo distributed the report compiled by investment counsel, Schultz Collins Lawson and Chambers, regarding the District's Budget and Finance Committee March 18, 2013 Page 3 Governmental Accounting Standards Board (GASB) 45 Other Post - Employment Benefits (OPEB) Public Agency Retirement Services (PARS) Trust (attached). Ms. Vassallo distributed a report from the Hawkins Advisory on the possible effects of the Federal budget sequestration on tax credit bond payments (attached). Ms. Vassallo announced that CCCERA will be providing an educational session for employers at the CCCERA March 27, 2013 Board meeting (attached). Ms. Vassallo announced that the next Deferred Compensation meeting with ICMA consolidation is scheduled for April 5, 2013. Ms. Vassallo announced that District Counsel Kent Alm provided the last of the open items for the CalPers questionnaire and that the questionnaire will be going out this week. 11. Suggestions for future agenda items The Committee suggested reviewing and discussing the report compiled by investment counsel, Schultz Collins Lawson and Chambers, regarding the District's Governmental Accounting Standards Board (GASB) 45 Other Post - Employment Benefits (OPEB) Public Agency Retirement Services (PARS) Trust. The Committee also suggested discussing reclassification of Cogen expenses and funding of FY 13 -14 Self- Insurance transfer from Operations and Maintenance. Finally, the Committee suggested discussing Board involvement in choosing new auditors. 12. Adjournment — at 3:47 p.m. * Attachment i� SCH_ULTZ COLLINS LAWSON CHAMBERS I N V E S T M E N T C O U N S E L TABLE OF CONTENTS EXECUTIVE SUMMARY 1 INTRODUCTION 1 DATA SOURCES 1 FUNDS 2 Commentary On Fund Changes, Additions, And Removals 6 Summary of Excess Returns 7 TRUST CHANGE 9 HIGHMARK POTENTIAL SALE 10 IPS COMMENTARY 1 FEES 10 EVALUATION OF CURRENT INVESTMENTS 11 ACTIVELY MANAGED MUTUAL FUNDS 11 Risk 11 Relative Performance 11 Expense Ratios 11 Consistency of Fund Management 11 BENCHMARK STYLE ANALYSIS 15 BENCHMARK STYLE ANALYSIS 15 Overall Effective Asset Mix 15 Rolling Style Benchmark 15 Overall Style /Seleciton 15 Fund /Benchmark Historical Correspondence 16 Monthly Excess Returns 16 Cumulative Excess Returns 16 Benchmarks Used 16 HARBOR CAPITAL APPRECIATION INSTL 17 T. ROWE PRICE GROWTH STOCK 18 COLUMBIA CONTRARIAN CORE Z 19 SENTINEL COMMON STOCK I 20 T. ROWE PRICE EQUITY INCOME 21 LOOMIS SAYLES VALUE Y 22 HIGHMARK GENEVA MID CAP GROWTH FIDUCIARY 23 TIAA -CREF MID -CAP VALUE INSTL 24 T. ROWE PRICE NEW HORIZONS 25 COLUMBIA SMALL CAP VALUE FUND II Z 26 NUVEEN REAL ESTATE SECS 1 27 MFS INTERNATIONAL GROWTH 1 28 HIGHMARK INTERNATIONAL OPPORTUNITIES FID 29 DODGE & COX INTERNATIONAL STOCK 30 SCHRODER EMERGING MARKET EQUITY INV 31 VANGUARD SHORT -TERM INVESTMENT -GRADE ADM 32 HIGHMARK BOND FID 33 PIMCO TOTAL RETURN INSTL 34 PIMCO HIGH YIELD INSTL 35 OVERALL STYLE DISTRIBUTION OF DOMESTIC EQUITY FUNDS 36 Overall Distribution 36 Rolling Period Historical Distribution 36 OVERALL STYLE DISTRIBUTION OF FOREIGN EQUITY FUNDS 37 Overall Distribution 37 Rolling Period Historical Distribution 37 OVERALL STYLE DISTRIBUTION OF FIXED INCOME FUNDS 38 Overall Distribution 38 Rolling Period Historical Distribution 38 FEE ANALYSIS 39 CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45/OTHER POST - EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 EXECUTIVE SUMMARY INTRODUCTION Central Contra Costa Sanitary District (Central San) maintains an Other Post - Employment Benefits (OPEB) trust (the Trust) that meets the accounting requirements of GASB 45. The Trust is managed by HighMark Capital Management. Central San has engaged Schultz Collins Lawson Chambers, Inc. (SCLC), a registered investment advisor, to conduct an investment review of the Trust, and a review of HighMark Capital Management's advisory services and fee structure. The one -time SCLC investment advisory services presented in this report include the following: • Review the OPEB Trust's Investment Guidelines Document (IGD), which we understand serves as the Trust's Investment Policy Statement (IPS). • Review the Trust's asset allocation, both as established by the IGD, and as actually implemented by HighMark Capital Management. • Review each fund used by HighMark Capital Management to deploy the portfolio. The review will include the following steps: 1) Evaluate the performance of the fund relative to relevant market indices and peer group averages. 2) Perform an attribution analysis on the fund to characterize the long -term style orientation of the fund and to construct a hypothetical passive portfolio that replicates, as closely as possible, the fund's historical performance results. The analysis will: • Determine the effective asset allocation for the fund; • Determine the extent to which the manager of the fund adds or subtracts value, relative to a passive portfolio; and • Permit SCLC to establish appropriate portfolio benchmarks and evaluate overall investment performance of each portfolio. 3) Evaluate the cost structure of the fund relative to alternate approaches, including reviewing both the explicit and implicit revenue sharing used to subsidize the cost of other plan operations. • Review any fund or benchmark changes made by HighMark Capital Management, and determine whether the change added value. • Review the HighMark Capital Management service agreement for reasonableness, scope of services, and level of fees. DATA SOURCES This report is prepared using public sources for fund and index performance data, such as Morningstar, Inc. and Ibbotson, Inc. Although Schultz Collins Lawson Chambers, Inc. (SCLC) believes these data sources to be reliable, SCLC has not independently verified the accuracy of any data reported. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S I N C d P N T R A I . C O N T A A C O S T A S A N I T A R Y D I S T R I C T G A S B 45/OTHER P O S T — E M P L O Y M E N T B E N E F I T S T R U S T R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 REVIEW AND COMMENTS ON INVESTMENT GUIDELINES DOCUMENT An investment policy provides guidelines and procedures that direct long -term management of investor assets. A written Investment Policy Statement (IPS) establishes a systematic approach to documenting investment objectives, relevant constraints, and governance structures. The purpose of an IPS is to assist the investor and portfolio manager in effectively selecting, monitoring, and evaluating investments to fulfill the objectives set forth in the IPS. An IPS is a highly customizable document that should be specifically tailored to investor objectives, restrictions, preferences, and tolerances for risk. The Chartered Financial Analysts Institute (CFA), the leading global association of investment professionals, provides IPS guidelines relating to general institutional investors. HighMark Capital Management's has developed an Investment Guidelines Document (IGD) for the OPEB Trust, which we understand has been adopted by Central San. The IGD serves as the Trust's IPS. The following table presents the CFA Institute guidelines for an IPS, as well as SCLC comments about whether the Trust IGD conforms to the CFA Institute guidelines. Significant variances from the guidelines are highlighted. CFA IPS Guidelines for general Institutional Investors Does Investment Guidelines Document (IGD) Conform to CFA Guidelines Comments And Responsibilities 1. Scope and Purpose 1a. Define the investor. Define who the investor is, be it a natural person or No Not explicit in IGD legal /corporate entity. Specify which of the investor's assets are to be No Not explicit in IGD governed by the IPS. 1b. Define the structure. Set forth key responsibilities and actors. Yes IGD Identify an organizational structure for investing. Yes IGD Identify a risk management structure applicable to No N/A investing. Assign responsibility for monitoring and reporting. Yes Portfolio manager Document acceptance of the IPS. Yes Acceptance of IGD 2. Governance 2a. Specify who is responsible for determining Yes Central San investment policy, executing investment policy, and monitoring the results of implementation of the policy. 2b. Describe the process for reviewing and updating Yes Central San the IPS. 2c. Describe the responsibility for engaging and No N/A discharging external advisers. 2d. Describe the roles and responsibilities of boards No N/A and staff. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5 , I N CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 4S/OTHER POST - EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 . 2 0 1 2 Does Investment Guidelines Comments CFA IPS Guidelines Document (IGD) Conform to And for general Institutional Investors CFA Guidelines Responsibilities 2e. Assign responsibility for determination of asset Yes Portfolio manager allocation, including Inputs used and criteria for development of input assumptions. 2f. Assign responsibility for risk management, Yes Portfolio manager monitoring, and reporting. 3. Investment, Return, and Risk Objectives 3a. Describe the overall investment objective. Yes Maximize total return affect investment decision making. Central San) with respect to risk 3b. State the return and risk requirements. Yes Prohibited State the overall investment performance objective. Yes Target return is 6% Identify performance objectives for each asset class No N/A eligible for investment. funds) Define a policy portfolio to serve as a basis for No N/A performance and risk assessments. portfolio invested in mutual 3c. Define the risk tolerance of the investor. Yes Moderate objective 3d. Describe relevant constraints. Yes Define an evaluation horizon for achievement of Yes "Long- term ", without performance objectives. Yes stating years Identify any requirements for maintaining liquidity. No (not generally applicable to N/A Identify constraints on participation in securities portfolio invested in mutual N/A lending programs. funds) Identify to what extent, if any, tax considerations will No (not generally applicable to N/A affect investment decision making. Central San) Specify any policies related to leverage. Yes Prohibited Identify any restrictions on investment in foreign No (not generally applicable to N/A securities or investments. portfolio invested in mutual funds) If relevant, specify a policy on foreign currency No(not generally applicable to N/A management. portfolio invested in mutual funds) 3e. Describe other considerations relevant to investment strategy. State the investment philosophy. Yes IGD Identify a proxy- voting policy. No (often omitted) N/A Identify constraints on participation in securities No (not generally applicable to N/A lending programs. portfolio invested in mutual funds) Identify special factors to be used in including or No (often omitted) N/A excluding potential investments from the portfolio. S C H U L T 2 C 0 L L I N S L A W S 0 N C H A M 8 E RS I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 4S/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 CFA IPS Guidelines for general Institutional Investors 4a. Establish performance measurement and reporting accountabilities. Does Investment Guidelines Document (IGD) Conform to CFA Guidelines 4. Risk Management 4b. Specify appropriate metrics for risk measurement and evaluation. 