Peralta Community College District Investment Performance Update

Transcription

1 Peralta Community College District Investment Performance Update February 25, 2016 Neuberger Berman Trust Company N.A.

2 Table of Contents I. INVESTMENT PERFORMANCE REVIEW AS OF DECEMBER 31, 2015 II. INVESTMENT PERFORMANCE REVIEW AS OF JANUARY 31, 2016 III. IMPLEMENTATION AS OF FEBRUARY 17, 2016 IV. MARKET OUTLOOK V. FOSSIL FUEL UPDATE VI. ADDITIONAL DISCLOSURES

3 INVESTMENT PERFORMANCE REVIEW AS OF DECEMBER 31, 2015

4 Peralta Community College District Executive Summary as of December 31, 2015 PORTFOLIO COMPOSITION Asset Class Market Value % of Total Cash and Fixed Income Cash and Equivalents 3,773, % Investment Grade Fixed Income 49,024, % High Yield Corporates 16,798, % Non-U.S. Fixed Income 6,845, % Subtotal $ 76,442, % Equity U.S. Large Cap 52,887, % U.S. Small & Mid Cap 18,940, % Developed International Equities 25,086, % Emerging Market Equities 9,576, % Public Real Estate 8,778, % Subtotal $ 115,270, % Hedge Funds 4.7% Private Equity 1.0% Commodities 1.9% Cash and Fixed Income 36.9% Real & Alternative Assets Hedge Funds 9,651, % Private Equity 1,980, % Commodities 3,841, % Subtotal $ 15,473, % Equity 55.6% TOTAL PORTFOLIO $ 207,186, % NET PERFORMANCE SUMMARY Trailing Trailing Year- Trailing Annualized Cumulative 1 Month 3 Months to-date 1 Year Since Inception Since Inception Total Portfolio (1/31/2006) (1.59) 2.54 (2.07) (2.07) Investment Policy Benchmark (1/31/2006) (1) (1.17) 1.83 (1.56) (1.56) (1) From 10/31/2013 to present consists of: 30% Barclays Capital Aggregate, 5% Barclays Capital US Corporate High Yield, 3% Barclays Capital Global Aggregate Ex-USD, 21% Russell 1000, 7% Russell 2500, 10% MSCI EAFE, 5% MSCI Emerging Markets, 4% NAREIT Equity, 3% Bloomberg Commodity Index, 6% HFRI FoF Composite Index, and 6% ThomsonOne Private Equity. ThomsonOne Private Equity data is not available until 45 days after quarter-end. HFRI returns are not yet available for December From 5/31/2012 to 10/31/2013 consists of: 35% Barclays Capital Aggregate, 5% Barclays Capital US Corporate High Yield, 23% Russell 1000, 8% Russell 2500, 15% MSCI EAFE, 7% MSCI Emerging Markets, 4% NAREIT Equity, and 3.0% Bloomberg Commodity Index. From 1/31/2006 to 5/31/2012 consists of: 35% Barclays Capital Aggregate, 30% S&P 500 Index, 10% Russell 2000, 20% MSCI EAFE, and 5% NAREIT Equity. See Additional Disclosures at the end of this material, which are an important part of this presentation. 4

5 Peralta Community College District Allocation by Investment Manager as of December 31, 2015 Manager/Asset Class Market Value % Of JP Morgan US Treasury Money Market Fund - VPIXZ 376, % Total Cash and Equivalents $ 376, % NB Fixed Income Structure Core 49,024, % Total Investment Grade Fixed Income 49,024, % NB High Income Bond Fund - NHILX 9,163, % NB Floating Rate Income Fund - NFIIX 7,635, % Total High Yield Fixed Income 16,798, % NB Emerging Markets Debt Fund - NERIX 6,845, % Total Non-U.S. Fixed Income 6,845, % Total Fixed Income $ 72,668, % NB Large Cap Value 21,839, % NB Socially Responsible Investing Group 22,994, % Clearbridge Advisors All Cap Growth 9,993, % Total U.S. Large Cap 54,827, % NB Genesis Fund - NBGIX 6,759, % Kayne Anderson Rudnick Small Cap Growth 6,866, % NB Greene Group Small Cap Intrinsic Value 6,328, % Total U.S. Small & Mid Cap 19,954, % Harding Loevner International Equity ADR 9,311, % NB International Fund - NBIIX 9,912, % Vanguard FTSE Europe Equity ETF - VGK 6,148, % Total Developed Equities 25,372, % NB Emerging Markets Fund - NEMIX 2,146, % Matthews Pacific Tiger Fund - MIPTX 7,429, % Total Emerging Equities 9,576, % NB REITs 8,935, % Total Public Real Estate 8,935, % Public Real Estate 4.3% Emerging Market Equities 4.6% Developed International Equities 12.2% U.S. Small & Mid Cap 9.6% Total Private Equity 1.0% Hedge Funds 4.7% Total Commodities 1.9% Cash and Equivalents 0.2% U.S. Large Cap 26.5% Investment Grade Fixed Income 23.7% High Yield Fixed Income 8.1% Non-U.S. Fixed Income 3.3% Total Equity $ 118,667, % NB Absolute Return Multi-Manager Fund - NABIX 9,651, % Total Low Vol Hedge Funds 9,651, % NB Risk Balanced Commodity Fund - NRBIX 3,841, % Total Commodities 3,841, % NB Secondary Opportunities Fund* 755, % NB Crossroads Fund* 1,225, % Total Private Equity 1,980, % Total Real & Alternative Assets $ 15,473, % Total Portfolio $ 207,186, % See Additional Disclosures at the end of this material, which are an important part of this presentation. * 3Q 2015 market value reflected. 5

6 Peralta Community College District Composite Performance Summary (Net) as of December 31, % October, % Total Portfolio Investment Policy Index 5.9% 5.2% 5.0% 4.9% 4.0% 2.0% % 1.8% (2.0%) (4.0%) (1.2%) (1.6%) (1.6%) (1.6%) (2.1%) (2.1%) Trailing 1 Month Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years Since Inception Trailing Trailing Year- Trailing Annualized Performance Composite / Index (Inception) Market Value % of 1 Month 3 Months to-date 1 Year 3 Years Inception Total Portfolio (1/31/2006) $ 207,186, % (1.59) 2.54 (2.07) (2.07) Investment Policy Benchmark (1) (1.17) 1.83 (1.56) (1.56) Total Fixed Income (1/31/2006) $ 72,668, % (0.96) (0.76) (1.50) (1.50) Barclays Capital U.S. Aggregate Bond Index (0.32) (0.57) Total Equity (1/31/2006) $ 118,667, % (1.97) 5.55 (1.48) (1.48) MSCI All Country World Index (1.76) 5.15 (1.84) (1.84) Total U.S. Equity (1/31/2006) $ 83,718, % (2.09) 5.53 (1.32) (1.32) Russell 3000 Index (2.05) Total Real & Alternative Assets (11/8/2013)* $ 15,473, % (1.39) (1.67) (4.69) (4.69) - (1.17) HFRI FoF Composite (0.61) 0.62 (0.39) (0.39) (1) From 10/31/2013 to present consists of: 30% Barclays Capital Aggregate, 5% Barclays Capital US Corporate High Yield, 3% Barclays Capital Global Aggregate Ex-USD, 21% Russell 1000, 7% Russell 2500, 10% MSCI EAFE, 5% MSCI Emerging Markets, 4% NAREIT Equity, 3% Bloomberg Commodity Index, 6% HFRI FoF Composite Index, and 6% ThomsonOne Private Equity. ThomsonOne Private Equity data is not available until 45 days after quarter-end. HFRI returns are not yet available for December From 5/31/2012 to 10/31/2013 consists of: 35% Barclays Capital Aggregate, 5% Barclays Capital US Corporate High Yield, 23% Russell 1000, 8% Russell 2500, 15% MSCI EAFE, 7% MSCI Emerging Markets, 4% NAREIT Equity, and 3.0% Bloomberg Commodity Index. From 1/31/2006 to 5/31/2012 consists of: 35% Barclays Capital Aggregate, 30% S&P 500 Index, 10% Russell 2000, 20% MSCI EAFE, and 5% NAREIT Equity. Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. See Additional Disclosures at the end of this material, which are an important part of this presentation. *Performance for NB Crossroads and NB Secondary Opportunities Fund is not available. 6

