May 30, 2013 - Public Employees Retirement Association of New ...

1. Pledge of Allegiance 

2. Roll Call 

3. Approval of Agenda 

4. Approval of Consent Agenda 

5. Current Business 

PUBLIC EMPLOYEES RETIREMENT BOARD 

MONTHLY MEETING 

PERA Building 

Senator Fabian Chavez, Jr. (PERA) Board Room 

33 Plaza La Prensa 

Santa Fe, New Mexico 87507 

May 30, 2013 

9:00 a.m. 

Time (estimated) 

9:05 a.m. A. Presentation of Service Pins to: 

(1) Sharon Moya (20 years) 

(2) Natasha Romero (5 years) 

9:10 a.m. B. Investments Division. 

1. Chief Investment Officer’s Performance Report 

2. April Hedge Fund Performance Report 

3. Presentations by International Value Equity Managers 

a. Kleinwort Benson Investors 

b. MFS Institutional Advisors, Inc. 

4. Action Item: 

Recommendation of Auditor for FY 13 Deferred 

Compensation Program Audit - CliftonLarsonAllen 

PRESENTER 

Wayne Propst 

Executive Director 

Joelle Mevi 

PERA CIO 

Joelle Mevi 

PERA CIO 

Padraig Sheehy BBs 

(Hons) 

Senior Vice President 

Camille Humphries Lee, 

CFA 

Investment Officer 

Carolyn M. Lucey, CIMA 

Director, Relationship 

Management 

Susan Biernacki 

Investments Chair 

Joelle Mevi 

PERA CIO

10:30 

a.m. 

C. Executive Director’s Report Wayne Propst 

Executive Director 

6. Other Business 

7. Adjournment 

Any person with a disability who is in need of a reader, amplifier, qualified sign language 

interpreter, or any other form of auxiliary aid or service to attend or participate in the 

hearing or meeting, please contact Judy Olson at (505) 476-9305 at least one week prior to 

the meeting, or as soon as possible. Public documents, including the agenda and minutes, 

can be provided in various accessible formats. Please contact Ms. Olson if a summary or 

other type of accessible format is needed.

PUBLIC EMPLOYEES RETIREMENT ASSOCIATION 

MONTHLY MEETING 

May 30, 2013 

CONSENT AGENDA 

1. Approval of Minutes: April 9, 2013 Rules & Administration Committee Meeting 

April 25, 2013 Board Meeting 

2. Ratification of Retirements – Benefits processed through May 23, 2013. 

a. Normal d. Non-Duty Death 

b. Deferred e. Non-Duty Disability 

c. Reciprocity to ERA f. Reciprocity to PERA 

3. Affidavits for Free Military Service: 

a. Enrique Granillo, 11 months of free military service 

b. William W. Cordova, 1 year and 2 months of free military service 

c. Frank Caulfield, 3 years and 5 months of free military service 

4. Duty and Non-Duty Death Determinations: 

a. James O’Neill (Non-duty death) 

b. Raymond Chavez (Non-duty death) 

c. Michael J. Seeley (Non-duty death) 

d. Patricia Bryne (Non-duty death) 

5. Resolutions: 

CITY OF MORIARTY – The City of Moriarty submitted Resolution No. 12-13-30 

authorizing an election for adoption of Municipal Police Member Coverage Plan 5. 

The election is scheduled for July 1, 2013. 

TOWN OF CARRIZOZO – The Town of Carrizozo submitted Resolution No. R2013-05 

approving participation in the Public Employees Retirement Association Municipal 

Police Member Coverage Plan 3. The plan change is effective the first pay period in 

July 2013. 

6. Educational Conferences: 

a. Daniel Esquibel – to attend the CAPP – Employee Pensions – Part 1 

June 25-26, 2013, Chicago, Illinois (expenses paid by PERA) 

Setting of Meetings – June, 2013 

a. Investments Committee 6/11/2013 9:00 a.m. 

b. Audit & Budget Committee 6/11/2013 After Investments Committee 

c. Rules & Administration Comm. 6/11/2013 After Audit & Budget Committee 

d. Legislative Committee 6/11/2013 After Rules & Administration Committee 

e. Disability Review Committee 6/11/2013 2:00 p.m. PERA Board Room 

f. Monthly Board Meeting 6/27/2013 9:00 a.m. PERA Board Room

Presentation to 

PUBLIC EMPLOYEES RETIREMENT ASSOCIATION OF NEW MEXICO 

PUBLIC EMPLOYEES RETIREMENT BOARD

Firm overview 

Global client base 

Specialist 

investment firm 

Part of Kleinwort 

Benson Group 

Meet highest 

international 

regulatory 

requirements 

Passionate belief in 

products and 

processes 

AUM: $5.1bn 

Pioneers in 

dividend-based 

investment 

Pioneers in 

environmental 

equity investing

Dividend Plus investment team 

Key People Title Experience Tenure 

Noel O’Halloran Chief Investment Officer 25 21 

Gareth Maher Head of Portfolio Management 25 13 

David Hogarty Head of Strategy Development 22 18 

Ian Madden Portfolio Manager 12 12 

James Collery Portfolio Manager 12 12 

Ultan O’Kane Trader 7 6 

3

Market overview 

Asset Class Performance ( US $ returns) 2012 

2013 

Q1 

Equities % % 

MSCI World Equity Index +16.5 + 7.9 

MSCI EAFE Equity Index +17.9 +5.2 

MSCI EMU Equity Index +22.5 - 0.3 

MSCI Emerging Market Equity Index +18.6 -1.6 

Source: Thomson Reuters Datastream, 

4

Key summary points Dividend Plus 

Investment 

Thesis: 

Strategy 

Delivers: 

Approach: 

KBI 

Consistent performance 

Quality, cash rich 

companies with better 

We target more Dividend 

Yield and Dividend 

Outperformed b/m on a 

consistent basis 

Downside protection 

balance sheets. 

Growth. 

Unique strategy that 

Lower risk, lower 

Better value companies 

Segmented construction: 

blends well 

volatility 

Total Return approach, 

not just income 

High Active Share 

All Cap portfolio 

Broadest opportunity 

(seek opportunities 

where other don’t look) 

Systematic approach to 

buy low and sell high 

Experienced specialist 

team 

Managing this approach 

since 2003 

set 

* Based on PERA vs MSCI EAFE value index 

5

Dividend Players 

North 

America 

Europe 

Pacific 

Basin 

Emerging 

Markets 

Total 

Number of 

Payers 

Dividend Yield 

(avg). 

Dividend Payout 

(avg) 

Dividend Growth 

(avg) 

542 409 446 740 2137 

2.1% 3.5% 2.6% 2.7% 2.6% 

28% 40% 36% 35% 34% 

3.3% 3.8% 1.1% 6.2% 4.0% 

Source: Kleinwort Benson Investors December 31st, 2012. MSCI All Countries index data. 

6

Performance 

Fund 

Performance 

% 

MSCI EAFE Value 

Index 

% 

Relative 

Return 

% 

Year to date (end March) +4.7 +3.6 +1.1 

1 Year +13.9 +11.7 +2.2 

3 Years (annualized) +5.8 +4.1 +1.7 

Source: Kleinwort Benson Investors. Returns quoted are in US$, Gross of Fees and as at 31 st March 2013. 

Inception date 31 st March 2010 

7

Active Fund Positions v Benchmark 

Regional 

Allocations 

PERA 

MSCI 

VALUE 

DIFFERENCE 

EUROLAND 25.0 31.1 -6.1 

EUROPE EX 

EUROLAND 

33.6 32.15 1.5 

JAPAN 19.6 21.7 -2.1 

PACIFIC BASIN 

EX JAPAN 

EMERGING 

MARKETS 

13.0 14.4 -1.4 

7.6 0.0 7.6 

SECTOR 

ALLOCATION 

CONSUMER 

DISCRETIONARY 

CONSUMER 

STAPLES 

PERA 

MSCI 

VALUE 

DIFFERENCE 

8.9 7.2 +1.7 

11.7 2.3 +9.4 

ENERGY 7.1 11.0 -3.9 

FINANCIAL 22.4 37.1 -11.7 

HEALTHCARE 10.3 8.3 -2.0 

INDUSTRIAL 11.1 10.2 +0.9 

INFORMATION 

TECHNOLOGY 

3.2 3.7 -0.5 

MATERIALS 8.0 6.1 +1.9 

TELECOM 

SERVICES 

4.9 8.0 -3.1 

UTILITIES 3.6 6.1 -2.5

Attribution Analysis – 1 year to 31 st March 2013 

What worked 

Europe, Pacific Basin 

Best performing sectors 

Consumer Services 

TUI Travel 

Banks & Diversified Financials 

Swedbank, Aeon Credit 

What did not work 

Japan & Emerging Markets 

Worst performing sectors 

European Semiconductors 

ST Micro Electronics 

Pacific Basin Telecoms 

Singapore Telecom 

Materials 

Anglo America, BHP

Current International portfolio 

Mkt. Cap 

$bn 

Dividend 

Plus 

% 

MSCI 

EAFE 

Index % 

+/- 

% 

25 44.7 53.2 -8.4 

Dividend 

Plus 

Strategy 

MSCI 

EAFE 

Index 

Dividend Yield (%) 4.6 3.4 

Dividend Payout (%) 52.8 44.0 

Dividend Growth (%) 6.1 4.7 

Total Payout Yield (%) 4.7 2.4 

P/E 10.7 12.7 

Better Total 

Return 

Active Share Measure is 74% 

Active Share measures the difference in 

portfolio holdings from the benchmark. 

Expressed as an overall percentage this means 

that 74% of our exposures are different to the 

benchmark, while 26% are the same. 

So constituent holdings within regions and 

industries are very different to the broad 

market. 

Source: Kleinwort Benson Investors, Datastream, December 31st , 2012 

Price/Book 1.5 1.2 

Price/Cashflow 7.9 9.0 

Weighted Avg. Mkt. 

Cap $ (bn) 

Beta 0.97 

40.2 47.4 

Better Value 

and Risk 

ROE (realised, %) 15.8 12.6 Better 

ROIC (realised, %) 9.0 8.5 

Net Debt/ Equity (%) 39.9 44.2 

Accruals (%) 3.2 5.0 

Profit Surprises (%) -0.9 0.3 

Quality 

Management 

& Better 

Balance 

Sheets 

10

International portfolio characteristics 

7.7% 

Geographical Breakdown 

18.5% 

11.6% 

Sector Breakdown 

8.6% 0.3% 

24.4% 

13.1% 

60.7% 

Europe 

Asia ex Japan 

Emerging Markets Japan 

Top 10 holdings 

Name Country Weight% 

Astra Zeneca Plc UK 4.8 

British American Tobacco Plc UK 3.8 

BASF Germany 2.8 

UPM-KYMMENE Finland 2.5 

Bouygues France 2.4 

Boskalis Westminster Netherlands 2.4 

Nestle Switzerland 2.3 

Total France 2.2 

Enel Italy 2.0 

Vodafone UK 2.0 

Source: Kleinwort Benson Investors, Datastream, December 31 st 2012 

9.5% 

4.1% 

5.4% 

10.1% 

4.2% 

12.1% 

Financials 

Healthcare 

Industrials 

Information Technology 

Materials 

Telecommunications Services 

Utilities 

Consumer Discretionary 

Consumer Staples 

Energy 

Other 

9.6% 

11

Current Emerging Markets portfolio 

Mkt. Cap 

$bn 

Dividend 

Plus 

% 

MSCI 

Emerging 

Markets 

Index % 

+/- 

% 

25 25.5 27.7 -2.2 

Active Share Measure is 75% 

Active Share measures the difference in 

portfolio holdings from the benchmark. 

Expressed as an overall percentage this 

means that 75% of our exposures are 

different to the benchmark, while 25% are 

the same. 

So constituent holdings within regions and 

industries are very different to the broad 

market. 

Source: Kleinwort Benson Investors, Datastream, December 31st , 2012 

Dividend 

Plus 

Strategy 

MSCI 

Emerging 

Markets 

Dividend Yield (%) 4.5 2.7 

Dividend Payout (%) 48.0 35.5 

Dividend Growth (%) 9.5 8.2 

Total Payout Yield (%) 3.9 1.6 

P/E 

12.0 12.4 

Price/Book 1.7 1.7 

Price/Cashflow 9.0 9.2 

Weighted Avg. Mkt. 

Cap $ (bn) 

Beta 0.93 

17.3 22.0 

Better Total 

Return 

Better Value 

and Risk 

ROE (realised, %) 20.9 17.5 Better Quality 

ROIC (realised, %) 14.1 11.6 Management 

Net Debt/ Equity (%) 1.1 17.2 

& Better 

Balance 

Accruals (%) 4.2 6.6 Sheets 

Profit Surprises (%) -0.8 -1.7 

12

Emerging Markets portfolio characteristics 

Geographical Breakdown 

17.2% 

14% 

Sector Breakdown 

28% 

21.2% 

61.6% 

9% 

EM Asia EM Latin America EM EMEA 

7% 

2% 

8% 

Top 10 holdings 

Name Country Weight% 

Taiwan Semiconductor 

Manufacturing 

Taiwan 5.3 

China Construction Bank China 2.7 

Ecopetrol SA ADR Colombia 2.7 

Banco Santander Chile Chile 2.6 

TSRC Corporation Taiwan 2.5 

Industrial & Commercial Bank of 

China 

China 2.5 

KT&G Corporation South Korea 2.3 

Bank of China Ltd China 2.2 

Kumba Iron Ore Ltd South Africa 2.2 

7% 

Financials 

Gazprom OAO Russia 2.2 Source: Kleinwort Benson Investors, Datastream, December 31 st , 2012 13 

12% 

Information Technology 

Telecommunications Services 

Consumer Discretionary 

Energy 

Industrials 

Materials 

Utilities 

14% 

Consumer Staples

Outlook 

Economic 

Economic growth in US and Asia will be solid, but will remain negative in the eurozone 

Real progress has been made in solving the eurozone fiscal crisis, but the crisis is far 

from over 

Interest rates in developed countries will remain exceptionally low for a prolonged 

period 

Inflation has peaked in emerging markets, and monetary policy is loosening, helping 

growth 

Markets 

Equities are close to fair value while corporate balance sheets are strong 

Equities to consolidate short term but then to move higher on 12-month view 

Core government bonds are expensive by any historic measure 

Earnings and dividend growth remain a strong support and driver to share prices 

We favour high quality companies (low debt, strong cash flow, strong management) 

Investing in companies that pay an above average and growing dividend should 

continue to be a winning strategy 

Emerging market equities are attractive and should outperform 

Source: Kleinwort Benson Investors 

14

Disclaimers 

USA/CANADA: 

IMPORTANT RISK DISCLOSURE STATEMENT. This material is provided for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase any security, product or 

service including any group trust or fund managed by Kleinwort Benson Investors International Ltd, or any of its affiliates (collectively, “Kleinwort Benson Investors”). The information contained herein does not set 

forth all of the risks associated with this strategy, and is qualified in its entirety by, and subject to, the information contained in other applicable disclosure documents relating to such a strategy. Kleinwort Benson 

Investors International Ltd’s investment products, like all investments, involve the risk of loss and may not be suitable for all investors, especially those who are unable to sustain a loss of their investment. 

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. 

This introductory material may not be reproduced or distributed, in whole or in part, without the express prior written consent of Kleinwort Benson Investors International Ltd. The information contained in this 

introductory material has not been filed with, reviewed by or approved by any United States regulatory authority or self-regulatory authority and recipients are advised to consult with their own independent 

advisors, including tax advisors, regarding the products and services described therein. The views expressed are those of Kleinwort Benson Investors International Ltd. and should not be construed as investment 

advice. We do not represent that this information is accurate or complete and it should not be relied upon as such. Opinions expressed herein are subject to change without notice. The products mentioned in this 

Document may not be eligible for sale in some states or countries, nor suitable for all types of investors; their value and the income they produce may fluctuate and/or be adversely affected by exchange rates, 

interest rates, or other factors. Additional information will be provided upon request. Kleinwort Benson Investors International Ltd. is a registered investment adviser with the SEC and regulated by the Central Bank 

of Ireland. Kleinwort Benson Investors International Ltd. is 100% owned by Kleinwort Benson Investors Dublin Ltd. Form ADV Part 1 and Part 2 are available on request. 

Gross results shown do not show the deduction of Adviser's fees. A client’s actual return will be reduced by the advisory fees and any other expenses which may be incurred in the management of an investment 

advisory account. See Part II of Adviser's Form ADV for a complete description of the investment advisory fees customarily charged by Adviser. Kleinwort Benson International will provide net performance figures 

for any account size on request. The performance results are that of a representative strategy which has been managed on a discretionary basis since its inception. Performance returns for individual investors may 

differ due to the timing of investments, subsequent subscriptions/redemptions, share classes, fees and expenses. Performance for periods of more than 1 year is annualized. Information about indices is provided to 

allow for comparison of the performance of the Adviser to that of certain well-known and widely recognized indices. There is no representation that such index is an appropriate benchmark for such comparison. 

You cannot invest directly in an index, which also does not take into account trading commissions and costs. Investments denominated in foreign currencies are subject to changes in exchange rates that may have 

an adverse effect on the value, price and income of the product. Income generated from an investment may fluctuate in accordance with market conditions and taxation arrangement. PAST PERFORMANCE IS NOT A 

RELIABLE GUIDE TO FUTURE PERFORMANCE AND THE VALUE OF INVESTMENTS MAY GO DOWN AS WELL AS UP. Stocks mentioned in this document may or may not be held in this strategy at this time. Any 

projections, market outlooks or estimates in this document are forward-looking statements and are based upon certain assumptions. Other events which were not taken into account may occur and may 

significantly affect the returns or performance of the strategy. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur. Discussions of market 

conditions, market high/lows, objectives, strategies, styles, positions, and similar information set forth herein is specifically subject to change if market conditions change, or if KBII believes, in its discretion, that 

investors returns can better be achieved by such changes and/or modification. Style descriptions, market movements over time and similar items are meant to be illustrative, and may not represent all market 

information over the period discussed. All MSCI data is provided “as is”. In no event shall MSCI, its affiliates, or any MSCI data provider have any liability of any kind in connection with the MSCI data. No further 

distribution or dissemination of the MSCI data is permitted without MSCI’s prior express written consent. 

Environmental Strategies USA/Canada: Renewable Energy Performance Disclaimer: Returns up to 04/30/08 are based on a Belgian Fund which followed the Renewable Energy Strategy and was managed by KBI. 

Returns from 05/01/08 are based on the KBI Renewable Energy Strategy. Water Performance Disclaimer: Returns up to 09/30/07 are based on a Belgian Fund which followed the same strategy as the Kleinwort 

Benson Investors Water Strategy and was managed by KBI. Returns from 10/01/07 are actual returns from the Kleinwort Benson Investors Water Strategy. AGRI Performance Disclaimer: Returns since inception 

are based on the KBI Agri Strategy. GESS Performance Disclaimer: Returns since inception are based on the KBI Global Environmental Solutions Strategy. Blended Environmental Index is made up of: Ardour Global 

Alternative Energy Index (25%), S-Network GlobalWater Index (25%), DAXglobal Agribusiness Index (25%), HSBC Climate Change Index (25%). 

Dividend Plus Strategies USA/Canada: Dividend Plus Global Performance Disclaimer: Returns reflect a combination of “simulated” or “backtested” returns of a portfolio of stocks that were selected under the KBI 

Dividend Plus Global Strategy up to 05/31/03 using step 1 of our investment process. Returns from 06/01/03 to 07/31/2004 are based on a Belgian Fund which followed the Dividend Plus Global Strategy and was 

managed by KBI. Returns from 08/01/2004 are actual returns from the KBI Dividend Plus Global Strategy. Simulated performance is not a reliable guide to future performance. Dividend Plus Global Developed 

Equity Performance Disclaimer: Returns reflect a combination of “simulated” or “backtested” returns of a portfolio of stocks that were selected under the KBI Dividend Plus Developed Equity Strategy up to 

05/31/03 using step 1 of our investment process. Returns from 06/01/03 to 07/31/2004 are based on a Belgian Fund which followed the Dividend Plus Developed Equity Strategy and was managed by KBI. Returns 

from 08/01/2004 are actual returns from the KBI Dividend Plus Developed Equity Strategy. Simulated performance is not a reliable guide to future performance. Dividend Plus Emerging Markets Performance 

Disclaimer: Returns reflect a combination of “simulated” or “backtested” returns of a portfolio of stocks that were selected under the KBI Dividend Plus Emerging Markets Strategy up to 04/30/10 using step 1 of 

our investment process. Returns from 05/01/10 to 07/31/2010 are based on the Emerging Markets component of a segregated account managed by KBI to an identical process applied to all KBI Dividend Plus 

Strategies. Returns from 08/01/2010 are actual returns from the KBI Dividend Plus Emerging Markets Strategy. Simulated performance is not a reliable guide to future performance. Dividend Plus International 

Developed Equity Performance Disclaimer: Returns reflect a combination of “simulated” or “backtested” returns of a portfolio of stocks that were selected under the KBI Dividend Plus International Developed 

Equity Strategy up to 05/31/03 using step 1 of our investment process. Returns from 06/01/03 to 07/31/04 are based on the International Developed Equity component of a Dividend Plus Global Belgian Fund which 

was managed by KBI. Returns from 08/01/04 to 06/30/05 are based on the International Developed Equity component of the KBI Dividend Plus Global Equity Strategy. Returns from 07/01/05 are based on the KBI 

Dividend Plus Intl Developed Equity Strategy. Simulated performance is not a reliable guide to future performance.

Manager Update Memorandum 

To: 

Susan Biernacki, PERA Investment Committee Chair 

PERA Board Members 

From: 

Ben Rotenberg, Cliffwater LLC 

Regarding: Manager Update – Kleinwort Benson Investors Int’l Ltd. (formerly known as KBC) 

Mandate/Strategy: International Developed Equity / Kleinwort Benson International Dividend Plus EAFE 

Developed Strategy 

Meeting Date: May 30, 2013 

CC: 

Joelle Mevi, Chief Investment Officer 

Julian Baca, Deputy Chief Investment Officer 

LeAnne Larrañaga-Ruffy, Portfolio Manager 

Summary 

The Public Employees Retirement Association of New Mexico (“PERA”) hired Kleinwort Benson Investors 

International Ltd. (“KBI” or “Kleinwort Benson” or “the firm”) to manage an international value equity 

mandate in 2010. KBI is managing the portfolio in the style of the firm’s Dividend Plus EAFE Developed 

strategy. PERA funded a separate account for Kleinwort Benson in April 2010. From 2000 to 2010, the 

firm was known as KBC and was owned by the Kleinwort Benson Group. 