4c. Define a process for rebalancing portfolios to target allocations. Yes No Yes Comments And Responsibilities Portfolio manager N/A IGD For clarity and accountability, the CFA Institute guidelines recommend clearly stating who the investor is, be it a person, corporation, or legal entity, and clearly stating which investor assets are to be governed by the IPS. The Trust IGD does not explicitly spell out who the investor is, nor does it identify specifically the assets that are governed by the IGD. One of the primary purposes of an investment policy is to address issues relating to risk and risk management. Although the IGD establishes that the investor has "Moderate Objective" for risk tolerance, the IGD does not define nor list risks relevant to the investor. The IGD also fails to identify a structure for risk management. An IPS should also determine who is responsible for engaging and discharging external investment managers, consultants, and other vendors who are associated with the investment assets. The IGD does not explicitly state whose responsibility it is to hire and fire external advisors, nor does it state the roles and responsibilities of the Trust's board and staff. While it's understood that as a discretionary portfolio manager, HighMark Capital Management is responsible for selecting and replacing funds, the IGD should state this explicitly, and should address responsibilities for hiring and firing other external advisors. The CFA Institute guidelines recommend defining performance and risk measures for assessing the actual outcome of investment results to objective of each investment. Specifically, an IPS should establish performance objectives for investible asset classes, define metrics used risk assessment, and determine a policy portfolio that is a basis for performance and risk evaluation. The IGD does not do any of these. S C H U L T Z C O L L I N S L A W S O N C H A M B E R 5 . I N C 4 CENTRA!. CONTPA COSTA SANITARY 0ISTR ICT GAS 45/OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 REVIEW AND COMMENTS ON TRUST ASSET ALLOCATION The following table tracks the Trust's asset allocation since December 31, 2011. The shaded rows are the asset classes defined in the Investment Guidelines Document (IGD). Below each of the asset classes defined in the IGD is the permissible asset allocation range, in parenthesis. The portfolio manager has maintained adherence to the bounds set in the IGD for each asset class. The asset allocation appears reasonable given our understanding of the Trust's investment objectives. The Trust is broadly diversified, and maintains a reasonably consistent allocation quarter to quarter. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5 . I N C December 31, March 31, June 30, September, December 31, Category 2011 2012 2012 2012 2012 Large Growth 9.51% 9.93% 9.77% 8.32% 8.54% Large Blend 9.77% 9.96% 10.11% 8.84% 9.00% Large Value 12.61% 12.98% 13.24% 11.29% 11.49% Large Cap Equity 31.89% 32.86% 33.12% 28.45% 29.03% (15 -45 %) Mid Cap Growth 1.94% 1.98% 2.00% 2.20% 2.26% Cap Value 2.68% 2.73% 2.79% 2.68% 2.76 %_ _Mid Mid Cap Equity 4.62% 4.71% 4.79% 4.87% 5.02% (0 -10 %) Small Growth 3.91% 3.69% 3.84% 3.88% 4.03% Small Value 2.19% 2.23% 2.28% 2.44% 2.52% _ Small Cap Equity 6.09% 5.92% 6.12% 6.32% 6.55% (0 -15 %) Int'I Large Growth 1.72% 1.23% 1.27% 1.23% 1.25% Int'I Large Blend 1.72% 1.70% 1.78% 1.47% 1.50% Int'I Large Value 1.72% 1.21% 1.26% 1.20% 1.25% Emerging Markets 3.41% 3.82% 4.06% 3.73% 3.78% Int'I Equity 8.57% 7.95% 8.37% 7.62% 7.78% (0 -15 %) Real Estate 1.46% 1.51% 1.53% 1.67% 1.74% (0 -10 %) Short Term Bonds 11.56% 10.25% 10.11% 10.20% 10.20% (0 -25 %) _ Intermediate Term Bonds 31.89% 30.74% 31.80% 33.95% 33.97% (25 -60 %) Long Term Bonds 0.00% 0.00% 0.00% 0.00% 0.00% (0 -25 %) Convertible Bonds 0.00% 0.00% 0.00% 0.00% 0.00% (0 -10 %) High Yield Bonds 0.00% 1.47% 1.48% 1.97% 1.99% (0 -10 %) Money Market (Cash) 3.91% 4.60% 2.69% 4.95% 3.73% (0 -20 %) The asset allocation appears reasonable given our understanding of the Trust's investment objectives. The Trust is broadly diversified, and maintains a reasonably consistent allocation quarter to quarter. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5 . I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 REVIEW AND COMMENTS ON FUNDS USED The aggregate Trust portfolio is invested in eighteen publicly traded mutual funds, in fifteen different categories, plus one money market fund. All nineteen mutual funds are actively managed. COMMENTARY ON FUND PERFORMANCE RELATIVE TO PEER GROUP The funds selected for the Trust have generally been performing better than the median fund in their respective peer group over the trailing three and five -year periods. No funds are performing below median over both the trailing three and five -year periods. For the four funds that rank below median in either the trailing three or five -year periods, they rank closely below the median, all above the 60`h percentile. Two funds (Harbor Capital Appreciation Instl and Schroder Emerging Market Equity Inv) rank below median over the trailing three year period, which aligns roughly with HighMark Capital Management's management of the Trust's investments. COMMENTARY ON FUND PERFORMANCE RELATIVE TO INDEX Ten of the actively managed funds selected for the Trust have performed similarly to, or better than, their underlying index over the trailing three year period. Eight funds have underperformed their underlying index by 50 basis points (0.50%) or more over the trailing three year period. The underperforming funds include Harbor Capital Appreciation Instl, Sentinel Common Stock I, Loomis Sayles Value Y, HighMark Geneva Mid Cap Growth Fiduciary, TIAA -CREF Mid -Cap Value Instl, Columbia Small Cap Value Fund II Z, Vanguard Short-Term Investment -Grade Adm and PIMCO High Yield Instl. While it is difficult to draw statistically significant conclusions about HighMark Capital Management's ability to select outperforming actively managed funds from such a limited data set, the initial indications do not appear to indicate that High Mark's selections are materially better than might be expected from random chance. [COMMENTARY ON FUND MANAGER TENURE The funds selected for the Trust generally have experienced limited manager turnover. MFS International Growth I fund is the only fund that exhibits limited manger consistency. The fund's manager tenure is 2.1 years, which is less than the 3 years we recommend for fund selection and retention purposes. COMMENTARY ON FUND AND BENCHMARK CHANGES, ADDITIONS, AND REMOVALS One of the key responsibilities of HighMark Capital Management, the Trust's portfolio manager is to determine which investments are appropriate for the Trust's assets. It is also the portfolio manger's responsibility to determine if previously selected investments are still appropriate given changes in market conditions. Below we identify the fund changes in the Trust portfolio, and comment on the potential effects of those changes. Sentinel Common Stock I replaced Manning & Napier Equity sometime in the second quarter of 2012. Assuming the change happened at the start of the quarter, the change would have benefited the Trust's performance. Over the time period of April 1, 2012 to December 31, 2012, Sentinel Common Stock I had returns of 2.68% whereas Manning & Napier Equity had returns of 2.46 %. Schroder Emerging Market Equity Inv replaced RS Emerging Markets Y sometime in the fourth quarter of 2012. Assuming the change happened at the start of the quarter, the change would have benefited the Trust performance. Over the time period from October 1, 2012, to December 31, 2012, Schroder Emerging Market Equity Inv had returns of 7.0% whereas RS Emerging Markets Y had returns of 1.40 %. Lazard Emerging Markets Equity Instl was removed from the Trust sometime in the first quarter of 2012. Assuming the removal happened at the start of the quarter, the change would have been detrimental to the Trust's performance. Over the time period from January 1, 2012 to December 31, 2012, Lazard Emerging Markets Equity Instl had returns of 22.36% whereas RS Emerging Markets Y, the other emerging markets fund in the Trust, had S C H U L T Z C 0 L L I N 5 L A W S 0 N C H A M B E R 5. I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 returns of 13.47 %. If Schroder Emerging Market Equity Inv had been in the Trust during that same time period, it would have provided returns of 21.73 %. In the first quarter of 2012, the PIMCO High Yield Instl fund was added to the portfolio, most likely to diversify the portfolio. HighMark Capital Management has not made any benchmark changes to their funds, but their choice of benchmarks could be more appropriate. For instance, they compare Harbor Capital Appreciation, a Large Growth fund, to the S &P 500 Index of large blend stocks. We believe that a more appropriate index would be the S &P 500 Growth Index. We note that Harbor uses the Russell 1000 Growth Index as the fund's primary benchmark, and uses the S &P 500 Index as a secondary benchmark. On pages 12 through 14 of this report, we compare the Trust investments to indexes that are more reflective of their asset class. SUMMARY OF EXCESS RETURNS ' Calculating "excess returns" is a useful way to determine whether actively managed funds add value relative to an indexed approach over extended time periods. We calculate and report trailing 10 year cumulative excess returns for each fund used in the portfolio, beginning on page 17. The trailing 10 year cumulative excess return is the value added or subtracted by trading strategies over the fund's comparative passive benchmark, which is derived from a regression of the fund's performance on various indexes. A large positive excess return suggests that the fund's active management is adding value over that of a comparable indexing strategy. However, a lower value may not indicate poor management. Lower values may not be statistically or economically significant; or, may be an artifact only of the sampling period; or, may simply reflect the unavoidable fact that the fund is investing in an asset class that imposes high liquidity costs. Many of the funds in the Trust have positive excess returns; four of the funds have negative excess returns, and only two of those have negative excess returns larger than 1 %. Looking at a 10 year period can be somewhat misleading, since a portfolio manager has the benefit of hindsight when selecting funds, and likely selected funds with positive historical selection returns. Evaluating the excess returns of the funds over a shorter trailing three -year period is more relevant to Central San, but the results would be less statistically significant. A general statement of whether a fund's active management has added or subtracted value is nonetheless informative in evaluating the portfolio manager's ability to select actively managed funds. We can observe the slope of each fund's cumulative excess return line over the last three years, to determine how the fund has performed recently. A "Positive" evaluation suggests that the portfolio manager has selected a fund with a management approach that has been beneficial; a "Negative" evaluation suggests that the portfolio manager has selected a fund with a management approach that has been detrimental; a "Flat" evaluation suggests that the portfolio manager has selected a fund with a management approach that has performed similar to its benchmark. For the most part, the portfolio manager has shown modest skill in selecting actively managed funds, used over the past three years. Three of the funds have positive trends, and only one fund has a negative trend; all the other funds have relatively flat trends. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S. I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45 /0 1 HER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 31, 2 0 1 2 The following table summarizes our evaluation of the excess returns generated by each fund used within the Trust, as of December 31, 2012: Trailing 10 Year Trailing 3 Year Cumulative Excess Cumulative Excess Fund Name Category Returns Returns Trend Harbor Capital Appreciation Inst'I Large Growth - 1.74® Negative T. Rowe Price Growth Stock Large Growth 1.54% Flat Columbia Contrarian Core Z Large Blend 8.32% Flat Sentinel Common Stock I Large Blend 5.77%1 Flat T. Rowe Price Equity Income Large Value -0.610/c Flat Loomis Sayles Value Y Large Value 8.99% Flat HighMark Geneva Mid Cap Growth Fiduciary Mid Cap Growth 3.56 %Z Flat TIAA -CREF Mid -Cap Value Instl Mid Cap Value 16.25% Flat T. Rowe Price New Horizons Small Growth 22.83% Positive Columbia Small Cap Value Fund II Z Small Value 3.88% Flat Nuveen Real Estate Secs I Real Estate 18.53% Flat MFS International Growth I Foreign Large Growth 11.46% Positive HighMark International Opportunities Fid Foreign Large Blend 1.37 %3 Flat Dodge & Cox International Stock Foreign Large Value 13.71% Flat Schroder Emerging Market Equity Inv Emerging Markets 4.23 %° Flat HighMark Diversified Money Market Fid Money Market N/A N/A Vanguard Short-Term Investment -Grade Adm Short Term Bond -0.68% Flat HighMark Bond Fid Intermediate Term Bond 3.42% Flat PIMCO Total Return Instl Intermediate Term Bond 16.94% Positive PIMCO High Yield Instl High Yield Bond -5.96% Flat ` A shares used since I shares have brief history. ' A shares used since Fiduciary shares have brief history. 