Market Insights from a Trusted Leader - Wilshire Associates August 2017 Market Insights from a Trusted Leader Wilshire Associates

INSTITUTIONAL EXPERTISE Wilshire Associates INSTITUTIONAL EXPERTISE Over $942 billion (as of March 31, 2017 ) in institutional consulting assets advised Advises on $179 billion (as of March 31, 2017) in assets for financial intermediaries Approximately 300 associates worldwide, 70+ of whom contribute to manager research 40+ years of experience Wilshire 5000 Total Stock Market IndexSM created 1974 Began asset allocation modeling for pension plans 1980 Wilshire U.S. Real Estate Securities IndexSM launched 1991 Wilshire Mutual Funds established 1997 Hedge fund platform created 2005 System Man Power Storage security 1972 Firm founded. Early innovator of equity risk models. 1978 Wilshire TUCS® created. Currently captures information on over $3.5 trillion in institutional holdings 1981 Pension consulting practice started 1996 Private equity Fund of Funds platform launched 1998 Asset advisory service started for financial advisors 2014 Wilshire launches Liquid Alternatives Indexes

Market Review

MARKET PERFORMANCE Wilshire Funds Management 2nd Quarter 2017 Year to Date 2017 Proxy Indices: Wilshire 5000 Total Market IndexSM, MSCI EAFE Index, MSCI Emerging Markets Index, Barclays U.S. Aggregate Index, Barclays Global Aggregate Bond Index, J.P. Morgan EMBI Global Index, Wilshire Global RESISM, S&P Goldman Sachs Commodity Index, and the HFRI Fund Weighted Composite Index Source: Wilshire Compass

2ND QUARTER 2017: U.S. EQUITY MARKET Wilshire Funds Management 2ND QUARTER 2017: U.S. EQUITY MARKET U.S. Equity Markets The U.S. stock market, represented by the Wilshire 5000 Total Market IndexSM, was up 2.95% for the second quarter of 2017. Economic releases during the second quarter were solid, with growth in both the economy and the labor markets. The Federal Open Market Committee raised the Fed Funds rate in June by 0.25%, the second such increase this year. Large capitalization stocks outperformed their smaller capitalization counterparts, with the Wilshire U.S. Large Cap IndexSM up 3.08% versus a gain of 1.65% for the Wilshire U.S. Small Cap IndexSM. The Wilshire U.S. Micro Cap IndexSM was up 3.53% for the quarter and 28.34% for the one year. Growth stocks led value stocks during the second quarter in both the large and small cap spaces.

2ND QUARTER 2017: GICS SECTOR RETURNS Wilshire Funds Management 2ND QUARTER 2017: GICS SECTOR RETURNS GICS Sector Returns The best performing sector was Health Care (+7.1%), with Industrials (+4.8%) and Financials (+4.3%) close behind. Two sectors were in negative territory, Energy (--6.4%) and Telecom Services (-7.1%).

Wilshire Funds Management TRUMP TRADE MONITOR Data Source: Bloomberg

2ND QUARTER 2017: INTERNATIONAL EQUITY MARKETS Wilshire Funds Management 2ND QUARTER 2017: INTERNATIONAL EQUITY MARKETS International Equity Markets   Developed and emerging non-U.S. equity markets produced strong returns during the second quarter of 2017. The U.S. dollar continued to weaken during the quarter, providing an additional boost for U.S. investors holding foreign currencies. While economic releases out of Europe continue to improve, Britain is showing signs of struggling with Brexit, although stocks in the U.K. are still producing positive returns. Japanese equities lifted the MSCI Pacific Index higher as the labor market in Japan improved during the quarter, as did domestic demand and consumption. Emerging markets are up most significantly in 2017 among the three major global equity market segments. Returns have been broad based, with 21 of the 24 countries in the index (representing more than 95% of the market value) producing gains.

2ND QUARTER 2017: FIXED INCOME MARKETS Wilshire Funds Management 2ND QUARTER 2017: FIXED INCOME MARKETS Fixed Income Markets   The U.S. Treasury yield curve continued to flatten during the quarter, with the one year yield up 21 basis points and the thirty year down 18 basis points. The bellwether 10 year Treasury yield ended the quarter at 2.31%, down slightly but still much higher than a year ago (1.49%). The Federal Open Market Committee decided to increase their overnight rate by 0.25% at their June meeting, their fourth increase since 2008. Credit spreads continued to move lower during the quarter in both investment grade and high yield bonds. High yield spreads, which have averaged 6% during the past decade, were below 4% during the quarter and stood at 3.6% as of June 30.

2ND QUARTER 2017: REAL ESTATE AND COMMODITY MARKETS Wilshire Funds Management 2ND QUARTER 2017: REAL ESTATE AND COMMODITY MARKETS Real Estate and Commodity Markets   In the second quarter real estate securities were up in the U.S. and globally, the latter due in part to a weakening U.S. dollar. Commodities were down for the quarter as crude oil fell -9.0% to $46.04 per barrel. Oil is down -14.3% for the first six months of 2017. Natural gas prices were down as well, posting a loss of -4.9% to end the quarter at $3.04 per million BTUs. MLP returns were negative for the quarter and roughly flat for the past 12 months. Gold prices fell, finishing the quarter at approximately $1,242 per troy ounce, down -0.7% from last quarter.

