Agenda packet — Los Gatos City Council, October 6, 2025

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IMPORTANT NOTICE
This is a hybrid meeting and will be held in-person at the Town Council Chambers at 110 E.

Main Street and virtually through Zoom Webinar (log-in information provided below). You may watch the Council meeting without providing public comment on Comcast cable channel 15 or at www.LosGatosCA.gov/TownYouTube. Members of the public may provide public comments for agenda items in-person or virtually by following the instructions listed at the end of the agenda.

To watch and participate via Zoom, please go to:
https://losgatosca-gov.zoom.us/j/85488322698?pwd=7Sq4eCaTO82GZSxVmc2bKaNicYDDOu.1 Passcode: 652669
Council Member Rob Rennie will be participating via teleconference pursuant to Government Code Section 54953(b)(3) from a location at Via Guglielmo Marconi, 15, 70011 Alberobello BA, Italy. The teleconference location shall be accessible to the public and the agenda will be posted at the teleconference location 24 hours before the meeting.

CALL MEETING TO ORDER

ROLL CALL
VERBAL COMMUNICATIONS (Members of the public are welcome to address the Council only on matters listed on the agenda. Each speaker is limited to three minutes or such time as authorized by the Mayor.)
OTHER BUSINESS (Up to three minutes may be allotted to each speaker on any of the following items.)

1. Presentation and Discussion of the Local Government Investment Environment and Its Implications on the Town’s California Employers’ Pension Prefunding Trust (CEPPT) and California Employers’ Retiree Benefit Trust (CERBT) to Provide a Training Foundation for the Town Council and Finance Commission.

TOWN OF LOS GATOS
SPECIAL MEETING OF THE TOWN COUNCIL: JOINT

FINANCE COMMISSION STUDY SESSION AGENDA
OCTOBER 6, 2025
110 EAST MAIN STREET AND VIA TELECONFERENCE

TOWN COUNCIL CHAMBERS
5:30 PM
Matthew Hudes, Mayor
Rob Moore, Vice Mayor
Mary Badame, Council Member
Rob Rennie, Council Member
Maria Ristow, Council Member

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ADJOURNMENT (Council policy is to adjourn no later than midnight unless a majority of Council votes for an extension of time)
ADA NOTICE - In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the Clerk’s Office at (408) 354-6834.

Notification at least two (2) business days prior to the meeting date will enable the Town to make reasonable arrangements to ensure accessibility to this meeting [28 CFR §35.102-35.104].

NOTE: The ADA access ramp to the Town Council Chambers is currently under construction and will be inaccessible until further notice. Individuals who require the use of that ramp to attend meetings should contact the Clerk’s Office at least two (2) business days in advance to arrange for alternative accommodations.

NOTICE REGARDING SUPPLEMENTAL MATERIALS - Materials related to an item on this agenda submitted to the Town Council after initial distribution of the agenda packets are available for public inspection in the Clerk’s Office at Town Hall, 110 E. Main Street, Los Gatos and on the Town’s website at www.losgatosca.gov. Town Council agendas and related materials can be viewed online at https://losgatos-ca.municodemeetings.com/.

HOW TO PARTICIPATE
The public is welcome to provide oral comments in real-time during the meeting in three ways:
 Zoom Webinar (Online): Join from a PC, Mac, iPad, iPhone or Android device. Please click this URL to join: https://losgatoscagov.zoom.us/j/85488322698?pwd=7Sq4eCaTO82GZSxVmc2bKaNicYDDOu.1 Passcode: 652669. You can also type in 854 8832 2698 in the “Join a Meeting” page on the Zoom website at zoom.us and use passcode 652669.
o When the Mayor announces the item for which you wish to speak, click the “raise hand” feature in Zoom. If you are participating by phone on the Zoom app, press *9 on your telephone keypad to raise your hand.
 Telephone: Please dial 1 (855) 758-1310 for US Toll-free or 1 (408) 961-3927 for US Toll. (Meeting ID: 854 8832 2698)
o If you are participating by calling in, press *9 on your telephone keypad to raise your hand.
 In-Person: Please complete a “speaker’s card” located on the back of the chamber benches and return it to the Town Clerk before the meeting or when the Mayor announces the item for which you wish to speak.

NOTES: Comments will be limited to three (3) minutes or less at the Mayor’s discretion.

If you are unable to participate in real-time, you may email [email protected] with the subject line “Public Comment Item #__ ” (insert the item number relevant to your comment).

Deadlines to submit written comments are:
-11:00 a.m. the business day before the Council meeting for inclusion in an addendum. -11:00 a.m. on the day of the Council meeting for inclusion in a desk item.

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PREPARED BY: Chris Constantin
Town Manager
Reviewed by: Finance Director
110 E. Main Street Los Gatos, CA 95030 ● (408)354-6832
www.losgatosca.gov

TOWN OF LOS GATOS

TOWN COUNCIL AND

FINANCE COMMISSION REPORT
MEETING DATE: 10/06/2025
ITEM NO: 1
DATE: October 6, 2025
TO: Town Council
Finance Commission
FROM: Chris Constantin, Town Manager
SUBJECT: Presentation and Discussion of the Local Government Investment Environment and Its Implications on the Town’s California Employers’ Pension Prefunding Trust (CEPPT) and California Employers’ Retiree Benefit Trust (CERBT) to Provide a Training Foundation for the Town Council and Finance Commission RECOMMENDATION:

Discussion only and no action is recommended.

FISCAL IMPACT
There is no fiscal impact associated with receiving this presentation. Any potential fiscal impact regarding the transfer of funds from CEPPT to California Public Employees’ Retirement System (CalPERS) will be considered in the future, pending direction from the Town Council, which serves as the Pension OPEB Trust Oversight Committee.

STRATEGIC PRIORITIES
This presentation furthers one of the Town Council’s top strategic priorities for ensuring prudent financial management. Additionally, it furthers the core goals of Fiscal Stability and Civic Engagement as it will enhance the ability to understand the complex area of how the Town can address its pension and OPEB liabilities.

BACKGROUND:

On November 5, 2019, the Town Council authorized participation in the CEPPT administered by CalPERS, selecting Strategy 2 as the Town’s investment allocation beginning March 2020. As of

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ITEM NO. 1.

PAGE 2 OF 2
SUBJECT: Fiduciary Presentation on Investment Environment and Trust Implications DATE: October 6, 2025
June 30, 2025, the Town’s CEPPT account balance was $3,090,730.98, with a Fiscal Year-to-Date (FYTD) net return of 8.63%.

The Town also participates in the CERBT to prefund Other Post-Employment Benefits (OPEB), selecting Strategy 1 as its investment allocation. As of June 30, 2025, the CERBT balance was $30,284,763.02, with a FYTD net return of 12.27%.

Separately, in April 2025, the Town engaged Shuster Advisory Group, LLC as its fiduciary investment advisor and plan consultant following a competitive Request for Proposals process.

Shuster currently advises the Town on its 457(b), 401(a), and other retirement-related plans, and provides independent fiduciary investment oversight for governmental pension, OPEB, and trust assets.

DISCUSSION:

The Town Council, who also serve as the Pension and OPEB Trusts Oversight Committee, is holding this joint session with the Finance Commission to receive insights from Shuster regarding:

1. Current Local Government Investment Environment – Shuster will provide an overview of local government investment information.

2. Implications for CEPPT and CERBT – Shuster will discuss how investing decisions can affect the Town’s existing balances in both CEPPT Strategy 2 and CERBT Strategy 1, including considerations of risk, return, and asset allocation selection.

3. CEPPT Transfer Consideration – The Finance Commission has previously recommended that the Town Council consider transferring the CEPPT balance directly to CalPERS to reduce unfunded liability interest costs. This presentation will help inform the Council’s future deliberations on whether such a transfer is advisable.

4. Fiduciary Perspective – As the Town’s independent fiduciary, Shuster will provide perspective on the benefits and risks of retaining assets in CEPPT versus transferring funds to CalPERS.

This session is informational only. No action is requested at this meeting. The purpose is to provide Councilmembers and Finance Commissioners with the knowledge necessary to guide future policy decisions regarding the management of the Town’s pension and OPEB trust funds.

Attachments:

1. Presentation

2. Items 2 (Receive the California Employer’s Retiree Benefit Trust (CERBT) Strategy 1 Market Value Summary Report for the Period Ending June 30, 2025, and the Performance Report as of June 30, 2025) and 3 (Receive the California Employer’s Pension Prefunding Trust (CEPPT) Strategy Market Value Summary Report for the Period Ending June 30, 2025, and Performance as of June 30, 2025) from the September 2, 2025, Agenda of the Town Pension and OPEB Trusts Oversight Committee

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ITEM NO. 1.

The Local Government Investment Environment and Implications on a Section 115 Trust for OPEB and Pension Prefunding
Prepared by
Prepared for
Town of Los Gatos Town Council & Finance Commission
October 6, 2025

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ITEM NO. 1.

POWERS AND DUTIES COMMON TO CITIES, COUNTIES

AND OTHER AGENCIES
CA GOVT CODE §53600.3
All governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard.

When investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.

Shuster Advisory Group, LLC
2

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ITEM NO. 1.

FIDUCIARY RESPONSIBILITIES – PLAN OVERSIGHT
 Plan fiduciaries have important responsibilities and are subject to standards of conduct.
 California Constitution, Article XVI, Section 17 contains fiduciary provisions that are essentially identical to those under ERISA.

Fiduciaries must:
 Act solely in the interest of plan participants and their beneficiaries;  Carry out their duties prudently;
 Follow plan documents;
 Diversify plan investments;
 Ensure plan and investment expenses are reasonable; and  Have a fidelity bond
Shuster Advisory Group, LLC
3

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ITEM NO. 1.

TABLE OF

CONTENTS

1. Shuster Advisory Group, LLC

2. 115 Trust Overview

3. Portfolio and Performance
Comparison

4. Market Review
4

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ITEM NO. 1.

SHUSTER ADVISORY

GROUP, LLC
1 5

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ITEM NO. 1.

SHUSTER ADVISORY

GROUP, LLC
Mark Shuster
Managing Partner
[email protected]
626.578.0816
JoAnn Parrino
Partner
[email protected]
626.578.3429
Michael Gonzalez, CFA, MSF
Portfolio Manager
[email protected]
626.737.8250
Sarah Yauchzee
Director of Operations
[email protected]
626.578.0816 x232
Shuster Advisory Group, LLC
6

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ITEM NO. 1.

SHUSTER ADVISORY

GROUP, LLC

 SEC-Registered Investment Advisor
w/ $9B+ in assets under
management/advisement
 Focuses on serving the unique
needs of governmental agencies
and special districts
 Fiduciary to plan investments
 Must act in the best interest of our
clients
 Provides investment selection and
ongoing monitoring and
management
 Provides transparent services and
fees
Shuster Advisory Group, LLC
7

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ITEM NO. 1.

PLAN CONSULTING

SERVICES
 Defined Contribution
 457(b)
 457(f)
 401(a)
 401(k)
 403(b)
 415(m)
 PT-OBRA/ Social Security Alternative
 Pension
 Defined Benefit
 Cash Balance
 Supplemental Defined Benefit
 Retiree Medical Reimbursement
 Future Liability Prefunding (115 Trust)
 Pension
 OPEB
 Operating Reserves/Cash Accounts
Shuster Advisory Group, LLC
8

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ITEM NO. 1.

SHUSTER ADVISORY GROUP, LLC
Cities, Agencies, and Public Entities We Proudly Serve
The cities and agencies listed above do not expressly recommend Shuster Advisory Group, LLC, a SEC Registered Investment Advisor.