3 M shares used since Fiduciary shares have brief history. Evaluation period is since the fund's inception, April 2006, which is less than a ten year period. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5 1 N C CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 REVIEW OF HIGHMARK CAPITAL MANAGEMENT SERVICE AGREEMENT /DOCUMENTS HighMark Capital Management does not appear to operate under the terms of a traditional, comprehensive Service Agreement. Rather, the terms under which HighMark Capital Management operates seem to be dispersed among various documents, including the "Public Agencies Post - Retirement Health Care Plan Trust Agreement ", the "Public Agencies Post - Retirement Health Care Plan Master Plan Document ", the "Adoption Agreement to the Public Agencies Post - Retirement Health Care Plan ", the "Mutual Fund Disclosure Statement for Business Trust (Non- ERISA) – Discretionary Accounts" and the "Investment Strategy Selection and Disclosure Form PARS OPEB (GASB 45) ". While there is no regulatory requirement that we are aware of that mandates the use of a comprehensive Service Agreement, the use of multiple documents makes it more difficult to evaluate services, and potentially creates compliance issues if the change to a service arrangement impacting one document isn't correctly tracked to other documents —as appears to be the case in the change of trustee, as noted further below. Section 5.1 of the Trust Agreement (page 14) provides that "If the Employer elects a discretionary approach, the Employer shall further elect between the various investment strategies offered and the Trustee, in accordance with Article IV, shall have absolute discretion over the investment of the Assets held in such Employer's Agency Account." This appears to be the arrangement elected by Central San. On Section A.4.1 of the Adoption Agreement, the box marked "a. Discretionary Investment Approach" is selected. Similarly, the "Investment Strategy Selection and Disclosure Form" indicates that "Union Bank of California, N.A. has been or is appointed Investment Manager of the above - referenced Plan ". Further, Central San has executed the "Discretionary Trustee Fee Schedule" attached to the "Investment Strategy Selection and Disclosure Form ". Thus, it appears reasonably clear that Union Bank of California, N.A., operating through its HighMark Capital Management subsidiary, is intended to serve as discretionary Investment Manager for the Trust. However, the scope and limitations on discretion are not laid out in the form we would normally see in a Service Agreement. The "Mutual Fund Disclosure Statement" indicates that "...no investment advisory fee is charged to your account for any Bank managed account assets invested in the Funds." This arrangement is typical when a portfolio manager, such as HighMark Capital Management, considers the use of proprietary mutual funds —to pay HighMark for both portfolio advisory and fund management services on the same assets would appear to be an inappropriate form of "double dipping" that incents HighMark to use its own funds. While we note that HighMark funds are used in the Trust portfolio, they do not appear to be used excessively. However, as noted in the fee evaluation section, the HighMark funds generally have higher relative expense ratios than the non - proprietary mutual funds used in the portfolio. I CHANGE OF TRUSTEE In February 2012, US Bancorp subsidiary, US Bank National Association entered into a definitive agreement to purchase the institutional trust and custody division of Union Bank. We understand that this sale subsequently closed, and that Union Bank's former trust operations are now owned and operated by US Bancorp. We further understand that the sale to US Bancorp did not include HighMark Capital Management, Union Bank's investment management subsidiary. However, the document forms we received and reviewed do not appear to reflect the change in trustee from Union Bank to US Bancorp. Perhaps more importantly, the document forms do not appear to ep rmit discretionary investment management to be provided by an entity that is unrelated to the trustee. The Trust Agreement indicates that "the Trustee ... shall have absolute discretion over the investment of the Assets held in such Employer's Agency Account." While it's possible that US Bancorp has in turn delegated its discretionary authority to HighMark Capital Management, we did not receive or review any documentation indicating such delegation. We recommend that Central San should restate the Trust Agreement to reflect the new arrangement with US Bancorp. We further recommend that Central San should learn more about any contractual arrangements for discretionary investment management authority that might have been executed between US Bancorp and HighMark Capital Management, to confirm that HighMark continues to be properly authorized to manage Trust assets, following the sale of the institutional trust and custody division of Union Bank to US Bancorp. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M 0 E R S. I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 POSSIBLE FUTURE ASSET SALES BY UNION BANK In addition to the February 2012 sale of its institutional trust and custody division to US Bancorp, Union Bank has recently sold other institutional service groups. In November 2007, signed a definitive agreement to sell its retirement recordkeeping business to Prudential Retirement, a subsidiary of Prudential Financial, Inc. Given the ongoing contraction of Union Bank's institutional service groups, it's possible that other operations might be sold, potentially including Union Bank's investment management subsidiary, HighMark Capital Management. FEES The fee analysis is intended to assure that the Trust pays reasonable fees, given the types of investments used and services provided. The elements evaluated in this fee analysis include: • Underlying fund expense ratio, which reflects the total annual operating expenses of the fund, including investment management and administration, expressed as a percentage of assets, as reported in the fund's prospectus. • Total fund fee, which is an estimate of the annual cost of holding the fund in dollar terms, based on the balanced held in the fund on December 31, 2012. • Expense ratio rank in category, which reflects how each investment option's expense compares to other mutual fund options in the same investment category. The lower the number, the lower the fund's relative cost. For example, an expense ratio rank in category of "1" would be the lowest cost percentile of all funds in the category. • PARS fee. • HighMark investment management fee. • Trust fees, which we understand our waived, since Since the Trust is an institutional investor, we expect the Trust to select funds offering institutional pricing. This means that each fund's expense rank in category should be lower than 50 (first or second quartile costs), and preferably, lower than 25 (first quartile costs). Only the HighMark Diversified Money Market Fid fund ranks in the bottom half of funds in its category, based on expenses. Six other funds rank in the second quartile of their respective categories. Of those six, three are HighMark funds. The costs of investing in the HighMark funds are somewhat offset by the fact that HighMark waives its investment management fees on assets held in HighMark funds. The total amount of assets held in HighMark funds is $6,420,624; the remaining $19,914,796 held in non - HighMark funds is subject to HighMark's investment management fee, estimated to be $47,372. The Trust's weighted expense ranks in the top quartile, consistent with our low cost expectations. Total Trust expense attributable to the underlying funds is estimated to be $176,089, or 0.67% of the Trust's $26,335,420 worth of total assets. With underlying fund expense estimated to be $176, 089, HighMark investment management fee estimated to be $47,372, and the PARS fee estimated to be $52,000, the estimated overall cost of the Trust is $275,464 per annum, which results in an overall fee of 1.05% of the Trust's $26,335,420 asset base. The cumulative cost structure for PARS operational services, HighMark Capital Management advisory services, and the cost of the underlying funds is higher than we would expect to see for a portfolio of similar size. We recommend that Central San consider potential ways to reduce the cost of operating the Trust. Our fee analytics begin on page 39. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S, I N CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 OTHER P DST- E M PLOY ME NT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 SCLC generally employs a set of specific criteria to evaluate mutual funds offered through plans. These criteria typically include minimum performance thresholds and other objective characteristics. We suggest applying these criteria for both the initial selection of funds, and for the ongoing evaluation of funds. We also suggest using different criteria for actively managed, indexed, and target date mutual funds. Our recommended selection and monitoring criteria for actively managed funds include the following: ACTIVELY MANAGED MUTUAL FUNDS RISK We suggest that a fund's Standard Deviation (i.e., its statistical measure of risk) should not be more than 25% higher than the average three -year standard deviation for funds in the same category. RELATIVE PERFORMANCE We suggest that that the performance of each mutual fund (i.e., the three year total rate of return) should be in the top half of funds in a similar investment category (percentile rank between 1 and 50. EXPENSE RATIOS We suggest that each actively managed fund have an expense ratio that is no greater than the average expense ratio of the relevant category. CONSISTENCY OF FUND MANAGEMENT We suggest that each actively managed fund should demonstrate manager consistency by having average manager tenure of at least three years. S C H U L T Z C 0 L L I N 5 L A W S 0 N C H A M B E R S, I N C 1 1 CENTRAL CONTRA COSTA SANITARY DISTRICT IS ASB 45 /0-HER POST- EMPLOYMENT BENEFITS TRUST REPQRI Fi R THE PERIOD ENDING DECEMBER 31. 