Public Employees Retirement Association of New Mexico · 9/30/2012 · Public Employees Retirement...

Public Employees Retirement Association of New MexicoExecutive SummaryPerformance Report

Quarter Ended September 30, 2012

Capital Markets Update

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Performance Update as of September 30, 2012

Third Calendar Quarter ObservationsAlthough uncertainty and weakness remained in domestic and European economies, equities made broad gains on the quarter.After mixed performance in July, equities posted solid returns in August and September, regaining the ground lost in the second calendar quarter.The Federal Reserve, concerned about continued weakness in the labor market, announced a new round of bond purchases, dubbed “QE3.”Concerned about the continued widening of debt spreads, European Central Bank (ECB) President Mario Draghi announced that the bank will begin purchasing sovereign bonds from Eurozone nations.

Index

4th Qtr2011

Return

1st Qtr2012

Return

2nd Qtr2012

Return QTD

Return YTD

Return

1-YearAnnualized

Return

3-YearAnnualized

Return

5-YearAnnualized

Return

10-YearAnnualized

Return

Russell 1000 Index 11.84% 12.90% -3.12% 6.31% 16.28% 30.05% 13.28% 1.23% 8.35% Russell 2000 Index 15.47% 12.44% -3.47% 5.25% 14.23% 31.90% 12.98% 2.21% 10.17% Russell 3000 Index 12.12% 12.87% -3.15% 6.23% 16.13% 30.20% 13.26% 1.30% 8.49% MSCI EAFE Index (Gross) 3.38% 10.98% -6.85% 6.98% 10.59% 14.33% 2.59% -4.77% 8.69% MSCI EAFE Index (Local) (Net) 4.12% 10.34% -5.14% 4.73% 9.61% 14.12% 1.72% -5.73% 5.37% MSCI EAFE Small Cap Index (Gross) -0.52% 14.94% -8.47% 7.94% 13.55% 12.97% 5.09% -2.64% 11.65% MSCI Emerging Markets Index (Gross) 4.45% 14.14% -8.77% 7.89% 12.34% 17.34% 5.96% -0.98% 17.37% MSCI AC World ex-US Index (Gross) 3.77% 11.34% -7.38% 7.49% 10.86% 15.04% 3.63% -3.67% 10.32% Barclays US Aggregate Bond Index 1.12% 0.30% 2.06% 1.58% 3.99% 5.16% 6.19% 6.53% 5.32% ML 3 Mo US T-Bill 0.00% 0.01% 0.03% 0.03% 0.07% 0.07% 0.11% 0.72% 1.82% NCREIF ODCE Index AWA (Gross) 2.97% 2.82% 2.58% 2.77% 8.39% 11.61% 12.19% -1.14% 6.67% HFRI FOF: Conservative Index 0.06% 2.47% -1.73% 1.64% 2.35% 2.41% 1.59% -1.54% 2.88% DJ-UBS Commodity Index 0.35% 0.89% -4.55% 9.69% 5.63% 5.99% 5.26% -3.03% 5.20%

As of September 30, 2012

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Current Market Themes – Unemployment

Source: Bloomberg

Page 3

Current Market Themes – Inflation

Source: Bloomberg

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Current Market Themes – GDP

Source: Bloomberg

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Current Market Themes – Oil/Commodities

Growth of $100

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Annual Asset Class Performance

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PERA Executive Summary

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Compare total fund performance in two ways:Relative to a benchmark to evaluate how the Plan is performing compared to its stated target (which changes over time).

Relative to peers to evaluate how the Plan is performing compared to other funds of similar type and size, and to understand best practices among the peers.

PERA’s Total Fund return is compared to the All Public Plans > $2 billion peer universe.It is important to note that peer public plans might have different interim and long-term target allocations than PERA’s targets, leading them to have different performance.

Performance Monitoring

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As summarized in the investment policy statement, the PERA portfolio is governed by the Uniform Prudent Investor Act, which states:

“A trustee’s investment and management decisions respecting individual assets must be evaluated not in isolation but in the context of the trust portfolio as a whole and as part of an overall investment strategy having risk and return objectives reasonably suited to the trust.”

Performance Monitoring

Page 10

PERA Total Fund Performancevs. Benchmarks

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PERA’s Long-Term Target Index

The Long-Term Target (Strategic Asset Allocation) is PERA’s asset allocation set forth in the investment policy statement.

Starting from the 1st quarter of 2007, the Long-Term Target Index shows how the Fund would have performed if it was always invested at its policy target allocation (which changes concurrent with Board’s approval to amend their policy statement) in each asset class’ respective benchmark.

The benchmark can be utilized in total fund attribution to measure two components of relative performance.

Active weight – cost/benefit of not being at the target allocation.Manager value added – did your managers out/underperform their asset class benchmark?

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Asset Allocation vs. Target as of September 30, 2012

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Over the fiscal year to date, PERA outperformed the Long-Term Target Allocation index by 17 basis points, net of fees.

PERA outperformed the Long-Term Target Allocation index in 7 of the last 10 calendar and fiscal years.

Total Fund Performance vs. Index

Please see Appendix for custom index definitions.

Calendar Years 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002NM PERA Total Fund -1.22 13.90 21.56 -31.96 7.25 14.96 8.46 11.67 20.84 -5.04Long-Term Target Allocation Index -1.29 11.88 21.43 -25.17 9.05 14.31 7.06 10.44 21.16 -8.27Difference 0.07 2.02 0.13 -6.79 -1.80 0.65 1.40 1.23 -0.32 3.23

Fiscal Years FY2012

FY2011

FY2010

FY2009

FY2008

FY2007

FY2006

FY2005

FY2004

FY2003

NM PERA Total Fund -0.38 22.50 15.01 -24.11 -7.40 18.07 11.76 9.85 15.55 3.73Long-Term Target Allocation Index -1.18 20.74 12.28 -16.68 -2.85 16.84 9.98 8.78 14.13 3.85Difference 0.80 1.76 2.73 -7.43 -4.55 1.23 1.78 1.07 1.42 -0.12

Period ending September 30, 2012 QTD FYTD CYTD 1Year

3Years

5Years

7Years

10Years

15Years

SinceInception

InceptionDate

NM PERA Total Fund 5.07 5.07 11.14 16.66 9.30 0.37 3.93 6.84 6.27 9.27 06/01/1985Long-Term Target Allocation Index 4.86 4.86 10.08 14.87 7.94 1.98 4.98 7.58 5.81 N/ADifference 0.21 0.21 1.06 1.79 1.36 -1.61 -1.05 -0.74 0.46 N/A

NM PERA Total Fund (Net) 5.03 5.03 11.01 16.48 N/A N/A N/A N/A N/A 8.31 01/01/2010

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Performance shown is gross of fees. Calculation is based on monthly periodicity.Please see Appendix for custom index definition. Total Value Added may differ from the Plan’s actual performance due to rounding.

PERA outperformed the Long-Term Index by 22 basis points for the quarter ended September 30, 2012.

Total Fund outperformance can be attributed to manager value added, specifically from Domestic Equity managers.

SMID Cap managers, led by JP Morgan, contributed the most to the Total Fund outperformance.

Why did PERA Outperform the Long-Term Index in the Most Recent Quarter?

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Performance shown is gross of fees. Calculation is based on monthly periodicity.Please see Appendix for custom index definition. Total Value Added may differ from the Plan’s actual performance due to rounding.

PERA outperformed the Long-Term Index by 179 basis points for the year ended September 30, 2012.

Total Fund outperformance can be attributed to manager value added from every asset class, particularly from Fixed Income managers.

Franklin and Manulife contributed the most to Fixed Income outperformance.

Why did PERA Outperform the Long-Term Index in the Most Recent Year?

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PERA Total Fund Performancevs. Peers

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Asset Allocation vs. >$2B Peer Group

PERA’s allocation as of September 30, 2012 compared to the All Public Plans >$2B universe:

Domestic Equity is 0.6% lower than median.International Equity is 7.1% higher than the median.US Fixed Income is 4.4% lower than the median.International Fixed Income is 0.8% higher than the median.Alternative Investments are equal to the median.Real Estate is 3.4% lower than the median.

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Asset Allocation vs. >$10B Peer Group

PERA’s allocation as of September 30, 2012 compared to the All Public Plans >$10B universe:

Domestic Equity is 0.4% higher than the median.International Equity is 3.5% higher than the median.US Fixed Income is 4.4% lower than the median.International Fixed Income is 0.4% higher than the median.Alternative Investments are 3.4% higher than the median.Real Estate is 3.4% lower than the median.

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PERA vs. Peer Group – Trailing Years

PERA ranked above median for the fiscal year to date, as well as the trailing long-term periods. In the most recent quarter, PERA ranked in the 23rd percentile in a universe of 55 public plans with a market value of $2 billion or greater.Despite ranking in the 29th and 39th percentiles in 2009 and 2010, respectively, performance in 2007, 2008, and 2011 resulted in long-term ranks below median.



3Years

5Years

7Years

10Years

15Years

SinceInception

InceptionDate

NM PERA Total Fund 5.07 5.07 11.14 16.66 9.30 0.37 3.93 6.84 6.27 9.27 06/01/1985All Public Plans > $2B (Custom Peer Group) Median 4.71 4.71 10.56 16.31 9.61 2.03 5.30 8.17 6.28 9.30NM PERA Total Fund Rank 23 23 38 41 60 94 92 87 52 67Population 55 55 55 55 51 50 49 46 36 13

Long-Term Target Allocation 4.86 4.86 10.08 14.87 7.94 1.98 4.98 7.58 5.81 8.12 03/01/1991All Public Plans > $2B (Custom Peer Group) Median 4.71 4.71 10.56 16.31 9.61 2.03 5.30 8.17 6.28 8.59Long-Term Target Allocation Rank 44 44 71 68 89 51 69 72 79 73Population 55 55 55 55 51 50 49 46 36 25

NM PERA Total Fund 5.07 5.07 11.14 16.66 9.30 0.37 3.93 6.84 6.27 9.27 06/01/1985All Public Plans-Total Fund Median 4.81 4.81 11.10 17.96 9.35 2.75 5.17 7.59 5.95 9.28NM PERA Total Fund Rank 32 32 49 70 53 97 93 76 34 54Population 297 297 297 295 270 228 175 151 90 16

NM PERA Total Fund 5.07 5.07 11.14 16.66 9.30 0.37 3.93 6.84 6.27 9.27 06/01/1985All Public Plans >$10B (Custom Peer Group) Median 4.59 4.59 10.51 16.64 9.30 1.91 5.29 7.82 6.27 N/ANM PERA Total Fund Rank 12 12 39 47 50 96 100 86 50 N/APopulation 27 27 27 27 25 25 24 22 19 N/A

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PERA vs. Peer Group – Calendar Years

PERA’s long-term rank versus peers was strongly affected by calendar years 2007, 2008, and 2011. PERA ranked in the 84th, 98th, and 96th percentiles in 2007, 2008, and 2011, respectively, when compared to all public plans >$2B.

2011 ranking was primarily due to an international equity allocation well above the peer group median.+6.6% as of December 31, 2011

PERA ranked above the All Public Plans >$2B median in 2006, 2009, and 2010.


Period ending September 30, 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

NM PERA Total Fund -1.22 13.90 21.56 -31.96 7.25 14.96 8.46 11.67 20.84 -5.04All Public Plans > $2B (Custom Peer Group) Median 1.05 13.33 18.50 -27.11 9.17 14.73 8.99 12.75 N/A N/ANM PERA Total Fund Rank 96 39 29 98 84 49 68 85 N/A N/APopulation 66 60 53 46 50 32 35 33 N/A N/A

Long-Term Target Allocation -1.29 11.88 21.43 -25.17 9.05 14.31 7.06 10.44 21.16 -8.27All Public Plans > $2B (Custom Peer Group) Median 1.05 13.33 18.50 -27.11 9.17 14.73 8.99 12.75 N/A N/ALong-Term Target Allocation Rank 96 77 32 35 54 60 92 99 N/A N/APopulation 66 60 53 46 50 32 35 33 N/A N/A

NM PERA Total Fund -1.22 13.90 21.56 -31.96 7.25 14.96 8.46 11.67 20.84 -5.04All Public Plans-Total Fund Median 0.31 12.83 19.52 -23.97 8.17 12.10 6.90 10.40 20.38 -8.32NM PERA Total Fund Rank 81 31 33 98 69 16 29 34 45 12Population 441 441 423 385 259 233 230 218 219 152

NM PERA Total Fund -1.22 13.90 21.56 -31.96 7.25 14.96 8.46 11.67 20.84 -5.04All Public Plans >$10B (Custom Peer Group) Median 0.54 12.68 17.93 -26.96 9.25 15.54 9.54 13.17 N/A N/ANM PERA Total Fund Rank 94 18 25 100 85 75 73 93 N/A N/APopulation 31 29 25 23 27 17 15 14 N/A N/A

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Calculation is based on quarterly periodicity.