KBI manages $111.3 million for PERA as of March 2013, representing 3.4% of PERA’s International 

Equity Composite, and 0.9% of PERA’s total plan. 

The firm is stable, and grew its assets under management by 30% in 2012, through a combination of net 

asset inflows and market performance. Inflows were positive in the Dividend Plus EAFE Developed 

strategy in 2012; strategy assets grew 27% as the strategy took on $250 million of net inflows. 

Performance in the strategy has been slightly positive relative to its benchmark recently. 

Relative performance for PERA has been positive. According to PERA’s custodian, KBI has 

outperformed its benchmark (MSCI EAFE Value - GD) by 1.67% since inception in April 2010 through 

March 2013. 

Cliffwater believes that KBI is well positioned to continue to manage assets for PERA, and recommends 

no changes to the mandate at this time. 

Firm / Personnel Update 

As of March 31, 2013, the firm manages $5.1 billion. The firm employs 47 professionals, including 14 

investment professionals. The investment professionals are comprised of 12 portfolio manager/research 

analysts, one economist and one trader. The firm is stable, and grew assets under management by 30% 

in 2012, through a combination of net asset inflows and market performance. Inflows have also been 

positive in the strategy. The firm now manages $1.8 billion in the strategy. 

KBI’s Dividend Plus team manages several other variations of the Dividend Plus strategy (one is 

Emerging Markets focused, while another is Global). The team is comprised of 12 portfolio managers / 

research analysts, one trader, and one economist. This team has stayed fairly static over the last three 

years. The firm has added one portfolio manager / analyst, and has not seen any departures. 

This report reflects information only through the date hereof. Our due diligence and reporting rely upon the accuracy and completeness of financial 

information (which may or may not be audited by the fund manager) and other information publicly available or provided to us by the fund manager, its 

professional staff, and through other references we have contacted. We have not conducted an independent verification of the information provided 

other than as described in this report. Our conclusions do not reflect an audit of the investment nor should they be construed as providing legal 

advice. Past performance does not guarantee future performance. The information contained herein is confidential commercial or financial information, 

the disclosure of which would cause substantial competitive harm to you, Cliffwater LLC, or the person or entity from whom the information was 

obtained, and may not be disclosed except as required by applicable law. 

© 2013 Cliffwater LLC. All rights reserved.

Overview of Investment Process 

Kleinwort Benson’s investment philosophy is that global investment markets are inefficient. Rather than 

focusing solely on dividends, KBI believes that investors should focus on quality, sustainability, and 

growth of those dividends. KBI’s investment process is systematic and rules based. The firm uses 

quantitative methods to execute their investment ideas. The team uses three steps to create a portfolio 

with their preferred financial characteristics. Firstly, to achieve a diversified dividend framework, the team 

divides the MSCI World into its Regional Industry Groups and calculates a yield hurdle for each. Stocks 

that achieve this yield hurdle are selected for further consideration. Next the team searches for 

companies with the financial strength to maintain and grow their payout commitments (and avoid dividend 

cuts and rights issues). KBI’s screening factors normally include a combination of free cash flow, 

dividend coverage, dividend growth and total payout measures. Finally, the portfolio is optimized using 

BARRA to create a portfolio with KBI’s preferred characteristics and financial “style”. These include better 

total return, better quality and governance and better value. 

Performance 

Relative performance against the benchmark has been positive. According to PERA’s custodian, KBI has 

outperformed its benchmark (MSCI EAFE Value - GD Index) by 1.67% since inception in April 2010. 

Since inception, Kleinwort Benson has delivered a +5.75% rate of return, compared to +4.09% for the 

benchmark MSCI EAFE Value - GD Index. Over longer periods of time, the strategy has delivered good 

absolute returns and modest returns relative to its benchmark and peer group. 

Performance Notes: Please note that the PERA-specific performance comes from PERA’s custodian. All 

other performance data is shown gross of fees and comes from eVestment Alliance and/or the investment 

manager. 

Exhibit 1 

Kleinwort Benson Performance for New Mexico PERA 

As of March 31, 2013 

Portfolio Name Market Value 

% of Total 

Plan MTD 3 Mo FYTD YTD 1 Year 3 Year 

Since 

Incep. Inception Date 

KBC 111,288,644 0.86 0.65 4.66 20.65 4.66 13.77 5.75 5.75 01-Apr-2010 

MSCI EAFE Value 0.17 3.63 19.75 3.63 11.73 4.09 4.09 

Excess Return 0.48 1.02 0.89 1.02 2.04 1.67 1.67 

Exhibit 2 

Kleinwort Benson Dividend Plus EAFE Developed Strategy (gross of fees) 

Annualized Performance 


Annualized Returns 

1 Yr 3 Yr 5 Yr 7 Yr 10 Yr 15 Yr Apr '98 

KBI Dividend Plus EAFE Developed 14.43% 5.95% -0.02% 2.27% 11.77% 7.79% 7.79% 

MSCI EAFE Value - GD Index 11.72% 4.09% -1.09% 1.20% 10.52% 5.09% 5.09% 

Difference 2.71% 1.87% 1.07% 1.07% 1.25% 2.70% 2.70% 

Manager Update Memorandum Page 2 of 7 


Exhibit 3 


Calendar Year Performance 


YTD 2013 2012 2011 2010 2009 2008 

KBI Dividend Plus EAFE Developed 5.13% 19.24% -10.56% 6.73% 31.34% -41.76% 

MSCI EAFE Value - GD Index 3.63% 18.43% -11.64% 3.80% 35.04% -43.68% 

Difference 1.50% 0.81% 1.08% 2.93% -3.70% 1.92% 

2007 2006 2005 2004 2003 

KBI Dividend Plus EAFE Developed 7.19% 31.22% 16.96% 34.02% 42.21% 

MSCI EAFE Value - GD Index 6.47% 31.05% 14.40% 24.89% 45.97% 

Difference 0.72% 0.17% 2.55% 9.12% -3.76% 

2002 2001 2000 1999 Apr-Dec'98 

KBI Dividend Plus EAFE Developed -7.62% -14.29% 0.73% 28.40% 4.89% 

MSCI EAFE Value - GD Index -15.60% -18.23% -2.81% 24.53% 1.22% 

Difference 7.98% 3.93% 3.53% 3.86% 3.67% 

Exhibit 4 


Risk Statistics vs. MSCI EAFE Value - GD Index 


KBI Dividend Plus EAFE Developed 

vs. MSCI EAFE Value - GD Index 

Return Risk 

Return / 

Risk 

Excess 

Return 

Excess 

Risk Info Ratio 

3 Yr 5.95% 18.88% 0.32 1.87% 3.05% 0.61 

5 Yr -0.02% 22.43% (0.00) 1.07% 4.01% 0.27 

7 Yr 2.27% 19.99% 0.11 1.07% 3.75% 0.29 

10 Yr 11.77% 18.22% 0.65 1.25% 3.77% 0.33 

15 Yr 7.79% 17.62% 0.44 2.70% 3.90% 0.69 

April 1998 (inception) 7.79% 17.57% 0.44 2.70% 3.90% 0.69 



Exhibits 5 and 6 are “skill charts” which attempt to discern whether or not the manager’s outperformance 

is attributable to luck or skill. The blue line represents the manager’s gross of fees rolling three or five 

year performance relative to the MSCI EAFE Value - GD Index. If the blue line is above 0, the manager 

has outperformed the index and conversely, if the blue line iss below 0, the 

manager has underperformed 

the index. 

The black lines represent confidence bands at thee 80% level which incorporate the manager’s 

tracking error (standard deviation of excess return) relative too the index. If the blue line is above the top 

black line, their outperformance can be attributable to skill. . Conversely, if the blue 

line is below the 

bottom black line, their underperformance can be attributable to a lack 

of skill. If the blue line 

is in 

between the two black 

lines, it is unclear whether or not their r relative performance is attributable to either 

luck or skill. These charts demonstrate that KBl has added alpha over most rolling three year and five 

year periods, but the level of alpha and consistency has comee down over recent years. 

Exhibit 5 

Kleinwort Bensonn Dividend Plus EAFE Equity Strategy (gross of fees) 

Rolling Three-Year Returns 

April 1998 through March 2013 


© 2013 Cliffwater LLC. All rights reserved. 

Page 

4 of 7

Exhibit 6 

Kleinwort Benson Dividend Plus EAFE Equity Strategy (gross of fees) 

Rolling Five-Year Returns 

April 1998 through March 2013 



Page 


Exhibit 7 

Performance Universe for EAFE All Cap Value Strategies 

Gross of Fees 


Source: Evestment Alliance. 

Exhibit 8 

MPT Statistics Universe for EAFE All Cap 

Value Strategies vs. MSCI EAFE Value-GD Index 






Page 


Watch List Test 

As stated in PERA’s investment policy, the following represent guidelines to be used in making a 

recommendation to the Investment Committee with regards to placing a traditional manager on the Watch 

List: 

Test 1: If the manager’s rolling three-year return (gross of fees) falls below the rolling three-year 

return of the benchmark for three consecutive quarters. 

Test 2: If the managers rolling three year return for three consecutive quarters ranks in the bottom 

third of the Consultant’s peer group universe. 

As of March 31, 2013, the strategy did not pass either Watch List Test. 

Exhibit 9 

Watch List Test 1: 

Kleinwort Benson Dividend Plus Strategy (gross of fees) 

Rolling Three Year Annualized Performance vs. Benchmark 

For Periods Ending 3/31/2013, 12/31/2012, and 9/30/2012 

3 Years 

ending 

3/31/2013 

3 Years 

ending 

12/31/2012 

Exhibit 10 


Kleinwort Benson Dividend Plus Strategy (gross of fees) 

Rolling Three Year Annualized Performance vs. Peer Group Universe 


3 Years 

ending 

9/30/2012 

KBI Dividend Plus EAFE Developed 5.95% 4.41% 2.95% 

MSCI EAFE Value - GD Index 4.09% 2.80% 0.47% 

Difference 1.87% 1.61% 2.48% 

3 Years 

ending 


3 Years 

ending 

12/31/2012 

3 Years 

ending 


KBI Dividend Plus EAFE Developed 5.95% 4.41% 2.95% 

eVestment Alliance EAFE All Cap Value Equity Universe Median 6.79% 5.40% 4.08% 

KBI Rank in Universe 58 71 71 

Suggested Questions for the Investment Manager 

1) What do you believe are the greatest risks in our portfolio today? When interest rates go up, will 

that affect your dividend strategy? 

2) What is your view on Europe today? 

3) Are there any significant changes in portfolio positioning in the last year or so? 

[As a reminder, we have not conducted full diligence on, or reviewed the legal documents for, this 

investment due to its legacy status in your portfolio.] 



MFS ® INTERNATIONAL VALUE EQUITY 

Presented to 

Public Employees Retirement Association 

of New Mexico 

30 May 2013 

FOR INSTITUTIONAL USE ONLY 

MFS Institutional Advisors, Inc. 

19964.3.exJUN13.US

Presenters 

Camille Humphries Lee, CFA 

Carolyn Lucey, CIMA 

- Investment Officer 

- Institutional Equity Portfolio Manager 

- As an Institutional Portfolio Manager, participates in the research process and strategy discussions. 

Assesses portfolio risk, customizes portfolios to client objectives and guidelines, and manages daily 

cash flows. Communicates investment policy, strategy, and positioning. 

- Joined MFS in 2000. 

- Previous experience includes 3 years as Research Analyst at SG Cowen Securities Corporation; 8 years as 

Research Analyst and Associate Analyst at Alex Brown. 

- Affiliations include CFA Institute, Boston Security Analysts Society, Inc. 

- University of Virginia, MBA 

- University of Virginia, BA 

- Director, Relationship Management 

- As a Relationship Manager, responsible for the overall client experience including communicating 

portfolio positioning, strategy, and performance attribution and ensuring that our clients' ongoing service 

needs are met. 

- Joined MFS in 1998; previous positions include Investment Director for Private Portfolio Services; Vice 

President, Director of Product Management; Assistant Vice President, Domestic Equity Product Manager. 

- Previous experience includes 1 year as Product Manager at Van Kampen American Capital; 6 years as 

Product Manager at John Hancock Funds; 2 years as Associate at Putnam Investments. 

- Affiliations include Investment Management Consultants Association (IMCA) 

- Manhattanville College, BA 

MFS ® International Value Equity 

225-I-CT-IV-30May13.2 

2

Table of contents 

Contents 

Tab 

Corporate organization 1 

Investment overview 2 

Appendix 3 



3

MFS ® overview 

Integrated Research 

We look at investment opportunities across the globe by 

integrating fundamental equity, quantitative and credit 

disciplines in our analysis. 

Global Collaboration 

Our team philosophy and incentive structure 

ensure strong collaboration across the firm. 

Active Risk Management 

We take a holistic approach to actively managing risk with 

reviews in place at security, portfolio and firm levels and a 

clear focus on generating alpha for our clients. 



We apply a uniquely collaborative approach to build better insights for our clients 

1 

1

Business profile (USD) 

348 billion total MFS AUM 

Diversified client and asset base 1 

Assets 2 

Multi-Strategy (5%) 

Assets 

Global equities 

65.7 billion 

Fixed Income (18%) 

Global equities (20%) 

EAFE/international equities 

64.1 billion 

US equities 

Regional equities 

Fixed Income 

98.9 billion 

23.4 billion 

59.8 billion 

Regional equities (7%) 

EAFE/ 

International 

equities (19%) 

Multi-strategy/Other 

17.9 billion 

US equities (30%) 

Institutional business by client type and region 1,3 

Regions 

Client types 

• Defined benefit/defined contribution 

• Endowment and foundation 

• Sovereign wealth fund/government agency 

• Institutional platform/insurance subadvisory 

North 

America (34%) 

Asia 

Pacific (34%) 

As of 31-Mar-13. 

1 

Does not include assets of MFS’ subsidiary MFS McLean Budden. 

2 

Data is rounded to the nearest figure. 

3 

Represents global clients in institutional vehicles only. 



EMEA (32%) 

Well-diversified business across clients, regions, and investment strategies 

2 

2

A holistic, multi-faceted approach to risk management 

Controls in place at security, portfolio, and firm levels 

Broad portfolio level controls 

• Daily review of portfolio guidelines and risk exposures 

• Pre- and post-trade compliance system for each portfolio’s guidelines 

• Semiannual strategy review by Investment Management Committee 

Sound business management 

• Stable, well-capitalized, profitable enterprise 

• Strong, established parent 

• Diversified by business channel, 

geography, and asset class 

• Rigorous capacity management 

Portfolio 

Operational excellence 

• Conservative approach to selection 

and monitoring of counterparties 

• Highly liquid investment strategies 

• Experienced traders (average 17 years) 

focused on best execution 

• Independent audit annually (SSAE 16, Type II) 


Deep understanding of risks at security-level (Know what you own) 

• Specialization by sector and industry 

• Integration of fundamental equity, fixed income credit, and quantitative analysts 

• Experienced investors (Analysts average 13 years, Portfolio Managers average 20 years) 

• Emphasis on global collaboration 

A balance of quantitative discipline and qualitative assessment 



3 

3

EAFE/International equity capabilities (USD) 

Composite performance as of 31 March 2013 – gross of fees 

YTD 1 Year 3 Years 5 Years 7 Years 10 Years Since Inception 

MFS Blended Research International Equity 3.2 6.3 – – – – -1.5 01-May-11 

MSCI All Country World (ex-US) Index (net div) 3.2 8.4 – – – – -2.2 

Excess Returns 0.0 -2.1 – – – – 0.7 

MFS International Equity 3.7 11.8 8.7 3.7 5.6 12.2 9.1 01-Mar-96 

MSCI EAFE (Europe, Australasia, Far East) Index (net div) 5.1 11.3 5.0 -0.9 1.6 9.7 4.6 

Excess Returns -1.4 0.5 3.7 4.6 4.0 2.5 4.5 

MFS International Research Equity 4.3 10.5 7.3 0.9 3.5 11.4 7.4 01-Jul-98 

MSCI EAFE (Europe, Australasia, Far East) Index (net div) 5.1 11.3 5.0 -0.9 1.6 9.7 3.8 

Excess Returns -0.8 -0.8 2.3 1.8 1.9 1.7 3.6 

MFS International Value Equity 8.5 16.4 11.1 5.0 6.5 14.1 9.9 01-Dec-97 

MSCI EAFE (Europe, Australasia, Far East) Value Index (net div) 3.5 11.0 3.5 -1.7 0.6 9.9 5.6 

Excess Returns 5.0 5.4 7.6 6.7 5.9 4.2 4.3 

MFS International Growth Equity 4.6 10.1 9.4 4.1 6.3 13.5 10.7 01-Oct-01 

MSCI All Country World (ex-US) Growth Index (net div) 4.5 9.1 5.5 -0.2 3.1 10.3 7.7 


MFS Emerging Markets Equity -1.9 2.6 5.6 1.0 6.3 17.8 10.4 01-Jan-00 

MSCI Emerging Markets Index (gross div) -1.6 2.3 3.6 1.4 6.7 17.4 8.6 

Excess Returns -0.3 0.3 2.0 -0.4 -0.4 0.4 1.8 

MFS International Concentrated Equity 4.5 11.5 7.8 3.7 – – 3.8 01-Apr-07 

MSCI EAFE (Europe, Australasia, Far East) Index (net div) 5.1 11.3 5.0 -0.9 – – -1.2 

Excess Returns -0.6 0.2 2.8 4.6 – – 5.0 

MFS International Small Cap Equity 6.9 17.2 13.5 6.8 7.5 16.4 11.5 01-Jan-01 

Blended Benchmark 2 5.1 9.4 6.6 1.6 3.8 14.1 8.9 


1 

MFS uses MSCI EMF gross dividends performance due to its longer track record. 

2 

The benchmark for the International Small Cap strategy was S&P Citigroup EMI Global ex-US Index prior to 1-Dec-11. After 1-Dec-11, the benchmark changed to the MSCI AC World 

ex-US Small Mid Cap Index. 

Please see the appendix for composite reports. 



4 

4

Global equity capabilities (USD) 



MFS Global Equity 9.5 18.6 13.0 6.8 8.0 12.7 10.5 01-Jan-88 

MSCI World Index (net div) 7.7 11.8 8.5 2.2 3.2 8.9 6.9 


MFS Global Value Equity 10.4 16.8 11.8 5.6 6.6 – 11.1 01-Jul-03 

MSCI World Value Index (net div) 7.7 13.2 7.4 1.3 2.2 – 7.2 

Excess Returns 2.7 3.6 4.4 4.3 4.4 – 3.9 

MFS Global Growth Equity 6.5 11.5 10.1 5.5 6.2 – 9.0 01-Dec-03 

MSCI All Country World Growth Index (net div) 6.6 9.8 8.8 2.8 4.1 – 6.7 

Excess Returns -0.1 1.7 1.3 2.7 2.1 – 2.3 

MFS Global Concentrated Equity 10.0 20.4 13.5 8.2 – – 7.3 01-Apr-07 

MSCI World Index (net div) 7.7 11.8 8.5 2.2 – – 1.3 

Excess Returns 2.3 8.6 5.0 6.0 – – 6.0 

MFS Blended Research - AC Global Equity Extension 4.3 8.3 9.9 – – – 5.3 01-Jul-08 

MSCI All Country World Index (net div) 6.5 10.6 7.8 – – – 2.5 

Excess Returns -2.2 -2.3 2.1 – – – 2.8 

MFS Global Equity Research 6.7 10.7 9.1 – – – 13.5 01-Nov-08 


Excess Returns 0.2 0.1 1.3 – – – 1.0 

MFS Blended Research Global Equity 6.6 11.1 – – – – 5.4 01-May-11 

MSCI All Country World Index (net div) 6.5 10.6 – – – – 2.8 

Excess Returns 0.1 0.5 – – – – 2.6 

1 

Closed. 




5 

5

US equity capabilities (USD) 



MFS Blended Research ® - US Core Equity 10.6 13.6 12.9 7.1 6.5 10.0 4.1 01-Feb-01 

Standard & Poor's 500 Stock Index 10.6 14.0 12.7 5.8 5.0 8.5 3.1 

Excess Returns 0.0 -0.4 0.2 1.3 1.5 1.5 1.0 

MFS Core Equity 10.6 16.0 12.1 6.6 6.7 9.8 9.3 01-Mar-93 


Excess Returns 0.0 2.0 -0.6 0.8 1.7 1.3 0.7 

MFS Research Equity 10.6 15.3 13.0 7.3 6.7 10.4 11.6 01-Jan-89 



MFS Blended Research ® - Large Cap Value 12.2 16.1 12.8 6.6 – – 4.2 01-Jan-08 

Russell 1000 Value Index 12.3 18.8 12.7 4.8 – – 2.8 

Excess Returns -0.1 -2.7 0.1 1.8 – – 1.4 

MFS Large Cap Value Equity 12.3 16.8 12.5 6.3 6.5 10.6 11.6 01-Feb-89 

Russell 1000 Value Index 12.3 18.8 12.7 4.8 4.2 9.2 9.9 

Excess Returns 0.0 -2.0 -0.2 1.5 2.3 1.4 1.7 

MFS Blended Research ® - Large Cap Growth 10.1 13.6 14.4 8.8 – – 5.8 01-Jan-08 

Russell 1000 Growth Index 9.5 10.1 13.1 7.3 – – 4.8 


MFS Large Cap Growth Equity 8.9 11.8 13.3 8.1 7.0 9.3 10.9 01-Jan-88 

Russell 1000 Growth Index 9.5 10.1 13.1 7.3 6.1 8.6 9.4 

Excess Returns -0.6 1.7 0.2 0.8 0.9 0.7 1.5 

MFS Large Cap Growth Concentrated 9.0 11.8 12.2 8.7 – – 6.4 01-Nov-07 


Excess Returns -0.5 1.7 -0.9 1.4 – – 2.6 

MFS Growth Equity 9.9 12.4 13.2 8.4 7.7 11.4 7.4 01-Aug-95 



MFS Institutional Mid Cap Growth Equity 11.6 13.7 12.9 9.2 – – 7.1 01-Oct-07 

Russell Midcap Growth Index 11.5 12.8 14.2 8.0 – – 4.7 

Excess Returns 0.1 0.9 -1.3 1.2 – – 2.4 

MFS Small Cap Growth Equity* 14.4 20.4 17.2 14.5 9.3 12.9 14.3 01-Jan-88 



* Only available in pooled vehicles. 