7 Peralta Community College District Net Performance by Investment Manager as of December 31, 2015, 2013 Manager (Inception) Investment Grade Fixed Income Market Value % of Tot. Port. 1 Month Annualized Perf. (%) Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years Since Inception NB Fixed Income Structure Core (1/31/2006) $ 49,024, % (0.52) (0.57) Barclays Capital US Aggregate Bond Index (0.32) (0.57) Variance from Index (0.19) 0.00 (0.12) (0.12) High Yield Fixed Income NB High Income Bond Fund - NHILX (5/31/2012) $ 9,163, % (1.94) (1.72) (4.78) (4.78) BofA ML US High Yield Master II Constrained Index (2.58) (2.16) (4.61) (4.61) Variance from Index (0.16) (0.16) (0.33) (0.24) NB Floating Rate Income Fund - NFIIX (11/8/2013) $ 7,635, % (0.89) (1.95) (0.02) (0.02) S&P/LSTA Leveraged Loan Index (1.05) (2.10) (0.69) (0.69) Variance from Index (0.17) Non-U.S. Fixed Income NB Emerging Markets Debt Fund - NERIX (02/10/2015) $ 6,845, % (2.18) (8.30) 50% (GBLDIV), 25% (JPMEMB) and 25% (CEMBI) Index (1.81) (6.92) Variance from Index (0.37) (1.38) U.S. Large Cap NB Large Cap Value (1/20/2006) $ 21,839, % (1.93) 4.28 (2.88) (2.88) Russell 1000 Value Index (2.15) 5.64 (3.83) (3.83) Variance from Index 0.22 (1.35) NB Socially Responsible Investing Group (5/31/2012) $ 22,994, % (1.13) S&P 500 Index (1.58) Variance from Index 0.45 (0.94) (1.01) (1.01) Clearbridge Advisors All Cap Growth (11/20/2014) $ 9,993, % (4.06) 5.36 (4.37) (4.37) - (4.55) Russell 3000 Growth Index (1.72) Variance from Index (2.34) (1.73) (9.46) (9.46) - (9.66) Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. See Additional Disclosures at the end of this material, which are an important part of this presentation. 7

8 Peralta Community College District Net Performance by Investment Manager as of December 31, 2015 Manager (Inception) Market Value % of Tot. Port. 1 Month Annualized Perf. (%) Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years Since Inception U.S. Small & Mid Cap NB Genesis Fund - NBGIX (5/31/2012) $ 6,759, % (4.82) Russell 2000 Index* (5.02) 3.59 (4.41) (4.41) Variance from Index 0.20 (0.69) (0.39) (1.42) Kayne Anderson Rudnick Small Cap Growth (10/02/15) $ 6,866, % (3.24) Russell 2000 Growth Index (4.77) Variance from Index NB Greene Group Small Cap Intrinsic Value (10/02/15) $ 6,328, % (3.51) Russell 2000 Value Index (5.27) Variance from Index Developed Equity Harding Loevner International Equity ADR (5/29/2012) $ 9,311, % (2.29) 6.41 (1.90) (1.90) MSCI ACWI Ex-US Index** (1.88) 3.24 (5.66) (5.66) Variance from Index (0.41) NB International Fund - NBIIX (1/31/2006) $ 9,912, % (2.12) MSCI EAFE Index (USD)*** (1.33) 4.75 (0.39) (0.39) Variance from Index (0.79) Vanguard FTSE Europe Equity ETF - VGK (02/11/2015) $ 6,148, % (2.42) (3.88) FTSE Developed Europe Index (2.49) (3.70) Variance from Index 0.07 (0.39) (0.18) Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. See Additional Disclosures at the end of this material, which are an important part of this presentation. * The Benchmark was updated retroactively to the Russell 2000 Index from the Russell 2000 Value Index since inception. ** The benchmark was updated retroactively to the MSCI ACWI Ex-US Index from the MSCI EAFE Index since inception. *** The benchmark was updated retroactively to the MSCI EAFE Index (USD) from the MSCI EAFE Index since inception. 8

9 Peralta Community College District Net Performance by Investment Manager as of December 31, 2015 Manager (Inception) Market Value % of Tot. Port. 1 Month Annualized Perf. (%) Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years Since Inception Emerging Equity NB Emerging Markets Fund - NEMIX (5/28/2013) $ 2,146, % (1.75) 4.18 (11.51) (11.51) - (5.97) MSCI Emerging Markets USD Index** (2.17) 0.73 (14.60) (14.60) - (6.93) Variance from Index Matthews Pacific Tiger Fund - MIPTX (11/19/2014) $ 7,429, % (1.15) (1.15) - (1.11) MSCI AC Asia Ex-Japan Index (0.42) 3.87 (8.90) (8.90) - (7.95) Variance from Index Public Real Estate NB REITS (1/31/2006) $ 8,935, % NAREIT All Equity REIT Index Variance from Index 0.14 (0.16) (1.27) (1.27) (1.63) 0.97 Low Vol Hedge Funds NB Absolute Return Multi-Manager Fund - NABIX (11/8/2013) $ 9,651, % (1.39) (1.67) (4.69) (4.69) - (1.13) HFRX Absolute Return Index*** (0.42) Variance from Index (0.97) (1.88) (7.54) (7.54) - (3.17) Commodities NB Risk Balanced Commodity Fund - NRBIX (02/05/2015) $ 3,841, % (2.98) (10.06) (23.16) Bloomberg Commodity Index (3.09) (10.52) (23.30) Variance from Index Private Equity NB Secondary Opportunities Fund (12/11/2013)* $ 755, % n/a n/a n/a n/a - n/a NB Crossroads Fund (6/23/2014)* $ 1,225, % n/a n/a n/a n/a - n/a Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. See Additional Disclosures at the end of this material, which are an important part of this presentation. * 3Q 2015 market value is reflected, performance returns are not available. ** The benchmark was updated retroactively to the MSCI Emerging Markets USD Index from the MSCI Emerging Markets Index since inception. ***The benchmark was updated retroactively to the HFRX Absolute Return Index from the HFRI FoF Composite Index since inception. 9

10 INVESTMENT PERFORMANCE REVIEW AS OF JANUARY 31, 2016

11 Peralta Community College District Executive Summary as of January 31, 2016 PORTFOLIO COMPOSITION Asset Class Market Value % of Total Cash and Fixed Income Cash and Equivalents 3,100, % Investment Grade Fixed Income 47,731, % High Yield Corporates 16,687, % Non-U.S. Fixed Income 6,844, % Subtotal $ 74,363, % Equity U.S. Large Cap 49,823, % U.S. Small & Mid Cap 17,639, % Developed International Equities 23,498, % Emerging Market Equities 9,045, % Public Real Estate 8,410, % Subtotal $ 108,417, % Hedge Funds 4.8% Private Equity 1.0% Commodities 1.9% Cash and Fixed Income 37.6% Real & Alternative Assets Hedge Funds 9,441, % Private Equity 1,980, % Commodities 3,744, % Subtotal $ 15,167, % Equity 54.8% TOTAL PORTFOLIO $ 197,948, % NET PERFORMANCE SUMMARY Trailing Trailing Year- Trailing Annualized Cumulative 1 Month 3 Months to-date 1 Year Since Inception Since Inception Total Portfolio (1/31/2006) (3.63) (5.31) (3.63) (5.12) Investment Policy Benchmark (1/31/2006) (1) (2.75) (4.48) (2.75) (4.09) (1) From 10/31/2013 to present consists of: 30% Barclays Capital Aggregate, 5% Barclays Capital U.S. Corporate High Yield, 3% Barclays Capital Global Aggregate Ex-USD, 21% Russell 1000, 7% Russell 2500, 10% MSCI EAFE, 5% MSCI Emerging Markets, 4% NAREIT Equity, 3% Bloomberg Commodity Index, 6% HFRI FoF Composite Index, and 6% Cambridge Associates U.S. PE. The 4Q Cambridge Associates U.S. PE return has yet to be published. From 5/31/2012 to 10/31/2013 consists of: 35% Barclays Capital Aggregate, 5% Barclays Capital U.S. Corporate High Yield, 23% Russell 1000, 8% Russell 2500, 15% MSCI EAFE, 7% MSCI Emerging Markets, 4% NAREIT Equity, and 3.0% Bloomberg Commodity Index. From 1/31/2006 to 5/31/2012 consists of: 35% Barclays Capital Aggregate, 30% S&P 500 Index, 10% Russell 2000, 20% MSCI EAFE, and 5% NAREIT Equity. See Additional Disclosures at the end of this material, which are an important part of this presentation. 11

