Iran and Sudan Divestment Policy

Adopted September 24, 2008

 

I.  Purpose

This Policy is adopted as required by ORC Section 707.20.  The purpose of this Policy is to divest and restrict the purchase of stocks and bonds (“holdings”) issued by a publicly traded  Company (as defined in Appendix A) with “scrutinized active business operations” in Iran and Sudan, subject to the fiduciary responsibilities of the Board of Trustees of the Ohio Police & Fire Pension Fund (the “Board”), as set forth in Chapters 707 and 742 of the Ohio Revised Code (“ORC”). 

The purpose of this Policy is to:

1.     Comply with the requirements of ORC Section 707.20

2.     Provide a clear understanding of the Board’s fiduciary responsibilities;

3.     Provide a clear understanding as to the scope of the Policy;

4.     State possible investment risks of such Policy;

5.     Reference the process for execution of the Policy;

6.     Communicate reporting requirements; and

                                    7.  Articulate events that shall cause the Policy to be terminated.

II.  Fiduciary Responsibilities

                    The implementation of this Policy shall be accomplished in a manner that fulfills the statutory requirements as set forth in ORC Chapters 707 and 742.  ORC Section 742.11(A) provides that the Board and other fiduciaries of OP&F shall discharge their duties with respect to the funds solely in the interest of the participants and beneficiaries for the exclusive purpose of providing benefits and defraying expenses.  On the other hand, ORC Section 707.20(C) provides that in considering the divestment of holdings in a publicly traded Company with scrutinized active business operations in Iran or Sudan, the Board shall divest only if doing so is consistent with the Board’s fiduciary duties and replacement holdings offer quality, return and safety comparable to the holdings of a Company with scrutinized active business operations in Iran or Sudan.  Similarly, when the Board considers whether to acquire holdings of the applicable Company with scrutinized active business operations, the Board must act consistent with its fiduciary duties and may not invest in comparable holdings unless it determines that comparable holdings offer quality, return and safety comparable to the holdings of the Company with scrutinized active business operations.

III.  Scope

                    This Policy shall apply to holdings of publicly traded Companies with “scrutinized active business operations” in Iran or  Sudan, as defined in Appendix A and consistent with the requirements of ORC Section 707.20, as amended from time to time.    

IV.  Risk Management

                    It should be understood that holdings of publicly traded Companies with scrutinized active business operations are components of various asset classes and/or portfolio benchmarks or indexes and divestment of such holdings may cause an increase in tracking error relative to the respective benchmark or index.

V.  Time Period

                This Policy shall be effective as of October 22, 2008.  The intent of the Board shall be to divest holdings of Companies with scrutinized active business operations when divestment would be prudent and consistent with the Board’s fiduciary duties as more fully described in Article II above. This Policy shall be applied only to the extent that in doing so, such action will not violate the Board’s fiduciary duties.  The Board’s holdings of publicly traded Companies with scrutinized active business operations as of June 30, 2008 shall be used as the starting point for the screening process and as the baseline to measure the percentage of divestment stocks and bonds of such Companies.

VI.  Process

                    The process for implementation of this Policy is set forth under a separate cover entitled “Iran and Sudan Divestment Process”.   

VII.  Reporting Requirements

                    Investment Staff will prepare a formal report to the Board annually and more frequently if the Board so requests.  The Board shall report on scrutinized Companies and all correspondence and engagement of Companies consistent with the requirements Ohio Revised Code §707.20(D), as amended from time to time.      

VIII.  Termination

                The Board will terminate this policy with respect to a country consistent with the provisions of ORC Section 707.20.

 

Scrutinized Companies