city of los angeles deferred compensation plan...business sentiment has turned positive,...

First Quarter 2015

City of Los AngelesDeferred Compensation PlanDefined Contribution Performance Evaluation

Services provided by Mercer Investment Consulting, Inc.

Contents

Mercer

Market Environment..................................................................................................................................................................................................................... 1

Summary ................................................................................................................................................................................................................................... 14

Fund Profiles .............................................................................................................................................................................................................................. 29

Disclaimer ............................................................................................................................................................................................................................... 100

Market Environment

1

1.81.0

1.63.8

-0.74.04.3

6.62.0

2.34.4

3.54.9

5.62.2

0.01.61.41.62.22.5

-2.5-4.0

4.04.2

2.5-5.9

-8.2

-15 -10 -5 0 5 10

Russell 3000S&P 500

Russell 1000Russell 1000 Growth

Russell 1000 ValueRussell Midcap


Russell 2000 Value

MSCI ACWIMSCI ACWI Small CapMSCI AC World ex US

MSCI EAFEMSCI EAFE Small Cap

MSCI EM

Barclays T-Bill 1-3 monthsBarclays Aggregate

Barclays TIPS 5-10 yrsBarclays Treasury

Barclays CreditBarclays High Yield

Citi WGBIJP GBI-EM Global Div.

NAREIT Equity REITsNAREIT Global REITsHFRI FOF Composite

Bloomberg Commodity TRS&P GSCI Commodity

Returns (%)

12.412.712.7

16.19.3

13.78.2

12.14.4

5.43.2

-1.0-0.9

-2.90.4

0.05.7

2.95.46.7

2.0-5.5

-11.1

22.716.1

5.4-27.0

-40.3

-50 -40 -30 -20 -10 0 10 20 30 40

Russell 3000S&P 500


Russell 1000 ValueRussell Midcap


Russell 2000 Value

MSCI ACWIMSCI ACWI Small CapMSCI AC World ex US

MSCI EAFEMSCI EAFE Small Cap

MSCI EM


Barclays TIPS 5-10 yrsBarclays Treasury

Barclays CreditBarclays High Yield

Citi WGBIJP GBI-EM Global Div.

NAREIT Equity REITsNAREIT Global REITsHFRI FOF Composite

Bloomberg Commodity TRS&P GSCI Commodity

Returns (%)

Performance Summary: Quarter in ReviewMarket Performance

First Quarter 2015Market Performance

1 Year

Source: Standard & Poor's, Russell, MSCI Barra, NAREIT, Bloomberg Source: Standard & Poor's, Russell, MSCI Barra, NAREIT, Bloomberg

DOMESTIC EQUITY

INTERNATIONAL EQUITY

FIXED INCOME

ALTERNATIVES

DOMESTIC EQUITY

INTERNATIONAL EQUITY

FIXED INCOME

ALTERNATIVES

2

World Economic Growth (Projections as of March 2015)

Macro Environment: Economic Review

Source: Bureau of Economic Analysis

Annual GDP Growth

Source: Bloomberg

The outlook for developed economies improved in the first quarter.Although growth in the US was slower than expected, data from theEurozone exceeded expectations. The IMF projects advanced economieswill expand by 2.4% this year, which would be the strongest since 2007.

The US economy appears to have sputtered as growth is estimated tocome in below 1%. Temporary factors appeared to play a role, includingthe weather and west coast ports strike. The strong dollar and a decline inenergy investment also contributed. However, economists remainoptimistic on the outlook for the remainder of the year and economistspolled by Bloomberg are forecasting growth of 3%. The unemploymentrate fell to 5.4% in the first quarter as the economy added an average of197,000 jobs a month.

The Eurozone economy improved, benefiting from the decline in the euro,the drop in oil prices and an uptick in credit growth. The IMF forecaststhat the region will grow by 1.5% in 2015, an increase from 0.9% in 2014.Recent data has surprised to the upside, suggesting possible upwardrevisions to growth forecasts.

After a difficult 2014, the outlook for Japan improved during the firstquarter. Business sentiment has turned positive, unemployment hasdeclined to its lowest level since 1997 and nominal wage growth isexpanding at its fastest clip since the mid-2000’s. Analysts polled byBloomberg forecast that Japan will expand by 1.0% in 2015, a markedimprovement from 2014 when growth was flat.

While developed growth continues to show signs of improvement,emerging growth is decelerating, although there were wide divergencesacross EM economies due to varying impacts of weak commodity pricesand the willingness to implement reforms. The outlook in India hasimproved substantially with growth forecasted to rise to 7.4%. In contrast,the Russian and Brazilian economies are forecasted to shrink in 2015.

Chinese growth slowed in the first quarter as credit and investmentactivities fell further. It is possible that growth could fall below 7% for thefirst time since 1990. However, the slowdown has a silver lining if policymakers continue to address the structural imbalances in the economy.

-4

-2

0

2

4

6

8

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

(F)

(%)

2.4 2.6

0.0

1.6

-0.4

1.40.4

7.4

4.7

0.2 0.6

3.0 2.6

1.01.6

0.5

2.20.9

7.0 7.4

-0.7

-4.0-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

US

UK

Japa

n

Ger

man

y

Italy

Spa

in

Fran

ce

Chi

na

Indi

a

Braz

il

Rus

sia

(%)

2014

2015 (f)

3

-40

-20

0

20

40

60

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

(%)

Euro UK Pound

Yen Swiss Franc

Macro Environment: CurrenciesPerformance of Foreign Currencies versus the US Dollar

Currency Valuation versus US Dollar (Based on Relative PPP)

Source: Bloomberg

Source: Bloomberg

Undervalued relative to the dollar

Overvalued relative to the dollar

The trade-weighted dollar continued its ascent during the first quarter,rising 8.1%. The dollar advanced by as much as 9.7%, but pared gainsafter the March FOMC meeting. The euro tumbled 11.3%, while the yenwas virtually flat. With a few exceptions, commodity sensitive currenciesand emerging market currencies also declined.

The current and expected level of global interest rates continue to impactcurrency markets. For example, the 10-year US Treasury ended thequarter yielding 1.9% compared to 0.2% in Germany and 0.4% in Japan.With global savings running high, the dollar should continue to benefitfrom foreign investment flows.

Although it is unclear when and how quickly the Fed will ultimately raiserates, we believe it will do so well ahead of other major central banks.This should lead to a US yield advantage on the short end of the curveand support the dollar over the intermediate-term. While the ECBrecently initiated a €1.1T QE program and Japan’s continues its efforts toreflate through large-scale QE, the Fed is unlikely to re-engage in QEabsent an unexpected shock.

The dollar has some long-term headwinds. While not at unprecedentedlevels, the dollar is priced richly against a basket of EAFE currenciesbased on purchasing power parity (PPP). In addition, the US is running asizeable current account deficit, and is expected to experience higherinflation than other economies, which tends to result in long-run currencydepreciation. While these factors argue in favor of the dollar remaining ina secular decline phase, they likely will not prove a serious hurdle overthe short-term.

A near-term risk for the dollar is that its appreciation could be self-limiting. A strong dollar impedes US growth and inflation, which may putFed rate hikes on hold. Calculations by the IMF suggest that a 10%appreciation in the real trade-weighted dollar has an equivalent effect asa 100 basis-point rate hike.

Dollar strength is also a consensus position, suggesting the potential of ashort-term reversal. During the late nineties, the dollar rallied and thegreenback corrected by 8% before continuing to trend higher.

2.21.21.2

0.1-0.4

-1.1-3.4

-4.2-4.9

-6.9-8.4

-11.3-16.8

-9.0-2.6

-3.70.3

-14.1-4.3

-14.4-13.9

-11.1-17.2

-12.9-22.1

-28.9-35 -30 -25 -20 -15 -10 -5 0 5 10

Swiss FrancTaiwan DollarIndian Rupee

Chinese YuanJapanese Yen

Korean WonMexican Peso

New Zealand DollarGB Pound

Australian DollarCanadian Dollar

EuroBrazilian Real

Returns (%)

Quarter

1 Year

4

Asset Class: US Equities – Style, Sector, Cap Performance Style and Capitalization Market Performance

Sector Performance

Source: Standard & Poor's, Russell, Bloomberg

Source: Russell 1000 GICs Sector

Broad MarketUS equities moved higher during the first quarter benefiting from asupportive macro environment. The Russell 3000 index returned 1.8%;however, returns varied significantly across market capitalizations andsectors.

Market Cap Large Caps: The S&P 500 rose 1.0% during the first quarter. Large cap

stocks lagged mid and small cap stocks by 300 bps and 330 bps,respectively, in the first quarter. Dollar strength may help explain relativesize performance as large caps are more multinational, while small capsare more domestically focused. However, over the last 12 months largecaps have outperformed small caps by 450 bps.

Mid Caps: The Russell Midcap Index gained 4.0% during the first quarterand was up 13.7% over the trailing year.

Small Caps: Small cap stocks surged in the first quarter, gaining 4.3%,and outperforming large and mid cap stocks. However, small caps wereup only 8.2% over the last 12 months, trailing large caps.

Style Value vs. Growth: Growth outperformed value across all market

capitalizations during the first quarter. Small cap growth was the leaderfor the quarter, spiking 6.6%. Large cap value was the laggard, declining0.7%.

Sector There was a wide dispersion in sector returns during the quarter. Utilities

plummeted 5.1%, while health care stocks spiked up 7.4%. Over thetrailing year, health care stocks jumped 27.5%, while energy stocks lost11.9% as oil prices dropped.

1.8

1.0

1.6

3.8

-0.7

4.0

5.4

2.4

4.3

6.6

2.0

12.4

12.7

12.7

16.1

9.3

13.7

15.6

11.7

8.2

12.1

4.4-5 0 5 10 15 20 25 30

Russell 3000

S&P 500

Russell 1000

Russell 1000 Growth

Russell 1000 Value

Russell Midcap

Russell Mid Growth

Russell Mid Value

Russell 2000

Russell 2000 Growth

Russell 2000 Value

Returns (%)

Quarter

1 Year

7.4

4.6

2.0

1.4

1.3

1.1

0.2

-0.9

-2.3

-5.1

27.5

17.3

4.2

17.6

16.9

4.6

8.6

10.7

-11.9

10.2

-20 -15 -10 -5 0 5 10 15 20 25 30 35

Health Care

Consumer Discretionary

Telecomm Services

Info Tech

Consumer Staples

Materials

Industrials

Financials

Energy

Utilities

Returns (%)

Quarter

1 Year

5

Asset Class: US Equities – Valuation ReviewS&P500 – P/E Ratio

S&P500 – Estimated Equity Risk Premium1

Versus Long-Term Treasuries

Source: S&P, Bloomberg, Mercer

1 Definitions:Shiller’s P/E= Current S&P 500 price/average 10-year real earningsNormalized P/E= Current S&P 500 price/(current trailing twelve month sales * 6.6% profit margin)Equity Risk Premium= Earnings yield (1/PE) minus the real yield on long-term Treasuries

Source: S&P, Bloomberg, Mercer

The P/E ratio on trailing earnings moved from 19.4 to 20.2 in the firstquarter, which is above the median of 17.4 since 1956. Valuations aremuch higher based on measures that adjust for record high profitmargins. The P/E ratio based on average 10-year real earnings (Shiller’smethodology) stands at 24.0.

S&P 500 earnings could face headwinds in the near-term. Low oil pricesare having an immediate negative impact on energy earnings while thestrong dollar is weighing on foreign sales. BCA research estimates that a10% appreciation in the trade-weighted dollar reduces S&P 500 EPS byaround 2.5%.

Companies have released negative guidance and analysts have slashed2015 EPS estimates by 11% in the last 6 months. With the bar set lower,a positive earnings surprise is a possibility; however, we are concernedthat analysts expect already record high profit margins to expand evenfurther.

The intermediate-term outlook for earnings is mixed. Lower oil prices willultimately reduce input costs, while healthy economic conditions shouldsupport revenue growth. However, with the labor market tightening,employees may begin to capture a large share of growth through wageincrease..

On a relative basis, valuations remain fairly attractive against bonds. Aconservative estimate of the equity risk premium finished the fourthquarter at 3.0%, which is near the long-term median. While we expectstocks to outperform bonds, current valuations leave little margin for errorand suggest long-term returns will be below normal.

0

5

10

15

20

25

30

35

40

45

50

1957

1959

1961

1963

1965

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1969

1971

1973

1975

1977

1979

1981

1983

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1987

1989

1991

1993

1995

1997

1999

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2005

2007

2009

2011

2013

2015

Shiller's (10-yr Avg. Real Earnings)

Normalized Earnings

Reported Earnings

-2

0

2

4

6

8

10

12

14

1951

1955

1959

1963

1967

1971

1975

1979

1983

1987

1991

1995

1999

2003

2007

2011

2015

(%)

6

Asset Class: International Equities – Performance Review Global equities performed solidly in the first quarter. The MSCI ACWI

Index gained 2.3% in the first quarter and 5.4% over the trailing year.Non-US equities outperformed in local terms, benefiting from improvedgrowth forecasts, although a strong dollar detracted from performance.The MSCI ACWI-ex US Index gained 3.5%.

Global small cap equities outperformed global large cap equities in thefirst quarter as the MSCI ACWI Small Cap index earned 4.4%.

International developed stocks posted strong gains in the first quarterbenefiting from improved economic expectations. The MSCI EAFE indexreturned 10.9% in local terms, outperforming the S&P 500 by 990 bps.Currency declines weighed on the markets with international stocksearning only 4.9% in $US terms but they still outperformed US stocks.Over the last 12 months, international developed stocks gained 17.7% inlocal terms, while the S&P 500 returned 12.7%. However in $US terms,the MSCI EAFE index was down 0.9% as the euro and the yen tumbled.European stocks spiked up 11.6% in local currency terms during the firstquarter, benefiting from QE, but returned only 3.5% in $US terms. Overthe trailing year, European stocks returned 14.7% in local terms, butdown 4.9% in $US terms. Japanese stocks jumped 10.2% in the firstquarter, supported by an uptick in GDP growth and an aggressive BOJstimulus. Over the trailing year, Japanese stocks were up 30.5% in localcurrency terms and 12.1% in $US terms.

International small cap equities outperformed international large capsin the first quarter. The MSCI EAFE small cap index earned 5.6%,exceeding large caps by 70 bps.

Emerging market stocks enjoyed a solid quarter, rising 4.9% in localcurrency terms and outperforming US stocks by 390 bps. However,currency declines pushed the $US return down to 2.2%. There continuesto be a wide dispersion in returns, with countries enacting structuralreforms outperforming. Chinese stocks gained 8.1% and Indian stocksrose 5.4%, while Brazilian stocks fell 14.6%. Russian stocks spiked18.6%, but are still down 25.1% over the last 12 months due to theUkraine crisis and the drop in energy prices..