6 

6

Blended research capabilities (USD) 



MFS Blended Research - US Core Equity 10.6 13.6 12.9 7.1 6.5 10.0 4.1 01-Feb-01 


Excess Returns 0.0 -0.4 0.2 1.3 1.5 1.5 1.0 

MFS Blended Research - Focused US Core 13.3 18.2 16.7 – – – 19.3 01-Mar-10 

Russell 1000 Index 11.0 14.4 12.9 – – – 14.8 

Excess Returns 2.3 3.8 3.8 – – – 4.5 

MFS Blended Research - US Core Equity Extension 9.8 15.7 14.2 7.8 – – 6.6 01-Oct-06 

Standard & Poor's 500 Stock Index 10.6 14.0 12.7 5.8 – – 4.7 

Excess Returns -0.8 1.7 1.5 2.0 – – 1.9 

MFS Blended Research - Large Cap Value 12.2 16.1 12.8 6.6 – – 4.2 01-Jan-08 

Russell 1000 Value Index 12.3 18.8 12.7 4.8 – – 2.8 

Excess Returns -0.1 -2.7 0.1 1.8 – – 1.4 

MFS Blended Research - Large Cap Growth 10.1 13.6 14.4 8.8 – – 5.8 01-Jan-08 




MSCI All Country World Index (net div) 6.5 10.6 – – – – 2.8 




Excess Returns -2.2 -2.3 2.1 – – – 2.8 


MSCI All Country World (ex-US) Index (net div) 3.2 8.4 – – – – -2.2 

Excess Returns 0.0 -2.1 – – – – 0.7 

MFS Blended Research - Emerging Markets Equity -1.3 4.4 – – – – 17.0 01-Oct-11 

MSCI Emerging Markets Index (gross div) -1.6 2.3 – – – – 14.2 





7 

7

Fixed income capabilities (USD) 


YTD 1 Year 3 Years 5 Years 10 Years Since Inception 

Short Term MFS Limited Maturity Fixed Income 0.50 2.98 3.17 3.65 3.59 5.82 01-Jan-88 

Barclays 1-3 Year U.S. Government/Credit Bond Index 0.20 1.09 1.65 2.37 3.06 5.45 

Excess Returns 0.30 1.89 1.52 1.28 0.53 0.37 

Aggregate MFS Core Plus Research Fixed Income 0.22 6.51 7.21 7.65 6.14 6.91 01-Mar-99 

Barclays U.S. Aggregate Bond Index -0.12 3.77 5.52 5.47 5.02 5.81 

Excess Returns 0.34 2.74 1.69 2.18 1.12 1.10 

MFS Global Aggregate Core Plus Fixed Income Unhedged -2.45 1.75 5.23 – – 5.23 01-Apr-10 

Barclays Global Aggregate Index (USD Unhedged) -2.10 1.25 4.52 – – 4.52 

Excess Returns -0.35 0.50 0.71 – – 0.71 

Corporate MFS Investment Grade Corporate Fixed Income 0.07 8.25 8.58 – – 11.02 01-Jul-09 

Barclays U.S. Credit Bond Index -0.17 7.00 7.86 – – 9.25 

Excess Returns 0.24 1.25 0.72 – – 1.77 

MFS Corporate Fixed Income 0.45 8.46 9.00 9.64 7.49 8.57 01-Jan-88 

Blend BC Govt & Credit 98 prior - BC Credit 99 forward 1 -0.17 7.00 7.86 7.52 5.96 7.55 


High Yield MFS US Core High Yield Fixed Income 2.43 12.16 11.25 9.57 8.68 8.64 01-Jan-88 

Blend BC US HY & 2% Capped at 2-1-12 2 2.89 13.08 11.23 11.64 10.12 8.93 

Excess Returns -0.46 -0.92 0.02 -2.07 -1.44 -0.29 

MFS Global High Yield 2.32 12.37 11.55 10.02 9.83 8.81 01-Dec-98 

BofA Merrill Lynch Global High Yield - Constrained Index (USD Hedged) 2.57 13.99 11.17 12.13 10.28 7.55 

Excess Returns -0.25 -1.62 0.38 -2.11 -0.45 1.26 

EM MFS Emerging Markets Debt 3 -1.36 11.68 10.88 11.27 12.69 12.93 01-Feb-97 

JPMorgan Emerging Markets Bond Index Global -2.30 10.44 10.55 9.81 10.59 9.85 


MFS Emerging Markets Local Currency Debt -0.45 7.57 6.80 7.58 – 10.25 01-Nov-06 

JPMorgan Government Bond Index Emerging Markets Global Diversified -0.12 7.68 7.92 8.43 – 10.62 

Excess Returns -0.33 -0.11 -1.12 -0.85 – -0.37 

1 

Benchmark methodology: Barclays Capital Aggregate Government & Credit Index from 1-Jan-98 to 31-Dec-98 and Barclays Capital US Aggregate Credit Index 1-Jan-99 forward. 

2 

Benchmark methodology: Barclays Capital U.S. High-Yield Corporate Bond Index from 1-Dec-98 to 31-Dec-11 and Barclays US Corporate High Yield – 2% Issuer Capped Index 1-Jan-12 forward. 

3 

Limited availability. Please consult your MFS representative. 




8 

8

Executive summary 

Performance (%) Gross and net of fees (USD), as of 30-Apr-13 

Portfolio gross Portfolio net MSCI EAFE Value 

8.7 8.6 

3.6 

24.4 23.6 

22.4 

13.1 12.6 

1Q13 1 Year Since PERA's inception 

(1-Apr-10) 

12 month performance review relative to MSCI EAFE Value Index 

• Underweight position and stock selection in basic materials added value 

• Stock selection in special products & services and utilities & communication benefitted 

relative returns 

• Underweight position in financial services detracted from returns 

6.1 

Asset summary (%) (USD) 

Beginning value as of 30-Apr-12 165,482,960 

Contributions 0 

Withdrawals 0 

Change in market value 40,321,107 

Ending value as of 30-Apr-13 205,804,068 

Sector weights (%) 

As of 30-Apr-13 

Portfolio Benchmark^ 

Top overweights 

Consumer Staples 20.6 0.5 

Technology 8.6 4.5 

Special Products & Services 6.9 3.0 

Top underweights 

Financial Services 18.9 37.7 

Energy 4.5 10.8 

Utilities & Communications 9.5 14.9 

^ MSCI EAFE (Europe, Australasia, Far East) Value Index 

(gross div). 

Source for benchmark performance: SPAR, FactSet Research 

Systems Inc. 

Past performance is no guarantee of future results. All 

periods greater than one year are annualized. 



9 

9

Market overview 

Region performance (%) 1 , as of 30-Apr-13 

MSCI EAFE Value sector performance (%) 2 , as of 30-Apr-13 

22.8 22.0 21.6 

1 Year 

36.9 36.1 

30.1 

1 Year 

16.1 

11.7 

23.0 22.2 

19.2 19.0 

16.5 15.4 

12.8 

6.2 6.0 

4.0 

1.4 

-7.1 

Pacific 

ex Japan 

Japan 

Europe 

ex U.K. 

United 

States 

U.K. 

Emerging 

Markets 

Canada 

Health Care 

Financial Services 

Consumer Staples 

Retailing 

Leisure 

Autos & Housing 

Transportation 

Industrial Goods 

& Services 

Technology 

Utilities & 

Communications 

Energy 

Special Products 

& Services 

Basic Materials 

Market review as of 30-Apr-13 

• Global equity markets have continued to rally in 2013, helped by accommodative monetary policies and modestly improving economic growth 

• Our outlook for global equity markets is cautious, considering the excessive levels of government debt for most developed countries, the structural imbalance 

of the common currency in Europe and the potential for adverse consequences from the unprecedented levels of quantitative easing around the world. 

• Ultimately, to see markets move sustainably higher, a reduction in government debt levels and meaningful progress toward the resolution of the banking and 

common currency problems in Europe are needed 

1 

Source: FactSet. Region performance based on MSCI regional/country indexes. 

2 

Source: FactSet. Sector performance based on MFS sector classification. The analysis of MSCI EAFE Value constituents are broken out by MFS Sectors. 



10 

10

Experienced MFS International Value Equity team 

Barnaby Wiener 

Portfolio Manager 

19 years industry experience 

Benjamin Stone 



Camille Lee, CFA 

Institutional Portfolio Manager 


Additional resources 

Nevin Chitkara 

Steven Gorham, CFA 

Katrina Mead, CFA 

Ann Marie Costello 





Institutional Portfolio Manager 


Investment Product Specialist 


Experienced management, tested by markets, backed by depth 



11 

11

Investment approach 

Goal 

Outperform the MSCI EAFE Value Index over full market cycles with below average volatility. 

The MSCI EAFE Index is a secondary benchmark. 

Invest rather than speculate 

Most market participants speculate on near-term information and over-react to short-term newsflow. 

• We invest on a 3 to 5 year time horizon. Our global research platform, collaborative investment 

approach and compensation structure are all aligned with this timeframe. 

Strategy 

Analyze rather than forecast 

Most market participants attach too much weight to forecasts, which often prove inaccurate, particularly 

at inflection points. 

• Typically, we seek an analytical advantage by evaluating the long-term quality, sustainability, 

improvement potential and intrinsic value of businesses. 

Focus on downside risk 

Most market participants overemphasize upside potential vs. downside risk. 

• We manage capital with the goal of avoiding stocks with substantial downside risk, and only invest 

where valuations more than compensate for inherent risks. 

Leverage long-term analysis to exploit market inefficiencies 



12 

12

Historically consistent performance in diverse markets (USD) 

Number of quarters above/below benchmark 

25 

20 

15 

10 

5 

MFS International Value composite (gross of fees) vs MSCI EAFE Value 1 , October 2003 – March 2013 

Number of outperforming quarters 

Number of underperforming quarters 

0 

Market return 

less than -5% 

Market return 

-5% to 5% 

Market return 

greater than 5% 

Average quarterly +5.0% +1.2% -1.4% +0.9% 

relative performance 

Total 

1 

MSCI EAFE Value with net dividends reinvested. 

Source: benchmark performance from SPAR, FactSet Research Systems Inc. 

Based on quarterly returns in USD. 

Downside risk management, upside participation 



13 

13

Investment process overview 

Idea generation 

Stock analysis 

Portfolio construction 

MFS ® International 

Value Equity 

Invest rather than speculate 

Analyze rather than forecast 

Focus on downside risk 

Research analysts 

Portfolio managers 

Quantitative analysis 

Evaluate quality 

Assess improvement potential 

Determine appropriate valuation 

Attractive valuation 

Risk/return 

Risk review 

Best 

high-quality 

value ideas 

80 to 100 holdings 

150 to 200 stocks that fit 

investment approach 

300 to 400 buy candidates 

750 – 850 stocks rated by non U.S. 

analyst team 

Rigorous analysis of business, risk and valuation 



14 

14

Performance results – gross and net of fees (USD) 

As of 30-Apr-13 Period Portfolio gross (%) Portfolio net (%) Benchmark^ (%) 

Quarterly returns 1Q13 8.7 8.6 3.6 

4Q12 2.3 2.1 7.4 

3Q12 7.5 7.3 7.6 

2Q12 -2.5 -2.7 -6.7 

Annual returns 2013 year to date 16.1 15.8 10.2 

2012 17.0 16.3 18.4 

2011 -0.8 -1.2 -11.6 

Annualized returns 1 Year 24.4 23.6 22.4 

3 Years 13.8 13.3 6.9 

Since Inception (1-Apr-10) 13.1 12.6 6.1 

^ MSCI EAFE (Europe, Australasia, Far East) Value Index (gross div). 

Source for benchmark performance: SPAR, FactSet Research Systems Inc. 

Past performance is no guarantee of future results. All periods greater than one year are annualized. 



15 

15

Performance drivers – sectors 

Relative to MSCI EAFE (Europe, Australasia, Far East) Value Index (USD) 

One year as of 30 April 2013 

Average relative Sector Stock Currency Relative 

weighting (%) selection (%) + selection (%) + effect (%) = contribution (%) 

Contributors Basic Materials -2.3 0.8 1.1 0.1 1.9 

Special Products & Services 3.3 -0.2 1.3 0.2 1.3 

Utilities & Communications -5.3 0.5 1.2 -0.8 0.9 

Energy -5.7 1.0 -0.4 -0.1 0.5 

Consumer Staples 19.4 1.6 -0.6 -0.6 0.4 

Autos & Housing -4.1 0.1 0.2 0.0 0.3 

Industrial Goods & Services 0.8 0.0 0.3 0.0 0.3 

Transportation -0.4 0.0 0.4 -0.2 0.2 

Currency Options 0.1 0.2 .– 0.0 0.2 

Technology 4.9 0.1 -0.2 0.3 0.1 

Health Care 2.0 0.3 -0.2 -0.1 0.0 

Detractors Financial Services -18.4 -2.1 0.2 -0.8 -2.6 

Cash 3.9 -1.0 .– 0.2 -0.8 

Retailing -0.3 0.0 -0.1 -0.1 -0.3 

Leisure 2.1 0.0 0.0 -0.3 -0.3 

Total 1.5 3.1 -2.3 2.3 

Attribution results are generated by the FactSet application utilising a methodology which is widely accepted in the investment industry. Results are based upon daily holdings using a buy and hold 

methodology to generate individual security returns and do not include expenses. As such, attribution results are essentially estimates and may not aggregate to the total return of the portfolio or of 

the benchmark which can be found elsewhere in this presentation. 



16 

16

Performance drivers – stocks 


One year as of 30 April 2013 

Average Weighting Returns Relative 

Portfolio (%) Benchmark (%) Portfolio (%) 1 Benchmark (%) contribution (%) 

Contributors Daiwa Securities 1.0 0.1 139.2 17.4 0.8 

KDDI Corp. 3.5 0.3 50.0 50.0 0.7 

Roche Holding Ltd. 2.5 .– 41.7 .– 0.4 

Bayer 2.0 0.4 51.8 28.4 0.4 

Japan Tobacco Inc 2.4 .– 39.7 .– 0.3 

Detractors Westpac Banking Corp .– 1.5 .– 58.9 -0.5 

Esprit Holdings 0.5 .– -25.5 .– -0.4 

Cmnwlth Bk Of Aust .– 1.6 .– 49.5 -0.4 

Cairn Energy PLC 0.7 .– -19.5 .– -0.4 

Novartis AG 0.3 2.7 11.4 39.8 -0.3 

1 

Represents performance for the time period stock was held in portfolio. 

Attribution results are generated by the Factset application utilising a methodology which is widely accepted in the investment industry. Results are based upon daily holdings using a buy and hold 





17 

17

Significant transactions 

Ending 

From 1-May-12 to 30-Apr-13 Security Sector Transaction type Trade (%) weight (%) 

Purchases NOVARTIS AG NEW Health Care New position 1.5 1.5 

CANON INC Technology New position 1.4 1.2 

DANONE Consumer Staples Add 1.1 3.6 

SONY CORP Financial Services New position 0.8 0.7 

GLAXOSMITHKLINE PLC Health Care Add 0.7 3.1 

Sales SANOFI Health Care Eliminate position -1.2 – 

HEINEKEN HOLDING NV Consumer Staples Trim -1.1 2.1 

SAMSUNG ELECTRONICS CO LTD Technology Eliminate position -1.0 – 

SHIN-ETSU CHEMICAL Basic Materials Eliminate position -1.0 – 

SYNTHES INC Health Care Eliminate position -1.0 – 



18 

18

Change in portfolio sector weights 

Portfolio as of 

30-Apr-12 (%) 



Financial Services 16.9 18.9 

Technology 7.8 8.6 

Special Products & Services 6.1 6.9 

Transportation 1.3 1.7 

Cash & Other 4.6 4.8 

Autos & Housing 1.4 1.4 

Utilities & Communications 9.5 9.5 

Industrial Goods & Services 4.7 4.6 

Consumer Staples 20.7 20.6 

Leisure 3.5 3.3 

Retailing 2.1 1.7 

Health Care 11.9 11.3 

Basic Materials 3.2 2.4 

Energy 6.2 4.5 

-1.7 

Decrease/Increase (%) 

0.8 

0.8 

0.4 

0.2 

0.0 

0.0 

-0.1 

-0.1 

-0.2 

-0.4 

-0.6 

-0.8 

2.0 

Cash and other assets are less liabilities; this may include derivative offsets. 


225-I-CT-IV-31May12.3 

 

19

Sector weights 

As of 30-Apr-13 Portfolio (%) 

MSCI EAFE (Europe, 

Australasia, Far 

East) Value Index (%) Underweight/overweight (%) Largest holdings 

Consumer Staples 20.6 0.5 20.1 Danone SA, Kao Corp, Japan Tobacco Inc 

Technology 8.6 4.5 4.1 

Telefonaktiebolaget LM Ericsson 

Special Products & Services 6.9 3.0 3.9 

Compass Group PLC, Amadeus IT Holding SA 

Health Care 11.3 8.3 3.0 

GlaxoSmithKline PLC, Roche Holding AG 

Leisure 3.3 1.1 2.2 

Fuji Media Holdings Inc, Pearson PLC 

Industrial Goods & Services 4.6 4.3 0.3 

Legrand SA, Cobham PLC 

Transportation 1.7 1.9 -0.2 

Yamato Holdings Co Ltd 

Retailing 1.7 2.8 -1.1 

Lawson Inc 

Basic Materials 2.4 4.9 -2.5 

Givaudan SA 

Autos & Housing 1.4 5.3 -3.9 

USS Co Ltd 

Utilities & Communications 9.5 14.9 -5.4 

KDDI Corp, Vodafone Group PLC 

Energy 4.5 10.8 -6.3 

Royal Dutch Shell PLC Class A, BP PLC 

Financial Services 18.9 37.7 -18.8 

HSBC Holdings PLC, Zurich Insurance Group 

4.6% cash and other assets are less liabilities; this may include derivative offsets. 



19 

20

Change in region and country weights 

Change in region and country weights 

30-Apr-12 to 30-Apr-13 (%) 





Europe 

ex-U.K. 2.0 

United 

Kingdom 

Japan 

Asia/Pacific 

ex-Japan 

Emerging 

Markets 

Cash & Other 

-2.1 

-1.4 

-0.4 

-0.2 

2.0 

~ Europe ex-U.K. 36.3 38.3 

^ Switzerland 12.1 11.7 

^ Netherlands 5.1 3.9 

^ Denmark 0.8 1.3 

^ Norway 0.9 1.2 

^ Germany 7.6 8.2 

^ Sweden 1.4 1.9 

^ Italy 1.1 1.5 

^ Spain 1.3 1.5 

^ France 6.0 6.1 

Ireland – 0.2 

Finland – 0.8 

~ United Kingdom 27.2 25.1 

~ Japan 26.6 28.6 

~ Asia/Pacific ex-Japan 2.1 1.7 

^ Singapore 0.4 0.3 

^ Hong Kong 0.7 0.5 

^ Australia 1.0 0.9 

~ Emerging Markets 3.0 1.6 

^ Taiwan 1.6 1.4 

^ South Korea 1.1 – 

^ China 0.4 0.2 

~ Cash & Other 4.8 4.6 



225-I-CT-IV-31May12.4 

21

Region and country weights 

Underweight/overweight 

as of 30-Apr-13 (%) 

Europe 

ex-U.K. 

United 

Kingdom 

Japan 

Asia/Pacific 

ex-Japan 

Emerging 

Markets 

-13.1 

-3.0 

1.6 

3.6 

6.7 

Portfolio (%) 



East) Value Index (%) 

Underweight/ 

overweight (%) 

Europe ex-U.K. 38.3 41.3 -3.0 

Switzerland 11.7 5.3 6.4 

Netherlands 3.9 2.0 1.9 

Denmark 1.3 0.3 1.0 

Germany 8.2 7.9 0.3 

Ireland 0.2 0.3 -0.1 

Finland 0.8 1.0 -0.2 

Norway 1.2 1.4 -0.2 

Sweden 1.9 3.0 -1.1 

Italy 1.5 3.1 -1.6 

Spain 1.5 4.8 -3.3 

France 6.1 10.9 -4.8 

Other 1 0.0 1.3 -1.3 

United Kingdom 25.1 21.5 3.6 

Japan 28.6 21.9 6.7 

Asia/Pacific ex-Japan 1.7 14.8 -13.1 

Singapore 0.3 1.9 -1.6 

Hong Kong 0.5 3.0 -2.5 

Australia 0.9 9.7 -8.8 

Other 1 0.0 0.1 -0.1 

Emerging Markets 1.6 0.0 1.6 

Taiwan 1.4 0.0 1.4 

China 0.2 0.0 0.2 

4.6% cash and other assets are less liabilities; this may include derivative offsets. Portfolio does not own securities in the Developed - Middle East/Africa region (0.5%). 

1 

Portfolio does not own securities in the following countries: Belgium 0.7%; Israel 0.5%; and 4 other countries with weights less than 0.5% totaling 0.6%. 



20 

22

Top 10 portfolio holdings 

30-Apr-12 

Country Sector Portfolio (%) Portfolio (%) 

30-Apr-13 



East) Value Index 

(%) 

KDDI Corp Japan Utilities & Communications 3.4 4.0 0.2 

Danone SA France Consumer Staples 2.8 3.6 .– 

GlaxoSmithKline PLC United Kingdom Health Care 2.6 3.1 .– 

Kao Corp Japan Consumer Staples 2.5 2.9 .– 

Roche Holding AG Switzerland Health Care 2.5 2.7 .– 

Japan Tobacco Inc Japan Consumer Staples 2.3 2.6 .– 

HSBC Holdings PLC United Kingdom Financial Services 2.5 2.4 3.4 

Royal Dutch Shell PLC Class A United Kingdom Energy 2.8 2.4 2.2 

Nestle SA Switzerland Consumer Staples 2.9 2.3 .– 

Reckitt Benckiser Group PLC United Kingdom Consumer Staples 1.8 2.2 .– 



21 

23

Characteristics 

As of 30-Apr-13 Portfolio MSCI EAFE Value MSCI EAFE 

Fundamentals 1 Price/earnings (12 months forward) 14.2x 11.4x 13.2x 

Price/book 1.9x 1.2x 1.6x 

Dividend yield 2.9% 4.0% 3.1% 

Return on equity (3-year average) 16.4% 11.4% 15.7% 

Market capitalization (USD) Median by weight 31.5 bn 43.4 bn 38.9 bn 

Weighted average 55.9 bn 63.6 bn 62.5 bn 

Diversification Top 10 holdings 28% 22% 13.5% 

Number of holdings 92 497 907 

Number of countries 18 22 22 

Turnover 2 1 year 14% – – 

Risk/reward (USD) Standard deviation (3 years) 15.41% 20.52% 19.43% 

Barra predicted tracking error vs. 3 – 7.1% 5.4% 

Beta (3 years) – 0.71 0.76 

Past performance is no guarantee of future results. No forecasts can be guaranteed. 