Antelope Valley Medical Center
Chino Valley Fire District
Conejo Recreation & Park District
County Commissioners’ Association of Ohio (CCAO)
First Public Hydrogen Authority
Hesperia Fire Protection District
Hesperia Water District
Madera Irrigation District
Midway City Sanitation District
Mountains Recreation & Conservation Authority
Ohio County Employees Retirement Plan (OCERP)
Ontario International Airport Authority
Orange County Fire Authority
Regional Center of the East Bay
San Bernardino Water District
South Bay Regional Public Communications Authority
Three Valleys Municipal Water District
Trinity County Waterworks
Valley-Wide Recreation & Park District
West Valley Water District
Los Gatos
Manhattan Beach
Montebello
Monterey Park
Moraga
Moreno Valley
Morgan Hill
Norwalk
Oakley
Ontario
Orange
Oxnard
Palmdale
Palm Desert
Perris
Pico Rivera
Pismo Beach
Placentia
Pleasant Hill
Rancho Cordova
Rancho Mirage
Rancho Palos Verdes
Redlands
Rialto
Riverside
San Bernardino
San Dimas
San Fernando
San Juan Capistrano
San Pablo
Santa Fe Springs
Sebastopol
Scotts Valley
Signal Hill
South Gate
Stanton
Stockton
Temecula
Union City
Upland
Vernon
Walnut
Whittier
Wildomar
American Canyon
Arcadia
Artesia
Azusa
Baldwin Park
Bell
Bell Gardens
Bellflower
Beverly Hills
Canyon Lake
Carson
Cathedral City
Chino
Claremont
Clovis
Colton
Commerce
Covina
Downey
Eastvale
El Segundo
Emeryville
Fontana
Fullerton
Gardena
Glendora
Hemet
Hermosa Beach
Hesperia
Huntington Park
Indian Wells
Inglewood
Jurupa Valley
Laguna Hills
La Mirada
La Palma
La Quinta
La Verne
Lafayette
Lakewood
Lancaster
Lomita
Lompoc
Los Altos
9

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ITEM NO. 1.

Corporate Clients We Proudly Serve
The entities listed above do not expressly recommend Shuster Financial Group, LLC, Shuster Advisory Group, LLC, KOBO Retirement Strategies, LLC, Shuster Financial & Insurance Services, Inc., or any other related company (“Shuster Companies”). Similarly, Shuster Companies do not expressly recommend the services or products provided by any of the entities listed above. The entities listed above are clients of a least one of the Shuster Companies but not necessarily all of the Shuster Companies.

Jenny Craig

SHUSTER ADVISORY GROUP, LLC
10

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ITEM NO. 1.

What does this mean?
A plan with lower overall plan fees and a stronger investment lineup can enhance long-term growth potential by reducing costs and improving investment quality.

What does this mean?
A plan with lower overall plan fees can enhance long-term growth potential by reducing costs.

FEES AND FUNDS MAKE A SIGNIFICANT DIFFERENCE OVER 30-YEARS FOR PARTICIPANTS’ RETIREMENT SAVINGS
See disclosure page for disclosures. Supporting data is available upon request. *The fee differentials shown take all assets into account, except for the City of Lafayette and the City of Morgan Hill, which do not account for the stability of principal assets.

Lower Fees
Lower Fees Client Starting Balance
Assumed Annualized Future Plan Growth: 6.00% 7.00% 8.00% Town of Moraga $5,345,983 $4,909,178 $6,417,024 $8,378,808 City of Los Altos $19,456,255 $11,321,104 $14,823,295 $19,377,823 City of San Pablo $20,175,108 $11,848,169 $15,509,532 $20,270,672 City of Lafayette* $32,763,336 $1,390,378 $1,826,303 $2,392,816 Town of Los Gatos $33,914,960 $12,801,839 $16,790,780 $21,975,967 City of Morgan Hill* $36,867,860 $35,999,586 $47,331,302 $62,070,958 City of Pleasant Hill $44,698,640 $15,227,698 $19,930,823 $26,044,284 City of Union City $46,390,555 $15,057,703 $19,696,229 $25,725,516 Total $108,555,655 $142,325,289 $186,236,845
Fee Savings ($)
Client Starting Balance
Assumed Annualized Future Plan Growth: 6.00% vs. 6.25% 6.00% vs. 6.50% 6.00% vs. 7.00% Town of Moraga $5,345,983 $6,707,338 $8,632,796 $12,900,892 City of Los Altos $19,456,255 $17,567,597 $24,256,084 $39,081,507 City of San Pablo $20,175,108 $19,098,819 $26,862,474 $44,070,938 City of Lafayette* $32,763,336 $11,607,736 $22,547,624 $46,795,065 Town of Los Gatos $33,914,960 $25,501,170 $39,098,429 $69,235,348 City of Morgan Hill* $36,867,860 $49,081,200 $63,087,918 $94,132,850 City of Pleasant Hill $44,698,640 $30,649,362 $47,161,421 $83,758,624 City of Union City $46,390,555 $31,004,684 $48,079,119 $85,922,489 Total $191,217,905 $279,725,865 $475,897,713
Fee Savings & Hypothetical Investment Performance Impact ($) Enhanced
Investments
Pricing reduction eff
10/1/25 and new
investments eff
11/14/25
11

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ITEM NO. 1.
30-YEAR FEE SAVINGS IMPACT FOR THE TOWN OF LOS GATOS
457(B) PLAN
….compounds to a large impact over time
65% Fee
Reduction
Please note: This summary is for illustrative purposes only and is not guaranteed. See disclosure page for additional disclosures. 62% Fee
Reduction
Starting
Balance:
$33.9M
Annualized impact…
Higher
investment
return increases
impact
Current New Difference Current New Difference
Total Plan Fees: 0.40% 0.14% -0.26% 0.41% 0.16% -0.26%
Equates to: $125,196 $43,520 -$81,676 $139,846 $52,676 -$87,170 Mutual Funds ($31.3M) Mutual Funds & Fixed Account ($33.9M) Gross Inv. Return End of Year 1 End of Year 5 End of Year 10 End of Year 15 End of Year 20 End of Year 25 End of Year 30

6.00% $87,170 $540,878 $1,419,628 $2,799,254 $4,912,682 $8,090,879 $12,801,839

7.00% $87,170 $561,037 $1,542,395 $3,187,008 $5,862,634 $10,122,004 $16,790,780

8.00% $87,170 $581,770 $1,674,718 $3,624,981 $6,987,066 $12,641,458 $21,975,967

6.00% vs. 6.25% $165,417 $1,034,687 $2,740,901 $5,450,763 $9,642,518 $16,000,858 $25,501,170

6.00% vs. 6.50% $243,664 $1,533,170 $4,090,488 $8,191,182 $14,588,875 $24,370,951 $39,098,429

6.00% vs. 7.00% $400,159 $2,544,297 $6,876,763 $13,949,874 $25,169,006 $42,595,189 $69,235,348 Combined Fee Savings Impact:

Pricing reduction eff
10/1/25 and new
investments eff
11/14/25
12

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ITEM NO. 1.
30-YEAR FEE SAVINGS DISCLOSURES
Assumptions:
- Beginning value of $33,914,960 ($31,298,880 funds and $2,616,080 safety of principal assets) estimated as of 9/23/2025. - Year-to-year values assume there are no contributions or distributions from the plan.

Please note:

This summary is for illustrative purposes only and is not guaranteed. This is to show estimated financial impacts of various investment returns and fee differentials. Hypothetical investment returns and fees are annualized. Actual returns will vary higher or lower thus affecting plan balances accordingly.

The fee differential shown for Safety of Principal Assets does not incorporate an assumed rate of return or crediting rate. Fee impacts assume no changes in fees over time.

The PLUS Fund Gross total fee is 0.21% of assets as reported on the MissionSquare PLUS Fund Fact Sheet. The total estimated expenses for the PLUS Fund R5 is 0.77% (with a MissionSquare expense of 0.56%) and the PLUS Fund R10 is 0.52% (with a MissionSquare expense of 0.31%).

All fees are annualized based on each years' hypothetical balances. The current fees shown are estimates based on documents provided by MissionSquare for a plan of similar size. The new fees are based on sample proposals obtained from MissionSquare for plans of similar size and demographics and are not guaranteed. Any variance in fees is purely accidental.

The current MissionSquare plan does not have an advisor thus there is no advisor fee. Shuster's total advisor compensation is $31,000 annually for the 457(b) plan, equating to approximately 0.09% based on approximate MSQ assets. Advisor compensation is applied to all assets. 13

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ITEM NO. 1.
115 TRUST OVERVIEW
2 14

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ITEM NO. 1.

Total Assets as of 6/30/25: $33,375,494
OPEB assets as of 6/30/2025: $30,284,763
Pension Stabilization assets as of 6/30/2025: $3,090,731 Investment Policy:

OPEB: CERBT Strategy 1 (70% Equity/30% Fixed Income & Cash) Pension Stabilization: CEPPT Strategy 2 (30% Equity/70% Fixed Income & Cash) Initial Funding and Contributions (as of 6/30/24):

OPEB: Initial contribution of $400,000 made 6/29/2009
Additional contributions of $14,899,963
Pension Stabilization: Initial contribution of $268,000 made 5/18/2020 Additional contributions of $2,463,400
Distributions (as of 6/30/24):

OPEB: $0
Pension Stabilization: $706,988
OPEB Plan Discount Rate: 6.25% as of FY 23-24 ACFR
Pension Plan Discount Rate: 6.80% as of FY 23-24
Shuster Advisory Group, LLC
Town of Los Gatos 115 Trust Summary
15

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ITEM NO. 1.

Shuster Advisory Group, LLC
Town of Los Gatos Cash Account
IPS Comparison with 53601
Town of Los Gatos CA Code 53601 Limits
1 US Treasury Obligations Same as the Code 5yr max maturity, no limit * 2 US Agency Obligations 5yr max maturity, no limit except for 20% limit on combination of GNMA, FNMA, and FHLMC securities 5yr max maturity, no limit * 3 Mortgage Pass-Through and Asset-Backed Securities Not explictly stated 5yr max maturity, 20% limit, AA rated or better, No portfolio limit on Agency MBS
* 4 Medium-Term Notes (i.e. corporates) 5yr max maturity, 30% limit, A rated or better 5% single-issuer limit
5yr max maturity, 30% limit, A rated or better
10% single-issuer limit
5 Negotiable CDs 5yr max maturity, 30% limit, 5% single-issuer limit 5yr max maturity, 30% limit 6 Non-negotiable CDs 5yr max maturity, 30% limit, 5% single-issuer limit 5yr max maturity, no limit 7 Mutual Funds and MMMFs MM same as the Code, Mutual Funds not explicitly stated 20% limit 8 Bankers' Acceptances 180 day max maturity, 30% limit, 5% single-issuer limit 180 day max maturity, 40% limit 9 Repurchase Agreements Not explictly stated 1yr max maturity, no limit 10 CP (non-pooled, city with >=100mn of investments) 270 day max maturity, 25% limit, A-1 rated or better, 5% single-issuer limit 270 day max maturity, 40% limit, A-1 rated or better 11 CP (non-pooled, city with <100mn of investments) 270 day max maturity, 25% limit, A-1 rated or better, 5% single-issuer limit 270 day max maturity, 25% limit, A-1 rated or better * 12 Supranational Obligations (IBRD, IFC, IADB) Not explictly stated 5yr max maturity, 30% limit, AA rated or better 13 Local Agency Bonds 5yr max maturity, 30% limit, A rated or better, 5% single-issuer limit 5yr max maturity, no limit 14 CA Local Agency Obligations 5yr max maturity, 30% limit, A rated or better, 5% single-issuer limit 5yr max maturity, no limit 15 State Obligations (CA and others) 5yr max maturity, 30% limit, A rated or better, 5% single-issuer limit 5yr max maturity, no limit 16 Reverse Repurchase Agreements & Sec Lending
Agreements Not explictly stated 92 day max maturity, 20% limit * 17 Joint Powers Authority Pool Not explictly stated No Limit 18 Local Agency Investment Fund (LAIF) Same as the Code No Limit in Aggregate / $75M per LAIF account 19 CP (pooled funds) Not explictly stated 270 day max maturity, 40% limit 20 Placement Service Deposits Not explictly stated 5yr max maturity, 50% limit 21 Placement Service Certificates of Deposit Not explictly stated 5yr max maturity, 50% limit 22 Collateralized Bank Deposits Not explictly stated 5yr max maturity, no limit 23 County Pooled Investment Funds Not explictly stated No Limit 24 Voluntary Investment Program Fund Not explictly stated No Limit 25 Public Bank Obligations Not explictly stated 5yr max maturity, no limit *Updates to the IPS for these investment types would have the greatest impact on increased investment flexibility.

