Retirement Board Terminates
Bond Fund Investment Option
August 25, 2007
(SitNews) - The Alaska Retirement Management Board on Friday,
August 24, 2007 terminated the Daily Government/Corporate Bond
Fund investment option for SBS Supplemental Annuity Plan participants
and for members of the Public Employees Retirement System and
Teachers Retirement System Defined Contribution plans.
The Alaska Retirement Management Board (ARM Board) is the fiduciary
of the fund pursuant to AS 37.10.210, AS 37.10.220(5)(B) and
AS 39.30.175(a). On August 23, 2007, the ARM Board convened an
emergency meeting, and on August 24, 2007, terminated the Daily
Government/Corporate Bond Fund effective immediately.
The ARM Board also directed that all monies in the fund be transferred
as soon as possible to a new investment option, the Barclays
Lehman Brothers Government/Credit Bond Index Fund. The investment
objective of this new fund is to match the return of the Lehman
Brothers Government/Credit Bond Index.
The ARM Board anticipates that the transfer of funds to the new
fund will be completed by August 29. Effective immediately,
all transfers into the Daily Government/Corporate Bond Fund are
The Daily Government/Corporate Bond Fund is one of 14 investment
options in the SBS Supplemental Annuity Plan and one of 10 investment
options in the new PERS and TRS defined contribution plans. The
other investment options including the balanced funds and target
date funds managed by T. Rowe Price are not affected.
There are approximately 1,100 participants in the Daily Government/Corporate
Bond Fund, with a total value of investments as of June 30, 2007,
of approximately $36 million.
The total value of these participants' investments in the Daily
Government/Corporate Bond Fund as of August 23, 2007, was approximately
The objective of the Daily Government/Corporate Bond Fund is
to meet or exceed the return of the Lehman Brother Government/Credit
Bond Index. This fund is intended to be among the least risky
of investment options available to SBS and Defined Contribution
As of August 23, 2007, the Lehman Brother Government/Credit Bond
Index was up nearly 3 percent for the year, versus the performance
of the Daily Government/Corporate Bond Fund, which was a negative
18%. Thus, the performance of the Daily Government/Corporate
Bond Fund was over 20 percent below its benchmark. Most of the
negative performance occurred in the month of August.
The investment manager of the Daily Government/Corporate Bond
Fund is State Street Global Advisors, headquartered in Boston,
While the SBS and Defined Contribution programs are intended
to be participant-directed investment programs, the ARM Board
concluded that its duty as fiduciary of this fund required it
to act decisively and immediately to stop further losses in the
Daily Government/Corporate Bond Fund in order to protect the
beneficiaries of this fund.
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