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SOLICITATION FOR PROPOSALS FOR
INVESTMENT CONSULTING SERVICES
TEACHERS’ RETIREMENT SYSTEM OF LOUISIANA
General Investment Consultant
The Teachers’ Retirement System of Louisiana (TRSL) is soliciting proposals for an investment consultant to provide
general investment consulting services for a defined benefit and/or defined contribution program. TRSL manages
an $11.5 billion defined benefit investment portfolio and approximately $1 billion defined contribution plan offered to
higher education personnel.
The scope of the requested services will include:
Monthly review and performance evaluation of investment managers (internal and external) as requested by
the Board
Attending monthly Investment Subcommittee of the Board meetings held in Baton Rouge, Louisiana
Asset allocation studies and recommendations as requested by the Board
Investment manager searches as requested by the Board
Advising the Board of Trustees (“Board”) on investment guidelines and policies, including the developments
of new guidelines and policies and amendments to existing ones
Working alongside the director, chief investment officer, and investment staff
This solicitation requires information to be submitted in response to certain minimum qualifications. These are at
Exhibit A and are divided into three (3) sections. Section I sets the Minimum Qualifications that all proposing firms
must meet. These requirements must be satisfied to qualify for this Solicitation for Proposals. Section II
contains the Minimum Services required by TRSL. Section III is a Questionnaire that will be used to evaluate the
consulting services provided by your firm. Proposals should follow the format provided in this solicitation. Relevant
information beyond what is requested may be submitted for consideration and should be placed in an appendix.
All proposing firms must state their fee for consulting services in Exhibit B. The schedule of events for this SFP is at
Exhibit C. A brief summary of TRSL’s structure is included at Exhibit D. The current TRSL Investment Policy is
provided at Exhibit E. Please note the deadline for acceptance of proposals is 4:30 p.m. (Central Standard Time),
September 17, 2010, at the TRSL office located at 8401 United Plaza Boulevard, Third Floor, Baton Rouge,
Louisiana 70809-7017. There will be no exceptions to this deadline. Proposals must be submitted as one signed
original and four (4) copies. Facsimile transmissions are not acceptable. Proposals are to be mailed to: Philip
Griffith, Chief Investment Officer, at the address shown for inquiries. Finalists will be interviewed by the Board of
Trustees in Baton Rouge on November 8, 2010. The Board may elect to conduct on-site evaluations of finalists in
addition to the formal interview. The consultant will be selected and notified no later than December 31, 2010. The
contract will be effective January, 2011, through December 31, 2015.
DURING THIS SEARCH FOR INVESTMENT CONSULTING SERVICES, August 2, 2010 THROUGH
December 31, 2010, CONTACT BY A PROPOSER CONCERNING THIS SEARCH WITH TRSL BOARD IS
PROHIBITED. DOING SO COULD CAUSE YOUR FIRM TO BE ELIMINATED FROM THE SEARCH PROCESS.
THE PROPOSING FIRM MUST ALSO ADHERE TO THE LOUISIANA CODE OF GOVERNMENTAL ETHICS. A
COMPLETE TEXT OF THE LOUISIANA CODE OF GOVERNMENTAL ETHICS CAN BE REVIEWED AT
http://www.ethics.state.la.us/EthicsPublicationSearch.aspx?portal=Laws
If selected, the firm must execute the “Contract for Investment Consulting Services,” attached hereto as Exhibit F.
Your application to this solicitation for proposal for investment management services for TRSL indicates your
agreement to execute this contract as written.
If selected, the firm must report any conflicts of interest as required by R.S. 11:269 A and B, which is available at
legis.state.la.us.
All inquiries regarding this solicitation should be directed to:
Mr. Philip Griffith, Chief Investment Officer
Teachers’ Retirement System of Louisiana
8401 United Plaza Boulevard
Third Floor, Suite 305
Baton Rouge, Louisiana 70809-7017
Phone: (225) 925-6467 --- Voice Mail: (225) 925-6470
Email: Philip.griffith@trsl.org
Teachers’ Retirement System of Louisiana reserves the right to reject any and all proposals.
EXHIBIT A: GENERAL INVESTMENT CONSULTING SERVICES
I. MINIMUM QUALIFICATIONS.
The proposing firm must meet the following minimum qualification. If you do not meet all of these
requirements, please do not submit a proposal. Please attach a cover letter to the questionnaire
in Exhibit A stating how your firm meets these minimum qualifications.
1. The investment consulting firm must be an SEC registered investment advisor under the
Investment Company Act of 1940 and in good standing.
2. The firm, and its consultant service unit, must have been in business at least ten (10) years as of
the filing date for this proposal. The firm must offer a team approach to providing investment
consulting services. At least two (2) professional consultants must be assigned to support TRSL,
with specialists available as required. The firm must agree that once assigned to TRSL, these
individuals will not be replaced on the account without prior written consent by TRSL. Attendance
by at least one (1) of these individuals is mandatory at monthly meetings of the Investment
Subcommittee of the Board.
a. The lead consultant must have a minimum of ten (10) years experience as an investment
consultant, the last three (3) of which must be with the responding firm.
b. The backup consultant must have a minimum of five (5) years experience as an
investment consultant, the last one (1) of which must be with the responding firm.
3. Current clients receiving similar consulting services must include at least three (3) defined benefit
public retirement systems, one of which has investment assets greater than $5 billion. Total assets
for all consulting clients must exceed $25.0 billion.
4. The firm must be able to maintain a data processing interface with TRSL’s custodian. This can be
done by tape, disk, on-line capability, or other electronic data means.
5. The proposing firm must agree to enter into good faith fee negotiations, as applicable.
6. The proposing firm must agree to accept fiduciary responsibility and to adhere to the Louisiana
Code of Governmental Ethics, see Exhibit F.
7. The firm must be able to provide the minimum services required by TRSL as stated in Section II.
8. The firm must agree to disclose all conflicts of interest, all sources of revenue, and all affiliations as
related to this assignment.
9. The firm shall provide evidence of professional liability insurance with contractual liability coverage
covering the firm’s liability arising from errors and omissions made directly or indirectly during the
duration of the contract.
II. MINIMUM SERVICES REQUIRED BY TRSL.
The investment consultant selected will be required to provide, at a minimum, the services listed in this
section. Such services apply to all asset classes and management styles.
1. Provide monthly performance measurement, risk management, and evaluation reports, both quantitative
and qualitative. The reports will be customized to meet TRSL’s needs and prepared for all TRSL managers.
Timeliness of reporting is crucial.
2. Identify and evaluate new investment management firms, including emerging managers.
3. Provide comparisons of fund characteristics and performance of the portfolios held by TRSL to those held
by other large institutional investors and similar public retirement funds as maintained in consulting firm’s
database at least quarterly.
4. Provide comparison of TRSL’s and individual manager’s historical performance to the appropriate
composites of other similarly managed portfolios at least quarterly.
5. Provide asset allocation studies and continuing evaluation of TRSL’s asset allocation strategy, both at the
total fund level and within asset classes.
6. Provide liability studies.
7. Help construct and provide continuing evaluation of investment policy with emphasis on developing
effective written investment guidelines, productive enhancement strategies, and efficient trading practices.
8. Assist in searches for public and private market investment managers, custodial firms, and providers of
other financial services, including:
a. Establish minimum qualification criteria for manager searches;
b. Prepare draft Solicitation for Proposal (SFP) document;
c. Screen all SFP responses for technical compliance with required performance parameters, style
validity, years in business, CFA Institute compliance issues, size of assets, etc.;
d. Contact references to verify the firm’s capabilities and performance;
e. Evaluate each proposal on a quantitative and qualitative basis;
f. Participate in all screening activities instituted by staff or Board;
g. Actively participate in the interview process; and
h. Participate in fee and contract negotiations.
9. Monitor and audit the performance of TRSL’s custodian.
10. Provide industry and legislative studies such as comparative investment costs, management fees, etc.
11. Provide client educational services, including tailored workshops on TRSL’s premises, as required by the
Board.
III. QUESTIONNAIRE
Responses to the following questions should be direct and supported by detailed data and examples, where
appropriate. Responses to this questionnaire should refer to the firm’s ability to provide general investment
consulting services.
Organization and Background
1. Provide the firm’s name (and the name under which it does business, if different), including your mailing and
physical addresses and the name, telephone, facsimile number and e-mail addresses of the person within
the firm who will serve as the primary contact for this selection process.
2. Briefly, describe your firm and its history (include the year founded).
3. Provide an organizational chart for the firm.
4. Does the firm engage in other business activities, besides consulting? If so, list the entire range of services
your firm provides.
a. Indicate which services are the firm’s specialties or areas of expertise.
b. Provide the percentage of revenue derived from investment consulting.
c. Are there any areas of potential conflict of interest between such activities and your consulting
function? If so, please identify these activities and their potential conflict, and explain the
safeguards implemented by the firm to preclude the occurrence of conflicts.
d. Disclose all third party business relationships that exist with portfolio managers, brokers and
service providers (universe comparisons, etc.).
5. List key personnel in the firm with brief biographies for each. Specify those professionals who would be
active in providing services to TRSL under the proposed contract.
6. Provide any significant developments in your firm such as changes in ownership, restructuring, personnel
reorganization, terminations, or investigations in the past five (5) years. Do you anticipate significant future
changes in your firm?
7. What distinguishes your firm in the investment consulting industry? Please note any significant
contributions your firm has made in developing and defining “best practices” in the defined benefit and/or
defined contribution public pension fund consulting field.
8. Does the firm’s consultants have additional responsibilities (such as marketing, etc.) that are outside their
primary consulting duties? If so, specify these responsibilities and the approximate amount of time
dedicated to each activity.
9. Does the firm make periodic recommendations to the Board (i.e., annually, every two years, etc.) with
respect to current investments and future investment issues and decisions? To what extent does the firm
allocate time to “forward thinking” to keep clients ahead of the curve on investment issues?
10. Does the firm typically initiate discussion on emerging issues or do you respond to issues raised by clients?
Can you describe previous recommendations made by your firm to other clients and address why the
recommendation was made, the circumstances leading to the recommendation, and the relative success of
the action taken by the client?