Investment Type
16

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ITEM NO. 1.

Pooled Asset & Money Market Comparison
CA Code 53601 (as of 9/25/25)
7-Day Yield (as of 9/25/2025)
Net Expense Ratio
Weighted Avg. Maturity
Weighted Avg. Life
Interest Paid
Liquidity
Transaction Fee
Credit Quality
CA Code 53601 Limit
Asset Breakdown
1 Managed by the California State Treasurer's Office. Net Expense Ratio not disclosed but calculated from most recent Annual Report. 2 Managed by PFM Asset Management, LLC.
3 Managed by Public Trust Advisors, LLC.
4 Managed by State Street Global Advisors Trust Company Schwab (SCOXX) BlackRock (TFDXX)

3.97% 4.02%
CalTRUST4

4.28%

0.26% 0.09% 0.10% 0.10% 0.19% 0.17%
Daily
Treasury Repos: 36%
Commercial Paper: 32%
CDs: 28%
Corporate Notes: 2%
(as of 8/31/25)
Note: The data above may change daily based upon the market environment, level of interest rates, and portfolio management decisions. All data has been obtained from publically available sources and may not accurately reflect the most up-to-date changes in the respective portfolios.

Shuster Advisory Group, LLC does not guarantee the accuracy of the data obtained from third-party and public sources. Any discrepancy is purely incidental.

LAIF1

4.20%
247 days
Not stated
Monthly
Daily
None
AAA
CAMP2

4.28%
48 days
Not stated
Monthly
Daily
CLASS3

4.18%
42 days
82 days
Monthly
40 days 44 days
98 days 103 days
Monthly Monthly
Daily Daily
None None

AAA AAA
Treasury Repos: 75.6%
Treasuries: 23.4%
(as of 6/30/25)
Treasuries: 42.8%
Treasury Repos: 29.3%
Agency Repos: 15.6%
Agencies: 12.3%
(as of 9/25/25)
20% of Total Portfolio 20% of Total Portfolio
Commercial Paper: 37.3%
Treasury/Agency: 31.4%
CDs: 26.9%
Money Market: 3.8%
(as of 3/28/25)
No Limit
None
AAA
None
AAA
Treasuries: 52.3%
Agencies: 28.5%
CDs/Bank Notes: 9.2%
Commercial Paper: 6.2%
Time Deposits: 3.2%
(as of 8/31/25)
$75M per Account No Limit
43 days
73 days
Commercial Paper: 35.1%
Treasury/Repos: 34.09%
CDs: 26.4%
Money Market: 3.5%
Corporates: 0.9%
(as of 8/31/25)
Monthly
Daily
None
AAA
No Limit
17

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ITEM NO. 1.

What is a Section 115 Trust?
• Authorized by the Internal Revenue Code for essential government functions
• Allows for the segregation of funds from general assets • Integral-Part Trust
• Used for funding essential government functions - Pension funding and post-employment obligations are considered essential − Considered a best practice by the Government Finance Officers Association (GFOA)
• The Trust is irrevocably committed to the specific
government/district function - Assets cannot be diverted Shuster Advisory Group, LLC
18

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ITEM NO. 1.

Why Use a Section 115 Trust?
Uses of the Trust
• Prefund pension contribution liabilities
• Prefund OPEB benefit liabilities
• Used as a budget stabilization tool
Benefits
• Non-taxable: Investment earnings are non-taxable
• Flexible: Investment restrictions applicable to the general fund do not apply - Allows for use of relatively higher discount rate
• Investment Growth: Allows for investment growth under the Town’s chosen strategy • Liquidity & Budget Stability: Assets can be accessed in years of budgetary stress to smooth contributions
• Demonstrated Fiscal Discipline: Considered a best practice by the Government Finance Officers Association (GFOA). IRS approval not required and no annual IRS filings. • Offset OPEB Liability: For GASB 75 reporting, the OPEB liability is reported net of Trust assets. Pension 115 Trusts are reported as a fiduciary fund.

Shuster Advisory Group, LLC
19

Page 23 ends

ITEM NO. 1.

Pension Prefunding:

Section 115 Trust vs. Direct Paydown
Prefunding via 115 Trust
• Does not offset unfunded liability
• Long-term strategy to manage
unfunded liability
• Keeps funds locally controlled
• Provides liquidity for budget
stabilization
• Potential for investment growth
• Use funds when most beneficial
(i.e. smooth contribution spikes or
provide budgetary safety net)
Shuster Advisory Group, LLC
Paying CalPERS Directly
• Immediately reduces unfunded
liability
• Locks up funds with CalPERS (no
access)
• Savings are actuarial – spread over
decades
Why use a 115 Trust instead of paying down the unfunded pension liability?
20

Page 24 ends

ITEM NO. 1.
115 Trust Components
• Agency authorization to participate in the Trust and authorized signers • Documents
− Trust Document and Adoption Agreement (for Multiple Employer Trusts) − Administrative Services Agreement
− Investment Fiduciary Agreement
− Investment Policy Statement
• Investment Portfolio
• 115 Trust Roles
− Administrator
− Investment Advisor/Fiduciary
− Directed Trustee
− Custodian
Shuster Advisory Group, LLC Note: Independent actuarial annual valuation of assets required 21

Page 25 ends

ITEM NO. 1.

Financial Components
Shuster Advisory Group, LLC
Platform
Fees:
● Trust
● Custody
Advisor
Fees:
● Fiduciary
● Consultant
Investment
Portfolio
Performance
22

Page 26 ends

ITEM NO. 1.

Institutional Portfolios – UC Universities*
Shuster Advisory Group, LLC
Campus
US
Equity
Non-US
Equity
Global
Equity
US
Fixed
Income
Non-US
Fixed
Income
Absolute
Return
Real
Assets
Real
Estate
Private
Equity
Private
Credit Other CashEquiv.

Regents' GEP 13.3% 1.9% 32.4% 7.5% 0.0% 3.9% 2.6% 12.4% 21.1% 4.2% 0.0% 0.7% Blue & Gold 86.0% 0.0% 14.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Berkeley 11.0% 12.3% 16.2% 3.4% 0.0% 17.2% 1.9% 3.8% 23.9% 0.0% 4.9% 5.4% Davis 27.4% 7.6% 3.5% 6.1% 0.0% 3.2% 4.2% 11.3% 29.6% 4.0% 0.0% 3.1% Irvine 18.4% 11.5% 18.1% 12.1% 0.0% 10.5% 6.0% 0.0% 19.0% 4.0% 0.0% 0.4% Los Angeles 0.0% 0.0% 38.0% 4.7% 0.0% 20.6% 7.4% 6.6% 21.7% 0.0% 0.2% 0.8% Merced 13.3% 1.9% 32.4% 7.5% 0.0% 3.9% 2.6% 12.4% 21.1% 4.2% 0.0% 0.7% Riverside 13.3% 1.8% 32.0% 7.5% 0.0% 3.8% 2.6% 12.3% 21.6% 4.2% 0.0% 0.9% San Diego 31.3% 0.0% 32.5% 5.2% 0.0% 2.7% 1.8% 8.7% 14.4% 2.9% 0.0% 0.5% San Francisco 0.0% 0.0% 26.8% 0.0% 0.0% 20.6% 0.0% 3.0% 34.3% 5.4% 0.0% 9.9% Santa Barbara 12.9% 1.8% 31.1% 7.3% 0.0% 3.7% 2.5% 11.9% 21.1% 4.0% 0.0% 3.6% Santa Cruz 13.3% 1.9% 32.4% 7.5% 0.0% 3.9% 2.6% 12.4% 21.1% 4.2% 0.0% 0.7% * Based upon data publicly available. Data as of fiscal year end 6/30/2024. 23

Page 27 ends

ITEM NO. 1.

PORTFOLIO AND

PERFORMANCE

COMPARISON
3 24

Page 28 ends

ITEM NO. 1.

CalPERS Public Employees’ Retirement Fund (PERF)
Performance Over the Last Ten Fiscal Years
Note: Shuster Advisory Group, LLC (“Shuster”), is a Securities & Exchange Commission Registered Investment Advisor. This material has been prepared for informational and summary purposes only and is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Past performance is not a guarantee of future results. All data as of 6/30 of each calendar year. CalPERS PERF returns shown are as announced in the CalPERS News available online at https://www.calpers.ca.gov/newsroom/calpers-news.

The 70/30% index shown is the Morningstar Balanced 70/30 GR USD which is a blended benchmark of 70% Morningstart DM GR USD and 40% Morningstar Gbl Trsy Bd TR USD rebalanced to target weights of 70% equity and 30% fixed income on a quarterly basis. The index does not incorporate Environmental, Social, or Governance (ESG) criteria. Any discrepancy is purely accidental.

Fiscal Year
Ending: 2016 2017 2018 2019 2020
CalPERS PERF 0.61% 11.20% 8.60% 6.70% 4.70%
70/30 Index 1.69% 11.21% 8.99% 6.60% 3.70%
Fiscal Year
Ending: 2021 2022 2023 2024 2025
5-Year
Annualized
10-Year
Annualized
CalPERS PERF 21.30% -6.10% 5.80% 9.30% 11.60% 8.01% 7.15% 70/30 Index 26.98% -15.87% 11.10% 12.97% 14.31% 8.92% 7.64% 25

Page 29 ends

ITEM NO. 1.

MARKET REVIEW
4 26

Page 30 ends

ITEM NO. 1.

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.

MARKET KALEIDOSCOPE
2025 YTD Index Returns
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
2025 YTD
as of
9/26/2025
Indices
Legend
Global REIT

22.81 Large Growth

5.67 Sm Value

31.74 Large Growth

30.21 Cash

1.87 Large Growth

36.39 Large Growth

38.49 Global REIT

32.50 Commodities

16.09 Large Growth

42.68 Large Growth

33.36 International

25.05 MSCI ACWI
ex-US
Large Value

13.45 S&P 500

1.38 Large Value

17.34 International

27.19 Fixed Income

0.01 S&P 500

31.49 Sm Growth

34.63 S&P 500

28.71 Cash

1.46 S&P 500

26.29 S&P 500

26.90 Large Growth

15.73 Russell 1000
Growth
S&P 500

13.69 Global REIT

0.59 S&P 500

11.96 Sm Growth

22.17 Large Growth
-1.51
Sm Growth

28.48 S&P 500

18.40 Sm Value

28.27 Large Value
-7.54
Sm Growth

18.66 Sm Growth

15.15 S&P 500

14.05 S&P 500
Large Growth

13.05 Fixed Income

0.55 Commodities

11.77 S&P 500

21.83 S&P 500
-4.38
Large Value

26.54 Balanced
Index

13.48 Large Growth

27.60 Fixed Income
-13.01
Sm Value

14.65 Large Value

14.37 Balanced
Index

12.86 40% Russell 3000,
40% Barclays U.S.

