Contract_Attachment_4.pdf

Optional Retirement Program ("oRP")

Imvestmemt Policy

NOTICE: This document &E--4g! outline the investment risks, fees, expenses, tenns, conditions, restrictions and other important information for Optional Retirement Program Participants. Participants should obtain such information from the Participant Inforrnatiott available on the Optional Retirement Program's website, ',rul*-.r'elircrrarlrltt.gtrr- or by contacting the current Designated Companies:

AIG RETIREMENT SERVICES-VALIC

TIAA

VOYA

888-569-7055 800-842-2776

866-776-6704, ext 2

Each Participant in the Optional Retirement Program is responsible for hislher own investment decisions. A Participant should request and read the prospectus and additional information provided by the Designated Company offering the investment option to which a Participant is considering allocating contributions" The prospectus and additional information outline the investment risks, fees, expenses, terms, conditions, restrictions and other important information necessary for a Participant to make an informed investment decision.

Opt i ona I Retire me nt P rog ranr Investnlent Policy Statement (fts1,- 02/2022) Page I of 15

TABLE OF CONTENTS

I. Definitions

IL Overview and Autority A. Introduction ......- B. InvestmentAuthority C. Fiduciary Standard D. Scope..

Objective

Roles and Responsibilities Trustees State Treasurer.

Chief Investment Offi cer Director of Deferred Compensation .

Department ofTreasury

,4

J

III.

IV.

A.

B.

C.

D.

E, F.

G.

A.

B.

C.

D.

E.

i*

."5

.,"6 Consultant(s) Designated Companies

Governing Principles Primary Investment Phi losophy Authorized Asset Classes and Investment Strategies..

Authorized Investment Vehicles

Revenue Sharing, Distribution and Service Fees

VI. Ccnsultant(s) and Service Providers

VII. Selection Criteria for Investment Options A- Mutual Funds B. Annuities C. Fixed Account.-..

D. Self-Directed Brokerage Accounl ("SDBA").

VIII. Selection Criteria for Designated Companies.

IX. Monitoring and Reporting......, A. Quarterlyl0 B. Periodically .

..6 -I

I

.8

.8

I r0

C, Annuatrtry.

l0

. . _..1 I

X. Underperforming Investment Options .................. ...1 1

XI. OtherConsiderations .... 1 1

XII. Approval and Adoption

Appendix A - ORP lnvestment Options and Designated Benchmarks..,, Op tional Re I i re menl P rogram Im'estment Poliqt Stotetent (Ra,. 02/2A22) Page 2 af 15

I. Delinitions

The following definitions are used hereafter with respect to this lnvestment Policy

Consultant(s) - An entity or individual. duly selected and contractually bound, with substantial experience in providing investment advice on andlor consulting services in the evaluation and selection of investment options. Such Consultant(s) will be appropriately registered. or exempt from registration, under the applicable state and federal securities laws, rules, and regulations.

Department of Treasury Staff - Each Department of Treasury employee involved in the administration or management of the ORP, Department of Treasury Staff includes, but is not Iimited to, the State Treasurer. Chief Investment Officer and Director of Deferred Compensation.

Designated Companies - The companies designated and autlrorized by the Trustees to provide investment options to Participants.

ORP- Optional Retirement Program for Employees of Public Institutions of Higher Education

Participant - An employee of a public institution of higher education in Tennessee who is eligible to participate, and elects to participate, in the Optional Retirement Program under Tennessee Code Annotated. Title 8, Chapter 25.

Self-Directed Brokerage Account ("SDBA") - An alternative method for Participants who wish to take an active role selecting investment instruments not available as a direct investment option in the ORP.

T.C.A. - Tennessee Code Annotated

Trustees - The Trustees of the Optional Retirement Program for Employees of Public Institutions of Higher Education, who are the commissioner of finance and administration, the chair of the finance, ways and means committee of the senate, the chair of the finance, ways and rneans committee of the house of representatives, and the chair of the consolidated retirement board.

Underperforming Investment Option - An investment option that is rated "underperforming', based on a performance analysis conducted by fhe Department of Treasury Staff.

Watch List - A list rnaintained by the Department of Treasury Staff in order to efficiently track any Underperform ing Investment Option.

Opliorol Re lirenent Progrom lwestment Policy Sratentenr (Ret. 02/2022) Page 3 of 15

II. Overview and Authority

A. Introduction

The Optional Retirement Program for Ernployees of Pubiic Institutions of Higher Education ("ORP") was established for the purpose of providing retirement and other benefits for eligible emplcyeesof participating public institutions of higher education.

B. InvestmentAuthoritv

Day-to-day administration and operation of the ORP is hereby delegated to the State Treasurer.

Implementation of the ORP Investment Policy established by the Trustees is hereby delegated to the State Treasurer, who shall put such policy into effect. In implementing this Investment Policy, the State Treasurer hereby delegates certain responsibilities to the Department of Treasury Stan:

including. but not limited to, the Director of Deferred Compensation and Chief lnvestment Officer.

The Trustees have the authority to designate at least two {2), but up to three (3), companies ("Designated Compar:ies") to provide investment options to Participants. The Trustees hereby delegate such authority to the State Treasurer, rls outlined within this lnvestment Policy.

C" Fiduciary Standand

All assets of the ORP shall be invested and managed solely in the interest of the ORP's beneficiaries and in a manner consistent with T.C.A. $35-14-107, the prudent investor rule pursuant to T.C.A. $35-14-103 and the standard of care pursuant to T.C.A. $35-14-104.

