CTA Retiree Healthcare Trust Brokerage Policy

Overall

The Board of Trustees (the “Board”) of the Chicago Transit Authority Retiree Healthcare Trust (“the Trust”) has adopted a Brokerage Policy with the overall goal of requiring that its investment managers achieve best execution in their trading of Plan assets.

The Board recognizes a commitment to the success of minority-owned, women-owned and disabled-owned businesses¹, and to promoting opportunities for those businesses in the City of Chicago and the State of Illinois.

To meet that commitment, the Board has adopted a Directed Brokerage Program. The goal of this program is to have investment managers achieve best execution, while utilizing minority-owned, women-owned and disabled-owned brokerage firms.

Directed Brokerage Program

The policy of the Plan with regard to its Directed Brokerage Program is as follows:

Subject to best execution, and where funds are not commingled, all Large-Capitalization Domestic Equity managers, Mid-Capitalization Domestic Equity Managers, Small-Capitalization Domestic Equity managers and International Equity managers shall participate in the Trust’s Directed Brokerage Program. Step-outs are not prohibited within the brokerage policy, but managers are encouraged to use minority-owned, women-owned and disabled-owned brokers for execution.

1. Large-Capitalization Active Domestic Equity Managers
   Subject to best execution and where funds are not commingled, each large capitalization, active domestic equity manager shall comply with the following goals:
   1. Managers are to direct not less than 33% of the total commission dollars to minority-owned, women-owned or disabled-owned brokerage firms with a significant presence in Chicago, and who preferably have an office located within the City of Chicago.
   2. Each investment manager shall submit a semi-annual progress report to the Investment Consultant for the Trust no later than March 1^st and September 1^st for the prior July to December and January to June periods respectively.
   3. If an investment manager fails to comply with the above guidelines, the manager may be scheduled to appear before the Trust to explain why it was unable to achieve its goals.
2. Mid-Capitalization Active Domestic Equity Managers
   Subject to best execution and where funds are not commingled, each mid- capitalization, active domestic equity manager shall comply with the following goals:
   1. Managers are to direct not less than 33% of the total commission dollars to minority-owned, women-owned or disabled-owned brokerage firms with a significant presence in Chicago, and who preferably have an office located within the City of Chicago.
   2. Each investment manager shall submit a semi-annual progress report to the Investment Consultant for the Trust no later than March 1^st and September 1^st for the prior July to December and January to June periods, respectively.
   3. If an investment manager fails to comply with the above guidelines, the manager may be scheduled to appear before the Board to explain why it was unable to achieve its goals.
3. Small-Capitalization Active Domestic Equity Managers
   Subject to best execution and where funds are not commingled, each small capitalization, active domestic equity manager shall comply with the following goals:
   1. Managers are to direct not less than 33% of the total commission dollars to minority-owned, women-owned or disabled-owned brokerage firms with a significant presence in Chicago, and who preferably have an office located within the City of Chicago.
   2. Each investment manager shall submit a semi-annual progress report to the Investment Consultant for the Trust no later than March 1^st and September 1^st for the prior July to December and January to June periods, respectively.
   3. If an investment manager fails to comply with the above guidelines, the manager may be scheduled to appear before the Board to explain why it was unable to achieve its goals.
4. International Equity Managers
   Subject to best execution and where funds are not commingled, each international equity manger shall comply with the following goals:
   1. Managers are to direct not less than 10% of the total commission dollars to minority-owned, and women-owned or disabled-owned brokerage firms with a significant presence in Chicago, and who preferably have an office located within the City of Chicago.
   2. Each investment manager shall submit a semi-annual progress report to the Investment Consultant for the Trust no later than March 1^st and September 1^st for the prior July to December and January to June periods, respectively.
   3. If an investment manager fails to comply with the above guidelines, the manager may be scheduled to appear before the Board to explain why it was unable to achieve its goals.

¹ For purposes of the Trust’s Brokerage Policy, a minority-owned, women-owned or disabled-owned brokerage firm is defined as a sole proprietorship, partnership, or corporation owned, operated, and controlled by a minority, a woman or a person with a disability who has at least 51% ownership. The minority group member(s) must have day-to-day operational and managerial control, and an interest in capital and earnings commensurate with his or her percentage of ownership. The brokerage firms and their operating members utilized by the Trust’s investment managers must be registered with federal and state agencies and must have an established record of performance with a history of having provided best execution and reporting.