Total Fund – Risk/Return Profile

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Composite Performance vs. Benchmarks

The Private Equity Composite is shown against it’s alternate benchmark as the current standard benchmark is actual composite performance.


3Years

5Years

10Years

15Years

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Domestic Equity Composite 7.00 7.00 17.20 32.41 14.93 1.48 8.51 6.39 -0.02 21.24 27.74 -39.04 5.43 15.85 6.95 13.24 28.97 -16.82R 3000 Index 6.23 6.23 16.13 30.20 13.26 1.30 8.49 4.95 1.03 16.93 28.34 -37.31 5.14 15.72 6.12 11.95 31.06 -21.54Difference 0.77 0.77 1.07 2.21 1.67 0.18 0.02 1.44 -1.05 4.31 -0.60 -1.73 0.29 0.13 0.83 1.29 -2.09 4.72All Public Plans-US Equity Segment Median 6.20 6.20 15.78 29.55 13.25 1.19 8.41 5.13 0.52 18.09 28.81 -37.58 4.99 14.65 7.20 13.26 33.41 -20.33Domestic Equity Composite Rank 11 11 6 5 6 32 46 6 62 9 71 70 44 25 61 51 95 6

Domestic Equity Composite (Net) 6.95 6.95 17.04 32.17 N/A N/A N/A N/A -0.20 21.04 N/A N/A N/A N/A N/A N/A N/A N/A

Int'l Equity Composite 7.42 7.42 11.49 15.50 3.85 -5.53 8.78 5.57 -13.07 11.78 32.85 -46.24 12.33 25.95 19.24 20.40 36.63 -15.00MSCI ACW Ex US Blended Index (Gross) 7.49 7.49 10.86 15.04 3.63 -3.67 9.58 4.35 -13.33 11.60 42.14 -45.24 15.58 26.86 14.02 20.70 39.17 -15.66Difference -0.07 -0.07 0.63 0.46 0.22 -1.86 -0.80 1.22 0.26 0.18 -9.29 -1.00 -3.25 -0.91 5.22 -0.30 -2.54 0.66All Public Plans-Intl. Equity Segment Median 7.40 7.40 12.10 16.33 4.60 -3.69 10.11 5.25 -12.65 12.33 37.84 -44.61 15.02 27.05 16.69 20.38 38.05 -14.87Int'l Equity Composite Rank 45 45 64 68 61 92 75 44 64 60 74 79 85 72 27 50 59 53

Int'l Equity Composite (Net) 7.37 7.37 11.33 15.28 N/A N/A N/A N/A -13.25 11.60 N/A N/A N/A N/A N/A N/A N/A N/A

Total Fixed Income Composite 3.36 3.36 7.65 9.63 8.26 6.84 5.73 6.43 6.19 9.21 14.36 -4.19 5.23 5.17 2.92 4.92 5.35 8.98Barclays Global Agg Blended Index 3.27 3.27 4.82 5.07 5.45 6.09 5.11 6.01 4.78 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 0.09 0.09 2.83 4.56 2.81 0.75 0.62 0.42 1.41 2.67 8.43 -9.43 -1.74 0.84 0.49 0.58 1.25 -1.27IM Global Fixed Income (SA+CF) Median 3.83 3.83 6.86 8.02 6.68 7.06 7.42 6.63 5.17 7.81 12.69 0.39 8.88 6.47 -0.70 10.18 15.80 16.63Total Fixed Income Composite Rank 68 68 44 41 31 58 86 67 39 36 43 62 79 74 41 91 83 74

Total Fixed Income Composite (Net) 3.31 3.31 7.48 9.39 N/A N/A N/A N/A 5.99 9.06 N/A N/A N/A N/A N/A N/A N/A N/A

Absolute Return Composite (Net) 2.44 2.44 5.69 6.24 5.67 1.18 N/A N/A -2.40 9.46 26.15 -26.04 7.36 N/A N/A N/A N/A N/AHFRI FOF Comp Index 2.42 2.42 3.42 2.93 1.51 -1.63 3.63 4.04 -5.72 5.70 11.47 -21.37 10.25 10.39 7.49 6.86 11.61 1.02Difference 0.02 0.02 2.27 3.31 4.16 2.81 N/A N/A 3.32 3.76 14.68 -4.67 -2.89 N/A N/A N/A N/A N/A

Private Equity Composite (Net) 1.18 1.18 9.53 6.79 14.82 4.82 N/A N/A 8.50 17.56 3.24 -13.06 -5.30 N/A N/A N/A N/A N/AR 3000 Index + 3% 6.90 6.90 18.43 33.20 16.27 4.35 11.52 8.00 4.03 19.93 31.34 -34.31 8.14 18.72 9.12 14.95 34.06 -18.54Difference -5.72 -5.72 -8.90 -26.41 -1.45 0.47 N/A N/A 4.47 -2.37 -28.10 21.25 -13.44 N/A N/A N/A N/A N/A

Real Estate Composite (Net) 2.56 2.56 14.83 24.27 15.30 11.24 N/A N/A 7.13 20.46 -7.14 -4.64 11.04 N/A N/A N/A N/A N/AReal Estate Custom Index 2.29 2.29 11.31 18.73 15.94 5.73 N/A N/A 15.63 19.40 -2.89 -11.19 9.68 N/A N/A N/A N/A N/ADifference 0.27 0.27 3.52 5.54 -0.64 5.51 N/A N/A -8.50 1.06 -4.25 6.55 1.36 N/A N/A N/A N/A N/A

Real Assets Composite (Net) 2.36 2.36 6.76 10.21 10.74 0.35 N/A N/A 7.21 12.10 -15.18 -5.54 N/A N/A N/A N/A N/A N/AReal Assets Custom Index -1.16 -1.16 8.79 7.31 14.19 5.69 21.10 15.02 13.51 15.18 -3.64 -4.47 25.01 41.73 84.99 43.24 17.80 13.44Difference 3.52 3.52 -2.03 2.90 -3.45 -5.34 N/A N/A -6.30 -3.08 -11.54 -1.07 N/A N/A N/A N/A N/A N/A

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Watch List

Page 24

The following represent guidelines to be used in making a recommendation to the Investment Committee with regards to placing a traditional asset class manager on the Watch List:

Test 1 If the manager’s rolling, three-year return (gross of fees) falls below the rolling, three-year benchmark return for three (3) consecutive quarters.

Test 2 If the manager’s rolling, three-year return (gross of fees) for three (3) consecutive quarters ranks in the bottom third of the Consultant’s peer group universe.

*Passive mandates have been excluded from the watch list analysis.

Watch List - Criteria

Page 25

Watch List – Managers Meeting Criteria

Manager Asset Class Reason Effective Date Recommendation

MANAGERS MEETING WATCH LIST CRITERIA

Wellington Emerging Markets Equity International Emerging Equity Performance September 30, 2011 Watch List

Public Employees Retirement Association of New MexicoManager Watch List

As of September 30, 2012

Wellington has failed Test 1 and Test 2 of the Watch List criteria. The product underperformed relative to its benchmark on a three-year rolling basis for each of the last three quarters. It has ranked in the bottom third of its peer universe on a three-year rolling basis for each of the last three quarters (81st, 85th, and 82nd). RVK does not recommend any action be taken at this time.

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Watch List – Criteria Performance Tables

Failed both tests;placed on Watch List

Period ending September 30, 20123

Years

3 YearsEnding

Jun-2012

3 YearsEnding

Mar-2012Wellington Emerging Markets Equity (With Comp History) 3.73 7.10 23.14MSCI Emg Mkts Index (Gross) 5.96 10.10 25.42Difference -2.23 -3.00 -2.28IM Emerging Markets Equity (SA+CF) Median 6.35 10.96 26.68Wellington Emerging Markets Equity (With Comp History) Rank 81 85 82

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Years

3 YearsEnding

Jun-2012

3 YearsEnding

Mar-2012CS McKee Value Equity 12.81 15.23 22.59R 1000 Value Index 11.83 15.80 22.82Difference 0.98 -0.57 -0.23IM U.S. Large Cap Value Equity (SA+CF) Median 11.88 15.17 22.57CS McKee Value Equity Rank 33 49 50

INTECH U.S. Enhanced Plus 14.27 17.17 23.63S&P 500 Index (Cap Wtd) 13.20 16.40 23.42Difference 1.07 0.77 0.21IM U.S. Large Cap Core Equity (SA+CF) Median 12.78 15.70 22.69INTECH U.S. Enhanced Plus Rank 22 22 34

Portable Alpha Composite 19.98 25.21 30.48Portable Alpha Custom Index + 3% 16.22 19.41 21.28Difference 3.76 5.80 9.20Portable Alpha Custom Index 13.20 16.40 18.11Difference 6.78 8.81 12.37IM U.S. Large Cap Core Equity (SA+CF) Median 12.78 15.70 22.69Portable Alpha Composite Rank 1 1 2

TimesSquare Capital SMID Cap Growth 18.72 23.27 31.53R 2500 Growth Index 15.17 19.38 29.86Difference 3.55 3.89 1.67IM U.S. SMID Cap Growth Equity (SA+CF) Median 15.20 19.48 29.41TimesSquare Capital SMID Cap Growth Rank 20 14 22

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Years

3 YearsEnding

Jun-2012

3 YearsEnding

Mar-2012RBC GAM Small Cap Growth 19.18 21.49 29.94R 2000 Growth Index 14.19 18.09 28.36Difference 4.99 3.40 1.58IM U.S. Small Cap Growth Equity (SA+CF) Median 15.79 19.33 29.39RBC GAM Small Cap Growth Rank 13 30 44

Principal International Small Cap Equity 11.37 15.27 28.67MSCI World Ex US Sm Cap Blended Index (Gross) 6.05 10.52 25.85Difference 5.32 4.75 2.82IM International Small Cap Equity (SA+CF) Median 8.37 11.99 25.94Principal International Small Cap Equity Rank 19 20 24

Eaton Vance Parametric Strct Emg Mkts Eq 7.73 12.53 27.62S&P/IFCI Composite Index 6.18 10.27 26.00Difference 1.55 2.26 1.62IM Emerging Markets Equity (SA+CF) Median 6.35 10.96 26.68Eaton Vance Parametric Strct Emg Mkts Eq Rank 33 34 42

BlackRock Core Active 7.15 8.13 8.42Barclays US Agg Bond Index 6.19 6.93 6.83Difference 0.96 1.20 1.59IM U.S. Broad Market Core Fixed Income (SA+CF) Median 7.15 8.03 8.35BlackRock Core Active Rank 51 49 50

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Watch List - Performance

PERA’s managers listed below do not have three years of historical performance for three trailing quarters with PERA of New Mexico.We have reviewed managers’ long-term performance using product returns and do not have concerns with any of the managers below:

Manager PERA Inception DateDFA US Targeted Value 10/1/2010MetWest Small Cap Intrinsic Value Equity 10/1/2010JP Morgan Small Cap Growth 9/1/2011Kleinwort Benson Dividend Plus International Equity 4/1/2010MFS International Value Equity 4/1/2010Schroder International Small Companies 5/1/2012Aberdeen Emerging Markets Equity 11/1/2009MacKay Shields Core Investment Grade 7/1/2012PIMCO Total Return Full Authority 4/1/2011Prudential Core Plus 6/1/2012Manulife Strategic Fixed Income 5/1/2011F. Templeton Global Multi-Sector Plus 5/1/2011

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Composite Performance for Managers Without 3 Years of PERA Performance

Note: KBC failed Test 2. However, RVK recommends not placing this manager on Watch List at this time as the product was recently funded and has outperformed the benchmark by 1.78% since inception in April 2010.

For managers with less than three quarters of rolling three year history, composite returns are used prior to the fund’s inception into the portfolio.


Years

3 YearsEnding

Jun-2012

3 YearsEnding

Mar-2012DFA US Targeted Value (With Comp History) 12.16 17.92 29.16R 2000 Value Index 11.72 17.43 25.36Difference 0.44 0.49 3.80IM U.S. Small Cap Value Equity (SA+CF) Median 13.32 18.56 29.09DFA US Targeted Value (With Comp History) Rank 73 60 50

MetWest Small Cap Intrinsic Value Equity (With Comp History) 12.14 17.95 32.34R 2000 Value Index 11.72 17.43 25.36Difference 0.42 0.52 6.98IM U.S. Small Cap Value Equity (SA+CF) Median 13.32 18.56 29.09MetWest Small Cap Intrinsic Value Equity (With Comp History) Rank 74 59 27

JP Morgan US Small Cap Growth (With Comp History) 16.76 19.84 31.64R 2000 Growth Index 14.19 18.09 28.36Difference 2.57 1.75 3.28IM U.S. Small Cap Growth Equity (SA+CF) Median 15.79 19.33 29.39JP Morgan US Small Cap Growth (With Comp History) Rank 35 46 33

Kleinwort Benson Dividend Plus Intl Eq (With Comp History) 2.89 6.18 17.06MSCI EAFE Value Index (Gross) 0.48 4.85 17.20Difference 2.41 1.33 -0.14IM International Value Equity (SA+CF) Median 4.03 8.04 19.22Kleinwort Benson Dividend Plus Intl Eq (With Comp History) Rank 67 73 68

MFS International Value Equity (With Comp History) 8.31 12.16 21.21MSCI EAFE Value Index (Gross) 0.48 4.85 17.20Difference 7.83 7.31 4.01IM International Value Equity (SA+CF) Median 4.03 8.04 19.22MFS International Value Equity (With Comp History) Rank 13 15 36

Schroder International Small Companies (With Comp History) 5.61 9.77 24.21MSCI EAFE Small Cap Index (Gross) 5.09 9.52 24.52Difference 0.52 0.25 -0.31IM International Small Cap Equity (SA+CF) Median 8.37 11.99 25.94Schroder International Small Companies (With Comp History) Rank 75 73 68

Note: Schroder failed Test 2. However, RVK recommends not placing this manager on Watch List at this time as the product was funded in April 2012.

