HomeMy WebLinkAboutHR12-228 - Original - 457 Deferred Compensation Plan Investment Policy Statement City of Kent 457 Plan
Investment Policy Statement
For the
City of Kent
457 Deferred Compensation Plan
Table of Contents
Investment Policy Statement City of Kent 457 Plan
I. Purpose........................................................................................................................................1
II. Responsibilities............................................................................................................................1
III. Plan Objectives............................................................................................................................2
IV. Selection and Retention Criterion for Investment Managers.................................................3
V. Investment Guidelines................................................................................................................4
VI. Derivative Policy.........................................................................................................................7
VII. Investment Restrictions..............................................................................................................7
VIII. Proxy Voting................................................................................................................................7
IX. Brokerage and Other Investment-Related Expenses ..............................................................7
X. Investment Manager Reporting................................................................................................8
XI. Investment Policy Changes........................................................................................................8
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Investment Policy Statement City of Kent 457 Plan
I. Purpose
The purpose of this Statement of Investment Policy is to assist the City of Kent in effectively
supervising and monitoring the investment of the City of Kent 457 Deferred Compensation Plan
("Plan") assets.
In the various sections of this policy document, the City of Kent Deferred Compensation Plan
Committee ("Committee") defines its investment program by:
• Stating in a written document Committee expectations and objectives in the investment of plan
assets and the duties and responsibilities of the various individuals and/or organizations responsible
for the management of these assets.
• Setting forth an investment "structure" for managing assets that includes various asset classes and
investment management styles that, in the aggregate, are expected to produce a prudent level of
diversification and a satisfactory investment return over time.
• Providing guidelines for each investment portfolio that control the level of risk assumed in the
portfolio and ensure that assets are managed in accordance with stated objectives.
• Stating how the performance results of the investment managers will be evaluated and monitored.
This Investment Policy Statement represents the current philosophy of the Committee regarding the
investment of plan assets. Although the Committee will utilize this Policy Statement in making
decisions concerning the plan, it shall not necessarily be bound solely by its contents.
II. Responsibilities
The Mayor of the City of Kent has created the Deferred Compensation Plan Committee and charged it
with fiduciary responsibility for the investment management of the Plan assets. Specifically, the
Committee is charged with the following responsibilities related to the management of the assets of the
plan:
• Manage the Plan's assets in compliance with applicable laws and regulations governing the
investment of the Plan's assets;
• Review, on a periodic basis, the current funds in the Plan's investment program and the Plan's
participants' use of such funds to ensure that those funds continue to be appropriate;
• Undertake, on a periodic basis, a review of the Plan's overall investment program relative to the
types of investment programs then available in the marketplace to ensure that the current program
remains competitive and attractive (or to make changes, if appropriate);
• DeveIop, review (at least annually) and revise (when necessary) the guidelines established in this
Investment Policy Statement;
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Investment Policy Statement City of Kent 457 Plan
• Retain, at its discretion, third-party outside professionals to facilitate and assist with the
management of the Plan;
• Review regularly the performance of the Plan's service providers, and report on this periodically to
the Mayor; and
• As appropriate, establish specific guidelines and objectives for individual managers of the Plan's
assets.
The Plan's investment managers, trustee and other service providers will discharge their duties in
compliance with applicable laws and regulations. If there is any perceived conflict between these laws
or regulations and the guidelines set forth in this policy and/or other instructions to the service
provider, the service provider shall immediately bring this to the attention of the Committee. The
Committee will then seek appropriate advice to resolve the conflict promptly.
The Committee will maintain, separate from this document, a set of Plan Oversight Administrative
Guidelines that delineates the administrative processes governing how and when the Committee will
meet, how its meetings will be conducted and documented, how its activities will be reported to the
Mayor, and any other administrative steps deemed necessary to help maintain the effective execution of
the Plan oversight function.
III. Plan Objectives
The objective of the Plan is to provide a vehicle for accumulation of retirement assets. Investment of
the Plan assets will be made for the sole interest and exclusive purpose of providing benefits to
participants. The Plan's investment choices should be selected with the care, skill, and diligence that a
prudent person acting in a like capacity would undertake.
The Plan is a "participant-directed account plan" that provides individual accounts for Plan participants
and permits each participant or beneficiary to exercise independent control over the investments of the
assets in such individual's account. Each participant and beneficiary should be given reasonable
opportunity to give investment instructions and obtain written confirmation of the completion of such
instructions. Sufficient information should be provided in a timely manner so that participants and
beneficiaries may make intelligent and informed investment decisions. The Committee may rely on
information and materials developed and disseminated by investment advisers and managers,to the extent
appropriate,in fulfilling its responsibilities to the Plan participants and beneficiaries.
The Plan's objective is to offer a broad range of no less than five (5) diversified investments, which
will enable a participant to construct a portfolio with aggregate risk and return characteristics within a
broad range normally appropriate for participants. The investments offered should provide the
participant the opportunity to diversify his or her account so as to generally reduce the risk of large
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Investment Policy Statement City of Kent 457 Plan
losses. Pooled funds (such as bank or insurance company pooled funds or mutual funds) may be used
as the investment vehicles for the Plan.
The following three tiers of investment options have been included to facilitate investing for participants
and beneficiaries with different objectives and investment experience:
• Core Funds-A selection of funds that provide broad coverage of the stock, fixed income,real estate
and cash asset classes.
• Asset Allocation Portfolios/Lifestyle Funds-A series (five to 10)of pre-mixed asset allocation
funds (ranging from conservative to aggressive,based on age/life-cycle). Each fund will normally be
comprised of a diversified blend of securities, including (as is appropriate for each fund's respective
objective), domestic stocks, foreign stocks, domestic fixed income, foreign fixed income, and cash
equivalents.
• Self Directed Brokerage Option-A"window"through which participants that wish to assume
complete responsibility for the selection and monitoring of the investments in their Plan portfolio may
access the services of an investment brokerage, specifically contracted to the Plan, for the purpose of
engaging these investments.
Given these three tiers of options, a participant has the flexibility to tailor his or her investment portfolio
to meet a wide variety of investment objectives.
IV. Selection and Retention Criterion for Investment Fund Managers
Investment fund managers shall be chosen using the following criteria:
• Performance Record—The manager should have a performance record that suggests investment
results will meet the investment goals of the plan. The attributes of such a performance record
would be expected to include that it is:
— CFA Institute (formerly AIMR) compliant (in the case of separate accounts)
— Reasonable
— A representative composite
— Above average in investment returns over trailing periods relative to an appropriate index and
peer group
— Sufficiently long in track record to afford adequate assessment (longer track records ,at least 5
P° years, are desirable, but shorter records may be acceptable depending on the circumstances)
• Management—The manager should have a stable corporate structure and consistent manager
tenure.
