June 9, 2011 - SURS

MINUTES
Meeting of the Investment Committee
of the Board of Trustees of the
State Universities Retirement System
2:05 p.m., Thursday, June 9, 2011
The Northern Trust, 50 South LaSalle Street
London Room B9, Chicago, Illinois 60603
The following Trustees were present: Dr. J. Fred Giertz, Chair; Dr. Jeffrey Beaulieu, Dr. John
Engstrom, Ms. Carrie Hightman, Ms. Dorinda Miller, Mr. Antonio Vasquez, and Mr. Mitchell
Vogel.
Others present: Mr. William Mabe, Executive Director; Mr. Michael Weinstein, General
Counsel; Mr. Daniel Allen, Chief Investment Officer; Mr. Douglas Wesley, Deputy Chief
Investment Officer; Ms. Kimberly Pollitt, Ms. Lou Ann Fillingham, Mr. Tony Lee and Mr.
Joseph Duncan, Investment Officers; Ms. Marilyn Branson, Investment Governance and
Compliance Officer; Mr. Steve Hayward, Director of Internal Audit; Mr. Terrin Krantz, Director
of Human Resources; Ms. Angie Lieb, Director of Member Services; Ms. Stefanie Rice,
Executive Assistant; Ms. Mary Pat Burns of Burke, Burns & Pinelli; Mr. Ryan Ball, Mr. Mark
Kline, Mr. Bo Abesamis and Ms. Karen Harris of Callan Associates; Ms. Patti Somerville-
Koulouris of the Northern Trust Company; Mr. Dan Hynes of Northern Trust Global Investments;
Ms. Leslie Thompson and Ms. Amy Williams of Gabriel, Roeder, Smith & Company; Ms.
Renaye Manley of the Service Employees International Union; and Ms. Linda Brookhart of the
State Universities Annuitants Association; Ms. Angela Myers of Loop Capital; Ms. Sharon Piet
of Podesta & Company; and Mr. Vito Laera of Cabrera Capital Markets.
Roll call attendance was taken. Trustee Beaulieu, present; Trustee Berns, absent; Trustee
Engstrom, present; Trustee Giertz, present; Trustee Hightman, present; Trustee Miller, present;
Trustee Rogers, absent; Trustee Vasquez, present; Trustee Vogel, present; Trustee Williams,
absent.
Trustee Giertz called the meeting to order at approximately 2:05 p.m.
APPROVAL OF MINUTES
Trustee Giertz presented the Minutes from the Investment Committee meeting of April 22, 2011.
Trustee Engstrom moved that:
• The Minutes from the April 22, 2011, Investment Committee meeting be approved as
presented.
Motion seconded by Trustee Miller and carried with all Trustees present voting in favor.

REVIEW OF CLOSED SESSION MINUTES
Trustee Giertz presented the closed session Minutes from the Investment Committee meeting of
October 28, 2010. Trustee Vogel moved that:
• The closed session Minutes from the October 28, 2010, Investment Committee meeting
be opened as the need for confidentiality no longer exists.
Motion seconded by Trustee Beaulieu and carried with all Trustees present voting in favor.
CHAIR’S REPORT
Mr. Allen reviewed the recent performance and strategic policy targets, which are accessible in
the monthly Investment Update. Through the end of March 2011, SURS had a rate of return for
the fiscal year-to-date of 22% with assets of approximately $14.5 billion. Mr. Ryan Ball
reviewed the Performance Report Executive Summary for the quarter ending March 31, 2011.
SURS’ asset allocation was discussed, noting that the portfolio is relatively close to the target
asset allocation. The fund’s total performance remains strong.
A copy of staff’s memorandum entitled “Report from the April 22, 2011, Investment Committee
Meeting” is incorporated as a part of these Minutes as Exhibit 1. A copy of staff’s memorandum
entitled “Investment Contracts Approved” is incorporated as a part of these Minutes as Exhibit 2.
RECOMMENDATION OF IMPLEMENTATION OF THE MONEY PURCHASE
FACTORS IN ACCORDANCE WITH THE ACTUARIAL EXPERIENCE STUDY
OUTCOMES
Ms. Leslie Thompson provided a presentation to illustrate the impact of changing the money
purchase factors. Ms. Angie Lieb advised that updates to the benefit estimator will be available
online by Monday, June 13, 2011, contingent on the Board’s approval. Mr. William Mabe and
Ms. Lieb provided an analysis of establishing an implementation date of July 2, 2012, noting that
said date provides SURS members additional time to be educated in order to make an informed
retirement decision, allows SURS to prepare for a surge in retirement applications, allows SURS
to verify compliance with the experience study recommendation from a certified actuary, and
reduces potential disruption during the school year due to a large number of retirements. Ms.
Mary Pat Burns emphasized that implementation of the recommended date will have no adverse
actuarial impact on SURS.
Trustee Rogers joined the meeting at 2:15 p.m.
At the conclusion of the discussion, Trustee Beaulieu moved that:
• The Money Purchase Factors (annuitization rate under Rule 2) and other actuarial tables
be effective September 2, 2011.
After further discussions, said motion was withdrawn.

