The foundation of the system’s strength and stability rests upon the diversification of plan assets. Just as building a house with one support beam would not be sound, investing all assets in one particular asset class or strategy would not be prudent. MOSERS’ investment program is well diversified among a myriad of asset classes and sub-asset class strategies which will perform well in a variety of economic conditions and will help the total portfolio’s overall volatility. Based on the board’s determination of the appropriate risk tolerance for the system and its long-term return expectations, the following broad asset allocation was selected.

POLICY MIX	PERCENT OF TOTAL FUND
Public Equity Investments*	45.0%
Public Debt Investments	30.0%
Alternative Investments	25.0%

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* May include non-equity investment opportunities resulting from the sub-prime credit crisis.

Recognizing that market values are constantly changing, the board requires that the Chief Investment Officer (CIO) maintain a rebalancing policy. The purpose of rebalancing is to keep the actual asset allocation in line with the approved asset allocation policy. The chart below depicts the asset allocation policy target as compared to the actual allocation at the end of the quarter.

Total Fund Asset Allocation as of March 31, 2008
Policy Target vs. Actual Allocation




The board has taken steps at the sub-asset class level to allow the CIO to establish the strategic (sub-asset class) allocation of the portfolio. This latitude is based on board approved predefined ranges and allows the CIO some flexibility to overweight investment opportunities that look attractive while underweighting less attractive opportunities. The CIO will make strategic allocation decisions away from the policy targets to take advantage “at the margin” of those opportunities believed to be attractive relative to the other sub-asset class options.

Following are the sub-asset classes and corresponding charts depicting the Policy Target as compared to the Actual Strategic Allocation.

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Public Equity Breakdown | Return to Asset Allocaton
Domestic/Hedged Equity, International Developed Equity and Emerging Market Equity

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Public Debt Breakdown | Return to Asset Allocaton
Core Fixed Income, High Yield Bonds, Treasury Inflation Protected Securities (TIPS) and Market Neutral

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Alternative Investments Breakdown | Return to Asset Allocaton
Real Assets and Private Investments



The sub-asset classes of real assets and private investments are benchmarked to specific strategies. The policy target and actual allocation is shown for each in the charts below.

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Real Assets - Alternative Investments Detail

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Private Investments - Alternative Investments Detail