TIAA-CREF Investment Services

SAMPLE OF INVESTMENT

POLICY STATEMENT

FOR THE (PLAN NAME)

This document is for sample purposes only. Please review with your legal counsel or Advisor.

TABLE OF CONTENTS

SECTIONSTOPICPAGES

1Plan Information4

2 Purpose of the Investment Policy Statement4

3 Statement of Objectives4

4.Roles and Responsibilities5

5Current Investment Lineup6

6Investment Menu Design6

7Asset Class Guidelines6

8QDIA 7

9Selection Process7

10Periodic Review10

11“Watch List” Procedure11

12Annuity Pay-Out Options12

13Education and Advice12

14Adoption and Approval13

  1. PLAN INFORMATION

The______(name of plan) (“thePlan”) is intended to provide eligible employees theopportunity to generate the long-term accumulationof retirement savings through employer and employeecontributions to individual participant accounts andthe earnings thereon. The Plan is an employee benefit plan intended tocomply with all applicable federal laws and regulationsincluding the Internal Revenue Code of 1986,as amended and applicable [state] law. The Plan’spurpose is to provide a vehicle to accumulate and growassets to fund retirement needs on an individual basisfor eligible employees. The Plan Sponsor appointsthe______(sponsor’s name)’s Retirement PlanOversight Committee (the “Committee”) and delegatesauthority to the Committee to choose and monitor planfunding options. It is the intent of the Committee toprovide a range of funding options under the Plan thatwill enable participants to invest according to varyingrisk tolerances, savings time horizons and otherfinancial goals. The funding options offered under thePlan shall be administered solely in the interests of theplan participants and their beneficiaries. The Committeeis responsible for maintaining a written recordof its decisions and steps taken in connection with themonitoring of the Plan’s funding options.

  1. PURPOSE OF THE INVESTMENT POLICY STATEMENT

This Investment Policy Statement (“IPS”) is intendedto assist the Committee in effectively structuring anappropriate investment menu. This includes establishinga prudent process for selecting, monitoring and, asnecessary, replacing funding options. Specifically, theIPS is intended to:

  • Define investment objectives for the Plan
  • Provide participants a range of diversified fundingoptions along the risk-return spectrum to assistparticipants in their retirement investmentdecision making.
  • Describe the criteria and procedures the Plan willuse in selecting investment options
  • Define the procedure for the ongoing monitoring offunding options

This “IPS” shall be reviewed at least annually by theCommittee and, if appropriate, can be amended toreflect changes in the capital markets, Plan participantobjectives, Plan demographics, legislative and regulatorychanges, or other factors relevant to the Plan.

  1. STATEMENT OF OBJECTIVES

The Plan will encourage participants to take an activerole for their retirement by providing education andinformation so that they can make informed decisionsabout their participation and funding option selections.The Plan’s funding options will be selected to:

  • Provide returns comparable to the appropriatebenchmark for the asset categories.
  • Provide opportunities to diversify across the riskreturnspectrum with a range of investment choiceswithin varied asset classes.
  • Control administrative, management and participantcosts.
  1. ROLES AND RESPONSIBILITIES OF PARTIES INVOLVED

(This section should be modified by plan sponsors to fittheir organization chart.)

BOARD OF DIRECTORS

  • Delegates investment fiduciary responsibilities tothe Investment Oversight Committee
  • Reviews and approves the IPS proposed by theRetirement Plan Oversight Committee

INVESTMENT OVERSIGHT COMMITTEE:

Members of this committee could include (not necessarilyinclude all and not limited to) the personnelbelow (titles could vary from organization to organization):

Members’ Names and Corporate TitlesCommittee Members’ Titles and Roles

CIO/CFO/Treasurer Committee Chair - Investment Review/Analysis

Sr.VP/VP/Director of Human Resources Co–Chair – Plan Administrator and design

Benefits Manager Plan Administrator and design - Participant

Communications

Legal Counselor Legal Advisor – Legal Oversight

Staff/Faculty Member Employee Representative – Employee feedback

The Investment Oversight Committee is generally responsible for:

  • Selecting and terminating funding options
  • Establishing and maintaining the IPS
  • Controlling fees and expenses
  • Monitoring the performance of the funding optionsand making investment changes when necessary
  • Generating communications to participants whennecessary

Investment Manager/Plan Vendor (Investment Consultant, if used) is responsible for:

  • Following this investment policy statement
  • Proposing investment options according to establishedcriteria in this investment policy statement
  • Reporting and reviewing investment options’performance according to frequencies required(quarterly, semi-annually or annually) by this investmentpolicy statement against established peergroups and benchmarks
  • Monitoring changes at fund management firms
  1. CURRENT INVESTMENT LINEUP

The current investment options offered under the Planshall be listed in Appendix A to this IPS, together withthe appropriate benchmark and peer universe (asapplicable) for each such option.