Developed Country Performance

Global and International Equity Performance

Emerging Market Performance

Source: MSCI, Bloomberg



2.3

4.4

3.5

4.9

5.6

5.8

3.9

5.4

3.2

-1.0

-0.9

-2.9

1.1

-2.9-10 -5 0 5 10

MSCI ACWI

MSCI ACWI Small Cap

MSCI AC World ex US

MSCI EAFE

MSCI EAFE Small Cap

MSCI EAFE Growth

MSCI EAFE Value

Returns (%)

Quarter1 Year

2.2

0.9

5.2

-9.6

0.4

-23.2

10.7

-20.9-30 -25 -20 -15 -10 -5 0 5 10 15

MSCI EM

EM Europe & M/East

EM Asia

EM Latin America

Returns (%)

Quarter1 Year

0.81.2

-6.0

3.5-1.0

8.34.7

6.8-0.6

10.23.1

10.912.2

-6.1-4.9

-5.5-2.6

-8.4-15.7

-9.512.1

-6.0-25 -20 -15 -10 -5 0 5 10 15 20

North AmericaUSA

CanadaEurope

UKGermany

FranceItaly

SpainJapan

Australia

Returns (%)

Quarter1 Year

7

-60

-50

-40

-30

-20

-10

0

10

20

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

(%)

Asset Class: International Equities – Valuation Review Global Valuations

Valuation of MSCI Emerging Markets to MSCI World(Based on Average of P/E, P/B and P/CF)



Based on trailing earnings, European stocks appear expensive, trading aP/E of 19.5, which is a 36% premium to their historical average since1970. However, current valuations are being depressed by weakearnings. EPS are 36% below their pre-financial crisis peak and profitmargins remain 17% below their historical average since 1970. On acyclically-adjusted basis European stocks appear fairly valued inabsolute terms and cheap in relative terms at a P/E of only 16.1.Improved economic activity, an uptick in credit growth, the weak euro andthe drop in oil prices should support earnings. Additionally, some of theresulting liquidity from the ECB’s QE program is likely to find its way intoequities. Potential risks for Eurozone stocks include a left-tail event inGreece, a relapse in the economy and earnings disappointments.

Strong earnings growth has provided a nice tailwind for Japanese stocksand they trade at a reasonable 17x trailing earnings. Companies stillhave ample capacity to grow earnings as ROE remains nearly 20%below its pre-financial crisis peak. Lower energy prices and a weak yenshould help boost profits, although slowing growth in China is a concern.While the recent uptick in wages may compress profit margins, it couldlead to higher consumption and improved sales, further boostingearnings. If profitability continues its upward trend and returns to pre-crisis levels, Japanese stocks still appear fairly cheap at a P/E of 13.0.

On the surface, emerging market equity valuations are compelling. Theytrade at a P/E of only 13.7, a 6% discount to the historical average since1996. Relative to the developed market equities, EM stocks are priced ata 30% discount versus a historical average of 20% since 2000. However,their apparent attractiveness may be misleading as their cheapness isdriven by exposure to energy and financials. The median sector in theEM index trades at a more elevated P/E of 16.1. Furthermore, EMcountries face a number of headwinds in the form of a weak commodityprices, geopolitical risks, and slowing growth in China and a stronger USdollar/tighter US monetary policy. As such, we would not be surprised tosee EM stocks continue to underperform developed equities.

Historical average for the longest period availableHistorical average since 2000

20.019.5

17.3

13.7

24.2

16.1

13.0 12.712.5

10.08.9 8.2

2.91.9 1.4 1.62.0

3.1

1.72.6

0

5

10

15

20

25

30

MSCI US MSCI Europe MSCI Japan MSCI EM

P/E TrailingP/E NormalizedP/CFP/BDividend Yield

8

Asset Class: Fixed Income – Interest Rates and Yield Curve

Bond Performance by Duration

The curve shifted down and modestly flattened in the first quarter. Duringthe quarter, the 2-year yield declined 11 bps to 0.56%, while the 10- and30-year yields each fell 23 bps and 21 bps to 1.94% and 2.54%,respectively.

We expect interest rates will edge higher, but not sharply. The Fed islikely to raise short-term rates at a slow, measured pace, and the excesssupply of global savings should keep a lid on the intermediate and longend of the curve. With the ECB and BOJ likely to keep nominal ratesnear zero for years to come, demand for relatively high yieldingTreasuries should remain significant, thus limiting upward pressure onrates.

US Bonds rose as Treasury yields declined and credit spreadsnarrowed. The Barclays Aggregate index returned 1.6% and was up5.7% over the trailing year.

Long-Duration Bonds continued to move higher in the first quarter dueto the decline in bond yields. The Barclays Long Treasury index rose4.0% and gained 21.4% over the last 12 months. Long corporatesearned 3.3% and gained 12.6% over the last 12 months.

TIPS slightly underperformed Treasuries during the first quarter,advancing 1.4%. The real yield on 5-year TIPS fell below zero in the firstquarter, declining from 0.38% to -0.14%. The inflation breakeven rate on5- and 10-year TIPS edged slightly higher in the first quarter, but finishedat just 1.5% and 1.8%, respectively.

Treasury Yield Curve

Source: Federal Reserve

Source: Barclays, Bloomberg

0.01.6

1.61.3

4.0

2.21.8

3.1

2.31.9

3.31.41.9

0.05.7

5.43.2

21.4

6.74.3

12.8

6.84.5

12.63.12.9

0 5 10 15 20 25


Barclays TreasuryBarclays Int Treasury

Barclays Long Treasury

Barclays CreditBarclays Credit Intermediate

Barclays Credit Long

Barclays CorporateBarclays Int Corporate

Barclays Long CorporateBarclays US TIPS

Barclays TIPS 5-10 yrs

Returns (%)

Quarter

1 Year

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

3 mo 6 mo 1 yr 2 Yr 3 Yr 5 yr 7 yr 10 yr 20 yr 30 yr

(%)

Treasuries at 09/30/14TIPS at 09/30/14Treasuries at 12/31/14TIPS at 12/31/14Treasuries at 03/31/15TIPS at 03/31/15

9

Asset Class: Fixed Income – Credit and Non-US Bonds During the quarter, the yield on the Corporate index declined a modest

20 bps to 3.1% while the option-adjusted spread to Treasuries wasunchanged at 1.3%, which is moderately above long term norms. Givenabove average spreads and the favorable economic outlook, theshort-term downside risk for investment-grade corporate bonds relativeto Treasuries is limited. Over the intermediate-term, credit trends areimportant to monitor. While debt relative to equity remains low andinterest coverage ratios are high, the credit quality of the IG corporatebond universe has declined.

The yield on the Barclays High Yield index declined from 6.6% to 6.2%during the first quarter. The option adjusted spread narrowed by 17 bpsin the first quarter, finishing the quarter at 4.7%, which is modestly belowlong-term norms. Given our expectation of a strengthening economy, therisk of broad systemic defaults appears low.

US Treasuries rose as Treasury yields declined, benefiting from highdemand for US Treasuries due to global economic and monetary policyconditions. The Barclays Treasury Index returned 1.6% for the quarter.

US Corporate bonds gained 2.3% as yields declined. Corporatesoutperformed Treasuries by 70 bps as credit spreads were unchanged.Over the trailing year, corporate bonds outperformed Treasuries by 140bps, benefiting from solid GDP growth and a longer duration.

US MBS, Agency, CMBS, and ABS bonds benefited from the decline inyields as they rose 1.1%, 1.8%, and 0.9%, respectively, for the quarter.

High Yield bonds earned 2.5% in the first quarter. Credit spreadsdeclined, benefiting from stable macro conditions.

Global Bonds were hurt as the US dollar appreciated relative to foreigncurrencies. The US dollar benefitted from higher yields and fastergrowth. The Citigroup WGBI fell 2.5% in the quarter.

Local Currency Emerging Market Debt fell 4.0% in the first quarter asthe dollar continued to appreciate. Over the last year, currency declinescaused Local Currency EMD to lose 11.1%. $US-denominated debt hasfared better, returning 1.9% in the first quarter and 4.5% over the trailingyear.

Sector, Credit, and Global Bond Performance

Credit Spreads

Source: Barclays

Source: Barclays, Citigroup, JP Morgan, Bloomberg

02468101214161820

0

1

2

3

4

5

6

7

1995

1996

1997

1998

1999

2000

2001

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2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

(%)

OAS to Treasuries I/G Corporates - left scaleOAS to Treasuries MBS - left scaleHigh Yield Bond Credit Spread - right scale

Average

2.5

1.8

1.4

2.3

2.2

1.6

1.1

1.6

1.2

0.9

1.9

-4.0

-2.5

2.0

4.4

3.1

6.8

6.7

5.4

5.5

5.7

3.7

2.2

4.5

-11.1

-5.5-15 -10 -5 0 5 10

Barclays High Yield

Barclays CMBS

Barclays US TIPS

Barclays Corporate

Barclays Credit

Barclays Treasury

Barclays MBS

Barclays Aggregate

Barclays Agency

Barclays ABS

JP Morgan EMBI

JP GBI-EM Global Div. (local)

Citi WGBI

Returns (%)

Quarter

1 Year

10

Asset Class: Alternatives – Performance Review

REITs – Global and US REITs moved 4.2% and 4.0% higher in the firstquarter, benefiting from the decline in interest rates and an improvementin economic conditions. Global REITs were up 16.1% over the last 12months, while US REITs earned 22.7%. Listed real estate has benefitedfrom the drop in bond yields and higher property prices.

Commodities continued to decline in the first quarter. The BloombergCommodity index shed 5.9% in the first quarter as oil prices slid 10.6%on the dollar strength and excess supply arising from US shale. Naturalresource stocks fared better, but still lost 1.5% during the quarter.

Hedge funds enjoyed a solid quarter, outperforming global stocks andUS bonds. The HFRI Fund of Funds Composite index earned 2.5%,while the MSCI ACWI index rose 2.3% and the Barclays Aggregate indexreturned 1.6%. Hedge funds benefitted from the wide dispersion in themarkets. Macro strategies were up 3.4%, while relative value strategiesgained 1.7%.

Real Asset Performance

Hedge Fund Performance

Source: HFR

Source: NAREIT, Dow-Jones, UBS, Goldman Sachs

4.0

4.2

-5.9

-8.2

-5.2

-1.5

22.7

16.1

-27.0

-40.3

-2.5

-13.5

-60 -50 -40 -30 -20 -10 0 10 20 30 40

NAREIT Equity REITs

NAREIT Global REITs

Bloomberg Commodity TR

S&P GSCI Commodity

Alerian Energy MLP TR

S&P NA Natural Resources

Returns (%)

Quarter

1 Year

2.5

1.0

2.6

2.9

2.4

2.3

2.0

0.6

1.7

3.4

5.4

2.9

5.6

5.4

4.3

3.0

1.1

-3.6

3.4

9.5

-10 -5 0 5 10 15

HFRI FOF Composite

HFRI FOF: Conservative

HFRI FOF: Diversified

HFRI FOF: Strategic

HFRI Fund Weighted Composite

HFRI Equity Hedge (Total)

HFRI Event-Driven (Total)

HFRI ED: Distressed/Restructuring

HFRI Relative Value (Total)

HFRI Macro (Total)

Returns (%)

Quarter

1 Year

11

Mutual Fund Universe

The majority of domestic equity funds posted solid returnsduring the first quarter. Growth-oriented stock fundsoutperformed value stock funds by a wide margin across allmarket capitalizations. Domestic bond funds delivered positivereturns, with those invested in long duration funds deliveringthe best results. Developed international equity funds postedstrong returns, while those invested in emerging market equityfunds showed only a small gain.

Domestic equity 1QOne Year

Three Years

Five Years

Ten Years

Mercer Combined Eq. Univ. Median Return 2.6 9.6 15.2 13.8 8.2

Index PerformanceS&P 500 Index 1.0 12.7 16.1 14.5 8.0Russell Midcap 4.0 13.7 18.1 16.2 10.0Russell 2000 4.3 8.2 16.3 14.6 8.8

Mercer Domestic Eq. Univ. MediansLarge Cap Value -0.1 8.3 15.3 12.6 6.8Large Cap Blend 1.1 10.8 15.0 13.0 7.5Large Cap Growth 3.4 14.6 15.2 14.2 8.6Mid Cap Value 2.8 9.7 16.7 14.1 8.4Mid Cap Blend 3.7 9.5 16.0 14.2 8.7Mid Cap Growth 5.9 11.7 14.8 14.8 9.7Small Cap Value 2.3 4.4 14.7 13.3 8.2Small Cap Blend 3.9 7.1 15.3 14.2 8.6Small Cap Growth 6.0 8.7 15.5 15.4 9.4

Fixed Income 1QOne Year

Three Years

Five Years

Ten Years

Mercer Combined FI Univ. Median Return 1.2 4.4 3.4 4.5 4.3

Index PerformanceBarclays Aggregate 1.6 5.7 3.1 4.4 4.9Barclays Gov't/Credit 1.8 5.9 3.4 4.8 5.0Barclays High Yield 2.5 2.0 7.5 8.6 8.2Citigroup Non-U.S. Gov't Bond -4.4 -9.8 -3.3 0.4 2.5Citigroup 3-Month T-Bill 0.0 0.0 0.1 0.1 1.4

Mercer Fixed Income Universe MediansCore Strategy 1.5 4.5 3.4 4.6 4.7Short Bond 0.5 0.9 1.1 1.7 2.9Long Duration Bond 3.1 15.4 7.5 10.1 7.4High-Yield Bond 2.3 1.3 6.7 7.8 7.1International Bond -1.5 -4.6 -0.4 2.3 3.8

International equity 1QOne Year

Three Years

Five Years

Ten Years

Mercer Int'l Eqty. Universe Median Return 4.9 -1.3 8.3 6.4 5.4

Index PerformanceMSCI EAFE 4.9 -0.9 9.0 6.2 4.9MSCI EAFE Ex-Japan 3.4 -4.1 8.9 6.2 5.4MSCI World 2.3 6.0 12.2 10.0 6.4MSCI Emerging 2.2 0.4 0.3 1.7 8.5

Mercer Int'l Eqty. Universe MediansEurope 4.7 -4.9 10.6 7.2 5.0Emerging Markets 1.3 -1.4 0.4 1.7 8.1Pacific 8.6 10.5 8.9 7.0 5.5Global Equity 2.8 4.8 11.5 10.0 6.6

12

Source: Investment Company Institute

Mutual Fund EnvironmentMutual Fund Asset Allocation

Total Net Assets ($Billions)

Net New Flows ($Millions)



During the quarter, mutual funds had net outflows of $11.9billion. Investors added $33.5 billion to bond funds, $25.4billion to stock funds, and $9.0 billion to hybrid funds.Investors withdrew $79.8 billion from money market funds.

