HomeMy WebLinkAbout2010-320D FLORIDA MUNICIPAL PENSION TRUST FUND
INVESTMENT POLICY
Amended and Restated As of June 1, 2007
I. AUTHORITY
The Master Trust Agreement originally made as of the 16th day of December, 1983 , and
as amended and restated most recently as of the 1St day of June , 2006 , by and between all parties
who are now or may hereafter become members of the Florida Municipal Pension Trust Fund
("FMPTF " or the "Master Trust Fund") and the individuals named as Master Trustees pursuant
to Section 109 of the Master Trust Agreement and their successors (such trustees collectively
referred to as the "Master Trustees") . The Master Trust Agreement provides that the Master
Trustees have the exclusive authority and discretion to manage and control the assets of the
Master Trust Fund according to the provisions herein . Except as otherwise defined herein, the
capitalized terms in this policy shall have the same meaning as such terms have in the Master
Trust Agreement .
II. PURPOSE
The purpose of the Master Trust Fund is to collectively manage the investment of the
assets of the Plans of participating Florida governments . The Master Trust Fund operates as a
non-profit, tax-exempt entity that provides professional and cost-effective investment and
administrative services for all types of retirement plans .
The Master Trustees have established the herein investment policy and portfolio
guidelines to assist the Administrator in the administration of the assets of the Master Trust
Fund ; to guide the investment managers in structuring portfolios consistent with the Master Trust
Fund ' s desired performance results and an acceptable level of risk ; and to assure the Master
Trust Fund assets are managed in a prudent fashion.
This policy is applicable to all funds, assets and properties under the control of the Master
Trustees and to all consultants, agents, and staff responsible to the Master Trustees .
III , DUTIES AND RESPONSIBILITIES
A . Administrator. Under the direction of the Master Trustees, it shall be the
responsibility of the Administrator to supervise and administer the Master Trust Fund ' s
investment program pursuant to a written agreement between the Master Trust Fund and the
Administrator, including , but not limited to, the following :
1 . Supervise and coordinate the activities of qualified investment
management firms , dealers , brokers , issuers, custodians , consultants and other investment
advisors in keeping with this investment policy .
2 . Provide advice and assistance in the administration and operation of the
Master Trust Fund ' s investment program .
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Revised June 1 , 2007
FLORIDA MUNICIPAL PENSION TRUST FUND
INVESTMENT POLICY
Amended and Restated As of June 1, 2007
I . AUTHORITY
The Master Trust Agreement originally made as of the 16th day of December, 1983 , and
as amended and restated most recently as of the 1St day of June , 2006 , by and between all parties
who are now or may hereafter become members of the Florida Municipal Pension Trust Fund
("FMPTF" or the "Master Trust Fund") and the individuals named as Master Trustees pursuant
to Section 109 of the Master Trust Agreement and their successors (such trustees collectively
referred to as the "Master Trustees") , The Master Trust Agreement provides that the Master
Trustees have the exclusive authority and discretion to manage and control the assets of the
Master Trust Fund according to the provisions herein . Except as otherwise defined herein , the
capitalized terms in this policy shall have the same meaning as such terms have in the Master
Trust Agreement.
II. PURPOSE
The purpose of the Master Trust Fund is to collectively manage the investment of the
assets of the Plans of participating Florida governments . The Master Trust Fund operates as a
non-profit, tax-exempt entity that provides professional and cost-effective investment and
administrative services for all types of retirement plans .
The Master Trustees have established the herein investment policy and portfolio
guidelines to assist the Administrator in the administration of the assets of the Master Trust
Fund ; to guide the investment managers in structuring portfolios consistent with the Master Trust
Fund' s desired performance results and an acceptable level of risk ; and to assure the Master
Trust Fund assets are managed in a prudent fashion.
This policy is applicable to all funds, assets and properties under the control of the Master
Trustees and to all consultants, agents, and staff responsible to the Master Trustees .
III . DUTIES AND RESPONSIBILITIES
A. Administrator. Under the direction of the Master Trustees, it shall be the
responsibility of the Administrator to supervise and administer the Master Trust Fund ' s
investment program pursuant to a written agreement between the Master Trust Fund and the
Administrator, including , but not limited to, the following :
1 . Supervise and coordinate the activities of qualified investment
management firms , dealers , brokers , issuers, custodians , consultants and other investment
advisors in keeping with this investment policy .
2 . Provide advice and assistance in the administration and operation of the
Master Trust Fund ' s investment program.
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Revised June 1 , 2007
3 . Establish accounting systems and procedures for the safekeeping, disposal
of and recording of all investment assets held or controlled by the Master Trust Fund
including the establishment of appropriate internal controls as required.
4 . Assist in the design, development, operation, review and evaluation of the
Master Trust Fund ' s investment program for compliance with this policy .
5 . Advise the Master Trustees as to recommendations relative to
amendments to this policy.
6 Inform the Master Trustees of unaddressed concerns with the Master Trust
Fund' s investment program .
7 . Immediately notify the Master Trustees of any event or of any information
that may have a severe and adverse effect on the Master Trust Fund' s investment
program under the provisions of this policy .
Be Investment Managers . Under the direction of the Master Trustees and subject to
an applicable written investment management agreement, the duties and responsibilities of the
investment managers for the Master Trust Fund shall include , but not be limited to , the
following .
1 . Will have full discretion in the management of assets allocated to the
investment managers, subject to the overall investment policy and guidelines set by the
Master Trustees .
2 . Serve as fiduciaries responsible for specific securities decisions .
3 . Will abide by duties, responsibilities and guidelines detailed in any
specific investment manager agreement .
C . Custodian Under the direction of the Master Trustees and subject to an
applicable written custodial agreement, the duties and responsibilities of the Custodian shall
include , but not be limited to , the following :
1 . Accepts possession of securities for safekeeping; collects and disburses
income ; collects principal of sold, matured or called items ; provides periodic accounting
statements ; and processes and maintains securities lending program .
2 . Meets as required with the Master Trustees and provides reports relative to
the status of the Master Trust Fund.
3 . In a timely fashion, forwards and transmits to the appropriate investment
managers all proxies related to equity securities held in an account.
4 . Will abide by duties, responsibilities and guidelines detailed in any
specific custodial agreement.
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Revised June 1 , 2007
3 . Establish accounting systems and procedures for the safekeeping, disposal
of and recording of all investment assets held or controlled by the Master Trust Fund
including the establishment of appropriate internal controls as required.
4 . Assist in the design, development, operation, review and evaluation of the
Master Trust Fund ' s investment program for compliance with this policy .
5 . Advise the Master Trustees as to recommendations relative to
amendments to this policy.
6 Inform the Master Trustees of unaddressed concerns with the Master Trust
Fund' s investment program .
7 . Immediately notify the Master Trustees of any event or of any information
that may have a severe and adverse effect on the Master Trust Fund' s investment
program under the provisions of this policy .
Be Investment Managers . Under the direction of the Master Trustees and subject to
an applicable written investment management agreement, the duties and responsibilities of the
investment managers for the Master Trust Fund shall include , but not be limited to , the
following .
1 . Will have full discretion in the management of assets allocated to the
investment managers, subject to the overall investment policy and guidelines set by the
Master Trustees .
2 . Serve as fiduciaries responsible for specific securities decisions .
3 . Will abide by duties, responsibilities and guidelines detailed in any
specific investment manager agreement .
C . Custodian Under the direction of the Master Trustees and subject to an
applicable written custodial agreement, the duties and responsibilities of the Custodian shall
include , but not be limited to , the following :
1 . Accepts possession of securities for safekeeping; collects and disburses
income ; collects principal of sold, matured or called items ; provides periodic accounting
statements ; and processes and maintains securities lending program .
2 . Meets as required with the Master Trustees and provides reports relative to
the status of the Master Trust Fund.
3 . In a timely fashion, forwards and transmits to the appropriate investment
managers all proxies related to equity securities held in an account.
4 . Will abide by duties, responsibilities and guidelines detailed in any
specific custodial agreement.
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D. Performance Monitoring Consultant (Investment Consultant) Under the
direction of the Master Trustees and subject to an applicable written investment consulting
agreement, the duties and responsibilities of the investment consultant shall include, but not be
limited to , the following :
1. Assists the Master Trustees in developing investment policy guidelines,
including asset class choices , asset allocation targets and risk diversification.
2 . Provides the Master Trustees with objective information on a broad
spectrum of investment management specialists and helps construct a portfolio
management team of superior investment managers .
3 . Monitors the performance of the investment managers and provides
regular quarterly reports to the Master Trustees, which will aid the Master Trustees in
carrying out the intent of this policy .
4 . Reports conclusions and recommendations to the Master Trustees as
required.
5 . Evaluates and makes recommendations , as needed, on portfolio
management.
6 . Evaluates and makes recommendations, as needed, on other areas of
investment, such as real estate, foreign securities or venture capital .
7 . Will abide by duties , responsibilities and guidelines detailed in any
specific investment consulting agreement.
IV. INVESTMENT AND FIDUCIARY STANDARDS
The standard of prudence to be used by investment advisors , money managers or other
qualified parties or individuals with contracted investment responsibilities with the Master Trust
Fund (the "Managers") shall be the "prudent person" , which provides that the investments of the
Master Trust Fund shall be made with the judgment and care under the circumstances then
prevailing which persons of prudence, discretion and intelligence exercise in the management of
their own affairs , not in regard to speculation but in regard to the permanent disposition of the
invested Master Trust Fund assets considering the probable income, total return and probable
safety of these Master Trust Fund investments . Managers shall adhere to the fiduciary standards
set forth in the Employee Retirement Income Security Act of 1974 at 29 U. S . C . s . 1104(a) ( 1 )(A)
through (C) . Individuals , acting in accordance with established procedures and exercising due
diligence , shall be relieved of personal responsibility for an individual security ' s credit risk or
market price changes, provided deviations from expectations are reported in a timely fashion and
appropriate action is taken to minimize any investment losses .
Any individual who is involved in the investment process shall refrain from personal
business activity that could conflict with proper execution of the investment program , or which
could impair their ability to make impartial investment decisions . Managers shall have a written
policy which addresses the disclosure of potential conflict-of4riterests which shall be submitted
to the Administrator upon request. Managers shall also disclose to the Administrator any
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Revised June 1 , 2007
D. Performance Monitoring Consultant (Investment Consultant) Under the
direction of the Master Trustees and subject to an applicable written investment consulting
agreement, the duties and responsibilities of the investment consultant shall include, but not be
limited to , the following :
1. Assists the Master Trustees in developing investment policy guidelines,
including asset class choices , asset allocation targets and risk diversification.