2012 TABLE 5. MUTUAL FUND PERFORMANCE SUMMARY AND OVERVIEW C H U L 1 0 L L I! . A W S 0 FI C H A M 8 E R. S 12 Percentile Percentile 3 Year Percentile Prospectus 12 Month Rankin 3 Year Rankin Standard 5 Year Rankin Turnover Manager Expense Fund Name Return Category Return Category Deviation Return Category Ratio Tenure Ratio (Net) Large Growth Harbor Capital Appreciation Instl 1569 43 9 11 51 1727 299 17 41 228 067 T- Rowe Price Growth Stock 18.92 14 1125 1 % 1803 2.64 22 30 5 3 070 Morningstar Large Growth Average 15.34 - 9.30 17.35 1.12 - 74 61 1.28 S &P 500 Growth Index 14.61 11.33 - 15.08 3.39 Large Blend Columbia Contrarian Core Z 18.67 SO 10.96 14 1674 3.91 S 62 7.9 0.95 Sentinel Common Stock 1 14.92 56 10.36 26 15.47 2.43 15 8 10 6 0.78 Morningstar Large Blend Average 14.96 - 9.05 - 1608 0.68 71 5.9 1.18 S &P 500 index 16.00 - 10.87 1S30 166 - - Large Value T. Rowe Price Equity Income 1725 21 10.26 28 15.68 158 29 15 27.3 0.68 Loomis Sayles Value Y 1970 4 9.20 50 16.94 0.85 44 25 10.2 073 Morningstar Large Value Average 14.57 9.03 15.74 0.32 - 77 6 0 1.21 5 &P 500 Value Index 17.68 - 10 47 15.98 -0.15 - - Mid Cap Growth HighMark Geneva Mid Cap Growth Fiduciary 9.97 85 13.64 16 1686 4 87 16 17 8 9 113 Morningstar Mid -Cap Growth Average 14.07 1108 - 18.47 174 - 91 6.1 139 S &P MidCap 400 Growth Index 17.27 14.90 - 18 25 S95 Mid Cap Value TIAA -CREF Mid -Cap Value Instl 16.60 47 11.40 38 16.97 2.45 S9 33 9.5 046 Morningstar Mid -Cap Value Average 1660 - 10.77 - 17.79 2.88 74 6,6 133 S &P MidCap 400 Value Index 18.53 - 12.40 - 18.35 4.34 - Small Growth T. Rowe Price New Horizons 16.20 23 1861 1 18.29 8.00 1 44 2.9 081 Morningstar Small Growth Average 13 15 - 11.74 20.37 255 92 6.6 150 S &P SmallCap 600 Growth Index 1456 - 14.96 18.47 5.51 - - Small Value Columbia Small Cap Value Fund 11 Z 14.57 60 12.00 37 21.21 3.14 73 41 10 4 1.06 Morningstar Small Value Average 16.00 1104 - 19.77 4.20 - 72 6 3 145 S &P SmallCap 600 Value Index 18.21 13.29 - 20.24 4.72 C H U L 1 0 L L I! . A W S 0 FI C H A M 8 E R. S CENTRAL CONTRA C'STA SANITARY DISTRICT GA5B 45/OTHER PC5T- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PER 00 END NG DECEMBER 31, 2012 TABLE 5. MUTUAL FUND PERFORMANCE SUMMARY AND OVERVIEW (CONTINUED) 12 Percentile Percentile 3 Year Percentile Prospectus Month Rankin 3 Year Rankin Standard 5 Year Rankin Turnover Manager Expense Fund Name Return Category Return Category Deviation Return Category Ratio Tenure Ratio (Net) Real Estate Nuveen Real Estate Secs 1 1834 22 1860 10 1806 7 26 12 21 7 7 1.04 Morningstar E Real Estate Average 17 60 17.29 17.64 4.86 - 77 7.0 1.39 Dl US Select REIT Index 1712 1794 18.61 5.08 - - - - Foreign Large Growth MIPS International Growth 1 1971 30 7.24 33 18.73 0.45 9 39 2 1 1.12 Morningstar Foreign Large Growth Average 1770 577 19.46 -2.26 56 5.8 1.43 MSCI EAFE Growth Index 16.86 - 485 - 19.12 -3.09 - - Foreign Large Blend HlghMark International Opportunities Fld 2087 17 450 35 20.46 -3.97 58 102 64 1.27 Morningstar Foreign Large Blend Average 18.29 3.89 19.70 -3.60 - 75 5 2 1.40 MSCI EAFE Index 1732 3.56 - 19.65 -3.69 - - Foreign Large Value Dodge & Cox International Stock 21.03 12 4.96 19 21.00 -1.89 11 16 83 0.64 Morningstar Foreign Large Value Average 16.21 104 - 19.79 -4.24 - 52 5.0 1.39 MSCI EAFE Value Index 1769 - 219 20.56 -4.34 - - Emerging Markets Schroder Emerging Market Equity Inv 21.73 20 4,79 54 21.91 -0.03 20 47 6 9 1.25 Morningstar Diversified Emerging Mkts Average 18.15 - 4 26 21.43 -2.16 - 80 3 4 1.66 MSCI EM Index 1822 - 466 21.80 -0.92 CENTRAL CONTRA COSTA SAN,TANY DISTR CT GASB 4510-01 ER PC'. '.T-EMPLOYMENT BENEFITS TRUST REPORT F'--R THE PF R1313 ENDING DECEMBER 31. 2012 TABLE 6. TARGET DATE FUND PERFORMANCE SUMMARY AND OVERVIEW C H U L T? C 0 L L 1 H 5 L A W S O FI C H A 11 6 E A. 5 tI -. 12 Percentile Percentile 3 Year Percentile Prospectus Month Rankin 3 Year Rank in Standard 5 Year Rankin Turnover Manager Expense Fund Name Return Category Return Category Deviation Return Categqy Ratio Tenure Ratio (Net) Money Market Taxable HighMark Diversified Money Market FId 002 27 0.06 14 0.02 072 8 14 3 0 57 Morningstar US Money Market Taxable Average 003 0,03 - - 046 USTREAS T -Bill Cnst Mat Rate 3 Mon Index 008 010 - 0.03 051 - - Short Term Bond Vanguard Short-Term Investment -Grade Adm 4.63 29 3 98 23 155 4 12 26 47 4.8 0 11 Morningstar Category: Short -Term Bond Average 367 - 3.21 - 149 330 - 134 7.0 O 85 Barclays Credit 1.5 Yr Index 551 - 466 198 5.17 - - Intermediate Term Bond HighMark Bond Rd 688 49 7.05 45 2.39 667 35 44 13.2 0.72 PIMCO Total Return Instl 10.36 12 7 75 26 3.25 834 7 584 258 046 Morningstar Intermediate -Term Bond Average 7.01 - 6.96 - 2.75 608 - 234 6 1 0 92 Barclays US Agg Bond Index 421 - 6 19 - 242 5.95 - - High Yield Bond PIMCO High Yield Instl 14.55 53 1082 41 7.20 839 43 50 3.1 055 Morningstar High Yield Bond Average 14.67 10.49 7.18 802 - 79 5 7 115 Credit Suisse HY Index 1471 1145 6.45 953 - - C H U L T? C 0 L L 1 H 5 L A W S O FI C H A 11 6 E A. 5 tI -. CENTRAL CONTRA COSTA SAN'TARY DISTRICT GAS 45/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 This section of the report provides information about each of the funds in a number of areas including: BENCHMARK STYLE ANALYSIS Developed by Nobel Laureate William Sharpe in 1990, Benchmark Style Analysis seeks to match the returns of a mutual fund to a mix of benchmark asset classes that best fits its behavior. This is done with the assumption that an historical analysis of return volatility facilitates prediction of future fund behavior and manager performance. It is important to note that style analysis does not attempt to find the exact investment holdings of a mutual fund. A prospectus or shareholder report can tell you a fund's objective or its current holdings. However, a shareholder report cannot explain the past behavior of the fund. A fund's stated objective does not guarantee that it will behave in that fashion. Through a multi- regression return analysis, benchmark style analysis discerns the mix of asset classes that is most similar to the fund's actual behavior. In other words, a fund may call itself a "growth fund" but behave like a value fund and, therefore, should be considered as a value component of an asset mix. For example, a domestic equity mutual fund investing in stocks that derive a majority of their revenue from sales abroad will clearly be influenced by factors in foreign economies. If the foreign economies go into recession, the fund will be affected. In this way, the fund, although domestic, responds to factors in foreign economies with a manner similar to an international equity fund. This is essential information in mapping the fund into an asset mix derived from basic asset classes. We use Benchmark Style Analysis to determine each fund's Overall Effective Asset Mix and Rolling Style Benchmark, We also use the analysis to determine the extent to which the various domestic equity funds cover the range of potential equity investment styles, and how consistent each fund's style orientation has been over time. OVERALL EFFECTIVE ASSET MIX The Overall Effective Asset Mix reflects the static mix of asset classes that best explains the fund's performance across the entire period under evaluation. It reflects how the fund would have performed if the fund's manager had made no market timing or security selection decisions. ROLLING STYLE BENCHMARK The Rolling Style Benchmark is a type of moving average, reflecting monthly changes in the fund's Effective Asset Mix. The color plot for the graphic is calculated as follows: 1) A constrained regression analysis of the first 36 months of fund returns defines the initial benchmark portfolio. This initial benchmark is represented by the color distribution at the far left of the graphic. 2) The color distribution for every other point on the graph represents the results of a similar regression analysis using an updated (by one month) set of 36 monthly data points. The final color distribution represents the results of the regression analysis for the 36 months of data ending December 31, 2012. OVERALL STYLE /SELECTION The portion of a fund's overall returns that can be explained by the historical return of its corresponding benchmark, derived from the overall effective asset mix, versus the portion that cannot. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5, I N C 1 CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EM PLOYMENT BENEFITS TRUST REPORT FOR THE PER OD ENDING DECEMBER 31. 2012 FUND /BENCHMARK HISTORICAL CORRESPONDENCE The historical correspondence is a measure of how much of a fund's performance can be explained by the performance of its corresponding benchmark over rolling 36 month periods. If a fund matches its benchmark perfectly over a given 36 month period, the historical correspondence value is 100 %. If a fund's returns bear no relationship to those of its benchmark, the historical correspondence value is 0 %. Investors owning index funds, for example, should expect historical correspondence close to 100 %. [MONTHLY EXCESS RETURNS The month -to -month returns difference between the fund and its comparative benchmark. Positive excess return signifies that the fund has earned a return greater than its benchmark for the given month. Negative excess return signifies that the fund's return has lagged the benchmark. f CUMULATIVE EXCESS RETURNS The amount (per $1.00 of initial investment) added or subtracted by trading strategies over the fund's comparative benchmark in the time period. Investors like to see values in excess of $1.00. However, a lower value may not indicate poor management. Lower values may not be statistically or economically significant; or, may be an artifact only of the sampling period; or, may simply reflect the unavoidable fact that the fund is investing in an asset class that imposes high liquidity costs. BENCHMARKS USED The Benchmark Style Analysis compares funds against a series of individual asset class benchmarks to determine which benchmark or combination of benchmarks best explains performance of the fund. We maintain three sets of benchmarks, one set for Fixed - Income funds one set for Domestic Equity funds and one set for International Equity funds. The benchmark sets include the following asset classes': Fixed Income US Short Corp Bonds US Short Gov't Bonds US Intermediate Corp Bonds US Intermediate Gov't Bonds US Long Corp Bonds US Long Gov't Bonds US Corp High Yield Bonds Thirty Day Treasuries Global Bonds Domestic Equity US Large Growth Stocks US Large Value Stocks US Mid Size Growth Stocks US Mid Size Value Stocks US Small Growth Stocks US Small Value Stocks MSCI EAFE Stocks Thirty Day Treasuries US Long Bonds US Intermediate Bonds Real Estate Stocks International Equity Large Europe Growth Stocks Large Europe Value Stocks Large Pacific Growth Stocks Large Pacific Value Stocks Emerging Market Stocks Small Europe Stocks Small Pacific Stocks Thirty Day Treasuries Aggregate US Bonds Total US Stocks 5 Asset classes are represented by the following indexes: US Large Growth Stocks = S &P /Citigroup 500 Growth; US Large Value Stocks = S &P /Citigroup 500 Value; US Mid Size Growth Stocks = S &P /Citigroup MidCap 400 Growth; US Mid Size Value Stocks = S &P /Citigroup MidCap 400 Value; US Small Growth Stocks = S &P /Citigroup Small Cap 600 Growth; US Small Value Stocks = S &P /Citigroup Small Cap 600 Growth; US Long Bonds = Ibbotson US Long Gov't Bond Index; US Intermediate Bonds = Ibbotson US Intermediate Gov't; Real Estate Stocks = NAREIT Equity Index; Large Europe Growth Stocks = MSCI Europe Growth Index; Large Europe Value Stocks = MSCI Europe Value Index; Large Pacific Growth Stocks = MSCI Pacific Growth Index; Large Pacific Value Stocks = MSCI Pacific Value Index; Emerging Market Stocks = MSCI Emerging Markets (Free) Index; Small Europe Stocks = MSCI Europe Small Cap (Cap Appr) Index; Small Pacific Stocks = MSCI Pacific Small Cap (Cap Appr) Index; Aggregate US Bonds = Barclays Aggregate Bond Index; Total US Stocks = Wilshire 5000 Total Market Index; US Short Corp Bonds = Barclays Capital Credit 1 -5 Year Index; US Short Gov't Bonds = Barclays Capital Government 1 -5 Year Index; US Intermediate Corp Bonds = Barclays Capital Intermediate Credit Index; US Intermediate Gov't Bonds = Barclays Capital Intermediate Government Index; US Long Corp Bonds = Barclays Capital Long Credit Index; US Long Gov't Bonds = Barclays Capital Long Credit Index; US Corp High Yield Bonds = Barclays Capital Corporate High Yield Index; Global Bonds = Citi World Government Bond Index. S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S. I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45 /OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 HARBOR CAPITAL APPRECIATION INSTL OVERALL EFFECTIVE ASSET MIX Harbor Capital Appreciation had: Overall US lntermed ate Bonds' 000 US Long Bonds 0 00 Thirty Day Treasures 000 MSCI EAFE Stocks 000 US Small Cap Value Stocks 000 US Small Cap Growth Stocks 000 US Mid Cap Value Stocks 000 US MM Cap Growth Stocks � 031 US Large Value Stacks 0 00 US Large Growth Stocks 069 000 010 020 030 040 050 060 070 080 090 10•. Style (92 OVERALL STYLE /SELECTION sryhBekedon Harbor Capital Appreciation Instil: Overall ,election 17 78%, MONTHLY EXCESS RETURNS Jan 2003 -Doc 2012 Using Arhh., Estimated, Overall Return Values 120% 100% 80% 60 %- 4 0 %- 20 %- 00% •2 0% 40%- -60% -80%- -10 0% -120% _.,. l.. ,. _.. ,. _. .,- .