Item #5 - UPDATE REGARDING UNFUNDED ACTUARIAL LIABILITY - RETIREMENT ENHANCEMENT PLANAGENDA ITEM NO.5
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE: September 17, 2019
TO: Mayor and City Council
FROM: David Carmany
City Manager
SUBJECT: UPDATE REGARDING UNFUNDED ACTUARIAL LIABILITY -
ENHANCEMENT PLAN
RECOMMENDATION:
It is recommended that the City Council receive and file this informational report.
BACKGROUND:
Unfunded pension liabilities
West Covina, like nearly all public agencies in California, must address the difference between the current and
future resources that exist to cover expenses related to providing retirement benefits for current and future retirees,
and the projected cost of providing those benefits in the coming years. The difference between those two amounts
is called the unfunded pension liability.
Retirement Enhancement Plan
The City of West Covina Retirement Enhancement Plan was implemented in November 2007 for employees in the
miscellaneous groups and public safety, not including the Police Officer's Association. The Retirement
Enhancement Plan represents an unfunded liability and is closed to new hires. Concluding the Retirement
Enhancement Plan is problematic - to terminate a plan, the benefits must be satisfied.
Pension Rate Stabilization Program
The City of West Covina also has a Pension Rate Stabilization Program, a tool for pre -funding pension obligations
which was established in September 2017. The City made an initial contribution to this fund in December 2017,
but has not continued with funding this program.
DISCUSSION:
Retirement Enhancement Plan
As of June 30, 2017, the actuarial liability for this plan is $3,365,944 which has increased by 10.36% from June 30,
2015. There are 140 active employees and 25 retirees enrolled in this program. In addition, there is also a
supplemental plan for City Council and Executive Management Team. As of June 30, 2017, the City of West
Covina had one active employee enrolled in this program and 9 retirees. Key plan amendments for both of these
programs can be found on pages 6 and 16 respectively in Attachment No. 1.
Unfunded Pension Liabilities
The unfunded liabilities for the Retirement Enhancement Plan are in addition to the unfunded liabilities for the
Ca1PERS pension plan. As of June 30, 2017, the actuarial liability for the City's Ca1PERS pension plan was $552.2
million, with an unfunded liability of $178.3 million. For Fiscal Year (FY) 2018-19, the City contributed $14.9
million toward pensions and the cost is expected to continue to increase annually reaching $23.7 million in FY
2024-25.
Prepared by: Nikole Bresciani, Assistant City Manager/Public Services Director
Fiscal Impact
FISCAL IMPACT:
The fiscal impact of pensions is increasing by millions annually with Cities burdened with the responsibility to
close the gap on the unfunded liability to ensure future retirees having intact retirement funds.
Attachments
Attachment No. 1 - PARS Summary Report
CITY COUNCIL GOALS & OBJECTIVES: Achieve Fiscal Sustainability and Financial Stability
r
u
r
CITY OF WEST COVINA
PUBUC
MENT PARS
AGENCY
RETIREMENT
Retirement Enhancement Plan (REP) &
SERVICES
Pension Rate Stabilization Program (PRSP) Client Review
TRUSTED SOLUTIONS. LASTING RESULTS.
August 26, 2019
PARS TRUST TEAM
PARS
TRUSTED SOLUTIONS. LASTING RESULTS.
35
Years of Experience
(1984-2019)
• Recordkeeping/reporting
• Coordinates all City services
• Monitors plan compliance
1,600+ 900+
Plans under Public Agency
Administration Clients
®bank.
• 5th largest commercial bank and one of the
nation's largest trustees for Section 115 trusts.
• Safeguard plan assets,
• Oversight protection as plan fiduciary
• Custodian of assets
156
S5.Or
Years of Experience
Assets under
(1863-2019)
Administration
ra� NPARS
SERMCES
TRUSTED SOLUTIONS. LASTING RESULTS.
• Processes contributions/disbursements
• Hands-on, dedicated support teams
500K+
Plan Participants
$3.8 B
Assets under
Administration
JHIGHMARK®
CAPITAL MANAGEMENT
• Investment sub -advisor to trustee U.S. Bank
• Investment policy assistance
• Uses open architecture
• Active and passive platform options
• Customized portfolios (with minimum asset level)
100
S16.0B
Years of Experience
Assets under
(1919-2019)
Management
CITY OF WEST COVINA 2
PARS ADMINISTRATIVE SERVICES
• Fielding Participant and Agency information requests
• Coordinating with PARS Trustee on benefit distributions and tax -reporting
(1099s and W2s)
• Preparing monthly and annual Agency statements
• Provide Quarterly Investment Updates
• Coordinating annual audit of PARS Trust by independent CPA firm for purposes
of GASB 67/68 reporting
• Preparing annual State Controller's Report
• Assisting Agency with ongoing compliance and qualification issues
• Coordinating actuarial valuations updates with Bartel Associates, LLC to help
comply with California Government Code 7504
• Evaluate annuity purchases for qualified plan
PARS
TRUSTED SOLUTIONS. LASTING RESULTS.
CITY OF WEST COVINA 1 3
Th e
PARS RETIREMENT
ENHANCEMENT PLAN
For Miscellaneous & Safety Employees
PARS
GN
R TRMM
SFAVICES
CITY OF WEST COVINA 1 4
TRUSTED SOLUTIONS. LASTING RESULTS.
SUMMARY OF AGENCY'S PLAN
Plan Effective Date: November 1, 2007
Type of Plan: 401(a) Tax -Qualified Defined Benefit
415(m) Excess Benefit
Benefit Level: Miscellaneous: 0.70% of PERS Supplemental Plan
Safety: 0.89% of PERS Supplemental Plan
Eligibility: Miscellaneous and Safety Employees (except POA)
• Employed on or After July 1, 2006
• 50 Years of Age
• 1 Year of Service
• Concurrent Retirement
• Closed to new hires (PEPRA compliant)
ilc mcy
PARS
TRUSTED SOLUTIONS. L%MKG RESULTS. CITY OF WEST COVINA 1 5
KEY PLAN AMENDMENTS
• Benefit Service for Employees in CEA, GEA, MCEA, NSSEA frozen as of July 1, 2015
• Employee that promotes to Police Management Employee position afterJuly 1,
2015 requires 3 years of services as a Police Management Employee
• Benefit Service for transfers to Police Management Employee after January 1,
2013 shall only include service as a Police Management Employee
PARSncwcy
CITY OF WEST COVINA 1 6
TRUSTED SOLUTIONS. LASTING RESULTS.
ti
APLOYEE DI.
Active Participant
Count
Retired Participant
Count
/40
June 30, 2015
June 30, 2017
Change
C)
PLAN FUNDING STATUS
$119,000 $143,715 20.77%
$753,000 $931,572 23.71 %
12.6% 15.4% 22.22%
PARSAGF CY
TRUSTED SOLUTIONS. LASTING RESULTS.
CITY OF WEST COVINA 1 8
June 30, 2015
3.90% Discount Rate
Normal Cost
Amortized Unfunded Actuarial Liability (UAAL)
Total Annual Contribution (ARC)
Contribution as a % of Payroll
SUMMARY OF AGENCY'S PLAN
CONTRIBUTIONS, DISTRIBUTIONS, AND TOTAL ASSETS AS OF JUNE 30, 20191:
$250,000
$200,000
$150, 000
$100,000
$50,000
$0
JC Jf JC e JC Jc Jf Jr JC JC Jf JC
> > > > > > > > > > > >
Jun-082
$148,659
$40,968
$96,535
Jun-09
$91,289
$148,331
$27,130
Jun-10
$187,028
$162,567
$52,145
Jun-11
$177,335
$157,310
$79,953
Jun-12
$132,736
$95,697
$111,166
Jun-13
$192,340
$199,474
$108,777
Jun-14
$64,704
$64,279
$119,353
Jun-15
$56,097
$8,970
$162,311
Jun-16
$56,439
$91,020
$125,270
Jun-17
$58,566
$43,344
$143,249
Jun-18
$60,056
$57,031
$153,732
Jun-19
$62,350
$80,968
$141,856
Plan Year Ending
I Includes combined assets from both Tax -Qualified and Excess benefit plans
w�c PARS 2 Plan Year Ending June 2008 is based on 7 months of activity from December 31, 2007
acwcy
SHEIIPENFM
TRUSTED SRLUNRNS. LASTING RESULTS. CITY OF WEST COVINA 10
PLAN CONTRIBUTIONS
AS OF PLAN YEAR ENDING JUNE 30, 20191:
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19
Plan Year Ending
Jun-082
$148,659
$0
Jun-09
$91,289
$0
Jun-10
$187,028
$0
Jun-11
$177,335
$0
Jun-12
$104,073
$28,663
Jun-13
$164,440
$27,900
Jun-14
$63,704
$1,000
Jun-15
$54,177
$1,920
Jun-16
$54,464
$1,975
Jun-17
$56,516
$2,050
Jun-18
$57,956
$2,100
Jun-19
$57,928
$4,422
i Includes combined assets from both Tax -Qualified and Excess benefit plans
aEr
PARS z Plan Year Ending June 2008 is based on 7 months of activityfrom December 31, 2007
TRNSM SOLUTIONS. LASTING RESULTS. CITY OF WEST COVINA 11
PLAN DISTRIBUTIONS
AS OF PLAN YEAR ENDING JUNE 30, 20191:
$250,000
$200,000
$150, 000
$100,000
$50,000
$0
Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19
Plan Year Ending
Year • - - Non -Qualified
Jun-082
$40,968
$0
Jun-09
$148,331
$0
Jun-10
$162,567
$0
Jun-11
$157,310
$0
Jun-12
$67,034
$28,663
Jun-13
$172,309
$27,165
Jun-14
$63,277
$1,002
Jun-15
$7,077
$1,893
Jun-16
$89,089
$1,931
Jun-17
$41,374
$1,970
Jun-18
$55,022
$2,009
Jun-19
$78,919
$2,049
I Includes combined assets from both Tax -Qualified and Excess benefit plans
w�c PARS 2 Plan Year Ending June 2008 is based on 7 months of activity from December 31, 2007
ncwcy
mwLL nmlmw 1AS A.amntt CITY OF WEST COVINA 1 12
PLAN ASSETS
AS OF PLAN YEAR ENDING JUNE 30, 20191:
$250,000
$200,000
$150, 000
$100,000
$50,000
Total Assets
aw ww one
Plan Year Ending
Jun-082
$96,535
$0
$96,535
Jun-09
$27,130
$0
$27,130
Jun-10
$52,145
$0
$52,145
Jun-11
$79,953
$0
$79,953
Jun-12
$111,166
$0
$111,166
Jun-13
$108,042
$735
$108,777
Jun-14
$118,605
$748
$119,353
Jun-15
$161,538
$773
$162,311
Jun-16
$124,427
$843
$125,270
Jun-17
$142,309
$939
$143,249
Jun-18
$152,682
$1,051
$153,732
Jun-19
$138,282
$3,574
$141,856
i Includes combined assets from both Tax -qualified and Excess benefit plans
w6uG PARS z Plan Year Ending June 2008 is based on 7 months of activity from December 31, 2007
AGENCY
NEi�fiE
S R,CF
TRUSTED SOLUTIONS. LASTING RESULTS. CITY OF WEST COVINA 1 13
Th e
PARS RETIREMENT
ENHANCEMENT PLAN
For City Council & Executive Employees
wBU PARS
AGwCy
RE RWM
Sm"M
CITY OF WEST COVINA J 14
TRUSTED SOLUTIONS. LASTING RESULTS.
