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HomeMy WebLinkAbout03. GASB 45 Trust First Quarter Report3.
OPEB Prefunding Trust Program
Client Review
gt"et Central Contra Costa Sanitar District
-M
v
April 27, 2015
PUBLIC
AGENCY
REnREMENT
SERVICES PARS
TRUSTED SOLUTIONS. LASTING RESULTS.
Contacts
PARS
Mitch Barker, Executive Vice President
mbarker @pars.org; 800.540.6369 ext. 116
Rachael Sanders, Supervisor, Client Services
rsanders @pars.org; 800.540.6369 ext. 121
HighMark Capital Management
Andrew Brown, CFA, Vice President, Senior Portfolio Manager
Andrew. Brown@ highmarkcapital.com; 415 -705 -7605
Role
Corporate Experience
OPEB Experience
Number of plans under
administration
OPEB Trust Team
PURUC
AUNCy
Rcnnu„eNT PARS
sraVICES
Trust Administrator and
Consultant
• Record keeping /Sub -trust
accounting
• Actuarial Coordination
*Monitor Contributions/ Process
Disbursements
• Monitor Plan Compliance
• Ongoing Client Liaison
*Pre-fund Pension Option —
NEW!
31 years
(1984 — 2015)
18 years
bank.. HIGHMARK0
CAPITAL MANAGEMENT
Trustee
• Safeguard plan assets
• Oversight protection
• Plan Fiduciary
• Custodian of assets
152 years
(1863 — 2015)
9 years
Investment Manager
• An investment sub - advisor to U.S.
Bank
• Open architecture
• Investment policy assistance
1,400 plans for 700 public agencies
96 years
(1919 — 2015)
18 vears
Dollars under More than More than More than
administration $1.7 billion $4 trillion $14.9 billion
under management
I
MORE THAN 140 OPEB CLIENT AGENCIES
.f
.., .
Alarneda
Novato
Calaveras County Water District
South Montebello Irrigation District
Allen
Redding
California JPIA
South Orange County Wastewater Authority
Atherton
Rialto
Central Contra Costa Sanitary District
South Placer Fire Protection District
Bakersfield
Richmond
Central Contra Costa Transit Authority
Southern Marin Fire Protection District
Brisbane
Rosemead
Coachella Valley Water District
Superior Court of CA, County of Contra Costa
Camarillo
San Leandro
Coastside Fire Protection District
Superior Court of CA, County of Imperial
Carver
Santa Clara
Contra Costa Mosquito & Vector Control District
Superior Court of CA, County of Inyo
Commerce
Santa Clarita
Crestline Village Water District
Superior Court of CA, County of Kern
Conroe
Sausalito- Pension Too Delta Diablo
Superior Court of CA, County of Marin
Coppell
Southlake
Desert Recreation District
Superior Court of CA, County of Merced
Coronado
Temple City
Eastern Sierra Community Services District
Superior Court of CA, County of Orange
Covina
Tyler
Fresno Irrigation District
Superior Court of CA, County of San Mateo
Crescent City
Union City
Fresno Metropolitan Flood Control District
Superior Court of CA, County of Shasta
Cupertino
Wareham
Glenn- COlusa Irrigation District
Superior Court of CA, County of Siskiyou
Duarte
Woodland
Great Basin Unified Air Pollution Control District
Superior Court of CA, County of Sonoma
Elk Grove
YOUntville
Hayward Area Recreation & Park District
Tarrant Regional Water District
Euless
Yucca Valley
Housing Authority of Florence, SC
Vallejo Sanitation & Flood Control District
Fort Worth
COUNTIES ErHousing Authority of the County of San Bernardino
Ventura Regional Sanitation District
Fountain Valley
Amador
INTELECOM
Walnut Valley Water District
Galt
Contra Costa
Menlo Park Fire Protection District
West County Wastewater District
Garland
Imperial
Mesa Water District
Western Riverside Council of Governments
Half Moon Bay
Inyo
Metropolitan Transportation Commission
SCHOOL
Haltom City
Kern
Mid - Peninsula Water District
Bass Lake Joint UESD Ontario - Montclair SD
Hercules
Merced
Mojave Desert Air Quality Management District
Bellflower USD Red Bluff Joint ESD
Hermosa Beach
Mono
Montecito Fire Protection District
Calistoga Joint USD Red Bluff Joint UHSD
Hurst
Plumas
Monterey Bay Unified Air Pollution Control District
Centinela Valley UHSD River Delta USD
La Verne
Plymouth
Moraga- Orinda Fire Protection District
Corning Union ESD Riverdale Joint USD
Lake Forest
San Benito
Municipal Water District of Orange County
El Dorado UHSD San Bruno Park SD
Lakewood
Shasta
Northern Lancaster County Reg Police Department
Fowler USD Sari Marino USD
Livermore
Solano- Pension Too
Orange County Vector Control District
John Swett USD Trona JUSD
Mammoth Lakes
Sonoma
Orange County Water District
Lemon Grove SD Twin Rivers USD
Mansfield
Trinity
Placer County Resource Conservation District
Manteca USD Visalia USD
North Richland Hills
Yolo
Rancho Murrieta Community Services District
Moreno Valley USD
COMMUNITY •
Rowland Water District
State Center CCD
Yosemite CCD
Santa Barbara County Law Library
Updated April 8, 2015
.f
Plan Overview
Type of Plan: IRC Section 115 Irrevocable Exclusive Benefit Trust
Trustee Approach: Discretionary
Plan Effective Date: November 6, 2008
Plan Administrator: Thea Vassallo- Finance Manager
Current Investment Strategy: Moderate: HighMark PLUS (Active) (Individual Account)
As of 02/28/2015:
Initial Contribution: March 2009— $560,000
Additional Contributions: $27,940,800
Total Contributions: $28,500,800
Disbursements: $0
Total Investment Earnings: $11,137,814
Account Balance: $39,183,715
-Selected on 11/18/2008
Summary of the Plan Activity
Central Contra Costa Sanitary District
Total Assets, Contributions & Disbursements
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$ 25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
oc
ti° titi ,yti
Plan Year Ending
ti3 tia by
*Plan Year Ending June 2015 is based on 8 months of activity through 02/28/2015.
Plan Year
End
Contributions
Disbursements
Total Assets
Jun -09
$2,240,000
$0
$2,341,251
Jun -10
$6,720,000
$0
$9,305,799
Jun -11
$6,565,000
$0
$18,077,303
Jun -12
$4,131,600
$0
$22,718,524
Jun -13
$4,142,600
$0
$29,352,833
Jun -14
$2,828,400
$0
$36,131,536
Jun -15*
$1,873,200
$0
$39,183,715
It
Actuarial Results
We have received the actuarial reports prepared by Bartel & Associates on April 6, 2015 with a
valuation date of July 1, 2014. In the tables below, we have summarized the results.
Demographic Study
Active Participants
July 1, 2012
242
July 1, ,,
259
Retirees
241
249
Total Plan Members
483
508
Active Average Age
46.2
46.0
Retiree Average Age
67.3
68.1
i
Actuarial Results (continued)
July 1,
,.
6.25% ..
6.25% .. Rate
Present Value of Projected Benefits
(PVPB)
$113,900,000
$118,848,000
Actuarial Accrued Liability
$100,498,000
$103,904,000
Actuarial Value of Assets
$22,481,000
$33,695,000
Unfunded Actuarial Liability
$78,017,000
$70,209,000
Normal Cost
$2,134,000
$2,325,000
Annual Required Contribution
$8,103,000
$7,866,000
(ARC)
Pay -As- You -Go
$4,813,000
$5,376,00
Central Contra Costa Sanitary District
First Quarter 2015
Presented by
Andrew Brown, CFA
JHIGHMARK®
CAPITAL MANAGEMENT
DISCUSSION HIGHLIGHTS - CCCSD
Asset Allocation: Moderate HM Plus BAs of 4-16-2015)
Allocation Target — 48.5% stocks (40 -60% range), 48% bonds (40 -60% range), 3.5% cash (0 -20% range)
Large cap 24.5 %, mid -cap 4.25 %, small cap 7.25 %, international 12.5%
Performance: Central Contra Costa Sanitary District
(as of 3 -31 -2015) gross of investment management fees, net of fund fees
3- months: 2.42%
1 -Year: 5.88%
Inception to date (4/1/2009) 11.87%
Bonds — Short duration a negative, High Yield slight positive
Stocks — Large cap and small cap outperformance. International and mid cap laggards.
