CITY OF OAKLAND · Diversified Income Global credit combining corporate and emerging markets debt...

of 1

CITY OF OAKLAND Retirement Systems 150 Frank H. Ogawa Plaza, 3rd Floor Oakland, California 94612

All persons wishing to address the Board must complete a speaker's card, stating their name and the agenda item (including "Open Forum") they wish to address. The Board may take action on items not on the agenda only if findings pursuant to the Sunshine Ordinance and Brown Act are made that the matter is urgent or an emergency. Presentations are limited to three minutes.

Oakland Municipal Employees’ Retirement Board meetings are held in wheelchair accessible facilities. Contact Retirement Systems, 150 Frank Ogawa Plaza, Suite 3332 or call (510) 238-7295 for additional information.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - AGENDA

SPECIAL INVESTMENT COMMITTEE MEETING of the OAKLAND MUNICIPAL EMPLOYEES’ RETIREMENT SYSTEM

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - MEMBERSHIP

Carl E. Gilmore, President William C. Russell, Vice President

Joseph T. Yew, Member Courtney Ruby, Member

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DATE: Thursday, October 8, 2009 TIME: 12:00 pm PLACE: 150 Frank H. Ogawa Plaza, 3rd Floor Conference Room Oakland, California 94612

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ORDER OF BUSINESS

1. Approval of the Minutes from the September 25, 2008 special meeting of the OMERS investment committee whose approval was tabled from the March 26, 2009 and the September 3, 2009 meetings.

2. Approval of the Minutes from the September 3, 2009 special meeting of the OMERS investment committee.

3. Interviews with Pimco, Highmark Capital Management and RBC Wealth Management for the purpose of hiring of a new fixed core income manager.

4. Information, discussion and possible recommendation for hiring of an interviewed fixed core income manager.

5. New Business. 6. Open Forum. 7. Future Scheduling.

0 Oakland_Municipal_ERS(10-08-09)

A Presentation on PIMCO’s Total Return II Fund for:

Oakland Municipal Employees’ Retirement SystemOctober 8, 2009

Investors should consider the investment objectives, risks, charges and expenses of this fund carefully before investing. This and other information are contained in the fund’s prospectus, which may be obtained by contacting your PIMCO representative. Please read the prospectus carefully before you invest or send money.Allianz Global Investors Distributors LLC, 840 Newport Center Drive, Newport Beach, CA 92660, (800) 927-4648

Investors should consider the investment objectives, risks, charges and expenses of this fund carefully before investing. This and other information are contained in the fund’s prospectus, which may be obtained by contacting your PIMCO representative. Please read the prospectus carefully before you invest or send money.Allianz Global Investors Distributors LLC, 840 Newport Center Drive, Newport Beach, CA 92660, (800) 927-4648

1

Biographical Information

Mark Romano, CFAMr. Romano is a senior vice president and an account manager in the Newport Beach office focusing on investment consulting firms, clients and developing new client relationships. Prior to joining PIMCO in 1997, he was with Wells Fargo’s institutional money management group. Prior to that, Mr. Romano was director of fixed income and a portfolio manager for the Pacifica family of mutual funds; he also invested assets for pension plans, foundations, financial institutions, corporations and trust accounts. In addition, Mr. Romano reported the daily business news for the San Diego ABC-TV affiliate. He has 27 years of investment experience and holds an MBA from San Diego State University. He earned an undergraduate degree in accounting from Shippensburg University, Pennsylvania.

Oakland_Municipal_ERS(10-08-09)

2 Oakland_Municipal_ERS(10-08-09)

I. Oakland Municipal Employees’ Retirement System Objectives & Requirements

II. Introduction to PIMCO

III. Investment Philosophy / Process

IV. Performance

V. Summary & Outlook

VI. Appendix

Agenda

3

Oakland Municipal Employees’ Retirement System – Your Objectives and Requirements:

Incorporate a core style of bond management benchmarked to an intermediate bond index

Complement existing managers of equity and other asset sectors in the plan

Focus keenly on risk management and reducing downside risk

Partner with Oakland Municipal Employees’ Retirement System to provide a high level of client service and opportunities for education

The above information and objectives have been provided by Oakland Municipal Employees’ Retirement System. No representation is being made that any portfolio or strategy will achieve the results stated above.

Oakland_Municipal_ERS(10-08-09)

4 cons_735_72_3qtr

PIMCO’s Record of Performance – Total Return Fund II

Refer to Appendix for additional performance and fee, chart, index, and risk information.

As of June 30, 2009

Performance quoted represents past performance. Past performance is not a guarantee or a reliable indicator of future results. Current performance may be lower or higher than performance shown. Investment return and principal value will fluctuate, so that Fund shares may be worth more or less than their original cost when redeemed. Performance data current to the most recent month-end is available at www.pimco-funds.com or by calling (800) 927-4648.

PIMCO Total Return Fund II 10 Yrs. 5 Yrs. 3 Yrs. 1 Yr.(Inception:12/30/91)

Before Expenses (%) 7.27 6.57 9.05 10.11After Expenses (%) 6.74 6.05 8.51 9.57

Barclays Capital U.S.Aggregate Index (%) 5.98 5.01 6.43 6.05

PIMCO Total Return Fund II (After Expenses) versus Barclays Capital U.S. Aggregate Index from Fourth

Quarter 1994 through Second Quarter 2009

0

5

10

15

0 5 10 15

Barclays Capital U.S. Aggregate Index Returns (%)

PIM

CO

Tota

l R

etu

rn F

und I

I R

etu

rns

(%)

Outperformance

Underperformance

Fund outperformed market index52 out of 59 annualizedrolling three-year periods after expenses

Contributing Factors

– Conservative Investment Philosophy

– Breadth, Depth and Continuity of Staff

– Legacy of Innovation

– Risk Management / Technology

5 asst_19ap

Introduction to PIMCO

Performance

People

HistoryFounded in 1971

Specialty fixed income manager

Assets under management:

employees: investment professionalstechnical and support

Highly experienced Experience at PIMCO– All investment professionals

– Senior professionals

Stable professional staff

Dedicated team of specialists

Goal of consistently outperforming with benchmark-like risk

$ 841.8 B

1214 396818

14 7

20 9

Average Years

As of June 30, 2009

6

Organizational Stability: Staffed for Investment Solutions

2cs_pimco_update_01

Breadth of Resources Enhances Investment Services

Assets Under Management: $841.8B

PIMCO Remains Strong, Adding Client Resources During Crisis

Investment philosophy facilitates organizational stability

Deep capabilities in asset allocation, analytics and strategy

Depth of Resources and Expertise for Distressed Assets

Experienced portfolio managers, credit analysts focused on distressed assets

Specialized reporting for transition mandates

Market Segment Focus Investment Solutions

Liquidity and Cash ManagementRisk-Adjusted ReturnsInflation ProtectionLiability Driven InvestingAsset AllocationRisk Hedging

CorporationsCentral BanksTaft-HartleySubadvisedVariable Annuity

Foundations EndowmentsPublic EntitiesInsuranceHealthcareRegistered Investment Advisors

As of June 30, 2009

$ 579.3190.139.015.913.93.3

U.S.EuropeJapanAsiaAustraliaCanada

Total of 396 Investment Professionals worldwide in 9 global offices

Net addition of 40 Investment Professionals and 250 total employees in 2008

Liquidity analysis available for all clients

Realistic, customized approach to transition mandates

7 asst_summary_01_USD

As of June 30, 2009

PIMCO continues to build on fixed income expertise to provide solutions to investor needs

Summary of PIMCO’s Investment Strategies

Alternative Absolute Return Strategies LIBOR based vehicles: enhanced cash or pure alpha $13,761Investments: Commodities Commodity-linked exposures enhanced with active bond portfolios 11,418

Real Estate Real Estate-linked exposure backed by inflation index bonds 45Real Return TIPS* and other inflation-hedging strategies 51,545Tactical Allocation Tactical allocation among commingled vehicles 15,890Diversified Income Global credit combining corporate and emerging markets debt 9,988CBO / CLO Collateralized bonds / loan obligations 6,221

Equities: U.S. Market Combines derivatives-based equity exposure with active bond management 18,133Large Cap StocksPLUS®

Small Cap StocksPLUS® Total ReturnInternational: StocksPLUS® PARS

Japan, Europe StocksPLUS® Long DurationGlobal, International Fundamental IndexPLUS™ / Fundamental Advantage

Fixed Long Duration Focus on long-term bonds; asset liability management 58,479Income: Intermediate** Total Return, Moderate Duration 348,131

Cash Management** Low Duration, Enhanced Cash, Money Market 56,968Credit Investment Grade Corporates, High Yield 55,626Mortgages Emphasis on management of mortgage pass-throughs 71,232Global Non-U.S. and global multiple currency formats 77,097Emerging Markets Focus on solid credits with improving economic fundamentals 18,969Municipals Tax-efficient total return management 10,906Other 17,397

Total Assets Under Management: $ 841,815 M

SOURCE: PIMCO* Treasury Inflation Protected Securities

** Stable Value assets have not been netted from US Total Return, US Moderate Duration and US Low Duration assets. Total Stable Value assets equal $23,802MM as of 6/30/09.Potential differences in asset totals are due to rounding

8 phil_04c_ap

PIMCO’s Investment Philosophy

Long term investment orientation

Seeks to exploit top-down and bottom-up opportunities

Attempts to identify and capture diversified sources of return

Focuses on strong risk management

Seek to provide consistent excess returns with similar or lower risk relative to the benchmark, over a business cycle

PIMCO’s Investment Process:

9 Total_return_review_01

PIMCO’s Active Management Approach = Goal of Consistent Added Value

Broad set of strategies

Dynamic approach

Source of success varies significantly over time

DurationDuration YieldCurveYieldCurve SectorSector QualityQuality

Quantitative Research

Quantitative Research

BondsPlusBondsPlus

IssueSelection

IssueSelection

Cost-EffectiveTrading

Cost-EffectiveTrading

Value Added

Top Down Strategies

Bottom Up Strategies

Credit Analysis

Credit Analysis

VolatilityVolatility

Alpha Sources – An Active and Dynamic Approach to Portfolios

Refer to Appendix for additional risk information

Yield Curve Strategy

Corporate Underweight

2007

Mortgages

Developed Non-U.S. Dollar

2006

DevelopedNon-U.S. Dollar

Emerging Markets

2005

High Quality

Management of Curves

2008-09

Inflation-linked

High Yield

2004

Emerging Markets

Credit Recovery

2003

Quality

Duration

2000-02

Stability

Yield

1997-99

10

Investment Process: Macroeconomic Forecasting

phil_16

Annual Secular Forum(3 – 5 Year Outlook)

Assess long term trends

Demographics, political factors, globalization of trade and capital, productivity / technology

Quarterly Cyclical Forum(6 – 9 Month Outlook)