Furthermore, the delegation of investment and management functions shall be carried out in accordance with T.C.A. $35-14-111

D. Scope

The Investment Policy is binding on all persons and entities with authority over the ORP' s assets, including, but not limited to. the Trustees, Department of Treasury Staff, Designated Companies and any other person who or entity that may have a fiduciary relationship with the ORP.

m. Objective

The purpose of this Investment Policy is to support the ORP's primary purpose by:

Outlining the distinct roles and responsibilities of the Trustees, Department of Treasury Staff, Consultant(s) and Designated Companies;

Establishing investment criteria which the Trustees determine to be prudent and in the best interest of the beneficiaries, for the selection, ongoing evaluation. and, if necessary, termination of investment options;

Communicating the lnvestment Policy, as approved by the Trustees, to the Department of Treasury Staff, Consultant(s), Designated Cornpanies and any other person who or entity that may have a fiduciary relationship with theORP;and Functioning as a supervisory tool. guiding the ongoing oversight of the investment options available under the ORP.

Opt ional Re tirenent Program ln'estuent Policy Statement {Rev. 02/2022) Page 4 ol 15

IY. Roles and Responsibilities tn addition to the responsitrilities described below and throughout the Investment Policy.

Designated Companies , as well as any other person who or entity that may have a fiduciary relationship with the ORP, may have additional duties and responsibilities outlined within federal and state laws, rules and reguiations; executed contracts or agreements; or as dictated by standard business or industry practices.

A, Trustees

I) Adopt an lnvestment Policy that establishes the investment criteria. which the

Trustees determine to be prudent;

2) Delegate investment and management functions that a prudent trustee of comparable skills would properly delegate under the circumstances;

3) Evaluate the investment performance of the investment options, through reports supplied by the State Treasurer, Department of Treasury Staff, Consultant( s), Designated Compan ies, and/or other serv ice prov iders; and

4) Periodically review the actions taken by delegates in order to monitor performance and compliance with the terms of the delegation-

B. StateTreasurer

I ) lmplement the Investment Policy, as approved by the Trustees;

2) Delegate investment and management functions that a prudent trustee of comparable skills would properly delegate under the circumstances;

3) Approve a prudent menu of investment options through the evaluation of the investments and recornmendations made by the Chief Investment Officer and

Department of Treasury Staff;

4) Review and, as applicable, authorize the use of Consultant(s), service providers and the employment of Department of Treasury Staf!

5) Evaluate and, as applicable, approve the processes employed and procedures established try Department of Treasury Staffl

6) With the advice and counsel, as applicable, of legal counsel, negotiate and execute all contracts, agreements, forms and memoranda of understanding deemed necessary or desirable for the efficient administration of the ORP' s aSSets;

7) Monitor the investment performance of the investment options and Designated Companies; and

8) Take actions that are deemed essential to protect the assets of the ORP with any emergency actions being promptly reported to the Trustees.

C. Chief Investment Officer

1) Assume executive responsibility and authority, as delegated by the State

Treasurer, and undertake the necessary authority to effectively manage and supervise, as applicable;

2) Delegate investment and management functions to Department of Treasury

Staffthat a prudent trustee of comparable skills would properly delegate under the circum stances;

3) Create a prudent menu of investment options through the evaluation of the investments offered by the Designated Companies and recommendations

Optiono I Re t i rene nl l' rogra m Ir*estment Poliqs Sratenent (Ret (,28022) Page 5 of I5 made by Department of Treasury Staff, Consultant(s) and/or service provider(s);

4) Report to and consult with the State Treasurer and/or his designee on administrative, organizational and investment activities;

5) Collaborate, as applicable, with the Department of Treasury Staff.

Consultant(s), Designated Companies, and service providers on development and implementation of appropriate strategies, policies, and procedures;

6) Prepare and submit reports, as required, to document activities; and

7) Notify the State Treasurer of situations that merit the Trustees ' attention.

D" Dinector of Deferrcd Comgrensatiom

l) Assurne executive responsibility and authority, as delegated by the State

Treasurer, and undertake the necessary authority to effectively manage and supervise the day-to-day operations of the ORP, as applicat,le;

2) Delegate functions to Department of Treasury Staff that a prudent trustee of comparable skills would properly delegate under the circumstances;

3) Report to and consult with the State Treasurer and/or his designee on administrative, organizational and management activities;

4) Collaborate, as applicable, with the Department of Treasury Staff, Consultant(s), Designated Companies, and service providers on development and implementation of appropriale strategies, policies, and procedures;

5) Prepare and submit r€ports, as required, to document activities; and

6) Notif! the State Treasurer of situations that merit the Trustees' attention.

E. Department of Treasury Staff

l) Utilize special skills and expeftise in an effort to accomplish the delegated or assigned task;

2) Evaluate the investment performance of the investment options, through reports supplied by the Consultant(s), Designated Companies andlor other service providers;

3) Assist the State Treasurer, or his designee, Chief Investment Officer and

Director of Deferred Compensation with respect to any matters related to the

ORP;

4) Prepare and submit reports, as required, to document activities; and

5) Notifo the State Treasurer of situations that merit his attention.

F. Consultant(s)

I) Act as an advisor to the Department of Treasury Staff in the analysis and selection of investment options;

2) Source and evaluate prospective investment options on an as-needed or as-requested basis;

3) Prepare and submit relevant, reiiable and timely investment and performance repofts and objective advice as required or as needed by the Trustees, State Treasurer, Chief Investment Officer or Department ofTreasury Staff; and

4) Support the Trustees, State Treasurer, Chief lnvestment Officer, Director of Deferred Cornpensation, or Department of Treasury Staff with respect to any rnatters related to the ORP.