Overweight to international
Active management challenges in 2014
12 -Month Changes
Asset Allocation: Euro - Stoxx, Ivy Mid -Cap Growth Fund
Outlook 2015
Oil and the Fed
International — Central banks supporting Japan and Europe
GDP est. 2.5% in 2015
Unemployment 5.5%
S &P 500 Target 2140
10 -yr yield 2.25 %, Fed Funds 0.5%
Plan Goals and Objectives
Discount rate and trends
JHIGHMARK°
CAPITAL MANAGEMENT
CCCSD
Asset Allocation
Total Assets: $39,311,571
Period Ending 3 -31 -15
1Q15 Return: 2.42%
1 Year Return: 5.88%
Inception -to -Date Return: 11.87%
Inception Date. 4 -1 -2009
Fixed Income
$19,048,080
48.4%
Investment Summary
Since Inception
Beginning Value
$ 3,771,422.27
Contributions
33,636, 811.95
Withdrawals
-8,701,167.64
Gain (Loss)
5,615,852.40
Interest and Dividends
4,988,716.87
Net Accrued Income
28,804.38
*Ending Market Value
$ 39,340,440.,23
Cash
111496112
Equity
8,779,380
47.8%
* Ending Market Value differs from total market value on page 5 due to differences in reporting methodology. The above ending market value is reported as of
trade date and includes accruals. The Asset Allocation total market value is reported as of settlement date.
A HIGHMARK`p'
CAPITAL MANAGEMENT
PARS: Central Contra Costa Sanitary District
Selected Period Performance
PARS /CENTRAL CONTRA COSTA SANT PRHCP
Account 6746030600
Period Ending: 03/31/2015
Account Inception: 4/2009
Returns are gross -of -fees unless otherwise noted. Returns for periods over one year are annualized. The information presented has been obtained from
sources believed to be accurate and reliable. Past performance is not indicative of future returns. Securities are not FDIC insured, have no bank guarantee,
and may lose value.
HIGHMARK® PARS: Central Contra Costa Sanitary District
CAPITAL MANAGEMENT
Year
Inception
to Date
to Date
Sector
(3 Months)
1 Year
2 Years
3 Years
5 Years
(6 Years)
Cash Equivalents
.00
.02
.02
.02
.03
.10
iMoneyNet, Inc. Taxable
.00
.01
.01
.02
.02
.03
Total Fixed Income
1.69
4.25
2.21
3.48
4.47
5.90
BC US Aggregate Bd Index
1.61
5.72
2.77
3.10
4.41
4.95
Total Equities
3.18
7.77
14.47
13.69
12.11
18.09
Large Cap Funds
2.00
11.04
17.38
15.97
13.11
18.45
S &P 500 Composite Index
.95
12.73
17.21
16.11
14.47
19.71
Mid Cap Funds
3.42
10.10
14.56
13.95
14.21
Russell Midcap Index
3.95
13.68
18.50
18.10
16.16
23.49
Small Cap Funds
5.16
8.67
18.69
17.64
17.10
23.72
Russell 2000 Index
4.32
8.21
16.26
16.27
14.57
21.47
International Equities
4.21
.82
4.70
4.43
4.08
12.36
MSC/ SAFE Index
4.88
-.92
7.92
9.02
6.16
13.00
MSCI EM Free Index
2.24
.44
-.50
.31
1.75
12.01
Total Managed Portfolio
2.42
5.88
7.88
8.24
8.24
11.87
Account Inception: 4/2009
Returns are gross -of -fees unless otherwise noted. Returns for periods over one year are annualized. The information presented has been obtained from
sources believed to be accurate and reliable. Past performance is not indicative of future returns. Securities are not FDIC insured, have no bank guarantee,
and may lose value.
HIGHMARK® PARS: Central Contra Costa Sanitary District
CAPITAL MANAGEMENT
ASSET ALLOCATION
As of March 31, 2015
Current Asset Allocation Investment Vehicle
Equity
47.77%
Range: 40%-60%
18, 779, 380
Large Cap Core
5.70%
SMGIX
Columbia Contrarian Core Cl Z
2,241,820
4.76%
SICWX
Sentinel Common Stock 1
1,871,300
Large Cap Value
2.70%
DODGX
Dodge & Cox Stock Fund
1,062,628
4.14%
LSGIX
Loomis Sayles Value Fund
1,627,286
Large Cap Growth
3.43%
HACAX
Harbor Capital Appreciation Instl
1,347,763
3.43%
PRGFX
T. Rowe Price Growth Stock Fund
1,348,400
Mid Cap Value
2.07%
TIMVX
TIAA -CREF Mid -Cap Value Instl
815,687
Mid Cap Growth
2.08%
IYMIX
Ivy Mid Cap Growth Fund 1
817,559
Small Cap Value
3.59%
NSVAX
Columbia Small Cap Value Fund II
1,411,196
Small Cap Growth
3.59%
PRNHX
T. Rowe Price New Horizons Fund
1,411,323
International Core
3.72%
NWHNX
Nationwide Bailard Intl Equities Fund
1,460,826
International Value
1.87%
DODFX
Dodge & Cox International Stock Fund
734,323
International Growth
1.87%
MQGIX
MFS International Growth Fund
734,722
Tactical - Europe
2.44%
FEZ
SPDR EURO STOXX 50 ETF
958,854
Emerging Markets
2.38%
SEMNX
Schroder Emerging Market Equity
935,693
Fixed Income
48.45%
Range: 40% -60%
19,046,080
Short-Term
6.17%
VFSUX
Vanguard Short -Term Corp Adm Fund
2,425,309
Intermediate -Term
19.93%
NWJJX
Nationwide HighMark Bond Fund
7,836,558
19.92%
PTTRX
PIMCO Total Return Instl Fund
7,832,042
High Yield
2.42%
PHIYX
PIMCO High Yield Instl
952,172
Cash 3.78% Range: 0%-20%
1,486,112
3.78% FPZXX Money Market 1,486,112
TOTAL 100.00% $39,311,571
-A HIGHMARK® PARS: Central Contra Costa Sanitary District
CAPITAL MANAGEMENT
CENTRAL CONTRA COSTA SANITARY DISTRICT
For Period Ending March 31, 2015
Data Source: Morningstar, SB Investments
Returns less than one year are not annualized. Past performance is not indicative of future returns. The information presented has been obtained from sources
Jbelieved accurate and reliable. Securities are not FDIC insured, have no bank guarantee and may lose value.
HIGHMARK® PARS: Central Contra Costa Sanitary District
CAPITAL MANAGEMENT
3 -Month
YTD
1 -Year
3 -Year
5 -Year
Fund Name
Inception
Return
Rank
Return
Rank
Return
Rank
Return
Rank
Return
Rank
Sentinel Common Stock 1
(7/13)
1.37
41
1.37
41
10.68
54
14.69
58
13.43
44
Columbia Contrarian Core Z
(7/13)
1.20
46
1.20
46
13.12
16
17.12
14
14.94
10
Dodge & Cox Stock
(8/14)
-1.19
90
-1.19
90
6.50
75
18.20
3
13.81
14
Harbor Capital Appreciation Instl
5.55
12
5.55
12
16.18
23
15.78
36
15.08
25
Loomis Sayles Value Fund
(7/11)
-0.38
67
-0.38
67
7.68
57
16.88
9
12.98
33
T. Rowe Price Growth Stock
6.04
7
6.04
7
16.85
19
17.05
16
16.23
9
Idx: Russell 1000
1.59
1.59
-
12.73
--
16.45
--
14.73
--
EQUITY
TIAA -CREF Mid -Cap Value Instl
2.85
47
2.85
47
11.47
23
16.95
47
14.69
32
Idx: Russell Mid Cap Value
2.42
--
2.42
--
11.70
--
18.60
15.84
-
Ivy Mid Cap Growth 1
(5/14)
3.99
77
3.99
77
11.09
56
13.62
68
15.21
37
Idx: Russell Mid Cap Growth
5.38
5.38
--
15.56
17.41
-
16.43
-
EQUITY
Columbia Small Cap Value II Z
3.93
18
3.93
18
6.36
33
16.06
23
14.68
14
Idx: Russell 2000 Value
1.98
--
1.98
4.43
14.79
-
12.54
T. Rowe Price New Horizons
6.40
38
6.40
38
10.99
27
19.03
7
20.72
1
Idx: Russell 2000 Growth
6.63
-
6.63
--
12.06
17.74
--
16.58
INTERNATIONAL
•
Dodge & Cox International Stock
4.20
68
4.20
68
1.48
21
12.25
5
7.99
9
Nationwide Bailard Intl Eqs InSw
4.49
62
4.49
62
1.01
25
10.15
16
7.08
17
MFS International Growth 1
5.11
51
5.11
51
0.68
55
5.87
83
6.63
54
Idx: MSCI EAFE
4.88
--
4.88
--
-0.92
--
9.02
--
6.16
--
Schroder Emerging Market Equity
(11/12)
2.94
23
2.94
23
0.84
33
0.88
41
1.81
42
Idx: MSCI Emerging Markets
2.24
2.24
0.44
0.31
--
1.75
--
SPDR EURO STOXX 50 ETF
(6/14)
4.53
50
4.53
50
-6.12
64
10.12
45
3.69
100
Pimco Total Return Inst'I
2.22
5
2.22
5
5.64
22
4.03
27
4.98
35
Vanguard Short -Term Investment -Grade Adm
1.03
26
1.03
26
2.08
14
2.32
16
2.77
25
Nationwide HighMark Bond InSvc
1.64
41
1.64
41
4.60
63
3.45
49
4.84
42
BarCap US Aggregate Bond
1.61
1.61
5.72
--
3.10
-
4.41
PIMCO High Yield Instl
(11/14)
2.46
34
2.46
34
3.06
11
6.86
34
7.72
40
Credit Suisse HY
2.59
-
2.59
1.39
7.07
--
8.29
Data Source: Morningstar, SB Investments
Returns less than one year are not annualized. Past performance is not indicative of future returns. The information presented has been obtained from sources
Jbelieved accurate and reliable. Securities are not FDIC insured, have no bank guarantee and may lose value.