1 

Weighted average. 

2 

(Lesser of purchases or sales)/average market value. 

3 

Source: Barra. The Barra information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial 

instruments or products or any indices. The Barra information is provided on an "as is" basis and the user of this information assumes the entire risk of any use made of this information. 

Barra, each of its affiliates and each other person involved in or related to compiling, computing or creating any Barra information (collectively, the "Barra Parties") expressly disclaims all warranties 

(including without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. 

Without limiting any of the foregoing, in no event shall any Barra Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or 

any other damages. 



22 

24

Distinguishing characteristics 

What makes us different 

from other international 

value managers? 

Integrated global research platform 

• Collaborative culture critical to process 

• Combines equity, fixed-income, and quantitative analysis 

Disciplined, consistent strategy 

• Seeks sustainable returns in various market environments 

• Assess investment opportunities in context of 3 to 5 year time horizon 

Rigorous valuation discipline 

• Patient, contrarian approach 

• Focus on downside risk management 

Integrated approach to analyzing value and evaluating risk 



23 

25

How has this translated into performance results? (USD) 

MFS International Value Equity composite 

Rolling 5-year periods (gross of fees) vs. MSCI EAFE Value 1 (1Q98 – 1Q13) 

Average rolling 5 year annualized excess returns since inception: 4.2% 


20 

Manager returns (%) 

10 

0 

-10 

-10 -5 0 5 10 15 20 25 30 

Benchmark returns (%) 

1 

MSCI EAFE Value with net dividends reinvested. 

Source: benchmark performance from SPAR, FactSet Research Systems, Inc. 

Disciplined approach, consistent relative returns 



24 

26

Appendix 

Contents 

Portfolio investment guidelines 

MFS International Value Equity Composite performance - gross of fees (USD) 

YTD attribution 

Process details 

MFS investment professionals 

MFS International Value Equity team 

Market capitalization (USD) 

Investing for the long term 

Historical portfolio weights 

Portfolio holdings 

MFS International Value Equity Composite performance – net of fees (USD) 

Capabilities (net of fees) 

Composite report (USD) 

Page 

2 

 

3 

3 

3 

3 

4 

4 

4 

4 

4 

4 

5 



25 

27

Portfolio’s investment guidelines 

Benchmark 

Performance objective 

MSCI EAFE Value or any benchmark determined as more appropriate by the PERA Board or Staff. 

200 basis points annually, net of the Base Fee, over a market cycle. 

International (Non-U.S.) developed markets large cap equity securities including common stock, preferred 

stock, ordinary shares (fully paid or contributing), convertible securities, preference shares or stock, share 

warrants and all other securities including but not limited to, rights to subscribe for or purchase such 

securities, sponsored or unsponsored Global Depository Receipts, American Depository Receipts, 

European Depository Receipts, Swedish Depository Receipts and other similar depositories. 

The use of futures and Exchange Traded Funds (ETFs) are permitted for purposes of equitizing cash. 

The portfolio’s currency exposure may be hedged. If utilized in the portfolio, currency hedging will be done 

for defensive purposes as detailed in the General Guidelines 

Eligible securities 

Initial Public Offerings (IPO), which are typically not included in any index, are permitted up to 5% of the 

portfolio, measured at time of purchase. 

The use of 144A (including Regulation S) and Private Placement securities are permitted. These securities 

should be deemed by MFS to be liquid at the time of purchase. The client confirms that it is permitted to 

purchase 144A securities and is considered a Qualified Institutional Buyer; otherwise 144A securities will 

not be permitted. 

Unless otherwise restricted in the Investment Guidelines, all types of securities are eligible securities to be 

included in the portfolio. 

Participation in PERA’s designated STIF managed by PERA’s custody bank. 

Note: This section is only intended to serve as a summary of the client’s investment guidelines. Please consult the complete investment guidelines. 



26 

28

Portfolio’s investment guidelines (continued) 

The maximum investment in any one issuer should be generally limited to 5% of portfolio at the time 

of purchase. 

The maximum investment in any one industry (as defined by the Manager) generally should be limited to 

25% at market at the time of purchase. 

Eligible securities 

he portfolio shall be fully invested under normal circumstances (except for transactional cash) with a 

maximum global fixed income, including cash and cash equivalents, allocation of 5%; the portfolio may 

temporarily exceed this cash guideline due to cash flows in and out of the portfolio. 

Investment in securities in emerging market countries, as defined by the MSCI EM benchmark or 

companies included in commonly-used and internationally-recognized indexes, is limited to 15% of the 

portfolio value at time of purchase. 



27 

29

Portfolio’s investment guidelines issue of note 

MFS requested and received permission to put a defensive currency hedge in place on the portfolio. While currency hedges are unusual for this strategy, this is a 

time when we feel it is prudent. We note that the persistent strength of the yen over the past ten years is somewhat anomalous given the continued deterioration 

in Japanese government finances, and we want to minimize the potential impact of a sharp reversal. 



28 

30

MFS International Value Composite 

Performance – gross of fees (USD) 

Annualized returns (%), as of 31-Mar-13 

MFS International Value Equity Composite 

MSCI EAFE (Europe, Australasia, Far East) Value Index (net div) 

MSCI EAFE (Europe, Australasia, Far East) Index (net div) 

16.4 

11.0 

11.3 

11.1 

14.1 

9.9 

9.7 

3.5 

5.0 

5.0 

-1.7 

-0.9 

Excess return (%) vs. 

1 Year 3 Years 5 Years 10 Years 

MSCI EAFE (Europe, Australasia, Far East) Value Index (net div) 5.4 7.6 6.7 4.2 

MSCI EAFE (Europe, Australasia, Far East) Index (net div) 5.1 6.1 5.9 4.4 

Annual performance (%), as of 31-Mar-13 YTD 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 

MFS International Value Equity Composite 8.5 17.2 -0.7 10.6 26.5 -30.9 8.8 30.3 16.3 29.4 35.0 

MSCI EAFE (Europe, Australasia, Far East) Value Index (net div) 3.5 17.7 -12.2 3.2 34.2 -44.1 6.0 30.4 13.8 24.3 45.3 

Excess return 5.0 -0.5 11.5 7.4 -7.7 13.2 2.8 -0.1 2.5 5.1 -10.3 

MSCI EAFE (Europe, Australasia, Far East) Index (net div) 5.1 17.3 -12.1 7.8 31.8 -43.4 11.2 26.3 13.5 20.2 38.6 

Excess return 3.4 -0.1 11.4 2.8 -5.3 12.5 -2.4 4.0 2.8 9.2 -3.6 

Please see performance methodology and composite report in appendix for net of fee performance and other information. 

Source for benchmark performance: SPAR, FactSet Research Systems Inc. Past performance is no guarantee of future results. 

A proven history of strong relative performance 



29 

31

Performance drivers – sectors 


YTD as of 30 April 2013 

Average relative Sector Stock Currency Relative 

weighting (%) selection (%) + selection (%) + effect (%) = contribution (%) 

Contributors Consumer Staples 20.1 1.2 0.8 -0.2 1.8 

Basic Materials -3.0 0.5 0.7 0.1 1.3 

Special Products & Services 3.5 0.0 1.0 0.1 1.0 

Utilities & Communications -5.3 0.0 1.4 -0.5 0.9 

Energy -6.2 0.5 0.1 -0.1 0.6 

Health Care 2.7 0.3 0.3 -0.1 0.5 

Industrial Goods & Services 0.4 0.0 0.3 0.0 0.3 

Leisure 2.1 0.1 0.3 -0.2 0.2 

Currency Options 0.2 0.2 .– 0.0 0.2 

Transportation -0.3 0.0 0.3 -0.2 0.2 

Autos & Housing -3.9 0.0 0.2 0.0 0.2 

Detractors Financial Services -17.5 -0.4 0.3 -0.5 -0.5 

Cash 3.9 -0.5 .– 0.1 -0.4 

Retailing -1.0 -0.1 0.0 -0.1 -0.1 

Technology 4.5 0.3 -0.4 0.1 0.0 

Total 2.2 5.4 -1.5 6.1 

Attribution results are generated by the FactSet application utilising a methodology which is widely accepted in the investment industry. Results are based upon daily holdings using a buy and hold 




225-I-CT-IV-30May13.30 


32

Performance drivers – stocks 


YTD as of 30 April 2013 

Average Weighting Returns Relative 

Portfolio (%) Benchmark (%) Portfolio (%) 1 Benchmark (%) contribution (%) 

Contributors KDDI Corp. 3.5 0.2 38.1 38.1 0.8 

Kao Corp. 2.7 .– 33.0 .– 0.5 

Japan Tobacco Inc 2.4 .– 35.7 .– 0.5 

Daiwa Securities 1.1 .– 64.2 .– 0.5 

Roche Holding Ltd. 2.7 .– 28.7 .– 0.5 

Detractors Westpac Banking Corp .– 1.7 .– 29.8 -0.3 

National Australia Bank .– 1.2 .– 36.0 -0.3 

Novartis AG 0.9 2.8 11.4 22.8 -0.3 

Mitsubishi UFJ Financial Group, Inc. .– 1.3 .– 29.0 -0.2 

Aust & Nz Bank Grp .– 1.4 .– 27.1 -0.2 

1 

Represents performance for the time period stock was held in portfolio. 

Attribution results are generated by the Factset application utilising a methodology which is widely accepted in the investment industry. Results are based upon daily holdings using a buy and hold 





31 

33

Idea generation: Invest rather than speculate 

79 research analysts 

24 U.S. equity; 

32 non-U.S. equity; 

23 fixed-income; 

backed by 18 

research/investment 

associates 

8 global sector teams 

organized by region 

and sectors; cross-border 

collaboration 

11 analyst-managed 

strategies 

USD 36.3 billion in 

assets under 

management 

71 portfolio managers 

with significant industry 

experience in value, 

core, growth, and fixed 

income 

Quantitative screens 

7 quantitative analysts 

provide proprietary 

research models, stock 

rankings, and scenario 

testing; backed by 11 

quantitative research 

associates 

TORONTO 

BOSTON 

LONDON 

TOKYO 

MEXICO CITY 

HONG KONG 

SINGAPORE 

SÃO PAULO 

SYDNEY 


Global collaboration and integration provide competitive advantages 



32 

34

Stock analysis: Analyze rather than forecast 

• Sustainability of business model 

• Industry growth rate, cyclicality and risk 

• Management strength and capital allocation 

Evaluate 

quality 

Intrinsic 

value 

• Changes in supply/demand 

• Relative profitability and restructuring 

potential 

Assess 

improvement 

potential 

Determine 

appropriate 

valuation 

• Examine a broad range of approaches 

• Assess value relative to history, peers, 

market 

• Analysis of change in management 

Assess durability of returns and intrinsic value 



33 

35

Portfolio construction: Focus on downside risk 

Entry points 

Portfolio construction 

Exit points 

• Negative short-term event 

• Underappreciated duration of returns 

• Unrecognized improvement potential 

• Attractive valuation 

• Determine position size by conviction and liquidity 

• Manage and evaluate risk and return 

- Security level and systemic risk assessment 

• Expensive valuation 

• Fundamentals change 

• Attractive alternatives 

• Senior management semiannual risk review: 

portfolio vs. objectives 

• Typical portfolio exposure has been: 

- Position size < 5% of portfolio at purchase 

- Industry weighting < 25% of portfolio 

- Emerging markets < 15% of portfolio 

Seeks to invest where we believe valuations more than compensate for inherent risks 



34 

36

MFS investment professionals 

Chairman and Chief Executive Officer 

Robert Manning 1 

President, Chief Investment Officer, and Director of Global Research – Michael Roberge 1 

Vice Chairman – David Antonelli 1 

20 fixed income 

portfolio managers 

23 years 

44 equity 


20 years 

7 quantitative 


18 years 

Portfolio management 

(71) 

23 fixed income analysts 

17 years 

5 fixed income associates 

7 years 

56 equity analysts 

12 years 

13 equity associates 

3 years 

7 quantitative analysts 

11 years 

11 quantitative associates 

11 years 

Research team 

(86) 

Research/investment 

associates 

(29) 

TOTAL 

216 

Gregory Heller, Director of Global Fixed Income Trading Jeff Estella, Brenda Farley, Co-Directors of Equity Trading 

14 equity traders – 17 years 

16 fixed income traders – 16 years 

Trading 

(30) 


Years = average years industry experience. 

1 

Member of Investment Management Committee. 

Our experienced investment team and collaborative culture distinguish our approach to investing 



35 

37

MFS International Value Equity team 

Barnaby Wiener 

Benjamin Stone, IIMR 


- Equity Portfolio Manager 

- Serves on MFS Global Equity Management Committee 

- As a Value Equity Portfolio Manager, responsible for final buy and sell decisions, portfolio construction, risk 

and cash management. Participates in the research process and strategy discussions. 

- Joined MFS in 1998; previous positions include Equity Research Analyst. 

- Previous experience includes 2 years as Vice President & Equity Analyst at Merrill Lynch; 2 years as Equity 

Research Analyst at Credit Lyonnais. 

- Served five years in the British Army reaching the rank of Captain 

- Royal Military College, Sandhurst , Graduate Course 

- Oxford University, MA, upper 2nd class history degree 






- Previous experience includes 9 years as Research Analyst at Schroders Investment Management. 

- Affiliations include Institute of Investment Management and Research 

- Durham University, BA, 2:1 

08APR13 



36 

38

MFS International Value Equity team (continued) 

Camille Humphries Lee, CFA 







- Previous experience includes 3 years as Research Analyst at SG Cowen Securities Corporation; 8 years as 

Research Analyst and Associate Analyst at Alex Brown. 


- University of Virginia, MBA 

- University of Virginia, BA 



37 

39

MFS International Value Equity team additional resources 

Nevin P. Chitkara 

Steven R. Gorham, CFA 






- Previous experience includes 5 years as Analyst, Acquisition Associate and Manager at General 

Electric Company. 

- Massachusetts Institute of Technology, MBA 

- Boston University, BS, magna cum laude 



- Serves on MFS Global Equity Management Committee 



- Joined MFS in 1989; previous positions include Equity Research Analyst; Marketing Representative; 

Teleservices Representative. 


- Boston College, MBA 

- University of New Hampshire, BS 



38 

40

MFS International Value Equity team additional resources (continued) 

Katrina (Kate) Mead, CFA 

Ann Marie Costello 







- Previous experience includes 2 years as Financial Analyst - Real Estate Advisory Services at Coopers & 

Lybrand, Financial Advisory Services. 


- University of Pennsylvania, MBA 

- Villanova University, BS, magna cum laude 

- Managing Director, Investment Product Specialist 

- As an Investment Product Specialist, communicates investment policy, strategy and tactics, performs 

portfolio analysis and leads product development. 


- Previous experience includes 13 years as Senior Product Manager, Investment Specialist, Senior Statistical 

Analyst - Performance and Analytics, and Supervisor - Institutional Accounting at Putnam Investments. 

- Suffolk University, MBA 

- University of Massachusetts, BS 



39 

41

Market capitalization (USD) 

As of 31-Mar-13 

Small-cap Mid-cap Large-cap 

% of portfolio 

13.8 

6.7 5.6 

31.3 

19.0 

20.5 20.2 20.4 21.7 20.5 

11.0 11.6 12.3 

39.5 41.3 

0.0 0.0 0.0 

0 – 1 bn 1 – 5 bn 5 – 10 bn 10 – 50 bn 50 – 100 bn 100 bn + 

Portfolio MSCI EAFE Value MSCI EAFE 

Weighted average market cap 

(USD billions) 

Portfolio 54.9 

MSCI EAFE Value 60.9 

MSCI EAFE 60.1 

Based on the MFS representative account for the strategy. 



40 

42

MFS International Value – investing for the long term 

28.7 

27.6 

Proportion of portfolio (%) 

8.1 

18.7 

6.8 

0 – 1 

Year 

1 – 3 

Years 

3 – 5 

Years 

5 – 10 

Years 

10+ 

Years 

Weighted average holdings duration: 4.9 years 

Source: MFS 

Data as of 31-Mar-13. Portfolio holdings duration since institutional composite inception. 



25913.1 

41 

43

Historical portfolio weights 

Five years as of 31 March 2013 

Developed markets 

weights Max Min Avg 

North America 0.6 – 0.1 

Canada 0.0 – 0.0 

United States 0.6 – 0.1 

Europe ex U.K. 48.4 35.6 41.8 

Austria – – – 

Belgium 0.4 – 0.1 

Denmark 1.2 – 0.5 

Finland 2.2 – 1.0 

France 11.4 5.9 8.4 

Germany 9.6 6.1 7.5 

Ireland 1.4 – 0.4 

Italy 2.0 0.8 1.3 

Netherlands 9.2 4.0 6.8 

Norway 2.9 0.7 1.2 

Spain 2.6 – 1.3 

Sweden 2.4 1.1 1.7 

Switzerland 12.7 9.8 11.5 

U.K. 27.9 14.7 23.0 

Japan 28.9 21.8 25.2 

Asia Pacific ex Japan 4.0 1.6 2.1 

Australia 2.3 – 0.8 

Hong Kong 1.1 0.2 0.7 

New Zealand 0.5 – 0.1 

Singapore 0.9 0.4 0.6 

Emerging markets 

weights Max Min Avg 

Asia Pacific ex Japan 

China 0.6 – 0.4 

South Korea 3.2 0.3 1.6 

Taiwan 2.8 0.9 1.6 

Thailand 1.1 – 0.4 

Thailand 1.1 – 0.4 

Europe/Middle East 

Czech Republic – – – 

Israel – – – 

Latin America 

Brazil 0.7 – 0.1 

Mexico 0.6 – 0.1 

Total Emerging Markets 6.9 1.6 4.0 

Sector weights Max Min Avg 

Autos & Housing 4.2 1.1 2.1 

Basic Materials 4.0 2.3 3.2 

Consumer Staples 21.1 9.8 17.1 

Energy 11.2 4.5 6.7 

Financial Services 20.4 14.6 17.5 

Health Care 15.9 9.9 13.0 

Industrial Goods & Services 7.8 4.5 5.8 

Leisure 6.9 2.1 4.2 

Retailing 3.1 1.3 2.2 

Special Products & Services 6.9 1.5 4.1 

Technology 9.4 6.1 7.5 

Transportation 3.7 1.3 2.5 

Utilities & Communications 12.7 8.5 10.1 

Based on the MFS representative account for the strategy. 

Data prior to 30-Jun-10 reflects market value, and is not based on equivalent exposure, which may differ. 



42 

44

Portfolio holdings 

Equivalent 

As of 30-Apr-13 Country Exposure (%) 

Autos & Housing 1.4 

USS Co Ltd Japan 0.7 

Geberit AG Switzerland 0.7 

Basic Materials 2.4 

Givaudan SA Switzerland 1.2 

Symrise AG Germany 0.8 

Brambles Ltd Australia 0.4 

Cash & Other 4.6 

Consumer Staples 20.6 

Danone SA France 3.6 

Kao Corp Japan 2.9 

Japan Tobacco Inc Japan 2.6 

Nestle SA Switzerland 2.3 

Reckitt Benckiser Group PLC United Kingdom 2.2 

British American Tobacco PLC United Kingdom 2.1 

Henkel AG & Co KGaA IPS Germany 2.1 

Heineken NV Netherlands 2.1 

Kose Corp Japan 0.4 

Ito En Ltd Japan 0.3 

Energy 4.5 

Royal Dutch Shell PLC Class A United Kingdom 2.4 

BP PLC United Kingdom 1.6 

Cairn Energy PLC United Kingdom 0.6 

Financial Services 18.9 

HSBC Holdings PLC United Kingdom 2.4 

DNB ASA Norway 1.2 

Zurich Insurance Group AG Switzerland 1.2 

Daiwa Securities Group Inc Japan 1.2 

Equivalent 


Sumitomo Mitsui Financial Group Inc Japan 1.2 

Swiss Re Ltd Switzerland 1.1 

Deutsche Wohnen AG Germany 0.9 

GSW Immobilien AG Germany 0.8 

Hiscox Ltd United Kingdom 0.7 

ING Groep NV Netherlands 0.7 

UniCredit SpA Italy 0.7 

Sony Financial Holdings Inc Japan 0.7 

TAG Immobilien AG Germany 0.6 

Julius Baer Group Ltd Switzerland 0.5 

Computershare Ltd Australia 0.5 

Delta Lloyd NV Netherlands 0.5 

Joyo Bank Ltd Japan 0.4 

Chiba Bank Ltd Japan 0.4 

Catlin Group Ltd United Kingdom 0.4 

Jardine Lloyd 

Thompson Group PLC United Kingdom 0.4 

North Pacific Bank Ltd Japan 0.3 

Hachijuni Bank Ltd Japan 0.3 

Amlin PLC United Kingdom 0.3 

Euler Hermes SA France 0.3 

IG Group Holdings PLC United Kingdom 0.2 

Governor & Co of the 

Bank of Ireland/The Ireland 0.2 

Jyske Bank AS Denmark 0.2 

Sydbank AS Denmark 0.2 

Unione di Banche Italiane SCPA Italy 0.1 




43 

45

Portfolio holdings (continued) 

Equivalent 


Health Care 11.3 

GlaxoSmithKline PLC United Kingdom 3.1 

Roche Holding AG Switzerland 2.7 

Bayer AG Germany 1.9 

Novartis AG Switzerland 1.5 

Santen Pharmaceutical Co Ltd Japan 0.8 

Kobayashi Pharmaceutical Co Ltd Japan 0.7 

Nihon Kohden Corp Japan 0.5 

Industrial Goods & Services 4.6 

Legrand SA France 1.3 

Cobham PLC United Kingdom 1.0 

Neopost SA France 0.9 

Spectris PLC United Kingdom 0.6 

Glory Ltd Japan 0.5 

Schindler Holding AG Switzerland 0.4 

Leisure 3.3 

Fuji Media Holdings Inc Japan 1.0 

Pearson PLC United Kingdom 1.0 

Nippon Television Holdings Inc Japan 0.8 

UBM PLC United Kingdom 0.3 

Sankyo Co Ltd Japan 0.3 

Retailing 1.7 

Lawson Inc Japan 1.3 

Esprit Holdings Ltd Hong Kong 0.5 

Special Products & Services 6.9 

Compass Group PLC United Kingdom 2.0 

Amadeus IT Holding SA Spain 1.5 

Bunzl PLC United Kingdom 1.3 

Equivalent 


Nomura Research Institute Ltd Japan 1.3 

Brenntag AG Germany 0.8 

Technology 8.6 

Telefonaktiebolaget LM Ericsson Sweden 1.9 

Taiwan Semiconductor 

Manufacturing Co Ltd ADR Taiwan 1.4 

Canon Inc Japan 1.2 

Hirose Electric Co Ltd Japan 0.8 

Obic Co Ltd Japan 0.8 

Nokia OYJ Finland 0.8 

Halma PLC United Kingdom 0.7 

Nintendo Co Ltd Japan 0.4 

Venture Corp Ltd Singapore 0.3 

ASM International NV Netherlands 0.3 

Transportation 1.7 

Yamato Holdings Co Ltd Japan 1.7 

Utilities & Communications 9.5 

KDDI Corp Japan 4.0 

Vodafone Group PLC United Kingdom 1.9 

NTT DoCoMo Inc Japan 1.1 

TDC AS Denmark 0.9 

Telecom Italia SpA Italy 0.7 

Deutsche Telekom AG Germany 0.5 

China Unicom Hong Kong Ltd China 0.2 

Koninklijke KPN NV Netherlands 0.1 

Koninklijke KPN NV Right Netherlands 0.1 




44 

46


Performance – net of fees (USD) 

Annualized returns (%), as of 31-Mar-13 


MSCI EAFE (Europe, Australasia, Far East) Value Index (net div) 

MSCI EAFE (Europe, Australasia, Far East) Index (net div) 

15.5 

13.3 

Percent (%) 

11.0 

11.3 

10.3 

9.9 

9.7 

3.5 

5.0 

4.3 

-1.7 

-0.9 

1 Year 3 Years 5 Years 10 Years 

Source for benchmark performance: SPAR, FactSet Research Systems Inc. Past performance is no guarantee of future results. 