12 Peralta Community College District Allocation by Investment Manager as of January 31, 2016 Manager/Asset Class Market Value % Of JP Morgan US Treasury Money Market Fund - VPIXZ 367, % Total Cash and Equivalents $ 367, % NB Fixed Income Structure Core 47,731, % Total Investment Grade Fixed Income 47,731, % NB High Income Bond Fund - NHILX 9,101, % NB Floating Rate Income Fund - NFIIX 7,586, % Total High Yield Fixed Income 16,687, % NB Emerging Markets Debt Fund - NERIX 6,844, % Total Non-U.S. Fixed Income 6,844, % Total Fixed Income $ 71,263, % NB Large Cap Value 20,556, % NB Socially Responsible Investing Group 21,541, % Clearbridge Advisors All Cap Growth 9,053, % Total U.S. Large Cap 51,152, % NB Genesis Fund - NBGIX 6,336, % Kayne Anderson Rudnick Small Cap Growth 6,444, % NB Greene Group Small Cap Intrinsic Value 5,813, % Total U.S. Small & Mid Cap 18,594, % Harding Loevner International Equity ADR 8,802, % NB International Fund - NBIIX 9,257, % Vanguard FTSE Europe Equity ETF - VGK 5,807, % Total Developed Equities 23,867, % NB Emerging Markets Fund - NEMIX 2,016, % Matthews Pacific Tiger Fund - MIPTX 7,028, % Total Emerging Equities 9,045, % NB REITs 8,490, % Total Public Real Estate 8,490, % Public Real Estate 4.3% Emerging Market Equities 4.6% Developed International Equities 12.1% U.S. Small & Mid Cap 9.4% Total Private Equity 1.0% Hedge Funds 4.8% Total Commodities 1.9% Cash and Equivalents 0.2% U.S. Large Cap 25.8% Investment Grade Fixed Income 24.1% High Yield Fixed Income 8.4% Non-U.S. Fixed Income 3.5% Total Equity $ 111,149, % NB Absolute Return Multi-Manager Fund - NABIX 9,441, % Total Low Vol Hedge Funds 9,441, % NB Risk Balanced Commodity Fund - NRBIX 3,744, % Total Commodities 3,744, % NB Secondary Opportunities Fund* 755, % NB Crossroads Fund* 1,225, % Total Private Equity 1,980, % Total Real & Alternative Assets $ 15,167, % Total Portfolio $ 197,948, % See Additional Disclosures at the end of this material, which are an important part of this presentation. * 3Q 2015 market value reflected. 12

13 Peralta Community College District Composite Performance Summary (Net) as of January 31, % 4.0% Total Portfolio Investment Policy Index 3.6% 3.7% 4.6% 4.7% 2.0% -- (2.0%) (4.0%) (6.0%) (3.6%) (2.8%) (5.3%) (4.5%) (3.6%) (2.8%) (5.1%) (4.1%) (8.0%) Trailing 1 Month Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years Since Inception Trailing Trailing Year- Trailing Annualized Performance Composite / Index (Inception) Market Value % of 1 Month 3 Months to-date 1 Year 3 Years Inception Total Portfolio (1/31/2006) $ 197,948, % (3.63) (5.31) (3.63) (5.12) Investment Policy Benchmark (1) (2.75) (4.48) (2.75) (4.09) Total Fixed Income (1/31/2006) $ 71,263, % 0.46 (1.21) 0.46 (2.22) Barclays Capital U.S. Aggregate Bond Index (0.16) Total Equity (1/31/2006) $ 111,149, % (6.35) (7.75) (6.35) (6.34) MSCI All Country World Index (6.01) (8.38) (6.01) (6.29) Total U.S. Equity (1/31/2006) $ 78,236, % (6.55) (7.88) (6.55) (5.53) Russell 3000 Index (5.64) (7.07) (5.64) (2.48) Total Real & Alternative Assets (11/8/2013)* $ 15,167, % (2.17) (4.08) (2.17) (5.79) - (2.09) HFRI FoF Composite (2.89) (2.98) (2.89) (3.25) (1) From 10/31/2013 to present consists of: 30% Barclays Capital Aggregate, 5% Barclays Capital U.S. Corporate High Yield, 3% Barclays Capital Global Aggregate Ex-USD, 21% Russell 1000, 7% Russell 2500, 10% MSCI EAFE, 5% MSCI Emerging Markets, 4% NAREIT Equity, 3% Bloomberg Commodity Index, 6% HFRI FoF Composite Index, and 6% Cambridge Associates U.S. PE. The 4Q Cambridge Associates U.S. PE return has yet to be published. From 5/31/2012 to 10/31/2013 consists of: 35% Barclays Capital Aggregate, 5% Barclays Capital U.S. Corporate High Yield, 23% Russell 1000, 8% Russell 2500, 15% MSCI EAFE, 7% MSCI Emerging Markets, 4% NAREIT Equity, and 3.0% Bloomberg Commodity Index. From 1/31/2006 to 5/31/2012 consists of: 35% Barclays Capital Aggregate, 30% S&P 500 Index, 10% Russell 2000, 20% MSCI EAFE, and 5% NAREIT Equity. Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. See Additional Disclosures at the end of this material, which are an important part of this presentation. *Performance for NB Crossroads and NB Secondary Opportunities Fund is not available. 13

14 Peralta Community College District Net Performance by Investment Manager as of January 31, 2016 Manager (Inception) Investment Grade Fixed Income Market Value % of Tot. Port. 1 Month Annualized Perf. (%) Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years NB Fixed Income Structure Core (1/31/2006) $ 47,731, % (0.27) Barclays Capital U.S. Aggregate Bond Index (0.16) Variance from Index (0.45) (0.57) (0.45) (0.11) (0.11) 0.09 High Yield Fixed Income NB High Income Bond Fund - NHILX (5/31/2012) $ 9,101, % (0.77) (5.11) (0.77) (6.26) BofA ML U.S. High Yield Master II Constrained Index (1.58) (6.26) (1.58) (6.76) Variance from Index NB Floating Rate Income Fund - NFIIX (11/8/2013) $ 7,586, % (0.59) (2.56) (0.59) (0.96) S&P/LSTA Leveraged Loan Index (0.65) (2.56) (0.65) (1.66) Variance from Index 0.06 (0.00) (0.14) Non-U.S. Fixed Income NB Emerging Markets Debt Fund - NERIX (02/10/2015) $ 6,844, % (0.08) (2.91) (0.08) - - (8.37) 50% (GBLDIV), 25% (JPMEMB), and 25% (CEMBI) Index 0.05 (3.00) (6.86) Variance from Index (0.13) 0.09 (0.13) - - (1.50) U.S. Large Cap NB Large Cap Value (1/20/2006) $ 20,556, % (5.88) (7.65) (5.88) (4.23) Russell 1000 Value Index (5.17) (6.85) (5.17) (5.00) Variance from Index (0.71) (0.80) (0.71) NB Socially Responsible Investing Group (5/31/2012) $ 21,541, % (6.32) (7.32) (6.32) (3.80) S&P 500 Index (4.96) (6.18) (4.96) (0.67) Variance from Index (1.36) (1.14) (1.36) (3.13) (1.11) 0.41 Since Inception Clearbridge Advisors All Cap Growth (11/20/2014) $ 9,053, % (9.40) (13.03) (9.40) (10.29) - (11.84) Russell 3000 Growth Index (5.97) (7.10) (5.97) (0.52) Variance from Index (3.43) (5.93) (3.43) (10.70) - (11.32) Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. See Additional Disclosures at the end of this material, which are an important part of this presentation. 14

