Topics & Report

              Pilots landing aircraft always aim for the very beginning of the runway to achieve the greatest mar­gin of safety. Marksmen seek the bull’s eye. Carpenters want to hit the nail on the head because, well, hitting your thumb hurts.
When we invest your retirement trust fund, we aim for a very spe­cific target as well. It’s the area where returns are higher and risk is lower. The most recent analy­sis of our performance shows we are pretty good shots. What’s more, we are shooting at a mov­ing target.
Executive Director’s Message
Teachers’ Retirement System of the State of Illinois
Spring 2007topics &report
Retirement Security for Illinois Educators
Highlights
Page 2
• Retirement Steps
• Board Information
Page 3
• Defined Benefit and Defined Contribution Plans
Page 4
• Online Retirement Planning
Page 5
• Legislative Update
Page 6
• TRIP Insurance Information
Page 7
• Historic Newman School
Page 8
• Schedule an Appointment
Executive Director’s Message continued on page 6
Jon Bauman
Executive Director
High return, low risk
The risk return chart shown below is one of many performance tools provided by our external consul­tant. A bit drab by contemporary standards, its message sparkles. Funds such as TRS that land in the upper left-hand portion produced higher-than-median returns with less-than-median risk. In short, we earned more and took fewer chances.
Let’s review the chart. As we said, TRS is a high-return, low-risk fund. In comparison, fund “A” is a high-return, high-risk fund, fund “B” is a low-return, high-risk fund, and Fund “C” is a low-risk, low-return fund.
Among our peers in the desirable quadrant 1, TRS achieved the second lowest risk, while producing the fourth highest return.
The TRS portfolio is managed by a team comprised of the very best investment firms that are evalu­ated quarterly by our staff and an external consultant. Firms that underperform are placed on a watch list. If performance does not improve, they are terminated. The value of our outstanding sta­ble of firms is shown on the chart. If our managers had not outper­formed the market indices, our performance would have ranked just a tad below the median fund. Instead, the manager effect pro­pelled TRS to the much-sought “higher return” quadrant.
1
3.512.010.59.07.56.04.5Return (%)1.5 3.0 4.5 6.0 7.5 9.0 10.5 12.0 13.5TRS ActualABC1 234TRS before manager effectHigh returnLow riskHigh returnHigh riskLow returnLow riskLow returnHigh riskRisk (Standard Deviation %)
Finding the right spot