HIGHMARK® PARS: Central Contra Costa Sanitary District
CAPITAL MANAGEMENT
Administrative Review
✓ Future Contributions
✓ Future Disbursement Requests- Options
✓ Agency's future actuarial valuation for GASB 45 compliance — Next Valuation Due
07/01/16
✓ Investment Guidelines Document — Completed: May, ?014
✓ Prefund Pension Obligations (Pension Rate Stabilization Program)
✓ Client Funding Policy
✓ Client Feedback
15
HIGHMARK®
CAPITAL MANAGEMENT
Vision. Discipline. Results"
WHY THE PARS DIVERSIFIED
CONSERVATIVE PORTFOLIO?
Comprehensive Investment Solution
HighMark' Capital Management, Ines
(HighMark) diversified investment portfolios are
designed to balance return expectations with risk
tolerance. Key features include: sophisticated
asset allocation and optimization techniques,
four layers of diversification (asset class, style,
manager, and security), access to rigorously
screened, top tier money managers, flexible
investment options, and experienced investment
management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above - average returns within acceptable
risk parameters, but have the resources and
commitment to continue to deliver these results.
We have set high standards for our investment
managers and funds. This is a highly specialized,
time consuming approach dedicated to one goal:
competitive and consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation
strategies: HighMark Plus utilizes actively
managed mutual funds while Index Plus utilizes
index -based securities, including exchange -
traded funds. Both investment options leverage
HighMark's active asset allocation approach.
Risk Management
The portfolio is constructed to control risk
through four layers of diversification -- asset
classes (cash, fixed income, equity), investment
styles (large cap, small cap, international, value,
growth), managers and securities. Disciplined
mutual fund selection and monitoring process
helps to drive return potential while reducing
portfolio risk.
INVESTMENT OBJECTIVE
To provide a consistent level of inflation - protected income over the long-term.
The major portion of the assets will be fixed income related. Equity securities
are utilized to provide inflation protection.
Efficient Frontier
Capital Appreciation
Balanced
Moderate
Moderately Conservative
3 /
Conservative
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
• HighMark Plus (Active)
Index Plus (Passive)
Risk (Standard Deviation)
Current Quarter *............................ 1.219E
ASSET ALLOCATION — CONSERVATIVE
PORTFOLIO
Year To Date* .... ............................... 3.88%
Year To Date* .... ............................... 4.3296
Strategic Range
Policy
Tactical
Equity
5 -20%
15%
15%
Fixed Income
60-95%
80%
80%
Cash
0-20%
5%
5%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
• HighMark Plus (Active)
Index Plus (Passive)
Current Quarter * ... ......................... 1.13%
Current Quarter *............................ 1.219E
Blended Benchmark *' ............ .......................... 1.60%
Blended Benchmark *'............ .......................... 1.60%
Year To Date* .... ............................... 3.88%
Year To Date* .... ............................... 4.3296
Blended Benchmark * .............. ..........................4.75%
Blended Benchmark *............. .......................... 4.75%
1 Year ................. ............................... 3.88%
1 Year................. ............................... 4.32%
Blended Benchmark ............... .......................... 4.75%
Blended Benchmark............... .......................... 4.75%
3 Year ................. ............................... 5.32%
3 Year................. ............................... 4.64%
Blended Benchmark ............... .......................... 4.28%
Blended Benchmark............... .......................... 4.28%
5 Year ................. ............................... 5.35%
5 Year................. ............................... 5.05%
Blended Benchmark ............... .......................... 4.57%
Blended Benchmark............... .......................... 4.57%
10 Year ............... ............................... 4.88%
10 Year............... ............................... 4.47%
Blended Benchmark ............... .......................... 4.31%
Blended Benchmark............... .......................... 4.31%
'Returns less than I -year are not annualized. 'Breakdown for Blended Benchmark- 7.5 %S&P500,1.5% Russell Mid Cap, 2.5%
Russell 2000, 1% MSCI EM FREE, 2% MSCI EAFE, 52.25% BC US Agg, 25.75% ML 1 -3 Yr US Corp✓Gov't, 2% US High Yield
Master 11, 0.5% Wilshire REM and 5 %Citi 1 Mth T -Bill. Prior to October 2012, the blended benchmarks were 12% S&P 500,
1% Russell 2000,2% MSCI EAFE, 40% ML 1 -3 YearCorpJGovt, 40% BC Agg, 5 %Citi 1 Mth T -Bill. Prior to April 2007, the
blended benchmarks were 15% S&P 500,40% ML 1 -3Yr Corp/Gov, 4096 BC Agg, and 5 %Citi 1 Mth T -Bill.
ANNUAL RETURNS
• HighMark Plus (Active)
Index Plus (Passive)
2008 ..................... ............................... - 9.04%
2008..................... ............................... - 6.70%
2009 ................... ............................... 15.59%
2009................... ............................... 10.49%
2010 ............................ .........................8.68%
2010 ............................ .........................7.67%
2011 ............................ .........................2.19%
2011 ............................ .........................3.70%
2012 ............................ .........................8.45%
2012 ............................ .........................6.22%
2013 ........................... ..........................3.69%
2013 ............................ .........................3.40%
2014 ........................... ..........................3.88%
2014........................... ..........................4.32%
PORTFOLIO FACTS
• HighMark Plus (Active)
Index Plus (Passive)
Inception Date ............................ 07/2004
Inception Date ............................ 07/2004
No. of Funds Held in Portfolio ............. 20
No. of Funds Held in Portfolio............. 14
A newly funded account enters a composite after three full months of management and is removed from a composite at the
last full
end of the month that the account is consistent with the
criteria of the composite. Terminated accounts are included
in the historical results of a composite through the last full month prior to closing. Composites may include accounts invested
in domestic (U.S.) or international (non -U.S.g individual securities, funds, or a combination thereof. Account exclusions based
on equity security concentrations are applied quarterly. Employing a construction methodology different from the above could
lead to different results.
-A HIGHMARKO
CAPITAL MANAGEMENT
Vision. Discipline. Results"
ABOUTTHE ADVISER
HighMark Capital Management, Inc. has over
90 years (including predecessor organizations)
of institutional money management experience
with more than $15.3 billion in assets under
management. HighMark has a longterm disciplined
approach to money management and currently
manages assets for a wide array of clients.