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Composite Performance for Managers Without 3 Years of PERA Performance

For managers with less than three quarters of rolling three year history, composite returns are used prior to the fund’s inception into the portfolio.


Years

3 YearsEnding

Jun-2012

3 YearsEnding

Mar-2012Aberdeen Emerging Markets Equity (With Comp History) 13.92 18.81 35.45MSCI Emg Mkts Index (Gross) 5.96 10.10 25.42Difference 7.96 8.71 10.03IM Emerging Markets Equity (SA+CF) Median 6.35 10.96 26.68Aberdeen Emerging Markets Equity (With Comp History) Rank 7 5 7

MacKay Shields Core Investment Grade (With Comp History) 7.92 8.69 8.95Barclays US Agg Bond Index 6.19 6.93 6.83Difference 1.73 1.76 2.12IM U.S. Broad Market Core Fixed Income (SA+CF) Median 7.15 8.03 8.35MacKay Shields Core Investment Grade (With Comp History) Rank 22 27 39

PIMCO Total Return Full Authority (With Comp History) 8.33 9.75 10.79Barclays US Agg Bond Index 6.19 6.93 6.83Difference 2.14 2.82 3.96IM U.S. Broad Market Core + Fixed Income (SA+CF) Median 8.37 9.77 10.87PIMCO Total Return Full Authority (With Comp History) Rank 52 51 53

Prudential Core Plus (With Comp History) 10.00 11.62 13.33Barclays US Agg Bond Index 6.19 6.93 6.83Difference 3.81 4.69 6.50IM U.S. Broad Market Core + Fixed Income (SA+CF) Median 8.37 9.77 10.87Prudential Core Plus (With Comp History) Rank 16 18 24

Manulife Strategic Fixed Income (With Comp History) 10.92 13.03 16.78Barclays US Unv Bond Index 6.70 7.55 7.89Difference 4.22 5.48 8.89IM U.S. Broad Market Core + Fixed Income (SA+CF) Median 8.37 9.77 10.87Manulife Strategic Fixed Income (With Comp History) Rank 8 7 7

F. Templeton Global Multi-Sector Plus (With Comp History) 12.33 13.67 19.71Barclays Multiverse Index 5.27 6.32 7.97Difference 7.06 7.35 11.74IM Global Unhedged Fixed Income (SA+CF) Median 6.15 7.56 9.71F. Templeton Global Multi-Sector Plus (With Comp History) Rank 2 2 3

Page 32

Appendix

Page 33

Domestic Equity

Page 34

Domestic Equity Structure Update

Q3 2012 Manager HiresThere were no domestic equity managers hired in Q3 2012.

Q3 2012 Manager TerminationsThere were no domestic equity managers terminated in Q3 2012.

Other UpdatesU.S. Equity Structure Study tentatively scheduled for January 2013.The contracts for TimesSquare and RBC will expire on March 31, 2013. An RFP to evaluate small cap growth and small/mid cap growth strategies is currently in process.

Page 35

Domestic Equity Market Performance

Page 36

The Domestic Equity Composite outperformed the Russell 3000 Index by 72 basis points, net of fees, for the quarter, returning 6.95 vs. 6.23%.

Domestic Equity Current Asset Allocation

*Source: R.V. Kuhns & Associates, Inc. Public Plan Survey, public plans greater than $1 billion (74 plans). Data as of June 30, 2012.

S/MCV - Active(DFA and MetWest)

$459,645,00413.14%

S/MCG - Active(JPM SCG, RBC GAM and

TimesSquare)$478,573,582

13.69%

Large Cap Value - Active (CS McKee)

$270,223,6607.73%

Large Cap Core - Active(INTECH)

$283,449,2078.11%

Portable Alpha Program$600,047,556

17.16%

S/MCC -Passive

(SSGA R 2500 Index)

$112,656,7443.22%

Large Cap Core - Passive(SSGA Russell 1000 Index)

$1,013,688,38028.99%

Large Cap Growth - Passive (Northern Trust R1000 Growth)

$278,320,1407.96%

Large Cap 70%Small/Mid Cap 30%

Value 21%Core 57%Growth 22%

Period ending September 30, 2012 QTD FYTD CYTD1

Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Domestic Equity Composite 7.00 7.00 17.20 32.41 14.93 1.48 8.51 6.39 -0.02 21.24 27.74 -39.04 5.43 15.85 6.95 13.24 28.97 -16.82R 3000 Index 6.23 6.23 16.13 30.20 13.26 1.30 8.49 4.95 1.03 16.93 28.34 -37.31 5.14 15.72 6.12 11.95 31.06 -21.54Difference 0.77 0.77 1.07 2.21 1.67 0.18 0.02 1.44 -1.05 4.31 -0.60 -1.73 0.29 0.13 0.83 1.29 -2.09 4.72

Peer Median / Avg*Active 60% 54% / 53%

CS McKee Large Value 8%INTECH Enhanced Large Core 8%Portable Alpha Large Core 17%DFA US Targeted Value Small Value 6%MetWest SC Value Small Value 7%JPM SCG Small Growth 4%RBC GAM Small Growth 5%TimesSquare Small Growth 5%

Passive 40% 46% / 47%State Street R 1000 Large Core 29%Northern Trust R 1000 G Large Growth 8%State Street R 2500 SMid Core 3%

Page 37

Domestic Equity Fiscal Year Performance

For the third quarter, the Domestic Equity Composite outperformed the benchmark Russell 3000 by 77 basis points, gross of fees.

The Large Cap Composite outperformed the Russell 1000 by 68 basis points, as all active managers outperformed their respective style benchmarks.

The SMID Cap Equity Composite outperformed the Russell 2500 by 146 basis points as every active manager outperformed its benchmark by more than 120 basis points.

JP Morgan posted the highest absolute return as well as the highest return relative to its style benchmark.

Page 38

Domestic Equity Portfolio Characteristics

Page 39

International Equity

Page 40

International Equity Structure Update

Q3 2012 Manager HiresThere were no international equity managers hired in Q3 2012.

Q3 2012 Manager TerminationsState Street International Alpha Select was terminated in Q3 2012.

Other UpdatesInternational Equity Structure Study tentatively scheduled for December 2012.In September 2012, BlackRock Transition Management assumed interim management of the terminated State Street portfolio.

Page 41

International Equity Market Performance

Page 42

*Source: R.V. Kuhns & Associates, Inc. Public Plan Survey, public plans greater than $1 billion (74 plans). Data as of June 30, 2012.Market values and allocations exclude residual assets remaining in the Northern Trust EAFE, Artio International Equity II, SSgA Emerging Markets, and Credit Suisse Transition accounts.

International Equity Current Asset Allocation

The International Equity Composite underperformed the MSCI ACW Ex US Blended Index (Gross) by 12 basis points, net of fees, for the quarter, returning 7.37% vs. 7.49%.


Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Int'l Equity Composite 7.42 7.42 11.49 15.50 3.85 -5.53 8.78 5.57 -13.07 11.78 32.85 -46.24 12.33 25.95 19.24 20.40 36.63 -15.00MSCI ACW Ex US Blended Index (Gross) 7.49 7.49 10.86 15.04 3.63 -3.67 9.58 4.35 -13.33 11.60 42.14 -45.24 15.58 26.86 14.02 20.70 39.17 -15.66Difference -0.07 -0.07 0.63 0.46 0.22 -1.86 -0.80 1.22 0.26 0.18 -9.29 -1.00 -3.25 -0.91 5.22 -0.30 -2.54 0.66

Large Cap 59%Small/Mid Cap 14%Emerging Markets 27%

Value 9%Core 82%Growth 9%

Emerging Markets Core - Active(Aberdeen, Eaton Vance, and Wellington)

$424,299,80914.05%

Developed Small Cap Core - Active (Principal and Schroder) $213,289,015

7.07%

All Country World Ex US - Passive(Northern Trust ACW Ex US)

$1,646,268,70054.53%

Developed LCG - Passive(SSGA EAFE

Growth)$268,104,999

8.88%

Large Cap Core -Active

(BlackRock Transition)$193,615,811

6.41%

Developed Large Cap Value - Active (Kleinwort and MFS)

$273,398,6359.06%

Peer Median / Avg*Active 37% 75% / 69%KBC Large Value 3%MFS Large Value 6%State Street Select Large Core 6%Principal Developed Small Core 5%Schroder Developed Small Core 2%Eaton Vance Emerging Core 7%Aberdeen Emerging Emerging Core 4%Wellington Emerging Emerging Core 4%

Passive 63% 28% / 34%Northern Trust ACW Ex US All Country World Ex US 55%State Street EAFE Growth Developed Large Growth 9%

Page 43

International Equity Fiscal Year Performance

The International Equity Composite underperformed the MSCI ACW Ex US Blended Index by 7 basis points, gross of fees, for the third quarter.

The International Developed Equity composite outperformed the MSCI EAFE Index by 8 basis points but trailed the broader index by 36 basis points.

Active manager performance over the third quarter was mixed, as Kleinwort and Principal outperformed their benchmarks, but MFS and Schroder did not.

The Emerging Equity Composite outperformed the MSCI Emerging Markets Index by 11 basis points and the broader index by 51 basis points.

Eaton Vance was the only manager to trail its benchmark over the quarter, however its long-term performance remains strong.

Wellington, currently on the Watch List, posted the highest return among active managers, ranking in the 15th percentile.

Page 44

International Equity Portfolio Characteristics

Page 45

Fixed Income

Page 46

Fixed Income Structure Update

Q3 2012 Manager HiresThere were no fixed income managers hired in Q3 2012.

Q3 2012 Manager TerminationsThere were no fixed income managers terminated in Q3 2012.

Other UpdatesThere were no other updates in Q3 2012.

Page 47

Fixed Income Market Performance

Page 48

Fixed Income Asset Allocation

The Fixed Income Composite outperformed the Barclays Global Agg Blended Index by 4 basis points, net of fees, for the quarter, returning 3.31% vs. 3.27%.

Market values and allocations exclude residual assets remaining in the Western Asset, F. Templeton Opp Core Plus, and Loomis Sayles High Yield Conservative accounts.


Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Total Fixed Income Composite 3.36 3.36 7.65 9.63 8.26 6.84 5.73 6.43 6.19 9.21 14.36 -4.19 5.23 5.17 2.92 4.92 5.35 8.98Barclays Global Agg Blended Index 3.27 3.27 4.82 5.07 5.45 6.09 5.11 6.01 4.78 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 0.09 0.09 2.83 4.56 2.81 0.75 0.62 0.42 1.41 2.67 8.43 -9.43 -1.74 0.84 0.49 0.58 1.25 -1.27

Core Fixed Income(BlackRock Core Active and MacKay Shields)

$1,237,502,37137.53%

Global Fixed Income (F. Templeton) $506,089,674

15.35%

Core Plus Fixed Income(PIMCO, Prudential, and Manulife)

$1,553,733,68647.12%

Page 49

Fixed Income Fiscal Year Performance

The Fixed Income Composite outperformed the Barclays Global Agg Blended Index by 9 basis points, gross of fees, for the third quarter.

The Domestic Core Fixed Income Composite outperformed the Barclays US Aggregate Index by 102 basis points but trailed the broader index by 67 basis points.

Every manager outperformed its respective style benchmark, however only Manulife and Prudential outperformed the broader benchmark.

The Plan’s sole global fixed income manager, Franklin Templeton, outperformed the Barclays Multiverse Index by 439 basis points and the Barclays Global Aggregate Index by 450 basis points.

The manager ranked in the 1st percentile versus other global fixed income strategies for the most recent quarter.

Page 50

Fixed Income Portfolio Characteristics

Negative sector allocation reflects managers’ use of derivatives or short selling. Allocation to "Other" consists of bank loans, sovereign bonds, futures, options, and swaps.Cash is defined as any security with duration under one year.

