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04.a. Highmark Other Post-Employment Benefits (OPEB) and Pension Prefunding Sub-Trust Reports for the First Quarter of Calendar Year 2023
Page 1 of 30 Item 4.a. F__1_448�411C_S0 May 23, 2023 TO: FINANCE COMMITTEE FROM: KEVIN MIZUNO, FINANCE MANAGER REVIEWED BY: PHI LI P LEI BER, DEPUTY GENERAL MANAGER, ADMINISTRATION ROGER S. BAILEY, GENERAL MANAGER SUBJECT: RECEIVE HIGHMARK OTHER POST -EMPLOYMENT BENEFITS (OPEB) AND PENSION PREFUNDING SUB -TRUST REPORTS FOR THE FIRST QUARTER OF CALENDAR YEAR 2023 Attached is the Investment Outlook Overview for provided by Highmark (Attachment 1) providing a current and prospective outlook on the economy and the markets, as well as Highmark's OPEB and Pension Pre - funding sub -trust investment reports for the quarter ending March 31, 2023 (Attachment 2). I n summary, this quarter's report reflects a return of 4.41 % and 3.79% for Central San's OPEB and Pension Pre -funding sub -trusts, respectively. The long-term targeted annual returns are 5.75% for the OPEB trust and 5.14% for the Pension Pre -funding trust. I n comparison, the inception -to -date annual returns have been 7.92% and 3.08% for the OPEB and Pension Pre -funding sub -trusts respectively. As approved by the Board, nearly the entire balance of the Pension Pre -funding trust was liquidated to help finance the payoff of Central San's unfunded actuarial accrued liability (UAAL) totaling approximately $70.8 million. Following the payoff of the UAAL in June 2021, a residual amount of $42,991 remained in the trust as of March 31, 2023. While not a new issue, staff emphasizes that a Public Agency Retirement Services (PARS) system limitation results in "Contributions" and "Withdrawals" for the OPEB Trust appearing significantly overstated on page 2 of 18 in Attachment 2. This is caused by two issues: (1) a change in account number related to the establishment of the Pension Pre -funding Trust in 2017, and (2) several changes to mutual fund investment share classes where movements of funds were reflected as withdrawals and contributions. Consistent with the Board -approved Fiscal Year (FY) 2022-23 budget plan (and the year prior), the excess of OPEB costs above and beyond the actuarially determined contribution (ADC) will be claimed from the OPEB trust following the close of FY2022-23. With total FY2022-23 pay -go retiree OPEB premiums estimated to be approximately $4.6 million, it is estimated Central San will claim a reimbursement of $1.3 million from the OPEB trust in July 2023. Additionally, to augment the plan against losses due to adverse market conditions in calendar year 2022, the Finance Committee and staff recommended the Board contribute an additional $1.0 million to the OPEB trust in FY 2022-23 from favorable prior year budgetary variances at last month's Finance Committee meeting. The $1.0 million in additional FY 2022-23 contributions are being contributed on a monthly basis utilizing a dollar cost averaging approach, with the last contribution being completed in June 2023. May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 119 of 166 Page 2 of 30 Strategic Plan Tie -In GOAL FOUR: Governance and Fiscal Responsibility Strategy 1 - Promote and uphold ethical behavior, openness, and accessibility, Strategy 3 - Maintain financial stability and sustainability ATTACHMENTS: 1. Highmark Investment Outlook, 2nd Quarter 2023 2. PARS Investment Report 1 st Quarter 2023 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 120 of 166 ATTACIMEN'1' 1 This informational material is provided by U.S. Bank Asset Management Group who provides JHIGHMARKD analysis and research to U.S. Bank and its affiliate HighMark Capital Management (HighMark). Contact your investment professional for more details. HighMark is an SEC Registered CAPITAL MANAGEMENT Investment Advisor and affiliate of U.S. Bancorp. HighMark is engaged by its clients to provide investment advisory services on behalf of U.S. Bank, N.A. 2Q 2023 Investment Outlook: Hurry Up and Wait Contributors from Executive summary U.S. Bank Asset Asset prices remain volatile following 2022s gyrations that saw both stocks and bonds Management Group: simultaneously decline in value over a calendar year for the first time since stock and bond Eric J. Freedman index measurement began. The current capital market environment includes questions about Chief Investment Officer financial sector health, global interest rate policy and economic trajectory. Investors await Kaush Amin, CFA answers to these questions, but we expect more waiting for definitive answers and likely more Head of Private Market volatility ahead. Investing Thomas M. Hainlin, CFA Our overall view remains that the confluence of higher interest rates inside a resilient yet National Investment gradually slowing economic landscape will lead to a tougher corporate profit backdrop. That Strategist said, we anticipate a more shallow dip in corporate and consumer activity, shaped by how high Robert L. Haworth, CFA central bank target interest rates ascend to thwart inflationary pressures and how long those Senior Investment Strategy rates remain elevated. Higher interest rates pressure asset prices, consumer and business Director demand, and as we have witnessed with recent banking sector casualties, elevated interest William J. Merz, CFA rates can adversely impact functioning within select institutions. If we see less credit extension Head of Fixed Income Research and tighter financial conditions, economic growth impulses may further decline, hampering consumer and business activity. We anticipate the Federal Reserve and other major central Terry D. sandven Chief Equity Strategist banks to remain steadfast in their attempts to thwart inflation through higher interest rates, the current financial sector issues to remain contained and for economic growth to weaken but Chad Burlingame, CFA, CAIA not to a point of a prolonged recession, per our U.S. Bank Economics group's forecast. Investors Head of Impact tend to overshoot with optimism and pessimism, and we expect opportunities to emerge as Investments answers evolve in coming quarters. Kevin T. Weigel, CFA Senior Research Analyst, Real Assets Investment products and services are: NOT A DEPOSIT • NOT FDIC INSURED • MAY LOSE VALUE • NOT BANK GUARANTEED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 121 of 166 Page 4 of 30 2Q 2023 investment outlook Global economic views The global economy started 2023 on a solid note, with a warm winter and softer energy prices supporting consumer activity. The strong U.S. job market supported consumer spending and domestic economic growth to start the year, though the recent failure of Silicon Valley Bank is tempering expectations. China's "reopening" from strict anticoronavirus measures boosted travel around the Lunar New Year holiday. Meanwhile, a warm European winter eased energy costs, supporting spending. Global economic data reflects resilient consumer and business activity despite challenges from higher global interest rates, slipping liquidity and geopolitical risks. Still, global growth likely remains modest into year end, though China's reopening may provide some lift later in the year. Significantly higher global interest rates, another inflation spike or increasing geopolitical conflict are risks to our tempered outlook as the Federal Reserve (Fed) balances combatting inflation with ensuring financial market stability. Continued strong U.S consumer spending registered in early 2023 is unlikely to last, but solid consumer and business balance sheets may mean the U.S. avoids a near -term recession. The U.S. economy remains resilient due to solid wage growth and a tight labor market. Despite a weakening housing market and a manufacturing slowdown, consumers continue to pursue experiences, focusing spending on travel and leisure activities. Still -solid wage growth and access to previously accumulated savings should support modest U.S.inflation measures 9 g U.S. Cyclical Core PCE Inflation 7 — U.S. Acyclical Core PCE Inflation Federal Reserve Bank of Cleveland Trimmed Mean CPI 6 consumer spending growth through the year. The investment component of the gross domestic product, including housing, is likely a key headwind to growth since higher borrowing costs dampen demand and slow activity. Additionally, recent failures of Silicon Valley Bank and Signature Bank may weigh on future loan growth as banks tighten lending standards. These headwinds should help ease inflation, though price gains are likely to remain well above the Fed's 2% target well into next year. Developed foreign economies in aggregate may avoid a near -term recession as energy costs ease. A warm winter and contained energy costs helped to avert recessionary fears, especially for Europe, as we started 2023. However, European Central Bank and Bank of England interest rate hikes likely dampen growth prospects, with both economies still battling robust inflation pressures. The United Kingdom appears likely to enter recession, with extremely high wage growth, a weak consumer and subdued consumer sentiment. In contrast, business surveys for Europe and Japan are improving, moving back into expansion territory. Growth throughout foreign developed economies is likely to remain modest over the course of the year as rising borrowing costs offset hopes for improving demand from China. The Russian invasion of Ukraine is a risk to European economic prospects, especially as sanctions limit the flow of energy into Europe and perhaps lead to further inflation acceleration. While most global central banks are battling inflation, the Bank of Japan maintained stimulative monetary policy, including low interest rates and asset purchase programs. After decades of deflationary pressures, Japan is embracing price and wage inflation for now. Economic growth improved from its third quarter contraction and appears poised to continue with support from China's economic reopening. 