HomeMy WebLinkAbout05. Review Board Policy 005 for the GASB 45 TrustCentral Contra Costa Sanitary District
BOARD OF DIRECTORS
POSITION PAPER
Board Meeting Date: September 1, 2016
Subject:
REVIEW AND READOPT THE BOARD POLICY NO. BP 005 -
STATEMENT OF INVESTMENT POLICY AND INVESTMENT
GUIDELINES FOR THE GASB 45 OTHER POST -EMPLOYMENT
BENEFITS TRUST
Submitted By:
Thea Vassallo, CPA, CMA
Finance Manager
5.
DRAFT
Initiating Dept./Div.:
Administrative/Finance & Accounting
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
K. Alm R. Bailey
Counsel for the District General Manager
ISSUE: The District's investment policies for District assets and the Government
Accounting Standards Board (GASB) 45 Other Post -Employment Benefits Trust (OPEB
Trust) are reviewed and approved annually by the Board of Directors in accordance
with the District investment policy.
BACKGROUND: BP 005 - Statement of Investment Policy: Section 53646 of the
California Government Code states that the Treasurer or Chief Fiscal Officer of the
local agency may annually render to the legislative body of that local agency and any
oversight committee of that local agency a statement of investment policy, which the
legislative body of the local agency shall consider at a public meeting.
Although no longer required, it has been the District's practice and policy to render an
annual Statement of Investment Policy to the District's governing Board for review and
approval (see Attachment 1) as well as a monthly investment report. These provisions
were previously incorporated into the District's investment policy.
In 2015, staff retained Lauren Brant, Managing Director with PFM Asset Management
LLC (PFMAM), to review the District's investment policy and provide recommendations.
After considerable deliberation of the alternatives allowed by the Government Code, the
document was revised to incorporate industry best practices.
Staff has reviewed BP 005 adopted in 2015 and recommends no changes at this time.
OPEB Trust: In 2013, the Board Finance Committee directed staff to hire a consultant
to perform a Benchmark Study on the District's OPEB Trust. The District engaged in a
contract with a registered investment advisor, to conduct an investment review. The
advisory services included reviewing the OPEB Trust Investment Guidelines Document
(IGD), asset allocation, funds used in the portfolio, performance of the funds, and level
Page 1 of 3
POSITION PAPER
Board Meeting Date:
Subject:
September 1, 2016
REVIEW AND READOPT THE BOARD POLICY NO. BP 005 -
STATEMENT OF INVESTMENT POLICY AND INVESTMENT GUIDELINES
FOR THE GASB 45 OTHER POST -EMPLOYMENT BENEFITS TRUST
of fees charged by HighMark Capital Management and Public Agency Retirement
Services (PARS).
As a result of the 2013 Benchmark Study, the OPEB Trust IGD was revised and the
level of fees charged by both HighMark Capital Management and PARS was lowered
by approximately 10 percent on an annual basis. The IGD document was updated to
more clearly specify the scope and purpose, investment objectives and constraints, and
duties and responsibilities of the plan sponsor, trustee and investment manager of the
Trust. The revised OPEB Trust IGD is attached (see Attachment 2). It is HighMark
Capital Management's responsibility to ensure compliance with the District's risk
tolerance objective and State laws regarding the OPEB Trust account.
PARS is the Trust Administrator responsible for recordkeeping/sub-trust accounting,
plan compliance relative to GASB 45/state laws, monitoring contributions and
processing disbursements; US Bank is the Trustee and custodian of assets; and
HighMark Capital Management is the sub -adviser, hired by US Bank to invest the plan
assets according to the moderate investment strategy chosen by the Board of Directors
in 2008.
Staff provides quarterly reports of the OPEB Trust investments to the Finance
Committee, and Highmark and/or PARS presents an update of the OPEB Trust twice a
year to the Finance Committee.
Staff has reviewed the OPEB Trust IGD and recommends no changes at this time.
FINANCIAL IMPACTS: The yield earned on District investments is directly correlated
to the policies and guidelines being considered which address the risk tolerance and
investment practices of the District relative to optimizing the return, taking into account
the priorities of safety and liquidity.
ALTERNATIVES/CONSIDERATIONS: Additional investment options could be added
for District investments that fall within the permissible investments prescribed by the
Government Code. The Board could also choose to make other changes to the Policy.