15 Peralta Community College District Net Performance by Investment Manager as of January 31, 2016 Manager (Inception) Market Value % of Tot. Port. 1 Month Annualized Perf. (%) Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years Since Inception U.S. Small & Mid Cap NB Genesis Fund - NBGIX (5/31/2012) $ 6,336, % (6.27) (8.75) (6.27) (2.75) Russell 2000 Index* (8.79) (10.56) (8.79) (9.92) Variance from Index (0.53) Kayne Anderson Rudnick Small Cap Growth (10/02/15) $ 6,444, % (6.14) (4.76) (6.14) Russell 2000 Growth Index (10.83) (11.98) (10.83) - - (8.59) Variance from Index NB Greene Group Small Cap Intrinsic Value (10/02/15) $ 5,813, % (8.14) (9.41) (8.14) - - (5.94) Russell 2000 Value Index (6.72) (9.12) (6.72) - - (4.71) Variance from Index (1.42) (0.28) (1.42) - - (1.23) Developed Equity Harding Loevner International Equity ADR (5/29/2012) $ 8,802, % (5.46) (7.62) (5.46) (8.20) MSCI ACWI Ex-U.S. Index** (6.80) (10.45) (6.80) (11.95) (2.17) 3.84 Variance from Index NB International Fund - NBIIX (1/31/2006) $ 9,257, % (6.60) (7.43) (6.60) (3.81) MSCI EAFE Index (USD)*** (7.22) (9.87) (7.22) (8.04) Variance from Index Vanguard FTSE Europe Equity ETF - VGK (02/11/2015) $ 5,807, % (5.88) (9.32) (5.88) - - (9.53) FTSE Developed Europe Index (6.65) (10.59) (6.65) - - (10.11) Variance from Index Emerging Equity NB Emerging Markets Fund - NEMIX (5/28/2013) $ 2,016, % (6.04) (9.25) (6.04) (17.21) - (7.96) MSCI Emerging Markets USD Index**** (6.48) (12.08) (6.48) (20.62) - (9.03) Variance from Index Matthews Pacific Tiger Fund - MIPTX (11/19/2014) $ 7,028, % (5.40) (4.99) (5.40) (10.66) - (5.52) MSCI AC Asia Ex-Japan Index (7.64) (11.13) (7.64) (17.92) - (13.36) Variance from Index Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. See Additional Disclosures at the end of this material, which are an important part of this presentation. * The Benchmark was updated retroactively to the Russell 2000 Index from the Russell 2000 Value Index since inception. ** The benchmark was updated retroactively to the MSCI ACWI Ex-U.S. Index from the MSCI EAFE Index since inception. *** The benchmark was updated retroactively to the MSCI EAFE Index (USD) from the MSCI EAFE Index since inception. **** The benchmark was updated retroactively to the MSCI Emerging Markets USD Index from the MSCI Emerging Markets Index since inception. 15

16 Peralta Community College District Net Performance by Investment Manager as of January 31, 2016 Manager (Inception) Market Value % of Tot. Port. 1 Month Annualized Perf. (%) Trailing 3 Months Year-to-Date Trailing 1 Year Trailing 3 Years Since Inception Public Real Estate NB REITS (1/31/2006) $ 8,490, % (4.99) (4.49) (4.99) (7.54) NAREIT All Equity REIT Index (3.52) (2.42) (3.52) (6.56) Variance from Index (1.47) (2.07) (1.47) (0.98) (1.77) 0.79 Low Vol Hedge Funds NB Absolute Return Multi-Manager Fund - NABIX (11/8/2013) $ 9,441, % (2.17) (4.08) (2.17) (5.79) - (2.06) HFRX Absolute Return Index** 0.05 (0.87) Variance from Index (2.22) (3.21) (2.22) (8.09) - (4.05) Commodities NB Risk Balanced Commodity Fund - NRBIX (02/05/2015) $ 3,744, % (2.53) (12.91) (2.53) - - (25.11) Bloomberg Commodity Index (1.68) (11.63) (1.68) - - (24.59) Variance from Index (0.85) (1.28) (0.85) - - (0.51) Private Equity NB Secondary Opportunities Fund (12/11/2013)* $ 755, % n/a n/a n/a n/a - n/a NB Crossroads Fund (6/23/2014)* $ 1,225, % n/a n/a n/a n/a - n/a Note: Benchmark inception dates correspond with that of the respective manager. Performance shown for periods of less than one year is cumulative. See Additional Disclosures at the end of this material, which are an important part of this presentation. * 3Q 2015 market value is reflected, performance returns are not available. **The benchmark was updated retroactively to the HFRX Absolute Return Index from the HFRI FoF Composite Index since inception. 16

17 IMPLEMENTATION AS OF FEBRUARY 17, 2016

18 Implementation As of February 17, 2016 Market Value Manager / Asset Class As Of 2/17/2016 % Of Proposed Change Proposed Value % Of State Street US Treasury Money Mkt Fund - STYTZ $ 249, % 249, % Total Cash $ 249, % $ - $ 249, % NB Fixed Income Structure Core 49,398, % 49,398, % Total Investment Grade Fixed Income * 49,398, % - 49,398, % NB Floating Rate Income Fund - NFIIX 7,508, % 7,508, % NB High Income Bond Fund - NHILX 9,006, % - 9,006, % Total High Yield Fixed Income 16,515, % - 16,515, % NB Emerging Markets Debt Fund - NERIX 6,890, % - 6,890, % Total Non-US Fixed Income 6,890, % - 6,890, % Total Fixed Income $ 72,804, % $ - $ 72,804, % Clearbridge Advisors All Cap Growth 9,207, % - 9,207, % NB Large Cap Value 20,222, % - 20,222, % NB Socially Responsible Investing Group 21,542, % - 21,542, % Total U.S. Large Cap 50,971, % - 50,971, % NB Genesis Fund - NBGIX 6,366, % 6,366, % NB Greene Group Small Cap Intrinsic Value 5,720, % 5,720, % Kayne Anderson Rudnick Small Cap Growth 6,487, % 6,487, % Total U.S. Small & Mid Cap 18,574, % - 18,574, % Harding Loevner International Equity ADR 8,596, % - 8,596, % Vanguard FTSE Europe Equity ETF - VGK 5,712, % - 5,712, % NB International Fund - NBIIX 9,194, % - 9,194, % Total Developed Equities 23,502, % - 23,502, % NB Emerging Markets Fund - NEMIX 1,990, % - 1,990, % Matthews Pacific Tiger Fund - MIPTX 6,760, % - 6,760, % Total Emerging Equities 8,750, % - 8,750, % NB REITs 8,154, % - 8,154, % Total Public Real Estate 8,154, % - 8,154, % Total Equities $ 109,954, % $ - $ 109,954, % NB Risk Balanced Commodity Fund - NRBIX 3,737, % - 3,737, % Total Commodities 3,737, % - 3,737, % NB Absolute Return Multi-Manager Fund - NABIX 9,327, % 9,327, % Total Hedge Funds 9,327, % - 9,327, % NB Crossroads Fund XX 1,505, % - 1,505, % NB Secondary Opportunities Fund 811, % 811, % Total Private Equity 2,316, % - 2,316, % Total Real & Alternative Assets $ 15,382, % $ - $ 15,382, % Total Portfolio $ 198,390, % $ - $ 198,390, % 18

