Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
AC 07-26-2021 Presentation
City of Cupertino PARS 115 Trust –OPEB Prefunding Program and Pension Rate Stabilization Program Client Review July 26, 2021 City of Cupertino ▎2 Contacts Mitch Barker Executive Vice President (800) 540-6369 x116 mbarker@pars.org Jennifer Meza Manager, Consulting (800) 540-6369 x141 jmeza@pars.org Carolyn Cox Sr. Vice President, Sr. Relationship Manager (415) 677-3603 carolyn.cox@usbank.com Rick Rosenthal Vice President, Senior Portfolio Manager (213) 359-7954 richard.rosenthal@usbank.com City of Cupertino ▎3 Pars Trust Team Trust Administrator & Consultant •Serves as record-keeper, consultant, and central point of contact •Sub-trust account valuations •Monitors contributions •Processes disbursements •Handles all agency/participant inquiries •Ongoing plan compliance (IRS/GASB/Government Code) Corporate Experience Dollars under Administration 37 years (1984-2021) Over $6.0 billion Investment Manager & Trustee •Custodian of assets •Investment fiduciary/oversight of plan assets •Manage program portfolios •Investment policy assistance •Open architecture with active and index platform Corporate Experience Dollars under Administration 158 years (1863–2021) Over $5.0 trillion City of Cupertino ▎4 Subaccounts OPEB and Pension assets are individually sub-accounted, and can be divided by dept., bargaining group, or cost center Assets in the PARS Section 115 Combination Trust can be used to address unfunded liabilities. Financial Stability Allows separate investment strategies for OPEB and Pension subaccounts. Flexible Investing OPEB and Pension assets aggregate and reach lower fees on tiered schedule sooner – saving money! Economies-of-ScaleAnytime Access Trust funds are available anytime; OPEB for OPEB and Pension for Pension. No set-up costs, no minimum annual contribution amounts, and no fees until assets are added. No Set Up Cost or Minimums Retiree Medical Benefits Prefund OPEB GASB 75 OPEB Reimburse agency; or Pay benefits provider Pension Rate Stabilization Program Prefund Pension (PRSP)GASB 68 Pension Reimburse agency; or Pay retirement system Assets can be used to:Assets can be used to: prefund either or both General Fund PARS IRS -Approved Section 115 Trust City of Cupertino ▎5 Plan Type:IRC Section 115 Irrevocable Exclusive Benefit Trust Trustee Approach:Discretionary Plan Effective Date:February 17, 2010 Plan Administrator:Director of Administrative Services Current Investment Strategy:US Bank Balanced Multi-Manager Summary of Agency’s OPEB Plan AS OF JUNE 30, 2021: Initial Contribution:June 2010: $7,000,000 Additional Contributions:$12,300,000 Total Contributions:$19,300,000 Reimbursements:$0 Total Investment Earnings:$19,667,667 Account Balance:$38,025,046 City of Cupertino ▎6 Summary of Agency’s OPEB Plan *Plan Year Ending June 2010 is based on 1 month of activity CONTRIBUTIONS, DISBURSEMENTS, AND TOTAL ASSETS AS OF JUNE 30, 2021: $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 Plan Year Ending Contributions Disbursements Total Assets Year Contributions Disbursement s Total Assets Jun-10*$7,000,000 $0 $6,985,379 Jun-11 $2,000,000 $0 $9,742,816 Jun-12 $900,000 $0 $10,810,484 Jun-13 $1,400,000 $0 $13,358,376 Jun-14 $0 $0 $15,054,002 Jun-15 $8,000,000 $0 $23,113,331 Jun-16 $0 $0 $22,834,090 Jun-17 $0 $0 $25,745,075 Jun-18 $0 $0 $28,056,145 Jun-19 $0 $0 $29,218,234 Jun-20 $0 $0 $29,370,249 Jun-21 $0 $0 $38,025,046 City of Cupertino ▎7 •We have received the actuarial report by Cheiron dated September 2020 with a measurement date as of June 30, 2020. In the table below, we have summarized the results. OPEB Actuarial Results Demographic Study Measurement Date: June 30, 2019 Measurement Date: June 30, 2020 Actives 174 176 Retirees 117 127 Beneficiaries 13 11 Total 304 314 City of Cupertino ▎8 OPEB Actuarial Results Measurement Date: January 30, 2019 Discount Rate: 7.00% Measurement Date: June 30, 2020 Discount Rate: 6.50% Total OPEB Liability (TOL) Actuarial Accrued Liability (AAL)$28,073,000 $31,338,000 Fiduciary Net Position Actuarial Value of Assets $29,218,000 $29,370,000* Net OPEB Liability (NOL) Unfunded Actuarial Accrued Liability (UAAL)($1,145,000)$1,968,000 Funded Ratio (%)104.08%93.72% Actuarially Determined Contribution (ADC) $1,300,000 for FY 2018-19 $1,401,000 for FY 2019-20 Annual Benefit Payments (Pay-as-you-Go) $1,423,000 for FY 2018-19 $1,490,000 for FY 2019-20 *As of June 30, 2021, assets at $38,025,046. Rule of thumb:For every one percent increase in the discount rate, the unfunded liability is lowered by 10 -12%. City of Cupertino ▎9 PARS Pension Rate Stabilization Program for prefunding pension obligations City of Cupertino ▎10 Plan Type:IRC Section 115 Irrevocable Exclusive Benefit Trust Trustee Approach:Discretionary Plan Effective Date:May 15, 2018 Plan Administrator:Director of Administrative Services Current Investment Strategy:US Bank Balanced Multi-Manager Summary of Agency’s PENSION Plan AS OF JUNE 30, 2021: Initial Contribution:March 2019: $8,000,000 Additional Contributions:$6,000,000 Total Contributions:$14,000,000 Reimbursements:$0 Total Investment Earnings:$4,583,859 Account Balance:$18,491,004 City of Cupertino ▎11 Summary of Agency’s PENSION Plan CONTRIBUTIONS, DISBURSEMENTS, AND TOTAL ASSETS AS OF JUNE 30, 2021: $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 Ma r - 1 9 Ap r - 1 9 Ma y - 1 9 Ju n - 1 9 Ju l - 1 9 Au g - 1 9 Se p - 1 9 Oc t - 1 9 No v - 1 9 De c - 1 9 Ja n - 2 0 Fe b - 2 0 Ma r - 2 0 Ap r - 2 0 Ma y - 2 0 Ju n - 2 0 Ju l - 2 0 Au g - 2 0 Se p - 2 0 Oc t - 2 0 No v - 2 0 De c - 2 0 Ja n - 2 1 Fe b - 2 1 Ma r - 2 1 Ap r - 2 1 Ma y - 2 1 Ju n - 2 1 Plan Month Ending Contributions Disbursements Total Assets Month Contributions Disbursements Total Assets Mar-19 $8,000,000 $0 $8,002,553 Apr-19 $0 $0 $8,073,643 May-19 $0 $0 $7,740,504 Jun-19 $0 $0 $8,119,289 Jul-19 $0 $0 $8,159,158 Aug-19 $0 $0 $8,084,254 Sep-19 $0 $0 $8,154,100 Oct-19 $0 $0 $8,288,373 Nov-19 $0 $0 $8,453,520 Dec-19 $0 $0 $8,657,992 Jan-20 $0 $0 $8,646,340 Feb-20 $0 $0 $8,221,627 Mar-20 $4,000,000 $0 $11,123,617 Apr-20 $0 $0 $11,889,492 May-20 $0 $0 $12,360,510 Jun-20 $0 $0 $12,725,224 Jul-20 $0 $0 $13,336,469 Aug-20 $0 $0 $13,862,575 Sep-20 $0 $0 $13,582,864 Oct-20 $0 $0 $13,455,686 Nov-20 $0 $0 $14,637,777 Dec-20 $0 $0 $15,177,347 Jan-21 $0 $0 $15,231,395 Feb-21 $0 $0 $15,440,185 Mar-21 $0 $0 $15,506,981 Apr-21 $0 $0 $16,076,429 May-21 $2,000,000 $0 $18,148,082 Jun-21 $0 $0 $18,491,004 City of Cupertino ▎12 Miscellaneous Group Valuation as of June 30, 2018 Valuation as of June 30, 2019 Change Actuarial Liability $141.0 M $148.2 M 5.11% ↑ Assets $93.6 M $99.4 M 6.20% ↑ Unfunded Liability $47.5 M $49.2 M 3.58% ↑ Funded Ratio 66.3%66.9%0.90% ↑ Employer Contribution Amount $5.1 M (FY 19-20) $5.8 M (FY 20-21)13.73% ↑ Employer Contribution Amount –Projected*---$7.0 M (FY 26-27)20.89% ↑ Pension Funding Status As of June 30, 2019, City of Cupertino’s CalPERS pension plan is funded as follows*: * Data through 2026-27 from Agency’s latest CalPERS actuarial valuation. City of Cupertino ▎13 US BANK Investment Review PARS/CITY OF CUPERTINO 115P OPEB & PENSION ACCOUNTS June 30, 2021 U.S. Bank Institutional Asset Management U.S. BANK | 15 Table of Contents Section 1 – PORTFOLIO REVIEW PARS/CITY OF CUPERTINO 115P - OPEB (6746059600) • History of Asset Growth •Account Performance •Asset Allocation • Holdings PARS/CITY OF CUPERTINO 115P – PENSION (6746059601) • History of Asset Growth •Account Performance •Asset Allocation • Holdings Section 2 – ECONOMIC OUTLOOK Section 3 – DISCLOSURES, DEFINITIONS, DESCRIPTIONS 6 U.S. BANK | 16 PORTFOLIO REVIEW PARS/CITY OF CUPERTINO OPEB AGG AGG460596 Period Ending: 06/30/2021 History of Asset Growth Graphs Ending Market Values Over Time Annual Portfolio Values Allocation Over Time Jan 2016- Jan 2017- Jan 2018- Jan 2019- Jan 2020- Jan 2021- Consolidated Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Jun 2021 Beginning Portfolio Value 22,293,645 22,293,645 23,808,269 27,914,893 25,771,054 31,154,264 35,029,500 Contributions 28,325,739 3 2 15 28,325,715 2 1 Withdrawals -28,925,662 -97,969 -106,702 -113,476 -28,432,997 -110,991 -63,527 Income Earned 2,852,508 448,187 452,364 548,841 695,433 482,644 225,039 Gain/Loss 13,484,781 1,164,403 3,760,960 -2,579,219 4,795,058 3,503,582 2,839,998 Ending Portfolio Value 38,031,011 23,808,269 27,914,893 