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EXHIBIT (d)(25)
INVESTMENT SUBADVISORY AGREEMENT
This Investment Subadvisory Agreement is made as of the 11th day of
October, 2000, by and between THE ICMA RETIREMENT CORPORATION, a Delaware
corporation (hereafter "Client"), THE ICMA RETIREMENT TRUST (the "Trust") and
WELLINGTON MANAGEMENT COMPANY, LLP, 00 Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxxxx 00000
(hereafter "Subadviser"), and is effective as of October 11th, 2000 (the
"Effective Date").
WHEREAS, Client serves as investment adviser to the ICMA Retirement Trust
(the "Trust"), pursuant to an investment advisory agreement that authorizes the
Client to enter into subadvisory agreements which provide for the commingled
investment of the assets of certain retirement plans that are administered by
the Client;
WHEREAS, Client and Subadviser wish to enter into a subadvisory agreement
pursuant to which Subadviser will provide such assistance to Client.
AGREEMENTS
In consideration of the performance by the Subadviser as Investment
Subadviser of certain Trust assets, the Client has authorized the Subadviser
to manage the securities and other assets as follows:
1. ACCOUNT
The account with respect to which the Subadviser shall perform its services
shall consist of those assets of the VantageTrust Income Preservation Fund (the
"Fund") that the Client determines to assign to an account with the Subadviser,
together with all income earned by those assets and all realized and unrealized
capital appreciation related to those assets (hereafter "Account"). From time to
time, the Client may, upon notice to the Subadviser, make additions to or
withdrawals from the Account.
2. APPOINTMENT STATUS, POWERS OF SUBADVISER
(a) Purchase and Sale. Client hereby appoints Subadviser to manage the
Account on the terms and conditions set forth in this Agreement. Subject to the
restrictions set forth in this Agreement, and acting always in conformity with
the Investment Policies provided in Paragraph 4, Subadviser shall supervise and
direct investment of the Account. Client hereby grants the Subadviser complete,
unlimited and unrestricted discretion and authority to select portfolio
securities with respect to the Account including the power to acquire (by
purchase, exchange, subscription or otherwise), to hold and to dispose (by
sale, exchange or otherwise). The Subadviser
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will consult with Client, upon the request of the Client concerning any
transactions it makes with respect to the investment of the Account.
(b) Limitation on Authority. Except as expressly authorized herein or
hereafter from time to time, Subadviser shall for all purposes be deemed an
independent contractor and shall have no authority to act for or to represent
the Client or the Funds in any way or otherwise to be an agent of the Client or
the Funds. The activities of Client and Subadviser in managing the assets of
the VantageTrust Income Preservation Fund shall in all instances be conducted
subject to the supervision and direction of the Board of Trustees of the Trust.
(c) Voting. Unless otherwise instructed by Client, Subadviser shall have
discretion to take any action or render any advice with respect to the voting
of shares or the execution of proxies solicited from time to time by, or with
respect to, the issuers of securities held in the Account. Subadviser will
report annually to Client regarding such voting.
(d) Key Personnel. Subadviser agrees that the following key personnel
have a primary responsibility with respect to the investment management of the
Account. If the(se) individual(s) is unable to devote sufficient time to
maintain primary responsibility of the Account, the Subadviser must give Client
written advance notice, or prompt notice within three (3) business days, of the
name of the person designated by the Subadviser to replace or supplement the
individual(s). In addition, the Subadviser will give Client written notice of
the replacement of any employee of the Subadviser who has direct supervisory
responsibility for the key personnel or who has responsibility for the key
personnel or who has responsibility for setting investment policy as soon as
reasonably practicable.
Key Personnel: XXXXXXX X. XXXXXXX
Supervisory Responsibility: XXXX XXXXXX, DIRECTOR OF FIXED INCOME
3. ACCEPTANCE OF APPOINTMENT
Subadviser accepts the appointment as an investment Subadviser and agrees
to use its best efforts and professional judgment to make timely investment
transactions for the Client with respect to the investments of the Account, and
to provide the other services required of the Subadviser under the provisions
of this Agreement.