Agg, 20% MSCI
ACWI ex-US
Balanced
Index 6.56
Cash

0.05 Sm Growth

11.32 Balanced
Index 15.00
Balanced
Index
-4.70
Global REIT

24.49 International

10.65 Commodities

27.11 Sm Value
-14.48
Balanced
Index

12.60 Balanced
Index

10.80 Sm Growth

10.81 Russell 2000
Growth
Fixed Income

5.97 Balanced
Index
-0.55
Large Growth

7.08 Large Value

13.66 Global REIT
-4.77
Sm Value

22.39 Fixed Income

7.51 Large Value

25.16 Balanced
Index
-15.87
Large Value

11.46 Sm Value

8.05 Commodities

9.82 Bloomberg
Commodities
Sm Growth

5.60 Sm Growth
-1.38
Balanced
Index 7.06
Global REIT

8.63 Large Value
-8.27
International

21.51 Sm Value

4.63 Balanced
Index

11.21 International
-16.00
Fixed Income

5.53 International

5.53 Large Value

9.60 Russell 1000
Value
Sm Value

4.22 Large Value
-3.83
Global REIT

6.90 Sm Value

7.84 Sm Growth
-9.31
Balanced
Index

20.02 Large Value

2.80 International

7.82 S&P 500
-18.11
Cash

5.03 Commodities

5.38 Sm Value

9.10 Russell 2000
Value
Cash

0.03 International
-5.66
International

4.50 Fixed Income

3.54 Commodities
-11.25
Fixed Income

8.72 Cash

0.74 Sm Growth

2.83 Global REIT
-23.60
International

0.03 Cash

5.25 Global REIT

8.60 S&P Global
REIT
International
-3.87
Sm Value
-7.47
Fixed Income

2.65 Commodities

1.70 Sm Value
-12.86
Commodities

7.69 Commodities
-3.12
Cash

0.08 Sm Growth
-26.36
Global REIT

0.01 Global REIT

3.92 Fixed Income

5.90 Bloomberg
Barclays Agg
Commodities
-17.01
Commodities
-24.66
Cash

0.33 Cash

0.86 International
-14.20
Cash

2.28 Global REIT
-8.11
Fixed Income
-1.54
Large Growth
-29.14
Commodities
-7.91
Fixed Income

1.25 Cash

3.14 Merrill Lynch
3-Mo T-Bill
27

Page 31 ends

ITEM NO. 1.

MARKET KALEIDOSCOPE
Index Information
Shuster Advisory Group, LLC
• The S&P 500 Index measures the stock performance of the 500 largest companies listed on stock exchanges in the United States. The index is a common benchmark used to track the overall equities market. • The Bloomberg Commodities Index tracks the price and the returns on an investment in a basket of commodities. It is a broadly diversified price index that represents different types of commodities including, but not limited to, crude oil, soybeans, wheat and copper. • The MSCI ACWI ex-USA Index captures large and mid-cap equity representation across 22 of 23 developed markets countries (excluding the US) and 27 emerging markets countries. With over 2,300 constituents, the index covers approximately 85% of the global equity opportunity set outside the US.
• The Russell 2000 Growth Index is a stock market index of the smallest 2,000 stocks by market capitalization in the United States that exhibit growth characteristics. A small cap stock is generally a company with a market capitalization between $500 million and $2 billion. Small cap stocks are typically more volatile and riskier investments relative to large cap stocks. • The Russell 1000 Growth Index is a stock market index that tracks the largest 1,000 stocks by market capitalization in the United States that exhibit growth characteristics. The index maintains larger companies whose market capitalization typically exceeds $10 billion. • The Russell 2000 Value Index is a stock market index of the smallest 2,000 stocks in the United States that exhibit value characteristics. A small cap stock is generally a company with a market capitalization between $500 million and $2 billion. Small cap stocks are typically more volatile and riskier investments relative to large cap stocks.
• The Russell 1000 Value Index is a stock market index that tracks the largest 1,000 stocks by market capitalization in the United States that exhibit value characteristics. The index maintains larger companies whose market capitalization typically exceeds $10 billion. • The S&P Global REIT serves as a comprehensive benchmark of publicly traded equity REITs listed in both developed and emerging markets. A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. This custom balanced index is an index that contains a broad US equities component, a broad US fixed income component, and an international equity component. The index is used to measure balanced portfolios that have a mix of the US equity and fixed income asset classes, as well as international equity and fixed income classes.
• The Bloomberg Barclays US Aggregate Bond Index is a broad-based, market capitalization-weighted bond market index representing intermediate term investment-grade bonds traded in the United States. This index is generally used to track core bond portfolios. • The Merrill Lynch 3-Mo T-Bill Index is an index that measures returns of 3-Month Treasury Bills. The 3-Month Treasury bill is a short-term US government obligation with a constant maturity period of 3 months. This typically is considered free of default as it is backed by the US Treasury and is used as a proxy measure to cash.
28

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ITEM NO. 1.

Quarterly Market Summary
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.

Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]), Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2025 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2025, all rights reserved. Bloomberg data provided by Bloomberg.

Returns (USD), as of June 30, 2025
Stocks Bonds
US Stock
Market
International
Developed Stocks
Emerging
Markets Stocks
Global
Real Estate
US Bond
Market
Global Bond
Market ex US
Q2 2025 10.99% 12.05% 11.99% 2.74% 1.21% 1.93%
Since January 2001
Average
Quarterly Return 2.5% 1.7% 2.6% 2.2% 0.9% 1.0%
Best
Quarter

22.0% 25.9% 34.7% 32.3% 6.8% 5.4%
2020 Q2 2009 Q2 2009 Q2 2009 Q3 2023 Q4 2023 Q4
Worst
Quarter
-22.8% -23.3% -27.6% -36.1% -5.9% -4.1%
2008 Q4 2020 Q1 2008 Q4 2008 Q4 2022 Q1 2022 Q1
Shuster Advisory Group, LLC
29

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ITEM NO. 1.

Long-Term Market Summary
Returns (USD), as of June 30, 2025
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.

Stocks Bonds
US Stock
Market
International
Developed Stocks
Emerging
Markets Stocks
Global
Real Estate
US Bond
Market
Global Bond
Market ex US
1 Year 15.30% 18.70% 15.29% 9.96% 6.08% 6.09%
5 Years 15.96% 11.51% 6.81% 6.20% -0.73% 0.91%
10 Years 12.96% 6.65% 4.81% 3.88% 1.76% 2.68%
15 Years 14.46% 7.42% 4.44% 6.71% 2.29% 3.09%
20 Years 10.53% 5.90% 6.45% 4.37% 3.09% 3.41%
Shuster Advisory Group, LLC
30

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ITEM NO. 1.

World Stock Market Performance
Graph Source: MSCI ACWI Index (net dividends). MSCI data © MSCI 2025, all rights reserved. Index level based at 100 starting January 2000.

It is not possible to invest directly in an index. Performance does not reflect the expenses associated with management of an actual portfolio. Past performance is not a guarantee of future results.

MSCI All Country World Index with selected headlines from Q2 2025 These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.

Q2 2025
320
340
360
380
400
420
440
460
Mar 31 Apr 30 May 31 Jun 30
240
280
320
360
400
440
Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
Last 3 months
1 YEAR (Q3 2024–Q2 2025)
“Trump Unveils Sweeping Tariffs in
Stark Shift in US Trade Policy”
“Trump Tariffs Send Dow to 1600-Point
Decline, Dollar Slumps”
“Stocks Stage Furious Rally as
Trump Pauses Some Tariffs”
“Stubbornly High Mortgage
Rates Thwart the Crucial
Home-Selling Season”
“Pope Francis, Advocate for
Economic and Social Justice,
Dies at 88”
“A Reckoning for the Magnificent
Seven Tests the Market”
“US Economy Contracted at 0.3%
Rate in First Quarter”
“Ukraine, US Sign Economic Deal
for Minerals”
“Bank of England Cuts
Rates After Fed Stands
Pat”
“US and UK Unveil
Framework for Trade
Deal”
“American Is Elected
Pope for First Time”
“Stocks Soar on Temporary USChina Tariff Rollback”
“Monthly Inflation Picked Up in April in
Midst of Tariff Swings”
“S&P 500 Turns Positive on Year For
First Time Since February”
“US Loses Last Triple-A
Credit Rating”
“Consumer Sentiment Darkens
Further with Inflation Worries
Rising”
“International Stocks Are
Crushing US Equities by
the Widest Margin Since
1993”
“Treasury Yields Rise amid Fiscal, Trade
Jitters”
“US Trade Deficit Cut in
Half on Record Drop in
Imports”
“ECB Cuts Rates for Eighth
Time, Widening Gap With
Fed”
“Hiring Slowed in May,
With 139,000 Jobs
Added”
“Israel Launches Attack on
Iran’s Nuclear Facilities”
“Fed Holds Rates Steady and Keeps
Door Open to Cuts”
“Massive US Strikes Target Iranian
Nuclear Sites”
“Global Business Remains Resilient in
Face of Tariffs, Middle East War”
“US Home Price Growth Cools
to Near-Two-Year Low”
“Historic Rebound
Sends S&P 500 to
New Highs”
“Stocks Set New
Record to Wrap
Up First Half”
31

Page 35 ends

ITEM NO. 1.

World Stock Market Performance
Graph Source: MSCI ACWI Index (net dividends). MSCI data © MSCI 2025, all rights reserved. Index level based at 100 starting January 2000.

It is not possible to invest directly in an index. Performance does not reflect the expenses associated with management of an actual portfolio. Past performance is not a guarantee of future results.

MSCI All Country World Index with selected headlines from past 12 months These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.
320
340
360
380
400
420
440
460
Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
SHORT TERM (Q3 2024–Q2 2025)
0 100
200
300
400
500
2000 2004 2008 2012 2016 2020 2024
LONG TERM (2000–Q2 2025)
Last 12
months
“US Loses Last Triple-A Credit
Rating”
“Fed Holds Rates Steady and Keeps
Door Open to Cuts”
“Massive US Strikes
Target Iranian
Nuclear Sites”
“Israeli Strikes Kill Hundreds,
Tipping Gaza Back Toward
War”
“Major Tech Outage Grounds Flights, Hits
Banks and Businesses Worldwide”
“Biden Drops Out of Presidential Race,
Endorses Harris”
“Growth Fears Rattle Markets; Nasdaq
Suffers Correction”
“US Job Market Was
Weaker Than Previously
Reported, Data Show”
“The Fed's Bold
Move Jolts Global
Markets”
“China Tries to Jolt Ailing Economy”
“US Economic Growth Extends
Solid Streak”
“Trump Defeats Harris, Marking
Historic Comeback”
“Fed Cuts Rates Again,
This Time by a
Quarter Point”
“Israel Approves Cease-Fire With
Hezbollah Aimed at Ending
Lebanon Conflict”
“Assad Flees to Russia From
Syria After Rebels Take
Damascus”
“Fed Signals Intent to Slow InterestRate Cuts After Approving QuarterPoint Reduction” “Trump Sworn In, Declares New ‘Golden
Age’ for America”
“Tech Stocks Sink in Broad
AI Rout Sparked by
China’s DeepSeek”
“Fed Dims Economic
Outlook, Citing Uncertainty
Over Tariffs”
“Stocks Soar on Temporary USChina Tariff Rollback”
“US and UK Unveil Framework
for Trade Deal”
“Trump Unveils
Sweeping Tariffs in
Stark Shift in US
Trade Policy”
“Stocks Stage Furious Rally as Trump
Pauses Some Tariffs”
“Historic Rebound
Sends S&P 500 to
New Highs”
“Fed Stands Pat on Rates,
Entering New Wait-andSee Phase”
“Stocks Extend Tumble
as Trump’s Tariffs
Spark Retaliation”
“Tech Shares Lead Stock Slide as Recession Talk
Roils Markets”
32

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ITEM NO. 1.