25,771,054 31,154,264 35,029,500 38,031,011 Total Return 10.56 7.25 17.73 -7.30 20.89 12.85 8.76 Principal 8.53 5.20 15.74 -9.15 18.08 11.09 8.09 Income 1.88 1.97 1.74 1.99 2.42 1.59 .62 2016 2017 2018 2019 2020 2021 0 20 40 60 80 100 Total Equity Total Fixed Income Total Real Assets Total Cash Eqv % 2016 2017 2018 2019 2020 2021 22M 24M 26M 28M 30M 32M 34M 36M 38M 40M $ U.S. BANK | 17 4 U.S. BANK | 18 Custom Benchmark Asset Class Benchmark Range Target Equities MSCI AC World Free Index 50%-70% 63% Fixed Income BBARC Global Aggregate Index 20%-40% 29% Real Estate S&P Global REIT TR USD 0%-15%5% Commodities S&P GSCI Commodity Index 0%-10%2% Cash FTSE 3-Mo US T-Bill Index 0%-10%1% CITY OF CUPERTINO PARS/CITY OF CUPERTINO OPEB AGG AGG460596 Period Ending: 06/30/2021 Selected Period Performance Year Inception to Date to Date Market Value 3 Months (6 Months) 1 Year 3 Years 5 Years 86 Months 07/01/2010 Total Portfolio Gross of Fees 38,031,011 6.34 8.76 29.93 10.95 11.10 7.98 8.16 Total Portfolio Net of Fees 38,031,011 6.29 8.66 29.70 10.74 10.88 7.75 City of Cupertino 5.93 8.26 27.88 11.45 10.67 7.35 8.73 Total Equity 25,562,332 7.70 11.89 44.47 16.56 16.65 12.31 13.93 MSCI ACWI (Net)7.39 12.30 39.26 14.57 14.61 10.12 11.60 U.S. Equity 18,663,164 8.10 14.28 43.28 16.22 16.80 13.48 S&P 500 Index (Gross)8.55 15.25 40.79 18.67 17.65 14.44 16.20 S&P MidCap 400 Index 3.64 17.59 53.24 13.17 14.29 11.83 14.62 S&P SmallCap 600 Index 4.51 23.56 67.40 12.20 15.82 12.56 15.45 Developed Markets Equity 4,619,781 7.49 6.38 51.22 20.94 18.38 10.83 MSCI EAFE Index (Net)5.17 8.83 32.35 8.27 10.28 5.22 7.91 Emerging Markets Equity 2,279,387 4.83 4.67 42.40 10.87 11.88 5.68 MSCI Emerging Markets Index (Net)5.05 7.45 40.90 11.27 13.03 7.10 6.23 Total Fixed Income 10,209,939 2.23 -.31 2.27 2.09 2.16 1.60 2.51 BBARC Global Aggregate Index 1.31 -3.21 2.63 4.23 2.34 1.98 2.79 BBARC US Aggregate Bond Index 1.83 -1.60 -.33 5.34 3.03 3.37 3.44 Total Real Assets 1,875,684 11.56 21.14 33.47 8.70 5.57 Real Estate 1,875,684 11.56 21.14 33.47 9.59 6.16 8.42 S&P Global REIT Index (Gross)10.43 17.55 36.11 8.40 5.77 7.26 10.42 S&P GSCI Index 15.72 31.40 57.37 -2.72 1.73 -8.75 -3.90 Total Cash Equivalents 383,056 .01 .01 .03 1.07 .96 .70 .47 ICE BofAML US 3-Month Treasury Bill Index .00 .02 .09 1.34 1.17 .85 .59 Pending Cash 0 .00 .00 .00 .00 .00 .00 .00 U.S. BANK | 19 PARS/CITY OF CUPERTINO OPEB AGG AGG460596 Period Ending: 06/30/2021 Asset Allocation Analysis Graph Market Value by Asset Class Market Value by Asset Class Pie Chart % of Market Value Mkt Val Total Equity $ 25,562,332 67.2% Total Fixed Income $ 10,209,939 26.8% Total Real Assets $ 1,875,684 4.9% Total Cash Eqv $ 383,056 1.0% Total $ 38,031,011 100.0% 1.0 4.9 26.8 67.2 $38.0M U.S. BANK | 20 PARS/CITY OF CUPERTINO 115P - OPEB Portfolio Holdings Account: 6746059600 Holdings Method: Direct Report Date: 06/30/2021 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2021 Symbol % of Port.Price Shares/ Units Portfolio Value Cost Basis Unrealized Gain/Loss Current Yield Projected Annual Income Total 100.0 38,007,681 12,621,669 25,386,012 1.53 581,101 Cash 1.01 383,049 383,049 .00 0.02 77 Cash Equivalents 1.01 383,049 383,049 .00 0.02 77 FIRST AM GOVT OB FD CL Z 31846V567 1.01 1.00 383,049 383,049 383,049 .00 0.02 77 Fixed Income 26.80 10,186,616 5,690,436 4,496,181 3.21 326,550 Investment Grade 20.84 7,921,570 3,464,742 4,456,829 2.56 202,669 Mutual Funds & ETFs 20.84 7,921,570 3,464,742 4,456,829 2.56 202,669 DoubleLine Total Return Bond Fund Class I DBLTX 5.94 10.54 214,057 2,256,166 1,414,816 841,349 3.22 72,565 Fidelity U.S. Bond Index Fund FXNAX 8.94 12.13 280,221 3,399,077 648,626 2,750,451 1.87 63,610 PGIM Total Return Bond Fund Class R6 PTRQX 5.96 14.69 154,277 2,266,328 1,401,299 865,028 2.93 66,493 High Yield 5.96 2,265,046 2,225,694 39,352 5.47 123,881 Mutual Funds & ETFs 5.96 2,265,046 2,225,694 39,352 5.47 123,881 American Century High Income Fund Clas…NPHIX 2.99 9.87 114,977 1,134,822 1,095,471 39,352 5.20 58,983 Artisan High Income Fund - Institutional S…APHFX 2.97 10.31 109,624 1,130,223 1,130,223 -.00 5.74 64,897 Equity 67.26 25,562,332 4,859,252 20,703,079 0.77 195,821 Large Cap U.S. Equity 28.11 10,685,781 1,927,264 8,758,517 0.96 102,523 Mutual Funds & ETFs 28.11 10,685,781 1,927,264 8,758,517 0.96 102,523 Columbia Dividend Income Fund Class I3 CDDYX 7.06 30.07 89,185 2,681,780 367,459 2,314,322 1.53 41,114 Harbor Capital Appreciation Fund - Retire…HNACX 7.04 114.38 23,383 2,674,602 486,854 2,187,748 0.00 0 T. Rowe Price Blue Chip Growth Fund, Inc.TRBCX 7.00 186.29 14,277 2,659,746 653,887 2,005,859 0.00 0 Vanguard Equity Income Fund Admiral Sh…VEIRX 7.02 90.86 29,382 2,669,653 419,064 2,250,588 2.30 61,408 Mid Cap U.S. Equity 16.02 6,088,195 1,114,759 4,973,436 1.04 63,451 Mutual Funds & ETFs 16.02 6,088,195 1,114,759 4,973,436 1.04 63,451 Fidelity Mid Cap Index Fund FSMDX 16.02 31.28 194,635 6,088,195 1,114,759 4,973,436 1.04 63,451 Small Cap U.S. Equity 4.97 1,889,189 238,720 1,650,468 0.87 16,383 Mutual Funds & ETFs 4.97 1,889,189 238,720 1,650,468 0.87 16,383 Fidelity Small Cap Index Fund FSSNX 4.97 29.29 64,499 1,889,189 238,720 1,650,468 0.87 16,383 Developed Markets Equity 12.15 4,619,781 469,173 4,150,608 0.29 13,465 Mutual Funds & ETFs 12.15 4,619,781 469,173 4,150,608 0.29 13,465 Vanguard International Growth Fund Admi…VWILX 12.15 170.52 27,092 4,619,781 469,173 4,150,608 0.29 13,465 U.S. BANK | 21 PARS/CITY OF CUPERTINO 115P - OPEB Portfolio Holdings Account: 6746059600 Holdings Method: Direct Report Date: 06/30/2021 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2021 Symbol % of Port.Price Shares/ Units Portfolio Value Cost Basis Unrealized Gain/Loss Current Yield Projected Annual Income Emerging Markets Equity 6.00 2,279,387 1,109,337 1,170,050 0.00 0 Mutual Funds & ETFs 6.00 2,279,387 1,109,337 1,170,050 0.00 0 Baron Emerging Markets Fd Inst Shs BEXIX 6.00 19.95 114,255 2,279,387 1,109,337 1,170,050 0.00 0 Real Assets 4.94 1,875,684 1,688,932 186,752 3.13 58,653 U.S. Listed Real Estate 4.94 1,875,684 1,688,932 186,752 3.13 58,653 Vanguard Real Estate ETF VNQ 4.94 101.79 18,427 1,875,684 1,688,932 186,752 3.13 58,653 U.S. BANK | 22 PARS/CITY OF CUPERTINO 115P- PENSION 6746059601 Period Ending: 06/30/2021 History of Asset Growth Graphs Ending Market Values Over Time Annual Portfolio Values Allocation Over Time May 2019- Jan 2020- Jan 2021- Consolidated Dec 2019 Dec 2020 Jun 2021 Beginning Portfolio Value 8,073,518 8,073,518 8,657,991 15,177,347 Contributions 6,000,004 1 4,000,002 2,000,000 Withdrawals -91,535 -20,472 -43,099 -27,964 Income Earned 448,995 155,938 193,205 99,851 Gain/Loss 4,062,925 449,006 2,369,247 1,244,672 Ending Portfolio Value 18,493,907 8,657,991 15,177,347 18,493,907 Total Return 15.45 7.51 17.09 8.44 Principal 13.33 5.52 15.31 7.79 Income 1.88 1.91 1.55 .61 2019 2020 2021 0 20 40 60 80 100 Total Equity Total Fixed Income Total Real Assets Total Cash Eqv % 2019 2020 2021 8M 10M 12M 14M 16M 18M 20M $ U.S. BANK | 23 5 U.S. BANK | 24 Custom Benchmark Asset Class Benchmark Range Target Equities MSCI AC World Free Index 50%-70% 63% Fixed Income BBARC Global Aggregate Index 20%-40% 29% Real Estate S&P Global REIT TR USD 0%-15%5% Commodities S&P GSCI Commodity Index 0%-10%2% Cash FTSE 3-Mo US T-Bill Index 0%-10%1% CITY OF CUPERTINO PARS/CITY OF CUPERTINO 115P- PENSION 6746059601 Period Ending: 06/30/2021 Selected Period Performance Year Inception to Date to Date Market Value 3 Months (6 Months) 1 Year 05/01/2019 Total Portfolio Gross of Fees 18,493,907 6.02 8.44 29.55 15.44 Total Portfolio Net of Fees 18,493,907 5.98 8.34 29.32 15.23 City of Cupertino 5.93 8.26 27.88 13.66 Total Equity 12,429,075 7.70 11.89 44.47 21.71 MSCI ACWI (Net)7.39 12.30 39.26 17.77 U.S. Equity 9,074,822 8.09 14.27 43.27 20.31 S&P 500 Index (Gross)8.55 15.25 40.79 21.22 S&P MidCap 400 Index 3.64 17.59 53.24 17.43 S&P SmallCap 600 Index 4.51 23.56 67.40 18.95 Developed Markets Equity 2,246,332 7.49 6.38 51.22 29.85 MSCI EAFE Index (Net)5.17 8.83 32.35 11.51 Emerging Markets Equity 1,107,921 4.83 4.67 42.40 16.60 MSCI Emerging Markets Index (Net)5.05 7.45 40.90 14.51 Total Fixed Income 4,968,018 2.21 -.33 2.25 1.34 BBARC Global Aggregate Index 1.31 -3.21 2.63 4.86 BBARC US Aggregate Bond Index 1.83 -1.60 -.33 5.23 Total Real Assets 912,649 11.65 21.24 33.59 10.00 Real Estate 912,649 11.65 21.24 33.59 10.00 S&P Global REIT Index (Gross)10.43 17.55 36.11 7.93 S&P GSCI Index 15.72 31.40 57.37 -.14 Total Cash Equivalents 184,165 .00 .01 .03 .75 ICE BofAML US 3-Month Treasury Bill Index .00 .02 .09 1.00 Pending Cash 0 .00 .00 .00 .00 U.S. BANK | 25 PARS/CITY OF CUPERTINO 115P- PENSION 6746059601 Period Ending: 06/30/2021 Asset Allocation Analysis Graph Market Value by Asset Class Market Value by Asset Class Pie Chart % of Market Value Mkt Val Total Equity $ 12,429,075 67.2% Total Fixed Income $ 4,968,018 26.9% Total Real Assets $ 912,649 4.9% Total Cash Eqv $ 184,165 1.0% Total $ 18,493,907 100.0% 1.0 4.9 26.9 67.2 $18.5M U.S. BANK | 26 PARS/CITY OF CUPERTINO 115P- PENSION Portfolio Holdings Account: 6746059601 Holdings Method: Direct Report Date: 06/30/2021 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2021 Symbol % of Port.Price Shares/ Units Portfolio Value Cost Basis Unrealized Gain/Loss Current Yield Projected Annual Income Total 100.0 18,482,633 8,695,501 9,787,131 1.53 282,679 Cash 1.00 184,148 184,148 .00 0.02 37 Cash Equivalents 1.00 184,148 184,148 .00 0.02 37 FIRST AM GOVT OB FD CL Z 31846V567 1.00 1.00 184,148 184,148 184,148 .00 0.02 37 Fixed Income 26.82 4,956,761 3,674,989 1,281,772 3.21 158,897 Investment Grade 20.86 3,854,616 2,600,971 1,253,645 2.56 98,618 Mutual Funds & ETFs 20.86 3,854,616 2,600,971 1,253,645 2.56 98,618 DoubleLine Total Return Bond Fund Class I DBLTX 5.94 10.54 104,158 1,097,823 795,107 302,717 3.22 35,310 Fidelity U.S. Bond Index Fund FXNAX 8.95 12.13 136,352 1,653,950 1,027,545 626,405 1.87 30,952 PGIM Total Return Bond Fund Class R6 PTRQX 5.97 14.69 75,074 1,102,842 778,319 324,524 2.93 32,357 High Yield 5.96 1,102,144 1,074,018 28,127 5.47 60,279 Mutual Funds & ETFs 5.96 1,102,144 1,074,018 28,127 5.47 60,279 American Century High Income Fund Clas…NPHIX 2.99 9.87 55,946 552,191 524,065 28,127 5.20 28,701 Artisan High Income Fund - Institutional S…APHFX 2.98 10.31 53,342 549,953 549,953 -.00 5.74 31,578 Equity 67.25 12,429,075 4,008,735 8,420,340 0.77 95,206 Large Cap U.S. Equity 28.11 5,194,628 1,649,426 3,545,202 0.96 49,828 Mutual Funds & ETFs 28.11 5,194,628 1,649,426 3,545,202 0.96 49,828 Columbia Dividend Income Fund Class I3 CDDYX 7.05 30.07 43,339 1,303,201 383,649 919,553 1.53 19,979 Harbor Capital Appreciation Fund - Retire…HNACX 7.03 114.38 11,365 1,299,892 391,625 908,267 0.00 0 T. Rowe Price Blue Chip Growth Fund, Inc.TRBCX 7.00 186.29 6,946 1,293,887 459,269 834,619 0.00 0 Vanguard Equity Income Fund Admiral Sh…VEIRX 7.02 90.86 14,282 1,297,647 414,883 882,764 2.30 29,849 Mid Cap U.S. Equity 16.02 2,961,126 894,742 2,066,384 1.04 30,861 Mutual Funds & ETFs 16.02 2,961,126 894,742 2,066,384 1.04 30,861 Fidelity Mid Cap Index Fund FSMDX 16.02 31.28 94,665 2,961,126 894,742 2,066,384 1.04 30,861 Small Cap U.S. Equity 4.97 919,068 209,065 710,002 0.87 7,970 Mutual Funds & ETFs 4.97 919,068 209,065 710,002 0.87 7,970 Fidelity Small Cap Index Fund FSSNX 4.97 29.29 31,378 919,068 209,065 710,002 0.87 7,970 Developed Markets Equity 12.15 2,246,332 556,230 1,690,102 0.29 6,547 Mutual Funds & ETFs 12.15 2,246,332 556,230 1,690,102 0.29 6,547 Vanguard International Growth Fund Admi…VWILX 12.15 170.52 13,173 2,246,332 556,230 1,690,102 0.29 6,547 U.S. BANK | 27 PARS/CITY OF CUPERTINO 115P- PENSION Portfolio Holdings Account: 6746059601 Holdings Method: Direct Report Date: 06/30/2021 © 2019 FactSet Research Systems Inc. All rights reserved. Past Performance is no guarantee of future results. Not A Deposit | Not FDIC Insured | May Lose Value | Not Bank Guaranteed | Not Insured By Any Federal Government Agency Material is based on data from sources deemed to be reliable, accuracy/completeness is not guaranteed. Holdings Date: 6/30/2021 Symbol % of Port.Price Shares/ Units Portfolio Value Cost Basis Unrealized Gain/Loss Current Yield Projected Annual Income Emerging Markets Equity 5.99 1,107,921 699,272 408,649 0.00 0 Mutual Funds & ETFs 5.99 1,107,921 699,272 408,649 0.00 0 Baron Emerging Markets Fd Inst Shs BEXIX 5.99 19.95 55,535 1,107,921 699,272 408,649 0.00 0 Real Assets 4.94 912,649 827,629 85,020 3.13 28,539 U.S. Listed Real Estate 4.94 912,649 827,629 85,020 3.13 28,539 Vanguard Real Estate ETF VNQ 4.94 101.79 8,966 912,649 827,629 85,020 3.13 28,539 U.S. BANK | 28 7 U.S. BANK | 29 ECONOMIC OUTLOOK [ 1 ] Important disclosures provided on page 4. This informational material is provided by U.S. Bank Asset Management Group who provides analysis and research to U.S. Bank and its affiliate U.S. Bancorp Investments. Contact your wealth professional for more details. Market analysis At a glance Higher oil prices did not deter investors last week, as the S&P 500 notched another all-time high. Manufacturing sentiment softened, but U.S. payrolls continued to rebound, a positive for the economic expansion. TERM OF THE WEEK Dot-com bubble – A rapid rise in U.S. technology stock equity valuations fueled by investments in internet-based companies in the late 1990s. The value of equity markets grew exponentially during this period, with the technology-dominated Nasdaq index rising from less than 1,000 to more than 5,000 between 1995 and 2000. The Nasdaq then fell 77 percent from March 10, 2000 to October 4, 2002. July 6, 2021 14.4% The S&P 500’s return through the first two quarters of 2021. “The global economy continues to recover from the COVID-19 pandemic. However, comparable year-over-year sales and earnings become more challenging in the second half, implying a slower earnings growth rate and, presumably, more subdued equity returns.” Terry Sandven, Portfolio Manager, Chief Equity Strategist, U.S. Bank usbank.com Investment products and services are: NOT A DEPOSIT • NOT FDIC INSURED • MAY LOSE VALUE • NOT BANK GUARANTEED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY U.S. BANK | 30 [ 2 ] Important disclosures provided on page 4. Global economy Quick take: U.S. job growth is strong, though there is significant room for improvement when compared to pre-pandemic employment. Meanwhile, surveys of U.S. businesses point to a moderation in activity from a very high level. In China, surveys of businesses point to slowing growth. Our view: Economic growth is positive, helped by reopening, stimulus and vaccine progress. Coronavirus case growth is falling globally. Overall, the global economy is in expansion. The U.S. added 850,000 jobs in June, beating estimates and exhibiting the highest growth since August 2020. The substantial gain indicates impediments to job gains are decreasing. However, future improvement is essential: The economy is still 6.8 million jobs short of pre-pandemic levels, and more than 14 million Americans are still receiving unemployment assistance. Another concern is supply constraints — also evident in business surveys noted below — which are potentially impacting hours worked and dampening growth in manufacturing. Back-to-school season will be a key indicator of the type of labor market we face. Surveys of U.S. businesses point to decelerating activity from high levels. Part of this is the inevitable normalization after the economy bounced back during reopening. Another factor is supply chain constraints that continue to push prices higher for U.S. manufacturers. These constraints are likely temporary but may take time to smooth over. China’s firms are experiencing decelerating activity, according to surveys of both state-owned and private sector Chinese companies. China’s regulatory push and efforts to control credit growth may cause further deceleration, as China resumes its gradual pre-pandemic path of normalization toward a lower growth rate compared to the previous decade. Equity markets Quick take: Policy, pandemic and economic reopening progress bode well for domestic equities in the second half of 2021. Our view: We maintain our “glass half-full” orientation for U.S. equities. Rising revenue and earnings, generally restrained inflation, relatively low interest rates, ongoing monetary and fiscal stimulus policies and COVID-19 medical progress support our outlook. First-half performance was superb and broad-based. The S&P 500 ended June 30 up 14.4 percent for the year, above the long- term annual average of roughly 10.5 percent. All 11 S&P 500 sectors have delivered year-to-date gains, with eight returning 10 percent or more. Both secular-growing and cyclical-oriented sectors are favorably positioned. Cyclically-oriented sectors (those that tend to move with the overall economy) outperformed in the first six months of 2021, led by Energy, Financials, Real Estate, Industrials, Materials and Communication Services. Ongoing monetary and fiscal stimulus in concert with vaccination progress continues to support reopening, with cyclical sectors well- positioned to benefit in this investment environment. Meanwhile, the positive trends in digitization, artificial intelligence, machine learning and e-commerce bode well for Information Technology, the best-performing sector in June, up 6.8 percent. Broad-market valuations remain elevated, yet short of dot- com era extremes. The global economy continues to recover from the COVID-19 pandemic. However, comparable year-over- year sales and earnings become more challenging in the second half, implying a slower earnings growth rate and, presumably, more subdued equity returns. The S&P 500 currently trades at roughly 23 times consensus earnings for 2021 of approximately $190, according to Bloomberg, FactSet and S&P Global. Inflation and tax changes are among potential disrupters to our second half outlook. During early-2021 earnings reports, an increasing number of companies signaled higher labor, freight and commodity prices spurred by pent-up demand due to COVID-19, along with port congestion and a shortage of semiconductor chips, ships, cargo containers and workers. While not yet at alarming levels, inflationary pressures are potentially problematic for equity prices. When inflation proves to be persistent, we have historically seen investors demand higher interest rates to compensate for higher costs. Additionally, potential corporate tax policy changes may have disparate impacts on companies and industries.U.S. BANK | 31 [ 3 ] Important disclosures provided on page 4. Bond markets Quick take: High- and low-quality bonds alike delivered favorable returns last week, benefitting from lower Treasury yields and investor enthusiasm about corporate and municipal credit health. Higher growth and inflation expectations reflected in rising oil prices and other risk assets make the recent weakness in Treasury yields unusual. Our view: A variety of lower-quality bonds offer the opportunity to increase current income, while the recovering economy and strong credit fundamentals should support bond prices. High yield corporate and municipal bonds, bank loans and mortgage loans not backed by the government offer meaningful yields, even though they are low by historical standards. Owning some high- quality bonds remains necessary to diversify portfolios, although we expect low yields to limit forward return potential. Despite strong employment data released Friday, lower long-term growth expectations contributed to a fall in Treasury yields. Inflation-adjusted yields fell last week in tandem with the market pricing in a slower expected pace of Federal Reserve (Fed) rate hikes. Although the payroll gains were stronger than expected, it will take many months of significant gains before the economy has substantially improved and the Fed can justify tighter policy. Recent Treasury yield weakness is unusual, because long-term yields tend to rise with higher oil prices and dollar strength. The recent fall in Treasury yields may have been caused in part by demand from investors looking to hedge equity risk and foreign buyers who can increase yield versus their local government bonds. We expect strong growth, inflation and Treasury issuance to support higher yields. We see value in increasing current income through lower- quality bonds. Low yields relative to Treasuries across the quality spectrum in corporate and municipal bonds limits the potential for price gains, but investors allocating to riskier high yield credits can still benefit from increasing current income. High yield corporate and municipal bonds, bank loans and mortgage loans not backed by the government pay attractive yields and present favorable credit quality. Real assets Quick take: Commodities outperformed the broader market last week, but commodity producers, like energy and mining companies, lagged. Defensive sectors remain funding sources for better growth opportunities. Our view: We believe our positive view on economic growth and inflation should reward tangible goods producers. That view was challenged last week, however. Real estate is likely a tale of two segments ― cyclical properties recovering as we reopen at the expense of secular growth properties, such as cell towers and data centers. We continue to remain neutral on real estate. Real Estate underperformed by 1 percent last week, even as interest rates declined. Losses were broad-based across sectors, with hotels and office properties the largest losers and retail as the top performer. Forward prospects for real estate remain mixed; as reopening should benefit prior laggards, such as hotels and retail properties, but future demand appears unclear for many sectors. Domestic crude oil prices rose 1.5 percent last week to new cycle highs, with domestic inventories again declining more than expected. Additionally, the Organization of Petroleum Exporting Countries (OPEC) and its oil-producing allies failed to reach a production agreement at its latest meeting, meaning current quotas likely remain in place, supporting prices in the short term. Gold and silver rose marginally last week as interest rates net of inflation (real interest rates) continued to trade lower. We believe the most likely move in gold is lower as nominal, and real interest rates should move higher, reducing speculative demand for precious metals. U.S. BANK | 32 [ 4 ] ©2021 U.S. Bank. This information represents the opinion of U.S. Bank Wealth Management. The views are subject to change at any time based on market or other conditions and are current as of the date indicated on the materials. This is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. U.S. Bank is not affiliated or associated with any organizations mentioned. Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio. Diversification and asset allocation do not guarantee returns or protect against losses. Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for direct investment. The S&P 500 Index consists of 500 widely traded stocks that are considered to represent the performance of the U.S. stock market in general. The NASDAQ Composite Index is a market-capitalization weighted average of roughly 5,000 stocks that are electronically traded in the NASDAQ market. Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investing in fixed income securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investment in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Investments in high yield bonds offer the potential for high current income and attractive total return, but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer's ability to make principal and interest payments. The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issues of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes, but may be subject to the federal alternative minimum tax (AMT), state and local taxes. There are special risks associated with investments in real assets such as commodities and real estate securities. For commodities, risks may include market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults). U.S. BANK | 33 Important disclosures, definitions of terms and index descriptions If you have questions regarding this information or wish to receive definitions of any additional terms or indexes used in this report, please contact your Portfolio Manager. U.S. BANK | 34 Important disclosures (page 1 of 4) The information provided here is not intended to replace your account statement. Your account statement is the official record of your account. Equal Housing Lender. Credit products are offered by U.S. Bank National Association and subject to normal credit approval. Deposit products offered by U.S. Bank National Association. Member FDIC. For use in one-on-one meetings/presentations. This information represents the opinion of U.S. Bank. The views are subject to change at any time based on market or other conditions and are current as of the date indicated on the materials. This is not intended to be a forecast of future events or guarantee of future results. The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation. Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for direct investment, nor are they subject to fees and expenses. Performance reports included may show performance results gross of fees and expenses. If fees and expenses were included, the performance would be lower. If you have any questions, please speak with your relationship manager for additional information. Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio. Diversification and asset allocation do not guarantee returns or protect against losses. U.S. BANK | 35 Important disclosures (page 2 of 4) Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. Stocks of small-capitalization companies involve substantial risk. These stocks historically have experienced greater price volatility than stocks of larger companies and may be expected to do so in the future. Stocks of mid-capitalization companies can be expected to be slightly less volatile than those of small-capitalization companies, but still involve substantial risk and may be subjectto more abrupt or erratic movements than large-capitalization companies. The value of large-capitalization stocks will rise and fall in response to the activities of the company that issued them, general market conditions and/or economic conditions. Growth investments focus on stocks of companies whose earnings/profitability are accelerating in the short term or have grown consistently over the long term. Such investments may provide minimal dividends, which could otherwise cushion stock prices in a market decline. Stock value may rise and fall significantly based, in part, on investors' perceptions of the company, rather than on fundamental analysis of the stocks. Investors should carefully consider the additional risks involved in growth investments. Value investments focus on stocks of income-producing companies whose price is low relative to one or more valuation factors, such as earnings or book value. Such investments are subject to risks that their intrinsic values may never be realized by the market, or such stocks may turn out not to have been undervalued. Investors should carefully consider the additional risks involved in value investments. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults). There are special risks associated with an investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in fixed income securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investment in fixed income securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Investments in high yield bonds offer the potential for high current income and attractive total return, but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer's ability to make principal and interest payments. U.S. BANK | 36 Important disclosures (page 3 of 4) The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issues of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes, but may be subject to the federal alternative minimum tax (AMT), state and local taxes. Treasury Inflation-Protected Securities (TIPS)offer a lower return compared to other similar investments and the principal value may increase or decrease with the rate of inflation. Gains in principal are taxable in that year, even though not paid out until maturity. Non-financial specialty assets, such as real estate, farm, ranch and timber properties, oil, gas and mineral interests or closely-held business interests are complex and involve unique risks specific to each asset type, including the total loss of value. Special risk considerations may include natural events or disasters, complex tax considerations and lack of liquidity. Specialty assets may not be suitable for all investors. Alternative investments very often use speculative investment and trading strategies. There is no guarantee that the investment program will be successful. Alternative investments are designed only for investors who are able to tolerate the full loss of an investment. These products are not suitable for every investor even if the investor does meet the financial requirements. It is important to consult with your investment professional to determine how these investments might fit your asset allocation, risk profile and tax situation. Hedge funds are speculative and involve a high degree of risk. An investment in a hedge fund involves a substantially more complicated set of risk factors than traditional investments in stocks or bonds, including the risks of using derivatives, leverage and short sales, which can magnify potential losses or gains. Restrictions exist on the ability to redeem or transfer interests in a fund. Exchange-traded funds (ETFs)are baskets of securities that are traded on an exchange like individual stocks at negotiated prices and are not individually redeemable. ETFs are designed to generally track a market index and shares may trade at a premium or a discount to the net asset value of the underlying securities. Private equity investments provide investors and funds the potential to invest directly into private companies or participate in buyouts of public companies that result in a delisting of the public equity. Investors considering an investment in private equity must be fully aware that these investments are illiquid by nature, typically represent a long-term binding commitment and are not readily marketable. The valuation procedures for these holdings are often subjective in nature. Private debt investments may be either direct or indirect and are subject to significant risks, including the possibility of default, limited liquidity and the infrequent availability of independent credit ratings for private companies. Structured products are subject to market risk and/or principal loss if sold prior to maturity or if the issuer defaults on the security. Investors should request and review copies of Structured Products Pricing Supplements and Prospectuses prior to approving or directing an investment in these securities. U.S. BANK | 37 Important disclosures (page 4 of 4) Mutual fund investing involves risk and principal loss is possible. Investing in certain funds involves special risks, such as those related to investments in small- and mid-capitalization stocks, foreign, debt and high-yield securities and funds that focus their investments in a particular industry. Please refer to the fund prospectus for additional details pertaining to these risks. An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although these funds seek to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in these funds. Holdings of First American Funds: U.S. Bancorp Asset Management, Inc. is a registered investment advisor and subsidiary of U.S. Bank National Association. U.S. Bank National Association is a separate entity and wholly owned subsidiary of U.S. Bancorp. U.S. Bank is not responsible for and does not guarantee the products, performance or services of U.S. Bancorp Asset Management. U.S. Bancorp Asset Management, Inc. serves as an investment advisor to First American Funds. Holdings of Nuveen mutual funds: Firstar Capital Corporation (Firstar Capital), an affiliate of U.S. Bancorp, holds a less-than-10 percent ownership interest in Windy City Investments Holdings, LLC which was formerly the parent of Windy City Investment Inc. and the indirect parent of Nuveen Fund Advisors, LLC which is the investment advisor to the Nuveen Mutual Funds. On October 1, 2014, Windy City Investments, Inc. was sold to Teachers Insurance and Annuity Association of America. As a result of the sale, U.S. Bancorp no longer has an indirect ownership interest in Nuveen Fund Advisors, LLC. Depending on the outcome of certain factors, Firstar Capital might in the future receive an earn-out payment in respect of its interest in Windy City Investment Holdings, LLC, under the terms of the sale. Non-proprietary mutual funds: U.S. Bank may enter into agreements with other non-proprietary mutual funds or their service providers whereby U.S. Bank provides shareholder services and/or sub-transfer agency, custodial and other administrative support services and receives compensation for these services. Compensation received by U.S. Bank directly or indirectly from mutual funds does not increase fund fees and expenses beyond what is disclosed in the fund prospectuses. For more information, review the fund prospectus. U.S. BANK | 38 Definitions of report and statement terms (page 1 of 5) Accredited Investor: Private placement securities generally require that investors be accredited due to the additional risks and speculative nature of the securities. For natural persons, the criteria is met by a net worth of more than $1 million (excluding primary residence) or an income of more than $200,000 individually ($300,000 jointly) for the two most recent years and a reasonable expectation for the same in the current year. For other entities, such as corporations, partnerships, trusts and employee benefit plans, the criteria is met with at least $5 million in assets. See full definition in Rule 501 of Regulation D under the Securities Act of 1933. Alpha: A measure of risk-adjusted performance. A statistic measuring that portion of a stock, fund or composite's total return attributable to specific or non-market risk. Alpha measures non-market return and indicates how much value has been added or lost. A positive Alpha indicates the fund or composite has performed better than its Beta would predict (i.e., the manager has added value above the benchmark). A negative Alpha indicates a fund or composite has underperformed given the composite's Beta. Alternative Investments: As used by U.S. Bank, an investment considered to be outside of the traditional asset classes of long-only stocks, bonds and cash. Examples of alternative investments include hedge funds, private equity, options and financial derivatives. Annualized Excess Return: Shows the difference between the annualized linked returns of a portfolio and the model benchmark. Performance reports provided annualize only periods greater than one year. Annualized or Annual Rate of Return: Represents the average annual change in the value of an investment over the periods indicated. Batting Average: Shows how consistently the portfolio return met or beat the market. Beta: A measure of your portfolio's risk relative to a benchmark. A portfolio with a beta of 1.5, for example, would be expected to return roughly 1.5 times the benchmark's return. A high Beta indicates a riskier portfolio. Bond Credit Rating: A grade given to bonds by a private independent rating service that indicates their credit quality. Ratings are the opinion of Standard & Poor's or other agencies as noted and not the opinion of U.S. Bank. Consumer Price Index (CPI): A measure of the average change in prices over time in a market basket of goods and services and is one of the most frequently used statistics for identifying periods of inflation and deflation. Convexity to Stated Maturity: A measure of the curvature in the relationship between bond prices and bond yields that demonstrates how the duration of a bond changes as the interest rate changes. Convexity is used as a risk-management tool and helps to measure and manage the amount of market risk to which a portfolio of bonds is exposed. This version of convexity measures the rate change in duration of a bond as the yield to (stated) maturity changes. U.S. BANK | 39 Definitions of report and statement terms (page 2 of 5) Cost basis/book value: The original value of an asset at the time it was acquired. This is normally the purchase price or appraised value at the time of acquisition. This data is for information purposes only. Cumulative Excess Return: Shows the difference between the annualized linked returns of a portfolio and the model benchmark. Performance reports provided use unannualized returns in periods up to one year, but annualized returns for periods exceeding one year. Downside Capture: The downside capture ratio reflects how a portfolio compares to a benchmark during periods when the benchmark is down. A downside capture ratio of 0.80 (or 80 percent) means the portfolio has historically declined only 80 percent as much as the benchmark during down markets. Downside Deviation: The deviation of returns that fall below a minimum acceptable return (MAR). Although the numerator includes only returns below the MAR, the denominator includes all returns in the performance period. This risk statistic is similar to the downside standard deviation except the sum is restricted to returns less than the MAR instead of the mean. Downside Standard Deviation: The deviation of returns that fall below the mean return. Although the numerator includes only returns below the mean, the denominator includes all returns in the performance period. This risk statistic is similar to the downside deviation except the sum is restricted to returns less than the mean instead of the minimum acceptable return (MAR). Effective Maturity: The date of a bond’s most likely redemption, given current market conditions, taking into consideration the optional and mandatory calls, the optional, mandatory and recurring puts, and the stated maturity. Estimated annual income: The amount of income a particular asset is anticipated to earn over the period indicted. The shares multiplied by the annual income rate. Gain/loss calculation: If an asset was sold, the difference between the proceeds received from the sale compared to the cost of acquiring the asset. If the value of the proceeds is the higher of the two numbers, then a gain was realized. If the value of the proceeds is the lower of the two numbers, a loss was incurred. This data is for information purposes only. Information Ratio: The information ratio compares the average excess return of the portfolio over its associated benchmark divided by the tracking error. M-Squared: The hypothetical return of the portfolio after its risk has been adjusted to match a benchmark. U.S. BANK | 40 Definitions of report and statement terms (page 3 of 5) Market Value: Publicly traded assets are valued using market quotations or valuation methods from financial industry services believed by us to be reliable. Assets, that are not publicly traded, may be reflected at values from other external sources or special valuations prepared by us. Assets for which a current value is not available may be reflected as not valued, at par value, or at a nominal value. Values shown do not necessarily reflect prices at which assets could have been bought or sold. Values are updated based on internal policy and may be updated less frequently than statement generation. Market Value Over Time: Many factors can impact the portfolio value over time, such as contributions to the account, distributions from the account, the investment of dividends and interest, the deduction of fees and expenses, and market performance. Modified Duration to Effective Maturity: A formula that expresses the measurable change in the value of a security in response to a change in interest rates. This version of Modified Duration takes into consideration a “horizon date/price” that is, given current conditions, the most likely redemption date/price using the set of calls/puts, as well as stated maturity. Modified Duration to Stated Maturity: A formula that expresses the measurable change in the value of a security in response to a change in interest rates. This version of Modified Duration uses stated maturity as the “horizon date/price” and ignores any potential call/put/pre- refunding, even if they are mandatory. Price/Earnings Ratio (P/E): The P/E ratio of a company is calculated by dividing the price of the company’s stock by its trailing 12-month earnings per share. A high P/E usually indicates that the market is paying a premium for current earnings because it believes in the firm’s ability to grow its earnings. A low P/E indicates the market has less confidence that the company’s earnings will increase. Within a portfolio, P/E is the weighted average of the price/earnings ratios of the stocks in the portfolio. Qualified Purchaser: Some private placement securities require that investors be Qualified Purchasers in addition to being Accredited Investors. For natural persons, the criteria is generally met when the client (individually or jointly) owns at least $5 million in investments. For other entities, such as corporations, partnerships, trusts and employee benefit plans, the criteria is met with at least $25 million in investments though there are other eligibility tests that may apply. See full definition in Section 2(a)(51) of the Investment Company Act of 1940. R-Squared: Measures the portion of the risk in your portfolio that can be attributed to the risk in the benchmark. Realized and Unrealized Gains/Losses: Are calculated for individual