COLORADO PERA. Providing a FOUNDATION. for the Future

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1 COLORADO PERA DC Plan Providing a FOUNDATION for the Future Annual Report for the PERAPlus 401(k)/457 and PERA DC Plans For the Year Ended December 31, 2014

2 LETTER FROM COLORADO PERA S EXECUTIVE DIRECTOR July 2015 Dear Plan Participant: I am pleased to present the Annual Report for the PERAPlus 401(k)/457 and PERA DC Plans for the year ended December 31, Inside, you will find the financial statements and the fund rates of return. The Annual Report for the PERAPlus 401(k)/457 and PERA DC Plans is an unaudited summary of fiduciary net position and changes in fiduciary net position for the PERAPlus 401(k)/457 and DC Plans. KPMG LLP, the independent accounting firm that conducted the annual PERA audit that reviews the PERAPlus 401(k)/457 and PERA DC Plans, gave an unqualified opinion on the financial statements in Colorado PERA s 2014 Comprehensive Annual Financial Report (CAFR). A copy of the CAFR is available on PERA s website at On December 31, 2014:»» The PERAPlus 401(k) Plan had a net position of $2,682,000,000 with 68,270 participant accounts.»» The PERAPlus 457 Plan had a net position of $689,451,000 with 17,738 participant accounts.»» The PERA DC Plan had a net position of $131,466,000 and 5,046 participant accounts. Voya Institutional Plan Services, LLC (Voya) is the service provider for the PERAPlus 401(k)/457 and PERA DC Plans. On September 1, 2014, ING Institutional Plan Services, LLC changed their name to Voya. Plan Changes The following changes were made to the PERAPlus 401(k)/457 and PERA DC Plans in 2014: Gregory W. Smith Executive Director»» On January 2, 2014, the allocation of the underlying funds in the PERAdvantage Fixed Income Fund changed from 75 percent in the PIMCO Total Return Fund and 25 percent in the BlackRock U.S. Debt Index Fund to an allocation of 50 percent in PIMCO and 50 percent in BlackRock.»» On March 21, 2014, the PERA Board of Trustees approved the addition of Roth accounts to the PERAPlus 401(k) and 457 Plans. The Roth option became available for employers to adopt in late 2014.»» On September 26, 2014, the allocation of the underlying funds in the PERAdvantage Fixed Income Fund changed from 50 percent in the PIMCO Total Return Fund and 50 percent in the BlackRock U.S. Debt Index Fund to an allocation of 100 percent in BlackRock. (On January 15, 2015, two underlying funds were added to the PERAdvantage Fixed Income Fund. The allocation changed from 100 percent in the BlackRock U.S. Debt Index Fund to an allocation of 25 percent in the BlackRock U.S. Debt Index Fund, 25 percent in the BlackRock CoreAlpha Bond Fund, and 50 percent in the Wells Fargo Core Bond II CIT Fund.)»» On November 14, 2014, the assets in the PERAdvantage 2015 Fund were transferred to the PERAdvantage Income Fund and the PERAdvantage 2015 Fund was eliminated. PERAPlus 401(k) Plan Design The 401(k) Plan was established on January 1, 1985, under state law and Section 401(k) of the Internal Revenue Code (IRC) and is amended periodically. A copy of PERA s 401(k) and Defined Contribution Plan and Trust Document is available from PERA. Plan participation is voluntary and contributions are separate from those that PERA members make to their defined benefit member accounts. Investment options in the PERAPlus 401(k) Plan are identical to those in the PERAPlus 457 and PERA DC Plans. Continued on the next page Mail: PO Box 5800, Denver, CO Offices: 1301 Pennsylvania Street, Denver 1120 W. 122nd Avenue, Westminster PERA (7372)

3 PERAPlus 457 Plan Design The 457 Plan was established by PERA on July 1, 2009, under state law and Section 457 of the IRC and is amended periodically. It is a continuation of the State Deferred Compensation Plan. A copy of The PERA Deferred Compensation Plan document is available from PERA. Plan participation is voluntary and contributions are separate from those that PERA members make to their defined benefit member accounts. Investment options in the PERAPlus 457 Plan are identical to those in the PERAPlus 401(k) and PERA DC Plans. PERA Defined Contribution (DC) Plan Design PERA s DC Plan was established on January 1, 2006, under state law and Section 401(a) of the IRC, and is amended periodically. A copy of PERA s 401(k) and Defined Contribution Plan and Trust Document is available from PERA. Investment options in the PERA DC Plan are identical to those in the PERAPlus 401(k)/457 Plans. DC Plan participant contributions are separate from those that are made to the PERAPlus 401(k)/457 Plans. More Information If you have additional questions about the PERAPlus 401(k)/457 or PERA DC Plans, call and select the PERAPlus/DC Plan option, or access the Plan websites by going to Gregory W. Smith Colorado PERA Executive Director 2

