PERFORMANCE SYNOPSIS - MID-YEAR 2017 RETURNS

PERFORMANCE SYNOPSIS - MID-YEAR 2017 RETURNS OREGON PUBLIC EMPLOYEES RETIREMENT FUND, 2002-17 75.000 70,000 65.000 60,000 55.000 50,000 45,000 40.000 35,000 30,000 25,000 HOW IS THE OPERF REGULAR ACCOUNT DIVERSIFIED? PUBLIC EQUITY (39.5% or $28.9 billion) Shares of public companies in the United States and abroad. OPPORTUNITY PORTFOLIO (2.1% or $1.5 billion) Tactical or episodic invest- ments designed to enhance returns and improve overall diversification. FIXED INCOME (21.8% or $15.9 billion) Income-generating investments such as corporate and government bonds. PRIVATE EQUITY (19.6% or $14.3 billion) Ownership interests in privately-held compa- nies, buyout funds and venture capital invest- ments. The Oregon Public Employees Retirement Fund (OPERF) is the trust fund that belongs to beneficiaries of Ore- gon's public employee retirement system, including teachers, public safety workers, and other state and local government employees. By law, OPERF assets must be invested with the goal of maximizing invest- ment returns on a risk-adjusted basis. The Oregon In- vestment Council (OIC) sets investment policy and over- sees overall fund performance, while Oregon State Treasury investment staff is responsible for all daily fund management activities. To increase the likelihood of successful, sustainable investment performance, OPERF capital is diversified across a wide array of asset classes, markets, and in- vestment strategies including public company stocks, real estate, bonds, private equity, and alternatives like timberland and agriculture. Depending on initial hire date, PERS-covered workers are impacted differently by OPERF performance. "Tier 1" workers (hired before 1996) have some investment guarantees no matter what happens in financial mar- kets, while most other PERS members earn "realized" or actual returns. Annual OPERF performance impacts the PERS system's "unfunded liability," an amount equal to the difference between the present value of OPERF's assets and the present value of all projected benefit payment obliga- tions. INVESTMENT RETURNS PUBLIC EMPLOYEES RETIREMENT FUND Regular Account Balance: $73.0 Billion (June 30, 2017) Globally diversified financial and real asset portfolio. Includes Individual Account Program (IAP) balances. 6-month +7.3% 1-year 5-year 10-year CASH RESERVES (0.1% or $29 million) Cash from employer contributions and investment distribu- tions, dividends and income held in the Oregon Short Term Fund to pay benefits or re-invest. REAL ESTATE (11.1% or $8.1 billon) Ownership interests in real property assets in the United States and abroad. ALTERNATIVES (5.9% or $4.3 billion) Non-correlated public market strategies and ownership inter- ests in real assets such as infrastructure, timberland, mining and agriculture. +11.9 +9.2% +5.4% VARIABLE ACCOUNT Balance: $593.5 Million (June 30, 2017) Closed to new deposits by legislative action. Invested in global 6-month stock market index fund. 1-year 5-year 10-year +11.6% +19.5% +11.1% +3.7% Q&A-Your retirement fund is not public money Q: Is the pension fund public money? A: No. OPERF is a trust fund and by law must be invested for the sole and exclusive benefit of its constituent owners (current and retired state and local government employees). OPERF assets also cannot le- gally be invested or diverted for any politi- cal purpose that might otherwise impair the fund's investment productivity and purpose. access to individual PERS members' ac- counts or records. In addition to the State Treasurer and PERS Director who both serve by position, the Governor appoints four volunteer OIC members. Q: Why is divestment a bad idea for trust funds? A: In order to better manage risk, the OIC has globally diversified OPERF by asset class, industry sector and economic geog- Q: What is the Oregon Investment Council raphy. Divestment would increase the (OIC)? A: The Council is made up of six people and sets investment policy for OPERF and other trust funds managed by the Oregon State Treasury. As fiduciaries, OIC members fo- cus on policies that support successful and sustainable, long-term investment perfor- mance. The OIC does not control nor have fund's risk by undercutting its diversifica- tion profile, making it more vulnerable to market volatility. In addition, trust funds cannot legally be used for political purpos- es which impair asset productivity or in- vestment returns. As fiduciaries, the OIC cannot make decisions with your money to achieve goals that do not benefit you or the portfolio. Q: Are OIC meetings open? A: Yes. Learn more about OIC and its meet- ings on our website at http:// www.oregon.gov/treasury/Divisions/ Investment/Pages/Oregon-Investment- Council-(OIC).aspx Q: Why do investment officers travel as part of their jobs? A: For proper investment oversight and monitoring, regular travel is an essential job requirement at Treasury. To critically evaluate the potential and on-going effica- cy of various investment strategies, Treas- ury staff meet with dozens of existing and prospective partners around the world each year. These "on the ground" meetings are often staff's only way to ensure the highest standards of investment perfor- mance, prudence and care.

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