2 . Provides the Master Trustees with objective information on a broad
spectrum of investment management specialists and helps construct a portfolio
management team of superior investment managers .
3 . Monitors the performance of the investment managers and provides
regular quarterly reports to the Master Trustees, which will aid the Master Trustees in
carrying out the intent of this policy .
4 . Reports conclusions and recommendations to the Master Trustees as
required.
5 . Evaluates and makes recommendations , as needed, on portfolio
management.
6 . Evaluates and makes recommendations, as needed, on other areas of
investment, such as real estate, foreign securities or venture capital .
7 . Will abide by duties , responsibilities and guidelines detailed in any
specific investment consulting agreement.
IV. INVESTMENT AND FIDUCIARY STANDARDS
The standard of prudence to be used by investment advisors , money managers or other
qualified parties or individuals with contracted investment responsibilities with the Master Trust
Fund (the "Managers") shall be the "prudent person" , which provides that the investments of the
Master Trust Fund shall be made with the judgment and care under the circumstances then
prevailing which persons of prudence, discretion and intelligence exercise in the management of
their own affairs , not in regard to speculation but in regard to the permanent disposition of the
invested Master Trust Fund assets considering the probable income, total return and probable
safety of these Master Trust Fund investments . Managers shall adhere to the fiduciary standards
set forth in the Employee Retirement Income Security Act of 1974 at 29 U. S . C . s . 1104(a) ( 1 )(A)
through (C) . Individuals , acting in accordance with established procedures and exercising due
diligence , shall be relieved of personal responsibility for an individual security ' s credit risk or
market price changes, provided deviations from expectations are reported in a timely fashion and
appropriate action is taken to minimize any investment losses .
Any individual who is involved in the investment process shall refrain from personal
business activity that could conflict with proper execution of the investment program , or which
could impair their ability to make impartial investment decisions . Managers shall have a written
policy which addresses the disclosure of potential conflict-of4riterests which shall be submitted
to the Administrator upon request. Managers shall also disclose to the Administrator any
Page 3 of 19
Revised June 1 , 2007
material financial/investment position or finding which may be contrary to this policy or
otherwise related to the performance of the Master Trust Fund ' s portfolio . Any adverse findings
of the U. S . Department of Labor or the Securities and Exchange Commission regarding a
Manager or its financial activities shall be brought to the immediate attention of the Master
Trustees by the Administrator once the Administrator is notified .
Before engaging in any investment transactions with the Master Trust Fund, a Manager
shall have submitted to the Administrator a signed certification from a duly authorized
representative attesting that the individuals responsible for the Master Trust Fund' s account have
reviewed and shall comply with this investment policy and that they agree to undertake
reasonable efforts to preclude imprudent transactions involving the assets of the Master Trust
Fund .
V. INTERNAL CONTROLS
The Master Trustees require that the Administrator and any other designees establish a
system of internal controls which shall be in writing . These controls shall be reviewed by
independent certified public accountants as part of any required periodic financial statement
audit . The internal controls should be designed to prevent losses of the Master Trust Fund which
might arise from fraud, error, misrepresentation by third parties, or imprudent actions by the
Master Trustees, Administrator or other designees .
VI. BROKERAGE AND BID REQUIREMENT
Managers shall use their best efforts to ensure that portfolio transactions are placed on a
best execution basis . The Master Trustees intend to utilize recapture commissions when it does
not interfere with best execution, solely at the discretion of the investment managers . Managers
are required to , on a quarterly basis, report all brokerage transactions and reasons for using
brokers to the Master Trustees . The Managers shall competitively bid securities in question
when feasible and appropriate . Except as otherwise required by law, the most economically
advantageous bid must be selected .
VII. PROXY VOTING
Responsibility for the voting of proxies shall be with the Master Trustees . The Master
Trustees may exercise the right to assign this responsibility to the investment managers . Since
proxy votes may be considered an asset of the Master Trust Fund, the assignment of voting
proxies shall be exercised solely in the interest of the participants and beneficiaries of the Master
Trust Fund, and for the exclusive purpose of providing benefits to participants and beneficiaries .
Documentation related to the handling and voting of proxies will be reported to the Master
Trustees on a quarterly basis .
The Master Trustees may (but are not required to) solicit Participating Employees '
instructions as to the voting of a Master Trust Fund investment for their benefit . In so doing, the
Master Trustees may solicit instructions from only those Participating Employees whose Plan
accounts held the applicable investment on the record date fixed by the investment issuer. To the
extent that the Administrator receives proper instructions from these Participating Employees,
the Master Trustees shall vote the Master Trust Fund' s rights in accordance with the instructions .
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Revised June 1 , 2007
material financial/investment position or finding which may be contrary to this policy or
otherwise related to the performance of the Master Trust Fund ' s portfolio . Any adverse findings
of the U. S . Department of Labor or the Securities and Exchange Commission regarding a
Manager or its financial activities shall be brought to the immediate attention of the Master
Trustees by the Administrator once the Administrator is notified .
Before engaging in any investment transactions with the Master Trust Fund, a Manager
shall have submitted to the Administrator a signed certification from a duly authorized
representative attesting that the individuals responsible for the Master Trust Fund' s account have
reviewed and shall comply with this investment policy and that they agree to undertake
reasonable efforts to preclude imprudent transactions involving the assets of the Master Trust
Fund .
V. INTERNAL CONTROLS
The Master Trustees require that the Administrator and any other designees establish a
system of internal controls which shall be in writing . These controls shall be reviewed by
independent certified public accountants as part of any required periodic financial statement
audit . The internal controls should be designed to prevent losses of the Master Trust Fund which
might arise from fraud, error, misrepresentation by third parties, or imprudent actions by the
Master Trustees, Administrator or other designees .
VI. BROKERAGE AND BID REQUIREMENT
Managers shall use their best efforts to ensure that portfolio transactions are placed on a
best execution basis . The Master Trustees intend to utilize recapture commissions when it does
not interfere with best execution, solely at the discretion of the investment managers . Managers
are required to , on a quarterly basis, report all brokerage transactions and reasons for using
brokers to the Master Trustees . The Managers shall competitively bid securities in question
when feasible and appropriate . Except as otherwise required by law, the most economically
advantageous bid must be selected .
VII. PROXY VOTING
Responsibility for the voting of proxies shall be with the Master Trustees . The Master
Trustees may exercise the right to assign this responsibility to the investment managers . Since
proxy votes may be considered an asset of the Master Trust Fund, the assignment of voting
proxies shall be exercised solely in the interest of the participants and beneficiaries of the Master
Trust Fund, and for the exclusive purpose of providing benefits to participants and beneficiaries .
Documentation related to the handling and voting of proxies will be reported to the Master
Trustees on a quarterly basis .
The Master Trustees may (but are not required to) solicit Participating Employees '
instructions as to the voting of a Master Trust Fund investment for their benefit . In so doing, the
Master Trustees may solicit instructions from only those Participating Employees whose Plan
accounts held the applicable investment on the record date fixed by the investment issuer. To the
extent that the Administrator receives proper instructions from these Participating Employees,
the Master Trustees shall vote the Master Trust Fund' s rights in accordance with the instructions .
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To the extent of the Master Trust Fund' s rights for which Participating Employees did not give
proper instructions, the Master Trustees may vote in their discretion.
VIII . CONTINUING EDUCATION
The Master Trust Fund acknowledges the importance of continuing education for Master
Trustees. To that end, the Master Trustees shall attend appropriate educational conferences in
connection with their duties and responsibilities as Master Trustees .
IX. REPORTING AND PERFORMANCE MEASUREMENT
The Administrator shall submit to the Master Trustees a quarterly investment report with
information sufficient to provide for a comprehensive review of investment activity and
performance for the quarter. Performance shall be measured against appropriate indices
identified by the Master Trustees for each investment category . This report shall summarize
recent market conditions, economic developments and anticipated investment conditions . The
report should also summarize the investment strategies employed in the most recent quarter, and
describe the portfolio in terms of investment securities, maturities, risk characteristics, adherence
to guidelines and other relevant features .
Managers shall provide timely transaction and performance data to record and document
investment activity, including asset valuation, yield and total return data and such other relative
performance data of the Master Trust Fund' s portfolio on a periodic basis as may be reasonably
requested by the Administrator.
The Administrator, Managers and other contracted parties shall provide to the Master
Trust Fund' s auditor such verifications or reports as are required for the purpose of developing
and supporting the annual financial statements of the Master Trust Fund and the footnotes
thereto .
Managers shall provide immediate written and telephonic notice to the Administrator of
any significant event relating to the Master Trust Fund, specifically but not limited to the
resignation, termination or incapacity of any senior personnel of any Manager.
X. RISK AND DIVERSIFICATION
The Master Trustees will monitor the return per unit of risk (as measured by the standard
deviation of quarterly returns) of the Master Trust Fund' s assets on an ongoing basis , with each
Manager' s contribution being reviewed independently and as to its impact on the overall Master
Trust Fund' s investment return and volatility of results over time . Each Manager' s contribution
will be measured against similar data for appropriate benchmarks.
Investment guidelines and monitoring will provide controls for identifying and limiting
risk of loss from over concentration of assets invested in a specific maturity, with a single issuer,
in like instruments, or dealers or through utilization of intermediaries for purchase and sale of
investments .
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To the extent of the Master Trust Fund' s rights for which Participating Employees did not give
proper instructions, the Master Trustees may vote in their discretion.
VIII . CONTINUING EDUCATION
The Master Trust Fund acknowledges the importance of continuing education for Master
Trustees. To that end, the Master Trustees shall attend appropriate educational conferences in
connection with their duties and responsibilities as Master Trustees .
IX. REPORTING AND PERFORMANCE MEASUREMENT
The Administrator shall submit to the Master Trustees a quarterly investment report with
information sufficient to provide for a comprehensive review of investment activity and
performance for the quarter. Performance shall be measured against appropriate indices
identified by the Master Trustees for each investment category . This report shall summarize
recent market conditions, economic developments and anticipated investment conditions . The
report should also summarize the investment strategies employed in the most recent quarter, and
describe the portfolio in terms of investment securities, maturities, risk characteristics, adherence
to guidelines and other relevant features .
Managers shall provide timely transaction and performance data to record and document
investment activity, including asset valuation, yield and total return data and such other relative
performance data of the Master Trust Fund' s portfolio on a periodic basis as may be reasonably
requested by the Administrator.
