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The open proceedings of this meeting are being recorded.

CAL POLY POMONA FOUNDATION, INC. CALIFORNIA STATE POLYTECHNIC UNIVERSITY, POMONA

Meeting of the Board of Directors, Number 382

February 25, 2020 at 2:00 pm Kellogg West Conference Center and Hotel

AGENDA

REGULAR MEETING Roll Call Page

I. PRESIDENT’S REPORT Soraya Coley, President Board Chair

II. ACKNOWLEDGEMENT OF MEMBERS OF THE PUBLIC who may or may not be commenting on a specific item or making a general comment. III. CONSENSUS ACTION ITEMS

Consensus Items: Items in this section are considered to be routine and acted on by the committee in one motion. Each item of the Consent agenda approved by the committee shall be deemed to have been considered in full and adopted as recommended. Any committee member may request that a consent item be removed from the consent agenda to be considered as a separate action item. If no additional information is requested, the approval vote will be taken without discussion. An “A” distinguishes items requiring approval.

A. Reading of Minutes 382 (12/05/19) Soraya Coley 2-3 (ATTACHMENT 382-III-A) A Board Chair

B. Investment Report 2nd Quarter 2019-2020 David Prenovost 4-48

(ATTACHMENT 382- III -B) A Senior Managing Dir./CFO

C. Selection of CPA Firm – Financial and Single Audit David Prenovost 49-60 (ATTACHMENT 382-III-C) A Senior Managing Dir./CFO

D. Selection of CPA Firm – External Child Dev Preschool Grant Program David Prenovost 61-68 (ATTACHMENT 382-III-D) A Senior Managing Dir./CFO

E. Financial Highlights 2nd Quarter David Prenovost 69-106 (ATTACHMENT 382-III-E) I Senior Managing Dir./CFO F. Modification to Bylaws David Prenovost No Attachments

(NO ATTACHMENT) A Deferred for subsequent meeting Senior Managing Dir./CFO

G. Board Members Term Limits David Prenovost No Attachments (NO ATTACHMENT) A Deferred for subsequent meeting Senior Managing Dir./CFO

IV. ACTION ITEMS

H. Tax Return Review David Prenovost 107 (ATTACHMENT 382-IV-H) A Senior Managing Dir./CFO I. Longevity Plan Revisions David Prenovost 108-134 (ATTACHMENT 382-IV-I) A Senior Managing Dir./CFO

V. INFORMATION ITEMS

The following items provide information and reports by management staff to the Board. Staff and Board may engage in discussion on any item if requested by committee member or staff member.

J. Marketing Department Projects Edwin Santiago 135 (ATTACHMENT 382-V-J)

VII. BOARD OF DIRECTORS OPEN FORUM

1

CAL POLY POMONA FOUNDATION, INC. California State Polytechnic University, Pomona

REGULAR MEETING MINUTES NO. 381

BOARD OF DIRECTORS December 5, 2019

Pursuant to a written order by Dr. Soraya M. Coley, delivered to each member of the Board of Directors on February 26, 2019, the Board of Directors of the CAL POLY POMONA FOUNDATION, INC. assembled and held a meeting on the campus of the California State Polytechnic University, Pomona, California, at 2:00 p.m. on May 14, 2019.

Present Dr. Soraya Coley, Ms. Danielle Manning, Mr. Daniel Montplaisir, Mr. David Speak, Mr. Michael Vazquez, Ms. Joy Tafarella, Dr. Lea Dopson, Ms. Deborah Goman, Dr. Xudong Jia, Ms. Rachel Dominguez, Ms. Erica Frausto and Mr. Lowell Overton

Absent Ms. Ravina Soma, Mr. Pasindu Senaratne, Mr. James Priest, Mr. Oliver Santos, Dr. Phyllis Nelson, Mr. John McGuthry, Dr. Eileen Sullivan, Dr. Sylvia Alva, Ms. Mei Lien Chang and Mr. Sean Yu

Staff Ms. Claudia Burciaga-Ramos, Mr. David Prenovost and Ms. Sandra Vaughan-Acton Danielle Manning called the meeting to order at 2:06 p.m. at Kellogg West Valley Vista Room. I. PRESIDENT’S REPORT

• Ribbon cutting ceremony for CenterPointe on Friday December 6th at 10:00 a.m.

• The University provided moving bins to help students relocate to the new residential housing buildings. • Update on the search for the Foundation’s Executive Director; there are three finalists; expect to have someone

hired by March. • Update on the search for new Chancellor; expect to make an announcement by March 2020.

• Dr. Coley rode Foothill Silver Streak bus to downtown LA; looking to develop a transit hub to Mt. SAC by looking

at a heat map to determine if there are enough demands for new approach for transportation to Cal Poly Pomona.

• Dr. Coley thanked Dean Lea Dopson for hosting students from a delegation from El Salvador. • A Mobility Manager position was hired to look at the way people move and the mobility demands especially on

the evening services.

II. CONSENSUS ACTION ITEMS A. Approval of Minutes 380 (09/17/19) B. Resignation of Foundation Board Member C. Capital Budget Request – KW Parking Lot Lighting D. Capital Budget Request – KW HVAC E. Capital Budget Request – KW Additional Parking Lot Lighting F. Investment Report 1st Quarter 2019-2020

G. Financial Highlights 1st Quarter

H Tax Return Process

2

I. Employment Development Department Audit Update

J. Minimum Authorized Signature Policy 122 (Amendments)

A motion was made to accept the consensus items as presented and unanimously approved.

III. ACTION ITEMS K. Modification to Bylaws Danielle Manning requested the Modification to Bylaws be tabled. A motion was made to table this item and

unanimously approved. L. Board Members Term Limits

Danielle Manning explained that since the Modification to the Bylaws were tabled the Board Member Term Limits should also be tabled since our current Bylaws do not have term limits. A motion was made to table this item and unanimously approved.

M. Compensation Review for Chief Financial Officer Position Danielle Manning informed the Members a notice will be sent to the Board members for a special conference call

meeting with regards to this item. A motion was made to table this item and unanimously approved.

IV. INFORMATION ITEMS The following items provide information and reports by management staff to the Board. Staff and Board may engage in discussion on any item if requested by committee member or staff member. N. Summary Review of Board Policies David Prenovost reviewed some of the Board Policies that may require updating mainly due to the restricted

assets that were transferred-by-gift and accepted by the new philanthropic foundation. O. Indirect Cost Rate Extension

David Prenovost explained our five year indirect cost rate agreement with Department of Health and Human Services is expiring June 30, 2020 for externally-funded sponsored research. Due to the significant cost of a full study, Foundation management, in consultation with University Administration have agreed to retain a firm to assist us in negotiating a four year extension to our agreement.

V. BOARD OF DIRECTORS OPEN FORUM Dr. Coley thanked and wished happy holidays to all Board Members. Meeting adjourned at 3:52 p.m.

Respectfully submitted, __________________________________ Dr. Lea Dopson Secretary/Treasurer

3

December Review

Capital Markets Commentary

6

Past performance is no guarantee of future results. Estimates of future performance are based on assumptions that may not be realized. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. Please refer to important information, disclosures and qualifications at the end of this material.

WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | QUARTER IN REVIEW

Quarter in Review—4Q 2019 As of January 1, 2019

Source: Morgan Stanley Wealth Management Investment Resources Market Research & Strategy Team

• Equity markets rallied globally in the fourth quarter while long-term fixed income sold off. The S&P 500 gained 9.1%,reaching all-time highs throughout the quarter. The Bloomberg Barclay’s US Aggregate Bond Index gained just 0.2% asthe yield on a 10-year Treasury bond rose to 1.92%, up from a near cycle low of 1.46% on September 4. 30-year Treasuries had a similar selloff, with yields backing up to 2.30% from 1.90%.

• The Federal Reserve cut rates again in October, lowering its target band by 25 bps to 1.50%-1.75%. While Fed ChairPowell characterized these moves as a mid-cycle adjustment and insurance cuts rather than the beginning of a prolongedeasing cycle, futures markets are pricing in one more cut over the next 12 months. The Fed’s actions were in response todeteriorating global growth conditions coupled with difficulty in controlling short-term interest rates.

• Earnings growth decelerated further through third quarter reporting, and was down about 1% year over year. S&P500 companies reported earnings-per-share (EPS) growth of -0.7% against sales growth of just 1.7% year on year,reflecting continued margin pressure. With revenue and EPS down, S&P 500 companies posted a deceleration in profitmargins from 10.2% to 9.75% and operating margins down from 13.2% to 12.9%.

• Geopolitical risks continued to dominate headlines. Conflict between the US and Iran surged in 4Q 2019 as Iranianofficials were sanctioned, a US government contractor was killed by an Iranian-backed militia, the US carried outretaliatory strikes on militias and Iranian-backed protestors stormed the US embassy in Iraq. Domestically, the House ofRepresentatives went forward with its impeachment proceedings in December. On a positive note, there was someresolution of the uncertainty that had dominated most of the year. Trade tensions appear poised to abate slightly with aPhase 1 deal expected to be signed in 1Q 2020. The House ratified the United States-Canada-Mexico Agreement trade treaty, setting the stage for full ratification of the NAFTA replacement in early 2020. Even Brexit saw some resolution ofuncertainty following a convincing December election win from Boris Johnson’s Conservative Party. The UK is now set toexit the European Union by January 31, 2020.

7

Presenter

Presentation Notes

{title}:QtrinRev002:



Asset Class Returns As of December 31, 2019

Source: FactSet, Morgan Stanley Wealth Management GIC; Indices used: Bloomberg Barclays Capital US Aggregate for US Bonds. FTSE 3M Treasury Bill for cash, Bloomberg Barclays US Aggregate for US Bonds, Bloomberg Barclays Global Majors ex US for DM Int’l Bonds, Bloomberg Barclays US TIPS for Inflation-linked securities, Bloomberg Barclays Global High Yield for global high yield, JP Morgan EMBI for EM Bonds, S&P 500 for US Stocks, MSCI EAFE IMI for Int’l Stocks, MSCI EM IMI for Emerging Market Stocks, FTSE EPRA/NAREIT Global for REITs, Bloomberg Commodity Index for commodities, BarclayHedge US Managed Futures Index for Managed Futures, Alerian MLP Index for MLPs , and HFRX Global hedge Funds for hedged strategies. Diversified portfolio is comprised of 25% S&P 500, 10% Russell 2000, 15% MSCI EAFE, 5% MSCI EME, 25% Bloomberg Barclays US Aggregate, 5% 3 mo. T-Bills, 5% HFRX Global Hedge Funds, 5% Bloomberg Commodity Index, and 5% FTSE EPRA/NAREIT Global Index. MLP data begins on January 1, 2007. Standard deviation (volatility) is a measure of the dispersion of a set of data from its mean.

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

82.9% 35.9% 13.9% 29.8% 32.4% 14.7% 1.4% 18.3% 37.3% 0.0% 13.6% 17.2%

76.4% 20.2% 13.6% 19.6% 27.6% 13.7% 0.9% 14.3% 26.7% 8.9% 13.6%

59.4% 20.0% 7.8% 19.1% 24.0% 12.3% 0.5% 12.0% 21.8% -1.3% 7.3% 13.5%

41.3% 16.8% 6.0% 18.2% 15.1% 6.0% -0.4% 11.8% 15.2% -4.1% 7.3% 12.0%

33.9% 15.7% 3.1% 16.8% 8.8% 4.8% -0.9% 10.3% 15.0% -4.4% 6.4% 11.9%

US Debt

26.5% 15.1% 2.1% 16.0% 7.3% 4.7% -1.4% 9.9% 14.9% -4.6% 11.5%

23.6% 14.8% -1.8% 12.0% 2.2% 3.6% -1.9% 7.5% 10.4% -5.5% 4.2% 6.9%

22.0% 12.7% -2.1% 7.0% 0.7% 3.4% -2.7% 4.7% 8.8% 4.0% 6.8%

18.9% 9.8% -4.3% 4.8% -1.9% 0.0% -3.6% 4.6% 6.0% 3.4% 6.2%

11.5% 7.0% -5.7% 4.8% -2.0% -1.4% -4.4% 2.6% 3.5% 8.4% 2.7% 5.6%

Inflation-Linked

11.4% 6.5% -8.1% 4.2% -5.6% -3.0% -13.5% 2.5% 3.0% 1.4%

5.9% 6.4% -12.2% 0.5% -8.6% -4.5% -14.9% 2.1% 1.7% 1.1% 4.0%

3.7% 6.3% -13.3% -1.1% -9.0% -5.7% -24.7% 1.6% -0.8% 6.6% 0.8% 3.7%

-4.8% 4.2% -19.2% -1.8% -9.5% -17.0% -32.6% -4.4% -6.5% 4.6% -4.7% 2.9%

18.1%

Managed Futures

Diversified Portfolio

Managed Futures

High Yield

EMD

DM Int'l Equities

US Equities

REITs


Inflation-LinkedEM Equities US Equities

High Yield

US Equities

EMD

Managed Futures

-0.8%

Commod.

High Yield

EMD


Inflation-Linked

DM Int'l Equities


US Equities

High Yield

DM Int'l Debt DM Int'l Equities

EMD

DM Int'l Equities

High Yield

EM Equities US Debt

EMD


Inflation-Linked

REITs

Managed Futures


4.3%

Hedged Strategies

DM Int'l Debt

DM Int'l Equities

Managed Futures

Managed Futures

Hedged Strategies

Managed Futures

MLPs1

US Debt

EM Equities

Hedged Strategies

Commod.

MLPs1

4.3%

Inflation-Linked

US Debt

EMD

Commod.

-11.2%

-7.0%

-14.0%

DM Int'l Debt

Inflation-Linked

DM Int'l Debt

REITs


EMD

-6.2%

Managed Futures

7.1%

US Equities

High Yield

EMD

MLPs1


REITs

Inflation-Linked

Hedged Strategies

10-Yrs ('10-'19) Volatility

MLPs1

REITs

Commod.

EM Equities

US Equities

DM Int'l Equities

High Yield

DM Int'l Debt

10-Yrs ('10-'19)

Ann. Return

DM Int'l Equities

EM Equities

US DebtMLPs1 REITs

Hedged Strategies

EM Equities

EM Equities

REITs


US Debt

US Debt

REITs Commod.

MLPs1 High Yield MLPs1

MLPs1

REITs

EMD

High Yield

US Equities

DM Int'l Equities

REITs

EM Equities MLPs1 US Equities

US Equities


EMD

Inflation-Linked

DM Int'l Debt

US Debt

Inflation-Linked

MLPs1

DM Int'l Debt

Hedged Strategies

DM Int'l Debt

High Yield


DM Int'l Equities Inflation-Linked

Commod. DM Int'l Equities MLPs²

Commod.

Hedged Strategies

US Debt

Managed Futures

Hedged Strategies

US Debt

EM Equities

Commod.

Managed Futures

DM Int'l Debt

DM Int'l DebtManaged

Futures

Commod.

EMD

DM Int'l Equities

Hedged Strategies

REITs DM Int'l DebtUS Debt

Hedged Strategies

EMD

EM Equities


Managed Futures

Inflation-Linked

US Equities

Commod.Hedged

Strategies

Commod.

MLPs1

High Yield

US Equities

Commod.

EM Equities

Hedged Strategies

Managed Futures

US Debt

High Yield

12.6%

US Equities

31.5%

REITs


DM Int'l Equities

23.1%

23.6%

8.7%

EM Equities

-6.1%

Inflation-Linked DM Int'l Debt

High Yield

REITs

-14.7%

19.1%

EMD

13.5%

Hedged Strategies

8.7%

Commod.

7.7%

US Debt

Inflation-Linked

-12.4%

EM Equities

DM Int'l Equities

US Equities

MLPs1

DM Int'l Debt

8

Presenter

Presentation Notes

{title}:QtrinRev004: Manual (done during Mkt Performance Update)

WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | 2020 OUTLOOK


• Global growth is expected to prevail in international versus US, where rebounding fundamentals likely favor Europe, Japan and emergingmarkets. As US growth continues to slow, Japan and Europe are considering further monetary and fiscal stimulus. Forecasts largely hingeon an easing of trade tensions and a significant escalation or de-escalation could validate bear and bull cases. Global private consumption isexpected to recover in 1Q20, followed by investment uptick in the back half of the year.

• Equities strongly correlated with liquidity in 2018 and 2019 and this trend will likely continue into 2020. Global monetary easing maysupport international equities over US as a weakening dollar would reverse the US dominance of recent years and ease conditions abroad.MS & Co. expects flat earnings growth in the US, coupled with relatively high valuations, where international could benefit from inflowsbased off growth, higher dividends, and possible multiple expansion.

• Sovereign rates are forecasted to steepen abroad and remain flat domestically. In the US, MS & Co. expects the rate pause to continuewhile longer-dated Treasuries trade range-bound between 1.75% and 2.00%. As for the UK and Europe, MS & Co. forecasts curvesteepening on a possible pickup in growth and inflation, while Japan will likely trade range-bound on balanced supply-demand forces.

• Inflation is expected to pick up in the US faster than rest of world. Core CPI is forecasted to modestly rise toward 2% domestically, whileEuropean and Japanese inflation forecasts also outlay modest rises yet are likely to end below their 2% targets. In emerging markets,disinflationary forces are projected to allow further stimulative rate cuts.

• Credit in the US is forecasted to underperform as companies face slowing top-line growth and continued earnings challenges. MS & Co.prefers higher-rated domestic credits, more elevated on the cap structure, with a tilt toward long duration on a convexity stance. On theinternational side, MS & Co. expects outperformance in European high yield and investment grade, Asian credit, and emerging marketcredit on easier monetary policy and growth.

• Currencies are expected to move based off growth and monetary policy. USD is expected to trend lower on weaker US growth. EUR isforecasted to appreciate from growth and decreasing Brexit uncertainty. Emerging markets currencies may outperform 1H20 on a cyclicalrebound. Safe-haven currencies such as the yen and Swiss franc may weaken on reflationary forces and risk-on sentiment.

• Commodities are forecasted to generally remain range-bound, where copper is expected to have the strongest upside fundamentals.

Source: Morgan Stanley & Co. Research, Morgan Stanley Wealth Management Investment Resources Market Strategy Team

2020 Economics Outlook As of December 31, 2019

9

Presenter

Presentation Notes

{title}:Out001:



2020 Portfolio Construction Advice from the GIC

• US equity markets, as measured by the S&P 500 Index, are likely to be range-bound with MS & Co.’s base-case for the index at3,000.

• With the year-end index selling at over 18x forward earnings, and 10-year Treasuries near 1.9%, the S&P 500 equity riskpremium is now below cycle average.

• We see expectations for 10% corporate earnings growth as unrealistic given weak productivity gains, limited new capexspending, and rising wage and commodity costs.

• Policy uncertainty around Fed easing cycle, trade escalation and Brexit has been removed and we see few positivecatalysts from the policymakers in 2020. Fed bias toward letting “inflation run hot” suggests a high bar for easing, andaggressive “repo” related operations have already approximated a QE4 that has expanded the Fed balance sheet almostback to pre-quantitative tightening levels. A Republican win in 2020 is already fully discounted.

• We prefer US stock picking as opposed to the S&P 500 Index overall. The growth rebound trade is NOT priced in US value stocks,cyclicals and small caps, in our view.

• We are active in financials, energy, industrials, and healthcare; barbelled against utilities and consumer staples.• We believe the highest beta to a global growth rebound is through international and emerging market stocks.

• US bond markets should also see limited returns with credit spreads already quite tight, Fed accommodation on hold andpressures to grow inflation expectations putting an upward bias on the curve. Long-duration Treasuries are best used as hedgeagainst cyclicals and the pro-reflationary trade, not against secular growers with which they are now positively correlated. Staybenchmark duration with a neutral Fed.

• In alternatives, we prefer TIPs, MLPs, commodities and hedge funds. Private markets are peaking and expected returns arelikely to halve over the next decade from current double-digit rates.

As of December 31, 2019

Source: Morgan Stanley & Co. US Equity Strategy, Morgan Stanley Wealth Management GIC. Equity risk premium is the excess return that an individual stock or the overall stock market provides over a risk-free rate. The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.

10

Presenter

Presentation Notes

{title}:Out002:



S&P 500 Index

Financials Tech. Healthcare Industrials EnergyConsumer

Disc.Consumer

StaplesComms Utilities Materials Real Estate

S&P Weight 100.0% 12.8% 23.3% 14.1% 9.2% 4.4% 9.8% 7.1% 10.6% 3.3% 2.6% 2.9%

YTD Return 31.5% 32.1% 50.3% 20.8% 29.4% 11.8% 27.9% 27.6% 32.7% 26.3% 24.6% 29.0%

4Q 2019 Return 9.1% 10.5% 14.4% 14.4% 5.5% 5.5% 4.5% 3.5% 9.0% 0.8% 6.4% -0.5%

Ret. since Top (October 2007)

167.8 36.4 348.1 257.2 139.8 6.5 299.6 216.4 79.2 151.1 87.8 111.2

Ret. since Low(March 2009)

498.5 644.8 838.9 475.9 559.0 95.0 825.1 343.7 242.3 339.5 347.3 683.0

Beta to S&P 500 1.00 1.37 1.12 0.74 1.20 1.03 1.12 0.58 0.64 0.43 1.24 1.20

Fwd. P/E Ratio 18.2x 13.4x 21.8x 16.2x 16.9x 17.7x 22.2x 20.2x 18.8x 19.9x 18.4x 19.9x

10-Yr Average 14.9x 12.2x 15.1x 14.4x 15.2x 19.0x 17.3x 17.2x 14.7x 15.6x 14.5x 17.7x

PB Ratio 3.3 1.4 7.7 4.2 5.0 1.6 8.1 5.8 3.4 2.2 1.8 3.6

10-Yr Average 2.7 1.3 4.0 3.7 3.2 1.9 3.5 4.3 2.2 1.8 2.7 2.9

Dividend Yield 1.9% 2.0% 1.4% 1.7% 1.9% 3.5% 1.2% 2.8% 1.3% 3.2% 2.0% 3.0%

10-Yr Average 2.0% 1.7% 1.3% 1.8% 2.1% 2.5% 1.3% 2.8% 4.7% 3.8% 2.1% N/A

S&P 500 Sector Performance and Valuation

Source: FactSet, Bloomberg, Morgan Stanley & Co. Research, Morgan Stanley Wealth Management Investment Resources


In US equities, just 3 out of 11 sectors outperformed the index, with Tech and Health Care leading the pack. Utilities and Real Estate lagged, snapping a recent string of outperformance as their sensitivity to rates acted as a headwind in Q4.

11

Presenter

Presentation Notes

{title}:QtrinRev005: Done. Returns and Valuation by Sector.xlsb



2019 Was the Opposite of 2018…Negative EPS Growth + Big Multiple Expansion

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

MSCI AC World MSCI Europe S&P 500 TOPIX MSCI EM (EmergingMarkets)

Δ NTM EPS Δ NTM P/E Dividend Yield Total Return

Source: FactSet

Global Indices’ Contributions to Trailing 12M Total Returns As of December 19, 2019

12

Presenter

Presentation Notes

{title}:Out012: Note: Manual data pull B:\Lentini\Chartbook\Mike Wilson - Global Indices Contribution to 12M Total Returns.xlsx



A Decent Rebound Is Quickly Getting Priced in – Leaving Limited Upside Potential for 2020

-10%

-6%

-2%

2%

6%

10%

-20%

-10%

0%

10%

20%

30%

2011 2012 2013 2014 2015 2016 2017 2018 2019

Y/Y MSCI All Country World (LS) Y/Y Global Composite PMI (RS)

Source: Bloomberg

MSCI All Country World vs. Global Composite PMI As of December 2019

13

Presenter

Presentation Notes

{title}:Out016: Note: Manual data pull B:\Lentini\Chartbook\Mike Wilson - ACWI vs Global PMIs.xlsx



Sequencing the Cycle—What Looks Cheap for 2020?

S&P 500

MSCI Europe

Topix

MSCI EM

JPY EUR

DBR 10Y

JGB 10Y

EM Local

US IG

US HY

EU IG

EU HY

EM Sov

MSCI China

MSCI Korea

RUB

FTSE 100

FTSE MIB

AUD

MSCI Russia

INR

KRW

MSCI Europe Value

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-0.10 0.10 0.30 0.50 0.70 0.90 1.10

Change in YoY Growth Forecasts 4Q19-4Q20

20Y Valuation Percentile

MSCI Brazil

BRL, GBP

UST 10Y

Source: FactSet, Datastream, Morgan Stanley & Co. Research

20-Year Valuation Percentile by Asset ClassAs of December 2019

14

Presenter

Presentation Notes

{title}:Out017: Note: Manual data pull B:\Lentini\Chartbook\2020 Outlook - Nov 18 Macro Forum Slides from Cross Asset Team.xlsx



2020 Equity Outlook: Tighter Ranges With More Upside Potential in International Markets

Equity Index As of December 31, 2019 Bear Delta Base1 Delta Bull Delta

Risk/Reward

Ratio2

S&P 500 3,243 2,750 -15% 3,000 -7% 3,250 0% 0.01

MSCI Europe 1,686 1,280 -24% 1,720 2% 2,030 20% 0.85

Topix 1,721 1,374 -20% 1,860 8% 2,050 19% 0.95

MSCI EM 1,115 799 -28% 1,150 3% 1,250 12% 0.43

Source: Bloomberg & Morgan Stanley & Co. Research. (1) Base represents Morgan Stanley & Co. Research’s estimate between the bear and bull estimates. (2) Risk/reward ratio is the bull estimate divided by the bear estimate.

15

Presenter

Presentation Notes

{title}:Out018: Note: Manual data pull Same as the one of the US Equity slide

GLOBAL INVESTMENT COMMITTEE I TOPICS IN PORTFOLIO CONSTRUCTION


30%

35%

40%

45%

50%

55%

10%

14%

18%

22%

Jan

'90

Aug

'91

Mar

'93

Oct

'94

May

'96

Dec

'97

Jul '

99

Feb

'01

Sep

'02

Apr

'04

Nov

'05

Jun

'07

Jan

'09

Aug

'10

Mar

'12

Oct

'13

May

'15

Dec

'16

Jul '

18

US RecessionLargest Five S&P 500 Companies (Left Axis)Largest 25 S&P Companies (Right Axis) 78.5%

43.1%37.9%

33.3% 33.3% 33.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Large Growth Momentum

Capitalization-WeightedEqual-Weighted

• Passive strategies, often tracking cap-weighted indexes like the S&P 500, may introduce unwanted risk to investors, particularly during times ofincreased concentration. Cap-weighted indices effectively act like trend-following strategies, tending to accrue biases towards stocks and factors withthe strongest recent performance. Today, the five and 25 largest companies constitute nearly 18% and 41% of the index weight, a post-2000 high.

