• The fundamental mission of the Retirement System (e.g., to provide retirement and other benefits to plan participants); and
• Exclusive purpose – investment solely in the interests of plan participants and beneficiaries, for the exclusive purpose of providing retirement and other benefits to plan participants and beneficiaries.

Asset allocation is the key determinant of return and, therefore, commitments to asset allocation targets will be maintained through a disciplined rebalancing program.

Diversification, both by and within asset classes, is a primary risk control element.

Passive and active management—active and passive fund portfolios are suitable investment strategies—with passive management especially suitable in highly efficient markets.

Market timing is precluded as an acceptable investment strategy.

Liabilities—the investment program is ultimately for the purpose of meeting the pension system’s obligations for benefit payments.

Cash flow obligations are important for the investment program to be cognizant.

For total plan assets, the goals are as follows:

• To preserve the actuarial soundness of the plan in order to meet benefit obligations;
• To achieve a long-term (one to two market cycles) return of at least the actuarial earnings rate; and
• To obtain a long-term (one to two market cycles) rate of return, net of fees, in excess of its policy benchmark by _____ basis points. The policy benchmark (see below) is a hypothetical portfolio of index funds weighted by asset allocation targets.Pension fund fiduciaries may consider the following items for inclusion in a section of the investment policy that defines the roles and responsibilities of internal staff and external professionals (or similar section).

• General duties – The Board has the responsibility of establishing and maintaining broad policies and objectives for all aspects of the System’s operation.
• Investment-related duties – The Board will review and approve the development or revision of the following documents: (a) The Investment Policy and Appendices; (b) The Strategic Asset Allocation; (c) Performance Benchmarks for the Strategic Asset Allocation; and (d) All other issues of investment policy not specifically enumerated here.
• Standard of care – The standard of prudence applied to the Board shall be the prudent standard and shall be applied in the context of managing an overall portfolio.

• General duties – A Chief Executive Officer (CEO) is appointed by, and serves at the pleasure of the Board. The CEO is responsible for planning, organizing, and administering the operations of the System under broad policy guidance and direction from the Board.
• Investment-related duties – The CEO, with the assistance of ________ (staff and/or investment consultants), monitors the performance of the investment portfolio; ensures that funds are invested in accordance with Board policies; studies, recommends, and implements policy and operational procedures that will enhance the investment program of the System; and ensures that proper internal controls are developed to safeguard the assets of the System.
• Standard of care – The standard of prudence applied to the Board shall be the prudent ______ standard and shall be applied in the context of managing an overall portfolio.

• Duties – The Investment Manager’s duty is to work with the Board and Staff to manage the investment process. This can include: (a) Review of asset allocations and performance in conjunction with the Staff, and making recommendations to the Board as appropriate; (b) Assistance with external money manager selection; he or she will promptly inform the Board and discuss the impact of material changes taking place within any current manager’s investment process; and (c) Meetings with the Board to provide an independent perspective on the Fund’s goals, structure, performance, and managers.
• Standard of care – The standard of prudence applied to the external investment consultant shall be the prudent ______ standard and shall be applied in the context of managing an overall portfolio.
• Acknowledgement of fiduciary obligations – The external investment consultant will acknowledge in writing that he/she is a fiduciary of the pension plan.
• Communication – The investment consultant will provide the System with quarterly reporting and commentary on total portfolio performance, performance by asset class, and individual manager performance.
• Investments– Money managers will select, buy, sell, and loan specific securities pursuant to this investment policy and guidelines. Discretion is delegated to the managers to carry out investment actions as directed by the System.