The Administrator, Managers and other contracted parties shall provide to the Master
Trust Fund' s auditor such verifications or reports as are required for the purpose of developing
and supporting the annual financial statements of the Master Trust Fund and the footnotes
thereto .
Managers shall provide immediate written and telephonic notice to the Administrator of
any significant event relating to the Master Trust Fund, specifically but not limited to the
resignation, termination or incapacity of any senior personnel of any Manager.
X. RISK AND DIVERSIFICATION
The Master Trustees will monitor the return per unit of risk (as measured by the standard
deviation of quarterly returns) of the Master Trust Fund' s assets on an ongoing basis , with each
Manager' s contribution being reviewed independently and as to its impact on the overall Master
Trust Fund' s investment return and volatility of results over time . Each Manager' s contribution
will be measured against similar data for appropriate benchmarks.
Investment guidelines and monitoring will provide controls for identifying and limiting
risk of loss from over concentration of assets invested in a specific maturity, with a single issuer,
in like instruments, or dealers or through utilization of intermediaries for purchase and sale of
investments .
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Revised June 1 , 2007
Risk and diversification strategies shall be reviewed and revised, if necessary , on a
regular basis in light of the current and projected market condition and the Master Trust Fund' s
needs .
Assets in the Master Trust Fund shall be diversified among equities, fixed income and
real estate to minimize overall portfolio risk consistent with the level of expected return and
thereby improve the long-term return potential of the Master Trust Fund ' s assets . The Master
Trustees reserve the right to add additional diversification by retaining multiple Managers or
portfolios , upon Master Trustee approval and amendment to this policy, to further minimize
portfolio risk or to maintain the level of expected return.
Managers shall be selected to fulfill a particular diversifying role within the Master Trust
Fund' s overall investment structure . It is the express intent of the Master Trustees to grant each
Manager substantial discretion over the assets under its control .
XI. CUSTODIAN
The Custodian shall hold all actively managed or non-indexed assets of the Master Trust
Fund . The Custodian will operate in accordance with a separate agreement with the Master
Trustees . All securities shall be held with a third party, and all securities purchased by, and all
collateral obtained by the Master Trustees shall be properly designated as an asset of the Master
Trustees . No withdrawal of securities , in whole or in part, shall be made from safekeeping
except by the Master Trustees or their designee . Securities transactions between a broker-dealer
and the custodian involving purchase or sale of securities by transfer of money or securities must
be made on a "delivery versus payment" basis , if applicable, to ensure that the Custodian will
have the security or money, as appropriate , in hand at the conclusion of the transaction.
XII. DEFINED BENEFIT PLAN SPECIFICATIONS
These provisions relate to the investment of the assets of the Defined Benefit Pension
Plan Trust and the portion of the Other Post-Employment Benefit Plan Trust relating to other
post-employment benefit plans that are defined benefit plans .
A. Investment Obiective and Exsected Annual Rate of Return . The primary
objective is to seek long-term growth of capital and income consistent with conservation of
capital . Necessary liquidity will be maintained to meet payout requirements . Emphasis is placed
on achieving consistent returns and avoiding extreme volatility in market value .
As of October 1 of each year, the Master Trustees shall determine for the defined benefit
plans in the Master Trust Fund the total expected annual rate of return for the current year, for
each of the next several years and for the long-term thereafter . The expected annual rate of
return for the current year and long-term thereafter is 7 . 5 % , until amended by the Master
Trustees. This determination must be filed promptly with the Department of Management
Services, the Administrator, Master Trustees, and the actuaries, if any, for the Plans . Specific
Plan provisions may supersede this expected rate of return by approval of the Administrator and
Plan actuary .
Be Asset Allocation and Portfolio Composition . Assets of the Master Trust Fund
shall be invested in a diversified portfolio consisting of equity and debt. Although cash is not
Page 6 of 19
Revised June 1 , 2007
Risk and diversification strategies shall be reviewed and revised, if necessary , on a
regular basis in light of the current and projected market condition and the Master Trust Fund' s
needs .
Assets in the Master Trust Fund shall be diversified among equities, fixed income and
real estate to minimize overall portfolio risk consistent with the level of expected return and
thereby improve the long-term return potential of the Master Trust Fund ' s assets . The Master
Trustees reserve the right to add additional diversification by retaining multiple Managers or
portfolios , upon Master Trustee approval and amendment to this policy, to further minimize
portfolio risk or to maintain the level of expected return.
Managers shall be selected to fulfill a particular diversifying role within the Master Trust
Fund' s overall investment structure . It is the express intent of the Master Trustees to grant each
Manager substantial discretion over the assets under its control .
XI. CUSTODIAN
The Custodian shall hold all actively managed or non-indexed assets of the Master Trust
Fund . The Custodian will operate in accordance with a separate agreement with the Master
Trustees . All securities shall be held with a third party, and all securities purchased by, and all
collateral obtained by the Master Trustees shall be properly designated as an asset of the Master
Trustees . No withdrawal of securities , in whole or in part, shall be made from safekeeping
except by the Master Trustees or their designee . Securities transactions between a broker-dealer
and the custodian involving purchase or sale of securities by transfer of money or securities must
be made on a "delivery versus payment" basis , if applicable, to ensure that the Custodian will
have the security or money, as appropriate , in hand at the conclusion of the transaction.
XII. DEFINED BENEFIT PLAN SPECIFICATIONS
These provisions relate to the investment of the assets of the Defined Benefit Pension
Plan Trust and the portion of the Other Post-Employment Benefit Plan Trust relating to other
post-employment benefit plans that are defined benefit plans .
A. Investment Obiective and Exsected Annual Rate of Return . The primary
objective is to seek long-term growth of capital and income consistent with conservation of
capital . Necessary liquidity will be maintained to meet payout requirements . Emphasis is placed
on achieving consistent returns and avoiding extreme volatility in market value .
As of October 1 of each year, the Master Trustees shall determine for the defined benefit
plans in the Master Trust Fund the total expected annual rate of return for the current year, for
each of the next several years and for the long-term thereafter . The expected annual rate of
return for the current year and long-term thereafter is 7 . 5 % , until amended by the Master
Trustees. This determination must be filed promptly with the Department of Management
Services, the Administrator, Master Trustees, and the actuaries, if any, for the Plans . Specific
Plan provisions may supersede this expected rate of return by approval of the Administrator and
Plan actuary .
Be Asset Allocation and Portfolio Composition . Assets of the Master Trust Fund
shall be invested in a diversified portfolio consisting of equity and debt. Although cash is not
Page 6 of 19
Revised June 1 , 2007
included in the asset allocation of the Master Trust Fund, surplus cash flows , additional
contributions and Manager cash will be utilized to pay obligations of the Master Trust Fund and
periodic re-balancing of the assets . The Master Trust Fund may consider investments in other
asset classes which offer potential enhancement to total return at risks no greater than the
exposure under the initially selected asset classes .
From time to time the Master Trustees will adopt asset allocation strategies within the
ranges specified below:
Maximum Target Limitation
Equities 70% at market
The Master Trustees may employ an independent consultant to perform an annual , or
more frequent, Asset Allocation Report that will include, but not be limited to , a strategic
analysis and report on asset allocation investments between different types of investments and
appropriate changes to the percentages therein . This study will be used to assist the Master
Trustees in the determination of the appropriate investment allocation to maximize the return and
minimize the risk to the pooled assets of the Master Trust Fund. This study may include a
recommendation to add or delete asset classes as is warranted by the risk/reward analysis and by
Master Trustees ' approval .
The Master Trustees are not bound by acceptance or denial of recommendations
presented in conjunction with the Asset Allocation Report .
It is not the intention of the Master Trust Fund to become involved in the day-to-day
investment decisions . Therefore , the Administrator is authorized by this policy to make asset
allocation decisions to reallocate or redirect either contributions or the investments held by the
Master Trust Fund in order to take advantage of changing market conditions . Any tactical
allocation that will cause the allocation of the investment classes to vary from the approved
strategic allocation percentages of any asset class by more than 5 % requires approval by the
Chair of the Master Trustees .
The Administrator will report to the Master Trustees at their quarterly meetings on the
tactical and re-balancing allocation decisions made during the prior quarter.
C . Maturity and Liquidity . The Master Trust Fund shall provide sufficient
liquidity to meet any required payment.
D . Authorized Investments . In an effort to accomplish the objectives of the Master
Trust Fund, this policy identifies various authorized investment instruments, issuer diversification,
maturity constraints, investment ratings and liquidity parameters . The following are authorized
investments :
1 . Repurchase agreements which are purchased only from dealers authorized
by the Master Trustees and may only involve the sale and repurchase of securities
authorized for purchase by this investment policy . Maximum maturity at purchase shall
not exceed 180 days with a total average maturity, at any point in time, for all repurchase
agreements held of not greater than 60 days .
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Revised June 1 , 2007
included in the asset allocation of the Master Trust Fund, surplus cash flows , additional
contributions and Manager cash will be utilized to pay obligations of the Master Trust Fund and
periodic re-balancing of the assets . The Master Trust Fund may consider investments in other
asset classes which offer potential enhancement to total return at risks no greater than the
exposure under the initially selected asset classes .
From time to time the Master Trustees will adopt asset allocation strategies within the
ranges specified below:
Maximum Target Limitation
Equities 70% at market
The Master Trustees may employ an independent consultant to perform an annual , or
more frequent, Asset Allocation Report that will include, but not be limited to , a strategic
analysis and report on asset allocation investments between different types of investments and
appropriate changes to the percentages therein . This study will be used to assist the Master
Trustees in the determination of the appropriate investment allocation to maximize the return and
minimize the risk to the pooled assets of the Master Trust Fund. This study may include a
recommendation to add or delete asset classes as is warranted by the risk/reward analysis and by
Master Trustees ' approval .
The Master Trustees are not bound by acceptance or denial of recommendations
presented in conjunction with the Asset Allocation Report .
It is not the intention of the Master Trust Fund to become involved in the day-to-day
investment decisions . Therefore , the Administrator is authorized by this policy to make asset
allocation decisions to reallocate or redirect either contributions or the investments held by the
Master Trust Fund in order to take advantage of changing market conditions . Any tactical
allocation that will cause the allocation of the investment classes to vary from the approved
strategic allocation percentages of any asset class by more than 5 % requires approval by the
Chair of the Master Trustees .
The Administrator will report to the Master Trustees at their quarterly meetings on the
tactical and re-balancing allocation decisions made during the prior quarter.