The current moderate investment strategy previously adopted by the Board for the
OPEB Trust could be changed to a less or more aggressive strategy.
COMMITTEE RECOMMENDATION: Staff presented BP 005 - Statement of
Investment Policy and the OPEB Trust IGD to the Administration Committee meeting
on August 19, 2016. The Committee recommended approval of both the Statement of
Investment Policy and the OPEB Trust IGD with no changes.
Page 2 of 3
POSITION PAPER
Board Meeting Date: September 1, 2016
Subject:
REVIEW AND READOPT THE BOARD POLICY NO. BP 005 -
STATEMENT OF INVESTMENT POLICY AND INVESTMENT GUIDELINES
FOR THE GASB 45 OTHER POST -EMPLOYMENT BENEFITS TRUST
RECOMMENDED BOARD ACTION: Approve both the BP 005 - Statement of
Investment Policy and the Investment Guidelines Document for the OPEB Trust with no
changes.
Attached Supportina Documents:
1. Board Policy 005 — Statement of Investment Policy
2. GASB 45 (OPEB) Trust Investment Guidelines Document (IGD)
Page 3 of 3
Number: BP 005
Authority: Board of Directors
Effective: September 1, 2011
Revised: September 17, 2015
Reviewed: September 1, 2016
Initiating Dept./Div.: Administration/Finance
BOARD POLICY
ATTACHMENT 1
Central Contra Costa
Sanitary District
www.centralsan.org
STATEMENT OF INVESTMENT POLICY
PURPOSE
The investment policy of the Central Contra Costa Sanitary District governs the District's
investments. Investments will be in compliance with the provisions of, but not
necessarily limited to California Government Code Section 53601 and other applicable
statutes. A separate investment policy governs the District's GASB 45 Trust. This
investment policy is embodied in the following fourteen sections:
POLICY
Statement of Objectives
The primary objectives, in priority order, of the District's investment activities
shall be:
• Safety. Investments of the District shall be undertaken in the manner
that seeks to ensure the preservation of capital in the overall portfolio.
• Liquidity. The District's portfolio will remain sufficiently liquid to enable
the District to meet all operating requirements which might be
reasonably anticipated.
• Return on Investment. The portfolio will be invested to attain a market
average rate of return throughout budgetary and economic cycles,
taking into account the investment risk constraints, liquidity needs, and
cash flow characteristics of the portfolio..
Permissible Investments
Within the constraints prescribed by the Government Code of the State of
California for permissible investments, the District's investment portfolio will
only be invested in the following instruments:
• United States Treasury Obligations. United States Treasury notes, bonds,
bills, or certificates of indebtedness, or those for which the full faith and
Number: BP 005
STATEMENT OF INVESTMENT POLICY
Page 2 of 7
credit of the United States are pledged for the payment of principal and
interest.
• United States Government Agency Issues. Federal agency or United
States government-sponsored enterprise obligations, participations, or
other instruments, including those issued by or fully guaranteed as to
principal and interest by federal agencies or United States government-
sponsored. enterprises.
• Municipal Investments. Registered state warrants or treasury notes or
bonds of this state, including bonds payable solely out of the revenues
from a revenue-producing property owned, controlled, or operated by the
state or by a department, board, agency, or authority of the state.
Registered treasury notes or bonds of any of the other 49 states in
addition to California, including bonds payable solely out of the revenues
from a revenue-producing property owned, controlled, or operated by a
state or by a department, board, agency, or authority of any of the other
49 states, in addition to California.
Eligible obligations shall be rated in category "AA" or its equivalent or
better by a nationally recognized statistical rating organization Nationally
Recognized Statistical Rating Organization (NRSRO). No more than 5%
shall be invested in any single issuer.
• Money Market Funds. Shares of beneficial interest issued by diversified
management companies that are money market funds registered with the
Securities and Exchange Commission under the Investment Company Act
of 1940 (15 U.S.C. See. 80a-1, et seq.). That invest in the securities and
obligations as authorized by California Government Code 53601
subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and
that comply with the investment restrictions of this article and Article 2
(commencing with Section 53630). To be eligible for investment pursuant
to this subdivision, these companies shall either:
i. Attain the highest ranking or the highest letter and numerical
rating provided by not less than two NRSROs;
ii. Retain an investment advisor registered or exempt from
registration with the Securities and Exchange Commission with
not less than five years' experience managing money market
mutual funds with assets under management in excess of five
hundred million dollars ($500,000,000).