ABOUT THE PORTFOLIO
MANAGEMENT TEAM
Andrew Brown, CFA"
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University
of Southern California;
BA, University of Southern California
Christiane Boyd
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University,
Tokyo
Kevin Churchill, CFA®, CFP®
Senior Portfolio Manager
Investment Experience: since 1996
HighMark Tenure: since 2012
Education: MS, Seattle University-, BS, University of
Puget Sound
Ryan Fox
Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2009
Education: BA, Boston College
Salvatore "Tory" Milazzo III, CFA`'
Senior Portfolio Manager
Investment Experience: since 1991
HighMark Tenure: since 2014
Education: BA, Colgate University
Matthew Webber, CFA®
Senior Portfolio Manager
Investment Experience: since 1995
HighMark Tenure: since 2011
Education: BA, University of California,
Santa Barbara
Anne Wimmer, CFAs
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California,
Santa Barbara
Asset Allocation Committee
Number of Members: 13
Average Years of Experience: 25
Average Tenure (Years): 13
Manager Review Committee
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
SAMPLE HOLDINGS
• HighMark Plus (Active)
Columbia Contrarian Core Z
T. Rowe Price Growth Stock
Columbia Small Cap Value II Z
T. Rowe Price New Horizons
Nationwide Bailard International Equities
Nationwide HighMark Bond
Vanguard Short Term Invest -Grade Adm
Loomis Sayles Value Y
PIMCO Total Return
Dodge & Cox International Stock
MFS International Growth I
Sentinel Common Stock I
First American Prime Obligation Z
TIAA -CREF Mid Cap Value
Ivy Mid Cap Growth
Harbor Capital Appreciation
Schroder Emerging Market Equity
Dodge & Cox Stock
SPDR Euro Stoxx 50 ETF
PIMCO High Yield
STYLE
Large Cap Value 2.2%
Cash s.a%_ --I
Mid Cap 1.29
Large Cap Growth 2.2%
Large Cap Core 3.20/6_
Short-Term Bond
• Index Plus (Passive)
iShares S&P 500
iShares S&P 500/Value
iShares S &P 500 /Growth
iShares S &P Small Cap 600 Value
iShares S&P Small Cap 600 Growth
iShares MSCI EAFE
iShares Russell Midcap Value
iShares Russell Midcap Growth
iShares Barclays Aggregate Bond
Vanguard Short-Term Invest -Grade Adm
First American Prime Obligation Z
SPDR Euro Stoxx 50 ETF
SPDR Barclays High Yield Bond ETF
Vanguard FTSE Emerging Markets ETF
Holdings are subject to change at the discretion
of the investment manager.
Cap 2.2%
= HighYieId4.0%
Intern -Term Bond
44.8%
The performance records shown represent size - welted composites of tax exempt accounts that meet the following criteria:
Composites are mans�d by HtMaik's Hi Mark capital Advisors (HCA) with full investment authority according to the PARS
Conservative active and passive objectives an do not have equity concentration of 25%or more in one common stock security.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank ma
charge clients as much as 0.6096 annual management fee based on a sliding scale. As of December 31. 2014. the blended rem is 0.5R% US
ce results is available upon request in Q l ZU 1 U, the YAKS composite detinition was changed tram $750,000 minimuin to no
Performance results are calculated and presented in US. dollars and do not reflect the I uction of investment advisory fees,
s,ortaxes but do reflect thedeductionoftradingexpenses. Returnsare calculatedbasedontradedateaccounting.
enchmarks represent HighMark's strategic allocations between equity, fixed income, and cash and are rebalanced monthly.
k retums do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of
and other earnings. An investor cannot invest directl in an index.�rhe unmans] 5&P 500 Index is representative of
mane of large companies in the U.S. stock market The MSCI EAFE Index is a free float -adjusted market capitalization
gned to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets
is a free float- adjusted market capitalization index that is designed to measure equity market performance in the elobal
U.S.
as a
terra to final maturity less than 3 years. The unmanaged Citigmup 1 -Month Treasury' Bill Index tracks the yield of the 1 -month U.S.
HIGHMARKO
CAPITAL MANAGEMENT
Vision. Discipline. Results:'
WHYTHE PARS DIVERSIFIED
MODERATELY CONSERVATIVE PORTFOLIO?
Comprehensive Investment Solution
HighMark Capital Management, Ines
(HighMark) diversified investment portfolios are
designed to balance return expectations with risk
tolerance. Key features include: sophisticated
asset allocation and optimization techniques,
four layers of diversification (asset class, style,
manager, and security), access to rigorously
screened, top tier money managers, flexible
investment options, and experienced investment
management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a
rigorous screening process that searches for
investment managers and styles that have
not only produced above - average returns
within acceptable risk parameters, but have
the resources and commitment to continue to
deliver these results. We have set high standards
for our investment managers and funds. This is
a highly specialized, time consuming approach
dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation
strategies: HighMark Plus utilizes actively
managed mutual funds while Index Plus utilizes
index -based securities, including exchange -
traded funds. Both investment options leverage
HighMark's active asset allocation approach.
Risk Management
The portfolio is constructed to control risk
through four layers of diversification -- asset
classes (cash, fixed income, equity), investment
styles (large cap, small cap, international, value,
growth), managers and securities. Disciplined
mutual fund selection and monitoring process
helps to drive return potential while reducing
portfolio risk.
INVESTMENT OBJECTIVE
To provide current income and moderate capital appreciation. The major portion of
the assets is committed to income - producing securities. Market fluctuations should be
expected.
Efficient Frontier
• Capital Appreciation
Balanced
a° Moderate
Moderately Conservative
(Conservative
Risk (Standard Deviation)
ASSET ALLOCATION — MODERATELY CONSERVATIVE PORTFOLIO
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
HighMark Plus (Active)
Current Quarter * ............................ 1.34%
Strategic Range
Policy
Tactical
Equity
20-40%
30%
30%
Fixed Income
50-80%
65%
68%
Cash
0-20%
5%
2%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
HighMark Plus (Active)
Current Quarter * ............................ 1.34%
Blended Benchmark*' ....... ...............................
2.17%
Year To Date* .... ...............................
4.41%
Blended Benchmark* ........ ...............................
5.91%
1 Year ................. ...............................
4.41%
Blended Benchmark .......... ...............................
5.91%
3 Year ................. ...............................
7.50%
Blended Benchmark .......... ...............................
6.79%
5 Year ................. ...............................
6.90%
Blended Benchmark .......... ...............................
6.45%
10 Year ............... ...............................
5.45%
Blended Benchmark .......... ..:............................
4.99%
Index Plus (Passive)
Current Quarter* ............................
1.76%
Blended Benchmark*' ....... ...............................
2.17%
Year To Date* .... ...............................
5.40%
Blended Benchmark* ........ ...............................
5.91%
1 Year ................. ...............................
5.40%
Blended Benchmark .......... ...............................
5.91%
3 Year ................. ...............................
6.80%
Blended Benchmark .......... ...............................
679%
5 Year ................. ...............................
6.65%
Blended Benchmark .......... ...............................
6.45%
Inception To Date (116- Mos.)........
5.33%
Blended Benchmark .......... ...............................
5.25%
'Returns less than 1 -year are not annualized. 'Breakdown for Blended Benchmark: 15.5 %S &P500, 3 %Russell Mid Cap,
4.5% Russell 2000, 2 %MSCI EM FREE, 4% MSCI EAFE, 49.25%
BC US Agg, 14% ML 1 -3 Yr US Corp(Gov't, 1.75 %US
Iligh Yield Master 11, 1 % Wilshire REIT, and 5 %Citi 1 Mth T -Bill. Prior to October 2012, the blended benchmarks were 25%
S&P 500; 1.5% Russell 2000,3.5% MSCI EAFE, 25% ML 1 -3 Year CorpJGovt, 40% BC Agg, 5% Citi I Mth T -Bill. Prior to
April 2007, the blended benchmarks were 30% S&P 500,25% ML 1 -Wr Corp/Gov, 40% BC Agg, and 5 %Citi 1 Mth T -Bill.
ANNUAL RETURNS
• HighMark Plus (Active)
Index Plus (Passive)
2008 ................. ............................... - 15.37%
2008.................... I............................ - 12.40%
2009 ................... ............................... 18.71%
2009................... ............................... 11.92%
2010 ................... ............................... 10.46%
2010........................... ..........................9.72%
2011 ........................... ..........................1.75%
2011........................... ..........................3.24%
2012 ................... ............................... 10.88%
2012........................... ..........................8.24%
2013 ........................... ..........................7.30%
2013........................... ..........................6.78%
2014 ........................... ..........................4.41%
2014........................... ..........................5.40%
PORTFOLIO FACTS
• HighMark Plus (Active)
Index Plus (Passive)
Inception Date .............................. 8/2004
Inception Date ............................ 05/2005
No. of Funds Held in Portfolio ............. 20
No. of Funds Held in Portfolio............. 14
A newly funded account enters a composite after three full months of management and is removed from a composite at the
end of the last full month that the account is consistent with the criteria of the composite. Terminated accounts are included
in the historical results of a composite througgh the last full month prior to closing. Composites may include accounts invested
in domestic (U.S.) or international (non -U.S.) individual securities, funds, or a combination thereof. Account exclusions based
on equity security concentrations are applied quarterly. Employing a construction methodology different from the above could
lead to different results.