Total mutual fund assets increased 1.9% during the past threemonths, ending the quarter at $16.1 trillion.

($75,000)

($50,000)

($25,000)

$0

$25,000

$50,000

$75,000

$100,000

($75,000)

($50,000)

($25,000)

$0

$25,000

$50,000

$75,000

$100,000

Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15

Stock FundsBond FundsHybrid FundsMoney Market FundsTotal Long-Term Mutual FundsTotal Mutual Funds

13

Summary

14

Investment Option Array

15

Management Summary

Plan Statistics:

At quarter-end, assets (including loans) in the Deferred

Compensation Plan totaled $4,909.1 million, an increase of

$104.6 million (+2.2%) from $4804.6 million reported at the

previous quarter end. The increase is a result of investment

gains and net cash inflows. Contributions (including other

deposits) for the quarter totaled $98.2 million compared to

withdrawals (including fees) of $73.2 million. Investment

gains totaled $78.3 million.

As of March 31, 2015, there were 41,053 participants with

account balances. The average account balance was

$115,117, while the median account balance was $50,964.

The distribution of participant balances is shown to the right;

34.1% of participants had a balance less than $25,000 and

3.2% had a balance greater than $500,000.

The Deferred Compensation Plan (DCP) Large Cap Stock Fund held the highest percentage of Plan assets (32.2%), followed by the DCP Stable

Value Fund (18.4%), Schwab PCRA Self Directed Brokerage Account (6.5%). All other funds held less than 6.0% of Plan assets.

Assets in the Profile funds (5 customized risk-based Profile funds ranging from Ultra Conservative to Ultra Aggressive) totaled $794.1 million (16.1% of

Plan Assets) at quarter end; this was an increase of $33.8 million from $760.3 million at the prior quarter end.

Asset allocation largely remained unchanged during the quarter with domestic equity representing the largest (41.4%) asset class in the Plan.

14,017

6,345

3,721

2,738

6,232

3,442

2,101

1,153 1,304

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

< $25,000 $25,001-$50,000

$50,001-$75,000

$75,001-$100,000

$100,001-$200,000

$200,001-$300,000

$300,001-$400,000

$400,001-$500,000

> $500,001

Nu

mb

er

of

Part

icip

an

ts

Distribution of Participant Account Balances

16

Management Summary

Quarterly Performance:

The Plan's investments generally met performance objectives during the quarter.

The DCP Bond Fund underperformed the Barclays US Aggregate Bond Index for the quarter, as Loomis Sayles Core Plus Bond Fund lagged theindex by 80 basis points. An overweight allocation to non-US dollar denominated securities, an underweight to US Treasuries, and security selectionwithin the industrials sector detracted from relative results.

All three domestic equity funds matched or outperformed their respective benchmarks for the quarter.

The Fidelity Diversified International Fund outperformed its index by 150 basis points during the quarter. This was due in part to an underweightallocation and security selection in Europe, Asia Pacific Ex Japan coupled with security selection withing the emerging markets and equity indexfutures.

17

Management Summary

Key Observations and Recommendations:

For the FDIC-Insured Savings Account, Bank of the West and East West Bank have weightings of 50% each. For the quarter ending March 31, 2015, their declared rates were as follows: Bank of the West = 0.25% and East West Bank = 0.24% yielding a blended rate of 0.245%.

Searches for the active and passive components of the Plan’s investment options are complete. The Board approved the following funds be added to the Plan (or retained). The Natixis Loomis Sayles Core Plus Bond Fund replaced PIMCO Total Return Fund on October 14, 2014. The majority of the fund transitions for the DCP Mid and Small Cap Stock Funds occured on March 20, 2015. The DCP International Stock Fund changes will occur on June 26, 2015. The passive sleeve of the DCP Small Cap Stock Fund will continue to invest in the SSgA Russell Small Cap Index NL Fund until transition to the Vanguard Small Cap Index Fund on June 26, 2015.

Investment Menu Option Fund Sub-Category (Target Weight) New Fund

DCP Bond Fund Passive Bond (50%) Vanguard Total Bond Market Index Fund Instl Plus (Retained)

Active Bond (50%) Natixis Loomis Sayles Core Plus Bond Fund N

DCP Large Cap Stock Fund Passive Large Cap Equity (100%) Vanguard Institutional Index Fund Instl Plus (Retained)

DCP Mid Cap Stock Fund

Passive Mid Cap Equity (50%) Vanguard Mid Cap Index Fund Instl Plus (Retained)

Active U.S. Mid Cap Value Equity (25%) RidgeWorth Mid-Cap Value Equity Fund I

Active U.S. Mid Cap Growth Equity (25%) Voya MidCap Opportunities Fund R6

DCP Small Cap Stock Fund

Passive Small Cap Equity (33.3%) Vanguard Small Cap Index Fund Instl Plus

Active U.S. Small Cap Value Equity (33.3%) DFA US Small Cap Value Portfolio Institutional

Active U.S. Small Cap Growth Equity (33.3%) Hartford SmallCap Growth HLS Fund IA

DCP International Stock Fund

Active International Developed Markets Equity (65%) MFS Institutional International Equity Fund

Active International Small Cap Equity (17.5%) Brandes International Small Cap Equity Fund I

Active Emerging Markets Equity (17.5%) DFA Emerging Markets Core Equity Portfolio Inst

18

Management Summary

Manager Updates:

Loomis, Sayles & Company (Loomis)

Loomis CEO Retirement – March 13, 2015

On March 1, 2015, we were informed Robert Blanding, Chairman and CEO of Loomis Sayles, is going to step down as CEO, but retain his role of Chairman. Current president and CFO Kevin Charleston will take on the role of CEO effective May 1, 2015.

Mercer View: We recommend no rating changes as a result of this announcement. We don’t take a strong view regarding this news. We believe Charleston has the experience necessary to be successful in his new role as CEO. We don’t expect this to have any impact on Loomis’ investment strategies.

Vanguard

Update on Passive Equity Capabilities (US Team) – March 18, 2015

When we last met with Vanguard’s Equity Investment Group (EIG), the team had recently undergone notable turnover, with Tim Buckley becoming Chief Investment Officer following the retirement of Gus Sauter and Joseph Brennan stepping in as Global Head of EIG when Sandeep Baghat left to pursue personal endeavors. The team has not experienced any significant turnover in the two years following this transition. With over 20 years of experience at the firm, both Buckley and Brennan are veterans of the Vanguard process and philosophy, and have kept the group focused on using economies of scale to provide the lowest cost index products possible while maintaining tight risk controls and low tracking error. The experienced Equity Investment Group and its reputation for acting in the best interest of its participants remains a clear strength of Vanguard’s passive equity products.

Vanguard retains its Preferred Provider status for its strong and experienced team, pragmatic cash flow management, and inexpensive fee scales. Vanguard’s unique ownership structure along with a focus on attracting long term investors into pooled vehicles allows it to maintain best in class fees. Organizational changes continue to be well-implemented and thought out.

State Street Global Advisors (SSgA)

CEO to retire in 2015 – April 1, 2015

We have been informed by SSgA that Scott Powers, CEO of SSgA, will be retiring in 2015 after being in the role for over 7 years. He will officially be replaced by Ronald O’Hanley in April 2015, although we understand the two will then spend the next few months transitioning across responsibilities. O’Hanley will report to Jay Hooley, Chairman and CEO of State Street Corporation, as well as joining the company’s Management Committee (to re-cap SSgA is the investment management subsidiary of State Street Corporation).

Mercer View: SSgA are unsurprisingly keen to confirm “business as usual” will be maintained and that they will continue to execute their strategy for growth across both institutional and intermediary channels, including building on their core capabilities in passive management as well as growing their active business. Overall, it appears O’Hanley has a good level of experience and we would not expect this senior role change to materially impact the underlying SSgA investment strategies that we currently rate. As such we do not propose making any changes to ratings as a result of this latest announcement. We will use future meetings to discuss how plans for the business are evolving.

19

MERCER

Asset Allocation

20

MERCER

Asset Allocation by TierTotal Market

Value% of

Portfolio Money Market Stable Value DomesticFixed Risk-Based Domestic

EquityInternational

EquityBrokerage

Window Other

Money MarketFDIC-Insured Savings Account $290,958,424 5.9% $290,958,424JPMorgan Chase Certificates of Deposit $0 0.0% $0

Stable ValueDeferred Compensation Stable Value Fund (Net) $903,858,339 18.4% $903,858,339

Domestic FixedDCP Bond Fund $165,385,247 3.4% $165,385,247

Risk-BasedUltra Conservative Profile $40,266,535 0.8% $40,266,535Conservative Profile $109,739,634 2.2% $109,739,634Moderate Profile $288,931,840 5.9% $288,931,840Aggressive Profile $262,320,161 5.3% $262,320,161Ultra Aggressive Profile $92,863,126 1.9% $92,863,126

Domestic EquityDCP Large Cap Stock Fund $1,578,600,218 32.2% $1,578,600,218DCP Mid Cap Stock Fund $230,689,252 4.7% $230,689,252DCP Small Cap Stock Fund $225,038,039 4.6% $225,038,039

International EquityDeutsche EAFE Equity Index Fund Institutional $42,663,152 0.9% $42,663,152Fidelity Diversified International Fund $174,830,600 3.6% $174,830,600

Brokerage WindowSchwab PCRA Self-Directed Brokerage Account $319,733,292 6.5% $319,733,292

Loan Account $183,255,910 3.7% $183,255,910Total $4,909,133,767 100.0% $290,958,424 $903,858,339 $165,385,247 $794,121,296 $2,034,327,509 $217,493,752 $319,733,292 $183,255,910

Fund Allocation

*Total Plan Market Value excludes $2.8 million in the Forfeiture/Asset Holding Account (this account is used to pay Plan expenses).

21

Allocation of Underlying Core Funds

22

Investment Expense Analysis

Median institutional share class net expense ratio as defined by the respective Mercer Mutual Fund Universe and Lipper institutional share class categorizations. The median stable value management fee is derived from Mercer's quarterly stablevalue survey. Profile funds are compared to the median institutional expense ratio of the corresponding Mercer Mutual Fund Target Risk Universe.

Total Plan expense ratio, total plan expense reimbursement, and total plan investment management fee calculations exclude assets in the FDIC-Insured Savings Account, JPMorgan Chase Certificates of Deposit, Schwab Self-Directed BrokerageAccount, and Loan Account.

Total estimated annual asset-based fee is $2,589,858 reflecting a quarterly per participant fee of 0.025% on the first $125,000 of balance. The number of participants with a $125k balance or less during the quarter was 28,899, and total assets forthis group amounted to $1,070,608,398. There were 12,154 participants with balances in excess of $125k with a billable balance of $1,519,250,000. The total participant count is 41,053.

23

Compliance Table

= Outperformed or matched performance = Underperformed = Index Fund 24

= Prior Quarter

3 Years 5 Years Comments

I – Index

U – Universe Median I U I U I U I U

Deferred Compensation Stable Value Fund (Net) Retain.

DCP Bond Fund

Retain. Fund inception was on April 20, 2012 with 50% allocated to PIMCO Total Return Fund Institutional and 50% allocated to Vanguard Total Bond Market Index Fund Inst Plus. PIMCO Total Return Fund was replaced with Natixis Loomis Sayles Core Plus Bond Fund on October 14, 2014. A core fixed income passive search was conducted and the Vanguard Total Bond Market Index Fund was retained.

Ultra Conservative Profile N/A N/A N/A N/A Retain. No changes to allocations.

Conservative Profile T N/A T N/A T N/A T N/A Retain. No changes to allocations.

Moderate Profile T N/A T N/A T N/A T N/A Retain. No changes to allocations.

Aggressive Profile T N/A T N/A T N/A T N/A Retain. No changes to allocations.

Ultra Aggressive Profile T N/A T N/A T N/A T N/A Retain. No changes to allocations.

DCP Large Cap Stock Fund T N/A T N/A T N/A T N/A Retain. A large cap equity passive search was conducted and the Vanguard Institutional Index Fund was retained.

DCP Mid Cap Stock Fund T T N/A T T N/A

Retain. Effective March 20, 2015, the DCP Mid Cap Stock Fund is comprised of 50% Vanguard Mid Cap Index Fund, 25% RidgeWorth Mid-Cap Value Equity Fund, and 25% Voya MidCap Opportunities Fund.

DCP Small Cap Stock Fund N/A N/A N/A N/A N/A N/A N/A N/A

Retain. Effective March 20, 2015, this Fund is comprised of 33.3% SSgA Russell Small Cap Index NL Fund, 33.3% DFA US Small Cap Value Portfolio, and 33.3% Hartford SmallCap Growth HLS Fund. On June 26, 2015, Vanguard Small Cap Index Fund will replace the SSgA Russell Small Cap Index NL Fund.

Deutsche EAFE Equity Index Fund Institutional T N/A T N/A T N/A T N/A Effective June 26, 2015, this Fund will be eliminated.

Fidelity Diversified International Fund

Effective June 26, 2015, this strategy will be replaced by the MFS Institutional International Equity Fund, which will be a component of the DCP International Stock Fund comprised of 65% MFS Institutional International Equity Fund, 17.5% Brandes International Small Cap Equity Fund, and 17.5% DFA Emerging Markets Core Equity Portfolio.

** FDIC-Insured Savings Account: The blended rate of 0.245% is as of 3/31/2015. Bank of the West and EastWest Bank have equal weightings of 50%; their declared rates at the end of the quarter are as follows: Bank of the West = 0.25% and EastWest Bank = 0.24%.

** Stable Value: The inception date of the Galliard Stable Value fund is July 1, 2008. Returns prior to the inception date are linked to the Wells Fargo Stable Return fund.

** DCP Bond Fund: Effective October 14, 2014, the Fund is comprised of 50% Vanguard Total Bond Market Index Fund / 50% Natixis Loomis Sayles Core Plus Bond Fund. From April 1, 2012 through October 14, 2014, the Fund is comprised of 50% Vanguard Total Bond Market

Index Fund / 50% PIMCO Total Return Fund. Performance prior to April 2012 is simulated, with a weighting of 50% Vanguard Total Bond Market Index Fund / 50% PIMCO Total Return Fund.

** Vanguard Total Bond Market Index Fund Inst Plus: Due to its longer history, performance of Vanguard Total Bond Market Index Fund Inst is shown.

** Vanguard Spliced Barclays USAgg Float Adj Idx: Barclays U.S. Aggregate Bond Index through 12/31/2009; Barclays U.S. Aggregate Float Adjusted Index thereafter.