11. State the number of clients, their total assets, and assets by client type for the following June 30th dates:
Number of Total Public Corporate Endowment
Year Accounts Assets Funds Funds Funds Other
2010 $ $ $ $ $
2009 $ $ $ $ $
2008 $ $ $ $ $
2007 $ $ $ $ $
2006 $ $ $ $ $
12. Has your firm lost any clients, or portion of a clients’ business, in the last five years? If so, please provide
the names and contact information of the four (4) most recent such clients.
13. How many asset allocation studies has your firm done in the last three years? When was the last asset
allocation study completed? If you were conducting an asset allocation study today what return and risk
assumptions would you use?
14. Referring to the asset allocation information provided in Exhibit D, comment on the current structure of
TRSL’s total portfolio.
15. How many liability studies has your firm done in the last three (3) years? When was the last liability study
completed? If you were conducting a liability study today, what are the primary areas that should be
addressed?
16. Describe the primary role that equity (domestic and international), fixed income (domestic,
international/global, investment grade/high yield), private market investments (private equity, real assets,
and debt related) play in the total portfolio.
17. Please describe your qualifications and expertise in monitoring private market assets (e.g. real assets, debt
related assets, and private equity).
18. Please describe your qualifications and expertise in selecting, implementing and monitoring hedge funds,
including fund of funds managers.
19. Provide a sample report (monthly, quarterly, and/or annually) that could be used for TRSL’s account.
20. How would you describe your relationship with your clients? Is this relationship different for public funds
versus other funds (corporate, endowment, etc.)? Please specifically address the relationship in terms of
decision making and reaching a consensus with staff when differences of opinion exist (i.e., how is the staff
and/or Board involved)?
21. In addition to the specific information requested on fees in Exhibit B, please address any philosophical or
practical preferences you have for the compensation structure and working relationship with TRSL.
22. Describe the working relationship that you would want with TRSL’s outside actuarial firm.
23. Describe your firm’s ability to assist TRSL with a defined contribution plan (e.g. higher education optional
retirement plan).
a. Does your firm have any defined contribution clients? If so, describe the scope of services
including:
i. Investment structure design
ii. Creation and maintenance of investment policy statement
iii. Ongoing performance measurement and reporting
iv. Investment manager searches
v. Specialized projects
b. Does your firm use the same consultants for defined contribution and defined benefit services?
c. Does your firm offer a bundled defined contribution and defined benefit fee structure? If so,
describe.
24. Attach your firm’s current Form ADV Part I and II
25. Attach your firm’s current audited Annual Financial Report
Standards of Conduct
1. Does your firm have a written code of conduct or set of standards for professional behavior? If yes, explain.
Has your firm adopted the CFA Institute’s Code of Ethics and Standards of Professional Conduct?
2. How is your code of conduct/ethics monitored and enforced?
3. How are consultant’s recommendations to clients reviewed and monitored by your firm? To what degree
does your firm adhere to a level of consistency in consultant recommendations?
4. Has your organization, an officer, or principal been involved in actual, pending, or threatened litigation or
administrative, regulatory or similar investigation proceedings relating to your investment consulting
assignments in the past five (5) years. If so, provide an explanation and indicate the current status or
disposition including censures or reprimands received from the regulatory agency.
5. Has your firm ever been required to pay damages or penalties or trade or relinquish something of value
under any of its existing or past contracts as it relates to services similar to those contemplated by this
SFP? If so, describe the situation.
6. Has your firm reviewed the Louisiana Code of Governmental Ethics (“Ethics Code”), is your firm in
compliance, and will your firm prospectively abide by the Ethics Code. If not, please explain.
Conflicts of Interest
1. How does your firm identify and manage conflicts of interest?
2. Disclose all potential conflicts of interest issues your firm would have in servicing TRSL including
relationships with custodians, investment managers, brokerage firms, staff, board members, elected
officials, etc.
3. Are there any circumstances under which your firm, or any other individual in your firm, receives
compensation, finder’s fees and/or any other benefit from investment managers or third parties? If yes,
describe in detail.
4. Does your firm hold or sponsor money manager or client conferences? If so, describe the fee arrangement
with money managers or other sponsors to attend or present at the conference(s).
5. Does your firm have any formal or informal solicitor agreement, or any like agreement (finders fee, etc.),
with an individual or firm that has or will result in their receipt of compensation, monetary or otherwise,
resulting from activities that culminate in your selection by the TRSL Board to provide investment consulting
services?
6. Does your firm ever receive fees or other forms of compensation from money managers, general partners
and/or others affiliated with investment firms if you place client’s money with them? If so, identify the party
and the nature of the agreement/relationship.
Personnel
1. How many investment consultants does your firm have and what is the client/consultant ratio?
2. Describe the firm’s other staff including support staff, analysts, researchers, and other professionals.
3. Identify the individuals (include detailed biographies) that will be assigned as the lead and back-up
consultant to the TRSL account.
a. Provide contact information for each consultant that will be assigned to TRSL with a minimum of
the following: full name, business address, business phone, and e-mail address.
b. The biography should indicate what year each consultant joined your firm and describe his or her
position, current responsibilities, areas of expertise, years and type of experience, education,
professional designations and memberships, and relevant publications and presentations.
c. Provide a list of their current clients.
4. State whether the individuals that will be assigned to TRSL have any responsibilities other than providing
consulting services and specify such responsibilities.
5. Give a brief description of the firm’s compensation arrangements for consulting staff.
6. Describe the firm’s preference for client communications. For example, does the firm prefer to have all client
communication flow through one contact person?
Research
1. Describe the internal structure and organization of your research department. If no separate department
exists, describe how this function is performed.
2. Describe the manner in which external resources and sources of information are used in the research
process. How does your firm integrate internal and external research?
3. Describe your firm’s public defined benefit and/or defined contribution research and investment research
provided to clients?
4. Describe your firm’s ability to provide customized analytical tools to your clients. Describe specific features.
5. Describe your firm’s process for monitoring industry and market trends affecting investment funds and
public (defined benefit and defined contribution) plans.
Investment Policies
1. Describe your approach to the analysis of applicable legal and practical parameters/restrictions under which
TRSL operates (Louisiana State statutes, pension liquidity needs, etc.).
2. Describe your approach to investment policy construction, including investment objectives and risk control
policies.
3. Describe your capabilities in the development of appropriate shareholder responsibility and proxy voting
policies and procedures in consultation with the TRSL Board, staff, and counsel.
4. Describe the process for maintaining a continuous review of investment policies.
Asset Allocation and Related Issues
1. Discuss the theory and methodology of the asset allocation models your firm employs.
a. What are the advantages and disadvantages of your model?
b. How do you develop asset class assumptions?
c. Has your model been revised in the last three (3) years? If so, what was the change?
d. What changes to the model do you expect to make over the next three (3) years?
2. Explain your firm’s philosophy and biases regarding:
a. Active versus passive management
b. Market capitalization
c. Style and style drift
d. Internal versus external management
3. Describe your firm’s capabilities and experience in assisting internal management.
4. Describe your firm’s capabilities and experience in alternative (i.e. private markets) investment arena.
a. List the factors you would consider in recommending an alternative investment.
b. Describe your firm’s due diligence process for assessing the risk and performance characteristics
of alternative investments.
c. Describe your firm’s ability to monitor alternative investment performance (i.e. vintage year universe
comparisons).
d. Describe the use of alternative investments in current client portfolios.
5. Describe your firm’s methodology for identifying and evaluating investment opportunities, and describe your
policy of recommending asset allocation changes in response to changes in the investment environment.
Describe the added value associated with these recommendations.
Investment Manager Searches
1. Do you maintain a proprietary database of managers; use a third-party database; or both?
a. How many managers/products are contained in the database(s) that you use?
i. Public equities
ii. Public fixed income
iii. Private equity
iv. Private fixed income and debt related (i.e. mezzanine, distressed debt, etc.)
v. Real Assets
vi. Hedge funds
vii. Other
b. How would the database(s) be available to TRSL staff?
c. If you use a third-party database, list the vendor(s).
2. For firms that have a proprietary database(s):
a. Do you charge managers direct or indirect fee to be included in the database(s)?
b. Do you sell access to third-parties?
c. What advantages does your proprietary database(s) have over your competitors?
d. How often are managers in your database reviewed, and under what circumstances are managers
added to and/or deleted from the database(s)?
e. Describe how your firm gathers, verifies, updates, and maintains the data collected on the manager
database(s).
3. Describe your firm’s process for evaluation and selection of investment managers including your process for
meeting and conducting on-site visits.
4. Describe how your firm’s process for evaluation and selection of investment managers adds value beyond
the mere provision of raw data. Has your firm added alpha/excess returns? If so, please describe.
Performance Evaluation and Reporting
1. Does your firm have the capability of using rates of return calculated by TRSL’s custodian bank in your
performance evaluation reports?
2. Can your firm provide custom benchmarks, including investment style benchmarks, and peer universe
rankings (i.e. public defined benefit pension funds)?
3. Discuss the portfolio analytics your firm is capable of providing?
a. Do you have international analytic capabilities?
i. List capabilities
b. Do you have alternative (private market) asset analytic capabilities?
i. List capabilities
4. Describe your firm’s capabilities in the development of risk/return characteristics of the asset mix as a whole
and of each asset class category and manager style.
5. What risk monitoring capabilities does your firm provide (i.e. Value at Risk).
6. What investment policy compliance monitoring capabilities does your firm provide?
7. What factors do you consider to be critical in reporting performance?
8. Do you have the ability to customize reports for clients?
9. What period of time is required to prepare reports after the end of the each month?
Technology
1. What technology capabilities beyond any internal investment manager database(s) do your firm have that
added value to the investment consulting and monitoring process?
Insurance and Liability
1. What limitation on liability, if any, do you impose through your contract?
2. Describe the levels of coverage for error and omissions insurance and any fiduciary or professional liability
insurance your firm carries?
3. Is coverage on a per client basis, or is the coverage applied to the firm as a whole?
4. List your insurance carrier(s)
5. Describe your disaster recovery plan and facilities.
6. Describe your firm’s procedures in the event that key personnel, particularly those assigned to TRSL,
should leave the firm or become incapacitated.