• The five largest names also contribute disproportionately to index-level risk, at 21% of the S&P 500's component-by-component implied volatility. Inaddition to a tilt toward large-cap stocks, cap-weighted indices are typically more exposed to the high momentum and high growth factors. Givenpassive strategies' greater prevalence, these concentration risks could exacerbate volatility and losses in the case of a market drawdown.

Source: FactSet, Morgan Stanley Wealth Management GIC. Drawdown is the peak-to-trough decline during a specific period.

Concentration Risks in Passive Strategies May Cause Outsized Losses in Drawdowns

S&P 500 Market Capitalization: Concentration in the Largest Companies January 1990 – December 2019

Cap-weighted strategies also face greater concentration in growth- and momentum-driven exposures relative to equal-weighted strategies.

The S&P 500 Index's concentration in mega-cap equities has risen to the highest levels since 2000, calling attention to other similarities.

S&P 500 Exposures: Capitalization- vs. Equal-Weighted

January 1, 1990 – December 31, 2019, Average, Top-Third Companies

16



93336

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0

100

200

300

400

500

600

700

2001 2004 2007 2010 2013 2016 2019

Bas

is P

oint

s

Bas

is P

oint

s

Investment Grade (Left Axis)

High Yield (Right Axis)

Corporate Spreads by Rating

Corporate OAS Vs. Average Investment Grade and High Yield Credit OAS1

Source: FactSet, Morgan Stanley & Co. Research. (1) Option Adjusted Spread (OAS) is a measurement of the spread of a fixed-income security rate and the risk-free rate of return, which is adjusted to take into account an embedded option. Investment Grade and High Yield are Bloomberg Barclays indices.

Monthly Data as of December 31, 2019 Monthly Data as of December 31, 2019

52 48 70120

182

324

869

81101 139

202

376

539

968

0

200

400

600

800

1,000

1,200

AAA AA A BAA BA B CAA

Bas

is P

oint

s

Bond Rating

Monthly Data as of 12/31/2019 20-Year Average

Fixed Income

Both Investment Grade and High Yield spreads widened slightly in August before coming back in in September, while corporate credit spreads across all ratings remained below their 20-year averages.

17

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Presentation Notes

{title}:QtrinRev012: Left Chart Done. Invest. Grade and High Yield Credit OAS Spreads.xlsb Right Chart Done. Corporate OAS Spreads vs. Average.xlsb


WEALTH MANAGEMENT INVESTMENT RESOURCES | CHARTBOOK | WEEKLY DIGEST

GIC Recommendations: Summary As of January 8, 2020

Source: Morgan Stanley Wealth Management GIC

Portfolio Construction

• Risk markets begin the year where they left off. We think strong 4Q rally in risk assets is due to four things: 1) Fed, ECB and BOJ expanding balance sheetsaggressively; 2) progress on Brexit and trade; 3) early indications that the global economy is troughing, most notably PMIs in China and Europe; and 4)valuations have rebounded sharply from the very cheap levels last summer.

• 4Q breakout in global equity markets suggests secular bull market has begun next leg. While equity markets are now pricing a strong rebound in growth,we think the rally can continue as long as the central banks’ balance sheet expansion persists at current rates of $100 billion per month. Valuations look“fair” assuming volatility stays low and could even go higher.

• Inflation may not be that far away. With central banks seemingly unafraid of inflation and fiscal policy on the rise, inflation risks are growing. This is goodfor nominal GDP growth and in line with our global reflation theme, but many portfolios may not be prepared for it. Our portfolios are more aligned with aworld of eventual rising inflation with overweight to US value and international stocks. We will look to hedge our portfolios from rising inflation during2020 as opportunities arise.

• The US will likely lag the global recovery. International economies are more levered to global trade improving while the US is still dealing with the fadingfiscal stimulus enacted in 2018 and corporate margin pressures. Capital spending has disappointed and is unlikely to bounce back much as US corporatesdelever until earnings growth returns. We forecast just 3 percent EPS growth for the S&P 500 in 2020. Meanwhile, international earnings growth looksbetter next year relative to the US, particularly in Japan, Brazil, and South Korea.

• Our view has been consistent over the past year to favor quality growth at a reasonable price and Value. Our only underweights within equities are in USgrowth and small/mid caps. Japan and Europe are our favored regions given their greater leverage to global growth recovery and trade deal. We also likeselect EM. We remain underweight credit.

• US overweights: Utilities, Staples & Financials. US underweights: Tech & Consumer Discretionary. We still prefer large cap to small and value to growth.We have been expecting a rotation from defensives to cyclicals once the Fed got ahead of the slowdown. That may have begun last month but is likelyahead of itself if rates are topping again. Avoid profitless growth stocks and maintain some bond proxies for potential 1H growth disappointments.

18

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Presentation Notes

{title}:Digest032:

Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States.

The sole purpose of this material is to inform, and it in no way is intended to be an ofer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be suitable for all clients. Any product discussed herein may be purchased only after a client has carefully reviewed the ofering memorandum and executed the subscription documents. Morgan Stanley Wealth Management has not considered the actual or desired investment objectives, goals, strategies, guidelines, or factual circumstances of any investor in any fund(s). Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable ofering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Morgan Stanley Smith Barney LLC ofers investment program services through a variety of investment programs, which are opened pursuant to written client agreements. Each program ofers investment managers, funds and features that are not available in other programs; conversely, some investment managers, funds or investment strategies may be available in more than one program.

Morgan Stanley’s investment advisory programs may require a minimum asset level and, depending on your specifc investment objectives and fnancial position, may not be suitable for you. Please see the Morgan Stanley Smith Barney LLC program disclosure brochure (the “Morgan Stanley ADV”) for more information in the investment advisory programs available. The Morgan Stanley ADV is available at www.morganstanley.com/ADV. Sources of Data. Information in this material in this report has been obtained from sources that we believe to be reliable, but we do not guarantee its accuracy, completeness or timeliness. Third-party data providers make no warranties or representations relating to the accuracy, completeness or timeliness of the data they provide and are not liable for any damages relating to this data. All opinions included in this material constitute the Firm’s judgment as of the date of this material and are subject to change without notice . This material was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Some historical fgures may be revised due to newly identifed programs, frm restatements, etc.

Global Investment Manager Analysis (GIMA) Focus List, Approved List and Tactical Opportunities List; Watch Policy. GIMA uses two methods to evaluate investment products in applicable advisory programs: Focus (and investment products meeting this standard are described as being on the Focus List) and Approved (and investment products meeting this standard are described as being on the Approved List). In general, Focus entails a more thorough evaluation of an investment product than Approved. Sometimes an investment product may be evaluated using the Focus List process but then placed on the Approved List instead of the Focus List. Investment products may move from the Focus List to the Approved List, or vice versa. GIMA may also determine that an investment product no longer meets the criteria under either process and will no longer be recommended in investment advisory programs (in which case the investment product is given a “Not Approved” status). GIMA has a ‘Watch” policy and may describe a Focus List or Approved List investment product as being on “Watch” if GIMA identifes specifc areas that (a) merit further evaluation by GIMA and (b) may, but are not certain to, result in the investment product becoming “Not Approved.” The Watch period depends on the length of time needed for GIMA to conduct its evaluation and for the investment manager or fund to address any concerns. Certain investment products on either the Focus List or Approved List may also be recommended for the Tactical Opportunities List based in part on tactical opportunities existing at a given time. The investment products on the Tactical Opportunities List change over time. For more information on the Focus List, Approved List, Tactical Opportunities List and Watch processes, please see the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management. Your Financial Advisor or Private Wealth Advisor can also provide upon request a copy of a publication entitled “Manager Selection Process.”

The Global Investment Committee is a group of seasoned investment professionals who meet regularly to discuss the global economy and markets. The committee determines the investment outlook that guides our advice to clients. They continually monitor developing economic and market conditions, review tactical outlooks and recommend model portfolio weightings, as well as produce a suite of strategy, analysis, commentary, portfolio positioning suggestions and other reports and broadcasts.

The GIC Asset Allocation Models are not available to be directly implemented as part of an investment advisory service and should not be regarded as a recommendation of any Morgan Stanley investment advisory service. The GIC Asset Allocation Models do not represent actual trading or any type of account or any type of investment strategies and none of the fees or other expenses (e .g. commissions, mark-ups, mark-downs, advisory fees, fund expenses) associated with actual trading or accounts are refected in the GIC Asset Allocation Models which, when compounded over a period of years, would decrease returns.

Adverse Active Alpha (AAA) is a patented screening and scoring process designed to help identify high-quality equity and fxed income managers with characteristics that may lead to future outperformance relative to index and peers. While highly ranked managers performed well as a group in our Adverse Active Alpha model back tests, not all of the managers will outperform. Please note that this data may be derived from back-testing, which has the beneft of hindsight. In addition, highly ranked managers can have difering risk profles that might not be suitable for all investors. Our view is that Adverse Active Alpha is a good starting point and should be used in conjunction with other information. Morgan Stanley Wealth Management’s qualitative and quantitative investment manager due diligence process are equally important factors for investors when considering managers for use through an investment advisory program. Factors including, but not limited to, manager turnover and changes to investment process can partially or fully negate a positive Adverse Active Alpha ranking. Additionally, highly ranked managers can have difering risk profles that might not be

DISCLOSURES 19

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suitable for all investors. For more information on AAA, please see the Adverse Active Alpha Ranking Model and Selecting Managers with Adverse Active Alpha whitepapers. The whitepaper are available from your Financial Advisor or Private Wealth Advisor. ADVERSE ACTIVE ALPHA is a registered service mark of Morgan Stanley and/or its afliates. U.S. Pat. No. 8,756,098 applies to the Adverse Active Alpha system and/or methodology.

The Global Investment Manager Analysis (GIMA) Services Only Apply to Certain Investment Advisory Programs GIMA evaluates certain investment products for the purposes of some – but not all – of Morgan Stanley Smith Barney LLC’s investment advisory programs (as described in more detail in the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management). If youdo not invest through one of these investment advisory programs, Morgan Stanley Wealth Management is not obligated to provide you notice of any GIMA Status changes even though it may give notice to clients in other programs.

Strategy May Be Available as a Separately Managed Account or Mutual Fund Strategies are sometimes available in Morgan Stanley Wealth Management investment advisory programs both in the form of a separately managed account (“SMA”) and a mutual fund. These may have diferent expenses and investment minimums. Your Financial Advisor or Private Wealth Advisor can provide more information on whether any particular strategy is available in more than one form in a particular investment advisory program. In most Morgan Stanley Wealth Management investment advisory accounts, fees are deducted quarterly and have a compounding efect on performance. For example, on an advisory account with a 3% annual fee, if the gross annual performance is 6.00%, the compounding efect of the fees will result in a net performance of approximately 3.93% after one year, 1 after three years, and 21.23% after fve years. Conficts of Interest: GIMA’s goal is to provide professional, objective evaluations in support of the Morgan Stanley Wealth Management investment advisory programs. We have policies and procedures to help us meet this goal. However, our business is subject to various conficts of interest. For example, ideas and suggestions for which investment products should be evaluated by GIMA come from a variety of sources, including our Morgan Stanley Wealth Management Financial Advisors and their direct or indirect managers, and other business persons within Morgan Stanley Wealth Management or its afliates. Such persons may have an ongoing business relationship with certain investment managers or mutual fund companies whereby they, Morgan Stanley Wealth Management or its afliates receive compensation from, or otherwise related to, those investment managers or mutual funds. For example, a Financial Advisor may suggest that GIMA evaluates an investment manager or fund in which a portion of his or her clients’ assets are already invested. While such a recommendation is permissible, GIMA is responsible for the opinions expressed by GIMA. See the conficts of interest section in the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management for a discussion of other types of conficts that may be relevant to GIMA’s evaluation of managers and funds. In addition, Morgan Stanley Wealth Management, MS & Co., managers and their afliates provide a variety of services (including research, brokerage, asset management, trading, lending and investment banking services) for each other and for various clients, including issuers of securities that may be recommended for purchase or sale by clients or are otherwise held in client accounts, and managers in various advisory programs. Morgan Stanley Wealth Management, managers, MS & Co., and their afliates receive compensation and fees in connection with these services. Morgan Stanley Wealth Management believes that the nature and range of clients to which such services are rendered is such that it would be inadvisable to exclude categorically all of these companies from an account .

Morgan Stanley charges each fund family we ofer a mutual fund support fee, also called a “revenue-sharing payment,” on client account holdings in fund families according to a tiered rate that increases along with the management fee of the fund so that lower management fee funds pay lower rates than those with higher management fees.

Consider Your Own Investment Needs: The model portfolios and strategies discussed in the material are formulated based on general client characteristics including risk tolerance . This material is not intended to be a client-specifc suitability analysis or recommendation, or ofer to participate in any investment. Therefore, clients should not use this profle as the sole basis for investment decisions. They should consider all relevant information, including their existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Such a suitability determination may lead to asset allocation results that are materially diferent from the asset allocation shown in this profle. Talk to your Financial Advisor about what would be a suitable asset allocation for you, whether CGCM is a suitable program for you.

No obligation to notify – Morgan Stanley Wealth Management has no obligation to notify you when the model portfolios, strategies, or any other information, in this material changes.

Please consider the investment objectives, risks, fees, and charges and expenses of mutual funds, ETFs, closed end funds, unit investment trusts, and variable insurance products carefully before investing. The prospectus contains this and other information about each fund. To obtain a prospectus, contact your Financial Advisor or Private Wealth Advisor or visit the Morgan Stanley website at www.morganstanley.com. Please read it carefully before investing.

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

The type of mutual funds and ETFs discussed in this presentation utilizes nontraditional or complex investment strategies and /or derivatives. Examples of these types of funds include those that utilize

DISCLOSURES 20

http://www.morganstanley.com/





one or more of the below noted investment strategies or categories or which seek exposure to the following markets: (1) commodities (e .g., agricultural, energy and metals), currency, precious metals; (2) managed futures; (3) leveraged, inverse or inverse leveraged; (4) bear market, hedging, long-short equity, market neutral; (5) real estate; (6) volatility (seeking exposure to the CBOE VIX Index). Investors should keep in mind that while mutual funds and ETFs may, at times, utilize nontraditional investment options and strategies, they should not be equated with unregistered privately ofered alternative investments. Because of regulatory limitations, mutual funds and ETFs that seek alternative-like investment exposure must utilize a more limited investment universe. As a result, investment returns and portfolio characteristics of alternative mutual funds and ETFs may vary from traditional hedge funds pursuing similar investment objectives. Moreover, traditional hedge funds have limited liquidity with long “lock-up” periods allowing them to pursue investment strategies without having to factor in the need to meet client redemptions and ETFs trade on an exchange . On the other hand, mutual funds typically must meet daily client redemptions. This difering liquidity profle can have a material impact on the investment returns generated by a mutual or ETF pursuing an alternative investing strategy compared with a traditional hedge fund pursuing the same strategy.

Nontraditional investment options and strategies are often employed by a portfolio manager to further a fund’s investment objective and to help ofset market risks . However, these features may be complex, making it more difcult to understand the fund’s essential characteristics and risks, and how it will perform in diferent market environments and over various periods of time. They may also expose the fund to increased volatility and unanticipated risks particularly when used in complex combinations and/or accompanied by the use of borrowing or “leverage.”

KEY ASSET CLASS CONSIDERATIONS AND OTHER RISKS

Investing in the markets entails the risk of market volatility. The value of all types of investments, including stocks, mutual funds, exchange-traded funds (“ETFs”), closed-end funds, and unit investment trusts, may increase or decrease over varying time periods. To the extent the investments depicted herein represent international securities, you should be aware that there may be additional risks associated with international investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and diferences in fnancial and accounting standards. These risks may be magnifed in emerging markets and frontier markets. Small- and mid-capitalization companies may lack the fnancial resources, product diversifcation and competitive strengths of larger companies. In addition, the securities of small- and mid-capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. The value of fxed income securities will fuctuate and, upon a sale, may be worth more or less than their original cost or maturity value. Bonds are subject to interest rate risk, call risk, reinvestment risk, liquidity risk, and credit risk of the issuer. High yield bonds are subject to additional risks such as increased risk of default and greater volatility because of the lower credit quality of the issues. In the case of municipal bonds, income is generally exempt from federal income taxes. Some income may be subject to state and local taxes and to the federal alternative minimum tax. Capital gains, if any, are subject to tax. Treasury Infation Protection Securities’ (TIPS) coupon payments and underlying principal are automatically increased to compensate for infation by tracking the consumer price index (CPI). While the real rate of return is guaranteed, TIPS tend to ofer a low return. Because the return of TIPS is linked to infation, TIPS may signifcantly underperform versus conventional U.S. Treasuries in times of low infation. There is no guarantee that investors will receive par if TIPS are sold prior to maturity. The returns on a portfolio consisting primarily of environmental, social, and governance-aware investments (“ESG”) may be lower or higher than a portfolio that is more diversifed or where decisions are based solely on investment considerations. Because ESG criteria exclude some investments, investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. The companies identifed and investment examples are for illustrative purposes only and should not be deemed a recommendation to purchase , hold or sell any securities or investment products. They are intended to demonstrate the approaches taken by managers who focus on ESG criteria in their investment strategy. There can be no guarantee that a client's account will be managed as described herein. Options and margin trading involve substantial risk and are not suitable for all investors. Besides the general investment risk of holding securities that may decline in value and the possible loss of principal invested, closed-end funds may have additional risks related to declining market prices relative to net asset values (NAVs), active manager underperformance and potential leverage. Closed-end funds, unlike open-end funds, are not continuously ofered. There is a one-time public ofering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. NAV is total assets less total liabilities divided by the number of shares outstanding. At the time an investor purchases shares of a closed-end fund, shares may have a market price that is above or below NAV. Portfolios that invest a large percentage of assets in only one industry sector (or in only a few sectors) are more vulnerable to price fuctuation than those that diversify among a broad range of sectors.

Alternative investments often are speculative and include a high degree of risk. Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefnite period of time. They may be highly illiquid and can engage in leverage and other speculative practices that may increase the volatility and risk of loss. Alternative Investments typically have higher fees than traditional investments. Investors should carefully review and consider potential risks before investing. Certain of these risks may include but are not limited to: Loss of all or a substantial portion of the investment due to leveraging, short-selling, or other speculative practices; Lack of liquidity in that there may be no secondary market for a fund; Volatility of returns; Restrictions on transferring interests in a fund; Potential lack of diversifcation and resulting higher risk due to concentration of trading authority when a single advisor is utilized; Absence of information regarding valuations and pricing; Complex tax structures and delays in tax reporting; Less regulation and higher fees than mutual funds; Risks associated with the operations, personnel, and processes of the manager; and Risks associated with cybersecurity. As a diversifed global fnancial services frm, Morgan Stanley Wealth Management engages in a broad spectrum of activities including fnancial advisory services, investment management activities, sponsoring and managing private investment

DISCLOSURES 21

funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Management therefore engages in activities where Morgan Stanley Wealth Management’s interests may confict with the interests of its clients , including the private investment funds it manages. Morgan Stanley Wealth Management can give no assurance that conficts of interest will be resolved in favor of its clients or any such fund. All expressions of opinion are subject to change without notice and are not intended to be a forecast of future events or results. Further, opinions expressed herein may difer from the opinions expressed by Morgan Stanley Wealth Management and/or other businesses/afliates of Morgan Stanley Wealth Management. This is not a "research report" as defned by FINRA Rule 2241 or a "debt research report" as defned by FINRA Rule 2242 and was not prepared by the Research Departments of Morgan Stanley Smith Barney LLC or Morgan Stanley & Co. LLC or its afliates. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may difer materially from those refected or contemplated in such forward-looking statements. Clients should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. While the HFRI indices are frequently used, they have limitations (some of which are typical of other widely used indices). These limitations include survivorship bias (the returns of the indices may not be representative of all the hedge funds in the universe because of the tendency of lower performing funds to leave the index); heterogeneity (not all hedge funds are alike or comparable to one another, and the index may not accurately refect the performance of a described style); and limited data (many hedge funds do not report to indices, and the index may omit funds, the inclusion of which might signifcantly afect the performance shown. The HFRI indices are based on information self-reported by hedge fund managers that decide on their own, at any time, whether or not they want to provide, or continue to provide, information to HFR Asset Management, L.L.C. Results for funds that go out of business are included in the index until the date that they cease operations . Therefore, these indices may not be complete or accurate representations of the hedge fund universe, and may be biased in several ways. Composite index results are shown for illustrative purposes and do not represent the performance of a specifc investment. Individual funds have specifc tax risks related to their investment programs that will vary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley Wealth Management does not provide tax or legal advice. Interests in alternative investment products are ofered pursuant to the terms of the applicable ofering memorandum, are distributed by Morgan Stanley Wealth Management and certain of its afliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley Wealth Management or any of its afliates, (3) are not guaranteed by Morgan Stanley Wealth Management and its afliates, and (4) involve investment risks, including possible loss of principal. Morgan Stanley Wealth Management is a registered broker-dealer, not a bank. This material is not to be reproduced or distributed to any other persons (other than professional advisors of the investors or prospective investors , as applicable, receiving this material) and is intended solely for the use of the persons to whom it has been delivered. This material is not for distribution to the general public. Past performance is no guarantee of future results. Actual results may vary. SIPC insurance does not apply to precious metals, other commodities, or traditional alternative investments. In Consulting Group’s advisory programs, alternative investments are limited to US-registered mutual funds, separate account strategies and exchange-traded funds (ETFs) that seek to pursue alternative investment strategies or returns utilizing publicly traded securities. Investment products in this category may employ various investment strategies and techniques for both hedging and more speculative purposes such as short -selling, leverage, derivatives and options, which can increase volatility and the risk of investment loss. Alternative investments are not suitable for all investors. As a diversifed global fnancial services frm, Morgan Stanley Wealth Management engages in a broad spectrum of activities including fnancial advisory services, investment management activities, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Management therefore engages in activities where Morgan Stanley Wealth Management’s interests may confict with the interests of its clients , including the private investment funds it manages. Morgan Stanley Wealth Management can give no assurance that conficts of interest will be resolved in favor of its clients or any such fund. Alternative investments involve complex tax structures, tax inefcient investing, and delays in distributing important tax information. Individual funds have specifc risks related to their investment programs that will vary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley Wealth Management does not provide tax or legal advice.

A majority of Alternative Investment managers reviewed and selected by GIMA pay or cause to be paid an ongoing fee for distribution from their management fees to Morgan Stanley Wealth Management in connection with Morgan Stanley Wealth Management clients that purchase an interest in an Alternative Investment and in some instances pay these fees on the investments held by advisory clients. Morgan Stanley Wealth Management rebates such fees that are received and attributable to an investment held by an advisory client and retains the fees paid in connection with investments held by brokerage clients. Morgan Stanley Wealth Management has a confict of interest in ofering alternative investments because Morgan Stanley Wealth Management or our afliates , in most instances, earn more money in your account from your investments in alternative investments than from other investment options.

It should be noted that the majority of hedge fund indexes are comprised of hedge fund manager returns. This is in contrast to traditional indexes, which are comprised of individual securities in the various market segments they represent and ofer complete transparency as to membership and construction methodology. As such, some believe that hedge fund index returns have certain biases that are not present in traditional indexes. Some of these biases infate index performance, while others may skew performance negatively. However, many studies indicate that overall hedge fund index performance has been biased to the upside. Some studies suggest performance has been infated by up to 260 basis points or more annually depending on the types of biases included and the time period studied. Although there are numerous potential biases that could afect hedge fund returns, we identify some of the more common ones throughout this paper.

Self-selection bias results when certain manager returns are not included in the index returns and may result in performance being skewed up or down . Because hedge funds are private placements, hedge fund managers are able to decide which fund returns they want to report and are able to opt out of reporting to the various databases . Certain hedge fund managers may choose only to report

DISCLOSURES 22

returns for funds with strong returns and opt out of reporting returns for weak performers. Other hedge funds that close may decide to stop reporting in order to retain secrecy, which may cause a downward bias in returns.

Survivorship bias results when certain constituents are removed from an index. This often results from the closure of funds due to poor performance, “blow ups,” or other such events. As such, this bias typically results in performance being skewed higher. As noted, hedge fund index performance biases can result in positive or negative skew. However, it would appear that the skew is more often positive. While it is difcult to quantify the efects precisely, investors should be aware that idiosyncratic factors may be giving hedge fund index returns an artifcial “lift” or upwards bias.

Hedge Funds of Funds and many funds of funds are private investment vehicles restricted to certain qualifed private and institutional investors. They are often speculative and include a high degree of risk. Investors can lose all or a substantial amount of their investment. They may be highly illiquid, can engage in leverage and other speculative practices that may increase volatility and the risk of loss, and may be subject to large investment minimums and initial lockups. They involve complex tax structures, tax-inefcient investing and delays in distributing important tax information. Categorically, hedge funds and funds of funds have higher fees and expenses than traditional investments, and such fees and expenses can lower the returns achieved by investors. Funds of funds have an additional layer of fees over and above hedge fund fees that will ofset returns. An investment in an exchange-traded fund involves risks similar to those of investing in a broadly based portfolio of equity securities traded on an exchange in the relevant securities market, such as market fuctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock and bond prices. An investment in a target date portfolio is subject to the risks attendant to the underlying funds in which it invests, in these portfolios the funds are the Consulting Group Capital Market funds. A target date portfolio is geared to investors who will retire and/or require income at an approximate year. The portfolio is managed to meet the investor’s goals by the pre-established year or “target date.” A target date portfolio will transition its invested assets from a more aggressive portfolio to a more conservative portfolio as the target date draws closer . An investment in the target date portfolio is not guaranteed at any time, including, before or after the target date is reached. Managed futures investments are speculative, involve a high degree of risk, use signifcant leverage, are generally illiquid, have substantial charges, subject investors to conficts of interest, and are suitable only for the risk capital portion of an investor’s portfolio. Managed futures investments do not replace equities or bonds but rather may act as a complement in a well diversifed portfolio. Managed Futures are complex and not appropriate for all investors. Rebalancing does not protect against a loss in declining fnancial markets. There may be a potential tax implication with a rebalancing strategy.