MERCER

Performance

Ending March 31, 2015

Market Value % ofPortfolio 3 Mo Rank 1 Yr Rank 3 Yrs Rank 5 Yrs Rank 10 Yrs Rank

_

Money MarketFDIC-Insured Savings Account (Blended Rate - 0.24515%) $290,958,424 5.9% 0.1% -- 0.4% -- 0.4% -- -- -- -- --JPMorgan Chase Certificates of Deposit $0 0.0% -- -- -- -- -- -- -- -- -- --

Stable ValueDeferred Compensation Stable Value Fund (Net) $903,858,339 18.4% 0.5% 41 1.8% 44 2.2% 37 2.7% 49 3.6% 54

3 YR CONSTANT MATURITY + 50bps 0.3% 85 1.4% 84 1.1% 99 1.2% 99 2.4% 99iMoneyNet MM All Taxable Plus 1% 0.3% 94 1.0% 94 1.0% 99 1.0% 99 2.3% 99

Mercer Instl Stable Value Median 0.5% 1.8% 2.1% 2.6% 3.6%Domestic Fixed

DCP Bond Fund $165,385,247 3.4% 1.2% 64 4.5% 51 3.2% 57 4.5% 54 5.4% 23Barclays Aggregate 1.6% 42 5.7% 22 3.1% 57 4.4% 55 4.9% 42

Mercer Mutual Fund US Fixed Core Median 1.5% 4.5% 3.4% 4.6% 4.7% Vanguard Total Bond Market Index Fund Inst Plus 1.7% 38 5.6% 37 3.1% 47 4.4% 46 4.9% 30 Vanguard Spliced Barclays USAgg Float Adj Idx 1.7% 38 5.7% 36 3.1% 46 4.4% 45 4.9% 29 Mercer Mutual Fund US Fixed Index Median 1.5% 4.4% 3.0% 4.3% 4.7%

Loomis Sayles Core Plus Bond Fund N 0.8% 77 3.6% 59 5.1% 15 6.5% 10 6.6% 5 Barclays Aggregate 1.6% 42 5.7% 22 3.1% 57 4.4% 55 4.9% 42 Mercer Mutual Fund US Fixed Core Median 1.5% 4.5% 3.4% 4.6% 4.7%

25

Performance

** Ultra Conservative Profile Custom Index: Effective March 20, 2015, the following composite index is used: 35.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 50.0% Barclays US Aggregate Index / 5% S&P 500 Index / 2.5% Russell Mid Cap Index/ 2.5% Russell 2000 Index / 5% MSCI EAFE

(NWHT) Index. From June 1, 2009 through March 19, 2015, the following composite index is used: 35.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 50.0% Barclays US Aggregate Index / 5% S&P 500 Index / 2.5% MSCI US Mid Cap 450 Index/ 2.5% Russell 2000 Index / 5% MSCI EAFE (NWHT)

Index. Prior to June 1, 2009, the following composite index is used: 35.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 50.0% Barclays US Aggregate Index / 5.0% S&P 500 Index / 5.0% Russell 2000 Index / 5.0% MSCI EAFE (NWHT) Index.

** Conservative Profile Custom Index: Effective March 20, 2015, the following composite index is used: 15.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 50.0% Barclays US Aggregate Index / 12.5% S&P 500 Index / 5% Russell Mid Cap Index/ 5.0% Russell 2000 Index / 12.5% MSCI EAFE (NWHT)

Index. From June 1, 2009 through March 19, 2015, the following composite index is used: 15.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 50.0% Barclays US Aggregate Index / 12.5% S&P 500 Index / 5% MSCI US Mid Cap 450 Index/ 5.0% Russell 2000 Index / 12.5% MSCI EAFE (NWHT) Index.

Prior to June 1, 2009, the following composite index is used: 15.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 50% Barclays US Aggregate Index / 25% S&P 500 Index / 5% Russell 2000 Index / 5% MSCI EAFE (NWHT) Index.

** Moderate Profile Custom Index: Effective March 20, 2015, the following composite index is used: 10.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 30.0% Barclays US Aggregate Index / 25.0% S&P 500 Index / 10.0% Russell Mid Cap Index/ 10.0% Russell 2000 Index / 15.0% MSCI EAFE (NWHT)

Index. From June 1, 2009 through March 19, 2015, the following composite index is used: 10.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 30.0% Barclays US Aggregate Index / 25.0% S&P 500 Index / 10.0% MSCI US Mid Cap 450 Index/ 10.0% Russell 2000 Index / 15.0% MSCI EAFE (NWHT)

Index. Prior to June 1, 2009, the following composite index is used: 5.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 35.0% Barclays US Aggregate Index / 40.0% S&P 500 Index / 10.0% Russell 2000 Index / 10.0% MSCI EAFE (NWHT) Index.

** Aggressive Profile Custom Index: Effective March 20, 2015, the following composite index is used: 5.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 20.0% Barclays US Aggregate Index / 25.0% S&P 500 Index / 15.0% Russell Mid Cap Index/ 15.0% Russell 2000 Index / 20.0% MSCI EAFE

(NWHT) Index. From June 1, 2009 through March 19, 2015, the following composite index is used: 5.0% 3 Yr Constant Maturity Treasury Index + 50 bps/ 20.0% Barclays US Aggregate Index / 25.0% S&P 500 Index / 15.0% MSCI US Mid Cap 450 Index/ 15.0% Russell 2000 Index / 20.0% MSCI EAFE

(NWHT) Index. For periods prior to June 1, 2009, the following composite index is used: 20% Barclays US Aggregate Index / 50% S&P 500 Index / 15% Russell 2000 Index / 15% MSCI EAFE (NWHT) Index.

** Ultra Aggressive Profile Custom Index: Effective March 20, 2015, the following composite index is used: 10.0% Barclays US Aggregate Index / 25.0% S&P 500 Index / 20.0% Russell Mid Cap Index/ 20.0% Russell 2000 Index / 25.0% MSCI EAFE (NWHT) Index. From June 1, 2009 through March 19,

2015, the following composite index is used: 10.0% Barclays US Aggregate Index / 25.0% S&P 500 Index / 20.0% MSCI US Mid Cap 450 Index/ 20.0% Russell 2000 Index / 25.0% MSCI EAFE (NWHT) Index. For periods prior to June 1, 2009, the following composite index is used: 60.0% S&P 500 Index /

20.0% Russell 2000 Index / 20.0% MSCI EAFE (NWHT) Index.



_

Risk-BasedUltra Conservative Profile $40,266,535 0.8% 1.3% 75 4.0% 58 4.5% 80 5.0% 81 -- --

Ultra Conservative Profile Custom Index 1.5% 64 4.5% 48 4.1% 85 4.5% 87 4.6% 73Mercer Mutual Fund Target Risk Conservative Median 1.7% 4.4% 6.1% 6.3% 5.2%

Conservative Profile $109,739,634 2.2% 2.0% 31 5.1% 29 6.7% 34 6.9% 38 5.7% 24Conservative Profile Custom Index 2.1% 22 5.7% 17 6.6% 36 6.7% 42 5.6% 32

Mercer Mutual Fund Target Risk Conservative Median 1.7% 4.4% 6.1% 6.3% 5.2%Moderate Profile $288,931,840 5.9% 2.4% 23 6.8% 29 9.9% 20 9.3% 23 6.7% 21

Moderate Profile Custom Index 2.4% 21 7.2% 20 9.9% 20 9.3% 24 6.6% 25Mercer Mutual Fund Target Risk Moderate Median 1.9% 5.6% 8.3% 8.1% 6.0%

Aggressive Profile $262,320,161 5.3% 2.9% 25 7.3% 49 11.7% 30 10.6% 32 6.9% 36Aggressive Profile Custom Index 3.0% 23 7.7% 43 11.7% 30 10.6% 33 6.9% 36

Mercer Mutual Fund Target Risk Aggressive Median 2.4% 7.3% 10.8% 9.9% 6.6%Ultra Aggressive Profile $92,863,126 1.9% 3.4% 10 7.9% 36 13.4% 9 11.8% 8 -- --

Ultra Aggressive Profile Custom Index 3.4% 9 8.1% 34 13.5% 8 11.8% 8 7.1% 29Mercer Mutual Fund Target Risk Aggressive Median 2.4% 7.3% 10.8% 9.9% 6.6%

26

MERCER

Performance

** DCP Large Cap Stock Fund: The Fund is comprised of 100% Vanguard Institutional Index Fund.

** DCP Mid Cap Stock Fund: Effective March 20, 2015, the Fund is comprised of 50% Vanguard Mid Cap Index Fund / 25% RidgeWorth Mid Cap Value Equity Fund / 25% Voya Mid Cap Opportunities Fund. Prior to March 20, 2015, the Fund is comprised of 100% Vanguard Mid

Cap Index Fund.

** DCP Mid Cap Custom Benchmark: S&P MidCap 400 Index through May 16, 2003; MSCI US Mid Cap 450 Index through January 30, 2013; CRSP US Mid Cap Index through March 19, 2015, Russell Mid Cap Index thereafter.

** Vanguard Spliced Mid-Cap Index: S&P MidCap 400 Index through May 16, 2003; MSCI US Mid Cap 450 Index through January 30, 2013; CRSP US Mid Cap Index thereafter.



_

Domestic EquityDCP Large Cap Stock Fund $1,578,600,218 32.2% 0.9% 36 12.7% 25 16.1% 32 14.5% 28 8.0% 26

S&P 500 1.0% 36 12.7% 24 16.1% 31 14.5% 28 8.0% 28DCP Mid Cap Stock Fund $230,689,252 4.7% 4.1% 45 14.7% 10 17.9% 22 16.1% 13 10.0% 9

DCP Mid Cap Custom Benchmark 4.0% 45 14.6% 11 17.9% 22 16.1% 13 10.0% 9Mercer Mutual Fund US Equity Mid Cap Core Median 3.7% 9.5% 16.0% 14.2% 8.7%

Vanguard Mid Cap Index Fund Instl Plus 4.3% 41 14.9% 10 18.0% 21 16.1% 11 10.0% 9 Vanguard Spliced Mid Cap 4.3% 41 15.0% 10 18.0% 20 16.1% 11 10.0% 9 Mercer Mutual Fund US Equity Mid Cap Core Median 3.7% 9.5% 16.0% 14.2% 8.7%

RidgeWorth Mid Cap Value Equity Fund I 0.4% 91 7.8% 62 16.3% 53 13.4% 64 11.1% 6 Russell MidCap Value 2.4% 69 11.7% 20 18.6% 16 15.8% 13 9.6% 26 Mercer Mutual Fund US Equity Mid Cap Value Median 2.8% 9.7% 16.7% 14.1% 8.4%

Voya Mid Cap Opportunities Fund R6 5.3% 63 15.0% 21 14.3% 59 15.5% 38 11.2% 15 Russell MidCap Growth 5.4% 63 15.6% 16 17.4% 17 16.4% 21 10.2% 37 Mercer Mutual Fund US Equity Mid Cap Growth Median 5.9% 11.7% 14.8% 14.8% 9.7%

27

Performance



_

DCP Small Cap Stock Fund $225,038,039 4.6% -- -- -- -- -- -- -- -- -- --Russell 2000 4.3% 40 8.2% 40 16.3% 36 14.6% 44 8.8% 44

Mercer Mutual Fund US Equity Small Cap Core Median 3.9% 7.1% 15.3% 14.2% 8.6% SSgA Russell Small Cap Index Non-Lending Series Fund 4.3% 40 8.2% 40 16.2% 37 14.5% 46 -- -- Russell 2000 4.3% 40 8.2% 40 16.3% 36 14.6% 44 8.8% 44 Mercer Mutual Fund US Equity Small Cap Core Median 3.9% 7.1% 15.3% 14.2% 8.6%

DFA US Small Cap Value Portfolio Institutional 2.4% 46 4.7% 47 17.5% 13 14.7% 15 8.5% 38 Russell 2000 Value 2.0% 57 4.4% 50 14.8% 49 12.5% 59 7.5% 67 Mercer Mutual Fund US Equity Small Cap Value Median 2.3% 4.4% 14.7% 13.3% 8.2%

Hartford Small Cap Growth HLS Fund IA 7.1% 32 13.1% 12 18.8% 13 19.6% 3 10.5% 22 Russell 2000 Growth 6.6% 41 12.1% 15 17.7% 23 16.6% 30 10.0% 34 Mercer Mutual Fund US Equity Small Cap Growth Median 6.0% 8.7% 15.5% 15.4% 9.4%

International EquityDeutsche EAFE Equity Index Fund Institutional $42,663,152 0.9% 5.3% 32 -1.4% 57 8.6% 38 5.9% 43 4.8% 62

MSCI EAFE 4.9% 51 -0.9% 27 9.0% 17 6.2% 29 4.9% 35Fidelity Diversified International Fund $174,830,600 3.6% 6.4% 17 3.8% 9 11.0% 17 7.7% 28 5.7% 43

MSCI EAFE 4.9% 50 -0.9% 44 9.0% 40 6.2% 55 4.9% 65Mercer Mutual Fund World ex US/EAFE Equity Median 4.9% -1.3% 8.3% 6.4% 5.4%

XXXXX

** DCP Small Cap Stock Fund: Effective March 20, 2015, the Fund is comprised of 33.3% SSgA Russell Small Cap Index NL Fund / 33.3% DFA US Small Cap Value Portfoio / 33.3% Hartford Small Cap Growth HLS Fund. Due to the Fund's inception date, there is not a full quarter'sworth of performance to be shown. On June 26, 2015, Vanguard Small Cap Index Fund will replace the SSgA Russell Small Cap Index NL Fund.

MERCER28

Fund Profiles

29

MERCER

Galliard's primary emphasis in managing stable value portfolios is safety of principal. Maintaining appropriate liquidity is another key investment objective, for it must be sufficient to accommodateparticipant changes and provide plan sponsor flexibility. The optimal amount of liquidity typically results in reduced contract charges (wrap fees), which helps to increase the crediting rate. Theprocess then focuses on security selection to ensure competitive returns for participants.Portfolios follow a traditional fixed income management approach with emphasis on high quality securities,broad diversification, adequate liquidity, controlled market risk (duration) and a disciplined risk management process to identify the best fundamental values across fixed income sectors. Theinvestment decision process is team-based, blending top down and bottom up decisions.Galliard manages individual stable value portfolios on a customized basis, based on specific plan needs andcharacteristics. The hallmarks of their strategy include high credit quality and diversification through the use of security backed contracts (i.e. Synthetic GICs). In structuring stable value portfolios, theprocess begins by determining the optimal target duration for the plan. Galliard portfolios utilize a two-tiered liquidity management approach, with the first tier compised of the liquidity buffer. Thesecond tier consists of the security backed contracts, which are structured to provide liquidity on a pro-rata basis. Most Galliard seperate accounts utilize various Galliard advised collective funds asthe underlying portfolio although outside sub-advisors may also be utilized. Also, depending on the client mandate, traditional GICs may also be used as a diversification strategy.