G-3 inflation and GDP forecasts

Fine tune the secular outlook

Top-down themes that guide portfolio construction

– Sector allocation ideas

– Interest rate direction and volatility

– Credit trends

Result:

Goal: Seek value in long term trends

11 orga_14c

Team Approach Used in Managing Portfolios

99 portfolio management investment professionals

Generalist / specialist team structure

6 Generalists coordinate overall portfolio characteristics

93 Specialists focus on sectors

Dynamic and flexible

Technology specialists manage risk

Diversified Sources of ReturnDiversified Sources of Return

As of June 30, 2009

EmergingSpecialistsEmergingSpecialists Convertible

SpecialistsConvertibleSpecialists

InternationalSpecialistsInternationalSpecialists

TechnologySpecialistsTechnologySpecialists

MunicipalSpecialistsMunicipalSpecialists

C

MortgageSpecialistsMortgageSpecialists

I nve

s tment ommitteeBill Gross

Mohamed El-ErianBill Gross

Mohamed El-Erian

Gov’ts. / FuturesSpecialists

Gov’ts. / FuturesSpecialists

Credit Specialists

Credit Specialists Short-Term

SpecialistsShort-TermSpecialists

lab

n n

o lG

Real ReturnReal Return

121 portfolio management investment professionals

Generalist / specialist team structure

9 Generalists coordinate overall portfolio characteristics

112 Specialists focus on sectors

Dynamic and flexible

12

Alpha Opportunities Abundant in 2009

mk_2cs_pimco_outlook_03

Risk management remains critical to success

Term Premiums Steeper yield curve may enable gains via roll-down opportunities

Liquidity Premiums

Forced selling presents historical return opportunities for

unlevered investors

Credit Premiums Downgrades and risk aversion may create opportunities

Volatility Premiums High implied volatility boosts potential option income

Refer to Appendix for additional risk information.

13

Oakland Municipal Employees’ Retirement

System

Oakland Municipal Employees’ Retirement

SystemDaily, monthly,quarterly reports ofportfolio statistics

Daily, monthly,quarterly reports ofportfolio statistics

Client workstation andon-line access to

portfolio information

Client workstation andon-line access to

portfolio information

Unique access toPIMCO Forum insights

and white papers

Unique access toPIMCO Forum insights

and white papers

Client meetings andboard presentationsClient meetings andboard presentations

The PIMCO Institute(client educational seminars)

The PIMCO Institute(client educational seminars)

1off_intl_orga_28_Oakland_ERS

Overview of PIMCO’s Client Service and Reporting Capabilities

14 Perf_Alpha_735_af

PIMCO Total Return Fund II vs. BCAG

SOURCE: PIMCOPerformance quoted represents past performance. Past performance is not a guarantee or a reliable indicator of future results. Current performance may be lower or higher than performance shown. Investment return and principal value will fluctuate, so that Fund shares may be worth more or less than their original cost when redeemed. Performance data current to the most recent month-end is available at www.pimco-funds.com or by calling (800) 927-4648.

Number of Outperforming PeriodsNumber of Underperforming Periods

126

Average Alpha in Outperforming PeriodsAverage Alpha in Underperforming Periods

124-27

Refer to Appendix for additional performance and fee, chart, index, and risk information.

-100

0

100

200

300

400

500

600Exc

ess

Ret

urn

s (b

ps)

92 94 96 98 00 02 04 06 08

PIMCO Total Return Fund II Since 1992(After Expenses)

LTCMThai BahtRussian-default

Sub-primemortgagecrisis

Mexican crisisFed Tightening

Acct Scandal:Enron, Worldcom, Tyco

09YTD

As of June 30, 2009

15 retu_735_72_monthly

How Has the PIMCO Total Return Fund II Performed?

Fund has added value over index over longer periods

Performance quoted represents past performance. Past performance is not a guarantee or a reliable indicator of future results. Current performance may be lower or higher than performance shown. Investment return and principal value will fluctuate, so that Fund shares may be worth more or less than their original cost when redeemed. Performance data current to the most recent month-end is available at www.pimco-funds.com or by calling (800) 927-4648. Refer to Appendix for additional performance and fee, index, and risk information.

PIMCO Total Return Fund II

(Inception:12/30/91)

Before Expenses (%) 7.72 6.76 9.32 13.35 4.74 2.60 4.42 8.91 5.65 11.51After Expenses (%) 7.18 6.23 8.78 12.79 4.22 2.09 3.90 8.37 5.12 11.14

Barclays Capital U.S. Aggregate Index (%) 6.31 4.96 6.35 7.94 4.34 2.43 4.33 6.97 5.24 4.62

Value Added After Expenses (bps) 87 127 243 485 -12 -34 -43 140 -12 652

'04 '05 '06 '07 '08 '098 Mos.

Years Ended 12/31

0

2

4

6

8

10

12

14

Retu

rns

(%)

10 Yrs. 5 Yrs. 3 Yrs. 1 Yr.

Periods Ended 08/31/09

16 risk_700_735_10yr

Total Return and Total Return II Funds

Performance quoted represents past performance. Past performance is not a guarantee or a reliable indicator of future results. Current performance may be lower or higher than performance shown. Investment return and principal value will fluctuate, so that Fund shares may be worth more or less than their original cost when redeemed. Performance data current to the most recent month-end is available at www.pimco-funds.com or by calling (800) 927-4648. . Refer to Appendix for additional performance and fee, chart, risk, and index information.

As of June 30, 2009

10 Yrs. 5 Yrs. 3 Yrs. 1 Yr.

PIMCO Total Return Fund (Inception: 05/11/87)Before Expenses (%) 7.47 6.82 8.88 9.76After Expenses (%) 7.01 6.36 8.41 9.27

PIMCO Total Return Fund II (Inception: 12/30/91)Before Expenses (%) 7.27 6.57 9.05 10.11After Expenses (%) 6.74 6.05 8.51 9.57

Barclays Capital U.S.Aggregate Index 5.98 5.01 6.43 6.05

Ten-Year Annualized Returns versus Volatility of Return

0

2

4

6

8

10

0 2 4 6 8 10

Annualized Standard Deviation of Monthly Return (%)

Annualiz

ed R

etu

rn (

%)

PIMCOTotal Return Fund(After Expenses)

BCAG

PIMCOTotal Return Fund II

(After Expenses)

17 phil_03

Why Choose PIMCO?

Goal of Consistent Returns

Depth of resources

Management style characterized by:

– Comprehensive set of fixed income skills

– Conservative, value orientation

High level of client servicing

Unique educational opportunities

AM to Customize

18

Cyclical Outlook: Growth Muted, Inflation Subdued

Base CaseImpact of Stimulus wanes and private

sectors are unable to pick up the slack

Global Recession

Subprime crisis led to massive deleveraging of the banking system

Forced sales of assets and bank recapitalization requirements made credit scarce

Corporations decreased capital expenditures and consumers increased savings in preparation for uncertain future

International trade ground to a halt

mk_2cs_intl_outlook_07

?

Optimistic

Case

Momentum from sti

mulus and emerging m

arkets

demands will l

ikely d

rive world

economic recovery

As of June 30, 2009

Stimulus Effect

World governments provided unprecedented fiscal stimulus in hopes of inducing recovery

Central bank rates converged on the zero bound to ease strained credit markets

Governments replaced private sectors as new shadow bank to provide liquidity

SOURCE: PIMCORefer to Appendix for additional outlook information.

19

Severe Recessions and Absence of Inflation Likely To Persist in 2009

SOURCE: Bloomberg Financial Markets, PIMCO* Inflation YoY: U.S. Inflation is Core PCE (note Core PCE is usually about 50 bps lower than core CPI), Eurozone inflation is EuroArea 13 HICP (headline), U.K. inflation is the

Consumer Price Index (headline), Japan inflation is CPI ex food; China inflation is Consumer Price Index.** Forecasts as of March 6, 2009.

Refer to Appendix for additional forecast and outlook information

GDP

-5.25% – -4.75%-1.9%U.K.

-4.75% – -4.25%-1.3%Euro

6.8%

-4.6%

-0.8%

Actual

4.75% – 5.25%

-5.25% – -4.75%

-3.25% – -2.75%

Forecast**

China

Japan

U.S.

China

Japan

U.K.

Euro

U.S.

Inflation*

0.00% – 0.50%3.0%

0.50% – 1.00%1.1%

-1.6%

0.0%

1.6%

Actual

-0.75% – -0.25%

-2.00% – -1.50%

-1.25% – -0.75%

Forecast**

Economic news will continue to be negative, while policy struggles with magnitude of response necessary to heal economic, financial systems

mk_1cs_pimco_outlook_02

As of March 31, 2009

20

Portfolio Strategy: Aim for Simplicity, Capitalize on Market Opportunities

mk_2cs_TR_strat_01

Core Strategies

Interest Rate Strategies

Duration: Plan to overweight in an effort to capitalize on higher intermediate yields

Curve: Seek to add modest exposure, as the Fed is likely to keep rates low throughout 2010

Core Strategies

Treasuries: Plan to tactically add intermediate maturities as yields become attractive

Mortgages: Seek to reduce overweight after strong rally led by Fed’s purchase program

Corporates: Look to opportunistically adjust positions during market rallies; focus on high quality and strong fundamentals

Non-Core Strategies

Municipals: Plan to maintain holdings and monitor new issue supply

TIPS: Seek to increase exposure to hedge secular inflation

Currency: Look to maintain modest position in stronger EM currencies given USD outlook

High Yield: Remain cautious with bulk of default cycle still to come

Refer to Appendix for additional investment strategy and risk information.