4. INVESTMENT POLICIES
(a) Investment Objectives. Subject to the supervision of the Trust's Board
of Trustees and the Client, the Subadviser shall direct the investments of the
Account in accordance with the Fund's investment objectives, policies, and
restrictions as provided
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in The Retirement Investment Guide of the Trust, as currently in effect and as
amended or supplemented from time to time, and such other limitations as the
Fund or Client may reasonably impose by written notice to the Subadviser or as
set forth in SCHEDULE A.
(b) Trust's Declaration of Trust. The Subadviser will adhere to all
specific provisions relating to the investment of the Account established in the
Trust's Declaration of Trust which is hereby incorporated by reference and made
a part of this Agreement. The Client shall give written notice to the Subadviser
of any amendments to the Declaration of Trust, which amendments, upon their
receipt by the Subadviser, shall be binding on the Subadviser.
(c) Investment Subadviser Guidelines. The Subadviser shall act in
accordance with The Retirement Investment Guide, and in accordance with the
limitations set forth in the specific statement of Investment Adviser
Guidelines, SCHEDULE B, as restated or modified from time to time by the Client
in written notice to the Subadviser. The Client retains the right, on written
notice to the Subadviser, to modify any such objectives, guidelines,
restrictions, and liquidity requirements in any manner at any time.
(d) Conflict in Policies. If a conflict in policies or guidelines
referenced herein occurs, the Registration Statement shall govern for purposes
of this Agreement.
5. CUSTODY, DELIVERY, RECEIPT OF SECURITIES
(a) Custody Responsibilities. The Client shall designate one or more
custodians to hold the Account. The Custodian, as designated by the Client will
be responsible for the custody, receipt and delivery of securities and other
asset of the Funds (including the Account). The Subadviser shall have no
authority, responsibility or obligation with respect to the custody, receipt or
delivery of securities or other assets of the Funds (including the Account). In
the event that any cash or securities of the Funds are delivered to the
Subadviser, it will promptly deliver the same over to the Custodian, in the name
of the Funds.
(b) Securities Transactions. Unless otherwise required by local
custom, all securities transactions for the Account will be consummated by
payment to or delivery by the funds of cash or securities due to or from the
Account. The Subadviser will make all reasonable efforts to notify the Custodian
of all orders to brokers for the Account by 9:00 am EST on the day following the
trade date and will affirm the trade within the close of business one (1)
business day after the trade date (T+1).
(c) Tri-Party Agreement. The Subadviser is authorized to enter into
Tri-Party Agreements and sign the standard PSA tri-party agreement (the
"Tri-Party Agreement") on behalf of the Client and the sub-custodian thereunder
is authorized to act as a sub-custodian for the Account's assets involved in any
tri-party repurchase agreement pursuant to such Tri-Party Agreement.
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6. RECORD KEEPING AND REPORTING
(a) Records. Subadviser will maintain proper and complete records
relating to the furnishing of services under this Agreement, including records
with respect to the acquisition, holding and disposition of securities for
Client that are required of an investment adviser pursuant to the Investment
Advisers Act of 1940, and the rules thereunder, and in accordance with such
reasonable instructions as shall be provided to Subadviser by Client from time
to time. All records maintained pursuant to this Agreement shall be subject to
examination by Client and by persons authorized by it during normal business
hours upon reasonable notice. Except as expressly authorized in this Agreement
or as required by applicable law, regulation or order of court or as directed by
other party in writing, Subadviser and Client shall keep confidential the
records and other information obtained by reason of this Agreement. Upon
termination of this Agreement, Subadviser shall promptly, upon demand, return to
Client all records Client reasonably believes are necessary in order to
discharge its responsibilities to the Funds. Subadviser shall be entitled to
retain originals or copies of records pursuant to the requirements of applicable
laws or regulations.
(b) Reconciliations. Subadviser shall reconcile security and cash
positions, and market values on a monthly basis to the Custodian's records and
report discrepancies to the Client by ten (10) business days after the end of
the month.