Page 51

Allocation by Manager

Page 52

Asset Allocation as of September 30, 2012

Color Legend: Blue = Domestic Equity; Green = Int'l Equity;Red = Fixed Income; Orange = Cash Equivalents

Asset Allocation by Asset ClassSeptember 30, 2012 : $12,311,260,437

Asset Allocation by Manager – Traditional AssetsSeptember 30, 2012 : $9,839,241,638

Asset Allocation by PoolSeptember 30, 2012 : $12,311,260,437

Page 53


Color Legend: Blue = Non-US; Green = Distressed; Red = Buyouts;Orange = Venture Capital.

Color Legend: Blue = Multi-Strat; Green = Credit; Red = Equity Long/Short; Orange = Event Driven; Light Blue = Distressed; Pink = Market Neutral; Yellow = Global Macro.

Asset Allocation by Manager – Absolute ReturnSeptember 30, 2012 : $1,182,958,371

Asset Allocation by Manager – Private EquitySeptember 30, 2012 : $484,908,917

Page 54


Color Legend: Blue = Commodities; Green = TIPS; Red = Energy.Color Legend: Blue = Opportunistic; Green = Value Added; Red = REITs.

Asset Allocation by Manager – Real EstateSeptember 30, 2012 : $380,143,134

Asset Allocation by Manager – Real AssetsSeptember 30, 20112: $336,332,169

Page 55

Performance Tables

Page 56

Comparative Performance


Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

TOTAL FUND

NM PERA Total Fund 5.07 5.07 11.14 16.66 9.30 0.37 6.84 6.27 -1.22 13.90 21.56 -31.96 7.25 14.96 8.46 11.67 20.84 -5.04Long-Term Target Allocation Index 4.86 4.86 10.08 14.87 7.94 1.98 7.58 5.81 -1.29 11.88 21.43 -25.17 9.05 14.31 7.06 10.44 21.16 -8.27Difference 0.21 0.21 1.06 1.79 1.36 -1.61 -0.74 0.46 0.07 2.02 0.13 -6.79 -1.80 0.65 1.40 1.23 -0.32 3.23All Public Plans > $2B 4.71 4.71 10.56 16.31 9.61 2.03 8.17 6.28 1.05 13.33 18.50 -27.11 9.17 14.73 8.99 12.75 N/A N/ANM PERA Total Fund Rank 23 23 38 41 60 94 87 52 96 39 29 98 84 49 68 85 N/A N/A

NM PERA Total Fund (Net) 5.03 5.03 11.01 16.48 N/A N/A N/A N/A -1.37 13.75 N/A N/A N/A N/A N/A N/A N/A N/A

NM PERA Total Fund Ex Alternatives 5.79 5.79 11.95 18.53 9.34 0.30 6.81 6.25 -2.13 14.31 22.08 -32.55 7.21 14.95 8.46 11.67 20.84 -5.04Total Fund Ex Alternatives Blended Index 5.50 5.50 10.95 17.46 8.44 2.24 7.69 5.88 -1.20 12.50 23.86 -26.56 8.49 14.31 7.06 10.44 21.16 -8.27Difference 0.29 0.29 1.00 1.07 0.90 -1.94 -0.88 0.37 -0.93 1.81 -1.78 -5.99 -1.28 0.64 1.40 1.23 -0.32 3.23All Public Plans > $2B 4.71 4.71 10.56 16.31 9.61 2.03 8.17 6.28 1.05 13.33 18.50 -27.11 9.17 14.73 8.99 12.75 N/A N/ANM PERA Total Fund Ex Alternatives Rank 3 3 11 14 60 97 88 55 99 20 24 98 85 49 68 85 N/A N/A

NM PERA Total Fund Ex Alternatives (Net) 5.74 5.74 11.79 18.30 N/A N/A N/A N/A -2.31 14.13 N/A N/A N/A N/A N/A N/A N/A N/A

EQUITY

Total Equity Composite 7.20 7.20 14.47 24.09 9.72 -1.95 8.05 N/A -6.55 17.08 28.75 -42.19 8.11 19.58 11.22 15.32 30.59 -16.41R 3000 / MSCI ACW Ex US Blended Index 6.72 6.72 14.15 24.28 9.54 -0.52 9.00 4.82 -4.69 14.96 33.62 -40.35 9.11 19.93 9.18 15.26 34.19 -19.23Difference 0.48 0.48 0.32 -0.19 0.18 -1.43 -0.95 N/A -1.86 2.12 -4.87 -1.84 -1.00 -0.35 2.04 0.06 -3.60 2.82IM Global Equity (SA+CF) Median 6.78 6.78 13.10 21.20 8.09 -0.94 9.56 6.39 -7.08 13.50 33.58 -41.22 11.76 22.27 13.13 17.39 35.58 -16.19Total Equity Composite Rank 39 39 34 29 32 66 81 N/A 47 29 71 56 71 71 66 64 77 53

Total Equity Composite (Net) 7.14 7.14 14.31 23.86 N/A N/A N/A N/A -6.73 16.89 N/A N/A N/A N/A N/A N/A N/A N/A

DOMESTIC EQUITY

Domestic Equity Composite 7.00 7.00 17.20 32.41 14.93 1.48 8.51 6.39 -0.02 21.24 27.74 -39.04 5.43 15.85 6.95 13.24 28.97 -16.82R 3000 Index 6.23 6.23 16.13 30.20 13.26 1.30 8.49 4.95 1.03 16.93 28.34 -37.31 5.14 15.72 6.12 11.95 31.06 -21.54Difference 0.77 0.77 1.07 2.21 1.67 0.18 0.02 1.44 -1.05 4.31 -0.60 -1.73 0.29 0.13 0.83 1.29 -2.09 4.72All Public Plans-US Equity Segment Median 6.20 6.20 15.78 29.55 13.25 1.19 8.41 5.13 0.52 18.09 28.81 -37.58 4.99 14.65 7.20 13.26 33.41 -20.33Domestic Equity Composite Rank 11 11 6 5 6 32 46 6 62 9 71 70 44 25 61 51 95 6

Domestic Equity Composite (Net) 6.95 6.95 17.04 32.17 N/A N/A N/A N/A -0.20 21.04 N/A N/A N/A N/A N/A N/A N/A N/A

Domestic Equity Composite Ex PA 6.67 6.67 16.24 31.53 13.96 2.07 8.82 6.59 -0.30 20.34 29.17 -36.95 5.66 15.85 6.95 13.24 28.97 -16.82R 3000 Index 6.23 6.23 16.13 30.20 13.26 1.30 8.49 4.95 1.03 16.93 28.34 -37.31 5.14 15.72 6.12 11.95 31.06 -21.54Difference 0.44 0.44 0.11 1.33 0.70 0.77 0.33 1.64 -1.33 3.41 0.83 0.36 0.52 0.13 0.83 1.29 -2.09 4.72IM U.S. Equity (SA+CF) Median 6.00 6.00 14.61 29.24 13.31 2.23 9.88 6.88 -0.29 19.72 31.53 -36.97 6.69 15.17 8.33 14.78 33.60 -19.77Domestic Equity Composite Ex PA Rank 32 32 33 30 40 53 67 55 51 48 58 50 57 43 62 59 73 39

Domestic Equity Composite Ex PA (Net) 6.61 6.61 16.05 31.25 N/A N/A N/A N/A -0.52 20.09 N/A N/A N/A N/A N/A N/A N/A N/A

Page 57



Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

DOMESTIC LARGE CAP EQUITY

Domestic Large Cap Equity Composite 6.99 6.99 17.79 31.46 15.05 0.66 7.97 4.97 1.29 18.97 26.73 -41.01 6.10 15.71 6.23 11.87 28.92 -20.23R 1000 Index 6.31 6.31 16.28 30.05 13.28 1.23 8.35 4.95 1.50 16.10 28.43 -37.60 5.77 15.46 6.27 11.40 29.89 -21.65Difference 0.68 0.68 1.51 1.41 1.77 -0.57 -0.38 0.02 -0.21 2.87 -1.70 -3.41 0.33 0.25 -0.04 0.47 -0.97 1.42IM U.S. Large Cap Equity (SA+CF) Median 6.33 6.33 15.73 29.17 12.77 1.53 8.60 5.79 1.08 15.09 27.87 -36.68 7.14 15.47 7.36 12.17 29.41 -20.98Domestic Large Cap Equity Composite Rank 28 28 21 23 15 69 76 76 48 17 55 85 58 48 63 53 55 44

Domestic Large Cap Equity Composite (Net) 6.98 6.98 17.75 31.39 N/A N/A N/A N/A 1.23 18.88 N/A N/A N/A N/A N/A N/A N/A N/A

Domestic Large Cap Equity Composite Ex PA 6.47 6.47 16.42 29.69 13.56 0.45 7.86 4.89 1.29 16.81 23.54 -38.50 6.44 15.71 6.23 11.87 28.92 -20.23R 1000 Index 6.31 6.31 16.28 30.05 13.28 1.23 8.35 4.95 1.50 16.10 28.43 -37.60 5.77 15.46 6.27 11.40 29.89 -21.65Difference 0.16 0.16 0.14 -0.36 0.28 -0.78 -0.49 -0.06 -0.21 0.71 -4.89 -0.90 0.67 0.25 -0.04 0.47 -0.97 1.42IM U.S. Large Cap Equity (SA+CF) Median 6.33 6.33 15.73 29.17 12.77 1.53 8.60 5.79 1.08 15.09 27.87 -36.68 7.14 15.47 7.36 12.17 29.41 -20.98Domestic Large Cap Equity Composite Ex PA Rank 44 44 40 46 35 73 78 78 48 31 74 69 55 48 63 53 55 44

Domestic Large Cap Equity Composite Ex PA (Net) 6.46 6.46 16.37 29.60 N/A N/A N/A N/A 1.21 16.68 N/A N/A N/A N/A N/A N/A N/A N/A

CS McKee Value Equity 7.48 7.48 16.97 27.93 12.81 0.94 N/A N/A -1.28 17.27 23.83 -35.76 5.99 N/A N/A N/A N/A N/AR 1000 Value Index 6.51 6.51 15.74 30.91 11.83 -0.90 8.17 5.47 0.39 15.51 19.69 -36.85 -0.17 22.25 7.05 16.49 30.03 -15.52Difference 0.97 0.97 1.23 -2.98 0.98 1.84 N/A N/A -1.67 1.76 4.14 1.09 6.16 N/A N/A N/A N/A N/AIM U.S. Large Cap Value Equity (SA+CF) Median 6.16 6.16 14.09 28.62 11.88 0.57 8.92 6.45 0.16 14.46 25.66 -35.50 4.01 18.86 8.37 15.12 30.68 -16.97CS McKee Value Equity Rank 19 19 17 56 33 46 N/A N/A 64 23 62 53 33 N/A N/A N/A N/A N/A

CS McKee Value Equity (Net) 7.44 7.44 16.82 27.64 12.46 0.68 N/A N/A -1.60 16.76 23.57 -35.85 5.79 N/A N/A N/A N/A N/A

State Street Russell 1000 Index Fund 6.29 6.29 16.27 30.06 N/A N/A N/A N/A 1.43 N/A N/A N/A N/A N/A N/A N/A N/A N/AR 1000 Index 6.31 6.31 16.28 30.05 13.28 1.23 8.35 4.95 1.50 16.10 28.43 -37.60 5.77 15.46 6.27 11.40 29.89 -21.65Difference -0.02 -0.02 -0.01 0.01 N/A N/A N/A N/A -0.07 N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. Large Cap Core Equity (SA+CF) Median 6.43 6.43 15.88 29.84 12.78 1.61 8.68 5.61 1.86 14.85 26.50 -36.16 7.24 15.53 7.35 11.87 28.75 -21.01State Street Russell 1000 Index Fund Rank 58 58 45 48 N/A N/A N/A N/A 56 N/A N/A N/A N/A N/A N/A N/A N/A N/A

State Street Russell 1000 Index Fund (Net) 6.29 6.29 16.26 30.05 N/A N/A N/A N/A 1.42 N/A N/A N/A N/A N/A N/A N/A N/A N/A

INTECH U.S . Enhanced Plus 6.57 6.57 16.15 30.72 14.27 2.06 N/A N/A 4.50 15.65 25.02 -36.59 7.40 14.70 9.29 N/A N/A N/AS&P 500 Index (Cap Wtd) 6.35 6.35 16.44 30.20 13.20 1.05 8.01 4.70 2.11 15.06 26.46 -37.00 5.49 15.79 4.91 10.88 28.68 -22.10Difference 0.22 0.22 -0.29 0.52 1.07 1.01 N/A N/A 2.39 0.59 -1.44 0.41 1.91 -1.09 4.38 N/A N/A N/AIM U.S. Large Cap Core Equity (SA+CF) Median 6.43 6.43 15.88 29.84 12.78 1.61 8.68 5.61 1.86 14.85 26.50 -36.16 7.24 15.53 7.35 11.87 28.75 -21.01INTECH U.S. Enhanced Plus Rank 44 44 48 35 22 37 N/A N/A 22 36 59 56 49 62 31 N/A N/A N/A