Op t iana I Re t irenre nt Prag ram lw*xxent Fshq gtst€Brint (kL A28fi12) ['Iype here] Pase 6 o./ t5 [Type here]

G. Designated Companiee

l) Act in a fiduciary capacity in selecting investment options that are suitable for the ORP;

2) Source and evaluate prospective investment options on an as-needed or as-requested basis;

3) Prepare and subrnit relevant. reliable and timely investment and performance reports and objective advice as required or as needed by the Trustees , State

Treasurer, Chief Investment Officer, Director of Deferred Compensation or Department ofTreasury Staff; and

4) Support the Trustees, State Treasurer, Chief Investment Officer, Director of Deferred Compensation or Department of Treasury Staff with respect to auy matters related tothe ORP.

Y. Governing Principles

A. Prirnary Investrmemt Philosophy

Each Participant may have a different risk tolerance, investment horizon, retirement savings goals and overall investrnent objectives. As such, Participants are responsible for their own investment decisions. To accommodate varying investment objectives, risk tolerances and time horizons. the Trustees seek to provide Participants with a prudent menu of investment options that is diversified across a range of asset classes, risk levels and investment strategies and reasonable in cost when compared with other investment options with sinrilar objectives.

B. Authorized Asset Classes and Investmenl Strategies

Subject to the approval of the State Treasurer and, as applicable, the terms, conditions, limitations and restrictions imposed by this Investment Policy, the Trustees authorize investmentoptions in each ol the following major asset classes and investment strategies:

Equity (Large-, Mid-, or Small-Cap) o Crowth o Blend o Value o Specialty (e.g. sector, international, etc.)

Fixed Income o Investment Crade (Short-, Intennediate-, or Long-Term) o Inflation-Protected o Specialfy (e.g. high-yield, international, etc.)

BalancedlAsset Allocation (asset allocation remains relatively static) Age-Based/Lifecycle (assets reallocated, over time, based on a specific date. commonly referred to as glide path) Stable Value/Fixed Account (or similar option that provides a guaranteed minimum rate of return or interest)

The Trustees acknowledge that lhe use of all of the above-referenced major asset classes and investment strategies may not be required in order to develop a prudent menu of investment options"

Opti ona I R.e t i renwnt Progrant Inxesrment Policy Srarencnr {Ret. 02/2022) Page 7 of 15

C. Authorized Investrnent Vehicies

Subject to the approval of the State Treasurer and, as applicable, the terms, conditions, limitations and restrictions imposed by this Investment Policy, the Trustees authorize the following investment vehicles: mutual funds, annuities, fixed accounts and self-directed brokerage accounts.

D. Benchmarks

Each investment option will be evaluated against its designated Lrenchmark, index or respective pe€r group. as outlined in Appendix A. The appropriateness of each investment option designated benchmark, index or respective peer group should be periodically evaluated by the Department of Treasury Staff and may be amended. subject to the approval of the State Treasurer.

E. Revenue Sharing, Distribution and Service Fees

To offset the costs of administration, the ORP may receive payments known as offsets or administrative fee reimbursements from certain mutual fund or insurance companies. Any offsets received shall be (a) used to reduce the overall expenses of the ORP orb) directly reimbursed or applied to the applicable Partici pant's account.

yI. Consultant(s) and Service Prorriders

T'he State Treasurer is authorized to contract for services and/or providers as determined to be in the best interest ofthe ORP and Participants. The State Treasurer is also authorized to consult wilh professionals as necessary about the administration of the ORP. The Trustees delegate to the State

Treasurer the responsibility to determine the procurement method for such services, providers and professionals, including the general and technical qualifications- The State Treasurer shall also determine the duties and responsibilities of the providers and professionals with such duties and responsibilities enumerated in a contractual agreement.

YII. Selection Criteria for Investment Options

The Trustees recognize that various factors are taken into consideration when evaluating investment performance and the menu of investment options. The Trustees rely on the State 'freasurer- Depafiment of Treasury Staff and. if applicable. the Consultant(s) to use reasonable judgment in proactively and objectively evaluatingeaclr investment option.

A. Mutual Funds

Mutual funds must be publicly listed and may be either actively or passively managed. At the time of'selection, a mutual fund must have:

At least three{3) yearsof investment and operational history;

Outperforrned its respective benchmark, net of fees, over at least fwo of the most recent 1-, 3-, or 5-year periods; and An expense ratio competitive with other investment options with similar objectives.

Mutual fund sales loads (front- or back-end). redemption, exchange. acccunt- or purchase fees that are paid by Participants will not be permitted. ln theeventa mutual fund nomlallycharges

Opt iona I Re t ire ment Progranr hrestment Policy Statemeat 1Rer,. 02/2023) Page 8 of 15 such fees but has arranged with the Designated Company for such fees to be waived, tlre Designated

Company is responsible for notifuing the Department of Treasury Staff and ensuring that any such fees shall not be borne in any manner by the ORP or Participants.

B. Annuities

Annuities may be either fixed or variable. At the time of selection, an annuity must have:

C. Fixed Account

A fixed account will generally guarantee a minimum rate of return or interest. Fixed accouttts available through an annuili cortract must satisf! the selection criteria for annuities. Fixed accounts available through a bank depository account must provide participant-level FDIC protection.

