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HIGHMARK® CAPITAL MANAGEMENT PARS DIVERSIFIED PORTFOLIOS BALANCED Q4 2017 INVESTMENT OBJECTIVE 7HY THE PARS DIVERSIFIED Efficient Frontier BALANCED PORTFOLIO? To provide growth of principal and income. While dividend and 'r S Capital Appreciation r Comprehensive Investment Solution interest income are an important Balanced 13 HighMark®Capital Management, Inc.'s(HighMark) component of the objective's Moderate diversified investment portfolios are designed to total return, it is expected that a Moderately Conservative balance return expectations with risk tolerance. capital appreciation will ° Key features include:sophisticated asset allocationcomprise a larger portion of the Conservative and optimization techniques, four layers of total return. diversification(asset class,style, manager, and Risk(Standard Deviation) security), access to rigorously screened, top tier ASSET ALLOCATION -BALANCED PORTFOLIO money managers, flexible investment options, and Strategic Range Policy Tactical experienced investment management. Equity 50-70% 60% 60% Fixed Income 30-50% 35% 37% Rigorous Manager Due Diligence Cash 0-20% 5% 3% Our manager review committee utilizes a rigorous screening process that searches for investment (Gross of Investment Management Fees, but managers and styles that have not only produced ANNUALIZED TOTAL RETURNS Net of Embedded Fund Fees) above-average returns within acceptable risk HighMark Plus(Active) Index Plus(Passive) parameters, but have the resources and commitment Current Quarter* 3.49% Current Quarter* 3.37% to continue to deliver these results.We have set high Blended Benchmark" 3.51% Blended Benchmark** 3.51% standards for our investment managers and funds. Year To Date 15.46% Year To Date 13.39% This is a highly specialized,time consuming Blended Benchmark 13.54% Blended Benchmark 13.54% approach dedicated to one goal: competitive and 1 Year 15.46% 1 Year 13.39% consistent performance. Blended Benchmark 13.54% Blended Benchmark 13.54% Flexible Investment Options 3 Year 7.25% 3 Year 6.78% In order to meet the unique needs of our clients, Blended Benchmark 7.06% Blended Benchmark 7.06% we offer access to flexible implementation strategies: 5 Year 8.54% 5 Year 8.35% HighMark Plus utilizes actively managed mutual Blended Benchmark 8.89% Blended Benchmark 8.89% funds while Index Plus utilizes index-based 10 Year 5.74% 10 Year 5.63% securities, including exchange-traded funds. Both Blended Benchmark 6.06% Blended Benchmark 6.06% investment options leverage HighMark's active asset *Returns less than 1-year are not annualized.**Breakdown for Blended Benchmark 32%S&P500,6%Russell Mid Cap.9%Russell allocation approach. 2000,4%MSCI EM FREE,7%MSCI EAFE,27%BC US Agg,675%ML 1-3 Yr US Corp/Gov't,1.25%US High Yield Master II, 2%Wilshire REIT,and 5%Citi 1 Mth T-Bill.Prior to October 2012,the blended benchmarks were 51%S&P 500;3%Russell 2000, -yo%MSCI EAFE,5%ML 1-3 Year Corp./Govt,30%BC Agg,5%Citi 1 Mth T-Bill.Prior to April 2007,the blended benchmarks were 50%S&P 500.5%ML 1-3Yr Corp/Gov,30%BC Agg,and 5%Citi 1 Mth T-Bill. Risk Management The portfolio is constructed to control risk through ANNUAL RETURNS four layers of diversification-asset classes(cash, HighMark Plus(Active) Index Plus(Passive) w fixed income, equity), investment styles(large cap, 2008 -25.72% 2008 -23.22% small cap, international, value, growth), managers 2009 21.36% 2009 17.62% and securities. Disciplined mutual fund selection and 2010 14.11% 2010 12.76% monitoring process helps to drive return potential 2011 -0.46% 2011 1.60% while reducing portfolio risk. 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 6.82% 2016 8.26% 2017 15.46% 2017 13.39% PORTFOLIO FACTS HighMark Plus(Active) Index Plus(Passive) Inception Data 10/2006 Inception Data 10/2007 No of Funds in Portfolio 19 No of Funds in Portfolio 13