As of June 30, 2009

21 Clt_fund_all

PIMCO Funds List of Clients

Non-Profit Organizations,Foundations & Endowments

AARPAdventis t HealthAm er. Soc. of Mech. EngineersAm erican Univers ity in CairoAssociation of GraduatesBlue Cross Blue ShieldBucknell Univers ityCam eron FoundationCam panile FoundationCargillCharles Stewart Mott FoundationChildren's Aid SocietyChildren's Museum of IndianapolisColonial William sburg FoundationCom m unity Fdn. for Greater BuffaloCrane Fund for Widows & ChildrenCys tic Fibros is FoundationDaniels FundDiocese of Rockville CentreDuke Managem entEast Tennessee Fdn.F.H. Prince & Co., Inc.Foundation for the CarolinasFrey FoundationGirl Scouts of the USAGrable FoundationHartford FoundationHudson-Webber FoundationInves tm ent Fund for FoundationsJ. Paul Getty Trus t

Larry Hillblom FoundationLegacy Health Sys tem sLongwood FoundationLyric Opera of ChicagoMary Reynolds Babcock Fdn.Masonic Charity Foundation of CTMennonite Mutual AidMeyer Mem orial Trus tNational Gallery of ArtNew Ham pshire Charitable Fdn.New York Presbyterian HospitalNoland Health ServicesPaso del Norte Health FoundationPublic Welfare FoundationRobert R. McCorm ick Tribune Fdn.Rose FoundationSeattle FoundationSilicon Valley Com m unity Fdn.Society of Jesus of New EnglandSpencer FoundationSt. Joseph HospitalSurdna Foundation, Inc.The Papal FoundationU.S. Holocaus t MuseumUnihealth FoundationVancouver FoundationVirginia Military Ins tituteWest Virginia Univers ity FoundationWorld Wildlife Fund, Inc.Y & H Soda Foundation

CorporateAAAAbbott LaboratoriesAccentureAegon Variable InsuranceAllianzAm erican Hom e ProductsAm phenol CorporationBest Buy Co., Inc.Carolina Power & Light Co.CH2M Hill Pens ionChildren's Hospital Los AngelesCIGNA FundsCitis treetConAgra Foods, Inc.Consum ers Energy Com panyCookson Am ericaCum m insCurtiss -WrightCytec Indus triesDole FoodsDow CorningDuPont Capital Managem entEnergy Eas t CorporationExelon CorporationFerro CorporationFirs t Data CorporationGE Variable InsuranceGlaxoSm ithKlineHonda of Am erica ManufacturingING

John HancockLand O'LakesMa. Mutual Life Insurance Co.Marsh & McLennan Com paniesMinnesota LifeNational Autom obile Dealers Assoc.National Grid Com panies , USANestle U.S.A., Inc.News CorporationNissan CorporationNoranda FinanceNorthwes t AirlinesOccidental PetroleumPacificorpPublix Super MarketsPuget Sound EnergyReed Elsevier Inc.Revco D.S.Rolls Royce Co.Sony Corporation of Am ericaSouthern California EdisonSouthwes t Airlines Com panySPX CorporationStarwood Hotels & ResortsThree Rivers InsuranceToyota Motor SalesTravelers Life InsuranceTri-MetWalgreensWyeth

Refer to Appendix for additional client list information

As of June 30, 2009

22 clt_fund_all

PIMCO Funds List of Clients

Taft-Hartley Public Law FirmsAirline Pilots AssociationDirectors Guild of Am ericaGMP Pens ionIATSE, National PlanIBEW LocalIndiana Area UFCWIron Workers LocalLine Cons truction Benefit FundMetal Trades Local 638Motion Pictures Indus triesNew York State United TeachersOhio Operating EngineersOperating Engineers Local #324Operating Engineers , Local #12Oregon-Washington CarpentersPA State EducationPhiladelphia Marine Trade AssocPipeline Indus try Benefit FundPlum bers & Steam fittersScreen Actors Guild (SAG)SEIU Local No. 1Sheet Metal Workers LocalSoft Drink & Brewery WorkersSouthern California UFCWTeam sters Local 617 Pens ion FundTuckpointers Local 53UMWA Strike FundUnited Mine Workers of Am ericaWA Retail ClerksWestern Penn Team sters

Adam s CountyCity of AuroraCity of Longm ontCity of WarwickClayton County Public Em pl.Colorado CountyColorado Public Em ployeesCom m unity Fdn. for SE MichiganEl Paso County Pens ion Sys temHawaii Deferred Com pensation FundHous ing Agency Ret. Trus tLouis iana Assessors Ret. Sys .Louis iana FirefightersMa. Turnpike AuthorityManhattan & Bronx Surface TOAMarin Com m unity FoundationNew York Metropolitan Trans .Ohio Public Em ployeesPenn Traffic Non-DiscretionPensacola General Pens .Retirem entPrince Georges CountySan Diego Trans it CorpState of IndianaState of MichiganState of Michigan Legis lativeTown of LexingtonVerm ont State Retirem ent Sys temVirginia Retirem ent Sys temWest Hartford Town Pens ion FundWyom ing Retirem ent Sys tem

Akin Gum p Strauss Hauer & FeldAm erican Bar AssociationAm erican Bar Endowm entClifford Chance US LLPFlorida Bar FoundationFolger & LevinLindabury, McCorm ick & Es tabrookLord, Bissell & BrookOregon State BarThe Legal Aid SocietyVedder, Price, Kaufm an & Kam m holzWhite & Case LLPzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

As of June 30, 2009

Refer to Appendix for additional client list information

23

Performance and feePast performance is not a guarantee or a reliable indicator of future results. The performance figures presented reflect the total return performance for Institutional Class shares (after fees) and reflect changes in share price and reinvestment of dividend and capital gain distributions. All periods longer than one year are annualized. The 45-degree line in the performance graph(s) represents the point at which the Fund performance is equal to the index.

ChartPerformance results for certain charts and graphs may be limited by date ranges specified on those charts and graphs; different time periods may produce different results.

Client ListThe client list is a partial listing of clients that have authorized their name for such use. The list is chosen from some of the largest authorized accounts in each category listed and contains client names that PIMCO considers to be widely recognized. It is not known whether the listed clients approve or disapprove of PIMCO or the advisory services provided.

ForecastForecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. There is no guarantee that results will be achieved.

Investment StrategyThere is no guarantee that these investment strategies will work under all market conditions and each investor should evaluate their ability to invest for a long-term especially during periods of downturn in the market. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those shown.

OutlookStatements concerning financial market trends are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

RiskInvesting in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk; investments may be worth more or less than the original cost when redeemed. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Income from municipal bonds may be subject to state and local taxes and at times the alternative minimum tax. Inflation-linked bonds (ILBs) issued by a government are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. Government. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. Diversification does not insure against loss.

The value of most bond funds and fixed income securities are impacted by changes in interest rates. Bonds and bond funds with longer durations tend to be more sensitive and more volatile than securities with shorter durations; bond prices generally fall as interest rates rise.

1off_Appendix_TR_Office_Prof

Appendix

24 1off_Appendix_TR_Office_Prof

Appendix

This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Statements concerning financial market trends are based on current market conditions, which will fluctuate. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Pacific Investment Management Company LLC, ©2009, PIMCO.

PIMCO Funds are distributed by Allianz Global Investors Distributors LLC, 840 Newport Center Drive, Newport Beach, CA 92660. (800) 927-4648.

Index DescriptionsBarclays Capital U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. Prior to November 1, 2008, this index was published by Lehman Brothers.

It is not possible to invest directly in an unmanaged index.

RBC Wealth Management Strategies & Solutions for Retirement Plans

Oakland Municipal Employees Retirement System

Presented by: David S. Tucker, III

Date: October 8, 2009

2Strategies & Solutions for Retirement Plans, 10/2/2009

Agenda

• Brief Overview of our Firm

• Investment Advisory Team & Process

• Fixed Income Strategy Group

• Fixed Income Product and Expertise

• Bond Portfolio Analysis and Recommendations


Company Overview

National firm, founded in 1909 with over 1700 Financial Consultants

7th largest full-service investment firm in the U.S. with over $140 billion assets under administration

Consulting services provided to private & public retirement plans, non-profits, foundations and endowments totaling over $35 billion in assets

Consult to over 2000 retirement plans

Branch Locations


Drawing on strength of RBC

RBC Dain Rauscher was acquired by Royal Bank of Canada (NYSE, TSE: RY) in 2001

Employs 60,000 people worldwide Serves 12 million clients in more than

30 countries around the globeHolds $1.1 trillion in assets under

administrationRated #1 top 10 Canadian Companies7th largest bank in North America,

based on market capitalization

Source: Bloomberg, S&P/TSX Composite Index, market capitalizations at close. Exchange rate – December 29, 2006: USD 0.85771 / CAD


Balance Sheet – Credit Ratings

(1) Assets as of December 31, 2006.(2) Source: Moody's Bank Ratings List - February 2007(3) Source: Standard & Poor's Global Ratings – February 2007.

AAAa14120.26482.0

AA-Aaa759.15491.5

A+Aa35109.44707.1

A+Aa33174.631351.5

AA-Aa22236.521459.7

AA-Aa11262.411882.6

Mkt CapRanking

Mkt CapUS$B S & P(3)Moodys(2)

Bank Holding Company

Senior Debt Rating

AssetRanking

AssetsUS$B(1)

■ 5th largest bank by assets in North America■Moody’s Investor Services upgraded RBC to Aaa in March 2007

5th Largest bank by assets and 7th largest by market capitalization in North America


Our Global Footprint

Caribbean –Banking, GPB, Reinsurance

Brazil – GPB

British Isles –GCM,GPB, GS

Singapore – GCM, GS, GPB

Hong Kong – GCM, GPB

Japan – GCM, GPB

Switzerland – GCM, GPB

Uruguay – GPB

Venezuela – GPB

Argentina – GPB

Luxemburg – GS

UAE – GS, GPBU.S. – Banking,

Investments, GPB, GCM, Insurance

Turkey – GPB

GCM – Global Capital MarketsGS – Global ServicesGPB – Global Private Banking

Brunei – GCM, GPB

Australia – GCM, GS

Ireland –Reinsurance

Netherlands – GCM Spain – GPB

Canada – Banking, Investments,

Insurance, GCM

David S. Tucker, III and David S. Tucker, Jr.

And RBC Wealth Management

Overview

“always earning the right to be our clients’ first choice.”


RBC Dain Rauscher and The Tucker Team

•RBC Wealth Management Corporation is a wholly owned indirect subsidiary of the Royal Bank of Canada and is one of the nationslargest full-service securities firms.

•Founded in 1909, RBC Wealth Management has grown into the company it is today through the combination of many firms that joined forces in pursuit of a common goal: to help their clients achieve their financial goals.

•The Tucker’s joined RBC Dain Rauscher in 2001through RBC Wealth Management’s acquisition of Sutro & Company a company that was founded in 1858.


Introducing the Tucker Team

The Tucker team•The Tucker team is a financial consultant team located in downtown Oakland California.

•The Tucker team formally formed in 1974 but a David S. Tucker has been providing investment advice since 1929.

•The Tucker team manages more than $500 million of investment assets for individual investors, corporate profit sharing, pension plans, tax-free foundations, and institutions.

•The Tucker team manages their investment strategies through a team approach with RBC Wealth Management that gives a client access to a complete range of products and services from a leading financialservices company.


The Tucker Team Client Focus

•Local Individual exceptional service.•Hands on approach.•Key investment philosophies: Preserve capital; Obtain as high a rate of return as possible with the safety of principal involved; Favor large capitalized dividend paying companies and fixed income issues; Diversify; Track market for current investment ideas; Access leading research; Ongoing review of holdings and clients risk profile.

•Always earning the right to be our clients’ first choice.


