For HOOPP, like other defined benefit pension plans, the true measure of investment success is our ability to cover the Plan’s current and future liabilities (in other words, meet our pension benefit obligations). While we still continue to measure our performance against our peers and appropriate industry benchmarks, what really counts is securing the pension promise.

With this over-riding obligation in mind, HOOPP focuses on a liability-driven approach to investing. With this approach, our investment team focuses on generating investment returns above the level required to fund the benefits being earned by Plan members while closely considering the risk of a particular asset relative to the Plan’s liabilities.

In short, liability-driven investing is about more than simply maximizing returns; it’s about achieving the best possible returns within acceptable risk parameters, given the Plan’s pension obligations.

During 2007, HOOPP estimated that to meet its future pension obligations and operating expenses it must – over the long term – achieve a nominal long term return target of 6.75 per cent (or a real rate of return of 4.50 per cent after adjusting for inflation of 2.25 per cent). The Fund’s return of 6.23 per cent for the year ended 2007 fell short of the target by 52 basis points. At the end of 2007, HOOPP lowered this investment return assumption by 25 basis points for future periods, which was consistent with the Plan’s move toward a more risk-averse investment strategy.

To achieve this target, HOOPP employs a variety of investment strategies – each of which supports the liability-driven investment approach. Details on some of these strategies are outlined in this section of the report.