Previous Clients and References
1. Provide a representative list of clients for which you provide consulting services. Include your ten largest
clients based on asset size and the three (3) defined benefit public retirement system clients. TRSL will use
this list to select at least three (3) references.
2. Provide a list of clients who have terminated your consulting relationship during the past three (3) years and
their reason(s) for doing so, if known. Include the entity’s name, a contact person with title, and telephone
number.
EXHIBIT B: FEE SCHEDULE
TRSL is seeking assistance with two primary responsibilities in this SFP. The first is a general investment
consultant to its defined benefit investment portfolio. The second is a general investment consultant to its
Optional Retirement Plan (“ORP”) which is a defined contribution program available to higher education
personnel. TRSL is accepting proposals for the Defined Benefit service only, the Defined Contribution service
only, and a combined Defined Benefit – Defined Contribution service.
Please refer to Exhibit D, TRSL System Summary for assistance in determining your fee. State your fee for the
services required for a defined benefit only, a defined contribution only, and/or a combined defined benefit -
defined contribution fee proposal.
Defined Benefit Only Defined Contribution Only Combined DB - DC*
Year One $ $ $
Year Two $ $ $
Year Three $ $ $
Year Four $ $ $
Year Five $ $ $
*Please allocate the Combined DB - DC fee proposal between defined benefit and defined contribution. TRSL
has separate funding sources for each which requires precise cost allocations.
EXHIBIT C
SCHEDULE OF EVENTS
TEACHERS' RETIREMENT SYSTEM OF LOUISIANA
CONSULTANT SEARCH
August 03, 2010 Board review and approval of SFP
August 04, 2010 Advertise notice – Pensions & Investments, The Times (Shreveport),
The Advocate (Baton Rouge), Times Picayune (New Orleans) and TRSL’s
Website
September 09, 2010 Appointment of subcommittee to review responses
September 17, 2010 Deadline to receive proposals
October 04, 2010 Subcommittee reviews proposals and recommends finalist(s) to be
interviewed
October, 2010 On-site visits to candidates’ offices (as needed)
November 08, 2010 Interview finalist(s) and recommend successful candidate firm(s)
November 09, 2010 Board approval of and notification to the successful candidate
firm
NLT – December 31, 2010 Contractual agreement
The intended schedule for the SFP is provided above. The Board reserves the right to modify the
schedule if it is deemed to be in the interest of the Board or participants. The Board also reserves the
right to forgo finalist interviews and select a vendor or vendors based solely on the SFP responses.
EXHIBIT D
SYSTEM SUMMARY
Teachers’ Retirement System of Louisiana (TRSL) is a governmental retirement plan qualified under the provisions
of the Internal Revenue Code, serving approximately 81,347 active members and 57,512 retirees and annuitants.
TRSL operates under the direction of a 16-member Board of Trustees and has a staff of 173, including an in-house
investment department.
The system has assets of approximately $11.5 billion. The current asset allocation as of June 30, 2010:
Public Markets
Equity: Domestic 30.4%
International 26.6%……………..57.0%
Fixed: Domestic 8.5%
Global 7.0%…………….15.5%
Debt Related* 1.9%
Real Assets* 3.0%...................04.8%
Private Markets (Alternative)
Private Equity 13.2%
Real Assets 3.7%
Debt Related 3.9%
Hedge Fund 0.0%...................20.8%
Cash and Other 01.9%
Total 100.0%
*Public Markets Debt Related and Real Assets managed by TRSL’s Private Markets Manager.
All portfolios are managed externally unless otherwise identified. The number of portfolios by asset category is:
Domestic Equity:
Large Cap Value 1
Large Cap Growth 1
Large Cap Core 3
Small Mid Cap Core 1
Mid Cap Growth 1
Mid Cap Value 1
Small Cap Growth 1
Small Cap Value 1
Equity Index Large Cap 3
International Equity:
Large Cap Growth 2
Large Cap Value 2
Small Cap 2
Equity Index MSCI EAFE 1
Terror-Free Index (Internal) 1
Domestic Fixed Income:
Investment-Grade 1
Mortgage-Backed 1
Global Fixed Income 2
Private Markets 1
Securities Lending 1
Total 27
Potential Manager Searches:
2011 - Domestic Investment Grade
- Global Fixed Income
2012 - Large Cap Domestic Equity (Core)
2013 - Large Cap International Equity (Growth)
- Large Cap Domestic Equity (Value)
- Small Cap Domestic Equity (Value)
- Large Cap Domestic Equity (Growth)
- High Yield (Debt Related)
2014 - Mid Cap Domestic Equity (Growth)
- Small Cap Domestic Equity (Growth)
2015 - Large Cap International Equity (Value)
- Small Cap International Equity
- Large Cap International Equity (Core – Index)
- SMID Core Domestic Equity
- Mid Cap Domestic Equity (Value)
System custodian is: BNY Mellon Bank
The TRSL annual financial report as of June 30, 2009 is available at www.trsl.org.
EXHIBIT E
INTRODUCTION
This document establishes the investment policy for Teachers' Retirement System of Louisiana (System) for the
management of the assets held for the benefit of participants and beneficiaries of the System.
The objective of this document is to establish and communicate the long-term goals and objectives of the System to
investment managers and other interested parties. In addition, this document formalizes the responsibilities and
guidelines for investment managers and defines the performance measurement and evaluation process.
The Board of Trustees (Board) is charged with the responsibility of investing the assets of the System in a prudent
manner such that the safety of the principal is preserved while providing reasonable returns and, in general,
avoiding speculative investments.
The Board, in carrying out these duties, shall adhere to the Prudent-Man Rule, which means that a fiduciary shall
exercise the judgment and care under the circumstances, then prevailing, which an institutional investor of ordinary
prudence, discretion, and intelligence exercises in the management of large investments entrusted to it, not in
regard to speculation but in regard to the permanent disposition of funds considering probable safety of capital as
well as probable income.
The Board's policies provide for the use of all suitable and prudent avenues of investment authorized under the
Louisiana statutes to maintain a high quality, diversified portfolio of investments, the prospects of which are
continually reviewed and assessed in various economic climates. To assure this, the Board shall retain investment
managers who possess skill and specialized research expertise with respect to investing the assets of the System.
This policy serves, in part, as investment instructions to the managers.
The Board has arrived at the following investment policy through careful study of the returns and risks associated
with various investment strategies in relation to the current and projected liabilities of the System.
LOUISIANA CODE OF GOVERNMENTAL ETHICS (Rev. 9/6/02)
The Teachers' Retirement System of Louisiana (TRSL) requires all investment managers, brokers, limited
partnerships, and service vendors to adhere to the Louisiana Code of Governmental Ethics (Code). This Code will
be included in all Solicitation for Proposals (SFP) and will be referenced in all contracts executed by TRSL. Detailed
information on the Code, including other provisions may be obtained by contacting the Louisiana Ethics Commission
at 1-800-842-6630 or by going to their web site: www.ethics.state.la.us/pub/gifts.htm
(Rev. 2/5/02)
STATEMENT OF SYSTEM OBJECTIVES
Financial objectives of the Teachers' Retirement System of Louisiana have been established in conjunction with a
comprehensive review of the current and projected financial requirements of the System.
The Board's investment objectives are to:
(1) Protect the System's assets in real terms such that assets are preserved to provide benefits to
participants and their beneficiaries. Real terms shall be a measurement in current dollars that
discounts inflationary increases in value as measured by the Consumer Price Index (CPI-U)
seasonally adjusted.
(2) Achieve investment returns sufficient to meet the actuarial assumption necessary to improve the
future soundness of the System. This is defined as an investment return (current income plus
realized and nonrealized gains and losses) that is greater than the actuarial assumption.
(3) Maximize the total rate of return on investments within prudent parameters of risk for a retirement
system of similar size and type.
While there can be no complete assurance that these objectives will be realized, this investment policy is believed to
provide a sound basis to successfully achieve System objectives.
The desired investment objective is a long-term compound rate of return on the System's assets of 3.9% above the
CPI-U seasonally adjusted or the actuarial rate (currently 8.25%), which ever is higher. The Board realizes that
market performance varies and that this return objective may not be meaningful during some periods. Accordingly,
relative performance benchmarks for investment managers are set forth in the Control Procedures section of this
document.
(Revised 02/08/08)
ASSET ALLOCATION GUIDELINES
It shall be the policy of the System to invest the assets in accordance with the minimum and maximum range for each asset
category as stated below:
Asset Category Minimum Target Maximum
Domestic Stock***
Large Cap 5% 15% 25%
Small/Mid Cap 5 15 25%
International Stock 10 29 40
Total Stock* 20 59 65
U.S. Bonds 4 6 10
Global Bonds 3 6 9
Total Fixed Income 7 12 19
Debt Related 0 8 12
Core/Opportunistic Real Assets 0 9 13
Private Equity 5 10 15
Hedge Funds - Multi-Strategy 0 1 3
Options/Derivatives 0
Total Alternative (Illiquid)** 9 28 43
Cash and Equivalents 0 1 5
Total n/a 100% n/a
* A 10% allocation to indexed equities is mandated by the Legislature (La.R.S. 11:267). This legislation also
sets the maximum allocation to equity at 65%.
**To determine the asset allocation for this asset category, only the actual amount invested, is applicable.
However, in no case shall total alternative investments exceed the maximum allowed at the time the investment
is made without Board approval.
Note: This asset allocation was adopted May 2008. It is anticipated that it will take 18 to 24 months to implement
the new policy. In the interim, we may be temporarily outside our policy ranges.
The asset allocation ranges established by this investment policy represent a long-term perspective. As such, rapid
unanticipated market shifts may cause the asset mix to fall outside the policy range. Any divergence from this
allocation should be of a short-term nature. The director is responsible for ensuring that any such divergence is as
brief as possible.
Divergence in the portfolio cash reserves is of particular concern. It is the Board’s policy that equity manager
portfolios be fully invested and that cash reserves, over time, should not exceed their 5% target. Managers have the
discretion to deviate from the cash reserve target but will be accountable to the Board for justifying such action.