Asset allocation and diversifcation do not assure a proft or protect against loss in declining fnancial markets. Past performance is no guarantee of future results. Actual results may vary.

Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its afliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at www.morganstanley.com/disclosures/dol. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

Annuities and insurance products are ofered in conjunction with Morgan Stanley Smith Barney LLC’s licensed insurance agency afliates.

Indices are unmanaged and investors cannot directly invest in them. They are not subject to expenses or fees and are often comprised of securities and other investment instruments the liquidity of which is not restricted. A particular investment product may consist of securities signifcantly diferent than those in any index referred to herein . Composite index results are shown for illustrative purposes only, generally do not represent the performance of a specifc investment, may not, for a variety of reasons, be a suitable comparison or benchmark for a particular investment and may not necessarily refect the actual investment strategy or objective of a particular investment. Consequently, comparing an investment to a particular index may be of limited use.

This material is not a fnancial plan and does not create an investment advisory relationship between you and your Morgan Stanley Financial Advisor. We are not your fduciary either under the Employee Retirement Income Security Act of 1974 (ERISA) or the Internal Revenue Code of 1986, and any information in this report is not intended to form the primary basis for any investment decision by you, or an investment advice or recommendation for either ERISA or Internal Revenue Code purposes. Morgan Stanley Private Wealth Management will only prepare a fnancial plan at your specifc request using Private Wealth Management approved fnancial planning signature.

We may act in the capacity of a broker or that of an advisor. As your broker, we are not your fduciary and our interests may not always be identical to yours. Please consult with your Private Wealth Advisor to discuss our obligations to disclose to you any conficts we may from time to time have and our duty to act in your best interest. We may be paid both by you and by others who compensate us based on what you buy. Our compensation, including that of your Private Wealth Advisor, may vary by product and over time.

Investment and services ofered through Morgan Stanley Private Wealth Management, a division of Morgan Stanley Smith Barney LLC, Member SIPC.

DISCLOSURES 23

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Investment, insurance and annuity products ofered through Morgan Stanley Smith Barney LLC are: NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED | NOT A BANK DEPOSIT | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Morgan Stanley Smith Barney LLC is a registered Broker/Dealer, Member SIPC, and not a bank. Where appropriate, Morgan Stanley Smith Barney LLC has entered into arrangements with banks and other third parties to assist in ofering certain banking related products and services.

For index, indicator and survey defnitions referenced in this report please visit the following: https://www.morganstanley.com/wealth-investmentsolutions/wmir-defnitions

GLOBAL INVESTMENT COMMITTEE (GIC) ASSET ALLOCATION MODELS: The Asset Allocation Models are created by Morgan Stanley Wealth Management’s GIC.

HYPOTHETICAL MODEL PERFORMANCE (GROSS): Hypothetical model performance results do not refect the investment or performance of an actual portfolio following a GIC Strategy, but simply refect actual historical performance of selected indices on a real-time basis over the specifed period of time representing the GIC’s strategic and tactical allocations as of the date of this report . The past performance shown here is simulated performance based on benchmark indices, not investment results from an actual portfolio or actual trading. There can be large diferences between hypothetical and actual performance results achieved by a particular asset allocation or trading strategy. Hypothetical performance results do not represent actual trading and are generally designed with the beneft of hindsight. Actual performance results of accounts vary due to, for example, market factors (such as liquidity) and client-specifc factors (such as investment vehicle selection, timing of contributions and withdrawals, restrictions and rebalancing schedules). Clients would not necessarily have obtained the performance results shown here if they had invested in accordance with any GIC Asset Allocation Model for the periods indicated. Despite the limitations of hypothetical performance, these hypothetical performance results allow clients and Financial Advisors to obtain a sense of the risk/return trade-of of diferent asset allocation constructs. The hypothetical performance results in this report are calculated using the returns of benchmark indices for the asset classes , and not the returns of securities, fund or other investment products. Models may contain allocations to Hedge Funds, Private Equity and Private Real Estate. The benchmark indices for these asset classes are not issued on a daily basis. When calculating model performance on a day for which no benchmark index data is issued, we have assumed straight line growth between the index levels issued before and after that date.

FEES REDUCE THE PERFORMANCE OF ACTUAL ACCOUNTS: None of the fees or other expenses (e.g. commissions, mark-ups, mark-downs, fees) associated with actual trading or accounts are refected in the GIC Asset Allocation Models. The GIC Asset Allocation Models and any model performance included in this presentation are intended as educational materials . Were a client to use these models in connection with investing, any investment decisions made would be subject to transaction and other costs which, when compounded over a period of years, would decrease returns. Information regarding Morgan Stanley’s standard advisory fees is available in the Form ADV Part 2, which is available at www.morganstanley.com/adv. The following hypothetical illustrates the compound efect fees have on investment returns: For example, if a portfolio’s annual rate of return is 15% for 5 years and the account pays 50 basis points in fees per annum, the gross cumulative fve-year return would be 101.1% and the fve-year return net of fees would be 96.8%. Fees and/or expenses would apply to clients who invest in investments in an account based on these asset allocations, and would reduce clients’ returns. The impact of fees and/or expenses can be material.

Variable annuities are long-term investments designed for retirement purposes and may be subject to market fuctuations, investment risk, and possible loss of principal. All guarantees, including optional benefts, are based on the fnancial strength and claims-paying ability of the issuing insurance company and do not apply to the underlying investment options. Optional riders may not be able to be purchased in combination and are available at an additional cost. Some optional riders must be elected at time of purchase. Optional riders may be subject to specifc limitations, restrictions, holding periods, costs, and expenses as specifed by the insurance company in the annuity contract. If you are investing in a variable annuity through a tax-advantaged retirement plan such as an IRA, you will get no additional tax advantage from the variable annuity. Under these circumstances, you should only consider buying a variable annuity because of its other features, such as lifetime income payments and death benefts protection. Taxable distributions (and certain deemed distributions) are subject to ordinary income tax and, if taken prior to age 59½, may be subject to a 10% federal income tax penalty. Early withdrawals will reduce the death beneft and cash surrender value.

Equity securities may fuctuate in response to news on companies, industries, market conditions and general economic environment. Ultrashort-term fxed income asset class is comprised of fxed income securities with high quality, very short maturities. They are therefore subject to the risks associated with debt securities such as credit and interest rate risk .

Master Limited Partnerships (MLPs) are limited partnerships or limited liability companies that are taxed as partnerships and whose interests (limited partnership units or limited liability company units) are traded on securities exchanges like shares of common stock. Currently, most MLPs operate in the energy, natural resources or real estate sectors. Investments in MLP interests are subject to the risks generally applicable to companies in the energy and natural resources sectors, including commodity pricing risk, supply and demand risk, depletion risk and exploration risk. Individual MLPs

DISCLOSURES 24

https://www.morganstanley.com/wealth-investmentsolutions/wmir-definitions















are publicly traded partnerships that have unique risks related to their structure. These include, but are not limited to, their reliance on the capital markets to fund growth, adverse ruling on the current tax treatment of distributions (typically mostly tax deferred), and commodity volume risk. The potential tax benefts from investing in MLPs depend on their being treated as partnerships for federal income tax purposes and, if the MLP is deemed to be a corporation, then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund’s value. MLPs carry interest rate risk and may underperform in a rising interest rate environment. MLP funds accrue deferred income taxes for future tax liabilities associated with the portion of MLP distributions considered to be a tax -deferred return of capital and for any net operating gains as well as capital appreciation of its investments; this deferred tax liability is refected in the daily NAV, and, as a result, the MLP fund’s after-tax performance could difer signifcantly from the underlying assets even if the pre-tax performance is closely tracked.

Investing in commodities entails signifcant risks. Commodity prices may be afected by a variety of factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii) governmental programs and policies, (iii) national and international political and economic events, war and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other disruptions due to various factors, including lack of liquidity, participation of speculators and government intervention. Physical precious metals are non-regulated products. Precious metals are speculative investments, which may experience short-term and long term price volatility. The value of precious metals investments may fuctuate and may appreciate or decline, depending on market conditions. Unlike bonds and stocks, precious metals do not make interest or dividend payments. Therefore, precious metals may not be suitable for investors who require current income. Precious metals are commodities that should be safely stored, which may impose additional costs on the investor.

REITs investing risks are similar to those associated with direct investments in real estate: property value fuctuations, lack of liquidity, limited diversifcation and sensitivity to economic factors such as interest rate changes and market recessions. Risks of private real estate include: illiquidity; a long-term investment horizon with a limited or nonexistent secondary market; lack of transparency; volatility (risk of loss); and leverage. Principal is returned on a monthly basis over the life of a mortgage-backed security. Principal prepayment can signifcantly afect the monthly income stream and the maturity of any type of MBS, including standard MBS, CMOs and Lottery Bonds. Asset-backed securities generally decrease in value as a result of interest rate increases, but may beneft less than other fxed-income securities from declining interest rates, principally because of prepayments.

Yields are subject to change with economic conditions. Yield is only one factor that should be considered when making an investment decision. Credit ratings are subject to change. Duration, the most commonly used measure of bond risk, quantifes the efect of changes in interest rates on the price of a bond or bond portfolio. The longer the duration, the more sensitive the bond or portfolio would be to changes in interest rates. The majority of $25 and $1000 par preferred securities are “callable” meaning that the issuer may retire the securities at specifc prices and dates prior to maturity. Interest/dividend payments on certain preferred issues may be deferred by the issuer for periods of up to 5 to 10 years, depending on the particular issue. The investor would still have income tax liability even though payments would not have been received. Price quoted is per $25 or $1,000 share, unless otherwise specifed. Current yield is calculated by multiplying the coupon by par value divided by the market price. The initial interest rate on a foating-rate security may be lower than that of a fxed-rate security of the same maturity because investors expect to receive additional income due to future increases in the foating security’s underlying reference rate. The reference rate could be an index or an interest rate. However, there can be no assurance that the reference rate will increase. Some foating-rate securities may be subject to call risk. The market value of convertible bonds and the underlying common stock(s) will fuctuate and after purchase may be worth more or less than original cost. If sold prior to maturity, investors may receive more or less than their original purchase price or maturity value, depending on market conditions. Callable bonds may be redeemed by the issuer prior to maturity. Additional call features may exist that could afect yield. Some $25 or $1000 par preferred securities are QDI (Qualifed Dividend Income) eligible. Information on QDI eligibility is obtained from third party sources. The dividend income on QDI eligible preferreds qualifes for a reduced tax rate. Many traditional ‘dividend paying’ perpetual preferred securities (traditional preferreds with no maturity date) are QDI eligible. In order to qualify for the preferential tax treatment all qualifying preferred securities must be held by investors for a minimum period – 91 days during a 180 day window period, beginning 90 days before the ex-dividend date.

Companies paying dividends can reduce or cut payouts at any time.

Nondiversifcation: For a portfolio that holds a concentrated or limited number of securities, a decline in the value of these investments would cause the portfolio’s overall value to decline to a greater degree than a less concentrated portfolio. The indices selected by Morgan Stanley Wealth Management to measure performance are representative of broad asset classes. Morgan Stanley Wealth Management retains the right to change representative indices at any time. Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies.

Growth investing does not guarantee a proft or eliminate risk. The stocks of these companies can have relatively high valuations. Because of these high valuations, an investment in a growth stock can be more risky than an investment in a company with more modest growth expectations. Value investing does not guarantee a proft or eliminate risk. Not all companies whose stocks are

DISCLOSURES 25

considered to be value stocks are able to turn their business around or successfully employ corrective strategies which would result in stock prices that do not rise as initially expected .Any type of continuous or periodic investment plan does not assure a proft and does not protect against loss in declining markets. Since such a plan involves continuous investment in securities regardless of fuctuating price levels of such securities, the investor should consider his fnancial ability to continue his purchases through periods of low price levels .This material is disseminated in the United States of America by Morgan Stanley Smith Barney LLC. Morgan Stanley Wealth Management is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the “Municipal Advisor Rule”) and the opinions or views contained herein are not intended to be , and do not constitute, advice within the meaning of the Municipal Advisor Rule. This material, or any portion thereof, may not be reprinted, sold or redistributed without the written consent of Morgan Stanley Smith Barney LLC.© 2020 Morgan Stanley Smith Barney LLC. Member SIPC.

DISCLOSURES 26

Investment Results As of December 31, 2019

1999 Avenue of the Stars, Suite 2400 Los Angeles, CA 90067

Cal Poly Pomona General Investment Portfolio

Andrew B. Price, CIMA® (310) 788-2043 Managing Director, Wealth Management Institutional Consulting Director [email protected]

Karin Longhurst, CTFA (310) 788-2156Senior Vice PresidentSenior Institutional Consultant [email protected]

Todd Au, CIMA® (707) 571-5704Senior Investment Management Consultant [email protected]

3562 Round Barn Circle Santa Rosa, CA 95403

27

Market Valuation

QuarterTo

DateYTD

SinceInception

InceptionDate

Total Fund Composite 03/01/2013

Beginning Market Value $28,256,724 $65,124,516 $24,301,287

Net Contributions ($1,704,526) ($42,557,508) ($5,387,312)

Gain/Loss $1,048,829 $5,034,019 $8,687,052

Ending Market Value $27,601,027 $27,601,027 $27,601,027

December 31, 2019 : $27,601

$0.0 $6,000.0 $12,000.0 $18,000.0 $24,000.0

Cash Equivalent

Alternative Investment

Domestic Fixed Income

International Equity

Domestic Equity

0.3%

10.2%

57.6%

16.3%

15.6%

Total Portfolio Performance (%)

General Investment Portfolio Cal Poly Pomona GIP Custom Benchmark*

0.0

4.0

8.0

12.0

16.0

Ret

urn

QTD Fiscal YTD

1Year

3Years

5Years

Fiscal Year 2018 Fiscal Year 2017 SinceInception

QTDFiscalYTD

1Year

3Years

5Years

Fiscal Year2018

Fiscal Year2017

SinceInception

InceptionDate

General Investment Portfolio 3.76 3.98 10.30 5.06 3.60 3.63 6.63 2.88 03/01/2013

Cal Poly Pomona GIP Custom Benchmark* 2.73 3.76 12.23 5.89 4.24 2.55 4.82 3.43 03/01/2013

Cal Poly Pomona General Investment PortfolioPortfolio SummaryAs of December 31, 2019

*The custom benchmark is an evolving benchmark that currently consists of 72% Barclays Int. Gov't Credit and 28% MSCI ACWI.

28

December 31, 2019 : $27,601,027

15.2%

7.5%

7.6%

2.0%

6.0%

61.6%

September 30, 2019 : $28,256,724

14.6%

7.0%

7.3%

1.8%

5.6%

63.7%

Market Value($)

Allocation(%)

US Equity 4,196,852 15.21¢

International Equity 2,072,645 7.51¢

International-Developed Equity 2,104,798 7.63¢

International-Emerging Equity 547,775 1.98¢

US Fixed Income 17,012,981 61.64¢

US Private Equity 1,665,977 6.04¢

Market Value($)

Allocation(%)

US Equity 4,118,408 14.57¢

International Equity 1,985,326 7.03¢

International-Developed Equity 2,059,427 7.29¢

International-Emerging Equity 519,664 1.84¢

US Fixed Income 17,995,582 63.69¢

US Private Equity 1,578,317 5.59¢

Cal Poly Pomona General Investment PortfolioPortfolio Asset Allocation SummaryAs of December 31, 2019

29

December 31, 2019 : $27,601,027 September 30, 2019 : $28,256,724

Market Value($)

Allocation(%)

Short-Term Portfolio Strategy 17,012,981 61.64¢

Thornburg Intl Growth 2,104,798 7.63¢

Oakmark International Value 2,072,645 7.51¢

Hamilton Lane 1,665,977 6.04¢

Polen Large Cap Growth 1,016,476 3.68¢

Aristotle Large Cap Value 792,739 2.87¢

iShares MSCI Emerging Markets Index 547,775 1.98¢

iShares Russell 1000 Growth 543,309 1.97¢

Bahl Gaynor Income Growth 512,650 1.86¢

iShares Russell 1000 Value 491,403 1.78¢

Delaware SMID Growth 449,258 1.63¢

Silvercrest SMID CAP Value 391,016 1.42¢

Market Value($)

Allocation(%)

Short-Term Portfolio Strategy 17,995,582 63.69¢

Thornburg Intl Growth 2,059,427 7.29¢

Oakmark International Value 1,985,326 7.03¢

Hamilton Lane 1,578,317 5.59¢

Polen Large Cap Growth 980,267 3.47¢

Aristotle Large Cap Value 774,550 2.74¢

Bahl Gaynor Income Growth 524,226 1.86¢

iShares Russell 1000 Growth 523,245 1.85¢

iShares MSCI Emerging Markets Index 519,664 1.84¢

iShares Russell 1000 Value 487,166 1.72¢

Delaware SMID Growth 441,811 1.56¢

Silvercrest SMID CAP Value 387,144 1.37¢

Cal Poly Pomona General Investment PortfolioAsset Allocation By Manager


30

Allocation

MarketValue

($)%

Performance(%)

QuarterTo

Date

FiscalYTD

1Year

3Years

5Years

Fiscal Year2018

Fiscal Year2017

SinceInception

InceptionDate

General Investment Portfolio 27,601,027 100.00 3.76 3.98 10.30 5.06 3.60 3.63 6.63 2.88 03/01/2013

Cal Poly Pomona Custom Benchmark* 2.73 3.76 12.23 5.89 4.24 2.55 4.82 3.43

Public Equities 8,922,069 32.33 9.66 9.63 26.88 10.65 6.82 9.72 16.81 6.03 04/01/2014

MSCI AC World Net 8.95 8.92 26.60 12.44 8.41 10.72 18.78 7.82

Domestic Equities 4,196,852 15.21 8.29 9.71 30.58 13.55 9.37 13.57 18.50 9.42 04/01/2014

Russell 3000 9.10 10.37 31.02 14.57 11.24 14.78 18.51 11.59

Polen Large Cap Growth 1,016,476 3.68 10.44 8.30 31.52 - - - - 31.52 01/09/2019

Russell 1000 Gr 10.62 12.26 36.39 20.49 14.63 22.51 20.42 32.35

iShares Russell 1000 Growth 543,309 1.97 10.46 12.17 35.26 19.86 11.29 22.04 20.37 17.37 08/02/2016

Russell 1000 Gr 10.62 12.26 36.39 20.49 14.63 22.51 20.42 17.99

Aristotle Large Cap Value 792,739 2.87 9.06 10.54 30.78 12.90 11.70 10.67 21.96 11.18 04/01/2014

Russell 1000 VL 7.41 8.86 26.54 9.68 8.29 6.77 15.53 8.97

Bahl Gaynor Income Growth 512,650 1.86 4.64 5.67 24.47 - - - - 24.47 01/08/2019

Russell 1000 VL 7.41 8.86 26.54 9.68 8.29 6.77 15.53 24.23

Russell 1000 Value 491,403 1.78 7.26 8.56 23.27 - - - - 23.27 01/08/2019

Russell 1000 VL 7.41 8.86 26.54 9.68 8.29 6.77 15.53 24.23

Delaware SMID Growth 449,258 1.63 8.18 1.43 24.25 - - - - 24.25 01/08/2019

Russell 2500 GR 10.57 7.05 32.65 15.17 10.84 21.54 21.44 28.14

Silvercrest SMID CAP Value 391,016 1.42 7.86 6.52 21.13 - - - - 21.13 01/08/2019

Russell 2500 VL 7.07 7.21 23.57 6.12 7.18 11.49 18.36 19.61

International and EM Equities 4,725,218 17.12 10.80 9.37 23.29 9.35 4.30 7.55 17.23 2.65 04/01/2014

MSCI AC World ex US Net 8.92 6.97 21.51 9.87 5.51 7.28 20.45 3.96

Thornburg International Growth 2,104,798 7.63 10.70 5.43 - - - - - 8.96 02/27/2019


Cal Poly Pomona General Investment PortfolioAnnualized Performance Summary



31

Cal Poly Pomona General Investment PortfolioAnnualized Performance Summary


Allocation

MarketValue

($)%

Performance(%)

QuarterTo

Date

FiscalYTD

1Year

3Years

5Years

Fiscal Year2018

Fiscal Year2017

SinceInception

InceptionDate

Oakmark International Value 2,072,645 7.51 11.06 9.35 23.14 7.13 3.22 3.39 17.67 2.57 06/01/2017


iShares MSCI Emerging Markets Index 547,775 1.98 12.09 6.74 16.01 10.86 4.47 8.68 21.14 4.47 01/01/2015

MSCI EM Net 11.84 7.09 18.42 11.57 5.61 8.20 23.74 5.61

Fixed Income 17,012,981 61.64 1.28 1.48 4.52 2.75 2.26 1.22 2.93 1.91 03/01/2013

Short-Term Portfolio Strategy 17,012,981 61.64 1.28 1.49 4.52 2.75 2.26 1.22 2.93 1.91 03/07/2013

BC Gov/Cr Intm 0.37 1.75 6.80 3.24 2.57 -0.58 -0.21 2.20

Private Equity 1,665,977 6.04 -0.05 2.24 4.04 - - 3.85 - 7.64 06/01/2017

Hamilton Lane 1,665,977 6.04 -0.05 2.24 4.04 - - 3.85 - 7.68 06/05/2017

Cambridge Private Equity** 0.00 1.40 9.26 13.08 11.57 18.84 18.11 13.38


32

Asset Allocation Over Time

QTDFiscalYTD

1Year

3Years

Fiscal Year2017

SinceInception

InceptionDate

General Investment Portfolio 03/01/2013

Beginning Market Value 28,256,724 63,151,007 65,124,516 42,238,403 43,243,289 24,301,287

Net Contributions -1,704,526 -36,724,435 -42,557,508 -21,660,344 6,962,990 -5,387,312

Gain/Loss 1,048,829 1,174,455 5,034,019 7,022,968 3,014,501 8,687,052

Ending Market Value 27,601,027 27,601,027 27,601,027 27,601,027 53,220,780 27,601,027

QTDFiscalYTD

1Year

3Years

SinceInception

InceptionDate

General Investment Portfolio 3.76 3.98 10.30 5.06 2.88 03/01/2013

Cal Poly Pomona GIP Custom Benchmark* 2.73 3.76 12.23 5.89 3.43 03/01/2013

US Equity International Equity Global Equity International-Developed Equity

International-Emerging Equity US Fixed Income Global Mixed Assets US Private Equity

0.0

25.0

50.0

75.0

100.0

Allo

cati

on

(%)

2/13 8/13 2/14 8/14 2/15 8/15 2/16 8/16 2/17 8/17 2/18 8/18 2/19 8/19 12/19

Cal Poly Pomona Foundation - General Investment PortfolioPerformance and Asset Allocation History



**Please see important disclosures at the end of the presentation.

33

Schedule of Investable Assets - Mar-2013 To Dec-2019

General Investment Portfolio Cal Poly Pomona GIP Custom Benchmark* Net Cash Flow

$0.0

$13,883,333.4

$27,766,666.8

$41,650,000.2

$55,533,333.6

$69,416,667.0

$83,300,000.4

$97,183,333.8

Mar

ket

Val

ue

2/13 12/13 12/14 12/15 12/16 12/17 12/18 12/19

$18,913,974.9

$31,516,740.0

$27,601,027.3

Periods EndingBeginning

Market Value($)

NetCash Flow

($)

Gain/Loss($)

EndingMarket Value

($)%Return Unit Value

Income($)

Income % ofBeginning

Market Value

2013 - - - 24,301,287 N/A 100.00 - 0.00

2013 24,301,287 3,157,866 13,036 27,472,189 0.43 100.43 582,334 2.40

2014 27,472,189 13,165,056 445,070 41,082,315 1.31 101.74 1,172,581 4.27

2015 41,082,315 942,525 -451,434 41,573,406 -0.90 100.83 1,208,866 2.94

2016 41,573,406 -992,415 1,657,412 42,238,403 3.85 104.70 940,772 2.26

2017 42,238,403 8,895,429 4,002,525 55,136,357 8.32 113.42 1,206,244 2.86

2018 55,136,357 12,001,735 -2,013,576 65,124,516 -2.95 110.07 2,248,858 4.08

2019 65,124,516 -42,557,508 5,034,019 27,601,027 10.30 121.41 1,397,273 2.15

24,301,287 -5,387,312 8,687,052 27,601,027 2.88 121.41 8,756,928 36.03

Cal Poly Pomona General Investment PortfolioGeneral Investment Portfolio vs. Cal Poly Pomona GIP Custom Benchmark*

March 1, 2013 To December 31, 2019


34

Account Name YTD1

Year3

Years5

Years10

YearsSince

InceptionInception

Date

Performance Appendix

QTD

Performance Data below is net of fees. Please see the Morgan Stanley Smith Barney LLC Form ADV Part 2 Brochure for advisory accounts and/or any applicable brokerage account trade confirmation statements fora full disclosure of the applicable charges, fees and expenses. Your Financial Advisor will provide those documents to you upon request.

Aristotle Large Cap Value 30.78 30.78 12.90 11.70 -- 11.18 04/01/20149.06

Bahl Gaynor Income Growth 24.47 24.47 -- -- -- 24.47 01/08/20194.64

Delaware SMID Growth 24.25 24.25 -- -- -- 24.25 01/08/20198.18

Oakmark International Value 23.14 23.14 -- -- -- 2.57 06/01/201711.06

Polen Large Cap Growth 31.52 31.52 -- -- -- 31.52 01/09/201910.44

Short-Term Portfolio Strategy 4.52 4.52 2.75 2.26 -- 1.91 03/07/20131.28

Silvercrest SMID CAP Value 21.13 21.13 -- -- -- 21.13 01/08/20197.86

Thornburg Intl Growth -- -- -- -- -- 8.96 02/27/201910.70

iShares MSCI Emerging Markets Index 16.01 16.01 10.86 4.47 -- 4.47 01/01/201512.09

iShares Russell 1000 Growth 35.26 35.26 19.86 -- -- 17.35 08/02/201610.46

iShares Russell 1000 Value 23.27 23.27 -- -- -- 23.27 01/08/20197.26

All performance above are Time Weighted(TWR) performance

QTDAccount Name YTD1

Year3

Years5

Years10

YearsSince

InceptionInception

Date

IRR Appendix

Hamilton Lane 3.99 3.99 -- -- -- 7.75 06/05/2017-0.05

All performance above are Dollar Weighted(IRR) performance

Glossary of Terms

Active Contribution Return: The gain or loss percentage of an investment relative to the performance of

the investment benchmark.