A maximum of 20% of the District's portfolio may be invested in money
market funds. No more than 10% of the District's portfolio may be invested
in any one fund.
Number: BP 005
STATEMENT OF INVESTMENT POLICY
Page 3 of 7
• Bankers' Acceptances, otherwise known as bills of exchange or time
drafts, drawn on and accepted by a commercial bank. Purchases of
bankers' acceptances shall not exceed 180 days' maturity or 40% of the
District's moneys that may be invested pursuant to this section. However,
no more than 5% of the District's moneys may be invested in the bankers'
acceptances of any one commercial bank pursuant to this section.
• Collateralized Certificates of Deposit issued by a Federal or State
chartered bank or a Federal or State chartered savings and loan
association. Time certificates of deposit shall meet the requirements for
deposit under Government Code Section 53635 et. seq. The Director of
Administration, for deposits up to the current FDIC insurance limit, may
waive collateral requirements if the institution insures its deposits with the
Federal Deposit Insurance Corporation (FDIC).
Fully insured time certificates of deposit placed through a deposit
placement service shall meet the requirements under Code Section
53601.8.
• Negotiable Certificates of Deposit issued by a nationally or state -chartered
bank, a savings association or a federal association (as defined by
Section 5102 of the Financial Code), a state or federal credit union, or by
a federally licensed or state -licensed branch of a foreign bank. Purchases
of negotiable certificates of deposit shall not exceed 30% of the District's
moneys that may be invested pursuant to this section and not more than
5% may be invested in any single issuer. Eligible negotiable certificates of
deposit shall be rated in category "AA" or its equivalent or better by a
NRSRO.
• Commercial Paper of prime quality of the highest ranking or of the highest
letter and number rating as provided for by a NRSRO. The entity that
issues the commercial paper shall meet all of the following conditions in
either paragraph (a) or paragraph (b):
a) The entity meets the following criteria: (i) Is organized and operating in
the United States as a general corporation. (ii) Has total assets in
excess of five hundred million dollars ($500,000,000). (iii) Has debt
other than commercial paper, if any, that is rated "A" or higher by a
NRSRO.
b) The entity meets the following criteria: (i) Is organized within the United
States as a special purpose corporation, trust, or limited liability
company. (ii) Has program wide credit enhancements including, but
not limited to, over collateralization, letters of credit, or surety bond. (iii)
Has commercial paper that is rated "A-1" or higher, or the equivalent,
by a NRSRO.
Number: BP 005
STATEMENT OF INVESTMENT POLICY
Page 4 of 7
Eligible commercial paper shall have a maximum maturity of 270 days or
less. The District may invest no more than 25% of their moneys in eligible
commercial paper and no more than 5% of the outstanding commercial
paper of any single issuer.
• Medium Term Notes, defined as all corporate and depository institution
debt securities with a maximum of five years maturity, issued by
corporations organized and operating within the United States or by
depository institutions licensed by the United States, or any state and
operating within the United States. Notes eligible for investment under this
subdivision shall be rated "AA" or better by an NRSRO. Purchases of
medium-term notes shall not include other instruments authorized by this
section and shall not exceed 30% of the District's moneys that may be
invested pursuant to this section. No more than 5% of the District's total
investment portfolio may be invested in the debt of any one corporation.
• Government Pools. Shares of beneficial interest issued by a joint powers
authority organized pursuant to California Government Code Section
6509.7 that invests in securities and obligations authorized by California
Government Code 53601 subdivisions (a) to (q), inclusive. Each share
shall represent an equal proportional interest in the underlying pool of
securities owned by the joint powers authority. To be eligible under this
section, the joint powers authority issuing the shares shall have retained
an investment adviser that meets all of the following criteria:
i. The adviser is registered or exempt from registration with the
Securities and Exchange Commission.
ii. The adviser has not less than five years of experience investing
in the securities and obligations authorized in California
Government Code 53601 subdivisions (a) to (q), inclusive.
iii. The adviser has assets under management in excess of five
hundred million dollars ($500,000,000).