D. Sclf-Directed Bnokerage Account {'SDBA"}

The purpose of a Self-Directed Brokerage Account ("SDBA") is to offer flexibility to Participants who wish to take an active role selecting investment instrunrents not available as a direct investment option in the ORP. The Trustees, State Treasurer, and Department of Treasury Staff have no responsibility to review or assess the self-directed brokerage account provider, brokerage window or the investment instruments available under a SDBA and have no responsibility to determine the appropriateness of a SDBA, or any investment instruments available within, forany Participant.

Department of Treasury Staff will establish procedures to ensure that a Participant electing the SDBA option:

maintains a minimum balance that is not less tl"ran fifty percent (50%) of a Participant's total ORP aceount balance in the direct investment options offered in the ORP;

makes a minimum initial transfer of at least fifteen thousand dollars ($15,000) into the SDBA;

makes subsequent transfer of at least one thousand dollars ( $ I ,000) into the SDBA;

does not purchase any direct investment option oifered in the ORP through the SDBA except for mutual funds available in the TIAA ORP core lineup;and receives disclosures related to investment risks and a Participant's responsibility to bear all applicable costs- fees, expenses, and commissions.

The Department of Treasury Staff may develop additional policies, procedures. restrictions and criteria for participation in a SDBA or investment instruments offered through a SDBA. Such policies, procedures, restrictions and criteria will be made readily available to Participants and the self-directed brokerage account provider.

Op t iorn I Re t i reme nl P rograrn Iwestntent Poliqt Statenmt {Rev. 02/2022) Page 9 of 15

. At least five (5) years of investment and operational history;

. An issuer, long-term rating of {or equivalent to) A+ cr better as determined by a credit rating agency that is registered with the Securities and Exchauge Commission ("SEC") as a Nationally Recognized Statistical Rating Organization ("NR.SRO"); and

' An expense ratio competitive with other investment optiorrs with similar objectives.

yIH. Selection Criteria for Designated Companies

Selection of the Designated Companies shall be dcne in accordance with applicable state laws.

rules and regulations governing procur€tnent and state contracting. The Trustees delegate to the

State Treasurer the responsibility to deternline the procurement method for such Designated Companies. including, but not limited to, the general and technical qualifications.

The State Treasurer shall also determine the duties and responsibilities of the Designated Companies with such duties and responsibilitiesenumerated ir a contractual agreenrent.

IX. Monitoring ard Reporting

A Qu*rterly

After the end of each calendar quarter, or as deemed necessary by the Trustees, State Treasurer or Departrnent of Treasury Staff, each Designated Company will provide a comprehensive performance report of each investment option offered by such Designated Company.

Additionally, Department of Treasury Staff and/or selected service provider or Consultant(s) will complete a performarrce anal5,sis for all of the investment options offered under the ORP. Such performance analysis will include, but is not limited to statistical measures of perforrnance, risk, style consistency, and other criteria used to evaluate the relative succ€ss and stability of each investment option.

The performance reports and performance analysis will be reviewed and evaluated by the Department of Treasury Staff. During such evaluation. any investment option that has any one or more of the fcllorving rivill be selected for fr-rrther review Department of Treasury Staff andlor Consultant(s):

. performed below benchrnark and below universe median perfcrmance for both the 3--and 5-year periods, . forpassive index mutual funds, failed totrack thestated index within a varianceof fifteen

(15) basis points(0.15%), grossof fees, ' for annuities and frxed accounts , received an issuer , long*term credit rating downgraded below A+ (or below its equivalent).

. sigr:ificant changes in orvnership, management, investment otrjective or investment style, . substantial portfolio turnover.

. material violations of tederal or state law, policies or procedures, or

. excessive re<lccurring administrative or operational issues

See {}nclerperfornzing InyesImenl OpIions for furIher information.

B. Periodically

The Trustees. State Treasurer, or Department of Treasury Staff rnay conduct, or request to be conducted. €rtanlr timea reviervorevaluation of an investment option ora f)esignated Company.

Opiom I Re t i reor nt Prqraa bnesmeu Poliq Srderren (Rey. A2/2022) Pay 18 a{ IS

C. Annually

At least annually, the Department of Treasury Staff andior selected service provider shall review the Investment Policy and overall investment perfonnance (measured in l-, 3-. and 5- cycles) of the investment options offered in the ORP and provide any recommendations to the State 'l reasurer.

X. flnderperforming Investment Options

If an investment option has been selected for further review, Department of Treasury Staff and/or Consultant(s) will gatlrer additional information related to the underperformance or eyents.

Additionally, the applicable Designated Company, investment company or insurance company may be involved andlor invited to meet with Department of Treasury Staff and explain the underperformanceor events and any remedial efforts.

If, based on such r€view, the State Treasurer and Department of Treasury Staff determine that the underperformance or event is material then the investment option vrill be placed on the Watch List- The inyestment option will remain on the Watch List and re-evaluated during the next q uarter's performance analysis.

An investment option will be added to, removed from, or remain on the Watch List, based on each quarter's performanee analysis. Notwithstanding the authority provided for in Section XI of this Investment Policy, an investment option that is on the Watch list for four or more (2: 4) consecutive quarters or seven or more (2:7) total {non-sequential) quarters in a trailing tu'elve

(12) quarter period may be, at the State Treasurer's discretion:

closed to new contributions;

phased out of the menu of available investment options; andlor terminated and the assets transferred to a new or existing investrnent option.

The Trustees reserye the right to change, eliminate, or restrict any investment option and such actions do not require Participant consent. When feasible and appropriate, reasonable notice will be provided to Participants regarding any material changes to the menu of available investment options.

