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HIGHMARK® CAPITAL MANAGEMENT PARS DIVERSIFIED PORTFOLIOS MODERATELY CONSERVATIVE Q4 2017 WHY THE PARS DIVERSIFIED INVESTMENT OBJECTIVE Efficient Frontier MODERATELY CONSERVATIVE PORTFOLIO? To provide current income and moderate capital appreciation. Comprehensive Investment Solution x Capital Appreciation p The major portion of the assets Balanced HighMark®Capital Management, Inc.'s(HighMark) is committed to income 5 Moderate ris diversified investment portfolios are designed toproducing securities. Market Moderately Conservative balance return expectations with risk tolerance. fluctuations should be expected. 3 Key features include: sophisticated asset allocation c2 Conservative and optimization techniques,four layers of diversification(asset class,style, manager, and Risk(Standard Deviation) security),access to rigorously screened, top tier ASSET ALLOCATION- MODERATELY CONSERVATIVE PORTFOLIO money managers, flexible investment options, and Strategic Range Policy Tactical experienced investment management. Equity 20-40% 30% 30% Fixed Income 50-80% 65% 67% Rigorous Manager Due Diligence o5% 0 Our manager review committee utilizes a rigorous Cash 0-20% 3/° 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* 1.94% Current Quarter' 1.83% to continue to deliver these results.We have set high Blended Benchmark** 1.87% Blended Benchmark** 1.87% standards for our investment managers and funds. Year To Date 9.56% Year To Date 8.08% This is a highly specialized,time consuming Blended Benchmark 8.11% Blended Benchmark 8.11% approach dedicated to one goal: competitive and consistent performance. 1 Year 9.56% 1 Year 8.08% Blended Benchmark 8.11% Blended Benchmark 8.11% Flexible Investment Options 3 Year 4.87% 3 Year 4.38% In order to meet the unique needs of our clients, Blended Benchmark 4.51% Blended Benchmark 4.51% we offer access to flexible implementation strategies: 5 Year 5.26% 5 Year 5.06% HighMark Plus utilizes actively managed mutual Blended Benchmark 5.31% Blended Benchmark 5.31% funds while Index Plus utilizes index-based 10 Year 4.93% 10 Year 4.40% securities, including exchange-traded funds. Both Blended Benchmark 4.63% Blended Benchmark 4.63% investment options leverage HighMark's active asset •Returns less than 1-year are not annualized.**Breakdown for Blended Benchmark 15.5%S&P500,3%Russell Mid Cap,45% allocation approach. Russell 2000,2%MSCI EM FREE,4%MSCI EAFE,49.25%BC US Agg,14%ML 1-3 Yr US Corp/Gov't,1.75%US High Yield Master II,1%Wilshire REIT,and 5%Citi 1 Mth T-Bill.Prior to October 2012,the blended benchmarks were 25%S&P 500;1.5% ' Russell 2000,3.5%MSCI EAFE,25%ML 1-3 Year Corp./Govt,40%BC Agg,5%Citi 1 Mth T-Bill.Poor to April 2007,the blended Risk Management benchmarks were 30%S&P 500,25%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 -15.37% 2008 -12.40% small cap, international, value, growth), managers 2009 18.71% 2009 11.92% and securities. Disciplined mutual fund selection and 2010 10.46% 2010 9.72% monitoring process helps to drive return potential 2011 1.75% 2011 3.24% while reducing portfolio risk. 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 4.93% 2016 5.42% 2017 9.56% 2017 8.08% PORTFOLIO FACTS HighMark Plus(Active) Index Plus(Passive) Inception Data 08/2004 Inception Data 05/2005 No of Funds in Portfolio 19 No of Funds in Portfolio 13