5 Emerging market economies likely see recovery in 2023, 3 led by China's reopening and easing inflation pressures. 2 China's reopening from COVID-19 restrictions led a recovery o , IF in travel for the Lunar New Year holiday. Consumer spending Feb-04 Apr-07 Jun -SO Aug-13 o.t-16 sec-19 Feh-23 is likely to follow in coming quarters, though full -year growth Source: U.S. Bank Asset Management Group, Bloomberg. is likely to be modest when compared to the past decade, with China's National People's Congress setting a 5% target for 2023. Economic maturity and slowing working age population growth in addition to the -1 ongoing recovery from 2 See important disclosures on page 10 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 122 of 166 Page 5 of 30 2Q 2023 investment outlook housing market problems serve as headwinds to the recovery However, some rebound in spending after more than two years of restrictions is likely to emerge over the course of 2023, likely starting toward the middle of the year. China's acceleration along with an end to Fed rate hikes should lift growth prospects for other emerging market economies in the latter portion of the year. Conflict and trade risks could weigh heavily for emerging markets' 2023 economic results. An escalating Russia/Ukraine conflict could challenge global energy supplies, rekindling inflation and constraining consumer spending. Additionally, U.S.-China trade relations remain a challenge. Tariffs remain in place and further escalation of trade limitations could dampen economic activity. U.S. equity markets U.S. equities trended higher in the first quarter; however, we maintain our cautious near -term outlook. Persistent inflation, elevated interest rates and uncertain 2023 earnings growth weigh on return prospects while financial stability concerns complicate the Fed's ongoing battle with inflation. Elevated inflation erodes the purchasing power of earning streams and future dividend payments. Early -year strength among growth -oriented equities reflected investors' anticipation of a sustained slowing in inflation, which has yet to materialize. Meanwhile, elevated interest rates, economic uncertainty and recent bank failures make higher -yielding, safer assets such as U.S. Treasuries more attractive, causing investors to demand higher compensation for taking on equity price risk by paying lower prices relative to anticipated earnings. Broad -market valuation, or the price investors are willing to pay for actual or estimated future earnings, is near historical averages dating back to 1990, neither at high nor low extremes. As of March 31, the S&P 500 trades at approximately 18.5 times last 12-months (LTM) and next 12-months (NTM) earnings projections, levels we regard to be within a "zone of okay." Analysts project S&P 500 earnings of roughly $220 per share for this year, down from the $250 estimate level as of mid-2022. While analysts have moderated 2023 expectations, we expect more downside lies ahead due to economic uncertainty following first quarter earnings reports and forward guidance, which begin in mid -April. S&P 500 last 12 months' price/earnings ratio 34.00 52.55 29.00 24.00 )%A Ave. 19.99 19.00 V 1 ' T u I 17.14 14.00 14.82 12.57 9.00 10.30 T Source: U.S. Bank Wealth Management, Bloomberg, March 6, 2023 Consumers are spending on experiences while business spending has a technology bias. We see select opportunities within all sectors. Consumer spending remains resilient, directed largely toward experiences such as travel and entertainment; in contrast, consumer spending on discretionary items such as home furnishings remains soft. Following fourth quarter earnings releases, company managements cited steady business spending on technology, particularly software and cloud - related expenditures, although they reported lengthening sales cycles as firms look to leverage current spending levels. While labor costs remain elevated, profit margins are holding up — down from recent peak levels but still at or above pre - pandemic levels. Supply chain bottlenecks are resolving and many retailers are streamlining inventories, which reduces the likelihood of widespread markdowns and should help support profit margins in coming quarters.. Traditionally defensive, dividend -paying equities offer near -term appeal when weighing the prospects for a growth slowdown or recession, while secular growth sectors remain well -positioned for longer -term growth. Dividend -paying equities afford investors both income and growth potential during times of uncertainty, which helps offset increasingly attractive bonds yields. The 10-year Treasury yield remains elevated, ending the quarter at 3.5%, while a modest 13% of S&P 500 companies currently offer a higher dividend yield. However, a significant proportion of S&P 500 companies pay dividends that are growing in excess of 3.5% per year; 26% of S&P 500 companies pay dividends with a three-year compound annual growth rate of 10% or higher, while 50% offer dividends with a three-year growth rate of 5% or higher. 3 See important disclosures on page 10 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 123 of 166 Page 6 of 30 2Q 2023 investment outlook Technological advancements and longer -term demographic trends continue to bolster prospects among select secular growth sector firms. Fast is getting faster, and speed, scale and efficiencies do not occur without technological advances. The interaction of artificial intelligence, machine learning, e-commerce, cloud computing, data security and analytics provides a platform for new tools and outcomes that favorably position companies within the Technology sector. Within the Consumer Discretionary sector, we favor companies that combine an internet presence, require or encourage in-store traffic and rank high on experiential metrics. Finally, we find opportunities within a bifurcated Communication sector, split between telecommunications and media -related companies. We favor the growth -oriented media companies that are moving to online platforms where consumer targeting and analytics, in many cases, provide better return potential than traditional media sources. Foreign equity markets Improving investor sentiment provides equity price support as warm weather and sufficient gas supplies help Europe avoid a winter energy crisis. Entering 2023, we regarded the unsettled Russia/Ukraine conflict, China's ongoing COVID restrictions and central banks tightening monetary policy to combat elevated inflation as key factors supporting a cautious near -term outlook for foreign developed and emerging market equity prospects. Despite a disruption in Russian energy imports, Europe accumulated sufficient natural gas supplies through alternative sources for the region's 2022-2023 winter season heating and industrial needs. Meanwhile, the region is experiencing a historically warm winter, with several countries reporting the highest January temperatures on record, leading to lower heating demand. Finally, while the Russia/Ukraine war remains an ongoing human tragedy, the conflict has yet to spread beyond Ukraine's borders or draw North Atlantic Treaty Organization (NATO) members into a broader conflict. As a result, foreign companies' 2023 corporate earnings estimates have stabilized. Analysts' consensus estimates imply a 9% corporate profit growth rate relative to 2022, reflecting a modestly positive outlook. The trend in valuation, or the price investors are willing to pay for anticipated earnings, also evidences improved sentiment toward foreign developed equities. By the end of last year's third quarter, elevated inflation, tightening financial conditions and energy supply concerns had precipitated a decline in foreign equities' price -to -earnings ratio to 11.5 times, representing a discount of more than 20% relative to historical average. Europe avoiding a worst -case scenario has coincided with improved investor sentiment, with the price -to -earnings ratio rising to 13.3. Stabilizing earnings estimates and improved investor sentiment has provided support for equity prices as we conclude the first quarter. Recent positive equity price performance is encouraging, but persistent inflation, elevated interest rates and structural headwinds temper our return outlook. While some