19 MARKET OUTLOOK

20 Index Performance Scorecard As of January 31, 2016 Asset Class Jan Dow S&P MSCI EAFE* MSCI Emerging Markets* Month T-Bill Year Treasury Barclays Corporate Barclays High Yield Barclays Municipal** Alerian MLP Index DEVELOPED AND EMERGING MARKET 2016 YTD PERFORMANCE (%) Equity Style Jan Russell Russell 1000 Growth Russell 1000 Value Russell Russell 2000 Growth Russell 2000 Value S&P 500 Sectors Jan Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunications Services Developed Utilities *Dollar returns. **Municipal performance not adjusted for taxes. Sources: Standard and Poor s; MSCI; Barclays. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Disclosures section at the end of this material, which is an important part of this presentation. 20 Emerging

21 Narrow Market Leadership A small number of large-cap growth stocks (FANG) drove the return of the S&P 500 Source: Strategas, Bloomberg. Indices are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Additional Disclosures at the end of this material, which are an important part of this presentation. 21

22 Narrow Market Leadership The top 3 stocks contributed 142% of the S&P 500 return in 2015, nearly double the contribution compared to 2011, a similarly flat year 150% 125% 100% 75% 50% 25% 0% -25% -50% -75% -100% -125% -150% Contribution from Top 3 Stocks to S&P 500 TR (Non-Negative Years) - LHS S&P 500 Return (%) - RHS % 30% 20% 10% 0% -10% -20% -30% -40% Source: FactSet. Indices are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Additional Disclosures at the end of this material, which are an important part of this presentation. 22

23 Value vs. Growth Relative outperformance of growth could be peaking 4 Russell 3000 Growth / Value Spread 3 2 Standard Deviation Dec-88 Dec-91 Dec-94 Dec-97 Dec-00 Dec-03 Dec-06 Dec-09 Dec-12 Dec-15 Normalized Growth/Value 10-Year Annualized Spread Source: FactSet. Indices are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Additional Disclosures at the end of this material, which are an important part of this presentation. 23

24 Value vs. Growth 2015 Results: Sector Story SECTOR PERCENT CONTRIBUTION TO INDEX RETURNS Russell 3000 Value Russell 3000 Growth 30% 20% 10% -10% 0% -20% -30% -40% -50% -60% -70% -80% 60% 50% 40% 30% 20% 10% 0% -10% -20% AVERAGE 2015 SECTOR WEIGHTS FOR STYLE INDICES Cons Discretionary Cons Staples Energy Financials Health Care Industrials Info Tech Materials Telecom Services Utilities Russell 3000 Value Russell 3000 Growth Source: FactSet. Indices are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Additional Disclosures at the end of this material, which are an important part of this presentation. 24

25 Sector Quilt Annual Percentage Returns ( ) Telecom, 36.8% Energy, 24.2% Utilities, 21.0% Financials, 19.2% Cons Disc, 18.6% Energy, 34.4% Materials, 22.5% Utilities, 19.4% Info Tech, 16.3% Cons Staples, 14.2% Cons Staples, -15.4% Health Care, -22.8% Utilities, -29.0% Telecom, -30.5% Cons Disc, -33.5% Info Tech, 61.7% Materials, 48.6% Cons Disc, 41.3% S&P 500, 26.5% Industrials, 20.9% Cons Disc, 27.7% Industrials, 26.7% Materials, 22.2% Energy, 20.5% Telecom, 19.0% Utilities, 19.9% Cons Staples, 14.0% Health Care, 12.7% Telecom, 6.3% Cons Disc, 6.1% Financials, 28.8% Cons Disc, 23.9% Telecom, 18.3% Health Care, 17.9% S&P 500, 16.0% Cons Disc, 43.1% Health Care, 41.5% Industrials, 40.7% Financials, 35.6% S&P 500, 32.4% Utilities, 29.0% Health Care, 25.3% Info Tech, 20.1% Cons Staples, 16.0% Financials, 15.2% Cons Disc, 10.1% Health Care, 6.9% Cons Staples, 6.6% Info Tech, 5.9% Telecom, 3.4% Materials, 18.6% Industrials, 12.0% Energy, -34.9% Health Care, 19.7% S&P 500, 15.1% Energy, 4.7% Industrials, 15.3% Info Tech, 28.4% S&P 500, 13.7% S&P 500, 1.4% S&P 500, 15.8% Cons Staples, 14.4% Industrials, 13.3% Telecom, 11.9% Health Care, 7.2% S&P 500, 5.5% S&P 500, -37.0% Industrials, -39.9% Info Tech, -43.1% Financials, 17.2% Cons Staples, 14.9% Energy, 13.8% Cons Staples, 14.1% Financials, 12.1% Info Tech, 10.2% Info Tech, 2.4% S&P 500, 2.1% Industrials, -0.6% Materials, 15.0% Info Tech, 14.8% Cons Staples, 10.8% Cons Staples, 26.1% Materials, 25.6% Energy, 25.1% Industrials, 9.8% Cons Disc, 9.7% Materials, 6.9% Financials, -1.5% Industrials, -2.5% Utilities, -4.8% Info Tech, 8.4% Cons Disc, -13.2% Materials, -45.7% Utilities, 11.9% Utilities, 5.5% Materials, -9.8% Energy, 4.6% Utilities, 13.2% Telecom, 3.0% Materials, -8.0% Health Care, 7.5% Financials, -18.6% Financials, -55.3% Telecom, 8.9% Health Care, 2.9% Financials, -17.1% Utilities, 1.3% Telecom, 11.5% Energy, -7.8% Indices are unmanaged and the figures for the indices presented herein include reinvestment of all dividends and capital gain distributions and do not reflect any fees or expenses. Investors cannot invest directly in a index. Past performance is not indicative of future results. Energy, -21.0% 25

26 The Dangers of Market Timing Calendar year returns vs. intra-year drawdowns Large market declines may tempt investors to exit their equity investments and wait on the sidelines until volatility subsides. Over the past 25 years, investors who chose to stay invested were often rewarded with an eventual recovery. Price Returns of S&P 500 (%) Intra-year Drawdowns (%) Source: FactSet, Standard & Poor s. Returns are based on price index only and do not include dividends. Intra-year drops refers to the largest markets drops from a peak to a trough during the year. For illustrative purposes only. Returns shown are calendar year returns from 1980 to Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Additional Disclosures at the end of this presentation, which are an important part of this presentation. 26

27 Neuberger Berman Multi-Asset Class Team Global Economic Environment Elevated Short-Term Risks in Midst of Extended Business Cycle OUTLOOK Global economic growth softening, but still positive over a twelve-month horizon In U.S., improving domestic demand offsets weak energy and manufacturing sectors Europe is benefiting from ECB stimulus and weaker euro China is slowing, but hard landing fears appear overdone Low interest rates as overall monetary environment remains accommodative Fed to tighten dovishly; other central banks continue to stimulate Low inflation Commodity prices bottoming, but supply/demand imbalances dampen inflation outlook Probability of near-term global recession remains low Markets will likely remain volatile in response to short-term growth concerns in China, oil price volatility, and anticipation of Fed moves As of January Views expressed herein are generally those of the Neuberger Berman Multi-Asset Class (MAC) team and do not reflect the views of the firm as a whole. Neuberger Berman advisors and portfolio managers may make recommendations or take positions contrary to the views expressed. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. Investing entails risks, including possible loss of principal. See Additional Disclosures at the end of this presentation, which are an important part of this presentation. 27

