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...44i ATTACHMENT 1 HIGHMARK® CAPITAL MANAGEMENT PARS DIVERSIFIED PORTFOLIOS CONSERVATIVE Q4 2017 WHY THE PARS DIVERSIFIED INVESTMENT OBJECTIVE Efficient Frontier CONSERVATIVE PORTFOLIO? To provide a consistent level of -. inflation-protected income over Capital Appreciation Comprehensive Investment Solution the long-term. The major portion o Balanced HighMark®Capital Management, Inc.'s(HighMark) of the assets will be fixed a) m Moderate cc diversified investment portfolios are designed toincome related. Equity securities Moderately Conservative balance return expectations with risk tolerance. m are utilized to provide inflation 3 Key features include: sophisticated asset allocationConservative protection. and optimization techniques, four layers of diversification(asset class,style, manager, and Risk(Standard Deviation) security), access to rigorously screened, top tier ASSET ALLOCATION -CONSERVATIVE PORTFOLIO money managers, flexible investment options, and Strategic Range Policy Tactical experienced investment management. Equity 5-20% 15% 15% Fixed Income 60-95% 80% 79% Rigorous Manager Due Diligence Cash 0-20% 5% 6% Our manager review committee utilizes a rigorous screening process that searches for investment ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but managers and styles that have not only produced 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° 1.17% Current Quarter' 1.08% to continue to deliver these results.We have set high Blended Benchmark** 1.00% Blended Benchmark** 1.00% standards for our investment managers and funds. Year To Date 6.73% Year To Date 5.52% This is a highly specialized, time consuming Blended Benchmark 5.24% Blended Benchmark 5.24% approach dedicated to one goal: competitive and consistent performance. 1 Year 6.73% 1 Year 5.52% Blended Benchmark 5.24% Blended Benchmark 5.24% Flexible Investment Options 3 Year 3.70% 3 Year 3.09% In order to meet the unique needs of our clients, Blended Benchmark 3.13% Blended Benchmark 3.13% we offer access to flexible implementation strategies: 5 Year 3.73% 5 Year 3.39% HighMark Plus utilizes actively managed mutual Blended Benchmark 3.46% Blended Benchmark 3.46% - funds while Index Plus utilizes index-based 10 Year 4.28% 10 Year 3.75% securities, including exchange-traded funds. Both Blended Benchmark 3.74% Blended Benchmark 3.74% investment options leverage HighMark's active asset •Returns less than 1-year are not annualized.**Breakdown for Blended Benchmark:7.5%S&P500,1.5%Russell Mid Cap,2.5% allocation approach. Russe/2000,1%MSCI EM FREE,2%MSCI EAFE,52.25%BC US Agg,25.75%ML 1-3 Yr US Corp/Gov't,2%US High Yield Master 0,0.5%Wilshire REIT,and 5%Citi 1 Mth T-Bill.Prior to October 2012,the blended benchmarks were 12%S&P 500;1% . Russell 2000,2%MSCI EAFE,40%ML 1-3 Year Corp./Govt,40%BC Agg,5%Citi 1 Mth T-Bill.Prior to April 2007,the blended Risk Management benchmarks were 15%S&P 500,40%ML 1-3Yr Corp/Gov,40%BC Agg,and 5%Citi 1 Mth T-Bill. The portfolio is constructed to control risk through ANNUAL RETURNS four layers of diversification-asset classes(cash, HighMark Plus(Active) Index Plus(Passive) - fixed income, equity), investment styles(large cap, 2008 -9.04% 2008 -6.70% small cap, international, value, growth), managers 2009 15.59% 2009 10.49% and securities. Disciplined mutual fund selection and 2010 8.68% 2010 7.67% - monitoring process helps to drive return potential 2011 2.19% 2011 3.70% while reducing portfolio risk. 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% PORTFOLIO FACTS HighMark Plus(Active) Index Plus(Passive) Inception Data 07/2004 Inception Data 07/2004 No of Funds in Portfolio 19 No of Funds in Portfolio 13