• Investment Style &Process—The style should be consistent with the given asset class and the
process should be reasonable.
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Investment Policy Statement City of Kent 457 Plan
• Assets Under Management—The manager should have a reasonable client base in this investment
style and the level of assets under management should be appropriate given the specific product to
be managed.
Changes in the investment management organization that cause any of the above criteria to be violated
will be carefully reviewed and could constitute cause for termination of the manager.
V. Investment Guidelines
The Plan may offer investment options in some or all of the asset categories described below.
Guidelines for each category are as follows. The investment performance for each option in the plan
will be assessed in comparison with the benchmarks detailed on Appendix A—Index and Peer Group
Benchmarks.
Stable Value Fund
The investment objective of the stable value fund is to allow Participants the opportunity to invest in a
fund that offers relatively stable annual returns without principal fluctuation. Stable value funds are
expected to invest in a diversified mix of Guaranteed Insurance Contracts (GICs) and Bank Investment
Contracts (minimum rating of AA by Standard & Poors (S&P)), Synthetic GICs (which are in turn
invested in portfolios of investment grade corporate bonds, mortgage backed securities and U.S.
government obligations, with minimum average credit ratings of AA or better by Standard and Poors)
and cash or near-cash investment grade debt instruments. All investments (except for U.S. government
obligations) should be well diversified by the issuer such that no more than 30% of the total portfolio is
invested with any one issuer.
Investment Grade Bond Fund
The investment objective of the investment grade bond fund is to provide a rate of return reflective of
the overall bond market. Fixed income funds are expected to invest predominantly in domestic debt
securities, including corporate and government bonds and mortgages. Foreign debt securities (defined
as debt issued by entities that report in non-dollar currencies) may also be purchased. However, such
securities should not comprise more than 20% of the total value of the fund. The average credit rating
of the portfolio should be A or higher (as rated by Standard and Poor's and/or Moody's). Normally,
the fund's duration should be within +/- 2 years of the duration of the Lehman Brothers Aggregate
Bond Index (or other appropriate index). All investments (except for US government obligations)
should be well diversified by issuer such that no more than 8% of the total market value of the portfolio
is invested with any one issuer.
High Yield Bond Fund
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Investment Policy Statement City of Kent 457 Plan
The investment objective of the high yield bond fund is to provide high current income and capital
appreciation through investment in an actively managed and well-diversified portfolio of non-
investment grade fixed income securities, the majority of which are issued by US domestic
corporations. The fund may also hold an unspecified percentage of the portfolio in cash and
investment grade bonds, at the portfolio manager's discretion.
Inflation Protected Bond Fund
The investment objective of the inflation protected bond fund is to provide inflation protection and
income consistent with investment in inflation-indexed securities, through investment in inflation-
indexed bonds issued by the US Treasury and government agencies, as well as US domestic
corporations. The fund may also hold an unspecified percentage of the portfolio in cash and
investment grade bonds, at the portfolio manager's discretion.
Domestic and International Equity Index Funds
The investment objective of the index funds is to offer participants the opportunity for participation in
various, broad portions of the U.S. and international equity markets, utilizing a passive investment
strategy with minimal cost These investments will, on a month-by-month basis, achieve results nearly
identical to their respective investment benchmarks. These results may be accomplished through
sampling, full replication, or a combination of both techniques to track the results of their respective
benchmark indexes. This alternative may also use derivatives to enhance the fund's tracking.
Domestic Equity Funds
The objective of the Domestic Equity Funds is to offer participants the growth and diversification
opportunities available from investments in the domestic equity market. The Committee expects that
funds with an identified asset class or category (examples: Large Cap Growth, Small Cap Value, etc.)will
be managed so as to be in general alignment with their respective asset class or category. (The investment
performance of these funds will be evaluated in comparison to the specific benchmarks identified in
Appendix A — Index and Peer Group Benchmarks.) In general, the Committee expects that these
portfolios may include any or all of the following:
• Equities traded on the domestic exchanges or in the Over-The-Counter (OTC) market. This
includes rights, warrants and issues convertible to stock.
• American Depository Receipts (ADRs) and foreign equities (defined as equities issued by firms
that report in non-dollar currencies) may also be included, for up to 20% of these portfolios.
Foreign exchange contracts may be held to the extent that the use of such contracts is limited to
hedging currency exposure existing in the portfolio.
• Fixed income securities and preferred stock. These issues should not form a significant portion
of any of domestic stock portfolio, but the Committee recognizes that at times, the use of these
instruments may be consistent with a portfolio's objectives.
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Investment Policy Statement City of Kent 457 Plan
• Stock index futures and/or options may be used to control a portfolio's asset allocation, to reduce
transaction costs, or to simulate full investment while maintaining cash to meet expected
withdrawals.
• Cash equivalents may also be held as a hedge against anticipated down markets or to meet other
liquidity needs, although the Committee expects that the domestic stock options will normally
maintain a fully invested status. Safety is the primary consideration for cash equivalent
investments. Cash equivalent investments should be well diversified and of high quality.
Issues selected for the portfolio(s) are subject to the following limits:
• Except for issues of the U.S. Government, its Agencies, and instrumentalities of the U.S.
Government, the Committee expects that generally no more than five percent (5%) of a
portfolio at the time of purchase will be invested in the issues of a single entity
• In general, no single economic sector, as defined by the most recent quarterly issue of the
Morningstar database, shall exceed the lesser of two times (2x) the sector weight of the
appropriate benchmark index weight, based upon the fund's investment category or asset class,
or 40% of fund assets.
Developed Markets International Stock Funds
The investment objective of developed markets international stock funds is long-term growth of
capital. Developed markets international stock funds should be well diversified across the foreign
equity markets with a primary emphasis on the more established companies in "developed" countries
and markets unless the fund has a regional or emerging market objective. Generally, it is intended that
no more than 40% of the fund should be held in any particular country. All investments should be well
diversified by issuer such that no more than 8% of the total market value of the portfolio, at time of
purchase, is invested with any one issuer. In the case of Global Stock Funds, equity securities of U.S
issuers may also be held.
Target-Date Lifecycle Portfolio Funds
The objective of target-date lifecycle portfolio funds is to allow participants the opportunity to invest in
a single investment option that will reflect their risk tolerance and time horizon. These funds shall be
invested in various asset classes based on the fund's stated objectives and target maturity date. These
asset classes shall include domestic and international equity investments, and a diversified array of
fixed income investments.
Real Estate Investment Trust (REIT) Fund
The objective of the Real Estate Investment Trust (REIT) fund is to seek capital appreciation and
current income through investment in a diversified portfolio of real estate investment trusts and real
estate investment equity. REITs are companies that own interests in real estate, real estate related loans
or other interests, and their revenues primarily consist of rent from income-producing real estate
properties and capital gains from the sales of such properties.
