minutes of the board of trustees of the state universities ...the active/passive mix, diversity...

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MINUTES

Meeting of the Investment Committee of the Board of Trustees of the

State Universities Retirement System 10:00 a.m., Wednesday, October 20, 2016

Northern Trust 50 S. LaSalle

Global Conference Center-1st Floor Chicago, Illinois 60603

The following trustees were present: Mr. Craig McCrohon, Chair; Mr. Aaron Ammons, Mr. Dennis Cullen, Mr. Tom Cross, Dr. John Engstrom, Dr. Fred Giertz, Mr. Francis Idehen, Mr. Paul R.T. Johnson Jr., Ms. Dorinda Miller and Dr. Steven Rock.

Others present: Mr. William Mabe (via conference call); Ms. Phyllis Walker, Chief Financial Officer; Ms. Bianca Green, General Counsel; Mr. Douglas Wesley, Interim Chief Investment Officer; Ms. Kim Pollitt and Mr. Shane Willoughby, Sr. Investment Officers; Mr. Alex Ramos, Investment Officer; Ms. Kristen Houch, Legislative Liaison; Ms. Allison Kushner, Compliance and Governance Officer; Ms. Lori Kern and Ms. Whitney Jones, Executive Assistants; Ms. Mary Pat Burns of Burke, Burns & Pinelli; Ms. Deanna Jones, Mr. Douglas Moseley and Mr. Kevin Leonard of NEPC; Ms. Patti Somerville-Koulouris of the Northern Trust Company; and Mr. Martin Noven of TIAA .

Investment Committee roll call attendance was taken. Trustee Cullen, present; Trustee Cross, absent; Trustee Giertz, present; Trustee Idehen, absent; Trustee Johnson, present; Trustee McCrohon, present; and Trustee Rock, present.

APPROVAL OF MINUTES

Trustee Craig McCrohon presented the minutes from the Investment Committee meeting of September 15, 2016. Trustee Paul Johnson, Jr. made the following motion:

• That the minutes from the September 15, 2016 Investment Committee Meeting be approvedas presented.

Trustee Dennis Cullen seconded and the motion carried with all trustees present voting in favor.

Copies of the staff memorandums titled “Report from the September 15, 2016 Investment Committee Meeting” and “Investment Contracts Approved” are incorporated as a part of these minutes as Exhibit 1 and Exhibit 2.

CHAIRPERSON’S REPORT

Trustee McCrohon did not have a Chairperson’s report.

CHIEF INVESTMENT OFFICER REPORT

Mr. Douglas Wesley provided a brief update on performance through September 30. Mr. Wesley also requested trustee input on the upcoming Trustee Education event in February. Finally, Trustee Engstrom discussed both a recent workshop he attended sponsored by Council of Institutional Investors (CII) and CFA Institute and the semiannual CII meeting held in Chicago.

GLADIUS ACCOUNT STRUCTURE

Mr. Wesley discussed the advantages of fully funding the Gladius account. Discussion regarding the appropriate asset class in which to include the Gladius account followed. Ultimately, the board agreed to include the account in a new subclass within the US equity asset class.

Trustee Tom Cross and Trustee Francis Idehen joined the meeting at 10:00 a.m.

Trustee Paul Johnson made the following motion:

• That the 2 percent commitment to Gladius Capital Management be implemented on a fullyfunded basis with funding sourced from the Northern Trust U.S. Equity Index account.

Trustee Fred Giertz seconded and the motion carried with all trustees present voting in favor with the exception of Trustee McCrohon who opposed.

A copy of the staff memorandum titled “Gladius Capital Management - Options Strategy Implementation Update” are incorporated as a part of these minutes as Exhibit 3.

UPDATE ON THE PRIVATE EQUITY SEARCH

Trustee McCrohon noted that the private equity search has been halted until such time as the new executive director and chief investment officer are on board and able to participate in the search. The search will resume at that time.

NON – U.S. EQUITY AND GLOBAL EQUITY ASSET CLASS STRUCTURE REVIEWS

Ms. Kim Pollitt presented a high level overview of the non-U.S. and global equity portfolios, noting the active/passive mix, diversity profile and performance results, among other things. Ms. Pollitt highlighted the dashboard reports created by staff for each of the investment managers and noted the current status of each of the existing managers. Discussion followed, including discussion on the management of currency risk in the portfolio.

Mr. Doug Moseley and Mr. Kevin Leonard of NEPC provided a presentation on the current state of the non-U.S. and global equity markets. Mr. Moseley commented that valuations of emerging markets appear attractive from a historical perspective and also commented on the historical return advantage of small cap stocks in the international marketplace. Differences in returns between

value and growth stocks were also examined. Mr. Moseley noted the SURS portfolio has a structural underweight to emerging market stocks and recommended that steps be taken to address the underweight position. Mr. Moseley also recommended that assets be reallocated to the three existing global equity managers in amounts sufficient to bring the global equity allocation to the 8 percent strategic policy target. Discussion ensued on the performance of the existing global equity managers. A decision on the second recommendation was deferred until the December Investment Committee meeting, when additional information on this topic will be provided to the board for further discussion.

Trustee Johnson made the following motion:

• That assets be reallocated from the BTC International Alpha Tilts account to the BTCEmerging Markets Index Fund in an amount sufficient to increase the emerging marketsposition to a market weighting in the total non-U.S. equity portfolio. As of September 30,2016, this amount is estimated to be approximately $20 million but may vary based onmarket fluctuations.

Trustee Steven Rock seconded and the motion carried with all trustees present voting in favor.

Copies of the presentations and reports titled “Non-U.S. & Global Equity Asset Class Review,” “Non US Equity eVestment Reports,” “Global Equity eVestment Reports,” "Non-US and Global Equity Portfolio Structure” and the staff memorandum titled “Non-US and Global Equity Structure Recommendations” are incorporated as a part of these minutes as Exhibit 4, Exhibit 5, Exhibit 6, Exhibit 7 and Exhibit 8.

INVESTMENT POLICY DISCUSSION

Trustee Cullen led a discussion on the proposed revisions to the SURS Investment Policy. As part of this discussion, the mechanics of the rebalancing process were reviewed. Discussion also touched on the need for brevity vs. a more detailed definitional approach. It was suggested that language be added to the policy to describe the recently approved option overlay/volatility harvesting strategy. Staff indicated such language had already been drafted and would be shared with Trustee Cullen for inclusion in the next draft of the policy. Other topics covered include benchmarking and the use of Performance Targets (benchmark plus a premium) in manager evaluation. Discussion ensued on the benefits and risks of using historical performance as the primary means of evaluation. Concern was expressed by staff and NEPC that relying on strict historical performance metrics to evaluate managers could lead to sub-optimal decision making. Alternative evaluation methods were discussed with additional information and discussion to take place at future meetings. A question was raised as to which asset class TIPS belong, and it was agreed that this topic would be addressed as part of asset allocation work planned for 2017. Other topics of interest included the potential use of asset limits for investment managers/funds and a potential process to lift out successful managers from the Progress Emerging Manager program into a direct relationship with SURS. Discussion followed.

Because the entire Investment Policy is unlikely to be finalized by the December Investment Committee meeting, staff noted that they would bring back the diversity goals section of the policy for consideration at that time. Statute requires an annual review of the diversity goals.

A copy of the staff memorandums titled “Draft Investment Policy” followed by a copy of the Draft Investment Policy are incorporated as a part of these minutes as Exhibit 9 and Exhibit 10.

FRANKLIN REAL ASSET ADVISORS ORGANIZATIONAL DISCUSSION

Continued discussions were held regarding Franklin Templeton organizational concerns and Mr. Shane Willoughby provided additional information on the topic. Discussion followed and it was determined the best course of action was to invite members of Franklin Real Asset Advisors to the December board meeting to provide further detail.

Copies of the staff memorandum titled “Franklin Real Asset Advisors Organizational Discussion” and the appendices titled “Franklin Templeton Diversity Profile” and “FRAA Skill Set and Experience” are incorporated as a part of these minutes as Exhibit 11, Exhibit 12 and Exhibit 13

INFORMATIONAL ITEMS NOT REQUIRING COMMITTEE ACTION

The following items were provided for reference and are incorporated as a part of these minutes:

1. Exhibit 14 - SURS Projected Funding Status 2017 Fiscal Year-to-Date Results2. Exhibit 15 - Annual Review of Minority-, Female- and Persons with a Disability- Owned

…………….Broker/Dealer Usage by SURS Investment Managers3. Exhibit 16 - Fiscal Year 2017 Summary Work Plan4. Exhibit 17 - Schedule of 2016-2017 Meetings Dates

PUBLIC COMMENT

Since there was no further business before the Committee, Trustee Cullen moved that the meeting be adjourned. The motion was seconded by Trustee Johnson and carried with all trustees present voting in favor.

Respectfully submitted,

Mr. William Mabe Secretary, Board of Trustees

WEM:wj

To: Investment Committee From: Douglas C. Wesley, CFA Date: October 7, 2016 Subject: Report from the September 15, 2016 Investment Committee Meeting

Enclosed are the Minutes of the September 15, 2016 Investment Committee Meeting. The purpose of this memorandum is to provide a status report on action items.

Three motions were approved during the Investment Committee Meeting. These included the approval of the minutes from the June 9, 2016 Investment Committee Meeting. The two remaining motions were approved at the SURS Board of Trustees meeting conducted on September 16, 2016. No motions required further action by SURS staff. Open motions requiring further action by SURS Staff are listed below.

Open Items From Prior Meetings April 21, 2016 Investment Committee Meeting

1. That a commitment of up to 2% of the portfolio be allocated to equity index optionstrategies, to be managed as an overlay mandate, by Gladius Capital Management,contingent upon successful contract negotiations.

Contract negotiations are currently in progress.

Please advise if you have any questions during or prior to the October 20, 2016 Investment Committee meeting.

Exhibit 1

To: William E. Mabe From: Douglas C. Wesley, CFA Date: October 7, 2016 Subject: Investment Contracts Approved Following are investment contract agreements approved by the Executive Director following the September 15, 2016 Investment Committee meeting. As stated in the Investment Policy, notice is provided to the Board of approved investment-related contract documents after execution.

September 2016

Muller and Monroe Asset Management – Illinois Private Equity Fund of Funds, L.P. Per the request of the General Partner, the term of the fund will be extended for one year, until December 1, 2017. This is the first executed extension. The Limited Partnership Agreement allows for a maximum of three extensions.

Please advise if you have questions regarding these items.

Exhibit 2

To: Investment Committee From: Investment Staff Date: October 6, 2016 Re: Gladius Capital Management - Options Strategy Implementation Update

Background At the April 2016 Investment Committee meeting the Board selected Gladius Capital Management “Gladius” to manage a commitment of up to two percent of the portfolio (on a notional basis) in equity index option strategies, upon successful contract negotiations, and within the risk metrics consistent with Board directives. Contract negotiations and account setup have been ongoing since Gladius was selected by the Board.

At the September 2016 Investment Committee meeting the Board discussed fully funding the Gladius strategy rather than funding the account on a notional basis. The Board requested further information for the October 2016 meeting.

Implementation Fully funding the strategy would mean that the dollar amount transferred to Gladius to manage would be equal to the amount approved by the Board for them to manage; the same as with a traditional equity or fixed income manager. Funding Gladius on a notional basis would have meant transferring only the required collateral amount to Gladius to manage on the same two percent allocation approved by the Board. Assets to fully fund the strategy will come out of the Passive U.S. Equity portfolio. The Gladius account will be included in the SURS Opportunity Fund. The table below contains SURS’ current strategic policy target and revised strategic policy target to reflect the 2% change from U.S. Equity to the Opportunity Fund.

ASSET CLASS STRATEGIC

POLICY TARGET REVISED POLICY

TARGET CHANGE

U.S. Equity 23.0% 21.0% -2.0% Non-U.S. Equity 19.0% 19.0% - Global Equity 8.0% 8.0% - Core Fixed Income 19.0% 19.0% - Emerging Market Debt 3.0% 3.0% - Treasury Inflation-Protected Securities 4.0% 4.0% - Private Equity 6.0% 6.0% - Real Estate REITS Direct Real Estate

10.0% 4.0% 6.0%

10.0% 4.0% 6.0%

-

Hedged Strategies 5.0% 5.0% - Opportunity Fund 1.0% 3.0% +2%

Commodities 2.0% 2.0% -

Total 100.0% 100.0% 0%

Exhibit 3

According to Gladius, the majority of their clients fully fund the strategy. Staff believes that fully funding the strategy would provide greater transparency into the process and would enhance evaluation of Gladius and their ability to add value to the SURS portfolio. Fully funding would also allow the options portfolio to be self-contained and not cross collateralize assets in their portfolio with assets managed by other managers. Gladius will hold cash, which will be equitized by S&P 500 and Russell 2000 futures. The account value will fluctuate with equity market changes and option premium gains and losses, net of exercise costs. The benchmark for the portfolio would be the Russell 3000.

Fully funding the strategy would also increase SURS diversity allocations because Gladius is a minority-owned firm.

Recommendations SURS staff and NEPC jointly recommend:

• That the 2% commitment to Gladius Capital Management be implemented on a fullyfunded basis with funding sourced from the Northern Trust U.S. Equity Index account.

• That SURS target asset allocation be adjusted to reflect a 2% reduction from the U.S.Equity allocation and an increase to the Opportunity Fund by 2%.

Exhibit 3

Non-U.S. & Global Equity Asset Class Review

Year Ending June 30, 2016

Exhibit 4

Non-U.S. Equity

Exhibit 4

Non-U.S. Equity Portfolio Overview • SURS Actual vs. Target Non-U.S. Equity Allocation:

• Actual Allocation (ex-overlay) = 18.4% • Actual Allocation (with overlay) = 18.9% • Strategic Policy Target = 19.0%

• SURS Non-U.S. Equity Exposure = $3.1 billion: • Active Non-U.S. Equity = $901 million or 29.0% • Structured Active Non-U.S. Equity = $877 million or 28.2% • Passive Non-U.S. Equity = $1.328 billion or 42.8%

Manager Type

Expected Value-Added

Expected Tracking Error

Active 2.00% 3% - 5%

Structured Active 0.50% 1% - 3%

Passive N/A N/A

29%

28%

43%

Active Structured Active Passive

Exhibit 4

MSCI ACWI ex-U.S. Index

Japan 16%

United Kingdom

14%

France 7%

Canada 7% Switzerland

7%

Germany 6%

China 6%

Australia 5%

Other 32%

Country Weights • MSCI ACWI ex-U.S. captures large and mid cap representation across 22 of 23 Developed Market Countries and 23 Emerging Markets around the world, excluding the U.S.

• Covers approximately 85% of the global equity opportunity set outside of the U.S.

• Average Market Cap is $9.4 billion. • Top 10 Holdings:

1. Nestle 2. Novartis 3. Roche Holding 4. Toyota Motor Corp 5. Samsung Electronics 6. Tencent Holdings 7. HSBC Holdings 8. Taiwan Semiconductor 9. British American Tobacco 10. Total

Exhibit 4

Active Non-U.S. Equity

26%

26%19%

29%

Ativo GlobeFlex Progress SGA

Manager Mandate Assets ($MM)

Ativo ACWI Ex-US $235

GlobeFlex ACWI Ex-US $237

Progress EAFE $168

Strategic Global

Advisors

EAFE

$261

$901

Active Managers: • Make active stock, sector and country selection decisions in an attempt to add

significant value relative to a passive benchmark over time. • Pros: provides opportunity for excess return. • Cons: managers may lag benchmark; higher fees relative to passive

management.

Exhibit 4

Structured Active Non-U.S. Equity

48%

52%

BTC Int'l Alpha Tilts Fidelity


BTC International

Alpha Tilts

EAFE

$421

Fidelity ACWI Ex-US $456

$877

Structured Active Managers: • Make active stock and sector selection decisions in a more risk-controlled

framework in an attempt to add modest value relative to a passive benchmark over time.

• Pros: provides opportunity for excess return in a risk-controlled manner. • Cons: managers may lag benchmark; higher fees relative to passive management.

Exhibit 4

12%

88%

BTC Emerging Markets BTC International

Passive Non-U.S. Equity


BTC Emerging Markets

Emerging Markets

$154

BTC International

ACWI Ex-US $1,175

$1,328

Passive Managers: • Attempt to replicate the risk-return profile of the benchmark, in this case the

MSCI All Country World ex-US Index. • Pros: cost, liquidity, reliability. • Cons: no opportunity for excess return.

Exhibit 4

History of Passive Non-U.S. Equity Investing

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16

% Active

% Structured Active

% Passive

Exhibit 4

Non-U.S. Equity Portfolio Overview

• SURS Diverse Manager Exposure ~ $901 million or 29% of Total Non-U.S. Equity:

Managers: Ativo, GlobeFlex, Progress, Strategic Global Advisors

19%

26%55%

African American Latino Woman

29%

71%

Diverse Other

Exhibit 4

Non-US Equity Risk/Return

• Current managers have favorable risk/return profiles relative to benchmark

Note: composite data used for periods longer than actual SURS history

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

12% 13% 13% 14% 14%

Retu

rn

Risk

Risk/Return 3 Years Ending 6/30/16

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

14.0% 14.5% 15.0% 15.5% 16.0%

Retu

rn

Risk


0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

15.0% 15.5% 16.0% 16.5%

Retu

rn

Risk


Exhibit 4

Total Non-U.S. Equity Performance (as of June 30, 2016)

-9.62%

2.14%1.16%

1.92%

-10.24%

1.16%0.10%

1.87%

-12.00%

-10.00%

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

1 Year 3 Years 5 Years 10 Years

Net of Fees

Total Non-U.S. Equity MSCI ACWI Ex-US

Exhibit 4

Global Equity

Exhibit 4

Global Equity Portfolio Overview • SURS Actual vs. Target Global Equity Allocation:

• Actual Allocation (ex-overlay) = 8.0% • Actual Allocation (with overlay) = 8.0% • Strategic Policy Target = 8.0%

• SURS Global Equity Exposure = $1.3 billion: • Active Global Equity = $1.1 billion or 82.6% • Passive Global Equity* = $235 million on 17.4%

*Parametric Clifton provided temporary passive ACWI exposure to the liquidated portfolio of previously terminated manager, Calamos.

Manager Type

Expected Value-Added

Expected Tracking Error

Active 2.00% 3% - 5%

83%

17%

Active Passive

Exhibit 4

Active Global Equity

33%

34%

32%

Mondrian T. Rowe Price Wellington

Manager Mandate Assets ($MM)*

Mondrian ACWI $371

T. Rowe Price ACWI $381

Wellington ACWI $361

$1,114

Active Managers: • Make active stock, sector and country selection decisions in an attempt to add

significant value relative to a passive benchmark over time. • Pros: provides opportunity for excess return. • Cons: managers may lag benchmark; higher fees relative to passive

management.

*Totals may not add due to rounding

Exhibit 4

100%

Parametric Clifton

Passive Global Equity


Parametric Clifton* ACWI $235

$235

Passive Managers: • Attempt to replicate the risk-return profile of the benchmark, in this case the

MSCI All Country World Index. • Pros: cost, liquidity, reliability. • Cons: no opportunity for excess return.

*Parametric Clifton provided temporary passive ACWI exposure to the liquidated portfolio of previously terminated manager, Calamos.

Exhibit 4

MSCI ACWI Index

United States 53%

Japan 8%

United Kingdom

6%

France 3%

Canada 3%

Other 27%

Country Weights • MSCI ACWI captures large and mid cap representation across 23 Developed Markets and 23 Emerging Markets countries.

• Covers approximately 85% of the global investable opportunity set.

• Average Market Cap is $15.1 billion.

• Top 10 Holdings: 1. Apple 2. Microsoft 3. Exxon Mobil 4. Johnson & Johnson 5. Amazon.com 6. General Electric 7. Facebook A 8. Nestle 9. AT&T 10. JP Morgan Chase

Exhibit 4

Global Equity Risk/Return

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

10% 12% 14% 16%

Retu

rn

Risk


0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

10% 12% 14% 16% 18%

Retu

rn

Risk


6.00%7.00%8.00%9.00%

10.00%11.00%12.00%13.00%

10% 12% 14% 16% 18%

Retu

rn

Risk


Mondrian

T. Rowe Price Global

Wellington

MSCI ACWI Index

MSCI ACWI Value Index

MSCI ACWI Growth Index

• Current managers have favorable risk/return profiles relative to benchmark

Note: composite data used for periods longer than actual SURS history

Exhibit 4

Total Global Equity Performance (as of June 30, 2016)

-2.39%

7.61%6.20%

4.43%

-3.73%

6.03%5.38%

4.17%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

1 Year 3 Years 5 Years 10 Years

Net of Fees

Total Global Equity MSCI ACWI

Exhibit 4

Recommendations

Manager Org Issues? Achieving Performance Target? Recommendation

Ativo No Yes Retain

GlobeFlex No Yes Retain

Strategic Global Advisors No Yes Retain

Active Non-US Equity Managers

Structured Active Non-US Equity Managers


BTC International Alpha Tilts No Yes Retain

Fidelity No Yes Retain

Active Global Equity Managers


Mondrian No Mixed results Retain

T. Rowe Price No Yes Retain

Wellington No Yes Retain

Exhibit 4

Glossary of Terms Exhibit 4

Ativo Capital Management Period Ended 6/2016Ativo International AC ex US

Equity Characteristics

Product Profile

ProductInception Date

01/01/2004

PreferredBenchmark

MSCI ACWI ex-US-GD

PrimaryUniverse

eVestment ACWI ex-US All Cap Core Equity

Primary EquityStyle Emphasis

Core

PrimaryInvestmentApproach

Quantitative

Total AUM $436.40

Performance

Ativo is a quantitative model-driven fundamental analysis firm. Over time, markets are rational. Fundamental economic performance andinvestor discount rates drive stock price. Measuring fundamental economic performance requires a meticulous understanding of reportedaccounting data. Quantifying the underlying factors that determine the discount rate provides a mechanism to assess a company's economicvalue. Thoughtful, fact-based investment decisions, not spin, stories or technical trading must drive every investment decision Ativo makes.

eVestment and its affiliated entities (collectively, "eVestment") collect information directly from investment management firms and other sources believed to be reliable; however, eVestment does notguarantee or warrant the accuracy, timeliness, or completeness of the information provided and is not responsible for any errors or omissions. Performance results may be provided with additionaldisclosures available on eVestment’s systems and other important considerations such as fees that may be applicable. Not for general distribution. * All categories not necessarily included; Totals maynot equal 100%. Copyright 2013-2015 eVestment Alliance, LLC. All Rights Reserved.

1 Year 3 Years 5 Years 7 Years 10 Years

Ativo International AC ex US -5.00 4.51 3.73 10.02 ---

MSCI ACWI ex-US-ND -10.24 1.16 0.10 5.35 1.87


Ativo International AC ex US - Standard Deviation 14.13 11.65 13.98 15.12 ---

MSCI ACWI ex-US-ND - Standard Deviation 16.89 13.25 15.54 16.20 19.15

Ativo International AC ex US - Information Ratio 0.86 0.82 0.91 1.10 ---

Ativo International AC ex US - Tracking Error 6.08 4.06 4.01 4.24 ---

Ativo International AC ex US - Treynor Ratio -6.54 5.29 4.21 11.02 ---

Ativo International AC ex US - Sortino Ratio -0.54 0.63 0.37 1.05 ---

Ativo International AC ex US - Sharpe Ratio -0.36 0.38 0.26 0.66 ---

Ativo International AC ex US - Upside Market Capture 65.60 88.01 93.00 97.44 ---

Ativo International AC ex US - Downside Market Capture 67.51 73.44 80.31 78.27 ---

Risk

Current # of Holdings 101

# of Countries in Portfolio 30

Current Cash Position 0.80%

Current P/E (12 mo Trailing) 12.74

Wgtd. Avg. Mkt. Cap $36,024

Median Mkt. Cap $14,883

Active Share 87.19%

Consumer Disc. 16.18%

Consumer Staples 11.74%

Energy 0.00%

Financials 28.47%

Health Care 4.93%

Industrials 12.36%

Technology 16.08%

Materials 5.11%

Telecom 2.50%

Utilities 0.05%

Other 2.57%

North America 11.60%

United Kingdom 11.69%

Continental Europe 38.20%

Japan 10.58%

Asia ex-Japan 8.38%

Emerging Mkts. 18.45%

Name Weight

Guangdong Invest NPV 1.20%

Compass Group Ord Gbp0.10625 1.30%

Netease Inc Sp ADR 1.30%

Daito Trust Const NPV 1.20%

Abacus Property Gr NPV (Stapled) 1.20%

Ambev SA NPV 1.20%

Taiwan Semicon Man TWD 1.30%

KDDI Corp NPV 1.30%

Inaba Denkisangyo NPV 1.20%

Keyence Corp NPV 1.20%

Sector Allocation

Top Ten Holdings

Regional Allocation

% Holdings In 10 Largest Stocks 12.40%

Performance in this report is gross of fees and based on the manager's composite data reported to eVestment. It may differ from performance in SURS account.

Exhibit 5

eVestment and its affiliated entities (collectively, "eVestment") collect information directly from investment management firms and other sources believed to be reliable;however, eVestment does not guarantee or warrant the accuracy, timeliness, or completeness of the information provided and is not responsible for any errors oromissions. Performance results may be provided with additional disclosures available on eVestment’s systems and other important considerations such as fees that maybe applicable. Not for general distribution. * All categories not necessarily included; Totals may not equal 100%. Copyright 2013-2015 eVestment Alliance, LLC. All RightsReserved.

Trailing Data

Risk Statistics 3 years 5 years 10 years

Product - Std Deviation 11.91 14.28 ---

Benchmark - Std Deviation 13.25 15.54 19.15

Product - Tracking Error 3.86 4.05 ---

Product - Beta 0.86 0.89 ---

Product - R-Squared 0.92 0.93 ---

Product - Up Mkt Capture 87.10 92.67 ---

Product - Down Mkt Capture 77.31 82.41 ---

Risk Adjusted Return Statistics 3 years 5 years 10 years

Product - Sharpe 0.30 0.22 ---

Benchmark - Sharpe 0.08 0.00 0.05

Product - Info Ratio 0.64 0.76 ---

Product - Annualized Alpha 2.54 3.03 ---

Quarterly ManagerDashboard

Ativo - International ACex US6/2016

ReturnsFirm Name Product Name Quarter 1 Year 3 Years 5 Years 7 Years 10 Years Inception

Ativo Intl -2.30 -5.55 3.62 3.17 8.75 --- 2.67

MSCI Index MSCI ACWI ex-US-ND -0.64 -10.24 1.16 0.10 5.35 1.87 -0.07

Excess ReturnsFirm Name Product Name Quarter 1 Year 3 Years 5 Years 7 years 10 Years Inception

Ativo Intl -1.66 4.70 2.45 3.07 3.40 --- 2.74

Rolling Data

Rolling 3 Year Tracking ErrorProduct Name Intl

TE 3 Years as of 6/2016 3.86

TE 3 Years as of 12/2015 3.45

TE 3 Years as of 6/2015 2.76

TE 3 Years as of 12/2014 3.22

TE 3 Years as of 6/2014 3.92

TE 3 Years as of 12/2013 4.28

TE 3 Years as of 6/2013 4.62

TE 3 Years as of 12/2012 4.78

TE 3 Years as of 6/2012 5.04

TE 3 Years as of 12/2011 5.70

TE 3 Years as of 6/2011 6.00

Rolling 3 Year Information RatioProduct Name Intl

IR 3 Years as of 6/2016 0.64

IR 3 Years as of 12/2015 1.35

IR 3 Years as of 6/2015 1.13

IR 3 Years as of 12/2014 1.08

IR 3 Years as of 6/2014 0.52

IR 3 Years as of 12/2013 0.41

IR 3 Years as of 6/2013 0.33

IR 3 Years as of 12/2012 0.43

IR 3 Years as of 6/2012 0.63

IR 3 Years as of 12/2011 0.64

IR 3 Years as of 6/2011 0.36

Rolling 3 Year ReturnsProduct Name Intl MSCI ACWI ex-US-ND

Returns 3 Years as of 6/2016 3.62 1.16










Returns 3 Years as of 6/2011 1.84 -0.35

Performance net-of-fees. Manager data on this page is based on actual performance in SURS account.

Exhibit 5

eVestment and its affiliated entities (collectively, "eVestment") collect information directly from investment management firms and other sources believed to bereliable; however, eVestment does not guarantee or warrant the accuracy, timeliness, or completeness of the information provided and is not responsible for any errorsor omissions. Performance results may be provided with additional disclosures available on eVestment’s systems and other important considerations such as fees thatmay be applicable. Not for general distribution. * All categories not necessarily included; Totals may not equal 100%. Copyright 2013-2015 eVestment Alliance, LLC. AllRights Reserved.

Universe Comparison


Ativo - International ACex US6/2016

ReturnsProduct Name Quarter Rank 1 Year Rank 3 Years Rank 5 Years Rank 7 Years Rank 10 Years Rank

Intl -2.24 85 -5.26 23 3.96 40 3.54 29 9.23 23 --- ---

MSCI ACWI ex-US-ND -0.64 39 -10.24 69 1.16 83 0.10 95 5.35 100 1.87 94

Performance gross-of-fees. Manager data on this page is based on actual performance in SURS account.

Standard DeviationProduct Name 3 Years Rank 5 Years Rank 7 Years Rank 10 Years Rank

Intl 11.90 91 14.25 91 15.16 92 --- ---

MSCI ACWI ex-US-ND 13.25 36 15.54 49 16.20 56 19.15 46

Exhibit 5

BlackRock Period Ended 6/2016International Alpha Tilts


Product Profile

Product InceptionDate

01/31/1996

PreferredBenchmark

MSCI EAFE-ND

Primary Universe eVestment EAFELarge Cap Core Equity


Core


Quantitative

Total AUM $2,251.00

Performance

BlackRock, through predecessor firm Barclays Global Investors, pioneered the investment philosophy, Total Performance Management, basedon the deliberate and structured balancing of return, risk, and cost through a disciplined investment process. This philosophy is rooted in thebelief that successful risks must be well understood and adequately compensated, and transaction costs must be explicitly considered in allinvestment decisions. BlackRock’s investment model systematically tracks and ranks the characteristics of thousands of stocks daily in order toconstruct a portfolio that has the best trade-off between returns, risk and costs. The investment model groups the universe of securities intothree broad areas: Company Fundamentals, Sentiment, and Macro Themes.



International Alpha Tilts -9.90 4.64 3.66 7.95 2.68

MSCI EAFE-ND -10.16 2.06 1.68 5.97 1.58


International Alpha Tilts - Standard Deviation 16.83 13.26 15.36 16.33 18.68

MSCI EAFE-ND - Standard Deviation 16.86 13.29 15.37 16.27 18.60

International Alpha Tilts - Information Ratio 0.21 1.52 1.13 1.15 0.63

International Alpha Tilts - Tracking Error 1.29 1.70 1.76 1.71 1.74

International Alpha Tilts - Treynor Ratio -10.08 4.63 3.63 7.88 1.71

International Alpha Tilts - Sortino Ratio -0.82 0.57 0.34 0.76 0.13

International Alpha Tilts - Sharpe Ratio -0.60 0.35 0.23 0.48 0.09

International Alpha Tilts - Upside Market Capture 99.14 105.64 103.90 104.05 102.96

International Alpha Tilts - Downside Market Capture 98.86 91.92 94.86 95.56 98.43

Risk


# of Countries in Portfolio ---

Current Cash Position ---




Active Share 50.97%



Energy 5.25%

Financials 20.55%

Health Care 12.40%

Industrials 16.05%

Technology 4.16%

Materials 6.26%

Telecom 4.61%

Utilities 4.68%

Other 0.00%

North America ---

United Kingdom ---

Continental Europe ---

Japan ---

Asia ex-Japan ---

Emerging Mkts. ---

Name Weight

--- ---

Sector Allocation

Top Ten Holdings

Regional Allocation

% Holdings In 10 Largest Stocks ---


Exhibit 5


Trailing Data


Product - Std Deviation 13.27 15.37 18.69


Product - Tracking Error 1.94 1.92 1.81

Product - Beta 0.99 0.99 1.00

Product - R-Squared 0.98 0.98 0.99

Product - Up Mkt Capture 104.28 102.78 102.24

Product - Down Mkt Capture 93.70 96.05 99.04


Product - Sharpe 0.30 0.20 0.07


Product - Info Ratio 1.03 0.78 0.42

Product - Annualized Alpha 1.99 1.49 0.77


Blackrock - InternationalAlpha Tilts

6/2016


BTC Intl -2.13 -10.72 4.06 3.16 7.52 2.34 6.21

MSCI Index MSCI EAFE-ND -1.46 -10.16 2.06 1.68 5.97 1.58 5.36


BTC Intl -0.66 -0.55 1.99 1.49 1.55 0.76 0.85

Rolling Data


TE 3 Years as of 6/2016 1.94

TE 3 Years as of 12/2015 1.88

TE 3 Years as of 6/2015 1.94

TE 3 Years as of 12/2014 1.83

TE 3 Years as of 6/2014 1.99

TE 3 Years as of 12/2013 1.81

TE 3 Years as of 6/2013 1.91

TE 3 Years as of 12/2012 1.70

TE 3 Years as of 6/2012 1.65

TE 3 Years as of 12/2011 1.54

TE 3 Years as of 6/2011 1.60


IR 3 Years as of 6/2016 1.03

IR 3 Years as of 12/2015 1.96

IR 3 Years as of 6/2015 1.85

IR 3 Years as of 12/2014 1.56

IR 3 Years as of 6/2014 0.85

IR 3 Years as of 12/2013 0.89

IR 3 Years as of 6/2013 0.77

IR 3 Years as of 12/2012 0.46

IR 3 Years as of 6/2012 0.30

IR 3 Years as of 12/2011 0.17

IR 3 Years as of 6/2011 0.17

Rolling 3 Year ReturnsProduct Name Intl MSCI EAFE-ND











Returns 3 Years as of 6/2011 -1.50 -1.77


Exhibit 5


Universe Comparison


Blackrock - InternationalAlpha Tilts

6/2016


Intl -2.09 75 -9.90 59 4.64 21 3.67 29 7.95 39 2.67 56

MSCI EAFE-ND -1.46 53 -10.16 63 2.06 75 1.68 81 5.97 86 1.58 89



Intl 13.26 29 15.36 34 16.33 32 18.68 42

MSCI EAFE-ND 13.29 27 15.37 33 16.27 37 18.60 47

Exhibit 5

Fidelity Institutional Asset Management Period Ended 6/2016Select International Plus


Product Profile


10/31/2008

PreferredBenchmark

MSCI ACWI ex-US-ND

PrimaryUniverse

eVestment ACWI ex-USLarge Cap Core Equity


Core


Fundamental

Total AUM $2,436.01

Performance

Select International Plus is a fundamental, risk-controlled core strategy that capitalizes on our fundamental research by combining qualitativestock selection with quantitative risk control. The strategy seeks to exploit market inefficiencies through bottom-up stock selection based onfundamental company research, implemented within a framework of quantitative risk control. By combining active, bottom-up stock selectionwith quantitative risk controls, the portfolio manager seeks to achieve a highly efficient portfolio that delivers consistent excess return withlow tracking error.



Select International Plus -11.10 2.35 1.23 6.15 ---

MSCI ACWI ex-US-ND -10.24 1.16 0.10 5.35 1.87


Select International Plus - Standard Deviation 16.09 12.94 15.42 16.07 ---


Select International Plus - Information Ratio -0.45 0.67 0.60 0.44 ---

Select International Plus - Tracking Error 1.89 1.76 1.87 1.82 ---

Select International Plus - Treynor Ratio -11.86 2.36 1.18 6.15 ---

Select International Plus - Sortino Ratio -0.95 0.28 0.11 0.58 ---

Select International Plus - Sharpe Ratio -0.70 0.18 0.08 0.38 ---

Select International Plus - Upside Market Capture 87.56 100.36 100.87 101.24 ---

Select International Plus - Downside Market Capture 98.05 94.44 96.12 97.77 ---

Risk







Active Share ---



Energy 7.01%

Financials 24.08%

Health Care 10.57%

Industrials 10.11%

Technology 9.14%

Materials 7.27%

Telecom 5.96%

Utilities 2.82%

Other 0.00%

North America 6.77%



Japan 16.40%

Asia ex-Japan 8.61%


Name Weight

--- ---

Sector Allocation

Top Ten Holdings

Regional Allocation



Exhibit 5


Trailing Data


Product - Std Deviation 12.74 --- ---


Product - Tracking Error 1.75 --- ---

Product - Beta 0.95 --- ---

Product - R-Squared 0.98 --- ---

Product - Up Mkt Capture 98.43 --- ---

Product - Down Mkt Capture 93.74 --- ---


Product - Sharpe 0.17 --- ---


Product - Info Ratio 0.59 --- ---

Product - Annualized Alpha 1.05 --- ---


Fidelity - SelectInternational Plus

6/2016


Fidelity Intl -0.41 -10.97 2.19 --- --- --- 5.05

MSCI Index MSCI ACWI ex-US-ND -0.64 -10.24 1.16 0.10 5.35 1.87 3.97


Fidelity Intl 0.23 -0.72 1.03 --- --- --- 1.08

Rolling Data


TE 3 Years as of 6/2016 1.75

TE 3 Years as of 12/2015 1.51

TE 3 Years as of 6/2015 1.42

TE 3 Years as of 12/2014 1.32

TE 3 Years as of 6/2014 ---

TE 3 Years as of 12/2013 ---


TE 3 Years as of 12/2012 ---


TE 3 Years as of 12/2011 ---



IR 3 Years as of 6/2016 0.59

IR 3 Years as of 12/2015 1.20

IR 3 Years as of 6/2015 1.03

IR 3 Years as of 12/2014 1.14

IR 3 Years as of 6/2014 ---

IR 3 Years as of 12/2013 ---


IR 3 Years as of 12/2012 ---


IR 3 Years as of 12/2011 ---







Returns 3 Years as of 6/2014 --- 5.73






Returns 3 Years as of 6/2011 --- -0.35


Exhibit 5


Universe Comparison


Fidelity - SelectInternational Plus

6/2016


Intl -0.32 27 -10.56 64 2.62 54 --- --- --- --- --- ---

MSCI ACWI ex-US-ND -0.64 37 -10.24 60 1.16 87 0.10 98 5.35 98 1.87 100



Intl 12.73 59 --- --- --- --- --- ---

MSCI ACWI ex-US-ND 13.25 29 15.54 42 16.20 42 19.15 31

Exhibit 5

GlobeFlex Capital, L.P. Period Ended 6/2016GlobeFlex ACWI ex-U.S.


Product Profile


03/01/2010

PreferredBenchmark

MSCI ACWI ex-US-GD

PrimaryUniverse

eVestment ACWI ex-US All Cap Core Equity


Core


Fundamental

Total AUM $726.00

Performance

GlobeFlex identifies companies that have accelerating short-term earnings growth, which is sustainable over the long-term, ahead of otherinvestors. This allows them to hold positions in these companies while they are underpriced and before better-than-expected earnings areannounced and/or before other investors discover the improving company fundamentals. On a historic basis, the majority of their portfolioholdings report operating results that outperform investor expectations --after they purchase them. This is a consistent byproduct of theirinvestment process. As a systematic, bottom-up investor, they quantitatively rank all stocks in their universe, then verify each buy and selldecision through a qualitative review performed by the portfolio management team. This ensures that they consistently identify successfulcompanies across style and industry based on future growth potential as well as current valuation. Stock selection drives the majority of theiractive return.



GlobeFlex ACWI ex-U.S. -6.03 4.30 3.41 --- ---

MSCI ACWI ex-US-ND -10.24 1.16 0.10 5.35 1.87


GlobeFlex ACWI ex-U.S. - Standard Deviation 16.72 12.93 15.15 --- ---


GlobeFlex ACWI ex-U.S. - Information Ratio 1.24 1.26 1.25 --- ---

GlobeFlex ACWI ex-U.S. - Tracking Error 3.41 2.48 2.65 --- ---

GlobeFlex ACWI ex-U.S. - Treynor Ratio -6.36 4.42 3.48 --- ---

GlobeFlex ACWI ex-U.S. - Sortino Ratio -0.58 0.56 0.32 --- ---

GlobeFlex ACWI ex-U.S. - Sharpe Ratio -0.37 0.33 0.22 --- ---

GlobeFlex ACWI ex-U.S. - Upside Market Capture 98.72 102.74 100.78 --- ---

GlobeFlex ACWI ex-U.S. - Downside Market Capture 85.78 86.59 87.33 --- ---

Risk







Active Share 89.10%



Energy 4.50%

Financials 20.10%

Health Care 10.80%

Industrials 13.90%

Technology 8.20%

Materials 7.30%

Telecom 8.10%

Utilities 4.50%

Other 0.00%

North America 3.10%



Japan 20.20%

Asia ex-Japan 12.20%


Name Weight

MERCK KGAA 1.87%

Ubisoft Entertainment 3.15%

Nippon Tel & Tel Corp 3.12%

Imperial Brands Plc 2.67%

Tencent Holdings Limited 2.13%

US Dollars 1.73%

Daito Trust Construction Co 3.15%

Fresenius Se&co Kgaa 2.76%

Harvey Norman Hldgs 2.55%

BT GROUP 2.04%

Sector Allocation

Top Ten Holdings

Regional Allocation



Exhibit 5


Trailing Data












Product - Info Ratio 0.89 --- ---

Product - Annualized Alpha 2.62 --- ---


GlobeFlex - GF ACWI exUS

6/2016


GlobeFlex Intl -3.58 -8.28 3.76 --- --- --- 6.99

MSCI Index MSCI ACWI ex-US-ND -0.64 -10.24 1.16 0.10 5.35 1.87 3.97


GlobeFlex Intl -2.94 1.97 2.60 --- --- --- 3.02

Rolling Data


TE 3 Years as of 6/2016 2.93

TE 3 Years as of 12/2015 2.33

TE 3 Years as of 6/2015 2.22

TE 3 Years as of 12/2014 2.40


TE 3 Years as of 12/2013 ---


TE 3 Years as of 12/2012 ---


TE 3 Years as of 12/2011 ---



IR 3 Years as of 6/2016 0.89

IR 3 Years as of 12/2015 1.94

IR 3 Years as of 6/2015 1.48

IR 3 Years as of 12/2014 1.73


IR 3 Years as of 12/2013 ---


IR 3 Years as of 12/2012 ---


IR 3 Years as of 12/2011 ---















Exhibit 5


Universe Comparison


GlobeFlex - GF ACWI exUS

6/2016


Intl -3.35 94 -7.43 43 4.72 30 --- --- --- --- --- ---

MSCI ACWI ex-US-ND -0.64 39 -10.24 69 1.16 83 0.10 95 5.35 100 1.87 94



Intl 13.01 47 --- --- --- --- --- ---

MSCI ACWI ex-US-ND 13.25 36 15.54 49 16.20 56 19.15 46

Exhibit 5

Strategic Global Advisors, LLC Period Ended 6/2016SGA International Large Cap Equity


Product Profile


11/30/2005

PreferredBenchmark

MSCI EAFE-ND

Primary Universe eVestment EAFELarge Cap Core Equity


Core


Combined

Total AUM $1,505.88

Performance

The Strategic Global Advisors (SGA) International Large Cap strategy seeks to provide long-term total returns by investing primarily incompanies headquartered outside of the US. The securities held are generally large cap equities, on a market relative basis, that may tradeon foreign exchanges as well as on US exchanges. The strategy is diversified across a broad number of sectors and countries. SGA’s approachto portfolio management integrates quantitative and fundamental methods to achieve risk-adjusted excess returns relative to the MSCI EAFENet Index.



SGA International Large Cap Equity -8.43 5.78 5.56 9.99 4.03

MSCI EAFE-ND -10.16 2.06 1.68 5.97 1.58


SGA International Large Cap Equity - Standard Deviation 16.27 12.83 14.50 15.18 18.30

MSCI EAFE-ND - Standard Deviation 16.86 13.29 15.37 16.27 18.60

SGA International Large Cap Equity - Information Ratio 0.67 1.43 1.50 1.54 0.81

SGA International Large Cap Equity - Tracking Error 2.60 2.60 2.60 2.61 3.05

SGA International Large Cap Equity - Treynor Ratio -8.99 6.04 5.91 10.74 3.16

SGA International Large Cap Equity - Sortino Ratio -0.73 0.73 0.56 1.04 0.23

SGA International Large Cap Equity - Sharpe Ratio -0.53 0.45 0.38 0.65 0.17

SGA International Large Cap Equity - Upside Market Capture 94.61 105.53 100.70 99.34 100.71

SGA International Large Cap Equity - Downside Market Capture 92.58 86.28 84.73 83.23 92.56

Risk







Active Share 75.16%



Energy 5.77%

Financials 22.80%

Health Care 13.45%

Industrials 13.04%

Technology 7.32%

Materials 5.72%

Telecom 4.79%

Utilities 2.61%

Other 0.00%

North America 1.15%



Japan 24.17%

Asia ex-Japan 8.90%


Name Weight

Klepierre SA 1.59%

GlaxoSmithKline plc 2.30%

Unilever PLC 1.91%

Central Japan Railway Company 1.66%

Daito Trust Construction Co., Ltd. 1.65%

KDDI Corporation 1.58%

Actelion Ltd. 2.22%

Mitsubishi Electric Corp. 1.68%

Shionogi & Co., Ltd. 1.65%

Kao Corp. 1.61%

Sector Allocation

Top Ten Holdings

Regional Allocation



Exhibit 5


Trailing Data





Product - Beta 0.93 0.93 ---










Strategic Global Advisors- International Large Cap

6/2016


S G A Intl -2.05 -7.43 6.57 6.08 10.52 --- 5.17

MSCI Index MSCI EAFE-ND -1.46 -10.16 2.06 1.68 5.97 1.58 1.33


S G A Intl -0.59 2.74 4.51 4.40 4.56 --- 3.84

Rolling Data


TE 3 Years as of 6/2016 2.71

TE 3 Years as of 12/2015 2.46

TE 3 Years as of 6/2015 2.52

TE 3 Years as of 12/2014 2.57

TE 3 Years as of 6/2014 2.67

TE 3 Years as of 12/2013 2.37

TE 3 Years as of 6/2013 2.44

TE 3 Years as of 12/2012 2.68

TE 3 Years as of 6/2012 2.76

TE 3 Years as of 12/2011 2.77



IR 3 Years as of 6/2016 1.66

IR 3 Years as of 12/2015 2.06

IR 3 Years as of 6/2015 1.94

IR 3 Years as of 12/2014 2.20

IR 3 Years as of 6/2014 1.74

IR 3 Years as of 12/2013 1.67

IR 3 Years as of 6/2013 1.85

IR 3 Years as of 12/2012 1.91

IR 3 Years as of 6/2012 1.79

IR 3 Years as of 12/2011 2.06


Rolling 3 Year ReturnsProduct Name Intl MSCI EAFE-ND













Exhibit 5


Universe Comparison


Strategic Global Advisors- International Large Cap

6/2016


Intl -1.97 71 -7.10 24 6.99 7 6.53 4 11.07 2 --- ---

MSCI EAFE-ND -1.46 53 -10.16 63 2.06 75 1.68 81 5.97 86 1.58 89



Intl 12.61 65 14.50 78 15.26 83 --- ---

MSCI EAFE-ND 13.29 27 15.37 33 16.27 37 18.60 47

Exhibit 5

Mondrian Investment Partners Limited Period Ended 6/2016Global All Countries World Equity


Product Profile


01/01/2009

PreferredBenchmark

MSCI ACWI-ND

PrimaryUniverse

eVestment GlobalLarge Cap ValueEquity


Value


Fundamental

Total AUM $1,303.45

Performance

Mondrian's investment philosophy is based on the belief that investments need to be evaluated in terms of their fundamental long-termvalue. Mondrian evaluates developed markets and emerging markets on a consistent currency adjusted real return basis. The use of adiscounted dividend approach allows Mondrian to compare and select what is believed to be the most attractive investment opportunitiesacross developed and emerging markets at the market and security level. This distinguishes Mondrian from many of its competitors who usedifferent investment criteria in each equity market and sector.



Global All Countries World Equity -0.31 5.36 5.99 9.59 ---

MSCI ACWI-ND -3.73 6.03 5.38 9.52 4.26


Global All Countries World Equity - Standard Deviation 13.80 11.17 12.32 13.37 ---

MSCI ACWI-ND - Standard Deviation 15.50 11.82 13.54 14.38 16.99

Global All Countries World Equity - Information Ratio 0.97 -0.21 0.18 0.02 ---

Global All Countries World Equity - Tracking Error 3.52 3.16 3.45 3.44 ---

Global All Countries World Equity - Treynor Ratio -0.52 5.82 6.73 10.52 ---

Global All Countries World Equity - Sortino Ratio -0.05 0.78 0.76 1.19 ---

Global All Countries World Equity - Sharpe Ratio -0.03 0.47 0.48 0.71 ---

Global All Countries World Equity - Upside Market Capture 96.89 93.44 94.08 93.33 ---

Global All Countries World Equity - Downside Market Capture 83.90 97.15 90.99 92.10 ---

Risk







Active Share 89.24%



Energy 4.55%

Financials 16.00%

Health Care 17.02%

Industrials 13.48%

Technology 13.20%

Materials 4.40%

Telecom 8.40%

Utilities 4.91%

Other 0.00%




Japan 5.84%

Asia ex-Japan 8.47%


Name Weight

--- ---

Sector Allocation

Top Ten Holdings

Regional Allocation



Exhibit 6


Trailing Data












Product - Info Ratio -0.31 --- ---

Product - Annualized Alpha -0.43 --- ---


Mondrian - Global AllCountries World

6/2016


Mondrian Global 1.70 -1.15 5.03 --- --- --- 7.75

MSCI Index MSCI ACWI-ND 0.99 -3.73 6.03 5.38 9.52 4.26 8.69


Mondrian Global 0.71 2.58 -1.00 --- --- --- -0.94

Rolling Data

Rolling 3 Year Tracking ErrorProduct Name Global

TE 3 Years as of 6/2016 3.26

TE 3 Years as of 12/2015 2.93

TE 3 Years as of 6/2015 2.91

TE 3 Years as of 12/2014 3.12


TE 3 Years as of 12/2013 ---


TE 3 Years as of 12/2012 ---


TE 3 Years as of 12/2011 ---


Rolling 3 Year Information RatioProduct Name Global

IR 3 Years as of 6/2016 -0.31

IR 3 Years as of 12/2015 -0.53

IR 3 Years as of 6/2015 -0.73

IR 3 Years as of 12/2014 -0.95


IR 3 Years as of 12/2013 ---


IR 3 Years as of 12/2012 ---


IR 3 Years as of 12/2011 ---


Rolling 3 Year ReturnsProduct Name Global MSCI ACWI-ND













Exhibit 6


Universe Comparison


Mondrian - Global AllCountries World

6/2016


Global 1.76 36 -0.95 33 5.25 58 --- --- --- --- --- ---

MSCI ACWI-ND 0.99 47 -3.73 53 6.03 50 5.38 64 9.52 62 4.26 61



Global 11.19 66 --- --- --- --- --- ---

MSCI ACWI-ND 11.82 54 13.54 51 14.38 52 16.99 44

Exhibit 6

T. Rowe Price Group, Inc. Period Ended 6/2016Global Focused Growth Equity Strategy


Product Profile


01/31/1996

PreferredBenchmark

MSCI ACWI-GD

Primary Universe eVestment Global AllCap Growth Equity


Growth


Fundamental

Total AUM $4,336.43

Performance

The strategy’s performance objective is to outperform its stated benchmark and a peer group of similarly managed portfolios over a fullmarket cycle. The targeted alpha is 400 basis points (gross of fees) or more with an expected tracking error of 400 to 800 basis points. TheGlobal Focused Growth Equity Strategy applies a global and integrated approach to portfolio management. The strategy is structured with asingle decision maker (Portfolio Manager David Eiswert) who amalgamates his own experience and insights with the best ideas of the firm’sglobal research platform to construct a focused portfolio of investment opportunities with strong upside return potential. Ultimate accountabilitylies with one person, allowing for investment decisions to be based on consistent stock comparisons, which they believe provides an executionadvantage relative to committee-based structures. Their worldwide investment team includes over 100 equity analysts and more than 40senior equity investment managers who are integral to the idea-generation process. This team of investment professionals producesrecommendations that form the primary source of investable ideas for the strategy. From this pool of information, the portfolio managerapplies a framework that focuses on industry, company, management, and valuation attributes to select the most alpha-rich opportunities forthe portfolio. Their expertise in managing global sector and regional portfolios strengthens their ability to identify the most attractiveinvestment opportunities throughout the world. The unique and complementary perspectives of their global sector and regional specialistinvestment professionals are critical to the stock selection process. An extremely high proportion of holdings within the Global Focused GrowthEquity Strategy is owned within another T. Rowe Price strategy, demonstrating the cross-fertilization of ideas between managers.



Global Focused Growth Equity Strategy -0.42 12.28 9.23 11.99 5.94

MSCI ACWI-ND -3.73 6.03 5.38 9.52 4.26


Global Focused Growth Equity Strategy - Standard Deviation 18.68 13.84 16.41 16.55 20.49


Global Focused Growth Equity Strategy - Information Ratio 0.56 1.28 0.73 0.51 0.27

Global Focused Growth Equity Strategy - Tracking Error 5.92 4.88 5.27 4.83 6.28

Global Focused Growth Equity Strategy - Treynor Ratio -0.49 11.09 7.92 10.76 4.30

Global Focused Growth Equity Strategy - Sortino Ratio -0.04 1.54 0.88 1.19 0.33

Global Focused Growth Equity Strategy - Sharpe Ratio -0.03 0.88 0.56 0.72 0.24

Global Focused Growth Equity Strategy - Upside Market Capture 143.60 127.51 126.28 114.54 120.38

Global Focused Growth Equity Strategy - Downside Market Capture 109.13 90.14 103.96 103.10 108.74

Risk







Active Share 89.00%



Energy 3.05%

Financials 14.51%

Health Care 14.01%

Industrials 7.98%

Technology 26.17%

Materials 2.71%

Telecom 0.00%

Utilities 0.00%

Other 0.00%




Japan 5.64%

Asia ex-Japan 3.95%


Name Weight

Alphabet Class A 2.73%

NXP Semiconductors 1.97%

ASML Holding 1.76%

Amazon.com 4.41%

Juniper Networks 3.12%

Priceline 2.71%

Aetna 1.81%

Tencent Holdings 1.75%

REI - SECURITY LENDING COLLATERAL 3.24%

Coach 2.86%

Sector Allocation

Top Ten Holdings

Regional Allocation



Exhibit 6


Trailing Data





Product - Beta 1.10 1.15 ---










T. Rowe Price - GlobalFocused Growth

6/2016


TRP Global 1.85 -0.52 12.23 9.28 12.06 --- 11.84



TRP Global 0.86 3.21 6.20 3.90 2.54 --- 2.40

Rolling Data


TE 3 Years as of 6/2016 4.99

TE 3 Years as of 12/2015 4.14

TE 3 Years as of 6/2015 4.29

TE 3 Years as of 12/2014 4.77

TE 3 Years as of 6/2014 5.96

TE 3 Years as of 12/2013 5.47

TE 3 Years as of 6/2013 5.12

TE 3 Years as of 12/2012 5.18

TE 3 Years as of 6/2012 5.07

TE 3 Years as of 12/2011 5.29



IR 3 Years as of 6/2016 1.24

IR 3 Years as of 12/2015 1.93

IR 3 Years as of 6/2015 1.39

IR 3 Years as of 12/2014 0.97

IR 3 Years as of 6/2014 0.49

IR 3 Years as of 12/2013 0.41

IR 3 Years as of 6/2013 0.00

IR 3 Years as of 12/2012 -0.21

IR 3 Years as of 6/2012 -0.19

IR 3 Years as of 12/2011 0.16















Exhibit 6


Universe Comparison


T. Rowe Price - GlobalFocused Growth

6/2016


Global 1.96 23 -0.07 24 12.75 6 9.79 15 12.57 34 --- ---

MSCI ACWI-ND 0.99 46 -3.73 52 6.03 78 5.38 70 9.52 74 4.26 83



Global 13.89 25 16.36 23 16.55 25 --- ---

MSCI ACWI-ND 11.82 84 13.54 77 14.38 76 16.99 63

Exhibit 6

Wellington Management Company LLP Period Ended 6/2016Global Research Equity


Product Profile


12/31/1995

PreferredBenchmark

MSCI World-GD

Primary Universe eVestment Global AllCap Core Equity


Core


Fundamental

Total AUM $11,820.00

Performance

The Global Research Equity approach seeks to achieve long-term total return in excess of the MSCI World Index by investing in equitysecurities of companies worldwide, emphasizing those with above-average potential for capital appreciation. Our approach employsfundamental, bottom-up security analysis. The portfolio consists of multiple subportfolios, each of which is actively managed by one or moreof our global industry analysts. The allocation of assets to the subportfolios corresponds to the relative weights of the analysts’ coverageuniverses within the index. Each analyst has developed an investment process and valuation methodology that has proven most relevant tohis or her areas of coverage. Stock selection and timing of investments is at the discretion of the global industry analysts. Country weightsare a consequence of the security-selection process.



Global Research Equity -3.00 9.56 8.53 12.60 5.87

MSCI ACWI-ND -3.73 6.03 5.38 9.52 4.26


Global Research Equity - Standard Deviation 16.65 12.64 14.10 14.85 18.10


Global Research Equity - Information Ratio 0.23 1.37 1.26 1.31 0.61

Global Research Equity - Tracking Error 3.18 2.57 2.49 2.35 2.64

Global Research Equity - Treynor Ratio -2.97 9.06 8.26 12.27 4.66

Global Research Equity - Sortino Ratio -0.28 1.32 0.96 1.44 0.38

Global Research Equity - Sharpe Ratio -0.19 0.75 0.60 0.84 0.27

Global Research Equity - Upside Market Capture 125.86 118.46 113.55 111.25 110.26

Global Research Equity - Downside Market Capture 110.60 97.44 96.22 96.58 101.71

Risk







Active Share 74.00%



Energy 7.00%

Financials 19.00%

Health Care 14.00%

Industrials 9.00%

Technology 14.00%

Materials 6.00%

Telecom 2.00%

Utilities 5.00%

Other 1.00%




Japan 6.00%

Asia ex-Japan 1.00%


Name Weight

Newfield Exploration 1.17%

Amazon.com Inc 2.36%

Alphabet Inc - Cl A 1.42%

WTC-CTF S-T Govt 0.4113% 1.22%

Comcast Corp Class A 1.17%

Bank of America Corp 1.15%

Bristol Myers Squibb 1.88%

Pioneer Nat Resource 1.38%

Medtronic PLC 1.19%

UnitedHealth Group 1.17%

Sector Allocation

Top Ten Holdings

Regional Allocation



Exhibit 6


Trailing Data





Product - Beta 1.06 1.06 ---










Wellington - GlobalResearch Equity

6/2016


Wellington Global 1.52 -4.48 8.42 7.22 11.50 --- 11.33



Wellington Global 0.53 -0.76 2.39 1.85 1.98 --- 1.89

Rolling Data


TE 3 Years as of 6/2016 2.39

TE 3 Years as of 12/2015 1.89

TE 3 Years as of 6/2015 2.05

TE 3 Years as of 12/2014 2.33

TE 3 Years as of 6/2014 2.42

TE 3 Years as of 12/2013 2.26

TE 3 Years as of 6/2013 2.25

TE 3 Years as of 12/2012 2.15

TE 3 Years as of 6/2012 2.14

TE 3 Years as of 12/2011 2.22



IR 3 Years as of 6/2016 1.00

IR 3 Years as of 12/2015 2.27

IR 3 Years as of 6/2015 1.72

IR 3 Years as of 12/2014 1.44

IR 3 Years as of 6/2014 0.85

IR 3 Years as of 12/2013 0.84

IR 3 Years as of 6/2013 0.73

IR 3 Years as of 12/2012 0.18

IR 3 Years as of 6/2012 0.71

IR 3 Years as of 12/2011 0.60















Exhibit 6


Universe Comparison


Wellington - GlobalResearch Equity

6/2016


Global 1.69 28 -3.69 56 9.16 23 7.87 28 12.07 26 --- ---

MSCI ACWI-ND 0.99 41 -3.73 56 6.03 71 5.38 74 9.52 76 4.26 79



Global 12.77 24 14.49 34 15.10 44 --- ---

MSCI ACWI-ND 11.82 52 13.54 62 14.38 68 16.99 65

Exhibit 6

Non-US and Global Equity Portfolio Structure

October 20, 2016

State Universities Retirement System of Illinois

Doug Moseley, PartnerKristin Finney-Cooke, CAIA, Senior ConsultantKevin Leonard, PartnerDeAnna I. Jones, Senior Analyst

Exhibit 7

Executive Summary

Exhibit 7

• US equity markets have significantly out-performed non-US markets over most trailing periods

– Trailing 5-year S&P 500 return of 12.1% crushing MSCI ACWI ex-US return of 0.1% (as of 6/30/16)

– Stronger US economic growth and US dollar have made US markets more attractive to investors

– EAFE equity markets may offer the potential for outsized returns going forward

• SURS non-US equity portfolio is diversified by strategy type, size and style exposure

– Policy allocations to International and Global– Emerging markets exposure obtained primarily through ACWI mandates and small

dedicated emerging markets passive allocation

• SURS active managers in the International and Global categories have performed well over time

– Lower tracking-error managers (BlackRock and Fidelity) have delivered consistent alpha of 0.75-1.0%

– Higher tracking-error managers have delivered 2.0-3.0% annualized alpha– Managers have provided more exposure to small- & mid-cap portions of the market

Executive Summary

3

Exhibit 7

Executive Summary (continued)

4

• The goal of this study is to review SURS’ non-US and global equity portfolio structure and managers

– Evaluate any unintended biases or tilts within the portfolio that can impact the portfolio’s risk/return objectives• Regional exposures or concentrations• Size bets (capitalization – small, mid, large)• Style bets (value vs. growth)

– Assess performance relative to benchmarks and peer-groups• Review the portfolio’s risk/return profile vs expectations

• Key questions to examine include:– Does SURS have an appropriately sized allocation to emerging markets?– Does SURS have any gaps in its market capitalization (size) exposures?– Should SURS modify any existing Policy or manager benchmarks?– Does SURS have the appropriate mix of active vs. passive management?– Should SURS terminate any existing managers?

Exhibit 7

Executive Summary – Manager Performance

5

• International Equity Portfolio and Managers– Existing multi-manager portfolio has out-performed Policy benchmark by approximately

100 bps over trailing 3- and 5-year periods• Includes impact of passive allocations (ACWI ex-US & Emerging Markets)• Includes impact of terminated manager (Herndon)

– Structured active managers BlackRock (Alpha Tilts) and Fidelity have delivered 100-150 bps of excess-return over trailing 3- and 5-year periods with low level of tracking-error

– Higher-tracking-error managers (Ativo, GlobeFlex and SGA) have added 250-350 bps of excess return over most trailing time periods• Managers delivering higher Sharpe & Information ratio portfolios

– Multi-manager mandate run by Progress has out-performed by approximately 0.50% over the trailing 3-year period

• Global Equity Portfolio and Managers– Existing multi-manager portfolio has out-performed Policy benchmark by approximately

155 bps and 80 bps, respectively over trailing 3- and 5-year periods• Includes impact of recent passive allocation (6-9 months)• Includes impact of terminated manager (Calamos)

– Growth style of T.Rowe Price has delivered the strongest recent out-performance with higher level of tracking-error

– Wellington’s core style portfolio as delivered approximately 180-200 bps of excess return over the trailing 3- and 5-year periods with lower level of tracking error

– Mondrian’s value-oriented and quality-biased approach to stock selection has struggled over trailing 3-year period

Exhibit 7

Executive Summary - Recommendations

6

• NEPC recommends that SURS make small increase to its dedicated emerging market equities via existing passive account (approximately $20 million)

– Valuations and long-term fundamentals suggest moving towards market weighting– SURS’ portfolio has been under-weight relative to many peers with larger dedicated

allocations, but SURS active managers have also shifted capital as valuations have become more attractive

– Depending on outcome RFP for dedicated emerging markets manager could be considered

• Re-allocate former Calamos Global mandate to the remaining active Global managers (T.Rowe Price, Wellington & Mondrian)

– Policy allocation currently part of Parametric overlay portfolio

• Recommend that SURS retain Mondrian despite under-performance over the trailing 3-year period

• Revisit the Total Equity Policy allocation as part of Asset Allocation review in 1st half of 2017

– Revisit individual Policy targets to US, non-US and Global equities– Consider shift towards over-weighting in emerging markets

• Continue to track non-US portfolio individual manager market cap (size) exposure

– Review size-based attribution to assess impact on relative excess return

Exhibit 7

Non-US Equity Broad Market Review

Exhibit 7

• Overweight Non-US developed market equities – Central bank support and dollar strength provide a positive economic backdrop– Corporate earnings remain well below 2007 levels despite recent earnings recovery– EAFE equity markets offer the potential for outsized returns relative to US equities

• Maintain or increase commitment to emerging market equities– Valuations and long-term fundamentals suggest an overweight– China uncertainty, dollar pressure and idiosyncratic country risks temper excitement– SURS’ portfolio has been under-weight relative to many peers with larger dedicated

allocations, but active manager likely to shift capital as valuations become more attractive

• Consider dedicated allocations to All-Cap or Small-Cap focused products to take advantage of market inefficiencies

– Active managers have been able to add more alpha over time in Developed and Emerging Markets small cap space

NEPC General Client Equity Recommendations

8

Exhibit 7

Major Asset Class Review – NEPC Asset Class Assumptions (Geometric)

9

Long Term Avg 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cash 3.42%1 4.00% 3.00% 2.00% 2.00% 1.25% 0.75% 1.50% 1.75% 1.50%

Core Bonds 7.70%2 5.00% 5.50% 3.75% 3.00% 2.88% 2.03% 2.53% 2.30% 2.43%

Large Cap 10.05%1 8.50% 9.25% 7.75% 7.00% 7.25% 6.75% 6.25% 6.00% 6.00%

Int'l Developed 8.84%3 9.00% 9.75% 8.00% 7.00% 7.75% 7.75% 7.25% 7.00% 7.25%

Emerging Markets 9.12%4 9.50% 10.50% 9.50% 9.00% 9.75% 9.75% 9.50% 9.00% 9.75%

Source: Bloomberg, Morningstar Direct, NEPC

NEPC 5-7 Year Assumptions

1. Reflects average annual return since 19262. Reflects average annual return since 19763. Reflects average annual return since 19704. Reflects average annual return since 2001 (inception with current country inclusion criteria)

Exhibit 7

• Total return expectations for non-US equities are higher vs. last year

• Expectations for US equities are the same despite a relatively flat year– Increased spread of 1.25% for developed non-US relative to US large cap– Increased premium for emerging equity as valuations have become more attractive

• Meaningful downside risks remain in developed and emerging world

• While we expect investors to be compensated over 5-7 years with a higher relative return for holding non-US equities, it is appropriate to use active management to mitigate exposure to downside risks

Comparison of Non-U.S. Equity and US Large Cap Equity Expectations

10

Return expectation premium

Return expectation premium

Exhibit 7

Non US Equity Overview

11

• Developed non-US equity: – Common stocks issued by companies in developed foreign markets (e.g.,

UK, France, Italy, Germany, Japan)

• Emerging markets equity: – Common stocks issued by companies in emerging foreign markets (e.g.,

Brazil, Russia, India, China, South Korea, South Africa)

• Why invest in non- US stocks?– U.S. represents a shrinking share of the world's financial markets– Provides diversification to domestic, U.S. Dollar denominated stocks

• Commonly used benchmarks– International equity: MSCI All Country World Index ex US– Developed international equity: MSCI EAFE (Europe, Australia, and Far

East) Index and Citigroup PMI (Primary Market Index)– Emerging markets equity: MSCI Emerging Markets Free Index

Exhibit 7

• Europe and Japan have faced major economic challenges

– For Japan, these challenges extend over the previous two decades

– Non-US equity returns relative to domestic are highly cyclical

• Success of US monetary action galvanized unprecedented action by the European Central Bank and Bank of Japan

– Seeking positive response in both capital markets and real economy

• Equities and other risky asset markets likely to benefit

– Stimulus promotes credit growth, spending and earnings

– Japanese companies flush with cash also seeking improved profitability

• Hedging a portion of non-US developed currency exposure remains a strategic goal

– Dollar strength likely to persist as Fed policy lifts off

Non-US Developed Equities Remain Attractive Given Monetary Support

Source: TSE, ECB, Bloomberg

Source: Standard & Poors, MSCI, Bloomberg

12

Exhibit 7

• Emerging market growth premium relative to developed world remains but is subdued

– Per Capita GDP continues to rise, pushing standard of living higher and supporting consumer growth

• Initiative to reform reflects the distinct and varied outlook across countries

– Political challenges and commodity market distress are material risks for both Russia and Brazil

– Reform minded countries are realizing economic adjustments necessary for sustainable growth and economic success

• Economic conditions across emerging world are distinct but China is the focus

– China remains the growth engine for the world but is transitioning to a new economic model

Emerging Market Growth Dependent on China and Rising Consumer Spending

Source: Bloomberg

Source: IMF

13

Exhibit 7

• Fundamentals of emerging markets suggest higher return potential than developed world

– Valuations appear reasonable especially versus developed world

– Superior real yields and fundamentals expected to flow through to higher returns over time

• Unique risks across countries suggest caution and patience

– China continues slow process to delicately rebalance economy

– Commodity dependent countries face financial challenges as they adjust to lower prices

– Credit dependence, particularly for dollar based borrowers could cause further strain

Emerging Markets Present Interesting Opportunity… But Require Patience

Source: JP Morgan, Bloomberg

Source: MSCI, Bloomberg

14

Exhibit 7

Why Emerging Market Equities?

Emerging Markets are underpriced compared to developed markets

Emerging market equities are trading at low valuations

relatives to developed markets.

Sources: FactSet, MSCI, Allianz Capital, Orbits Investments, Datastream, IF World Economic Outlook

DM Price/Revenue Ratio vs. EM Price/Revenue Ratio

Consumers in emerging markets are younger and have growing spending power

15

Exhibit 7

US Europe

Japan

• Easy monetary policy remains in place in the US but explicit easing has ended and short rates expected to rise as Fed slowly normalizes policy

• Unprecedented stimulus in Japan is ongoing and supportive of risky asset prices

• Europe has resumed easing after recovery began to falter

Commentary

Central Banks Driving Divergences in Global Equity Prices

16

Source: Federal Reserve, Standard and Poors, Bloomberg Source: European Central Bank, MSCI, Bloomberg

Source: Bank of Japan, MSCI, Bloomberg

Exhibit 7

NEPC General Equity Thoughts and Recommendations – “Beta” Views

17

Beta Subset Outlook Comments

Large Cap Neutral- Valuations appear mostly fair or high- Strong dollar cutting into profit margins for multi-national

companies and spurring manufacturing decline- Economic foundations for earnings growth remain in place

Small/Mid Cap Neutral- Valuations near or above long term averages- Tighter monetary policy has potential to cause stress to

companies with lower debt quality and higher leverage- Still positive economic backdrop

Non-US Developed Overweight

- Valuations appear fair but supportive monetary policy in Europe remains firmly in place

- Weaker Euro increasing competitiveness and forming foundation for earnings growth potential plus easy monetary policy could stem increase in M&A activity

- Japanese companies seeing ROE improvements through more focus on profits, but magnitude of monetary experimentation remains a risk

Non-US Developed Small Overweight

- More exposure to local consumer growth factors (industrials, consumer discretionary, info tech) with similar volatility levels as large caps

- Should exhibit less energy and macro/currency sensitivity

Emerging Neutral

- Valuations look more attractive but macro risks loom- Growth concerns and volatility from China indicate markets

may remain stressed in interim before a rebound occurs- Recommend a tilt towards consumer focused strategies

(more insulated from sentiment, currencies, and flows)

Emerging Small Overweight

- Provides attractive return profile that exploits consumer growth theme

- Companies are more insulated from macro risks that may cause outflows or currency depreciation

- Recommend overweight to small cap strategies

Exhibit 7

• In most years, international small cap outperforms the larger cap index, even in down markets

Better International Return Exposure from Small Cap?

18

Source: MSCI

-60%

-40%

-20%

0%

20%

40%

60%

80%

EAFE SC

EAFE

Exhibit 7

Manager Universe Median Excess Return by Asset Class – Recent Trends

Source: eVestment as of 6/30/2016

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

ACWI EAFE EAFE Growth EAFE Value EAFE SM EM EMSC

1 Year

2 Year

3 Year

Growth managers have deliveredhigher levels of excess-returnin growth-oriented market

Value managers have struggledin part due to weaker results inKey sectors like Energy & Financials

Exhibit 7

Total Equity Portfolio

Exhibit 7

Current Equity Portfolio Structure

GlobalInternational

TOTAL EQUITY PORTFOLIO (51%)

• Capital appreciation and provides diversification to debt

• 25% of the total SURS portfolio

• 63% passively managed / 37% actively managed

• Capital appreciation and provides diversification to U.S. investments


• 26% EAFE /69% ACWI ex US/ 5% Emerging Markets

• Capital appreciation, provides opportunities to tactically move in to US and international holdings


21

Domestic Equity

U.S. Equity , 23%

U.S. Equity , 25%

Non U.S. Equity, 19%

Non U.S. Equity, 18%

Global Equity, 8%

Global Equity,8%

Strategic Policy Target Allocation as of 6/30/16

50% oftarget policy allocation

51% of current allocation

Total Equity Allocation

As of 6/30/16, the SURS portfolio had

$8.65B (51%) invested in equities, this meant the plan with slightly over

allocated to equities.

Exhibit 7

Total Equity Manager and Country Allocation

Equity Allocation Breakout by Mandate(as of 6/30/16)

US Equity 48%

International Equity 36%

Global Equity16%• SURS Total Equity portfolio makes up

51% of the total SURS’ portfolio−The largest composite in the equity

portfolio is the domestic equity portfolio

• The SURS’ Total Equity composite is well diversified by country allocation

• Policy targets results in an overweight to domestic (US) and UK equities

• Underweight to emerging markets, North America (ex US) and Japan

Country Allocation(as of 6/30/16)

SURS Portfolio MSCI ACWIOther* 0.3% 0.3%Emerging Markets 7.8% 9.2%Japan 7.0% 7.7%Pacific Basin ex Japan 4.8% 5.0%United Kingdom 6.1% 6.2%Europe ex UK 14.3% 14.7%United States 57.6% 53.6%North America ex US 1.9% 3.2%

0%10%20%30%40%50%60%70%80%90%

100%

22

Source: MSCI, NEPC

Exhibit 7

Total Equity Portfolio Size Allocation

Look Thru by Capitalization Size as of 6/30/2016

• While the portfolio is well diversified by capitalization, there are some biases when compared to the MSCI ACWI index:−Overweight to mid and small cap names −Under weight to large cap

23

Source: MSCI, NEPC

Average Weighted Market Cap

SURS Equity Portfolio 75.1

MSCI Index 87.6

0% 20% 40% 60% 80% 100%

Total Equity

MSCI ACWI

Large Cap

Mid/Large Cap

Mid Cap

Small/Mid Cap

Small Cap

Large Cap: $50B / Mid Large Cap: $10-50B / Mid Cap:$5-10B / Small Mid Cap: $1.5-5B / Small Cap: $1.5>

Exhibit 7

Growth vs. Value Summary

Growth• Better than average gains,

high levels of profit growth

• Tends to perform well in markets where corporate earnings are rising

• May lag in declining markets

• Higher P/E Ratios and P/B ratios

Value• Names that trade lower

than their intrinsic values i.e. underpriced

• Offer higher dividend yields

• Tends to do well in recovery markets, will lag in bullish markets

• Lower P/E Ratios and P/B ratios

The majority of SURS’ equity managers have a “Core” strategy, which means they can opportunistically position the portfolio to

have a growth or value tilt based on the current market environment.

P/E Ratio P/B Ratio

SURS Equity Portfolio 22.1 4.1

MSCI Index All World All Country 21.3 3.2

24

Source: NEPC

Exhibit 7

International Equity Portfolio

Exhibit 7

International Equity Portfolio Structure

MSCI All Country All World ex US Index

MSCI EAFE Index

MSCI Emerging Market Index

The MSCI ACWI ex USA Index captures large and mid cap representation across 22

Developed Markets (DM) countries (excluding the US)

and 23 Emerging Markets (EM) countries, this captures

roughly 85% of the global equity market.

The MSCI EAFE index captures large and mid-cap

securities across 21 developed markets, including

countries in Europe, Australasia and the Far East,

excluding the U.S. and Canada.

MSCI Emerging Markets Index consists of 23 countries

representing 10% of the world market capitalization,

covers approximately 85% of the free float-adjusted

market capitalization in each of the 23 countries.

$2.1B / 68% of International

Equity Portfolio

• Black Rock International• Ativo Capital • GlobeFlex Capital • Pyramis/Fidelity

Developed Countries in Index

• Europe: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Netherlands, Norway, Portugal, France, Spain, Sweden, Switzerland, UK

• Americans: Canada• Pacific: Australia, Hong Kong,

Japan, New Zealand, Singapore

Index Description Emerging Countries in Index

• Americas: Brazil, Chile, Colombia, Mexico, Peru

• Middle East/Europe/Africa: Czech Republic, Egypt, Greece, Hungary, Poland, Qatar, Russia, South Africa, Turkey, UAE

• Asia: China, India, Indonesia, Korea, Malaysia, Philippines, Taiwan, Thailand

SURS Managers

• Europe: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Netherlands, Norway, Portugal, France, Spain, Sweden, Switzerland, UK

• Americans: Canada• Pacific: Australia, Hong Kong,

Japan, New Zealand, Singapore

• None

$850.6M / 27% of International

Equity Portfolio

• Progress (MoM)• Strategic Global Advisors• BlackRock Alpha Tilts

• None

• Americas: Brazil, Chile, Colombia, Mexico, Peru

• Middle East/Europe/Africa: Czech Republic, Egypt, Greece, Hungary, Poland, Qatar, Russia, South Africa, Turkey, UAE

• Asia: China, India, Indonesia, Korea, Malaysia, Philippines, Taiwan, Thailand

$153.4M / 5% of International

Equity Portfolio

• BlackRock Emerging Markets

26

Exhibit 7

International Equities – Portfolio Summary

27

Exhibit 7

International Equity Manager and Country Allocation

SURS Portfolio MSCI ACWI ex US IndexOther* 0.8% 0.7%Emerging Markets 18.1% 19.8%Japan 16.7% 16.6%Pacific Basin ex Japan 10.7% 10.8%United Kingdom 13.3% 13.3%Europe ex UK 33.7% 31.7%United States 2.1% 0.3%North America ex US 4.7% 6.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Manager Breakout(as of 6/30/16)

Strategic Global Advisors

8%BlackRock

International Alpha Tilts

13%

Ativo Capital 8%

GlobeFlex8%

Pyramis15%

Progress Investment

Management5%

BlackRock International Equity Fund

38%

BlackRock Emerging Markets

5%

Passively Managed Assets Actively Managed Assets

Country Allocation(as of 6/30/16)

• The international equity portfolio makes up ~$3.11 billion (18%) of the total SURS portfolio: − 43% of the international equity portfolio is passively managed (BlackRock

ACWI ex US index fund and BlackRock Emerging Markets index fund)

28

Source: NEPCSource: NEPC

Exhibit 7

International Equity Market Cap Analysis

Market Cap Breakout by Holdings(as of 6/30/16)


29

Source: MSCI, NEPC

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

International Equity

MSCI ACWI ex US

MSCI EAFE

MSCI Emerging Markets

Large Cap

Mid/Large Cap

Mid Cap

Small/Mid Cap

Small Cap

Exhibit 7

International Equity Regional Allocation


BlackRock International Equity Fund

38%

Ativo Capital 8%GlobeFlex

8%

Pyramis15%

Progress Investment

Management5%

BlackRock International Alpha Tilts

13%

Strategic Global Advisors

8%

BlackRock Emerging Markets

5%

ACWI ex US Index MSCI EAFE Index MSCI Emerging Markets

• Heavily allocated to developed equities −82% of the international portfolio is allocated to developed equities

Developed vs Emerging Breakout by Holdings(as of 6/30/16)

30

Source: investment manager reported, NEPCSource: NEPC

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Emerging

Developed

Exhibit 7

International Equity Performance Summary

31

3 Year Risk/Return as of 6/30/16

Source: NEPC

Exhibit 7

International Equity Risk Statistics vs. Peer Universe

3 Year International Equity Risk Statistics vs. Peer Universe (as of 6/30/16)*

* International equity portfolio versus eA All ACWI ex US (net)

Annualized Return Annualized SD Annualized Alpha Sharpe Ratio Sortino Ratio RF Tracking ErrorInternational Equity 2.4% 12.9% 1.3% 0.2 0.3 1.1

Rank 65 57 66 64 64 1

5th Percentile 8.4% 10.5% 7.5% 0.8 1.4 2.4

Upper Quartile 4.9% 12.0% 3.9% 0.4 0.7 3.6

Median 3.3% 12.7% 2.2% 0.3 0.4 4.8Lower Quartile 1.6% 13.6% 0.4% 0.1 0.2 6.1

95th Percentile -0.3% 14.7% -1.4% 0.0 -0.1 7.9

Observations 155 155 155 155 155 155

32

Source: NEPC

Exhibit 7

International Equity Manager – Return and Risk Statistics

33

Standard Deviation - The standard deviation is a statistical term that describes the distribution of results. It is a commonly used measure of volatility of returns of a portfolio, asset class, or security. The higher the standard deviation the more volatile the returns are.

Sharpe Ratio - A measure of the excess return or risk premium per unit of risk in an investment asset or trading strategy.

Tracking Error - Tracking error, also known as residual risk, is a measure of the degree to which a portfolio tracks its benchmark. It is also a measure of consistency of excess returns. Tracking error is computed as the annualized standard deviation of the difference between a portfolio's return and that of its benchmark.

Information Ratio – a measure of the risk-adjusted return of a portfolio (or security) that reflects the active return (or alpha) divided by the amount of benchmark-relative risk, or tracking error.

Up/Down Capture Ratio - A measure of what percentage of a market's returns is "captured" by a portfolio. For example, if the market declines 10% over some period, and the manager declines only 9%, then his or her capture ratio is 90%. In down markets, it is advantageous for a manager to have as low a capture ratio as possible.

Exhibit 7

International Equity Manager – Return and Risk Statistics

34






Exhibit 7

Global Equity Portfolio

Exhibit 7

Global Equities – Portfolio Summary

36

Exhibit 7

Global Equity Manager and Country Allocation


Wellington 33%

Mondrian 33%

T. Rowe Price Global34%

Passively Managed Assets Actively Managed Assets

Developed vs. Emerging Breakout(as of 6/30/16)

• The global equity composite makes up 16% of the total equity portfolio − All three of the managers have equal weighted in the portfolio−There is no permanent passively managed allocation in global equity composite

(Parametric provides temporary passive exposure)

• Slight overweight to US equities and underweight to emerging market equities

37

Source: NEPC Source: NEPC Investment Manager Reported

75%

80%

85%

90%

95%

100%

Wellington Mondrian T. Rowe EquityComposite

MSCI ACWI

Developed Emerging

Exhibit 7

Global Equity Allocation Capitalization Breakout

Market Cap Breakout(as of 6/30/16)

• The global equity portfolio is well diversified by market cap− Typically has a bias towards small & mid cap holdings

38

Source: NEPC, MSCI


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Global Equity

MSCI ACWI

Large Cap

Mid/Large Cap

Mid Cap

Small/Mid Cap

Small Cap

Exhibit 7

Global Equity Performance Summary

39

3 Year Risk/Return as of 6/30/16

Source: NEPC

Exhibit 7

Global Equity Return/Risk Statistics

3 Year Global Equity Risk Statistics vs. Peer Universe (as of 6/30/16)*

SURS’ global equity portfolio has outpaced its peers for the rolling 3 year period with a slightly lower risk profile than its peers.

40

Source: NEPC

Exhibit 7

Global Equity Manager – Return and Risk Statistics

41






Exhibit 7

Appendix

Exhibit 7

• Real earnings growth assigned to each market over forecast period• Valuation input based on current P/E trending to forecast value• Profit margin adjustment shifts from current to forecast value• Dividend yield based on current yield trending to forecast value• Global inflation input of 3.0% flows through all global equity markets

Assumption Development – Global Equities

43

Index Current US Large Cap US Small/Mid Cap Int’l Developed Emerging Markets

Forward P/E 17.6 23.3 15.8 11.6Profit Margins 8.3% 2.8% 6.0% 8.1%Dividend Yield 2.1% 1.6% 3.2% 3.1%

Exhibit 7

International Equity – Rolling Periods

Passive Outperforms

¹ Annualized net-of-fee results are calculated by subtracting the average manager fee, respective of asset class and style, from the eVestment or ICC gross-of-fee performance. The average manager fees used prior to 2009 were obtained from the 2008 eVestment Alliance manager fee study. For periods after to 2009, the 2009 eVestment Alliance manager fee study was used.² The universe data shown includes only actively managed portfolios. The minimum sample size used for each time period is 20 portfolios.

The median international equity developed manager has outperformed the MSCI EAFE, net of fees¹, in:

- 70 of 96 rolling one-year periods (or, 73% of the time)- 89 of 96 rolling three-year periods (or, 93% of the time)- 96 of 96 rolling five-year periods (or, 100% of the time)

44

Exhibit 7

International Equity – Benchmark Ranks

MSCI EAFE ranked below median 12 out of the last 16 years

¹ eVestment and ICC universes shown. Benchmark rankings are relative to the respective actively managed gross-of-fee universe. Rankings reflect the gross-of-fee results of the benchmark. For periods prior to 2009 results were calculated by adding the respective asset class and style annual fee as obtained from the 2008 eVestment Alliance manager fee study to the annual benchmark return. For periods after to 2009, the 2009 eVestment Alliance manager fee study was used.

Percen

tile Ra

nk

45

Exhibit 7

Emerging Markets – Rolling Periods

¹ Annualized net-of-fee results are calculated by subtracting the average manager fee, respective of asset class and style, from the eVestment or ICC gross-of-fee performance. The average manager fees used prior to 2009 were obtained from the 2008 eVestment Alliance manager fee study. For periods after to 2009, the 2009 eVestment Alliance manager fee study was used.² The universe data shown includes only actively managed portfolios. The minimum sample size used for each time period is 20 portfolios.

The median international equity emerging market manager has outperformed the MSCI EM Market, net of fees¹, in:

- 40 of 89 rolling one-year periods (or, 45% of the time)- 46 of 81 rolling three-year periods (or, 57% of the time)- 52 of 73 rolling five-year periods (or, 71% of the time)

46

Exhibit 7

Emerging Markets – Benchmark Ranks

MSCI EM Index ranked below median 6 out of the last 16 years

¹ eVestment and ICC universes shown. Benchmark rankings are relative to the respective actively managed gross-of-fee universe. Rankings reflect the gross-of-fee results of the benchmark. For periods prior to 2009 results were calculated by adding the respective asset class and style annual fee as obtained from the 2008 eVestment Alliance manager fee study to the annual benchmark return. For periods after to 2009, the 2009 eVestment Alliance manager fee study was used.

Percen

tile Ra

nk

47

Exhibit 7

0.5%

0.0%0.4%

1.8% 1.8%

0.5%1.0%

1.9%

3.2% 3.3%

0.5%

-1.0%

-1.8%

-0.7%

0.6%0.5%

3.6%

5.2%

6.9% 6.9%

0.5%

2.1%

3.5%

5.0%5.4%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0-2% 2-4% 4-6% 6-8% 8+%

Exce

ss R

etu

rn (

Net

of

Fee)

Tracking Error

Framework to Evaluate Fee and Risk Budgets – Emerging Markets Equity

43 bps 90 bps 90 bps 88 bps 93 bps

48

Source: eEvestment and NEPC; time period since inception – 12/31/2015

Exhibit 7

NEPC Manager Selection in Practice – Emerging Market Equity

‐5.0%‐4.0%‐3.0%‐2.0%‐1.0%0.0%1.0%2.0%3.0%4.0%5.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

Alph

a

Tracking Error

FPL History

‐2.0%‐1.0%

0.0%1.0%

2.0%3.0%4.0%

5.0%6.0%

7.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

Alph

a

Tracking Error

Current FPL

49

Source: eEvestment and NEPC. Time periods are from approval date through 12/31/2015. Other FPL strategies may not display similar characteristics.

Exhibit 7

Emerging Market Equities

An emerging country with a gross national income per head between $975 to $11,905. Emerging markets represents ~84% of the world’s population.Emerging markets equities refer to any investments in stocks (i.e., publicly traded equity ownership) of companies domiciled, listed, and/or traded on

the securities exchanges of countries classified as “emerging”.

50

Exhibit 7

To: Investment Committee From: Investment Staff Date: October 6, 2016 Re: Non-US and Global Equity Structure Recommendations

Summary As presented in the accompanying information provided to the Board by staff and NEPC, the following conclusions were drawn following the non-U.S. and global equity structure study.

• The SURS non-U.S. equity portfolio has a small underweight to emerging marketsecurities relative to the MSCI ACWI ex-US Index. In order to resolve thisunderweight, staff and NEPC recommend that assets be reallocated from developed non-U.S. equities, specifically the BTC International Alpha Tilts account, to the passiveemerging market equities account in an amount sufficient to increase the emergingmarkets position to a market weighting in the total non-U.S. equity portfolio. As ofSeptember 30, 2016, this amount is estimated to be approximately $20 million.

• Calamos Investments was terminated as a global equity manager in October 2015. Sincethat time, Parametric Clifton has been providing synthetic global equity exposure tomaintain the portfolio’s strategic policy target exposure. Staff and NEPC recommendreallocating assets to the three existing global equity managers in amounts sufficient tobring the global equity allocation to the 8% strategic policy target level, whileapproximately equal weighting each of the three existing managers (post-allocation).As of September 30, 2016, the total amount to be reallocated is estimated to beapproximately $181 million, as shown in the following table.

Manager Market Value as of 9/30/16

$MM

Projected Additional Allocation

(Estimated) - $MM

New Projected Market Values

(Estimated) - $MM Mondrian $388 $69 $457 T. Rowe Price Global $418 $39 $457 Wellington $384 $73 $457

Totals ($MM) $1,190 $181 $1,371 % of Total Fund 6.9% 8.0%

Recommendations Staff and NEPC recommend:

• That assets be reallocated from the BTC International Alpha Tilts account to the BTCEmerging Markets Index Fund in an amount sufficient to increase the emerging marketsposition to a market weighting in the total non-U.S. equity portfolio. As of September30, 2016, this amount is estimated to be approximately $20 million but may vary basedon market fluctuations.

Exhibit 8

• That assets be reallocated to the three existing global equity managers (MondrianInvestment Partners, T. Rowe Price Global Focused Growth and WellingtonManagement) in amounts sufficient to bring the global equity allocation to the 8%strategic policy target level, while approximately equal weighting each of the threeexisting managers (post-allocation). As of September 30, 2016, the total amount to bereallocated is estimated to be approximately $181 million but may vary based on marketfluctuations. Funds for this allocation will be sourced from asset class(es) overweightrelative to the policy target.

Exhibit 8

To: Investment Committee From: Investment Staff Date: October 6, 2016 Re: Draft Investment Policy Following this memo is a draft Investment Policy circulated by Trustee Cullen in September 2016. This draft Policy is still under review and is being included in the materials to serve as a common reference point for conversation at the October 20 Investment Committee meeting.

Exhibit 9

STATE UNIVERSITIES RETIREMENT SYSTEM OF ILLINOIS

INVESTMENT POLICY

Adopted by the Board of Trustees [ ], 2016

Exhibit 10

INVESTMENT POLICY

Table of Contents Section / Page No. Description I / 3 Mission Statement II / 4 Statement of Purpose of Investment Policy III / 5 Financial Goal & Strategic Objectives IV / 6 Role Definitions

• Board of Trustees • Investment Committee • Executive Director • Internal Investment Staff • External Investment Consultant(s) • External Investment Managers • Custodian • General Counsel’s Office • External Counsel

V / 11 Asset Allocation and Rebalancing Strategy VI / 13 Investment Risk Management Policy VII / 15 Portfolio Construction and Performance Benchmarks

• Public Equity • Fixed Income • Private Equity • Real Estate • Opportunity Fund • Hedged Strategies • Commodities

VIII / 22 Selection and Retention • Consultant Selection and Retention • Investment Manager Selection • Custodian Selection • Quiet Period Policy • Investment Manager and Fund Monitoring

IX / 27 Investment Manager Termination Guidelines X / 28 Performance Evaluation and Reporting XI / 30 Safeguard of Assets XII / 32 General Investment Restrictions and/or Guidelines XIII / 34 Corporate Governance

• Proxy Voting Policy • Securities Litigation Policy

XIV / 38 Emerging Investment Managers, MFDB Managers and Minority-Owned Broker/Dealers • Goals for Utilization of MFDB Managers • Goals for Utilization of Minority-Owned Broker/Dealers • Manager Diversity Program

Exhibit I / 39 Glossary of Terms Appendices / 48

Exhibit 10

I. Mission Statement The Board of Trustees (“Board”) of the State Universities Retirement System (“SURS”, or the “System”) has a fiduciary responsibility to the Members1 of the System. In recognition of this responsibility, the Board has adopted the following Mission Statement:

The mission of SURS is to secure and deliver the retirement benefits promised to its Members by achieving its Financial Goal, subject to all statutory requirements[, guidelines and recommendations] of the State of Illinois. ___________________________________________

1. Capitalized terms not defined in the text of this document can be found in the Glossary of Terms attached hereto as Exhibit I.

Exhibit 10

II. Statement of Purpose of Investment Policy This document specifically outlines the investment philosophy and practices of SURS and has been developed to serve as a reference point for the management of the Defined Benefit Plan. In developing this Policy, the Board and Staff understand and accept their fiduciary obligations to the Members of the System. These obligations are legal in nature, and are outlined in the Illinois Pension Code [40 ILCS 5] NOTE: Need to review all Code references throughout this document. Investments shall satisfy the conditions of the Illinois Compiled Statutes, and in particular, the prudent person standard of 40 ILCS 5/1-109. For brevity and clarity, the Board adopts the following interpretation of the statute as its guiding principles: 1. Preserve the long-term principal of the Portfolio. 2. Maximize total return within prudent risk parameters. 3. Act in the exclusive interest of the Members of the System. These principles, combined with the applicable sections of the Illinois Pension Code [40 ILCS 5], serve as the basic guideline for this Policy.

Exhibit 10

III. Financial Goal & Strategic Objectives The Financial Goal, as set forth in the SURS Strategic Plan, is to assure the financial soundness of the System. The strategic objectives designed to achieve the SURS Financial Goal are as follows:

• Secure the Actuarilly Determined Contribution; • Achieve longterm, sustainable, investment performance necessary to meet or exceed

the System’s Assumed Rate of Return (set forth in Appendix 1), net of investment management fees;

• Manage the risk and volatility of financial assets in the Portfolio; • Control Manager and Vendor fees and expensees to achieve an optimal rate of

return; • Manage operational expense at a prudent level; and • Manage the System’s Liquidity, in order to meet Member and other System

obligations in a timely manner.

Exhibit 10

IV. Role Definitions Because of the System’s size and complexity, the Board relies on both Staff and a variety of third party Managers and Vendors in order to properly administer the System and implement its investment strategies. The following sections outline the roles of the principal parties involved, their responsibilities and performance evaluation. Board of Trustees The Board is responsible for establishing the Policy for the System, overseeing the investment of the Portfolio and overseeing the expenditures required to meet System obligations. Specifically with regard to investments, the Board takes action upon recommendations made by its Investment Committee, Staff or the Consultant. The Board also approves actuarial assumptions, certifies contribution rates and determines policies pertaining to the administration of the plans and benefits under its jurisdiction and responsibility. All members of the Board shall be indemnified and held harmless by the System for any reasonable cost or expenses incurred as a result of any actual or threatened litigation or administrative proceeding arising out of the performance of such member’s duties in accordance with 40 ILCS 5/1-107. No member of the Board may participate in deliberations or vote on any matter before the Board which will, or is likely to, result in direct, measurable gain to the Board member, to the Board member’s immediate family members or to that Board member's employer. Formal Review Schedule The Board recognizes that even though Portfolio return is subject to short-term volatility, it shall maintain a long-term investment focus. This prevents ad-hoc revisions to SURS Financial Goal and strategic objectives in reaction to short-term market fluctuations. In order to preserve this long-term view, the Board has adopted a formal review schedule, as set forth in Appendix 2. Investment Committee The Investment Committee reviews and makes recommendations to the Board on a broad range of issues covered by this Policy including, but not limited to, those set forth in Appendix 3. The Investment Committee shall conduct an annual self-assessment regarding its performance against its stated responsibilities and will share the results with the Board. Executive Director The Executive Director is appointed by and serves at the pleasure of the Board. Responsibilities related to achieving the System’s Financial Goal and delegated by the Board to the Executive Director include, but are not limited to, those set forth in Appendix 4.

Exhibit 10

The Executive Director and other Employees of the System shall be indemnified and held harmless by the System for actions within the scope of their employment, pursuant to 40 ILCS 5/1-107 and 108. This indemnification extends to former Employees for actions within the scope of their employment at time of employment. Internal Investment Staff The internal investment staff (“Staff”), including the Chief Investment Officer (“CIO”), reports to the Executive Director. The Staff provides internal investment management and/or consulting services to the Board and Executive Director. The Staff also implements and manages the System’s Portfolio, consistent with this Policy. Related to achieving the System’s Financial Goal, the CIO will work directly with the Board and the Investment Committee and will oversee the performance of other members of the Staff. The primary functions delegated by the Board to the CIO and the Staff may include, but are not limited to, those set forth in Appendix 5. Staff works closely with Consultant(s). Recommendations to the Investment Committee or the Board will generally be developed jointly by the Staff and Consultant. However, where views diverge, the Staff will ensure that each party’s perspective is adequately presented. External Investment Consultant(s) The Board shall generally have under contract an investment advisor who is a paid, professional consultant (“Consultant”) and who is qualified to provide the Board with investment advice by academic and professional training and experience and is considered an expert in the field of investment and finance. The Board may elect to retain one or more Consultants that specialize in specific areas of asset consulting. The Consultant's relationship with the Board shall be that of a fiduciary under 40 ILCS 5/1-101.2(2). The Consultant is hired by and reports directly to the Board. The Consultant's duty is to work with the Board, Investment Committee and its chair, and Staff in the management of the investment process. This includes regular meetings with the Board to provide an independent perspective on the System's Financial Goal and strategic objectives. In the course of the Consultant’s normal functions, the Consultant will provide the services set forth in Appendix 6.

The Board will establish a list of criteria by which the Consultant(s) performance may be evaluated. An annual review of the Consultant(s) will be conducted by the Board, with input from the Staff. External Investment Managers The external investment managers (“Managers”) are selected by, and serve at the pleasure of, the Board. The Staff and Consultant will provide Managers with explicit written directions (“Manager Guidelines”) detailing their particular Board-approved assignments. Duties of Managers include, but may not be limited to, those set forth in Appendix 7. Staff implements the Board’s decisions through negotiation, execution and enforcement of Investment Management Agreements and Manager Guidelines. All Investment Management Agreements and amendments thereto, with the exception of revisions to

Exhibit 10

Manager Guidelines, must be executed by the Executive Director. Specific operational information for each Manager will be addressed at length in the individual Manager Guidelines. Criteria for selection, retention and termination of Managers are covered in Sections VIII and IX. Master Trustee / Custodian The Master Trustee/Custodian (“Custodian”) is selected by, and serves at the pleasure of, the Board. The Custodian will, among other duties, collect income and keep safe all cash and securities, and will regularly summarize these holdings, along with both their individual and collective performance, for Staff’s review. The Custodian will provide data and performance reports to the Staff and Consultant at requested intervals. In addition, a bank or trust depository arrangement will be utilized to accept and hold cash prior to allocating it to Managers and to invest such cash in liquid, short-term securities in accordance with this Policy. Pursuant to approved Strategic Policy Targets, Staff will direct the Custodian to allocate cash and/or securities to the System’s Managers as necessary. The Custodian may also, with the approval of the Board and at the direction of the Staff, engage in a Securities Lending program. Alternatively, the Board may choose to retain a third party firm to provide Securities Lending services to SURS. General Counsel’s Office The role of the General Counsel’s office is to oversee all legal services provided to the System in connection with this Policy. This includes reviewing legal documents and providing advice and counsel to Staff and the Executive Director and working with External Counsel. While the General Counsel’s office does not review or approve investment decisions, it does review business terms for proper form and legality. The following documents and issues will be brought to the attention of the General Counsel’s office:

1. Any document that the Executive Director is requested to sign; 2. New Investment Management Agreements and any amendments thereto; 3. Contracts, letter agreements and side letters with Vendors and any amendments

thereto; 4. Any matter that the Staff wishes to assign to outside counsel, excluding routine

matters for which the Staff may directly interact with outside counsel: 5. Correspondence to or from any Manager or Vendor concerning actual or

potential litigation or legal issue: and 6. Any material violation by a Manager or Vendor of any terms or obligations in a

contract with the System that comes to the attention of the Staff. External Counsel External Counsel may be retained to provide legal services in connection with the review and negotiation of Investment Management Agreements or investment transactions where specialized experience is required or where General Counsel Office resources are unavailable.

Exhibit 10

V. Asset Allocation and Rebalancing Strategy A. Purpose The purpose of the Asset Allocation and Rebalancing strategy is to establish a framework that has a high likelihood, in the judgment of the Board, of realizing the System’s Assumed Rate of Return. B. Targets and Ranges Asset Allocation involves establishing Target Allocation Percentages for each approved Asset Class. Target Allocation Percentages are established and amended from time-to-time by the Board, based on recommendations from the Consultant. Target Allocation Percentages are selected based upon a review of various combinations of Asset Classes designed to achieve the System’s Assumed Rate of Return with an acceptable level of risk. In developing its recommendation, the Consultant takes into consideration Expected Returns, Volatility of Returns and Covariance of Returns, and certain scenario and Liquidity risks. SURS’ current Strategic Policy Target and Interim Policy Target Percentages are set forth in Appendix 8. The Interim Policy Target may change over time and reflects the necessity of a gradual shift of assets to the Strategic Policy Target, due to practical implementation considerations and Liquidity constraints. Staff has discretion to gradually adjust the Interim Policy Targets toward the Strategic Policy Targets. C. Rebalancing Successful Asset Allocation requires that Asset Class Percentages be maintained over time. Investment returns on each Asset Class in the portfolio (both positive and negative) cause the balance of each such Asset Class to increase/decrease. Such changes cause the resultant Asset Class Percentages to deviate from the Strategic Policy Target, requiring Rebalancing. Rebalancing shall automatically occur whenever an Asset Class is three (3) percentage points greater or lesser than the Strategic Policy Target level or when the overall Equity and/or Fixed Income allocation deviates from the aggregate Equity and/or Fixed Income targets by more than five (5) percentage points. Rebalancing may also occur in the event of a change in the Strategic Policy Target mix by the Board. Rebalancing, when required, shall occur as soon as practical and may be facilitated by the use of a Manager providing Cash Overlay Services, provided the Board has formally approved the retention of such a Manager. In conducting Rebalancing activities, the Board expects the Staff to operate under these guidelines:

1. Whenever Asset Class Percentages fall outside the indicated range for that Asset Class, the Staff shall initiate Rebalancing transactions to bring all percentages to values that do not exceed the range limits;2

2. At any time and in its discretion, the Staff may bring an out-of- balance Asset Class

to, or nearer to, the Target Allocation Percentages;

Exhibit 10

3. At a minimum, the Staff will ensure that as a result of [its annual] review, no Asset Class Percentage is outside the allowable range; and

4. In the event of extraordinary market events that (a) result in the Asset Class

Percentage being outside the acceptable ranges but (b) prevent the implementation of Rebalancing activities, Staff may request from the Board temporary exceptions to these guidelines. Rebalancing activity will occur as soon as is prudently feasible.

The spirit of this policy is to ensure compliance with the Target Allocation Percentages at a reasonable cost, recognizing that overly precise administration of policy targets can result in transaction costs that are not economically justified. Consequently, the Board accords the Staff discretion to take those actions which, in the judgment of the Staff, are within the spirit of these guidelines and in the best interest of SURS. Staff will report the results of Rebalancing activity to the Investment Committee at the next regular Investment Committee meeting. D. Periodic Review The Target Allocation Percentage will be reviewed annually for reasonableness relative to changes in Consultant’s recommendation. The Board will undertake a comprehensive review of the Asset Allocation policy every three years, or to the extent there are any significant changes made to the System’s Financial Goal or strategic objectives. This review will take into consideration the ongoing effectiveness of the Consultant’s recommendation, an updated Asset/Liability Study, System Liquidity and other factors that may influence the Strategic Policy Target or Rebalancing strategies. ___________________________________________ 2Because some Asset Classes are illiquid or less liquid than others, it may be costly or impractical to Rebalance in the short term. Accordingly, qualitative considerations (e.g., transaction costs, liquidity needs, investment time horizons, etc.) will be considered in determining the potential timing and extent of Rebalancing to the extent illiquid/less liquid Asset Classes require adjustment.

Exhibit 10

VI. Investment Risk Management Policy Note: This policy is one component of the broader SURS risk management function. Risk Oversight The Board understands the need to take investment risk in order to secure and deliver the retirement benefits promised to Members. In an attempt to deliver the System’s Assumed Rate of Return, the Board monitors investment risk and sets guidelines for the Staff to manage such risk within acceptable tolerance levels. Portfolio Risk Risk levels within the Portfolio will evolve over time for various reasons, including (but not limited to) changes in: (i) Asset Allocation; (ii) volatility in Asset Class returns; (iii) Asset Class correlations; and (iv) asset Liquidity. Other System Risks The System also incurs risks associated with: (i) amount and timing of Appropriation payments; (ii) the amount and timing of Member benefits and other System obligations; and (iii) changes in the System’s Asset/Liability Position. Risk Monitoring Portfolio risk shall be monitored through various forms of analysis. Analysis will occur at various levels of detail, including individual Manager, Asset Class and total Portfolio. For Marketable Securities’ portfolios, individual Managers will be reviewed quarterly using risk measures that may include: (i) Beta (ii) Standard Deviation; (iii) Tracking Error (iv) R-squared and (v) Active Share. For private markets, individual Managers will be periodically reviewed using risk measures tailored for each Asset Class. For major Asset Classes, the Board will review quarterly risk measures that may include: (i) Standard Deviation and (ii) Active Share. For the Portfolio as a whole, the Board will review on a quarterly basis various risk measures that may include: (i) Actual vs. Target Allocation Percentages; (ii) Total Portfolio Risk; (iii) market Volatility Index; (iv) Standard Deviation; (v) Value at Risk; (vi) Actual vs. projected Sharpe Ratios; (vii) Actual vs. projected Information Ratio; and (viii) Liquidity Profile. Other system risk metrics may include: (i) System Cash Flow analysis and (ii) Asset/Liability gap analysis. To the extent that risk thresholds at the individual Manager, Asset Class or Portfolio level exceed those established by the Board, Staff will recommend remedial action for Board approval at the next scheduled Board Meeting. Reporting Reports will be assembled on a [monthly][quarterly] basis by [Staff, Consultant or Custodian, as applicable] and provided to the CIO for review.

Exhibit 10

Summary reports as described in Appendix 9 will be assembled and presented to the Investment Committee and the Board on a quarterly basis.

Exhibit 10

VII. Portfolio Construction and Performance Benchmarks The Board has adopted Target Allocation Percentages in accordance with its Asset Allocation and Rebalancing strategy described in Section V. Within each Asset Class, the Board will determine the percentage of such class that will be (i) managed internally vs. externally; (ii) managed actively vs. passively; (iii) allocated to a particular sector or style, if any, and (iv) allocated to each approved Manager. Asset Class allocations will be reviewed annually in connection with the Target Allocation Percentage review. The choice of internal vs. external management shall be based on a periodic comparison of (i) the cost and availability of qualified Staff and systems support and (ii) the cost and availability of Managers. Currently, the Board makes exclusive use of external Managers. Active Management shall be considered for Asset Classes and styles of Marketable Securities (actively traded, public Equity, Fixed-income, Real Estate and Alternative markets), where empirical evidence shows that (i) a significant percentage [(e.g. 25%)] of Managers in such category (adjusted for survivorship) have consistently outperformed applicable Benchmarks for such category (net of fees) over a three (3), five (5) and ten (10) year period and (ii) that outperformance has been significant [(e.g. greater than 50 basis points)]. For categories not meeting this threshold, and subject to SURS’ MFDB Manager Utilization Goals and Manager Diversity Program, Passive Management will be followed. For all non-actively traded, public Equity, Fixed-income Real Estate and Alternative markets, Active Management will be used. Percentages allocated to a particular sector or style shall also be based on empirical evidence showing that (i) a significant percentage [(e.g. 25%)] of Managers in such sub-sector or style (adjusted for survivorship) have consistently outperformed applicable Benchmarks for such sub-sector or style (net of fees) over a three (3), five (5) and ten (10) year period and (ii) that outperformance has been significant [(e.g. greater than 50 basis points)]. If such threshold is not met, no allocation to such sub-sector or style will be made. Percentages allocated to each Manager, within an Asset Class, sector or style shall be based on: (i) the total dollar amount to be allocated to such category; (ii) the relative ongoing Risk-adjusted Returns (after fees) of applicable Managers; (iii) the unique attributes of such Manager’s investment style and potential benefits from diversification; and (iv) the overhead cost of managing the number of Managers within such category. Subject to SURS’ MFDB Manager Utilization Goals and Manager Diversity Program, the Board has a bias toward fewer Managers and more meaningful allocations. Managers selected by the Board will be given specific roles within each Asset Class, sub-sectors and styles, as applicable. These roles are specifically set forth for each firm as Manager Guidelines, established at the beginning of the relationship with SURS as part of the contract negotiation process. These guidelines cover such items as Benchmarks, Performance Targets, permissible investments, use of leverage, obligor concentrations, currency denomination, etc. Staff and Consultant will be responsible for implementation of these guidelines, supervision of the Managers, performance monitoring and reporting. Updates will be provided to the Board or Investment Committee as requested, or as deemed necessary by Staff and Consultant.

Exhibit 10

Public Equity Structure

A. Role The public Equity portfolio is expected to generate attractive absolute returns in a relatively low cost manner. The public Equity portfolio may also serve as a source of Liquidity.

B. Investment Structure

1. The public Equity allocation consists of a highly diversified mix of publicly traded global Equities. Common stocks, preferred stocks, or other Equity securities are typically utilized.

2. The public Equity portfolio is composed of U.S., non-U.S. and global Equity segments. o U.S. Equities

Managers invest primarily in publicly traded Equity securities of U.S. companies.

o Non-U.S. Equities Managers invest primarily in publicly traded Equity securities of

non-U.S. companies, in both developed and emerging markets. o Global Equities

Managers make the allocation decisions between U.S. and non-U.S. companies, in both developed and emerging markets.

3. Allocation The policy targets for the subcomponents of the Equity portfolio are set forth in Appendix 8.

4. Assets may be held in Commingled Funds or privately managed Separate Accounts.

5. Leverage is not typically allowed in the public Equity portfolio, with assets invested in long-only mandates. Use of leverage will be controlled as appropriate in the Manager’s Guidelines.

6. Implementation of the public Equity portfolio is via a combination of Active Management and Passive Management. Passive Management is currently most prevalent in U.S. Equities, which is a highly efficient market, but is also employed significantly in the non-U.S. Equity portfolio. The global Equity portfolio is currently implemented entirely via Active Management.

C. Benchmarks and Performance Targets

Benchmarks and Performance Targets for subcomponents of the Equity portfolio are set forth in Appendix10.

Fixed Income Structure

A. Role The Fixed Income portfolio is expected to provide steady income and significant diversification to the total Portfolio due to low correlation with other Asset Classes. In addition, the Fixed Income portfolio is expected to provide capital preservation, a

Exhibit 10

source of Liquidity, and competitive returns relative to an appropriate performance Benchmark.


1. The Fixed Income allocation consists of a diversified mix of publicly traded Fixed Income securities, invested across multiple asset types.

o Quality standards, such as credit, concentration, duration, liquidity, etc., will be specifically set forth in each Manager’s Guidelines, as applicable. In the event a security no longer meets the quality standards referenced above, the Manager may continue to hold such security if it believes doing so is in the best interest of SURS. The Manager shall provide written justification of the action to Staff [and Consultant] as soon as practicable.

2. The Fixed Income portfolio is composed of Core, Treasury Inflation-Protected Securities (“TIPS”) and Emerging Market Debt (“EMD”) segments.

o Core Fixed Income – This segment is further broken down as follows: Core Managers invest primarily in investment grade Fixed

Income issues, including Treasuries, agencies, corporate and mortgage securities, with sector allocations and risk profiles similar to those of the applicable Benchmarks.

Core Plus managers are given additional flexibility to add instruments with greater risk and greater potential return, such as high yield, global and emerging market debt and asset-backed securities for example, to Core portfolios.

Unconstrained Managers are less restricted in their ability to allocate between sectors and are not anchored to a traditional Fixed Income Benchmark.

o TIPS Managers invest primarily in inflation-linked, Fixed Income

securities in an effort to provide a hedge against unanticipated inflation.

o EMD Managers invest in debt securities of emerging market countries,

in both U.S. dollar and local currency terms, providing additional diversification and opportunities for higher yield.

3. Allocation o The policy targets for the subcomponents of the portfolio are set forth in

Appendix 8. 4. Assets may be held in Commingled Funds or privately managed Separate

Accounts. 5. Leverage is not typically allowed in the Fixed Income portfolio, with assets

invested in long-only mandates. However, short sales are permitted in certain mandates. Use of leverage will be controlled as appropriate in the Manager’s Guidelines.

6. Implementation of the Fixed Income portfolio is primarily via Active Management, although Passive Management is utilized to a modest extent in the Core segment for Liquidity purposes. The TIPS and EMD segments are implemented entirely via Active Management.

Exhibit 10

C. Benchmarks and Performance Targets Benchmarks and Performance Targets for subcomponents of the Fixed Income portfolio are set forth in Appendix 10.

Private Equity Structure A. Role

The Private Equity portfolio is expected to earn Risk-Adjusted Returns in excess of the public Equity markets, primarily due to the Liquidity Premium demanded by investors. The Private Equity portfolio is also expected to decrease the volatility of the Portfolio, through the diversification benefits of having lower correlations with other Asset Classes.


1. The Private Equity allocation generally consists of investments into private companies, either directly or through buyouts of public companies that result in a delisting of public Equity.

2. The Private Equity portfolio is composed of three major subcomponents. o Venture Capital/Growth

Venture capital partnerships primarily invest in businesses still in the conceptual stage (start-up or seed) or where products may not be fully developed, and where revenues and/or profits may be several years away.

Growth/later-stage venture capital partnerships typically invest in more mature companies in need of growth or expansion capital.

o Buyout These partnerships provide the equity capital for acquisition

transactions either from a private seller or the public, which may represent the purchase of an entire company, or a refinancing or recapitalization transaction where Equity is purchased.

o Other Mezzanine/subordinated debt partnerships provide the

intermediate capital between Equity and senior debt in a buyout or refinancing transaction.

Restructuring/distressed debt partnerships typically make new investments in financially or operationally troubled companies, often for a control position, with a view to improving the balance sheet and operations for a subsequent sale.

Special situations partnerships include organizations with a specific industry focus or transaction type not covered by the other subclasses mentioned above, or unique opportunities that fall outside such subclasses.

3. Allocation

o The Private Equity portfolio shall be diversified by time, subclass, and geography.

Exhibit 10

o Such diversification is expected to enhance returns, control risk, and reduce volatility.

4. Within the portfolio, the account structure is typically in funds. SURS commonly participates through a Fund-of-Funds structure, which provides Manager diversification and the opportunity for co-investment and secondary fund opportunities.

5. Leverage may be present in Private Equity investments, most commonly in buyout partnerships. Levels are generally determined on a fund-level basis.

6. Implementation of the Private Equity portfolio is via Active Management.

C. Benchmarks and Performance Targets Benchmarks and Performance Targets for the Private Equity portfolio are set forth in Appendix 10.

Real Estate Structure

A. Role The Real Estate portfolio is expected to generate attractive Risk-adjusted Returns through stable income and the opportunity for capital appreciation, while providing diversification to the overall Portfolio.


1. The Real Estate allocation consists of highly liquid, publicly traded real estate investment trust securities (“REITS”) and Direct Real Estate.

2. The direct Real Estate portfolio is composed of Core and Non-Core segments. o Core Real Estate

Core Real Estate Managers typically invest in properties that are well located and well leased with strong quality tenants. Core investments provide stable income with lower volatility.

o Non-Core Real Estate Non-core Real Estate Managers provide opportunities for higher

returns by investing in assets in need of re-tenanting, re-development, or renovation, or are otherwise in some form of distress.

3. Allocation o The policy targets for the subcomponents of the portfolio are set forth in

Appendix 8.

4. The REIT portfolios may be held in Commingled Funds or privately managed Separate Accounts. The account structure for Direct Real Estate is typically either Open-end Funds or Closed-end Funds. SURS may also participate through Fund-of-Funds structures, which provide further Manager diversification and the opportunity for co-investment and secondary fund opportunities.

5. Leverage is an inherent component of Real Estate investing and levels are generally determined on a fund-level basis.

6. Implementation of the REIT portfolio is via a combination of Active and Passive Management. The Direct Real Estate portfolio is implemented via Active Management.

Exhibit 10

C. Benchmarks and Performance Targets Benchmarks and Performance Targets for subcomponents of the Real Estate portfolio are set forth in Appendix 10.

Opportunity Fund

A. Role The Opportunity Fund portfolio is designed to allow flexibility for opportunistic investment. Investments in the Opportunity Fund may be a one-time occurrence, such as investments capitalizing on a market dislocation. Successful investments that evolve into a more permanent opportunity may ultimately be transitioned into another Asset Class with similar characteristics.

B. Investment Structure The structure of the Opportunity Fund is not fixed and may vary considerably over time.

C. Benchmark Benchmarks and Performance Targets for the Opportunity Fund portfolio are set forth in Appendix 10.

Hedged Strategies

A. Role The Hedged Strategies portfolio is expected to provide stable, Risk-adjusted Returns. Hedged Strategies attempts to offer downside protection and risk mitigation to the overall SURS Portfolio, through diversification lower correlations with other Asset Classes.

B. Investment Structure 1. SURS has implemented its Hedged Strategies through a Fund-of-Funds

structure. 2. The Fund-of-Funds portfolio shall consist of investments, by one or more Hedge

Fund-of-Fund Managers, in a select group of experienced Hedge Fund Managers that (i) pursue a variety of strategies and (ii) invest in a variety of markets, through limited partnerships, limited liability companies and other investment entities.

3. Hedge Fund-of-Funds Managers typically invest in Hedge Funds pursuing one or more of the following strategies: convertible bond hedging, fixed income relative value, distressed, long/short credit, event driven equities, equity market neutral, long/short equity, emerging markets, event driven, global macro, managed futures, niches strategies and opportunistic sectors, among others.

4. The Hedged Strategies portfolio will seek to invest globally across Asset Classes and will be diversified by underlying Hedge Fund Managers and sectors.

5. Within the portfolio, the account structure is typically in funds. 6. Leverage is not typically employed at the Fund-of-Funds level, but may be

employed to varying degrees at the Hedge Fund level. 7. Implementation of the Hedged Strategies portfolio is via Active Management.

Exhibit 10

C. Benchmarks and Performance Targets Benchmarks and Performance Targets for the Hedged Strategies portfolio are set forth in Appendix 10.

Commodities

A. Role The Commodities portfolio is expected to provide protection against the risks associated with inflation. In addition, the Commodities portfolio is expected to enhance the diversification of the total Portfolio and provide a source of Liquidity when other Asset Class portfolios are experiencing lower real returns due to unanticipated inflation. The Commodities portfolio generates no current income.

B. Investment Structure 1. The Commodities portfolio consists primarily of liquid positions in Commodity

Options, Futures, Swaps, and other financial instruments that provide direct or indirect exposure to Commodity markets. As collateral for the Commodity positions, cash, cash equivalents and other Fixed Income instruments may be held as required by exchanges or counterparties.

2. The Commodities portfolio is composed of Long-Only and Long/Short segments.

o Long-Only • Long-only strategies manage Commodities through key value

drivers, including term structure weighting, optimal roll yield, and tactical allocation among different sectors and individual commodities. Some long-only Managers pursue strategies that equalize risk among the four primary commodity complexes: precious metals, industrial metals, energy, and agriculture/livestock. Long-only strategies are expected to provide Beta exposure consistent with applicable Benchmarks.

o Long/Short • Long/short Managers have an absolute return objective, whereby

they can invest in both long and short commodities positions depending on market conditions. The Beta of long/short strategies tends to be quite low compared to the applicable Benchmark. Long/short Managers may invest in Commodities not typically represented in traditional Commodities’ Benchmarks.

3. Diversification While the Commodities portfolio’s positions are generally expected to be held across Commodity sectors, exposure to a particular Commodity sector (or to a particular Commodity within such sector) may be concentrated from time to time.

4. Within the portfolio, the account structure is typically in funds. 5. Leverage may be present in Commodities portfolios and is determined on a

fund-level basis.

Exhibit 10

6. Implementation of the commodities portfolio is currently via Passive Management, with a commitment to Active Management contemplated going forward.

C. Benchmarks and Performance Targets Benchmarks and Performance Targets for the Commodities portfolio are set forth in Appendix 10

Exhibit 10

VIII. Selection and Retention Introduction The Board has established the following guidelines for hiring Consultants, Managers and Custodians. In establishing these guidelines, it is the Board’s intention to assure all interested parties that decisions made in carrying out these actions occur in a full disclosure environment, characterized by competitive bids, objective evaluation, and proper selection and documentation. The overriding consideration with respect to all decisions is that they shall be made solely in the best interest of Members.

1. Consultant Selection and Retention A Consultant is any person or entity retained or employed by the Board to perform some or all of the roles set forth in Section IV. Search Process The search process for a Consultant shall be a competitive proposal process and shall generally follow the guidelines listed in Appendix 11. Exceptions to this competitive proposal process are allowed for (i) sole source procurements, (ii) emergency procurements, and (iii) at the discretion of the Board, contracts that are nonrenewable and one year or less in duration, so long as the contract has a value of less than $20,000. All exceptions granted under this section must be published on the SURS web site, shall name the person authorizing the procurement, and shall include a brief explanation of the reason for the exception.

2. Investment Manager Selection Managers will be selected to fill investment needs identified by the Staff and Consultant, pursuant to the Portfolio Construction guidelines set forth in Section VII, and approved by the Board. Selection Criteria The criteria used to determine the qualifications of Potential Managers are shown below:

Selection Criteria

1. Registration with the Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940, or otherwise qualified under the Illinois Pension Code.

2. Experience of the firm in the management of institutional

portfolios operated under prudent person standards.

3. Qualifications and/or depth of the firm’s professional staff.

4. Soundness of the firm’s investment philosophy and process.

Exhibit 10

5. The investment record of the firm and/or the firm’s principals in former associations, where that record is verifiable.

6. The adequacy of the firm’s trading, back office, accounting and reporting, and client servicing capabilities.

7. Fees.

The Board shall periodically establish Performance Targets for each Asset Class, sub-sector and style, as applicable, and for each Manager. Performance Targets for Active Managers shall include an Active Manager Premium, representing an excess Risk-adjusted Return over an applicable Benchmark (net of fees). Passive Managers are expected to match their Benchmark (gross of an acceptable Tracking Error that includes fees), on a Risk-adjusted Return basis. Current Performance Targets approved by the Board are set forth in Appendix 10. When examining investment records of Potential Managers, Performance Targets shall be used as a minimum return criteria. Historic Risk-adjusted Returns for three (3), five (5) and ten (10) year Trailing Periods (or from inception, if the Board considers such shorter period representative of such Potential Manager’s performance), shall be used in comparison to Performance Targets. However, Calendar-year Returns, Rolling Returns and other performance metrics may also be considered in comparison to Perfromance Targets. Candidates are also required to make certain disclosures regarding the diversity of their staff and vendors. These disclosures shall be considered by the Board, within the bounds of financial and fiduciary prudence, prior to the awarding of an Investment Management Contract. Emerging Manager Criteria SURS does not use any criteria that would be considered a barrier to an Emerging Investment Manager, such as a minimum number of years in business, a minimum level of assets under management or historic Risk-asjusted Returns for a limited number of years. If an Emerging Investment Manager meets all other criteria established for a specific search, such Manager shall be eligible for consideration, subject to the bounds of financial and fiduciary prudence.

Search Process

The search process for Manager(s) shall be conducted in a substantially similar manner to that of the Consultant search process, discussed in Section VIII,1. and the guidelines set forth in Appendix 6 (with the exception of point[s] 9. [and 10].). Exceptions to this process include Qualified Fund of Funds Management Services and investments by SURS in follow on funds to Closed-end Funds in which SURS has previously invested. Additional funding may also be awarded to existing Managers with the approval of the Board. The Consultant may assist Staff in the

Exhibit 10

search process. Staff and Consultant utilize databases to ensure that qualified Emerging Investment Managers are included in the pool of eligible candidates. The Board is currently pursuing a framework for pre-qualifying potential Managers in private market sectors, where it is impractical to follow a traditional RFP process.

Documentation Upon approval by the Board for the hiring of a Manager, an Investment Management Agreement and other related documents shall be executed prior to funding the account. All Investment Management Agreements will be in compliance with the relevant section(s) of the Illinois Compiled Statutes, and the five year limitation on the duration of a contract does not apply. Contingent and Placement Fees Contingent and placement fees are prohibited per statute.

3. Custodian Selection NOTE: To be completed

4. Quiet Period Policy Purpose The Quiet Period policy establishes guidelines by which Board and Staff will communicate with Potential Consultants, Custodians, Managers and Vendors during the search process. Policy Objectives The objectives of the policy are to ensure that:

• All Potential Consultants, Custodians, Managers and Vendors have equal access to information regarding the search parameters;

• Communications related to the selection are consistent and accurate; and • The process of selecting Potential Consultants, Custodians, Managers

and Vendors is efficient, diligent, and fair. Policy Guidelines

Exhibit 10

Guidelines to be instituted during the search for a Potential Consultant, Custodian, Manager and Vendor are set forth in Appendix 12. 5. Investment Manager and Fund Monitoring

Marketable Securities Portfolios An evaluation of each Manager shall be conducted annually by the Staff and the Consultant. The evaluation shall be based on whether the Manager has met its Manager Guidelines, including its Performance Target. Evaluation will include the results of periodic due diligence meetings and phone calls. Documenting the annual evaluation, Staff and Consultant(s) shall issue Manager Evaluation Reports. Reports shall include a recommendation to: (i) retain the Manager; (ii) retain or change the Manager’s funding allocation; (iii) place the Manager on Watch List (see ‘Watch List‘ below); or (iv) terminate the Manager (see Section IX, ‘Investment Manager Termination Guidelines.’ Between annual reviews, Managers may be placed on Watch List or, subject to Manager Termination Guidelines, the Staff or Consultant may recommend immediate Termination. Closed-end Fund and Separate Account Evaluation Limited partnership interests in private Closed-end Funds and investments in private markets Separate Accounts (i.e., private equity, real estate, infrastructure, etc.) will be reviewed by Staff [and Consultant] annually. The evaluation shall be based on whether the Manager has met its Manager Guidelines, including its Performance Target. Evaluation will include the results of periodic due diligence meetings and phone calls. Documenting the annual evaluation, Staff and Consultant(s) shall issue Manager Evaluation Reports. Reports will include a recommendation to: (i) retain the Manager; (ii) make follow-on investments or investments in subsequent Closed-end Funds or Separate Accounts; (iii) place the Manager on Watchlist; and (iv) subject to legal review, pursue available exit strategies. To the extent that significant concerns about a Closed-end Fund or Separate Account or material events arise in the interim, the Staff or Consultant shall communicate their concerns to the Investment Committee/Board and recommend available options, including exit strategies. Watch List The Watch List will consist of Managers that are not meeting the requirements of their Manager Guidelines including, but not limited to, the follwing:

• Investment Performance for Marketable Securities – Three (3) year rolling Risk-adjusted Returns (net of fees) are below the Performance Target for two consecutive quarters or other performance metrics are significantly below Performance Targets, for any two (2) consecutive quarters;

Exhibit 10

• Investment Performance for Other Securities – Significant undrperformance of applicable performance metrics for any two (2) consecutive quarters;

• Change in ownership, organizational structure or key personnel; • Significant loss of clients or assets under management; or • Significant change in investment style.

Managers will be removed from the Watch List to the extent that the Board believes that acceptable remedial actions have been taken, or, upon Termination.

Exhibit 10

IX. Investment Manager Termination Guidelines Introduction From time to time it will be necessary for the System to terminate a contractual relationship with a Manager. Pursuant to its fiduciary duties, the Board has established the following guidelines to assist in making these Termination decisions. In establishing these guidelines, it is the Board’s intention to carry out these actions using objective evaluation, proper documentation and full disclosure. The overriding consideration with respect to all decisions is that they shall be made solely in the best interest of Members and consistent with all legal requirements. Clearly Defined Objectives Any action to terminate a Manager should be based on one or more of the following primary criteria: • A Watch Listed Manger has been unable to remediate concerns to the Board’s

satisfaction; • Investment Performance described under Watch List above, continues for four (4)

consecutive quarters; • Any other Watch List guideline is violated by a Manager and is not remediated to the

satisfaction of the Board; • Default under an Investment Management Agreement; • Change in Asset Allocation, which reduces or eliminates the need for all existing

Managers; or • Failure to satisfy any other legal or Policy requirements.

Prior to a Termination decision, a thorough evaluation of the relevant criteria supporting such action shall be reviewed by the Board. Documentation regarding any such action shall include the reasons for such decision. In the event that termination of a Manager is warranted under the Manager Termination Guidelines, and prompt termination of the Manager is necessary to protect and preserve System assets, SURS Staff may, with the prior approval of the Executive Director, terminate the Manager prior to Board action. The Board shall be promptly notified of the decision to terminate the Manager and the decision shall be presented to the Board for ratification at its next meeting.

Investment Manager Transition In the event of the need to transfer the management of assets from one Manager to another, Staff will effect the change in as efficient and prudent a manner as possible. The use of Transition Manager(s), which could include the use of a Cash Overlay Manager, is permitted when deemed in the best interests of the System. Transition plans may include, but are not limited to, the following: a transfer of securities to an appropriate Passive Investment, crossing securities with other institutional investors, or a transfer of securities to another approved Manager.

Exhibit 10

X. Performance Evaluation and Reporting Performance Evaluation Marketable Securities Portfolios Rates of Return and Risk-adjusted Returns, on a net-of-fees basis, shall be calculated quarterly by the Custodian to measure the performance of each major Asset Class. Actual Trailing Period returns for fiscal year-to-date, one (1) year, three (3) year, five (5) year, ten (10) year periods will be compared to comparable returns for applicable Policy Portfolio indices. Rates of Return and Risk-adjusted Returns, on a net-of-fees basis, shall also be calculated quarterly by the Custodian to measure the performance of each individual Manager. Actual (i) Trailing Period returns for one (1) year, three (3) year, five (5) year, ten (10) year periods and from inception and fiscal year-to-date and rolling three (3) year returns for the previous four (4) quarters, will be compared to comparable Performance Targets, to determine Excess Returns and Excess Risk-adjusted Returns. For individual Managers, a number of other performance measures shall be calculated quarterly. These may include such items as peer group performance, Risk Statistics and Performance Statistics. Private Markets Portfolios For Private Equity, Direct Real Estate and infrastructure portfolios, Internal Rates of Return shall be calculated quarterly by the Custodian. These returns will be used to measure performance of the portfolios in comparison with Policy Portfolio indices and Performance Targets for Asset Classes and individual Managers. Returns are calculated quarterly in arrears. Other more tailored performance measures may also be used for absolute and peer group comparisons. Total Portfolio Actual returns for the total Portfolio are compared to returns on the Poicy Portfolio. Returns are calculated quarterly by the Custodian. Style Analysis Staff and Consultant will periodically analyze Manager portfolios, as well as the aggregate Asset Class portfolios, to confirm that such portfolios conform to individual Manager style Benchmarks and aggregate Asset Class indices. Metrics such as Active Share will be used in this analysis. Significant deviations shall cause individual Managers to be placed on Watch List and, if not remediated, shall lead to Termination.

Performance Reporting Performance reports (see Appendix 13 for sample formats) shall be prepared by [the Custodian][Consultant][Staff] quarterly and included in SURS Quarterly Investment Update.

Exhibit 10

The Consultant will analyze the system’s performance and periodically provide the Board with a detailed report on the total Portfolio, Asset Classes and individual Managers. Annually, the Staff and Consultant will prepare and present a comprehensive review of the fiscal year results. Market Values All assets in the Portfolio will be Marked-to-Market at least quarterly, to provide an estimate of the price at which .they could be sold. Following is a description of this process. Marketable Securities The Custodian provides price indications for stocks, bonds, warrants, futures, options, etc. traded on public exchanges. Private or Illiquid Securities For Private Equity, Real Estate (ex REITs), Hedged Strategies and certain other Alternatives, each individual Manager or Fund-of-Funds Manager has the responsibility for estimating and publishing the market value of these investments. The valuation and appraisal methods used should be consistent with current CFA Institute and industry standards.

Exhibit 10

XI. Safeguard of Assets • Qualification of Service Providers

Any firm which SURS retains to manage, control or have custody of assets shall be qualified by thorough due diligence. Appropriate agreements with the firms and trust agreements shall minimize any risk of loss of assets or income.

• Asset Limits

There are cost and service advantages in firms managing or having custody of large pools of assets so that in the absence of any statutory provision(s) to the contrary, there shall be no specific limit on the size of assets controlled or held in custody by any one firm within the asset allocation guidelines. However, limits may be considered on an individual manager basis and will reflect such issues as type of mandate, strength and stability of organization, risk characteristics, etc.

• Monitoring of Service Providers

There shall be continuous monitoring of firms which manage or have custody of assets to assure the firms continue to be stable and financially secure. Instability of any firm or financial weakness shall be reason to transfer custody and/or management of assets from the firm.

• Authorization to Transfer Funds

Transfer of funds between accounts must be evidenced in writing or conducted electronically by an authorized Staff Member and be in compliance with the Custodial bank’s procedures. The following positions have been designated by the Board to have the authority to give direction to the Custodian on any and all actions with respect to the Master Trustee relationship between the Board and the Custodian: Executive Director, Chief Investment Officer, and Deputy Chief Investment Officer. The Senior Investment Officers have been designated by the Board to have the limited authority to only approve payments initiated through the Trade Order Entry system related to initial or subsequent investments in limited partnerships, real estate, infrastructure, or other investments approved by the Board.

• Insurance Requirements

All investment managers shall be required to secure and maintain throughout the term of the investment management relationship with SURS insurance that satisfies the requirements set forth below and that is provided by insurer(s) rated A- or better by A.M. Best & Company. Specific insurance requirements are set forth in each manager’s Investment Management Agreement. Each investment manager shall be required to provide to the Board: (i) evidence of the requisite insurance policies upon initiation of the contract, (ii) an annual certification that the insurance requirements continue to be satisfied, and (iii) evidence of continued satisfaction of

Exhibit 10

the insurance requirements upon request. With the exception of the Manager Diversity Program, the minimum insurance required for each investment manager shall include: (i) a bond protecting SURS assets that meets the requirements of and that is in the amount specified under ERISA and the regulations thereunder; and (ii) errors and omissions coverage in an amount equal to the greater of: a) $5 million or, b) 5% of the SURS assets under management, up to a maximum as established in the investment management agreement, but not to exceed $50 million. For investment managers in the Manager Diversity Program, the minimum insurance required for each investment manager shall include: (i) a bond protecting SURS assets that meets the requirements of and that is in the amount specified under ERISA and the regulations thereunder; and (ii) errors and omissions coverage in an amount not less than $1 million of coverage. The insurance shall protect SURS against losses from the negligent acts, errors or omissions of the investment manager.

• Custodial Credit Risk

Pursuant to the 40 ILCS 5/15-166, the Board of Trustees has statutory authority to be the custodian of all cash and securities belonging to the System created under Article 15 of the Pension Code. Pursuant to 40 ILCS 5/15-167, the Board may deposit SURS trust funds with one or more banks, savings and loan associations, or trust companies. This policy addresses how SURS will handle custodial credit risk. Credit risk is the risk that an issuer or other counter-party to an investment transaction will not fulfill its obligations. Custodial credit risk is the risk that, in the event of the failure of a financial institution or counter-party to a transaction, SURS would not be able to recover the value of deposits or investments in the possession of an outside party. To minimize this risk, SURS takes the following measures:

1. Performs due diligence for custody financial institutions and advisors with which SURS will do business and appropriately documents business relationships with these service providers.

2. Provides investment parameters for the investment vehicles detailed in the specific investment management agreements.

3. Monitors the financial condition of the custodian. If there is cause for concern, the Board of Trustees will determine appropriate action.

4. Endeavors to have all investments held in custodial accounts through an agent, in the name of custodian’s nominee3, or in a corporate depository or federal book-entry system. For those deposits or investment assets held outside of the custodian, SURS will follow applicable regulatory rules.

5. Requires the custodian to meet the following requirements: • The custodian or its sub-custodians will provide safekeeping of all SURS

securities in segregated accounts that reflect the holdings of SURS; the custodian will not commingle SURS securities with the custodian’s own securities.

• Monthly reports will be provided/made available by the custodian.

Exhibit 10

XII. General Investment Restrictions and/or Guidelines

• Investment Authorization No investment or action pursuant to an investment may be taken unless permitted by this Policy or by each Investment Manager’s Guidelines. Exceptions may be made subject to prior review by, and express written authorization from, the Investment Staff and Consultant. In the event that any material exception is discovered which has not been specifically authorized, the Staff will immediately provide to the Board a detailed explanation of the exception and action being taken to remedy the situation.

• Mini-Tenders This guideline applies to all Managers of SURS. It should be considered as an integral part of each Investment Manager’s Guidelines. This guideline applies to tender offers that are exempt from registration requirements imposed by the U.S. Securities and Exchange Commission (such tender offers are generally known as “mini-tenders”; currently where the total amount of the tender offer is limited to five percent (5%) or less of the outstanding shares of the issuer). Managers may tender shares owned by SURS only upon the following terms and conditions:

1. Either the securities involved in the tender are publicly traded, and the issuer of the shares and the entity making the tender offer are the same, OR

2. The Manager provides three (3) days’ advance written notice to SURS that

it is going to tender shares pursuant to a mini-tender offer.1

3. Each notice must be in writing and must include the following information:

a. The identity of the offeror and what due diligence has been performed by the Manager to satisfy itself as to the creditworthiness of the offeror.

b. The identity of the transfer or receiving agent, whether or not the

transfer or receiving agent is affiliated with the offeror, and what due

1The sole purpose of the notice requirement is for the investment manager to confirm that it has conducted due diligence adequate to protect the SURS assets involved in the mini-tender, and SURS does not assume responsibility for such due diligence or for the investment decision. The investment manager shall retain full fiduciary responsibility for the investment decision, including a determination that a decision to tender SURS’ securities under the terms and circumstances involved in the mini-tender is prudent, is protective of SURS’ assets, and is otherwise in accordance with the Manager’s fiduciary duties to SURS, which determinations may involve due diligence and consideration of factors beyond those outlined in this section [3], in the Manager’s sole discretion.

Exhibit 10

diligence has been performed by the Manager to satisfy itself as to the creditworthiness of the transfer agent.

c. The expiration date of the offer, the deadline for settlement of the

tender, and whether the terms of the tender offer permit the offeree to revoke the tender if payment is not received by the settlement deadline.

d. Whether securities tendered on behalf of SURS will be maintained in

trust or escrow pending receipt of payment for the securities, or the other protections that will be in place to ensure the safekeeping of SURS’ securities pending receipt of payment.

Exhibit 10

XIII. Corporate Governance

A. Proxy Voting Guidelines

1) Domestic Shares

A proxy voting service, pursuant to a contract with SURS, will vote the proxies of domestic shares according to the proxy voting service’s proxy voting guidelines, as customized for SURS and approved by the SURS Board. All proxy votes not specifically addressed by the proxy voting service’s approved proxy voting guidelines will be voted consistently with the Council of Institutional Investors’ Corporate Governance Policy. Proxy votes not addressed by either of the above standards will be voted for the exclusive benefit of System participants and beneficiaries, generally in favor of enhancing shareholders’ long-term value. The proxy voting service shall provide to SURS regular reports of proxy voting activity, pursuant to the terms of a contract with SURS.

2) Non-Domestic Shares

Investment managers shall vote the proxies of non-domestic shares under their discretion and report the results of those votes not less than annually. Proxies shall be voted for the exclusive benefit of System participants and beneficiaries. In general, proxies should be voted in favor of enhancing shareholders’ long-term value. As a general rule, votes that fall within the context of Routine and Non-Routine Matters should be made in accordance with the following guidelines:

• Routine Matters: Routine proxy proposals may be voted in support of company proposals unless doing so would be contrary to the interests of the shareholders. Routine matters include the following, unless a proxy contest is being waged with respect to such matter, in which case it becomes Non-Routine: o Election of directors; o Selection of auditors; o Corporate name change; o Amendment of Articles of Incorporation that are required to

comply with federal or state regulation; and o Change in the date, time or location of annual meeting.

• Non-Routine Matters: Non-Routine proposals should be

carefully analyzed and considered on a case-by-case basis. Non-Routine proposals that do not eliminate the rights of shareholders, unreasonably dilute or impair the status of securities held, or impair ownership status of the securities may be voted with management. Non-Routine proposals that would or might impair

Exhibit 10

the economic interests of shareholders should be voted against management.

• Reporting: Investment managers shall report the results of their

votes at least annually. The report shall contain at a minimum the name of the corporation, a brief description of the proposal, the vote cast, and whether the vote cast was with or against management.

B. Securities Litigation Policy

1) Identification Of Potential Claims

a) In order to weigh the costs and benefits of the various alternatives as specified below, SURS Staff will identify potential claims by determining if it bought or sold the securities of a company during applicable periods.

b) SURS Staff will regularly match the SURS portfolios against reports of

securities litigation cases obtained from Consultants, law firms engaged for securities litigation, and from other sources deemed reliable by Staff.

c) If SURS did not buy or sell securities of a company during the applicable

period, the inquiry will end. If SURS had purchases or sales during the period, evaluation of the potential claim will proceed as specified below.

2) Evaluation Of Potential Claims

a) If SURS bought or sold securities during an applicable period, evaluation of the alternatives available will begin with an initial assessment of the size of the potential claim.

b) When potential losses are deemed insignificant, further action will

ordinarily be limited to monitoring as specified in Part 3 below to ensure that class member claims are filed if and when there is a right to do so, unless there are extenuating circumstances that warrant further consideration by Staff and the Board.

c) When potential losses are deemed significant, the alternative courses of

action available shall be identified by the Staff. Alternatives will likely include several different courses of action, such as:

i) Monitoring the course of a class action suit and filing a claim at the

end to participate in a class payment. ii) After consultation with the Illinois Attorney General’s office,

monitoring the course of a class action suit, but objecting to a proposed settlement if there are reasons to object.

iii) After consultation with the Illinois Attorney General’s office, seeking to control a class action by seeking designation as lead plaintiff, either singly or with others.

Exhibit 10

iv) After consultation with the Illinois Attorney General’s office, opting out of a class action suit and filing a separate suit, either singly or with others.

d) The relative merits of each alternative will be weighed and considered by

Staff, as well as by the Illinois Attorney General’s Office.

e) Staff and the Illinois Attorney General’s office will make a recommendation to the Executive Committee of any course of action beyond participating in the litigation as a passive member of the class. The Executive Committee will have the authority to approve any course of action beyond monitoring the case. If the Executive Committee approves active participation in the litigation, additional authorization is not necessary to align with other potential plaintiffs in application for named plaintiff status if such an action is agreed appropriate by the SURS General Counsel and the SURS Executive Director. In such instances, the Attorney General will be asked to represent SURS in such action.

3) Monitoring a) The Staff will utilize the services of the system’s custodian, as well as

the services of any consultants, including Securities Litigation counsel, with expertise in this area chosen by Staff, to monitor pending cases which involve securities that SURS bought and sold during the relevant periods to evaluate any settlements proposed and to file claims as necessary for SURS to participate in distributions of funds. To the extent that Staff finds a proposed settlement inadequate to protect the interests of the System, the Executive Committee may authorize action to file legal objections. Authorization is not necessary for staff to file an objection to attorneys’ fees or expenses if an objection is agreed appropriate by the SURS General Counsel and the SURS Executive Director after consultation with the Illinois Attorney General.

4) Legal Action

a) Where the Executive Committee has determined under Part 2 that the interests of the System will be best served by seeking designation as lead plaintiff or by opting out of a class action, the Illinois Attorney General, acting as legal counsel to the System, will choose appropriate counsel and will negotiate a fee agreement, if necessary. If the Executive Committee determines that appropriate counsel is a firm not on the approved list, the recommendation of such firm shall be made to, and approved by, the Executive Committee.

b) Where the Executive Committee and the Attorney General disagree as to

the desirability of seeking designation as lead plaintiff or opting out of a class action, the Executive Committee shall act in accordance with its fiduciary obligations in making a final determination.

c) Any legal action authorized or taken shall be reported to the Board of

Trustees, who shall also be provided periodic updates on the status of

Exhibit 10

such actions.

5) Approved Law Firms

a) SURS Staff will interview and select, through a competitive proposal process, a roster of no more than three qualified securities litigation firms. This roster will constitute SURS’ “approved list.”

b) In cases where the initiation of litigation is a formality designed to

provide support for another institutional investor, SURS Staff may recommend that the most sensible and cost-effective source of legal representation will be the SURS General Counsel or the legal counsel representing the institutional investor that SURS wishes to support.

Exhibit 10

XIV. Emerging Investment Managers, MFDB Managers and Minority-Owned Broker/Dealers SURS is committed to providing opportunities for Emerging Investment Managers and Minority Owned Broker/Dealers. SURS is also committed to providing ongoing opportunities for minority-, female-, and persons with a disability-owned (“MFDB”) Managers that have advanced beyond the statutory definition of Emerging Investment Managers. In determining the status of a business enterprise, SURS will use the definitions found in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, 30 ILCS 575/2(A), (B). The Illinois Pension Code, in 40 ILCS 5/1-109.1, encourages the Board to use Emerging Investment Managers in managing the System’s assets to the greatest extent feasible within the bounds of financial and fiduciary prudence, and to take affirmative steps to remove any barriers to the full participation of Emerging Investment Managers in investment opportunities afforded by the System. Furthermore, in accordance with the Illinois Pension Code, SURS encourages its Fund-of-Fund Managers to use Emerging Investment Managers as subcontractors when the opportunity arises.

A. Goals for Utilization of MFDB Managers

Subject to the bounds of financial and fiduciary prudence, the Board has established specific MFDB Manager Utilization Goals. These include: (i) a percentage of total Portfolio assets and (ii) a percentage of Actively Managed assets. Furthermore, in accordance with 40 ILCS 5/1-109.1 and with the intent of having MFDB Managers significantly represented in each broad Asset Class and not concentrated in any particular Asset Class, the Board has established additional sub-goals for Actively Managed assets, specific to Minorities, Females and Persons with Disabilities, for each major Asset Class. The current MFDB Manager Utilization Goals are set forth in Appendix 9. While these objectives may not be immediately achieved, the desire is to show meaningful progress toward these goals over time. These goals shall be reviewed annually.

B. Goals for Utilization of Minority-Owned Broker/Dealers The Board has set minimum expectations for the use of qualified Broker/Dealers that meet the definition of a minority-owned business, female-owned business or a business owned by a person with a disability (“Minority-owned Broker/Dealer”) by the System’s Managers. Only trades executed directly with Minority-owned Broker/Dealers will be considered in the achievement of these goals. Summary goals for Minority-owned Broker/Dealer Utilization have been established for the aggregate U.S. equity, Non-U.S. Equity and Fixed Income Asset Classes as set forth in Appendix 10. SURS seeks to consistently meet or exceed these goals, while achieving best execution.

Exhibit 10

In order to achieve the aggregate U.S. Equity, Non-U.S. Equity and Fixed Income goals, minimum expectations have been established for individual Managers within a number of Sub-Asset Classes. [Utilization Goals are included in Manager Guidelines]. Subject to best execution, SURS requires its Managers to meet the minimum expectations set forth in Appendix 11 for each rolling twelve (12) month period. Reporting Guidelines Each Manager will submit a compliance report within 30 days after March 31, June 30, September 30 and December 31 of each year. Reporting will be monitored over a rolling twelve-month period. Consequences of Non-Compliance Failure to meet Minority-owned Broker/Dealer Utilization Goals will lead to the following:

1) Staff notification to the non-compliant Manager; 2) Placement of the Manager on Watch List;

3) Staff examination of reasons for non-compliance; and

4) Remediation plan acceptable to the Staff or recommendation to the Board to

Terminate. C. Manager Diversity Program

Objectives and Goals SURS has implemented a Manager Diversity Program (“MDP”) to support Emerging Investment Managers in their early stages of development. The programs primary goal is to identify Emerging Investment Managers that will be initially awarded smaller allocations, within the MDP. Once such Managers have reached an acceptable measure of performance (see ‘Growth Opportunities,’ below), they shall be awarded meaningful allocations in the Actively Managed Portfolio. The MDP is a Manager-of-Managers program, overseen by SURS Staff. Staff may recommend, for the Board’s approval, one or more Manager-of-Managers that will play an active role in identifying Potential Managers for the program and will maintain an ongoing involvement in the evaluation and performance of such Managers. Benchmarks and Performance Targets Manager Benchmarks and Performance Targets are identified in the Manager Guidelines for each Manager in the program. Benchmarks and Performance Targets for the MDP for each applicable Asset Class are the same as those set forth in the applicable Appendix.

Exhibit 10

Search and Selection Process The criteria used to determine the minimum qualifications of Potential Managers to be selected for an assignment are the same as the criteria generally applicable to Manager selection, discussed in Section VIII, 2. entitled “Investment Manager Selection.” Investment Manager Evaluation Managers in the MDP will be evaluated in the same manner as that set forth in Section VIII (‘Selection and Retention’). Managers will be placed on Watch List as described in Section VIII. Termination decisions will follow the guidelines set forth in Section X (‘Investment Manager Termination Guidelines’). An evaluation of each Manager shall be conducted annually. Authority to Hire/Retain/Terminate Investment Managers Staff shall work with the Manager-of-Managers to identify, recruit, and monitor MDP Managers. Staff shall make recommendations to the Board, for its approval, on the selection, retention and Termination of MDP Managers.

Retention and Termination decisions will be fully documented and will include a full description of the reason for the action. Growth Opportunities The following factors are considered in determining when an MDP Manager should be considered for a larger allocation in the SURS Portfolio: • Stability in Manager’s Organization; • Growth in Assets Under Management; • Confidence in Manager’s investment process; • Meeting its Performance Targets; and • Product Fit. In addition to the factors mentioned above, the needs of the overall SURS investment program will be considered.

Initially adopted December 8, 2006; Revised April 26, 2007; September 21, 2007; September 12, 2008; April 23, 2009; September 11, 2009; December 2, 2009; September 3, 2010; September 16, 2011; October 25, 2012; September 13, 2013, September 19, 2014; September 11, 2015; [ ], 2016.

Exhibit 10

Exhibit I Glossary of Terms

Active Management means the style of fund management whereby Managers attempt to outperform a given Benchmark or Performance Target, after fees, through superior security or sector selection, market timing, technical modeling or other active technique. Active Manager Premium means a percentage spread above an applicable Benchmark that represents the minimal additional return required by SURS to pursue Active Management for a given Asset Class. Active Share means a measure of how the security holdings of a given portfolio differ from the holdings of an index or Benchmark. Actuarially Determined Contribution means [ ]. Alternative means an investment that is not one of the three major Asset Classes, Equities, Fixed Income and Cash. Annualized Alpha means a measure of the relationship between a Fund performance and the performance of a Benchmark and equals the excess return where the Benchmark return is zero. Annualized Return means the return realized over a period of time, expressed as a time-weighted annual percentage. Appropriation means [ ]. Asset Allocation means an investment portfolio technique that aims to balance risk and create diversification by dividing assets among major Asset Classes, such as Equities, Fixed Income, Cash and Alternatives. Asset Class means a group of securities that exhibits similar characteristics, behaves similarly in the marketplace and is subject to the same laws and regulations. Major Asset Classes include Equities, Fixed Income and Cash. Asset Class Percentage means, with respect to the Strategic Policy Target, Interim Policy Target or Policy Portfolio, the percentage that a given Asset Class represents of the total. Asset/Liability Position means a measurement, as of a point in time, of the System’s ability to meet its future obligations with available assets and future cash inflows. Asset/Liability Study means an analysis of the System’s available assets and future cash flow (including Appropriations) and it ability to meet current and future Member benefits and other System obligations. Assets Under Management means the market value of assets that a Manager manages on behalf of investors.

Exhibit 10

Assumed Rate of Return means the Expected Rate of Return adopted by the Board as one of the actuarial assumptions used to determine the System’s net pension liability in accordance with GASB Statement No. 67. Board means the SURS Board of Trustees. Broker/Dealer means a firm in the business of buying and selling securities that may act as either an agent or a principal in a transaction. Benchmark means a standard against which the performance of a Manager can be measured and usually consists of a market index or market-segment index representative of a Manager’s investment style. Beta means a measure of volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole. Calendar Year Returns means trailing period returns ending on the last day of the calendar year. Cash Flow means the net amount of cash moving into and out of an account or an entity. Cash Overlay Manager means a Manager that is used to minimize an unintended cash position in a portfolio or to transition a portfolio in need of Rebalancing. Cash Overlay Services means various financial techniques such as Futures and Options to achieve a given overlay strategy. Chief Investment Officer or CIO means Closed-end Fund means a [publicly traded] investment company that raises a fixed amount of capital, through an initial public offering, by issuing a fixed number of shares. Commingled Fund means an institutional fund which invests in a portfolio of assets and is funded by pooling the investments of multiple investors. Commodity means a basic good, most often used as an input into the production of other goods or services. Consultant means any person or entity retained or employed by the Board to perform some or all of the roles set forth in Section IV. Core Fixed Income means a Sub-Asset Class consisting of Traditional Fixed Income, Core Plus Fixed Income and Unconstrained Fixed Income securities. Core Plus Fixed Income means a Sub-Asset Class consisting of Traditional Fixed Income securities plus other instruments such as high yield, global or emerging market debt and asset-backed securities.

Exhibit 10

Core Real Estate means a Sub-Asset Class consisting of real estate assets that are well located and well leased with strong quality tenants and which provide stable income with low volatility. Covariance of Returns means the measure of the degree to which returns on two risky assets move in tandem, with positive covariance describing two asset returns that move together and negative covariance describing two asset returns that move inversely. Custodian means an organization that meets the requirements set forth in Section IV. Defined Benefit Plan means the SURS’ Traditional Benefit Package and the Portable Benefit Package that provide retirement, disability, death and survivor benefits to eligible participants and annuitants. Defined Contribution Plan means the SURS’ Self-Managed Plan. Direct Real Estate means a Sub-Asset Class consisting of both Core Real Estate and Non-core Real Estate. Down Capture Ratio means the percentage of the market’s Downside movement ‘captured’ or achieved by a Fund. Emerging Investment Manager means, as defined by 40 ILCS 5/1-109.1(4), “a qualified investment adviser that manages an investment portfolio of at least $10,000,000 but less than $10,000,000,000 and is a ‘minority owned business’, ‘female owned business’ or ‘business owned by a person with a disability’ as those terms are defined in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.” Emerging Markets Debt or EMD means a Sub-Asset Class consisting of Fixed Income securities of emerging market countries. Employee means [ ]. Equity means a stock or other security representing an ownership interest in an entity. Excess Return means the difference between the Rate of Return on a Fund, Asset Class or the Portfolio and the Rate of Return of the applicable Performance Target. Excess Risk-adjusted Return means the difference between the Risk-adjusted Return on a Fund, Asset Class or the Portfolio and the Rate of Return of the applicable Performance Target. Executive Director means the chief executive officer of SURS. Existing Service Provider means a Service Provider that is currently under contract with SURS to provide a given investment related service.

Exhibit 10

Expected Rate of Return means a probability weighted estimate of a range of future rates of return. External Counsel means a law firm that is engaged by SURS, from time to time, to provide legal services in connection with its investment activities. Financial Goal means, as set forth in the SURS Strategic Plan, to assure the financial soundness of the System. Fixed Income means, as related to securities, an investment that provides a return in the form of a fixed periodic payment, with the eventual return of principal over time or at maturity. Fund means a securities portfolio, that may take various legal forms and that is designed to meet various investor requirements. Fund-of-Funds means a multi-manager investment, in which a single manager manages a fund that invests in multiple underlying funds, each managed by s separate manager. Future means a legal agreement to buy or sell a Commodity or financial instrument at a predetermined price at a specified time in the future. General Counsel means the chief legal officer of SURS. Hedged Strategies means the range of Hedge Fund styles included in the Portfolio. Hedge Fund means an Alternative investment designed either to generate above market returns (through Active Management) or more moderate returns (with a reduction in downside risk), while generating low correlation with other Asset Classes. Hedge Fund-of Funds means a Fund-of-Fund structure with Hedge Funds as the underlying funds. Illinois Compiled Statutes means [ ]. Illinois Pension Code means [ ]. Information Ratio means a measure of the degree to which a Fund has outperformed its Benchmark to the consistency by which the Fund has outperformed the Benchmark, defined as the Fund’s Excess Return divided by the Fund’s Tracking Error. Interim Policy Target means the intermediate Target Allocation Percentages for each Asset Class, reflecting the necessity of a gradual shift of assets to the Strategic Policy Target, due to practical implementation considerations and Liquidity constraints. Investment Committee means a committee consisting of at least three (3) members of the Board that assists the Board in the development of investment strategies and the review of prospective investments with the goal of supporting the Board in prudent investment and

Exhibit 10

expenditure of System assets. The Investment Committee provides investment oversight in support of the Board through the review of investment Policies and practices and the performance of investment vehicles. Investment Management Agreement means the legal contract between SURS and a Manager, setting forth the duties and obligations of the parties with respect to the Manager’s investment management engagement. Investment Manager Termination Guidelines means those guidelines set forth in Section IX. Investment Risk Management Policy means the policy set forth in Section VI. Liquidity means the degree to which an asset or security can be quickly bought or sold in the market for cash, without affecting the asset’s or security’s price. Liquidity Premium means a premium demanded by investors to invest in a security that is considered to be illiquid and not easily converted to cash without a loss in value. Long Only means an investment style where assets represent only Long Positions. Long Position means a holding of assets, whereby the value of such position will rise if the price of the security increases. Long/Short means an investment style that allows for both Long Positions and Short Positions, where the value of ‘short positions’ rise when the price of the security falls. Marketable Securities means securities that may be bought or sold, typically on a public exchange, and quickly converted to cash. Manager means an external investment manager that manages a given portfolio of securities on behalf of SURS under and Investment Management Agreement and pursuant to Manager Guidelines. Manager Diversity Program or MDP means a program to support Emerging Investment Managers in their early stages of development. Manager Evaluation Report means a report documenting the annual evaluation of a Manager by the Consultant and Staff, including recommended action to the Board. Manager Guidelines means a set of investment guidelines that governs a Manager’s investment activities. Manager Termination Guidelines means the set of guidelines set forth in Section IX of this Policy.

Exhibit 10

Member means an individual that is eligible under the Defined Benefit Plan to receive retirement, disability, death, or refund benefits as authorized under the Illinois Compiled Statutes. MFDB means a minority-owned business, a female-owned business or a business owned by a person with a disability as those terms are defined in the Business Enterprise for Minorities, Females and Persons with Disabilities Act. MFDB Manager Utilization Goals means those goals, as revised from time-to-time, set forth in Appendix 14. Minority-owned Broker/Dealer means, in accordance with 40 ILCS 5/1-109.1, a qualified broker-dealer who meets the definition of ‘minority owned business’, ‘female owned business’, or ‘business owned by a person with a disability’, as those terms are defined in the Business Enterprise for Minorities Females, and Persons with Disabilities Act.” Non-Core Real Estate means a Sub-Asset Class consisting of real estate assets in need of re-tenanting, redevelopment or renovation, or is otherwise in some form of distress. Open-end Fund means a Fund that does not have any restrictions on the amount of shares it can issue and that can issue and redeem shares at any time. Opportunity Fund means an Asset Class consisting of investments that are opportunistic in nature and may or may not transition into a more permanent Asset Class. Option means a contract between a buyer and a seller that gives the buyer the right, but not the obligation, to buy or sell a particular asset at a later date and at an agreed upon price. Passive Management means a management style that attempts to replicate a market index or Benchmark. Performance Evaluation means a measurement of a Manager, Asset Class or the total Portfolio versus various standards of performance. Performance Statistics means analytical tools such as the Sharpe Ratio, Information Ratio, Annualized Alpha, Treynor Ratio, Sortino Ratio, Up Market Capture and Down Market Capture. Performance Target means, for (i) an Active Manager, the applicable Benchmark for such Manager’s given Asset Class or style, plus the Active Manager Premium, as set forth in Appendix 5; (ii) for a Passive Manager, the applicable Benchmark for such Manager’s given Asset Class; (iii) for an Asset Class, such Asset Class’ applicable Benchmark and (iv) for the Portfolio, the blended Benchmarks of the Policy Portfolio.. Portfolio means the investment portfolio of the Defined Benefit Plan.

Exhibit 10

Portable Benefit Package means one of two packages offered under SURS’ Defined Benefit Plan that offers a more generous separation refund in exchange for a reduction in retirement and death benefits. Potential Consultant means a Consultant that is being considered for selection by SURS. Potential Custodian means a Custodian that is being considered for selection by SURS. Potential Manager means a Manager that is being considered for selection by SURS. Potential Vendor means Policy means this Policy, as amended from time to time. Policy Portfolio means a portfolio comprised of Asset Class benchmarks, reflecting a passive implementation of SURS Strategic Policy Target, as amended form time to time. Private Equity means equity investments in private companies, either directly or through buyouts of public companies that result in a delisting of public Equity. Qualified Fund-of-Fund Management Services means, per 40 ILCS 5/113.15, either (i) the services of an investment adviser acting in its capacity as an investment manager of a Fund-of-Funds or (ii) an investment adviser acting in its capacity as an investment manager of a separate account that is invested on a side-by-side basis in a substantially identical manner to a Fund-of-Funds, in each case pursuant to qualified written agreements. Quarterly Investment Update means a quarterly report generated by Staff and distributed to Members that summarizes investment results for the System. Quarterly Reporting Period means Quiet Period means a period of time during which a search for a Potential Consultant, Custodian, Manager or Vendor is underway and during which a set of guidelines governs any communication by the Board, Consultant or Staff with such parties. Rate of Return means is a profit on an investment over a period of time, expressed as a proportion of the original investment. Real Estate means an Asset Class that consists of land, buildings and natural resources. Rebalancing means the process of adjusting Asset Class Percentages to bring them back into alignment with Target Allocation Percentages. Request For Proposal or RFP means a formal solicitation for a service or Service Provider, made through a competitive bidding process. Risk-adjusted Return means a measure of return for a Fund or Asset Class, defined as:

Exhibit 10

Risk-free Rate + (Standard Deviation of the Benchmark/Standard Deviation of a Fund) * (Fund return – Risk-free Rate). Risk Statistics means analytical tools such as Standard Deviation, Tracking Error, Beta, R-Squared and Active Share. R-Squared means the percentage of a Fund’s movements that can be explained by movement of the Benchmark. Securities Lending means an agreement to lend securities, held in a portfolio, to a Broker/Dealer or other entity with a simultaneous agreement to return the securities in the future. Self-managed Plan means the SURS’ Defined Contribution Plan that establishes an account in the Member’s name, into which Member and employer contributions are placed and which is invested in mutual funds and annuities at the direction of the Member. Separate Account means a privately managed investment account that is designed and managed specifically for an investor. Sharpe Ratio means a measure of a Fund’s return or an Asset Class’ return (Fund or Asset Class Rate of Return less the return of the risk-free rate) relative to its risk (Standard Deviation of the Fund or Asset Class). Short Position means a sale of a borrowed security, whereby the value of such position will rise if the price of the security falls. Sortino Ratio means a measure of a Fund’s return or Asset Class’ return (Fund or Asset Class Rate of Return less the return of the risk-free rate) relative to its downside risk (downside deviation of Fund or Asset Class). Staff means the SURS investment staff. Standard Deviation means a measure of the dispersion of a set of data from its mean, calculated as the square root of variance. State Universities Retirement System of Illinois or SURS means the pension fund established for the benefit of the staff members and employees of the Illinois state universities, community colleges and certain other state educational and scientific agencies, and the survivors, dependents, and other beneficiaries of those employees. Strategic Plan means [ ]. Strategic Policy Target means the total of all approved Target Allocation Percentages. Sub-Asset Class means a subset of an Asset Class that shares common characteristics with both the Asset Class and such subset.

Exhibit 10

Swap means a derivative contract through which two parties exchange financial obligations. System means the State Universities Retirement system of Illinois. Target Allocation Percentage means the target percentage of each major Asset Class in the Strategic Policy Target. Termination means the cancellation of a contract and related obligations. Tracking Error means, with respect to a security investment, the Standard Deviation of the Excess Return. Traditional Benefit Package means one of two packages offered under SURS’ Defined Benefit Plan that offers lifetime retirement benefits, but a limited separation refund. Traditional Fixed Income means a Sub-Asset Class consisting generally of investment-grade, Fixed Income securities. Trailing Period means the prior period (months, quarters, years) ending on the date being used for a given analysis. Transition Manager means a Manager that helps transition a portfolio of securities necessitated by the change in a Manager’s funding mandate, a Manager’s termination or changes in Asset Allocation. Treasury Inflation Protected Securities or TIPS means a Treasury security that is indexed to inflation. Treynor Ratio means a measure of a Fund’s return or an Asset Class’ return (Fund or Asset Class Rate of Return less the return of the risk-free rate) relative to its risk (Beta of the Fund or Asset Class). Up Capture Ratio means the percentage of the market’s upside movement ‘captured’ or achieved by a Fund. Unconstrained Fixed Income means a Sub-Asset Class consisting of Fixed Income securities, that would tend to vary from those typically found in Core Fixed Income or Core Plus Fixed Income. Utilization Goals means the percentage of the total Portfolio or volume of business activity that is to be represented by a specific subset of the Portfolio. Variance means a measurement of the spread of a set of numbers from the mean of the data set. Vendor means [ ]

Exhibit 10

Volatility of Return means a statistical measure of dispersion of returns for a given security, Asset Class or portfolio. Watchlist means a list of Managers that are not meeting the requirements of their Manager Guidelines. Weighted Expected Rate of Return means a probability weighted estimate of a range of future rates of return for a portfolio, with the estimate weighted by the component investments or Asset Classes of the portfolio.

Exhibit 10

Appendix 1

System Assumed Rate of Return For Fiscal Year [2016]

7.25%.

Exhibit 10

Appendix 2

Formal Board Review

Formal Review Agenda Item Formal Review Schedule Total Fund Performance At least quarterly Asset Allocation At least annually Investment Policy At least annually

Exhibit 10

Appendix 3 Investment Committee Roles and Responsibilities

1. Changes to this Policy; 2. The Portfolio’s Asset Allocation; 3. Investment strategy and plans; 4. The Investment Risk Management Policy; 5. Portfolio construction and the addition or removal of Asset Classes; 6. Cost effectiveness of managing System assets; 7. Oversight of compliance with this Policy; 8. Approval of Asset Allocation policy targets, Benchmarks, Performance Targets,

Portfolio Construction and investment manager structure; 9. Selection and termination of the Custodian; 10. Selection, termination and funding of Managers; 11. Selection and termination of Consultant(s); 12. Selection and termination of Vendors; 13. Asset/Liability Position and Portfolio Liquidity; and 14. Changes to Performance Measurement and Reporting.

Exhibit 10

Appendix 4

Executive Director Roles and Responsibilities

1. Planning, organizing, and administering the operations of the System under broad

policy guidance and direction from the Board; 2. Execution of agreements and contracts, and amendments thereto, with Board-

approved Managers, Consultants, Custodians and Vendors; 3. Monitoring of the performance of the Portfolio; 4. Monitoring the performance of the Staff; 5. Ensuring that funds are invested in accordance with Board policies; 6. Communicating with the Board, its Officers and Investment Committee chair; 7. Studying, recommending, and implementing policy and operational procedures that

will enhance the investment program of SURS; and 8. Ensuring that proper internal controls are developed to safeguard the assets of the

System.

Exhibit 10

Appendix 5

Internal Investment Staff Roles and Responsibilities

1. Reviewing and drafting annual recommendations to the Investment Policy; 2. Analyzing and Rebalancing the Portfolio’s Asset Allocation; 3. Adding and removing Asset Classes, consistent with Board approved Portfolio

construction; 4. Managing cash-flow and liquidating assets, as necessary, to pay monthly

benefits and other System obligations; 5. Conducting due diligence and providing recommendations in the selection and

termination of Managers, Consultant(s), Custodians and Vendors; 6. Implementing the decisions of the Board regarding funding modifications,

hiring, and termination of Managers; 7. Implementing the decisions of the Board regarding the hiring and termination of

Consultants, Custodians and Vendors; 8. Monitoring compliance with Board-approved policies and guidelines for all

investment-related activities and Vendors; 9. Oversight and monitoring of Managers, including, but not limited to,

Performance Evaluation; 10. Approving revisions to Manager Guidelines, with approval of Consultant and

General Counsel; 11. Preparing Portfolio Performance Evaluation, Asset Allocation, and investment

risk management reports for the Investment Committee/Board; 12. Managing and monitoring the custodial bank relationship; 13. Consulting with External Counsel regarding investment and legal matters; 14. Serving on advisory boards for Portfolio investments when appropriate and

voting on issues as necessary to promote the best interests of the System in a fiduciary manner;

15. Responding to inquiries from various parties concerning Portfolio investments in accordance with SURS communication policies;

16. Monitoring and reporting to the Investment Committee/Board, as applicable, on programs related to the diversity of the Portfolio’s Managers and Broker/Dealers;

17. Authorizing resolution of securities litigation-related claims valued at less than $250,000, with approval of the General Counsel;

18. Completing other administrative duties related to the operation of the investment program, and

19. Serving as a liaison to the investment community.

Exhibit 10

Appendix 6

Consultant Roles and Responsibilities

1. Work directly with the Staff to formulate and review investment goals, objectives, and policies;

2. Assist in the development of the Board’s Asset Allocation policy and Portfolio construction;

3. Perform Asset/Liability Studies; 4. Advise on Liquidity management; 5. Review performance of the total Portfolio, Asset Classes and Managers; 6. Assist Staff and the Investment Committee with Manager selection and due

diligence; 7. Assist in the drafting of RFPs; 8. Develop cash flow forecasts for illiquid Asset Classes; 9. Provide long-term economic and investment forecasts; and 10. Provide fiduciary education to inform the Board and Staff regarding significant

trends in institutional investment management and new investment opportunities.

Exhibit 10

Appendix 7

External Investment Managers’ Roles and Responsibilities

1. Selection, purchase and sale of specific securities or investments, within the parameters specified by Staff and Consultant and in adherence to this Policy;

2. Construction and management of investment portfolios that are consistent with their specific Manager Guidelines;

3. Providing performance reporting to the Staff at intervals specified by Staff and sufficient to meet the requirements set forth in Section X;

4. On an annual basis, providing Staff with proof of insurance coverage in an amount and type specified in their Investment Management Agreement;

5. On an annual basis, certifying in writing to Staff that they remain a fiduciary to the System and that they have been in compliance with the Manager Guidelines during the past year;

6. Utilizing investment strategies designed to ensure that all securities transactions are executed in such a manner that the [total explicit and implicit costs and total proceeds in every transaction are the most favorable under the circumstances];

7. Complying with all applicable laws and regulations, including those of the State of Illinois and the United States of America.

Exhibit 10

Appendix 8

Asset Allocation Policy Mix

As of [7-1-15]

ASSET ALLOCATION POLICY MIX

STRATEGIC POLICY TARGET

INTERIM POLICY TARGET

STRATEGIC POLICY

TARGET SUB-COMPONENTS

U.S. Equity 23.0% [29.0]% 46.0% Non-U.S. Equity 19.0% 19.0% 38.0% Global Equity 8.0% 8.0% 16.0%

Total Public Equity 50.0% 56.0% 100.0% Core Fixed Income 19.0% 19.0% 73.0% Emerging Market Debt 3.0% 3.0% 15.0% TIPS 4.0% 4.0% 12.0%

Total Fixed Income 26.0% 26.0% 100.0% Private Equity 6.0% 6.0% REITS 4.0% 4.0% 40.0% Direct Core 3.6% 3.6% 36.0% Direct-Non-core 2.4% 1.4% 24.0% Total Real Estate 10.0% 9.0% 100.0% Hedged Strategies 5.0% [0.0]% Opportunity Fund 6 1.0% 1.0% Commodities 2.0% 2.0%

Total Alternatives 24.0% 18.0% Grand Total 100.0% 100.0%

Exhibit 10

Appendix 9

Risk Management Reports

Exhibit 10

Appendix 10

Benchmarks and Performance Targets

As of [9-16-16]

ASSET ALLOCATION POLICY MIX

BENCHMARK

PERFORMANCE TARGET5

U.S. Equity Dow Jones U. S. Total Stock Market Index Large Cap BM+0.75% Large Cap Structured BM+0.50% Small & Mid Cap BM+1.0% Non-U.S. Equity MSCI ACW Ex-US BM+2.0% Global Equity MSCI All Country World BM+2.0%

Total Public Equity Core Fixed Income Barclays Capital Aggregate Index BM+0.40% Core Plus Fixed Income [ ] BM+0.70% Emerging Market Debt 50% - JP Morgan Government Bond Index –

Emerging Markets Global Diversified 25% - JP Morgan Emerging Markets Bond

Index - Global Diversified 25% - JP Morgan Corporate Emerging

Markets Bond Index – Broad

BM+1.0%

TIPS Barclays Capital U.S. TIPS Index BM+0.30% Total Fixed Income

Private Equity Dow Jones U.S. Total Stock Market Index Secondary Benchmarks may include: peer

group comparison, return multiple or public market equivalent comparisons.

BM+3.0%

REITS FTSE EPRA/NAREIT Developed Index BM+[1.0]% Direct Core NCREIF ODCE Index BM+[ ]% Direct Non-core NCREIF ODCE Index BM+1.5%

Total Real Estate Hedged Strategies LIBOR BM+5.0%

Opportunity Fund2 Weighted Average of the Underlying

Investment Benchmarks BM+[ ]%

Commodities Bloomberg Commodity Index BM+1.0% Total Alternatives

Grand Total Policy Portfolio

2 The Opportunity Fund shall be no more than 5% of SURS total market value. 5 The Performance Target equals the Benchmark plus an additional percentage representing the Active Management Premium (or in the case of Private Equity, a Liquidity Premium).

Exhibit 10

Appendix 11

Search Process for Consultants, Managers and Custodians

1. Advertisements for the search process shall be placed in a [State of Illinois] newspaper and in one or more industry periodicals, at least 14 days before the response to the offer is due.

2. Uniform documents shall be used for the solicitation, review, and acceptance services to be performed and will be posted on the SURS web site. Documents may differ based on the specific search mandate.

3. Interested respondents shall return their responses to the Staff, which shall open and record them, providing a list of all respondents to the Investment Committee/Board.

4. Following review and evaluation of the responses from interested firms, the field of candidates is narrowed to a smaller list of the most highly qualified.

5. Staff meets with representatives of each firm to obtain an independent assessment of the firm’s capabilities.

6. Following the interview with the selected firm(s), Staff recommends to the Board one or more Consultants for engagement. Generally, the finalists appear before the Board to present their firms’ qualifications.

7. Candidates are required to make all statutorily required disclosures and such disclosures shall be considered, within the bounds of financial and fiduciary prudence, prior to the awarding of a contract.

8. The Board accepts or modifies the recommendation and makes the final decision with respect to the engagement, if satisfied with the firm’s capabilities.

9. Contracts are then completed with the selected firm(s). SURS shall not enter into a contract with a Consultant that exceeds 5 years in duration. No contract to provide consulting services may be renewed or extended. At the end of the term of a contract, however, the Consultant is eligible to compete for a new contract as provided in this section.

10. SURS shall post the name(s) of the successful respondent(s) on the SURS web site, along with a disclosure including the total amount applicable to the contract, the total fees paid or to be paid, and a description of the factors that contributed to the selection of the Consultant.

Exhibit 10

Appendix 12

Policy Guidelines for Potential [Service Providers]

1. A Quiet Period will commence upon Board authorization and end once a selection has been made by the Board and offer accepted by the Potential Service Provider;

2. Initiation, continuation and conclusion of the Quiet Period shall be publicly communicated to prevent inadvertent violations;

3. All Board members, and Staff not directly involved in the search process, shall refrain from communicating with Potential Service Providers regarding any product or service related to the search in process and from accepting meals, travel, hotel, or other value from such Potential Service Providers;

4. Throughout the Quiet Period, if any Board member is contacted by a Potential Service Provider, the Board member shall refer such party to the Staff directly involved in the search process;

5. All authority related to the search process shall be exercised solely by the Investment Committee or Board as a whole, and not by individual Board members;

6. All information related to the search process shall be communicated by the Consultant and Staff to the Investment Committee or Board as a whole, and not to individual Board Members;

7. The Quiet Period does not prevent Board approved due diligence, client conference attendance or communications with an Existing Service Provider; provided, however, that discussions related to the pending selection shall be avoided during those activities;

8. The provisions of this policy shall apply throughout the Quiet Period and shall be communicated to Potential Service Providers in conjunction with any search; and

9. A Potential Service Provider may be disqualified from a search process for a violation of this policy.

Exhibit 10

Appendix 13

Portfolio Reporting

Exhibit 10

Appendix 14

Utilization Goals for MFDB Managers

Asset Class

Goal for Minorities

Goal for Females

Goal for Persons with a Disability

Overall Active Goal

Equities 20% 10% 0-2% 30% Fixed Income (includesTIPS)

12% 8% 0-1% 20%

Alternative Investments

0-20% of new allocations



20% of new allocations

Total Fund 16% 8% 1% 25%

Exhibit 10

Appendix 15

System Utilization Goals for Minority-owned Broker/Dealers

Asset Class Goal U.S. Equity 30.0% Non-U.S. Equity 15.0% Fixed Income 20.0%

Exhibit 10

Appendix 16

Manager Utilization Goals for Minority-owned Broker/Dealers

ASSET CLASS

MINIMUM EXPECTATION

TRADE VOLUME

COMMISSIONS

Equity: Active U.S. Equity 30.0% X (1) Passive U.S. Equity 35.0% X (1) Structured Active U.S. Equity 10.0% X (1) X (1) Non-U.S. Equity 15.0% X (1)(2) Structured Active Non-U.S. Equity 10.0% X (1)(2) X (1)(2) Global Equity 20.0% X (1)(2) REITS 10.0% X (1)(2) Fixed Income: Fixed Income 20.0% X (1)(2) TIPS 10.0% X (1) ‘(1) Exception for electronic trading. ‘(2) Exception for emerging markets.

Exhibit 10

To: Investment Committee From: Investment Staff Date: October 7, 2016 Re: Franklin Real Asset Advisors Organizational Discussion

Summary Staff presented information at the June 2016 Investment Committee meeting relating to a potential Key Person Event regarding one of the SURS real estate mandates with Franklin Real Asset Advisors (FRAA), MDP RE 2015. SURS was notified of a Key Person departure at the firm on May 2. Per the Limited Partnership Agreement (LPA), a Key Person Event would not have taken effect until August 1, at which point a suspension of the Commitment Period could potentially have begun.

The intent of staff and NEPC was to receive Investment Committee approval to amend the LPA of MDP RE 2015 to allow the continuation of the mandate’s Commitment Period. Several questions were raised and a discussion ensued regarding the need for further Trustee diligence, including the ability for Trustees to meet in person or telephonically with representatives from Franklin. Deliberations concluded with a motion allowing for the consent, but not to be executed until on or about August 1 allowing for legal negotiations and any further Trustee due diligence to take place.

As part of further Trustee diligence, Trustee Ammons expressed interest in having a phone call with FRAA to further discuss the situation. That call was held on July 11 with Trustee Ammons, staff, and Marc Weidner, Managing Director and Portfolio Manager of FRAA, participating. As follow up from that call, Trustee Ammons sought and received information on diversity efforts at Franklin.

Background Following expiration of the Trustee diligence period and the execution and delivery of the consent allowing the continuation of the MDP RE 2015 Commitment Period, at the September 2016 Investment Committee meeting Trustees brought up additional concerns regarding the FRAA relationship. Regarding those concerns, this memo is intended to provide further information on Franklin Templeton Institutional, Franklin Real Asset Advisors, and the investment team dedicated to the SURS MDP RE 2015 relationship. Potential options, post-executed consent, are also addressed.

Franklin Templeton Institutional Franklin Templeton Institutional (FTI) is the investment advisor for the parent company, Franklin Resources. FTI is one of the largest cross-border fund managers in the world and has more than 65 years of asset management experience with investment professionals in over 30 offices worldwide. Franklin Resources has a strong balance sheet with $9.6 billion in net cash and investments as of June 30, 2016. Franklin Resources has the highest long-term credit ratings among asset managers (Moody’s A1 / Standard & Poor’s AA-). FTI has $732.1 billion in AUM as of June 30, 2016. The charts below highlight AUM changes and assets gained/lost over the last several years at FTI.

Exhibit 11

AUM increases equate to a nearly 7% compound annual growth rate since the 2008 global financial crisis. Preliminary data indicates that AUM has increased to $739.9 billion at the end of July and further to $740.1 billion at the end of August.

Franklin Real Asset Advisors FRAA encompasses the global private real estate, real estate securities, and listed infrastructure accounts managed by the Real Asset Group of FTI. FRAA has been investing in real estate since 1984. FRAA has a dedicated team of 20 individuals, including10 investment professionals and is backed by Franklin Templeton’s global platform providing reporting, compliance, and back office functions. Each of the world's three major investment regions — the Americas, Europe, and Asia Pacific — is covered by professionals with experience in the local market, providing cultural perspective and specialized asset class knowledge. The three-person Investment Committee of FRAA (Raymond Jacobs, Glenn Uren, and Marc Weidner) has been working together at FRAA for nearly 15 years. Final decision making responsibility rests with the Investment Committee. Marc Weidner, Managing Director and member of the Investment Committee, is the lead portfolio manager for all three SURS relationships.

The FRAA team of 20 is responsible for the investment activity of the globally-focused Franklin Templeton Private Real Estate Fund (FTPREF), and broadly assists with execution of the SURS Emerging Manager Real Estate Fund of Funds (EMREFF) and MDP RE 2015 products. As mentioned above, Marc Weidner is the lead portfolio manager for SURS as it relates to this product and the EMREFF and MDP RE 2015 products. Assisting Marc Weidner for each of these funds is Julie Donegan (Senior Vice President) and Luke Anderson (Senior Vice President), who focus exclusively on U.S. investment opportunities for FRAA. Danita Johnson (Vice President) was formerly on this team, as well.

SURS made a $50 million commitment to FTPREF in 2012. The fund has a 24% inception-to-date IRR.

SURS made a $75 million commitment to the U.S.-focused (EMREFF) product in 2011. This commitment was made as part of a consortium of Illinois-based plans that includes commitments from IMRF and Chicago Teachers. EMREFF’s Commitment Period has already ended. EMREFF has produced a 14.74% inception-to-date IRR.

In March 2015, MDP RE 2015 was approved by the Board for a $90 million commitment to be invested in $30 million tranches over three years. As of September 30, the mandate has committed

2007 2008 2009 2010 2011 2012 2013 2014 2015 2Q 2016Total $643,741 $416,203 $553,516 $670,719 $674,336 $707,103 $879,139 $880,146 $763,873 $732,113Source: eVestment

Franklin Templeton Institutional AUM ($ Mill ions)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2Q 2016Gained $4,933 $5,921 $3,103 $7,174 $8,593 $7,448 $8,983 $7,802 $8,741 $842Lost $1,504 $3,154 $4,690 $4,562 $9,132 $6,266 $3,844 $6,183 $4,892 $2,347Net $3,429 $2,766 ($1,587) $2,612 ($539) $1,182 $5,139 $1,618 $3,849 ($1,506)Source: eVestment

Franklin Templeton InstitutionalAssets Gained/Lost ($ Mill ions)

Exhibit 11

$45 million of the $90 million total, as two commitments closed early in the third quarter. It is too early to determine the performance of the mandate given the early stages of investing.

The table below provides further performance detail on the Franklin products SURS invests in. Performance over all time periods has exceeded the benchmark, in most cases quite significantly.

The following charts show recent AUM changes and new private real estate commitments relating to the broader FRAA platform.

Franklin Real Asset Advisors Real Estate AUM ($ Millions)

2014 2015 2Q 2016 Public Real Estate $1,584 $1,470 $1,445 Private Real Estate $3,297 $2,657 $2,510 Total $4,881 $4,127 $3,955 Source: FRAA

Franklin Real Asset Advisors New Private Real Estate Commitments ($ Millions)

2014 2015 2Q 2016 Separate Account $350 $340 - Commingled Fund - $104 - Total $350 $444 - Source: FRAA

While overall FRAA AUM has declined due to the liquidation of legacy portfolios and returning capital to investors, it’s important to note that FRAA has been consistently winning new accounts and assets along the way, as shown above.

FTI and FRAA Diversity Efforts Creating a more diverse workforce at FTI continues to be a key priority. With a workforce comprised of individuals in more than 30 countries on six continents and fund shareholders in 150 countries, FTI’s employees are diverse by nature. As a solution to better target applicants of diverse backgrounds, FTI posts all of its U.S. external job openings to specialized diversity job boards.

FundVintage

Year Commitment Funding FeesCumulative

Distributions Valuation 1 Year 3 YearSince

InceptionEMREFF 2011 $75,000,000 $63,109,041 $2,830,945 $39,228,093 $49,689,134 19.65% 17.33% 14.74%FTPREF 2012 $50,000,000 $38,423,947 $815,102 $29,419,785 $25,864,114 20.45% 29.64% 24.00%MDP RE 2015 2015 $90,000,000* $3,172,048 $172,661 $0 $3,055,948 NMF NMF NMF

Benchmark - EMREFF 14.13% 14.09% 13.59% Alpha - EMREFF 5.52% 3.24% 1.15%Benchmark - FTPREF 14.13% 14.09% 13.91% Alpha - FTPREF 6.32% 15.55% 10.09%

* $30,000,000 commitment each year for three years beginning in 2015

Franklin Templeton Performance DetailMarch 31, 2016

IRR Summary

Exhibit 11

Franklin builds cultural awareness in its employees and leaders through training programs and has policies in place to promote an environment free of discrimination or harassment. The team members of FRAA are a diverse group of professionals who actively participate in numerous women and minority organizations. In addition to promoting a culture and environment of collaboration, flexibility, diversity and inclusion, Franklin Templeton has been recognized for its corporate efforts with regard to diversity and inclusion.

In 2016, Franklin Templeton was one of 26 financial services firms that were recognized for its strong commitments to gender equality, including dedicated social disclosure policies and practices as part of the inaugural Bloomberg Financial Services Gender-Equality Index. Firms submitted a social survey created by Bloomberg in partnership with third-party experts, including Women’s World Banking, Catalyst and Working Mother Media. The 26 firms that were included in the inaugural index scored at or above 60 points, a global threshold established by Bloomberg and its partners to reflect disclosure and the achievement or adoption of best-in-class statistics and policies.

Franklin Templeton is part of the 400 organizations that took part in the 2016 Stonewall Workplace Equality Index. The Stonewall Workplace Equality Index uses an evidence-based benchmarking tool for employers to assess their achievements and progress on LGBT equality in the workplace.

Following this memo in the appendix (Appendix I) are tables providing the most recent diversity profiles for both FTI and FRAA, broken out by ethnicity, gender, and disabled status. The data for FTI is as of July 31, 2015. This is the latest data available as FTI reports EEO-1 status as of July 31 annually. The data shows that 35% of all FTI employees are classified as minority and 49% as female. For investment professionals, 36% are considered minority and 48% are female.

As of June 30, 2016, FRAA reports that 35% of all employees are classified as minority and 45% are female. For FRAA investment professionals, 40% are minority and 40% are female.

FRAA has a Diversity Committee with the stated objectives of: • Identifying, evaluating, and including emerging manager investments and opportunities• Enhancing MFDB outreach and deal flow• Identifying market trends and the growing importance of diversity in institutional investment• Establishing a framework to provide feedback to MFDB managers• Enhancing FRAA’s proprietary real estate manager database to include MFDB opportunities• Providing MFDB managers mentoring and networking opportunities, access to other MFDB

managers and organizations, as well as industry groups• Participating in industry conferences dedicated to educational opportunities for MFDB

managers

FRAA has committed $340 million to MFDB managers since 2010, including the significant commitments made by SURS to both the EMREFF and MDP RE 2015 products.

FRAA Personnel Changes Like any organization, from time to time changes in personnel have occurred at FRAA. Since 2014 FRAA has added four members to the team and had six team members depart. It is important to note that only one of the departures (Danita Johnson) has any effect on the MDP RE 2015 relationship. The tables below provide information on each addition and departure, broken out by the broader FRAA team in the first chart and then for the SURS investment team in the second.

Exhibit 11

A chart in the appendix (Appendix II) outlines the FRAA team’s skill set and experience. The team averages 16 years of real estate industry experience and eight years with FRAA. The FRAA team is assisted by a global team of approximately 25 legal & compliance, client service, business development, and operational/accounting professionals. Highlighted on the Appendix II chart is the SURS investment team, along with Ms. Johnson. As previously mentioned, the SURS investment team consists of Marc Weidner, Julie Donegan, and Luke Anderson.

The following shows a chronology of the SURS investment team (including its former member, Ms. Johnson) as their titles have changed through the years:

Exhibit 11

While Marc Weidner has consistently remained Managing Director and Portfolio Manager for the three SURS products, each of the other team members have been promoted to new roles over time. While each team member brings their own skill set and experience to the organization, the real estate landscape in which the SURS products are invested in is changing and FRAA has had to evolve and adjust its resources as necessary. FRAA is moving away from pure manager selection and focusing much more on direct underwriting of individual transactions, including co-investments and joint-venture opportunities. The decision to shift team resources to individuals with direct underwriting experience unfortunately resulted in having to part ways with Danita Johnson, whom Marc Weidner and the team held in high regard as a professional. Danita’s departure, however, does not diminish the strong network of MFDB managers FRAA has already established as a platform. As evidence that FRAA is well positioned to manage the MDP RE 2015 commitment with its current resources, half of the mandate’s $90 million commitment has been designated for investment early in year two of its three-year commitment pace.

Options for Consideration Jackson Walker was the external legal counsel who negotiated the MDP RE 2015 legal documents on SURS behalf. SURS investment and internal legal staff held a call with Jackson Walker on September 20 discuss possible options as they relate to our commitment to this mandate and our other FRAA relationships. The outcome of this call was that SURS, as the sole Limited Partner in this fund-of-one product, has four options for consideration:

• Option 1: Maintain the mandate’s Commitment Period as iso The preferred option of staff and consultanto Consistent with executed consent following Board-approved direction at the June

2016 meetingo Least disruptive to stated diversity objectives

• Option 2: Terminate the mandate’s Commitment Periodo Requires notice to FRAA and can be done at any timeo FRAA would remain manager throughout the mandate’s term, but would not make

any new investmentso $45 million in un-invested MFDB commitment would be outstanding

• Option 3: Terminate the mandate itselfo Requires 120 days’ notice to FRAAo SURS can name liquidator, which could remain FRAA

2010 2011 2012 2013 2014 2015 2016Managing Director

Senior Investment ManagerInvestment ManagerSenior AnalystAnalyst

Senior Vice President / Director (Europe)

Vice President

Marc WeidnerJulie DoneganLuke Anderson

Danita Johnson

Julie DoneganLuke Anderson

Danita Johnson

Danita Johnson

Exhibit 11

o Would require immediate liquidation of the currently-invested portfolio of whichtiming and pricing of liquidation may be inopportune

o $45 million in un-invested MFDB commitment would be outstanding

• Option 4: Remove FRAA as the General Partnero Requires notice to FRAA and can be done at any timeo Replacement GP would not make new investments and would sell down currently-

invested portfolio in an orderly fashiono Would require lengthy process with or without an RFP to find replacement GP (2-3

months to upwards of 9 months)o A replacement GP would need to invest the remaining un-invested commitmento FRAA’s interest would be converted to an LP interest and would continue to receive

all distributions from the Partnership as if it had not been removedo FRAA would be entitled to 100% of carried interest it would have received if it had

not been removedo Broader ramifications for other existing FRAA mandates with SURS

Aside from the option of maintaining the mandate’s Commitment Period as is, each of the remaining three options present unique challenges and potential disruptions to SURS’ stated objectives of increasing manager diversity within the real estate portfolio.

Consultant Comments NEPC recommends that SURS maintain the commitment for MDP RE 2015 and allow FRAA to complete its mandate as originally approved by the Board. While personnel changes are generally suboptimal relative to having a stable investment team, it is a fluid nature of any professional industry. FRAA must adapt to shifting business needs just as investors should embrace change if the outcome will either aid to preserve, or improve upon, the ultimate objective of the fund(s). As such, comfort with FRAA can be gained through two key considerations:

1) The existing team of Marc Weidner (MD), Luke Anderson (SVP), and Julie Donegan(SVP) are seasoned investors who have been with the program since the inception of theSURS relationship through EMREFF (2011). Although shifting business needsunfortunately resulted in Danita Johnson’s (VP) departure, it does not hinder the broadnetwork of MFDB managers the platform has built over the years, nor does it diminishFRAA’s position as the most tenured, and notably well-capitalized, GP with respect tothe real estate MFDB space.

2) It is important to keep in mind that the primary objective of the mandate is to achieve thebest risk-adjusted returns for SURS and its plan beneficiaries. To that end, FRAA hasthe longest and most extensive track record of accomplishing such goals, exemplifiedthrough SURS’ investment in EMREFF, which is currently tracking to a 14.7%inception-to-date IRR.

Conclusion and Recommendation While it is always unfortunate to lose a member of an investment team, staff and NEPC conclude that the most appropriate course of action is to maintain our relationship with FRAA as is. Franklin Resources is a financially strong organization and Franklin Real Asset Advisors, given the team in place and broad performance across its SURS mandates, remains well equipped to continue investing the remainder of the MDP RE 2015 mandate. As stated at the June Investment Committee meeting, staff will continue to monitor the situation closely.

Exhibit 11

As a result, staff and NEPC recommend: • That SURS maintain the Commitment Period for MDP RE 2015 as contemplated

following the June 2016 Board of Trustees meeting and that all real estate relationships with FRAA remain in their current form.

Exhibit 11

Male Female Male Female WhiteAfrican

American

Native Hawaiian or Other Pacific

Islander

Asian

American Indian or

Alaska Native

Two or More Races

WhiteBlack or African

American


Islander

Asian

American Indian or

Alaska Native

Two or More Races

Exec / Sr. Officials & Managers - - 2.6% 1.4% 50.1% 1.7% - 6.3% - 0.9% 26.9% 0.3% - 9.5% - 0.3%Investment Professionals (Excluding Traders) - - 3.4% 3.3% 34.9% 1.5% 0.3% 10.5% 0.1% 1.3% 29.3% 2.8% 0.3% 10.9% 0.1% 1.3%Investment Professionals (Traders) - - - - - - - - - - - - - - - -Professionals - Operations, Compliance, etc. - - - - - - - - - - - - - - - -Professionals - Sales / Marketing & Client Services - - 2.0% 2.0% 75.4% 0.4% 0.4% - - 13.3% 13.3% 0.4% - 0.8% - -Administrative Support, Office / Clerical - - 2.1% 6.8% 23.2% 0.9% 1.2% 4.7% - 1.4% 35.8% 7.2% 1.8% 11.2% 0.3% 3.2%Other Non-Professionals - - 11.5% - 7.7% 7.7% - 3.9% 3.9% 7.7% 3.9% - - - - -% of Total 0.0% 0.0% 3.1% 3.9% 36.0% 1.3% 0.5% 8.3% 0.1% 1.4% 29.5% 3.5% 0.6% 10.2% 0.1% 1.6%

Male Female Male Female WhiteAfrican

American


Islander

Asian

American Indian or

Alaska Native

Two or More Races

WhiteBlack or African

American


Islander

Asian

American Indian or

Alaska Native

Two or More Races

Exec / Sr. Officials & Managers - - - - - - - - - - - - - - - -Investment Professionals (Excluding Traders) - - - - 40.0% - - 20.0% - - 20.0% - - 20.0% - -Investment Professionals (Traders) - - - - - - - - - - - - - - - -Professionals - Operations, Compliance, etc. - - - 25.0% 50.0% - - - - - 25.0% - - - - -Professionals - Sales / Marketing & Client Services - - - - 75.0% - - - - - - - - 25.0% - -Administrative Support, Office / Clerical - - - - - - - - - - 50.0% - - 50.0% - -Other Non-Professionals - - - - - - - - - - - - - - - -% of Total 0.0% 0.0% 0.0% 5.0% 45.0% 0.0% 0.0% 10.0% 0.0% 0.0% 20.0% 0.0% 0.0% 20.0% 0.0% 0.0%

Appendix IFranklin Templeton Diversity Profiles

Franklin Real Asset AdvisorsDiversity ProfileJune 30, 2016

Male Female

Franklin Templeton Institutional Diversity Profile

July 31, 2015Non-Hispanic or LatinoDisabled Hispanic or Latino

Male FemaleDisabled Hispanic or Latino Non-Hispanic or Latino

Exhibit 12

Name Title NationalityYears of RE Exp.

Years with FT

Management Committee

Real Estate Investment Committee

SURS Portfolio Manager Europe Americas Asia Sourcing

Due Diligence

Portfolio Construction

Investment Monitoring

Direct Investing

Multi-manager Investing

Direct Asset Management

Investment Restructuring

Raymond Jacobs Managing Director Netherlands 26 17 Glenn Uren Managing Director Malaysia 20 20 Marc Weidner Managing Director Belgium 24 14 Luke Anderson Senior Vice President United States 32 5 Julie Donegan Senior Vice President United States 18 6 Wenning Jung Senior Vice President China 30 9 Riccardo Abello Senior Vice President Italy 13 <1 Felix Lempert Vice President Russia 19 10 Caroline Demol Vice President Belgium 12 11 Danita Johnson Vice President United States 13 8 Simon Mok Senior Investment Manager Hong Kong 14 5 Greg Wilkinson Director, Institutional Portfolio Manager United Kingdom 9 9 Anthony Iessi Director, Global Analytics United States 8 1 Maria Gavilanes Analyst Ecuador 4 <1 Karen Gu Research Analyst Singapore 3 1

SURS Team

Appendix IIFranklin Real Asset Advisors Team

Skill Set and Experience

Governance Region of Coverage Investment Process Expertise

Exhibit 13

MarketValue

Estimated Unfunded FundingAssets Liabilities Liabilities Ratio Month FYTD

Jun-16 16.77$ 40.82$ 24.05$ 41.1%Jul-16 17.20 40.93 23.73 42.0% 2.83% 2.8%

Aug-16 17.20 41.04 23.83 41.9% 0.02% 2.9%

Note: Assets and liabilities are estimated and unaudited through July 31, 2016. The fund has an actuarial value funding ratio of 43.3% at the end of Fiscal Year 2015, utilizing a 7.25% assumed rate of return.

Rate of Return

0%

20%

40%

60%

80%

100%

$0$2$4$6$8

$10$12$14$16$18$20$22$24$26$28$30$32$34$36$38$40$42

Jun-16 Jul-16

Perc

ent F

unde

d

$Bill

ions

SURS Projected Funding Status 2017 Fiscal Year-to-Date Results

Assets Liability Funding Ratio

Exhibit 14

To: Investment Committee From: Investment Staff Date: October 6, 2016 Re: Annual Review of Minority-, Female- and Persons with a Disability- Owned

Broker/Dealer Usage by SURS Investment Managers

A brokerage usage policy was instituted by SURS at the December 9, 2005, Board of Trustees meeting when approved as a component of the Investment Policy. Annual revisions have been approved by the Board beginning in 2007, providing modifications to brokerage expectations. Standard investment reports prepared quarterly for the Board include brokerage cost reviews by asset class that summarize the total usage of minority-, female- and persons with a disability-owned (MFDB) brokerage firms over the prior four quarters by investment managers in SURS defined benefit portfolio.

A brokerage review is presented to the Board of Trustees on an annual basis to summarize results of the previous fiscal year and to identify investment managers facing challenges in achieving the established expectation levels of usage of MFDB firms over the previous fiscal year. Based on information included in the quarterly reports and annual reviews, investment managers may be invited to participate in a presentation to the Board to assist in explaining current brokerage compliance issues. An investment manager that is continually unable to attain the expected level of usage of MFDB firms may be potentially terminated. In 2013, one manager was terminated due to the continued inability to achieve the expected level of utilization of MFDB firms.

Fiscal Year 2016 Results

SURS Summary Goals Utilization of Minority-, Female- and Persons with a Disability- Owned

Broker/Dealer Firms Asset Class Goal

U.S. Equity 30.0% Non-U.S. Equity 15.0% Fixed Income 20.0%

The table above lists the minority-, female- and persons with a disability-owned brokerage goals by asset class included in SURS Investment Policy, as approved at the Board Meeting on September 10, 2015.

Exhibit 15

The summary table on the following page indicates that in the four previous fiscal years, total commissions paid by SURS equity investment managers declined from 2010 through 2012 while utilization of MFDB brokerage firms steadily increased. Since 2012, MFDB utilization and total commissions paid have been about the same with some fluctuations.

The following table summarizes the utilization of MFDB broker/dealers in each of the major asset classes for the one-year period ending June 30, 2016.

Total Commissions ($) Actual MFDBTotal Commissions Actual MFDB Commissions to MFDB Firms Utilization

Fiscal Year Commissions * to MFDB Firms Utilization Increase(Decrease) Increase(Decrease) Increase(Decrease)2010 5,081,540$ 1,622,970$ 31.94%

2011 4,299,700$ 1,483,763$ 34.51% -15.39% -8.58% 8.05%

2012 3,871,797$ 1,556,867$ 40.21% -9.95% 4.93% 16.52%

2013 4,266,669$ 1,658,716$ 38.88% 10.20% 6.54% -3.32%

2014 3,982,710$ 1,518,156$ 38.12% -6.66% -8.47% -1.95%

2015 4,035,852$ 1,565,431$ 38.79% 1.33% 3.11% 1.76%

2016 3,750,457$ 1,437,702$ 38.33% -7.07% -8.16% -1.17%

* Total commissions exclude electronic trades and emerging market trades.

Equity Commissions Summary Results

Commissions Actual MFDBto MFDB Firms Utilization Goal Variance

U.S. Equity, Active 434,980$ 40.80% 30.00% 10.80%U.S. Equity, Passive 80,244$ 99.70% 35.00% 64.70%U.S. Equity, Enhanced Active 155,760$ 36.11% 10.00% 26.11%U.S. Equity, Total 670,984$ 42.52% 30.00% 12.52%

Non-U.S. Equity, Active 457,485$ 48.36% 15.00% 33.36%Non-U.S. Equity, Enhanced Active 43,792 14.65% 10.00% 4.65%Non-U.S. Equity, Total 501,277$ 40.26% 15.00% 25.26%

Global Equity 164,404$ 22.99% 20.00% 2.99%

REITs 1 101,037$ 47.54% 10.00% 37.54%

Total Equity 1,437,702$ 38.33%

Fixed Income 2 N/A 34.88% 20.00% 14.88%

TIPS 2 N/A 14.52% 10.00% 4.52%

1 Domestic REITs and global REITs, 2

Asset Class

Commissions are not applicable to fixed income. Percentage calculation is based on percent of total market

Trading with Minority-, Female- and Persons with a Disability- Owned Broker/Dealer FirmsYear Ending June 30, 2016

Exhibit 15

Commissions totaled $3.8 million on equity trades for the year ended June 30, 2016. As the table above indicates, commissions to MFDB broker/dealer firms were approximately $1.4 million, representing 38.3% of total commissions paid on equity trades for the period.

In aggregate, all asset classes exceeded the brokerage goals set forth in the Investment Policy for trading with minority-, female- and persons with a disability-owned firms.

As a component of the annual compliance process, SURS’ staff communicates with each of the investment managers, to remind them of SURS commitment to the MFDB brokerage utilization initiative adopted by the Board at the March 19, 2004 meeting. This initiative was created to develop a strategy for increasing the utilization of minority- and women-owned broker/dealers. Since January 2006, SURS has been formally communicating quarterly with investment managers that are not attaining the desired levels of utilization. The evaluation is based on a rolling four-quarter period. Due to the inherent seasonality embedded in the reporting process, managers may occasionally fall below levels of utilization for truncated periods of time while consistently reaching overall utilization goals over the longer term. SURS domestic equity, non-U.S. equity, global equity and REIT managers submit brokerage information quarterly that is reconciled to data provided by SURS custodian, Northern Trust.

Managers Not Achieving Desired Expectation Levels For the rolling four-quarter periods ended during Fiscal Year 2016, the level of MFDB usage achieved by the following investment managers was below the expectations established by SURS.

Asset Class Investment Manager 12-Month Period End

Utilization Goal

Actual MFDB Utilization

U.S. Equities T.Rowe Price 06/30/2016 10.00% 6.12%

Global Equities

T.Rowe Price 06/30/2016 20.00% 5.73%

U.S. Equities Mesirow 06/30/2016 30.00% 29.47%

Each manager unable to achieve minimum level of minority-owned broker/dealer usage for a rolling four-quarter period in Fiscal Year 2016 received a letter reiterating SURS usage expectations. Discussions are ongoing between SURS staff and these managers to understand and resolve the reasons for failure to attain the expected utilization levels.

SURS Monitoring Process During Fiscal Year 2016, staff visited and communicated with the investment managers not meeting the established usage levels of MFDB broker/dealers. Letters of non-compliance were sent to the managers listed above with a response requested that was to address the reason(s) for not attaining the expected level of MFDB utilization. All managers are aware of the importance of the initiative as well as the goals set forth in the Investment Policy, with some acknowledging challenges in achieving both best execution and the established MFDB utilization levels. The September 2010 revision to the Investment Policy that allows credit only for direct, rather than

Exhibit 15

indirect, trading with MFDB firms has proven challenging for several non-U.S. and global equity managers. The universe of MFDB firms capable of providing direct international trade execution at competitive rates is relatively small at this time, hindering the efforts of some investment managers to meet expectations. Staff is regularly communicating with managers in an effort to achieve the MFDB utilization goals without compromising best execution.

When selecting a broker, the manager must consider several factors, including achieving best price, commission rate, liquidity and willingness to commit capital, trade flow, transaction size, confidentiality, technology infrastructure, operational capabilities, broker research, expertise in particular markets and use of local desks in global markets.

Compliance Enforcement Measures Included in Appendix 2 and as stated in section XIV (B) of SURS Investment Policy adopted by the Board of Trustees on September 11, 2015, an investment manager will be subject to the following sequence of events when continuing to fall short of achieving the desired level of MFDB broker/dealer utilization:

1) A follow-up letter will be distributed to the investment manager not achieving the minimumlevel of minority-owned broker/dealer usage. The investment manager will be reminded ofthe usage expected by SURS. Currently, as stated in the Annual Report to the Governor andGeneral Assembly on the Use of Emerging Investment Managers, prepared as required inPublic Act 87-1265, a letter is distributed to all of the investment managers on an annualbasis listing the level of expectations.

2) Not achieving the desired level of minority-owned broker/dealer usage will be noted in theannual investment manager review. This could impact the evaluation of the firm.

3) SURS Staff will conduct a meeting with the investment manager to discuss the reasons fornot achieving the desired level of trading.

4) Investment managers not achieving the expected levels of broker/dealer usage may be subjectto a moratorium on additional funding.

5) If an investment manager fails to comply with the request, they may be invited to appearbefore the SURS Board of Trustees to explain why they are unable to achieve the desiredlevel of trading.

SURS On-line Brokerage Reporting System An on-line brokerage reporting system, developed by SURS staff in 2010, has been used by investment managers since the first quarter of calendar year 2011 to enter quarterly data. Staff uses information in the system to complete various reports, including quarterly brokerage cost reviews, annual reports of the utilization of the Chicago Stock Exchange, and the annual utilization of Illinois broker/dealers. The data in the system is available for ad hoc purposes as well. The system has provided significant time savings for staff by eliminating cumbersome, labor-intensive tasks involved in reconciling, recording and reporting brokerage information. Additional annual cost savings were realized by eliminating the need for a $35,000 contract to monitor and report manager utilization of the Chicago Stock Exchange. The system is enhanced to address specific needs as they arise.

Exhibit 15

Summary Appendix 1 includes a comparison of SURS desired usage levels of MFDB broker/dealer firms versus other Illinois large public pension funds. Appendix 2 lists the brokerage expectation levels stated in the Investment Policy approved by SURS Board on September 10, 2015.

Staff continues to expand its knowledge regarding the brokerage oversight function. SURS does not identify broker/dealers to be used by investment managers; however, when SURS becomes aware of a MFDB broker/dealer, the firm’s information is shared with SURS investment managers. The investment managers are expected to communicate with the prospective broker/dealer firm to assess the feasibility of establishing a relationship. SURS has increased awareness of the brokerage community as a result of the Board initiative and the Senate Pensions and Investments Committee hearings.

Staff will continue to monitor investment manager utilization of MFDB broker/dealers on a quarterly basis. In addition, staff will continue to encourage managers to enhance efforts in achieving the expected levels of direct trading with MFDB broker/dealers while maintaining best execution practices.

Exhibit 15

Appendix 1

Teachers Retirement System of Illinois (TRS) Domestic Equity 19.0% International Equity 12.5% Fixed Income (based on volume) 15.0%

Illinois Municipal Retirement Fund (IMRF) (All trade levels must be directly executed) U.S. Equities 25% U.S. Large-Cap Equities 30% International Equities 20% Fixed Income 22% High-Yield Bonds 5% U.S. Micro-Cap Equities 7% International Small-Cap Equities 5% Emerging Market Equities 5% Emerging Market Debt Best Efforts Bank Loans Best Efforts Opportunistic Strategies Best Efforts Hedge Funds Best Efforts

State Universities Retirement System (SURS) (All trade levels must be directly executed) Active U.S. Equity 30% Passive U.S. Equity 35% Structured Active Domestic Equity 10% Non-U.S. Equity 15% Structured Active Non-U.S. Equity 10% Global Equity 20% Real Estate Investment Trusts (REITS) 10% Fixed Income 20% Treasury Inflation-Protected Securities (TIPS) 10%

Illinois State Board of Investment (ISBI) Domestic Equity 30% International Equity 20% Fixed Income 20% International Fixed Income and Emerging Market Small Cap Equity 0 - 5% Hedged Equity 0 - 5%

Public School Teachers' Pension & Retirement Fund of Chicago (CTPF) (All trade levels must be directly executed unless otherwise noted) Active Domestic Managers and Manager-of-Managers All Cap, Large Cap Equity 50% Active Domestic Small Cap Equity and Passive Domestic Equity 35% Active International Managers and Manager-of-Managers All Cap, Large Cap Equity and Passive International Equity 25% Active International Small Cap Equity 5% Active and Passive fixed income managers (goal is based on volume traded) 25% Active REIT managers 10%

County Employees' Annuity & Benefit Fund of Cook County Domestic Equity 35% International Equity 10% International Small Cap and Emerging Market Equity 3% Fixed Income (based on volume) 10% Transition Mgmt. 40%

Municipal Employees' Annuity and Benefit Fund of Chicago Domestic Equity 40% International Equity - Developed 20% International Equity - Emerging 10% Fixed Income (based on volume) 25%

Minority-, Female- and Persons with a Disability- Owned Broker/Dealer Usage

September 2016Expectation Levels

Exhibit 15

Appendix 2

State Universities Retirement System of Illinois Minority-Owned Broker/Dealer Usage Policy 1

Section XIV(B) of SURS Investment Policy (9/15)

The Board of Trustees of the State Universities Retirement System has an established policy that seeks increased participation of investment management firms owned by minorities, females, and persons with a disability. As part of this policy, the Board also adopts minimum expectations for the use of minority-owned broker/dealers1 by the System’s investment managers. Only trades executed directly with minority-owned broker/dealers will be considered in the achievement of these goals.

Summary goals for the utilization of minority-owned broker/dealers have been established for the aggregate U.S. equity, non-U.S. equity and fixed income asset classes as shown in the table below. SURS seeks to consistently exceed these high level goals while achieving best execution.

Asset Class Goal U.S. Equity 30.0% Non-U.S. Equity 15.0% Fixed Income 20.0%

In order to achieve the goals at the asset class level, minimum expectations have been established for individual investment managers. These levels are based on the asset class in which the investment manager invests. SURS encourages its investment managers to strive to exceed the minimum expectations shown in the table that follows.

Asset Class Minimum Expectation EQUITY Active U.S. Equity 30.0% Passive U.S. Equity 35.0% Structured Active U.S. Equity 10.0% Non-U.S. Equity 15.0% Structured Active Non-U.S. Equity 10.0% Global Equity 20.0% Real Estate Investment Trusts (REITS) 10.0% FIXED INCOME Fixed Income 20.0% Treasury Inflation-Protected Securities (TIPS) 10.0%

1For purposes of this section and in accordance with 40 ILCS 5/1-109.1, “minority-owned broker dealer” means “a qualified broker-dealer who meets the definition of ‘minority owned business’, ‘female owned business’, or ‘business owned by a person with a disability’, as those terms are defined in the Business Enterprise for Minorities Females, and Persons with Disabilities Act.”

Exhibit 15

U.S. Equity Separate Accounts Subject to best execution, active U.S. equity investment managers for SURS are required to direct 30% of the total eligible commission dollars to minority-owned broker/dealers. Trades executed using electronic trading platforms are excluded from this requirement.

Subject to best execution, passive U.S. equity investment managers for SURS are required to direct 35% of the total eligible commission dollars to minority-owned broker/dealers. Trades executed using electronic trading platforms are excluded from this requirement.

Structured Active U.S. Equity Separate Accounts Subject to best execution, structured active U.S. equity investment managers for SURS are required to direct 10% of the total eligible commission dollars or eligible trading volume to minority-owned broker/dealers. Trades executed using electronic trading platforms are excluded from the 10% requirement.

Non-U.S. Equity Separate Accounts Subject to best execution, active non-U.S. equity investment managers for SURS are required to direct 15.0% of the total eligible commission dollars to minority-owned broker/dealers. Trades executed in emerging market countries2 or using electronic trading platforms are excluded from this requirement.

Structured Active Non-U.S. Equity Separate Accounts Subject to best execution, structured active non-U.S. equity investment managers for SURS are required to direct 10% of the total eligible commission dollars or eligible trading volume to minority-owned broker/dealers. Trades executed in emerging market countries or using electronic trading platforms are excluded from the 10% requirement.

Global Equity Separate Accounts Subject to best execution, active global equity investment managers for SURS are required to direct 20.0% of the total eligible commission dollars to minority-owned broker/dealers, effective January 1, 2015.3 Trades executed in emerging market countries or using electronic trading platforms are excluded from the 20.0% requirement.

Fixed Income Separate Accounts Subject to best execution, fixed income investment managers for SURS are required to direct 20% of eligible fixed income trading volume to minority-owned broker/dealers. Trades executed in emerging market countries or using electronic trading platforms are excluded from the minimum trading requirements.

2 As defined by Morgan Stanley Capital International 3 The minimum expectation for global equity investment managers increases from 17.5% to 20.0%, effective January 1, 2015.

Exhibit 15

Treasury Inflation-Protected Securities (TIPS) Separate Accounts Subject to best execution, active TIPS investment managers for SURS are required to direct 10% of eligible TIPS trading volume to minority-owned broker/dealers. Trades executed in emerging market countries or using electronic trading platforms are excluded from the minimum trading requirements.

Real Estate Investment Trust Securities (REITS) Separate Accounts Subject to best execution, active REITS investment managers for SURS are required to direct 10% of the total eligible commission dollars to minority-owned broker/dealers. Trades executed in emerging market countries or using electronic trading platforms are excluded from this requirement.

Reporting Guidelines Each investment manager will submit a compliance report within 30 days after March 31, June 30, September 30 and December 31 of each year. Reporting will be monitored over a rolling twelve-month period.

Consequences of Non-Compliance SURS continuously monitors investment managers’ compliance with this policy and has established a series of consequences for those investment managers who continually fail to meet expectations. The investment managers are expected to achieve the desired levels over rolling twelve-month periods. The following steps will occur if the investment manager continues to fall short of expectations:

1) A follow-up letter will be distributed to the investment manager notachieving the minimum level of minority-owned broker/dealer usage. Theinvestment manager will be reminded of the usage expected by SURS.Currently, as stated in the Annual Report to the Governor and GeneralAssembly on the Use of Emerging Investment Managers, prepared asrequired in Public Act 87-1265, a letter is distributed to all of theinvestment managers on an annual basis listing the level of expectations.

2) Not achieving the desired level of minority-owned broker/dealer usagewill be noted in the annual investment manager review presented to theSURS Board of Trustees. This could impact the evaluation of the firm.

3) SURS Staff will conduct a meeting with the investment manager todiscuss the reasons for not achieving the desired level of trading.

4) Investment managers not achieving the expected levels of broker/dealerusage may be subject to a moratorium on additional funding.

5) If an investment manager fails to comply with the request, they may beinvited to appear before the SURS Board of Trustees to explain why theyare unable to achieve the desired level of trading.

Exhibit 15

Fiscal Year 2017 Summary Work Plan Investment Committee Schedule

State Universities Retirement System

Denotes recurring items- Denotes non-recurring items

FISCAL YEAR 2017

October 20, 2016 Annual Broker/Dealer Review Annual Global/International Equity Asset Class Reviews- Status Update of Private Equity Fund-of-Funds Search - Educational Topic (TBD)

December 8, 2016 Receipt of Annual Report to the Governor and General Assembly on Utilization of Emerging Investment

Managers Annual Index Fund Investments Review Annual Real Estate Asset Class Review- Educational Topic (TBD)

February 2, 2017 Annual Fixed Income & Emerging Market Debt Asset Class Reviews- Educational Topics – Trustee Educational Forum (TBD)

March 9, 2017 Annual Hedged Strategies Asset Class Review Annual Commodities Asset Class Review- Educational Topic (TBD)

April 20, 2017 Annual U.S. Equity Asset Class Review

Exhibit 16

Annual Investment Review of Self-Managed Plan (SMP)- Educational Topic (TBD)

June 8, 2017 SURS FY ’18 Budget Consultant Annual Review of MDP Annual Private Equity Asset Class Review Annual Opportunity Fund Asset Class Review- Educational Topic (TBD)

Exhibit 16

Memorandum

To: SURS Board of Trustees From: William Mabe, Interim Executive Director Date: September 1, 2016 Re: Schedule of 2016-2017 Meetings Dates

Thursday, February 4, 2016 9:00 a.m. – 5:00 p.m. Investment Committee Friday, February 5, 2016 9:00 a.m. – 1:00 p.m. Investment Forum Chicago

Thursday, March 10, 2016 9:00 a.m. – 5:00 p.m. Committee Meetings 5:00 p.m. – 9:00 p.m. Legislative Event

Friday, March 11, 2016 9:00 a.m. – 12:00 p.m. Committee Meetings Champaign Board Meeting

Thursday, April 21, 2016 9:00 a.m. - 5:00 p.m. Investment Committee Chicago

Tuesday, May 3, 2016 Springfield

5:00 p.m. - 7:00p.m. Legislative Event

Thursday, June 9, 2016 9:00 a.m. - 5:00 p.m. Committee Meetings Friday, June 10, 2016 9:00 a.m. - 12:00 p.m. Committee Meetings Chicago Board Meeting

Thursday, September 15, 2016 9:00 a.m. - 5:00 p.m. Committee Meetings Friday, September 16, 2016 9:00 a.m. - 12:00 p.m. Committee Meetings Champaign Board Meeting

Thursday, October 20, 2016 9:00 a.m. - 5:00 p.m. Investment Committee Chicago

Thursday, December 8, 2016 9:00 a.m. - 5:00 p.m. Committee Meetings Friday, December 9, 2016 9:00 a.m. - 12:00 p.m. Committee Meetings Chicago Board Meeting

Exhibit 17

Thursday, February 2, 2017 9:00 a.m. – 5:00 p.m. Investment Committee Friday, February 3, 2017 9:00 a.m. – 1:00 p.m. Investment Forum Chicago

Thursday, March 9, 2017 9:00 a.m. – 5:00 p.m. Committee Meetings Friday, March 10, 2017 9:00 a.m. – 12:00 p.m. Committee Meetings Champaign Board Meeting

Thursday, April 20, 2017 9:00 a.m. - 5:00 p.m. Investment Committee Chicago

Thursday, June 8, 2017 9:00 a.m. - 5:00 p.m. Committee Meetings Friday, June 9, 2017 9:00 a.m. - 12:00 p.m. Committee Meetings Chicago Board Meeting

Thursday, September 14, 2017 9:00 a.m. - 5:00 p.m. Committee Meetings Friday, September 15, 2017 9:00 a.m. - 12:00 p.m. Committee Meetings Champaign Board Meeting

Thursday, October 19, 2017 9:00 a.m. - 5:00 p.m. Investment Committee Champaign

Thursday, December 7, 2017 9:00 a.m. - 5:00 p.m. Committee Meetings Friday, December 8, 2017 9:00 a.m. - 12:00 p.m. Committee Meetings Chicago Board Meeting

Exhibit 17