(B) The annual investment plan must be consistent with actions taken by the commission pursuant to subsection (A) and must include, but is not limited to, the following components:

1. (1) general operational and investment policies;
2. (2) investment objectives and performance standards;
3. (3) investment strategies, which may include indexed or enhanced indexed strategies as the preferred or exclusive strategies for equity investing, and an explanation of the reasons for the selection of each strategy;
4. (4) industry sector, market sector, issuer, and other allocations of assets that provide diversification in accordance with prudent investment standards, including desired rates of return and acceptable levels of risks for each asset class;
5. (5) policies and procedures providing flexibility in responding to market contingencies;
6. (6) procedures and policies for selecting, monitoring, compensating, and terminating investment consultants, equity investment managers, and other necessary professional service providers; and
7. (7) methods for managing the costs of the investment activities.

(C) In developing the annual investment plan, the chief investment officer shall:

1. (1) diversify the investments of the retirement systems, unless the commission reasonably determines that, because of special circumstances, it is clearly not prudent to do so; and
2. (2) make a reasonable effort to verify facts relevant to the investment of assets of the retirement systems.