INTECH U.S . Enhanced Plus (Net) 6.52 6.52 16.00 30.50 14.04 1.90 N/A N/A 4.33 15.33 24.85 -36.62 7.30 14.59 9.17 N/A N/A N/A

Portable Alpha Composite (Net) 8.75 8.75 22.18 37.08 19.98 -2.84 N/A N/A 1.33 25.77 18.72 -51.30 N/A N/A N/A N/A N/A N/APortable Alpha Custom Index + 3% 7.43 7.43 18.79 33.20 16.22 -1.07 8.25 5.93 5.11 18.06 0.35 -34.00 8.49 18.79 7.91 13.88 31.68 -19.10Difference 1.32 1.32 3.39 3.88 3.76 -1.77 N/A N/A -3.78 7.71 18.37 -17.30 N/A N/A N/A N/A N/A N/APortable Alpha Custom Index 6.35 6.35 16.44 30.20 13.20 -4.11 5.22 2.89 2.11 15.06 -2.68 -37.00 5.49 15.79 4.91 10.88 28.68 -22.10Difference 2.40 2.40 5.74 6.88 6.78 1.27 N/A N/A -0.78 10.71 21.40 -14.30 N/A N/A N/A N/A N/A N/AIM U.S. Large Cap Core Equity (SA+CF) Median 6.43 6.43 15.88 29.84 12.78 1.61 8.68 5.61 1.86 14.85 26.50 -36.16 7.24 15.53 7.35 11.87 28.75 -21.01Portable Alpha Composite (Net) Rank 4 4 3 2 1 99 N/A N/A 57 2 90 100 N/A N/A N/A N/A N/A N/A

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Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Northern Trust R 1000 Growth Index 6.06 6.06 16.72 29.04 14.78 3.41 8.49 4.02 2.64 16.84 37.63 -38.17 11.77 9.06 5.31 6.31 29.73 -27.69R 1000 Growth Blended Index 6.11 6.11 16.81 29.19 14.73 3.24 8.41 3.98 2.64 16.71 37.22 -38.44 11.81 9.07 5.26 6.30 29.75 -27.88Difference -0.05 -0.05 -0.09 -0.15 0.05 0.17 0.08 0.04 0.00 0.13 0.41 0.27 -0.04 -0.01 0.05 0.01 -0.02 0.19IM U.S. Large Cap Growth Equity (SA+CF) Median 6.19 6.19 16.18 27.64 13.10 2.47 8.58 5.80 -0.03 16.11 34.54 -38.56 13.33 9.34 7.47 9.32 28.64 -24.58Northern Trust R 1000 Growth Index Rank 56 56 45 39 28 31 53 93 26 45 33 48 60 53 68 78 46 70

Northern Trust R 1000 Growth Index (Net) 6.05 6.05 16.71 29.02 14.76 3.39 8.48 4.01 2.62 16.82 37.61 -38.18 11.75 9.04 5.29 6.30 29.71 -27.70

DOMESTIC SMALL/MID CAP EQUITY

Domestic Small/Mid Cap Equity Composite 7.03 7.03 15.91 34.89 14.59 3.89 10.31 9.81 -2.93 26.53 30.67 -32.96 3.41 15.93 9.13 17.85 30.64 -8.74R 2500 Index 5.57 5.57 14.33 30.93 14.07 2.80 10.86 7.05 -2.51 26.71 34.39 -36.79 1.38 16.17 8.11 18.29 45.51 -17.80Difference 1.46 1.46 1.58 3.96 0.52 1.09 -0.55 2.76 -0.42 -0.18 -3.72 3.83 2.03 -0.24 1.02 -0.44 -14.87 9.06IM U.S. SMID Cap Equity (SA+CF) Median 5.42 5.42 13.05 29.21 14.31 3.20 11.36 9.03 -1.54 26.40 36.40 -37.98 7.51 14.70 10.22 18.95 40.98 -14.61Domestic Small/Mid Cap Equity Composite Rank 18 18 25 11 47 38 77 35 63 48 78 21 67 41 61 55 95 23

Domestic Small/Mid Cap Equity Composite (Net) 6.89 6.89 15.50 34.25 N/A N/A N/A N/A -3.38 26.04 N/A N/A N/A N/A N/A N/A N/A N/A

State Street Russell 2500 Index Fund 5.60 5.60 14.33 30.83 N/A N/A N/A N/A -2.60 N/A N/A N/A N/A N/A N/A N/A N/A N/AR 2500 Index 5.57 5.57 14.33 30.93 14.07 2.80 10.86 7.05 -2.51 26.71 34.39 -36.79 1.38 16.17 8.11 18.29 45.51 -17.80Difference 0.03 0.03 0.00 -0.10 N/A N/A N/A N/A -0.09 N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. SMID Cap Equity (SA+CF) Median 5.42 5.42 13.05 29.21 14.31 3.20 11.36 9.03 -1.54 26.40 36.40 -37.98 7.51 14.70 10.22 18.95 40.98 -14.61State Street Russell 2500 Index Fund Rank 49 49 38 37 N/A N/A N/A N/A 59 N/A N/A N/A N/A N/A N/A N/A N/A N/A

State Street Russell 2500 Index Fund (Net) 5.59 5.59 14.31 30.80 N/A N/A N/A N/A -2.61 N/A N/A N/A N/A N/A N/A N/A N/A N/A

TimesSquare Capital SMID Cap Growth 6.49 6.49 18.42 39.95 18.72 7.98 N/A N/A 3.44 25.73 45.69 -35.97 16.70 13.78 N/A N/A N/A N/AR 2500 Growth Index 5.22 5.22 14.10 29.52 15.17 3.26 11.23 5.06 -1.57 28.86 41.65 -41.50 9.69 12.26 8.17 14.59 46.31 -29.09Difference 1.27 1.27 4.32 10.43 3.55 4.72 N/A N/A 5.01 -3.13 4.04 5.53 7.01 1.52 N/A N/A N/A N/AIM U.S. SMID Cap Growth Equity (SA+CF) Median 5.24 5.24 14.07 27.75 15.20 2.88 11.02 7.66 -2.00 29.51 37.85 -41.63 15.36 10.92 10.54 13.47 44.50 -24.48TimesSquare Capital SMID Cap Growth Rank 30 30 13 2 20 6 N/A N/A 19 72 27 9 47 30 N/A N/A N/A N/A

TimesSquare Capital SMID Cap Growth (Net) 6.26 6.26 17.84 39.03 17.67 7.00 N/A N/A 2.55 24.37 43.94 -36.53 16.13 12.76 N/A N/A N/A N/A

DFA US Targeted Value 7.24 7.24 13.62 34.25 N/A N/A N/A N/A -6.76 N/A N/A N/A N/A N/A N/A N/A N/A N/AR 2000 Value Index 5.67 5.67 14.37 32.63 11.72 1.35 9.68 7.08 -5.50 24.50 20.58 -28.92 -9.78 23.48 4.71 22.25 46.03 -11.43Difference 1.57 1.57 -0.75 1.62 N/A N/A N/A N/A -1.26 N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. Small Cap Value Equity (SA+CF) Median 5.56 5.56 13.16 31.63 13.32 3.49 11.71 9.39 -3.31 27.77 34.03 -32.92 -2.11 18.50 8.16 22.29 45.36 -9.05DFA US Targeted Value Rank 26 26 48 37 N/A N/A N/A N/A 75 N/A N/A N/A N/A N/A N/A N/A N/A N/A

DFA US Targeted Value (Net) 7.13 7.13 13.28 33.72 N/A N/A N/A N/A -7.17 N/A N/A N/A N/A N/A N/A N/A N/A N/A

MetWest Small Cap Intrinsic Value Equity 7.44 7.44 14.93 34.94 N/A N/A N/A N/A -6.88 N/A N/A N/A N/A N/A N/A N/A N/A N/AR 2000 Value Index 5.67 5.67 14.37 32.63 11.72 1.35 9.68 7.08 -5.50 24.50 20.58 -28.92 -9.78 23.48 4.71 22.25 46.03 -11.43Difference 1.77 1.77 0.56 2.31 N/A N/A N/A N/A -1.38 N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. Small Cap Value Equity (SA+CF) Median 5.56 5.56 13.16 31.63 13.32 3.49 11.71 9.39 -3.31 27.77 34.03 -32.92 -2.11 18.50 8.16 22.29 45.36 -9.05MetWest Small Cap Intrinsic Value Equity Rank 21 21 39 33 N/A N/A N/A N/A 76 N/A N/A N/A N/A N/A N/A N/A N/A N/A

MetWest Small Cap Intrinsic Value Equity (Net) 7.37 7.37 14.55 34.39 N/A N/A N/A N/A -7.18 N/A N/A N/A N/A N/A N/A N/A N/A N/A

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RBC GAM Small Cap Growth 6.63 6.63 19.64 33.40 19.18 6.53 N/A N/A 4.95 27.50 33.88 -33.42 7.38 6.73 N/A N/A N/A N/AR 2000 Growth Index 4.84 4.84 14.08 31.18 14.19 2.96 10.55 3.42 -2.91 29.09 34.47 -38.54 7.05 13.35 4.15 14.31 48.54 -30.26Difference 1.79 1.79 5.56 2.22 4.99 3.57 N/A N/A 7.86 -1.59 -0.59 5.12 0.33 -6.62 N/A N/A N/A N/AIM U.S. Small Cap Growth Equity (SA+CF) Median 5.60 5.60 14.97 31.26 15.79 2.99 11.41 7.60 -1.91 29.04 37.61 -41.69 10.98 12.47 7.72 13.65 48.06 -26.21RBC GAM Small Cap Growth Rank 35 35 13 35 13 11 N/A N/A 11 65 65 9 62 88 N/A N/A N/A N/A

RBC GAM Small Cap Growth (Net) 6.43 6.43 19.11 32.50 18.38 5.95 N/A N/A 4.08 26.65 33.25 -33.56 7.05 6.42 N/A N/A N/A N/A

JP Morgan US Small Cap Growth 8.45 8.45 15.06 35.14 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AR 2000 Growth Index 4.84 4.84 14.08 31.18 14.19 2.96 10.55 3.42 -2.91 29.09 34.47 -38.54 7.05 13.35 4.15 14.31 48.54 -30.26Difference 3.61 3.61 0.98 3.96 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. Small Cap Growth Equity (SA+CF) Median 5.60 5.60 14.97 31.26 15.79 2.99 11.41 7.60 -1.91 29.04 37.61 -41.69 10.98 12.47 7.72 13.65 48.06 -26.21JP Morgan US Small Cap Growth Rank 11 11 50 23 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

JP Morgan US Small Cap Growth (Net) 8.25 8.25 14.46 34.36 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

INTERNATIONAL EQUITY

Int'l Equity Composite 7.42 7.42 11.49 15.50 3.85 -5.53 8.78 5.57 -13.07 11.78 32.85 -46.24 12.33 25.95 19.24 20.40 36.63 -15.00MSCI ACW Ex US Blended Index (Gross) 7.49 7.49 10.86 15.04 3.63 -3.67 9.58 4.35 -13.33 11.60 42.14 -45.24 15.58 26.86 14.02 20.70 39.17 -15.66Difference -0.07 -0.07 0.63 0.46 0.22 -1.86 -0.80 1.22 0.26 0.18 -9.29 -1.00 -3.25 -0.91 5.22 -0.30 -2.54 0.66All Public Plans-Intl. Equity Segment Median 7.40 7.40 12.10 16.33 4.60 -3.69 10.11 5.25 -12.65 12.33 37.84 -44.61 15.02 27.05 16.69 20.38 38.05 -14.87Int'l Equity Composite Rank 45 45 64 68 61 92 75 44 64 60 74 79 85 72 27 50 59 53

Int'l Equity Composite (Net) 7.37 7.37 11.33 15.28 N/A N/A N/A N/A -13.25 11.60 N/A N/A N/A N/A N/A N/A N/A N/A

Northern Trust ACW Ex US Index 7.48 7.48 10.69 14.85 N/A N/A N/A N/A -13.38 N/A N/A N/A N/A N/A N/A N/A N/A N/AMSCI ACW Ex US Index (Gross) 7.49 7.49 10.86 15.04 3.63 -3.67 10.32 4.72 -13.33 11.60 42.14 -45.24 17.12 27.16 17.11 21.36 41.41 -14.67Difference -0.01 -0.01 -0.17 -0.19 N/A N/A N/A N/A -0.05 N/A N/A N/A N/A N/A N/A N/A N/A N/AIM International Core Equity (SA+CF) Median 7.54 7.54 11.98 17.27 4.55 -3.81 9.86 5.67 -12.11 11.64 33.57 -44.22 11.66 27.73 17.00 20.15 37.77 -12.58Northern Trust ACW Ex US Index Rank 54 54 75 80 N/A N/A N/A N/A 67 N/A N/A N/A N/A N/A N/A N/A N/A N/A

Northern Trust ACW Ex US Index (Net) 7.48 7.48 10.67 14.82 N/A N/A N/A N/A -13.40 N/A N/A N/A N/A N/A N/A N/A N/A N/A

INTERNATIONAL DEVELOPED EQUITY

Int'l Developed Equity Composite 7.06 7.06 11.32 14.94 4.02 -5.33 N/A N/A -10.95 10.77 28.62 -44.36 8.98 N/A N/A N/A N/A N/AMSCI EAFE Index (Gross) 6.98 6.98 10.59 14.33 2.59 -4.77 8.69 3.78 -11.73 8.21 32.46 -43.06 11.63 26.86 14.02 20.70 39.17 -15.66Difference 0.08 0.08 0.73 0.61 1.43 -0.56 N/A N/A 0.78 2.56 -3.84 -1.30 -2.65 N/A N/A N/A N/A N/AIM International Equity (SA+CF) Median 7.61 7.61 12.22 17.13 5.23 -2.50 11.12 7.09 -13.08 15.07 39.26 -44.81 14.44 28.96 17.81 21.56 41.93 -10.69Int'l Developed Equity Composite Rank 64 64 63 67 65 85 N/A N/A 34 70 78 48 74 N/A N/A N/A N/A N/A

Int'l Developed Equity Composite (Net) 6.98 6.98 11.09 14.63 N/A N/A N/A N/A -11.24 10.63 N/A N/A N/A N/A N/A N/A N/A N/A

Kleinwort Benson Dividend Plus Intl Eq 7.95 7.95 11.88 15.66 N/A N/A N/A N/A -11.09 N/A N/A N/A N/A N/A N/A N/A N/A N/AMSCI EAFE Value Index (Gross) 7.55 7.55 10.23 13.34 0.48 -5.74 9.10 4.70 -11.65 3.81 35.06 -43.68 6.49 31.05 14.39 24.88 45.97 -15.60Difference 0.40 0.40 1.65 2.32 N/A N/A N/A N/A 0.56 N/A N/A N/A N/A N/A N/A N/A N/A N/AIM International Value Equity (SA+CF) Median 7.35 7.35 10.97 15.17 4.03 -2.82 10.28 6.56 -11.02 11.09 35.42 -41.05 10.06 28.71 15.00 23.69 42.31 -8.17Kleinwort Benson Dividend Plus Intl Eq Rank 37 37 41 44 N/A N/A N/A N/A 52 N/A N/A N/A N/A N/A N/A N/A N/A N/A

Kleinwort Benson Dividend Plus Intl Eq (Net) 7.86 7.86 11.63 15.30 N/A N/A N/A N/A -11.40 N/A N/A N/A N/A N/A N/A N/A N/A N/A

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MFS International Value Equity 7.45 7.45 14.30 18.49 N/A N/A N/A N/A -0.62 N/A N/A N/A N/A N/A N/A N/A N/A N/AMSCI EAFE Value Index (Gross) 7.55 7.55 10.23 13.34 0.48 -5.74 9.10 4.70 -11.65 3.81 35.06 -43.68 6.49 31.05 14.39 24.88 45.97 -15.60Difference -0.10 -0.10 4.07 5.15 N/A N/A N/A N/A 11.03 N/A N/A N/A N/A N/A N/A N/A N/A N/AIM International Value Equity (SA+CF) Median 7.35 7.35 10.97 15.17 4.03 -2.82 10.28 6.56 -11.02 11.09 35.42 -41.05 10.06 28.71 15.00 23.69 42.31 -8.17MFS International Value Equity Rank 48 48 23 26 N/A N/A N/A N/A 3 N/A N/A N/A N/A N/A N/A N/A N/A N/A

MFS International Value Equity (Net) 7.29 7.29 13.78 17.78 N/A N/A N/A N/A -1.26 N/A N/A N/A N/A N/A N/A N/A N/A N/A

BlackRock Transition Account N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AMSCI EAFE Index (Gross) 6.98 6.98 10.59 14.33 2.59 -4.77 8.69 3.78 -11.73 8.21 32.46 -43.06 11.63 26.86 14.02 20.70 39.17 -15.66Difference N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM International Large Cap Equity (SA+CF) Median 7.22 7.22 11.70 16.92 4.53 -3.41 9.95 5.81 -11.35 11.31 33.88 -42.74 12.96 26.99 16.10 20.10 37.97 -13.79BlackRock Transition Account Rank N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

State Street EAFE Growth Strategy 6.39 6.39 10.76 15.10 4.54 N/A N/A N/A -11.79 12.40 29.32 -41.95 N/A N/A N/A N/A N/A N/AMSCI EAFE Growth Index (Gross) 6.40 6.40 10.86 15.22 4.68 -3.88 8.19 2.50 -11.82 12.60 29.90 -42.46 16.84 22.69 13.64 16.48 32.48 -15.77Difference -0.01 -0.01 -0.10 -0.12 -0.14 N/A N/A N/A 0.03 -0.20 -0.58 0.51 N/A N/A N/A N/A N/A N/AIM International Growth Equity (SA+CF) Median 7.20 7.20 13.09 18.56 6.21 -2.53 10.37 5.89 -12.33 14.67 37.60 -45.23 16.70 25.70 18.14 18.62 36.73 -16.67State Street EAFE Growth Strategy Rank 74 74 76 75 74 N/A N/A N/A 47 64 76 32 N/A N/A N/A N/A N/A N/A

State Street EAFE Growth Strategy (Net) 6.39 6.39 10.74 15.08 4.51 N/A N/A N/A -11.81 12.37 29.29 -41.97 N/A N/A N/A N/A N/A N/A

Principal International Small Cap Equity 9.31 9.31 15.00 17.22 11.37 N/A N/A N/A -10.34 32.34 35.98 -49.67 N/A N/A N/A N/A N/A N/AMSCI World Ex US Sm Cap Blended Index (Gross) 8.65 8.65 12.43 13.27 6.05 -2.25 12.46 6.53 -15.50 24.90 51.42 -47.78 4.88 25.94 21.87 30.01 58.07 -5.85Difference 0.66 0.66 2.57 3.95 5.32 N/A N/A N/A 5.16 7.44 -15.44 -1.89 N/A N/A N/A N/A N/A N/AIM International Small Cap Equity (SA+CF) Median 8.67 8.67 16.05 17.65 8.37 -2.23 13.65 8.58 -13.62 23.37 44.93 -46.82 8.54 29.34 25.23 29.68 56.87 -9.90Principal International Small Cap Equity Rank 29 29 65 59 19 N/A N/A N/A 18 7 76 73 N/A N/A N/A N/A N/A N/A

Principal International Small Cap Equity (Net) 9.09 9.09 14.47 16.59 10.96 N/A N/A N/A -10.62 31.97 35.75 -49.86 N/A N/A N/A N/A N/A N/A

Schroder International Small Companies 6.96 6.96 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AMSCI EAFE Small Cap Index (Gross) 7.94 7.94 13.55 12.97 5.09 -2.64 11.65 N/A -15.66 22.40 47.32 -46.78 1.79 19.67 26.65 31.27 62.14 -7.44Difference -0.98 -0.98 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM International Small Cap Equity (SA+CF) Median 8.67 8.67 16.05 17.65 8.37 -2.23 13.65 8.58 -13.62 23.37 44.93 -46.82 8.54 29.34 25.23 29.68 56.87 -9.90Schroder International Small Companies Rank 84 84 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Schroder International Small Companies (Net) 6.87 6.87 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

EMERGING MARKETS EQUITY

Int'l Emerging Equity Composite 8.00 8.00 14.84 19.08 8.39 -2.65 N/A N/A -15.91 22.90 63.95 -54.84 32.64 N/A N/A N/A N/A N/AMSCI Emg Mkts Index (Gross) 7.89 7.89 12.34 17.34 5.96 -0.98 17.37 7.46 -18.17 19.20 79.02 -53.18 39.78 32.59 34.54 25.95 56.28 -6.00Difference 0.11 0.11 2.50 1.74 2.43 -1.67 N/A N/A 2.26 3.70 -15.07 -1.66 -7.14 N/A N/A N/A N/A N/AIM Emerging Markets Equity (SA+CF) Median 7.70 7.70 12.65 17.66 6.35 -0.95 18.07 8.67 -18.60 21.27 79.73 -54.44 40.40 33.30 36.49 26.14 59.13 -3.92Int'l Emerging Equity Composite Rank 42 42 30 37 28 76 N/A N/A 25 37 91 58 88 N/A N/A N/A N/A N/A

Int'l Emerging Equity Composite (Net) 7.82 7.82 14.29 18.31 N/A N/A N/A N/A -16.42 22.42 N/A N/A N/A N/A N/A N/A N/A N/A

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Eaton Vance Parametric Strct Emg Mkts Eq 7.28 7.28 13.41 16.20 7.73 N/A N/A N/A -16.30 24.35 69.50 -50.74 N/A N/A N/A N/A N/A N/AS&P/IFCI Composite Index 7.93 7.93 12.77 17.12 6.18 -0.85 17.95 8.38 -19.03 20.64 81.03 -53.74 40.28 35.11 35.19 28.11 57.16 -3.94Difference -0.65 -0.65 0.64 -0.92 1.55 N/A N/A N/A 2.73 3.71 -11.53 3.00 N/A N/A N/A N/A N/A N/AIM Emerging Markets Equity (SA+CF) Median 7.70 7.70 12.65 17.66 6.35 -0.95 18.07 8.67 -18.60 21.27 79.73 -54.44 40.40 33.30 36.49 26.14 59.13 -3.92Eaton Vance Parametric Strct Emg Mkts Eq Rank 68 68 44 60 33 N/A N/A N/A 30 31 86 24 N/A N/A N/A N/A N/A N/A

Eaton Vance Parametric Strct Emg Mkts Eq (Net) 7.13 7.13 13.02 15.69 7.29 -0.35 N/A N/A -16.65 23.89 68.93 -51.03 N/A N/A N/A N/A N/A N/A

Aberdeen Emerging Markets Equity 7.92 7.92 18.67 24.77 N/A N/A N/A N/A -10.46 29.05 N/A N/A N/A N/A N/A N/A N/A N/AMSCI Emg Mkts Index (Gross) 7.89 7.89 12.34 17.34 5.96 -0.98 17.37 7.46 -18.17 19.20 79.02 -53.18 39.78 32.59 34.54 25.95 56.28 -6.00Difference 0.03 0.03 6.33 7.43 N/A N/A N/A N/A 7.71 9.85 N/A N/A N/A N/A N/A N/A N/A N/AIM Emerging Markets Equity (SA+CF) Median 7.70 7.70 12.65 17.66 6.35 -0.95 18.07 8.67 -18.60 21.27 79.73 -54.44 40.40 33.30 36.49 26.14 59.13 -3.92Aberdeen Emerging Markets Equity Rank 44 44 11 7 N/A N/A N/A N/A 7 11 N/A N/A N/A N/A N/A N/A N/A N/A

Aberdeen Emerging Markets Equity (Net) 7.65 7.65 17.80 23.55 N/A N/A N/A N/A -11.08 28.63 N/A N/A N/A N/A N/A N/A N/A N/A

Wellington Emerging Markets Equity 9.49 9.49 13.04 17.70 N/A N/A N/A N/A -21.51 17.23 N/A N/A N/A N/A N/A N/A N/A N/AMSCI Emg Mkts Index (Gross) 7.89 7.89 12.34 17.34 5.96 -0.98 17.37 7.46 -18.17 19.20 79.02 -53.18 39.78 32.59 34.54 25.95 56.28 -6.00Difference 1.60 1.60 0.70 0.36 N/A N/A N/A N/A -3.34 -1.97 N/A N/A N/A N/A N/A N/A N/A N/AIM Emerging Markets Equity (SA+CF) Median 7.70 7.70 12.65 17.66 6.35 -0.95 18.07 8.67 -18.60 21.27 79.73 -54.44 40.40 33.30 36.49 26.14 59.13 -3.92Wellington Emerging Markets Equity Rank 16 16 47 50 N/A N/A N/A N/A 71 81 N/A N/A N/A N/A N/A N/A N/A N/A

Wellington Emerging Markets Equity (Net) 9.33 9.33 12.56 16.94 N/A N/A N/A N/A -22.20 16.35 N/A N/A N/A N/A N/A N/A N/A N/A

FIXED INCOME

Total Fixed Income Composite 3.36 3.36 7.65 9.63 8.26 6.84 5.73 6.43 6.19 9.21 14.36 -4.19 5.23 5.17 2.92 4.92 5.35 8.98Barclays Global Agg Blended Index 3.27 3.27 4.82 5.07 5.45 6.09 5.11 6.01 4.78 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 0.09 0.09 2.83 4.56 2.81 0.75 0.62 0.42 1.41 2.67 8.43 -9.43 -1.74 0.84 0.49 0.58 1.25 -1.27IM Global Fixed Income (SA+CF) Median 3.83 3.83 6.86 8.02 6.68 7.06 7.42 6.63 5.17 7.81 12.69 0.39 8.88 6.47 -0.70 10.18 15.80 16.63Total Fixed Income Composite Rank 68 68 44 41 31 58 86 67 39 36 43 62 79 74 41 91 83 74

Total Fixed Income Composite (Net) 3.31 3.31 7.48 9.39 N/A N/A N/A N/A 5.99 9.06 N/A N/A N/A N/A N/A N/A N/A N/A

DOMESTIC FIXED INCOME

Domestic Fixed Income Composite 2.60 2.60 6.40 8.28 8.44 6.95 5.79 6.47 8.00 9.21 14.36 -4.19 5.23 5.17 2.92 4.92 5.35 8.98Barclays US Agg Bond Index 1.58 1.58 3.99 5.16 6.19 6.53 5.32 6.15 7.84 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 1.02 1.02 2.41 3.12 2.25 0.42 0.47 0.32 0.16 2.67 8.43 -9.43 -1.74 0.84 0.49 0.58 1.25 -1.27All Public Plans-US Fixed Income Segment Median 2.54 2.54 6.30 8.08 7.74 7.09 5.81 6.74 7.75 8.05 13.76 -4.11 6.53 4.89 2.60 5.36 5.76 9.17Domestic Fixed Income Composite Rank 48 48 48 48 37 52 52 66 40 29 46 52 83 43 34 65 60 58

Domestic Fixed Income Composite (Net) 2.55 2.55 6.24 8.07 N/A N/A N/A N/A 7.80 9.06 N/A N/A N/A N/A N/A N/A N/A N/A

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Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

DOMESTIC CORE FIXED INCOME

Domestic Core Fixed Income Composite 2.60 2.60 6.40 8.28 7.97 6.64 N/A N/A 7.63 8.55 11.95 -2.76 5.41 N/A N/A N/A N/A N/ABarclays US Agg Bond Index 1.58 1.58 3.99 5.16 6.19 6.53 5.32 6.15 7.84 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 1.02 1.02 2.41 3.12 1.78 0.11 N/A N/A -0.21 2.01 6.02 -8.00 -1.56 N/A N/A N/A N/A N/AIM U.S. Broad Market Core Fixed Income (SA+CF) Median 2.15 2.15 5.36 6.62 7.15 7.15 5.77 6.49 7.85 7.22 9.79 3.03 6.88 4.48 2.72 4.53 4.52 10.27Domestic Core Fixed Income Composite Rank 19 19 22 13 21 78 N/A N/A 62 18 30 76 85 N/A N/A N/A N/A N/A

Domestic Core Fixed Income Composite (Net) 2.55 2.55 6.24 8.07 N/A N/A N/A N/A 7.44 8.42 N/A N/A N/A N/A N/A N/A N/A N/A

BlackRock Core Active 2.05 2.05 5.16 6.68 7.15 7.79 N/A N/A 8.72 6.61 9.90 5.75 6.22 N/A N/A N/A N/A N/ABarclays US Agg Bond Index 1.58 1.58 3.99 5.16 6.19 6.53 5.32 6.15 7.84 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 0.47 0.47 1.17 1.52 0.96 1.26 N/A N/A 0.88 0.07 3.97 0.51 -0.75 N/A N/A N/A N/A N/AIM U.S. Broad Market Core Fixed Income (SA+CF) Median 2.15 2.15 5.36 6.62 7.15 7.15 5.77 6.49 7.85 7.22 9.79 3.03 6.88 4.48 2.72 4.53 4.52 10.27BlackRock Core Active Rank 57 57 57 49 51 19 N/A N/A 12 81 48 25 69 N/A N/A N/A N/A N/A

BlackRock Core Active (Net) 1.97 1.97 4.97 6.44 6.95 7.65 N/A N/A 8.51 6.42 9.87 5.72 6.19 N/A N/A N/A N/A N/A

MacKay Shields Core Investment Grade 2.35 2.35 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/ABarclays US Agg Bond Index 1.58 1.58 3.99 5.16 6.19 6.53 5.32 6.15 7.84 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 0.77 0.77 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. Broad Market Core Fixed Income (SA+CF) Median 2.15 2.15 5.36 6.62 7.15 7.15 5.77 6.49 7.85 7.22 9.79 3.03 6.88 4.48 2.72 4.53 4.52 10.27MacKay Shields Core Investment Grade Rank 31 31 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

MacKay Shields Core Investment Grade (Net) 2.35 2.35 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

PIMCO Total Return Full Authority 2.17 2.17 6.40 8.29 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/ABarclays US Agg Bond Index 1.58 1.58 3.99 5.16 6.19 6.53 5.32 6.15 7.84 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 0.59 0.59 2.41 3.13 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. Broad Market Core + Fixed Income (SA+CF) Median 2.86 2.86 7.05 8.89 8.37 7.58 6.47 6.70 7.51 8.99 14.98 -2.60 6.15 5.08 2.88 5.19 6.47 9.08PIMCO Total Return Full Authority Rank 91 91 69 62 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

PIMCO Total Return Full Authority (Net) 2.11 2.11 6.22 8.04 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Prudential Core Plus 3.35 3.35 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/ABarclays US Agg Bond Index 1.58 1.58 3.99 5.16 6.19 6.53 5.32 6.15 7.84 6.54 5.93 5.24 6.97 4.33 2.43 4.34 4.10 10.25Difference 1.77 1.77 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. Broad Market Core + Fixed Income (SA+CF) Median 2.86 2.86 7.05 8.89 8.37 7.58 6.47 6.70 7.51 8.99 14.98 -2.60 6.15 5.08 2.88 5.19 6.47 9.08Prudential Core Plus Rank 30 30 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Prudential Core Plus (Net) 3.33 3.33 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

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Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Manulife Strategic Fixed Income 3.97 3.97 9.43 14.45 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/ABarclays US Unv Bond Index 2.00 2.00 4.93 6.45 6.70 6.63 5.74 6.26 7.40 7.16 8.60 2.38 6.50 4.97 2.73 4.95 5.84 9.83Difference 1.97 1.97 4.50 8.00 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM U.S. Broad Market Core + Fixed Income (SA+CF) Median 2.86 2.86 7.05 8.89 8.37 7.58 6.47 6.70 7.51 8.99 14.98 -2.60 6.15 5.08 2.88 5.19 6.47 9.08Manulife Strategic Fixed Income Rank 12 12 13 5 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Manulife Strategic Fixed Income (Net) 3.95 3.95 9.35 14.34 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

GLOBAL FIXED INCOME

Global Fixed Income Composite 7.77 7.77 15.29 17.85 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/ABarclays Multiverse Index 3.38 3.38 5.14 5.57 5.27 6.31 6.65 N/A 5.55 5.84 8.04 3.76 9.23 6.92 -4.15 9.44 13.24 16.05Difference 4.39 4.39 10.15 12.28 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM Global Unhedged Fixed Income (SA+CF) Median 3.74 3.74 6.19 7.21 6.15 7.01 7.37 6.63 5.42 7.13 11.36 2.21 10.11 6.26 -3.96 10.37 16.61 18.37Global Fixed Income Composite Rank 1 1 2 2 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Global Fixed Income Composite (Net) 7.69 7.69 15.03 17.49 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

F. Templeton Global Multi-Sector Plus 7.77 7.77 15.29 17.85 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/ABarclays Multiverse Index 3.38 3.38 5.14 5.57 5.27 6.31 6.65 N/A 5.55 5.84 8.04 3.76 9.23 6.92 -4.15 9.44 13.24 16.05Difference 4.39 4.39 10.15 12.28 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AIM Global Unhedged Fixed Income (SA+CF) Median 3.74 3.74 6.19 7.21 6.15 7.01 7.37 6.63 5.42 7.13 11.36 2.21 10.11 6.26 -3.96 10.37 16.61 18.37F. Templeton Global Multi-Sector Plus Rank 1 1 2 2 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

F. Templeton Global Multi-Sector Plus (Net) 7.69 7.69 15.03 17.49 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

CASH EQUIVALENTS

Cash Equivalent Composite -0.48 -0.48 3.26 4.26 4.85 3.55 5.27 5.27 4.80 6.25 1.14 0.50 6.21 6.11 14.20 2.01 7.94 5.13BofA ML 3 Mo US T-Bill Index 0.03 0.03 0.07 0.07 0.11 0.72 1.82 2.76 0.10 0.13 0.21 2.06 5.00 4.85 3.07 1.33 1.15 1.78Difference -0.51 -0.51 3.19 4.19 4.74 2.83 3.45 2.51 4.70 6.12 0.93 -1.56 1.21 1.26 11.13 0.68 6.79 3.35

Cash Equivalent Composite (Net) -0.50 -0.50 3.22 4.22 N/A N/A N/A N/A 4.75 6.10 N/A N/A N/A N/A N/A N/A N/A N/A

JP Morgan STIF -0.54 -0.54 1.95 2.89 4.03 3.06 N/A N/A 3.84 6.08 1.14 0.50 6.27 N/A N/A N/A N/A N/ABofA ML 3 Mo US T-Bill Index 0.03 0.03 0.07 0.07 0.11 0.72 1.82 2.76 0.10 0.13 0.21 2.06 5.00 4.85 3.07 1.33 1.15 1.78Difference -0.57 -0.57 1.88 2.82 3.92 2.34 N/A N/A 3.74 5.95 0.93 -1.56 1.27 N/A N/A N/A N/A N/A

JP Morgan STIF (Net) -0.55 -0.55 1.92 2.84 3.95 2.99 N/A N/A 3.79 5.93 1.09 0.45 6.21 N/A N/A N/A N/A N/A

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Year3

Years5

Years10

Years15

Years2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

ALTERNATIVE ASSETS

Alternative Assets Composite (Net) 2.18 2.18 7.87 9.54 9.49 2.50 N/A N/A 2.64 12.59 16.00 -22.61 5.26 N/A N/A N/A N/A N/A3 Month LIBOR Index + 4% 1.08 1.08 3.30 4.47 4.37 5.21 6.21 7.07 4.33 4.34 4.75 7.06 9.31 9.23 7.63 5.67 5.22 5.79Difference 1.10 1.10 4.57 5.07 5.12 -2.71 N/A N/A -1.69 8.25 11.25 -29.67 -4.05 N/A N/A N/A N/A N/A

Absolute Return Composite (Net) 2.44 2.44 5.69 6.24 5.67 1.18 N/A N/A -2.40 9.46 26.15 -26.04 7.36 N/A N/A N/A N/A N/AHFRI FOF Comp Index 2.42 2.42 3.42 2.93 1.51 -1.63 3.63 4.04 -5.72 5.70 11.47 -21.37 10.25 10.39 7.49 6.86 11.61 1.02Difference 0.02 0.02 2.27 3.31 4.16 2.81 N/A N/A 3.32 3.76 14.68 -4.67 -2.89 N/A N/A N/A N/A N/A3 Month LIBOR Index + 4% 1.08 1.08 3.30 4.47 4.37 5.21 6.21 7.07 4.33 4.34 4.75 7.06 9.31 9.23 7.63 5.67 5.22 5.79Difference 1.36 1.36 2.39 1.77 1.30 -4.03 N/A N/A -6.73 5.12 21.40 -33.10 -1.95 N/A N/A N/A N/A N/A

Private Equity Composite (Net) 1.18 1.18 9.53 6.79 14.82 4.82 N/A N/A 8.50 17.56 3.24 -13.06 -5.30 N/A N/A N/A N/A N/APrivate Equity Custom Index 1.18 1.18 9.53 6.79 14.82 4.82 N/A N/A 8.50 17.56 3.24 -13.06 -5.30 N/A N/A N/A N/A N/ADifference 0.00 0.00 0.00 0.00 0.00 0.00 N/A N/A 0.00 0.00 0.00 0.00 0.00 N/A N/A N/A N/A N/AR 3000 Index + 3% 6.90 6.90 18.43 33.20 16.27 4.35 11.52 8.00 4.03 19.93 31.34 -34.31 8.14 18.72 9.12 14.95 34.06 -18.54Difference -5.72 -5.72 -8.90 -26.41 -1.45 0.47 N/A N/A 4.47 -2.37 -28.10 21.25 -13.44 N/A N/A N/A N/A N/A

Real Estate Composite (Net) 2.56 2.56 14.83 24.27 15.30 11.24 N/A N/A 7.13 20.46 -7.14 -4.64 11.04 N/A N/A N/A N/A N/AReal Estate Custom Index 2.29 2.29 11.31 18.73 15.94 5.73 N/A N/A 15.63 19.40 -2.89 -11.19 9.68 N/A N/A N/A N/A N/ADifference 0.27 0.27 3.52 5.54 -0.64 5.51 N/A N/A -8.50 1.06 -4.25 6.55 1.36 N/A N/A N/A N/A N/A

Real Assets Composite (Net) 2.36 2.36 6.76 10.21 10.74 0.35 N/A N/A 7.21 12.10 -15.18 -5.54 N/A N/A N/A N/A N/A N/AReal Assets Custom Index -1.16 -1.16 8.79 7.31 14.19 5.69 21.10 15.02 13.51 15.18 -3.64 -4.47 25.01 41.73 84.99 43.24 17.80 13.44Difference 3.52 3.52 -2.03 2.90 -3.45 -5.34 N/A N/A -6.30 -3.08 -11.54 -1.07 N/A N/A N/A N/A N/A N/AConsumer Price Index + 6% 2.35 2.35 6.84 7.99 8.33 8.11 8.49 8.44 8.96 7.50 8.72 6.09 10.08 8.54 9.42 9.26 7.88 8.38Difference 0.01 0.01 -0.08 2.22 2.41 -7.76 N/A N/A -1.75 4.60 -23.90 -11.63 N/A N/A N/A N/A N/A N/A

Page 65

Financial Reconciliationand

Schedule of Investable Assets

Page 66

Financial Reconciliation and Schedule of Investable Assets

Performance shown is gross of fees. Fees are representative of traditional assets only.

Page 67

Custom Index Definitions

Page 68

Long-Term Target Allocation consists of:40% S&P 500 Index (Cap Wtd), 60% LB Aggregate Bond Index until 08/31/199255% S&P 500 Index (Cap Wtd), 45% LB Aggregate Bond Index until 08/31/199552.5% S&P 500 Index (Cap Wtd), 2.5% MSCI EAFE Blend, 45% LB Aggregate Bond Index until 11/30/199550% S&P 500 Index (Cap Wtd), 5% MSCI EAFE Blend, 45% LB Aggregate Bond Index until 02/29/199645% S&P 500 Index (Cap Wtd), 10% MSCI EAFE Blend, 45% LB Aggregate Bond Index until 11/30/199745% S&P 500 Index (Cap Wtd), 15% MSCI EAFE Blend, 40% LB Aggregate Bond Index until 02/28/199942% Russell 3000 Index, 18% MSCI EAFE Blend, 40% LB Aggregate Bond Index until 05/31/199945% Russell 3000 Index, 15% MSCI EAFE Index (Gross), 40% LB Aggregate Bond Index until 06/30/200042% Russell 3000 Index, 18% MSCI EAFE Index (Gross), 40% LB Aggregate Bond Index until 06/30/200540% Russell 3000 Index, 25% MSCI EAFE Index (Gross), 35% LB Aggregate Bond Index until 06/30/200735% Russell 3000 Index, 25% MSCI ACW Ex US Blended Index (Gross), 25% LB Aggregate Bond Index, 5% 3 Mo LIBOR Index + 4%, 5% Venture Economics All Private Equity Index (lagged one quarter), 2.5% NCREIF Property Index, and 2.5% CPI + 5% until 10/31/200935% Russell 3000 Index, 25% MSCI ACW Ex US Blended Index (Gross), 25% Barclays US Aggregate Bond Index, 5% 3 Mo LIBOR Index + 4%, 5% Venture Economics All Private Equity Index (lagged one quarter), 2.5% NCREIF Property Index, 1% Barclays US TIPS Index, 1% S&P GSCI Light Energy Index, and 0.5% CPI + 5% until 06/30/201027% Russell 3000 Index, 27% MSCI ACW Ex US Index (Gross), 26% Barclays Aggregate Bond Index, 9% HFRI Fund of Funds Composite Index, 5% Private Equity Custom Index, 3% Real Estate Custom Index, and 3% Real Assets Custom Index thereafter

Total Fund Ex Alternatives Blended Index is based on the target allocation and consists of:40% S&P 500 Index, 60% LB Aggregate Bond Index until 08/31/199255% S&P 500 Index, 45% LB Aggregate Bond Index until 08/31/199552.5% S&P 500 Index, 2.5% MSCI EAFE Blend, 45% LB Aggregate Bond Index until 11/30/199550% S&P 500 Index, 5% MSCI EAFE Blend, 45% LB Aggregate Bond Index until 02/29/199645% S&P 500 Index, 10% MSCI EAFE Blend, 45% LB Aggregate Bond Index until 11/30/199745% S&P 500 Index, 15% MSCI EAFE Blend, 40% LB Aggregate Bond Index until 02/28/199942% Russell 3000 Index, 18% MSCI EAFE Blend, 40% LB Aggregate Bond Index until 05/31/199945% Russell 3000 Index, 15% MSCI EAFE Index (Gross), 40% LB Aggregate Bond Index until 06/30/200042% Russell 3000 Index, 18% MSCI EAFE Index (Gross), 40% LB Aggregate Bond Index until 06/30/200540% Russell 3000 Index, 25% MSCI EAFE Index (Gross), 35% LB Aggregate Bond Index until 06/30/200740% Russell 3000 Index, 25% MSCI ACW Ex US Index (Gross), 35% Barclays Global Agg Blended Index thereafter.


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R 3000 / MSCI ACW Ex US Blended Index consists of 61.54% R 3000 Index and 38.46% MSCI EAFE Index (Gross) until 6/30/2007 and 61.54% R 3000 Index and 38.46% MSCI ACW Ex US Index (Gross) thereafter.

Portable Alpha Custom Benchmark + 3% consists of 100% S&P 500 + 3% until 2/28/09; 100% custom S&P 500 + 3% until 6/30/09; and currently consists of 100% S&P 500 +3%. The custom S&P 500 was calculated by Cliffwater LLC and an annual rate of 3% was added; the custom S&P 500 + 3% accounts for the defunding of the Beta Overlay program.

Portable Alpha Custom Benchmark consists of 100% S&P 500 until 2/28/09; 100% custom S&P 500 until 6/30/09; and currently consists of 100% S&P 500. The custom S&P 500 was calculated by Cliffwater LLC; the custom S&P 500 accounts for the defunding of the Beta Overlay program.

R 1000 Growth Blended Index consists of 100% BT Large Cap Growth Index until 06/30/99 and 100% Russell 1000 Growth Index thereafter.

MSCI ACW Ex US Blended Index (Gross) consists of 100% MSCI EAFE Index (Gross) until 06/30/2007 and 100% MSCI ACW Ex US Index (Gross) thereafter.

MSCI World Ex US Sm Cap Blended Index (Gross) consists of 100% MSCI World Ex US Sm Cap Provisional Index (Gross) until 06/30/2008 and 100% MSCI World Ex US SmCap Index (Gross) thereafter.

Barclays Global Agg Blended Index consists of 100% Barclays US Agg Bond Index until 03/31/2011 and 100% Barclays Global Agg Bond Index thereafter.

Real Estate Custom Index consists of 75% NCREIF Property Index + 3% and 25% FTSE NAREIT Equity REITs Total Return Index.

Private Equity Custom Index consists of actual Private Equity Composite performance.

Real Assets Custom Index consists of 75% Cliffwater Private Energy Index lagged one quarter and 25% S&P GSCI Light Energy Index.


Page 70

Watch List Review Wellington Emerging Markets Equity

September 30, 2012 Funding Date: November 2009 Mandate: Emerging Markets

Equity Current PERA NM Assets: Initial Funding Amount: Net Flows: Benchmark Value Estimate:

$106 million $99 million $0 million $112 million

Benchmark: MSCI Emerging Markets Index

% of Non-US Equity Comp.: % of Total Fund:

3.5% 0.9%

Status: Watch List as of 9/30/11

NOTE: Net Cash Flow includes investment management fees paid PERA’s Recent Performance Summary As of September 30, 2012

QTD CYTD 1Year

2011 2010 SinceInception

InceptionDate

Wellington Emerging Markets Equity 9.49 13.04 17.70 -21.51 17.23 2.50 12/01/2009MSCI Emg Mkts Index (Gross) 7.89 12.34 17.34 -18.17 19.20 4.70Difference 1.60 0.70 0.36 -3.34 -1.97 -2.20IM Emerging Markets Equity (SA+CF) Median 7.70 12.65 17.66 -18.60 21.27 5.39Wellington Emerging Markets Equity Rank 16 47 50 71 81 79 *Returns represent PERA performance as reported by JPMorgan Chase, which may differ from the manager due to pricing discrepancies. Inception Date refers to PERA’s first full month of performance. Performance Summary (with Strategy Composite History) As of September 30, 2012

QTD 1Year

3Years

5Years

7Years

10Years

15Years

SinceInception

InceptionDate

Wellington Emerging Markets Equity (With Comp History) 9.49 17.70 3.73 -0.71 9.78 18.82 9.31 8.53 01/01/1995MSCI Emg Mkts Index (Gross) 7.89 17.34 5.96 -0.98 8.97 17.37 7.46 6.71Difference 1.60 0.36 -2.23 0.27 0.81 1.45 1.85 1.82IM Emerging Markets Equity (SA+CF) Median 7.70 17.66 6.35 -0.95 9.33 18.07 8.67 8.58Wellington Emerging Markets Equity (With Comp History) Rank 16 50 81 49 44 35 41 55 * Performance prior to inception is represented by the Wellington Emerging Markets Equity composite.

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Wellington Emerging Markets Equity (With Comp History) -21.51 17.23 75.87 -50.51 47.19 35.12 36.05 27.14 62.68 -4.14MSCI Emg Mkts Index (Gross) -18.17 19.20 79.02 -53.18 39.78 32.59 34.54 25.95 56.28 -6.00Difference -3.34 -1.97 -3.15 2.67 7.41 2.53 1.51 1.19 6.40 1.86IM Emerging Markets Equity (SA+CF) Median -18.60 21.27 79.73 -54.44 40.40 33.30 36.49 26.14 59.13 -3.92Wellington Emerging Markets Equity (With Comp History) Rank 71 81 69 22 16 39 53 44 36 56 * Performance prior to inception is represented by the Wellington Emerging Markets Equity composite.

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PERA’s Net of Fees Performance Summary As of September 30, 2012

QTD CYTD 1Year

2011 2010 SinceInception

InceptionDate

Wellington Emerging Markets Equity (Net) 9.33 12.56 16.94 -22.20 16.35 1.73 12/01/2009MSCI Emg Mkts Index (Gross) 7.89 12.34 17.34 -18.17 19.20 4.70Difference 1.44 0.22 -0.40 -4.03 -2.85 -2.97 Watch List Performance As stated in PERA’s investment policy, the following represent guidelines to be used in making a recommendation to the Investment Committee with regards to placing a traditional asset class manager on the Watch List:

Test 1: If the manager’s rolling, three-year return (gross of fees) falls below the rolling, three-year benchmark return for three (3) consecutive quarters.

Test 2: If the manager’s rolling, three-year return (gross of fees) for three (3)

consecutive quarters ranks in the bottom third of the Consultant’s peer group universe.

As of September 30, 2012, the strategy failed both Watch List tests.


Years

3 YearsEnding

Jun-2012

3 YearsEnding

Mar-2012Wellington Emerging Markets Equity (With Comp History) 3.73 7.10 23.14MSCI Emg Mkts Index (Gross) 5.96 10.10 25.42Difference -2.23 -3.00 -2.28IM Emerging Markets Equity (SA+CF) Median 6.35 10.96 26.68Wellington Emerging Markets Equity (With Comp History) Rank 81 85 82

Background

As a follow up to Wellington’s presentation to the Board in September 2011, RVK provided an in-depth review of Wellington Emerging Markets Equity to the Investment Committee on October 11, 2011. While recognizing recent disappointing performance by Wellington, RVK did not recommend any change given the account’s relatively short history with PERA and the fact that the performance did not meet the Investment Policy’s definition for “Watch” status.

Effective October 1, 2011 Wellington agreed to change the fee structure on this product. Under the defined terms, Wellington reduced the fee from a flat 80 basis points to a base fee of 60 basis points with a performance-based fee that does not go into effect until the since inception return is positive.

On October 27, 2011, the Board approved the Investment Committee’s recommendation to place Wellington on “Watch” status.

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Wellington failed both Watch List tests effective September 30, 2012. However, performance has improved during this year and the strategy has added value over the benchmark in 2012. Wellington will present to the Board on November 29, 2012.

2012 Third Calendar Quarter Performance Analysis For the most recent quarter, the strategy outperformed the MSCI Emerging Markets Index by 1.60%, ranking in the 16th percentile.

Overall stock selection added to performance relative to the benchmark,

particularly in Brazil, South Korea, Thailand, and Mexico. By sector, stock selection was positive in Information Technology, Materials, and Telecommunication Services.

From an allocation point of view, sector allocation contributed to relative performance, in particular, the overweight to Information Technology and the underweights to Materials and Telecommunication Services. Country allocation detracted value from performance; the underweight to India as well as the overweight to China had the largest negative impact.

Top individual stock contributors for the quarter were Hon Hai Precision/Foxconn (Taiwan, Information Technology), GS Holdings (South Korea, Energy), and Cemex (Mexico, Materials), and not holding Vale (Brazil, Materials) which had a negative ten percent return.

Firm and Team Update

There were no changes to the emerging markets team during the quarter. We view the stability of the team managing this strategy as a positive.

Recommendation: We recommend Wellington Emerging Markets Equity remain on the Watch List.

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