XI. OtherConsiderations

The Trustees, State Treasurer, Depaftment of Treasury Staff. Consultant(s), Designated Companies and service providers are required to comply with all applicable federal and state laws, rules and regulations. The Investment Policy may reference or restate applicable laws, rules and regulations, or portions thereof, for convenience; however. in the event of any conflict between the law and this Investment Policy, the law prevails. Each fiduciary to the ORP is ultimately responsible for compliance with applicable laws, rules and regulations.

The Trustees hereby authorize the State Treasurer to take, for and on behalf of the ORP. al1 actions necessary to comply with applicable federal and state securities laws, rules and regulations. In implementing such, the State Treasurer may delegate certain responsibilities to the Department of Treasury staff or service providers.

Apfional Re liren@n I Progranr hn'estn en Polic) Stateorcnt (Ret 02/2022) Page lI olIS

In ca.ses of utrcertainty, the State Treasurer is aulhorized to plovide ittterpretivc guidance and aplll'ovc, from linre to tirne, r,ariarices frorn thc requircrncuts coutaincd rvithin thc Invcstmcnt Policy, including irttnrediate teruiirtation of att inveshnent option or optious. itr fitfilrerance of compliance or as deenred in tlre best intercst of Participants, cottsistent with both tiduciary standards and the scope of lhe Ifl\,estnenl Policy. Such interpretive guidauce or variance shall be reported to lhe Trustees at their next rueeting.

XII. Approval and Adoption Tlre Tnrstees of the Optional Retireurent Prograur hereby approved and arloptecl this m,ised attd restated lnvestment Policy of the Optiortat Retircnrent Progranr on the lltb . day of L4a"<1" ,2$22.

CFIAIR

TENNESSEE CONSOLIDATED

RETIREMENT SYSTEM BOARD

COMMISSIONER

DEPARTMENT OF FINANCE AND

ADMINISTRATION

D|9llall, rlgned by

,a,e d&- 3:llis;illijli . l{}lS:54 {600' March 7,2422

David H, Lillard, Jr.

Trustee

Date Butch Eley Tr-ustee

Date

CHAIR

HOUSE FINANCE WAYS AND

MEANS COMMITTEE

CHAIR

SENATE FINANCE WAYS AND MEANS

COMMITTEE

/L"/^ 1, fizz

Patsy Hazleryood Tnrstee

Ayt iott ol Reti te*teu I Progmnt Inveslneat Potity S!ateD,en, {Rey. 02120}2)

Date Bo Watson Tnrstee

Date

Page l2of15

In cases of uncertainty, the State Treasurer is authorized to provide intetpretive guidance and approve, from time to time, variances from the requirements contained within the Investment Policy, including immediate termination of an investment option or options, in furtherance of compliance or as deemed in the best interest of Participants, consistent with both fiduciary standards and the scope of the Investment Policy. Such interpretive guidance or variance shall be reported to the Trustees at their next meeting.

XII. Approval and Adoption "fhe Trustees of the Optional Retirement Program hereby approved and adopted this revised and restated

Investrnent Policy of the Optional Retirement Program on the I I tu day of Mddl ,2022.

CHAIR

TENNESSEE CONSOLIDATED

RETIREMENT SYSTEM BOARD

Digitally signed by

.des&-il+;,,x,,,":}/ March 2,2022

David II. Lillard, Jr.

Trustee

Date

CHAIR

HOUSE FINANCE WAYS AND

Date Trustee

COMMISSIONER

DEPARTMENT OF FINANCE AND

ADMINISTRATION

Butch Eley Trustee

Date q L)

CHAIR

SENATE FINANCE WAYS AND MEANS

COMMITTEE

Bo l#atson Trustee

Date

Optional Re ti reme nt Program Iivestment Policy Stateienr (Rev 02/2A?2) Page 12 of I 5

In cases of uncertainty, the State Treasurer is authorized to provide interpretive guidance and approve- from time to time, variances from the requirements contained within the lnvestment Policy. including immediate termination of an investment option or options, in furtherance of compliance or as deemed in the best interest of Participants, consistent with both fiduciary standards and the scope of the Investment Policy. Such interpretive guidance or variance shall be reported to the Trustees at their next meeting.

XII. Approval and Adoption The Trustees of the Optional Retirement Program hereby approved and adopted this revised and restated Investment Policy of the Optional Retirement Program on the J)ln _day of Ma*ch .2022.

,a&/r#_

CHAIR

TENNESSEE CONSOLIDATED

RETIREMENT SYSTEM BOARD

COMMISSIONER

DEPARTMENT OF FINANCE AND

ADMINISTRATION

Tlrtf zz Eley Date

Trustee

CHAIR

SENATE FINANCE WAYS AND MEANS

COMMITTEE

Bo Watson Trustee

Date

Digila,ly !iqred by OryidH Linard,Jr- Date 2022 ,3 B7

1O:l&54 -t)6'g0' March 7,2022 David H. Lillard, Jr.