near -term concerns have receded, intermediate - and longer -term challenges remain. Elevated inflation continues to erode consumers' purchasing power, while tightening monetary policy increases companies' financing costs, impairing profitability potential. Europe and Japan continue to experience slowing population growth — in some cases population declines — challenging longer -term growth prospects. Finally, secular growth sectors such as Technology, Communication Services and Consumer Discretionary represent a smaller mix in foreign equity markets (25%) relative to the United States (46%). While we respect recent positive equity price performance, we continue to view the rally's durability with skepticism given ongoing intermediate- and longer -term concerns. China's COVID policy reversal and Fed interest rate increases represent competing influences leading to two- sided potential outcomes for emerging market equities. At the end of the year, Chinese authorities quickly pivoted from their restrictive "zero-COVID" policies, ending quarantines, close contact identification and border checks while shifting to voluntary testing. The ensuing case growth surge disrupted economic activity throughout January, however, a second COVID wave did not materialize during the Chinese New Year holiday and the economy recovered faster than expected in February. Manufacturers' sentiment improved to the highest reading since 2012 and China's policymakers recently set a 5% growth target for 2023, prioritizing a consumer spending recovery. 4 See important disclosures on page 10 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 124 of 166 Page 7 of 30 2Q 2023 investment outlook Meanwhile, China household bank deposits have increased by 49% since the pandemic's onset, representing significant pent-up consumer demand for domestic and foreign goods and services. Looking ahead, the combination of economic reopening, policy support and pent-up demand bolsters China's economic growth potential, while improved supply chain transmission would also help alleviate global inflationary pressures given the country's key position in global linkages. Annual change in China household deposits 20 F 5 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 - - - - Avg 2013-2019 - - - - Avg 2020-2022 Source: Bloomberg. CNY is Chinese Yuan Renminbi, the general term for the currency of the People's Republic of China However, ongoing Fed rate hikes represent a counterbalancing headwind for emerging market prospects. Emerging market firms that need to raise funds compete with elevated U.S. interest rates, resulting in higher interest costs to attract investors' capital which increases expenses and pressures profit margins. A reopening China and tight Fed monetary policy highlights two-sided outcomes for emerging market prospects, driving our balanced outlook. Fixed income High -quality bonds offer compelling total return opportunities and can defensively position portfolios for slowing economic growth. The increase in Treasury yields over the past year to near their highest levels in 15 years greatly improves income available on high -quality bonds. Bond prices and yields move in opposite directions, so the uptrend in yields has dragged down returns. However, we expect headwinds to bond prices could fade this year as we near a potential peak in the Fed's policy rate and as economic growth prospects slow. The eventual peak in interest rate hikes (dependent upon ongoing inflation and or growth deceleration or strained financial conditions) would support longer -term bonds, but current elevated inflation in the meantime warrants more moderate interest rate sensitivity. Ten-year Treasury yield 4 3 2 w-year ireasury yieia 0 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19 Mar-2 1 Mar-23 Sources: U.S. Bank, Bloomberg, Federal Reserve. Central banks must balance raising interest rates to slow inflation and avoiding exacerbating financial system stress. Inflation remains uncomfortably high despite the Fed raising interest rates by 4.75% since early 2022. More restrictive monetary policy may be necessary to cool inflation, however, fear of spreading trouble in the banking sector favors a more patient tightening approach that reacts to evolving financial conditions. Stress on the financial system reducing lending activity may replace the need for additional hikes to slow inflation. Further, Fed policy changes work with long and variable lagged effects on economic growth and ultimately on inflation. Consequently, investors expect the Fed will begin a series of rate cuts beginning mid -year. The Fed and FDIC programs that offer overnight loans in U.S. Dollars to foreign central banks and short-term loans to financial institutions aim to contain financial system stress. However, the Fed continues to allow up to $95 billion of its Treasury and mortgage bond holdings to mature without reinvesting the proceeds, referred to as "quantitative tightening." Private investors must step in for the Fed, which can reduce investment in other assets and further tighten financial conditions. Restrictive Fed policy, through rate hikes and quantitative tightening, remains a headwind for economic growth by increasing borrowing costs and reducing market liquidity. Fed policy uncertainty contributes to short-term Treasury yield volatility while long-term yields depend in part on the Fed successfully slowing inflation and in part on long-term 5 See important disclosures on page 10 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 125 of 166 Page 8 of 30 2Q 2023 investment outlook economic growth prospects. The lagged impact of restrictive Fed policy to slow growth and inflation should support long- term bond prices but inflation and policy uncertainty fuel bond price volatility. However, the increase in high -quality bond yields over the last year offers a greater cushion against bond price swings. Additional high -quality corporate and municipal bond yields relative to U.S. Treasuries are near long-term averages and, coupled with strong credit fundamentals, support future return prospects. Typically, valuations fall when economic growth slows, which we measure by the additional yield investors require to compensate them for taking additional risk relative to safer Treasuries. Thus far, valuations remain near average historical levels but have worsened slightly (meaning investors are requiring slightly higher relative yields) due to recent unease around the banking system. However, strong credit fundamentals support high -quality issuers' ability to make interest and principal payments, supporting these valuation levels. Meanwhile, average valuations on riskier high yield corporate and municipal bonds offer little incentive to increase credit risk. Weak investor sentiment is pressuring below investment -grade bond prices and remains a risk, especially for economically sensitive issuers. Low yields in 2020 and 2021 allowed many companies and municipalities to refinance and extend maturities, but persistently high borrowing rates may eventually stress individual bond issuers that must refinance with costlier debt. Additionally, high yield companies that have been reliant upon financing tied to floating interest rates are already experiencing significantly higher interest expense. The gradual weakening of credit fundamentals presents a modest headwind to corporate and municipal bonds compared to Treasuries, but compelling absolute return opportunities exist for high quality issuers thanks to currently elevated bond yields. Mortgage bonds not backed by the government and insurance -linked bonds offer attractive income with unique return sources. Cautious investor sentiment toward a slowing housing market creates opportunities to earn high income with strong fundamental tailwinds in the mortgage bond market not backed by the government. Most home loans originated before 2022 remain well -secured by the value of the homes collateralizing them, even if home prices continue to fall somewhat further. Slowing housing activity reduced new mortgage originations to a trickle, limiting the supply of new bonds, which in turn should support existing bond prices. Investor sentiment remains the largest near -term risk. Reinsurance, also referred to as insurance -linked securities, continues to offer compelling yields. Insurance premiums (minus insured losses from natural disasters) drive returns and remain uncorrelated with typical economic cycles that drive stock and bond returns.. Real asset markets Despite growing income and declining vacancies, real estate markets still see re -pricing ahead due to higher interest rates. Publicly traded real estate securities underperformed the broader market in the first quarter by 5.6%, with persistent inflation leading to rising interest rates offsetting positive property market fundamentals. Additionally, fears of an economic recession affected some sectors, such as cell towers and office properties, more than others. These sectors experienced negative returns while all other property types experienced positive performance. Nationally, vacancy rates continue to decline across most property types and income continues to grow at an above - average pace. However, the pace of income growth is decelerating, and we expect it to taper off to more average levels through the rest of 2023. Income relative to property values rose in the publicly traded real estate market due to declining prices, but less so for private markets. Credit for property investment is still available but it is no longer cheap, making quality investments more difficult to find. As we look into the second quarter, decelerating economic growth should be a negative for property prices, especially in the private markets. Private real estate appraisals are slowly adjusting to the shifting economic tides, and we believe the second quarter brings further price declines, particularly to office and retail properties where excess capacity makes it highly unlikely landlords can raise rents to offset declining income growth and rising vacancies. Publicly traded real estate investment trusts (REITs), on the other hand, have re- priced significantly and now trade at cheaper levels relative to their fundamentals. 