(c) Loss Reimbursement. Subadviser shall reimburse the Account for any
material error to the Fund's net asset value caused by Subadviser's breach of
its standard of care set forth in Section 12 that is a direct cause of a delay
in the accurate daily pricing of the Fund(s), provided such loss was not the
result of action or inaction of other service providers to the Client or the
Fund.
(d) Reports. Subadviser shall furnish Client and the Board of Trustees
of the Trust such periodic and special reports and information as either of them
may request, including such information as shall be reasonably necessary to
evaluate the terms of any subadvisory agreement between Client and Subadviser
with respect to the assets of the VantageTrust Income Preservation Fund.
(e) Other Reports on Request. Subadviser shall provide to Client
promptly upon request any information available in the records maintained by
Subadviser relating to the Account.
(f) Marketing Materials. Subadviser shall be given the opportunity to
review any marketing materials produced for the Fund that make reference to the
Subadviser prior to the use of such materials.
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7. PURCHASE AND SALE OF SECURITIES
(a) Selection of Brokers. Except to the extent otherwise instructed in
writing by Client in acting on behalf of the Fund, (it being understood that
Client, acting on behalf of the Fund, may, in its absolute discretion, direct
portfolio transactions for which Subadviser is responsible to any broker that
Client may see fit), Subadviser shall place all orders for the purchase and sale
of securities on behalf of the Client with brokers or dealers selected by
Subadviser.
(b) Best Execution. In placing such orders, the subadviser will give
primary consideration to obtaining the most favorable price and efficient
execution reasonably available under the circumstances. In evaluating the terms
available for executing particular transactions for the Fund and in selecting
brokers and dealers to execute such transactions, the Subadviser may consider,
in addition to commission cost and execution capabilities, the financial
stability and reputation of brokers and dealers and the brokerage and research,
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934, as amended) provided by brokers and dealers. Subadviser is
authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if Subadviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker and dealer in discharging responsibilities with respect
to the Account or to other client accounts as to which it exercises investment
discretion.
(c) Bunching Orders. Client agrees that Subadviser may aggregate sales
and purchase orders of Account with similar orders being made simultaneously for
other accounts managed by Subadviser, if in Subadviser's reasonable judgment
such aggregation shall result in an overall economic benefit or more efficient
execution to the Account taking into consideration the advantageous selling or
purchase price, brokerage commission and other expenses. Client acknowledges
that the determination of such economic benefit to the Fund by Subadviser
represents Subadviser's evaluation that the Account is benefited by relatively
better purchase or sales prices, lower commission expenses and beneficial timing
of transactions or a combination of these and other factors. In such event,
allocation of the securities so purchased or sold, as well as expenses incurred
in the transaction, will be made by the Subadviser in a manner the Subadviser
considers to be most equitable and consistent with its fiduciary obligations to
the Fund and to its other clients.
8. INVESTMENT FEES
(a) Fee Schedule. The compensation of the Subadviser for its services
under this Agreement shall be calculated and paid by the Client from the assets
of the Account in accordance with SCHEDULE C hereto.
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(b) For purposes of this Section 8 and Schedule C, all payments due to
Subadviser shall be solely made from the assets of the Fund, which is a series
of the Trust.
(c) Pro Rata Fee. If the Subadviser should serve for less than the whole
of any calendar quarter, its compensation shall be determined as provided above
on the basis of the average market value of the Account in the quarter in which
termination occurs and shall be payable on a pro rata basis for the period of
the calendar quarter for which it has served as Subadviser hereunder.
9. BEST EFFORTS; NON-EXCLUSIVITY OF SERVICES
The Subadviser shall devote its best efforts and such time as it deems
necessary to provide prompt and expert service to the Client. The services of
Subadviser to be provided to Client hereunder are not to be deemed exclusive and
Subadviser shall be free to provide similar services for its own account and the
accounts of other persons and to receive compensation for such services. Client
acknowledges that Subadviser and its members, Affiliates and employees, and
Subadviser's other clients may at any time, have, acquire, increase, decrease,
or dispose of positions in the same investments which are at the same time being
held, acquired for or disposed of under this Agreement for the Fund. Subadviser
shall have no obligation to acquire or dispose of a position in any investment
pursuant to this Agreement simply because Subadviser, its directors, members,
Affiliates or employees invest in such a position for its or their own accounts
or for the account of another client.