• Local Agency Investment Fund of the State of California. Investment in
LAIF may not exceed the current LAIF limit and should be reviewed
periodically.
• Supranationals, defined as United States dollar denominated senior
unsecured unsubordinated obligations issued or unconditionally
guaranteed by the International Bank for Reconstruction and
Development, International Finance Corporation, or Inter -American
Development Bank, with a maximum remaining maturity of five years or
less, and eligible for purchase and sale within the United States.
Supranationals shall be rated "AA" or its equivalent or better by a NRSRO.
Purchases of supranationals may not exceed 30% of the District's
investment portfolio and no more than 5% may be invested in any single
issuer.
Number: BP 005
STATEMENT OF INVESTMENT POLICY
Page 5 of 7
III. Bank and Dealers
The District has the option of investing funds internally, using the services of
the Treasurer's Office of the County of Contra Costa or a registered
investment advisor to transact the District's investments in compliance with
the requirements described in this investment policy. If the District uses the
services of the County, the County Treasurer's Office will execute the
District's investments through such brokers, dealers and financial institutions
as are approved by the County Treasurer, and through the State Treasurer's
Office for investment in the Local Agency Investment Fund. If the District
utilizes an external investment advisor, the advisor is authorized to transact
with its own approved broker -deal list on behalf of the district. The advisor
will perform all due diligence for the brokers and dealers on its approved list.
IV. Maturities
To the extent possible, the District shall attempt to match its investments with
anticipated cash flow requirements. Unless stated otherwise in this Policy or
approval made by the District's executive body, the maximum maturity of the
District's eligible investments will not exceed five years.
V. Diversification
The District's investments shall be diversified by:
• Limiting investments to avoid over concentration in securities from a
specific issuer or sector.
• Limiting investments in securities that have higher credit risks.
• Investing in securities with varying maturities.
• Continuously investing a portion of the portfolio in readily available
funds such as local government investment pools or money market
funds to ensure that appropriate liquidity is maintained in order to meet
ongoing obligations.
VI. Risk
Credit and market risks will be minimized through adherence to the list of
permissible investments, a limit on maximum maturities, and the limitation on
the total investment in a single issuer.
VII. Delegation and Authority
The Board of Directors is responsible for the investment of the District's
funds. The Board hereby delegates responsibility for investment transactions
Number: BP 005
STATEMENT OF INVESTMENT POLICY
Page 6 of 7
for the investment program to the General Manager or designee, for a one-
year period.
The General Manager or designee may delegate the day-to-day execution of
investments to a registered investment advisor, via written agreement
approved by the Board. The Advisor in coordination with the General
Manager or designee will manage on a daily basis the District's investment
portfolio pursuant to the specific and stated investment objectives of the
District. The Advisor shall follow the policy and such other written instructions
provided by the General Manager or designee.
VIII. Prudence
Prudent judgment must be exercised by the General Manager or designee
and all investment staff responsible for investment transactions undertaken in
accordance with this investment policy. The standard of prudence to be
applied by the investment officer shall be the "prudent person" rule:
"Investments shall be made with judgment and care, under
circumstances then prevailing, which persons of prudence,
discretion and intelligence exercise in the management of their own
affairs, not for speculation, but for investment, considering the
probable safety of their capital as well as the probable income to be
derived." The prudent person rule shall be applied in the context of
managing the overall portfolio.
IX. Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from
personal business activity that could conflict with the proper execution and
management of the investment program, or that could impair their ability to
make impartial decisions. Employees and investment officials shall disclose
any material interests in financial institutions with which they conduct
business. They shall further disclose any personal financial/investment
positions that could be related to the performance of the investment portfolio.
Employees and officers shall refrain from undertaking personal investment
transactions with the same individual with whom business is conducted on
behalf of the District.
X. Controls
The General Manager or designee will establish subsidiary accounting
records of each investment which will enable the determination of income
earned monthly and through maturity, and the balancing of the principal
amounts to a control account in the general ledger. Internal control
procedures require the General Manager or designee to sign all transactions,
Number: BP 005
STATEMENT OF INVESTMENT POLICY
Page 7 of 7
which are then countersigned by the General Manager. Such internal
controls are to be reviewed by the District's independent auditors annually.