HIGHMARKO
CAPITAL MANAGEMENT
Vision. Discipline. Results?"
ABOUT THE ADVISER
HighMark Capital Management, Inc. has over
90 years (including predecessor organizations)
of institutional money management experience
with more than $15.3 billion in assets under
management. HighMark has a longterm disciplined
approach to money management and currently
manages assets for a wide array of clients.
ABOUTTHE PORTFOLIO
MANAGEMENT TEAM
Andrew Brown, CFA'
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University
of Southern California;
BA, University of Southern California
Christiane Boyd
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University,
Tokyo
Kevin Churchill, CFA', CFP0
Senior Portfolio Manager
Investment Experience: since 1996
HighMark Tenure: since 2012
Education: MS, Seattle University; BS, University of
Puget Sound
Ryan Fox
Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2009
Education: BA, Boston College
Salvatore "Tory" Mitazzo 111, CFA®
Senior Portfolio Manager
Investment Experience: since 1991
HighMark Tenure: since 2014
Education: BA, Colgate University
Matthew Webber, CFA®
Senior Portfolio Manager
Investment Experience: since 1995
HighMark Tenure: since 2011
Education: BA, University of California,
Santa Barbara
Anne Wimmer, CFA'
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California,
Santa Barbara
Asset Allocation Committee
Number of Members: 13
Average Years of Experience: 25
Average Tenure (Years): 13
Manager Review Committee
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
SAMPLE HOLDINGS
• HighMark Plus (Active)
Index Plus (Passive)
Columbia Contrarian Core Z
iShares S&P 500
T. Rowe Price Growth Stock
iShares S &P 500/Value
Columbia Small Cap Value II Z
iShares S&P 500 /Growth
T. Rowe Price New Horizons
iShares S &P Small Cap 600 Value
Nationwide Bailard International Equities
iShares S &P Small Cap 600 Growth
Nationwide HighMark Bond
iShares MSCI EAFE
Vanguard Short Term Invest -Grade Adm
iShares Russell Midcap Value
Loomis Sayles Value Y
iShares Russell Midcap Growth
PIMCO Total Return
iShares Barclays Aggregate Bond
Dodge & Cox International Stock
Vanguard Short -Term Invest -Grade Adm
MFS International Growth I
First American Prime Obligation Z
Sentinel Common Stock I
SPDR Euro Stoxx 50 ETF
First American Prime Obligation Z
SPDR Barclays High Yield Bond ETF
TIAA -CREF Mid Cap Value
Vanguard FTSE Emerging Markets ETF
Ivy Mid Cap Growth
Harbor Capital Appreciation
Schroder Emerging Market Equity
Dodge &Cox Stock
Holdings are subject to change at the discretion
SPDR Euro Stoxx 50 ETF
of the investment manager.
PIMCO High Yield
STYLE
Large Cap Value 4.3%
cash 2.5%
Intl Stocks 7.8%
Mid Cap 2.6 9/6, -
Large Cap
Large Cap Core
Short-Tern
169%
The performance records shown re
performance records shown repprese
are managed by HighMark' s F g19
Conservative active and passive objet
The adviser to the PARS portfolios is
17te 36bas1 points paid the
points id to
e_portfolio returns Assumir
trom the assets at m;rmaarket a
$12.76 million before fees
ting performance results is;
n to no minimum. Performa
Yield 3.4%
IntemrTeml Bond
47.2°%
ent size weighted co mposites of tax exempt accounts that meet the following criteria: The
ze weighted composites of tax exempt accounu that meet the following mteria: Composites
Capital Advisors (HC A) with full investment authority according to the PARS Moderately
s and do not have equity concentration of 2576 or more in one common stock security.
Bank and HighMark serves as sub�dviser to US Bank to manage these portfolios. US Bank may
management tee based on a slidin scale. As of December 31, 2014, the blended rate is 0.5896.
ual management fee for assets subgedvised by HighMark under its subadvisory agreement with
dmMarl . as well as other exoen�c that may Fr inn m cl in the mamas rant of rl, n tf,l:n
upon
advisory tees, custody tees, ortows butdo retlectthe deduction ottiading expenses. Returns are calculated based on tradedate accountine.
HIGHMARKO
CAPITAL MANAGEMENT
Vision. Discipline. Results:'
WHY THE PARS DIVERSIFIED
MODERATE PORTFOLIO?
Comprehensive Investment Solution
HighMark° Capital Management, Ines
(HighMark) diversified investment portfolios are
designed to balance return expectations with risk
tolerance. Key features include: sophisticated
asset allocation and optimization techniques,
four layers of diversification (asset class, style,
manager, and security), access to rigorously
screened, top tier money managers, flexible
investment options, and experienced investment
management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a
rigorous screening process that searches for
investment managers and styles that have
not only produced above - average returns
within acceptable risk parameters, but have
the resources and commitment to continue to
deliver these results. We have set high standards
for our investment managers and funds. This is
a highly specialized, time consuming approach
dedicated to one goal: competitive and
consistent performance.
Flexible investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation
strategies: HighMark Plus utilizes actively
managed mutual funds while Index Plus utilizes
index -based securities, including exchange -
traded funds. Both investment options leverage
HighMark's active asset allocation approach.
Risk Management
The portfolio is constructed to control risk
through four layers of diversification -- asset
classes (cash, fixed income, equity), investment
styles (large cap, small cap, international, value,
growth), managers and securities. Disciplined
mutual fund selection and monitoring process
helps to drive return potential while reducing
portfolio risk.
INVESTMENT OBJECTIVE
To provide growth of principal and income. It is expected that dividend and
interest income will comprise a significant portion of total return, although
growth through capital appreciation is equally important.
Efficient Frontier
r
Capital Appreciation
Balanced
a Moderate
-o /' Moderately Conservative
v �
Conservative
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
• HighMark Plus (Active)
Risk (Standard
Deviation)
Current Quarter* ............................ 2.10%
ASSET ALLOCATION
- MODERATE PORTFOLIO
Year To Date' .... ............................... 4.84%
Year To Date' .... ............................... 5.72%
Blended Benchmark' ............. .......................... 6.95%
Strategic Range
Policy
Tactical
Equity
40-60%
50%
50%
Fixed Income
40-60%
45%
48%
Cash
0-20%
5%
2%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
• HighMark Plus (Active)
Index Plus (Passive)
Current Quarter* ............................ 1.67%
Current Quarter* ............................ 2.10%
Blended Benchmark'' ............ .......................... 2.81%
Blended Benchmark''............ .................:........ 2.81%
Year To Date' .... ............................... 4.84%
Year To Date' .... ............................... 5.72%
Blended Benchmark' ............. .......................... 6.95%
Blended Benchmark'............. .......................... 6.95%
1 Year ................. ............................... 4.84%
1 Year................. ............................... 5.72%
Blended Benchmark ............... .......................... 6.95%
Blended Benchmark............... .......................... 6.95%
3 Year ................. ............................... 9.99%
3 Year................. ............................... 9.77%
Blended Benchmark .............. ......................... 10.07%
Blended Benchmark ........................................ 10.07%
5 Year ................. ............................... 8.50%
'5 Year................. ............................... 8.62%
Blended Benchmark ............... .......................... 8.66%
Blended Benchmark............... .......................... 8.66%
10 Year ............... ............................... 5.59%
Inception To Date (104- Mos.)........ 5.62%
Blended Benchmark ............... .......................... 5.67%
Blended Benchmark............... .......................... 5.80%
'Returns less than 1-year are not annualized. 'Breakdown for Blended Benchmark 26.5% S&P500,5% Russell Mid Cap, 7.5%
Russell 2000,3.25% MSCI EM FREE, 6% MSCI EAFE, 33.50% BC US Agg, 10% ML 1 -3 Yr US Corp/Gov't, 1.50% US High
Yield Master II, 1.75% Wilshire REn; and 5 %Citi 1 Mth T -Bill. Prior to October 2012, the blended benchmarks were 43%
S&P 500; 2% Russell 2000, 5% MSCI EAFE, 15% ML 1 -3 Year Corp /Govt, 30% BC Agg, 5 %Citi 1 Mth T -Bill. Prior to April
2007, the Mended benchmarks were 50% S&P 500, 15% ML 1 -3Yr Corp/Gov, 30% BC Agg, and 5% Citi I Mth T -Bill.