4 PLAN FEES (As of March 31, 2015) The PERAPlus 401(k)/457 and PERA DC Plans charge an administrative flat fee of $1.00 per month to all participants. If you participate in multiple plans, you will pay $1.00 per month for each plan. Participants will also pay a Plan administration asset-based fee of up to 0.14 percent on each underlying PERAdvantage portfolio. That fee is automatically built into the total asset-based fee as shown in the chart to the right. Fees are deducted from the investment option s rate of return. (Rates of return are on pages 4 and 5.) There are no other shareholder-type fees that apply. Total Asset-Based Fee Fund Percentage Per $1,000 PERAdvantage Capital Preservation Fund 0.35% $3.50 PERAdvantage Fixed Income Fund 0.36% $3.60 PERAdvantage Real Return Fund 0.32% $3.20 PERAdvantage U.S. Large Cap Stock Fund 0.35% $3.50 PERAdvantage International Stock Fund 0.58% $5.80 PERAdvantage U.S. Small and Mid Cap Stock Fund 0.55% $5.50 The PERAdvantage International Stock Fund and PERAdvantage Socially Responsible Investment (SRI) Fund use revenue sharing PERAdvantage SRI Fund PERAdvantage Target Retirement Date Funds 0.38% 0.25% $3.80 $2.50 from the underlying investment portfolios to reduce the Plan administration asset-based fee by the amount of such revenue sharing. Funds from revenue sharing, Plan administration asset-based fees, and Plan administration flat fees are used by PERA for Plan expenses including Plan recordkeeping, custodial services, consulting, and internal PERA administrative expenses. If you have a Self-Directed Brokerage Account, you will pay an annual $50 Self-Directed Brokerage fee and a 0.06 percent annual Plan administration asset-based fee on the balance in your brokerage account. Additional trading fees charged by TD Ameritrade may apply. The asset-based fee is less than the standard 0.14 percent charged on PERAdvantage funds because PERA receives revenue sharing from TD Ameritrade. Investments with revenue sharing reduce the asset-based administrative fee by the amount of such revenue sharing. If you take a loan from your PERAPlus 401(k) or PERAPlus 457 Plan account, you will pay a $75 non-refundable loan application fee for each loan. The interest rate for loans is the prime rate as quoted in The Wall Street Journal in effect at the time you apply for the loan, plus 1 percent. If you enroll in Voya Financial s Professional Management program, you will pay a fee of approximately $5 for every $10,000 in your account. Fees are proportionately lower for accounts with balances over $50,000. A complete fee schedule is available on the Plan websites accessible through Fees and expenses are only one of several factors that participants should consider when making investment decisions. The cumulative effect of fees and expenses can substantially reduce the growth of a participant s account. QUALIFIED DEFAULT INVESTMENT ALTERNATIVE (QDIA) Plan participants who do not actively direct how their contributions are invested will have their money automatically invested in the Plan s QDIA, the PERAdvantage Target Retirement Date fund based on their date of birth and expected retirement at age 65 (see table below). Participants may move all or a portion of their money out of the QDIA into any other fund(s) in the Plan. They may also choose to have future contributions invested in another fund. As the target year approached for the PERAdvantage 2015 Fund, the asset allocation became identical to the PERAdvantage Income Fund. Therefore, in the fourth quarter of 2014, assets in the PERAdvantage 2015 Fund were transferred to the PERAdvantage Income Fund and the PERAdvantage 2015 Fund was eliminated. The PERAdvantage 2060 Fund was added in February Fund Date of Birth Range PERAdvantage Income Fund December 31, 1952, or earlier PERAdvantage 2020 Fund January 1, 1953 December 31, 1957 PERAdvantage 2025 Fund January 1, 1958 December 31, 1962 PERAdvantage 2030 Fund January 1, 1963 December 31, 1967 PERAdvantage 2035 Fund January 1, 1968 December 31, 1972 PERAdvantage 2040 Fund January 1, 1973 December 31, 1977 PERAdvantage 2045 Fund January 1, 1978 December 31, 1982 PERAdvantage 2050 Fund January 1, 1983 December 31, 1987 PERAdvantage 2055 Fund January 1, 1988 December 31, 1992 PERAdvantage 2060 Fund January 1, 1993, or later 3