SUMMARY OF AGENCY'S PLAN
Plan Effective Date: November 1, 2007
Type of Plan: 401(a) Tax -Qualified Defined Benefit
415(m) Excess Benefit
Benefit Level: Tier I & II - $909.26/mo. (as of 2018)
Tier III - 2.5% at 55 Supplemental Plan
Eligible Groups: Tier I - Non -Safety Department Heads
Tier II - City Council Member
Tier III - City Manager
Eligibility: • Non -Safety Department Head employed between November
1, 2007 and June 30, 2016
• City Council member employed between November 1, 2007
and December 31, 2012
• Hired on or before December 31, 2012
MBUC
PARS Age 50 with 5 years of Continuous Service
°`° Concurrent Retirement
TRUSTED SOLUTIONS. LASTING RESULTS. CITY OF WEST COVINA 1 15
KEY PLAN AMENDMENTS
• Closed to Department Head employees who are promoted to the position after
June 30, 2016
• City Manager excluded from Tier I and Tier II per employment agreement
A GMCY
PARS
CITY OF WEST COVINA 1 16
June 30, 2015 1 June 30, 2017 1 % Change
Active Participant
Count
Retired Participant
Count
f
PLAN FUNDING STATUS
$677,000 $611,580 -9.66%
$3,050,000 $3,365,944 10.36%
22.2% 18.2%-18.02%
MBU
PARS
AGF CY
TRUSTED SOLUTIONS. LASTINC RESULTS. CITY OF WEST COVINA
ju
PENSION COST
PARSAGmgl
* 10 year fixed (closed) period for projected UAAL as of 6130116
CITY OF WEST COVINA 1 19
MUSTM
SUMMARY OF AGENCY'S PLAN
CONTRIBUTIONS, DISTRIBUTIONS, AND TOTAL ASSETS AS OF JUNE 30, 20191:
'.:11 111
$700,000
i..11 111
$500,000
$400,000
$300,000
$200,000
$100,000
$0
;=
m"
Ob
<Z j
NQ1
Plan Year Ending
PARS
TRUSTED SOLUTIONS. LASTING RESULTS.
Jun-082
$147,176
$0
$144,854
Jun-09
$164,294
$13,624
$279,847
Jun-10
$167,177
$18,625
$455,532
Jun-11
$56,701
$18,625
$574,358
Jun-12
$45,787
$36,678
$593,263
Jun-13
$80,333
$64,691
$659,886
Jun-14
$59,063
$81,779
$706,379
Jun-15
$78,220
$104,470
$686,683
Jun-16
$78,300
$137,079
$632,804
Jun-17
$73,467
$136,329
$611,580
Jun-18
$74,100
$139,056
$580,176
Jun-19
$78,102
$152,749
$534,237
I Includes combined assets from both Tax -Qualified and Excess benefit plans
z Plan Year Ending June 2008 is based on 5 months of activity from February 29, 2008
CITY OF WEST COVINA 1 20
PLAN CONTRIBUTIONS
AS OF PLAN YEAR ENDING JUNE 30, 20191:
$180, 000
$160,000
$140,000
$120, 000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19
Plan Year Ending
Jun-082
$147,176
$0
Jun-09
$164,294
$0
Jun-10
$167,177
$0
Jun-11
$56,701
$0
Jun-12
$22,567
$23,220
Jun-13
$27,160
$53,173
Jun-14
$23,362
$35,701
Jun-15
$0
$78,220
Jun-16
$0
$78,300
Jun-17
$0
$73,467
Jun-18
$0
$74,100
Jun-19
$0
$78,102
I Includes combined assets from both Tax -Qualified and Excess benefitplans
��c PARS 2 Plan Year Ending June 2008 is based on 5 months of activity from February 29, 2008
Ali
TRUSTED SOLUTIONS. LASTING RESULTS. CITY OF WEST COVINA 1 21
PLAN DISTRIBUTIONS
AS OF PLAN YEAR ENDING JUNE 30, 20191:
$180,000
$160, 000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19
Plan Year Ending
Year • - - Non -Qualified
Jun-082
$0
$0
Jun-09
$13,624
$0
Jun-10
$18,625
$0
Jun-11
$18,625
$0
Jun-12
$22,862
$13,816
Jun-13
$28,544
$36,148
Jun-14
$33,294
$48,485
Jun-15
$45,162
$59,308
Jun-16
$65,274
$71,805
Jun-17
$63,094
$73,245
Jun-18
$64,346
$74,711
Jun-19
$76,544
$76,205
I Includes combined assets from both Tax -Qualified and Excess benefit plans
��c PARS z Plan Year Ending June 2008 is based on 5 months of activity from February 29, 2008
AGMCY
Ali
TRUSTED SoumoNS. LMNG RESULTS. CITY OF WEST COVINA 1 22
PLAN ASSETS
AS OF PLAN YEAR ENDING JUNE 30, 20191:
;I Bills 118
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
Jc Jc JO JO JC JO JO JJ JC JO JO JO
> > > > > > > > > > > >
Plan Year Ending
PARS
TRUSTED SOLUTIONS. LASTING RESULTS.
Jun-082
$144,854
$0
$144,854
Jun-09
$279,847
$0
$279,847
Jun-10
$455,532
$0
$455,532
Jun-11
$574,358
$0
$574,358
Jun-12
$583,872
$9,392
$593,263
Jun-13
$633,002
$26,884
$659,886
Jun-14
$691,391
$14,988
$706,379
Jun-15
$653,480
$33,203
$686,683
Jun-16
$591,918
$40,887
$632,804
Jun-17
$567,622
$43,957
$611,580
Jun-18
$535,138
$45,038
$580,176
Jun-19
$485,254
$48,983
$534,237
T Includes combined assets from both Tax -Qualified and Excess benefit plans
z Plan Year Ending June 2008 is based on 5 months of activity from February 29, 2008
CITY OF WEST COVINA 1 23
6"1 X S
,S
INVESTMENT STRATEGY
• HighMark Capital Management is a sub -advisor to the PARS Trustee and serves
as investment manager and investment fiduciary for plan assets
• Agency currently utilizes the Balanced Index Plus investment strategy for
both of the Tax -Qualified Plans, as well as the Excess Benefit Plan for City Council
and Executive Employees. These assets are invested in approximately 60%
Equity / 40% Fixed Income.
• Agency currently utilizes the Moderate Index Plus investment strategy for the
Excess Benefit Plan for Miscellaneous and Safety Employees (EPMC). These
assets are invested in approximately 50% Equity / 50% Fixed Income.
PARS
TRUSTED SOLUTIONS. LASTING RESULTS.
CITY OF WEST COVINA 1 24
Th e
PARS PENSION RATE
STABILIZATION PROGRAM
for prefunding pension obligations
a PARS
TRUSTED SGLUTIUNS. LASTING RESULTS.
CITY OF WEST COVINA J 25
SECTION 115 TRUST BACKGROUND
• Section 115 Trusts are used by local governments to fund essential
governmental functions (i.e., pension benefits and retiree health care) into an
irrevocable trust
• The PARS Trust received an IRS Private Letter Ruling (PLR) in June 2015 to fund
both OPEB and Pension Liabilities for a multiple -employer trust
• Any income derived from a Section 115 Trust is tax exempt
• Once contributions are placed into The PARS Trust, assets from the Trust can be
used for specific benefit plan purposes including:
Reimbursing the City for retirement system contributions
Transferring assets directly to the retirement system
— Paying plan expenses (actuarial valuation or audit)
a PARS
TRUSTED SOLUTIONS. LASTING RESULTS.
CITY OF WEST COVINA 1 26
THE PARS IRS -APPROVED COMBINATION 115 TRUST
4....) prefund
(GASB 45/75)
Retiree Medical Benefits
or
• Assets are sub -accounted for separately
• Prefund one now and the other later
• Addresses unfunded liabilities
• Can choose different investment risk
tolerance levels for each
a PARS
Pension Rate Stabilization Program
or
• Can access funds at anytime; OPEB for OPEB
and pension for pension
• Assets (OPEB and Pension) aggregate and
reach lower fees on tiered schedule sooner -
saving money!