ANNUAL RETURNS
• HighMark Plus (Active)
Index Plus (Passive)
2008 .................. ............................... - 22.88%
2008.................. ............................... - 18.14%
2009 .......................... ........................21.47%
2009................... ............................... 16.05%
2010 .......................... ........................ 12.42%
2010................... ............................... 11.77%
2011 ........................... ..........................0.55%
2011 ............................ .........................2.29%
2012 ................... ............................... 12.25%
2012................... ............................... 10.91%
2013 ................... ............................... 13.06%
2013................... ............................... 12.79%
?f) 14 ...................... ............................... 4.84%
2014...................... ............................... 5.72%
PORTFOLIO FACTS
• HighMark Plus (Active)
Index Plus (Passive)
Inception Date ............................ 10/2004
Inception Date ............................ 05/2006
No. of Funds Held in Portfolio ............. 20
No. of Funds Held in Portfolio............. 14
A newly funded account enters a composite after three full months of management and is removed from a composite at the
end of the last full month that the account is consistent with the criteria of the composite. Terminated accounts are included
in the historical results of a composite through the last full month prior to closing. Composites may include accounts invested
in domestic (U.S.) or international (non -U.S.) individual securities, funds, or a combination thereof. Account exclusions based
on equity security concentrations are applied quarterly. Employing a construction methodology different from the above could
lead to different results.
HIGHMARK®
CAPITAL MANAGEMENT
Vision. Discipline. Results:"
ABOUT THE ADVISER
HighMark Capital Management, Inc. has over
90 years (including predecessor organizations)
of institutional money management experience
with more than $15.3 billion in assets under
management. HighMark has a longterm disciplined
approach to money management and currently
manages assets for a wide array of clients.
ABOUT THE PORTFOLIO
MANAGEMENTTEAM
Andrew Brown, CFA',
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University
of Southern California;
BA, University of Southern California
Christiane Boyd
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University,
Tokyo
Kevin Churchill, CFAI, CW
Senior Portfolio Manager
Investment Experience: since 1996
HighMark Tenure: since 2012
Education: MS, Seattle University; BS, University of
Puget Sound
Ryan Fox
Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2009
Education: BA, Boston College
Salvatore "Tory" Milazzo III, CFAI'
Senior Portfolio Manager
Investment Experience: since 1991
HighMark Tenure: since 2014
Education: BA, Colgate University
Matthew Webber, CFA°
Senior Portfolio Manager
Investment Experience: since 1995
HighMark Tenure: since 2011
Education: BA, University of California,
Santa Barbara
Anne Wimmer, CFA'
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California,
Santa Barbara
Asset Allocation Committee
Number of Members: 13
Average Years of Experience: 25
Average Tenure (Years): 13
Manager Review Committee
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
SAMPLE HOLDINGS
• HighMark Plus (Active)
Index Plus (Passive)
Columbia Contrarian Core Z
iShares S &P 500
T. Rowe Price Growth Stock
iShares S&P 500/Value
Columbia Small Cap Value II Z
iShares S &P 500 /Growth
T. Rowe Price New Horizons
iShares S&P Small Cap 600 Value
Nationwide Bailard International Equities
iShares S&P Small Cap 600 Growth
Nationwide HighMark Bond
iShares MSCI EAFE
Vanguard Short Term Invest -Grade Adm
iShares Russell Midcap Value
Loomis Sayles Value Y
iShares Russell Midcap Growth
PIMCO Total Return
iShares Barclays Aggregate Bond
Dodge & Cox International Stock
Vanguard Short -Term Invest -Grade Adm
MFS International Growth I
First American Prime Obligation Z
Sentinel Common Stock I
SPDR Euro Stoxx 50 ETF
First American Prime Obligation Z
SPDR Barclays High Yield Bond ETF
TIAA -CREF Mid Cap Value
Vanguard FTSE Emerging Markets ETF
Ivy Mid Cap Growth
Harbor Capital Appreciation
Schroder Emerging Market Equity
Dodge &Cox Stock
Holdings are subject to change at the discretion
SPDR Euro Stoxx 50 ETF
of the investment manager.
PIMCO High Yield
STYLE
Large Cap Value 7.31% Small Cap 7.6%
Cash 2.5%
High Yield 2.4%
Intl Stocks 13.01% -
Mid Cap 4.2% Interm -Term Bond
33.2%
Large Cap Growth
Large Cap Core 10.6%-/
Short-Term Bond 11.9%
The performance records shown represent size - weighted composite; of tax exe pt accounts that meet the following criteria:
Composites are managed by HighMark's HighMark Capital Advisors HCA) with full investment authority according to the PARS
Moderate active and passive objectives and do not have equity concentration of 25% or more in one common stock security.
The adviser to the PARS portfolios is US Bank, and Hi rk serves as sub-adviser to US Bank to manage these portfolios. US Bank ma
charge clients as much as 0.60% annual management based on a sliding scale. As of December 31 -014, the blended rate is 0.58'76.
US 13ank S�yyss Hi Mack 60% of the annual management fee for assets subadvised by HighMark under its sub-advisor agreernent with
US Bark Tfre 36 points paid to HighMark, as well as other expenses that may be incurred in the managgeemment of the portfolio will
seduce the rtfolio returns Assuming an tnvestrr�ent%rfive years, a S %annual total return and an annual subadvisory rate o f 0.3696
deducted from the assets at market at the end of each year, a 10 million initial value would gmw to $12.54 million aer Cres (Net of-
and) rid $12.76 million before fees (Gross of- Fees). Additional information re�atdi'n� the firm's policies and procedures for calculating
and reporting perfnmtance results is available upon request In Q1 2010, the PARS Composite definition was changed from $750,000
mimmum to no mmit�um. Performance resultsare calculated and presented in U.S. dollarsand do not n�fled the deduction of investment
advisory fees, ciistodv lees, ortaxes but do tefled the deduction of tradine excenses. Returns are calculated bated nn tradeclam arrrn ntinv
HIGHMARK®
CAPITAL MANAGEMENT
Vision. Discipline. Results '
WHYTHE PARS DIVERSIFIED
BALANCED PORTFOLIO?
Comprehensive Investment Solution
HighMark' Capital Management, Ines (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above - average returns within acceptable
risk parameters, but have the resources and
commitment to continue to deliver these results.
We have set high standards for our investment
managers and funds. This is a highly specialized,
time consuming approach dedicated to one goal:
competitive and consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation
strategies: HighMark Plus utilizes actively
managed mutual funds while Index Plus utilizes
index -based securities, including exchange -
traded funds. Both investment options leverage
High Mark's active asset allocation approach.
Risk Management
The portfolio is constructed to control risk
through four layers of diversification -- asset
classes (cash, fixed income, equity), investment
styles (large cap, small cap, international, value,
growth), managers and securities. Disciplined
mutual fund selection and monitoring process
helps to drive return potential while reducing
portfolio risk.
INVESTMENT OBJECTIVE
To provide growth of principal and income. While dividend and interest income are an
important component of the objective's total return, it is expected that capital appreciation
will comprise a larger portion of the total return.
Efficient Frontier
f Capital Appreciation
Balanced
v ; = Moderate
Moderately Conservative
Conservative
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
• HighMark Plus (Active)
Risk (Standard Deviation)
Current Quarter * .. ..........................1.69%
ASSET ALLOCATION - BALANCED PORTFOLIO
Blended Benchmark *' ............ .......................... 3.13%
Blended Benchmark *'............ .......................... 3.13%
Year To Date* .... ............................... 4.70%
Strategic Range
Policy
Tactical
Equity
50-70%
60%
60%
Fixed Income
30-50%
35%
38%
Cash
0-20%
5%
2%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
• HighMark Plus (Active)
Index Plus (Passive)
Current Quarter * .. ..........................1.69%
Current Quarter* ............................ 2.28%
Blended Benchmark *' ............ .......................... 3.13%
Blended Benchmark *'............ .......................... 3.13%
Year To Date* .... ............................... 4.70%
Year To Date* .... ............................... 6.08%
Blended Benchmark * ............. .......................... 7.49%
Blended Benchmark *............. .......................... 749%
1 Year ................. ............................... 4.70%
1 Year................. ............................... 6.08%
Blended Benchmark ............... .......................... 7.49%
Blended Benchmark............... .......................... 7.49%
3 Year .............. ............................... 11.41%
3 Year.............. ............................... 11.14%
Blended Benchmark .............. ......................... 11.75%
Blended Benchmark.............. ......................... 11.75%
5 Year ................. ............................... 9.45%
5 Year................. ............................... 9.48%
Blended Benchmark ............... .......................... 9.88%
Blended Benchmark............... .......................... 9.88%
Inception To Date (99- Mos.) .......... 5.34%
Inception To Date (87- Mos.) .......... 4.73%
Blended Benchmark ............... .......................... 6.07%
Blended Benchmark............... .......................... 5.31%
' Returns less than I-year are not annualized. Breakdown for Blended Bendunark: 32% S0500,6& Russell Mid Cap, 996 Russell 20D0, 4%
MSCI EM FREE, 7% MSCI EAFE, 27% BC US Agg, 6.75% ML 1 -3 Yr US Corp/Gov't,1.25% US High Yield Master 11, 2% Wilshire REIT, and
5 %Citi 1 Mth T -Bill. Prior to October 2012, the blended benchmarks
were 51 %S&P 500,3% Russell 2000,6% MSCI EAFE, 5% ML 1 -3 Year
Corp /Govt, 3096 BC Agg, 5 %Citi 1 Mth T -Bill. Priorto April 2007, the blended benchmarks were 60 %SILP 5005% 1- 3YrCorp/Gw, 30%
BC Agg. and 5 %Citi I Mth T -Bill.