10. XXXXXXX XXXXXXX POLICIES ANDCODE OF ETHICS
Subadviser hereby represents that it has adopted policies that meet the
requirements of Rule 17j-1 under the Investment Company Act of 1940. Copies of
such policies shall be delivered to the Client upon request, and any material
violation of such policies by personnel of the Subadviser who are "access
persons" with respect to the Account shall be reported to the Client.
11. INSURANCE
At all times during the term of this Agreement, Subadviser shall
maintain, at its own cost and expense, professional liability insurance for
errors, omissions, and negligent acts, in an amount and with such terms as are
standard in the financial services industry for an investment adviser managing
the amount of aggregate assets managed by Subadviser for Client and for the
Subadviser's other clients.
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12. LIABILITY
In the absence of any gross negligence, willful malfeasance, or willful
violation of this Agreement, Subadviser shall not be liable to Client for honest
mistakes of judgment or for action or inaction taken in good faith for a purpose
that the Subadviser reasonably believes to be in the best interests of the
Client or the Fund. However, neither this provision nor any other provision of
this Agreement shall constitute a waiver or limitation of any rights which
Client may have under federal or state securities laws.
13. TERM
This Agreement shall be in effect for an initial term of one year
beginning on the Effective Date and from year to year thereafter, unless
terminated by either party as provided herein.
14. TERMINATION
This Agreement may be terminated by either party hereto, without the
payment of any penalty, immediately upon notice to the other in the event of a
material breach of any provision thereof by the party so notified if such breach
shall not have been cured within a twenty (20) day period after notice of such
breach, or otherwise by Subadviser upon sixty (60) days' written notice to the
Client or by the Client upon thirty (30) days' written notice to Subadviser,
except that this Agreement shall automatically terminate in the event of its
assignment, as provided in Paragraph 19, at the discretion of the Client in the
event of Subadviser's change in control as provided in Paragraph 19, upon the
termination of the Funds, or upon termination of Client's advisory agreement
with the Funds. Any termination in accordance with the terms of this Agreement
shall not cause the payment of any penalty. Any such termination shall not
affect the status, obligations or liabilities of any party hereto to the other.
15. REPRESENTATIONS
(a) Subadviser hereby confirms to Client that Subadviser is registered
as an investment adviser under the Investment Advisers Act of 1940, that it has
full power and authority to enter into and perform fully the terms of this
Agreement and that the execution of this Agreement on behalf of Subadviser has
been duly authorized and, upon execution and delivery, this Agreement will be
binding upon Subadviser in accordance with its terms.
(b) Client hereby confirms to Subadviser that it is registered as an
investment adviser under the Investment Advisers Act of 1940, that it has full
power and authority to enter into this Agreement and that the execution of this
Agreement on behalf of Client
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has been fully authorized and, upon execution and delivery, this Agreement will
be binding upon Client in accordance with its terms.
16. NOTICES
Notices or other notifications given or sent under or pursuant to this
Agreement shall be in writing and be deemed to have been given or sent if
delivered to the party at its address listed below in person or by telex or
telecopy receipt of which is confirmed or by mail or by registered mail, return
receipt requested. The addresses of the parties are:
CLIENT:
ICMA Retirement Corporation
Attention: Xxxx Xxxxxxxxx, Legal Department
000 Xxxxx Xxxxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
SUBADVISER:
Wellington Management Company, LLP
Attention: Regulatory Affairs Department
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Each party may change its address by giving notice as herein required.
17. SOLE INSTRUMENT
This instrument constitutes the sole and only agreement of the parties
to it relating to its object and correctly sets forth the rights, duties, and
obligations of each party to the other as of its date. Any prior agreements,
promises, negotiations or representations not expressly set forth in this
Agreement are of no force or effect.
18. WAIVER OR MODIFICATION
No waiver or modification of this Agreement shall be effective unless
reduced to a written document signed by the party to be charged. No failure to
exercise and no delay in exercising, on the part of any party hereto, of any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof.