• No cost to set up; no fees until assets are
added
CITY OF WEST COVINA 1 27
rnusTo
WHY PREFUNO PENSION OBLIGATIONS?
2
3
0
PARS
Complete Local Control over Assets
Pension Rate Stabilization Program provides an alternative to sending money
directly to retirement system to address unfunded pension liabilities
Pension Rate Stabilization
Assets can be transferred to retirement system plan at the City's direction, which can
reduce or eliminate large fluctuations in Employer contributions to retirement
system
Rainy Day Fund
Emergency source of funds when Employer revenues are impaired based on
economic or other conditions
Diversified Investing
Potential for Greater Return than General Fund
CITY OF WEST COVINA 1 28
TRUSTED SOLUTIONS. LASTING RESULTS.
SUMMARY OF AGENCY'S PENSION PLAN
Plan Type:
Trustee Approach:
Plan Effective Date:
Plan Administrator:
Current Investment Strategy:
AS OF DUNE 30, 2019:
Initial Contribution:
Additional Contributions:
Total Contributions:
Disbursements:
Net Investment Earnings:
Account Balance:
a� PARS
AM
TRUSTED SOLUTIONS LASTING RESULTS.
IRC Section 115 Irrevocable Exclusive Benefit Trust
Discretionary
September 5, 2017
City Manager
Balanced Index PLUS (Passive) Strategy; Pooled Account
December 2017: $312,195
$0
$312,195
$312,854
$8,050
$7,391
CITY OF WEST COVINA 1 29
SUMMARY OF AGENCY'S PENSION PLAN
CONTRIBUTIONS, DISBURSEMENTS, AND TOTAL ASSETS AS OF JUNE 30, 2019:
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
n m m o� m oo w co m m w oo co m m rn m rn rn
G -6 bp L > u C-6 T G
p er ii 2¢ 2 ¢� O Z❑- ❑1 2¢ 2
Plan Month Ending
Dec-17
$312,195
$0
$313,722
Jan-18
$0
$0
$320,229
Feb-18
$0
$0
$310,582
Mar-18
$0
$0
$309,084
Apr-18
$0
$0
$308,921
May-18
$0
$0
$313,058
Jun-18
$0
$0
$312,854
Jul-18
$0
$0
$318,524
Aug-18
$0
$312,854
$7,159
Sep-18
$0
$0
$7,141
Oct-18
$0
$0
$6,793
Nov-18
$0
$0
$6,880
Dec-18
$0
$0
$6,581
Jan-19
$0
$0
$6,954
Feb-19
$0
$0
$7,084
Mar-19
$0
$0
$7,179
Apr-19
$0
$0
$7,324
May-19
$0
$0
$7,093
Jun-19 _
$0
$0
$7,391
PARS
TRUSTED SOLUTIONS LASTING RESULTS. CITY OF WEST COVINA Q 30
A
PENSION FUNDING STATUS
As of] une 30, 2017, City of West Covina's CaIPERS pension plan is funded as follows*:
Actuarial Liability
Assets
mwc�PARS
TRUSTED SOLUTIONS LASTING RESULTS.
Unfunded Liability
Funded Ratio
Employer Contribution Amount (FY 18-19)
Projected Employer Contribution Amount (FY 24-25)
$552.2 M
$343.8 M
$178.3 M
65.9%
$14.9 M
$23.7 M (% T)
* Data from Agency's 2077-18 CaIPERS actuarial valuation
CITY OF WEST COVINA 1 31
PROJECTED EMPLOYER CONTRIBUTIONS (misc.)
Projected misc. contributions increase from $3.3M to $5.7M* (74.5% fl
50.00%
48.00%
46.00%
44.00%
42.00%
a
c
40.00%
0
38.00%
36.00%
34.00%
32.00%
30.00%
M PARS
TRUSTED SOLUTIONS LASTING RESULTS.
2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
—Total Contributions (°/D)
* Data from Agency's 2017-18 Ca1PER5 actuarial valuation
CITY OF WEST COVINA 1 32
PROJECTED EMPLOYER CONTRIBUTIONS csnrErn
Projected safety contributions increase from $11.6M to $18.OM* (54.8% /M
85.00%
80.00%
T 75.00%
a
4-
0
0
70.00%
65.00%
60.00%
1 PARS
TRUSTED SOLUTIONS LASTING RESULTS.
2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
—Total Contributions (°/D)
* Data from Agency's 2017-18 CalPERS actuarial valuation
CITY OF WEST COVINA 1 33
HIGHMARK CAPITAL MANAGEMENT
INVESTMENT REVIEW
" PARS
nGENCy
CITY OF WEST COVINA � 34
TRUSTED SOLUTIONS. LASTING RESULTS.
PARS: City of West Covina
August 2019
Presented by:
Keith Stribling, CFA
J HIGHMARK°
CAPITAL MANAGEMENT
CITY OF WEST COVINA 1 35
DISCUSSION HIGHLIGHTS - City of West Covina
Investment objective — Balanced INDEX PLUS
Asset Allocation (as of 713112019)
• Allocation Target — 61.11 % stocks (50-70% range), 36.17% bonds (30-50% range), 2.72% cash (0-20% range)
• Large cap 32.76%, Mid -cap 4.97%, Small cap 8.92%, International 11.69%; REIT 2.77%
Performance: City of West Covina (as of 7/3112019) (gross of investment management fees, net of fund fees)
• 3-months:
1.50%
• 1-Year:
5.38%
• 3-Year:
6.93%
• 5-Year:
5.77%
• ITD (Dec, 2007):
5.40%
Investment objective — Moderate INDEX PLUS
Asset Allocation (as of 7131/2019)
• Allocation Target — 52.30% stocks (40-60% range), 46.83% bonds (40-60% range), 0.87% cash (0-20% range)
• Large cap 25.10%, Mid -cap 1.58%, Small cap 12.44%, International 10.70%; REIT 2.48%
Performance: City of West Covina (as of 7/3112019) (gross of investment management fees, net of fund fees)
• 3-months:
1.55%
• 1-Year:
1.23%
• 3-Year:
4.00%
• 5-Year:
2.24%
• ITD (May, 2012):
1.66%
12-Month Changes
• Asset Allocation:
• Recently lowered allocation to stocks
• Recently replaced small cap growth manager
JHIGHMARK@ PARS: City of West Covina
CAPITAL MANAGEMENT CITY OF WEST COVINA 1 36
DISCUSSION HIGHLIGHTS - City of West Covina
Economic Review
• Trade disagreements still ongoing
• Brexit & a new Prime Minister in the UK
• EU economies struggling so ECB ramps up its QE
• Negative rates in Europe
• ECB monetary policy & a slowing growth rate alters Fed direction
• Interest rates — yield curve inversion... what does it mean?
• Consumer well positioned & employment remains strong
2020 Outlook
• Modest GDP growth
• 2018E 1.8% - 2.4%;
• 10-yr yield 2.0% - 2.5%
• Fed Funds 1.75% - 2.25%
JHIGHMARK@ PARS: City of West Covina
CAPITAL MANAGEMENT
CITY OF WEST COVINA 1 37
REP (EPMC)
Selected
Period Performance
West Covina REP (EPMC)
AGG000579
Period Ending: 7/31/2019
Year
Inception
to Date
to Date
Sector
1 Month
3 Months (7 Months)
1 Year
3 Years
5 Years
12/01/2007
Cash Equivalents
.19
.57 1.33
2.17
1.30
.82
.65
Lipper Money Market Funds Index
17
.53 1.27
2.08
1.21
.74
.57
Total Fixed Income
.18
2.91 5.66
7.30
1.91
2.62
3.59
BC US Aggregate Bd Index (USD)
.22
3.28 6.35
8.08
2.17
3.05
4.00
Total Equities
.74
.71 18.24
3.98
11.23
8.40
6.68
Large Cap Funds
1.50
1.64 19.91
8.16
13.40
11.20
8.28
S&P 500 Composite Index
1.44
1.69 20.24
7.99
13.36
11.34
8.47
Mid Cap Funds
1.47
1.66 22.80
6.86
11.12
9.74
Russell Midcap Index
1.43
1.74 23.08
6.71
11.02
9.60
8.78
Small Cap Funds
.85
-.78 17.29
-3.96
10.82
9.00
8.89
Russell 2000 Index (USD)
.58
-.69 17.66
-4.42
10.36
8.53
7.84
REIT Funds
1.69
3.40 21.12
13.13
3.16
Wilshire REIT Index
1.58
3.42 19.78
11.61
3.18
International Equities
-1.89
-1.74 11.80
-2.75
6.85
1.99
.15
MSCI EAFE Index (Net)
-1.27
-.44 12.58
-2.60
6.87
2.39
1.20
MSCI EM Free Index (Net USD)
-1.22
-2.67 9.23
-2.18
8.42
1.84
.87
Total Managed Portfolio
.52
1.50 13.23
5.38
6.93
5.77
5.40
Returns are gross of account level investment advisory fees and net of any fees, including
fees to manage mutual fund or exchange traded
fund holdings. Securities are not
FDIC insured, have no bank
guarantee, and may lose value. 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.
