How to Access Trusted Financial Advisors (for Free)

PAGE • 1

H000178516

• July 2016 •

Quarterly Fund Performance

Summary ...................................... 2

Investment Plan Fund

Name Change ............................... 2

Free Employee Workshop

Webcasts ...................................... 5

Lifetime Annuity Quotes —

$100,000 Premium ....................... 5

What’s the Right Way to Use a

Retirement Date Fund? ................. 6

About Your Annual Fee Disclosure

Statement .................................... 6

2016 Legislative Update

In the April 2016 issue of this newsletter, we indicated

that several bills had passed that will affect the

Florida Retirement System (FRS). All bills discussed

in the April newsletter have now been signed into law.

Additional information can be found on the “2016

Legislation” page in the “Alerts & Hot Topics” box

on the

MyFRS.com

home page.

How to Access Trusted Financial

Advisors (for Free)

When it comes to seeking professional nancial advice, how do you

know you can trust the guidance you get? Is the nancial advisor

acting in your best interest, or is he or she just looking to score a big

commission by steering you to an expensive investment? The answer

lies in whether or not the advisor has a duciary responsibility to you,

and many American adults (41%) don’t know whether their nancial

advisor is a duciary or not. Almost half (46%) mistakenly believed that

all nancial advisors were required to put their clients’ interests rst

when it comes to retirement.

A duciary is someone you can trust, someone who acts in your best

interest at all times. In nancial matters, a duciary’s responsibilities

are both ethical and legal. When an advisor enters into a duciary

relationship with you, he or she is expected to manage your assets for

your benet rather than for his or her own prot.

Recently, the Department of Labor nalized a new rule requiring

nancial advisors who provide advice on retirement assets to serve as

duciaries. But, as a member of the Florida Retirement System (FRS),

you’ve had access to professional, unbiased nancial planners — at no

cost — all along.

The MyFRS Financial Guidance Program provides you free access to

EY nancial planners. These planners do not sell any investment or

insurance products, and they do not receive a commission for the work

they do with you. They will always put your interests rst.

Similarly, Financial Engines, who provides guidance and online tools

for MyFRS.com, is a duciary to the FRS. Financial Engines discharges

its duties solely in the interest of FRS members and does not directly or

indirectly receive any benet from recommendations it makes to you

through the online ADVISOR

SERVICE tool.

To take advantage of the unbiased nancial planners and tools available

to FRS members, call the MyFRS Financial Guidance Line toll-free at

1-866-446-9377, Option 2.

In Whose Best Interest?,

Financial Engines, March 2016

, https://corp.financialengines.com/docs/Financial-Engines-Best-

Interest-Report-040416.pdf.

Check Up on Your

Financial Advisor

To view the employment history, certifications,

licenses, and possible violations or complaints against

your broker or investment or financial advisor, use

BrokerCheck, a free online tool provided by the

Financial Industry Regulatory Authority. To check an

advisor, go to

brokercheck.finra.org

PAGE • 2

Quarterly Fund Performance Summary

Overview

The Performance Summary is organized by asset classes: Retirement Date Funds, money market

funds, real assets funds, bond funds, U.S. stock funds, and foreign and global funds. Retirement

Date Funds are a special asset class that provides a diversified mixture of various asset classes.

A Self-Directed Brokerage Account (SDBA) is also available.

Asset classes are groups of similar investments whose values react to changes in the economy

the same basic way. Organizing funds according to asset classes is a way to simplify how you

invest and improve the odds of meeting your retirement goals. Investing in a mix of asset

classes (also called “diversifying”) helps you control your risk, because the different asset classes

typically react to market volatility in different ways.

Before you select any investment funds or make an election, you should also review the Fund

Profiles, the Investment Fund Summary, and the Annual Fee Disclosure Statement posted in the

“Investment Funds” section on MyFRS.com. The asset class descriptions below are general in

nature and should not be relied on as your sole source of information regarding a specific fund(s).