Managers will be evaluated on the performance of the total portfolio, including cash.
It is expected that all assets of the System will be managed in accordance with the Louisiana Revised Statutes. It is
the policy of the Board, provided all investment factors are equal and within the limits of prudence, that investments
in Louisiana securities are encouraged.
In accordance with the Louisiana Revised Statutes, the System will invest at least 10% of total stock in equity
indexing, not to exceed 65%. The index portfolio(s) shall be invested in indices that seek either to replicate or to
enhance a particular index. The index portfolio(s) may be invested in a variety of equity capitalization ranges and
could be invested in either domestic or international equity.
In addition to direct investment in individual securities, mutual funds and pooled asset portfolios are acceptable
investment vehicles.
Rebalancing
TRSL’s Chief Investment Officer will review the asset allocation monthly to determine if each asset class is within the
range established by Board Policy. Any out-of-range condition and rebalancing recommendation will be reported to
the Board at the Board Investment Committee meeting. The Chief Investment Officer will consider market conditions
and transaction costs, as well as any other relevant factors, when determining the most cost-effective process to
rebalance the portfolio. The Chief Investment Officer will direct staff and investment managers to transfer funds to
rebalance the asset allocation, as necessary.
PORTFOLIO GUIDELINES
Fixed Income Guidelines for Domestic Managers (Rev. 11/06)
Investments in fixed income securities shall be high quality marketable securities meeting one or more of the
following criteria:
(1) All U.S. Treasury, federal agencies, and U.S. Government guaranteed obligations.
(2) Corporate bonds, debentures, notes, asset-backed securities, and equipment trust certificates or
any debt instrument included in the Lehman Brothers Aggregate Bond Index rated Baa3 or BBB- or
higher (investment grade) by Moody's, Standard & Poor's, or Fitch (includes split-rated bonds).
(3) Mortgage securities portfolios will be limited to: pass-throughs, collateralized mortgage obligations,
adjustable rate mortgages, commercial mortgage-backed securities, and other mortgage securities
deemed prudent by the investment manager. The use of interest-only strips and principal-only
strips may not exceed 10% of the portfolio.
(4) Municipal bonds rated Baa3 or BBB- or higher may not exceed 20% of the market value of the
bond portfolio.
(5) Positions in any one issuer of corporate or municipal securities are not to exceed 5% of the market
value of the bond portfolio, measured at the time of purchase. With regards to structured, pooled,
or commingled vehicles, the 5% diversification test will look through to the underlying or referenced
assets individually.
(6) Holdings of individual issues are to be of sufficient size to accommodate easy liquidation.
(7) Private placements (including Rule 144As) may be held, provided that holdings do not exceed 25%
of the market value of the bond portfolio. High-yield portfolios and Mezzanine Limited Partnerships
are excluded from this restriction.
(8) Debt obligations of foreign governments, corporations, and supranationals issued outside of the
U.S. (Eurobonds and non-U.S. dollar bonds) may be held by investment managers.
(9) High yield portfolios are to be invested in debt securities (including convertibles) rated from Ba1 to
Caa (Moody’s rating) or BB+ to CCC (Standard & Poor’s rating) and in unrated securities
determined to be of comparable quality by the manager. Unrated securities and securities rated
Caa, CCC, or below shall not exceed 20% of the market value of the portfolio.
(11) High yield portfolios are subject to the criteria in paragraphs (5) and (6) with bond rating modified
according to paragraph (9).
(12) High yield fixed income portfolios may invest in debt obligations of foreign governments,
corporations and supernationals and are dollar denominated (Yankee) securities. Aggregate
weighting of those securities shall be limited to 10% o the market value of the portfolio.
(13) Investment grade fixed income (core) portfolios are to be invested in fixed income securities
pursuant to paragraphs (1), (2), (3), (4), (5) and (6) above, except that all securities, at the time
of purchase, shall be investment grade. If a security is downgraded below investment grade,
the investment manager will work to seek the best resolution over time to such downgrade.
(14) Investment grade fixed income core portfolios shall not invest in mortgage–backed inverse
floaters, interest-only, principal-only strips or highly volatile less liquid tranches.
(15) Investment grade fixed income core portfolios may invest in debt obligations of foreign
governments, corporations and supranationals issued in the United States and are dollar
denominated (Yankee) securities. Aggregate weighting of these securities shall be limited to
10% of the market value of the portfolio.
(16) Investment grade fixed income core portfolios may invest in Derivatives, including but not
limited to futures, options, and swaps.
At all times counterparty for OTC derivatives must maintain at least a rating of A or A2. In the
case of split ratings, the lower will apply. In the event a counterparty’s rating falls below the
minimum required rating, the Manager will close all positions with the counterparty in a timely
and orderly fashion, exercising best judgment with regards to liquidity and prevailing market
conditions.
Derivatives, futures, options, and swaps may only be used for the following purposes:
1. to adjust dollar-weighted duration and term structure of the portfolio,
2. to protect against the downside on credit defaults
3. to dampen volatility,
4. to create synthetic exposures not otherwise prohibited by these guidelines,
5. to take advantage of periodic pricing anomalies
Long futures and swaps contracts must be fully backed with cash or liquid holdings.
Fixed Income Guidelines for Approved Global Fixed Income Manager(s) (Rev. 10/6/03)
Items (1) through (7) of the Fixed Income Guidelines for Domestic Managers will apply with the following additional
guidelines.
(1) The debt of countries, foreign and domestic agencies, foreign and domestic corporations, and
supranational entities are acceptable for investment. The manager should consider the
creditworthiness and the liquidity of a potential security before making an investment. The
manager should also review whether the custodian has a subcustodian within a particular country
before considering an investment.
(2) Portfolio weightings in countries represented in the Citibank World Government Bond Index,
including cash, may range from 0% to 100% of the portfolio.
(3) Portfolio weightings in countries not represented in the Citibank World Government Bond Index,
including cash, may not, in aggregate, exceed 40% of the portfolio market value without Board
approval. However, practical consideration should be given to liquidity and marketability of
issues, particularly within nonmajor and emerging markets.
(4) Quality ratings for corporate debt shall be consistent with those stated in item (2) of the Fixed
Income Guidelines for Domestic Managers.
(5) Permitted hedge vehicles for currency exposure management are as follows:
(a) Forward Foreign Exchange Contracts
(b) Currency Futures Contracts
(c) Options on Currency Futures Contracts
(d) Options on Spot Currencies
(6) Net short foreign currency positions may not be taken in this portfolio.
Stock Guidelines for Domestic Managers (Rev. 4/8/05)
Common stock securities, including ADRs, shall be high quality, readily marketable securities offering potential for
above-average growth. Common stock investments are limited to those meeting all of the following criteria:
(1) Stocks must be listed or traded on a national securities exchange, including the NASDAQ. ADR
securities may be traded over the counter. U.S. stocks must be registered with the Securities and
Exchange Commission. The use of derivatives (such as Exchange Traded Funds (ETFs), options,
warrants, and futures to establish unleveraged long positions in equity markets) is permissible.
(2) No more than 5% of the total outstanding shares of common stock for any one corporation may be
held in the System’s equity portfolio.
(3) No more than 5% of the cost or market value of the System’s equity portfolio (whichever is more) or
15% of the market value of each manager’s portfolio may be invested in the common stock of any
one corporation.
(4) No more than 20% of stock valued at market of the System’s equity portfolio may be held in any
one industry category as defined by the custodian.
(5) Convertible securities and covered-option writing, if any, shall be considered as part of the
equity portfolio.
(6) Equity managers (growth or value) hired for the small cap investment category are expected to
maintain a weighted average market capitalization of the portfolio within minus 50% and plus 100%
of the weighted average market capitalization of the Russell 2000 Index (growth or value,
respectively).
(7) Equity managers (growth or value) hired for the mid cap investment category are expected to
maintain a weighted average market capitalization of the portfolio within plus or minus 50% of the
weighted average market capitalization of the Russell Mid Cap Index (growth or value,
respectively).
(8) Equity managers hired in the small/mid (SMID) cap investment category are expected to maintain a
weighted average market capitalization of the portfolios within plus or minus 50% of the weighted
average market capitalization of the Russell 2500 Index.
Stock Guidelines for Approved International Equity Manager(s) (Rev. 2/5/02)
Common stock securities of Developed Markets (EAFE Countries and Canada), shall be high quality, readily
marketable securities offering potential for above-average growth. Items (2), (4), and (5) of the Stock Guidelines for
Domestic Managers will apply with the following additional guidelines.
(1) Investment managers may invest up to 20% of the market value of the portfolio in the emerging
market countries contained in the IFC Investable Index, including up to 5% (of the 20% limit) in
emerging market countries not contained in the IFC Investable index. Managers should consider
liquidity and marketability of issues, particularly within non-major and emerging markets, and
should also be sensitive to the weight of individual economic sectors of the market within the
portfolio. The manager should also review whether the custodian has a subcustodian within a
particular country before considering an investment.
(2) Investment managers may invest up to 10% of the portfolio’s market value in domestic equity
securities. This flexibility should be viewed by the manager as an opportunistic or defensive
mechanism rather than a normal position.
(3) No single industry group shall constitute more than 25% of the portfolio’s market value or its
equivalent representation in the EAFE Index; whichever is more, without prior Board approval.
(4) No individual security shall constitute more than 10% of the portfolio’s market value.
(5) Cash held by the manager may be in U.S. dollars or foreign currencies of the manager’s choice.
(6) Residual currency exposures of the underlying international equity portfolio may be actively
managed by the investment manager. If actively managed, the objectives of the foreign exchange
exposure management, within the international equity portfolio, are to:
(a) Add value by increasing total returns and reducing volatility of returns through hedging and
cross-hedging activities.
(b) Avoid currency losses in periods of an appreciating U.S. dollar.
(7) Permitted Equity Investments
(a) Equity managers are to confine investments to common stocks and securities that are
directly convertible or exercisable into common stocks, including ADR’s and GDR’s.
(b) Use of derivatives such as options, warrants, and futures to establish unleveraged long
positions in equity markets is permissible.