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Investment Policy Statement City of Kent 457 Plan
VI. Derivative Policy
The Plan's investment managers may use derivative instruments. However, in no case may a
derivative instrument be used that would cause the Plan to:
• Be leveraged in any way, or
• Be exposed to risks that would not inherently be encountered by investing directly in a portfolio of
securities allowed by this policy.
VII. Investment Restrictions
It is the policy of the Committee to allow the Plan's investment advisors discretion within their area of
expertise. It is expected that the majority of the Plan's investment funds will be mutual funds or other
commingled fund vehicles. As such, the Committee, and its advisors as appropriate, clearly
understands that any investments in any commingled funds are governed solely by the guidelines as
stated in the fund's prospectus or similar charter. The guidelines and objectives in this Investment
Policy Statement are solely for the Committee's use in evaluating the continued appropriateness of an
investment in the given commingled fund. The Committee, and its advisors as appropriate, will
monitor the funds for adherence to these guidelines and objectives, recognizing that a fund change may
be necessary if such parameters are not met.
VIII. Proxy Voting
The investment and/or fund manager is responsible for voting the proxies, and other decisions
regarding rights, which may be connected to investments in individual securities held by the funds in
the plan. The investment and/or fund managers will provide the Committee with their written proxy
voting policies upon the request of the Committee and keep the Committee updated with any changes
to these policies. The Committee will review the policy statements and ensure they provide
satisfactory guidelines for voting proxies. The Committee should also ensure that these policies
provide that proxies be voted and rights exercised exclusively in the best interest of the Plan's
participants and beneficiaries.
The Committee, or an agent appointed for this purpose, is responsible for voting proxies, and other
decisions regarding rights, with respect to mutual fund shares held by the Plan (or by Plan participants).
Proxies should be voted and rights exercised exclusively in the best interest of the Plan's participants
and beneficiaries. The Committee should maintain, or have access, to a record of how such proxies
were voted for at least a 5-year period.
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Investment Policy Statement City of Kent 457 Plan
IX. Brokerage and Other Investment-related Expenses
Brokerage commissions, incurred in the normal course of trading securities, are expenses to the plan.
The plan's investment and/or fund managers will have discretion to select brokers and negotiate
commissions. In executing this responsibility, the investment and/or fund managers should seek "best
execution" services. The Committee at its discretion may from time to time review the brokerage
practices of the Plan's investments.
In addition to brokerage commissions, total fund operating expenses (including investment
management fees, 12b-1 fees, etc.) should be reviewed periodically to ensure that such expenses are
competitive and being managed in the best interest of the Plan's participants and beneficiaries.
X. Investment Fund Manager Reporting
The investment fund managers should promptly notify the Committee should any changes occur in
manager's organization or investment philosophy or process.
The plan service provider, plan vendor, and/or record-keeper will ensure that all data necessary for the
appropriate execution of plan oversight will be provided to the plan sponsor. This information is
generally expected to include:
• A quarterly summary of contributions, withdrawals, income and expenses by fund
• Quarterly investment returns, net of fees, and the current expense ratio of the fund.
The Committee shall meet at least annually to review the investment performance of each fund and to
review the Plan's objectives and guidelines In addition, the Committee intends to provide participants
with sufficient information to make informed decisions with regard to investment alternatives available
under the Plan. This information, which may be provided by the Plan's service provider, will be
provided in a timely manner so as to enable participants to make informed investment decisions
XI. Investment Policy Changes
Any changes to this Statement of Investment Policy, or exceptions to the guidelines herein, whether
recommended by the investment managers, or initiated by the Committee, should be documented in the
Committee meeting minutes.
The City of Kent 457 Deferred Compensation Plan Investment Policy was adopted by the City of Kent
Deferred Compensation Plan Committee during a regular scheduled meeting held on February 23,
2011.
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Investment Policy Statement City of Kent 457 Plan
Jo dgson, CAO 4Committee Chair D e
- /UJX I,,v
Robert Nachlinger, Finance Director Date
Z4 6 i
Tom Brubaker, City Attorney late
Sue Viseth, Employee Services Director Date
's-aLi-I
Becky FowleY Benefits Manager Date
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Investment Policy Statement City of Kent 457 Plan
APPENDIX A
Index and Peer Group Benchmarks
Investment Option Performance Benchmark Peer Group
1CMA-RC Plus Fund Hueler Universe Average N/A
Vanguard Inflation Protected Barclays Inflation Adjusted Bond Index Inflation Adjusted Bond Universe
Securities Institutional Median
PIMCO Total Return A Barclays Aggregate Bond Index Intermediate./Long Term Bond
Universe Median
PIMCO High Yield Admen
Merrill Lynch High Yield Master II Index High Yield bond Universe Median
T Rowe Price Retirement
Income Dow Jones Target Date Today Index Lifestyle Income/05 Universe Median
T Rowe Price Retirement 2010 Adv Dow Jones Target Date 2010 Index Lifestyle 2010/15 Universe Median
T Rowe Price Retirement Dow Jones Target Date 2015 Index Lifestyle 2010/15 Universe Median
2015 Adv
T Rowe Price Retirement Dow Jones Target Date 2020 Index Lifestyle 2020/25 Universe Median
2020 Adv
T Rowe Price Retirement Dow Jones Target Date 2025 Index Lifestyle 2020/25 Universe Median
2025 Adv
T Rowe Price Retirement Dow Jones Target Date 2030 Index Lifestyle 2030/35 Universe Median
2030 Adv
T Rowe Price Retirement Dow Jones Target Date 2035 Index Lifestyle 2030/35 Universe Median
2035 Adv
T Rowe Price Retirement Dow Jones Target Date 2040 Index Lifestyle 2040/45 Universe Median
2040 Adv
T Rowe Price Retirement Dow Jones Target Date 2045 Index Lifestyle 2040/45 Universe Median
2045 Adv
T Rowe Price Retirement Dow Jones Target Date 2045 Index Lifestyle 2050/55 Universe Median
2050 Adv
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Investment Policy Statement City of Kent 457 Plan
VT Alliance NFJ Dividend Russell 1000 Value Index Large Cap Value Universe Median
Value Admin
Neuberger Berman Socially S&P 500 Index Large Cap Core Universe Median
Responsible TR
VT Fidelity Contra Fund
Russell 1000 Growth Index Large Cap Growth Universe Median
Riversource Mid Cap Value Russell Midcap Value Index Mid Cap Value Universe Median
R4
TimeSquare Mid Cap Growth Russell Midcap Growth Index Mid Cap Growth Universe Median
Prem
VT Royce Premier Service Russell Midcap Core Index Mid Cap Core Universe Median
VT Allianz NFJ Small Cap Russell 2000 Value Index Small Cap Value Universe Median
Value
VT Keeley Small Cap Value Russell Small Cap Core Index Small Cap Core Universe Median
A
Baron Small Cap Russell 2000 Growth index Small Cap Growth Universe Median
VT Harbor International MSCI EAFE index Foreign Equity Universe Median
Admin
American Funds EuroPacific MSCI EAFE Index Foreign Equity Universe Median
Growth R4
Cohen & Steers Realty MSCI US REIT Index US RETi'Universe Median
Shares
Vantagepoint 500 Stock S&P 500 Index Large Cap Core Universe Median
Index II
Vantagepoint Broad Market Wilshire 5000 Total Market Index US Equity Universe Median
Index II
Vantagepoint Mid/Small Wilshire 4500 Market Completion Index Custom Blend
Company Index II
Vantagepoint Overseas MSCI EAFE Index Foreign Equity Universe Median
Equity Index 11
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Investment Policy Statement City of Kent 457 Plan
Investment Policy Statement
For the
City of Kent
457 Deferred Compensation Plan
Amended September 6, 2012
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Investment Policy Statement City of Kent 457 Plan
Table of Contents
I. Purpose........................................................................................................................................I
II. Responsibilities............................................................................................................................1
III. Plan Objectives............................................................................................................................2
IV. Selection and Retention Criterion for Investment Managers.................................................3
V. Investment Guidelines................................................................................................................4
VI. Derivative Policy.........................................................................................................................7
VII. Investment Restrictions..............................................................................................................8
VIII. Proxy Voting................................................................................................................................7
IX. Brokerage and Other Investment-Related Expenses ..............................................................7
X. Investment Manager Reporting................................................................................................9
XI. Investment Policy Changes........................................................................................................9
Investment Policy Statement City of Kent 457 Plan
I. Purpose
The purpose of this Statement of Investment Policy is to assist the City of Kent in effectively
supervising and monitoring the investment of the City of Kent 457 Deferred Compensation Plan
("Plan") assets.