45 

47

EAFE/International equity capabilities (USD) 

Composite performance as of 31 March 2013 – net of fees 



MFS International Equity 3.5 10.8 7.9 2.9 4.8 11.4 8.2 01-Mar-96 

MFS International Research Equity 4.1 9.7 6.5 0.2 2.7 10.5 6.6 01-Jul-98 

MFS International Value Equity 8.3 15.5 10.3 4.3 5.7 13.3 9.1 01-Dec-97 

MFS International Growth Equity 4.4 9.3 8.6 3.3 5.5 12.7 9.8 01-Oct-01 

MFS Emerging Markets Equity -2.1 1.7 4.6 0.0 5.3 16.7 9.4 01-Jan-00 

MFS International Concentrated Equity 4.3 10.6 6.9 2.8 – – 2.9 01-Apr-07 

MFS International Small Cap Equity 6.7 16.1 12.4 5.8 6.5 15.3 10.4 01-Jan-01 




46 

48

Global equity capabilities (USD) 



MFS Global Equity 9.3 17.7 12.1 6.0 7.1 11.8 9.6 01-Jan-88 

MFS Global Value Equity 10.2 15.9 11.0 4.9 5.8 – 10.3 01-Jul-03 

MFS Global Growth Equity 6.3 10.7 9.3 4.7 5.4 – 8.2 01-Dec-03 

MFS Global Concentrated Equity 9.7 19.4 12.5 7.3 – – 6.4 01-Apr-07 


MFS Global Equity Research 6.5 9.9 8.3 – – – 12.6 01-Nov-08 


1 

Closed. 




47 

49

US equity capabilities (USD) 



MFS Blended Research ® - US Core Equity 10.5 13.2 12.5 6.7 6.2 9.6 3.7 01-Feb-01 

MFS Core Equity 10.5 15.3 11.4 5.9 6.0 9.1 8.6 01-Mar-93 

MFS Research Equity 10.4 14.6 12.3 6.6 6.1 9.7 10.9 01-Jan-89 

MFS Blended Research ® - Large Cap Value 12.2 15.7 12.5 6.2 – – 3.8 01-Jan-08 

MFS Large Cap Value Equity 12.2 16.2 11.9 5.7 5.9 10.0 10.9 01-Feb-89 

MFS Blended Research ® - Large Cap Growth 10.0 13.2 14.0 8.4 – – 5.4 01-Jan-08 

MFS Large Cap Growth Equity 8.7 11.2 12.5 7.4 6.3 8.6 10.2 01-Jan-88 

MFS Large Cap Growth Concentrated 8.8 11.1 11.4 7.9 – – 5.7 01-Nov-07 

MFS Growth Equity 9.7 11.7 12.5 7.6 7.0 10.6 6.6 01-Aug-95 

MFS Institutional Mid Cap Growth Equity 11.4 12.8 12.0 8.4 – – 6.3 01-Oct-07 

MFS Small Cap Growth Equity* 14.1 19.2 16.1 13.3 8.2 11.8 13.2 01-Jan-88 

* Only available in pooled vehicles. 




48 

50

Blended research capabilities (USD) 



MFS Blended Research - US Core Equity 10.5 13.2 12.5 6.7 6.2 9.6 3.7 01-Feb-01 

MFS Blended Research - Focused US Core 13.1 17.3 15.8 – – – 18.5 01-Mar-10 

MFS Blended Research - US Core Equity Extension 9.6 14.8 13.3 6.9 – – 5.7 01-Oct-06 

MFS Blended Research - Large Cap Value 12.2 15.7 12.5 6.2 – – 3.8 01-Jan-08 

MFS Blended Research - Large Cap Growth 10.0 13.2 14.0 8.4 – – 5.4 01-Jan-08 




MFS Blended Research - Emerging Markets Equity -1.5 3.7 – – – – 16.2 01-Oct-11 




49 

51

Fixed income capabilities (USD) 


YTD 1 Year 3 Years 5 Years 10 Years Since Inception 

Short Term MFS Limited Maturity Fixed Income 0.43 2.67 2.86 3.34 3.28 5.51 01-Jan-88 

Aggregate MFS Core Plus Research Fixed Income 0.13 6.14 6.83 7.27 5.77 6.54 01-Mar-99 

MFS Global Aggregate Core Plus Fixed Income Unhedged -2.55 1.35 4.81 – – 4.81 01-Apr-10 

Corporate MFS Investment Grade Corporate Fixed Income -0.03 7.82 8.15 – – 10.58 01-Jul-09 

MFS Corporate Fixed Income 0.35 8.03 8.57 9.19 7.03 8.09 01-Jan-88 

High Yield MFS US Core High Yield Fixed Income 2.29 11.55 10.64 8.97 8.08 8.04 01-Jan-88 

MFS Global High Yield 2.18 11.76 10.95 9.42 9.23 8.22 01-Dec-98 

EM MFS Emerging Markets Debt 1 -1.51 11.02 10.23 10.61 12.02 12.26 01-Feb-97 

MFS Emerging Markets Local Currency Debt -0.61 6.88 6.08 6.84 – 9.50 01-Nov-06 

1 

Limited availability. Please consult your MFS representative. 




50 

52

Performance Presentation Report 

2013, Q1 

Composite: MFS Blended Research 

International Equity Composite 

Benchmark MSCI AC World Index ex 

USA - Net Return 

Creation Date: 24-Jun-2011 

Inception Date: 1-May-2011 

Investment Objective: To provide longterm 

growth of capital through investments primarily in 

international (non-US), including emerging markets, 

securities selected through a blend of fundamental 

and quantitative research. 

Institutional Separate Account Fee Schedule 

Asset Breakpoints (USD) 

Fee 

For Assets Up To 50 MM 

55 bp 

For Assets From 50 MM To 100 MM 45 bp 

For Assets Over 100 MM 40 bp 

Accounts are eligible for inclusion in the composite if 

they have assets greater than 2 MM USD. 

Accounts are included as of their first full month of 

performance. 

Derivative Exposure Disclosure 

Certain MFS portfolios in this composite may utilize 

derivative instruments to manage risk or to achieve timely 

and cost effective implementation of the investment 

strategy. As of 31-Mar-2013, the number of accounts 

shown below held derivatives with the depicted 

equivalent exposure as a percent of total net assets: 

Number of Accounts 

Long Exposure 1 

Short Exposure 0 

Exposure 

0.45% 

0.00% 

Period 

Composite and Benchmark Return 

Gross of fees Net of fees Benchmark 

Composite 

Dispersion 

Accounts in Annualized 3-Year 

Composite at Standard Deviation 

End of Period Composite Benchmark 

Assets in Composite 

(USD million) % Firm 

2013 Q1 

3.24 

3.10 3.17 n/a



Composite: MFS International Equity 

Composite 

Benchmark MSCI EAFE - Net Return 

Creation Date: 31-Dec-1997 

Inception Date: 1-Mar-1996 

Investment Objective: Seeks capital 

appreciation by investing principally in equities of 

companies whose primary activities lie outside of the 

U.S. Portfolios in this strategy seek companies that 

provide above-average, sustainable earnings growth 

and whose stocks trade at a discount to their 

expected growth rate. 



Fee 


85 bp 





performance. 

Period 



Composite 

Dispersion 







3.74 

3.52 5.13 0.49 37 

19.43 19.35 $ 19,062.9 5.5 

2012 23.22 

22.19 17.32 0.67 37 

19.89 19.65 $ 17,758.8 5.5 

2011 -8.89 

-9.55 -12.14 0.43 33 

22.85 22.75 $ 13,229.2 5.9 

2010 11.49 

10.66 7.75 0.41 33 

n/a n/a $ 14,768.9 6.7 

2009 35.07 

34.08 31.78 1.06 36 

n/a n/a $ 14,512.3 7.9 

2008 -35.06 

-35.57 -43.38 0.58 36 

n/a n/a $ 10,456.8 8.2 

2007 10.15 

9.34 11.17 0.31 38 

n/a n/a $ 17,151.6 8.7 

2006 29.05 

28.11 26.34 0.29 34 

n/a n/a $ 15,727.0 8.4 

2005 13.54 

12.70 13.54 0.28 37 

n/a n/a $ 11,487.2 7.1 

2004 20.08 

19.20 20.25 0.50 23 

n/a n/a $ 5,652.8 3.9 

2003 33.49 

32.51 38.59 0.54 19 

n/a n/a $ 2,535.6 1.8 

MFS Investment Management® claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance 

with the GIPS® standards. MFS has been independently verified for the periods 1-Jan-1988 through 31-Dec-2011. 

Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's 

policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. MFS International Equity Composite has been 

examined for the periods 01-Mar-1996 through 31-Dec-2011. The verification and performance examination reports are available upon request. 

Total Gross-of-fee returns in USD (includes both capital appreciation and income), are net of transaction costs, withholding taxes and direct expenses, 

but before management fees, custody and other indirect expenses. Certain accounts may be subject to Fair Valuation as conditions warrant. Typical 

separate accounts utilize 4:00 PM (London Time) foreign exchange rates; retail products will use rates deemed most appropriate for daily NAV per 

share calculations. The possibility exists for performance dispersion between otherwise similarly managed accounts and also with the benchmark. 

Net composite returns are prepared by subtracting from the monthly gross returns one-twelfth of the maximum applicable annual institutional separate 

account fee. 

Total Returns of the Benchmark are provided for each period depicted, expressed in USD. Source of Benchmark Performance: FACTSET ®. 

Benchmark returns are not examined by independent accountants. 

MSCI EAFE (Europe, Australasia, Far East) Index- a market capitalization-weighted index that is designed to measure equity market performance in 

the developed markets, excluding the U.S. and Canada. 

Composite Dispersion is measured by the asset-weighted standard deviation of account returns for all accounts in the composite for the full period. For 

composites containing less than 6 accounts, dispersion is deemed not meaningful. 

Prior to 31-Mar-2009 accounts would be eligible for inclusion in the composite if they had assets greater than 5.0 MM USD and as of their second full 

month of performance. 

No segments of balanced mandates are currently included in this composite. Prior to 1-Jan-2003, the International sub portfolios of Global Equity 

Accounts had been included in the International Equity composite. Effective 1-Jan-2003, these sub portfolios were removed from the International 

Equity Composite. 

Prior to 1-May-2011, the maximum institutional separate account fee charged for this product was 75 bps. The net returns depicted in this report are 

based upon the historical max in effect for each of the periods depicted. 

For purposes of GIPS® compliance, the firm is defined as MFS Investment Management® which is comprised of Massachusetts Financial Services 

Company (MFS) and MFS Institutional Advisors, Inc. (MFSI), each of which is a registered investment advisor, MFS Heritage Trust Company, a New 

Hampshire Trust company, and McLean Budden Limited, a registered investment advisor (MFS® McLean BuddenSM). Total firm assets are calculated 

at market value and include assets managed by MFS, MFSI, MFS Heritage Trust Company and MFS®McLean BuddenSM as well as assets managed 

by MFS and MFSI in a sub-advisory capacity on behalf of affiliated investment advisors that may or may not be registered under the United States 

Investment Advisers Act of 1940, such as MFS International (U.K.), Ltd. (MIL UK) and MFS Investment Management K.K. (MIMKK), as well as assets 

managed by MFS and MFSI on behalf of unaffiliated investment advisors that may or may not be registered under the United States Investment 

Advisers Act of 1940. Total firm assets for GIPS® purposes do not include assets of non-discretionary advisory relationships. 

In November of 2011 MFS acquired McLean Budden Limited. Total firm assets from 31-Mar-2012 forward include the assets of institutional and pooled 

McLean Budden Limited products. Assets from 31-Dec-2012 forward include the McLean Budden Limited PPM product assets. 

A complete list of firm composites and descriptions, along with additional information regarding policies for calculating and reporting returns are 

available upon request. 

Run time: 22-Apr-2013 1:25:22 PM 

AEIE 

Page 1 of 1 

54



Composite: MFS International 

Research Equity Composite 

Benchmark MSCI EAFE - Net Return 

Creation Date: 30-Jun-1998 

Inception Date: 1-Jul-1998 

Investment Objective: To seek capital 

appreciation by investing in equities of companies 

whose primary activities lie outside the US and 

represent the best ideas of the MFS International 

Research analysts while maintaining a sector neutral 

weighting relative to the MSCI EAFE. 



Fee 


75 bp 






performance. 

Period 



Composite 

Dispersion 







4.27 

4.08 5.13 0.16 14 

18.65 19.35 $ 10,869.0 3.1 

2012 17.97 

17.10 17.32 0.27 14 

19.03 19.65 $ 10,356.4 3.2 

2011 -9.78 

-10.46 -12.14 0.06 11 

23.23 22.75 $ 8,563.3 3.8 

2010 12.31 

11.48 7.75 0.11 7 

n/a n/a $ 8,625.8 3.9 

2009 32.89 

31.92 31.78 0.19 8 

n/a n/a $ 7,243.3 4.0 

2008 -41.99 

-42.45 -43.38 0.14 7 

n/a n/a $ 5,241.4 4.1 

2007 14.44 

13.59 11.17 0.09 7 

n/a n/a $ 8,343.9 4.2 

2006 29.00 

27.99 26.34 0.26 7 

n/a n/a $ 6,683.7 3.6 

2005 17.90 

16.97 13.54 n/a 7 

n/a n/a $ 4,193.4 2.6 

2004 22.10 

21.15 20.25 n/a



Composite: MFS International Value 

Equity Composite 

Benchmark MSCI EAFE Value - Net 

Return 

Creation Date: 19-Oct-2005 

Inception Date: 1-Dec-1997 


capital appreciation and current income by 

investing principally in attractively valued equities of 

companies whose operations lie outside of the U.S. 

Stock selection is based solely on MFS proprietary 

research process and therefore excludes assets 

managed by external parties or non-MFS subadvisors. 



Fee 


75 bp 






performance. 











Exposure 

2.82% 

-2.82% 

Period 



Composite 

Dispersion 







8.48 

8.28 3.50 0.21 19 

14.65 20.38 $ 14,713.3 4.2 

2012 17.21 

16.34 17.69 0.23 19 

14.59 20.56 $ 12,317.2 3.8 

2011 -0.68 

-1.43 -12.17 0.10 12 

19.87 24.86 $ 6,494.2 2.9 

2010 10.60 

9.78 3.25 n/a 9 

n/a n/a $ 5,104.7 2.3 

2009 26.50 

25.57 34.23 n/a



Composite: MFS International 

Growth Equity Composite 


USA Growth - Net Return 

Creation Date: 13-Nov-2001 

Inception Date: 1-Oct-2001 

Investment Objective: Seeks long-term 

capital appreciation by investing principally in stocks 

of companies whose primary activities lie outside the 

US. Portfolios in this strategy seek companies with 

higher sustainable earnings growth and returns than 

their industry, improving fundamentals, and whose 

stock valuations do not fully reflect their long-term 

growth prospects. 



Fee 


75 bp 






performance. 

Period 



Composite 

Dispersion 







4.62 

4.43 4.51 0.17 12 

18.29 18.82 $ 7,923.6 2.3 

2012 20.92 

20.03 16.67 0.22 12 

18.76 19.37 $ 7,210.5 2.2 

2011 -9.54 

-10.22 -14.21 0.46 9 

22.20 22.05 $ 4,321.4 1.9 

2010 16.43 

15.57 14.45 0.28 9 

n/a n/a $ 4,187.3 1.9 

2009 40.05 

39.03 38.67 0.83 7 

n/a n/a $ 3,166.4 1.7 

2008 -39.33 

-39.80 -45.61 0.37 8 

n/a n/a $ 1,660.7 1.3 

2007 17.59 

16.72 21.03 n/a



Composite: MFS Emerging Markets 


Benchmark MSCI EMF (Emerging 

Markets ) - Gross Return 

Creation Date: 13-Sep-2005 

Inception Date: 1-Jan-2000 

Investment Objective: 

To achieve capital 

appreciation through investment in the stocks of firms 

in emerging market countries. Stock selection is 

based solely on MFS proprietary research process 

and therefore excludes assets managed by external 

parties or non-MFS sub-advisors. 



Fee 


95 bp 






performance. 











Exposure 

4.21% 

0.00% 

Period 



Composite 

Dispersion 







-1.85 

-2.08 -1.57 0.24 10 

20.15 21.11 $ 3,259.7 0.9 

2012 20.58 

19.45 18.63 0.22 9 

20.81 21.79 $ 2,988.7 0.9 

2011 -17.21 

-18.01 -18.17 n/a 7 

24.37 26.13 $ 2,103.3 0.9 

2010 25.32 

24.15 19.20 n/a



Composite: MFS International Small 

Cap Equity Composite 

Benchmark S&P Global xUS SC - 

MSCI AC World xUS Small Mid Cap 

Index Blend at 12-1-11 

Creation Date: 18-Sep-2001 



appreciation by investing principally in equities of 

smaller capitalization companies whose primary 

activities lie outside the US. 



Fee 


95 bp 






performance. 











Exposure 

2.55% 

0.00% 

Period 



Composite 

Dispersion 







6.91 

6.66 5.12 n/a



Composite: MFS Global Equity 

Composite 

Benchmark MSCI The World Index - 

Net Return 



Investment Objective: The primary 

objective is long-term growth of capital through 

investments in high quality global companies with 

above-average growth. 



Fee 


75 bp 






performance. 

Period 



Composite 

Dispersion 







9.45 

9.26 7.73 0.23 59 

17.54 16.65 $ 30,447.6 8.7 

2012 24.13 

23.20 15.83 0.34 59 

17.80 16.98 $ 27,407.8 8.5 

2011 -3.37 

-4.15 -5.54 0.36 59 

20.87 20.44 $ 21,181.9 9.5 

2010 13.31 

12.42 11.76 0.19 56 

n/a n/a $ 20,350.4 9.3 

2009 33.80 

32.75 29.99 0.56 52 

n/a n/a $ 14,853.0 8.1 

2008 -33.61 

-34.16 -40.71 0.54 48 

n/a n/a $ 9,125.5 7.2 

2007 10.74 

9.87 9.04 0.29 45 

n/a n/a $ 15,216.1 7.7 

2006 25.58 

24.60 20.07 0.37 38 

n/a n/a $ 11,972.5 6.4 

2005 8.61 

7.75 9.49 0.39 29 

n/a n/a $ 7,403.7 4.6 

2004 19.90 

18.96 14.72 0.29 24 

n/a n/a $ 5,231.0 3.6 

2003 29.41 

28.40 33.11 0.26 21 

n/a n/a $ 3,862.6 2.8 




policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. MFS Global Equity Composite has been examined for 

the periods 01-Jan-1988 through 31-Dec-2011. The verification and performance examination reports are available upon request. 






account fee. 



MSCI World Index - a market capitalization-weighted index that is designed to measure equity market performance in the global developed markets. 





Prior to 1-Mar-2012, the maximum institutional separate account fee charged for this product was 80 bps. The net returns depicted in this report are 















AEGE 


60



Composite: MFS Global Value Equity 

Composite 

Benchmark MSCI The World Index 

Value - Net Return 




appreciation and reasonable income by investing 

primarily in U.S. and non-U.S. equities that are 

attractively valued. 



Fee 


75 bp 






performance. 

Period 



Composite 

Dispersion 







10.44 

10.24 7.73 0.17 7 

14.62 16.80 $ 3,270.4 0.9 

2012 16.66 

15.80 15.51 n/a 7 

14.57 16.99 $ 2,979.3 0.9 

2011 1.14 

0.43 -5.62 n/a



Composite: MFS Global Growth 


Benchmark MSCI AC World Index 

Growth - Net Return 

Creation Date: 17-Jan-2006 



Seeks long-term 

capital appreciation by investing principally in stocks 

of companies worldwide that have higher sustainable 

earnings growth and returns than their industry, 

improving fundamentals, and whose stock valuations 

do not fully reflect their long-term growth prospects. 

Investment discretion over portfolios is vested in a 

single, dedicated portfolio management team. 



Fee 


75 bp 






performance. 