6 See important disclosures on page 10 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 126 of 166 Page 9 of 30 2Q 2023 investment outlook A slowing economy may support infrastructure assets paying consistent dividends. Global infrastructure includes companies operating in utilities, toll roads, transportation and communications infrastructure and energy storage and transportation. Economic uncertainty and slowing inflation in 2023 may lead investors to prefer investments with consistent and growing cash flows, such as global infrastructure. This has not yet come to fruition; since the market low in October 2022 infrastructure has lagged the broader market, and it underperformed the S&P 500 by 5.4% in the first quarter. Utilities led the underperformance, with defensive sectors out of favor in a more aggressive market. Infrastructure assets may perform relatively well amid an uncertain economy and slowing, but elevated inflation. Midstream energy stocks should continue to produce outsized earnings growth, even as it decelerates, and the Utilities sector is also producing strong earnings growth. With these stocks comprising 50% of most infrastructure benchmarks, we see strong performance for the asset class throughout the remainder of 2023. Decelerating economic growth and declining inflation is bearish for commodities. Entering 2023 we were cautious on commodities based on the decelerating economic growth. The Russia/Ukraine conflict has led to volatility in commodities markets, which have declined relative to year-ago levels. In the first quarter, the Bloomberg Commodity Index was down 5.4%, led by an 18.7% decline in the Energy sector that was driven by a 50.9% decline in natural gas. Decelerating economic growth should become more pronounced through 2023, reducing demand. Prices reflect the conflict between Russia/Ukraine, and the risk of a synchronized global slowdown will continue to pressure prices lower, with precious metals a possible exception. On an intermediate -term horizon, the outlook for commodities changes given the potential for a Federal Reserve pivot on monetary policy. A Fed willing to pursue expansionary policy would quickly change the environment for commodities, considering limited investments in numerous commodities' productive capacity over the past several years. Additionally, policies supporting alternative energy networks likely require additional fossil fuels and metals in their development. Alternative investments A volatile market environment creates opportunities for hedge fund managers, but economic uncertainty may lead them to favor defensive positioning. Higher interest rates have led to a market environment featuring increased volatility and significant stock price movements, providing an ample opportunity set for hedge fund managers. They pursue investments to both buy long or sell short but are challenged to find economic inflection points, so nimbleness and agility remain critical. Even tactically oriented managers skilled in trading can find these choppy markets difficult to navigate. The current economic uncertainty may favor defensive positioning with less overall exposure to the equity and credit markets. This situation does not mean hedge funds will avoid risk, but we expect them to focus more on individual stocks and bonds than the overall direction of markets. Low overall net exposure (the difference between overall long and short investments) helps position managers for potential market downside and allow for a portfolio starting point from which to tactically lean net long (more total long investments than short) or short and pursue high conviction opportunities. Hedge funds' attractive investment characteristics include trading flexibility, strategy breadth and diversification. The current capital market environment may favor defensive strategies and strategies less correlated with broad stock and bond market movements, such as active trading and market neutral funds (strategies that seek to avoid broad market risk by using both long and short investments). In contrast, we expect fundamentally focused and directional strategies that produced consistent returns during the extended period of monetary policy stimulus may face more challenges in a tighter liquidity environment. Higher interest rates may improve long and short investing opportunities in credit markets, taking advantage of wider credit spreads (the additional yield investors demand for taking additional risk relative to safer Treasuries) and performance dispersion among individual securities. Finally, we continue to look for tactical opportunities, including idiosyncratic distressed debt, where managers invest in securities of companies otherwise unable to refinance their debt or meet restrictions on existing debt covenants. As we noted last quarter, we remain positive on macro strategies. 7 See important disclosures on page 10 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 127 of 166 Page 10 of 30 2Q 2023 investment outlook Discretionary approaches that incorporate a manager's relative value outlook across asset classes and hedge funds that systematically follow security price trends are finding opportunities among changing economic growth rates, interest rate levels and currency values. Private markets Business fundamentals helped sustain private equity performance despite elevated interest rates and economic slowdown concerns. Private equity -owned companies met or exceeded their 2022 revenue and profitability goals despite a rapid rise in interest rates, inflationary pressures and economic slowdown concerns. While this resulted in less downward pressure on private equity investment performance compared to other asset classes, we do anticipate additional downward pressure on privately held company prices, reflecting the continued rise in interest rates. After the market downturn in March 2020, private market valuations increased less than public market prices that peaked in 2021, which partially explains the muted price correction in private markets. Other key private equity return drivers have contributed to a more modest correction as well, such as fund manager expertise and control over business operations to increase revenues and profits. Managers with specific expertise in their focal sectors or industries have multiple tools to improve business performance of their portfolio companies. Private equity managers drive strategic business decisions via board membership and provide operational assistance in areas such as recruiting key executives, enhancing sales efforts, improving technology infrastructure, reducing costs, overseeing mergers and acquisitions and upgrading product offerings. If the economic environment cools further, we expect fund managers to work even harder to add value through their expertise and their toolkit. This value add will be a key determinant of investment performance going forward as the boost from investors willing to pay higher prices — a function of lower interest rates — in the prior decade is no longer a tailwind. While past performance is not a guarantee of future returns, markets tend to overcorrect in either direction, presenting the potential for attractive opportunities to invest during a slowdown. Private equity funds launched during prior downturns have performed well. The performance figures in the chart below represent median returns of private equity buyout investments made in two prior downturns. In both cases, investments made during the downturns performed well over time. Global buyouts' median deal internal rate of return Tech bubble 48% Global financial crisis 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: U.S. Bank Asset Management Group, Bain Capital, DealEdge powered by CEPRES data. Buyers and sellers disagree on company valuations, suppressing private market activity. Buyers and sellers differ in valuing private market companies, subduing overall deal activity. Sellers are still anchoring on company values prior to the market correction