In the various sections of this policy document, the City of Kent Deferred Compensation Plan
Committee ("Committee") defines its investment program by:
• Stating in a written document Committee expectations and objectives in the investment of plan
assets and the duties and responsibilities of the various individuals and/or organizations responsible
for the management of these assets.
• Setting forth an investment "structure" for managing assets that includes various asset classes and
investment management styles that, in the aggregate, are expected to produce a prudent level of
diversification and a satisfactory investment return over time.
• Providing guidelines for each investment portfolio that control the level of risk assumed in the
portfolio and ensure that assets are managed in accordance with stated objectives.
• Stating how the performance results of the investment managers will be evaluated and monitored.
This Investment Policy Statement represents the current philosophy of the Committee regarding the
investment of plan assets Although the Committee will utilize this Policy Statement in making
decisions concerning the plan, it shall not necessarily be bound solely by its contents.
II. Responsibilities
The Mayor of the City of Kent has created the Deferred Compensation Plan Committee and charged it
with fiduciary responsibility for the investment management of the Plan assets. Specifically, the
Committee is charged with the following responsibilities related to the management of the assets of the
plan:
• Manage the Plan's assets in compliance with applicable laws and regulations governing the
investment of the Plan's assets;
• Review, on a periodic basis, the current funds in the Plan's investment program and the Plan's
participants' use of such funds to ensure that those funds continue to be appropriate,
• Undertake, on a periodic basis, a review of the Plan's overall investment program relative to the
types of investment programs then available in the marketplace to ensure that the current program
remains competitive and attractive (or to make changes, if appropriate);
• Develop, review (at least annually) and revise (when necessary) the guidelines established in this
Investment Policy Statement;
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Investment Policy Statement City of Kent 457 Plan
r
• Retain, at its discretion, third-party outside professionals to facilitate and assist with the
management of the Plan;
• Review regularly the performance of the Plan's service providers, and report on this periodically to
the Mayor, and
• As appropriate, establish specific guidelines and objectives for individual managers of the Plan's
assets.
The Plan's investment managers, trustee and other service providers will discharge their duties in
compliance with applicable laws and regulations If there is any perceived conflict between these laws
or regulations and the guidelines set forth in this policy and/or other instructions to the service
provider, the service provider shall immediately bring this to the attention of the Committee. The
Committee will then seek appropriate advice to resolve the conflict promptly.
The Committee will maintain, separate from this document, a set of Plan Oversight Administrative
Guidelines that delineates the administrative processes governing how and when the Committee will
meet, how its meetings will be conducted and documented, how its activities will be reported to the
Mayor, and any other administrative steps deemed necessary to help maintain the effective execution of
the Plan oversight function.
III. Plan Objectives
The objective of the Plan is to provide a vehicle for accumulation of retirement assets. Investment of
the Plan assets will be made for the sole interest and exclusive purpose of providing benefits to
participants. The Plan's investment choices should be selected with the care, skill, and diligence that a
prudent person acting in a like capacity would undertake.
The Plan is a "participant-directed account plan" that provides individual accounts for Plan participants
and permits each participant or beneficiary to exercise independent control over the investments of the
assets in such individual's account. Each participant and beneficiary should be given reasonable
opportunity to give investment instructions and obtain written confirmation of the completion of such
instructions. Sufficient information should be provided in a timely manner so that participants and
beneficiaries may make intelligent and informed investment decisions. The Committee may rely on
information and materials developed and disseminated by investment advisers and managers,to the extent
appropriate, in fulfilling its responsibilities to the Plan participants and beneficiaries.
The Plan's objective is to offer a broad range of no less than five (5) diversified investments, which
will enable a participant to construct a portfolio with aggregate risk and return characteristics within a
broad range normally appropriate for participants. The investments offered should provide the
participant the opportunity to diversify his or her account so as to generally reduce the risk of large
mokowd
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Investment Policy Statement City of Kent 457 Plan
t
losses. Pooled funds (such as bank or insurance company pooled funds or mutual funds) may be used
as the investment vehicles for the Plan.
The following four tiers of investment options have been included to facilitate investing for participants
and beneficiaries with different objectives and investment experience:
• Core Funds—A selection of funds that provide broad coverage of the stock, fixed income,real estate
and cash asset classes.
• Asset Allocation Portfolios/Lifestyle Funds—A series(five to 10)of pre-mixed asset allocation
funds (ranging from conservative to aggressive, based on age/life-cycle). Each fund will normally be
comprised of a diversified blend of securities, including(as is appropriate for each fund's respective
objective), domestic stocks, foreign stocks, domestic fixed income, foreign fixed income, and cash
equivalents.
• Minimum Guaranteed Withdrawal Benefit Fund—A financial product that is designed to provide
income to retired participants, with a guarantee of a minimum amount of income payments that will
continue for the duration of the participant's (and possibly a spouse's) life. Assets in the fund are
typically invested in a portfolio of stocks and bonds.