Active Exposure: The percentage difference in weight of the portfolio compared to its policy benchmark.

Active Return: Arithmetic difference between the manager’s return and the benchmark’s return over a

specified time period.

Actual Correlation: A measure of the correlation (linear dependence) between two variables X and Y, with

a value between +1 and -1 inclusive. This is also referred to as coefficient of correlation.

Alpha: A measure of a portfolio's time weighted return in excess of the market’s return, both adjusted for

risk. A positive alpha indicates that the portfolio outperformed the market on a risk-adjusted basis, and a

negative alpha indicates the portfolio did worse than the market.

negative alpha indicates the portfolio did worse than the market.

Best Quarter: The highest quarterly return for a certain time period.

Beta: A measure of the sensitivity of a portfolio’s time weighted return (net of fees) against that of the

market. A beta greater than 1.00 indicates volatility greater than the market.

Consistency: The percentage of quarters that a product achieved a rate of return higher than that of its

benchmark. The higher the consistency figure, the more value a manager has contributed to the product’s

performance.

Core: Refers to an investment strategy mandate that is blend of growth and value styles without a

pronounced tilt toward either style.

Cumulative Selection Return (Cumulative Return): Cumulative investment performance over a specified

period of time.

35

period of time.

Distribution Rate: The most recent distribution paid, annualized, and then divided by the current market

price. Distribution rate may consist of investment income, short-term capital gains, long-term capital gains,

and/or return of capital.

Down Market Capture: The ratio of average portfolio returns over the benchmark during periods of

negative benchmark return. Lower values indicate better product performance.

Downside Risk: A measure similar to standard deviation, but focuses only on the negative movements of

the return series. It is calculated by taking the standard deviation of the negative quarterly set of returns. The

higher the value, the more risk the product has.

Downside Semi Deviation: A statistical calculation that measures the volatility of returns below a

minimum acceptable return. This return measure isolates the negative portion of volatility: the larger the

number, the greater the volatility.

Drawdown: A drawdown is the peak-to-trough decline during a specific period of an investment, fund or

commodity.

Excess over Benchmark: The percentage gain or loss of an investment relative to the investment's

benchmark.

Excess Return: Arithmetic difference between the manager’s return and the risk-free return over a specified

time period.

Growth: A diversified investment strategy which includes investment selections that have capital

appreciation as the primary goal, with little or no dividend payouts. These strategies can include

reinvestment in expansion, acquisitions, and/or research and development opportunities.

Growth of Dollar: The aggregate amount an investment has gained or lost over a certain time period, also

referred to as Cumulative Return, stated in terms of the amount to which an initial dollar investment would

have grown over the given time period.

Investment Decision Process (IDP): A model for structuring the investment process and implementing the

correct attribution methodologies. The IDP includes every decision made concerning the division of the

assets under management over the various asset categories. To analyze each decision‘s contribution to the

total return, a modeling approach must measure the marginal value of every individual decision. In this

respect, the hierarchy of the decisions becomes very important. We therefore use the IDP model, which

serves as a proper foundation for registering the decisions and relating them to each other.

Information Ratio: Measured by dividing the active rate of return by the tracking error. The higher the

Information Ratio, the more value-added contribution by the manager.

Jensen’s Alpha: The Jensen's alpha measure is a risk-adjusted performance measure that represents theaverage return on a portfolio or investment above or below that predicted by the capital asset pricing model(CAPM) given the portfolio's or investment's beta and the average market return. This metric is alsocommonly referred to as alpha..

Kurtosis: A statistical measure that is used to describe the distribution, or skewness, of observed dataaround the mean, sometimes referred to as the volatility of volatility.

around the mean, sometimes referred to as the volatility of volatility.

Maximum Drawdown: The drawdown is defined as the percent retrenchment from a fund's peak to thefund's trough value. It is in effect from the time the fund's retrenchment begins until a new fund high isreached. The maximum drawdown encompasses both the period from the fund's peak to the fund's valley(length), and the time from the fund's valley to a new fund high (recovery). It measures the largestpercentage drawdown that has occurred in any fund's data record.

Modern Portfolio Theory (MPT): An investment analysis theory on how risk-averse investors canconstruct portfolios to optimize or maximize expected return based on a given level of market risk,emphasizing that risk is an inherent part of higher reward.

Mutual Fund (MF): An investment program funded by shareholders that trade in diversified holdings andis professionally managed.

Peer Group: A combination of funds that share the same investment style combined as a group forcomparison purposes.

Peer/ Plan Sponsor Universe: A combination of asset pools of total plan investments by specific sponsorand plan types for comparison purposes.

Performance Ineligible Assets: Performance returns are not calculated for certain assets because accuratevaluations and transaction data for these assets are not processed or maintained by us. Common examples ofthese include life insurance, some annuities and some assets held externally.

Performance Statistics: A generic term for various measures of investment performance measurementterms.

Portfolio Characteristics: A generic term for various measures of investment portfolio characteristics.

Preferred Return: A term used in the private equity (PE) world, and also referred to as a “Hurdle Rate.” Itrefers to the threshold return that the limited partners of a private equity fund must receive, prior to the PEfirm receiving its carried interest or "carry."

Ratio of Cumulative Wealth: A defined ratio of the Cumulative Return of the portfolio divided by theCumulative Return of the benchmark for a certain time period.

Regression Based Analysis: A statistical process for estimating the relationships among variables. Itincludes many techniques for modeling and analyzing several variables, when the focus is on therelationship between a dependent variable and one or more independent variables

Residual Correlation: Within returns-based style analysis, residual correlation refers to the portion of astrategy’s return pattern that cannot be explained by its correlation to the asset-class benchmarks to which itis being compared.

Return: A rate of investment performance for the specified period.

Rolling Percentile Ranking: A measure of an investment portfolio’s ranking versus a peer group for aspecific rolling time period (i.e. Last 3 Years, Last 5 years, etc.).

R-Squared: The percentage of a portfolio's performance explained by the behavior of the appropriatebenchmark. High R-Squared means a higher correlation of the portfolio's performance to the appropriatebenchmark.

SA/CF (Separate Account/Comingled Fund): Represents an acronym for Separate Account andCommingled Fund investment vehicles.

Sector Benchmark: A market index that serves as a proxy for a sector within an asset class.

36

Sharpe Ratio: Represents the excess rate of return over the risk free return divided by the standarddeviation of the excess return. The result is the absolute rate of return per unit of risk. The higher the value,the better the product’s historical risk-adjusted performance results in.

Standard Deviation: A statistical measure of the range of a portfolio's performance; the variability of areturn around its average return over a specified time period.

Total Fund Benchmark: The policy benchmark for a complete asset pool that could consist of multipleinvestment mandates.

Total Fund Composite: The aggregate of multiple portfolios within an asset pool or household.

Tracking Error: A measure of standard deviation for a portfolio's investment performance, relative to theperformance of an appropriate market benchmark.

Treynor Ratio: A ratio that divides the excess return (above the risk free rate) by the portfolio’s beta toarrive at a unified measure of risk adjusted return. It is generally used to rank portfolios, funds andbenchmarks. A higher ratio is indicative of higher returns per unit of market risk. This measurement canhelp determine if the portfolio is reaching its goal of increasing returns while managing market risk.

Up Market Capture: The ratio of average portfolio returns over the benchmark during periods of positivebenchmark return. Higher values indicate better product performance.

Upside Semi Deviation: A statistical calculation that measures the volatility of returns above an acceptablereturn. This return measure isolates the positive portion of volatility: the larger the number, the greater thevolatility.

Value: A diversified investment strategy that includes investment selections which tend to trade at a lowerprice relative to its dividends, earnings, and sales. Common attributes are stocks that include high dividend,low price-to-book ratio, and/or low price-to-earnings ratio.

Worst Quarter: The lowest rolling quarterly return for a certain time period.

Information Disclosures

Performance results are annualized for time periods greater than one year and include all cash and cash

equivalents, realized and unrealized capital gains and losses, and dividends, interest and income. The

investment results depicted herein represent historical performance. As a result of recent market activity,

current performance may vary from the figures shown. Past performance is not a guarantee of future

results.

Please see the Morgan Stanley Smith Barney LLC Form ADV Part 2 Brochure for advisory accounts

and/or any applicable brokerage account trade confirmation statements for a full disclosure of the

applicable charges, fees and expenses. Your Financial Advisor will provide those documents to you upon

request.

Benchmark indices and blends included in this material are for informational purposes only, are

provided solely as a comparison tool and may not reflect the underlying composition and/or investment

objective(s) associated with the account(s). Indices are unmanaged and not available for direct

investment. Index returns do not take into account fees or other charges. Such fees and charges would

reduce performance.

The performance data shown reflects past performance, which does not guarantee future results.

The performance data shown reflects past performance, which does not guarantee future results.

Investment return and principal will fluctuate so that an investor’s shares when redeemed may be worth

more or less than original cost. Please note, current performance may be higher or lower than the

performance data shown. For up to date month-end performance information, please contact your

Financial Advisor or visit the funds’ company website.

Investors should carefully consider the fund’s investment objectives, risks, charges and expenses before

investing. The prospectus and, if available the summary prospectus, contains this and other information

that should be read carefully before investing. Investors should review the information in the prospectus

carefully. To obtain a prospectus, please contact your Financial Advisor or visit the funds’ company

website.

Past performance is no guarantee of future results.

Investing involves market risk, including possible loss of principal. Growth investing does not guarantee a

profit or eliminate risk. The stocks of these companies can have relatively high valuations. Because of these

high valuations, an investment in a growth stock can be more risky than an investment in a company with

more modest growth expectations. Value investing involves the risk that the market may not recognize that

securities are undervalued and they may not appreciate as anticipated. Small and mid-capitalization

companies may lack the financial resources, product diversification and competitive strengths of larger

companies. The securities of small capitalization companies may not trade as readily as, and be subject to

higher volatility than those of larger, more established companies. Bond funds and bond holdings have the

same interest rate, inflation and credit risks that are associated with the underlying bonds owned by the

funds. The return of principal in bond funds, and in funds with significant bond holdings, is not guaranteed.

International securities’ prices may carry additional risks, including foreign economic, political, monetary

and/or legal factors, changing currency exchange rates, foreign taxes and differences in financial and

accounting standards. International investing may not be for everyone. These risks may be magnified in

emerging markets. Alternative investments, including private equity funds, real estate funds, hedge funds,

managed futures funds, and funds of hedge funds, private equity, and managed futures funds, are

speculative and entail significant risks that can include losses due to leveraging or\other speculative

investment practices, lack of liquidity, volatility of returns, restrictions on transferring interests in a fund,

potential lack of diversification, absence and/or delay of information regarding valuations and pricing,

complex tax structures and delays in tax reporting, less regulation and higher fees than mutual funds and

risks associated with the operations, personnel and processes of the advisor. Master Limited Partnerships

(MLPs) are limited partnerships or limited liability companies that are taxed as partnerships and whose

interests (limited partnership units or limited liability company units) are traded on securities exchanges like

shares of common stock. Currently, most MLPs operate in the energy, natural resources or real estate

sectors. Investments in MLP interests are subject to the risks generally applicable to companies in the

energy and natural resources sectors, including commodity pricing risk, supply and demand risk, depletion

risk and exploration risk; and MLP interests in the real estate sector are subject to special risks, including

interest rate and property value fluctuations, as well as risks related to general and economic conditions.

Because of their narrow focus, MLPs maintain exposure to price volatility of commodities and/or

underlying assets and tend to be more volatile than investments that diversify across many sectors and

companies. MLPs are also subject to additional risks including: investors having limited control and rights

to vote on matters affecting the MLP, limited access to capital, cash flow risk, lack of liquidity, dilution risk,

conflict of interests, and limited call rights related to acquisitions.

Mortgage backed securities also involve prepayment risk, in that faster or slower prepayments than

expected on underlying mortgage loans can dramatically alter the yield-to-maturity of a mortgage-backed

security and prepayment risk includes the possibility that a fund may invest the proceeds at generally lower

interest rates.

37

interest rates.

Tax managed funds may not meet their objective of being tax-efficient.

Real estate investments are subject to special risks, including interest rate and property value fluctuations,

as well as risks related to general and economic conditions. High yield fixed income securities, also known

as “junk bonds”, are considered speculative, involve greater risk of default and tend to be more volatile than

investment grade fixed income securities.

Credit quality is a measure of a bond issuer’s creditworthiness, or ability to repay interest and principal to

bondholders in a timely manner. The credit ratings shown are based on security rating as provided by

Standard & Poor’s, Moody’s and/or Fitch, as applicable. Credit ratings are issued by the rating agencies for

the underlying securities in the fund and not the fund itself, and the credit quality of the securities in the

fund does not represent the stability or safety of the fund. Credit ratings shown range from AAA, being the

highest, to D, being the lowest based on S&P and Fitch’s classification (the equivalent of Aaa and C,

respectively, by Moody(s). Ratings of BBB or higher by S&P and Fitch (Baa or higher by Moody’s) are

considered to be investment grade-quality securities. If two or more of the agencies have assigned different

ratings to a security, the highest rating is applied. Securities that are not rated by all three agencies are listed

as “NR”.

“Alpha tilt strategies comprise a core holding of stocks that mimic a benchmark type index such as theS&P 500 to which additional securities are added to help tilt the fund toward potentially outperforming themarket in an effort to enhance overall investment returns. Tilt strategies are subject to significant timingrisk and could potentially expose investors to extended periods of underperformance.”

Custom Account Index: The Custom Account Index is an investment benchmark based on your historical

target allocations and/or manager selection that you may use to evaluate the performance of your account.

The Custom Account index does take into consideration certain changes that may have occurred in your

portfolio since the inception of your account, i.e., asset class and/or manager changes. However, in some

circumstances, it may not be an appropriate benchmark for use with your specific account composition. For

detailed report of the historical composition of this blend please contact your Financial Advisor.

Peer Groups

Peer Groups are a collection of similar investment strategies that essentially group investment products that

share the same investment approach. Peer Groups are used for comparison purposes to compare and

illustrate a clients investment portfolio versus its peer across various quantitative metrics like performance

and risk. Peer Group comparison is conceptually another form of benchmark comparison whereby the

actual investment can be ranked versus its peer across various quantitative metrics.

All Peer Group data are provided by Investment Metrics, LLC.

The URL below provides all the definitions and methodology about the various Peer Groups

https://www.invmetrics.com/style-peer-groups

Peer Group Ranking Methodology

A percentile rank denotes the value of a product in which a certain percent of observations fall within a peer

group. The range of percentile rankings is between 1 and 100, where 1 represents a high statistical value and

100 represents a low statistical value.

The 30th percentile, for example, is the value in which 30% of the highest observations may be found, the

The 30th percentile, for example, is the value in which 30% of the highest observations may be found, the

65th percentile is the value in which 65% of the highest observations may be found, and so on.

Percentile rankings are calculated based on a normalized distribution ranging from 1 to 100 for all products

in each peer group, where a ranking of 1 denotes a high statistical value and a ranking of 100 denotes a low

statistical value. It is important to note that the same ranking methodology applies to all statistics, implying

that a ranking of 1 will always mean highest value across all statistics.

For example, consider a risk/return assessment using standard deviation as a measure of risk. A percentile

ranking equal to 1 for return denotes highest return, whereas a percentile ranking of 1 for standard deviation

denotes highest risk among peers.

In addition, values may be used to demonstrate quartile rankings. For example, the third quartile is also

known as the 75th percentile, and the median is the 50th percentile.

Alternatives

Graystone Consulting is a business of Morgan Stanley Smith Barney LLC. (“Morgan Stanley”) Thismaterial is not to be reproduced or distributed to any other persons (other than professional advisors of theinvestors) and is intended solely for the use of the persons to whom it has been delivered. This material isnot for distribution to the general public.

The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation topurchase or sell any security, other investment or service, or to attract any funds or deposits. Investmentsmentioned may not be suitable for all clients. Any product discussed herein may be purchased only after aclient has carefully reviewed the offering memorandum and executed the subscription documents. MorganStanley has not considered the actual or desired investment objectives, goals, strategies, guidelines, orfactual circumstances of any investor in any fund(s). Before making any investment, each investor shouldcarefully consider the risks associated with the investment, as discussed in the applicable offeringmemorandum, and make a determination based upon their own particular circumstances, that the investmentis consistent with their investment objectives and risk tolerance.

This information is being provided as a service of your Graystone Institutional Consultant and does notsupersede or replace your Morgan Stanley customer statement. The information is as of the date(s) notedand subject to daily market fluctuation. Your interests in Alternative Investments, which may have beenpurchased through us, are generally not held here, and are generally not covered by SIPC. The informationprovided to you: 1) is included as a service to you, valuations for certain products may not be available; 2)is derived from you or another external source for which we are not responsible, and may have beenmodified to take into consideration capital calls or distributions to the extent applicable; 3) may not reflectactual shares, share prices or values; 4) may include invested or distributed amounts in addition to a fairvalue estimate; and 5) should not be relied upon for tax reporting purposes. Notwithstanding the foregoing,1) to the extent this report displays Alternative Investment positions within a Morgan Stanley IndividualRetirement Account (“IRA”), such positions are held by Morgan Stanley Smith Barney LLC as thecustodian of your Morgan Stanley IRA; and 2) if your Alternative Investment positon(s) is held by us and isregistered pursuant to the Securities Act of 1933, as amended, your Alternative Investment position(s) iscovered by SIPC.

Alternatives may be either traditional alternative investment vehicles or non-traditional alternative strategyvehicles. Traditional alternative investment vehicles may include, but are not limited to, Hedge Funds,Fund of Funds (both registered and unregistered), Exchange Funds, Private Equity Funds, Private CreditFunds, Real Estate Funds, and Managed Futures Funds. Non-traditional alternative strategy vehicles mayinclude, but are not limited to, Open or Closed End Mutual Funds, Exchange-Traded and Closed-EndFunds, Unit Investment Trusts, exchange listed Real Estate Investment Trusts (REITs), and Master LimitedPartnerships (MLPs). These non-traditional alternative strategy vehicles also seek alternative-like exposurebut have significant differences from traditional alternative investment vehicles. Non-traditional alternativestrategy vehicles may behave like, have characteristics of, or employ various investment strategies andtechniques for both hedging and more speculative purposes such as short-selling, leverage, derivatives, and38

techniques for both hedging and more speculative purposes such as short-selling, leverage, derivatives, andoptions, which can increase volatility and the risk of investment loss. Characteristics such as correlation totraditional markets, investment strategy, and market sector exposure can play a role in the classification of atraditional security being classified as alternative.

Traditional alternative investment vehicles are illiquid and usually are not valued daily. The estimatedvaluation provided will be as of the most recent date available and will be included in summaries of yourassets. Such valuation may not be the most recent provided by the fund in which you are invested. Norepresentation is made that the valuation is a market value or that the interest could be liquidated at thisvalue. We are not required to take any action with respect to your investment unless valid instructions arereceived from you in a timely manner. Some positions reflected herein may not represent interests in thefund, but rather redemption proceeds withheld by the issuer pending final valuations which are not subjectto the investment performance of the fund and may or may not accrue interest for the length of thewithholding. Morgan Stanley does not engage in an independent valuation of your alternative investmentassets. Morgan Stanley provides periodic information to you including the market value of an alternativeinvestment vehicle based on information received from the management entity of the alternative investmentvehicle or another service provider.

Traditional alternative investment vehicles often are speculative and include a high degree of risk. .Investors should carefully review and consider potential risks before investing. Certain of these risks mayinclude but are not limited to:• Loss of all or a substantial portion of the investment due to leveraging, short-selling, or other speculative practices;• Lack of liquidity in that there may be no secondary market for afund;• Volatility of returns;• Restrictions on transferring interests in a fund;• Potential lack of diversificationand resulting higher risk due to concentration of trading authority when a single advisor is utilized;•Absence of information regarding valuations and pricing;• Complex tax structures and delays in taxreporting;• Less regulation and higher fees than mutual funds; and• Risks associated with the operations,personnel, and processes of the manager. As a diversified global financial services firm, Morgan StanleyWealth Management engages in a broad spectrum of activities including financial advisory services,investment management activities, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, researchpublication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Managementtherefore engages in activities where Morgan Stanley Wealth Management’s interests may conflict with theinterests of its clients, including the private investment funds it manages. Morgan Stanley WealthManagement can give no assurance that conflicts of interest will be resolved in favor of its clients or anysuch fund.

Indices are unmanaged and investors cannot directly invest in them. Composite index results are shown forillustrative purposes and do not represent the performance of a specific investment. Past performance is noguarantee of future results. Actual results may vary. Diversification does not assure a profit or protectagainst loss in a declining market. Any performance or related information presented has not been adjustedto reflect the impact of the additional fees paid to a placement agent by an investor (for Morgan Stanleyplacement clients, a one-time upfront Placement Fee of up to 3%, and for Morgan Stanley investmentadvisory clients, an annual advisory fee of up to 2.5%), which would result in a substantial reduction in thereturns if such fees were incorporated.

For most investment advisory clients, the program account will be charged an asset-based wrap fee everyquarter (“the Fee”). In general, the Fee covers investment advisory services and reporting. In addition to theFee, clients will pay the fees and expenses of any funds in which their account is invested. Fund fees andexpenses are charged directly to the pool of assets the fund invests in and impact the valuations. Clientsmust understand that these fees and expenses are an additional cost and will not be included in the Feeamount in the account statements.

As fees are deducted quarterly, the compounding effect will be to increase the impact of the fees by anamount directly related to the gross account performance. For example, for an account with an initial valueof $100,000 and a 2.5% annual fee, if the gross performance is 5% per year over a three year period, thecompounding effect of the fees will result in a net annual compound rate of return of approximately 2.40%per year over a three year period, and the total value of the client’s portfolio at the end of the three yearperiod would be approximately $115,762.50 without the fees and $107,372.63 with the fees. Please see theapplicable Morgan Stanley Smith Barney LLC Form ADV Part 2A for more information including a

applicable Morgan Stanley Smith Barney LLC Form ADV Part 2A for more information including adescription of the fee schedule. It is available at www.morganstanley.com/ADV<http://www.morganstanley.com/ADV> <http://www.morganstanley.com/ADV> or from your FinancialAdvisor/Private Wealth Advisor.

Alternative investments involve complex tax structures, tax inefficient investing, and delays in distributingimportant tax information. Individual funds have specific risks related to their investment programs that willvary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley does notprovide tax or legal advice. Interests in alternative investment products are offered pursuant to the terms ofthe applicable offering memorandum, are distributed by Morgan Stanley Smith Barney LLC and certain ofits affiliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley orany of its affiliates, (3) are not guaranteed by Morgan Stanley and its affiliates, and (4) involve investmentrisks, including possible loss of principal. Morgan Stanley Smith Barney LLC is a registered broker-dealer,not a bank.

SIPC insurance does not apply to precious metals, other commodities, or traditional alternative investments.

© 2018 Morgan Stanley Smith Barney LLC. Member SIPC.

Money Market Funds

You could lose money in Money Market Funds. Although MMFs classified as government funds (i.e.,MMFs that invest 99.5% of total assets in cash and/or securities backed by the U.S government) and retailfunds (i.e., MMFs open to natural person investors only) seek to preserve value at $1.00 per share, theycannot guarantee they will do so. The price of other MMFs will fluctuate and when you sell shares they maybe worth more or less than originally paid. MMFs may impose a fee upon sale or temporarily suspend salesif liquidity falls below required minimums. During suspensions, shares would not be available forpurchases, withdrawals, check writing or ATM debits. A MMF investment is not insured or guaranteed bythe Federal Deposit Insurance Corporation or other government agency.

39

This document is for institutional use only and redistribution is expressly prohibited.

Summary Investment Report

Cal Poly Pomona Foundation

All Accounts

July 1, 2019 - December 31, 2019

40

TOTAL PORTFOLIO MARKET VALUE AS OF 12/31/2019

Investment CategoryAdjusted

Market Value Allocation %Portfolio Total Core Funds $497,160.00 100.00%Portfolio Total $497,160.00 100.00%

All Accounts

Fund performance is depicted net of fees. Manager and strategy performance is net of sub-advisor management fees and gross of other Commonfund Fund expenses. Past performance is no assuranceof future returns.

2/6/2020 6:35:19 PM Cal Poly Pomona Foundation 141

NON-MARKETABLE INVESTMENTS SINCE INCEPTION TO VALUE DATE

Non-Marketable Fund Incep. Date Commitment Capital Calls DistributionsNet Income/

(Loss) Value Date Market Value IRR1 Multiple2

Private Equity Partners VII 9/30/2007 $750,000.00 $689,625.00 ($970,675.00) $696,651.00 9/30/2019 $415,601.00 13.71% 2.01Capital Partners IV 9/30/2007 $250,000.00 $232,500.00 ($292,841.00) $183,415.00 9/30/2019 $123,074.00 9.97% 1.79Total Core Funds $1,000,000.00 $922,125.00 ($1,263,516.00) $880,066.00 $538,675.00 12.67% 1.95Non-Marketable Total $1,000,000.00 $922,125.00 ($1,263,516.00) $880,066.00 $538,675.00 12.67% 1.95

NON-MARKETABLE INVESTMENTS ROLL FORWARD FROM VALUE DATE TO 12/31/2019

Non-Marketable Fund Incep. Date CommitmentValuation

DateMost Recent

Valuation

Capital Callssince Valuation

Date

Distributionssince Valuation

DateAdjusted

Market ValuePrivate Equity Partners VII 9/30/2007 $750,000.00 9/30/2019 $415,601.00 $2,250.00 ($36,271.00) $381,580.00Capital Partners IV 9/30/2007 $250,000.00 9/30/2019 $123,074.00 $0.00 ($7,494.00) $115,580.00Total Core Funds $1,000,000.00 $538,675.00 $2,250.00 ($43,765.00) $497,160.00Non-Marketable Total $1,000,000.00 $538,675.00 $2,250.00 ($43,765.00) $497,160.00

1. IRR, or internal rate of return, represents the annualized implied discount rate calculated from the cash flows to/from the partnerships since inception of the respective partnership through the valuedate. The IRR performance calculation is net of all fees and carried interest.2. Multiple represents a cash-on-cash return calculated by adding distributions to the ending market value and dividing the total value by capital called -((Distributions to date + Adjusted ending market value)/$ called to date). The Multiple performance calculation is net of all fees and carried interest.