•-- n.rr- mp..... -T-,. .. „--- •- m- ..rt..,�p- ..- n.- r-- mnrrnm Jan Dec Dec Dec Dec Dec Dec Dec Dec Dec 0 a 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 T -me Harbor Capital Apprecatian nsd ROLLING STYLE BENCHMARK Area Graph for Harbor Capital Appreciation Instl - Estimated Weights W elghls Jan — uac uec uac uec uec Uec 2006 2006 2007 2008 2009 2010 2011 2012 Time US Large Growth Stocks E.i US Large Value Stocks US Mid Cap Growth Stocks US MA Cap Value Stocks US Small Cap Grovdh Stocks , US Smau Cap Value Stocks MSCI EAFE Stacks Th try Day Treasures US Lang Bonds US ntermedrate Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for Harbor Capital Appreciation Instl - Estimated Weights Weights Jan Dec Dec Dec Dec Dec Dec Deg 2006 2005 2007 2008 2009 2010 2011 2012 T,me Policy . Selection CUMULATIVE EXCESS RETURNS Jan 2003 - Doc 2012 Using Arhh., Estimated, Overall ,dcx Values',ISD 2 9 0. 9 + n. n--,. 1.-+ n. m... r- r••.... i-- n-..-+- grrnnn..---- •r•- •-- ..>- ,- n.-- �..�- .,m -.�„- Dec Dec Dec Dec Dec Dec Dec Dec D Dec Dec 2002 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time Harbor Capital Appreciation Instl S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S. I N C 1 7 CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45/OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 . 2 0 1 2 T. ROWE PRICE GROWTH STOCK OVERALL EFFECTIVE ASSET MIX T. Rowe Price Growth Stock : Overall US Intermediate Bands g 00 US Long Bonds 000 Th try Day Treasuries 000 MSCI EAFE Stocks 0 004 US Small Cap Value Stacks 000 US Small Cap Growth Stocks 000 US Mid Cap Value Stocks 000 US Mid Cap Growth Stocks � 030 US Large Value Stocks 000 US Large Growth Stocks 057 000 0 10 020 030 040 050 060 0 70 080 090 1 00 Style ( 95 97% OVERALL STYLE /SLECTION SryleBelectlan T. Rowe P.. Growth Stock : Overall Select on ( 4 03 %, MONTHLY EXCESS RETURNS Jan 2003 - Dec 2012 Using Arhh., Estimated, Overall Rotum Values 120% 1 o o %- 80% 60% 40% lox 00% T -20% 40% _60%_ _80%_ -to o %- -12 0% Jan Dec Dec Dec De: Dec Dec Dec Doc Dec Dec 2003 2003 2004 2005 2006 2007 2005 2009 2010 2011 2012 Time M T Rowe Prce Growth Stock ROLLING STYLE BENCHMARK Area Graph for T. Rowe Price Growth Stock - Estimated Weights Weights jan uec uec uec uec uec uec us 2006 2006 2007 2008 2009 2010 2011 2012 Time US Large Growth Stocks L i US Large Value Stocks US Mid Cap Growth Stacks US Mid Cap Value Stocks i US SmaX Cap Growth Stocks , US Small Cap Value Stocks MSCI EAFE Stocks Th ny Day Treasuries US Long Bonds US intermed.ate Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE R- Squared Graph for T. Rowe Price Growth Stock - Estimated Weights Weights 100% 2005 2006 2007 2008 2009 2010 2011 2012 Time mPC'!my Selection -,dex Values USD 2 5 C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S. I N i 1 CUMULATIVE EXCESS RETURNS Jan 2003 - Dee 2012 Using Arith., Estimated. Overall Dec Dec Dec Dac Dac Dec Osc Dec Dec 7ec De: 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Time — T Rowe Pr,ce Growth Stock CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 COLUMBIA CONTRARIAN CORE Z OVERALL EFFECTIVE ASSET MIX Columbia Contrarian Core Z : Overall US Intermediate Bonds 000 US Long Bonds 000 Thirty Day Treasuries 000 MSCI EAFE Stocks 005 US Small Cap Value Stacks 000 US Small Cap Growth Stocks 0 00 US Mid Cap Value Stocks 0 00 US Mid Cap Growth Stocks 0 12 US Large Value Stocks 033 US Large Growth Stocks 0 50 000 010T 020 030 040T 050T 060, 070 080 090 1 C Styre 196 OVERALL STYLE /SELECTION Style/Selection Columbia Contrarian Core Z: Overall cn,367%, MONTHLY EXCESS RETURNS Jan 2003 - Dec 2012 Using Arhh., Estimated, Overall Return Values 120% 100% 80% 60% 40% 20% 00 %- •2 0% 40% -60% -80% -100%-. - 120 % -r - "r Jan Dec Dec Dec Dec Der Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time Cnlumbsa Contrarian Core Z S C H U L T Z C 0 L L I N 5 L A W S 0 N C H A M 8 E R 5 1 N ROLLING STYLE BENCHMARK Area Graph for Columbia Contrarian Core Z - Estimated VlNights We ghts Jan Dec Dec Dec Dec Dec Dec Cec 2006 2006 2007 2006 2009 2010 2011 2C'2 Time US Large Grcvnh Sic cks ® US Large Value Stocks US Mid Cap Growth Stocks US Mid Cap Value Stacks US Small Cap Grov4h Stacks US Small Cap Value Stocks MSCI EAFE Stocks Thuy Day Treasuries US Long Bonds US Intermediate Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE R'Squared Graph for Columbia Contrarian Core Z - Estimated Weights Weights 100% Jan Dec Dec Dec Dec Dec De: Dec 2006 2006 2007 2006 2009 2010 2011 2012 Time w rio cy Selection CUMULATIVE EXCESS RETURNS Jan 2003 - Dec 2012 Using Arhh., Estimated, Overall ndez Valdes USD 2 1 09 Dec Dec Dec Dec Dec Dec Dec Dec De: Der. Dec 2002 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time Columbia Contrarian Core Z CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEF TS TRUST REPORT FCR THE PERIOD ENDING DECEMBER 31, 2012 SENTINEL COMMON STOCK I (A shares used since I shares have brief history) OVERALL EFFECTIVE ASSET MIX Sentinel Common Stock A: Overall Style US Intermediate Bonds 000 US Lorg Bonds 0 00 Thirty Day Treasu,ies 004 MSCI EAFE Stocks 012 US Small Cap Value Stocks 000 US Small Cap Growth Stacks 000 US Mid Cap Value Stocks 001 US Mid Cap Growth Stocks 001 US Large Va ue Stocks 0:39 US Large Growth Stocks 043 I._,____7 —._ 000 010 020 030 040 050 060 070 060 090 1 O Stpa , 95 715: OVERALL STYLE /SELECTION StylelSslection Sentinel Common Stock A: Overall Style Selection 3 29% MONTHLY EXCESS RETURNS Jan 2003 - Dec 2012 Using Arith., Estimated, Overall Return Values 120% 100% 50% 60% 40% 20% -20% 40% -60% -80% .100% Jan Dec Dec Dec Dec Dec Dec De- Dec Dec Dec 2003 2003 2004 2005 2006 2007 2000 2009 2010 2011 2012 T me M Sentinel Common Stock A ROLLING STYLE BENCHMARK Area Graph for Sentinel Common Stock A - Estimated Weights Weights Jan Dec Dec Dec Dec Dec De- De: 2006 2006 2007 2006 2009 2010 2011 2012 Time US Large Growth Stocks ® US Large Value Stocks US Mid Cap Growth Stacks US Mid Cap Va ue Stocks US Small Cap Growth Stocks , US Small Cap Value Stocks MSC EAFE Stocks Thirty Day Treasuries US Long Bonds US Intermed,ate Bands FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for Sentinel Common Stock A - Estimated Weights Weights 65% fi0% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Jan 2006 0 Policy 0 Selection Time CUMULATIVE EXCESS RETURNS Jan 2003 - Dec 2012 Using Aft., Estimated, Overall nde: Values (USDA 2 — W I c6 1 Dec Dec Dec Dec Dec Dec Dec Dec Dec Use Doc 2002 2003 2004 2005 2006 2007 2000 2009 2010 2011 2012 Tme — Sentmei Common Stock A S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S, i N C 2 0 E PlTRA.I. CONTRA. fOSTA 'AN ITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 T. ROWE PRICE EQUITY INCOME OVERALL EFFECTIVE ASSET MIX T. Rowe Price Equity Income : Overall US intermediate Bands 000 US Lang Bonds 0 02 Thirty Day Treasuries 000 MSCI EAFE Stocks 002 US SmallCap Value Stocks 003 US Small Cap Growth Stocks 000 US Mid Cap Value Stocks 000 US Mid Cap Growth Stacks 000 US Large Value Stocks 0.78 US Large Growth Stocks 0 14 000 010 020 030 040 050 060 070 080 090 160 Stye l 96 11 % OVERALL STYLE /SELECTION Style/Selection T. Rowe Price Equity Income: Overall MONTHLY EXCESS RETURNS Jan 2003 -Dec 2012 Using Arhh., Estimated, Overall ( 1 89 %1 Return Values 120%- 10 0 %- 8 0 % -J 60% 40% 2 0% 0 0% -20% FF Is 40% -60% -50% -100%— -12 0% Jan Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Time T Rowe Price Equity income ROLLING STYLE BENCHMARK Area Graph for T. Rows Price Equity Income - Estimated Weights Weights Jan Dec Dec Dec Dec Dec Uric Uec 2005 2006 2007 2008 2009 2010 2011 2012 Tme US Large Growth Stccks US Large Vaiue Stocks US Mid Cap Growth S4n_ks US Mid Cap Value Stocks US Small Cap Growth Stacks US Smat Cap Value Stocks MSCI EAFE Stocks Thirty Day Treasuries US Lang Bonds US Intermediate Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE R- Squared Graph for T. Rows Price Equity Income - Estimated Weights Weights 100% 95% 90% 65% 60% 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Jan Dec Dec Dec Dec Dec Dec Dec 2006 2006 2007 2006 2009 2010 2011 2012 Time P cy U 7 Sete-win CUMULATIVE EXCESS RETURNS Jan 2007 -Dec 2012 Using Arith., Estimated, Overall Index Values (USD 2 W 1 Dec Dec Dec Dec Dec Dec De- De; Dec Dec De- 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Time T Rowe Price Equity Income S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S, I N C 1 1 CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 LOOMIS SAYLES VALUE Y OVERALL EFFECTIVE ASSET MIX Loomis Bayles Value Y: Overall Style US Intermediate Bonds P 004 US Lang Bonds 000 Th rty DayTreasuries 000 MSCI EAFE Stocks 0 12 US Sma i Cap Value Stocks 1 0 02 US Small Cap Growth Stocks 000 US Mid Cap Value Stocks 005 US Mid Cap Growth Stocks 002 US Large Value Stocks - 063 US La ge IS—A, Stocks. 0 12 000 010 020 030 040 050 060 070 080 090 1 00 Style 197 OVERALL STYLE /SELECTION StylelSelection Loomis Bayles Value Y : Overall Style 1249%) MONTHLY EXCESS RETURNS Jan 2003 - Dec 2012 Using Arith., Estimated, Overall Return Values 120 %7 100% 80% 60% 40% 20% 00% -2 0% .40% .60% -80% -100%- -12 0% Jan Dec Dec De: Dec Dec Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Time Loomis Bayles Value Y ROLLING STYLE BENCHMARK Area Graph for Loomis Bayles Value Y - Estimated Weights Weights Jan Uec Uec Dec Dec Dec Dec Dec 2006 2006 2007 2008 2009 2010 2011 2012 Time US Large Growth Stacks r . US Large Value Stocks US Mid Cap GmvAh Stocks US M.d Cap Value Stocks US Small Cap GrovAh Stocks US Smat Cap Value Stocks MSCI EAFE Stocks Thirty Day Treasuries US Long Bonds US Intermediate Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for Loomis Bayles Value Y - Estimated Weights Weights 100% r Jan Dec Dec Dec Dec Dec Ccc Dec 2006 2006 2007 2008 2009 2010 2011 2012 Time M Policy I Selection CUMULATIVE EXCESS RETURNS Jan 2003 -Dec 2012 Using Arith., Estimated, Overall I,dex Vaues IUSDI 2 NJ 1 09 - ' _- 't-�...r- ,,,.- �..n- T -.r..- - Dec Dec Dec Dec Dec Dec Doc Dec Dec Dec Dec 2002 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time Loomis Sayles Value Y S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5 , I N C CENTRA_ CONTRA COSTA SANITARY DISTRICT GAS 45 OTHER POST - EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 HIGHMARK GENEVA MID CAP GROWTH FIDUCIARY (A shares used since Fiduciary shares have brief history) OVERALL EFFECTIVE ASSET MIX HighMark Geneva Mid Cap Growth A : Overall US Intermediate Bonds 000 US Lang Bonds 000 Thirty Day Treasures E 010 MSCI EAFE Stocks 0 00 US Small Cap Value Stocks 0.00 US Small Cap Growth Stocks FO US Mid Cap Value Stocks US Mid Cap Growth Stocks 0 50 US Large Value Stocks JS Large Growth Stocks 000 010,020 030 040 050 060 070 080 090 100 Style { 93 OVERALL STYLE /SELECTION Otylel8election HighMark Geneva Mid Cap Growth A: Overall selection 16 36 %) MONTHLY EXCESS RETURNS Jan 2003 - Dec 2012 Using Arith., Estimated, Overall Return Values 120%— 10 0% so %- 60% 40 %— 20% 0 0 -20% 40% -60% -80% -100% -120% Jan Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 T me HighMark Geneva Mid Cap Growth A ROLLING STYLE BENCHMARK Area Graph for HighMark Geneva Mid Cap Growth A - Estimated Weights Weights 100% 90% 80% 70% 80% 50% 0% Jan Dec Dec Dec Dec 2006 2006 2007 2008 2009 Time Large Growth Stocks Cj US Large Value Stocks .US US Mid Cap Growth Stocks US M d Cap Value Stocks US Small Cap Growth Stocks US 6ma:i Cap Value Stocks MSCI EAFE Stocks Thirty Day Treasuries I US Long Bonds US intermediate Bonds Dec Dec Dec 2010 2011 2012 FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for HighMark Geneva Mid Cap Growth A - Estimated Weights Weights 1 ., 2006 2005 2007 2006 2009 2010 2011 2012 Time �Pcl.cy L] Selection ndev Va4es(USDi 2 la S C H U L T Z C O L L I N S L A W S O N C H A M B E R S. I N C 1 CUMULATIVE EXCESS RETURNS Jan 2003 -Dee 2012 Using Arkh., Estimated, Overall 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Time HighMark Geneva Mid Cap Growth A CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 OTHER POST EM P LOYM ENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 TIAA -CREF MID -CAP VALUE INSTL OVERALL EFFECTIVE ASSET MIX TIAA -CREF Mid-Cap Value Instil: Overall .,5 ntermediate Bonds 000 US Lang Bonds 000 Thirty Day Treasuries 000 MSC EAFE Stocks 010 US Small Cap Value Sto, ks 000 US Small Cap Growth Stocks 000 US Mid Cap Va'ue Stocks 040 US Mid Cap Growth Stocks 0 16 US Large Value Stocks 0 22 US Large Growth Stocks 0 02 000 010 020 030 040 050 060 070 080 090 100 Style (97 OVERALL STYLE /SELECTION Styletselection TIAA -CREF Mkt -Cap Value hied: Overall (234%) MONTHLY EXCESS RETURNS Jan 2003 -Dec 2012 Using Arith., Estimated, Overall Return Va ues 120% 100% 60% 60% 40% 20% -20% 40% -60% -a 0 %- -10 0% -120% i ... .. ..... ........ .... ..... .. ..., _. _.. -1 -,,- -..- ...,,- ,- .,,,.,_ Jan Dec Dec Dec Dec Dec Dec Dec Dec Oec `Dec 2003 2003 2004 2005 2005 2007 2008 2009 2010 2011 2012 Time TIAA -CREF Mid -Cap Value Instl ROLLING STYLE BENCHMARK Area Graph for TIAA -CREF Mid -Cap Value Insd - Estimated Weights W e ghls Jan Dec Dec Dec Dec Dec Doc De 2006 2006 2007 2008 2009 2010 2011 2012 Time US Large Grcwth St =cks p US Large Value Stocks US Mid Cap Gr wmh Storks US M d Cap Value Stocks US Small Cap Growth Stocks US Sma+Cap Value Stocks .MSCI EAFE Stocks Thirty Day Treasuries US Long Bonds US Intermediate Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for TIAA -CREF Mid -Cap Value Insd - Estimated Weights Weights Jan Dec Dec Dec Dec Dec Oac Dec 2006 2006 2007 2008 2009 2010 2011 2012 Time Policy Se'ec0on CUMULATIVE EXCESS RETURNS Jan 2003 - Dec 2012 Using Arhh., Estimated, Overall nde: Values (USDi 2 1 09 _ ... ............- ,._-....,_. _,,.....,....,. .. I.,....,,,, I I I I ,1 11 - .1 ..,...1,. ,.....,. Dec Dec Dec Dec Dec Dec Der. De: Doc Dec Dec 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 T,me — TAA -CREF Mid -Cap Value Instl S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S, I N C 2 .1 CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 4S/OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 31, 2 0 1 2 T. ROWE PRICE NEW HORIZONS OVERALL EFFECTIVE ASSET MIX T. Rowe Price New Horizons: Overall US Intermediate Bonds 000 US Long Bonds 000 Thirty Day Treasuries 000 MSCI EAFE Stocks 0 00 US Small Cap Value Stacks 009 US Small Cap Growth Stocks 036 US Mid Cap Value Stocks 001 US Mid Cap Growth Stocks 049 US Large Value Stacks rOO US Large Growth Stocks 002 000 010 020 030 040 050 060 070 080 090 ' 00 Stye ( 95 56% OVERALL STYLE /SELECTION 9tyhBaMetlon T. Rowe Price New Horizons: Overall (444 %) MONTHLY EXCESS RETURNS Jan 2003 -Dec 2012 Using Arhh., Estimated, Overall Retum Va ues 120% 100% 80% 60% 40% 20% 00% 110L � -20% 40% -60% -80% -10 0% - Jan Dec Dec De: Dec Dec Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Time `T Rowe Price New Horizons ROLLING STYLE BENCHMARK Area Graph for T. Rowe Price New Horizons - Estimated Weights We -ghts 100% 90 %- 70% 60% 50% 40% 30% 20% 10% o% Jan Dec 2006 2006 US Large Growth Stocks US Mid Cap Growth Stocks US Small Cap Growth Stocks MSCI EAFE Stocks US Long Bands Dec Dec Dec 2007 2008 2009 Time E3 US Large Va us Stocks US Mid Cap Value Stocks US Sma Cap Value Stocks Thirty Day Treasuries US Intermediate Bonds Dec Dec De: 2010 2011 2012 FUND /BENCHMARK HISTORICAL CORRESPONDENCE R- Squared Graph for T. Rowe Price New Horizons - Estimated Weights Weights 100% Jan Dec Dec Dec Dec Dec Dec Dec 2006 2006 2007 2006 2009 2010 2011 2012 Time Policy Sels.fl- CUMULATIVE EXCESS RETURNS Jan 2003 - Dec 2012 Using Arhh.. Estimated. Overall ndex Va ues iUSD. 2 09 Dec Dec Dec De, Dec Dec De: Dec Dec De: Dec 2002 2003 2004 2005 2006 2007 2008 2009 2010 20.1 2012 T me — T Rowe Price New Horizons S C H U L- Z C 0 L L I N S L A W S 0 N C H A M B E R S. I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 COLUMBIA SMALL CAP VALUE FUND II Z OVERALL EFFECTIVE ASSET MIX Columbia Small Cap Value Fund II Z: Overall US Intermediate Bonds 000 US Lang Bonds 000 Thirty Day Treasuries 000 MSCI EAFE Stocks 0 00 US Small Cap Value Stocks 050 US Small Cap Growth Stocks 016 US Mid Cap Value Stacks US Mid Cap Growth Stocks 0 03 US Large Value Stocks 007 US Large Growth Stocks 000 000 010T020 030 040 050 060 070 080 090 100 Style (97 OVERALL STYLE /SELECTION Stykl9ehction Columbia Small Cap Value Fund 0 Z: Overall (2.e7 %) MONTHLY EXCESS RETURNS Jan 2003 - Dee 2012 Using Arldr.. Estimated. Overall Return Values 120% 100% 80% 60% 40% 20% 1011 1 IT 00% 114 L -20% 40% -60% -80% -1 o o %- Jan Dec Dec Dec Dac Dec Dec Dec Dec Doc Dec 2003 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time Columbia Small Cap Va :ue Fund b Z ROLLING STYLE BENCHMARK Area Graph for Columbia Small Cap Value Fund II Z • Estimated Weights Weights 2006 2006 2007 2008 2009 2010 20+' 2C12 Tme US Large Growth Stocks O US Large Value Stocks US Mid Cap Growth Stacks US Mid Cap Value Stocks US Small Cap Growth Stocks US SmaiI Cap Value Stocks MSCI EAFE Stocks Thirty Day Treasures US Long Bands I US Intermediate Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for Columbia Small Cap Value Fund II Z • Estimated Weights Weights 1 Jan uec uec uec uec tJec Uec Dec 2006 2006 2007 2008 2009 2010 2011 2012 Ttme -PO',_y MSe'.ection CUMULATIVE EXCESS RETURNS Jan 2003 • Dee 2012 Using Arith., Estimated, Overall Inc e. Va ues •LSD. ME J4 1 09 , . -- _-.r -•--• mT- .r.r-- v,- ,+...-- T- ..- *- .. --. -.- ...fr- •�."-- ..- .,-n.l r........1 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Time Columbia Small Cap Value Fund II Z S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S . t< 1 b CF NTRAL CONTPS C05l SANITARY DISTRICT GAS 45/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 NUVEEN REAL ESTATE SECS I OVERALL EFFECTIVE ASSET MIX Nuveen Real Estate Sacs 1: Overall US Real Estate 093 US Intermediate Bonds 0 00 US Long Bonds 000 Thirty Day Treasudes 0 003 MSCI EAFE Stocks 000 US Small Cap Value Stocks 000 US Small Cap Gmvnh Stacks 001 US Mid Cap Value Stocks 000 US Mid Cap Growth Stocks 0 01 US Large Value Stocks 000 US Large Growth Stocks' 002 000 010 020 030 040 050 060 070 080 090 100 Style ( 99 44% OVERALL STYLE /SELECTION StybfBebction Nuveen Real Estate Secs 1: Overall Selection (0 561A MONTHLY EXCESS RETURNS Jan 2003 - Doc 2012 Using Arith., Estimated, Overall Return Values 120% 100 % - 80% 60% 40% 20% -20%— 4 0% -60% -80%— -to 0 %- -120% Jan Dec Dec Dec De: Dec Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Tme Nuveen Real Estate Secs 1 ROLLING STYLE BENCHMARK Area Graph for Nuveen Real Estate Secs I - Estimated Weights Weights Jan Dec Dec Dec Dec Dec Dec Dec 2006 2006 2007 2008 2009 2010 2011 2012 Time US Large Growth Stocks ® US Large Value Stocks US M -d Cap GrovM Stocks US Mid Cap Value Stocks J US Small Cap Growth Stacks , US Small Cap Va us Storks MSCI EAFE Stacks Thirty Day Treasuries US Long Bonds US Intermed ate Bonds US Real Estate FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for Nuveen Real Estate Saes t - Estimated Weights Weights Jan Dec Dec Dec Dec Dec Dec Dec 2006 2006 2007 2008 2009 2010 2011 2012 Time �Pcbcy I_ ;See:eon CUMULATIVE EXCESS RETURNS Jan 2003 - Dec 2012 Using Arhh., Estimated, Overall index Values IUSD) 2 15 19 1 09 - --n•'- °v.- IT-11-11 I- ..,....,,- _..r..- -^r^— i-'n'-* Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2002 2003 2004 2005 2005 2007 2008 2009 2010 2011 2012 Time Nween Real Estate Secs I S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S, I r4 i 7 CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 MFS INTERNATIONAL GROWTH I OVERALL EFFECTIVE ASSET MIX MFS International Growth I : Overall Aggrgate US Bonds 000 30 Day T -Bill 000 Total US Stock 016 Emerging Markets Stock 014 Small Pacific Stock 0 O7 Small Europe Stock 0 00 Large Pacific Value Stock 0 00 Large Pacific Growth Stock 0 17 Large Europe Value Stock 0 03 Large Europe Growth Stock 047 _ 2 . —7— .. 000 010 020 030 040 050 060 070 060 090 100 Style 96 OVERALL STYLE /SELECTION StylelSelection MFS International Growth I : Overall (200 %) MONTHLY EXCESS RETURNS Jan 2003 • Dec 2012 Using Arith.. Estimated, Overall Return Values 12 0 %- 10 0 %- 80% 60 %- 40% 00% { elenk rOeJ 40% -80% -80% -100% -120% .,. . - _..- r— ...), -�-. -. .. .. _. nrr- in•r.,.... Jan Dec Dec Dec Dec Der. Dec De; Dec Dec Dec 2003 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time MFS International Growth 1 ROLLING STYLE BENCHMARK Area Graph for MFS International Growth I - Estimated Weights We.ghts Jan uec uec Dec Dec Dec Dec Dec 2006 2005 2007 2006 2009 2010 2011 2012 T -me Large Europe Growth Stock E] Large Eum pe Value Stock Large Pacific Growth Stock Large Pacific Value Stock Small Europe Stock Small Pacific Stock Emerging Markets Stack Total US Stack 30 Day T -Bill Aggregate US B:nds FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for MFS International Growth I - Estimated Weights Weights Jan Dec Dec Dec Dec Dec Dec Dee. 2006 2006 2007 2000 2009 2010 2011 2012 Time Policy Selection CUMULATIVE EXCESS RETURNS Jan 2003 -Dec 2012 Using Ar"rth, Estimated, Overall Inge: Values (USD 2 1 09 ... -.. __. Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2002 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time —MFS ntematicnal GrowthI S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5 . I N C 2 0 CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 HIGHMARK INTERNATIONAL OPPORTUNITIES FID (M shares used since Fiduciary shares have brief history) OVERALL EFFECTIVE ASSET MIX HighMark International Opportunities M : Overall Aggregate US Bonds 000 30 Day T -B,, 0 00 Total US Stock' 0 00 Emerging Markets Stock 0 17 Small Pacific Stock 0 04 Small Europe Stock 000 Large Pacific Value Stock 0 00 Large Pacific Grovith Stock 022 Large Europe Value Stock 0.16 Large Europe Growth Stock 040 000 010 020 030 040 050 060 T 11 70T080 090 100 Style ( 97 OVERALL STYLE /SELECTION Style/Selection HlghMark International Opportunities M : Overall (2 14 %1 MONTHLY EXCESS RETURNS Jan 2003 -Dec 2012 Using Arith., Estimated, Overall Return Values 120% 100% 60% 60% 40% 20% 00% •20% 40% -60% -6 0% -100% -120% __ .... ..T Jan Dec Dec Dec Dec Dec Dec Dec Dec Dec Doc 2003 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time HighMark International Opportunities M ROLLING STYLE BENCHMARK Area Graph for HighMark International Opportunities M - Estimated Weights We ghts Jan Dec Dec Dec Dec Dec Dec Dec 2006 2006 2007 2006 2009 2010 2cii 2012 Time Largo Europe GrovAh Stack [ : Large Europe Value Stock Largo Pacific Gr,Mh Stock Large Pacifc Value Stcck ' SmaP Europe Stock Small Pacific Stock Emerging MarkeLS Stock Total US Stock 30 Day T -Bill Aggregate US Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE R- Squared Graph for HighMark International Opportunities M - Estimated Weights Weights 100 %7 _ -- -s Jan uec Ue: uec uec Dec Dec Dec 2006 2006 2007 2008 2009 2010 2011 2012 Time M PU-cy - 1 Se:ectice ,idea Va.,es LSD 2 w S C H U L T Z C 0 L L I N 5 L A W S 0 N C H A M B E R 5. i N C CUMULATIVE EXCESS RETURNS Jan 2003 -Doc 2012 Using Arhh, Estimated, Overall Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2002 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 T me — HghMark Internationa: Opportu+d,es M CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BEN EFTS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 . 