JHIGHWRK@ PARS: City of West Covina
CAPITAL MANAGEMENT
CITY OF WEST COVINA 1 38
Asset Allocation - REP (EPMC)
As of July 31, 2019
Equity Range: 50% - 70% 61.11 %
Large Cap Core IVV iShares Tr Core S&P 500 ETF 18.36%
Large Cap Value IVE iShares S&P 500 Value ETF 7.25%
Large Cap Growth IVW iShares S&P 500 Growth ETF 7.15%
Mid Cap Core
Small Cap Value
Small Cap Growth
International Core
IWR
iShares Russell Mid Cap ETF
IWN
iShares Russell 2000 Value ETF
IWO
iShares Russell 2000 Growth ETF
EFA
iShares MSCI EAFE ETF
Emerging Markets VWO Vanguard FTSE Emerging Markets ETF
REIT VNQ Vanguard REIT ETF
4.97%
4.38%
4.54%
6.63%
5.06%
2.77%
Fixed Income Range: 30%- 50% 36.17%
Short -Term VFSUX Vanguard Short -Term Corp Adm Fund 7.19%
Intermediate -Term AGG iShares US Core Aggregate Bond ETF 28.97%
Cash Range: 0% - 20% 2.72%
FGZXX First American Prime Obligations Fund 2.72%
JHIGHMARK° PARS: City of West Covina
CAPITAL MANAGEMENT
100.00%
CITY OF WEST COVINA i 39
REP (EXEC)
Selected
Period Performance
West Covina REP (EXEC)
AGG000580
Period Ending: 7/3112019
Year
Inception
to Date
to Date
Sector
1 Month
3 Months (7 Months)
1 Year
3 Years
5 Years
02/01/2008
Cash Equivalents
.19
.57 1.33
2.17
1.30
.82
.62
Lipper Money Market Funds Index
.17
.53 1.27
2.08
1.21
.74
.52
Total Fixed Income
.18
2.91 5.66
7.30
1.91
2.62
3.45
BC US Aggregate Bd Index (USD)
.22
3.28 6.35
8.08
2.17
3.05
3.88
Total Equities
.74
.71 18.24
3.98
11.23
8.40
7.61
Large Cap Funds
1.50
1.64 19.91
8.16
13.40
11.20
9.20
S&P 500 Composite Index
1.44
1.69 20.24
7.99
13.36
11.34
9.24
Mid Cap Funds
1.47
1.66 22.80
6.86
11.12
9.74
Russell Midcap Index
1.43
1.74 23.08
6.71
11.02
9.60
9.58
Small Cap Funds
.85
-.78 17.29
-3.96
10.82
9.00
9.69
Russell 2000 Index (USD)
.58
-.69 17.66
-4.42
10.36
8.53
8.63
REIT Funds
1.69
3A0 21.12
13.13
3.16
Wilshire REIT Index
1.58
3.42 19.78
11.61
3.18
International Equities
-1.89
-1.74 11.80
-2.75
6.85
1.99
1.20
MSCI EAFE Index (Net)
-1.27
-.44 12.58
-2.60
6.87
2.39
2.28
MSCI EM Free Index (Net USD)
-1.22
-2.67 9.23
-2.18
8.42
1.84
2.03
Total Managed Portfolio
.52
1.50 13.23
5.38
6.93
5.77
5.80
Returns are gross of account level investment advisory fees and net of any fees, including
fees to manage mutual fund or exchange traded
fund holdings. Securities are not FDIC insured, have no bank guarantee, and
may lose value. 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.
JHIGHMARKO PARS: City of West Covina
CAPITAL MANAGEMENT
CITY OF WEST COVINA 140
Asset Allocation - REP (EXEC)
As of July 31, 2019
Equity
Range: 50% - 70%
61.11 %
Large Cap Core
IVV
iShares Tr Core S&P 500 ETF
18.36%
Large Cap Value
IVE
iShares S&P 500 Value ETF
7.25%
Large Cap Growth
IVW
iShares S&P 500 Growth ETF
7.15%
Mid Cap Core
IWR
iShares Russell Mid Cap ETF
4.97%
Small Cap Value
IWN
iShares Russell 2000 Value ETF
4.38%
Small Cap Growth
IWO
iShares Russell 2000 Growth ETF
4.54%
International Core
EFA
iShares MSCI EAFE ETF
6.63%
Emerging Markets
VWO
Vanguard FTSE Emerging Markets ETF
5.06%
REIT
VNQ
Vanguard REIT ETF
2.77%
Fixed Income
Range: 30% - 50%
36.17%
Short -Term
VFSUX
Vanguard Short -Term Corp Adm Fund
7.19%
Intermediate -Term
AGG
iShares US Core Aggregate Bond ETF
28.97%
Cash
Range: 0% - 20%
2.72%
FGZXX
First American Prime Obligations Fund
2.72%
TOTAL
JHIGHWRK@ PARS: City of West Covina
CAPITAL MANAGEMENT
CITY OF WEST COVINA 1 41
EPMC 415M Selected Period Performance
PARS/CITY OF WEST COVINA EPMC 415M
Account ******3800
Period Ending: 7/31/2019
Year
Inception
to Date
to Date
Sector
1 Month
3 Months
(7 Months)
1 Year
3 Years
5 Years
05/01/2012
Cash Equivalents
.19
.57
1.19
2.03
1.13
.69
.48
Lipper Money Market Funds Index
.17
.53
1.27
2.08
1.21
.74
.51
Total Fixed Income
.18
2.91
5.69
7.58
2.97
17.67
BC US Aggregate Bd Index (USD)
.22
3.28
6.35
8.08
2.17
3.05
Total Equities
.62
.37
17.29
2.01
Large Cap Funds
1.48
1.70
19.97
7.81
S&P 500 Composite Index
1.44
1.69
20.24
7.99
Mid Cap Funds
1.47
1.65
Russell Midcap Index
1.43
1.74
Small Cap Funds
.80
-.93
15.54
-6.15
Russell 2000 Index (USD)
.58
-.69
17.66
-4.42
REIT Funds
1.69
3.40
Wilshire REIT Index
1.58
3.42
International Equities
-1.90
-2.01
10.75
-4.46
MSCI EAFE Index (Net)
-1.27
-.44
12.58
-2.60
MSCI EM Free Index (Net USD)
-1.22
-2.67
9.23
-2.18
Total Managed Portfolio
.41
1.55
6.61
1.23
4.00
2.24
1.66
Returns are gross of account level investment advisory fees
and net of any fees, including
fees to manage
mutual fund or exchange traded fund
holdings. Securities are not FDIC insured, have no bank
guarantee, and may lose value. 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.
JHIGHMARKO
CAPITAL MANAGEMENT
PARS: City of West Covina
CITY OF WEST COVINA 142
Asset Allocation - EPMC 415M
As of July 31,2019
Equity
52.30%
Range: 40%- 60%
$ 1,873
Large Cap Core
16,72%
IVV
iShares Tr Core S&P 500 ETF
598
Large Cap Value
3.31%
IVE
iShares S&P 500 Value ETF
119
Large Cap Growth
5.07%
IVW
iShares S&P 500 Growth ETF
181
Mid Cap Core
1.58%
IWR
iShares Russell Mid Cap ETF
57
Small Cap Value
6.76%
IWN
iShares Russell 2000 Value ETF
242
Small Cap Growth
5.68%
IWO
iShares Russell 2000 Growth ETF
203
International Core
7.20%
EFA
iShares MSCI EAFE ETF
258
Emerging Markets
3.50%
VWO
Vanguard FTSE Emerging Markets ETF
125
REIT
2.48%
VNQ
Vanguard REIT ETF
89
Fixed Income
46.83%
Range: 40%- 60%
$ 1,676
Short -Term
9.52%
VFSUX
Vanguard Short -Term Corp Adm Fund
341
Individual FI
37.31%
AGG
iShares Core US Agg Bond ETF
1,336
Cash
0.87%
Range: 0%-20%
$ 31
0.87%
FGZXX
First American Prime Obligations Fund
31
TOTAL 100 00% $ 3,580
HIGHMARK° PARS: City of West Covina
CAPITAL MANAGEMENT
CITY OF WEST COVINA 1 43
EXEC 415M Selected Period Performance
West Covina EXEC 415M
AGG000581
Period Ending: 7/31/2019
Year
Inception
to Date
to Date
Sector
1 Month
3 Months
(7 Months)
1 Year
3 Years
5 Years
02/01/2012
Cash Equivalents
.06
.45
1.19
2.04
1.26
.80
.54
Lipper Money Market Funds Index
.17
.53
1.27
2.08
1.21
.74
.49
Total Fixed Income
.17
2.93
5.61
7.24
1.87
2.60
2.46
BC US Aggregate Bd Index (USD)
.22
3.28
6.35
8.08
2.17
3.05
2.68
Total Equities
.72
.75
18.37
3.31
11.05
8.30
11.15
Large Cap Funds
1.48
1.80
20.23
7.50
13.26
11.12
13.62
S&P 500 Composite Index
1.44
1.69
20.24
7,99
13.36
11.34
13.92
Mid Cap Funds
1.44
1.70
23.18
6.44
10.92
9.62
12.80
Russell Midcap Index
1.43
1.74
23.08
6.71
11.02
9.60
12.90
Small Cap Funds
.87
-.75
17.38
-4.86
10.27
8.67
11.52
Russell 2000 Index (USD)
.58
-.69
17.66
-4.42
10.36
8.53
11.10
REIT Funds
1.74
3.38
21.08
12.95
3.21
Wilshire REIT Index
1.58
3.42
19.78
11.61
3.18
International Equities
-2.00
-2.05
11.57
-3.27
6.63
1.86
4.03
MSCI EAFE Index (Net)
-1.27
-.44
12.58
-2.60
6.87
2.39
6.30
MSCI EM Free Index (Net USD)
-1.22
-2.67
9.23
-2.18
8.42
1.84
2.75
Total Managed Portfolio
.61
1.29
10.69
5.16
6.19
5.33
6.62
Returns are gross of account level investment advisory fees and net of any fees, including
fees to manage mutual fund or exchange traded fund holdings.