All Accounts



PORTFOLIO PERFORMANCE AS OF 12/31/2019

ASSETS INVESTMENT PERFORMANCE

InvestmentMarket Value

($)Average

Allocation

MTD QTD FYTD 1 Year 3 Years 5 Years 10 YearsAccount

InceptionAccount

Inception DatePrivate Equity Partners VII 381,580 76.8% 0.00 2.49 4.50 11.39 18.44 17.14 15.72 8.00 12/31/2007US Private Equity 381,580 76.8% 0.00 2.49 4.50 11.39 18.44 17.14 15.72 8.00 12/31/2007Capital Partners IV 115,580 23.2% 0.00 -1.67 1.46 2.91 11.98 10.52 11.67 4.61 12/31/2007Multi-Asset 115,580 23.2% 0.00 -1.67 1.46 2.91 11.98 10.52 11.67 4.61 12/31/2007Total Non-Marketable 497,160 100.0% 0.00 1.51 3.79 9.38 16.92 15.51 8.45 1.12 9/30/2005Total Portfolio 497,160 100.0% 0.00 1.51 3.79 9.38 16.92 15.51 11.50 5.78 9/30/2003

Performance returns in open-end investment products include closed account history in group composites, if applicable. Performance is calculated monthly. Therefore, returns for any investments in anyfund for less than a full month are not included in these performance figures.

Investments in Programs for closed-end investment products are carried as of the most recent valuation date, which may not correspond to the marketable securities valuation dates.Distressed Debt programs are reported with a one quarter lag. For example, if the report 'As of' date is 9/30/YY then Distressed Debt programs are represented using 6/30/YY, or previous quarter values.Private Capital programs are reported with a one quarter lag. For example, if the report 'As of' date is 9/30/YY then Private Capital and Real Estate programs are represented using 6/30/YY, or previousquarter values. Private Investment returns are normally reported as an Internal Rate of Return (IRR). All other Commonfund investment returns are reported as Time Weighted Rates of Return (TWR). ForConsolidated Performance reporting purposes, TWRs are used for all individual and composite returns.

All Accounts



Commonfund Important Notes

PERFORMANCE | OPEN-END INVESTMENT PRODUCTSUnless otherwise indicated, performance of open-end Investment Products shown is unaudited, net of applicable management, performance and other fees and expenses, presumes reinvestment of earnings and excludes investor specific sales and other charges. Fees may be modified or waived for certain investors. Please refer to an Investment Product’s Prospectus or the Investment Manager’s Form ADV Part 2A for more information regarding the

Investment Product’s fees, charges and expenses. An investor’s actual performance and actual fees may differ from the performance information shown due to, among other factors, capital contributions and withdrawals or redemptions, different share classes and eligibility to participate in “new issues.”

PERFORMANCE | CLOSED-END INVESTMENT PRODUCTSUnless otherwise indicated, performance of closed-end Investment Products shown is net of all fees and any carried interest and excludes commitments by the applicable general partner and any limited partners that do not pay a management fee. Each Investment Product’s Internal Rate of Return (“IRR”) should be evaluated in light of the information and risks disclosed in the respective Prospectus. Certain investors in an Investment Product may receive a management fee and management fee discount; performance data herein reflects the weighted average blended management fee applicable to actual limited partners of such vehicles. Return information is calculated on a dollar-weighted (e.g., internal rate of return), since inception basis. There can be no assurance that unrealized investments ultimately will be realized at the valuations used in calculating IRRs or Net Multiples or that the calculated IRRs will be obtained. Actual realized returns will depend on, among other factors, future operating results, the value of assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale. Certain Investment Products use leverage to finance investments, which may involve a high degree of financial risk. Such Borrowings has the potential to enhance overall returns that exceed the Investment Product’s cost of

borrowed funds; however, borrowings will further diminish returns (or increase losses on capital) to the extent overall returns are less than the Investment Product’s cost of borrowed funds. Where applicable, returns take into

consideration the reinvestment or “recycling” of investment proceeds.

ADVISORY SERVICESAdvisory services, including those described under the trade name “Commonfund Strategic Solutions,” are generally provided by Comanco or, on occasion, by CCI and subject to an investment advisory agreements. Comanco’s and

CCI’s Form ADV Part 2A will be provided upon request.

BENCHMARKS AND FINANCIAL INDICESBenchmarks and financial indices are shown for illustrative purposes only. They provide general market data that serves as point of reference to compare the performance of Investment Product’s with the performance of other

securities that make up a particular market. Such benchmark and indices are not available for direct investment and their performance does not reflect the expenses associated with the management of an actual portfolio, the actual cost of investing in the instruments that comprise it or other fees. An Investment Product’s investment objective is not restricted to the securities and instruments comprising any one index. No representation is made that any benchmark or index is an appropriate measure for comparison. For a list of commonly used indices, please visit www.commonfund.org/important-disclosures. This list may not represent all available indices or those indices used in this material.

Past performance is not indicative of future results. An investor may lose all or a substantial portion of their investment in an Investment Product.

Interests in Commonfund funds and those offered by Commonfund’s affiliates are placed by Commonfund Securities, Inc., a member FINRA, SIPC. www.commonfund.org/important-disclosures


http://www.commonfund.org/important-disclosures

Benchmark Descriptions

3-Month Treasury Bill Index is the average coupon - equivalent yield of the weekly 3-Month U.S. Treasury bill auctions during the month.

Barclays Capital U.S. Treasury Inflation Protected Securities (“TIPS") includes all publicly issued, U.S. Treasury inflation-protected securities that have at least one year remaining to maturity, are rated investment grade and have $250 million or more of outstanding face value.

Bloomberg Barclays US Aggregate Bond Index measures the performance of the U.S. investment grade bond market. The index invests in a wide spectrum of public, investment-grade, taxable, fixed income securities in the U.S. – including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.

Bloomberg Commodity Index (“BCOM”) is calculated on an excess return basis and reflects commodity futures price movements. The index rebalances annually weighted 2/3 by trading volume and 1/3 by world production and weight-caps are applied at the commodity, sector and group level for diversification. Roll period typically occurs from 6th-10th business day based on the roll schedule.

Citigroup World Government Bond Index (“WGBI”) measures the performance of fixed-rate, local currency, investment grade sovereign bonds. The WGBI is a widely used benchmark that currently comprises sovereign debt from over twenty countries, denominated in a variety of currencies, and has more than twenty-five years of history available. The WGBI provides a broad benchmark for the global sovereign fixed income market. Sub-indices are available in any combination of currency, maturity, or rating.

CS Leveraged Loan Index is an index designed to mirror the investable universe of the U.S. dollar denominated leveraged loan market. The index inception is January 1992. The index frequency is monthly. New loans are added to the index on their effective date if they qualify according to the following criteria: loans must be rated “5B” or lower; only fully-funded term loans are included; the tenor must be at least one year; and the Issuers must be domiciled in developed countries (i.e., issuers from developing countries are excluded). Fallen angels are added to the index subject to the new loan criteria. Loans are removed from the index when they are upgraded to investment grade, or when they exit the market (for example, at maturity, refinancing or bankruptcy workout). Note that issuers remain in the index following default. Total return of the index is the sum of three components: principal, interest, and reinvestment return. The cumulative return assumes that coupon payments are reinvested into the index at the beginning of each period.

Dow Jones US Select Real Estate Securities Index (“RESI") represents equity real estate investment trusts (“REITs”) and real estate operating companies traded in the U.S. The Dow Jones U.S. Select REIT Index is a subset of the Dow Jones Americas Select RESISM and includes only REITs and REIT-like securities.

GMAP Composite Benchmark consists of the following components: MSCI ACWI Total Return Net Index (70%); Bloomberg Barclays U.S. Aggregate Bond Index (30%). Prior to December 1, 2018 it consisted of: MSCI ACWI Index - Total Return (50.0%), Bloomberg Barclays U.S. Aggregate Bond Index (20.0%), HFRI FOF Conservative Index (17.5%), MSCI US REIT Index (5.0%), Bloomberg Commodity Index (5.0%), S&P Global Natural Resources Index (2.5%).

HFRI FOF:Conservative Index seeks consistent returns by primarily investing in funds that generally engage in more 'conservative' strategies such as Equity Market Neutral, Fixed Income Arbitrage, and Convertible Arbitrage; exhibits a lower historical annual standard deviation than the HFRI Fund of Funds Composite Index. A fund in the HFRI FOF Conservative Index shows generally consistent performance regardless of market conditions.

HFRI Monthly Indices (“HFRI”) Most HFRI are equally weighted performance indices, utilized by numerous hedge fund managers as a benchmark for their own hedge funds. The HFRI are broken down into four main strategies, each with multiple sub-strategies. All single-manager HFRI Index constituents are included in the HFRI Fund Weighted Composite, which accounts for over 2000 funds listed on the internal HFR Database. Funds included in the HFRI Monthly Indices must: report monthly returns; report net of all fees returns; report assets in U.S. dollars; and, have at least $50 million under management or have been actively trading for at least twelve months. Funds are eligible for inclusion in the HFRI the month after their addition to HFR Database. If a fund in an index liquidates or closes, that fund's performance will be included in the HFRI up to the fund's last reported performance update. Fund of Funds are not included in the HFRI Fund Weighted Composite Index. Both domestic and offshore funds are included in the HFRI. In cases where a manager lists mirrored-performance funds, only the fund with the larger asset size is included in the HFRI. FX-hedged versions of HFRI Indices are calculated by applying to the USD index value the cost of a rolling monthly foreign exchange contract on the relevant currency. The HFRI are updated three times a month. The current month and the prior three months are left as estimates and are subject to change. All performance prior to that is locked and is no longer subject to change. Due to contractual obligations, Comanco does not disclose the particular funds behind any index. See https://www.hedgefundresearch.com/hfri-index-methodology

ICE BofAML 1-3 Year US Treasury Index is an unmanaged index that tracks the performance of the direct sovereign debt of the U.S. Government having a maturity of at least one year and less than three years. It is not possible to invest directly in an unmanaged index. BOFA Merrill Lynch is licensing the BOFA Merrill Lynch Indices "As Is," makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the BOFA Merrill Lynch Indices or any data included in, related to, or derived therefrom, assumes no liability in connection with their use, and does not sponsor, endorse, or recommend Commonfund, or any of its products or services.

ICE BofAML 3-Month US Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding Treasury Bill that matures closest to, but not beyond, three months from the rebalancing date. To qualify for selection, an issue must have settled on or before the month-end rebalancing date.

ICE BofAML High Yield Master II Index tracks the performance of US dollar denominated below investment grade corporate debt publicly issued in the US domestic market.

MSCI ACWI ex USA net captures large and mid-cap representation across 22 of 23 developed markets countries – excluding the U.S. With 1,003 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

MSCI ACWI Total Return Net Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes. The developed market country indexes included are as follows: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the U.S. The emerging market country indexes included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates. (List as of January 2016.)


Benchmark Descriptions

MSCI EAFE Net Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The MSCI EAFE Index consists of the following 21 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. (List as of January 2016.)

MSCI Emerging Markets Free Net Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. (List as of January 2016.)

MSCI Europe Net Index captures large and mid cap representation across 15 Developed Markets (DM) countries in Europe. With 446 constituents, the index covers approximately 85% of the free float-adjusted market capitalization across the European Developed Markets equity universe.

MSCI Japan Net Index is designed to measure the performance of the large and mid cap segments of the Japanese market. With 321 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in Japan.

MSCI US REIT Index is a free float‐adjusted market capitalization weighted index that is comprised of Equity REIT securities. The MSCI US REIT Index includes securities with exposure to core real estate (e.g., residential and retail properties) as well as securities with exposure to other types of real estate (e.g., casinos, theaters).

MSCI World Energy Index is designed to capture the large and mid-cap segments across 23 Developed Markets (DM) countries. All securities in the index are classified in the Energy sector as per the Global Industry Classification Standard (GICS®).

MSE Funds Composite Benchmark is calculated using the following components’ weights: for time periods after April 1, 2017, S&P 500 (85%) and MSCI All Country World Index excluding the U.S. Net (15%); and for time periods prior to April 1, 2017, S&P 500 (75%), MSCI All Country World Index excluding the U.S. Net (15%), and HFRI Fund of Funds Composite Index (10%). The monthly return used for the HFRI Composite FOF Index, a component of the MSE Funds Composite Benchmark, is the Flash Update return that is published by HFRI by the 5th business day of the following month. HFRI reserves the right to adjust the monthly return of the HFRI index up to four months after the month end performance date. Monthly returns for the MSE Funds Composite Benchmark may be retroactively restated based on later adjustments to the HFRI index.

Real Asset Strategies Composite Benchmark consists of the following components: Bloomberg Commodity Index (40.0%), MSCI US REIT Index (40.0%), S&P Global Natural Resources Index (20.0%)

Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000 is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set.

Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

S&P 500 Index is a widely recognized gauge of the U.S. equities market. This index is an unmanaged capitalization-weighted index consisting of 500 of the largest capitalization U.S. common stocks. The returns of the S&P 500 include the reinvestment of dividends.

S&P Global Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified and investable equity exposure across three primary commodity-related sectors: agribusiness, energy, and metals & mining.

S&P/LSTA Leveraged Loan Index is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market based upon market weightings, spreads and interest payments. Eligible for inclusion in the LLI loans are U.S. dollar denominated senior secured loans with a minimum initial term of one year, minimum initial spread of LIBOR + 125 basis points and initial funding of $50M. The index covers all issuers regardless of origin, however all facilities must be denominated in U.S. dollar.


This document is for institutional use only and redistribution is expressly prohibited.

This communication has been approved for distribution in the UK by Commonfund UK Limited, which is authorised and regulated by the UK Financial Conduct Authority. Only certain services provided by Commonfund UK Limited are regulated by the UK Financial Conduct Authority. Please contact the London office for further information on these services.

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CAL POLY POMONA FOUNDATION, INC.INVESTMENT SUMMARY AS OF DECEMBER 31, 2019

Policy Range Policy Range Policy Portfolio Total Graystone Target Graystone Commonfund FoundationAsset Class Minimum Maximum Target Allocation Portfolio Amount Portfolio Allocation Portfolio Amount Portfolio Amount Portfolio Amount

Equities Domestic & Int'l (Dev & Emerging) 10% 65% 27% 31% 8,922,070 27.00% 8,922,070 Fixed Income 40% 85% 65% 60% 17,012,981 72.00% 17,012,981 Cash Equivalents 0% 20% 0% 0% - Real Assets 0% 10% 0% 0% - Real Estate 0% 10% 0% 0% - Alternative Investments 0% 25% 8% 9% C/F Private Equity & Capital Partners 497,160 497,160 Innovation Way Infrastructure 489,088 489,088 Hamilton Lane-Private Equity 1,665,977 1% 1,665,977 -

100% 100% 28,587,276 100% 27,601,028 497,160 489,088

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9ay 29, 2018 David Prenovost, CFO Cal Poly Pomona Foundation, Inc. 3801West Temple Avenue, Bldg 55 Pomona, CA 91768 We are pleased to confirm our understanding of the services we are to provide for Cal Poly Pomona Foundation, Inc. (the Foundation) for the year ending June 30, 2020. OUR RESPONSIBILITIES, AUDIT OBJECTIVES AND PROCEDURES We will audit the financial statements of Cal Poly Pomona Foundation, Inc., which comprise the statement of net position as of June 30, 2020, and the related statements of revenues, expenses, and changes in net position, and cash flows for the year then ending, and the related notes to the financial statements (the financial statements). Accounting standards generally accepted in the United States of America provide for certain required supplementary information (RSI), such as management’s discussion and analysis (MD&A), to supplement Cal Poly Pomona Foundation, Inc.’s basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to Cal Poly Pomona Foundation, Inc.’s RSI in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The following RSI is required by U.S. generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited:

1) Management’s Discussion and Analysis 2) Schedule of Foundation’s Proportionate Share of the Net Pension Liability 3) Schedule of Foundation Contributions 4) Other Postemployment Benefits Plan 5) Schedule of Revenues, Expenses, and Changes in Net Position for the Debt Service Coverage Ratio

We have also been engaged to report on supplementary information other than RSI that accompanies the Foundation’s financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America, and we will provide an opinion on it in relation to the financial statements as a whole, in a report combined with our auditor’s report on the financial statements:

1) Schedule of Expenditures of Federal Awards 2) Schedule of Net Position 3) Schedule of Revenues, Expenses, and Changes in Net Position 4) Other Information

Aldrich CPAs + Advisors LLP

7676 Hazard Center Dr., Suite 1300

San Diego, CA 92108

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AUDIT OBJECTIVE The objective of our audit is the expression of an objective opinion about whether your financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. The objective also includes reporting on:

Internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards.

Internal control over compliance related to major programs and an opinion (or disclaimer of opinion) on

compliance with federal statutes, regulations, and the terms and conditions of federal awards that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

The Government Auditing Standards report on internal control over financial reporting and on compliance and other matters will include a paragraph that states that (1) the purpose of the report is solely to describe the scope of testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance, and (2) the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. The Uniform Guidance report on internal control over compliance will include a paragraph that states that the purpose of the report on internal control over compliance is solely to describe the scope of testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Both reports will state that the report is not suitable for any other purpose. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of the Uniform Guidance, and will include tests of accounting records, a determination of major program(s) in accordance with the Uniform Guidance, and other procedures we consider necessary for us to obtain reasonable assurance required to express such an opinion. We will issue written reports upon completion of our single audit. Our reports will be addressed to the Audit Committee of Cal Poly Pomona Foundation, Inc. We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or add an emphasis-of-matter or other-matter paragraph. If our opinions are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or issue reports, or we may withdraw from this engagement. AUDIT PROCEDURES - GENERAL An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve professional judgment about the number of transactions to be examined and the areas to be tested. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by the Foundation’s management, as well as evaluating the overall presentation of the financial statements. We will plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the Foundation or to acts by management or employees acting on behalf of the Foundation. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse.

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Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us, even though the audit is properly planned and performed in accordance with U.S. generally accepted auditing standards and Government Auditing Standards. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or on major programs. However, we will inform the appropriate level of management of any material errors of any fraudulent financial reporting or misappropriation of assets that comes to our attention. We will also inform the appropriate level of management of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential, and of any material abuse that comes to our attention. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit as stated above and does not extend to any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We may also request written representations from the Foundation’s attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about your responsibilities for the financial statements; schedule of expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by generally accepted auditing standards. AUDIT PROCEDURES—INTERNAL CONTROL Our audit will include obtaining an understanding of the Foundation and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. As required by the Uniform Guidance, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to the Uniform Guidance. An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. Accordingly, we will express no such opinion. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Government Auditing Standards, and the Uniform Guidance. AUDIT PROCEDURES—COMPLIANCE As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the Foundation’s compliance with provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance, and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.

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The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the Foundation’s major programs. The purpose of these procedures will be to express an opinion on Cal Poly Pomona Foundation, Inc.’s compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to the Uniform Guidance. OTHER SERVICES We may also provide the following bookkeeping or consulting services:

a. Preparation of proposed journal entries. b. Consulting on accounting and income tax matters. c. Assist with the reconciliations or calculations of various balance sheet accounts.

These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. These other services are limited to the financial statement services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities. We may advise management with regard to tax positions taken in the preparation of the tax return, but management must make all decisions with regard to those matters. MANAGEMENT RESPONSIBILITIES Management is responsible for (1) designing, implementing, establishing and maintaining effective internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, including internal controls over federal awards, and for evaluating and monitoring ongoing activities to help ensure that appropriate goals and objectives are met; (2) following laws and regulations; (3) ensuring that there is reasonable assurance that government programs are administered in compliance with compliance requirements; and (4) ensuring that management and financial information is reliable and properly reported. Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of the financial statements, schedule of expenditures of federal awards, and all accompanying information in conformity with U.S. generally accepted accounting principles; and for compliance with applicable laws and regulations (including federal statutes) and the provisions of contracts and grant agreements (including award agreements). Your responsibilities also include identifying significant contractor relationships in which the contractor has responsibility for program compliance and for the accuracy and completeness of that information. Management is also responsible for making all financial records and related information available to us, and for the accuracy and completeness of that information. You are also responsible for providing us with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, (2) access to personnel, accounts, books, records, supporting documentation, and other information as needed to perform an audit under the Uniform Guidance, (3) additional information that we may request for the purpose of the audit, and (4) unrestricted access to persons within the Foundation from whom we determine it necessary to obtain audit evidence. Your responsibilities include adjusting the financial statements to correct material misstatements and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements as a whole.

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You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the Foundation involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the Foundation received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the Foundation complies with applicable laws, regulations, contracts, agreements, and grants. Management is also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements, or abuse that we report. Additionally, as required by the Uniform Guidance, it is management’s responsibility to evaluate and monitor noncompliance with federal statutes, regulations, and the terms and conditions of federal awards; take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; promptly follow up and take corrective action on reported audit findings; and prepare a summary schedule of prior audit findings and a separate corrective action plan. You are responsible for identifying all federal awards received and understanding and complying with the compliance requirements and for the preparation of the schedule of expenditures of federal awards (including notes and noncash assistance received) in conformity with the Uniform Guidance. You agree to include our report on the schedule of expenditures of federal awards in any document that contains and indicates that we reported on the schedule of expenditures of federal awards. You also agree to include the audited financial statements with any presentation of the schedule of expenditures of federal awards that includes our report thereon OR make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued with our report thereon. Your responsibilities include acknowledging to us in the representation letter that (1) you are responsible for presentation of the schedule of expenditures of federal awards in accordance with the Uniform Guidance; (2) you believe the schedule of expenditures of federal awards, including its form and content, is stated fairly in accordance with the Uniform Guidance; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards. You are also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U.S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplemental information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon. Your responsibilities include acknowledging to us in the representation letter that (1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. You are also responsible for providing management’s views on our current findings, conclusions, and recommendations, as well as your planned corrective actions for the report, and for the timing and format for providing that information.

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You agree to assume all management responsibilities relating to the financial statements, schedule of expenditures of federal awards, and related notes, and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter the services provided and that you have evaluated the adequacy of our services and have reviewed and approved the results of the services and have accepted responsibility for them. Further, you agree to oversee the nonaudit services by designating an individual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of the services; and accept responsibility for them. ENGAGEMENT PERSONNEL, FEES, AND OTHER We understand that your employees will prepare all cash, accounts receivable, and other confirmations we request and will locate any documents selected by us for testing. At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that summarizes our audit findings within 30 days of report issuance. It is management’s responsibility to electronically submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditor’s reports, and corrective action plan) along with the Data Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic submission and certification. The Data Collection Form and the reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s reports or nine months after the end of the audit period. We will provide copies of our reports to the Foundation; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. Andy Maffia is the engagement partner and is responsible for supervising the engagement and signing the report or authorizing another individual to sign it. Billings for these services will be invoiced in accordance with our attached Aldrich CPAs + Advisors LLP General Business Terms & Conditions. We estimate that our fees for the audit and tax returns to be the following:

Year Financial

Statement Audit Single Audit 990 June 30, 2020 $53,300 $18,380 Hourly as needed

Any consulting necessary regarding the implementation of the lease standard (GASB 87) will be billed as out of scope based on our hourly rates. However, our fees are not contingent on the results of our services. In addition, our fee estimate is based on the assumptions and management responsibilities contained in this letter. Accordingly, if significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter and the attached Aldrich CPAs + Advisors LLP General Business Terms & Conditions, please sign the enclosed copy and return it to us. Very truly yours,

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ACCEPTED:

This letter correctly sets forth the understanding of Cal Poly Pomona Foundation, Inc.:

Management:

By: Title:

Governance:

By: Title:

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1 Aldrich CPAs + Advisors LLP Assurance General Terms and Conditions

9/19

ALDRICH CPAS + ADVISORS LLP GENERAL BUSINESS TERMS & CONDITIONS

ASSURANCE & FINANCIAL STATEMENT PREPARATION SERVICES

This document describes certain customary practices and general terms, conditions, and limitations (“Terms”) relating to the delivery of audit, review, compilation, agreed upon procedure and financial statement preparation services (“Services” or “Engagement”) by Aldrich CPAs + Advisors LLP (“we” or “our”). All Services Aldrich CPAs + Advisors provides to its clients or a third party (“you” or “your”) are subject to these Terms, and the terms and conditions contained in the accompanying Engagement Letter.

1. Scope of Services. Our services will be limited to the Services specifically described in our Engagement Letter. Services do not include presentation to or representation before any third party, regulator or other authorities. If services beyond those specifically described in our Engagement Letter are requested by you or required, these additional services will be provided either under a separate engagement or a modification of an existing Engagement at an additional cost. We presume requests for additional services by your personnel or agents are authorized by you. Our agreement to provide Services under the current Engagement does not obligate us to accept any other engagement.

2. Invoices. Our fees and expenses are billed on a regular basis. Unless otherwise indicated, fees and expenses quoted in our Engagement Letter are estimates, are not contingent on the results of the Services, and each invoice is payable in full on receipt. If you believe any invoice is incorrect or unacceptable, you will notify us in writing within 30 days of receipt. Aldrich CPAs + Advisors may suspend or terminate Services and charge interest on amounts due if any invoice remains unpaid more than 30 days after date of invoice.

3. Confidentiality. Aldrich CPAs + Advisors and its employees will maintain the confidentiality of your Confidential Information, as defined below. We may disclose Confidential Information if compelled by a court or governmental agency, but we will use reasonable efforts to inform you prior to such disclosure.

Aldrich CPAs + Advisors will use reasonable precautions to protect your Confidential Information, but we have no obligation to use any measures not regularly employed by us in protecting our own Confidential Information. Except as provided below, “Confidential Information” means (i) information contained in your internal financial and business records, (ii) information reported on your tax returns, and (iii) other information concerning you or your business that is marked confidential” or otherwise identified as “confidential” in writing at the time of disclosure. Confidential Information does not include information (i) that is or becomes publicly known or available without breach of our obligations under this section, (ii) is disclosed by you to another party without confidentiality restrictions, (iii) is received by us on a non-confidential basis from another party reasonably presumed to be authorized to make such disclosure, or (iv) previously known or subsequently independently developed by us.