The Tucker Team

David S. Tucker, Jr.Senior Vice PresidentFinancial Consultant

•49 years industry experience•34 year with Sutro now RBC•75 years of age•Married to Ann Tucker•Five Children •15 Grand children

David S. Tucker, IIIFinancial Consultant

•16 years industry experience•13 years with Sutro now RBC•49 years of age•Married to Nicole Tucker•Two Children


The Tucker Team

David S. Tucker, Jr.Senior Vice President Financial Consultant

David S. Tucker, Jr. is an Oakland native and graduate of the Oakland Public School System. In 1959, David began his 48-year career in the Financial Services industry, following three years of employment with the Southern California Gas Co. in Los Angeles. He was employed by Cruttenden, Podesta & Co. from 1959-1963, Walston & Co. from 1963-1974 and Sutro & Co., now RBC Wealth Management from 1974 to present where he formed the Tucker team with his father, David S. Tucker, Sr. He attended Oregon State University and graduated from Reedley College with an AA degree, California State University, Chico with a Bachelor of Arts degree and the University of California, Berkeley with Graduate School of Business degree. David is a member of RBC Wealth Management Chairman’s Council and a ten-year former member of Sutro & Co. Board of Directors. He was a former Director of the Marcus A. Foster Educational Institute, member of the San Francisco Bond Club, Yerba Buena Lodge, Scottish Rite, Metropolitan Club, Sequoyah Country Club, and an Elder of the First United Presbyterian Church of Oakland. He also was former Director of the Oakland Redevelopment Agency 1970-1971 and Community Action Agency of the City of Oakland 1972-1973. He was also past president of The Association of California Urban School Districts and the Alameda County School Boards Association. He served 14 years on the Oakland Board of Education from 1971-1985. He was also an Oakland mayoral candidate in 1977.


The Tucker Team

David S. Tucker, IIIFinancial Consultant

David S. Tucker, III is an Oakland native and graduate of the Oakland Public School System. David began working in the Financial Services industry in 1991 at Sutro & Co., now RBC Wealth Management. He served a four-year tour in the U.S. Air Force, where he worked in and studied communications, mechanical and electronic engineering through the College of the Air Force and The University of Michigan. He graduated from California State University, Sacramento with Bachelor of Arts Degree in both Business Administration and Finance. He further earned an Accredited Wealth Manager designation at RBC Dain Rauscher through Michigan State University, where he studied advanced wealth management, concentrating in the areas of business and retirement planning, insurance solutions, charitable giving, advanced investment strategies, and estate and trust planning strategies.David also holds the Series 7, 63 and 65 licenses, as well as a California Insurance License. He has extensive consulting experience in business development and management of small businesses. Very involved in the community, he is a past president of the Oakland Executive Association and former treasurer of the Oakland Kiwanis. He is a current member of Sequoyah Country Club, the Golden Gate Wine Society, and the Keiretsu Forum and the Keiretsu Forum Charitable Foundation. Some of David’s charitable work includes: Oakland School For The Arts, Hanna Boys Center, The Wheel Chair Foundation, Camp Wamp, Habitat For Humanity, Danville Chamber of Commerce, American Heart Association, Tasajara Schools, Sheppard’s Gate, and Eden Medical Center. David is a member of RBC Dain Rauscher Fixed Income Advisory Council and member of the Board of Directors of Tucker Associates Real Estate Services


Fixed Income Strategy Group at RBC Wealth Management

Fixed Income Strategy Group at RBC Wealth Management

Our Competitive Advantage………


Portfolio Strategists

Our Portfolio Strategists take an unbiased approach to the marketplace allowing them to objectively evaluate current investment opportunities. They produce a series of model portfolios to assist The Tucker team in determining the optimal distribution among different asset classes for a given market entry point.


Craig Bishop Manager, Senior Portfolio Strategist

Craig has 29 years of professional experience in the financial services industry. Craig’s career includes experience in sales, both retail and institutional, trading, and marketing/portfolio structuring of all fixed income products. His special area of expertise is with taxable products, specifically: mortgage-backed securities, corporate bonds, U.S. government agencies, CD’s, zero-coupon securities, and money market instruments


Joyce BiddlemanPortfolio Strategist

Joyce has been an active participant in fixed income trading and sales for the past 27 years. Joyce works closely with the salesforce, bringing her knowledge of the full range of fixed income securities to our team.


LARRY PODOBINSKISENIOR PORTFOLIO STRATEGIST

Larry has been a Fixed Income trader for 30 years. His area of specialty has been the Treasury and Agency markets. Larry has also been involved in the retail and institutional distribution of Corporates, MBS and Municipals products. He has worked extensively with the retail sales force to enhance the overall portfolio performance for clients over the past 10 years.


PAUL WINGHARTSENIOR PORTFOLIO STRATEGIST

Paul joined the Fixed Income Strategist Group over six years ago, after transferring from RBC Wealth Management Operations. He has also assisted in the fixed income trading area. With his pendant for analysis, Paul provides The Tucker team with valuable source market strategy and economic commentary.


ROD GONZALEZPORTFOLIO STRATEGIST

Rod joined RBC Wealth Management over five years ago and is currently responsible for portfolio structuring, optimization, attribution and performance analyses. He works in the ongoing assessment of fundamental trends on a given industry, thereby providing our clients with recommendations based on market research.


BRIAN CAPSENIOR CREDIT STRATEGIST

Brian joined RBC Wealth Management’s Fixed Income Strategies Group as Credit Strategist in 2008. For the past 25 years, as a fixed income analyst, he has focused on numerous domestic and foreign investment grade and high-yield issuers, spread across a variety of industries. As a credit strategist, Brian uses his knowledge and expertise to provide timely information and recommendations on the many corporate and preferred issuers for RBCWM’s Financial Consultants


Fixed Income at RBC Wealth Management

Fixed Income at RBC Wealth Management

Our Competitive Advantage………


RBC Dain Rauscher

RBC Wealth Management Fixed Income Products and Expertise•National leader in trading, sales and public finance.•More than 425 employees in more than 30 locations.•Group ranks in the top 10 nationally in all major categories including senior and co-managed negotiated underwriting and financial advisory work.


Trading - Products

• Municipal Bonds

• U.S. Treasuries & U.S. Government Agencies (GSEs)

• CDs

• Corporate Bonds – Investment Grade and High Yield

• Preferred Securities

• Structured Products

• Mortgage-Backed Securities – CMOs and Pass-throughs

• Unit Investment Trusts

• Commercial Paper

• Emerging Markets – Dollar Denominated

• Convertibles


Overall Strengths

• Responsive, service-oriented Traders, Marketers, and Strategists

• The Tucker team has hands-on, personal contact; no buffers, junior traders, liaisons.

• Capital provided by RBC means plentiful product inventories

• Experienced Manager/Head Traders at each Desk and in the Strategies Group

• BondDesk provides access to more than 75 co-mingled inventories from primary and regional

dealers

• Access to innovative, customized products through Structured Products Group

• 27 Regional Underwriting/Banking Offices; approximately 200 professionals


Taxable Trading – CDs

JR Rhodes – Head Trader, Desk ManagerGina Carlucci – Trading AssociateJohn Dipaolo – TraderMichael Drake – Trader & UnderwriterSteven Spino – Trader

Strengths:• Large number of issuers• Active primary and secondary markets across the curve; par and discounted items, all with the estate

put feature• Innovative, Structured Product CDs linked to various indices/sectors with principal and FDIC

protection• Proactive marketing of ideas and strategies to The Tucker team


Taxable Trading – Corporate Bonds

Paul Rich – Head Trader, Desk ManagerAdam Molino – TraderHal Goldstein - TraderMitch Morrissey – Trader, High YieldTim Lodie – Trader, High Yield

Strengths:• Strong secondary market presence across the curve and sectors• Insightful market commentary on corporate bond issues• Access to highly regarded independent high yield research from KDP• Proactive marketing of ideas and strategies to The Tucker team


Taxable Trading – Preferred Securities

Ken Harris – Head Trader, Desk ManagerShannon Dahl – TraderRichard Bansa – Trader

Strengths:• Participation in virtually every new issue usually in a co-manager position due to extremely strong

Dealer relationships• Proactive announcement and marketing of new issues• The Tucker Group’s given the ability to “work” new issues as announced; not shut out of deals as they

are at many wirehouses• Preferred Market Monitor available on InfoNET; an excellent tool to identify secondary issues


Taxable Trading – Structured Products

Tom Stotts – Head Trader, Desk ManagerNicole Dunham – Trader

Strengths:• Innovative structures designed to capitalize on cross-market relationships• Ability to create new issues via a “reverse inquiry” from The Tucker team• Many different structures with varying degrees of risk; on-line tutorials available on the InfoNET to

educate The Tucker team• Strong retail trading support with access to other Dealers products, not just those originated by Royal

Bank of Canada Capital Markets (RBCCM)• Proactive marketing of ideas and strategies to The Tucker team at RBC Wealth Management


Taxable Trading – Mortgage-Backed Securities

Jerry Smith – Head Trader, Desk ManagerPaul Pugsley – TraderMegan Swenson - TraderScott Glas – Trader

Strengths:• Strong analytical skills which allows the desk to position high-quality MBS product, both agency and

private-label, across the curve. NO SUB PRIME ISSUES!• Action-oriented market commentary and analysis supporting The Tucker team that sell MBS keeping

them ahead of the market.• “Knowing their customers” allows traders to strategically commit capital to buy size when they

recognize an issue that will work for The Tucker team• Strong secondary market support


Taxable Trading – Unit Investment Trusts

Roger Stanton - Head Trader, Desk ManagerJulie Johnson – TraderMike Lacognata – Trader

Strengths:• Broad Selection with over 100 UITs available at any given time covering many styles, sectors, and

strategies. Allows clients to achieve broad equity and/or bond exposure in a low cost structure.• Perfect for use with internal Wealth Management Custom Portfolio Planning software to identify

sectors clients should be exposed too• Experienced Trading Desk coupled with resources from UIT wholesaler relationships provides strong

sales support and proactive ideas/strategies• Synergies from working with internal RBCCM research sources to develop various UIT structures


Taxable Trading - Treasuries & Agencies (GSEs)

Bill LaRocco – Head Trader, Desk Manager David Cohen – TraderBob Irving - TraderAngie Soriano – Agency Desk Marketing

Strengths:• Availability of new issues• Strong secondary market presence• Full range of products across the curve: bullets/callables, zeros, state-exempt names, inflation-indexed

issues• Proactive marketing of ideas and strategies to The Tucker team


Bond Portfolio Analysis and Recommendations

•Bond Portfolio Analysis•Monthly Cash Flow•Maturity•Laddered Portfolio Recommendations•Fees

Laddered Portfolio

Tuesday, September 29, 2009

Prepared For: City of Oakland MERP

Prepared By: David Tucker, III

DurationRating /

FDIC #

Yield to

WorstCusip Issue Coupon Maturity Price Principal Net AmountYield to

Maturity

Accrued

Interest

Qty

(000)

