3.5% Real Rate of Return Objective

The Fund’s primary objective is to meet or exceed a real rate of return of 3.5 per cent over the long term. The 3.5 per cent real rate of return is the Fund’s most important investment objective, as this is the rate of return needed over the long term to ensure the fully funded status of the Fund.

The Fund’s real rate of return is calculated by adjusting the Fund’s nominal return for inflation, as measured by U.S. CPI. For example, if inflation is 2 per cent for a given year, the Fund would need to generate a nominal return of approximately 5.5 per cent in order to achieve a real return of 3.5 per cent.

The 22 Year Historic Performance Report shows that the Fund generated performance which exceeded that of the 3.5 per cent real rate of return objective in 14 out of the past 22 calendar years. On average, the Fund generated performance which exceeded the 3.5 per cent real rate of return objective over the past 22 calendar years.