5 RATES OF RETURN The rates of return presented in this report are shown net of investment manager fees and asset-based Plan administrative fees and are as of December 31, Current returns are available on the Plan websites. These funds commenced as of October 1, As of October 1, 2011, performance is calculated using Net Asset Values (NAV). Actual historic performance prior to October 1, 2011, does not exist. Simulated Performance The simulated performance presented on pages 4 and 5 in italics, for the 5-year and 10-year returns, is intended to provide an indication of how the funds may have performed in the past. The simulated performance is based on the composite performance of institutional accounts managed by the managers with investment strategies similar to those expected to be implemented by the managers in the funds or on the actual historical returns of the underlying portfolios used by the fund. To produce the simulated returns, the managers composite returns were combined in accordance with the target asset allocation and rebalanced quarterly. Past performance, whether actual or simulated, does not guarantee future results. PERAdvantage Capital Preservation Fund The PERAdvantage Capital Preservation Fund is a fund for which the return is fixed. The return is an annualized crediting rate that is established at the beginning of each quarter and credited to the participant s account on a daily basis. You may access the most recent crediting rate on the Plan websites. In certain extreme circumstances, there may be a limit on your ability to withdraw from this fund or you may be limited to withdrawing your funds at the lesser of book value or market value. Extreme circumstances could include, but are not limited to, fund subscription and redemption activity, a sharp decline in the market value of the fixed income investments, or a deterioration in the credit worthiness of the stable value provider. PERAdvantage Fund Benchmark 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Year 10-Year 4 PERAdvantage Capital Preservation Fund 0.43% 0.43% 0.43% 0.45% 1.75% Hueler Stable Value Index (Equal Wtd Avg) 0.41% 0.41% 0.42% 0.44% 1.69% PERAdvantage Fixed Income Fund 1.55% 2.20% (0.08%) 1.76% 5.53% 4.94% 5.59% Barclays US Agg Bond Index 1.84% 2.04% 0.17% 1.79% 5.97% 4.45% 4.71% PERAdvantage Real Return Fund 3.53% 4.51% (4.97%) (2.50%) 0.25% 3.48% 70% SSgA Real Asset Strategy 1 / 30% Barclays US TIPS Index 3.65% 4.56% (4.94%) (2.43%) 0.51% 3.74% PERAdvantage U.S. Large Cap Stock Fund 1.73% 4.67% 0.64% 5.07% 12.59% 15.41% 8.25% Russell 1000 Index 2.05% 5.12% 0.65% 4.88% 13.24% 15.64% 7.96% PERAdvantage International Stock Fund 0.88% 4.96% (4.06%) (3.45%) (1.91%) 6.88% MSCI ACW ex US Index (Net) 0.51% 5.03% (5.27%) (3.87%) (3.87%) 4.43% PERAdvantage U.S. Small and Mid Cap Stock Fund 0.99% 2.93% (4.98%) 5.37% 4.08% 16.67% 9.58% Russell 2500 Index 2.30% 3.57% (5.35%) 6.77% 7.07% 16.36% 8.72% PERAdvantage SRI Fund 1.53% 3.64% (1.28%) 1.11% 5.03% 8.11% SRI Fund Custom Index % 3.39% (1.25%) 1.33% 4.98% 9.48% PERAdvantage Income Fund % 3.00% (1.38%) 1.37% 4.96% 6.81% BlackRock LifePath Retirement Index 2.01% 3.02% (1.32%) 1.44% 5.19% 7.01% PERAdvantage 2015 Fund % 3.07% (1.39%) BlackRock LifePath 2015 Index 2.02% 3.08% (1.34%) PERAdvantage 2020 Fund 1.97% 3.43% (1.59%) 1.45% 5.30% 7.90% BlackRock LifePath 2020 Index 2.04% 3.45% (1.54%) 1.54% 5.54% 8.10% PERAdvantage 2025 Fund 1.99% 3.72% (1.73%) 1.52% 5.53% 8.48% BlackRock LifePath 2025 Index 2.06% 3.73% (1.68%) 1.63% 5.78% 8.72% PERAdvantage 2030 Fund 2.00% 3.97% (1.86%) 1.57% 5.71% 9.01% BlackRock LifePath 2030 Index 2.06% 3.98% (1.82%) 1.70% 5.99% 9.19% PERAdvantage 2035 Fund 2.02% 4.19% (1.97%) 1.61% 5.88% 9.44% BlackRock LifePath 2035 Index 2.09% 4.21% (1.93%) 1.77% 6.17% 9.66% PERAdvantage 2040 Fund 2.03% 4.39% (2.07%) 1.63% 6.01% 9.84% BlackRock LifePath 2040 Index 2.09% 4.40% (2.02%) 1.82% 6.32% 10.02% See page 5 for footnote references.