Securities are not FDIC insured, have no bank
guarantee, and may lose value. 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.
JHIGHMNRK@ PARS: City of West Covina
CAPITAL MANAGEMENT
CITY OF WEST COVINA 1 44
Asset Allocation - EXEC 415M
As of July 31, 2019
Equity
54.23%
Range: 50% - 70% $
23,167
Large Cap Core
16.11 %
IVV
iShares Tr Core S&P 500 ETF
6,882
Large Cap Value
6.39%
IVE
iShares S&P 500 Value ETF
2,728
Large Cap Growth
6.37%
IVW
iShares S&P 500 Growth ETF
2,721
Mid Cap Core
4.25%
IWR
iShares Russell Mid Cap ETF
1,814
Small Cap Value
4.25%
]WIN
iShares Russell 2000 Value ETF
1,814
Small Cap Growth
4.29%
IWO
iShares Russell 2000 Growth ETF
1,831
International Core
5.88%
EFA
iShares MSCI EAFE ETF
2,514
Emerging Markets
4.20%
VWO
Vanguard FTSE Emerging Markets ETF
1,796
REIT
2.50%
VNQ
Vanguard REIT ETF
1,067
Fixed Income
32.10%
Range: 30% - 50% $
13,712
Short -Term
7.35%
VFSUX
Vanguard Short -Term Corp Adm Fund
3,139
Individual FI
24.75%
AGG
iShares Core US Agg Bond ETF
10,574
Cash
13.67%
Range: 0% - 20% $
5,841
13.67%
FGZXX
First American Prime Obligations Fund
5,841
TOTAL 100.00% $ 42,720
JHIGHMARKO PARS: City of West Covina
CAPITAL MANAGEMENT
CITY OF WEST COVINA 145
Pension
Selected Period
Performance
PARS/PRSP BALANCED
INDEX PLUS
Account ******0109
Period Ending:
7/31/2019
Year
Inception
to Date
to Date
Sector
1 Month
3 Months
(7 Months)
1 Year
12/01/2017
Cash Equivalents
.19
.57
1.34
2.19
1.89
Lipper Money Market Funds Index
.17
.53
1.27
2.08
1.78
Total Fixed Income
.17
2.91
5.67
7.30
3.67
8C US Aggregate Bd Index (USD)
.22
3.28
6.35
8.08
4.05
Total Equities
.83
.81
18.32
3.79
5.58
Large Cap Funds
1.62
1.76
20.03
7.85
9.01
S&P 500 Composite Index
1.44
1.69
20.24
7.99
9.45
Mid Cap Funds
1.54
1.73
22.85
6.64
7.39
Russell Midcap Index
1.43
1.74
23.08
6.71
7.59
Small Cap Funds
.83
-.80
17.26
-4.66
2.05
Russell 2000 Index (USD)
.58
-.69
17.66
-4.42
2.54
REIT Funds
1.68
3.38
21.17
Wilshire REIT Index
1.58
3.42
19.78
International Equities
-1.78
-1.62
11.88
-2.51
-1.02
MSCI EAFE Index (Net)
-1.27
-.44
12.58
-2.60
-.84
MSCI EM Free Index (Net USD)
-1.22
-2.67
9.23
-2.18
-2.01
Total Managed Portfolio
.57
1.56
13.09
5.43
4.92
Returns are gross of account level investment advisory fees and net of any fees, including fees to manage mutual fund or exchange traded
fund holdings. securities are not FDIC insured, have no bank
guarantee, and may lose value. 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.
JHIGHMARK@ PARS: City of West Covina
CAPITAL MANAGEMENT
CITY OF WEST COVINA i 46
Asset Allocation — Pension
As of July 31, 2019
Equity
Range: 50% - 70%
59.88%
Large Cap Core
IVV
iShares Tr Core S&P 500 ETF
17.81 %
Large Cap Value
IVE
iShares S&P 500 Value ETF
7.01 %
Large Cap Growth
IVW
iShares S&P 500 Growth ETF
6.95%
Mid Cap Core
IWR
iShares Russell Mid Cap ETF
4.82%
Small Cap Value
IWN
iShares Russell 2000 Value ETF
4.48%
Small Cap Growth
IWO
iShares Russell 2000 Growth ETF
4.48%
International Core
EFA
iShares MSCI EAFE ETF
6.68%
Emerging Markets
VWO
Vanguard FTSE Emerging Markets ETF
4.86%
REIT
VNQ
Vanguard REIT ETF
2.79%
Fixed Income
Range: 30%-50%
36.04%
Short -Term
VFSUX
Vanguard Short -Term Corp Adm Fund
7.21%
Intermediate -Term
AGG
iShares US Core Aggregate Bond ETF
28.83%
Cash
Range: 0% - 20%
4.08%
FGZXX
First American Prime Obligations Fund
4.08%
JH IGHMARK® PARS: City of West Covina
CAPITAL MANAGEMENT
100.00%
CITY OF WEST COVINA 1 47
City of West Covina
For Period Ending July 31, 2019
W.
LARGE CAP fqjjjWUNDS
1-Month
3-Month
Year -to-
1-Year
3-Year
5-Year
10-Year
Fund Name
Return
Return
Date
Return
Return
Return
Return
iShares S&P 500 Growth Index
1.15
1.67
21.46
9.41
15.74
13.44
15.26
iShares S&P 500 Index Fnd
1.43
1.68
20.23
7.95
13.32
11.29
13.96
iShares S&P 500 Value Index
1.75
1.61
18.66
6.12
10.13
8.47
12.20
iShares Russell Midcap Index
1.41
1.70
22.94
6.61
10.86
9.43
14.16
iShares Russell 2000 Value
0.14
-2.23
13.52
-7.85
7.83
6.64
11.05
iShares Russell 2000 Growth
0.98
0.68
21.51
-1.25
12.68
10.30
13.75
INTERNATIONAL•
iShares MSCI EAFE Index
-1.29
-0.42
12.61
-2.64
6.80
2.32
5.73
Vanguard FTSE Emerging Markets ETF
-1.13
-2.43
10.90
-1.04
7.22
1.75
4.29
AAIIIIIIIIIIIIIIIIII�mDS
Vanguard REIT ETF
1.59
3.43
21.20
13.16
3.16
8.01
14.48
BOND FUNDS
iShares Barclays Aggregate Bond
0.23
3.26
6.34
8.05
2.13
3.00
3.65
Vanguard Short -Term Investment -Grade Adm
0.15
1.72
4.30
5.49
2.21
2.31
2.99
BarCap US Aggregate Bond
0.22
3.28
6.35
8.08
2.17
3.05
3.75
Source: SEI Investments, Morningstar Investments
Returns less than one year are not annualized. Past performance is no indication of future results. The information presented has been obtained from sources believed
to be accurate and reliable. Securities are not FDIC insured, have no bank guarantee and may lose value.
JHIGHMARK® PARS: City of West Covina
CAPITAL MANAGEMENT CITY OF WEST COVINA 1 48
ADMINISTRATIVE REVIEW
1 Future contributions
2 Future disbursement requests/options
3 Investment Guidelines Document (Needed)
4 Sub -Accounts
5 I Client Feedback
I PARS
CITY OF WEST COVINA 1 49
TRUSTED SOLUTIONS LASTING RESULTS.
GASB 67/68 REPORTING
• To assist our public agency clients with GASB 67/68, PARS will be providing the
following:
— An individual trust statement of each agency's plan assets that shows a
reconciliation of assets held at the beginning of the fiscal year through the end
of the fiscal year, breaking out the appropriate plan contributions, benefit
payments, expenses, and investment earnings
Year-end audited financial statements of the Trust as a whole including Schedule
of Changes in Fiduciary Net Position by Employer completed by White Nelson
Diehl Evans that is intended to be compliant with GASB 67/68 requirements.
Supporting SOC 1-Type 2 report on the controls over the calculation and
allocation of additions and deductions to employer accounts within the Trust
Investment allocation data and information on investment policies including
target asset allocations and allowable asset class allocation ranges
• PARS Auditors have determined that participating plans should be considered an
agent multiple -employer defined benefit plan as defined under GASB
PARS
TRUSTED SOLUTIONS. LASTING RESULTS.
CITY OF WEST COVINA 1 50
CONTACTS
DENNISYU
Executive Vice President
dyu@pars.org
(800) 540-6369 x104
JENNIFER MEZA
Manager, Consulting
jmeza@pars.org
(800) 540-6369 x141
RYAN NICASIO
Vice President, Consulting
rnicasio@pars.org
(800) 540-6369 x134
PATRICK PACHECO
Senior Vice President
ppacheco@pars.org
(800) 540-6369 x118
PARS
AGE C/
sFAmm
TRUSTED SOLUTIONS. LASTING RESULTS.
4350 Von Karman Avenue, Suite 100
Newport Beach, CA 92660
T: (800) 540-6369
PARS F: (800) 660 8057
AG N Y
TRUSTED SOLUTIONS. LASTING RESULTS.
CITY OF WEST COVINA 1 51
I
11
I
J
I
A
f-�
JHIGHMARKD
CAPITAL MANAGEMENT
WHY THE PARS DIVERSIFIED
CONSERVATIVE PORTFOLIO?