Investment Philosophy

Deferred Compensation Stable Value Fund (Net) Fund Information

30

DCP Bond Fund Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsDCP Bond Fund 1.2% 4.5% 3.2% 4.5% 5.4%Barclays Aggregate 1.6% 5.7% 3.1% 4.4% 4.9%Universe Median 1.5% 4.5% 3.4% 4.6% 4.7%

Annualized Returns 2014 2013 2012 2011 2010 2009DCP Bond Fund 4.8% -2.0% 7.2% 6.0% 7.7% 9.8%Barclays Aggregate 6.0% -2.0% 4.2% 7.8% 6.5% 5.9%Universe Median 4.8% -0.8% 6.5% 5.8% 7.3% 12.3%

31

Anlzd Return Anlzd StandardDeviation Tracking Error Anlzd Alpha J Beta Sharpe Ratio Information Ratio Up Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt Capture

RatioDown Mkt Annual

Return_

DCP Bond Fund 4.46% 2.93% 1.49% 0.70% 0.85 1.50 0.03 101.40% 6.67% 102.47% -3.94%

Barclays Aggregate 4.41% 3.02% 0.00% 0.00% 1.00 1.44 -- 100.00% 6.58% 100.00% -3.84%XXXXX

DCP Bond Fund Fund Information

MPT Statistics represent 5 year periods.

32

Plan City of Los Angeles Deferred Compensation Plan

Strategy Vanguard - Vanguard Total Bond Market Index Fund (US)

Benchmark Barclays Capital U.S. Aggregate Float Adjusted Bond Index

Manager Philosophy and Process

Vanguard Total Bond Market Index Fund (US) seeks to track the investment performance of the Barclays U.S. Aggregate Float Adjusted Bond Index, an unmanaged benchmark representing the broad U.S. bond market. The Fund invests in investment-grade corporate, U.S. Treasury, mortgage-backed, and asset-backed securities with short, intermediate, and long maturities in excess of one year, resulting in a portfolio of intermediate duration. The Fund's passive investment style uses a sampling technique to closely match key benchmark characteristics: sector weight, coupon, maturity, effective duration, convexity, and credit quality. Optimized sampling is designed to avoid the expense and impracticality of fully replicating the index.

Quarterly Attribution

For the fourth quarter, the Vanguard Total Bond Market Index Fund (Inst Shares) performed in line with the Barclays U.S. Aggregate Float Adjusted Bond Index benchmark (1.65% vs. 1.66%).

• Treasuries returned 1.64%, more than agency bonds and mortgage-backed securities.• Investment-grade corporate bonds returned 2.3%, with bonds issued by utilities and industrial companies outperforming those of financial institutions.• The returns of longer-dated securities were well ahead of their shorter-dated counterparts.

Manager Commentary

33

Vanguard Total Bond Market Index Fund Inst Plus Fund Information

Annualized Returns 2014 2013 2012 2011 2010 2009Vanguard Total Bond Market Index Fund InstPlus 5.9% -2.1% 4.2% 7.7% 6.6% 5.9%

Vanguard Spliced Barclays USAgg Float Adj Idx 5.8% -2.0% 4.3% 7.9% 6.4% 5.9%Universe Median 4.4% -2.1% 4.1% 7.6% 6.1% 5.2%

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsVanguard Total Bond Market Index Fund Inst Plus 1.7% 5.6% 3.1% 4.4% 4.9%Vanguard Spliced Barclays USAgg Float Adj Idx 1.7% 5.7% 3.1% 4.4% 4.9%Universe Median 1.5% 4.4% 3.0% 4.3% 4.7%

34

Vanguard Total Bond Market Index Fund Inst Plus Fund Information


Anlzd Return Anlzd StandardDeviation Tracking Error Anlzd Alpha J Beta Sharpe Ratio Information

RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt

Capture RatioDown Mkt

Annual Return_

Vanguard Total Bond Market Index Fund Inst Plus 4.39% 3.12% 0.21% -0.10% 1.02 1.39 -0.11 99.34% 6.58% 99.10% -3.93%

Vanguard Spliced Barclays USAgg Float Adj Idx 4.42% 3.06% 0.00% 0.00% 1.00 1.42 -- 100.00% 6.62% 100.00% -3.96%

35

Fixed Income Sectors as of 09/30/2014GOVERNMENT 48.47%

MUNICIPAL 0.75%

CORPORATE 22.46%

SECURITIZED 24.01%

CASH & EQUIVALENTS 4.28%

DERIVATIVE 0.00%

Maturities as of 09/30/20141 to 3 Years 23.42%

3 to 5 Years 15.39%

5 to 7 Years 10.84%

7 to 10 Years 9.42%

10 to 15 Years 4.11%

15 to 20 Years 3.91%

20 to 30 Years 24.77%

Greater than 30 Years 3.35%

Vanguard Total Bond Market Index Fund Inst Plus Historical - Fund Information

Credit Quality as of 06/30/2014AAA 69.87%

AA 4.20%

A 12.55%

BBB 13.38%

BB 0.00%

B 0.00%

Below B 0.00%

Not Rated 0.00%


3 to 5 Years 15.19%

5 to 7 Years 10.73%

7 to 10 Years 9.56%

10 to 15 Years 4.10%

15 to 20 Years 3.81%

20 to 30 Years 25.24%



AA 4.17%

A 13.43%

BBB 13.68%

BB 0.00%

B 0.00%

Below B 0.01%

Not Rated 0.00%


AA 3.93%

A 12.69%

BBB 13.50%

BB 0.00%

B 0.00%

Below B 0.01%

Not Rated 0.00%


3 to 5 Years 14.98%

5 to 7 Years 11.06%

7 to 10 Years 9.82%

10 to 15 Years 3.25%

15 to 20 Years 4.55%

20 to 30 Years 23.43%



MUNICIPAL 0.74%

CORPORATE 24.02%

SECURITIZED 22.85%


DERIVATIVE 0.00%


MUNICIPAL 0.77%

CORPORATE 23.38%

SECURITIZED 23.15%


DERIVATIVE 0.00%

Fund Characteristics as of 09/30/2014Sharpe Ratio (3 Year) 0.91

Average Duration 5.60

Average Coupon 3.52%

Average Effective Maturity 7.70

Average Credit Quality AA (9.31)

R-Squared (3 Year) 1.00

Alpha (3 Year) -0.04%















36


Strategy Loomis, Sayles & Company - Core Plus Bond

Benchmark Barclays US Aggregate

Current Positioning

• Relative to the the Barclays US Aggregate the Fund is overweight the corporate and asset backed securities.• The Fund is underweight the treasury/agency and mortgage related securities.• Within the mortgage related securities the Fund is underweight the MBS and overweight the CMBS.• The Fund is overweight the non-US-dollar denominated securities.• The Fund is significantly overweight the non investment grade securities.


Positive Impact on Performance:

• A longer nominal duration position relative to the Barclays US Aggregate Bond Index• Security selection within the mortgage backed securities• An overweight allocation to the high yield securities

Negative Impact on Performance:

• An underweight allocation to the US Treasurys• Security selection within the industrial sector• An overweight allocation to the non-US-dollar denominated securities

Manager Commentary

37


Strategy Loomis, Sayles & Company - Core Plus Bond

Benchmark Barclays US Aggregate

Portfolio Characteristics

Current Yield: 4.3%Average Coupon: 4.4%Average Quality: A3Effective Duration: 6.1 YearsEffective Maturity: 8.6 Years% non Investment Grade: 20.5%% Foreign: 24.2%Number of Securities: 254

Responsible Investment ESG Comment

ESG4 - We observed no evidence that ESG factors are taken into consideration within the corporate credit selection process. As such, we believe an ESG4 rating is appropriate.

Manager Commentary

38

Loomis Sayles Core Plus Bond Fund N Fund Information

Annualized Returns 2014 2013 2012 2011 2010 2009Loomis Sayles Core Plus Bond Fund N 6.4% -0.5% 11.3% 7.7% 10.3% 16.6%Barclays Aggregate 6.0% -2.0% 4.2% 7.8% 6.5% 5.9%Universe Median 4.8% -0.8% 6.5% 5.8% 7.3% 12.3%

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsLoomis Sayles Core Plus Bond Fund N 0.8% 3.6% 5.1% 6.5% 6.6%Barclays Aggregate 1.6% 5.7% 3.1% 4.4% 4.9%Universe Median 1.5% 4.5% 3.4% 4.6% 4.7%

39

Loomis Sayles Core Plus Bond Fund N Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Loomis Sayles Core Plus Bond Fund N 6.54% 3.77% 2.84% 2.84% 0.84 1.72 0.75 137.76% 8.78% 51.23% -1.97%

Barclays Aggregate 4.41% 3.02% 0.00% 0.00% 1.00 1.44 -- 100.00% 6.58% 100.00% -3.84%

40


3 to 5 Years 13.22%

5 to 7 Years 15.42%

7 to 10 Years 16.81%

10 to 15 Years 2.00%

15 to 20 Years 4.02%

20 to 30 Years 16.13%



AA 1.96%

A 16.49%

BBB 24.95%

BB 16.96%

B 3.08%

Below B 0.00%

Not Rated 0.00%


3 to 5 Years 13.84%

5 to 7 Years 14.38%

7 to 10 Years 15.54%

10 to 15 Years 3.07%

15 to 20 Years 4.07%

20 to 30 Years 14.37%



AA 2.00%

A 17.73%

BBB 23.12%

BB 15.18%

B 3.91%

Below B 0.00%

Not Rated 0.16%

Loomis Sayles Core Plus Bond Fund N Historical - Fund Information


AA 3.72%

A 17.96%

BBB 21.35%

BB 14.66%

B 4.27%

Below B 0.00%

Not Rated 0.00%


MUNICIPAL 0.00%

CORPORATE 45.85%

SECURITIZED 15.71%


DERIVATIVE 0.00%


MUNICIPAL 0.00%

CORPORATE 42.97%

SECURITIZED 23.52%


DERIVATIVE 0.62%


3 to 5 Years 13.90%

5 to 7 Years 14.37%

7 to 10 Years 15.79%

10 to 15 Years 1.96%

15 to 20 Years 4.28%

20 to 30 Years 14.88%



MUNICIPAL 0.00%

CORPORATE 42.62%

SECURITIZED 24.32%


DERIVATIVE 0.53%





Average Credit Quality A (8.07)


Alpha (3 Year) 0.67%















41

Ultra Conservative Profile Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 YrsUltra Conservative Profile 1.3% 4.0% 4.5% 5.0%Ultra Conservative Profile Custom Index 1.5% 4.5% 4.1% 4.5%Universe Median 1.7% 4.4% 6.1% 6.3%

Annualized Returns 2014 2013 2012 2011 2010 2009Ultra Conservative Profile 3.9% 4.0% 6.5% 4.4% 7.1% 8.8%Ultra Conservative Profile Custom Index 4.3% 3.5% 4.9% 3.8% 6.5% 8.1%Universe Median 4.2% 7.6% 9.1% 2.0% 9.7% 19.3%

42

Ultra Conservative Profile Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Ultra Conservative Profile 5.04% 2.09% 0.45% 0.52% 1.00 2.38 1.15 111.46% 6.45% 99.43% -1.94%

Ultra Conservative Profile Custom Index 4.53% 2.05% 0.00% 0.00% 1.00 2.18 -- 100.00% 5.84% 100.00% -1.95%

43

Conservative Profile Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsConservative Profile 2.0% 5.1% 6.7% 6.9% 5.7%Conservative Profile Custom Index 2.1% 5.7% 6.6% 6.7% 5.6%Universe Median 1.7% 4.4% 6.1% 6.3% 5.2%

Annualized Returns 2014 2013 2012 2011 2010 2009Conservative Profile 4.6% 9.1% 9.3% 2.9% 9.4% 13.4%Conservative Profile Custom Index 5.2% 8.9% 8.1% 2.7% 9.4% 13.2%Universe Median 4.2% 7.6% 9.1% 2.0% 9.7% 19.3%

44

Conservative Profile Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Conservative Profile 6.87% 4.87% 0.44% 0.25% 0.99 1.40 0.35 101.67% 11.93% 98.38% -6.99%

Conservative Profile Custom Index 6.72% 4.92% 0.00% 0.00% 1.00 1.35 -- 100.00% 11.77% 100.00% -7.10%

45

Moderate Profile Fund Information

Annualized Returns 2014 2013 2012 2011 2010 2009Moderate Profile 6.0% 17.6% 12.1% 0.9% 12.6% 19.1%Moderate Profile Custom Index 6.4% 17.5% 11.2% 0.8% 12.7% 19.2%Universe Median 5.1% 14.3% 11.6% 0.6% 11.8% 23.6%

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsModerate Profile 2.4% 6.8% 9.9% 9.3% 6.7%Moderate Profile Custom Index 2.4% 7.2% 9.9% 9.3% 6.6%Universe Median 1.9% 5.6% 8.3% 8.1% 6.0%

46

Moderate Profile Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Moderate Profile 9.34% 8.87% 0.34% 0.18% 0.99 1.05 0.22 100.04% 17.33% 98.51% -17.53%

Moderate Profile Custom Index 9.27% 8.97% 0.00% 0.00% 1.00 1.03 -- 100.00% 17.33% 100.00% -17.80%

47

Aggressive Profile Fund Information

Annualized Returns 2014 2013 2012 2011 2010 2009Aggressive Profile 6.0% 22.6% 13.9% -1.1% 14.7% 22.8%Aggressive Profile Custom Index 6.3% 22.7% 13.2% -1.1% 14.9% 23.2%Universe Median 6.1% 21.0% 13.5% -2.0% 13.5% 27.1%

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsAggressive Profile 2.9% 7.3% 11.7% 10.6% 6.9%Aggressive Profile Custom Index 3.0% 7.7% 11.7% 10.6% 6.9%Universe Median 2.4% 7.3% 10.8% 9.9% 6.6%

48

Aggressive Profile Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Aggressive Profile 10.59% 11.59% 0.24% 0.04% 1.00 0.91 0.03 99.96% 21.44% 99.84% -23.95%

Aggressive Profile Custom Index 10.58% 11.63% 0.00% 0.00% 1.00 0.90 -- 100.00% 21.44% 100.00% -23.99%

49

Ultra Aggressive Profile Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 YrsUltra Aggressive Profile 3.4% 7.9% 13.4% 11.8%Ultra Aggressive Profile Custom Index 3.4% 8.1% 13.5% 11.8%Universe Median 2.4% 7.3% 10.8% 9.9%

Annualized Returns 2014 2013 2012 2011 2010 2009Ultra Aggressive Profile 6.1% 27.7% 15.7% -3.0% 16.9% 26.5%Ultra Aggressive Profile Custom Index 6.3% 28.1% 15.2% -3.0% 16.9% 27.0%Universe Median 6.1% 21.0% 13.5% -2.0% 13.5% 27.1%

50

Ultra Aggressive Profile Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Ultra Aggressive Profile 11.78% 14.33% 0.24% -0.10% 1.00 0.82 -0.25 100.03% 25.66% 100.67% -29.99%

Ultra Aggressive Profile Custom Index 11.84% 14.28% 0.00% 0.00% 1.00 0.83 -- 100.00% 25.65% 100.00% -29.79%

51


Strategy Vanguard - Vanguard Institutional Index Fund (US)

Benchmark S&P 500


The Vanguard Institutional Index Fund (US) attempts to replicate the S&P 500 index by investing all, or substantially all, of its assets in the stocks that make up the Index, holding each stock in approximately the same proportion as its weighting in the Index. Vanguard's security lending program is value oriented. It generates revenue by lending limited amounts of select, hard-to-borrow securities that are in high demand.