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2 Aldrich CPAs + Advisors LLP Assurance General Terms and Conditions

4. Data Security. Aldrich CPAs + Advisors regularly communicates via email and stores and process your information, including Confidential Information, on private networks and secured provider networks, computer servers and applications (the “Cloud”). Emails and other electronically stored and transmitted information may be diverted, intercepted, altered, read, disclosed or otherwise used or communicated by unauthorized third parties. While we will use resources and select suppliers of computer services that we determine provide highly secure environments, the security and protection of email and other electronically stored or transmitted data cannot be guaranteed or warranted. Accordingly, we will not be responsible for and specifically disclaim any liability for any information security breaches whatsoever, unless such breach is the result of our gross negligence or intentional misconduct, subject to the limitations set forth in Section 12.

5. Deliverables, Documents & Files. We will deliver to you the opinions, reports, financial statements or other documents or information expressly identified in the Engagement Letter (“Deliverables”). Unless otherwise provided by applicable laws or regulations and except for the Deliverables, our work product, work papers and files will remain our property; and we retain all related intellectual property rights. We, in our sole discretion, may provide you with access to or copies of our work product, work papers and files, but you agree to pay all costs associated with such access or copies. At the conclusion of our Engagement, we will promptly return to you your original records and documents. We will retain Engagement documentation for a period of 7 years. Thereafter, we will destroy our Engagement files in accordance with our document retention policy.

6. Document Production & Testimony. If, during the Engagement or thereafter, we are requested or authorized by you, or if we are required by law or regulation, subpoena or other authorities or legal process, to produce any documents or files, or to make our personnel available in connection with our Engagement, you will reimburse us for our professional time and expenses, as well as the fees and expenses of our legal counsel or other advisors, incurred in responding to such requests.

In certain circumstances, information, particularly Confidential Information, may be protected by an accountant/client privilege; which you are responsible for recognizing, asserting and maintaining. You must notify us if you wish to claim any privilege, and we will cooperate with your reasonable instructions relating to the privilege. Any questions concerning the availability, maintenance, waiver, and process for asserting a privilege should be directed to your legal counsel. In some jurisdictions the accountant/client privilege may belong to the accountant and not the client.

7. Third Parties, Independent Contractors. In performing the Services, we may use the services of domestic and foreign (as permitted by applicable law and regulation) independent contractors, other third party personnel, and part-time or seasonal employees. By engaging us, you authorize us to allow employees of such third parties to access to your files, financial information and other Confidential Information as necessary to provide the Services. We require third parties to protect the confidentiality of Confidential Information disclosed to them; and may also require you to execute documents authorizing such disclosure. Our use of any third party does not affect our obligations to you under our Engagement Letter.

8. Reliance. Our Services, including our opinions, reports, compilations or financial statements, are provided for your benefit, and not for the benefit of any third party. You agree to indemnify and hold Aldrich harmless, in accordance with Seciton 13, from claims based on a third party’s use of or reliance on our Services.

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3 Aldrich CPAs + Advisors LLP ASSURANCE General Terms and Conditions

9. Changes in Laws, Regulations & Standards. Changes to applicable law, regulations, and accounting, auditing or professional standards could materially affect the performance of the Services, including our opinions, reports, and presentation of financial statements. Such changes may also impact the time required to complete the Services and our professional fees.

10. Independence & Conflicting Engagements. If at any time, we determine in our sole discretion that our independence or objectivity is potentially impaired or a conflict of interest exists which prevents us from providing the Services in accordance with the applicable professional and ethical standards, we will notify you of the potential impairment or conflict, and we may withdraw from the engagement, unless the impairment or conflict can be removed to the extent permitted by applicable professional and ethical standards. You agree to advise us of other actual or potential engagements involving Aldrich CPAs + Advisors.

11. Termination. You may terminate the Engagement Letter at any time by written notice to us. Subject to any restrictions imposed by applicable professions and ethical standards, we may terminate the Engagement Letter at any time upon written notice to you. Termination for any reason will not affect your obligation to pay us for fees and expenses incurred prior to termination, or our obligation to transfer files to and otherwise cooperating with successor auditors or accountants. If you terminate any Engagement Letter after we have commenced performing services under a fixed fee arrangement, you are obligated to pay us the entire fixed fee upon termination. All provisions of these Terms and the Engagement Letter will survive the termination of the Engagement Letter; except our obligation to perform Services and your obligation to pay invoices for Services not performed.

12. Warranties & Limitations. The Services performed under the Engagement Letter and Terms are professional in nature. Aldrich CPAs + Advisors warrants that it will perform the Services in good faith, with due care and in accordance with any applicable professional standards. Aldrich CPAs + Advisors specifically disclaims all other warranties, either express or implied, and makes no guarantee regarding the results of the Services and/or the use or implementation by you or any permitted third party. As your exclusive remedy for any breach of this warranty, Aldrich CPAs + Advisors will, on receipt of written notice within a reasonable time following the discovery of the breach, use diligent efforts to cure the breach.

If Aldrich CPAs + Advisors fails to provide an acceptable cure in a reasonable period of time, Aldrich CPAs + Advisors will return the professional fees paid to Aldrich CPAs + Advisors with respect to the Services giving rise to the breach, not to exceed the amount of actual and direct damages resulting from our failure to meet our obligations. This will be your sole and exclusive remedy. In no event will our liability for any claim arising out of or relating to our failure to meet our obligations under the Engagement Letter or these Terms exceed the amount of the fees actually paid to us under the Engagement Letter or extend to any indirect consequential, special, exemplary or punitive damages.

Any claim or action by either party, regardless of its nature, arising out of or relating to any matter under the Engagement Letter or these Terms must be brought with 24 months after the party first knows or has reason to know that the claim or cause of action exists, unless otherwise provided by applicable law.

13. Indemnification. You will indemnify and hold harmless, Aldrich CPAs + Advisors, its subcontractors and their personnel from any and all costs, expenses, settlements or penalties (“Liability”) related to any proceeding initiated by a third party, and to the extent that such Liability results directly or indirectly from your knowing, intentional or negligent misrepresentations, the provision of inaccurate or incomplete information by you, material errors, irregularities, fraud, embezzlements or other defalcation not detected by us, or the unauthorized disclosure of our Deliverables to a third party; provided that the Liability is not the result of our failure to comply with professional standards, these Terms or the Engagement Letter.

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4 Aldrich CPAs + Advisors LLP ASSURANCE General Terms and Conditions

14. Dispute Resolution. Aldrich CPAs + Advisors and you agree that any dispute regarding the Services will be finally resolved first through mediation, and, if unsuccessful, through arbitration. Following a good faith attempt by the parties’ representatives to resolve the dispute, non-binding mediation may be initiated by either party; and the parties will select a mediator acceptable to both and will share the cost of mediation equally. Failing resolution through mediation, the parties will submit the dispute to binding arbitration before a single arbitrator with accounting industry experience reasonably acceptable to the parties. The arbitration will be subject to the rules established by the parties or the arbitrator, if the parties cannot agree. Arbitration will take place in Clackamas County, Oregon, or such other place as the parties may agree. The findings of the arbitrator will be final and binding, and enforceable in any court with appropriate jurisdiction. Each party shall bear its own costs related to the arbitration; provided, however, the parties shall share the fees and expenses of the arbitrator equally.

You acknowledge and agree that no affiliated or related entity of Aldrich CPAs + Advisors will have any liability to you or any other person; and you will not bring any action against any such affiliated or related entity of Aldrich CPAs + Advisors in connection with the Engagement.

15. General. These Terms and the Engagement Letter represent our entire agreement and understanding concerning the Services described in the Engagement Letter, and supersede all prior negotiations, commitments or agreements. These Terms and the Engagement Letter may only be amended by our written agreement. In the event of a conflict between these Terms and the Engagement Letter, these Terms will prevail.

If either party is delayed in performance or has the inability to perform due to any breach of this agreement by the other party, act of God, labor dispute or strike, or civil disturbance, significant cyber security incident perpetrated by an external third party, or any other cause beyond that party’s control and not due to that party’s fault or negligence, then the failure to perform is excused. The other party shall have the right to terminate this agreement if such failure continues for an unreasonable period of time, and neither party shall be liable to the other party on such termination.

No waiver of any breach of these Terms or the Engagement Letter will be effective unless the waiver is in writing and signed by the applicable party. No waiver of one breach will be a waiver of any other or subsequent breach.

You may not assign the Engagement Letter to any other party without our prior written consent, except that you may assign the Engagement Letter to any party that acquires substantially all of your assets and goodwill. These Terms and the Engagement Letter is binding on Aldrich CPAs + Advisors’ and your successors and assigns. Except as expressly provided in the Engagement Letter, there are no third party beneficiaries to the Engagement Letter.

The Engagement Letter, including these Terms, and all matters relating to the Services will be governed by the laws of the State of Oregon. Any legal action related to the Services not subject to arbitration as described in Section 14 will be brought exclusively in the appropriate court located in Clackamas County, Oregon.

If any provision of these Terms or the Engagement Letter is found to be unenforceable, such finding will not affect the enforceability of other provisions; and such unenforceable provision will be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the parties.

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January 7, 2020

Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs 3801 West Temple Street, Bldg. 55 Pomona, CA 91768

We are pleased to confirm our understanding of the services we are to provide for Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs for the year ended June 30, 2020.

We will audit the financial statements of Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs, which comprise the statement of financial position as of June 30, 2020, and the related statements of activities, functional expenses, and cash flows for the year ended June 30, 2020, and the related notes to the financial statements. Also, the following supplementary information accompanying the financial statements will be subjected to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America, and we will provide an opinion on it in relation to the financial statements as a whole in a report combined with our auditor’s report on the financial statements:

1) Schedule of expenditures of federal and state awards.

2) Supplementary information required in conformity with the California Department of Education Audit Guide.

Audit Objectives

The objective of our audit is the expression of an opinion about whether your financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion. We will issue a written report upon completion of our audit of Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs’ financial statements. Our report will be addressed to the Members of the Board of Cal Poly Pomona Foundation, Inc. State Preschool, General Child

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Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs Engagement Letter Page 2 of 7

Care and Prekindergarten Programs. We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or add an emphasis-of-matter or other-matter paragraph. If our opinion is other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or issue reports, or we may withdraw from this engagement.

We will also provide a report (which does not include an opinion) on internal control related to the financial statements and compliance with the provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. The report on internal control and on compliance and other matters will include a paragraph that states that (1) the purpose of the report is solely to describe the scope of testing of internal control and compliance, and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control on compliance and (2) the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. The paragraph will also state that the report is not suitable for any other purpose. If during our audit we become aware that Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs is subject to an audit requirement that is not encompassed in the terms of this engagement, we will communicate to management and those charged with governance that an audit in accordance with U.S. generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards may not satisfy the relevant legal, regulatory, or contractual requirements.

Audit Procedures—General

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the Organization or to acts by management or employees acting on behalf of the Organization. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse.

Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us, even though the audit is properly planned and performed in accordance with U.S. generally accepted auditing standards and Government Auditing Standards. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements. However, we will inform the appropriate level of management of any material errors, fraudulent financial reporting, or misappropriation of assets that comes to our attention. We will also inform the appropriate level of

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management of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential, and of any material abuse that comes to our attention. Our responsibility as auditors is limited to the period covered by our audit and does not extend to later periods for which we are not engaged as auditors.

Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from the Organization’s attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about your responsibilities for the financial statements; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by generally accepted auditing standards.

Audit Procedures—Internal Control

Our audit will include obtaining an understanding of the Organization and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards.

An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. Accordingly, we will express no such opinion. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards and Government Auditing Standards.

Audit Procedures—Compliance

As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs’ compliance with the provisions of applicable laws, regulations, contracts, agreements, and grants. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.

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Other Services

We will assist in preparing the financial statements and related notes of the Organization in conformity with U.S. generally accepted accounting principles based on information provided by you. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards.

The other services are limited to the financial statement services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities.

Management Responsibilities

Management is responsible for (1) designing, implementing, establishing, and maintaining effective internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, and for evaluating and monitoring ongoing activities to help ensure that appropriate goals and objectives are met; (2) following laws and regulations; and (3) ensuring that management and financial information is reliable and properly reported. Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of the financial statements and all accompanying information in conformity with U.S. generally accepted accounting principles; and for compliance with applicable laws and regulations and the provisions of contracts and grant agreements.

Management is also responsible for making all financial records and related information available to us and for the accuracy and completeness of that information. You are also responsible for providing us with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, (2) additional information that we may request for the purpose of the audit, and (3) unrestricted access to persons within the organization from whom we determine it necessary to obtain audit evidence.

Your responsibilities include adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole.

You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the organization involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the Organization received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the Organization complies with applicable laws, regulations, contracts, agreements, and grants and for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts or grant agreements, or abuse that we report.

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You are responsible for the preparation of the supplementary information, which we have been engaged to report on, in conformity with U.S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information.

Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or other engagements or studies. The Organization is also responsible for providing management’s views on our current findings, conclusions, and recommendations, as well as your planned corrective actions for the report, and for the timing and format for providing that information.

You agree to assume all management responsibilities relating to the tax services, financial statements, related notes, and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter the tax services provided and our assistance with the preparation of the financial statements and related notes and that you have evaluated the adequacy of our services and have reviewed and approved the results of the services, the financial statements, and related notes prior to their issuance and have accepted responsibility for them. Further, you agree to assume all management responsibilities for the tax services, financial statement preparation services, and any other nonattest services we provide; you agree to oversee the nonaudit services by designating an individual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of those services; and accept responsibility for them.

Engagement Administration, Fees, and Other

We may from time to time and depending on the circumstances, use third-party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide

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your consent prior to the sharing of your confidential information with the third-party service provider. Furthermore, we will remain responsible for the work provided by any such third-party service providers.

We understand that your employees will prepare all cash, accounts receivable, and other confirmations we request and will locate any documents selected by us for testing.

We will provide copies of our reports to the Organization; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection.

The audit documentation for this engagement is the property of GYL LLP and constitutes confidential information. However, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of GYL LLP personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies.

The audit documentation for this engagement will be retained for a minimum of seven years after the report release date or for any additional period requested by the federal agency. If we are aware that a federal awarding agency or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation.

Joseph O. Romero is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. We expect to begin our audit on approximately July 1, 2020 and to complete your information returns and issue our report no later than September 30, 2020 .

We estimate that our fees for these services will be $15,500 for the audit. You will also be billed for travel and other out-of-pocket costs such as report production, word processing, postage, etc. The fee estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the engagement. If significant additional time is necessary, we will keep you informed of any problems we encounter and our fees will be adjusted accordingly. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. We will require a $3,000 retainer fee at the time this engagement letter is returned to us. Your cooperation and assistance are necessary to the successful completion of the services and can significantly affect our fees. If your records, or lack thereof, made available to us and/or cooperation prevents us from completing the engagement, we will stop work immediately and all issues and possible pricing changes will be discussed with you before continuing. Bills for services are due and payable upon presentation. If invoices are more than 30 days unpaid, no further work will be done until invoices are paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report. You will be obligated to compensate us for all time expended and

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to reimburse us for all out-of-pocket expenditures through the date of termination. We may charge 1.5% interest per month on outstanding balances after 30 days.

We appreciate the opportunity to be of service to Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us.

Very truly yours,

GYL LLP

RESPONSE:

This letter correctly sets forth the understanding of Cal Poly Pomona Foundation, Inc. State Preschool, General Child Care and Prekindergarten Programs.

Management signature:

Title:

Date:

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Memorandum Date: February 7, 2020 To: Board of Directors Cal Poly Pomona Foundation, Inc.

From: David F. Prenovost, Senior Managing Director/CFO Subject: FINANCIAL HIGHLIGHTS – DECEMBER 2019 Following are the year-to-date financial statement Surplus/(Deficit) amounts for your review:

For the fiscal quarter ended December 2019 revenues of $42.9 million were 6% or $2.5 million over the budget. Expenditures of $40.9 million are 7% or $2.8 million over budget. The variances are explained in the following analysis of each activity. ADMINISTRATIVE ACTIVITIES

Administrative activities includes the supporting operations and revenues are 5% or $118,000 more than budget mainly due to the unbudgeted Endowment Admin Fee of $98,735 and Kellogg Endowment Admin fee $60,794.

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ENTERPRISES ACTIVITIES

Enterprise revenues of $25.3 million are 99% or $271,000 short of budget mainly due to Village and Bookstore sales; expenditures of $23.1 million as budgeted. Following is the summary of each Enterprise Activities:

DINING SERVICES

Dining Service revenues are 48% of Enterprise Activities and are 1% or $148,502 short of budget, cost of goods is 26% versus 30% of budget and payroll and expenditures are 68% versus 67% of budget. Retail Operations - This reporting unit includes the retail units at Campus Center Marketplace and Bronco Student Center, convenient stores, vending, Kellogg West Catering/Conference Foods and commission vending. Revenues were 4% or $348,249 short of budget; cost of goods is 32% versus 33% of budget and payroll and expenditures are 69% versus 67% of budget generating a deficit of $116,329 versus a budgeted deficit of $33,854. Grubhub/Tapingo, our mobile ordering platform implemented last spring generated $348,230 in retail revenue for the quarter ending December 2019. Board Operations - This reporting unit includes the Board Operations at Los Olivos, Denny’s and Vista Market Place. Revenues exceed budget by 5% or $199,746; costs goods are 15% versus 23% of budget, payroll and expenditures are 67% versus 69% of budget generating a surplus of $746,723 versus $342,145 budgeted. Cost of goods is lower than budgeted due to our new systems and procurement strategy approved by the Foundation Board last fall as part of our Dining Master Plan update. This procurement strategy combines our purchasing dollars with the UC system and participating CSU campuses and provides more advantageous terms with many of our existing distributors. The systems strategy provides us with the tools and resources necessary to control costs in a more effective manner.

BOOKSTORE

Bookstore revenues are 16% of Enterprise revenues and are 4% or $193,600 short of budget mainly due to new and used textbook sales/rentals, digital books and supply sales and $18,000 more than the same time last year. Cost of goods is 71% versus 69%; expenditures and payroll are 30% versus 29% of budget generating a deficit of 1% versus 2% budgeted versus prior year’s

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surplus of 0.3%. We continue to focus on used and rental books as well as digital textbook options to reduce the increasing costs for textbooks. This is the start of our second year with the Instant Access program for the College of Engineering. We have over 600 participating student enrolled in classes with access to their digital textbooks and related online homework/tutorial/assessment programs. The cost of the course materials is billed to their student accounts and the bookstore collect the funds from the University’s cashier’s office and pays the publishers. Students have the choice to opt out of the program before the end of the drop/add period. The Presidential Order also continues to support the sales in the bookstore.

KELLOGG WEST

Kellogg West Conference Center & Hotel includes room and conference center activities. Kellogg West revenues are 4% of Enterprise Activities and are 8% or $72,000 short of budget; payroll and expenditures are 105% versus 101% of budget generating a deficit more than budgeted.

UNIVERSITY VILLAGE

University Village - Revenues are 20% of Enterprise Activities and are 9% or $481,000 short of budget due to vacancies over the summer. Payroll and expenditures are 77% versus 72% budgeted resulting in a surplus less than budgeted. As we began the 2nd half of the academic year occupancy is at 93% versus 96% budgeted. We continue to increase our outreach to area colleges and universities as well.

Real Estate/Building Rentals

Real Estate/Building Rentals includes Innovation Village, CTTi, faculty/staff housing and rental facilities in Bookstore and Campus Center Marketplace facilities. Revenues are 12% of Enterprise Activities and exceed budget by 26% or $624,000 and expenditures exceed budget by 31% or $605,000.

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DESIGNATED FUND

Designated fund expenditures include development, alumni affairs, public relations, publications, athletics and other and generated a deficit less than budgeted.

OTHER ACTIVITIES

Sponsored Research has generated a year to date surplus of $20,000 versus a budgeted surplus of $20,000; year to date indirect revenues exceed budget by 7% or $45,579 and direct grant expenditures are 95% or $302,902 generating an effective rate of 11.79% versus the budgeted rate of 11.5%. Agriculture-Aid-to-Instruction year to date revenues are 16% or $360,189 short of budget mainly due to West Wind Ranch and to a lesser degree Agronomy Farm, Cattle Unit and Farm store, costs of goods are 18% versus 18% of budget and payroll and expenditures are 99% versus 93% of budget generating a year to date surplus of $25,513 versus a budgeted surplus of $151,047. The overdrawn cash account balances of these programs is $1,455,211. Continuing Education year to date revenues are 11% or $255,300 short of budget; payroll and expenditures are 72% vs 78% generating a year to date surplus of $580,378 versus a budget surplus of $518,614 mainly due to Global Educ. Programs. Foundation Programs-Unrestricted includes exchange transactions mainly consisting of program fees and indirect cost recoveries. Year to date revenues exceed budget by $1,646,529 and expenditures exceed budget by $2,650,627 generating a year to date deficit of $1,004,098 versus a zero budget. The remaining restricted Foundation Program derived fund balances were transferred in December 2019 and other restricted assets will be transferred when appropriate, i.e. real estate, charitable remainder trusts, etc... General Portfolio Investment the General Investment portfolio has generated a year to date surplus of $1,166,766 versus a year to date budgeted surplus of $511,571 as unrealized/realized gains/losses are $1,199,818 vs $546,806 budgeted. Endowment/Investment – were transferred to the new Philanthropic Foundation. Foundation Programs/Scholarships-Restricted were transferred to the new Philanthropic Foundation.

72

Unrestricted RestrictedFoundation Auxiliary Sponsored Foundation

General Designated Programs Activities Total Programs Programs Endowment Total Current Year June 30, 2019Fund Fund Fund Fund Unrestricted Fund Fund Fund Restricted Total Total

CURRENT ASSETS:Cash:

On hand and in commercial accounts (378,611) 700 10,867 56,185 (310,859) 0 0 0 0 (310,859) (242,835)

Due to/(form) (76,321,168) 18,123,218 9,946,974 46,408,590 (1,842,386) 1,835,927 0 6,459 1,842,386 0 0Investments 23,577,259 182,062 590,042 0 24,349,363 0 0 6,321 6,321 24,355,684 54,006,958Marketable securities 10,492,754 0 0 0 10,492,754 0 1,368,933 0 1,368,933 11,861,687 118,047,445

Total cash and cash equivalent (42,629,766) 18,305,980 10,547,883 46,464,775 32,688,872 1,835,927 1,368,933 12,780 3,217,640 35,906,512 171,811,568

Receivables:Accounts and notes receivable 3,203,550 1,299 998,192 5,029,688 9,232,729 437,980 0 0 437,980 9,670,709 12,992,185Interfund loans (net) 489,088 0 50,000 0 539,088 0 0 0 0 539,088 839,088

3,692,638 1,299 1,048,192 5,029,688 9,771,817 437,980 0 0 437,980 10,209,797 13,831,273Less-Allowance for doubtful accounts 0 0 (37,610) (37,204) (74,814) 0 0 0 0 (74,814) (74,397)

Total receivables 3,692,638 1,299 1,010,582 4,992,484 9,697,003 437,980 0 0 437,980 10,134,983 13,756,876

Inventories 1,117,900 0 20,601 2,623,794 3,762,295 0 0 0 0 3,762,295 3,222,056Prepaid expenses and deferred charges 456,997 56,984 8 143,113 657,102 500 0 0 500 657,602 148,367OPEB asset 0 1,000,000 0 0 1,000,000 0 0 0 0 1,000,000 0

Total current assets (37,362,231) 19,364,263 11,579,074 54,224,166 47,805,272 2,274,407 1,368,933 12,780 3,656,120 51,461,392 188,938,867

FIXED ASSETSLand 14,787,159 0 0 212,000 14,999,159 0 1,243,330 0 1,243,330 16,242,489 16,038,189Buildings and improvements 15,414,608 0 1,065,196 49,447,794 65,927,598 0 392,783 0 392,783 66,320,381 65,778,826Equipment, furniture and fixtures 1,708,598 0 543,054 9,181,123 11,432,775 0 31,301 0 31,301 11,464,076 11,180,490Orchards 0 0 0 143,638 143,638 0 0 0 0 143,638 143,638Works of Art 0 0 0 0 0 0 0 0 0 0 1,663,065Construction in progress 827,563 0 55,680 5,804,582 6,687,825 0 365,083 0 365,083 7,052,908 5,555,009

32,737,928 0 1,663,930 64,789,137 99,190,995 0 2,032,497 0 2,032,497 101,223,492 100,359,217Less-Accumulated depreciation (14,548,626) 0 (1,065,730) (39,833,355) (55,447,711) 0 (297,459) 0 (297,459) (55,745,170) (54,212,672)

Total fixed assets 18,189,302 0 598,200 24,955,782 43,743,284 0 1,735,038 0 1,735,038 45,478,322 46,146,545

Restricted Funds 0 0 0 0 137,175 0 0 137,175 137,175 137,175

Total assets (19,172,929) 19,364,263 12,177,274 79,179,948 91,548,556 2,411,582 3,103,971 12,780 5,528,333 97,076,889 235,222,587

DEFERRED OUTFLOWS OF RESOURCES:Unamortized loss on debt refunding 0 0 0 292,276 292,276 0 0 0 0 292,276 311,663Net OPEB Obligation 0 1,934,932 0 0 1,934,932 0 0 0 0 1,934,932 1,934,932Net pension obligations - contributions 4,261,373 0 0 0 4,261,373 0 0 0 0 4,261,373 4,261,373

CAL POLY POMONA FOUNDATION, INC.STATEMENTS OF FINANCIAL POSITION

for period ended December 31, 2019

73

Unrestricted RestrictedFoundation Auxiliary Sponsored Foundation

General Designated Programs Activities Total Programs Programs Endowment Total Current Year June 30, 2019Fund Fund Fund Fund Unrestricted Fund Fund Fund Restricted Total Total

CAL POLY POMONA FOUNDATION, INC.STATEMENTS OF FINANCIAL POSITION

for period ended December 31, 2019

LIABILITIES:Accounts payable 1,890,131 11,783 4,355 758,312 2,664,581 63,649 0 0 63,649 2,728,230 4,267,300Accrued liabilities 900,975 (310,805) 40,467 762,948 1,393,585 259,947 0 6,321 266,268 1,659,853 2,265,078Receipts in excess of expenditures on 0 0 0 0 0 0 0 specific sponsored programs 0 0 (1,812,719) 0 (1,812,719) 2,087,986 0 0 2,087,986 275,267 (476,862)Deferred income 439,781 0 141,995 1,166,671 1,748,447 0 0 0 0 1,748,447 1,516,256Deposits held in custody for others 0 0 0 0 0 0 (464) 0 (464) (464) 903,198Inter-fund loans 489,088 0 50,000 0 539,088 0 0 0 0 539,088 839,088

