System Embraces Anti-Terrorism Policy

Concern over genocide and terrorism has led to significant discussions in Washington D.C. and state capitals around the nation as legislators and state officials debate the merits of policies that would restrict public pension fund investments in companies doing business with terrorist-sponsored states. Close to home, a non-binding resolution was recently introduced in the Missouri legislature that would call on all Missouri public retirement systems to divest funds invested in any U.S. State Department designated terrorist-sponsoring state.

Clearly, no one involved in the oversight or administration of PEERS, as well as other public retirement systems in the United States, is a supporter of terrorism or human rights violations. Thus, several public pension funds (including PEERS) have adopted anti-terrorism policies. The PEERS Board adopted a policy June 13, 2005 that calls for staff to annually seek guidance from Federal agencies on countries, and more specifically companies, which are believed to be supporting terrorism. Through these agencies, the System is directed to a number of lists (including firms and individuals) maintained by the Federal government. PEERS does not and will not hold investments in any companies identified on the lists from the Federal government.

The PEERS staff and Board considered the following when developing the anti-terrorism policy:

The PEERS Board and administration are not positioned to make foreign policy judgment calls regarding which, if any, multi-national companies (foreign and domestic) may be operating in ways that run counter to the interest of the United States. Thus, the Systems will continue to look to the Federal government for guidance to ensure that any divestment efforts of PEERS do not unknowingly harm U.S. companies whose activities abroad are consistent with the objectives of the United States.

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	System Embraces Anti-Terrorism Policy Concern over genocide and terrorism has led to significant discussions in Washington D.C. and state capitals around the nation as legislators and state officials debate the merits of policies that would restrict public pension fund investments in companies doing business with terrorist-sponsored states. Close to home, a non-binding resolution was recently introduced in the Missouri legislature that would call on all Missouri public retirement systems to divest funds invested in any U.S. State Department designated terrorist-sponsoring state. Clearly, no one involved in the oversight or administration of PEERS, as well as other public retirement systems in the United States, is a supporter of terrorism or human rights violations. Thus, several public pension funds (including PEERS) have adopted anti-terrorism policies. The PEERS Board adopted a policy June 13, 2005 that calls for staff to annually seek guidance from Federal agencies on countries, and more specifically companies, which are believed to be supporting terrorism. Through these agencies, the System is directed to a number of lists (including firms and individuals) maintained by the Federal government. PEERS does not and will not hold investments in any companies identified on the lists from the Federal government. The PEERS staff and Board considered the following when developing the anti-terrorism policy: The Board acts in a fiduciary capacity charged with oversight of trust money and is, accordingly, required to discharge its duties exclusively in the interests of plan participants (you, the beneficiaries). In order to achieve the best risk-adjusted returns available, it is necessary to recognize the fact that we function in a global economy and must include non-U.S. holdings in the portfolio to take full advantage of the diversification and risk reduction benefits offered through global investing. In addition to diversification benefits, the non-U.S. stocks in the PEERS portfolio have also been the largest contributor to the total fund return over the last five years, as non-U.S. stocks returned 16.4% on an annualized basis relative to 8.1% for U.S. stocks. Individual retirement systems are not positioned to make judgment calls regarding whether or not particular companies (domestic or foreign) are operating for or against the interests of the United States. The PEERS Board and administration are not positioned to make foreign policy judgment calls regarding which, if any, multi-national companies (foreign and domestic) may be operating in ways that run counter to the interest of the United States. Thus, the Systems will continue to look to the Federal government for guidance to ensure that any divestment efforts of PEERS do not unknowingly harm U.S. companies whose activities abroad are consistent with the objectives of the United States.