Note that there can be risk in holding a large portion of your account balance in a single fund (unless that fund is a reasonably diversified

fund, such as a Retirement Date Fund). For further information about diversifying your account, please call the MyFRS Financial Guidance

Line at 1-866-446-9377, Option 2, or call the Telecommunications Relay Service (TRS 711), or visit MyFRS.com. Additional information

about investing and diversification can be found on the U.S. Department of Labor’s website at

dol.gov/ebsa/investing.html

This Performance Summary is

intended for use in connection

with the FRS Investment Plan,

pursuant to Florida law, and is

not intended for use by other

investors. Sections 121.4501(8)

(b)4 and 121.4501(15)(b),

Florida Statutes, incorporate

the federal law concept of

participant control, established

by regulations of the U.S.

Department of Labor under

Section 404(c) of the Employee

Retirement Income Security

Act of 1974. If you exercise

control over the assets in your

Investment Plan account,

including the Self-Directed

Brokerage Account, pursuant to

Section 404(c) regulations and

all applicable laws governing

the operation of the Investment

Plan, no program fiduciary shall

be liable for any loss to your

account which results from your

exercise of control.

Retirement Date Funds

These funds are particularly good for “one-stop shopping.”

Each Retirement Date Fund is a diversified portfolio of other

FRS Investment Plan funds and uses an asset allocation

concept called “target date funds.” The mix of funds in each

Retirement Date Fund is based on the amount of time you

have before retirement, and the mix gradually changes as you

approach retirement. This gradual change follows a careful

investment strategy called a “glide path.” Each Retirement

Date Fund’s glide path was developed for the FRS by a

global investment consulting firm and a fiduciary to the FRS.

Money Market Funds

These funds invest in short-term securities (financial

instruments or obligations) that are high-quality and can be

sold quickly with little loss of value. The funds have limited

risk of declining in value; however, over the long term, returns

have been modest and may not keep pace with inflation.

Money market funds are not FDIC-insured or guaranteed.

Real Assets Funds

These funds invest in a diversified array of assets that may

help offset inflationary pressures. The funds seek long-term

real (net of inflation) returns to preserve the future purchasing

power of accumulated assets. You could lose money over

short or long periods by investing in this fund. The fund’s

price and return will vary over a wide range.

Bond Funds

These funds invest primarily in bonds, which are like IOUs;

a company or government agency borrows money and pays

it back with interest to the bondholder (the entity making the

loan). The quality of a bond is reflected in the credit rating of

the company or agency that issues the bond. The short-term

risk of bond funds is relatively low. However, over time, the

value of a bond is affected by interest rates, inflation, and

other factors. When inflation or interest rates go up, the value

of bonds goes down because they pay a fixed rate of interest

(the market sees other investments as being more attractive).

Therefore, bonds and bond funds don’t always protect the

value of your retirement savings against inflation.

U.S. Stock Funds

These funds invest primarily in equity shares or stocks

issued by U.S. companies. The short-term risk of investing

in stocks has been much higher than bonds. However, over

long periods of time, stocks have generally done better than

bonds, which is one of the main reasons that stocks are

typically recommended for retirement investing. Some risk is

necessary to achieve long-term investment growth.

Foreign and Global Stock Funds

These funds invest primarily in stocks issued by foreign

companies. Foreign stocks are affected by additional risk

factors, such as foreign laws and regulations, differences

in accounting practices, political risk (foreign governments

are sometimes unstable), and currency risk (differences in

the relative value of domestic and foreign money). Over the

long term, foreign stocks have not done quite as well as U.S.

stocks, but they have provided diversification benefits.