(c) Currency options contracts may be exchange traded or over-the-counter (OTC) traded in the
interbank market. Additional instruments, such as swaps, or other derivatives, may be used if
the risk/return trade-off is perceived by the manager to be suitable and competitive with the
above-stated hedge vehicles.
(d) International equity managers may invest up to 10% of the portfolio in Rule 144A securities.
(8) Permitted hedge vehicles for currency exposure management are as follows:
(a) Forward Foreign Exchange Contracts
(b) Currency Futures Contracts
(c) Options on Currency Futures Contracts
(d) Options on Spot Currencies
(9) Net short foreign currency positions may not be taken in this portfolio
Core Real Estate (Rev. 5/9/06)
Core real estate minimizes risk under both an "asset definition" and a "portfolio definition”. Under the “asset
definition” means substantially rented existing properties, which have an orderly lease expiration schedule, are of
high quality, are from among the four basic property types (office, industrial, retail and multifamily housing), are
functional and well maintained without excessive capital reinvestment required, and carry no more than 25 percent
debt.
Under the "portfolio definition" means a mix of at least three of the four main property types, geographic
diversification, tenant/industry diversification and lease rollovers staggered across an entire investment portfolio in a
fairly balanced pattern. Such a definition can be satisfied in a substantial portfolio wholly owned by a large
institution, or in a commingled portfolio -- that includes multiple investors.
1) Core Real Estate means to buy, hold and operate real estate that offers high current income with lower
volatility and lower expected returns than opportunistic real estate
2) Core Real Estate is not necessarily looking for a discount to fair market value; it is looking for long-term
anchor tenants to lease the property
3) Core Real Estate can be provided by a separately managed account, commingled fund, partnership,
direct ownership or Exchange Traded Funds
4) Core Real Estate can be in warehouses, industrial, apartments, offices, storage, land development,
single family homes, parking garages and hotels
5) Core Real Estate offers stable return patterns and reasonable risk levels except when market disruption
occurs (real estate glut, overvaluation, or a dramatic change in interest rates).
Manager Cash Guidelines (Rev. 02/06/01)
The System expects the manager’s cash position to be kept to a minimum and adhere to the following:
(1) Equity manager’s cash shall not constitute more than 5% of the market value of the manager’s
portfolio without prior Board approval.
(2) The manager’s cash will be swept daily into a STIF account by the custodian.
(3) STIF deposit accounts at foreign subcustodian banks are allowed only for the global and
international managers.
Restricted Investments (Rev. 05/09/06)
Categories of investments that are not eligible include:
(1) Use of margin or leverage (except limited partnerships and core real estate)
(2) Short sales of securities
(3) Investments in commodities or commodity contracts
(4) Direct loans or extending lines of credit to any interested party
(5) Letter stock
(6) Unregistered securities (except 144A securities and limited partnerships).
Hedge funds and market protection investment strategies will not be subject to the Restricted Investments listed
above.
With Board approval, global managers may use financial-futures contracts and options thereon, currency-forward
contracts and options thereon, and options on physical securities and currencies. Also for these managers, initial
and variation margin on financial futures and related options are allowed.
Diversification
Investments shall be diversified with the intent to minimize the risk of large losses to the System. The total portfolio
will be constructed and maintained to provide prudent diversification through equity, fixed income, real estate, and
alternative investments.
Volatility (Rev. 2/5/02)
Consistent with the desire for adequate diversification, it is expected that the volatility of the System’s total portfolio
will be similar to that of the market. It is expected that the volatility of the total portfolio, in aggregate, will be
reasonably close to the volatility of a commitment-weighted composite of market indices (e.g., Russell 3000 Index
for stocks and Lehman Brothers Aggregate Bond Index for bonds, etc.).
Liquidity Needs (Rev. 2/5/02)
It is expected that contributions will exceed benefit payments for the foreseeable future. Therefore, staff will
maintain an allocation to cash to meet benefit payments. External managers should maintain cash levels that are
within their investment guidelines. (See Manager Cash Guidelines)
Proxy Voting (Rev. 10/6/03)
It shall be the policy of the System to allow the investment manager to vote all proxies. Nevertheless, each
investment manager is required to advise the Board on any issues that should require special consideration. Staff
will report to the Board annually summarizing the proxies that were voted by the investment managers.
Execution of Securities Trades (Rev. 9/08)
The System expects the purchase and sale of securities to be directed through brokerage firms offering the best
price and execution. Small-cap, international, fixed income, and index investment managers are not required to use
the System’s internal trading desk. However, they are expected to place orders through Louisiana brokerage firms
whenever they can provide total transaction costs equivalent to, or below, the lowest non-Louisiana brokerage firm.
Small-cap, international, fixed income, and index investment managers may not place trade orders through their own
firm, or through affiliated or subsidiary companies with related ownership, in whole or part, to the investment
manager without prior written approval. If and when such approval is granted, all trades shall comply with the best
price and execution expectations. These trades must be identified in the manager's monthly trading report for review
by TRSL.
Act 788 mandates that TRSL direct 10% of trades (equity and fixed income) to brokers that are incorporated in
Louisiana. Another 10% must be directed to brokers that have an office in Louisiana but are incorporated outside of
Louisiana.
Alternative Investment Guidelines (Rev. 02/08/08)
Included in the Investment Policy of the Teachers’ Retirement System of Louisiana (the “System”) dated October 6,
2003 is the Alternative Investment Guidelines (the “Guidelines”) (REV. 8/7/01). The Guidelines indicate that the
System’s Board of Trustees (the “Board”) may consider the following investment vehicles.
(a) Core/Value-add/Opportunistic Real Assets
(b) Private Equity
(c) Debt Related Financing
(d) Options
(e) Derivatives (Futures, Swaps, etc.)
(f) Hedge Funds - Multi-Strategy
The Guidelines provide further that the Board may adopt additional objectives, rules and guidelines for these
investment vehicles, all of which become a part of the Guidelines upon approval of the Board. The following
document sets forth enhanced guidelines that provide a general framework for selecting, building, and managing the
System’s investments in Hedge Funds – Multi-Strategy, Private Equity (including Mezzanine) and Value-
add/Opportunistic Real Estate, which are referred to herein as “Alternative Investments”. The only exception to this
document will be the policy approved by the Board relating to Act 788 of 2003, which will govern investments in
venture capital, emerging businesses, and money managers in Louisiana. Should the Board determine that
investments in Options and/or Derivatives are appropriate for the System, a separate set of enhanced guidelines
would be adopted for those types of investments as well. If the Board approves Options in the form of a collar
(buying a put at or below current market and selling a call above current market), then no further guidelines are
required.
I. OBJECTIVES
1. Return
On a relative basis, the return objective for Alternative Investments is 400 bps over the S&P 500 index net
of fees, expenses and carried interest. On an absolute basis, the return is assumed to be 14-20%.
The Board understands that, for a given partnership, return can only be reliably measured over the life of
the partnership (typically 10+ years). Private equity funds are not typically marked to market and the
valuation methodology used by one general partner may differ from the valuation methodology used by
another. In addition, the IRR performance in the first few years of a partnership’s life is routinely negative
due to the J-curve effect. During this period, partnerships are actively making investments and drawing
management fees, which results in negative capital account balances.
2. Risk
The Board understands that Alternative Investments are illiquid and will have a long term holding period.
When used with publicly traded assets, the asset class helps diversification and reduces risk at the total
fund level. Nonetheless, the Board expects that the Consultant will take all appropriate measures to reduce
risks that are not adequately compensated for by expected return. Such measures include, but are not
necessarily limited to, diversification (as detailed in Section II below), due diligence, and governance
activities.
II. INVESTMENT GUIDELINES
1. Eligible Investments
The System will invest primarily in limited partnership interests of pooled vehicles covering the broad
spectrum of private investments, including:
Private equity funds, including corporate finance/buyout and venture capital,
Private debt funds, including mezzanine and distressed debt funds,
Co-investments – direct investments made alongside a partnership,
Secondary purchases – purchases of existing partnership interest or pool of partnership interests
from an investor,
Real estate equity funds, including value-add/opportunistic,
Hedge Funds – Multi-Strategy and
Other investments that are deemed appropriate within the System’s risk profile.
2. Commitment Size
The maximum investment in any single partnership shall be no greater than one percent (1%) of the
System’s total assets at the time of commitment.
3. Limitation on Percent of Partnership’s Total Commitment
The System’s commitment to any given partnership shall not exceed 10% of that partnership’s total
commitments with the exception of the policy for investments in venture capital, emerging businesses, and
money managers in Louisiana.
4. Diversification
The System should diversify the sources of risk in the portfolio. Specifically:
i) Partnerships
No more than 10% of the Portfolio’s total exposure (cost plus unfunded commitments) to
Alternative Investments may be attributable to partnerships by the same manager at the time the
commitment is made.
The System shall diversify the portfolio across vintage years when possible.
The geographic distribution of actual investments shall be monitored and the System shall avoid
excessive exposure to the economic conditions of any one locale.
The System shall monitor investments with respect to industry and property type. In the event that
the current cost associated with any one industry or property type exceeds 20%, the System shall
attempt to reduce this exposure by limiting future commitments to partnerships with an explicit
focus on the industry or property type in question, with the understanding that industry exposure at
an investment level will be managed at the discretion of the general partner.
ii) Sub-Asset Classes
Assets committed to venture capital shall be diversified across the stages of venture capital (e.g.
early-stage, mid-stage, and late-stage).
Assets committed to corporate finance/buyouts shall be diversified by target company size (e.g.
large, medium, small).
Assets committed to real estate shall be diversified by risk profile (e.g. core plus, value-added, and
opportunistic).
No more than 40% of Total Allocation at the time of commitment may be committed to secondary
investments.
No more than 5% of Total Allocation at the time of commitment may be invested in co-investments.
No more than 5% of Total Allocation at the time of commitment may be invested in Hedge Funds –
Multi-Strategy.
In addition to the Diversification criteria listed above, the System’s staff and Consultant will adopt optimal
sub-asset allocation targets, which will be periodically updated to reflect general changes in the economy.