2 0 1 2 DODGE & COX INTERNATIONAL STOCK OVERALL EFFECTIVE ASSET MIX Dodge & Cox International Stock : Overall Aggregate US Bonds 1 000 30 Day T -Bd: 000 Tota US Stock 012 Emerging Markets Stock 0 16 Small Paa6c Stock 000 Smal Europe Stock - D 11 Large Pacific Value Stock 0 10 Large Pacific Grovith Stock 0 07 Large Europe Vaue Stock 044 Large Europe Grovah Stock 000 000 010 - 020 030 040 050 06 700 700 0T080 090 100 Style 9617% OVERALL STYLE /SELECTION Style/Selection Dodge & Cox International Stock: Overall Seiecto' 383 %, MONTHLY EXCESS RETURNS Jan 2003 - Dee 2012 Using Arith., Estimated, Overall Return Values 120% 100% 80% 60% 40% 20 %- 00 %��� -20% 1- r' 40% -s 0 %- -6 o %- -10 0% Jan Dec Dec Dec Dec Dec Dec Dec De_ Dec Dec 2003 2003 2004 2005 2005 2007 2006 2009 2010 2011 2012 T me Dodge 6 Cox InternaG;,nal Stock ROLLING STYLE BENCHMARK Area Graph for Dodge 6 Cox International Stock - Estimated Weights Weights Jan Dec Dec Dec Dec Dec Dec De- 2006 2006 2007 2006 2009 2010 2011 2012 Time Large Europa Groveth Stock Ej Large E rope Value Stack Large Pacific GrovAh Stock Large Paufic Value Stack Smal Europe Stock Sma I Pacific Stock Emerging Markets Stock Total US Stock 30 Day T -Bill Aggregate US Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE Rsquarad Graph for Dodge & Cox International Stock - Estimated Weights Weights 100 %-T Jan uec uec Uec Dec Uec uec Dec 2006 2006 2007 2009 2009 2010 2011 2012 Time m Po.y []Selection CUMULATIVE EXCESS RETURNS Jan 2003 -Dec 2012 Using Arlth, Estimated, Overall I ndex Values (USD) 2 WIN 1 09 , I — Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2002 2003 2004 2005 2006 2007 2006 2009 2C10 2011 2012 T.me — Dodge 6 Cox International Stack S C H U L T 2 C 0 L L I N S L A W S 0 N C R A M B E R S I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 31, 2 0 1 2 SCHRODER EMERGING MARKET EQUITY INV OVERALL EFFECTIVE ASSET MIX Schroder Emerging Market Equity Inv : Overall Aggregate US B -nds 000 30 Day T -Bill I 000 Total US Stock 002 Emerging Markets Stock 092 Small Pacific Stock 000 Small Europe Stock 000 Large Pacific Value Stock 000 Large Pacific Growth Stock 0 00 Large E„rope Vakie Stack 0 01 Large Europe Growth Stock 004 000 010. 020.030 040 050 060 070 080 090 100 Style ( 98 OVERALL STYLE /SELECTION Style/Selection Schroder Emerging Market Equity Inv: Overall MONTHLY EXCESS RETURNS Apr 2006 - Dec 2012 Using Arith., Estimated, Overall 1 85 %) Return Values 120%- 10 0% 80% 60% 40% 20 %- 0 0% -20% 40% -60%- -8 0% - 100 % -, -120% 1 - .1,- .., .i_ Apr Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun De- 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 Time Schroder Emerging Market Equity Inv S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S, ry ROLLING STYLE BENCHMARK Area Graph for Schroder Emerging Market Equity Inv - Estimated Weights Weights Apr Dec Jun Dec Jun Dec Jun Dec 2009 2009 2010 2010 2011 2011 2012 2012 Time Large Europe Growth Stock © Large Europe Value Stock Large Pacific Growth Stock Large Pacific Value Stock Small Europe Stock Small Pacific Stock Emerging Markets Stork Total US Stack 30 Day T -B. Aggregate US Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for Schroder Emerging Market Equity Inv - Estimated Weights Weights 100% 95 %- 90% 85% 80% 75 %- 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -pohcy 8c 12 Time r7i Sereconn CUMULATIVE EXCESS RETURNS Apr 2006 -Dec 2012 Using Arith, Estimated, Overall :ndez Vaues(USD. 2 1.5 Mar Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 Time — Schroder Emerging Market Equity nv CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST - EMPLOYMENT BENEFITS TRL ST REPORT FOR THE PERIOD ENDING DECEMBER 31. 2012 VANGUARD SHORT -TERM INVESTMENT -GRADE ADM OVERALL EFFECTIVE ASSET MIX Vanguard Short-Term Investment -Grade Adm: Overall Gobal Bonds 000 US 30 Day Treasuries 030 US Corp High Yield Bonds. 007 US Long Gott Bonds 000 US Long Corp Bonds 000 US Intermediate Gov't Bonds 000 US Intermediate Corp Bonds 000 US Short GoVt Bonds 000 US Short Carp Bonds 054 000010 020 030 0.40 050 050 070 060 090 100 Stye 19065% OVERALL STYLE /SELECTION erylelseleetion Vanguard Short-Term Investment -Grade Adm : Overall act o, 19 3S %I MONTHLY EXCESS RETURNS Jan 2000 - Dee 2012 Using Arith „Estimated, Ovarall Return Values 4 0 %l 3S% 11I 30 %i 25% 20% 15% 10% -05% -1 0% - .1 5% -20% -25% .30% -35% 40% j p.. _ .,1n,nmv,ln.._nn..,...�...- i Jan Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time Vanguard Short-Tenn Investment-Grade Adm ROLLING STYLE BENCHMARK Area Graph for Vanguard Short-Term Investment -Grade Adm - Estimated Weights We ghts Jan Uec Uec Uec Dec Uec Uec Ue- 2006 2006 2007 2006 2009 2010 2011 2012 Tme US Short Corp Bonds US Short Gov't Bonds US Intermediate Carp Bands US Intermediate Gov't Bonds US Long Corp Bonds . US Long Galt Bonds US Corp High Yield Bands US 30 Day Treasures Global Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE R- Squared Graph for Vanguard Short -Term Investment -Grade Adm - Estimated Weights Weights 100 %T -- Jan Uec Uec Dec Dec Uec Dec Dec 2005 2006 2007 2006 2009 2010 201' 2012 Time poky Se'scbon CUMULATIVE EXCESS RETURNS Jan 2007 - Dee 2012 Using Aridt., Estimated, Overall Inde. Values (USD) 2 15 1 99 09 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2002 2003 2004 2005 2006 2007 2005 2009 2010 2011 2012 Time Vanguard Short-Term Investment -Grade Adm S C H U L T Z C O L L I N S L A W S O N C H A M B E R S . I M C 3 2 CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 HIGHMARK BOND FID OVERALL EFFECTIVE ASSET MIX 024 US Intermediate Corp Bands 0 37 US Short Govt Bonds 012 US Short Corp Bonds ■ 010 000 010 020 030 040 050 060 070 060 090 100 Stye 1 95 fig% OVERALL STYLE /SELECTION style/Selection HighMark Bond Fid : Overall Style Selection (4 31 %, MONTHLY EXCESS RETURNS Jan 2003 - Dee 2012 Using Arith., Estimated, Overall Return Values 40 %- 35%- 30% 25% 20% 15% 10 %- 05% 1 0% ANA 11 PAR OL -0 5 �� 5% -1 0% -1 5% -20%- -2S%- -30% -35%- Jan Dec Dec Dec Dec Dec Cec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time HghMark Bond Fid ROLLING STYLE BENCHMARK HighMark Bond Fid : Overall Style Global Bonds We -ghts US 30 Day Treasuries �00 006 US Corp High Yield Bonds, 0 04 US Long Galt Bonds, 004 US Long Corp Bonds I 004 US Intermediate Govt Bonds % 024 US Intermediate Corp Bands 0 37 US Short Govt Bonds 012 US Short Corp Bonds ■ 010 000 010 020 030 040 050 060 070 060 090 100 Stye 1 95 fig% OVERALL STYLE /SELECTION style/Selection HighMark Bond Fid : Overall Style Selection (4 31 %, MONTHLY EXCESS RETURNS Jan 2003 - Dee 2012 Using Arith., Estimated, Overall Return Values 40 %- 35%- 30% 25% 20% 15% 10 %- 05% 1 0% ANA 11 PAR OL -0 5 �� 5% -1 0% -1 5% -20%- -2S%- -30% -35%- Jan Dec Dec Dec Dec Dec Cec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time HghMark Bond Fid ROLLING STYLE BENCHMARK Area Graph for HighMark Bond Fid - Estimated Weights We -ghts 100% 90% % Pr 70% % 50% 40% 30% 20% 10% 0% Jan Dec Dec Dec Dec Dec Dec Dec 2006 2006 2007 2008 2009 2010 2011 2012 Time US Short Corp Bonds [..: US Short Govt Bonds US mermediate Corp Bonds US Intermediate Gott Bonds US Long Carp Bonds . US Long Govt Bonds Bonds US Corp High Yield B US 30 Day Treasuries Global Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE RSquared Graph for HighMark Bond Fid - Estimated Weights We -ghts 100 %T Jan Uec Dea pea Dec Dec Uec Dec 2006 2006 2007 2008 2009 2010 2011 2012 T,me Po"cy [ ; Seecticn CUMULATIVE EXCESS RETURNS Jan 2003 - Dec 2012 Using Arhh. Estimated, Overall .r.dex Values iUSD, 2 w 1 09 - --- ter..... -• -- - ^�- �•-, -- Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2002 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time — HighMatk Band Fid S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5 1 N C CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 PIMCO TOTAL RETURN INSTL OVERALL EFFECTIVE ASSET MIX PIA CO Total Return hied: Overall Style Global Bonds ■ 007 US 30 Day Treasuries 000 US Corp High Yield Bonds' 003 US Long Govt Bonds 000 US Long Corp Bonds 000 US Intermediate Gott Bonds 019 US Intermedlate Corp Bonds 0 55 US Short Govt Bonds 016 US Short Corp Bonds 000 J - - .— . . . . . . . I _ . _ 000 0 10 020 030 040 050 060 070 080 0 90 100 Sty e, 85 OVERALL STYLE /SELECTION StylelSelection PIMCO Total Return Instl : Overall Style MONTHLY EXCESS RETURNS Jan 2003 -Dec 2012 Using Arhh., Estimated, Overall 14 05 %l Return Va ues 40% 35% 30% 25% 20% 15% 10% 0 0% 00% -05 %+ -1 0% -1 5% -2 0% -25%- -30% -3 5% Jan Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time PWCO Total Return rosd S C H 0 L T 2 C 0 L L I N S L A W S 0 N C H A M B E R S, I N ROLLING STYLE BENCHMARK Area Graph for PIMCO Total Return Instl - Estimated Weights Weights Jan Dec Dec Dec Dec Dec Dec Dec 2006 2006 2007 2008 2009 2010 2011 2012 T me US Short Corp Bands 10 US Shod Govt Bands US Intermediate Corp Bcnds US Intermed ate Govt Bonds US Long Corp Bonds US Lang Gov't Bonds US Corp High Yield Bonds US 30 Day Treasuries G obal Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE It-Squared Graph for PIMCO Total Return Instl - Estimated Weights Weights Time P�scy ® Selection CUMULATIVE EXCESS RETURNS Jan 2007 - Dec 2012 Using Arith., Estimated, Ovsrall ndes Values (USD) 2 N t I' 1 09 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 T,me — P'MCO Tota Retum Inst 1c 12 CENT?„'_ CrS' T 2C '',')STA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST REPORT FOR THE PERIOD ENDING DECEMBER 31, 2012 PIMCO HIGH YIELD INSTL OVERALL EFFECTIVE ASSET MIX PIMCO High Yield Insti : Overall Style Global Bonds' 003 US 30 Day Treasuries 000 US Corp High Yield Bonds 081 US Long Govt Bonds 000 US Long Carp Bonds 004 US Intermediate Gott Bands 000 US Intermed ate Corp Bonds. 0 12 US Short Gott Bonds 0 00 US Short Corp Bonds 000 000 010 020 030 040 050 060 070 080 090 100 Style t 95 68% OVERALL STYLE /SELECTION Style/Selection PIMCO High Yield Instl: Overall Style Selection (4 32 %, MONTHLY EXCESS RETURNS Jan 2002 - Dec 2012 Using Arith., Estimated. Overall Return Values 40% 35% 30%-- 25 20 %- 1.5% 10% 05% 00% -05% -1 0% -1 5% -2 0% -25% -30 %- -3 5% -40% —t Jan Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Time PIMCO High Yie d nsd ROLLING STYLE BENCHMARK Area Graph for PIMCO High Yield Insti - Estimated Weights Weights Jan Dec Dec De: Dec Dec De: Dec 2006 2006 2007 2006 2009 2010 201• 2012 T.me US Short Corp Bonds US Short Gott Bonds US Intermediate Corp Bonds US Intermedate Govt Bonds US Long Corp Bonds . US Long Govt Bonds Bonds US Corp High Yield B US 30 Day Treasuries Globa• Bonds FUND /BENCHMARK HISTORICAL CORRESPONDENCE R- Squared Graph for PIMCO High Yield Insti - Estimated Weights Weights 100% Jan Dec Dec Dec Dec Dec fie: Dec 2006 2006 2007 2006 2009 2010 2011 2012 T me �POHCy i iSelection CUMULATIVE EXCESS RETURNS Jan 2007 - Dec 2012 Using Arhh.. Estimated, Overall ndex Values (USDA 2 4 1 C 94 09 +r–T–•+–+ -+ Dec Dec Dec Dec Dec Dec Dec Dec Dec Doc Dec 2002 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 Time PIMCO High Yield Intl S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R S, I N C 3 CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRLST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 OVERALL STYLE DISTRIBUTION OF DOMESTIC EQUITY FUNDS OVERALL DISTRIBUTION Overall Style Jan 2003 - Dec 2012 100% -- 90% C 80% T. Rowe Price Equity Income 70% 60 %- Loomis Sayles Value Y 50 % -' ■ 40 % -- a 30% 20% Z Sentinel Common Stock A TIAA -CREF Mid -Cap Value Instl 10% ♦ 0% • -10% TIAA -CREF Mid -Cap Value Instl -20% T. Rowe Price New Horizons -30% Columbia Small Cap Value Fund II Z -40% -50% -60% -70% Columbia Small Cap Value Fund II Z -80% -90% -100% Columbia Contrarian Core Z V Sentinel Common Stock A T. Rowe Price Growth StockA *A Harbor Capital Appreciation Instl rn m J HighMark Geneva Mid Cap Growth A - 100% -80% -60% -40% -20% 0% 20% <— Value ROLLING PERIOD HISTORICAL DISTRIBUTION Rolling Style Jan 2003 - Dec 2012 T. Rowe Price New Horizons E I v 40% 60% 80% 100% Growth - -> 110% 90% _> AT I 50% rn 30% , J z a�Z 10% H � -10% -30% HI ~ 1 H - -50% N -N N"g" (E -70% v -90% °/ 11 0 0 - T T I -110% -90% -70% -50% -30% -10% 10% 30% 50% 70% 90% 110% <— Value Growth - -> ■ Harbor Capital Appreciation Instl a T. Rowe Price Growth Stock Columbia Contrarian Core Z Sentinel Common Stock A a T. Rowe Price Equity Income ♦ Loomis Sayles Value Y • HighMark Geneva