250 $250,000.00$0.0002586TL69 AMERICAN EXPRESS CENTURION

BK SALT LAKE CITY UTAH

PRIMARY Conditional Puts - Death of

holder - Restricted States: OH,TX

2.400% 10/09/2012 $100.000 2.400% $250,000.00 2.400% 2.9227471

250 $250,000.00$0.002581157R9 DORAL BANK

PRIMARY Callable 04/10@100 -

Conditional Puts - Death of holder -

Restricted States: PR

3.000% 10/09/2013 $100.000 3.000% $250,000.00 3.000% 3.7832102

100 $100,000.00$0.0006740KBY2 BARCLAYS BANK DELAWARE

PRIMARY Conditional Puts - Death of

holder

3.250% 10/07/2014 $100.000 3.250% $100,000.00 3.250% 4.6557203

100 $99,454.90$0.0017312QMH9 CITIBANK NATL ASSN LAS VEGAS

NEV PRIMARY Conditional Puts -

Death of holder

3.150% 10/07/2014 $99.455 3.269% $99,454.90 3.269% 4.667213

250 $250,000.00$0.0036966R4P8 GENERAL ELECTRIC CAPITAL

CORPORATION Conditional Puts -

Death of holder

4.100% 10/15/2015 $100.000 4.100% $250,000.00 4.100% 5.40Aa2/AA+

250 $258,579.69$4,088.8931331GTF6 FEDERAL FARM CR BKS GLOBAL 3.680% 04/20/2016 $103.432 3.097% $262,668.58 3.097% 5.81Aaa/AAA

300 $300,000.00$0.0061745E6A4 MORGAN

STANLEY Callable 01/10@100 - Multi-

Step Coupon

5.000% 10/07/2024 $100.000 6.261% $300,000.00 5.000%(c)

0.25A2/A

RateStep Date

5.000%10/07/2009

7.250%10/07/2014

3.623% $100.536 $1,508,034.59 $1,512,123.48$4,088.89Weighted Averages and Totals

Avg Yrs

Maturity

Avg

Price

Total

Accrued

Interest

Total

Principal

Total

Investment

Avg

Coupon

6.95 3.786% 3.534%

Avg

Yield to

Maturity

Avg

Yield to

Worst

3.65

Avg

Duration

(n) Floating/Variable rate - (c) Yield to Call - (p) Yield to Par Call - (w) Yield to Middle Call - (u) Yield to Put - (dis) Discount Yield - (r) Pre-Refund - (t) Mandatory Put - (f) Called in Full

Oct/09 Nov/09 Dec/09 Jan/10 Feb/10 Mar/10 Apr/10 May/10 Jun/10 Jul/10 Aug/10 Sep/10 First Year

AMERICAN EXPRESS CENTURION BK S 2,992 $2,992

DORAL BANK 637 616 637 637 575 637 616 637 616 637 637 $6,884

BARCLAYS BANK DELAWARE 1,621 $1,621

CITIBANK NATL ASSN LAS VEGAS NEV 1,571 $1,571

GENERAL ELECTRIC CAPITAL CORPOR 5,324 $5,324

FEDERAL FARM CR BKS GLOBAL 4,600 4,600 $9,200

MORGAN STANLEY 7,500 $7,500

Total $4,600 $637 $616 $637 $637 $575 $24,244 $616 $637 $616 $637 $637 $35,091

Monthly Coupon Payments

Page 1 of 2

Laddered Portfolio

Tuesday, September 29, 2009

Prepared For: City of Oakland MERP

Prepared By: David Tucker, III

$1,508,034.59

$4,088.89

$1,512,123.48

$35,090.91

$1,500,000.00

3.623%

$100.54

3.604%

3.786%

3.65

3.534%Total Principal

Total Accrued Interest

Total Investment

Next 12 months Income

Maturity Value

Average Coupon

Average Price

Average Yield to Maturity

Average Duration

Tax Equivalent Yield6.95 yr(s)Average Maturity

Ladder Summary

Average Yield to Worst 3.534%

Annualized Current Yield

$0

$4,000

$8,000

$12,000

$16,000

$20,000

$24,000

$28,000

10/1

/200

9

11/1

/200

9

12/1

/200

9

1/1/

2010

2/1/

2010

3/1/

2010

4/1/

2010

5/1/

2010

6/1/

2010

7/1/

2010

8/1/

2010

9/1/

2010

Monthly Coupon Payments

2.00

2.40

2.80

3.20

3.60

4.00

4.40

4.80

5.20

10/9

/201

2

10/9

/201

3

10/7

/201

4

10/7

/201

4

10/1

5/20

15

4/20

/201

6

10/7

/202

4

Yield vs. Maturity

The information provided herein, while not guaranteed as to timeliness, accuracy or completeness, has been obtained from sources which we believe to be reliable. Under no

circumstances should the information provided herein be construed as an offer to sell or solicitation of an offer to buy a particular security. Prices, yields, and availability are time

sensitive and subject to change. Certain call or special redemption features may exist which could impact yield. On fixed income securities, accrued interest changes daily. Please

contact your Financial Consultant for more information.

Use of AMT bonds in accounts that are subject to AMT can have an altered affect on the actual yield. Please contact your Tax Advisor for more information.

Page 2 of 2

David Tucker, III Fixed Income Strategies Group

CITY OF OAKLAND MERP Bond Portfolio Analysis

Summary

Total Investment 6

Total Par (000)AverageYield 1

AverageMaturity 2

Avg. Call Protection 5

Avg. Credit Quality

AveragePrice 3

Annual Income 4

U.S.Treasury

CDs $700,000 $700 2.84% 4 Yrs. 4 Yrs. AAA $100 $19,900

Agency &GSE $258,575 $250 3.10% 6.6 Yrs. 6.6 Yrs. AAA $103.430 $9,200

Corp $550,000 $550 4.59% 10.9 Yrs. 2.9 Yrs. A1 $100.000 $25,250

HighYield

Pfd3

MBS

Munis7

Portfolio Averages $1,508,575 $1,500 3.53% 7 Yrs. 4 Yrs. AA1 $100.572 $54,350

Prepared for:

Financial Consultant:

Date Prepared: September 29, 2009

1 All averages are weighted by the investment amount. Yield used is the yield-to-maturity or yield-to-call, whichever is lower, except MBS which uses the bond equivalent yield to the estimated average life.2 Uses the estimated average life for Mortgage-Backed Securities.3 Price as a Percent of Par.

6 The above prices, yields and maturities have been obtained from sources believed to be reliable, but are not necessarily complete and can not be guaranteed. Prices, yields and availability of specific issues are subject to change. Totals are subject to rounding errors.

7 Yield and income are taxable equivalents based on a combined state and federal tax rate of 0% for IRA Double Exempt Bonds and 0% for others

4 MBS annualized income is estimated and will reduce as principal is returned.5 Average weighted call protection does not include mortgage-backed securities, whose prepayment activity is unknown.

CDs47%Agency &

GSE17%

Corp36%

Page 1

Financial Consultant: David Tucker, III Fixed Income Strategies GroupPrepared for: CITY OF OAKLAND MERP Bond Portfolio Analysis

Date Prepared: September 29, 2009 Summary

Industry Sector Market Value Quality Sector Market Value

Taxable - BANK 46.55% AAA 63.43%

Taxable - FINANCIAL 36.57% A2e 19.95%

Taxable - GOVT AGENCY 16.88% Aa2e 16.62%

Grand Total 100.00% Grand Total 100.00%

Total Investment $1,508,575 Average Coupon 3.62%Total Par Value $1,500,000 Annual Coupon Cash Flow $54,350Taxable Equivalent Yield* 3.52% Taxable Equivalent* $54,350Average Maturity Date 09/10/2016 Percent Subject to AMT 0.0%Percent of Portfolio Callable 36.6% Percent of Market Value Insured 0%Average Call Date 02/17/2010 Average Yield (To Worst) 3.53%Average Credit Quality AA1 Average Yield (To Maturity) 3.78%

* Taxable equivalents based on a combined state and federal tax rate of 0% for IRA Double Exempt Bonds and 0% for others* Security values and gains / (losses) are based on pricing estimates at time of evaluation.* Information based on Bloomberg data* No guarantee can be made as the accuracy of this analysis. This material is intended for informational purposes only and does not constitute, and should not be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell securities

Portfolio Characteristics

Page 2

09/29/2009 Fixed Income Strategy Bond Portfolio Analysis

Summary

CITY OF OAKLAND MERPPortfolio Characteristics

Average Yield (To Worst) 3.53% Average Credit Quality AA1Average Yield (To Maturity) 3.78% Percent of Market Value Insured (Munis) 0% Taxable Equivalent Book Yield* 3.52%Average Coupon 3.62% Percent of Market Value Subject to AMT 0.0%Average Maturity Date 9/10/2016 Percent of Portfolio Callable 36.6% Avg Monthly Coupon Cash Flow $4,529Average Effective Maturity (Maturity/Call) 9/10/2016 Average Call Date 02/17/2010 Taxable Equivalent* $4,529Years to Effective Maturity (Maturity/Call) 6.95 Number of Holdings 7 Average Modified Duration (Maturity/Call) 5.58 Average Market Value $214,843 Annual Coupon Cash Flow $54,350Total Investment $1,508,575 Accrued Interest $4,033 Taxable Equivalent* $54,350Total Par Value $1,500,000

Sector Characteristics

Maturity Sector Market Value Coupon Sector Market Value Industry Sector Market Value STATE_CODE Market Value2 - 4 Yrs 16.62% 2 - 3% 16.62% Taxable - BANK 46.55% Grand Total #DIV/0!4 - 6 Yrs 29.92% 3 - 4% 46.81% Taxable - FINANCIAL 36.57%6 - 8 Yrs 33.51% 4 - 5% 16.62% Taxable - GOVT AGENCY 16.88%Above 10 Yrs 19.95% 5 - 6% 19.95% Grand Total 100.00%Grand Total 100.00% Grand Total 100.00%

Effective Maturity nt of Portfolio %2 - 4 Yrs 28.57%4 - 6 Yrs 42.86%6 - 8 Yrs 14.29%Above 10 Yrs 14.29%Grand Total 100.00% Quality Sector Market Value Call Protection Portfolio %

AAA 63.43% 0 - 2 Yrs 36.6%A2e 19.95% Noncall 63.4%Aa2e 16.62% Grand Total 100.0%Grand Total 100.00%

Duration Sector Market Value2 - 4 Yrs 33.25%4 - 6 Yrs 46.81%Above 10 Yrs 19.95%Grand Total 100.00%

* Taxable equivalents based on a combined state and federal tax rate of 0% for IRA Double Exempt Bonds and 0% for others* Security values and gains / (losses) are based on pricing estimates at time of evaluation.* Information based on Bloomberg data

Cash Flows and Taxable Equivalents

* No guarantee can be made as the accuracy of this analysis. This material is intended for informational purposes only and does not constitute, and should not be considered as an offer to buy or sell, or a solicitation of an offer to buy or sell securities