The current optimal sub-asset class allocation ranges and targets for the System’s Alternative Investments
are:
Sub- Asset Class Range Long-term Target
Private Equity 40-80% 55%
Private Debt 0-20% 10%
Real Estate 20-40% 30%
Co-Investments 0-5% 0%
Hedge Funds - Multi-Strategy 0-10% 5%
5. Prohibited Transactions
The System shall not make direct investments in any company or property. These Investments will be done
through a commingled partnership, in which the System is an existing limited partner.
6. Advisory Board
The System should seek to obtain a limited partner advisory board seat for each partnership investment.
7. Illiquidity
By its nature, Alternative Investments are not designed to meet any short-term liquidity needs of the
System. The Board should assume that the investments in this asset class are illiquid until the partnerships,
at their discretion, sell investments and distribute proceeds.
8. Distribution
The Consultant is not responsible for investing or disposing of distributions from partnerships.
III. REVIEW OF INVESTMENT GUIDELINES
The Consultant will notify the System, via the Chief Investment Officer and Director, if the Guidelines would impede
the System’s investment performance. In this regard the Consultant may consider the guidelines and other relevant
information adopted by its other clients that invest in Alternative Investments. The Consultant also will review the
guidelines annually with the Chief Investment Officer and Director, and recommend any changes deemed beneficial
to the System’s program. In addition, the Consultant will prepare an annual Strategic Plan for the System’s
Alternative Investments to take advantage of changing market conditions.
Louisiana Venture Capital, Emerging Businesses, and Money Managers Adopted: 12/9/03)
As required by Act 788 of 2003, the Teachers’ Retirement System of Louisiana (“TRSL”) Board of Trustees has
approved the establishment of a program for investing in venture capital, emerging businesses, and money
managers focused on Louisiana (the “Program”). The Program is intended to enhance economic development in
Louisiana by stimulating job creation and capital formation through investments in Louisiana businesses, as well as
result in a market rate of return for TRSL. These potential investments should have several provisions that differ
from the current TRSL private equity program. The provisions are listed below under “Louisiana Venture Capital and
Emerging Businesses” and “Money Managers”.
In selecting investments for the Program, the Board of Trustees of TRSL (the “Board”) will seek attractive business
opportunities that are expected to result in the greatest increase in employment and economic growth in the state of
Louisiana. In addition to these goals, the Program is intended to produce significant capital gains for TRSL and
additional diversification of the plan’s assets. The Board will seek to accomplish these goals by investing in private
equity partnerships that invest in Louisiana companies and by co-investing with these partnerships or other qualified
investors directly in Louisiana companies. The Program should include companies suffering a so-called capital gap,
which means they cannot get conventional sources of funding.
The Board recognizes that portfolio risk may be higher and diversification may be lower in the Program when
compared to TRSL’s other investments, due to the relatively small size of the Louisiana economy and the industry
concentrations within the state. Nevertheless, the returns earned on Program investments are expected to exceed
public market returns and to equal or exceed returns on similar investments that are available outside of the
Program.
Louisiana Venture Capital and Emerging Businesses
This part of the Program is intended to produce significant capital gains for TRSL and additional diversification of the
plan’s assets. An additional goal of the program is to promote economic development in Louisiana. These goals will
be accomplished through investments in private equity partnerships and co-investments with these partnerships or
other qualified investors directly in Louisiana companies. It is recognized that portfolio risk will be higher and
diversification will be lower in this Program due to the small size and inherent characteristics of the Louisiana
economy.
As with the current TRSL private equity program, commitments to Louisiana partnerships should be staged over
time. The level of annual commitments will fluctuate as Louisiana opportunities arise.
In regard to co-investments and direct investments, TRSL will only invest in Louisiana companies that
receive or have received equity investments from other qualified investors. Qualified investors are
Louisiana private equity funds, current TRSL private equity program funds, or other qualified entities that
have demonstrated abilities and relationships in making investments in new, emerging, or expanding
businesses. TRSL will structure co-investments and direct investments at its discretion with the advice of
its private equity consultants. In making co-investments and direct investments, TRSL will have the
same objectives as those for investments in private equity funds: obtaining a reasonable, risk-adjusted
rate of return.
Program Requirements
The Board will seek investments in funds that are committed to investing, or that help secure investing by others, in
businesses that have their principal place of business in Louisiana and that hold promise for attracting additional
capital from national sources for investment in the state. The Program will be governed by the Prudent-Investor
Rule.
1. Investments may be made in funds that:
a. accept investments from qualified investors only; and
b. maintain an active office in Louisiana staffed by at least one full-time manager who is a Louisiana
resident and who has at least three years of professional experience in assessing the growth
prospects of businesses or evaluating business plans.
2. Co-investments and direct investments may be made in Louisiana entities that:
a. receive equity investments from other qualified investors; and
b. have their principal office and a majority of their full-time employees located in Louisiana or, if a
limited partnership, have its principal place of business and the majority of its assets located in
Louisiana. This includes a company that has agreed to relocate to Louisiana from another state.
3. The Program is subject to the following limitations:
a. each investment by TRSL may not represent more than 51% of the total investment capital in a
Louisiana business, provided that nothing in this policy prohibits the ownership of more than 51%
of the total investment capital in a Louisiana business if the additional ownership interest:
is due to foreclosure or other action by TRSL pursuant to agreements with the business or
other investors in that business; and
is necessary in the good-faith judgment of the Board to protect the investment.
b. no more than 10% of the total Program may be invested in any one Louisiana business
c. if the investment exceeds $1 million in a Louisiana business, then TRSL’s investment cannot
exceed 10% of the Louisiana business.
Louisiana Money Managers
TRSL will continue its practice of allowing maximum participation in money manager searches by giving more
managers the opportunity to compete. Increased participation by Louisiana money managers increases their
opportunity to manage assets for TRSL.
Program Requirements
To allow maximum participation TRSL will reduce the minimum requirements to allow more managers to compete.
This can be accomplished without any negative impact to the manager search process.
1. The assets under management requirement will be reduced to allow newer and smaller firms to participate.
This parameter will be determined by staff and consultant and be consistent with the size and style of the
mandate.
2. The five-year performance record requirement has been reduced to three years. The track record can be
for an individual that developed the performance record while at another firm.
Glossary of Terms
Co-Investment – An investment made in a Louisiana company in addition to the investment in that company by a
private equity fund in which TRSL is an investor.
Direct Investment – An investment made in a Louisiana business that for the purposes of this Program has also
received investments from other qualified investors.
Emerging Business – A start-up business or an established business that seeks capital to grow the business and/or
expand its product lines.
Qualified Investor - May be Louisiana private equity funds, current TRSL private equity program funds or other
qualified entities that have demonstrated abilities and relationships in making investments in new, emerging or
expanding businesses.
Venture Capital – An investment strategy that provides start-up or growth capital to companies in the early stages of
development. Venture investments generally involve a greater degree of risk, but have the potential for higher
returns.
Securities Lending Guidelines (Rev. 8/6/96)
The System may engage in the lending of securities subject to the following guidelines:
(1) Collateral on loans is set at a minimum 102% of the market value of the security plus accrued interest.
(2) Collateral on loans of international securities is set at a minimum 105% of the market value of the
security plus accrued interest.
(3) Securities of the System are not released until the custodian bank receives payment for the book-entry
withdrawal of the loaned security.
(4) Funds from the lending of securities accrue to the System’s account and not to investment manager’s
since they would not be involved in the process.
(5) The System's Investment Department may engage in the lending of all applicable securities.
Internal Cash and Cash Equivalents Guidelines (Rev. 3/6/98)
Cash and cash equivalents include daily cash balances above day-to-day needs and funds set aside for portfolio
strategy reasons. Short-term securities managed by the System's Investment Department are subject to the
approval of the director in accordance with the guidelines and restrictions set forth by the Board.
Short-term investments may be invested in:
(1) U.S. Treasury bills, other issues of the U.S. government, issues of federal agencies, and
government- sponsored enterprises with a maturity of one year or less.
(2) Repurchase agreements collateralized by U.S. Treasury or agency securities subject to the market
value of collateral, including accrued interest, meeting at least 100% of the amount of their
purchase agreement.
(3) Commercial paper rated P-1 by Moody's or A-1 by Standard & Poor's and having a senior bond
rating of A/A or better. No single issue may exceed 10% of outstanding short-term obligations.
The maximum maturity will be 90 days.
(4) Certificates of deposit limited to Louisiana banks, savings and loans, and credit unions provided
that:
(a) Maximum amount in any one bank will be limited to $1 million
(b) All deposits in excess of federal insurance limits shall be collateralized subject to the same
rules and regulations in effect for certificates of deposit placed by the Louisiana Department of
the Treasury
(c) Maximum amount limited to 5% of capitalization
(d) Maximum maturity is 366 days
(5) Money market funds adhering to restrictions (1) through (4) above.
(6) Issues of commercial debt market with maturities of one year or less and having a rating of A or
better. The obligations of any single issuer may not exceed 10% of the total outstanding short-term
obligations of the System.
CONTROL PROCEDURES
Review of Liabilities
All major liability assumptions regarding number of plan participants, payroll, benefit levels, and actuarial
assumptions will be subject to an annual review. This review will focus on an analysis of the major differences
between the System's assumptions and actual experience.
Review of Investment Objectives
The achievement of investment objectives will be reviewed on an annual basis. This review will focus on the
continued feasibility of achieving the investment objectives and the appropriateness of the investment policy for
achieving these objectives. It is not expected that the investment policy will change frequently. In particular,
short-term changes in the financial markets should not require an adjustment to the investment policy.
Review of Investment Managers (Rev. 2/6/01)
The Board will require each investment manager to report monthly in a manner agreed upon by the Board, staff,
consultant, and manager.
The Board will meet at least annually, and preferably more frequently, with its investment managers and consultants.
Additionally, with or without the investment managers, the Board will review investment results at least quarterly.
These reviews will focus on:
(1) Manager adherence to the policy guidelines.
(2) A comparison of manager results versus appropriate financial indices.
(3) A comparison of manager results using similar policies (in terms of commitment to equity, style,
diversification, volatility, etc.).