The Self-Directed Brokerage Account

The Self-Directed Brokerage Account (SDBA) allows you

to invest in thousands of different investments in addition to

the Investment Plan’s primary investment funds. An SDBA

is not suitable for all members, and you assume the full risk

and responsibility for the investments you select. Additional

information on the SDBA is available in the “Investment

Funds” section on

MyFRS.com

Investment Plan Fund Name Change

The FRS Retirement Income Fund (2000) has changed its name to

“FRS Retirement Fund (2000).” The fund’s benchmark has also

changed its name from “Retirement Income Custom Index” to

“Retirement Custom Index.” Although the names have changed,

there has been no change to the management company, fund

objectives, investment strategy, or portfolio management team.

If you have questions, please call the MyFRS Financial Guidance

Line toll-free at 1-866-446-9377, Option 2 (TRS 711).

PAGE • 3

What’s in the Summary?

Below you’ll nd a brief description of the information in the Performance Summary.

Long-Term Fees are the value in today’s dollars of the total fees that

would be charged over 30 years, assuming a $1,000 initial investment.

“PB” stands for “performance benchmark.” It allows you to see how well

the fund is doing relative to the performance of the market sector it is trying to

beat. Note that index funds are designed to approximate the returns of their

benchmarks. Benchmarks do not have costs.

Total Index is a combination of all the market benchmarks in each market

sector and is based on the asset amounts of each fund in each market sector.

Management Type is the type of investment strategy used by a fund.

Passively Managed (or index) funds follow a strategy to produce the

same level and pattern of investment returns generated in a market index

(such as the S&P 500

index) by buying and holding the same securities

as the index itself. Index funds carry a very low fee.

Actively Managed funds try to predict securities price movements in

order to beat a market index. The higher fees associated with actively

managed funds are used to support the research needed to predict

market changes.