Only the Chief Executive Officer has authority on behalf of the client to modify
or waive any of the provisions of the Agreement. It is understood that certain
material amendments may require approval of the Trust.
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19. ASSIGNMENT AND CHANGE IN CONTROL
This Agreement shall automatically terminate in the event of its
assignment. Subadviser agrees to provide immediate written notice in the event
of a change in control. Such a change in control will entitle, but not require,
the Client to terminate the Agreement immediately or upon notice.
20. COUNTERPARTS
This Agreement may be executed in counterparts each of which shall be
deemed to be an original and all of which, taken together, shall be deemed to
constitute one and the same instrument.
21. CHOICE OF LAW
This Agreement shall be governed by, and the rights of the parties
arising hereunder construed in accordance with, the laws of the State of
Delaware without reference to principles of conflict of laws.
22. YEAR 2000 STATEMENT
Subadviser certifies that it has taken the steps to address the Year
2000 problem that are set forth in Subadviser's SEC Form ADV-Y2K, a copy of
which has been filed with the SEC and provided to Client. Any subsequent SEC
filings regarding this issue shall be provided to Client.
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IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON October 11,
2000, and make it effective on the date set forth.
CLIENT SUBADVISER
ICMA Retirement Corporation Wellington Management Company, LLP
by: by:
/S/ XXXXXX XXXXXX /S/ XXXX X. XXXXX
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(Signature) (Signature)
Xxxx X. Xxxxx, Senior Vice President
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Xxxxxx Xxxxxx, President (Name, Title)
Date: Oct. 11, 2000 Date: October 11, 2000
FUND
ICMA Retirement Trust
VantageTrust Income Preservation Fund
by:
/s/ XXXXXX XXXXXX
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(Signature)
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Xxxxxx Xxxxxx, President
Date: Oct. 11, 2000
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SCHEDULE A
ICMA RETIREMENT TRUST
VANTAGETRUST INCOME PRESERVATION FUND
STATEMENT OF POLICIES AND GUIDELINES
These Polices and Guidelines apply to the VantageTrust Income Preservation Fund
until all assets have been transferred to the Vantagepoint Income Preservation
Fund.
These investment polices and guidelines have been adopted by the ICMA Retirement
Trust (the "Trust") pursuant to Section 2.2 of the Declaration of Trust to
govern the management and administration of the VantageTrust Income Preservation
Fund of the Trust by the ICMA Retirement Corporation (the "Retirement
Corporation"). They may be reviewed and revised at the discretion of the
Trustees of the Trust. The VantageTrust Income Preservation Fund's investment
administration is under the supervision of the Retirement Corporation, which is
responsible for the monitoring and appointment of subadvisers to handle the
day-to-day investment of assets assigned to them.
These Investment Policies and Guidelines cover two different matters:
1. They set forth criteria to be applied by the Retirement Corporation in
the selection of investment contracts; these criteria are referred to
as "Fund Level" policies and guidelines;
2. They also set forth criteria that should be applied to the management
of asset portfolios in Participating Contracts; these criteria are
referred to as "Portfolio Level" policies and guidelines.
INVESTMENT POLICIES
I. INVESTMENT OBJECTIVE
The VantageTrust Income Preservation Fund seeks stable returns while
preserving principal.
II. STABLE VALUE INVESTMENTS
Stable value investment contracts are financial instruments negotiated by the
Retirement Corporation (RC) for the benefit of the Trust with approved contract
issuers. A stable value contract entails a promise to pay a stated rate of
interest on a principal amount for an agreed upon period of time. The time to
maturity and the interest paid may be fixed or variable as negotiated. Stable
value contracts as negotiated by RC, provide liquidity for required redemptions,
e.g., benefit withdrawals and transfers to other fund options. Participant
initiated redemptions are honored at book value; for that reason, such contracts
are termed "benefit responsive" and are valued at all times at original
principal
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plus accrued interest regardless of fluctuations in market interest rates. This
is referred to as "book value," an accounting treatment.