Top performing index sectors:

• Health care (+6.5%), consumer discretionary (+4.8%) and telecommunication services (+1.5%)

Bottom performing index sectors:

• Utilities (-5.2%), energy (-2.9%) and financials (-2.1%)

Manager Commentary

52

MERCER

DCP Large Cap Stock Fund Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsDCP Large Cap Stock Fund 0.9% 12.7% 16.1% 14.5% 8.0%S&P 500 1.0% 12.7% 16.1% 14.5% 8.0%Universe Median 0.9% 12.4% 15.9% 14.2% 7.8%

Annualized Returns 2014 2013 2012 2011 2010 2009DCP Large Cap Stock Fund 13.7% 32.4% 16.0% 2.1% 15.1% 26.7%S&P 500 13.7% 32.4% 16.0% 2.1% 15.1% 26.5%Universe Median 13.3% 32.2% 15.8% 1.9% 14.8% 26.4%

53

DCP Large Cap Stock Fund Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

DCP Large Cap Stock Fund 14.46% 14.45% 0.01% 0.00% 1.00 1.00 -0.33 99.96% 27.68% 99.98% -26.08%

S&P 500 14.47% 14.45% 0.00% 0.00% 1.00 1.00 -- 100.00% 27.69% 100.00% -26.09%

54

Sector Allocation as of 09/30/2014BASIC MATERIALS 3.29%

COMMUNICATION SERVICES 4.02%

CONSUMER CYCLICAL 10.19%

CONSUMER DEFENSIVE 9.48%

ENERGY 9.67%

FINANCIAL SERVICES 14.90%

HEALTHCARE 14.27%

INDUSTRIALS 10.98%

REAL ESTATE 1.92%

TECHNOLOGY 17.96%

UTILITIES 2.99%

DCP Large Cap Stock Fund Historical - Fund Information

Portfolio Fund Information as of 09/30/2014Ticker VIIIX

Morningstar Category Large Blend

Average Market Cap ($mm) 70,096.04

Net Assets ($mm) 81,815.05

% Assets in Top 10 Holdings 17.68

Total Number of Holdings 509

Manager Name Donald M. Butler

Manager Tenure 14

Expense Ratio 0.02%

Closed to New Investors No





ENERGY 8.40%


HEALTHCARE 14.64%

INDUSTRIALS 11.13%

REAL ESTATE 2.10%

TECHNOLOGY 17.80%

UTILITIES 3.22%








Manager Tenure 14

Expense Ratio 0.02%






ENERGY 8.00%


HEALTHCARE 15.36%

INDUSTRIALS 11.12%

REAL ESTATE 2.26%

TECHNOLOGY 17.82%

UTILITIES 3.03%








Manager Tenure 14

Expense Ratio 0.02%




Price/Earnings 17.06

Price/Book 2.39

Price/Sales 1.70

Price/Cash Flow 7.48

Dividend Yield 2.29

Number of Equity Holdings 504






Price/Book 2.49

Price/Sales 1.78


Dividend Yield 2.09







Price/Book 2.58

Price/Sales 1.71


Dividend Yield 2.24




55

MERCER

DCP Mid Cap Stock Fund Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsDCP Mid Cap Stock Fund 4.1% 14.7% 17.9% 16.1% 10.0%DCP Mid Cap Custom Benchmark 4.0% 14.6% 17.9% 16.1% 10.0%Universe Median 3.7% 9.5% 16.0% 14.2% 8.7%

Annualized Returns 2014 2013 2012 2011 2010 2009DCP Mid Cap Stock Fund 13.8% 35.2% 16.0% -1.9% 25.7% 40.5%DCP Mid Cap Custom Benchmark 13.8% 35.2% 16.0% -1.9% 25.7% 40.5%Universe Median 8.3% 34.0% 16.1% -3.4% 23.7% 33.3%

56

DCP Mid Cap Stock Fund Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

DCP Mid Cap Stock Fund 16.08% 16.74% 0.06% -0.01% 1.00 0.96 -0.05 100.02% 35.18% 100.06% -26.50%

DCP Mid Cap Custom Benchmark 16.08% 16.73% 0.00% 0.00% 1.00 0.96 -- 100.00% 35.17% 100.00% -26.48%

57


Strategy Vanguard - Vanguard Mid-Cap Index Fund (US)

Benchmark CRSP US Mid Cap Index


Vanguard Mid-Cap Index Fund seeks to track the investment performance of the CRSP US Mid Cap Index, an unmanaged benchmark representing medium-size U.S. firms. The experience and stability of Vanguard's Quantitative Equity Group have permitted continuous refinement of techniques for reducing tracking error. The group uses proprietary software to implement trading decisions that accommodate cash flow and maintain close correlation with index characteristics.The Fund employs a passively managed, full-replication approach. The Fund holds all stocks in the same capitalization weighting as the index.Vanguard Mid-Cap Index Fund participates in securities lending program.


Top performing index sectors:

• Health care (+17.2%), industrials (+4.1) and financials (+4.0%)


• Utilities (-3.9%), basic materials (-2.5%) and oil & gas (-0.5%)

Manager Commentary

58

MERCER

Vanguard Mid Cap Index Fund Instl Plus Fund Information

Annualized Returns 2014 2013 2012 2011 2010 2009Vanguard Mid Cap Index Fund Instl Plus 13.8% 35.2% 16.0% -1.9% 25.7% 40.5%Vanguard Spliced Mid Cap 13.8% 35.2% 16.0% -1.9% 25.7% 40.5%Universe Median 8.3% 34.0% 16.1% -3.4% 23.7% 33.3%

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsVanguard Mid Cap Index Fund Instl Plus 4.3% 14.9% 18.0% 16.1% 10.0%Vanguard Spliced Mid Cap 4.3% 15.0% 18.0% 16.1% 10.0%Universe Median 3.7% 9.5% 16.0% 14.2% 8.7%

59

Vanguard Mid Cap Index Fund Instl Plus Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Vanguard Mid Cap Index Fund Instl Plus 16.12% 16.74% 0.04% -0.04% 1.00 0.96 -0.74 99.87% 35.24% 100.06% -26.50%

Vanguard Spliced Mid Cap 16.15% 16.73% 0.00% 0.00% 1.00 0.96 -- 100.00% 35.27% 100.00% -26.48%

60

Vanguard Mid Cap Index Fund Instl Plus Historical - Fund Information





ENERGY 7.18%


HEALTHCARE 9.89%

INDUSTRIALS 14.54%

REAL ESTATE 5.47%

TECHNOLOGY 14.54%

UTILITIES 5.06%

Portfolio Fund Information as of 09/30/2014Ticker VMCPX

Morningstar Category Mid-Cap Blend






Manager Tenure 17

Expense Ratio 0.06%






ENERGY 6.20%


HEALTHCARE 10.23%

INDUSTRIALS 13.91%

REAL ESTATE 5.88%

TECHNOLOGY 14.75%

UTILITIES 5.19%








Manager Tenure 17

Expense Ratio 0.06%






ENERGY 6.35%


HEALTHCARE 11.25%

INDUSTRIALS 13.62%

REAL ESTATE 5.84%

TECHNOLOGY 15.09%

UTILITIES 4.71%








Manager Tenure 17

Expense Ratio 0.06%





Price/Book 2.52

Price/Sales 1.43


Dividend Yield 1.51







Price/Book 2.56

Price/Sales 1.48


Dividend Yield 1.58







Price/Book 2.61

Price/Sales 1.50


Dividend Yield 1.50




61


Strategy Ceredex Value Advisors - Ceredex Mid Cap Value Equity

Benchmark Russell Midcap Value

Current Positioning

• Relative to the benchmark, the Fund is overweight the information technology, energy, and health care sectors• Conversly, the Fund is underweight the financials, consumer discretionary, utilities, and consumer staples sectors



• An overweight allocation to the health care sector• An underweight allocation to the utilities sector• Security selection within the health care, industrials, materials, and utilities sectors


• An overweight allocation to the energy and information technology sectors• Security selection within the consumer discretionary, financials, and information technology sectors• An average 4% allocation to cash during the quarter

Manager Commentary

62

abhishek-gupta3

Text Box

Note: The RidgeWorth Mid Cap Value Equity Fund is sub-advised by Cederex.


Strategy Ceredex Value Advisors - Ceredex Mid Cap Value Equity

Benchmark Russell Midcap Value


Number of Holdings: 58Weighted Market Capitalization (billions): $14.4Median Market Capitalization (billions): $9.5P/E ratio: 20.4xP/B ratio: 2.1xEarnings growth (5-year EPS Growth): 12.23%Turnover: 107%% Cash: 3.60


ESG3 - We believe an ESG3 rating is appropriate. Ceredex does not explicitly incorporate environmental, social, and governance (ESG) and active ownership practices into its investment process. The team does consider certain factors such as the quality of management as part of the fundamental research. However, this evaluation is just one input into the team's risk/reward assessment of a given stock. For voting proxies, RidgeWorth has a central team in Atlanta that handles all voting across the subsidiaries, involving Ceredex's portfolio managers as necessary if any issues arise. The firm is not a signatory to the UN Principles for Responsible Investment.

Manager Commentary

63

abhishek-gupta3

Text Box

Note: The RidgeWorth Mid Cap Value Equity Fund is sub-advised by Cederex.

aurora-bello

Sticky Note

Rejected set by aurora-bello

MERCER

RidgeWorth Mid Cap Value Equity Fund I Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsRidgeWorth Mid Cap Value Equity Fund I 0.4% 7.8% 16.3% 13.4% 11.1%Russell MidCap Value 2.4% 11.7% 18.6% 15.8% 9.6%Universe Median 2.8% 9.7% 16.7% 14.1% 8.4%

Annualized Returns 2014 2013 2012 2011 2010 2009RidgeWorth Mid Cap Value Equity Fund I 11.0% 31.2% 21.8% -7.3% 27.7% 47.0%Russell MidCap Value 14.7% 33.5% 18.5% -1.4% 24.8% 34.2%Universe Median 9.5% 34.4% 16.4% -4.1% 21.8% 34.2%

64

RidgeWorth Mid Cap Value Equity Fund I Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

RidgeWorth Mid Cap Value Equity Fund I 13.39% 18.91% 4.05% -4.85% 1.15 0.70 -0.61 102.38% 34.91% 125.70% -32.67%

Russell MidCap Value 15.84% 16.19% 0.00% 0.00% 1.00 0.98 -- 100.00% 34.34% 100.00% -25.72%

65





ENERGY 6.93%


HEALTHCARE 13.97%

INDUSTRIALS 15.15%

REAL ESTATE 2.86%

TECHNOLOGY 12.79%

UTILITIES 4.44%

RidgeWorth Mid Cap Value Equity Fund I Historical - Fund Information





ENERGY 6.58%


HEALTHCARE 12.78%

INDUSTRIALS 12.24%

REAL ESTATE 1.47%

TECHNOLOGY 15.43%

UTILITIES 6.12%

Portfolio Fund Information as of 12/31/2014Ticker SMVTX

Morningstar Category Mid-Cap Value





Manager Name Don Wordell

Manager Tenure 13

Expense Ratio 1.10%









Manager Tenure 13

Expense Ratio 1.10%









Manager Tenure 13

Expense Ratio 1.10%






ENERGY 7.43%


HEALTHCARE 12.17%

INDUSTRIALS 7.78%

REAL ESTATE 0.84%

TECHNOLOGY 16.95%

UTILITIES 9.47%




Price/Book 1.81

Price/Sales 1.38


Dividend Yield 2.14







Price/Book 1.96

Price/Sales 1.54


Dividend Yield 2.01







Price/Book 2.06

Price/Sales 1.51


Dividend Yield 2.32




66


Strategy Voya Investment Management Co. - Voya Mid Cap Growth

Benchmark Russell Midcap Growth

Current Positioning

As of 3/31/15:

• Relative to the Russell Midcap Growth Index, the Fund has a modest overweight (90 bps) to the consumer staples sector.• The Fund has a modest underweight (90 bps) to the health care sector.• The Fund is managed on a sector neutral basis.


As of 3/31/15:

Positive Impact on Performance: • Stock selection within the consumer discretionary, industrials, information technology, and energy sectors.

Negative Impact on Performance: • Stock selection within the health care and materials sectors


As of 3/31/15:

Number of holdings: 79Weighted Average Market Capitalization ($MM): $16,015P/E ratio (next 12 month): 22.81%Earnings growth (3-5 year): 15.53%Return on Assets: 8.8%Dividend Yield: 0.77%

Manager Commentary

67


Strategy Voya Investment Management Co. - Voya Mid Cap Growth

Benchmark Russell Midcap Growth


ESG3 - Voya considers environmental, social and governance (ESG) issues in the context of their potential financial effect on a company's stock price, but the factors are not explicit drivers of the investment philosophy and process.