• Self Directed Brokerage Option—A"window"through which participants that wish to assume
complete responsibility for the selection and monitoring of the investments in their Plan portfolio may
access the services of an investment brokerage, specifically contracted to the Plan, for the purpose of
engaging these investments.
Given these three tiers of options,a participant has the flexibility to tailor his or her investment portfolio
to meet a wide variety of investment objectives.
IV. Selection, Retention and Termination Criterion for Investment Fund
Managers
A. Investment fund manager selection criteria:
• Performance Record — The manager should have a performance record that suggests investment
results will meet the investment goals of the Plans The attributes of the manager's performance
record would be expected to include.
— CFA Institute (formerly AIMR) compliant(in the case of separate accounts)
— A proven history of a reasonable investment approach
— A representative composite of investments similar in nature to current Plans
— Above average in investment returns over a 5 year trailing period relative to an appropriate
index and peer group
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Investment Policy Statement City of Kent 457 Plan
P Nt
— Sufficiently long in track record to afford adequate assessment (longer track records ,at least 5
years, are desirable, but shorter records may be acceptable depending on the circumstances)
• Management — The manager should have worked within a stable corporate structure and shown
consistent tenure as a manager within current and past corporate structures.
• Investment Style & Process — The style should be consistent with the given asset class and the
process should be reasonable.
• Assets Under Management — The manager should have a reasonable client base in this investment
style and the level of assets under management should be appropriate given the specific product to
be managed.
B. Investment fund manager retention and termination criteria
• Generally, all investment options are expected to remain true to their stated investment objectives and perform
as well as or better than their prescribed performance benchmarks, net of fees.
• A watch status may be initiated when a fund option trails its benchmark and peers for at least two consecutive
quarters on a trailing five-year basis
• If the fund's five-year trailing performance does not return above benchmark and above median versus same
style peers and/or its benchmark within two quarters of being placed on watch,the fund may be considered for
termination Performance improvement in the most recent quarter will be noted and maybe considered in the
decision to leave any fund on watch for a longer period of time.
• In any case, the Administrator, in consultation with the Plan Provider, reserves the right to terminate
investment fund relationships at any time, for any reason Further participant contributions to a fund may be
frozen or the fund may be replaced with or without transferring existing assets from the replaced fund Once
the decision to terminate a fund is made, asset transfer and liquidation, as appropriate to the action taken and
as allowed by established Plan policies and procedures. should be handled to the best advantage of the Plan,
with due consideration given to impacts on Plan participants.
• In the event that any fund termination process would cause a participant to be unable to perform a transaction
in his or her account for 3 or more business days, it is the Administrator's intent to inform Plan participants of
that action at least 30 days prior to the transaction
V. Investment Guidelines
The Plan may offer investment options in some or all of the asset categories described below.
Guidelines for each category are as follows. The investment performance for each option in the plan
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Investment Policy Statement City of Kent 457 Plan
. 77
will be assessed in comparison with the benchmarks detailed on Appendix A—Index and Peer Group
Benchmarks.
Stable Value Fund
The investment objective of the stable value fund is to allow Participants the opportunity to invest in a
fund that offers relatively stable annual returns without principal fluctuation. Stable value funds are
expected to invest in a diversified mix of Guaranteed Insurance Contracts (GICs) and Bank Investment
Contracts (minimum rating of AA by Standard & Poors (S&P)), Synthetic GICs (which are in turn
invested in portfolios of investment grade corporate bonds, mortgage backed securities and U.S.
government obligations, with minimum average credit ratings of AA or better by Standard and Poors)
and cash or near-cash investment grade debt instruments. All investments (except for U.S. government
obligations) should be well diversified by the issuer such that no more than 30% of the total portfolio is
invested with any one issuer.
Investment Grade Bond Fund
The investment objective of the investment grade bond fund is to provide a rate of return reflective of
the overall bond market. Fixed income funds are expected to invest predominantly in domestic debt
securities, including corporate and government bonds and mortgages. Foreign debt securities (defined
as debt issued by entities that report in non-dollar currencies) may also be purchased. However, such
securities should not comprise more than 20% of the total value of the fund. The average credit rating
of the portfolio should be A or higher (as rated by Standard and Poor's and/or Moody's). Normally,
the fund's duration should be within +/- 2 years of the duration of the Lehman Brothers Aggregate
Bond Index (or other appropriate index). All investments (except for US government obligations)
should be well diversified by issuer such that no more than 8% of the total market value of the portfolio
is invested with any one issuer.
High Yield Bond Fund
The investment objective of the high yield bond fund is to provide high current income and capital
appreciation through investment in an actively managed and well-diversified portfolio of non-
investment grade fixed income securities, the majority of which are issued by US domestic
corporations. The fund may also hold an unspecified percentage of the portfolio in cash and
investment grade bonds, at the portfolio manager's discretion.
Inflation Protected Bond Fund
The investment objective of the inflation protected bond fund is to provide inflation protection and
income consistent with investment in inflation-indexed securities, through investment in inflation-
indexed bonds issued by the US Treasury and government agencies, as well as US domestic
corporations. The fund may also hold an unspecified percentage of the portfolio in cash and
investment grade bonds, at the portfolio manager's discretion.
5
Investment Policy Statement City of Kent 457 Plan
Domestic and International Equity Index Funds
The investment objective of the index funds is to offer participants the opportunity for participation in
various, broad portions of the U S and international equity markets, utilizing a passive investment
strategy with minimal cost These investments will, on a month-by-month basis, achieve results nearly
identical to their respective investment benchmarks. These results may be accomplished through
sampling, full replication, or a combination of both techniques to track the results of their respective
benchmark indexes. This alternative may also use derivatives to enhance the fund's tracking.
Domestic Equity Funds
The objective of the Domestic Equity Funds is to offer participants the growth and diversification
opportunities available from investments in the domestic equity market. The Committee expects that
funds with an identified asset class or category(examples: Large Cap Growth, Small Cap Value, etc)will
be managed so as to be in general alignment with their respective asset class or category. (The investment
performance of these funds will be evaluated in comparison to the specific benchmarks identified in
Appendix A — Index and Peer Group Benchmarks.) In general, the Committee expects that these
portfolios may include any or all of the following:
• Equities traded on the domestic exchanges or in the Over-The-Counter (OTC) market. This
includes rights,warrants and issues convertible to stock.
• American Depository Receipts (ADRs) and foreign equities (defined as equities issued by firms
that report in non-dollar currencies) may also be included, for up to 20% of these portfolios.
Foreign exchange contracts may be held to the extent that the use of such contracts is limited to
hedging currency exposure existing in the portfolio
• Fixed income securities and preferred stock. These issues should not form a significant portion
of any of domestic stock portfolio, but the Committee recognizes that at times, the use of these
instruments may be consistent with a portfolio's objectives.