Market Outlook

INVESTMENT STRATEGY COMMITTEE’S VIEWS - JULY 2017 Wilshire Funds Management INVESTMENT STRATEGY COMMITTEE’S VIEWS - JULY 2017 Nationwide ProAccount Implementation Removing the High Yield overweight vs. Equities Moving from an overweight of Credit vs. Government to an underweight position Moving from an overweight to a large overweight of Foreign Equity vs. Domestic Equity

2ND QUARTER 2017: FIXED INCOME MARKETS Wilshire Funds Management 2ND QUARTER 2017: FIXED INCOME MARKETS

2ND QUARTER 2017: INTEREST RATES AND INFLATION Wilshire Funds Management 2ND QUARTER 2017: INTEREST RATES AND INFLATION Interest Rates: The Treasury curve flattened during the quarter, with yields for maturities three years and lower moving higher and longer term rates falling. The 10 year Treasury was down just nine basis points, finishing at 2.31%. Inflation: Consumer price increases have moderated during much of 2017. The Consumer Price Index was down - 0.2% for the three months ending in May, and up 1.9% for the one year period. The 10 year breakeven inflation rate closed the second quarter at 1.73%, down from 1.97% at the end of March. Inflation expectations are still up, however, from a year ago.

2ND QUARTER 2017: INVESTMENT GRADE BOND SPREADS Wilshire Funds Management 2ND QUARTER 2017: INVESTMENT GRADE BOND SPREADS Investment grade spreads compressed to remain below their historical average as market conditions remained stable and investors increasingly sought higher quality credits.

2ND QUARTER 2017: HIGH YIELD BOND SPREADS Wilshire Funds Management 2ND QUARTER 2017: HIGH YIELD BOND SPREADS The average high yield option-adjusted spread continued to narrow in the second quarter from 383 to 364 basis points.

2ND QUARTER 2017: 10-YEAR SOVEREIGN DEBT YIELDS Wilshire Funds Management 2ND QUARTER 2017: 10-YEAR SOVEREIGN DEBT YIELDS 10-year sovereign debt yields fell across U.S.A., Spain, Italy, Greece and France. The 10-year sovereign debt yields rose in the U.K., Japan, Germany and Canada.

2ND QUARTER 2017: REAL U.S. GDP Wilshire Funds Management Real GDP growth slowed to 1.40% annualized during the first quarter of 2017. This was not much lower than the 1.60% pace set in 2016. Both consumer and business spending contributed to growth. In an encouraging sign, nonresidential fixed investment was up a little more than 10%, thanks in part to increased spending on gas and oil well drilling. A shrinking trade deficit contributed to growth as well, with a contraction in government spending representing the only detractor.

GLOBAL GDP GROWTH (NORMALIZED, 5 YEARS) Wilshire Funds Management GLOBAL GDP GROWTH (NORMALIZED, 5 YEARS) Data Source: Bloomberg

ECONOMIC MOMENTUM IN EUROPE VS UNITED STATES Wilshire Funds Management ECONOMIC MOMENTUM IN EUROPE VS UNITED STATES Data Source: Bloomberg

2ND QUARTER 2017: EQUITY MARKET VOLATILITY Wilshire Funds Management 2ND QUARTER 2017: EQUITY MARKET VOLATILITY Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), remained low throughout the second quarter following the presidential elections. The VIX dropped to 11.2 at the end of the quarter, remaining below its historical average of 19.5.

2ND QUARTER 2017: S&P 500 P/E RATIO Wilshire Funds Management 2ND QUARTER 2017: S&P 500 P/E RATIO The relative value of the U.S. equity market, measured here by the trailing price-to-earnings ratio, remained above its historical average of 16.6x, with a value of 21.5x at the end of the second quarter.

2ND QUARTER 2017: EUROPE Wilshire Funds Management Eurozone government debt, as a percentage of GDP, continued to level off as many countries within the European Union were stabilizing or reducing government bond buying programs.

2ND QUARTER 2017: EMERGING MARKETS Wilshire Funds Management 2ND QUARTER 2017: EMERGING MARKETS The MSCI Emerging Markets Index Price to Book ratio rose from 1.55x at the end of March 2017 to 1.64x at the end of June 2017, rising above its historical average of 1.55x.

2ND QUARTER 2017: COMMODITY PRICES Wilshire Funds Management 2ND QUARTER 2017: COMMODITY PRICES Grains and Livestock experienced quarterly gains while Energy, Industrial Metals and Precious Metals suffered quarterly losses.

CURRENCY MARKETS - YEAR TO DATE 2017 Wilshire Funds Management CURRENCY MARKETS - YEAR TO DATE 2017 Source: Bloomberg

2ND QUARTER 2017: HISTORICAL ASSET CLASS RETURNS Wilshire Funds Management 2ND QUARTER 2017: HISTORICAL ASSET CLASS RETURNS The value of holding a diversified portfolio has been consistently illustrated over the past 10 calendar years. Best Worst

2ND QUARTER 2017: ASSET CLASS CORRELATIONS AND VOLATILITY Wilshire Funds Management 2ND QUARTER 2017: ASSET CLASS CORRELATIONS AND VOLATILITY Below are correlations across multiple asset classes for the trailing 5 years (blue) and 10 years (green).