Exposure 

0.57% 

0.00% 

Period 



Composite 

Dispersion 







6.48 

6.28 6.59 0.18 11 

17.46 17.16 $ 3,290.8 0.9 

2012 20.29 

19.41 16.69 n/a 11 

17.88 17.70 $ 3,184.9 1.0 

2011 -5.31 

-5.97 -7.37 n/a



Composite: MFS Global 

Concentrated Equity Composite 

Benchmark MSCI The World Index - 

Net Return 

Creation Date: 28-Mar-2007 

Inception Date: 1-Apr-2007 

Investment Objective: Seeks long-term 

growth of capital while typically investing in twenty to 

thirty securities that represent the best global 

investment opportunities for sustainable, aboveaverage 

growth and returns and reasonable valuation. 



Fee 


85 bp 






performance. 

Period 



Composite 

Dispersion 







9.98 

9.75 7.73 0.09 31 

17.65 16.65 $ 11,726.7 3.4 

2012 25.36 

24.32 15.83 0.12 27 

17.80 16.98 $ 9,268.8 2.9 

2011 -3.54 

-4.36 -5.54 0.09 18 

20.53 20.44 $ 4,863.9 2.2 

2010 14.70 

13.74 11.76 0.11 9 

n/a n/a $ 3,366.9 1.5 

2009 38.09 

36.95 29.99 n/a 6 

n/a n/a $ 1,726.6 0.9 

2008 -33.04 

-33.63 -40.71 n/a




Global Equity Composite 

Benchmark MSCI AC World Index - 

Net Return 





global, including emerging market, securities, selected 

through a blend of fundamental and quantitative 

research. 



Fee 


55 bp 






performance. 











Exposure 

0.37% 

0.00% 

Period 



Composite 

Dispersion 







6.62 

6.48 6.50 n/a



Composite: MFS Global Equity 

Research Composite 


Net Return 


Inception Date: 1-Nov-2008 


appreciation by investing in high quality global 

companies that represent the best ideas of the MFS 

global equity research analysts. 



Fee 


75 bp 



Tyco Intl Ltd Settlement Impact 

On 7-Sep-2010, certain MFS accounts received 

compensation as part of a class action litigation settlement. 

These proceeds had a material one-day impact on the 

performance of these accounts. As of 31-Mar-2013 the impact 

of the performance of the composite has been calculated to 

be: 

Actual Return Effective 

Return ex Impact Impact 

3 Yr (annualized): 9.10 8.88 0.21 




performance. 











Exposure 

0.00% 

-0.02% 

Period 



Composite 

Dispersion 







6.73 

6.54 6.50 n/a




- AC Global Equity Extension 

Composite 


Net Return 

Creation Date: 27-Aug-2008 



growth of capital through targeted weighting of 

130% long and 30% short investments in global, 

including emerging market, securities selected 


research. 



Fee 


100 bp 






performance. 

Short Sale Exposure Disclosure 

Certain funds in this composite are allowed to participate 

in short sales. As of 31-Mar-2013, 2 accounts in the 

composite held short positions with an average 

exposure of -30% of total net assets. 











Exposure 

0.49% 

0.00% 

Period 



Composite 

Dispersion 







4.34 

4.08 6.50 n/a




- US Core Equity Composite 

Benchmark S&P 500 - Total Return 

Creation Date: 3-Apr-2001 

Inception Date: 1-Feb-2001 


growth of capital through investments, generally 

in U.S. companies, selected through a blend of 

fundamental and quantitative research. Portfolios are 

tightly constrained to resemble the benchmark's 

characteristics. 



Fee 


35 bp 






performance. 

Period 



Composite 

Dispersion 







10.62 

10.53 10.61 0.04 6 

15.17 15.01 $ 2,526.8 0.7 

2012 16.01 

15.61 16.00 n/a 6 

15.63 15.30 $ 2,291.5 0.7 

2011 2.59 

2.23 2.11 n/a



Composite: MFS Core Equity 

Composite 





growth of capital and secondarily income through 

investment in large capitalization blue chip equities. 



Fee 


55 bp 






performance. 

Period 



Composite 

Dispersion 







10.63 

10.48 10.61 0.05 14 

16.10 15.01 $ 7,963.0 2.3 

2012 20.04 

19.39 16.00 n/a 14 

16.24 15.30 $ 6,917.3 2.2 

2011 -1.12 

-1.77 2.11 n/a



Composite: MFS Research Equity 

Composite 





growth of capital through investment in the best 

ideas of the MFS Equity Research Analysts. 



Fee 


65 bp 










be: 



3 Yr (annualized): 13.03 12.91 0.10 

5 Yr (annualized): 7.30 7.23 0.06 




performance. 











Exposure 

0.10% 

-0.01% 

Period 



Composite 

Dispersion 







10.60 

10.43 10.61 n/a




- Large Cap Value Composite 

Benchmark Russell 1000 Value - 

Total Return 





in undervalued larger cap companies, selected 


research. 



Fee 


35 bp 






performance. 

Period 



Composite 

Dispersion 







12.25 

12.15 12.31 n/a



Composite: MFS Large Cap Value 



Total Return 

Creation Date: 20-Feb-2001 



appreciation and reasonable income by investing 

primarily in out-of-favor and undervalued large 

capitalization stocks with lower volatility over full 

market cycles (typically 3 to 5 years). 



Fee 


55 bp 






performance. 

Period 



Composite 

Dispersion 







12.32 

12.17 12.31 0.04 33 

15.26 15.62 $ 41,749.0 12.0 

2012 17.19 

16.55 17.51 0.11 33 

15.23 15.73 $ 36,730.7 11.4 

2011 0.77 

0.22 0.39 0.27 32 

18.93 20.98 $ 29,468.8 13.2 

2010 12.43 

11.82 15.51 0.18 29 

n/a n/a $ 27,127.3 12.3 

2009 21.85 

21.19 19.69 0.49 25 

n/a n/a $ 19,989.1 10.9 

2008 -32.09 

-32.51 -36.85 0.14 21 

n/a n/a $ 12,169.9 9.5 

2007 8.85 

8.15 -0.17 0.24 20 

n/a n/a $ 16,018.3 8.1 

2006 21.98 

21.20 22.25 0.23 24 

n/a n/a $ 14,436.4 7.7 

2005 7.41 

6.72 7.05 0.21 27 

n/a n/a $ 11,911.6 7.3 

2004 16.40 

15.65 16.49 0.22 37 

n/a n/a $ 12,016.5 8.2 

2003 26.20 

25.39 30.03 0.24 42 

n/a n/a $ 10,632.4 7.6 




policies and procedures are designed to calculate and present performance in compliance with the GIPS® standards. MFS Large Cap Value Equity Composite has been 

examined for the periods 01-Feb-1989 through 31-Dec-2011. The verification and performance examination reports are available upon request. 






account fee. 



Russell 1000 Value Index - constructed to provide a comprehensive barometer for the value securities in the large-cap segment of the U.S. equity 

universe. Companies in this index generally have lower price-to-book ratios and lower forecasted growth values. 





Prior to 1-Aug-2008, the maximum institutional separate account fee charged for this product was 65 bps. The net returns depicted in this report are 


Composite assets have changed from amounts previously reported. Management has deemed these changes immaterial. 














AELV 


71




- Large Cap Growth Composite 

Benchmark Russell 1000 Growth - 

Total Return 





in above-average growth larger cap companies, 

selected through a blend of fundamental and 

quantitative research. 



Fee 


35 bp 






performance. 

Period 



Composite 

Dispersion 







10.05 

9.96 9.54 n/a



Composite: MFS Large Cap Growth 



Total Return 




appreciation by investing principally in U.S. large 

capitalization stocks with higher sustainable earnings, 

growth rates, and returns than their industry and in 

stocks with valuations that do not fully reflect their 

long-term growth prospects. 



Fee 


60 bp 









be: 



3 Yr (annualized): 13.25 13.04 0.19 

5 Yr (annualized): 8.10 7.98 0.11 




performance. 

SEC Settlement Impact 

On 2-Nov-2010, MFS paid compensation to certain of its 

funds as part of a settlement agreed upon with the SEC. 

These proceeds had impact on the performance of these 

accounts. As of 31-Mar-2013 the impact of the performance of 

the composite has been calulated to be: 



3 Yr (annualized): 


13.25 

8.10 

12.96 

7.94 

0.26 

0.16 

SEC Settlement Impact 

On 29-Aug-2011, MFS paid compensation to certain of its 

funds as part of a settlement agreed upon with the SEC. 

These proceeds had impact on the performance of these 

accounts. As of 31-Mar-2013 the impact of the performance of 

the composite has been calulated to be: 



Period 



Composite 

Dispersion 







8.85 

8.69 9.54 n/a



Composite: MFS Large Cap Growth 

Concentrated Composite 


Total Return 




growth of capital primarily by disciplined 

investing in high quality, reasonably valued large 

capitalization stocks with above average and/or 

sustainable earnings growth. Portfolios in this 

strategy are typically concentrated in 25-40 stocks. 



Fee 


70 bp 










be: 





12.15 

8.68 

11.91 

8.54 

0.22 

0.13 




performance. 

Period 



Composite 

Dispersion 







9.00 

8.82 9.54 n/a



Composite: MFS Growth Equity 

Composite 


Total Return 


Inception Date: 1-Aug-1995 


To provide longterm 

growth of capital through investments principally 

in US large capitalization stocks with flexibility to 

invest in lower capitalization stocks. The strategy 

seeks companies with higher sustainable earnings 

and cash flow growth rates than their peers, 

sustainable and improving fundamentals, and whose 

stock valuations do not fully reflect their long-term 

growth prospects. 



Fee 


60 bp 









be: 





13.21 

8.35 

13.04 

8.25 

0.15 

0.09 




performance. 

Period 



Composite 

Dispersion 







9.87 

9.71 9.54 0.07 10 

15.86 15.45 $ 10,156.4 2.9 

2012 18.27 

17.56 15.26 0.24 10 

16.45 15.88 $ 9,132.6 2.8 

2011 0.35 

-0.30 2.64 n/a 9 

18.18 18.01 $ 5,847.1 2.6 

2010 16.86 

16.11 16.71 n/a



Composite: MFS Fund of Funds - 

Aggressive Growth Allocation 

Composite 

Benchmark Aggressive Growth 

Allocation Fund Historical Blend 

Creation Date: 17-May-2007 

Inception Date: 1-Aug-2002 


To seek a high 

level of total return consistent with an aggressive level 

of risk relative to the other asset allocation strategies. 



Fee 


107 bp 



Accounts are included as of their second full month 

of performance. 

Period 



Composite 

Dispersion 







8.79 

8.51 8.16 n/a



Composite: MFS Small Cap Growth 



Total Return 



Investment Objective: The investment 

objective is long-term growth of capital primarily by 

investing in small and medium capitalization stocks 

with above average and/or sustainable earnings 

growth. 



Fee 


100 bp 






performance. 

Period 



Composite 

Dispersion 







14.40 

14.13 13.21 n/a




- US Core Equity Composite 






in U.S. companies, selected through a blend of 

fundamental and quantitative research. Portfolios are 

tightly constrained to resemble the benchmark's 

characteristics. 



Fee 


35 bp 






performance. 

Period 



Composite 

Dispersion 







10.62 

10.53 10.61 0.04 6 

15.17 15.01 $ 2,526.8 0.7 

2012 16.01 

15.61 16.00 n/a 6 

15.63 15.30 $ 2,291.5 0.7 

2011 2.59 

2.23 2.11 n/a




- Focused US Core Composite 

Benchmark Russell 1000 - Total 

Return 

Creation Date: 10-Mar-2010 




in US companies, selected by taking the best ideas 

from a blend of fundamental and quantitative 

research. 



Fee 


75 bp 







performance. 

Period 



Composite 

Dispersion 







13.31 

13.10 10.96 n/a




- US Core Equity Extension Composite 





growth of capital though targeted weightings of 

130% long and 30% short investments, generally in 

US companies, selected through a blend of 

fundamental and quantitative research. 



Fee 


85 bp 






performance. 



in short sales. As of 31-Mar-2013, 1 account in the 



Period 



Composite 

Dispersion 







9.78 

9.56 10.61 n/a




- Large Cap Value Composite 


Total Return 





in undervalued larger cap companies, selected 


research. 



Fee 


35 bp 






performance. 

Period 



Composite 

Dispersion 







12.25 

12.15 12.31 n/a




- Large Cap Growth Composite 


Total Return 





in above-average growth larger cap companies, 

selected through a blend of fundamental and 

quantitative research. 



Fee 


35 bp 






performance. 

Period 



Composite 

Dispersion 







10.05 

9.96 9.54 n/a




Global Equity Composite 


Net Return 





global, including emerging market, securities, selected 


research. 



Fee 


55 bp 






performance. 











Exposure 

0.37% 

0.00% 

Period 



Composite 

Dispersion 







6.62 

6.48 6.50 n/a




- AC Global Equity Extension 

Composite 


Net Return 




growth of capital through targeted weighting of 

130% long and 30% short investments in global, 

including emerging market, securities selected 


research. 



Fee 


100 bp 






performance. 



in short sales. As of 31-Mar-2013, 2 accounts in the 













Exposure 

0.49% 

0.00% 

Period 



Composite 

Dispersion 







4.34 

4.08 6.50 n/a




International Equity Composite 


USA - Net Return 





international (non-US), including emerging markets, 

securities selected through a blend of fundamental 

and quantitative research. 



Fee 


55 bp 






performance. 











Exposure 

0.45% 

0.00% 

Period 



Composite 

Dispersion 







3.24 

3.10 3.17 n/a




- Emerging Markets Equity Composite 

Benchmark MSCI EMF (Emerging 

Markets ) - Gross Return 





emerging markets securities selected through a blend 

of fundamental and quantitative research. 



Fee 


65 bp 






performance. 











Exposure 

1.98% 

0.00% 

Period 



Composite 

Dispersion 







-1.31 

-1.47 -1.57 n/a



Composite: MFS Limited Maturity 

Fixed Income Composite 

Benchmark Barclays US Aggregate 

Government & Credit (1-3 Y) 



Investment Objective: Seeks to 

outperform the Barclays Capital US Aggregate 

Government & Credit (1-3 Y) Index through active 

management of sector allocation, security selection 

and yield curve positioning. The portfolio invests 

primarily in US fixed income securities which in 

aggregate have a duration with a range similar to that 

of the benchmark. 



Fee 


30 bp 



For Assets Over 100 MM 17.5 bp 

As of 31-Mar-2013, 3 accounts within the composite 

held illiquid securities. There are 2 accounts that 

total more than 5.0% of total net assets of the 

account, the maximum percentage held was 

6.32%.These securities were fair valued in 

compliance with our Policies and Procedures. 















Exposure 

0.79% 

-4.64% 

Period 



Composite 

Dispersion 







0.50 

0.43 0.20 n/a



Composite: MFS Core Plus 

Research Fixed Income Composite 





To seek total return 

by investing primarily in US high grade fixed income 

securities with tactical allocations to high yield, 

emerging markets and international bonds while 

maintaining duration neutrality to primary benchmark. 

Managed by Fixed Income Analysts. 



Fee 


35 bp 




held illiquid securities, the maximum percentage 

held was 5.11% of the account. These securities 

were fair valued in compliance with our Policies and 

Procedures. 















Exposure 

4.39% 

-4.31% 

Period 



Composite 

Dispersion 







0.22 

0.13 -0.12 n/a



Composite: MFS Global Aggregate 

Core Plus Fixed Income Unhedged 

Composite 

Benchmark Barclays Global 

Aggregate (USD Unhedged) 


Inception Date: 1-Apr-2010 


Seeks total return 

by investing primarily in global developed market, 

emerging market sovereign and corporate bonds, and 

other fixed income asset classes. Tactical allocations 

may be made to high yield bonds and currencies are 

actively managed. 



Fee 


40 bp 



As of 31-Mar-2013, 1 account within the composite 

held illiquid securities totalling less than 5.0% of 

total net assets. These securities were fair valued 

in compliance with our Policies and Procedures. 















Exposure 

73.17% 

-70.80% 

Period 



Composite 

Dispersion 







-2.45 

-2.55 -2.10 n/a



Composite: MFS Investment Grade 

Corporate Fixed Income Composite 


Credit 




outperform the Barclays Capital US Credit Bond Index 

over a full market cycle. The strategy aims to invest 

purely in investment grade corporate fixed income 

securities. 



Fee 


40 bp 

For Assets From 25 MM To 50 MM 30 bp 











Period 



Composite 

Dispersion 







0.07 

-0.03 -0.17 n/a



Composite: MFS Corporate Fixed 

Income Composite 

Benchmark Blend BC Gov'tCred 

Prior 98_BC Cred 99 forward 




outperform the Barclays Capital US Credit Bond Index 

over a full market cycle. The strategy invests primarily 

in investment grade corporate fixed income securities 

but may also invest in high yield bonds and other 

credit-related securities. 



Fee 


40 bp 

For Assets From 25 MM To 50 MM 30 bp 





















Exposure 

0.46% 

0.00% 

Period 



Composite 

Dispersion 







0.45 

0.35 -0.17 n/a



Composite: MFS US Core High Yield 

Fixed Income Composite 

Benchmark Blend BC US HY & 2% 

Capped at 2-1-12 



Investment Objective: To outperform the 

Barclays Capital U.S. Corporate High Yield 2% Issuer 

Capped Index over a full market cycle by investing 

primarily in U.S. non-investment grade fixed income 

securities. 



Fee 


55 bp 
























Exposure 

2.74% 

-1.32% 

Period 



Composite 

Dispersion 







2.43 

2.29 2.89 n/a



Composite: MFS Global High Yield 

Composite 

Benchmark BofA Merrill Lynch 

Global High Yield - Constrained (USD 

Hedged) 




To outperform the 

BofA Merrill Lynch Global High Yield Constrained 

Index (USD Hedged) over full market cycles by 

investing primarily in U.S. and other global noninvestment 

grade fixed income securities. Non-U.S 

dollar denominated securities are typically hedged to 

USD. 



Fee 


55 bp 






















Exposure 

2.77% 

-2.45% 

Period 



Composite 

Dispersion 







2.32 

2.18 2.57 n/a




Debt Composite 

Benchmark JP Morgan EMBI Global 




Outperform the JP 

Morgan EMBI Global index in both up and down 

markets by investing primarily in emerging markets 

fixed income securities and local markets. 



Fee 


60 bp 





















Exposure 

21.75% 

-16.52% 

Period 



Composite 

Dispersion 







-1.36 

-1.51 -2.30 n/a




Local Currency Debt Composite 

Benchmark JP Morgan GBI EM 

Global Div Index - Total Return 




To outperform the 

JP Morgan GBI Emerging Markets Global Diversified 

Index in both up and down markets and over full 

market cycles by investing primarily in emerging 

markets local fixed income securities and currency 

markets. 



Fee 


65 bp 























Exposure 

113.92% 

-113.11% 

Period 



Composite 

Dispersion 







-0.45 

-0.61 -0.12 n/a


To: 

Susan Biernacki, PERA Investment Committee Chair 

PERA Board Members 

From: 

Ben Rotenberg, Cliffwater LLC 

Regarding: Manager Update – Massachusetts Financial Services Company (commonly known 

as MFS Investment Management) 

Mandate/Strategy: International Developed Equity / MFS International Value Strategy 

Meeting Date: May 30, 2013 

CC: 

Joelle Mevi, Chief Investment Officer 

Julian Baca, Deputy Chief Investment Officer 

LeAnne Larrañaga-Ruffy, Portfolio Manager 

Summary 

The Public Employees Retirement Association of New Mexico (“PERA”) hired Massachusetts Financial 

Services Company (“MFS Investment Management” or “MFS” or “the firm”) to manage an international 

value equity mandate in 2010. MFS is managing the portfolio in the style of the firm’s International Value 

strategy. PERA funded a separate account for MFS in April 2010. 

MFS manages $193.2 million for PERA as of March 2013, representing 6.0% of PERA’s International 

Equity Composite, and 1.5% of PERA’s total plan. 

The firm is stable, and grew its assets under management by 28% in 2012, through a combination of net 

asset inflows and market performance. Inflows were positive in the International Value strategy in 2012; 

strategy assets grew 90%, from $6.5 billion to $12.4 billion, as a result of both strong inflows and 

performance. Performance in the strategy has been outstanding in recent years. 

MFS’ performance for PERA has been excellent. According to PERA’s custodian, MFS has outperformed 

its benchmark (MSCI EAFE Value - GD) by 7.07% since inception in April 2010 through March 2013. 

Cliffwater believes that MFS is well positioned to continue to manage assets for PERA, and recommends 

no changes to the mandate at this time. 

Firm / Personnel Update 

As of March 31, 2013, the firm manages $347.8 billion. The firm employs 187 investment professionals, 

comprised of 71 portfolio managers, 86 research analysts, and 30 traders. The firm is stable and 

growing; MFS grew assets under management by 28% in 2012, through a combination of market 

performance and net asset inflows. Flows have also been positive in the International Value strategy. 

MFS now manages $14.8 billion in the strategy as of March 31, 2013. 

MFS’ International Value strategy is managed by a team of 3 portfolio managers, who are supported by 

63 research analysts and 14 traders. The global analyst team has grown over the last three years. 

During that time, the firm has added 29 analysts, and 11 analysts have departed. 

Overview of Investment Process 

MFS believes that most market participants speculate on near-term information and overreact to shortterm 

news flow. MFS diverges from this view by investing on a three- to five-year time horizon. The 

firm’s global research platform and compensation structure are all aligned with this time frame. MFS also 

This report reflects information only through the date hereof. Our due diligence and reporting rely upon the accuracy and completeness of financial 

information (which may or may not be audited by the fund manager) and other information publicly available or provided to us by the fund manager, its 

professional staff, and through other references we have contacted. We have not conducted an independent verification of the information provided 

other than as described in this report. Our conclusions do not reflect an audit of the investment nor should they be construed as providing legal 

advice. Past performance does not guarantee future performance. The information contained herein is confidential commercial or financial information, 

the disclosure of which would cause substantial competitive harm to you, Cliffwater LLC, or the person or entity from whom the information was 

obtained, and may not be disclosed except as required by applicable law. 


elieves that most market participants attach too much weight to forecasts, which often prove inaccurate, 

particularly at inflection points. Consequently, MFS seeks to gain an analytical advantage by evaluating 

the long-term quality, sustainability, improvement potential, and intrinsic value of businesses. Finally, 

MFS believes that most market participants overemphasize upside potential versus downside risk. MFS 

attempts to avoid stocks with substantial downside risk and only invests where valuations more than 

compensate for inherent risks. 

