1. MU Retirees Association Retirement Plan Update March 17, 2018

2. S&P 500 Monthly Returns
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1992
-2.0%
1.0%
-2.2%
2.8%
0.1%
-1.7%
3.9%
-2.4%
0.9%
0.2%
3.0%
1993
0.7%
1.1%
1.9%
-2.5%
2.3%
-0.5%
3.4%
-1.0%
-1.3%
1994
3.3%
-3.0%
-4.6%
1.2%
-2.7%
3.2%
3.8%
2.1%
-4.0%
1995
2.4%
3.6%
2.7%
0.0%
4.0%
4.1%
1.7%
1996
0.8%
1.3%
5.4%
2.6%
7.3%
1997
6.1%
0.6%
-4.3%
5.8%
5.9%
4.4%
7.8%
-5.8%
5.3%
-3.5%
4.5%
1.6%
1998
7.0%
5.0%
-1.9%
-1.2%
-14.6%
6.2%
8.0%
5.6%
1999
-3.2%
-0.6%
-2.9%
6.3%
2000
-5.1%
9.7%
-3.1%
-1.6%
-5.4%
-8.0%
0.4%
2001
3.5%
-9.2%
-6.4%
7.7%
0.5%
-1.1%
-8.2%
1.8%
7.5%
2002
-2.1%
3.7%
-6.1%
-0.9%
-7.3%
-7.9%
-11.0%
8.6%
5.7%
-6.0%
2003
8.1%
5.1%
5.5%
2004
-3.4%
1.4%
2005
-1.8%
-0.1%
2006
2.5%
2007
4.3%
1.5%
-4.4%
2008
4.8%
-8.6%
-9.1%
-16.9%
-7.5%
2009
8.5%
9.4%
7.4%
2010
-3.7%
2.9%
6.9%
-4.7%
8.8%
-0.2%
6.5%
2011
-1.4%
-5.7%
-7.2%
10.8%
2012
3.1%
-0.8%
-6.3%
2.0%
0.3%
2013
-1.5%
2014
-3.6%
-0.4%
2015
8.4%
2016
-5.0%
6.8%
2017
2018

3. Total Portfolio Returns
(as of December 31, 2017)
1 Year Actual
1 Year Benchmark
Policy Objective*
Total Portfolio
13.8
13.2
7.2
* Policy Objective lowered from 7.75% to 7.20% September 2017.
For calendar year 2017, public equities delivered the largest absolute returns at nearly 24%, with private equity, private debt and real estate posting strong results as well. All asset classes had positive returns in 2017, which is somewhat unusual.

4. Longer-Term Returns 3 Year Return 7.2 6.4 5 Year Return 7.7 7.6
(as of December 31, 2017)
Retirement Plan
Actual
Benchmark
Policy Objective*
3 Year Return
7.2
6.4
5 Year Return
7.7
7.6
7 Year Return
7.5
10 Year Return
4.8
4.9
* Policy Objective lowered from 7.75% to 7.20% September 2017.

5. Asset Allocation Objectives
Reduce public equity allocation
Reduce credit risk exposure
Increase US TIPs and US Treasuries
Expand portable alpha program
Improve portfolio balance
Reduce portfolio risk

6. Asset Allocation Changes
(approved by the Board of Curators – September 28, 2017)
Prior
New
Global Equity
37%
32%
Private Equity
10%
Private Debt 0% 3%
Global Fixed Income 4%
Sovereign Bonds
15%
Inflation-Linked Bonds
17%
Prior
New
Emerging Markets Debt 6% 0%
Opportunistic Debt
12%
Hedge Funds
Real Estate 8%
Risk Balanced
10%
Commodities 3% 5%
*Portable alpha program increases from 7% to 20% of capital.

7. Asset Allocation Changes
Prior
New
Mean Expected Return
6.8%
7.2%
Standard Deviation
11.5%
10.2%
Sharpe Ratio
0.46
0.54
Actuarial Return Assumption
7.75%
7.20%
* Revisions to actuarial assumptions will be considered by the Board of Curators at the December 2017 meeting.

8. New Portfolio Mix - Range of Outcomes
New Portfolio – Range of Rolling Five Year Outcomes ( )

9. Retirement Plan Investment Objectives
(approved by the Board of Curators – September 28, 2017)
Retirement Plan investments should be managed in a manner that maximizes returns while attempting to minimize losses during adverse economic and market events, with an overall appetite for risk governed by the Plan’s liability structure and the need to make promised benefit payments to members over time. This will be accomplished through a more ‘risk-balanced’ portfolio that seeks meaningful diversification of assets, which necessarily means less equity risk and more long-term bond exposure relative to peers. To offset potentially lower returns from a more risk-balanced portfolio, a key component of this strategy includes a less common, yet prudent, program of return enhancement commonly referred to in the investment industry as portable alpha. These investment objectives seek to prioritize the long-term structural needs of the Retirement Plan over short-term performance comparisons of the investment portfolio relative to peers.