International Equity Fund – Index Portfolio Policy & Procedure

  • Purpose – The International Equity Fund - Index Portfolio is one of the investment options offered to participants by the Plan. The investment options are intended to provide participants with a variety of choices with differing risk and return characteristics in which to invest under the Plan. The purpose of the Index Portfolio within this group of investment alternatives is to provide exposure to stock markets based outside the United States.
  • Objective – The Index Portfolio investment objective is to provide long term growth of capital through exposure to the international stock markets. The Index Portfolio is designed to invest its assets in equity securities of non-U.S. based companies and to diversify broadly among developed markets.
  • Strategy – The Index Portfolio consists of one or more managers who provide a passively managed account, benchmarked to the MSCI EAFE standard. Manager portfolios are broadly diversified by country, sector and industry. This approach seeks to potentially mitigate style risk and manager risk.
  • Risk – The Index Portfolio is exposed to the potential risks and potential benefits of foreign markets, including currency fluctuations and political ramifications. International funds may also be subject to higher transaction fees and less liquidity compared to domestic funds. These risks may make the Index Portfolio more volatile than domestic funds however, full market cycles for international fund options may offer higher return potential compared to other options.
  • Investment Return Objectives – The objective of the Index Portfolio is to approximate the return of the MSCI EAFE benchmark, net of fees over rolling three-year periods.
  • Trading Restrictions – Exchanges into the Index Portfolio are prohibited for 60 days following the most recent exchange out of the Index Portfolio (or the International Equity Fund – Active Portfolio). New deferrals are not subject to this restriction.
  • Replacing Managers – Managers are monitored against the MSCI EAFE benchmark on a quarterly basis. Managers are also measured against a universe of non-U.S. equity peers. A manager may be replaced for consistent under-performance, or if developments at their organization require immediate action (e.g., their international equity investment team leaves the organization).
  • Commission Recapture – The Board may elect to institute a commission recapture program. If instituted, each of the managers will receive a list of commission recapture brokers. Managers will be requested to allocate a portion of their trades to the commission recapture broker of their choice.
  • Communications – Monthly, managers provide detailed reports to the Board, which list individual holdings, transaction history, portfolio composition (including country and investment sector composition) and a summary of results for the most recent quarter, year-to-date and other specified periods.
    Periodically, managers are called to present to the Board. Presentations include investment results in relation to their objectives, investment strategy, philosophy and notification of any significant changes in the manager’s organization.
  • Fees – Investment management and custodial fees are assessed against the Index Portfolio on a daily basis. The net asset value (NAV) of the Index Portfolio is reported on a net of fees basis.
  • Proxy Voting – Proxy voting is conducted at the manager level.