(4) The opportunities available in both equity and debt markets.
(5) Material changes in the manager organizations, such as investment philosophy, personnel changes,
acquisitions, or losses of major accounts, etc.
The managers will be responsible for advising the Board of any material change in personnel, investment strategy,
or other pertinent information potentially affecting performance.
Performance Expectations (Rev. 4/4/08)
The most important performance expectation is the achievement of investment results that are consistent with the
System's investment policy. A long-term average annual return of 3.9% above inflation as measured by the CPI-U
seasonally adjusted or the actuarial rate (currently 8.25%), which ever is higher is reasonable in light of the policy.
Implementation of the policy will be directed toward achieving this return and not toward maximizing return without
regard to risk.
The Board recognizes that this real-return objective may not be meaningful during some periods. To ensure that
investment opportunities available over a specific period are fairly evaluated, the Board will use comparative
performance statistics to evaluate investment results. The Board expects the total fund to perform in the top third of
a universe of total funds having similar size and investment policies. To stay abreast of what other state and local
plans are achieving, the System's performance will also be compared to the results of other public plans. Each
manager is expected to perform in the top half of his or her respective equity manager or fixed income manager
universe and in the top quartile of his or her investment manager style universe. Additionally, each manager will be
compared/evaluated versus their specific style benchmarks. This performance should be achieved over rolling
three-year periods or over the length of each manager's contract, whichever comes first. Short-term results will also
be monitored. For purposes of this evaluation, the universes maintained by the System’s consultant, will be used.
TRSL’s investment managers may be placed on a watch list in response to the Board’s concern about the
manager’s recent or long-term investment results, failure of the investment advisor to comply with any of TRSL’s
investment guidelines, significant changes in the investment manager’s firm, or for any other reason that the Board
deems appropriate. Any manager placed on the watch list will be sent a letter advising of the Board’s concern with
the manager. Failure to correct problem situations to the satisfaction of the Board will lead to dismissal, at the
discretion of the Board. However, investment managers can be dismissed for any reason, subject to contract
provisions, even if they have not been previously placed on the watch list.
Responsibilities of Chief Investment Officer
This position administers the investment program of TRSL. Duties include:
(a) Responsible for all functions of the Investment Department
(b) Oversee all TRSL investments and investment managers
(c) Meet with the Investment Committee/Board to review investments and policies
(d) Monitor existing limited partnerships and review/recommend future investments
(e) Monitor investment portfolios to ensure they are within the Investment Policy Statement (Policy)
established by the Board
(f) Research new investment vehicles and present viable investments to the Board for possible
inclusion to the Investment Policy Statement
(g) Responsible for effectively implementing the Investment Policy Statement
(h) Implement asset allocation shifts to maintain portfolio allocations within Policy guidelines
(i) Direct the activities of the System’s consultants for the best interest of TRSL and to leverage the
activities of staff
(j) Make recommendations concerning the hiring/terminating of investment manager/advisors
(k) Represent TRSL at limited partnership meetings and Advisory Committee meetings.
(l) Assist the Director with legislative issues.
(m) During exigent circumstances, after consultation with and the concurrence of the Director, if
practicable, and the Chairperson of the Investment Committee and/or the Chairperson of the Board,
take such actions necessary to preserve and protect the assets and interests of TRSL.
Responsibilities and Review of Investment Consultant
The Investment Consultants shall assist the Board, the Director and the Chief Investment Officer in developing
and modifying policy objectives and guidelines, including the development of an asset allocation strategy and
recommendations on the appropriate mix of investment manager styles and strategies. The Consultants shall
act as fiduciaries to the Fund.
Additionally, the Consultants shall provide assistance in manager searches and selection, investment
performance evaluation, and any other relevant analysis. The Consultants shall provide timely information,
written and/or oral, on investment strategies, instruments, managers and other related issues, as requested by
the Board, the Director, or the Chief Investment Officer.
All consultants will be evaluated on an annual basis.
Responsibilities and Review of Custodian Bank
The custodian bank is responsible for performing the following functions, among others designated by contract:
Safekeeping of securities;
Process and settlement of all investment manager transactions;
Accept instructions from designated TRSL staff concerning the movement or disbursement of cash and
securities;
Collection of interest, dividends, proceeds from maturing securities, and other distributions due TRSL;
Daily sweep of idle cash balances into interest bearing accounts;
Advise investment staff daily of changes in cash equivalent balances;
Notify investment managers of tenders, rights, fractional shares or other dispositions of holdings;
Notify appropriate entities of proxies;
Provide holdings and performance reports as required by TRSL;
Third party securities lending and related functions.
The Custodian Bank will be evaluated on an annual basis.
Alternative Investment Guidelines
The Alternative Investment Manager guidelines are incorporated by reference.
Investment Manager Watch List Policy
The Manager Watch List Policy is incorporated by referenced.
Placement Agent and Finder Disclosure
The purpose of this section of the Investment Policy is to ensure the integrity of all TRSL investment transactions
and conformity with the highest fiduciary, ethical, and legal standards by all parties involved.
This section applies to all agreements between TRSL and any external investment management firm/partnership.
The Public Markets Consultant and Private Markets Manager are responsible for collecting and evaluating the
relevance of the following information and disclosing this information to the Chief Investment Officer and General
Counsel. This information must be disclosed at the time investment discussions are initiated with an external
investment management firm/partnership. A summary of the information obtained must be presented to the TRSL
Board in conjunction with presentations and/or recommendations made to the Board concerning the external
investment management firm/partnership.
(1) The name of each placement agent, finder, third-party intermediary or any other individual or entity hired or
otherwise engaged, or expected to be hired or otherwise engaged, in connection with any fundraising
activity related to the investment product. A detailed description of the services to be performed and specific
details on how the external investment management firm/partnership was introduced to such person or
entity should be included.
(2) Details on who will bear the cost of any compensation of any kind or value paid to any placement agent,
finder, third-party intermediary or other individual or entity. To the extent the bearer of the cost is the
external investment management firm/partnership, detail exactly how this cost is being borne.
(3) Details on whether or not any placement agent, finder, third-party intermediary or other individual or entity
has provided, or is expected to provide, any services in respect of any client of either TRSL’s Public
Markets Consultant or Private Markets Manager.
(4) Details on the amount of compensation of any kind or value paid, or expected to be paid, to any placement
agent, finder, third-party intermediary or other individual or entity for any services provided in respect of any
client of either TRSL’s Public Markets Consultant or Private Markets Manager. The timing of any
compensation and the expected compensation should also be included.
(5) Certification by the external investment management firm/partnership that the investment product and its
principals and affiliates are in compliance with all state and local laws and regulations related to the
solicitation of, and investment by, governmental agencies and authorities, including but not limited to “pay-
to-play” laws and regulations.
(6) Certification by the external investment management firm/partnership that the investment product and its
principals and affiliates are in compliance with the State of Louisiana Code of Government Ethics, La.
Revised Statutes 42:1101 et seq, and Louisiana’s laws governing Executive Branch Lobbying, La. Revised
Statutes 49:71 et seq. The Louisiana Code of Governmental Ethics and Executive Branch Lobbying laws,
including any updates thereto, may be found at
http://www.ethics.state.la.us/EthicsPublicationSearch.aspx?portal=Laws.
(7) A statement whether any placement agent, finder, third-party intermediary or other individual or entity is
registered with the Securities and Exchange Commission or the Financial Industry Regulatory Association
or any similar regulatory agent in a country other than the United States and the details of such registration
or explanation of why such registration is not required. A statement whether any said placement agent,
finder, third-party intermediary or other individual or entity is registered as a lobbyist with any state or
national government.
(8) An update of any changes to any of the information included as a response to the items above within five
business days of the occurrence of the change in information.
EXHIBIT F
CONTRACT FOR CONSULTANT SERVICES
BY AND BETWEEN
TEACHERS' RETIREMENT SYSTEM OF LOUISIANA
and
{COMPANY}
________________________________________
WHEREAS THIS AGREEMENT (hereinafter referred to as the "Contract"), entered into by and between the
Teachers' Retirement System of Louisiana (hereinafter referred to as "TRSL"), officially domiciled on the Third
Floor, 8401 United Plaza Boulevard, Baton Rouge, Louisiana 70809 and {COMPANY} (hereinafter referred to
as "Company”, officially domiciled at {COMPANY’S ADDRESS} do hereby enter into a contract as follows:
1. Appointment. Effective on__________, 200_, TRSL, pursuant to a Resolution of the Board of Trustees
("Board"), hereby appoints {COMPANY} to serve as a consultant for TRSL. The company represents
that it is duly registered with the Securities and Exchange Commission as an investment advisor under the
Investment Advisers' Act of 1940, and that it will take all steps necessary to maintain such registration in full
force and effect. The company represents that it is in compliance with its state's registration requirements.
2. Scope of Services.
a. Portfolio Review and Evaluation. The company will prepare portfolio and comparative return
analysis on all public and private market accounts, regardless of type managed for or by TRSL.
Analysis will include comparisons to other funds, to similar managers or accounts, to standard
benchmarks, and to other accounts managed by that manager. These evaluations will be
conducted on a monthly basis with written reports provided in advance of oral presentations at
scheduled Board or Investment Committee meetings. This service must include, but is not limited
to, rate of return results and compliance with TRSL Investment Guidelines, Money Manager
Objectives, and Board Policies and Directives. This service will also include investment manager
diagnostics in order to monitor the investment manager's conformance to its represented style.