• Stock index futures and/or options may be used to control a portfolio's asset allocation, to reduce
transaction costs, or to simulate full investment while maintaining cash to meet expected
withdrawals.
• Cash equivalents may also be held as a hedge against anticipated down markets or to meet other
liquidity needs, although the Committee expects that the domestic stock options will normally
maintain a fully invested status. Safety is the primary consideration for cash equivalent
investments. Cash equivalent investments should be well diversified and of high quality.
Issues selected for the portfolio(s) are subject to the following limits:
6
Investment Policy Statement City of Kent 457 Plan
• Except for issues of the U.S. Government, its Agencies, and instrumentalities of the U.S.
Government, the Committee expects that generally no more than five percent (59/0) of a
portfolio at the time of purchase will be invested in the issues of a single entity.
• In general, no single economic sector, as defined by the most recent quarterly issue of the
Morningstar database, shall exceed the lesser of two times (2x) the sector weight of the
appropriate benchmark index weight, based upon the fund's investment category or asset class,
or 40% of fund assets.
Developed Markets International Stock Funds
The investment objective of developed markets international stock funds is long-term growth of
capital Developed markets international stock funds should be well diversified across the foreign
equity markets with a primary emphasis on the more established companies in "developed" countries
and markets unless the fund has a regional or emerging market objective. Generally, it is intended that
no more than 40% of the fund should be held in any particular country. All investments should be well
diversified by issuer such that no more than 8% of the total market value of the portfolio, at time of
purchase, is invested with any one issuer. In the case of Global Stock Funds, equity securities of U.S
issuers may also be held.
Target-Date Lifecycle Portfolio Funds
The objective of target-date lifecycle portfolio funds is to allow participants the opportunity to invest in
a single investment option that will reflect their risk tolerance and time horizon. These funds shall be
invested in various asset classes based on the fund's stated objectives and target maturity date. These
asset classes shall include domestic and international equity investments, and a diversified array of
fixed income investments.
Real Estate Investment Trust(REIT) Fund
The objective of the Real Estate Investment Trust(REIT) fund is to seek capital appreciation and
current income through investment in a diversified portfolio of real estate investment trusts and real
estate investment equity. REITs are companies that own interests in real estate,real estate related loans
or other interests, and their revenues primarily consist of rent from income-producing real estate
properties and capital gains from the sales of such properties.
Minimum Guaranteed Withdrawal Benefit Fund
The objective of the Minimum Guaranteed Withdrawal Benefit(GMWB) fund is to seek both
moderate capital growth and current income while providing a guaranteed lifetime income feature that
protects retirement income against market downturns. GMWBs typically consist of a balanced
portfolio of stocks and bonds in which an insurance company guarantees, for a fee, that an investor in
retirement may periodically withdraw a percentage of their initial investment plus any gains from
market appreciation and/or additional contributions.
7
Investment Policy Statement City of Kent 457 Plan
VI. Derivative Policy
The Plan's investment managers may use derivative instruments. However, in no case may a
derivative instrument be used that would cause the Plan to:
• Be leveraged in any way, or
• Be exposed to risks that would not inherently be encountered by investing directly in a portfolio of
securities allowed by this policy.
VII. Investment Restrictions
It is the policy of the Committee to allow the Plan's investment advisors discretion within their area of
expertise. It is expected that the majority of the Plan's investment funds will be mutual funds or other
commingled fund vehicles. As such, the Committee, and its advisors as appropriate, clearly
understands that any investments in any commingled funds are governed solely by the guidelines as
stated in the fund's prospectus or similar charter. The guidelines and objectives in this Investment
Policy Statement are solely for the Committee"s use in evaluating the continued appropriateness of an
investment in the given commingled fund. The Committee, and its advisors as appropriate, will
monitor the funds for adherence to these guidelines and objectives, recognizing that a fund change may
be necessary if such parameters are not met.
VIII. Proxy Voting
The investment and/or fund manager is responsible for voting the proxies, and other decisions
regarding rights, which may be connected to investments in individual securities held by the funds in
the plan. The investment and/or fund managers will provide the Committee with their written proxy
voting policies upon the request of the Committee and keep the Committee updated with any changes
to these policies. The Committee will review the policy statements and ensure they provide
satisfactory guidelines for voting proxies. The Committee should also ensure that these policies
provide that proxies be voted and rights exercised exclusively in the best interest of the Plan's
participants and beneficiaries.
The Committee, or an agent appointed for this purpose, is responsible for voting proxies, and other
decisions regarding rights, with respect to mutual fund shares held by the Plan (or by Plan participants).
Proxies should be voted and rights exercised exclusively in the best interest of the Plan's participants
and beneficiaries. The Committee should maintain, or have access, to a record of how such proxies
were voted for at least a 5-year period.
8
Investment Policy Statement City of Kent 457 Plan
IX. Brokerage and Other Investment-related Expenses
Brokerage commissions, incurred in the normal course of trading securities, are expenses to the plan.
The plan's investment and/or fund managers will have discretion to select brokers and negotiate
commissions. In executing this responsibility, the investment and/or fund managers should seek "best
execution" services. The Committee at its discretion may from time to time review the brokerage
practices of the Plan's investments.
In addition to brokerage commissions, total fund operating expenses (including investment
management fees, 12b-1 fees, etc.) should be reviewed periodically to ensure that such expenses are
competitive and being managed in the best interest of the Plan's participants and beneficiaries.
X. Investment Fund Manager Reporting
The investment fund managers should promptly notify the Committee should any changes occur in
managers organization or investment philosophy or process.
The plan service provider, plan vendor, and/or record-keeper will ensure that all data necessary for the
appropriate execution of plan oversight will be provided to the plan sponsor. This information is
generally expected to include:
• A quarterly summary of contributions, withdrawals, income and expenses by fund
• Quarterly investment returns, net of fees, and the current expense ratio of the fund.
The Committee shall meet at least annually to review the investment performance of each fund and to
review the Plan's objectives and guidelines In addition, the Committee intends to provide participants
with sufficient information to make informed decisions with regard to investment alternatives available
under the Plan. This information, which may be provided by the Plan's service provider, will be
provided in a timely manner so as to enable participants to make informed investment decisions.
XI. Investment Policy Changes
Any changes to this Statement of Investment Policy, or exceptions to the guidelines herein, whether
recommended by the investment managers, or initiated by the Committee, should be documented in the
Committee meeting minutes.
