The sole purpose of the Fund is to accumulate the financial reserves necessary to provide benefits to eligible members of the System and their beneficiaries. To achieve this outcome consistently and sustainably, the Fund will be structured and managed to maximize, in rank order of importance, net of all fees and expenses, the probability of achieving:

1. A long-term, annualized nominal rate of return that meets or exceeds the actuarially assumed rate of return for the System; and
2. A long-term, risk-adjusted relative rate of return that meets or exceeds the Passive Benchmark (i.e., the Reference Portfolio); and
3. A long-term, risk-adjusted relative rate of return that meets or exceeds the Policy Benchmark (i.e., the Strategic Benchmark); and
4. A long-term, risk-adjusted relative rate of return that ranks in the top quartile of comparable peers consistently.

The Fund will pursue achievement of these strategic objectives via fiduciary best practices that:

• Ensure proper diversification of asset classes and factor exposures; and
• Maintain appropriate long-term risk and return expectations; and
• Adapt the Fund’s positioning to changing market conditions.

The Board, with consultation, advice and assistance from the System’s Staff and Investment Consultant(s), will use the Fund’s strategic asset allocation process and its effective implementation as the primary tools to achieve these goals. A primary emphasis of the management of the Fund is consistency of growth by seeking to balance the risk of inadequate long-term returns against the risk of permanent impairment of capital. Taxes shall not be a consideration except that the System’s tax-exempt status should be preserved.