Comprehensive Investment Solution
HighMark® Capital Management, Inc.'s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above -average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index -based
securities, including exchange -traded funds. Both
investment options leverage HighMark's active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification - asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
INVESTMENT OBJECTIVE
Efficient Frontier
To provide a consistent level of
inflation -protected income over m
the long-term. The major portion o
ca
Balanced
of the assets will be fixed m
Moderate
income related. Equity securities o
Moderately Conservative
are utilized to provide inflation
protection.
conservative
Risk (Standard Deviation)
ASSET ALLOCATION - CONSERVATIVE PORTFOLIO
Strategic Range
Policy
Tactical
Equity
5-20%
15%
16%
Fixed Income
60-95%
80%
78%
Cash
0-20%
5%
6%
ANNUALIZED TOTAL RETURNS EmrbeddeInvestment
°Fund Fees Management Fees, but Net of
HighMark Plus Composite (Active) Index Plus Composite (Passive)
Current Quarter*
2.98%
Current Quarter*
2,62%
Blended Benchmark*,'*
2,67%
Blended Benchmark*,**
2,67%
Year To Date*
7.72%
Year To Date*
7.01 %
Blended Benchmark',"
6.80%
Blended Benchmark*,**
6.80%
1 Year
7.22%
1 Year
6.76%
Blended Benchmark"
6.62%
Blended Benchmark'*
6.62%
3 Year
4.29%
3 Year
3.57%
Blended Benchmark'*
3.77%
Blended Benchmark'*
3.77%
5 Year
3,60%
5Year
3.21%
Blended Benchmark"
3.38%
Blended Benchmark**
3.38%
10 Year
5,25%
10 Year
4.75%
Blended Benchmark"
4.39%
Blended Benchmark**
4.39%
-.....---...,...._._...__._.... _._.-...._...._.._... _..__.-..__ ........ _......_,1
he Barclays
arclwas12%S8P 500;1%Ror to pr122%MSCI nded(net),40%ICE B5%S P
BBGBardayev, 0%5%FTSE1sU Agg,.Prior%FTSEI Mttheblentled banchmarkwas 15%58P
13Vr Cory/Gw, 40%BBG Barclays US A99. antl5%FTSE i Mlh T-Bill.
ANNUAL RETURNS
(Gross of Investment Management Fees, but Net of Embedded
Fund Fees)
HighMark Plus Composite (Active)
Index Plus Composite (Passive)
2008
-9.04%
2008
-6.70%
2009
15.59%
2009
10.49%
2010
8.68%
2010
7.67%
2011
2.19%
2011
3.70%
2012
8.45%
2012
6.22%
2013
3.69%
2013
3,40%
2014
3.88%
2014
4.32%
2015
0.29%
2015
0.06%
2016
4.18%
2016
3.75%
2017
6.73%
2017
5.52%
2018
-1.35%
2018
-1.09%
PORTFOLIO FACTS
HighMark Plus (Active)
Index Plus (Passive)
Composite Inception Date
07/2004
Composite Inception Date
07/2004
No of Holdings in Portfolio
18
No of Holdings in Portfolio
12
HOLDINGS
HighMark Plus (Active)
Index Plus (Passive)
Columbia Contrarian Core 13
iShares Care S&P 500 ETF
Vanguard Growth & Income Adm
iShares S&P 500 Value ETF
Dodge & Cox Stock Fund
iShares S&P 500 Growth ETF
Harbor Capital Appreciation - Retirement
iShares Russell Mid -Cap ETF
T. Rowe Price Growth Stock - I
Vanguard Real Estate ETF
iShares Russell Mid -Cap ETF
iShares Russell 2000 Value ETF
Vanguard Real Estate ETF
iShares Russell 2000 Growth ETF
Undiscovered Managers Behavioral Value-R6
iShares MSCI EAFE ETF
Victory RS Small Cap Growth - R6
Vanguard FTSE Emerging Markets ETF
DFA Large Cap International Portfolio
Vanguard Short -Term Invest -Grade Adm
Dodge & Cox International Stock
iShares Core U.S. Aggregate
MFS International Growth - R6
First American Government Obligations Z
Hartford Schroders Emerging Markets Eq
Vanguard Short -Term Invest -Grade Adm
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
Holdings are subject to change at the
DoubleLine Core Fixed Income - I
discretion of the investment manager.
First American Government Obligations Z
STYLE
In
Mid
Large Cap Growl
1.6%
Large Cap Core _
4.4%
Short -Term Bond
17.6%
Large Cap Value Real Estate
tterm-Telm Bond
60.9%
The performance records shown represent size -weighted composites of tax exempt accounts that meet the following criteria:
Accounts are managed by HlghMark's Portfolio Management Group (PMG) with full investment authority awarding to the
PARS Conservative active and passive objectives.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub -adviser to US Bank to manage these portfolios.
US Bank may charge clients as much as 0.60%annual management fee based on a sliding scale. US Bank pays HighMark
60% of the annual management fee for assets sub -advised by HighMark under its sub -advisory agreement with US Bank.
The 0.36% paid to HighMark, as well as other expenses that may be Incurred in the management of the portfolio, will reduce
the portin io's returns. Assuming an investment for five years, a 5% annual total return, and an annual sub -advisory fee rate
of 0.36%deducted from the assets at market ai the end of each Year, a $10 million initial value would grow to $12.53 million
and
3n1's return
the firm'$
results are
s,ortaxes
uction of Trading expenses. Ixeturns are calculated based on tram¢-ame accounting.
represent HighMark's strategic allocations between equity, fixed income, and cash and are rebalanced
returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the
ends and other earnings. An investor cannot Invest directly in an Index. The unmanaged S&P 500 Index
to Performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free goat-
talizalion index designed to measure developed market equity performance, excluding the U.S. and
measures
ICE BofAML U.S. Corporate & Government Index, with a remaining term to final mal
FTSE 1-Month Treasury Bill Index tracks the yield of the 1-month U.S. Treasury Bill.
an
a
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,
I
I
HIGHMARK®
CAPITAL MANAGEMENT
WHY THE PARS DIVERSIFIED
MODERATELY CONSERVATIVE PORTFOLIO?
Comprehensive Investment Solution
HighMark® Capital Management, Inc.'s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above -average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index -based
securities, including exchange -traded funds. Both
investment options leverage HighMark's active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification - asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
INVESTMENT OBJECTIVE
To provide current income, with
capital appreciation as a
secondary objective. The major we
portion of the assets is v
committed to income -producing 9
securities. Market fluctuations 2
should be expected. I
Efficient Frontier
/ Moderate
Moderately Conservative
Appreciation
Risk (Standard Deviation)
ASSET ALLOCATION - MODERATELY CONSERVATIVE PORTFOLIO
Strategic Range
Policy Tactical
Equity 20-40%
30% 31%
Fixed Income 50 - 80%
65% 66%
Cash 0-20%
5% 3%
ANNUALIZED TOTAL RETURNS
Fund Fees)Management Fees, but Net of
EmrbeddedInvestment
HighMark Plus Composite (Active)
Index Plus Composite (Passive)
Current Quarter* 3.10%
Current Quarter*
2.83%
Blended Benchmark*,** 2.97%
Blended Benchmark*,**
2.97%
Year To Date* 9.37%
Year To Date*
8.98%
Blended Benchmark*,** 8.90%
Blended Benchmark*,'*
8.90%
1 Year 7.01%
1 Year
6.99%
Blended Benchmark** 6.97%
Blended Benchmark**
6.97%
3 Year 5.82%
3 Year
5.10%
Blended Benchmark** 5.40%
Blended Benchmark**
5.40%
5 Year 4.34%
5 Year
4.16%
Blended Benchmark** 4.40%
Blended Benchmark**
4.40%
10 Year 6.71 %
10 Year
6.24%
Blended Benchmark** 6.11 %
Blended Benchmark**
6.11 %
-Returns less than one year are not annualized."Breakdown
for Blended Benchma,k: From 10I12012-Present: 16.5%8&P500,
3%Russell Mid Cao. 4.5%Russ ell 2000.2%MSCI EM (net).4%MSCI EAFE men. 49.25%BEG Barclays US Ann. 14%ICE
EAFE (net), 25%ICE BofAML 1-
rded benchmark was 30%S&P
ANNUAL RETURNS
f Investment Management Fees, but Net of Embedded
Fund Fees)
HighMark Plus Composite
(Active)
Index Plus Composite (Passive)
2008
-15.37%
2008
-12.40%
2009
18.71%
2009
11.92%
2010
10.46%
2010
9.72%
2011
1.75%
2011
3.24%
2012
10.88%
2012
8.24%
2013
7.30%
2013
6.78%
2014
4.41%
2014
5.40%
2015
0.32%
2015
-0.18%
2016
4.94%
2016
5.42%
2017
9.56%
2017
8.08%
2018
-2.60%
2018
-2.33%
PORTFOLIO FACTS
HighMark Plus (Active)
Index Plus (Passive)
Composite Inception Date
08/2004
Composite Inception Date
05/2005
No of Holdings in Portfolio
18
No of Holdings in Portfolio
12
MR11 OR
HighMark Plus (Active)
Columbia Contrarian Core 13
Vanguard Growth & Income Adm
Dodge & Cox Stock Fund
Harbor Capital Appreciation - Retirement
T. Rowe Price Growth Stock - I
iShares Russell Mid -Cap ETF
Vanguard Real Estate ETF
Undiscovered Managers Behavioral Value-R6
Victory RS Small Cap Growth - R6
DFA Large Cap International Portfolio
Dodge & Cox International Stock
MFS International Growth - R6
Hartford Schroders Emerging Markets Eq
Vanguard Short -Term Invest -Grade Adm
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
DoubleLine Core Fixed Income - I
First American Government Obligations Z
STYLE
Intl StocksI
Mid Cap 2.5 %
Large Cap Growth -
Index Plus (Passive)
iShares Core S&P 500 ETF
iShares S&P 500 Value ETF
iShares S&P 500 Growth ETF
iShares Russell Mid -Cap ETF
Vanguard Real Estate ETF
iShares Russell 2000 Value ETF
iShares Russell 2000 Growth ETF
iShares MSCI EAFE ETF
Vanguard FTSE Emerging Markets ETF
Vanguard Short -Term Invest -Grade Adm
Shares Core U.S. Aggregate
First American Government Obligations Z
Holdings are subject to change at the
discretion of the investment manager,
Real Estate 1.4 %
Large Cap Value Small Cap 4.6%
3.5%
Cash 3.4%
Large Cap Core J,
9.0% Interco -Term Bond
51.2%
Short -Term Bond
14.7%
The performance records shown represent a size -weighted composite of tax exempt accounts that meet the following criteria.