Amounts paid to honor redemption requests initiated by Plans, as distinguished
from Participants, may be less than invested principal based on market
conditions at the time of withdrawal.
There are types of stable value investment contracts in which the Trust may
invest: Non-Participating and Participating. The term "participating" refers to
the whether or not a contract's interest rate reflects the actual investment
performance of the assets in which the principal is invested.
THE VANTAGETRUST INCOME PRESERVATION FUND WILL INVEST IN PARTICIPATING SYNTHETIC
CONTRACTS ONLY.
PARTICIPATING CONTRACTS: In Participating contracts, the amount of interest paid
is determined by the actual investment performance of an identified separate
portfolio of high quality, marketable securities, in which the contract is
invested. The term to maturity can be a fixed period of time or an indefinite
period with specified termination provisions.
Examples of typical Participating contracts are actively managed insurance
company separate accounts and "synthetic" contracts consisting of a portfolio of
securities managed by an investment subadviser with the benefit payments at book
value underwritten by a qualified financial institution.
The principal distinction between separate account contracts and synthetic
contracts is the ownership of the assets supporting the contracts. With a
separate account contract, the contract issuer is the legal owner of all
contract assets. In a synthetic contract, the Trust is the legal owner of the
separate portfolio of marketable securities.
III. STRUCTURE
The assets of the VantageTrust Income Preservation Fund are managed by the ICMA
Retirement Corporation which selects investment subadvisers and investment
contracts (wrappers) for the fund. Selection of participating investment
contracts will ordinarily entail review and approval of a subadviser to manage
the underlying contract portfolio. Each subadviser must either be registered
with the Securities and Exchange Commission (SEC) under the Investment Advisers
Act of 1940 or be a Bank, Insurance Company or Trust Company exempted as such
from registration.
IV. INVESTMENT STRATEGY
A. FUND LEVEL STRATEGY
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The Retirement Corporation is expected to seek requisite yield, interest
rate responsiveness, diversification and liquidity. The Fund's assets
will be allocated in a manner that achieves these objectives. The
selected subadvisers should be able to add value over passive benchmarks
selected by the Retirement Corporation on a net of fee basis.
B. PORTFOLIO LEVEL STRATEGY
The Retirement Corporation is expected to seek a variety of applicable
fixed income management approaches and investment disciplines to obtain a
complementary commingling of styles that will effectively achieve the
investment objective of the Fund.
The Fund will be partially invested in the VantageTrust PLUS Fund in
decreasing proportions until all assets from the PLUS Fund have been
transferred. The investment guidelines of the VantageTrust PLUS Fund will
apply to the portion of the Fund that remains invested in PLUS Fund
shares.
Investment strategies employed in portfolios underlying the contracts
will involve active fixed income management.
Active management strategies may include:
- Core strategies which encompass the entire investment grade
universe,
- Tactical management in which attractive sectors of the bond
market are identified and undervalued securities within those
sectors are owned,
- Duration management which adjusts duration based on the most
undervalued sectors of the yield curve or on expected changes in
interest rates.
V. PERFORMANCE BENCHMARKS
Performance benchmarks will be established for the Fund. These benchmarks will
be recommended by the Retirement Coporation and adopted by the Trust and will be
subject to review by the Retirement Corporation and revision by the Trust when
appropriate.
VI. TRUSTEE REVIEW
The Retirement Corporation will report periodically to the Trustees on
performance of the Fund against benchmarks and on manager results and will
evaluate for the Trustees the overall performance of the Fund and its
objectives. The Trustees will consider such reports and other relevant factors
in appraising the investment objectives and performance of the Fund.
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VIP FUND LEVEL INVESTMENT GUIDELINES
A. SYNTHETIC GICs Synthetic investment contracts will be formed through
the use of selected fixed income subadvisers and wrappers.
FIXED INCOME SUBADVISERS: The subadvisers will be selected based on
the Retirement Corporation's expectation of the subadviser's ability
to add value over a passive fixed income benchmark through active
management. In addition to investment level guidelines at the Fund
level, the subadvisers will be required to conform to investment level
guidelines at the manager level with respect to asset allocation,
credit quality, issue and issuer exposure, duration and prohibited
practices.