XI. Safekeeping and Custody
All investment transactions will be executed on a delivery versus payment
basis. Securities will be held in safekeeping by a third party custodian
designated by the District. The custodian will be required to provide timely
(written or on-line) confirmation of receipt and monthly position and
transaction reports.
XII. Reporting
The General Manager or designee will annually render a statement of
investment policy to the Board of Directors. Also, annually, the GASB 45
Trust Investment Policy will be brought before the Board. The General
Manager or designee will submit a monthly report to the District's General
Manager and Board of Directors showing the type of investment, issuer, date
of maturity, par (or face), dollar amount invested, current market value of all
securities, and the source of this same valuation, and a statement of
compliance of the portfolio with the investment policy.
XIII. Performance Evaluation
The investment portfolio shall be designed with the objective of obtaining a
rate of return throughout budgetary and economic cycles, commensurate with
the investment risk constraints and the cash flow needs.
XIV. Policy Considerations
This policy shall be reviewed on an annual basis. Any changes must be
approved by the Board after review by the Administration Committee, as well
as the individual(s) charged with maintaining internal controls.
[Original Retained by the Secretary of the District]
HIGHMARK®
CAPITAL MANAGEMENT
ATTACHMENT 2
Investment Guidelines Document
Central Contra Costa County Sanitary District
GASB 45 / Other Post -Employment Benefits Trust
October 2013
Investment Guidelines Document
Scope and Purpose
The purpose of this Investment Guidelines Document is to:
• Facilitate the process of ongoing communication between the Plan Sponsor and its plan
fiduciaries;
• Confirm the Plan's investment goals and objectives and management policies applicable
to the investment portfolio identified below and obtained from the Plan Sponsor;
• Provide a framework to construct a well -diversified asset mix that can potentially be
expected to meet the account's short- and long-term needs that is consistent with the
account's investment objectives, liquidity considerations and risk tolerance;
• Identify any unique considerations that may restrict or limit the investment discretion of its
designated investment managers;
• Help maintain a long-term perspective when market volatility is caused by short-term
market movements.
• Assist the Plan Sponsor in formulating an Investment Policy Statement ("IPS") for the
account.
Key Plan Sponsor Account Information as of October 23, 2013
Plan Sponsor: Central Contra Costa County Sanitary District
Governance: Board of Directors of the Central Contra Costa County
Sanitary District
Plan Name ("Plan"): Central Contra Costa County Sanitary District
GASB 45/Other Post -Employment Benefits Trust
Trustee: US Bank
Contact: Fran Schoenfeld, 949-224-7204
fran.schoenfeld@usbank.com
Account Number ("Account"):6746030600
Type of Account:
ERISA Status:
Market Value of Account:
Investment Manager:
GASB 45/Other Post -Employment Benefits Trust
Not subject to ERISA
$32,000,000
US Bank, as discretionary trustee, has delegated investment
management responsibilities to HighMark Capital Management,
Inc. ("Investment Manager"), an SEC -registered investment
adviser
Contact: Andrew Brown, CFA, 415-705-7605
Andrew.brown@highmarkcapital.com
Central Contra Costa County Sanitary District — GASB 45/Other Post -Employment Benefits Trust
Investment Guidelines Document — HighMark Capital Management, Inc.
(v. 4/26/2013 - cls)
2
Investment Authority: Except as otherwise noted, the Trustee, US Bank, has delegated
investment authority to HighMark Capital Management, an SEC -registered investment adviser.
Investment Manager has full investment discretion over the managed assets in the account.
Investment Manager is authorized to purchase, sell, exchange, invest, reinvest and manage the
designated assets held in the account, all in accordance with account's investment objectives,
without prior approval or subsequent approval of any other party(ies).
Investment Objectives and Constraints
The goal of the Plan's investment program is to generate adequate long-term returns that, when
combined with contributions, will result in sufficient assets to pay the present and future
obligations of the Plan. The following objectives are intended to assist in achieving this goal:
• The Plan should earn, on a long-term average basis, a rate of return equal to or in excess
of the target rate of return of 6.25%.
• The Plan should seek to earn a return in excess of its policy benchmark over the long-
term.