and holding on to hopes for a bounce back. Buyers are wary of paying too much for those same companies given higher interest rates, fearing there could be more pain to come for the businesses if the economy slows further. However, the gap between sellers' and buyers' price expectations is narrowing as time passes. In 2022s fourth quarter, deal activity fell 41.8% compared to the fourth quarter in 2021. Activity so far in 2023 is stabilizing but still below average deal levels. We expect activity to pick up once interest rates stabilize and the gap between buyers and sellers price expectations close in the quarters ahead. As the deal activity and initial public offerings pick up, managers will start returning capital to investors; they have a backlog of mature investments ready for sale. Private market fund raising activity slowed significantly during 2023's first quarter, and we anticipate that trend continuing throughout the year. Some investors are over -allocated because their private market allocations held up better through 2022 while public market allocations decreased in 8 See important disclosures on page 10 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 128 of 166 Page 11 of 30 2Q 2023 investment outlook value. Other investors are just retrenching in the uncertain environment. We believe the remaining quarters in 2023 will present attractive opportunity potential for investing in private markets. We continue to source compelling opportunities while applying our thematic and opportunistic framework in combination with a deep bottom -up diligence process. We partner with high -quality, hard -to -find managers sourced through private market industry relationships. There are opportunities across private equity and private debt, such as lower middle -market and middle -market buyouts across certain sectors, including industrials, technology and healthcare services, with flexible solutions for companies in need of capital or business transformation and private debt in performing or stressed situations. HighMark Capital Management, Inc. (HighMark), an SEC -registered investment adviser, is a wholly owned subsidiary of MUFG Union Bank, N.A. (MUFG Union Bank). HighMark manages institutional separate account portfolios for a wide variety of for -profit and nonprofit organizations, public agencies, and public and private retirement plans. The ultimate parent company of HighMark and MUFG Union Bank is a wholly -owned subsidiary of U.S. Bancorp ("USB"). MUFG Union Bank provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results. Individual account management and construction will vary depending on each client's investment needs and objectives. Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal. 9 See important disclosures on page 10 May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 129 of 166 Page 12 of 30 HIGHMARK° CAPITAL MANAGEMENT This commentary was prepared March 2023 and represents the opinion of U.S. Bank Asset Management group. The views are subject to change at any time based on market or other conditions and are not intended to be a forecast of future events or guarantee of future results and is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Any organizations mentioned in this commentary are not affiliated or associated with U.S. Bank or U.S. Bancorp Investments in any way. U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/ or legal advisor for advice and information concerning your particular situation. Diversification and asset allocation do not guarantee returns or protect against losses. Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio. Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for investment. The S&P 500 Index is an unmanaged, capitalization -weighted index of 500 widely traded stocks that are considered to represent the performance of the stock market in general. The MSCI EAFE Index includes approximately 1,000 companies representing the stock markets of 21 countries in Europe, Australasia and the Far East (EAFE). The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. The Consumer Price Index is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is one of the most frequently used statistics for identifying periods of inflation or deflation. The Personal Consumption Expenditures (PCE) Price Index is a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services. It is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior. Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. The value of large -capitalization stocks will rise and fall in response to the activities of the company that issued them, general market conditions and/or economic conditions. Stocks of small -capitalization companies involve substantial risk. These stocks historically have experienced greater price volatility than stocks of larger companies and may be expected to do so in the future. Growth investments focus on stocks of companies whose earnings/profitability are accelerating in the short term or have grown consistently over the long term. Such investments may provide minimal dividends, which could otherwise cushion stock prices in a market decline. Stock value may rise and fall significantly based, in part, on investors' perceptions of the company, rather than on fundamental analysis of the stocks. Investors should carefully consider the additional risks involved in growth investments. Value investments focus on stocks of income -producing companies whose price is low relative to one or more valuation factors, such as earnings or book value. Such investments are subject to risks that their intrinsic values may never be realized by the market, or such stocks may turn out not to have been undervalued. Investors should carefully consider the additional risks involved in value investments. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible difference in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investing in fixed income securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Investment in debt securities typically decrease in value when interest rates rise. The risk is usually greater for longer -term debt securities. Investments in lower -rated and non -rated securities present a greater risk of loss to principal and interest than higher -rated securities. Investments in high yield bonds offer the potential for high current income and attractive total return but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer's ability to make principal and interest payments. The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes but may be subject to the federal alternative minimum tax (AMT), state and local taxes. There are special risks associated with investments in real assets such as commodities and real estate securities. For commodities, risks may include market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults). Hedge funds are speculative and involve a high degree of risk. An investment in a hedge fund involves a substantially more complicated set of risk factors than traditional investments in stocks or bonds, including the risks of using derivatives, leverage and short sales, which can magnify potential losses or gains. Restrictions exist on the ability to redeem or transfer interests in a fund. Private capital investment funds are speculative and involve a higher degree of risk. These investments usually involve a substantially more complicated set of investment strategies than traditional investments in stocks or bonds, including the risks of using derivatives, leverage, and short sales, which can magnify potential losses or gains. Always refer to a Fund's most current offering documents for a more thorough discussion of risks and other specific characteristics associated with investing in private capital and impact investment funds. Private equity investments provide investors and funds the potential to invest directly into private companies or participate in buyouts of public companies that result in a delisting of the public equity. Investors considering an investment in private equity must be fully aware that these investments are illiquid by nature, typically represent a long- term binding commitment and are not readily marketable. The valuation procedures for these holdings are often subjective in nature. Private debt investments may be either direct or indirect and are subject to significant risks, including the possibility of default, limited liquidity and the infrequent availability of independent credit ratings for private companies 10 ©2023 U.S. Bank 952502 CR-27060064 (04/23) May 23, 2023 Regular FINANCE Committee Meeting Agenda Packet - Page 130 of 166 PARS: Central Contra Costa Sanitary District OPEB and Pension Plan First Quarter 2023 Presented by Andrew Brown, CFA JHIGHMARKO CAPITAL MANAGEMENT CCCSD - OPEB Asset Allocation Total Assets: $78,792,424 Period Ending: 3-31-2023 1 Q23 Return: 4.41 % 1 Year Return: -5.75% Inception -to -Date Return: 7.92% Inception Date: 4-1-2009 Plan target rate of return: 5.75% Fixed Income $38,591,856 48.980/, Cash $1,866,346 2.3701, Beginning Value 566,683.26 Contributions 108,872,765.79 Withdrawals -65,866,234.96 Gain (Loss) 12,472,703.34 Interest and Dividends 22,746,506.91 Net Accrued Income 153,071.66 Ending Market Value $78,945,496.00* Equity $38,334,222 48.65% * Ending Market Value differs from total market value on page 3 due to differences in reporting methodology. The above ending market value includes accruals. HIGHMARK® PARS: Central Contra Costa Sanitary District 2 CAPITAL MANAGEMENT Asset Allocation - Central Contra Costa Sanitary District OPEB As of First Quarter 2023 Equity 48.65% Range: 40%-60 % 38, 334, 222 Large Cap Core 8.84% IVV iShares Core S&P 500 ETF 6,963,695 7.17% VGIAX Vanguard Growth & Income Adm 5,645,692 Large Cap Value 5.60% IVE iShares S&P 500 Value ETF 4,408,780 Large Cap Growth 4.82% IVW iShares S&P 500 Growth ETF 3,796,727 Mid Cap Core 4.04% IWR iShares Russell Mid -Cap ETF 3,180,591 Small Cap Value 3.36% UBVFX Undiscovered Managers Behavioral Val R6 2,644,045 Small Cap Growth 3.32% FGROX Emerald Growth Institutional 2,618,953 International Core 4.57% VEA Vanguard FTSE Developed Markets ETF 3,603,843 International Value 1.04% DODFX Dodge & Cox International Stock I 821,055 International Growth 1.07% MGRDX MFS International Growth R6 844,261 Emerging Markets 3.54% HHHFX Hartford Schroders Emerging Mkts Eq F 2,788,592 Real Estate 1.29% VNQ Vanguard Real Estate ETF 1,017,987 Fixed Income 48.98% Range: 40%-60% 38,591,856 28.83% Core Fixed Income Portfolio 22,714,748 Short -Term 3.90% VFSUX Vanguard Short -Term Investment -Grade Adm 3,069,781 Intermediate -Term 7.88% DODIX Dodge & Cox Income I 6,209,436 7.88% PTRQX PGIM Total Return Bond R6 6,207,079 High Yield 0.50% PHIYX PIMCO High Yield Instl 390,812 Cash 2.37% Range: 0%-20% 1,866,346 2.37% FGZ O( First American Government Oblig Z 1,866,346 TOTAL 100.00% $78, 792, 424 JHIGHMARK@ PARS: Central Contra Costa Sanitary District 3 CAPITAL MANAGEMENT Selected Period Performance CCCSD -OPEB Period Ending: 3/31/2023 Year Inception to Date to Date (3 Months) 1 Year 3 Years 5 Years 10 Years 04/01/2009 Cash Equivalents 1.06 2.54 .87 1.27 .77 .60 Lipper Money Market Funds Index 1.07 .89 1.26 .74 Fixed Income ex Funds 3.49 -4.23 -1.59 1.39 Total Fixed Income 3.22 -4.25 -1.36 1.31 1.54 3.29 Bloomberg US Aggregate Bd Index (USD) 2.96 -4.78 -2.77 .91 1.36 2.68 Total Equities 5.96 -7.65 17.47 8.21 9.59 12.45 Large Cap Funds 7.04 -7.76 18.66 10.87 11.85 13.84 S&P 500 Composite Index 7.50 -7.73 18.60 11.19 12.24 14.67 Mid Cap Funds 3.93 -8.96 19.04 7.85 8.83 Russell Midcap Index 4.06 -8.78 19.20 8.05 10.05 14.41 Small Cap Funds 2.41 -9.90 19.79 6.24 9.80 14.29 Russell 2000 Index (USD) 2.74 -11.61 17.51 4.71 8.04 12.42 International Equities 7.03 -4.52 12.10 2.39 4.20 7.55 MSC/ EAFE Index (Net) 8.47 -1.38 12.99 3.52 5.00 7.93 MSCI EMFree Index (Net USD) 3.96 -10.70 7.83 -.91 2.00 6.55 RR: REITS 1.67 -20.03 9.49 5.43 Wilshire REIT Index 3.32 -21.33 11.03 5.66 5.89 13.82 Total Managed Portfolio 4.41 -5.75 7.82 4.99 5.62 7.92 CCCSD OPEB Benchmark 4.39 -5.25 7.65 4.97 5.74 7.94 Account Inception: 4/2009 From April 1, 2009 to July 31, 2017, the portfolio was invested in account 6746030600, PARS/Central Contra Costa Sant PRHCP. The portfolio then moved to account 6746055900, PARS/CCCSD 115 - OPEB. CCCSD OPEB Benchmark consists of: 26.5% of S&P 500, 5% Russell Midcap, 7.5% Russell 2000, 1.75% Wilshire REIT, 3.25% MSCI EM Free, 6% MSCI EAFE, 33.5% BC Aggregate, 10% ML 1-3 Yr US Corp/Govt, 1.5% ML US High Yield Mstr II, and 5% Citigroup 1 Month T-Bill Indexes. 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. J HIGHMARK® PARS: Central Contra Costa Sanitary District CAPITAL MANAGEMENT 4 Fixed Income Portfolio: Statistics As of First Quarter 2023 Weighted Average Maturity CCCSD BC Aggregate Bond OPEB Index 9.34 years Effective Duration 1 6.16 years Average Coupon 1 3.86% Yield to Maturity 1 4.81 % Average Quality HIGHMARK® CAPITAL MANAGEMENT Aa2 PARS: Central Contra Costa Sanitary District 8.58 years 6.18 years 3.08% 4.40% Aa2 Source: BondEdge Fixed Income Portfolio: Sectors As of First Quarter 2023 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% ■ CCCS❑ OPEB ■ Barclays U.S. Aggregate Bond Index JHIGHMARKO CAPITAL MANAGEMENT Cash Treasury Agency 0.3% 29.2% 0.0% 0.0% 40.6% 1.1 % Corp Non -Corp MBS 27.2% 2.1 % 32.0% 24.0% 3.8% 28.2% PARS: Central Contra Costa Sanitary District CM❑ ABS CMBS 0.0% 9.2% 0.0% 0.0% 0.4% 1.8% Source: BondEdge Fixed Income Portfolio: Effective Duration and Effective Maturity As of First Quarter 2023 Effective Duration 30% 25% 20% 15% 10% 5% 001a 0-1 Yrs. 1-3 Yrs. 3-5 Yrs. 5-7 Yrs. 7-10 10+ Yrs. Yrs. ■CCCSD DPEB 6.55% 18.15% 22.79% 21.59% 14.57% 16.34% BC Aggregate Bond Index 0.27% 23.52% 24.77% 27.49% 8.13% 15.82% JHIGHMARKO CAPITAL MANAGEMENT Effective Maturity 45% 40% 35% 30% 25% 20% 15% 10% 5% no/- 0-1 Yr. 1-3 Yrs. 3-5 Yrs. 5-7 Yrs. 7-10 Yrs. 10+ Yrs. ■ CCCSD OPEB 5.68% 17.69% 9.59% 7.99% 39.38% 19.67% BC Aggregate Bond Index 0.07% 20.95% 16.37% 15.32% 29.86% 17.42% PARS: Central Contra Costa Sanitary District Source: BondEdge Holdings - Reporting as of Trade Date Account: 6746055900- PARS/CCCSD 115P - OPEB As of: 31-Mar-2023 Asset Type Asset Name Ticker Shares/Units Price Market Value Equities DODGE & COX INTL STOCK FD(CLSD)#1048 DODFX 17,942.6450 $45.7600 $821,055.44 Equities EMERALD GROWTH INSTITUT #13406 FGROX 115,017.7060 $22.7700 $2,618,953.17 Equities HARTFORD SCHRODERS EMRG MKT FD#3150 HHHFX 182,380.1250 $15.2900 $2,788,592.11 Equities ISHARES RUSSELL MIDCAP ETF IWR 45,489.0000 $69.9200 $3,180,590.88 Equities ISHARES S&P 500 GROWTH ETF IVW 59,426.0000 $63.8900 $3,796,727.14 Equities ISHARES S&P 500 VALUE ETF IVE 29,051.0000 $151.7600 $4,408,779.76 Equities ISHARES TR CORE S&P500 ETF IVV 16,940.0000 $411.0800 $6,963,695.20 Equities MFS INTERNATIONAL GROWTH R6#4805 MGRDX 21,460.6240 $39.3400 $844,260.95 Equities UNDISCOVERED MGRS BEHAVL R6#3467 UBVFX 34,707.8640 $76.1800 $2,644,045.08 Equities VANGUARD FTSE DEVELOPED MARKETS ETF VEA 79,784.0000 $45.1700 $3,603,843.28 Equities VANGUARD GRO & INC ADMIRALSHRS #593 VGIAX 67,411.2440 $83.7500 $5,645,691.69 Equities VANGUARD REAL ESTATE ETF VNQ 12,259.0000 $83.0400 $1,017,987.36 Fixed Income DODGE & COX INCOME FD #147 DODIX 498,349.6280 $12.4600 $6,209,436.36 Fixed Income PIMCO HIGH YIELD,INSTL #108 PHIYX 50,754.7510 $7.7000 $390,811.58 Fixed Income PRUDENTIAL TOTAL RTRNBDCLQ PTRQX 518,120.1490 $11.9800 $6,207,079.39 Fixed Income VNGRDSTTERMINVMTGRADE ADM #539 VFSUX 304,844.1780 $10.0700 $3,069,780.87 Fixed Income EXETER ATMOBILE REC 1.050% 5/15/26 EAR0026A 79,127.4800 98.487% $77,930.28 Fixed Income GM FIN CONS ATMB TR 0.450% 7/16/25 GFC0025B 59,280.5400 98.224% $58,227.72 Fixed Income ACACN 2015-1A NITS 3.600% 3/15/27 A21\13627 116,392.4700 92.494% $107,656.05 Fixed Income AERCAP IRELAND CAPIT 3.300% 1/30/32 AIC3332 95,000.0000 82.843% $78,700.85 Fixed Income ALASKA AIRLINES EQ 4.800% 2/15/29 AAE4829 104,523.8000 97.047% $101,437.21 Fixed Income AMGEN INC 5.650% 3/02/53 A155653 115,000.0000 104.070% $119,680.50 Fixed Income AT&T INC GLBL NT 3.500% 6/01/41 AIG3541 140,000.0000 78.919% $110,486.60 Fixed Income BRITISH AIRWAYS 20134.625% 12/20/25 BA24625 65,926.5000 98.823% $65,150.55 Fixed Income BROADSTONE NET LEASE 2.600% 9/15/31 BNL2631 130,000.0000 72.472% $94,213.60 Fixed Income CALIFORNIA HEALTH FA 4.353% 6/01/41 CHF4341 135,000.0000 92.625% $125,043.75 Fixed Income CAPITAL ONE FINL COR 5.817% 2/01/34 COF5834 90,000.0000 96.632% $86,968.80 Fixed Income CAPITAL ONE PRIME TR 2.670% 6/16/25 COP2625 82,652.3400 98.634% $81,523.31 Fixed Income CARVANA AUTO RECS TR 0.660% 6/12/28 CAR0628 54,816.2900 91.422% $50,114.15 Fixed Income CROWN CASTLE TOWERS 3.663% 5/15/45 CCT3645 175,000.0000 96.070% $168,122.50 JHIGHMARK@ CAPITAL MANAGEMENT PARS: Central Contra Costa Sanitary District I. Holdings - Reporting as of Trade Date Account: 6746055900- PARS/CCCSD 115P - OPEB As of: 31-Mar-2023 Asset Type Asset Name Ticker Shares/Units Price Market Value Fixed Income CVS HEALTH CORP 5.050% 3/25/48 CHC5048 57,000.0000 93.551% $53,324.07 Fixed Income DALLAS FT WORTH TEX 4.507% 11/01/51 DFW4551 150,000.0000 92.406% $138,609.00 Fixed Income DELL INTERNATIONAL 5.250% 2/01/28 D155228 80,000.0000 100.972% $80,777.60 Fixed Income DICKS SPORTING GOODS 4.100% 1/15/52 DSG4152 105,000.0000 71.041% $74,593.05 Fixed Income DNKN 2017-1A A211 4.030% 11/20/47 D2A4047 175,750.0000 93.120% $163,658.40 Fixed Income DRIVE AUTO REC TR 200.580% 12/15/25 DAR0025 85,812.5600 99.312% $85,222.17 Fixed Income DRIVE AUTO RECV TR 2.700% 5/15/27 DAR2727 192,359.5100 98.249% $188,991.29 Fixed Income ENERGY TRANSFER OPER 5.800% 6/15/38 ETO5838 125,000.0000 98.140% $122,675.00 Fixed Income ENTERGYTEXAS INC 11V15.000% 9/15/52 ET15052 65,000.0000 97.062% $63,090.30 Fixed Income ESSENTIAL UTILS INC 3.351% 4/15/50 EU13350 85,000.0000 71.274% $60,582.90 Fixed Income EXETER AUTO RECV TR 0.690% 1/15/26 EAR0826 161,125.5400 98.842% $159,259.71 Fixed Income EXETER AUTO RECV TR 3.710% 3/17/25 EAR3725 67,966.8400 99.145% $67,385.72 Fixed Income EXTRA SPACE STORAGE 5.700% 4/01/28 ESS5728 100,000.0000 100.678% $100,678.00 Fixed Income F&G GLOBAL FUNDING 2.000% 9/20/28 FGF2028 130,000.0000 84.775% $110,207.50 Fixed Income FAIRFAX US INC 4.875% 