Firm-wide, MFS’ team of global industry analysts review more than 750 stocks of non-U.S. companies 

and rate each of these stocks "buy, hold, or sell." The list of potential investment opportunities is 

narrowed to generally 300 to 400 buy candidates by MFS analysts. From these stocks, the International 

Value Equity team further narrows its universe of candidates against the specific buy criteria to 

approximately 150 to 200 stocks. The portfolio typically holds 80 to 100 stocks that the team believes 

represent the most attractive opportunities to provide above-average, sustainable growth while also being 

attractively valued. 

Performance 

Absolute and relative performance have both been outstanding. According to PERA’s custodian, MFS 

has outperformed its benchmark (MSCI EAFE Value - GD Index) by 7.07% since inception in April 2010. 

Since inception, MFS has delivered an 11.16% rate of return, compared to 4.09% for the benchmark 

MSCI EAFE Value - GD Index. Over longer periods of time, the strategy has delivered very good 

absolute returns and very good returns relative to its benchmark and peer group. 

Performance Notes: Please note that the PERA-specific performance comes from PERA’s custodian. All 

other performance data is shown gross of fees and comes from eVestment Alliance and/or the investment 

manager. 

Exhibit 1 

MFS Performance for New Mexico PERA 


Portfolio Nam e Market Value 

% of Total 

Plan MTD 3 Mo FYTD YTD 1 Year 3 Year 

Since 

Incep. Inception Date 

MFS 193,244,744 1.49 2.68 8.77 19.46 8.77 16.48 11.16 11.16 01-Apr-2010 


Excess Return 2.51 5.14 (0.29) 5.14 4.75 7.07 7.07 

Exhibit 2 

MFS International Value Strategy (gross of fees) 

Annualized Performance 


Annualized Returns 

1 Yr 3 Yr 5 Yr 7 Yr 10 Yr 15 Yr Dec '97 

MFS International Value 16.38% 11.14% 5.05% 6.51% 14.11% 8.85% 9.88% 

MSCI EAFE Value - GD Index 11.72% 4.09% -1.09% 1.20% 10.52% 5.09% 6.21% 

Difference 4.67% 7.06% 6.14% 5.30% 3.60% 3.76% 3.67% 



Exhibit 3 


Calendar Year Performance 


YTD 2013 2012 2011 2010 2009 2008 

MFS International Value 8.47% 17.26% -0.65% 10.60% 26.48% -30.86% 

MSCI EAFE Value - GD Index 3.63% 18.43% -11.64% 3.80% 35.04% -43.68% 

Difference 4.84% -1.17% 10.99% 6.80% -8.57% 12.82% 

2007 2006 2005 2004 2003 2002 

MFS International Value 8.77% 30.23% 16.34% 29.41% 34.99% -4.85% 

MSCI EAFE Value - GD Index 6.47% 31.05% 14.40% 24.89% 45.97% -15.60% 

Difference 2.30% -0.82% 1.94% 4.52% -10.97% 10.75% 

2001 2000 1999 1998 Dec'97 

MFS International Value -13.77% -1.58% 19.19% 5.34% 1.64% 

MSCI EAFE Value - GD Index -18.23% -2.81% 24.53% 1.22% 0.47% 

Difference 4.46% 1.23% -5.34% 4.11% 1.17% 

Exhibit 4 


Risk Statistics vs. MSCI EAFE Value - GD Index 


MFS International Value 

vs. MSCI EAFE Value - GD Index 

Return Risk 

Return / 

Risk 

Excess 

Return 

Excess 

Risk Info Ratio 

3 Yr 11.14% 14.64% 0.76 7.06% 7.68% 0.92 

5 Yr 5.05% 19.59% 0.26 6.14% 7.51% 0.82 

7 Yr 6.51% 17.22% 0.38 5.30% 6.69% 0.79 

10 Yr 14.11% 15.61% 0.90 3.60% 6.02% 0.60 

15 Yr 8.85% 15.26% 0.58 3.76% 6.75% 0.56 

December 1997 (inception) 9.88% 15.21% 0.65 3.67% 6.72% 0.55 



Exhibits 5 and 6 are “skill charts” which attempt to discern whether or not the manager’s outperformance 

is attributable to luck or skill. The blue line represents the manager’s gross of fees rolling three or five 

year performance relative to the MSCI EAFE Value - GD Index. If the blue line is above 0, the manager 

has outperformed the index and conversely, if the blue line iss below 0, the 

manager has underperformed 

the index. 

The black lines represent confidence bands at thee 80% level which incorporate the manager’s 

tracking error (standard deviation of excess return) relative too the index. If the blue line is above the top 

black line, their outperformance can be attributable to skill. . Conversely, if the blue 

line is below the 

bottom black line, their underperformance can be attributable to a lack 

of skill. If the blue line 

is in 

between the two black 

lines, it is unclear whether or not their r relative performance is attributable to either 

luck or skill. These charts demonstrate that MFS 

has added significant alpha over most rolling threee year 

and five year periods. 

Exhibit 5 

MFS International Value Strategyy (gross of fees) 

Rolling Three-Year Returns 

December 1997 through March 2013 



Page 


Exhibit 6 

MFS International Value Strategyy (gross of fees) 

Rolling Five-Year Returns 

December 1997 through March 2013 



Page 5 of 7

Exhibit 7 

Performance Universe for EAFE All Cap Value Strategies 




Exhibit 8 

MPT Statistics Universe for EAFE All Cap 

Value Strategies vs. MSCI EAFE Value-GD Index 






Page 


Watch List Test 

As stated in PERA’s investment policy, the following represent guidelines to be used in making a 

recommendation to the Investment Committee with regards to placing a traditional manager on the Watch 

List: 

Test 1: If the manager’s rolling three-year return (gross of fees) falls below the rolling three-year 

return of the benchmark for three consecutive quarters. 

Test 2: If the managers rolling three year return for three consecutive quarters ranks in the bottom 

third of the Consultant’s peer group universe. 

As of March 31, 2013, the strategy does not pass either Watch List test. 

Exhibit 9 



Rolling Three Year Annualized Performance vs. Benchmark 


3 Years 

ending 


3 Years 

ending 

12/31/2012 

3 Years 

ending 


MFS International Value 11.14% 8.82% 8.20% 

MSCI EAFE Value - GD Index 4.09% 2.80% 0.47% 

Difference 7.06% 6.02% 7.73% 

Exhibit 10 



Rolling Three Year Annualized Performance vs. Peer Group Universe 


3 Years 

ending 


3 Years 

ending 

12/31/2012 

3 Years 

ending 


MFS International Value 11.14% 8.82% 8.20% 

eVestment Alliance EAFE All Cap Value Equity Universe Median 6.79% 5.40% 4.08% 

MFS Rank in Universe 13 19 13 

Suggested Questions for the Investment Manager 

1) Given the rapid increase in assets under management in this strategy, what is your current 

thinking regarding capacity? 

2) Can you talk about your current views on Europe? 

3) Are you comfortable with your underweight positioning in the Australian banking sector? 

[As a reminder, we have not conducted full diligence on, or reviewed the legal documents for, this 

investment due to its legacy status in your portfolio.] 



PERA Executive Investment Summary 

April 2013 

Market Review: 

After a month of see-saw action in the US equity markets, the S&P set a new all-time high of 1,597, 

finishing the month up 1.93% (12.74% CYTD and 19.45% FYTD). Central bank actions and 

anticipated actions caused the Japanese and European markets to outperform in April with the 

EAFE index climbing 5.33% (10.84% CYTD and 26.41% FYTD) while the EMF index lagged somewhat 

at 0.79% (-0.79% CYTD and 13.04% FYTD). The Barclays core bond index was up 1% (0.89% CYTD 

and 2.72% FYTD) and High Yield bonds returned 1.81% (4.76% CYTD and 13.11% FYTD). Notably, a 

perennial laggard, the Japan Nikkei 225 stock index was up 11.8% in the month (33.4% CYTD and 

54% FYTD). 

April US data releases showed fewer jobs were added than forecast, with March payrolls growing by 

88,000 compared to the 190,000 expectation. Retail sales declined 0.4% and consumer sentiment 

fell six points to 72.3. The US economy expanded 2.5% in the first quarter of 2013 – short of the 

3.0% expectation - while the housing market continued to recover. 

Outside the US, all eyes were on Japan’s central bank which, under new management, announced 

plans for massive monetary stimulus. The Yen depreciated to 99.72 (to one USD) in the month, or 

6% compared to the March close and 25% off the level a year ago. Economists speculate that if 

Japan is successful in making wide-reaching structural changes, the reforms could power the 

Japanese economy (and equity markets) beyond one described as simply a cyclical expansion into 

one of years of sustainable growth. These reforms include labor market deregulation, free-trade 

agreements in Asia and Europe, entertainment/tourism industry deregulation (casinos), and a tax 

system overhaul. In Europe unemployment reached an all-time high of 12% while the Producer 

Manufacturing Index for all Euro countries turned negative, signaling an economic contraction in 

the Eurozone. Germany’s PMI dropped below the 50.0 level, dipping to 49.0. Despite poor data, the 

European markets were buffeted by expectations that the ECB will reduce lending rates at its May 

2 nd meeting. 

The PERA Fund extended its gains for the FYTD to 15.74% by rising 1.98% in the month, bringing the 

Fund market value to $13.256 billion. 

Pension Systems Update: 

The Public Broadcasting Station (PBS) aired a FRONTLINE special called “The Retirement Gamble” 

in April that discussed the pitfalls of deferred compensation retirement savings plans. The film 

focused on 401(k) retirement plans that have replaced defined benefit plans in the past few years. 

It mentioned that funds provided in the plans can sometimes be funds that have high costs 

associated with them. These 401(k) plan providers sometimes use proprietary funds that are cost 

effective to the provider but not always the lowest cost funds for plan participants. Additionally, 

it went on to say that banks, brokerages, insurance companies and financial service providers 

operate under a suitability standard and are not required to give the best advice. They work on 

commissions, thus do not have very good alignment of interests with plan participants, and do not 

always recommend products that maximize returns. The U.S. Labor Department does not currently 

require advisors to be fiduciaries whereas DC and DB plan sponsors like PERA require a fiduciary 

standard of care of all its investment managers and advisers. Additionally, 401(k) plans can be 

opaque as evidenced by a recent AARP survey that found that 70% of mutual fund savers are not 

aware of fees. The special is available on-demand at: 

http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/ 

~JoAnn Garcia, PERA Deferred Compensation Plan Manager 

Quote for the Month: 

“His political aspirations and workings got us (Dimensional) into the penalty box. 

That is not something he wanted to do…[defined benefit plans] are how we make our 

living. We are big fans of defined benefit plans.” ~David Booth, Chairman and co-CEO of 

Dimensional Fund Advisors, commenting on Director Rex Sinquefield’s affiliation with the 

Show-Me Institute, an organization critical of DB plan impact on public sector finances. 

~ quoted from P&I: http://tinyurl.com/P-I-DB-Plans 

1



Market Values, Asset Allocation & Performance Data: 

TABLE I: Fund Market Values (in millions $) 

Asset Class 4/30/2013 Prev. Month's Chg 

Total Equities 7,305 121.96 

Domestic Equity 3,950 1.78 

Large Cap 2,725 13.64 

Small/Mid Cap 1,225 -11.86 

International Equity 3,355 120.19 

Total Fixed Income 3,365 50.93 

Total Alternatives 2,438 13.57 

Absolute Return 1,124 -27.51 

Private Equity 531 7.04 

Real Estate 439 23.58 

Real Assets 344 10.45 

STIF/STO Cash Balances 148 24.35 

TOTAL FUNDS 13,256 210.82 

TABLE II: Fund Asset Allocation Comparison 

Asset Class Actual Target Variance Ranges $ in Millions 

Total Equities 55.1% 49% 6.1% - 809.4 

Domestic Equity 29.8% 29% 0.8% 24-34% 105.7 

Large Cap 20.6% 20% 0.3% - 34.2 

Small/Mid Cap 9.2% 9% 0.5% - 71.5 

International Equity 25.3% 20% 5.3% 15-25% 703.7 

Total Fixed Income 25.4% 26% -0.6% 23-29% -81.2 

Liquid Alpha 0.0% 5% -5.0% 0-7% - 

Total Alternatives 18.4% 20% -1.6% - -213.4 

Absolute Return 8.5% 7% 1.5% 5-9% 195.9 

Private Equity 4.0% 5% -1.0% 3-7% -132.1 

Real Estate 3.3% 3% 0.3% 1-5% 41.5 

Real Assets 2.6% 5% -2.4% 3-7% -318.7 

STIF/STO Cash Balances 1.1% 0% 1.1% - 148.1 

TABLE III: PERA Performance for Month and Fiscal Year to Date (in percent %) 

4/30/2013 Fiscal YTD 1 Year 3 Year 

Total Domestic Equity 1.11% 22.45% 18.80% 13.81% 

Russell 3000 Index 1.64% 20.22% 17.21% 12.78% 

Value Added -0.53% 2.23% 1.59% 1.03% 

International Equity 3.72% 22.51% 14.80% 6.89% 

MSCI ACWI ex-US Index 3.65% 22.38% 15.07% 6.58% 

Value Added 0.07% 0.13% -0.27% 0.31% 

Fixed Income 1.54% 7.76% 8.30% 7.53% 

85/15 Barclays Index 1.08% 2.47% 3.44% 5.43% 

Value Added 0.46% 5.29% 4.86% 2.10% 

Alternative Assets 1.71% 9.56% 9.34% 8.27% 

Cash Equivalents 0.38% 3.05% 3.23% 5.83% 

TOTAL FUND 1.98% 15.74% 13.18% 9.18% 

Custom Benchmark 1.78% 13.43% 11.32% 8.61% 

Value Added 0.20% 2.31% 1.86% 0.57% 

2



Market Values, Asset Allocation & Performance: 

Market Value & Asset Allocation: 

The US equity markets marched higher in April with the Total Fund market value up $211 million 

over the previous month to $13,256,418,592. The Board ratified a new strategic asset allocation in 

November by approving revisions to its IPS, which increased the target US equity allocation by 2% 

to 29%, reduced the Non-US equity allocation by 7% to 20%, added the 5% Liquid Alpha bucket, 

reduced hedge funds by 2% to 7%, and increased the Real Assets target by 2% to 5%. Based on 

current market values and the new strategic asset allocation targets, the Non-US allocation is 

overweight by 5%, but still within the allowable range, pending the GTAA implementation. Along 

the same lines, the Absolute Return portfolio is overweight and the Real Assets portfolio is 

underweight pending an AR portfolio rebalance and the expansion of the RA portfolio. 

Asset Transfers: 

PERA transferred $40 million at month-end – after reversing $10 million in excess funds early in the 

month -- from the STIF account to supplement beneficiary payments and to pay refunds and agency 

expenses, including investment manager fees. For the fiscal-year-to-date, PERA has transferred 

$338 million to the PERA General account, $16.5 million to the Magistrate account, and $3 million 

to the Judicial fund to cover potential shortfalls in employer and employee contributions. PERA 

has made no transfers to the Volunteer Fire Fighter account for the fiscal-year-to-date. 

Private partnerships called $22 million in the month of April, distributing $8.7 million. In the 

current fiscal year, capital calls have averaged $19.9 million per month and total $199 million. In 

fiscal year 2012 capital calls averaged $22.5 million per month and totaled $270 million. 

Fund Returns & Performance: 

The Total Fund returned 1.98% for the month with active management adding value across most 

public market mandates and hedge funds. With the exception of JPMAM, PERA’s active small and 

SMID cap managers were unable to outperform during April’s volatile market environment. The 

Fund’s 55% actual total equity allocation was a driver of performance in April, a period when 

equity markets reached new highs. Over the trailing one-year and three-year periods, the Fund has 

returned 13.18% (1YR) and 9.18% (3YR) compared to the Custom Index return of 11.32% (1YR) and 

8.61% (3YR). 

The PERA Fund ranked 37 th for the quarter and 13 th for the year ending March 31, 2013 in the 

Wilshire TUCS universe of public funds > $1 billion. 

Watch List Update: 

None of PERA’s active domestic equity and fixed income managers are on the Watch List. The 

Wellington Emerging Markets Equity mandate is on Watch at present. The Investment Committee 

voted to terminate SSgA International Alpha Select at the August 2012 meeting. This account was 

held since late September with an interim manager and transitioned in early April to the Northern 

Trust passive ACWI ex-US account. The Board approved a recommendation to add Schroder 

International Equity Small Cap mandate to the watch list at the April meeting. Four of PERA’s 

alternative investments are on Cliffwater’s Watch List. 

3



Portfolio Manager Views: 

Hedge Funds: 

Despite a substantial downturn mid-month, the rally in equities persisted during April with most 

major benchmark indices extending their gains for the year. Equities in the U.S. climbed almost 

+2.00% for the month on positive housing data and corporate earnings while Europe’s DJ Eurostoxx 

Index advanced more than +3.00% on better-than-expected GDP data in the U.K., optimism over 

recent political developments in Italy and the anticipation of an ECB rate cut in early May. Asian 

equities were mixed, with gains in Japan and Australia being muted by losses in China and Korea. 

Commodities fell sharply, led by steep declines in precious metals. U.S. and European bond yields 

fell across most maturities. 

In hedge funds, April marked the 9th month of gains in the last 10, with the HFRI Fund Weighted 

Composite Index gaining +0.70% for the month. Macro CTA strategies were some of the strongest 

performers in April, returning +2.30% as equities and commodities experienced a significant 

divergence. April’s strong performance for these trend-following funds marks a much welcomed 

reversal from previous months during which Systematic Macro managers trailed the broader hedge 

fund set. PERA’s Systematic Macro funds followed suit, with Blue Trend and Lynx both posting 

returns well above the Systematic CTA index. Additional strength in April came from Relative 

Value and Event Driven strategies, returning +1.0% and +0.90%, respectively. As might be 

expected, short-biased equity funds performed poorly, losing -2.77%, with weakness in the group 

being driven by the broader equity market behavior. Based on preliminary estimates, PERA’s 

Absolute Return portfolio generated approximately +0.90% of performance during April, modestly 

outperforming the hedge fund universe. 

~ Jason Goeller 

Real Assets: 

PERA’s Real Assets private partnerships called $8.4 million during the month of April. Distributions 

were not received during the month. Year to date the portfolio of sixteen partnerships had drawn 

$242 million on $392 million in commitments. Cumulative distributions total $77.6 million, with an 

(unrealized) fair value of $198.3 million, resulting in an Internal Rate of Return of 10.08%, or 1.20x 

cost since the inception of the program. 

~ Christina Keyes 

Fixed Income: 

In April, the fixed income markets were positive, with the Barclays U.S. Aggregate bond index 

posting 1.01%. All of NMPERA’s managers posted positive returns in excess of their respective 

benchmarks. Prudential, a relatively new core plus manager, has done well in every time period. 

Since inception the mandate has exceeded its benchmark by 528 basis points. The mandate’s 

continued overweight positions to High Yield and CMBS as well as its duration and curve 

positioning, both inside and outside the U.S. contributed to returns. 

~ LeAnne Larrañaga-Ruffy 

4



Portfolio Manager Views, cont.: 

Public Equity: 

In April, large cap stocks outperformed small cap with the S&P 500 posting 1.90% and the Russell 

2000 Index posting -0.37%. JPMorgan was the only small cap manager that was able to provide 

outperformance versus its benchmark, but still posted a negative absolute return. International 

equity saw positive returns for the month; NMPERA managers had mixed results, but all posted 

positive returns. Emerging markets equity was positive for the month and all of NMPERA’s managers 

in this space exceeded their benchmark. Aberdeen, one of NMPERA’s International Emerging Market 

managers, has shown strong performance for every time period, outperforming its benchmark by 

755 basis points since inception. 

~ LeAnne Larrañaga-Ruffy 

Private Equity: 

As of April 30, 2013 the Private Equity portfolio is 69% drawn ($616 million) on $887 million 

committed. Residual fair value ($522 million) plus cumulative distributions ($208 million) make for 

a total fair value of $731 million, or 1.18x cost, and a net since inception IRR of +7.43%. Capital 

called during April totaled $5.3 million, $1.1 million of which funded 2 new deals transacted by 2 

different GPs. Capital distributed totaled $4.9 million, $4.4 million of which was return of capital 

and $500,000 current income of cash flow. 

~Joaquin Lujan 

Real Estate: 

As of April 30, 2013 the Real Estate portfolio excluding REITs is 65% drawn ($234 million) on $350 

million committed. Residual fair value ($188 million) plus cumulative distributions ($84 million) 

make for a total fair value of $272 million, or 1.16x cost, and a net since inception IRR of +6.94%. 

Capital called totaled $8.6 million, $4.7 million of which funded 4 new deals transacted by 4 

different GPs and $3.6 million additional investments in an existing property. Capital distributed 

totaled $2.6 million, $2.3 million of which was return of capital, and $215,304 of which was return 

of capital. 

~Joaquin Lujan 

5



Monthly Outlook: Can the Millennials Save the U.S. Economy? 

Millennials, or Generation Y, are defined as the generation of people currently between 18 and 35 years of age; the 

majority of whom are either attending college or looking for a job. But, they are not looking in the way that most people 

over the age of 37 think about looking for a job. They are browsing websites, reviewing other people’s comments about the 

company and making a decision to apply or stay away. Right now, however, my guess is they are taking pictures of 

themselves, posting them on Instagram, and checking their Smartphones to make sure somebody in the world “liked” it. The 

Millennials currently contribute 21% of consumer spending. 

This generation currently makes up the largest population in the U.S., a staggering 86 million people, surpassing 

their parent’s generation, the Baby Boomers, by 7%. Millennials have been described as spoiled, entitled and narcissistic. This 

could be blamed on helicopter parents, who made sure each child received a medal for mere participation and remained in 

constant communication throughout childhood via cell phone. The Millennials have witnessed some of the worst episodes in 

U.S. history, 9/11, school shootings, domestic terrorist bombings, the great recession and, worst of all, reality television. The 

latter can be blamed for encouraging this generation to seek constant social interaction, without which they feel anxiety over 

“missing something exciting”. 

As this largest population segment starts growing up and into their highest earning years, can they be expected to 

save the U.S. economy? They have already put their mark on education spending, by increasing college admissions by 30%. 

