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_ Ali HIGHMARK® CAPITAL MANAGEMENT PARS DIVERSIFIED PORTFOLIOS MODERATE Q4 2017 WHY THE PARS DIVERSIFIED INVESTMENT OBJECTIVE Efficient Frontier MODERATE PORTFOLIO? To provide growth of principal and income. It is expected that • Comprehensive Investment Solution Capital Appreciation cC HighMark®Capital Management, Inc.'s(HighMark) dividend and interest income will o Balanced comprise a significant portion of Moderate diversified investment portfolios are designed to m cr • balance return expectations with risk tolerance. total return, although growth Moderately Conservative Key features include: sophisticated asset allocation through capital appreciation is and optimization techniques, four layers of equally important. Conservative diversification (asset class, style, manager, and Risk(Standard Deviation) security), access to rigorously screened, top tier ASSET ALLOCATION - MODERATE PORTFOLIO • • money managers, flexible investment options, and Strategic Range Policy Tactical • experienced investment management. Equity 40-60% 50% 50% Fixed Income 40-60% 45% 47% Rigorous Manager Due Diligence Our manager review committee utilizes a rigorous Cash 0 20% 5% 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* 2.97% Current Quarter* 2.86% to continue to deliver these results.We have set high Blended Benchmark** 2.95% Blended Benchmark** 2.95% standards for our investment managers and funds. Year To Date 13.19% Year To Date 11.59% This is a highly specialized,time consuming Blended Benchmark 11.65% Blended Benchmark 11.65% approach dedicated to one goal: competitive and consistent performance. 1 Year 13.19% 1 Year 11.59% Blended Benchmark 11.65% Blended Benchmark 11.65% Flexible Investment Options 3 Year 6.46% 3 Year 5.98% In order to meet the unique needs of our clients, Blended Benchmark 6.20% Blended Benchmark 6.20% we offer access to flexible implementation strategies: 5 Year 7.42% 5 Year 7.26% HighMark Plus utilizes actively managed mutual Blended Benchmark 7.69% Blended Benchmark 7.69% - funds while Index Plus utilizes index-based 10 Year 5.45% 10 Year 5.51% securities, including exchange-traded funds. Both Blended Benchmark 5.56% Blended Benchmark 5.56% investment options leverage HighMark's active asset *Returns less than 1-year are not annualized"Breakdown for Blended Benchmark:26.5%S&P500,5%Russell Mid Cap,7.5% allocation a r08Ch. Russell 2000,3.25%MSCI EM FREE,6%MSCI EAFE,33,50%BC US Agg,10%ML 1-3 Yr US Corp/Gov't,1.50%US High Yield pp Master II,1.75%Wilshire REIT,and 5%Citi 1 Mth T-Bill.Prior to October 2012,the blended benchmarks were 43%S&P 500;2% -- Russell 2000,5%MSCI EAFE,15%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 500,15%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) fixed income, equity), investment styles(large cap, 2008 -22.88% 2008 -18.14% small cap, international, value,growth), managers 2009 21.47% 2009 16.05% and securities. Disciplined mutual fund selection and 2010 12.42% 2010 11.77% - monitoring process helps to drive return potential 2011 0.55% 2011 2.29% while reducing portfolio risk. 2012 12.25% 2012 10.91% 2013 13.06% 2013 12.79% 2014 4.84% 2014 5.72% 2015 0.14% 2015 -0.52% 2016 6.44% 2016 7.23% 2017 13.19% 2017 11.59% PORTFOLIO FACTS HighMark Plus(Active) Index Plus(Passive) - Inception Data 10/2004 Inception Data 05/2006 No of Funds in Portfolio 19 No of Funds in Portfolio 13