Accounts are managed by HighMark's Portfolio Management Group (PMG) with full investment authority according to the
PARS Moderately Conservative active and passive objectives.
The adviser to the PARS ponfolios Is US Bank, and HighMark serves as sub -adviser to US Bank to manage these portfolios.
US Bank may charge clients as much as 0.60%annual management fee based on a sliding scale. US Bank Pays HighMark
custody fees, or taxes
expenses. Returns are calculated based on
HighMark Capital Management. Inc. (HighMark), an SEC -registered investment adviser. Is a wholly owned subsidiary of
for
are
FDIC or by any
Bank affiliate,
I
J.
HIGHMARKID
CAPITAL MANAGEMENT
WHY THE PARS DIVERSIFIED
MODERATE PORTFOLIO?
Comprehensive Investment Solution
HighMark® Capital Management, Inc.'s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above -average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index -based
securities, including exchange -traded funds. Both
investment options leverage HighMark's active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification - asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential -
while reducing portfolio risk.
INVESTMENT OBJECTIVE
To provide current income and
moderate capital appreciation. v
It is expected that dividend and a
interest income will comprise a 2
significant portion of total return, 2
although growth through capital
appreciation is equally important.
Efficient Frontier
Risk (Standard Deviation)
ASSET ALLOCATION
- MODERATE PORTFOLIO
Strategic Range
Policy
Tactical
Equity
40-60%
50%
51%
Fixed Income
40-60%
45%
46%
Cash
0-20%
5%
3%
ANNUALIZED TOTAL RETURNSEmbedded Management Fees' but Net of
HighMark Plus Composite (Active)
Index Plus Composite (Passive)
Current Quarter*
3.23%
Current Quarter*
2.95%
Blended Benchmark*,*'
3.16%
Blended Benchmark*,*`
3.16%
Year To Date*
11.74%
Year To Date*
11.36%
Blended Benchmark*,**
11.35%
Blended Benchmark*,*`
11.35%
1 Year
6.94%
1 Year
6.77%
Blended Benchmark**
6.95%
Blended Benchmark**
6.95%
3 Year
7.95%
3 Year
7.14%
Blended Benchmark**
7.52%
Blended Benchmark"
7.52%
5 Year
5.43%
5 Year
6.18%
Blended Benchmark**
5.62%
Blended Benchmark"
5.62%
10 Year
8.35%
10 Year
8.09%
Blended Benchmark`*
8.18%
Blended Benchmark**
8.18%
BofWL 1-3 Yr
Year Core./Goh, 30%BBG Barclays US Agg, 5%FTSE 1 Mth T-Bill. Prior to April 2007: the blendetl benchmark was 50%S&P
500, 15%ICE BofAML 1-3Yr CoroGev, 30%BBG Barclays US Agg. and 5%FTSE 1 Mth T-Bill.
ANNUAL RETURNS
(Gross of Investment Management Fees, but Net of Embedded
Fund Fees)
HighMark Plus Composite
(Active)
Index Plus Composite (Passive)
2008
-22.88%
2008
-18.14%
2009
21.47%
2009
16.05%
2010
12.42%
2010
11.77%
2011
0.55%
2011
2.29%
2012
12.26%
2012
10.91%
2013
13.06%
2013
12.79%
2014
4.84%
2014
5.72%
2015
0.14%
2015
-0.52%
2016
6.45%
2016
7.23%
2017
13.19%
2017
11.59%
2018
-4.03%
2018
-4.03%
PORTFOLIO FACTS
HighMark Plus (Active)
Index Plus (Passive)
Composite Inception Date
10/2004
Composite Inception Date
05/2006
No of Holdings in Portfolio
18
No of Holdings in Portfolio
12
HOLDINGS
HighMark Plus (Active)
Index Plus (Passive)
Columbia Contrarian Core 13
iShares Core S&P 500 ETF
Vanguard Growth & Income Adm
iShares S&P 500 Value ETF
Dodge & Cox Stock Fund
iShares S&P 500 Growth ETF
Harbor Capital Appreciation - Retirement
iShares Russell Mid -Cap ETF
T. Rowe Price Growth Stock - I
Vanguard Real Estate ETF
iShares Russell Mid -Cap ETF
iShares Russell 2000 Value ETF
Vanguard Real Estate ETF
iShares Russell 2000 Growth ETF
Undiscovered Managers Behavioral Value-R6
iShares MSCI EAFE ETF
Victory RS Small Cap Growth - R6
Vanguard FTSE Emerging Markets ETF
DFA Large Cap International Portfolio
Vanguard Short -Term Invest -Grade Adm
Dodge & Cox International Stock
iShares Core U.S. Aggregate
MFS International Growth - R6
First American Government Obligations Z
Hartford Schroders Emerging Markets Eq
Vanguard Short -Term Invest -Grade Adm
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
Holdings are subject to change at the
Doublel-ine Core Fixed Income - I
discretion of the investment manager.
First American Government Obligations Z
STYLE
Intl Stocks
10.0%
Cash
3.1%
Real Estate
2.4%
/ Small Cap
�Je W.—__ 7.6%
Mid Cap
4.0% rm-Te Inlemi Bond
36.4%
Largo Cap Growth
Large Cap Core)
15.0 %
Short -Term Bond
9.7%
The performance records shown represent size -weighted composites of tax exempt accounts that meet the following criteria:
Accounts are managed by HighMark's Portfolio Management Group (PMG) with full investment authority according to the
PARS Moderate active and passive objectives.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub -adviser to US Bank to manage these portfolios.
US Bank may charge clients as much as 0,60%annual mammemenl fee based on a sliding scale. US Bank cave HighMark
a advisory fees and other expenses it may incur as a client. Additional information regarding the firm's
as for calculating and reporting performance results is available upon request. Performance results are
ated in U.S, dollars and do not reflect the deduction of Investment advisory fees, custody fees, or taxes
uction of trading expenses. Returns are calculated based on trade tale accounting.
represent HighMark's strategic allocations between equity, fixed income, and cash and are rebalanced
returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the
2000
with a remaining term to
cribs i-month U.S. Tree
and
IHIGHMARKD
I' CAPITAL MANAGEMENT
11
J
t
WHY THE PARS DIVERSIFIED
BALANCED PORTFOLIO?
Comprehensive Investment Solution
HighMark® Capital Management, Inc.'s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above -average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index -based
securities, including exchange -traded funds, Both
investment options leverage HighMark's active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification - asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
INVESTMENT OBJECTIVE
Efficient Frontier
To provide growth of principal
and income. While dividend and E.
u
interest income are an important o
Capital
aalancea
Apprectalior
component of the objective's 2
Moderate
total return, it is expected that E
Moderately Conservative
capital appreciation will T
comprise a larger portion of the rc
Conservative
total return.
-
Risk (Standard Deviation)
ASSET ALLOCATION - BALANCED PORTFOLIO
Strategic Range
Policy Tactical
Equity 50-70%
60% 61%
Fixed Income 30-50%
35% 36%
Cash 0-20%
5% 3%
(Gross of Investment Management Fees, but
Net of
ANNUALIZED TOTAL RETURNS Embedded
Fund Fees)
HighMark Plus Composite (Active)
Index Plus Composite (Passive)
Current Quarter* 3.30%
Current Quarter*
3.04%
Blended Benchmark*,** 3.26%
Blended Benchmark*,**
3.26%
Year To Date 13.04%
Year To Date*
12.53%
Blended Benchmark*,** 12.59%
Blended Benchmark*,**
12.59%
1 Year 6.82%
1 Year
6.55%
Blended Benchmark** 6.90%
Blended Benchmark**
6.90%
3 Year 9.11 %
3 Year
8.09%
Blended Benchmark** 8.58%
Blended Benchmark**
8.58%
5 Year 5.92%
5 Year
5.65%
Blended Benchmark** 6,22%
Blended Benchmark-
6.22%
10 Year 9.07%
10 Year
8,89%
Blended Benchmark** 9.26%
Blended Benchmark-
9.28%
' Returns less than one year are not annualized. "Breakdown for Blended Benchmark: From 101W612-Present 32%S&P500, 6%
Russell Mid Cap, 9%Russell 2000, 4%MSCI EM (net), 7%MSCI EAFE (net), 27%BBG Barclays US Agg, 6.75%ICE BoIAML 1-3
Yr US Corp/Gov'l, 1.25%ICE BofAML US High Yield Master
II, 2% Wilshire REIT, and 5%FTSE 1 Win T-Bill. From 4/112007-
913012012:Me blended benchmark was 51%S&P 500; 3%Russel
2000, 6%MSCI SAFE (net), 5% ICE SolAML 1J
Year
Corp./G wl, 30%BBG Barclays US Agg, 5%FTSE 1 Mth T-Bill.
Poor to Apri12007: the blended benchmark was 60%S&P
600, 5%
ICE BoI ML1-3Yr Corp/Gov, 30% BBG Barclays US Agg. and 5%FTSEi Min T-Bill.