  1. INVESTMENT MENU DESIGN

While offering a variety of funding options is important,efforts will be made to keep the total numberto a prudent level that balances the benefits of broaddiversification with the disadvantages of too manychoices. At a minimum, the Plan shall offer enoughfunding options to well represent at least four majorasset classes: Guaranteed or Stable Value, Cash orCash Equivalents, Domestic and International FixedIncome and Equities. Other alternative asset classessuch as Real Estate and Emerging Markets Equitiesmay also be included.

With respect to the establishment of an upper limiton the number of funding options, the plan shouldnot provide so many options as to create excessiveredundancy in funding options, generate increasedfund monitoring and/or administrative costs, or causeundue complexity in plan design.

  1. ASSET CLASS GUIDELINES

The Plan shall provide each participant with the abilityto diversify among an array of asset classes in order toconstruct individual portfolios consistent with theirdesired level of risk over their respective time horizons.The Plan will offer funding options through mutualfunds and annuities in the following asset categorieslisted below (could be all or several of these):

  • Cash or Equivalents
  • Guaranteed or Stable Value
  • Lifecycle/Target-Dates Funds
  • Balanced/Allocation Target-Risk Funds
  • U.S. Fixed Income (Government, Government/Credit, High Yield, Short/Intermediate/Long Term)
  • U.S./Global Inflation-Protected Bond
  • Global/International Bond
  • U.S. Equities (All Cap, Large/Mid/Small Caps, inValue/Core/Growth Styles)
  • Global/International Equities (All Cap, Large/Mid/Small Caps, in Value/Core/Growth styles)
  • U.S./Global Socially Responsible Equities
  • U.S./Global REIT
  • U.S./Global Direct Real Estate
  1. QUALIFIED DEFAULT INVESTMENT ALTERNATIVE (“QDIA”)

The Lifecycle and Targeted Retirement Date funds,which provide participants with age appropriate assetallocation, are designated as the default funding option in the Plan. These age appropriate funding options are consistent with the requirements of the applicableDepartment of Labor (DOL) regulation on QualifiedDefault Investment Alternatives, Section 2550.404c-5 which is referenced herein as a “best practice.” The default options will be used in situations wherea participant does not actively select funding optionsunder the Plan. On an annual basis, each default optionshall be reviewed to ensure it continues to be an appropriatedefault option.

  1. PLAN VENDORS, INVESTMENT MANAGERS AND INVESTMENT OPTIONS SELECTION PROCESS

When evaluating providers to offer funds/accountsunder the Plan, the Committee will choose investmentoptions provided by a bank, insurance company, andmutual fund or investment management company.

PLAN VENDOR/INVESTMENT MANAGER ASSESSMENT

The Plan Sponsor shall conduct an assessment of thecompany providing the asset management of a fundingoption. The Committee will be responsible for conductingthe periodic assessment of the company on behalfof the Plan Sponsor. At a minimum, the assessmentcan include a review of the following, if applicable:

  • History of the firm
  • Part II of Form ADV for investment advisors underthe Investment Advisers Act of 1940
  • Management and ownership structure
  • Breadth of products offered
  • Financial stability of the company issuing thefunding option
  • Investment philosophy
  • Any material pending or concluded legal orethical violations

Additional aspects of the Investment Provider maybe reviewed at the discretion of the Plan Sponsor. Inaddition, the Committee will conduct regular [can bequarterly, semi-annually or annually] reviews of investmentreturns against standard benchmarks applicableto the funding option.