Page 3

09/29/2009 Holdings

CusipPar

Value% of

Portfolio Name CouponMaturity Date 1 Call Date Bond Sector Industry

Credit Enhancement

Rating 2 State AMT

Double-Exempt Price YTW

02586TL69 250 16.6% American Express Bk Centurion 2.400 10/09/2012 CDs Taxable - BANK FDIC AAA N 100.000 2.40

2581157R9 250 16.6% Doral Federal Savings Bank 3.000 10/09/2013 04/09/2010 @ 100 CDs Taxable - BANK FDIC AAA N 100.000 3.00

06740KBY2 100 6.6% Barclays Bank Delaware 3.250 10/07/2014 CDs Taxable - BANK FDIC AAA N 100.000 3.25

17312QMH9 100 6.6% Citibank Na 3.150 10/07/2014 CDs Taxable - BANK FDIC AAA N 100.000 3.15

36966R4P8 250 16.6% General Elec Cap Corp 4.100 10/15/2015 Corporate Bonds Taxable - FINANCIAL Aa2e N 100.000 4.10

31331GTF6 250 16.9% Federal Farm Credit Bank 3.680 04/20/2016 Agency/GSE Taxable - GOVT AGENCY AAA N 103.430 3.10

61745E6A4 300 19.9% Morgan Stanley 5.000 10/07/2024 01/07/2010 @ 100 Corporate Bonds Taxable - FINANCIAL A2e N 100.000 5.00

1 Uses the estimated average life for Mortgage-Backed Securities.2 Represents Bloomberg generated Composite Rating when available. Always refer to the Credit Review Page. If NR refer to the Credit Page Page 4

Prepared For: CITY OF OAKLAND MERPCertificates of Deposits

CusipPar

AmountCredit

Quality* Security Coupon Maturity Call Date Price YTW02586TL69 250 AAA American Express Bk Centurion 2.400 10/09/2012 100.000 2.402581157R9 250 AAA Doral Federal Savings Bank 3.000 10/09/2013 04/09/2010 @ 100 100.000 3.0006740KBY2 100 AAA Barclays Bank Delaware 3.250 10/07/2014 100.000 3.2517312QMH9 100 AAA Citibank Na 3.150 10/07/2014 100.000 3.15

Total Par $700

Average Yield 2.84%

Average Credit Quality AAA

Average Maturity 4 Yrs.

Total Investment $700,000Annual Income $19,900

* Credit Quality shown represents Bloomberg generated Composite Rating when available. For detailed information refer to the Credit Review Page. If Non Rated (NR) refer to the Credit Review Page Page 5

Prepared For: CITY OF OAKLAND MERPAgencies

CusipPar

AmountCredit

Quality* Security Coupon Maturity Call DateCall

Type1 Price YTW31331GTF6 250 AAA Federal Farm Credit Bank 3.680 04/20/2016 Noncall 103.430 3.10

Total Par $250

Average Yield 3.10%

Average Credit Quality AAA

Average Maturity 6.6 Yrs.

Total Investment $258,575Annual Income $9,200

1 Call Type: A = American (anytime), B= Bermuda (Coupon Date Only), E=European (1 time only)


Prepared For: CITY OF OAKLAND MERPCorporate Bonds

CusipPar

AmountCredit

Quality* Security Coupon Maturity Call Date Price YTW36966R4P8 250 Aa2e General Elec Cap Corp 4.100 10/15/2015 100.000 4.1061745E6A4 300 A2e Morgan Stanley 5.000 10/07/2024 01/07/2010 @ 100 100.000 5.00

Total Par $550

Average Yield 4.59%

Average Credit Quality A1

Average Maturity 10.9 Yrs.

Total Investment $550,000

Annual Income $25,250


Credit Review

Cusip Par Amount Security Coupon Maturity Call Date Sector Moodys

Moody's Watchlist

Date

Moodys Outlook

Moody's Outlook

DateS & P

S & P Watchlist

Date

S & P Outlook

S & P Outlook

Date

Credit Enhancement

Moody's Underlying

S & P Underlying

02586TL69 250 American Express Bk Centurion 2.400 10/09/2012 CDs STABLE 04/24/2009 NEG 04/30/2009 FDIC2581157R9 250 Doral Federal Savings Bank 3.000 10/09/2013 04/09/2010 @ 100 CDs FDIC06740KBY2 100 Barclays Bank Delaware 3.250 10/07/2014 CDs FDIC17312QMH9 100 Citibank Na 3.150 10/07/2014 CDs STABLE 02/27/2009 STABLE05/08/2009 FDIC36966R4P8 250 General Elec Cap Corp 4.100 10/15/2015 Corporate Bonds Aa2e STABLE 03/23/2009 AA+e STABLE03/12/200931331GTF6 250 Federal Farm Credit Bank 3.680 04/20/2016 Agency/GSE Aaa STABLE 08/06/2002 AAA61745E6A4 300 Morgan Stanley 5.000 10/07/2024 01/07/2010 @ 100 Corporate Bonds A2e NEG 12/17/2008 Ae NEG 12/19/2008

Page 8

Monthly Cash Flow

$625

$625

$625

$24,0

50

$625

$625

$625

$625

$625

$24,0

50

$625

$625

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Jan Feb Mar Apr May Jun Jly Aug Sep Oct Nov Dec

Maturity / Runoff Schedule

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Shortest Possible Current Market Workout Longest Possible

RBC Wealth Management Fixed-Income Strategies GroupRBC Capital Markets is the trade name used by the fixed income business of RBC Wealth Management, a wholly owned subsidiary of Royal Bank of Canada (RBC). Products and services are offered through RBC Wealth Management [or RBC Capital Markets Corp., as applicable].

The material contained herein is not a product of any research department of RBC Capital Markets or any of its affiliates. Nothing herein constitutes a recommendation of any security or regarding any issuer; nor is it intended to provide information sufficient to make an investment decision.

The information contained in this communication has been compiled by RBC Capital Markets from sources believed to be reliable, but no representation or warranty, express or implied, is made by RBC Capital Markets, its affiliates or any other person as to its accuracy, completeness or correctness.

All opinions and estimates contained in this communication constitute RBC Capital Markets’ judgment as of the date of this communication, are subject to change without notice and are provided in good faith but without legal responsibility.

Nothing in this communication constitutes legal, accounting or tax advice or individually tailored investment advice. This material is prepared for general circulation to clients and may have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The investments or services contained in this communication may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services.

Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.

Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as wellas the process for doing so. As a result, any specific securities discussed in this communication may not be eligible for sale in some jurisdictions. This communication is not, and under no circumstances should be construed as, a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction.

To the fullest extent permitted by law neither RBC Capital Markets, nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this communication or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of RBC Capital Markets.

RBC Capital Markets may buy from or sell to customers on a principal basis in the securities or related derivatives that are the subject of this communication.

RBC Capital Markets has or may have proprietary positions in the securities or in related derivatives that are the subject of this communication.

RBC Capital Markets may have been manager or co-manager of a public offering of securities of the issuer within the past twelve months. Additional information is available upon request.

Oct. 8, 2009 Core Fixed Income 1

Fred P. HurstVice President / Business Development(415) [email protected]

Jack Montgomery, CFAVice President / Director of Taxable Fixed Income(415) [email protected]

HIGHMARK CAPITAL MANAGEMENT PRESENTATION FOR

OAKLAND MUNICIPAL EMPLOYEES’ RETIREMENT SYSTEM


FIRM OVERVIEW

Equities, 25.3%

Cash & Fixed Income, 74.1%

• Wholly-owned subsidiary of Union Bank, N.A.

• San Francisco-based Registered Investment Advisor with more than $17 billion in assets under management

• Managing assets since 1919 using a multi- disciplined approach for mutual funds and commingled funds as well as other institutional clients

• Experienced staff of 140 professionals with 19 years average experience, including 63 investment professionals and 25 CFAs

• Ranked #10 in Barron’s 2008 Fund-Family Rankings report; received 5 Lipper Awards for 2008

• Resources of a larger firm benefiting from advantages typically reserved for smaller organizations

Assets Under Management as of 7/31/2009 $17.4 Billion

(In Billions)

Client Base Asset Class

Mutual Funds & Commingled Funds, $10.0

Advisory Portfolios*,

$7.4

*Institutional, high-net-worth, and family trust relationships

Representative Client List**

**This partial list of clients is not intended to serve as a reference for our investment management services. Client references are available upon request.

City of Concord Gunite Workers Local 345City of Oxnard JELD-WEN, Inc.Contra Costa Water District Komatsu America Corp.Core-Mark International La ClinicaCounty of Merced Oakdale Irrigation DistrictEarthjustice Legal Defense Fund Price Smart, Inc.El Toro Water District So Cal Pipe TradesEplica Insurance So Cal UFCWFresno Community Hospital Sprint Nextel Corp.Frontier Oil Corp. TDK USA, Inc.


ASSET ALLOCATION COMMITTEE

Asset AllocationCommittee

IPC

RIC

Critical function since our business requires managing Asset Allocation decisions for Defined Benefit, Endowment, and Individual Trust clients with multi-asset objectives

Managing Strategic Policy Targets and Tactical Asset Allocation

Asset AllocationCommittee

Global Economic Conditions

Capital Market OutlookProfit Forecast

Market Demographics & TrendsInterest Rates, Currencies

Investment ProfessionalsInvestment Professionals8

Investment ExperienceInvestment Experience25 year average

HighMark Capital ManagementHighMark Capital Management13 year average

MultiMulti--disciplinary Groupdisciplinary GroupEquity, Bond, Quantitative


CORE FIXED INCOME STRATEGY OVERVIEW

GOALS

PHILOSOPHY

To construct an actively managed, high quality, diversified portfolio of intermediate term securities that will outperform the benchmark.

We seek to take advantage of opportunities arising from changes in interest rates, volatility, credit and sector spreads, and the shape of the yield curve in constructing a diversified intermediate term portfolio that attempts to outperform the Index and provide a competitive total return.

STRATEGY

Interest rate and credit risk, the key determinants of portfolio volatility and performance, are carefully monitored and controlled to achieve the highest total return for any given level of risk.