Trustee

Date

CHAIR

HOUSE FINANCE WAYS AND

MEANS COMMITTEE

Patsy Hazlewood Trustee

Opt i ona I Re I i rtne il P rogrant htrestnrcnt Policl Statzneat (Re,-. A2/2A22)

Date

Poge 12 of 15

AIG RETIREMf,NT SERVICES

Available Investment Option Designated Benchmark

American Funds 2020 Target Date Retire R6 S&P Target Date 2020 lndex

American Funds 2025 Target Date Retire R6 S&P Target Date 2025 Index

American Funds 2030 Target Date Retire R6 S&P Target Date 2030 Index

American Funds 2035 Target Date Retire R6 S&P Target Date 2035 Index

,\rrrrriuurr Furrds 2040 Target Date Retire R6 S&P Target Date 2040 Index

American Funds 2045 Target Date Retire R6 S&P Target Date 2045 Index

American Funds 2050 Target Date Retire R6 S&P Target Date 2050 Index

American Funds 2055 Target Dale Retire R6 S&P Target Date 2055 Index

American Funds 2060 Target Date Retire R6 S&P Target Date 2060+ Index

Vanguard Instl Index Plus s&P s00

American Funds Fundamental Invs R6 Russell 1000

American Funds American Mutual R6 Russell 1000 Value

American Funds CroMh Fund of America R6 Russell 1000 Growth

Vanguard Mid Cap Index I Spliced Vanguard Mid Cap Index

Victory Sycamore Established Value R6 Russell MidCap Value

JP Morgan Mid Cap Crowth R6 Russell MidCap Growth

Vanguard Small Cap Index I Spliced Vanguard Small Cap lndex

Vanguard Small Cap Value Index I

Spliced Vangumd Small Cap Vaiue Index

Vanguard Small Cap Crowth Index Adm Spliced Vanguard Small Growth Index American Funds Capital World Growth & Income

R6 MSCI ACWI

American Funds Europacific Grawth R6 MSCI ACWI ex US Growth

Vanguard Total Stock Index I Spliced Vanguard International Index

PIMCO TotalReturn I Bloomberg US Ag$egate TR Vanguard Total Bond Market lndex Inst Plus Bloomberg US Aggregate TR Vanguard Inflation Protected Sec I Bloomberg US TIPS TR

Vanguard Real Estate lndex I Spliced Vanguard Real Estate Index

VALIC Fixed Option N/A Vanguard Federal Money Market ICE BofA 91 Days T-Bills TR

Appendix A - Active ORP Investment Options and Designated Benchmarks as of Februarv ?A22

Opt ional Re t i re ment P rogrant Im'esrment Policy Stateneat (Ret 02/2012) Page 13of15

TIAA

Available Inyestment Option Designated Benchmark

TIAA-CREF Lifecycle 2010 t Momingstar Lifetime Mod 2010 TR USD

TIAA-CREF Lifecycle 2015 I Morninsstar Lifetime Mod 2015 TR USD

TIAA-CREF Lifecycle 202A I Momingstar Lifetime Mod 2020 TR USD

TIAA-CREF Lifecycle 2A25 1 Morningstar Lifetime Mod2A25 TR USD

TIAA-CREF Lifecycle 2030 I Momingstar Lifetirne Mod 2030 TR USD

TIAA-CREF Lifecycle 2035 I Morningstar Lifetirne Mod 2035 TR USD

TIAA-CREF Lifecycle 2040 I Morningstar Lifetime Mod 2040 TR USD

TIAA-CREF Lifecycle 2045 1 Momingstar Lifetime Mod 2045 TR USD

TIAA-CREF Lifecycle 2050 I Morninsstar Lifetime Mod 2050 TR USD

TIAA-CREF Lifecycle 2055 I Morninsstar Lifetime Mod 2055 TR USD

TIAA-CREF Lifecycle 2060 I Morningstar Lifetime Mod 2060 TR USD TIAA-CREF Lifecycle Retirement Income I Momingstar Lifbtime Mod Income TR USD

CREF SocialChoice R3 Momingstar Mod Tgt Risk TR USD

CREF Equity Index R3 Russell 3000

TIAA-CREF S&P 500 Index I s&P 500

Diamond Hill Large Cap Class Y Russel[ 1000 Value

CREF Growth R3 Russell 1000 Growth

Victory Sycamore Established Value R6 Russell Mid Cap Value

Carillon Eaele Mid Cap Crowth R6 Russell Mid Cap Growth

Vanguard Small Cap Value Index I Spliced Vanguard Small Cap Value Index

Carillon Eagle Small Cap Crowth R6 Russell 2000 Crowth American Funds Europacific Growth R6 MSCI ACWI ex US Growth

CREF Global Equities R3 MSCI ACWI CREF Stock R3 707o Russell 3000/30% MSCI ACWI ex US

CREF Bond Market R3 Bloomberg US Aesresate TR PIMCO Total Retum I Bloomberg US Aggregate TR

TIAA-CREF Inflation-Linked Bond I Custom Blended Bloomberg US TIPS I - l0 Yr

TIAA RealEstate NCREIF Property Index

TIAA Stable Value NIA TIAA CREF Money Markel l ICE BofA 9l Days T-Bills TR

Optiotul Retirenen! Pragrom hwestment Policlt Sratement (Rev. A2nA22) Page ll of 15

VOYA

Available Investm ent Option Designated Benchmark

Vanguard Trgt Retire Income lnv Momingstar Lifetime Mod Income TR tJSD

Yanguard Trgt Retire 2015 I Morningstar Lifetime Mod 2015 TR USD

Vanguard Trgt Retire 2A2A I Morningstar Lifetime Mod 2020 TR USD

Vanguard Trgt Retire 20251 Momingstar Lifetime Mod 2025 TR USD

Vanguard Trgt Retire 2030 I Morningstar Lifetime Mod 2030 TR USD Vanguard Trgt Retire 2035 I Morningstar Lifetime Mod 2035 TR USD Vanguard Trgt Retire 20401 Momingstar Lifetime Mod 2040 TR USD Vanguard Trp( Retire 2A451 Morningstar Lifetime Mod 2045 TR USD