Mid Cap Growth A Z TIAA -CREF Mid -Cap Value Instl H T. Rowe Price New Horizons • Columbia Small Cap Value Fund II Z 5 C H U L T Z C 0 L L I N S L A W S 0 N C H A N 8 E R S, I N S CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 OTHER POST - EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 OVERALL STYLE DISTRIBUTION OF FOREIGN EQUITY FUNDS [OVERALL DISTRIBUTION Overall Style Jan 2003 -Dec 2012 100% MFS International Growth I 90% 80% 70% ♦ HighMark International Opportunities M I A 60% 50% Dodge & Cox Intemational Stock 40% 30% 20% 10% 0% Schroder Emerging Market Equity Inv, -10% -20% -30% _ -40% -50% -60% -70% -80% -90% -100% - r - 100% -80% -60% -40% -20% 0% 20% <— Value ROLLING PERIOD HISTORICAL DISTRIBUTION Rolling Style Jan 2003 - Dec 2012 a� rn `m _ J Y rn c d E Lu E rn V 40% 60% 80% 100% Growth - -> 110% 90% ♦ W w i 50% .TV •x � A rn m _ J 30% y y 10% /� s -10% rn W E -30 %– W M -50% E -70% S -90% - 110% -110% -90% -70% -50% -30% -10% 10% 30% 50% 70% 90% 110% <— Value Growth - -> ■ MFS International Growth I A HighMark Intemational Opportunities M Dodge & Cox International Stock Schroder Emerging Market Equity Inv S C H U L T Z C 0 L L I N S L A W S 0 N C H A M B E R 5 . I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 /OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 OVERALL STYLE DISTRIBUTION OF FIXED INCOME FUNDS OVERALL DISTRIBUTION 100% 90% 80% 70% 60 %- 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% -70% -80% -90% - 100% - 100% -80% Overall Style Jan 2003 - Dec 2012 n E m 0 0 J E PIMCO High Yield Insu `m 0 HighMark Bond Fid L rn A V PIMCO Total Return Instl Vanguard Short-Term Investment -Grade Adm -60% -40% -20% 0% 20% 40% 60% 80% 100% < -- Government Corporate - - -> ROLLING PERIOD HISTORICAL DISTRIBUTION Rolling Style Jan 2003 - Dec 2012 110% 90% 70% 50% 30% 10% -10% -30% -50% . ��� ♦ 1 -70% -90% - 110% -110% -90% -70% -50% -30% -10% 10% <— Government ■ Vanguard Short-Term Investment -Grade Ado; HighMark Bond Fid V PIMCO Total Return Instl .1 PIMCO High Yield Instl n E W H o� 0 0 J i i i T - 30% 50% 70% 90% 110% Corporate - -> S C H U L - -. - L I N S L A W S 0 N C H A M B E R 5, I N C CENTRAL CONTRA COSTA SANITARY DISTRICT GAS 45 /OTHER POST- EMPLOYMENT BENEFITS TRU57 R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 . 2 0 1 2 The following tables break down the fees for the Trust: As of: 12/31/2012 Expense Color Code FIRST QUARTILE EXPENSES SECOND QUARTILE EXPENSES THIRD QUARTILE EXPENSES S C H U L Z C 0 L L I N S L A W S 0 N C H A M 8 E R S. I N r s % S LARGE GROWTH FUNDS 1.28 Harbor Capital Appreciation Intl $1,123,309 0.67 $7,526 7 0.30 T. Rover Price Groxth Stock $1,124,599 010 $7,872 8 0.34 LARGE BLEND FUNDS 1.18 Columbia Contrarian Core $1,186,095 0.95 $11,268 35 1.58 Sentinel Common Stock $1,183,599 0.78 $9,232 23 1.03 LARGE VALUE FUNDS 1.21 T. Rowe Price Equip Income $1,513,057 0,68 $10,289 11 0.63 Loomis SqjlesVahoeY $1,513,410 0.73 $11,048 14 0.80 MID -CAP GROWTH FUNDS 1.39 HighAlark Geneva Mid Cap Growth Fiducian $594,065 1.13 $6,713 36 0.81 MID -CAP VALUE FUNDS 1.33 TIAA- CREFMid -Cap Value Intl $727,026 0,46 1 $3,344 2 0.06 SMALL GROIfTH FUNDS 1.50 T. Rome Price New Horizons $663,060', 0.81 $5,371 4 0.10 SMALL VALUE FUNDS 1A5 Columbia Small Cap Value Fund II Z $1,061,369 1.06 $11,251 19 0.77 REAL ESTATE FUNDS 1.38 Nuveen Real Estate Secs/ $457,764 1.04 $4,761 27 0.47 FOREIGN LARGE GROFVTH FUNDS 3A2 AIFS International Grrnvth 1 $328,754 1.12 $3,682 29 0.36 FOREIGN LARGE BLEND FUNDS 1.40 HighAlark International Opportunities Fid $395,186 1.27 $5,019 44 0.66 FOREIGN LARGE VALUE FUNDS 139 Dodge & Cox International Stock $328,006 0.64 $2,099 5 0.06 EMERGING MARKETS FUNDS 1.65 Schroder Emerging Market Equip Im $996,057 1.25 $12,451 19 0.72 MONEY MARKET FUNDS 0S8 HighAlark Diversified Monep Market Fid $982,142 0.57 $5,598 57 2.13 SHORT TERM BOND FUNDS 0.85 Vanguard Short -Term Invewment -Grade Adm $2,686,205 0.11 $2,955 2 0.20 INTERMEDIATE TERM BOND FUNDS 0.93 HighAlark Bond Fid $4,449,231 0.72 $32,034 37 6.25 PIMCO Total Return Intl $4,497,212 0.46 $20,687 11 1.88 HIGH YIELD BOND FUNDS 1.15 PIMCO High Yield Instl $525,274 0.55 $2,889 3 0.06 Plan Totals $26.335.420 0.67% 5176.089 N/A 18.5' Expense Color Code FIRST QUARTILE EXPENSES SECOND QUARTILE EXPENSES THIRD QUARTILE EXPENSES S C H U L Z C 0 L L I N S L A W S 0 N C H A M 8 E R S. I N r CENTRAL CONTRA COSTA SANITARY DISTRICT GASB 45/OTHER POST- EMPLOYMENT BENEFITS TRUST R E P O R T F O R T H E P E R I O D E N D I N G D E C E M B E R 3 1 , 2 0 1 2 For Trust Assets From: Annual Rate: Amount $0 - $10,000,000 0.25% $25,000 $10,000,001- $15,000,000 0.20% $10,000 $15,000,001- $50,000,000 0.15% $17,003 $50,000,001 and above 0.10% $0 Total PARS Fee $52,003 HighMark Investment Management Fee Breakdown Total Trust Assets $26,335,420 Amount in HighMark Funds $6,420,624 Amount subject to HighMark Fee: $19,914,796 For Amount Subject to HighMark Fee From: Annual Rate: Amount $0 - $5,000,000 0.35% $17,500 $5,000,001- $10,000,000 0.25% $12,500 $10,000,001 - $15,000,000 0.20% $10,000 $15,000,000 - $50,000,000 0.15% $7,372 $50,000,000 and above 0.10% $0 Total HighMark Investment Management Fee $47,372 Fee Breakdown % of Trust Assets Amount Fund Level Fees 0.67% $176,089 PARS Fee 0.20% $52,003 HighMark Investment Management Fee 0.18% $47,372 Grand Total of Fees 1.05% $275,464 - C H U L T 2 C r) L. L I N S L A '�'� I H A M B E R S. : N r .1 0 MARCH 5, 2013 SPECIAL EDITION HAWKINS DELAFIELD & WOOD LLP HAWKINS ADVISORY 1015 EFFECT OF SEQUESTRATION ON TAX CREDIT BOND PAYMENTS As part of the Federal budget sequestration, the Internal Revenue Service ( "IRS ") has announced that, as of March 1, 2013, credit payments claimed on Form 8038 -CP by issuers of certain tax credit bonds, including Build America Bonds, Recovery Zone Economic Development Bonds, Qualified School Construction Bonds, Qualified Zone Academy Bonds, New Clean Renewable Energy Bonds and Qualified Energy Conservation Bonds, may be subject to a reduction of 8.7 %. Without further Congressional action, this reduction will remain in effect for all credit payments made from March 1, 2013 through September 30, 2013, inclusive, after which date a different rate will apply. Issuers should continue to prepare and file Form 8038 -CP as before, and they will be notified if and to what extent their credit payments are reduced. Issuers with questions about the status of their credit payments can contact the IRS at 1- 877 - 829 -5500. Please contact a member of the Tax Department if you have any questions about the use of this information. About Hawkins Advisory The Hawkins Advisory is intended to provide occasional general comments on new developments in Federal and State law and regulations that we believe might be of interest to our clients. Articles in the Hawkins Advisory should not be considered opinions of Hawkins Delafield & Wood LLP. The Hawkins Advisory is not intended to provide legal advice as a substitute for seeking profes- sional counsel; readers should not under any circumstance act upon the information in this publication without seeking specific professional counsel. Hawkins Delafield & Wood LLP will be pleased to provide additional details regarding any article upon re- quest. This Hawkins Advisory is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that the Internal Revenue Service may impose on the taxpayer. Additional copies of this edition of the Hawkins Advisory may be obtained by contacting any attorney in the Firm. New York San Francisco Newark Hartford One Chase Manhattan Plaza One Embarcadero Center One Gateway Center 20 Church Street New York, NY San Francisco, CA Newark, NJ Hartford, CT Tel: (212) 820 -9300 Tel: (415) 486 -4200 Tel: (973) 642 -8584 Tel: (860) 275 -6260 Los Angeles Sacramento Washington, D.C. Portland 333 South Grand Avenue 1415 L Street 601 Thirteenth Street, N.W. 200 South West Market Street Los Angeles, CA Sacramento, CA Washington, D.C. Portland, OR Tel: (213) 236 -9050 Tel: (916) 326 -5200 Tel: (202) 682 -1480 Tel: (503) 402 -1320 1 (i�1`fii'/� DELAFIELD & WOOD u N Debt Service Schedules bt'-�J( V % 6 The following table presents a schedule of the Installment Payments, assuming no optional prepayments. The Installment Payments have been established in an amount equal to debt service on the Certificates. The Refundable Credits are shown as a credit against debt service with respect to the Series A Certificates; the Refundable Credits are pledged by the District as security for the Installment Payments allocable to the Series A Certificates only. Year Series A Series A Less Series A Series B Series B Total Series B Ending Certificates - Certificates - Refundable Credit Certificates D ebt Certificat es - Certificates - Certificates Sept 30 Principal Interest Service Principal Interest Debt Service Grand Total 2010 $ 959,287.78 $ (335,750.72) $ 623,537.06 $3,460,000 $1,004,06944 $ 4,464,06944 $ 5,087,606.50 2011 1,190,840.00 (416,794.00) 774,048.00 3,465,000 1,210,35000 4,875,35000 5,449,396.00 2012 1,190,840.00 (416,794.00) 774,048.00 3,605,000 1,071,750.00 4,678,750 00 5,450,798 00 2013 1,190.840.00 (418,794 00 ) /i/ 774,046.00X 3,720,000 963,600.00 ,� 4,683,800 00 5,457,846 00 2014 — 1,190,840.00 (418,794.00)' 774,046.00 3,865,000 829,300.00 4,694,30000 5,468,34800 2015 1,190,840.00 (418,794 00) 774,046.00 2,210,000 674,700 00 2,884,700.00 3,658,746 00 2016 1,190,840.00 (418,794 00) 774,048.00 2,300,000 586,300.00 2,888,300 00 3,660,346 00 2017 1,190,840.00 (418,794.00) 774,046 00 2,405,000 484,300 00 2,889,300 00 3,663,348.00 2018 1,190,840.00 (416,794 00) 774,046.00 2,480,000 412,150.00 2,892,150 00 3,666,196 00 2019 1,190,840.00 (418,794.00) 774,046.00 2,580,000 312,950 00 2.892,950.00 3,666,996 00 2020 $1,660,000 1,190,840.00 (416,79400) 2,434,046 00 1,025,000 209,750.00 1,234,75000 3,668,79600 2021 1,715,000 1,104,520.00 (386,582.00) 2,432,938.00 1,070,000 168,750.00 1,238,75000 3,671,68800 2022 1,775,000 1,012,767.50 (354,46862) 2,433,298.88 1,125,000 115,250.00 1,240,250.00 3,673,54888 2023 1,835,000 915,142.50 (320,299.88) 2,429,842.62 1,180,000 59,000.00 1,239,000.00 3,668,84262 2024 1,905,000 812,382.50 (284,333.88) 2,433,04862 -- — 2,433,04862 2025 1,975,000 703,797.50 (246,329 12) 2,432,468.38 2,432,468 38 2026 2,060,000 574,435.00 (201,052.26) 2,433,382.74 — 2,433,382.74 2027 2,145,000 439,505.00 (153,826.76) 2,430,678 24 2,430,678.24 2028 2,235,000 299,007.50 (104,652,62) 2,429,354 88 — — 2,429,354 88 2029 2,330,000 152,615.00 53 415.26 2,429.199.74 2,429,199 74 Total $19,635,000 $18,881,8602 ($6,608,651.12) j $31,908,209.16 $34,490,000 $8,102,219.44 $42,592,21944 $74,500,428.60 bt'-�J( V % 6 a CQJ /� log ro `L Employees Retirement Association 1355 willow way suite 221 concord ca 94520 925.521.3960 fax 925.646.5747 March 15, 2013 To All Interested Parties: In the next few days you will receive an agenda for the CCCERA's Board of Trustees meeting on March 27, 2013. This meeting will include items of interest to all employers as follows: Educational session by The Segal Company on CCCERA's Actuarial Funding Policy. This educational session will include the significant provisions that ,would comprise an actuarial funding policy for CCCERA. We will review CCCERA's current funding policy elements, along with the consideration of the Government Accounting Standards Board (GASB)'s recently adopted Statements No. 67 and 68. This educational session will include discussion on the general funding policy goals, the actuarial cost method, asset smoothing method, amortization method, and various other funding policy parameters. Any recommended changes would be proposed for use in the December 31, 2012 actuarial valuation. Please join us for this informational meeting regarding an educational session on the Actuarial Funding Policy. The Retirement Board administers the fund for the benefit of all member groups. We invite you to attend this meeting, ask questions and learn more about this critical subject. Sincerely, Marilyn Leedom Chief Executive Officer