8/13/24 FU14824 115,000.0000 98.095% $112,809.25 Fixed Income FGLMC #E03097 2.500% 3/01/27 E03097F 48,845.8200 96.585% $47,177.74 Fixed Income FGLMC #G60453 3.000% 1/01/46 G60453F 96,452.5800 92.180% $88,909.99 Fixed Income FGLMC #J30401 3.000% 1/01/30 J30401F 57,826.3000 96.150% $55,599.99 Fixed Income FGLMC #Q13204 3.000% 11/01/42 Q13204F 72,108.2000 92.333% $66,579.66 Fixed Income FHLMC#SD8230 4.500% 6/01/52 SD8230A 392,783.9000 97.982% $384,857.52 Fixed Income FHLMC # SD8258 5.000% 10/01/52 SD8258A 342,348.1500 99.724% $341,403.27 Fixed Income FHLMC G08823 3.500% 7/01/48 G08823F 54,406.2800 94.296% $51,302.95 Fixed Income FHLMC G15252 3.000% 12/01/29 G15252F 51,380.6000 96.151% $49,402.96 Fixed Income FHLMC Q38373 3.500% 1/01/46 Q38373F 51,829.2500 94.514% $48,985.90 Fixed Income FHLMC RB5091 2.500% 11/01/40 RB5091A 268,992.9000 89.209% $239,965.88 Fixed Income FHLMC SB0380 3.500% 2/01/34 SB0380A 71,105.9900 97.389% $69,249.41 Fixed Income FHLMC SB8006 3.000% 9/01/34 SB8006A 60,533.5200 94.969% $57,488.08 Fixed Income FHLMC SD8221 3.500% 6/01/52 SD8221A 582,672.0400 92.926% $541,453.82 Fixed Income FHLMC SD8222 4.000% 6/01/52 SD8222A 472,243.3800 95.640% $451,653.57 Fixed Income FHLMC SD8237 4.000% 8/01/52 SD8237A 208,412.0200 95.640% $199,325.26 JHIGHMARK@ CAPITAL MANAGEMENT PARS: Central Contra Costa Sanitary District A" Holdings - Reporting as of Trade Date Account: 6746055900- PARS/CCCSD 115P - OPEB As of: 31-Mar-2023 Asset Type Asset Name Ticker Shares/Units Price Market Value Fixed Income FHLMC V60586 3.0000% 8/1/2029 V60586F 55,421.6100 96.149% $53,287.32 Fixed Income FIRST HORIZON CORPOR 4.000% 5/26/25 FHC4025 145,000.0000 93.223% $135,173.35 Fixed Income FN MA # CB3630A 4.000% 5/01/52 CB3630A 631,532.6800 95.651% $604,067.32 Fixed Income FN MA # MA4626 4.000% 6/01/52 MA4626A 453,424.8500 95.640% $433,655.53 Fixed Income FNMA #MA3238 3.500% 11/01/47 MA3238A 37,287.8500 94.326% $35,172.14 Fixed Income FN MA #MA4492 2.000% 12/01/51 MA4492A 994,820.9500 82.810% $823,811.23 Fixed Income FN MA AL8174 3.5000% 2/1/2046 AL8174A 119,527.1600 94.413% $112,849.18 Fixed Income F N MA A L8924 3.0000% 12/1/2030 AL8924A 87,879.1100 95.801% $84,189.07 Fixed Income F N MA A L9376 3.0000% 8/1/2031 AL9376A 50,343.7600 95.544% $48,100.44 Fixed Income FNMAAL9861 3.000% 8/01/30 AL9861A 119,227.6000 95.812% $114,234.35 Fixed Income FNMAAS4916 3.000% 5/01/30 AS4916A 81,971.3300 95.793% $78,522.80 Fixed Income FN MA AS7729 3.0000% 8/1/2046 AS7729A 96,524.1600 91.794% $88,603.39 Fixed Income FN MA AT0293 3.0000% 3/1/2043 AT0293A 67,420.0300 92.230% $62,181.49 Fixed Income FNMA BC1486 3.0000% 8/1/2046 BC1486A 89,478.6200 91.773% $82,117.21 Fixed Income FNMA BM4913 3.000% 5/01/46 BM4913A 52,934.6600 92.232% $48,822.70 Fixed Income FNMA CA6348 2.500% 7/01/50 CA6348A 182,430.4900 86.445% $157,702.04 Fixed Income FNMA CA6638 2.500% 8/01/50 CA6638A 223,670.3600 86.777% $194,094.43 Fixed Income FNMA CA6801 2.500% 8/01/50 CA6801A 248,558.2400 86.351% $214,632.53 Fixed Income FNMA CA7231 2.500% 10/01/50 CA7231A 225,930.1900 86.653% $195,775.29 Fixed Income FNMA FM3494 2.500% 4/01/48 FM3494A 99,310.5200 87.713% $87,108.24 Fixed Income FNMA MA2730 2.500% 8/01/46 MA2730A 213,364.3600 87.341% $186,354.57 Fixed Income FNMA MA2779 2.0000% 10/1/2026 MA2779A 30,724.8500 95.927% $29,473.43 Fixed Income FNMA MA2895 3.000% 2/01/47 MA2895A 58,107.8200 91.479% $53,156.45 Fixed Income FNMA MA3210 3.500% 11/01/47 MA3210A 35,142.0600 94.473% $33,199.76 Fixed Income FNMA MA3313 3.500% 3/01/33 MA3313A 26,038.2500 97.388% $25,358.13 Fixed Income FNMA MA3332 3.500% 3/01/48 MA3332A 47,086.2100 94.256% $44,381.58 Fixed Income FNMA MA3489 3.500% 10/01/33 MA3489A 23,762.7000 97.388% $23,142.02 Fixed Income FNMA MA3536 4.000% 12/01/48 MA3536A 11,914.2400 97.124% $11,571.59 Fixed Income FNMA MA4123 2.000% 9/01/35 MA4123A 163,922.0500 90.470% $148,300.28 Fixed Income FN MA SUPER LNG 30 YE 3.000% 4/01/52 FS3275A 448,401.8500 89.806% $402,691.77 JHIGHMARK@ CAPITAL MANAGEMENT PARS: Central Contra Costa Sanitary District 10 Holdings - Reporting as of Trade Date Account: 6746055900- PARS/CCCSD 115P - OPEB As of: 31-Mar-2023 Asset Type Asset Name Ticker Shares/Units Price Market Value Fixed Income FNMA LIMBS INT 2.000% 8/01/36 CB1446A 178,576.6400 90.250% $161,165.42 Fixed Income GOLDEN CREDITCARD 1.140% 8/15/28 GCC1128 250,000.0000 88.735% $221,837.50 Fixed Income GOLDMAN SACHS GROUP 1.948% 10/21/27 GSG1927 95,000.0000 89.342% $84,874.90 Fixed Income HARLEY DAVIDSON FINL6.500% 3/10/28 HDF6528 120,000.0000 101.092% $121,310.40 Fixed Income HARLEY-DAVIDSON MTR 2.450% 5/15/25 HM22425 48,527.4000 99.308% $48,191.59 Fixed Income HILTON GRAN D VACA TR 3.540% 2/25/32 HGV3532 158,963.7900 97.014% $154,217.13 Fixed Income INTELCORP 5.625% 2/10/43 IC55643 60,000.0000 102.484% $61,490.40 Fixed Income MAGALLANES INC 5.141% 3/15/52 MI55152 165,000.0000 81.023% $133,687.95 Fixed Income MINNESOTA MUT LIFE 8.250% 9/15/25 MML8225 100,000.0000 105.809% $105,809.00 Fixed Income MVW 2020-1 1.740% 10/20/37 M211737 98,776.0800 91.717% $90,594.46 Fixed Income NEW YORK LIFE 4.550% 1/28/33 NYL4523 110,000.0000 98.946% $108,840.60 Fixed Income NORTHERN TR CORP SUB 6.125% 11/02/32 NTC6132 100,000.0000 106.612% $106,612.00 Fixed Income OKLAHOMA DEV FIN AUT4.135% 12/01/33 ODF4133 70,000.0000 99.274% $69,491.80 Fixed Income ONE GAS INC SR NT 1.100% 3/11/24 OG11124 121,000.0000 96.035% $116,202.35 Fixed Income PACIFIC LIFECORP SR 5.400% 9/15/52 PLS5452 130,000.0000 98.620% $128,206.00 Fixed Income PENN MUTUAL LIFE INS 3.800% 4/29/61 PML3861 175,000.0000 70.696% $123,718.00 Fixed Income PHILIP MORRIS INTL 5.375% 2/15/33 PM15333 100,000.0000 102.159% $102,159.00 Fixed Income PHYSICIANS RLTY LP 3.950% 1/15/28 PRL3928 55,000.0000 93.724% $51,548.20 Fixed Income PRIMERICA INC SR NIT 2.800% 11/19/31 PIS2831 70,000.0000 83.953% $58,767.10 Fixed Income PUBLIC SERVICE CO CO 5.250% 4/01/53 PSC5253 70,000.0000 101.861% $71,302.70 Fixed Income REALTY INCOME CORP 4.850% 3/15/30 RIC4830 55,000.0000 98.517% $54,184.35 Fixed Income SANTANDER AUTO REC 0.890% 12/15/25 SAR0825 57,110.4300 99.530% $56,842.01 Fixed Income SANTANDER RENG AT LN 2.800% 1/26/32 RA2832 230,000.0000 95.115% $218,764.50 Fixed Income SBA TOWER TRUST 1.631% 5/15/51 STT1651 140,000.0000 87.575% $122,605.00 Fixed Income SOUTHERN CALIF EDISO 4.700% 6/01/27 SCE0027 70,000.0000 100.182% $70,127.40 Fixed Income SOUTHERN CALIF GAS 6.350% 11/15/52 SCG6352 100,000.0000 115.163% $115,163.00 Fixed Income SPRINT SPECTRUM CO 4.738% 9/20/29 SSC4729 100,000.0000 99.239% $99,239.00 Fixed Income STANDARD CHARTERED 2.02201% 3/30/26 SC22026 200,000.0000 100.267% $200,534.00 Fixed Income TIME WARNER CABLE NT7.300% 7/01/38 TWC7338 105,000.0000 103.764% $108,952.20 Fixed Income TRI-STATE GENERATION 6.000% 6/15/40 TG66040 115,000.0000 97.104% $111,669.60 JHIGHMARK@ CAPITAL MANAGEMENT PARS: Central Contra Costa Sanitary District 11 Holdings - Reporting as of Trade Date Account: 6746055900- PARS/CCCSD 115P - OPEB As of: 31-Mar-2023 Asset Type Asset Name Ticker Shares/Units Price Market Value Fixed Income UNITEDAIRI4-2A 3.750% 9/03/26 UA13726 87,088.5500 93.592% $81,507.92 Fixed Income UNITED STATES TREAS 3.500% 1/31/30 UST3530 820,000.0000 99.594% $816,670.80 Fixed Income UNITED STATES TREAS 3.500% 2/15/33 UST3533 1,695,000.0000 100.156% $1,697,644.20 Fixed Income UNITED STATES TREAS 3.875% 2/15/43 UST3843 1,430,000.0000 100.891% $1,442,741.30 Fixed Income UNITED STATES TREAS 3.875% 3/31/25 UST3825 400,000.0000 99.695% $398,780.00 Fixed Income UNITED STATES TREAS 4.000% 2/15/26 UST4026 357,000.0000 100.414% $358,477.98 Fixed Income UNITED STATES TREAS 4.000% 11/15/52 UST4052 762,000.0000 106.125% $808,672.50 Fixed Income UNITED STATES TREAS 4.125% 1/31/25 UST4125 700,000.0000 99.973% $699,811.00 Fixed Income UNITED STATES TREAS 4.625% 2/28/25 UST4625 450,000.0000 100.973% $454,378.50 Fixed Income UNIV CALIF REGTS IVIED 4.132% 5/15/32 UCR4132 140,000.0000 96.043% $134,460.20 Fixed Income UNTD AIR 2013-1 4.300% 8/15/25 UA24325 72,272.5300 95.958% $69,351.27 Fixed Income UTD AUTO CR SEC TR 6.320% 7/10/25 UAC6325 114,772.0500 99.894% $114,650.39 Fixed Income WELLS FARGO & CO F/R 2.393% 6/02/28 WFC2328 110,000.0000 90.046% $99,050.60 Fixed Income WEYERHAEUSER CO DEB 7.375% 3/15/32 WCD7332 105,000.0000 114.906% $120,651.30 Fixed Income WISCONSIN PWR & LT 4.950% 4/01/33 WPL4933 90,000.0000 100.620% $90,558.00 Fixed Income WORLD OMNI AUTO RECV 0.870% 10/15/26 WOA0826 115,000.0000 93.746% $107,807.90 Fixed Income COMMONWEALTH EDISON 5.875% 2/01/33 EXC/33 115,000.0000 105.320% $121,118.00 Fixed Income HESS CORP HES/33 95,000.0000 110.862% $105,318.90 Fixed Income ASSOCIATED BANC-CORP 4.250% 1/15/25 ASB25 60,000.0000 95.670% $57,402.00 Fixed Income CONSOLIDATED EDISON 5.700% 12/01/36 ED36B 80,000.0000 104.106% $83,284.80 Fixed Income MOTOROLA SOLUTIONS 2.750% 5/24/31 MS131 150,000.0000 82.580% $123,870.00 Fixed Income PLAINS ALL AMERN PIP4.300% 1/31/43 PAA43 155,000.0000 74.587% $115,609.85 Fixed Income VERIZON COMMUNICATIO 4.400% 11/01/34 VZ34B 145,000.0000 95.046% $137,816.70 Fixed Income BANK OF AMERICA CORP 4.375% 65,000.0000 85.014% $55,259.10 Fixed Income BANK OF NOVA SCOTIA 4.900% 