Vanguard Trgt Retire 2050 I Morninsstar Lifetime Mod 2050 TR USD

Vanguard Trgt Retire 2055 I Morningstar Lifetime Mod 2055 TR USD

Vanguard Trgt Retire 2060 I Momingstar Lifetime Mod 2060 TR USD

Vanguard Trp5t Retire 20651 Momingstar Lifetime Mod 2060 TR USD

Vanguard Wellington Adm Morningstar Mod Tgt Risk TR USD

Vanguard Instl Index Plus s&P 500

Vanguard FTSE Social Index Adm Spliced Vanguard Social Index

JP Morgan Large Cap Value R6 Russell 1000 Value

Vanguard Equity Income Adm Russeil 1000 Value American Funds Growth Fund of Arnerica R6 Russell 1000 Growth Vanguard Mid Cap Index I Spliced Vanguard Mid Cap Index

Vanguard Mid Cap Growth Index Adm Spliced Vanguard Mid Cap Growth Index

Vanguard Small Cap Index I Spliced Vanguard Small Cap Index Vanguard Small Cap Value Index I Spliced Vanguard Small Cap Value Index

Vanguard Explorer Adm Russell 2000 Growth

American Funds Europacific Crowth R6 MSCI ACWI ex US Crowth MFS Institutional Intl Equify MSCI ACWI ex US Growth

PIMCO Total Return I Bloomberg US Apgregate TR Vanguard Total Bond Market Index Inst Plus Bloomberg US Aggregate TR Vanguard Inflation Protected Sec Adm BloomLrerg US TIPS TR

Vanguard Short-Term Bond Index Adm Spliced BBgBarc US i-5 Cov/Cr FlAdj Index

Vanguard Real Estate Index I Spliced Vanguard Real Estate Index

Voya Fixed Plus Account lll N/A

Opt iona I fu t ire nent F n tN n,nt Iutestment Policy Statement (Ret'. A2/2022) Page 15 oJ IS

ORP SDBA Policy (Rev. 02/2022) Page 1 of 2

Tennessee Department of Treasury

Deferred Compensation Division

Optional Retirement Program Self-

Directed Brokerage Account Policy

The purpose of this policy is to document the self-directed brokerage account (SDBA) policy for the State of Tennessee Optional Retirement Program (ORP) as shall be updated from time to time.

1. The self-directed brokerage window is intended for use by experienced, knowledgeable investors. Use of the brokerage window is neither encouraged nor discouraged.

2. Legal documents are required before a participant can exercise this option.

3. A participant electing to use the self-directed brokerage account option should exercise great care over all brokerage account transaction activity. Funds moved from the third party plan administrator, TIAA or Voya, through the brokerage window, are outside of the Plan offerings, oversight and influence.

4. Participants are responsible for monitoring self-directed brokerage account balances and transactions. Follow up all issues with the self-directed brokerage account provider immediately to assure your instructions are implemented.

5. A self-directed brokerage account offered through a deferred compensation plan account is sometimes called a broker window. The Plan and the record keeper create a window that permits the transfer of funds from an existing Plan Investment option to another investment.

6. A broker is a salesperson or company that sells investment products.

7. Self-directed brokerage means that the participant chooses to go outside of the investment products offered by the Plan to open a separate broker account to obtain a specific product not offered by the Plan. The self-directed brokerage account provider will answer questions regarding events after a transfer is made to the self-directed brokerage account.

8. While restricting investment in mutual funds offered in the ORP investment option lineups may not be possible, the purpose of the self-directed brokerage account is to offer flexibility to plan participants who wish to invest in a mutual fund not adopted for use of the Plan as a whole.

9. To the extent it is possible to invest in mutual funds offered in the core investment lineups through the SDBA, the participant is discouraged from doing so to avoid potentially higher fees.

10. Use of the SDBA option is a voluntary choice of an investment option selected by the participant.

11. Participants are responsible for all choices exercised.

12. Participants are responsible for monitoring the execution of their instructions to the broker.

13. Participants of the ORP and 403(b) Plan may utilize the SDBA from either or both the

ORP or the 403(b) Plan provided the respective account individually meets the criteria for participation set forth below and in the Tennessee Board of Regents 403(b)

Retirement Plan and University of Tennessee 403(b) Plan Self-Directed Brokerage

Account Policy Document, which can be located at www.retirereadytn.gov.

14. The participant bears all costs of transactions, funds transfer, commissions, access fees, recordkeeping fees, and all other costs accumulated for assets in the account.

http://www.retirereadytn.gov/

ORP SDBA Policy (Rev. 02/2022) Page 2 of 2

15. Account balance refers to the total amount in the ORP account in all investment fund options, including the balance in the brokerage account. The core balance is the dollar value amount in the basic core investment options provided by the Plan. The core investment options are named funds that a participant may invest in directly through regular salary reduction deferral. The core balance does not include any self-directed brokerage account balance.

16. In order to participate and set up an active account in the self-directed brokerage option, the participant must leave and otherwise maintain a minimum of 50% of the participant’s

ORP account balance as the ORP core balance after the SDBA transaction is completed.

17. The initial amount of the transfer to the SDBA to acquire mutual fund(s) through the

SDBA provider must be at least $15,000.

18. Subsequent transfers to the SDBA investment option must be at least $1,000.

19. The participant may not invest in mutual funds offered by the Plan, except for mutual funds available in the TIAA ORP core investment options.

