PERFORMANCE SYNOPSIS - MID-YEAR 2017 RETURNS

INDIVIDUAL ACCOUNT PROGRAM New Target-Date Funds will adjust investment risk as you age To improve the retirement security of par- ticipants in the Individual Account Pro- gram (IAP), the Oregon Investment Council and Oregon State Treasury are planning an important change in 2018 that aligns IAP with investment best practices. Specifical- ly, this change will better match IAP partic- ipants' individual investment mix with their individual risk profile. The IAP is separate from pension benefits, and is currently funded with 6 percent of workers' pay. Created by the 2003 Legisla- ture, IAP was designed to replace as much as 20 percent of workers' income after 30 years of employment. Importantly, IAP returns are not guaranteed and instead determined exclusively by financial market investment performance. The structural change planned for IAP in- cludes a switch from a "one-size-fits-all" format to a Target-Date Fund approach that increases savings growth potential for younger workers and lowers the risk of investment losses for older workers. Under the current structure, older public employees are exposed to the same level of investment risks as younger workers. With the new approach, the risk of invest- ment losses will decline gradually as work- ers approach and ultimately reach retire- ment age. This "glide path" feature is an investment best practice. It is important that PERS beneficiaries un- derstand this change and its accompany- ing rationale. In addition, the change will 100 90 80 70 Fixed Income Public Equity Growth Assets 60 50 40 30 OPERF 20 10 0 25 Age 30 Young Saver 35 40 45 50 55 Midlife Saver 60 65 70 75 New Retiree 80 Senior Retiree 85 be automatic - PERS members won't need to do a thing. As opposed to the current "one-size-fits- all" format, each IAP participant will be invested in a Target-Date Fund based on birth year. Investment of the IAP will con- tinue to be managed by Treasury, and this planned change will not impact members' pension benefits in any way. As fiduciaries, the Oregon Investment Council and State Treasury are committed to managing PERS members' retirement WHICH TARGET-DATE FUND WILL I BE IN? Born 1993 or after assets for strategic and sustainable long- term success. This new IAP structure matches investment best practice and is therefore consistent with that fiduciary obligation. You can find additional questions and an- swers online at www.Oregon.gov/IAP. For information about your personal balance, log-in to the IAP portal at IAP.Voya.com, which is managed by Voya, or call PERS Member Services at 888-320-7377. Born between 1988 and 1992 Born between 1983 and 1987 Born between 1978 and 1982 Born between 1973 and 1977 Born between 1968 and 1972 Born between 1963 and 1967 Born between 1958 and 1962 Born between 1953 and 1957 Born in 1952 or before IAP 2060 Target Date Fund IAP 2055 Target Date Fund IAP 2050 Target Date Fund IAP 2045 Target Date Fund IAP 2040 Target Date Fund IAP 2035 Target Date Fund IAP 2030 Target Date Fund IAP 2025 Target Date Fund IAP 2020 Target Date Fund Retirement Allocation Fund THREE THINGS TO KNOW ABOUT SECURITIES LITIGATION AND PROTECTING THE PENSION FUND Treasury can take legal action if bad actors reduce share value 2011 $473K 2012 $452K 2013 $1.4M 2014 $2.4M 2015 $3.8M 2016 $5.9M From 2011 to 2016, Treas- ury recouped $12.6 million through the securities litigation program. 1 Stock prices go up and down. Those changes are most often a simple function of market volatility, and based on factors such as expectations of economic growth and corporate profitability. However, in some in- stances, share prices can fall due to allegations of corpo- rate malfeasance among executives or board members. 2 The Oregon Public Employees Retirement Fund is a major investor across financial markets, and can be impacted. When deemed a strong case, Treasury works with the Oregon Attorney General to seek ac- countability when malfeasance results in losses, and re- store fund value via our securities litigation program. 3 Lawsuits, while often a pow- erful deterrent, are not Treas- ury's preferred approach as litigation can be lengthy and expen- sive. As an alternative path to im- proving corporate practices, Treas- ury engages proactively with com- panies and regulators via a compre- hensive "corporate governance" program. With the goal of improv- ing long-term shareholder value, these efforts reduce the need for, and frequency of, legal action.

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