C . Maturity and Liquidity . The Master Trust Fund shall provide sufficient
liquidity to meet any required payment.
D . Authorized Investments . In an effort to accomplish the objectives of the Master
Trust Fund, this policy identifies various authorized investment instruments, issuer diversification,
maturity constraints, investment ratings and liquidity parameters . The following are authorized
investments :
1 . Repurchase agreements which are purchased only from dealers authorized
by the Master Trustees and may only involve the sale and repurchase of securities
authorized for purchase by this investment policy . Maximum maturity at purchase shall
not exceed 180 days with a total average maturity, at any point in time, for all repurchase
agreements held of not greater than 60 days .
Page 7 of 19
Revised June 1 , 2007
2 . Direct obligations of the United States Treasury including bills, notes,
bonds and various forms of Treasury zero-coupon securities .
I Any authorized investments purchased by or through the State Board of
Administration or the Office of the State Treasurer and held on behalf of the Master Trust
Fund in a commingled pool or separate account.
4 . Commercial paper issued in the United States by any corporation, provided
that such instrument carries a rating of A 1 /P 1 (or comparable rating) as provided by two of
the top nationally recognized statistical rating organization; and that the corporation' s long
term debt, if any, is rated at least Al /A+ by a nationally recognized statistical rating
organization or, if backed by a letter of credit ("LOC"), the long term debt of the LOC
provider must be rated at least AA (or a comparable rating) by at least two of the nationally
recognized statistical rating agencies publishing ratings for financial institutions. The
maximum maturity shall not exceed 270 days from the time of purchase .
5 . Banker' s acceptances issued within the U . S . by institutions with a long term
debt rating of at least AA or short term debt rating of PI (or comparable ratings), as
provided by one nationally recognized statistical rating organization. Exceptions to the
above may be approved by the Administrator from time to time and reported to the Master
Trustees . The invested account of a Manager may own no more than 5% of the portfolio in
banker ' s acceptances issued by any one depository institution at one time . Maximum
maturity shall not exceed 270 days from the time of purchase .
6 . Nonnegotiable Certificates of Deposit issued by Florida Qualified Public
Depositories as identified by the State Treasurer' s office and/or negotiable certificates of
deposit issued in U . S . dollars by institutions , provided such institution carries a short term
rating of at least Al /P1 (or comparable rating) and a long term rating of a least A (or
comparable rating) as provided by two of the top nationally recognized rating agencies .
The invested account of a Manager may own no more than $5 ,000,000 in certificates of
any one depository institution at one time . Maximum maturity on any certificate shall be 2
years.
7 . Obligations of the agencies or instrumentalities of the federal government,
including, but not limited to, the Federal Home Loan Mortgage Corporation, Federal
National Mortgage Association, Federal Home Loan Banks, Federal Farm Credit Banks ,
Student Loan Marketing Association and the Resolution Master Trust Funding
Corporation.
8 . Money market mutual master trust funds as defined and regulated by the
Securities Exchange Commission. Money market master trust funds will be limited to
monies held by trustees, paying agents, safekeeping agents, etc . as a temporary investment
to facilitate relationships as delineated above .
9 . Mortgage obligations guaranteed by the United States government and
sponsored agencies or instrumentalities including but not limited to the Government
National Mortgage Association, the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation. Mortgage-backed securities, including
Page 8 of 19
Revised June 1 , 2007
2 . Direct obligations of the United States Treasury including bills, notes,
bonds and various forms of Treasury zero-coupon securities .
I Any authorized investments purchased by or through the State Board of
Administration or the Office of the State Treasurer and held on behalf of the Master Trust
Fund in a commingled pool or separate account.
4 . Commercial paper issued in the United States by any corporation, provided
that such instrument carries a rating of A 1 /P 1 (or comparable rating) as provided by two of
the top nationally recognized statistical rating organization; and that the corporation' s long
term debt, if any, is rated at least Al /A+ by a nationally recognized statistical rating
organization or, if backed by a letter of credit ("LOC"), the long term debt of the LOC
provider must be rated at least AA (or a comparable rating) by at least two of the nationally
recognized statistical rating agencies publishing ratings for financial institutions. The
maximum maturity shall not exceed 270 days from the time of purchase .
5 . Banker' s acceptances issued within the U . S . by institutions with a long term
debt rating of at least AA or short term debt rating of PI (or comparable ratings), as
provided by one nationally recognized statistical rating organization. Exceptions to the
above may be approved by the Administrator from time to time and reported to the Master
Trustees . The invested account of a Manager may own no more than 5% of the portfolio in
banker ' s acceptances issued by any one depository institution at one time . Maximum
maturity shall not exceed 270 days from the time of purchase .
6 . Nonnegotiable Certificates of Deposit issued by Florida Qualified Public
Depositories as identified by the State Treasurer' s office and/or negotiable certificates of
deposit issued in U . S . dollars by institutions , provided such institution carries a short term
rating of at least Al /P1 (or comparable rating) and a long term rating of a least A (or
comparable rating) as provided by two of the top nationally recognized rating agencies .
The invested account of a Manager may own no more than $5 ,000,000 in certificates of
any one depository institution at one time . Maximum maturity on any certificate shall be 2
years.
7 . Obligations of the agencies or instrumentalities of the federal government,
including, but not limited to, the Federal Home Loan Mortgage Corporation, Federal
National Mortgage Association, Federal Home Loan Banks, Federal Farm Credit Banks ,
Student Loan Marketing Association and the Resolution Master Trust Funding
Corporation.
8 . Money market mutual master trust funds as defined and regulated by the
Securities Exchange Commission. Money market master trust funds will be limited to
monies held by trustees, paying agents, safekeeping agents, etc . as a temporary investment
to facilitate relationships as delineated above .
9 . Mortgage obligations guaranteed by the United States government and
sponsored agencies or instrumentalities including but not limited to the Government
National Mortgage Association, the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation. Mortgage-backed securities, including
Page 8 of 19
Revised June 1 , 2007
mortgage-pass through securities and collateralized mortgage obligations ("CMOs") issued,
guaranteed or backed by an agency or instrumentality of the federal government or other
mortgage securities including CMOs rated AAA or equivalent by a nationally recognized
statistical rating organization. Derivative mortgage securities, such as interest only ,
principal only , residuals and inverse floaters are prohibited.
10 . Corporate fixed income securities issued by any corporation in the United
States with any A rating or better. A Manager may hold no more than 3 % of the invested
account in any one corporation at the time of purchase .
11 . Asset-backed securities issued in the United States.
12 . Securities of state, municipal and county governments or their public
agencies, which are rated A or better by a nationally recognized statistical rating
organization.
13 . Commingled governmental investment trusts, no-load investment master
trust funds, or no-load mutual master trust funds in which all securities held by the trusts or
master trust funds are authorized investments as provided herein or as may be approved by
the Master Trustees .
14 . Guaranteed investment contracts ("GIC' s") with insurance companies rated
in the highest category by AM Best Rating System or a comparable nationally recognized
statistical rating organization.
15 . Investment agreements with other financial institutions . If collateralized,
the collateral securing the investment agreement shall be limited to those securities
authorized for purchase by this investment policy. The invested account of a Manager may
own, at one time, no more than $ 10,000 ,000 in investment agreements from any one
financial institution. Investment agreements are obligations of financials institutions
typically bearing a fixed rate of interest and having a fixed maturity date . Investment
agreements are privately negotiated and illiquid.
16 . Equity assets, including common stock, preferred stock and interest bearing
obligations having an option to convert into common stock.
17 . Securities lending with approved dealers and custodians .
18 Florida Municipal Investment Trust (FMIvT) Portfolios .
E. Valuation of Illiquid Investments. If illiquid investments for which a generally
recognized market is not available or for which there is no consistent or generally accepted
pricing mechanism, the criteria set forth in Section 215 .47(6) , Florida Statutes, shall apply,
except that submission to an Investment Advisory Council is not required . For each plan year
(defined benefit plans only) the Master Trustees must verify the determination of the fair market
value for those investments and ascertain that the determination complies with all applicable
state and federal requirements . The Master Trustees shall disclose to the Department of
Management Services and the Administrator each such investment for which the fair market
value is not provided.
Page 9 of 19
Revised June 1 , 2007
mortgage-pass through securities and collateralized mortgage obligations ("CMOs") issued,
guaranteed or backed by an agency or instrumentality of the federal government or other
mortgage securities including CMOs rated AAA or equivalent by a nationally recognized
statistical rating organization. Derivative mortgage securities, such as interest only ,
principal only , residuals and inverse floaters are prohibited.
10 . Corporate fixed income securities issued by any corporation in the United
States with any A rating or better. A Manager may hold no more than 3 % of the invested
account in any one corporation at the time of purchase .
11 . Asset-backed securities issued in the United States.
12 . Securities of state, municipal and county governments or their public
agencies, which are rated A or better by a nationally recognized statistical rating
organization.
13 . Commingled governmental investment trusts, no-load investment master
trust funds, or no-load mutual master trust funds in which all securities held by the trusts or
master trust funds are authorized investments as provided herein or as may be approved by
the Master Trustees .
14 . Guaranteed investment contracts ("GIC' s") with insurance companies rated
in the highest category by AM Best Rating System or a comparable nationally recognized
statistical rating organization.
15 . Investment agreements with other financial institutions . If collateralized,
the collateral securing the investment agreement shall be limited to those securities
authorized for purchase by this investment policy. The invested account of a Manager may
own, at one time, no more than $ 10,000 ,000 in investment agreements from any one
financial institution. Investment agreements are obligations of financials institutions
typically bearing a fixed rate of interest and having a fixed maturity date . Investment
agreements are privately negotiated and illiquid.
16 . Equity assets, including common stock, preferred stock and interest bearing
obligations having an option to convert into common stock.
17 . Securities lending with approved dealers and custodians .
18 Florida Municipal Investment Trust (FMIvT) Portfolios .
E. Valuation of Illiquid Investments. If illiquid investments for which a generally
recognized market is not available or for which there is no consistent or generally accepted
pricing mechanism, the criteria set forth in Section 215 .47(6) , Florida Statutes, shall apply,
except that submission to an Investment Advisory Council is not required . For each plan year
(defined benefit plans only) the Master Trustees must verify the determination of the fair market
value for those investments and ascertain that the determination complies with all applicable
state and federal requirements . The Master Trustees shall disclose to the Department of
Management Services and the Administrator each such investment for which the fair market
value is not provided.