ANNUALRETURNS
• HighMark Plus (Active)
Index Plus (Passive)
2008 .................. ............................... - 25.72%
2008.................. ............................... - 23.22%
2009 ......................... .........................21.36%
2009................... ............................... 17.62%
2010 ................... ............................... 14.11%
2010................... ............................... 12.76%
2011 ..................... ............................... -0.46%
2011...................... ............................... 1.60%
2012 ................... ............................... 13.25%
2012................... ............................... 11.93%
2013 ................... ............................... 16.61%
2013................... ............................... 15.63%
2014 ........................... ..........................4.70%
2014........................... ..........................6.08%
PORTFOLIO FACTS
• HighMark Plus (Active)
Index Plus (Passive)
Inception Date ............................ 10/2006
Inception Date ............................ 10/2007
No. of Funds Held in Portfolio ............. 20
No. of Funds Held in Portfolio............. 14
A newly funded account enters a composite after three full months of management and is removed from a composite at the
end of the last full month that the account is consistent with the criteria of the composite. Terminated accounts are included
in the historical results of a composite through the last full month prior to closing. Composites may include accounts invested
in domestic (U.S.) or international (non -U.S.1 individual securities, funds, or a combination thereof. Account exclusions based
on equity security concentrations are applied quarterly. Employing a construction methodology different from the above could
lead to different results.
HIGHMARKO
CAPITAL MANAGEMENT
Vision. Discipline. Results!"
ABOUT THE ADVISER
HighMark Capital Management, Inc. has over
90 years (including predecessor organizations)
of institutional money management experience
with more than $15.3 billion in assets under
management. HighMark has a longterm disciplined
approach to money management and currently
manages assets for a wide array of clients.
ABOUT THE PORTFOLIO
MANAGEMENTTEAM
Andrew Brown, CFAI
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University
of Southern California;
BA, University of Southern California
Christiane Boyd
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University,
Tokyo
Kevin Churchill, CFA°, CFP®
Senior Portfolio Manager
Investment Experience: since 1996
HighMark Tenure: since 2012
Education: MS, Seattle University, BS, University of
Puget Sound
Ryan Fox
Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2009
Education: BA, Boston College
Salvatore "Tory" Milazzo III, CFA'
Senior Portfolio Manager
Investment Experience: since 1991
HighMark Tenure: since 2014
Education: BA, Colgate University
Matthew Webber, CFA0
Senior Portfolio Manager
Investment Experience: since 1995
HighMark Tenure: since 2011
Education: BA, University of California,
Santa Barbara
Anne Wimmer, CFA
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California
Santa Barbara
Asset Allocation Committee
Number of Members: 13
Average Years of Experience: 25
Average Tenure (Years): 13
Manager Review Committee
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
SAMPLE HOLDINGS
• HighMark Plus (Active)
Index Plus (Passive)
Columbia Contrarian Core Z
iShares S &P 500
T. Rowe Price Growth Stock
iShares S&P 500/Value
Columbia Small Cap Value II Z
iShares S &P 500 /Growth
T Rowe Price New Horizons
iShares S &P Small Cap 600 Value
Nationwide Bailard International Equities
iShares S&P Small Cap 600 Growth
Nationwide HighMark Bond
iShares MSCI EAFE
Vanguard Short Term Invest -Grade Adm
iShares Russell Midcap Value
Loomis Sayles Value Y
iShares Russell Midcap Growth
PIMCO Total Return
iShares Barclays Aggregate Bond
Dodge & Cox International Stock
Vanguard Short Term Invest -Grade Adm
MFS International Growth I
First American Prime Obligation Z
Sentinel Common Stock I
SPDR Euro Stoxx 50 ETF
First American Prime Obligation Z
SPDR Barclays High Yield Bond ETF
TIAA -CREF Mid Cap Value
Vanguard FTSE Emerging Markets ETF
Ivy Mid Cap Growth
Harbor Capital Appreciation
Schroder Emerging Market Equity
Dodge & Cox Stock
Holdings are subject to change at the discretion
SPDR Euro Stoxx 50 ETF
of the investment manager.
PIMCO High Yield
STYLE
Intl Stocks
Mid Cap
Large Cap Gi
Term Bond
6.2%
Large cap Core 12.8%
The performance records shown represent size - weighted mm ites of tax exempt accounts that meet the followin criteria: Composites
are managed by High.Mark's HighMark Capital Advisors (HC with full investment authority according to the PA12 A% criteria: activeand
passive objectives and do not have equity concentration of 25% or more in one common stock security.
The corn to name has been changed from PARS Balanced/Moderate Aggressive m PARS Balanced on 5/1/2013. The adviser to the
PARS_porliosisUSBank and HighT�iark serves assubedviser oUSBan�mr�nanagetheseport folios. US Bankm�aychargeclientsasmuch
as 0. annual management fee based on a sliding sale. As of December 31, 2014, the blended rate is 0.5896. US Bank pays HidiMark
mancunoerrtssu" civisoryagreet�entwithUSBank .The3 basis points
ed in the management of the portfolio, will reduce the po lio returns.
and an annual sub -adv' ry fee rate of 0.36% deducted from the assets at
r$12.54 million aft6r fees (Net-of-Fees) and $12.76 million before
to ies and procedures for calculatingand reporting performance results is
on was changed from $750,000 minimum to no minimum. Performance
ect the deduction of investment advisory fees, custody fees, or taxes but do
based on trade -date accounting.
s between equity, fixed income, and cash and are rebalanced monthly
to
to measure
m1. U -N. LO rate ik Govemment Index with a remaining terra to tinal- maturity less than 3 years. The unmanaged Citigroup I -Month
Treasury Bill Index tracks the yield of the i -month US. Treasury Bill.
HighMark Ca ital Management Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of MUFG
Union Bank N.A. (MUB). Highly lark manages institutional seppaarate account portfolios for a wide vanety of for -profit and nonprofit
organizations, public agencies,pubhc and pnvate retirement plans, and ppeersonal trusts of all sizes. It may also serve as subedviser for
mutual funds, common tnut �tuunds, and collective investment funds. MU$, a subsidiaryof MUFG Americas Holdings Corporation,
provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results.
Individual account management and construction wdl Viary depending on each client's investment needs and ob'ectives. Investments
empl ngHighMarikstrateg�esareNOTinsuredbytheFlllC orbyenyotherFederalGovernmentp�ency areOTBankdeposits,
are N�T guaranteed by the Bank or arty Bank affiliate, and MAY lose value, including pkusible loss of PtinnpaL
HIGHMARK®
CAPITAL MANAGEMENT
Vision. Discipline. Results '
WHY THE PARS DIVERSIFIED
CAPITAL APPRECIATION PORTFOLIO?
Comprehensive investment Solution
HighMark" Capital Management, Ines (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above - average returns within acceptable
risk parameters, but have the resources and
commitment to continue to deliver these results.
We have set high standards for our investment
managers and funds. This is a highly specialized,
time consuming approach dedicated to one goal:
competitive and consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation
strategies: HighMark Pius utilizes actively
managed mutual funds while Index Plus utilizes
index -based securities, including exchange -
traded funds. Both investment options leverage
HighMark's active asset allocation approach.