• The Plan's assets will be managed on a total return basis which takes into consideration
both investment income and capital appreciation. While the Plan Sponsor recognizes the
importance of preservation of capital, it also adheres to the principle that varying degrees
of investment risk are generally rewarded with compensating returns. To achieve these
objectives, the Plan Sponsor allocates its assets (asset allocation) with a strategic, long-
term perspective of the capital markets.
Investment Time Horizon:
Anticipated Cash Flows:
Target Rate of Return:
Investment Objective:
Risk Tolerance:
Long-term
Approximately $200,000 to $300,000 in monthly contributions.
Distributions are expected to be modest in the early years of the
Plan.
6.25% annual target
The primary objective is to maximize total Plan return, subject to
the risk and quality constraints set forth herein. The investment
objective the Plan Sponsor has selected is the Moderate
Objective, which has a dual goal to seek moderate growth of
income and principal.
Moderate
The account's risk tolerance has been rated moderate, which
demonstrates that the account can accept average, or moderate,
price fluctuations to pursue its investment objectives.
Central Contra Costa County Sanitary District — GASB 45/Other Post -Employment Benefits Trust
Investment Guidelines Document — HighMark Capital Management, Inc.
(v. 4/26/2013 - cls)
3
Strategic Asset Allocation: The asset allocation ranges for this objective are listed below:
Strategic Asset Allocation Ranges
Cash Fixed Income Equity
0-20% 40%-60% 40%-60%
Policy: 5% Policy: 45% Policy: 50%
Market conditions may cause the account's asset allocation to vary from the stated range from
time to time. The Investment Manager will rebalance the portfolio no less than quarterly and/or
when the actual weighting differs substantially from the strategic range, if appropriate and
consistent with your objectives.
Security Guidelines:
Equities
With the exception of limitations and constraints described above, Investment Manager may
allocate assets of the equity portion of the account among various market capitalizations (large,
mid, small) and investment styles (value, growth). Further, Investment Manager may allocate
assets among domestic, international developed and emerging market equity securities.
Total Equities 40%-60%
Equity Style Range
Domestic Large Cap Equity 15%-45%
Domestic Mid Cap Equity 0%-10%
Domestic Small Cap Equity 1 0%-15%
International Equity (incl Emerging Markets) 1 0%-15%
Real Estate Investment Trust (REIT) 0%-15%
Fixed Income
In the fixed income portion of the account, Investment Manager may allocate assets among
various sectors and industries, as well as varying maturities and credit quality that are consistent
with the overall goals and objectives of the portfolio.
Total Fixed Income 40%-60%
Fixed Income Style Range
Long-term bonds (maturities >7 years) 0%-25%
Intermediate-term bonds (maturities 3-7 years) 25%-60%
Short -Term bonds (maturities <3 years) 0%-25%
High Yield bonds 0%-10%
Convertible bonds 0%-10%
Central Contra Costa County Sanitary District — GASB 45/Other Post -Employment Benefits Trust
Investment Guidelines Document — HighMark Capital Management, Inc.
(v. 4/26/2013 - cls)
4
Performance Benchmarks:
The performance of the total Plan shall be measured over a three and five-year periods. These
periods are considered sufficient to accommodate the market cycles experienced with
investments. The performance shall be compared to the return of the total portfolio blended
benchmark shown below.
Total Portfolio Blended Benchmark
26.50% S&P500
5.00% Russell Mid Cap
7.50% Russell 2000
3.25% MSCI EM FREE
6.00% MSCI EAFE
1.75% Wilshire REIT
33.50% BC US Aggregate
10.00% ML 1-3 Year US Corp/Gov't
1.50% US High Yield Master II
5.00% Citi 1 Mth T -Sill
Asset Class/Stvle Benchmarks
Over a market cycle, the long-term objective for each investment strategy is to add value to a
market benchmark. The following are the benchmarks used to monitor each investment strategy:
Large Cap Equity S&P 500
Mid Cap Equity Russell MidCap Index
Growth Russell MidCap Growth
Value Russell MidCap Value
Small Cap Equity Russell 2000 Index
Growth Russell 2000 Growth
Value Russell 2000 Value
REITs Wilshire REIT
International Equity MSCI EAFE
Investment Grade Bonds BarCap US Aggregate Bond
High Yield Credit Suisse High Yield
Security Selection
Investment Manager may utilize a full range of investment vehicles when constructing the
investment portfolio, including but not limited to individual securities, mutual funds, and exchange -
traded funds. In addition, to the extent permissible, Investment Manager is authorized to invest in
shares of mutual funds in which the Investment Manager serves as advisor or subadviser.