Motion by Trustee Beaulieu that:
• The Money Purchase Factors (annuitization rate under Rule 2) and other actuarial tables
be effective July 2, 2012.
Motion seconded by Trustee Vogel and carried with all Trustees present voting in favor with the
exception of Trustee Giertz who refrained from voting due to a potential conflict of interest.
Mr. Mabe was directed to provide updates to SURS members on the Board’s position. Mr. Mabe
reported that letters have been sent and the internet has been updated to reflect the potential
change. Ms. Lieb advised that the online SURS estimator will be updated to reflect the changes
at the beginning of the business day on June 13, 2011.
A copy of GRS’ presentation entitled “Decision Making and Timing Costs-Money Purchase Plan
Factor Updates” is incorporated as a part of these Minutes as Exhibit 3. A copy of staff’s
memorandum entitled “Recommendation for the Implementation Date of Change to Money
Purchase Factors – Actuarial Experience Study” is incorporated as a part of these Minutes as
Exhibit 4. Copies of GRS’ memorandums entitled “4-Year Experience Analysis for the State
Universities Retirement System of Illinois; related proposed changes for the Plan,” and “Money
Purchase Annuity Conversion Factors” are incorporated as part of these Minutes as Exhibit 5 and
Exhibit 6.
Educational session began at 2:40 p.m.
ASSET/LIABILITY STUDY RECOMMENDATIONS
(Educational Session)
Ms. Karen Harris of Callan Associates provided an educational presentation on asset liability
studies. Mr. Mark Kline of Callan Associates remarked on the importance of the organization’s
asset allocation. Callan presented a recommended target mix for the fund. At the conclusion of
the presentation, Mr. Allen noted that the new policy targets are not significantly different than
the current targets and will not require major changes. Staff will provide a status update on the
asset allocation targets at the September meeting.
Educational session concluded at 3:30 p.m.
Trustee Hightman moved that:
• The strategic policy allocation targets be approved as presented, giving staff the
discretion to gradually implement those policy targets in coordination with the actual
transition of assets, in accordance with the Investment Policy.
Asset Class Prior Policy Target New Policy Target
U.S. Equity 32% 30%
Non-U.S. Equity 18 20
Global Equities 10 10
Fixed Income 18 19
TIPS 4 4
Real Estate 6 6
REITS 4 4

Private Equity 6 6
Opportunity Fund 2 1
Total 100% 100%
Motion seconded by Trustee Vogel and carried with all Trustees present voting in favor.
A copy of staff’s memorandum entitled “Status Update of the Asset/Liability Study” is
incorporated as a part of these Minutes as Exhibit 7. A copy of Callan’s presentation entitled
“Asset Allocation and Liability Study” is incorporated as a part of these Minutes as Exhibit 8.
PRIVATE EQUITY ASSET CLASS ANNUAL MANAGER REVIEWS
Mr. Kline outlined the current market conditions and the rationale for investing in private equity.
Mr. Doug Wesley provided a report on the private equity asset class. The current allocation is
approximately 7.8% of the portfolio. The portfolio is broadly diversified and has performed well
over the long term. The need for consideration of additional private equity commitments to
maintain vintage year diversification was also discussed.
Trustee Vogel moved that:
• Pantheon Ventures be retained as a private equity manager.
• Adams Street Partners be retained as a private equity manager.
Each motion was seconded by Trustee Beaulieu and carried with all Trustees present voting in
favor.
A copy of Callan’s presentation entitled “Private Equity Market Conditions” is incorporated as a
part of these Minutes as Exhibit 9. A copy of staff’s memorandum entitled “Executive Summary
of the Private Equity Asset Class” is incorporated as a part of these Minutes as Exhibit 10. A
copy of an article entitled “Private Equity – The Strategy Comes of Age” is incorporated as a part
of these Minutes as Exhibit 11.
OPPORTUNITY FUND ASSET CLASS ANNUAL MANAGER REVIEWS
Mr. Joseph Duncan reported on the infrastructure asset class which is a component of the
Opportunity Fund along with the Public-Private Investment Program investments. There are no
major organizational issues to report, and performance is not yet meaningful due to the short
history of the investments.
Ms. Kimberly Pollitt reported on the Public-Private Investment Program (PPIP) created by the
Department of Treasury in 2009 to help support mortgage-backed securities during the financial
crisis. It was noted that although the program is still young, the results have exceeded the
benchmarks since inception with a return over 31%.
A copy of staff’s memorandums entitled “Executive Summary of the Infrastructure Asset Class”
and “Executive Summary of Public-Private Investment Program (PPIP) Asset Class” are
incorporated as a part of these Minutes as Exhibit 12 and Exhibit 13. A copy of the United
States Department of the Treasury report entitled “Legacy Securities Public-Private Investment