GENERAL SELECTION REQUIREMENTS FOR ALL INVESTMENT & FUNDING OPTIONS

All Plan funding options should maintain the followingcharacteristics:

  • Diversification by Holdings:Except for InsuranceCompany General Account products, all funding optionsshall maintain a sufficient number and breadthof holdings to provide an adequate representation ofthe primary characteristics of the benchmark index.
  • Competitive Fee Structure:The impact of fees onthe long-term performance of the funding optionswithin the Plan shall be an important consideration.Overall expenses, including sales loads, 12b-1 fees,administrative charges, and mortality and expensecharges (for annuity accounts) can significantlydetract from long-term performance. The netexpense ratio shall be below median expense levelof the appropriate peer group. (The net expenseratio is what the investor pays currently and thegross expense ratio is what the investor couldpotentially pay if there were no fee waivers.) Nomutual funds with front-end or back-end salescharges shall be allowed. All fee information shouldbe adequately disclosed to participants.
  • Track Record of Funding Option: Each activelymanaged funding option should have a minimumtrack record of three years during which the sameportfolio management team managed the fund. The three-year requirement may be waived at thediscretion of the Committee if the manager has aproven track record of managing assets in the samecategory under consideration, or if the fund is an“index” strategy.
  • Track closely to their stated investmentobjective: Each funding option’s objective shouldremain consistent with the option’s role within thePlan’s overall investment structure.

SELECTION REQUIREMENT FOR ALL INVESTMENT & FUNDING OPTIONS

Guaranteed or Stable Value

  • Investment Objective: A Guaranteed option providedby the Insurance Company or InvestmentManager (Issuer), which seeks to provide a minimumlevel of income while preserving principal. This option is typically supported by the TrustFund of the Manager or the General Account of theInsurance Company.

Guidelines:

  • Performance: This funding option should have aguaranteed rate of return that is competitive withother similar options in the marketplace.
  • Issuer Credit Rating: The issuer shall have andmaintain a rating that conveys significant financialstrength as determined by nationally recognizedstatistical rating agencies such as A.M. Best,Standard & Poor’s, Moody’s, and Fitch.

Cash or Cash Equivalents

  • Investment Objective: The cash option shall investin a portfolio of short-term securities to maximizecurrent income while preserving capital.

Guidelines:

  • Performance: Annualized investment return shall becompared to appropriate benchmarks. Investmentperformance (gross of fees) shall either (a) approximateor exceed relevant benchmarks or (b) be abovethe appropriate peer universe, in either case overone, three or five years.

Fixed Income

  • Investment Objective: To seek favorable long-termreturns by investing in a diversified portfolio offixed income securities achieving returns throughinterest payments and capital appreciation of theunderlying securities.

Guidelines:

  • Performance: Annualized investment return shall becompared to appropriate benchmarks. Investmentperformance (gross of fees) shall either (a) approximateor exceed relevant benchmarks or (b) be abovethe 50th percentile of the appropriate peer universe,in either case over one, three or five years.

Equities

  • Investment Objective: To seek favorable long-termreturns from capital appreciation and dividendincome by investing in a portfolio composed of abroad cross-section of common stocks. These fundscan invest in domestic stocks, foreign stocks, or acombination of the two.

Guidelines:

  • Performance: Annualized investment return shall becompared to appropriate benchmarks. Investmentperformance (gross of fees) shall either (a) approximateor exceed relevant benchmarks or (b) be abovethe appropriate peer universe, in either case overone, three or five years.

Directly Owned Real Estate

  • Investment Objective: To seek favorable long-termreturns from income and appreciation primarilyfrom private real estate investments.

Guidelines:

  • Performance: Annualized investment return shall becompared to appropriate benchmarks. Investmentperformance (gross of fees) shall either (a) approximateor exceed relevant benchmarks or (b) be abovethe appropriate peer universe, in either case overone, three or five years.
  • Investment Process: The funding option shall investin real estate primarily through direct ownership ofproperties. The holdings shall be diversified both byproperty type (including commercial office, residential,and retail) and geography.

Index Funds

  • Investment Objective: To achieve a rate of returnthat approximates the return of a specific benchmarkinvestment index after making a reasonableallowance for costs.

Guidelines:

  • Performance: The returns of the fundingoption [less fees] shall be compared to appropriatebenchmarks, and investment performance(gross of fees) shall approximate the return of therelevant benchmark.
  • Investment Process: The funding option will seek toapproximate the return of its target benchmark byinvesting in the same or a representative samplingof those securities that are held by the benchmark.

Lifecycle Funds

  • Investment Objective: To provide a multi-asset-classfunding solution that offers investment diversificationincorporating an allocation that progresses frommore aggressive to more conservative as the participantapproaches a given target retirement date.