20. No investment vehicles other than mutual funds may be acquired through the SDBA.

21. The State, in coordination with TIAA and Voya, will monitor participant compliance with the requirement to maintain a minimum of 50% of the participant’s ORP account balance as the ORP core balance. A core minimum balance shortfall will be expected to be corrected by the participant within a reasonable time. It is expected that the participant will make up the core balance shortfall thus avoiding the need for further action. Should the participant fail to correct a minimum balance shortfall within a reasonable time, further action will be taken, which may include written instruction from the Plan Sponsor authorizing the SDBA provider to fully or partially liquidate the participant’s SDBA account.

22. Commissions for purchases in the SDBA account are added to the amount paid for the trade; commissions for sales are deducted from the sale proceeds. Recordkeeping fees are assessed against the core investments on a monthly basis, and only apply to those participants who had an SDBA balance at any time during the past 90 calendar days.

23. These policies may be updated from time to time. This policy will be available to participants upon request and posted to www.retirereadytn.gov.

403(b) SDBA Policy (Rev. 02/2022) Page 1 of 2

State of Tennessee Treasury Department

Deferred Compensation Division

Tennessee Board of Regents 403(b)

Retirement Plan & University of

Tennessee 403(b) Plan Self-Directed

Brokerage Account Policy

The purpose of this policy is to document the self-directed brokerage account (SDBA) policy for the Tennessee Board of Regents 403(b) Retirement Plan and the University of Tennessee 403(b)

Plan as shall be updated from time to time.

1. The self-directed brokerage window is intended for use by experienced, knowledgeable investors. Use of the brokerage window is neither encouraged nor discouraged.

2. Legal documents are required before a participant can exercise this option.

3. A participant electing to use the self-directed brokerage account option should exercise great care over all brokerage account transaction activity. Funds moved from the third party plan administrator, TIAA or Voya, through the brokerage window, are outside of the Plan offerings, oversight and influence.

4. Participants are responsible for monitoring self-directed brokerage account balances and transactions. Follow up all issues with the self-directed brokerage account provider immediately to assure your instructions are implemented.

5. A self-directed brokerage account offered through a deferred compensation plan account is sometimes called a broker window. The Plan and the record keeper create a window that permits the transfer of funds from an existing Plan Investment option to another investment.

6. A broker is a salesperson or company that sells investment products.

7. Self-directed brokerage means that the participant chooses to go outside of the investment products offered by the Plan to open a separate broker account to obtain a specific product not offered by the Plan. The self-directed brokerage account provider will answer questions regarding events after a transfer is made to the self-directed brokerage account.

8. While restricting investment in mutual funds offered in the 403(b) Plan investment option lineups may not be possible, the purpose of the self-directed brokerage account is to offer flexibility to plan participants who wish to invest in a mutual fund not adopted for use of the Plan as a whole.

9. To the extent it is possible to invest in mutual funds offered in the core investment lineups through the SDBA, the participant is discouraged from doing so to avoid potentially higher fees.

10. Use of the SDBA option is a voluntary choice of an investment option selected by the participant.

11. Participants are responsible for all choices exercised.

12. Participants are responsible for monitoring the execution of their instructions to the broker.

13. Participants of the 403(b) and ORP plans may utilize the SDBA from either or both plans provided the respective account individually meets the criteria for participation set forth below and in the ORP Self-Directed Brokerage Account Policy Document, which can be

403(b) SDBA Policy (Rev. 02/2022) Page 2 of 2 located at www.retirereadytn.gov.

14. The participant bears all costs of transactions, funds transfer, commissions, access fees, recordkeeping fees, and all other costs accumulated for assets in the accounts.

15. Account balance refers to the total amount in the 403(b) account in all investment fund options, including the balance in the brokerage account. The core balance is the dollar value amount in the basic core investment options provided by the Plan. The core investment options are named funds that a participant may invest in directly through regular salary reduction deferral. The core balance does not include any self-directed brokerage account balance.

16. In order to participate and set up an active account in the self-directed brokerage option the participant must leave and otherwise maintain a minimum of 50% of the participant’s

403(b) account balance as the 403(b) core account balance after the SDBA transaction is completed.

17. The initial amount of the transfer to the SDBA to acquire mutual fund(s) through the

SDBA provider must be at least $5,000.

18. Subsequent transfers to the SDBA investment option must be at least $1,000.

19. The participant may not invest in mutual funds offered by the Plan, except for mutual funds available in the TIAA 403(b) core investment options.

20. No investment vehicles other than mutual funds may be acquired through the SDBA.

21. The State, in coordination with TIAA and Voya, will monitor participant compliance with the requirement to maintain a minimum of 50% of the participant’s ORP account balance as the ORP core balance. A core minimum balance shortfall will be expected to be corrected by the participant within a reasonable time. It is expected that the participant will make up the core balance shortfall thus avoiding the need for further action. Should the participant fail to correct a minimum balance shortfall within a reasonable time, further action will be taken, which may include written instruction from the Plan Sponsor authorizing the SDBA provider to fully or partially liquidate the participant’s SDBA account.

22. Commissions for purchases in the SDBA account are added to the amount paid for the trade; commissions for sales are deducted from the sale proceeds. Recordkeeping fees are assessed against the core investments on a monthly basis, and only apply to those participants who had an SDBA balance at any time during the past 90 calendar days.

23. These policies may be updated from time to time. This policy will be available to participants upon request and posted to www.retirereadytn.gov.

http://www.retirereadytn.gov/