Annual Report PDF file 2009 - State of Illinois

% Investment Returns June 30201510Total FundComposite BenchmarkCPI50-5-10-202009 2008 2007 2006 2005those accounts are yet to be fully funded.ISBI’s Real Estate portfolio is invested primarily throughinterests in separate accounts, limited partnerships, trusts,and other forms of pooled investments. Long-term results forreal estate are shown in Figure 2.Private EquityIn FY 2008, ISBI’s Private Equity portfolio returns were negative18.8%. The Private Equity portfolio consists of interests inlimited partnerships and other commingled vehicles that investin management buyouts, venture capital, and other privateplacement equity strategy activities. The Private Equity assetclass was challenged by disruptions in the credit markets andan overall weakness in pricing for the fiscal year period. Inspite of these challenges, long-term results as detailed inFigure 2 show that Private Equity remains the best performingasset class for the ten-year period ended June 30, 2009.Management ExpensesThe resulting expense ratio (expenses divided by average fairvalue of assets) was .44% for fiscal year 2009, as compared to.36% for fiscal year 2008. Total expenses for fiscal year 2009,based on $8.7 billion in total assets were $41.2 million,compared to $41.9 million based on $11.3 billion in total assetsfor fiscal year 2008. Decreased aggregate expenses in fiscal2009 were mainly a result of decreased fees paid to investmentmanagers.Minority/Female ParticipationJust as ISBI seeks prudent diversification within its totalportfolio, the Board continues to seek an appropriate level ofdiversity among the professionals charged with meeting theBoard’s mission. The Board membership itself is comprised of33% minority and 22% women.ISBI operates under its own Minority Brokers and MoneyManagers Policy regarding utilization of minority and femaleowned broker/dealers, minority and female owned moneymanagers, and emerging managers. Since April, 2006, theBoard has achieved its minimum goal of 5% of the totalportfolio being managed by emerging and minority managers.At the end of FY 2009, 25.7% of ISBI’s portfolio was managedby emerging, minority, and female owned firms. During fiscalyear 2009, the Board increased the allocations to three of itsexisting emerging/minority managers: RhumbLine, DecaturCapital, and Rock Creek Capital.At its meeting held in July, 2008, the Board’s Minority Brokerand Money Managers Policy was amended to increase theminority broker/dealer target to 20% from 15%. The policyrequires that such trades be executed directly and prohibitsthe utilization of step-outs. Further, language was addedincorporating ISBI’s international equity portfolio into thepolicy. The Board’s policy also encourages utilization ofIllinois-based broker/dealers and establishes 25% utilization asa minimum.During fiscal year 2009, utilization of minority-ownedILLINOIS STATE BOARD OF INVESTMENT6