June 15, 2006

Sacramento, CA – The California State Teachers' Retirement System today launched a search for one or more investment management firms with experience in corporate governance and a successful track record in relational investing to complement and add to its current relational portfolio. The final filing date for proposals is July 21 with selections expected in the fall of 2006. A copy of the request for proposals is available at www.CalSTRS.com/rfp.

The selected managers will invest in and actively work with underperforming publicly traded companies (either US or non-US equity securities). The relational investment strategy is an active subset of the US and non-US equity allocations with approximately $91.5 billion currently under management. No dollar amount has yet been established for this additional allocation.

"We believe that significant alpha can be added to the Fund, above and beyond the returns available from its core equity portfolio," said Elleen Okada, CalSTRS' director of global equities and operations. "This is an opportune time to expand the corporate governance investment strategy into the non-US equity markets as well as increasing our US exposure. The relational investment strategies should provide an overall positive effect on our broader public market investments and heighten our corporate governance message."

Successful firms will propose an investment strategy that relies on active intervention in a company's long-term strategy, capital structure and capital allocation plan, and its corporate governance, including, but not limited to board structure and board composition.

In addition to awarding one or more contracts, CalSTRS may also use this process to establish a pool of qualified investment management firms as replacements or additions in the future. In the event that none of the proposals is satisfactory, no selection will be made.

With a $146 billion investment portfolio, the California State Teachers' Retirement System is the second-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California's 776,000 public school educators from kindergarten through community college.