6 RATES OF RETURN (continued) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Year 10-Year PERAdvantage 2045 Fund 2.03% 4.56% (2.14%) 1.66% 6.13% 10.21% BlackRock LifePath 2045 Index 2.09% 4.58% (2.10%) 1.85% 6.45% 10.42% PERAdvantage 2050 Fund 2.03% 4.75% (2.26%) 1.72% 6.26% 10.61% BlackRock LifePath 2050 Index 2.09% 4.77% (2.22%) 1.95% 6.63% 10.73% PERAdvantage 2055 Fund 2.07% 4.93% (2.44%) 1.77% 6.34% BlackRock LifePath 2055 Index 2.11% 4.96% (2.38%) 1.98% 6.69% Performance is net of management and asset-based administrative fees. Performance is calculated using Net Asset Values (NAV). All performance is calculated by RVK. 1 The SSgA Real Asset Strategy Index consists of 30 percent Barclays Capital U.S. Treasury Inflation Protected Securities Index, 15 percent Dow Jones U.S. Select REIT Index, 25 percent DJ-UBS Roll Select Commodity Total Return Index, 30 percent S&P Global LargeMidCap Commodity and Resources Index. Prior to July 1, 2014, the Index consisted of 25 percent Barclays Capital U.S. Treasury Inflation Protected Securities Index, 20 percent Dow Jones U.S. Select REIT Index, 20 percent DJ-UBS Roll Select Commodity Total Return Index, 35 percent S&P Global LargeMidCap Commodity and Resources Index. Prior to December 1, 2012, the DJ-UBS Roll Select Commodity Index portion of the benchmark was the DJ-UBS Commodity Total Return Index. 2 The SRI Fund Custom Index consists of 60 percent MSCI World ESG Index (Net) and 40 percent Barclays U.S. Government Index. Prior to January 1, 2013, the benchmark consisted of 60 percent S&P 500 Index and 40 percent Barclays U.S. Aggregate Index. 3 In November 2014, the PERAdvantage 2015 Fund transitioned into the PERAdvantage Income Fund. STATEMENTS OF FIDUCIARY NET POSITION As of December 31, 2014 (Unaudited) (In Thousands of Dollars) ASSETS Investments at Fair Value 401(k) Plan 457 Plan DC Plan PERAdvantage Capital Preservation Fund $223,152 $159,234 $9,133 PERAdvantage Fixed Income Fund 234,530 58,694 7,258 PERAdvantage Real Return Fund 11,465 4, PERAdvantage U.S. Large Cap Stock Fund 1,220, ,615 25,303 PERAdvantage International Stock Fund 209,872 68,345 11,440 PERAdvantage U.S. Small and Mid Cap Stock Fund 163, ,178 16,462 PERAdvantage SRI Fund 10,754 2, PERAdvantage Income Fund 129,724 25,971 5,875 PERAdvantage 2020 Fund 98,368 19,252 4,165 PERAdvantage 2025 Fund 88,197 20,013 4,500 PERAdvantage 2030 Fund 66,293 13,543 6,089 PERAdvantage 2035 Fund 57,778 12,357 6,366 PERAdvantage 2040 Fund 35,115 7,278 7,766 PERAdvantage 2045 Fund 20,299 3,532 10,983 PERAdvantage 2050 Fund 11,950 2,044 8,342 PERAdvantage 2055 Fund 9,755 2,680 2,216 TD Ameritrade Self-Directed Brokerage Account 15,879 14,466 1,268 Total investments, at fair value 2,607, , ,338 Other plan assets Cash 1, Short-term interest accounts 3,855 1,391 1,569 Benefit receivable 5,140 2,879 1,652 Participant loans receivable 65,403 11,852 Total other plan assets 75,822 16,764 3,334 Total assets 2,682, , ,672 LIABILITIES Amount due to/from combined investment fund (348) (89) (35) Accounts payable (421) (182) (114) Advance deposits (152) (97) (57) Total liabilities (921) (368) (206) Fiduciary net position restricted for defined contribution pension plans, and held in trust for deferred compensation benefits $2,682,000 $689,451 $131,466 5