ANNUAL RETURNS (Gross of Investment
Management Fees, but Net of Embedded
Fund Fees)
HighMark Plus Composite (Active)
Index Plus Composite (Passive)
2008-25.72%
2008
-23.22%
2009 21.36%
2009
17.62%
2010 14.11%
2010
12.76%
2011 -0.46%
2011
1.60%
2012 13,25%
2012
11.93%
2013 16.61%
2013
15.63%
2014 4.70%
2014
6.08%
2015 0.04%
2015
-0.81%
2016 6.81 %
2016
8.25%
2017 15.46%
2017
13.39%
2018 -4.88%
2018
-5.05%
PORTFOLIO FACTS
HighMark Plus (Active)
Index Plus (Passive)
Composite Inception Date 1012006
Composite Inception Dale
10/2007
No of Holdings in Portfolio 18
No of Holdings in Portfolio
12
HOLDINGS
HighMark Plus (Active)
Index Plus (Passive)
Columbia Contrarian Core 13
iShares Core S&P 500 ETF
Vanguard Growth & Income Adm
iShares S&P 500 Value ETF
Dodge & Cox Stock Fund
iShares S&P 500 Growth ETF
Harbor Capital Appreciation - Retirement
iShares Russell Mid -Cap ETF
T. Rowe Price Growth Stock - I
Vanguard Real Estate ETF
iShares Russell Mid -Cap ETF
iShares Russell 2000 Value ETF
Vanguard Real Estate ETF
iShares Russell 2000 Growth ETF
Undiscovered Managers Behavioral Value-R6
iShares MSCI EAFE ETF
Victory IRS Small Cap Growth - R6
Vanguard FTSE Emerging Markets ETF
DFA Large Cap International Portfolio
Vanguard Short -Term Invest -Grade Adm
Dodge & Cox International Stock
iShares Core U.S. Aggregate
MFS International Growth - R6
First American Government Obligations Z
Hartford Schroders Emerging Markets Eq
Vanguard Short -Term Invest -Grade Adm
PIMCO Total Return Fund - Insl
PGIM Total Return Bond - R6
Holdings are subject to change at the
DoubleLine Core Fixed Income - I
discretion of the investment manager.
First American Government Obligations Z
STYLE
Intl
t
Large C
7
Real Estate
. a.
Interm-Term Bond
29.1%
Short -Term Bond
7.3%
Large Cap Core
18.2%
The performance records shown reppresent size -weighted composites of tat exempt accounts that meet the following cdlede:
Accounts are managed by HighMark'a Portfolio Management Group (PMG) with full investment authority according to the
PARS Balanced active and passive objectives.
The composite name has been chapped from PARS BalancedlModeralely Aggressive to PARS Balanced on 611=13. The
adviser to the PARS portfolios is US Bank, and HighMark serves as sub -adviser to US Bank to manage these portfolios. US
Bank may charge clients as much as 0.60%annual management fee based on a sliding scale. US Bank pays HighMark 60%
of the annual management fee for assets sub -advised by HighMark under its sub -advisory agreement with US Bank. The
0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the
portfolio's returns. Assuming an Investment for five years, a 5% annual total return, and an annual sub -advisory fee rate of
0.36%deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million
after fees (Net -of -Fees) and $12.76 million before fees (Gross -of -Fees). Gross returns are presented before management
and custadlet fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return
will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm's
policies and procedures for calculating and regarding performance results is available upon request. Performance results are
calculated and presented in U.S. dollars and So not reflect the deduction of investment advisory fees, custody fees, or taxes
but do reflect the deduction of trading expenses. Returns are calculated based on trade -date accounting.
Blended benchmarks represent HlghMark's strategic allocations between equity, fixed Income, and cash and are rebalanced
monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the
reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanagged S&P 500 Index
is representative of the ...formers. of lane communes In the U.S. stock market. The MSCI EAFE Index is a free fimt-
traded Real Estate Investors
representative of the U.S. tat
tracks the bond performance
less than 3 years. The unmet
Inc. (HighMark), an SEC -registered Investment adviser, is a wholly owned subsidiary of
HighMark manages institutional separate account portfolios for a wide variety of for -pro
other Federal Government Agency, are NOT Bank deposits, are
and MAY lose value. Including possible loss of principal.
1
HIGHAMARK°
CAPITAL MEMENT
I
1'
l�# d
J
11
J
WHY THE PARS DIVERSIFIED
CAPITAL APPRECIATION PORTFOLIO?
Comprehensive Investment Solution
HighMark® Capital Management, Inc.'s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.
Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.
Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above -average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.
This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.
Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:
HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index -based
securities, including exchange -traded funds. Both
investment options leverage HighMark's active asset
allocation approach.
Risk Management
The portfolio is constructed to control risk through
four layers of diversification — asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.
INVESTMENT OBJECTIVE
To provide growth of principal
The major portion of the assets
are invested in equity securities
and market fluctuations are
expected.
E
Efficient Frontier
/ Moderate
Moderately Conservative
Risk (Standard Deviation)
Appreciation
ASSET ALLOCATION - CAPITAL APPRECIATION PORTFOLIO
Strategic Range
Policy Tactical
Equity 65 - 85%
75% 76%
Fixed Income 10 - 30%
20% 22%
Cash 0-20%
5% 2%
of Fees, but Net of
beddednvestment Fund Fees)Management
ANNUALIZED TOTAL RETURNS Emross
Consolidated Composite
Current Quarter*
3.32%
Blended Benchmark*,**
3.37%
Year To Dale*
14.55%
Blended Benchmark*,**
14.34%
1 Year
6,61%
Blended Benchmark**
6.65%
3 Year
10.10%
Blended Benchmark**
10.10%
5 Year
6.62%
Blended Benchmark**
6.94%
10 Year
9.93%
Blended Benchmark**
10.66%
' Returns less than one yearare not annualized."Breakdo for Blended Benchmark: 39.5%S&P500, 7.6% Russell Mid Cap,
10.5%Russell 2000, 5 25%MSCI EM (net), 10.25% MSCI EAFE (nefi, 16%Sao Barclays US Agg, 3%ICE BofAML 1-3 Yr US
CorprGoo, 1%ICE BofAML US High Yield Master II, 2% Wilshire REIT, and 5%FTSE 1 Mth T-Bill.
ANNUAL RETURNS (Gross of Investment
Management Fees, but Net of Embedded
Fund Fees)
Consolidated Composite
2008
N/A
2009
23.77%
2010
12.95%
2011
-1.35%
2012
13.87%
2013
20.33%
2014
6.05%
2015
-0.27%
2016
8.81%
2017
16.72%
2018
-5.82%
PORTFOLIO FACTS
Consolidated Composite
Composite Inception Date 01/2009
No of Holdings in Portfolio 18
HOLDINGS
HighMark Plus (Active)
Index Plus (Passive)
Columbia Contrarian Core 13
!Shares Core S&P 500 ETF
Vanguard Growth & Income Adm
!Shares S&P 500 Value ETF
Dodge & Cox Stock Fund
!Shares S&P 500 Growth ETF
Harbor Capital Appreciation - Retirement
Shares Russell Mid -Cap ETF
T. Rowe Price Growth Stock - I
Vanguard Real Estate ETF
iShares Russell Mid -Cap ETF
!Shares Russell 2000 Value ETF
Vanguard Real Estate ETF
iShares Russell 2000 Growth ETF
Undiscovered Managers Behavioral Value-R6
iShares MSCI EAFE ETF
Victory IRS Small Cap Growth - R6
Vanguard FTSE Emerging Markets ETF
DFA Large Cap International Portfolio
Vanguard Short -Term Invest -Grade Adm
Dodge & Cox International Stock
iShares Core U.S. Aggregate
MFS International Growth - R6
First American Government Obligations Z
Hartford Schroders Emerging Markets Eq
Vanguard Short -Term Invest -Grade Adm
PIMCO Total Return Fund - Inst
PGI M Total Return Bond - R6
Holdings are subject to change at the
DoubleLine Core Fixed Income - I
discretion of the investment manager.
First American Government Obligations Z
STYLE
Real Estate
Intl Steel
16.3%
Mid
6.1
22.5%
Bond
m Bond
The performance records shown represent asize-weighted composite of tax exempt accounts that meet the following criteria
Accounts are managed by HighMark's Portfolio Management Group (PMG) with full investment authority according to the
PARS Capital Apprecla0on active and passive objectives.
The adviser to the PARS portfolios is US Bank, and HighMark serves as sub -adviser to US Bank to manage these pordolios.
US Bank may charge clients as much as 0.60%annual management fee based on a sliding scale. US Bank cave HighMark
calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes
but do reflect the deduction of trading expenses. Returns are calculated based on trade -date accounting.
Blended benchmarks represent HlghMark's strategic allocations between equity, fixed income, and cash and are rebalanced
monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the
reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index
is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free goat -
adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and
Canada. The MSCI Emerging Markets Index is a free float -adjusted market capital otion index that is designed to measure
equity market performance In the global emergmg markets. The Russell Midcap Index measures the performance of the mid -
cap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small -cap segment of the
U.S. equity universe. The ICE BofAML US High Yield Master 11 Index tracks the performance of below investment grade U.S.
dollar -denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicll
traded Real Estate Investment Trusts. The unmanaged Bloomberg Barclayys U.S. Aggregate Bond Index is generally
representatve of the U.S. taxable bond market as a whole. The ICE BofAML 1-3 Year U.S. Corporate & Government Index
cracks the bond performance of the ICE BnIAML U.S. Corporate & Government Index, with a remaining term to final maturity
less than 3 years. The unmanaged FTSE i-Month Treasury Bill Index tracks the yield of the 1-month U.S. TreasuryBill.
Holdings Gorporstion, provides cerain services to HighMark and is compensated for these services. Past performance does
not guarantee future results. Individual account management and construction will valy depending on each chenrs
Investment needs and objectives. Investments employing HighMark strategies am 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.