Total current liabilities 3,719,975 (299,022) (1,575,902) 2,687,931 4,532,982 2,411,582 (464) 6,321 2,417,439 6,950,421 9,314,058

Long-term liabilities:Notes and contracts payable 2,000,000 0 0 0 2,000,000 0 0 0 2,000,000 3,000,000Unitrust liability 0 0 0 0 0 0 847,960 0 847,960 847,960 890,408Lease obligations 1,497,751 0 0 20,880,721 22,378,472 0 0 0 0 22,378,472 23,484,352OPEB Liability 0 7,943,627 0 0 7,943,627 0 0 0 0 7,943,627 7,943,627Pension liability 8,194,358 0 0 0 8,194,358 0 0 0 0 8,194,358 8,194,358

Total long-term liabilities 11,692,109 7,943,627 0 20,880,721 40,516,457 0 847,960 0 847,960 41,364,417 43,512,745

Total liabilities 15,412,084 7,644,605 (1,575,902) 23,568,652 45,049,439 2,411,582 847,496 6,321 3,265,399 48,314,838 52,826,803

DEFERRED INFLOWS OF RESOURCES:Deferred inflow 50,274 0 0 0 50,274 0 0 0 0 50,274 54,987Net pension obligation 1 0 0 0 1 0 0 0 0 1 1Net OPEB obligation 0 654,435 0 0 654,435 0 0 0 0 654,435 654,435Split interest agreement 0 0 0 0 0 1,110,902 0 1,110,902 1,110,902 1,333,985

Net Assets Beginning (30,127,776) 12,091,141 5,151,417 53,550,008 40,664,790 0 43,881,124 101,485,340 145,366,464 186,031,254 180,641,078

change in net Assets (246,139) 909,014 (928,379) 2,353,565 2,088,061 0 (33,205,415) (101,478,880) (134,684,295) (132,596,234) 6,219,266

Total liabilities and Net Assets (14,911,556) 21,299,195 2,647,136 79,472,225 88,507,000 2,411,582 12,634,107 12,781 15,058,470 103,565,470 241,730,555

74

CAL POLY POMONA FOUNDATION, INC.Statement of Activities

For period ending Dec 31, 2019 and 2018

REVENUES EXPENSES SURPLUS/(DEFICIT)FY 18‐19 FY 19‐20 YTD FY 18‐19 FY 19‐20 YTD FY 18‐19 FY 19‐20 YTD FY 18‐19 FY 19‐20

Description YTD Actual Budget Actual YTD Actual Budget Actual YTD Actual Budget Actual Actual Budget General Activities: Administration 2,481,229 2,397,954 2,515,954 3,041,283 3,139,396 3,052,374 (560,054) (741,442) (536,420) (1,686,067) (1,622,726)

TOTAL GENERAL 2,481,229 2,397,954 2,515,954 3,041,283 3,139,396 3,052,374 (560,054) (741,442) (536,420) (1,686,067) (1,622,726)

Enterprise Activities: Campus Center 948,460 1,047,969 993,516 1,033,028 1,078,833 1,172,343 (84,568) (30,864) (178,827) (334,174) (124,223) Bronco Student Center 1,680,762 1,740,813 1,797,056 1,556,035 1,638,604 1,695,395 124,727 102,209 101,661 181,514 174,682 CStore 1,787,110 1,741,213 1,572,805 1,480,817 1,566,849 1,428,631 306,293 174,364 144,174 629,514 303,030 Retail 1,940,239 2,204,744 2,048,941 2,029,416 2,150,684 2,095,365 (89,177) 54,060 (46,424) (160,535) 110,753 Los Olivos 3,755,801 3,949,016 4,148,762 2,884,035 3,635,545 3,410,785 871,766 313,471 737,977 863,216 (306,625) KW Dining 1,568,309 1,627,627 1,591,557 1,329,245 1,443,327 1,413,595 239,064 184,300 177,962 449,738 200,011 Vending 42,744 36,040 38,995 32,946 32,536 30,198 9,798 3,504 8,797 22,298 10,261 Dining Mgt/Overhead 7,288 285,123 417,095 316,221 (285,123) (417,095) (308,933) (701,801) (798,846) Total Dining Services 11,723,425 12,347,422 12,198,920 10,630,645 11,963,473 11,562,533 1,092,780 383,949 636,387 949,770 (430,957) BookStore 4,098,687 4,310,450 4,116,856 4,084,533 4,223,726 4,161,740 14,154 86,724 (44,884) 324,776 222,889 KW Conference Center 924,336 962,748 890,317 861,942 971,859 932,050 62,394 (9,111) (41,733) 111,649 19,085 University Village 4,983,140 5,524,752 5,043,664 3,603,648 3,973,920 3,895,986 1,379,492 1,550,832 1,147,678 3,057,415 3,506,111 Real Estate/Building Rentals 2,463,829 2,444,909 3,068,600 2,374,096 1,925,805 2,530,881 89,733 519,104 537,719 184,638 619,578 Total Enterprise 24,193,417 25,590,281 25,318,357 21,554,864 23,058,783 23,083,190 2,638,553 2,531,498 2,235,167 4,628,248 3,936,706TOTAL GENERAL & ENTERPRISE 26,674,646 27,988,235 27,834,311 24,596,147 26,198,179 26,135,564 2,078,499 1,790,056 1,698,747 2,942,181 2,313,980

Uses of Designated Funds: Designated Funds 4,940 0 62,359 550,005 657,942 537,258 (545,067) (657,942) (474,901) (1,454,003) (1,317,367)

Other Activities: Research Office 646,916 657,062 702,641 626,916 637,062 682,641 20,000 20,000 20,000 20,000 19,997 Agriculture 1,886,738 2,231,313 1,871,124 1,843,267 2,080,266 1,845,611 43,471 151,047 25,513 211,440 253,980 Continuing Education 2,685,062 2,318,939 2,063,581 1,784,041 1,800,325 1,483,203 901,021 518,614 580,378 255,182 92,406 Foundation Programs 8,108,969 434,004 2,080,533 6,161,731 434,004 3,084,631 1,947,238 0 (1,004,098) TOTAL OTHER 13,327,685 5,641,318 6,717,879 10,415,955 4,951,657 7,096,086 2,911,730 689,661 (378,207) 486,622 366,383OPERATING SURPLUS DEFICIT 40,007,271 33,629,553 34,614,549 35,562,107 31,807,778 33,768,908 4,445,162 1,821,775 845,639 1,974,800 1,362,996 Investments‐General Portfolio (2,026,650) 546,806 1,199,818 78,405 35,235 33,052 (2,105,055) 511,571 1,166,766 1,200,858 727,153UNRESTRICTED SURPLUS (DEFICIT) 37,980,621 34,176,359 35,814,367 35,640,512 31,843,013 33,801,960 2,340,107 2,333,346 2,012,405 3,175,658 2,090,149

Grants and Contracts 7,605,630 6,263,889 7,134,511 7,605,630 6,263,889 7,134,511Transfers to the University 270,913 0 (75,654) (270,913) 75,654 (2,615,095)TOTAL FOUNDATION NET 45,586,251 40,440,248 42,948,878 43,517,055 38,106,902 40,860,817 2,069,194 2,333,346 2,088,059 560,563 2,090,149

Significant & Unusual transactions Endowments/Investments 0 0 101,478,880 0 0 (101,478,880) 1,758,022 0 FDN Program‐Restricted 0 0 33,205,415 0 0 (33,205,415) 1,813,763 0 Philanthropic Transfer of Gifts 0 0 0 0 0 134,684,294 0 0 (134,684,294) 3,571,785 0 TOTAL 0 0 0 0 0 134,684,294 0 0 (134,684,294) 3,571,785 0

GRAND TOTAL in Fund Balance 45,586,251 40,440,248 42,948,878 43,517,055 38,106,902 175,545,111 2,069,194 2,333,346 (132,596,235) 4,132,348 2,090,149

2/2/2020 \\fdn.cpp.edu\admin\Shared\Meetings\Finance Committee\2019-2020 Finance Meetings\02102020 Finance Committee\Backup\08b Statement of Activities 12-31-19.xlsx

75

AGRICULTURE FUNDSSURPLUS/(DEFICIT) BUDGET COMPARISON SUMMARYFOR THE FISCAL YEAR

DESCRIPTION 2017-18 Actual

2017-18 Forecast

2017-18 Approved

Budget2018-19 Actual

2018-19 Forecast

2018-2019 Approved

Budget

2019-20 YTD Actual

12/31/2018

2019-20 YTD Approved

Budget

016200 Agronomy Farms (490,470) (429,507) (508,546) (247,024) (226,366) (397,830) (52,345) (143,131)

260200 Arabian Horse Show (42,744) (13,968) (88,748) (3,906) - - (12) -

020010 Cattle Unit (17,361) 661 8,618 20,382 27,651 2,614 5,799 51,231

027190 Consignment Sales 409 - - - - - - -

340010 Fruit Industry 5,039 2,764 11,548 (33,471) (10,617) 221 (12,452) 13,638

300010 AVS Department Lab (20,645) (20,000) 550 (399) - - - -

320300 Ornamental Horticulture 42,419 5,209 5,530 61,748 34,291 7,043 29,292 (21,593)

193040 Pine Tree Ranch (2,012) 120,326 13,130 (27,426) 85,668 58,066 (64,148) (69,188)

420010 Llama and Sheep Unit (9,540) 614 4,596 7,367 7,768 160 (2,766) 7,213

430010 Swine Unit (4,373) 309 116 (402) (5,334) 664 (2,669) (145)

260220 Farm Store at Kellogg Ranch 85,488 1,480 19,627 2,746 2,195 29,809 8,275 7,632

460360 Petting Farm 3,808 (4,613) - (2,759) 5,904 (4,467) 13,102 17,217

350810 Truck and Trailer 59,580 57,360 - (89) - - - -

428460 Vet Clinic (12,501) 403 8,271 67,937 24,725 1,690 (31,759) 4,362

350820 Pomona Organics St Project - - - (147) - - - -

462300 Pumpkin Festival 42,969 56,007 86,182 23,615 19,197 56,745 101,649 30,755

462530 Westwind Ranch 66,638 171,660 326,398 323,236 245,363 338,306 (48,833) 180,196

462540 Wasmansdorff House - Pine Tree (1,110) (1,825) 11,149 (695) (1,492) (382) (7) (2)

462610 Agriscapes Outreach (5,169) 6,323 (33,787) 20,728 21,349 10,674 82,387 72,862

Total (299,575) (46,797) (135,366) 211,441 230,302 103,313 25,513 151,047

76

REAL ESTATESURPLUS/(DEFICIT) BUDGET COMPARISON SUMMARYFOR THE FISCAL YEAR

DESCRIPTION 2017-18Actual

2017-18 Forecast

2017-18 Approved

Budget 2018-19 Actual2018-19Forecast

2018-19 Approved

Budget

2019-20 YTD Actual

12/31/2019


Budget

REAL ESTATE DEVELOPMENT220080 Center for Training Technology & Incubation 80,890 31,713 (3,860) (34,651) - 2,884 175,204 131,569 220010 Innovation Village 862,257 821,624 794,035 869,952 849,630 827,478 472,586 466,600 220050 Innovation Village/American Red Cross (1,413) - - (1,097) - - 10,390 - 220052 Innovation Village/Tramel Crow (4,262) - - 4,126 - - 969 - 220070 Innovation Village Common Areas - - - 886 (1,624) 2 (62,335) (70,312) 220250 Trammel Crow/I.V. Phase IV (4,114) - - 2,552 - - (472) - 459540 Spadra Solar Farm - - - (418,637) - (418,632) - - 461890 Innovation Village Phase V (5,017) - - 439 - - 1,581 - 462140 Support for Lanterman Operations (525,274) (500,000) (500,000) (474,725) (500,000) (500,000) (297,389) (130,617)

Total Real Estate Development 403,067 353,337 290,175 (51,155) 348,006 (88,268) 300,534 397,240

RENTAL Buildings200660 Building # 66 - Classrooms & Offices 172,297 181,491 148,802 155,270 163,117 178,153 72,895 78,636

190970 Building # 97 - Offices 155,399 155,084 137,643 159,750 171,985 160,378 73,763 81,912

200220 CTTi Building # 220A - College of ENV Studio (140,793) (153,142) (167,352) (149,601) (165,523) (166,032) (73,402) (86,166)

Total Rental Buildings 186,903 183,433 119,093 165,419 169,579 172,499 73,256 74,382

FACULTY/STAFF HOUSINGFund 11 Faculty/Staff Housing 191,163 84,641 164,237 70,372 - 85,220 163,927 47,482

Total Faculty/Staff Housing 191,163 84,641 164,237 70,372 - 85,220 163,927 47,482

GRAND TOTAL REAL ESTATE 781,133 621,411 573,505 184,636 517,585 169,451 537,717 519,104

77

CONTINUING EDUCATION PROGRAMSSURPLUS/(DEFICIT) BUDGET COMPARISON SUMMARYFOR THE FISCAL YEAR


2017-18 Forecast

2017-18 Approved


2018-19 Forecast

2018-19 Approved

Budget

2019-20 YTD Actual

12/31/19


Budget

COLLEGE OF EXTENDED UNIVERSITY - Programs283500 Administration 326,969 73,891 101,286 (59,451) 7,511 64,805 (246,986) 365,338 283620 Six Sigma Program 11,276 6,717 14,323 13,533 8,997 7,842 14,656 3,447 283630 Professional Project Management Program 24,026 24,897 23,008 20,833 15,821 22,272 30,642 1,503 283790 On Site Training Programs 1,535 12,352 8,808 (401) 1,245 22,258 24,070 572 283060 Start-Up Programs (150) - - (319) - - (324) - 283073 Test Prep Programs 66,414 108,184 27,153 176,479 177,564 156,198 199,852 51,525 460280 SUMMER SUPPORT @ CEU (13,536) 262 (981) (24,236) - (1,004) 31,988 (21,370) 460920 Business Comm & Grant Writing 12,596 7,144 - 5,893 3,620 8,380 (4,679) 1,654 460940 Math & Science (1,759) (3,806) 704 1,420 134 1,600 687 - 460950 Hospitality & Service Industry 12,342 14,538 6,186 15,616 17,305 126,156 72,429 13,426 460960 Supply Chain Management 7,460 172 - (16,627) 846 172 (3,772) 12,804 460970 Human Resources Management 6,530 4,275 2,200 15,071 7,130 3,128 16,921 1,852 460980 Building & Construction Management 39,777 30,930 16,780 61,927 35,537 27,459 91,328 15,646 460990 Ed2Go 7,268 4,000 528 6,878 1,805 4,000 27,280 1,705 461000 Art, Media, & Design (6,545) - - - - - - - 461010 Global Ed Programs Standard 157,432 216,730 125,117 16,575 100,255 141,492 420,168 171,920 461020 Global Ed Programs Camps - - 8,306 (73) - - - - 461030 CPELI Camps 1,441 (3,862) 3,223 - - - - - 461040 CPELI Standard 2,637 48,309 103,111 168,585 228,606 65,919 193,926 93,976 461820 Program Development (259,373) (284,897) (311,613) (312,673) (312,430) (292,520) (148,964) (221,074) 461840 Summer Camps 36,228 62,347 1,204 110,223 113,739 70,300 (1,692) (12,117) 462120 CEU CPP Aviation Hospitality 59,853 30,504 - 152,413 105,636 51,754 (57,100) 17,612 462760 CEU Academic Studies Program 25,017 51,100 8,154 (98,199) (64,113) 52,576 (58,053) 24,220

Total College of Extended Univ Programs 517,438 403,787 137,497 253,467 449,208 532,787 602,377 522,639

78

CONTINUING EDUCATION PROGRAMSSURPLUS/(DEFICIT) BUDGET COMPARISON SUMMARYFOR THE FISCAL YEAR


2017-18 Forecast

2017-18 Approved


2018-19 Forecast

2018-19 Approved

Budget

2019-20 YTD Actual

12/31/19


Budget

COLLEGE OF ENGINEERING381500 Non-Credit Learning Admin (7,849) (7,849) 174 - - - - -

381675 Civil Engineering Review (28,715) (28,716) 4,966 - - -

Total College of Engineering (36,564) (36,565) 5,140 - - - - -

COLLEGE OF SCIENCE406440 Chemistry Agilent Project - 6,595 2,383 - - 2,383 (22,000) (4,025)

Total College of Science - 6,595 2,383 - - 2,383 (22,000) (4,025)

GRAND TOTAL CONTINUING EDUCATION 480,874 373,817 145,020 253,467 449,208 535,170 580,377 518,614

79

2017-2018

2018-2019

2015-2016

2016-2017

CAL POLY POMONA FOUNDATION

ANALYSIS OF REVENUES & SURPLUS/DEFICITS

ACTUAL vs. FORECAST vs. BUDGETED

with charts and footnotes

FISCAL YEARS

2014-2015

80

Footnotes

Decrease in revenue due to total investment returns including unrealized gains/losses

*Includes multiple revenue sources that are presented in the following pages.

84,816,043

71,431,874

95,905,788

89,884,694

95,244,360

88,545,773

75,717,902

98,384,566

105,007,637

95,619,477

90,647,369

87,748,638

92,957,813

95,633,486

101,742,502

-

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

TOTAL FOUNDATION SUMMARYRevenue

Actual Forecast Approved

81

Footnotes

2015-16 Mainly due to total investment loss2017-18 Mainly due to Investment loss, Board Dining, and Agriculture actuals coming in under Forecast2018-19 Mainly due to GASB adjustments made in Administration projects. (See Admin chart)

8,377,074

(11,782,119)

18,589,535

11,775,921

6,250,202

7,636,439

(1,601,734)

17,303,959 15,999,176

8,481,234

13,450,932

8,223,888

11,377,560

8,459,411

10,647,705

(15,000,000)

(10,000,000)

(5,000,000)

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

TOTAL FOUNDATION SUMMARYSurplus (Deficit)


82

Notes: *Administrative fees charged to support overhead operations*The Administration Division includes the Executive Director's Office, Employment Services, Information Technology, Financial Services, Marketing, Real Estate administration and benefits not allocated.

4,732,378 4,632,726

4,703,711

4,835,114

5,036,833

4,582,774 4,628,094 4,680,041

4,755,391

5,048,573

4,386,307

4,706,208

4,893,449

4,983,524

5,073,218

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

AdministrationRevenue


83

Footnotes

2014-15

2015-16

2016-17 CalPERS actual investment returns were less than the actuarial projections. 2017-18 Due to implementation of GASB 75 (OPEB) year end adjustment, and GASB 68 (CalPERS) year end adjustment not included in Forecast or budget2018-19 Due to GASB 75 (OPEB) year end adjustment, and GASB 68 (CalPERS) year end adjustment not included in Forecast or budget

Note: The Administration Division includes the Executive Director's Office, Employment Services, Information Technology, Financial Services, Marketing, Real Estate administration and benefits not allocated.

Benefits charged to Payroll and insurance premiums charged to Insurance Program instead of allocating to respective projects, Technology Innovation & Commercialization Expenditures not budgeted or forecasted.With the implementation of GASB 68, the forecasted amortization of CalPERS deferred inflows resulted in a forecasted surplus. Benefits charged to Payroll and insurance premiums charged to Insurance Program instead of allocating to respective projects, which was not forecasted; Technology Innovation & Commercialization expenditures not budgeted or forecasted

(880,624)

(501,366)

(1,764,757)

935,591

(1,373,943)

(702,783)

95,858

(91,022)

(1,126,904)

1,169,560

(808,373)

(1,012,316)

23,234

(103,345)

(812,836)

(2,000,000)

(1,500,000)

(1,000,000)

(500,000)

-

500,000

1,000,000

1,500,000

2014-15 2015-16 2016-17 2017-18 2018-19

AdministrationNet Surplus/Deficit


84

Note: Revenue includes ground leases at Innovation Village and buildings 66 & 97, and from the faculty/staff housing program

3,274,330

4,010,537

4,757,1744,633,410

4,773,214

3,267,192

3,975,830

4,766,1234,720,690

4,517,437

2,807,587

3,282,739

4,101,132

4,611,177

4,791,573

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

Real EstateRevenue


85

Footnotes

2014-15 Mainly due to capitalization of prior year architecture and consulting expenditures at Spadra; amounts to be invoiced at Innovation Village V; Support for Lanterman Operations and gains on sale of faculty/staff housing.

2015-16 Mainly due to occupancy at Center for Training Technology and Incubation; expenditure savings at Innovation Village; additional revenues at Innovation Village V, expenditure savings in Rental Buildings and faculty staff housing.

2016-17 Mainly due to lower than budgeted expenses in CTTi and Faculty/Staff Housing 2017-18 Mainly due to higher gains on sales of Faculty/Staff housing2018-19 Mainly due to the write-off of the California Environmental Quality Act study at Spadra Solar Farm, not being included in the Forecast

592,605

436,907

811,318

781,135

184,640

388,922

293,201

644,420

621,411

504,537

403,391

20,719

332,331

573,505

169,451

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

Real EstateNet Surplus


86

Note: Includes working capital of Foundation and gains/losses due to portfolio returns

(397,678)

(822,617)

2,571,021

1,204,690

1,353,892

9,139

(1,116,641)

1,891,864

2,302,009

550,300

1,226,246 1,181,071

918,560

1,225,539

1,991,383

(1,500,000)

(1,000,000)

(500,000)

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2014-15 2015-16 2016-17 2017-18 2018-19

General InvestmentsRevenue


87

Footnotes

2014-15 Unrealized losses on investments managed by Graystone offset by Realized/unrealized gains on private equity investments with Common Fund.2015-16 Realized/unrealized losses on investment managed by Graystone.2016-17 Realized/unrealized gains on investment managed by Graystone.2017-18 Realized/unrealized gains on investment managed by Graystone were lower than budgeted2018-19 Realized/unrealized gains on investment on both general and common higher than budgeted

Actual Benchmark

2014-15 0.06% 1.41%2015-16 -0.81% 1.93%2016-17 6.62% 4.82%2017-18 3.63% 2.55%2018-19 3.19% 6.91%

(490,998)

(922,919)

2,462,142

1,068,771 1,200,859

(80,510)

(1,213,025)

1,791,554

2,168,587

399,156

1,147,691 1,084,584

831,084

1,126,219

1,837,929

(1,500,000)

(1,000,000)

(500,000)

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

General InvestmentsNet Surplus/Deficit


88

10,646,776

9,764,489

9,382,965

9,263,006

8,911,409

9,828,276

9,705,6909,660,080 9,684,336

9,265,763

9,488,000

9,763,780

9,310,080

9,696,620

9,650,725

8,000,000

8,500,000

9,000,000

9,500,000

10,000,000

10,500,000

11,000,000

11,500,000

12,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

BookstoreRevenue


89

Footnotes

2014-15 Mainly due revenue exceeding forecast2015-16 Mainly due to expenditures and labor costs under forecast2016-17 Mainly due to expenditures under forecast2017-18 Small variance2018-19 Forecasted COGS were over budgeted. Actual was close to approved budget

583,469

487,500

469,228

438,401

324,776

392,437

279,045270,569

433,676

63,732

285,881

317,399

292,798

426,166

319,852

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2014-15 2015-16 2016-17 2017-18 2018-19

BookstoreNet Surplus


90

12,164,598 12,023,185

12,712,064

13,300,517

13,975,679

11,080,312

11,520,823

12,151,757

12,708,658

13,299,418

9,934,568

11,551,820

12,178,610

12,561,988

13,745,482

-

2,500,000

5,000,000

7,500,000

10,000,000

12,500,000

15,000,000

17,500,000

2014-15 2015-16 2016-17 2017-18 2018-19

RETAIL DININGRevenue


91

Footnotes

2014-15 Mainly due to higher than expected revenues at Starbucks, Kellogg West catering events, and Pony Express at CBA. 2015-16 Mainly due to higher than expected revenues at Carl's Jr., and Kellogg West catering events. BSC Overhead saw lower than expected expenses.2016-17 Mainly due to higher than expected revenues in Panda, Subway, Qdoba and KW Catering. Also lower than expected expenses in FS Overhead.2017-18 Mainly due to KW catering/conference dining coming in higher than budget2018-19 Mainly due to KW catering/conference dining coming in higher than budget. C-stores also out performing budget

Dining Project Changes:

2014-15 Innovation Brew Works opened (170104). Bronco Bowl replaces Kikka (170116).2015-16 Hibachi San is opened to replace Bronco Bowl (170116). H Café opens (170300).2017-18 Recharge Café (280596) opened in the SCE building & We split out IG to 1701092018-19 Created project (170555) for Retail Catering out of BSC

462,097 440,173

388,087

289,003

(96,076)

157,444

41,413

(38,807)

162,450

(338,075)

(76,155)

342,904

(26,327)

237,678

262,763

(400,000)

(300,000)

(200,000)

(100,000)

-

100,000

200,000

300,000

400,000

500,000

600,000

2014-15 2015-16 2016-17 2017-18 2018-19

RETAIL DININGNet Surplus


92

8,180,125

7,176,948

8,690,505

8,345,559

8,839,424

7,573,986

7,395,293

8,731,934 8,632,234

8,481,247

7,450,819

7,850,295

8,447,254

8,793,585

8,366,596

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

11,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

BOARD DININGRevenue


93

Footnotes

2014-15 Mainly due to higher than expected revenues at Los Olivos.2015-16 Mainly due to lower enrollment of students in housing than budgeted 2016-17 Mainly due to lower than expected COGS and expenses versus budget2017-18 Mainly due to lower than expected revenue at Los Olivos2018-19 Mainly due to higher than expected revenue at Los Olivos & Vista Café

913,139

374,644

1,362,842

823,167

1,033,398

626,648

561,131

1,153,150

1,051,955

779,597

540,978

684,685

803,609

884,083 908,892

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2014-15 2015-16 2016-17 2017-18 2018-19

BOARD DININGNet Surplus


94

1,640,208

1,579,698

1,800,493

1,908,529

1,973,474

1,626,969

1,506,686

1,745,230

1,865,276 1,864,463

1,452,619

1,542,709

1,648,756 1,693,185

1,914,874

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2014-15 2015-16 2016-17 2017-18 2018-19

KW Conference Center & Hotel Revenue


95

Footnotes

2014-15 Mainly due to expenditures coming in under forecast and collaborations with the CEU International programs2015-16 Mainly due to actual revenue coming in over forecast2016-17 Mainly due to an increase in topline revenue2017-18 Mainly due to actual revenue coming in over forecast2018-19 Mainly due to actual revenue coming in over forecast

116,267

81,903

170,750

122,972

112,409

68,604

8,668

173,723

78,602

6,089

23,949

12,349 16,952

50,737

70,161

-

50,000

100,000

150,000

200,000

250,000

2014-15 2015-16 2016-17 2017-18 2018-19

KW Conference Center & HotelNet Surplus/(Deficit)


96

9,137,429

9,467,585

9,861,187 9,975,264

10,271,362

9,021,729 9,192,470

9,730,478 9,708,250

10,666,352

9,603,211 9,540,576

10,068,266 10,224,439

10,891,090

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

11,000,000

12,000,000

13,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

University Village Revenue


97

Footnotes

2014-15 Mainly due to expenditures under forecast2015-16 Mainly due to revenue exceeding forecast2016-17 Mainly due to revenue exceeding forecast and expenditures under forecast2017-18 Mainly due to revenue exceeding forecast2018-19 Mainly due to revenue being under forecast

1,482,735

2,218,863

2,665,252

2,755,814

3,057,415

834,306

1,887,163

2,342,016

2,436,406

3,290,795

1,581,600

1,331,210

2,335,736

2,554,666

3,038,874

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

University VillageNet Surplus


98

1,717,303

1,208,524

1,050,136

1,207,451

1,454,004

2,079,000

1,307,229 1,326,596

1,577,596

1,692,096

2,086,608

1,355,338

1,558,684 1,543,258

1,696,832

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2014-15 2015-16 2016-17 2017-18 2018-19

Designated Gifts ExpendituresNet (Support)


99

Footnotes The Grants and Contracts Division manages externally-funded sponsored programs. Revenue equals expenditures except with capital grants2014-15 Surplus due to capital grant expenditures for Huntley College of Agriculture Greenhouse2015-16 Surplus due to capital grant expenditures for Huntley College of Agriculture Greenhouse2016-17 Surplus due to capital grant expenditures for Huntley College of Agriculture Greenhouse

13,174,000

13,885,000 13,710,673

15,243,493

13,951,151

11,205,000

12,445,000

13,550,000

14,000,000

13,243,000

11,205,000

12,445,000

13,550,000

14,000,000

13,243,000

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

GRANTS AND CONTRACTSRevenue


100

Effective Rate:

2014-15 10.25%2015-16 11.02%2016-17 11.41%2017-18 10.80%2018-19 11.85%

1,137,995

1,341,153

1,423,605

1,529,961

1,579,476

1,250,000

1,320,000

1,456,520

1,392,510

1,346,685

1,288,575

1,250,000

1,355,000

1,505,000

1,421,318

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2014-15 2015-16 2016-17 2017-18 2018-19

ResearchIndirect Cost Recovery Revenues


101

3,094,560

3,434,370 3,516,212

3,333,028

3,722,402

3,508,172

3,684,243

3,522,619 3,485,463

3,617,067

3,470,211 3,455,800

3,858,345 3,880,485

3,657,300

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

2014-15 2015-16 2016-17 2017-18 2018-19

Agriculture Aid to InstructionRevenue


102

Footnotes

2014-15 Mainly due to Agronomy Farm, Arabian Horse Center, Beef Unit, and Swine Unit's revenue coming in under forecast2015-16 Mainly due to Agronomy Farm's revenue coming in under forecast2016-17 Mainly due to deficits at Westwind Ranch, Agronomy Farm & Arabian Horse Center2017-18 Mainly due to the surplus at Westwind Ranch was less than budgeted

(157,969)

(15,263)

(464,641)

(299,575)

211,441

244,926

287,176

(132,432)

(46,797)

230,302

61,989

42,676

(12,352)

(135,366)

103,313

(500,000)

(400,000)

(300,000)

(200,000)

(100,000)

-

100,000

200,000

300,000

400,000

2014-15 2015-16 2016-17 2017-18 2018-19

Agriculture Aid to InstructionNet Surplus/(Deficit)


103

4,100,819

5,697,604

4,669,398

4,162,895

4,578,035

4,258,069

5,619,343

4,346,298

4,120,777

4,396,939 4,389,641

5,768,481

6,967,988

4,469,434

4,264,341

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

College of the Extended UniversityRevenue


104

Footnotes

2014-15 Mainly due to Program Development not budgeted2015-16 Mainly due to Administration and Aviation Hospitality coming in over budget2016-17 Mainly due to Administration expenses lower than budgeted2017-18 Mainly due to lower than budgeted expenditures 2018-19 Mainly due to higher than budgeted revenue

296,551

956,728

592,384

480,878

544,677

154,088

407,620

325,090

373,906

449,208

478,555

245,944

315,081

145,020

255,182

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2014-15 2015-16 2016-17 2017-18 2018-19

College of the Extended UniversityNet Surplus


105

2014-15 Mainly due to expenditure exceeding budget and revenue under budget2015-16 Mainly due to revenue exceeding budget, while expeditures under budget2016-17 Mainly due to revenue exceeding budget, while expeditures under budget2017-18 Mainly due to expenditure exceeding budget and revenue under budget2018-19 Due to $1.8M adjustment to revenue from Grants Kellogg Endowment payable

484,721

672,599 668,617

592,627

2,765,992

575,000 575,000

460,500

630,174

868,010

794,856

575,004 575,004

460,500

630,174

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2014-15 2015-16 2016-17 2017-18 2018-19

Unrestricted Foundation ProgramsRevenue


106

Memorandum Date: February 14, 2020 To: Board of Directors Cal Poly Pomona Foundation, Inc. From: David F. Prenovost Senior Managing Director/CFO Enclosure: Current LPP with 457(b) Vesting Requirements 457(b) vs HRA Plan Provisions & Eligibility Chart

Graph Comparing 457(b) Expense with HRA Expense Subject: Improving the Longevity Pay Plan Funding Model by Adding the

Health Reimbursement Account and Removing the 457(b) In February 2009, Foundation discontinued offering post-employment healthcare benefits to employees hired on or after March 1, 2009. In May 2010, Foundation adopted a new benefit called the Longevity Pay Plan (LPP). The purpose of the LPP was to offer some level of benefit to eligible newly hired employees who would not be eligible for post-employment healthcare benefits through Foundation’s group plan. The LPP program applies to employees hired on or after March 1, 2009, and who have worked for Foundation for 10 or more years. Meeting these two criteria allows an employee to receive a Foundation cash benefit via the 457 plan. The current cash benefit, and funding model, permits Foundation to contribute a pre-tax cash amount into the employee’s 457(b) account based on a formula. The formula factors in the rate of pay for an individual employee, and that rate of pay is multiplied by a percentage based on full time years of service of the employee. As an employee earns more years of service, the percentage factor increases as longevity increases, generally (see attached chart). Once an employee ends their employment with Foundation for any reason, funds from the 457(b) account may be withdrawn, are subject to Federal income tax, and may be used for any purpose. The first two employees will become eligible for a cash payment into their 457(b) from the LPP benefit this year. However, due to favorable tax changes in the Internal Revenue Code, Foundation management has been evaluating the use of a Health Reimbursement Account (HRA) which is tax free, to replace the existing 457(b) funding model, which is a tax deferred plan. An HRA is more closely aligned with the original intent of the LPP (to help cover medical insurance expenses into retirement years), and unlike the 457(b) funding model, an HRA allows Federal tax-free withdrawals.

108

The proposed HRA plan will have vesting parameters modeled loosely after the vesting schedule for CalPERS pension benefits. Under the HRA funding model, the vesting period will start at 10 years, same as the CalPERS postretirement healthcare benefits, an employee will not begin to receive contributions to the proposed HRA until they have also reached 52 years of age. For example, HRA eligibility will require an employee to have at least 10 years of full time service with Foundation and be at least 52 years old to be eligible to receive contributions to the employee’s HRA account. The amount Foundation will contribute to the proposed HRA for each eligible employee will be equal to the Foundation’s monthly healthcare premium paid for the “Employee Only” level, and this monthly amount will mirror the existing premiums each year for “Employee Only” level. The contribution to the HRA Plan will occur once per year, typically in July, and will represent the prior year vesting amounts for each employee meeting the minimum eligibility requirements. The interactive excel worksheet illustrates the current forecasted contributions to the current Federal and State taxable 457(b) funding model, and compares that expense to the forecasted expense under the Federal tax free proposed HRA funding model. PROPOSED ACTION: The following resolution is recommended for approval by the Finance and Personnel Committees: RESOLVED, that the Board of Directors approves Foundation Management’s proposal to develop and implement a Federal tax free HRA vesting and funding model for eligible employees hired on or after March 1, 2020 for its Longevity Pay Plan. BE IT FURTHER RESOLVED, that upon approval of this resolution by the Board of Directors, the Senior Managing Director/Chief Financial Officer of the Cal Poly Pomona Foundation is authorized and directed to take any and all action as may be necessary to effectuate this Resolution. PASSED AND ADOPTED THIS 25th DAY OF FEBRUARY 2020. __________________________________ Dr. Lea Dopson, Secretary/Treasurer Board of Directors Cal Poly Pomona Foundation, Inc.

109

Plan Provision 457(b) HRA

Eligibility 10 yos hired on or after 3‐1‐2009 and before 3‐1‐2020

Age 52 & 10 yos hired on or after 3‐1‐2020

Vesting 100% upon eligibility 100% upon eligibility

Benefit 2% of base pay in the 1st year, escalating 0.5% per each additional yos

100% of CPPF’s share of the lowest cost premium contribution based on Employee Only Annual contributions July 1 after age 52.

Growth in Benefit due to: Salary Scale (Assume 3.25% salary growth; same as OPEB valuation)

COLA on employer share of premium paid (Assume 5.00%/yr.)

Participant Access to Funds After employment After employment

Individual Participant Accounts Maintained

Yes, keeping track of deposits and investment earnings

Yes, keeping track of deposits and investment earnings

Investment Earnings Yes Yes

Investment Allocation Employee directed Employee directed

Forfeitures No No

Employer Contributions Made annually to each participant account in the amount of benefit earned

Made annually to a trust

Taxable Withdrawals Yes No

Employer Discretion over Amount of Annual Contribution?

Yes, the BOD can decide not to make a contribution in any given year.

No

Notes:

1. Foundation eliminated retiree healthcare benefits for employees hired on or after 3‐1‐2009. The LPP was created (using the 457 plan) to offer a cash benefit to help offset the loss of retiree healthcare insurance for newly hired full time employees.

2. 457(b) funding model requires the employee to be hired on or after 3‐1‐2009 and before 3‐1‐2020 in a full time status. The HRA funding model requires the employee to be hired on or after 3‐1‐2020 in a full time status. Employees hired prior to 3‐1‐2009 are eligible for retiree healthcare benefits and therefore are not eligible for the existing LPP cash payment using the 457 and or the HRA plans. Employees hired prior to 3‐1‐2020 will not be eligible for the HRA plan.

3. Using the HRA as the funding model compared to the 457 model will approximately equal the cost to Foundation during the first 5 years. After that period and going forward, the cost to Foundation will decrease to approximately 50% using the HRA funding model.

110

Purpose. The purpose of this policy is to provide the structure to offer a new benefit program designed

to reward employees for their long term commitment and contributions to Foundation. This new

benefits program is called “Foundation’s Longevity Pay Plan”, hereinafter referred to as the “FLPP”.

Although the FLPP is not intended to replace the retiree health benefits program offered prior to March

1, 2009, employees will be able to use funds from the FLPP for any purpose, thereby providing

maximum flexibility to the individual who has earned these funds.

Applicability. This policy applies to all “Benefited” employees of Foundation to the extent it is not in

conflict with rules and regulations associated with grants and contracts.

Policy Provisions.

1. To be eligible for the FLPP, employees of the Foundation must be first hired on or after March 1,

2009. Employees must be classified as full time (scheduled to work at least 30 hours per week

on average during the full 12 month fiscal year) and be classified as a “benefited employee”, and

must have completed the periods of employment as stated below. Student employees and

employees not working at least 30 hours per week are not eligible for the FLPP.

2. An employee must have at least 120 months of benefited service with Foundation to begin to

receive funds from the FLPP. Employees who work partial years due to seasonal lay-offs or

partial year schedules (i.e.: 10/12 months) and are otherwise classified as “benefited

employees” are eligible to have their time pro-rated based on the hours they have worked as a

benefited employee.

For example, when a benefited employee is laid off during the months of July and August due to

work schedule reductions beyond the control of the employee, such an employee would still

receive credit for the two months they were laid off even though they did not actually perform

services for Foundation during those two months.

3. Foundation will seek approval from the Board of Directors, on an annual basis, for an aggregate

amount to be contributed to the FLPP. Those funds will then be applied to each employee’s

account per the below schedule.

111

All contribution amounts for the FLPP are reviewed annually by the Board of Directors and are

completely discretionary from year to year – the Board of Directors might approve or deny the

request to apply Foundation contributions into the FLPP in any given year. However, once

approved by the Board of Directors, the FLPP contributions are irrevocable and will be credited

to the individual employee’s account. Many factors are considered in the review process by the

Board of Directors, although the two key factors include the overall financial performance of

Foundation for the prior fiscal year, and the expected fiscal constraints during future fiscal years

expected by either the Foundation and or University.

4. Schedule for FLPP

a. Years of Completed Service Compensation Factor

10 2%

11 2.5%

12 3%

13 3.5%

14 4%

15 5%

16 5.5%

17 6%

18 6.5%

19 7%

20 10%

25+ 15%*

5. Once an employee has achieved the completed Years of Service as outlined in the above

Schedule, the corresponding Compensation Factor will be applied to the total annual base

wages paid to the employee for the last calendar year, and this will be the amount Foundation

will contribute into the FLPP on the part of the eligible employee. All FLPP contributions will be

deposited directly into the Foundation 457(b) plan, and become fully vested by the employee

immediately.

I acknowledge that it is my responsibility to read the above items and where applicable, I agree to comply with their provisions as a condition of my employment.

Employee Signature: ___________________________________ Date: ______________5/18/17, 6:42:22 PM

112

©2019 ARTHUR J. GALLAGHER & CO. | AJG.COM

November 19, 2019

Introducing HealthInvest HRAA tax-free health reimbursement arrangement for public and non-profit employees

Dutch Ross, HealthInvest HRA National Sales DirectorSheilla Jones, Area Counsel HRA Plan and Trust Consulting

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• Account-based group health plan• Funded by the employer• Assets held in trust (VEBA)• Tax-free contributions• Tax-free earnings• Tax-free reimbursements of qualified

out-of-pocket medical care expenses and premiums

• No high deductible health plan required• No IRS contribution limits• Full carryover of unused balances• Surviving dependents can use funds

What is a funded HRA?

HRAHealth Reimbursement Arrangement

“Medical Expense Reimbursement Account”

“VEBA”

“MERP”

“Retirement Health Savings Account”

“Retirement Medical Savings Account”

“Post Employment Health Plan”

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• Retiree

• Spouse

• IRS qualified dependent(s) Qualifying child (through age 26) Qualifying relative

Whose expenses are eligible?

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• Out-of-pocket medical expenses are defined by the IRS Medical, dental, and vision

Co-payments, deductibles, co-insurance

Prescription drugs

• Qualified insurance premiums Medical, dental, and vision

Medicare and Medicare supplement plans

Tax-qualified long-term care (subject to IRS limits)

Qualified Expenses

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Depending on your employer’s plan design, you may be able to use your post-separation account for dental and vision expenses during active employment.

Post-separation Benefits Plan

* If you become re-employed by the employer that made (or is making) contributions to your post-separationaccount, you will not be eligible to file claims to that account for expenses you incur while re-employed.

For any HRA-eligible employee, including those who are not eligible to receive contributions to the In-service Benefits Plan

Reimburses expenses after you separate from service or retire*

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Customizable Plan Design

• Eligibility– Completed five years of work and attained at least age 52

• Funding– Eligible employees will be 100% vested and contributions will be made

to a trust for their benefit during their active employment only, accordingly no OBEP obligation will be incurred

• Claims-eligible upon separation from service*We will need to draft the eligibility requirements in a way that we don’t discriminate in favor of highly compensated employees.

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Introducing HealthInvest HRA

HealthInvest HRA is a turn-key, funded HRA solution for actives and retirees.

Gallagher has been providing funded HRA programs since 1984, longer than anyone in the market.

Single- and multiple-employer HRA plan and trust clients

170,000+

Participants

1,150+

Employers

Over $1 billion

in total funded HRA

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Proven, turn-key, full-service SolutionWe’ll handle the details

Administration and Recordkeeping

Custodial, Trust, and Banking

Customer Care Center

Consulting and Compliance

Investments

Plan Communication and Education

GallagherHRA

Service Manager

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Common funding sources

• Cash-outs of unused leave time

• Excess benefit dollars• Medical opt-out dollars• Direct employer

contributions• Contributions as part of

COLA

• Mandatory employee contributions

• Wellness incentives

• Retirement incentives

• Executive/Key employee contributions (Section 115 trust; post-separation premiums only)

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• Participant-directed• Invest your HRA by choosing from a menu of

13 investment funds• Can select any combination of funds• Can change allocation monthly• Earnings are tax-exempt

Investment Options

Investment Fund Overview is updated quarterly and contains historical performance data for each fund.

The choiceis yours.

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• Multiple options to fit every participant Online

HRAgo® mobile app

Paper form (mail or email)

OneBridge Benefits Card (debit card)

• Direct deposit available

• Most claims processed within 1-3 business days

Getting Money Out

H RA

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Responsive Website Platforms

Web portals are optimized for viewing on a variety of devices

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Online Participant PortalReal time account dashboard

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• Add mobile access. Download HRAgo® from the App Store or Google Play

• Snap pictures of supporting documentation and submit claims from your smartphone

• Check your balance, view and update your investments, update your contact information, and more!

Mobile Access

HRA

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Thank you!

Dutch Ross, HealthInvest National Sales Director303.889.2768 I [email protected]

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Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SECRegistered Investment Adviser. Gallagher Fiduciary Advisors, LLC may pay referral fees or other remuneration to employees ofAJG or its affiliates or to independent contractors; such payments do not change our fee. This document contains confidential andproprietary information that belongs to Gallagher Fiduciary Advisors, LLC and is protected by copyright, trade secret and other Stateand Federal laws. Any copying, redistribution or retransmission of any of the contents without the written consent of GallagherFiduciary Advisors, LLC is expressly prohibited. Gallagher Fiduciary Advisors, LLC is a single-member, limited liability company,with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC northeir affiliates provide accounting, legal or tax advice.

Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. Gallagher Benefit Services, Inc. is alicensed insurance agency that does business in California as Gallagher Benefit Services of California Insurance Services and inMassachusetts as Gallagher Benefit Insurance Services. Neither Arthur J. Gallagher & Co., nor its affiliates provide accounting,legal or tax advice.


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HealthInvest HRA

Plan Adoption Process and Flow of Funds

1. Plan Sponsor Decides to adopt HealthInvest HRA Plan

2. Plan Sponsor and GBS execute

Plan Adoption

Agreement

Master Trust Adoption Agreement

Gallagher – HRA Service Manager In the Adoption Agreement and Plan Documents, Plan Sponsor engages

and directs Gallagher as HRA Service Manager to perform or sub-

contract any or all of the administrative services to third-party

service providers.

System Administration, Recordkeeping, Claims Payment,

Reporting

Outgoing mail and print services

Scanning Services

Plan Operation

Compliance and Consulting

Customer Care

Center

Investment Management (Fund lineup)

HealthInvest HRA Program Fully Serviced, Turnkey Plan

Trustee and Master Trustee Plan Sponsor trust adopts

HealthInvest Master Trust and engages the Master Trustee for trustee, custodial, banking, and

transfer agent services

Trustee/custodial Banking

Transfer agent (investment trades)

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Flow of Funds for HealthInvest HRA Plan

Employer contributions $$$$$ remitted to Plan

Master Trustee/Custodian/Transfer Agent Employer contributions are held and invested on an omnibus basis in the following custodial accounts

Participant Accounts

Balances, investment earnings/losses, expenses, and fees, credited through sub-accounting by plan record-keeper, who also aggregates participant transactions and

provides aggregate daily trade instructions to Master Trustee bank

Claims Payment Account Moneys transferred from participant accounts to pay claims

$$$ transferred at participant direction to pay claims

$$$ collected from plan administration

fees

Reimbursements paid to participants

Participant Accounts $$$$ Participant

Accounts $$$$

Participant Accounts $$$$ Participant

Accounts $$$$

HRA Service Manager Moneys transferred from participant for plan operation

Pays subcontractor fees and other plan operation expenses

Contribution Account From the contribution account, funds are allocated and invested based upon participant elections. HealthInvest HRA record-keeper will do participant sub-

accounting.

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Memorandum

To: Dutch Ross From: HealthInvest HRA Legal and Compliance Date: July 31, 2019 Re: Trust Options for Cal Poly Foundation (the “Foundation”)

______________________________________

The following is a summary of trust options available to Cal Poly Foundation for funding HRA plan assets. We understand that the Foundation is interested in implementing a post-separation health reimbursement arrangement (HRA) plan for some or all of its employees. In doing so, the Foundation would like to explore its options for funding contributions to the plan and holding plan assets on a tax-exempt basis. The Foundation currently participates in a VEBA trust established to fund and provide pension plan benefits for a number of entities related to the Foundation, and for which the Foundation has a representative on the Board of Trustees/Directors. For funding of the HRA plan, the Foundation could: (1) establish a new single-employer VEBA trust; (2) establish a new multiple-employer VEBA trust; (3) utilize a non-VEBA trust; or (4) utilize the already-established pension plan VEBA trust in which it participates. Each option is explained more fully below. Single-employer VEBA trust. Gallagher can assist the Foundation in establishing its own VEBA trust into which it can fund its assets. The trust will require initial application for exemption from the IRS and it must file an annual IRS Form 990 tax return. Since the Foundation’s plan is subject to ERISA, an annual financial audit would be required. The audit and tax returns are trust administration costs that are not included in the HealthInvest HRA fees for administration of the plan. These costs could be assumed by the Foundation or allocated to participants as an additional trust administration fee. We can recommend and engage a firm to perform these functions, which would cost approximately $10,000 annually, or the Foundation could engage its own audit firm to perform these functions. Initial setup cost for a single-employer VEBA trust, including drafting the Trust Agreement and filing for exemption with the IRS, would be $3,500. However, if any complications arose in the application process, additional pass-through fees or expenses may arise. Multiple-employer VEBA trust. The Foundation may also consider establishing a multiple-employer VEBA trust that can be utilized by other entities affiliated with the Foundation and/or other California non-profit entities. Each participating entity would adopt its own separate plan for which it has complete and independent control. The multiple-employer trust would simply serve as a funding vehicle for each entity’s plan assets. Initial trust set-up cost of $3,500 would be borne by the Foundation, but we could discuss ways in which that cost might be shared by other adopting entities. If any complications arose with the application process, there may be additional pass-through fees or expenses. Annual trust administration costs, including an annual financial audit and IRS Form 990 tax return would be shared by all participating employers on a pro-rata basis, based upon participant count. Depending on the timing of the Foundation’s plan adoption and the number of other entities who

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participate in this trust, the Foundation’s annual trust administration costs would be no greater than the single-employer option of $10,000 and would decrease proportionately as other plan sponsors adopt this multiple-employer trust. Non-VEBA trust. Similarly to the single-employer VEBA trust described above, Gallagher can assist the Foundation in establishing its own non-VEBA trust into which it can fund its assets. The advantage would be that a non-VEBA trust would not be subject to some of the stringent rules and regulations and transfer limitations applicable to VEBAs. The trust may require initial application for exemption from the IRS, but we believe this will be a shortened application process since the exemption is based upon the existing tax-exemption for the Foundation. Similar to a VEBA trust, the non-VEBA trust will likely be required to file an annual IRS Form 990 tax return, and an annual financial audit would be required under ERISA. The audit and tax returns are trust administration costs that are not included in the HealthInvest HRA fees for administration of the plan. These costs could be assumed by the Foundation or allocated to participants as an additional trust administration fee. We can recommend and engage a firm to perform these functions, which would cost approximately $10,000 annually, or the Foundation could engage its own audit firm to perform these functions. Initial setup cost for a non-VEBA trust, including drafting the Trust Agreement and filing for exemption with the IRS, would be $3,500. If complications arose with the filing, additional pass-through costs or fees may apply. Use of existing pension plan trust. The Foundation may be able to utilize the previously established pension plan VEBA trust to fund its HRA plan assets. The advantages to this option are as follows:

Utilizing the existing trust would eliminate the set-up costs associated with a new trust;

Possibly all or most of the expenses for the trust’s annual audit and tax return may also be eliminated, though we cannot opine on how the existing Board may decide to allocate trust expenses when the HRA plan is added to the trust; and

Other entities participating in the pension plan would also be able to adopt the HealthInvest HRA for their employees.

However, there are a number of considerations that might make use of the existing pension plan trust less desirable, including:

Lack of Control: We assume that administration of the existing VEBA trust is controlled by its Board. This may result in the Board making discretionary and administrative decisions that could impact the Foundation’s separate HRA plan without the consent or control of the Foundation.

Competitor Concerns: We understand that Keenan & Associates is the plan and trust consultant for the existing VEBA trust and pension plan. While this service is likely limited to the pension plan, Keenan & Associates also offers a funded HRA program that competes with HealthInvest HRA. Gallagher would likely be uncomfortable with Keenan & Associates having access to information related to the HRA plan and Gallagher’s administration of it.

Different Custodians: The HealthInvest HRA requires use of the HealthInvest Master Trustee and Custodian, Washington Trust Bank. This would likely require amendment of the trust document

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and approval by the Board to allow the HRA plan assets to be held by a different custodian than the one used for the pension plan.

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Memorandum Date: February 3, 2020 To: Board of Directors Cal Poly Pomona Foundation, Inc. From: David F. Prenovost Senior Managing Director/CFO

Subject: Status Report on the 2019-2020 Foundation Projects The Board will receive an update from Edwin Santiago, Director of Marketing, regarding new and exciting campaigns coming up for our Foundation operations.

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