Performance Summary as of June 30, 2016

Fees per Annual Average Investment Returns

$1,000 After Deducting Fees

Annual Long-Term Previous Previous Previous Previous

Fees

Fees Quarter

Year 5 Years 10 Years

TOTAL FRS INVESTMENT PLAN – – – – 1.69% -0.88% 5.51% 4.87%

PB: Investment Plan Total Index

– – – – 1.81% -0.36% 5.37% 4.50%

RETIREMENT DATE FUNDS – – – – 1.81% -0.76% – – – –

PB: Total Retirement Custom Index

– – – – 1.68% -0.68% – – – –

FRS 2055 Retirement Date Fund

(2055) $0.70 $21 1.44% -2.04% – – – –

PB: 2055 Retirement Custom Index

– – – – 1.40% -2.36% – – – –

FRS 2050 Retirement Date Fund

(2050) $0.70 $21 1.43% -2.06% 6.59% – –

PB: 2050 Retirement Custom Index

– – – – 1.40% -2.36% 6.35% – –

FRS 2045 Retirement Date Fund

(2045) $0.70 $21 1.45% -2.03% 6.60% – –

PB: 2045 Retirement Custom Index

– – – – 1.40% -2.36% 6.35% – –

FRS 2040 Retirement Date Fund

(2040) $0.70 $21 1.48% -2.02% 6.60% – –

PB: 2040 Retirement Custom Index

– – – – 1.41% -2.22% 6.38% – –

FRS 2035 Retirement Date Fund

(2035) $0.80 $24 1.62% -1.66% 6.60% – –

PB: 2035 Retirement Custom Index

– – – – 1.51% -1.84% 6.40% – –

FRS 2030 Retirement Date Fund

(2030) $1.00 $30 1.70% -0.85% 6.04% – –

PB: 2030 Retirement Custom Index

– – – – 1.63% -0.95% 5.85% – –

FRS 2025 Retirement Date Fund

(2025) $1.20 $37 1.87% -0.41% 5.37% – –

PB: 2025 Retirement Custom Index

– – – – 1.74% -0.34% 5.18% – –

FRS 2020 Retirement Date Fund

(2020) $1.30 $40 2.05% -0.08% 4.69% – –

PB: 2020 Retirement Custom Index

– – – – 1.87% 0.30% 4.52% – –

FRS 2015 Retirement Date Fund

(2015) $1.50 $46 2.23% 0.38% 4.04% – –

PB: 2015 Retirement Custom Index

– – – – 2.01% 1.00% 3.84% – –

FRS Retirement Fund

(2000) $1.50 $46 2.30% 0.70% 3.84% – –

PB: Retirement Custom Index

– – – – 2.03% 1.30% 3.52% – –

MONEY MARKET FUND

FRS Money Market Fund (60) $0.60 $18 0.14% 0.38% 0.25% 1.23%

PB: iMoneyNet Money Fund Average

– – – – 0.06% 0.15% 0.06% 1.22%

REAL ASSETS FUND

FRS Real Assets Fund

(300) $4.50 $145 3.73% -2.92% 0.44% – –

PB: FRS Custom Real Assets Index

– – – – 3.03% -0.23% -0.11% – –

Refer to page 2 for a definition of these

asset classes.

= Passively Managed Type

= Actively Managed Type

To Be Updated

PAGE • 4

Fees per Annual Average Investment Returns

$1,000 After Deducting Fees

Annual Long-Term Previous Previous Previous Previous

Fees

Fees Quarter

Year 5 Years 10 Years

BOND FUNDS – – – – 2.53% 5.31% 3.81% 5.46%

PB: Investment Plan Total Bond Index

– – – – 2.38% 4.94% 3.64% 5.06%

FRS U.S. Bond Enhanced Index Fund

(80) $0.50 $15 2.27% 6.25% 3.91% 5.36%

PB: Barclays Capital Aggregate Bond Index

– – – – 2.21% 6.00% 3.76% 5.13%

FIAM Intermediate Duration Pool Fund

(90) $1.21 $37 2.03% 4.69% 3.30% 4.65%

PB: Barclays Capital Intermediate

– – – – 1.44% 4.36% 2.96% 4.66%

Aggregate Bond Index

FRS Core Plus Fixed Income Fund

(310) $2.40 $75 2.77% 5.51% 4.69% – –

PB: FRS Custom Core Plus Fixed Income Index

– – – – 2.61% 5.21% 4.70% – –

U.S. STOCK FUNDS – – – – 2.40% 0.57% 11.15% 7.74%

PB: Investment Plan Total U.S. Equities Index

– – – – 2.93% 1.19% 11.02% 7.26%

FRS U.S. Stock Market Index Fund

(120) $0.20 $6 2.65% 2.30% 11.68% 7.49%

PB: Russell 3000 Index

– – – – 2.63% 2.14% 11.60% 7.40%

FRS U.S. Large Cap Equity Fund

(320) $3.30 $104 1.25% -2.26% 11.20% – –

PB: Russell 1000 Index

– – – – 2.54% 2.93% 11.88% – –

FRS U.S. Small/Mid Cap Equity Fund

(330) $6.60 $220 3.02% -0.22% 10.71% – –

PB: Russell 2500 Index

– – – – 4.01% -2.10% 7.84% – –

FOREIGN AND GLOBAL STOCK FUNDS – – – – -0.28% -8.44% 2.74% 3.27%

PB: Investment Plan Total Foreign/Global

– – – – -0.43% -8.81% 1.91% 2.00%

Equities Index

FRS Foreign Stock Index Fund

(200) $0.30 $9 -0.48% -9.60% 1.67% 2.01%

PB: MSCI ACWI ex US IMI Index

– – – – -0.68% -9.61% 1.35% 1.69%

American Funds EuroPacific Growth Fund

(220) $4.90 $159 -0.32% -9.57% 2.50% 3.97%

PB: MSCI ACWI ex US Index

– – – – -0.40% -9.80% 0.56% 1.45%

American Funds New Perspective Fund

(210) $4.90 $159 0.84% -1.60% 8.00% 6.95%

PB: MSCI All Country World Index

– – – – 0.99% -3.73% 5.69% 3.97%

The performance information presented reflects past performance, which is not necessarily an indication of future performance. The most recent quarter,

1-, 5-, and 10-year performance returns are shown. The following applies to “FRS” labeled funds with an inception date of 7-1-2014: 1) the 5-year history,

if available, is considered the return since inception; and 2) 1-year and 5-year historical performance is based on the target weight of the underlying

managers/funds that would have been in place if the funds had been in place during these time periods.