Risk Management
The portfolio is constructed to control risk
through four layers of diversification -- asset
classes (cash, fixed income, equity), investment
styles (large cap, small cap, international, value,
growth), managers and securities. Disciplined
mutual fund selection and monitoring process
helps to drive return potential while reducing
portfolio risk.
INVESTMENT OBJECTIVE
The primary goal of the Capital Appreciation objective is growth of principal. The major
portion of the assets are invested in equity securities and market fluctuations are expected.
Efficient Frontier
IT
° Moderate
Moderately Conservative
3 /
i
l
/ Conservative
f Capital Appreciation
Balanced
Risk (Standard Deviation)
ASSET ALLOCATION — CAPITAL APPRECIATION PORTFOLIO
Strategic Range Policy Tactical
Equity 65 -85% 75% 75%
Fixed Income 10-30% 20% 23%
Cash 0-20% 5% 2%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees)
Current Quarter * ............................ 2.27%
Blended Benchmark" ....... ...............................
3.36%
Year To Date" .... ...............................
6.050
Blended Benchmark" ........ ...............................
788%
1 Year ................. ...............................
6.05%
Blended Benchmark .......... ...............................
788%
3 Year .............. ...............................
13.26%
Blended Benchmark ........ ...............................
13.84%
5 Year ...................... ........................10.12%
Blended Benchmark ........ ...............................
11.03%
Inception To Date (7 2-Mos.) ........
12.28%
Blended Benchmark ........ ...............................
13.36%
'Returns less than I- yearare not annualized. 'Breakdown for Blended Benchmark 39.5 %S&P500, 7.5 %Russell Mid Cap, 10.5 %Russe112000,
5.25 %MSCI EM FREE, 10.25% MSCI EAFE,16%BC US Agg, 3% ML 1 -3 Yr US Corp/Gov't,1 %US High Yield Master 11, 2% Wilshire REn;
and 5 %Citi 1 Mth T -Bill.
ANNUAL RETURNS
2008 .................. ............................... N /A%
2009 ............... ...............................
23.77%
2010 ............... ...............................
12.95%
2011 ................ ...............................
- 1.35%
2012 ............... ...............................
13.87%
2013 ............... ...............................
20.33%
2014 .................. ...............................
6.05%
PORTFOLIO FACTS
• HighMark Ptus (Active) Index Plus (Passive)
Inception Date ............................ 01/2009 Inception Date..... ............................... N/A
No. of Funds Held in Portfolio ............. 20 No. of Funds Held in Portfolio............. 14
A newly funded account enters a composite after three full months of management and is removed from a composite at the
end of the last full month that the account is consistent with the criteria of the composite. Terminated accounts are included
in the historical results of a composite through the last full month prior to closing. Composites may include accounts invested
in domestic (U.S.) or international (non -U.S.g individual securities, funds, or a combination thereof. Account exclusions based
on equity security concentrations are applied quarterly. Employing a construction methodology different from the above could
lead to different results.
HIGHMARKO
CAPITAL MANAGEMENT
Vision. Discipline. Results!"
ABOUT THE ADVISER
HighMark Capital Management, Inc. has over
90 years (including predecessor organizations)
of institutional money management experience
with more than $15.3 billion in assets under
management. HighMark has a longterm disciplined
approach to money management and currently
manages assets for a wide array of clients.
ABOUT THE PORTFOLIO
MANAGEMENT TEAM
Andrew Brown, CFAI'
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University
of Southern California;
BA, University of Southern California
Christiane Boyd
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University,
Tokyo
Kevin Churchill, CFA", CFP®
Senior Portfolio Manager
Investment Experience: since 1996
HighMark Tenure: since 2012
Education: MS, Seattle University; BS, University of
Puget Sound
Ryan Fox
Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2009
Education: BA, Boston College
Salvatore "Tory" Milazzo 111, CFA®
Senior Portfolio Manager
Investment Experience: since 1991
HighMark Tenure: since 2014
Education: BA, Colgate University
Matthew Webber, CFA0
Senior Portfolio Manager
Investment Experience: since 1995
HighMark Tenure: since 2011
Education: BA, University of California
Santa Barbara
Anne Wimmer, CFAm
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California,
Santa Barbara
Asset Allocation Committee
Number of Members: 13
Average Years of Experience: 25
Average Tenure (Years): 13
Manager Review Committee
Number of Members: 7
Average Years of Experience: 22
Average Tenure (Years): 10
SAMPLE HOLDINGS
• HighMark Plus (Active)
• Index Plus (Passive)
Columbia Contrarian Core Z
iShares S &P 500
T. Rowe Price Growth Stock
iShares S &P 500Nalue
Columbia Small Cap Value II Z
iShares S&P 500 /Growth
T. Rowe Price New Horizons
iShares S&P Small Cap 600 Value
Nationwide Bailard International Equities
iShares S &P Small Cap 600 Growth
Nationwide HighMark Bond
iShares MSCI EAFE
Vanguard Short Term Invest -Grade Adm
iShares Russell Midcap Value
Loomis Sayles Value Y
iShares Russell Midcap Growth
PIMCO Total Return
iShares Barclays Aggregate Bond
Dodge & Cox International Stock
Vanguard Short Term Invest -Grade Adm
MFS International Growth I
First American Prime Obligation Z
Sentinel Common Stock I
SPDR Euro Stoxx 50 ETF
First American Prime Obligation Z
SPDR Barclays High Yield Bond ETF
TIAA -CREF Mid Cap Value
Vanguard FTSE Emerging Markets ETF
Ivy Mid Cap Growth
Harbor Capital Appreciation
Schroder Emerging Market Equity
Dodge & Cox Stock
Holdings are subject to change at the discretion
SPDR Euro Stoxx 50 ETF
of the investment manager.
PIMCO High Yield
STYLE
Large Cap Value 10.9%
—Small Cap 11.2%
Cash 2.0% ice-- High Yield 1.2%
Inter 16e2r% Bond
Intl Stocks 19.6%
Bond 5.6%
Mid
Large Cap Growth10.9%J large Cap Core 16.0%
The performance records shown re nt size - weighted com iris of tax exempt accounts that meet the followingg �criteria: Composites
aremanagedbyHighMark 'sHi�CapitalAdvrwrs(HC with full investmentauthorityaccordingtothePARSCapiha lApprenation
active and passive ci 'ectives an do not have equity concentration of 25 %or more in one common stock security.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank may
charge clients as much as 0.6096 annual management tee based on a sliding scale. As of December 31, -014, the blended rate is 0.5896.
US Bank yyss Hi����j�yy��rk 6096 of the annual management fee for assets subedvised by HighMark under its sub-advisory agreement with
US Bank he 3G basis points paid m HighMark, as well as other expenses that may be incurred in the managgeemment of the portfo,o, will
reduce thel ortfolio returns. Assuming an investment forfiveyears, a 5% annual total return, and an annual subadvisory fee rate of 0.36%
auu rcyurwrg pcnVnnancc asuns is avauaoue upon
minimum to no mtnit�tum. Performance resultsarei
advisory tees, custody lees, or taxes but do reflect the
Blended benchmarks represent HighMark's strateg
Benchmark returns do not reflect the deduction of a
and other earnings. An investor cannot invest direct,
large companies in the US. stock market. The MSCI
developed market equity performance, excluding th
market capitalization index that is designed to meas
Index measures the performance of the midtap segi
of thesmall- ap segment of the U.S. equity universe.
U.S. dollardenommated corporate bonds publicly r&
Real Estate Investment Trusts. The unmans Bar
taxable bond market as a whole. The Merri ll Lynch
of The ML US. Corporate & Government Index, w
1 -Month Treasury Bill Index tracks the yield ofthe 1-
HighMark Ca ital Management, Inc. (HighMark
Union Bank, N.A. (MUB). HighMark manages insi
organizations, public agencies,pu blic and private n
mutual funds, common trust funds, and collective
provides certain services to HighMark and is com
Individual account management and construction
em to * gHighMarkstrategtesareNOTinsuredk
are NOT guaranteed by the Bank or any Bank affil
Coated based on trai
and cash and are re
assumes the reinves
is tctive of 1
tpita rfration index d
ikets Free Index is a
to in ore ua. uomesuc marxer. vvusnne Kti i index measures
rys Capital (BC) U.S. Aggregate Bond Index is generally repro
ML) 1 -3 Year U.S. Corporate & Government Index tracks the
h a retraining term to final maturity less than 3 years. The un
aonth US. Treasury Bill.
an SEC - registered investment_ adviser, is a wholly owned su
to