Core Fixed Income Strategy

Investment Style Intermediate Taxable Fixed Income

Primary Benchmark Barclays U.S. Aggregate Bond Index

Average Credit Quality Ranges A to AAA

Strategy Total Net Assets $510 MM

Number of Securities 60 - 90

HIGHLIGHTS • High-quality, actively managed strategy• Consistent management since 1994• Strict adherence to fundamental credit research• No leveraged interest rate or prepayment risk• Avoids major or sudden shifts to portfolio duration


CORE FIXED INCOME INVESTMENT PROCESS

Fundamental economic analysis provides top-down view and establishes portfolio interest rate risk target and identifies attractive economic sectors

Market analysis is used to control interest rate risk and credit risk, the primary determinants of portfolio volatility

Disciplined portfolio construction process includes fundamental and quantitative credit analysis

1.Fundamental

Economic Analysis

2.Market

Analysis

3.Portfolio

Construction

Risk Management



• Real Interest Rates

• Economic Growth

• Inflation

• Trade

• Capacity Utilization

• Treasury/Corporate Spread

• Yield Curve Slope

• Currency Strength

1.Fundamental

Economic Analysis



Duration Management• Manages portfolio duration within range of 75% to 125% of Barclays

Aggregate Index

Sector Analysis• Identifies sectors offering highest total return potential.• Determines relative portfolio weights for major sectors such as

Treasury, Agency, Corporate, Mortgage-Backed, and Asset-Backed securities

Term Structure• Positions the portfolio to take advantage of changes in the slope of

the yield curve

Quality Spreads• Monitors spreads among quality sectors from AAA to BBB to position

the portfolio for maximum risk-adjusted return

2.Market

Analysis


MERRILL U.S. CORPORATE MASTER INDEX Option Adjusted Spread, January 1997 – July 2009

0

100

200

300

400

500

600

700

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Bas

is P

oint

s

A verag e 157 b p

+1 st d d ev 2 71 b p

- 1 st d dev

Dec. 2008 +656 bp

Oct. 1997 +53 bp

Sector spreads are analyzed relative to the long term mean, and assets are

allocated in proportion to each sector’s deviation from its mean.



DiversificationCredit risk is spread across multiple industries and companies

Scenario AnalysisMonte Carlo analysis is used to determine interest rate sensitivity and total return characteristics

Security SelectionTop-down macro-economic analysis selects economic sectors while fundamental security analysis identifies attractive buy candidates

Portfolio RepositioningPortfolios are repositioned to take advantage of opportunities arising from changes in interest rates, the yield curve, sector, and credit spreads

3.Portfolio

Construction


CORE FIXED INCOME PORTFOLIO CHARACTERISTICS As of June 30, 2009

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Treasury Agency MBS ABS CMBS Corp Bonds Int'l Cash

Core Fixed IncomeBarclays Aggregate Bond Index

Core Fixed Income Portfolio Characteristics Quality

Core Fixed Barclays Agg Bond

Treasury/Agency 39.3% 73.2%

AAA 13.7% 5.8%

AA 3.8% 3.6%

A 19.4% 9.6%

BBB 21.1% 7.8%

Below BBB 2.7% 0.0%

Core Fixed Barclays Agg Bond

Average Maturity 5.35 yrs 5.88 yrs

Effective Duration 3.79 yrs 4.24 yrs

Average Quality AA- AAA

Yield to Maturity 4.99% 3.93%

Average Coupon 5.63% 4.94%


CORE FIXED INCOME ANNUALIZED INVESTMENT RETURNS As of June 30, 2009

0%

2%

4%

6%

8%

HM Core Fixed IncomeComposite

3.71% 5.48% 6.00% 6.70% 5.29% 6.21%

Barclays Aggregate BondIndex

1.79% 1.91% 6.06% 6.43% 5.02% 5.98%

2Q09* YTD* 1 Yr 3 Yrs 5 Yrs 10 Yrs

Annualized Total Rate of Return

*Returns for periods under one year are not annualized.Past performance does not guarantee future results. Securities investments involve risk, including the possible loss of the principal amount invested. Investments are not deposits of the advisor’s parent or any of the advisor’s affiliates, and are not FDIC insured. This information is suitable only for one-on-one presentations, is unaudited, and is not intended for distribution to the general public. Please refer to page 16 for important disclosures.


PORTFOLIO REQUIREMENTS AND FEES

Proposed Annual Investment Management Fees for OMERS

0.50%* on the first $5 million

0.40%* on all assets over $5 million

Minimum Annual Fee: $7,500Fees are calculated quarterly and paid in arrears.

*Investment management fees are waived on all assets invested in HighMark Funds. Fee waivers are subject to HighMark’s discretion.For more information on advisory fees, please refer to HighMark’s Form ADV.


PORTFOLIO MANAGEMENT TEAM

David Goerz, Senior Vice President and Chief Investment OfficerDavid Goerz joined HighMark in 2003. As CIO, David provides leadership to all of HighMark’s investment activities. He chairs the Investment Policy Committee, the Asset Allocation Committee, and is a member of the Executive Committee of HighMark Capital. Prior to joining HighMark, he was Chief Investment Officer at Morningstar Associates and mPower Advisors, prior to their purchase. Previously, he was Director of Global Asset Allocation Research and Portfolio Manager for Wellington Management. He also held portfolio management and senior investment research positions with TSA Capital Management and ARCO Investment Management. David received his BS from UCLA in Applied Mathematics and a Masters in Operations Research Engineering from Stanford. David regularly appears on various business news programs for CNBC as well as Bloomberg TV and Radio. He also is quoted frequently in the Wall Street Journal, Business Week, Financial Times, Investment News, Reuters, MSN Money, Forbes, and other investment periodicals. He also serves on the Board of Directors for Axioma, Inc. and Mismi, Inc., two investment software companies based in New York.

Doug Foreman, Senior Vice President, Director of EquitiesDoug Foreman, Senior Vice President, Director of Equities, joined HighMark Capital Management, in April of 2009. As Director of Equities, Doug is primarily responsible for management and oversight of the Equity Division including Equity Research, Equity Portfolio Management, Quantitative Strategies and Equity Trading. He is a member of both the HighMark Investment Policy Committee (IPC) and the Asset Allocation Committee. Prior to joining HighMark, Doug was the Group Managing Director and Chief Investment Officer of US Equities at Trust Company of the West (TCW) in Los Angeles from 1994 through 2006. Prior to TCW, Doug was a Portfolio Manager at Putnam Investments in Boston managing several mutual funds. Additionally, while in the U.S. Navy, he served aboard a Destroyer and taught celestial navigation for ROTC students at MIT. Doug has made frequent appearances on business television and radio programs and brings to HighMark over 21 years of investment experience. Doug received a Bachelor of Science degree in Marine Engineering from The U.S. Naval Academy and an M.B.A. with a concentration in Finance from Harvard University.


CORE FIXED INCOME TEAM

E. Jack Montgomery, CFA, Director of Taxable Fixed IncomeJack joined HighMark in 1994. He is responsible for taxable fixed income strategies at HighMark, including two mutual funds – HighMark Short Term Bond Fund and HighMark Bond Fund. In addition, he is a member of HighMark’s Investment Policy Committee (IPC) and Asset Allocation Committee (AAC). Jack has more than 27 years investment management experience. Formerly, Jack was the portfolio manager of the San Francisco Employees' Retirement Systems fixed income portfolio. In addition, Jack spent eleven years at First Interstate Bank of Oregon, managing employee benefit fixed income portfolios. Jack has an MBA in Finance from the University of Oregon at Eugene and a BA in Finance from the University of Oklahoma. Jack is a member of the San Francisco Society of Financial Analysts and is a holder of the right to use the Chartered Financial Analyst designation from the CFA Institute.

Gregory B. Lugosi, Funds ManagerGreg Lugosi joined HighMark Capital Management in August of 1991. Greg is responsible for managing taxable fixed income funds and separate accounts as well as executing fixed income trades on behalf of regional portfolio managers. In particular, Greg is the primary portfolio manager for the Union Bank Stable Value Fund. Greg has ten years of investment management experience with firms that include Union Capital Advisors, a predecessor organization, Planned Asset Management, and Petra Financial Group. Greg received a Bachelor of Arts degree in Business Administration from Woodbury University.


CORE FIXED INCOME TEAM

Philip B. Levy, Senior Fixed Income Securities AnalystPhil Levy joined HighMark Capital Management in February of 2008. Phil is responsible for performing corporate bond research for the taxable fixed income strategies. He has more than 17 years experience in the investment industry including nine years credit research experience at American Century Investments. Prior to this position, Phil was an Auditor at KPMG Peat Marwick. He began his career in the industry as a Fund Accounting Analyst at Franklin Templeton Investments. Phil is a Director and past President of the CFA Society of San Francisco. He received a Bachelor of Arts degree from the University of California at Santa Barbara. In addition, Phil is a CFA charter-holder and a Certified Public Accountant (CPA).

Andrew A. Gilligan, Vice President and Fixed Income Securities AnalystAndrew Gilligan joined HighMark Capital Management in September of 1998. Andrew is responsible for evaluating the creditworthiness of securities for the money market, cash management, municipal bond and regional investment teams. His primary coverage is for financial institutions. Andrew has more than 18 years research experience. Prior to joining HighMark, Andrew was Vice President and High Grade Research Analyst at Bear Sterns & Co., covering banks. Prior to this position, he performed quantitative research for equity portfolio managers as a Research Analyst at First Chicago NBD Corporation. Andrew is an active member of the CFA Society of San Francisco and the Fixed Income Analyst’s Society. He received a Bachelor of Arts degree from the University of Chicago and is a CFA charter-holder.

Timothy Z. Louie, Vice President and Senior Fixed Income Securities AnalystTim Louie joined HighMark Capital Management in April of 1998. Tim is responsible for analyzing the credit risk of fixed income investments including asset- backed commercial paper conduits, structured asset-backed issues and domestic and international companies for the money market team. He is also responsible for ensuring compliance with 2a-7 regulations in money market fund investments. Tim has more than 16 years experience in the investment industry having previously held positions with Charles Schwab Investment Management, Inc., Charles Schwab & Co., and Bank of America Corporation. Tim received a Bachelor of Arts degree in Political Science from the University of California at Berkeley. He earned a Master’s degree in International Accounting and Finance from London School of Economics, and a Master’s degree in Business Administration with an emphasis in Accounting and Finance from University of Southern California.


DISCLOSURESThis unaudited information is approved for one-on-one presentations only and is not intended for reproduction or distribution or to provide specific investment advice to any individual. HighMark Capital Management, Inc., ("HighMark") a wholly-owned subsidiary of Union Bank, N.A., is an SEC-registered investment adviser and serves as the investment adviser for the HighMark Funds. Please refer to HighMark's Form ADV for more information, including advisory fees. HighMark Funds are distributed by PFPC Distributors Inc., which is unaffiliated with the adviser, its parent or any affiliates. Union Bank, N.A., a subsidiary of UnionBanCal Corporation, performs certain services for the HighMark Funds and other investment products managed by HighMark and is compensated for these services.

All investments, including in the HighMark Funds or HighMark strategies, are not deposits, obligations of or guaranteed by the adviser, its parent, or any affiliates. Investments involve risk, including possible loss of principal, and are not insured by the FDIC or any other governmental agency. Past performance is no indication of future results. Current performance may be higher or lower than the performance data quoted.

Some information provided herein was obtained from third party sources deemed to be reliable; HighMark and its affiliates make no representations or warranties with respect to the timeliness, accuracy, or completeness of the information provided. Any information provided is subject to change without notice.

Composite returns represented on page 11:A complete list and description of firm composites and additional information regarding the firm's policies and procedures for calculating and reporting performance results are available upon request. All returns are expressed in U.S. dollars. The Core Fixed Income Composite includes all institutional portfolios invested in a diversified portfolio of investment grade U.S. fixed income securities. The composite was created in January 1996. As of June 30, 2009, the composite represented 3 accounts totaling $348 million in assets, which is 2.07% of total assets under management for the firm.

The benchmark is the Barclay's Capital (BC) U.S. Aggregate Bond Index, which is unmanaged that is generally representative of the U.S. investment grade taxable bond market as a whole. Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. An investor cannot invest directly in an index. Total benchmark returns assume the reinvestment of dividends and other earnings.

Past performance does not guarantee future results. Securities investments involve risk, including the possible loss of the principal amount invested. Returns for periods under one year are not annualized. Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. Client's return will be reduced by the advisory fees and other expenses it may incur as a client. Fees charged are at the discretion of HighMark Capital Management, Inc. and Union Bank, N.A.; investment advisory fees are described in Part II of HighMark's Form ADV, which is available upon request. Assuming an investment for 5 years, a 5% annual total return, and an annual fee rate of 0.50% deducted from the assets at market value at the end of each year, a $10 million initial value would grow to $12.45 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees).

The standard management fee schedule is 0.50%. The minimum portfolio size for inclusion in the Core Fixed Income Composite is $3 million.Past performance does not guarantee future results. Securities investments involve risk, including the possible loss of the principal amount invested. Investments are not deposits of the advisor’s parent or any of the advisor’s affiliates, and are not FDIC insured.

© HighMark Capital Management, Inc. 2009. All rights reserved.

5.24%

2.30%

2008

6.96%

7.26%

2007

4.33%

4.58%

2006

2.43%

2.60%

2005

4.33%

4.54%

2004

8.68%-0.82%11.62%8.44%10.25%4.10%Barclays Aggregate Bond Index

-1.07%

1999

9.15%

1998

11.59%

2000

8.87%8.68%5.54%HM Core Fixed Income Composite

200120022003Historical Returns

5.24%

2.30%

2008

6.96%

7.26%

2007

4.33%

4.58%

2006

2.43%

2.60%

2005

4.33%

4.54%

2004

8.68%-0.82%11.62%8.44%10.25%4.10%Barclays Aggregate Bond Index

-1.07%

1999

9.15%

1998

11.59%

2000

8.87%8.68%5.54%HM Core Fixed Income Composite

200120022003Historical Returns


SUMMARY

• Local portfolio management firm with more than 90 years of fiduciary experience and $17 billion in assets under management

• Resources of a larger firm benefiting from advantages typically reserved for smaller organizations

• Actively managed Core Fixed Income strategy with strong risk management controls– Duration management– Portfolio structuring– Sector rotation– Credit research

• Team manages more than $2 billion in assets on behalf of a diverse tax-exempt client base, including public agencies, taft-hartley, corporate retirement, and endowments

– Solid and consistent investment performance

• Commitment to excellence and high ethics

OMERS Investment CommitteeSeptember 25, 2008

Page 1 of 2

A SPECIAL MEETING OF THE INVESTMENT AND FINANCIAL MATTERS COMMITTEE ofthe Oakland Municipal Employees' Retirement System was held September 25, 2008 inhearing room 2, One Frank Ogawa Plaza, Oakland, California.

Committee Members Present: -Carl Gilmore, Chairman-William Noland, Member-William Russell, Member

Committee Members Absent: -Courtney Ruby, Member

Additional Attendees: -David Sancewich, Pension Consulting Alliance-Yvonne Hudson, David Low, Teir Jenkins, Staff Member

The meeting was called to order at 12:15 PM.

1. Approval of Minutes - The Minutes of the February 28, 2008 Investment Committeemeeting, having been furnished to each member of the committee, were approved on amotion by William Noland, second by William Russell. Motion passed.

[NOLAND - Y I RUSSELL -Y 1(2-0-0)]

2. PCA Performance Report - David Sancewich reported on the OMERS investmentmanager performance report through June 30, 2008. Mr. Sancewich reviewed theindividual successes and deficiencies of each manager. Mr. Noland asked whetherWAMC0 is performing poorly enough that the board should pursue a replacementmanager. Mr. Sancewich responded that since June 30, 2008, WAMCO has performedwith a positive 200 basis points. Their recommendation would be to keep WAMCO for theshort term.

3. Committee review of current investment managers - Mr. Russell asked David Tucker IIIof RBC Dain Rauscher to report on his ongoing study of the OMERS investment portfolio.Mr. Tucker noted that RBC Dain Rauscher originally presented two different investmentplans to the OMERS board. Mr. Tucker went on to state his belief that WAMCO willcontinue to do poorly in the future due to its liability with mortgage-backed securities. Mr.Tucker firmly believed the way the OMERS Board managed its portfolio, which coincideswith the methodology emplOyed by RBC Dai~ Rauscher, is the most effective investmentstrategy for the OMERS investment plan.

4. PCA Memo outlining OMERS exposure to recent economic downturn - Mr. Sancewichreported on the exposure of the OMERS portfolio to the recent financial troubles involvingthe U.S. Companies AIG, Merrill Lynch and Lehman Brothers. Total exposure of theOMERS portfolio totaled $24,778, exclusively by way of investments from Western AssetManagement. Mr. Sancewich said he would keep the Board updated on the developmentregarding this exposure.

5. Investment Manager Comparison Report - At the request of the OMERS Board, Mr.Sancewich reported on the PCA review of one of the RBC Dain Rauscher proposals

OMERS Investment CommitteeSeptember 25, 2008

Page 2 of 2

previously submitted to the OMERS Board. Comparing apples to apples, the RBC DainRauscher proposal was compared to the WAMCO portfolio and performed more poorlythan WAMCO. Mr. Russell expressed his belief that the RBC Dain Rauscher proposal isthe more beneficial proposal for the OMERS plan.

6. New Business - Yvonne Hudson reported that staff will be presenting plans for the futureof the OMERS system for the next meeting.

7. Open Forum - No Report.

8. Future Scheduling - The next Investment committee meeting will be scheduled by staff.

The meeting adjourned at 12:50 PM.

OMERS Special Investment CommitteeSeptember 3, 2009

Page 1 of 2

A SPECIAL MEETING OF THE INVESTMENT AND FINANCIAL MATTERS COMMITTEE ofthe Oakland Municipal Employees' Retirement System was held September 3, 2009 in the 3rd

Floor Conference Room, 150 Frank Ogawa Plaza, Oakland, California.

Committee Members Present: -Courtney Ruby, Member-Joseph 1. Yew, Jr., Member-William Russell, Member

Committee Members Absent: -Carl Gilmore, Chairman

Additional Attendees: -David Sancewich, Pension Consulting Alliance-David Low, Teir Jenkins, Staff Member

The meeting was called to order at 1:00 PM.

1. Approval of September 25, 2008 Investment Committee Minutes - The Minutes of theSeptember 25, 2008 Investment Committee meeting, having been furnished to eachmember of the committee, were submitted for approval but were not approved. MemberRuby was absent at the last meeting and Former Member Bill Noland was replaced with anew board member. With only one committee member present who was at the lastmeeting, it was agreed that the approval of these minutes would be held over for the nextinvestment committee meeting. This situation occurred at the February 28, 2009 meetingas well. •

2. Approval of the March 26, 2009 Investment Committee Minutes - The Minutes of theMarch 26, 2009 Investment Committee meeting, having been furnished to each member ofthe Investment Committee, were approved on a motion by Member Ruby, second byMember Russell. Motion passed.

[RUSSELL - Y I GILMORE -(absent) I RUBY - Y I YEW - absent (2-2)]

3. PCA Performance Report - David Sancewich reported on the OMERS investmentmanager performance report through June 30, 2009. Mr. Sancewich reported that theOMERS portfolio outperformed the policy benchmark for the 1-month period by 60 basispoints, 100 basis points forthe calendar qua~er and underperformed by 560 basis pointsfor the year. Also of note; 'since inception (May 2003) the portfolio is outperforming thepolicy benchmark by 30 basis points (2.7 vs. 2.4). Mr. Sancewich proceeded to providedetails of the investment portfolio performance.

4. PCA report on memo reviewing Core Fixed Income Manager Search - Mr. Sancewichreported on the memo showing the fixed income manager search update. Mr. Sancewichexplained the search process utilized by PCA to define the selection of managers theyrecommend. These managers are J.P. Morgan, PIMCO and TS&W. Mr. Sancewich invitedthe committee members to advise on any additions or deletions to this list. Member Yewasked Mr. Sancewich to specify what managed assets were going to be affected by thisnew manager selection. Mr. Sancewich responded that the new fixed income manager

OMERS Special Investment CommitteeSeptember 3, 2009

Page 2 of 2

would take control of the OMERS assets currently managed by Western AssetManagement Co (WAMCO; Fixed income mgr) and the iShares Barclays Aggregate Bond.These assets total $1,496,134 as of June 30, 2009. Member Jew expressed his concernsthat the new investment manager may not provide good service to the OMERS portfoliobecause the investment amount is so small (compared to larger pension funds who mayinvest $14 million or more, for example). Member Yew asked if working with a smallerinvestment firm might provide more advantages and service than working with a larger firmwhere the OMERS smaller investment amount may not yield adequate service expected bythe OMERS Board. Member Russell concurred with this concern and relayed the OMERSboard's positive experiences with a previous manager who was smaller than the large firmscurrently representing the OMERS portfolio. Member Russell expressed his strong supportfor the idea of including a smaller, local firm who can provide OMERS with the attention itneeds. The addition of a small. local firm comparable in size to RBC Wealth Manaqementwould be reviewed and invited by PCA for the Core Fixed Income manaqer for OMERS.Member Russell also expressed his opinion that the OMERS investment committee shouldmeet monthly until an investment manager is selected.

5. OMERS 2009-10 administrative budget - David Low reported that the 2009-10administrative budget was intended as an agenda item for the OMERS board meeting andshould not have been included in the investment coml'J1ittee agenda package. MemberRuby asked staff to clarify reported budget item for PCA at the board meeting.

6. New Business - No Report.

7. Open Forum - David Tucker III of RBC Wealth Management spoke to the investmentcommittee regarding his com'pany's analysis of the investment performance of the OMERSportfolio.

8. Future Scheduling - The next Investment committee meeting was scheduled forThursday, October 8 at 12PM in the 3rd floor conference room in 150 Frank H. OgawaPlaza.

The meeting adjourned at 1:50 PM.

(P~ )lLCARL GILMcmE, COMMITTEE CHAIRMAN

/J/J1»U7DATE

CITY OF OAKLAND · Diversified Income Global credit combining corporate and emerging markets debt...

Documents

Transcript of CITY OF OAKLAND · Diversified Income Global credit combining corporate and emerging markets debt...