Program: Program Update – Quarter Ended March 31, 2011” is incorporated as a part of these
Minutes as Exhibit 14.
APPROVAL OF THE SCRUTINIZED COMPANIES LIST AS DEFINED BY ILLINOIS
PUBLIC ACT 95-616 (IRAN LEGISLATION)
Ms. Marilyn Branson reported on the scrutinized companies list as defined by Illinois Public Act
95-616 noting that RiskMetrics Group (now known as MSCI ESG Research) assists in identifying
the “scrutinized companies” as defined by statute. In June of 2010, the Board adopted a list of 39
scrutinized companies which has now been modified to reflect 34 scrutinized companies. Each
investment manager is informed of the list and the law that governs it. Ms. Branson advised that
no divestment from direct holdings in scrutinized companies occurred this year since investment
in scrutinized companies amounted to less than 0.5% of the total fund.
At the conclusion of the report, Trustee Beaulieu moved that:
• The Board adopt the Iran Scrutinized Companies list updated as of May 2, 2011, as
presented.
Motion seconded by Trustee Vasquez and carried with all Trustees present voting in favor.
A copy of staff’s memorandum entitled “Iran Legislation Compliance” is incorporated as a part of
these Minutes as Exhibit 15.
REVIEW OF THE FISCAL YEAR 2012 INVESTMENT DEPARTMENT BUDGET
Trustee Giertz introduced the Investment Department Budget and identified the two main parts:
administrative expenses and investment management fees. Ms. Lou Ann Fillingham reported that
the investment budget is presented separately from the rest of SURS’ budget due to bylaw
requirements; however, the budget also will be incorporated into a comprehensive SURS budget.
The fiscal year 2012 administrative expenses cover the management and fiduciary oversight of
SURS investments, which are expected to increase from fiscal year 2011. The second portion of
the investment budget, investment management fees, is based on the level of assets under
management that can fluctuate as the market value of the assets change. The investment manager
fees are presented only for acceptance rather than approval, which is consistent with last year.
Trustee Vogel moved that:
• The Investment Department Administrative Expense Budget for Fiscal Year 2012 be
approved as presented.
The motion was seconded by Trustee Vasquez and carried with all Trustees present voting in
favor.
Trustee Vasquez moved that:
• The projected Investment Department Investment Management Fees for Fiscal Year 2012
be accepted as presented.