28 Global Economic Growth is Moderating But Still Positive PROJECTED GDP GROWTH RATES 8% 6% 7.3% 6.8% 6.3% 4% 2.8% 2.4% 2.6% 2.4% 2.7% 2.9% 2.4% 4.6% 4.3% 4.0% 3.4% 3.4% 3.1% 2% 0.9% 1.5% 1.6% 0.6% 1.0% 1.0% 1.7% 0.6% 0% -2% -0.1% -0.6% -4% -3.8% -6% United States Euro Area Japan Canada Australia Russia China Emerging Markets World 2014 GDP Growth Rate 2015 Projected GDP Growth Rate 2016 Projected GDP Growth Rate Sources: International Monetary Fund, Neuberger Berman. As of January 31, IMF Estimates begin after

29 U.S. Recession Probabilities and the Business Cycle SMOOTHED U.S. RECESSION PROBABILITIES 1 100% 90% 80% 70% 60% 50% 40% 30% 20% POST-WAR BUSINESS CYCLE RECOVERY DURATIONS Present 10% 0% Post-War Average Average Last Three Full Recoveries Years Recession Smoothed U.S. Recession Probabilities 1. Source: Federal Reserve Bank of St. Louis As of January 31, Smoothed recession probabilities for the United States are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales. 2. Source: National Bureau of Economic Research. As of January 31, Contractions (recessions) start at the peak of a business cycle and end at the trough. Expansion (recoveries) start at the trough of a business cycle and end at the peak. See Additional Disclosures at the end of this presentation, which are an important part of this presentation. 29

30 Major Government Bond Yields Remain Low Divergence between FOMC plans and market expectations 10-YEAR GOVERNMENT BOND YIELDS 6% FOMC DOTS AND FED FUND FUTURES % 4% 3% 2% (%) Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Median FED Dots Fed Funds Futures Jan-25 Jul-25 1% 0% Yr UST Bond 10-Yr Bund 10-Yr JGB 10-Yr Gilts Sources: Bloomberg, Neuberger Berman. Monthly data January 2004 January

31 Quantitative Easing Driving Markets ECB and BoJ are ensuring that global liquidity stays ample BALANCE SHEETS OF THE MAJOR CENTRAL BANKS (DOTTED LINES REPRESENT NB FORECASTS) % GDP 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% May - 06 May - 07 May - 08 May - 09 May - 10 May - 11 May - 12 May - 13 May - 14 May - 15 May - 16 May - Federal Reserve European Central Bank Bank of Japan Bank of England 17 BALANCE SHEETS OF THE MAJOR CENTRAL BANKS (DOTTED LINES REPRESENT NB FORECASTS) USD Trillion Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Total Central Bank Balance Sheet in USD Terms Forecast Source: Bloomberg, Neuberger Berman Europe Limited calculations. Data as of January 31, Assumptions: Bank of Japan expands their balance sheet by JPY 80 trn p.a. until Japanese year end 2015 (March 2016). ECB continues to expand their balance sheet by EUR 60 bln per month and reaches EUR 3 trn in March Total balance sheet expansion is EUR 1,140 bln. The Federal Reserve, the Bank of England do not wind down their balance sheets over the forecast horizon. Projected USD values assumes unchanged exchanges rates against the US dollar from the as of date. Forecasts do not include GDP growth. 31

32 Global Energy Climate Oil production remains high despite a falling U.S. rig count WORLD LIQUID FUELS PRODUCTION AND CONSUMPTION OIL PRICE AND RIG COUNT projections , , , , , Q Q Q Q Q Q Q Q Implied stock change and balance (right axis, million barrels per day) World production (left axis, million barrels per day) World consumption (left axis, million barrels per day) -3 1, , US Rotary Rig Count (LHS) WTI Crude Oil (RHS) Sources: FactSet, U.S. Energy Information Administration (EIA) Short-Term Energy Outlook. Data as of January 31,

33 Unemployment Declining, Wage Pressures Picking Up? UNITED STATES JAPAN 10% 3.0% 6.0% 4% 9% 2.5% 5.5% 2% Unemployment 8% 7% 6% 5% 2.0% 1.5% 1.0% Wage Growth Unemployment 5.0% 4.5% 4.0% 0% -2% -4% Wage Growth 4% 0.5% 3.5% -6% 3% 0.0% % -8% U.S Unemployment Wage Growth Japan Unemployment Wage Growth UNITED KINGDOM EUROPE 9% 10% 13% 4.0% Unemployment 8% 7% 6% 5% 8% 6% 4% 2% 0% -2% -4% -6% Wage Growth Unemployment 4% -8% % 11% 10% 9% 8% 7% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Wage Growth 6% 0.0% UK Unemployment Wage Growth Source: Bloomberg. Monthly data January 2000 December Eurozone Unemployment Wage Growth 33

34 Currencies Strong U.S. Dollar Likely to Continue Key focus is on U.S. dollar vs. Chinese currency U.S. DOLLAR INDEX (DXY) Weight in DXY Index EUR 57.6% JPY 13.6% GBP 11.9% CAD 9.1% SEK 4.2% CHF 3.6% CHINA CURRENCY DEVALUATION DXY Index US Trade Weighted Broad Dollar Index (LHS) CNY per USD (RHS, inverted) Sources: Bloomberg, Monthly DXY data from January 1975 January USD/CNY monthly data from January 2014 December The DXY Index is a measure of the value of the USD relative to a basket comprised of major world currencies. 34

35 Neuberger Berman Multi-Asset Class Team 1Q16 Outlook Caution warranted as markets process near-term growth concerns and higher Fed Funds rates Volatility likely to create opportunities as business cycle extends 12 MONTH VIEW EQUITIES U.S. stock market reflects reasonable valuations given muted 2016 earnings outlook European equities remain supported by ECB stimulus as business conditions improve Japan stocks benefiting from weak yen and reallocation of pension fund assets, but threatened by slowing China and weak sentiment Emerging Market equities facing headwinds including China slowing, strong U.S. dollar, and low commodity prices FIXED INCOME Corporate spreads becoming attractive across quality spectrum; may represent better risk-adjusted exposure to economic growth than equities Underweight view on most developed market government securities as low yields do not compensate for risk of higher rates Cautious on emerging market debt with bias toward hard currency sovereigns ALTERNATIVES Neutral on commodities due to recent significant sell-off, but ample supply and weak demand could limit upside Hedge Funds: Directional and absolute return strategies may benefit from increased volatility and a rising U.S. interest rate environment Private Markets: Seek to capture illiquidity premium in private debt; high cash flow; short J-curve As of January Views expressed herein are generally those of the Neuberger Berman Multi-Asset Class (MAC) team and do not reflect the views of the firm as a whole. Neuberger Berman advisors and portfolio managers may make recommendations or take positions contrary to the views expressed. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. Investing entails risks, including possible loss of principal. See Additional Disclosures at the end of this presentation, which are an important part of this presentation. 35

36 Asset Allocation Committee: 12-Month Outlook as of 1Q2016 A multidisciplinary committee is polled quarterly for its asset class return outlook and allocation views Asset Class Fixed Income Global Bonds Investment Grade Fixed Income U.S. TIPS High Yield Fixed Income Developed Market - Non-US Debt Emerging Markets Debt Equity Global Equities U.S. All Cap U.S. Large Cap U.S. Small & Mid Cap MLPs Developed Market - Non-US Equities Emerging Markets Equities Public Real Estate Real & Alternative Assets Commodities Low er Volatility Hedge Funds Directional Hedge Funds Private Equity Below Normal Return Outlook 12 Month Forecast In Line with (5-7 Yr) Annual Return Outlook Return outlook higher than previous quarter Return outlook essentially unchanged Above Normal Return Outlook Change from Previous Outlook Return outlook low er than previous quarter As of 1Q Views expressed herein are generally those of the Neuberger Berman Asset Allocation Committee and do not reflect the views of the firm as a whole. Neuberger Berman advisors and portfolio managers may make recommendations or take positions contrary to the views expressed. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. See Additional Disclosures at the end of this material, which are an important part of this presentation. *The currency forecasts are not against the U.S. dollar but stated against the other major currencies. As such, the forecasts should be seen as relative value forecasts and not directional U.S. dollar pair forecasts. Currency forecasts are shorter-term in nature, with a duration of 1 3 months. Regional equity and fixed income views reflect a 1-year outlook. The Committee members are polled on the asset classes listed above and these discretionary views are representative of an Asset Allocation Committee consensus. 36