Manager Commentary

68

MERCER

Voya Mid Cap Opportunities Fund R6 Fund Information

Annualized Returns 2014 2013 2012 2011 2010 2009Voya Mid Cap Opportunities Fund R6 8.8% 31.4% 13.6% -0.9% 30.0% 41.0%Russell MidCap Growth 11.9% 35.7% 15.8% -1.7% 26.4% 46.3%Universe Median 7.1% 36.1% 14.5% -2.9% 26.0% 39.7%

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsVoya Mid Cap Opportunities Fund R6 5.3% 15.0% 14.3% 15.5% 11.2%Russell MidCap Growth 5.4% 15.6% 17.4% 16.4% 10.2%Universe Median 5.9% 11.7% 14.8% 14.8% 9.7%

69

Voya Mid Cap Opportunities Fund R6 Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Voya Mid Cap Opportunities Fund R6 15.53% 16.54% 2.35% -0.28% 0.96 0.94 -0.38 88.74% 30.61% 91.11% -29.26%

Russell MidCap Growth 16.43% 17.03% 0.00% 0.00% 1.00 0.96 -- 100.00% 33.25% 100.00% -32.11%

70

Portfolio Fund Information as of 09/30/2014Ticker IMOZX

Morningstar Category Mid-Cap Growth


Net Assets ($mm) 45.23



Manager Name Jeff Bianchi

Manager Tenure 10

Expense Ratio 0.88%






ENERGY 6.57%


HEALTHCARE 12.00%

INDUSTRIALS 17.27%

REAL ESTATE 0.93%

TECHNOLOGY 17.19%

UTILITIES 0.00%





ENERGY 4.85%


HEALTHCARE 12.43%

INDUSTRIALS 18.17%

REAL ESTATE 0.98%

TECHNOLOGY 16.16%

UTILITIES 0.00%








Manager Tenure 10

Expense Ratio 0.88%


Voya Mid Cap Opportunities Fund R6 Historical - Fund Information








Manager Tenure 10

Expense Ratio 0.88%






ENERGY 4.85%


HEALTHCARE 12.43%

INDUSTRIALS 18.17%

REAL ESTATE 0.98%

TECHNOLOGY 16.16%

UTILITIES 0.00%




Price/Book 3.66

Price/Sales 1.89


Dividend Yield 0.91







Price/Book 3.81

Price/Sales 2.03


Dividend Yield 0.80







Price/Book 3.81

Price/Sales 2.03


Dividend Yield 0.80




71

MERCER

DCP Small Cap Stock Fund Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsDCP Small Cap Stock Fund 4.3% 8.2% 16.2% 14.5% 10.0%Russell 2000 4.3% 8.2% 16.3% 14.6% 8.8%Universe Median 3.9% 7.1% 15.3% 14.2% 8.6%

Annualized Returns 2014 2013 2012 2011 2010 2009DCP Small Cap Stock Fund 4.9% 38.7% 16.2% -4.0% 26.6% 26.6%Russell 2000 4.9% 38.8% 16.3% -4.2% 26.9% 27.2%Universe Median 4.2% 37.4% 14.8% -2.8% 25.8% 31.0%

72

DCP Small Cap Stock Fund Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

DCP Small Cap Stock Fund 14.52% 18.81% 0.10% -0.02% 1.00 0.77 -0.43 99.53% 36.10% 99.78% -31.77%

Russell 2000 14.57% 18.83% 0.00% 0.00% 1.00 0.77 -- 100.00% 36.22% 100.00% -31.84%

73


Strategy State Street Global Advisors - Russell 2000 Index Strategy

Benchmark Russell 2000


Investment PhilosophySSgA's aim is to achieve returns as close to the index as possible, but in a cost effective manner. Market anomalies will be exploited where they can be, at very low risk levels.

Investment ProcessSSgA manages the Russell 2000 Index strategy using either a replication or sampling and optimization approach. With regard to the replication approach, securities in the benchmark are purchased in the weights they represent in the benchmark. However, SSgA does allow for small mis-weights in the portfolio, recognizing that the cost of trading to avoid small mis-weights may be greater than any potential improvement in tracking error.


Top performing index sectors: • Health care (+12.4%), information technology (+5.7%) and consumer discretionary (+5.1%)


• Energy (-0.6%), telecommunication services (-0.4%) and consumer staples (+0.4%)

Manager Commentary

74

MERCER

SSgA Russell Small Cap Index Non-Lending Series Fund Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsSSgA Russell Small Cap Index Non-Lending SeriesFund 4.3% 8.2% 16.2% 14.5%

Russell 2000 4.3% 8.2% 16.3% 14.6% 8.8%Universe Median 3.9% 7.1% 15.3% 14.2% 8.6%

Annualized Returns 2014 2013 2012 2011 2010 2009SSgA Russell Small Cap Index Non-LendingSeries Fund 4.9% 38.7% 16.2% -4.0% 26.6% 26.6%

Russell 2000 4.9% 38.8% 16.3% -4.2% 26.9% 27.2%Universe Median 4.2% 37.4% 14.8% -2.8% 25.8% 31.0%

75




RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

SSgA Russell Small Cap Index Non-Lending SeriesFund 14.52% 18.81% 0.10% -0.02% 1.00 0.77 -0.43 99.53% 36.10% 99.78% -31.77%

Russell 2000 14.57% 18.83% 0.00% 0.00% 1.00 0.77 -- 100.00% 36.22% 100.00% -31.84%

76

GICS SectorSelection

Effect(Local)

AllocationEffect

(Local)

InteractionEffects

_

Energy 0.02% 0.01% 0.00%Materials 0.02% 0.00% 0.00%Industrials 0.05% 0.00% 0.00%Consumer Discretionary -0.02% 0.00% 0.00%Consumer Staples -0.01% 0.00% 0.00%Health Care 0.14% -0.02% 0.00%Financials -0.03% -0.01% 0.00%Information Technology 0.04% 0.00% 0.00%Telecommunications Services 0.00% 0.00% 0.00%Utilities -0.01% 0.00% 0.00%Unclassified 0.00% -0.04% 0.00%Total 0.21% -0.05% -0.01%

XXXXX

Top ContributorsEnd Weight Return Contribution

ABIOMED 0.16 88.07 0.14NEUROCRINE BIOSCIENCES 0.18 77.75 0.14QORVO 0.62 20.10 0.12HORIZON PHARMA 0.10 101.47 0.10IMPAX LABORATORIES 0.18 47.95 0.09

Characteristics

Portfolio Russell2000

Number of Holdings 1,631 1,980

Weighted Avg. Market Cap. ($B) 2.12 2.11

Median Market Cap. ($B) 0.74 0.74

Price To Earnings 27.11 26.42

Price To Book 3.92 3.27

Price To Sales 3.18 2.88

Return on Equity (%) 12.93 11.20

Yield (%) 1.28 1.12

Beta 1.00 1.00

R-Squared 1.00 1.00

COMPANY SIZE DISTRIBUTION

Weighted Ave. Market Cap. ($B) 2.12 2.11

Median Market Cap. ($B) 0.74 0.74

Large Cap. (%) 0.00 0.00

Medium/Large Cap. (%) 0.00 0.00

Medium Cap. (%) 0.64 0.63

Medium/Small Cap. (%) 15.90 16.63

Small Cap. (%) 83.46 82.74


Bottom ContributorsEnd Weight Return Contribution

INSULET 0.10 -27.59 -0.03FEI 0.18 -15.26 -0.03DARLING INGREDIENTS 0.12 -22.85 -0.03HELIX ENERGY SLTN.GP. 0.08 -31.06 -0.02NEKTAR THERAPEUTICS 0.08 -29.03 -0.02

Largest HoldingsEnd Weight Return

QORVO 0.62 20.10ISIS PHARMACEUTICALS 0.40 3.13OFFICE DEPOT 0.28 7.29BRUNSWICK 0.26 0.60DEXCOM 0.26 13.24

77

MERCER

SSgA Russell Small Cap Index Non-Lending Series Fund Historical - Fund Information

SSgA Russell Small Cap Index Non-Lending Series Fund Equity Characteristicsvs Russell 2000

Portfolio Index Portfolio Index Portfolio Index Portfolio IndexQ1-15 Q1-15 Q4-14 Q4-14 Q3-14 Q3-14 Q2-14 Q2-14

CharacteristicsWtg. Avg. Market Cap. (Bil) 2.12 2.11 1.90 1.89 -- 1.68 -- 1.77Median Market Cap (Bil) 0.74 0.74 0.72 0.71 -- 0.67 -- 0.67P/E Ratio 27.11 26.42 26.03 25.12 -- 22.33 -- 23.85Yield 1.28 1.12 1.32 1.10 -- 1.19 -- 1.06EPS Growth - 5 Yrs. 8.55 8.40 6.00 5.35 -- 5.25 -- 5.04Price to Book 3.92 3.27 3.76 3.12 -- 2.86 -- 3.06Beta (holdings; domestic) 1.28 1.28 1.30 1.30 -- 1.33 -- 1.34

Sector DistributionEnergy 2.84 3.37 3.34 3.39 -- 5.51 -- 6.32Materials 4.29 4.36 4.42 4.60 -- 4.98 -- 5.11Industrials 13.04 13.57 13.49 13.77 -- 13.89 -- 14.08Consumer Discretionary 13.46 13.98 13.51 13.69 -- 13.22 -- 13.14Consumer Staples 2.86 3.18 3.30 3.33 -- 3.27 -- 3.17Health Care 14.54 15.68 14.29 14.75 -- 13.37 -- 13.20Financials 22.82 23.66 24.22 24.29 -- 23.78 -- 22.98Information Technology 16.77 17.96 17.55 17.86 -- 18.02 -- 17.86Telecommunications Services 0.62 0.75 0.72 0.78 -- 0.78 -- 0.78Utilities 3.33 3.49 3.48 3.55 -- 3.19 -- 3.38

Sector PerformanceEnergy 0.05 -0.57 -- -30.61 -- -20.52 -- 11.52Materials 1.13 0.73 -- 2.14 -- -8.31 -- 1.72Industrials 2.87 2.53 -- 9.11 -- -9.53 -- 0.20Consumer Discretionary 4.99 5.17 -- 13.87 -- -8.52 -- 1.28Consumer Staples -0.07 0.11 -- 12.47 -- -3.35 -- 1.12Health Care 13.25 12.23 -- 17.59 -- -5.06 -- 0.40Financials 1.51 1.62 -- 11.48 -- -5.23 -- 1.94Information Technology 5.34 5.11 -- 11.73 -- -5.54 -- 1.97Telecommunications Services -0.27 -0.61 -- 8.74 -- -6.96 -- -3.07Utilities 0.75 0.95 -- 17.12 -- -10.14 -- 8.94Cash -- -- -- -- -- -- -- --

78

MERCER

SSgA Russell Small Cap Index Non-Lending Series Fund Historical - Fund Information

SSgA Russell Small Cap Index Non-Lending Series Fund Equity Characteristicsvs Russell 2000

Portfolio Index Portfolio Index Portfolio Index Portfolio IndexQ1-15 Q1-15 Q4-14 Q4-14 Q3-14 Q3-14 Q2-14 Q2-14

Company Size DistributionWeighted Ave. Market Cap. ($B) 2.12 2.11 1.90 1.89 -- 1.68 -- 1.77Median Market Cap. ($B) 0.74 0.74 0.72 0.71 -- 0.67 -- 0.67Large Cap. (%) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Medium/Large Cap. (%) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Medium Cap. (%) 0.64 0.63 0.00 0.00 0.00 0.00 0.00 0.00Medium/Small Cap. (%) 15.90 16.63 14.20 14.66 0.00 10.87 0.00 10.89Small Cap. (%) 83.46 82.74 85.80 85.34 0.00 89.13 0.00 89.11

Region WeightingNorth America ex U.S. 0.16 0.16 0.14 0.15 -- 0.39 -- 0.42United States 99.00 99.68 99.76 99.76 -- 99.45 -- 99.34Europe Ex U.K. 0.22 0.01 0.00 0.02 -- 0.03 -- 0.05United Kingdom 0.06 0.06 0.06 0.05 -- 0.10 -- 0.16Pacific Basin Ex Japan -- -- -- -- -- -- -- --Japan -- -- -- -- -- -- -- --Emerging Markets 0.02 0.01 0.02 0.01 -- 0.01 -- 0.01Other 0.54 0.07 0.02 0.01 -- 0.01 -- 0.01

79


Strategy Dimensional Fund Advisors - US Small Cap Value Strategy

Benchmark Russell 2000 Value

Current Positioning

• Relative to the Russell 2000 Value, the Fund is overweight the industrials, information technology and energy sectors.• The Fund is significantly underweight the REITs sector followed by utilities and telecommunication services sectors.• Top holdings: CNO Financial, JetBlue Airways, Life Point Hospitals and Esterline Technologies.



• Security selection within the financials, energy and consumer staples sector• An underweight allocation to the utilities sector• An overweight allocation to and security selection within the industrials and information technology sectors• An overweight allocation to the consumer discretionary and health care sectors• Top contributors: JetBlue Airways, Delek and Skechers


• An overweight allocation to the energy sector• An underweight allocation to the REITs sector• Security selection within the materials and telecommunication services sectors• Top detractors: Century Aluminum, Helix Energy and Devry Education

Manager Commentary

80


Strategy Dimensional Fund Advisors - US Small Cap Value Strategy

Benchmark Russell 2000 Value


Number of holdings: 1,208Median Market Capitalization ($MM): $404Weighted Average Market Capitalization ($MM): $1,978P/E ratio: 16.5xP/B ratio: 1.3xTurnover (trailing 12 months as of 10/31/14): 9.0%% cash: 0.2%


ESG4 - DFA makes a conscious effort to include elements of corporate governance into its models on the belief that stronger corporate governance policies will be reflected in higher stock prices. It seeks to impact governance through a variety of means, including proxy voting, engagement, internal projects, research, and industry surveys and events. The firm is a signatory to the UNPRI. Even so, DFA manages a quantitatively driven process, where the firm does not focus on ESG issues on an individual stock basis. Therefore, we believe the traditional equity strategies warrant an ESG4 rating.

Manager Commentary

81

DFA US Small Cap Value Portfolio Institutional Fund Information

Annualized Returns 2014 2013 2012 2011 2010 2009DFA US Small Cap Value Portfolio Institutional 3.5% 42.4% 21.7% -7.5% 30.9% 33.6%Russell 2000 Value 4.2% 34.5% 18.1% -5.5% 24.5% 20.6%Universe Median 3.6% 36.4% 16.9% -3.8% 25.8% 31.3%

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsDFA US Small Cap Value Portfolio Institutional 2.4% 4.7% 17.5% 14.7% 8.5%Russell 2000 Value 2.0% 4.4% 14.8% 12.5% 7.5%Universe Median 2.3% 4.4% 14.7% 13.3% 8.2%

82


RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

DFA US Small Cap Value Portfolio Institutional 14.72% 20.89% 3.60% 0.68% 1.12 0.70 0.61 126.74% 39.74% 110.03% -36.53%

Russell 2000 Value 12.54% 18.48% 0.00% 0.00% 1.00 0.68 -- 100.00% 33.78% 100.00% -33.01%

DFA US Small Cap Value Portfolio Institutional Fund Information


83





ENERGY 9.03%


HEALTHCARE 5.36%

INDUSTRIALS 20.23%

REAL ESTATE 0.37%

TECHNOLOGY 13.34%

UTILITIES 0.11%

Portfolio Fund Information as of 09/30/2014Ticker DFSVX

Morningstar Category Small Value




Total Number of Holdings 1,281

Manager Name Joseph H. Chi

Manager Tenure 3

Expense Ratio 0.52%


DFA US Small Cap Value Portfolio Institutional Historical - Fund Information





ENERGY 7.08%


HEALTHCARE 5.39%

INDUSTRIALS 19.93%

REAL ESTATE 0.36%

TECHNOLOGY 13.95%

UTILITIES 0.07%




Price/Book 1.24

Price/Sales 0.65


Dividend Yield 1.16

Number of Equity Holdings 1,272










Manager Tenure 3

Expense Ratio 0.52%









Manager Tenure 3

Expense Ratio 0.53%






ENERGY 7.15%


HEALTHCARE 5.60%

INDUSTRIALS 20.77%

REAL ESTATE 0.31%

TECHNOLOGY 13.55%

UTILITIES 0.08%




Price/Book 1.30

Price/Sales 0.69


Dividend Yield 1.10







Price/Book 1.27

Price/Sales 0.66


Dividend Yield 1.26




84


Strategy Hartford Funds - Hartford SmallCap Growth HLS Fund

Benchmark Russell 2000 Growth

Current Positioning

• Hartford continues to find attractively valued stocks with the characteristics they seek, and are cautiously optimistic about the outlook for the US economyand for equity markets.