Guidelines:

  • Performance: Annualized investment return shall becompared to appropriate benchmarks. Investmentperformance (gross of fees) shall either (a) approximateor exceed relevant benchmarks or (b) be abovethe appropriate peer universe, in either case overone, three or five years.
  • A periodic review of the Lifecycle Fund’s asset allocationand rebalancing strategies will be undertakento ensure the prudence of these processes. Considerationwill also be given to the stability and continuityof the funds included in the Lifecycle offering.
  • Investment Process: Lifecycle fund portfolio is composedof allocations to a variety of underlying fundswith differing risk/return characteristics. MultipleLifecycle funds are made available, each with a differenttarget maturity date to accommodate Planparticipants’ various ages and anticipated retirementdates. The composition of each Lifecycle fundis modified over time following a predeterminedschedule, slowly adapting from a more aggressiveallocation to an allocation that assumes less risk asthe retirement date approaches.
  1. PERIODIC REVIEW

The ongoing monitoring of Plan funding optionsmust be a regular and disciplined process. It is themechanism for measuring ongoing compliance by eachfunding option against the evaluation criteria specifiedbelow. While frequent change in funding options isneither expected nor desirable, monitoring the investmentperformance of the investments in the Planrelative to specified guidelines is an ongoing activity,intended to be conducted quarterly but no lessfrequently than annually.

Each funding option shall be reviewed pursuant to thefollowing evaluation criteria:

  • Adherence to the original investment/accountselection requirements, including long–termperformance measures
  • Any material changes to the option’s organization,process, or portfolio manager or team
  • Any material litigation or regulatory action againstthe firm that may impact future performance or thereputation of the provider
  • Significant loss or growth of assets undermanagement
  • The fund/account is sufficiently utilized by planparticipants

If an assessment of a funding option against the evaluationcriteria does not identify any significant issues, no further action by the Committee is necessary. Ifa material issue is identified for a particular fundingoption against any of the criteria, then the Committeemay decide, in its sole judgment, to (i) take no actionif it concludes that it has reasonable basis for such aconclusion, (ii) monitor the fund closely on a regularbasis (quarterly, or semi-annually or annually) for at least one year as a means of evaluating future progress in addressing the issue of concern or (iii) terminate asan active funding option under the Plan (consider thepros and cons of allowing participants to keep existingmoney in the fund).

It is important to recognize that the IPS providesguidelines to assist the Committee in its decision to select retain or replace a funding option or investmentmanager, but the final decision shall not be made basedon the outlined IPS criteria in isolation. The final decisionshall be based on the Committee’s confidence inthe funding option’s ability to perform competitively inthe future. Any final decision shall be an exercise of theCommittee’s sole and exclusive judgment.

  1. “WATCH LIST” PROCEDURE

(Plan sponsor can keep a “WatchList” as a prudent stepthat precedes fund deletions. Plan sponsor remains as thesole decision maker for fund addition and deletion basedon investment evaluation criteria specified below, with orwithout a “Watch List.”)

An investment option may be placed on a “Watch List”for closer monitoring when one or more of the followingoccur but is not limited to these items:

  • An investment option performs below the medianfor its peer group over 3- or 5-year cumulativemeasurement period.
  • There is a style drift away from the stated investmentapproach for more than two years.
  • There is a significant change in the professionalsmanaging the investment.
  • There is a significant decrease in the investmentoption’s asset under management.
  • There is an increase in the investment fees andexpenses.
  • Any extraordinary event occurs that may interferewith an investment manager’s ability to prudentlymanage investment assets.

The investment may be placed on the “Watch List” fora period of 12 months; however, the Committee retainsthe discretion to extend or reduce the time period thatan investment option is on watch and the Committeewill review and evaluate the appropriateness of theoffering for the Plan.

  1. ANNUITY PAY-OUT OPTIONS

The Committee shall choose annuity pay-out contractsas required by the Plan that provide for periodicpayments that are guaranteed to continue as long asthe participant or beneficiary lives. In choosing suchoptions the Committee shall:

  • Engage in an objective, thorough and analyticalsearch for the purpose of identifying and selectingproviders from which to purchase annuities;
  • Appropriately consider the cost (including fees, surrender charges andcommissions) of the annuity contract in relationto the benefits and administrative services to beprovided under the contract;
  • Appropriately conclude that, at the time of selection, the annuity provider is financially ableto make all future payments under the annuitycontract and that the cost of the annuity contractis reasonable in relation to the benefits and services provided under the contract; and
  • Choose from annuity contact providers that haveand maintain a rating that conveys significantfinancial strength as determined by nationallyrecognized statistical rating agencies such asA.M. Best, Standard & Poor’s, Moody’s, and Fitch.

13. EDUCATION AND ADVICE