37 Developed Markets Equity Risk Premiums Appear Reasonable Non-U.S. more attractive than U.S. EQUITY RISK PREMIUM Latest Data U.S. ERP: 4.44% Europe ERP: 6.59% Asia ex-japan ERP: 6.52% Japan ERP: 7.54% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% U.S. (S&P500) Europe Asia ex-japan Japan Sources: Bloomberg, Neuberger Berman. As of January 31, Note: Equity risk premium is defined as the difference between Forward Earnings Yield (inverse of Forward P/E) of the region s benchmark equity index and region s 10-year nominal yield. 37

38 U.S. Equities Muted 2016 Earnings Outlook S&P 500 INDEX CY EARNINGS GROWTH REVISION 30% 20% 10% 0% -10% Earnings Growth -20% S&P 500 Index Earnings P/E -30% 12-Mo Trailing Mo Forward % -50% -60% -70% S&P 500 Index PERFORMANCE AND EARNINGS DURING RISING RATE CYCLES VALUE HAS UNDERPERFORMED GROWTH SINCE Tightening Cycles S&P 500 Trailing 12 Month Earnings S&P 500 Earnings December 2014 CY Estimates CY Estimates Sources: Bloomberg, FactSet. As of January Russell 1000 Value Relative to Russell 1000 Growth Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. The performance of asset classes following interest rake hikes has varied significantly and are no indication of how the markets may perform following any future interest rate increases. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Additional Disclosures at the end of this presentation, which are an important part of this presentation. 38

39 Europe Monetary Stimulus Lending Support to Investing Environment European corporate earnings are still below former high levels even as U.S. corporate earnings have recovered MONEY SUPPLY AND REAL GDP 6% 4% 2% GDP 0% -2% -4% 15% 13% 11% 9% 7% 5% 3% 1% Money Supply CREDIT DEMAND U.S. EARNINGS ALREADY HIGH, BUT EUROPEAN EARNINGS CAN IMPROVE Corporate Consumer Credit Household Mortgages -6% % Eurozone Real GDP YoY ECB Money Supply M1 YoY (Advanced by 12Mo) United States Sources: Bloomberg, FactSet, European Central Bank. Money Supply, Real GDP, and Credit Demand data as of December Earnings Data as of January Europe ex UK

40 Japan Corporations Benefitting From Lower Yen; Consumers Yet to See Benefits JAPANESE YEN AND EQUITY MARKET Consumer Confidence CONSUMER CONFIDENCE AND CORPORATE PROFITS Corporate Profits Yen per Dollar Topix Index JAPAN EXPORTS TO CHINA 25% Japan Consumer Confidence 0 3.5% Japanese Yen per US Dollar Topix Index % 15% 10% 5% 0% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Japan Corporate Current Profits (Billion Yen) Exports as % of Total Exports Exports as % of GDP Exports to China as % of Total Exports Exports to China as % of GDP Sources: Bloomberg, Neuberger Berman calculations. Yen and Equity Market data as of January All other data as of December

41 Emerging Market Equities Earnings Headwinds and Modest Valuations TOTAL RETURN (indexed to 100) NEXT 12 MONTH EARNINGS PER SHARE (indexed to 100) % MSCI China MSCI Brazil MSCI India MSCI Russia FORWARD PRICE TO EARNINGS 25x 25 20x MSCI China MSCI Brazil MSCI India MSCI Russia 15x 10x 5x 0x Source: FactSet. Monthly data January 2008 January Total returns in USD. MSCI China MSCI Brazil MSCI India MSCI Russia Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Additional Disclosures at the end of this presentation, which are an important part of this presentation. 41

42 China Hard or Soft Landing? CHINA GDP VS. SHANGHAI STOCK EXCHANGE COMPOSITE INDEX SERVICES SECTOR VS. MANUFACTURING SECTOR (% OF GDP) 55% 50% 45% % USD Billions % 30% CHINA PMI Manufacturing Sector Services Sector China GDP (LHS) Shanghai Stock Index (RHS) China Manufacturing PMI China Non-Manufacturing PMI Sources: Bloomberg, FactSet, Neuberger Berman calculations. GDP data as of December PMI Data as of January

43 Brazil GDP, CPI, AND UNEMPLOYMENT 12% 10% 8% 6% 4% GOVERNMENT BOND YIELDS VS. CDS 17% % 15% % % 12% % % 9% 100 8% Bond Year Yield (LHS) CDS in bps (RHS) 2% 0% -2% -4% -6% GDP YoY CPI IPCA YoY Unemployment Rate - Six Largest Metropolitan Areas SIGNIFICANT CURRENCY DEPRECIATION % 10% 5% 0% -5% BRL/USD Retail Sales YoY Sources: Bloomberg, FactSet. Government Bond Yields and CDS data as of January 31, All other data as of December 31, % 43

44 Interest Rates Government Bond Yields Poised to Rise Current Interest Rate Environment U.S. TREASURY RATES Maturity State I State II Fair Current Years Treasuries Treasuries Value Treasuries 1Y Y Y Y Y Y Y (%) GLOBAL 10-YR YIELD CURRENT VS. FAIR VALUES 0.0 Current Value Fair Value Difference US Bonds 1.92% 2.55% -0.63% German Bunds 0.33% 1.18% -0.86% Jul-25 Jan-25 Jul-24 Jan-24 Jul-23 Jan-23 Jul-22 Jan-22 Jul-21 Jan-21 Jul-20 Jan-20 Jul-19 Jan-19 Jul-18 Jan-18 Jul-17 Jan-17 Jul-16 Jan-16 Median FED Dots State I State II Current Market Expectations NB Expectations Japan JGBs 0.10% 0.62% -0.52% UK Gilts 1.56% 2.38% -0.82% Canada CSBs 1.23% 2.09% -0.87% Australia TBs 2.64% 3.33% -0.70% Source: Neuberger Berman internal calculations, Bloomberg. As of January 31, State Space analysis is Neuberger Berman s proprietary framework for representing the investment views of our sector specialists and implementing those views into our asset allocation decisions. Fair Values are generated by Neuberger Berman using proprietary processes, are subject to change without notice and may differ significantly from the fair values produced by other sources. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. Investing entails risks, including possible loss of principal. 44

45 U.S. Investment Grade Risk Premium Today vs. Historical Quartiles Option adjusted spread on U.S. Corporate Investment Grade debt CORPORATE FIXED INCOME RISK PREMIUM (OPTION ADJUSTED SPREAD) 7% Data Range (January January 2016) Current Risk Premium 1.93% Premium %ile 24% Quartile Ranges: Quartile % % Quartile % % Quartile % % Quartile % % 6% 5% 4% 3% 2% 1% 0% US Corporate IG OAS Sources: Bloomberg, Barclays Capital. Data as of January 31, The Barclays US Aggregate Corporate Average OAS is the corporate portion of the Barclays US Aggregate Credit Average OAS. 45

46 U.S. High Yield Default rates have historically lagged interest rates by 1-3 years GLOBAL SPECULATIVE-GRADE 12-MONTH ROLLING DEFAULT RATES VS. THE FEDERAL FUNDS TARGET RATE 20% 15% HIGH YIELD YIELD-TO-WORST IS HIGH RELATIVE TO S&P 500 EARNINGS YIELD 18% 16% 12% 14% 12% 10% 9% 8% 6% 6% 4% 2% 0% Rising Rates Recessions Fed Funds Rate 3% High Yield Yield to Worst S&P 500 Earnings Yield Default Rate US High Yield OAS Sources: Moody s Investors Service, Bloomberg, FactSet. Monthly data January 1991 January 2016, and January 1995 January Third-party economic or market estimates discussed herein may or may not be realized and no representation is being given regarding such estimates. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. See Additional Disclosures at the end of this presentation, which are an important part of this presentation