tax lots based on the records we have available. Some data may be incomplete or differ from what you are required to report on your tax return. Some data used in these calculations may have been obtained from outside sources and cannot be verified by U.S. Bank. The data is intended for informational purposes only and should not be used for tax reporting purposes. Please consult with your tax or legal advisor for questions concerning your personal tax or financial situation. U.S. BANK | 41 Definitions of report and statement terms (page 4 of 5) Residual Risk: The amount of risk specific to the assets in a portfolio distinct from the market, represented by a benchmark. Return: An indication of the past performance of your portfolio. Sharpe Ratio: Measures of risk-adjusted return that calculates the return per unit of risk, where risk is the Standard Deviation of your portfolio. A high Sharpe ratio indicates that the portfolio is benefiting from taking risk. Sortino Ratio: Intended to differentiate between good and bad volatility. Similar to the Sharpe ratio, except it uses downside deviation for the denominator instead of standard deviation, the use of which doesn't discriminate between up and down volatility. Spread: The difference between the yields of two bonds with differing credit ratings (most often, a corporate bond with a certain amount of risk is compared to a standard traditionally lower risk Treasury bond). The bond spread will show the additional yield that could be earned from a bond which has a higher risk. Standard Deviation: A measure of the volatility and risk of your portfolio. A low standard deviation indicates a portfolio with less volatile returns and therefore less inherent risk. Time-weighted Return: The method used to calculate performance. Time-weighted return calculates period by period returns that negates the effect of external cash flows. Returns for periods of greater than one year are reported as an annualized (annual) rate of return. Returns of less than one year are reported on a cumulative return basis. Cumulative return is the aggregate amount an investment has gained or lost over time, independent of the period involved. Tracking Error: A divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the context of a hedge or mutual fund that did not work as effectively as intended, creating an unexpected profit or loss instead. Traditional Investments: As used by U.S. Bank, an investment made in equity, fixed income or cash securities, mutual funds or exchange-traded funds (ETFs) where the investor buys at a price with the goal that the investment will go up in value. Top 10 Holdings: The 10 assets with the highest market values in the account. Total Portfolio Gross of Fees: Represents all assets included in the calculation of the portfolio, before the deduction of trust and asset management fees, and is inclusive of all applicable third-party security fees and expenses. Details of those fees and expenses are provided in the security’s prospectus or offering documents. U.S. BANK | 42 Definitions of report and statement terms (page 5 of 5) Total Return: The rate of return that includes the realized and unrealized gains and losses plus income for the measurement period. Treynor Ratio: Measures the performance of a sector relative to risk by dividing the return of the sector in excess of the risk-free return by the sector's Beta. The higher the Treynor ratio, the better the return relative to risk. Turnover Percent: Indicates how frequently asset are bought and sold within a portfolio. Turnover Ratio: The percentage of a mutual fund’s or other investment vehicle's holdings that have been "turned over" or replaced with other holdings in a given year. Unrealized gain (loss)— The difference between the current market value (at the end of the statement period) and the cost to acquire the asset. If the current market value is higher than the cost, a gain is reflected. If the current market value is lower than the cost paid, a loss is reflected. This data is for information purposes only. Upside Capture: The upside capture ratio reflects how a portfolio compares to the selected model benchmark during periods when the benchmark is up. An upside capture ratio of 1.15 (or 115 percent) means the portfolio has historically beat the benchmark by 15 percent during up markets. Yield: The annual rate of return on an investment, expressed as a percentage. For bonds, it is the coupon rate divided by the market price. For stocks, it is the annual dividend divided by the market price. U.S. BANK | 43 Frequently used indexes (page 1 of 5) Bloomberg Barclays 1-3 year U.S. Treasury Index: Measures the performance of the U.S. government bond market and includes public obligations of the U.S. Treasury with a maturity between one year and up to (but not including) three years. Bloomberg Barclays 1-5 year U.S. Treasury Index: Includes all publicly issued, U.S. Treasury securities that have a remaining maturity of greater than or equal to one year and less than five years, are rated investment grade and have $250 million or moreof outstanding face value. The Bloomberg Barclays 1-5 year Municipal Index: Measures the performance of municipal bonds with time to maturity of more than one year and less than five years. Bloomberg Barclays 7-year Municipal Index: Includes municipal bonds with a minimum credit rating of Baa that have been issued as part of a transaction of at least $50 million, have a maturity value of at least $5 million and a maturity range of four to six years. Bloomberg Barclays Global Aggregate Index ex-U.S. Index: Measure of global investment grade debt from 24 local currency markets. This multi-currency benchmark includes Treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. Bloomberg Barclays Global Treasury ex-U.S. Index: Includes government bonds issued by investment-grade counties outside the United States, in local currencies, that have a remaining maturity of one year or more and are rated investment grade. Bloomberg Barclays High Yield Municipal Bond Index: An unmanaged index made up of bonds that are non-investment grade, unrated or below Ba1 bonds. Bloomberg Barclays Intermediate Aggregate Index: Consists of one- to 10-year governments, one- to 10-year corporate bonds, all mortgages and all asset-backed securities within the Aggregate Index. Bloomberg Barclays Mortgage-Backed Securities Index: Covers agency mortgage-backed pass-through securities (both fixed- rate and hybrid adjustable-rate mortgages) issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). Bloomberg Barclays U.S. Aggregate Bond Index: Measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. Bloomberg Barclays U.S. Corporate Bond Index: Measures the investment grade, fixed-rate, taxable corporate bond market and includes U.S. dollar-denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers. U.S. BANK | 44 Frequently used indexes (page 2 of 5) Bloomberg Barclays U.S. Corporate High Yield Bond Index: Measures the U.S. dollar denominated, high yield, fixed-rate corporate bond market. Bloomberg Barclays U.S. Municipal Bond Index: Measures the investment grade, U.S. dollar-denominated, fixed tax-exempt bond market. The index includes state and local general obligation, revenue, insured and pre-refunded bonds. Bloomberg Barclays U.S. Treasury Index: Measures U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) Index: An unmanaged index includes all publicly issued, U.S. TIPS that have at least one year remaining to maturity, are rated investment grade, and have $250 million or more of outstanding face value. Cambridge U.S. Private Equity Index: This index is based on returns data compiled for U.S. private equity funds (including buyout, growth equity and mezzanine funds) that represent the majority of institutional capital raised by private equity partnerships formed since 1986. Returns may be delayed by up to six months. Quarterly performance is prorated based on the cube root for the months of the quarter. Citigroup 3-Month Treasury Bills: An unmanaged index and represents monthly return equivalents of yield averages of the last three-month Treasury Bill issues. Citigroup 6-Month Treasury Bills: An unmanaged index and represents monthly return equivalents of yield averages of the last six- month Treasury Bill issues. Credit Suisse Leverage Loan Index: Represents