The Month in Brief. In this issue. Geopolitical news. All Eyes on Greece 1 Geopolitical news 2 Economic news 2 Financial news 2 Financial markets

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1 Aon Hewitt Retirement and Investment The Month in Brief June 2015 In this issue All Eyes on Greece 1 Geopolitical news 2 Economic news 2 Financial news 2 Financial markets All Eyes on Greece Geopolitical news Greece saw its debt crisis worsen in June as it became the first developed economy to default on a loan with the International Monetary Fund. The International Monetary Fund said the U.S. Federal Reserve should delay raising its interest rates until the first half of 2016, citing renewed economic uncertainty and weak inflation. The Bank of Canada expressed concerns that the valuation of S&P / TSX Composite Index was above historical averages and close to all-time highs, warning that a buildup of higher-risk positions could lead to systematic stress if there was a sharp drop in asset prices. The International Energy Agency raised its forecast for global oil demand, saying that the collapse in oil prices is helping to boost fuel use, while also forecasting exceptionally high growth in supply. The U.S. Federal Reserve Board cut its 2015 economic growth forecast to 1.8-2% from its March forecast of %. It also raised its expectation for the unemployment rate from the range of % to between %. Risk. Reinsurance. Human Resources.

2 Economic news The Organization for Economic Co-operation and Development (OECD) reported that world economic growth is slow so far this year, with a forecast of 3.1% growth in The outlook for 2016 is for an improvement to 3.8%. Auto sales in Canada hit a record in May with 197,937 cars and light trucks sold. Similarly, cars and trucks sales in the U.S. had the best month since early Canada s economy added 59,000 jobs in May, the biggest increase in 7 months. As a result, the unemployment rate was unchanged at 6.8%. The Canadian economy posted a two-month record trade deficit of $6.8 billion in March and April, with a cumulative trade deficit of $11 billion year to date. Housing starts in Canada reached a seasonally adjusted rate of 201,705 units in May, up from 183,329 in April, pointing to an economic recovery in the second quarter. The ECB economic stimulus package seems to be working, with an inflation rate of 0.3% in May, the first positive number in six months. Financial markets In June, investors sustained losses in most financial markets. Expressed in local currencies, the performance of the major stock indices ranged from -4.40% for the MSCI EAFE to -1.94% for the S&P 500 Index. Commodities were an exception with the S&P GSCI Commodity Index, Light Energy (CAD) posting a gain of 1.96% for the month. Canadian investors saw a positive currency impact in most markets, with investments in Emerging markets the exception. Yields on long maturities bonds rose further during the month, while those of short maturities fell. The result was a loss of 1.88% for the FTSE TMX Canada Long Term Bond Index and a gain of 0.07% for the FTSE TMX Canada 91 Day T-Bill Index. The FTSE TMX Canada Universe Bond Index posted a loss of 0.55% for the period. In May the median solvency ratio of our Pension Plan Universe decreased from 93.3% to 92.5%, while the percentage of plans in solvency shortfall rose from 71.7% to 75.3%. Our representative balanced portfolio lost 1.65% during the month, posting a return of 4.12% for the first half of the year. Financial news Intel Corp. agreed to purchase Altera Corp. for US$16.7 billion, seeking to make up for slowing demand from the PC industry by expanding its line-up of higher-margin chips used in data centres. Ivanhoé Cambridge, the Caisse de dépôt et placement du Québec s real estate arm, announced it was partnering with APG Asset Management NV, a Dutch fund manager, in a US$920 million investment in a Shanghai retail developer, and will invest $180 million in Chinese warehouse properties in partnership with the U.S. real estate investor CBRE Global Investments. The Canada Pension Plan Investment Board was said to be in talks to acquire General Electric Co. s U.S. private-equity lending business of more than US$10 billion in loan assets. The OECD warned that pension funds shifting to global investing may be taking excessive risks. A study by OceanRock Investments Inc. confirmed the advantages of responsible investing over traditional mutual investing, including strong financial returns, reduced risk and more downside protection. The Month in Brief Aon Hewitt June

3 Performance of indices TOTAL RETURNS TO JUNE 30, 2015 ASSET CLASSES RETURNS (%) ANNUALIZED RETURNS (%) STANDARD DEVIATION (%) Indices 1 month YTD 2015:2 2015:1 2014:4 2014:3 1 year 2 years 5 years 10 years 15 years 5 years 10 years 15 years FIXED INCOME FTSE TMX Canada 91 Day T-Bill FTSE TMX Canada Universe Bond FTSE TMX Canada Long Term EQUITIES S&P/TSX Composite S&P 500 (CAD) S&P 500 (USD) MSCI EAFE (CAD) (Net dividend) MSCI EAFE (Local Currency) MSCI World (CAD) (Net dividend) MSCI World (Local Currency) MSCI Emerging Markets (CAD) MSCI Emerging Markets (Local Currency) OTHERS FTSE EPRA/NAREIT Developed (CAD) S&P GSCI Commodity Index, Light Energy (CAD) USD return for a Canadian investor BALANCED PORTFOLIO, MONTHLY REBALANCING * * 5% FTSE TMX Canada 91-Day T-Bill + 40%FTSE TMX Canada Universe Bond + 30% S&P/TSX Composite % S&P 500 (CAD) % MSCI EAFE (CAD) (Net dividend). FTSE TMS Canada Federal long-term yield Yield (%) Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Difference between FTSE TMX Canada long-term and short-term yield Long-Term Advantage Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Difference (%) Short-Term Advantage The Month in Brief Aon Hewitt June

4 Volatility of S&P 500 (USD) May-96 May-97 Apr-98 Apr-99 Mar-00 Mar-01 Feb-02 Jan-03 Jan-04 Dec-04 Dec-05 Nov-06 Oct-07 Oct-08 Sep-09 Sep-10 Aug-11 Jul-12 Jul-13 Annualized Standard Deviation (%) Measured over a 60-Market Day moving period. Pension plans median solvency ratio and percentage of plans in solvency shortfall Median solvency ratio Percentage of plans in solvency shortfall 120% 110% 100% 90% 80% 70% 60% 50% 40% June 2015: 92.5% June 2015: 75.3% The Month in Brief Aon Hewitt June

5 Contact Information Matt MacLean Aon Hewitt (Halifax) Mario Delisle Aon Hewitt (Montreal) Brian White Aon Hewitt (Toronto) John Myrah Aon Hewitt (Regina) Julianna Spiropoulos Aon Hewitt (Calgary) Chris Kautzky Aon Hewitt (Vancouver) Mathieu Vézina Aon Hewitt (Quebec) About Aon Hewitt Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit aonhewitt.com Aon Hewitt Inc. All Rights Reserved. This document contains confidential information and trade secrets protected by copyrights owned by Aon Hewitt. The document is intended to remain strictly confidential and to be used only for your internal needs and only for the purpose for which it was initially created by Aon Hewitt. No part of this document may be disclosed to any third party or reproduced by any means without the prior written consent of Aon Hewitt. Risk. Reinsurance. Human Resources.