47 U.S. High Yield Fundamentals LEVERAGE REMAINS MODEST Q15 LOW MATURITY WALL 1 Total Debt / EBITDA INTEREST COVERAGE REMAINS STRONG Q15 EBITDA-C apex / Int Ex p EBITDA / Int Exp Sources: J.P. Morgan, Neuberger Berman. 1. For each year set forth above, the table shows the amount of leveraged loans and high yield bonds outstanding as of November 30, 2015 expected to mature. 2. Data as of September 30, Adjusted for one-time charges. 47

48 Sovereign Spread (bps) Emerging Market Debt Recent deterioration in credit quality and increased default expectations pose risks EM SOVEREIGN SPREADS AND IG WEIGHT IN EMBIG INDEX 1,400 1,200 1, EM OAS Investment-Grade Weight 75% 60% 45% 30% 15% 0% Investment Grade Weight in Index EM CORPORATE HY VS. U.S. HY DEFAULT RATE 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% EM HY US HY LOCAL CURRENCY HARD CURRENCY SPREAD Spread (bps) Standard Deviation - 1 Standard Deviation Local Currency vs. Hard Currency Spread Average YTD LC MORE ATTRACTIVE HC MORE ATTRACTIVE Sources: Bloomberg, J.P. Morgan. Data as of January 31, Default Rate data through November Local Currency yield is represented by the J.P. Morgan GBI-EM Global Diversified Index. Hard Currency yield is represented by the J.P. Morgan EMBI Global Diversified Index. For illustrative purposes only. Indexes are unmanaged and are not available for direct investment. Past performance is no guarantee of future results. Default rates are par-weighted, based on EM HY portion of the EM corporate external bond stock. 48

49 Hedge Funds Rising Rates Have Historically Presented Attractive Opportunities Hedge Funds have often performed well when rates rise or fall HFRI FUND WEIGHTED COMPOSITE CUMULATIVE PERFORMANCE FROM JANUARY 2000 JANUARY 2015 PERFORMANCE DURING RISING RATES ENVIRONMENTS Months when 10-Yr Treasury rates were rising Months when 10-Yr Treasury rates were falling 16% 12% 8% 13.6% 15.6% 12.3% 10.9% 4% 0% -0.1% 70% 62% -4% Jun 03 - May 04 Jun 05 - Jun 06 Jan 09 - Jul 09 Sept 10 - Mar 11 May 13 - Aug 13 % of months where HFRI had positive returns % of months where HFRI had positive returns Sources: Bloomberg, Neuberger Berman. For illustrative purposes only. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. The performance of asset classes during different interest rate environments has varied significantly and is no indication of how the markets may perform during any future interest rate environments. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. 16% 12% 8% 4% 0% -4% -8% PERFORMANCE DURING FALLING RATES ENVIRONMENTS 16.0% 8.7% -5.2% 11.0% 3.3% 8.8% Jan 00 - May 03 Jun 04 - May 05 Jul 06 - Dec 08 Aug 09 - Aug 10 Apr 11 - Apr 13 Sept 13 - Jan 15 49

50 Private Debt Has Demonstrated Attractive Absolute Yields FIXED INCOME YIELDS 24% 22% 20% 18% 16% Historical yields for second lien and mezzanine private debt have been attractive across different interest rate and economic environments due to the illiquidity premium 14% 12% 10% ILLIQUIDITY PREMIUM 8% 6% 4% 2% 0% Private Equity-backed Mezzanine U.S. 10 Year Treasury U.S. High Yield Second Lien Sources: Bloomberg, S&P LCD. Monthly data January 2004 January For illustrative purposes only. Second Lien yield is represented by the second lien portion of the S&P LCD Leveraged Loans Index. Assets classes and indexes shown may have significantly different overall risk-return characteristics which should be consider before investing. Indexes are unmanaged and are not available for direct investment. Past performance is no guarantee of future results. See Additional Disclosures at the end of this presentation, which are an important part of this presentation. 50

51 Investment Risks and Challenges Neuberger Berman Multi-Asset Class Team: Growth Shocks Warrant Caution Global economic growth disappointment China hard landing potential for further currency devaluation, repercussion through commodities markets, hit to global growth Broader Emerging Markets crisis driven by low commodities prices, strong U.S. dollar, elevated debt levels, political risks (Brazil, etc.) RISKS Lower commodity prices could lead to deflationary expectations Credit market liquidity as spreads widen potential evidence of impending distress Central bank policy Fed too fast, ECB and BoJ pushing on a string? Geopolitical events conflicts in Middle East, terrorism, boundary disputes in Asia As of January This material is provided for informational purposes only. Views expressed herein are as of the date indicated and subject to change and are generally those of the Neuberger Berman Multi-Asset Class (MAC) team and do not reflect the views of the firm as a whole. Neuberger Berman advisors and portfolio managers may make recommendation or take positions contrary to the views expressed. Nothing herein constitutes a prediction or projection of future events or future market behavior. Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. See Additional Disclosures at the end of this material, which are an important part of this presentation. 51

52 Market Volatility EQUITY VOLATILITY FIXED INCOME VOLATILITY CURRENCY VOLATILITY Yr Average: Yr Average: Yr Average: Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 VIX Index MOVE Index JP Morgan G7 Volatility Index Source: Bloomberg. Daily data January 2014 January For illustrative purposes only. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. 52

53 FOSSIL FUEL UPDATE

54 Fossil Fuels Resolution Adopted December 10, 2013 The Peralta Community Colleges Board urges the Retirement Board to direct the Retiree Health Care Plan s current asset managers to: Avoid any new direct investments in fossil-fuel companies Minimize investments in commingled assets that include fossil-fuel companies Divest from any current fossil-fuel holdings at the earliest propitious moment within five years The top 200 companies on the Carbon Tracker List as published by the Fossil Free website apply to the proposal 54

55 Our Analysis of the Portfolio We analyzed the impact of the Resolution on the current portfolio holdings as of 12/31/2015 All holdings in Separately Managed Accounts and mutual funds were cross-referenced with the Top 200 Companies on the Carbon Tracker List Assuming the mutual funds were single holdings, there are a total of 742 individual holdings in the portfolio 15 individual stocks and 8 mutual funds were flagged in the cross-reference Separately Managed Accounts NB Core Fixed Income NB Large Cap Value NB Socially Responsible Investing Group Clearbridge Advisors All Cap Growth Harding Loevner International Equity ADR Mutual Funds NB Emerging Markets Fund - NEMIX NB Absolute Return Multi-Manager Fund - NABIX NB Genesis Fund - NBGIX NB Floating Rate Income Fund - NFIIX NB High Income Bond Fund - NHILX NB Emerging Market Debt Fund - NERIX NB Risk Balanced Commodity Fund NRBIX NB International Equity Fund - NBIIX If we assume all 23 flagged items were to be removed, then that represents $59.8 million (with $1.2 million in unrealized losses) The 15 individual stocks constitute $3.8 million of that value (with $0.50 million in unrealized losses) The 8 mutual funds constitute $55.9 million of that value (with $0.70 million in unrealized losses) 55

56 Energy Consuming Industries are Significant Sources of C02 Emissions More than 80% of emissions disclosed to CDP are from hydrocarbon consuming industries Source: Carbon Disclosure Project (CDP) This material is intended as a broad overview of the Portfolio Manager s style, philosophy and investment process and is subject to change without notice. Portfolio Manager s views may differ from those of other Portfolio Managers as well as the views of Neuberger Berman LLC. Of course, all accounts are managed based upon each client s needs and objectives. FOR INVESTMENT PROFESSIONALS, BROKER-DEALER AND INSTITUTIONAL USE ONLY. NOT FOR USE WITH OR DISTRIBUTION TO THE GENERAL PUBLIC. 56