The motion was seconded by Trustee Miller and carried with all Trustees present voting in favor.
A copy of staff’s memorandum entitled “Investment Operations Budget – Fiscal Year 2012” is
incorporated as a part of these Minutes as Exhibit 16. Copies of the Investment Operations
Budget for administrative expenses, investment management fees and a statement of expenses are
each incorporated as a part of these Minutes as Exhibit 17, Exhibit 18, and Exhibit 19.
CONSENT TO ASSIGNMENT OF ING INVESTMENT
MANAGEMENT AGREEMENT
Mr. Allen reported on a merger between ING Clarion and CB Richard Ellis Group (CBRE) but
stated that all staff and functions of the Real Estate Investment Trust Securities (REITS) group
will remain the same. There are no concerns at this time and it is recommended to consent to the
assignment. A status report will be provided in the upcoming months.
Trustee Vogel moved that
• The consent to the assignment of the investment management agreements with ING
Clarion Real Estate Securities be approved, pending legal review, which will result from
the expected sale to CB Richard Ellis.
Motion seconded by Trustee Vasquez and carried with all Trustees present voting in favor.
A copy of staff’s memorandum entitled “ING Clarion Real Estate Securities Consent” is
incorporated as a part of these Minutes as Exhibit 20. A copy of Callan Associates memorandum
entitled “ING Clarion Real Estate Securities Sale to CB Richard Ellis Group, Inc.” is incorporated
as a part of these Minutes as Exhibit 21. Copies of letters from Clarion Real Estate Securities
dated February 15, 2011, and from ING Real Estate dated May 25, 2011, are each incorporated as
a part of these Minutes as Exhibit 22.
ANNUAL CONSULTANT EVALUATION OF SURS MANAGER DIVERSITY
PROGRAM
Mr. Ball provided an annual review of the Manager Diversity Program (MDP). The goal of the
review is to evaluate the process of monitoring the managers. Mr. Ball advised that SURS
employs a very adequate process to monitor said program.
A copy of a memorandum from Callan Associates is incorporated as a part of these Minutes as
Exhibit 23. A copy of a presentation from Callan Associates entitled “MDP Annual Review” is
incorporated as a part of these Minutes as Exhibit 24.
PRESENTATION OF THE SURS INVESTMENT MANAGER WATCH LIST
Mr. Tony Lee reported on the watch list noting that an update is provided to the Board biannually
with one in June and one in December. Seven additional firms have been added to the
June list for either performance or organizational concerns. One manager is on the watch list for
both performance and organizational concerns.

A copy of staff’s memorandum entitled “June 2011 Investment Manager Watch List” is
incorporated as a part of these Minutes as Exhibit 25.
DISCUSSION OF THE ROLES AND RESPONSIBILITIES OF THE TRANSITION
MANAGER RELATIONSHIP
(Educational Topic)
Educational session began at 4:30 p.m.
Mr. Ball introduced Mr. Bo Abesamis who leads Callan Associates’ efforts in the master trust and
securities lending research. Mr. Abesamis provided an educational session on transition
management.
Educational session concluded at 5:45 p.m.
At the conclusion of the presentation, Trustee Hightman moved that:
• The issuance of a request for proposals for transition management services be authorized,
on such criteria as determined by the Investment Staff and Investment Consultant, with
the goal of insuring there are no barriers to participation (of qualified firms with the
requisite qualifications).
Motion seconded by Trustee Vogel and carried with a roll call vote:
Trustee Beaulieu aye
Trustee Berns absent
Trustee Engstrom aye
Trustee Giertz nay
Trustee Hightman aye
Trustee Miller aye
Trustee Rogers aye
Trustee Vasquez aye
Trustee Vogel aye
Trustee Williams absent
A copy of staff’s memorandum entitled “Transition Management Search Update” is incorporated
as a part of these Minutes as Exhibit 26. A copy of a presentation from Callan Associates
entitled “Transition Management Discussion” is incorporated as a part of these Minutes as
Exhibit 27. A copy of a memorandum from Callan Associates entitled “Transition Management
Pool – Minimum Qualifications” is incorporated as a part of these Minutes as Exhibit 28. A
copy of a report from Callan Associates entitled “Transition Management – Beyond the Basics” is
incorporated as a part of these Minutes as Exhibit 29.
INFORMATIONAL ITEMS NOT REQUIRING COMMITTEE ACTION
The following items were provided for reference and are incorporated as a part of these Minutes:
1. Exhibit 30 - SURS Funding Status through April 2011.
2. Exhibit 31 - Letter from LM Capital Group dated April 19, 2011.

3. Exhibit 32 - Staff memorandum entitled “Compliance Update.”
4. Exhibit 33 - Investment Compliance Activities 2011-2012.
5. Exhibit 34 - Callan’s Fiscal Year 2011-2012 Work Plan Investment Committee
Schedule.
6. Exhibit 35 - Schedule of Formal Reviews for SURS Investment Managers: Defined
Benefit Plan & SMP.
7. Exhibit 36 - Staff memorandum entitled “Schedule of Investment Committee Meetings.”
There being no further business to come before the Committee, Trustee Vogel moved that the
meeting be adjourned. Motion seconded by Trustee Vasquez and carried.
WEM:ssr
Respectfully submitted,
Mr. William E. Mabe
Secretary, Board of Trustees