This contributes to the idea that the Millennials will be the highest educated, and possibly highest paid generation. The 

Urban Land Institute (ULI) speculates that Generation Y is a potential “game changer” in the US real estate market. 

Currently, Millennials prefer to rent apartments in downtown areas. But, as they get married and start families they will 

likely follow the custom of buying homes, which could spur a housing boom by 2019. There are indications that this trend has 

been happening over the past couple of years, with the National Association of Home Builders market index rising by 163%. 

Millennials have also changed the way money is spent, whether it’s less cash, more cards or paying with a 

Smartphone app. Malls are considering the ever-changing tastes of Millennials and adding more restaurants and 

entertainment to their landscapes, just to encourage them to show up. A survey indicates that 46% of Millennials dine out 

with others at least once a week. For the most part younger people are shopping online, which could be adding to the 

vacancy rates in the mall near you (Coronado). 

The financial market downturns, economic uncertainty and high unemployment have encouraged Millennials to be 

savers and investors. They are not afraid of risk and are buying stocks. They are skeptical about the “security” of social 

security, so they are taking responsibility for their own retirement saving. They have less household and credit card debt than 

any previous generation on record. Even though it is a somewhat morbid realization, many Millennials also know they will 

receive inheritances which will increase their net worth, making future spending less burdensome. The Millennials have the 

potential to drive the economy, possibly helping lift the GDP growth to 3% or more as the Baby Boomers did in the 1990’s. 

The bright side is they are a generation whose mantra is “think, think about it before you do it”. With that reasoned 

approach and outlook we can only be optimistic about the future being in their Smartphone-carrying, Twitter-posting, 

Instagram-liking hands. ~LeAnne Larrañaga-Ruffy 

*This officially made me feel old. 

Sources: 

“On the Rise” by Jacqueline Doherty – Barron’s - 4/29/2013 

“Unlike Boomers, Millennials Appear to be Super Savers” – USA Today – 5/12/2013 

“Millennials: The Me Me Me Generation” – Time – 5/20/2013 

“Generation Y Tastes Have Mall Owners Shifting to Entertainment” – WSJ blogs – 5/17/2013 

6

New Mexico PERA Monthly Performance 

Asset Allocation by Composite 

For Period Ending April 2013 

Domestic Equity Composite Int'l Equity Composite Total Fixed Income Composite 

Absolute Return Composite Private Equity Composite Real Estate Composite 

Real Assets Composite Cash Equivalent Composite STO Cash Balance 

Market Value Allocation 

($) (%) 

Domestic Equity Composite 3,950,041,662 29.80% 

Int'l Equity Composite 3,354,957,041 25.31% 

Total Fixed Income Composite 3,365,486,771 25.39% 

Absolute Return Composite 1,123,860,615 8.48% 

Private Equity Composite 530,692,155 4.00% 

Real Estate Composite 439,207,925 3.31% 

Real Assets Composite 344,100,996 2.60% 

Cash Equivalent Composite 106,308,200 0.80% 

STO Cash Balance 41,763,227 0.32% 

Total New Mexico PERA Fund 13,256,418,593 

Prepared by Cliffwater using returns and market values provided by J.P. Morgan 

1

Public Employees Retirement Association of New Mexico 

Asset Allocation & Performance - Trailing Periods 

As of April 2013 

Portfolio Name Market Value % MTD 3 Mo FYTD YTD 1 Year 3 Year 5 Year 10 Year 15 Year Since Incep. Inception Date 

NM PERA Total Fund 13,214,655,366 100.00 1.98 4.29 15.74 7.47 13.18 9.18 3.35 7.20 6.27 9.44 01-Jun-1985 

Target Total Plan Benchmark 1.78 3.79 13.43 6.51 11.32 8.61 4.24 7.77 5.38 

Excess Return 0.20 0.50 2.31 0.96 1.87 0.56 (0.90) (0.57) 0.89 

NM PERA Total Fund Ex Alternatives 10,776,793,675 81.55 2.04 4.40 17.29 7.89 14.11 9.44 3.42 7.24 6.29 9.46 01-Jun-1985 

Target Traditional Assets 2.00 4.02 14.81 7.07 12.02 8.48 4.39 7.78 5.41 

Excess Return 0.04 0.37 2.47 0.82 2.09 0.96 (0.97) (0.54) 0.88 

Total Equity Composite 7,304,998,703 55.28 2.28 5.33 22.51 10.64 16.96 10.30 2.21 8.41 5.95 01-Jun-1998 

Target Total Equity 2.08 6.18 22.23 11.69 17.07 9.91 3.12 

Excess Return 0.20 (0.85) 0.29 (1.04) (0.11) 0.38 (0.92) 

Domestic Equity Composite 3,950,041,662 29.89 1.11 6.91 22.45 13.07 18.80 13.81 5.97 8.82 6.39 11.29 01-Jun-1985 

Russell 3000 1.64 7.02 20.22 12.89 17.21 12.78 5.63 8.48 4.73 10.44 

Excess Return (0.53) (0.11) 2.22 0.18 1.59 1.03 0.35 0.35 1.66 0.86 

Intl Equity Composite 3,354,957,041 25.39 3.72 3.52 22.51 7.89 14.80 6.89 (2.02) 9.16 5.93 8.09 01-Sep-1995 

MSCI ACWI ex USA IMI GD 3.65 3.20 22.38 7.45 15.07 6.58 (0.31) 10.84 5.31 6.08 

Excess Return 0.07 0.32 0.13 0.44 (0.27) 0.31 (1.71) (1.68) 0.63 2.01 

Total Fixed Income Composite 3,365,486,771 25.47 1.54 2.48 7.76 2.54 8.30 7.53 7.30 5.77 6.36 8.05 01-Jun-1985 

85% Barclays US Aggregate / 15% Barclays Multiverse 1.08 1.40 2.47 0.67 3.44 5.43 5.68 5.02 5.87 7.54 

Excess Return 0.46 1.08 5.29 1.86 4.86 2.10 1.62 0.75 0.49 0.51 

Total Cash 106,308,200 0.80 0.38 1.33 3.05 1.61 3.23 5.83 3.73 5.31 5.22 5.35 01-Mar-1989 

ML US 3-Month Treasury 0.01 0.03 0.10 0.03 0.12 0.11 0.33 1.75 2.56 3.73 

Excess Return 0.37 1.30 2.94 1.59 3.10 5.72 3.40 3.57 2.66 1.61 

Alternative Assets Composite 2,437,861,691 18.45 1.71 3.84 9.56 5.66 9.34 8.27 4.49 3.67 01-Jan-2007 


2





Total Equity 7,304,998,703 55.28 2.28 5.33 22.51 10.64 16.96 10.30 2.21 8.41 5.95 01-Jun-1998 

Target Total Equity 2.08 6.18 22.23 11.69 17.07 9.91 3.12 

Excess Return 0.20 (0.85) 0.29 (1.04) (0.11) 0.38 (0.92) 

Domestic Equity Composite 3,950,041,662 29.89 1.11 6.91 22.45 13.07 18.80 13.81 5.97 8.82 6.39 11.29 01-Jun-1985 

Russell 3000 1.64 7.02 20.22 12.89 17.21 12.78 5.63 8.48 4.73 10.44 

Excess Return (0.53) (0.11) 2.22 0.18 1.59 1.03 0.35 0.35 1.66 0.86 

Domestic Large Cap Equity Composite 2,725,262,141 20.62 2.05 7.53 21.45 13.40 18.32 13.92 5.08 8.06 4.89 10.49 01-Jun-1985 

Russell 1000 1.81 7.16 20.24 12.97 17.17 12.91 5.49 8.32 4.66 10.70 

Excess Return 0.24 0.38 1.21 0.43 1.14 1.01 (0.40) (0.26) 0.23 (0.20) 

Large Cap Core 2,119,105,599 16.04 2.09 7.87 22.47 13.89 19.45 14.32 4.03 4.32 01-Jun-2006 

Russell 1000 1.81 7.16 20.24 12.97 17.17 12.91 5.49 5.81 

Excess Return 0.28 0.71 2.23 0.93 2.28 1.41 (1.46) (1.50) 

Intech Enhanced 316,835,090 2.40 1.90 7.67 19.13 12.65 16.44 13.64 5.74 7.41 01-Oct-2004 

S&P 500 1.93 7.18 19.44 12.74 16.89 12.80 5.21 6.48 

Excess Return (0.02) 0.48 (0.32) (0.09) (0.45) 0.84 0.53 0.93 

SSGA Russell 1000 1,216,664,863 9.21 1.77 7.12 20.17 12.93 17.13 12.89 12.89 01-May-2010 

Russell 1000 1.81 7.16 20.24 12.97 17.17 12.91 12.91 

Excess Return (0.03) (0.03) (0.07) (0.04) (0.04) (0.03) (0.03) 

Portable Alpha 585,605,646 4.43 2.86 9.61 29.12 16.86 25.95 17.66 3.38 0.39 01-Oct-2007 

S&P 500 +1% (3/1/2013) 2.01 7.36 19.64 12.92 17.09 12.87 5.25 3.09 

Excess Return 0.85 2.24 9.47 3.94 8.87 4.79 (1.87) (2.70) 

Large Cap Growth 307,217,866 2.32 2.12 7.28 17.07 11.85 12.57 13.45 6.60 6.97 01-Jun-2006 

Russell 1000 Growth 2.12 7.27 17.14 11.87 12.60 13.44 6.66 7.03 

Excess Return 0.00 0.00 (0.07) (0.02) (0.03) 0.01 (0.06) (0.06) 

NT Growth 307,217,866 2.32 2.12 7.28 17.07 11.85 12.57 13.45 6.80 8.16 3.80 9.52 01-Mar-1989 

Russell 1000 Growth 2.12 7.27 17.14 11.87 12.60 13.44 6.66 8.08 3.30 9.26 

Excess Return 0.00 0.00 (0.07) (0.02) (0.03) 0.01 0.14 0.08 0.50 0.25 

Large Cap Value 298,938,676 2.26 1.72 5.42 18.90 11.50 16.50 11.75 3.79 8.02 01-Jun-2006 

Russell 1000 Value 1.51 7.05 23.27 14.01 21.80 12.35 4.17 4.47 

Excess Return 0.20 (1.63) (4.37) (2.51) (5.31) (0.60) (0.38) 3.55 


3





CS Mckee 298,938,676 2.26 1.72 5.42 18.90 11.50 16.50 11.75 4.15 5.08 01-Jul-2006 

Russell 1000 Value 1.51 7.05 23.27 14.01 21.80 12.35 4.17 4.43 

Excess Return 0.20 (1.63) (4.37) (2.51) (5.31) (0.60) (0.01) 0.65 

Domestic Small / Mid Cap 1,224,779,521 9.27 (0.96) 5.53 24.74 12.33 19.90 13.46 8.44 7.02 01-Jun-2006 

Russell 2500 0.31 5.95 23.21 13.20 18.97 12.95 7.95 6.56 

Excess Return (1.27) (0.42) 1.53 (0.87) 0.93 0.51 0.49 0.46 

SS Russell 2500 131,438,408 0.99 0.31 5.97 23.20 13.19 18.95 20.09 01-Jul-2010 

Russell 2500 0.31 5.95 23.21 13.20 18.97 20.01 

Excess Return 0.01 0.02 (0.01) (0.01) (0.02) 0.08 

Times Square 202,206,260 1.53 (0.76) 5.71 24.24 12.65 19.61 17.38 11.44 12.28 01-Apr-2005 

Russell 2500 Growth 0.35 5.36 20.58 12.59 15.08 13.77 7.83 8.36 

Excess Return (1.11) 0.35 3.66 0.05 4.53 3.60 3.62 3.92 

Voyageur 195,557,113 1.48 (2.55) 4.49 19.31 9.97 17.44 16.75 11.46 8.92 01-Apr-2005 

Russell 2000 Growth (0.66) 5.52 18.44 12.47 15.67 12.94 7.81 7.62 

Excess Return (1.90) (1.03) 0.88 (2.50) 1.77 3.81 3.65 1.30 

JPM Asset Mgmt 145,385,758 1.10 (0.12) 6.11 20.83 12.87 14.55 18.34 01-Sep-2011 

Russell 2000 Growth (0.66) 5.52 18.44 12.47 15.67 17.67 

Excess Return 0.54 0.59 2.39 0.40 (1.12) 0.67 

DFA 268,205,748 2.03 (1.14) 5.34 26.62 12.42 21.30 15.79 01-Oct-2010 

Russell 2000 Value (0.10) 5.25 21.64 11.52 19.71 15.01 

Excess Return (1.04) 0.09 4.98 0.89 1.58 0.78 

Metwest Capital Mgmt 281,986,131 2.13 (0.82) 5.81 30.32 13.01 24.01 17.94 01-Oct-2010 

Russell 2000 Value (0.10) 5.25 21.64 11.52 19.71 15.01 

Excess Return (0.73) 0.56 8.69 1.49 4.29 2.92 

Intl Equity Composite 3,354,957,041 25.39 3.72 3.52 22.51 7.89 14.80 6.89 (2.02) 9.16 5.93 8.09 01-Sep-1995 

MSCI ACWI ex USA IMI GD 3.65 3.20 22.38 7.45 15.07 6.58 (0.31) 10.84 5.31 6.08 

Excess Return 0.07 0.32 0.13 0.44 (0.27) 0.31 (1.71) (1.68) 0.63 2.01 

Blackrock EAFE Transition 1,423,266 0.01 (0.83) (1.69) 4.05 11.23 01-Oct-2012 


4





NTGI ACWI x US 2,003,828,356 15.16 3.95 3.09 22.12 7.29 14.68 3.73 01-Jan-2011 

MSCI ACWI ex USA GD 3.77 2.96 21.98 7.16 14.69 3.78 

Excess Return 0.17 0.14 0.14 0.13 (0.01) (0.04) 

KBC 117,113,892 0.89 5.23 4.70 26.96 10.14 22.07 8.10 7.36 01-Apr-2010 


Excess Return (1.13) 0.63 (0.42) (0.10) (0.37) 1.17 1.28 

MFS 206,287,370 1.56 6.75 9.28 27.52 16.11 24.25 13.87 13.21 01-Apr-2010 


Excess Return 0.38 5.21 0.15 5.88 1.80 6.94 7.13 

SSGA EAFE 315,796,318 2.39 4.33 6.44 25.32 11.38 17.30 8.85 0.12 (0.55) 01-Jan-2008 

MSCI EAFE Growth 4.34 6.47 25.45 11.45 17.50 8.91 0.09 (0.57) 

Excess Return (0.01) (0.04) (0.13) (0.07) (0.20) (0.06) 0.03 0.02 

Principal Global Investors 167,249,617 1.27 4.04 8.50 31.28 13.98 21.11 14.71 3.63 1.37 01-Dec-2007 

MSCI World ex USA Small Cap GD 2.96 5.40 25.92 10.49 15.12 8.52 2.52 1.00 

Excess Return 1.09 3.10 5.36 3.49 5.99 6.20 1.11 0.37 

Schroder Investment Mgmt. 86,480,237 0.65 3.05 5.61 24.97 11.38 13.86 13.86 01-May-2012 

MSCI-EAFE Small Cap (Gross) 3.66 6.86 28.72 12.45 18.32 18.32 

Excess Return (0.61) (1.24) (3.75) (1.08) (4.47) (4.47) 

Intl Emerging Equity Composite 456,777,986 3.46 1.35 (0.56) 16.27 1.70 8.88 6.70 (0.79) 6.51 01-Jul-2006 

MSCI Emerging Markets GD 0.79 (2.15) 13.04 (0.79) 4.34 3.44 (0.02) 7.71 

Excess Return 0.56 1.59 3.23 2.48 4.54 3.26 (0.77) (1.21) 

Aberdeen 132,455,644 1.00 1.53 1.07 17.39 2.03 12.61 11.82 14.50 01-Nov-2009 

MSCI Emerging Markets GD 0.79 (2.15) 13.04 (0.79) 4.34 3.44 6.45 

Excess Return 0.74 3.22 4.35 2.82 8.27 8.38 8.04 

Wellington Emerging 111,554,107 0.84 1.36 (2.30) 15.55 (0.09) 5.78 2.09 3.69 01-Dec-2009 

MSCI Emerging Markets GD 0.79 (2.15) 13.04 (0.79) 4.34 3.44 5.31 

Excess Return 0.56 (0.15) 2.51 0.70 1.43 (1.35) (1.62) 


5





Eaton Vance 212,768,235 1.61 1.23 (0.63) 15.96 2.45 8.32 5.98 2.15 0.29 01-Nov-2007 

S&P/IFC Investable 1.07 (1.60) 14.01 0.19 5.26 3.72 0.37 (1.64) 

Excess Return 0.16 0.97 1.95 2.26 3.05 2.26 1.78 1.94 

Total Fixed 3,365,486,771 25.47 1.54 2.48 7.76 2.54 8.30 7.53 7.30 5.77 6.36 8.05 01-Jun-1985 

85% BC US Agg/15% BC Multiverse (1) 1.08 1.40 2.47 0.67 3.44 5.43 5.68 5.02 5.87 7.54 

Excess Return 0.46 1.08 5.29 1.86 4.86 2.10 1.62 0.75 0.49 0.51 

Domestic Fixed Income 2,798,685,800 21.18 1.30 2.02 5.50 1.79 6.41 7.27 7.14 5.68 6.30 8.01 01-Jun-1985 

Benchmark based on Barclays U.S. Aggregate (Total) 1.01 1.60 2.71 0.89 3.68 5.51 5.72 5.04 5.88 7.55 

Excess Return 0.28 0.42 2.80 0.90 2.74 1.76 1.42 0.63 0.42 0.47 

Blackrock 620,628,156 4.70 1.46 2.20 4.20 1.49 5.18 6.44 7.28 5.71 6.43 6.75 01-Sep-1992 

Barclays U.S. Aggregate 1.01 1.60 2.71 0.89 3.68 5.51 5.72 5.04 5.88 6.25 

Excess Return 0.45 0.60 1.49 0.60 1.50 0.93 1.56 0.67 0.55 0.50 

MacKay Shields 609,880,650 4.62 1.14 1.68 4.07 1.06 4.07 01-Jul-2012 

Barclays U.S. Aggregate 1.01 1.60 2.71 0.89 2.71 

Excess Return 0.13 0.08 1.36 0.17 1.36 

Manulife Asset Management 284,199,349 2.15 1.18 2.28 10.04 3.21 10.17 6.49 01-May-2011 

Barclays U.S. Universal 1.10 1.70 3.80 1.17 4.73 6.04 

Excess Return 0.08 0.58 6.25 2.04 5.44 0.44 

PIMCO 669,088,422 5.06 1.01 2.00 4.50 1.67 5.48 7.59 01-Apr-2011 

Barclays US Aggregate 1.01 1.60 2.71 0.89 3.68 6.00 

Excess Return 0.00 0.40 1.80 0.79 1.81 1.58 

Prudential Investment Mgmt. 614,889,223 4.65 1.65 2.08 7.48 2.29 8.03 01-Jun-2012 

Barclays U.S. Aggregate 1.01 1.60 2.71 0.89 2.75 

Excess Return 0.64 0.48 4.78 1.40 5.29 

Global Fixed Income 566,800,971 4.29 2.74 4.80 20.70 6.40 21.26 11.27 01-May-2011 

Barclays Multiverse 1.44 0.27 2.52 (0.55) 1.95 2.64 

Excess Return 1.30 4.53 18.18 6.95 19.31 8.63 

Franklin Templeton Global 566,800,971 4.29 2.74 4.80 20.70 6.40 18.40 9.95 01-May-2011 

Barclays Multiverse 1.44 0.27 2.52 (0.55) 1.95 2.64 

Excess Return 1.30 4.53 18.18 6.95 16.45 7.31 


6





Total Cash & Equivalents 106,308,200 0.80 0.38 1.33 3.05 1.61 3.23 5.83 3.73 5.31 5.22 5.35 01-Mar-1989 

ML US 3-Month Treasury 0.01 0.03 0.10 0.03 0.12 0.11 0.33 1.75 2.56 3.73 

Excess Return 0.37 1.30 2.94 1.59 3.10 5.72 3.40 3.57 2.66 1.61 

J.P. Morgan STIF 103,517,845 0.78 0.34 1.25 1.84 1.46 2.10 4.68 3.04 4.97 4.99 5.20 01-Mar-1989 

ML U.S. 3-Month Treasury 0.01 0.03 0.10 0.03 0.12 0.11 0.33 1.75 2.56 3.73 

Excess Return 0.33 1.23 1.74 1.43 1.98 4.56 2.72 3.22 2.43 1.47 

Alternative Assets Composite 2,437,861,691 18.45 1.71 3.84 9.56 5.66 9.34 8.27 4.49 3.67 01-Jan-2007 

Private Equity 530,692,155 4.02 1.54 4.22 8.28 5.02 10.08 11.22 6.87 2.64 01-Jan-2007 

Russell 3000 + 3% Index 1.88 7.79 23.22 13.99 20.72 16.16 8.80 7.53 

Excess Return (0.34) (3.58) (14.94) (8.98) (10.65) (4.94) (1.92) (4.89) 

Absolute Return 1,123,860,615 8.50 1.16 3.16 9.95 5.68 8.90 4.75 3.13 2.87 01-Jan-2007 

HFRI Fund Weighted Composite Index 0.69 2.01 10.74 4.82 8.50 4.91 3.44 3.95 

Excess Return 0.48 1.15 (0.79) 0.85 0.39 (0.16) (0.31) (1.08) 

Real Estate 439,207,925 3.32 4.31 7.90 16.58 9.37 17.95 15.87 9.20 8.78 01-May-2007 

Real Estate Custom Benchmark 1.27 4.75 11.63 5.52 14.88 16.89 6.90 7.29 

Excess Return 3.05 3.14 4.95 3.85 3.07 (1.02) 2.30 1.49 

Real Assets 344,100,996 2.60 0.62 0.64 1.91 1.92 0.82 8.19 1.64 (1.30) 01-Feb-2007 

CPI SA +5% Annually 0.04 1.35 8.50 1.79 1.97 7.56 (1.47) 4.36 

Excess Return 0.58 (0.71) (6.59) 0.12 (1.16) 0.62 3.11 (5.66) 

Endnotes 

(1) Total Fixed Income Benchmark: RV Kuhns used the Barclays Global Aggregate on an interim basis from 4/1/11 to 11/30/12. 


7

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