Central Contra Costa County Sanitary District — GASB 45/Other Post -Employment Benefits Trust
Investment Guidelines Document — HighMark Capital Management, Inc.
(v. 4/26/2013 - cls)
5
Investment Limitations:
The following investment transactions are prohibited:
Direct investments in precious metals (precious metals mutual funds and exchange -traded
funds are permissible).
• Venture Capital
• Short sales*
• Purchases of Letter Stock, Private Placements, or direct payments
• Leveraged Transactions*
• Commodities Transactions Puts, calls, straddles, or other option strategies*
• Purchases of real estate, with the exception of REITs
Derivatives, with exception of ETFs*
*Permissible in diversified mutual funds and exchange -traded funds
Duties and Responsibilities
Responsibilities of Plan Sponsor
The Budget and Finance Committee of the Central Contra Costa Sanitary District is responsible
for:
• Confirming the accuracy of this Investment Guidelines Document, in writing.
• Advising Trustee and Investment Manager of any change in the plan/account's financial
situation, funding status, or cash flows, which could possibly necessitate a change to the
account's overall risk tolerance, time horizon or liquidity requirements; and thus would
dictate a change to the overall investment objective and goals for the account.
■ Providing Trustee and Investment Manager with an approved IPS for the account and
providing any updates to the IPS.
• Monitoring and supervising service vendors and investment options, including investment
managers.
• Avoiding prohibited transactions and conflicts of interest.
Responsibilities of Trustee
The plan Trustee is responsible for:
• Valuing the holdings.
• Collecting all income and dividends owed to the Plan.
• Settling all transactions (buy -sell orders).
Responsibilities of Investment Manager
The Investment Manager is responsible for:
• Assisting the Budget and Finance Committee with the development and maintenance of
this Investment Policy Guideline document annually.
• Meeting with the Budget and Finance Committee semi-annually to review portfolio
structure, holdings, and performance.
• Designing, recommending and implementing an appropriate asset allocation consistent
with the investment objectives, time horizon, risk profile, guidelines and constraints
outlined in this statement.
■ Researching and monitoring investment advisers and investment vehicles.
■ Purchasing, selling, and reinvesting in securities held in the account.
Central Contra Costa County Sanitary District — GASB 45/Other Post -Employment Benefits Trust
Investment Guidelines Document — HighMark Capital Management, Inc.
(v. 4/26/2013 - cls)
6
• Monitoring the performance of all selected assets.
• Voting proxies, if applicable.
• Recommending changes to any of the above.
• Periodically reviewing the suitability of the investments, being available to meet with the
Budget and Finance Committee at least twice a year, and being available at such other
times within reason at your request.
• Preparing and presenting appropriate reports.
• Informing the Budget and Finance Committee if changes occur in personnel that are
responsible for portfolio management or research.
Acknowledgement and Acceptance
11We being the Plan Sponsor with responsibility for the account(s) held on behalf of the Plan
Sponsor specified below, designate Investment Manager as having the investment discretion and
management responsibility indicated in relation to all assets of the Pian or specified Account. If
such designation is set forth in the Plan/trust, 1/We hereby confirm such designation as
Investment Manager.
I have read the Investment Guidelines Document, and confirm the accuracy of it, including the
terms and conditions under which the assets in this account are to be held, managed, and
disposed of by Investment Manager, This Investment Guidelines Document supersedes all
previous versions of an Investment Guidelines Document or investment objective instructions that
may have been executed for this account.
Gr. % Date:
Plan S or. Central Contra Coun6 Sanitary Oistrict Board President
Plan Sponsor. Central Contra County Sanitary District
Date:
Date:
/2-/20/i3
Investment Manager. Andrew Brown, CFA, Senior Portfolio Manager, (415) 705-7605
Central Contra Costa County Sanitary District — GASB 45/Other Post -Employment Benefits Trust
Investment Guidelines Document — HighMark Capital Management, Inc.
(v. 4/28/2013 - cis)
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