90,000.0000 91.000% $81,900.00 Fixed Income BANK OF NY MELLON 3.750% 105,000.0000 82.460% $86,583.00 Fixed Income BRITISH AIRWAYS PLC 3.300% 6/15/34 96,516.9000 86.327% $83,320.14 Fixed Income DELTA AIR LINES 2.500% 12/10/29 92,892.3500 87.652% $81,421.63 Fixed Income FEDERAL EX CORP 1.875% 8/20/35 125,616.2000 84.152% $105,708.54 Fixed Income GUARDIAN LIFE GLOBAL FDG MTN 145,000.0000 84.761% $122,903.45 JHIGHMARK@ CAPITAL MANAGEMENT PARS: Central Contra Costa Sanitary District 12 Asset Type Fixed Income Fixed Income Fixed Income Fixed Income Fixed Income Cash & Cash Equivalents Cash & Cash Equivalents SUBTOTALS Cash & Cash Equivalents Equities Fixed Income TOTALS JHIGHMARK@ CAPITAL MANAGEMENT Holdings - Reporting as of Trade Date Account: 6746055900- PARS/CCCSD 115P - OPEB As of: 31-Mar-2023 Asset Name JPMORGAN CHASE & CO 3.650% PNC FINL SVCS GROUP 3.400% SPIRITAIRLINES 2017-1 STORE CAP CORP 4.500% 3/15/28 TRUIST FINL CORP F/R 5.125% CASH FIRST AMERN GOVT OBLIG FD CL Z #3676 Ticker Shares/Units 65, 000.0000 110,000.0000 79, 793.0200 115,000.0000 64, 000.0000 FGZXX PARS: Central Contra Costa Sanitary District (500,730.4900) 2, 367, 076.8800 Price Market Value 87.500% $56,875.00 79.302% $87, 232.20 83.171% $66,364.65 89.559% $102,992.85 84.750% $54, 240.00 $22,714,747.69 $1.0000 ($500,730.49) $1.0000 $2,367,076.88 $1, 866, 346.39 $38, 334, 222.06 $38, 591, 855.89 $78,792,424.34 13 CCCSD — Pension Asset Allocation Total Assets: $42,945 Period Ending: 3-31-2023 1 Q24 Return: 3.79% 1 Year Return: -5.33% Inception -to -Date Return: 3.08% Inception Date: 9-1-2017 Plan target rate of return: 5.14% Fix $28, 788 67.030/, Beginning Value Contributions Withdrawals Gain (Loss) Interest and Dividends Net Accrued Income Ending Market Value Cash Equity $1,415 $12,742 0 3,359,081.81 7,245,356.11 -12,944,505.67 1,448,027.77 934,985.28 45.97 $42,991.27* * Ending Market Value differs from total market value on page 15 due to differences in reporting methodology. The above ending market value includes cruals. a HIGHMARK® PARS: Central Contra Costa Sanitary District CAPITAL MANAGEMENT 14 Asset Allocation - Central Contra Costa Sanitary District Pension As of First Quarter 2023 Equity 29.67% Range: 20 %-40 % 12,742 Large Cap Core 4.79% IVV iShares Core S&P 500 ETF 2,055 4.16% VGIAX Vanguard Growth & Income Adm 1,786 Large Cap Value 3.53% IVE iShares S&P 500 Value ETF 1,518 1.04% DODFX Dodge & Cox International Stock 1 446 Large Cap Growth 3.12% IVW iShares S&P 500 Growth ETF 1,342 Mid Cap Core 2.60% IWR iShares Russell Mid -Cap ETF 1,119 Small Cap Value 2.08% UBVFX Undiscovered Managers Behavioral Val R6 892 Small Cap Growth 1.99% FGROX Emerald Growth Institutional 856 International Core 2.52% VEA Vanguard FTSE Developed Markets ETF 1,084 International Growth 1.12% MGRDX MFS International Growth R6 480 Emerging Markets 1.94% HHHFX Hartford Schroders Emerging Mkts Eq F 833 Real Estate 0.77% VNQ Vanguard Real Estate ETF 332 Fixed Income 67.03% Range: 50%-80% 28,788 Short -Term 4.94% VFSUX Vanguard Short -Term Investment -Grade Adm 2,121 19.95% AGG iShares Core US Aggregate Bond ETF 8,569 Intermediate -Term 19.83% DODIX Dodge & Cox Income I 8,514 21.81% PTRQX PGIM Total Return Bond R6 9,368 High Yield 0.50% PHIYX PIMCO High Yield Instl 215 Cash 3.30% Range: 0%-20% 1,415 3.30% FGZXX First American Government Oblig Z 1,415 TOTAL 100.00% $42,945 JHIGHMARK@ PARS: Central Contra Costa Sanitary District 15 CAPITAL MANAGEMENT Selected Period Performance PARS/CCCSD 115P - PENSION Account ******5901 Period Ending: 3/31/2023 Year Inception to Date to Date (3 Months) 1 Year 3 Years 5 Years 09/01/2017 Cash Equivalents 1.05 2.53 .87 1.28 1.25 Lipper Money Market Funds Index 1.07 2.59 .89 -1 1 1.23 Total Fixed Income 3.07 -4.89 -2.07 .97 .63 Bloomberg US Aggregate Bd Index (USD) 2.96 -4.78 -2.77 .91 .53 Total Equities 5.98 -7.36 16.31 7.47 7.92 Large Cap Funds 7.00 -7.75 17.36 10.15 10.44 S&P 500 Composite Index 7.50 -7.73 18.60 11.19 11.49 Mid Cap Funds 4.04 -8.88 18.00 7.37 8.05 Russell Mldcap Index 4.06 -8.78 19.20 8.05 8.76 Small Cap Funds 2.98 -8.81 18.79 5.53 6.71 Russell 2000 Index (USD) 2.74 -11.61 17.51 4.71 5.95 International Equities 6.40 -4.38 12.11 2.43 3.24 MSCI EAFE Index (Net) 8.47 -1.38 12.99 3.52 4.09 MSCI EMFree Index (Net USD) 3.96 -10.70 7.83 -.91 .65 RR: REITS 1.30 -20.00 9.54 5.44 3.42 Wilshire REIT Index 3.32 -21.33 11.03 5.66 3.90 Total Managed Portfolio 3.79 -5.33 3.63 3.27 3.08 CCCSD Pension Benchmark 3.68 -4.39 3.78 3.45 3.36 Performance Inception: 09/2017 CCCSD Pension Benchmark consists of: 15.5% of S&P 500, 3% Russell Midcap, 4.5% Russell 2000, 1% Wilshire REIT, 2% MSCI EM Free, 4% MSCI EAFE, 49.25% BC Aggregate, 14% ML 1-3 Yr US Corp/Govt, 1.75% ML US High Yield Mstr II, and 5% Citigroup 1 Month T-Bill Indexes. 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. JHIGHMARK@ PARS: Central Contra Costa Sanitary District CAPITAL MANAGEMENT 16 Asset Type Cash & Cash Equivalents Cash & Cash Equivalents Equities Equities Equities Equities Equities Equities Equities Equities Equities Equities Equities Equities Fixed Income Fixed Income Fixed Income Fixed Income Fixed Income SUBTOTALS Cash & Cash Equivalents Equities Fixed Income TOTALS JHIGHMARK@ CAPITAL MANAGEMENT Holdings - Reporting as of Trade Date Account: 6746055901- PARS/CCCSD 115P - PENSION As of: 31-Mar-2023 Asset Name Ticker Shares/Units Price Market Value CASH (40.3200) $1.0000 ($40.32) FI RST AMERN GOVT OBLIG FD CL Z #3676 FGZXX 1,455.6800 $1.0000 $1,455.68 DODGE & COX INTL STOCK FD(CLSD)#1048 DODFX 9.7480 $45.7600 $446.07 EMERALD GROWTH INSTITUT #13406 FGROX 37.5880 $22.7700 $855.88 HARTFORD SCHRODERS EMRG MKT FD#3150 HHHFX 54.4620 $15.2900 $832.72 ISHARES RUSSELL MIDCAP ETF IWR 16.0000 $69.9200 $1,118.72 ISHARES S&P 500 GROWTH ETF IVW 21.0000 $63.8900 $1,341.69 ISHARES S&P 500 VALUE ETF IVE 10.0000 $151.7600 $1,517.60 ISHARES TR CORE S&P500 ETF IVV 5.0000 $411.0800 $2,055.40 MFS INTERNATIONAL GROWTH R6#4805 MGRDX 12.1890 $39.3400 $479.52 UNDISCOVERED MGRS BEHAVL R6#3467 UBVFX 11.7060 $76.1800 $891.76 VANGUARD FTSE DEVELOPED MARKETS ETF VEA 24.0000 $45.1700 $1,084.08 VANGUARD GRO & INC ADMIRAL SHRS #593 VGIAX 21.3270 $83.7500 $1,786.14 VANGUARD REAL ESTATE ETF VNQ 4.0000 $83.0400 $332.16 DODGE & COX INCOME FD #147 DODIX 683.3340 $12.4600 $8,514.34 ISHARES CORE US AGGREGATE BD ETF AGG 86.0000 $99.6400 $8,569.04 PIMCO HIGH YIELD,INSTL #108 PHIYX 27.9860 $7.7000 $215.49 PRUDENTIAL TOTAL RTRN BD CL Q PTRQX 781.9980 $11.9800 $9,368.34 VNGRDSTTERMINVMTGRADE ADM #539 VFSUX 210.6250 $10.0700 $2,120.99 PARS: Central Contra Costa Sanitary District $1,415.36 $12, 741.74 $28, 788.20 $42, 945.30 17 CENTRAL CONTRA COSTA SANITARY DISTRICT March 31, 2023 3-Month YTD 1-Year 3-Year 5-Year 10-Year Fund Name Inception Return Rank Return Rank Return Rank Return Rank Return Rank Return Rank iShares Core S&P 500 ETF (4/17) 7.49 23 7.49 23 -7.76 52 18.57 31 11.15 21 12.20 11 iShares S&P 500 Value ETF (4/17) 5.13 8 5.13 8 -0.34 4 18.91 49 9.29 22 9.98 23 Vanguard Growth & Income Adm (12/16) 6.47 48 6.47 48 -8.16 62 19.11 21 10.89 29 12.18 12 iShares S&P 500 Growth ETF (4/17) 9.58 67 9.58 67 -15.47 76 16.63 38 11.70 30 13.42 24 S&P 500 TR USD 7.50 7.50 MID CAP EQUITY FUNDS -7.73 18.60 M 11.19 12.24 iShares Russell Mid -Cap ETF (3/16) 4.03 38 4.03 38 -8.90 75 19.01 61 7.90 35 9.88 26 Russell Mid Cap TR USD 4.06 -- 4.06 SMALL -- CAP EQUITY -8.78 - 19.20 - 8.05 10.05 -- Undiscovered Managers Behavioral Val R6 (9/16) 0.53 64 0.53 64 -3.97 26 32.79 13 8.40 13 10.28 4 Russell 2000 Value TR USD -0.66 -0.66 -12.96 21.01 4.55 7.22 Emerald Growth Institutional (1/23) 4.12 75 4.12 75 -11.72 51 14.43 63 5.69 73 10.08 34 Russell 2000 Growth TR USD 6.07 6.07 - -10.60 13.36 4.26 8.49 INTERNATIONAL• Dodge & Cox International Stock 1 6.15 69 6.15 69 -0.46 49 17.30 23 2.91 32 5.06 15 Vanguard FTSE Developed Markets ETF (9/18) 7.75 54 7.75 54 -2.93 59 13.86 25 3.44 33 5.26 22 MFS International Growth R6 9.22 59 9.22 59 1.03 4 13.16 15 6.73 12 6.87 22 MSCI EAFE NR USD 8.47 8.47 -1.38 12.99 3.52 5.00 Hartford Schroders Emerging Mkts Eq F 5.16 41 5.16 41 -10.26 62 7.86 59 -0.55 42 2.64 29 IMSCI EM NR USD 3.96 3.96 -10.70 7.83 -0.91 2.00 EQUITYREIT Vanguard Real Estate ETF (4/17) 1.77 73 1.77 73 -20.12 55 9.80 66 5.80 45 5.78 44 Wilshire REIT Index 3.32-- -- BOND FUNDS -21.33 - 11.03 - 5.66 5.89 iShares Core US Aggregate Bond ETF (6/21) 3.13 47 3.13 47 -4.75 33 -2.77 69 0.88 42 1.32 38 Dodge & Cox Income 1 (1/23) 3.13 53 3.13 53 -3.03 7 0.13 14 1.93 7 2.35 7 PGIM Total Return Bond R6 (5/16) 3.17 50 3.17 50 -6.05 73 -1.14 49 0.99 50 2.07 14 Vanguard Short -Term Investment -Grade Adm 1.88 28 1.88 28 -0.19 37 0.75 52 1.59 29 1.59 16 Bloomberg US Agg Bond TR USD 2.96 -- 2.96 -- -4.78 - -2.77 - 0.91 1.36 -- PIMCO High Yield Instl (12/20) 3.98 8 3.98 8 -2.66 31 4.55 75 2.94 33 3.73 23 ICE BofA US High Yield Mstr II Index 3.72 -- 3.72 -- -3.56 - 5.84 - 3.06 4.06 Data Source: Morningstar, SEI 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 believed accurate and reliable. Securities are not FDIC insured, have no bank guarantee and may lose value. JHIGHMARK PARS: Central Contra Costa Sanitary District CAPITAL MANAGEMENT 18