Fees and expenses are only one of several factors that you should consider when making investment decisions.

Not annualized.

This fund is subject to an Excessive Fund Trading Policy, which may limit your ability to make investment changes involving this fund. The policy is

available on the “Investment Funds” page of

MyFRS.com

Effective July 1, 2016, the benchmark changed from a custom benchmark, the FRS Custom Small/Mid Cap Index, to the Russell 2500 Index.

= Passively Managed Type

= Actively Managed Type

Performance Summary as of June 30, 2016 — continued

PAGE • 5

Beneficiary Designation

Reminder

Your enclosed quarterly FRS Investment Plan

Account Statement lists your current Investment

Plan account beneficiary(ies). Please review

these beneficiary(ies) to ensure they are correct.

You can change your beneficiaries by logging in

MyFRS.co

m and clicking Manage Investment

> Personal Information > Beneficiaries.

Or you can complete an FRS Investment Plan

Beneficiary Designation Form (IPBEN-1), which

is also available online. You can also update your

beneficiaries by calling the FRS Investment Plan

Administrator at 1-866-446-9377, Option 4

(TRS 711).

Lifetime Annuity Quotes —

$100,000 Premium (As of 6/30/2016)

Annuity Type Monthly Benefit

Single Life $498

Joint and Survivor $431

Assumptions: The monthly benefits listed in the examples above assume you used $100,000 of your Investment

Plan balance to purchase a lifetime fixed annuity from the Investment Plan’s annuity provider.

The Single Life Annuity example assumes a female, aged 62. By choosing a single life annuity, she will receive

fixed payments in the amount of $498 for the rest of her life, no matter how long she lives. All income payments will

cease upon her death and no further benefit payments will be due.

The Joint and Survivor Annuity example assumes a female, aged 62, has chosen her spouse, aged 62, as her

survivor. By choosing a joint and survivor annuity, she will receive $431 for the rest of her life. When she dies, if her

spouse is still alive, then the spouse will continue to receive the $431 for the rest of the spouse’s life, no matter how

long the spouse lives. You may name anyone as your survivor when you purchase a joint and survivor annuity.

Your actual annuity quotes may vary based on your individual data and other circumstances. Please note other

annuity payment options and features are also available.

To find out if an annuity is right for you, or to purchase an annuity, please call the MyFRS Financial

Guidance Line at 1-866-446-9377, Option 2 (TRS 711).

Free Employee Workshop Webcasts

The FRS offers free nancial planning workshop webcasts for

FRS-covered employees. You may attend as many workshops as

you wish.

• By Phone: 1-866-446-9377, Option 2 (TRS 711)

• Online: tinyurl.com/zrsh8r6 (After login, select “Attend a

Workshop,” then “WEBINAR” under the County drop-down box,

and then select the workshop you would like to attend.)

2016 Dates 10:00 a.m. to Noon ET 1:00 to 3:00 p.m. ET

July 19 Using the FRS to Plan Estate Planning: Caring for

for Retirement Your Loved Ones

July 20 Nearing Retirement in Insurance Planning: Protecting

the FRS Your Loved Ones

October 5 Using the FRS to Plan FRS Investment Plan:

for Retirement Understanding Your Benefits

October 6 Nearing Retirement in Investment Planning for

the FRS Everyone - The Details

Change Your MyFRS.com

Security experts suggest you change your online

passwords on a regular basis. You may want to

consider changing your

MyFRS.com

Password

each quarter. You can let your quarterly

statement serve as your reminder. To change

your

MyFRS.com

following steps:

• Loginto

MyFRS.com

with your current

User ID and Password.