7 STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION For the Year Ended December 31, 2014 (Unaudited) (In Thousands of Dollars) ADDITIONS 401(k) Plan 457 Plan DC Plan Contributions Employers $3,866 $43 $11,531 Members 126,112 50,370 9,179 Total contributions 129,978 50,413 20,710 Investment income adjusted for fair value appreciation or depreciation PERAdvantage Capital Preservation Fund 4,101 3, PERAdvantage Fixed Income Fund 12,319 2, PERAdvantage Real Return Fund (148) (58) (17) PERAdvantage U.S. Large Cap Stock Fund 141,689 16,752 2,825 PERAdvantage International Stock Fund (3,978) (1,273) (231) PERAdvantage U.S. Small and Mid Cap Stock Fund 6,854 4, PERAdvantage SRI Fund PERAdvantage Income Fund 3, PERAdvantage 2015 Fund 3, PERAdvantage 2020 Fund 4, PERAdvantage 2025 Fund 4, PERAdvantage 2030 Fund 3, PERAdvantage 2035 Fund 3, PERAdvantage 2040 Fund 1, PERAdvantage 2045 Fund 1, PERAdvantage 2050 Fund PERAdvantage 2055 Fund TD Ameritrade Self-Directed Brokerage Account Short-term interest income 3 Net investment income 188,199 32,133 6,745 Other additions Revenue sharing Participant loan interest 2, Miscellaneous Total other additions 2, Total additions 320,468 83,024 27,463 DEDUCTIONS Benefits paid (144,329) (35,584) (8,690) Plan expenses (3,050) (1,074) (738) Other deductions (839) (517) (69) Total deductions (148,218) (37,175) (9,497) Net increase in fiduciary net position $172,250 $45,849 $17,966 6

8 ANALYSIS OF PLAN ADMINISTRATIVE INCOME/(EXPENSE) For the Year Ended December 31, 2014 (Unaudited) (In Thousands of Dollars) 401(k) Plan 457 Plan DC Plan Plan income Administrative fees $5,056 $1,186 $241 Loan and other fees Short-term interest income from operations 3 Revenue sharing Forfeitures 880 Total plan income 5,416 1,320 1,128 Plan expense Consulting fees (155) (40) (7) Recordkeeping fees (1,380) (643) (439) Custodial fees (234) (60) (11) PERA administrative expense (1,281) (331) (281) Total plan expense (3,050) (1,074) (738) Net plan administrative income $2,366 $246 $390 REVIEWING YOUR INVESTMENTS You may review or change your investment mix by calling and selecting the PERAPlus/DC Plan option or by accessing your account online. To access your account online, go to and click the Member/Retiree Login button. After you enter your User ID and password and gain access to your account, click on either PERAPlus 401(k) Account Access, PERAPlus 457 Account Access, or PERA DC Plan Account Access on the top of the page or under the Benefit Programs menu. Once on the Plan s website, you may generate a statement, which will show your Personal Investment Performance and the funds in which you are invested. To help you better understand the investment options available to you, this Annual Report includes the fund fact sheets as of December 31, 2014, for all funds currently available beginning on page 8. The most current fund fact sheets can be found on the Plan websites. Disclosure information applicable to all PERAdvantage funds is found on pages Risk definitions can be found on the Plan websites. SELF-DIRECTED BROKERAGE ACCOUNTS The Self-Directed Brokerage Account allows you to select from numerous mutual funds and/or other types of securities, such as stocks and bonds, for an additional fee (see page 3). This Annual Report does not include rates of return on the investments available to participants using the Self-Directed Brokerage Account with TD Ameritrade. More information can be found on the Plan websites. 7

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27 Colorado Public Employees Retirement Association 1301 Pennsylvania Street, Denver, Colorado PRESORTED STANDARD U.S. POSTAGE PAID Permit No. 45 DENVER, CO This report provides information about the PERAPlus 401(k)/457 and PERA DC Plans. Your rights, benefits, and obligations as a Colorado PERA member are governed by Title 24, Article 51 of the Colorado Revised Statutes, the Rules of the Colorado Public Employees Retirement Association, the 401(k) and Defined Contribution Plan and Trust Document, and the PERA Deferred Compensation Plan, which take precedence over any interpretations in this report. 14/27 (REV 7-15) 62M