• Hartford continues to monitor policy decisions and economic trends which may have an impact on the fund's holdings.• Their disciplined portfolio construction process allows them to assess risk and weight individual positions to help build a portfolio that focuses largely on

stock selection to drive performance.• At the end of the quarter, the Fund was overweight to the financials and materials sectors. Conversely, the Fund was underweight to the health care,

consumer discretionary, and information technology sectors.• The Fund had no exposure to the telecommunication services and utilities sectors.



• Security selection in the information technology, industrials, and materials sectors• Individual securities that were the largest relative contributors to performance were Anacor Pharmaceuticals and Hyperion Therapeutics


• An underweight allocation to the health care sector• Lack of exposure to the utilities sector• An overweight allocation to the consumer staples sector• Stock selection in the consumer discretionary and energy sectors


Number of holdings: 348Median Market Capitalization ($MM): $1,500Weighted Average Market Capitalization ($MM): $2,600Earnings growth: 14.5%Turnover: 106%% Cash: 1.0%

Manager Commentary

85

Hartford Small Cap Growth HLS Fund IA Fund Information

Annualized Returns 2014 2013 2012 2011 2010 2009Hartford Small Cap Growth HLS Fund IA 5.8% 44.9% 17.4% 1.4% 36.6% 35.4%Russell 2000 Growth 5.6% 43.3% 14.6% -2.9% 29.1% 34.5%Universe Median 2.5% 42.6% 13.9% -2.5% 28.0% 35.8%

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsHartford Small Cap Growth HLS Fund IA 7.1% 13.1% 18.8% 19.6% 10.5%Russell 2000 Growth 6.6% 12.1% 17.7% 16.6% 10.0%Universe Median 6.0% 8.7% 15.5% 15.4% 9.4%

86

Hartford Small Cap Growth HLS Fund IA Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Hartford Small Cap Growth HLS Fund IA 19.61% 20.02% 2.47% 2.62% 1.02 0.98 1.22 115.04% 42.41% 95.23% -29.13%

Russell 2000 Growth 16.58% 19.39% 0.00% 0.00% 1.00 0.85 -- 100.00% 38.63% 100.00% -30.66%

87





ENERGY 3.60%


HEALTHCARE 21.26%

INDUSTRIALS 16.54%

REAL ESTATE 3.00%

TECHNOLOGY 24.22%

UTILITIES 0.00%

Portfolio Fund Information as of 09/30/2014Ticker HISCX

Morningstar Category Small Growth





Manager Name Mammen Chally

Manager Tenure 6

Expense Ratio 0.67%


Hartford Small Cap Growth HLS Fund IA Historical - Fund Information





ENERGY 2.39%


HEALTHCARE 20.94%

INDUSTRIALS 16.89%

REAL ESTATE 3.08%

TECHNOLOGY 23.50%

UTILITIES 0.00%








Manager Tenure 6

Expense Ratio 0.67%









Manager Tenure 6

Expense Ratio 0.67%






ENERGY 1.83%


HEALTHCARE 16.81%

INDUSTRIALS 12.80%

REAL ESTATE 2.03%

TECHNOLOGY 17.44%

UTILITIES 0.01%




Price/Book 3.37

Price/Sales 1.23


Dividend Yield 0.77







Price/Book 2.79

Price/Sales 1.16


Dividend Yield 0.59







Price/Book 3.16

Price/Sales 1.31


Dividend Yield 0.53




88


Strategy Deutsche Asset & Wealth Management - Deutsche EAFE® Equity Index Fund

Benchmark MSCI EAFE Index


The fund seeks to replicate, as closely as possible, the performance of the MSCI EAFE Index, which emphasizes stocks of companies in major markets in Europe, Australasia and the Far East. The fund invests for capital appreciation, not income. The fund may lend securities up to 33.3% of total assets to approved institutions. The strategy invests typically 80% of the fund in index securities and selects derivative instruments relating to the index.


Positive Impact on Performance: • Top performing sectors were health care (+9.6%), consumer discretionary (+8.3%), and information technology (+7.1%)• Top performing countries were Denmark (+15.8%), Japan (+10.2%), and Israel (+9.0%)

Negative Impact to Performance: • Bottom performing sectors were energy (-4.8%), utilities (-4.8%), and telecommunications services (+2.4%)• Bottom performing countries were Canada (-6.0%), Singapore (-1.9%), and New Zealand (-1.8%)

Manager Commentary

89

Deutsche EAFE Equity Index Fund Institutional Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsDeutsche EAFE Equity Index Fund Institutional 5.3% -1.4% 8.6% 5.9% 4.8%MSCI EAFE 4.9% -0.9% 9.0% 6.2% 4.9%Universe Median 4.9% -1.3% 8.4% 5.9% 4.8%

Annualized Returns 2014 2013 2012 2011 2010 2009Deutsche EAFE Equity Index Fund Institutional -5.8% 21.6% 18.3% -12.4% 7.7% 29.3%MSCI EAFE -4.9% 22.8% 17.3% -12.1% 7.8% 31.8%Universe Median -5.1% 21.4% 17.5% -12.7% 8.6% 31.4%

90


RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Deutsche EAFE Equity Index Fund Institutional 5.89% 17.73% 1.18% -0.53% 1.04 0.33 -0.23 103.24% 27.82% 104.23% -31.75%

MSCI EAFE 6.16% 16.98% 0.00% 0.00% 1.00 0.36 -- 100.00% 27.16% 100.00% -30.33%

Deutsche EAFE Equity Index Fund Institutional Fund Information


91

Portfolio Fund Information as of 09/30/2014Ticker BTAEX

Morningstar Category Foreign Large Blend





Manager Name Joseph LaPorta

Manager Tenure 1

Expense Ratio 0.50%






ENERGY 5.79%


HEALTHCARE 10.91%

INDUSTRIALS 11.22%

REAL ESTATE 3.63%

TECHNOLOGY 5.38%

UTILITIES 3.65%

Deutsche EAFE Equity Index Fund Institutional Historical - Fund Information








Manager Tenure 1

Expense Ratio 0.50%






ENERGY 5.51%


HEALTHCARE 10.87%

INDUSTRIALS 11.25%

REAL ESTATE 3.62%

TECHNOLOGY 5.36%

UTILITIES 3.38%








Manager Tenure 1

Expense Ratio 0.50%






ENERGY 6.81%


HEALTHCARE 10.93%

INDUSTRIALS 10.98%

REAL ESTATE 3.35%

TECHNOLOGY 5.15%

UTILITIES 3.57%




Price/Book 1.52

Price/Sales 0.98


Dividend Yield 2.92







Price/Book 1.54

Price/Sales 1.01


Dividend Yield 3.11







Price/Book 1.58

Price/Sales 1.10


Dividend Yield 3.15




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Top Regions as of 09/30/2014EUROZONE 28.39%

UNITED KINGDOM 20.53%

JAPAN 20.17%

EUROPE EXEURO 14.08%

AUSTRALIASIA 7.37%

Deutsche EAFE Equity Index Fund Institutional Historical - Fund Information

Top Countries as of 09/30/2014United Kingdom 20.53%

Japan 20.17%

France 9.40%

Switzerland 8.90%

Germany 7.90%

Australia 7.24%

Spain 3.48%

Sweden 2.88%

Hong Kong 2.83%

Netherlands 2.60%



JAPAN 20.76%


AUSTRALIASIA 7.47%


Japan 20.76%

Switzerland 9.24%

France 9.19%

Germany 8.65%

Australia 7.32%

Spain 3.42%

Netherlands 3.01%

Sweden 3.01%

Hong Kong 2.97%


JAPAN 21.18%



AUSTRALIASIA 7.36%

Top Countries as of 02/28/2015Japan 21.18%

United Kingdom 20.32%

France 9.37%

Switzerland 8.95%

Germany 8.55%

Australia 7.21%

Spain 3.25%

Sweden 3.07%

Hong Kong 2.92%

Netherlands 2.61%

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Strategy Fidelity Management & Research Company - FMRCo. (US Mutual Funds Only) - Fidelity Diversified International

Benchmark MSCI EAFE

Current Positioning

• Relative to MSCI EAFE the Fund has underweight exposure to Europe, Japan and Asia Pacific Ex Japan.• The Fund continues to have an out-of-benchmark allocation to the United States, Emerging Markets and Canada.• From a sector perspective the Fund is overweight the information technology, health care, consumer discretionary and consumer staples sectors.• The Fund is underweight the industrials, financials, materials, industrials, energy and telecommunication services sectors.• The Fund has no exposure to the utilities sector.• The ten largest holdings represent approximately 14.6% of the portfolio.• The top five holdings are Novo Nordisk, Anheuser-Busch InBev, ORIX, Bayer and Hoya.



• An underweight allocation to and security selection in Europe, Asia Pacific Ex Japan• Security selection within the Emerging Markets and Equity Index Futures• An underweight allocation to and security selection within the financials and materials sectors• An overweight allocation to and security selection within the health care sector• No allocation to the utilities sector• Top contributors: Altice SA, Royal Dutch Shell, Novo Nordisk, Rakuten, Inc. and Essentra


• Security selection in Canada and the United States• An underweight allocation to Japan• An underweight allocation to and security selection within the industrials sector• Security selection within the information technology, energy and consumer discretionary sectors• Top detractors: Alibaba, Toyota Motor, Alimentation Couche-Tard, Inc. Class B, Credit Suisse, Melco Crown Entertainment

Manager Commentary

94


Strategy Fidelity Management & Research Company - FMRCo. (US Mutual Funds Only) - Fidelity Diversified International

Benchmark MSCI EAFE


Number of holdings: 238Median Market Capitalization (billions): $17.0Weighted Average Market Capitalization (billions): $54.8P/E ratio: 22.8xP/B ratio: 2.9xEarnings growth (5 year):12.7%% cash: 4.3%


ESG4 - Fidelity analysts routinely consider corporate governance. Environmental and social practices are assessed at the discretion of the analyst, but there is no evidence of regular scrutiny or engagement with management on such practices. Discussions with FMRCo management suggest little awareness of environment and social matters and little interest in pursuing them. Neither Fidelity Invesments nor FMRCo are signatories to the UN Principles on Responsible Investment and discussions with FMRCo management suggest this is a low priority. We believe an ESG4 rating is appropriate (some element of corporate governance but very little thought given to environmental and social issues).

Manager Commentary

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Fidelity Diversified International Fund Fund Information

Annualized Returns Last 3 Mo. 1 Yr 3 Yrs 5 Yrs 10 YrsFidelity Diversified International Fund 6.4% 3.8% 11.0% 7.7% 5.7%MSCI EAFE 4.9% -0.9% 9.0% 6.2% 4.9%Universe Median 4.9% -1.3% 8.3% 6.4% 5.4%

Annualized Returns 2014 2013 2012 2011 2010 2009Fidelity Diversified International Fund -3.2% 25.2% 19.4% -13.8% 9.7% 31.8%MSCI EAFE -4.9% 22.8% 17.3% -12.1% 7.8% 31.8%Universe Median -5.2% 21.7% 18.7% -13.6% 12.3% 34.7%

96

Fidelity Diversified International Fund Fund Information



RatioUp Mkt Capture

RatioUp Mkt Annual

ReturnDown Mkt


Annual Return_

Fidelity Diversified International Fund 7.66% 17.38% 2.76% 1.44% 1.01 0.44 0.54 104.13% 28.00% 93.32% -28.11%

MSCI EAFE 6.16% 16.98% 0.00% 0.00% 1.00 0.36 -- 100.00% 27.16% 100.00% -30.33%

97





ENERGY 3.45%


HEALTHCARE 16.60%

INDUSTRIALS 6.79%

REAL ESTATE 0.06%

TECHNOLOGY 10.68%

UTILITIES 0.31%

Portfolio Fund Information as of 09/30/2014Ticker FDIVX

Morningstar Category Foreign Large Growth





Manager Name William Bower

Manager Tenure 14

Expense Ratio 0.92%






ENERGY 3.10%


HEALTHCARE 15.55%

INDUSTRIALS 6.64%

REAL ESTATE 0.05%

TECHNOLOGY 12.17%

UTILITIES 0.00%








Manager Tenure 14

Expense Ratio 0.91%


Fidelity Diversified International Fund Historical - Fund Information





ENERGY 2.54%


HEALTHCARE 15.61%

INDUSTRIALS 6.18%

REAL ESTATE 0.05%

TECHNOLOGY 11.78%

UTILITIES 0.00%








Manager Tenure 14

Expense Ratio 0.91%





Price/Book 2.20

Price/Sales 1.56


Dividend Yield 2.63







Price/Book 2.39

Price/Sales 1.64


Dividend Yield 2.65







Price/Book 2.47

Price/Sales 1.80


Dividend Yield 2.95




98

Fidelity Diversified International Fund Historical - Fund Information



JAPAN 16.67%

EUROPE EXEURO 9.93%

UNITED STATES 9.33%



JAPAN 15.17%

EUROPE EXEURO 9.97%

UNITED STATES 8.83%


Japan 16.67%

United States 9.33%

Germany 5.27%

France 4.99%

Switzerland 4.84%

Canada 3.98%

Australia 2.95%

Belgium 2.70%

Denmark 2.65%


Japan 15.22%

United States 7.84%

Germany 5.44%

France 4.68%

Switzerland 4.40%

Canada 3.16%

Netherlands 3.10%

Belgium 2.89%

India 2.85%


Japan 15.17%

United States 8.83%

Switzerland 5.10%

Germany 5.09%

France 4.33%

Canada 3.69%

Netherlands 3.10%

Belgium 2.69%

Israel 2.54%



JAPAN 15.22%

EUROPE EXEURO 9.00%

UNITED STATES 7.84%

99

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