• Onceloggedin,moveyourmousecursor

over your name in the top-right corner

and select “My Profile.”

• Whenthe“MyProfile”informationpage

appears, enter your current Password and

your new Password, confirm your new

Password, and select “SAVE.”

Your Password will be changed.

Your Password is case-sensitive and must

be between 8 and 32 characters in length.

Special characters are allowed

(except for “_” underscore).

PAGE • 6

Did You Know?

Happiness is being able to learn

something new. Learning something

new gives you knowledge, and with

knowledge comes power. You have the

power to control your retirement, and

now is the perfect time to start. Learn

something new today, set goals, and

take control to ensure happiness in

your retirement years. Many helpful

tools are available on

MyFRS.com

help you calculate your retirement

needs to ensure you have the financial

means to retire when the time comes.

Speak with an EY planner for help to

get started saving. Call today – it’s

never too soon!

What’s the Right Way to Use a Retirement

Date Fund?

The Investment Plan’s Retirement Date Funds are designed to make investing for

your retirement simple. All you have to do is choose the one Retirement Date Fund

that most closely matches the year you expect to retire from the FRS Investment

Plan. Choosing just one Retirement Date Fund is the best way to get the most from it.

What makes this “one and done” approach possible is that each Retirement Date

Fund is a diversied portfolio of other FRS Investment Plan funds. The mix of funds

is based on the amount of time you have before retirement. As your retirement

gets nearer, this mix gradually shifts — from growth to preservation — to match

your changing investment needs.

A recent survey from Financial Engines, who provides guidance and online tools

for MyFRS.com, found that many investors are not using Retirement Date Funds

correctly.

Instead of investing in just one Retirement Date Fund, as recommended,

many investors are investing in a Retirement Date Fund plus additional investment

funds. Participants who mixed Retirement Date Funds with other funds saw median

annual returns 2.11% lower than investors who held almost all of their funds in just

one Retirement Date Fund.

If you are invested in more than one Retirement Date Fund or in a Retirement Date

Fund plus additional investment funds, call the MyFRS Financial Guidance Line at

1-866-446-9377, Option 2, to discuss your investment goals and approach.

Pick One and Done!

Each Retirement Date Fund is a diversied portfolio of other FRS Investment Plan

funds. To match your changing investment needs, the mix of funds gradually

changes as retirement gets nearer.

FRS Retirement Fund (2000)

FRS 2015 Retirement Date Fund (2015)

FRS 2020 Retirement Date Fund (2020)

FRS 2025 Retirement Date Fund (2025)

FRS 2030 Retirement Date Fund (2030)

FRS 2035 Retirement Date Fund (2035)

FRS 2040 Retirement Date Fund (2040)

FRS 2045 Retirement Date Fund (2045)

FRS 2050 Retirement Date Fund (2050)

FRS 2055 Retirement Date Fund (2055)

For more information about Retirement Date Funds, visit the “Investment Funds”

section on MyFRS.com.

Not so simple: Why target-date funds are widely misused by retirement investors

, Financial Engines, March 1, 2016,

https://corp.financialengines.com/docs/Financial-Engines-TDF-Report-022916.pdf

About Your Annual Fee Disclosure Statement

The Annual Fee Disclosure Statement for the FRS Investment Plan provides

information concerning the Investment Plan’s structure, administrative and

individual expenses, and investment funds, including performance, benchmarks,

fees, and expenses. This Statement is designed to set forth relevant information

in simple terms to help you make better investment decisions. The Statement

is available online in the “Investment Funds” section on MyFRS.com, or you can

request a printed copy be mailed at no cost to you by calling the MyFRS Financial

Guidance Line toll-free at 1-866-446-9377, Option 4 (TRS 711).