The City of Kent 457 Deferred Compensation Plan Investment Policy was amended by the City of Kent
Deferred Compensation Plan Committee during a regular scheduled meeting held on September 6,
2012
9
Investment Policy Statement City of Kent 457 Plan
ohn odgson, C - Committee Chair Date
/7i,Z'
Robert Nachlinger, Finance Director Date
W Z
To Brubaker, City Attorney Date
/� �64L
Lorraine Patterson, Human Resources Director Date
.' glrl1 , Q-
Becky Fowlerjlhenefits Manager Date
OW+tr"..a... ,..,. '"8dJ#imlkiii�a4iS
10
a
Investment Policy Statement City of Kent 457 Plan
APPENDIX A
Index and Peer Group Benchmarks
Investment Option Performance Benchmark Peer Group
ICMA-RC Plus Fund Five Year Constant Maturity Treasury Index Custom US SV Peer Group
VantageTrust Retirement Custom Benchmark NA
Income Advantage Fund
Vanguard Inflation Protected Barclays Inflation Adjusted Bond Index Inflation Adjusted Bond Universe
Securities Institutional Median
PIMCO Total Return A Barclays Aggregate Bond Index Intermediate./Long Term Bond
Universe Median
PIMCO High Yield Admin
Merrill Lynch High Yield Master II Index High Yield bond Universe Median
T Rowe Price Retirement
Income Dow Jones Target Date Today Index Lifestyle Income/05 Universe Median
T Rowe Price Retirement Dow Jones Target Date 2010 Index Lifestyle 2010/15 Universe Median
2010 Adv
T Rowe Price Retirement Dow Jones Target Date 2015 Index Lifestyle 2010/15 Universe Median
2015 Adv
T Rowe Price Retirement Dow Jones Target Date 2020 Index Lifestyle 2020125 Universe Median
2020 Adv
T Rowe Price Retirement Dow Jones Target Date 2025 Index Lifestyle 2020/25 Universe Median
2025 Adv
T Rowe Price Retirement Dow Jones Target Date 2030 Index Lifestyle 2030/35 Universe Median
2030 Adv
T Rowe Price Retirement Dow Jones Target Date 2035 Index Lifestyle 2030/35 Universe Median
2035 Adv
T Rowe Price Retirement Dow Jones Target Date 2040 Index Lifestyle 2040/45 Universe Median
2040 Adv
T Rowe Price Retirement Dow Jones Target Date 2045 Index Lifestyle 2040/45 Universe Median
2045 Adv
,Ar
2
Investment Policy Statement City of Kent 457 Plan
T Rowe Price Retirement Dow Jones Target Date 2045 Index Lifestyle 2050/55 Universe Median
2050 Adv
VT Alliance NFJ Dividend Russell 1000 Value Index Large Cap Value Universe Median
Value Admin
Neuberger Berman Socially S&P 500 Index Large Cap Core Universe Median
Responsible TR
VT Fidelity Contra Fund
Russell 1000 Growth Index Large Cap Growth Universe Median
Riversource Mid Cap Value Russell Midcap Value Index Mid Cap Value Universe Median
R4
TimeSquare Mid Cap Growth Russell Midcap Growth Index Mid Cap Growth Universe Median
Prem
VT Royce Premier Service Russell Midcap Core Index Mid Cap Core Universe Median
VT Allianz NFJ Small Cap Russell 2000 Value Index Small Cap Value Universe Median
Value
VT Keeley Small Cap Value Russell Small Cap Core Index Small Cap Core Universe Median
A
Baron Small Cap Russell 2000 Growth Index Small Cap Growth Universe Median
VT Harbor International MSCI EAFE Index Foreign Equity Universe Median
Admm
American Funds EuroPacific MSCI EAFE Index Foreign Equity Universe Median
Growth R4
Cohen & Steers Realty MSCI US REIT Index US REIT Universe Median
Shares
Vantagepoint 500 Stock S&P 500 Index Large Cap Core Universe Median
Index II
Vantagepoint Broad Market Wilshire 5000 Total Market Index US Equity Universe Median
Index II
Vantagepoint Mid/Small Wilshire 4500 Market Completion Index Custom Blend
Company Index II
Vantagepoint Overseas
Equity Index II MSCI EAFE Index Foreign Equity Universe Median
3
G R O U P
City of Kent Deferred Compensation Plan
Revenue Sharing and Expense Payment-Policy
Approved February 23, 2011
Revenue Sharing Compensation
The agreements entered into between the Employer and Service Providers may
state that a portion of revenue sharing amounts paid to the provider (such as 1112b-
1 fees") that are attributable to assets held or services provided under the Plan will
be remitted by the providers to the Plan. Any such revenue sharing remittances
received by the Plan shall be held in an unallocated trust assets account maintained
under the Plan, and thereafter shall be used exclusively for the benefit of
Participants and their Beneficiaries, or to defray the reasonable expenses of
administering and managing the Plan.
Payment of Expenses
All expenses incidental to the administration or protection of the Plan, and the
management of the assets of the Plan, shall be paid from the assets of the Plan or
by the Plan participants; unless the Employer chooses to pay such expenses
directly. To the extent permitted by law, the Employer may be reimbursed from the
Plan for any direct expenses properly and actually incurred in connection with the
performance of services for the Plan.
Expenses may be paid or reimbursed from the Account only upon the review and
approval of the Committee, or by such other appropriate fiduciary of the Plan.
The expenses that may be paid from, or which may be reimbursed to the Employer
for its payment of, include, and are not limited to, the following:
(a)Ongoing plan administrative expenses, such as record keeping, legal,
auditing, annual reporting, claims processing and similar administrative
expenses;
(b)Investment advisory, investment management, administrative investment or
service fees and expenses;
(c)Costs incurred in preparing, printing and distributing plan-related documents
and other Participant communication materials;
(d)Costs associated with benefit distributions and transactions;
(e)Expenses to provide investment assistance and education to Participants;
and
1
G R O U P
City of Kent Deferred Compensation Plan
Revenue Sharing and Expense Payment Policy
Approved February 23, 2011
(f) Costs for providing on-going education, including the costs of attending
seminars and conferences, for members of the Committee, fiduciaries and
staff with respect to the Plan as necessary or appropriate to assist in the
discharge of their responsibilities to the Plan.
Allocation of Excess Revenue Share Compensation
Excess revenue remaining in the Forfeiture Account may be allocated to plan
participants at the Committee's discretion. Such amounts shall be allocated to plan
participants based on their pro-rata share of Plan assets.
vjtabi 4� l
John od son, CAO - Committee Chair D A to
4 I� Of//j
Robert Nachlinger, Finance Director Date
- zh LLA, bjaWes-, S i � I
To Brubaker, City Attorney Date
Sue Viseth, Employee Services Director Date
Becky Fow er, Benefits Manager Date
2
i
City of Kent
Deferred Compensation Plan Committee
Operating Guidelines
Approved February 23, 2011
I. Membership — the Committee is composed of the following
representative members or their designees:
a. Plan Fiduciary(Committee Chair) — Chief Administrative
Officer
b. Employee Services Director
c. Finance Director
d. Benefits Manager
e. City Attorney
f. Ad Hoc (non voting) Members:
i. Benefits Analyst (Committee Secretary)
Ad hoc members are appointed by the Chair; replacement of
Committee Members is the responsibility of the Chair, but
must be approved by a simple majority of the Committee
Members in attendance at the time the motion for approval is
proposed.
