Total Allocation Portfolio (TAP)

Fund Objective

The Washington State Investment Board’s (WSIB) Total Allocation Portfolio (TAP) is a diversified investment portfolio designed for the long-term investor.

Investment Strategy

Assets in TAP will be commingled in a pool with assets of the Washington state defined benefit retirement plans that have a long performance history.

The TAP invests across five broad asset classes:

• U.S. equity (U.S. stocks)
• non-U.S. equity (international stocks)
• fixed income (bonds)
• private equity and
• real estate

The U.S. Equity program is 100 percent passively managed against a broad U.S. market index. Approximately 80 percent of the U.S. equity investments are large-capitalization stocks, and 20 percent are mid- and small-capitalization stocks. The Non-U.S. Equity program invests actively and passively in both the developed and emerging international markets. The fixed income program, directly invested by WSIB staff, seeks a rate of return over the Lehman Universal Index. TAP’s private equity and real estate investments are long term, illiquid investments that seek top performing investment partnerships to generate a higher return than other asset classes, and provide additional diversification.

The illiquid assets provide increased diversification for the portfolio, but the values of these assets can only be provided on a monthly basis.

Investment Risk

The Board works with several top national consultants and experienced WSIB investment staff to develop an optimal portfolio mix designed to generate maximum return at a prudent level of risk.

Investment Manager

The TAP is managed by the WSIB. Under the direction of the WSIB, assets are invested by board-selected external managers, with the exception of the fixed income program, which is directly invested by the Washington State Investment Board.

Asset Allocation

Studies have shown that more than 90 percent of portfolio investment returns can be explained by the asset allocation decision, that is how assets are divided between public market securities such as stocks, fixed income and cash, and private market investments such as real estate and private equity.

* This performance (including those shown above) is reported net of the WSIB’s fees, currently 51.3 basis points. This is the same return and cost for all the state’s retirement funds. Plan 3 members do not pay any additional fees to invest in the TAP.

Historical performance is not necessarily indicative of actual future investment performance, which could differ substantially. All returns are calculated in U.S. dollars.

** Other expenses are as of March 31, 2008. Expenses include the operating costs associated with portfolio management and items such as custodial fees, audit fees and transfer agent fees. They are usually fixed costs and change in percentage as the fund balance changes.

Fees are calculated based upon your monthly account balance.

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