US Stocks
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Marketwide (Russell 3000 Index), Large Cap (Russell 1000 Index), Large Value (Russell 1000 Value Index), Large Growth (Russell 1000 Growth Index), Small Cap (Russell 2000 Index), Small Value (Russell 2000 Value Index), and Small Growth (Russell 2000 Growth Index). World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. Russell 3000 Index is used as the proxy for the US market. Dow Jones US Select REIT Index used as proxy for the US REIT market. MSCI data © MSCI 2025, all rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes.

Returns (USD), 2nd Quarter 2025

ANNUALIZED
Asset Class QTR YTD 1
Year
3 Years
5 Years
10 Years
15 Years
20 Years
Large Growth 17.84 6.09 17.22 25.76 18.15 17.01 17.54 12.99 Small Growth 11.97 -0.48 9.73 12.38 7.42 7.14 11.06 8.49 Large Cap 11.11 6.12 15.66 19.59 16.30 13.35 14.74 10.71 Marketwide 10.99 5.75 15.30 19.08 15.96 12.96 14.46 10.53 Small Cap 8.50 -1.79 7.68 10.00 10.04 7.12 10.35 7.76
Small Value 4.97 -3.16 5.54 7.45 12.47 6.72 9.35 6.80
Large Value 3.79 6.00 13.70 12.76 13.93 9.19 11.57 8.11  The US equity market posted positive returns for the
quarter and underperformed both non-US developed and
emerging markets.
 Value underperformed growth.
 Small caps underperformed large caps.
 REIT indices underperformed equity market indices.

World Market Capitalization Periodic Returns (%)
US Market
$59.7 trillion
Ranked Returns (%)
Large Growth
Small Growth
Large Cap
Marketwide
Small Cap
Small Value
Large Value

17.84 11.97

11.11 10.99

8.50 4.97

3.79 63%
US Market
33

Page 37 ends

ITEM NO. 1.

10.51 6.74

5.19 3.73

16.82 13.64

12.05 10.53
Local currency US currency
International Developed Stocks
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Large Cap (MSCI World ex USA Index), Small Cap (MSCI World ex USA Small Cap Index), Value (MSCI World ex USA Value Index), and Growth (MSCI World ex USA Growth Index). All index returns are net of withholding tax on dividends. World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. MSCI World ex USA IMI Index is used as the proxy for the International Developed market. MSCI data © MSCI 2025, all rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes.

Returns (USD), 2nd Quarter 2025
 Developed markets outside of the US posted positive
returns for the quarter and outperformed both US and
emerging markets.
 Value underperformed growth.
 Small caps outperformed large caps.

International Developed
Market
$24.7 trillion
World Market Capitalization
Ranked Returns (%)
Small Cap
Growth
Large Cap
Value

ANNUALIZED
Asset Class QTR YTD 1
Year
3 Years
5 Years
10 Years
15 Years
20 Years
Small Cap 16.82 20.79 22.92 13.40 9.82 6.64 8.11 6.47
Growth 13.64 16.02 12.63 13.72 8.11 6.69 7.61 6.23
Large Cap 12.05 18.99 18.70 15.73 11.51 6.65 7.42 5.90
Value 10.53 21.90 24.96 17.76 14.76 6.34 7.03 5.41
Periodic Returns (%)
26%
International
Developed
Market
34

Page 38 ends

ITEM NO. 1.

12.36 9.58

7.93 6.17

17.17 13.82

11.99 10.02
Local currency US currency
Emerging Markets Stocks
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Large Cap (MSCI Emerging Markets Index), Small Cap (MSCI Emerging Markets Small Cap Index), Value (MSCI Emerging Markets Value Index), and Growth (MSCI Emerging Markets Growth Index). All index returns are net of withholding tax on dividends. World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. MSCI Emerging Markets IMI Index used as the proxy for the emerging market portion of the market. MSCI data © MSCI 2025, all rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes.

Returns (USD), 2nd Quarter 2025

ANNUALIZED
Asset Class QTR YTD 1
Year
3 Years
5 Years
10 Years
15 Years
20 Years
Small Cap 17.17 10.74 8.40 13.81 13.86 5.97 5.66 7.95
Growth 13.82 15.72 17.69 9.18 4.64 5.49 5.39 6.74
Large Cap 11.99 15.27 15.29 9.70 6.81 4.81 4.44 6.45
Value 10.02 14.77 12.66 10.22 9.07 4.01 3.39 6.07
 Emerging markets posted positive returns for the
quarter and outperformed the US market, but
underperformed non-US developed markets.
 Value underperformed growth.
 Small caps outperformed large caps.

Emerging Markets
$10.2 trillion
World Market Capitalization Periodic Returns (%)
Ranked Returns (%)
Small Cap
Growth
Large Cap
Value
11%
Emerging
Markets
35

Page 39 ends

ITEM NO. 1.
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Korea
Israel
Greece
Taiwan
Portugal
Austria
Hungary
Mexico
Peru
Netherlands
Ireland
Spain
Poland
Germany
Italy
Czech Republic
Hong Kong
Finland
Australia
Canada
Brazil
UAE
South Africa
Belgium
Japan
Colombia
US
Norway
India
Sweden
UK
France
New Zealand
Singapore
Chile
Indonesia
Switzerland
Denmark
Kuwait
Philippines
Malaysia
Qatar
Egypt
China
Thailand
Turkey
Saudi Arabia
Country Returns
Past performance is no guarantee of future results.

Country returns are the country component indices of the MSCI All Country World IMI Index for all countries except the United States, where the Russell 3000 Index is used instead. Global is the return of the MSCI All Country World IMI Index. MSCI index returns are net dividend. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. MSCI data © MSCI 2025, all rights reserved.

Returns (USD), 2nd Quarter 2025
Global
36

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ITEM NO. 1.

Fixed Income

1. Bloomberg US Treasury and US Corporate Bond Indices.

2. Bloomberg Municipal Bond Index.

One basis point (bps) equals 0.01%. Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Yield curve data from Federal Reserve. State and local bonds and the Yield to Worst are from the S&P National AMT-Free Municipal Bond Index. AAA-AA Corporates represent the ICE BofA US Corporates, AA-AAA rated. A-BBB Corporates represent the ICE BofA Corporates, BBB-A rated. Bloomberg data provided by Bloomberg. US long-term bonds, bills, inflation, and fixed income factor data © Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook , Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). FTSE fixed income indices © 2025 FTSE Fixed Income LLC, all rights reserved. ICE BofA index data © 2025 ICE Data Indices, LLC. S&P data © 2025 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Bloomberg data provided by Bloomberg.

Returns (USD), 2nd Quarter 2025
During the quarter, short- to intermediate-term
interest rates decreased, and long-term interest
rates increased within the US Treasury market.

On the short end of the yield curve, the 1-Month
US Treasury Bill yield decreased 10 basis points
(bps) to 4.28%, while the 1-Year US Treasury Bill
yield decreased 7 bps to 3.96%. The yield on the 2-
Year US Treasury Note decreased 17 bps to 3.72%.

The yield on the 5-Year US Treasury Note
decreased 17 bps to 3.79%. The yield on the 10-
Year US Treasury Note increased 1 bp to 4.24%.

The yield on the 30-Year US Treasury Bond
increased 19 bps to 4.78%.

In terms of total returns, short-term US treasury
bonds returned +1.67% while intermediate-term
US treasury bonds returned +1.46%. Short-term
corporate bonds returned +1.80% and
intermediate-term corporate bonds returned
+2.12%.1
The total returns for short- and intermediate-term
municipal bonds were +1.06% and +1.21%,
respectively. Within the municipal fixed income
market, general obligation bonds returned 0.00%
while revenue bonds returned -0.20%.2

ANNUALIZED
Asset Class QTR YTD 1 Year 3 Years 5 Years 10 Years 15 Years 20 Years FTSE World Government Bond Index 1-5 Years 4.17 7.03 8.67 3.54 0.42 1.05 0.55 1.63 Bloomberg U.S. High Yield Corporate Bond Index 3.53 4.57 10.29 9.93 5.97 5.38 6.44 6.62 FTSE World Government Bond Index 1-5 Years (hedged
to USD) 1.52 2.97 6.20 3.74 1.46 1.92 1.79 2.42
Bloomberg U.S. Aggregate Bond Index 1.21 4.02 6.08 2.55 -0.73 1.76 2.29 3.09 ICE BofA US 3-Month Treasury Bill Index 1.04 2.07 4.68 4.56 2.76 1.98 1.34 1.69 ICE BofA 1-Year US Treasury Note Index 0.90 1.96 4.76 3.90 2.07 1.81 1.32 1.86 Bloomberg U.S. TIPS Index 0.48 4.67 5.84 2.34 1.61 2.67 2.88 3.40 Bloomberg Municipal Bond Index -0.12 -0.35 1.11 2.50 0.51 2.20 2.96 3.32 Bloomberg U.S. Government Bond Index Long -1.51 3.08 1.58 -3.66 -8.16 0.15 2.14 3.09 Yield to Maturity Yield to Worst
US Treasury Yield Curve (%) Bond Yield Across Issuers (%) Periodic Returns (%)
6/30/2025
3/31/2025
6/30/2024

0.00 1.00

2.00 3.00

4.00 5.00

6.00 3M 5Y 10Y 30Y

4.24 4.12

4.70 5.10

3.89 10-Year US
Treasury
State and Local
Municipals
AAA-AA
Corporates
A-BBB
Corporates
37

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ITEM NO. 1.

Is Gold a Safe Haven?
See following page for important disclosure.

Not since the release of the third Austin Powers movie
have I heard so much talk about gold. Stellar recent
returns account for some of that—gold was up 25% yearto-date as of April 30. But another reason is the belief among some market participants that gold represents a
safe haven, an asset to stabilize the portfolio when
equity markets are choppy.

The problem with that story is that gold has been far
from immune to drawdowns. In fact, since 1970, gold
has been positive in just 60% of calendar years, while the S&P 500 Index has been positive in 80%. Investors
hoping for a safe haven may not find it with gold.
2nd Quarter 2025
Wes Crill, PhD, Senior Client Solutions Director and Vice President, Dimensional Fund Advisors

FREQUENCY OF POSITIVE CALENDAR-YEAR RETURNS
1970–2024
38

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ITEM NO. 1.

Past performance is no guarantee of future results.

Disclosures
The information in this material is intended for the recipient’s background information and use only. It is provided in good faith and without any warranty or representation as to accuracy or completeness. Information and opinions presented in this material have been obtained or derived from sources believed by Dimensional to be reliable, and Dimensional has reasonable grounds to believe that all factual information herein is true as at the date of this material. It does not constitute investment advice, a recommendation, or an offer of any services or products for sale and is not intended to provide a sufficient basis on which to make an investment decision. Before acting on any information in this document, you should consider whether it is appropriate for your particular circumstances and, if appropriate, seek professional advice. It is the responsibility of any persons wishing to make a purchase to inform themselves of and observe all applicable laws and regulations. Unauthorized reproduction or transmission of this material is strictly prohibited. Dimensional accepts no responsibility for loss arising from the use of the information contained herein.

This material is not directed at any person in any jurisdiction where the availability of this material is prohibited or would subject Dimensional or its products or services to any registration, licensing, or other such legal requirements within the jurisdiction. “Dimensional” refers to the Dimensional separate but affiliated entities generally, rather than to one particular entity. These entities are Dimensional Fund Advisors LP, Dimensional Fund Advisors Ltd., Dimensional Ireland Limited, DFA Australia Limited, Dimensional Fund Advisors Canada ULC, Dimensional Fund Advisors Pte. Ltd., Dimensional Japan Ltd., and Dimensional Hong Kong Limited. Dimensional Hong Kong Limited is licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities) regulated activities only and does not provide asset management services.

RISKS
Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.

Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

Investment products: • Not FDIC Insured • Not Bank Guaranteed • May Lose Value Dimensional Fund Advisors does not have any bank affiliates. (continued from page 15)
Is Gold a Safe Haven?
39

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ITEM NO. 1.

MORNINGSTAR DISCLOSURE
No system or strategy can by itself be used to consistently determine which securities to buy or sell or when to buy or sell them. The Shuster Advisory Group Strategies were developed using historical data that might not be indicative of future events.

The performance presentation shown represents hypothetical past performance of the Shuster Advisory Group Strategies. The performance results represent the results of actual trading by Shuster Advisory Group using client assets from the time trading began with clients, combined with the retroactive application of a back-tested model prior to the time clients were engaged that was designed with the benefit of hindsight. During the period prior to client engagement, Shuster Advisory Group was not managing money according to the strategies depicted. Future securities market conditions may be affected by factors that cannot be accounted for using historical modeling techniques.

Past performance is no guarantee of future results. Performance data of the investments was provided by Morningstar, and Morningstar obtains their information directly from the investment companies. Monthly total returns for each of the Shuster Advisory Group Strategies were calculated by applying the ending period holding weightings to each of the Shuster Advisory Group Strategies investments’ monthly returns. Monthly performance was determined using each individual investment’s Internal Rate of Return for each month. Interest, dividends, and capital gains distributions are included at the end of the month. Trailing returns are calculated by geometrically linking these weighted-average monthly returns. The Shuster Advisory Group Strategies’ portfolio returns thus assume monthly rebalancing.

Risk is measured and presented above as the Standard Deviation of monthly investment performance for the full five (5) year period shown. Standard Deviation is a measure of how spread out numbers are, which is determined by the square root of the variance of the monthly returns.
© 2022 Morningstar. All Rights Reserved. The information, data, analyses and opinions contained herein (1) include the confidential and proprietary information of Morningstar, (2) may include, or be derived from, account information provided by your financial advisor which cannot be verified by Morningstar, (3) may not be copied or redistributed, (4) do not constitute investment advice offered by Morningstar, (5) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (6) are not warranted to be correct, complete or accurate. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, this information, data, analyses or opinions or their use. This report is supplemental sales literature, and therefore must be preceded or accompanied by a prospectus and disclosure statement. Please read the prospectus carefully. 40

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ITEM NO. 1.

NITROGEN DISCLOSURE
The information, data, analysis and opinions contained in the following pages include the confidential and proprietary information of Nitrogen Wealth, Inc. (previously Riskalyze, Inc.) that may include or be derived from account information provided by Shuster Advisory Group, LLC which cannot be verified by Nitrogen Wealth, Inc. (“Nitrogen”); may not be copied or redistributed; does not constitute investment advice offered by Nitrogen; are provided solely for informational purposes and do not constitute an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Except as otherwise provided by law, Nitrogen shall not be responsible for any trading decisions, damages or other losses resulting from the use of this information, data, analysis or opinion. This report is supplemental sales literature.

The summaries provided are for simplification and illustrative purposes only and is not guaranteed by Shuster Advisory Group, LLC or Nitrogen. Please refer to the Nitrogen reports in the supplemental handout that correspond with the Equity/Fixed allocations listed as current and options #1 through #10.
© 2022 Riskalyze, Inc. All Rights Reserved.
41

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ITEM NO. 1.

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IMPORTANT NOTICE
This is a hybrid meeting and will be held in-person at the Town Council Chambers at 110 E. Main Street and virtually through Zoom Webinar (log-in information provided below). You may watch the Council meeting without providing public comment on Comcast cable channel 15 or at www.LosGatosCA.gov/TownYouTube. Members of the public may provide public comments for agenda items in-person or virtually by following the instructions listed at the end of the agenda.

CALL MEETING TO ORDER

ROLL CALL
CONSENT ITEMS (Consent Items are considered routine Town business and may be approved by one motion. Any member of the Committee may remove an item from the Consent Items for comment and action. Members of the public may provide input on any or multiple Consent Item(s) when the Mayor asks for public comments on the Consent Items. If you wish to comment, please follow the Participation Instructions at the end of this agenda. If an item is removed, the Mayor has the sole discretion to determine when the item will be heard.)

1. Approve the Minutes of the June 3, 2025, Town Pension and OPEB Trusts Oversight Committee Meeting.

RECOMMENDATION: Approve the Minutes of the June 3, 2025, Town Pension and OPEB Trusts Oversight Committee Meeting.

2. Receive the California Employer’s Retiree Benefit Trust (CERBT) Strategy 1 Market Value Summary Report for the Period Ending June 30, 2025, and the Performance Report as of June 30, 2025.

RECOMMENDATION: Receive California Employer’s Retiree Benefit Trust (CERBT) Strategy 1 Market Value Summary Report for the Period Ending June 30, 2025, and the Performance Report as of June 30, 2025.

TOWN OF LOS GATOS

TOWN PENSION AND OPEB TRUSTS OVERSIGHT

COMMITTEE AGENDA
SEPTEMBER 02, 2025
110 EAST MAIN STREET AND TELECONFERENCE

TOWN COUNCIL CHAMBERS
6:15 PM
Matthew Hudes, Mayor
Rob Moore, Vice Mayor
Mary Badame, Council Member
Rob Rennie, Council Member
Maria Ristow, Council Member
To watch and participate via Zoom, please go to:
https://losgatosca-gov.zoom.us/j/85411386935?pwd=awrZm7EN2dTJD3FOqHwCEw6jmQbNff.1 Enter passcode: 801018

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ITEM NO. 1.

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3. Receive the California Employer’s Pension Prefunding Trust (CEPPT) Strategy Market Value Summary Report for the Period Ending June 30, 2025, and Performance as of June 30, 2025.

RECOMMENDATION: Receive the California Employer’s Pension Prefunding Trust (CEPPT) Strategy 2 Market Value Summary Report for the period ending June 30, 2025, and performance as of June 30, 2025.

VERBAL COMMUNICATIONS (Members of the public are welcome to address the Committee only on matters listed on the agenda. To ensure all agenda items are heard, this portion of the agenda is limited to 30 minutes. Each speaker is limited to no more than three (3) minutes or such time as authorized by the Mayor.)
OTHER BUSINESS (Up to three minutes may be allotted to each speaker on any of the following items.)

4. Town Pension and OPEB Trusts Oversight Committee Report.

RECOMMENDATION: Receive the CalPERS Actuarial Valuation Reports as of June 30, 2024.

ADJOURNMENT
ADA NOTICE - In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the Clerk’s Office at (408) 354-6834.

Notification at least two (2) business days prior to the meeting date will enable the Town to make reasonable arrangements to ensure accessibility to this meeting [28 CFR §35.102-35.104].

When the Mayor announces the item for which you wish to speak, click the “raise hand” feature in Zoom. If you are participating by phone on the Zoom app, press *9 on your telephone keypad to raise your hand.

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ITEM NO. 1.

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 Telephone: Please dial 1 (855) 758-1310 for US Toll-free or 1 (408) 961-3928 for US Toll. (Meeting ID: 854 1138 6935). If you are participating by calling in, press *9 on your telephone keypad to raise your hand.
 In-Person: Please complete a “speaker’s card” located on the back of the chamber benches and return it to the Town Clerk before the meeting or when the Mayor announces the item for which you wish to speak.

NOTES: Comments will be limited to three (3) minutes or less at the Mayor’s discretion.

If you are unable to participate in real-time, you may email [email protected] with the subject line “Public Comment Item #__ ” (insert the item number relevant to your comment).

Deadlines to submit public comments are:
-11:00 a.m. the business day before the Committee meeting for inclusion in an addendum. -11:00 a.m. on the day of the Committee meeting for inclusion in a desk item.

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ITEM NO. 1.
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov

TOWN OF LOS GATOS

PENSION AND OPEB TRUSTS

OVERSIGHT COMMITTEE
REPORT
MEETING DATE: 09/02/2025
ITEM NO: 1
DRAFT
Minutes of the Town Pension and OPEB Trust Oversight Committee Special Meeting June 3, 2025
8:30 P.M. (or immediately following the regular Town Council Meeting) The Pension and OPEB Trusts Oversight Committee of the Town of Los Gatos conducted a meeting in person and via teleconference.

MEETING CALLED TO ORDER AT 9:46 P.M.

ROLL CALL

Present: Mayor Matthew Hudes, Vice Mayor Rob Moore, Council Member Mary Badame, Council Member Rob Rennie, Council Member Maria Ristow.

Absent: None.

CONSENT ITEMS (TO BE ACTED UPON BY A SINGLE MOTION)

1. Approve the Minutes of the March 18, 2025, Town Pension and OPEB Trusts Oversight Committee Meeting.

Mayor Hudes opened public comment.

No one spoke.

Mayor Hudes closed public comment.

MOTION: Motion by Council Member Ristow to approve the consent item. Seconded by Vice Mayor Moore.

VOTE: Motion passed unanimously.

VERBAL COMMUNICATIONS
No one spoke.

OTHER BUSINESS

2. Receive the California Employer’s Pension Prefunding Trust (CEPPT) Strategy Market Value Summary Report for the Period Ending March 31, 2025, and Performance as of March 31, 2025.

Gitta Ungvari, Finance Director, presented the staff report.

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ITEM NO. 1.

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PAGE 2 OF 2
SUBJECT: Draft Minutes of the Pension and OPEB Trusts Oversight Committee Meeting of June 3, 2025
DATE: August 5, 2025
Mayor Hudes opened public comment.

No one spoke.

Mayor Hudes closed public comment.

The Committee received the report.

3. Receive the California Employer’s Retiree Benefit Trust (CERBT) Strategy 1 Market Value Summary Report for the Period Ending March 31, 2025, and the Performance Report as of March 31, 2025.

Gitta Ungvari, Finance Director, presented the staff report.

Mayor Hudes opened public comment.

No one spoke.

Mayor Hudes closed public comment.

The Committee discussed the item and received the report.

ADJOURNMENT
The meeting adjourned at 9:51 p.m.

Attest:
_____________________________________
Keara Johnson, Deputy Town Clerk

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ITEM NO. 1.

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PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

TOWN PENSION AND OPEB TRUSTS

OVERSIGHT COMMITTEE REPORT
MEETING DATE: 09/02/2025
ITEM NO: 2
DATE: August 14, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Receive the California Employer’s Retiree Benefit Trust (CERBT) Strategy 1 Market Value Summary Report for the Period Ending June 30, 2025, and the Performance Report as of June 30, 2025
RECOMMENDATION: Receive California Employer’s Retiree Benefit Trust (CERBT) Strategy 1 Market Value Summary Report for the Period Ending June 30, 2025, and the Performance Report as of June 30, 2025.

FISCAL IMPACT:

There is no fiscal impact related to receiving this report.

BACKGROUND:

In 2009, the Council approved participating in the CERBT Fund. The CERBT Fund is an IRS Section 115 trust fund dedicated to the prefunding of other post-employment benefits (“OPEB”). The CERBT Strategy 1 is the single investment vehicle for the Town’s OPEB Plan (“OPEB Plan”).

DISCUSSION:

The ending OPEB 115 Trust account balance as of March 31, 2025, was $30,284,763.02 compared to $28,308,357.69 as of March 31, 2025 (Attachment 1). As of June 30, 2025, the CERBT Strategy 1 fund had a net return of 3.16% for the month and 12.27% as of Fiscal Year to Date (Attachment 2).

The Town Finance Commission will receive this information at its September 8, 2025, meeting.

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ITEM NO. 2.

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ITEM NO. 1.

PAGE 2 OF 2
SUBJECT: Receive the California Employer’s Retiree Benefit Trust (CERBT) Strategy 1 Market Value Summary Report for the Period Ending June 30, 2025, and the Performance Report as of June 30, 2025
DATE: September 2, 2025
Attachments:

1. OPEB 115 Trust Market Value Summary Report as of June 30, 2025

2. CERBT Strategy 1 Performance Report June 30, 2025

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ITEM NO. 2.

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ITEM NO. 1.

Town of Los Gatos
Please note the Grand Total is your actual fund account balance at the end of the period, including all contributions per GASB 74 paragraph 22 and accrued disbursements. Please review your statement promptly. All information contained in your statement will be considered true and accurate unless you contact us within 30 days of receipt of this statement. If you have questions about the validity of this information, please contact [email protected]. 1,188,552.988 1,188,552.988
$30,284,763.02 $30,284,763.02
Period Ending Unit Value 25.480364 25.480364
Period Beginning Unit Value 23.817498 22.696679

0.000

0.000
1,188,552.988

0.000

0.000
1,188,552.988
Current Period Year to Date
Ending Units
Unit Sales for Withdrawals
Unit Purchases from Contributions
Beginning Units
Market Value Summary: Unit Value Summary:

Grand Total $30,284,763.02 $30,284,763.02

0.00 (9,237.62)

0.00 3,329,558.32

0.00 $26,976,205.35

0.00 (1,934.42)

0.00 1,981,420.50

0.00 $28,308,357.69
Current Period Year to Date
Ending Balance
Disbursement
Administrative Expenses
Other
Investment Earnings
Contribution
Beginning Balance
QTD Fiscal QTD Fiscal
FY End Contrib per GASB 74 Para 22 0.00 0.00
Transfer In
Transfer Out

0.00 0.00

0.00 0.00
Unit Transfer In
Unit Transfer Out

0.000

0.000
Investment Expense (3,080.75) (11,763.03)
CERBT Strategy 1
Entity #: SKB0-4589482285
Quarter Ended June 30, 2025
FY End Disbursement Accrual 0.00 0.00

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ATTACHMENT 1

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ITEM NO. 2.

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ITEM NO. 1.

Statement of Transaction Detail for the Quarter Ending 06/30/2025 Town of Los Gatos
Entity #: SKB0-4589482285
Date Description Amount Unit Value Units Check/Wire Notes If you have any questions or comments regarding the new statement format please contact [email protected] Client Contact:

[email protected]

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ITEM NO. 2.

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ITEM NO. 1.

Asset Class Target
Allocation
Target
Range Benchmark
Global Equity 49% ± 5% MSCI All Country World
Index IMI (Net)
Fixed Income 23% ± 5% Bloomberg Long Liability
Index
Treasury Inflation-Protected
Securities ("TIPS") 5% ± 3% Bloomberg US TIPS
Index, Series L
Real Estate Investment
Trusts ("REITs") 20% ± 5% FTSE EPRA/NAREIT
Developed Index (Net)
Commodities 3% ± 3% S&P GSCI Total Return
Index
Cash - + 2% ICE BofA US 3-Month
Treasury Bill Index
Assets Under Management
As of the specified reporting month-end:

SKB0
CERBT Strategy 1 Annual Operating Ratio
$22,009,428,766 0.085%
CERBT Strategy 1 Performance as of June 30, 2025
1 Month 3 Months Fiscal YTD 1 Year 3 Years* 5 Years* 10 Years* Since Inception*
(June 1, 2007)
1,3 Gross Return 3.17% 7.00% 12.35% 12.35% 9.92% 7.97% 6.90% 5.68% 2,3 Net Return 3.16% 6.98% 12.27% 12.27% 9.83% 7.88% 6.81% 5.60% Benchmark Returns 3.13% 6.87% 11.97% 11.97% 9.65% 7.73% 6.57% 5.30% 4 Standard Deviation - - - - 13.15% 12.83% 11.52% 12.80% * Returns for periods greater than one year are annualized. 1 Gross returns are net of State Street Investment Management operating expenses. 2 Net returns are net of State Street Investment Management operating expenses, investment management, administrative and recordkeeping fees. 3 Expenses are described in more detail on page 2 of this document. 4 Standard deviation is based on gross returns and is reported for periods greater than 3 years.

California Employers' Retiree Benefit Trust (CERBT)
CERBT Strategy 1
June 30, 2025
Objective
The CERBT Strategy 1 portfolio seeks to provide capital appreciation and income consistent with its strategic asset allocation. There is no guarantee that the portfolio will achieve its investment objective.

Strategy
The CERBT Strategy 1 portfolio is invested in various asset classes. CalPERS periodically adjusts the composition of the portfolio in order to match the target allocations. Generally, equities are intended to help build the value of the employer’s portfolio over the long term while bonds are intended to help provide income and stability of principal. Also, strategies invested in a higher percentage of equities seek higher investment returns (but assume more risk) compared with strategies invested in a higher percentage of bonds.

Compared with CERBT Strategy 2 and Strategy 3, this portfolio has a higher allocation to equities than bonds and other assets.

Historically, equities have displayed greater price volatility and, therefore, this portfolio may experience greater fluctuation of value. Employers that seek higher investment returns, and are able to accept greater risk and tolerate more fluctuation in returns, may wish to consider this portfolio.

CalPERS Board may change the list of approved asset classes in composition as well as targeted allocation percentages and ranges at any time.

Composition
Asset Class Allocations and Benchmarks
The CERBT Strategy 1 portfolio consists of the following asset classes and corresponding benchmarks:

Portfolio Benchmark
The CERBT Strategy 1 benchmark is a composite of underlying asset class market indices, each assigned the target weight for the asset class it represents.

Target vs. Actual Asset Class Allocations
The following chart shows policy target allocations compared with actual asset allocations as of the specified reporting month-end. CalPERS may temporarily deviate from the target allocation to a particular asset class based on market, economic, or other considerations.

ATTACHMENT 2

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ITEM NO. 2.

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ITEM NO. 1.

CERBT Strategy Risk Levels
CalPERS offers employers the choice of one of three investment strategies. Projected risk levels among strategies vary, depending upon the target asset class allocations. Generally, equities carry more risk than fixed income securities. 1 Asset Class Target Allocations Strategy 1 Strategy 2 Strategy 3 Global Equity 49% 34% 23%
Fixed Income 23% 41% 51%
Treasury Inflation-Protected Securities 5% 5% 9%
Real Estate Investment Trusts 20% 17% 14%
Commodities 3% 3% 3%
1 Since June 2018, State Street Investment Management has passively managed all CERBT asset classes. Previously, Fixed Income, TIPS and Commodity asset classes were managed internally by CalPERS.

California Employers' Retiree Benefit Trust (CERBT)
CERBT Strategy 1
June 30, 2025
General Information
Information Accessibility
The CERBT Strategy 1 portfolio consists of assets managed internally by CalPERS and/or by external advisors. Since it is not a mutual fund, a prospectus is not available and daily holdings are not published. CalPERS provides a quarterly statement of the employer’s account and other information about the CERBT. For total market value, detailed asset allocation, investment policy and current performance information, please visit our website at: www.calpers.ca.gov.

Portfolio Manager Information
The CalPERS Board, through its Investment Committee, directs the CERBT investment strategy based on policies approved by the Board of Administration. State Street Investment Management manages all underlying investments for CERBT, which include: Global Equity, Fixed Income, Real Estate Investment Trusts, Treasury Inflation-Protected Securities, and Commodities.1
Custodian and Record Keeper
State Street Bank serves as custodian for the CERBT. Northeast Retirement Services serves as recordkeeper.

Expenses
CERBT is a self-funded trust in which participating employers pay for all administrative and investment expenses. Expenses reduce the gross investment return by the fee amount. The larger the expenses, the greater the reduction of investment return. Currently, CERBT expenses are

0.085% which consist of administrative expenses borne by CalPERS to administer and oversee the Trust assets, investment management and administrative fees paid to State Street Investment Management to manage all asset classes, and recordkeeping fees paid to Northeast Retirement Services to administer individual employer accounts. The expenses described herein are reflected in the net asset value per unit.

The expense ratio is subject to change at any time and without prior notification due to factors such as changes to average fund assets or market conditions. CalPERS reviews the operating expenses annually and changes may be made as appropriate. Even if the portfolio loses money during a period, the expenses will still be charged.

What Employers Own
Each employer invested in CERBT Strategy 1 owns units of this portfolio, which invests in pooled asset classes managed by CalPERS and/or external advisors. Employers do not have direct ownership of the securities in the portfolio.

Price
The value of the portfolio changes daily based upon the market value of the underlying securities. Just as prices of individual securities fluctuate, the portfolio’s value also changes with market conditions.

Principal Risks of the Portfolio
The CalPERS CERBT Fund provides California government employers with a trust through which they may prefund retiree medical costs and other postemployment benefits (OPEB). CERBT is not, however, a defined benefit plan. There is no guarantee that the portfolio will achieve its investment objectives or provide sufficient funding to meet employer obligations. Further, CalPERS will not make up the difference between an employer's CERBT assets and the actual cost of OPEB provided to an employer's plan members.

An investment in the portfolio is not a bank deposit, nor is it insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC), CalPERS, the State of California or any other government agency.

There are risks associated with investing, including possible loss of principal.

The portfolio’s risk depends in part on the portfolio’s asset class allocations and the selection, weighting and risks of the underlying investments. For more information about investment risks, please see the document entitled “CERBT Principal Investment Risks” located at www.calpers.ca.gov.

Fund Performance
Performance data shown on page 1 represents past performance and is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an employer’s units, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than historical performance data shown. For current performance information, please visit www.calpers.ca.gov and follow the links to California Employers' Retiree Benefit Trust.

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ITEM NO. 2.

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ITEM NO. 1.

PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

TOWN PENSION AND OPEB

TRUSTS OVERSIGHT

COMMITTEE REPORT
MEETING DATE: 09/02/2025
ITEM NO: 3
DATE: August 14, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Receive the California Employer’s Pension Prefunding Trust (CEPPT) Strategy Market Value Summary Report for the Period Ending June 30, 2025, and Performance as of June 30, 2025
RECOMMENDATION: Receive the California Employer’s Pension Prefunding Trust (CEPPT) Strategy 2 Market Value Summary Report for the period ending June 30, 2025, and performance as of June 30, 2025.

FISCAL IMPACT:

There is no fiscal impact associated with receiving this report.

BACKGROUND:

On November 5, 2019, the Town Council authorized the Town Manager to enter into an agreement with CalPERS for participation in the California Employers' Pension Prefunding Trust (CEPPT) program.

The CEPPT Fund is a Section 115 trust fund dedicated to prefunding employer contributions to defined benefit pension systems for eligible California public agencies. On March 3, 2020, the Town Pension and OPEB Trusts Oversight Committee adopted CEPPT Strategy 2 as the asset allocation for the Town’s Section 115 Trust pension assets.

DISCUSSION:

Effective Fiscal Year (FY) 2015-16, Council determined that if sufficient General Fund year-end savings are available and targeted reserve levels for the Catastrophic Reserve and Budget Stabilization Reserve have been met, upon the final close of the fiscal year, a minimum of

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PAGE 2 OF 2
SUBJECT: CEPPT Update
DATE: September 2, 2025
$300,000 annually shall be deposited into the Pension/OPEB Reserve Fund. In 2018, the Council updated the General Fund Reserve Policy to provide for additional discretionary payments Strategy 2 (ADPs) of $390,000 per year to address the unfunded pension liability.

Under the updated Policy, a 20-year amortization equivalence will be achieved.

The ending CEPPT 115 Trust account balance as of June 30, 2025, was $3,090,730.98 (Attachment 1). As of June 30, 2025, the CEPPT Strategy 2 fund had a net return of 2.09% for the month and 8.63% for the Fiscal Year to Date (FYTD) (Attachment 2). Staff transferred $690,000 to the CEPPT Trust during this quarter. According to the March 2024 Pension/OPEB Oversight Committee action, the Town will keep the funds in the CEPPT Trust. It will continuously monitor and evaluate whether an additional discretionary payment should be made directly to CalPERS.

The Town Finance Commission will receive this report at its September 8, 2025, regular meeting.

The Commission reiterated its prior recommendation to the Oversight Committee on March 10, 2025, to transfer the balance of the Pension IRS 115 Trust to CalPERS and pay off the Longest Base in the Safety Plan to maximize the interest savings. According to the actuarial analysis, paying an ADP of $2.18 million to the Safety Plan would have yielded approximately $2,259,000 in interest savings at the time of the former recommendation. The Finance Commission also recommended that the Town move from Strategy 2 to Strategy 1.

Staff plans to set up a joint Study Session between the Town Pension and OPEB Trust Oversight Committee and the Finance Commission to discuss the pension and OPEB Trusts.

Staff recommends waiting until the study session to decide on transferring the money to CalPERS. In the meantime, if the Council wishes to take a higher risk in the CEPPT Trust investment, the portfolio can be moved from Strategy 2 to Strategy 1. Taking higher risks can potentially increase the growth as well as the loss in the current portfolio.

Attachments:

1. CEPPT Market Value Summary Report as of June 30, 2025

2. CEPPT Strategy 2 Performance as of June 30, 2025

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Town of Los Gatos
Please note the Grand Total is your actual fund account balance at the end of the period, including accrued contribution and disbursements. Please review your statement promptly. All information contained in your statement will be considered true and accurate unless you contact us within 30 days of receipt of this statement. If you have questions about the validity of this information, please contact [email protected]. 266,043.432 266,043.432
$3,090,730.98 $3,090,730.98
Period Ending Unit Value 11.617392 11.617392
Period Beginning Unit Value 11.213381 10.694469

0.000
61,390.096
204,653.336

0.000

0.000
266,043.432
Current Period Year to Date
Ending Units
Unit Sales for Withdrawals
Unit Purchases from Contributions
Beginning Units
Market Value Summary: Unit Value Summary:

Grand Total $3,090,730.98 $3,090,730.98

0.00 (3,704.01)

0.00 217,687.93
690,000.00
$2,188,658.95

0.00 (1,095.19)

0.00 109,145.05

0.00 $2,983,246.45
Current Period Year to Date
Ending Balance
Disbursement
Administrative Expenses
Other
Investment Earnings
Contribution
Beginning Balance
QTD Fiscal QTD Fiscal
FY End Contribution Accrual 0.00 0.00
Transfer In
Transfer Out

0.00 0.00

0.00 0.00
Unit Transfer In
Unit Transfer Out

0.000

0.000
Investment Expense (565.33) (1,911.89)
CEPPT Strategy 2
Entity #: SKHE-4589482285-501P
Quarter Ended June 30, 2025
FY End Disbursement Accrual 0.00 0.00

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Statement of Transaction Detail for the Quarter Ending 06/30/2025 Town of Los Gatos
Entity #: SKHE-4589482285-501P
Date Description Amount Unit Value Units Check/Wire Notes If you have any questions or comments regarding the new statement format please contact [email protected] Client Contact:

[email protected]

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California Employers' Pension Prefunding Trust (CEPPT)
CEPPT Strategy 2
June 30, 2025
Asset Class Target
Allocation
Target
Range Benchmark
Global Equity 21% ± 5% MSCI All Country World
Index IMI (Net)
Fixed Income 61% ± 5% Bloomberg US Aggregate
Bond Index
Treasury Inflation-Protected
Securities ("TIPS") 9% ± 3% Bloomberg US TIPS Index,
Series L
Real Estate Investment
Trusts ("REITs") 9% ± 5% FTSE EPRA/NAREIT
Developed Index (Net)
Cash - + 2% ICE BofA US 3-Month
Treasury Bill Index
Assets Under Management
As of the specified reporting month-end:

CEPPT Strategy 2 Annual Expense Ratio
$77,118,114 0.25%
CEPPT Strategy 2 Performance as of June 30, 2025
SKHE Since Inception*
1 Month 3 Months Fiscal YTD 1 Year 3 Years* 5 Years* 10 Years* (January 1, 2020) Gross Return 1,3 2.11% 3.66% 8.88% 8.88% 5.78% 2.63% - 2.89% Net Return 2,3 2.09% 3.60% 8.63% 8.63% 5.54% 2.40% - 2.66% Benchmark Return 2.09% 3.62% 8.68% 8.68% 5.68% 2.50% - 2.77% Standard Deviation 4 - - - - 9.05% 8.04% - 8.05%
* Returns for periods greater than one year are annualized. 1 Gross returns are net of State Street Investment Management operating expenses. 2 Net returns are net of State Street Investment Manaagement operating expenses, investment management, administrative and recordkeeping fees. 3 Expenses are described in more detail on page 2 of this document. 4 Standard deviation is based on gross returns and is reported for periods greater than 3 years.

Objective
The CEPPT Strategy 2 portfolio seeks to provide capital appreciation and income consistent with its strategic asset allocation. There is no guarantee that the portfolio will achieve its investment objective.

Strategy
The CEPPT Strategy 2 portfolio is invested in various asset classes that are passively managed to an index. CalPERS periodically adjusts the composition of the portfolio in order to match the target allocations. Generally, equities are intended to help build the value of the employer's portfolio over the long term while bonds are intended to help provide income and stability of principal. Also, strategies invested in a higher percentage of equities seek higher investment returns (but assume more risk) compared with strategies invested in a higher percentage of bonds.

Compared with CEPPT Strategy 1, this portfolio has a lower allocation to equities and a higher allocation to bonds. Historically, funds with a lower percentage of equities have displayed less price volatility and, therefore, this portfolio may experience comparatively less fluctuation of value. Employers that seek greater stability of value, in exchange for possible lower investment returns, may wish to consider this portfolio.

CalPERS Board may change the list of approved asset classes in composition as well as targeted allocation percentages and ranges at any time.

Composition
Asset Class Allocations and Benchmarks
The CEPPT Strategy 2 portfolio consists of the following asset classes and corresponding benchmarks:

Portfolio Benchmark
The CEPPT Strategy 2 benchmark is a composite of underlying asset class market indices, each assigned the target weight for the asset class it represents.

Target vs. Actual Asset Class Allocations
The following chart shows policy target allocations compared with actual asset allocations as of the specified reporting month-end. CalPERS may temporarily deviate from the target allocation for a particular asset class based on market, economic, or other considerations.

ATTACHMENT 2

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California Employers' Pension Prefunding Trust (CEPPT
CEPPT Strategy 2
June 30, 2025
)
Asset Class Target Allocations Strategy 1 Strategy 2
Global Equity 37% 21%
Fixed Income 44% 61%
Treasury-Inflation Protected Securities 5% 9%
Real Estate Investment Trusts 14% 9%
General Information
Information Accessibility
The CEPPT Strategy 2 portfolio consists of assets managed internally by CalPERS and/or by external managers. Since it is not a mutual fund, a prospectus is not available and daily holdings are not published. CalPERS provides a quarterly statement of the employer's account and other information about the CEPPT. For total market value, detailed asset allocation, investment policy and performance information, please visit our website at www.calpers.ca.gov.

Portfolio Manager Information
The CalPERS Board, through its Investment Committee, directs the CEPPT investment strategy based on policies approved by the Board of Administration. State Street Investment Management manages all underlying investments for CEPPT, which include: Global Equity, Fixed Income, Real Estate Investment Trusts, and Treasury Inflation-Protected Securities.

Custodian and Record Keeper
State Street Bank serves as custodian for the CEPPT. Northeast Retirement Services serves as recordkeeper.

Expenses
CEPPT is a self-funded trust in which participating employers pay for all administrative and investment expenses. Expenses reduce the gross investment return by the fee amount. The larger the expenses, the greater reduction of investment return. Currently, CEPPT expense ratios are

0.25%. This equates to $2.50 per $1,000 invested. The expenses consist of administrative expenses borne by CalPERS to administer and oversee the Trust assets, investment management and administrative fees paid to State Street Investment Management to manage all asset classes, and recordkeeping fees paid to Northeast Retirement Services to administer individual employer accounts. The expenses described herein are reflected in the net asset value per unit. The expense ratio is subject to change at any time and without prior notification due to factors such as changes to average fund assets or market conditions. CalPERS reviews the operating expenses annually and changes may be made as appropriate. Even if the portfolio loses money during a period, the expenses will still be charged.

What Employers Own
Each employer invested in CEPPT Strategy 2 owns units of this portfolio, which invests in pooled asset classes managed by CalPERS and/or external advisors. Employers do not have direct ownership of the securities in the portfolio.

Price
The value of the portfolio changes daily based upon the market value of the underlying securities. Just as prices of individual securities fluctuate, the portfolio's value also changes with market conditions.

Principal Risks of the Portfolio
The CEPPT fund is a trust fund dedicated to prefunding employer contributions to defined benefit pension plans for eligible state and local agencies. CEPPT is not, however, a defined benefit plan. There is no guarantee that the portfolio will achieve its investment objectives or provide sufficient funding to meet employer obligations.

There are risks associated with investing, including possible loss of principal. The portfolio's risk depends in part on the portfolio's asset class allocations and the selection, weighting and risks of the underlying investments. For more information about investment risks, please see the document entitled "CEPPT Principal Investment Risks" located at www.calpers.ca.gov.

Fund Performance
Performance data shown on page 1 represents past performance and is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an employer's units, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than historical performance data shown. For current performance information, please visit www.calpers.ca.gov and follow the links to California Employers' Pension Prefunding Trust.

CEPPT Strategy Risk Levels
CalPERS offers employers the choice of one of two investment strategies. Projected risk levels among risk strategies vary, depending upon the target asset class allocations. Generally, equities carry more risk than fixed income securities.

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Los Gatos City CouncilOctober 6, 2025

Los Gatos City Council
October 6, 2025