II. Roles and Responsibilities — the following roles and
responsibilities are not all encompassing, but should be
utilized as a guideline for the Committee
a. Governance of the Plan/Amendments;
b. Fiduciary Oversight-
i. Ensuring that all reports are filed correctly with any
agency of the state or federal government
ii. Complying with disclosure requirements
iii. Maintaining all records of the Plan not maintained by
the Administrator
iv. Issuing instructions to Plan Administration Service
Provider regarding payment of fees, taxes, charges
or other costs
v. Qualifying or continuing to qualify under applicable
law
vi. Ensuring that the Committee is expressly reposed
with discretionary authority and powers regarding
claims for benefits under the Plan (as defined in the
Plan Document Amendments)
c. Investment Policy Development/Implementation and
Oversight;
1
City of Kent
Deferred Compensation Plan Committee
Operating Guidelines
Approved February 23, 2011
II. Roles and Responsibilities cont. -
d. Reporting Plan status to Mayor and Participants; and
Adopting By-laws and Guidelines.
III. Quorum — The presence of a simple majority of Committee
Members shall constitute a quorum and authorize the
Committee to conduct all committee duties.
IV. Effect of Absence of Committee Members — Should the
Chairperson be absent or unable to exercise authority, the
Chairperson Pro Tempore shall assume the Chairperson's
duties and powers. Each Committee Member is expected to
notify the Chairperson or the Secretary prior to a scheduled
meeting if that Member will not be able to attend that
meeting. If the Chair has not designated a Chairperson Pro
Tem, the Employee Services Director shall serve as the
Chairperson Pro Tem.
V. Voting by the Committee — Each Committee Member shall
have one (1) vote, which must be cast by that Committee
Member in person. If any person on the Committee has a
conflict of interest regarding a matter pending before the
Committee, or if circumstances call into question whether the
member can maintain an appearance of fairness with respect
to a matter pending before the Committee, that Committee
Member shall disqualify him or herself from participating in
the deliberations and the decision-making process with
respect to that matter.
VI. Meetings — Committee meetings will be conducted not less
than 3 times per year as scheduled by the Secretary and
Committee Chair. Meeting minutes will be maintained and
should be distributed to the Committee approximately two (2)
weeks prior to the next Committee Meeting. Meeting Minutes
shall be made available upon request to Plan participants.
Meeting Agendas will include:
a. Call to Order;
b. Roll Call or Attendance Sheet;
2
City of Kent
Deferred Compensation Plan Committee
Operating Guidelines
Approved February 23, 2011
VI. Meetings
c. Approval of minutes from previous meeting;
d. Old Business;
e. New Business;
f. Review Reports from Consultants and/or Providers.
g. Topical Presentations from Experts (Optional); and
h. Adjourn
VII. Participation of Committee Members - Members are
expected to participate in Committee meetings on a regular
basis to provide oversight for the entire City Deferred
Compensation Plans. Members need to attend at least two
(2) meetings per year to maintain active membership subject
to the will of the entire committee.
L
John o son, A - Committee Chair I Oaie
�L fell
Robert Nachlinger, Finance Director Date
,,ff W, r22L L� *A1 I t
To Brubaker, City Attorney Date
i" ���
Sue Viseth, Employee Services I
Becky Fowl r, Benefits Manager Date
3
r
Amendment to Section IV of City of Kent Deferred Compensation Plan
Investment Policy Statement
Approved February 23, 2011
IV. Selection, Retention and Termination Criterion for Investment
Fund Managers
A. Investment fund manager selection criteria:
• Performance Record — The manager should have a performance record that
suggests investment results will meet the investment goals of the Plans. The
attributes of the manager's performance record would be expected to include:
— CFA Institute (formerly AIMR) compliant (in the case of separate accounts)
— A proven history of a reasonable investment approach
— A representative composite of investments similar in nature to current Plans
— Above average in investment returns over trailing periods relative to an
appropriate index and peer group
— Sufficiently long in track record to afford adequate assessment (longer track
records ,at least 5 years, are desirable, but shorter records may be acceptable
depending on the circumstances)
• Management —The manager should have worked within a stable corporate structure
and shown consistent tenure as a manager within current and past corporate
structures.
• Investment Style & Process — The style should be consistent with the given asset
class and the process should be reasonable
• Assets Under Management — The manager should have a reasonable client base in
this investment style and the level of assets under management should be
appropriate given the specific product to be managed.
B. Investment fund manager retention and termination criteria
• Generally, all investment options are expected to remain true to their stated
investment objectives and perform as well as or better than their prescribed
performance benchmarks, net of fees.
• A watch status may be initiated when a fund option trails its benchmark and peers
for at least two consecutive quarters on a trailing five-year basis
Hyas Group• 108 NW 9' Avenue Swte 203,Portland,Oregon 97209• ph 971-6341500 fx 971-275-1856
Amendment to Section IV of City of Kent Deferred Compensation Plan
Investment Policy Statement
Approved February 23, 2011
• If the fund's five-year trailing performance does not return above benchmark and
above median versus same style peers and/or its benchmark within two quarters of
being placed on watch, the fund may be considered for termination Performance
improvement in the most recent quarter will be noted and may be considered in the
decision to leave any fund on watch for a longer period of time
• In any case, the Administrator, in consultation with the Plan Provider, reserves the
right to terminate investment fund relationships at any time, for any reason Further
participant contributions to a fund may be frozen or the fund may be replaced with or
without transferring existing assets from the replaced fund Once the decision to
terminate a fund is made, asset transfer and liquidation, as appropriate to the action
taken and as allowed by established Plan policies and procedures, should be
handled to the best advantage of the Plan, with due consideration given to impacts
on Plan participants
• In the event that any fund termination process would cause a participant to be
unable to perform a transaction in his or her account for 3 or more business days, it
is the Administrator's intent to inform Plan participants of that action at least 30 days
prior to the transaction
J h?odgs C O ate
Robert Nachlinger, Finance Director ( Date
5 it
TorrV Brubaker, City Attorney Date
Hyas Group• 108 NW 9�Avenue Suite 203,Portland,Oregon 97209• ph 971-6341500 fx 971-275-1856
� f
Amendment to Section IV of City of Kent Deferred Compensation Plan
Investment Policy Statement
Approved February 23, 2011
Sue Viseth, Employee Services Director Date
Bec Fowler, Benefits Manager Date
Hyas Group• 108 NW 9'h Avenue Suite 203,Portland,Oregon 97209 • ph 971-634-1500 be 971-275-1856
.ems'.