Page 9 of 19
Revised June 1 , 2007
F. Master Repurchase Agreements . All approved institutions and dealers
transacting repurchase agreements shall execute and perform as stated in a Master Repurchase
Agreement . All repurchase agreement transactions shall adhere to the requirements of the
Master Repurchase Agreement. This provision does not restrict or limit the terms of any such
Master Repurchase Agreement.
G . Criteria for Investment Manager Review. The Master Trustees wish to adopt
standards by which ongoing retention of a Manager should be determined . With this in mind, the
following guidelines are adopted :
If, at any time, any one of the following is breached, the Manager will be notified of the
Master Trustees ' serious concern for the Fund ' s continued safety and performance and that
manager termination could occur.
1 . Consistent performance below the 50`h percentile in the specified universe
over rolling 3 - year periods .
2 . Consistent under-performance of the stated target index over rolling 3 -
year periods .
3 . Loss by the Manager of any senior personnel deemed detrimental to the
Manager ' s ability to perform required duties or any potentially detrimental organizational
issues that may arise and have an effect on the management of Master Trust Fund assets .
4 . Substantial change in basic investment philosophy by the Manager.
5 . Substantial change of ownership of the firm deemed detrimental to the
Manager ' s ability to perform required duties .
6 . Failure to attain at least a 51 % vote of the confidence of the Master
Trustees .
7 . Failure to observe any guidelines as stated in this policy .
This shall in no way limit or diminish the Master Trustees ' right to terminate the
Manager at any time for any reason .
An investment management agreement will be entered into between the Master Trustees
and each Manager. Each investment management agreement will include such items as fiduciary
standards , notice requirements, duties and responsibilities and specific investment guidelines for
the Manager and will be subject to the prior review and approval of an attorney for the Master
Trustees .
All Managers must be duly registered with the appropriate government agencies to act in
the capacity of investment manager on behalf of the Master Trustees . Any Manager appointed
shall promptly notify the Master Trustees in the event any circumstance arises that may result in
its failing to continue to meet the requirements stipulated by the respective government agencies .
Page 10 of 19
Revised June 1 , 2007
F. Master Repurchase Agreements . All approved institutions and dealers
transacting repurchase agreements shall execute and perform as stated in a Master Repurchase
Agreement . All repurchase agreement transactions shall adhere to the requirements of the
Master Repurchase Agreement. This provision does not restrict or limit the terms of any such
Master Repurchase Agreement.
G . Criteria for Investment Manager Review. The Master Trustees wish to adopt
standards by which ongoing retention of a Manager should be determined . With this in mind, the
following guidelines are adopted :
If, at any time, any one of the following is breached, the Manager will be notified of the
Master Trustees ' serious concern for the Fund ' s continued safety and performance and that
manager termination could occur.
1 . Consistent performance below the 50`h percentile in the specified universe
over rolling 3 - year periods .
2 . Consistent under-performance of the stated target index over rolling 3 -
year periods .
3 . Loss by the Manager of any senior personnel deemed detrimental to the
Manager ' s ability to perform required duties or any potentially detrimental organizational
issues that may arise and have an effect on the management of Master Trust Fund assets .
4 . Substantial change in basic investment philosophy by the Manager.
5 . Substantial change of ownership of the firm deemed detrimental to the
Manager ' s ability to perform required duties .
6 . Failure to attain at least a 51 % vote of the confidence of the Master
Trustees .
7 . Failure to observe any guidelines as stated in this policy .
This shall in no way limit or diminish the Master Trustees ' right to terminate the
Manager at any time for any reason .
An investment management agreement will be entered into between the Master Trustees
and each Manager. Each investment management agreement will include such items as fiduciary
standards , notice requirements, duties and responsibilities and specific investment guidelines for
the Manager and will be subject to the prior review and approval of an attorney for the Master
Trustees .
All Managers must be duly registered with the appropriate government agencies to act in
the capacity of investment manager on behalf of the Master Trustees . Any Manager appointed
shall promptly notify the Master Trustees in the event any circumstance arises that may result in
its failing to continue to meet the requirements stipulated by the respective government agencies .
Page 10 of 19
Revised June 1 , 2007
A Manager ' s performance will be evaluated with the assistance of performance
measurement consultants on an on-going basis and will be a primary criteria for their retention.
XIII . DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLAN
SPECIFICATIONS
These provisions relate to the investment of the assets of the Defined Contribution
Pension Plan Trust, the Deferred Compensation Plan Trust and the portion of the Other Post-
Employment Benefit Plan Trust relating to other post-employment benefit plans that are defined
contribution plans .
A. Pur ose. The Master Trustees are charged with the overall responsibility to
manage the Master Trust Fund assets prudently on behalf of the Participating Employees . The
general purpose of this investment policy is to assist the Master Trustees in discharging their
responsibility to supervise, monitor and evaluate the investment of the Master Trust Fund assets .
The Master Trustees believe this investment policy should be dynamic and should be reviewed
periodically . The Master Trustees intend that this policy will not be overly restrictive given
changing economic, business and capital market conditions .
Therefore , this policy is compiled to ensure :
1 . The Master Trustees define a formal set of investment objectives ,
guidelines and procedures for the management of the Master Trust Fund assets, subject to
the terms of the Plans ' documents and investment advisory agreements entered into by
the Managers and the Trustees .
2 . Direct and indirect investment expenses are controlled and reasonable.
3 . The investments of the Master Trust Fund assets are managed in
accordance with the fiduciary prudence and due diligence requirements that experienced
investment professionals would utilize and with all applicable laws, rules and regulations
from various state , local and federal agencies that may impact the Master Trust Fund
assets .
4 . If and to the extent permitted by their respective Plans , Participating
Employees and Beneficiaries have the ability to invest in a variety of asset classes,
thereby gaining exposure to a wide range of investment opportunities .
Be Investment Objective . To the extent any Plans provide for participant-directed
investments, the Master Trust Fund will make available a range of different diversified
investment options that have varying degrees of risk and return .
It is anticipated, but not required, that the same investment options be available for each
Plan . Investment options offered to Participating Employees and their Beneficiaries shall be
approved by the Trustees .
To the extent any Plans provide for participant-directed investment, the primary objective
of the Master Trust Fund is to offer the Participating Employees and their Beneficiaries a range
Page 11 of 19
Revised June 1 , 2007
A Manager ' s performance will be evaluated with the assistance of performance
measurement consultants on an on-going basis and will be a primary criteria for their retention.
XIII . DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLAN
SPECIFICATIONS
These provisions relate to the investment of the assets of the Defined Contribution
Pension Plan Trust, the Deferred Compensation Plan Trust and the portion of the Other Post-
Employment Benefit Plan Trust relating to other post-employment benefit plans that are defined
contribution plans .
A. Pur ose. The Master Trustees are charged with the overall responsibility to
manage the Master Trust Fund assets prudently on behalf of the Participating Employees . The
general purpose of this investment policy is to assist the Master Trustees in discharging their
responsibility to supervise, monitor and evaluate the investment of the Master Trust Fund assets .
The Master Trustees believe this investment policy should be dynamic and should be reviewed
periodically . The Master Trustees intend that this policy will not be overly restrictive given
changing economic, business and capital market conditions .
Therefore , this policy is compiled to ensure :
1 . The Master Trustees define a formal set of investment objectives ,
guidelines and procedures for the management of the Master Trust Fund assets, subject to
the terms of the Plans ' documents and investment advisory agreements entered into by
the Managers and the Trustees .
2 . Direct and indirect investment expenses are controlled and reasonable.
3 . The investments of the Master Trust Fund assets are managed in
accordance with the fiduciary prudence and due diligence requirements that experienced
investment professionals would utilize and with all applicable laws, rules and regulations
from various state , local and federal agencies that may impact the Master Trust Fund
assets .
4 . If and to the extent permitted by their respective Plans , Participating
Employees and Beneficiaries have the ability to invest in a variety of asset classes,
thereby gaining exposure to a wide range of investment opportunities .
Be Investment Objective . To the extent any Plans provide for participant-directed
investments, the Master Trust Fund will make available a range of different diversified
investment options that have varying degrees of risk and return .
It is anticipated, but not required, that the same investment options be available for each
Plan . Investment options offered to Participating Employees and their Beneficiaries shall be
approved by the Trustees .
To the extent any Plans provide for participant-directed investment, the primary objective
of the Master Trust Fund is to offer the Participating Employees and their Beneficiaries a range
Page 11 of 19
Revised June 1 , 2007
of investment choices to permit diversification and a choice of investment strategies . The
objectives are further defined as follows :
1 . To provide a spectrum of investment options so a Participating Employee
will be able to choose the investment mix that may fall within a range of risk and return
characteristics customarily appropriate for the Participating Employee .
2 . To provide sufficient investment choices so that the asset classes selected
shall be such that taken together Participating Employees will have a reasonable
opportunity to materially affect the potential investment returns in their accounts , while at
the same time controlling risk or volatility . It is the intent that a Participating Employee
may be able to build a balanced portfolio in a manner generally consistent with modern
portfolio theory .
co Guidelines
1 . Investment options for the Participating Employees shall be determined
solely in the interest of the Participating Employees and their Beneficiaries and for the
exclusive purpose of providing benefits to the Participating Employees and their
Beneficiaries .
2 . Investment options for the Participating Employees shall be determined
with the care, skill , prudence and diligence under the circumstances then prevailing that a
prudent person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of like character and aims .
3 . Investment options for the Participating Employees shall be determined so
as to offer an array of investment options so Participating Employees can protect
themselves from large losses by appropriately diversifying their account.
D. Participant Control . To the extent permitted by the Plans, Participating
Employees shall be given control over the investment allocation process . This shall include the
right to change investment allocations of existing account balances and future contributions
daily. Participating Employees shall also be given information necessary for them to reasonably
understand the investments and to make reasonably informed investment decisions .
E. Procedure
1 . The Master Trustees shall use business judgment in selecting investment
products limited to registered investment company ["mutual fund"] shares and collective
investment fund units, which the Master Trustees may own indirectly through a group
trust or a securities account . The Plans ' investment options shall not include any
investment for which the indicia of ownership cannot be held by the Master Trustees in
the United States of America. Investment companies need not be classified as
" diversified" as defined by the Investment Company Act of 1940 . Both passive and
actively managed investment strategies will be considered .
Page 12 of 19
Revised June 1 , 2007
of investment choices to permit diversification and a choice of investment strategies . The
objectives are further defined as follows :
1 . To provide a spectrum of investment options so a Participating Employee
will be able to choose the investment mix that may fall within a range of risk and return
characteristics customarily appropriate for the Participating Employee .