tradable, senior-secured, U.S. dollar-denominated non-investment grade loans. Dow Jones Industrial Average (DJIA): The price-weighted average of 30 significant U.S. stocks traded on the New York Stock Exchange and NASDAQ. The DJIA is the oldest and single most watched index in the world. Dow Jones Select REIT Index: Measures the performance of publicly traded REITs and REIT-like securities in the U.S. and is a proxy for direct real estate investment, in part by excluding companies whose performance may be driven by factors other than the value of real estate. HFRI Indices: The Hedge Fund Research, Inc. (HFRI) indexes are a series of benchmarks designed to reflect hedge fund industry performance by constructing composites of constituent funds, as reported by the hedge fund managers listed within the HFR Database. U.S. BANK | 45 Frequently used indexes (page 3 of 5) HFRI Equity Hedge Total Index: Uses the HFR (Hedge Fund Research) database and consists only of equity hedge funds with a minimum of $50 million assets under management or a 12-month track record and that reported assets in U.S. dollars. HFRI Relative Value Fixed Income Corporate Index: Uses the HFR (Hedge Fund Research) database and consists of only relative value fixed income corporate funds with a minimum of $50 million assets under management or a 12-month track record and that reported assets in U.S. dollars. ICE BofAML 1-3 Year Corporate Index: Tracks U.S. dollar-denominated investment grade public debt issued in the U.S. bond market with maturities of one to three years. ICE BofAML 1-5 Year Corporate and Government Index: Tracks the performance of short-term U.S. investment grade government and corporate securities with maturities between one and five years. ICE BofAML U.S. 7-10 Year Index: Tracks the performance of U.S. dollar denominated investment grade rated corporate debt publicly issued in the U.S. domestic market and includes all securities with a remaining term to maturity of greater than or equal to seven years and less than 10 years. ICE BofAML Global Broad Market Index: Tracks the performance of investment grade public debt issued in the major domestic and Eurobond markets, including global bonds. ICE BofAML U.S. High Yield Master II Index: Commonly used benchmark index for high yield corporate bonds and measures the broad high yield market. J.P. Morgan Emerging Markets Bond Index Global (EMBI Global): Tracks total returns for traded external debt instruments in the emerging markets. London Interbank Offered Rate (LIBOR)3-months: The interest rate offered by a specific group of London banks for U.S. dollar deposits with a three-month maturity. London Interbank Offered Rate (LIBOR) 9-months:The interest rate offered by a specific group of London banks for U.S. dollar deposits with a nine-month maturity. MSCI All Country World Index (ACWI): Designed to measure the equity market performance of developed and emerging markets. U.S. BANK | 46 Frequently used indexes (page 4 of 5) Russell 2000 Value Index: Measures companies in the Russell 2000 Index having lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index includes the 2,000 firms from the Russell 3000 Index with the smallest market capitalizations. Russell 3000 Index: Measures the performance of the 3,000 largest U.S. securities based on total market capitalization. Russell Midcap Index: Measures the 800 smallest companies in the Russell 3000 Index. Russell Midcap Growth Index: Measures companies in the Russell Midcap Index having higher price-to-book ratios and higher forecasted growth values. Russell Midcap Value Index: Measures companies in the Russell Midcap Index having lower price-to-book ratios and lower forecasted growth values. MSCI All County World ex-U.S. Index (ACWI, excluding United States): Tracks the performance of stocks representing developed and emerging markets around the world that collectively comprise most foreign stock markets. U.S. stocks are excluded from the index. MSCI EAFE Index: Includes approximately 1,000 companies representing the stock markets of 21 countries in Europe, Australasia and the Far East. MSCI Emerging Markets (EM) Index: Designed to measure equity market performance in global emerging markets. MSCI World Index: Tracks equity market performance of developed markets through individual country indices. NAREIT Index: Includes REITs (Real Estate Investment Trusts) listed on the New York Stock Exchange, NASDAQ and American Stock Exchange. NASDAQ Composite Index: A market capitalization-weighted average of roughly 5,000 stocks that are electronically traded in the NASDAQ market. NCREIF Property Index (NPI): Measures the investment performance of a very large pool of individual commercial real estate properties acquired in the private market for investment purposes only. Russell 1000 Index: Measures the performance of the 1,000 largest companies in the Russell 3000 Index and is representative of the U.S. large capitalization securities market. U.S. BANK | 47 Frequently used indexes (page 5 of 5) Russell 1000 Growth Index: Measures companies in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values. It includes the largest 1,000 firms in the Russell 3000 Index. Russell 1000 Value Index: Measures companies in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values. It includes the largest 1,000 firms in the Russell 3000 Index. Russell 2000 Index: Measures the performance of the 2,000 smallest companies in the Russell 3000 Index and is representative of the U.S. small capitalization securities market. Russell 2000 Growth Index: Measures companies in the Russell 2000 Index having higher price-to-book ratios and higher forecasted growth values. and is representative of U.S. securities exhibiting growth characteristics. The Russell 2000 Index includes the 2,000 firms from the Russell 3000 Index with the smallest market capitalizations. S&P 500 Index: Consists of 500 widely traded stocks that are considered to represent the performance of the U.S. stock market. S&P Global ex-U.S. Property Index: Measures the investable universe of publicly traded property companies domiciled in developed and emerging markets excluding the United States. The companies included are engaged in real estate related activities such as property ownership, management, development, rental and investment. S&P GSCI: A composite index of commodity sector returns, representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the spectrum of commodities. S&P/Case-Shiller Home Price Indexes: A group of indexes that track changes in home prices throughout the United States. Case- Shiller produces indexes representing certain metropolitan statistical areas (MSA) as well as a national index. Swiss Re Global Cat Bond Total Return Index: Tracks the aggregate performance of all U.S. dollar-denominated euros and Japanese yen-denominated catastrophe bonds, capturing all ratings, perils and triggers. U.S. Dollar Index: Indicates the general international value of the U.S. dollar by averaging the exchange rates between the U.S. dollar and six major world currencies. Wilshire 5000 Index: Composed of more than 6,700 publicly-traded U.S. companies and is designed to track the overall performance of the American stock markets. U.S. BANK | 48 City of Cupertino ▎49 Administrative Review 1 Future contributions 2 Future disbursement requests/options 3 Agency’s future actuarial valuation for GASB 45/75 compliance Next valuation measurement date: (06/22) 4 GASB 75 updates –effective for fiscal years beginning after June 15, 2017 5 Client funding policy 6 GASB 74/75 Compliance 7 Employer Portal –Now Available City of Cupertino ▎50 Public Agency Retirement Services (PARS) is pleased to announce the launch of our new employer portal for the IRC Section 115 Trust. Features include: To access this powerful new tool for account management, please provide: •Opt-In Addendum •Agency Personnel Designation Form Employer PORTAL •Latest monthly account balance •Transaction history •Downloadable prior statements •Investment Performance employer.pars.org City of Cupertino ▎51 •To assist our public agency clients with GASB 74/75,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 CliftonLarsonAllen (CLA)that is intended to be compliant with GASB 74/75 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 OPEB plan (agent OPEB plan)as defined under GASB GASB 74/75 Reporting