WRAPPERS: The role of the wrappers is to enable book value accounting
and simultaneously ensure benefit responsiveness. The wrappers will be
selected from an approved list maintained by the Retirement
Corporation's credit analysis department.
B. PORTFOLIO ASSET ALLOCATION: Characteristics of the VIP Fund should
conform to the following asset allocation limitations outlined below.
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ASSET TYPE TARGET MINIMUM MAXIMUM
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Cash and Cash 10% 5% 100%
Equivalents
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Enhanced Cash 30% 0% 100%
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Xxxxxx 30% 0% 50%
Intermediate
Gov't/Corporate
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Xxxxxx Aggregate 30% 0% 50%
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C. PORTFOLIO DURATION: The target duration for the overall Fund is 2.5
YEARS. At any given time the duration of the Fund may deviate from the
target within a range of PLUS OR MINUS 1 YEAR.
D. PORTFOLIO QUALITY: The target overall quality of the Fund is AA.
Investment guidelines at the Fund and manager level are designed to
achieve this target. The minimum quality for any issue in the
portfolio is BBB-.
E. ELIGIBLE INVESTMENTS
1. FIXED INCOME SECURITIES:
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- Money market instruments including CDs, Commercial Paper,
Bankers Acceptances, Time Deposits, Repurchase and
Reverse-repurchase agreements, Floating rate instruments, US
money market funds and bank STIFs
- Securities issues by the US Treasury, government agencies and
government sponsored enterprises
- Corporate Bonds
- Asset-Backed Securities
- Mortgage-Backed fixed Income Securities including CMOs and
CMBSs
- US dollar-denominated securities issued by foreign governmental
and corporate entities that meet the Fund's criteria for
quality
2. DERIVATIVES
- Options, Futures and Mortgage forwards (TBA dollar rolls) may
be used to obtain exposure to fixed income sectors within the
subadviser's respective benchmark without incurring leverage.
- Swaps, Caps and Floors may be used to take advantage of manager
expectations of interest rates.
F. ELIGIBLE PRACTICES
There are no restrictions on subadvisers as to the following:
- Portfolio Turnover
- Realized Gains and Losses
G. SECTOR DIVERSIFICATION
Sector diversification will vary depending on the subadviser's style and
investment approach. These limits will be set by the Retirement
Corporation with each subadviser.
H. PROHIBITED PRACTICES AND SECURITIES
- Short Sales
- Derivative securities except as explicitly approved by the
Retirement Corporation. This restriction applies to among
others:
- Inverse Floaters
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- Interest Only Securities (I/Os)
- Principal Only Securities (P/Os)
- Securities for which there is no established trading market
- Commodities (other than approved financial futures)
- Margin purchases and other forms of borrowing; granting of pledges or
other security interests in assets of the Fund
- Securities issued by the subadvisers, wrappers or their affiliates
- Equity securities (except preferred stock and convertible bonds) and
their derivatives including financial futures on equities
I. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in the Fund Level Investment
Guidelines Section may be used but only if explicitly aproved in advance by the
Retirement Corporation and reported to the Trust.
J. SECURITIES LENDING
The Retirement Corporation will deem the securities in the synthetic fixed
income portfolios as eligible for the Corporation's securities lending program.
K. PERFORMANCE EVALUATION
The performance of the fund at the subadviser, Fund and RC External Product
level is outlined as follows:
1. RC INVESTMENTS FUND LEVEL BENCHMARK: The Fund's overall benchmark
will be a composite consisting of 10% 90-Day T-Xxxx plus a 90%
wrapped portion consisting of 30% 90-Day T-Xxxx plus 30% Xxxxxx
Brothers Intermediate Government/Corporate Index plus 30% Xxxxxx
Brothers Aggregate Index.
2. RC FUND PEER GROUP: The Institute of Management and Administration
(IOMA) Stable Value Pool. The Retirement Corporation may select any
benchmark considered suitable for the Fund.
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SCHEDULE B
VANTAGETRUST INCOME PRESERVATION FUND
INVESTMENT GUIDELINES
FOR
WELLINGTON MANAGEMENT COMPANY
I. OBJECTIVE
The Wellington Management Company Portfolio (the "Portfolio") objective
is total return in excess of the benchmark through active management of
a portfolio of high quality fixed-income securities, with risk
characteristics similar to the benchmark.
II. BENCHMARK
The performance and risk benchmark is a blend of two bond indexes:
- 50% Xxxxxx Brothers Aggregate Bond Index
- 50% Xxxxxx Brothers Intermediate Government/Credit Bond Index
III. PORTFOLIO MANAGEMENT GUIDELINES
To ensure the fund maintains a high quality status, the following
guidelines are in effect for the Portfolio:
A. PORTFOLIO DURATION: The portfolio's market value weighted duration
is to be between three and five years.
B. PORTFOLIO QUALITY RATING: The portfolio's market value weighted
quality is to be at least Aa2/AA. The lower of the Xxxxx'x or
Standard & Poor's ratings shall be used in assigning an issue's
rating.
C. LIQUIDITY: Because the Portfolio represents only a portion of the
VIP Fund, and because the VIP Fund contains a cash buffer to meet
anticipated shareholder liquidity needs, the Portfolio can be
managed using a "fully invested" approach. However, all issues held
should have a high degree of liquidity.
D. TYPES OF SECURITIES AND MAXIMUM AMOUNTS: Only the fixed-income
security types contained in the benchmark indexes (or futures on
such securities), or security types otherwise explicitly permitted
in these guidelines or amendments thereto, may be held in the
Portfolio. The maximum amounts that may be held, subject to other
limitations below, are shown in brackets.
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1) Cash equivalents, rated Aaa/AAA or A1/P1 [maximum limit = 100%]
2) Fixed Income Securities (securities with durations greater than one
year):
a) US Treasury securities, including strips [100%]
b) US Government Agency securities, fully backed by US Treasury
[50%]
(Note: Agency-backed pass-through securities included in
mortgage category below)
c) US corporate fixed-income securities, rated between Aaa/AAA and
Baa2/BBB [50%]
- BBB rated securities [10%]
- Holdings downgraded to Baa3/BBB- must be sold within 90 days
of downgrade. Issues downgraded below Baa3/BBB- must be sold
in the shorter of 3O days or the remainder of the previous
90 days.
d) Mortgage-backed securities [35%]
- Securities representing an entire mortgage pool may be held.
CMO's may also be held, however segmented issues with
volatile cashflows, such as IOs or POs, may not be held.
- Commercial mortgage-backed securities [10%]
e) Asset-backed securities [10%]
OTHER NON-BENCHMARK SECURITY TYPES THAT ARE PERMITTED INCLUDE:
- Medium term notes [25%]
- Taxable municipal securities [25%]
- 144A securities with sufficient liquidity as indicated by issuance
size greater than $100 million, or with registration rights [10%]
- Adjustable-rate mortgages [10%]
- Non-agency mortgages [10%]
- Treasury and other inflation-linked securities [10%]
- Capital trust securities [10%]
- Derivatives on fixed-income securities contained in the indexes
[50%, based on face value]
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E. PORTFOLIO CONCENTRATION LIMITS
- Single issue [5%]
- Single issuer:
- US Treasury [100%]
- US Government Agency [30%]
- Corporation [5%], with special limit on BBB issuer [1%]
- Other issuers [5%]
F. PROHIBITED PRACTICES
- Transactions resulting in a leveraged position
- Short sales
- Investment in issues of VIP Fund subadvisers or affiliates
- Investment in security types not specified herein, without
prior written permission from ICMA-RC.
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SCHEDULE C
VANTAGETRUST INCOME PRESERVATION FUND
FEE SCHEDULE
FOR
WELLINGTON MANAGEMENT COMPANY, LLP
The Adviser's quarterly fee shall be calculated based on the average daily net
assets of the assets under management as provided by the Custodian, based on the
following annual rate.
First $ 100 million 0.25 percent
Over $ 100 million 0.15 percent