2 . To provide sufficient investment choices so that the asset classes selected
shall be such that taken together Participating Employees will have a reasonable
opportunity to materially affect the potential investment returns in their accounts , while at
the same time controlling risk or volatility . It is the intent that a Participating Employee
may be able to build a balanced portfolio in a manner generally consistent with modern
portfolio theory .
co Guidelines
1 . Investment options for the Participating Employees shall be determined
solely in the interest of the Participating Employees and their Beneficiaries and for the
exclusive purpose of providing benefits to the Participating Employees and their
Beneficiaries .
2 . Investment options for the Participating Employees shall be determined
with the care, skill , prudence and diligence under the circumstances then prevailing that a
prudent person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of like character and aims .
3 . Investment options for the Participating Employees shall be determined so
as to offer an array of investment options so Participating Employees can protect
themselves from large losses by appropriately diversifying their account.
D. Participant Control . To the extent permitted by the Plans, Participating
Employees shall be given control over the investment allocation process . This shall include the
right to change investment allocations of existing account balances and future contributions
daily. Participating Employees shall also be given information necessary for them to reasonably
understand the investments and to make reasonably informed investment decisions .
E. Procedure
1 . The Master Trustees shall use business judgment in selecting investment
products limited to registered investment company ["mutual fund"] shares and collective
investment fund units, which the Master Trustees may own indirectly through a group
trust or a securities account . The Plans ' investment options shall not include any
investment for which the indicia of ownership cannot be held by the Master Trustees in
the United States of America. Investment companies need not be classified as
" diversified" as defined by the Investment Company Act of 1940 . Both passive and
actively managed investment strategies will be considered .
Page 12 of 19
Revised June 1 , 2007
2 . The following characteristics (when applicable) shall be considered in
selecting the specific asset classes and corresponding investments to be made available to
Participating Employees :
(a) Investment category and objective as defined in the prospectus or
equivalent literature as well as current and historically consistent adherence to the
asset classes and investment styles as defined in Section XIII. F below.
(b) The Manager(s) and tenure . (Longer tenure is preferred . )
(c) Acquisition costs and ongoing management fees including
turnover. (Lower fees and turnover are preferred )
(d) Investment record : total returns (net of expenses) on a time-
weighted basis over three- and five-year periods and their relationship to
appropriate benchmarks and peer groups . (Higher returns are preferred . )
(e) Risk adjusted return measurements : Sharpe Ratio and Alpha
Returns and their relationship to appropriate benchmarks and peer groups .
(Higher Sharpe Ratio and Alpha Return are preferred .)
(f) Risk characteristics : risk as measured implicitly by reviewing
standard deviation and beta as used to compute Sharpe Ratios and Alpha
statistics . (Lower standard deviations and betas are preferred . )
(g) Any other criteria that the Master Trustees deem worthwhile in
judging the suitability of an investment, including , but not limited to , funds of the
type customarily described or classified as socially responsible, as long as the
overall range of other investment options meets all requirements of this
investment policy .
The Master Trustees shall review the long-term performance, risk and correlation
characteristics of various asset classes, focusing on the balance between risk and return
and the asset class ' market behavior so that the investment options reasonably span the
risk/return spectrum.
3 . Miscellaneous Criteria : In selecting the specific investments to be made
available to participants , the Master Trustees shall consider the following additional
criteria :
(a) Services to Participating Employees
( 1 ) Communication from the funds
(2) Accessibility to fund information
(3 ) Ease and cost of investment transfers
(4) Nature and frequency of reports to Participating Employees
Page 13 of 19
Revised June 1 , 2007
2 . The following characteristics (when applicable) shall be considered in
selecting the specific asset classes and corresponding investments to be made available to
Participating Employees :
(a) Investment category and objective as defined in the prospectus or
equivalent literature as well as current and historically consistent adherence to the
asset classes and investment styles as defined in Section XIII. F below.
(b) The Manager(s) and tenure . (Longer tenure is preferred . )
(c) Acquisition costs and ongoing management fees including
turnover. (Lower fees and turnover are preferred )
(d) Investment record : total returns (net of expenses) on a time-
weighted basis over three- and five-year periods and their relationship to
appropriate benchmarks and peer groups . (Higher returns are preferred . )
(e) Risk adjusted return measurements : Sharpe Ratio and Alpha
Returns and their relationship to appropriate benchmarks and peer groups .
(Higher Sharpe Ratio and Alpha Return are preferred .)
(f) Risk characteristics : risk as measured implicitly by reviewing
standard deviation and beta as used to compute Sharpe Ratios and Alpha
statistics . (Lower standard deviations and betas are preferred . )
(g) Any other criteria that the Master Trustees deem worthwhile in
judging the suitability of an investment, including , but not limited to , funds of the
type customarily described or classified as socially responsible, as long as the
overall range of other investment options meets all requirements of this
investment policy .
The Master Trustees shall review the long-term performance, risk and correlation
characteristics of various asset classes, focusing on the balance between risk and return
and the asset class ' market behavior so that the investment options reasonably span the
risk/return spectrum.
3 . Miscellaneous Criteria : In selecting the specific investments to be made
available to participants , the Master Trustees shall consider the following additional
criteria :
(a) Services to Participating Employees
( 1 ) Communication from the funds
(2) Accessibility to fund information
(3 ) Ease and cost of investment transfers
(4) Nature and frequency of reports to Participating Employees
Page 13 of 19
Revised June 1 , 2007
(b) Services to Master Trustees
( 1 ) Nature and frequency of investment reports
(2) Availability and access to Administrator and Managers
(3 ) Corresponding costs and expenses associated with Plan
record keeping and reporting and administration
(4) Quantitative and qualitative due diligence regarding the
Managers
F. Asset Classes . As a result of review and analysis, and in consideration of the
criteria outlined in this policy, the Master Trustees have selected the following asset classes
(investment styles) . It is understood that this list is dynamic and subject to change by
amendment of this policy at any time and from time to time :
1 . Money Market Fund - Seeks income by investing in cash or cash
equivalent investments, primarily from banks .
2 . Stable Value Fund - Seeks income with capital preservation by investing
in a pool consisting of one or more of the following : GICs, synthetic investment
contracts and separate account investment contracts issued by insurance companies ; bank
investment contracts ; asset-backed securities ; Treasury bonds and cash equivalents . The
preponderance of its assets are invested in securities with a credit quality of AAA .
3 , Short Term Bond Fund - Seeks income by investing the preponderance of
the fund ' s assets in fixed income securities , primarily corporate bonds of various credit
ratings and other investment grade securities . Will generally invest in securities with
average credit ratings of at least BBB or better and with average effective durations of
between 1 and 3 . 5 years .
4 . Intermediate Term Bond Fund - Seeks income by investing the
preponderance of the fund ' s assets in fixed income securities , primarily corporate bonds
of various credit ratings and other investment grade securities . Will generally invest in
securities with average credit ratings of at least BBB or better and with average effective
durations of between 3 . 5 and 6 years .
5 . Long Term Bond Fund - Seeks income by investing the preponderance of
the fund' s assets in fixed income securities, primarily corporate bonds of various credit
ratings and other investment grade securities . Will generally invest in securities with
average credit ratings of at least BBB or better and with average effective durations
greater than 6 years .
6 . Balanced Fund — Seeks both income and growth of capital by investing in
fixed income securities with average credit ratings of BBB or better and large cap
domestic equities .
7 . Large Company Value Fund — Seeks growth of capital and current income
as near equal objectives by investing in securities with above- average yields and with
some potential for appreciation. Exhibits an investment style generally categorized as
large value by investing the preponderance of its assets in securities with weighted
Page 14 of 19
Revised June 1 , 2007
(b) Services to Master Trustees
( 1 ) Nature and frequency of investment reports
(2) Availability and access to Administrator and Managers
(3 ) Corresponding costs and expenses associated with Plan
record keeping and reporting and administration
(4) Quantitative and qualitative due diligence regarding the
Managers
F. Asset Classes . As a result of review and analysis, and in consideration of the
criteria outlined in this policy, the Master Trustees have selected the following asset classes
(investment styles) . It is understood that this list is dynamic and subject to change by
amendment of this policy at any time and from time to time :
1 . Money Market Fund - Seeks income by investing in cash or cash
equivalent investments, primarily from banks .
2 . Stable Value Fund - Seeks income with capital preservation by investing
in a pool consisting of one or more of the following : GICs, synthetic investment
contracts and separate account investment contracts issued by insurance companies ; bank
investment contracts ; asset-backed securities ; Treasury bonds and cash equivalents . The
preponderance of its assets are invested in securities with a credit quality of AAA .
3 , Short Term Bond Fund - Seeks income by investing the preponderance of
the fund ' s assets in fixed income securities , primarily corporate bonds of various credit
ratings and other investment grade securities . Will generally invest in securities with
average credit ratings of at least BBB or better and with average effective durations of
between 1 and 3 . 5 years .
4 . Intermediate Term Bond Fund - Seeks income by investing the
preponderance of the fund ' s assets in fixed income securities , primarily corporate bonds
of various credit ratings and other investment grade securities . Will generally invest in
securities with average credit ratings of at least BBB or better and with average effective
durations of between 3 . 5 and 6 years .
5 . Long Term Bond Fund - Seeks income by investing the preponderance of
the fund' s assets in fixed income securities, primarily corporate bonds of various credit
ratings and other investment grade securities . Will generally invest in securities with
average credit ratings of at least BBB or better and with average effective durations
greater than 6 years .
6 . Balanced Fund — Seeks both income and growth of capital by investing in
fixed income securities with average credit ratings of BBB or better and large cap
domestic equities .
7 . Large Company Value Fund — Seeks growth of capital and current income
as near equal objectives by investing in securities with above- average yields and with
some potential for appreciation. Exhibits an investment style generally categorized as
large value by investing the preponderance of its assets in securities with weighted
Page 14 of 19
Revised June 1 , 2007
average market capitalizations of over $ 10 billion and exhibiting a value-oriented
investment style as generally defined by professional investment analysis.
8 . Large Company Core Fund - Seeks to replicate the performance of the
S &P 500 Index with an average market capitalization of over $ 10 billion and
price/earnings and price/book ratios within 12 . 5 % of the S &P 500 ' s ratios . May achieve
this objective through passive (index) or active management.
9 . Large Company Core Socially Conscious Fund — Having the same
financial characteristics as the Large Company Core Fund, invests according to non-
economic guidelines . May make investments based on issues such as environmental
responsibility , human rights or religious views . May take a proactive stance by
selectively investing in companies with good records in these areas or avoid investing in
companies involved in promoting alcohol , tobacco , or gambling or in the defense
industry .
10 . Large Company Growth Fund - Seeks capital appreciation by investing
primarily in equity securities of companies that are expected to grow at an above-average
rate . Current income is a secondary objective . Exhibits an investment style generally
categorized as large growth by investing the preponderance of its assets in securities with
median market capitalizations of over $ 10 billion and exhibiting a growth-orientated
investment style as generally defined by professional investment analysis .
11 . Small Company Core Fund - Seeks capital appreciation by investing
primarily in stocks of small companies as determined by market capitalization or assets .
Exhibits an investment style generally categorized as small blend by investing the
preponderance of its assets in securities with median market capitalizations below $2
billion and exhibiting a core investment style as generally defined by professional
investment analysis .
12 . Foreign Fund - Invests in equity securities of issuers located outside the
United States except under adverse market conditions . Exhibits an investment style
generally categorized as large blend by investing the preponderance of its assets in
securities with median market capitalizations over $ 10 billion and exhibiting a core
investment style as generally defined by professional investment analysis .
13 . Emerging Markets Fund - Invests in equity securities issued by companies
located outside of the United States but within the less developed or emerging market
countries as generally defined by the professional investment organizations . Exhibits an
investment style generally categorized as blend by investing the preponderance of its
assets in securities with median market capitalizations below $ 10 billion and exhibiting a
core investment style as generally defined by professional investment analysis .
14 . Real Estate Fund - Seeks total return with equal emphasis on capital
appreciation and current income by investing in equity securities of real estate
companies, predominantly within the United States . Exhibits an investment style that is
focused (not diversified) and generally categorized as core real estate by professional
investment analysis .
Page 15 of 19
Revised June 1 , 2007
average market capitalizations of over $ 10 billion and exhibiting a value-oriented
investment style as generally defined by professional investment analysis.
8 . Large Company Core Fund - Seeks to replicate the performance of the
S &P 500 Index with an average market capitalization of over $ 10 billion and
price/earnings and price/book ratios within 12 . 5 % of the S &P 500 ' s ratios . May achieve
this objective through passive (index) or active management.
9 . Large Company Core Socially Conscious Fund — Having the same
financial characteristics as the Large Company Core Fund, invests according to non-
economic guidelines . May make investments based on issues such as environmental
responsibility , human rights or religious views . May take a proactive stance by
selectively investing in companies with good records in these areas or avoid investing in
companies involved in promoting alcohol , tobacco , or gambling or in the defense
industry .
10 . Large Company Growth Fund - Seeks capital appreciation by investing
primarily in equity securities of companies that are expected to grow at an above-average
rate . Current income is a secondary objective . Exhibits an investment style generally
categorized as large growth by investing the preponderance of its assets in securities with
median market capitalizations of over $ 10 billion and exhibiting a growth-orientated
investment style as generally defined by professional investment analysis .
11 . Small Company Core Fund - Seeks capital appreciation by investing
primarily in stocks of small companies as determined by market capitalization or assets .
Exhibits an investment style generally categorized as small blend by investing the
preponderance of its assets in securities with median market capitalizations below $2
billion and exhibiting a core investment style as generally defined by professional
investment analysis .
12 . Foreign Fund - Invests in equity securities of issuers located outside the
United States except under adverse market conditions . Exhibits an investment style
generally categorized as large blend by investing the preponderance of its assets in
securities with median market capitalizations over $ 10 billion and exhibiting a core
investment style as generally defined by professional investment analysis .
13 . Emerging Markets Fund - Invests in equity securities issued by companies
located outside of the United States but within the less developed or emerging market
countries as generally defined by the professional investment organizations . Exhibits an
investment style generally categorized as blend by investing the preponderance of its
assets in securities with median market capitalizations below $ 10 billion and exhibiting a
core investment style as generally defined by professional investment analysis .
14 . Real Estate Fund - Seeks total return with equal emphasis on capital
appreciation and current income by investing in equity securities of real estate
companies, predominantly within the United States . Exhibits an investment style that is
focused (not diversified) and generally categorized as core real estate by professional
investment analysis .
Page 15 of 19
Revised June 1 , 2007
G . Trustee-Directed Participant Allocation . The following investment allocation
will be made for each Participating Employee ' s account that does not file and maintain a timely
investment election form .
Age Based Default Fund utilizing the Vanguard Target Retirement Funds
H. Performance Measurement
I . Each investment shall be measured against the performance of its
corresponding asset class and peer group as defined by performance monitoring services
deemed to be acceptable by the investment consultant to the Master Trust Fund .
2 . The performance of each investment shall be measured against market
indexes that correspond with its investment category .
(a) Money Market Fund: Morningstar 3 -Month Treasury Bill Index
(b) Pooled GIC Fund : Morningstar 3 -Month Treasury Bill Index
(c) Short Term Bond Fund : Lehman Brothers Government 1 -3 year
Bond Index
(d) Intermediate Term Bond Fund : Lehman Brothers Aggregate Bond
Index
(e) Long Term Bond Fund : Lehman Brothers Government/Credit
Long Bond Index
(f) Balanced Fund : S &P 500 Index and the Lehman Brothers
Aggregate Bond Index
(g) Large Company Value : Russell 1000 Value Index
(h) Large Company Core Fund : S &P 500 Index
(i) Large Company Growth Fund : Russell 1000 Growth Index
0 ) Small Company Core Fund : Russell 2000 Index
(k) Foreign Fund : MSCI EAFE Index
(1) Emerging Markets Fund : MSCI Emerging Markets Free Index
(m) Real Estate Fund : Wilshire REIT Index
3 . The performance of each investment may be measured against additional
standards and benchmarks established by the Master Trustees from time to time as
criteria for continued acceptance of each investment .
I . Criteria for Evaluating Funds Selected in Each Asset Category
L The following information shall be considered in determining if an
investment option should be replaced. Once an investment is selected for the Master
Trust Fund, performance will be evaluated from the date it was added to the Master Trust
Fund using these criteria. At all times each mutual fund must carry a Morningstar Star
rating of at least a three if available .
(a) Portfolio statistics as determined by portfolio and style analysis
that demonstrates a departure from the fund ' s intended investment category (asset
class) .
Page 16 of 19
Revised June 1 , 2007
G . Trustee-Directed Participant Allocation . The following investment allocation
will be made for each Participating Employee ' s account that does not file and maintain a timely
investment election form .
Age Based Default Fund utilizing the Vanguard Target Retirement Funds
H. Performance Measurement
I . Each investment shall be measured against the performance of its
corresponding asset class and peer group as defined by performance monitoring services
deemed to be acceptable by the investment consultant to the Master Trust Fund .
2 . The performance of each investment shall be measured against market
indexes that correspond with its investment category .
(a) Money Market Fund: Morningstar 3 -Month Treasury Bill Index
(b) Pooled GIC Fund : Morningstar 3 -Month Treasury Bill Index
(c) Short Term Bond Fund : Lehman Brothers Government 1 -3 year
Bond Index
(d) Intermediate Term Bond Fund : Lehman Brothers Aggregate Bond
Index
(e) Long Term Bond Fund : Lehman Brothers Government/Credit
Long Bond Index
(f) Balanced Fund : S &P 500 Index and the Lehman Brothers
Aggregate Bond Index
(g) Large Company Value : Russell 1000 Value Index
(h) Large Company Core Fund : S &P 500 Index
(i) Large Company Growth Fund : Russell 1000 Growth Index
0 ) Small Company Core Fund : Russell 2000 Index
(k) Foreign Fund : MSCI EAFE Index
(1) Emerging Markets Fund : MSCI Emerging Markets Free Index
(m) Real Estate Fund : Wilshire REIT Index
3 . The performance of each investment may be measured against additional
standards and benchmarks established by the Master Trustees from time to time as
criteria for continued acceptance of each investment .
I . Criteria for Evaluating Funds Selected in Each Asset Category
L The following information shall be considered in determining if an
investment option should be replaced. Once an investment is selected for the Master
Trust Fund, performance will be evaluated from the date it was added to the Master Trust
Fund using these criteria. At all times each mutual fund must carry a Morningstar Star
rating of at least a three if available .
(a) Portfolio statistics as determined by portfolio and style analysis
that demonstrates a departure from the fund ' s intended investment category (asset
class) .
Page 16 of 19
Revised June 1 , 2007
(b) Termination of the Manager, material change in the management
team or change in ownership .
(c) Increase in direct and indirect expenses .
(d) A total return in the lowest 25th percentile in any consecutive 4
calendar quarters as compared to the fund' s peer group that defines the
comparable investment styles (universes) .
( e) Rolling total returns in the bottom 50th percentile for any 3 -year
period ending on a calendar quarter as compared to the fund ' s peer group that
defines the comparable investment styles (universes) .
(f) Sharpe Ratios in the bottom 50th percentile for any 3 - year period
ending on a calendar quarter as compared to the fund ' s peer group that defines the
comparable investment styles (universes) .
(g) Negative Alpha Returns over any three-year period ending on a
calendar quarter for actively managed funds . This is an observable and not
actionable measurement and should be factored in only if there are other reasons
for the fund to be on the monitor list.
(h) Any other information that may lead the Master Trustees to believe
the fund is not fulfilling the intent and purpose of this policy, including
performance relative to indexes specified in Section XIII .H above .
Investment options offered through the MetLife CHART Program are exempt
from the following minimum performance criteria. However, as part of the effort to
monitor the viability of the CHART Program, the Master Trustees will generally evaluate
their proprietary funds in a manner comparable to what is applied to any fund included on
the investment menu. The CHART Program is an advisory service offered by MetLife
that utilizes "fund of funds" actively managed by MetLife .
Risk is measured implicitly by reviewing the Sharpe Ratio and Alpha statistic .
If any of these events occur, the Master Trustees shall consider whether the fund
continues to be an appropriate investment for the Master Trust Fund . The Master
Trustees acknowledge that fluctuating rates of return characterize the securities markets,
particularly during short-term time periods. Recognizing that short-term fluctuations
may cause variations in performance, the Master Trustees intend to evaluate Manager
performance from a long-term perspective giving funds an opportunity to recover from
periods of poor returns . If a Manager has consistently failed to adhere to one or more of
the above conditions, it is reasonable to presume a lack of adherence going forward.
Failure to remedy the circumstances of unsatisfactory performance by the Manager,
within a reasonable time, shall be grounds for termination. Any recommendation to
terminate a Manager will not be made solely based on quantitative data. Frequent
changes are neither expected nor desirable . When a fund is replaced, all assets in the
replaced fund will be transferred to the new fund 30 days after the Master Trustees have
Page 17 of 19
Revised June 1 , 2007
(b) Termination of the Manager, material change in the management
team or change in ownership .
(c) Increase in direct and indirect expenses .
(d) A total return in the lowest 25th percentile in any consecutive 4
calendar quarters as compared to the fund' s peer group that defines the
comparable investment styles (universes) .
( e) Rolling total returns in the bottom 50th percentile for any 3 -year
period ending on a calendar quarter as compared to the fund ' s peer group that
defines the comparable investment styles (universes) .
(f) Sharpe Ratios in the bottom 50th percentile for any 3 - year period
ending on a calendar quarter as compared to the fund ' s peer group that defines the
comparable investment styles (universes) .
(g) Negative Alpha Returns over any three-year period ending on a
calendar quarter for actively managed funds . This is an observable and not
actionable measurement and should be factored in only if there are other reasons
for the fund to be on the monitor list.
(h) Any other information that may lead the Master Trustees to believe
the fund is not fulfilling the intent and purpose of this policy, including
performance relative to indexes specified in Section XIII .H above .
Investment options offered through the MetLife CHART Program are exempt
from the following minimum performance criteria. However, as part of the effort to
monitor the viability of the CHART Program, the Master Trustees will generally evaluate
their proprietary funds in a manner comparable to what is applied to any fund included on
the investment menu. The CHART Program is an advisory service offered by MetLife
that utilizes "fund of funds" actively managed by MetLife .
Risk is measured implicitly by reviewing the Sharpe Ratio and Alpha statistic .
If any of these events occur, the Master Trustees shall consider whether the fund
continues to be an appropriate investment for the Master Trust Fund . The Master
Trustees acknowledge that fluctuating rates of return characterize the securities markets,
particularly during short-term time periods. Recognizing that short-term fluctuations
may cause variations in performance, the Master Trustees intend to evaluate Manager
performance from a long-term perspective giving funds an opportunity to recover from
periods of poor returns . If a Manager has consistently failed to adhere to one or more of
the above conditions, it is reasonable to presume a lack of adherence going forward.
Failure to remedy the circumstances of unsatisfactory performance by the Manager,
within a reasonable time, shall be grounds for termination. Any recommendation to
terminate a Manager will not be made solely based on quantitative data. Frequent
changes are neither expected nor desirable . When a fund is replaced, all assets in the
replaced fund will be transferred to the new fund 30 days after the Master Trustees have
Page 17 of 19
Revised June 1 , 2007
voted to remove the fund . Written notice to all affected Participating Employers will be
sent within 10 days of the Master Trustees decision to remove the fund . All deposits
previously allocated into the replaced fund will be directed to the new fund . Appropriate
information about the fund replacement and new fund prospectus will be given to
Participating Employees prior to the exchange .
Events that Constitute Immediate Removal of a Mutual Fund.
In an effort to maintain strict oversight of the mutual funds in which assets of the
Defined Contribution Pension Plan Trust, Deferred Compensation Plan Trust and Other
Post-Employment Benefit Plan Trust are held, the following guidelines have been
developed as a basis for when a mutual fund must immediately be removed from the
Master Trust Fund. Funds meeting the following criteria may be removed by the
Administrator with 30 days written notice to affected Participating Employees and
notification to the Chair of the Master Trustees . Written notice to all affected
Participating Employers will be sent within 10 days of the decision to remove the fund .
Appropriate information about the fund' s replacement and new fund prospectus will be
given to Participating Employees prior to the exchange .
• Management team termination
12 -month returns as compared to the relevant universe in the bottom 10th
percentile
2 . Qualitative due diligence of each fund will be conducted on a periodic
basis with appropriate parties at each investment entity. Any issue materially affecting
the management staff and investment process associated with each fund will be
considered, including :
(a) Changes to the management team or the firm ' s ownership .
(b) Modifications to the fund ' s investment policy, philosophy and
decision process .
(c) Deviation of investment style, regulatory action and investigation
or litigation by a government agency .
J . Proxy Votina. The Master Trustees will vote on all proxies issued by the
mutual funds .
XIV, REVIEW AND AMENDMENTS
It is intended that the Managers , investment consultants, Administrator and Master
Trustees review this investment policy periodically . If at any time a Manager or consultant
believes that the specific objectives defined herein cannot be met or that the guidelines
unreasonably constrict performance, the Master Trustees shall be notified in writing . By the
initial and continuing acceptance of these investment guidelines , the Manager concurs with the
provisions of this policy .
Page 18 of 19
Revised June 1 , 2007
voted to remove the fund . Written notice to all affected Participating Employers will be
sent within 10 days of the Master Trustees decision to remove the fund . All deposits
previously allocated into the replaced fund will be directed to the new fund . Appropriate
information about the fund replacement and new fund prospectus will be given to
Participating Employees prior to the exchange .
Events that Constitute Immediate Removal of a Mutual Fund.
In an effort to maintain strict oversight of the mutual funds in which assets of the
Defined Contribution Pension Plan Trust, Deferred Compensation Plan Trust and Other
Post-Employment Benefit Plan Trust are held, the following guidelines have been
developed as a basis for when a mutual fund must immediately be removed from the
Master Trust Fund. Funds meeting the following criteria may be removed by the
Administrator with 30 days written notice to affected Participating Employees and
notification to the Chair of the Master Trustees . Written notice to all affected
Participating Employers will be sent within 10 days of the decision to remove the fund .
Appropriate information about the fund' s replacement and new fund prospectus will be
given to Participating Employees prior to the exchange .
• Management team termination
12 -month returns as compared to the relevant universe in the bottom 10th
percentile
2 . Qualitative due diligence of each fund will be conducted on a periodic
basis with appropriate parties at each investment entity. Any issue materially affecting
the management staff and investment process associated with each fund will be
considered, including :
(a) Changes to the management team or the firm ' s ownership .
(b) Modifications to the fund ' s investment policy, philosophy and
decision process .
(c) Deviation of investment style, regulatory action and investigation
or litigation by a government agency .
J . Proxy Votina. The Master Trustees will vote on all proxies issued by the
mutual funds .
XIV, REVIEW AND AMENDMENTS
It is intended that the Managers , investment consultants, Administrator and Master
Trustees review this investment policy periodically . If at any time a Manager or consultant
believes that the specific objectives defined herein cannot be met or that the guidelines
unreasonably constrict performance, the Master Trustees shall be notified in writing . By the
initial and continuing acceptance of these investment guidelines , the Manager concurs with the
provisions of this policy .
Page 18 of 19
Revised June 1 , 2007
XV. FILING OF INVESTMENT POLICY
Upon adoption by the Master Trustees , this investment policy shall be promptly filed
with the Department of Management Services, the Participating Employers and the Plans '
actuaries , if any . The effective date of this investment policy and any amendment hereto , shall
be the 31s' calendar day following the date of such filing.
XVI. EFFECTIVE DATE
This amendment and restatement of the Florida Municipal Pension Trust Fund Investment
Policy shall become effective as of June 1 , 2007 .
Adopted by the Master Trustees of the Florida Municipal Pensi (tees
d this 31 st day
of May, 2007 .
Chair of the Ma
Attest :
FLOP
AGUE OF CI S , IN
c
By :
e Director,
Page 19 of 19
Revised June 1 , 2007
XV. FILING OF INVESTMENT POLICY
Upon adoption by the Master Trustees , this investment policy shall be promptly filed
with the Department of Management Services, the Participating Employers and the Plans '
actuaries , if any . The effective date of this investment policy and any amendment hereto , shall
be the 31s' calendar day following the date of such filing.
XVI. EFFECTIVE DATE
This amendment and restatement of the Florida Municipal Pension Trust Fund Investment
Policy shall become effective as of June 1 , 2007 .
Adopted by the Master Trustees of the Florida Municipal Pensi (tees
d this 31 st day
of May, 2007 .
Chair of the Ma
Attest :
FLOP
AGUE OF CI S , IN
c
By :
e Director,
Page 19 of 19
Revised June 1 , 2007
FLORIDA MUNICIPAL PENSION TRUST FUND
INVESTMENT POLICY
Amended and Restated As of June 1, 2007
I. AUTHORITY
The Master Trust Agreement originally made as of the 16th day of December, 1983 , and
as amended and restated most recently as of the 1St day of June , 2006 , by and between all parties
who are now or may hereafter become members of the Florida Municipal Pension Trust Fund
("FMPTF " or the "Master Trust Fund") and the individuals named as Master Trustees pursuant
to Section 109 of the Master Trust Agreement and their successors (such trustees collectively
referred to as the "Master Trustees") . The Master Trust Agreement provides that the Master
Trustees have the exclusive authority and discretion to manage and control the assets of the
Master Trust Fund according to the provisions herein . Except as otherwise defined herein, the
capitalized terms in this policy shall have the same meaning as such terms have in the Master
Trust Agreement .
II. PURPOSE
The purpose of the Master Trust Fund is to collectively manage the investment of the
assets of the Plans of participating Florida governments . The Master Trust Fund operates as a
non-profit, tax-exempt entity that provides professional and cost-effective investment and
administrative services for all types of retirement plans .
The Master Trustees have established the herein investment policy and portfolio
guidelines to assist the Administrator in the administration of the assets of the Master Trust
Fund ; to guide the investment managers in structuring portfolios consistent with the Master Trust
Fund ' s desired performance results and an acceptable level of risk ; and to assure the Master
Trust Fund assets are managed in a prudent fashion.
This policy is applicable to all funds, assets and properties under the control of the Master
Trustees and to all consultants, agents, and staff responsible to the Master Trustees .
III , DUTIES AND RESPONSIBILITIES
A . Administrator. Under the direction of the Master Trustees, it shall be the
responsibility of the Administrator to supervise and administer the Master Trust Fund ' s
investment program pursuant to a written agreement between the Master Trust Fund and the
Administrator, including , but not limited to, the following :
1 . Supervise and coordinate the activities of qualified investment
management firms , dealers , brokers , issuers, custodians , consultants and other investment
advisors in keeping with this investment policy .
2 . Provide advice and assistance in the administration and operation of the
Master Trust Fund ' s investment program .
Page 1 of 19
Revised June 1 , 2007