The company will meet with the Chief Investment Officer and/or Director of TRSL prior to
company's presentation of the performance data and analysis to the Board.
b. Asset Allocation. The company will complete an asset allocation study for TRSL at a time
mutually agreed upon. This will include risk return tradeoffs of alternative policies based on both
historical and projected return assumptions, and data sufficient to analyze alternative allocation
strategies both among and within major asset classes. The company will review TRSL's asset
allocation position periodically, review the impact of manager's decisions on the allocation, and
advise the Board as to possible advantageous changes in the allocation strategy.
c. Investment Manager Structure. The company will assist TRSL in determining the appropriate mix
of manager styles within each asset class and the appropriate funding levels for each manager or
investment vehicle. The company will assist the Board with the search for and selection of
investment managers and investment vehicles. This assistance must include, but not be limited to,
use and analysis of data from databases and screens, oral and written presentations of research
results and evaluations to the Board, and conduct interviews as appropriate. The company shall
provide this assistance for all classes of assets. The company will assist in the evaluation of
performance reports submitted by managers, and will make recommendations as to the retention or
termination of managers as appropriate. For purposes of this subsection, custodians shall be
included with investment managers.
d. Reconciliation of Custodian Reports. The company will reconcile the custodian report with each
investment manager on a monthly basis. The company will also coordinate the resolution of any
discrepancies between the custodian and the manager.
e. Investment Policy Statement. The company will assist the Board in developing and modifying the
Investment Policy Statement for publicly traded assets to ensure that the Board's intentions are
clearly and accurately articulated and communicated. This service will include, but not be limited
to, an ongoing review of the appropriateness and sufficiency of the Investment Guidelines and
Money Manager Objectives.
f. Education and Training. The company will provide TRSL with timely and appropriate research
and analysis, as prepared by the company from time to time, on investment topics. The company
will organize, prepare, and present seminars to TRSL as requested from time to time.
g. Transition Management. The company will assist TRSL in the planning, oversight, and review of
asset transitions among investment managers and investment vehicles.
h. Attendance at Meetings. At least one senior consultant assigned to the TRSL support team will
attend each monthly meeting of the Investment Committee, and such other meetings as the Board
may designate in advance.
i. Additional Services. The company will provide consultant services and assistance to TRSL
when requested by the Director under the terms and conditions as set forth by the Director in the
request for such additional services and assistance.
3. Compensation. In consideration of the consulting services rendered by the company to TRSL under this
Contract, the company will receive an annual fee of $________for each year, to be paid on a monthly basis.
All normal expenses incurred by the company shall be borne by the company provided, however, that the
Board of Trustees may approve reimbursement for extraordinary travel expenses required by the Board.
Reimbursement shall only be made after Board approval and be in accordance with TRSL's approved travel
policy.
The company shall submit an invoice at the end of each calendar month, and TRSL shall pay each bill
within thirty (30) days.
4. Designation of Personnel.
The company shall provide the names of each person who will exercise a significant administrative,
policy, or consulting role under this Contract. These personnel shall be hereafter referred to (both
individually and collectively) as "Key/Authorized Personnel".
The company shall promptly notify TRSL of any substitution, replacement or reassignment of
Key/Authorized Personnel. The parties may agree in writing to a change in these Key/Authorized
Personnel, which writing shall become a part of this Contract.
5. Independent Judgment. All services, advice, and recommendations provided by the company hereunder
shall be based in its best professional judgment, independent of any conflict of interest. The company
understands and agrees that it is in a fiduciary relationship with TRSL as defined by La. R.S. 11:261 et seq.
6. Term. This Contract shall be effective___________, and shall continue in force and effect
through___________, unless terminated in accordance with this section. TRSL may terminate this Contract
with or without cause upon written notice to the company. The company may terminate this Contract upon
thirty (30) days written notice to TRSL. Fees for any partial month shall be prorated.
7. Amendment. This Contract may be amended only in writing, signed by both parties.
8. Audit. Those accounts of the company relating to this Contract shall be subject to audit by the Legislative
Auditor of the State of Louisiana and/or any Certified Public Accounting firm under Contract with TRSL or
TRSL audit staff.
9. Ethics Compliance: In the completion of work according to this agreement, the company must comply with
the state of Louisiana Code of Governmental Ethics as published by the Louisiana Board of Ethics. The
complete Louisiana Code of Governmental Ethics and any updates may be found at
http://www.ethics.state.la.us/EthicsPublicationSearch.aspx?portal=Laws
10. Disclosure Statement.
a. The company shall provide full disclosure to TRSL of conflicts of interest, including non-pension
sponsor sources of revenue. The company also shall provide full disclosure of any payments
received from money managers, in hard or soft dollars, or any other benefits for any services they
provide, including but not limited to, performance measurement, business consulting and
education.
b. By signing this Contract, the company represents that it has not entered into any formal or informal
solicitor agreement, or any like agreement (finder's fee, etc.) with any individual or firm that has or
will result in the receipt of any compensation, monetary or otherwise, by that individual or firm
resulting from activities that culminated in your selection by the TRSL Board of Trustees to provide
the investment services agreed to in this Contract. The company shall provide TRSL with a full
disclosure of any payments or other benefits received by the company in hard or soft dollars.
11. Disclosure of Expenditures: Any individual, committee, association, corporation, and any other
organization or group of persons who has or is seeking a contractual, financial, or business relationship with
any state or statewide retirement system in Louisiana must report expenditures, gifts, donations, etc., given
to retirement officials. The law can be found on the Louisiana Legislature website at
http://www.legis.state.la.us/lss/lss.asp?doc=285461 and the complete Louisiana Code of Ethics can be
found at http://www.ethics.state.la.us.
12. Payment of Taxes. The company hereby agrees that the responsibility for payment of taxes from the fees
received under this Contract shall be said the company's obligation and identified under Tax Identification
Number 75-2095078.
13. Assignment. This agreement and performance under it may not be assigned by the company without the
prior written approval of the Board.
14. Independent Contractor. The company and the Board agree that the company will act as an independent
contractor in the performance of its duties under this Contract. Accordingly, the company shall be
responsible for payment of all taxes, including Federal, State and local taxes arising out of the company's
activities in accordance with this Contract, including by way of illustration but not limitation, Federal and
State income tax, Social Security tax, Unemployment insurance taxes, and any other taxes or business
license fees required.
15. Warranties.
a. The company warrants that it maintains an errors and omissions insurance policy providing a
prudent amount of coverage for negligent acts or omissions and that such coverage is applicable to
the company's actions under the Contract.
b. The company warrants that it is willing and able to comply with Louisiana laws with respect to
foreign (non-Louisiana) corporations.
c. The company warrants that it shall maintain a fidelity bond in the amount sufficient to cover any
loss to TRSL due to any fraudulent or dishonest act on the part of the company or any sub-
Company, or any officer, employee or agent thereof and naming TRSL as the insured.
d. The company warrants that it maintains or shall cause to be maintained an "All Risk Coverage" for
property damage and business interruption (including computers and their peripheral equipment)
subject to policy term and conditions.
e. The company warrants that it will not delegate its fiduciary responsibilities under the Contract.
f. The company warrants that is has completed, obtained and performed all registrations, filings,
approvals, authorizations, consents or examinations required by a government or a governmental
authority for acts contemplated by the Contract.
g. The company warrants that is has implemented and enforces a policy designed to insure that its
employees and individuals subject to its control do not engage in illegal insider trading proscribed
by federal and state securities laws and regulations.
h. The company agrees to promptly notify TRSL of any changes in the company's compliance with
the warranties stated herein and agrees to restore the warranties, as required by TRSL, in the
event of a lapse. In the absence of a notice to TRSL to the contrary, TRSL has the right to rely on
the on-going effectiveness of each warranty contained herein.
i. If applicable, further and other warranties will be determined at the time of execution of the contract
agreed upon by both the company and TRSL.
j. As specified in the Investment Advisers Act of 1940, the company will make available for review the
policies concerning proxy voting, insider trading, code of ethics, and compliance.
16. Indemnification. The company agrees to indemnify and hold harmless TRSL, its officers and employees,
and to hold it and them harmless from any loss, liability, expense or claim of any kind or notion whatsoever
suffered or incurred by it or them as a result of any act or omission of negligence, malfeasance, bad faith or
willful misconduct by the company.
17. Confidential Information. The company agrees that any information received by the company during any
performance of the company's obligations under this Contract, which concerns the personal, financial, or
other affairs of the Board will be treated by the company in full confidence and will not be revealed to any
other person, firm or organization without the Board's consent.
18. Governing Law and Forum. This Contract shall be interpreted, administered and enforced according to
the laws of the State of Louisiana (without regard to any conflict of law provisions). Any suit brought
hereunder, shall be brought in the state or federal courts sitting in Baton Rouge, Louisiana, the parties
hereby waiving any claim or defense that such forum is not convenient or proper. Each party agrees that
any such court shall have in personam jurisdiction over it and consents to service of process in any manner
authorized by Louisiana law.
19. Representations. The parties represent that they have read, understand, and agree to all the terms of this
Contract, and that the signatories hereto are duly authorized to execute this agreement and thereby bind
the respective parties.
20. Disputes. Any dispute concerning a question of fact arising under the terms of this Contract which is not
disposed of within a reasonable period of time by the company and TRSL employees normally responsible
for the administration of this Contract shall be brought to the attention of the Executive Director/Officer (or
designated representative) of each organization for joint resolution. At the request of either party, TRSL
shall provide a forum for the discussion of the disputed item(s), at which time a third party, mutually agreed
upon by the parties to this Contract, shall be requested to assist in the resolution of the dispute. If
agreement cannot be reached through the application of high-level management attention, either party may
assert its other rights and remedies within this Contract or within a court of competent jurisdiction. TRSL
and the company agree that, the existence of a dispute notwithstanding, they will continue without delay to
carry out all their responsibilities under this Contract which are not affected by the dispute.
21. Contract Management. Unless otherwise expressly provided in this Contract, the Contract Manager for
each of the parties shall be the contact person for all communications and billings regarding the
performance of this Contract. Each party shall promptly notify the other, in writing, of any change in its
Contract Manager designation or any change in their Contract Manager's contact information.
Contract Manager contact information for each party is as follows:
TRSL:
Teachers' Retirement System of Louisiana
8401 United Plaza Boulevard, 3rd Floor
Baton Rouge, Louisiana 70809
Attention: Philip Griffith, Chief Investment Officer
COMPANY:
_________________________________
_________________________________
_________________________________
_________________________________
IN WITNESS WHEREOF, TRSL and {COMPANY} have executed this agreement as of the
_____ day of _____, 200__.
WITNESSES: TEACHERS' RETIREMENT SYSTEM OF LOUISIANA
BY:
{THE COMPANY}
BY:
