TRS 2011 Comprehensive Annual Financial Report

TEACHER RETIREMENT SYSTEM OF TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT 2011
Comparative Schedule of Investing
Activity Expenses
PENSION TRUST FUND
FOR THE FISCAL YEAR ENDED AUGUST 31, 2011 (With Comparative Data for August 31, 2010)
2011 2010
S C H E D U L E 3
Direct Expenses:
Salaries and Other Personnel Costs $ 29,476,277 $ 16,283,310
Professional Fees and Services 3,767,718 5,232,615
Consumable Supplies 35,633 41,972
Travel 506,220 490,522
Building Lease 1,019,436 1,486,486
Copier Rentals 75,000 74,039
Dues, Fees and Staff Development 27,648 41,146
Subscriptions and Reference Materials 36,796 40,989
Reproduction and Printing Services 12,721
Software Upgrades 150,796 196,123
Telecommunication and Data Services 322,907 357,760
Furniture and Equipment - Expensed 40,086 246,601
Depreciation - Leasehold Improvements 516,031 516,031
Total Direct Expenses $ 35,987,269 $ 25,007,594
Indirect Expenses:
Depreciation $ 200,523 $ 173,164
Executive Management Support 1,030,719 827,413
Legal Support 1,515,794 1,585,381
Audit Support 761,710 1,442,557
Human Resources Support 609,223 558,432
Fiscal Management Support 1,531,627 1,505,945
Information Technology Support 2,339,344 2,643,578
Staff Services Support 1,057,415 1,191,293
Other Support Services 382,096 408,159
Total Indirect Expenses $ 9,428,451 $ 10,335,922
Total Internal Administrative
Investing Activity Expenses* $ 45,415,720 $ 35,343,516
External Manager Fees ** $ 137,954,055 $ 76,575,138
Total Investing Activity Expenses (Exh. II) *** $ 183,369,775 $ 111,918,654
* Not netted against or included in performance calculations.
** Performance calculations net of External Manager Fees
*** The investing activity expenses do not include the following expenditures:
During fiscal year 2011, the system paid commissions to various brokers totaling $58,304,167. A portion of the total commissions was paid
to soft dollar brokers generating $6,516,399 of soft dollar credits. Soft dollar credits were spent during fiscal year 2011 in accordance with
Section 28(e) of the Securities Exchange Act of 1934 totaling $6,155,201. Unspent soft dollar credits (totaling $2,428,236) are held by the
receiving broker and will be utilized in the new fiscal year. Another portion of the total commissions was paid through various Commission
Sharing Arrangements (CSA) generating $11,036,887 in CSA proceeds. These proceeds were used to acquire research services from
various investment related firms totaling $14,536,387. Unspent CSA proceeds (totaling $6,396,266) are held by either State Street Bank
and Trust Company as the system’s CSA agent or by the CSA broker as a reserve for future expenses.
Through its contractual agreements with various firms, the system benefited from $6,773,218 in vendor paid expenses and contractual
allowances. Vendor paid expenses are legal arrangements that are used to acquire investment related items other than those paid for with
Soft Dollar credits and CSA proceeds.
In addition to the commission expenses mentioned above, $416,378,165 was paid to various Alternative and Pooled Investment General
Partners for a total of $474,712,229 in fees and commissions which are not included in Investing Activities Expense on Exhibit II. These
amounts are reported in the Schedule of Fees and Commissions and are netted against investment performance on Exhibit II in the
Net Appreciation in Fair Value of Investments amount. Custodial management fees were netted against income from securities lending
activities.
78 FINANCIAL SECTION